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OMEGA HEALTHCARE INVESTORS, INC.

DEFERRED STOCK PLAN
 

 
 
 
 

 

 
 

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TABLE OF CONTENTS

OMEGA HEALTHCARE INVESTORS, INC. DEFERRED STOCK PLAN

SECTION
 
PAGE
                 
1.
ELIGIBILITY
1
 
2.
DEFERRAL ELECTIONS
1
 
3.
TIMING OF ELECTIONS
1
 
4.
TERMS AND CONDITIONS OF DEFERRED STOCK GRANTS
2
 
5.
SOURCE OF SHARES UNDER PLAN
4
 
6.
CHANGE IN CAPITALIZATION
4
 
7.
ADMINISTRATION
5
 
8.
UNFUNDED PLAN
5
 
9.
PARTICIPATION VOLUNTARY
6
 
10.
AMENDMENT AND TERMINATION
6
 
11.
GOVERNING LAW
6
 
12.
DEFINITIONS
6
 

 

 
 

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OMEGA HEALTHCARE INVESTORS, INC.
DEFERRED STOCK PLAN
 
1.  
ELIGIBILITY

 
Directors of the Company who are not employees of the Company are eligible to
participate in the Plan.  In addition, executive officers of the Company shall
be eligible to participate at such date as is determined by the Committee.
 
2.  
DEFERRAL ELECTIONS

 
(a) Directors’ Elections.  Each Director may elect, in the manner prescribed
herein, to defer receipt of any Stock Grant, and if desired, the Dividend
Equivalents attributable to the deferred Stock Grant, unless otherwise
determined by the Committee.
 
(b) Other Participants’ Elections.  Each Participant (other than a Director of
the Company) may elect to defer receipt of any Stock Grant, and if desired, the
Dividend Equivalents attributable to the deferred Stock Grant, to the extent
provided by the Committee.
 
3.  
TIMING OF ELECTIONS

 
(a) First Year of Eligibility.  Each Participant may elect, within thirty (30)
days after the later of the Effective Date or the date the Participant first
becomes eligible to participate in the Plan, to defer receipt of any Stock Grant
that is made after the date of the election and represents compensation for
services rendered by the Participant after the election.
 
(b) Initial Deferral Election with respect to Forfeitable Rights.  Each
Participant may elect to defer receipt of any Stock Grant, the terms of which
require the Participant to continue to provide services to the Company for at
least twelve (12) months from the date of grant to avoid forfeiture, if the
election is made within thirty (30) days of the date of grant.  For purposes of
this Subsection (b), a Stock Grant will not be treated as failing to require the
Participant to perform services for at least twelve (12) months from the date of
grant merely because the risk of forfeiture lapses upon the Participant’s death
or Disability, or a Change in Control, provided that if the Participant’s death
or Disability or a Change in Control occurs and the risk of forfeiture lapses
within such twelve (12) month period, the deferral election will be given effect
only if it is permitted under this Section without regard to this Subsection.
 
(c) Initial Deferral Election with respect to Performance-Based
Compensation.  Each Participant may elect to defer receipt of any
Performance-Based Stock Grant within six (6) months before the end of the
applicable performance period, provided that the Participant continuously
performs services for the Company from the later of the beginning of the
performance period or the date the performance criteria are established through
the date an election is made under this Subsection, provided that no such
election may be made after the compensation underlying the Performance-Based
Stock Grant has become readily ascertainable.
 
(d) Initial Deferral Election with respect to Short-Term Deferrals.  Each
Participant may elect to defer receipt of any Stock Grant that, absent the
deferral election, would be treated as a “short-term deferral” within the
meaning of Treas. Reg. Section 1.409A-1, in accordance with the requirements of
Subsection (f) below, applied as if the Stock Grant were a deferral of
compensation and the scheduled payment date were the date the risk of forfeiture
lapses; provided, however, that such election may require payment upon a Change
in Control without regard to the five-year additional deferral requirement in
Subsection (f).
 
(e) General Rule.  Except as otherwise provided in this Section, each
Participant may elect to defer receipt of any Stock Grant that represents
compensation for services for a calendar year only if the election is made not
later than the last day of the immediately preceding calendar year.
 
(f) Standing Election.  Notwithstanding any other provision hereof, the
Committee may provide that a deferral election made in a given year will apply
also to future Stock Grants made in future years, unless and until the
Participant revokes or modifies the deferral election.  In such case, the
Participant must submit a written modification or revocation in such form as the
Committee may require before the latest permissible date for making a deferral
election in accordance with the other subsections of this Section.
 
(g) Subsequent Changes in Deferral Elections.  Once a Participant makes a
deferral election, the Participant may change his deferral election at any time
before the last permissible date for making a deferral election as set forth
above in this Section.
 
(h) Dividend Equivalents.  The Committee shall specify in the applicable
Agreement when Dividend Equivalents will be paid, which may be at the same date
the Shares subject to the deferred Stock Grant are issued or may be subject to
an election by the Participant subject to the same timing rules as apply in this
Section, to the extent provided in the applicable Agreement.
 
(i) Other Restrictions.  The Committee may provide other restrictions on the
timing or revocation of deferral elections, and all such elections will be
limited as the Committee may provide in the applicable Agreement.
 
4.  
TERMS AND CONDITIONS OF DEFERRED STOCK GRANTS

 
(a) Terms of Deferred Stock Grants and Dividend Equivalent Rights.  The
Committee shall have the sole authority and discretion in determining the terms
and conditions with respect to each deferred Stock Grant and Dividend
Equivalents, which shall be reflected in the applicable Agreement.
 
(b) Deferred Stock Grants.  The Committee may provide in the applicable
Agreement that all or a portion of the deferred Stock Grant will be forfeited
under specified terms and conditions.
 
(c) Dividend Equivalents.  Stock Grants that are deferred shall accrue Dividend
Equivalents, unless otherwise determined by the Committee.  The Committee may
provide in the applicable Agreement that all or a portion of the Dividend
Equivalents will be forfeited under specified terms and conditions.  The
Committee may specify, or allow the Participant to specify, in the applicable
Agreement that Dividend Equivalents will be paid when earned, that Dividend
Equivalents will earn interest at a specified interest rate and paid at a date
or event specified, or converted into the right to receive Shares at a specified
date or event under a specified conversion formula.
 
(d) Manner of Deferral Election and Timing of Payment.  A Participant may elect
to defer receipt of a Stock Grant and Dividend Equivalents by entering into an
Agreement provided by the Company for this purpose which shall contain such
terms and conditions as may be established by the Committee.  If a Participant
makes a deferral election, the issuance of Shares and Dividend Equivalents shall
be delayed until the date or event specified in the Agreement at the date the
Participant’s deferral election in Section 3 is made.  Except as otherwise
provided in an Agreement, Shares attributable to a Stock Grant that is deferred
shall be issued, and Dividend Equivalents that are deferred will be paid only
upon an event or date set forth below:
 
(i) a specified date;
 
(ii) the date of the Participant’s Separation from Service if the Participant is
not a Specified Employee;
 
(iii) six (6) months after the date of the Participant’s Separation from Service
if the Participant is a Specified Employee;
 
(iv) the date of the Participant’s death;
 
(v) the date the Participant becomes subject to a Disability;
 
(vi) the date of a Change in Control; or
 
(vii) the date the Participant is subject to an Unforeseeable Emergency;
 
provided, however, that such further terms, conditions, and restrictions as set
forth in the applicable Agreement shall apply.
 
(e) Subsequent Changes in Time of Payment.  If a Participant is permitted to
elect the timing of payment pursuant to subsection (d), the Participant may
change the timing of payment of Stock Grants and Dividend Equivalents at any
time before the last permissible date for making a deferral election as to such
Stock Grants and Dividend Equivalents as set forth in Section 3, or if after
such last permissible date, only in accordance with the following rules:
 
(i) the election shall not take effect until at least twelve (12) months after
the date on which the election is made;
 
(ii) in the case of an election related to a payment that is not on account of
the Participant’s Disability or death, or the occurrence of an Unforeseeable
Emergency, the payment with respect to which the election is made must be
deferred for a period of at least five (5) years from the date that such payment
would have been made; and
 
(iii) any election related to a payment to be paid at a specified time or
pursuant to a fixed schedule must be made at least twelve (12) months before the
date the payment was previously scheduled to be paid.
 
(f) Non-Transferability.  The rights and interests of a Participant in respect
of the deferred Stock Grant and Dividend Equivalents shall not be transferable
or assignable other than by will or the laws of succession to the legal
representative of the Participant; provided, however, that the Committee may
allow a Participant to designate a person to receive the benefits payable under
the Plan on the Participant’s death or alter or revoke such designation from
time to time, subject to the provisions of any applicable law.
 
(g) Deferred Stock Grants are not Shares.  Deferred Stock Grants are not Shares,
and do not entitle any Participant to the exercise of voting rights, the receipt
of dividends, or the exercise of any other rights attaching to ownership of
Shares.
 
5.  
SOURCE OF SHARES UNDER PLAN

 
No Shares are reserved for issuance under the Plan.  The Plan is merely a
vehicle under which Stock Grants that are made by the Company can be
deferred.  Sources of Stock Grants may include, but not be limited to, the Omega
Healthcare Investors, Inc. 2004 Stock Incentive Plan.
 
6.  
CHANGE IN CAPITALIZATION

 
(a) The number and kind of Shares shall be proportionately adjusted for any
nonreciprocal transaction between the Company and holders of capital stock of
the Company that causes the per share value of the Shares underlying the Stock
Grants to change, such as a stock dividend, stock split, spin-off, rights
offering, or recapitalization through a large, non-recurring cash dividend
(each, an “Equity Restructuring”).
 
(b) In the event of a merger, consolidation, extraordinary dividend, sale of
substantially all of the Company’s assets or other material change in the
capital structure of the Company, or a tender offer for shares of Common Stock,
or other reorganization of the Company, that in each case is not an Equity
Restructuring, the Committee shall take such action and make such adjustments
with respect to the Shares or the terms of this Plan 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 Plan, or substituting cash, other securities, or other property
to replace the award payable under the Plan, or terminating awards under the
Plan in exchange for their cash value (as determined by the Committee).
 
(c) All determinations and adjustments made by the Committee pursuant to this
Section will be final and binding on the Participant.  Any action taken by the
Committee need not treat all Participants under the Plan equally.
 
(d) The existence of the Plan and any deferred Stock Grants and Dividend
Equivalents thereunder 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.
 
7.  
ADMINISTRATION

 
The Committee shall administer the Plan in accordance with its terms. The
Committee may, subject to the terms of the Plan, delegate duties relating to the
administration of the Plan and will determine the scope of such delegation. Any
decision made by the Committee in carrying out its responsibilities with respect
to the administration of the Plan will be final and binding on the Participants.
 
In addition to the other powers granted to the Committee under the Plan and
subject to the terms of the Plan, the Committee will have full and complete
authority to interpret the Plan. The Committee may from time to time prescribe
such rules and regulations and make all determinations necessary or desirable
for the administration of the Plan.  Any such interpretation, rule,
determination or other act of the Committee will be conclusively binding upon
all persons, including the Participants and their legal representatives and
beneficiaries.
 
No member of the Committee will be liable for any action or determination made
in good faith pursuant to the Plan. To the full extent permitted by law, the
Company will indemnify and save harmless each person made, or threatened to be
made, a party to any action or proceeding by reason of the fact that such person
is or was a member of the Committee or is or was a member of the Committee and,
as such, is or was required or entitled to take action pursuant to the terms of
the Plan.
 
8.  
UNFUNDED PLAN

 
The Plan is unfunded.  The Company’s obligations hereunder will constitute
general, unsecured obligations, payable solely out of its general assets, and no
Participant or other person has any right to any specific assets of the
Company.  The Company will not segregate any assets for the purpose of funding
its obligations with respect to Shares credited hereunder.  The Company will not
be deemed to be a trustee of any amounts to be distributed or paid pursuant to
the Plan.  No liability or obligation of the Company pursuant to the Plan will
be deemed to be secured by any pledge of, or encumbrance on, any property of the
Company.
 
9.  
PARTICIPATION VOLUNTARY

 
Participation in the Plan by Participants is voluntary.  The issuance of
Agreements under the Plan will not be construed as giving a Participant any
right to continue in the service of the Company or any of its
Affiliates.  Participation in the Plan by any Participant will constitute
acceptance of the terms and conditions of the Plan by the Participant and as to
the Participant’s agreement to be bound thereby.
 
10.  
AMENDMENT AND TERMINATION

 
The Board of Directors may from time to time amend, suspend or terminate the
Plan in whole or in part.  No amendment or termination of the Plan will take
away any rights that the Participant has under the terms of any applicable
Agreement.
 
11.  
GOVERNING LAW

 
The Plan will be governed by the laws of the State of Maryland, to the extent
not pre-empted by Federal law, without reference to principles of conflicts of
laws.
 
12.  
DEFINITIONS

 
For purposes of the Plan, the terms contained in this Plan have the following
meanings.
 
(a) “Affiliate” means:
 
(i) any Subsidiary or Parent;
 
(ii) any entity that directly or through one or more intermediaries controls, is
controlled by, or is under common control with the Company, as determined by the
Committee; or
 
(iii) any entity in which the Company has such a significant interest that the
Company determines it should be deemed an “Affiliate,” as determined in the sole
discretion of the Committee.
 
(b) “Agreement” means an agreement approved by the Committee which sets forth
the terms and conditions of the Participant’s deferred Stock Grant and Dividend
Equivalents.
 
(c) “Board of Directors” means the board of directors of the Company.
 
(d) “Change in Control” means a “change in the ownership of the corporation, a
change in the effective control of the corporation, or a change in the ownership
of a substantial portion of the assets of the corporation,” in each case within
the meaning of Treas. Reg. Section 1.409A-3; provided that the term
“corporation” in this definition shall refer to the Company.
 
(e) “Committee” means the Compensation Committee of the Board of Directors.
 
(f) “Company” means Omega Healthcare Investors, Inc., a Maryland corporation.
 
(g) “Common Stock” means the Company’s common stock.
 
(h) “Disability” means any condition that constitutes a “disability” under
Treas. Reg. Section 1.409A-3.
 
(i) “Dividend Equivalents” means an amount equal to the dividends per Share
payable to shareholders of record on or after the date of grant of the deferred
Stock Grant through the day before the date the Shares attributable to the
deferred Stock Grant are issued.
 
(j) “Effective Date” means January 20, 2009.
 
(k) “Parent” means any corporation (other than the Company) in an unbroken chain
of corporations ending with the Company if each of the corporations other than
the Company owns stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.  A “Parent” may include any entity other than a corporation to
the extent permissible under Section 424(e) of the Internal Revenue Code or
regulations and rulings thereunder.
 
(l) “Participant” means any individual who participates in the Plan pursuant to
Section 1.
 
(m) “Performance-Based Stock Grant” means a Stock Grant, the entitlement to
which is contingent on the satisfaction of preestablished organizational or
individual performance criteria relating to a performance period of at least
twelve (12) consecutive months.  Organizational or individual performance
criteria are considered preestablished if established in writing within ninety
(90) days after the commencement of the period of service to which the criteria
relates, provided that the outcome is substantially uncertain at the time the
criteria are established.  Compensation may be performance-based compensation if
the amount will be paid regardless of satisfaction of the performance criteria
due to the Participant’s death or Disability, or a Change in Control, provided
that payment made under such circumstances without regard to the satisfaction of
the performance criteria will not constitute a Performance-Based Stock Grant.
 
(n) “Plan” means the Omega Healthcare Investors, Inc. Deferred Stock Plan, as it
may be amended from time to time.
 
(o) “Separation from Service” means a “separation from service” within the
meaning of Treas. Reg. Section 1.409A-1.
 
(p) “Share” means a share of Common Stock.
 
(q) “Specified Employee” means a “specified employee” within the meaning of
Treas. Reg. Section 1.409A-1.
 
(r) “Stock Grant” means a grant of Shares or the grant of the right to receive
Shares in the future, whether contingent or absolute.
 
(s) “Subsidiary” means any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company if each of the corporations
other than the last corporation in the unbroken chain owns stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.  A “Subsidiary” shall
include any entity other than a corporation to the extent permissible under
Section 424(f) of the Internal Revenue Code or regulations and rulings
thereunder.
 
(t) “Unforeseeable Emergency” means an “unforeseeable emergency” within the
meaning of Treas. Reg. Section 1.409A-3.
 
The Plan was estalished as of the Effective Date, January 20, 2009.
 
OMEGA HEALTHCARE INVESTORS, INC.

By:                                                                      

Title:                                                                      
 
 

 
 

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DEFERRED STOCK AGREEMENT
PURSUANT TO THE OMEGA HEALTHCARE INVESTORS, INC.
2004 STOCK INCENTIVE PLAN
 

 
THIS AGREEMENT (this “Agreement”) is made as of _________________, 2009 (the
“Effective Date”), by Omega Healthcare Investors, Inc. (the “Company”) and
____________________________________ (the “Director”).
 

 
This Agreement includes the Terms and Conditions, which are part of this
Agreement.
 

 
 
A.
Effect of Agreement:  This Agreement relates to the quarterly grants of Stock to
the Director that are scheduled to be made after the Effective Date (including
each future year) as of the quarterly dates set forth in Item D
below.  Therefore, this Agreement shall constitute a standing election to defer
such future quarterly Stock grants and shall remain in place until revoked or
modified by the Director.

 

 
If the Director is making a deferral election within thirty (30) days after the
date he first becomes eligible under the Deferred Stock Plan, he may revoke or
modify this election for the current year, only if he submits a written election
to do so to the Company’s Chief Financial Officer within that same thirty (30)
day period and before the date the first quarterly Stock grant is deferred under
this Agreement.
 

 
If the Director wishes to revoke or modify this election as to quarterly Stock
grants to be made in a future year, he must submit a written election to do so
to the Company’s Chief Financial Officer by December 31 of the preceding
year.  (So, for example, if the Director elects in January 2009 to defer
quarterly Stock grants, if he wishes to elect not to defer quarterly Stock
grants in 2010, he must submit a new election by December 31, 2009.)  The only
exception to the foregoing rules is that if the Director becomes subject to an
Unforeseeable Emergency, he may elect to immediately revoke his election to
defer future quarterly Stock grants for the current year.
 

 
 
B.
“Plan”: (under which the “Shares” (as defined below) will be issued) Omega
Healthcare Investors, Inc. 2004 Stock Incentive Plan.

 

 
 
C.
“Deferred Stock Plan”:  Omega Healthcare Investors, Inc. Deferred Stock Plan, to
which this Agreement is also subject.

 

 
 
D.
“Stock Units”:  This Agreement relates to the quarterly grants of Stock to the
Director that are scheduled to be made after the Effective Date (including each
future year) as of the quarterly dates set forth below.

 

 
 
The Director should check all of the following quarterly Stock grants which the
Director is electing to defer:

 

 
[ ]           February 15;
 

 
[ ]           May 15;
 

 
[ ]           August 15;
 

 
[ ]           November 15.
 

 
In lieu of receiving such quarterly Stock grants, the Director will be credited
on each quarterly date selected above with a number of Stock Units that is equal
to the number of Shares that would otherwise have been granted to the Director
as of such quarterly date (the “Applicable Quarterly Grant Date”).  The number
of Stock Units will be increased by the number of Stock Units attributable to
the Converted Dividend Equivalents if the Director elects Item E.1. below.  Each
Stock Unit represents the Company’s unsecured obligation to issue one share of
Stock and the related Converted Dividend Equivalents, Deferred Dividend
Equivalents, or Current Dividend Equivalents (whichever is selected in Item E)
in accordance with this Agreement.  The shares of Stock represented by the Stock
Units shall be referred to as the “Shares.”
 

 
 
E.
“Dividend Equivalents”:  Each Stock Unit shall accrue an amount equal to the
dividends per share payable on Stock to shareholders of record on or after the
Applicable Quarterly Grant Date and through the day before the date the Shares
are issued.

 

 
The Director must check either paragraph 1, 2 or 3 below:
 

 
 
1.
[ ]
“Converted Dividend Equivalents”:  The Dividend Equivalents will be converted
into a number of Stock Units equal to the amount of the Dividend Equivalents
that are accrued as of the dividend payment date, divided by the closing price
per share of Stock on the dividend payment date.  Such Stock Units shall also
accrue future Dividend Equivalents that shall be converted into Stock Units in
accordance with the preceding formula.  The Stock Units under this paragraph
shall be paid on the date the Shares are payable to the Director; or

 

 
 
2.
[ ]
“Deferred Dividend Equivalents”:  The Dividend Equivalents shall be paid to the
Director, with interest accrued on a quarterly basis at a rate equal to the
Company’s average borrowing rate for the preceding calendar quarter, as
determined in the sole discretion of the Committee, on the date the Shares are
payable to the Director; or

 

 
 
3.
[ ]
“Current Dividend Equivalents”:  The Dividend Equivalents shall be paid to the
Director on the same date that the dividends per share are paid to shareholders.

 

 
 
F.
“Deferral Period”:  The Director has elected to defer receipt of the Shares (and
Converted Dividend Equivalents or Deferred Dividend Equivalents if Item E.1. or
E.2. was elected) until the dates or events set forth below:

 

 
The Director must check either paragraph 1 or 2 below, but may check other
paragraphs as well.
 

 
1.           [ ]           , 2_____ (specify date);
 
2.           the Director may check A or B below, but not both:
 
A.           [ ]           the Director’s Separation from Service; or
 
 
B.
[ ]
January 1 of the __________ (specify number, first, second, etc.) year following
the year of the Director’s Separation from Service;

 
3.           [ ]           the earlier of paragraph 1 or 2 above;
 
4.           [ ]           the later of paragraph 1 or 2 above;
 
 
5.
[ ]
If a Change in Control occurs before the date payment is required to be made
pursuant to the elections above, payment shall be made as a result of the Change
in Control;

 
 
6.
[ ]
If the Director becomes subject to a Disability before the date payment is
required to be made pursuant to the elections above, payment shall be made as a
result of the Disability.

 
Notwithstanding the foregoing, the Shares (and Converted Dividend Equivalents or
Deferred Dividend Equivalents if Item E.1. or E.2. was elected) shall be payable
not later than ninety (90) days following the Director’s date of death.
 
The Director may elect to change the timing of payment in Item F only under the
following conditions:
 
(i)  
the election shall not take effect until twelve (12) months after the date the
written election is submitted to the Company;

 
(ii)  
in the case of an election related to a payment date or event other than
Disability, the election must, with respect to such payment date or event, defer
payment for at least five (5) years from the prior payment date or event; and

 
(iii)  
in the case of a payment at a specified date, the election must be submitted at
least twelve (12) months before the date payment was previously scheduled to be
made.

 
IN WITNESS WHEREOF, the Company and the Director have executed this Agreement as
of the Effective Date set forth above.
 

 
DIRECTOR                                                                           OMEGA
HEALTHCARE INVESTORS, INC.
 

 

 
By:
 

 
[Signature]                                                                           Title:
 

 

 
--
 
 
 

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TERMS AND CONDITIONS TO THE
DEFERRED STOCK AGREEMENT
PURSUANT TO THE OMEGA HEALTHCARE INVESTORS, INC.
2004 STOCK INCENTIVE PLAN
 

 
1. Payment for Stock Units. The Company shall deliver a share certificate
representing the number of Shares attributable to the Stock Units (and the
amount of the Deferred Dividend Equivalents, if applicable) to the Director
within ninety (90) days following the conclusion of the Deferral Period.

 
2. Unforeseeable Emergency. In the event of an Unforeseeable Emergency, the
Director may terminate the Deferral Period but only to the extent of the number
of Shares necessary to meet the emergency (which may include amounts necessary
to pay Federal, state, local, or foreign taxes or penalties reasonably
anticipated to result from the distribution), and only to the extent that the
hardship is not or cannot be relieved through reimbursement or compensation by
insurance or otherwise, or by liquidation of the Director’s assets to the extent
such liquidation would not itself cause severe financial hardship, or by
cessation of future deferrals.

 
3. Restrictions on Transfer of Stock Units and Shares.  Except for the transfer
by bequest or inheritance, the Director 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 any Stock Units or Shares until
issued.  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.

 
4. Legend on Stock Certificates.  Certificates evidencing the Shares shall have
noted conspicuously on the certificates any legends required when applicable
securities laws are otherwise determined by the Company to be appropriate, such
as:

 
TRANSFER IS RESTRICTED
 

 
THE SECURITIES EVIDENCED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, OR HYPOTHECATED UNLESS (1) THERE IS AN EFFECTIVE REGISTRATION UNDER
SUCH ACT COVERING SUCH SECURITIES, (2) THE TRANSFER IS MADE IN COMPLIANCE WITH
RULE 144 PROMULGATED UNDER SUCH ACT, OR (3) THE ISSUER RECEIVES AN OPINION OF
COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE,
TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT.
 

 
5.   Change in Capitalization.

 
(a)                 The number and kind of Shares shall be proportionately
adjusted for any nonreciprocal transaction between the Company and holders of
capital stock of the Company that causes the per share value of the Shares
underlying the Stock Units to change, such as a stock dividend, stock split,
spin-off, rights offering, or recapitalization through a large, non-recurring
cash dividend (each, an “Equity Restructuring”).
 

 
(b)                 In the event of a merger, consolidation, extraordinary
dividend, sale of substantially all of the Company’s assets or other material
change in the capital structure of the Company, or a tender offer for shares of
Common Stock, or other reorganization of the Company, that in each case is not
an Equity Restructuring, the Committee shall take such action and make such
adjustments with respect to the Shares 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 Agreement, or substituting cash, other securities, or
other property to replace the award payable under the Agreement, or terminating
the Agreement in exchange for the cash value (as determined by the Committee) of
the Shares (and the Deferred Dividend Equivalents, if applicable).
 

 
(c)                 Notwithstanding the foregoing or any other provisions of
this Agreement, if a Change in Control of the type described in Section 15(a)(i)
occurs and if the Director has not elected to end the Deferral Period as of the
date of the Change in Control, the Company shall pay the Deferred Dividend
Equivalents, if applicable, to the Director within ninety (90) days following
the date of the Change in Control, and shall pay the same amount of
consideration per Share attributable to the Stock Units as is paid to each
holder of a share of Common Stock in connection with the Change in Control and
on the same schedule and under the same terms and conditions, provided that
payment must be completed within five (5) years after the Change in Control.
 

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

 
(e)                 The existence of the Plan, the Deferred Stock Plan, and this
Agreement 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 Agreement shall be construed, administered and enforced
according to the laws of the State of Maryland; provided, however, no 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 Director 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 party at the last known address of the party.  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.  This Agreement is subject to the terms and conditions of
the Plan and the Deferred Stock Plan, and in the event of a conflict, such plans
shall control.  Subject to the terms and conditions of the Plan and the Deferred
Stock Plan, this Agreement expresses the entire understanding and agreement of
the parties with respect to the subject matter.

 
11. Headings and Capitalized Terms.  Paragraph headings used herein are for
convenience of reference only and shall not be considered in construing this
Agreement.

 
12. 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.

 
13. No Right to Continued Retention.  Neither the establishment of the Plan, nor
the Deferred Stock Plan, nor this Agreement, shall be construed as giving
Director the right to continued service with the Company or an Affiliate.

 
14. Termination of Agreement.  The Company reserves the right to accelerate the
time of payment under this Agreement pursuant to a termination and liquidation
of the award under this Agreement, to the extent permitted under Treas. Reg.
Section 1.409A-3, notwithstanding any election made by the Director or any other
provisions of this Agreement.

 
15. Definitions.  Capitalized terms used, but not defined, in this Agreement
shall be given the meaning ascribed to them in the Plan.  When used in this
Agreement, the following terms have the meanings set forth below:

 
(a)  
“Change in Control” means:

 
(i)  
“A change in the ownership of the corporation,”

 
(ii)  
“A change in the effective control of the corporation,” or

 
(iii)  
“A change in the ownership of a substantial portion of the assets of the
corporation,”

 
in each case within the meaning of Treas. Reg. Section 1.409A-3; provided,
however, that for purposes of determining a “substantial portion of the assets
of the corporation” “eighty-five percent (85%)” shall be used instead of “forty
percent (40%).”  For purposes of this subsection (a), the “corporation” refers
to the Company.  Notwithstanding the foregoing, in the event of a merger,
consolidation, reorganization, share exchange or other transaction as to which
the holders of the capital stock of the Company before the transaction continue
after the transaction to hold, directly or indirectly, shares of capital stock
of the Company  (or other surviving company) representing more than fifty
percent (50%) of the value or ordinary voting power to elect directors of the
capital stock of the Company (or other surviving company), such transaction
shall not constitute a Change in Control.
 

 
(b)  
“Disability” means any condition that would constitute a “disability” under
Treas. Reg. Section 1.409A-3.

 
(c)  
“Separation from Service” means a “separation from service” within the meaning
of Treas. Reg. Section 1.409A-1.

 
(d)  
“Unforeseeable Emergency” means an “unforeseeable emergency” within the meaning
of Treas. Reg. Section 1.409A-3.

 
 

 
 

--------------------------------------------------------------------------------

 

DEFERRED RESTRICTED STOCK AGREEMENT
PURSUANT TO THE OMEGA HEALTHCARE INVESTORS, INC.
2004 STOCK INCENTIVE PLAN
 

 
THIS AGREEMENT (this “Agreement”) is made as of _________________, 20____ (the
“Effective Date”), by Omega Healthcare Investors, Inc. (the “Company”) and
____________________________________ (the “Director”).
 

 
This Agreement includes the Terms and Conditions, which are part of this
Agreement.
 

 
 
A.
Effect of Agreement:  This Agreement relates to the annual grants of Stock to
the Director that are scheduled to be made after the Effective Date (including
each future year).  Therefore, this Agreement shall constitute a standing
election to defer such annual Stock grants and shall remain in place until
revoked or modified by the Director.

 

 
If the Director is making a deferral election within thirty (30) days after the
date he first becomes eligible under the Deferred Stock Plan, he may revoke or
modify this election for the current year, only if he submits a written election
to do so to the Company’s Chief Financial Officer within that same thirty (30)
day period and before the date the first annual Stock grant is deferred under
this Agreement.
 

 
If the Director wishes to revoke or modify this election as to annual Stock
grants to be made in a future year, he must submit a written election to do so
to the Company’s Chief Financial Officer by December 31 of the preceding
year.  (So, for example, if the Director elects in January 2009 to defer annual
Stock grants, if he wishes to elect not to defer the annual Stock grant in 2010,
he must submit a new election by December 31, 2009.)
 

 
 
B.
“Plan”: (under which the “Shares” (as defined below) will be issued) Omega
Healthcare Investors, Inc. 2004 Stock Incentive Plan.

 

 
 
C.
“Deferred Stock Plan”:  Omega Healthcare Investors, Inc. Deferred Stock Plan, to
which this Agreement is also subject.

 

 
 
D.
“Stock Units”:  This Agreement relates to the annual grants of Stock to the
Director that are scheduled to be made after the Effective Date (including each
future year).

 

 
In lieu of receiving such annual Stock grants, the Director will be credited on
each annual date that the annual Stock grant would otherwise have been made with
a number of Stock Units that is equal to the number of Shares that would
otherwise have been granted to the Director as of such annual date (the
“Applicable Annual Grant Date”).  The number of Stock Units will be increased by
the number of Stock Units attributable to the Converted Dividend Equivalents if
the Director elects Item E.1. below.  Each Stock Unit represents the Company’s
unsecured obligation to issue one share of Stock and the related Converted
Dividend Equivalents, Deferred Dividend Equivalents, or Current Dividend
Equivalents (whichever is selected in Item E) in accordance with this
Agreement.  The shares of Stock represented by the Stock Units shall be referred
to as the “Shares.”
 

 
 
E.
“Dividend Equivalents”:  Each Stock Unit shall accrue an amount equal to the
dividends per share payable on Common Stock to shareholders of record on or
after the Applicable Annual Grant Date and through the day before the date the
Shares are issued (or until the Stock Units are forfeited, if earlier).

 

 
The Director must check either paragraph 1, 2 or 3 below:
 

 
 
1.
[ ]
“Converted Dividend Equivalents”:  The Dividend Equivalents will be converted
into a number of Vested Stock Units equal to the amount of the Dividend
Equivalents that are accrued as of the dividend payment date, divided by the
closing price per share of Stock on the dividend payment date.  Such Vested
Stock Units shall also accrue future Dividend Equivalents that shall be
converted into Vested Stock Units in accordance with the preceding formula.  The
Stock Units under this paragraph shall be paid on the date the Shares are
payable to the Director; or

 

 
 
2.
[ ]
“Deferred Dividend Equivalents”:  The Dividend Equivalents shall be paid to the
Director, with interest accrued on a quarterly basis at a rate equal to the
Company’s average borrowing rate for the preceding calendar quarter, as
determined in the sole discretion of the Committee, on the date the Shares are
payable to the Director; or

 

 
 
3.
[ ]
“Current Dividend Equivalents”:  The Dividend Equivalents shall be paid to the
Director on the same date that the dividends per share are paid to shareholders.

 

 
 
F.
“Deferral Period”:  The Director has elected to defer receipt of the Vested
Shares (and Converted Dividend Equivalents or Deferred Dividend Equivalents if
Item E.1. or E.2. was elected) until the dates or events set forth below:

 

 
The Director must check either paragraph 1 or 2 below, but may check other
paragraphs as well.
 

 
 
1.
If the Director completes this paragraph 1, the Director must complete A, B, and
C below:

 

 
 
A.
[ ]
as to the first one-third of the Shares, which become Vested Shares one (1) year
after the Grant Date, ___________, 2_____ (specify date that is at least one (1)
year after the Grant Date); and

 

 
 
B.
[ ]
as to the second one-third of the Shares, which become Vested Shares two (2)
years after the Grant Date, ___________, 2_____ (specify date that is at least
two (2) years after the Grant Date); and

 

 
 
C.
[ ]
as to the third one-third of the Shares, which become Vested Shares three (3)
years after the Grant Date, ___________, 2_____ (specify date that is at least
three (3) years after the Grant Date);

 
 
 
2.
The Director may check A or B below, but not both:

 
 
A.           [ ]           the Director’s Separation from Service; or
 
 
 
B.
[ ]
January 1 of the __________ (specify number, first, second, etc.) year following
the year of the Director’s Separation from Service;

 
 
3.           [ ]           the earlier of paragraph 1 or 2 above;
 
 
4.           [ ]           the later of paragraph 1 or 2 above;
 
 
 
5.
[ ]
If a Change in Control occurs before the date payment is required to be made
pursuant to the elections above, payment shall be made as a result of the Change
in Control;

 
 
 
6.
[ ]
If the Director becomes subject to a Disability before the date payment is
required to be made pursuant to the elections above, payment shall be made as a
result of the Disability.

 

 
The Director may elect to change the timing of payment in Item F only under the
following conditions:
 

 
(iv)  
the election shall not take effect until twelve (12) months after the date the
written election is submitted to the Company;

 
(v)  
in the case of an election related to a payment date or event other than
Disability, the election must, with respect to such payment date or event, defer
payment for at least five (5) years from the prior payment date or event; and

 
(vi)  
in the case of a payment at a specified date, the election must be submitted at
least twelve (12) months before the date payment was previously scheduled to be
made.

 
Notwithstanding the foregoing, the Vested Shares (and Converted Dividend
Equivalents or Deferred Dividend Equivalents if Item E.1. or E.2. was elected)
shall be payable not later than ninety (90) days following the Director’s date
of death.
 

 
 
G.
“Vesting Schedule”: Except as provided in Item E.1., the Stock Units and Shares
shall vest according to the Vesting Schedule attached hereto as Exhibit 1 (the
“Vesting Schedule”).  The Stock Units and Shares which have become vested are
herein referred to as the “Vested Stock Units” and “Vested Shares,”
respectively.

 

 
IN WITNESS WHEREOF, the Company and the Director have executed this Agreement as
of the Effective Date set forth above.
 

 
DIRECTOR                                                                           OMEGA
HEALTHCARE INVESTORS, INC.
 

 

 
By:
 

 
[Signature]                                                                           Title:
 

 

 
 

--------------------------------------------------------------------------------

 

TERMS AND CONDITIONS TO THE
DEFERRED RESTRICTED STOCK AGREEMENT
PURSUANT TO THE OMEGA HEALTHCARE INVESTORS, INC.
2004 STOCK INCENTIVE PLAN

1. Payment for Vested Stock Units. The Company shall deliver a share certificate
representing the number of Shares attributable to the Vested Stock Units
(and the amount of the Deferred Dividend Equivalents, if applicable) to the
Director within ninety (90) days following the conclusion of the Deferral
Period.

2. Unforeseeable Emergency. In the event of an Unforeseeable Emergency, the
Director may terminate the Deferral Period but only to the extent of the number
of Vested Shares (and Deferred Dividend Equivalents, if applicable) necessary to
meet the emergency (which may include amounts necessary to pay Federal, state,
local, or foreign taxes or penalties reasonably anticipated to result from the
distribution), and only to the extent that the hardship is not or cannot be
relieved through reimbursement or compensation by insurance or otherwise, or by
liquidation of the Director’s assets to the extent such liquidation would not
itself cause severe financial hardship, or by cessation of future deferrals.

3. Restrictions on Transfer of Stock Units and Shares.  Except for the transfer
by bequest or inheritance, the Director 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 any Stock Units or Shares until
issued.  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.

4. Legend on Stock Certificates.  Certificates evidencing the Shares shall have
noted conspicuously on the certificates any legends required when applicable
securities laws are otherwise determined by the Company to be appropriate, such
as:

TRANSFER IS RESTRICTED

THE SECURITIES EVIDENCED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, OR HYPOTHECATED UNLESS (1) THERE IS AN EFFECTIVE REGISTRATION UNDER
SUCH ACT COVERING SUCH SECURITIES, (2) THE TRANSFER IS MADE IN COMPLIANCE WITH
RULE 144 PROMULGATED UNDER SUCH ACT, OR (3) THE ISSUER RECEIVES AN OPINION OF
COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE,
TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT.

5. Change in Capitalization.

(a)           The number and kind of Shares shall be proportionately adjusted
for any nonreciprocal transaction between the Company and holders of capital
stock of the Company that causes the per share value of the Shares underlying
the Restricted Units to change, such as a stock dividend, stock split, spin-off,
rights offering, or recapitalization through a large, non-recurring cash
dividend (each, an “Equity Restructuring”).

(b)           In the event of a merger, consolidation, extraordinary dividend,
sale of substantially all of the Company’s assets or other material change in
the capital structure of the Company, or a tender offer for shares of Common
Stock, or other reorganization of the Company, that in each case is not an
Equity Restructuring, the Committee shall take such action and make such
adjustments with respect to the Shares 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 Agreement, or substituting cash, other securities, or
other property to replace the award payable under the Agreement, or terminating
the Agreement in exchange for the cash value (as determined by the Committee) of
the Shares (and the Deferred Dividend Equivalents, if applicable).

(c)           Notwithstanding the foregoing or any other provisions of this
Agreement, if a Change in Control of the type described in Section 15(a)(i)
occurs and if the Director has not elected to end the Deferral Period as of the
date of the Change in Control, the Company shall pay the Deferred Dividend
Equivalents, if applicable, to the Director within ninety (90) days following
the date of the Change in Control, and shall pay the same amount of
consideration per Share attributable to the Stock Units as is paid to each
holder of a share of Common Stock in connection with the Change in Control and
on the same schedule and under the same terms and conditions, provided that
payment must be completed within five (5) years after the Change in Control.

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

(e)           The existence of the Plan, the Deferred Stock Plan, and this
Agreement 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 Agreement shall be construed, administered and enforced
according to the laws of the State of Maryland; provided, however, no 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 Director 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 party at the last known address of the party.  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.  This Agreement is subject to the terms and conditions of
the Plan and the Deferred Stock Plan, and in the event of a conflict, such plans
shall control.  Subject to the terms and conditions of the Plan and the Deferred
Stock Plan, this Agreement expresses the entire understanding and agreement of
the parties with respect to the subject matter.

11. Headings and Capitalized Terms.  Paragraph headings used herein are for
convenience of reference only and shall not be considered in construing this
Agreement.

12. 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.

13. No Right to Continued Retention.  Neither the establishment of the Plan, nor
the Deferred Stock Plan, nor this Agreement shall be construed as giving
Director the right to continued service with the Company or an Affiliate.

14. Termination of Agreement.  The Company reserves the right to accelerate the
time of payment under this Agreement pursuant to a termination and liquidation
of the award under this Agreement, to the extent permitted under Treas. Reg.
Section 1.409A-3, notwithstanding any election made by the Director or any other
provisions of this Agreement.

15. Definitions.  Capitalized terms used, but not defined, in this Agreement
shall be given the meaning ascribed to them in the Plan.  When used in this
Agreement, the following terms have the meanings set forth below:

(a)  
“Change in Control” means:

i.  
“A change in the ownership of the corporation,”

 
ii.  
“A change in the effective control of the corporation,” or

 
iii.  
“A change in the ownership of a substantial portion of the assets of the
corporation,”

 
in each case within the meaning of Treas. Reg. Section 1.409A-3; provided,
however, that for purposes of determining a “substantial portion of the assets
of the corporation” “eighty-five percent (85%)” shall be used instead of “forty
percent (40%).”  For purposes of this subsection (a), the “corporation” refers
to the Company.  Notwithstanding the foregoing, in the event of a merger,
consolidation, reorganization, share exchange or other transaction as to which
the holders of the capital stock of the Company before the transaction continue
after the transaction to hold, directly or indirectly, shares of capital stock
of the Company  (or other surviving company) representing more than fifty
percent (50%) of the value or ordinary voting power to elect directors of the
capital stock of the Company (or other surviving company), such transaction
shall not constitute a Change in Control.

(b)  
“Disability” means any condition that would constitute a “disability” under
Treas. Reg. Section 1.409A-3.

(c)  
“Separation from Service” means a “separation from service” within the meaning
of Treas. Reg. Section 1.409A-1.

(d)  
“Unforeseeable Emergency” means an “unforeseeable emergency” within the meaning
of Treas. Reg. Section 1.409A-3.

 
 

--------------------------------------------------------------------------------

 

 
Exhibit 1 to Deferred Restricted Stock Agreement
 
Vesting Schedule
 

 
The Stock Units and the Shares shall become vested as follows:
 

 

 
 
Percentage
 
 
Years of Service
after Grant Date
   
33-1/3%
 
1
   
66-2/3%
 
2
   
100%
 
3
 

 
For purposes of the above schedule, the Director shall receive credit for a year
of service as of each anniversary of the Grant Date that the Director remains at
all times a director, employee, or consultant of the Company or an Affiliate
from the Grant Date to such date.  Any of the Stock Units and the Shares which
are not vested (1) at the time that the Director ceases to be a director,
employee, or consultant of the Company due to death or Disability, or (2) upon a
Change in Control shall become fully vested.  Notwithstanding the foregoing, any
of the Stock Units and the Shares which are not vested at the time that the
Director ceases to be a director, employee, or consultant of the Company or an
Affiliate for any reason other than death or Disability shall be forfeited to
the Company.
 

 
 

 
 

--------------------------------------------------------------------------------