Exhibit 10.8D

 

TSR-BASED PERFORMANCE PROFITS INTEREST UNITS AGREEMENT

PURSUANT TO THE OMEGA HEALTHCARE INVESTORS, INC.

2018 STOCK INCENTIVE PLAN

The grant pursuant to this agreement (this “Agreement”) is made as of the Grant
Date, by OHI Healthcare Properties Limited Partnership (the “Partnership”), a
limited partnership controlled by, and an Affiliate (as defined below) of, Omega
Healthcare Investors, Inc. (Omega Healthcare Investors, Inc. is hereafter
referred to as 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) and the Limited Partnership
Agreement (as defined herein), the Partnership hereby awards as of the Grant
Date to the Recipient the number of Profits Interest Units set forth below (the
“Profits Interest Unit Grant” or the “Award”). The underlined and capitalized
captions in Items A through E below shall have the meanings therein ascribed to
them.

A.        Grant Date:  __________, 20__.

B.         Plan (under which Profits Interest Unit Grant is granted): Omega
Healthcare Investors, Inc. 2018 Stock Incentive Plan.

C.         Profits Interest Units: _______ Profits Interest Units. “Profits
Interest Units” has the same meaning as “LTIP Units” as defined in the Limited
Partnership Agreement, and  each Profits Interest Unit represents, on the Grant
Date, one  “Unvested Profits Interest Unit,” which is one “Unvested LTIP Unit”
as defined in and pursuant to the Limited Partnership Agreement, subject to
adjustment as provided in the attached Terms and Conditions, and also represents
the Partnership’s unsecured obligation to issue to the Recipient distributions
described in Item E below.

D.        Vesting of LTIP Units:  The Recipient shall become vested in a number
of Profits Interest Units (“Vested Profits Interest Units”) as and when
determined pursuant to Exhibit 1.

E.         Distributions:  The “LTIP Unit Distributions Participation Date”
attributable to Profits Interest Units as defined in and pursuant to Section
15.4 of the Limited Partnership Agreement shall be _________, 20__; provided,
however, that until any of the Profits Interest Units become “Earned Unvested
Profits Interest Units” the Recipient shall receive a distribution when paid to
holders of “LP Units” (as defined in the Limited Partnership Agreement) of an
amount per Profits Interest Unit (the “Interim Distribution per Profits Interest
Unit”), and an allocation of “Net Income and Net Loss” (as defined in the
Limited Partnership Agreement) per Profits Interest Unit, equal to (i) 10% of
the regular periodic distributions per LP Unit paid by the Partnership to LP
Unit holders and a corresponding  percentage allocation of Net Income and Net
Loss attributable to the regular periodic distributions per LP Unit and (ii) 0%
of the special distributions and other distributions not made in the ordinary

 

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course per LP Unit paid by the Partnership to LP Unit holders and a
corresponding 0% allocation of Net Income and Net Loss attributable to the
special distributions and other distributions per LP Unit not made in the
ordinary course. As to all Profits Interest Units that become Earned Unvested
Profits Interest Units, the Recipient shall receive within twenty  (20) business
days after the date they become Earned Unvested Profits Interest Units, a
distribution from the Partnership per Earned Unvested Profits Interest Unit and
a corresponding allocation of Net Income and Net Loss per Earned Unvested
Profits Interest Unit equal to the excess of (x) the amount of distributions
from the Partnership that would have been paid per Profits Interest Unit if the
Profits Interest Unit had been an LP Unit on _________, 20__ (determined without
regard to this Item E) over (y) the Interim Distribution per Profits Interest
Unit. In addition, with respect to distributions and allocations of Net Income
and Net Loss that accrue following the date that any Profits Interest Units
become Earned Unvested Profits Interest Units or Vested Profits Interest Units,
the Recipient shall receive with respect to each Earned Unvested Profits
Interest Unit and each Vested Profits Interest Unit distributions and
allocations of Net Income and Net Loss pursuant to the Limited Partnership
Agreement determined without regard to the adjustments in this Item E.

 

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IN WITNESS WHEREOF, the Partnership and the Recipient have executed and agree to
be bound by this Agreement effective as of the Grant Date set forth above.

 

OHI HEALTHCARE PROPERTIES LIMITED PARTNERSHIP

 

 

 

 

 

 

 

By:

 

 

 

 

 

Title:

 

 

 

 

 

RECIPIENT

 

 

 

 

By:

 

 

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TERMS AND CONDITIONS TO THE

TSR-BASED PERFORMANCE PROFITS INTEREST UNITS AGREEMENT

PURSUANT TO THE OMEGA HEALTHCARE INVESTORS, INC.

 2018 STOCK INCENTIVE PLAN

1.         Conditions to Grant of Profits Interest Units. As a condition of
receiving the grant of Profits Interest Units hereunder, the Recipient must (a)
execute the representations and warranties set forth on Exhibit 2 attached
hereto, and deliver them to the Partnership within ten (10) days of the Grant
Date, and (b) file with the IRS within thirty (30) days of the Grant Date, a
valid election under Code Section 83(b), in substantially the form of Exhibit 3
attached hereto, as to all of the Profits Interest Units.  The Recipient must
also deliver to the Partnership, within thirty (30) days after the Grant Date, a
copy of such election.  Failure to comply with the requirements of this Section
shall result in the forfeiture of all the Profits Interest Units and the
cancellation of this Agreement.

2.         Issuance of Profits Interest Units.  The Partnership shall record in
the name of the Recipient the number of Profits Interest Units (“LTIP Units,” as
defined in the Limited Partnership Agreement”) awarded as of the Grant Date. The
Partnership and the Recipient acknowledge and agree that the Profits Interest
Units are hereby issued to the Recipient for the performance of services to or
for the benefit of the Partnership and its Affiliates. If the Recipient is not
already a partner of the Partnership pursuant to the Limited Partnership
Agreement (defined therein as a “Partner”), the Partnership admits the Recipient
as an “LTIP Unit Limited Partner” (as defined therein) and a Partner on the
terms and conditions in this Agreement, the Plan and the Limited Partnership
Agreement. Upon execution of this Agreement, the Recipient shall, automatically
and without further action on the Recipient’s part, be deemed to be a signatory
of and bound by the Limited Partnership Agreement. At the request of the
Partnership, the Recipient shall execute the Limited Partnership Agreement or a
counterpart signature page thereto.

3.         Rights as a Unitholder.  The Profits Interest Units shall be treated
as a “profits interest” within the meaning of Revenue Procedure 93-27, and the
Recipient shall be treated as having received the interest on the Grant Date as
contemplated under Section 4 of Revenue Procedure 2001-43.  As the owner of the
Profits Interest Units for income tax purposes, the Recipient shall take into
account the Recipient’s distributive share of income, gain, loss, deduction and
credit associated with the Profits Interest Units as determined in accordance
with the terms of the Limited Partnership Agreement and this Agreement.

4.         Restrictions on Transfer.  The Recipient shall not sell, pledge,
assign, transfer or hypothecate, or otherwise dispose of any Profits Interest
Units, 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 the
Profits Interest Units, except as otherwise provided in the Limited Partnership
Agreement. Any 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 and the Limited Partnership Agreement.

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5.         Tax Withholding. If and only if tax withholding applies with respect
to the grant, vesting, ownership or disposition of Profits Interest Units, the
Company or an Affiliate may withhold from the Recipient’s wages, or require the
Recipient to remit to the Partnership, the Company or an Affiliate, any
applicable required tax withholding.

6.         Change in Capitalization.

(a)        The number and kind of units issuable under this Agreement shall be
proportionately adjusted for any non-reciprocal transaction between the
Partnership and the holders of partnership interests of the Partnership that
causes the per unit value of the Profits Interest Units 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 Partnership’s assets,
other material change in the capital structure of the Partnership, or a tender
offer for Profits Interest Units (“LTIP Units,” as defined in the Limited
Partnership Agreement), in each case that does not constitute an Equity
Restructuring, the Committee shall take such action to make such adjustments
with respect to the Profits Interest Units 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 Profits Interest Unit Grant shall
not affect the right or power of the Partnership to make or authorize any
adjustment, reclassification, reorganization or other change in its capital or
business structure, any merger or consolidation of the Partnership, any issue of
debt or equity securities having preferences or priorities as to the Profits
Interest Units or the rights thereof, the dissolution or liquidation of the
Partnership, any sale or transfer of all or part of its business or assets, or
any other corporate act or proceeding.

7.         Governing Laws.  This Award shall be construed, administered and
enforced according to the laws of the State of Maryland; provided, however, no
Profits Interest Units 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.

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

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9.         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 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.

10.       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.

11.       Entire Agreement.  This Agreement and the Limited Partnership
Agreement, together with the terms and conditions set forth in the Plan, express
the entire understanding and agreement of the parties with respect to the
subject matter. In the event of a conflict between the terms of the Plan or the
Limited Partnership Agreement and this Agreement, the Plan and the Limited
Partnership Agreement shall govern.

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 Award hereunder shall be construed as giving Recipient the right to
continued service with the Company or an Affiliate.

14.       Tax Effects under 409A.  It is intended that the Award under this
Agreement be exempt from Section 409A of the Internal Revenue Code (the “Code”)
as a current grant of a profits interest as provided in Section 3 hereof.

15.       Headings and Capitalized Terms.  Except as otherwise provided in this
Agreement, section 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.

16.       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 20__ on the exchange on which
Common Stock is traded, which is $__.__

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

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“Cause” shall have the meaning set forth in the employment agreement then in
effect between the Recipient and the Company or an Affiliate, 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 or responsibilities of the Recipient’s position with the Company or an
Affiliate, which refusal continues after the Board has again given the direction
in writing;

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

(c)        material breach by the Recipient of the Intellectual Property
Agreement between the Recipient and the Company, which causes material harm to
the Company or an Affiliate;

(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

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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 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 (i) 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 (ii) 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.

“Common Stock” means common stock of the Company.

“Ending Stock Price” means the average closing price per share of Common Stock
for the months of November and December 20__ on the exchange on which Common
Stock is traded, unless a Change in Control occurs on or before December 31,
20__, 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 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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“Ending Value of Reinvested Dividends” means the dollar amount equal to the
Ending Stock Price multiplied by the total number of shares hypothetically
purchased with the dividends declared to a shareholder of record during the
Performance Period, assuming that each dividend is re-invested in Common Stock
at the closing price per share on the last business day before the ex-dividend
date. For purposes of this calculation, the dividends declared to a shareholder
of record during the Performance Period will initially be calculated on one
share of Common Stock beginning as of the first dividend declaration date during
the Performance Period, and as of each dividend declaration date during the
Performance Period thereafter, the dividends will be calculated with respect to
the sum of one share of Common Stock plus the cumulative number of shares of
Common Stock hypothetically purchased prior to such dividend declaration date.
The “Ending Value of Reinvested Dividends” can also be expressed as the
following formula:

Ending Value of Reinvested Dividends = (Ending Stock Price x Total Number of
Shares Hypothetically Purchased with Reinvested Dividends)

Total Number of Shares Hypothetically Purchased with Reinvested Dividends =
Number of Shares Hypothetically Purchased with First Reinvested Dividend + the
sum of the Number of Shares Hypothetically Purchased with each Subsequent
Reinvested Dividend

Number of Shares Hypothetically Purchased with First Reinvested Dividend =
(dividend declared to a shareholder of record during the Performance Period
calculated on one share of Common Stock as of the first dividend declaration
date during such period)/closing price per share of Common Stock on the last
business day before the ex-dividend date)

Number of Shares Hypothetically Purchased with each Subsequent Reinvested
Dividend = (each dividend declared to a shareholder of record after the first
dividend declaration date during the Performance Period calculated on the sum of
the one share of Common Stock beginning as of the first dividend declaration
date + the number of shares hypothetically purchased with reinvested dividends
before such subsequent dividend declaration date)/closing price per share of
Common Stock on the last business day before the related ex-dividend date)

“Good Reason” shall have the meaning set forth in the employment agreement then
in effect between the Recipient and the Company or an Affiliate, 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 the Recipient’s 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;

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(b)        the Company or an Affiliate 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 or an Affiliate 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 the Recipient’s
objection to the event;

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

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

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

“Limited Partnership Agreement” means the Second Amended and Restated Agreement
of OHI Healthcare Properties Limited Partnership, dated as of April 1, 2015, as
it may be amended or any successor agreement thereto.

“Performance Period” means the period from and including January 1, 20__ through
the earlier of December 31, 20__ or the date of a Change in Control.

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

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

“Total Shareholder Return” means the compound annual growth rate (also known as
“CAGR”), expressed as a percentage, of an investment in one share of Common
Stock over the Performance Period, based on the Ending Stock Price plus the
Ending Value of Reinvested Dividends, as compared to the Beginning Stock Price,
and using the following formula:

 (((Ending Stock Price + Ending Value of Reinvested Dividends)/Beginning Stock
Price)^(1/3)) – 1

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 “Vesting Period” means the period beginning on the day after the last day of
the Performance Period and ending December 31, 20__.

 

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EXHIBIT 1

A.         Except as provided in Items B and C below, the number of Unvested
Profits Interest Units that is earned (the “Earned Unvested Profits Interest
Units”) is determined as of the last day of the Performance Period from the TSR
Chart set forth below; provided that the Recipient shall vest in twenty-five
percent (25%) of the Earned Unvested Profits Interest Units, which shall then
become Vested Profits Interest 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

 

 

 

 

*           If Total Shareholder Return falls between Threshold TSR and Target
TSR or between Target TSR and High TSR, the number of Earned Unvested Profits
Interest Units under the TSR Chart shall be determined in accordance with a
separate written interpolation methodology established by the Company in
connection with valuing the Profits Interest Units as of the Grant Date.

B.         Except as provided in Item C below, 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 and all Affiliates for
Good Reason or the Company and all Affiliates terminate the Recipient’s
employment without Cause (each such event referred to as a “Qualifying
Termination”), in each case:

(i)         during the Performance Period, the Recipient shall vest upon
completion of the Performance Period in the number of Earned Unvested Profits
Interest Units determined from the TSR Chart (or if a Change in Control occurs
after the Qualifying Termination and on or before December 31, 20__, the number
of Earned Unvested Profits Interest 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 vest in the same
number of Earned Unvested LTIP Units determined in the TSR Chart as if the
Recipient were to remain an employee of the Company or an Affiliate through the
last day of the Vesting Period.

 

 

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C.         Notwithstanding Item C above, if a Change in Control occurs upon or
after the Grant Date and on or before December 31, 20__, 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 on or before December 31, 20__, the
number of Earned Unvested Profits Interest Units determined:

a.          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.          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.          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

2.          if the Change in Control occurs after December 31, 20__, the number
of Earned Unvested Profits Interest Units determined in the TSR Chart that were
actually earned for the Performance Period which have not previously become
Vested Profits Interest Units pursuant to Item B.(i) above.

D.         All Profits Interest Units that have not become Earned Unvested
Profits Interest Units as of the last day of the Performance Period shall be
forfeited as of the last day of the Performance Period. All Unvested Profits
Interest Units that have not become Vested Profits Interest Units (except Earned
Unvested Profits Interest Units to the extent provided in Item B or C) as of the
date the Recipient ceases to be an employee, director, or consultant of the
Company and all Affiliates shall be forfeited.

E.         If any calculation in this Exhibit results in a fractional number of
Vested Profits Interest Units, the number of Vested Profits Interest Units shall
be rounded to the closest whole number.

 

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EXHIBIT 2

Representations and Warranties of the Recipient

In connection with the grant of the Profits Interest Units pursuant to the
Agreement, the Recipient hereby represents and warrants to the Partnership that:

1.         The Recipient is acquiring the Profits Interest Units for the
Recipient’s own account with the present intention of holding the Profits
Interest Units for investment purposes and not with a view to distribute or sell
the Profits Interest Units, except in compliance with federal securities laws or
applicable securities laws of other jurisdictions;

2.         The Recipient acknowledges that the Profits Interest Units have not
been registered under the Securities Act of 1933 (the “1933 Act”) or applicable
securities laws of other jurisdictions and that the Profits Interest Units will
be issued to the Recipient in reliance on exemptions from the registration
requirements provided by Sections 3(b) or 4(2) of the 1933 Act and the rules and
regulations promulgated thereunder and applicable securities laws of other
jurisdictions and in reliance on the Recipient’s representations and agreements
contained herein;

3.         The Recipient is an employee of the Partnership or an Affiliate;

4.         The Recipient acknowledges that the Profits Interest Units are
subject to the restrictions contained in the Limited Partnership Agreement, and
the Recipient has received and reviewed a copy of the Limited Partnership
Agreement;

5.         The Recipient has had the opportunity to ask questions of and receive
answers from the Partnership and any person acting on its behalf concerning the
terms and conditions of the Profits Interest Units awarded hereunder and has had
full access to such other information concerning the Partnership and its
Affiliates as the Recipient may have requested in making the Recipient’s
decision to invest in the Profits Interest Units being issued hereunder;

6.         The Recipient has such knowledge and experience in financial and
business matters that the Recipient is capable of evaluating the merits and
risks of the acquisition of the Profits Interest Units hereunder and the
Recipient is able to bear the economic risk, if any, of such acquisition;

7.         The Recipient has only relied on the advice of, or has consulted
with, the Recipient’s own legal, financial and tax advisors, and the
determination of the Recipient to acquire the Profits Interest Units pursuant to
this Agreement has been made by the Recipient independent of any statements or
opinions as to the advisability of such acquisition or as to the properties,
business, prospects or condition (financial or otherwise) of the Partnership or
its Affiliates which may have been made or given by any other person or by any
agent or employee of such person and independent of the fact that any other
person has decided to become a holder of Profits Interest Units;

8.         None of the Partnership or any of its Affiliates has made any
representation or agreement to the Recipient with respect to the income tax
consequences of the issuance,

 

 

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ownership or vesting of Profits Interest Units or the transactions contemplated
by this Agreement (including without limitation the making of an election under
Code Section 83(b)), and the Recipient is in no manner relying on the
Partnership or any Affiliate or their representatives for an assessment of tax
consequences to the Recipient. The Recipient is advised to consult with the
Recipient’s own tax advisor with respect to the tax consequences;

9.         The Recipient is not acquiring the Profits Interest Units as a result
of, or subsequent to, any publicly disseminated advertisement, article, sales
literature, publication, broadcast or any public seminar or meeting or any
solicitation nor is the Recipient aware of any offers made to other persons by
such means;

10.       The Recipient understands and agrees that if certificates representing
the Profits Interest Units are issued, such certificates may bear such
restrictive legends as the Partnership or its legal counsel may deem necessary
or advisable under applicable law or pursuant to this Agreement;

11.       The Profits Interest Units cannot be offered for sale, sold or
transferred by the Recipient other than pursuant to: (i) an effective
registration under the 1933 Act or in a transaction otherwise in compliance with
the 1933 Act; and (ii) evidence satisfactory to the Partnership of compliance
with the applicable securities laws of other jurisdictions.  The Partnership
shall be entitled to rely upon an opinion of counsel satisfactory to it with
respect to compliance with the above laws;

12.       The Partnership shall be under no obligation to register the Profits
Interest Units or to comply with any exemption available for sale of the Profits
Interest Units without registration or filing;

13.       The Recipient represents that the Recipient is an “accredited
investor” as that term is defined in Rule 501 of Regulation D of the 33 Act;
specifically, either (a) the Recipient is an executive officer of the
Partnership or of Omega Healthcare Investors, the general partner of the
Partnership, or  (b) the Recipient has (i) had an individual income in excess of
$200,000 in each of the two most recent years or joint income with the
Recipient’s spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching the same income level in the current year, or
(ii) the Recipient’s net worth or joint net worth with the Recipient’s spouse
(excluding the value of the Recipient’s primary residence), exceeds $1,000,000;
and

14.       The Recipient agrees to furnish any additional information requested
to assure compliance with applicable securities laws in connection with the
issuance or holding of Profits Interest Units. The Recipient acknowledges that
the Plan and this Agreement are intended to conform to the extent necessary with
applicable federal and state laws. Notwithstanding anything to the contrary
herein, the Plan shall be administered and the grant of Profits Interest Units
is made only in such manner as to conform to such laws. To the extent permitted
by applicable law, the Plan and this Agreement shall be deemed amended to the
extent necessary to conform to such laws.  By execution below, the Recipient
acknowledges that he has received a copy of the Agreement, the Limited
Partnership Agreement and the Plan.

2

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RECIPIENT

 

Signature

Date

 

Name

 

 

3

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EXHIBIT 3

SECTION 83(b) ELECTION

The undersigned hereby elects to be taxed pursuant to Section 83(b) of the
Internal Revenue Code of 1986 (the “Code”) with respect to the property
described below and supplies the following information in accordance with the
regulations promulgated thereunder:

1.         The name, address and taxpayer identification number of the
undersigned is:

________________________

________________________

________________________

Taxpayer I.D. No.:  ________________________

2.         Description of property with respect to which the election is being
made:

_______ Profits Interest Units of OHI Healthcare Properties Limited Partnership
(the “Profits Interest Units,” defined in the OHI Healthcare Properties Limited
Partnership as “LTIP Units”).

3.         The date on which the property was transferred:

The Profits Interest Units were transferred on January 1, 20__.

4.         The taxable year to which this election relates is calendar year
20__.

5.         The nature of the restriction(s) to which the property is subject is:

The Profits Interest Units shall vest in increments on specified vesting dates
or upon certain vesting events subsequent to the property transfer date,
provided that the taxpayer continues to perform services for OHI Healthcare
Properties Limited Partnership (the “Partnership”) or an affiliate.  In the
event the taxpayer ceases to perform services for the Partnership and its
affiliates prior to the final vesting date, any unvested Profits Interest Units
shall be forfeited back to the Partnership.

6.         Fair Market Value:

Because the Profits Interest Units constitute a profits interest, the grant of
the interest is not taxable under Code Section 83 pursuant to Revenue Procedure
93-27 and Revenue Procedure 2001-43.  Therefore, the taxpayer is reporting that
the fair market value at the time of transfer (determined without regard to any
restrictions other than restrictions which by their terms will never lapse) of
the property with respect to which this election is being made as $0 per Profits
Interest Unit.

7.         Amount paid for property:

The taxpayer did not pay for the Profits Interest Units.

8.         Furnishing statement to the person for whom services are performed:

A copy of this statement has been furnished to the Partnership.

By:

 

 

Date:

 

 

 

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