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EXHIBIT 10.3
12/13/97
SERVICES AGREEMENT
This Services Agreement (this "Agreement") is made as of this ___ day of
_________ 1998 (the "Effective Date"), by and between Omega Healthcare
Investors, Inc., a Maryland corporation ("Omega"), and Omega Worldwide, Inc., a
Maryland corporation ("Omega Worldwide").
WHEREAS, Omega intends to consolidate its healthcare management business
and international operations and assets into Omega Worldwide and distribute
certain of the outstanding Common Stock of Omega Worldwide on a pro rata basis
to the holders of the Common Stock of Omega and sell some of the outstanding
Common Stock of Omega Worldwide to institutional investors; and
WHEREAS, Omega Worldwide wishes to purchase and acquire from Omega certain
administrative services, as more fully described in Exhibit A hereto (the
"Services"), designed to assist Omega Worldwide in the cost-efficient
administration of Omega Worldwide's corporate and business affairs, in the
manner and pursuant to terms and conditions as more specifically described
herein; and
WHEREAS, Omega desires to provide or cause to be provided the Services
specified in this Agreement under the terms and conditions specified herein.
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
Section 1. Disinterested Directors.
As used herein, the term "Disinterested Directors" means the member(s) of
Omega Worldwide's Board of Directors who are not, and are not associates of, a
direct, indirect or beneficial stockholder, director, officer, employee or
affiliate of Omega or any of its affiliates. For purposes of this Section, the
terms "associate" and "affiliate" shall have the respective meanings given them
in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as
amended.
Section 2. Services.
2.1 Subject to the terms of this Agreement, Omega shall render to
Omega Worldwide those routine and ordinary Services listed on Exhibit A,
attached hereto and made a part hereof. Omega Worldwide shall give
Omega written notice of its intent to terminate any Service at least 10 days
prior to the termination of the Service.
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2.2 From time to time, Omega Worldwide may desire additional services
not specifically addressed in Exhibit A. The provision of any such additional
services by Omega, and the amount of compensation therefor, shall, if material,
be approved by a majority of the Disinterested Directors and the rates for such
compensation shall be the rates which allow Omega to recover the direct cost
for such services. For purposes of this subsection 2.2, the term "material"
shall mean an amount expected to be equal to or in excess of $_________ in any
calendar year.
2.3 In providing the Services Omega shall not be obligated to (i) hire
any additional employees; (ii) maintain the employment of any specific current
Omega employee; (iii) purchase, please or license any additional equipment or
software; or (iv) pay any costs related to the transfer or conversion of Omega
Worldwide's data to Omega Worldwide or any alternate supplier of administrative
services. Upon the termination of any of the Services, Omega Worldwide shall
be obligated to return to Omega, as soon as practicable, any equipment or other
property of Omega relating to the Services which is owned or leased by Omega
and is or was in Omega Worldwide's possession or control.
2.4 Omega Worldwide shall compensate Omega quarterly for Omega's costs
for rendering such Services (including, without limitation, overhead expenses
such as salary expenses, rent, heating and air conditioning, electricity, and
other similar expenses). Omega's costs for providing the Services shall be
determined at the end of each fiscal quarter by (i) dividing Omega Worldwide's
assets at the end of such fiscal quarter by the sum of Omega's assets at the
end of such fiscal quarter and Omega Worldwide's assets, and (ii) multiplying
the quotient by the amount of Omega's overhead expenses.
2.5 Omega shall xxxx Omega Worldwide within 30 days of the end of each
fiscal quarter for the amount due to Omega for Services provided for such
fiscal quarter. All such bills shall contain reasonable detail with respect to
the calculation of the fee and shall be due 30 days after receipt. The failure
of Omega Worldwide to pay any xxxx within 30 days of receipt shall result in
Omega Worldwide owing Omega an additional handling charge equal to 1-1/4% per
month of the amount due from the date due to the payment date.
Section 3. Term.
The initial term of this Agreement shall commence on the date hereof and
shall extend through December 31, 1999 (the "Initial Term"). Thereafter, this
Agreement shall be renewed for consecutive one (1) year terms (each, a "Renewal
Term"), provided that Omega and Omega 4. Worldwide mutually consent to each
such renewal not less than ninety (90) days prior to the end of the current
term. A majority of the Disinterested Directors must approve each renewal of
this Agreement and approve the compensation payable by Omega Worldwide during
such Renewal Term for the Services.
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Section 4. Confidentiality.
Any and all information which is not generally known to the public
which is exchanged between the parties in connection with this Agreement,
whether of a technical or business nature, shall be considered to be
confidential. The parties agree that confidential information shall not be
disclosed to any third party or parties without the written consent of the
other party. Each party shall take reasonable measures to protect against
nondisclosure of confidential information by its officers and employees.
Confidential information shall not include any information (i) which is or
becomes part of the public domain, (ii) which is obtained from third parties
who are not bound by confidentiality obligations, or (iii) which is required to
be disclosed by law or the rules of any state or Federal regulatory agency, any
national securities exchange or the NASDAQ National Market System. The
provisions of this Section shall survive the termination of this Agreement.
Section 5. Indemnification.
5.1 Omega Worldwide shall indemnify, defend and hold Omega,
and its directors, officers, and employees harmless from and against all
damages, losses and out-of-pocket expenses (including fees) incurred by them in
the course of performing the duties prescribed hereby, except for matters
covered by subsection 8.2 hereof.
5.2 Omega shall indemnify, defend and hold Omega Worldwide,
its directors, officers and employees harmless from and against all damages,
losses and out-of-pocket expenses (including fees) caused by or arising out of
any willful misconduct or gross negligence in the performance of any obligation
or agreement of Omega herein.
5.3 Except as otherwise provided in subsection 8.2 hereof,
Omega does not assume any responsibility under this Agreement other than to
render the Services called for under this Agreement in good faith. Omega
Worldwide's sole remedy on account of the failure of Omega to render the
Services as and when required hereunder shall be to procure services
elsewhere and to charge Omega the difference between the reasonable increased
cost, if any, to procure new services, and the current cost to Omega Worldwide
to procure Services under this Agreement.
Section 6. Notices.
All notices, requests, demands, waivers and other communications
(hereafter "notices") required or permitted to be given pursuant to this
Agreement shall be in writing and shall be deemed to have been duly given (i)
at the time of delivery, if delivered by hand, (ii) on the date of termination,
if sent by telegrams, telex or telecopy or (iii) three business days after
mailing, if mailed registered or certified first- class mail, postage prepaid,
return receipt requested. Notices shall be delivered or sent, as the case may
be, to the following addresses or to such other addresses as the parties may
hereafter designate by like notice similarly provided:
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If to Omega Worldwide: Omega Worldwide, Inc.
000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxx 000 Xxx Xxxxx,
Xxxxxxxx 00000
Attention: Chief Financial Officer
If to Omega: Omega Healthcare Investors, Inc.
000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxx 000 Xxx
Xxxxx, Xxxxxxxx 00000
Attention: Vice President and Secretary
Section 7. Force Majeure.
Anything else in this Agreement notwithstanding, Omega shall be excused
from performance hereunder while, and to the extent that, its performance is
prevented by fire, drought, explosion, flood, invasion, rebellion, earthquake,
civil commotion, strike or labor disturbance, governmental or military
authority, act of God, mechanical failure or any other event or casualty beyond
the reasonable control of Omega , whether similar or dissimilar to those
enumerated in this paragraph (hereafter a "Casualty"). In the event of a
Casualty, Omega Worldwide shall be responsible for making its own alternative
arrangements with respect to the interrupted Services.
Section 8. Independent Contractor.
The relationship of Omega to Omega Worldwide which is created hereunder
is that of an independent contractor. This Agreement is not intended to created
and shall not be construed as creating between Omega Worldwide and Omega the
relationship of affiliate, principal and agent, joint venture, partnership, or
any other similar relationship, the existence of which is hereby expressly
denied.
Section 9. Waiver, Amendment or Modification.
No waiver, amendment or modification of this Agreement shall be valid
unless in writing and duly executed by the party to be charged therewith.
Section 10. Assignment; Third Party Beneficiaries.
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto, each of their respective successors and permitted assigns,
but may not be assigned by either party without the prior written consent of
the other party, and no other persons shall have or derive any right,
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benefit or obligation hereunder. Omega shall not be liable to any third party
in any way for any obligations or commitment pursuant to this Agreement or for
any act or omission hereunder.
Section 11. Headings.
The headings and titles of the various paragraphs of this Agreement are
inserted merely for the purpose of convenience, and do not expressly or by
implication limit, define, extend or affect the meaning or interpretation of
this Agreement or the specific terms or text of the paragraph so designated.
Section 12. Severability.
If any provision of this Agreement shall be held invalid by a court with
jurisdiction over the parties to this Agreement, then and in that event such
provision shall be deleted from the Agreement, which shall then be construed to
give effect to the remaining provisions thereof. If any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, then in that event, to the maximum extent permitted by law,
such invalidity, illegality or enforceability shall not affect any other
provisions of this Agreement or any other such instrument.
Section 13. Counterparts.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which taken together shall be
considered one and the same instrument.
Section 14. Governing Law.
Despite any different result required by any conflicts of law
provisions, this Agreement shall be governed by the laws of the State of
Maryland.
Section 15. Entire Agreement.
This Agreement, together with the Exhibits hereto, constitutes and
sets forth the entire agreement and understanding of the parties pertaining to
the subject matter hereof, and no prior or contemporaneous written or oral
agreements, understandings, undertakings, negotiations, promises, discussions,
warranties or covenants not specifically referred to or contained herein or
attached hereto shall be valid and enforceable. No supplement, modification,
termination in whole or in part, or waiver of this Agreement shall be binding
unless executed in writing by the party to be bound thereby. No waiver of any
of the provisions of this Agreement shall be deemed, or shall constitute, a
waiver of any other provision hereof (whether or not similar), nor shall any
such waiver constitute a continuing waiver unless otherwise expressly provided.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
OMEGA HEALTHCARE INVESTORS, INC.
By:_____________________________________
Name:
Title:
OMEGA WORLDWIDE, INC.
By:_____________________________________
Name:
Title:
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EXHIBIT A
SERVICES TO BE PROVIDED BY OMEGA
1. Corporate Accounting Services for:
Payroll and related items; payment of operating expenses; payment of
development costs; payment of mortgages and notes payable; collection
of mortgages and notes receivable; payment of real estate, local
privilege, sales, use, personal property taxes; over the counter
deposits; cash management; investment of excess funds; coverage of
controlled disbursement accounts; wire transfers in and out; bank
account maintenance; bank account reconciliations; opening/closing of
operating, security deposit, local depository and xxxxx cash accounts;
maintaining bank relationships; monitoring balances for bank
compensation purposes; obtaining FEIN's; maintaining FEIN information;
providing FEIN's to vendors and tenants; processing property insurance
claims; maintenance of tax returns; labor allocations and related
recoveries; travel and entertainment reimbursements; employee W-2's;
tracking of pending deal expenses; tracking of relocation expenses;
tracking of interviewing expenses; general accounting system
maintenance; identification of ERISA issues; tracking benefit hours;
tracking and paying wage garnishments and related orders; union
reporting; dealing with investment houses for 401(k) plan; paying
employee/employer match for 401(k); payroll bank account
reconciliations; retirement plan discrimination tests; dealing with
outside/tenant auditors for labor accounting; billing reports for
employee insurance; dealing with taxing jurisdictions for state,
federal and local employer taxes; dealing with payroll service bureau;
dealing with insurance agency regarding employee/employer share of
insurance payments; auto and equipment leasing; title and license
propriety; taxable aspect of leased autos and gas; ad hoc reports
concerning year-to-date overhead, projected overhead, direct payroll
by company, department, etc.; corporate budget monitoring; maintenance
of intercompany notes and related interest; workers' compensation
xxxxxxxx and audits; head counts for fidelity bonds.
2. Management Personnel Services for:
Market evaluation; strategic and long range planning -- interfacing
with leasing, operations and development to improve property
performance; personnel training and development; strategic
advertising for certain properties; property training seminars and
conferences; collateral material resources; hiring and terminating
property personnel; property purchasing, contracts, payables and
receivables; planning and executing special events; advertising
campaigns; public relations including crisis communications training
and management; designing and executing visual displays; merchant
communication and meetings.
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3. Human Resources Services for:
Coordination of recruitment (sourcing and interviewing) and staffing
needs; temporary usage; outplacement; employee and labor relations
including statutory compliance, affirmative action, workforce
demographics and utilization and EEO -- charges and annual reporting
requirements; compensation administration; office services; Human
Resources Information Systems; development of employment policies and
procedures; personnel administration -- processing of new hires,
terminations, transfers, leaves of absence, and miscellaneous status
changes; unemployment; workers compensation; employee assistance
program; training and development including new employee orientation,
supervisory skills and management development; employee relocation;
health and welfare programs -- group health, dental, life insurance,
disability, accidental death (AD&D), supplemental life insurance;
qualified plans including 401(k) and cash balance; miscellaneous
employee benefits -- tuition reimbursement, key employee medical;
employee communications; desktop publishing; design and print material
coordination.
4. Operations Services for:
Coordination of mail in/out and messenger/overnight mail; coordination
of supply orders, copy services, records storage, facsimile services
and office maintenance.
5. Computer Services for:
Bookkeeping; accounts payable and cash disbursement systems (including
fraud control); cash management system; wire transfers; short-term
investments; tax and regulatory reporting; auditor support; payroll
and personnel related systems support; litigation management system;
national retail reporting; capital projects system; telephone services
and maintenance; telephone rate negotiation; telephone services
consultation; configuring telephone systems for malls; mainframe
computer operation and support; local area network and wide area
network communications support; personal computer setup and
distribution; personal computer maintenance and repair; hotline desk
with hardware, commercial software and proprietary program support;
training and orientation of new employees; advanced training;
documentation support; volume purchase discounts; electronic mail for
internal and external communications; broker communication support;
maintenance of broker names and mailing addresses.
6. Financial Reporting/Asset Accounting for:
Training and staffing; hiring and reviews; general ledger review and
maintenance; outside manager relations/recording/reporting; budget
review and approval; cash/tax/GAAP variance analysis -- asset review;
cash flow, income tax and GAAP projections; cash generated
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analysis and reporting; periodic historical cash/tax/GAAP financial
reporting; audit support; investor reporting; technical review of SEC
filings including XXXXX support; acquisition/disposition analysis,
cutoff, prorations, reports and reviews; depreciation and amortization
lapsing schedules; profit and loss calculations; distribution
allocations; preference return calculations; lender statements;
contingent interest reports; escalation billing statements/audits;
maintenance of intercompany advances; maintenance of investment and
capital account records.
7. Legal Services for:
Coordination of litigation of various forms; corporate and
regulatory records and filings; legal aspects of operational
issues and questions; equity offerings and debt financings; contract
disputes; other miscellaneous matters.
8. Insurance Services for:
Claims handling; processing property insurance claims; premiums/policy
renewals; loss prevention and other miscellaneous administrative
functions.
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