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EXHIBIT 10.2
OPPORTUNITY AGREEMENT
THIS OPPORTUNITY AGREEMENT (this "Agreement") is entered into as of
April , 1998 between Omega Healthcare Investors, Inc., a Maryland
corporation ("Omega"), and Omega Worldwide, Inc., a Maryland corporation
("Omega Worldwide").
The circumstances underlying the execution and delivery of this
Agreement are as follows:
A. Capitalized terms used but not otherwise defined herein have the
respective meanings given them in Article I below.
B. Omega is a REIT and, as such, principally pursues REIT Opportunities
that are passive investments producing current interest or rental income for
distribution to its shareholders. Nevertheless, Omega also desires to make other
investments, within or outside of the United States, if its investment
objectives can be satisfied.
C. Omega Worldwide (which is not a REIT and therefore is not limited in
the nature of the investment opportunities that it may pursue by Sections 856
though 860 of the Code) has been formed by Omega to provide Omega's shareholders
the opportunity to benefit from Worldwide Opportunities, which generally are not
well-suited to Omega because of its REIT status, investment approach and capital
structure. Specifically, Omega Worldwide has been formed to pursue healthcare
investment and operating opportunities and active advisory management
opportunities. Its investment strategy typically will not result in investments
producing a significant current yield for distribution to its shareholders;
rather, its investment strategy contemplates investments that will produce
long-term appreciation in the value of Omega Worldwide's stock.
D. In order to further its investment strategy, Omega Worldwide
requires a source of investment, operations and management expertise and
experience and other services. Pursuant to a Services Agreement of even date
herewith, Omega has agreed to provide to Omega Worldwide a number of services,
including without limitation the investment, operations and management expertise
and experience of the executives and other employees of Omega.
E. Omega would not have formed Omega Worldwide, and would not enter
into the Services Agreement with Omega Worldwide, but for Omega Worldwide's
agreement that Omega be provided with the first opportunity to pursue REIT
Opportunities and the opportunity to pursue Worldwide Opportunities that Omega
Worldwide declines to pursue. Omega Worldwide would not agree to provide Omega
with the first opportunity to pursue REIT Opportunities and the opportunity to
pursue Worldwide Opportunities that Omega Worldwide declines to pursue but for
Omega's agreement that Omega Worldwide be provided with the first opportunity to
pursue Worldwide Opportunities and the opportunity to pursue REIT Opportunities
that Omega declines to pursue.
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F. In order to further their respective investment strategies, each of
Omega and Omega Worldwide may desire to pursue jointly certain Opportunities
that each would be unable or unwilling to pursue individually.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained in this Agreement and other good and valuable
consideration, the receipt and adequacy of which hereby are acknowledged, the
parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. The following terms shall have the respective
meanings given them below:
"Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Affiliate" means, with respect to a Person, any Person that
controls, is controlled by or is under common control with such Person.
For purposes of this definition, "control" means, with respect to a
Person, the power to direct the management and policies of the Person,
directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "affiliated,"
"controlling" and "controlled" have meanings correlative to the
foregoing.
"Change of Control" means a change in control of either party
of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A, Regulation 240, 14a-101, promulgated under the
Act, or, if Item 6(e) is no longer in effect, any regulation issued by
the SEC pursuant to the Act that serves similar purposes; provided
that, without limitation, a Change of Control shall be deemed to have
occurred if and when (a) any "person" (as defined in Sections 13(d) and
14(d)(2) of the Act) is or becomes a beneficial owner, directly or
indirectly, of securities of such company representing 50% or more of
the combined voting power of such company's then outstanding
securities, (b) individuals who are members of the board of directors
immediately prior to a meeting of the shareholders of such company
involving a contest for the election of directors shall not constitute
a majority of the board of directors following such election, or (c) a
merger in which such company is not the surviving corporation, and the
shareholders of such company immediately prior to such merger do not
own at least a majority of the outstanding shares of the surviving
corporation.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
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"Independent Directors" means the members of the board of
directors of Omega who are not, and are not associates (as defined in
Rule 12b-2 promulgated under the Act) of, a direct, indirect or
beneficial stockholder, director, officer, employee or Affiliate of
Omega Worldwide, and the members of the board of directors of Omega
Worldwide who are not, and are not associates (as defined in Rule 12b-2
promulgated under the Act) of, a direct, indirect or beneficial
stockholder, director, officer, employee or Affiliate of Omega.
"Omega Notice" means a written notice that (a) describes an
Opportunity of which Omega Worldwide has become aware, including
whether the Opportunity is a REIT Opportunity or a Worldwide
Opportunity, and (b) if the Opportunity is a Worldwide Opportunity,
sets forth Omega Worldwide's determination to decline the Opportunity
or Omega Worldwide's request to pursue the Opportunity jointly with
Omega.
"Opportunity" means either a REIT Opportunity or a Worldwide
Opportunity.
"Person" means any individual, corporation, proprietorship,
firm, partnership, limited partnership, limited liability company,
trust, association or other entity.
"REIT" means a real estate investment trust under Sections 856
through 860 of the Code.
"REIT Opportunity" means any opportunity within the United
States to (a) make any investment in real estate, real estate
mortgages, real estate derivatives or entities that invest exclusively
in or have a substantial portion of their assets in any of the
foregoing, so long as such investment would be consistent with the
requirements of the Code and regulations relating to Omega's status as
REIT; or (b) to make any REIT Qualified Investment.
"REIT Qualified Investment" means an investment which, if made
by a REIT, would not result in the termination of the REIT's status as
a REIT pursuant to Sections 856 through 860 of the Code.
"SEC" means the Securities and Exchange Commission.
"Worldwide Notice" means a written notice that (a) describes
an Opportunity of which Omega has become aware, including whether the
Opportunity is a Worldwide Opportunity or a REIT Opportunity, and (b)
if the Opportunity is a REIT Opportunity, sets forth Omega's
determination to decline the Opportunity or Omega's request to pursue
the Opportunity jointly with Omega Worldwide.
"Worldwide Opportunity" means any opportunity to (a) provide
advisory services and/or management services to any person; (b) acquire
or make debt and/or equity investments (through a joint venture or
otherwise) in any healthcare
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investor or in healthcare real estate related assets outside
the United States; (c) make investments in any entity conducting
healthcare operations; or (d) make any other real estate, finance or
other investments not customarily undertaken by a qualified REIT.
ARTICLE II
RELATIONSHIP BETWEEN OMEGA
AND OMEGA WORLDWIDE
SECTION 2.1 OFFER OF OPPORTUNITIES TO OMEGA WORLDWIDE. Omega promptly
shall give Omega Worldwide a Worldwide Notice if (a) Omega becomes aware of a
Worldwide Opportunity or (b) Omega becomes aware of a REIT Opportunity and
determines, in its sole discretion, either that Omega does not desire to pursue
the REIT Opportunity or that Omega desires to pursue the REIT Opportunity
jointly with Omega Worldwide. Omega Worldwide shall, within ten (10) business
days after receipt of the Worldwide Notice, notify Omega in writing of Omega
Worldwide's determination as to whether Omega Worldwide desires to pursue the
Opportunity described in the Worldwide Notice. The failure of Omega Worldwide to
so notify Omega within the ten-day period described above shall be deemed an
election by Omega Worldwide to decline the Opportunity. If Omega Worldwide
notifies Omega that Omega Worldwide has determined not to pursue the
Opportunity, or if Omega Worldwide is deemed to have declined the Opportunity,
Omega shall have the right to pursue the Opportunity itself or to offer the
Opportunity to any Person.
SECTION 2.2 OFFER OF OPPORTUNITIES TO OMEGA. Omega Worldwide promptly
shall give Omega an Omega Notice if (a) Omega Worldwide becomes aware of a
Worldwide Opportunity or (b) Omega Worldwide becomes aware of a REIT Opportunity
and determines, in its sole discretion, either that Omega Worldwide does not
desire to pursue the Opportunity or Omega Worldwide desires to pursue the
Opportunity jointly with Omega. Omega shall, within ten (10) business days
after receipt of the Omega Notice, notify Omega Worldwide in writing of Omega's
determination as to whether Omega desires to pursue the Opportunity described in
the Omega Notice. The failure of Omega to so notify Omega Worldwide
within the ten-day period described above shall be deemed an election by Omega
to decline the Opportunity. If Omega notifies Omega Worldwide that Omega has
determined not to pursue the Opportunity or if Omega is deemed to have declined
the Opportunity, Omega Worldwide shall have the right to pursue the Opportunity
itself or to offer the Opportunity to any Person.
SECTION 2.3 DETERMINATION AS TO WHETHER TO PURSUE OPPORTUNITY. Each of
Omega and Omega Worldwide shall have the right, in its sole discretion, to
determine whether to pursue any REIT Opportunity and Worldwide Opportunity,
respectively. Omega shall not be obligated to notify Omega Worldwide of any REIT
Opportunity that Omega determines to pursue, and Omega Worldwide shall not be
obligated to notify Omega of any Worldwide Opportunity that Omega Worldwide
determines to pursue. The determination
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by Omega or Omega Worldwide as to whether to pursue individually a REIT
Opportunity or a Worldwide Opportunity, respectively, shall be made by the
affirmative votes of the Independent Director(s) of the board of directors of
Omega or Omega Worldwide, as the case may be. Each of Omega and Omega Worldwide
agrees that it will appoint, within ninety (90) days after the date of this
Agreement, and that it will thereafter maintain at all times during the term of
this Agreement, at least one (1) Independent Director.
SECTION 2.4 JOINT PURSUIT OF OPPORTUNITIES. Each of Omega and Omega
Worldwide may participate jointly with the other in Opportunities that either
Omega or Omega Worldwide declines to pursue individually. The terms upon which
each of Omega and Omega Worldwide may participate jointly in such Opportunities
will be negotiated in good faith on arm's length terms mutually acceptable to
the respective boards of directors of each of Omega and Omega Worldwide, with
the affirmative votes of the Independent Directors of the respective boards of
directors of Omega and Omega Worldwide.
ARTICLE III
MISCELLANEOUS
SECTION 3.1 TERM AND TERMINATION.
(a) This Agreement shall terminate on , 2008, subject to
renewal by mutual agreement of the parties for successive five-year terms.
(b) Notwithstanding Section 3.1(a), if either Omega or Omega
Worldwide is in default under this Agreement in any material respect and such
default remains uncured for a period of fifteen (15) days after receipt by the
defaulting party of written notice thereof, the other party may terminate this
Agreement by giving written notice to the defaulting party.
(c) Notwithstanding Section 3.1(a), this Agreement
automatically shall terminate upon a Change of Control of either party.
SECTION 3.2 ACKNOWLEDGMENTS.
( a) Each party acknowledges that the obligations undertaken
by it pursuant to this Agreement are unique and that the other party will not
have an adequate remedy at law if it shall fail to perform its obligations of
this Agreement in any material respect. Accordingly, each party agrees that (i)
the other shall have the right to specific performance of the terms of this
Agreement, (ii) the right of each party to specific performance of the terms of
this Agreement is essential to protect the rights and interests of the parties
and (iii) each party shall have the right to obtain preliminary and permanent
injunctive relief to secure specific performance and to prevent a breach or
contemplated breach of this Agreement by the other party.
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(b) If the performance of any provision of this Agreement, at
the time such performance shall be due, shall transcend the limit of validity
prescribed by law, then the obligation to be performed shall be reduced to the
limit of such validity; and if any clause or provision contained in this
Agreement operates or would invalidate this Agreement, in whole or in part, then
such clause or provision only shall be held ineffective, as though not herein
contained, and the remainder of this Agreement shall remain operative and in
full force and effect. The parties shall negotiate in good faith a replacement
clause or provision as consistent with the ineffective clause or provision as is
practicable under the law.
SECTION 3.3 SUBSIDIARIES. If either party elects to pursue any
Opportunity that is offered to it, it may elect to have a subsidiary pursue the
Opportunity on its behalf.
SECTION 3.4 CONTRACTUAL RESTRICTIONS. No party shall be required to
comply with the notification rights set forth in Article II of this Agreement if
such compliance would violate any confidentiality or other contractual
restriction binding on such party.
SECTION 3.5 INTENTIONALLY DELETED.
SECTION 3.6 AMENDMENT. This Agreement may be amended, modified or
supplemented only in writing signed by each of the parties hereto; provided,
however, that any such amendment, modification or supplement shall be approved
by the respective boards of directors of Omega and Omega Worldwide.
SECTION 3.7 NOTICES. Any notice, request, instruction or other document
given hereunder by a party hereto shall be in writing and shall be deemed to
have been given (i) when received if given in person or by courier or
courier service, (ii) on the date of transmission if sent by facsimile or other
wire transmission, or (iii) three business days (seven business days for
overseas mail) after being deposited in the U.S. mail, certified or registered
mail, postage prepaid:
(a) If to Omega, addressed as follows:
Omega Healthcare Investors, Inc.
000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxx Xxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile No.: (000) 000-0000
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(b) If to Omega Worldwide, addressed as follows:
Omega Worldwide, Inc.
000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxx Xxxxx, Xxxxxxxx 00000
Attention: Vice President and Secretary
Facsimile No.: (000) 000-0000
or to such other individual or address as a party hereto may designate for
itself by notice given as herein provided.
SECTION 3.8 WAIVERS. The delay or failure of a party hereto at any time
or times to require performance of any provision hereof shall in no manner
affect its right at a later time to enforce the same. No waiver by a party of
any condition or of any breach of any term, covenant, representation or warranty
contained in this Agreement shall be effective unless in writing, and no waiver
in any one or more instances shall be deemed to be a further or continuing
waiver of any such condition or breach in other instances or a waiver of any
other condition or breach of any other term, covenant, representation or
warranty. Either party may waive in writing participation in any Opportunity,
whether a REIT Opportunity or a Worldwide Opportunity, and such waiver shall be
binding in the absence of fraud.
SECTION 3.9 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 3.10 INTERPRETATION. The headings preceding the text of
Articles and Sections included in this Agreement are for convenience only and
shall not be deemed part of this Agreement or be given any effect in
interpreting this Agreement. The use of the masculine, feminine or neuter gender
herein shall not limit any provision of this Agreement. The use of the terms
"including" or "include" shall in all cases mean "including, without limitation"
or "include, without limitation," respectively. Underscored references to
Articles, Sections or Exhibits shall refer to those portions of this Agreement.
SECTION 3.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MICHIGAN, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 3.12 ASSIGNMENT. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns. Except as otherwise specifically provided in this Agreement, no
assignment of any rights or obligations shall be made by any party without the
written consent of the other party.
SECTION 3.13 NO THIRD PARTY BENEFICIARIES. This Agreement is solely for
the
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benefit of the parties hereto, and no provision of this Agreement shall be
deemed to confer upon third parties any remedy, claim, liability, reimbursement,
cause of action or other right.
SECTION 3.14 REMEDIES CUMULATIVE. The remedies provided in this
Agreement shall be cumulative and shall not preclude the assertion or exercise
of any other rights or remedies available by law, in equity or otherwise.
SECTION 3.15 ENTIRE UNDERSTANDING. This Agreement sets forth the entire
agreement and understanding of the parties hereto with respect to the matters
set forth herein and supersedes any and all prior agreements, arrangements and
understandings between the parties.
SECTION 3.16 NO PRESUMPTION AGAINST DRAFTER. Each of the parties hereto
has participated in the negotiation and drafting of this Agreement. In the event
of any ambiguity or a question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties, and no
presumption or burden of proof shall arise favoring either party by virtue of
the authorship of any of the provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
OMEGA HEALTHCARE INVESTORS, INC.
By:
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Name:
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Title:
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OMEGA WORLDWIDE, INC.
By:
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Name:
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Title:
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