Document:

Exhibit 10.1
                                                                    ------------

                           The Hampstead Group, L.L.C.
                        2200 Ross Avenue, Suite 4200 West
                            Dallas, Texas 75201-6799

                                  June 1, 2001

Omega Healthcare Investors, Inc.
900 Victors Way, Suite 350
Ann Arbor, Michigan 48108

Ladies and Gentlemen:

     Reference is made to the Amended and Restated  Advisory  Agreement dated as
of  October 4, 2000 (as  amended,  the  "Agreement")  between  Omega  Healthcare
Investors,  Inc. (the "Company") and The Hampstead Group, L.L.C.  ("Hampstead").
Capitalized  terms used herein but not defined have the meanings  given to those
terms in the Agreement.

     By signing in the space provided below, Hampstead and the Company
agree, in accordance with Section 1 of the Agreement, as follows:

     A.  Past Services.

     The parties agree that Hampstead has previously provided services under the
Agreement ("Past Services"), including without limitation the following:

         1. Chief Financial Officer.   Richard FitzPatrick  has served full-time
in the capacity as Chief Financial Officer of the Company for the period July 1,
2000 through April 30, 2001.

         2. Chairman / Executive  Chairman.    Daniel   Decker  has  served   as
Chairman/Executive  Chairman  of the Company since July 16, 2000 and has devoted
substantially all his efforts during working hours to the Company's business.

         3. Executive  Search   and   Strategic  Matters.   Donald  McNamara has
assisted  the Company in  its search for a new Chief Executive Officer and other
senior management and with respect to various strategic matters.

         4. Company  Indebtedness.    Kurt  Read,  Steven  Sheetz  and/or  other
individuals  at  Hampstead  have advised and assisted the Company in its efforts
(i) to refinance, repay or extend the respective maturity dates of the Company's
indebtedness that may be incurred pursuant to (A)  the Loan Agreement, dated  as
of August 16, 2000,  by and among the Company, Sterling Acquisition Corp., Delta
Investors I, LLC,  The Provident Bank,  as Agent,  and the various lenders named
therein, as amended (the "Provident Debt"),  (B) the Loan Agreement, dated as of
June 15, 2000,  by and among  the Company and certain  of its subsidiaries,  the
Banks  signatory  thereto  and  Fleet  Bank, N.A.,  as  Agent for such Banks, as
amended (the "Fleet Debt"),  (C) the Indenture,  dated  as  of  August 27, 1997,
between  the  Company  and  NBD Bank,  as Trustee, as amended  (the "2002 Public
Debt"), and (D) the Indenture, dated as of January 24, 1997, between the Company
and NBD Bank,  as Trustee,  as  amended  (together with the Provident Debt,  the
Fleet Debt and the 2002 Public Debt,  collectively, the "Company Indebtedness"),
and (ii) to manage the Company's capitalization and liquidity.

         5. Other Past Services.   Various other  individuals at  Hampstead have
devoted significant amounts of time with respect to financial, strategic growth,
asset disposition and other matters.

B.       Anticipated Services.

     The parties agree that Hampstead shall provide the following services under
the Agreement  through December 31, 2001  ("Anticipated  Services," and together
with the Past Services, the "Services"):

         1. Chief Financial Officer.     Hampstead  shall  make  Mr. FitzPatrick
available to  continue to serve as Chief Financial Officer of the Company at the
sole  cost and expense of  the Company in accordance with the terms set forth on
Annex A hereto.

         2. Chairman/Executive  Chairman.    Hampstead  shall  make  Mr.  Decker
available  to  continue  to  serve  as the Company's Executive Chairman and will
devote  substantially  all  of his efforts during working hours to the Company's
business  until  the  date  on  which  a Chief Executive Officer is hired by the
Company.  Thereafter,  Mr. Decker will remain Chairman of the Company's Board of
Directors  with  a significantly  reduced time commitment as is consistent for a
non-executive Chairman.

         3. Executive Search and Strategic Matters.  Hampstead shall make Donald
McNamara available  to  continue  to  assist the Company in its search for a new
Chief Executive Officer and other senior management.

         4. Company Indebtedness. Hampstead shall make Kurt Read, Steven Scheetz
and/or other individuals designated by Hampstead available to continue to advise
and  assist  the  Company  in  its efforts (i) to refinance, repay or extend the
respective  maturity dates of the Company's Indebtedness, and (ii) to manage the
Company's capitalization and liquidity.

         5. Other Anticipated Services.   Hampstead shall make William Cavanaugh
available  to  continue to assist  the  Company  in  resolving  its  "re-leasing
program"  and  "transition liability" issues.  Mr. Cavanaugh and Michael Wallace
(or another analyst designated by Hampstead) may, if the Company so requests and
Hampstead so agrees, assist the Company on other specified matters.

         6. Substitution of Personnel.  In the event that any of the individuals
above are not available to Hampstead and  therefore  cannot be made available to
the Company,  Hampstead  will  use  its  commercially reasonable best efforts to
provide substitute personnel with similar expertise and training to the Company.

     C.  Agreement As To Compensation.

     By signing in the space provided below, Hampstead and the Company agree, in
accordance with Sections 2 and 3 of the Agreement, as follows:

         1. Reimbursement of Out-of-Pocket Expenses. The Company will promptly
reimburse Hampstead an amount in cash equal to $221,033 in respect of
Out-of-Pocket Expenses incurred prior to January 1, 2001. The Company further
agrees to promptly reimburse Hampstead for all Out-of-Pocket Expenses
(including, without limitation, reasonable attorneys' fees and expenses)
incurred by Hampstead under the Agreement or this letter agreement in accordance
with Section 3 of the Agreement.

         2. Reimbursement of Services of Chief Financial Officer. In addition to
any  Y2000/2001  Advisory Fee (as defined below), Fees that may be payable under
the Agreement or reimbursements payable  pursuant  to  Section 1  of this letter
agreement  (but without duplication),  the Company  will  reimburse Hampstead an
amount in cash  equal  to  $295,833  in  respect  of  services  provided  by Mr.
FitzPatrick  to  the  Company  prior  to  May 1, 2001.   As  of May 1, 2001, Mr.
FitzPatrick became an employee of the Company in accordance with the terms set
forth in Annex A hereto. Hampstead will continue to provide health insurance and
other  benefits  to  Mr. FitzPatrick as described on Annex A hereto. Hampstead's
costs in providing such benefits will be deemed to be Out-of-Pocket Expenses for
purposes of Section 3 of the Agreement.

         3. Financial Advisory Fee.  (a)  Section 2 of the Agreement will become
Section 2(a).   The  following  will  be  added  to  the end of Section 2 of the
Agreement:

               "; provided,  however,  that, in  consideration  for the Services
               provided or to be provided by the Advisor under this Agreement as
               defined in that certain letter agreement  between the Company and
               the Advisor  dated as of June 1, 2001 (the  "Letter  Agreement"),
               the Company will pay to the Advisor the  advisory  fees set forth
               in  paragraph  (b) of this  Section 2 (the  "Y2000/2001  Advisory
               Fee").

                    (b) With respect to any Company  Indebtedness (as defined in
               the Letter  Agreement)  that, on or before December 31, 2002, (i)
               is refinanced,  whether such  refinancing is provided by the same
               lender as the original indebtedness or otherwise, with a maturity
               date at least 12 months after the  maturity  date of such Company
               Indebtedness  in  effect  on the  date  hereof,  (ii) is  repaid,
               whether such  repayments  are made from the Company's cash flows,
               assets sales or otherwise, or (iii) the maturity date is extended
               to a date that is at least 12 months after the  maturity  date of
               such Company  Indebtedness in effect on the date hereof (any such
               Company  Indebtedness so refinanced,  repaid or the maturity date
               so extended, "Refinanced Debt"), the Company will pay the Advisor
               a fee equal to 1% of the aggregate amount of Refinanced Debt. For
               the avoidance of doubt,  Refinanced Debt will include the maximum
               amount of Company  Indebtedness  that could have been outstanding
               had all  amounts  available  thereunder  been fully drawn and not
               subsequently  repaid  (regardless  of whether  the full amount of
               such Company  Indebtedness is then  outstanding at the time it is
               refinanced,  repaid or extended). In no event will the Y2000/2001
               Advisory Fee payable under this Section 2 exceed $3.1 million.

                    (c) Payment of any  Y2000/2001  Advisory Fee will be made by
               the Company to the Advisor  within five  business  days after the
               date on which any Company  Indebtedness  becomes Refinanced Debt,
               provided, however, that:

                         (i)  unless the  entire  balance  of the $10.0  million
                    Revolving  Loan B under the Provident Debt maturing on March
                    31, 2002 has been refinanced, repaid or extended, the amount
                    of  the  Y2000/2001   Advisory  Fee  relating  to  any  such
                    Refinanced Debt will not be paid until March 31, 2002;

                         (ii) unless the entire balance of the $125.0 million in
                    2002  Public  Debt  maturing  on  June  15,  2002  has  been
                    refinanced, repaid or extended, the amount of the Y2000/2001
                    Advisory Fee relating to any such  Refinanced  Debt will not
                    be paid until June 15, 2002;

                         (iii)  unless  the  entire  balance  of the Fleet  Debt
                    maturing on December 31, 2002 has been refinanced, repaid or
                    extended, the amount of the Y2000/2001 Advisory Fee relating
                    to any such  Refinanced Debt will not be paid until December
                    31, 2002; and

                         (iv) no  portion  of the  Advisory  Fee will be payable
                    prior to December 31, 2001 in any event.

                    (d)  Notwithstanding  the  foregoing,  nothing  herein  will
               prevent the Company from engaging one or more investment bankers,
               mortgage  bankers or other  third  party  advisors to assist with
               refinancing,  repayment  and/or the  extension of the maturity of
               any Company  Indebtedness;  provided,  however,  that in no event
               will any such  engagement  reduce the  Y2000/2001  Advisory  Fees
               payable hereunder to the Advisor."

         4. Term.   The  phrase "July 1, 2001" in Section 6(ii) of the Agreement
is hereby deleted and replaced with "December 31, 2001."

         5. Limitation  on  Fees  and  Services.   Except as described herein or
otherwise  subsequently  agreed,  (i) the  Company  will  have  no obligation to
reimburse Hampstead for Mr. Decker's  past services,  any other past services or
any Anticipated Services through December 31, 2001 (except for compensation paid
or payable to Hampstead personnel in their capacity as directors of the Company)
and (ii) Hampstead will have no obligation to provide services to the Company.

     The  parties  acknowledge  that  the  compensation   payable  to  Hampstead
hereunder is based on the Past Services, the Anticipated Services to be provided
hereunder  and the  parties'  current  assessment  of the time to be spent until
December  31,  2001  to  achieve  the  parties'  objectives.  The  parties  also
acknowledge  that, in the event that other challenges or opportunities  develop,
the  parties'  estimates  of  future  services  required  could be  dramatically
understated and the achievement of these  objectives may require services beyond
December 31, 2001.  In either case,  each of Hampstead  and the Company agree to
negotiate  in  good  faith  to  increase  Hampstead's   compensation  to  fairly
compensate Hampstead for such expanded services.

     Each of the Company and  Hampstead  represent and warrant to the other that
(i) it has the requisite  power and authority to execute and deliver this letter
agreement,  (ii) the  execution  and delivery of this letter  agreement has been
duly  authorized  by all necessary  corporate or limited  liability  action,  as
applicable,  and (iii) this letter  agreement has been duly and validly executed
and  delivered  by  it  and  constitutes  its  valid  and  binding   obligation,
enforceable against it in accordance with the terms hereof.

     This letter  agreement will be governed by and construed in accordance with
the laws of the  State of  Delaware,  without  regard  to its  conflict  of laws
principles,  and may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.  This letter  agreement may be executed by
the parties hereto in separate counterparts,  each of which when so executed and
delivered  will  be  an  original,  but  all  such  counterparts  will  together
constitute  one and the same  instrument.  A facsimile  copy of a signature page
will be deemed to be an original signature page.

     The provisions  hereof will be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns but are otherwise not
intended to confer upon any person  other than the parties  hereto any rights or
remedies. Except as otherwise expressly amended hereby, the terms and provisions
of the Agreement will remain in full force and effect.

                  [Remainder of page intentionally left blank]

<PAGE>

         By signing below, each of the parties agrees to be bound hereby.

                                              THE HAMPSTEAD GROUP, L.L.C.

                                              By:  /s/ WILLIAM T. CAVANAUGH
                                                   --------------------------
                                                       William T. Cavanaugh, Jr.
                                                       Vice President

Agreed and accepted as of the date first written above, which agreement has been
approved by a majority of the Company's independent directors.

OMEGA HEALTHCARE
INVESTORS, INC.

By:  /s/ THOMAS W. ERICKSON
     ------------------------
         Thomas W. Erickson
         Chief Executive OfficerExhibit 10.2
                                                                    ------------

                              EMPLOYMENT AGREEMENT
                              --------------------

     THIS  AGREEMENT  (the  "Agreement")  to be  effective as of the 12th day of
June, 2001 (the "Effective Date"), between Omega Healthcare Investors, Inc. (the
"Company"), and C. Taylor Pickett (the "Executive").

                                  INTRODUCTION
                                  ------------

     The  Company  and the  Executive  now desire to enter  into this  Agreement
confirming the terms of the Executive's employment.

     NOW, THEREFORE, the parties agree as follows:

1.   Terms and Conditions of Employment.
     -----------------------------------

     (a) Employment. During the Term, Company will employ the Executive, and the
Executive  will  serve  as the  Chief  Executive  Officer  of the  Company  on a
full-time  basis and will have such  responsibilities  and authority as may from
time to time be  assigned  to the  Executive  by the Board of  Directors  of the
Company. The Executive will report to the Board of Directors of the Company. The
Executive  will  also be  permitted  to  attend  all  meetings  of the  Board of
Directors and  executive  sessions  thereof  (except for portions of meetings or
executive sessions involving discussions relating to the Executive's employment,
including  without  limitation,  his compensation and performance  ("Executive's
Employment  Issues")) and shall be provided copies of all materials  provided to
the Board of Directors (except those relating to Executive's Employment Issues).
The Board of  Directors  will use its  commercially  reasonable  best efforts to
cause the  shareholders  of the Company to approve  amendments  to the Company's
Articles of Incorporation and Bylaws to increase the maximum number of directors
of the  Company;  provided,  however,  that nothing  herein  shall  obligate the
Company to call a special meeting of stockholders to accomplish such amendments.
If the shareholders approve such amendments,  the Executive will be appointed to
serve as a member of the Board of Directors of the Company if he is then serving
as the  Chief  Executive  Officer,  and he  shall so  serve  without  additional
compensation  beyond that set forth in this Agreement,  and shall continue to so
serve for so long as he is thereafter  elected to such position by the Company's
stockholders.   The  Executive's   primary  office  will  be  at  the  Company's
headquarters  in such  geographic  location  within the United  States as may be
determined by the Company.

     (b)  Exclusivity.  Throughout the  Executive's  employment  hereunder,  the
Executive shall devote  substantially  all of the Executive's  time,  energy and
skill during  regular  business  hours to the  performance  of the duties of the
Executive's employment,  shall faithfully and industriously perform such duties,
and shall diligently follow and implement all management  policies and decisions
of the  Company;  provided,  however,  that this  provision  is not  intended to
prevent the  Executive  from managing his  investments,  so long as he gives his
duties to the Company  first  priority  and such  investment  activities  do not
interfere with his  performance of duties for the Company.  Notwithstanding  the
foregoing,  other than with regard to the Executive's duties to the Company, the
Executive  will not accept any other  employment  during the Term,  perform  any
consulting  services  during  the Term,  or serve on the board of  directors  or
governing body of any other  business,  except with the prior written consent of
the Board of  Directors.  Further,  the  Executive  has  disclosed  on Exhibit A
hereto,  all of his healthcare related  investments,  and agrees during the Term
not to make any investments during the term hereof except as a passive investor.

2.       Compensation.
         -------------

     (a) Base Salary. Beginning on the date of this Agreement, the Company shall
pay the Executive  base salary of $450,000 per annum,  which base salary will be
subject  to review  effective  as of  January  1,  2003,  and at least  annually
thereafter,  by the Company for  possible  increases.  The base salary  shall be
payable in equal installments, no less frequently than bi-monthly, in accordance
with the Company's regular payroll practices.

     (b) Bonus.  The  Executive  shall be eligible  for an annual bonus of up to
100% of the Executive's annual base salary ("Bonus"), which Bonus, if any, shall
be payable as soon as feasible following the year the Bonus is earned. The Bonus
criteria shall be determined in the discretion of the Compensation  Committee of
the Board of  Directors  of the  Company  and shall  consist of such  objective,
subjective and personal  performance  goals as the Compensation  Committee shall
determine  appropriate.  The Bonus for the year ending December 31, 2001, may be
prorated by the Compensation  Committee for the partial year the Executive works
in 2001.  The Bonus for any  calendar  year will be earned and  accrued for that
year only if the Executive  remains employed by the Company through the last day
of the year.

     (c) Stock  Option.  As of the Effective  Date,  the Company shall grant the
Executive  stock options to purchase  800,000  shares of the common stock of the
Company at an exercise  price per share equal to the  weighted  average  trading
price of the Company's common stock as of the trading day immediately  preceding
the Effective Date. A portion of the options will be designated as an "incentive
stock option"  (within the meaning of Section 422 of the Internal  Revenue Code)
as of the date of grant as to the  maximum  number  of  shares  permitted  under
Section 422(d) of the Internal Revenue Code, based on the assumption, solely for
purposes of determining such maximum number, that the Executive remains employed
with the  Company  for four years  from the date of grant and vests  accordingly
pursuant to the vesting schedule set forth in the form of incentive stock option
agreement  attached  hereto as an Exhibit.  The balance will be  designated as a
nonqualified  stock option as of the date of grant.  [Assuming an exercise price
of $2.10 per share (approximate current trading price) and continuous employment
through the ISO Vesting Schedule (defined below),  under those assumptions,  the
portion of the options  designated as incentive  stock options as of the date of
grant would be for 190,478 shares (i.e. 47,619 shares (or $100,000/$2.10)  first
vesting and exercisable in each of 2002, 2003, 2004, and 2005.) The "ISO Vesting
Schedule  shall mean (1) the portion of the option for a number of shares  equal
to $100,000  divided by the  exercise  price per share  vesting on December  31,
2002,  (2) the  portion of the option for 50% of the shares  minus the number of
shares in clause (1),  vesting after 2 years,  and (3) the portion of the option
for 25% of the shares vesting ratably each month in 2004, and (4) the portion of
the option for the remaining 25% of the shares  vesting  ratably each month over
the first six months in 2005.] Such stock  options shall be subject to the terms
of the stock option award agreements (attached hereto as Exhibits) and the terms
of the applicable stock option plan maintained by the Company.

     (d) Restricted Stock. As of the Effective Date, the Company shall grant the
Executive  a  restricted  stock award for 50,000  shares of common  stock of the
Company,  subject to the terms of the restricted stock award agreement (attached
hereto as an  Exhibit)  and the terms of the  applicable  stock  incentive  plan
maintained by the Company.

     (e)  Expenses.  The  Executive  shall  be  entitled  to  be  reimbursed  in
accordance with Company policy for reasonable and necessary expenses incurred by
the Executive in connection with the  performance of the  Executive's  duties of
employment hereunder;  provided, however, the Executive shall, as a condition of
such  reimbursement,  submit  verification  of the  nature  and  amount  of such
expenses in accordance with the reasonable  reimbursement  policies from time to
time adopted by the  Company.  Until June 12,  2002,  or the date the  Executive
relocates his primary  residence from the Baltimore,  Maryland area, if earlier,
the Company will  reimburse  the Executive for his  reasonable  travel  expenses
between the Baltimore area and the Company's  headquarters,  and the Executive's
reasonable   lodging  and  living   expenses  in  the  area  of  the   Company's
headquarters.

     (f)  Vacation.  The  Executive  shall be entitled to vacation in accordance
with the terms of Company policy.

     (g)  Benefits.  In  addition  to the  benefits  payable  to  the  Executive
specifically  described herein, the Executive shall be entitled to such benefits
as generally may be made  available to all other  Executives of the Company from
time to time; provided, however, that nothing contained herein shall require the
establishment or continuation of any particular plan or program.

     (h) Withholding.  All payments  pursuant to this Agreement shall be reduced
for any applicable state, local, or federal tax withholding obligations.

3.   Term, Termination and Termination Payments.
     -------------------------------------------

     (a) Term. The term of this Agreement  shall begin as of the Effective Date.
It shall  continue  through the fourth  anniversary  of the Effective  Date (the
"Term").

     (b) Termination.  This Agreement and the employment of the Executive by the
Company hereunder may only be terminated: (i) by expiration of the Term; (ii) by
mutual agreement of the parties; (ii) by the Company without Cause; (iii) by the
Executive  for Good  Reason;  (iv) by the  Company or the  Executive  due to the
Disability  of the  Executive;  (v) by the  Company  for  Cause;  or (vi) by the
Executive for any reason in his sole  discretion,  upon at least sixty (60) days
prior  written  notice to the  Company.  This  Agreement  shall  also  terminate
immediately upon the death of the Executive.  Notice of termination by any party
shall be given prior to  termination  in writing and shall specify the basis for
termination  and the effective date of  termination.  Notice of termination  for
Cause by the Company or Good Reason by the Executive shall specify the basis for
termination for Cause or Good Reason, as applicable.  The Executive shall not be
entitled to any payments or benefits after the effective date of the termination
of this Agreement, except for base salary pursuant to Section 2(a) accrued up to
the effective date of termination,  any unpaid earned and accrued Bonus, if any,
pursuant  to  Section  2(b),  as  provided  under the terms of the stock  option
agreements  and  restricted  stock  agreements  referred to in Section  2(c) and
Section 2(d),  respectively,  and expenses required to be reimbursed pursuant to
Section  2(e).  The  expiration  of the Term  shall  not be  deemed to result in
termination  without Cause by the Company or termination  for Good Reason by the
Executive.

     (c)  Termination by the Company  without Cause or by the Executive for Good
Reason.  In the event the  employment  of the  Executive  is  terminated  by the
Company  without  Cause or by the  Executive  for Good Reason,  the Company will
continue to pay the Executive the sum of (i) his base salary pursuant to Section
2(a) hereof for a period of the shorter of twelve  months  following the date of
termination or the then  remaining  Term, in either case on the same schedule as
if the Executive  had continued to perform  services for such period and (ii) an
amount equal to the Bonus actually paid to Executive during the prior year, paid
in twelve monthly equal  installments.  In the event a termination  occurs under
this Section 3(c) prior to the  calculation of the  Executive's  Bonus for 2001,
then a deemed Bonus equal to $225,000  will be used  strictly for the purpose of
calculating the severance  payment  hereunder.  As a condition to the payment of
any severance pay hereunder,  the Executive shall be required to execute and not
revoke within the revocation period provided therein, the Release.

     (d)  Survival.  The  covenants in Sections 4, 5, and 6 hereof shall survive
the termination of this Agreement and shall not be extinguished thereby.

4.   Ownership and Protection of Proprietary Information.
     ----------------------------------------------------

     (a) Confidentiality. All Confidential Information and Trade Secrets and all
physical  embodiments  thereof  received or  developed  by the  Executive  while
employed by the Company are confidential to and are and will remain the sole and
exclusive property of the Company. Except to the extent necessary to perform the
duties  assigned  by  the  Company  hereunder,  the  Executive  will  hold  such
Confidential  Information  and Trade Secrets in trust and strictest  confidence,
and will not use, reproduce,  distribute,  disclose or otherwise disseminate the
Confidential  Information and Trade Secrets or any physical  embodiments thereof
and may in no event take any action causing or fail to take the action necessary
in order to prevent, any Confidential Information and Trade Secrets disclosed to
or  developed  by the  Executive  to lose its  character  or cease to qualify as
Confidential Information or Trade Secrets.

     (b) Return of Company  Property.  Upon request by the  Company,  and in any
event upon termination of this Agreement for any reason, as a prior condition to
receiving any final compensation  hereunder  (including any payments pursuant to
Section 3 hereof),  the  Executive  will  promptly  deliver to the  Company  all
property  belonging  to  the  Company,   including,   without  limitation,   all
Confidential Information and Trade Secrets (and all embodiments thereof) then in
the Executive's custody, control or possession.

     (c) Survival.  The covenants of confidentiality set forth herein will apply
on and after the date hereof to any  Confidential  Information and Trade Secrets
disclosed  by the Company or developed  by the  Executive  prior to or after the
date hereof. The covenants restricting the use of Confidential  Information will
continue and be maintained by the Executive for a period of two years  following
the  termination of this Agreement.  The covenants  restricting the use of Trade
Secrets will continue and be maintained by the Executive  following  termination
of this Agreement for so long as permitted by the governing law.

5.   Non-Competition and Non-Solicitation Provisions.
     ------------------------------------------------

     (a) The Executive agrees that during the Applicable  Period,  the Executive
will not (except on behalf of or with the prior written  consent of the Company,
which  consent may be withheld in Company's  sole  discretion),  within the Area
either  directly or  indirectly,  on his own behalf,  or in the service of or on
behalf of  others,  engage  in or  provide  managerial  services  or  management
consulting services to, any Competing Business.  The Executive  acknowledges and
agrees that the Business of the Company is conducted in the Area.

     (b) The Executive  agrees that during the Applicable  Period,  he will not,
either  directly  or  indirectly,  on his own behalf or in the  service of or on
behalf of others solicit,  divert or appropriate,  or attempt to solicit, divert
or appropriate,  to a Competing  Business,  any individual or entity which is an
actual or, to his knowledge,  actively sought  prospective client or customer of
the Company or any of its  Affiliates  (determined  as of date of termination of
employment)  with whom he had material  contact while he was an Executive of the
Company.

     (c) The Executive  agrees that during the Applicable  Period,  he will not,
either  directly  or  indirectly,  on his own behalf or in the  service of or on
behalf of others,  solicit,  divert or hire,  or attempt to  solicit,  divert or
hire,  or  encourage  to go to work for  anyone  other  than the  Company or its
Affiliates, any person that is a management level or key employee of the Company
or an Affiliate.

     (d) The Executive  agrees that during the  Applicable  Period,  he will not
take any action  that is adverse to the  interests  of the Company or any of its
Affiliates  or make any  statement  (written or oral) that could  reasonably  be
perceived  as  disparaging  to the  Company  or any  person  or  entity  that he
reasonably should know is an Affiliate of the Company or any statement  (written
or oral) that is  damaging  to the  commercial  interests  of the Company or any
person or entity that he reasonably should know is an Affiliate of the Company.

     (e) In the event that this  Section 5 is  determined  by a court  which has
jurisdiction to be  unenforceable  in part or in whole, it shall be deemed to be
revised to the minimum extent  necessary to be enforceable to the maximum extent
permitted by law.

6.   Agreements with Former Employer or Business/Noninterference with Duties/No
     ---------------------------------------------------------------------------
     Litigation.
     -----------

     The Executive hereby represents, warrants, and covenants that he is not and
shall not be,  during the period of time which begins as of the  Effective  Date
and extends through the Term, subject to any employment or consulting  agreement
or other  document,  with another  employer or with any business as to which the
Executive's  employment by the Company and provision of services in the capacity
contemplated  herein  would  be  a  breach.  The  Executive  hereby  represents,
warrants, and covenants that he is not and shall not be subject to any agreement
which  prohibits the Executive  during the period of time which begins as of the
Effective  Date and  extends  through  the Term from any of the  following:  (i)
providing  services  for  the  Company  in the  capacity  contemplated  by  this
Agreement;  (ii) competing with, or in any way participating in a business which
includes  the  Company's  business;  (iii)  soliciting  personnel of such former
employer  or other  business to leave such former  employer's  employment  or to
leave such other business;  or (iv) soliciting customers of such former employer
or other business on behalf of another business.  Further,  the Executive is not
aware of the existence of any circumstances that could materially interfere with
his duties under this Agreement,  and the Executive represents and warrants that
there  is  no  pending  or  threatened   litigation  against  him  unrelated  to
Executive's  role as an officer at  Integrated  Health  Services,  Inc.  and its
subsidiaries.

7.   Remedies and Enforceability.
     ----------------------------

     The Executive agrees that the covenants,  agreements,  and  representations
contained  in Sections 4, 5, and 6 hereof are of the essence of this  Agreement;
that each of such covenants are reasonable and necessary to protect and preserve
the interests and properties of the Company;  that  irreparable  loss and damage
will  be  suffered  by the  Company  should  the  Executive  breach  any of such
covenants  and  agreements;  that  each  of such  covenants  and  agreements  is
separate,  distinct and severable not only from the other of such  covenants and
agreements but also from the other and remaining  provisions of this  Agreement;
that the unenforceability of any such covenant or agreement shall not affect the
validity or enforceability of any other such covenant or agreements or any other
provision  or  provisions  of this  Agreement;  and that,  in  addition to other
remedies  available to it,  including,  without  limitation,  termination of the
Executive's  employment  for cause,  the Company  shall be entitled to seek both
temporary and permanent  injunctions to prevent a breach or contemplated  breach
by the Executive of any of such covenants or agreements.

8.   Notice.
     -------

     All notices,  requests, demands and other communications required hereunder
shall be in writing and shall be deemed to have been duly given if  delivered or
if mailed,  by United States certified or registered mail,  prepaid to the party
to which the same is  directed  at the  following  addresses  (or at such  other
addresses as shall be given in writing by the parties to one another):

         If to the Company:                    Omega Healthcare Investors, Inc.
                                               900 Victors Way
                                               Suite 350
                                               Ann Arbor, MI  48108
                                               Attn:    Chairman

         If to the Executive:                  C. Taylor Pickett
                                               3509 Houcks Mill Road
                                               Monkton , MD 21111

Notices delivered in person shall be effective on the date of delivery. Notices
delivered by mail as aforesaid shall be effective upon the third calendar day
subsequent to the postmark date thereof.

9.   Miscellaneous.
     --------------

     (a)  Assignment.  The  rights and  obligations  of the  Company  under this
Agreement  shall inure to the benefit of the Company's  successors  and assigns.
This  Agreement  may be assigned by the  Company to any legal  successor  to the
Company's  business or to an entity that purchases all or  substantially  all of
the assets of the Company,  but not otherwise  without the prior written consent
of the Executive.  In the event the Company  assigns this Agreement as permitted
by this  Agreement  and the  Executive  remains  employed by the  assignee,  the
"Company" as defined  herein will refer to the assignee and the  Executive  will
not be deemed to have  terminated his employment  hereunder  until the Executive
terminates his employment  with the assignee.  The Executive may not assign this
Agreement.

     (b) Waiver.  The waiver of any breach of this  Agreement by any party shall
not be  effective  unless in writing,  and no such waiver shall  constitute  the
waiver of the same or another breach on a subsequent occasion.

     (c)  Governing  Law. This  Agreement  shall be governed by and construed in
accordance  with the internal  laws of the State of Michigan.  The parties agree
that any appropriate state or federal court located in Ann Arbor, Michigan shall
have jurisdiction of any case or controversy arising under or in connection with
this  Agreement and shall be a proper forum in which to adjudicate  such case or
controversy.   The  parties   consent  to  the   jurisdiction  of  such  courts.
Notwithstanding  the foregoing,  if requested by the Company, in connection with
any relocation of the Company's  headquarters  to another  state,  the Executive
will enter into an  amendment  to this  Agreement  to make it  governed  by such
state's laws and subject to the jurisdiction of the appropriate state or federal
courts located in such state.

     (d) Entire Agreement.  This Agreement  embodies the entire agreement of the
parties  hereto  relating to the subject  matter hereof and  supersedes all oral
agreements,  and to the extent  inconsistent  with the terms  hereof,  all other
written agreements.

     (e) Amendment. This Agreement may not be modified, amended, supplemented or
terminated except by a written instrument executed by the parties hereto.

     (f)  Severability.   Each  of  the  covenants  and  agreements  hereinabove
contained shall be deemed separate,  severable and independent covenants, and in
the event that any covenant shall be declared  invalid by any court of competent
jurisdiction,  such  invalidity  shall not in any  manner  affect or impair  the
validity or enforceability of any other part or provision of such covenant or of
any other covenant contained herein.

     (g)  Captions  and  Section  Headings.  Except as set forth in  Section  10
hereof,  captions and section  headings used herein are for convenience only and
are not a part of this Agreement and shall not be used in construing it.

10.  Definitions
     -----------

     (a)  "Affiliate"  means  any  person,   firm,   corporation,   partnership,
association  or entity  that,  directly  or  indirectly  or through  one or more
intermediaries,  controls,  is controlled by or is under common control with the
Company.

     (b) "Applicable  Period" means the period commencing as of the date of this
Agreement  and ending  twelve months after the  termination  of the  Executive's
employment with the Company or any of its Affiliates.

     (c) "Area" means Alabama, Arizona, Arkansas, California, Colorado, Florida,
Georgia,   Idaho,  Illinois,   Indiana,  Iowa,  Kansas,   Kentucky,   Louisiana,
Massachusetts,  Michigan, Missouri, Nevada, New Hampshire, North Carolina, Ohio,
Oklahoma,  Pennsylvania,  Tennessee, Texas, Utah, Washington, and West Virginia,
and such other states where the Company or its  subsidiaries  may  materially do
business during the Term.

     (d) "Business of the Company"  means any business with the primary  purpose
of leasing  assets to  healthcare  operators,  or  financing  the  ownership  or
operation  of,  senior  housing,  long-term  care  facilities,  assisted  living
facilities,  retirement  housing  facilities,  or other healthcare  related real
estate, and ancillary financing businesses relating to any of the foregoing.

     (e) "Cause" the occurrence of any of the following events:

          (i) willful  refusal by the Executive to follow a lawful  direction of
     the Board of  Directors  of the  Company,  provided  the  direction  is not
     materially   inconsistent  with  the  duties  or  responsibilities  of  the
     Executive's  position  as Chief  Executive  Officer of the  Company,  which
     refusal  continues  after  the  Board of  Directors  has  again  given  the
     direction;

          (ii) willful  misconduct or reckless disregard by the Executive of his
     duties or of the interest or property of the Company;

          (iii)  intentional  disclosure  by the  Executive  to an  unauthorized
     person of Confidential  Information or Trade Secrets, which causes material
     harm to the Company;

          (iv) any act by the  Executive  of fraud,  material  misappropriation,
     significant dishonesty, or act involving moral turpitude;

          (v) commission by the Executive of a felony; or

          (vi) a material  breach of this Agreement by the  Executive,  provided
     that  the  nature  of  such  breach  shall  be set  forth  with  reasonable
     particularity  in a written notice to the Executive who shall have ten (10)
     days  following  delivery  of such  notice  to cure  such  alleged  breach,
     provided that such breach is, in the reasonable  discretion of the Board of
     Directors, susceptible to a cure.

     (f)  "Competing  Business"  means  any  person,  firm,  corporation,  joint
venture, or other business that is engaged in the Business of the Company.

     (g) "Confidential  Information" means data and information  relating to the
Business of the Company or an Affiliate  (which does not rise to the status of a
Trade  Secret)  which is or has been  disclosed to the Executive or of which the
Executive  became aware as a consequence of or through his  relationship  to the
Company or an Affiliate  and which has value to the Company or an Affiliate  and
is not generally known to its competitors.  Confidential  Information  shall not
include  any data or  information  that has been  voluntarily  disclosed  to the
public by the Company or an Affiliate  (except where such public  disclosure has
been made by the Executive without authorization) or that has been independently
developed and disclosed by others,  or that  otherwise  enters the public domain
through lawful means without breach of any obligations of  confidentiality  owed
to the Company or any of its Affiliates.

     (h)  "Disability"  means the  inability  of the  Executive  to perform  the
material  duties of his position as Chief Executive  Officer  hereunder due to a
physical,  mental,  or emotional  impairment,  for a ninety (90) consecutive day
period or for  aggregate  of one  hundred  eighty  (180)  days  during any three
hundred sixty-five (365) day period.

     (i) "Good  Reason"  means the  occurrence  of all of the  events  listed in
either (i) or (ii) below:

          (i) (A) the Company  materially  breaches  this  Agreement,  including
     without   limitation,    a   material   diminution   of   the   Executive's
     responsibilities  as CEO as established in the sole discretion of the Board
     of  Directors of the Company  within the first 180 days of the  Executive's
     employment hereunder, as reasonably modified by the Board of Directors from
     time to time  thereafter,  such that the  Executive  would no  longer  have
     responsibilities  substantially  equivalent  to  those  of  other  CEO's at
     companies with similar revenues and market capitalization;

          (B) the Executive gives written notice to the Company of the facts and
     circumstances constituting the breach of the Agreement within ten (10) days
     following the occurrence of the breach;

          (C) the  Company  fails to  remedy  the  breach  within  ten (10) days
     following the Executive's written notice of the breach; and

          (D) the Executive  terminates his employment and this Agreement within
     ten (10) days following the Company's failure to remedy the breach.

          (ii)  (A) the  Company  relocates  the  Executive's  primary  place of
     employment  to a new  location  (other  than a  location  in the Ann Arbor,
     Michigan area, or the Baltimore,  Maryland  area),  that is more than fifty
     (50) miles from its current location, without the Executive's consent; and

          (B) the Executive  provides the Company with written  notice of intent
     to terminate employment for a reason specified by the Executive pursuant to
     Section 10(ii)(A) above at least thirty days prior to the effective date of
     termination of employment (such termination to occur only during the period
     of January 1 through  January 31 of the year following the calendar year in
     which the  relocation  occurred);  and the Executive does in fact terminate
     employment  during the  period of January 1 through  January 31 of the year
     following the calendar year in which the relocation occurred.

     (j)  "Release"  means a  comprehensive  release,  covenant  not to sue, and
non-disparagement  agreement  from the  Executive in favor of the  Company,  its
executives,  officers,  directors,  Affiliates, and all related parties, in such
form as the Company may provide to the Executive in its sole discretion.

     (k) "Term" has the meaning as set forth in Section 3(a) hereof.

     (l) "Trade  Secrets"  means  information  including,  but not  limited  to,
technical or nontechnical  data,  formulae,  patterns,  compilations,  programs,
devices, methods,  techniques,  drawings,  processes,  financial data, financial
plans,  product  plans or lists of actual or  potential  customers  or suppliers
which (i) derives economic value, actual or potential,  from not being generally
known to, and not being readily  ascertainable by proper means by, other persons
who can  obtain  economic  value  from its  disclosure  or use,  and (ii) is the
subject of efforts that are reasonable  under the  circumstances to maintain its
secrecy.

                         [SIGNATURES ON FOLLOWING PAGE]

<PAGE>

         IN WITNESS WHEREOF, the Company and the Executive have each executed
and delivered this Agreement as of the date first shown above.

                                               COMPANY:

                                               OMEGA HEALTHCARE INVESTORS, INC.

                                               By:  /s/ Daniel Decker
                                                  ------------------------------
                                                   Daniel Decker, Chairman

                                               THE EXECUTIVE:

                                                    /s/ C. Taylor Pickett
                                                   -----------------------------
                                                   C. Taylor Pickett

<PAGE>

                                    EXHIBIT A

Investment                                                 Ownership
----------                                                 ---------

Chance Murphy, Inc.                                          49.5%

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