Exhibit 10.1
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The Hampstead Group, L.L.C.
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June 1, 2001
Omega Healthcare Investors, Inc.
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Ladies and Gentlemen:
Reference is made to the Amended and Restated Advisory Agreement dated as
of October 4, 2000 (as amended, the "Agreement") between Omega Healthcare
Investors, Inc. (the "Company") and The Hampstead Group, L.L.C. ("Hampstead").
Capitalized terms used herein but not defined have the meanings given to those
terms in the Agreement.
By signing in the space provided below, Hampstead and the Company
agree, in accordance with Section 1 of the Agreement, as follows:
A. Past Services.
The parties agree that Hampstead has previously provided services under the
Agreement ("Past Services"), including without limitation the following:
1. Chief Financial Officer. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ has served full-time
in the capacity as Chief Financial Officer of the Company for the period July 1,
2000 through April 30, 2001.
2. Chairman / Executive Chairman. ▇▇▇▇▇▇ ▇▇▇▇▇▇ has served as
Chairman/Executive Chairman of the Company since July 16, 2000 and has devoted
substantially all his efforts during working hours to the Company's business.
3. Executive Search and Strategic Matters. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ has
assisted the Company in its search for a new Chief Executive Officer and other
senior management and with respect to various strategic matters.
4. Company Indebtedness. ▇▇▇▇ Read, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and/or other
individuals at Hampstead have advised and assisted the Company in its efforts
(i) to refinance, repay or extend the respective maturity dates of the Company's
indebtedness that may be incurred pursuant to (A) the Loan Agreement, dated as
of August 16, 2000, by and among the Company, Sterling Acquisition Corp., Delta
Investors I, LLC, The Provident Bank, as Agent, and the various lenders named
therein, as amended (the "Provident Debt"), (B) the Loan Agreement, dated as of
June 15, 2000, by and among the Company and certain of its subsidiaries, the
Banks signatory thereto and Fleet Bank, N.A., as Agent for such Banks, as
amended (the "Fleet Debt"), (C) the Indenture, dated as of August 27, 1997,
between the Company and NBD Bank, as Trustee, as amended (the "2002 Public
Debt"), and (D) the Indenture, dated as of January 24, 1997, between the Company
and NBD Bank, as Trustee, as amended (together with the Provident Debt, the
Fleet Debt and the 2002 Public Debt, collectively, the "Company Indebtedness"),
and (ii) to manage the Company's capitalization and liquidity.
5. Other Past Services. Various other individuals at Hampstead have
devoted significant amounts of time with respect to financial, strategic growth,
asset disposition and other matters.
B. Anticipated Services.
The parties agree that Hampstead shall provide the following services under
the Agreement through December 31, 2001 ("Anticipated Services," and together
with the Past Services, the "Services"):
1. Chief Financial Officer. Hampstead shall make ▇▇. ▇▇▇▇▇▇▇▇▇▇▇
available to continue to serve as Chief Financial Officer of the Company at the
sole cost and expense of the Company in accordance with the terms set forth on
Annex A hereto.
2. Chairman/Executive Chairman. Hampstead shall make ▇▇. ▇▇▇▇▇▇
available to continue to serve as the Company's Executive Chairman and will
devote substantially all of his efforts during working hours to the Company's
business until the date on which a Chief Executive Officer is hired by the
Company. Thereafter, ▇▇. ▇▇▇▇▇▇ will remain Chairman of the Company's Board of
Directors with a significantly reduced time commitment as is consistent for a
non-executive Chairman.
3. Executive Search and Strategic Matters. Hampstead shall make ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ available to continue to assist the Company in its search for a new
Chief Executive Officer and other senior management.
4. Company Indebtedness. Hampstead shall make ▇▇▇▇ Read, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and/or other individuals designated by Hampstead available to continue to advise
and assist the Company in its efforts (i) to refinance, repay or extend the
respective maturity dates of the Company's Indebtedness, and (ii) to manage the
Company's capitalization and liquidity.
5. Other Anticipated Services. Hampstead shall make ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
available to continue to assist the Company in resolving its "re-leasing
program" and "transition liability" issues. ▇▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
(or another analyst designated by Hampstead) may, if the Company so requests and
Hampstead so agrees, assist the Company on other specified matters.
6. Substitution of Personnel. In the event that any of the individuals
above are not available to Hampstead and therefore cannot be made available to
the Company, Hampstead will use its commercially reasonable best efforts to
provide substitute personnel with similar expertise and training to the Company.
C. Agreement As To Compensation.
By signing in the space provided below, Hampstead and the Company agree, in
accordance with Sections 2 and 3 of the Agreement, as follows:
1. Reimbursement of Out-of-Pocket Expenses. The Company will promptly
reimburse Hampstead an amount in cash equal to $221,033 in respect of
Out-of-Pocket Expenses incurred prior to January 1, 2001. The Company further
agrees to promptly reimburse Hampstead for all Out-of-Pocket Expenses
(including, without limitation, reasonable attorneys' fees and expenses)
incurred by Hampstead under the Agreement or this letter agreement in accordance
with Section 3 of the Agreement.
2. Reimbursement of Services of Chief Financial Officer. In addition to
any Y2000/2001 Advisory Fee (as defined below), Fees that may be payable under
the Agreement or reimbursements payable pursuant to Section 1 of this letter
agreement (but without duplication), the Company will reimburse Hampstead an
amount in cash equal to $295,833 in respect of services provided by ▇▇.
▇▇▇▇▇▇▇▇▇▇▇ to the Company prior to May 1, 2001. As of May 1, 2001, ▇▇.
▇▇▇▇▇▇▇▇▇▇▇ became an employee of the Company in accordance with the terms set
forth in Annex A hereto. Hampstead will continue to provide health insurance and
other benefits to ▇▇. ▇▇▇▇▇▇▇▇▇▇▇ as described on Annex A hereto. Hampstead's
costs in providing such benefits will be deemed to be Out-of-Pocket Expenses for
purposes of Section 3 of the Agreement.
3. Financial Advisory Fee. (a) Section 2 of the Agreement will become
Section 2(a). The following will be added to the end of Section 2 of the
Agreement:
"; provided, however, that, in consideration for the Services
provided or to be provided by the Advisor under this Agreement as
defined in that certain letter agreement between the Company and
the Advisor dated as of June 1, 2001 (the "Letter Agreement"),
the Company will pay to the Advisor the advisory fees set forth
in paragraph (b) of this Section 2 (the "Y2000/2001 Advisory
Fee").
(b) With respect to any Company Indebtedness (as defined in
the Letter Agreement) that, on or before December 31, 2002, (i)
is refinanced, whether such refinancing is provided by the same
lender as the original indebtedness or otherwise, with a maturity
date at least 12 months after the maturity date of such Company
Indebtedness in effect on the date hereof, (ii) is repaid,
whether such repayments are made from the Company's cash flows,
assets sales or otherwise, or (iii) the maturity date is extended
to a date that is at least 12 months after the maturity date of
such Company Indebtedness in effect on the date hereof (any such
Company Indebtedness so refinanced, repaid or the maturity date
so extended, "Refinanced Debt"), the Company will pay the Advisor
a fee equal to 1% of the aggregate amount of Refinanced Debt. For
the avoidance of doubt, Refinanced Debt will include the maximum
amount of Company Indebtedness that could have been outstanding
had all amounts available thereunder been fully drawn and not
subsequently repaid (regardless of whether the full amount of
such Company Indebtedness is then outstanding at the time it is
refinanced, repaid or extended). In no event will the Y2000/2001
Advisory Fee payable under this Section 2 exceed $3.1 million.
(c) Payment of any Y2000/2001 Advisory Fee will be made by
the Company to the Advisor within five business days after the
date on which any Company Indebtedness becomes Refinanced Debt,
provided, however, that:
(i) unless the entire balance of the $10.0 million
Revolving Loan B under the Provident Debt maturing on March
31, 2002 has been refinanced, repaid or extended, the amount
of the Y2000/2001 Advisory Fee relating to any such
Refinanced Debt will not be paid until March 31, 2002;
(ii) unless the entire balance of the $125.0 million in
2002 Public Debt maturing on June 15, 2002 has been
refinanced, repaid or extended, the amount of the Y2000/2001
Advisory Fee relating to any such Refinanced Debt will not
be paid until June 15, 2002;
(iii) unless the entire balance of the Fleet Debt
maturing on December 31, 2002 has been refinanced, repaid or
extended, the amount of the Y2000/2001 Advisory Fee relating
to any such Refinanced Debt will not be paid until December
31, 2002; and
(iv) no portion of the Advisory Fee will be payable
prior to December 31, 2001 in any event.
(d) Notwithstanding the foregoing, nothing herein will
prevent the Company from engaging one or more investment bankers,
mortgage bankers or other third party advisors to assist with
refinancing, repayment and/or the extension of the maturity of
any Company Indebtedness; provided, however, that in no event
will any such engagement reduce the Y2000/2001 Advisory Fees
payable hereunder to the Advisor."
4. Term. The phrase "July 1, 2001" in Section 6(ii) of the Agreement
is hereby deleted and replaced with "December 31, 2001."
5. Limitation on Fees and Services. Except as described herein or
otherwise subsequently agreed, (i) the Company will have no obligation to
reimburse Hampstead for ▇▇. ▇▇▇▇▇▇'▇ past services, any other past services or
any Anticipated Services through December 31, 2001 (except for compensation paid
or payable to Hampstead personnel in their capacity as directors of the Company)
and (ii) Hampstead will have no obligation to provide services to the Company.
The parties acknowledge that the compensation payable to Hampstead
hereunder is based on the Past Services, the Anticipated Services to be provided
hereunder and the parties' current assessment of the time to be spent until
December 31, 2001 to achieve the parties' objectives. The parties also
acknowledge that, in the event that other challenges or opportunities develop,
the parties' estimates of future services required could be dramatically
understated and the achievement of these objectives may require services beyond
December 31, 2001. In either case, each of Hampstead and the Company agree to
negotiate in good faith to increase Hampstead's compensation to fairly
compensate Hampstead for such expanded services.
Each of the Company and Hampstead represent and warrant to the other that
(i) it has the requisite power and authority to execute and deliver this letter
agreement, (ii) the execution and delivery of this letter agreement has been
duly authorized by all necessary corporate or limited liability action, as
applicable, and (iii) this letter agreement has been duly and validly executed
and delivered by it and constitutes its valid and binding obligation,
enforceable against it in accordance with the terms hereof.
This letter agreement will be governed by and construed in accordance with
the laws of the State of Delaware, without regard to its conflict of laws
principles, and may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto. This letter agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered will be an original, but all such counterparts will together
constitute one and the same instrument. A facsimile copy of a signature page
will be deemed to be an original signature page.
The provisions hereof will be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns but are otherwise not
intended to confer upon any person other than the parties hereto any rights or
remedies. Except as otherwise expressly amended hereby, the terms and provisions
of the Agreement will remain in full force and effect.
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By signing below, each of the parties agrees to be bound hereby.
THE HAMPSTEAD GROUP, L.L.C.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
Vice President
Agreed and accepted as of the date first written above, which agreement has been
approved by a majority of the Company's independent directors.
OMEGA HEALTHCARE
INVESTORS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chief Executive Officer
