Exhibit 10.9

 

PERFORMANCE RESTRICTED STOCK UNIT AGREEMENT

PURSUANT TO THE OMEGA HEALTHCARE INVESTORS, INC.

2013 STOCK INCENTIVE PLAN

 

The grant pursuant to this agreement (this “Agreement”) is made as of the Grant
Date, by Omega Healthcare Investors, Inc. (the “Company”) to ______________ (the
“Recipient”).

 

Upon and subject to this Agreement (which shall include the Terms and Conditions
and Exhibits appended to the execution page), the Company hereby awards as of
the Grant Date to the Recipient, the opportunity to earn Vested Restricted Units
(the “Restricted Unit Grant” or the “Award”). Underlined and capitalized terms
in Items A through F below shall have the meanings there ascribed to them.

 

A.Grant Date: January 1, 2014.

 

B.Plan (under which Restricted Unit Grant is granted): Omega Healthcare
Investors, Inc. 2013 Stock Incentive Plan.

 

C.Vested Restricted Units: The Recipient shall earn a number of Vested
Restricted Units determined pursuant to Exhibit 1. Each Vested Restricted Unit
represents the Company’s unsecured obligation to issue one share of the
Company’s common stock (“Common Stock”) and related Dividend Equivalents (as
defined below) in accordance with this Agreement.

 

D.Dividends Equivalents. Each Vested Restricted Unit shall accrue Dividend
Equivalents, an amount equal to the dividends per share paid on one share of
Common Stock to a shareholder of record on or after the Grant Date and until the
date that the Vested Shares ( as defined below) are issued.

 

E.Distribution Date of Vested Shares. Shares of Common Stock attributable to
Vested Restricted Units (“Vested Shares”) shall be issued and distributed upon
the earlier of the dates listed below, subject to receipt from the Recipient of
the required tax withholding:

 

1.within ten (10) business days following the last day of each calendar quarter
in 2017; or

 

2.the date of a Change in Control.

 

Notwithstanding the foregoing, distribution shall be delayed to the extent
provided in any deferral agreement between the Recipient and the Company

 

F.Distribution Date of Dividend Equivalents. Dividend Equivalents attributable
to Vested Restricted Units shall be distributed to the Recipient on the same
date as Vested Shares are distributable to the Recipient under Item E above,
except as otherwise provided in any deferral agreement.

 

 

 

 

IN WITNESS WHEREOF, the Company has executed this Agreement to be effective as
of the Grant Date set forth above.

 

  OMEGA HEALTHCARE INVESTORS, INC.    

 

  By:     Title:  

 

ii

 

 

TERMS AND CONDITIONS TO THE

PERFORMANCE RESTRICTED STOCK UNIT AGREEMENT

PURSUANT TO THE OMEGA HEALTHCARE INVESTORS, INC.

2013 STOCK INCENTIVE PLAN

 

1.            Payment for Vested Restricted Units.   The Company shall issue in
book entry form in the name of the Recipient, or issue and deliver to the
Recipient a share certificate representing, the Vested Shares on the
Distribution Date of Vested Shares.

 

2.            Dividends Equivalents.      The Company shall pay Dividend
Equivalents attributable to Vested Restricted Units on the Distribution Date of
Dividend Equivalents, subject to required tax withholding.

 

3.            Tax Withholding.

 

(a)            The minimum amount of the required tax obligations imposed on the
Company by reason of the issuance of the Vested Shares shall be satisfied by
reducing the actual number of Vested Shares by the number of whole shares of
Common Stock which, when multiplied by the Fair Market Value of the Common Stock
on the Distribution Date, is sufficient, together with cash in lieu of any
fractional share, to satisfy such tax withholding, assuming that (i) the
Recipient does not make a valid election to satisfy tax withholding in cash
pursuant to Subsection (b), and (ii) the Committee does not determine that tax
withholding will be required to be satisfied in another manner.

 

(b)            However, the Recipient may elect in writing by notice to the
Company received at least ten (10) days before the earliest Distribution Date to
satisfy such tax withholding obligation in cash by the earliest Distribution
Date, as provided in Subsection (a)(i). If the Recipient fails to timely satisfy
payment of the cash amount, then Subsection (a) shall apply.

 

(c)            To the extent that the Recipient is required to satisfy the tax
withholding obligation in this Section in cash, the Company shall withhold the
cash from any cash payments then owed to the Recipient, or if none, the
Recipient shall timely remit the cash amount.

 

(d)            If the Recipient does not timely satisfy payment of the tax
withholding obligation, the Recipient will forfeit the Vested Shares.

 

4.            Restrictions on Transfer.   Except for the transfer by bequest or
inheritance, the Recipient shall not have the right to make or permit to exist
any transfer or hypothecation, whether outright or as security, with or without
consideration, voluntary or involuntary, of all or any part of any right, title
or interest in or to this Award. Any such disposition not made in accordance
with this Agreement shall be deemed null and void. Any permitted transferee
under this Section shall be bound by the terms of this Agreement.

 

 

 

 

5.            Change in Capitalization.

 

(a)            The number and kind of shares issuable under this Agreement shall
be proportionately adjusted for any non-reciprocal transaction between the
Company and the holders of capital stock of the Company that causes the per
share value of the shares of Common Stock subject to the Award to change, such
as a stock dividend, stock split, spinoff, rights offering, or recapitalization
through a large, non-recurring cash dividend (each, an “Equity Restructuring”).
No fractional shares shall be issued in making such adjustment.

 

(b)            In the event of a merger, consolidation, reorganization,
extraordinary dividend, sale of substantially all of the Company’s assets, other
material change in the capital structure of the Company, or a tender offer for
shares of Common Stock, in each case that does not constitute an Equity
Restructuring, the Committee shall take such action to make such adjustments
with respect to the shares of Common Stock issuable hereunder or the terms of
this Agreement as the Committee, in its sole discretion, determines in good
faith is necessary or appropriate, including, without limitation, adjusting the
number and class of securities subject to the Award, substituting cash, other
securities, or other property to replace the Award, or removing of restrictions.

 

(c)            All determinations and adjustments made by the Committee pursuant
to this Section will be final and binding on the Recipient. Any action taken by
the Committee need not treat all recipients of awards under the Plan equally.

 

(d)            The existence of the Plan and the Restricted Unit Grant shall not
affect the right or power of the Company to make or authorize any adjustment,
reclassification, reorganization or other change in its capital or business
structure, any merger or consolidation of the Company, any issue of debt or
equity securities having preferences or priorities as to the Common Stock or the
rights thereof, the dissolution or liquidation of the Company, any sale or
transfer of all or part of its business or assets, or any other corporate act or
proceeding.

 

6.            Governing Laws.  This Award shall be construed, administered and
enforced according to the laws of the State of Maryland; provided, however, no
Vested Shares shall be issued except, in the reasonable judgment of the
Committee, in compliance with exemptions under applicable state securities laws
of the state in which Recipient resides, and/or any other applicable securities
laws.

 

7.            Successors.  This Agreement shall be binding upon and inure to the
benefit of the heirs, legal representatives, successors, and permitted assigns
of the parties.

 

8.            Notice.    Except as otherwise specified herein, all notices and
other communications under this Agreement shall be in writing and shall be
deemed to have been given if personally delivered or if sent by registered or
certified United States mail, return receipt requested, postage prepaid,
addressed to the proposed recipient at the last known address of the

 

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recipient. Any party may designate any other address to which notices shall be
sent by giving notice of the address to the other parties in the same manner as
provided herein.

 

9.            Severability.   In the event that any one or more of the
provisions or portion thereof contained in this Agreement shall for any reason
be held to be invalid, illegal, or unenforceable in any respect, the same shall
not invalidate or otherwise affect any other provisions of this Agreement, and
this Agreement shall be construed as if the invalid, illegal or unenforceable
provision or portion thereof had never been contained herein.

 

10.          Entire Agreement.    Subject to the terms and conditions of the
Plan, this Agreement expresses the entire understanding and agreement of the
parties with respect to the subject matter.

 

11.          Specific Performance.   In the event of any actual or threatened
default in, or breach of, any of the terms, conditions and provisions of this
Agreement, the party or parties who are thereby aggrieved shall have the right
to specific performance and injunction in addition to any and all other rights
and remedies at law or in equity, and all such rights and remedies shall be
cumulative.

 

12.          No Right to Continued Retention.   Neither the establishment of the
Plan nor the Award hereunder shall be construed as giving Recipient the right to
continued service with the Company or an Affiliate.

 

13.          Headings and Capitalized Terms.     Paragraph headings used herein
are for convenience of reference only and shall not be considered in construing
this Agreement. Capitalized terms used, but not defined, in this Agreement shall
be given the meaning ascribed to them in the Plan.

 

14.          Definitions.  As used in this Agreement:

 

“Beginning Stock Price” means the average closing price per share of Common
Stock for the months of November and December 2013 on the exchange on which
Common Stock is traded.

 

“Below Threshold Relative TSR” means that Relative Total Shareholder Return is
less than -300 basis points.

 

“Below Threshold TSR” means the Company has achieved Total Shareholder Return of
less than eight percent (8%) for the Performance Period.

 

“Cause” shall have the meaning set forth in the employment agreement then in
effect between the Recipient and the Company, or, if there is none, then Cause
shall mean the occurrence of any of the following events:

 

(a)          willful refusal by the Recipient to follow a lawful direction of
the person to whom the Recipient reports or the Board of Directors of the
Company (the “Board”), provided the direction is not materially inconsistent
with the duties

 

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or responsibilities of the Recipient’s position with the Company, which refusal
continues after the Board has again given the direction in writing;

 

(b)          willful misconduct or reckless disregard by the Recipient of his
duties or with respect to the interest or material property of the Company;

 

(c)          intentional disclosure by the Recipient to an unauthorized person
of Confidential Information or Trade Secrets, which causes material harm to the
Company;

 

(d)          any act by the Recipient of fraud against, material
misappropriation from or significant dishonesty to either the Company or an
Affiliate, or any other party, but in the latter case only if in the reasonable
opinion of at least two-thirds of the members of the Board (excluding the
Recipient), such fraud, material misappropriation, or significant dishonesty
could reasonably be expected to have a material adverse impact on the Company or
its Affiliates; or

 

(e)          commission by the Recipient of a felony as reasonably determined by
at least two-thirds of the members of the Board (excluding the Recipient).

 

“Change in Control” means any one of the following events which occurs following
the Grant Date:

 

(a)          the acquisition within a twelve (12) month period, directly or
indirectly, by any “person” or “persons” (as such terms are used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than
the Company or any employee benefit plan of the Company or an Affiliate, or any
corporation pursuant to a reorganization, merger or consolidation, of equity
securities of the Company that in the aggregate represent thirty percent (30%)
or more of the total voting power of the Company’s then outstanding equity
securities;

 

(b)          the acquisition, directly or indirectly, by any “person” or
“persons” (as such terms are used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended), other than the Company or any employee
benefit plan of the Company or an Affiliate, or any corporation pursuant to a
reorganization, merger or consolidation of equity securities of the Company,
resulting in such person or persons holding equity securities of the Company
that, together with equity securities already held by such person or persons, in
the aggregate represent more than fifty percent (50%) of the total fair market
value or total voting power of the Company’s then outstanding equity securities;

 

(c)          individuals who as of the date hereof, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least two-thirds of the directors
then comprising the Incumbent Board shall be considered as though such
individual

 

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were a member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or consents by or on
behalf of a person other than the Board;

 

(d)          a reorganization, merger or consolidation, with respect to which
persons who were the holders of equity securities of the Company immediately
prior to such reorganization, merger or consolidation, immediately thereafter,
own equity securities of the surviving entity representing less than fifty
percent (50%) of the combined ordinary voting power of the then outstanding
voting securities of the surviving entity; or

 

(e)          the acquisition within a twelve (12) month period, directly or
indirectly, by any “person” or “persons” (as such terms are used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than
any corporation pursuant to a reorganization, merger or consolidation, of assets
of the Company that have a total gross fair market value equal to or more than
eighty-five percent (85%) of the total gross fair market value of all of the
assets of the Company immediately before such acquisition.

 

Notwithstanding the foregoing, no Change in Control shall be deemed to have
occurred for purposes of this Award (a) unless the event also constitutes a
“change in the ownership or effective control of the corporation or in the
ownership of a substantial portion of the assets of the corporation” within the
meaning of Code Section 409A(a)(2)(v), or (b) by reason of any actions or events
in which the Recipient participates in a capacity other than in his capacity as
an officer, employee, or director of the Company or an Affiliate.

 

“Confidential Information” means data and information relating to the business
of the Company or an Affiliate (which does not rise to the status of a Trade
Secret) which is or has been disclosed to the Recipient or of which the
Recipient became aware as a consequence of or through his relationship to the
Company or an Affiliate and which has value to the Company or an Affiliate and
is not generally known to its competitors. Confidential Information shall not
include any data or information that has been voluntarily disclosed to the
public by the Company or an Affiliate (except where such public disclosure has
been made by the Recipient without authorization) or that has been independently
developed and disclosed by others, or that otherwise enters the public domain
through lawful means without breach of any obligations of confidentiality owed
to the Company or any of its Affiliates.

 

“Ending Stock Price” means the average closing price per share of Common Stock
for the months of November and December 2016 on the exchange on which Common
Stock is traded, unless a Change in Control occurs before January 1, 2017, in
which case the term means the value per share determined as of the date of the
Change in Control, such value to be determined by the Compensation Committee in
its reasonable discretion based on the actual or implied price per share paid in
the Change in Control transaction.

 

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“Good Reason” shall have the meaning set forth in the employment agreement then
in effect between the Recipient and the Company, or, if there is none, then Good
Reason shall mean the occurrence of an event listed in Subsection (a) through
(c) below:

 

(a)          the Recipient experiences a material diminution of the Recipient’s
responsibilities of his position, as reasonably modified by the person to whom
the Recipient reports or the Board from time to time, such that the Recipient
would no longer have responsibilities substantially equivalent to those of other
executives holding equivalent positions at companies with similar revenues and
market capitalization;

 

(b)          the Company reduces the Recipient’s annual base salary or annual
bonus opportunity at high, target or threshold performance as a percentage of
annual base salary; or

 

(c)          the Company requires the Recipient to relocate the Recipient’s
primary place of employment to a new location that is more than fifty (50) miles
from its current location (determined using the most direct driving route),
without the Recipient’s consent;

 

provided however, as to each event in Subsection (a) through (c),

 

(i)          the Recipient gives written notice to the Company within ten (10)
days following the event or receipt of notice of the event of his objection to
the event;

 

(ii)         the Company fails to remedy the event within ten (10) days
following the Recipient’s written notice; and

 

(iii)        the Recipient terminates his employment within thirty (30) days
following the Company’s failure to remedy the event.

 

“High Relative TSR” means that Relative Total Shareholder Return is +300 basis
points or more.

 

“High TSR” means the Company has achieved Total Shareholder Return of at least
twelve percent (12%) for the Performance Period.

 

“Performance Period” means the period from and including January 1, 2014 through
the earlier of December 31, 2016 or the date of a Change in Control.

 

“Relative Total Shareholder Return” means the Company’s total shareholder return
expressed as a positive or negative number of basis points relative to the
average total shareholder return reported for the MSCI U.S. REIT Index (the
“Index”) for the Performance Period. For this purpose, the Company’s total
shareholder return shall be calculated in the same manner as total shareholder
return is calculated for the Index, and the average closing price per share for
the November and December before the

 

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beginning, and before the end, of the Performance Period shall be used for
calculating both the Company’s total shareholder return and total shareholder
return for the Index.

 

“Target Relative TSR” means that Relative Total Shareholder Return is 0 basis
points.

 

“Target TSR” means the Company has achieved Total Shareholder Return of ten
percent (10%) for the Performance Period.

 

“Threshold Relative TSR” means that Relative Total Shareholder Return is -300
basis points.

 

“Threshold TSR” means that the Company has achieved Total Shareholder Return of
eight percent (8%) for the Performance Period.

 

“Total Shareholder Return” means the compound annualized growth rate, expressed
as a percentage, in the price of Common Stock over the Performance Period due to
Common Stock price appreciation and dividends declared to a shareholder of
record with respect to one share of Common Stock during the Performance Period
and assuming that dividends are reinvested. For this purpose, the beginning of
the Performance Period price is the Beginning Stock Price and the end of the
Performance Period price is the Ending Stock Price. Total Shareholder Return
shall be calculated in substantially the same manner as total shareholder return
is calculated for the MSCI U.S. REIT Index.

 

“Trade Secrets” means information including, but not limited to, technical or
nontechnical data, formulae, patterns, compilations, programs, devices, methods,
techniques, drawings, processes, financial data, financial plans, product plans
or lists of actual or 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.

 

“Vesting Period” means the period beginning on the day after the last day of the
Performance Period and ending December 31, 2017.

 

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EXHIBIT 1

 

A.The number of potential Vested Restricted Units is determined as of the last
day of the Performance Period by adding the number determined in the TSR Chart
and the Relative TSR Chart set forth below; provided that the Recipient shall
vest in twenty-five percent (25%) of the potential Vested Restricted Units,
which shall then become Vested Restricted Units, as of the last day of each
calendar quarter during the Vesting Period only if the Recipient remains an
employee, director or consultant of the Company or an Affiliate during the
entire Performance Period and through the last day of such calendar quarter.

 

TSR Chart

 

Below

Threshold

TSR

*Threshold

TSR

*Target

TSR

*High

TSR

Zero

Vested

Units

     

 

Relative TSR Chart

 

Below

Threshold

Relative TSR

**Threshold

Relative TSR

**Target

Relative TSR

**High

Relative TSR

Zero

Vested

Units

     

 

*If Total Shareholder Return falls between Threshold TSR and Target TSR or
between Target TSR and High TSR, the number of Vested Restricted Units under the
TSR Chart shall be determined by rounding actual Total Shareholder Return to the
closest (but rounded up in the event of a tie) 0.5% percentage points and then
applying linear interpolation based on the percentage points by which Threshold
TSR or Target TSR, as so adjusted, respectively, is exceeded.

 

**If Relative Total Shareholder Return falls between Threshold Relative TSR and
Target Relative TSR or between Target Relative TSR and High Relative TSR, the
number of Vested Restricted Units under the Relative TSR Chart shall be
determined by rounding Relative TSR to the closest (but rounded up in the event
of a tie) 50 basis points and then applying linear interpolation based on the
basis points by which Threshold Relative TSR or Target Relative TSR,
respectively, is exceeded.

 

B.Notwithstanding the foregoing, if the Recipient dies or becomes subject to a
Disability while an employee, director or consultant of the Company or an
Affiliate, the Recipient resigns from the Company for Good Reason or the Company
terminates the Recipient’s employment without Cause (each such event referred to
as a “Qualifying Termination”), in each case:

 

 

 

 

(i)during the Performance Period and more than sixty (60) days before a Change
in Control, the Recipient shall earn upon completion of the Performance Period a
number of Vested Restricted Units equal to the number of Vested Restricted Units
determined in the charts above (or if a Change in Control occurs after the
Qualifying Termination and before January 1, 2017, a number of Vested Restricted
Units determined pursuant to Section C.1. below), multiplied by a fraction, the
numerator of which is the number of days elapsed in the Performance Period
through the date of such event and the denominator of which is 1,095 (i.e., 365
x 3), or

 

(ii)during the Vesting Period, the Recipient shall earn the same number of
Vested Restricted Units determined in the charts above as if the Recipient were
to remain an employee of the Company through the last day of the Vesting Period.

 

C.Notwithstanding any other provision of this Agreement, if a Change in Control
occurs upon or after the Grant Date and before December 31, 2017, and (i) the
Recipient remains an employee, director or consultant of the Company or an
Affiliate during the entire Performance Period until the date of the Change in
Control, or (ii) if within sixty (60) days before the Change in Control, the
Recipient incurs a Qualifying Termination, the Recipient shall be 100% vested
in, as of the date of the Change in Control:

 

1.if the Change in Control occurs before January 1, 2017, the number of units
determined from the Relative TSR Chart based on the basis points of Relative
Total Shareholder Return achieved for the Performance Period through the date of
the Change in Control, plus

 

a.the number of units determined in the TSR Chart if the applicable level of
Total Shareholder Return for the full three year Performance Period (determined
without regard to the shortening of the period as a result of the Change in
Control) is achieved, or

 

b.a number of units equal to the number of units determined in the TSR Chart
multiplied by a fraction, the numerator of which is the number of days elapsed
in the Performance Period through the date of the Change in Control and the
denominator of which is 1,095 (i.e., 365 x 3), if the applicable level of Total
Shareholder Return has been achieved based on annualized performance to the date
of the Change in Control but not for the full three year Performance Period
(determined without regard to the shortening of the period as a result of the
Change in Control), or

 

c.a number of units determined by interpolation between the numbers in clause
(a) and (b) above if the applicable level of Total Shareholder Return has been
exceeded based on performance to the date of the Change in Control but is less
than the applicable level for the full three year Performance Period (determined
without regard to the shortening of the period as a result of the Change in
Control), or

 

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2.if the Change in Control occurs after December 31, 2016, the number of units
determined in the above charts that were actually earned for the Performance
Period.

 

D.The portion of the Restricted Unit Grant that has not become Vested Restricted
Units as of the earlier of the last day of the Performance Period, or, except as
provided in Item C above, as of the date the Recipient ceases to be an employee,
director, or consultant of the Company or an Affiliate shall be forfeited. In
addition, if the Recipient ceases to be an employee, director, or consultant of
the Company or an Affiliate during, but before the last day of, each calendar
quarter during the Vesting Period, then except as provided in Item C above, the
unvested portion of the Restricted Unit Grant shall be forfeited.

 

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