-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F1tAOzEhAesntU2teee3XBM96W4Sc9lrbQ3wawXs5ND3DZ9W+rWUQ3Xt++HrzZgr 9FHofnLyhkkFLmuXS5wmmg== 0000895345-01-500086.txt : 20010427 0000895345-01-500086.hdr.sgml : 20010427 ACCESSION NUMBER: 0000895345-01-500086 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20010426 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: VENCOR INC /NEW/ CENTRAL INDEX KEY: 0001060009 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-NURSING & PERSONAL CARE FACILITIES [8050] IRS NUMBER: 611323993 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-53977 FILM NUMBER: 1612126 BUSINESS ADDRESS: STREET 1: ONE VENCOR PLACE STREET 2: 680 S FOURTH ST CITY: LOUISVILLE STATE: KY ZIP: 40202 BUSINESS PHONE: 5025967300 MAIL ADDRESS: STREET 1: 3300 AEGON CENTER STREET 2: 400 WEST MARKET ST CITY: LOUISVILLE STATE: KY ZIP: 40202 FORMER COMPANY: FORMER CONFORMED NAME: VENCOR HEALTHCARE INC /DE/ DATE OF NAME CHANGE: 19991124 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: APPALOOSA MANAGEMENT LP CENTRAL INDEX KEY: 0001006438 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 223220835 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 26 MAIN ST STREET 2: 1ST FLOOR CITY: CHATHAM STATE: NJ ZIP: 07928 BUSINESS PHONE: 2013765400 MAIL ADDRESS: STREET 1: 26 MAIN ST STREET 2: 1ST FLOOR CITY: CHATAM STATE: NJ ZIP: 07928 SC 13D 1 sc13d.txt SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 KINDRED HEALTHCARE, INC. (formerly Vencor, Inc.) - ---------------------------------------------------------------------------- (Name of Issuer) Common Stock, par value $0.25 per share - ---------------------------------------------------------------------------- (Title of Class of Securities) 494580 10 3 -------------------------------- (CUSIP Number) Kenneth Maiman, Esq. Appaloosa Management L.P. 26 Main Street, First Floor Chatham, NJ 07928 (973) 701-7000 - ---------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communication) April 20, 2001 - ---------------------------------------------------------------------------- (Date of Event Which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this Schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|. Note. Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. The information required in the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 (the "Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). SCHEDULE 13D CUSIP No. 494580 10 3 Page 2 of 12 Pages 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Appaloosa Management L.P. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] 3 SEC USE ONLY 4 SOURCE OF FUNDS OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE NUMBER OF 7 SOLE VOTING POWER SHARES 5,496,822 BENEFICIALLY 8 SHARED VOTING POWER OWNED BY EACH REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 5,496,822 10 SHARED DISPOSITIVE POWER 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5,496,822 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ] EXCLUDES CERTAIN SHARES 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 31.4% 14 TYPE OF REPORTING PERSON PN SCHEDULE 13D CUSIP No. 494580 10 3 Page 3 of 12 Pages 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Appaloosa Partners Inc. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] 3 SEC USE ONLY 4 SOURCE OF FUNDS OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE NUMBER OF 7 SOLE VOTING POWER SHARES 5,496,822 BENEFICIALLY 8 SHARED VOTING POWER OWNED BY EACH REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 5,496,822 10 SHARED DISPOSITIVE POWER 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5,496,822 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ] EXCLUDES CERTAIN SHARES 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 31.4% 14 TYPE OF REPORTING PERSON CO SCHEDULE 13D CUSIP No. 494580 10 3 Page 4 of 12 Pages 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON David A. Tepper 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] 3 SEC USE ONLY 4 SOURCE OF FUNDS OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6 CITIZENSHIP OR PLACE OF ORGANIZATION USA NUMBER OF 7 SOLE VOTING POWER SHARES 5,496,822 BENEFICIALLY 8 SHARED VOTING POWER OWNED BY EACH REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 5,496,822 10 SHARED DISPOSITIVE POWER 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5,496,822 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ] EXCLUDES CERTAIN SHARES 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 31.4% 14 TYPE OF REPORTING PERSON IN UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 ITEM 1. SECURITY AND ISSUER. The class of equity securities to which this statement relates is the new common stock, par value $0.25 per share (the "Common Stock"), of Kindred Healthcare, Inc., a Delaware corporation, formerly Vencor, Inc. (the "Company"). The principal executive offices of the Company are located at 680 South Fourth Street, Louisville, Kentucky 40202-2412. ITEM 2. IDENTITY AND BACKGROUND. This statement on Schedule 13D is being filed by Appaloosa Management L.P., a Delaware limited partnership (the "Manager"), Appaloosa Partners Inc., a Delaware corporation ("API"), and David A. Tepper ("Mr. Tepper" and, together with the Manager and API, the "Reporting Persons"). The Reporting Persons have entered into a Joint Filing Agreement, dated as of April 26, 2001, a copy of which is attached hereto as Schedule I. The general partner of the Manager is API. Mr. Tepper is the sole stockholder and President of API. The Manager is the general partner of Appaloosa Investment Limited Partnership I, a Delaware limited partnership ("AILP"), and acts as an investment adviser to Palomino Fund Ltd., a British Virgin Islands corporation ("Palomino"). The Manager, API and Mr. Tepper each disclaims beneficial ownership of any of the securities covered by this statement. The address of the principal business and principal office of the Manager, API and Mr. Tepper is 26 Main Street, 1st Floor, Chatham, New Jersey 07928. The business address of AILP is 26 Main Street, 1st Floor, Chatham, New Jersey 07928. The address of the principal business and principal office of Palomino is c/o Trident Trust Company (Cayman) Ltd., 1 Capital Place, P.O. Box 847, Grand Cayman, Cayman Islands. AILP and Palomino are sometimes referred to herein collectively as the "Purchasers." During the past five years, none of the Reporting Persons has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Mr. Tepper is a citizen of the United States. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. 2,975,428 shares of Common Stock were distributed to the Purchasers by the Company pursuant to the consummation of the Plan of Reorganization of Vencor, Inc. ("Vencor"), the predecessor of the Company, under Chapter 11 of the United States Bankruptcy Code (the "Plan of Reorganization") on account of the respective claims held by the Purchasers against Vencor in that bankruptcy case. Such claims arose from the ownership by the Purchasers of (i) $103,455,595.30 aggregate principal amount of loans pursuant to a credit agreement, dated as of April 29, 1998, among Vencor Operating, Inc., Vencor, Inc. (formerly known as Vencor Healthcare, Inc.), the lenders party thereto, the swingline bank party thereto and the other parties thereto and (ii) $108,921,000 aggregate principal amount of Vencor's 9 7/8% Guaranteed Senior Subordinated Notes due 2005. The foregoing claims were extinguished pursuant to the terms of the Plan of Reorganization. The Purchasers did not pay additional consideration for the shares of Common Stock that they received pursuant to the Plan of Reorganization. Under the terms of the Plan of Reorganization and the New Warrant Agreement, as described in Item 6 hereof, on account of the respective claims of the Purchasers described above, the Purchasers also received warrants representing, upon exercise thereof, the right to receive an aggregate of 720,398 shares of Common Stock at an exercise price of $30.00 per share (the "Series A Warrants") and warrants representing, upon exercise thereof, the right to receive an aggregate of 1,800,996 shares of Common Stock at an exercise price of $33.33 per share (the "Series B Warrants" and, collectively with the Series A Warrants, the "New Warrants"). The Purchasers did not pay additional consideration for the New Warrants that they received pursuant to the Plan of Reorganization. ITEM 4. PURPOSE OF TRANSACTION. As described in the response to Item 3 above, the shares beneficially owned by the Reporting Persons were acquired pursuant to the terms of the Plan of Reorganization on account of claims in Vencor's Chapter 11 case. Additionally, pursuant to the Plan of Reorganization, the Purchasers acquired $50,423,386.66 aggregate principal amount of the Company's New Senior Secured Notes. While the Reporting Persons do not have current plans to sell any of the securities acquired pursuant to the Plan of Reorganization, the Reporting Persons may determine, based on market and general economic conditions, the business affairs and financial conditions of the Company, market price of the Company's securities and other factors deemed relevant by them, to sell some or all of such securities, to exercise the right to convert the New Warrants into Common Stock of the Company or to purchase additional securities of the Company. Except as otherwise described in this Schedule 13D, the Reporting Persons currently have no plans or proposals which relate or would result in any transaction, event or action enumerated in paragraphs (a) through (j) of Item 4 of the form of the Schedule 13D promulgated under the Exchange Act. So long as the Reporting Persons and their affiliates collectively are one of the largest stockholders of the Company, the Reporting Persons may seek to influence the management of the Company through representation on the board of directors or otherwise. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) Based upon information obtained from the Company, as of April 20, 2001, there were a total of 15,000,000 shares of Common Stock issued by the Company pursuant to the Plan of Reorganization. The Purchasers are the beneficial owners of 2,975,428 of these shares of Common Stock. Additionally, upon exercise of the New Warrants, the Purchasers would beneficially own an additional 2,521,394 shares of Common Stock. Therefore, as of the date hereof, the Reporting Persons' beneficial ownership constitutes 5,496,822 shares or approximately 31.4% of the issued and outstanding Common Stock. Reference is made to the response in Item 6 below, which is hereby incorporated herein, for a description of the terms of the New Warrant Agreement described therein. (b) The Manager, API and Mr. Tepper may be deemed to have the sole voting and dispositive power with respect to 5,496,822 shares of Common Stock. (c) Except as described in this Schedule 13D, neither of the Reporting Persons has effected any transactions in the Common Stock during the sixty days preceding the date of this Schedule 13D. (d) Not applicable. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. AILP was a member of the Official Committee of Unsecured Creditors in Vencor's Chapter 11 case (the "Committee"). The Committee was a co-proponent of the Plan of Reorganization. Under the terms of the Plan of Reorganization, which was confirmed by the United States Bankruptcy Court for the District of Delaware pursuant to an order entered on March 16, 2001, the holders of certain claims against Vencor, including the Purchasers, collectively designated six members of the Company's new seven member board of directors. Two officers of certain affiliates of the Purchasers have been designated as members of the Company's board of directors: David A. Tepper and James Bolin. Mr. Tepper is the President and sole stockholder of API. Mr. Bolin is a Vice President and the Secretary of API. A copy of the Plan of Reorganization is attached as Exhibit I. In addition, the Purchasers have entered into two agreements which relate to the Common Stock, a Registration Rights Agreement and a New Warrant Agreement, which are each described below. The Purchasers entered into a New Warrant Agreement dated as of April 20, 2001. Under the terms of the New Warrant Agreement and in accordance with the Plan of Reorganization, the Company issued to holders of certain claims two series of New Warrants representing the right to purchase 7,000,000 shares (subject to adjustment upon the occurrence of certain events) of Common Stock. Both series of New Warrants have identical terms except each series has a different exercise price. Subject to certain adjustments, the Series A Warrants represent the right to purchase 2,000,000 shares of Common Stock at an exercise price of $30.00 per share, and the Series B Warrants represent the right to purchase 5,000,000 shares of Common Stock at an exercise price of $33.33 per share. The New Warrants are subject to dilution upon the issuance of Common Stock, warrants, options or other securities of the Company pursuant to certain employee benefit plans, dividend reinvestment plans, certain underwritten public offerings and certain other transactions as provided in the New Warrant Agreement. The New Warrants are exercisable in whole or in part at any time prior to April 20, 2006. Any New Warrants that are not exercised prior to such date will become void and all rights thereunder will terminate. A copy of the New Warrant Agreement is attached hereto as Exhibit II. The Purchasers also entered into a Registration Rights Agreement with the Company pursuant to which the Company has granted certain registration rights to the Purchasers and others with respect to all of the shares of Common Stock, the New Warrants and the shares of Common Stock issuable upon exercise of the New Warrants (collectively, the "Registrable Securities") as follows: (i) The Company will file a shelf registration statement with respect to the Registrable Securities as soon as practicable but in no event later than 120 days following the effective date of the Plan of Reorganization; (ii) The Company will use its reasonable best efforts to cause such registration statement to be declared effective as soon as practicable, and to keep such registration statement continuously effective for a period of the earlier of two years from the effective date of the Plan of Reorganization or the date on which there are no holders of Registrable Securities; (iii) Each holder of Registrable Securities may require the Company, on one occasion, to file a registration statement with respect to such securities, provided that such request covers securities with an estimated market value of at least $10 million or not less than 5% of the Registrable Securities; and (iv) Each time the Company files a registration statement with respect to any offering of Registrable Securities, the parties to such agreement may, subject to certain limitations, require the inclusion of their Registrable Securities in that offering. A copy of the Registration Rights Agreement is attached hereto as Exhibit III. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. 1. Schedule I 2. Exhibit I - Plan of Reorganization 3. Exhibit II - New Warrant Agreement 4. Exhibit III - Registration Rights Agreement SIGNATURE After reasonable inquiry and to the best of its knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: April 26, 2001 APPALOOSA MANAGEMENT L.P. By: APPALOOSA PARTNERS INC., Its General Partner By: /s/ David A. Tepper ----------------------------------- Name: David A. Tepper Title: President APPALOOSA PARTNERS INC. By: /s/ David A. Tepper ----------------------------------- Name: David A. Tepper Title: President /s/ David A. Tepper ----------------------------------- David A. Tepper EX-99.1 2 sc1.txt SCHEDULE 1 JOINT FILING AGREEMENT The undersigned hereby agree that the Statement on Schedule 13D filed herein (and any amendments thereto), relating to the common stock, $0.25 par value, of Kindred Healthcare, Inc., is being filed jointly with the Securities and Exchange Commission pursuant to Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, as amended, on behalf of each such person. Dated: April 26, 2001 APPALOOSA MANAGEMENT L.P. By: APPALOOSA PARTNERS INC., Its General Partner By: /s/ David A. Tepper ------------------------------- Name: David A. Tepper Title: President APPALOOSA PARTNERS INC. By: /s/ David A. Tepper ------------------------------ Name: David A. Tepper Title: President /s/ David A. Tepper ------------------------------ David A. Tepper EX-99.2 3 rsexha.txt EXHIBIT I EXHIBIT I EXHIBITS TO THE DISCLOSURE STATEMENT EXHIBIT A PLAN OF REORGANIZATION IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: ) ) Case Nos. 99-3199 (MFW) Vencor, Inc., et al., ) through 99-3327 (MFW) ) ) Chapter 11 Debtors and Debtors in Possession. ) ) Jointly Administered FOURTH AMENDED JOINT PLAN OF REORGANIZATION OF VENCOR, INC. AND AFFILIATED DEBTORS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE - ---------------------------------- --------------------------------------- Thomas J. Moloney, Esq. William H. Sudell, Jr., Esq. Lindsee P. Granfield, Esq. (Del. Bar #463) CLEARY, GOTTLIEB, STEEN & HAMILTON Eric D. Schwartz, Esq. (Del. Bar #3134) One Liberty Plaza MORRIS, NICHOLS, ARSHT & TUNNELL New York, New York 10006 1201 North Market Street P.O. Box 1347 Wilmington, Delaware 19899-1347 - ---------------------------------- --------------------------------------- COUNSEL TO THE DEBTORS AND DEBTORS IN POSSESSION TABLE OF CONTENTS Page INTRODUCTION..............................................................1 ARTICLE I DEFINITIONS, RULES OF INTERPRETATION, COMPUTATION OF TIME AND GOVERNING LAW.....................................1 A. Definitions...........................................1 B. Rules of Interpretation, Computation of Time and Governing Law........................................17 1. Rules of Interpretation.........................17 2. Computation of Time.............................18 3. Governing Law...................................18 ARTICLE II ADMINISTRATIVE AND TAX CLAIMS.............................18 2.01. ADMINISTRATIVE CLAIMS.....................................18 2.02. BAR DATE FOR ADMINISTRATIVE CLAIMS........................18 2.03. TAX CLAIMS................................................19 ARTICLE III CLASSIFICATION OF CLAIMS AGAINST AND INTERESTS IN THE DEBTORS...................................................19 3.01. CLASS 1 - PRIORITY CLAIMS.................................19 3.02. CLASS 2 - SECURED CLAIMS..................................19 3.03. CLASS 3A - CONVENIENCE CLAIMS.............................19 3.04. CLASS 3B - TRADE CLAIMS, MALPRACTICE AND OTHER LITIGATION CLAIMS, BENEFITS CLAIMS AND UNSECURED CLAIMS...............................19 3.05. CLASS 4 - SENIOR DEBT CLAIMS..............................19 3.06. CLASS 5 - VENTAS CLAIM....................................19 3.07. CLASS 6 - UNITED STATES CLAIMS AND PIP CLAIM..............20 3.08. CLASS 7A - SUBORDINATED NOTEHOLDER CLAIMS.................20 3.09. CLASS 7B - NOTEHOLDER SECURITIES FRAUD CLAIMS.............20 3.10. CLASS 8 - PUT RIGHTS......................................20 3.11. CLASS 9 - INTENTIONALLY OMITTED...........................20 3.12. CLASS 10 - PUNITIVE DAMAGE CLAIMS.........................20 3.13. CLASS 11A - PREFERRED EQUITY INTERESTS....................20 3.14. CLASS 11B - PREFERRED EQUITY SECURITIES FRAUD CLAIMS......20 3.15. CLASS 12A - COMMON EQUITY INTERESTS.......................20 3.16. CLASS 12B - COMMON EQUITY SECURITIES FRAUD CLAIMS.........20 3.17. SUMMARY OF CLAIMS AND INTERESTS...........................20 ARTICLE IV TREATMENT OF CLASSES UNIMPAIRED UNDER THE PLAN............21 4.01. CLASS 1 - PRIORITY CLAIMS.................................21 4.02. CLASS 2 - SECURED CLAIMS..................................21 ARTICLE V TREATMENT OF CLASSES IMPAIRED UNDER THE PLAN..............21 5.01. CLASS 3A - CONVENIENCE CLAIMS.............................21 5.02. CLASS 3B - TRADE CLAIMS, MALPRACTICE AND OTHER LITIGATION CLAIMS, BENEFIT CLAIMS, INDEMNIFICATION CLAIMS, EMPLOYEE CONTRACT CLAIMS AND UNSECURED CLAIMS THAT ARE NOT CONVENIENCE CLAIMS......................l......22 5.03. CLASS 4 - SENIOR DEBT CLAIMS..............................22 5.04. CLASS 5 - VENTAS CLAIM....................................22 5.05 CLASS 6 - CLASS 6 CLAIMS..................................25 5.06. CLASS 7A - SUBORDINATED NOTEHOLDER CLAIMS.................25 5.07. CLASS 7B - NOTEHOLDER SECURITIES FRAUD CLAIMS.............25 5.08. CLASS 8 - PUT RIGHTS......................................25 5.09. CLASS 9 - INTENTIONALLY OMITTED...........................25 5.10. CLASS 10 - PUNITIVE DAMAGE CLAIMS.........................25 5.11. CLASS 11A - PREFERRED EQUITY INTERESTS....................25 5.12. CLASS 11B - PREFERRED EQUITY SECURITIES FRAUD CLAIMS......25 5.13. CLASS 12A - COMMON EQUITY INTERESTS.......................26 5.14. CLASS 12B - COMMON EQUITY SECURITIES FRAUD CLAIMS.........26 ARTICLE VI GENERAL PROVISIONS REGARDING TREATMENT OF CLAIMS AND INTERESTS AND DISTRIBUTIONS UNDER THE PLAN............26 6.01. DISTRIBUTION DATE.........................................26 6.02. EXCHANGE AGENT............................................26 6.03. DISTRIBUTION RECORD DATE - SENIOR DEBT CLAIMS AND SUBORDINATED NOTEHOLDER CLAIMS............................27 6.04. SURRENDER OF INSTRUMENTS AND RECEIPT OF DISTRIBUTION - SENIOR DEBT CLAIMS AND SUBORDINATED NOTEHOLDER CLAIMS.....27 6.06. SURRENDER OF INSTRUMENTS AND RECEIPT OF DISTRIBUTION - OLD PREFERRED STOCK.......................................28 6.07. SURRENDER OF INSTRUMENTS AND RECEIPT OF DISTRIBUTION - OLD COMMON STOCK..........................................29 6.08. INTENTIONALLY OMITTED.....................................29 6.09. UNCLAIMED DISTRIBUTIONS...................................29 6.10. TAX PROVISIONS............................................30 6.11. SETOFFS...................................................30 6.12 THE UNITED STATES CLAIMS AND THE PIP CLAIM................30 (a) The Debtors' Obligations to the United States Under the Government Settlement......................30 (b) The Ventas Entities' Obligations Under the Government Settlement................................34 (c) Releases Under the Government Settlement...........................................38 (d) Additional Terms of Government Settlement...........................................43 ARTICLE VII PROVISIONS FOR TREATMENT OF DISPUTED, CONTINGENT AND UNLIQUIDATED CLAIMS AND ADMINISTRATIVE EXPENSES AND FOR DEEMED ALLOWANCE OF CLAIMS............................44 7.01. CHARACTERIZATION OF DISPUTED CLAIMS.......................44 7.02. RESOLUTION OF CONTESTED CLAIMS AND INTERESTS..............44 7.03. RESERVES AND DISTRIBUTIONS................................44 7.04. ALLOWED CLAIMS............................................44 ARTICLE VIII IMPLEMENTATION OF THE PLAN................................45 8.01. SUBSTANTIVE CONSOLIDATION OF DEBTORS FOR PLAN PURPOSES ONLY.............................................45 8.02. CONTINUED CORPORATE EXISTENCE AND VESTING OF ASSETS IN THE REORGANIZED DEBTORS................................46 8.03. AMENDED AND RESTATED CERTIFICATE OF INCORPORATION.........46 8.04. AMENDED AND RESTATED BY-LAWS..............................46 8.05. NEW SECURITIES AND COLLATERAL DOCUMENTS...................46 8.06. CANCELLATION OF SECURITIES AND AGREEMENTS.................47 8.07. MANAGEMENT OF THE REORGANIZED DEBTORS.....................47 8.08. OFFICERS..................................................47 8.09. SATURDAY, SUNDAY OR LEGAL HOLIDAY.........................47 8.10. OTHER DOCUMENTS AND ACTIONS...............................48 8.11. CORPORATE ACTIONS.........................................48 8.12. REGISTRATION RIGHTS.......................................48 8.13. LISTING OF THE NEW COMMON STOCK AND NEW WARRANTS..........48 8.14. FRACTIONAL SHARES - DISTRIBUTION OF NEW COMMON STOCK AND NEW WARRANTS..........................................49 8.15. CLAIMS OF SUBORDINATION...................................49 8.16. SETTLEMENTS UNDER BANKRUPTCY RULE 9019....................50 ARTICLE IX ACCEPTANCE OR REJECTION OF THE PLAN.......................50 9.01. PRESUMED ACCEPTANCE OF PLAN...............................50 9.02. DEEMED NON-ACCEPTANCE OF PLAN.............................50 9.03. VOTING CLASSES............................................50 9.04. ACCEPTANCE BY IMPAIRED CLASSES............................50 9.05. NON-CONSENSUAL CONFIRMATION...............................50 ARTICLE X CONDITIONS PRECEDENT......................................50 10.01. CONDITIONS TO CONFIRMATION................................50 10.02. CONDITIONS TO THE EFFECTIVE DATE..........................52 10.03. WAIVER OF CONDITIONS......................................52 ARTICLE XI EFFECT OF PLAN CONFIRMATION...............................52 11.01. DISCHARGE AND RELEASE.....................................52 11.02(A) RELEASES OF THE DEBTORS...................................53 11.02(B) RELEASE OF THE VENTAS ENTITIES............................54 11.03. RELEASES BETWEEN THE DEBTORS, VENTAS, HOLDERS OF THE SENIOR DEBT AND THE SUBORDINATED NOTEHOLDERS..........55 11.04. TERM OF INJUNCTIONS OR STAYS..............................56 11.05. EXCULPATION...............................................56 11.06. REVESTING.................................................57 11.07. RETENTION OF CAUSES OF ACTION/RESERVATION OF RIGHTS.......57 11.08. POST CONSUMMATION EFFECT OF EVIDENCES OF CLAIMS OR INTERESTS.................................................57 ARTICLE XII TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES.....58 12.01. ASSUMPTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES....58 12.02. CLAIMS BASED ON REJECTION OF EXECUTORY CONTRACTS OR UNEXPIRED LEASES..........................................58 12.03. SURVIVAL OF THE DEBTORS' CORPORATE INDEMNITIES............58 ARTICLE XIII RETENTION OF JURISDICTION.................................59 13.01. RETENTION OF JURISDICTION.................................59 13.02. FAILURE OF COURT TO EXERCISE JURISDICTION.................59 ARTICLE XIV MISCELLANEOUS PROVISIONS..................................60 14.01. RETIREE BENEFITS..........................................60 14.02. MODIFICATION OF PLAN......................................60 14.03. WITHDRAWAL OF PLAN........................................60 14.04. DISSOLUTION OF CREDITORS' COMMITTEE.......................60 14.05. HEADINGS..................................................61 14.06. SUCCESSORS AND ASSIGNS....................................61 14.07. PAYMENT OF STATUTORY FEES.................................61 14.08. NOTICES...................................................61 14.09. SEVERABILITY OF PLAN PROVISIONS...........................61 14.10. EXHIBITS..................................................62 14.11. NO ADMISSIONS.............................................62 14.12. CONSENT RIGHTS............................................62 ARTICLE XV CONFIRMATION REQUEST......................................64 EXHIBITS TO THE PLAN OF REORGANIZATION EXHIBIT NUMBER EXHIBIT 1 Common Equity Securities Fraud Claims 2 Noteholder Securities Fraud Claims 3 Preferred Equity Securities Holder Fraud Claims 4 United States Proofs of Claim 5 Qui Tam Actions SCHEDULES TO THE PLAN OF REORGANIZATION LETTER SCHEDULE A Schedule of Attorneys Fees B Consent to Plan Treatment C Description of Covered Conduct D Illustrative Schedule of Ventas Payments E Schedule of Allocation of Government Settlement EXHIBITS TO THE PLAN SUPPLEMENT EXHIBIT NUMBER EXHIBIT 1 List of Agreements Between the Debtors and the Ventas Entities 2 Intentionally omitted 3 Vencor's Amended and Restated By-laws 4 Vencor's Amended and Restated Certificate of Incorporation 5 Tax Refund Escrow Agreement 6 Amended Ventas Leases 7 Corporate Integrity Agreement 8 Executory Contracts and Unexpired Leases Not Assumed 9 Intentionally omitted 10 Term Sheet for New Senior Secured Credit Agreement 11 New Warrant Agreement 12 Registration Rights Agreement 13 Form of Certificate of Amendment of the Certificate of Incorporation of Each Corporate Debtor 14 Intentionally omitted 15 Projected Financial Statements 16 Historical Financial Information 17 Liquidation Analysis 18 New Stock Option Plan 19 Restricted Share Plan 20 Long-Term Incentive Plan 21 Cornerstone Insurance Company Information INTRODUCTION VENCOR, INC., ET AL., DEBTORS AND DEBTORS IN POSSESSION, PROPOSE THE FOLLOWING FOURTH AMENDED JOINT PLAN OF REORGANIZATION (THE "PLAN") FOR THE RESOLUTION AND FULL SATISFACTION AND DISCHARGE OF ALL CLAIMS AGAINST, AND INTERESTS IN, THE DEBTORS. REFERENCE IS MADE TO THE DEBTORS' FOURTH AMENDED DISCLOSURE STATEMENT FILED CONTEMPORANEOUSLY WITH THE PLAN (THE "DISCLOSURE STATEMENT"), FOR A DISCUSSION OF THE DEBTORS' HISTORY, BUSINESSES, PROPERTIES, RESULTS OF OPERATIONS AND PROJECTIONS FOR FUTURE OPERATIONS, AND FOR A SUMMARY AND ANALYSIS OF THE PLAN AND CERTAIN RELATED MATTERS. THE DEBTORS ARE THE PROPONENTS OF THE PLAN WITHIN THE MEANING OF SECTION 1129 OF THE BANKRUPTCY CODE, 11 U.S.C. SS. 1129. ALL HOLDERS OF CLAIMS AGAINST AND INTERESTS IN THE DEBTORS ENTITLED TO VOTE ON THE PLAN ARE ENCOURAGED TO READ THE PLAN AND THE DISCLOSURE STATEMENT IN THEIR ENTIRETY BEFORE VOTING TO ACCEPT OR REJECT THE PLAN. SUBJECT TO CERTAIN RESTRICTIONS AND REQUIREMENTS SET FORTH IN THE PLAN, THE DEBTORS RESERVE THE RIGHT TO ALTER, AMEND, MODIFY, REVOKE OR WITHDRAW THE PLAN PRIOR TO ITS CONSUMMATION. ARTICLE I DEFINITIONS, RULES OF INTERPRETATION, COMPUTATION OF TIME AND GOVERNING LAW A. DEFINITIONS Certain capitalized terms used throughout the Plan are defined in this Article I. Other capitalized terms found in the Plan shall have the meaning ascribed to such terms in the Bankruptcy Code or the Bankruptcy Rules (and shall be construed in accordance with the rules of construction thereunder). ADMINISTRATIVE CLAIM means a Claim for payment of administrative expense of a kind specified in section 503(b) of the Bankruptcy Code and referred to in section 507(a)(1) of the Bankruptcy Code, other than a Ventas Claim or a Class 6 Claim, and including, without limitation, the actual, necessary costs and expenses incurred after the Petition Date of preserving the Estates and operating the businesses of the Debtors, including wages, salaries or commissions for services, compensation for legal, financial advisory, accounting and other services and reimbursement of expenses awarded or allowed under sections 330(a) or 331 of the Bankruptcy Code, all fees and charges assessed against the Estates under chapter 123 of title 28, United States Code and the reasonable expenses of the 1997 Indenture Trustee and the 1998 Indenture Trustee and the reasonable fees and expenses of their respective counsel (such fees and expenses of the 1997 Indenture Trustee and the 1998 Indenture Trustee and their respective counsel to be subject to allowance by the Court upon submission of a fee application and, upon objection by a party in interest in the Debtors' cases, after notice and a hearing). ALLOWED ADMINISTRATIVE CLAIM means all or that portion of an Administrative Claim which either (i) has been allowed by a Final Order as an Administrative Claim, or (ii) was incurred by the Debtors in the ordinary course of business during their Reorganization Cases and is determined to be due, owing, valid and enforceable by the Debtors without offset, defense or counterclaim. ALLOWED CLAIM means that portion of any Claim, other than an Administrative Claim, (i) as to which (a) no proof of claim has been timely or deemed timely filed in accordance with the Bar Date Order and (b) the liquidated and noncontingent amount of which has been scheduled by a Debtor pursuant to the Bankruptcy Code as undisputed, or (ii) as to which a proof of claim has been timely filed in a liquidated amount in accordance with the Bar Date Order or any other order of the Court provided that (a) no objection to the allowance of such Claim or motion to expunge such Claim has been interposed before any final date for the Filing of such objections or motions as set forth in the Confirmation Order or other Court order or (b) if such objection or motion has been Filed and not withdrawn, such objection or motion has been overruled by a Final Order (but only to the extent such objection or motion has been overruled), or (iii) as to which a Final Order has been entered allowing such Claim. ALLOWED COMMON EQUITY INTEREST means a Common Equity Interest that is of record as of the Distribution Record Date in a stock register that is maintained by or on behalf of Vencor, Inc. ALLOWED PREFERRED EQUITY INTEREST means a Preferred Equity Interest that is of record as of the Distribution Record Date in a stock register that is maintained by or on behalf of Vencor, Inc. AMENDED AND RESTATED BY-LAWS means the Amended and Restated By-laws of Reorganized Vencor which shall be substantially in the form set forth in Exhibit 3 to the Plan Supplement. AMENDED AND RESTATED CERTIFICATE OF INCORPORATION means the Amended and Restated Certificate of Incorporation of Reorganized Vencor which shall be substantially in the form set forth in Exhibit 4 to the Plan Supplement. AMENDED VENTAS CREDIT AGREEMENT means the Amended and Restated Credit, Security, Guaranty and Pledge Agreement, dated as of January 31, 2000, by and among Ventas Realty, Limited Partnership, a Delaware limited partnership, as borrower thereunder, each of Ventas, Inc. and Ventas LP Realty, L.L.C., a Delaware limited liability company, as guarantors, each of the Lenders therein named, Bank of America, N.A., as Administrative Agent and Morgan Guaranty Trust Company of New York, as Documentation Agent, as may be amended from time to time. AMENDED VENTAS LEASES means the Five Ventas Leases, as amended into the four leases, which shall be substantially in the form of the four master leases and exhibits thereto collectively set forth in Exhibit 6 to the Plan Supplement. The Amended Ventas Leases shall contain a schedule allocating the rent under the Amended Ventas Leases among the properties governed by the agreements, which schedule shall be finalized by agreement of the Debtors and Ventas on or prior to the Effective Date, without need for further approval by the Court or any other party in interest. BALLOTS means the ballots accompanying the Disclosure Statement upon which holders of Impaired Claims or Impaired Interests entitled to vote on the Plan shall indicate their acceptance or rejection of the Plan in accordance with the instructions regarding voting. BANK AGENT means Morgan Guaranty Trust Company of New York, the Documentation Agent and Collateral Agent under the Senior Credit Agreement, in its capacity as such. BANKRUPTCY CODE means title 11 of the United States Code, as now in effect or hereafter amended. BANKRUPTCY RULES means, collectively, the Federal Rules of Bankruptcy Procedure, as amended, promulgated under 28 U.S.C. ss. 2015, and the general and local rules of the Court, as applicable from time to time in the Reorganization Cases. BAR DATE ORDER means the Order Establishing Bar Dates For Filing Proofs Of Claim And Approving Form And Manner Thereof, entered by the Court on December 1, 1999. BENEFITS CLAIM means any Claim against a Debtor arising from or with respect to any employee benefits plan, other than the Deferred Compensation Plan and the SERP, that is not an Administrative Claim or Employee Contract Claim. BUSINESS DAY means any day except a Saturday, Sunday or "legal holiday" (as defined in Bankruptcy Rule 9006(a)). CASH means cash and cash equivalents. CLAIM means a claim against a Debtor, whether asserted or not asserted, as defined in section 101(5) of the Bankruptcy Code. CLASS means a category of holders of Claims or Interests as defined in Article III of the Plan. CLASS 6 CLAIMS means the United States Claims, the PIP Claim and, to the extent not included in the United States Claims and the PIP Claim, all other known or unknown, asserted or unasserted, civil and administrative monetary claims (e.g., claims seeking monetary remedies or payments), administrative monetary actions, monetary causes of action (including attorneys fees, costs, and expenses of every kind) of the United States, for itself, its agencies, departments, officers, agents, employees and assigns, fiscal intermediaries, or third parties under 31 U.S.C. ss. 3730(b) or (d), arising on or before the Effective Date (except as set forth in (iv) below), for: (i) administrative overpayments, including claims or causes of action for services rendered or products supplied to beneficiaries, under the Medicare Program ("Medicare"), Title XVIII of the Social Security Act, 42 U.S.C. ss.ss. 1395-1395ggg and under the TRICARE Program (also known as the Civilian Health and Medical Program of the Uniformed Services ("CHAMPUS")), 10 U.S.C. ss.ss. 1071-1106; (ii) claims relating to any of the federal health care programs set forth in (i) above under the False Claims Act, 31 U.S.C. ss.ss. 3729-3733 (sealed and unsealed), the Civil Monetary Penalties Law, 42 U.S.C. ss. 1320a-7a, the Program Fraud Civil Remedies Act, 31 U.S.C. ss.ss. 3801-3812, the Medicare Act and regulations, and other federal statutes; (iii) claims for money arising out of quality of care issues relating to any of the federal health care programs set forth in (i) above; (iv) claims based on the submission of Medicare cost reports, interim payments and/or any other claims for payment or payments made with respect thereto, and/or derived from or arising from the Medicare provider agreements, and/or otherwise relating to participation in the Medicare program for periods (including partial periods) prior to the Petition Date; (v) common law claims relating to any of the federal health care programs set forth in (i) above, including, without limitation, fraud, payment by mistake of fact and unjust enrichment, failure to deliver goods and services, and warranty claims for deficient goods and services; (vi) all claims asserted by the United States or third parties under 31 U.S.C. ss.ss. 3730(b) or (d) in the pending lawsuits listed on Exhibit 5 to the Plan; and (vii) all claims asserted by the United States in the Government Proofs of Claim; provided, however, that claims arising under Title 26 of the United States Code (the Internal Revenue Code), claims seeking non-monetary remedies, criminal liability or any civil, criminal or administrative claims brought by the Securities and Exchange Commission or any other governmental or regulatory agency related to securities law violations, including but not limited to claims based on the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Advisers Act of 1940, the Investment Company Act, the Commodity Exchange Act and the rules and regulations under such statutes are expressly excluded from this definition. COMMON EQUITY INTERESTS means the rights of holders of Old Common Stock. COMMON EQUITY SECURITIES FRAUD CLAIMS means all Claims, including unknown claims, demands, rights, liabilities and causes of action of any kind whatsoever, known or unknown, asserted or which might have been, or might in the future be, asserted in a direct, derivative or other capacity against any Person or Entity, arising out of, relating to, or in connection with: (i) the purchase, sale or other decision or action made or taken, or declined, failed or refused to be made or taken, or otherwise foregone, concerning or relating to Common Equity Interests, (ii) the facts, transactions, events, occurrences, acts, representations, disclosures, statements, omissions, or failures to act which were alleged or could have been alleged in the pending litigation asserted against any of the Debtors, whether asserted individually or on behalf of a class of plaintiffs, which generally arise from allegations of alleged acts or omissions of the Debtors or any other Persons or Entities prior to the Petition Date with respect to or concerning the Old Common Stock, or the purchase, sale or ownership thereof, including, without limitation, the litigation set forth on Exhibit 1 to the Plan, (iii) the purchase, ownership or sale of the common stock of any of the Debtors, (iv) indemnification claims with respect to any of the foregoing, and (v) any other claims arising out of, relating to, or in connection with Common Equity Interests that would be subject to section 510(b) of the Bankruptcy Code; provided that Indemnification Claims are excluded from this definition. CONFIRMATION DATE means the date on which the Court enters the Confirmation Order on its docket, within the meaning of Bankruptcy Rules 5003 and 9021. CONFIRMATION ORDER means the order of the Court confirming the Plan pursuant to section 1129 of the Bankruptcy Code, the form of which shall be subject to Section 14.12 of the Plan. CONSUMMATION means the occurrence of the Effective Date. CONVENIENCE CLAIMS means (i) all Trade Claims, Malpractice and Other Litigation Claims, Benefits Claims, Indemnification Claims, Employee Contract Claims and Unsecured Claims held by a Person or Entity where the aggregate amount of such Allowed Claims is $3,000 or less (or in the case of a transferee or assignee of Claims, all Allowed Claim where the aggregate amount of such Allowed Claims transferred by an individual Person or Entity is $3,000 or less) (it being understood for these purposes that such claims acquired by a transferee or assignee from different Persons or Entities shall not be aggregated to exceed the $3,000 threshold), or (ii) Trade Claims, Malpractice and Other Litigation Claims, Benefit Claims, Indemnification Claims, Employee Contract Claims or Unsecured Claims as to which the holder thereof elects to reduce the aggregate amount of such Allowed Claim to $3,000 or less (or in the case of a transferee or assignee of Claims, where the transferee elects to reduce the aggregate amount of such Allowed Claim transferred by an individual Person or Entity to $3,000 or less) (it being understood for these purposes that such claims acquired by a transferee or assignee from different Persons or Entities shall not be aggregated to exceed the $3,000 threshold). CORPORATE INDEMNITIES means any obligations of the Debtors pursuant to their corporate charters and by-laws or agreements entered into any time prior to the Effective Date, to indemnify current or former directors, officers, agents and/or employees with respect to all present and future actions, suits and proceedings against the Debtors or such directors, officers, agents and/or employees, based upon any act or omission for or on behalf of, the Debtors. CORPORATE INTEGRITY AGREEMENT means the Corporate Integrity Agreement between the OIG-HHS and Vencor, Inc. dated July 25, 2000, which is to become binding on the Effective Date and is attached as Exhibit 7 to the Plan Supplement. COURT means the United States Bankruptcy Court for the District of Delaware and, to the extent it may exercise jurisdiction in the Reorganization Cases, the United States District Court for the District of Delaware, or if either such Court ceases to exercise jurisdiction over the Reorganization Cases, such other court that properly exercises jurisdiction over the Reorganization Cases. COVERED CONDUCT means the conduct set forth on Schedule C to the Plan. CREDITORS' COMMITTEE means the Official Creditors' Committee appointed pursuant to section 1102 of the Bankruptcy Code in the Reorganization Cases. DEBTOR PARTIES shall mean, collectively, the Debtors and each of their Representatives. DEBTORS means the 129 debtors and debtors-in-possession set forth on the signature pages hereof. DEFERRED COMPENSATION PLAN means the Vencor, Inc. Deferred Compensation Plan, effective April 30, 1998, as the same may be amended from time to time. DELAWARE GENERAL CORPORATION LAW means title 8 of the Delaware Code, as now in effect or hereafter amended. DIP AGENT means Morgan Guaranty Trust Company of New York, as Arranger, Syndication Agent, Collateral Agent and Administrative Agent under the DIP Credit Agreement, in its capacity as such. DIP CREDIT AGREEMENT means the Debtor-in-Possession Credit Agreement dated as of September 13, 1999 among Vencor, Inc., Vencor Operating and each of the other Debtors party thereto, each as debtor and debtor-in-possession, the lenders party thereto, the LC Issuing Banks party thereto, and Morgan Guaranty Trust Company of New York, as Arranger, Syndication Agent, Collateral Agent and Administrative Agent, as the same may be amended from time to time. DISCLOSURE STATEMENT means the Debtors' Fourth Amended Disclosure Statement Filed with the Court on December 14, 2000, as it may be amended, modified or supplemented (and all exhibits or schedules annexed thereto or references therein), which relates to the Plan and which has been prepared and distributed pursuant to an order of the Court approving the same, in accordance with sections 1125 and 1126(b) of the Bankruptcy Code and Bankruptcy Rule 3018. DISTRIBUTION RECORD DATE means the Confirmation Date. DOJ means the United States Government, U.S. Department of Justice, Civil Division. EFFECTIVE DATE means a date selected by the Debtors that is no more than ten (10) Business Days following the date on which all conditions set forth in Sections 10.01 and 10.02 of this Plan have been satisfied or, if capable of being waived, duly and expressly waived pursuant to Sections 10.03 and 14.12 of this Plan, provided, however, that such date shall be no later than May 1, 2001. ELIGIBLE INSTITUTION means a member firm of a registered national securities exchange in the United States, a member of the National Association of Securities Dealers, Inc., or a commercial bank or trust company having an office or a correspondent in the United States. EMPLOYEE CONTRACTS mean all contracts existing on the Petition Date between any employee, officer or director of the Debtors and any or all of the Debtors, as any such contract may be amended from time to time, excluding the Deferred Compensation Plan, the SERP and the Put Rights. EMPLOYEE CONTRACT CLAIMS means all claims of any current or former employee, officer or director of the Debtors under Employee Contracts, except for Indemnification Claims and Benefit Claims. ENTITY means an entity as defined in section 101(15) of the Bankruptcy Code. ESTATES means the estates created for the Debtors in their Reorganization Cases pursuant to section 541 of the Bankruptcy Code, as deemed consolidated for purposes of the Plan but not for corporate purposes. EXCHANGE ACT means the Securities and Exchange Act of 1934, as now in effect or hereinafter amended. EXCHANGE AGENT means an entity to be designated by the Debtors not less than ten (10) days prior to the hearing on confirmation of the Plan, which entity shall be approved by the Court. EXIT FACILITY means a credit facility which, together with the Cash of the Debtors, shall be sufficient to make all payments due on and after the Effective Date of the Plan, and to provide adequate working capital for the Debtors after the Effective Date. FILE, FILED OR FILING means file, filed or filing with the clerk of the Court in the Reorganization Cases or, with respect to proofs of claim, with any agent approved by order of the Court in accordance with the Bar Date Order. FINAL ORDER means an order of the Court (i) as to which the time to appeal, petition for certiorari, or move for reargument, rehearing or new trial has expired and as to which no appeal, petition for certiorari, or other proceedings for reargument, rehearing or new trial shall then be pending; (ii) as to which any right to appeal, petition for certiorari, reargue, rehear or retry shall have been waived in writing; or (iii) in the event that an appeal, writ of certiorari, reargument, rehearing or new trial has been sought, as to which (a) such order of the Court shall have been affirmed by the highest court to which such order is appealed; (b) certiorari has been denied as to such order; or (c) reargument or rehearing or new trial from such order shall have been denied, and the time to take any further appeal, petition for certiorari or move for reargument, rehearing or new trial shall have expired without such actions having been taken. FIVE VENTAS LEASES means collectively, (i) the four Master Lease Agreements dated as of April 30, 1998, and entered into as part of the Agreement and Plan of Reorganization dated as of April 30, 1998 by and between Ventas, Inc. and Ventas Realty, Limited Partnership as lessor and Vencor, Inc. and Vencor Operating, Inc. as tenant, and (ii) the Lease Agreement dated as of August 7, 1998, by and between Ventas Realty, Limited Partnership, as lessor and Vencor Nursing Centers Limited Partnership, as tenant, concerning a facility commonly known as the Corydon, Indiana Skilled Nursing Center, all as amended prior to the Effective Date. GOVERNMENT PROOFS OF CLAIM shall mean, collectively, the proof of claim dated March 9, 2000, and filed in the Reorganization Cases by the DOJ in the amount of $1,017,337,643.00 plus civil penalties, and the proof of claim dated March 9, 2000, and filed in the Reorganization Cases by HCFA in the amount of $290,967,775, and any amendments thereto. GOVERNMENT SETTLEMENT shall mean the settlement between and among the Debtors, the Ventas Entities and the United States provided for in Section 6.12 of the Plan and binding as of the Effective Date. HCFA shall mean the Health Care Financing Administration, the designated component of the United States Department of Health and Human Services, Health Care Financing Administration, which administers the Medicare program. IMPAIRED means, when used with reference to a Claim or Interest, a Claim or Interest that is impaired within the meaning of section 1124 of the Bankruptcy Code. INDEMNIFICATION CLAIMS means all Claims, if any, to the extent based upon the Corporate Indemnities. INTERESTS means Common Equity Interests and Preferred Equity Interests. LETTER OF TRANSMITTAL means the documentation required to be provided to the Exchange Agent as set forth in Section 6.04 of the Plan. LONG-TERM INCENTIVE PLAN means the plan of Reorganized Vencor that provides, among other things, for cash awards to designated officers and other key employees of Reorganized Vencor based on the performance of Reorganized Vencor. The Compensation Committee of the Board of Directors of Reorganized Vencor shall designate applicable performance goals, performance periods and eligible participants. The maximum award under the plan that can be earned in each year of a performance period shall be based on each participant's annual base salary during the applicable year, ranging from 15% to 100% of such base salary. One-third of the award earned each year by a participant will be paid to such participant at the close of the following year, with an additional one-third paid at the end of each successive year; such payments shall be in cash. Awards under the plan shall vest upon any change in control (as defined in the plan). The Long-Term Incentive Plan is substantially in the form of Exhibit 20 to the Plan Supplement. MALPRACTICE AND OTHER LITIGATION CLAIMS means all Claims (but excluding Punitive Damage Claims) against the Debtors which are asserted under lawsuits or complaints or otherwise, existing as of the commencement of the Reorganization Cases excluding (i) the Common Equity Securities Fraud Claims; (ii) the Noteholder Securities Fraud Claims, if any; (iii) the Preferred Equity Securities Fraud Claims, if any; and (iv) the Class 6 Claims. MUTUAL OF OMAHA LETTERS means the April 21, 1999 and the January 4, 2000 letters of Mutual Of Omaha to Vencor, Inc. NEW COLLATERAL DOCUMENTS means the Vencor Pledge and Security Agreement, the Subsidiaries Security and Guaranty Agreement and the New Leasehold Mortgages provided for under the New Senior Secured Credit Agreement. NEW COMMON STOCK means the thirty-nine million (39,000,000) shares of common stock par value $0.25 per share of Reorganized Vencor authorized pursuant to the Amended and Restated Certificate of Incorporation. Fifteen million (15,000,000) shares of New Common Stock are to be issued and distributed to holders of Claims in Classes 4, 5, and 7A in accordance with Section 6.01 of the Plan, and 600,000 shares of New Common Stock shall be issued and distributed in accordance with the terms of the Restricted Share Plan, which shall constitute 100% of the total number of shares of such New Common Stock to be issued and outstanding as of ten (10) days after the Effective Date. The exercise of the New Stock Options and the New Warrants will result in the issuance of up to an additional 7,600,000 shares of New Common Stock. NEW LEASEHOLD MORTGAGES means the mortgages with respect to leasehold interests provided for under the New Senior Secured Credit Agreement. NEW SECURITIES means, collectively, the New Senior Secured Notes, the New Common Stock, the New Warrants and the New Stock Options. NEW SENIOR SECURED CREDIT AGREEMENT means the credit agreement under which the New Senior Secured Notes will be issued, the material terms of which are set forth in Exhibit 10 to the Plan Supplement. NEW SENIOR SECURED NOTES means the senior secured notes of Reorganized Vencor Operating in the aggregate principal amount of $300,000,000.00, that are dated as of the Effective Date and issued pursuant to the New Senior Secured Credit Agreement. NEW STOCK OPTION PLAN means the plan for issuance of the New Stock Options for up to 600,000 shares of New Common Stock to key employees of Reorganized Vencor, which provides that both non-qualified stock options and incentive stock options are available for grant, as recommended by the Chief Executive Officer of Reorganized Vencor and approved by the Executive Compensation Committee of the Board of Directors of Reorganized Vencor at the time of the grant, and further provides that no individual participant may be granted an option to purchase more than 150,000 shares of New Common Stock in any calendar year. The New Stock Option Plan is substantially in the form of Exhibit 18 to the Plan Supplement. NEW STOCK OPTIONS means the stock options to be granted pursuant to the New Stock Option Plan for an aggregate of no more than 600,000 shares of the New Common Stock, with the following terms: (i) an exercise price of $29.33 per share for options initially granted, which price may be paid in cash or by tender of shares of New Common Stock previously owned; (ii) an option term of five (5) years; (iii) a vesting period in equal annual portions over three (3) years, where one-third of the options initially granted will vest on each of the first, second and third anniversaries of the Effective Date or as otherwise determined by the Executive Compensation Committee of the Board of Directors of Reorganized Vencor and set forth in the applicable option grant agreement; and (iv) automatic vesting upon a change of control of Reorganized Vencor (as defined in the New Stock Option Plan). In the event an employee is terminated for cause, such employee's New Stock Options shall be cancelled upon the termination of the employee. In the event an employee is terminated other than for cause, death or disability, vested options remain exercisable for ninety (90) days after termination of employment and then expire, and options not vested expire on termination of employment. For termination of an employee due to death or disability, vested options remain exercisable for one year after termination of employment and then expire, and options not vested expire upon termination. NEW WARRANT AGREEMENT means the warrant agreement under which the New Warrants will be issued, substantially in the form of Exhibit 11 to the Plan Supplement. NEW WARRANTS means warrants issued by Reorganized Vencor pursuant to the New Warrant Agreement for the purchase of an aggregate of 7,000,000 shares of New Common Stock, with a five-year term, which shall consist of warrants for 2,000,000 shares priced at $30.00 per share and warrants for 5,000,000 shares priced at $33.33 per share and such other terms as provided in the New Warrant Agreement. 1997 INDENTURE means the indenture dated as of July 21, 1997 between Vencor, Inc. and The Bank of New York, as Trustee (as the same may be amended from time to time) pursuant to which the 1997 Notes were issued. 1998 INDENTURE means the indenture dated as of April 30, 1998 between Vencor Operating, Inc., Vencor, Inc. and HSBC Bank USA (as successor in interest to PNC Bank, National Association), as Trustee (as the same may be amended from time to time) pursuant to which the 1998 Notes were issued. 1997 INDENTURE TRUSTEE means The Bank of New York, acting as Trustee under the 1997 Indenture. 1998 INDENTURE TRUSTEE means HSBC Bank USA (as successor in interest to PNC Bank, National Association), acting as Trustee under the 1998 Indenture. 1997 NOTES means the $2,391,000 principal amount of outstanding 8 5/8% Senior Subordinated Notes due 2007 of Vencor, Inc. 1998 NOTES means the $300,000,000 principal amount of outstanding 9 7/8% Guaranteed Senior Subordinated Notes due 2005 of Vencor Operating, with Vencor, Inc. as guarantor. NONDEBTOR AFFILIATES means: Atria Communities, Inc.; Behavioral Healthcare Corporation; Fox Hill Village Partnership; HealthEssentials Solutions, Inc.; Hillhaven-MSC Partnership; Lectus, Inc.; Ledgewood Health Care Corporation; Starr Farm Partnership; VNA/CPS Pharmaceutical Services. NONDEBTOR SUBSIDIARIES means: California Respiratory Care Partnership; Caribbean Behavioral Health Systems, Inc.; Cornerstone Insurance Company; Foothill Nursing Company Partnership; MedAssure, L.L.C.; Northridge Surgery Center, Ltd.; Northridge Surgery Center Development, Ltd.; Pharmaceutical Infusion Therapy Partnership; Recovery Inn of Menlo Park, L.P.; Visiting Nurse Advanced Infusion Systems - Anaheim; Visiting Nurse Advanced Infusion Systems - Colton; Visiting Nurse Advanced Infusion Systems - Newbury Park. NOTEHOLDER SECURITIES FRAUD CLAIMS means all Claims, including unknown claims, demands, rights, liabilities and causes of action of any kind whatsoever, known or unknown, asserted or which might have been, or might in the future be, asserted in a direct, derivative or other capacity against any Person or Entity arising out of, relating to, or in connection with: (i) the purchase, sale or other decision or action made or taken, or declined, failed or refused to be made or taken, or otherwise foregone, concerning or relating to the Subordinated Notes; (ii) the facts, transactions, events, occurrences, acts, representations, disclosures, statements, omissions, or failures to act which were alleged or could have been alleged in the pending litigation asserted against any of the Debtors, whether asserted individually or on behalf of a class of plaintiffs, which generally arise from allegations of alleged acts or omissions of the Debtors or any other Persons or Entities prior to the Petition Date with respect to or concerning the Subordinated Notes, or the purchase, sale or ownership thereof, including, without limitation, the litigation set forth on Exhibit 2 to the Plan; (iii) the purchase, ownership or sale of the Subordinated Notes; (iv) indemnification claims with respect to any of the foregoing; and (v) any other claims arising out of, relating to, or in connection with the Subordinated Notes that would be subject to section 510(b) of the Bankruptcy Code; provided that Indemnification Claims are excluded from this definition. OIG-HHS means the Office of Inspector General of the Department of Health and Human Services. OLD COMMON STOCK means the common stock issued, or subject to issuance, by Vencor, Inc. and authorized and outstanding immediately prior to the Distribution Record Date, and any items convertible into the common stock of Vencor, Inc., including any rights relating to the securities of The Hillhaven Corporation, to the extent not previously converted. OLD DEBT SECURITIES means the notes and securities evidencing the Senior Debt Claims and the Subordinated Noteholder Claims, respectively. OLD PREFERRED STOCK means the 17,433 shares of the 6% Series A Non-Voting Convertible Preferred Stock issued by Vencor, Inc. and outstanding immediately prior to the Distribution Record Date. PERFORMANCE BONUSES means an aggregate of up to $3.675 million in bonuses to be paid to certain of Vencor Inc.'s key employees, subject to certain conditions, on the Effective Date. PERSON shall have the meaning set forth in section 101(41) of the Bankruptcy Code. PETITION DATE means September 13, 1999. PIP CLAIM means the Claim of the United States based on periodic interim payment review overpayments of Medicare reimbursements in the total outstanding amount of approximately $67.5 million as of September 30, 2000, adjusted for payments of principal, if any, made on such Claim prior to the Effective Date, as described and containing the repayment terms set forth in the Mutual Of Omaha Letters. PLAN means this Fourth Amended Joint Plan of Reorganization for the Debtors and all exhibits and schedules annexed hereto or referenced herein, as it may be amended, supplemented or modified by the Debtors from time to time in accordance with the Bankruptcy Code and the Bankruptcy Rules, and the terms and conditions of Sections 14.02 and 14.09 of the Plan. PLAN DOCUMENTS means the documents to be executed, delivered, assumed and/or performed in conjunction with the consummation of the Plan on the Effective Date, including but not limited to (i) a list of allowed defaults under the Amended Ventas Leases; (ii) the Amended and Restated By-Laws; (iii) the Amended and Restated Certificate of Incorporation; (iv) the Tax Refund Escrow Agreement; (v) the Amended Ventas Leases and other agreements between the Debtors and the Ventas Entities, including without limitation the agreements listed on Exhibit 1 to the Plan Supplement (unless otherwise provided under Section 5.04(v) and (vi) of the Plan); (vi) the Corporate Integrity Agreement; (vii) the New Collateral Documents; (viii) the New Senior Secured Credit Agreement; (ix) the New Senior Secured Notes; (x) the New Warrant Agreement; (xi) the Registration Rights Agreement; (xii) the Subsidiaries Security and Guaranty Agreement; (xiii) the Vencor Pledge And Security Agreement; (xiv) Form of Amendment of Certificate of Incorporation of Debtors; and (xv) the Exit Facility, each of which shall be subject to Section 14.12 of the Plan. Each of the Plan Documents to be entered into as of the Effective Date, other than the New Senior Secured Credit Agreement (for which a term sheet will be Filed), the New Collateral Documents, the Exit Facility and the documents listed on Exhibit 1 to the Plan Supplement, will be filed in draft form in the Plan Supplement. PLAN SUPPLEMENT means a supplemental appendix to the Plan that will contain the draft form of the Plan Documents to be entered into as of the Effective Date, other than the New Senior Secured Credit Agreement (for which a term sheet will be Filed), the New Collateral Documents and the Exit Facility. POST-PETITION PERSONAL INJURY CLAIMS means all Administrative Claims against the Debtors arising from and after the Petition Date, which are asserted under lawsuits, complaints or otherwise, and which allege personal injury to the claimant. PREFERRED EQUITY INTEREST LOANS means the loans (including principal and any accrued interest) on the books of Vencor Operating made to certain holders of Preferred Equity Interests. PREFERRED EQUITY INTERESTS means the rights of holders of Old Preferred Stock, including redemption rights, and liquidation preferences. PREFERRED EQUITY SECURITIES FRAUD CLAIMS means all Claims, including unknown claims, demands, rights, liabilities and causes of action of any kind whatsoever, known or unknown, asserted or which might have been, or might in the future be, asserted in a direct, derivative or other capacity against any Person or Entity arising out of, relating to, or in connection with: (i) the purchase, sale or other decision or action made or taken, or declined, failed or refused to be made or taken, or otherwise foregone, concerning or relating to Preferred Equity Interests, (ii) the facts, transactions, events, occurrences, acts, representations, disclosures, statements, omissions, or failures to act which were alleged or could have been alleged in the pending litigation asserted against any of the Debtors, whether asserted individually or on behalf of a class of plaintiffs, which generally arise from allegations of alleged acts or omissions of the Debtors or any other Persons or Entities prior to the Petition Date with respect to or concerning the Old Preferred Stock, or the purchase, sale or ownership thereof, including, without limitation, the litigation set forth on Exhibit 3 to the Plan, (iii) the purchase, ownership or sale of the Old Preferred Stock of the Debtors, (iv) indemnification claims with respect to any of the foregoing, and (v) any other claims arising out of, relating to, or in connection with Preferred Equity Interests that would be subject to section 510(b) of the Bankruptcy Code; provided that Indemnification Claims are excluded from this definition. PRIORITY CLAIM means a Claim for an amount entitled to priority under section 507(a) of the Bankruptcy Code, other than an Administrative Claim or a Tax Claim. PUNITIVE DAMAGE CLAIMS means any Claim arising before the Petition Date, whether secured or unsecured, for any fine, penalty, or forfeiture, or for multiple, exemplary, or punitive damages, to the extent that such fine, penalty, forfeiture or damages is not compensation for actual pecuniary loss suffered by the holder of such Claim, other than Class 6 Claims. PUT RIGHTS means the Claims arising from any agreements between holders of Preferred Equity Interests and Vencor, Inc. and/or Vencor Operating granting those holders the right to put their Old Preferred Stock to Vencor, Inc. and/or Vencor Operating, which rights are being cancelled and rejected under Section 12.01 of the Plan. QUI TAM ACTIONS means those cases listed on Exhibit 5 to the Plan. REGISTRATION RIGHTS AGREEMENT means the agreement, substantially in the form of Exhibit 12 to the Plan Supplement, pursuant to which certain holders of New Common Stock and New Warrants will be granted registration rights. REORGANIZATION CASES means the Debtors' cases under chapter 11 of the Bankruptcy Code. REORGANIZED DEBTORS means the Debtors on and after the Effective Date. REORGANIZED VENCOR means Vencor, Inc. on and after the Effective Date. REORGANIZED VENCOR OPERATING means Vencor Operating on and after the Effective Date. REPRESENTATIVES means as to the referenced Person, such Person's present and former officers, directors, shareholders, trustees, partners and partnerships, members, agents, employees, representatives, financial advisors, professionals, accountants, attorneys, commercial bankers, lenders, insurers, heirs, executors, estates, administrators, successors or assigns of any of the foregoing, in each case solely in their capacity as such. RESTRICTED SHARE PLAN means the plan of Reorganized Vencor that provides, among other things, for awards of New Common Stock to key employees of Reorganized Vencor. The Compensation Committee of the Board of Directors of Reorganized Vencor shall designate eligible participants and the number of shares of New Common Stock awarded to each participant. The maximum number of shares of New Common Stock that may be granted under the Restricted Share Plan is 600,000 shares. The award shall provide restricted shares of New Common Stock, which shall be non-transferable and subject to forfeiture unless and until they have vested. Shares in each participant's award shall vest according to the following schedule: one-third will vest immediately upon grant to the participant; the remaining two-third shall vest over a period of four years, with fifteen percent vesting on the first and second anniversaries of the date of grant, twenty percent vesting on the third anniversary of the date of grant, and the remaining fifty percent vesting on the fourth anniversary of the date of grant. The Restricted Share Plan is substantially in the form of Exhibit 19 to the Plan Supplement. RETENTION BONUSES means up to an aggregate of $7.325 million in bonuses paid under the Retention Plan, as authorized pursuant to the terms of an order of the Court dated November 4, 1999 (the "Retention Order"), and consisting of the following payment schedule, subject to certain conditions: (i) a one-third payment of the bonus made at the time the Retention Order was entered; (ii) a one-third payment to be made on the Effective Date; and (iii) a one-third payment to be made three (3) months following the Effective Date. RETENTION PLAN means the plans of Vencor, Inc. for the payment of up to $11 million to its key employees in the form of (i) Retention Bonuses paid pursuant to an Order of the Court; and (ii) Performance Bonuses. SCHEDULES means, collectively: (i) the schedules of assets and liabilities and the statement of financial affairs Filed by the Debtors in the Reorganization Cases, pursuant to section 521 of the Bankruptcy Code, the Bankruptcy Rules and the Official Bankruptcy Forms, as amended; and (ii) the schedules of unliquidated, disputed or contingent Claims, as required by any local rule of the Court, as amended, as such requirements may be modified by any Order of the Court. SECURED CLAIM means a Claim that is secured by a lien on property in which any or all of the Estates have an interest or that is subject to setoff under section 553 of the Bankruptcy Code, to the extent of the value of the Claim holder's interest in the Estates' interest in such property or to the extent of the amount subject to setoff, as applicable, as determined pursuant to section 506(a) of the Bankruptcy Code, provided, however, that solely for the purposes of treatment under the Plan, a Secured Claim shall not include a Senior Debt Claim, a Ventas Claim, a Class 6 Claim, a PIP Claim, a Subordinated Noteholder Claim, an Employee Contract Claim, an Indemnification Claim, a Punitive Damage Claim, a Common Equity Securities Fraud Claim, a Noteholder Securities Fraud Claim, a Preferred Equity Securities Fraud Claim, or a Put Right (to the extent, if any, such Claims are secured). SECURITIES ACT means the Securities Act of 1933, as now in effect or hereafter amended. SENIOR CREDIT AGREEMENT means the $1,000,000,000 Credit Agreement dated as of April 29, 1998, among Vencor Operating, Inc., Vencor, Inc. (formerly known as Vencor Healthcare, Inc.), the Lenders party thereto, the Swingline Bank party thereto, the LC Issuing Banks party thereto, the Senior Managing Agents, Managing Agents and Co-Agents party thereto, Morgan Guaranty Trust Company of New York, as Documentation Agent and Collateral Agent, and Bank of America N.A. (as successor of NationsBank, N.A.), as Administrative Agent, as amended. SENIOR DEBT CLAIMS means Claims arising from or with respect to amounts due under the Senior Credit Agreement and the Swap Agreements. SERP means the Vencor, Inc. Supplemental Executive Retirement Plan, effective January 1, 1998, as amended previously and as may be amended from time to time. SUBORDINATED NOTEHOLDER CLAIMS means Claims arising from or with respect to amounts due under the Subordinated Notes, other than Claims for fees and expenses under section 5.07 of the 1997 Indenture or Claims for fees and expenses under section 5.07 of the 1998 Indenture. SUBORDINATED NOTEHOLDERS means the holders of the Subordinated Notes as of the Distribution Record Date. SUBORDINATED NOTES means the 1998 Notes and the 1997 Notes. SUBSIDIARIES SECURITY AND GUARANTY AGREEMENT means an agreement setting forth the collateral pledge and guaranty of the Restricted Subsidiaries, as such term is defined in the New Senior Secured Credit Agreement. SUBSIDIARY OWNERSHIP INTERESTS means, as to each of the Debtors other than Vencor, Inc., the common stock and any other instruments and/or agreements evidencing an ownership interest in such Debtors, regardless of whether they may be transferred, and any option, warrant or right, contractual or otherwise, to acquire an ownership interest in such Debtors. SWAP AGREEMENTS means (i) the interest rate swap transaction effective May 15, 1997, in the notional principal amount of $100 million, pursuant to the ISDA Master Agreement dated as of October 24, 1995, between Vencor Operating (as successor to Ventas, Inc.) and Bank of America, N.A. (as successor to NationsBank, N.A.), as the same may be amended or supplemented from time to time; (ii) the interest rate swap transaction effective May 15, 1997, in the notional principal amount of $100 million, pursuant to the ISDA Master Agreement dated as of April 29, 1997, between Vencor Operating (as successor to Old Vencor) and Deutsche Bank, AG - New York Branch, as the same may be amended or supplemented from time to time; and (iii) the amortizing interest rate swap transaction effective May 15, 1997, in the notional principal amount of $100 million, pursuant to the ISDA Master Agreement dated as of April 16, 1997, between Vencor Operating (as successor to Old Vencor) and The Toronto-Dominion Bank, acting through its New York Branch, as the same may be amended or supplemented from time to time. TAX CLAIM means a Claim for an amount entitled to priority under section 507(a)(8) of the Bankruptcy Code. TAX REFUND ESCROW AGREEMENT shall mean an agreement between the Reorganized Debtors and the Ventas Entities substantially in the form of Exhibit 5 to the Plan Supplement that provides for the escrow and use of certain tax refunds. TAX STIPULATION means the Stipulation and Order by and among the Debtors and Ventas, dated May 23, 2000 and so ordered by the Court. TRADE CLAIM means any unsecured Claim against the Debtors arising in the ordinary course of the Debtors' businesses, from or with respect to the sale of goods or services to the Debtors prior to the Petition Date, and including but not limited to, any Claim of an employee that is not a Priority Claim, a Benefits Claim, an Indemnification Claim or an Employee Contract Claim. UNIMPAIRED means, with respect to a Claim or Interest, a Claim or Interest that is not impaired within the meaning of section 1124 of the Bankruptcy Code. UNITED STATES means the United States of America and all agencies thereof including, without limitation, OIG-HHS, DOJ and HCFA. UNITED STATES CLAIMS means all (i) civil or administrative monetary claims (e.g., claims seeking monetary remedies or payments) or civil or administrative monetary causes of action (including attorneys fees, costs, and expenses of every kind) the United States of America, or its agencies, departments, officers, agents, employees and assigns, or third parties under 31 U.S.C. ss. 3730(b) or (d), has or may have against the Debtors or the Ventas Entities under the False Claims Act, 31 U.S.C. ss.ss. 3729-3733; the Civil Monetary Penalties Law, 42 U.S.C. ss. 1320a-7a; the Program Fraud Civil Remedies Act, 31 U.S.C. ss.ss. 3801-3812; and/or common law doctrines of payment by mistake, unjust enrichment, breach of contract or fraud for the Covered Conduct; (ii) administrative overpayments, including claims or causes of action for services rendered or products supplied to beneficiaries, under the Medicare Program ("Medicare"), Title XVIII of the Social Security Act, 42 U.S.C. ss.ss. 1395-1395ggg and under the TRICARE Program (also known as the Civilian Health and Medical Program of the Uniformed Services ("CHAMPUS")), 10 U.S.C. ss.ss. 1071-1106; (iii) civil monetary penalties imposed pursuant to 42 U.S.C. ss. 1395i-3(h)(2)(B)(ii) and 42 U.S.C. ss. 1396r(h)(2)(A)(ii); and (iv) actions for permissive exclusion from Medicare, the Medicaid program and other federal health programs (as defined in 42 U.S.C. ss. 1320a-7b(f)) under 42 U.S.C. ss. 1320a-7(b) and 42 U.S.C. ss. 1320a-7a for the Covered Conduct. All other Claims of the United States of America are expressly excluded from this definition, including, but not limited to, the PIP Claim and those claims set forth at Section 6.12(c)1(i) through (ix) and Section 6.12(c)2(i) through (ix) herein. UNSECURED CLAIM means any Claim, including Claims based on the rejection of executory contracts or unexpired leases, which is not an Administrative Claim, Secured Claim, Priority Claim, Tax Claim, Senior Debt Claim, Subordinated Noteholder Claim, Put Rights, Trade Claim, Indemnification Claim, Benefits Claim, Punitive Damage Claim, Common Equity Securities Fraud Claim, Noteholder Securities Fraud Claim, Preferred Equity Securities Fraud Claim, Malpractice and Other Litigation Claim, Ventas Claim, PIP Claim, Class 6 Claims, Post-Petition Personal Injury Claim, or an Employee Contract Claim. VENCOR, INC. means Vencor, Inc., a Delaware corporation. VENCOR OPERATING means Vencor Operating, Inc., a Delaware corporation. VENCOR PLEDGE AND SECURITY AGREEMENT means an agreement setting forth the collateral pledge and, with respect to Reorganized Vencor, guaranty of Reorganized Vencor and Reorganized Vencor Operating as contemplated by the New Senior Secured Credit Agreement. VENTAS means Ventas, Inc. VENTAS CLAIM means any and all Claims by any Ventas Entity against any Debtor including, but not limited to (i) the Claim by the Ventas Entities, if any, for payment of an administrative expense of a kind specified in section 503(b) of the Bankruptcy Code and referred to in section 507(a)(1) of the Bankruptcy Code including but not limited to any Claim for unpaid rent and any other Claims arising under or related to the Five Ventas Leases on or after the Petition Date and prior to the Effective Date, and any Claims arising from the Ventas Rent Stipulation; (ii) any Claim for unpaid rent and any other Claims arising under or related to the Five Ventas Leases prior to the Petition Date; (iii) Claims arising from the Agreement and Plan of Reorganization by and between Vencor, Inc. (n/k/a Ventas, Inc.) and Vencor Healthcare, Inc. (n/k/a Vencor, Inc.) dated as of April 30, 1998 (the "Spinoff Agreement"), and all agreements, instruments, assignments or other arrangements referred to therein, contemplated thereby or otherwise related thereto, including but not limited to, the Five Ventas Leases, the other "Ancillary Agreements" as defined in the Spinoff Agreement and all indemnification claims against any Debtor; (iv) Claims arising from any other agreements, instruments, assignments or other arrangements entered into by and between any of the Ventas Entities and any Debtor on or after April 30, 1998; (v) any Claims set forth in any proofs of claim filed by any Ventas Entity against any Debtor, and (vi) any other Claims by any Ventas Entity asserted to arise by operation of law or otherwise. VENTAS ENTITIES means, collectively, Ventas, Ventas Realty, Limited Partnership and Ventas LP Realty, L.L.C. VENTAS ENTITY means any one of the Ventas Entities. VENTAS PARTIES means, collectively, the Ventas Entities and each of their Representatives. VENTAS RENT STIPULATION means the Stipulation and Order Pursuant to Section 365 of the Bankruptcy Code Regarding Vencor, Inc., Vencor Operating, Inc. and Vencor Nursing Centers Limited Partnership's Performance of Obligations Under, and Extending the Time Within Which Vencor, Inc., Vencor Operating, Inc. and Vencor Nursing Centers Limited Partnership May Accept or Reject, Certain Agreements Between Vencor, Inc., Vencor Operating, Inc. and Vencor Nursing Centers Limited Partnership, Ventas, Inc. and Ventas Realty, Limited Partnership, dated September 13, 1999, as the same may be extended or modified from time to time pursuant to the terms thereof. VOTING EXPIRATION DATE means 4:00 p.m. Eastern Standard Time on February 15, 2001, the date fixed by the Court after which Ballots with respect to the Plan may no longer be accepted by the Debtors without leave of Court. B. RULES OF INTERPRETATION, COMPUTATION OF TIME AND GOVERNING LAW 1. RULES OF INTERPRETATION. For purposes of the Plan (i) whenever from the context it is appropriate, each term, whether stated in the singular or the plural, shall include both the singular and the plural; (ii) subject to Section 14.12 of the Plan, any reference in the Plan to a contract, instrument, release, indenture or other agreement or document being in a particular form or on particular terms and conditions means that such document shall be substantially and materially in such form or substantially and materially on such terms and conditions; (iii) any reference in the Plan to an existing document or exhibit to the Plan, Plan Supplement or Disclosure Statement Filed or to be Filed means such document, schedule or exhibit, as it may have been or may be amended, modified or supplemented pursuant to the terms of the Plan; (iv) if the Plan's description of the terms of a Plan Document, schedule or exhibit to the Plan, Plan Supplement or Disclosure Statement is inconsistent with the terms of such Plan Document or exhibit, the terms of the Plan Document, schedule or exhibit shall control; (v) to the extent that the Plan's description of a Person or Entity's obligations under a Plan Document are inconsistent with the terms of the Plan Document, the Plan Document shall control; (vi) unless otherwise specified, all references in the Plan to articles, sections, clauses, schedules and exhibits are references to articles, sections, clauses, schedules and exhibits of or to the Plan unless otherwise specified; (vii) the words "herein" and "hereto" refer to the Plan in its entirety rather than to a particular portion of the Plan unless otherwise specified; (viii) captions and headings to articles and sections are inserted for convenience of reference only and are not intended to be a part of or to affect the interpretation of the Plan; (ix) the rules of construction set forth in section 102 of the Bankruptcy Code shall apply to the extent such rules are not inconsistent with any other provision in this Section I.B.1. Payments and acts required to be made or performed pursuant to the Plan Documents shall be made or performed in accordance with the terms of the applicable Plan Document. 2. COMPUTATION OF TIME. In computing any period of time prescribed or allowed by the Plan, the provisions of Bankruptcy Rule 9006(a) shall apply; provided however that any period of time prescribed or allowed by a Plan Document shall be computed in accordance with the terms of the applicable Plan Document. 3. GOVERNING LAW. Except to the extent that the Bankruptcy Code or Bankruptcy Rules are applicable, and except as otherwise provided in any contract, instrument, release, indenture or other agreement or document entered into in connection with the Plan, including the Plan Documents, the rights and obligations arising under the Plan shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, without giving effect to the principles of conflicts of law thereof; provided, however, that the rights and obligations arising under provisions of the Plan that relate to the United States Claims and Class 6 Claims, including but not limited to, the Corporate Integrity Agreement, shall be governed by and construed and enforced in accordance with federal law. ARTICLE II ADMINISTRATIVE AND TAX CLAIMS In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative Claims and Tax Claims, as described below, have not been classified. 2.01. ADMINISTRATIVE CLAIMS. Unless otherwise agreed to by the parties, each holder of an Allowed Administrative Claim, shall receive Cash equal to the unpaid portion of such Allowed Administrative Claim on the later of (i) the Effective Date, or (ii) thirty (30) days after the date on which such Claim becomes an Allowed Administrative Claim; provided, however, that the Administrative Claims that represent liabilities incurred by the Debtors in the ordinary course of business during the Reorganization Cases shall be paid on the date on which the liability becomes due and payable in the ordinary course of business and in accordance with the terms and conditions of any agreements relating thereto. 2.02. BAR DATE FOR ADMINISTRATIVE CLAIMS. (a) PRE-EFFECTIVE DATE CLAIMS AND EXPENSES. All applications for final compensation of professional persons for services rendered and reimbursement of expenses incurred on or before the Effective Date and all other claims for payment of administrative costs and expenses incurred on or before the Effective Date under section 507(a)(1) or 507(b) of the Bankruptcy Code (except only for Post-petition Personal Injury Claims, or other claims incurred in the ordinary course of business and claims under 28 U.S.C. ss. 1930) shall be Filed no later than forty-five (45) days after the Effective Date. (b) EFFECT OF FAILURE TO TIMELY FILE CLAIM OR REQUESTS FOR PAYMENT. Any request for payment of an Administrative Claim of the type specified in Section 2.02(a), which is not Filed by the applicable deadline set forth in Section 2.02(a) above shall be barred. Under no circumstance will the applicable deadlines set forth above be extended by order of the Court or otherwise. Any holders of Administrative Claims who are required to File a Claim or request for payment of such Claims or expenses and who do not File such Claims or requests by the applicable bar date shall be forever barred from asserting such Claims or expenses against the Debtors, the Reorganized Debtors, or any property of the Debtors or the Reorganized Debtors, and from receiving any distributions under the Plan. 2.03. TAX CLAIMS. Unless otherwise agreed to by the parties, each holder of an Allowed Tax Claim will receive Cash equal to the unpaid portion of such Allowed Tax Claim on or as soon as practical after the later of: (i) thirty (30) days after the Effective Date, or (ii) thirty (30) days after the date on which such Tax Claim becomes an Allowed Tax Claim; provided, however, that at the option of the Reorganized Debtors, a Reorganized Debtor may pay Allowed Tax Claims over a period not exceeding six (6) years after the date of assessment of the Tax Claims as provided in subsection 1129(a)(9)(C) of the Bankruptcy Code. If a Reorganized Debtor elects this option as to any Allowed Tax Claim, then the payment of such Allowed Tax Claim shall be made in equal semiannual installments with the first installment due on the latest of: (i) thirty (30) days after the Effective Date, (ii) thirty (30) days after the date on which such Tax Claim becomes an Allowed Claim, or (iii) such other time as may be agreed to by the holder of such Tax Claim and the Reorganized Debtor. Each installment shall include simple interest on the unpaid portion of such Allowed Tax Claim, without penalty of any kind, at the statutory rate of interest provided for such taxes under applicable nonbankruptcy law; provided, however, that the Reorganized Debtors shall reserve the right to pay any Allowed Tax Claim, or any remaining balance of such Allowed Tax Claim, in full, at any time on or after the Effective Date, without premium or penalty. Article III CLASSIFICATION OF CLAIMS AGAINST AND INTERESTS IN THE DEBTORS The classification of the Claims and Interests listed below shall be for all purposes, including voting, confirmation and distribution pursuant to the Plan. A Claim or Interest is in a particular class only to the extent that the Claim or Interest is an Allowed Claim or Allowed Interest in that Class and has not been paid, released, or otherwise satisfied before the Effective Date; a Claim or Interest which is not an Allowed Claim or Interest is not in any class and does not receive any payments, distributions or rights under this Plan. 3.01. CLASS 1 - PRIORITY CLAIMS. Class 1 consists of all Priority Claims. 3.02. CLASS 2 - SECURED CLAIMS. Class 2 consists of all Secured Claims. 3.03. CLASS 3A - CONVENIENCE CLAIMS. Class 3A consists of all Convenience Claims. 3.04. CLASS 3B - TRADE CLAIMS, MALPRACTICE AND OTHER LITIGATION CLAIMS, BENEFITS CLAIMS, INDEMNIFICATION CLAIMS, EMPLOYEE CONTRACT CLAIMS AND UNSECURED CLAIMS. Class 3 consists of all Trade Claims, Malpractice and Other Litigation Claims, Benefits Claims, Indemnification Claims, Employee Contract Claims and Unsecured Claims that are not Convenience Claims. 3.05. CLASS 4 - SENIOR DEBT CLAIMS. Class 4 consists of all Senior Debt Claims. 3.06. CLASS 5 - VENTAS CLAIM. Class 5 consists of the Ventas Claim. 3.07. CLASS 6 - CLASS 6 CLAIMS. Class 6 consists of all Class 6 Claims. 3.08. CLASS 7A - SUBORDINATED NOTEHOLDER CLAIMS. Class 7A consists of all Subordinated Noteholder Claims. 3.09. CLASS 7B - NOTEHOLDER SECURITIES FRAUD CLAIMS. Class 7B consists of all Noteholder Securities Fraud Claims. 3.10. CLASS 8 - PUT RIGHTS. Class 8 consists of all Put Rights. 3.11. CLASS 9 - INTENTIONALLY OMITTED. 3.12. CLASS 10 - PUNITIVE DAMAGE CLAIMS. Class 10 consists of all Punitive Damage Claims. 3.13. CLASS 11A - PREFERRED EQUITY INTERESTS. Class 11A consists of all Preferred Equity Interests. 3.14. CLASS 11B - PREFERRED EQUITY SECURITIES FRAUD CLAIMS. Class 11B consists of all Preferred Equity Securities Fraud Claims. 3.15. CLASS 12A - COMMON EQUITY INTERESTS. Class 12A consists of all Common Equity Interests. 3.16. CLASS 12B - COMMON EQUITY SECURITIES FRAUD CLAIMS. Class 12B consists of all Common Equity Securities Fraud Claims. 3.17. SUMMARY OF CLAIMS AND INTERESTS. CLASS DESCRIPTION STATUS - ----- ----------- ------ Class 1 Priority Claims Unimpaired; deemed to have accepted the Plan Class 2 Secured Claims Unimpaired; deemed to have accepted the Plan Class 3A Convenience Claims Impaired; entitled to vote Class 3B Trade Claims, Malpractice and Other Impaired; entitled Litigation Claims, Benefits Claims, to vote Indemnification Claims, Employee Contract Claims and Unsecured Claims that are not Convenience Claims Class 4 Senior Debt Claims Impaired; entitled to vote Class 5 Ventas Claim Impaired; entitled to vote Class 6 Class 6 Claims Impaired; entitled to vote Class 7A Subordinated Noteholder Claims Impaired; entitled to vote Class 7B Noteholder Securities Fraud Claims Impaired; deemed to have rejected the Plan Class 8 Put Rights Impaired; entitled to vote Class 9 Intentionally Omitted Class 10 Punitive Damage Claims Impaired; deemed to have rejected the Plan Class 11A Preferred Equity Interests Impaired; deemed to have rejected the Plan Class 11B Preferred Equity Securities Fraud Claims Impaired; deemed to have rejected the Plan Class 12A Common Equity Interests Impaired; deemed to have rejected the Plan Class 12B Common Equity Securities Fraud Claims Impaired; deemed to have rejected the Plan Article IV TREATMENT OF CLASSES UNIMPAIRED UNDER THE PLAN 4.01. CLASS 1 - PRIORITY CLAIMS. Allowed Class 1 Claims are Unimpaired. Unless otherwise agreed to by the parties, each holder of an Allowed Claim in Class 1 shall retain, unaltered, the legal, equitable and contractual rights to which such Allowed Claim entitles the holder or, at the sole option of the Debtor, shall be paid the allowed amount of such Claim in full in Cash on the later of (i) the Effective Date, or (ii) thirty (30) days after the date such Claim becomes an Allowed Claim. 4.02. CLASS 2 - SECURED CLAIMS. Allowed Class 2 Claims are Unimpaired. Each holder of an Allowed Claim in Class 2 shall retain, unaltered, the legal, equitable and contractual rights, including, without limitation, any valid and perfected liens that secure such Allowed Claims, to which such Allowed Claim entitles the holder. Any Allowed Claim based on any deficiency claim by a holder of an Allowed Class 2 Claim shall become, and shall be treated for all purposes under this Plan as an Allowed Unsecured Claim and shall be classified as a Class 3A or 3B Claim. Article V TREATMENT OF CLASSES IMPAIRED UNDER THE PLAN 5.01. CLASS 3A - CONVENIENCE CLAIMS. Allowed Claims in Class 3A are Impaired. Each holder of an Allowed Class 3A Claim shall be entitled to payment in Cash of the full amount of its Allowed Class 3A Claim, including any applicable interest through the Petition Date, in complete settlement, satisfaction and discharge of its Class 3A Claim. 5.02. CLASS 3B - TRADE CLAIMS, MALPRACTICE AND OTHER LITIGATION CLAIMS, BENEFIT CLAIMS, INDEMNIFICATION CLAIMS, EMPLOYEE CONTRACT CLAIMS AND UNSECURED CLAIMS THAT ARE NOT CONVENIENCE CLAIMS. Allowed Claims in Class 3B are Impaired. Each holder of an Allowed Class 3B Claim shall receive, in complete settlement, satisfaction and discharge of its Class 3B Claim, Cash payments equal to the full amount of its Allowed Class 3B Claim, paid over three years in the form of equal quarterly payments, starting on the last day of the first full fiscal quarter after the Effective Date, together with simple interest accruing at 6% per annum from the Effective Date. In order to permit Claims Allowed after the Effective Date to a "catch-up" with the distributions made to other Allowed Class 3B Claims, if a claim does not become an Allowed Class 3B Claim until after the Effective Date, it shall receive as its initial distribution an amount equal to what it would have received if it had been an Allowed Claim as of the Effective Date. With respect to Allowed Class 3B Claims for and to the extent which insurance is available, such Allowed Class 3B Claims shall be paid in the ordinary course of the Reorganized Debtors' business to the extent of such insurance, when any such Claims become Allowed Claims and such insurance proceeds become available; provided however, that to the extent insurance is not available or is insufficient, the payment schedule provided for in this section shall govern. 5.03. CLASS 4 - SENIOR DEBT CLAIMS. Class 4 Claims are deemed to be Allowed Claims, as set forth and only to the extent provided in Section 7.04(a) of the Plan, and are Impaired. Each holder of an Allowed Class 4 Claim shall receive in complete settlement, satisfaction and discharge of its Class 4 Claim and related security interest: (i) its pro rata share of the New Senior Secured Notes; and (ii) its pro rata share of 9,826,092 shares of New Common Stock (65.507% of the shares of New Common Stock, subject to dilution from stock issuances occurring after the Effective Date including without limitation the New Warrants, New Stock Option Plan and Restricted Share Plan). 5.04. CLASS 5 - VENTAS CLAIM. The Ventas Claim is Impaired. Notwithstanding any other provision of the Plan, each Ventas Claim shall be classified and treated as a Class 5 Claim regardless of whether such Claim otherwise would fit within the description of another Class. Further, notwithstanding any limitations set forth in Section 12.01 of the Plan, the holder of the Ventas Claim shall receive, in complete settlement, satisfaction and discharge of its Class 5 Claims, the following treatment: (i) the Class 5 Claims shall be deemed Allowed Claims to the extent of the treatment of such Claims under the Plan without the need for filing any further proofs of claim or request for payment of an administrative expense and without the need for further order of the Court; (ii) 1,498,500 shares of New Common Stock (9.99% of the shares of the New Common Stock) (or such lesser number of shares of New Common Stock that equals 9.99% of the shares of New Common Stock to be distributed on the Effective Date after application of Section 8.14 (the "Ventas REIT Limitation"), subject to dilution from stock issuances occurring after the Effective Date including without limitation the New Warrants, New Stock Option Plan and Restricted Share Plan) shall be issued to Ventas Realty, Limited Partnership or directly to its designee(s) pursuant to Section 6.01 of the Plan, which New Common Stock is being received as additional rent in consideration of the agreement of the applicable Ventas Entities to enter into the Amended Ventas Leases and thereby agree to charge Base Rent as provided in the Amended Ventas Leases (as defined in the Amended Ventas Leases); the Debtors shall have complete discretion to distribute any shares of New Common Stock that would have been received by Ventas Realty, Limited Partnership or its designee(s) but for the Ventas REIT Limitation; (iii) the Five Ventas Leases shall be assumed in their entirety, and the applicable Ventas Entities and the Debtors and Reorganized Debtors shall simultaneously amend and restate the Five Ventas Leases in their entirety in accordance with the terms of the Amended Ventas Leases as of the Effective Date by executing the Amended Ventas Leases, and by virtue of the Confirmation Order (conditioned upon the occurrence of the Effective Date) pursuant to sections 365 and 1123 of the Bankruptcy Code without the need for further cure payments or adequate assurances of future performance being required for purposes of satisfying section 365 of the Bankruptcy Code other than as provided for in the Amended Ventas Leases; (iv) defaults existing as of the Effective Date under the Amended Ventas Leases, if any, shall be governed by and treated in accordance with the terms of the Amended Ventas Leases, including but not limited to the obligation of the Debtors and Reorganized Debtors to cure such defaults; (v) the Development Agreement dated as of April 30, 1998 between Vencor, Inc. and Ventas, Inc. and the Participation Agreement dated as of April 30, 1998 between Vencor, Inc. and Ventas, Inc. shall be terminated on the Effective Date and the Debtors and Reorganized Debtors on the one hand, and the Ventas Entities on the other hand, shall be deemed to have waived any and all damages, claims, liabilities, obligations and causes of action against the other related to or arising from such agreements provided that the parties shall not be released from their obligations under the Sale and Purchase Agreement dated August 1, 1998, between Ventas Realty, Limited Partnership, Vencor Nursing Centers Limited Partnership, Vencor Operating, Inc. and Vencor, Inc. and the documents related thereto; (vi) the Tax Stipulation, the Ventas Rent Stipulation and the Tolling Agreement (as defined in the Ventas Rent Stipulation), as well as the Standstill Agreement referenced therein, shall be terminated on the Effective Date and be of no further force and effect; (vii) except as expressly set forth in this Section 5.04, each and every written agreement by and among one or more of the Debtors and one or more of the Ventas Entities and/or guaranty from one or more of the Debtors for the benefit of one or more of the Ventas Entities shall be deemed assumed by the Debtors and Reorganized Debtors by virtue of the Confirmation Order pursuant to sections 365 and 1123 of the Bankruptcy Code (conditioned upon the occurrence of the Effective Date). A schedule of all written agreements known to exist between the Debtors and the Ventas Entities to the best of their respective knowledge is set forth on Exhibit 1 to the Plan Supplement. An inadvertent failure to list an agreement in Exhibit 1 to the Plan Supplement shall not affect the assumption of such agreement by the Debtors and Reorganized Debtors or the performance thereunder (including but not limited to the cure of defaults according to the terms of any such agreement) by either the Debtors, Reorganized Debtors or the Ventas Entities; (viii) the Ventas Entities shall waive the Agreement Rent Claim (as defined under the Ventas Rent Stipulation) without further compensation from the Debtors and Reorganized Debtors except for the treatment of Class 5 under the Plan; (ix) Ventas and the Reorganized Debtors shall enter into the Tax Refund Escrow Agreement and the Registration Rights Agreement as of the Effective Date; (x) the right of a Ventas Entity to any equitable remedy, indemnification, reimbursement, contribution or similar relief pursuant to the terms of any agreement assumed by the Reorganized Debtors shall not be adversely affected by this Plan (except as otherwise provided in this Section 5.04), including, without limitation, any provision discharging, disallowing or releasing the liability of a Debtor or Reorganized Debtor to a third party with respect to the claims giving rise to such right to indemnification, contribution, reimbursement or similar relief; provided, however, that notwithstanding anything to the contrary herein, the Ventas Entities shall not be entitled to indemnification, reimbursement, contribution or similar relief from the Debtors or the Reorganized Debtors for the payments to be made by the Ventas Entities to the United States under Section 6.12(b)12 of the Plan, for the costs incurred by the Ventas Entities in connection with the negotiation of the Government Settlement, or for the professional fees and expenses incurred by the Ventas Entities related to the Debtors' Reorganization Cases; and provided further, however, that the reasonable legal fees, costs and expenses for the joint defense of the Debtors and the Ventas Entities relating to the matters covered by the Government Settlement are to be paid by the Debtors as set forth in Section 6.12(d) of the Plan; and (xi) the Reorganized Debtors shall not renew or extend any lease with a third party as to which a Ventas Entity may have liability thereunder because it, an affiliate or a predecessor was the tenant prior to the assignment of the lease to the Debtors unless the Reorganized Debtors first obtain a release of the Ventas Entities from such liability. 5.05. CLASS 6 - CLASS 6 CLAIMS. The Class 6 Claims (excluding the PIP Claim) are Impaired. The sole treatment provided on account of the Class 6 Claims is the consideration set forth in section 6.12 of the Plan. Notwithstanding any exclusion of claims from the releases under section 6.12, except for the treatment provided for therein (i.e., the satisfaction of the United States Claims and the PIP Claim in the amounts set forth in section 7.04(d) and (e)), all Class 6 Claims shall be discharged as set forth in Article 11 of the Plan without any additional payment by the Debtors; provided, however, that notwithstanding Article 11 or any other provision of this Plan, Vencor facilities as of the Effective Date of this Plan shall retain their quality of care history, as reflected by findings on HCFA forms 2567 (or successor forms). 5.06. CLASS 7A - SUBORDINATED NOTEHOLDER CLAIMS. Allowed Claims in Class 7A are Impaired. Each holder of an Allowed Claim in Class 7A shall receive, in complete settlement, satisfaction and discharge of its Class 7A Claims, its pro rata share of (i) 3,675,408 shares of the New Common Stock (24.503% of the shares of New Common Stock, subject to dilution from stock issuances occurring after the Effective Date including without limitation the New Warrants, New Stock Option Plan and Restricted Share Plan), and (ii) New Warrants to purchase in the aggregate 7,000,000 shares of New Common Stock. 5.07. CLASS 7B - NOTEHOLDER SECURITIES FRAUD CLAIMS. Allowed Claims in Class 7B are Impaired. Each holder of an Allowed Claim in Class 7B shall receive no distribution under the Plan in respect of its Class 7B Claim and shall be enjoined from pursuing any Noteholder Securities Fraud Claim against the Debtors or Reorganized Debtors. 5.08. CLASS 8 - PUT RIGHTS. Allowed Claims in Class 8 are Impaired. Each holder of an Allowed Put Right who accepts the Plan shall receive, in complete settlement, satisfaction and discharge of its Put Right, the following: (i) the Put Rights will be cancelled and rejected under Section 12.01 of the Plan and (ii) any monetary damages due to the rejection of the Put Rights will be cancelled in exchange for the cancellation of the Preferred Equity Interest Loans. If a holder of a Put Right rejects the Plan, the Debtors reserve the right to reject the agreement providing a Put Right and seek the subordination of and/or to object to the allowance of the Claim of any such holder of any Put Right and to pursue recovery of any Preferred Equity Interest Loan from such holder. 5.09. CLASS 9 - INTENTIONALLY OMITTED. 5.10. CLASS 10 - PUNITIVE DAMAGE CLAIMS. Allowed Punitive Damage Claims in Class 10 are Impaired. Each holder of an Allowed Punitive Damage Claim shall receive no distribution under the Plan, in complete settlement, satisfaction and discharge of its Class 10 Claims. 5.11. CLASS 11A - PREFERRED EQUITY INTERESTS. Interests in Class 11A are Impaired. Each holder of an Allowed Preferred Equity Interest in Class 11A shall receive no distribution under the Plan in respect of its Class 11A Interest, and the Old Preferred Stock shall be cancelled. 5.12. CLASS 11B - PREFERRED EQUITY SECURITIES FRAUD CLAIMS. Class 11B Claims are Impaired. Each holder of an Allowed Preferred Equity Securities Fraud Claim shall receive no distribution under the Plan in respect of its Class 11B Claim and shall be enjoined from pursuing any Preferred Equity Securities Fraud Claim against the Debtors or Reorganized Debtors. 5.13. CLASS 12A - COMMON EQUITY INTERESTS. Interests in Class 12A are Impaired. Each holder of an Allowed Common Equity Interest shall receive no distribution under the Plan in respect of its Class 12A Interest, and the Old Common Stock shall be cancelled. 5.14. CLASS 12B - COMMON EQUITY SECURITIES FRAUD CLAIMS. Claims in Class 12B are Impaired. Each holder of an Allowed Common Equity Securities Fraud Claim shall receive no distribution under the Plan in respect of its Class 12B Claim and shall be enjoined from pursuing any Common Equity Securities Fraud Claim against the Debtors or Reorganized Debtors. Article VI GENERAL PROVISIONS REGARDING TREATMENT OF CLAIMS AND INTERESTS AND DISTRIBUTIONS UNDER THE PLAN 6.01. DISTRIBUTION DATE. Except as otherwise provided in the Plan, property to be distributed under the Plan to an Impaired Class (i) shall be distributed on or as soon as practicable after the Effective Date, but no more than ten (10) days after the Effective Date with respect to property other than Cash, and thirty (30) days after the Effective Date with respect to Cash, to each holder of an Allowed Claim or Allowed Interest of that Class that is an Allowed Claim or Allowed Interest as of the Effective Date, and (ii) shall be distributed to each holder of an Allowed Claim or Allowed Interest of that Class that is allowed after the Effective Date, to the extent allowed, as soon as practicable, but no more than thirty (30) days after the order of the Court allowing the Claim or Interest becomes a Final Order. On the Effective Date, the Reorganized Debtors shall deliver all of the New Common Stock and New Warrants to be distributed to the holders of Allowed Class 4, 5 and 7A Claims to the Exchange Agent on behalf of such holders, pending distribution in accordance with this Article VI, or directly to the holders of such Claims. Property to be distributed under the Plan to a Class that is not Impaired shall be distributed on the latest of (a) to each holder of an Allowed Claim of that Class that is an Allowed Claim as of the Effective Date, on or as soon as practicable, but not more than ten (10) days after the Effective Date with respect to property other than Cash, and thirty (30) days after the Effective Date with respect to Cash; (b) to each holder of an Allowed Claim of that Class that is allowed after the Effective Date, to the extent allowed, as soon as practicable, but no more than thirty (30) days after the order of the Court allowing the Claim becomes a Final Order; (c) the date on which the distribution to the holder of the Claim would have been due and payable in the ordinary course of business and under the terms of the Claim in the absence of the Reorganization Cases; or (d) as otherwise agreed upon between the holder of the Claim and the Reorganized Debtors. 6.02. EXCHANGE AGENT. The Debtors may designate an entity or entities to serve as Exchange Agent or may itself serve as Exchange Agent to distribute and deliver all the property to be distributed under the Plan, including without limitation Cash, the New Common Stock, the New Senior Secured Notes and the New Warrants. 6.03. DISTRIBUTION RECORD DATE - HOLDERS OF CLAIMS AND INTERESTS. As of the close of business on the Distribution Record Date, the various transfer registers for each of the Classes of Claims and Interests as maintained by the Debtors, or their respective agents, shall be closed, and there shall be no further changes in the record holders of any of the Claims or Interests. The Debtors shall have no obligation to recognize any transfer of the Claims or Interests occurring on or after the Distribution Record Date. The Debtors shall be entitled instead to recognize and deal for all purposes hereunder only with those record holders stated on the transfer ledgers as of the close of business on the Distribution Record Date, to the extent applicable. 6.04. SURRENDER OF INSTRUMENTS AND RECEIPT OF DISTRIBUTION - SENIOR DEBT CLAIMS AND SUBORDINATED NOTEHOLDER CLAIMS. SENIOR DEBT CLAIMS. As a condition to participation under the Plan, each holder of a Senior Debt Claim is required to provide evidence of the Old Debt Securities by completing and returning a Letter of Transmittal to the Exchange Agent, together with debt instruments (to the extent such exist) representing their Old Debt Securities (the "Tendered Debt Certificates") promptly after the Confirmation Date. The Exchange Agent will deliver, in accordance with Section 6.01 of the Plan, to each holder of a Senior Debt Claim who has properly completed and returned a Letter of Transmittal and Tendered Debt Certificates, the New Senior Secured Notes and New Common Stock to be issued to such holder in accordance with the Plan. Pending satisfaction of these conditions, the Exchange Agent will hold such New Common Stock on behalf of the respective holders. HOLDERS OF SENIOR DEBT CLAIMS WHO HAVE NOT PROPERLY COMPLETED AND RETURNED TO THE EXCHANGE AGENT LETTERS OF TRANSMITTAL, TOGETHER WITH THE TENDERED DEBT CERTIFICATES, WITHIN ONE YEAR OF THE EFFECTIVE DATE WILL NOT RECEIVE THE NEW SENIOR SECURED NOTES AND NEW COMMON STOCK TO WHICH THEY ARE OTHERWISE ENTITLED PURSUANT TO THE PLAN NOR WILL THEY BE ENTITLED TO ANY OTHER DISTRIBUTION UNDER THE PLAN. The Debtors selected one year as opposed to the five-year period permitted (but not required) under section 1143 of the Bankruptcy Code because the Debtors believe that the cost and expense of establishing an escrow fund for delinquent tenders outweighs the risk that substantial holders of Old Debt Securities will fail to surrender their debt instruments within one year. SUBORDINATED NOTEHOLDER CLAIMS. Promptly after the Effective Date and in accordance with Section 6.01 of the Plan, the Exchange Agent will instruct The Depository Trust Company ("DTC") to cancel the existing positions with respect to the Subordinated Notes (including the global certificate held in the name of DTC's nominee Cede & Co.) of each financial institution that is a participant in DTC's book-entry transfer facility system. Simultaneously therewith, DTC will execute a book-entry credit for the benefit of each such financial institution with the number of New Common Stock and New Warrants to be issued to such holder in accordance with the Plan (a "book-entry exchange"). In connection with the foregoing, the Exchange Agent will deliver (i) to DTC a global certificate, to be registered in the name of Cede & Co., representing all shares of New Common Stock to be issued in connection with the Subordinated Noteholder Claims hereunder and (ii) to the Warrant Agent a global certificate representing all New Warrants to be issued in connection with the Subordinated Noteholder Claims hereunder. A beneficial owner of Old Debt Securities that are held by or registered in the name of a broker, dealer, commercial bank, trust company or other nominee or custodian is urged to contact such entity promptly if such beneficial owner has questions regarding the foregoing procedure. LETTERS OF TRANSMITTAL. Signatures on a Letter of Transmittal must be guaranteed by an Eligible Institution, unless the Old Debt Securities tendered pursuant thereto are tendered for the account of an Eligible Institution. If Old Debt Securities are registered in the name of a person other than the person signing the Letter of Transmittal, in order to be validly tendered, the Old Debt Securities must be endorsed or accompanied by properly completed power of authority, with signature guaranteed by an Eligible Institution. Holders of Old Debt Securities who are not holders of record should: (i) obtain a properly completed Letter of Transmittal (or facsimile thereof) from the record holder, and include with the Letter of Transmittal a properly completed and duly executed instrument of assignment or endorsement, with signature guaranteed by an Eligible Institution, with respect to such Old Debt Securities from the record holder, or (ii) effect a record transfer of their Old Debt Securities prior to delivery of the Letter of Transmittal. In addition to any requirements under the applicable certificate or articles of incorporation or bylaws of the Debtors, any holder of a Claim evidenced by Old Debt Securities represented by debt instruments that have been lost, stolen, mutilated or destroyed may, in lieu of surrendering such debt instruments, deliver to the Exchange Agent: (i) evidence satisfactory to the Exchange Agent of the loss, theft, mutilation or destruction; and (ii) such security or indemnity as may be required by the Exchange Agent to hold the Exchange Agent harmless from any damages, liabilities or costs incurred in treating such individual as a holder of the old Debt Securities. Upon compliance with this paragraph by a holder of a Claim evidenced by the Old Debt Securities, such holder shall, for all purposes under the Plan, be deemed to have surrendered the old Debt Securities, as applicable. ALL QUESTIONS AS TO THE VALIDITY, FORM, ELIGIBILITY (INCLUDING TIME OF RECEIPT), AND ACCEPTANCE OF LETTERS OF TRANSMITTAL, TENDERED DEBT CERTIFICATES AND BOOK-ENTRY EXCHANGE PROCEDURES WILL BE RESOLVED BY THE DEBTORS, WHOSE DETERMINATION WILL BE FINAL AND BINDING, SUBJECT ONLY TO REVIEW BY THE COURT UPON APPLICATION WITH DUE NOTICE TO ANY AFFECTED PARTIES IN INTEREST. THE DEBTORS RESERVE THE RIGHT TO REJECT ANY AND ALL LETTERS OF TRANSMITTAL AND TENDERED DEBT CERTIFICATES NOT IN MATERIALLY PROPER FORM, OR LETTERS OF TRANSMITTAL AND TENDERED DEBT CERTIFICATES, THE DEBTORS' ACCEPTANCE OF WHICH WOULD, IN THE OPINION OF THE DEBTORS OR THEIR COUNSEL, BE UNLAWFUL 6.05. INTENTIONALLY OMITTED. 6.06. SURRENDER OF INSTRUMENTS - OLD PREFERRED STOCK. The Debtors are in possession of the Old Preferred Stock. Promptly following the Effective Date, each share of Old Preferred Stock, without any action required on the part of the record holder thereof, shall cease to be outstanding, and shall be cancelled and retired. 6.07. SURRENDER OF INSTRUMENTS - OLD COMMON STOCK. Without any further action by the Debtors or the holders of the Old Common Stock, all shares of the Old Common Stock will be cancelled and retired on the Effective Date. 6.08. INTENTIONALLY OMITTED. 6.09. UNCLAIMED DISTRIBUTIONS. (a) CASH DISTRIBUTIONS. An Unclaimed Cash Distribution shall be any distribution made to the holder of an Allowed Claim pursuant to the Plan including, in the case of check or other instrument, the proceeds thereof, that (i) is returned to the Reorganized Debtors as undeliverable or because delivery thereof is not accepted, or (ii) in the case of a distribution made in the form of a check or other instrument, is not negotiated. Any Unclaimed Cash Distribution shall, until such time, if ever, as such Unclaimed Cash Distribution becomes deliverable, be retained by the Reorganized Debtors which may commingle such funds with their other funds; provided, however, that any holder of an Allowed Claim that does not claim an Unclaimed Cash Distribution within the later of three (3) years after the entry of the Confirmation Order or one (1) year after such check or other instrument was issued by the Reorganized Debtors shall not participate in any further distributions under the Plan, and shall be forever barred from asserting any such Claim against the Reorganized Debtors or their property. Any Cash held for distribution on account of such holder's Claim and any accumulated income thereon shall be property of the Reorganized Debtors, free and clear of any restrictions thereon. Nothing contained in the Plan shall require the Reorganized Debtors to attempt to locate any holder of an Allowed Claim other than by reviewing their books and records (including any proofs of claim filed against the Debtors). Within thirty (30) days after the end of each fiscal quarter of the Reorganized Debtors, the Reorganized Debtors shall distribute all such previously Unclaimed Cash Distributions that became deliverable during the preceding fiscal quarter. (b) DISTRIBUTIONS OTHER THAN CASH. If any holder of a Claim or Interest entitled to a distribution directly from the Exchange Agent under the Plan cannot be located on the Effective Date, such distributions shall be set aside and maintained by the Exchange Agent on behalf of such holder. If such person is located within one (1) year of the Effective Date, such distributions shall be distributed to such person. If such person cannot be located within one (1) year of the Effective Date, any such distributions shall become the property of and shall be released to the Reorganized Debtors; provided, however, that nothing contained in this Plan shall require the Reorganized Debtors to attempt to locate such person and provided further that with respect to the New Senior Secured Notes, the New Common Stock and New Warrants, the distributions shall be reallocated and distributed pro rata among the remaining holders of Claims in the same Class. (c) NOTICE OF UNCLAIMED DISTRIBUTIONS. Prior to the first, second and third anniversaries of the Effective Date, the Debtors or Reorganized Debtors shall File a list of unclaimed distributions with the Court. 6.10. TAX PROVISIONS. Pursuant to section 1146(c) of the Bankruptcy Code, the issuance, transfer or other exchange of a security, or the making or delivery of an instrument of transfer under the Plan shall not be taxed under any law imposing a stamp tax, transfer tax, or similar tax or fee. 6.11. SETOFFS. Except with respect to Senior Debt Claims, the Subordinated Noteholder Claims, the PIP Claim, the United States Claims, the Ventas Claim, and Indemnification Claims, the Debtors may, but shall not be required to, setoff against any Claim (for purposes of determining the allowed amount of such Claim on which distribution shall be made), any claims of any nature whatsoever that the Debtors may have against the claimant, but neither the failure to do so nor the allowance of any Claim hereunder shall constitute a waiver or release by the Debtors of any such claim the Debtors may have against such claimant. 6.12 THE UNITED STATES CLAIMS AND THE PIP CLAIM. The United States has filed the Government Proofs of Claims against the Debtors and has initiated investigations relating to pending Qui Tam Actions as well as other issues involving the Debtors and the Ventas Parties. The United States contends that as a result of the Covered Conduct, the United States has been damaged in the amount of over $1,017,337,643, which represents $1,016,987,643 in treble damages and $350,000 in damages not subject to trebling. The Debtors and the Ventas Parties deny the contentions of the United States, including but not limited to the conduct described in the Qui Tam Actions and the Government Proofs of Claim. The United States, through HCFA, has asserted an additional nonfraud claim against the Debtors in the estimated amount of $290,967,775. The United States contends it has made overpayments to the Debtors and the Ventas Parties based on services provided to Medicare beneficiaries under the Medicare program under Title XVIII of the Social Security Act, 42 U.S.C. ss.ss. 1395-1395ggg, for fiscal years ending January 31, 1995 through the Petition Date, plus civil monetary penalties that have accrued beginning in 1998 through the Petition Date. The Debtors and the Ventas Parties deny the contentions of the United States. In order to avoid the delay, uncertainty, inconvenience and expense of protracted litigation, the Debtors, the Ventas Entities and the United States have reached the Government Settlement settling the United States Claims and the PIP Claim which shall be implemented pursuant and subject to the provisions of this Plan. Accordingly, the provisions of this Section 6.12 shall be conditioned upon and effective only as of the occurrence of the Effective Date. (a) THE DEBTORS' OBLIGATIONS TO THE UNITED STATES UNDER THE GOVERNMENT SETTLEMENT. 1. The Debtors shall pay the United States $25.9 million (to be allocated as follows: $20.9 million for the Covered Conduct and $5 million for nonfraud monetary Medicare program claims), payable as follows: (i) a payment of $10 million in Cash on the Effective Date; and (ii) an additional payment in the aggregate principal amount of $15.9 million payable in six (6) monthly payments under a level payment amortization schedule, with interest at the rate of 6% per annum beginning on the Effective Date with payments beginning on the first business day after the end of the calendar quarter in which the Effective Date occurs. 2. Payments pursuant to subsections 6.12(a)1(i) and (ii) shall be made to the United States Department of Justice via electronic transfer according to instructions given to the Debtors by J. Christopher Kohn, Director, Commercial Litigation Branch, or his successor or designated representative. 3. In addition to the payments set forth in Sections 6.12(a)1(i) and (ii), the United States shall receive payment of the PIP Claim in full pursuant to the terms of the Mutual of Omaha Letters, including, but not limited to, the United States' right to recoup interim payments in the event of default. 4. The Debtors shall not be responsible in any manner for the payments owed by the Ventas Entities under this Plan and any failure of the Ventas Entities to make such payments shall not affect the Debtors' rights, duties, benefits and obligations under this Plan. Debtors will not reduce amounts they must pay pursuant to this Section as a result of the denial of claims for payment to Debtors, the Ventas Entities or any other entity now being withheld from payment by any Medicare carrier or intermediary, TRICARE, Federal Employee Health Benefits Program ("FEHBP"), Veterans Affairs Program ("VA") carrier or payer, or any State payer; and Debtors agree not to resubmit to any Medicare carrier or intermediary, TRICARE, FEHBP or VA carrier or payer, or any State payer any claims relating to the Covered Conduct or the period prior to the Petition Date, and agree not to appeal any such denials of claims. 5. The Corporate Integrity Agreement shall be effective as of the Effective Date. 6. The Debtors acknowledge and agree that all costs (as defined in the Federal Acquisition Regulations ("FAR") ss. 31.205-47 and in Titles XVIII and XIX of the Social Security Act, 42 U.S.C. ss.ss. 1395-1395ggg and 1396-1396v, and the regulations promulgated thereunder) incurred by or on behalf of the Debtors, the Ventas Entities or any other entity, their present or former officers, directors, employees, shareholders, and agents, in connection with: (i) the matters covered by the Government Settlement, including, but not limited to, the costs of negotiating the CIA and other aspects of the Government Settlement; (ii) the United States' audit(s) and any civil and criminal investigation(s) of the matters covered by the Government Settlement; (iii) the investigation, defense, and corrective actions undertaken in response to the United States' audit(s) and any civil and criminal investigation(s) in connection with the matters covered by this Government Settlement (including attorney's fees) by Debtors, Ventas Parties or any other entity; (iv) the obligations under the Corporate Integrity Agreement incorporated in the Plan to: (a) perform Review and Monitoring Functions as described in Section III.D. of the CIA (except to the extent such Review Functions are performed by Vencor); and (b) prepare and submit reports to the OIG-HHS; and (v) the payments made pursuant to section 6.12 of the Plan, are unallowable costs on Government contracts and under Medicare, the Medicaid Program, the TRICARE Program, the VA and FEHBP (collectively, the "Unallowable Costs"). The Debtors shall separately determine and account for these Unallowable Costs in a nonreimbursable cost center and shall neither charge such costs, directly, or indirectly, to any contracts with the United States or any state Medicaid program, nor seek payment for such Unallowable Costs through any cost report, cost statement, information statement or payment request submitted by the Debtors that include Postpetition periods to the Medicare, Medicaid, TRICARE, VA, or FEHBP programs (collectively, the "Postpetition Cost Reports"). Nothing in this paragraph affects the allowability of costs not expressly enumerated herein. Within sixty days of the Effective Date, the Debtors shall identify to applicable Medicare and TRICARE fiscal intermediaries, carriers and/or contractors, and Medicaid, VA and FEHBP fiscal agents, any Unallowable Costs included in the Postpetition Cost Reports and will request, and agree that the Postpetition Cost Reports, even if already settled, be adjusted to account for the effect of the inclusion of the Unallowable Costs. The Debtors agree that the United States will be entitled to recoup any overpayment as a result of the inclusion of such Unallowable Costs on the Postpetition Cost Reports. Any payments due after the adjustments have been made shall be paid to the United States pursuant to the direction of the Department of Justice, and/or the affected agencies. The United States reserves its rights to disagree with any of the Debtors' calculations submitted on the effect of inclusion of Unallowable Costs on the Postpetition Cost Reports. If and to the extent the Ventas Entities identify to the Vencor Entities any Ventas Unallowable Costs pursuant to Section 6.12(b)19 herein, the Vencor Entities shall identify to applicable Medicare and TRICARE fiscal intermediaries, carriers and/or contractors, and Medicaid, VA and FEHBP fiscal agents, any Ventas Unallowable Costs that were included in any Cost Reports (as defined in Section 6.12(b)19 herein) filed by Vencor Entities, and will request, and agree, that such Cost Reports, even if already settled, be adjusted to account for the effect of the inclusion of the Ventas Unallowable Costs. The Debtors agree that the United States will be entitled to recoup any overpayment as a result of the inclusion of such Ventas Unallowable Costs on such Cost Reports. Any payments due after the adjustments have been made shall be paid to the United States pursuant to the direction of the Department of Justice, and/or the affected agencies. The United States reserves its rights to disagree with any of the Debtors' calculations submitted on the effect of inclusion of Ventas Unallowable Costs on such Cost Reports. 7. The Debtors shall cooperate fully and truthfully with the United States' investigation of individuals and entities not specifically released pursuant to this Section 6.12 for the Covered Conduct. Upon reasonable notice, the Debtors will make reasonable efforts to identify, facilitate access to, and encourage the cooperation of, their directors, officers, employees, and other witnesses for interviews and testimony, consistent with the rights and privileges of such individuals, and will make available to the United States, upon reasonable request, all nonprivileged documents and records in its possession, custody or control relating to the Covered Conduct. In the event the United States, or anyone acting pursuant to 31 U.S.C. ss. 3730, institutes litigation with respect to Class 6 Claims against any current or former officer, director or employee of the Debtors, the Ventas Entities or Nondebtor Subsidiaries, and to the extent such current or former officer, director or employee asserts a claim for indemnification, contribution and/or other or similar relief from the Debtors, the Ventas Entities or Nondebtor Subsidiaries, the Debtors and the Nondebtor Subsidiaries agree that they will not formally admit or concede liability for such indemnification, contribution and/or other or similar relief without the prior written consent of the United States, and to the extent any current or former officer, director or employee of the Debtors, the Ventas Entities or the Nondebtor Subsidiaries is hereafter criminally convicted for any matter that relates to a Class 6 Claim, Debtors and the Nondebtor Subsidiaries will contest the assertion of such claim for indemnification, contribution and /or other or similar relief; provided, however, that the Debtors and the Nondebtor Subsidiaries waive any claim against the United States under 8 Del. Code ss. 145(c). Debtors and the Nondebtor Subsidiaries hereby covenant that on a going forward basis they will not voluntarily incur any additional duty or obligation of indemnification, contribution, and/or other or similar relief to any current or former officer, director or employee of the Debtors, the Ventas Entities or the Nondebtor Subsidiaries for any matter for which such officer, director or employee has been or is hereafter convicted criminally. Debtors and the Nondebtor Subsidiaries agree that they will use commercially reasonable efforts to continue and maintain all insurance covering directors, officers and employees taken out by them as of September 1, 2000, in similar coverage and the same face amounts as existed on that date and will not, without the prior consent of the United States and Ventas, which consent shall not be unreasonably withheld, decrease the face amount or materially decrease the coverage. The Reorganized Debtors shall provide the United States Government and Ventas with 30 days advance notice of the cancellation, expiration or termination (in whole or in part) of any such policy. 8. Notwithstanding this or any other Section of the Plan, the Debtors shall remain obligated to the United States, and shall not be released from or receive a discharge for, any overpayment in Medicare cost report years within which the Petition Date falls in a pro rata amount equal to the amount of the overpayment attributable to the portion of the cost report year following the Petition Date (for purposes of calculating the pro rata amount attributable to the portion of the cost report year following the Petition Date, the total overpayment for that cost report year will be multiplied by a fraction, the numerator of which is the amount of days following the Petition Date in the cost report year, and the denominator of which is 365). The Debtors shall be entitled to seek reimbursement for the costs of preparing, submitting and processing their Medicare cost reports described in this section in accordance with applicable statutes and regulations. 9. Notwithstanding this or any other Section of the Plan, the Debtors shall remain obligated to the United States, and shall not be released from or receive a discharge for, any overpayment in Medicare cost report years that commenced after the Petition Date. The Debtors shall be entitled to seek reimbursement for the costs of preparing, submitting and processing their Medicare cost reports for Medicare cost report years that commence on or after the Petition Date in accordance with applicable statutes and regulations. 10. Notwithstanding this or any other Section of the Plan, the United States shall be entitled to reopen the Debtors' Medicare cost reports for years that are covered by this Government Settlement solely for the purpose of complying with any Act of Congress requiring the United States to rely upon settled cost reports for these years as a basis for adjusting federal payment rates to providers participating in Medicare; provided, however, that the United States shall not use such adjustments in order to seek any further payments from the Debtors for periods prior to the Petition Date, and the United States shall only use such adjustments to adjust payment rates to the Debtors in cost report periods after the Petition Date as part of adjustments in federal payment rates applicable to all similarly situated providers participating in Medicare. 11. The Debtors release the United States as set forth in Section 6.12(c)3 below. (b) The Ventas Entities' Obligations Under the Government Settlement. 12. The Ventas Entities shall pay the United States $103.6 million (to be allocated as follows: $83.6 million for the Covered Conduct and $20 million for nonfraud monetary Medicare program claims), payable as follows: (i) a payment of $34 million in Cash on the Effective Date; and (ii) an additional payment in the principal amount of $69.6 million paid over a term of five (5) years, together with interest at the rate of 6% per annum beginning on the Effective Date, to be paid as follows: (x) a payment of accrued interest only on the outstanding principal balance on the last day of the calendar quarter in which the Effective Date occurs, and (y) twenty (20) consecutive level payments of principal and interest, payable quarterly, commencing on the last day of the first full calendar quarter occurring after the calendar quarter in which the Effective Date occurs. To illustrate the operation of the foregoing, if the Effective Date occurs on February 1, 2001, the payment schedule for Ventas would occur as set forth on Schedule D attached hereto. 13. Payments pursuant to subsections 6.12(b)12(i) and (ii) shall be made to the United States Department of Justice via electronic transfer according to instructions given to the Ventas Entities by J. Christopher Kohn, Director, Commercial Litigation Branch, or his successor or designated representative. 14. If an "Event of Default" under and as defined in the Amended Ventas Credit Agreement shall occur and be continuing and the administrative agent or the lenders thereunder declare, under and in accordance with Article 7 of the Amended Ventas Credit Agreement, that the principal of and the interest on the loans under the Amended Ventas Credit Agreement and the notes evidencing the loans thereunder and all other amounts payable under the Amended Ventas Credit Agreement to be forthwith due and payable (a "Declaration of Acceleration"), and such declaration has not subsequently been rescinded or revoked, then the United States may, in its discretion, by written notice to the Ventas Entities, declare all unpaid principal and accrued and unpaid interest payable by the Ventas Entities under Section 6.12 (b) 12 (ii) of this Plan to be immediately due and payable, whereupon the same shall become and be forthwith due and payable. Ventas shall provide prompt written notice to J. Christopher Kohn, Director, Commercial Litigation Branch, or his successor or designated representative, upon Ventas' receipt of a Declaration of Acceleration under the Amended Ventas Credit Agreement. 15. If the Ventas Entities shall fail to make any payment required to be paid by the Ventas Entities under Section 6.12(b)12 (ii) of this Plan as and when due and the Ventas Entities shall fail to make such payment within five (5) business days of receipt of written notice from the United States that such payment is delinquent, then the United States may, in its discretion, by written notice to the Ventas Entities, declare all unpaid principal and accrued and unpaid interest payable by the Ventas Entities under Section 6.12(b)12(ii) of this Plan to be immediately due and payable, whereupon the same shall become and be forthwith due and payable. 16. The Ventas Entities hereby covenant and agree with the United States, that if, from and after the Effective Date either: (a) the loans under the Amended Ventas Credit Agreement (the "Ventas Senior Bank Debt") shall be amended and, as a result of such amendment, (i) the final maturity date of the Ventas Senior Bank Debt shall be scheduled to occur prior to the final maturity date of the payments due under Section 6.12(b)12(ii), or (ii) less than $100 million of the outstanding principal under the Ventas Senior Bank Debt shall be scheduled to be paid after the final maturity date of the obligations due under Section 6.12(b)12(ii), or (b) the Ventas Senior Bank Debt shall be replaced in whole by new debt (the "Refinancing Debt"), and (i) the final maturity date of the Refinancing Debt shall be scheduled to occur prior to the final maturity date of the payments due under Section 6.12(b)12(ii), or (ii) less than $100 million of the outstanding principal of the Refinancing Debt shall be scheduled to be paid after the final maturity date of the obligations due under Section 6.12(b)12(ii), then in either case, the final maturity date of the obligations payable under Section 6.12(b)12(ii) and the remaining payments thereunder shall be proportionately and equitably adjusted in time and amount so that the final maturity date and the scheduled principal payments of the Ventas Senior Bank Debt or the Refinancing Debt, as the case may be, and the remaining obligations under Section 6.12(b)12(ii) shall have the same proportionate relationship as before such amendment or replacement, and in any such event, at least $100 million of the outstanding principal balance of the Ventas Senior Bank Debt or the Refinancing Debt, as applicable, shall be scheduled to be paid after the due date of the final payment under Section 6.12(b)12(ii). 17. If the Ventas Entities shall fail to make any payment required to be paid by the Ventas Entities under Section 6.12(b)12(ii) of this Plan as and when due, then, during the period commencing on the due date of the delinquent payment and continuing to and until such time as the delinquent payment shall be paid to the United States (such period being referred to as a "Delinquency Period"), Ventas, Inc. shall suspend the payment of dividends on account of shares of any class of stock of Ventas, Inc., provided that and notwithstanding the foregoing, during any Delinquency Period, Ventas, Inc. may declare and pay an amount equal to the Minimum REIT Dividend (as hereinafter defined) for the applicable taxable year (or the unpaid portion of the Minimum REIT Dividend for the applicable taxable year) as necessary for Ventas, Inc. to maintain, for that taxable year, its status as a real estate investment trust under the Internal Revenue Code of 1986, as heretofore and hereafter amended, as codified at 26 U.S.C. ss. 1 et seq., and the rules and regulations promulgated thereunder, or any successor provision thereto (collectively, the "Tax Code"). "Minimum REIT Dividend" as used herein shall mean, with respect to the 2000 taxable year of Ventas, Inc., an amount equal to the sum of 95% (or, if different, the percentage then applicable under Section 857(a)(1)(A)(i) of the Tax Code) of the real estate investment trust taxable income of the Ventas Entities (adjusted as provided in Section 857(a)(1)(A)(i) of the Tax Code) for such year and 95% (or, if different, the percentage then applicable under Section 857(a)(1)(A)(ii) of the Tax Code) of the excess of the net income from foreclosure property of the Ventas Entities for such year over the tax imposed on such income, minus any excess noncash income (as determined under Section 857(e) of the Tax Code) for such year and, with respect to any subsequent taxable year of Ventas, Inc. an amount equal to the sum of 90% (or, if different, the percentage then applicable under Section 857(a)(1)(A)(i) of the Tax Code) of the real estate investment trust taxable income of the Ventas Entities (adjusted as provided in Section 857(a)(1)(A)(i) of the Tax Code) for such year and 90% (or, if different, the percentage then applicable under Section 857(a)(1)(A)(ii) of the Tax Code) of the excess of the net income from foreclosure property of the Ventas Entities for such year over the tax imposed on such income, minus any excess noncash income (as determined under Section 857(e) of the Tax Code) for such year. 18. The Ventas Entities shall not be responsible in any manner for the payments owed by the Debtors under this Plan, and any failure of the Debtors to make such payments shall not affect the Ventas Entities' rights, duties, benefits, and obligations under this Plan. 19. The Ventas Entities acknowledge and agree that all costs (as defined in the Federal Acquisition Regulations ("FAR") ss. 31.205-47 and in Titles XVIII and XIX of the Social Security Act, 42 U.S.C. ss.ss. 1395-1395ggg and 1396-1396v, and the regulations promulgated thereunder) incurred by or on behalf of the Debtors, the Ventas Entities or any other entity, their present or former officers, directors, employees, shareholders, and agents, in connection with: (i) the matters covered by the Government Settlement, including, but not limited to, the costs of negotiating the CIA and other aspects of the Government Settlement; (ii) the United States' audit(s) and any civil and criminal investigation(s) of the matters covered by the Government Settlement; (iii) the investigation, defense, and corrective actions undertaken in response to the United States' audit(s) and any civil and criminal investigation(s) in connection with the matters covered by this Government Settlement (including attorney's fees) by Debtors, Ventas Parties or any other entity; (iv) Vencor's obligations under the Corporate Integrity Agreement incorporated in the Plan to: (a) perform Review and Monitoring Functions as described in Section III.D. of the CIA (except to the extent such Review Functions are performed by Vencor); and (b) prepare and submit reports to the OIG-HHS; and (v) the payments made pursuant to section 6.12 of the Plan, are unallowable costs on Government contracts and under Medicare, the Medicaid Program, the TRICARE Program, the VA and FEHBP (collectively, the "Ventas Unallowable Costs"). The Ventas Entities shall neither charge such costs, directly, or indirectly, to any contracts with the United States or any state Medicaid program, nor seek payment (directly or indirectly) for such Ventas Unallowable Costs through any cost report, cost statement, information statement or payment request that is submitted to the Medicare, Medicaid, TRICARE, VA, or FEHBP programs (collectively, the "Cost Reports"). Nothing in this paragraph affects the allowability of costs not expressly enumerated herein. Within sixty days of the Effective Date, the Ventas Entities shall a) identify to the Vencor Entities and HHS-OIG all Ventas Unallowable Costs charged to the Vencor Entities or previously sought from the United States or any State Medicaid Program; and b) to the extent the Ventas Entities have charged any Ventas Unallowable Costs directly to the United States (or any of its fiscal intermediaries, carriers, contractors, or fiscal agents) the Ventas Entities will pay to the United States, pursuant to the direction of the Department of Justice and/or the affected agencies, the amount of such Ventas Unallowable Costs. (The United States reserves its rights to disagree with any of the Ventas Entities' calculations submitted on the effect of any such charges of Ventas Unallowable Costs.) 20. The Ventas Entities shall cooperate fully and truthfully with the United States' investigation of individuals and entities not specifically released pursuant to this Section 6.12 for the Covered Conduct. Upon reasonable notice, the Ventas Entities will make reasonable efforts to identify, facilitate access to, and encourage the cooperation of, their directors, officers, employees, and other witnesses for interviews and testimony, consistent with the rights and privileges of such individuals, and will make available to the United States, upon reasonable request, all nonprivileged documents and records in its possession, custody or control relating to the Covered Conduct. In the event the United States, or anyone acting pursuant to 31 U.S.C. ss. 3730, institutes litigation with respect to Class 6 Claims against any current or former officer, director or employee of the Ventas Entities or Nondebtor Subsidiaries, and to the extent such current or former officer, director or employee asserts a claim for indemnification, contribution and/or other or similar relief from the Debtors, the Ventas Entities or Nondebtor Subsidiaries, the Ventas Entities agree that they will not formally admit or concede liability for such indemnification, contribution and/or other or similar relief without the prior written consent of the United States, and to the extent any current or former officer, director or employee of the Debtors, the Ventas Entities or the Nondebtor Subsidiaries is hereafter criminally convicted for any matter that relates to a Class 6 Claim, the Ventas Entities will contest the assertion of such claim for indemnification, contribution and/or other or similar relief; provided, however, that the Ventas Entities waive any claim against the United States under 8 Del. Code ss. 145(c). The Ventas Entities hereby covenant that on a going forward basis they will not voluntarily incur any additional duty or obligation of indemnification, contribution, and/or other or similar relief to any current or former officer, director or employee of the Debtors, the Ventas Entities or the Nondebtor Subsidiaries for any matter for which such officer, director or employee has been or is hereafter convicted criminally. The Ventas Entities agree that they will use commercially reasonable efforts to continue and maintain all insurance covering directors, officers and employees taken out by them as of September 1, 2000, in similar coverage and the same face amounts as existed on that date and will not, without the prior consent of the United States, which consent shall not be unreasonably withheld, decrease the face amount or materially decrease the coverage. The Ventas Entities shall provide the United States Government and the Reorganized Debtors with 30 days advance notice of the cancellation, expiration or termination (in whole or in part) of any such policy. 21. The Ventas Entities release the United States as set forth in Section 6.12(c)4 below. Except for the obligations created under this subsection b, Sections 6.12(d), and the Ventas Entities' release of the United States under Section 6.12(c)4, the Ventas Entities shall have no obligations to the United States under any other Sections or subsections of the Plan. (c) RELEASES UNDER THE GOVERNMENT SETTLEMENT. 1. RELEASE OF UNITED STATES CLAIMS AS TO THE DEBTORS. The United States (on behalf of itself, its officers, agents, agencies, and departments) releases the United States Claims against the Debtors. OIG-HHS releases and agrees to refrain from instituting, directing or maintaining any administrative claim or any action seeking exclusion from the Medicare, Medicaid or other federal health care programs (as defined in 42 U.S.C. ss. 1320a-7b(f)) against the Debtors under 42 U.S.C. ss. 1320a-7a (Civil Monetary Penalties Law), or 42 U.S.C. ss. 1320a-7(b) (permissive exclusion), for the Covered Conduct, except as reserved in this Section 6.12(c)1. The Debtors acknowledge and agree that OIG-HHS expressly reserves all rights to comply with any statutory obligations to exclude the Debtors from the Medicare, Medicaid or other Federal health care program under 42 U.S.C. Section 1320a-7(a) (mandatory exclusion) based on the Covered Conduct. The TRICARE Support Office (the "TSO") (formerly the Office of CHAMPUS), a field activity of the Office of the Secretary of Defense, the United States Department of Defense, releases and agrees to refrain from instituting, directing or maintaining any administrative claim or any action seeking exclusion from instituting, directing or maintaining any administrative claim or any action seeking exclusion from the TRICARE program against the Debtors under 32 C.F.R. ss. 199.9 for the Covered Conduct except as reserved in this Section 6.12(c)1. The Debtors acknowledge and agree that TSO expressly reserves all rights to comply with any statutory obligations to exclude the Debtors from the TRICARE program under 32 C.F.R. ss. 199.9(f)(1)(i)(A), (f)(1)(i)(B), (f)(1)(i)(D), and (f)(1)(iii) based on the Covered Conduct. With respect to the first three pending Qui Tam Actions, as listed on Exhibit 5 to the Plan, the United States agrees to move to dismiss with prejudice to the United States and the relators. With respect to all claims in their entirety against any or all of the Debtors and the Ventas Entities and current and former officers, directors and employees of the Debtors and Ventas Entities in each of the other pending Qui Tam Actions listed on Exhibit 5 to the Plan, the United States agrees: 1) to move to dismiss with prejudice as to the relators for all claims except claims under 31 U.S.C. ss. 3730(h); 2) to move to dismiss with prejudice to the United States for the Covered Conduct; and 3) to move to dismiss without prejudice to the United States for any claims other than for the Covered Conduct. Such motions shall be made within thirty (30) days of the Effective Date. The following are specifically excluded from the scope and terms of the release described in this Section 6.12(c)1: (i) Any civil, criminal or administrative claims arising under Title 26, U.S. Code (Internal Revenue Code); (ii) Any criminal liability; (iii) Except as explicitly stated in this Section, any administrative liability, including mandatory exclusion from federal health care programs; (iv) Any claims based upon such obligations as are created by the Plan, the Corporate Integrity Agreement, and/or both; (v) Any express or implied warranty claims or other claims for defective or deficient products or services, including quality of goods and services, provided by the Debtors except as expressly set forth in the Covered Conduct; (vi) Any claims for personal injury or property damage or for other consequential damages arising from the Covered Conduct except as expressly set forth in the Covered Conduct; (vii) Any claims based on a failure to deliver items or services due, except as expressly set forth in the Covered Conduct; (viii) Any claims against any individuals, including officers, directors and employees; and (ix) Any findings on a HCFA Form 2567, Statement of Deficiencies (or successor form). The foregoing exclusions are for the purposes of Section 6.12 only and shall not limit the provisions of Article 11 of the Plan. 2. RELEASE OF UNITED STATES CLAIMS AS TO THE VENTAS ENTITIES. The United States (on behalf of itself, its officers, agents, agencies and departments) releases the United States Claims against the Ventas Entities. OIG-HHS releases and agrees to refrain from instituting, directing or maintaining any administrative claim or any action seeking exclusion from the Medicare, Medicaid or other federal health care programs (as defined in 42 U.S.C. ss. 1320a-7b(f)) against the Ventas Entities under 42 U.S.C. ss. 1320a-7a (Civil Monetary Penalties Law), or 42 U.S.C. ss. 1320a-7(b) (permissive exclusion), for the Covered Conduct, except as reserved in this Section 6.12(c)2. The Ventas Entities acknowledge and agree that OIG-HHS expressly reserves all rights to comply with any statutory obligations to exclude the Ventas Entities from the Medicare, Medicaid or other Federal health care program under 42 U.S.C. Section 1320a-7(a) (mandatory exclusion) based on the Covered Conduct. The TSO releases and agrees to refrain from instituting, directing or maintaining any administrative claim or any action seeking exclusion from instituting, directing or maintaining any administrative claim or any action seeking exclusion from the TRICARE program against the Ventas Entities under 32 C.F.R. ss. 199.9 for the Covered Conduct, except as reserved in this Section 6.12(c)2. The Ventas Entities acknowledge and agree that TSO expressly reserves all rights to comply with any statutory obligations to exclude the Debtors from the TRICARE program under 32 C.F.R. ss. 199.9(f)(1)(i)(A), (f)(1)(i)(B), (f)(1)(i)(D), and (f)(1)(iii) based on the Covered Conduct. With respect to the first three pending Qui Tam Actions, as listed on Exhibit 5 to the Plan, the United States agrees to move to dismiss with prejudice to the United States and the relators. With respect to all claims in their entirety against any or all of the Debtors and the Ventas Entities and current and former officers, directors and employees of the Debtors and Ventas Entities in each of the other pending Qui Tam Actions listed on Exhibit 5 to the Plan, the United States agrees: 1) to move to dismiss with prejudice as to the relators for all claims except claims under 31 U.S.C. ss. 3730(h); 2) to move to dismiss with prejudice to the United States for the Covered Conduct; and 3) to move to dismiss without prejudice to the United States for any claims other than for the Covered Conduct. Such motions shall be made within thirty (30) days of the Effective Date. The following are specifically excluded from the scope and terms of the release contained in this Section 6.12(c)2: (i) Any civil, criminal or administrative claims arising under Title 26, U.S. Code (Internal Revenue Code); (ii) Any criminal liability; (iii) Except as explicitly stated in this Section, any administrative liability, including mandatory exclusion from federal health care programs; (iv) Any claims based upon such obligations as are created by the Plan; (v) Any express or implied warranty claims or other claims for defective or deficient products or services, including quality of goods and services, provided by the Ventas Entities, except as expressly set forth in the Covered Conduct; (vi) Any claims for personal injury or property damage or for other consequential damages arising from the Covered Conduct, except as expressly set forth in the Covered Conduct; (vii) Any claims based on a failure to deliver items or services due, except as expressly set forth in the Covered Conduct; (viii) Any claims against any individuals, including officers, directors and employees; and (ix) Any findings on a HCFA Form 2567, Statement of Deficiencies (or successor form). The foregoing exclusions are for the purposes of Section 6.12 only and shall not limit the provisions of Article 11 of the Plan. 3. The Debtors' Release of the United States. (i) The Debtors release the United States of all claims or causes of action for services rendered or products supplied to beneficiaries under Medicare, up to and including the Petition Date; the Prospective Payment System inflation adjustments for the period July 1, 1998 through June 30, 1999; and claims or causes of action for services rendered or products supplied to beneficiaries under CHAMPUS, up to and including the Petition Date; provided, however, that, as of, and conditioned upon, the Effective Date, the United States shall remain obligated to the Debtors for any underpayment in Medicare cost report years ending after the Petition Date; provided further, however, that for any underpayment in Medicare cost report years within which the Petition Date falls, the United States is obligated only for the pro rata amount of the underpayment attributable to the portion of the cost report year following the Petition Date (for purposes of calculating the pro rata amount attributable to the portion of the cost report year following the Petition Date, the total underpayment for that cost report year will be multiplied by a fraction, the numerator of which is the amount of days following the Petition Date in the cost report year, and the denominator of which is 365). The release set forth in this paragraph is given in exchange for the release of the United States Claims other than for those claims brought pursuant to the False Claims Act, 31 U.S.C. ss.ss. 3729-3733, including any alternative remedies thereto. (ii) The Debtors release the United States and each of their agencies, officers, agents, employees and contractors from all claims and causes of action (including attorneys fees, costs and expenses), adjustments, and set-offs of any kind for the United States Claims, including the investigation of the Covered Conduct, and the Government Settlement. The release set forth in this paragraph is given in exchange for the release of the United States Claims brought pursuant to the False Claims Act, 31 U.S.C. ss.ss. 3729-3733, including any alternative remedies thereto. (iii) The Debtors will not seek payment for any of the Medicare, Medicaid or CHAMPUS claims released by the Government Settlement from any Medicare, Medicaid or CHAMPUS beneficiaries or their parents or sponsors. The Debtors waive any causes of action against these beneficiaries or their parents or sponsors based on the claims released under the Government Settlement. (iv) Debtors waive and will not assert any defenses they may have to any criminal prosecution or administrative action relating to the United States Claims, to the extent such defenses are based in whole or in part on a contention that, under the Double Jeopardy Clause in the Fifth Amendment of the Constitution, or under the Excessive Fines Clause in the Eighth Amendment of the Constitution, the Government Settlement bars a remedy sought in such criminal prosecution or administrative action. Debtors agree that the Government Settlement is not punitive in purpose or effect. Nothing in this paragraph or any other provision of this Plan constitutes an agreement by the United States concerning the characterization of the Government Settlement for purposes of the Internal Revenue Laws, Title 26 of the United States Code. 4. THE VENTAS ENTITIES' RELEASE OF THE UNITED STATES. (i) The Ventas Entities release the United States of all claims or causes of action for services rendered or products supplied to beneficiaries under Medicare up to and including the Petition Date; the Prospective Payment System inflation adjustments for the period July 1, 1998 through June 30, 1999; and all claims or causes of action for services rendered or products supplied to beneficiaries under CHAMPUS, up to and including the Petition Date. The release set forth in this paragraph is given in exchange for the release of the United States Claims other than for those claims brought pursuant to the False Claims Act, 31 U.S.C. ss.ss. 3729-3733, including any alternative remedies thereto. (ii) The Ventas Entities release the United States and each of their agencies, officers, agents, employees and contractors from all claims and causes of action (including attorneys fees, costs and expenses), adjustments, and set-offs of any kind for the United States Claims, including the investigation of the Covered Conduct, and the Government Settlement. The release set forth in this paragraph is given in exchange for the release of the United States Claims brought pursuant to the False Claims Act, 31 U.S.C. ss.ss. 3729-3733, including any alternative remedies thereto. (iii) The Ventas Entities will not seek payment for any of the Medicare, Medicaid or CHAMPUS claims released by the Government Settlement from any Medicare, Medicaid or CHAMPUS beneficiaries or their parents or sponsors. The Ventas Entities waive any causes of action against these beneficiaries or their parents or sponsors based on the claims released under the Government Settlement. (iv) The Ventas Entities waive and will not assert any defenses they may have to any criminal prosecution or administrative action relating to the United States Claims, to the extent such defenses are based in whole or in part on a contention that, under the Double Jeopardy Clause in the Fifth Amendment of the Constitution, or under the Excessive Fines Clause in the Eighth Amendment of the Constitution, the Government Settlement bars a remedy sought in such criminal prosecution or administrative action. The Ventas Entities agree that this settlement is not punitive in purpose or effect. Nothing in this paragraph or any other provision of this Plan constitutes an agreement by the United States concerning the characterization of the Government Settlement for purposes of the Internal Revenue Laws, Title 26 of the United States Code. (d) ADDITIONAL TERMS OF GOVERNMENT SETTLEMENT. 22. The Government Settlement set forth in this Section 6.12 of the Plan is intended for the benefit of the Debtors, the Ventas Entities and the United States only, and by the settlement provided in this Section 6.12, the parties do not release any claims against any other person, except as expressly provided herein. 23. By executing Schedule B to the Plan, the Debtors, the Ventas Entities and the United States acknowledge and agree to be bound by the terms of this Plan. In the event of a default under Section 6.12 by either the Debtors, the Ventas Entities or the United States, the sole remedy available to the other parties shall be enforcement of the defaulting party's obligations under the Plan. The Debtors and the Reorganized Debtors are not liable for the Ventas Entities' obligations under this Plan. The Ventas Entities are not liable for the Debtors' obligations under this Plan. The United States is not liable for the obligations of any other party to this Plan to any other Person, whether a party to this Plan or not. 24. The Debtors, the Ventas Entities and the United States shall each bear their own legal and other expenses incurred in connection with the negotiation of the Government Settlement, and the payment by the Debtors and Ventas of the amounts set forth in Section 6.12(a)1 and Section 6.12(b)12, respectively, except that the reasonable legal fees, costs and expenses for the joint defense of the Debtors and the Ventas Entities relating to the matters covered by the Government Settlement are to be paid by the Debtors. 25. Subject to its receipt of the payments required by this Section, the United States agrees to pay 15 percent of the proceeds paid by the Debtor and the Ventas Entities to resolve all claims for the Covered Conduct as to relators in the Qui Tam Actions, as listed on Exhibit 5 to the Plan, and in accordance with the allocations set forth in Schedule E attached hereto. 26. Pursuant to Bankruptcy Rule 9019, and any applicable federal, nonbankruptcy and state law, including, but not limited to 31 U.S.C. ss. 3730(c)(2)(B), the Government Settlement as set forth in this Section 6.12, and each of the specific settlement amounts enumerated in Schedule E attached hereto, shall constitute a good faith compromise and full and final monetary settlement of the United States Claims, which compromise and settlement is in the best interests of creditors and the Debtors' estates and the Government Settlement and each enumerated settlement amount are fair, adequate and reasonable under all the circumstances. Confirmation of the Plan by the Bankruptcy Court shall constitute approval of the Government Settlement. 27. The Debtors and the Ventas Entities agree to pay the attorney's fees and expenses of relators who filed Qui Tam Actions, as listed on Exhibit 5 to the Plan, in accordance with Schedule A attached hereto. Article VII PROVISIONS FOR TREATMENT OF DISPUTED, CONTINGENT AND UNLIQUIDATED CLAIMS AND ADMINISTRATIVE EXPENSES AND FOR DEEMED ALLOWANCE OF CLAIMS 7.01. CHARACTERIZATION OF DISPUTED CLAIMS. Pursuant to subsection 1111(a) of the Bankruptcy Code, a proof of Claim is deemed Filed under section 501 of the Bankruptcy Code if that Claim is included in the Schedules Filed under section 521 or 1106(a)(2) of the Bankruptcy Code and is deemed Filed in the amount listed on the Schedules, except if the Claim is scheduled as disputed, contingent, or unliquidated. Such a disputed, contingent, or unliquidated claim must be asserted by its holder, or an indenture trustee representing such holder, by the timely filing of a proof of claim. If a proof of claim is not filed in a timely manner, the Claim may be deemed to be barred or disallowed. Any Administrative Claim that is not timely filed in accordance with Section 2.02 of this Plan shall be barred. 7.02. RESOLUTION OF CONTESTED CLAIMS AND INTERESTS. The Debtors and Reorganized Debtors shall have the right to object to and contest the allowance of any Claim or Interest filed or deemed filed against the Debtors, whether or not such Claim or Interest was scheduled as disputed, contingent or unliquidated, other than Claims allowed pursuant to Section 7.04 of the Plan. Any objections to Claims and Interests shall be Filed by the latest of (i) one hundred twenty (120) days after the Effective Date, (ii) thirty (30) days after a Proof of Claim or Proof of Interest is filed and properly served upon the Debtors, or (iii) such later date as may be fixed by the Court. 7.03. RESERVES AND DISTRIBUTIONS. The Debtors may fund the payment of disputed Claims in Class 3A and Class 3B, to the extent such Claims are Allowed Claims, through the Reorganized Debtors' cash flows and the Exit Facility; however if, and only if determined necessary by the Court with respect to any particular Claim, the Debtors shall reserve in a trust account for the benefit of holders of Allowed Class 3A and Allowed Class 3B Claims, Cash, securities or other property in an amount determined by the Court on account of disputed Claims in Class 3A and Class 3B, from which distributions shall be made in accordance with Section 6.01 of the Plan. Any amounts that remain in the trust account following the resolution and payment of all disputed Claims in Class 3A and Class 3B shall be paid to the Reorganized Debtors. 7.04. ALLOWED CLAIMS. The following Claims shall be deemed allowed for the purposes of their treatment under this Plan and conditioned upon the Effective Date occurring: (a) The Senior Debt Claims shall be allowed in the aggregate amount equal to $522 million in principal, plus accrued but unpaid interest, fees, costs and expenses to the Effective Date; (b) The Ventas Claim shall be deemed allowed and treated as provided in the Plan; (c) The Subordinated Noteholder Claims, shall be allowed as follows: the Claims on the 1998 Notes shall be allowed in the aggregate principal amount of $300 million plus accrued but unpaid interest to the Petition Date, and the Claims on the 1997 Notes shall be allowed in the aggregate principal amount of $2,391,000 plus accrued but unpaid interest to the Petition Date; (d) The United States Claims against the Debtors (other than the PIP Claim) shall be allowed in the aggregate amount of $25.9 million, consisting of $20.9 million to be paid to resolve the specified claims for the Covered Conduct and $5 million to be paid to resolve nonfraud monetary Medicare program claims; (e) The PIP Claim shall be an Allowed Claim; and (f) The Corporate Indemnities and Indemnification Claims shall survive and be allowed as set forth in Section 12.01, as limited by Section 12.03 of the Plan, without any further necessary approval or action. To the extent this Plan is not confirmed or if the Effective Date does not occur, then the allowance of these Claims shall not occur under this Plan and such Claims shall remain subject to allowance and objection with all rights reserved to both the claimants and the Debtors. Article VIII IMPLEMENTATION OF THE PLAN 8.01. DEEMED CONSOLIDATION OF DEBTORS FOR PLAN PURPOSES ONLY. Subject to the occurrence of the Effective Date, the Debtors shall be deemed consolidated for the following purposes under the Plan: (i) no distributions shall be made under the Plan on account of intercompany claims among the Debtors; (ii) no distributions shall be made under the Plan on account of Subsidiary Ownership Interests; (iii) all guarantees by any of the Debtors of the obligations of any other Debtor arising prior to the Effective Date shall be deemed eliminated so that any Claim against any Debtor and any guarantee thereof executed by any other Debtor and any joint or several liability of any of the Debtors shall be deemed to be one obligation of the deemed consolidated Debtors; and (iv) each and every Claim Filed or to be Filed in the Reorganization Case of any of the Debtors shall be deemed Filed against the deemed consolidated Debtors, and shall be deemed one Claim against and obligation of the deemed consolidated Debtors. Such deemed consolidation, however, shall not (other than for purposes related to funding distributions under the Plan and as set forth above in this Section 8.01) affect: (i) the legal and organizational structure of the Reorganized Debtors; (ii) intercompany claims by and among the Debtors or Reorganized Debtors; (iii) Subsidiary Ownership Interests; (iv) pre and post Petition Date guarantees, liens and security interests that are required to be maintained (a) in connection with executory contracts or unexpired leases that were entered into during the Reorganization Cases or that have been or will be assumed, (b) pursuant to the Plan, (c) in connection with the Amended Ventas Leases, or (d) in connection with any financing entered into by the Reorganized Debtors on the Effective Date; and (v) distributions out of any insurance policies or proceeds of policies. 8.02. CONTINUED CORPORATE EXISTENCE AND VESTING OF ASSETS IN THE REORGANIZED DEBTORS. Each of the Debtors shall, as a Reorganized Debtor, continue to exist after the Effective Date as a separate legal entity, with all powers of a corporation, limited liability company or general or limited partnership, as applicable, under the laws of their respective states of incorporation or organization and without prejudice to any right to alter or terminate such existence (whether by merger or otherwise) under such applicable state law. The Reorganized Debtors shall be revested with their assets as provided in Section 11.06 of the Plan. On or prior to the Effective Date, the Debtors intend to amend the SERP to eliminate certain change in control provisions and to terminate the SERP. 8.03. AMENDED AND RESTATED CERTIFICATE OF INCORPORATION. On the Effective Date, Reorganized Vencor shall file the Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware in accordance with Section 103 of the Delaware General Corporation Law. The Amended and Restated Certificate of Incorporation of Reorganized Vencor will, among other things, provide (to the extent necessary to effectuate the terms of the Plan) for (i) the authorization of 39,000,000 shares of the New Common Stock, 15,000,000 of which will be distributed to creditors, and which issuance is subject to dilution from the New Warrants, New Stock Option Plan and Restricted Share Plan, which also are being distributed under the Plan; (ii) the authorization of 1,000,000 shares of preferred stock; (iii) the prohibition of the issuance of non-voting equity securities; (iv) the elimination of staggered terms for directors and an initial board of seven members; (v) general indemnification of the officers and directors of Reorganized Vencor, and the ratification of the Corporate Indemnities as provided in Section 12.03 of the Plan; (vi) certain provisions relating to mandatory redemptions from Ventas and ownership limits relating to one shareholder of Ventas which are intended to minimize the likelihood of compromising Ventas's REIT status; and (vii) the change of Reorganized Vencor's corporate name. Confirmation of the Plan shall constitute an election by Vencor, Inc. not to be governed by Section 203 of the Delaware General Corporation Law. The Certificate of Incorporation of each of the Reorganized Debtors other than Reorganized Vencor shall be amended to prohibit the issuance of non-voting equity securities if necessary, such amendment to be substantially in the form of Exhibit 13 to the Plan Supplement. 8.04. AMENDED AND RESTATED BY-LAWS. Reorganized Vencor shall adopt and effect the Amended and Restated Certificate of Incorporation and Amended and Restated By-laws in accordance with Section 303 of the Delaware General Corporation Law. 8.05. NEW SECURITIES AND COLLATERAL DOCUMENTS. On the Effective Date, in accordance with the provisions of Article VI of the Plan, the relevant Reorganized Debtors (i) shall issue the New Senior Secured Notes, the New Common Stock and the New Warrants, (ii) shall execute and deliver the New Collateral Documents, the New Senior Secured Credit Agreement, the New Warrant Agreement and the Registration Rights Agreement and (iii) shall enter into the Exit Facility. 8.06. CANCELLATION OF SECURITIES AND AGREEMENTS. Except as expressly provided in the Plan or in the Confirmation Order, on the Effective Date, the Debtors' Senior Credit Agreement, Subordinated Notes, 1997 Indenture, 1998 Indenture, Old Common Stock, Old Preferred Stock, Put Rights, stock options, stock-based compensation agreements and any and all documentation relating thereto shall be cancelled and all obligations of the Debtors under or in respect of any of the foregoing shall be terminated, in exchange for the receipt of Cash, if applicable, the New Senior Secured Notes, New Common Stock, the New Warrants, and other obligations under the Plan. All payments made or to be made by the Debtors and or pursuant to any charging lien under the 1997 Indenture and/or the 1998 Indenture for fees, costs and expenses in or in connection with the Bankruptcy Cases, or in connection with the Plan and incident to the Bankruptcy Cases shall be subject to approval of the Court as being reasonable following application and the opportunity for notice and a hearing. Pursuant to the foregoing, the 1997 Indenture Trustee and/or the 1998 Indenture Trustee shall file an application with the Court seeking the allowance and payment on account of its asserted Administrative Claim and its charging lien, if any, pursuant to Section 2.02(a) of the Plan. Upon payment in full of the reasonable fees and expenses of the Indenture Trustees upon approval of the Court and in accordance with the foregoing procedure, the charging liens of the Indenture Trustees on the distributions to the holders of the Subordinated Notes shall be released and extinguished. 8.07. MANAGEMENT OF THE REORGANIZED DEBTORS. On the Effective Date, the operation of the Reorganized Debtors shall become the general responsibility of their respective Boards of Directors or other internal governance as applicable with respect to limited liability companies or partnerships, who shall, thereafter, have the responsibility for the management, control and operation of the Reorganized Debtors. The Board of Directors of Reorganized Vencor shall be comprised of seven directors, consisting of the following nominees: (i) the current Chairman of the Board, Chief Executive Officer and President of Vencor, Inc., Edward Kuntz; (ii) four directors selected by a majority in amount of the holders of the Senior Debt Claims; and (iii) two directors selected by a majority in amount of the Subordinated Noteholder Claims. The identity of each of the nominees shall be announced prior to the hearing with respect to confirmation of the Plan. Certain of the holders constituting a majority of New Common Stock may agree in advance to vote in favor of the members of the Board of Directors in office on the Effective Date for a certain period of time, in which case such directors will remain in office beyond the annual meeting of shareholders. The Boards of Directors or other current internal governance, as applicable, of the other Reorganized Debtors shall remain the same. Such persons shall be deemed elected pursuant to the Confirmation Order, and such elections shall be effective on and after the Effective Date, without any requirement of further action by stockholders or other owners of the Reorganized Debtors. 8.08. OFFICERS. On the Effective Date, the existing officers of the Reorganized Debtors shall remain as officers and shall continue to serve until such time as they may resign, be removed or be replaced by the Boards of Directors of the Reorganized Debtors. 8.09. SATURDAY, SUNDAY OR LEGAL HOLIDAY. If any payment or act under the Plan (other than under the Plan Documents) is required to be made or performed on a date that is not a Business Day, then the making of such payment or the performance of such act may be completed on the next succeeding business day, but shall be deemed to have been completed as of the required date. 8.10. OTHER DOCUMENTS AND ACTIONS. The Debtors and the Reorganized Debtors may execute such documents and take such other actions as is necessary to effectuate the transactions provided in the Plan. 8.11. CORPORATE ACTIONS. The issuance of the New Senior Secured Notes pursuant to the New Senior Secured Credit Agreement, the New Common Stock, the New Warrants, the performance under the New Stock Option Plan, Restricted Share Plan, the Long-Term Incentive Plan, the Amended Ventas Leases and all other Plan Documents, the adoption of the Amended and Restated Certificate of Incorporation and By-laws by Reorganized Vencor and other Reorganized Debtors, as necessary, the selection of certain directors and officers of the Reorganized Debtors, the execution and delivery of any documents to be executed and delivered under the Plan, and other matters under the Plan involving the corporate structure of Vencor, Inc. or corporate action by Vencor, Inc. and the other Debtors shall be deemed to have occurred and be effective on and after the Effective Date without any requirement of further action by stockholders or directors of the Debtors as Reorganized Debtors pursuant to and in accordance with Section 303 of the Delaware General Corporation Law and any analogous and applicable provisions in other states' laws. Without limiting the foregoing, upon entry of the Confirmation Order by the Clerk of the Court, the filing by Vencor, Inc. or Reorganized Vencor of the Amended and Restated Certificate of Incorporation shall be authorized and approved in all respects, to be operative on the Effective Date. On the Effective Date, or as soon thereafter as is practicable, pursuant to applicable state law, Reorganized Vencor shall file with the applicable state governmental agencies or offices its Amended and Restated Certificate of Incorporation and By-laws. 8.12. REGISTRATION RIGHTS. On the Effective Date, Reorganized Vencor shall execute and deliver the Registration Rights Agreement, which will, among other things, provide that (i) Reorganized Vencor shall file a shelf registration statement with respect to the New Common Stock and New Warrants as soon as practicable after the Effective Date but in no event no later than 120 days after the Effective Date and (ii) Reorganized Vencor will use its reasonable best efforts to cause such registration statement to be declared effective as soon as practicable and to keep such registration statement continuously effective for a period of two years with respect to such securities (subject to commercially reasonable exceptions). Holders of 10% or more (or 9.99% or more in the case of Ventas Realty, Limited Partnership, or its designee, if any, to which New Common Stock is issued under Section 5.04(ii) of the Plan) of the New Common Stock (either initially or upon exercise of New Warrants) and the New Warrants (on a fully converted basis) will be entitled to participate in the Registration Rights Agreement by executing and delivering the same no later than thirty (30) days after the Effective Date. 8.13. LISTING OF THE NEW COMMON STOCK AND NEW WARRANTS. Reorganized Vencor shall use commercially reasonable efforts necessary to facilitate a public market for the New Common Stock and New Warrants of the Reorganized Vencor including, but not limited to, (i) issuing appropriate releases of information and otherwise complying with the requirements of paragraph (c) of Rule 144 under the Securities Act of 1933; and (ii) using its commercially reasonable efforts to obtain the listing of the New Common Stock and New Warrants on a national securities exchange or NASDAQ. 8.14. FRACTIONAL SHARES - DISTRIBUTION OF NEW COMMON STOCK AND NEW WARRANTS. Notwithstanding any other provision of the Plan (except for and subject to the Ventas REIT Limitation in Section 5.04(ii) herein), only whole numbers of New Warrants and shares of New Common Stock will be issued. When any distribution on account of an Allowed Claim would otherwise result in the issuance of a number of New Warrants or shares of New Common Stock that is not a whole number, the actual distribution of such New Warrants and shares of such stock will be rounded to the next lower whole number. The total number of New Warrants and shares of New Common Stock to be distributed on account of Allowed Claims will be adjusted as necessary to account for the rounding provided in this Section, and any New Warrants and shares of New Common Stock that are not distributed as a result of such rounding shall be released to the Reorganized Debtors. No consideration will be provided in lieu of fractional New Warrants or shares of New Common Stock that are rounded down. 8.15. CLAIMS OF SUBORDINATION. (a) To the fullest extent permitted by applicable law, all Claims against and Interests in the Debtors, and all rights and claims between or among creditors or holders of Interests relating in any manner whatsoever to Claims against or Interests in the Debtors, based on any subordination rights, either contractual, legal or equitable, shall be terminated on the Effective Date and discharged in the manner provided in this Plan, and all such Claims, Interests and rights so based and all such subordination rights to which any Entity may be entitled shall be irrevocably waived by the acceptance by such Entity of this Plan or of any distribution pursuant to this Plan. Except as otherwise provided in this Plan and to the fullest extent permitted by applicable law, the rights afforded and the distributions that are made in respect of any Claims or Interests hereunder shall not be subject to levy, garnishment, attachment or like legal process by any holder of a Claim or Interest by reason of any subordination rights, either contractual, legal or equitable, so that, notwithstanding any such subordination rights, each holder of a Claim or Interest shall have and receive the benefit of the rights and distributions set forth in this Plan. (b) Pursuant to Bankruptcy Rule 9019, and any applicable state law, and as consideration for the treatment and other benefits provided under this Plan, the provisions of this Section 8.15 shall constitute a good faith compromise and settlement of any causes of action relating to the Plan or the treatment of Classes of Claims and Interests under this Plan which causes of action might be available to any holder of a Claim or Interest against or involving another holder of a Claim or Interest solely in its capacity as such. Such compromise and settlement is in the best interests of creditors and holders of Interests and is fair, equitable and reasonable. The settlement set forth in Section 8.15(a) shall be approved by the Court as a settlement of all such causes of action. The Court's approval of the settlement pursuant to Bankruptcy Rule 9019 and its finding that this is a good faith and reasonable settlement pursuant to any applicable state law, including, without limitation, the laws of the states of Kentucky, New York, and Delaware, given and made after due notice and opportunity for hearing, shall bar any cause of action relating to the Plan or the treatment of Classes of Claims and Interests under, the Plan and which could be brought by any holder of a Claim or Interest against another holder of a Claim or Interest solely in its capacity as such, provided however, the foregoing shall not impair any party's rights, benefits or obligations under the Plan or Plan Documents. 8.16. SETTLEMENTS UNDER BANKRUPTCY RULE 9019. The Plan incorporates a series of proposed compromises and settlements under Bankruptcy Rule 9019 of certain issues which were disputed by the Debtors, the Ventas Entities, the United States, the Creditors Committee, the holders of the Senior Debt Claims, the holders of the Subordinated Notes, the holders of the Put Rights and others, including without limitation, the treatment of the Ventas Claims and the Class 6 Claims and the provisions of the Government Settlement set forth in Section 6.12 of the Plan, and the treatment of all other Classes of Claims and Interests under the Plan. Upon the Effective Date, each of such settlements shall be binding upon the Debtors, all holders of Claims and/or Interests and all Persons receiving any payment or other distributions under the Plan. Article IX ACCEPTANCE OR REJECTION OF THE PLAN 9.01. PRESUMED ACCEPTANCE OF PLAN. Classes 1 and 2 are Unimpaired under the Plan, and, therefore, conclusively are presumed to have accepted the Plan in accordance with section 1126(f) of the Bankruptcy Code. 9.02. DEEMED NON-ACCEPTANCE OF PLAN. Classes 7B, 10, 11A, 11B, 12A and 12B have been deemed to have rejected the Plan. The Debtors are seeking permission from the Court not to solicit Classes 7B, 10, 11A, 11B, 12A and 12B given that the Debtors intend to treat these classes of Claims and Interests under section 1129(b) of the Bankruptcy Code. 9.03. VOTING CLASSES. Each holder of an Allowed Claim or an Allowed Interest in Classes 3A, 3B, 4, 5, 6, 7A and 8 shall be entitled to vote to accept or reject the Plan. 9.04. ACCEPTANCE BY IMPAIRED CLASSES. An Impaired Class of Claims shall have accepted the Plan if (i) the holders (other than those designated under section 1126(e) of the Bankruptcy Code) of at least two-thirds in amount of the Allowed Claims actually voting in such Class have voted to accept the Plan and (ii) the holders (other than those designated under section 1126(e) of the Bankruptcy Code) of more than one-half in number of the Allowed Claims actually voting in such Class have voted to accept the Plan. An Impaired Class of Interests shall have accepted the Plan if the holders (other than those designated under section 1126(e) of the Bankruptcy Code) of at least two-thirds in amount of the Allowed Interests actually voting in such Class have voted to accept the Plan. 9.05. NON-CONSENSUAL CONFIRMATION. In light of the fact that Classes 7B, 10, 11A, 11B, 12A and 12B are deemed to have rejected the Plan and in the event that any other Impaired Class of Claims or Interests does not accept the Plan in accordance with section 1126 of the Bankruptcy Code, the Debtors hereby request that the Court confirm the Plan in accordance with section 1129(b) of the Bankruptcy Code. Subject to section 1127 of the Bankruptcy Code, the Debtors reserve the right to modify the Plan to the extent that confirmation pursuant to section 1129(b) of the Bankruptcy Code requires modification. Article X CONDITIONS PRECEDENT 10.01. CONDITIONS TO CONFIRMATION. The following are each conditions to entry of the Confirmation Order: (a) The Confirmation Order must include provisions: (i) authorizing Reorganized Vencor to adopt and file the Amended and Restated Certificate of Incorporation and By-laws and authorizing the other Reorganized Debtors to adopt and file amended and restated certificates of incorporation and By-laws if necessary or appropriate; (ii) authorizing the issuance of the New Common Stock, New Warrants, New Stock Options and New Common Stock issued under the Restricted Share Plan and authorizing the implementation of the Long-Term Incentive Plan; (iii) authorizing the Debtors' and Reorganized Debtors' assumption of the Five Ventas Leases, and the simultaneous amendment and restatement of the Five Ventas Leases in accordance with the terms of the Amended Ventas Leases as of the Effective Date by execution of the Amended Ventas Leases, without further cure or adequate assurance of future performance by the Debtors being required for purposes of satisfying section 365 of the Bankruptcy Code other than as provided for in the Amended Ventas Leases; (iv) authorizing the execution and delivery of the New Senior Secured Credit Agreement, the New Senior Secured Notes and the New Collateral Documents; (v) authorizing all of the other transactions contemplated by the Plan and the Plan Documents in order to effectuate the Plan; (vi) exempting the New Warrants, the New Common Stock, New Stock Options and New Common Stock issued under the Restricted Share Plan from registration under the Securities Act and state or local laws, pursuant to section 1145 of the Bankruptcy Code; (vii) making the provisions of the Confirmation Order non-severable and mutually dependent; (viii) approving the Government Settlement and the allowance and treatment of the Class 6 Claims and the Debtors' payment of such Claims, as set forth in Sections 5.05 and 6.12 of the Plan, as a settlement under Rule 9019 of the Bankruptcy Rules, conditioned upon confirmation of the Plan and the Effective Date occurring, and approving the Corporate Integrity Agreement; (ix) approving all settlements other than the Government Settlement set forth in this Plan under Rule 9019 of the Bankruptcy Rules; and (x) approving and incorporating by reference the discharge, release and injunctive provisions of Sections 11.01 through 11.03 of the Plan. (b) The Debtors must have legally binding and enforceable commitments for the Exit Facility on or before the Confirmation Date. 10.02. CONDITIONS TO THE EFFECTIVE DATE. The following are each conditions to the Effective Date: (a) The Confirmation Order shall contain the provisions set forth in, and shall be a Final Order in accordance with, Section 10.01 of the Plan (unless waived in accordance with the provisions of Section 10.03 of the Plan). (b) To the extent that it has not terminated prior thereto, the DIP Credit Agreement shall have been terminated, and all amounts, if any, payable thereunder shall have been paid to the DIP Agent. (c) Execution and the delivery of the Plan Documents to be entered into as of the Effective Date (or as to the New Common Stock and New Warrants, issuance and delivery as provided in the Plan). (d) No event of default exists under the Ventas Leases, Exit Facility or New Senior Secured Notes that (i) has not been waived by all parties to such agreements and (ii) would result in the existence of a default under one or more of such agreements on the Effective Date that, based on the Debtors' knowledge as of the Effective Date, the Reorganized Debtors will not be able to cure pursuant to the terms of the relevant agreement. (e) The Ventas Rent Stipulation has not terminated prior to the Effective Date and the Tax Stipulation has not been terminated by the Debtors prior to the Effective Date (f) The Debtors shall not have renewed or extended after December 10, 2000 any lease with a third party as to which a Ventas Entity may have liability thereunder because it, an affiliate or a predecessor was the tenant prior to the assignment of the lease to the Debtors unless the Debtors first have obtained a release of the Ventas Entities from such liability. 10.03. WAIVER OF CONDITIONS. Subject to Section 14.12 of the Plan, the Debtors may waive any condition set forth in this Article X at any time, without leave of or notice to the Court, and without any formal action other than proceeding to consummate the Plan. Article XI EFFECT OF PLAN CONFIRMATION 11.01. DISCHARGE AND RELEASE. Except as otherwise expressly provided in the Plan or Confirmation Order, as of the Effective Date, the Debtor Parties (but as to any Debtor Representative only with respect to claims arising from such Person's relationship with the Debtors which qualifies such Person as a Representative) shall be discharged and released forthwith from, and the Confirmation Order shall operate as an injunction against the commencement or continuation of any action, the employment of process, or any act to collect, recover or offset, any Claim (including any claim for contribution or indemnity relating thereto) and any "debt" (as that term is defined in section 101(12) of the Bankruptcy Code) and any Interest (or Claims or debt related thereto) from or against the Debtor Parties or the Reorganized Debtors, including but not limited to claims set forth in and arising from or relating to the proofs of claim that were filed by the United States, the Class 6 Claims (including third party claims under 31 U.S.C. ss. 3730(b) or (d)), the holders of the Senior Debt Claims, the Ventas Entities, holders of the Subordinated Noteholder Claims and the holders of the Claims in Classes 3A and 3B, and including, without limitation, with respect to the Debtors and Reorganized Debtors to the extent provided for or authorized by sections 524 and 1141 thereof, and the Debtor Parties' and the Reorganized Debtors' liability in respect thereof shall be extinguished completely, whether reduced to judgment or not, liquidated or unliquidated, contingent or noncontingent, asserted or unasserted, fixed or not, matured or unmatured, disputed or undisputed, legal or equitable, known or unknown, or arising from any agreement of the Debtors entered into or obligation of any kind of the Debtors or their predecessors in interest incurred before the Confirmation Date, or from any conduct of the Debtor Parties occurring prior to the Confirmation Date or that otherwise arose before the Confirmation Date (including, without limitation, all interest, if any, on any such debts, whether such interest accrued before or after the date of commencement of the applicable Reorganization Cases), and the Debtors Parties and the Reorganized Debtors shall be discharged from any such liability that is of a kind specified in sections 502(g), 502(h) and 502(i) of the Bankruptcy Code, whether or not a proof of claim is filed or deemed filed under section 501 of the Bankruptcy Code, such Claim is allowed under section 502 of the Bankruptcy Code, or the holder of such Claim has accepted the Plan, and all of such Claims that are pre-petition derivative Claims shall be released; provided however that the foregoing shall not release and discharge the Debtor Parties from their obligations under the Plan or the Plan Documents; provided further, that nothing in this Section shall affect, limit, or enlarge the discharge provided the Debtors under section 1141 of the Bankruptcy Code and provided further that nothing herein shall affect, limit or enlarge the discharge of the Debtor Parties other than the Debtors with respect to Classes 11A, 11B, 12A and 12B; provided further, that with respect to claims of the United States, the foregoing release and discharge of Representatives applies only to Class 6 Claims, and the release and discharge of the United States of the Representatives shall only include those monetary claims, demands, debts, rights, causes of action and liabilities against a Representative who is a current or former officer, director or employee of either a Debtor or a Nondebtor Subsidiary and is entitled to indemnification, contribution and/or other or similar relief from a Debtor, a Ventas Entity and/or Nondebtor Subsidiary with respect thereto (the "Vencor Indemnified Representative"), and only to the extent that such claims exceed the lesser of (i) an amount equal to $13 million minus all other Class 6 Claims in the aggregate against any or all of the Vencor Indemnified Representatives and the Ventas Indemnified Representatives that are satisfied from any available insurance proceeds after the Effective Date, and (ii) any insurance proceeds actually available to satisfy such claims; and provided that the Debtors' liability, if any, for any Class 6 Claim against a Debtor that (i) arises from the Debtor's relationship with a Nondebtor Subsidiary and (ii) would have been discharged or released herein if the Nondebtor Subsidiary obtained the same discharges and releases provided herein for the Debtor, shall in no event exceed the value of the Debtor's investment in such Nondebtor Subsidiary as of the Confirmation Date (including all contingent assets and all contingent claims), and only to the extent the United States is unable to recover the full amount of its judgment from the Nondebtor Subsidiary or any other party responsible to pay for such judgment. 11.02(a) RELEASES OF THE DEBTORS. Except as otherwise provided expressly in the Plan or the Confirmation Order, as of the Effective Date, in consideration for, or as part of, the treatment accorded to the holders of Claims and Interests under the Plan, each holder of such Claims or Interests against or in the Debtors shall be deemed to have forever released, waived and discharged the Debtors from any and all claims, demands, debts, rights, causes of action or liabilities (other than the right to enforce the Debtors' or the Reorganized Debtors' obligations under the Plan or the Plan Documents), whether existing in law or in equity, whether based on tort, fraud, contract or otherwise liquidated or unliquidated, fixed or contingent, matured or unmatured, known or unknown, foreseen or unforeseen, then existing or thereafter arising, that are based in whole or in part on any act, omission or other occurrence taking place on or prior to the Confirmation Date, or which otherwise arose prior to the Confirmation Date, in accordance with the terms of the Plan; provided, however, that this section 11.02(a) shall not apply to the United States. 11.02(b) RELEASE OF THE VENTAS ENTITIES. In consideration for the respective Ventas Entities entering into the Amended Ventas Leases, entering into the agreements set forth in section 6.12 of the Plan and agreeing to the treatment set forth in the Plan, all of which are integral to the effectuation of this Plan and the consummation of the transactions contemplated hereby (including, without limitation, the funding of distributions to holders of Allowed Claims and the Debtors' performance under the contracts and leases assumed pursuant to this Plan), all of the following waivers, releases and related relief shall be provided by and binding on the Nondebtor Subsidiaries (other than Cornerstone Insurance Company), the Debtors, the Estates and the Reorganized Debtors and the holders of Claims in Classes 3A, 3B, 4, 7A and 8 of the Plan on their own behalf, as well as on behalf of all Entities authorized to bring suits in their name or on their behalf and all Entities they can legally bind to the Plan and Class 6 (including third party claims under 31 U.S.C. ss. 3730(b) or (d)): Except as otherwise expressly provided in the Confirmation Order, as of the Effective Date, the Ventas Parties (but as to any Ventas Representative only with respect to claims arising from such Person's relationship with the Ventas Entities which qualifies such Person as a Representative) shall be discharged and released forthwith from, and the Confirmation Order shall operate as an injunction against the commencement or continuation of any action, the employment of process, or any act to collect, recover or offset, any claim (as defined in section 101(5) of the Bankruptcy Code) (including any claim for contribution or indemnity relating thereto) and any "debt" (as that term is defined in section 101(12) of the Bankruptcy Code) against a Ventas Party as if such Ventas Party was a corporate debtor under a confirmed plan of reorganization under chapter 11 of the United States Code which plan provides for and effectuates a discharge to the full extent permitted by the Bankruptcy Code (including but not limited to any claim, demand, debt, right, cause of action or liability arising under sections 542, 543, 544, 547, 548, 549 or 550 of the Bankruptcy Code or any other applicable law providing for an avoidance or a recovery on account of or due to a preferential payment, fraudulent conveyance or fraudulent transfer, and any claims set forth in or arising from or relating to the proofs of claim that were filed by or claims otherwise held by or that could have been asserted by the holders of the Class 6 Claims with respect to the Class 6 Claims, the holders of the Senior Debt Claims (or anyone on their behalf), the Ventas Entities (or anyone on their behalf), holders of the Subordinated Noteholder Claims (or anyone on their behalf) and the holders of the Claims in Classes 3A and 3B (or anyone on their behalf)) and each Ventas Party's liability in respect thereof shall be extinguished completely, whether reduced to judgment or not, liquidated or unliquidated, contingent or noncontingent, asserted or unasserted, fixed or not, matured or unmatured, disputed or undisputed, legal or equitable, known or unknown, or arising from any agreement of a Ventas Party entered into or obligation of any kind of a Ventas Party or its predecessors in interest incurred before the Confirmation Date, or from any conduct of a Ventas Party occurring prior to the Confirmation Date or that otherwise arose before the Confirmation Date (including, without limitation, all interest, if any, on any such debts, whether such interest accrued before or after the date of commencement of the applicable Reorganization Cases); provided, however, that the foregoing shall not release and discharge a Ventas Party from its obligations under the Plan or the Plan Documents; and provided further that notwithstanding anything to the contrary in the foregoing, nothing herein shall apply to, affect or release direct claims held by creditors of the Debtors (other than a holder of a Class 6 Claim with respect to the Class 6 Claim) against the Ventas Parties that are unrelated to the "spin-off" of the Debtors from Ventas effectuated pursuant to the Agreement and Plan of Reorganization by and between Vencor, Inc. (now known as Ventas, Inc.) and Vencor Healthcare, Inc. (now known as Vencor, Inc.) dated April 30, 1998 and each of the documents, agreements and transactions entered into in connection therewith and unrelated to the Debtors (including, without limitation, their current or former operations or Ventas's or its predecessor's operations prior to the "spin-off") and that were not and could not have been asserted against the Debtors in the Reorganization Cases including but not limited to claims arising under the Amended Ventas Credit Agreement, and all agreements executed and delivered by the Ventas Entities in connection therewith, each as may be amended from time to time; and provided further that with respect to claims of the United States, the foregoing release and discharge applies only to Class 6 Claims, and the release and discharge by the United States of the Representatives shall only include those monetary claims, demands, debts, rights, causes of action and liabilities against a Representative who is a current or former officer, director or employee of a Ventas Entity and is entitled to indemnification, contribution and/or other or similar relief from a Debtor and/or a Ventas Entity and/or a Nondebtor Subsidiary with respect thereto (the "Ventas Indemnified Representative"), and only to the extent that such claims exceed the lesser of (i) an amount equal to $13 million minus all other Class 6 Claims in the aggregate against any or all of the Vencor Indemnified Representatives and the Ventas Indemnified Representatives that are satisfied from any available insurance proceeds after the Effective Date, and (ii) any insurance proceeds actually available to satisfy such claims; and provided further that nothing in Article XI shall release or discharge any indemnification claims of any current or former director, officer, or employee of any of the Ventas Entities against any of the Ventas Entities; and provided further that the Ventas Entities' liability, if any, for any Class 6 Claim against any of the Ventas Entities that (i) arises from the Ventas Entity's relationship with a Nondebtor Subsidiary and (ii) would have been discharged or released herein if the Nondebtor Subsidiary obtained the same discharges and releases provided herein for the Debtor, shall in no event exceed the value of the Debtor's investment in such Nondebtor Subsidiary as of the Confirmation Date (including all contingent assets and all contingent claims), and only to the extent the United States is unable to recover the full amount of its judgment from the Nondebtor Subsidiary or any other party responsible to pay for such judgment. 11.03. RELEASES BETWEEN THE DEBTORS, VENTAS, HOLDERS OF THE SENIOR DEBT AND THE SUBORDINATED NOTEHOLDERS. Except as otherwise provided in the Plan or the Confirmation Order and without limiting Sections 11.01, 11.02(a) or 11.02(b), on the Effective Date, in consideration for, or as part of, the treatment accorded to each of the Ventas Entities, each holder of a Senior Debt Claim and each Subordinated Noteholder under the Plan, Vencor, Inc., Vencor Operating, the other Debtors, the Nondebtor Subsidiaries (with respect to releases by or against the Ventas Entities, not including Cornerstone Insurance Company), the Ventas Entities, each holder of a Senior Debt Claim and each of the Subordinated Noteholders (each of the foregoing, solely in their capacities as such) (collectively, the "Releasors"), shall be deemed to have forever released, waived and discharged each other and each other's (and solely with respect to the Debtors, their own) respective officers, directors, employees, members, principals, attorneys, advisors, agents, professionals, representatives, benefit plan administrators or trustees (each of the foregoing solely in their capacity as such), from any and all claims, demands, debts, rights, causes of action or liabilities (other than the right to enforce each of the parties' respective obligations under the Plan or the Plan Documents), whether existing in law or in equity, whether based on tort, fraud, contract or otherwise liquidated or unliquidated, fixed or contingent, matured or unmatured, known or unknown, foreseen or unforeseen, then existing or thereafter arising, that are based in whole or in part on any act, omission or other occurrence taking place on or prior to the Effective Date, or which otherwise arose prior to the Effective Date (except for claims arising under the Plan or any Plan Document) and are related to the "spin-off," as defined below, of the Debtors from Ventas effectuated pursuant to the Agreement and Plan of Reorganization dated April 13, 1998, provided, however, that the foregoing shall not apply to or affect (i) direct claims between the parties that are unrelated to the "spin-off" of the Debtors from Ventas effectuated pursuant to the Agreement and Plan of Reorganization by and between Vencor, Inc. (now known as Ventas, Inc.) and Vencor Healthcare, Inc. (now known as Vencor, Inc.) dated April 30, 1998 and (ii) each of the documents, agreements and transactions entered into in connection with the Amended Ventas Credit Agreement and all agreements executed and delivered by the Ventas Entities in connection with the Amended Ventas Credit Agreement, each as may be amended from time to time; and provided further that nothing herein shall release or discharge any indemnification claims of any current or former director, officer, or employee of any of the Ventas Entities against any of the Ventas Entities. 11.04. TERM OF INJUNCTIONS OR STAYS. Unless otherwise provided, all injunctions or stays provided for in the Reorganization Cases pursuant to section 105 or 362 of the Bankruptcy Code or otherwise in effect on the Confirmation Date shall remain in full force and effect until the Effective Date. 11.05. EXCULPATION. None of the Debtors, the Reorganized Debtors, the Ventas Entities, any of their respective Representatives, benefit plan administrators or trustees, and their principals, advisors, professionals and agents, nor the Creditors' Committee, and its members, advisors, attorneys, professionals and agents, nor the holders of Senior Debt Claims, any of their officers, directors, employees, agents, legal or financial advisors, nor the Subordinated Noteholders, any of their officers, directors, employees, agents, legal or financial advisors (each of the foregoing solely in their capacity as such) shall have or incur any liability to any holder of a Claim or Interest for any good faith act or good faith omission in connection with the Debtors' restructuring, the Plan, or the Reorganization Cases, including all decisions, actions, inactions and alleged negligence or misconduct relating thereto, all prepetition activities leading to the promulgation and confirmation of the Plan, and administration of the Plan or the property to be distributed under the Plan; provided, however, such exculpation shall not relate to post Confirmation Date conduct deemed to be willful misconduct or gross negligence and shall not limit the claims and rights, if any, of the United States. 11.06. REVESTING. Except as otherwise expressly provided in the Plan, the New Collateral Documents, the New Senior Secured Credit Agreement, the New Senior Secured Notes, the Exit Facility, the Amended Ventas Leases or any other Plan Document, or any documents or instruments executed in accordance therewith, on the Effective Date, the Debtors and Reorganized Debtors will be vested with all of the property of their respective Estates free and clear of all Claims, Interests, liens, encumbrances, charges and other interests of creditors and equity security holders, and may operate their businesses free of any restrictions imposed by the Bankruptcy Code or by the Court, including, without limitation, performing any contracts or leases entered into or assumed by any of the Debtors after the Petition Date. The Debtors shall continue as debtors in possession under the Bankruptcy Code until the Effective Date, and thereafter, subject to the terms of the Plan, the Reorganized Debtors may operate their businesses free of any restrictions imposed by the Bankruptcy Code or the Court. 11.07. RETENTION OF CAUSES OF ACTION/RESERVATION OF RIGHTS. (a) Except for the Claims allowed pursuant to Section 7.04 and except as provided by Sections 11.02, 11.03 and 11.05 of the Plan, nothing contained in the Plan or the Confirmation Order shall be deemed to be a waiver or the relinquishment of any rights or causes of action that the Debtors, the debtors in possession or the Reorganized Debtors may have or which the Reorganized Debtors may choose to assert on behalf of their respective Estates under any provision of the Bankruptcy Code or any applicable non-bankruptcy law, including, without limitation, (i) any and all Claims against any Person or Entity, to the extent such Person or Entity asserts a crossclaim, counterclaim and/or Claim for setoff which seeks affirmative relief against the Debtors, the Reorganized Debtors, their officers, directors or representatives, (ii) the avoidance of any transfer by or obligation of the Debtors, or (iii) the turnover of any property of the Estates, all of which are expressly reserved by the Plan, or (iv) derivative actions currently pending on behalf of the Debtors which shall be dismissed by the Reorganized Debtors immediately following the Effective Date. (b) Nothing contained in the Plan or the Confirmation Order shall be deemed to be a waiver or relinquishment of any claim, cause of action, right of setoff, or other legal or equitable defense which the Debtors had immediately prior to the Petition Date, against or with respect to any Claim left Unimpaired by the Plan. The Reorganized Debtors shall have, retain, reserve and be entitled to assert all such claims, causes of action, rights of setoff and other legal or equitable defenses which they had immediately prior to the Petition Date fully as if the Reorganization Cases had not been commenced; and all of the Reorganized Debtors' legal and equitable rights respecting any claim left Unimpaired by the Plan may be asserted after the Confirmation Date to the same extent as if the Reorganization Cases had not been commenced. 11.08. POST CONSUMMATION EFFECT OF EVIDENCES OF CLAIMS OR INTERESTS. Unless expressly provided to the contrary in the Plan, outstanding notes, stock certificates and other evidences of Claims against or Interests in the Debtors in Classes 3A, 3B, 4, 6, 7A, 7B, 8, 10, 11A, 11B, 12A and 12B shall, effective upon, and subject to fulfillment of all conditions to, the Effective Date, represent only the right to participate in the distributions contemplated by the Plan, if any. Article XII TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES 12.01. ASSUMPTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES. On the Effective Date, and to the extent permitted by applicable law, all executory contracts, including without limitation the Employee Contracts, the Deferred Compensation Plan, the SERP and the unexpired leases of the Debtors, other than those set forth on Exhibit 8 to the Plan Supplement or as otherwise provided under Article V of the Plan, shall be assumed in accordance with the provisions of section 365 and 1123 of the Bankruptcy Code (but in the case of contracts evidencing Corporate Indemnities, such assumption shall be subject to the provisions of Section 12.03 of the Plan), unless such executory contracts or unexpired leases set forth on Exhibit 8 to the Plan Supplement are rejected by the Debtors' motion prior to the Confirmation Date or in connection with the confirmation hearing. Notwithstanding the foregoing, the Employee Contracts shall be assumed as amended (including the cancellation of any Put Rights in such contracts), and the Put Rights shall be rejected. Upon the assumption of the SERP and the Deferred Compensation Plan, all payments owed under each of the agreements shall be made in accordance with the terms of the agreement. Under the terms of each plan, emergence from bankruptcy would not constitute a change in control (as defined in each plan). Contracts or leases entered into after the Petition Date will be performed by the Reorganized Debtors in the ordinary course of business pursuant to their terms. 12.02. CLAIMS BASED ON REJECTION OF EXECUTORY CONTRACTS OR UNEXPIRED LEASES. Any Claims arising out of the rejection of contracts or leases must be Filed with the Court within the earlier of the time set by any Final Order rejecting an executory contract or unexpired lease or thirty (30) days after the Effective Date. Any Claims not Filed within such time will be forever barred from assertion against the Debtors or Reorganized Debtors, their estates and their property. Unless otherwise ordered by the Court or provided in this Plan, all such Claims for which proofs of Claim are required to be filed will be treated as Class 3A or 3B Claims. 12.03. SURVIVAL OF THE DEBTORS' CORPORATE INDEMNITIES. Except as provided in this Section, the Corporate Indemnities shall not be discharged or impaired by Confirmation of this Plan. Such obligations shall be deemed and treated as executory contracts to be assumed by the Debtors and the Reorganized Debtors pursuant to the Plan, and shall continue as obligations of the Reorganized Debtors, provided that the Debtors' or Reorganized Debtors' obligations on such Corporate Indemnities shall be limited as follows: (i) such claims of officers, directors, agents and employees who were employed by the Debtors or serving as directors as of the Petition Date shall be fully assumed; and (ii) the claims of agents and employees who were no longer employed by the Debtors as of the Petition Date shall be fully assumed, other than such agents and employees who were officers and directors of the Debtors before the Petition Date. Except as set forth above, all other Corporate Indemnities shall be rejected, unless otherwise provided for by order of the Court. Article XIII RETENTION OF JURISDICTION 13.01. RETENTION OF JURISDICTION. Notwithstanding the entry of the Confirmation Order or the Effective Date having occurred, the Court shall retain original jurisdiction to (i) determine any disputed Claims, (ii) determine requests for payment of Claims entitled to priority under section 507(a)(1) of the Bankruptcy Code, including compensation and reimbursement of expenses of professionals and other parties entitled thereto, (iii) resolve controversies and disputes regarding interpretation and implementation of the Plan, (iv) enter orders in aid of the Plan, including, without limitation, appropriate orders (which may include contempt or other sanctions) to protect the Debtors and the Reorganized Debtors in accordance with sections 524 and 1141 of the Bankruptcy Code and the terms and conditions of the Confirmation Order, (v) modify the Plan pursuant to Section 14.02 of the Plan, (vi) determine any and all applications, adversary proceedings and contested or litigated matters pending on the Effective Date, (vii) allow, disallow, estimate, liquidate or determine any Claim or Interest (subject to the provisions contained in 28 U.S.C. 157(b)(2)(B) and (b)(5) regarding personal injury tort and wrongful death claims) and to enter or enforce any order requiring the filing of any such Claim before a particular date, (viii) determine any and all pending applications for the rejection of executory contracts or unexpired leases, or for the assignment of assumed executory contracts and unexpired leases, and to hear and determine, and if need be, liquidate, any and all Claims arising from any such rejection, assumption and/or assignment, (ix) determine any actions or controversies arising under or in connection with the Plan, the Confirmation Order, or any contract, instrument, release, or other agreement created in connection with the Plan, except for any actions or controversies arising under or in connection with the Exit Facility, (x) enter and implement orders as are necessary or appropriate if the Confirmation Order is for any reason modified, stayed, reversed, revoked or vacated, (xi) enter a final decree closing the Reorganization Cases, (xii) determine any actions or controversies related to or asserted against the Exchange Agent, (xiii) enforce the exculpation provided for in Section 11.05 of the Plan, and (xiv) enforce the provisions of the Government Settlement provided for in Section 6.12 of the Plan; provided, however, that the Court shall not have jurisdiction over OIG-HHS's exercise of any breach and default remedies under the Corporate Integrity Agreement. Such jurisdiction of the Court shall be exclusive to the Court prior to the entry of an order closing the Reorganization Cases and shall be non-exclusive thereafter. Notwithstanding the foregoing, on and after the Effective Date, the jurisdiction and applicable law provisions, if any, of the New Senior Secured Notes, the New Collateral Documents, the Five Ventas Leases, the Amended Ventas Leases and any other assumed agreements between any of the Reorganized Debtors and any of the Ventas Entities shall govern disputes arising under such agreements. 13.02. FAILURE OF COURT TO EXERCISE JURISDICTION. If the Court abstains from exercising or declines to exercise jurisdiction, or determines that it is otherwise without jurisdiction over any matter or proceeding arising out of, related to or otherwise connected with the Reorganization Cases, including the matters set forth in this Article XIII, this Article shall not prohibit, limit or otherwise affect the exercise of jurisdiction by any other court having competent jurisdiction with respect to such matter or proceeding. Article XIV MISCELLANEOUS PROVISIONS 14.01. RETIREE BENEFITS AND EXECUTIVE COMPENSATION. On and after the Effective Date, pursuant to section 1129(a)(13) of the Bankruptcy Code and applicable nonbankruptcy law, the Reorganized Debtors shall continue to be obligated to pay all retiree benefits, as that term is defined in section 1114 of the Bankruptcy Code, and shall continue to pay such retiree benefits as they become due at the level established at any time prior to confirmation of the Plan pursuant to subsection (e)(1)(B) or (g) of section 1114 of the Bankruptcy Code, for the duration of the period each of the Debtors has obligated itself to provide such benefits; provided, however, that nothing herein shall extend or otherwise modify the duration of such period or prohibit the Debtors' or the Reorganized Debtors' ability to modify the duration of such period or otherwise modify the terms and conditions of the retiree benefits as otherwise permitted by such plans and otherwise applicable nonbankruptcy law. As of the Effective Date, the Debtors intend to (i) adopt the Long-Term Incentive Plan, which shall be retroactive to January 1, 2000, the New Stock Option Plan, and the Restricted Share Plan; and (ii) pay the Retention Bonuses and the Performance Bonuses. 14.02. MODIFICATION OF PLAN. Subject to Section 14.12 of the Plan, the Debtors reserve the sole right, in accordance with the Bankruptcy Code and Bankruptcy Rules, to alter, amend or modify the Plan prior to the entry of the Confirmation Order. After the entry of the Confirmation Order, subject to Section 14.12 of the Plan, the Reorganized Debtors may, upon order of the Court, alter, amend or modify the Plan in accordance with section 1127(b) of the Bankruptcy Code and the Bankruptcy Rules, or remedy any defect or omission or reconcile any inconsistency in the Plan in such manner as may be necessary to carry out the purpose and intent of the Plan. 14.03. WITHDRAWAL OF PLAN. The Debtors reserve the right, at any time prior to the entry of the Confirmation Order, to revoke or withdraw the Plan provided however that the Debtors shall provide Ventas, Bank Agent, the DOJ and the Creditors' Committee three (3) Business Days notice of such withdrawal, or such other notice as the Court may direct. If the Debtors revoke or withdraw the Plan under this Section, or if entry of the Confirmation Order or the occurrence of the Effective Date does not occur, then the Plan shall be deemed null and void. In that event, nothing contained in the Plan shall be deemed to (i) constitute a waiver or release of any Claims by or against, or any Interests in, the Debtors, or (ii) prejudice in any manner the rights of the Debtors or any other party in interest in any further proceedings involving the Debtors, or (iii) constitute an admission against interest by the Debtors or any other party in interest. 14.04. DISSOLUTION OF CREDITORS' COMMITTEE. The Creditors' Committee shall be dissolved on the Effective Date without need for a further Order of the Court. 14.05. HEADINGS. The headings used in this Plan are inserted for convenience only and neither constitute a portion of the Plan nor in any manner affect the provisions of the Plan. 14.06. SUCCESSORS AND ASSIGNS. The rights, benefits and obligation of any Persons or Entity named or referred to in the Plan shall be binding upon, and shall inure to the benefit of, the heir, executor, administrator, successor or assign of such Person or Entity. 14.07. PAYMENT OF STATUTORY FEES. All fees payable pursuant to section 1930 of Title 28 of the United States Code, as determined by the Court at the hearing pursuant to section 1128 of the Bankruptcy Code, shall be paid on or before the Effective Date. Unless relieved of any of these obligations by further Order of the Court, the Reorganized Debtors shall be responsible for the timely payment of fees incurred pursuant to 28 U.S.C. ss. 1930(a)(6), and after confirmation, the Reorganized Debtors shall file with the Court and serve on the United States Trustee a quarterly disbursement report for each quarter, or portion thereof, until a Final Decree has been entered, or the case dismissed or converted to another chapter, in a format prescribed by and provided to the Reorganized Debtors by the United States Trustee. 14.08. NOTICES. Any notice, request or demand given or made under this Plan or under the Bankruptcy Code or the Bankruptcy Rules shall be in writing and shall be hand delivered or sent by a reputable overnight courier service, and shall be deemed given when actually received at the following addresses whether hand delivered or sent by overnight courier service: Vencor, Inc. 680 South Fourth Street Louisville, KY 40202 Attn: M. Suzanne Riedman, General Counsel with a copy to: Cleary, Gottlieb, Steen & Hamilton One Liberty Plaza New York, New York 10006 Attn: Thomas J. Moloney, Esq. Lindsee P. Granfield, Esq. Notwithstanding anything to the contrary provided herein, all notices concerning this Plan (excluding notice requirements under the Plan Documents) shall be served upon the Persons and entities prescribed and in the manner prescribed under the Bankruptcy Code and the Bankruptcy Rules. 14.09. SEVERABILITY OF PLAN PROVISIONS. If prior to confirmation, any term or provision of the Plan is held by the Court to be invalid, void or unenforceable, the Court shall have the power, solely upon the request of the Debtors and subject to Section 14.12 of the Plan, to alter and interpret such term or provision to make it valid or enforceable to the maximum extent practicable, consistent with the original purpose of the term or provision held to be invalid, void or unenforceable, and such term or provision shall then be applicable as altered or interpreted. Notwithstanding any such holding, alteration or interpretation, the remainder of the terms and provisions of the Plan will remain in full force and effect and will in no way be affected, impaired or invalidated by such holding, alteration or interpretation. The Confirmation Order shall constitute a final judicial determination and shall provide that each term and provision of the Plan, as it may have been altered or interpreted in accordance with the foregoing, is valid and enforceable pursuant to its terms. 14.10. EXHIBITS. Exhibits to the Plan or Disclosure Statement that are not attached to the Plan or Disclosure Statement shall be included in the Plan Supplement filed with the Court, which will contain the draft form of the Plan Documents to be entered into as of the Effective Date, other than the New Senior Secured Credit Agreement (for which a term sheet will be Filed), the New Collateral Document and the Exit Facility. 14.11. NO ADMISSIONS. If the Confirmation and Effective Dates do not occur, nothing contained in the Plan or Disclosure Statement shall be deemed as an admission or release by the Debtors or any other Person or Entity with respect to any matter set forth herein including, without limitation, liability on any Claim or the propriety of the classification of any Claim. 14.12. CONSENT RIGHTS. Once the Court has entered an Order approving the adequacy of the Disclosure Statement under Bankruptcy Rule 3017 and the Debtors have filed a Plan and Disclosure Statement in accordance with such Order, the consent of Ventas, the Bank Agent, the Creditors' Committee and the DOJ shall be required for (i) any modification or alteration of a Plan Document to which the entity is a party or any modification or alteration of a Plan Document or such Plan that either directly affects the treatment or releases provided to or given by such party under the Plan or any Plan Document or otherwise materially improves the economic rights or distributions under the Plan or any Plan Document of some other party; or (ii) any waiver by the Debtors of a condition to the entry of the Confirmation Order or the occurrence of the Effective Date which directly affects the treatment or releases provided to or given by such party or otherwise materially affects such Party's rights or distributions under the Plan or the Plan Documents. On or prior to the Voting Expiration Date, Ventas, the Bank Agent, the Creditors' Committee and the DOJ shall each have the right to approve the form of the Plan, Plan Documents and the Confirmation Order (a vote to accept the Plan, including with respect to the Bank Agent a vote in favor of the Plan by Class 4 and with respect to the Creditors' Committee a vote in favor of the Plan by Classes 3B and 7A shall be deemed approval of the Plan). Without limiting the foregoing consent rights and/or such party's rights under section 1127 of the Bankruptcy Code, after the respective voting deadline, the consent of these entities shall be required to the extent that (i) any amendment or modification is made to the Plan or Plan Documents that directly affects the treatment or releases provided to or given by such party under the Plan, the Plan Document or the Confirmation Order (including its or any party's economic recovery, distribution or consideration) or any amendment or modification is made to a Plan Document to which the entity is a party, (ii) any other material modification or alteration is made to the Plan, a Plan Document or the Confirmation Order, or (iii) to the extent of any substantial deviation of a final Plan Document from the terms of an approved term sheet (e.g., any deviation that directly affects the treatment or releases provided to or given by such party under the Plan, a Plan Document or Confirmation Order (including its or any party's economic recovery, distribution or consideration)) or (iv) with respect to any new agreement, including without limitation, an Exit Facility or any modification or alteration of any of the previously enumerated documents, that is inconsistent with, or prohibits performance of, the Plan or some other Plan Document. Article XV CONFIRMATION REQUEST The Debtors request confirmation of the Plan under section 1129(a) or 1129(b) of the Bankruptcy Code, as applicable. Dated: December 14, 2000 ADVANCED INFUSION SYSTEMS, INC. AMERICAN X-RAYS, INC. C.P.C. OF LOUISIANA, INC. COMMUNITY BEHAVIORAL HEALTH SYSTEM, INC. COMMUNITY PSYCHIATRIC CENTERS OF ARKANSAS, INC. COMMUNITY PSYCHIATRIC CENTERS OF CALIFORNIA COMMUNITY PSYCHIATRIC CENTERS OF FLORIDA, INC. COMMUNITY PSYCHIATRIC CENTERS OF IDAHO, INC. COMMUNITY PSYCHIATRIC CENTERS OF INDIANA, INC. COMMUNITY PSYCHIATRIC CENTERS OF KANSAS, INC. COMMUNITY PSYCHIATRIC CENTERS OF MISSISSIPPI, INC. COMMUNITY PSYCHIATRIC CENTERS OF MISSOURI, INC. COMMUNITY PSYCHIATRIC CENTERS OF NORTH CAROLINA, INC. COMMUNITY PSYCHIATRIC CENTERS OF OKLAHOMA, INC. COMMUNITY PSYCHIATRIC CENTERS OF UTAH, INC. COMMUNITY PSYCHIATRIC CENTERS PROPERTIES INCORPORATED COMMUNITY PSYCHIATRIC CENTERS PROPERTIES OF OKLAHOMA, INC. COMMUNITY PSYCHIATRIC CENTERS PROPERTIES OF TEXAS, INC. COMMUNITY PSYCHIATRIC CENTERS PROPERTIES OF UTAH, INC. COURTLAND GARDENS HEALTH CENTER, INC. CPC INVESTMENT CORP. CPC MANAGED CARE HEALTH SERVICES, INC. CPC OF GEORGIA, INC. CPC PROPERTIES OF ARKANSAS, INC. CPC PROPERTIES OF ILLINOIS, INC. CPC PROPERTIES OF INDIANA, INC. CPC PROPERTIES OF KANSAS, INC. CPC PROPERTIES OF LOUISIANA, INC. CPC PROPERTIES OF MISSISSIPPI, INC. CPC PROPERTIES OF MISSOURI, INC. CPC PROPERTIES OF NORTH CAROLINA, INC. FIRST REHAB, INC. FLORIDA HOSPITAL PROPERTIES, INC. HEALTH CARE HOLDINGS, INC. HEALTH CARE TECHNOLOGY, INC. HELIAN ASC OF NORTHRIDGE, INC. HELIAN HEALTH GROUP, INC. HELIAN RECOVERY CORPORATION HOMESTEAD HEALTH CENTER, INC. HORIZON HEALTHCARE SERVICES, INC. INTERAMERICANA HEALTH CARE GROUP J.B. THOMAS HOSPITAL, INC. LAFAYETTE HEALTH CARE CENTER, INC. MEDEQUITIES, INC. MEDISAVE OF TENNESSEE, INC. MEDISAVE PHARMACIES, INC. OLD ORCHARD HOSPITAL, INC. PALO ALTO SURGECENTER CORPORATION PEACHTREE-PARKWOOD HOSPITAL, INC. PERSONACARE, INC. PERSONACARE LIVING CENTER OF CLEARWATER, INC. PERSONACARE OF BRADENTON, INC. PERSONACARE OF CLEARWATER, INC. PERSONACARE OF CONNECTICUT, INC. PERSONACARE OF GEORGIA, INC. PERSONACARE OF HUNTSVILLE, INC. PERSONACARE OF LITTLE ROCK, INC. PERSONACARE OF OHIO, INC. PERSONACARE OF OWENSBORO, INC. PERSONACARE OF PENNSYLVANIA, INC. PERSONACARE OF POMPANO EAST, INC. PERSONACARE OF POMPANO WEST, INC. PERSONACARE OF READING, INC. PERSONACARE OF SAN ANTONIO, INC. PERSONACARE OF SAN PEDRO, INC. PERSONACARE OF SHREVEPORT, INC. PERSONACARE OF ST. PETERSBURG, INC. PERSONACARE OF WARNER ROBBINS, INC. PERSONACARE OF WISCONSIN, INC. PERSONACARE PROPERTIES, INC. PRODATA SYSTEMS, INC. RECOVERY INNS OF AMERICA, INC. RESPIRATORY CARE SERVICES, INC. STAMFORD HEALTH FACILITIES, INC. THC-CHICAGO, INC. THC-HOLLYWOOD, INC. THC-HOUSTON, INC. THC-MINNEAPOLIS, INC. THC-NORTH SHORE, INC. THC-ORANGE COUNTY, INC. THC-SAN DIEGO, INC. THC-SEATTLE, INC. THERATX HEALTHCARE MANAGEMENT, INC. THERATX HEALTH SERVICES, INC. THERATX MANAGEMENT SERVICES, INC. THERATX MEDICAL SUPPLIES, INC. THERATX REHABILITATION SERVICES, INC. THERATX STAFFING, INC. TRANSITIONAL HOSPITALS CORPORATION, A DELAWARE CORPORATION TRANSITIONAL HOSPITALS CORPORATION, A NEVADA CORPORATION TRANSITIONAL HOSPITALS CORPORATION OF INDIANA, INC. TRANSITIONAL HOSPITALS CORPORATION OF LOUISIANA, INC. TRANSITIONAL HOSPITALS CORPORATION OF MICHIGAN, INC. TRANSITIONAL HOSPITALS CORPORATION OF NEVADA, INC. TRANSITIONAL HOSPITALS CORPORATION OF NEW MEXICO, INC. TRANSITIONAL HOSPITALS CORPORATION OF TAMPA, INC. TRANSITIONAL HOSPITALS CORPORATION OF TEXAS, INC. TRANSITIONAL HOSPITALS CORPORATION OF WISCONSIN, INC. TUCKER NURSING CENTER, INC. TUNSTALL ENTERPRISES, INC. VC-OIA, INC. VC-TOHC, INC. VC-WM, INC. VENCARE, INC. VENCARE REHAB SERVICES, INC. VENCOR FACILITY SERVICES, INC. VENCOR HOLDINGS, L.L.C. VENCOR HOME CARE SERVICES, INC. VENCOR HOSPICE, INC. VENCOR HOSPITALS EAST, L.L.C. VENCOR HOSPITALS WEST, L.L.C. VENCOR, INC. VENCOR INSURANCE HOLDINGS, INC. VENCOR INVESTMENT COMPANY VENCOR NEVADA, L.L.C. VENCOR NURSING CENTERS EAST, L.L.C. VENCOR NURSING CENTERS CENTRAL L.L.C. VENCOR NURSING CENTERS NORTH, L.L.C. VENCOR NURSING CENTERS SOUTH, L.L.C. VENCOR NURSING CENTERS WEST, L.L.C. VENCOR OPERATING, INC. VENCOR PEDIATRIC CARE, INC. VENCOR PROVIDER NETWORK, INC. VENTECH SYSTEMS, INC. BY: VENCOR OPERATING, INC., as agent and attorney-in- fact for each of the foregoing entities By: /s/ Richard A. Schweinhart ------------------------------------------------ Name: Title: STAMFORD HEALTH ASSOCIATES, L.P. BY: STAMFORD HEALTH FACILITIES, INC., ITS GENERAL PARTNER By: /s/ Richard A. Schweinhart ------------------------------------------------ Name: Title: VENCOR HOME CARE AND HOSPICE INDIANA PARTNERSHIP BY: VENCOR HOME CARE SERVICES, INC., ITS GENERAL PARTNER By: /s/ Richard A. Schweinhart ------------------------------------------------ Name: Title: BY: VENCOR HOSPICE, INC., ITS GENERAL PARTNER By: /s/ Richard A. Schweinhart ------------------------------------------------ Name: Title: VENCOR HOSPITALS LIMITED PARTNERSHIP BY: VENCOR OPERATING, INC., ITS GENERAL PARTNER By: /s/ Richard A. Schweinhart ------------------------------------------------ Name: Title: BY: VENCOR NURSING CENTERS LIMITED PARTNERSHIP, ITS GENERAL PARTNER BY: VENCOR OPERATING, INC., ITS GENERAL PARTNER By: /s/ Richard A. Schweinhart ------------------------------------------------ Name: Title: VENCOR NURSING CENTERS CENTRAL LIMITED PARTNERSHIP BY: VENCOR OPERATING, INC., ITS GENERAL PARTNER By: /s/ Richard A. Schweinhart ------------------------------------------------ Name: Title: BY: VENCOR NURSING CENTERS LIMITED PARTNERSHIP, ITS GENERAL PARTNER BY: VENCOR OPERATING, INC., ITS GENERAL PARTNER By: /s/ Richard A. Schweinhart ------------------------------------------------ Name: Title: VENCOR NURSING CENTERS LIMITED PARTNERSHIP BY: VENCOR OPERATING, INC., ITS GENERAL PARTNER By: /s/ Richard A. Schweinhart ------------------------------------------------ Name: Title: BY: VENCOR HOSPITALS LIMITED PARTNERSHIP, ITS GENERAL PARTNER BY: VENCOR OPERATING, INC., ITS GENERAL PARTNER By: /s/ Richard A. Schweinhart ------------------------------------------------ Name: Title: Prepared by: William H. Sudell, Jr., Esq. Eric D. Schwartz, Esq. Morris, Nichols, Arsht & Tunnell 1201 North Market Street P.O. Box 1347 Wilmington, Delaware 19899-1347 (302) 658-9200 Thomas J. Moloney, Esq. Lindsee P. Granfield, Esq. Cleary, Gottlieb, Steen & Hamilton One Liberty Plaza New York, New York 10006 (212) 225-2000 Counsel for Debtors and Debtors in Possession EX-99.3 4 exhibit2.txt EXHIBIT II - ------------------------------------------------------------------------------- EXHIBIT II WARRANT AGREEMENT between VENCOR, INC. (to be renamed Kindred Healthcare, Inc.) and WELLS FARGO BANK MINNESOTA, N.A. as Warrant Agent ___________________________ Dated as of April 20, 2001 - ------------------------------------------------------------------------------- TABLE OF CONTENTS Page Section 1. Definitions................................................1 Section 2. Form of Warrant; Execution; Registration...................3 2.1 Form of Warrant; Execution of Warrants.....................3 2.2 Registration...............................................3 2.3 Countersignature of Warrants...............................3 Section 3. Transfer and Exchange of Warrants..........................4 Section 4. Term of Warrants; Exercise of Warrants; Compliance with Government Regulation......................................4 4.1 Term of Warrants...........................................4 4.2 Exercise of Warrants.......................................5 4.3 Compliance with Government Regulations; Qualification under Securities Laws......................................6 Section 5. Payment of Taxes...........................................6 Section 6. Mutilated or Missing Warrant Certificates..................6 Section 7. Reservation of Warrant Shares..............................7 Section 8. Listings; Quotation........................................7 Section 9. Adjustment of Exercise Price; Number of Warrant Shares into Which Warrants are Exercisable........................7 9.1 Mechanical Adjustments.....................................8 (a) Adjustment for Change in Capital Stock............8 (b) Adjustment for Rights Issue.......................8 (c) Adjustment for Other Distributions................9 (d) Adjustment for Common Stock and Convertible Securities Issue..................................9 (e) Current Market Price; Price Per Share............10 (f) When De Minimis Adjustment May Be Deferred.......11 (g) Adjustment in Exercise Price.....................11 (h) When No Adjustment is Required...................11 (i) Capitalization, Reclassification or Consolidation....................................12 (j) Shares of Common Stock...........................12 (k) Expiration of Rights, etc........................13 9.2 Notice of Adjustment......................................13 9.3 Preservation of Purchase Rights upon Merger or Consolidation.............................................13 9.4 Statement on Warrants.....................................14 Section 10. Fractional Interests......................................14 Section 11. No Rights as Stockholders.................................14 Section 12. Payments in U.S. Currency................................14 Section 13. Merger or Consolidation or Change of Name of Warrant Agent.....................................................14 Section 14. Appointment of Warrant Agent..............................15 14.1 Correctness of Statements.................................15 14.2 Breach of Covenants.......................................15 14.3 Performance of Duties.....................................15 14.4 Reliance on Counsel.......................................15 14.5 Proof of Actions Taken....................................15 14.6 Compensation and Indemnification..........................15 14.7 Legal Proceedings.........................................16 14.8 Other Transactions in Securities of Company...............16 14.9 Liability of Warrant Agent................................16 14.10 Reliance on Documents.....................................16 14.11 Validity of Agreement.....................................16 14.12 Instructions from Company.................................17 Section 15. Change of Warrant Agent...................................17 Section 16. Notices...................................................17 Section 17. Cancellation of Warrants..................................18 Section 18. Supplements and Amendments................................18 Section 19. Successors................................................19 Section 20. Applicable Law............................................19 Section 21. Benefits of this Agreement................................19 Section 22. Counterparts..............................................19 Section 23. Captions..................................................19 WARRANT AGREEMENT, dated as of April 20, 2001, between Vencor, Inc. (to be renamed Kindred Healthcare, Inc.), a Delaware corporation (the "Company"), and Wells Fargo Bank Minnesota, National Association, as Warrant Agent (together with any successors and assigns, the "Warrant Agent"). W I T N E S S E T H: WHEREAS, the Company and certain affiliates of the Company were Debtors and Debtors-in-Possession in the jointly administered cases (the "Chapter 11 Cases") filed under title 11 of the U.S. Code, as amended from time to time ("the Bankruptcy Code") in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"), entitled "In re Vencor, Inc., et al., Debtors and Debtors in Possession," Chapter 11 Case Nos. 99-3199 through 99-3327; WHEREAS, in connection with and as part of the transactions to be consummated pursuant to the confirmation of a Plan of Reorganization (as amended, modified or supplemented from time to time) of the Company and its affiliated debtors in the Chapter 11 Cases (the "Plan"), the Company has agreed to issue two series of Warrants (the "Series A Warrants" and the "Series B Warrants" and, collectively, the "Warrants"), with the Series A Warrants exercisable for the purchase of an aggregate of 2,000,000 shares of Common Stock (as defined herein) of the Company and the Series B Warrants exercisable for the purchase of an aggregate of 5,000,000 shares of Common Stock of the Company; WHEREAS, by Order signed by the Bankruptcy Court on March 16, 2001 and entered on the docket of the Bankruptcy Court on March 19, 2001, the Bankruptcy Court confirmed the Plan; WHEREAS, the Plan contemplates that the Company will enter into certain agreements, including, without limitation, this Warrant Agreement; WHEREAS, the Company desires to issue the Warrants, each of which entitles the holder thereof to purchase one share of its Common Stock (each of said shares of Common Stock deliverable upon exercise of the Warrants, a "Warrant Share"); and WHEREAS, the Company wishes the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing to so act in connection with the issuance, division, transfer, exchange and exercise of Warrants. NOW, THEREFORE, in consideration of the foregoing, to implement the terms of the Plan, and for the purpose of defining the terms and provisions of the Warrants and the respective rights and obligations thereunder of the Company and the registered owners of the Warrants (the "Holders") and any security into which they may be exchanged, the Company and the Warrant Agent hereby agree as follows: Section 1. Definitions. The following terms, as used herein, have the following meanings (all terms defined in the singular to have the correlative meanings when used in the plural and vice versa): "Agreement" means this Warrant Agreement, as the same may be amended, modified or supplemented from time to time. "Assets" has the meaning ascribed to such term in Section 9.1(c) hereof. "Business Day" means a day other than (a) a Saturday or Sunday, (b) any day on which banking institutions located in the City of New York, New York or Minneapolis, Minnesota are required or authorized by law or by local proclamation to close, or (c) any day on which the New York Stock Exchange is closed. "Commercially Reasonable Efforts", when used with respect to any obligation to be performed or term or provision to be observed hereunder, means such efforts as a reasonably prudent Person seeking the benefits of such performance or action would make, use, apply or exercise to preserve, protect or advance its rights or interests, provided that such efforts do not require such Person to incur a material financial cost or a substantial risk of material liability unless such cost or liability (i) would customarily be incurred in the course of performance or observance of the relevant obligation, term or provision, (ii) is caused by or results from the wrongful act or negligence of the Person whose performance or observance is required hereunder, or (iii) is not excessive or unreasonable in view of the rights or interests to be preserved, protected or advanced. Such efforts may include, without limitation, the expenditure of such funds and retention by such Person of such accountants, attorneys or other experts or advisors as may be necessary or appropriate to effect the relevant action; the undertaking of any special audit or internal investigation that may be necessary or appropriate to effect the relevant action; and the commencement, termination or settlement of any action, suit or proceeding involving such Person to the extent necessary or appropriate to effect the relevant action. "Common Stock" means the common stock, par value $0.25 per share, of the Company after the Effective Date (defined in the Plan as "New Common Stock"). "Convertible Securities" has the meaning ascribed to such term in Section 9.1(d) hereof. "Effective Date" has the meaning ascribed to such term in the Plan. "Exercise Period" has the meaning ascribed to such term in Section 4.1 hereof. "Exercise Price" means, collectively, (i) $30.00 per Warrant Share for the Series A Warrants (the "Series A Exercise Price") and (ii) $33.33 per Warrant Share for the Series B Warrants (the "Series B Exercise Price"), in each case as adjusted pursuant to Section 9 hereof. "Holder" has the meaning ascribed to such term in the preamble hereto. "NASD" has the meaning ascribed to such term in Section 4.2 hereof. "Person" means a natural person, a corporation, a partnership, a trust, a joint venture, any regulatory authority or any other entity or organization. "Plan" has the meaning ascribed to such term in the preamble hereto. "Price Per Share" has the meaning ascribed to such term in Section 9.l(e)(ii) hereof. "Rights" has the meaning ascribed to such term in Section 9.l(b) hereof. "SEC" means the U.S. Securities and Exchange Commission, or any successor governmental agency or authority thereto. "Series A Warrants" has the meaning ascribed to such term in the preamble hereto. "Series B Warrants" has the meaning ascribed to such term in the preamble hereto. "Subsidiary" has the meaning ascribed to such term in Section 9.1(c) hereof. "Transfer Agent" has the meaning ascribed to such term in Section 7 hereof. "Warrant" has the meaning ascribed to such term in the preamble hereto. "Warrant Certificate" has the meaning ascribed to such term in Section 2.1 hereof "Warrant Register" has the meaning ascribed to such term in Section 2.2 hereof. "Warrant Share" has the meaning ascribed to such term in the preamble hereto. Section 2. Form of Warrant; Execution; Registration. 2.1 Form of Warrant; Execution of Warrants. The certificates evidencing the Series A Warrants and the Series B Warrants (collectively, the "Warrant Certificates") shall be in registered form only and shall be issued initally in the form of a single, global Warrant Certificate for the Series A Warrants and a single global Warrant Certificate for the Series B Warrants, substantially in the form set forth as Exhibit A and Exhibit B hereto, respectively, and in each case (i) bearing the legend set forth in Exhibit C hereto, (ii) registered in the name of The Depository Trust Company (the "DTC") or its nominee and (iii) deposited with the Warrant Agent as custodian for the Holder. Transfers of beneficial interests in, and exercises of, Warrants evidenced by a global Warrant Certificate may only be made in accordance with the rules and regulations of the DTC. Beneficial interests in Warrants evidenced by a global Warrant Certificate may be exchanged upon request, in whole or in part, (a) in respect of Series A Warrants, for a definitive Warrant Certificate substantially in the form of Exhibit A hereto and (b) in respect of Series B Warrants, for a definitive Warrant Certificate substantially in the form of Exhibit B hereto, in each case registered in the name of the holder. The Warrant Certificates shall be signed on behalf of the Company by its Chairman of the Board, Chief Executive Officer, Chief Financial Officer or one of its Vice Presidents. The signature of any such officer on the Warrant Certificates may be manual or by facsimile. Any Warrant Certificate may be signed on behalf of the Company by any person who, at the actual date of the execution of such Warrant Certificate, shall be a proper officer of the Company to sign such Warrant Certificate. Each Warrant Certificate shall be dated the date it is countersigned by the Warrant Agent pursuant to Section 2.3 hereof. 2.2 Registration. The Warrant Certificates shall be numbered and shall be registered on the books of the Company maintained at the principal office of the Warrant Agent initially in Minneapolis, Minnesota (or such other place in the continental United States as the Warrant Agent shall from time to time notify the Company and the Holders in writing) (the "Warrant Register") as they are issued. The Company and the Warrant Agent shall be entitled to treat the registered owner of any Warrant as the owner in fact thereof for all purposes and shall not be bound to recognize any equitable or other claim to or interest in such Warrant on the part of any other person. 2.3 Countersignature of Warrants. The Warrant Certificates shall be manually countersigned by the Warrant Agent and shall not be valid for any purpose unless so countersigned. Warrant Certificates may be countersigned, however, by the Warrant Agent and may be delivered by the Warrant Agent notwithstanding that the persons whose manual or facsimile signatures appear thereon as proper officers of the Company shall have ceased to be such officers at the time of such countersignature, issuance or delivery. The Warrant Agent shall, upon written instructions of the Chairman of the Board, the Chief Executive Officer, Chief Financial Officer or any Vice President of the Company, countersign, issue and deliver Warrant Certificates entitling the Holders thereof to purchase not more than an aggregate of 7,000,000 Warrant Shares (subject to adjustment pursuant to Section 9 hereof) and shall countersign, issue and deliver Warrant Certificates as otherwise provided in this Agreement. Section 3. Transfer and Exchange of Warrants. Subject to the terms hereof, the Warrant Agent shall initially countersign, register in the Warrant Register and deliver Warrants hereunder in accordance with the written instructions of the Company. Subject to the terms hereof and the receipt of such documentation as the Warrant Agent may reasonably require, the Warrant Agent shall thereafter from time to time register the transfer of any outstanding Warrants upon the Warrant Register upon surrender of the Warrant Certificate or Certificates evidencing such Warrants duly endorsed or accompanied (if so required by it) by a written instrument or instruments of transfer in form reasonably satisfactory to the Warrant Agent, duly executed by the registered Holder or Holders thereof or by the duly appointed legal representative thereof or by a duly authorized attorney. Subject to the terms of this Agreement, each Warrant Certificate may be exchanged for another Warrant Certificate or Certificates entitling the Holder thereof to purchase a like aggregate number of Warrant Shares, at the same exercise price and having the same term, as the surrendered Warrant Certificate or Certificates then entitles such Holder to purchase. Any Holder desiring to exchange a Warrant Certificate or Certificates shall make such request in writing delivered to the Warrant Agent, and shall surrender, duly endorsed or accompanied (if so required by the Warrant Agent) by a written instrument or instruments of transfer in form reasonably satisfactory to the Warrant Agent, the Warrant Certificate or Certificates to be so exchanged. Upon registration of transfer, the Company shall issue and the Warrant Agent shall countersign and deliver by certified mail a new Warrant Certificate or Certificates to the persons entitled thereto. Upon any partial transfer, a new Warrant Certificate of like tenor and representing in the aggregate the number of Warrants which were not so transferred, shall be issued to, and in the name of, the Holder. No service charge shall be made for any exchange or registration of transfer of a Warrant Certificate or of Warrant Certificates, but the Company may require payment of a sum sufficient to cover any stamp tax or other tax or other governmental charge that is imposed in connection with any such exchange or registration of transfer pursuant to Section 5 hereof. By accepting the initial delivery, transfer or exchange of Warrants, each Holder shall be deemed to agree to the terms of this Agreement as it may be in effect from time to time, including any amendments or supplements duly adopted in accordance with Section 18 hereof. Section 4. Term of Warrants; Exercise of Warrants; Compliance with Government Regulation. 4.1 Term of Warrants. Subject to the terms of this Agreement, each Holder shall have the right, until the expiration of the applicable Exercise Period for the Warrants held, to receive from the Company the number of Warrant Shares which the Holder may at the time be entitled to receive upon exercise of such Warrants and payment of the Exercise Price then in effect for such Warrant Shares, and the Warrant Shares issued to a Holder upon exercise of its Warrants shall be duly authorized, validly issued, fully paid and nonassessable. Each Warrant not exercised prior to the expiration of its Exercise Period shall become void, and all rights thereunder and all rights in respect thereof under this Agreement shall cease as of the expiration of such Exercise Period. The Exercise Period for the Warrants shall begin at 9:00 a.m., New York City time, on the date of their issuance, and end at 5:00 p.m, New York City time, on April 20, 2006 (five years after the Effective Date). 4.2 Exercise of Warrants. During the Exercise Period, each Holder may, subject to this Agreement, exercise from time to time some or all of the Warrants evidenced by its Warrant Certificate(s) by (i) surrendering to the Company at the principal office of the Warrant Agent such Warrant Certificate(s) with the form of election to purchase on the reverse thereof duly filled in and signed, which signature shall be guaranteed by a bank or trust company having an office or correspondent in the United States or a broker or dealer which is a member of a registered security exchange or the National Association of Securities Dealers, Inc. (the "NASD"), or, to the extent held in "street" name, Holder shall comply with applicable law, and (ii) paying to the Warrant Agent for the account of the Company the aggregate Exercise Price for the number of Warrant Shares in respect of which such Warrants are exercised. Warrants shall be deemed exercised on the date such Warrant Certificate(s) are surrendered to the Warrant Agent and tender of payment of the aggregate Exercise Price is received by the Warrant Agent. Payment of the aggregate Exercise Price shall be made in cash by wire transfer of immediately available funds to the Warrant Agent for the account of the Company. Upon the exercise of any Warrants in accordance with this Agreement, the Company shall issue and cause to be delivered promptly, to or upon the written order of the Holder and in the name of the Holder, a certificate or certificates for the number of full Warrant Shares issuable upon exercise of such Warrants, and shall take such other actions as are reasonably necessary to complete the exercise of such Warrants (including, without limitation, payment of any cash with respect to fractional interests required under Section 10 hereof). The Warrant Agent shall have no responsibility or liability for such issuance or the determination of the number of Warrant Shares issuable upon such exercise. The certificate or certificates representing such Warrant Shares shall have been issued and the Holder shall be deemed to have become a holder of record of such Warrant Shares as of the date such Warrants are exercised in accordance with the terms hereunder. Each Warrant Share, when issued upon exercise of the Warrants, shall be duly authorized, validly issued, fully paid and non-assessable and shall be delivered free and clear of all claims, liens, charges, security interests or encumbrances of any kind, including without limitation any preemptive or similar rights. In the event that less than all of the Warrants evidenced by a Warrant Certificate are exercised, the Holder thereof shall be entitled to receive a new Warrant Certificate or Certificates as specified by such Holder evidencing the remaining Warrants, and the Warrant Agent is hereby irrevocably authorized by the Company to countersign, issue and deliver the required new Warrant Certificate or Certificates evidencing such remaining Warrants pursuant to the provisions of this Section 4.2 hereof and of Section 3 hereof. The Company, whenever required by the Warrant Agent, will supply the Warrant Agent with Warrant Certificates duly executed on behalf to the Company for such purpose. Upon delivery of the Warrant Shares issuable upon exercise in accordance herewith and of any required new Warrant Certificates, the Company shall direct the Warrant Agent by written order to cancel the Warrant Certificates surrendered upon exercise. Such canceled Warrant Certificates shall then be disposed of by the Warrant Agent in a manner permitted by applicable law and satisfactory to the Company in accordance with its written instructions to the Warrant Agent. The Warrant Agent shall inform promptly the Company with respect to Warrants exercised and concurrently pay to the Company all amounts received by the Warrant Agent upon exercise of such Warrants. The Warrant Agent shall keep copies of this Agreement and any notices given or received hereunder available for inspection by the Holders during normal business hours at its office. The Company shall supply the Warrant Agent from time to time with such numbers of copies of this Agreement as the Warrant Agent may reasonably request. 4.3 Compliance with Government Regulations; Qualification under Securities Laws. The Company is issuing the Warrants based upon the belief that the issuance and the exercise of the Warrants, and the issuance of the Warrant Shares upon exercise of the Warrants, are exempt from registration under the Federal securities laws pursuant to Section 1145 of the Bankruptcy Code. The Company covenants that if, following a due demand to exercise Warrants, any Warrant Shares required to be reserved for purposes of exercise of such Warrants require, under any federal or state law, registration with or approval of any governmental authority before such shares may be issued upon exercise, and the Holder requesting the exercise of a Warrant provides an opinion of counsel acceptable to the Company to the effect that the exercise of the Warrant requires registration, then the Company will, unless the Company has received an opinion of counsel to the effect that such registration is not then required by such laws, use its Commercially Reasonable Efforts to cause such shares to be so registered or approved, as the case may be; provided that in no event shall such Warrant Shares be issued, and the exercise of all such Warrants shall be suspended, for the period from the date of such due demand for exercise until such registration or approval is in effect; provided, further, that the Exercise Period for such Warrants (but only such Warrants) shall be extended one day for each day (or portion thereof) that any such suspension is in effect. The Company shall promptly notify the Warrant Agent of any such suspension, and the Warrant Agent shall have no duty, responsibility or liability in respect of any Warrant Shares issued or delivered prior to its receipt of such notice. The Company shall promptly notify the Warrant Agent of the termination of any such suspension, and such notice shall set forth the number of days that the Exercise Period with respect to such Warrants shall be extended as a result of such suspension. Section 5. Payment of Taxes. The Company will pay all documentary stamp and other like taxes, if any, attributable to the initial issuance and delivery of the Warrants and the initial issuance and delivery of the Warrant Shares upon the exercise of Warrants, provided, that the Company shall not be required to pay any tax or taxes which may be payable in respect of any transfer of the Warrants, and the Warrant Agent shall not register any such transfer or issue or deliver any Warrant Certificate(s) unless or until the persons requesting the registration or issuance shall have paid to the Warrant Agent for the account of the Company the amount of such tax (which the Warrant Agent shall then apply to the payment of such tax), if any, or shall have established to the reasonable satisfaction of the Company that such tax, if any, has been paid. Section 6. Mutilated or Missing Warrant Certificates. In the event that any Warrant Certificate shall be mutilated, lost, stolen or destroyed, the Company shall issue, and at the direction of the Company by written order the Warrant Agent shall countersign and deliver in exchange and substitution for and upon cancellation of the mutilated Warrant Certificate or in lieu of and substitution for the Warrant Certificate lost, stolen or destroyed, a new Warrant Certificate of like tenor and representing all equivalent right or interest, but only upon receipt of evidence reasonably satisfactory to the Company and the Warrant Agent of such loss, theft or destruction of such Warrant Certificate and an indemnity or bond, if requested by the Company or the Warrant Agent, also reasonably satisfactory to them. An applicant for such a substitute Warrant Certificate shall also comply with such other reasonable procedures as the Company or the Warrant Agent may reasonably require. Section 7. Reservation of Warrant Shares. There have been reserved, and the Company shall at all times keep reserved, free from preemptive rights, out of its authorized Common Stock a number of shares of Common Stock sufficient to provide for the exercise of the rights of purchase represented by the outstanding Warrants. The transfer agent for the Common Stock and every subsequent or other transfer agent for any shares of the Company's capital stock issuable upon the exercise of the Warrants (each, a "Transfer Agent") will be and are hereby irrevocably authorized and directed at all times to reserve such number of authorized shares as shall be required for such purpose. The Company will keep a copy of this Agreement on file with each Transfer Agent. The Warrant Agent is hereby irrevocably authorized to requisition from time to time from the Company or a Transfer Agent, as the case may be, the certificates for Warrant Shares required to honor outstanding Warrants upon exercise thereof in accordance with the terms of this Agreement. The Company will supply its Transfer Agent with duly executed stock certificates for such purposes and will promptly provide or otherwise make available any cash which may be payable as provided in Section 10 hereof. The Company will furnish to its Transfer Agent a copy of all notices of adjustments and certificates related thereto, transmitted to each Holder pursuant to Section 9.2 hereof. The Company will give the Warrant Agent prompt notice of any change in any Transfer Agent or any change of address of any Transfer Agent. Before taking any action which would cause an adjustment pursuant to Section 9 reducing the Exercise Price, the Company will take any and all corporate action which may be necessary in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares (free of preemptive rights and free from all taxes, liens, charges and security interests with respect to the issuance thereof) at the Exercise Price as so adjusted. Section 8. Listings; Quotation. The Company shall use its Commercially Reasonable Efforts (including requests for waivers) to have each series of the Warrants listed on a national securities exchange or included for quotation in the Nasdaq National Market or the Nasdaq Small Cap Market, and shall use its Commercially Reasonable Efforts to maintain such listing or inclusion. In the event the Warrants do not qualify for such listing or inclusion, the Company will use its Commercially Reasonable Efforts (including requests for waivers) to achieve such qualification and to effect such inclusion or listing whenever the Warrants qualify therefor, and prior to such time, shall use Commercially Reasonable Efforts to cause some other customary trading market to admit the Warrants for trading. Section 9. Adjustment of Exercise Price; Number of Warrant Shares into Which Warrants are Exercisable. The number and kind of securities purchasable upon the exercise of each Warrant, and the Exercise Price, shall be subject to adjustment from time to time upon the happening of certain events, as hereinafter described. The Warrant Agent shall be fully protected in relying on the certificate described in Section 9.2 below regarding the adjustment and on any adjustment therein contained, and shall not be obligated or responsible for calculating any adjustment, nor shall it be deemed to have knowledge of such an adjustment unless and until it shall have received such certificate. 9.1 Mechanical Adjustments. The number of Warrant Shares purchasable upon the exercise of each Warrant and the Exercise Price shall be subject to adjustment as follows: (a) Adjustment for Change in Capital Stock. Subject to paragraphs (f) and (h) below, in the event the Company (i) pays a dividend on all its outstanding shares of Common Stock in shares of Common Stock, or makes a distribution of shares of Common Stock on all its outstanding shares of Common Stock; (ii) makes a distribution on all its outstanding shares of Common Stock in shares of its capital stock other than Common Stock; (iii) subdivides its outstanding shares of Common Stock into a greater number of shares of Common Stock; (iv) combines its outstanding shares of Common Stock into a smaller number of shares of Common Stock; or (v) issues, by reclassification of its shares of Common Stock, other securities of the Company (including any such reclassification in connection with a consolidation or merger in which the Company is the surviving entity), then the number of Warrant Shares purchasable upon exercise of each Warrant immediately prior thereto shall be adjusted so that the Holder of each Warrant shall be entitled to receive upon the exercise of the Warrant the kind and number of Warrant Shares or other securities of the Company which such Holder would have owned or have been entitled to receive upon the happening of any of the events described above had such Warrant been exercised in full immediately prior to the happening of such event or any record date with respect thereto. If a Holder is entitled to receive shares of two or more classes of capital stock of the Company pursuant to the foregoing upon exercise of Warrants, the allocation of the adjusted Exercise Price between such classes of capital stock shall be determined reasonably and in good faith by the Board of Directors of the Company. After such allocation, the exercise privilege and the Exercise Price with respect to each class of capital stock shall thereafter be subject to adjustment on terms substantially identical to those applicable to Common Stock in this Section 9. An adjustment made pursuant to this paragraph (a) shall become effective immediately after the record date for such event or, if none, immediately after the effective date of such event. Such adjustment shall be made successively whenever such an event occurs. (b) Adjustment for Rights Issue. Subject to paragraphs (f), (h) and (k) below, in case the Company shall issue rights, options or warrants (collectively, "Rights") to all holders of its outstanding Common Stock entitling them to subscribe for or purchase shares of Common Stock at a Price Per Share (as defined in paragraph (e) below) which is lower at the record date mentioned below than the Current Market Price (as defined in paragraph (e) below) per share of Common Stock on such record date, then the number of Warrant Shares thereafter purchasable upon the exercise of each Warrant shall be determined (subject to readjustment pursuant to Section 9.1(k) below) by multiplying the number of Warrant Shares theretofore purchasable upon exercise of each Warrant by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding on the date of issuance of such Rights plus the additional Number of Shares (as defined in paragraph (e) below) of Common Stock offered for subscription or purchase in connection with such Rights and the denominator of which shall be the number of shares of Common Stock outstanding on the date of issuance of such Rights plus the number of shares of Common Stock which the aggregate Proceeds (as defined in paragraph (e) below) received or receivable by the Company upon exercise of such Rights would purchase at the Current Market Price per share of Common Stock at such record date. Such adjustment shall be made whenever Rights are actually issued, and shall become effective on the date of distribution retroactive to the record date for the determination of stockholders entitled to receive such Rights. (c) Adjustment for Other Distributions. Subject to paragraphs (f) and (h) below, in case the Company shall distribute to all holders of shares of its outstanding Common Stock (x) evidences of indebtedness or assets (excluding cash dividends or distributions payable out of the consolidated earnings or surplus legally available for such dividends or distributions and dividends or distributions referred to in paragraphs (a) or (b) above) of the Company or any corporation or other legal entity a majority of the voting equity or equity interests of which are owned, directly or indirectly, by the Company (a "Subsidiary"), or (y) shares of capital stock of a Subsidiary (such evidences of indebtedness, assets and securities as set forth in clauses (x) and (y) above, collectively, "Assets"), then in each case the number of Warrant Shares thereafter purchasable upon the exercise of each Warrant shall be determined by multiplying the number of Warrant Shares theretofore purchasable upon the exercise of each Warrant by a fraction, the numerator of which shall be the Current Market Price per share of Common Stock on the date of such distribution and the denominator of which shall be such Current Market Price per share of Common Stock less the fair value as of such record date as determined reasonably and in good faith by the Board of Directors of the Company of the portion of the Assets applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made, and shall become effective on the date of distribution retroactive to the record date for the determination of stockholders entitled to receive such distribution. (d) Adjustment for Common Stock and Convertible Securities Issue. Subject to paragraphs (f) and (h) below, in case the Company shall issue shares of its Common Stock, or securities convertible into, or exchangeable or exercisable for Common Stock or Rights to subscribe for or purchase such securities (collectively, "Convertible Securities") (excluding the issuance of (i) Common Stock or Convertible Securities issued in any of the transactions described in paragraphs (a), (b) or (c) above or (ii) Warrant Shares issued upon the exercise of the Warrants), at a Price Per Share of Common Stock, in the case of the issuance of Common Stock, or at a Price Per Share of Common Stock initially deliverable upon conversion, exercise or exchange of such Convertible Securities, in each case, together with any other consideration received by the Company in connection with such issuance, below the Current Market Price per share of Common Stock on the date the Company fixed the offering, conversion or exercise or exchange price of such additional shares, then the number of Warrant Shares thereafter purchasable upon the exercise of each Warrant shall be determined by multiplying the number of Warrant Shares theretofore purchasable upon exercise of each Warrant by a fraction, the numerator of which shall be the total number of shares of Common Stock outstanding on such date plus the additional Number of Shares (as defined below) offered for subscription or purchase and the denominator of which shall be the number of shares of Common Stock outstanding on such date plus the additional Number of Shares which the aggregate Proceeds (as defined below) of the total amount of Convertible Securities so offered would purchase at the Current Market Price per share of Common Stock at such record date. In case the Company shall issue and sell Convertible Securities for a consideration consisting, in whole or in part, of property other than cash or its equivalent, then in determining the "Price Per Share" of Common Stock and the "consideration received by the Company" for purposes of this paragraph (d), the Board of Directors of the Company shall reasonably and in good faith determine the fair value of such property. The determination of whether any adjustment is required under this paragraph (d), by reason of the sale and issuance of any Convertible Securities and the amount of such adjustment, if any, shall be made at such time and not at the subsequent time of issuance of shares of Common Stock upon the exercise, conversion or exchange of Convertible Securities. (e) Current Market Price; Price Per Share. (i) For the purpose of any computation under this Section 9.1, the "Current Market Price" per share of Common Stock at any date shall be the volume weighted daily average prices for the 20 consecutive trading days preceding the date of such computation. The closing price for each day shall be (x) if the Common Stock shall be then listed or admitted to trading on the New York Stock Exchange, the closing price on the NYSE - Consolidated Tape (or any successor composite tape reporting transactions on the New York Stock Exchange) or (y) if such a composite tape shall not be in use or shall not report transactions in the Common Stock, or if the Common Stock shall be listed on a stock exchange other than the New York Stock Exchange, the last reported sales price regular way or, in case no such reported sale takes place on such day, the average of the closing bid and asked prices regular way for such day, in each case on the principal national securities exchange on which the shares of Common Stock are listed or admitted to trading (which shall be the national securities exchange on which the greatest number of shares of the Common Stock have been traded during such 20 consecutive trading days) or (z) if the Common Stock is not listed or admitted to trading, the average of the closing bid and asked prices of the Common Stock in the over-the-counter market as reported by the Nasdaq National Market or any comparable system or, if the Common Stock is not included for quotation in the Nasdaq National Market or a comparable system, the average of the closing bid and asked prices as furnished by two members of the NASD selected reasonably and in good faith from time to time by the Board of Directors of the Company for that purpose. In the absence of one or more such quotations, the Current Market Price per share of the Common Stock shall be determined reasonably and in good faith by the Board of Directors of the Company. (ii) For purposes of this Section 9.1, "Price Per Share" shall be defined and determined according to the following formula: P = R/N Where P = Price Per Share; R = the "Proceeds" received or receivable by the Company which (x) in the case of shares of Common Stock is the total amount received or receivable by the Company in consideration for the issuance and sale of such shares; (y) in the case of Rights or Convertible Securities with respect to shares of Common Stock, is the total amount received or receivable by the Company in consideration for the issuance and sale of Rights or such Convertible Securities, plus the minimum aggregate amount of additional consideration, other than the surrender of such Convertible Securities, payable to the Company upon exercise, conversion or exchange thereof; and (z) in the case of Rights to subscribe for or purchase such Convertible Securities, is the total amount received or receivable by the Company in consideration for the issuance and sale of such Rights plus the minimum aggregate amount of additional consideration, other than the surrender of such Convertible Securities, payable upon the exercise of the Right and the conversion or exchange or exercise of such Convertible Securities; provided that in each case the proceeds received or receivable by the Company shall be the net cash proceeds after deducting therefrom any compensation paid or discount allowed in the sale, underwriting or purchase thereof by underwriters or dealers or other performing similar services; N = the "Number of Shares," which (x) in the case of Common Stock is the number of shares issued; and (y) in the case of Rights or Convertible Securities with respect to shares of Common Stock, is the maximum number of shares of Common Stock initially issuable upon exercise, conversion or exchange thereof. (f) When De Minimis Adjustment May Be Deferred. No adjustment in the number of Warrant Shares purchasable hereunder shall be required unless such adjustment would require an increase or decrease of at least three percent (3%) in the number of Warrant Shares purchasable upon the exercise of each Warrant, provided that any adjustments which by reason of this paragraph (f) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations shall be made to the nearest one-hundredth of a Warrant Share and the nearest cent. (g) Adjustment in Exercise Price. Whenever the number of Warrant Shares purchasable upon the exercise of each Warrant is adjusted as herein provided, the Exercise Price payable upon exercise of each Warrant immediately prior to such adjustment shall be adjusted by multiplying such Exercise Price by a fraction, the numerator of which shall be the number of Warrant Shares purchasable upon the exercise of each Warrant immediately prior to such adjustment and the denominator of which shall be the number of Warrant Shares purchasable immediately thereafter. (h) When No Adjustment is Required. No adjustment in the number of Warrant Shares purchasable upon the exercise of each Warrant or in the Exercise Price need be made under this Section 9.1 in connection with: (i) the issuance of Common Stock, options, rights, Warrants or other securities pursuant to the Plan; (ii) shares of Common Stock, options, rights, warrants or other securities issued by the Company or its subsidiaries for the benefit of employees or directors pursuant to any formal employee stock plan or other employee benefit plan arrangement duly authorized by the Board; (iii) any issuance of shares of Common Stock or Convertible Securities pursuant to an underwritten public offering for a price per share of Common Stock in the case of an issuance of shares of Common Stock, or for a price per share of Common Stock initially deliverable upon conversion or exchange of such securities, that is equal to or greater than 95% of the Current Market Price per share of Common Stock on the date the Company fixed the offering, conversion or exchange price of such additional shares of Common Stock; (iv) sales of Common Stock pursuant to a plan adopted by the Company for reinvestment of dividends or interest; (v) shares of Common Stock issued to shareholders of any corporation that is acquired by, merged into or made a part or subsidiary of the Company in an arm's-length transaction; or (vi) a change in the par value of the shares of Common Stock. Additionally, no adjustment need be made if the Company issues or distributes to each Holder of Warrants the shares, rights, options, warrants, evidences of indebtedness, assets or other securities referred to in those paragraphs which each Holder of Warrants would have been entitled to receive had the Warrants been exercised for the number of Warrant Shares for which Warrants are then exercisable prior to the happening of such event or the record date with respect thereto. (i) Capitalization, Reclassification or Consolidation. If any capital reorganization of the Company, or any reclassification of the Common Stock, or any consolidation of the Company with or merger of the Company with or into any other Person, or any sale, lease or other transfer of all or substantially all of the assets of the Company to any other Person, shall be effected in such a way that the holders of the Common Stock shall be entitled to receive stock, other securities, cash or other assets (whether such stock, other securities, cash or other assets are issued or distributed by the Company or another Person) with respect to or in exchange for the Common Stock, then, upon exercise of each Warrant, the Holder shall have the right to receive the kind and amount of stock, other securities, cash or other assets receivable upon such reorganization, reclassification, consolidation, merger or sale, lease or other transfer, by a holder of the number of Warrant Shares that such Holder would have been entitled to receive upon exercise of such Warrant had such Warrant been exercised immediately before such reorganization, reclassification, consolidation, merger or sale, lease or other transfer, subject to adjustments (as determined in good faith by the Board of Directors of the Company). Adjustments for events subsequent to the effective date of such a reorganization, reclassification, consolidation, merger, sale or transfer of assets shall be as nearly equivalent as may be practicable to the adjustments provided for in this Agreement. In any such event, effective provisions shall be made in the certificate or articles of incorporation of the resulting or surviving corporation, in any contract of sale, merger, conveyance, lease, transfer or otherwise so that the provisions set forth herein for the protection of rights of the Holders shall thereafter continue to be applicable; and any such resulting or surviving corporation shall expressly assume the obligation to deliver, upon exercise, such shares of stock, other securities, cash and property. The provisions of Section 9 shall similarly apply to successive consolidations, mergers, sales, leases or transfers. (j) Shares of Common Stock. For all purposes of this Agreement, the term "shares of Common Stock" shall mean (i) the class of stock designated as the Common Stock of the Company at the date of this Agreement, or (ii) any other class of stock resulting from successive reclassifications of such shares consisting solely of changes in par value, or from par value to no par value, or from no par value to par value. In the event that at any time, as a result of an adjustment made pursuant to this Section 9.1, the Holders shall become entitled to purchase any securities of the Company other than shares of Common Stock, thereafter the number of such other shares so purchasable upon exercise of each Warrant and the Exercise Price of such shares shall be subject to adjustment from time to time in a manner and on terms substantially identical to the provisions with respect to the Warrant Shares contained in paragraphs (a) through (h) above, and the provisions of this Agreement with respect to the Warrant Shares shall apply on like terms to any such other securities. (k) Expiration of Rights, etc. Upon the expiration of any Rights in respect of which an adjustment has been made pursuant to Section 9.1(b), if any thereof shall not have been exercised, the Exercise Price and the number of Warrant Shares purchasable upon the exercise of each outstanding Warrant shall be readjusted so that (i) any calculation previously made on the basis of the additional number of shares of Common Stock offered for subscription or purchase in connection with such Rights shall instead be made on the basis of the additional number of shares of Common Stock actually subscribed to or actually purchased in connection with such Rights and (ii) any calculation previously made on the basis of the aggregate offering price of the total number of shares issuable upon exercise of such Rights shall instead be made on the basis of the aggregate offering price of the total number of shares actually issued upon exercise of such Rights; provided that if, as a result of such readjustment, the net adjustment to the number of Warrant Shares purchasable, upon the exercise of each Warrant as a result of the issuance and exercise of such Rights shall be sufficiently small as to qualify for de minimis deferral pursuant to Section 9.1(f), then the Exercise Price and the number of Warrant Shares purchasable upon the exercise of each Warrant shall be as if no Rights had ever been issued and the provisions of Section 9.1(f) shall otherwise prevail. 9.2 Notice of Adjustment. Whenever the number of Warrant Shares purchasable upon the exercise of each Warrant or the Exercise Price of Warrant Shares is adjusted, as herein provided, the Company shall cause the Warrant Agent promptly to mail to each Holder notice of such adjustment or adjustments and shall deliver to the Warrant Agent a certificate of a firm of independent public accountants (who may be the regular accountants employed by the Company) setting forth the number of Warrant Shares purchasable upon the exercise of each Warrant and the Exercise Price of Warrant Shares after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth in reasonable detail the computations by which such adjustment was made. The Warrant Agent shall be entitled to rely on such certificate and shall be under no duty or responsibility with respect to any such certificate, except to exhibit the same, from time to time, to any Holder requesting an inspection thereof during reasonable business hours. The Warrant Agent shall not at any time be under any duty or responsibility to any Holder to determine whether any facts exist which may require any adjustment of the Exercise Price or the number of Warrant Shares or other stock or property purchasable upon exercise of Warrants, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed in making such adjustment. 9.3 Preservation of Purchase Rights upon Merger or Consolidation. The Company shall not merge or consolidate with or into any other entity unless the successor entity (in the event the Company is not the successor entity) shall expressly assume, by supplemental agreement reasonably satisfactory in form and substance to the Warrant Agent in its sole judgment and executed and delivered to the Warrant Agent, the due and punctual performance and observance of the covenants and conditions of this Agreement to be performed and observed by the Company. The provisions of this Section 9.3 shall similarly apply to successive consolidations or mergers. The Warrant Agent shall be under a good faith duty and responsibility to determine the correctness of any provisions contained in any such agreement relating to the kind or amount of shares of stock or other securities or property receivable upon exercise of Warrants or with respect to the method employed and provided therein for any adjustments and shall be entitled to rely upon the provisions contained in any such agreement. In the event of any conflict between this Section 9.3 and Section 9.1(i), Section 9.1(i) shall prevail. 9.4 Statement on Warrants. Irrespective of any adjustments in the Exercise Price or the number or kind of shares purchasable upon the exercise of the Warrants, Warrant Certificates theretofore or thereafter issued may continue to express the same Exercise Price and number and kind of Warrant Shares as are stated in the Warrant Certificates initially issuable pursuant to this Agreement. Section 10. Fractional Interests. Neither the Company nor the Warrant Agent shall be required to issue fractional Warrant Shares on the exercise of Warrants. If more than one Warrant shall be exercised at the same time by the same Holder, the number of full Warrant Shares which shall be issuable upon such exercise shall be computed on the basis of the aggregate number of Warrants so exercised. If any fraction of a Warrant Share would, except for the provisions of this Section 10, be issuable on the exercise of any Warrant, then the Company shall pay an amount in cash equal to the Current Market Price for one Warrant Share on the date the Warrant Certificate is presented for exercise (determined in accordance with Section 9.1(e) hereof), multiplied by such fraction. Section 11. No Rights as Stockholders. Nothing contained in this Agreement or in any of the Warrants shall be construed as conferring upon the Holders or their transferees the right to vote or to receive dividends or to consent or to receive notice as stockholders in respect of any meeting of stockholders for the election of directors of the Company or any other matter, or any rights whatsoever as stockholders of the Company. Section 12. Payments in U.S. Currency. All payments required to be made hereunder shall be made in lawful money of the United States of America. Section 13. Merger or Consolidation or Change of Name of Warrant Agent. Any corporation into which the Warrant Agent may be merged or with which it may be consolidated, or any corporation resulting from any merger or consolidation to which the Warrant Agent shall be a party, or any corporation succeeding to the corporation trust business of the Warrant Agent, shall be the successor to the Warrant Agent hereunder without, other than prompt written notice to the Company with respect thereto, the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that such corporation would be eligible for appointment as a successor Warrant Agent under the provisions of Section 15 hereof. In case any of the Warrant Certificates shall have been countersigned but not delivered at the time such successor to the Warrant Agent shall succeed to the agency created by this Agreement, any such successor to the Warrant Agent may adopt the countersignature of the original Warrant Agent and deliver such Warrant Certificates so countersigned; and in case at that time any of the Warrant Certificates shall not have been countersigned, any successor to the Warrant Agent may countersign such Warrant Certificates either in the name of the predecessor Warrant Agent or in its name; and in all such cases such Warrant Certificates shall be fully valid and effective as provided therein and in this Agreement. In case at any time the name of the Warrant Agent shall be changed and at such time any of the Warrant Certificates shall have been countersigned but not delivered, the Warrant Agent may adopt the countersignatures under its prior name and deliver such Warrant Certificates so countersigned; and in case at that time any of the Warrant Certificates shall not have been countersigned, the Warrant Agent may countersign such Warrant Certificates either in its prior name or in its changed name; and in all such cases such Warrant Certificates shall be fully valid and effective as provided therein and in this Agreement. Section 14. Appointment of Warrant Agent. The Company hereby appoints the Warrant Agent to act as agent for the Company hereunder and in accordance with the terms and conditions hereof, and the Warrant Agent hereby accepts such appointment and undertakes the duties and obligations imposed by this Agreement upon the following terms and conditions. 14.1 Correctness of Statements. The statements contained herein and in the Warrant Certificates shall be taken as statements of the Company, and the Warrant Agent assumes no responsibility for the correctness of any of the same except statements that describe the Warrant Agent or action taken by it. 14.2 Breach of Covenants. The Warrant Agent shall not be responsible for any failure of the Company to comply with any of the covenants contained in this Agreement or in the Warrant Certificates to be complied with by the Company. 14.3 Performance of Duties. The Warrant Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its duly appointed attorneys or agents. 14.4 Reliance on Counsel. Before the Warrant Agent acts or refrains from acting, the Warrant Agent may consult at any time with legal counsel satisfactory to it (who may be counsel for the Company), and the Warrant Agent shall incur no liability or responsibility to the Company or to any Holder in respect to any action taken, suffered or omitted by it hereunder in good faith and in accordance with the written opinion or the written advice of such counsel. 14.5 Proof of Actions Taken. Whenever in the performance of its duties under this Agreement the Warrant Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed conclusively to have been proved and established by a certificate signed by any of the Chairman of the Board, Chief Executive Officer, Chief Financial Officer or one of the Vice Presidents of the Company and delivered to the Warrant Agent; and such certificate shall be full authorization to the Warrant Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate. 14.6 Compensation and Indemnification. The Company agrees to pay the Warrant Agent reasonable compensation for all services rendered by the Warrant Agent in the performance of its duties under this Agreement, to reimburse the Warrant Agent for all reasonable expenses, taxes and governmental charges and other charges incurred by the Warrant Agent in the performance of its duties under this Agreement (including but not limited to the reasonable fees and expenses of a single legal counsel), and to indemnify the Warrant Agent and its officers, agents and directors for and to hold each harmless from and against any and all losses and liabilities, including judgments, costs and reasonable counsel fees, for anything done or omitted by the Warrant Agent or any of its agents in the performance of its duties under this Agreement, except as a result of the Warrant Agent's gross negligence or willful misconduct as determined in a final judgment of a court of competent jurisdiction and authority. The Company's obligations under this Section 14.6 and any claim arising hereunder shall survive the resignation or removal of the Warrant Agent and the termination or discharge of the Company's obligations under this Agreement. 14.7 Legal Proceedings. The Warrant Agent shall be under no obligation to institute any action, suit or legal proceeding or to take any other action likely to involve material expense unless the Company or any one or more Holders shall furnish the Warrant Agent with reasonable security and indemnity for any costs and expenses which may be incurred or any liabilities which may arise (but only to the extent such costs and expenses or liabilities would be covered by the preceding Section 14.6), but this provision shall not affect the power of the Warrant Agent to take such action as the Warrant Agent may consider proper, whether with or without any such security or indemnity. All rights of action of any Holder under this Agreement or under any of the Warrants may be enforced by the Warrant Agent, and any action, suit or proceeding instituted by the Warrant Agent shall be brought in its name as Warrant Agent, and any recovery of judgment shall be for the ratable benefit of the Holders, as their respective rights or interests may appear. 14.8 Other Transactions in Securities of Company. Subject to the provisions of applicable law, the Warrant Agent and any stockholder, director, officer or employee of the Warrant Agent may buy, sell or deal in any of the Warrants or any other securities of the Company or have a pecuniary interest in any transaction in which the Company may be interested or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Warrant Agent under this Agreement. Nothing herein shall preclude the Warrant Agent from acting in any other capacity for the Company or for any other legal entity. 14.9 Liability of Warrant Agent. The Warrant Agent shall act hereunder solely as agent, and its duties shall be determined solely by the provisions hereof. The Warrant Agent shall not be liable for anything which it may do or refrain from doing in connection with this Agreement except for its own negligence or bad faith. 14.10 Reliance on Documents. The Warrant Agent will not incur any liability or responsibility to the Company or to any Holder for any action taken in reliance on any notice, resolution, waiver, consent order, certificate, or other paper, document or instrument reasonably believed by it to be genuine and to have been signed, sent or presented by the proper party or parties. 14.11 Validity of Agreement. The Warrant Agent shall not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution hereof by the Warrant Agent) or for any of the statements of fact or recitals contained in this Agreement or in respect of the validity or execution of any Warrant Certificate (except its countersignature thereof) or any Warrant; nor shall the Warrant Agent by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any Warrant Shares (or other securities) to be issued pursuant to this Agreement or any Warrant, or as to whether any Warrant Shares (or other securities) will, when issued, be validly issued, fully paid and nonassessable, or as to the Exercise Price or the number or amount of Warrant Shares or other securities or any assets or other property issuable upon exercise of any Warrant. 14.12 Instructions from Company. The Warrant Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from any person believed in good faith by the Warrant Agent to be the Chairman of the Board, Chief Executive Officer, the Chief Financial Officer or one of the Vice Presidents of the Company, and to apply to such officers for advice or instructions in connection with its duties, and shall not be liable for any action taken or suffered to be taken by it in good faith in accordance with instructions of any such officer or officers or any delay in acting while waiting for these instructions. Section 15. Change of Warrant Agent. The Warrant Agent may resign and be discharged from its duties under this Agreement by giving to the Company thirty (30) days' prior written notice. The Warrant Agent may be removed by like notice to the Warrant Agent and the Holders from the Company, such notice to specify the date when removal shall become effective. If the Warrant Agent shall resign or be removed or shall otherwise become incapable of acting, then the Company shall appoint a successor to the Warrant Agent. If the Company shall fail to make such appointment within a period of thirty (30) days after such removal or written notification of such resignation or incapacity by the resigning or incapacitated Warrant Agent, then any Holder may, at the Company's expense, apply to any court of competent jurisdiction for the appointment of a successor to the Warrant Agent. Any successor Warrant Agent, whether appointed by the Company or such a court, shall be a bank or trust company, in good standing, incorporated under the laws of the United States of America or any state thereof and having at the time of its appointment as Warrant Agent a combined capital and surplus of at least $100,000,000. After appointment and acceptance of such appointment in writing, the successor Warrant Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Warrant Agent without further act or deed; but the former Warrant Agent shall deliver and transfer to the successor Warrant Agent any property at the time held by it hereunder, and shall execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Failure to file any notice provided for in this Section 15, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Warrant Agent or the appointment of the successor Warrant Agent, as the case may be. In the event of such resignation or removal, the successor Warrant Agent shall promptly mail to each Holder written notice of such removal or resignation and the name and address of such successor Warrant Agent. Section 16. Notices. Any notice pursuant to this Agreement by the Company or by any Holder to the Warrant Agent, shall be in writing and shall be delivered in person or sent by registered or certified mail and shall be deemed given upon receipt at its offices at: If by mail: Wells Fargo Bank Minnesota, N.A. Sixth and Marquette MAC N9303-120 Minneapolis, MN 55479 Attention: Corporate Trust Services If in person: Wells Fargo Bank Minnesota, N.A. Corporate Trust Services 608 Second Avenue South 12th Floor - Northstar East Bldg. Minneapolis, MN 55402 Any notice pursuant to this Agreement by the Warrant Agent or by any Holder to the Company, shall be in writing and shall be delivered in person or sent by registered or certified mail and shall be deemed given upon receipt at its offices at Vencor, Inc. (to be renamed Kindred Healthcare, Inc.), 680 South Fourth Street, Louisville, Kentucky 40202, Attn: General Counsel and Chief Financial Officer. Each party hereto may from time to time change the address to which its notices are to be delivered or mailed hereunder by notice to the other party. Any notice mailed pursuant to this Agreement by the Company or the Warrant Agent to the Holders shall be in writing and shall be mailed first class, postage prepaid, or otherwise delivered, to such Holders at their respective addresses in the Warrant Register. The initial address of each Holder shall be as provided by the Company to the Warrant Agent. Any Holder may change its address by notice to the Company and the Warrant Agent given in accordance with this Section 16. Section 17. Cancellation of Warrants. In the event the Company shall purchase or otherwise acquire any Warrants, the same shall thereupon be delivered to the Warrant Agent and be cancelled by it and retired. The Warrant Agent shall cancel any Warrant Certificate surrendered for exchange, substitution, transfer or exercise in whole or in part. Section 18. Supplements and Amendments. The Company and the Warrant Agent may from time to time supplement or amend this Agreement, the Warrants and the Warrant Certificates without approval of any Holder, in order to cure any ambiguity or to correct or supplement any provision contained herein which may be defective or inconsistent with any other provision herein, or to comply with the requirements of any national securities exchange or the Nasdaq National Market or the Nasdaq Small Cap Market, or to make any other provisions in regard to matters or questions arising hereunder which the Company and the Warrant Agent may deem necessary or desirable and which shall not be inconsistent with the provisions of the Warrants and this Agreement. Any other supplement or amendment to this Agreement may be made with the approval of the Holders of a majority of outstanding Warrants of each series of Warrants, voting separately as two classes. Notwithstanding anything in this Agreement to the contrary, no supplement or amendment that changes the rights and duties of the Warrant Agent under this Agreement will be effective against the Warrant Agent without the execution of such supplement or amendment by the Warrant Agent. Section 19. Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Warrant Agent shall bind and inure solely to the benefit of the Company or the Warrant Agent and their respective successors hereunder. Section 20. Applicable Law. This Agreement and each Warrant issued hereunder shall be governed by and construed in accordance with the laws of the state of New York without giving effect to the principles of conflict of laws thereof. Section 21. Benefits of this Agreement. Nothing in this Agreement shall be construed to give to any Person other than the Company, the Warrant Agent and the Holders any legal or equitable right, remedy or claim under this Agreement; rather, this Agreement shall be for the sole and exclusive benefit of the Company, the Warrant Agent, their respective successors, and the Holders. Section 22. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. Section 23. Captions. The captions of the Sections and subsections of this Agreement, have been inserted for convenience only and shall have no substantive effect. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, all as of the day and year first above written. VENCOR, INC. (to be renamed Kindred Healthcare, Inc.) By: /s/ Richard A. Schweinhart ------------------------------------ Name: Richard A. Schweinhart ---------------------------------- Title: Senior Vice President and Chief Financial Officer --------------------------------- WELLS FARGO BANK MINNESOTA, N.A. as Warrant Agent By: /s/ Nicholas D. Tally ------------------------------------ Name: Nicholas D. Tally ---------------------------------- Title: Vice President --------------------------------- EXHIBIT A TO WARRANT AGREEMENT No. _______________ _____________ Warrants Series A Warrant Certificate CUSIP No. 494580-11-1 VENCOR, INC. (to be renamed Kindred Healthcare, Inc.) This Warrant Certificate certifies that _____________________ or registered assigns, is the registered holder of Series A Warrants (the "Warrants") expiring at 5:00 p.m., New York City time, on April 20, 2006 (five years after the Effective Date of the Plan (as defined in the Warrant Agreement referred to on the reverse side hereof)) (the "Expiration Date"), to purchase Common Stock, $0.25 par value per share (the "Common Stock"), of VENCOR, INC. (to be renamed Kindred Healthcare, Inc.), a Delaware corporation (the "Company"). The Warrants may be exercised at any time from 9:00 a.m., New York City time, on April 20, 2001 to 5:00 p.m., New York City time, on the Expiration Date. Each Warrant entitles the holder upon exercise to receive from the Company, if exercised before 5:00 p.m., New York City time, on the Expiration Date, one fully paid and nonassessable share of Common Stock (a "Warrant Share") at the Series A Exercise Price (as defined in the Warrant Agreement referred to on the reverse side hereof), payable in lawful money of the United States of America, upon surrender of this Warrant Certificate and payment of the Series A Exercise Price at the office or agency of the Warrant Agent, subject to the conditions set forth herein and in the Warrant Agreement. The Series A Exercise Price and number of Warrant Shares issuable upon exercise of the Warrants are subject to adjustment upon the occurrence of certain events as set forth in the Warrant Agreement. WARRANTS NOT EXERCISED ON OR BEFORE 5:00 P.M., NEW YORK CITY TIME, ON APRIL 20, 2006 (FIVE YEARS FROM THE EFFECTIVE DATE) SHALL BECOME VOID. Reference is hereby made to the further provisions of this Warrant Certificate set forth on the reverse hereof, and such further provisions shall for all purposes have the same effect as though fully set forth at this place. This Warrant Certificate shall not be valid unless countersigned by the Warrant Agent, as such term is used in the Warrant Agreement. IN WITNESS WHEREOF, VENCOR, INC. (to be renamed Kindred Healthcare, Inc.) has caused this Warrant Certificate to be duly executed. VENCOR, INC. (to be renamed Kindred Healthcare, Inc.) By: ------------------------------ Title: --------------------------- Dated: ---------------------------------- Countersigned: WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as Warrant Agent By: -------------------------------- Authorized Signatory [Form of Warrant Certificate] (Reverse) The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Warrants expiring on the Expiration Date entitling the holder upon exercise to receive shares of Common Stock of the Company and are issued or to be issued pursuant to a Warrant Agreement dated as of April 20, 2001 (the "Warrant Agreement"), duly executed and delivered by the Company to Wells Fargo Bank Minnesota, National Association, as Warrant Agent (the "Warrant Agent"), which Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Warrant Agent, the Company and the holders (the words "holders" or "holder" meaning the registered holders or registered holder) of the Warrants. A copy of the Warrant Agreement may be obtained by the holder hereof upon written request to the Warrant Agent. By accepting initial delivery, transfer or exchange of this Warrant Certificate, the duly registered holder shall be deemed to have agreed to the terms of the Warrant Agreement as it may be in effect from time to time, including any amendments or supplements duly adopted in accordance therewith. The holder of Warrants evidenced by this Warrant Certificate may exercise them by surrendering this Warrant Certificate, with the form of election to purchase set forth hereon properly completed and executed, together with payment of the aggregate Series A Exercise Price in the manner described below at the office of the Warrant Agent. In the event that upon any exercise of Warrants evidenced hereby the number of Warrants exercised shall be less than the total number of Warrants evidenced hereby, there shall be issued to the holder hereof or its assignee a new Warrant Certificate evidencing the number of Warrants not exercised. Payment of the aggregate Series A Exercise Price must be made in cash by wire transfer to the Warrant Agent for the account of the Company. The Warrant Agreement provides that upon the occurrence of certain events the number of shares of Common Stock or type of stock issuable upon the exercise of each Warrant, and the Series A Exercise Price of each Warrant, may, subject to certain conditions, be adjusted. No fractions of a share of Common Stock will be issued upon the exercise of any Warrant, but the Company shall pay the cash value thereof determined as provided in the Warrant Agreement. Warrant Certificates, when surrendered at the office of the Warrant Agent by the registered holder thereof in person or by legal representative or attorney duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided in the Warrant Agreement, but without payment of any service charge, for another Warrant Certificate or Warrant Certificates of like tenor evidencing in the aggregate a like number of Warrants. Upon due presentation for registration of transfer of this Warrant Certificate at the office of the Warrant Agent, a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee(s) in exchange for this Warrant Certificate, subject to the limitations provided in the Warrant Agreement, without charge except for any tax or other governmental charge imposed in connection therewith. The Company and the Warrant Agent may deem and treat the registered holder(s) hereof as the absolute owner(s) of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, of any distribution to the holder(s) hereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary. Neither the Warrants nor this Warrant Certificate entitles any holder hereof to any rights of a stockholder of the Company. PURCHASE FORM The undersigned hereby irrevocably elects to exercise ___ Warrant(s) represented by this Warrant Certificate, according to the terms and conditions hereof and hereby makes payment of $________ in payment of the aggregate Series A Exercise Price thereof. If the number of Warrants exercised shall not be all of the Warrants represented by this Warrant Certificate, then a new Warrant Certificate for the balance remaining shall be issued in the name of the undersigned or its assignee as indicated on the Assignment Form. Dated: ----------------------------------- INSTRUCTIONS FOR REGISTRATION OF STOCK -------------------------------------- Name: ----------------------------------------------------------------------- (please typewrite or print in block letters) Address: -------------------------------------------------------------------- Signature: ------------------------------------------------------------- Note: The signature must conform in all respects to name of holder as specified on the face of this Warrant Certificate Signature Guaranteed: ASSIGNMENT FORM --------------- FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto Name: ___________________________________________________________________ (please typewrite or print in block letters) Address:__________________________________________________________________ its right, title and interest in ___ Warrants represented by this Warrant Certificate and does hereby irrevocably constitute and appoint _________ Attorney, to transfer the same on the books of the Company, with full power of substitution in the premises. Dated: ----------------------------- Signature: ---------------------------- - ------------------------------------ Note: The signature must conform Social Security or other identifying in all respects to name of number of holder holder as specified on the face of this Warrant Certificate Signature Guaranteed: EXHIBIT B TO WARRANT AGREEMENT No. _______________ _____________ Warrants Series B Warrant Certificate CUSIP 494580-12-9 VENCOR, INC. (to be renamed Kindred Healthcare, Inc.) This Warrant Certificate certifies that _____________________ or registered assigns, is the registered holder of Series B Warrants (the "Warrants") expiring at 5:00 p.m., New York City time, on April 20, 2006 (five years after the Effective Date of the Plan (as defined in the Warrant Agreement referred to on the reverse side hereof)) (the "Expiration Date"), to purchase Common Stock, $0.25 par value per share (the "Common Stock"), of VENCOR, INC. (to be renamed Kindred Healthcare, Inc.), a Delaware corporation (the "Company"). The Warrants may be exercised at any time from 9:00 a.m., New York City time, on April 20, 2001 to 5:00 p.m., New York City time, on the Expiration Date. Each Warrant entitles the holder upon exercise to receive from the Company, if exercised before 5:00 p.m., New York City time, on the Expiration Date, one fully paid and nonassessable share of Common Stock (a "Warrant Share") at the Series B Exercise Price (as defined in the Warrant Agreement referred to on the reverse side hereof), payable in lawful money of the United States of America, upon surrender of this Warrant Certificate and payment of the Series B Exercise Price at the office or agency of the Warrant Agent, subject to the conditions set forth herein and in the Warrant Agreement. The Series B Exercise Price and number of Warrant Shares issuable upon exercise of the Warrants are subject to adjustment upon the occurrence of certain events as set forth in the Warrant Agreement. WARRANTS NOT EXERCISED ON OR BEFORE 5:00 P.M., NEW YORK CITY TIME, ON APRIL 20, 2006 (FIVE YEARS FROM THE EFFECTIVE DATE) SHALL BECOME VOID. Reference is hereby made to the further provisions of this Warrant Certificate set forth on the reverse hereof, and such further provisions shall for all purposes have the same effect as though fully set forth at this place. This Warrant Certificate shall not be valid unless countersigned by the Warrant Agent, as such term is used in the Warrant Agreement. IN WITNESS WHEREOF, VENCOR, INC. (to be renamed Kindred Healthcare, Inc.) has caused this Warrant Certificate to be duly executed. VENCOR, INC. (to be renamed Kindred Healthcare, Inc.) By: --------------------------------- Title: ------------------------------ Dated: ------------------------------- Countersigned: WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION as Warrant Agent By: ---------------------------------- Authorized Signatory [Form of Warrant Certificate] (Reverse) The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Warrants expiring on the Expiration Date entitling the holder upon exercise to receive shares of Common Stock of the Company and are issued or to be issued pursuant to a Warrant Agreement dated as of April 20, 2001 (the "Warrant Agreement"), duly executed and delivered by the Company to Wells Fargo Bank Minnesota, National Association, as Warrant Agent (the "Warrant Agent"), which Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Warrant Agent, the Company and the holders (the words "holders" or "holder" meaning the registered holders or registered holder) of the Warrants. A copy of the Warrant Agreement may be obtained by the holder hereof upon written request to the Warrant Agent. By accepting initial delivery, transfer or exchange of this Warrant Certificate, the duly registered holder shall be deemed to have agreed to the terms of the Warrant Agreement as it may be in effect from time to time, including any amendments or supplements duly adopted in accordance therewith. The holder of Warrants evidenced by this Warrant Certificate may exercise them by surrendering this Warrant Certificate, with the form of election to purchase set forth hereon properly completed and executed, together with payment of the aggregate Series B Exercise Price in the manner described below at the office of the Warrant Agent. In the event that upon any exercise of Warrants evidenced hereby the number of Warrants exercised shall be less than the total number of Warrants evidenced hereby, there shall be issued to the holder hereof or its assignee a new Warrant Certificate evidencing the number of Warrants not exercised. Payment of the aggregate Series B Exercise Price must be made in cash by wire transfer to the Warrant Agent for the account of the Company. The Warrant Agreement provides that upon the occurrence of certain events the number of shares of Common Stock or type of stock issuable upon the exercise of each Warrant, and the Series B Exercise Price of each Warrant, may, subject to certain conditions, be adjusted. No fractions of a share of Common Stock will be issued upon the exercise of any Warrant, but the Company shall pay the cash value thereof determined as provided in the Warrant Agreement. Warrant Certificates, when surrendered at the office of the Warrant Agent by the registered holder thereof in person or by legal representative or attorney duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided in the Warrant Agreement, but without payment of any service charge, for another Warrant Certificate or Warrant Certificates of like tenor evidencing in the aggregate a like number of Warrants. Upon due presentation for registration of transfer of this Warrant Certificate at the office of the Warrant Agent, a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee(s) in exchange for this Warrant Certificate, subject to the limitations provided in the Warrant Agreement, without charge except for any tax or other governmental charge imposed in connection therewith. The Company and the Warrant Agent may deem and treat the registered holder(s) hereof as the absolute owner(s) of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, of any distribution to the holder(s) hereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary. Neither the Warrants nor this Warrant Certificate entitles any holder hereof to any rights of a stockholder of the Company. PURCHASE FORM ------------- The undersigned hereby irrevocably elects to exercise ___ Warrant(s) represented by this Warrant Certificate, according to the terms and conditions hereof and hereby makes payment of $________ in payment of the aggregate Series B Exercise Price thereof. If the number of Warrants exercised shall not be all of the Warrants represented by this Warrant Certificate, then a new Warrant Certificate for the balance remaining shall be issued in the name of the undersigned or its assignee as indicated on the Assignment Form. Dated:__________________________________ INSTRUCTIONS FOR REGISTRATION OF STOCK -------------------------------------- Name: ------------------------------------------------------------------------ (please typewrite or print in block letters) Address: --------------------------------------------------------------------- Signature: ---------------------------------------------------------- Note: The signature must conform in all respects to name of holder as specified on the face of this Warrant Certificate Signature Guaranteed: ASSIGNMENT FORM --------------- FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto Name: ------------------------------------------------------------------------ (please typewrite or print in block letters) Address: --------------------------------------------------------------------- its right, title and interest in ___ Warrants represented by this Warrant Certificate and does hereby irrevocably constitute and appoint _________ Attorney, to transfer the same on the books of the Company, with full power of substitution in the premises. Dated: ---------------------- Signature: ---------------------------- - ------------------------------------ Note: The signature must conform Social Security or other identifying in all respects to name of number of holder holder as specified on the face of this Warrant Certificate Signature Guaranteed: EXHIBIT C TO WARRANT AGREEMENT UNLESS THIS WARRANT CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR THE WARRANT AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR EXERCISE, AND ANY WARRANT CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY WARRANT SHARES ISSUED UPON THE EXERCISE HEREOF ARE REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, EXERCISE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. EX-99.4 5 exhibit3.txt EXHIBIT III EXHIBIT III REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of April 20, 2001, by and among Vencor, Inc. (to be renamed Kindred Healthcare, Inc.), a Delaware corporation (the "Company") and the Persons identified on Schedule 1 hereto (the "Initial Holders"). RECITALS A. Pursuant to the Company's Fourth Amended and Restated Plan of Reorganization dated as of December 14, 2000 (the "Plan"), upon satisfaction of certain conditions, the Company will issue New Common Stock and/or New Warrants (both as defined in the Plan) to the Initial Holders in the amounts set forth on Schedule 1 hereto. B. In order to induce the Initial Holders to agree to the Plan, the Company has agreed to grant certain securities registration rights to the Initial Holders as set forth herein. AGREEMENTS In consideration of the premises and the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Definitions and General Interpretive Principles. In addition to the defined terms set forth in the Plan that are not otherwise defined herein (which shall have the same meanings herein as in the Plan) and to the capitalized terms defined elsewhere in this Agreement, the following capitalized terms shall have the following meanings when used in this Agreement: "Adverse Disclosure" means public disclosure of material non-public information, which disclosure in the good faith judgment of the chief executive officer or chief financial officer of the Company (i) would be required to be made in any registration statement filed with the Commission by the Company so that such registration statement would not be materially misleading; (ii) would not be required to be made at such time but for the filing of such registration statement; and (iii) the Company has a bona fide business purpose for avoiding. "Allocation Percentage" has the meaning set forth in Section 3(e). "Commission" means the U.S. Securities and Exchange Commission and any agency succeeding to its functions. "Demand Registration" has the meaning set forth in Section 3(a). "Demand Suspension" has the meaning set forth in Section 3(c). "Expiration Time" means the earlier of (i) April 20, 2003 (the second anniversary of the Effective Date); provided, however, that the rights and obligations relating to Piggyback Registrations contained in Section 4 and Demand Registrations solely as they relate to a Ventas Stockholder Distribution contained in Section 3 (and the provisions of this Agreement specifically related thereto) shall continue until April 20, 2005 (the fourth anniversary of the Effective Date) and (ii) the first time at which there are no Holders. "Holder" means an Initial Holder or a successor, assignee or transferee of an Initial Holder as contemplated by Section 13 hereof, in each case for so long as such Initial Holder, successor, assignee or transferee holds Registrable Securities. "Included Registrable Securities" has the meaning set forth in Section 4(a). "Indemnified Party" has the meaning set forth in Section 8(c). "Indemnifying Party" has the meaning set forth in Section 8(c). "Loss" has the meaning set forth in Section 8(a). "NASD" means the National Association of Securities Dealers, Inc. "New Warrant Stock" means any New Common Stock or other security of the Company or any successor entity issued or issuable upon exercise of any New Warrant. "Participant" has the meaning set forth in Section 8(a). "Person" means a natural person, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or other entity, or a governmental entity or any department, agency or political subdivision thereof. "Piggyback Registration" has the meaning set forth in Section 4(a). "Registrable Securities" means (i) the New Common Stock, (ii) the New Warrants and (iii) the New Warrant Stock issuable upon exercise of the New Warrants, in each case including any securities of the Company or any successor entity that may be issued or distributed in respect thereof by way of stock dividend, stock split or other distribution, consolidation, reclassification or any similar transaction; provided, however, that the foregoing securities shall cease to be "Registrable Securities" to the extent that (i) a registration statement with respect to the sale of such securities has been declared effective under the Securities Act and such securities have been disposed of pursuant to such registration statement, (ii) such securities have been disposed of pursuant to and in accordance with Rule 144 (or any similar provision then in force) under the Securities Act or (iii) such securities may be disposed of pursuant to Rule 144(k) (or any similar provision then in force) under the Securities Act. For purposes of this Agreement, any reference to a percentage (or a majority in number) of Registrable Securities shall mean that percentage of Registrable Securities, collectively, computed on the assumption that all such New Warrants were exercised. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. "Securities Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder. "Shelf Period" has the meaning set forth in Section 2(b). "Shelf Registration" means a registration effected pursuant to Section 2. "Shelf Registration Statement" means a registration statement of the Company filed with the Commission on Form S-1 or, if available, Form S-3 (or any successors thereto) for an offering to be made on a continuous or delayed basis pursuant to Rule 415 under the Securities Act (or any similar rule that may be adopted by the Commission) covering all of the Registrable Securities requested to be included by the Initial Holders. "Shelf Suspension" has the meaning set forth in Section 2(c). "Underwritten Offering" means an offering registered under the Securities Act in which securities of the Company are sold to an underwriter on a firm commitment basis for reoffering to the public. "Ventas" means Ventas Realty, Limited Partnership and/or one or more trusts established for the benefit of the stockholders of Ventas, Inc. (the "Trust"). For purposes of requesting a Demand Registration pursuant to Section 3 hereof, either Ventas Realty, Limited Partnership or the Trust (but not both) shall be deemed an Initial Holder. "Ventas Stockholder Distribution" means a pro rata distribution by Ventas, Inc. of Registrable Securities held by Ventas, Inc. solely to its beneficial owners. Whenever used in this Agreement, except as otherwise expressly provided or unless the context otherwise requires, any noun or pronoun shall be deemed to include the plural as well as the singular and to cover all genders. The name assigned this Agreement and the section captions used herein are for convenience of reference only and shall not be construed to affect the meaning, construction or effect hereof. Unless otherwise specified, the terms "hereof," "herein," "hereunder" and similar terms refer to this Agreement as a whole, and references herein to Sections refer to Sections of this Agreement. 2. Shelf Registration ------------------ (a) Filing. Subject to Section 2(c), as soon as practicable after the Effective Date, but in no event later than 120 days following the Effective Date, the Company shall file with the Commission a Shelf Registration Statement relating to the offer and sale of Registrable Securities by the Holders thereof from time to time in accordance with (i) the reasonable and customary methods of distribution elected by such Holders (including one or more Underwritten Offerings) and (ii) in order to permit a Ventas Stockholder Distribution, in each case as set forth in such Shelf Registration Statement, and shall use its reasonable best efforts to cause such Shelf Registration Statement to be declared effective under the Securities Act as soon as practicable thereafter. (b) Continued Effectiveness. Subject to Section 2(c), the Company shall use its reasonable best efforts to keep the Shelf Registration Statement continuously effective in order to permit any prospectus that forms a part thereof to be usable by Holders until the Expiration Time (such period being the "Shelf Period"), provided that the Shelf Period shall be subject to extension in accordance with Section 6(c). (c) Delay in Filing; Suspension of Registration. If the filing, initial effectiveness or continued effectiveness of the Shelf Registration Statement at any time would require the Company to make an Adverse Disclosure or would require the inclusion in such Shelf Registration Statement of audited financial statements that are unavailable to the Company for reasons beyond its reasonable control, the Company may, upon giving prompt written notice (but in any event within five (5) days of determination) of such action to the Holders, delay the filing or initial effectiveness of, or suspend use of, the Shelf Registration Statement for the shortest period of time determined in good faith by the Company to be necessary for such purpose (a "Shelf Suspension"); provided, however, that the Company shall not be permitted to exercise a Shelf Suspension (i) more than three times during any twenty-four (24) month period, (ii) for a period exceeding ninety (90) days on any one occasion, or (iii) for an aggregate period exceeding one hundred twenty (120) days in any twelve (12) month period. In the event of a Shelf Suspension, the Holders agree to suspend, immediately upon their receipt of the notice referred to above, any sale or offer to sell the Registrable Securities, and the use of the prospectus related to the Shelf Registration in connection with any such sale or offer to sell Registrable Securities, and agree not to disclose to any other Person the fact that the Company has exercised a Shelf Suspension or any related facts. The Company shall promptly (but in any event within five (5) days) notify the Holders upon the termination of any Shelf Suspension. (d) Underwritten Offering. If the Holders holding not less than a majority of the Registrable Securities included in the Shelf Registration Statement so elect by written request to the Company, such Holders may conduct an offering in the form of an Underwritten Offering and the Company, if necessary, shall amend or supplement the Shelf Registration Statement for such purpose. The Holders holding a majority of the Registrable Securities included in such Underwritten Offering shall, after consulting with the Company, have the right to select the managing underwriter or underwriters for the offering, subject to the right of the Company to approve such managing underwriter or underwriters (which approval shall not be unreasonably withheld) and to select one co-managing underwriter reasonably acceptable to such Holders. (e) Effect on Demand Registration Obligation. The provisions of Section 3 of this Agreement shall not apply at any time that the Company maintains the effectiveness of a Shelf Registration Statement and is otherwise complying with its obligations under this Section 2 with respect to all Registrable Securities. 3. Demand Registrations. -------------------- (a) Demand by Holders. (i) Subject to Section 2(e), each Initial Holder may make a written request to the Company for registration of all or any part of the Registrable Securities held by such requesting Holder; provided that the estimated market value of the Registrable Securities to be so registered is at least $10 million in the aggregate or not less than 5% of the Registrable Securities; and provided further that Ventas shall be entitled to request a Demand Registration with respect to a Ventas Stockholder Distribution without regard to the dollar or percentage limits set forth above. Any such requested registration shall hereinafter be referred to as a "Demand Registration." Each request for a Demand Registration shall specify the aggregate amount of Registrable Securities to be registered and the intended methods of disposition thereof. (ii) Within ten (10) days following receipt of any request for a Demand Registration, the Company shall deliver written notice of such request to all other Holders of Registrable Securities. Thereafter, subject to Section 3(e), the Company shall include in such Demand Registration any additional Registrable Securities which the Holder or Holders thereof have requested in writing be included in such Demand Registration, provided that all requests therefor have been received by the Company within ten (10) days of the Company's having given the applicable notice to such Holder or Holders. All such requests shall specify the aggregate amount of Registrable Securities to be registered and the intended method or methods of distribution of the same. The Company also may elect to include in such registration additional securities of the Company to be registered thereunder, including securities to be sold for the Company's own account or for the account of Persons who are not Holders. (iii) As promptly as practicable following receipt of a request for a Demand Registration, but in no event later than the later of (x) 180 days following the Effective Date and (y) 60 days following receipt by the Company of such request, the Company shall, subject to the terms hereof and applicable law, use its reasonable best efforts to file a registration statement relating to such Demand Registration and shall use its reasonable best efforts to cause such registration statement to be declared effective under the Securities Act as soon as practicable thereafter and to keep such registration statement effective for not less than ninety (90) days (or such shorter period during which a prospectus is required to be delivered under the Securities Act). (b) Limitation on Demand Registrations; Effective Registration. In no event shall the Company be required to effect more than one Demand Registration requested by any Initial Holder. In addition, the Company shall not be required to file a registration statement for a Demand Registration (i) at any time during the 120-day period following the effective date of another such registration statement (other than a registration statement relating solely to a Ventas Stockholder Distribution), or (ii) during the period commencing on the seventh day prior to the effective date of an offering by the Company that is registered under the Securities Act and ending on the ninetieth day after such offering is completed, provided that, solely with respect to a Ventas Stockholder Distribution, Ventas shall have been afforded the opportunity to participate in such offering in accordance with the provisions of Section 4 hereof. A registration will not count as a Demand Registration hereunder until the related registration statement becomes effective and has remained effective for the period of time specified in Section 3(a)(iii). (c) Suspension of Registration. If the filing, initial effectiveness or continued use of a registration statement in respect of a Demand Registration at any time would require the Company to make an Adverse Disclosure or would require the inclusion in such registration statement of audited financial statements that are unavailable to the Company for reasons beyond the Company's reasonable control, the Company may, upon giving prompt written notice (but in any event within five (5) days of determination) of such action to the Holders holding Registrable Securities included or proposed to be included in such Demand Registration, delay the filing or initial effectiveness of, or suspend use of, such registration statement for the shortest period of time determined in good faith by the Company to be necessary for such purpose (a "Demand Suspension"); provided, however, that the Company shall not be permitted to exercise a Demand Suspension (i) more than three times during any twenty-four (24) month period, (ii) for a period exceeding ninety (90) days on any one occasion, or (iii) for an aggregate period exceeding one hundred twenty (120) days in any twelve (12) month period. In the event of a Demand Suspension, the Holders agree to suspend, immediately upon their receipt of the notice referred to above, any sale or offer to sell the Registrable Securities, and the use of the prospectus related to the Demand Registration in connection with any such sale or offer to sell Registrable Securities, and agree not to disclose to any other Person the fact that the Company has exercised a Demand Suspension or any related facts. The Company shall promptly (but in any event within five (5) days) notify the Holders holding Registrable Securities affected by any Demand Suspension upon the termination of such Demand Suspension. (d) Underwritten Offering. If the Holders holding not less than a majority of the Registrable Securities included in any offering pursuant to a Demand Registration so elect by written request to the Company, such offering shall be in the form of an Underwritten Offering. Holders holding a majority of the Registrable Securities included in such Underwritten Offering shall, after consulting with the Company, have the right to select the managing underwriter or underwriters for the offering, subject to the right of the Company to approve such managing underwriter or underwriters (which approval shall not be unreasonably withheld) and to select one co-managing underwriter reasonably acceptable to such Holders. (e) Priority of Securities Registered Pursuant to Demand Registrations. If the managing underwriter or underwriters of a proposed offering of Registrable Securities included in a Demand Registration inform the Holders of such Registrable Securities and the Company in writing that, in its or their opinion, the number of securities requested to be included in such Demand Registration (including securities of the Company for its own account or for the account of other Persons which are not Holders) exceeds the number which can be sold in such offering without being likely to have an adverse effect on the price, timing or distribution of the securities offered or the market for the securities offered, the Company will include in such registration all of the Registrable Securities sought to be registered therein by the Holders and only such lesser number of other securities requested to be included for the account of the Company or for the account of other Persons which are not Holders as shall not, in the opinion of the managing underwriter or underwriters, be likely to have such an effect. In the event that, despite the reduction of the number of securities to be offered for the account of the Company or for the account of Persons which are not Holders in such registration pursuant to the immediately preceding sentence, the number of Registrable Securities to be included in such registration exceeds the number which, in the opinion of the managing underwriter or underwriters, can be sold without having the adverse effect referred to above, the number of Registrable Securities that can be included without having such an adverse effect shall be allocated pro rata among the Holders which have requested participation in the Demand Registration (based, for each such Holder, on the percentage derived by dividing (i) the number of Registrable Securities which such Holder has requested to include in such Demand Registration by (ii) the aggregate number of Registrable Securities which all such Holders have requested to include (such Holder's "Allocation Percentage")). Notwithstanding the foregoing, if more than 50% of the Registrable Securities of a Holder requested to be registered pursuant to a Demand Registration under this Section 3 are excluded from such Demand Registration, then the Holder having such securities excluded (an "Excluded Holder") shall have the right to withdraw all, or any number, of their Registrable Securities from inclusion in such Demand Registration no later than 20 days prior to its effectiveness. If less than 80% of the aggregate Registrable Securities requested to be included in such Demand Registration by an Initial Holder are actually included therein, such registration will not count as a Demand Registration of such Initial Holder for purposes of this Section 3. Notwithstanding the foregoing, no Registrable Securities to be distributed pursuant to a Ventas Stockholder Distribution shall be excluded from a Demand Registration by virtue of this Section 3(e). (f) Registration Statement Form. Registrations under this Section 3 shall be on such appropriate registration form of the Commission (i) as shall be selected by the Company and as shall be reasonably acceptable to the Holders holding a majority of Registrable Securities requesting participation in the Demand Registration and (ii) as shall permit the disposition of the Registrable Securities in accordance with the intended method or methods of disposition specified in the applicable Holders' requests for such registration. 4. Piggyback Registrations. ----------------------- (a) Participation. ------------- (i) If the Company at any time proposes to file a registration statement with respect to any offering of equity securities for its own account or for the account of any holders of its securities (other than (A) a registration under Section 2 hereof, (B) a registration on Form S-4 or S-8 or any successor form to such forms or (C) a registration on any registration form which does not permit secondary sales or does not include substantially the same information as would be required to be included in a registration statement covering the sale of Registrable Securities (other than information as to the selling stockholders and their intended method or methods of disposition)), then, as soon as practicable (but in no event less than fifteen (15) days prior to the proposed date of filing such registration statement with the Commission), the Company shall give written notice of such proposed filing to all Holders of Registrable Securities and such notice shall offer the Holders the opportunity to register such number of Registrable Securities as each such Holder may request in writing (a "Piggyback Registration"). Subject to Section 4(b), the Company shall include in such registration statement all such Registrable Securities with respect to which the Company has received written requests for inclusion therein within ten (10) days after the Company's notice has been given ("Included Registrable Securities"). If at any time after giving written notice of its intention to register any equity securities and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to register or to delay registration of such equity securities, the Company may, at its election, give written notice of such determination to each Holder holding Included Registrable Securities and, (x) in the case of a determination not to register, shall be relieved of its obligation to register any Included Registrable Securities in connection with such registration, and (y) in the case of a determination to delay registering, shall be permitted to delay registering any Included Registrable Securities for the same period as the delay in registering such other equity securities. (ii) If the offering pursuant to a Piggyback Registration is to be an Underwritten Offering, then each Holder making a request for its Registrable Securities to be included therein must, and the Company shall use its reasonable best efforts to make such arrangements with the underwriters so that each such Holder may, participate in such Underwritten Offering on the same terms as other Persons selling securities in such Underwritten Offering. If the offering pursuant to such registration is to be on any other basis, then each Holder making a request for a Piggyback Registration pursuant to this Section 4(a) must participate in such offering on such basis. Notwithstanding any provision in this Agreement to the contrary, any Holder participating through a Piggyback Registration shall have no right to change the intended method or methods of disposition otherwise applicable, other than to include provisions reasonably necessary to effect a Ventas Stockholder Distribution. (b) Priority of Piggyback Registration. If the managing underwriter or underwriters of any proposed offering of securities included in a Piggyback Registration informs the Holders holding Included Registrable Securities in writing that, in its or their opinion, the total number of securities which such Holders and any other Persons intend to include in such offering exceeds the number which can be sold in such offering without being likely to have an adverse effect on the price, timing or distribution of the securities offered or the market for the securities offered, then the securities to be included in such registration shall be allocated as follows: (i) first, 100% of the securities that the Company or any Person exercising a contractual right to demand registration has proposed to sell shall be included therein; (ii) second, and only if all the securities referenced in clause (i) have been included, the number of Included Registrable Securities that, in the opinion of such underwriter or underwriters, can be sold without having such adverse effect shall be included therein, with such number to be allocated pro rata among the Holders of Included Registrable Securities (based, for each such Holder, on such Holder's Allocation Percentage); provided, however, that if as a result of the provisions of this Section 4(b), any Holder shall not be entitled to include at least 50% of such Holder's Included Registrable Securities, such Holder may withdraw such Holder's request to include all, or any number of such Registrable Securities in such registration statement no later than 20 days prior to its effectiveness; and (iii) third, and only if all of the Registrable Securities referenced in clauses (i) and (ii) have been included, any other equity securities eligible for inclusion in such registration which, in the opinion of such underwriters, can be sold without having such adverse effect shall be included therein. 5. Black-out Periods ----------------- (a) Black-out Periods for Holders. In the event of (i) a registration by the Company involving the offering and sale by the Company of its equity securities or securities convertible into or exchangeable for its equity securities or (ii) an Underwritten Offering involving the offering and sale by Holders of Registrable Securities, the Holders agree, if requested by the Company (or, in the case of any Underwritten Offering, by the managing underwriter or underwriters) and provided that the Company has complied with its obligations under Section 4, not to effect any public sale or distribution (including any sale pursuant to Rule 144 under the Securities Act) of any securities of the Company (except, in each case, as part of the applicable registration, if permitted, and provided that, solely with respect to a Ventas Stockholder Distribution, Ventas shall have been afforded the opportunity to participate in such offering in accordance with the provisions of Section 4 hereof) which securities are the same as or similar to those being registered in connection with such registration, or which are convertible into or exchangeable or exercisable for such securities, during the period beginning seven (7) days before and ending 90 days (or such lesser period as may be permitted by the Company or such managing underwriters) after, the effective date of the registration statement filed in connection with such registration, to the extent such Holders are timely notified in writing by the Company or the managing underwriter or underwriters. (b) Black-out Periods for the Company. In the event of a registration of Registrable Securities pursuant to Section 2 or Section 3 hereof, the Company agrees, if requested by the Holders holding a majority of the Registrable Securities to be sold pursuant to such registration (or, in the case of an Underwritten Offering, by the managing underwriter or underwriters in such Underwritten Offering), not to effect any public sale or distribution of any securities of the Company which are the same as or similar to those being registered, or which are convertible into or exchangeable or exercisable for such securities, during the period beginning seven (7) days before, and ending 90 days (or such lesser period as may be permitted by such Holders or such underwriter or underwriters) after, the effective date of the registration statement filed in connection with such registration (or, in the case of an Underwritten Offering under the Shelf Registration, the date of the closing under the underwriting agreement in connection therewith), to the extent the Company is timely notified in writing by such Holders or such underwriter or underwriters. Notwithstanding the foregoing, the Company may effect a public sale or distribution of securities of the type described above and during the periods described above if the same (A) is made pursuant to a registration on Form S-4 or S-8 or any successor form to such forms or (B) in connection with a direct or indirect acquisition, merger or other business combination by the Company of or with another Person. 6. Registration Procedures. ----------------------- (a) In connection with the Company's registration obligations pursuant to this Agreement, the Company shall, subject to the limitations set forth herein, use its reasonable best efforts to effect any such registration so as to permit the sale of the applicable Registrable Securities in accordance with the intended method or methods of distribution thereof as expeditiously as reasonably practicable and, in any event, in conformity with any required time period set forth herein, and in connection therewith the Company shall: (i) before filing a registration statement or prospectus with the Commission, or any amendments or supplements thereto, furnish to the underwriter or underwriters, if any, and to the Holders holding Registrable Securities included in such registration statement, copies of all documents prepared to be filed, which documents shall be subject to the reasonable review and comment of such Holders, such underwriters, if any, and their respective counsel; (ii) prepare and file with the Commission a registration statement relating to the registration on any appropriate form under the Securities Act, which form shall be available for the sale of the Registrable Securities; (iii) prepare and file with the Commission such amendments or supplements to the applicable registration statement or prospectus used in connection therewith as may be (A) reasonably requested by any participating Holder (to the extent such request relates to information relating to such Holder), (B) necessary to keep such registration effective for the period of time required by this Agreement or (C) necessary to comply with the applicable provisions of Rules 424 and 430A under the Securities Act; (iv) notify the selling Holders and the managing underwriter or underwriters, if any, as soon as reasonably practicable after notice thereof is received by the Company (A) when the applicable registration statement or any amendment thereto has been filed or becomes effective and when the applicable prospectus or any amendment or supplement thereto has been filed, (B) of any written comments by the Commission or any request by the Commission for amendments or supplements to such registration statement or prospectus or for additional information, (C) of the issuance by the Commission of any stop order suspending the effectiveness of such registration statement or any order preventing or suspending the use of any preliminary or final prospectus or the initiation or threat of any proceedings for such purposes and (D) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities for offering or sale in any jurisdiction or the initiation or threat of any proceeding for such purpose; (v) promptly notify each selling Holder and the managing underwriter or underwriters, if any, when the Company becomes aware of the occurrence of any event as a result of which the applicable registration statement or prospectus (as then in effect) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein (in the case of the prospectus and any preliminary prospectus, in light of the circumstances under which they were made) not misleading or, if for any other reason it shall be necessary to amend or supplement such registration statement or prospectus in order to comply with the Securities Act and, in either case as promptly as reasonably practicable thereafter, prepare and file with the Commission a post-effective amendment or supplement to such registration statement or prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Registrable Securities, the prospectus shall not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading; (vi) make every reasonable effort to prevent or obtain at the earliest possible moment the withdrawal of any stop order with respect to the applicable registration statement or other order suspending the use of any preliminary or final prospectus; (vii) promptly incorporate in a prospectus supplement or post-effective amendment to the applicable registration statement such information as the managing underwriter or underwriters, if any, or the Holders holding a majority of the Registrable Securities being sold agree should be included therein (or, in the case of a Ventas Stockholder Distribution, by Ventas) relating to the plan of distribution with respect to such Registrable Securities, the amount of Registrable Securities being distributed and the purchase price being paid therefor; and make all required filings of such prospectus supplement or post-effective amendment as soon as reasonably practicable after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; (viii) furnish to each selling Holder and each managing underwriter, if any, without charge, as many conformed copies as such Holder or managing underwriter may reasonably request of the applicable registration statement, including all documents incorporated by reference therein or exhibits to such registration statement; (ix) deliver to each selling Holder and each managing underwriter, if any, without charge, as many copies of the applicable prospectus (including each preliminary prospectus) as such Holder or managing underwriter may reasonably request (it being understood that the Company consents to the use of the prospectus by each of the selling Holders and the underwriter or underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by the prospectus); (x) on or prior to the date on which the applicable registration statement is declared effective, use its reasonable best efforts to register or qualify such Registrable Securities for offer and sale under the securities or "Blue Sky" laws of each state and other jurisdiction of the United States, as any such selling Holder or underwriter, if any, or their respective counsel reasonably and timely requests in writing, and do any and all other acts or things reasonably necessary or advisable to keep such registration or qualification in effect so as to permit the commencement and continuance of sales and dealings in such jurisdictions for as long as may be necessary to complete the distribution of the Registrable Securities covered by the registration statement; provided that the Company shall not be required (A) to qualify generally to do business in any jurisdiction where it is not then so qualified, (B) to take any action which would subject it to taxation or general service of process in any such jurisdiction where it is not then so subject or (C) make any change in its charter or by-laws that the board of directors of the Company determines in good faith to be contrary to the best interests of the Company and its stockholders; (xi) cooperate with the selling Holders and the managing underwriter, underwriters or agent, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends; (xii) not later than the effective date of the applicable registration statement, provide a CUSIP number for all Registrable Securities included in such registration statement and provide the applicable transfer agent with printed certificates for the Registrable Securities, which certificates shall be in a form eligible for deposit with The Depository Trust Company; (xiii) obtain for delivery to the underwriter or underwriters, if any, with copies to the Holders included in such registration, an opinion or opinions from counsel for the Company dated the effective date of the registration statement or, in the event of an Underwritten Offering, the date of the closing under the underwriting agreement, in customary form, scope and substance; (xiv) in the case of an Underwritten Offering, obtain for delivery to the Company and the underwriter or underwriters, if any, with copies (subject to the reasonable consent of the certified public accountants referred to below, determined in accordance with market practice) to the Holders included in such registration, a comfort letter from the Company's independent certified public accountants in customary form and covering such matters of the type customarily covered by comfort letters and as the managing underwriter or underwriters reasonably request, dated the date of execution of the underwriting agreement and brought down to the closing under the underwriting agreement; (xv) reasonably cooperate with each selling Holder of Registrable Securities and each underwriter or agent, if any, participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with the NASD; (xvi) use its reasonable best efforts to comply with all applicable rules and regulations of the Commission and make generally available to its securityholders such information (financial or otherwise) as may be required thereunder; (xvii) provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by the applicable registration statement from and after a date not later than the effective date of such registration statement; (xviii) cause all Registrable Securities covered by the applicable registration statement to be listed on each securities exchange on which any of the Company's securities of such class are then listed or quoted and on each inter-dealer quotation system on which any of the Company's securities of such class are then quoted; and (xix) make available upon reasonable notice at reasonable times and for reasonable periods for inspection by each Initial Holder and a representative appointed by the Holders holding a majority of the Registrable Securities covered by the applicable registration statement, by any managing underwriter or underwriters participating in any disposition to be effected pursuant to such registration statement and by any attorney, accountant or other agent retained by such Holders or any such managing underwriter, all pertinent financial and other records, pertinent corporate documents and properties of the Company as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause all of the Company's officers, directors and employees and the independent public accountants who have certified its financial statements to make themselves available upon reasonable notice at reasonable times and for reasonable periods to discuss the business of the Company and to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement as shall be reasonably necessary to enable them to exercise their due diligence responsibility (subject to the entry by each party referred to in this clause (xix) into a customary confidentiality agreement in a form reasonably acceptable to the Company). (b) The Company may require each selling Holder as to which any registration is being effected to furnish to the Company such information regarding itself, the Registrable Securities held by it, the distribution of such Holder's Registrable Securities and such other information relating to such Holder and its ownership of the applicable Registrable Securities as the Company may from time to time reasonably request, including without limitation information required under Item 507 of Regulation S-K and other information necessary to effect a registration with respect to a Ventas Stockholder Distribution. Each Holder agrees to furnish such information to the Company and to cooperate with the Company as necessary to enable the Company to comply with the provisions of this Agreement. The Company shall have the right to exclude any Holder that does not comply with the preceding sentence from the applicable registration. (c) Each Holder agrees by acquisition of its Registrable Securities that, upon receipt of any notice from the Company of the occurrence of any event of the kind described in Section 6(a)(v), such Holder shall discontinue disposition of its Registrable Securities pursuant to such registration statement until such Holder's receipt of the copies of the supplemented or amended prospectus contemplated by Section 6(a)(v) and of any additional or supplemental filings that are incorporated by reference in the prospectus, or until such Holder is advised in writing by the Company that the use of the prospectus may be resumed, and has received copies and, if so directed by the Company, such Holder shall deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Holder's possession, of the prospectus covering such Registrable Securities which are current at the time of the receipt of such notice. In the case of the Shelf Registration Statement, in the event the Company shall give any such notice, the Shelf Period shall be extended by the number of days in the period from and including the date of the giving of such notice in accordance with Section 16 and pursuant to this Section 6(c) to but not including the date when each Holder of Registrable Securities covered by the Shelf Registration Statement shall have received copies of the supplemented or amended prospectus contemplated by Section 6(a)(v), and the restrictions of this Section 6(c) shall no longer be applicable. 7. Registration Expenses. The Company shall pay all expenses incident to its performance or compliance with its obligations under this Agreement, including without limitation: (i) all registration and filing fees, and any other fees and expenses associated with filings required to be made with the Commission or the NASD, (ii) all fees and expenses of compliance with federal and state securities or "Blue Sky" laws, (iii) all of its printing, duplicating, word processing, messenger, telephone, facsimile and delivery expenses (including expenses of printing certificates for the Registrable Securities in a form eligible for deposit with The Depository Trust Company and of printing prospectuses), (iv) all fees and disbursements of counsel for the Company and of all independent certified public accountants of the Company, (v) Securities Act liability insurance or similar insurance if the Company so desires, (vi) all fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange or the quotation of the Registrable Securities on any inter-dealer quotation system, (vii) the reasonable fees and expenses of one counsel for all Holders (selected by the Holders of a majority of the Registrable Securities included in a registration) in an amount not to exceed $50,000 and (viii) all road show costs and expenses not paid for by the underwriters. In addition, the Company shall pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any audit and the fees and expenses of any Person, including special experts, retained by the Company. The Company shall not be required to pay (w) any other costs or expenses in the course of the transactions contemplated hereby, (x) any expenses incurred by the Holders (except as provided in clauses (i), (ii) and (vii) of the preceding sentence), (y) any underwriting discounts or commissions or transfer taxes attributable to the sale of Registrable Securities or (z) any fees and expenses of counsel to the underwriters. 8. Indemnification. --------------- (a) Indemnification by the Company. The Company agrees to indemnify and hold harmless, to the fullest extent permitted by law, each Holder selling Registrable Securities and its respective officers, directors, partners and employees and each Person who controls (within the meaning of the Securities Act or the Securities Exchange Act) such selling Holder (each, a "Participant") from and against any and all losses, claims, damages, judgments, liabilities and expenses (including reasonable costs of investigation and legal expenses) caused by, arising out of or based upon (i) any untrue or alleged untrue statement of a material fact contained in any registration statement under which such Registrable Securities were registered under the Securities Act (including any final, preliminary or summary prospectus contained therein or any amendment thereof or supplement thereto or any documents incorporated by reference therein) or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus or preliminary prospectus, in light of the circumstances under which they were made) not misleading (each, a "Loss" and collectively "Losses"); provided, however, that the Company shall not be liable to any Participant in any such case to the extent that any such Loss is caused by written information furnished to the Company by such Holder expressly for use in the preparation thereof , or if such untrue statement or alleged untrue statement or omission or alleged omission is corrected in an amendment or supplement to such prospectus which has been made available to the Holders and the relevant Holder fails to deliver such prospectus as so amended or supplemented, if such delivery is required under applicable law or the applicable rules of any securities exchange, prior to or concurrently with the sales of the Registrable Securities to the Person asserting such Loss. This indemnity shall be in addition to any liability the Company may otherwise have. (b) Indemnification by the Holders. Each selling Holder agrees (severally and not jointly) to indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors, officers and employees and each Person who controls the Company (within the meaning of the Securities Act and the Securities Exchange Act) from and against any and all Losses to the extent, but only to the extent, that any such Loss is caused by, arises out of or is based upon any information furnished in writing by such selling Holder to the Company specifically for inclusion in any registration statement under which such Registrable Securities were registered under the Securities Act (including any final, preliminary or summary prospectus contained therein or any amendment thereof or supplement thereto or any documents incorporated by reference therein) and was not corrected in a subsequent writing prior to or concurrently with the sale of the Registrable Securities to the Person asserting such Loss. The liability of any Holder under this paragraph shall in no event exceed the amount by which proceeds received by such Holder from sales of Registrable Securities giving rise to such obligations exceeds the amount of any Loss which such Holder has otherwise been required to pay by reason of such untrue statement or omission. This indemnity shall be in addition to any liability such Holder may otherwise have. (c) Indemnification Proceedings. Any Person entitled to indemnification hereunder (an "Indemnified Party") shall (i) give prompt written notice to the Person from whom such indemnification may be sought (the "Indemnifying Party") of any claim with respect to which it seeks indemnification, provided, however, that the failure to so notify the Indemnifying Party shall not relieve it of any obligation or liability which it may have hereunder or otherwise except to the extent it is materially prejudiced by such failure, and (ii) permit such Indemnifying Party to assume the defense of such claim with counsel reasonably satisfactory to the Indemnified Party; provided, however, that the Indemnified Party shall have the right to select and employ separate counsel and to participate in the defense of such claim, and the fees and expenses of such counsel shall be at the expense of the Indemnified Party unless (A) the Indemnifying Party has agreed in writing to pay such fees or expenses, (B) the Indemnifying Party shall have failed to assume the defense of such claim within a reasonable time after having received notice of such claim from the Indemnified Party and to employ counsel reasonably satisfactory to the Indemnified Party, (C) in the reasonable judgment of the Indemnified Party, based upon advice of its counsel, a conflict of interest exists between the Indemnified Party and the Indemnifying Party with respect to such claims or (D) the Indemnified Party has reasonably concluded (based on advice of counsel) that there may be legal defenses available to it or other Indemnified Parties that are different from or in addition to those available to the Indemnifying Party (in which case, if the Indemnified Party notifies the Indemnifying Party in writing that the Indemnified Party elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense of such claim on behalf of the Indemnified Party). If such defense is assumed by the Indemnifying Party, or if such defense is not assumed by the Indemnifying Party but the Indemnifying Party acknowledges that the Indemnified Party is entitled to indemnification hereunder, the Indemnifying Party shall not be subject to any liability for any settlement made without its consent, which consent shall not be unreasonably withheld; provided, that an Indemnifying Party shall not be required to consent to any settlement involving the imposition of equitable remedies or involving the imposition of any material obligations on such Indemnifying Party other than financial obligations for which such Indemnified Party will be indemnified hereunder. If the Indemnifying Party assumes the defense, the Indemnifying Party shall have the right to settle such action without the consent of the Indemnified Party; provided, that the Indemnifying Party shall be required to obtain the consent of the Indemnified Party (which consent shall not be unreasonably withheld) if the settlement includes any admission of wrongdoing on the part of the Indemnified Party or any equitable remedies or restriction on the Indemnified Party or its officers, directors or employees. No Indemnifying Party shall consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to each Indemnified Party of an unconditional release from all liability in respect of such claim or litigation. An Indemnifying Party (or, as the case may be, Indemnifying Parties) shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than one separate firm admitted to practice in such jurisdiction at any one time from all Indemnified Parties collectively unless (x) the employment of more than one counsel has been authorized in writing by such Indemnifying Party (or Indemnifying Parties) or (y) a conflict exists or may exist (based on advice of counsel to an Indemnified Party) between such Indemnified Party and other Indemnified Parties, in each of which cases the Indemnifying Party (or Indemnifying Parties) shall be obligated to pay the reasonable fees and expenses of such additional counsel or counsels. The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Party or any officer, director or controlling Person of such Indemnified Party and shall survive the transfer of Registrable Securities. (d) Contribution. If for any reason the indemnification provided for in paragraphs (a) and (b) of this Section 8 is unavailable to an Indemnified Party or is insufficient to hold it harmless as contemplated by paragraphs (a) and (b) of this Section 8, then the Indemnifying Party shall contribute to the amount paid or payable by the Indemnified Party as a result of such Loss in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and the Indemnified Party on the other. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Indemnifying Party or the Indemnified Party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. Notwithstanding anything in this Section 8(d) to the contrary, no Indemnifying Party (other than the Company) shall be required pursuant to this Section 8(d) to contribute any amount in excess of the amount by which the net proceeds received by such Indemnifying Party from the sale of Registrable Securities in the offering to which the Losses of the Indemnified Parties relate exceeds the amount of any damages which such Indemnifying Party has otherwise been required to pay by reason of such untrue statement or omission. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 8(d) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in the preceding sentences. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. If indemnification is available under this Section 8, the Indemnifying Parties shall indemnify each Indemnified Party to the fullest extent provided in Sections 8(a) and 8(b) hereof without regard to the relative fault of said Indemnifying Parties or Indemnified Party. (e) Reimbursement. In addition to, but not in duplication of, the foregoing, each Initial Holder shall be entitled to reimbursement from the Company for any out-of-pocket losses actually incurred in the event, and only to the extent, that such Holder suffers such losses as a result of such Holder's inability to make delivery of sold securities due to the Company's breach of its commitment to provide timely notice as required by clauses (C) and (D) of Section 6(a)(iv). 9. Compliance with Rule 144. The Company shall file the reports required to be filed by it under the Securities Act and the Securities Exchange Act so long as the Company is obligated to file such reports, and it shall take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144 under the Securities Act, as such Rule may be amended from time to time or (b) any similar rules or regulations hereafter adopted by the Commission. Upon the written request of any Holder, the Company shall deliver to such Holder a written statement as to whether it has complied with such requirements. 10. Underwriting Agreements. If requested by the underwriters for any Underwritten Offering requested by Holders pursuant to Section 2 or Section 3, the Company and the Holders of Registrable Securities to be included therein shall enter into an underwriting agreement with such underwriters, such agreement to be reasonably satisfactory in substance and form to the Company, the Holders holding a majority of the Registrable Securities to be included in such Underwritten Offering and the underwriters, and to contain such terms and conditions as are generally prevailing in agreements of that type, including, without limitation, such representations and warranties to, and covenants with, the underwriters with respect to the business of the Company and its subsidiaries and the registration statement, prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, as are customarily made by issuers to underwriters in underwritten offerings of securities similar to the Registrable Securities, and indemnities no less favorable to the recipient thereof than those provided in Section 8. The Holders holding any Registrable Securities to be included in any Underwritten Offering pursuant to Section 4 shall enter into such an underwriting agreement at the request of the Company. No Holder shall be required in any such underwriting agreement to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements regarding such Holder, such Holder's Registrable Securities, such Holder's intended method of distribution and any other representations required by law or as the underwriters may reasonably request; provided, however, that each Holder agrees to execute customary powers of attorney, custody agreements and other forms or documents reasonably requested by the underwriters. 11. Term. This Agreement shall terminate at the Expiration Time. The provisions of Section 8, 22 and 23 shall survive any termination. 12. Amendments and Waivers. The provisions of this Agreement may be amended or waived at any time only by the written agreement of the Company and the Holders holding a majority of the Registrable Securities; provided, however, that any amendment or waiver that adversely effects any Holder or group of Holders (including without limitation any amendment or waiver to the extent it has an adverse effect on the ability to effect a Ventas Stockholders Distribution) shall only be binding on those Holders that have expressly agreed to such amendment or waiver. Any amendment or waiver on the part of any such Holders of any provision or condition of this Agreement must be made in writing and shall be effective only to the extent specifically set forth in writing. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each Holder and the Company, except as provided in the proviso to the first sentence of this section. Each Holder acknowledges that by operation of this paragraph the Holders holding a majority of the Registrable Securities, acting in conjunction with the Company, will have the right and power to diminish or eliminate all rights pursuant to this Agreement, except as provided in the proviso to the first sentence of this section. 13. Successors, Assigns and Transferees. ----------------------------------- (a) The registration rights (other than demand registration rights pursuant to Section 3 hereof; provided, however, that each Initial Holder may transfer and assign all but not less than all of its Registrable Securities to one entity, in which case such Initial Holder's unexercised Demand Registration shall also be transferred and assigned) of any Holder under this Agreement with respect to any Registrable Securities may be transferred and assigned, provided that no such transfer or assignment shall be binding upon or obligate the Company under this Agreement to any such transferee or assignee unless and until (i) the Company shall have received notice of such transfer or assignment as herein provided and a written agreement of the transferee or assignee to be bound by the provisions of this Agreement and (ii) such transferee or assignee holds Registrable Securities. Any transfer or assignment of the rights and obligations under this Agreement made other than as provided in the first sentence of this Section 13 shall be null and void. (b) This Agreement shall be binding upon and shall inure to the benefit of the parties hereto, and their respective successors and permitted assigns. 14. Final Agreement. This Agreement constitutes the final agreement of the parties concerning the matters referred to herein, and supersedes all prior agreements and understandings. 15. Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement. 16. Notices. All notices, demands or other communications or documents to be given or delivered under or by reason of the provisions of this Agreement shall be made in writing and shall be deemed to have been received (a) when delivered personally to the recipient; (b) when sent to the recipient by telecopy (receipt electronically confirmed by sender's telecopy machine) if during normal business hours of the recipient, otherwise on the next business day; (c) one business day after the date when sent to the recipient by reputable express courier service (charges prepaid), or (d) seven business days after the date when mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid. Such notices, demands and other communications shall be sent to the parties at the addresses indicated below, or to such other address as any party hereto may, from time to time, designate in writing delivered pursuant to the terms of this Section 16: If to the Initial Holders, to the addresses set forth on Schedule 1 hereto. If to Holders other than the Initial Holders, to the addresses set forth on the stock record books of the Company. If to the Company, to: Vencor, Inc. (to be renamed Kindred Healthcare, Inc.) 680 South Forest Street Louisville, KY 40202 Attention: General Counsel and Chief Financial Officer Fax: (502) 596-4715 17. Governing Law; Service of Process; Consent to Jurisdiction. (a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED WITHIN THE STATE. (b) To the fullest extent permitted by applicable law, each party hereto (i) agrees that any claim, action or proceeding by such party seeking any relief whatsoever arising out of, or in connection with, this Agreement or the transactions contemplated hereby shall be brought only in the U.S. District Court for the Southern District of New York and in any New York State court located in the Borough of Manhattan and not in any other State or Federal court in the United States of America or any court in any other country, (ii) agrees to submit to the exclusive jurisdiction of such courts located in the State of New York for purposes of all legal proceedings arising out of, or in connection with, this Agreement or the transactions contemplated hereby and (iii) irrevocably waives any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. 18. Counterparts and Facsimile Execution. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and such counterparts together shall constitute one instrument. This agreement may be executed by the exchange of signatures by facsimile transmission. Each party shall receive a duplicate original of the counterpart copy or copies executed by it and the Company. 19. Securities Held by the Company or its Affiliates. Whenever the consent or approval of Holders of a specified percentage of Registrable Securities is required hereunder, Registrable Securities held by the Company or any of its affiliates (as such term is defined in Rule 405 under the Securities Act, but excluding any Holders of Registrable Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage. 20. Specific Performance. Without limiting or waiving in any respect any rights or remedies of the parties under this Agreement now or hereinafter existing at law or in equity or by statute, each of the parties hereto shall be entitled to seek specific performance of the obligations to be performed by the other(s) in accordance with the provisions of this Agreement. 21. No Inconsistent Agreements. (a) The Company shall not, on or after the date of this Agreement, enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders pursuant to this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's securities under any other agreement in effect on the date hereof. (b) In the event of any inconsistency with respect to the registration and sale of New Warrants and New Warrant Stock as provided for in this Agreement and in the Warrant Agreement, dated as of the date hereof between the Company and the Warrant Agent named therein, this Agreement shall govern the rights and obligations of those Holders of Registrable Securities who are also Holders as defined in the Warrant Agreement. 22. Third Party Beneficiaries. Holders of Registrable Securities and the Indemnified Parties are intended third party beneficiaries of this Agreement, and this Agreement shall inure to the benefit of, and may be enforced by, such Persons. Other than as set forth in the preceding sentence, this Agreement shall be binding upon and inure solely to the benefit of each party hereto. 23. NASD Rule 4460. For the period beginning on the date hereof until the date the New Common Stock are listed and admitted and authorized for trading on the New York Stock Exchange, the Nasdaq Stock Market or another national securities exchange, the Company shall comply with the requirements of NASD Rule 4460 as if it were subject thereto, other than those (a) requiring the Company to provide notice of certain actions or events to the NASD or (b) set forth in subsections (b) and (k) thereof. 24. Listing of New Common Stock. The Company shall use its reasonable best efforts to cause the New Common Stock, including the Registrable Securities, to be approved for listing on the New York Stock Exchange, the Nasdaq Stock Market, or other national securities exchange. 25. Capacity of Trust as Signatory. The Company and the Holders agree that (i) this Agreement is executed and delivered by the trustee of the Trust, which initially is The Bank of New York (the "Trustee"), not individually or personally but solely in its capacity as the Trustee of the Trusts, in the exercise of the powers and authority conferred and vested in it as such, (ii) the representations, undertakings and agreements herein made on the part of each applicable Trust are made and intended not as personal representations, undertakings and agreements by the Trustee, but are made and intended for the purpose of binding only each applicable Trust, (iii) nothing herein contained shall be construed as creating any liability on the Trustee, individually or personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties who are signatories to this Agreement and by any Person claiming by, through or under such parties and (iv) under no circumstances shall the Trustee be personally liable for the payment of any indebtedness or expenses of each applicable Trust or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by each applicable Trust under this Agreement. [Remainder of page intentionally left blank. Signature pages follow.] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first written above. VENCOR, INC. (to be renamed KINDRED HEALTHCARE, INC.) By: /s/ Richard A. Schweinhart ------------------------------- Name: Richard A. Schweinhart Title: Senior Vice President and Chief Financial Officer [Signature blocks of Initial Holders to appear on subsequent pages] SCHEDULE 1 INITIAL HOLDERS Holder Holding - ------ ------- Ventas Realty, Limited Partnership 1,498,500 shares of New Common Stock The Ventas Stockhold 0 shares of New Common Stock [Additional Initial Holders: To include each entity owning at least 10% of the New Common Stock and New Warrants (on a fully converted basis) issued and outstanding immediately following the Effective Date; counterparts may be executed within 30 days of the Effective Date.] -----END PRIVACY-ENHANCED MESSAGE-----