CONSULTING AGREEMENT

Exhibit 10.1

CONSULTING AGREEMENT

THIS AGREEMENT (the “Agreement”) is made effective as of the 1st day of August, 2015 (the “Effective Date”), except as otherwise provide herein, among Omega Healthcare Investors, Inc. (the “Parent”), Omega Asset Management LLC (the “Company”) and R. Lee Crabill, Jr. (the “Consultant”).

INTRODUCTION

The Consultant has retired from the Company and its Affiliates effective July 31, 2015, and the term of the Employment Agreement effective March 31, 2015 among the Parent, the Company and the Consultant (the “Employment Agreement”) has been terminated as of July 31, 2015. The Company wishes to allow the Consultant, having reached age 61 and performed 14 years of service to the Company and its Affiliates, to retire without forfeiting incentive compensation that is attributable to services already performed. Further, the Company recognizes that due in part to the Consultant’s long tenure with the Company and its Affiliates, the Consultant has unique knowledge, experience and skills, and the Company has a unique need to engage the Consultant for an interim period to assist in a smooth transition of his duties and knowledge to other officers. Accordingly, the parties desire to enter into an agreement pursuant to which the Consultant will provide services to the Company from and after the Effective Date through December 31, 2015, upon the terms set forth below.

NOW, THEREFORE, the parties agree as follows:

(a)         Engagement.  The Consultant shall perform such business consulting and business advisory services to the Company as the Company may require from time to time. The Consultant shall report to the Chief Executive Officer of the Company or to such person(s) as the Chief Executive Officer shall designate.

(b)        Consultant Relationship.  The Consultant is an independent contractor to the Company, and the Consultant shall not be an employee of the Company. The Consultant is not an agent of the Company and shall have no right to bind the Company. The Company will report all payments to be made under Sections 2(a) and 2(f) on Forms 1099 as payments to the Consultant for independent contracting services, but will report the payments under Sections 2(b) through 2(e) on Form W-2 or Form 1099 to the extent that the Company determines to be the appropriate reporting. The Consultant shall not be entitled to participate in any employee benefits or incentive compensation plans or programs of the Company, except to the extent required by the continuing health coverage requirements of the Consolidated Budget Reconciliation Act of 1985, as amended (“COBRA”) and Sections (2(b) through 2(e) of this Agreement. This is a services contract for the services of the Consultant. The Consultant cannot subcontract the Consultant’s duties or cause any other person or entity to perform the Consultant’s services. The Consultant shall devote sufficient business time and efforts to the performance of services for the Company to complete the services within the time frames for completion established by the Company. The Consultant shall use the Consultant’s best efforts in such endeavors. The Consultant shall also perform the Consultant’s services with a level of care, skill, and diligence that a prudent professional acting in a like capacity and familiar with such matters would use.

(a)         Fees.  The Company shall pay the Consultant $250 per hour for the Consultant’s services hereunder.  The Consultant shall keep a daily record of hours worked and submit such records to the Company on a weekly basis or with such other frequency as may be required by the Company.  Payment shall be made in twice monthly installments in arrears.

(b)         Bonus.  Subject to Sections 2(g), 3 and 6, the Consultant shall be eligible to earn an unprorated annual bonus for 2015 pursuant to Section 2(b) of the Employment Agreement, which will be paid at the same time as annual bonuses for 2015 are paid to executive officers of the Company.

(c)         Time-Based Restricted Stock Units.  Subject to Sections 2(g), 3 and 6, the Consultant shall vest as of December 31, 2015 in a total of 23,902 time-based restricted stock units under the Restricted Stock Units Award Agreements issued by Parent effective December 31, 2013, January 1, 2014, and March 31, 2015, which shall be paid by January 10, 2016. The 23,902 units are comprised of 8,960 units under the December 31, 2013 award agreement, 10,239 units under the January 1, 2014 award agreement and 4,703 units under the March 31, 2015 award agreement.

(d)         Performance Restricted Stock Units.  Subject to Sections 2(g), 3 and 6, the Consultant shall vest in the same number of performance restricted stock units under the Performance Stock Units Agreements issued by Parent effective December 31, 2013, January 1, 2014, and March 31, 2015, as if the Consultant had incurred a “Qualifying Termination” (as defined in such agreements) on December 31, 2015, which vested units shall be paid when required by the terms of such agreements.  The number of vested units under each such agreement is set forth below, based on the applicable level of performance achieved (threshold, target or high) and based on an assumption that a “Change in Control” (as defined in such agreements) does not occur during the applicable “Performance Period” (as defined in such agreements). If a Change in Control does occur during the applicable Performance Period, the number of vested units will be determined under the applicable agreement, as modified by this subsection.

(e)         Performance LTIP Units.  Subject to Sections 2(g), 3 and 6, the Consultant shall vest in the same numbers of performance LTIP units under the Performance LTIP Units

Agreement issued by Parent effective March 31, 2015, as if the Consultant had incurred a “Qualifying Termination” (as defined in such agreement) on December 31, 2015, which shall be paid when required by the terms of such agreement.  The number of vested units under such agreement is set forth below, based on the applicable level of performance achieved (threshold, target or high) and based on an assumption that a “Change in Control” (as defined in such agreement) does not occur during the applicable “Performance Period” (as defined in such agreement). If a Change in Control does occur during the applicable Performance Period, the number of vested units will be determined under the applicable agreement, as modified by this subsection.

(f)          Expenses.  The Consultant shall be entitled to be reimbursed in accordance with the policies of the Company, as adopted and amended from time to time, for all reasonable and necessary expenses and business travel incurred by the Consultant in connection with the performance of services hereunder; provided, however, the Consultant shall, as a condition of such reimbursement, submit verification of the nature and amount of such expenses in accordance with the reimbursement policies from time to time adopted by the Company.

(g)         Release Contingency.  The payments to the Consultant required by Sections 2(b) through 2(e) are contingent upon the Consultant executing the Release Agreement attached hereto as Exhibit A (the “Release Agreement”) by August 22, 2015, and delivering it to the Company by August 23, 2015 and not revoking the Release Agreement in accordance with its procedures within the revocation period provided in the Release Agreement. If the Consultant fails to timely execute and deliver the Release Agreement or if the Consultant revokes the Release Agreement within the revocation period provided in the Release Agreement, this Agreement shall thereupon automatically terminate, without the requirement of any further action by any party.  

(a)         Termination.  This Agreement and the engagement of the Consultant by the Company hereunder shall automatically terminate effective at the close of business on December 31, 2015, without the requirement of any further action by any party. Before December 31, 2015, this Agreement and the engagement of the Consultant by the Company hereunder may be terminated only: (i) by mutual agreement of the parties; (ii) by the Consultant with at least two (2) weeks’ notice; (iii) by the death of the Consultant, (iv) as provided in Section 2(g), as a result of the failure of the Consultant to timely execute and deliver the Release Agreement or as a result of the Consultant revoking the Release Agreement or (v) by the Company, as a result of the Consultant’s material breach of this Agreement, and if the breach is determined to be curable in the reasonable judgment of the Company, only if the Company has first given the Consultant written notice of the breach and a reasonable opportunity to cure the same. Notice of termination shall be given prior to termination in writing and shall specify the effective date of termination. Except for earned and accrued fees and expenses under Sections 2(a) and 2(f), the Consultant shall not be entitled to any payments if this Agreement terminates for any reason (other than due to the death of the Consultant) before December 31, 2015, and in such case (again, other than

termination due to the death of the Consultant), the Consultant shall forfeit all amounts payable under Sections 2(b) through 2(e).

(b)         Survival.  The covenants of the Consultant in Sections 4 through 6 and shall survive the termination of this Agreement and shall not be extinguished thereby.

(a)         Confidentiality.  All Confidential Information and Trade Secrets of the Company and its Affiliates and all physical embodiments thereof received or developed by the Consultant while engaged by the Company or the Parent are confidential to and are and will remain the sole and exclusive property of the Company and its Affiliates. Except to the extent necessary to perform the duties assigned by the Parent or the Company hereunder, and except to the extent required by law, the Consultant 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 Consultant 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 Consultant will promptly deliver to the Company all property belonging to the Company and its Affiliates, including, without limitation, all Confidential Information and Trade Secrets of the Company and its Affiliates (and all embodiments thereof) then in the Consultant’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 an Affiliate or developed by the Consultant while employed or engaged by the Company or the Parent prior to or after the date hereof. The covenants restricting the use of Confidential Information will continue to apply for a period of two years following the termination of this Agreement.  The covenants restricting the use of Trade Secrets will continue to apply following termination of this Agreement for so long as permitted by the governing law.

The Consultant previously agreed pursuant to Sections 4 and 5 of the Employment Agreement to be subject to certain nondisclosure, noncompetition, nonsolicitation and nondisparagement obligations which survived his termination of employment. The Consultant confirms that he agrees to comply with his obligations pursuant to Sections and 5 of the Employment Agreement.

The Consultant 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 and its Affiliates; that irreparable loss and damage will be suffered by the Company and its Affiliates should the Consultant 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 (a) the Consultant shall forfeit any unpaid compensation under Sections 2(b) through 2(e) if the Consultant materially breaches a covenant in Sections 4 or 5 hereof, and (b) the Company and the Parent shall be entitled to seek both temporary and permanent injunctions to prevent a breach or contemplated breach by the Consultant of any of such covenants or agreements, in addition to other remedies available to them.  

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):

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.

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

engagement hereunder until the Consultant terminates his engagement with the assignee. The Consultant 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. The parties agree that the term of the Employment Agreement is terminated effective July 31, 2015 and that the Employment Agreement is hereby terminated effective July 31, 2015, except as to the terms which survive termination, including Sections 4 and 5 of the Employment Agreement.  As of July 31, 2015, the Consultant resigns from all positions that he holds with the Parent, the Company and the Affiliates.  

(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.

(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, as determined by the Company.

(b)         “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 Consultant or of which the Consultant 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 Consultant 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 Consultant.

(c)         “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 Parent, the Company and the Consultant have each executed and delivered this Agreement as of the date first shown above.

EXHIBIT A

RELEASE AGREEMENT

RELEASE AGREEMENT

This Agreement (this “Agreement”) is made this ___ day of August, 2015, among Omega Healthcare Investors, Inc. (“Parent”), OHI Asset Management LLC (“Employer”), and R. Lee Crabill, Jr. (“Employee”).

Introduction

On July 31, 2015, Employee retired from the Company as an employee of the Company and an executive officer of Parent and the Company. Effective August 1, 2015, Employer, Parent and Employee entered into a Consulting Agreement (the “Consulting Agreement”).  

The Consulting Agreement requires that as a condition to Employee’s right to receive payments under Sections 2(b) through 2(e) of the Consulting Agreement (the “Incentive Payments”), Employee must execute this Agreement.

NOW, THEREFORE, the parties agree as follows:

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,

and this provision of the Agreement satisfies the requirement of the Older Workers Benefit Protection Act that Employee be so advised in writing.

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

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. Employee may take up to twenty-one (21) days 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, Parent, Employer and Employee have executed this Agreement effective as of the date first written above.