<PAGE> 1
OMEGA WORLDWIDE, INC.
900 VICTORS WAY, SUITE 345
ANN ARBOR, MICHIGAN 48108
(734) 887-0300
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MARCH 23, 1999
To the Shareholders:
The Annual Meeting of Shareholders of Omega Worldwide, Inc. will be held at
the offices of the Company at 900 Victors Way, Suite 345, Ann Arbor, Michigan on
Tuesday, March 23, 1999, at 11:00 a.m., for the following purposes:
1. To elect three members of the Board of Directors; and
2. To transact such other business as properly may come before the
meeting or any adjournment thereof.
The nominees for election as directors are Essel W. Bailey, Jr., Harold J.
Kloosterman and Robert L. Parker, each of whom presently is serving as a
director of the Company.
The Board of Directors has fixed the close of business on February 4, 1999
as the record date for the determination of shareholders who are entitled to
notice of and to vote at the meeting or any adjournments thereof.
We encourage you to attend the meeting. Whether you are able to attend or
not, we urge you to indicate your vote on the enclosed proxy card FOR the
election of directors as set forth in the attached Proxy Statement. Please sign,
date and return the proxy card promptly in the enclosed envelope. If you attend
the meeting, you may vote in person even if you previously have mailed a proxy
card.
By order of the Board of Directors
SUSAN ALLENE KOVACH
Corporate Secretary
January 28, 1999
Ann Arbor, Michigan
<PAGE> 2
OMEGA WORLDWIDE, INC.
900 VICTORS WAY, SUITE 345
ANN ARBOR, MICHIGAN 48108
(734) 887-0300
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
MARCH 23, 1999
The accompanying proxy is solicited by the Board of Directors of Omega
Worldwide, Inc. (the "Company") to be voted at the Annual Meeting of
Shareholders to be held March 23, 1999, and any adjournments of the meeting (the
"Annual Meeting"). It is anticipated that this proxy material will be mailed on
or about February 8, 1999 to shareholders of record at the close of business on
February 4, 1999.
A copy of the Annual Report of the Company for the year ended September 30,
1998, including financial statements, is enclosed herewith. THE COMPANY WILL
PROVIDE, WITHOUT CHARGE TO ANY PERSON SOLICITED HEREBY, UPON THE WRITTEN REQUEST
OF SUCH PERSON, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR
ENDED SEPTEMBER 30, 1998, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
SUCH REQUESTS SHOULD BE DIRECTED TO SUSAN ALLENE KOVACH, VICE PRESIDENT, GENERAL
COUNSEL AND CORPORATE SECRETARY, AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICES.
A shareholder giving a proxy has the power to revoke it at any time before
it is exercised. A proxy may be revoked by filing with the Secretary of the
Company (i) a signed instrument revoking the proxy or (ii) a duly executed proxy
bearing a later date. A proxy also may be revoked if the person executing the
proxy is present at the meeting and elects to vote in person. If the proxy is
not revoked, it will be voted by those named in the proxy.
VOTING SECURITIES
The outstanding voting securities of the Company as of December 31, 1998,
consisted of 12,258,000 shares of Common Stock, par value $.10 per share
("Common Stock"). Each holder of record of Common Shares as of the close of
business on February 4, 1999 is entitled to notice of and to vote at the Annual
Meeting or any adjournments of the Annual Meeting. Each holder of shares of
Common Stock is entitled to one vote per share on all matters properly brought
before the Annual Meeting. Shareholders are not permitted to cumulate votes for
the purpose of electing directors or otherwise.
ELECTION OF DIRECTORS
Pursuant to the Company's Articles of Incorporation, the directors have
been divided into three groups. At this year's Annual Meeting, three directors
will be elected in one group to hold office for a term of three years or, in
each case, until their respective successors shall have been duly elected and
qualified. The remaining directors shall continue in office until their
respective terms expire and until their successors have been duly elected and
qualified.
The nominees for election to the three positions of director to be voted
upon at this year's Annual Meeting are Essel W. Bailey, Jr., Harold J.
Kloosterman and Robert L. Parker. Unless authority to vote for the election of
directors has been specifically withheld, the persons named in the accompanying
proxy intend to vote for the election of Messrs. Bailey, Kloosterman and Parker
to hold office as directors for a term of three years each or until their
respective successors have been duly elected and qualified. The affirmative vote
of a majority of all votes cast at the Annual Meeting is required for the
election of a director.
<PAGE> 3
If any nominee becomes unavailable for any reason (which event is not
anticipated), the shares represented by the enclosed proxy may (unless such
proxy contains instructions to the contrary) be voted for such other person or
persons as may be determined by the holders of such proxies. In no event would
the proxy be voted for more than three nominees.
The following information relates to the nominees for election as directors
of the Company and the other persons whose terms as directors continue after
this meeting:
<TABLE>
<CAPTION>
YEAR FIRST EXPIRATION
BECAME A OF TERM AS
DIRECTORS DIRECTOR BUSINESS EXPERIENCE DURING PAST 5 YEARS DIRECTOR
--------- ---------- --------------------------------------- ----------
<S> <C> <C> <C>
Jacques Aigrain (44).............. 1998 Managing Director of J.P. Morgan and Company, 2001
where he has been employed since 1981, has
been a member of the Investment Banking
Committee since December 1997 and has been
co-head of Global Mergers and Acquisitions
since July 1998, working from New York and
London. From 1996 to 1998, Mr. Aigrain headed
Morgan's Paris office, and from 1991 through
1996 he served in the London office, where he
was responsible for transactions in the
healthcare and chemical industries. Mr.
Aigrain holds a Ph.D. in Economics from the
Sorbonne in Paris.
Essel W. Bailey, Jr. (54)......... 1997 President, Chief Executive Officer and 1999
Director of the Company since its formation
in 1997. Mr. Bailey currently is a Managing
Director of Principal Healthcare Finance
Limited ("Principal"), a company that
finances healthcare facilities in the United
Kingdom and in which the Company owns 33.375%
of the ordinary shares, and Principal
Healthcare Finance Trust, an Australian unit
trust that is wholly owned by the Company and
that finances healthcare facilities in
Australia. Mr. Bailey also has served as
President and Chief Executive Officer of
Omega Healthcare Investors, Inc. ("Omega"), a
real estate investment trust that is listed
on the New York Stock Exchange (Ticker: OHI),
since its formation in 1992. Mr. Bailey also
has served as Chairman of Omega, which
provides sale/leaseback and other capital
financing to healthcare service providers in
the United States, since 1995. Prior to
forming Omega, Mr. Bailey was a Managing
Director of Omega Capital, a healthcare
investment partnership, from 1986 to 1992.
Mr. Bailey was formerly a director of
Evergreen Healthcare, Inc., which was a NYSE
listed company engaged in the operation of
long-term healthcare facilities, and of
Vitalink Pharmacy Services, Inc., a NYSE
listed company operating institutional
pharmacies serving the long-term care
industry in the United States.
</TABLE>
2
<PAGE> 4
<TABLE>
<CAPTION>
YEAR FIRST EXPIRATION
BECAME A OF TERM AS
DIRECTORS DIRECTOR BUSINESS EXPERIENCE DURING PAST 5 YEARS DIRECTOR
--------- ---------- --------------------------------------- ----------
<S> <C> <C> <C>
James E. Eden (61)................ 1998 Mr. Eden is President and principal owner of 2000
Eden & Associates, Inc., which provides
consulting services to the senior living and
long-term care industries. He also is
President and principal owner of Senior
Living Properties, LLC, and serves as
Chairman and Chief Executive Officer of
Oakwood Living Centers, Inc., which owns and
operates 7 nursing homes in Massachusetts and
Virginia. From 1976 to 1992, Mr. Eden held
various positions in healthcare at Marriott
Corporation, ultimately as Executive Vice
President and General Manager of its Senior
Living Services Division. Mr. Eden also is a
director of Omega, the Alliance for Aging
Research and United Vanguard Homes.
Thomas F. Franke (69)............. 1998 Chairman and principal owner of Cambridge 2001
Partners, Inc., an owner, developer and
manager of multifamily housing in Grand
Rapids and Ann Arbor, Michigan. He also is
the principal owner of private healthcare
firms operating in the United States and the
United Kingdom and a private hotel firm in
the United Kingdom. Mr. Franke has been a
director of Omega since its formation in 1992
and, since Principal's formation in 1995, Mr.
Franke has been a director of Principal.
Anil K. Gupta (49)................ 1998 Dr. Gupta is Professor of Strategy, 2000
Organization and International Business at
the Robert H. Smith School of Business, The
University of Maryland. He holds a Doctor of
Business Administration from Harvard Business
School. Dr. Gupta served as a director of
Vitalink Pharmacy Services from 1992 to 1998.
He is the recipient of numerous scholarly
awards and provides consulting and executive
training to a number of multinational
companies.
Harold J. Kloosterman (56)........ 1998 Mr. Kloosterman has been a director of Omega 1999
since its formation in 1992 and was a
managing director of Omega Capital from 1986
to 1992. Mr. Kloosterman has been involved in
the acquisition, development and management
of commercial and multi-family properties
since 1978. He has been a senior officer of
LaSalle Partners, Inc., and in 1985 he formed
Cambridge Partners, Inc., where he serves as
President. At Cambridge, he has been involved
in the development and management of
commercial, apartment and condominium
projects in Grand Rapids and Ann Arbor,
Michigan and in the Chicago area.
</TABLE>
3
<PAGE> 5
<TABLE>
<CAPTION>
YEAR FIRST EXPIRATION
BECAME A OF TERM AS
DIRECTORS DIRECTOR BUSINESS EXPERIENCE DURING PAST 5 YEARS DIRECTOR
--------- ---------- --------------------------------------- ----------
<S> <C> <C> <C>
Bernard J. Korman (67)............ 1998 Mr. Korman is Chairman of the Board of 2000
Trustees of Philadelphia Health Care Trust, a
private health care foundation and Chairman
of the Board of NutraMax Products, Inc., a
public consumer health care products company.
He formerly was President, Chief Executive
Officer and Director of MEDIQ Incorporated
(health care services) from 1977 to 1995. Mr.
Korman has been a director of Omega since
1993 and also is a director of the following
public companies: The New America High Income
Fund (financial services), The Pep Boys, Inc.
(auto supplies), Today's Man, Inc. (retail
men's clothing sales), Kranzco Realty Trust
(real estate investment trust) and NutraMax
Products, Inc. (consumer health care
products).
Edward Lowenthal (54)............. 1998 Mr. Lowenthal is President and Chief 2001
Executive Officer of Wellsford Real
Properties, Inc. (AMEX: WRP), a real estate
merchant bank, and was President of the
predecessor of Wellsford Real Properties,
Inc. since 1986. Mr. Lowenthal has been a
Director of Omega since 1995 and also serves
as a director of United American Energy
corporation, a developer, owner and operator
of energy facilities; Corporate Renaissance
Group, Inc., a mutual fund; Equity
Residential Properties Trust; and Great Lakes
REIT, Inc.
Robert L. Parker (64)............. 1998 Mr. Parker has served as Chairman of the 1999
Company's Board of Directors since April
1998. He is a consultant to, and from 1992 to
1995 was Chairman of, Omega. He continues to
serve as a Director of Omega. Mr. Parker was
Managing Director of Omega Capital from 1986
to 1992. From 1972 through 1983, Mr. Parker
was a senior officer of Beverly Enterprises,
the largest operator of long-term care
facilities in the United States. At the time
of his retirement in 1983, Mr. Parker was
Executive Vice president of Beverly
Enterprises. Mr. Parker is a registered
architect and is licensed in California and
Oklahoma. Mr. Parker also served as a
director of GranCare, Inc., a public company
engaged in the operation of long-term care
facilities, from 1995 to 1997, and of
Vitalink Pharmacy Services, Inc., a
publicly-traded institutional pharmacy,
during 1997. Mr. Parker has served as a
director of Principal since 1995 and of First
National Bank of Bethany, Oklahoma.
</TABLE>
4
<PAGE> 6
PRINCIPAL SHAREHOLDERS
At December 31, 1998, the Company was aware that the following beneficially
owned more than 5% of the outstanding shares of Common Stock:
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK PERCENT OF
BENEFICIAL OWNER BENEFICIALLY OWNED CLASS
---------------- ------------------ ----------
<S> <C> <C>
Gotham International Advisors, L.L.C. ...................... 1,215,900 9.92%
110 East 42nd Street, 18th Floor
New York, New York 10017
Omega Healthcare Investors, Inc. ........................... 1,163,061 9.49%
900 Victors Way, Suite 350
Ann Arbor, Michigan 48108
Essel W. Bailey, Jr. ....................................... 843,434 6.88%
900 Victors Way, Suite 345
Ann Arbor, Michigan 48108
</TABLE>
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of December 31, 1998 (i) by each of
the Company's directors and executive officers and (ii) by all directors and
executive officers as a group. Except as indicated in the footnotes to this
table, the persons named in the table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them,
subject to community property laws where applicable.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK PERCENT OF
BENEFICIAL OWNER BENEFICIALLY OWNED CLASS
---------------- ------------------ ----------
<S> <C> <C>
Essel W. Bailey, Jr. ....................................... 843,434(1) 6.88%
James P. Flaherty........................................... 34,924 0.28%
F. Scott Kellman............................................ 20,722 0.17%
Susan A. Kovach............................................. 4,068 *
David A. Stover............................................. 40,434(2) 0.33%
Jacques Aigrain............................................. 1,000(3) *
James E. Eden............................................... 4,421 *
Thomas F. Franke............................................ 282,520(4) 2.30%
Anil K. Gupta............................................... 1,000(3) *
Harold Kloosterman.......................................... 115,907(5) 0.95%
Bernard J. Korman........................................... 353,613 2.88%
Edward Lowenthal............................................ 36,559 0.30%
Robert L. Parker............................................ 97,722(6) 0.80%
--------- ------
Directors and executive officers as a group (13 persons).... 1,836,324 14.98%
</TABLE>
- ---------------
* Less than 0.10%
The business address of all the above persons is 900 Victors Way, Suite 345, Ann
Arbor, Michigan 48108.
(1) Includes shares owned jointly by Mr. Bailey and his wife, plus 520,804
shares held solely in Mrs. Bailey's name. Mr. Bailey disclaims any
beneficial interest in the shares held solely by Mrs. Bailey.
(2) Includes shares owned jointly by Mr. Stover and his wife.
(3) Includes 1,000 unvested shares of Restricted Stock that were granted in July
1998.
(4) Includes 282,520 shares owned by a family limited liability company (Franke
Family LLC) of which Mr. Franke is a Member.
(5) Includes shares owned jointly by Mr. Kloosterman and his wife, and 55,044
owned directly by his wife.
(6) Includes 1,123 shares owned by a private pension plan for Mr. Parker's
benefit and 61,134 shares owned by a trust of which Mr. Parker is sole
trustee.
5
<PAGE> 7
DIRECTORS AND OFFICERS OF THE COMPANY
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors held five meetings during fiscal year 1998. The
Board of Directors has an Audit Committee, consisting of Messrs. Korman,
Kloosterman and Gupta, a Compensation Committee, consisting of Messrs. Aigrain,
Franke and Lowenthal, an Independent Directors Committee consisting of Messrs.
Gupta and Aigrain, and a Nominating Committee, consisting of Messrs. Bailey,
Eden and Parker.
The Audit Committee, which met once in fiscal year 1998, selects the
Company's independent accountants, approves the compensation to be paid to such
accountants and reports to the Board concerning the scope of audit procedures.
The Compensation Committee met three times during fiscal year 1998 and has
responsibility for the compensation of the Company's key management personnel
and administration of the Company's Stock Option and Restricted Stock Plan.
The Independent Directors Committee, which met once during fiscal year
1998, has responsibility for passing upon those issues with respect to which a
conflict may exist between the Company and Omega Healthcare Investors, Inc.
("Omega"), including issues with respect to the Opportunity Agreement between
them (the "Opportunity Agreement") and the allocation of costs between the
Company and Omega pursuant to the Services Agreement between them (the "Services
Agreement").
The Nominating Committee, which met once during fiscal year 1998, reviews
suggestions of candidates for director made by directors, shareholders,
management and others, and makes recommendations to the Board of Directors
regarding the composition of the Board of Directors and nomination of individual
candidates for election to the Board of Directors. Suggestions by shareholders
for candidates should be submitted in writing to the office of the President,
Omega Worldwide, Inc., 900 Victors Way, Suite 345, Ann Arbor, Michigan 48108.
COMPENSATION COMMITTEE REPORT
The Compensation Committee (the "Committee") is composed of outside
directors who administer the Company's Stock Option and Restricted Stock Plan,
approve the compensation of James P. Flaherty, the Company's chief operating
officer, and review with the Board of Directors all aspects of compensation for
the Company's executive officers. The Committee did not approve the base
compensation for the chief operating officer for the period ended September 30,
1998, because his base compensation for that period was determined by Omega,
which employed Mr. Flaherty, prior to the date on which the Company commenced
operations, to develop and oversee the investments in the United Kingdom that
Omega contributed to the Company. In connection with Omega's contribution of
those investments to the Company, the Company assumed the obligation of Omega to
pay Mr. Flaherty's compensation for the period ended September 30, 1998. The
Committee has awarded a $50,000 cash bonus to Mr. Flaherty for the period ended
September 30, 1998.
The Committee does not determine the salaries of the other executive
officers. The salaries of the other executive officers are determined by Omega,
and the Company reimburses Omega for a portion of their salaries pursuant to the
Services Agreement.
COMPENSATION OF DIRECTORS
The Company pays each non-employee director a fee of $10,000 per year for
services as a director, plus $1,000 for services as a Committee Chairperson and
$500 for attendance at a meeting of the Board of Directors or any Committee
thereof. In addition, the Company reimburses the directors for travel expenses
incurred in connection with their duties as directors. Employee directors
receive no compensation for service as directors.
6
<PAGE> 8
Directors are eligible to participate in the Company's Stock Option and
Restricted Stock Plan. Each non-employee director was awarded options with
respect to 10,000 shares on his election as a director of the Company, and each
non-employee director is to be granted an additional option grant with respect
to 1,000 shares on or after each anniversary of the initial grant. All grants
have been and are to be at an exercise price equal to 100% of the fair market
value of the Company's common stock on the date of the grant. Non-employee
director options vest one third after each year for three years. Each
non-employee director also is annually awarded 1,000 shares of restricted stock,
with each such grant of restricted stock shares vesting six months after the
date of grant.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth, for the period ended September 30, 1998,
the compensation for services in all capacities to the Company of those persons
who were at September 30, 1998 (i) the chief executive officer and (ii) the
other executive officers of the Company whose total 1998 annual salary and bonus
exceeded $100,000. The Committee does not determine the salaries of the chief
executive officer or the other executive officers other than the chief operating
officer. Their salaries are determined by Omega, and the Company reimburses
Omega for a share of their salaries, as well as certain other overhead expenses,
pursuant to the Services Agreement. See "Certain Transactions" below.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------------------------
AWARDS PAYOUTS
-------------------------- -------
OTHER RESTRICTED SECURITIES ALL
FISCAL ANNUAL STOCK UNDERLYING LTIP OTHER
NAME AND YEAR SALARY BONUS COMPENSATION AWARD(S) OPTIONS/ PAYOUTS COMPENSATION
PRINCIPAL POSITION (1) ($)(1) ($)(1) ($)(2) ($) SARS(#) ($) ($)
------------------ ------ ------ ------ ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Essel W. Bailey, Jr. ... 1998 0 0 0 0 113,000 0 0
President and CEO
James P. Flaherty....... 1998 116,379 $50,000 $38,477 0 90,000 0 0
Chief Operating Officer
F. Scott Kellman........ 1998 0 0 0 0 90,000 0 0
Vice President
David A. Stover......... 1998 0 0 0 0 90,000 0 0
Vice President and
Chief Financial Officer
</TABLE>
- ---------------
(1) Amounts in each column reflect compensation for the period from April 2,
1998 (commencement of operation) to September 30, 1998. Mr. Flaherty is the
only officer of the Company who receives annual compensation directly from
the Company. All other executive officers are compensated by Omega
Healthcare Investors, Inc. and the Company is charged pursuant to the
provisions of the Service Agreement between the Company and Omega.
(2) "Other Annual Compensation" comprises $23,215 used to purchase private
health and retirement benefits for Mr. Flaherty in England and $15,262,
representing the allocable portion of the value of restricted stock granted
by Omega to Mr. Flaherty and charged to the Company.
7
<PAGE> 9
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning options/SARs
granted during fiscal year 1998 to the named executives:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------------------- VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS EXERCISE PRICE APPRECIATION FOR GRANT
UNDERLYING GRANTED TO OR BASE OPTION TERM DATE
OPTIONS/SAR EMPLOYEES IN PRICE EXPIRATION ----------------------- PRESENT
NAME GRANTED FISCAL YEAR ($/SHARE) DATE(1) 5%($)(2) 10%($)(2) VALUE($)(3)
---- ----------- ------------ --------- ---------- -------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Essel W. Bailey,
Jr................. 13,333 7.500 4/8/08 62,798 159,596 N/A
99,667 7.500 4/8/09 530,228 1,387,365 N/A
------- --------- ---------
Total.............. 113,000 17.44% 593,026 1,546,961 N/A
======= ========= =========
James P. Flaherty.... 13,333 7.500 4/8/08 62,798 159,596 N/A
76,667 7.500 4/8/09 407,868 1,067,205 N/A
------- --------- ---------
Total.............. 90,000 13.89% 470,666 1,226,801 N/A
======= ========= =========
F. Scott Kellman..... 13,333 7.500 4/8/08 62,798 159,596 N/A
76,667 7.500 4/8/09 407,868 1,067,205 N/A
------- --------- ---------
Total.............. 90,000 13.89% 470,666 1,226,801 N/A
======= ========= =========
Susan A. Kovach...... 13,333 7.500 4/8/08 62,798 159,596 N/A
6,667 7.500 4/8/09 35,468 92,805 N/A
------- --------- ---------
Total.............. 20,000 3.09% 98,266 252,401 N/A
======= ========= =========
David A. Stover...... 13,333 7.500 4/8/08 62,798 159,596 N/A
76,667 7.500 4/8/09 407,868 1,067,205 N/A
------- --------- ---------
Total.............. 90,000 13.89% 470,666 1,226,801 N/A
======= ========= =========
</TABLE>
- ---------------
(1) Incentive stock options expire 10 years from date of grant (April 8, 2008),
while non-qualified options expire 11 years after date of grant (April 8,
2009).
(2) The assumed annual rates of appreciation of 5% and 10% would result in the
price of the Company's stock increasing at the expiration date of the
options, to $12.21 and $19.47, respectively for the April 8, 1998 incentive
stock options grant, $12.82 and $21.42, respectively for the April 8, 1998
non-qualified stock options grant.
(3) The Company does not elect to provide grant date present value as an
alternative to disclosing potential realizable value.
8
<PAGE> 10
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table summarizes options and SARs exercised during fiscal
year 1998 and presents the value of unexercised options and SARs held by the
named executives at Year-End:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS/SARS
SHARES OPTIONS/SARS AT AT FISCAL
ACQUIRED ON VALUE FISCAL YEAR-END(#) YEAR-END($)
EXERCISE REALIZED UNEXERCISABLE(U) UNEXERCISABLE(U)
NAME (#) ($) EXERCISABLE(E) EXERCISABLE(E)
---- ----------- -------- ---------------------- ----------------
<S> <C> <C> <C> <C>
Essel W. Bailey, Jr.................... 0 0 113,000(U) 0(U)
0(E) 0(E)
James P. Flaherty...................... 0 0 90,000(U) 0(U)
0(E) 0(E)
F. Scott Kellman....................... 0 0 90,000(U) 0(U)
0(E) 0(E)
Susan A. Kovach........................ 0 0 20,000(U) 0(U)
0(E) 0(E)
David A. Stover........................ 0 0 90,000(U) 0(U)
0(E) 0(E)
</TABLE>
LONG-TERM INCENTIVE PLAN
For the period from April 2, 1998 (Commencement of Operations) through
September 30, 1998, the Company had no long-term incentive plans.
DEFINED BENEFIT OR ACTUARIAL PLAN
For the period from April 2, 1998 (date of commencement of operations of
the Company) through September 30, 1998, the Company had no pension plans.
9
<PAGE> 11
COMPARISON OF CUMULATIVE TOTAL RETURN*
Among: Omega Worldwide, Inc.
S&P 500 Index
S&P Small Cap 600 Index
[LINE GRAPH]
<TABLE>
<CAPTION>
S&P SMALLCAP 600
OWWI S&P INDEX
---- --- ----------------
<S> <C> <C> <C>
4/10/98 100.00 100.00 100.00
4/30/98 113.00 101.00 100.15
5/31/98 113.00 99.00 94.85
6/30/98 101.00 103.00 95.13
7/31/98 88.00 102.00 87.85
8/31/98 68.00 87.00 70.89
9/30/98 68.00 92.00 75.23
</TABLE>
THIS GRAPH REPRESENTS HISTORICAL STOCK PRICE PERFORMANCE AND IS NOT
NECESSARILY INDICATIVE OF ANY FUTURE STOCK PRICE PERFORMANCE.
THE PERFORMANCE GRAPH THAT APPEARS ABOVE SHALL NOT BE DEEMED TO BE
SOLICITING MATERIAL OR TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934 OR
INCORPORATED BY REFERENCE IN ANY DOCUMENT SO FILED.
CERTAIN TRANSACTIONS
The Company and Omega have entered into the Opportunity Agreement to
provide each other with rights to participate in certain transactions and to
make certain investments. The Opportunity Agreement provides, subject to certain
terms, that, regardless of whether the following kinds of investments (each a
"Worldwide Opportunity") first come to the attention of the Company or Omega,
the Company will have the right to: (a) provide advisory services and/or
management services to any healthcare investors, wherever located; (b) acquire
or make debt and/or equity investments (through a joint venture or otherwise) in
any healthcare investor or in healthcare real estate-related assets outside the
United States; (c) make investments in any entity conducting healthcare
operations; and (d) make any other real estate, finance or other investments not
customarily undertaken by a qualified REIT. However, Omega will have the right,
regardless of whether the following kinds of investments (each a "REIT
Opportunity") first come to the attention of the Company or Omega, to make any
investment within the United States (a) 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 Omega's
REIT status would not be jeopardized by the investment; and (b) that, if made by
a REIT, would not result in the termination of the REIT's status as a REIT under
Sections 856 through 860 of the Internal Revenue Code. If the Company declines
to pursue a Worldwide Opportunity, it must offer that opportunity to Omega, and
if Omega declines to pursue a REIT Opportunity, it must offer that opportunity
to the Company. Each of the Company and Omega may participate, in its
discretion, in any REIT Opportunity or Worldwide Opportunity that the other
requests be pursued jointly. The terms upon which each of the Company and Omega
may elect to participate in any such an opportunity will be negotiated in good
faith and must be mutually acceptable to the respective boards of directors of
the Company and Omega, with the affirmative votes of the independent directors
of the respective boards of directors of the
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Company and Omega. Each of the Company and Omega, in its sole discretion, will
make all decisions as to whether to pursue transactions or investments. The
determination by each of the Company and Omega as to whether to pursue an
investment or transaction individually shall be made by the affirmative votes of
the independent director(s) of the board of directors of the Company or Omega.
Each of Omega and the Company has agreed to notify the other of, and make
available to the other, investment opportunities developed by such party or of
which such party becomes aware but is unable or unwilling to pursue. The
Opportunity Agreement has a term of ten years and automatically renews for
successive five-year terms unless terminated.
Omega and the Company have entered into the Services Agreement pursuant to
which Omega provides shared management and other employees, office space and
administrative services to the Company. The Company reimburses Omega quarterly
for a portion of Omega's overhead expenses such as rent, compensation and
utilities, based on a formula determined by dividing the value of the assets
managed by the Company at the end of each fiscal quarter by the sum of the value
of the assets of Omega and assets managed by the Company at the end of each
fiscal quarter. During the fiscal year ended September 30, 1998, the Company
paid to Omega the sum of $303,000 under the Services Agreement.
The Company has invested approximately $37.9 million in Principal
Healthcare Finance Limited ("Principal") as of September 30, 1998. As of that
date, Principal owned and leased 176 nursing homes or residential care
facilities located in the British Isles. Essel W. Bailey, Jr., President, Chief
Executive Officer and a director, and directors Thomas F. Franke, Harold J.
Kloosterman, Bernard J. Korman and Robert L. Parker, have invested in the
aggregate, directly or indirectly, approximately $2,170,000 in Principal.
Pursuant to an Amended and Restated Advisory Agreement (the "Advisory
Agreement"), the Company has agreed to provide certain investment management and
advisory services to Principal in exchange for a fee. During the period ended
September 30, 1998, Principal paid to the Company approximately $1.9 million for
services rendered by the Company to Principal pursuant to the Advisory
Agreement.
RELATIONSHIP WITH INDEPENDENT AUDITORS
Ernst & Young LLP audited the Company's financial statements the year ended
September 30, 1998. Representatives of Ernst & Young LLP are expected to be
present at the Annual Meeting and will be given the opportunity to make a
statement if they desire to do so. It is also expected that they will be
available to respond to appropriate questions from shareholders at the Annual
Meeting.
SHAREHOLDERS PROPOSALS
October 1, 1999 is the date by which proposals of shareholders intended to
be presented at the Annual Meeting of Shareholders, held on or about March 15,
2000, must be received by the Company for inclusion in the Company's proxy
statement and form of proxy relating to that meeting.
EXPENSES OF SOLICITATION
The total cost of this solicitation will be borne by the Company. In
addition to use of the mails, proxies may be solicited by directors, officers
and regular employees of the Company personally and by telephone, telex or
facsimile. The Company may reimburse persons holding shares in their own names
or in the names of the nominees for expenses such persons incur in obtaining
instructions from beneficial owners of such shares. The Company has also engaged
Georgeson & Company Inc. to solicit proxies for a fee not to exceed $7,500 plus
out-of-pocket expenses.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Forms 3 for Messrs. Bailey, Kellman, Flaherty and Stover and for Ms.
Kovach were required to be filed with the Securities and Exchange Commission
("SEC") by April 12, 1998 and were filed with the SEC
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on April 14, 1998. In addition, the Form 4 for Mr. Flaherty for the month of
May, 1998 was required to be filed with the SEC by June 10, 1998 and was filed
on November 13, 1998.
Todd P. Robinson, who was appointed Vice President of the Company on April
2, 1998 and resigned from the Company on April 20, 1998, was required to file
his Form 3 by April 12, 1998 and his Form 4 for the month of April, 1998 by May
10, 1998. He filed his Form 3 with the SEC on April 14, 1998 and his Form 4 with
the SEC on November 13, 1998.
The Form 3 for Mr. Aigrain was required to be filed with the SEC by July
17, 1998 and was filed on July 20, 1998. The Form 4 for Mr. Franke for the month
of April, 1998 was required to be filed with the SEC by May 10, 1998 and was
filed on June 10, 1998. The Form 4 for Mr. Kloosterman for the month of May,
1998 was required to be filed on June 10, 1998 and was filed with the SEC on
October 9, 1998.
OTHER MATTERS
The Board of Directors knows of no other business to be presented at the
Annual Meeting, but if other matters do properly come before the Annual Meeting,
it is intended that the persons named in the proxy will vote on said matters in
accordance with their best judgment.
ESSEL W. BAILEY, JR.
President and Chief Executive Officer
January 28, 1999
Ann Arbor, Michigan
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PROXY
OMEGA WORLDWIDE, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Susan Allene Kovach and Don M. Pearson, and each
of them, as proxies, each with the power to appoint his or her substitute to
represent and to vote as designated below, all the shares of Common Stock of
Omega Worldwide, Inc. held of record by the undersigned on February 4, 1999 at
the Annual Meeting of Stockholders to be held on March 23, 1999 or any
adjournment thereof.
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting and at any adjournment thereof.
This Proxy when properly executed will be voted in the manner directed herein
by the undersigned. If no specification is made, the Proxy will be voted FOR
the election of the directors named in the Proxy Statement.
If any nominee named above declines or is unable to serve as a director, the
persons named as proxies, and each of them, shall have full discretion to vote
for any other person who may be nominated.
(Continued, and to be marked, dated and signed, on the other side)
SEE REVERSE
SIDE
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<S> <C> <C>
PLEASE MARK YOUR 2953
[ X ] VOTE AS IN THIS
EXAMPLE.
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The Directors recommend a vote FOR Proposal 1.
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FOR WITHHELD
1. Election of [ ] [ ] NOMINEES:
Directors Essel W. Bailey, Jr.
[INSTRUCTIONS: To withhold authority to vote for any Harold J. Kloosterman
individual nominee, write that nominee's name in Robert L. Parker
the space provided below.]
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NOTE: Please sign exactly as name
appears on this Proxy. When
shares are held by joint tenants,
both should sign. When signing
as attorney, executor,
administrator, trustee or
guardian, please give full title
as such. If a corporation,
please sign in full corporate
name by President or other
authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
Please check the box [ ]
if you plan to attend
the Annual Meeting
in person.
SIGNATURE(S) DATE
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NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please give
full title as such. This proxy will not be used if you attend the meeting in person
and so request.
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