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                                                                  10.5 (REFILED)

* PLEASE NOTE THAT CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED ON A
REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE COMMISSION ALONG WITH THE
INFORMATION REQUESTED TO BE OMITTED.

                           OPTION & LICENSE AGREEMENT

1.  INTRODUCTION

    THIS AGREEMENT is between the UNIVERSITY OF SOUTHERN CALIFORNIA,
(hereinafter USC) a California nonprofit corporation with its principal place of
business at University Park, Los Angeles, California 90089, and BioKeys, Inc., a
Delaware corporation, with its principal place of business at 11466 Winding
Ridge Drive, San Diego, California 92141 (hereinafter Licensee).

    WHEREAS USC warrants that it is the owner and that it has the right to
exclusively license those rights it has in the inventions which are the subject
matter of the patent applications listed in Appendix A and of which the inventor
is Charles McKenna of USC (hereinafter Inventor);

    WHEREAS Licensee desires to obtain an exclusive license in the defined FIELD
OF USE to manufacture and market products utilizing the inventions as
hereinafter defined;

    WHEREAS, USC is willing to grant a worldwide, exclusive license in the
defined FIELD OF USE to Licensee subject to the terms, conditions, limitations,
and restrictions set forth below;

    NOW, THEREFORE, in consideration of the covenants herein contained, the
parties agree as follows:

2.  DEFINITIONS

    For all purposes of this Agreement the following terms shall have the
meanings specified below:

    a.  The term "PATENT" or "PATENTS" shall mean any and all patent
        applications listed in Appendix A (Appendix A may be added to from time
        to time by USC and USC shall notify Licensee of any such additions), any
        and all patents issued thereon or any continuation, division, extensions
        or reissue thereof, and any and all foreign patents issuing from any
        application filed which corresponds to claims contained in any of the
        foregoing patents or applications.

    b.  "PRODUCT" or "PRODUCTS" shall mean any article, composition, apparatus,
        substance, chemical, material, method or service which is made, used,
        distributed or sold by Licensee which:

        i.  is covered in whole or in part by one or more pending or unexpired
            claims contained in a PATENT in the country in which the PRODUCT(S)
            is made, used, distributed or sold;

        ii. is manufactured using a method or process which is covered in whole
            or in part by one or

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            more pending or unexpired claims contained in a PATENT in the
            country in which (a) the PRODUCT(S) is made, used, distributed or
            sold, or (b) the method or process is used or sold; or

       iii. the use of which is covered in whole or in part by one or more
            pending or unexpired claims contained in a PATENT in the country in
            which (a) the PRODUCT(S) is made, used, distributed or sold, or (b)
            the method or process is used or sold;

        iv. incorporates technology transferred to Licensee pursuant to the
            confidential disclosure agreement dated May 22, 2000 between USC and
            Licensee.

    A PRODUCT is covered by a pending or unexpired claim of a PATENT if in the
course of manufacture, use, distribution or sale, it would, in the absence of
this Agreement, infringe one or more claims of the PATENT which has not been
held invalid by a court from which no appeal can be taken.

    c.  "FIELD OF USE" shall mean use of thiophosphonoformic acid (TPFA) and
        derivatives thereof for treatment of infection by Human Immunodeficiency
        Virus (HIV), Human Papillomavirus (HPV) and other viral infections.

    d.  "NET SALES PRICE" shall mean the gross billing price of any PRODUCT
        received by Licensee or its SUBLICENSEE for the sale or distribution of
        any PRODUCT, less the following amounts actually paid by Licensee or
        SUBLICENSEE:

        i.  discounts allowed;

        ii. returns;

       iii. transportation charges or allowances;

        iv. packing and transportation packing material costs (not including
            product containers or product packing containers as manufactured by
            the Company);

        v.  customs and duties charges; and

        vi. sales, transfer and other excise taxes or other governmental charges
            levied on or measured by the sales but no franchise or income tax of
            any kind whatsoever.

    Every commercial use or disposition of any PRODUCT, in addition to a bona
fide sale to a customer, shall be considered a sale of such PRODUCT. The NET
SALES PRICE, in the case of a use or disposition other than a bona fide sale,
shall be equivalent to the then payable NET SALES PRICE of such PRODUCT in an
arm's length transaction.

    e.  "SUBLICENSEE" shall mean any third party licensed by Licensee to make,
        or sell any PRODUCT in accordance with the terms of this Agreement.

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    f.  "EFFECTIVE DATE" of this Agreement shall be the date when the last party
        has signed this Agreement.

3.  OPTION PHASE

    a.  USC hereby grants Licensee the exclusive right to conduct various
        technical, pre-clinical, marketing, patent, and other studies on
        PRODUCTS in the FIELD OF USE during a three (3) month period commencing
        on the EFFECTIVE DATE of this Agreement. The option period may be
        extended by mutual written agreement of the parties.

    b.  The consideration for the grant of this option phase shall be One
        Hundred Fifty Thousand Dollars ($150,000). Such payment shall be due on
        the earlier to occur of: (i) within three (3) months of the EFFECTIVE
        DATE of this Agreement or (ii) thirty (30) days from the date Licensee
        raises its next round of private funding.

4.  LICENSE PHASE

    a.  In consideration of the license fee and royalties, and subject to the
        terms and conditions, as set forth in this Agreement and effective upon
        written notification to USC during the option phase that Licensee
        desires to license the PATENT(S), USC hereby grants to Licensee:

        i.  the exclusive worldwide license to use the PATENT to manufacture and
            sell the PRODUCT(S) for application in the FIELD OF USE; and

        ii. the right to grant sublicenses to any PATENT licensed exclusively
            hereunder, provided that any SUBLICENSEE agrees to be bound by the
            terms and conditions of this Agreement applicable to SUBLICENSEES.

    b.  In addition to the consideration referred to in Paragraph 3.b., Licensee
        and USC shall during the option phase negotiate in good faith the terms
        of a mutually agreeable research agreement for the purpose of testing
        and developing the PRODUCT(S) for commercial purposes throughout the
        world.

    c.  If USC is not notified of Licensee's desire to enter the license phase
        by the end of the option phase or any extensions thereto and Licensee
        and USC are not able to agree to the terms of a research agreement
        pursuant to Paragraph 4.b., this Agreement and the license granted
        herein shall immediately terminate. Payments referred to in Section 3
        shall not be refunded upon such termination.

    d.  All licenses pursuant to Paragraphs 4.a. and 4.c. to inventions
        conceived or first actually reduced to practice during the course of
        research funded by a U.S. federal agency are subject to the rights,
        conditions and limitations imposed by U.S. law, including but not
        limited to the following:

        i.  The words "exclusive license" as used herein shall mean exclusive
            except for the

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            royalty free non-exclusive license granted to the U.S. government by
            USC pursuant to 35 USC Section 202(c)(4) for any PATENT claiming an
            invention subject to 35 USC Section 201 and except for the rights of
            USC and Inventor as set forth in Paragraph 6.

        ii. Licensee agrees that PRODUCTS used or sold in the United States
            shall be manufactured substantially in the United States, unless a
            written waiver is obtained in advance from the relevant U.S. federal
            agency.

5.  ROYALTY

    a.  On all sales of PRODUCTS anywhere in the world by Licensee, Licensee
        shall pay USC a royalty of (SPACE) the NET SALES PRICE.

    b.  If any PRODUCT is manufactured and sold under sublicense from the
        Licensee, the Licensee shall pay USC a royalty equal to (SPACE) of all
        of the Licensee's revenue received from the sublicense, including but
        not limited to earned royalty, prepaid royalty and license fees.

    c.  The Licensee will pay an annual minimum royalty. The minimum royalty on
        each PRODUCT will be Twenty-Five Thousand Dollars ($25,000.00)
        commencing on the first anniversary date of this Agreement, Seventy-Five
        Thousand Dollars ($75,000) on the second anniversary date and on the
        third anniversary date and thereafter One Hundred Twenty-Five Thousand
        Dollars ($125,000.00) for each succeeding year up to the date of
        expiration of the last PATENT. Minimum royalties are to be paid
        biannually to USC, one half due and payable on January 1 of each year
        and the second half due and payable on July 1 of each year. Should
        Licensee fail to make earned royalty payments sufficient to meet said
        minimum royalty requirements, it may pay the difference between the
        earned royalty and the minimum royalty requirement to keep this
        Agreement in force.

    d.  Licensee shall pay such royalties to USC on a calendar quarter basis.
        With each quarterly payment, Licensee shall deliver to USC a full and
        accurate accounting to include at least the following information:

        i.  Quantity of each PRODUCT sold (by country) by Licensee and its
            SUBLICENSEES;

        ii. Total receipts for each PRODUCT (by country);

       iii. Quantities of each PRODUCT used by Licensee and its SUBLICENSEES;

        iv. Names and addresses of SUBLICENSEES of Licensee;

        v.  Total number of PRODUCTS manufactured (by country); and

        vi. Total royalties payable to USC.

    e.  In each year the amount of royalty due shall be calculated quarterly as
        of March 31, June 30,

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        September 30 and December 31 and shall be paid quarterly within the next
        thirty (30) days following such date. Every such payment shall be
        supported by the accounting prescribed in Paragraph 5.d. and shall be
        made in United States currency. Whenever for the purpose of calculating
        royalties conversion from foreign currency shall be required, such
        conversion shall be at the rate of exchange thereafter published in the
        Wall Street Journal for the business day closest to the applicable end
        of calendar quarter.

    f.  The royalty payments due under this Agreement shall, if overdue, bear
        interest until payment at a per annum rate equal to (SPACE) above the
        prime rate in effect at Bank of America on the due date, not to exceed
        the maximum permitted by law. The payments of such interest shall not
        preclude USC from exercising any other rights it may have as a
        consequence of the lateness of any royalty payment.

6.  RIGHTS RETAINED BY UNIVERSITY

    Notwithstanding the exclusive license granted in Paragraph 4.a., USC and
Inventor will have the absolute, nontransferable right to use the technology
covered by the PATENTS and all improvements thereof, for conducting research and
educational purposes.

7.  PATENT PROSECUTION

    a.  USC shall file, prosecute and maintain, during the course of this
        Agreement, the patent applications and patents listed in Appendix A.
        Should Licensee require the filing of foreign patents, USC shall take
        responsibility for filing, prosecuting and maintaining said foreign
        patents.

    b.  Licensee shall reimburse all reasonable legal expenses incurred and paid
        by USC in filing, prosecuting and maintaining the U.S. and foreign
        applications listed (or to be listed pursuant to Paragraph 2.a.) in
        Appendix A, whether such expenses were incurred before or after the date
        of this Agreement. These legal expenses shall include the attorneys' and
        agents' fees, foreign filing fees and out-of-pocket costs associated
        with responding to office actions and any other fees and costs directly
        related to obtaining and/or maintaining patent protection in the
        countries listed in Appendix A. Licensee shall advance payments of
        maintenance fees and annuities as part of such legal expenses to be
        reimbursed by Licensee within thirty (30) days of request by USC, unless
        Licensee is advised otherwise by timely notice from USC.

    c.  Licensee agrees to pay to USC an initial deposit of Twenty-Five Thousand
        Dollars ($25,000.00) within fifteen (15) days of the EFFECTIVE DATE of
        this Agreement. Such deposit will be held in a trust account. Licensee
        authorizes USC to use that account to pay all legal expenses incurred
        pursuant to Paragraph 7.b. When the trust account drops below
        Twenty-Five Thousand Dollars ($25,000.00), Licensee agrees to pay within
        thirty (30) days of USC's written demand, the amount to maintain the
        balance of the trust account at a minimum of Twenty-Five Thousand
        Dollars ($25,000.00). Upon termination of this Agreement, any unused
        deposit shall be refunded.

    d.  If the Licensee elects (i) not to pursue a PATENT or (ii) to terminate
        the prosecution or

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        maintenance of a PATENT in any country, the Licensee surrenders its
        right to make, use or sell PRODUCTS covered by the non-elected PATENT in
        that particular country and shall grant to USC the exclusive rights
        previously granted to Licensee, without limitation, for that country.
        Licensee agrees to execute all necessary documents to carry out this
        grant of rights to USC. Payments referred to in Paragraphs 7.a. and 7.b.
        shall not be refunded upon such non-election or termination.

    e.  If the Licensee decides to terminate this agreement pursuant to
        Paragraph 16, Licensee shall reimburse all reasonable legal expenses
        incurred up to six (6) months from the date written notification of
        termination is sent to Licensee; provided, however, such legal expenses
        shall not exceed (SPACE).

8.  PATENT INFRINGEMENT

    a.  Defensive Controversy.

    Licensee shall promptly notify USC of all claims, allegations and
notifications of infringement of third party patents. Except for the placing in
escrow of a portion of royalties as referred to hereinafter, USC shall have no
obligation or liability in the event that legal action is brought against
Licensee for patent infringement. Such obligation and liability shall be borne
by Licensee. Licensee may choose legal counsel and defend the patent
infringement lawsuit. During such lawsuit, Licensee may place all of the
royalties derived from sales of the PRODUCT in the country where such lawsuit is
pending in an interest-bearing escrow account. The escrow account shall be
established in a bank mutually acceptable to both parties under escrow
instructions insulating the funds from claims of any creditor. Upon termination
of the action, one-half (1/2) of any judgment amount, reasonable attorneys' fees
and costs, may be paid from this escrow account. Should the settlement of any
such patent infringement lawsuit involve payment of royalties by Licensee to a
third party for the continued right to manufacture, use, and sell the PRODUCT,
then funds in the escrow account and royalties payable to USC may be applied
against up to one-half (1/2) of such royalties to a third party. Any funds
thereafter remaining in the escrow shall be paid to USC. The above shall
constitute USC's sole liability and responsibility in the event of such action.
Royalties paid to third parties as provided for above shall be included when
determining whether the minimum royalty provided for in this Agreement has been
paid in a given year. During the patent infringement litigation both parties
shall keep each other informed in writing of significant developments in the
lawsuit.

    b.  Offensive Controversy.

    Licensee shall promptly notify USC of any potential infringement of a
PATENT. In the event that a third party infringes on a PATENT, Licensee shall
have the right but not an obligation to bring legal action to enforce any such
patent. If Licensee exercises such right, Licensee shall select legal counsel
and pay all legal fees and costs of prosecution of such action. In the event
that Licensee shall choose not to take such action, USC shall have the right, at
its option and at its own expense, to prosecute any action to enjoin such
infringement or to prosecute any claim for damages. The party prosecuting any
such action shall be entitled to retain any funds received as a result of
settlement

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or judgment of such action. The parties may also agree to jointly pursue
infringers. After deduction and payment to the parties of their respective costs
and fees (including without limitation reasonable attorneys' fees) incurred in
prosecuting any such actions, the net funds obtained as a result of settlement
or of judgment of any such jointly prosecuted action shall be divided in the
following manner: 25% of all net funds shall be divided equally by the parties
and 75% of all the net funds shall be divided between the parties in the
proportion to the amount of legal fees and costs incurred by the parties in the
prosecution of such actions. If funds are insufficient to pay all costs and fees
then all of the funds shall be paid to the parties in said proportion.

    c.  During any litigation hereunder both parties shall keep each other
        timely informed of any signifi cant development in the litigation and
        provide all reasonably requested technical assistance. During any said
        controversy, full royalty payment shall continue, except as otherwise
        provided herein.

9.  RECORDS

    Licensee and SUBLICENSEES shall keep complete, true and accurate books of
account and records for the purpose of showing the derivation of all amounts
payable to USC under this Option and License Agreement. Said books and records
shall be kept at Licensee's principal place of business for at least four (4)
years following the end of the calendar year to which they pertain and shall be
open at all reasonable times for inspection by a representative of USC for the
purpose of verifying Licensee's royalties statement or Licensee's compliance in
other respects with this Option and License Agreement. All information obtained
as a result of such audit shall be maintained in confidence, except that the
representative may disclose to USC the aggregate amount of royalties due to USC
during each year, as determined in such audit. Should an audit by USC show an
underpayment of royalties by more than 10%, Licensee shall immediately pay such
underpayment and all interest, as well as for USC's reasonable audit expenses.

10. SERVICES OF INVENTOR

    USC shall make reasonable efforts to make Inventor available during regular
business hours to answer questions concerning technical aspects of the
technology necessary to understand the PATENT(S). Should Licensee desire to use
the services of Inventor for further technical information and/or market studies
of the technology, a separate research and development and/or consulting
agreement should be negotiated with Inventor and the USC Office of Contracts and
Grants.

11. SUBLICENSE PERMISSION

    Licensee may sublicense the PATENT(S) only with prior written permission
from USC, which permission will not be unreasonably withheld. Notwithstanding
the foregoing, no permission will be granted for a sublicense unless the
SUBLICENSEE agrees in writing to be bound by the terms of this Agreement.

12. PATENT MARKING

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    Licensee shall use reasonable efforts to place all appropriate patent and
other intellectual property notices, markings and indicia on product and
marketing literature for the PRODUCTS as needed to protect the patent and other
intellectual property rights of USC and right for damages for infringement
thereof.

13. PUBLICATIONS

    Nothing in this Agreement shall limit or prevent USC or Inventor from
publishing any information about the PATENT. Thirty (30) days prior to
submission for publication, USC and Inventor will use their reasonable efforts
to submit the proposed publication, for review only, to Licensee.

14. PUBLICITY

    Neither party shall use the name, trade name, trademark or other designation
of the other party in connection with any products, promotion or advertising
without the prior written permission of the other party.

15. ASSIGNMENTS/TRANSFERS

    Licensee may not assign or transfer this Agreement in whole or part to any
third party without the prior written permission of USC, which permission shall
be granted in the sole discretion of USC. The Licensee may only assign the
entire Agreement to successors of the entire business of the PRODUCTS if the
successor agrees to be bound by this Agreement and prior written notice is
provided to USC.

16. TERMINATION

    a.  Upon the breach of or default under this Option and License Agreement by
        either party, the non-breaching party may terminate this Option and
        License Agreement by forty-five (45) days written notice to the
        breaching party. Said notice shall be effective at the end of such
        period unless during said period breaching party shall remedy such
        defect or default. Licensee may also terminate this Agreement at any
        time, for any reason, by providing USC a thirty (30) day written notice
        and paying to USC the legal expenses incurred up to six (6) months from
        the date written termination is sent to Licensee. No option fees,
        license fees, or royalties shall be returnable. This Agreement may also
        be terminated immediately by USC upon notice to Licensee upon the
        occurrence of any of the following: (i) Licensee attempts to use,
        sublicense, transfer or assign its rights or obligations under this
        Agreement in any manner contrary to the terms of this Agreement or in
        derogation of USC's proprietary rights; (ii) Licensee fails to obtain
        and maintain the insurance coverages required by Paragraph 24 hereof; or
        (iii) Licensee is determined to be insolvent or makes an assignment for
        the benefit of creditors, or has a bankruptcy petition filed by or
        against it, or a receiver or trustee in bankruptcy or similar officer is
        appointed to take charge of all or part of Licensee's property. Upon
        termination of the Agreement all rights granted to or provided by each
        party to the other shall automatically and irrevocably revert to the
        granting party.

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    b.  Surviving any termination are:

        i.  Licensee's obligation to pay the amount for consideration for the
            grant of the option phase and royalties accrued or accruable.

        ii. Licensee's obligation of Paragraph 9 to keep and allow a final
            audit.

       iii. Any cause of action or claim of Licensee or USC, accrue or to
            accrue, because of any breach or default by the other party.

        iv. The provisions of Paragraphs 22, 23 and 24.

    c.  Upon termination of this Agreement, Licensee agrees to immediately
        discontinue the manufacture and sale of the PRODUCTS and the use of the
        PATENTS. Within twenty (20) days after such termination, Licensee shall
        provide USC with a written inventory of all PRODUCTS currently in its
        stock as of the date of termination (the "INVENTORY"). USC shall have
        the option to grant to Licensee the privilege of disposing of such
        INVENTORY at its normal prices within three (3) months after said
        termination. Licensee shall dispose of this INVENTORY only to customers
        who had previously purchased PRODUCTS from Licensee during the term of
        this Agreement, and in no event shall Licensee sell such INVENTORY to
        wholesalers, diverters, jobbers or any other entity which does not sell
        at retail exclusively or to anyone else who intends to sell such
        INVENTORY at close-out. The disposition of all such INVENTORY, however,
        shall be subject to all of the terms and conditions of this Agreement.
        After the three (3) month sell-off period, Licensee shall destroy or
        return to USC all remaining unsold PRODUCTS, all equipment used in the
        manufacture of the PRODUCTS and all packaging and marketing materials,
        and shall certify their destruction or return to USC specifying the
        number of each destroyed or returned. All royalty obligations, including
        any unpaid portions of the minimum royalty, shall be accelerated and
        shall become immediately due and payable. In addition, Licensee shall
        immediately deliver to USC (i) all materials relating to the PATENTS,
        together with all copies thereof, and (ii) all market studies or other
        tests or studies conducted by Licensee with respect to the PRODUCTS, all
        at no cost whatsoever to USC.

    d.  LICENSEE acknowledges and agrees that any violation of this Agreement by
        Licensee would result in irreparable harm to USC. Accordingly, Licensee
        consents and agrees that, if Licensee violates any of the provisions of
        this Agreement, USC shall be entitled, in addition to other remedies
        available to it, to an injunction to be issued by any court of competent
        jurisdiction restraining Licensee from committing or continuing any
        violation of this Agreement, without the need for posting any bond or
        any other undertaking.

17. NOTICES, REPORTS AND PAYMENTS

    Any notice, report or payment permitted or required under this Agreement
shall be in writing, and shall be sent or delivered to the receiving party at
the address set forth below or at such address as either party may from time to
time designate in writing.

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USC:          Office of Technology Licensing
              University of Southern California
              3716 South Hope Street, Suite 313
              Los Angeles, California 90007-4344 (U.S.A.)

Attn:         Director

LICENSEE:     BioKeys, Inc.
              11466 Winding Ridge Drive
              San Diego, California 92141

Attn:         Nicholas Jon Virca
              President & Chief Executive Officer

18. PARAGRAPH HEADINGS

    Paragraph headings are for the convenience of this Agreement only and shall
not add to or detract from any of the terms or provisions.

19. SEVERABILITY

    If any provision of this Agreement is held invalid under any law applicable
to the parties, SUBLICENSEES and/or assignees, that provision shall be
considered severable and its invalidity shall not affect the remainder of this
Agreement, which shall continue in full force and effect.

20. CONTROLLING LAW, JURISDICTION AND VENUE

    This Agreement shall be deemed to be executed and to be performed in the
State of California, and shall be construed in accordance with the laws of the
State of California as to all matters, including but not limited to matters of
validity, construction, effect and performance. In the event of any controversy,
claim or dispute between the parties hereto arising out of or relating to this
agreement, such controversy, claim or dispute may be tried exclusively in the
courts of the State of California or in the United States Federal District Court
for the Central District of California, as either party may elect. Each of the
parties hereby waives any defense of lack of in personam jurisdiction, improper
venue and forum non conveniens, and agrees that service of process of such court
may be made upon each of them by personal delivery or by mailing certified or
registered mail, return receipt requested, to the other party at the address
provided for in Paragraph 17 hereof. Both parties hereby submit to the
jurisdiction of the court so selected, to the exclusion of any other courts
which may have had jurisdiction apart from this Paragraph 20.

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21. TERM OF THE AGREEMENT

    Except as otherwise terminated pursuant to the other provisions of this
OPTION AND LICENSE AGREEMENT, this Agreement shall terminate upon expiration of
the last to expire of the patents or fifteen (15) years from the Effective Date
of this Agreement, whichever is longer.

22. NEGATION OF WARRANTIES

    a.  Nothing in this Agreement shall be construed as:

        i.  a warranty or representation by USC as to the validity or scope of
            the PATENT and/or PATENT Application; or

        ii. a warranty or representation that any PRODUCTS made, used, sold or
            otherwise disposed of under any license granted in this Agreement is
            or will be free from infringement of patents of third parties; or

        iii. an obligation to bring or prosecute actions or suits against third
            parties for infringement; or

        iv. conferring the rights to use in advertising, publicity or otherwise
            any trademark, trade name, or names or any contraction,
            abbreviation, simulation or adoption thereof, of USC or Licensee; or

        v.  any obligation to furnish any know-how not provided.

    b.  USC MAKES NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS
        FOR A PARTICULAR PURPOSE, nor does USC represent that the rights granted
        hereunder will result in PRODUCTS that are commercially successful.

    c.  Licensee further agrees that it will not rely upon technical information
        provided by USC and Inventor in developing and manufacturing any
        PRODUCTS hereunder, but will independently test, analyze and evaluate
        all PRODUCTS prior to manufacture and distribution of such PRODUCTS.

    d.  UNDER NO CIRCUMSTANCES SHALL USC BE LIABLE TO LICENSEE OR ANY OF ITS
        SUBLICENSEES FOR ANY INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR
        PUNITIVE DAMAGES ARISING OUT OF OR IN CONNECTION WITH THE AGREEMENT.
        NOTWITHSTANDING THE FOREGOING, UNDER NO CIRCUMSTANCE SHALL USC HAVE ANY
        CUMULATIVE LIABILITY FOR ANY CLAIM ARISING FROM THIS AGREEMENT IN EXCESS
        OF THE TOTAL AMOUNTS PAID BY LICENSEE TO USE UNDER THIS AGREEMENT.

23. INDEMNITY

    a.  Licensee shall defend, indemnify and hold harmless USC and its trustees,
        officers, medical and

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        professional staff, employees and agents and their respective
        successors, heirs and assigns (the "Indemnitees"), against all
        liabilities, demands, losses, costs, and expenses (including without
        limitation attorneys' fees) incurred by or imposed upon the Indemnitees
        or any one of them in connection with any claims, suits, actions,
        demands or judgments arising out of any theory of liability (including
        but not limited to, actions in the form of tort, warrantee, or strict
        liability) for death, personal injury, illness, or property damage
        arising from Licensee's use, sale, or other disposition of the
        PRODUCT(S).

    b.  Licensee agrees, at its own expense, to provide attorneys reasonably
        acceptable to USC to defend against any actions brought or filed against
        any party indemnified hereunder with respect to the subject of indemnity
        contained herein, whether or not such actions are rightfully brought. To
        the extent that any proposed settlement directly affects USC, the
        Licensee shall obtain the approval of USC before finally agreeing to
        such settlement proposal, which consent shall not be unreasonably
        withheld.

24. INSURANCE

    a.  Not less than thirty (30) days prior to the exercise of the license
        phase of this Agreement, Licensee shall at its sole cost and expense,
        procure and maintain in effect a comprehensive general liability policy
        of insurance in single limit coverage of not less than One Million
        Dollars ($1,000,000) per incident and One Million Dollars ($1,000,000)
        annual aggregate for death, bodily injury or illness and Two Hundred
        Thousand Dollars ($200,000) annual aggregate in property damage. Such
        comprehensive general liability insurance shall provide (i) product
        liability coverage and (ii) broad form contractual liability coverage
        for Licensee's indemnification. If Licensee elects to self-insure all or
        part of the limits described above (including deductibles or retention
        which are in excess of annual aggregate) such self-insurance program
        must be acceptable to USC. Each such policy of insurance shall name USC
        as an additional insured and shall provide for not less than thirty (30)
        days prior written notice before any cancellation or material change in
        coverage shall be effective. A Certificate evidencing the comprehensive
        general liability policy herein defined shall be delivered to USC within
        ten (10) days of the EFFECTIVE DATE of this agreement. Licensee shall
        maintain such comprehensive general liability insurance until such time
        as the policy in Paragraph 24.b. or Paragraph 24.c is procured, or until
        fifteen (15) years after the term of this Agreement.

    b.  During such time and in each country where PRODUCT, or any modification
        thereof, is utilized in human clinical trials by Licensee or any
        SUBLICENSEE, Licensee shall at its sole cost and expense, procure and
        maintain in effect a comprehensive general liability policy of insurance
        in single limit coverage of not less than Five Million Dollars
        ($5,000,000) per incident and Five Million Dollars ($5,000,000) annual
        aggregate for death, bodily injury, illness or property damage. Such
        comprehensive general liability insurance shall provide (i) product
        liability coverage and (ii) broad form contractual liability coverage
        for Licensee's indemnification. If Licensee elects to self-insure all or
        part of the limits described above (including deductibles or retention
        which are in excess of $125,000 annual aggregate) such self-insurance
        program must be acceptable to USC. Each such policy of insurance shall
        name USC as an additional insured and shall provide for not less than
        thirty (30) days prior written notice before any cancellation or
        material change in coverage shall be effective. A Certificate evidencing
        the comprehensive general liability policy herein defined shall be
        delivered to USC prior to any manufacture, sale, distribution or
        administration to humans. Licensee shall maintain such comprehensive

                                       12
<Page>

        general liability insurance until such time as the policy in Paragraph
        24.c is procured, or until fifteen (15) years after the term of this
        Agreement.

    c.  During such time and in each country where PRODUCT, or any modification
        thereof, is administered to humans, manufactured or distributed for any
        purpose other than for human clinical trials as specified in Paragraph
        23.b (including for the purpose of obtaining regulatory approvals) by
        Licensee or any SUBLICENSEE, Licensee shall at its sole cost and
        expense, procure and maintain in effect a comprehensive general
        liability policy of insurance in single limit coverage of not less than
        Ten Million Dollars ($10,000,000) per incident and Ten Million Dollars
        ($10,000,000) annual aggregate for death, bodily injury, illness or
        property damage. Such comprehensive general liability insurance shall
        provide (i) product liability coverage and (ii) broad form contractual
        liability coverage for Licensee's indemnification. If Licensee elects to
        self-insure all or part of the limits described above (including
        deductibles or retention which are in excess of $250,000 annual
        aggregate) such self-insurance program must be acceptable to USC. Each
        such policy of insurance shall name USC as an additional insured and
        shall provide for not less than thirty (30) days prior written notice
        before any cancellation or material change in coverage shall be
        effective. A Certificate evidencing the comprehensive general liability
        policy herein defined shall be delivered to USC prior to any
        manufacture, sale, distribution or administration to humans. Licensee
        shall maintain such comprehensive general liability insurance during the
        period that the PRODUCT or any modification thereof is being
        manufactured, sold, distributed or administered to humans by the
        Licensee or its SUBLICENSEES and a reasonable period thereafter which in
        no event shall be less than fifteen (15) years.

    d.  In the event that Licensee does not maintain such insurance, but is
        self-insured, or carries a substantial self-retention, USC may grant
        permission for such self-insurance only if, in the sole discretion of
        USC, the net worth, assets and earnings of the Licensee are deemed
        sufficient to protect USC's economic interests in the event of claims,
        liability, demands, damages, expenses and losses from death, personal
        injury, illness, or property damage.

    e.  The minimum amounts of insurance coverage required under this Paragraph
        (subparts 24.a., 24.b., and 24.c.) shall not be construed to create a
        limit of Licensee's liability with respect to its indemnification in
        Paragraph 23 or any other provision of this Agreement.

    f.  By SUBLICENSEES

    As a condition precedent to a grant of permission by USC for Licensee to
sublicense the PATENT rights herein, the prospective SUBLICENSEE shall agree to
indemnify Licensee and USC to the same extent and degree as Licensee has agreed
to indemnify USC herein. Such SUBLICENSEE shall also provide insurance identical
in coverage and amount to that required of Licensee in subparagraph b, above,
naming both Licensee and USC as additional insured. A Certificate evidencing the
comprehensive general liability policy shall be delivered to USC prior to USC's
giving permission for such sublicensing agreement and a Certificate evidencing
the product liability coverage shall be delivered prior to first manufacture of
any PRODUCTS by the SUBLICENSEE. In the event a prospective SUBLICENSEE does not
maintain such insurance, but is self-insured, or carries a substantial
self-retention, USC may grant permission for such sublicense only if, in the
sole discretion of USC, the net worth, assets and earnings of such prospective
SUBLICENSEE are deemed sufficient to

                                       13
<Page>

protect USC's economic interests in the event of claims, liability, demands,
damages, expenses and losses from death, personal injury, illness, or property
damage.

25. ATTORNEYS' FEES

    In any action on or concerning this Agreement, the prevailing party shall be
awarded its reasonable attorneys' fees, costs and necessary disbursements, to be
paid by the nonprevailing party.

26. PRODUCT DEVELOPMENT

    If Licensee exercises its option, Licensee shall use diligent efforts to
test and develop the PRODUCT for commercial purposes throughout the world. On or
before January 1 of each year during the term of this Agreement, commencing on
the EFFECTIVE DATE of this Agreement, Licensee shall submit to USC a report
detailing its research, regulatory approval, marketing and product development
objectives the coming year as well as the research, regulatory approval,
marketing and development activities which Licensee undertook during the
preceding year. The reports shall identify specific future milestones
(regulatory approval and product development) and information demonstrating that
the Licensee is providing sufficient financial and manpower resources to
evidence its use of reasonable efforts. If USC desires to know the status of the
development of PRODUCTS before January 1, USC shall make a request in writing
for the status and Licensee shall provide, within fifteen (15) days, a written
summary of the status of such development of PRODUCT(S). Within six (6) months
after the signing of this Agreement and each two (2) years thereafter, a
representative from the USC Technology Licensing Office, at Licensee's expense
(including transportation, and, if appropriate, lodging and meals), shall visit
the manufacturing and marketing facilities of Licensee and be presented with an
in-depth updating of the manufacturing capability and marketing network of
Licensee.

27. EXPORT CONTROLS

    It is understood that USC is subject to United States laws and regulations
controlling the export of technical data, computer software, laboratory
prototypes and other commodities (such laws include the Arms Export Control Act,
as amended and the Export Administration Act), and that its obligations
hereunder are contingent on compliance with applicable United States export laws
and regulations. The transfer of certain technical data and commodities by the
Licensee may require a license from the cognizant agency of the United States
Government and/or written assurances by Licensee that Licensee shall not export
data or commodities to certain foreign countries without prior approval of such
agency. USC neither represents that a license shall not be required nor that, if
required, it shall be issued. Licensee shall not engage in any activity in
connection with this Agreement that is in violation of any applicable U.S. law.

28. INDEPENDENT CONTRACTOR

                                       14
<Page>

    In rendering performances under this Agreement, Licensee will function
solely as an independent contractor and not as agent, partner, employee or joint
venturer with USC. Nothing in this Agreement shall be deemed or construed to
create the relationship of principal and agent, or of partnership or joint
venture, and neither party shall hold itself out as an agent, legal
representative, partner, subsidiary, joint venturer, servant or employee of the
other. Neither party nor any officer, employee, agent or representative thereof
shall, in any event, have any right, collectively or individually, to bind the
other party, to make any representations or warranties, to accept service of
process, to receive notice or to perform any act or thing on behalf of the other
party, except as expressly authorized under this Agreement or in writing by such
other party in its sole discretion.

29. WAIVER

    No waiver by either party of any default or breach shall be deemed as a
waiver of prior or subsequent default or breach of the same or other provisions
of this Agreement.

30. ENTIRE AGREEMENT

    This Agreement constitutes the entire agreement between the parties
concerning the subject matter hereof. No amendment, modification, extension or
cancellation of this Agreement shall be binding on the parties unless mutually
agreed to and executed in writing by each of the parties.

UNIVERSITY OF SOUTHERN CALIFORNIA   BIOKEYS, INC.

/s/ DENNIS F. DOUGHERTY                 /s/ NICHOLAS JON VIRCA
---------------------------------       ----------------------------------------
Dennis F. Dougherty                     Nicholas Jon Virca
Senior Vice President,                  President & Chief Executive Officer
Administration

             8/17/00                                 8/17/00
---------------------------------       ----------------------------------------
(Date)                                  (Date)

                                       15
<Page>

                                   APPENDIX A

<Table>
<Caption>
USC#           TITLE                                      SERIAL #     DATE      PATENT #     COUNTRY
-----------------------------------------------------------------------------------------------------------
<S>            <C>                                        <C>          <C>       <C>          <C>
2227           Preparation and Use of Thiophosphonates    369,468      6/21/89   5,072,032    United States
               and Thio-Analogues Of Phosphonoformic
               Acid
2227A          Preparation and Use of                     768,155      9/30/91   5,183,812    United States
               Thiophosphonates and Thio-Analogues
               Of Phosphonoformic Acid
2633           Improved Preparations of Thiophosphites    09/304,252   5/3/99                 United States
               and Thiophosphonates
2633           Improved Preparations of Thiophosphites                 5/3/00                 PCT
               and Thiophosphonates
2788A          Preparation and Use of Alpha-Keto          09/352,236   7/13/99                United States
               Bisphosphonates
2789           Preparation and Use of Sulfur-Containing   60/092,560   7/13/98                United States
               Phosphonoformate Analogues
2871           Synthesis and Use Of Lipophilic            60/125,805   3/23/99                United States
               Phosphonocarboxylate Derivatives
</Table>

                                       16<PAGE>

                                                                   EXHIBIT 10.42

                        AMENDMENT NO. 4 TO LOAN AGREEMENT

         AMENDMENT NO. 4 TO LOAN AGREEMENT (this "FOURTH AMENDMENT"), made and
executed this 21st day of December, 2001, by and among:

         OMEGA HEALTHCARE INVESTORS, INC. and certain of its subsidiaries
(individually, a "BORROWER" and collectively, the "BORROWERS"),

         The Banks that have executed the signature pages hereto (individually,
a "BANK" and collectively, the "BANKS"); and

         FLEET NATIONAL BANK, a national banking association, as Agent for the
Banks (in such capacity, together with its successors in such capacity, the
"AGENT").

                             PRELIMINARY STATEMENTS

         (A) The Borrowers have entered into a certain Loan Agreement dated June
15, 2000 (as amended by (i) Amendment No. 1 to Loan Agreement dated August 15,
2000, (ii) Amendment No. 2 to Loan Agreement dated November 20, 2000, and (iii)
Amendment No. 3 to Loan Agreement dated January 30, 2001, hereinafter referred
to as the "LOAN AGREEMENT") with the Agent and the Banks; and

         (B) The Borrowers have requested that the Banks and the Agent amend
certain provisions of the Loan Agreement, and the Banks and the Agent are
willing to do so, all on the terms and conditions hereinafter set forth;

         NOW, THEREFORE, in consideration of the agreements and provisions
contained herein, the parties hereto hereby agree as follows:

         1. DEFINITIONS. Capitalized terms used but not otherwise defined herein
shall have the meanings ascribed to such terms in the Loan Agreement.

         2. CERTAIN AMENDMENT TO THE LOAN AGREEMENT.

                 2.1. Article 1 of the Loan Agreement (Definitions) is hereby
deleted in its entirety and the following is substituted therefor:

         "ARTICLE 1   DEFINITIONS.

                  SECTION 2.1.  DEFINED TERMS.

                  As used in this Agreement, the following terms shall have the
         following meanings:

                  'ACCRUED CATCH-UP DIVIDENDS': the aggregate accrued but
         undeclared dividends on Omega's Series A, Series B and Series C
         Preferred Stock during the period commencing February 1, 2000 through
         the first date thereafter (the "CATCH-UP DATE") on which Omega shall
         have declared a dividend on any of such Series A, Series B or Series C
         Preferred Stock.

<PAGE>
                  'ADDITIONAL COLLATERAL': as defined in subsection 4.1(c)
         hereof.

                  'ADDITIONAL COSTS': as defined in subsection 2.19(b) hereof.

                  'ADDITIONAL ELIGIBLE HEALTHCARE ASSET(S)': as of any date as
         of which such assets are to be determined, all Facilities of the
         Borrowers other than:

                           (i) any Facility which has a Fixed Charge Coverage of
                  less than 1.00 to 1.00; and

                           (ii) any Facility, if the payment of any Lease Rental
                  Expenses or Mortgage Expenses, as applicable, arising from
                  such Facility, are delinquent in payment for thirty (30) days
                  or more.

                  'ADDITIONAL EQUITY CONTRIBUTION': as defined in the Investment
         Agreement.

                  'ADJUSTED EBITDA': for any period, with respect to Omega on a
         consolidated basis, determined in accordance with GAAP, the sum of net
         income (or net loss) for such period PLUS the sum of all amounts
         treated as expenses for: (a) interest, (b) depreciation, (c)
         amortization, and (d) all accrued or paid taxes on or measured by
         income to the extent included in the determination of such net income
         (or net loss); provided, however, that net income (or net loss) shall
         be computed without giving effect to extraordinary losses or gains (it
         being acknowledged that non-cash gains or losses associated with or
         resulting from property dispositions or non-cash impairment charges
         shall be treated as extraordinary); and provided further, however, that
         the calculation of Adjusted EBITDA (i) for any period during which an
         Investment or a Disposition was effected shall be determined on a pro
         forma basis as if such Investment or Disposition were effected on the
         first day of such period, and (ii) shall not include (A) a one time
         charge of $11,000,000 related to the settlement of the Karrington
         Lawsuit (including up to $1,000,000 in legal expenses incurred prior to
         the Amendment No. 4 Effective Date), (B) $5,000,000 constituting
         expenses related to the relocation of Omega's headquarters to
         Baltimore, Maryland, including severance costs incurred in connection
         therewith, (C) up to $31,000,000 in the aggregate for certain
         loss/impairment charges satisfactory to the Agent related to certain of
         Omega's investments, (D) $5,000,000 in the aggregate in connection with
         litigation settlement charges (in addition to settlement charges
         relating to the Karrington Lawsuit referred to in clause (A) above) and
         Medicare charges, (E) up to $12,000,000 in connection with the costs
         associated with collections of, and reserves taken against, accounts
         receivable associated with certain Facilities which are owned and
         operated by Omega and/or certain of its Subsidiaries, (F) up to
         $5,000,000 in the aggregate related to one time charges incurred by the
         Borrowers in connection with the termination of certain third party
         leases, and (G) non-cash charges related to changes in the effect of a
         change occurring in GAAP or in the application thereof on derivatives
         (FASB Statement No. 133); provided that with respect to all of the
         foregoing exclusions contained in clauses (A) through (G), the
         Borrowers shall submit to the Agent documentation in form and substance
         satisfactory to the Agent evidencing such exclusions.

                  'AFFECTED LOANS': as defined in Section 2.22 hereof.

                                       2
<PAGE>

                  'AFFECTED TYPE': as defined in Section 2.22 hereof.

                  'AFFILIATE': as to any Person, any other Person that directly
         or indirectly controls, or is under common control with, or is
         controlled by, such Person. As used in this definition, "control"
         (including, with its correlative meanings, "controlled by" and "under
         common control with") shall mean possession, directly or indirectly, of
         power to direct or cause the direction of management or policies
         (whether through ownership of securities or partnership or other
         ownership interests, by contract or otherwise), PROVIDED THAT, in any
         event: (a) any Person that owns directly or indirectly five (5%)
         percent or more of the securities having ordinary voting power for the
         election of directors or other governing body of a corporation or five
         (5%) percent or more of the partnership or other ownership interests of
         any other Person (other than as a limited partner of such other Person)
         will be deemed to control such corporation or other Person; and (b)
         each shareholder, director and officer of any Borrower shall be deemed
         to be an Affiliate of such Borrower.

                  'AGENCY FEE': as defined in subsection 2.8(c) hereof.

                  'ALTERNATE BASE RATE': for any day, a rate per annum (rounded
         upwards, if necessary, to the next 1/16th of 1%) equal to the greater
         of (a) the Prime Rate in effect on such day, and (b) 0.5% plus the
         Federal Funds Rate in effect on such day.

                  'AMENDMENT FEE': as defined in subsection 2.8(a) hereof.

                  'AMENDMENT NO. 4': Amendment No. 4 to Loan Agreement dated
         December 21, 2001, by and among the Borrowers the Banks and the Agent.

                  'AMENDMENT NO. 4 EFFECTIVE DATE': the "Effective Date" as
         defined in Amendment No. 4.

                  'APPLICABLE MARGIN':

                           (i) as at any date of determination thereof through
                  and including December 31, 2002, the applicable percentage set
                  forth below opposite the Leverage Ratio as at such date of
                  determination:

<TABLE>
<CAPTION>
         ------------------------------------ ------------------------ ----------------------
                                               APPLICABLE MARGIN        APPLICABLE MARGIN
                   LEVERAGE RATIO              FOR PRIME RATE LOANS     FOR LIBOR LOANS
         ------------------------------------ ------------------------ ----------------------
<S>                                           <C>                      <C>
         Greater than or equal to 5.0:1.0             1.00%                   3.25%
         ------------------------------------ ------------------------ ----------------------
         Less than 5.0:1.0 but                        0.75%                   3.00%
         greater than or equal to 4.5:1.0
         ------------------------------------ ------------------------ ----------------------
         Less than 4.5:1.0 but                        0.50%                   2.75%
         greater than or equal to 4.0:1.0
         ------------------------------------ ------------------------ ----------------------
         Less than 4.0:1.0                            0.25%                   2.50%
         ------------------------------------ ------------------------ ----------------------
</TABLE>

                                       3
<PAGE>

                           (ii) as at any date of determination thereof after
                  December 31, 2002, the applicable percentage set forth below
                  opposite the Leverage Ratio as at such date of determination:

<TABLE>
<CAPTION>
         ---------------------------------- --------------------------- ----------------------
                                             APPLICABLE MARGIN           APPLICABLE MARGIN
                  LEVERAGE RATIO             FOR PRIME RATE LOANS        FOR LIBOR LOANS
         ---------------------------------- --------------------------- ----------------------
<S>                                         <C>                         <C>
         Greater than or equal to 4.0:1.0           1.00%                      3.25%
         ---------------------------------- --------------------------- ----------------------
         Less than 4.0:1.0                          0.75%                      3.00%
         ---------------------------------- --------------------------- ----------------------
</TABLE>

                  The determination of the applicable percentage pursuant to the
         tables set forth above shall be made on a quarterly basis based on an
         examination of the financial statements of Omega delivered pursuant to
         and in compliance with Section 5.1 or Section 5.2 hereof, which
         financial statements, whether annual or quarterly, shall indicate that
         there exists no Default or Event of Default hereunder. Each
         determination of the Applicable Margin shall be effective as of the
         first day of the calendar month following the date on which the
         financial statements on which such determination was based were
         received by the Agent. In the event that financial statements for the
         four full fiscal quarters most recently completed prior to such date of
         determination have not been delivered to the Agent in compliance with
         Section 5.1 or 5.2 hereof, then the Agent may determine, in its
         reasonable judgment, the ratio referred to above that would have been
         in effect as at such date, and, consequently, the Applicable Margin in
         effect for the period commencing on such date. Notwithstanding anything
         to the contrary contained in this definition, during the period
         commencing on the date hereof through and including March 31, 2001, the
         Applicable Margin for Prime Rate Loans shall be 1.00% and the
         Applicable Margin for LIBOR Loans shall be 3.25%

                  'APPLICATION(S)': as defined in subsection 2.2(a)(iv) hereof.

                  'APPRAISAL': an appraisal providing an assessment of the fair
         market value (using the income and comparable sales approaches to
         valuation, where applicable) of a Facility (whether appraised on a
         stand-alone basis or "in bulk" together with similar Facilities, I.E.
         under a Master Lease ), which appraisal is independently and
         impartially prepared by a nationally recognized appraiser or an
         appraiser acceptable to the Agent and having substantial experience in
         the appraisal of health care facilities and conforming to Uniform
         Standards of Professional Appraisal Practice adopted by the Appraisal
         Standards Board of the Appraisal Foundation.

                  'APPRAISED VALUE': with respect to any Facility, the value of
         such Facility reflected in the most recent Appraisal prepared with
         respect to such Facility.

                  'ARRANGEMENT FEE': as defined in subsection 2.8(c) hereof.

                  'ASSESSMENT RATE': at any time, the rate (rounded upwards, if
         necessary, to the nearest 1/100 of one (1%) percent) then charged by
         the Federal Deposit Insurance Corporation (or any successor) to the
         Reference Bank for deposit insurance for Dollar time deposits with the
         Reference Bank at the Principal Office as determined by the Reference
         Bank.

                                       4
<PAGE>

                  'ASSIGNMENT AND ACCEPTANCE': an agreement in the form of
         Exhibit B hereto.

                  'BENEFICIARY DOCUMENTS': as defined in subsection 2.2(c)(i)
         hereof.

                  'BONDS': collectively, the Senior Notes and the Debentures.

                  'BORROWER MORTGAGE(S)': as defined in subsection 2.10(a)(ii)
         hereof.

                  'BORROWER SECURITY AGREEMENT': as defined in subsection
         2.10(a)(i) hereof.

                  'BORROWING NOTICE': as defined in Section 2.3 hereof.

                  'BUSINESS DAY': any day other than Saturday, Sunday or any
         other day on which commercial banks in New York City are authorized or
         required to close under the laws of the State of New York.

                  'CAPITAL EXPENDITURES': for any period, the aggregate amount
         of all payments made or to be made during such period by any Person
         directly or indirectly for the purpose of acquiring, constructing or
         maintaining fixed assets, real property or equipment that, in
         accordance with GAAP, would be added as a debit to the fixed asset
         account of such Person, including, without limitation, all amounts paid
         or payable during such period with respect to Capitalized Lease
         Obligations and interest that are required to be capitalized in
         accordance with GAAP.

                  'CAPITALIZED LEASE': any lease, the obligations to pay rent or
         other amounts under which constitute Capitalized Lease Obligations.

                  'CAPITALIZED LEASE OBLIGATIONS': as to any Person, the
         obligations of such Person to pay rent or other amounts under a lease
         of (or other agreement conveying the right to use) real and/or personal
         property which obligations are required to be classified and accounted
         for as a capital lease on a balance sheet of such Person under GAAP
         and, for purposes of this Agreement, the amount of such obligations
         shall be the capitalized amount thereof, determined in accordance with
         GAAP.

                  'CASH': as to any Person, such Person's cash and cash
         equivalents, as defined in accordance with GAAP consistently applied.

                  'CERCLA': the Comprehensive Environmental Response
         Compensation and Liability Act of 1980, 42 U.S.C. section 9601, et
         seq., as amended from time to time.

                  'CLOSING DATE': the date specified in a written notice from
         the Agent on which the last of the conditions precedent to the
         obligations of the Banks to make the initial Credit Loan to be made
         hereunder has been fulfilled to the satisfaction of the Agent.

                  'CODE': the Internal Revenue Code of 1986, as it may be
         amended from time to time, and the regulations promulgated thereunder.

                  'COLLATERAL': all of the assets and properties covered by each
         of the respective Security Documents.

                                       5
<PAGE>

                  'COLLATERAL COVERAGE': as at the last day of any fiscal
         quarter, the ratio determined by dividing (x) the sum of Lease Rental
         Expense and Mortgage Expense payments received from Operators (other
         than from an Investment which as of the date thereof is delinquent for
         thirty (30) days or more in payments to the Borrowers (after the
         application of any security deposit with respect thereto)) by (y) all
         interest paid or payable on the Credit Loans: with respect to each of
         clause (x) and clause (y), determined with regard to four fiscal
         quarters of Omega ending on such day.

                  'COMMITMENT': as to each Bank, such Bank's Revolving Credit
         Commitment set forth opposite such Bank's name on the signature pages
         hereof under the caption "Revolving Credit Commitment" as such amount
         may be increased or reduced in accordance with the terms hereof.

                  'COMMITMENT FEE': as defined in subsection 2.8(b) hereof.

                  'COMMITMENT FEE PERCENTAGE':

                           (i) as at any date of determination thereof through
                  and including December 31, 2002, the applicable percentage set
                  forth below opposite the Leverage Ratio as at such date of
                  determination:
<TABLE>
<CAPTION>
         ----------------------------------------- -----------------------------
                   LEVERAGE RATIO                    COMMITMENT FEE PERCENTAGE
         ----------------------------------------- -----------------------------
<S>                                                <C>
         Greater than or equal to 5.0:1.0                       0.50%
         ----------------------------------------- -----------------------------
         Less than 5.0:1.0 but                                  0.45%
         greater than or equal to 4.5:1.0
         ----------------------------------------- -----------------------------
         Less than 4.5:1.0 but                                  0.35%
         greater than or equal to 4.0:1.0
         ----------------------------------------- -----------------------------
         Less than 4.0:1.0                                      0.30%
         ----------------------------------------- -----------------------------
</TABLE>

                           (ii) as at any date of determination thereof after
                  December 31, 2002, the applicable percentage set forth below
                  opposite the Leverage Ratio as at such date of determination:
<TABLE>
<CAPTION>
         ----------------------------------------- -----------------------------
                  LEVERAGE RATIO                     COMMITMENT FEE PERCENTAGE
         ----------------------------------------- -----------------------------
<S>                                                <C>
         Greater than or equal to 4.0:1.0                       0.50%
         ----------------------------------------- -----------------------------
         Less than 4.0:1.0                                      0.40%
         ----------------------------------------- -----------------------------
</TABLE>

                  The determination of the applicable percentage pursuant to the
         tables set forth above shall be made on a quarterly basis based on an
         examination of the financial statements of Omega delivered pursuant to
         and in compliance with Section 5.1 or Section 5.2 hereof, which
         financial statements, whether annual or quarterly, shall indicate that
         there exists no Default or Event of Default hereunder. Each
         determination of the Commitment Fee Percentage shall be effective as of
         the first day of the calendar month following the date on which the
         financial statements on which such determination was based were
         received by the Agent. In the event that financial statements for the
         four full fiscal quarters most recently completed prior to such date of
         determination have not been delivered to the Agent in compliance with
         Section 5.1 or 5.2 hereof, then the Agent may

                                       6
<PAGE>

         determine, in its reasonable judgment, the ratio referred to above that
         would have been in effect as at such date, and, consequently, the
         Commitment Fee Percentage in effect for the period commencing on such
         date. Notwithstanding anything to the contrary contained in this
         definition, during the period commencing on the date hereof through and
         including March 31, 2001, the Commitment Fee Percentage shall be 0.50%.

                  'COMPLIANCE CERTIFICATE': a certificate in the form of Exhibit
         C annexed hereto, executed by the chief executive officer or chief
         financial officer of Omega to the effect that: (a) as of the effective
         date of the certificate, no Default or Event of Default under this
         Agreement exists or would exist after giving effect to the action
         intended to be taken by the Borrowers as described in such certificate,
         including, without limitation, that the covenants set forth in Section
         6.9 hereof would not be breached after giving effect to such action,
         together with a calculation in reasonable detail, and in form and
         substance satisfactory to the Agent, of such compliance, and (b) the
         representations and warranties contained in Article 3 hereof are true
         and with the same effect as though such representations and warranties
         were made on the date of such certificate, except for changes in the
         ordinary course of business none of which, either singly or in the
         aggregate, have had a Material Adverse Effect.

                  'CONSTRUCTION INVESTMENT(S)': financing extended by Omega with
         respect to a Facility which is either under construction (i.e., has not
         received a certificate of occupancy) or in development (i.e., has
         received a certificate of occupancy or operating license within the
         preceding eighteen (18) months); provided, however, that a Facility
         will not be considered to be in development if at least three (3)
         calendar months have elapsed since the date on which the Facility
         received a certificate of occupancy and such Facility has a Fixed
         Charge Coverage of at least 1.10:1.00, with the Fixed Charge Coverage
         Ratio computed by reference to the most recent three (3) calendar month
         period.

                  'CONTROLLED GROUP': all members of a controlled group of
         corporations and all trades or businesses (whether or not incorporated)
         under common control which, together with Omega, are treated as a
         single employer under Section 414(b), 414(c) or 414(m) of the Code and
         Section 4001(a)(2) of ERISA.

                  'CREDIT LOAN(S)': as defined in Section 2.1 hereof.

                  'CREDIT PERIOD': the period commencing on the date of this
         Agreement and ending on the Revolving Credit Commitment Termination
         Date.

                  'DEBENTURES': those certain Subordinated Debentures maturing
         on February 1, 2001.

                  'DEBT INSTRUMENT': as defined in subsection 8.4(a) hereof.

                  'DEFAULT': an event which with notice or lapse of time, or
         both, would constitute an Event of Default.

                  'DELTA': Delta Investors II, LLC, a Maryland limited liability
         company.

                                       7
<PAGE>

                  'DISPOSITION': the sale, lease, conveyance, transfer or other
         disposition of any Facility (whether in one or a series of
         transactions), including first mortgage notes receivable and
         sale-leaseback transactions.

                  'DOLLARS' and '$': lawful money of the United States of
         America.

                  'EBITDA': for any period, with respect to Omega on a
         consolidated basis, determined in accordance with GAAP, the sum of net
         income (or net loss) for such period PLUS, the sum of all amounts
         treated as expenses for: (a) interest, (b) depreciation, (c)
         amortization, and (d) all accrued or paid taxes on or measured by
         income to the extent included in the determination of such net income
         (or net loss); provided, however, that net income (or net loss) shall
         be computed without giving effect to extraordinary losses or gains.

                  'ELIGIBLE ASSIGNEE': a commercial bank or other financial
         institution organized under the laws of the United States of America or
         any state and having a combined capital and surplus of at least One
         Hundred Million ($100,000,000) Dollars.

                  'ELIGIBLE HEALTHCARE ASSETS': as of any date as of which such
         assets are to be determined, all Facilities of the Borrowers other
         than:

                           (i) any Facility which has a Fixed Charge Coverage of
                  less than 1.25 to 1.00;

                           (ii) any Construction Investment;

                           (iii) any Facility which is subject to any Lien other
                  than a Permitted Lien or a Mortgage;

                           (iv) any Facility, the Operator of which is
                  acceptable to less than the Required Lenders (provided that
                  the Operators listed on Exhibit 2 hereof constitute approved
                  Operators);

                           (v) any Facility, if the Lease Rental Expense or
                  Mortgage Expense, as the case may be, arising from such
                  Facility, together with all such amounts arising from all
                  other Facilities operated by the Operator of such Facility
                  (including any Affiliates of such Operator but for purposes of
                  this clause (v), neither Lyric Healthcare Holdings, Inc. nor
                  Lyric Healthcare Holdings II, Inc. shall be considered an
                  Affiliate of Integrated Health Services, Inc.) and included in
                  the Collateral, exceeds twenty-five (25%) percent of the
                  aggregate amount of Lease Rental Expense and Mortgage Expense
                  arising from all of the Facilities comprising the Collateral
                  (except that SunBridge Healthcare Corporation may operate
                  Facilities which generate (A) up to thirty-three (33%) percent
                  of the aggregate amount of Lease Rental Expense and Mortgage
                  Expense arising from all of the Facilities comprising the
                  Collateral); or (B) up to thirty-seven (37%) percent of the
                  aggregate amount of Lease Rental Expense and Mortgage Expense
                  arising from all of the Facilities comprising the Collateral
                  in the event that the percentage increase above thirty-three
                  (33%) percent is solely as a result of self-operative
                  escalations contained in the Lease Rental Expense or the
                  Mortgage Expense related to such Facilities);

                                       8
<PAGE>

                           (vi) any Facility, if the Lease Rental Expense or the
                  Mortgage Expense arising from such Facility, together with the
                  aggregate amount of Lease Rental Expense and Mortgage Expense
                  arising from all other Facilities located in the State in
                  which such Facility is located and included in the Collateral,
                  exceeds twenty-five (25%) percent of the aggregate amount of
                  Lease Rental Expense and Mortgage Expense arising from all of
                  the Facilities comprising the Collateral;

                           (vii) any Facility covered by a Mortgage, if the
                  Mortgage Expense arising from such Facility, together with the
                  Mortgage Expense arising from each other Facility covered by a
                  Mortgage which is included in the Collateral, exceeds
                  thirty-seven (37%) percent of the Lease Rental Expense and
                  Mortgage Expense arising from all of the Facilities comprising
                  the Collateral; and

                           (viii) any Facility covered by a Master Lease if the
                  termination date of the Lease with respect to such Facility is
                  earlier than the Revolving Credit Commitment Termination Date
                  or any Facility covered by a mortgage if the maturity date of
                  such Mortgage is earlier than the Revolving Credit Commitment
                  Termination Date.

                  Notwithstanding clause (i) above, with respect to Pooled
         Facilities comprised of two (2) or more properties, any individual
         Facility which has a Fixed Charge Coverage of less than 1.25 to 1.00
         may be included in the computation of Eligible Healthcare Assets if (1)
         the aggregate Fixed Charge Coverage of the Pooled Facilities which are
         to be treated as Eligible Healthcare Assets and of which such Facility
         is a part is greater than or equal to 1.25 to 1.00, and (2) each
         individual Facility which is a part of such Pooled Facilities which are
         to be treated as Eligible Healthcare Assets (other than SunBridge Care
         & Rehab for Lexington, SunBridge Care & Rehab for Coalinga and
         SunHealth Robert H. Ballard Rehab Hospital) has a Fixed Charge Coverage
         of not less than .50 to 1.00.

                  'EMPLOYEE BENEFIT PLAN': any employee benefit plan within the
         meaning of Section 3(3) of ERISA which is subject to ERISA and (a) is
         maintained for employees of Omega, or (b) with respect to which any
         Loan Party has any liability.

                  'ENVIRONMENTAL LAWS AND REGULATIONS': all federal, state and
         local environmental laws, regulations, ordinances, orders, judgments
         and decrees applicable to the Borrowers or any other Loan Party, or any
         of their respective assets or properties.

                  'ENVIRONMENTAL LIABILITY': any liability under any applicable
         Environmental Laws and Regulations for any disposal, release or
         threatened release of a hazardous substance pollutant or contaminant as
         those terms are defined under CERCLA, and any liability which would
         require a removal, remedial or response action, as those terms are
         defined under CERCLA, by any person or by any environmental regulatory
         body having jurisdiction over Omega and its Subsidiaries and/or any
         liability arising under any Environmental Laws and Regulations for
         Omega's or any Subsidiary's failure to comply with such laws and
         regulations, including without limitation, the failure to comply with
         or obtain any applicable environmental permit.

                                       9
<PAGE>

                  'ENVIRONMENTAL PROCEEDING': any judgment, action, proceeding
         or investigation pending before any court or governmental authority,
         with respect to Omega or any Subsidiary and arising under or relating
         to any Environmental Laws and Regulations.

                  'EQUITY CONTRIBUTION': as defined in subsection 4.1(d) hereof.

                  'ERISA': the Employee Retirement Income Security Act of 1974,
         as it may be amended from time to time, and the regulations promulgated
         thereunder.

                  'ERISA AFFILIATE': as applied to any Loan Party, any
         corporation, person or trade or business which is a member of a group
         which is under common control with any Loan Party, who together with
         any Loan Party, is treated as a single employer within the meaning of
         Section 414(b) - (o) of the Code and, if applicable, Section
         4001(a)(14) and (b) of ERISA.

                  'EVENT OF DEFAULT': as defined in Article 8 hereof.

                  'FACILITY': a health care facility offering health
         care-related products and services, including any acute care hospital,
         rehabilitation hospital, nursing home, retirement center, long-term
         care facility, assisted living facility, or medical office building,
         and facilities directly related thereto.

                  'FEDERAL FUNDS RATE': for any day, the weighted average of the
         rates on overnight federal funds transactions with member banks of the
         Federal Reserve System arranged by federal funds brokers as published
         by the Federal Reserve Bank of New York for such day, or if such day is
         not a Business Day, for the next preceding Business Day (or, if such
         rate is not so published for any such day, the average rate charged to
         the Agent on such day on such transactions as reasonably determined by
         the Agent).

                  'FEE(S)': as defined in subsection 2.8(e) hereof.

                  'FINANCIAL STATEMENTS': the audited Consolidated Balance
         Sheets of Omega and its Subsidiaries as of December 31, 1999 and the
         related audited Consolidated Statements of Operations, Shareholders'
         Equity and Cash Flows for the fiscal year then ended, certified by
         Ernst & Young.

                  'FIXED CHARGE COVERAGE': with respect to any Facility, the
         ratio of: (x) pre-tax net income plus Mortgage Expense (but excluding
         therefrom any amounts relating to principal), Lease Rental Expense,
         depreciation and amortization on the Facility and actual management
         fees paid to any Operator of such Facility less an imputed management
         fee equal to four (4%) percent of the net revenues of the Facility, to
         (y) the sum of Lease Rental Expense and Mortgage Expense; all of the
         foregoing calculated as at any date of determination thereof by
         reference to the four (4) fiscal quarters ended on such date of
         determination and based upon the financial statements (or cost reports,
         as the case may be) provided to Omega by each Operator for such four
         (4) fiscal quarters of each Operator (or if such financial statements
         or cost reports have not been so delivered to Omega, then based upon
         the financial statements or cost reports covering the most recent
         available four (4) fiscal quarters of any such Operator.

                                       10
<PAGE>

                  'FLEET': Fleet National Bank, a national banking association,
         in its capacity as a Bank or L/C Issuer hereunder.

                  'FUNDED INDEBTEDNESS': as of any date of determination, all
         Indebtedness for borrowed money (which in any event does not include
         accounts payable and accrued liabilities) of Omega on a consolidated
         basis including, in any event, the Credit Loans.

                  'GAAP': generally accepted accounting principles, as in effect
         in the United States.

                  'GRADUATE SALE': as defined in subsection 2.8(a)(i)(B) hereof.

                  'GRANTORS': as defined in subsection 2.10(a)(i) hereof.

                  'HAZARDOUS MATERIALS': any toxic chemical, hazardous
         substances, contaminants or pollutants, medical wastes, infectious
         wastes, or hazardous wastes.

                  'HEALTHCARE ASSETS': as of any date as of which the amount
         thereof is to be determined, the aggregate amount equal to the sum of:

                           (i) the Appraised Value of each Facility owned
                  entirely by a Borrower and leased to an Operator; plus

                           (ii) the lesser of the Appraised Value of any
                  Facility encumbered by a Mortgage or the outstanding principal
                  amount of the Mortgage which encumbers any such Facility.

                  'INDEBTEDNESS': with respect to any Person, all: (a)
         liabilities or obligations, direct and contingent, which in accordance
         with GAAP would be included in determining total liabilities as shown
         on the liability side of a balance sheet of such Person at the date as
         of which Indebtedness is to be determined, including, without
         limitation, contingent liabilities that in accordance with such
         principles, would be set forth in a specific Dollar amount on the
         liability side of such balance sheet, and Capitalized Lease Obligations
         of such Person; (b) liabilities or obligations of others for which such
         Person is directly or indirectly liable, by way of guaranty (whether by
         direct guaranty, suretyship, discount, endorsement, take-or-pay
         agreement, agreement to purchase or advance or keep in funds or other
         agreement having the effect of a guaranty) or otherwise; (c)
         liabilities or obligations secured by Liens on any assets of such
         Person, whether or not such liabilities or obligations shall have been
         assumed by it; and (d) liabilities or obligations of such Person,
         direct or contingent, with respect to letters of credit issued for the
         account of such Person and bankers acceptances created for such Person.

                  'INITIAL COLLATERAL': as defined in subsection 4.1(c) hereof.

                  'INTEREST COVERAGE': as at the last day of any fiscal quarter,
         the ratio, determined by dividing Adjusted EBITDA by Interest Expense;
         all of the foregoing calculated by reference to the immediately
         preceding four (4) fiscal quarters of Omega ending on such date of
         determination, but excluding interest on the Debentures and any other

                                       11
<PAGE>

         Indebtedness repaid with the proceeds of the Equity Contribution, the
         Additional Equity Contribution, or the Second Additional Equity
         Contribution.

                  'INTEREST EXPENSE': for any period, on a combined basis, the
         sum of all interest paid or payable (excluding unamortized debt
         issuance costs) on all items of Indebtedness of Omega on a consolidated
         basis outstanding at any time during such period.

                  'INTEREST PERIOD': with respect to any LIBOR Loan, each period
         commencing on the date such Loan is made or converted from a Loan or
         Loans of another Type into a LIBOR Loan, or the last day of the next
         preceding Interest Period with respect to such Loan, and ending on the
         same day 1, 2, 3 or 6 months thereafter, as the Borrowers may select as
         provided in Section 2.3 hereof, except that each such Interest Period
         which commences on the last LIBOR Business Day of a calendar month (or
         on any day for which there is no numerically corresponding day in the
         appropriate subsequent calendar month) shall end on the last LIBOR
         Business Day of the appropriate subsequent calendar month.

                  Notwithstanding the foregoing: (a) each Interest Period that
         would otherwise end on a day which is not a LIBOR Business Day shall
         end on the next succeeding LIBOR Business Day (or, if such next
         succeeding LIBOR Business Day falls in the next succeeding calendar
         month, on the next preceding LIBOR Business Day); (b) with respect to
         LIBOR Loans, no more than six (6) Interest Periods for Credit Loans
         shall be in effect at the same time; (c) any Interest Period relating
         to a Credit Loan that commences before the Revolving Credit Commitment
         Termination Date shall end no later than the Revolving Credit
         Commitment Termination Date; and (d) notwithstanding clause (c) above,
         no Interest Period shall have a duration of less than one month. In the
         event that the Borrowers fail to select the duration of any Interest
         Period for any LIBOR Loan within the time period and otherwise as
         provided in Section 2.3 hereof, such LIBOR Loans will be automatically
         converted into a Prime Rate Loan on the last day of the preceding
         Interest Period for such LIBOR Loan.

                  'INTEREST RATE CONTRACTS': interest rate swap agreements,
         interest rate cap agreements, interest rate collar agreements, interest
         rate insurance and other agreements or arrangements designed to provide
         protection against fluctuation in interest rates, in each case, in form
         and substance satisfactory to the Agent and, in each case, with
         counter-parties satisfactory to the Agent.

                  'INVESTMENT': a Facility or a Mortgage, individually or
         collectively, as the case may be.

                  'INVESTMENT AGREEMENT': the Investment Agreement dated as of
         May 11, 2000 by and between Omega and Explorer Holdings, L.P., a
         Delaware limited partnership.

                  'ISSUANCE REQUEST': as defined in subsection 2.2(a) hereof.

                  'JUNE 2002 NOTES': those certain 6.95% Senior Unsecured Notes
         in the original principal amount of $125,000,000, maturing June, 2002.

                                       12
<PAGE>

                  'KARRINGTON LAWSUIT': that certain lawsuit styled KARRINGTON
         HEALTH, INC. V. OMEGA HEALTHCARE INVESTORS, INC. originally filed in
         the Common Pleas Court of Franklin County, Ohio, and subsequently
         removed to the United States District Court for the Southern District
         of Ohio, Eastern Division, which lawsuit and all claims arising
         therefrom were settled in full by Omega on August 13, 2001 without
         admission of any liability or fault by Omega.

                  'LATEST BALANCE SHEET': as defined in subsection 3.9(a)
         hereof.

                  'L/C(S)': any irrevocable letter of credit issued by the L/C
         Issuer for the account of the Borrowers pursuant to subsection 2.2(a)
         hereof, in each case, as amended, supplemented or modified from time to
         time.

                  'L/C DOCUMENTS': as defined in subsection 2.2(a) hereof.

                  'L/C FEE': as defined in subsection 2.8(d) hereof.

                  'L/C FEE PERCENTAGE':

                           (i) as at any date of determination thereof through
                  and including December 31, 2002, the applicable percentage set
                  forth below opposite the Leverage Ratio as at such date of
                  determination:
<TABLE>
<CAPTION>
         --------------------------------------- --------------------------
                    LEVERAGE RATIO                   L/C FEE PERCENTAGE
         --------------------------------------- --------------------------
<S>                                              <C>
         Greater than or equal to 5.0:1.0                  3.25%
         --------------------------------------- --------------------------
         Less than 5.0:1.0 but                             3.00%
         greater than or equal to 4.5:1.0
         --------------------------------------- --------------------------
         Less than 4.5:1.0 but                             2.75%
         greater than or equal to 4.0:1.0
         --------------------------------------- --------------------------
         Less than 4.0:1.0                                 2.50%
         --------------------------------------- --------------------------
</TABLE>

                           (ii) as at any date of determination thereof after
                  December 31, 2002, the applicable percentage set forth below
                  opposite the Leverage Ratio as at such date of determination:
<TABLE>
<CAPTION>
         --------------------------------------- ---------------------------
                   LEVERAGE RATIO                    L/C FEE PERCENTAGE
         --------------------------------------- ---------------------------
<S>                                              <C>
         Greater than or equal to 4.0:1.0                   3.25%
         --------------------------------------- ---------------------------
         Less than 45.0:1.0                                 3.00%
         --------------------------------------- ---------------------------
</TABLE>

                  The determination of the applicable percentage pursuant to the
         tables set forth above shall be made on a quarterly basis based on an
         examination of the financial statements of Omega delivered pursuant to
         and in compliance with Section 5.1 or Section 5.2 hereof, which
         financial statements, whether annual or quarterly, shall indicate that
         there exists no Default or Event of Default hereunder. Each
         determination of the L/C Fee Percentage shall be effective as of the
         first day of the calendar month following the date on which the
         financial statements on which such determination was based were
         received by the Agent. In the event that financial statements for the
         four full fiscal quarters most

                                       13
<PAGE>

         recently completed prior to such date of determination have not been
         delivered to the Agent in compliance with Section 5.1 or 5.2 hereof,
         then the Agent may determine, in its reasonable judgment, the ratio
         referred to above that would have been in effect as at such date, and,
         consequently, the L/C Fee Percentage in effect for the period
         commencing on such date. Notwithstanding anything to the contrary
         contained in this definition, during the period commencing on the date
         hereof through and including March 31, 2001, the L/C Fee Percentage
         shall be 3.25%.

                  'L/C ISSUER': Fleet in its individual capacity as issuer of
         L/Cs under this Agreement.

                  'L/C OBLIGATIONS': as at any date, an amount equal to: (a) the
         aggregate stated amount (reduced by any partial drawing) of all L/Cs,
         PLUS (b) all Unpaid Drawings.

                  'LEASE RENTAL EXPENSE': for any period and with respect to any
         Facility, the total amount payable during such period by the lessee of
         such Facility to any Borrower, including, without limitation, (a) base
         rent (as adjusted from time to time), plus (b) all incremental charges
         to which the Facility is subject under the lease relating thereto.

                  'LENDING OFFICE': with respect to each Bank, with respect to
         each Type of Loan, the Lending Office as designated for such Type of
         Loan below its name on the signature pages hereof or such other office
         of such Bank or of an affiliate of such Bank as it may from time to
         time specify to the Agent and the Borrowers as the office at which its
         Loans of such Type are to be made and maintained.

                  'LEVERAGE RATIO': as of any date of determination thereof, the
         quotient of (a) Funded Indebtedness as of such date DIVIDED by (b)
         Adjusted EBITDA for the period of four consecutive fiscal quarters
         ending on, or most recently before, such date.

                  'LIBOR BASE RATE': with respect to any LIBOR Loan, for any
         Interest Period therefor, the rate per annum (rounded upwards, if
         necessary, to the nearest 1/16 of one (1%) percent) quoted by the
         Reference Bank at approximately 11:00 a.m. London time (or as soon
         thereafter as practicable) two (2) LIBOR Business Days prior to the
         first day of such Interest Period as the rate at which the Reference
         Bank is offered deposits in the applicable Permitted Currency in the
         London interbank market where the LIBOR and foreign currency and
         exchange operations of the Reference Bank are customarily conducted,
         having terms of one (1), two (2), three (3) or six (6) months and in an
         amount comparable to the principal amount of the LIBOR Loan to be made
         by the Banks to which such Interest Period relates.

                  'LIBOR BUSINESS DAY': a Business Day on which dealings in
         Dollar deposits and pounds sterling are carried out in the London
         interbank market.

                  'LIBOR LOAN(S)': any Credit Loan the interest on which is
         determined on the basis of rates referred to in the definition of
         "LIBOR Base Rate" in this Article 1.

                  'LIBOR RATE': for any LIBOR Loan for any Interest Period
         therefor, the rate per annum (rounded upwards, if necessary, to the
         nearest 1/100 of one (1%) percent) determined by the Agent to be equal
         to: (a) the LIBOR Base Rate for such Loan for such

                                       14
<PAGE>

         Interest Period; DIVIDED BY (b) one (1) MINUS the Reserve Requirement
         for such Loan. The Agent shall use its best efforts to advise the
         Borrower of the LIBOR Rate as soon as practicable after each change in
         the LIBOR Rate; PROVIDED, HOWEVER, that the failure of the Agent to so
         advise the Borrower on any one or more occasions shall not affect the
         rights of the Banks or the Agent or the obligations of the Borrowers
         hereunder.

                  'LIEN': any mortgage, deed of trust, pledge, security
         interest, encumbrance, lien, claim or charge of any kind (including any
         agreement to give any of the foregoing), any conditional sale or other
         title retention agreement, any lease in the nature of any of the
         foregoing, and the filing of or agreement to give any financing
         statement under the Uniform Commercial Code of any jurisdiction.

                  'LOAN(S)': as defined in subsection 2.1(b) hereof. Loans of
         different Types made or converted from Loans of other Types on the same
         day (or of the same Type but having different Interest Periods) shall
         be deemed to be separate Loans for all purposes of this Agreement.

                  'LOAN DOCUMENTS': this Agreement, the Notes, the Security
         Documents, the L/C Documents, Amendment No. 4, all Interest Rate
         Contracts and all other documents executed and delivered in connection
         herewith or therewith, including all amendments, modifications and
         supplements of or to all such documents.

                  'LOAN PARTY': each Borrower and any other Person (other than
         the Banks and the Agent) which now or hereafter executes and delivers
         to any Bank or the Agent any Loan Document.

                  'LTV RATIO': as at any date of determination thereof, the
         ratio of (i) the aggregate principal amount of all Credit Loans then
         outstanding PLUS all L/C Obligations, at such date, to (ii) the
         Appraised Value of the Facilities comprising the Collateral at such
         date (which, in any event, shall not include any Facility, if the
         payment of any Lease Rental Expenses or Mortgage Expenses, as
         applicable, arising from such Facility, are delinquent in payment for
         thirty (30) days or more (AFTER THE APPLICATION OF ANY SECURITY DEPOSIT
         WITH RESPECT THERETO)).

                  'MANDATORY BORROWING': as defined in subsection 2.2(b)(ii)
         hereof.

                  'MASTER LEASE': any lease pursuant to which a Borrower leases
         to an Operator one or more Facilities.

                  'MATERIAL ADVERSE EFFECT': any fact or circumstance which (a)
         materially and adversely affects the business, operation, property or
         financial condition of the Borrowers taken as a whole, or (b) has a
         material adverse effect on the ability of the Borrowers to perform
         their respective obligations under this Agreement, the Notes or the
         other Loan Documents.

                  'MORTGAGE(S)': mortgages of real property constituting a
         Facility for which any Borrower is the mortgagee.

                                       15
<PAGE>

                  'MORTGAGE EXPENSE': for any period and with respect to any
         Facility, the total amount payable during such period by the mortgagor
         of such Facility to any Borrower, including, without limitation, (a)
         interest and principal (as adjusted from time to time) plus (b) all
         incremental charges to which the Facility is subject under the
         mortgage.

                  'MULTIEMPLOYER PLAN': a "multiemployer plan" as defined in
         Section 4001(a)(3) of ERISA to which any Loan Party or any ERISA
         Affiliate is making, or is accruing an obligation to make,
         contributions or has made, or been obligated to make, contributions
         within the preceding six (6) years.

                  'NET ISSUANCE PROCEEDS': in respect of any issuance of
         Indebtedness or equity, the proceeds in Cash received by Omega or any
         of its Subsidiaries upon or simultaneously with such issuance, net of
         any payments of any outstanding Indebtedness and any direct costs of
         such issuance and any taxes paid or payable by the recipient of such
         proceeds.

                  'NET LOSS': with respect to any period, the excess, if any of:
         (i) the aggregate amount of expenses of Omega on a consolidated basis,
         over (ii) the aggregate amount of revenues of Omega on a consolidated
         basis, in each case, during such period, as to all of the foregoing, as
         determined in accordance with GAAP.

                  'NET PROCEEDS': in respect of any Disposition, the proceeds in
         Cash received by any of the Borrowers upon or simultaneously with such
         Disposition, net of (i) direct costs of such Disposition, (ii) any
         taxes paid or payable by the recipient of such proceeds, and (iii)
         amounts required to be applied to repay any Indebtedness secured by a
         lien on the asset which is the subject of the Disposition.

                  'NEW PROVIDENT LOAN AGREEMENT': that certain Loan Agreement
         dated on or about August 11, 2000 among Omega, certain of its
         Subsidiaries, the lenders party thereto and The Provident Bank, as
         Agent for such lenders, as the same may have been and may hereafter be
         amended from time to time during the term of this Agreement.

                  'NEW TYPE LOANS': as defined in Section 2.22 hereof.

                  '1997 LOAN AGREEMENT': the Second Amended and Restated Loan
         Agreement, dated September 30, 1997, by and among the Borrowers listed
         on Exhibit 1 thereto, the Agent and the banks party thereto, as amended
         from time to time.

                  'NOTE(S)': as defined in subsection 2.5(a) hereof.

                  'NRS': NRS Ventures, L.L.C., a Kentucky limited liability
         company.

                  'OBLIGATIONS': collectively, all of the Indebtedness of the
         Borrowers to the Banks (and affiliates thereof in connection with
         Interest Rate Contracts) and the Agent, whether now existing or
         hereafter arising, whether or not currently contemplated, including,
         without limitation, those arising under or in relation to the Loan
         Documents.

                  'OMEGA': Omega Healthcare Investors, Inc., a Maryland
         corporation.

                                       16
<PAGE>

                  'OMEGA'S FIXED COVERAGE RATIO': as at the last day of any
         fiscal quarter, with respect to the immediately preceding four (4)
         fiscal quarters of Omega ending on such date, the ratio of (x) Adjusted
         EBITDA, to (y) the sum of Interest Expense, and Cash dividends

                  'OPERATOR': (a) the lessee of any Facility owned or leased by
         a Borrower, and (b) the mortgagor of a Facility which is subject to a
         Mortgage to the extent that such entity controls the operation of the
         Facility.

                  'PAYOR': as defined in Section 2.16 hereof.

                  'PBGC': Pension Benefit Guaranty Corporation.

                  'PERMITTED LIENS': as to any Person: (a) pledges or deposits
         by such Person under workers' compensation laws, unemployment insurance
         laws, social security laws, or similar legislation, or good faith
         deposits in connection with bids, tenders, contracts (other than for
         the payment of Indebtedness of such Person), or leases to which such
         Person is a party, or deposits to secure public or statutory
         obligations of such Person or deposits of Cash or United States
         Government Bonds to secure surety, appeal, performance or other similar
         bonds to which such Person is a party, or deposits as security for
         contested taxes or import duties or for the payment of rent; (b) liens
         imposed by law, including without limitation, carriers',
         warehousemen's, materialmen's and mechanics' liens, or liens arising
         out of judgments or awards or judicial attachment liens against such
         Person with respect to which such Person at the time shall currently be
         prosecuting an appeal or proceedings for review; (c) liens for taxes
         not yet subject to penalties for non-payment and liens for taxes the
         payment of which is being contested as permitted by Section 6.6 hereof;
         (d) non-consensual liens that have been bonded within thirty (30) days
         after notice of such lien(s) by a Person (not an Affiliate of a
         Borrower) reasonably satisfactory to the Required Banks in an aggregate
         amount secured by all such liens not in excess of $5,000,000; and (e)
         minor survey exceptions, minor encumbrances, easements or reservations
         of, or rights of, others for rights of way, highways and railroad
         crossings, sewers, electric lines, telegraph and telephone lines and
         other similar purposes, or zoning or other restrictions as to the use
         of real properties, or Liens incidental to the conduct of the business
         of such Person or to the ownership of such Person's property that were
         not incurred in connection with Indebtedness of such Person, all of
         which Liens referred to in this clause (e) do not in the aggregate
         materially impair the value of the properties to which they relate or
         materially impair their use in the operation of the business taken as a
         whole of such Person, and as to all the foregoing only to the extent
         arising and continuing in the ordinary course of business.

                  'PERSON': an individual, a corporation, a partnership, a joint
         venture, a trust or unincorporated organization, a joint stock company
         or other similar organization, a government or any political
         subdivision thereof, a court, or any other legal entity, whether acting
         in an individual, fiduciary or other capacity.

                  'PLAN': at any time an employee pension benefit plan that is
         covered by Title IV of ERISA or subject to the minimum funding
         standards under Section 412 of the Code and is either: (a) maintained
         by Omega or any member of the Controlled Group for

                                       17
<PAGE>

         employees of Omega, or by Omega for any other member of such Controlled
         Group, or (b) maintained pursuant to a collective bargaining agreement
         or any other arrangement under which more than one employer makes
         contributions and to which Omega or any member of the Controlled Group
         is then making or accruing an obligation to make contributions or has
         within the preceding five plan years made contributions.

                  'POOLED FACILITIES': Facilities which are (i) leased by a
         Borrower to an Operator or Operators pursuant to a single Master Lease,
         or (ii) commonly owned by an Operator or Operators, the Mortgages on
         which are held by a Borrower to secure a single loan.

                  'POST-DEFAULT RATE': (a) in respect of any Loans, a rate per
         annum equal to: (i) if such Loans are Prime Rate Loans, two (2%)
         percent above the Alternate Base Rate as in effect from time to time
         plus the Applicable Margin for Prime Rate Loans, or (ii) if such Loans
         are LIBOR Loans, two (2%) percent above the rate of interest in effect
         thereon at the time of the Event of Default that resulted in the
         Post-Default Rate being instituted until the end of the then current
         Interest Period therefor and, thereafter, two (2%) above the Alternate
         Base Rate as in effect from time to time plus the Applicable Margin for
         Prime Rate Loans; and (b) in respect of other amounts payable by the
         Borrowers hereunder (other than interest), equal to two (2%) above the
         Alternate Base Rate as in effect from time to time plus the Applicable
         Margin for Prime Rate Loans.

                  'PRIME RATE': the variable per annum rate of interest so
         designated from time to time by Fleet as its prime rate.
         Notwithstanding the foregoing, the Borrowers acknowledge that the Prime
         Rate is a reference rate and Fleet may regularly make domestic
         commercial loans at rates of interest less than the rate of interest
         referred to in the preceding sentence. Each change in any interest rate
         provided for herein based upon the Prime Rate resulting from a change
         in the Prime Rate shall take effect at the time of such change in the
         Prime Rate.

                  'PRIME RATE LOANS': Loans that bear interest at a rate based
         upon the Alternate Base Rate.

                  'PRINCIPAL OFFICE': the office of Fleet presently located at
         1185 Avenue of the Americas, New York, New York 10036.

                  'PROJECTIONS': (a) the annual cash flow projections relating
         to Omega and its Subsidiaries for the years ending December 31, 2001
         and 2002, and (b) the quarterly cash flow projections relating to Omega
         and its Subsidiaries for the period commencing April 1, 2000 through
         and including March 31, 2001, in each case including balance sheets and
         statements of operations (together with related assumptions) as
         furnished by Omega to the Agent.

                  'PROPERTY': any estate or interest in any kind of property or
         asset, whether real, personal or mixed, and whether tangible or
         intangible.

                  'QUARTERLY DATES': the first day of each October, January,
         April and July, the first of which shall be the first such day after
         the date of this Agreement, PROVIDED THAT, if any such date is not a
         LIBOR Business Day, the relevant Quarterly Date shall be the next
         succeeding LIBOR Business Day (or, if the next succeeding LIBOR
         Business Day falls

                                       18
<PAGE>

         in the next succeeding calendar month, then on the next preceding LIBOR
         Business Day).

                  'REFERENCE BANK": a bank appearing on the display designated
         as page "LIBOR" on the Reuters Monitor Money Rates Service (or such
         other page as may replace the LIBOR page on that service for the
         purpose of displaying London interbank offered rates of major banks);
         provided, that, if no such offered rate shall appear on such display,
         "Reference Bank" shall mean a bank in the London interbank market as
         selected by the Agent.

                  'REGULATION D': Regulation D of the Board of Governors of the
         Federal Reserve System, as the same may be amended or supplemented from
         time to time.

                  'REGULATORY CHANGE': as to any Bank, any change after the date
         of this Agreement in United States federal, or state, or foreign, laws
         or regulations (including Regulation D and the laws or regulations that
         designate any assessment rate relating to certificates of deposit or
         otherwise (including the "Assessment Rate" if applicable to any Loan))
         or the adoption or making after such date of any interpretations,
         directives or requests applying to a class of banks, including such
         Bank, of or under any United States federal, or state, or foreign laws
         or regulations (whether or not having the force of law) by any court or
         governmental or monetary authority charged with the interpretation or
         administration thereof.

                  'REIT STATUS': with respect to any Person, (a) the
         qualification of such Person as a real estate investment trust under
         Sections 856 through 860 of the Code, and (b) the applicability to such
         Person and its shareholders of the method of taxation provided for in
         Sections 857 ET SEQ. of the Code.

                  'REQUIRED BANKS': at any time, Banks having at least 66-2/3%
         of the Total Revolving Credit Commitment hereunder, or if the Total
         Revolving Credit Commitment has been terminated at such time, Banks
         having at least 66-2/3% of the aggregate principal amount of Loans and
         L/C Obligations, in each case then outstanding.

                  'REQUIRED PAYMENT': as defined in Section 2.16 hereof.

                  'RESERVE REQUIREMENT': for any LIBOR Loans as to which
         interest is payable hereunder, the average maximum rate at which
         reserves (including any marginal, supplemental or emergency reserves)
         are required to be maintained during such period under Regulation D by
         member banks of the Federal Reserve System in New York City with
         deposits exceeding One Billion ($1,000,000,000) Dollars against
         "Eurocurrency liabilities" (as such term is used in Regulation D).
         Without limiting the effect of the foregoing, the Reserve Requirement
         shall reflect any other reserves required to be maintained by such
         member banks by reason of any Regulatory Change against: (a) any
         category of liabilities which includes deposits by references to which
         the LIBOR Rate for LIBOR Loans is to be determined as provided in the
         definition of "LIBOR Base Rate" in this Article 1, or (b) any category
         of extensions of credit or other assets which include LIBOR Loans.

                                       19
<PAGE>

                  'REVOLVING CREDIT COMMITMENT': as to each Bank, the obligation
         of such Bank to make Credit Loans and/or participate in the Letter of
         Credit Documents issued on behalf of the Borrowers hereunder in the
         aggregate amount, if any, set forth opposite such Bank's name on the
         signature pages hereof under the caption "Revolving Credit Commitment"
         as such amount is subject to increase or reduction in accordance with
         the terms hereof.

                  'REVOLVING CREDIT COMMITMENT TERMINATION DATE': December 31,
         2003.

                  'SECOND ADDITIONAL EQUITY CONTRIBUTION': a contribution to the
         capital of Omega of not less than $50,000,000 in gross cash proceeds
         pursuant to documentation in form and substance satisfactory to the
         Agent.

                  'SECURITY DOCUMENTS': as defined in subsection 2.10(b) hereof.

                  'SENIOR NOTES': those certain Senior Unsecured Notes maturing
         July 15, 2000.

                  'SUBSIDIARY": with respect to any Person, any corporation,
         partnership, limited liability company, joint venture or other entity,
         whether now existing or hereafter organized or acquired: (a) in the
         case of a corporation, of which a majority of the securities having
         ordinary voting power for the election of directors (other than
         securities having such power only by reason of the happening of a
         contingency) are at the time owned by such Person and/or one or more
         Subsidiaries of such Person, (b) in the case of a partnership, limited
         liability company or other entity, in which such Person is a general
         partner or managing member or of which a majority of the partnership or
         other equity interests are at the time owned by such Person and/or one
         or more of its Subsidiaries, or (c) in the case of a joint venture, in
         which such Person is a joint venturer and of which a majority of the
         ownership interests are at the time owned by such Person and/or one or
         more of its Subsidiaries. Unless the context otherwise requires,
         references in this Agreement to "Subsidiary" or "Subsidiaries" shall be
         deemed to be references to a Subsidiary or Subsidiaries of Omega.

                  'TANGIBLE NET WORTH': the sum of capital surplus, earned
         surplus and capital stock, MINUS deferred charges, intangibles and
         treasury stock, all as determined in accordance with GAAP consistently
         applied.

                  'TOTAL REVOLVING CREDIT COMMITMENT': the aggregate obligation
         of the Banks to make Credit Loans and/or issue or participate in the
         L/C Documents hereunder up to the aggregate amount of One Hundred Sixty
         Million ($160,000,000) Dollars, as such amount may be increased or
         reduced in accordance with the terms hereof.

                  'TYPE': refers to the characteristics of a Loan as a Prime
         Rate Loan or a LIBOR Loan for a particular Interest Period. All Prime
         Rate Loans are of the same Type. All LIBOR Loans with identical
         interest rates and Interest Periods are of the same Type. All other
         Loans are of different Types. Interest Periods are identical if they
         begin and end on the same days.

                  'UNPAID DRAWINGS': any payment or disbursement made by the L/C
         Issuer with respect to a L/C and not reimbursed by the Borrowers.

                                       20
<PAGE>
                  'UNUSED COMMITMENT': as at any date, for each Bank, the
         difference, if any, between: (a) the amount of such Bank's Revolving
         Credit Commitment, as in effect on such date, and (b) the then
         aggregate outstanding principal amount of all Credit Loans made by such
         Bank and such Bank's PRO RATA share of all L/C Obligations.

                           SECTION 1.2  GAAP.

                  Any accounting terms used in this Agreement that are not
         specifically defined herein shall have the meanings customarily given
         to them in accordance with GAAP as in effect on the date of this
         Agreement, except that references in Article 5 to such principles shall
         be deemed to refer to such principles as in effect on the date of the
         financial statements delivered pursuant thereto."

         2.2. Article 2 of the Loan Agreement (Commitments; Loans; Letters of
Credit; Collateral) is hereby deleted in its entirety and the following is
substituted therefor:

         "ARTICLE 2   COMMITMENTS; LOANS; LETTERS OF CREDIT; COLLATERAL.

                  SECTION 2.1.  LOANS.

                  Each Bank hereby severally agrees, on the terms and subject to
         the conditions of this Agreement and Amendment No. 4, to make loans
         (individually a 'CREDIT LOAN', collectively, the 'CREDIT LOANS') to the
         Borrowers during the Credit Period to and including the Revolving
         Credit Commitment Termination Date in an aggregate principal amount at
         any one time outstanding up to, but not exceeding, the Revolving Credit
         Commitment of such Bank as then in effect; PROVIDED, HOWEVER, that the
         sum of (x) the aggregate principal amount of Credit Loans, plus (y) L/C
         Obligations, in each case, at any one time outstanding, shall not
         exceed the Total Revolving Credit Commitment, as then in effect.
         Subject to the terms of this Agreement, including the borrowing
         limitation referred to above, during the Credit Period the Borrowers
         may borrow, repay and reborrow Credit Loans. The Credit Loans shall be
         in amounts up to an aggregate outstanding principal amount at any one
         time of One Hundred Sixty Million and 00/100 ($160,000,000.00) Dollars.

                  SECTION 2.2.  LETTERS OF CREDIT.

                  (a) ISSUANCE.

                           (i) Subject to the terms and conditions of this
         Agreement, the Borrowers may request that the L/C Issuer, in its
         individual capacity, issue L/Cs to beneficiaries designated by the
         Borrowers pursuant to an Application and other documentation in form
         and substance satisfactory to the L/C Issuer (collectively, the 'L/C
         DOCUMENTS'). Each L/C shall be deemed to be a utilization of the
         Revolving Credit Commitment of each Bank in an amount equal to each
         Bank's PRO RATA share of the stated amount of each L/C.

                           (ii) Each L/C Document shall provide that drafts
         drawn thereunder shall be payable on sight (but in no event later than
         the Revolving Credit Commitment Termination Date). The maximum
         aggregate stated amount of L/C's issued and

                                       21
<PAGE>

         outstanding at any one time hereunder shall not exceed Fifteen Million
         ($15,000,000) Dollars and all L/C's shall be denominated in Dollars.

                           (iii) The Borrowers shall give notice to the L/C
         Issuer of a request for issuance of any L/C not less than ten (10)
         Business Days prior to the proposed issuance date (which prescribed
         time period may be waived at the option of the L/C Issuer in the
         exercise of its sole discretion). Each such notice (an 'ISSUANCE
         REQUEST') shall specify: (1) the requested date of such issuance (which
         shall be a Business Day); (2) the maximum stated amount of such L/C;
         (3) the expiration date of such L/C; (4) the purpose of such L/C; (5)
         the name and address of the beneficiary of such L/C; and (6) the
         required documents under any such L/C.

                           (iv) Each L/C shall be issued by the L/C Issuer,
         subject to the payment by the Borrowers of the standard issuance fees
         and charges customarily imposed by the L/C Issuer in connection with
         the issuance thereof, pursuant to the L/C Issuer's standard form of
         application for such L/C Documents (each, an 'APPLICATION' and
         collectively, the 'APPLICATIONS') executed by the Borrowers. In the
         event that any term or condition set forth in any Application shall be
         inconsistent with the terms and conditions of this Agreement, the terms
         and conditions herein set forth shall prevail.

                           (v) Notwithstanding the foregoing, the L/C Issuer
         shall not be under any obligation to issue any L/C Document if at the
         time of such issuance any order, judgment or decree of any governmental
         authority or arbitrator shall purport by its terms to enjoin or
         restrain the L/C Issuer from issuing such L/C Documents or any
         requirement of law applicable to the L/C Issuer or any request or
         directive (whether or not having the force of law) from any
         governmental authority with jurisdiction over the L/C Issuer shall
         prohibit, or request that the L/C Issuer refrain from the issuance of
         letters of credit generally or any such L/C Documents in particular, or
         shall impose upon the L/C Issuer with respect to any L/C Documents any
         requirement (for which the L/C Issuer is not otherwise compensated) not
         in effect on the date hereof.

                  (b) REPAYMENT; MANDATORY BORROWINGS.

                           (i) The Borrowers shall be obligated pursuant to each
         Application to reimburse the L/C Issuer immediately in immediately
         available funds at the Principal Office for sight drafts drawn under
         any L/C Document.

                           (ii) If any drawing under a L/C shall not be
         reimbursed on the date when due, provided that an event of the type set
         forth in subsection 8.6(a) has not occurred, the Borrowers'
         reimbursement obligation in respect of such Unpaid Drawing shall be
         funded on such date with the borrowing of a Credit Loan (each such
         borrowing a 'MANDATORY BORROWING') in the full amount of the Unpaid
         Drawings from all Banks based on each Bank's PRO RATA share of the
         Total Revolving Credit Commitment. The L/C Issuer shall promptly notify
         the Agent of the amount of such Unpaid Drawings and the Agent shall
         promptly notify the Banks of the amount of each such Mandatory
         Borrowing not later than 12:00 noon (New York City time) on the date on
         which such Mandatory Borrowing is to be made. Provided that an event of
         the type set forth in subsection 8.6(a) has not occurred, each such
         Bank hereby irrevocably agrees to make Credit Loans

                                       22
<PAGE>

         pursuant to each Mandatory Borrowing in the amount, and not later than
         5:00 p.m. (New York City time), on the date, and in the manner
         specified in the preceding sentence, notwithstanding that the amount of
         the Mandatory Borrowing may not comply with the minimum amount for
         borrowings otherwise required hereunder. In the event that the Agent
         delivers the above-described notice to any Bank later than 12:00 noon
         (New York City time) on the date of the required Mandatory Borrowing,
         then such Bank shall not be obligated to effect such Mandatory
         Borrowing until the next succeeding Business Day (but not later than
         5:00 p.m. (New York City time)).

                           (iii) Notwithstanding the foregoing, in the event
         that at any time when a draft is drawn under a L/C Document, there are
         not sufficient funds in any account of the Borrowers with the L/C
         Issuer or sufficient availability to permit creation of Credit Loans
         sufficient to fund payment of the draft(s) in accordance with its
         terms, any funds advanced by the L/C Issuer and the other Banks in
         payment thereof shall be due and payable immediately and shall bear
         interest until paid in full at the Post-Default Rate, such interest to
         be payable on demand. In the event of any conflict or discrepancy
         between the terms provided herein and the terms established by the L/C
         Issuer in its Application or otherwise and this Loan Agreement, the
         terms provided herein shall prevail.

                  (c) GENERAL UNCONDITIONAL OBLIGATIONS. The obligations of the
         Borrowers under this Agreement, the Applications and any other
         agreement, instrument or document relating to reimbursement or payment
         of Unpaid Drawings shall be absolute, unconditional and irrevocable,
         and shall be performed strictly in accordance with the terms of this
         Agreement and the L/C Documents, under all circumstances whatsoever,
         including, without limitation, the following circumstances, whether
         relating to any one or more L/C Documents:

                           (i) any agreement between the Borrower(s) and any
         beneficiary or any agreement or instrument relating thereto (the
         'BENEFICIARY DOCUMENTS') proving to be forged, fraudulent, invalid,
         unenforceable or insufficient in any respect;

                           (ii) any amendment or waiver of or any consent to
         departure from all or any of the Beneficiary Documents;

                           (iii) the existence of any claim, setoff, defense or
         other rights which the Borrower(s) may have at any time against any
         beneficiary or any transferee of any L/C Document (or any persons or
         entities for whom any beneficiary or any such transferee may be
         acting), the L/C Issuer, any other Bank, the Agent or any other person
         or entity, whether in connection with the Agreement, the Beneficiary
         Documents or any unrelated transaction;

                           (iv) any demand presented under any L/C Document (or
         any endorsement thereon) proving to be forged, fraudulent, invalid,
         unenforceable or insufficient in any respect or any statement therein
         being inaccurate in any respect whatsoever;

                                       23
<PAGE>

                           (v) the use to which any L/C Document may be put or
         any acts or omission of any beneficiary in connection therewith; or

                           (vi) any other circumstances or happening whatsoever,
         whether or not similar to any of the foregoing.

                  (d)  PARTICIPATIONS BY BANKS.

                           (i) On the date of issuance of each L/C, the L/C
         Issuer thereof shall be deemed irrevocably and unconditionally to have
         sold and transferred to each Bank (excluding, for all purposes of this
         paragraph (i), the L/C Issuer, which shall retain a portion equal to
         its PRO RATA share of its Revolving Credit Commitment) without recourse
         or warranty, and each Bank shall be deemed to have irrevocably and
         unconditionally purchased and accepted from the L/C Issuer, an
         undivided interest and participation, to the extent of such Bank's PRO
         RATA share of Revolving Credit Commitment, in effect on the date of
         such issuance, in such L/C, each substitute therefor, each drawing made
         thereunder, the related Applications and all obligations relating
         thereto and all Loan Documents supporting, or otherwise benefiting the
         payment of such Obligations.

                           (ii) In the event that any Unpaid Drawing is not paid
         to the L/C Issuer with respect to any L/C Document in full immediately
         or by a Mandatory Borrowing from all the Banks, the L/C Issuer shall
         promptly notify the Agent to that effect, and the Agent shall promptly
         notify the Banks of the amount of such Unpaid Drawing and each such
         Bank shall immediately pay to the Agent, for immediate payment to the
         L/C Issuer, in lawful money of the United States and in immediately
         available funds, an amount equal to such Bank's ratable portion of the
         amount of such Unpaid Drawing.

                           (iii) The obligation of each Bank to make Credit
         Loans, in respect of each Mandatory Borrowing and to make payments
         under the preceding subparagraph (d)(ii) shall be absolute and
         unconditional and irrevocable and not subject to any qualification or
         exception whatsoever (except as set forth in this subsection
         2.2(d)(iii)), and shall be made in accordance with the terms and
         conditions of this Agreement under all circumstances and shall not be
         subject to any conditions set forth in Article 4 hereof or otherwise
         affected by any circumstance including, without limitation: (1) the
         occurrence or continuance of a Default or Event of Default (except that
         the Banks shall not, and shall not have any obligation to, make any
         Credit Loan in respect of a Mandatory Borrowing after an event of the
         type specified in subsection 8.6(a) hereof has occurred); (2) any
         adverse change in the business condition (financial or otherwise),
         operations, performance, properties or prospects of any Loan Party; (3)
         any breach of this Agreement or any Application or other Loan Documents
         by the Borrowers; (4) any setoff, counterclaim, recoupment, defense or
         other right which such Bank or the Borrowers may have at any time
         against the L/C Issuer, any other Bank, or any beneficiary named in any
         L/C Document in connection herewith or otherwise; (5) the validity,
         sufficiency or genuineness of documents, or of any endorsement thereon,
         even if such documents should prove to be in any or all respects
         invalid, insufficient, fraudulent or forged; (6) any lack of validity
         or enforcement of this Agreement or any of the Loan Documents; (7) any
         other circumstance, happening or event whatsoever, whether or not
         similar to any of the foregoing, PROVIDED THAT such circumstances or
         happenings shall not have constituted

                                       24
<PAGE>

         gross negligence or willful misconduct of the L/C Issuer. The Borrowers
         agree that any Bank purchasing a participation in any L/C Document from
         the L/C Issuer may, to the fullest extent permitted by law, exercise
         all of its rights of payment with respect to such participation as
         fully as if such Bank were the direct creditor of the Borrowers in the
         amount of such participation.

                           (iv) If the L/C Issuer receives a payment on account
         of an Unpaid Drawing with respect to any L/C Document as to which any
         other Bank has funded its participation pursuant to subparagraph
         (d)(iii) above, the L/C Issuer shall, within one Business Day, pay to
         the Agent, and the Agent shall, within one Business Day, pay to each
         Bank which funded its participation therein, in lawful money of the
         United States and in the kind of funds so received, an amount equal to
         such Bank's ratable share thereof plus interest at the Federal Funds
         Rate if not paid to each such Bank within one Business Day of the date
         such funds were received by the Agent.

                           (v) If any payment received on account of any
         reimbursement obligation with respect to any L/C Document and
         distributed to a Bank as a participant under paragraph (iv) is
         thereafter recovered from the L/C Issuer thereof in connection with any
         bankruptcy or insolvency proceeding relating to the Borrower(s) or
         otherwise, each Bank which received such distribution shall, upon
         demand by the Agent, repay to the L/C Issuer such Bank's ratable share
         of the amount so recovered together with an amount equal to such Bank's
         ratable share (according to the proportion of (1) the amount of such
         Bank's required repayment to (2) the total amount so recovered) of any
         interest or other amount paid or payable by the L/C Issuer in respect
         of the total amount so recovered.

                  (e) NON-LIABILITY. The Borrowers assume all risks of the acts
         or omissions of any beneficiary or transferee of any L/C Document with
         respect to its use thereof. None of the Agent, the L/C Issuer, or any
         other Bank, nor any of their respective officers or directors, shall be
         liable or responsible for: (1) the use that may be made of any L/C
         Document or any acts or omissions of any beneficiary or transferee in
         connection therewith; (2) the validity, sufficiency or genuineness of
         documents, or of any endorsement thereon, even if such documents should
         prove to be in any or all respects invalid, insufficient, fraudulent or
         forged; (3) payment by the L/C Issuer against presentation of documents
         that do not comply with the terms of the L/C Documents issued by the
         L/C Issuer, EXCEPT that the Borrowers shall have a claim against the
         L/C Issuer, and the L/C Issuer shall be liable to the Borrowers, to the
         extent of any direct, but not consequential, damages suffered by the
         Borrowers that the Borrowers prove were caused solely by (A) the L/C
         Issuer's willful misconduct or gross negligence in determining whether
         documents presented under any L/C Document comply with the terms of
         such L/C Document or (B) the L/C Issuer's willful failure to make
         lawful payment under a L/C Document after the presentation to it of a
         draft and documents and/or certificates strictly complying with the
         terms and conditions thereof; (4) for errors, omissions, interruptions
         or delays in transmission or delivery of any messages, by mail, cable,
         telegraph, telex or otherwise, whether or not they are in cipher; (5)
         for errors in interpretation of technical terms; (6) for any loss or
         delay in the transmission or otherwise of any document required in
         order to make a drawing under any such L/C Document or of the proceeds
         thereof; and (7) for any consequence arising from causes beyond the

                                       25
<PAGE>

         control of the L/C Issuer, including, without limitation, any
         government acts. The Uniform Customs and Practice for Documentary
         Credits as most recently published by the International Chamber of
         Commerce shall be deemed a part of this Section 2.2 as if incorporated
         herein in all respects and shall apply to the L/Cs.

                  (f) INDEMNIFICATION. In addition to amounts payable as
         elsewhere provided in this Agreement, without duplication, the
         Borrowers agree to indemnify and save harmless the Agent and each Bank
         including the L/C Issuer from and against any and all claims, demands,
         liabilities, damages, losses, costs, charges and expenses (including
         reasonable attorneys' fees and allocated costs of internal counsel)
         which such Agent, Bank or L/C Issuer may incur or be subject to as a
         consequence, direct or indirect, of the issuance of any L/C Document or
         any action or proceeding relating to a court order, injunction, or
         other process or decree restraining or seeking to restrain the L/C
         Issuer or the Agent from paying any amount under any L/C Document or
         the failure of the L/C Issuer to honor a drawing under any L/C Document
         issued by such Issuer as a result of any act or omission, whether
         rightful or wrongful, of any present or future DE JURE or DE FACTO
         government or governmental authority, except that no such Person shall
         be entitled to indemnification for matters caused solely by such
         Person's gross negligence or willful misconduct. Without modifying the
         foregoing, and anything contained herein to the contrary
         notwithstanding, the Borrowers shall cause each L/C issued for its
         account to be canceled and returned to the L/C Issuer thereof on or
         before its expiration date.

                  SECTION 2.3.  NOTICES RELATING TO LOANS.

                  The Borrowers shall give the Agent written notice of each
         termination or reduction of the Commitments, each borrowing,
         conversion, repayment and prepayment of each Loan and of the duration
         of each Interest Period applicable to each LIBOR Loan (in each case, a
         'BORROWING NOTICE'). Each such written notice shall be irrevocable and
         shall be effective only if received by the Agent not later than 11
         a.m., New York City time on the date that is:

                           (a) In the case of each notice of termination or
                  reduction of the Commitments, five (5) Business Days prior to
                  the date of the related termination or reduction;

                           (b) In the case of each notice of borrowing and
                  repayment of, or conversion into, Prime Rate Loans, the same
                  Business Day of the related borrowing or repayment or
                  conversion; and

                           (c) In the case of each notice of borrowing or
                  repayment of, or conversion into, LIBOR Loans, or the duration
                  of an Interest Period for LIBOR Loans, three (3) LIBOR
                  Business Days prior to the date of the related borrowing,
                  repayment or conversion or the first day of such Interest
                  Period.

                  Each such notice of termination or reduction shall specify the
         amount thereof. Each such notice of borrowing, conversion, repayment or
         prepayment shall specify the amount (subject to Section 2.1 hereof) and
         Type of Loans to be borrowed, converted, repaid or prepaid (and, in the
         case of a conversion, the Type of Loans to result from such
         conversion), the date of borrowing, conversion, repayment or prepayment
         (which shall

                                       26
<PAGE>

         be: (i) a Business Day in the case of each borrowing or repayment of
         Prime Rate Loans, and (ii) a LIBOR Business Day in the case of each
         borrowing, prepayment, or repayment of LIBOR Loans and each conversion
         of or into a LIBOR Loan). Each such notice of the duration of an
         Interest Period shall specify the Loans to which such Interest Period
         is to relate. The Agent shall notify the Banks of the content of each
         such Borrowing Notice promptly after its receipt thereof.

                  SECTION 2.4.  DISBURSEMENT OF LOAN PROCEEDS.

                  The Borrowers shall give the Agent notice of each borrowing
         hereunder as provided in Section 2.3 hereof and the Agent shall
         promptly notify the Banks thereof. Not later than 1:00 p.m., New York
         City time, on the date specified for each borrowing hereunder, each
         Bank shall transfer to the Agent, by wire transfer or otherwise, but in
         any event in immediately available funds, the amount of the Loan to be
         made by it on such date, and the Agent, upon its receipt thereof, shall
         disburse such sum to the Borrowers by depositing the amount thereof in
         an account of the Borrowers, or any of them, designated by the
         Borrowers maintained with the Agent.

                  SECTION 2.5.  NOTES.

                  (a) The Credit Loans made by each Bank shall be evidenced by a
         single joint and several promissory note of the Borrowers in
         substantially the form of Exhibit A to Amendment No. 4 (each, a 'NOTE'
         and collectively, the 'NOTES'). Each Note shall be dated the Amendment
         No. 4 Effective Date, shall be payable to the order of such Bank in a
         principal amount equal to such Bank's Revolving Credit Commitment as
         originally in effect, and shall otherwise be duly completed. The Notes
         shall be payable as provided in Sections 2.1 and 2.6 hereof.

                  (b) Each Bank is authorized to enter on a schedule with
         respect to its Note(s) a notation with respect to each Credit Loan made
         hereunder of: (i) the date and principal amount thereof and (ii) each
         payment and repayment of principal thereof. The failure of any Bank to
         make a notation on any such schedule as aforesaid shall not limit or
         otherwise affect the joint and several obligation of the Borrowers to
         repay the Loans in accordance with their respective terms as set forth
         herein.

                  SECTION 2.6.  PAYMENT OF LOANS; VOLUNTARY CHANGES
                                IN COMMITMENT; MANDATORY REPAYMENTS

                  (a) All outstanding Credit Loans shall be paid in full not
         later than the Revolving Credit Commitment Termination Date.

                  (b) The Borrowers shall be entitled to terminate or reduce the
         Total Revolving Credit Commitment and repay or prepay the principal
         amount of the Loans PROVIDED THAT the Borrowers shall give notice of
         such termination, reduction, prepayment or repayment to the Agent as
         provided in Section 2.3 hereof and that any repayment or prepayment or
         partial reduction of the Total Revolving Credit Commitment shall be in
         the minimum aggregate amount of Three Million ($3,000,000) Dollars and
         multiples of One Million ($1,000,000) Dollars in excess thereof. Any
         such termination or reduction shall be permanent and irrevocable. In
         connection with any such termination or reduction, the

                                       27
<PAGE>

         Agent shall, at the request of the Borrowers and subject to the consent
         (which shall not be unreasonably withheld) of the Required Banks,
         release from its Lien thereon items of Collateral designated by the
         Borrowers, provided that, after giving effect to such release, the LTV
         Ratio shall not be greater than 0.667:1.000 and no Default or Event of
         Default shall exist. Any repayment of a LIBOR Loan shall be on the last
         day of the relevant Interest Period and all repayments or prepayments
         of principal (whether mandatory or voluntary) shall be applied first to
         Prime Rate Loans, and then to the fewest number of Types of LIBOR Loans
         as possible. Each partial reduction of the Total Revolving Credit
         Commitment shall be applied to the Total Revolving Credit Commitment
         according to each Bank's respective Revolving Credit Commitment.

                  (c) Notwithstanding any other provision of this Agreement, the
         Loans (i) shall be repaid as and when necessary to cause the aggregate
         principal amount of (x) Loans outstanding, plus (y) L/C Obligations not
         to exceed the Total Revolving Credit Commitment, as at any date of
         determination thereof; and (ii) shall be repaid in order to maintain a
         LTV Ratio of not greater than 0.667:1.000.

                  (d) (i) In the event of a Disposition (which Disposition
         shall, except as provided in subsection 2.6(d)(ii) below, require the
         consent (in each case, not to be unreasonably withheld) of (x) the
         Required Banks and the Agent if the asset(s) to be included in the
         Disposition constitutes Collateral and if after giving effect to such
         Disposition the aggregate amount of the Net Proceeds arising from all
         Dispositions of Collateral is equal to or less than $35,000,000, and
         (y) the Banks and the Agent if the asset(s) to be included in the
         Disposition constitutes Collateral and if the aggregate amount of the
         Net Proceeds of all Dispositions of Collateral theretofore made exceeds
         $35,000,000), the Borrowers shall either (A) repay the Credit Loans in
         an amount equal to the aggregate Net Proceeds of such Disposition
         immediately upon receipt thereof or (B) pledge additional Collateral to
         the Agent such that after giving effect to any such pledge and any
         resulting repayment of the Credit Loans, the LTV Ratio is not greater
         than 0.667:1.000 (as verified by an Appraisal of the additional
         Collateral) which additional Collateral shall, if replacing a portion
         of the Initial Collateral, meet the criteria contained in the
         definition of Eligible Healthcare Assets or, if replacing a portion of
         the Additional Collateral, meet the criteria contained in the
         definition of Additional Eligible Healthcare Asset. Simultaneously with
         the Borrowers fulfilling their obligations under this subsection, the
         Agent shall release its Lien on any Collateral that is subject to the
         Disposition.

                           (ii) The parties hereto acknowledge that the term
         "Disposition" includes the prepayment or repayment in full in
         accordance with their respective terms of any Mortgage(s) which
         constitute Collateral, and notwithstanding anything to the contrary
         contained in subsection 2.6(d)(i) above in connection with a
         Disposition arising from any such prepayment or repayment,
         simultaneously with the Borrowers fulfilling their obligations under
         subsection 2.6(d)(i) above, the Agent shall release its Lien on such
         Collateral covering the Mortgage (which release shall not require the
         consent of any Bank).

                  (e) If any Borrower shall make any public or private issuance
         of Indebtedness or equity (other than (i) in connection with any
         dividend reinvestment program(s), (ii) the

                                       28
<PAGE>

         Equity Contribution, (iii) the Second Additional Equity Contribution,
         or (iv) the proceeds of any other issuance of Indebtedness or equity
         (which issuance of Indebtedness by its terms matures later than
         December 31, 2002) of up to $50,000,000 received prior to February 1,
         2001), Omega shall promptly notify the Agent of such issuance and repay
         the Credit Loans in an amount equal to the aggregate Net Issuance
         Proceeds of such issuance immediately upon receipt thereof, except that
         the Borrower may use the proceeds of the loans to be made by The
         Provident Bank and the other lenders party thereto under the New
         Provident Loan Agreement as permitted pursuant to the New Provident
         Loan Agreement.

                  SECTION 2.7.  INTEREST

                  (a) The Borrowers shall pay to the Agent for the account of
         each Bank interest on the unpaid principal amount of each Loan made by
         such Bank for the period commencing on the date of such Loan until such
         Loan shall be paid in full, at the following rates per annum:

                           (i) During such periods that such Loan is a Prime
         Rate Loan, the Alternate Base Rate PLUS the Applicable Margin; and

                           (ii) During such periods that such Loan is a LIBOR
         Loan, for each Interest Period relating thereto, the LIBOR Rate for
         such Loan for such Interest Period PLUS the Applicable Margin.

                  (b) Notwithstanding the foregoing, the Borrowers shall pay
         interest on any Loan or any installment thereof, and on any other
         amount (including Unpaid Drawings) payable by the Borrowers hereunder
         (to the extent permitted by law) that shall not be paid in full when
         due (whether at stated maturity, by acceleration or otherwise) for the
         period commencing on the due date thereof until the same is paid in
         full at the applicable Post-Default Rate.

                  (c) Except as provided in the next sentence, accrued interest
         on each Loan shall be payable: (i) in the case of each Prime Rate Loan,
         quarterly on the Quarterly Dates, (ii) in the case of a LIBOR Loan, on
         the last day of each Interest Period for such Loan (and, if such
         Interest Period exceeds three months' duration, quarterly, commencing
         on the first quarterly anniversary of the first day of such Interest
         Period), and (iii) in the case of any Loan, upon the payment, repayment
         or prepayment thereof or the conversion thereof into a Loan of another
         Type (but only on the principal so paid, repaid or converted). Interest
         that is payable at the Post-Default Rate shall be payable from time to
         time on demand of the Agent. Promptly after the establishment of any
         interest rate provided for herein or any change therein, the Agent will
         notify the Banks and the Borrowers thereof, PROVIDED THAT the failure
         of the Agent to so notify the Banks and the Borrowers shall not affect
         the obligations of the Borrowers hereunder or under any of the Notes in
         any respect. Interest on all Loans and each Fee shall be computed on
         the basis of a year of 360 days and actual days elapsed (including the
         first day but excluding the last) occurring in the period for which
         payable.

                                       29
<PAGE>

                  (d) Anything in this Agreement or any of the Notes to the
         contrary notwithstanding, the obligation of the Borrowers to make
         payments of interest shall be subject to the limitation that payments
         of interest shall not be required to be made to any Bank to the extent
         that such Bank's receipt thereof would not be permissible under the law
         or laws applicable to such Bank limiting rates of interest that may be
         charged or collected by such Bank. Any such payments of interest that
         are not made as a result of the limitation referred to in the preceding
         sentence shall be made by the Borrowers to such Bank on the earliest
         interest payment date or dates on which the receipt thereof would be
         permissible under the laws applicable to such Bank limiting rates of
         interest that may be charged or collected by such Bank. Such deferred
         interest shall not bear interest.

                  SECTION 2.8.  FEES.

                  (a) Simultaneously with the execution and delivery of
         Amendment No. 4, the Borrowers shall pay to the Agent, for the ratable
         benefit of the Banks, a non-refundable amendment fee in the aggregate
         amount of $480,000 (the 'AMENDMENT FEE').

                  (b) The Borrowers shall pay to the Agent for the account of
         the Banks, PRO RATA according to their respective Revolving Credit
         Commitments, a commitment fee (the 'COMMITMENT FEE') on the daily
         average amount of such Bank's Unused Commitment, for the period from
         the Closing Date to and including the earlier of (i) the date such
         Bank's Revolving Credit Commitment is terminated, and (ii) the
         Revolving Credit Commitment Termination Date, at the rate per annum
         equal to the Commitment Fee Percentage from time to time in effect on
         the amount of the Total Revolving Credit Commitment. The accrued
         Commitment Fee shall be payable on the Quarterly Dates, and on the
         earlier of (i) the date the Total Revolving Credit Commitment is
         terminated, or (ii) the Revolving Credit Commitment Termination Date,
         and in the event the Borrowers reduce the Total Revolving Credit
         Commitment as provided in subsection 2.6(b) hereof, on the effective
         date of such reduction.

                  (c) The Borrowers shall pay to the Agent, for its own account:
         (i) an annual agency fee (the 'AGENCY FEE') commencing on the Closing
         Date, and (ii) simultaneously with the execution and delivery of
         Amendment No. 4, (A) a non-refundable arrangement fee (the 'ARRANGEMENT
         FEE'), and (B) fees and expenses in accordance with Section 10.1
         hereof.

                  (d) The Borrowers shall pay to the Agent for the account of
         the Banks, PRO RATA according to their respective Revolving Credit
         Commitments, a letter of credit fee (the 'L/C FEE') on the daily
         average amount of the aggregate stated amount of the L/C's, for the
         period from the date hereof to and including the earlier of (i) the
         date such Bank's Revolving Credit Commitment is terminated and (ii) the
         Revolving Credit Commitment Termination Date, at the rate per annum
         equal to the L/C Fee Percentage from time to time in effect. The
         accrued L/C Fee shall be payable on the Quarterly Dates, and on the
         earlier of (i) the date the Total Revolving Credit Commitment is
         terminated, or (ii) the Revolving Credit Commitment Termination Date.

                                       30
<PAGE>

                  (e) The Amendment Fee, the Commitment Fee, the Agency Fee, the
         Arrangement Fee and the L/C Fee are hereinafter sometimes referred to
         individually as a 'FEE' and collectively as the 'FEES'. Each of the
         Amendment Fee, the Agency Fee and the Arrangement Fee are more fully
         described in a separate written agreement among the Borrowers and the
         Agent.

                  SECTION 2.9.  USE OF PROCEEDS OF LOANS

                  The proceeds of the Credit Loans hereunder may be used by the
         Borrowers solely: (a) for working capital purposes, (b) subject to
         subsection 2.2(a) hereof, for the issuance of L/C's to beneficiaries
         designated by the Borrowers, and (c) for general corporate purposes
         (including, without limitation, those permitted under Sections 7.4, 7.5
         and 7.8 hereof); provided, however, that no proceeds of the Credit
         Loans may be utilized (i) to repay any of the June 2002 Notes unless,
         after giving effect to any such payment, there would be not less than
         $10,000,000 available under the Revolving Commitment; or (ii) to pay
         all or any part of the Accrued Catch-Up Dividends if an Event of
         Default shall then exist or would exist after giving effect to any such
         payment.

                  SECTION 2.10.     COLLATERAL.

                  (a) In order to secure the due payment and performance by the
         Borrowers of the Obligations, on the Closing Date each of Omega, OHI
         (Illinois), Inc., NRS, and Delta (collectively, the 'GRANTORS') shall:

                           (i) Grant to the Agent for the ratable benefit of the
         Banks (and affiliates thereof in connection with Interest Rate
         Contracts) a Lien on such of its personal properties and assets,
         whether now owned or hereafter acquired, tangible and intangible,
         related to the Facilities identified on Schedule 2.10 hereto (as the
         same may be modified from time to time in accordance with the terms
         hereof) by the execution and delivery to the Agent of a Security
         Agreement in form and substance satisfactory to the Agent (the
         'BORROWER SECURITY AGREEMENT');

                           (ii) Grant to the Agent for the ratable benefit of
         the Banks (and affiliates thereof in connection with Interest Rate
         Contracts) a Lien on such interests in real property related to the
         Facilities identified on Schedule 2.10 hereto (as the same may be
         modified from time to time in accordance with the terms hereof), and
         all improvements now or hereafter located thereon, as the Agent shall
         require, by the execution and delivery to the Agent of mortgages, deeds
         of trust, or assignments of mortgages, in form and substance
         satisfactory to the Agent (individually, a 'BORROWER MORTGAGE' and
         collectively, the 'BORROWER MORTGAGES'); and

                           (iii) Execute and deliver or cause to be executed and
         delivered such other agreements, instruments and documents as the Agent
         may reasonably require in order to effect the purposes of the Borrower
         Security Agreement, the Borrower Mortgages, this Section 2.10 and this
         Agreement.

                  (b) All of the agreements, instruments and documents provided
         for or referred to in this Section 2.10 are hereinafter sometimes
         referred to collectively as the 'SECURITY DOCUMENTS'.

                                       31
<PAGE>

                  SECTION 2.11.  MINIMUM AMOUNTS OF BORROWINGS,
                                 CONVERSIONS AND REPAYMENTS.

                  Except for borrowings, conversions and repayments that exhaust
         the full remaining amount of a Commitment (in the case of borrowings)
         or result in the conversion or repayment of all Loans of a particular
         Type (in the case of conversions or repayments) or conversions made
         pursuant to Section 2.20 or Section 2.21 hereof, each borrowing from
         each Bank, each conversion of Loans of one Type into Loans of another
         Type and each repayment or prepayment of principal of Loans hereunder
         shall be in a minimum amount of One Million ($1,000,000) Dollars, in
         the case of Prime Rate Loans, and Three Million ($3,000,000) Dollars,
         in the case of LIBOR Loans, and in either case if in excess thereof, in
         integral multiples of One Hundred Thousand ($100,000) Dollars
         (borrowings, conversions and repayments of different Types of Loans at
         the same time hereunder to be deemed separate borrowings, conversions
         and repayments for purposes of the foregoing, one for each Type).

                  SECTION 2.12.  TIME AND METHOD OF PAYMENTS

                  All payments of principal, interest, Fees and other amounts
         (including indemnities) payable by the Borrowers hereunder shall be
         made in Dollars, in immediately available funds, to the Agent at the
         Principal Office not later than 11:00 a.m., New York City time, on the
         date on which such payment shall become due (and the Agent or any Bank
         for whose account any such payment is to be made may, but shall not be
         obligated to, debit the amount of any such payment that is not made by
         such time to any ordinary deposit account of the Borrowers, or any of
         them, with the Agent or such Bank, as the case may be). Additional
         provisions relating to payments are set forth in Section 10.3 hereof.
         Each payment received by the Agent hereunder for the account of a Bank
         shall be paid promptly to such Bank, in like funds, for the account of
         such Bank's Lending Office for the Loan in respect of which such
         payment is made.

                  SECTION 2.13.  LENDING OFFICES

                  The Loans of each Type made by each Bank shall be made and
         maintained at such Bank's applicable Lending Office for Loans of such
         Type.

                  SECTION 2.14.  SEVERAL OBLIGATIONS

                  The failure of any Bank to make any Loan to be made by it on
         the date specified therefor shall not relieve the other Banks of their
         respective obligations to make their Loans on such date, but no Bank
         shall be responsible for the failure of the other Banks to make Loans
         to be made by such other Banks.

                                       32
<PAGE>

                  SECTION 2.15.  PRO RATA TREATMENT AMONG BANKS.

                  Except as otherwise provided herein: (a) each borrowing from
         the Banks under Section 2.1 hereof will be made from the Banks and each
         payment of each Fee (other than as set forth in subsection 2.8(a)
         hereof and the Agency Fee and the Arrangement Fee) shall be made for
         the account of the Banks PRO RATA according to the amount of their
         respective Commitments; (b) each partial reduction of the Revolving
         Credit Commitment shall be applied to the Commitments of the Banks PRO
         RATA according to each Bank's respective Commitment; (c) each payment
         and repayment of principal of or interest on Loans will be made to the
         Agent for the account of the Banks PRO RATA in accordance with the
         respective unpaid principal amounts of the Loans held by such Banks;
         and (d) each conversion of Loans of a particular Type shall be made PRO
         RATA among the Banks holding Loans of such type according to the
         respective principal amounts of such Loans held by such Banks.

                  SECTION 2.16.  NON-RECEIPT OF FUNDS BY THE AGENT.

                  Unless the Agent shall have been notified by a Bank or the
         Borrowers (the 'PAYOR') prior to the date on which such Bank is to make
         payment to the Agent of the proceeds of a Loan to be made by it
         hereunder or the Borrowers are to make a payment to the Agent for the
         account of one or more of the Banks, as the case may be (such payment
         being herein called the 'REQUIRED PAYMENT'), which notice shall be
         effective upon receipt, that the Payor does not intend to make the
         Required Payment to the Agent, the Agent may assume that the Required
         Payment has been made and may, in reliance upon such assumption (but
         shall not be required to), make the amount thereof available to the
         intended recipient on such date and, if the Payor has not in fact made
         the Required Payment to the Agent, the recipient of such payment shall,
         on demand, repay to the Agent the amount made available to it together
         with interest thereon in respect of each day during the period
         commencing on the date such amount was so made available by the Agent
         until the date the Agent recovers such amount at a rate per annum equal
         to (i) when the recipient is a Bank, the Federal Funds Rate for such
         day, or (ii) when the recipient is a Borrower, the rate of interest
         applicable to such Loan.

                  SECTION 2.17.  SHARING OF PAYMENTS AND SET-OFF AMONG BANKS.

                  The Borrowers hereby agree that, in addition to (and without
         limitation of) any right of setoff, banker's lien or counterclaim a
         Bank may otherwise have, each Bank shall be entitled, at its option, to
         offset balances held by it at any of its offices against any principal
         of or interest on any of its Loans hereunder or any Fee payable to it,
         that is not paid when due (regardless of whether such balances are then
         due to the Borrowers), in which case it shall promptly notify the
         Borrowers and the Agent thereof, PROVIDED THAT its failure to give such
         notice shall not affect the validity thereof. If a Bank shall effect
         payment of any principal of or interest or Fee on Loans held by it
         under this Agreement through the exercise of any right of set-off,
         banker's lien, counterclaim or similar right, it shall promptly
         purchase from the other Banks participations in the Loans held by the
         other Banks in such amounts, and make such other adjustments from time
         to time as shall be equitable, to the end that all the Banks shall
         share the benefit of such payment PRO RATA in accordance with the
         unpaid amount of principal and interest or Fee on the Loans held

                                       33
<PAGE>

         by each of them. To such end all the Banks shall make appropriate
         adjustments among themselves (by the resale of participations sold or
         otherwise) if such payment is rescinded or must otherwise be restored.
         The Borrowers agree that any Bank so purchasing a participation in the
         Loans held by the other Banks may, to the fullest extent permitted by
         law, exercise all rights of payment (including the rights of set-off,
         banker's lien, counterclaim or similar rights) with respect to such
         participation as fully as if such Bank were a direct holder of Loans in
         the amount of such participation. Nothing contained herein shall
         require any Bank to exercise any such right or shall affect the right
         of any Bank to exercise and retain the benefits of exercising, any such
         right with respect to any other indebtedness or obligation of the
         Borrowers.

                  SECTION 2.18.  CONVERSION OF LOANS.

                  The Borrowers shall have the right to convert Loans of one
         Type into Loans of another Type from time to time, PROVIDED THAT: (i)
         the Borrowers shall give the Agent notice of each such conversion as
         provided in Section 2.3 hereof; (ii) LIBOR Loans may be converted only
         on the last day of an Interest Period for such Loans; (iii) no LIBOR
         Loan shall be continued as or converted into another LIBOR Loan, or
         Prime Rate Loan converted into a LIBOR Loan for a new Interest Period,
         if the principal amount (determined as of the date of any proposed
         conversion or continuation thereof) of the aggregate Loans and the L/C
         Obligations outstanding after giving effect to such continuation or
         conversion would exceed the Total Revolving Commitment then in effect;
         and (iv) no Prime Rate Loan may be converted into a LIBOR Loan or LIBOR
         Loan continued as or converted into another LIBOR Loan if on the
         proposed date of conversion a Default or an Event of Default exists.
         The Agent shall use its best efforts to notify the Borrowers of the
         effectiveness of such conversion, and the new interest rate to which
         the converted Loans are subject, as soon as practicable after the
         conversion; PROVIDED, HOWEVER, that any failure to give such notice
         shall not affect the Borrowers' obligations, or the Agent's or the
         Banks' rights and remedies, hereunder in any way whatsoever.

                  SECTION 2.19.  ADDITIONAL COSTS; CAPITAL REQUIREMENTS.

                  (a) In the event that any existing or future law or
         regulation, guideline or interpretation thereof, by any court or
         administrative or governmental authority (foreign or domestic) charged
         with the administration thereof, or compliance by any Bank with any
         request or directive (whether or not having the force of law) of any
         such authority shall impose, modify or deem applicable or result in the
         application of, any capital maintenance, capital ratio or similar
         requirement against loan commitments or other obligations entered into
         by any Bank hereunder, and the result of any event referred to above is
         to impose upon any Bank or increase any capital requirement applicable
         as a result of the making or maintenance of such Bank's Commitment or
         the obligation of such Bank hereunder with respect to such Commitment
         or otherwise (which imposition of capital requirements may be
         determined by each Bank's reasonable allocation of the aggregate of
         such capital increases or impositions), then, upon demand made by such
         Bank as promptly as practicable after it obtains knowledge that such
         law, regulation, guideline, interpretation, request or directive exists
         and determines to make such demand, the Borrowers shall immediately pay
         to such Bank from time to time as specified by such

                                       34
<PAGE>

         Bank additional amounts which shall be sufficient to compensate such
         Bank for such imposition of or increase in capital requirements
         together with interest on each such amount from the date demanded until
         payment in full thereof at the Post-Default Rate. A certificate setting
         forth in reasonable detail the amount necessary to compensate such Bank
         as a result of an imposition of or increase in capital requirements
         submitted by such Bank to the Borrowers shall be conclusive, absent
         manifest error, as to the amount thereof. All references to any "Bank"
         shall be deemed to include any participant in such Bank's Commitment.

                  (b) In the event that any Regulatory Change shall: (i) change
         the basis of taxation of any amounts payable to any Bank under this
         Agreement or the Notes in respect of any Loans including, without
         limitation, LIBOR Loans (other than taxes imposed on the overall net
         income of such Bank for any such Loans by the United States of America
         or the jurisdiction in which such Bank has its principal office); or
         (ii) impose or modify any reserve, Federal Deposit Insurance
         Corporation premium or assessment, special deposit or similar
         requirements relating to any extensions of credit or other assets of,
         or any deposits with or other liabilities of, such Bank (including any
         of such Loans or any deposits referred to in the definition of "LIBOR
         Base Rate" in Article 1 hereof); or (iii) impose any other conditions
         affecting this Agreement in respect of Loans or L/C's, including,
         without limitation, LIBOR Loans (or any of such extensions of credit,
         assets, deposits or liabilities); and the result of any event referred
         to in clause (i), (ii) or (iii) above shall be to increase such Bank's
         costs of making or maintaining any Loans or L/C's including, without
         limitation, LIBOR Loans, or its Commitment, or to reduce any amount
         receivable by such Bank hereunder in respect of its Commitment (such
         increases in costs and reductions in amounts receivable are hereinafter
         referred to as 'ADDITIONAL COSTS') in each case, only to the extent,
         with respect to LIBOR Loans, that such Additional Costs are not
         included in the LIBOR Base Rate applicable to LIBOR Loans, then, upon
         demand made by such Bank as promptly as practicable after it obtains
         knowledge that such a Regulatory Change exists and determines to make
         such demand (a copy of which demand shall be delivered to the Agent),
         the Borrowers shall pay to such Bank from time to time as specified by
         such Bank, additional amounts which shall be sufficient to compensate
         such Bank for such increased cost or reduction in amounts receivable by
         such Bank from the date of such change, together with interest on each
         such amount from the date demanded until payment in full thereof at the
         Post-Default Rate. All references to any "Bank" shall be deemed to
         include any participant in such Bank's Commitment.

                  (c) Without limiting the effect of the foregoing provisions of
         this Section 2.19, in the event that, by reason of any Regulatory
         Change, any Bank either: (i) incurs Additional Costs based on or
         measured by the excess above a specified level of the amount of a
         category of deposits or other liabilities of such Bank which includes
         deposits by reference to which the interest rate on LIBOR Loans is
         determined as provided in this Agreement or a category of extensions of
         credit or other assets of such Bank which includes LIBOR Loans, or (ii)
         becomes subject to restrictions on the amount of such a category of
         liabilities or assets that it may hold, then, if such Bank so elects by
         notice to the Borrowers (with a copy to the Agent), the obligation of
         such Bank to make, and to convert Loans of any other Type into, Loans
         of such Type hereunder shall be suspended until the date such
         Regulatory Change ceases to be in effect (and all Loans of such Type

                                       35
<PAGE>

         then outstanding shall be converted into Prime Rate Loans or into LIBOR
         Loans of another duration as the case may be, in accordance with
         Sections 2.18 and 2.22).

                  (d) Determinations by any Bank for purposes of this Section
         2.19 of the effect of any Regulatory Change on its costs of making or
         maintaining Loans or L/C's or on amounts receivable by it in respect of
         Loans, and of the additional amounts required to compensate such Bank
         in respect of any Additional Costs, shall be set forth in writing in
         reasonable detail and shall be conclusive, absent manifest error.

                  SECTION 2.20.  LIMITATION ON TYPES OF LOANS.

                  Anything herein to the contrary notwithstanding, if, on or
         prior to the determination of an interest rate for any LIBOR Loans for
         any Interest Period therefor, the Required Banks determine (which
         determination shall be conclusive):

                  (a) by reason of any event affecting the money markets in the
         United States of America or the London interbank market, quotations of
         interest rates for the relevant deposits are not being provided in the
         relevant amounts or for the relevant maturities for purposes of
         determining the rate of interest for such Loans under this Agreement;
         or

                  (b) the rates of interest referred to in the definition of
         "LIBOR Base Rate" in Article 1 hereof upon the basis of which the rate
         of interest on any LIBOR Loans for such period is determined, do not
         accurately reflect the cost to the Banks of making or maintaining such
         Loans for such period;

         then the Agent shall give the Borrowers and each Bank prompt notice
         thereof (and shall thereafter give the Borrowers and each Bank prompt
         notice of the cessation, if any, of such condition), and so long as
         such condition remains in effect, the Banks shall be under no
         obligation to make Loans of such Type or to convert Loans of any other
         Type into Loans of such Type and the Borrowers shall, on the last
         day(s) of the then current Interest Period(s) for the outstanding Loans
         of the affected Type either repay such Loans in accordance with Section
         2.6 hereof or convert such Loans into Loans of another Type.

                  SECTION 2.21.  ILLEGALITY.

                  Notwithstanding any other provision in this Agreement, in the
         event that it becomes unlawful for any Bank or its applicable Lending
         Office to: (a) honor its obligation to make any Type of LIBOR Loans
         hereunder, or (b) maintain any Type of LIBOR Loans hereunder, then such
         Bank shall promptly notify the Borrowers thereof (with a copy to the
         Agent), describing such illegality in reasonable detail (and shall
         thereafter promptly notify the Borrowers and the Agent of the
         cessation, if any, of such illegality), and such Bank's obligation to
         make such Type of LIBOR Loans and to convert Prime Rate Loans into
         LIBOR Loans hereunder shall, upon written notice given by such Bank to
         the Borrowers, be suspended until such time as such Bank may again make
         and maintain such type of LIBOR Loans and such Bank's outstanding LIBOR
         Loans of such Type shall be converted into Prime Rate Loans, in
         accordance with Sections 2.18 and 2.22 hereof.

                                       36
<PAGE>

                  SECTION 2.22.   CERTAIN CONVERSIONS PURSUANT
                                  TO SECTIONS 2.19 AND 2.21.

                  If the Loans of any Bank of a particular Type (Loans of such
         Type are hereinafter referred to as 'AFFECTED LOANS' and such Type is
         hereinafter referred to as the 'AFFECTED TYPE') are to be converted
         pursuant to Section 2.19 or 2.21 hereof, such Bank's Affected Loans
         shall be converted into Prime Rate Loans, or LIBOR Loans of another
         Type, as the case may be (the 'NEW TYPE LOANS'), on the last day(s) of
         the then current Interest Period(s) for the Affected Loans (or, in the
         case of a conversion required by subsection 2.19(b) or Section 2.21
         hereof, on such earlier date as such Bank may specify to the Borrowers
         with a copy to the Agent) and, until such Bank gives notice as provided
         below that the circumstances specified in Section 2.19 or 2.21 hereof
         which gave rise to such conversion no longer exist:

                           (a) to the extent that such Bank's Affected Loans
                  have been so converted, all payments and repayments of
                  principal which would otherwise be applied to such Affected
                  Loans shall be applied instead to its New Type Loans;

                           (b) all Loans which would otherwise be made by such
                  Bank as Loans of the Affected Type shall be made instead as
                  New Type Loans and all Loans of such Bank which would
                  otherwise be converted into Loans of the Affected Type shall
                  be converted instead into (or shall remain as) New Type Loans.

                  SECTION 2.23.  INDEMNIFICATION.

                  The Borrowers shall pay to the Agent for the account of each
         Bank, upon the request of such Bank through the Agent, such amount or
         amounts as shall compensate such Bank for any loss (including loss of
         profit), cost or expense incurred by such Bank (as reasonably
         determined by such Bank) as a result of:

                           (a) any payment or repayment or conversion of a LIBOR
                  Loan held by such Bank on a date other than the last day of an
                  Interest Period for such LIBOR Loan except pursuant to
                  Sections 2.19 or 2.21 hereof; or

                           (b) any failure by the Borrowers to borrow a LIBOR
                  Loan held by such Bank on the date for such borrowing
                  specified in the relevant Borrowing Notice under Section 2.3
                  hereof, or

                           (c) any failure by the Borrowers to continue a LIBOR
                  Loan after giving notice of continuation or to prepay a LIBOR
                  Loan on the date specified in a notice of prepayment,

         such compensation to include, without limitation, an amount equal to:
         (i) any loss or expense suffered by such Bank during the period from
         the date of receipt of such early payment or repayment or the date of
         such conversion to the last day of such Interest Period if the rate of
         interest obtainable by such Bank upon the redeployment of an amount of
         funds equal to such Bank's PRO RATA share of such payment, repayment or
         conversion or failure to borrow or convert or continue or prepay is
         less than the rate of interest applicable to such LIBOR Loan for such
         Interest Period, or (ii) any loss or

                                       37
<PAGE>

         expense suffered by such Bank in liquidating LIBOR deposits prior to
         maturity which correspond to such Bank's PRO RATA share of such
         payment, repayment, conversion, failure to borrow or failure to convert
         or failure to continue or failure to prepay. The determination by each
         such Bank of the amount of any such loss or expense, when set forth in
         a written notice to the Borrowers, containing such Bank's calculation
         thereof in reasonable detail, shall be presumed correct, in the absence
         of manifest error."

                  2.3. Article 6 of the Loan Agreement is hereby amended by
deleting Section 6.9 (Financial Covenants) thereof in its entirety and
substituting the following therefor:

                  "Section 6.9   FINANCIAL COVENANTS.

                  (a) Have or maintain, with respect to Omega, on a consolidated
         basis, as at the last day of each fiscal quarter of Omega, a ratio of
         Indebtedness to Tangible Net Worth of not more than 1.50:1.00.

                  (b) Have or maintain, with respect to Omega, on a consolidated
         basis, as at the last day of each fiscal quarter of Omega after the
         Amendment No. 4 Effective Date, Tangible Net Worth (after the Second
         Additional Equity Contribution) of not less than $400,000,000 as at
         December 31, 2001, $425,000,000 as at March 31, 2002 and June 30, 2002,
         and $430,000,000 as at September 30, 2002 and each fiscal quarter
         thereafter, plus, in each case, 50% of (i) the Net Issuance Proceeds
         received by Omega (or any of its Subsidiaries) in connection with the
         issuance of any equity interest in Omega (or any of its Subsidiaries)
         other than any such equity interests issued in connection with the
         Second Additional Equity Contribution and any dividend reinvestment
         program(s), and (ii) the value (determined in accordance with GAAP) of
         any capital stock by Omega issued upon the conversion of convertible
         Indebtedness.

         With respect to the foregoing subsection 6.9(b), for purposes of
         computing Tangible Net Worth, from and after the Catch-Up Date, the
         amount of Accrued Catch-Up Dividends shall be added to Tangible Net
         Worth to the extent that such amount(s) have been externally financed
         (provided the calculation of Accrued Catch-Up Dividends shall be set
         forth in writing delivered to and in form and substance satisfactory to
         the Agent, which shall include a description of the source of payment
         therefor).

                  (c) Have or maintain, with respect to Omega, on a consolidated
         basis, as at the last day of each fiscal quarter of Omega, Interest
         Coverage of not less than the respective ratio set forth opposite each
         such date:

<TABLE>
<CAPTION>
                           DATE                     MINIMUM INTEREST COVERAGE RATIO
                           ----                     -------------------------------
<S>                                                 <C>
                  March 31, 2002                              2.00:1.00
                  June 30, 2002                               2.25:1.00
                  September 30, 2002                          2.25:1.00
                  December 31, 2002                           2.50:1.00
                  March 31, 2003                              2.75:1.00
                    and the last day of each
                    fiscal quarter thereafter
</TABLE>

                                       38
<PAGE>

                  (d) Intentionally Omitted.

                  (e) Have or maintain as at the last day of each fiscal quarter
         of Omega, Omega's Fixed Coverage Ratio of not less than 1.00:1.00.

         With respect to the foregoing subsection 6.9(e), for purposes of
         computing Omega's Fixed Coverage Ratio, from and after the Catch-Up
         Date, there shall be subtracted from the computation of "Cash
         dividends", the amount of the Accrued Catch-Up Dividends to the extent
         that such amount(s) have been externally financed (provided the
         calculation of Accrued Catch-Up Dividends shall be set forth in writing
         delivered to and in form and substance satisfactory to the Agent, which
         shall include a description of the source of payment therefor).

                  (f) Have or maintain as at the last day of each fiscal quarter
        of Omega, commencing with the fiscal quarter ending March 31, 2002, a
        Leverage Ratio of not greater than the respective ratio set forth
        opposite each such date:

<TABLE>
<CAPTION>
                           DATE                       MAXIMUM LEVERAGE RATIO
                           ----                       ----------------------
<S>                                                   <C>
                  March 31, 2002                             5.50:1.00
                  June 30, 2002                              5.00:1.00
                  September 30, 2002                         4.75:1.00"
                    and the last day of each
                    fiscal quarter thereafter
</TABLE>

                  (g) Have or maintain Collateral Coverage with respect to the
         Facilities comprising the Collateral of at least 1.40:1.00 at all
         times."

                  2.4. Article 7 of the Loan Agreement is hereby amended by
deleting Section 7.5 (Redemptions; Distributions) thereof in its entirety and
substituting the following therefor:

                 "Section 7.5  REDEMPTIONS; DISTRIBUTIONS.

                  (a) Purchase, redeem, retire or otherwise acquire, directly or
         indirectly, or make any sinking fund payments with respect to, any
         shares of any class of stock of Omega or any Subsidiary now or
         hereafter outstanding or set apart any sum for any such purpose; unless
         (i) the ^ JUNE 2002 NOTES have been paid in full or the Required Banks
         are satisfied that sources of funds are and will remain available to
         repay the ^ JUNE 2002 NOTES in full, and (ii) after giving effect
         thereto (A) no Event of Default shall exist, (B) there shall be not
         less than $15,000,000 available under the Revolving Credit Commitment;
         and (C) the aggregate amount of all such purchases, redemptions and
         payments shall be less than $15,000,000; or

                  (b) Declare or pay any dividends or make any distribution of
         any kind on Omega's outstanding stock, or set aside any sum for any
         such purpose, except that:

                           (i) Omega may declare and make dividend payments or
         other distributions payable solely (A) in its common stock; and (B) in
         kind to Explorer

                                       39
<PAGE>

         Holdings, L.P. in respect of the Series C Convertible Preferred Stock
         of Omega as contemplated under the Investment Agreement;

                           (ii) If no Default or Event of Default exists or will
         occur after giving effect thereto, Omega may declare and pay cash
         dividends in any fiscal quarter in an amount, which when added to the
         cash dividends paid with respect to the three (3) immediately preceding
         fiscal quarters, does not exceed ninety-five (95%) percent of Adjusted
         EBITDA (which shall be calculated without adding back interest expense
         for the purpose hereof) for those four (4) fiscal quarters calculated
         on a rolling four-quarter basis (provided that in computing the amount
         of all such cash dividends permitted to be paid hereunder, there shall
         be excluded therefrom the portion of any Accrued Catch-Up Dividend
         (otherwise included therein) the payment of which has been externally
         financed, and, provided further, that the calculation thereof shall be
         set forth in writing delivered to and in form and substance
         satisfactory to the Agent, and shall include a description of the
         source of payment therefor);

                           (iii) If a Default or Event of Default exists or
         would occur after giving effect thereto, Omega may declare and pay
         dividends in any fiscal quarter in the minimum amount necessary to
         maintain its REIT status; and

                           (iv) Omega may pay the Accrued Catch-Up Dividends
         provided the Borrowers shall deliver to the Agent in reasonable written
         detail a calculation of the amount thereof which shall include a
         description of the source of payment therefor."

         3. REPRESENTATIONS AND WARRANTIES. In order to induce the Banks and the
Agent to enter into this Fourth Amendment, each of the Loan Parties hereby
represents and warrants to the Banks and the Agent, as to itself with respect to
the Loan Documents to which it is a party, that:

                 3.1 NO DEFAULT. After giving effect to this Fourth Amendment,
no Default or Event of Default shall have occurred or be continuing.

                 3.2 EXISTING REPRESENTATIONS AND WARRANTIES. As of the date
hereof and after giving effect to this Fourth Amendment, each and every one of
the representations and warranties set forth in the Loan Documents are true,
accurate and complete in all respects and with the same effect as though made on
the date hereof, and each is hereby incorporated herein in full by reference as
if restated herein in its entirety, except as set forth on Schedule 3.2 hereto
and for changes in the ordinary course of business which are not prohibited by
the Loan Agreement (as amended hereby) and which do not, either singly or in the
aggregate, have a Material Adverse Effect.

                 3.3 AUTHORITY; ENFORCEABILITY. (i) The execution, delivery and
performance by each Loan Party of this Fourth Amendment and the Notes (as
defined in the Loan Agreement as amended hereby, the "NOTES") are within its
organizational powers and have been duly authorized by all necessary action
(corporate or otherwise) on the part of each Loan Party, (ii) each of this
Fourth Amendment and the Notes is the legal, valid and binding obligation of
each Loan Party party thereto, enforceable against each Loan Party in accordance
with its terms, and (iii) this Fourth Amendment and the Notes and the execution,
delivery and performance by each

                                       40
<PAGE>

Loan Party thereof does not: (A) contravene the terms of any Loan Party's
organization documents, (B) conflict with or result in any breach or
contravention of, or the creation of any Lien under, any document evidencing any
contractual obligation to which any Loan Party is a party or any order,
injunction, writ or decree to which any Loan Party or its property is subject,
or (C) violate any requirement of law.

         4. CONDITIONS PRECEDENT TO EFFECTIVENESS.

         This Fourth Amendment shall become effective on the date (the
"EFFECTIVE DATE") that the following conditions precedent shall have been
fulfilled (to the satisfaction of the Agent, which in no event shall be later
than February 28, 2002):

                 4.1 FOURTH AMENDMENT. The Agent shall have received this Fourth
Amendment, duly executed by a duly authorized officer or officers of each
Borrower, the Agent and each Bank.

                 4.2 NOTES. Each Borrower shall have executed and delivered to
each Bank its Note.

                 4.3 FEES. The Borrower shall have paid to the Agent
simultaneously with the execution and delivery of this Fourth Amendment (i) for
the account of the Banks, the Amendment Fee, and (ii) for its own account, the
Arrangement Fee.

                 4.4 SECOND ADDITIONAL EQUITY CONTRIBUTION. The Agent shall have
received documentation in form and substance satisfactory to it that the Second
Additional Equity Contribution has been consummated.

                 4.5 AMENDMENT TO PROVIDENT LOAN AGREEMENT. The Agent shall
have received a true and complete copy of a waiver and amendment to the
Provident Loan Agreement, pursuant to which the Provident Loan Agreement shall
be no more restrictive on the Borrower than the Loan Agreement as amended
hereby, and which waiver and amendment shall be in form and substance
satisfactory to the Agent.

                 4.6 OPINION. Counsel to the Borrowers shall have delivered its
opinion to, and in form and substance satisfactory to, the Agent.

                 4.7 CERTIFICATES. The Agent shall have received a certificate
of the Secretary or Assistant Secretary of each Borrower (i) attaching a true
and complete copy of the resolutions of its Board of Directors and of all
documents evidencing all necessary corporate action (in form and substance
reasonably satisfactory to the Administrative Agent) taken by it to authorize
this Fourth Amendment, (ii) certifying that its certificate of incorporation and
by-laws have not been amended since June 15, 2000, or, if so, setting forth the
same, and (iii) setting forth the incumbency of its officer or officers who may
sign this Amendment, including therein a signature specimen of such officer or
officers.

                 4.8 ADDITIONAL DOCUMENTS. The Agent shall have received such
other documents as it shall reasonably request.

                                       41
<PAGE>

         5.   ADDITIONAL CONDITIONS PRECEDENT TO LOANS
              AND L/CS UNDER THE LOAN AGREEMENT AS AMENDED.

         The obligation of (i) each Bank to make a Credit Loan to be made by it
under the Loan Agreement as amended hereby and (ii) the L/C Issuer to issue an
L/C under the Loan Agreement as amended hereby, shall in each case be subject to
the fulfillment (to the satisfaction of the Agent and the L/C Issuer, as
applicable) of (x) the conditions set forth in Section 4.1 and 4.2 to the Loan
Agreement, and (y) the following additional condition precedent:

                  5.1 UPDATED APPRAISAL. The Agent shall have conducted, at the
Borrowers' expense, an updated Appraisal of all Eligible Healthcare Assets
comprising the Initial Collateral and the Additional Collateral and the results
thereof shall be satisfactory to the Agent and the Banks.

         6.   REFERENCE TO AND EFFECT UPON THE LOAN AGREEMENT.

                  6.1 EFFECT. Except as specifically set forth herein, the Loan
Agreement and the other Loan Documents shall remain in full force and effect in
accordance with their terms and are hereby ratified and confirmed.

                  6.2 NO WAIVER; REFERENCES. The execution, delivery and
effectiveness of this Fourth Amendment shall not operate as a waiver of any
right, power or remedy of the Agent or any Bank under the Loan Agreement, nor
constitute a waiver of any provision of the Loan Agreement, except as
specifically set forth herein. Upon the effectiveness of this Fourth Amendment,
each reference in:

                       (i) the Loan Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of similar import shall mean and be a reference to
the Loan Agreement as amended hereby;

                       (ii) the other Loan Documents to the "Loan  Agreement"
shall mean and be a reference to the Loan Agreement as amended hereby; and

                       (iii) the Loan Documents to (ii) the Tranche A Notes
and/or the Tranche B Notes shall mean and be a reference to the Notes, (ii) the
terms "Tranche A Revolving Credit Commitment" and/or "Tranche B Revolving Credit
Commitment" shall mean and be a reference to the Revolving Credit Commitment as
defined in the Loan Agreement as amended hereby, and (iii) the "Loan Documents"
shall be deemed to include this Fourth Amendment.

         7.  MISCELLANEOUS.

                 7.1 EXPENSES. The Loan Parties agree to pay the Agent upon
demand for all reasonable expenses, including reasonable attorneys' fees and
expenses of the Agent, incurred by the Agent in connection with the preparation,
negotiation and execution of this Fourth Amendment.

                 7.2. LAW. THIS FOURTH AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.

                                       42
<PAGE>

                 7.3 SUCCESSORS. This Fourth Amendment shall be binding upon the
Loan Parties, the Banks and the Agent and their respective successors and
assigns, and shall inure to the benefit of the Loan Parties, the Banks and the
Agent and the successors and assigns of the Banks and the Agent.

                 7.4 EXECUTION IN COUNTERPARTS. This Fourth Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute one
and the same instrument.

                           [Signature Page to Follow]

                                       43
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Fourth
Amendment to be executed and delivered by their respective officers thereunto
duly authorized as of the date first written above.

                                OMEGA HEALTHCARE
                                 INVESTORS, INC.
                                DELTA INVESTORS I, LLC
                                DELTA INVESTORS II, LLC
                                JEFFERSON CLARK, INC.
                                NRS VENTURES, L.L.C.
                                OHI (CLEMMONS), INC.
                                OHI (FLORIDA), INC.
                                OHI (GREENSBORO), INC.
                                OHI (ILLINOIS), INC.
                                OHI (IOWA), INC.
                                OHI (KANSAS), INC.
                                OHI OF TEXAS, INC.
                                OMEGA (KANSAS), INC.
                                OS LEASING COMPANY
                                STERLING ACQUISITION CORP.
                                STERLING ACQUISITION CORP. II

                                BY______________________________________

         __________________, as an executive officer of all of the
aforementioned entities, has executed this Fourth Amendment to Loan Agreement
and intending that all entities above named are bound and are to be bound by the
one signature as if [s]he had executed this Fourth Amendment to Loan Agreement
separately for each of the above named entities.

           Signature Page to Fourth Amendment to Loan Agreement among
       Omega Healthcare Investors, Inc., and certain of its Subsidiaries,
           the Banks party thereto, and Fleet National Bank, as Agent

                                       44
<PAGE>

REVOLVING CREDIT COMMITMENT:      FLEET NATIONAL BANK, AS AGENT
                                  AND AS A BANK
$26,000,000

                                  By:_________________________________

                                     Name:____________________________
                                     Title:___________________________

           Signature Page to Fourth Amendment to Loan Agreement among
       Omega Healthcare Investors, Inc., and certain of its Subsidiaries,
           the Banks party thereto, and Fleet National Bank, as Agent

<PAGE>

REVOLVING CREDIT COMMITMENT:          DRESDNER BANK AG, NEW YORK BRANCH
                                      AND GRAND CAYMAN BRANCH

$18,000,000

                                      By:___________________________________
                                            Name:___________________________
                                            Title:__________________________

                                      By:___________________________________
                                            Name:___________________________
                                            Title:__________________________

           Signature Page to Fourth Amendment to Loan Agreement among
       Omega Healthcare Investors, Inc., and certain of its Subsidiaries,
           the Banks party thereto, and Fleet National Bank, as Agent

<PAGE>

REVOLVING CREDIT COMMITMENT:             HARRIS TRUST AND SAVINGS BANK

$18,000,000

                                         By:________________________________
                                            Name:___________________________
                                            Title:__________________________

           Signature Page to Fourth Amendment to Loan Agreement among
       Omega Healthcare Investors, Inc., and certain of its Subsidiaries,
           the Banks party thereto, and Fleet National Bank, as Agent

<PAGE>

REVOLVING CREDIT COMMITMENT:            BANK ONE, MICHIGAN

$34,000,000

                                        By:_________________________________
                                            Name:___________________________
                                            Title:__________________________

           Signature Page to Fourth Amendment to Loan Agreement among
       Omega Healthcare Investors, Inc., and certain of its Subsidiaries,
           the Banks party thereto, and Fleet National Bank, as Agent

<PAGE>

REVOLVING CREDIT COMMITMENT:            FOOTHILL INCOME TRUST, L.P.
                                        BY FIT-GP, LLC
$16,000,000

                                        By:________________________________
                                           Name:___________________________
                                           Title:  Managing Member

           Signature Page to Fourth Amendment to Loan Agreement among
       Omega Healthcare Investors, Inc., and certain of its Subsidiaries,
           the Banks party thereto, and Fleet National Bank, as Agent

<PAGE>

REVOLVING CREDIT COMMITMENT:            LASALLE BANK NATIONAL ASSOCIATION

$24,000,000

                                        By:________________________________
                                           Name:___________________________
                                           Title:__________________________

           Signature Page to Fourth Amendment to Loan Agreement among
       Omega Healthcare Investors, Inc., and certain of its Subsidiaries,
           the Banks party thereto, and Fleet National Bank, as Agent

<PAGE>

REVOLVING CREDIT COMMITMENT:         PB CAPITAL CORPORATION (SUCCESSOR IN
                                     INTEREST TO BHF (USA) CAPITAL CORPORATION)
$14,400,000

                                     By:_____________________________________
                                        Name:________________________________
                                        Title:_______________________________

                                     By:_____________________________________
                                        Name:________________________________
                                        Title:_______________________________

           Signature Page to Fourth Amendment to Loan Agreement among
       Omega Healthcare Investors, Inc., and certain of its Subsidiaries,
           the Banks party thereto, and Fleet National Bank, as Agent

<PAGE>

REVOLVING CREDIT COMMITMENT:         KBC N.V.

$9,600,000

                                     By:_____________________________________
                                        Name:________________________________
                                        Title:_______________________________

                                     By:_____________________________________
                                        Name:________________________________
                                        Title:_______________________________

           Signature Page to Fourth Amendment to Loan Agreement among
       Omega Healthcare Investors, Inc., and certain of its Subsidiaries,
           the Banks party thereto, and Fleet National Bank, as Agent

<PAGE>

                                    EXHIBIT A
                      TO AMENDMENT NO. 4 TO LOAN AGREEMENT
                                  BY AND AMONG
                        OMEGA HEALTHCARE INVESTORS, INC.
                        AND CERTAIN OF ITS SUBSIDIARIES,
                           THE BANKS SIGNATORY HERETO
                                       AND
                          FLEET NATIONAL BANK, AS AGENT

                                  FORM OF NOTE

$____________                                              DATED: _______, 2002

         FOR VALUE RECEIVED, each of the undersigned corporations (collectively,
the "BORROWERS"), hereby jointly and severally promises to pay to the order of
______________________ (the "BANK") on the Revolving Credit Commitment
Termination Date (as defined in the Agreement referred to below), the principal
sum of _____________________ Dollars ($___________), or such lesser amount as
shall be equal to the aggregate unpaid principal amount of the Credit Loans (as
defined in the Agreement) outstanding on the close of business on the Revolving
Credit Commitment Termination Date made by the Bank to the Borrowers; together,
in each case, with interest on any and all principal amounts remaining unpaid
hereunder from time to time outstanding. Interest upon the unpaid principal
amount hereof shall accrue at the rates, shall be calculated in the manner and
shall be payable on the dates set forth in the Agreement. After maturity,
whether by acceleration or otherwise, accrued interest shall be payable upon
demand. Both principal and interest shall be payable in the applicable currency
determined in accordance with the Agreement to Fleet National Bank, as Agent
(the "AGENT") on behalf of the Bank, at its office determined in accordance with
the Agreement in immediately available funds. The Credit Loans made by the Bank
to the Borrowers pursuant to the Agreement and all payments on account of
principal hereof may be recorded by the Bank on Schedule A attached hereto which
is part of this Note or otherwise in accordance with its usual practices and
such notations shall be conclusively presumed to be accurate absent manifest
error; PROVIDED, HOWEVER, that the failure to so record shall not affect the
Borrowers' obligations under this Note.

         Anything herein to the contrary notwithstanding, the obligation of the
Borrowers to make payments of interest shall be subject to the limitation that
payments of interest shall not be required to be made to the Bank to the extent
that the Bank's receipt thereof would not be permissible under the law or laws
applicable to the Bank limiting rates of interest which may be charged or
collected by the Bank. Any such payments of interest which are not made as a
result of the limitation referred to in the preceding sentence shall be made by
the Borrowers to the Bank on the earliest interest payment date or dates on
which the receipt thereof would be permissible under the laws applicable to the
Bank limiting rates of interest which may be charged or collected by the Bank.

         This Note is a Note referred to in, and is entitled to the benefits of,
the Loan Agreement dated June 15, 2000 by and among the Borrowers, the Banks
signatory thereto (including the Bank) and the Agent (as amended by (i)
Amendment No. 1 to Loan Agreement dated August 15, 2000, (ii) Amendment No. 2 to
Loan Agreement dated November 20, 2000, (iii) Amendment No.

<PAGE>

3 to Loan Agreement dated January 30, 2001, and (iv) Amendment No. 4 to Loan
Agreement dated December 21, 2001, and, as it may hereafter be further amended,
modified or supplemented from time to time, the "AGREEMENT") and the other Loan
Documents.

         Capitalized terms used but not otherwise defined herein shall have the
respective meanings ascribed thereto in the Agreement. The Agreement, among
other things, contains provisions for acceleration of the maturity hereof upon
the happening of certain stated events and also for repayments on account of
principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.

         The Borrowers shall pay costs and expenses of collection, including,
without limitation, attorneys' fees and disbursements in the event that any
action, suit or proceeding is brought by the holder hereof to collect this Note.

         The Borrowers hereby waive presentment, demand, protest or notice of
any kind in connection with this Note.

         THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE OF
NEW YORK BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

                            OMEGA HEALTHCARE INVESTORS, INC.
                            DELTA INVESTORS I, LLC
                            DELTA INVESTORS II, LLC
                            JEFFERSON CLARK, INC.
                            NRS VENTURES, L.L.C.
                            OHI (CLEMMONS), INC.
                            OHI (FLORIDA), INC.
                            OHI (GREENSBORO), INC.
                            OHI (ILLINOIS), INC.
                            OHI (IOWA), INC.
                            OHI (KANSAS), INC.
                            OHI OF TEXAS, INC.
                            OMEGA (KANSAS), INC.
                            OS LEASING COMPANY
                            STERLING ACQUISITION CORP.
                            STERLING ACQUISITION CORP. II

                             BY_______________________________

         ______________________, as an executive officer of all of the
aforementioned entities, has executed this Note intending that all entities
above named are bound and are to be bound by the one signature as if he had
executed this Note separately for each of the above named entities.

                                       2
<PAGE>

                                                                      Schedule A

--------------------------------------------------------------------------------
                               PRINCIPAL PAYMENTS
--------------------------------------------------------------------------------

                Note dated _______, 2002 payable to the order of
                                     [BANK]

<TABLE>
<CAPTION>
------- ------------- ----------- -------------------- ------------------ ------------- -----------
                                   INTEREST  PERIOD
        PRINCIPAL                  (IF OTHER THAN A                          UNPAID
        AMOUNT OF       TYPE OF    PRIME RATE LOAN)     AMOUNT OF           PRINCIPAL    NOTATION
DATE    CREDIT LOAN      LOAN      AND INTEREST RATE    PRINCIPAL REPAID     BALANCE      MADE BY
------- ------------- ----------- -------------------- ------------------ ------------- -----------
<S>     <C>           <C>         <C>                  <C>                <C>           <C>
------- ------------- ----------- -------------------- ------------------ ------------- -----------

------- ------------- ----------- -------------------- ------------------ ------------- -----------

------- ------------- ----------- -------------------- ------------------ ------------- -----------
</TABLE>

<PAGE>

                                  SCHEDULE 3.2
                      TO AMENDMENT NO. 4 TO LOAN AGREEMENT
                                  BY AND AMONG
                        OMEGA HEALTHCARE INVESTORS, INC.
                        AND CERTAIN OF ITS SUBSIDIARIES,
                           THE BANKS SIGNATORY HERETO
                                       AND
                          FLEET NATIONAL BANK, AS AGENT

                    CHANGES TO REPRESENTATIONS AND WARRANTIES

         All matters disclosed in Omega Healthcare Investors, Inc. public
filings under the Securities and Exchange Act of 1934, 15 U.S.C. 78(a), et seq.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00033-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00033-of-00352.parquet"}]]