OMEGA WORLDWIDE, INC.
CHANGE IN CONTROL AGREEMENT
This Change in Control Agreement (the "Agreement") is made as of March
24, 2000 (the "Effective Date") by and between XXXXX X. XXXXXXXX (the
"Officer"), and OMEGA WORLDWIDE, INC., a Maryland corporation.
WHEREAS, the Officer presently serves at the pleasure of the Board of
Directors of the Company as Chief Operating Officer of the Company and performs
significant strategic and management responsibilities necessary to the continued
conduct of the Company's business and operations.
WHEREAS, the Board of Directors of the Company has determined that it
is in the best interests of the Company and its stockholders to assure that the
Company will have the continued dedication and objectivity of the Officer,
notwithstanding the possibility or occurrence of a Change in Control (as defined
below) of the Company.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and in consideration of the continuing employment of Officer by the
Company, the parties agree as follows:
1. Definitions. For purposes of this Agreement, the following terms
shall have the meanings set forth in this Section 1:
(a) "Board" means the Board of Directors of the Company.
(b) "Cause" means (i) willful refusal to follow a lawful
written order of the Board; (ii) willful misconduct or reckless
disregard of his or her duties by the Officer; (iii) any act of fraud,
misappropriation, dishonesty or moral turpitude; or (iv) the conviction
of the Officer of any felony.
(c) "Change in Control" means the occurrence of any of the
following events:
(i) A change in control of the Company 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 Securities Exchange Act of 1934 as in
effect on the date hereof (the "Exchange
Act"), or, if Item 6(e) is no longer in
effect, any regulation issued by the
Securities and Exchange Commission pursuant
to the Exchange Act which serves similar
purposes.
(ii) any "Person" (as defined in Section 3(a)(9)
of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) of the Exchange
Act) is or becomes the "beneficial owner"
(as defined in Rule 13d-3 of the Exchange
Act), directly or indirectly, of equity
securities of the Company representing more
than fifty percent (50%) of the combined
voting power or value of the surviving
entity's then outstanding voting equity
securities.
(iii) during any period of not more than two (2)
consecutive years, not including any period
prior to the Effective Date, individuals who
at the beginning of such period constitute
the Board (the "Incumbent Directors"), cease
for any reason to constitute at least a
majority thereof; provided, however, that
any director who was not a director as of
the Effective Date shall be deemed to be an
Incumbent Director if that director was
elected to such board of directors on the
recommendation, or with the approval, of at
least two-thirds (2/3)of the directors who
then qualified as Incumbent Directors; and
provided further, that no director whose
initial assumption of office is in
connection with an actual or threatened
election contest relating to the election
of directors shall be deemed to be an
Incumbent Director;
(iv) the approval by the shareholders of the
Company of a merger, consolidation, share
exchange or other reorganization in which
the shareholders of the Company immediately
prior to the transaction do not own equity
securities of the surviving entity
representing at least fifty percent (50%) of
the combined voting power or value of the
surviving entity's then outstanding voting
securities immediately after the
transaction;
(v) the sale or transfer of more than fifty
percent (50%) of the value of the assets of
the Company, in a single transaction, in a
series of related transactions, or in a
series of transactions over any one year
period; or
(vi) a dissolution or liquidation of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as
amended.
(e) "Company" means Omega Worldwide, Inc.
(f) "Compensation Committee" means the Compensation Committee
of the Board.
(g) "Confidential Information" means data and information
relating to the business of the Company (which does not rise to the
status of a Trade Secret) which is or has been disclosed to the Officer
or of which the Officer became aware as a consequence of or through the
Officer's relationship to the Company and which has value to the
Company 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 (except where such
public disclosure has been made by the Officer without authorization)
or that has been independently developed and disclosed by others, or
that otherwise enters the public domain through lawful means.
(h) "Disability" has the same meaning as provided in the
long-term disability plan or policy maintained or, if applicable, most
recently maintained, by the Company for the Officer. If no long-term
disability plan or policy was ever maintained on behalf of the Officer,
Disability means that condition described in Code Section 22(e)(3), as
amended from time to time. In the event of a dispute, the determination
of Disability shall be made by the Board and shall be supported by
advice of a physician competent in the area to which such Disability
relates.
(i) "Fair Market Value of Restricted Stock Awards" means an
amount equal to the value per share of common stock of the Company
multiplied by the number of shares of common stock subject to
restricted stock awards granted to the Officer during the twelve (12)
full months (excluding any partial month in which the Change in Control
occurs) immediately preceding termination of the Officer's employment.
The value per share will be equal to:
(i) the closing price per share at which sales of the
common stock of the Company shall have been sold on the most
recent trading date immediately prior to the date of grant of
the restricted stock award, as reported by any such exchange
or system selected by the Company on which the shares of
common stock are then traded;
(ii) if such market information is not published, the
price of one share of common stock in the over-the-counter
market on the most recent trading date prior to the date of
grant of the restricted stock award that is available as
reported by the Nasdaq Stock Market or, if not so reported, by
a generally accepted reporting service; or
(iii) if no such information is available, the value
of one share of common stock as of the date of grant of the
restricted stock award, as determined in good faith by the
Company with due consideration being given to the most recent
independent appraisal of the Company and the valuation
methodology used in the appraisal.
(j) "Quit With Good Reason" mean the Officer's resignation
within ninety (90) days following the occurrence of any of the
following events which (except as to Subsection (j)(vi)) occurs without
the Officer's written consent:
(i) the failure of the Board to reelect the
Officer to his or her then existing office;
(ii) a diminution in the Officer's title, position,
authority or responsibility or the assignment to the Officer
of duties or work responsibilities which are inconsistent with
his or her title, position, authority or responsibility;
(iii) any reduction in the Officer's base salary,
bonus opportunity or other compensation, or a material
reduction in employee benefits;
(iv) a change in the position to which the Officer
reports or the positions which report to the Officer;
(v) the relocation of the Company's headquarters or
the primary place at which the Officer is to perform his or
her duties to a location more than fifty (50) miles from the
location at which the Officer previously performed his or her
duties; or
(vi) the expiration of one hundred eighty (180) days
after the occurrence of a Change in Control, regardless of
whether the Officer consented to the Change in Control.
Each separate event meeting the above requirements will allow
the Officer to terminate his or her employment due to a Quit With Good
Reason and the failure of the Officer to do so within one hundred
eighty (180) days from the occurrence of such event in any given case
will not prevent the Officer from terminating his or her employment due
to a Quit With Good Reason if a later event occurs which entitles the
Officer to do so.
(k) "Period of Employment" means the number of months that the
Officer has been an employee of the Company. Prior service may be
included within "Period of Employment" at the discretion of the
Compensation Committee. "Period of Employment" shall include
disability, sick leave, vacation and military leaves of absence but
exclude other leaves of absence unless such leaves of absence are for
the convenience of the Company and are approved by the Compensation
Committee.
(l) "Termination Payment" means a payment under this Agreement
equal to two (2) times the Officer's Total Compensation less one dollar
($1.00).
(m) "Total Compensation" means that amount paid to the Officer
by the Company during the last twelve (12) full months (excluding any
partial month in which the Change in Control occurs) immediately
preceding termination of Officer's employment equal to aggregate
compensation (salary, inclusive of any elective salary reductions, such
as contributions to a plan described in Code Section 401(k) or to a
nonqualified deferred compensation plan, plus any cash bonus) plus the
Fair Market Value of Restricted Stock Awards (whether or not such
awards are vested).
(n) "Trade Secrets" means Employer information including, but
not limited to, technical or nontechnical data, formulas, 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.
2. Eligibility. Unless otherwise determined by the Compensation Committee, no
Termination Payment shall be paid to the Officer unless, at the time that the
Change in Control occurs, his or her Period of Employment is at least one (1)
year.
3. Severance Benefits Upon Termination Of Employment. If, within three (3) years
after a Change in Control, the Officer's employment is terminated by the Company
without Cause or by the Officer due to a Quit With Good Reason, the Company
shall pay to the Officer, a Termination Payment in a lump sum cash payment
within thirty (30) days following the later of the Officer's termination of
employment or the occurrence of the Change in Control. Payments made to the
Officer hereunder as a Termination Payment shall be subject to applicable
federal, state and local tax withholding requirements. If the Officer's
employment is terminated due to his death or Disability, that will not be deemed
a termination of employment by the Company without Cause or by a Quit With Good
Reason.
4. Death Of Officer. If the Officer is entitled to receive a Termination Payment
and dies before receiving the Termination Payment, the Company will pay the
Termination Payment to his or her beneficiary as designated in writing by the
Officer or, in the absence of such written designation, his or her estate. The
Officer shall designate in writing a beneficiary or beneficiaries to receive the
Termination Payment hereunder. The Officer may revoke or change his or her
designation of a beneficiary at any time by written notice to the Company.
5. Other Company Employment Benefits. If the Officer is entitled to receive a
Termination Payment, the Officer shall be entitled to participate in certain
employee insurance plans (as described below) for three (3) years following the
date of termination (the "Termination Coverage Period"). During the Termination
Coverage Period, the officer shall be treated as a continuing employee for
purposes of participation in and accrual of rights and benefits under all of the
Company's life, accident, medical and dental insurance plans for Officer and his
or her spouse. If such participation in one or more of such plans is not
possible, Company shall arrange to provide Officer with benefits substantially
similar to those which the Officer would have been entitled to receive if he or
she had continued as an employee at the Total Compensation level. Benefits of
continued participation in the Company deferred compensation plan and any
retirement plans hereafter adopted in which the Officer was entitled to
participate prior to the date of termination shall continue; provided, however,
that if Officer's continued participation is not possible under the general
terms and provisions of the foregoing plans, the Company shall arrange to
provide Officer with benefits substantially similar to those which the Officer
would have been entitled to receive under the foregoing plans if he or she had
continued as an employee of the Company during the Termination Coverage Period.
6. Tax Indemnity Payment. Should any of the payments or benefits that are
provided for hereunder to be paid to or for the benefit of Officer or payments
or benefits under any other plan, agreement or arrangement between Officer and
the Company, be determined or alleged to be subject to an excise or similar
purpose tax pursuant to Code Section 4999 or any successor or other comparable
federal, state or local tax laws, the Company shall pay to the Officer such
additional compensation as is necessary (after taking into account all federal,
state and local income taxes payable by the Officer as a result of the receipt
of such additional compensation) to place the Officer in the same after-tax
position (including federal, state and local taxes) the Officer would have been
in had no such excise or similar purpose tax (or any interest or penalties
thereon) been paid or incurred. The Company hereby agrees to pay such additional
compensation within ten (10) business days after the Officer notifies the
Company that the Officer intends to file a tax return which takes the position
that such excise or similar purpose tax is due and payable in reliance upon a
written opinion of the Officer's tax counsel (such tax counsel to be chosen
solely by the Officer), that is more likely than not that such excise tax is due
and payable. The costs of obtaining such tax counsel's opinion shall be borne by
the Company, and as long as such tax counsel was chosen by the Officer in good
faith, the conclusions reached in such opinion shall not be challenged or
disputed by the Company. If the Officer intends to make any payment with respect
to any such excise or similar purpose tax as a result of an adjustment to the
Officer's tax liability by any federal, state or local tax authority, the
Company will pay such additional compensation by delivering its cashier's check
payable in such amount to the Officer within ten (10) business days after the
Officer notifies the Company of his intention to make such payment. Without
limiting the obligation of the Company hereunder, the Officer agrees, in the
event the Officer makes any payment pursuant to the preceding sentence, to
negotiate with the Company in good faith with respect to procedures reasonably
requested by the Company which would afford the Officer the ability to contest
the imposition of such excise tax; provided, however, that the Officer will not
be required to afford the Company any right to contest the applicability of any
such excise tax to the extent that the Officer reasonably determines (based upon
the opinion of his tax counsel) that such contest is inconsistent with the
overall tax interests of the Officer.
7. No Mitigation. No amounts or benefits payable to the Officer hereunder shall
be subject to mitigation or reduction by income or benefits the Officer receives
from other sources.
8. Nondisclosure Of Confidential Information. The Officer agrees not to
disclose, directly or indirectly to any third person any Confidential
Information, Trade Secrets or customer list relating to Company's business
within three (3) years following payment of the Termination Payment.
9. Continued Employment. Nothing herein shall entitle Officer to continued
employment with the Company or to continued tenure in any specific office or
position.
10. Sole Remedy. The Termination Payment provided hereby supersedes and
replaces any and all other termination compensation to which Officer is or might
become entitled, except termination compensation covered by an agreement in
effect on the Effective Date that has separately been approved by the
Compensation Committee or by the Board.
11. 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
or to an entity which purchases all or substantially all of the assets of the
Company. In the event the Company assigns this Agreement as permitted by this
Agreement and the Officer remains employed by the assignee, the "Company" as
defined herein will refer to the assignee and the Officer will not be deemed to
have terminated employment hereunder until the Officer terminates employment
from the assignee.
12. Attorneys' Fees. If the Officer (or the Officer's estate in the event of his
or her death) brings any action at law or in equity to enforce any of the
provisions or rights hereunder, the Company shall pay all costs, expenses and
reasonable attorneys' fees incurred by the Officer.
13. Headings. Sections or other headings contained herein are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
14. Entire Agreement. This Agreement contains the entire understanding of the
parties with respect to the subject matter hereof.
15. Intentionally Omitted.
16. Severability. In the event that one or more of the provisions of this
Agreement shall be or become invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not be affected thereby.
17. Governing Law. To the full extent controllable by stipulation of the
parties, this Agreement shall be interpreted and enforced under Michigan law.
18. Amendment. This Agreement may not be modified, amended, supplemented or
terminated except by a written agreement between the Company and the Officer.
IN WITNESS WHEREOF, each of the parties has executed this Agreement as
of the date and year first above written.
COMPANY:
OMEGA WORLDWIDE, INC.,
a Maryland corporation
By: /s/: Xxxxx X. Xxxxxx, Xx.
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Its: President and Chief Executive Officer
OFFICER:
/s/: Xxxxx X. Xxxxxxxx
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