<PAGE>
EXHIBIT 4.1
[LETTERHEAD OF VENTAS, INC.]
October 27, 1999
Seth Klarman
President
The Baupost Group, L.L.C.
44 Brattle Street
P.O. Box 381288
Cambridge, Massachusetts 02238
Re: Request by The Baupost Group, L.L.C. ("TBG") for a Waiver of Certain
Provisions of Article XII of the Certificate of Incorporation of Ventas,
Inc. (the "Company")
Dear Mr. Klarman:
This letter is in response to the request by TBG for an amendment of
the previously granted waiver of certain provisions of Article XII of the
Certificate of Incorporation of the Company with respect to TBG and its Advisory
Clients as described in the letter from TBG to the Company dated October 26,
1999, which is attached hereto (the "Request Letter"). Terms used herein with
an initial capital letter and not otherwise defined shall have the meaning
specified in said Article XII.
Based upon the representations, warranties and covenants set forth in
the Request Letter, the Company hereby confirms that, effective as of April 15,
1999, the term "Ownership Limit" with respect to Common Shares shall mean,
solely as applied to TBG, its Advisory Clients, and any other person who, in
combination with TBG or the Advisory Clients, would comprise a "group" as that
term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of
1934, Beneficial Ownership of 14.9%, in number of shares or value, of the Common
Shares.
Notwithstanding the foregoing, the ownership of the Company's Common
Shares by TBG or any of its Advisory Clients shall remain subject to the
otherwise applicable 9.0% Ownership Limit in the event that such ownership
should result in (i) any "individual" (within the meaning of Section 542(a)(2)
of the Internal Revenue Code of 1986, as amended (the "Code"), as modified by
Section 856(h) of the Code) owning (after taking into account the constructive
ownership rules of Section 544 of the Code, as modified by Section 856(h) of the
Code) in excess of 9.0% of the Common Shares or (ii) any 10.0% Company
Shareholder, alone or in combination with other 10.0% Company Shareholders,
owning (either directly or by operation of the attribution rules of Section 318
of the Code, as modified by Section 856(d)(5) of the Code), a 10.0% or greater
interest in the stock of Vencor, Inc. or in the stock, assets, or net profits of
any other present or future tenant of the Company. For purposes of the
preceding sentence, the term "10.0% Company Shareholder" means a person who
beneficially owns 10.0% or more of the total combined voting power or total
number of shares of stock of the Company,
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either directly or by operation of the attribution rules of Section 318 of the
Code, as modified by Section 856(d)(5) of the Code.
Without limiting the foregoing, the breach of any representation,
warranty or covenant contained in the Request Letter, or the failure to comply
with the covenants and undertakings in the Request Letter, shall cause the
waiver granted in this letter to become null and void, and shall cause any
Common Shares owned by TBG or its Advisory Clients in excess of the otherwise
applicable 9.0% Ownership Limit to become designated as Excess Shares under
Article XII, in addition to any other remedy available to the Company.
Nothing in this letter shall be deemed to grant any person, other than
TBG or its Advisory Clients, permission to own securities in excess of the
Company's otherwise applicable 9.0% investment limit.
If this letter accurately sets forth our understanding, please sign
the letter where indicated below and return a signed copy to me. This letter
shall be of no force and effect, and may be revoked at any point in time prior
to the Company's receipt of a signed copy from TBG.
Very truly yours,
VENTAS, INC.
By: /s/ T. Richard Riney
--------------------
Name: T. Richard Riney
Title: Executive Vice President and
General Counsel
ACCEPTED AND AGREED
This 2nd day of
November, 2000
THE BAUPOST GROUP, L.L.C.
on behalf of itself and on behalf of its
Beneficial Owners and the Advisory Clients
By /s/ Seth Klarman
----------------
Name: Seth Klarman
Title: President
attachment
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[LETTERHEAD OF BAUPOST GROUP, L.L.C.]
October 26, 2000
Board of Directors
Ventas, Inc.
4360 Brownsboro Road
Suite 115
Louisville, Kentucky 40207-1642
Re: Request by The Baupost Group, L.L.C. for Waiver to Provisions of Article
XII of the Certificate of Incorporation of Ventas, Inc. (the "Company")
To the Directors of Ventas, Inc.:
The Baupost Group, L.L.C. ("TBG") is an investment advisor registered under
the Investment Advisers Act of 1940. The "Advisory Clients" listed in Exhibit A
hereto, together with TBG, currently own, in the aggregate, 7,138,546 shares of
the outstanding common stock, (the "Common Shares") of the Company (the
"Shares"). Pursuant to advisory contracts with the Advisory Clients, TBG
exercises sole voting and investment discretion over such shares. No other
person who would constitute, along with TBG or with any one or more of the
Advisory Clients, a "group" as that term is used for purposes of Section
13(d)(3) ("Section 13(d)") of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") owns any shares of the Company. Because that portion of
the Shares which exceed the Ownership Limit (capitalized terms in this letter
are used as defined in Article XII of the Certificate of Incorporation of the
Company) is subject to being designated as Excess Shares under Article XII, TBG
requests that the Board of Directors of the Company (the "Board") grant a waiver
to TBG and the Advisory Clients from certain of the provisions of Article XII
that relate to limitations upon ownership of Common Shares, so that TBG, its
Advisory Clients, and any other Person who would constitute, along with TBG or
any Advisory Client, a "group" as that term is used for purposes of Section
13(d) of the Exchange Act may Beneficially Own, in the aggregate, up to 14.9%,
in number of shares or value, of the Common Shares.
In consideration and as a condition to such waiver, each of TBG and the
Advisory Clients agree that it shall not take any of the actions described below
with respect to any Additional Shares for so long as such shares shall
constitute Additional Shares or until any of the Events (as defined below) shall
occur. "Additional Shares" shall mean the number of Common Shares owned by all
of TBG, the Advisory Clients and any other persons who would constitute, along
with TBG or any Advisory Client, a "group" under Section 13(d), that exceeds
9.0% of the Common Shares of the Company outstanding. The undersigned has the
legal authority to bind each Advisory Client and the Beneficial Owners of TBG to
the terms of this letter and the related Waiver. With respect to Additional
Shares, TBG shall not, and it shall not permit any Advisory Clients to:
(a) Solicit proxies from stockholders of the Company, the power to vote,
become a "participant" in any "election contest" (as such terms are used in Rule
14a-11 of the Exchange Act), with respect to the Company, or make any
communication (other than as required by law)
<PAGE>
referred to in Rule 14a-1(l)(2)(iv) of the Exchange Act in connection with any
election contest or other vote by stockholders of the Company or otherwise that
is contrary to or conflicts with actions taken or omitted or to be omitted by
the Board;
(b) Seek or vote for the removal of any member of the Board, except removal
"for cause" as such term is used under the Delaware General Corporation Law;
(c) Vote for any individual nominated for election to the Board other than
those individuals nominated by the Board or a committee thereof;
(d) Call or seek to have called any meeting of the stockholders of the
Company; or
(e) Otherwise act, alone or in concert with others (i) by voting to
solicit, propose, or approve any business combination with the Company, (ii) by
voting to solicit, propose or approve any tender offer or exchange offer for any
voting securities of the Company, or (iii) by voting in a manner which would
otherwise assist or facilitate any effort or attempt by any persons to do or
seek to do any of the foregoing.
Notwithstanding anything herein to the contrary, with respect to Additional
Shares, TBG and its Advisory Clients shall not be prohibited from engaging in
the activities set forth in sections (a) through (e) above at any time after any
of the following events (the "Events") shall occur:
(a) either Douglas Crocker II or Debra A. Cafaro shall cease to serve as a
director of the Company;
(b) Debra A. Cafaro shall cease to serve as Chief Executive Officer of the
Company;
(c) a voluntary or involuntary bankruptcy proceeding shall be commenced by
or against the Company; or
(d) the average "closing price" of the Company's Common Shares for any
twenty consecutive trading day period shall be less than $2.25 per share
("closing price" shall mean the last sale price, regular way, as reported in the
principal consolidated transaction reporting system where the Common Shares are
listed or admitted to trading or, if the Common Shares are not listed or
admitted to trading on any national securities exchange, the last quoted price,
or if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotations System, or if the Common Shares are not
traded, such amount as an independent investment banking firm, mutually selected
by the Company and TBG, determines to be the value of a Common Share).
In support of its request, TBG hereby makes the following representations,
warranties and covenants:
1. The name and taxpayer identification number ("TIN") of each Advisory
Client of TBG is set forth in Exhibit A. Exhibit A shows, as of the date hereof,
the amount of
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Common Shares purchased on behalf of each such Advisory Client and the number of
shares beneficially owned by TBG, none of which exceeds 9.0%.
2. In excess of 99% of the ownership interest in each of HB, PB, and YB
respectively, is owned by a single (but different with respect to each of HB, PB
and YB) educational organization described in Section 170(b)(1)(A)(ii) of the
Code, or its affiliated support organization described in Section 509(a)(3) of
the Code. No Person (as defined in Article XII) Beneficially Owns, or is
believed by TBG to be likely to Beneficially Own in the future, 5% or more of
the outstanding shares (or other ownership interest) of any of the other
Advisory Clients.
3. TBG is a limited liability company organized under Massachusetts law.
Seth A. Klarman beneficially owns an approximate 65% interest in TBG. William J.
Poorvu owns an approximate 16.66% interest in TBG. No interests in TBG are owned
by any member of Seth Klarman's Family, any member of Mr. Poorvu's Family, any
Klarman-Related Entities, or any Poorvu-Related Entities. For this purpose,
members of an individual's "Family" include the individual's spouse, siblings,
half-siblings, ancestors, and lineal descendants, and the term "Related
Entities," when used with respect to an individual, includes any trust, estate,
partnership, limited liability company, or corporation in which such individual
and/or a member of such individual's Family is a beneficiary, partner, member or
shareholder owning a 5% or greater interest. No person or entity beneficially
owns an interest in TBG of 5% or more except as specifically described in this
paragraph.
4. Neither the Beneficial Owners of TBG, TBG, nor any of its Advisory
Clients, taken separately or taken together in any combination, are, and will
not in the future be, partners in any partnership between or among any two or
more of them as determined for federal income tax purposes which partnership
Beneficially Owns any of the Company's Common Stock. TBG currently does not
Beneficially Own (within the meaning of Article XII), and will not at any time
in the future Beneficially Own, more than 9.0% of the Company's Common Shares
(excluding for this purpose its Beneficial Ownership of Common Shares in excess
of such amounts to the extent such Beneficial Ownership results solely from its
being treated, along with the Advisory Clients, as a "group" under Section 13(d)
of the Exchange Act).
5. TBG currently does not own, either actually or under the constructive
ownership rules of Section 318 of the Code, as modified by Section 856(d)(5) of
the Code, any stock of Vencor, Inc. ("Vencor"). In the future, the TBG will not
Beneficially Own and no Advisory Client will Beneficially Own more than 9.0% of
any stock of Vencor or any options to acquire any stock of Vencor (including
convertible debt) while Beneficially Owning more than 9.0% of the Company's
common stock. In addition, TBG will not acquire, on behalf of itself or any of
the Advisory Clients, an interest representing 5% or more of (i) the voting
power, value or total number of shares of the stock of any tenant of the Company
that is a corporation or (ii) the assets or net profits of any tenant of the
Company that is an entity other than a corporation.
6. Seth Klarman, together with members of his Family and all Klarman-
Related Entities, currently do not Beneficially Own, and will not at any time in
the future
<PAGE>
Beneficially Own, more than 9.0% of the Common Shares (excluding for this
purpose their Beneficial Ownership of Common Shares in excess of such amounts to
the extent such Beneficial Ownership results solely from their being treated,
along with TBG and its Advisory Clients, as a "group" under Section 13(d) of the
Exchange Act).
7. Seth Klarman, together with members of his Family and all Klarman-
Related Entities, currently do not beneficially own, either actually or under
the constructive ownership rules of Section 318 of the Code, as modified by
Section 856(d)(5) of the Code, any stock of Vencor. In the future, Seth Klarman
will not acquire, on behalf of himself, any member of his Family, or any
Klarman-Related Entity which he controls, any stock of Vencor or any options to
acquire any stock of Vencor (including convertible debt). In addition, Mr.
Klarman, together with members of his Family and all Klarman-Related Entities
which he controls, will not acquire any interest representing 5% or more of (i)
the voting power, value or total number of shares of the stock of any tenant of
the Company that is a corporation or (ii) the assets or net profits of any
tenant of the Company that is an entity other than a corporation.
8. TBG will limit the aggregate Beneficial Ownership (as defined in
Article XII) by it and any Person who would constitute, along with TBG or any
Advisory Client, a "group," as that term is used for purposes of Section 13(d)
of the Exchange Act, of the Common Shares to no more than 14.9%, in number of
shares or value, of the Common Shares.
9. To the best of TBG's knowledge: (i) no single Advisory Client or
combination of Advisory Clients with a mutual 10.0% or greater owner,
Beneficially Owns more than 9.0% of the Common Shares, (ii) no single Advisory
Client currently beneficially owns (either directly or under the attribution
rules of Section 318 of the Code, as modified by Section 856(d)(5) of the Code)
any shares of stock of Vencor, and (iii) none of the educational organizations
or affiliated support organizations described in paragraph 2 currently
beneficially owns (either directly or under the attribution rules of Section 318
of the Code, as modified by Section 856(d)(5) of the Code), 5% or more of the
outstanding shares of stock of Vencor.
10. Notwithstanding any other provision of this letter or the related
waiver, if any 10.0% or greater Beneficial Owners of TBG, TBG, its Advisory
Clients, or any other person would, along with TBG or any of them, either
constitute a "group" under Section 13(d)(3) or a partnership for federal income
tax purposes, Beneficially Owns (excluding for this purpose Beneficial Ownership
of Common Stock that results solely from being treated as part of a "group"
under Section 13(d)) more than 9.0% of the stock of the Company while
Beneficially Owning, singly or taken together in any combination, more than 9%
of the stock, warrants, options, convertible debt or any other rights to acquire
the stock of Vencor, Inc. or any other tenant of the Company, the Additional
Shares owned will be automatically designated as "Excess Shares" under Article
XII. Such designation will be effective as of the close of business on the
business day prior to the date of the relevant event.
11. TBG and any Person who would constitute, along with TBG or any Advisory
Client, a "group" under Section 13(d) of the Exchange Act, will comply with the
terms of Article XII, except as expressly waived by the Board.
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TBG understands that the breach of any representation, warranty or covenant
contained herein or the failure to comply with its covenants and undertakings in
this letter, in addition to any other remedy available to the Company, subjects
the Additional Shares to being designated as "Excess Shares" under Article XII.
In such event, any waiver granted by the Board shall terminate and the Company
may proceed in any manner permitted under Article XII.
Upon acceptance of this letter by you, this letter shall supersede our
letter dated April 15, 1999, which was accepted by you on April 15, 1999, which
shall be of no further force and effect.
Very truly yours,
THE BAUPOST GROUP, L.L.C.
on behalf of itself and on behalf of its
Beneficial Owners and the Advisory
Clients
By: /s/ Seth Klarman
----------------
Name: Seth Klarman
Title: President
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
Number of
Common
Name of Advisory Client T.I.N. Shares
------------------------------------------------------- ------------- ---------
<S> <C> <C>
1. The Baupost Fund (the "Fund")/1/ 04-6655157 496,850
2. Baupost Limited Partnership 1983 A-1 ("A") 04-2780320 768,400
3. Baupost Limited Partnership 1983 B-1 ("B") 04-2780324 362,500
4. Baupost Limited Partnership 1983 C-1 ("C") 04-2780321 2,356,696
5. Baupost Limited Partnership 1987 F-1 ("F") 04-2982721 0
6. HB Institutional Limited Partnership ("HB") 04-3425685 1,973,250
7. PB Institutional Limited Partnership ("PB") 04-3425688 821,550
8. YB Institutional Limited Partnership ("YB") 04-3431530 359,300
Investment Adviser
------------------
The Baupost Group, L.L.C. ("TBG") 04-3402144 0
</TABLE>
___________________
/1/ The Fund, a Massachusetts business trust, is an open-end management
investment company registered under the Investment Company Act of 1940, as
amended that has elected to be taxed as a regulated investment company
under the Code.
