CONSULTING AND SEVERANCE AGREEMENT
This Agreement ("this Agreement") is made this 18th day of July, 2000,
by and between Omega Healthcare Investors, Inc. (the "Company"), and Xxxxx X.
Xxxxxx, Xx. (the "Officer" or "you") and describes certain compensation,
benefits and severance which you will become entitled to receive upon the
happening of certain events and the purchase on or before August 31, 2000, by
Explorer Holdings, L.P. from the Company of preferred stock for at least
$90,000,000 (the "Transaction").
INTRODUCTION:
The Officer is a valued employee of the Company and is terminating his
employment with the Company, conditioned upon and effective upon completion of
the Transaction.
The Company values the Officer's significant contribution to the
Company and desires to maintain and increase the goodwill between them and
desires to continue to retain the Officer as a consultant.
NOW, THEREFORE, the parties agree as follows:
1. Resignation; Effectiveness of Agreement.
(a) Effective as of the close of business on the date of
closing of the Transaction (the "Resignation Date"), you hereby resign
as an employee, officer, and director and from all other positions you
hold with the Company. Effective as of the close of business on the
first business day following the date of closing of the Transaction,
you hereby resign as an officer and director, and from all other
positions you hold with all direct and indirect subsidiaries of the
Company (the "Subsidiaries"). The parties acknowledge and agree that
Omega Worldwide, Inc. is not a Subsidiary for purposes of this
Agreement.
(b) This Agreement is expressly contingent upon the closing of
the Transaction by August 31, 2000, and the provisions of this
Agreement will become effective upon such closing, and, in the event
that the Transaction does not close by such date, this Agreement will
be null and void and of no force or effect whatsoever.
2. Compensation Prior to Termination. The Company will continue to pay your
regular base salary through the Resignation Date with all benefits as an officer
and on the same terms and conditions as apply to other executive officers.
During this period, you will perform such duties, consistent with your position,
as requested by the Board of Directors of the Company, and you agree to vote all
shares of common stock, par value $.10 per share, of the Company ("Common
Stock") as to which you possess voting authority in favor of the Transaction and
in favor of the Company's 2000 Stock Incentive Plan at the special meeting of
the stockholders of the Company held to vote on such matters or any adjournment
of such meeting.
3. Severance Payment. Within two (2) business days following the end of the
Revocation Period, the Company will pay you, in cash by wire transfer (in
accordance with wire transfer instructions to be provided by you) of immediately
available funds, a lump sum severance benefit in the amount of $1,555,000.
4. Directors' Retirement Plan; 1993 Deferred Compensation Plan. All amounts
credited to you under the Directors' Retirement Plan which was terminated in
1998, including $35,000 of your own contributions, have previously been
deposited in Account Number 000-00000-00 of Omega Healthcare Investors, Inc.
with the Palisade Capital Securities, L.L.C. and Bear, Xxxxxxx Securities Corp.
as clearance agent (the "Account"). As of June 30, 2000, the dollar value
attributable to 13,000 Deferred Compensation Units credited to you under the
Company's 1993 Deferred Compensation Plan, as amended (the "Plan"), which
represents all of your units under the Plan, is $248,218. The dollar value
attributable to such units will be adjusted pursuant to the terms of the Plan
through the date of payment and will be deposited by the Company into the
Account (in accordance with the wire transfer instructions set forth on Exhibit
A) in a single lump sum within two days following the end of the Revocation
Period. Immediately thereafter, legal ownership and all rights in the Account,
together with the corresponding liabilities associated therewith, are hereby
assigned by the Company to Alpha Capital, Inc., a Michigan corporation, and, on
the delivery of any documents required by the broker to reflect such transfer
and assignment, you hereby agree that all of the Company's obligations with
respect to the foregoing balances and the two foregoing plans are hereby
released and extinguished and thereafter you will look solely to Alpha Capital,
Inc. with respect to its continued administration of the Plans for any recovery
or rights you may have therein; and you will indemnify and hold the Company
harmless from any cost or liability it may incur as a result of its taking the
actions described above in this paragraph.
5. Restricted Stock. All vesting requirements applicable to 12,218 shares of
restricted stock granted to you before February 10, 2000 will be deemed
fulfilled as of the expiration of the Revocation Period. With respect to the
63,321 shares of restricted stock granted to you on February 10, 2000, all
vesting requirements applicable to 47,490 of such shares will be deemed
fulfilled as of the expiration of the Revocation Period, and the remaining
15,831 of such shares will automatically immediately vest if the Company
achieves (a) a price per share of Common Stock (as reported on the New York
Stock Exchange ("NYSE")) at or above $10 and the stock price remains at or above
that price for ten (10) consecutive business days between July 11, 2000 and
February 10, 2001, or (b) an average price per share of Common Stock, as
reported on the NYSE, of $10 or more for any thirty (30) consecutive business
days between July 11, 2000 and February 10, 2001. The number of shares of Common
Stock and the $10 price target will be proportionately adjusted for any increase
or decrease in the number of issued and outstanding shares of Common Stock
resulting from a subdivision or combination of shares or the payment of a stock
dividend in shares of Common Stock to holders of outstanding shares of Common
Stock.
6. Stock Options. You have previously been granted options to purchase shares of
Common Stock. Options to purchase 85,000 shares of Common Stock are not vested
and those options are hereby terminated as of the Resignation Date. The
remainder of your stock options will expire and cease to be exercisable as of
the earlier of three months after your Resignation Date or such earlier date as
may apply pursuant to the terms of the applicable stock option agreement.
7. Borrowing Program. On or before the date which is thirty (30) days following
the Resignation Date, you may tender to the Company 6,627 shares of Common Stock
purchased by you pursuant to the Company's Borrowing Program, as amended and
restated by the Board of Directors of the Company on June 15, 2000, in full
satisfaction of the principal amount of your indebtedness of $191,802.74 and all
accrued interest outstanding under the Borrowing Program. If you do not tender
back those shares of Common Stock within such 30 day period, the principal and
interest outstanding under the Borrowing Program will immediately be due and
payable in cash as of the expiration of such thirty (30) day period.
8. Life, Health, Long-Term Disability. For the twenty-four month period
following the Resignation Date, the Company will continue to offer to you the
same group health, group life insurance, and group long-term disability
insurance coverage that the Company offers to its other executive officers
during such period, at the same cost as applies to other executive officers;
provided, however, that to the extent the applicable insurer will not permit the
Company to continue coverage for you under (a) the applicable health policy for
the period following your period of coverage required to be offered pursuant to
Section 601 et seq. of the Employee Retirement Income Security Act of 1974, as
amended ("COBRA") and up to the expiration of the twenty-four month period, or
(b) under the applicable group life or long-term disability insurance policy for
any portion of the twenty-four month period, the Company will pay you during the
period of such disallowed coverage an amount equal to the amount it would have
contributed towards your cost of coverage had you remained an employee of the
Company during such period; and provided further, that in the event you receive
other health insurance, life insurance, or long-term disability coverage, or
receive payment or reimbursement therefor, from another employer or business or
any other source during such twenty-four month period, the Company will cease to
be obligated to provide you such coverage or reimbursement in lieu of coverage.
In the event you receive any other such coverage, you shall, no later than the
effective date of such other coverage, notify the Company of the same. The
period for which you are entitled to group health insurance continuation
hereunder will count towards any required period of continuation coverage
pursuant to COBRA.
9. Office, Secretary, Support. For the twenty-four month period following the
Resignation Date, the Company will reimburse you for your cost, not to exceed
$75,000 in the aggregate per twelve months, of the following: your rent,
utilities and other related occupancy costs of an office similar to your office
at the Company, the compensation for your secretary, and the compensation for
such other staff as the Company and you determine are appropriate to the
rendering of your services to the Company pursuant to paragraph 10 hereunder;
provided, however, that if the Company retains a full-time secretary who is
available to perform services on a full-time basis for you at your office, which
secretary is reasonably acceptable to you, the Company's cost of compensation
for such secretary will reduce its reimbursement obligation to you by the cost
of such compensation; provided, further, that to the extent an office and/or
secretary, or payment or reimbursement therefor, is provided to you by another
employer or business during such twenty-four month period, the Company will
cease to be obligated to provide you reimbursement for an office and/or
secretary, as applicable. In the event an office or a secretary is so provided
to you, you shall, no later than the effective date the same are initially
provided to you, notify the Company of the same.
10. Consulting and Litigation Support Services. For a period of twelve (12)
months following the close of the Transaction, you will render consulting
services requested by the Company and reasonably agreed to by you at times and
places agreed to by you and the Company. In addition, until all the Litigation
Matters are definitively disposed of or settled, you will assist the Company and
cooperate with the Company in the defense of, and assertion of any claims in
connection with, (a) the Res-Care Inc. v. Omega Healthcare Investors, Inc.,
United States District Court for the Western District of Kentucky, Civil Action
No. 95-42-LS; the Omega Healthcare Investors, Inc. v. Res-Care, Inc.; the
Karrington Health, Inc. v. Omega Healthcare Investors, Inc.; and the Madison/OHI
Liquidity Investors, LLC v. Omega Healthcare Investors, Inc., United States
District Court for the Eastern District of Michigan, Civil Action No. 00-72793;
and the Xxxxxx Xxxxxxxxx filed June 21, 0000, Xxxxxx Xxxxxx Xxxxxxxx Xxxxx for
the Southern District of New York, litigation matters; (b) all other litigation
matters referenced in Exhibit B hereto, and the Wolf Halderstein Xxxxx Xxxxxxx &
Xxxxx LLP litigation matter; and (c) any other litigation matters related to any
of the foregoing litigation matters or arising therefrom, as well as any other
litigation matters, provided that in the case of any of the matters described in
clause (b) or clause (c) and not also described in clause (a), your cooperation
will be required if such matters are based on facts and circumstances arising on
or before the Resignation Date as to which you were involved in a material
manner or have particular information or understanding of the underlying facts
or circumstances not generally known to other officers of the Company
(collectively, all the litigation matters described in this paragraph are
referred to as the "Litigation Matters").
11. Noncompete/Nonsolicitation.
(a) You agree that during the Applicable Period you will not (except on
behalf of or with the prior written consent of the Company, which
consent may be withheld in Company's sole discretion), within the
Area, either directly or indirectly, on your own behalf, or in the
service of or on behalf of others, as either an employee or
independent contractor, engage in or provide managerial services or
management consulting services to, or own (other than any ownership
existing on the date hereof and other than ownership of less than five
percent (5%) of the outstanding voting securities of an entity whose
voting securities are traded on a national securities exchange or
quoted on Nasdaq) a beneficial interest in, any Competing Business or
otherwise take any action that is adverse to the interests of the
Company or any of its Subsidiaries or make any statement (written or
oral) that could reasonably be perceived as disparaging to the Company
or any person or entity that you reasonably should know is an
affiliate of the Company or any statement (written or oral) that is
damaging to the commercial interests of the Company or any person or
entity that you reasonably should know is an affiliate of the Company.
You represent and warrant to the Company that, to the extent that you
have, on the date hereof, any direct or indirect ownership of a
beneficial interest in any entity that engages in any Competing
Business, such interest constitutes less than five percent (5%) of the
outstanding voting securities of such entity, and you also covenant
that, during the Applicable Period, you will not increase your direct
or indirect beneficial ownership in any such entity or become actively
involved in the management or operation of any such entity. You
acknowledge and agree that the Business of the Company is conducted in
the Area.
(b) You agree that during the Applicable Period, you will not, either
directly or indirectly, on your own behalf or in the service of or on
behalf of others solicit, divert or appropriate, or attempt to
solicit, divert or appropriate, to a Competing Business, any
individual or entity which is an actual or, to your knowledge,
actively sought prospective client or customer of the Company or any
of its Subsidiaries (determined as of the Resignation Date) with whom
you had material contact while you were an employee of the Company.
(c) You agree that during the Applicable Period, you will not, either
directly or indirectly, on your own behalf or in the service of or on
behalf of others, solicit, divert or hire, or attempt to solicit,
divert or hire any employee employed by the Company or any of its
Subsidiaries with whom you had material contact while you were an
employee of the Company or who is a management employee of the Company
or a Subsidiary. This subparagraph 11(c) will not apply with regard to
Xxxxx Xxxxxx and/or Xxxx Xxxxxx.
12. Nondisclosure of Confidential Information. You will not disclose, directly
or indirectly, to any third person any (a) Confidential Information, including
without limitation any customer lists relating to the business of the Company or
any Subsidiary, or (b) Trade Secrets for so long as they may be protected by
Michigan law.
13. Return of Materials. All Trade Secrets and Confidential Information,
including documents or tangible or intangible materials, including computer
data, provided to or obtained by you during the course of employment by the
Company which contain Trade Secrets and Confidential Information, are the
property of the Company (collectively, the "Materials"). You will not remove
from the Company's premises or copy or reproduce any Materials (except as your
consulting obligations to the Company will require), and upon the Resignation
Date you will leave with the Company, or immediately return to the Company, all
Materials or copies or reproductions thereof in your possession, custody or
control.
14. Non-Disparagement. During the Applicable Period, the Company shall (and
shall cause its officers and directors in their capacity as such and
Subsidiaries to) refrain from making any statements (written or oral) that could
reasonably be perceived as disparaging to you or any persons or entities that
the Company reasonably should know are your affiliates or statements (written or
oral) that are damaging to your commercial interests.
15. Compensation for Consulting and Noncompete/Nonsolicitation.
(a) In exchange for the services and your continuing obligations pursuant
to paragraphs 10 and 11 hereof, the Company agrees to pay you
$1,770,000 in twelve installments of $147,500 per month, in cash, over
the twelve month period following the Resignation Date, with the first
payment being made one month after the Resignation Date and each
successive payment being made one month after the preceding payment.
(b) Notwithstanding anything to the contrary in this Agreement, in no
event will the Company have the right to withhold payments due you
under subparagraph 15(a) except in the event of a "Material Breach"
(as defined below). If the Board of Directors of the Company
reasonably determines in good faith (by a vote of at least two-thirds
of the Board) that you are violating the provisions of paragraph 10 or
11 of this Agreement, the Board will provide written notice to you
specifying with particularity how your activities violate such
provisions, and if you cease such alleged violations within ten (10)
calendar days of the date of such notice, then there will be deemed to
have been no Material Breach for purposes solely of this subparagraph
15(b). In addition, you will have the option of having an arbitrator
determine the issue of whether you are violating the provisions of
paragraph 10 or 11 of this Agreement as alleged by the Company's Board
of Directors in such notice, in accordance with the arbitration
provisions of this Agreement. Notwithstanding anything to the contrary
in this Agreement (including paragraph 31 below), such arbitration
will be completed within thirty (30) calendar days after the date of
such notice from the Company's Board of Directors. If the arbitrator
determines that your activities do not violate the provisions of
paragraph 10 or 11 of this Agreement, then you will be permitted to
continue your alleged violative activities, and there will not be
deemed to have occurred a Material Breach for purposes solely of this
subparagraph 15(b). If the arbitrator determines that your activities
violate the provisions of paragraph 10 or 11 of this Agreement, and
you do not thereafter within two (2) calendar days of such
determination cease engaging in such violative activities, then there
will be deemed to have occurred a Material Breach. In the event the
arbitrator has not rendered a determination within such thirty (30)
day period, the Company may suspend payments under subparagraph 15(a)
of this Agreement until such determination is rendered and shall
thereafter immediately recommence payments (together with any
suspended payments) in the event it is determined that you have not
violated the provisions of paragraph 10 or 11 of this Agreement, or
you otherwise shall cease such activity as violates paragraph 10 or 11
of this Agreement, within the required two (2) calendar day period
referenced above. The Company and you will cooperate to attempt to
ensure that the arbitration is completed as expeditiously as possible
with the intent to avoid such suspension. If you voluntarily cease
engaging in activities alleged by the Board of Directors to violate
paragraph 10 or 11 or if an arbitrator determines (in accordance with
this subparagraph 15(b)) that your activities violate paragraph 10 or
11, you will use your reasonable efforts to cure the negative effect
of such violations, but in no event will your failure to comply with
such obligation give the Company the right to suspend payments or to
fail to recommence payments as would otherwise be required by this
subparagraph 15(b).
(c) The provisions of subparagraph 15(b) are not exclusive remedy
provisions or liquidated damages provisions and in no way preclude the
Company from seeking legal or equitable relief, including without
limitation damages or injunctive relief, for any breach of this
Agreement by you. Further, the definition of "Material Breach" used in
subparagraph 15(b) is solely for the purpose of determining whether
the Company is contractually obligated to continue to make the
payments set forth in subparagraph 15(a) to you, and the fact that an
activity by you may not represent a "Material Breach" as defined in
subparagraph 15(b) will not necessarily preclude the Company from
establishing that you have nonetheless breached this Agreement or from
enforcing its rights as described in this subparagraph 15(c) or
enforcing any other rights it may have pursuant to this Agreement,
including without limitation pursuing a claim for damages or
injunctive relief as a result of such breach.
16. Indemnification. The Company will indemnify you to the extent permitted by
applicable law and the Company's Articles of Incorporation and Bylaws, including
in accordance with the Indemnity Agreement dated as of November 13, 1998 between
the Company and you, which agreement will survive the execution, delivery and
performance of this Agreement, and will continue to provide you with the benefit
of directors and officers liability insurance coverage with respect to your acts
as an officer, director or agent of the Company (or in any other capacity to
which you would be entitled to insurance coverage thereunder) to the same extent
as the same is provided to other non-continuing directors of the Company.
17. Gross-Up Payment. In the event it is determined that any payment (other than
the Gross-Up Payments provided for herein) or distribution by the Company or any
of its affiliates to or for your benefit, whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or otherwise pursuant
to or by reason of any other agreement, policy, plan, program or arrangement, or
the lapse or termination of any restriction on, or the vesting or exercisability
of any of the foregoing (a "Payment"), would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code") (or any successor provision thereto) or any interest or penalties with
respect to such excise tax (such tax, together with any such interest and
penalties, are hereafter collectively referred to as the "Excise Tax"), then you
will be entitled to receive an additional payment or payments (a "Gross-Up
Payment") in an amount such that, after payment by you of all taxes (including
any interest or penalties imposed with respect to such taxes), including any
Excise Tax, imposed upon the Gross-Up Payment, you retain an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Such amounts
shall be paid by the Company to you within ten (10) days after payment by you of
taxes described in the prior sentence. For purposes of calculating the Gross-Up
Payment, it will be assumed that all taxable payments you receive are taxed at
the highest marginal federal income tax rate and the highest state income tax
rate in the state in which you reside, but without regard to any reduction in
personal exemptions or deductions associated with your level of income. All
determinations required to be made under this paragraph 17, including whether an
excise tax is payable by you and the amount of such excise tax and any Gross-Up
Payment, will be made by a nationally recognized firm of certified public
accountants selected by the Company in its sole discretion, provided, however,
that if the Internal Revenue Service determines that an Excise Tax is owing by
you, such determination shall be conclusive and binding on the Company, unless
the Company elects to engage at its sole expense such an accounting firm to
contest such determination, in which case the final resolution of such contest
shall be conclusive and binding on the Company.
18. Bayside Street II. Effective no later than thirty (30) days after the
Resignation Date, you will transfer good title, free and clear of any liens or
encumbrances, to an officer or director of the Company designated to you by
written notice from the Company, of twelve (12) shares of common stock of
Bayside Street II, Inc. which represents all of the equity in Bayside Street II,
Inc. beneficially owned by you as of the date hereof, in consideration of a cash
payment to you by such designee of $22,500, which represents an amount equal to
your purchase price of such equity.
19. Attorneys' Fees. The Company will reimburse you for your attorneys' fees and
expenses in negotiating and preparing this Agreement in an aggregate amount not
to exceed $10,000 promptly following receipt of a written invoice from your
attorneys.
20. General Release. The payment of all of the amounts and the vesting of all of
the benefits provided for in this Agreement are expressly contingent upon your
executing and returning to the Company, within twenty-one days of the
Resignation Date, a general release of all claims and a covenant not to xxx in
favor of the Company, Explorer Holdings, L.P., and their respective officers,
directors, stockholders, successors and assigns, and any other parties listed in
the release in the form attached hereto as Exhibit C (the "Release"), and your
not revoking the Release within a seven-day revocation period provided for under
the terms of the Release (the "Revocation Period"). The Release will not apply
to any of the payments or benefits to which you are entitled to under this
Agreement or under any employee benefit plan (within the meaning of the Employee
Retirement Income Security Act of 1974). The Company hereby agrees to execute
the Release immediately upon your delivery of the Release executed by you to the
Company and deliver to you a copy of the Release promptly upon the expiration of
the Revocation Period.
21. Termination of Employment Agreement and Change in Control Agreement. The
Employment Agreement dated as of June 15, 2000, between you and the Company and
the Change in Control Agreement dated March 22, 2000, between the Company and
you are terminated and are void and of no force and effect.
22. Nonduplication. This Agreement is not intended to duplicate any compensation
or benefits to which you are entitled under any other plan, program, agreement
or arrangement of the Company not specifically described herein. Therefore, in
the event you are entitled to any similar payments under the terms of any other
plan, program, agreement, or arrangement of the Company, your payments under
this Agreement will be correspondingly reduced.
23. No Mitigation. Except as otherwise provided herein, no amounts or benefits
payable to you hereunder will be subject to mitigation or reduction by income or
benefits you receive from other sources.
24. Not an Employment Agreement. This Agreement does not constitute an
employment agreement or an agreement to employ you for any definite period.
During the period you perform services for the Company pursuant to paragraph 10
hereof following the Resignation Date, you will be an independent contractor and
not an employee of the Company.
25. Withholding of Taxes.
(a) The Company may withhold from any amounts payable under paragraphs 2,
3, 5, 6, 8, 17, or 19 of this Agreement all federal, state, city or
other taxes as the Company is required to withhold pursuant to any law
or government regulation or ruling and report such payment on a Form
W-2 or 1099 to the extent required pursuant to any law or government
regulation or ruling. In addition, the Company may report any amounts
payable under paragraphs 9 and 15 of this Agreement on a Form 1099 to
the extent required pursuant to any law or government regulation or
ruling.
(b) To the extent that the Company's outside accountants reasonably and in
good faith determine that the Company is required to report any direct
or indirect payment, transfer, assignment of ownership, or other
action (other than payments described in subparagraph 25(a) hereof),
as compensation to you, the Company will issue you a Form W-2 or 1099,
as appropriate. To the extent that the Company's outside accountants
reasonably and in good faith determine that the Company is required to
withhold any federal, state, city or other taxes on account of such
direct or indirect payment to you, transfer, assignment of ownership,
or other action, the Company may withhold such taxes from such other
direct or indirect payment, transfer, assignment of ownership, or
other action or from any other payment to be made to you under this
Agreement. To the extent that the Company's outside accountants
determine that there is a reasonable basis not to issue you a Form W-2
or 1099 or not to withhold taxes with regard to such direct or
indirect payment, transfer, assignment of ownership, or other action,
then the Company will not do so; provided, however, that, unless the
Company's outside accountants issue an unqualified opinion to the
Company that the Company is not required to issue you a Form W-2 or
1099 and that the Company is not required to withhold taxes with
regard to such direct or indirect payment, transfer, assignment of
ownership, or other action, then you will indemnify and hold the
Company harmless from any cost (including without limitation, loss or
delay in the income deduction that it otherwise would have received if
it issued a Form W-2 or 1099 and withheld taxes) or liability it may
incur as a result of not issuing a Form W-2 or 1099 or not withholding
taxes.
26. Severability. In the event that one or more of the provisions of this
Agreement will be or become invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein will not be affected thereby.
27. Officer's Estate. All payments and rights under this Agreement are payable
to your estate and accrue to its benefit in the event of your death.
28. Governing Law. To the full extent controllable by stipulation of the
parties, this Agreement will be interpreted and enforced under Michigan law,
without regard to principles of conflicts of laws.
29. Amendment. This Agreement may not be modified, amended, supplemented or
terminated except by a written agreement between the Company and you.
30. Remedies. You agree that the covenants and agreements contained in
paragraphs 10, 11, 12, 13, 14 and 18 hereof are of the essence of this
Agreement; that each of such covenants is reasonable and necessary to protect
and preserve the interests and properties of the Company and the Business of the
Company; that the Company is engaged in and throughout the Area in the Business
of the Company; that irreparable loss and damage will be suffered by the Company
should you breach any of such covenants and agreements; that each of such
covenants and agreements is separate, distinct and severable not only from the
other of such covenants and agreements but also from the other and remaining
provisions of this Agreement; that the unenforceability of any such covenant or
agreement will not affect the validity or enforceability of any other such
covenant or agreements or any other provision or provisions of this Agreement;
and that, in addition to other remedies available to it, the Company will be
entitled to specific performance of such covenants and agreements of this
Agreement and to both temporary and permanent injunctions to prevent a breach or
contemplated breach by you of any of such covenants or agreements. If any part
of paragraphs 10, 11, 12, 13, 14 or 18 is unenforceable because of the duration,
geographic, or product scope of such provision, or for any other reason, such
provision will be deemed modified to the minimum extent necessary to make such
provision enforceable. Further, any court or arbitrator shall have the power to
make such modification. If any such court or arbitrator declines to so modify
such provision, the parties agree to negotiate in good faith such modification
that will make such provision enforceable.
31. Arbitration. Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be adjudicated through binding
arbitration before a single arbitrator in accordance with the Commercial
Arbitration Rules of the American Arbitration Association ("AAA") in Detroit,
Michigan; provided, however, the provisions of this paragraph will not prevent
the Company from instituting an action in a court of law under this Agreement
for specific performance of this Agreement or injunctive relief as provided in
paragraph 30 hereof. Except as provided in paragraph 15 hereof, any party who
desires to submit a claim to arbitration in accordance with this paragraph shall
file its demand for arbitration with AAA within thirty (30) days of the event or
incident giving rise to the claim. A copy of said demand shall be served on the
other party in accordance with the notice provisions in paragraph 32 of this
Agreement. The parties agree that they shall attempt in good faith to select an
arbitrator by mutual agreement within twenty (20) days after the responding
party's receipt of the demand for arbitration. If the parties do not agree on
the selection of an arbitrator within that timeframe, the selection shall be
made pursuant to the rules from the panels of arbitrators maintained by the AAA.
Unless otherwise designated by the arbitrator as a result of fault, each party
shall pay its own attorneys' fees and expenses of arbitration, and the expenses
of the arbitrator shall be equally shared. Any award rendered by the arbitrator
shall be accompanied by a written opinion providing the reasons for the award.
The arbitrator's award shall be final and non-appealable. Any such arbitrator's
award may be entered in and enforced by any court having jurisdiction thereof,
and the parties consent and commit themselves to the exclusive jurisdiction of
the courts of the State of Michigan for the purposes of the enforcement of any
such arbitrator's award. Nothing in this paragraph shall prevent the parties
from settling any dispute or controversy by mutual agreement at any time.
Notwithstanding anything to the contrary in this Agreement (including in this
paragraph 31), none of the foregoing time periods or time frames will apply with
regard to any arbitration contemplated by paragraph 15 above, and the parties
will take all actions necessary or appropriate to attempt to complete such
arbitration within the thirty day calendar period contemplated by subparagraph
15(b) with the intent to avoid a suspension of payment as contemplated by such
subparagraph.
32. Notice.
All notices, requests, demands and other communications required
hereunder shall be in writing and shall be deemed to have been duly given if
delivered in person or by a nationally recognized overnight courier service with
all applicable fees prepaid or, if mailed, by United States certified or
registered mail, prepaid to the party to which the same is directed at the
following addresses (or at such other addresses as shall be given in writing by
the parties to one another):
If to the Company: Omega Healthcare Investors, Inc.
000 Xxxxxxx Xxx
Xxxxx 000
Xxx Xxxxx, XX 00000
Attn: General Counsel
If to the Officer: Xxxxx X. Xxxxxx, Xx.
000 Xxxxx Xxxxx Xxxx
Xxxx Xxxxx, XX 00000
Notices delivered in person shall be effective on the date of delivery. Notices
delivered by an overnight courier service shall be effective on the business day
immediately following the date of delivery thereof to such courier. Notices
delivered by mail as aforesaid shall be effective upon the third calendar day
subsequent to the postmark date thereof.
33. Definitions. The capitalized terms used in this Agreement and not otherwise
defined in this Agreement have the meanings set forth below.
"Area" means the following states:
Alabama
Arizona
Arkansas
California
Colorado
Florida
Georgia
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Massachusetts
Michigan
Missouri
Nevada
New Hampshire
North Carolina
Ohio
Oklahoma
Pennsylvania
Tennessee
Texas
Utah
Washington
West Virginia
"Applicable Period" means the period commencing on the
Resignation Date and ending twenty-four months after the Resignation
Date.
"Business of the Company" means any business that has the
primary purpose of financing the ownership or operation of long-term
care facilities.
"Competing Business" means any person, firm, corporation, joint
venture, or other business that is engaged in the Business of the
Company, but does not include Omega Worldwide, Inc. or any business
engaged primarily in the operation of long term care facilities.
"Confidential Information" means data and information relating
to the business of the Company (which does not rise to the status of a
Trade Secret) which is or has been disclosed to you or of which the you
became aware as a consequence of or through your relationship to the
Company and which has value to the Company and is not generally known to
its competitors. Confidential Information will not include any data or
information that has been voluntarily disclosed to the public by the
Company (except where such public disclosure has been made by you
without authorization) or that has been independently developed and
disclosed by others, or that otherwise enters the public domain through
lawful means.
"Litigation Matters" is defined in paragraph 10 of this
Agreement.
"Revocation Period" is defined in paragraph 20 of this
Agreement.
"Trade Secrets" means Company information including, but not
limited to, technical or nontechnical data, formulas, patterns,
compilations, programs, devices, methods, techniques, drawings,
processes, financial data, financial plans, product plans or lists of
actual or, to your knowledge, actively sought potential customers or
suppliers which: (i) derives economic value, actual or, potential, from
not being generally known to, and not being readily ascertainable by
proper means by, other persons who can obtain economic value from its
disclosure or use; and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.
34. Miscellaneous.
(a) This Agreement (including the Exhibits to this Agreement) is the
entire agreement of the parties with regard to its subject matter and
supersedes all other agreements between the parties with regard to
such subject matter, including the term sheet for severance and
consulting agreement for you.
(b) This Agreement may be executed in counterparts, each of which shall be
deemed an original, but both of which shall constitute one and the
same instrument.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, you and the Company have executed this Agreement as
of the date first written above.
OMEGA HEALTHCARE INVESTORS, INC.
By: /s/ Xxxxx Xxxxxx Xxxxxx
-----------------------------
Name: Xxxxx Xxxxxx Xxxxxx
-----------------------------
Title: Vice President
------------------------------
/s/ Xxxxx X. Xxxxxx, Xx.
------------------------------
Xxxxx X. Xxxxxx, Xx.
Exhibit A
---------
Wire Transfer Instructions for Plans Balance
Pay to: Citibank
000 Xxxx Xxxxxx
Xxx Xxxx, XX
ABA #: 021 000 089
Acct #: 09253186
Acct Name: Bear, Xxxxxxx Securities Corp.
Reference: Sub A/C Omega Healthcare Investors, Inc.
Sub A/C: 000-00000-00
Exhibit B
---------
Litigation Matters
[Attached]
Exhibit C
---------
RELEASE AGREEMENT
This Release Agreement (this "Agreement") is made this 18th day of July,
2000, by Omega Healthcare Investors, Inc., a Maryland corporation (referred to
as "Employer"), and Xxxxx X. Xxxxxx, Xx. ("Employee" or "you").
INTRODUCTION
Employee has agreed to resign as the Chief Executive Officer and
Chairman of the Board of Directors of Employer and as an employee, officer and
director of Employer, all to be effective upon the closing of the purchase on or
before August 31, 2000, by Explorer Holdings, L.P., from Employer of preferred
stock for at least $90,000,000 (the "Transaction"), in exchange for certain
payments and benefits set forth in the Consulting and Severance Agreement (the
"Severance Agreement") between Employer and Employee dated July 18, 2000.
NOW, THEREFORE, the parties agree as follows:
1. The effective date of this Agreement will be the date eight (8) days after
the date on which Employee signs this Agreement (the "Effective Date"). Employer
will execute this Agreement on the same date as Employee returns the Agreement
executed by him to the Employer. As of the Effective Date, if Employee has not
revoked this Agreement, it will be fully effective and enforceable.
2. In exchange for Employee's execution of this Agreement and in full and
complete settlement of any and all claims, Employer will provide Employee with
the payments and benefits set forth in the Severance Agreement.
3. Employee acknowledges and agrees that this Agreement is in compliance with
the Age Discrimination in Employment Act and the Older Workers Benefit
Protection Act and that the releases set forth in this Agreement will be
applicable, without limitation, to any claims brought under these Acts.
The release given by Employee in this Agreement is given
solely in exchange for the consideration set forth in this Agreement and such
consideration is in addition to anything of value that Employee was entitled to
receive prior to entering into this Agreement.
Employee has been advised to consult an attorney prior to
entering into this Agreement, and this provision of the Agreement satisfies the
requirement of the Older Workers Benefit Protection Act that Employee be so
advised in writing.
Employee has been offered twenty-one (21) days from
receipt of this Agreement within which to consider this Agreement.
By entering into this Agreement, neither Employee nor Employer
waive rights or claims that may arise after the date this Agreement is executed.
4. For a period of seven (7) days following Employee's execution of this
Agreement, Employee may revoke this Agreement, and this Agreement will not
become effective or enforceable until such seven (7) day period has expired.
Employee must communicate the desire to revoke this Agreement in writing.
Employee understands that he may sign the Agreement at any time before the
expiration of the twenty-one (21) day review period. To the degree Employee
chooses not to wait twenty-one (21) days to execute this Agreement, it is
because Employee freely and unilaterally chooses to execute this Agreement
before that time. Employee's signing of the Agreement triggers the commencement
of the seven (7) day revocation period.
5. This Agreement will in no way be construed as an admission by either party
that it has acted wrongfully with respect to the other party or any other person
or that either party has any rights whatsoever against the other party. Each
party specifically disclaims any liability to or wrongful acts against the other
party or any other person on the part of itself, its employees or its agents.
6. As a material inducement to Employer to enter into this Agreement, Employee
hereby irrevocably releases (a) Employer and Explorer Holdings, L.P. ("Explorer"
and together with Employer, the "Direct Releasees"), and (b) each of the owners,
stockholders, predecessors, successors, directors, officers, employees,
representatives, and attorneys of Employer or Explorer (in their capacity as
such), any persons or entities that the Employee reasonably should know are
affiliates of Employer or Explorer, (provided that Omega Worldwide, Inc. will
not be deemed an affiliate of Employer or Explorer for purposes of this
Agreement) ("Direct Releasee Affiliates") (and agents, directors, officers,
employees, representatives and attorneys of Direct Releasee Affiliates) and all
persons acting by, through, under or in concert with them (all such persons or
entities in this clause (b) collectively referred to as the "Indirect
Releasees", and together with the Direct Releasees, collectively referred to as,
the "Releasees"), from any and all charges, claims, liabilities, agreements,
damages, causes of action, suits, costs, losses, debts and expenses (including
attorneys' fees and costs actually incurred) of any nature whatsoever, known or
unknown, including, but not limited to, rights arising out of alleged violations
of any contracts (including without limitation the Employment Agreement dated as
of June 15, 2000 between the Company and the Employer and the Change in Control
Agreement dated March 22, 2000 between the Company and the Employee), express or
implied, any covenant of good faith and fair dealing, express or implied, or any
tort, or any legal restrictions on Employer's right to terminate employees, or
any federal, state or other governmental statute, regulation, or ordinance,
including, without limitation: (1) Title VII of the Civil Rights Act of 1964, as
amended by the Civil Rights Act of 1991 (race, color, religion, sex, and
national origin discrimination); (2) 42 U.S.C. ss. 1981 (discrimination); (3)
the Americans with Disabilities Act (disability discrimination); (4) the Age
Discrimination in Employment Act; (5) the Older Workers Benefit Protection Act;
(6) the Equal Pay Act; (7) Executive Order 11246 (race, color, religion, sex,
and national origin discrimination); (8) Executive Order 11141 (age
discrimination); (9) Section 503 of the Rehabilitation Act of 1973 (disability
discrimination); (10) negligence; (11) negligent hiring and/or negligent
retention; (12) intentional or negligent infliction of emotional distress or
outrage; (13) defamation; (14) interference with employment; (15) wrongful
discharge; (16) invasion of privacy; or (17) violation of any other legal or
contractual duty arising under the laws of any state or the laws of the United
States ("Claim" or "Claims"), which Employee now has, or claims to have, or
which Employee at any time heretofore had, or claimed to have, or which Employee
at any time hereinafter may have, or claim to have, against each or any of the
Releasees, in each case as to acts or omissions by each or any of the Releasees
occurring up to and including the Effective Date. Subject to the last sentence
of this Paragraph 6, notwithstanding anything to the contrary in this Agreement,
any release of any of the Indirect Releasees pursuant to this Agreement will be
only with regard to Claims relating directly or indirectly to, or arising
directly or indirectly out of their relationship to, Employer and/or Explorer.
Employee agrees not to allow to be initiated any action of any nature with
respect to any Claim released herein. This Agreement in no way affects or
releases any claims which Employee may have under any employee benefit plan
(within the meaning of the Employee Retirement Income Security Act of 1974, as
amended), other than any such plan for which a settlement provision is made
under the Severance Agreement, or which Employee may have if Employer breaches
any of the provisions of the Severance Agreement or Employer breaches any of the
provisions of this Agreement.
7. Employer hereby irrevocably releases Employee and his heirs, successors,
assigns, agents and persons or entities that the Company reasonably should know
are Employee's affiliates from any and all charges, claims, liabilities,
agreements, damages, causes of action, suits, costs, losses, debts and expenses,
(including attorneys' fees and costs actually incurred), (collectively "Employer
Claims"), but only to the extent that indemnification is permitted pursuant to
applicable law and the Employer's Articles of Incorporation or Bylaws. Employer
agrees not to initiate any action of any nature with the respect to any Employer
Claims released herein. This Agreement in no way affects or releases any claims
which Employer may have if Employee breaches any provisions of the Severance
Agreement or Employee breaches any of the provisions of this Agreement.
8. In the event Employee breaches any of the provisions of this Agreement,
Employee will fully indemnify Releasees for any charges, claims, liabilities,
damages, causes of action, suits, costs, losses, debts, expenses (including
attorneys' fees and costs actually incurred) (collectively "Releasee Losses")
incurred as a result of any breach of this Agreement by Employee. In the event
Employer breaches any of the provisions of this Agreement, Employer will fully
indemnify Employee and his heirs, successors, assigns, agents and persons or
entities that the Company reasonably should know are Employee's affiliates for
any charges, claims, liabilities, damages, causes of action, suits, costs,
losses, debts, expenses (including attorneys' fees and costs actually incurred)
(collectively "Employee Losses") incurred as a result of any breach of this
Agreement by Employer.
9. Any dispute relating to this Agreement will be resolved pursuant to the
dispute resolution provisions of the Severance Agreement.
10. Employer and Employee agree that the terms of this Agreement will be final
and binding and that this Agreement will be interpreted, enforced and governed
under the laws of the State of Michigan, without regard to conflicts of laws.
The provisions of this Agreement can be severed, and if any part of this
Agreement is found to be unenforceable, the remainder of this Agreement will
continue to be valid and effective.
11. This Agreement and the Severance Agreement set forth the entire agreement
between Employer and Employee and fully supersedes any and all prior agreements
or understandings, written and/or oral, between Employer and Employee pertaining
to the subject matter of this Agreement and the Severance Agreement.
Your signature below indicates your understanding and agreement with
all of the terms in this Agreement.
Please take this Agreement home and carefully consider all of its
provisions before signing it. You may take up to twenty-one (21) days to decide
whether you want to accept and sign this Agreement. Also, if you sign this
Agreement, you will then have an additional seven (7) days in which to revoke
your acceptance of this Agreement after you have signed it. This Agreement will
not be effective or enforceable, nor will any consideration be paid, until after
the seven (7) day revocation period has expired. Again, you are free and
encouraged to discuss the contents and advisability of signing this Agreement
with an attorney of your choosing.
PLEASE READ CAREFULLY. THIS AGREEMENT INCLUDES A RELEASE OF ALL
KNOWN AND UNKNOWN CLAIMS. YOU ARE STRONGLY ADVISED TO CONSULT WITH AN
ATTORNEY BEFORE EXECUTING THIS DOCUMENT.
IN WITNESS WHEREOF, Employee and Employer have executed this Agreement
effective as of the date first written above.
EMPLOYEE
/s/ Xxxxx X. Xxxxxx, Xx.
---------------------------------
Xxxxx X. Xxxxxx, Xx.
July 18, 2000
---------------------------------
Date Signed
OMEGA HEALTHCARE INVESTORS, INC.
By: /s/ Xxxxx Xxxxxx Xxxxxx
---------------------------
Title: Vice President
----------------------------
