Document:

lease.htm

140 Kendrick Street

Needham, MA

(the “Property”)

THIRD AMENDMENT TO LEASE

Execution Date:  October 27, 2010

	
LANDLORD:

	
Boston Properties Limited Partnership, a Delaware limited partnership

	  	  
	
TENANT:

	
Parametric Technology Corporation,

a Massachusetts corporation

	  	  
	
ORIGINAL LEASE EXECUTION

DATE:

	
December 14, 1999

	  	  
	
PROPERTY:

	
The land in Needham, Massachusetts located on Kendrick Street, as more particularly described on Exhibit A-1 and shown on Exhibit A-2, each attached to the Lease, together with all improvements constructed thereon, including three buildings, known as “Building A”, “Building B” and “Building C” (collectively, the “Buildings”), the Garage, and surface parking areas.

	  	  
	
SURRENDERED

PREMISES:

	
Areas containing approximately 60,332 rentable square feet, in the aggregate, located on the third (3rd) floor of Building C (“Surrendered Tenanted Premises”), and elsewhere in Buildings A, B, and C (“Surrendered Common Spaces”), all as shown on Exhibit A attached hereto and incorporated herein

	  	  
	
REMAINING

PREMISES:

	
Approximately 320,655 rentable square feet consisting of 89,758 rentable square feet in Building A, 122,797 rentable square feet in Building B, and 108,100 rentable square feet in Building C, as shown on Exhibit A attached hereto and incorporated herein

	  	  
	
ORIGINAL LEASE

EXPIRATION DATE:

	
November 30, 2012

  

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EXTENDED

EXPIRATION DATE:

	
November 30, 2022

	  	  
	
PREVIOUS

LEASE

AMENDMENTS:

	
Letter agreement dated April 25, 2000

Second Amendment to Lease dated June __, 2001

WHEREAS, Tenant desires (i) to surrender to Landlord the Surrendered Premises, and (ii) extend the Term of the Lease with respect to the Remaining Premises for a period of ten (10) years;

WHEREAS, in order to accommodate Tenant’s desire to surrender the Surrendered Premises, Landlord must make certain base building improvements and other changes to the Property to enable Landlord to make Building C a multi-tenanted building and to create certain common areas on the Property; and

WHEREAS, Landlord is willing to accept such surrender, make certain modifications to the Buildings, create certain common areas, and extend the Lease Term upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the foregoing and for other consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant agree that the above-referenced Lease (as previously amended, the “Lease”) is hereby further amended as follows (the parties hereby agreeing that any capitalized term, as used in this Amendment, shall have the same meaning as set forth in the Lease, except to the extent inconsistent with the provisions of this Amendment):

1.           TERMINATION OF LEASE IN RESPECT OF SURRENDERED PREMISES

Subject to Tenant’s right to lease all or any portion of the Surrendered Premises, as set forth in Section 9 below, the Term of the Lease with respect to the Surrendered Premises shall terminate as of November 30, 2012 (“Effective Reduction Date”).

B.           On or before the Effective Reduction Date with respect to the Surrendered Premises, Tenant shall vacate and surrender the Surrendered Premises to Landlord in the condition in which the Surrendered Premises are in as of the Execution Date of this Third Amendment, reasonable wear and tear, and damage by fire or other casualty and condemnation, excepted, free and clear of all tenants or other occupants and broom-clean, with all furniture and personal property, cabling and Tenant’s security system with respect to the Surrendered Premise removed therefrom.  Tenant shall have no obligation to remove any alterations or leasehold improvements which exist in the Surrendered Premises as of the Execution Date of this Third Amendment.

  

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C.           Tenant shall have the right to retain the security cameras (“Common Cameras”) presently located in the Surrendered Common Spaces and in other common areas on the Property, provided that Landlord shall have the right to connect to the feeds from such Common Cameras to use such information for security purposes for the Property.  Tenant shall maintain in good condition and, if necessary, replace, such Common Cameras throughout the term of the Lease, Landlord hereby agreeing, however, that Tenant’s operation and maintenance of such Common Cameras is solely for the benefit of Tenant and its employees and Tenant shall have no liability or obligation to Landlord based upon its operation or maintenance of such Common Cameras.  Landlord shall have the right to install additional security areas for the Surrendered Common Spaces and for the other common areas of the Property, provided however, that Tenant shall have the right, at any time, upon ten (10) days prior written notice to Landlord, to abandon the Common Cameras and to terminate Tenant’s obligation to maintain the Common Camera.  If Tenant exercises such right, then, at Landlord’s written election, either: (i) Landlord shall have the right to use such Common Cameras in any manner which Landlord deems fit, or (ii) Landlord shall have the right to require Tenant, at Tenant’s cost to remove the Common Cameras within five (5) business days after Tenant receives written notice of such election from Landlord.

D.           As of the Effective Reduction Date:

(1)           The term “Premises”, as defined in the Lease, shall be deemed to mean the entirety of the interior of Buildings A, B, and C, excluding only the Surrendered Premises, as shown on Exhibit A attached hereto  (the parties hereby agreeing that, from and after the Effective Reduction Date, the Remaining Premises shall constitute the “Premises”), and

(2)           The remainder of the Property other than the Premises and the Surrendered Tenanted Premises, shall be considered to be Common Areas, and the “Common Areas” will include, in addition to the Surrendered Common Spaces: (i) the roof and exterior of each Building, (ii) all areas located on the Property which are located outside of each Building, and (iii) the pipes, ducts, conduits, wires and appurtenant meters and equipment serving the Premises in common with others.

2.           RENT CREDIT

Subject to the provisions of this Section 2, Tenant shall be entitled to a rent credit in the amount of Three Million Two Hundred Six Thousand Five Hundred Fifty and 00/100 Dollars ($3,206,550.00) (“Rent Credit”), to be applied against the Annual Fixed Rent payable by Tenant under the Lease for the period commencing as of the monthly payment of Annual Fixed Rent due on the first of the calendar month next following the Execution Date of this Third Amendment and ending on November 30, 2012 (the “Rent Credit Term”).  Such Rent Credit shall be applied in equal monthly amounts to the Annual Fixed Rent over the Rent Credit Term.

  

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3.           LANDLORD’S BASE BUILDING WORK

A.           Landlord, at Landlord’s cost, shall perform the work (“Landlord’s Base Building Work”) described in Exhibit B.  All such work shall be performed in a good and workmanlike manner, in a manner similar to and consistent with the Building standard improvements for the Property, and shall, at the time of Substantial Completion of such work, be in accordance with all Legal Requirements, including, without limitation, the Americans with Disabilities Act, and Insurance Requirements.  Landlord shall be responsible, at Landlord’s sole cost and expense, for obtaining any and all permits and approvals required for the performance of Landlord’s Base Building Work.

B.           Tenant acknowledges that Landlord’s Base Building Work will be performed during Tenant’s occupancy of the Premises.  Such work shall be commenced promptly by Landlord: (i) upon Landlord’s entering into a lease or other agreement providing for the occupancy of any portion of the Surrendered Tenanted Premises to any party other than Tenant or an Existing Subtenant, or (ii) at Landlord’s election, prior to such time, and thereafter completed with all reasonable speed and diligence.  Landlord shall give Tenant at least 90 days advance notice of its commencement of the Landlord’s Base Building Work.  Landlord shall use commercially reasonable efforts to coordinate Landlord’s Base Building Work with Tenant’s requirements, whenever possible, so as to minimize disruption to Tenant’s business operations, including Tenant’s access to the Property, Garage and Premises, visibility of Tenant’s signage, and accessibility of the visitor and Reserved Parking spaces serving the Premises, but there shall be no diminution or abatement of Annual Fixed Rent or Additional Rent or other compensation due from Landlord to Tenant hereunder, nor shall this Lease be affected or any of the Tenant’s obligations hereunder reduced, and Landlord shall have no responsibility or liability for any inconvenience or disruption to Tenant’s business, Tenant hereby agreeing that Tenant’s sole remedy in the event of any delay in the performance of Landlord’s Base Building Work is as set forth in Section 3C.

C.           The parties acknowledge that Landlord’s Base Building Work is being performed to create a multi-tenant complex.  Therefore, Landlord covenants and agrees that Landlord shall have no right to allow any third party, other than Tenant and the Existing Subtenants, to use or occupy the Surrendered Tenanted Premises prior to Substantial Completion, as hereinafter defined, of Landlord’s Base Building Work (the parties hereby expressly agreeing that the construction of leasehold improvements and the installation of furniture, fixtures, and equipment shall not constitute use or occupancy of the Surrendered Tenanted Premises for the purposes of this Section 3C).  Since Tenant is presently subleasing portions of the Surrendered Tenanted Premises to the Existing Subtenants, Tenant agrees that Landlord shall have the right to enter into direct leases with all or any of the Existing Subtenants of any portion of the Surrendered Tenanted Premises and that the terms of such direct leases (and the occupancy of the Surrendered Tenanted Premises by the Existing Subtenants) may commence prior to the Substantial Completion of Landlord’s Base Building Work.

D.           For the purposes hereof:

  

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(1) The “Existing Subtenants” are:

 

 

	
·  

	
Navigant (f/k/a The Bard Group)

	
·  

	
Lustig, Glaser & Wilson

	
·  

	
Career Academy

	
·  

	
Bulfinch

	
·  

	
Sierra Atlantic

	
·  

	
FinArc

	
·  

	
Object Management Group

	
·  

	
First Notice Systems (sub-subtenant in OMG suite)

	
·  

	
Dovetail Health (f/k/a ACM Partners)

(2) “Substantial Completion” shall be defined as the date on which Landlord’s Base Building Work is completed, except for Punch List Items (which shall be completed by Landlord as provided in Section 4.0D of the Lease), and, if provided by the Town of Needham given the nature of Landlord’s Base Building Work, evidence, from the appropriate agency of the Town of Needham that Landlord’s Base Building Work has been approved by such agency (e.g., if a building permit is required for the performance of a portion of Landlord’s Base Building Work, a written sign-off from the Town of Needham with respect to such portion of Landlord’s Base Building Work), unless Landlord’s Base Building Work is actually delayed by Tenant Delays, in which event Substantial Completion shall be the date that Landlord would have completed Landlord’s Base Building Work, as aforesaid, but for such Tenant Delays.

E.           Article IV of the Lease shall have no applicability to Landlord’s Base Building Work, except for the provisions of Section 4.4(B) thereof, and to the extent that the provisions of this Section 3 expressly references definitions or obligations set forth in Article IV of the Lease.

4.           COMMON AREAS

A.           Rights to Use Common Areas.  Tenant shall have, as appurtenant to the Premises, the non-exclusive right to use the Common Areas in common with others entitled thereto, subject to: (i) rules and regulations promulgated by Landlord pursuant to Section 20 hereof, and (ii) Landlord’s rights under Sections 4B and 4C hereof.

B.           Landlord’s Reservations.  Landlord reserves the right from time to time, upon reasonable prior notice to Tenant (except no prior notice shall be required in an emergency), and without unreasonable interference with Tenant’s access to or use and enjoyment of the Property and Premises:  (i) to install, use, maintain, repair, replace and relocate for service to the Premises and other parts of the Property, or either, pipes, ducts, conduits, wires and appurtenant fixtures, wherever located in the Premises or Property, and (ii) to alter or relocate such common facilities, provided that substitutions are substantially equivalent or better.  Installations, replacements and relocations referred to

  

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in clause (i) above shall be located so far as practicable in the central core area of the Building, above ceiling surfaces, below floor surfaces or within perimeter walls of the Premises.   In exercising its rights hereunder, Landlord shall use reasonable efforts to minimize interference with Tenant’s access to and use of the Premises for the conduct of business.

C.           Landlord’s Right to Change Common Areas.

Landlord reserves the right, exercisable by itself or its nominee, at any time and from time to time without the same constituting an actual or constructive eviction and without incurring any liability to Tenant therefor or otherwise affecting Tenant's obligations under this Lease, to make such changes, alterations, additions, improvements, repairs or replacements in or to the Common Areas (including, without limitation, the Parking Facility) and the fixtures and equipment thereof, as well as in or to the street entrances, halls, passages, elevators, escalators, and stairways thereof, as it may deem necessary or desirable, and to change the arrangement and/or location of entrances or passageways, doors and doorways, and corridors, elevators, stairs, toilets, or other public parts of the Building, provided, however, that: (i) there be no unreasonable obstruction of the right of access to, or unreasonable interference with the use and enjoyment of, the Premises by Tenant, and (ii) so long as at least 160,000 square feet of the Property is leased there shall continue to be a Cafeteria and Fitness Center in operation throughout the Term of the Lease and Landlord shall have no right to relocate or change the dimensions of the Cafeteria or the Fitness Center.  Nothing contained in this Section 4C shall be deemed to relieve Tenant of any duty, obligation or liability of Tenant imposed on Tenant by the Lease or by reason of Legal Requirements with respect to making any repair, replacement or improvement or complying with any law, order or requirement of any governmental or other authority.  Neither this Lease nor any use by Tenant shall give Tenant any right or easement for the use of any door in Building C or any passage or any concourse connecting with any building or to any public convenience, and the use of such doors, passages and concourses and of such conveniences may be regulated or discontinued at any time and from time to time by Landlord without notice to Tenant and without affecting the obligation of Tenant hereunder or incurring any liability to Tenant therefor, provided, however, that: (i) there be no unreasonable obstruction of the right of access to, or unreasonable interference with the use of the Premises by Tenant, and (ii) there shall continue to be a Cafeteria and Fitness Center in operation throughout the Term of the Lease and Landlord shall have no right to relocate or change the dimensions of the Cafeteria or Fitness Center. The Property shall continue to be operated in a manner consistent with other Class A office buildings owned by Boston Properties, Inc. or its affiliates, in the Route 128 Central market, or, at such time as Boston Properties, Inc. and its affiliates no longer owns any Class A office buildings in the Route 128 Central market, then the Property shall be operated in a manner consistent with other Class A office buildings in the Route 128 Central market which were previously owned by Boston Properties, Inc. or its affiliates.

5.           TENANT’S WORK

  

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A. Definitions.  For the purposes hereof:

(1)           “Hard Costs” shall be defined as the cost incurred by Tenant in making leasehold improvements to the Premises, including, without limitation, ceiling system, HVAC, electricity, life safety, paint, carpet, demolition, installation of new partitions and glass, and Landlord’s Construction Management Fee.

(2)           “Soft Costs” shall be defined as architectural and engineering design services, working drawings, installation of wiring and cabling in the Premises.

(3)           “Other Costs” shall be defined as other costs incurred by Tenant in connection with the termination of the Lease with respect to the Surrendered Premises and the renovation of the Remaining Premises, including the cost of furniture and moving costs.  In no event shall Other Costs include rent payments or legal fees.

(4)           “Permitted Costs” shall be defined as Hard Costs, Soft Costs, and Other Costs.

(5)           “Landlord’s Share” shall be defined as the ratio, from time to time, of Twelve Million Eight Hundred Twenty Six Thousand Two Hundred and 00/100 Dollars ($12,826,200.00) to the total amount, from time to time, of the Budget, as hereinafter defined, provided, however, that in no event shall Landlord’s Share be greater than 100%.

(6)           “Tenant’s Share” shall be defined, with respect to each Hard Cost Requisition and each Soft Cost Requisition, as the amount, if any, by which the amount of such Requisition (as approved by Landlord and Tenant) exceeds Landlord’s Share of the amount of such Requisition (as approved by Landlord and Tenant).

(7)           “Hard Cost Requisition” shall be defined as an application for payment from any contractor or vendor (“Tenant Contractor”) with whom Tenant has entered into contract (“Hard Cost Contract”) for the performance of any portion of Tenant’s Work, which includes: (i) a waiver of liens in the forms attached hereto as Exhibit C from such contractor and any subcontractor performing any portion of Tenant’s Work through such contractor, and (ii) any other documentation required pursuant to the provisions of the applicable Hard Cost Contract.  No Tenant Contractor may submit a Hard Cost Requisition to Landlord more often than one (1) time per calendar month.

(8)            “Tenant Requisition” shall mean written documentation showing in reasonable detail the Soft Costs or Other Costs, as the case may be, for which Tenant is seeking reimbursement.  Each Tenant Requisition shall be accompanied by evidence reasonably satisfactory to Landlord that all work covered by previous Tenant Requisitions has been fully paid by Tenant.  Landlord shall have the right, 

 

  

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upon reasonable advance notice to Tenant, to inspect Tenant’s books and records relating to each Tenant Requisition in order to verify the amount thereof.  Tenant may submit a Tenant Requisition to Landlord no more often than one (1) time per calendar month.

B.           As Is Condition; Plan Approval Process; Budget.

(1)           Except for Landlord’s obligation (i) to perform Landlord’s Base Building Work and (ii) to provide Landlord’s Contribution, Tenant shall accept the Premises, the Remaining Premises, and the Property in their as-is condition without any obligation on Landlord’s part to perform any additions, alterations, improvements, demolition or other work therein or pertaining thereto.  Tenant, at its sole cost and expense, but subject to Landlord’s Contribution, shall perform all work (other than Landlord’s Base Building Work) necessary to renovate the Premises in accordance with plans and specifications prepared by an architect, licensed by the Commonwealth of Massachusetts and reasonably approved by Landlord, such plans and specifications to be subject to the reasonable approval of the Landlord.  Tenant shall submit to Landlord a detailed floor plan layout together with working drawings for work to be performed by Tenant to refurbish the Premises for the Extended Term (“Tenant’s Work”).  Such floor plan layout and working drawings (the “Plans”) shall contain at least the information required by, and shall conform to the requirements of, Exhibit D, attached hereto and incorporated herein (Tenant Plan and Working Drawing Requirements).  Provided that the Plans contain at least the information required by, and conform to the requirements of, said Exhibit D, Landlord’s approval of the Plans shall not be unreasonably withheld, conditioned, or delayed.

(2)           If Landlord shall fail to respond in writing to a written request for Landlord’s consent to the Plans within ten (10) business days after Landlord’s receipt of such written request (i.e., by either approving the Plans or disapproving the Plans in writing), then Tenant shall have the right to send Landlord a Second Tenant Plan Consent Request, as hereinafter defined.  If Landlord shall fail to respond in writing to a written request for Landlord’s consent to the Plans within three (3) business days after Landlord’s receipt of a Second Tenant Plan Consent Request (i.e., by either approving the Plans or disapproving the Plans in writing), then Landlord shall conclusively be deemed to have consented to the Plans.  A “Second Tenant Plan Consent Request” shall be defined as a written request for Landlord’s consent to the Plans which states in bold face, all capital letters at the top thereof: “WARNING:  IF LANDLORD FAILS TO RESPOND IN WRITING TO THIS SECOND TENANT PLAN CONSENT REQUEST WITHIN THREE (3) BUSINESS DAYS AFTER LANDLORD’S RECEIPT OF THIS SECOND TENANT PLAN CONSENT REQUEST, LANDLORD SHALL CONCLUSIVELY BE DEEMED TO HAVE CONSENTED TO THE PLANS REFERENCED IN THIS SECOND TENANT PLAN 

 

  

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CONSENT REQUEST IN ACCORDANCE WITH SECTION 5B OF THE THIRD AMENDMENT TO LEASE.”

(3)           If Landlord disapproves of any Plans within the required time, then Tenant shall promptly have the Plans revised by its architect to incorporate all objections and conditions presented by Landlord and shall resubmit such plans to Landlord no later than ten (10) days after Landlord has submitted to Tenant its objections and conditions.  Such process shall be followed until the Plans shall have been approved by the Landlord without objection or condition.  Upon Tenant’s determination of the price estimates for Tenant’s Work, and prior to submission by Tenant to Landlord of any requisition for payment of any portion of Landlord’s Contribution, Tenant shall give Landlord a reasonably detailed budget (the “Budget”) for the cost of Tenant’s Work.  Tenant shall submit an updated Budget to Landlord every three (3) months after Tenant submits its initial Budget to Landlord, for the purpose of determining Landlord’s Share.

C.           Tenant’s Work.

(1)           Once the Plans have been approved by Landlord, Tenant, at its sole cost and expense (subject to Landlord’s Contribution), shall promptly, and with all due diligence, perform Tenant’s Work as set forth on the Plans, and, in connection therewith, Tenant shall obtain all necessary governmental permits and approvals for Tenant’s Work.  All of Tenant’s Work shall be performed in accordance with: (i) the Plans, (ii) applicable Legal Requirements and Insurance Requirements, and (iii) the provisions of the Lease; provided however, that Tenant shall not be required to cause its contractors performing the initial Tenant’s Work to obtain a payment bond (as otherwise would have been required pursuant to Section 9.3 of the Lease).  Subject to Section 5E hereof, Tenant shall have Tenant’s Work performed by contractors licensed in the Commonwealth of Massachusetts and reasonably approved by Landlord, which contractors shall provide to Landlord such insurance as required by the Lease.  Landlord shall have the right, in accordance with Section 20 hereof, to provide such reasonable rules and regulations relative to the performance of Tenant’s Work and any other work which the Tenant may perform under the Lease, and Tenant shall abide by all such rules and regulations and shall cause all of its contractors to so abide, including, without limitation, payment for the costs of using Building services.

(2)           Tenant shall prepare and submit to Landlord promptly after Tenant’s Work is substantially complete a set of as-built plans in both print and electronic forms showing the work performed by Tenant to the Premises including, without limitation, any wiring or cabling installed by Tenant or Tenant Contractor for Tenant’s computer, telephone and other communication systems.

(3)           All of Tenant’s Work shall be coordinated with any work being performed by or for Landlord at the Property and in such manner as to maintain harmonious labor relations.  Each party may inspect the work of the other at reasonable times and shall promptly give notice of observed defects.  Each party authorizes the other to rely in connection with design and construction upon approval and other actions on the party’s behalf by any construction representative of each of Landlord and Tenant or any person hereafter designated in substitution or addition by notice to the party relying.  As of the date hereof, Landlord’s construction representative shall be Michael Schumacher, having 

 

  

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a telephone number of 617-236-3341 and an e-mail address of mschumacher@bostonproperties.com, and Tenant’s construction representative shall be Glenn Morris, having a telephone number of 781-270-5353 and an e-mail address of gmorris@PTC.com.  Tenant acknowledges that Tenant is acting for its own benefit and account and that Tenant will not be acting as Landlord’s agent in performing any Tenant’s Work, accordingly, no contractor, subcontractor or supplier shall have a right to lien Landlord’s interest in the Property in connection with any work.

 

D.           Landlord’s Contribution.

(1)           Landlord shall, in the manner hereinafter set forth, contribute an amount (“Landlord’s Contribution”) equal to up to Twelve Million Eight Hundred Twenty Six Thousand Two Hundred and 00/100 Dollars ($12,826,200.00) towards Permitted Costs.  Landlord shall be under no obligation to apply any portion of Landlord’s Contribution for any purposes other than to pay for Permitted Costs.

(2)           At least Six Million Four Hundred Thirteen Thousand One Hundred and 00/100 Dollars ($6,413,100.00) of Landlord’s Contribution (“Minimum Hard Cost Contribution”) must be used to pay for Hard Costs.  In addition, however, to the hard construction costs, Tenant may pay Landlord’s Construction Management Fee from the Minimum Hard Cost Contribution.

(3)           Provided that Tenant is not in monetary default, or material non-monetary default, of its obligations under the Lease at the time that Landlord receives any Hard Cost Requisition or Tenant Requisition, as the case may be, Landlord shall, subject to the provisions of this Section 5D:

	
(a)  

	
with respect to Hard Costs, pay Landlord’s Share of the amount due to each contractor performing any portion of Tenant’s Work (“Tenant Contractor”) directly to such Tenant Contractor within fifteen (15) business days after Landlord’s receipt of any Hard Cost Requisition, as hereinafter defined; and

 

 

	
(b)  

	
with respect to Soft Costs, pay to Tenant Landlord’s Share of the cost of the work shown on each Tenant Requisition submitted by Tenant to Landlord within fifteen (15) business days after Landlord’s receipt of such requisition.

Notwithstanding the foregoing, if Landlord refuses to pay any portion of Landlord’s Contribution based upon a default of Tenant, then Tenant shall have the right to resubmit its request for payment of such portion of Landlord’s Contribution (and Landlord shall make payment to Tenant on account of such resubmission, in accordance with the provisions of this Section 5D) on the conditions that:  (i) Tenant has cured such default, (ii) Tenant is then in full compliance with its obligations under the Lease, and (iii) the Lease is then in full force and effect.

(4)           Requisitions.  Landlord, in its capacity as Tenant’s construction manager, as set forth in Section 5E below, shall receive all Hard Cost Requisitions.  Landlord and Tenant shall review and approve each Hard Cost Requisition prior to Landlord’s making 

 

  

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any payment on account of such Hard Cost Requisition.  Tenant agrees to pay to the contractor submitting any Hard Cost Requisition which has been approved by Landlord and Tenant, Tenant’s Share of the amount approved for payment under such Hard Cost Requisition.

 

 

(5)           Notwithstanding anything to the contrary herein contained: (i) it shall be a condition to Landlord’s obligation to pay any amount due based upon an invoice submitted by any contractor of Tenant’s that Tenant have complied with its obligation to submit a Budget (or updated Budget), as applicable, (ii) Landlord shall have no obligation to pay any amount to Tenant on account of Other Costs until all Hard Costs and Soft Costs for which Tenant is seeking reimbursement have been fully paid for from Landlord’s Contribution, and (iii) Tenant may not seek payment by Landlord hereunder of Landlord’s Share of more than Three Million Two Hundred Six Thousand Five Hundred Fifty and 00/100 Dollars ($3,206,550.00) to pay for Other Costs.

(6)           Notwithstanding anything to the contrary herein contained:

(a)           Landlord shall have no obligation to advance funds on account of Landlord’s Contribution unless and until Landlord has received the Hard Cost Requisition or Soft Cost Requisition in question, together with (in the case of any Hard Cost Requisition) a certification from Tenant’s architect, certifying that the work shown on the Hard Cost Requisition has, to the best of its knowledge, been performed in accordance with applicable law and in accordance with the approved Plans.

(b)           Landlord shall have no obligation to pay Landlord’s Contribution in respect of any requisition submitted after December 31, 2014.

(7)           Except for Landlord’s Contribution, Tenant shall bear all other costs of Tenant’s Work.  Landlord shall have no liability or responsibility for any claim, injury or damage alleged to have been caused by the particular materials, whether building standard or non-building standard, selected by Tenant in connection with Tenant’s Work.

E.           Landlord acting as Tenant’s Construction Manager for Tenant’s Work

Tenant shall engage Landlord to act as its construction manager in connection with the performance of the leasehold improvements portion of Tenant’s Work.  In its role as construction manager: (i) Landlord shall provide oversight and coordination services, (ii) Landlord shall consult with Tenant as to the selection of contractors and vendors providing Tenant’s Work, all of which shall be subject to Tenant’s approval, such approval not to be unreasonably withheld or delayed, (iii) Tenant shall enter into direct contracts with such approved contractors and vendors on such terms and conditions as may be mutually acceptable to Tenant and such contractor or vendor, and Landlord shall have no liability arising from the defaults or non-performance by such contractors or vendors, and (iv) Tenant shall pay to Landlord, as additional rent, a construction management fee (“Landlord’s Construction Management Fee”) in an amount equal to 

 

  

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three and one-half percent (3.5%) of the Hard Costs of Tenant’s Work.  Landlord’s Construction Management Services, pursuant to this Section 5(E), shall be subject to the terms and conditions of a Consulting Service Agreement substantially in the form attached hereto as Exhibit E, as modified by such revisions as may be mutually agreed to in writing by Tenant and Landlord.  In no event shall Landlord be required to act as construction manager with respect to the portions of Tenant’s Work categorized under Soft Costs or Other Costs, as defined in Section 5(A) above.  At Tenant’s election, Landlord may deduct Landlord’s Construction Management Fee from Landlord’s Contribution at the same time that Landlord pays Hard Costs to Tenant (i.e., 3.5% of any Hard Costs paid by Landlord).  If Tenant elects to pay Landlord’s Construction Management Fee directly to Landlord (i.e. in lieu of allowing Landlord to deduct the amount of Landlord’s Construction Management Fee from Landlord’s Contribution), and if Tenant fails to pay any invoice from Landlord on account of Landlord’s Construction Management Fee with thirty (30) days of billing therefor, Landlord shall, without limiting any other rights or remedies Landlord may have, have the right to deduct such past due amount from Landlord’s Contribution with respect to the next succeeding requisition.

6.           EXTENSION OF TERM

A.           The Term of the Lease with respect to the Remaining Premises is hereby extended for an additional period of ten (10) years commencing December 1, 2012 and expiring November 30, 2022 (the “Extended Term”).  Said Extended Term shall be upon all of the same terms and conditions of the Lease in effect immediately preceding the commencement of the Extended Term, except to the extent inconsistent with the provisions of this Third Amendment.  Tenant shall have no further right to extend the Term of the Lease beyond the Extended Term, except as set forth in Section 11 of this Third Amendment.

B.           Annual Fixed Rent.  During the Extended Term, the Annual Fixed Rent payable by Tenant to Landlord shall, subject to Section 6C, be Seven Million Three Hundred Seventy Five Thousand Sixty Five and 00/100 Dollars ($7,375,065.00), i.e., $614,588.75 per month.

C.           Management Fee.  During the Extended Term, Tenant shall continue to be obligated to pay the Management Fee, as defined in Section 6.5 of the Lease, provided, however, that such Management Fee shall, during the Extended Term, be equal to 2.5% of the amount of Annual Fixed Rent and Tenant’s Proportionate Share of Operating Expenses (including, without limitation, Landlord’s Tax Expenses) payable by Tenant under the Lease, from time to time.

D.           Operating Expenses.  Reference is made to the fact that Tenant is presently paying the entirety of Operating Expenses (including, without limitation, Landlord’s Tax Expenses) with respect to the Property.  Notwithstanding the provisions of Article VI of the Lease, the parties hereby agree that during the Extended Term, Tenant shall only be responsible for paying Tenant’s Proportionate Share, as hereinafter defined, of Operating Expenses incurred during the Extended Term.  “Tenant’s 

 

  

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Proportionate Share” shall be defined as the ratio of the rentable area of the Remaining Premises (i.e., 320,655 rentable square feet) to the rentable area of the Buildings (i.e., 380,987 rentable square feet), or 84.16%.  Tenant’s Proportionate Share shall be adjusted for changes in the Rentable Square Footage of the Premises and/or the Rentable Square Footage of the Buildings, including, without limitation, changes which may result from any condemnation or other taking of a portion of the Building.  Upon written notice from Tenant, Landlord agrees to meet with Tenant on a quarterly basis to discuss the budget for Operating Expenses and consider any input which may be suggested by Tenant.  Tenant shall have the option to utilize either Landlord or a third party (the identity of such third party to be reasonably approved by Landlord] to provide any above-standard services to the Premises, other than janitorial services and overtime HVAC services.

E.           Rent Credit.  Provided that there is no Event of Default by Tenant, Tenant shall have be entitled to the Building C Second Floor Rent Credit, as hereinafter defined, against the payments of Annual Fixed Rent payable by Tenant with respect to the months of December, 2012 and January, 2013.  The “Building C Second Floor Rent Credit” shall be defined as the monthly installments of Annual Fixed Rent payable by Tenant with respect to the portion of the Remaining Premises located on the second floor of Building C (i.e. $112,905.08 per month, or $225,810.16 in the aggregate).  Notwithstanding the foregoing, if an Event of Default occurs at any time during the Term prior to the dates on which the payments of the Annual Fixed Rent for December, 2012 and January, 2013 are due from Tenant, then Tenant shall not be entitled to any remaining Building C Second Floor Rent Credit then outstanding as of the date of such Event of Default.  The provisions of this Section 6E shall not limit or affect any of Landlord’s other rights or remedies based upon such Event of Default, pursuant to the Lease or at law or in equity.

F.           Landlord’s Maintenance and Operations. In accordance with, and subject to, Sections 7.1 and 7.2 of the Lease, should any of the Buildings’ structural components or mechanical, electrical, and HVAC systems (or any roofs), fail to the extent the same need to be replaced during the Extended Term, then Landlord shall replace same, at Landlord’s sole cost and expense,  and the costs thereof may be included in Operating Expenses, but only to the extent permitted under Section 6.2 of the Lease, as amended by Section 7B of this Third Amendment.

G.           Tenant’s Repairs.  With respect to Tenant’s repair and maintenance obligations under Article VIII (Tenant’s Repairs) of the Lease, during the Extended Term and the Second Extended Term, as applicable, all references to the “Building” shall be deemed to mean the “Remaining Premises” or “Premises”.

7.           OPERATING EXPENSES

A.           As of the Effective Reduction Date, the following Section 6.6 (Gross-Up Provision) shall be added to Article VI of the Lease (Taxes and Operating Expenses):

  

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“6.6           Gross-Up Provision.  Notwithstanding anything contained in Article VI to the contrary, in determining the amount of Operating Expenses for any calendar year or portion thereof falling within the Term, if less than ninety-five percent (95%) of the Rentable Area of the Buildings shall have been occupied by tenants at any time during the period in question, then, at Landlord’s election, Operating Expenses for such period shall be adjusted to equal the amount Operating Expenses would have been for such period had occupancy been ninety-five percent (95%) throughout such period.  The extrapolation of Operating Expenses under this paragraph shall be performed by appropriately adjusting the cost of those components of Operating Expenses that are impacted by changes in the occupancy of the Buildings.”

B.           As of the Effective Reduction Date, the first clause of Section 6.2(i) of the Lease (i.e. which reads “depreciation...made after the expiration of the initial Lease Term”) is hereby deleted in its entirety and the following inserted in its place (the parties expressly agreeing that the remainder of Section 6.2(i) shall continue to apply):

(i) depreciation for capital expenditures made by Landlord during the Extended Term or the Second Extended Term, as applicable, but only to the extent such improvements are (a) required by applicable law, ordinance or regulation adopted after the Execution Date of the Third Amendment to Lease, or (b) believed by Landlord, in Landlord’s reasonable business judgment, to result in a reduction of Operating Expenses at the Property.

8.           ELECTRICITY

As of the Effective Reduction Date, Section 7.4 of the Lease shall be deleted in its entirety and the provisions set forth in Exhibit F attached hereto and incorporated herein shall be substituted therefor.

9.           TENANT’S RIGHT TO LEASE SURRENDERED TENANTED PREMISES

On the conditions (which conditions Landlord may waive, at its election, by written notice to Tenant at any time) that as of the Outside Election Date, as hereinafter defined: (i) no Event of Default by Tenant exists, and (ii) this Lease is still in full force and effect, Tenant shall have the right to lease all or any part of the Surrendered Tenanted Premises (the “Expansion Premises”) as follows.  Tenant may exercise its rights under this Section 9 by giving Landlord written notice (“Expansion Exercise Notice”) on or before December 31, 2010 (the “Outside Election Date”). Tenant’s Expansion Exercise Notice shall set forth the size of the Surrendered Tenanted Premises that Tenant desires to lease.  If Tenant timely notifies Landlord of its election to lease the Expansion Premises, then: (x) Landlord shall designate the location of the Expansion Premises, which location shall be reasonably acceptable to Tenant, and shall be of marketable configuration with a reasonable amount of fenestration, (y) Tenant’s demise of the Expansion Premises shall be upon all of the same terms and conditions of the Lease applicable to the Remaining 

 

  

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Premises, and (z) the Annual Fixed Rent rate for the Expansion Premises shall be at the same per-rentable-square-foot rent rate that Tenant is then paying for the Remaining Premises, except that neither the Rent Credit set forth in Section 2 above nor the Building C Second Floor Rent Credit set forth in Section 6E above shall be applicable to the Expansion Premises.

10.           RIGHT OF FIRST OFFER

On the conditions (which conditions Landlord may waive by written notice to Tenant at any time) that:  (i) as of both the time that the RFO Premises first becomes available and as of the Commencement Date in respect of the RFO Premises, no Event of Default of Tenant exists, (ii) this Lease is still in full force and effect, and (iii) Tenant is in compliance with the Occupancy Condition, as hereinafter defined, both at the time that Landlord is required to give Landlord’s Notice, as hereinafter defined, and as of the Term Commencement Date in respect of the RFO Premises, as hereinafter defined, Tenant shall have a continuous right (the “RFO”) to lease the RFO Premises when such RFO Premises become available for lease to Tenant, as hereinafter defined.

A.           Definition of RFO Premises

The “RFO Premises” shall be defined as any separately demised space in the Surrendered Tenanted Premises, when such area becomes available for lease to Tenant, as hereinafter defined, during the Term of the Lease.  For the purposes of this Section 10, the RFO Premises shall be deemed to be “available for lease to Tenant” if, during the Term of the Lease, the lease of such RFO Premises to a tenant is expiring or earlier terminating, and such tenant has not exercised its right, if any, to extend the term of its lease for such RFO Premises and any failure to so exercise is not rectified within thirty (30) days after the last day upon which such right was exercisable.  In no event shall the RFO Premises be deemed to be “available for lease to Tenant” until such RFO Premises have been leased to a third party after Tenant’s surrender of the Surrendered Tenanted Premises.

B.           Exercise of Right to Lease RFO Premises

(1)           Landlord shall give Tenant written notice (“Landlord’s Notice”) at the time that a RFO Premises becomes available for lease to Tenant.  Landlord’s Notice shall set forth the exact location of the RFO Premises, Landlord’s designation of the Fair Market Rental Value (as defined in Section 11 hereof) applicable to the RFO Premises (the “RFO Rent”) and the estimated Commencement Date in respect of the RFO Premises.

(2)           If Tenant disagrees with Landlord’s designation of the Fair Market Rental Value, the parties shall, at Tenant’s request, negotiate in good faith to reach agreement on the RFO Rent during the twenty (20) business day period (the “RFO Negotiation Period”) after Landlord gives Landlord’s Notice.  If the parties have not, on or before the last day of the RFO Negotiation Period, executed a written agreement (“RFO Lease 

 

  

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Amendment”) whereby Tenant agrees to lease the RFO Premises at a mutually agreed upon RFO Rent, then Tenant shall have the right, by written notice (“Tenant’s RFO Exercise Notice”) given to Landlord on or before the last day of the RFO Negotiation Period, to unconditionally exercise its right to lease such RFO Premises, and either: (x) accept the RFO Rent set forth in Landlord’s Notice, or (y) dispute the RFO Rent set forth in Landlord’s Notice and submit such dispute as to the Fair Market Rental Value applicable to such RFO Premises to a binding broker determination as set forth in Exhibit G of the Lease.   If Tenant’s RFO Exercise Notice does not expressly dispute the RFO Rent set forth in Landlord’s Notice, Tenant shall conclusively be deemed to have agreed that the RFO Rent payable with respect to such RFO Premises is as set forth in Landlord’s Notice.   If Tenant fails timely to give Tenant’s RFO Exercise Notice with respect to such RFO Premises, Tenant shall have no further right to lease all or any portion of such RFO Premises pursuant to this Section 10 until the same have been leased by a third party and again becomes “available for lease to Tenant”.

(3)           Upon the timely giving of Tenant’s RFO Exercise Notice, Landlord shall lease and demise to Tenant and Tenant shall hire and take from Landlord, such RFO Premises, upon all of the same terms and conditions of the Lease except as hereinafter set forth.  Time is of the essence with respect to Tenant’s obligations under this Section 10.

C.           Lease Provisions Applying to RFO Premises

The leasing to Tenant of such RFO Premises shall be upon all of the same terms and conditions of the Lease, except as follows:

(1)           Commencement Date.  The Commencement Date in respect of such RFO Premises shall be the later of:  (x) the estimated Commencement Date in respect of such RFO Premises as set forth in Landlord’s Notice or (y) the date that Landlord delivers such RFO Premises to Tenant.  Landlord shall endeavor in good faith and use reasonable efforts (including legal process if appropriate) to deliver the RFO Premises on or about the estimated Commencement Date set forth in Landlord’s Notice.  If the Commencement Date in respect of a RFO Premises does not occur on or before the date one hundred fifty (150) days after the estimated Commencement Date set forth in Landlord’s Notice, Tenant shall have the right, exercisable on thirty (30) days’ prior written notice, to terminate Tenant’s exercise of such RFO.  Notwithstanding the foregoing, if Landlord delivers the RFO Premises during such 30-day period, such termination by Tenant shall be void and Tenant’s exercise of the RFO shall remain in full force and effect.

(2)           Upon the occurrence of the Commencement Date in respect of such RFO Premises, such RFO Premises shall be deemed to be part of the Premises, for all purposes under the Lease.

(3)           Term.

  

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      (a)           If Tenant elects to lease the RFO Premises and there are more than three (3) years remaining in the Lease Term as of the Commencement Date of the RFO Premises, then the Term of the Lease with respect to such RFO Premises shall be co-terminous with the Term of the Lease for the Premises.

      (b)           If Tenant elects to lease the RFO Premises and there are less than three (3) years remaining in the Lease Term as of the Commencement Date of the RFO Premises, then the Term of the RFO Premises shall, at Landlord’s option, be either (i) co-terminous with the Term of the Lease for the Premises or (ii) for a period of three (3) years.

      (c)           If any RFO Premises becomes available for lease to Tenant during any Non-RFO Period, as hereinafter defined, then Tenant shall have no right to lease such RFO Premises and Landlord shall have no obligation to give Landlord’s Notice to Tenant with respect to such RFO Premises.  The following shall be defined as “Non-RFO Periods”:

	
(i)  

	
the period between the date twenty (20) months prior to the expiration of the Extended Term and the last day of the Extended Term, unless Tenant has unconditionally extended the Lease Term for the Second Extended Term, in which event, such period shall not be deemed to be a Non-RFO Period (i.e. and Tenant shall have the right to lease such RFO Premises in accordance with this Section 10); and

	
(ii)  

	
the period between the date twenty (20) months prior to the expiration of the Second Extended Term and the last day of the Second Extended Term.

(4)           Rent.  If Tenant elects to lease the RFO Premises as set forth above, the Annual Fixed Rent of such RFO Premises shall be the Prevailing Fair Market Rent (as defined and determined in accordance with Exhibit G of the Lease) of such RFO Premises, in its “as-is” condition as of the Term Commencement Date in respect of such RFO Premises.  There shall be no Rent Credits applicable to the RFO Premises.  Tenant’s Proportionate Share shall be increased proportionately as a result of the addition of the rentable square feet of the RFO Premises to the rentable square feet of the Premises, and Tenant shall commence paying Tenant’s Proportionate Share of Operating Expenses and any other Additional Rent allocable to the RFO Premises as of the Commencement Date for the RFO Premises.

(5)           Condition of RFO Premises.  Tenant shall take such RFO Premises “as-is” in its then (i.e., as of the date of delivery) state of construction, finish, and decoration (but broom clean and free of the prior occupant’s personal property), without any obligation on the part of Landlord to construct or prepare any RFO Premises for Tenant’s occupancy, and without any obligation on the part of Landlord to provide any Landlord 

 

  

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Contribution or other funds towards the preparation of such RFO Premises for Tenant’s occupancy.

D.           Execution of Lease Amendments

Notwithstanding the fact that Tenant’s exercise of the above-described option to lease the RFO Premises shall be self-executing, as aforesaid, the parties hereby agree promptly to execute a lease amendment reflecting the addition of any RFO Premises, except that the Annual Fixed Rent payable in respect of such RFO Premises may not yet have been determined, and therefore may not be able to be set forth in such amendment. In such event, at the time that such Annual Fixed Rent is determined, the parties shall execute a written agreement confirming the same.  The execution of such lease amendment shall not be deemed to waive any of the conditions to Tenant’s exercise of the herein RFO, unless otherwise specifically provided in such lease amendment.

11.           EXTENSION OPTION

A.           Except as set forth in this Section 11, Tenant shall have no right to extend the term of the Lease with respect to any portion of the Remaining Premises beyond November 30, 2022.  Section 3.2 of the Lease (Extension Options) is hereby deleted in its entirety, and the below-listed Section 3.2 is hereby substituted therefor:

“3.2           EXTENSION OPTION

A.           On the conditions (which conditions Landlord may waive by written notice to Tenant at any time) that (i) both at the time of Tenant’s Exercise Notice, as hereinafter defined, and as of the commencement of the Second Extended Term, as hereinafter defined, there exists no Event of Default of Tenant, (ii) this Lease is still in full force and effect, and (iii) Tenant is in compliance with the Occupancy Condition, Tenant, at Tenant’s election, shall have the right (the “Extension Option”) to extend the Term of the Lease for one (1) additional period of ten (10) years (i.e. commencing as of December 1, 2022 and expiring as of November 30, 2032) (the “Second Extended Term”) with respect to either (x) the entirety of the Premises then demised to Tenant, or (y) only Buildings A and B as hereinafter set forth.  The Second Extended Term shall be upon all the same terms, conditions, covenants and agreements herein which were in effect immediately preceding the commencement of the Second Extended Term, except that:  (i) the Annual Fixed Rent for the Second Extended Term shall be equal to ninety-five percent (95%) of the Prevailing Fair Market Rent as determined and defined in Exhibit G of the Lease, and (ii) there shall be no further option to extend the Term other than the Second Extended Term provided in this Section 3.2.

B.           Notwithstanding any implication to the contrary, Landlord has no obligation to make any additional payment to Tenant in respect of any construction allowance or the like or to perform any work to the Premises as a 

 

  

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result of the exercise by Tenant of the Extension Option under this Section 3.2.

C.           If Tenant desires to exercise the Extension Option, then Tenant shall give notice (“Extension Exercise Notice”) to Landlord exercising such Extension Option not earlier than December 1, 2020, or later than March 31, 2021.  Within fifteen (15) days after Landlord’s receipt of the Exercise Notice, Landlord shall provide Landlord’s quotation (“Landlord’s Rent Quotation”) to Tenant of Annual Fixed Rent (the “Extension Rent”) payable by Tenant with respect to the Second Extended Term (i.e., 95% of the Prevailing Fair Market Rent for the Second Extended Term).  If Tenant does not object to Landlord’s Rent Quotation in writing (“Tenant’s Objection Notice”) on or before the date (“Extension Period End Date”) which is the later of: (i) the date thirty (30) days after Tenant gives Landlord the Extension Exercise Notice (ii) or fifteen (15) days after Tenant’s receipt of Landlord’s Rent Quotation, Tenant shall be deemed to have accepted the Extension Rent set forth in Landlord’s Rent Quotation.

If Tenant disagrees with Landlord’s Rent Quotation, Tenant may promptly notify Landlord in writing of such disagreement, and the parties shall negotiate, in good faith, to reach agreement on the Extension Rent during the period (the “Extension Negotiation Period”) ending as of the Extension Period End Date.  If the parties have not entered into a written agreement on the Extension Rent by the end of the Extension Negotiation Period, then Tenant shall have the right, by written notice to Landlord on or before the expiration of the Extension Negotiation Period, either to: (x) withdraw its Exercise Notice (unless Tenant does not have the right to withdraw its Exercise Notice, as provided in Section 10C(3)(c)) or (y) submit such dispute to binding broker determination (the “Broker Determination”) as to the Prevailing Fair Market Rent (as defined in Exhibit G of the Lease) for the Second Extended Term in accordance with Exhibit G of the Lease.  If Tenant does not timely rescind its Exercise Notice or request the Broker Determination, then Tenant shall have no further right to withdraw its Exercise Notice, the Term of the Lease shall be extended for the Second Extended Term, and the Annual Fixed Rent during the Second Extended Term shall be equal to Landlord’s Rent Quotation.

D.           If the Term of the Lease is extended for the Second Extended Term, as aforesaid: (i) all references herein to the Lease Term or the Term of this Lease shall be construed as referring to the Lease Term, as so extended, unless the context clearly otherwise requires, and (ii) no further agreements or documentation shall be necessary to confirm such extension of the Term; however, Landlord and Tenant agree to enter into an instrument in writing setting forth the Annual Fixed Rent for the Second Extended Term as determined in the relevant manner set forth in this Section 3.2.”

B.           Occupancy Condition. For purposes of this Section 11 and of Section 10 above, Tenant shall be deemed to have satisfied the “Occupancy Condition” if: (i) Tenant has not (except for an assignment permitted without Landlord’s consent under Section 12.2 of the Lease) assigned its interest in the Lease or (ii) Tenant has not (except for subleases permitted without Landlord’s consent under 

 

  

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Section 12.2 of the Lease) subleased more than 125,000 rentable square feet of the Premises.

12.           OMITTED.

13.           SIGNAGE

A.           Tenant’s Existing Signage.  With the exception of existing Tenant-specific signage located within the Common Areas, Landlord agrees that for so long as there is no Event of Default by Tenant under this Lease and Tenant is leasing at least 195,160 rentable square feet of space in the Buildings, Tenant shall continue to have the right to maintain its existing signage program, including its existing exterior Building and street monument signage pursuant to the provisions of Section 16.28 of the Lease.  Tenant’s signage rights are personal to Parametric Technology Corporation and any assignee or subtenant for whom Landlord’s consent is not required pursuant to Section 12.2 of the Lease, and may not be transferred to any other assignee or subtenant.  If and at the time that Tenant ceases to lease any portion of Building c, Landlord shall have the right to install any signage which it determines is appropriate identifying the Building C and/or any of the Building in, on, or about Building C and on Kendrick Street.

B.           Landlord’s Signage Rights

(1)           Entrance to Property.  Landlord shall have the right to add an additional Property-specific monument sign located on the west side of the entrance to 140 Kendrick Street.  Such monument sign will not include the names of any tenant at the Property.

(2)           Building C.  Landlord shall have the right to install an additional monument sign located outside of Building C’s east entrance.  Such sign will display the names of tenants at the Property other than Tenant.  Landlord shall have no right to install any exterior signage displaying the names of other tenants at the Property other than such monument sign at the east entrance to Building C.

14.           PARKING

A.           During the Extended Term and the Second Extended Term, as applicable, Landlord shall provide to Tenant, free of charge (other than the costs of operating, maintaining, and repairing the same, which will be included in Operating Expenses), monthly parking privileges in the Garage and the surface parking spaces on the Land (collectively, the “Parking Facility”) at the rate of 3.5 parking spaces per 1,000 rentable square feet of the Premises (“Tenant’s Parking Allocation”) for the parking of motor vehicles.  In the event that the Rentable Floor Area of the Premises increases or decreases at any time during the Lease Term, the number of parking privileges provided to Tenant hereunder shall be increased or reduced proportionately, as the case may be.  Tenant shall have no right to sublet, assign, or otherwise transfer said parking privileges other than to 

 

  

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subtenants and assignees who are permitted pursuant to the provisions of the Lease.  Except as set forth below, said parking privileges will be on an unassigned, non-reserved basis, and shall be subject to the rules and regulations from time to time in force.

B.           Included in Tenant’s Parking Allocation, Tenant shall have fourteen (14) reserved parking spaces (the “Reserved Parking”).  The Reserved Parking shall be located in Tenant’s existing exclusive executive parking area in the Garage.

C.           Landlord agrees that, subject to causes beyond Landlord’s reasonable control, the parking areas shall contain a visitor parking area (which shall be available to all visitors of the Property) containing at least fifteen (15) parking spaces.

D.           Tenant agrees that it and all persons claiming by, through and under it, shall at all times abide by all reasonable rules and regulations promulgated by Landlord and delivered to Tenant in writing with respect to the Parking Facility in accordance with Section 20.  Landlord assumes no responsibility whatsoever for loss or damage due to fire or theft or otherwise to any automobile or to any personal property therein, however caused, and Tenant agrees, upon request from the Landlord, from time to time, to notify its officers, employees and agents then using any of the parking privileges provided for herein, of such limitation of liability.  Tenant further acknowledges and agrees that a license only is hereby granted, and no bailment is intended or shall be created.

15.           COMPETITORS OF TENANT

Landlord agrees that for so long as (i) there is no Event of Default under the Lease, (ii) this Lease is in full force and effect, and (iii) Parametric Technology Corporation, and its assignees and subtenants (if any) for whom Landlord’s consent is not required pursuant to Section 12.2 of the Lease, are occupying at least 195,160 rentable square feet of space in the Buildings, in the aggregate, Landlord will not enter into another lease of space in the Surrendered Tenanted Premises with any of the following competitors of Tenant:  Oracle, SAP, Autodesk, Siemens, and Dassault.

16.           BROKER

A.           Tenant represents and warrants that it has not directly or indirectly dealt, with respect to the leasing of space in the Buildings with any broker, other than FHO Partners, LLC (“Broker”) or had its attention called to the Premises or other space to let in the Buildings, by anyone other than Broker.  Tenant agrees to defend, exonerate and save harmless and indemnify Landlord and anyone claiming by, through or under Landlord against any claims, other than by Broker, for a commission arising in breach of the representation and warranty set forth in the immediately preceding sentence.

B.           Landlord represents and warrants that it has not directly or indirectly dealt, with respect to the leasing of space in the Building with any broker, other than Broker or had its attention called to the Premises or other space to let in the Building, etc., by anyone other than Broker.  Landlord agrees to defend, exonerate and save harmless and 

 

  

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indemnify Tenant and anyone claiming by, through or under Tenant against any claims, other than by Broker, for a commission arising in breach of the representation and warranty set forth in the immediately preceding sentence.

C.           Landlord shall be solely responsible for the payment of brokerage commissions to Broker in connection with this Third Amendment pursuant to a separate agreement between Landlord and the Broker.

17.           SUBORDINATION, NONDISTURBANCE, AND ATTORNMENT AGREEMENT

Landlord shall endeavor to secure and deliver a Subordination, Nondisturbance, and Attornment Agreement with respect to the Lease, as amended by this Third Amendment, from Landlord’s current mortgagee in the customary recordable form required by such mortgagee as amended by such commercially reasonable changes as Tenant may request.

18.           LETTER OF CREDIT

A.           General Letter of Credit.  Landlord and Tenant hereby acknowledge that pursuant to Section 16.26 of the Lease, Landlord is presently holding the General Letter of Credit in the amount of Three Million ($3,000,000) Dollars (“Existing General Letter of Credit”).  Tenant shall, at the time that it executes and delivers this Third Amendment to Landlord, deliver to Landlord either: (i) an amendment to the Existing General Letter of Credit, which shall be in form and substance satisfactory to Landlord, reducing the amount of the Existing General Letter of Credit to Two Million ($2,000,000.00) Dollars and confirming that the Existing General Letter of Credit secures Tenant’s obligations under the Lease, as amended by this Third Amendment, or (ii) a new General Letter of Credit (“New General Letter of Credit”) satisfying the requirements of Section 16.26(A) of the Lease in the amount of Two Million ($2,000,000.00) Dollars securing Tenant’s obligations under the Lease, as amended by this Third Amendment.  If Tenant delivers a new General Letter of Credit to Landlord, Landlord shall promptly return the Existing General Letter of Credit to Landlord.  The Existing General Letter of Credit, as amended as aforesaid, and the New General Letter of Credit are each hereinafter referred to in this Section 18A as a “General Letter of Credit”.  Landlord shall hold the General Letter of Credit in accordance with Section 16.26 of the Lease, except that there shall be no reductions in the amount of the General Letter of Credit (i.e. Section 16.26B of the Lease is hereby deleted in its entirety and is of no further force and effect).

B.           TI Letter of Credit.  The parties acknowledge that the TI Letter Credit has expired and the provisions of Section 16.26(D) of the Lease are no longer in force or effect.

19.           CAFETERIA

  

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A.           Landlord and Tenant acknowledge that there is currently a Cafeteria in Building A (the “Cafeteria”).  As provided in Section 1D above, such Cafeteria is to become part of the Common Areas.  Landlord hereby agrees that so long as at least 160,000 square feet of the Property is leased and occupied, Landlord shall continue to operate the Cafeteria, with service and choices of at least the same quality as those provided as of the date hereof, for the benefit of tenants of the Property.  The cafeteria vendor and any changes or additions to the quality or type of food and service to be provided in the Property shall be at the reasonable discretion of Landlord, with appropriate input from Tenant.  The Cafeteria shall provide food and beverages for sale during the hours of at least 7:30 a.m. to 10 a.m. and 11:30 a.m. to 2 p.m. on business days, and such additional hours, if any, as Landlord may elect to operate same (the “Cafeteria Operation Hours”).  The Cafeteria may be operated, at Landlord’s election, either by personnel of Landlord or a tenant, contractor, or agent selected by Landlord.

B.           Subject to reasonable rules and regulations promulgated by Landlord or the operator of the Cafeteria in accordance with Section 20 below, Tenant shall have access to the Cafeteria during all Cafeteria Operation Hours.  In addition, Tenant shall have the non-exclusive right, in common with other tenants at the Property, and subject to Landlord’s right to schedule such use to accommodate the needs of Tenant and the other occupants of the Property, to reserve the Cafeteria on an as-needed basis for private meetings, functions, etc.: (i) after normal business hours, and (ii) during normal business hours, excluding the hours between 8 a.m. and 10 a.m. and between 11:30 a.m. to 2 p.m. (the “Restricted Hours”), notwithstanding the limitations set forth in subsection (ii), Tenant shall have the right, subject to Landlord’s right to schedule such use to accommodate the needs of Tenant and the other occupants of the Property, to reserve the Cafeteria at any time during the day, including the Restricted Hours (but not between noon and 2 p.m.), as needed for Tenant’s employee meetings, provided such employee meetings shall be limited to no more than once per calendar quarter and not more than ninety (90) minutes each time and Tenant shall give Landlord at least 30 days advance notice thereof.

C.           The net cost to Landlord to operate the Cafeteria (i.e., the total cost to conduct such operation less the total revenue generated by such operation) shall be included in Operating Expenses.

20.           RULES AND REGULATIONS

Tenant will faithfully observe and comply with the reasonable rules and regulations as Landlord hereafter at any time or from time to time may make and for which Landlord provides at least five (5) business days’ prior notice in writing to Tenant (referred to collectively herein as “Rules and Regulations”), which in the reasonable judgment of Landlord shall be necessary for the reputation, safety, care or appearance of the Property, or the preservation of good order therein, or the operation or maintenance of the Property, or the equipment thereof, or the comfort of tenants or others at the Property, provided, however, that: (i) in the case of any conflict between the provisions of the Lease and any such Rules and Regulations, the provisions of the Lease shall control, and 

 

  

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(ii) such Rules and Regulations shall not be discriminatory against Tenant in either enforcement or effect.   Landlord shall not be liable to Tenant for violation of the Rules and Regulations by any other tenant, its servants, employees, agents, contractors, visitors, invitees or licensees, subject to the provisions of Section 16.3 of the Lease.

 

21.           SELF-HELP

A.           Effective as of the Effective Reduction Date, for the purposes of Section 15.6A(a) a “Landlord Default” shall be defined and limited to any service, maintenance, repair or other like obligation that Landlord is obligated to provide or perform pursuant to the provisions of the Lease, and Section 15.6B (Landlord Cure Period) of the Lease shall be deleted in its entirety and the following shall be substituted in its place:

“B.           Landlord Cure Period.  For the purposes of Paragraph A of this Section 15.6, the “Landlord Cure Period” shall be defined as follows:

(1)           In the event of an emergency threatening life or property, or Tenant’s interest in this Lease, three (3) business days after receipt by Landlord of written notice from Tenant of such Landlord Default;

(2)           In the event of any other Landlord Default (a “Non-Emergency Landlord Default”), forty-five (45) days after receipt by Landlord of written notice from Tenant of such Non-Emergency Landlord Default, subject to the provisions of subsection (4) hereof;

(3)           Notwithstanding the provisions of subsection (2) hereof, in the event of a Non-Emergency Landlord Default which affects any structural element of Building C, including the roof thereof, or any building system serving both the portion of the Premises within Building C and the Surrendered Tenant Premises (a “Building Wide Landlord Default”), Tenant shall not have the right to exercise the self-help rights provided for in Paragraph A of this Section 15.6 unless Tenant has first given a second notice to Landlord (a “Second Landlord Default Notice”), stating in bold face, all capital letters at the top thereof: “WARNING:  THIS CONSTITUTES A SECOND LANDLORD DEFAULT NOTICE TO LANDLORD OF A BUILDING WIDE LANDLORD DEFAULT.  IF LANDLORD FAILS TO COMMENCE TO CURE SUCH BUILDING WIDE LANDLORD DEFAULT WITHIN FIVE (5) BUSINESS DAYS AFTER LANDLORD’S RECEIPT OF THIS SECOND LANDLORD DEFAULT NOTICE, LANDLORD SHALL CONCLUSIVELY BE DEEMED TO HAVE CONSENTED TO TENANT’S EXERCISE OF THE SELF-HELP RIGHTS SET FORTH IN SECTION 15.6A OF THE LEASE WITH RESPECT TO SUCH BUILDING WIDE LANDLORD DEFAULT.”

(4)           Notwithstanding the foregoing, in the event that Landlord has commenced to cure any Non-Emergency Landlord Default, including any Building Wide Landlord Default, within forty-five (45) days after Tenant’s notice 

 

  

24

  

thereof (or within five (5) business days after any Second landlord Default Notice, in the case of a Building Wide Landlord Default), and so long as Landlord thereafter diligently prosecutes such cure to completion, the forty-five (45) day period (or, in the case of a Building Wide Landlord Default, the five (5) business day period) shall be extended to such period of time as Landlord reasonably requires to cure such Non-Emergency Landlord Default.”

B.           Notwithstanding the provisions of Paragraph C of Section 15.6 of the Lease, which provide Tenant with at least thirty (30) days prior notice (except in an emergency) before Landlord has the right to perform an obligation which Tenant is obligated to perform under the Lease at Tenant’s expense, if Tenant fails to maintain any Common Camera in good condition, as defined in Section 1C above, Landlord shall have the right to cure such default by Tenant if Tenant fails to cure such default within twenty-four (24) hours after Landlord gives Tenant notice of such default.

22.           FITNESS CENTER

Landlord and Tenant acknowledge that there is currently a Fitness Center in Building C (the “Fitness Center”).  Landlord hereby agrees that so long as at least 100,000 square feet of the Property is leased and occupied, Landlord shall continue to operate the Fitness Center with facilities and equipment of at least the same quality as those provided as of the completion of Landlord’s Base Building Work for the benefit of tenants of the Property. The parties acknowledge and agree that the costs of the maintenance, repairs and replacements (subject to amortization of any capital expenditures) of the fitness center are components of Operating Costs.  Landlord reserves the right to impose reasonable rules and regulations relating to the use of the Fitness Center subject to and in accordance with Section 20 above, including, without limitation, requiring each user of the Fitness Center to sign a waiver of liability in favor of Landlord in such form as may be required by Landlord, in its sole discretion.  Landlord intends that the Fitness Center will not be manned but agrees that Tenant, at its sole cost and expense and without liability to Landlord, may have a trainer or other person in attendance at the Fitness Center (referred to herein as “Trainer”) from time to time.  Subject to Landlord’s reasonable rules and regulations and scheduling requirements, Tenant’s Trainer shall have the right to use the office and training room in the Fitness Center for the purposes for which they were intended.

23.           SUBLETTING AND ASSIGNMENT

The following shall be added as a new clause (4) at the end of Section 12.4B of the Lease (the provision which sets forth, without limitation, reasonable bases for Landlord’s withholding its consent to proposed subleases and assignments):

“(4)           the proposed subtenant is either: (i) a Restricted Tenant, as hereinafter defined, or (ii) a prospective tenant with whom Landlord has negotiated to lease space at the Property during the three month period immediately prior to Landlord’s receipt of Tenant’s request for Landlord’s consent.  A “Restricted 

 

  

25

  

Tenant” shall be defined as any tenant of premises at the Property, except for a tenant who satisfies all of the following criteria:

(a)           Such tenant desires to sublease premises from Tenant for expansion purposes only; and

(b)           Such tenant's occupancy of the Tenant’s premises will not, either directly or indirectly, cause a vacancy in the premises which such tenant then occupies at the Property; and

(c)           Such tenant's need, as to the size of premises and length of term, cannot then (i.e., at the time that Tenant requests Landlord's consent to a sublease or assignment to such tenant) be satisfied by Landlord with other space at the Property.

24.           PAYMENT PROCEDURES WITH RESPECT TO REAL ESTATE TAXES

Effective as of the Execution Date of this Third Amendment, Section 6.3C of the Lease shall be deleted in its entirety and shall be of no further force and effect (i.e. Real Estate Taxes shall be included in Operating Expenses and Tenant shall be required to make monthly estimated payments to Landlord on account of Real Estate Taxes, as provided in Section 6.3 of the Lease).  If requested by Tenant in writing, from time to time, Landlord shall provide to Tenant copies of tax bills on the basis of which Real Estate Taxes are included in Operating Expenses.

25.           UNUSED CONSTRUCTION CONTINGENCY

Landlord and Tenant acknowledge and agree that as of the date hereof all remaining amounts in the Reserve Fund under Section 4.6 of the Lease shall be retained by Landlord for the benefit of Landlord.

26.           INAPPLICABLE LEASE PROVISIONS

Exhibits B-1 (Base Building Work Specifications), B-2 (Tenant Improvement Work Plans and Specifications), B-3 (Plans and Specifications for Off-Site Mitigation Work), and B-4 (Qualifications and Assumptions with respect to Landlord’s Work) of the Lease shall have no applicability with respect to this Third Amendment.

27.           RECORDING

At the request of either party, the other party shall execute and deliver a mutually acceptable amendment and restatement of the existing Notice of Lease with respect to the Lease, evidencing the extension of the Term of the Lease and other amendments to the Lease set forth herein, in form recordable and complying with applicable law and otherwise in the form required by Section 16.8 of the Lease.

  

26

  

28.           MISCELLANEOUS

Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to such terms in the Lease.  All other terms and conditions of the Lease, as hereby amended, are ratified, confirmed and approved in all respects, and the Lease, as amended hereby, shall remain in full force and effect, as so amended.

[Signatures on following page]

  

27

  

EXECUTED UNDER SEAL as of the date first above written.

LANDLORD:

	
BOSTON PROPERTIES LIMITED PARTNERSHIP

	  	  	  
	
By:

	  	
/S/ David C. Provost

	  	
Name:

	
David C. Provost

	  	
Title:

	
Senior Vice President

	  	  	
   Hereunto Duly Authorized

TENANT:

	
PARAMETRIC TECHNOLOGY CORPORATION

	  	  	  
	
By:

	  	
/S/ James E. Heppelmann

	  	
Name:

	
James E. Heppelmann

	  	
Title:

	
President and Chief Executive Officer

	  	  	
   Hereunto Duly Authorized

28ex10_2.htm

 

EMPLOYMENT AGREEMENT

THIS AGREEMENT (the “Agreement”) to be effective as of October 22, 2010 (the “Effective Date”), between Omega Healthcare Investors, Inc. (the “Company”), and C. Taylor Pickett (the “Executive”).

 

INTRODUCTION

The Company and the Executive are parties to an employment agreement dated September 1, 2004, amended May 7, 2007 and December 16, 2008, and now desire to enter into this Agreement to replace and supercede the existing employment agreement.

 

NOW, THEREFORE, the parties agree as follows:

 

1. Terms and Conditions of Employment.

 

(a) Employment.  During the Term, Company will employ the Executive, and the Executive will serve as the Chief Executive Officer of the Company on a full-time basis and will have such responsibilities and authority as may from time to time be assigned to the Executive by the Board of Directors of the Company.  In this capacity, Executive will provide unique services to the Company and be privy to the Company’s Confidential Information and Trade Secrets.  The Executive will report to the Board of Directors of the Company.  Except to the extent prohibited by law or applicable listing requirements, the Executive will also be permitted to attend all meetings of the Board of Directors and executive sessions thereof (except for portions of meetings or executive sessions involving discussions relating to the Executive’s employment, including without limitation, his compensation and performance (“Executive’s Employment Issues”)) and shall be provided copies of all materials provided to the Board of Directors (except those relating to Executive’s Employment Issues).  If the Executive is or is hereafter elected to serve as a member of the Board of Directors of the Company, he shall so serve without additional compensation beyond that set forth in this Agreement, and shall continue to so serve for so long as he is thereafter elected to such position by the Company’s stockholders.  The Executive’s primary office will be at the Company’s headquarters in such geographic location within the United States as may be determined by the Company.

 

(b) Exclusivity.  Throughout the Executive’s employment hereunder, the Executive shall devote substantially all of the Executive’s time, energy and skill during regular business hours to the performance of the duties of the Executive’s employment, shall faithfully and industriously perform such duties, and shall diligently follow and implement all management policies and decisions of the Company; provided, however, that this provision is not intended to prevent the Executive from managing his investments, so long as he gives his duties to the Company first priority and such investment activities do not interfere with his performance of duties for the Company.  Notwithstanding the foregoing, other than with regard to the Executive’s duties to the Company, the Executive will not accept any other employment during the Term, perform any consulting services during the Term, or serve on the board of directors or governing body of any other business, except with the prior written consent of the Board of Directors.  Further, the Executive has disclosed on Exhibit A hereto, all of his nonpublic company healthcare related investments, and agrees during the Term not to make any investments during the term hereof except as a passive investor.  The Executive agrees during the Term not to own directly or indirectly equity securities of any public healthcare related company (excluding the Company) that represents five percent (5%) or more of the value of voting power of the equity securities of such company.

 

2. Compensation.

 

(a) Base Salary.  The Company shall pay the Executive base salary of $600,000 per annum effective January 1, 2010, which base salary will be subject to review effective as of January 1, 2011, and at least annually thereafter by the Company for possible increases.  The base salary shall be payable in equal installments, no less frequently than twice per month, in accordance with the Company’s regular payroll practices.

 

(b) Bonus.

 

(i) The Executive shall be eligible to earn an annual bonus of 150%, 125% and 100%, respectively, for high, target and threshold performance, respectively, of the Executive’s annual base salary (the “Bonus”), which Bonus, if any, shall be payable (A) promptly following the availability to the Company of the required data to calculate the Bonus for the year for which the Bonus is earned (which data may in the Company’s discretion include audited financial statements), and (B) by no later than March 15 of the year following the year for which the Bonus is earned.

 

(ii) The Bonus metrics, the relative weighting of the bonus metrics and the specific threshold, target and high levels of each metric for 2010 are set forth on Exhibit B. The performance metrics and the weighting set forth on Exhibit B, but not the specific required levels at threshold, target and high, will continue to apply for 2011 and each subsequent year through 2013 unless the Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”) changes the metrics or the weighting by no later than the first ninety (90) days of the year in which such change is to occur.  If the Compensation Committee changes the metrics or the weighting with respect to a year, it will communicate the new metrics and the weighting, and the required levels for threshold, target and high performance to the Executive promptly after it approves such changes (which approval must occur no later than the first ninety (90) days of the year in which the change is made).  After any such change is made, the changed metrics and the weighting, but not the required levels for threshold, target and high performance, will continue to apply to each subsequent year through 2013, unless the Compensation Committee takes further action to change the metrics or weighting in the same manner described above.  Regardless of whether or not the Compensation Committee changes the metrics or the weighting for a year, it will establish the required levels for threshold, target and high performance for the year by no later than the first ninety (90) days of the year, and promptly thereafter communicate the same to the Executive.  All required levels for threshold, target and high performance for any year that are based on objective criteria of the type contained in the Company’s budget will be based on the Company’s budget for the subject year that has been approved by the Board of Directors.  Notwithstanding any of the foregoing, the Compensation Committee reserves the right to make adjustments at any time (including without limitation, after the first ninety (90) days of the year to which the bonus criteria apply) to the bonus metrics, the relative weighting of the bonus metrics and the specific threshold, target and high levels of each metric.

 

(iii) The Executive will be eligible for a prorated Bonus, prorated in accordance with procedures established in the Company’s discretion, if the Executive terminates employment during a calendar year due to death.  In addition, if the Term is not extended beyond December 31, 2013, the Executive will be eligible for a Bonus for 2013 if he remains employed through December 31, 2013.  Otherwise, the Executive will be eligible for a Bonus for any calendar year only if the Executive remains employed by the Company on the date the Bonus is paid, unless otherwise provided by the terms of the applicable bonus plan or the Compensation Committee.

 

(c) Long-Term Incentive Compensation.  Subject to the Executive’s continued employment through the effective date of each grant specified below, the Executive shall be entitled to the following grants:

 

(i) effective January 1, 2011, a grant of restricted stock pursuant to an agreement in substantially the form attached hereto as Exhibit C (the “Restricted Stock Agreement”);

 

(ii) effective January 1, 2011, a grant of performance restricted stock units for the performance period January 1, 2011 through December 31, 2013 with additional quarterly vesting period through December 31, 2014 pursuant to an agreement in substantially the form attached hereto as Exhibit D (the “Multi-year PRSU Agreement”); and

 

(iii) effective on each of January 1, 2011, January 1, 2012, and January 1, 2013, a grant of performance restricted stock units pursuant to an agreement in substantially the form attached hereto as Exhibit E (the “Annual PRSU Agreement”).

 

The number of shares of stock subject to the Restricted Stock Agreement and the numbers of units subject to the Multi-year PRSU Agreement and the Annual PRSU Agreement shall be determined in accordance with Exhibit F hereto.

 

Notwithstanding the foregoing, in the event of any conflict between the terms of the Restricted Stock Agreement, the Multi-year PRSU Agreement or the Annual PRSU Agreement described in this Agreement and Exhibit F and the actual Restricted Stock Agreement, the actual Multi-year PRSU Agreement or the actual Annual PRSU Agreement, the actual Restricted Stock Agreement, the actual Multi-year PRSU Agreement or the actual Annual PRSU Agreement shall govern.  The Executive shall be entitled to any other long-term compensation provided by the Company to the extent provided by, and subject to the terms of, any plan, program, or agreement applicable to the Executive.  Nothing herein shall supersede the terms and conditions of any previously granted long-term or equity incentives.

 

(d) Expenses.  The Executive shall be entitled to be reimbursed in accordance with Company policy for reasonable and necessary expenses incurred by the Executive in connection with the performance of the Executive’s duties of employment hereunder; provided, however, the Executive shall, as a condition of such reimbursement, submit verification of the nature and amount of such expenses in accordance with the reasonable reimbursement policies from time to time adopted by the Company.  In the case of taxable reimbursements or in-kind benefits that are subject to Section 409A of the Internal Revenue Code, the policy must provide an objectively determinable nondiscretionary definition of expenses eligible for reimbursement or in-kind benefits to be provided, the expense must be incurred or in-kind benefit must be provided during the period that the Executive is employed by or performing services for the Company, unless a different objectively and specifically prescribed period is specified under the applicable policy, the amount of expenses that are eligible for reimbursement or in-kind benefits provided during the Executive’s taxable year may not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable year, the reimbursement must be paid to the Executive on or before the last day of the Executive’s taxable year following the taxable year in which the expense was incurred, and the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.

 

(e) Paid Time Off.  The Executive shall be entitled to paid time off in accordance with the terms of Company policy.

 

(f) Benefits.  In addition to the benefits payable to the Executive specifically described herein, the Executive shall be entitled to such benefits as generally may be made available to all other Executives of the Company from time to time; provided, however, that nothing contained herein shall require the establishment or continuation of any particular plan or program.

 

(g) Withholding.  All payments pursuant to this Agreement shall be reduced for any applicable state, local, or federal tax withholding obligations.

 

(h) Insurance and Indemnification.  The Executive shall be entitled to indemnification, including advancement of expenses (if applicable), in accordance with and to the extent provided by the Company’s bylaws and articles of incorporation, and any separate indemnification agreement, if any.

 

3. Term, Termination and Termination Payments.

 

(a) Term.  The term of this Agreement (the “Term”) shall begin as of the Effective Date and shall continue through December 31, 2013, unless sooner terminated pursuant to Section 3(b) hereof.

 

(b) Termination.  This Agreement and the employment of the Executive by the Company hereunder shall only be terminated: (i) by expiration of the Term; (ii) by the Company without Cause; (iii) by the Executive for Good Reason; (iv) by the Company or the Executive due to the Disability of the Executive; (v) by the Company for Cause; (vi) by the Executive for other than Good Reason or Disability, upon at least sixty (60) days prior written notice to the Company; or (vii) upon the death of the Executive.  Notice of termination by any party shall be given in writing prior to termination and shall specify the basis for termination and the effective date of termination.  Further, notice of termination for Cause by the Company or Good Reason by the Executive shall specify the facts alleged to constitute termination for Cause or Good Reason, as applicable.  Except as provided in Section 3(c), the Executive shall not be entitled to any payments or benefits after the effective date of the termination of this Agreement, except for base salary pursuant to Section 2(a) accrued up to the effective date of termination, any unpaid earned and accrued Bonus, if any, pursuant to Section 2(b), pay for accrued but unused vacation that the Employer is legally obligated to pay Employee, if any, and only if the Employer is so obligated, as provided under the terms of any other employee benefit and compensation agreements or plans applicable to the Executive, expenses required to be reimbursed pursuant to Section 2(d), and any rights to payment the Executive has under Section 2(h).

 

(c) Termination by the Company without Cause or by the Executive for Good Reason.

 

(i) If the employment of the Executive is terminated by the Company without Cause or by the Executive for Good Reason, the Company will pay the Executive three times the sum of (A) his base salary pursuant to Section 2(a) hereof, plus (B) an amount equal to the average annual Bonus paid to the Executive for the three most recently completed calendar years prior to termination of employment; provided, however, that if the Executive’s termination of employment occurs before the Bonus, if any, for the most recently completed calendar year is payable, then the averaging will be determined by reference to the three most recently completed calendar years before that calendar year.  Such amount shall be paid in substantially equal annual installments not less frequently than twice per month over the thirty-six (36) month period commencing as of the date of termination of employment, provided that the first payment shall be made sixty (60) days following termination of employment and shall include all payments accrued from the date of termination of employment to the date of the first payment; provided, however, if the Executive is a “specified employee” within the meaning of Section 409A of the Internal Revenue Code, as amended (the “Code”), at the date of his termination of employment then, to the extent required to avoid a tax under Code Section 409A, payments which would otherwise have been made during the first six (6) months after termination of employment shall be withheld and paid to the Executive during the seventh month following the date of his termination of employment.  Notwithstanding the foregoing, if the total payments to be paid to the Executive hereunder, along with any other payments to the Executive, would result in the Executive being subject to the excise tax imposed by Code Section 4999, the Company shall reduce the aggregate payments to the largest amount which can be paid to the Executive without triggering the excise tax, but only if and to the extent that such reduction would result in the Executive retaining larger aggregate after-tax payments.  The determination of the excise tax and the aggregate after-tax payments to be received by the Executive will be made by the Company after consultation with its advisors and in material compliance with applicable law.  If payments are to be reduced, the payments made latest in time will be reduced first and if any payments are to be made at the same time, non-cash payments will be reduced before cash payments.

 

(ii) If the Term is not extended or the Term is not extended and the Company or the Executive terminates the Executive’s employment upon or following expiration of the Term, such termination shall not be deemed to be a termination of the Executive’s employment by the Company without Cause or a resignation by Executive for Good Reason.

 

(iii) Notwithstanding any other provision hereof, as a condition to the payment of the amounts in this Section, the Executive shall be required to execute and not revoke within the revocation period provided therein, the Release.  The Company shall provide the Release for the Executive’s execution in sufficient time so that if the Executive timely executes and returns the Release, the revocation period will expire before the date the Executive is required to begin to receive payment pursuant to Section 3(c)(i).

 

(d) Survival.  The covenants in Section 3 hereof shall survive the termination of this Agreement and shall not be extinguished thereby.

 

4. Ownership and Protection of Proprietary Information.

 

(a) Confidentiality.  All Confidential Information and Trade Secrets and all physical embodiments thereof received or developed by the Executive while employed by the Company are confidential to and are and will remain the sole and exclusive property of the Company.  Except to the extent necessary to perform the duties assigned by the Company hereunder, the Executive will hold such Confidential Information and Trade Secrets in trust and strictest confidence, and will not use, reproduce, distribute, disclose or otherwise disseminate the Confidential Information and Trade Secrets or any physical embodiments thereof and may in no event take any action causing or fail to take the action necessary in order to prevent, any Confidential Information and Trade Secrets disclosed to or developed by the Executive to lose its character or cease to qualify as Confidential Information or Trade Secrets.

 

(b) Return of Company Property.  Upon request by the Company, and in any event upon termination of this Agreement for any reason, as a prior condition to receiving any final compensation hereunder (including any payments pursuant to Section 3 hereof), the Executive will promptly deliver to the Company all property belonging to the Company, including, without limitation, all Confidential Information and Trade Secrets (and all embodiments thereof) then in the Executive’s custody, control or possession.

 

(c) Survival.  The covenants of confidentiality set forth herein will apply on and after the date hereof to any Confidential Information and Trade Secrets disclosed by the Company or developed by the Executive while employed or engaged by the Company prior to or after the date hereof.  The covenants restricting the use of Confidential Information will continue and be maintained by the Executive for a period of two years following the termination of this Agreement.  The covenants restricting the use of Trade Secrets will continue and be maintained by the Executive following termination of this Agreement for so long as permitted by the governing law.

 

5. Non-Competition and Non-Solicitation Provisions.

 

(a) The Executive agrees that during the Applicable Period, the Executive will not (except on behalf of or with the prior written consent of the Company, which consent may be withheld in Company’s sole discretion), within the Area either directly or indirectly, on his own behalf, or in the service of or on behalf of others, provide managerial services or management consulting services substantially similar to those Executive provides for the Company to any Competing Business.  As of the Effective Date, the Executive acknowledges and agrees that the Business of the Company is conducted in the Area.

 

(b) The Executive agrees that during the Applicable Period, he will not, either directly or indirectly, on his own behalf or in the service of or on behalf of others solicit any individual or entity which is an actual or, to his knowledge, actively sought prospective client of the Company or any of its Affiliates (determined as of date of termination of employment) with whom he had material contact while he was an Executive of the Company, for the purpose of offering services substantially similar to those offered by the Company.

 

(c) The Executive agrees that during the Applicable Period, he will not, either directly or indirectly, on his own behalf or in the service of or on behalf of others, solicit for employment with a Competing Business any person who is a management level employee of the Company or an Affiliate with whom Executive had contact during the last year of Executive’s employment with the Company.  The Executive shall not be deemed to be in breach of this covenant solely because an employer for whom he may perform services may solicit, divert, or hire a management level employee of the Company or an Affiliate provided that Executive does not engage in the activity proscribed by the preceding sentence.

 

(d) The Executive agrees that during the Applicable Period, he will not make any statement (written or oral) that could reasonably be perceived as disparaging to the Company or any person or entity that he reasonably should know is an Affiliate of the Company.

 

(e) In the event that this Section 5 is determined by a court which has jurisdiction to be unenforceable in part or in whole, the court shall be deemed to have the authority to strike any unenforceable provision, or any part thereof or to revise any provision to the minimum extent necessary to be enforceable to the maximum extent permitted by law.

 

(f) The provisions of this Section 5 shall survive termination of this Agreement, except that if the Executive remains employed by the Company through December 31, 2013 and the Term expires at December 31, 2013, and as a result no severance is payable pursuant to Section 3 of this Agreement, then the provisions of this Section 5 shall also expire at December 31, 2013.

 

6. Remedies and Enforceability.

 

The Executive agrees that the covenants, agreements, and representations contained in Sections 4 and 5 hereof are of the essence of this Agreement; that each of such covenants are reasonable and necessary to protect and preserve the interests and properties of the Company; that irreparable loss and damage will be suffered by the Company should the Executive breach any of such covenants and agreements; that each of such covenants and agreements is separate, distinct and severable not only from the other of such covenants and agreements but also from the other and remaining provisions of this Agreement; that the unenforceability of any such covenant or agreement shall not affect the validity or enforceability of any other such covenant or agreements or any other provision or provisions of this Agreement; and that, in addition to other remedies available to it, including, without limitation, termination of the Executive’s employment for Cause, the Company shall be entitled to seek both temporary and permanent injunctions to prevent a breach or contemplated breach by the Executive of any of such covenants or agreements.

 

7. Notice.

 

All notices, requests, demands and other communications required hereunder shall be in writing and shall be deemed to have been duly given if delivered or if mailed, by United States certified or registered mail, prepaid to the party to which the same is directed at the following addresses (or at such other addresses as shall be given in writing by the parties to one another):

 

	
  

	
If to the Company:

	
Omega Healthcare Investors, Inc.

	
  

	
Suite 3500

	
  

	
200 International Circle

	
  

	
Hunt Valley MD 21030

	
  

	
Attn: Chairman

 

	
  

	
If to the Executive:

	
to the last address the Company

 

	
  

	
has on file for the Executive

 

Notices delivered in person shall be effective on the date of delivery.  Notices delivered by mail as aforesaid shall be effective upon the fourth calendar day subsequent to the postmark date thereof.

 

8. Miscellaneous.

 

(a) Assignment.  The rights and obligations of the Company under this Agreement shall inure to the benefit of the Company’s successors and assigns.  This Agreement may be assigned by the Company to any legal successor to the Company’s business or to an entity that purchases all or substantially all of the assets of the Company, but not otherwise without the prior written consent of the Executive.  In the event the Company assigns this Agreement as permitted by this Agreement and the Executive remains employed by the assignee, the “Company” as defined herein will refer to the assignee and the Executive will not be deemed to have terminated his employment hereunder until the Executive terminates his employment with the assignee.  The Executive may not assign this Agreement.

 

(b) Waiver.  The waiver of any breach of this Agreement by any party shall not be effective unless in writing, and no such waiver shall constitute the waiver of the same or another breach on a subsequent occasion.

 

(c) Governing Law.  This Agreement shall be governed by and construed in accordance with the internal laws of the State of Maryland.  The parties agree that any appropriate state or federal court located in Baltimore, Maryland shall have jurisdiction of any case or controversy arising under or in connection with this Agreement and shall be a proper forum in which to adjudicate such case or controversy.  The parties consent to the jurisdiction of such courts.

 

(d) Entire Agreement.  This Agreement embodies the entire agreement of the parties hereto relating to the subject matter hereof and supersedes all oral agreements, and to the extent inconsistent with the terms hereof, all other written agreements.

 

(e) Amendment.  This Agreement may not be modified, amended, supplemented or terminated except by a written instrument executed by the parties hereto.

 

(f) Severability.  Each of the covenants and agreements hereinabove contained shall be deemed separate, severable and independent covenants, and in the event that any covenant shall be declared invalid by any court of competent jurisdiction, such invalidity shall not in any manner affect or impair the validity or enforceability of any other part or provision of such covenant or of any other covenant contained herein.

 

(g) Captions and Section Headings.  Except as set forth in Section 9 hereof, captions and section headings used herein are for convenience only and are not a part of this Agreement and shall not be used in construing it.

 

9. Definitions.

 

(a) “Affiliate” means any person, firm, corporation, partnership, association or entity that, directly or indirectly or through one or more intermediaries, controls, is controlled by or is under common control with the Company.

 

(b) “Applicable Period” means the period commencing as of the date of this Agreement and ending thirty-six (36) months after the termination of the Executive’s employment with the Company or any of its Affiliates.

 

(c) “Area” means Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Nevada, New Hampshire, New Mexico, North Carolina, Ohio, Oklahoma, Pennsylvania, Rhode Island, Tennessee, Texas, Vermont, Washington, West Virginia and Wisconsin.

 

(d) “Business of the Company” means any business with the primary purpose of leasing assets to healthcare operators, or financing the ownership of, or financing the operation of, senior housing, long-term care facilities, assisted living facilities, retirement housing facilities, or other residential healthcare related real estate.

 

(e) “Cause” the occurrence of any of the following events:

 

(i) willful refusal by the Executive to follow a lawful direction of the Board of Directors of the Company, provided the direction is not materially inconsistent with the duties or responsibilities of the Executive’s position as Chief Executive Officer of the Company, which refusal continues after the Board of Directors has again given the direction in writing;

 

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

 

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

 

(iv) any act by the Executive 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 of Directors of the Company (excluding the Executive), such fraud, material misappropriation, or significant dishonesty could reasonably be expected to have a material  adverse impact on the Company or its Affiliates;

 

(v) commission by the Executive of a felony as reasonably determined by at least two-thirds of the members of the Board of Directors of the Company (excluding the Executive); or

 

(vi) a material breach of this Agreement by the Executive, provided that the nature of such breach shall be set forth with reasonable particularity in a written notice to the Executive who shall have ten (10) days following delivery of such notice to cure such alleged breach, provided that such breach is, in the reasonable discretion of the Board of Directors, susceptible to a cure.

 

(f) “Competing Business” means the entities listed below and any person, firm, corporation, joint venture, or other business that is engaged in the Business of the Company:

 

(i) Ventas, Inc.,

(ii) Nationwide Health Properties,

(iii) Health Care Property Investors Inc.,

(iv) Healthcare Realty Trust,

(v) National Health Investors Inc.,

(vi) National Health Realty, Inc.,

(vii) Senior Housing Properties Trust,

(viii) Health Care REIT Inc.,

(ix) LTC Properties Inc., and

(x) Medical Properties Trust, Inc.

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

 

(h) “Disability” means the inability of the Executive to perform the material duties of his position hereunder due to a physical, mental, or emotional impairment, for a ninety (90) consecutive day period or for aggregate of one hundred eighty (180) days during any three hundred sixty-five (365) day period.

 

(i) “Good Reason” means the occurrence of all of the events listed in either (i) or (ii) below:

 

(i) (A)           the Company materially breaches this Agreement, including without limitation, a material diminution of the Executive’s responsibilities as Chief Executive Officer, as reasonably modified by the Board of Directors from time to time hereafter, such that the Executive would no longer have responsibilities substantially equivalent to those of other chief executive officers at companies with similar revenues and market capitalization;

 

(B) the Executive gives written notice to the Company of the facts and circumstances constituting the breach of the Agreement within ten (10) days following the occurrence of the breach;

 

(C) the Company fails to remedy the breach within ten (10) days following the Executive’s written notice of the breach; and

 

(D) the Executive terminates his employment within thirty (30) days following the Company’s failure to remedy the breach; or

 

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

 

(B) the Executive gives written notice to the Company within ten (10) days following receipt of notice of relocation of his objection to the relocation;

 

(C) the Company fails to rescind the notice of relocation within ten (10) days following the Executive’s written notice; and

 

(D) the Executive terminates his employment within thirty (30) days following the Company’s failure to rescind the notice.

 

(j) “Release” means a comprehensive release, covenant not to sue, and non-disparagement agreement from the Executive in favor of the Company, its executives, officers, directors, Affiliates, and all related parties, in the form attached hereto as Exhibit G; provided, however, the Company may make any changes to the Release as it determines to be necessary only to ensure that the Release is enforceable under applicable law.

 

(k) “Term” has the meaning as set forth in Section 3(a) hereof.

 

(l) “Termination of employment” and similar terms shall refer solely to a “separation from service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended.

 

(m) “Trade Secrets” means information including, but not limited to, technical or nontechnical data, formulae, patterns, compilations, programs, devices, methods, techniques, drawings, processes, financial data, financial plans, product plans or lists of actual or potential customers or suppliers which (i) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

 

IN WITNESS WHEREOF, the Company and the Executive have each executed and delivered this Agreement as of the date first shown above.

 

 

COMPANY:

OMEGA HEALTHCARE INVESTORS, INC.

By:         /s/ Bernard Korman                                                      

Bernard Korman, Chairman

THE EXECUTIVE:

/s/ C. Taylor Pickett                                                                        

C. Taylor Pickett

	 	
 

  

  

  

EXHIBIT A

	
Investment

	
Ownership

	
 

U.S. Wound Care and all related affiliates

	
 

Less than 50%

  

  

  

EXHIBIT B

2010 BONUS PLAN

	
Metric

	
Weighting

	
Threshold

	
Target

	
High

	
Adjusted

FFO(1)

	
40%

	
$43,425,000

	
$44,440,000

	
$45,458,000

	
Tenant quality (uncollected rents)(2)

	
20%

	
 

Less than 3%

	
 

Less than 2%

	
 

Less than 1%

	
Leverage (coverage ratio)(3)

	
20%

	
 

Less than 4.75

	
 

Less than 4.50

	
Less than 4.25 or ratings upgrade from either agency

	
Individual/ subjective measures(4)

	
20%

	
N/A

	
N/A

	
N/A

	
  

	
(1)

	
4th quarter run rate total dollars based on per share Adjusted FFO of 42.7¢, 43,7¢, and 44.7¢.

	
  

	
(2)

	
2010 uncollected rents as a percentage of 2010 gross revenues.

	
  

	
(3)

	
Debt/EBITDA using bank covenant formula.

	
  

	
(4)

	
Subjective measures will include sustainability of the Adjusted FFO run rate.

  

  

  

EXHIBIT C

RESTRICTED STOCK AGREEMENT

  

  

  

RESTRICTED STOCK AWARD

PURSUANT TO THE OMEGA HEALTHCARE INVESTORS, INC.

2004 STOCK INCENTIVE PLAN

THIS AWARD is made as of the Grant Date, by Omega Healthcare Investors, Inc. (the “Company”) to _______________ (the “Recipient”).

Upon and subject to the Terms and Conditions attached hereto and incorporated herein by reference as part of this Award, the Company hereby awards as of the Grant Date to the Recipient the Restricted Shares (the “Restricted Stock Grant”).

	
  

	
A.

	
Grant Date:  January 1, 2011.

	
  

	
B.

	
Plan: (under which Restricted Stock Grant is granted): Omega Healthcare Investors, Inc. 2004 Stock Incentive Plan.

	
  

	
C.

	
Restricted Shares: _________ shares of the Company’s common stock (“Common Stock”), subject to adjustment as provided in the attached Terms and Conditions.

	
  

	
D.

	
Vesting Schedule:  The Restricted Shares shall vest according to the Vesting Schedule attached hereto as Exhibit 1 (the “Vesting Schedule”).  The Restricted Shares which have become vested pursuant to the Vesting Schedule are herein referred to as the “Vested Restricted Shares.”

IN WITNESS WHEREOF, the Company has executed this Award as of the Grant Date set forth above.

OMEGA HEALTHCARE INVESTORS, INC.

By:                                                                

Title:                                                                

  

  

  

TERMS AND CONDITIONS TO THE

RESTRICTED STOCK AGREEMENT

PURSUANT TO THE OMEGA HEALTHCARE INVESTORS, INC.

2004 STOCK INCENTIVE PLAN

1.           Restricted Shares.  The Company shall cause the Restricted Shares to be issued in book-entry form in the name of the Recipient with appropriate notations and stop-transfer instructions reflecting the applicable restrictions in this Agreement.  When any portion of the Restricted Shares become Vested Restricted Shares, the Company shall cause the notations regarding the restrictions and stop-transfer instructions as to such portion to be removed.  In the event that the Recipient forfeits any of the Restricted Shares, those shares shall automatically be transferred to the Company, without any action by the Recipient, and if the number of Vested Restricted Shares includes a fraction of a share, the Company shall cancel the fractional share, and the Company shall pay the Recipient the amount determined by the Company to be the estimated fair market value therefore.  In the event of a transaction pursuant to Section 6, the Recipient agrees that any shares of Common Stock or other securities or property issued as a result of any of the foregoing shall be subject to all of the provisions of this Award as if initially granted thereunder.

2.           Rights of a Shareholder.  During the period before the Restricted Shares vest and as long as they are not forfeited, the Recipient shall be entitled to all rights applicable to shares of Common Stock not so restricted, except as otherwise provided in the Award, including the right to receive dividends paid on Common Stock notwithstanding that all or some of the Restricted Shares may not be Vested Restricted Shares.

3.           Withholding.

(a)           The Recipient must deliver to the Company, within ten (10) days after written notification from the Company as to the amount of the tax withholding that is due, either (i) cash, or (ii) a certified check payable to the Company, in the amount of all tax withholding obligations imposed on the Company by reason of the vesting of the Restricted Shares, or the making of an election pursuant to Code Section 83(b), as applicable, except as provided in Section 3(b), or (iii) by tendering a number of whole shares of Common Stock which, when multiplied by the Fair Market Value of the Common Stock on the vesting date or effective date of the 83(b) election, as applicable, is sufficient to satisfy the minimum amount of the required tax withholding obligations imposed on the Company (the “Stock Tendering Election”); provided, however, the Committee may in its sole discretion, disapprove and give no effect to the Stock Tendering Election by giving written notice to the Recipient within ten (10) days after receipt of the Stock Tendering Election, in which event the Recipient must deliver, within ten (10) days after receiving such notice, the tax withholding in the manner provided in clause (i) or (ii).  If the Recipient does not make an election pursuant to Code Section 83(b) and does not timely satisfy payment of the tax withholding obligation, the Recipient will be deemed to have made an election to satisfy tax withholding in the manner provided in Section 3(b).  If the Recipient makes an election pursuant to Code Section 83(b) and does not timely satisfy payment of the tax withholding obligation, the Recipient will forfeit the Restricted Shares to which such election relates.

 

(b)           If the Recipient does not make an election pursuant to Code Section 83(b), in lieu of paying the tax withholding obligation as described in Section 3(a), Recipient may elect to have the actual number of Vested Shares reduced by the number of whole shares of Common Stock which, when multiplied by the Fair Market Value of the Common Stock on the vesting date, is sufficient to satisfy the minimum amount of the required tax obligations imposed on the Company by reason of the vesting of the Restricted Shares (the “Withholding Election”).  Recipient may make a Withholding Election only if all of the following conditions are met:

 

(i)           the Withholding Election must be made within ten (10) days after the Recipient receives written notification from the Company as to the amount of the tax withholding that is due (the “Tax Notice Date”), by executing and delivering to the Company a properly completed Notice of Withholding Election, in substantially the form of Exhibit 3 attached hereto; and

 

(ii)           any Withholding Election made will be irrevocable; however, the Committee may, in its sole discretion, disapprove and give no effect to any Withholding Election, by giving written notice to the Recipient no later than ten (10) days after the Company’s receipt of the Notice of Withholding Election, in which event the Recipient must deliver to the Company, within ten (10) days after receiving such notice, the amount of the tax withholding pursuant to Section 3(a).  If the Recipient does not timely deliver the amount of the tax withholding pursuant to Section 3(a), the Recipient will forfeit the Restricted Shares to which the tax withholding requirement relates.

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

5.           Additional Restrictions on Transfer.

If for any reason the Restricted Share shall be represented in certificated form prior to becoming Vested Restricted Shares, the certificates evidencing the Restricted Shares shall bear a notation required under applicable securities laws or otherwise determined by the Company to be appropriate, such as:

TRANSFER IS RESTRICTED

THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER AND FORFEITURE PROVISIONS WHICH ALSO APPLY TO THE TRANSFEREE AS SET FORTH IN A RESTRICTED STOCK AGREEMENT DATED JANUARY _, 2011, A COPY OF WHICH IS AVAILABLE FROM THE COMPANY.  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.

	
6.

	
Change in Capitalization.

(a)           The number and kind of unvested Restricted Shares shall be proportionately adjusted for nonreciprocal transactions between the Company and the holders of Common Stock that cause the per share value of the Restricted Shares to change, such as a stock dividend, stock split, spinoff, or rights offering (each an “Equity Restructuring”).  No fractional shares shall be issued in making such adjustment.

(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, in each case that does not result in an Equity Restructuring or a Change in Control, the Compensation Committee shall take such action to make such adjustments with respect to the unvested Restricted Shares as the Compensation 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 unvested portion of the Award, substituting cash, other securities, or other property to replace the unvested portion of the Award, or removing of restrictions on unvested Restricted Shares.

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

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

7.           Governing Laws.  This Award shall be construed, administered and enforced according to the laws of the State of Maryland; provided, however, no Restricted Shares shall be issued except, in the reasonable judgment of the Compensation 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 Award shall be binding upon and inure to the benefit of the heirs, legal representatives, successors, and permitted assigns of the parties.

9.           Notice.  Except as otherwise specified herein, all notices and other communications under this Award 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 Award 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 Award, and this Award shall be construed as if the invalid, illegal or unenforceable provision or portion thereof had never been contained herein.

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

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

13.           Specific Performance.  In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Award, 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.

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

15.           Definitions.  As used in these Terms and Conditions and this Award:

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

	
(a)

	
willful refusal by the Recipient to follow a lawful direction of the person to whom the Recipient reports or the Board of Directors of the Company (the “Board”), provided the direction is not materially inconsistent with the duties or responsibilities of the Recipient’s position with the Company, which refusal continues after the Board has again given the direction in writing;

	
(b)

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

	
(c)

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

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

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

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

 

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

 

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

 

(c) individuals who as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board;

 

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

 

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

 

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

 

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

“Good Reason” shall have the meaning set forth in the employment agreement then in effect between the Recipient and the Company, or, if there is none, then Good Reason shall mean   the occurrence of all of the events listed in either (a) or (b) below:

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

(ii)           the Recipient gives written notice to the Company of the facts and circumstances constituting the material diminution in responsibilities within ten (10) days following the occurrence of such material diminution;

(iii)           the Company fails to remedy the material diminution in responsibilities within ten (10) days following the Recipient’s written notice of the material diminution in responsibilities; and

(iv)           the Recipient terminates his employment and this Agreement within thirty (30) days following the Company’s failure to remedy the material diminution in responsibilities.

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

 

(ii)           the Recipient gives written notice to the Company within ten (10) days following receipt of notice of relocation of his objection to the relocation;

 

(iii)           the Company fails to rescind the notice of relocation within ten (10) days following the Recipient’s written notice; and

(iv)           the Recipient terminates his employment within thirty (30) days following the Company’s failure to rescind the notice.

“Trade Secrets” means information including, but not limited to, technical or nontechnical data, formulae, patterns, compilations, programs, devices, methods, techniques, drawings, processes, financial data, financial plans, product plans or lists of actual or potential customers or suppliers which (i) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

  

  

  

Exhibit 1 to Restricted Stock Agreement

Vesting Schedule

	
A.

	
The Restricted Shares shall become Vested Shares in accordance with the schedule below:

 

	
 

Date

	
Percentage of Restricted

Shares which are Vested Shares

	  	  
	
December 31, 2013

	
100%

; provided the Recipient must remain an employee, director or consultant of the Company or an Affiliate through the indicated date set forth above to vest in accordance with the schedule above.

 

	
B.

	
Notwithstanding the foregoing, if more than sixty (60) days before a Change in Control and in the year set forth in the schedule below:

 

	
  

	
1.

	
the Recipient ceases services as an employee, director or consultant of the Company or an Affiliate due to the Recipient’s death or Disability,

 

	
  

	
2.

	
the Recipient resigns from the Company for Good Reason, or

 

	
  

	
3.

	
the Company terminates the Recipient’s employment without Cause,

 

then the percentage of the Restricted Shares in the schedule set forth shall become Vested Shares if they have not been previously forfeited.

 

	
 

Year of Termination

	
Percentage of Restricted

Shares which are Vested Shares

	  	  
	
2011

	
331/3%

	
2012

	
662/3%

	
2013

	
100%

	
C.

	
Notwithstanding the foregoing, if a Change in Control occurs on or after the Grant Date and before December 31, 2013, and within (i) sixty (60) days before a Change in Control or (ii) after a Change in Control:

	
  

	
1.

	
the Recipient ceases services as an employee, director or consultant of the Company or an Affiliate due to the Recipient’s death or Disability,

 

	
  

	
2.

	
the Recipient resigns from the Company for Good Reason, or

 

	
  

	
3.

	
the Company terminates the Recipient’s employment without Cause.

 

then all Restricted Shares shall become Vested Shares as of the later of the date of the Change in Control or the date of termination of employment if they have not been previously forfeited.

	
D.

	
Restricted Shares which have not become Vested Shares as of the earlier of December 31, 2013 or, except as provided in Item C above, the Recipient’s cessation of services as an employee, director, or consultant of the Company or an Affiliate shall be forfeited.

Exhibit 1 – Page 

  

  

  

EXHIBIT D

PERFORMANCE RESTRICTED STOCK UNIT

AGREEMENT – FOR MULTI-YEAR PRSUs

  

  

  

PERFORMANCE RESTRICTED STOCK UNIT AGREEMENT

PURSUANT TO THE OMEGA HEALTHCARE INVESTORS, INC.

2004 STOCK INCENTIVE PLAN

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

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

	
A.  

	
Grant Date:  January 1, 2011.

	
B.  

	
Plan (under which Restricted Unit Grant is granted): Omega Healthcare Investors, Inc. 2004 Stock Incentive Plan.

	
C.  

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

	
D.  

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

	
E.  

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

	
1.  

	
within ten (10) business days following the last day of each calendar quarter in 2014; or

 

	
2.  

	
the date of a Change in Control.

 

	
F.  

	
Distribution Date of Dividend Equivalents.  Dividend Equivalents attributable to Vested Restricted Units shall be distributed to the Recipient on the same date as Vested Shares are distributable to the Recipient under Item E above.

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

OMEGA HEALTHCARE INVESTORS, INC.

By:                                                                

Title:                                                                

  

  

  

TERMS AND CONDITIONS TO THE

PERFORMANCE RESTRICTED STOCK UNIT AGREEMENT

PURSUANT TO THE OMEGA HEALTHCARE INVESTORS, INC.

2004 STOCK INCENTIVE PLAN

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

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

3. Tax Withholding.

(a) The Recipient must deliver to the Company, within ten (10) days after written notification from the Company as to the amount of the tax withholding that is due, either (i) cash, or (ii) a check payable to the Company, in the amount of all tax withholding obligations imposed on the Company as a result of the issuance of the Vested Shares, except as provided in Section 3(b).  If the Recipient does not timely satisfy payment of the tax withholding obligation, the Recipient will be deemed to have made an election to satisfy tax withholding in the manner provided in Section 3(b).

(b) In lieu of paying the tax withholding obligation described in Section 3(a), the Recipient may elect to have the number of Vested Shares reduced by the number of whole shares of Common Stock which, when multiplied by the Fair Market Value of the Common Stock on the Distribution Date of the Vested Shares, together with cash or a check in lieu of any fractional Vested Share, is sufficient to satisfy the minimum amount of the required tax obligations imposed on the Company as a result of the issuance of the Vested Shares (the “Withholding Election”).  The Recipient may make a Withholding Election only if all of the following conditions are met:

(i) The Withholding Election must be made within ten (10) days after the Recipient receives written notification from the Company as to the amount of the tax withholding that is due (the “Tax Notice Date”), by executing and delivering to the Company a properly completed Notice of Withholding Election, in substantially the form of Exhibit 2 attached hereto; and

 

(ii) Any Withholding Election made will be irrevocable; however, the Committee may, in its sole discretion, disapprove and give no effect to any Withholding Election, by giving written notice to the Recipient no later than ten (10) days after the Company’s receipt of the Notice of Withholding Election, in which event the Recipient must deliver to the Company, within ten (10) days after receiving such notice, the amount of the tax withholding pursuant to Section 3(a).  If the Recipient does not timely deliver the amount of the tax withholding, the Recipient will forfeit the Vested Shares to which the tax withholding requirement relates.

 

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

5. Change in Capitalization.

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

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

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

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

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

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

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

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

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

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

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

 

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

 

14. Definitions.  As used in this Agreement:

 

“Beginning Stock Price” means the volume-weighted average price per share of Common Stock for the month of December 2010 on the exchange on which Common Stock is traded.

 

“Below Threshold Relative TSR” means that Relative Total Shareholder Return is less than the fiftieth (50th) percentile.

 

“Below Threshold TSR” means the Company has achieved Total Shareholder Return of less than eight percent (8%) for the Performance Period calculated on an annualized basis and compounded each December 31.

 

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

 

(a) willful refusal by the Recipient to follow a lawful direction of the person to whom the Recipient reports or the Board of Directors of the Company (the “Board”), provided the direction is not materially inconsistent with the duties or responsibilities of the Recipient’s position with the Company, which refusal continues after the Board has again given the direction in writing;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(c)           individuals who as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board;

 

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

 

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

 

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

 

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

 

“Ending Stock Price” means the volume-weighted average price per share of Common Stock for the month of December 2013 on the exchange on which Common Stock is traded unless a Change in Control occurs before January 1, 2014, in which case the term means the value per share determined as of the date of the Change in Control, such value to be determined by the Compensation Committee in its reasonable discretion based on the actual or implied price per share paid in the Change in Control transaction.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“High Relative TSR” means that Relative Total Shareholder Return is the eightieth (80th) percentile or above.

 

 “High TSR” means the Company has achieved an annualized Total Shareholder Return, compounded each December 31, of at least twelve percent (12%) for the Performance Period.  In calculating High TSR, dividends paid during the calendar year shall be subtracted from the stock price in effect at the beginning of the year (i.e., in the case of 2011, the Beginning Stock Price) multiplied by twelve percent (12%) to arrive at the stock price in effect at the beginning of the next year for purposes of the compounding calculation.

 

“Performance Period” means the period from and including January 1, 2011 through the earlier of December 31, 2013 or the date of a Change in Control.

 

“Relative Total Shareholder Return” means Total Shareholder Return ranked on a percentile basis relative to the average total shareholder return of companies comprising the MSCI U.S. REIT Index for the same period for which Total Shareholder Return is calculated and using the same methodology used for calculating Total Shareholder Return.

 

“Target Relative TSR” means that Relative Total Shareholder Return is the sixty-fifth (65th) percentile.

 

“Target TSR” means the Company has achieved an annualized Total Shareholder Return, compounded each December 31, of ten percent (10%) for the Performance Period.  In calculating Target TSR, dividends paid during the calendar year shall be subtracted from the stock price in effect at the beginning of the year (i.e., in the case of 2011, the Beginning Stock Price) multiplied by ten percent (10%) to arrive at the stock price in effect at the beginning of the next year for purposes of the compounding calculation.

 

“Threshold Relative TSR” means that Relative Total Shareholder Return is the fiftieth (50th) percentile.

 

“Threshold TSR” means that the Company has achieved an annualized Total Shareholder Return, compounded each December 31, of eight percent (8%) for the Performance Period.  In calculating Threshold TSR, dividends paid during the calendar year shall be subtracted from the stock price in effect at the beginning of the year (i.e., in the case of 2011, the Beginning Stock Price) multiplied by eight percent (8%) to arrive at the stock price in effect at the beginning of the next year for purposes of the compounding calculation.

 

“Total Shareholder Return” means the sum of the total change in the Ending Stock Price as compared to the Beginning Stock Price, plus any dividends paid to a shareholder of record with respect to one share of Common Stock during the Performance Period.

 

“Trade Secrets” means information including, but not limited to, technical or nontechnical data, formulae, patterns, compilations, programs, devices, methods, techniques, drawings, processes, financial data, financial plans, product plans or lists of actual or potential customers or suppliers which (i) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

 

“Vesting Period” means the period beginning on the day after the last day of the Performance Period and ending December 31, 2014.

 

  

  

  

EXHIBIT 1

	
A.

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

 

	
  

	
TSR Chart

 

	
Below

Threshold

TSR

	
*Threshold

TSR

	
*Target

TSR

	
*High

TSR

	
Zero

Vested

Units

	  	  	  

 

	
  

	
Relative TSR Chart

 

	
Below

Threshold

Relative TSR

	
**Threshold

Relative TSR

	
**Target

Relative TSR

	
**High

Relative TSR

	
Zero

Vested

Units

	  	  	  

	
*

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

 

	
**

	
If Relative Total Shareholder Return falls between Threshold Relative TSR and Target Relative TSR or between Target Relative TSR and High Relative TSR, the number of Vested Restricted Units under the Relative TSR Chart shall be determined by rounding Relative TSR to the closest five (5) percentile points and then applying linear interpolation based on the percentile by which Threshold Relative TSR or Target Relative TSR, respectively, is exceeded.

 

	
B.

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

 

	
  

	
(i)

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

 

	
  

	
(ii)

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

 

	
C.

	
Notwithstanding any other provision of this Agreement, if a Change in Control occurs upon or after the Grant Date and before December 31, 2014, and (i) the Recipient remains an employee, director or consultant of the Company or an Affiliate during the entire Performance Period until the date of the Change in Control, or (ii) if within sixty (60) days before the Change in Control, the Recipient incurs a Qualifying Termination, the Recipient shall be 100% vested in, as of the date of the Change in Control:

 

	
  

	
1.

	
if the Change in Control occurs before January 1, 2014, the number of units determined from the Relative TSR Chart based on the percentile of Relative Total Shareholder Return achieved for the Performance Period through the date of the Change in Control, plus

 

	
  

	
a.

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

 

	
  

	
b.

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

 

	
  

	
c.

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

 

	
  

	
2.

	
if the Change in Control occurs after December 31, 2013, the number of units determined in the above charts that were actually earned for the Performance Period.

 

	
D.

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

 

  

  

  

EXHIBIT 2

NOTICE OF WITHHOLDING ELECTION

PURSUANT TO OMEGA HEALTHCARE INVESTORS, INC.

2004 STOCK INCENTIVE PLAN

	
TO:

	
Omega Healthcare Investors, Inc.

	
  

	
Attention: Chief Financial Officer

FROM:                                

RE:                      Withholding Election

This election relates to the Restricted Unit Grant identified in Paragraph 3 below.  I hereby certify that:

 

(1)           My correct name and social security number and my current address are set forth at the end of this document.

 

(2)           I am (check one, whichever is applicable).

 

[ ]           the original recipient of the Restricted Unit Grant.

 

	
  

	
[ ]

	
the legal representative of the estate of the original recipient of the Restricted Unit Grant.

 

	
  

	
[ ]

	
a legatee of the original recipient of the Restricted Unit Grant.

 

	
  

	
[ ]

	
the legal guardian of the original recipient of the Restricted Unit Grant.

 

(3)           The Restricted Unit Grant pursuant to which this election relates was issued with a Grant Date of __________________ under the Omega Healthcare Investors, Inc. 2004 Stock Incentive Plan (the “Plan”) in the name of ___________________.  This election relates to ______ shares of Common Stock issuable pursuant to the Restricted Unit Grant.

(4)           I hereby elect to have certain of the shares of Common Stock withheld by the Company for the purpose of having the value of the shares applied to pay federal, state and local, if any, taxes arising from the exercise.

The fair market value of the shares of Common Stock to be withheld in addition to $_________ in cash to be tendered to the Company by the recipient of the Restricted Unit Grant shall be equal to the minimum statutory tax withholding requirement under federal, state and local law in connection with the exercise.

(5)           This Withholding Election is made no later than ten (10) days after the Tax Notice Date and is otherwise timely made pursuant to the Plan.

(6)           I further understand that, if this Withholding Election is not disapproved by the Committee, the Company shall withhold from the Common Stock issuable to me a whole number of shares of Common Stock having the value specified in Paragraph 4 above.

(7)           The Plan has been made available to me by the Company, I have read and understand the Plan and I have no reason to believe that any of the conditions therein to the making of this Withholding Election have not been met.  Capitalized terms used in this Notice of Withholding Election without definition shall have the meanings given to them in the Plan.

Dated:                                                                                     

Signature:                                                                           

Name (Printed)

Street Address

City, State, Zip Code

  

  

  

EXHIBIT E

PERFORMANCE RESTRICTED STOCK UNIT

AGREEMENT – FOR ANNUAL PRSUs

  

  

  

PERFORMANCE RESTRICTED STOCK UNIT AGREEMENT

PURSUANT TO THE OMEGA HEALTHCARE INVESTORS, INC.

2004 STOCK INCENTIVE PLAN

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

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

	
A.  

	
Grant Date:  January 1, 201__.

	
B.  

	
Plan (under which Restricted Unit Grant is granted): Omega Healthcare Investors, Inc. 2004 Stock Incentive Plan.

	
C.  

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

	
D.  

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

	
E.  

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

	
  

	
1.

	
within ten (10) business days following December 31, 201__; or

 

	
  

	
2.

	
the date of a Change in Control.

 

	
F.  

	
Distribution Date of Dividend Equivalents.  Dividend Equivalents attributable to Vested Restricted Units shall be distributed to the Recipient on the same date as Vested Shares are distributable to the Recipient under Item E above.

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

OMEGA HEALTHCARE INVESTORS, INC.

By:                                                                

Title:                                                                

  

  

  

TERMS AND CONDITIONS TO THE

PERFORMANCE RESTRICTED STOCK UNIT AGREEMENT

PURSUANT TO THE OMEGA HEALTHCARE INVESTORS, INC.

2004 STOCK INCENTIVE PLAN

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

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

3. Tax Withholding.

(a) The Recipient must deliver to the Company, within ten (10) days after written notification from the Company as to the amount of the tax withholding that is due, either (i) cash, or (ii) a check payable to the Company, in the amount of all tax withholding obligations imposed on the Company as a result of the issuance of the Vested Shares, except as provided in Section 3(b).  If the Recipient does not timely satisfy payment of the tax withholding obligation, the Recipient will be deemed to have made an election to satisfy tax withholding in the manner provided in Section 3(b).

(b) In lieu of paying the tax withholding obligation described in Section 3(a), the Recipient may elect to have the number of Vested Shares reduced by the number of whole shares of Common Stock which, when multiplied by the Fair Market Value of the Common Stock on the Distribution Date of the Vested Shares, together with cash or a check in lieu of any fractional Vested Share, is sufficient to satisfy the minimum amount of the required tax obligations imposed on the Company as a result of the issuance of the Vested Shares (the “Withholding Election”).  The Recipient may make a Withholding Election only if all of the following conditions are met:

(i) The Withholding Election must be made within ten (10) days after the Recipient receives written notification from the Company as to the amount of the tax withholding that is due (the “Tax Notice Date”), by executing and delivering to the Company a properly completed Notice of Withholding Election, in substantially the form of Exhibit 2 attached hereto; and

 

(ii) Any Withholding Election made will be irrevocable; however, the Committee may, in its sole discretion, disapprove and give no effect to any Withholding Election, by giving written notice to the Recipient no later than ten (10) days after the Company’s receipt of the Notice of Withholding Election, in which event the Recipient must deliver to the Company, within ten (10) days after receiving such notice, the amount of the tax withholding pursuant to Section 3(a).  If the Recipient does not timely deliver the amount of the tax withholding, the Recipient will forfeit the Vested Shares.

 

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

5. Change in Capitalization.

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

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

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

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

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

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

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

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

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

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

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

 

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

 

14. Definitions.  As used in this Agreement:

 

“Beginning Stock Price” means the volume-weighted average price per share of Common Stock for the month of December 201__ on the exchange on which Common Stock is traded.

 

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

 

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

 

(a) willful refusal by the Recipient to follow a lawful direction of the person to whom the Recipient reports or the Board of Directors of the Company (the “Board”), provided the direction is not materially inconsistent with the duties or responsibilities of the Recipient’s position with the Company, which refusal continues after the Board has again given the direction in writing;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(c) individuals who as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board;

 

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

 

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

 

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

 

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

 

“Ending Stock Price” means the volume-weighted average price per share of Common Stock for the month of December 201__ on the exchange on which Common Stock is traded, unless a Change in Control occurs before December 31, 201__, in which case the term means the value per share determined as of the date of the Change in Control, such value to be determined by the Compensation Committee in its reasonable discretion based on the actual or implied price per share paid in the Change in Control transaction.

 

“Good Reason” shall have the meaning set forth in the employment agreement then in effect between the Recipient and the Company, or, if there is none, then Good Reason shall mean the occurrence of all of the events listed in either (a) or (b) below:

 

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

 

(ii)           the Recipient gives written notice to the Company of the facts and circumstances constituting the material diminution in responsibilities within ten (10) days following the occurrence of such material diminution;

 

(iii)           the Company fails to remedy the material diminution in responsibilities within ten (10) days following the Recipient’s written notice of the material diminution in responsibilities; and

 

(iv)           the Recipient terminates his employment and this Agreement within thirty (30) days following the Company’s failure to remedy the material diminution in responsibilities.

 

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

 

(ii)           the Recipient gives written notice to the Company within ten (10) days following receipt of notice of relocation of his objection to the relocation;

 

(iii)           the Company fails to rescind the notice of relocation within ten (10) days following the Recipient’s written notice; and

 

(iv)           the Recipient terminates his employment within thirty (30) days following the Company’s failure to rescind the notice.

 

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

 

“Performance Period” means the period from and including January 1, 201__ through the earlier of December 31, 201__ or the date of a Change in Control.

 

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

 

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

 

“Total Shareholder Return” means the sum of the total change in the Ending Stock Price as compared to the Beginning Stock Price, plus any dividends paid to a shareholder of record with respect to one share of Common Stock during the Performance Period.

 

“Trade Secrets” means information including, but not limited to, technical or nontechnical data, formulae, patterns, compilations, programs, devices, methods, techniques, drawings, processes, financial data, financial plans, product plans or lists of actual or potential customers or suppliers which (i) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

 

  

  

  

EXHIBIT 1

	
A.

	
The number of Vested Restricted Units earned is determined as of the last day of the Performance Period pursuant to the following chart; provided that the Recipient must remain an employee, director or consultant of the Company or an Affiliate during the entire Performance Period to earn the number of Vested Restricted Units determined in the chart below.

 

	
Below

Threshold

Performance

	
*Threshold Performance

	
*Target

Performance

	
*High

Performance

	
Zero

Vested

Units

	  	  	  

 

	
*

	
If Total Shareholder Return falls between Threshold Performance and Target Performance or between Target Performance and High Performance, the number of Vested Restricted Units shall be determined by rounding actual Total Shareholder Return to the closest 0.5% percentage points and then applying linear interpolation based on the percentage points by which Threshold Performance or Target Performance, respectively, as so adjusted, is exceeded.

 

	
B.

	
Notwithstanding the foregoing, if during the Performance Period and more than sixty (60) days before a Change in Control, the Recipient dies or becomes subject to a Disability while an employee, director or consultant of the Company or an Affiliate, the Recipient resigns from the Company for Good Reason, or the Company terminates the Recipient’s employment without Cause (each such event referred to as a “Qualifying Termination”), the Recipient shall earn a number of Vested Restricted Units equal to the number of Vested Restricted Units determined in the chart above as of the completion of the Performance Period, 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 365.

 

	
C.

	
Notwithstanding the foregoing, if a Change in Control occurs on or after the Grant Date and before December 31, 201__ and (i) while the Recipient remains an employee, director or consultant of the Company or an Affiliate, or (ii) within sixty (60) days before the Change in Control, the Recipient incurs a Qualifying Termination, the Recipient shall earn a number of Vested Restricted Units determined in the chart above based on the level of Total Shareholder Return through the date of the Change in Control relative to the level required for the full Performance Period (determined without regard to the shortening of the period as a result of the Change in Control), and shall not thereafter earn any additional Vested Restricted Units.

 

	
D.

	
The portion of the Restricted Unit Grant that has not become earned Vested Restricted Units as of the earlier of the last day of the Performance Period, or, except as provided in Item C above, as of the date the Recipient ceases to be an employee, director, or consultant of the Company or an Affiliate shall be forfeited.

 

  

  

  

EXHIBIT 2

NOTICE OF WITHHOLDING ELECTION

PURSUANT TO OMEGA HEALTHCARE INVESTORS, INC.

2004 STOCK INCENTIVE PLAN

	
TO:

	
Omega Healthcare Investors, Inc.

	
  

	
Attention: Chief Financial Officer

FROM:                                

RE:                      Withholding Election

This election relates to the Restricted Unit Grant identified in Paragraph 3 below.  I hereby certify that:

 

(1)           My correct name and social security number and my current address are set forth at the end of this document.

 

(2)           I am (check one, whichever is applicable).

 

[ ]           the original recipient of the Restricted Unit Grant.

 

	
  

	
[ ]

	
the legal representative of the estate of the original recipient of the Restricted Unit Grant.

 

	
  

	
[ ]

	
a legatee of the original recipient of the Restricted Unit Grant.

 

	
  

	
[ ]

	
the legal guardian of the original recipient of the Restricted Unit Grant.

 

(3)           The Restricted Unit Grant pursuant to which this election relates was issued with a Grant Date of __________________ under the Omega Healthcare Investors, Inc. 2004 Stock Incentive Plan (the “Plan”) in the name of ___________________.  This election relates to ______ shares of Common Stock issuable pursuant to the Restricted Unit Grant.

(4)           I hereby elect to have certain of the shares of Common Stock withheld by the Company for the purpose of having the value of the shares applied to pay federal, state and local, if any, taxes arising from the exercise.

The fair market value of the shares of Common Stock to be withheld in addition to $_________ in cash to be tendered to the Company by the recipient of the Restricted Unit Grant shall be equal to the minimum statutory tax withholding requirement under federal, state and local law in connection with the exercise.

(5)           This Withholding Election is made no later than ten (10) days after the Tax Notice Date and is otherwise timely made pursuant to the Plan.

(6)           I further understand that, if this Withholding Election is not disapproved by the Committee, the Company shall withhold from the Common Stock issuable to me a whole number of shares of Common Stock having the value specified in Paragraph 4 above.

(7)           The Plan has been made available to me by the Company, I have read and understand the Plan and I have no reason to believe that any of the conditions therein to the making of this Withholding Election have not been met.  Capitalized terms used in this Notice of Withholding Election without definition shall have the meanings given to them in the Plan.

Dated:                                                                                     

Signature:                                                                           

Name (Printed)

Street Address

City, State, Zip Code

  

  

  

EXHIBIT F

DETERMINATION OF NUMBERS OF RESTRICTED SHARES AND UNITS

 

The number of shares of stock subject to the Restricted Stock Agreement, the number of units subject to the Multi-year PRSU Agreement, and the number of units subject to the Annual PRSU Agreement shall be determined as described below.  (The methodology set forth below is the same as used in the charts provided by FPL Associates L.P. to the Compensation Committee on August 19, 2010, except that for purposes of illustration, the FPL memo uses a $23 share price assumption, whereas the actual final calculations of the potential number of shares and units will be based on the volume weighted-average trading price per share of Omega common stock (“VWAP”) for the month of December 2010.)

 

Step 1:            Start with threshold, target and high levels of 2011-2013 aggregate compensation (comprised of base salary, bonus opportunity and long-term incentive opportunity):

	
Threshold

	
Target

	
High

	
$8,000,000

	
$12,000,000

	
$16,000,000

Step 2:            Determine aggregate salary and bonus opportunities for 2011-2013:

	
Threshold

	
Target

	
High

	
$3,600,000

	
$4,050,000

	
$4,500,000

Step 3:            Subtract Step 2 from Step 1 to arrive at aggregate long-term incentive opportunity (excluding dividends) for 2011-2013:

	
Threshold

	
Target

	
High

	
$4,400,000

	
$7,950,000

	
$11,500,000

 

Step 4:            Determine projected dividends per share of Omega common stock based on Omega’s projections as of December 31, 2010.  Determine the number of shares of Omega common stock, which, based on the December 2010 VWAP and assuming “Target TSR” and “Target Relative TSR” (as defined in the Multi-year PRSU Agreement) are achieved (assuming, for purposes of calculating Target TSR and Target Relative TSR referred to above, that the projected dividends are paid), results in the $7,950,000 target level of aggregate long-term incentive compensation (i.e., restricted shares, units subject to the Multi-year PRSU agreement, and units subject to the Annual PRSU agreement (excluding projected dividends) at Step 3 as of December 31, 2013 being earned.  For purposes of this Exhibit F, compensation attributable to the Multi-year PRSU agreement shall be calculated based on the projected value, using the preceding methodology, of one-third of the units at each of December 31, 2011, December 31, 2012 and December 31, 2013.

 

Step 5:  Divide the number of shares determined at Step 4 into two components equal in number.

 

Step 5A:  The first component is the number of shares subject to the Restricted Stock Agreement.

 

Step 5B:  Divide the second component into two sub-components equal in number.  The first sub-component is the number of units subject to the Multi-year PRSU Agreement if Target TSR and Target Relative TSR are achieved.  Divide the second subcomponent into three equal numbers of units, each of which represents the number of shares issuable pursuant to the Annual PRSU Agreement if “Target Performance” (as defined in the Annual PRSU Agreement) for the applicable year is achieved.

 

Step 6:  The number of shares of stock subject to the Restricted Stock Agreement as determined at Step 5A is held constant, regardless of performance.  The numbers of units subject to the Multi-year PRSU Agreement and the Annual PRSU Agreement if Target TSR and Target Relative TSR, and Target Performance, respectively are achieved are as provided in Step 5B.  Determine the number of units subject to the Multi-year PRSU Agreement and the Annual PRSU Agreement if “Threshold TSR” and “Threshold Relative TSR” (as those terms are defined in the Multi-year PRSU Agreement) and “Threshold Performance” (as defined in the Annual PRSU Agreement) are achieved by subtracting the projected compensation (excluding dividends) attributable to the Restricted Stock Agreement as determined in Step 5A from the $4,400,000 of aggregate long-term incentive compensation (excluding dividends) at Step 3 at threshold to arrive at the difference and then determine the number of shares of Omega common stock, which based on the December 2010 VWAP and assuming Threshold TSR and Threshold Relative TSR are achieved and projected dividends are paid, results in an amount of projected compensation (excluding dividends) at December 31, 2013 that is equal to such difference. This number of units is then divided into two equal subcomponents; a multi-year subcomponent and an annual subcomponent (that is divided into three equal annual subcomponents) all in the same manner as discussed at Step 5B, but using Threshold TSR, Threshold Relative TSR and Threshold Performance instead of Target TSR, Target Relative TSR and Target Performance, respectively, in such formula.  The numbers of units at High TSR, High Relative TSR and High Performance are determined in the same manner as the number of units at Threshold TSR, Threshold Relative TSR and Threshold Performance are determined in this Step 6, except that “High” is substituted into this formula in lieu of “Threshold.”

 

This is only a summary of the methodology for determining the number of shares subject to the Restricted Stock Agreement and the numbers of units subject to the Multi-year PRSU Agreement and the Annual PRSU Agreement.  The actual numbers shall be calculated by FPL Associates L.P. or other compensation consultant retained by the Compensation Committee of the Board of Directors of the Company (either, the “Compensation Consultant”), and in the event of any conflict between the terms of this summary and such calculation, the calculation shall control as long as the calculation is based on the Compensation Consultant’s interpretation of this Exhibit F and such interpretation is not manifestly unreasonable.

 

  

  

  

EXHIBIT G

RELEASE, AGREEMENT PURSUANT TO

EMPLOYMENT AGREEMENT

This Agreement (this “Agreement”) is made this ___ day of _____, 200_, by OMEGA HEALTHCARE INVESTORS, INC. (the “Employer”) and ________________ (the “Employee”).

Introduction

Employee and the Employer entered into an Employment Agreement dated ________, 2010 (the “Employment Agreement”).

The Employment Agreement requires that as a condition to the Employer’s obligation to pay payments and benefits under Section 3(c) of the Employment Agreement (the “Severance Benefits”), Employee must provide a release and agree to certain other conditions as provided herein.

NOW, THEREFORE, the parties agree as follows:

	
1.  

	
[For Employee under age 40: The effective date of this Agreement shall be the date on which Employee signs this Agreement (“the Effective Date”), at which time this Agreement shall be fully effective and enforceable.]

[For Employee age 40 and over or group termination of Employees age 40 and over: Employee has been offered [twenty-one (21) days] [forty-five (45) days if group termination] from receipt of this Agreement within which to consider this Agreement. The effective date of this Agreement shall be the date eight (8) days after the date on which Employee signs this Agreement (“the Effective Date”). For a period of seven (7) days following Employee’s execution of this Agreement, Employee may revoke this Agreement, and this Agreement shall not become effective or enforceable until such seven (7) day period has expired. Employee must communicate the desire to revoke this Agreement in writing.  Employee understands that he or she may sign the Agreement at any time before the expiration of the [twenty-one (21) day] [forty-five (45) day] review period.  To the degree Employee chooses not to wait [twenty-one (21) days] [forty-five (45) days] to execute this Agreement, it is because Employee freely and unilaterally chooses to execute this Agreement before that time.  Employee’s signing of the Agreement triggers the commencement of the seven (7) day revocation period.]

	
2.  

	
In exchange for Employee’s execution of this Agreement and in full and complete settlement of any claims as specifically provided in this Agreement, the Employer will provide Employee with the Severance Benefits.

	
3.  

	
[For Employee age 40 or over or group termination of Employees age 40 and over:  Employee acknowledges and agrees that this Agreement is in compliance with the Age Discrimination in Employment Act and the Older Workers Benefit Protection Act and that the releases set forth in this Agreement shall be applicable, without limitation, to any claims brought under these Acts.]

The release given by Employee in this Agreement is given solely in exchange for the consideration set forth in Section 2 of  this Agreement and such consideration is in addition to anything of value that Employee was entitled to receive prior to entering into this Agreement.

Employee has been advised to consult an attorney prior to entering into this Agreement [For Employee age 40 or over or group termination of Employees age 40 and over: and this provision of the Agreement satisfies the requirement of the Older Workers Benefit Protection Act that Employee be so advised in writing].

[For under age 40: Employee has been offered an ample opportunity from receipt of this Agreement within which to consider this Agreement.]

By entering into this Agreement, Employee does not waive any rights or claims that may arise after the date this Agreement is executed.

	
4.  

	
[For group termination of Employees age 40 and over:  The Employer has ________________________________________________ [The Employer to describe class, unit, or group of individuals covered by termination program, any eligibility factors, and time limits applicable] and such employees comprise the “Decisional Unit.” Attached as “Attachment 1” to this Agreement is a list of ages and job titles of persons in the Decisional Unit who were and who were not selected for termination and the offer of consideration for signing the Agreement.]

	
5.  

	
This Agreement shall in no way be construed as an admission by the Employer that it has acted wrongfully with respect to Employee or any other person or that Employee has any rights whatsoever against the Employer.  The Employer specifically disclaims any liability to or wrongful acts against Employee or any other person on the part of itself, its employees or its agents.

	
6.  

	
As a material inducement to the Employer to enter into this Agreement, Employee hereby irrevocably releases the Employer and each of the owners, stockholders, predecessors, successors, directors, officers, employees, representatives, attorneys, affiliates (and agents, directors, officers, employees, representatives and attorneys of such affiliates) of the Employer and all persons acting by, through, under or in concert with them (collectively, the “Releasees”), from any and all charges, claims, liabilities, agreements, damages, causes of action, suits, costs, losses, debts and expenses (including attorneys’ fees and costs actually incurred) of any nature whatsoever, known or unknown, including, but not limited to, rights arising out of alleged violations of any contracts, express or implied, any covenant of good faith and fair dealing, express or implied, or any tort, or any legal restrictions on the Employer’s right to terminate employees, or any federal, state or other governmental statute, regulation, or ordinance, including, without limitation: (1) Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991 (race, color, religion, sex, and national origin discrimination); (2) the Employee Retirement Income Security Act (“ERISA”); (3) 42 U.S.C. § 1981 (discrimination); (4) the Americans with Disabilities Act (disability discrimination); (5) the Equal Pay Act; [For Employee age 40 or over or group termination of Employees age 40 and over: (6) the Age Discrimination in Employment Act; (7) the Older Workers Benefit Protection Act;]  (6) Executive Order 11246 (race, color, religion, sex, and national origin discrimination); (7) Executive Order 11141 (age discrimination); (8) Section 503 of the Rehabilitation Act of 1973 (disability discrimination); (9) negligence; (10) negligent hiring and/or negligent retention; (11) intentional or negligent infliction of emotional distress or outrage; (12) defamation; (13) interference with employment; (14) wrongful discharge; (15) invasion of privacy; or (16) violation of any other legal or contractual duty arising under the laws of the State of Maryland or the laws of the United States (“Claim” or “Claims”), which Employee now has, or claims to have, or which Employee at any time heretofore had, or claimed to have, or which Employee at any time hereinafter may have, or claim to have, against each or any of the Releasees, in each case as to acts or omissions by each or any of the Releasees occurring up to and including the Effective Date.

	
7.  

	
The release in the preceding paragraph of this Agreement does not apply to (a) all benefits and awards (including without limitation cash and stock components) which pursuant to the terms of any compensation or benefit plans, programs, or agreements of the Employer are earned or become payable, but which have not yet been paid, and (b) pay for accrued but unused vacation that the Employer is legally obligated to pay Employee, if any, and only if the Employer is so obligated, (c) unreimbursed business expenses for which Employee is entitled to reimbursement under the Employer’s policies, (d) any rights to indemnification that Employee has under any directors and officers or other insurance policy the Employer maintains or under the bylaws and articles of incorporation of the Company, and under any indemnification agreement, if any, and (e) any rights the Employee may have (if any) to workers compensation benefits.

	
8.  

	
Employee promises that he will not make statements disparaging to any of the Releasees.  Employee agrees not to make any statements about any of the Releasees to the press (including without limitation any newspaper, magazine, radio station or television station) without the prior written consent of the Employer.  The obligations set forth in the two immediately preceding sentences will expire two years after the Effective Date.  Employee will also cooperate with the Employer and its affiliates if the Employer requests Employee’s testimony.  To the extent practicable and within the control of the Employer, the Employer will use reasonable efforts to schedule the timing of Employee’s participation in any such witness activities in a reasonable manner to take into account Employee’s then current employment, and will pay the reasonable documented out-of-pocket expenses that the Employer pre-approves and that Employee incurs for travel required by the Employer with respect to those activities.

	
9.  

	
Except as set forth in this Section, Employee agrees not to disclose the existence or terms of this Agreement to anyone.  However, Employee may disclose it to a member of his immediate family or legal or financial advisors if necessary and on the condition that the family member or advisor similarly does not disclose these terms to anyone.  Employee understands that he will be responsible for any disclosure by a family member or advisor as if he had disclosed it himself.  This restriction does not prohibit Employee’s disclosure of this Agreement or its terms to the extent necessary during a legal action to enforce this Agreement or to the extent Employee is legally compelled to make a disclosure.  However, Employee will notify the Employer promptly upon becoming aware of that legal necessity and provide it with reasonable details of that legal necessity.

	
10.  

	
Employee has not filed or caused to be filed any lawsuit, complaint or charge with respect to any Claim he releases in this Agreement.  Employee promises never to file or pursue a lawsuit, complaint or charge based on any Claim released by this Agreement, except that Employee may participate in an investigation or proceeding conducted by an agency of the United States Government or of any state.  Notwithstanding the foregoing, Employee is not prohibited from filing a charge with the Equal Employment Opportunity Commission but expressly waives his right to personal recovery as a result of such charge.  Employee also has not assigned or transferred any claim he is releasing, nor has he purported to do so.  [For group termination of Employees age 40 and over: Employee covenants and agrees not to institute, or participate in any way in anyone else’s actions involved in instituting, any action against any of the members of the Decisional Unit with respect to any Claim released herein.]

	
11.  

	
The Employer and Employee agree that the terms of this Agreement shall be final and binding and that this Agreement shall be interpreted, enforced and governed under the laws of the State of Maryland.  The provisions of this Agreement can be severed, and if any part of this Agreement is found to be unenforceable, the remainder of this Agreement will continue to be valid and effective.

	
12.  

	
This Agreement sets forth the entire agreement between the Employer and Employee and fully supersedes any and all prior agreements or understandings, written and/or oral, between the Employer and Employee pertaining to the subject matter of this Agreement.

	
13.  

	
Employee is solely responsible for the payment of any fees incurred as the result of an attorney reviewing this agreement on behalf of Employee.  In any litigation concerning the validity or enforceability of this contract or in any litigation to enforce the provisions of this contract, the prevailing party shall be entitled to recover reasonable attorneys’ fees and costs, including court costs and expert witness fees and costs.

 

Employee’s signature below indicates Employee’s understanding and agreement with all of the terms in this Agreement.

 

Employee should take this Agreement home and carefully consider all of its provisions before signing it. [For Employee age 40 or over or group termination of Employees age 40 and over: Employee may take up to [twenty-one (21) days] [forty-five (45) days if group termination] to decide whether Employee wants to accept and sign this Agreement.  Also, if Employee signs this Agreement, Employee will then have an additional seven (7) days in which to revoke Employee’s acceptance of this Agreement after Employee has signed it.  This Agreement will not be effective or enforceable, nor will any consideration be paid, until after the seven (7) day revocation period has expired.] Again, Employee is free and encouraged to discuss the contents and advisability of signing this Agreement with an attorney of Employee’s choosing.

 

 

Employee should read carefully.  This agreement includes a release of all known and unknown claims through the effective date.  Employee is strongly advised to consult with an attorney before executing this document.

 

IN WITNESS WHEREOF, Employee and the Employer have executed this agreement effective as of the date first written above.

EMPLOYEE

C. Taylor Pickett

Signature

Date Signed

OMEGA HEALTHCARE INVESTORS, INC.

By:                                                                

Title:                                                                

  

  

  

ATTACHMENT I

[Insert descriptive name of decisional unit from the Agreement]

Employees Comprising the “Decisional Unit”

 

	
Job Title:

	
Age:

	
Participating:

	
Not Participating:

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