Document:

REGISTRATION RIGHTS AGREEMENT

     REGISTRATION  RIGHTS  AGREEMENT  (this  "Agreement"),  dated as of July 14,
2000,   between  Explorer  Holdings,   L.P.,  a  Delaware  limited   partnership
("Stockholder"),  and Omega Healthcare  Investors,  Inc., a Maryland corporation
(the "Company").

                                    RECITALS

                  The parties  hereto have entered into other  agreements  which
contemplate, among other things, the execution and delivery of this Agreement by
the parties hereto.

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

     1.  Definitions.  For purposes of this Agreement,  the following terms have
the following meanings when used herein with initial capital letters:

     (a) Advice: As defined in Section 6 hereof.

     (b) Common  Stock:  The Common  Stock,  par value  $0.10 per share,  of the
Company.

     (c) Demand Notice: As defined in Section 3 hereof.

     (d) Demand Registration: As defined in Section 3 hereof.

     (e) Investment Agreement: The Investment Agreement dated as of May 11, 2000
by and between the Company and Stockholder.

     (f) Losses: As defined in Section 8 hereof.

     (g) Piggyback Registration: As defined in Section 4 hereof.

     (h)  Prospectus:  The  prospectus  included in any  Registration  Statement
(including,   without  limitation,   a  prospectus  that  discloses  information
previously omitted from a prospectus filed as part of an effective  registration
statement in reliance upon Rule 430A  promulgated  under the Securities Act), as
amended or supplemented by any prospectus supplement,  with respect to the terms
of the  offering of any portion of the  Registrable  Securities  covered by such
Registration   Statement  and  all  other  amendments  and  supplements  to  the
Prospectus,  including post-effective  amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.

     (i)  Registrable  Securities:  All shares of Series C Preferred  and Common
Stock  acquired  by  Stockholder  or  any  of its  Affiliates  or any  permitted
transferee or their respective  assigns of any such Person (including all shares
of Common Stock issued upon conversion of any shares of Series C Preferred,  any
shares of Series C Preferred  or Common  Stock or other  securities  that may be
received by Stockholder or any permitted  transferee or their respective assigns
(x) as a result of a stock  dividend  or stock  split of Series C  Preferred  or
Common  Stock or (y) on  account  of Series C  Preferred  or  Common  Stock in a
recapitalization or other transaction involving the Company) upon the respective
original issuance thereof,  and at all times subsequent  thereto,  and all other
securities of the Company of any class or series that are beneficially  owned by
Stockholder or any of its  Affiliates,  until, in the case of any such security,
(i) it is  effectively  registered  under the  Securities Act and disposed of in
accordance with the Registration  Statement  covering it, (ii) it is saleable by
the holder  thereof  pursuant  to Rule  144(k)  without  any  volume  limitation
applicable  thereto,  or (iii) it is distributed to the public  pursuant to Rule
144.

     (j) Registration Expenses: As defined in Section 7 hereof.

     (k) Registration Statement: Any registration statement of the Company under
the Securities Act that covers any of the Registrable Securities pursuant to the
provisions of this Agreement,  including the related Prospectus,  all amendments
and  supplements  to  such  registration  statement  (including   post-effective
amendments),  all exhibits and all material  incorporated by reference or deemed
to be incorporated by reference in such registration statement.

     (l) Rule  144:  Rule 144  under  the  Securities  Act,  as such Rule may be
amended from time to time, or any similar rule or regulation  hereafter  adopted
by the SEC.

     (m) SEC: The Securities and Exchange Commission.

     (n) Securities Act: The Securities Act of 1933, as amended.

     (o) Series C Preferred: Shares of Series C Preferred Stock, par value $1.00
per share, of the Company.

     (p)  Underwritten  registration or underwritten  offering:  A distribution,
registered pursuant to the Securities Act in which securities of the Company are
sold to an underwriter for reoffering to the public.

     2. Holders of  Registrable  Securities.  Whenever a number or percentage of
Registrable  Securities is to be  determined  hereunder,  each  then-outstanding
other equity  security that is  exercisable  to purchase,  convertible  into, or
exchangeable  for  shares of Common  Stock of the  Company  will be deemed to be
equal to the  number  of shares of Common  Stock  for which  such  other  equity
security  (or the  security  into  which  such  other  equity  security  is then
convertible) is then so purchasable, convertible, exchangeable or exercisable.

     3. Demand Registration. (a) Requests for Registration. At any time and from
time to time after the first  anniversary  of the Closing  Date,  the holders of
Registrable  Securities  constituting  at  least  25% of  the  total  number  of
Registrable  Securities then  outstanding  will have the right by written notice
delivered to the Company (a "Demand Notice"), to require the Company to register
(a "Demand  Registration")  under and in accordance  with the  provisions of the
Securities  Act a number of  Registrable  Securities  that would  reasonably  be
expected to result in aggregate  gross  proceeds  from such offering of not less
than $10  million  ($5  million in the case of any Demand  Registration  that is
requested to be effected as a "shelf" registration);  provided, however, that no
Demand Notice may be given prior to six months after the  effective  date of the
immediately preceding Demand Registration or any Piggyback Registration of which
the Company has  notified  the Holder in  accordance  with  Section 4(a) and for
which the number of  Registrable  Securities  requested to be  registered by the
Holder has not been reduced pursuant to Section 4(b).

     The number of Demand Registrations  pursuant to this Section 3(a) shall not
exceed  five;  provided,  however,  that in  determining  the  number  of Demand
Registrations to which the holders of Registrable  Securities are entitled there
shall  be  excluded  (1)  any  Demand   Registration  that  is  an  underwritten
registration  if the  managing  underwriter  or  underwriters  have  advised the
holders  of  Registrable   Securities  that  the  total  number  of  Registrable
Securities  requested to be included  therein  exceeds the number of Registrable
Securities  that can be sold in such offering in accordance  with the provisions
of this Agreement without materially and adversely affecting the success of such
offering,  (2) any Demand  Registration that does not become effective or is not
maintained  effective for the period  required  pursuant to Section 3(b) hereof,
unless in the case of this clause (2) such Demand  Registration  does not become
effective  after being  filed by the Company  solely by reason of the refusal to
proceed  by the  holders of  Registrable  Securities  unless (i) the  refusal to
proceed is based upon the advice of counsel relating to a matter with respect to
the Company or (ii) the holders of the Registrable  Securities  elect to pay all
Registration  Expenses in connection with such Demand Registration,  and (3) any
Demand  Registration  in  connection  with  which any other  stockholder  of the
Company or the Company exercises a right of first refusal which it may otherwise
have and  purchases  all the stock  registered  and to be sold  pursuant  to the
Demand Registration.

     (b)  Filing  and  Effectiveness.  The  Company  will  file  a  Registration
Statement relating to any Demand  Registration within 45 calendar days, and will
use its best  efforts to cause the same to be declared  effective  by the SEC as
soon as practicable  thereafter,  and in any event,  within 90 calendar days, of
the date on which the holders of  Registrable  Securities  first give the Demand
Notice required by Section 3(a) hereof with respect to such Demand Registration.

     All  requests  made  pursuant to this  Section 3 will specify the number of
Registrable  Securities  to be  registered  and will also  specify the  intended
methods of  disposition  thereof;  provided,  that if the holder  demanding such
registration specifies one particular type of underwritten offering, such method
of disposition  shall be such type of underwritten  offering or a series of such
underwritten  offerings (as such demanding holders of Registrable Securities may
elect) during the period during which the Registration Statement is effective.

     The  Company  will keep the  Registration  Statement  filed in respect of a
Demand  Registration  effective  for a period of up to 90 calendar days from the
date on which the SEC declares such Registration Statement effective (subject to
extensions  pursuant  to  Section 6 hereof)  or such  shorter  period  that will
terminate when all Registrable  Securities deemed by such Registration Statement
have  been  sold  pursuant  to  such  Registration   Statement.  If  any  Demand
Registration  is  requested  to be  effected  as a "shelf"  registration  by the
holders of  Registrable  Securities  demanding  such  Demand  Registration,  the
Company will keep the Registration  Statement filed in respect thereof effective
for a period of up to 12 months  from the date on which  the SEC  declares  such
Registration  Statement  effective  (subject to extension  pursuant to Section 6
hereof)  or such  shorter  period  that  will  terminate  when  all  Registrable
Securities  covered by such  Registration  Statement  have been sold pursuant to
such Registration Statement.

     Within ten calendar days after receipt of such Demand  Notice,  the Company
will  serve  written  notice  thereof  (the  "Notice")  to all other  holders of
Registrable  Securities  and will,  subject to the  provisions  of Section  3(c)
hereof,  include in such registration all Registrable Securities with respect to
which the Company  receives  written  requests for inclusion  therein  within 20
calendar days after the receipt of the Notice by the applicable holder.

     The  holders  of  Registrable  Securities  will be  permitted  to  withdraw
Registrable  Securities  from a Registration  at any time prior to the effective
date of such registration.

     (c) Priority on Demand Registration.  If any of the Registrable  Securities
registered  pursuant to a Demand Registration are to be sold in one or more firm
commitment underwritten  offerings,  the Company may also provide written notice
to holders of its equity securities (other than Registrable Securities), if any,
who have piggyback  registration rights with respect thereto and will permit all
such  holders who request to be included in the Demand  Registration  to include
any or all equity securities held by such holders in such Demand Registration on
the same terms and conditions as the Registrable Securities. Notwithstanding the
foregoing,  if the managing underwriter or underwriters of the offering to which
such Demand Registration  relates advises the holders of Registrable  Securities
that the total amount of Registrable  Securities and securities that such equity
security  holders  intend  to  include  in such  Demand  Registration  is in the
aggregate  such as to  materially  and  adversely  affect  the  success  of such
offering, then (i) first, the amount of securities to be offered for the account
of the  holders of such other  equity  securities  will be  reduced,  to zero if
necessary  (pro rata among such holders on the basis of the amount of such other
securities  to be included  therein by each such holder),  and (ii) second,  the
number of Registrable  Securities  included in such Demand Registration will, if
necessary,  be  reduced  and there  will be  included  in such  firm  commitment
underwritten  offering only the number of  Registrable  Securities  that, in the
opinion  of such  managing  underwriter  or  underwriters,  can be sold  without
materially and adversely  affecting the success of such offering,  allocated pro
rata among the holders of  Registrable  Securities on the basis of the number of
Registrable Securities held by each such holder.

     (d)  Postponement of Demand  Registration.  The Company will be entitled to
postpone  the  filing  period  (or  suspend  the  effectiveness)  of any  Demand
Registration for a reasonable  period of time not in excess of 90 calendar days,
if the Board of Directors of the Company determines,  in the good faith exercise
of its reasonable  business judgment,  that such registration and offering would
materially  interfere  with bona fide  financing  plans of the  Company or would
require  disclosure  of  information,  the  premature  disclosure of which could
materially and adversely affect the Company; provided, however, that the Company
may not exercise  such right more than twice or for an aggregate of more than 90
calendar  days during any twelve  month  period.  If the Company  postpones  the
filing of a  Registration  Statement,  it will  promptly  notify the  holders of
Registrable  Securities in writing when the events or  circumstances  permitting
such postponement have ended.

     4.  Piggyback  Registration.  (a)  Right to  Piggyback.  If at any time the
Company proposes to file a registration  statement under the Securities Act with
respect  to an  offering  of  any  class  of  equity  securities  (other  than a
registration  statement  (i) on Form S-4, S-8 or any  successor  form thereto or
(ii) filed  solely in  connection  with an offering  made solely to employees or
securityholders  of the Company),  whether or not for its own account,  then the
Company  will give  written  notice of such  proposed  filing to the  holders of
Registrable  Securities at least 20 calendar days before the anticipated  filing
date.  Such notice  will offer such  holders the  opportunity  to register  such
amount of  Registrable  Securities as each such holder may request (a "Piggyback
Registration"). Subject to Section 4(b) hereof, the Company will include in each
such Piggyback Registration all Registrable Securities with respect to which the
Company has received  written  requests for  inclusion  therein.  The holders of
Registrable  Securities  will  be  permitted  to  withdraw  all or  part  of the
Registrable  Securities  from a Piggyback  Registration at any time prior to the
effective date of such Piggyback Registration.

     (b)  Priority  on  Piggyback  Registrations.  The  Company  will  cause the
managing  underwriter or  underwriters  of a proposed  underwritten  offering to
permit  holders  of  Registrable  Securities  requested  to be  included  in the
registration   for  such  offering  to  include  therein  all  such  Registrable
Securities  requested to be so included on the same terms and  conditions as any
similar securities, if any, of the Company included therein. Notwithstanding the
foregoing,  if the managing underwriter or underwriters of such offering advises
the holders of  Registrable  Securities  to the effect that the total  amount of
securities  which such holders,  the Company and any other persons having rights
to participate in such registration  propose to include in such offering is such
as to materially and adversely affect the success of such offering, then:

          (i) if such  registration  is a primary  registration on behalf of the
     Company, the amount of securities to be included therein for the account of
     all other  holders of  securities  of the Company  (other  than  holders of
     Registrable  Securities) will be reduced (to zero if necessary) pro rata in
     proportion  to  the  number  of  shares  held  by  each  such  person,  and
     thereafter,  if such  reduction is not  sufficient so as, in the opinion of
     such  managing  underwriters  or  underwriters,  to permit the inclusion of
     Registrable  Securities  without  adversely  affecting  the  success of the
     offering,   the  amount  of  Registrable  Securities  so  included  in  the
     Registration  Statement  for the  account  of the  holders  of  Registrable
     Securities will be reduced (to zero if necessary) pro rata in proportion to
     the number of shares held by such persons to the extent necessary to reduce
     the total  amount of  securities  to be  included  in such  offering to the
     amount recommended by such managing underwriter or underwriters; and

          (ii) if such registration is an underwritten secondary registration on
     behalf of holders  of  securities  of the  Company  other than  Registrable
     Securities,  the Company will include  therein:  (x) first,  up to the full
     number of  securities  of such  persons  exercising  "demand"  registration
     rights that in the opinion of such managing underwriter or underwriters can
     be sold or allocated among such holders as they may otherwise so determine,
     (y) second,  up to the full amount of Registrable  Securities  that, in the
     opinion  of  such  managing  underwriter  or  underwriters,   can  be  sold
     (allocated  pro rata among the holders of such  Registrable  Securities  in
     proportion to the number of Registrable  Securities  held by such persons),
     and (z)  third,  all  other  securities  proposed  to be sold by any  other
     persons that in the opinion of such managing  underwriter  or  underwriters
     can be sold or  allocated  among  such  holders  as they may  otherwise  so
     determine.

     (c) Registration of Securities other than Registrable  Securities.  Without
the  written  consent  of the  holders  of a  majority  of the  then-outstanding
Registrable  Securities,  the Company  will not grant to any person the right to
request  the  Company  to  register  any  securities  of the  Company  under the
Securities  Act unless the rights so granted are subject to the prior  rights of
the holders of Registrable Securities set forth herein, and, if exercised, would
not  otherwise  conflict  or  be  inconsistent  with  the  provisions  of,  this
Agreement.

     5. Restrictions on Sale by Holders of Registrable  Securities.  Each holder
of  Registrable  Securities  whose  Registrable  Securities  are  covered  by  a
Registration  Statement filed pursuant to Section 3 or Section 4 hereof,  agrees
and will  confirm  such  agreement  in writing,  if such holder is so  requested
(pursuant  to  a  timely  written   notice)  by  the  managing   underwriter  or
underwriters  in an  underwritten  offering,  not to effect any  public  sale or
distribution of any of the Company's equity  securities  (except as part of such
underwritten  offering),  including  a sale  pursuant  to Rule 144,  during  the
10-calendar  day period prior to, and during such period of time,  not to exceed
90 days as any managing  underwriter or underwriters  may reasonably  request in
connection with any underwritten  public offering beginning on, the closing date
of each underwritten  offering made pursuant to such  Registration  Statement or
such other shorter period to which the executive officers may agree.

     6. Registration  Procedures.  In connection with the Company's registration
obligations  pursuant to Sections 3 and 4 hereof,  the Company  will effect such
registrations  to permit the sale of such  Registrable  Securities in accordance
with the intended method or methods of disposition thereof, and pursuant thereto
the Company will as expeditiously as possible:

     (a) Prepare and file with the SEC a Registration  Statement or Registration
Statements on any  appropriate  form under the  Securities Act available for the
sale of the  Registrable  Securities by the holders  thereof in accordance  with
holders'  notice  to the  Company  as to  the  intended  method  or  methods  of
distribution thereof (including, without limitation, distributions in connection
with  transactions  with  broker-dealers  or others  for the  purpose of hedging
Registrable Securities,  involving possible sales, short sales, options, pledges
or other  transactions  which may require delivery and sale to broker-dealers or
others of Registrable Securities), and cause each such Registration Statement to
become  effective and remain effective as provided  herein;  provided,  however,
that before filing a  Registration  Statement or Prospectus or any amendments or
supplements thereto (including documents that would be incorporated or deemed to
be incorporated therein by reference) the Company will furnish to the holders of
the Registrable Securities covered by such Registration  Statement,  the Special
Counsel and the  managing  underwriters,  if any,  copies of all such  documents
proposed  to be filed,  which  documents  will be  subject to the review of such
holders,  the Special  Counsel and such  underwriters.  Notwithstanding  Section
3(b),  the Company  will not file any such  Registration  Statement or amendment
thereto or any Prospectus or any supplement  thereto  (including  such documents
which, upon filing,  would or would be incorporated or deemed to be incorporated
by  reference  therein) to which the  holders of a majority  of the  Registrable
Securities  covered by such Registration  Statement,  the Special Counsel or the
managing underwriter, if any, shall reasonably object on a timely basis.

     (b)  Prepare  and  file  with the SEC such  amendments  and  post-effective
amendments  to each  Registration  Statement  as may be  necessary  to keep such
Registration   Statement   continuously  effective  for  the  applicable  period
specified in Section 3; cause the related  Prospectus to be  supplemented by any
required Prospectus  supplement,  and as so supplemented to be filed pursuant to
Rule 424 (or any similar provisions then in force) under the Securities Act; and
comply with the provisions of the Securities Act with respect to the disposition
of all securities  covered by such Registration  Statement during the applicable
period in accordance  with the intended  methods of  disposition  by the sellers
thereof  set  forth in such  Registration  Statement  as so  amended  or to such
Prospectus as so supplemented.

     (c) Notify the  selling  holders of  Registrable  Securities,  the  Special
Counsel and the managing  underwriters,  if any, promptly,  and (if requested by
any such person)  confirm such notice in writing,  (i) when a Prospectus  or any
Prospectus  supplement or  post-effective  amendment  has been filed,  and, with
respect to a Registration  Statement or any post-effective  amendment,  when the
same has become  effective,  (ii) of any request by the SEC or any other federal
or state governmental  authority for amendments or supplements to a Registration
Statement or related  Prospectus  or for  additional  information,  (iii) of the
issuance by the SEC or any other federal or state governmental  authority of any
stop order  suspending  the  effectiveness  of a  Registration  Statement or the
initiation  of any  proceedings  for  that  purpose,  (iv)  if at any  time  the
representations  and  warranties  of the  Company  contained  in  any  agreement
contemplated by Section 6(m) hereof (including any underwriting agreement) cease
to be true and  correct,  (v) of the receipt by the Company of any  notification
with  respect  to  the  suspension  of  the   qualification  or  exemption  from
qualification of any of the Registrable  Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose, (vi) of the
occurrence  of any event which  makes any  statement  made in such  Registration
Statement or related  Prospectus  or any document  incorporated  or deemed to be
incorporated  therein  by  reference  untrue in any  material  respect  or which
requires the making of any changes in a  Registration  Statement,  Prospectus or
documents  so  that,  in the  case of the  Registration  Statement,  it will not
contain any untrue  statement  of a material  fact or omit to state any material
fact required to be stated therein or necessary to make the  statements  therein
not  misleading  and,  in the case of the  Prospectus,  it will not  contain any
untrue  statement of a material fact or omit to state any material fact required
to be stated or is necessary  to make the  statements  therein,  in light of the
circumstances  under  which they were  made,  not  misleading,  and (vii) of the
Company's  reasonable   determination  that  a  post-effective  amendment  to  a
Registration Statement would be appropriate.

     (d) Use  every  reasonable  effort to obtain  the  withdrawal  of any order
suspending the effectiveness of a Registration  Statement, or the lifting of any
suspension of the qualification (or exemption from  qualification) of any of the
Registrable  securities for sale in any  jurisdiction,  at the earliest possible
moment.

     (e) If requested by the managing underwriters,  if any, or the holders of a
majority  of  the  Registrable   Securities  being   registered,   (i)  promptly
incorporate  in  a  Prospectus  supplement  or  post-effective   amendment  such
information as the managing underwriters,  if any, and such holders agree should
be  included  therein as may be  required  by  applicable  law and (ii) make all
required filings of such Prospectus supplement or such post-effective  amendment
as soon as  practicable  after the  Company  has  received  notification  of the
matters to be  incorporated  in such  Prospectus  supplement  or  post-effective
amendment;  provided, however, that the Company will not be required to take any
actions  under this Section 6(e) that are not, in the opinion of counsel for the
Company, in compliance with applicable law.

     (f) Furnish to each selling holder of Registrable  Securities,  the Special
Counsel and each managing  underwriter,  if any,  without  charge,  at least one
conformed copy of the Registration  Statement and any  post-effective  amendment
thereto,  including financial statements (but excluding schedules, all documents
incorporated  or deemed  incorporated  therein by  reference  and all  exhibits,
unless requested in writing by such holder, counsel or underwriter).

     (g) Deliver to each selling holder of Registrable  Securities,  the Special
Counsel and the  underwriters,  if any,  without  charge,  as many copies of the
Prospectus or Prospectuses  relating to such Registrable  Securities  (including
each  preliminary  prospectus)  and any amendment or supplement  thereto as such
persons  may  request;  and  the  Company  hereby  consents  to the  use of such
Prospectus  or each  amendment  or  supplement  thereto  by each of the  selling
holders of Registrable  Securities and the  underwriters,  if any, in connection
with  the  offering  and  sale of the  Registrable  Securities  covered  by such
Prospectus or any amendment or supplement thereto.

     (h) Prior to any public offering of Registrable Securities,  to register or
qualify or cooperate  with the selling  holders of Registrable  Securities,  the
underwriters,  if any,  and their  respective  counsel  in  connection  with the
registration  or   qualification   (or  exemption  from  such   registration  or
qualification)  of such  Registrable  Securities  for offer  and sale  under the
securities  or blue sky laws of such  jurisdictions  within the United States as
any seller or  underwriter  reasonably  requests  in writing to the extent  such
registration  or  qualification  would be required  taking into account  federal
securities  laws;  keep each such  registration or  qualification  (or exemption
therefrom)  effective during the period such Registration  Statement is required
to be kept  effective  and do any and all  other  acts or  things  necessary  or
advisable to enable the  disposition  in such  jurisdiction  of the  Registrable
Securities covered by the applicable Registration Statement;  provided,  however
that the Company will not be required to (i) qualify generally to do business in
any  jurisdiction  in which it is not then so  qualified or (ii) take any action
that would subject it to general service of process in any such  jurisdiction in
which it is not then so subject.

     (i) Cooperate with the selling  holders of  Registrable  Securities and the
managing underwriters, if any, to facilitate the timely preparation and delivery
of  certificates   representing   Registrable   Securities  to  be  sold,  which
certificates will not bear any restrictive  legends; and enable such Registrable
Securities  to be in such  denominations  and  registered  in such  names as the
managing underwriters, if any, shall request at least two business days prior to
any sale of Registrable securities to the underwriters.

     (j) Use reasonable  efforts to cause the Registrable  Securities covered by
the applicable  Registration Statement to be registered with or approved by such
other  governmental  agencies or authorities  within the United States except as
may be required  solely as a consequence of the nature of such selling  holder's
business,  in which case the Company will cooperate in all  reasonable  respects
with  the  filing  of  such  Registration  Statement  and the  granting  of such
approvals  as may be  necessary  to enable the seller or sellers  thereof or the
underwriters,  if  any,  to  consummate  the  disposition  of  such  Registrable
Securities.

     (k) Upon the occurrence of any event  contemplated  by Section  6(c)(vi) or
6(c)(vii)  hereof,  prepare a  supplement  or  post-effective  amendment to each
Registration Statement or a supplement to the related Prospectus or any document
incorporated  therein by reference or file any other required  document so that,
as thereafter delivered to Stockholder of the Registrable  Securities being sold
thereunder,  such Prospectus will not contain an untrue  statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements  therein,  in light of the circumstances under which they
were made, not misleading.

     (l) Use its best  efforts to cause all  Registrable  Securities  covered by
such Registration Statement to be listed on each securities exchange, if any, on
which similar securities issued by the Company are then listed or, if no similar
securities  issued by the  Company  are then so  listed,  on the New York  Stock
Exchange or another national securities exchange if the securities qualify to be
so listed or, if the  securities do not qualify for such listing,  authorized to
be quoted on the National  Association of Securities Dealers Automated Quotation
System  ("NASDAQ")  or the National  Market  System of NASDAQ if the  securities
qualify to be so quoted; in each case, if requested by the holders of a majority
of the  Registrable  Securities  covered by such  Registration  statement or the
managing underwriters, if any.

     (m) In the event of an  underwritten  offering,  enter into such agreements
(including  an  underwriting  agreement  in  form,  scope  and  substance  as is
customary  in  underwritten  offerings)  and  take  all such  other  actions  in
connection  therewith  (including those reasonably requested by the holders of a
majority of the Registrable  Securities being sold or those reasonably requested
by the managing underwriters) in order to expedite or facilitate the disposition
of  such  Registrable   Securities  and  in  such  connection,   (i)  make  such
representations and warranties to the underwriters,  if any, with respect to the
business  of the  Company  and its  subsidiaries,  the  Registration  Statement,
Prospectus and documents  incorporated  by reference or deemed  incorporated  by
reference, if any, in each case, in form, substance and scope as are customarily
made by issuers to underwriters  in underwritten  offerings and confirm the same
if and when  requested;  (ii)  obtain  opinions  of counsel to the  Company  and
updates thereof (which counsel and opinions (in form, scope and substance) shall
be reasonably satisfactory to the managing underwriters, if any, and the holders
of a majority  of the  Registrable  Securities  being  sold)  addressed  to such
selling holder of Registrable  Securities and each of the underwriters,  if any,
covering the matters  customarily  covered in opinions requested in underwritten
offerings and such other matters as may be reasonably  requested by such holders
and  underwriters,  including  without  limitation  the  matters  referred to in
Section 6(m)(i) hereof;  (iii) use its best efforts to obtain "comfort"  letters
and updates thereof from the  independent  certified  public  accountants of the
Company  (and, if  necessary,  any other  certified  public  accountants  of any
subsidiary  of the Company or of any business  acquired by the Company for which
financial  statements and financial  data is, or is required to be,  included in
the  Registration  Statement),  addressed to each selling  holder of Registrable
Securities and each of the underwriters, if any, such letters to be in customary
form and covering matters of the type customarily  covered in "comfort"  letters
in connection with underwritten  offerings;  and (iv) deliver such documents and
certificates as may be requested by the holders of a majority of the Registrable
Securities  being sold, the Special  Counsel and the managing  underwriters,  if
any, to evidence the continued validity of the representations and warranties of
the  Company  and its  subsidiaries  made  pursuant  to clause  (i) above and to
evidence compliance with any customary  conditions contained in the underwriting
agreement  or similar  agreement  entered  into by the  Company.  The  foregoing
actions will be taken in connection with each closing under such underwriting or
similar agreement as and to the extent required thereunder.

     (n) Make  available for  inspection by a  representative  of the holders of
Registrable  Securities  being  sold,  any  underwriter   participating  in  any
disposition of Registrable  Securities,  and any attorney or accountant retained
by such  selling  holders  or  underwriter,  all  financial  and other  records,
pertinent   corporate   documents   and   properties  of  the  Company  and  its
subsidiaries, and cause the officers, directors and employees of the Company and
its  subsidiaries  to supply all  information  reasonably  requested by any such
representative,  underwriter,  attorney or accountant  in  connection  with such
Registration  Statement;  provided,  however,  that any records,  information or
documents that are designated by the Company in writing as  confidential  at the
time  of  delivery  of  such  records,  information  or  documents  will be kept
confidential  by such persons unless (i) such records,  information or documents
are in the public domain or otherwise  publicly  available,  (ii)  disclosure of
such records,  information  or documents is required by court or  administrative
order or is necessary to respond to inquires of regulatory authorities, or (iii)
disclosure of such records,  information or documents, in the opinion of counsel
to such person,  is otherwise  required by law (including,  without  limitation,
pursuant to the requirements of the Securities Act).

     (o) Comply with all  applicable  rules and  regulations of the SEC and make
generally  available to its security holders earning  statements  satisfying the
provisions of Section 11(a) of the  Securities  Act and Rule 158  thereunder (or
any similar rule promulgated under the Securities Act) no later than 45 calendar
days after the end of any 12-month  period (or 90 calendar days after the end of
any 12-month  period if such period is a fiscal year) (i)  commencing at the end
of any fiscal quarter in which  Registrable  Securities are sold to underwriters
in a firm commitment or best efforts underwritten offering, and (ii) if not sold
to  underwriters  in such an offering,  commencing on the first day of the first
fiscal  quarter  of the  Company,  after the  effective  date of a  Registration
Statement, which statements shall cover said 12-month period.

     (p) Cooperate with any  reasonable  request by holders of a majority of the
Registrable  Securities offered for sale, including by ensuring participation by
the  executive  management  of the  Company  in  road  shows,  so  long  as such
participation does not materially  interfere with the operation of the Company's
business.

     The Company may require each seller of  Registrable  Securities as to which
any  registration  is being effected to furnish to the Company such  information
regarding the  distribution of such  Registrable  Securities as the Company may,
from time to time,  reasonably  request in writing  and the  Company may exclude
from such registration the Registrable Securities of any seller who unreasonably
fails to furnish such information  within a reasonable time after receiving such
request.

     Each  holder of  Registrable  Securities  will be deemed to have  agreed by
virtue of its acquisition of such  Registrable  Securities that, upon receipt of
any notice from the Company of the occurrence of any event of the kind described
in Section 6(c)(ii),  6(c)(iii),  6(c)(v),  6(c)(vi) or 6(c)(vii)  hereof,  such
holder will forthwith  discontinue  disposition of such  Registrable  Securities
covered by such Registration  Statement or Prospectus (a "Black-Out") until such
holder's  receipt  of the  copies  of the  supplemented  or  amended  Prospectus
contemplated  by Section  6(k)  hereof,  or until it is advised in writing  (the
"Advice")  by the  Company  that  the use of the  applicable  Prospectus  may be
resumed,  and has received copies of any additional or supplemental filings that
are  incorporated or deemed to be incorporated by reference in such  Prospectus,
provided,  however,  that in no event shall the aggregate  number of days during
which a Black-Out is effective  during any period of twelve  consecutive  months
exceed 90 calendar  days.  In the event the Company  shall give any such notice,
the time period prescribed in Section 3(b) hereof will be extended by the number
of days during the time period from and including the date of the giving of such
notice to and  including  the date when each  seller of  Registrable  Securities
covered by such Registration Statement shall have received (x) the copies of the
supplemented  or amended  Prospectus  contemplated by Section 6(k) hereof or (y)
the Advice.

     7. Registration  Expenses.  All Registration  Expenses will be borne by the
Company  whether or not any of the  Registration  Statements  become  effective.
"Registration  Expenses"  will  mean  all  fees  and  expenses  incident  to the
performance  of or  compliance  with this  Agreement by the Company,  including,
without  limitation,  (i) all  registration  and filing fees (including  without
limitation  fees and expenses  (x) with  respect to filings  required to be made
with the National Association of Securities Dealers,  Inc. and (y) of compliance
with  securities  or "blue  sky" laws  (including  without  limitation  fees and
disbursements  of counsel for the  underwriters or selling holders in connection
with "blue sky"  qualifications of the Registrable  Securities and determination
of the eligibility of the Registrable  Securities for investment  under the laws
of such  jurisdictions  as the  managing  underwriters,  if any, or holders of a
majority of the Registrable Securities being sold may designate)), (ii) printing
expenses  (including  without limitation  expenses of printing  certificates for
Registrable  Securities in a form eligible for deposit with The Depository Trust
Company  and  of  printing  prospectuses  if the  printing  of  prospectuses  is
requested by the holders of a majority of the Registrable Securities included in
any Registration Statement),  (iii) messenger,  telephone and delivery expenses,
(iv)  fees  and  disbursements  of  counsel  for  the  Company,   (v)  fees  and
disbursements  of all independent  certified public  accountants  referred to in
Section  6(m)(iii)  hereof  (including  the  expenses of any  special  audit and
"comfort"  letters required by or incident to such  performance),  (vi) fees and
expenses  of  any  "qualified  independent  underwriter"  or  other  independent
appraiser  participating  in an offering  pursuant to Section 3 of Schedule E to
the By-laws of the National  Association  of  Securities  Dealers,  Inc.,  (vii)
Securities  Act  liability  insurance if the Company so desires such  insurance,
(viii) all fees and expenses in listing the Registrable  Securities  pursuant to
Section 6(e),  and (ix) fees and expenses of all other  persons  retained by the
Company, provided, however, that Registration Expenses will not include fees and
expenses  of counsel  for the holders of  Registrable  Securities  and any local
counsel nor shall it include underwriting  discounts and commissions relating to
the offer and sale of Registrable Securities, all of which shall be borne by the
holders of  Registrable  Securities  included in such  registration  pro rata in
proportion to the number of  Registrable  Securities of such holder  included in
such  registration.  In addition,  the Company  will pay its  internal  expenses
(including  without  limitation  all  salaries  and expenses of its officers and
employees  performing  legal or  accounting  duties),  the expense of any annual
audit,  the fees and  expenses  incurred in  connection  with the listing of the
securities  to be  registered  on  any  securities  exchange  on  which  similar
securities  issued by the Company  are then listed and the fees and  expenses of
any person, including special experts, retained by the Company.

     8.  Indemnification.  (a) Indemnification by the Company. The Company will,
without  limitation  as to time,  indemnify  and hold  harmless,  to the fullest
extent  permitted  by law,  each  holder of  Registrable  Securities  registered
pursuant to this Agreement, the officers,  directors and agents and employees of
each of them,  each  person who  controls  such  holder  (within  the meaning of
Section 15 of the  Securities  Act or Section  20 of the  Exchange  Act) and the
officers,  directors,  agents and employees of any such controlling person, from
and against all losses, claims, damages,  liabilities,  costs (including without
limitation  the  costs  of  investigation  and  attorneys'  fees)  and  expenses
(collectively,  "Losses"), as incurred,  arising out of or based upon any untrue
or alleged  untrue  statement of a material fact  contained in any  Registration
Statement,  Prospectus  or form of  Prospectus or in any amendment or supplement
thereto or in any  preliminary  prospectus,  or arising out of or based upon any
omission or alleged  omission to state  therein a material  fact  required to be
stated  therein or  necessary  to make the  statements  therein not  misleading,
except  insofar  as the same are based  solely  upon  information  furnished  in
writing  to the  Company by such  holder or any  underwriter  expressly  for use
therein; provided, however, that the Company will not be liable to any holder of
Registrable  Securities  to the extent that any such Losses  arise out of or are
based upon an untrue  statement  or alleged  untrue  statement  or  omission  or
alleged  omission  made in any  preliminary  prospectus  if either  (A) (i) such
holder failed to send or deliver a copy of the  Prospectus  with or prior to the
delivery of written  confirmation  of the sale by such  holder of a  Registrable
Security to the person asserting the claim from which such Losses arise and (ii)
the  Prospectus  would have  corrected  in all  material  respects  such  untrue
statement or alleged untrue statement or such omission or alleged  omission;  or
(B) such  untrue  statement  or alleged  untrue  statement,  omission or alleged
omission is corrected in all material  respects in an amendment or supplement to
the Prospectus  previously  furnished by or on behalf of the Company with copies
of the  Prospectus  as so amended or  supplemented,  and such holder  thereafter
fails to deliver  such  Prospectus  as so amended  or  supplemented  prior to or
concurrently with the sale of a Registrable Security to the person asserting the
claim from which such Losses arise.

     The rights of any holder of  Registrable  Securities  hereunder will not be
exclusive of the rights of any holder of Registrable  Securities under any other
agreement or  instrument  of any holder of  Registrable  Securities to which the
Company is a party.  Nothing  in such  other  agreement  or  instrument  will be
interpreted as limiting or otherwise adversely affecting a holder of Registrable
Securities  hereunder  and  nothing in this  Agreement  will be  interpreted  as
limiting or otherwise adversely affecting the holder of Registrable  Securities'
rights under any such other agreement or instrument,  provided, however, that no
Indemnified  Party  will  be  entitled   hereunder  to  recover  more  than  its
indemnified Losses.

     (b)  Indemnification  by Holders of Registrable  Securities.  In connection
with any Registration  Statement in which a holder of Registrable  Securities is
participating, such holder of Registrable Securities will furnish to the Company
in writing  such  information  as the  Company  reasonably  requests  for use in
connection  with any  Registration  Statement or Prospectus  and will  severally
indemnify,  to the fullest extent  permitted by law, the Company,  its directors
and officers, agents and employees, each person who controls the Company (within
the meaning of Section 15 of the  Securities  Act and Section 20 of the Exchange
Act),  and the  directors,  officers,  agents or employees  of such  controlling
persons,  from and  against  all  Losses  arising  out of or based  upon (i) any
disposition of Registrable  Securities after receiving notice of a Black-Out and
prior to receiving  Advice  under  Section 6 that use of the  Prospectus  may be
resumed  or (ii) any  untrue  statement  of a  material  fact  contained  in any
Registration  Statement,  Prospectus or preliminary prospectus or arising out of
or based upon any omission of a material fact  required to be stated  therein or
necessary to make the statements therein not misleading, to the extent, but only
to the extent,  that such  untrue  statement  or omission is finally  judicially
determined by a court to have been contained in any  information so furnished in
writing by such holder to the  Company  expressly  for use in such  Registration
Statement or Prospectus and was relied upon by the Company in the preparation of
such Registration Statement,  Prospectus or preliminary prospectus.  In no event
will the liability of any selling holder of Registrable  Securities hereunder be
greater in amount than the dollar  amount of the proceeds (net of payment of all
expenses and  underwriter's  discounts and commissions)  received by such holder
upon the sale of the Registrable  Securities giving rise to such indemnification
obligation.

     (c) Conduct of  Indemnification  Proceedings.  If any person  shall  become
entitled to indemnity hereunder (an "Indemnified Party"), such Indemnified Party
shall give prompt  notice to the party from which such  indemnity is sought (the
"Indemnifying  Party")  of any  claim or of the  commencement  of any  action or
proceeding with respect to which such Indemnified Party seeks indemnification or
contribution pursuant hereto;  provided,  however, that the failure to so notify
the  Indemnifying  Party  will  not  relieve  the  Indemnifying  Party  from any
obligation  or liability  except to the extent that the  Indemnifying  Party has
been prejudiced materially by such failure. All fees and expenses (including any
fees and expenses  incurred in  connection  with  investigating  or preparing to
defend such action or  proceeding)  will be paid to the  Indemnified  Party,  as
incurred,   within  five  calendar  days  of  written   notice  thereof  to  the
Indemnifying  Party upon receipt of an undertaking to repay such amount if it is
ultimately   determined   that  an   Indemnified   Party  is  not   entitled  to
indemnification  hereunder). The Indemnifying Party will not consent to entry of
any judgment or enter into any  settlement  or otherwise  seek to terminate  any
action or proceeding in which any  Indemnified  Party is or could be a party and
as to which  indemnification or contribution could be sought by such Indemnified
Party  under  this  Section  8,  unless  such  judgment,   settlement  or  other
termination includes as an unconditional term thereof the giving by the claimant
or  plaintiff  to such  Indemnified  Party of a release,  in form and  substance
reasonably  satisfactory to the Indemnified Party, from all liability in respect
of such claim or litigation for which such  Indemnified  Party would be entitled
to indemnification hereunder.

     (d) Contribution.  If the indemnification provided for in this Section 8 is
unavailable to an Indemnified Party under Section 8(a) or 8(b) hereof in respect
of any Losses or is insufficient to hold such Indemnified  Party harmless,  then
each applicable  Indemnifying  Party, in lieu of indemnifying  such  Indemnified
Party, will, jointly and severally,  contribute to the amount paid or payable by
such  Indemnified  Party as a result of such Losses,  in such  proportion  as is
appropriate  to  reflect  the  relative  fault  of  the  Indemnifying  Party  or
Indemnifying  Parties, on the one hand, and such Indemnified Party, on the other
hand, in connection  with the actions,  statements or omissions that resulted in
such Losses as well as any other relevant equitable considerations. The relative
fault of such Indemnifying Party or Indemnifying  Parties,  on the one hand, and
such  Indemnified  Party, on the other hand, will be determined by reference to,
among other  things,  whether any action in  question,  including  any untrue or
alleged untrue statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or related to information supplied by,
such Indemnifying  Party or Indemnified Party, and the parties' relative intent,
knowledge,  access to  information  and  opportunity  to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any  Losses  will be deemed to include  any legal or other  fees or  expenses
incurred by such party in connection with any action or proceeding.

     The  parties  hereto  agree  that it  would  not be just and  equitable  if
contribution  pursuant  to  this  Section  8(d)  were  determined  by  pro  rata
allocation or by any other method of allocation  that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding  the provision of this Section 8(d), an Indemnifying  Party that
is a selling holder of Registrable Securities will not be required to contribute
any  amount  in excess  of the  amount  by which  the  total  price at which the
Registrable  Securities sold by such  Indemnifying  Party and distributed to the
public (net of any  related  expenses)  exceeds the amount of any damages  which
such  Indemnifying  Party has  otherwise  been required to pay by reason of such
untrue or alleged untrue  statement or omission or alleged  omission.  No person
guilty of fraudulent  misrepresentation  (within the meaning of Section 11(f) of
the Securities Act) will be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.

     The indemnity, contribution and expense reimbursement
obligations  of the Company  hereunder  will be in addition to any liability the
Company  may  otherwise  have  hereunder,  under  the  Investment  Agreement  or
otherwise. The provisions of this Section 8 will survive any termination of this
Agreement.

     9. Rules 144 and 144A.  The Company  will file the  reports  required to be
filed by it under the  Securities  Act and the Exchange Act in a timely  manner,
and will cooperate with any holder of Registrable  Securities (including without
limitation  by making such  representations  as any such  holder may  reasonably
request),  all to the extent required from time to time to enable such holder to
sell Registrable Securities without registration under the Securities Act within
the  limitations  of the exemptions  provided by Rules 144 and 144A  (including,
without  limitation,  the requirements of Rule 144A(d)(4)).  Upon the request of
any holder of Registrable Securities,  the Company will deliver to such holder a
written statement as to whether it has complied with such filing requirements.

     10.  Underwritten  Registrations.  If  any of  the  Registrable  Securities
covered by any Demand  Registration are to be sold in an underwritten  offering,
the  investment  banker or investment  bankers and manager or managers that will
manage the  offering  will be selected by the holder of  Registrable  Securities
that gave the Demand  Notice with respect to such  offering;  provided that such
investment banker or manager shall be reasonably satisfactory to the Company. If
any Piggyback  Registration is an underwritten  offering,  the Company will have
the right to select the investment banker or investment  bankers and managers to
administer the offering.

     11. Miscellaneous. (a) Remedies. In the event of a breach by the Company of
its obligations under this Agreement,  each holder of Registrable Securities, in
addition  to being  entitled to exercise  all rights  granted by law,  including
recovery of damages,  will be  entitled  to specific  performance  of its rights
under this  Agreement.  The Company  agrees that  monetary  damages would not be
adequate  compensation  for any loss incurred by reason of a breach by it of any
of the provisions of this Agreement and hereby further agrees that, in the event
of any action for specific  performance in respect of such breach, it will waive
the defense that a remedy at law would be adequate.

     (b) No Inconsistent Agreements. The Company has not, as of the date
hereof, and will not, on or after the date hereof, enter into any agreement with
respect to its securities which conflicts with the rights granted to the holders
of  Registrable  Securities in this  Agreement or otherwise  conflicts  with the
provisions hereof. This Agreement will be deemed to be an independent  agreement
and no limitation or  restriction  contained in this Agreement will be deemed to
conflict  with,  limit or  restrict  the  rights of the  Stockholder  under this
Agreement.

     (c) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence,  may not be amended,  modified or supplemented,
and waivers or  consents to  departures  from the  provisions  hereof may not be
given,  unless the Company  has  obtained  the  written  consent of holders of a
majority of the  then-outstanding  Registrable  Securities.  Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that  relates  exclusively  to the rights of holders of  Registrable
Securities whose securities are being sold pursuant to a Registration  Statement
and that does not directly or  indirectly  affect the rights of other holders of
Registrable  Securities  may  be  given  by  holders  of at  least  51%  of  the
Registrable Securities being sold by such holders;  provided,  however, that the
provisions of this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the immediately preceding sentence.

     (d) Notices. All notices and other communications provided for or permitted
hereunder  shall be made in writing and will be deemed  given (i) when made,  if
made by hand  delivery,  (ii) upon  confirmation,  if made by fax,  or (iii) one
business day after being deposited with a reputable  next-day  courier,  postage
prepaid, to the parties as follows:

               (x) if to the Company,  at 900 Victors Way, Suite 350, Ann Arbor,
          Michigan 48108,  Attention:  General Counsel; Fax No.: (734) 996-0200,
          or at such other  address,  notice of which is given to the holders of
          Registrable  Securities  in  accordance  with the  provisions  of this
          Section 11(d);

               (y) if to the  Stockholder,  at 4200 Texas  Commerce  Tower West,
          2200  Ross  Avenue,  Dallas,  Texas  75201,   Attention:   William  T.
          Cavanaugh;  Fax No.: (214) 220-4949, or at such other address,  notice
          of which is given in accordance  with the provisions of Section 11(d);
          and

               (z) if to any other holder of Registrable Securities, at the most
          current address given by such holder to the Company in accordance with
          the provisions of this Section 11(d).

     (e) Owner of Registrable  Securities.  The Company will  maintain,  or will
cause its registrar and transfer agent to maintain, a stock book with respect to
the  Series C  Preferred  and the  Common  Stock,  in  which  all  transfers  of
Registrable  Securities  of  which  the  Company  has  received  notice  will be
recorded.  The Company  may deem and treat the person in whose name  Registrable
Securities  are registered in the stock book of the Company as the owner thereof
for all purposes,  including without limitation the giving of notices under this
Agreement.

     (f) Successors and Assigns. This Agreement will inure to the benefit of and
be binding upon the successors and permitted  assigns of each of the parties and
will inure to the  benefit of each  holder of any  Registrable  Securities.  The
Company  may not assign its rights or  obligations  hereunder  without the prior
written consent of each holder of any Registrable Securities. The holders of the
Registrable  Securities  may  assign  the  rights  and  obligations  under  this
Agreement   to  any   subsequent   holder   of  such   Registrable   Securities.
Notwithstanding the foregoing, no transferee will have any of the rights granted
under this  Agreement  (i) until such  transferee  shall have  acknowledged  its
rights  and  obligations  hereunder  by  a  signed  written  statement  of  such
transferee's acceptance of such rights and obligations or (ii) if the transferor
notifies the Company in writing on or prior to such transfer that the transferee
shall not have such rights.

     (g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate  counterparts,  each of which
when so  executed  will be  deemed  to be an  original  and all of  which  taken
together will constitute one and the same instrument.

     (h)  Headings.  The  headings  in this  Agreement  are for  convenience  of
reference only and will not limit or otherwise affect the meaning hereof.

     (i)  Governing  Law.  THIS  AGREEMENT  WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE,  AS APPLIED TO CONTRACTS MADE
AND  PERFORMED  WITHIN THE STATE OF DELAWARE,  WITHOUT  REGARD TO  PRINCIPLES OF
CONFLICT OF LAWS.

     (j) Jurisdiction; Consent to Service of Process.

                  (A) Each party hereby irrevocably and unconditionally submits,
         for itself  and its  property,  to the  exclusive  jurisdiction  of the
         Delaware  state  court  located in  Wilmington,  Delaware or the United
         States District for Delaware (as applicable,  a "Delaware Court"),  and
         any  appellate  court  from any such  court,  in any  suit,  action  or
         proceeding  arising  out  of or  relating  to  this  Agreement,  or for
         recognition  or  enforcement  of any judgment  resulting  from any such
         suit,  action or  proceeding,  and each party  hereby  irrevocably  and
         unconditionally  agrees  that all  claims in  respect of any such suit,
         action or proceeding may be heard and determined in the Delaware Court.

                  (B) It will be a condition  precedent to each party's right to
         bring any such suit,  action or  proceeding  that such suit,  action or
         proceeding,  in the first  instance,  be brought in the Delaware  Court
         (unless such suit,  action or  proceeding  is brought  solely to obtain
         discovery or to enforce a judgment),  and if each such court refuses to
         accept  jurisdiction  with  respect  thereto,   such  suit,  action  or
         proceeding  may  be  brought  in any  other  court  with  jurisdiction;
         provided  that the  foregoing  will not  apply to any  suit,  action or
         proceeding by a party seeking  indemnification or contribution pursuant
         to  this  Agreement  or  otherwise  in  respect  of a suit,  action  or
         proceeding against such party by a thirty party if such suit, action or
         proceeding by such party seeking  indemnification  or  contribution  is
         brought in the same  court as the suit,  action or  proceeding  against
         such party.

                  (C) No party may move to (i) transfer any such suit, action or
         proceeding  from the  Delaware  Court  to  another  jurisdiction,  (ii)
         consolidate any such suit, action or proceeding brought in the Delaware
         Court with a suit,  action or  proceeding in another  jurisdiction,  or
         (iii)  dismiss  any such  suit,  action or  proceeding  brought  in the
         Delaware  Court  for the  purpose  of  bringing  the  same  in  another
         jurisdiction.

                  (D) Each party hereby irrevocably and unconditionally  waives,
         to the fullest  extent it may legally  and  effectively  do so, (i) any
         objection  which it may now or hereafter have to the laying of venue of
         any suit,  action or  proceeding  arising  out of or  relating  to this
         Agreement in the Delaware  Court,  (ii) the defense of an  inconvenient
         forum to the maintenance of such suit, action or proceeding in any such
         court, and (iii) the right to object, with respect to such suit, action
         or  proceeding,  that such court does not have  jurisdiction  over such
         party.  Each party  irrevocably  consents  to service of process in any
         manner permitted by law.

     (k) Severability.  If any term, provision,  covenant or restriction of this
Agreement is held by a court of competent  jurisdiction  to be invalid,  void or
unenforceable,   the   remainder  of  the  terms,   provisions,   covenants  and
restrictions  set forth  herein will remain in full force and effect and will in
no way be affected,  impaired or  invalidated,  and the parties  hereto will use
their best efforts to find and employ an  alternative  means to achieve the same
or substantially the same result as that  contemplated by such term,  provision,
covenant  or  restriction.  It is  hereby  stipulated  and  declared  to be  the
intention of the parties  that they would have  executed  the  remaining  terms,
provisions,  covenants and restrictions  without including any of such which may
be hereafter declared invalid, void or unenforceable.

     (l) Entire Agreement.  This Agreement is intended by the parties as a final
expression  of their  agreement  and is intended to be a complete and  exclusive
statement of the agreement and understanding of the parties hereto in respect of
the  registration  rights granted by the Company with respect to the Registrable
Securities.  This Agreement  supersedes all prior agreements and  understandings
among the parties with respect to such registration rights.

     (m)  Attorneys'  Fees. In any action or  proceeding  brought to enforce any
provision of this Agreement,  or where any provision  hereof is validly asserted
as a defense, the prevailing party, as determined by the court, will be entitled
to recover reasonable attorneys' fees in addition to any other available remedy.

                            [Signature page follows]

<PAGE>

                  IN WITNESS  WHEREOF,  the parties have executed this Agreement
as of the date first written above.

                                                     EXPLORER HOLDINGS, L.P.

                                          By:    Explorer Holdings GenPar, LLC,
                                                 its General Partner

                                          By:   /s/ William T. Cavanaugh, Jr.
                                                ----------------------------
                                                Name:  William T. Cavanaugh, Jr.
                                                Title: Vice President

                                              OMEGA HEALTHCARE INVESTORS, INC.

                                           By:  /s/ Susan Allene Kovach
                                                -----------------------
                                                  Name:  Susan Allene Kovach
                                                  Title: Vice PresidentLOAN AGREEMENT

                                  BY AND AMONG

                        OMEGA HEALTHCARE INVESTORS, INC.
                        AND CERTAIN OF ITS SUBSIDIARIES,

                           THE BANKS SIGNATORY HERETO

                                       AND

                                FLEET BANK, N.A.,
                             AS AGENT FOR SUCH BANKS

                                  JUNE 15, 2000

<PAGE>

                                                 TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                       PAGE

<S>                                                                                                     <C>

Article 1.     Definitions...............................................................................1

Section 1.0.      Defined Terms..........................................................................1
Section 1.0.      GAAP..................................................................................18

Article 1.     Commitments; Loans; Letters of Credit; Collateral........................................19

Section 1.0.      Loans.................................................................................19
Section 1.0.      Letters of Credit.....................................................................19
Section 1.0.      Notices Relating to Loans.............................................................24
Section 1.0.      Disbursement of Loan Proceeds.........................................................25
Section 1.0.      Notes.................................................................................25
Section 1.0.      Payment of Loans; Voluntary Changes...................................................25
Section 1.0.      Interest..............................................................................27
Section 1.0.      Fees..................................................................................28
Section 1.0.      Use of Proceeds of Loans..............................................................29
Section 1.0.      Collateral............................................................................29
Section 1.0.      Minimum Amounts of Borrowings,........................................................30
Section 1.0.      Time and Method of Payments...........................................................30
Section 1.0.      Lending Offices.......................................................................31
Section 1.0.      Several Obligations...................................................................31
Section 1.0.      Pro Rata Treatment Among Banks........................................................31
Section 1.0.      Non-Receipt of Funds by the Agent.....................................................31
Section 1.0.      Sharing of Payments and Set-Off Among Banks...........................................31
Section 1.0.      Conversion of Loans...................................................................32
Section 1.0.      Additional Costs; Capital Requirements................................................32
Section 1.0.      Limitation on Types of Loans..........................................................34
Section 1.0.      Illegality............................................................................34
Section 1.0.      Certain Conversions pursuant to Sections 2.19 and 2.21................................35
Section 1.0.      Indemnification.......................................................................35

Article 1.     Representations and Warranties...........................................................36

Section 1.0.      Organization..........................................................................36
Section 1.0.      Power, Authority, Consents............................................................36
Section 1.0.      No Violation of Law or Agreements.....................................................37
Section 1.0.      Due Execution, Validity, Enforceability...............................................37
Section 1.0.      Title to Properties, Priority of Liens................................................37
Section 1.0.      Judgments, Actions, Proceedings.......................................................37
Section 1.0.      No Defaults, Compliance With Laws.....................................................38
Section 1.0.      Burdensome Documents..................................................................38
Section 1.0.      Financial Statements; Projections.....................................................38
Section 1.0.      Tax Returns...........................................................................39
Section 1.0.      Intangible Assets.....................................................................39
Section 1.0.      Regulation U..........................................................................39
Section 1.0.      Name Changes, Mergers, Acquisitions...................................................39
Section 1.0.      Full Disclosure.......................................................................39
Section 1.0.      Licenses and Approvals................................................................40
Section 1.0.      ERISA.................................................................................40
Section 1.0.      REIT Status...........................................................................40

Article 1.     Conditions to the Loans and Letters of Credit............................................40

Section 1.0.      Conditions to Initial Loan(s).........................................................40
Section 1.0.      Conditions to Subsequent Loans........................................................43
Section 1.0.      Conditions to Issuance of L/Cs........................................................43
Section 1.0.      Termination of this Agreement.........................................................44

Article 1.     Delivery of Financial Reports,   Documents and Other Information.........................44

Section 1.0.      Annual Financial Statements...........................................................44
Section 1.0.      Quarterly Financial Statements........................................................44
Section 1.0.      Compliance Information................................................................45
Section 1.0.      No Default Certificate................................................................45
Section 1.0.      Certificate of Accountants............................................................45
Section 1.0.      Intentionally Omitted.................................................................45
Section 1.0.      Business Plan and Budget..............................................................45
Section 1.0.      Quarterly Operator Reports............................................................46
Section 1.0.      Accountants' Reports..................................................................46
Section 1.0.      Copies of Documents...................................................................46
Section 1.0.      Notices of Defaults...................................................................46
Section 1.0.      ERISA Notices and Requests............................................................46
Section 1.0.      Additional Information................................................................47

Article 1.     Affirmative Covenants....................................................................47

Section 1.0.      Books and Records.....................................................................47
Section 1.0.      Inspections and Audits; Appraisals....................................................47
Section 1.0.      Maintenance and Repairs...............................................................48
Section 1.0.      Continuance of Business...............................................................48
Section 1.0.      Copies of Corporate Documents.........................................................48
Section 1.0.      Perform Obligations...................................................................48
Section 1.0.      Notice of Litigation..................................................................48
Section 1.0.      Insurance.............................................................................49
Section 1.0.      Financial Covenants...................................................................49
Section 1.0.      Notice of Certain Events..............................................................50
Section 1.0.      Comply with ERISA.....................................................................50
Section 1.0.      Environmental Compliance..............................................................50
Section 1.0.      Maintenance of REIT Status............................................................50

Article 1.     Negative Covenants.......................................................................50

Section 1.0.      Indebtedness..........................................................................51
Section 1.0.      Liens.................................................................................51
Section 1.0.      Guaranties............................................................................51
Section 1.0.      Mergers, Acquisitions.................................................................52
Section 1.0.      Redemptions; Distributions............................................................52
Section 1.0.      Changes in Structure..................................................................53
Section 1.0.      Disposition of Assets.................................................................53
Section 1.0.      Investments...........................................................................53
Section 1.0.      Fiscal Year...........................................................................54
Section 1.0.      ERISA Obligations.....................................................................55
Section 1.0.      Capital Expenditures..................................................................55
Section 1.0.      Use of Cash...........................................................................55
Section 1.0.      Transactions with Affiliates..........................................................55
Section 1.0.      Hazardous Material....................................................................56
Section 1.0.      Interest Rate Protection..............................................................56
Section 1.0.      Double Negative Pledge................................................................56

Article 1.     Events of Default........................................................................56

Section 1.0.      Payments..............................................................................56
Section 1.0.      Certain Covenants.....................................................................57
Section 1.0.      Other Covenants.......................................................................57
Section 1.0.      Other Defaults........................................................................57
Section 1.0.      Representations and Warranties........................................................57
Section 1.0.      Bankruptcy............................................................................57
Section 1.0.      Judgments.............................................................................58
Section 1.0.      ERISA.................................................................................58
Section 1.0.      Material Adverse Effect...............................................................58
Section 1.0.      Ownership.............................................................................58
Section 1.0.      REIT Status, Etc......................................................................59
Section 1.0.      Environmental.........................................................................59
Section 1.0.      Default by Operator...................................................................59
Section 1.0.      Liens.................................................................................59

Article 1.     The Agent................................................................................60

Section 1.0.      Appointment, Powers and Immunities....................................................60
Section 1.0.      Reliance by Agent.....................................................................60
Section 1.0.      Events of Default.....................................................................60
Section 1.0.      Rights as a Bank......................................................................61
Section 1.0.      Indemnification.......................................................................61
Section 1.0.      Non-Reliance on Agent and other Banks.................................................61
Section 1.0.      Failure to Act........................................................................62
Section 1.0.      Resignation or Removal of Agent.......................................................62
Section 1.0.      Sharing of Payments...................................................................62

Article 1.     Miscellaneous Provisions.................................................................63

Section 1.0.      Fees and Expenses; Indemnity..........................................................63
Section 1.0.      Taxes.................................................................................64
Section 1.0.      Payments..............................................................................65
Section 1.0.      Survival of Agreements and Representations; Construction..............................65
Section 1.0.      Lien on and Set-off of Deposits.......................................................66
Section 1.0.      Modifications, Consents and  Waivers; Entire Agreement................................66
Section 1.0.      Remedies Cumulative; Counterclaims....................................................66
Section 1.0.      Further Assurances....................................................................67
Section 1.0.      Notices...............................................................................67
Section 1.0.      Counterparts..........................................................................68
Section 1.0.      Severability..........................................................................68
Section 1.0.      Binding Effect; No Assignment.........................................................69
Section 1.0.      Assignments and Participations by Banks...............................................69
Section 1.0.      Delivery of Tax Forms.................................................................71
Section 1.0.      GOVERNING LAW; CONSENT TO.............................................................72
Section 1.0.      Joint and Several Obligations.........................................................73

Exhibits

    1             List of Borrowers
    2             List of Approved Operators
    A-1           Form of Tranche A Note
    A-2           Form of Tranche B Note
    B             Form of Assignment and Acceptance
    C             Form of Compliance Certificate

Schedules

     2.10         Collateral Facilities
     3.1          States of Incorporation, Organization and Qualification, and
                     Capitalization of Borrowers
     3.2          Required Consents
     3.6          Judgments, Actions, Proceedings
     3.7          Existing Defaults
     3.8          Burdensome Documents
     3.9          Material  Liabilities and  Obligations in Addition to those
                     disclosed on the Company's Financial Statements
     3.13         Name Changes, Mergers, Acquisitions
     3.16         Employee Benefit Plans
     7.1          Permitted Indebtedness and Guaranties
     7.2          Permitted Liens
     7.8          Permitted Investments

</TABLE>

<PAGE>

                                 LOAN AGREEMENT

         AGREEMENT, made this 15th day of June, 2000, by and among:

         Each  of  the  corporations  listed  on  Exhibit  1  annexed  hereto
(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 BANK,  N.A.,  a national  banking  association,  as agent for the
Banks (in such  capacity,  together with its  successors in such  capacity,  the
"Agent");

                              W I T N E S S E T H:

         WHEREAS,  the  Borrowers  wish to  obtain  loans  from the Banks in the
aggregate principal sum of up to One Hundred Seventy Five Million ($175,000,000)
Dollars,  and the Banks are  willing to make such loans to the  Borrowers  in an
aggregate  principal  amount  of up to  such  sum on the  terms  and  conditions
hereinafter set forth;

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
covenants contained herein, the parties hereto agree as follows:

Article 1.        Definitions.

     Section 1.1. Defined Terms.

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

                  "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 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.

                  "Affected Loans":  as defined in Section 2.22 hereof.

                  "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.

                  "Applicable  Margin":  as at any date of  determination
thereof,  the applicable  percentage set forth below opposite the Leverage Ratio
as at such date of determination:

<TABLE>
<CAPTION>

<S>                   <C>                                       <C>                              <C>
------------------------------------------------- ----------------------------------- --------------------------------
                                                          Applicable Margin                  Applicable Margin
                 Leverage Ratio                          for Prime Rate Loans                 for LIBOR Loans
------------------------------------------------- ----------------------------------- --------------------------------
------------------------------------------------- ----------------------------------- --------------------------------
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>

The determination of the applicable  percentage  pursuant to the table 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.

                  "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. ss.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.

                  "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":   as  at  any  date  of
determination   thereof,  the  applicable percentage set forth below opposite
the Leverage Ratio as at such date of determination:

<TABLE>
<CAPTION>
<S>                          <C>                                                           <C>

----------------------------------------------------------------------- ----------------------------------------------
                            Leverage Ratio                                        Commitment Fee Percentage
----------------------------------------------------------------------- ----------------------------------------------
----------------------------------------------------------------------- ----------------------------------------------
Greater than or equal to 5.0:1.0                                                            0.50%
----------------------------------------------------------------------- ----------------------------------------------
----------------------------------------------------------------------- ----------------------------------------------
Less than 5.0:1.0 but greater than or equal to 4.5:1.0                                      0.45%
----------------------------------------------------------------------- ----------------------------------------------
----------------------------------------------------------------------- ----------------------------------------------
Less than 4.5:1.0 but greater than or equal to 4.0:1.0                                      0.35%
----------------------------------------------------------------------- ----------------------------------------------
----------------------------------------------------------------------- ----------------------------------------------
Less than 4.0:1.0                                                                           0.30%
----------------------------------------------------------------------- ----------------------------------------------

</TABLE>

The determination of the applicable  percentage  pursuant to the table 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 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 subsection 2.1(b) 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.

                  "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 "$":  awful 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);

                  (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.

                  "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.

                  "Existing L/Cs":  as defined in subsection 2.2(a)(i) 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.

                  "Fleet":  Fleet Bank,  N.A., 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  of  Omega  on a consolidated basis (other than contingent
liabilities) 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  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  Indebtedness  repaid with the proceeds of the
Equity Contribution or the 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.

                  "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":  as at any date of  determination
thereof,  the applicable  percentage set forth below opposite the Leverage Ratio
as at such date of determination:

<TABLE>
<CAPTION>
<S>                                 <C>                                                     <C>

----------------------------------------------------------------------- ----------------------------------------------
                            Leverage Ratio                                           L/C Fee Percentage
----------------------------------------------------------------------- ----------------------------------------------
----------------------------------------------------------------------- ----------------------------------------------
Greater than or equal to 5.0:1.0                                                            3.25%
----------------------------------------------------------------------- ----------------------------------------------
----------------------------------------------------------------------- ----------------------------------------------
Less than 5.0:1.0 but greater than or equal to 4.5:1.0                                      3.00%
----------------------------------------------------------------------- ----------------------------------------------
----------------------------------------------------------------------- ----------------------------------------------
Less than 4.5:1.0 but greater than or equal to 4.0:1.0                                      2.75%
----------------------------------------------------------------------- ----------------------------------------------
----------------------------------------------------------------------- ----------------------------------------------
Less than 4.0:1.0                                                                           2.50%
----------------------------------------------------------------------- ----------------------------------------------

</TABLE>

The determination of the applicable  percentage  pursuant to the table 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
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 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,  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.

                  "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.

                  "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 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(b) 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.

                  "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) 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.

                  "Origination Fee":  as defined in subsection 2.8(a) hereof.

                  "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 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 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.

                  "Revolving  Credit  Commitment":  as to each Bank, its Tranche
A Revolving  Credit  Commitment, Tranche B Revolving Credit  Commitment, or
collectively  its Tranche A Revolving  Credit  Commitment and Tranche B
Revolving Credit Commitment, in each case, as applicable.

                  "Revolving Credit Commitment Termination Date":  December 31,
2002.

                  "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  Seventy-Five
Million  ($175,000,000)  Dollars,  as such amount may be increased or reduced in
accordance with the terms hereof.

                  "Tranche A Credit Loans":  as defined in subsection 2.1(a)
hereof.

                  "Tranche A Note(s)":  as defined in subsection 2.5(a) hereof.

                  "Tranche A Revolving Credit Commitment":  as to each Bank, the
obligation of such Bank to make Tranche A 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 "Tranche A Revolving  Credit  Commitment" as such
amount is subject to increase or reduction in accordance with the terms hereof.

                  "Tranche B Credit Loans":  as defined in subsection 2.1(b)
hereof.

                  "Tranche B Note(s)":  as defined in subsection 2.5(a)(ii)
hereof.

                  "Tranche B Revolving Credit Commitment":  as to each Bank, the
obligation of such Bank to make Tranche B 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 "Tranche B Revolving  Credit  Commitment" as such
amount is subject to increase or reduction 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.

                  "Unused  Commitment":  as at any  date,  for  each  Bank,  the
difference,  if any, between:  (a) the amount of such Bank's Tranche A Revolving
Credit Commitment and Tranche B Revolving Credit  Commitment,  each 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.

         Article 2. Commitments; Loans; Letters of Credit; Collateral.

                    Section 2.1. Loans.

(a)  Tranche A Credit Loans. Each Bank hereby severally agrees, on the terms and
     subject to the conditions of this Agreement,  to make loans (individually a
     "Tranche A Credit Loan", collectively, the "Tranche A 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 Tranche A Revolving Credit
     Commitment of such Bank as then in effect; provided,  however, that the sum
     of (x) the aggregate  principal amount of Tranche A Credit Loans,  plus (y)
     the  aggregate  principal  amount of Tranche B Credit  Loans,  plus (z) 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  Tranche A Credit  Loans.  The Tranche A Credit  Loans shall be in
     amounts  up to an  aggregate  outstanding  at any one  time of One  Hundred
     Thirty-One   Million  Nine  Hundred  Three  Thousand   Sixteen  and  00/100
     ($131,903,016.00) Dollars.

(b)  Tranche B Credit Loans. Each Bank hereby severally agrees, on the terms and
     subject to the conditions of this Agreement,  to make loans (individually a
     "Tranche B Credit Loan",  collectively,  the "Tranche B Credit Loans";  the
     Tranche A Credit  Loans  and the  Tranche  B Credit  Loans are  hereinafter
     sometimes  referred  to  individually  as a "Credit  Loan" or a "Loan"  and
     collectively as the "Credit Loans" or the "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  Tranche B  Revolving  Credit
     Commitment of such Bank as then in effect; provided,  however, that the sum
     of (x) the aggregate  principal amount of Tranche B Credit Loans,  plus (y)
     the  aggregate  principal  amount of Tranche A Credit  Loans,  plus (z) 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  Tranche B Credit  Loans.  The Tranche B Credit  Loans shall be in
     amounts  up to an  aggregate  outstanding  at any one  time of  Forty-Three
     Million   Ninety-Six   Thousand   Nine  Hundred   Eighty-Four   and  00/100
     ($43,096,984.00) 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   Tranche  B   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;
                         provided,  however,  that each L/C currently issued and
                         outstanding    under    the   1997    Loan    Agreement
                         (collectively,  the "Existing  L/Cs") shall be deemed a
                         utilization   of  the   Tranche  A   Revolving   Credit
                         Commitment  of each  Bank in an  amount  equal  to each
                         Bank's  pro  rata  share  of the  face  amount  of each
                         Existing L/C, and provided  further that if at the time
                         the Borrowers make an Issuance  Request no availability
                         exists under the Tranche B Revolving Credit Commitment,
                         the L/C shall be deemed a utilization  of the Tranche A
                         Revolving  Credit  Commitment  to the extent  permitted
                         hereunder.

                    (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  outstanding  at  any  one  time  hereunder
                         (including  the Existing L/Cs) 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 Tranche B Credit Loan (or if at the time
                         no  availability  exists  under the Tranche B Revolving
                         Credit  Commitment,  a  Tranche  A  Credit  Loan to the
                         extent  permitted  hereunder)  (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 Tranche B Credit
                         Loans or  Tranche A Credit  Loans,  as the case may be,
                         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  Tranche B Credit
                         Loans or  Tranche A Credit  Loans,  as the case may be,
                         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;

                    (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 Tranche A Revolving  Credit  Commitment or
                         its Tranche B Revolving Credit Commitment,  as the case
                         may be)  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 its  Tranche A Revolving
                         Credit  Commitment  or its Tranche B  Revolving  Credit
                         Commitment,  as the case may be,  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  Tranche B Credit
                         Loans or Tranche A Credit Loans, as the case may be, 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
                         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 (6) for any
                    consequence  arising  from causes  beyond the 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 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.  Except as otherwise
specifically stated herein, each borrowing shall be a Tranche A borrowing if and
to  the  extent  availability  exists  under  the  Tranche  A  Revolving  Credit
Commitment; and otherwise shall be a Tranche B borrowing.

               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)  (i) The  Tranche A 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-1
                    hereto  (each,  a  "Tranche  A Note" and  collectively,  the
                    "Tranche A Notes"). Each Tranche A Note shall be dated as of
                    the Closing Date, shall be payable to the order of such Bank
                    in a  principal  amount  equal  to  such  Bank's  Tranche  A
                    Revolving  Credit  Commitment as  originally in effect,  and
                    shall otherwise be duly completed. The Tranche A Notes shall
                    be payable as provided in Sections 2.1 and 2.6 hereof.

                    (ii) The  Tranche B 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-2 hereto (each, a "Tranche B Note" and  collectively,
                         the  "Tranche  B  Notes";  the  Tranche A Notes and the
                         Tranche B Notes are hereinafter  sometimes  referred to
                         individually  as  a  "Note"  and  collectively  as  the
                         "Notes").  Each Tranche B Note shall be dated as of the
                         Closing  Date,  shall be  payable  to the order of such
                         Bank in a principal amount equal to such Bank's Tranche
                         B Revolving Credit  Commitment as originally in effect,
                         and shall  otherwise be duly  completed.  The Tranche B
                         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 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 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 (and, so long as after giving effect thereto
                    no Event of Default  exists and the LTV Ratio is not greater
                    than 0.667:1.000 (as evidenced by the relevant  Appraisals),
                    the Borrowers  may reborrow  Tranche A Loans in an amount up
                    to such  Net  Proceeds  from  Dispositions  plus  any  other
                    amounts  previously repaid from any other source,  and apply
                    such amounts to the  repayment of the Bonds or for any other
                    purpose   permitted   under  Section  2.9),  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.  In no event  shall the  proceeds  of any
                    borrowing  under  Tranche  B  be  used  either  directly  or
                    indirectly  to repay  amounts  outstanding  under Tranche A.
                    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  Equity
                    Contribution, or (iii) 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.

               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.

               (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)  (i) On the later of (A) the  execution  and delivery of this
                    Agreement,  or (B) the closing of the sale by Omega to Tenet
                    Healthsystem  Philadelphia,  Inc.  of three  medical  office
                    buildings  and a parking deck  located  adjacent to Graduate
                    Hospital in Philadelphia, Pennsylvania (the "Graduate Sale")
                    (but in no event later than the Closing Date), the Borrowers
                    shall  pay to the  Agent,  for the  ratable  benefit  of the
                    Banks,   a  portion  in  the  amount  of   $300,000  of  the
                    non-refundable  origination  fee in the aggregate  amount of
                    $1,312,500 (the "Origination  Fee"), and (ii) on the Closing
                    Date, the Borrowers shall pay to the Agent,  for the ratable
                    benefit  of  the  Banks,  the  balance  (in  the  amount  of
                    $1,012,500) of the Origination 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,  (ii) (A) a  portion  in the  amount  of
                    $125,000  of  the   non-refundable   arrangement   fee  (the
                    "Arrangement  Fee") on the  later of (x) the  execution  and
                    delivery of this Agreement, or (y) the Graduate Sale (but in
                    no event later than the Closing  Date),  and (B) the balance
                    of the  Arrangement  Fee on the Closing Date,  and (iii) (A)
                    $250,000 on account of fees and expenses in accordance  with
                    Section  10.1 hereof on the later of (i) the  execution  and
                    delivery of this  Agreement,  or (ii) the Graduate Sale (but
                    in no  event  later  than  the  Closing  Date),  and (B) the
                    balance of such fees and expenses on the Closing Date.

               (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.

               (e)  The Origination 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 Origination 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) to repay in full all outstanding  Indebtedness  under the 1997 Loan
Agreement,  (b) for working capital  purposes,  (c) subject to subsection 2.2(a)
hereof, for the issuance of L/C's to beneficiaries  designated by the Borrowers,
and (d) for general corporate purposes  (including,  without  limitation,  those
permitted under Sections 7.4, 7.5 and 7.8 hereof); provided, however, that prior
to the repayment in full of the Bonds or  satisfaction to the Banks that sources
of funds are and will remain  available to repay in full the Bonds,  none of the
proceeds  of the  Tranche  B Credit  Loans  may be used for  investments  in, or
acquisitions  of,  Healthcare  Assets.  No proceeds  of the Credit  Loans may be
utilized  to repay  any  Indebtedness  for  borrowed  money,  including  without
limitation any of the Bonds, except as provided in subsection 2.6(d) hereof. For
purposes  of this  Agreement,  provided no Event of Default is  continuing,  all
funds which under Section 2.6(d) may be reborrowed and used for repayment of the
Bonds shall be deemed  available  for repayment of the Bonds.  Furthermore,  for
purposes of this  Agreement,  provided  that (i)  Explorer  Holdings,  L.P.  has
purchased $100,000,000 of Series C Preferred Stock of Omega substantially on the
terms set forth in the  Investment  Agreement,  (ii) the Senior  Notes have been
paid in full, and (iii) Explorer Holdings,  L.P. remains obligated to provide to
Omega the Additional Equity Financing (as defined in the Investment  Agreement),
the Borrowers shall be deemed to have funds which are and will remain  available
to repay in full the Bonds.

               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, 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".

               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.

                    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 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 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 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.

          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 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.

     Article 3. Representations and Warranties.

                  Each of the Borrowers  hereby  represents  and warrants to the
Banks and the Agent,  and shall again represent and warrant to the Banks and the
Agent on the Closing Date, that:

          Section 3.1. Organization.

          (a)  Each Borrower is duly  organized and validly  existing  under the
               laws of its  state of  organization  and has the power to own its
               assets and to  transact  the  business  in which it is  presently
               engaged  and in which it proposes  to be  engaged.  Schedule  3.1
               hereto accurately and completely lists, as to each Borrower:  (i)
               the state of  incorporation  or organization of each such entity,
               (ii) as to each of them that is a  corporation,  the  classes and
               number of authorized and  outstanding  shares of capital stock of
               each such  corporation  and, with respect to the Borrowers  other
               than  Omega,  the  owners of such  outstanding  shares of capital
               stock, (iii) as to each of them that is a legal entity other than
               a corporation (but not a natural person),  the type and amount of
               equity interests  authorized and outstanding of each such entity,
               and the owners of such equity interests, and (iv) the business in
               which each of such  entities  is  engaged.  All of the  foregoing
               shares or other equity  interests that are issued and outstanding
               have  been  duly  and  validly  issued  and are  fully  paid  and
               non-assessable.  Except as set forth on Schedule 3.1, none of the
               Borrowers has any Subsidiary.

          (b)  Each  Borrower is in good  standing in its state of  organization
               and in each state in which it is qualified to do business.  There
               are no  jurisdictions  other  than as set forth on  Schedule  3.1
               hereto in which the character of the properties owned or proposed
               to be owned by each Borrower or in which the  transaction  of the
               business of each  Borrower as now  conducted or as proposed to be
               conducted requires or will require such Borrower to qualify to do
               business  and as to which  failure  so to  qualify  could  have a
               Material Adverse Effect on such Borrower.

               Section 3.2. Power, Authority, Consents.

     Each  Borrower  has the power to  execute,  deliver  and  perform  the Loan
Documents to be executed by it. Each Borrower has the power to borrow  hereunder
and has  taken  all  necessary  corporate  action  to  authorize  the  borrowing
hereunder on the terms and conditions of this Agreement. Each Borrower has taken
all  necessary  action,  corporate or  otherwise,  to authorize  the  execution,
delivery and  performance of the Loan Documents to be executed by it. No consent
or approval  of any  landlord  or  mortgagee,  no waiver of any Lien or right of
distraint or other similar right and no consent,  license,  certificate of need,
approval,  authorization or declaration of any governmental authority, bureau or
agency,  is or will be required in connection  with the  execution,  delivery or
performance  by each  Borrower  or any other  Loan  Party,  or the  validity  or
enforcement  of the Loan  Documents or any Lien created and granted  thereunder,
except  (i) to the  extent  that the  failure to obtain  such  consent,  waiver,
license,  certificate of need, approval,  authorization or declaration could not
in the  aggregate  have a  Material  Adverse  Effect;  or (ii) as set  forth  on
Schedule 3.2 hereto,  each of which either has been duly and validly obtained on
or  prior  to the  date  hereof  and is now in  full  force  and  effect,  or is
designated on Schedule 3.2 as waived by the Required Banks.

               Section 3.3. No Violation of Law or Agreements.

     The  execution and delivery by each Borrower of each Loan Document to which
it is a party and performance by it hereunder and  thereunder,  will not violate
any  provision  of law and will not  conflict  with or result in a breach of any
order,  writ,  injunction,  ordinance,  resolution,  decree,  or  other  similar
document or instrument of any court or governmental authority, bureau or agency,
domestic or foreign,  or any  certificate  of  incorporation  or by-laws of each
Borrower,  or create (with or without the giving of notice or lapse of time,  or
both) a default  under or breach of any  agreement,  bond,  note or indenture to
which each  Borrower  is a party,  or by which each  Borrower is bound or any of
their respective properties or assets is affected,  except for such defaults and
breaches which in the aggregate could not have a Material  Adverse Effect on the
Borrowers, or result in the imposition of any Lien of any nature whatsoever upon
any of the properties or assets owned by or used in connection with the business
of each  Borrower,  except for the Liens  created  and  granted  pursuant to the
Security Documents.

               Section 3.4. Due Execution, Validity, Enforceability.

     This  Agreement  has been,  and each  other  Loan  Document  to which  each
Borrower is a party will be, duly  executed and  delivered by each Borrower that
is a party thereto and each constitutes, or will on the Closing Date constitute,
the valid and  legally  binding  obligation  of each  Borrower,  enforceable  in
accordance  with  its  terms,  except  as such  enforcement  may be  limited  by
applicable bankruptcy, insolvency, reorganization,  moratorium, or other similar
laws,  now or hereafter in effect,  relating to or affecting the  enforcement of
creditors'  rights generally and except that the remedy of specific  performance
and other equitable remedies are subject to judicial discretion.

               Section 3.5. Title to Properties, Priority of Liens.

     Each of the  Borrowers has good and  marketable  title in fee simple to, or
valid  leasehold  interests  in, or valid  mortgage  liens on, all real property
necessary  or used in the  ordinary  course  of its  business,  except  for such
defects in title as could not, individually or in the aggregate, have a Material
Adverse Effect.  All of the properties and assets covered by a Security Document
(other than those encumbered by a Mortgage in favor of one of the Borrowers) are
owned by each of the Borrowers, as applicable, free and clear of any Lien of any
nature  whatsoever,  except as provided  for in the Security  Documents,  and as
permitted  by  Section  7.2  hereof.  The Liens  that,  simultaneously  with the
execution  and delivery of this  Agreement and the  consummation  of the initial
Loans, have been created and granted by the Security Documents  constitute valid
perfected  first  Liens on the  properties  and assets  covered by the  Security
Documents,  subject to no prior or equal Lien except as permitted by Section 7.2
hereof.

               Section 3.6. Judgments, Actions, Proceedings.

     Except as set  forth on  Schedule  3.6  hereto,  there  are no  outstanding
judgments,   actions  or  proceedings,   including,   without  limitation,   any
Environmental  Proceeding,  pending before any court or governmental  authority,
bureau or agency, with respect to or, to the best of each Borrower's  knowledge,
threatened against or affecting such Borrower involving,  (i) in the case of any
court  proceeding,  a claim in  excess  of Two  Million  Five  Hundred  Thousand
($2,500,000)  Dollars,  and (ii) in the case of any  outstanding  judgments,  in
excess of One Million ($1,000,000)  Dollars, nor, to the best of each Borrower's
knowledge,  is there any reasonable basis for the institution of any such action
or proceeding  that is probable of assertion,  nor are there any such actions or
proceedings in which any Borrower is a plaintiff or complainant.

               Section 3.7. No Defaults, Compliance With Laws.

     Except as set forth on Schedule  3.7 hereto,  none of the  Borrowers  is in
default  under  any  agreement,  ordinance,   resolution,  decree,  bond,  note,
indenture,  order or judgment to which it is a party or by which it is bound, or
any other agreement or other instrument by which any of the properties or assets
owned by it or used in the conduct of its  business is affected,  which  default
could  have a  Material  Adverse  Effect on such  Borrower.  Each  Borrower  has
complied  and is in  compliance  in  all  respects  with  all  applicable  laws,
ordinances and regulations,  resolutions,  ordinances, decrees and other similar
documents and instruments of all courts and  governmental  authorities,  bureaus
and  agencies,  domestic  and  foreign,   including,   without  limitation,  all
applicable  provisions  of  the  Americans  with  Disabilities  Act  (42  U.S.C.
ss.12101-12213)  and  the  regulations  issued  thereunder  and  all  applicable
Environmental  Laws and  Regulations,  non-compliance  with  which  could have a
Material Adverse Effect on such Borrower.

               Section 3.8. Burdensome Documents.

     Except as set forth on Schedule 3.8 hereto,  none of the  Borrowers  is, to
the best of the Borrowers' knowledge, a party to or bound by, nor are any of the
properties or assets owned by any of the Borrowers  used in the conduct of their
respective businesses affected by, any agreement, ordinance, resolution, decree,
bond, note, indenture, order or judgment,  including, without limitation, any of
the foregoing  relating to any  Environmental  Liability,  that  materially  and
adversely affects their respective businesses,  assets or conditions,  financial
or otherwise.

               Section 3.9. Financial Statements; Projections.

               (a)  Each of the  Financial  Statements  is complete and presents
                    fairly the  consolidated  financial  position of Omega as at
                    its date, and has been prepared in accordance with generally
                    accepted  accounting  principles.  To the  best  of  Omega's
                    knowledge,  except as set forth on Schedule 3.9 hereto, none
                    of the  Borrowers to which any of the  Financial  Statements
                    relates,   has  any   material   obligation,   liability  or
                    commitment,   direct  or  contingent   (including,   without
                    limitation,  any  Environmental  Liability),   that  is  not
                    reflected  in  the  Financial   Statements  which  would  be
                    required to be so reflected in accordance  with GAAP.  There
                    has  been  no  material  adverse  change  in  the  financial
                    position or  operations  of any of the  Borrowers  since the
                    date of the latest  balance sheet  included in the Financial
                    Statements  (the "Latest  Balance  Sheet").  Each Borrower's
                    fiscal year is the twelve-month period ending on December 31
                    in each year.

               (b)  The  Projections  have  been  prepared  on the  basis of the
                    assumptions  accompanying  them and  reflect  as of the date
                    thereof  Omega's good faith  projections,  after  reasonable
                    analysis,  of the matters set forth  therein,  based on such
                    assumptions.

               Section 3.10. Tax Returns

     Omega and each of its Subsidiaries have filed all federal,  state and local
tax  returns  required to be filed by them and have not failed to pay any taxes,
or interest and penalties relating thereto,  on or before the due dates thereof.
Except to the extent that  reserves  therefor  are  reflected  in the  Financial
Statements: (i) there are no material federal, state or local tax liabilities of
any of Omega or its Subsidiaries, due or to become due for any tax year ended on
or  prior to the date of the  Latest  Balance  Sheet  relating  to such  entity,
whether  incurred in respect of or measured by the income of such  entity,  that
are not properly  reflected in the Latest Balance Sheet relating to such entity,
and (ii) there are no material  claims  pending or, to the  knowledge of each of
the  Borrowers,  proposed or  threatened  against such entity for past  federal,
state or local taxes,  except  those,  if any, as to which  proper  reserves are
reflected in the Financial Statements.

               Section 3.11. Intangible Assets

     Each  Borrower  possesses all patents,  trademarks,  service  marks,  trade
names,  and copyrights,  and rights with respect to the foregoing,  necessary to
conduct its business as now conducted  and as proposed to be conducted,  without
any conflict  with the patents,  trademarks,  service  marks,  trade names,  and
copyrights and rights with respect to the foregoing, of any other Person.

               Section 3.12. Regulation U.

     No part of the  proceeds  received by any of the  Borrowers  from the Loans
will be used directly or indirectly for: (a) any purpose other than as set forth
in Section 2.9 hereof,  or (b) the purpose of  purchasing  or  carrying,  or for
payment in full or in part of Indebtedness that was incurred for the purposes of
purchasing or carrying,  any "margin stock", as such term is defined in ss.221.3
of  Regulation  U of the Board of Governors of the Federal  Reserve  System,  12
C.F.R., Chapter II, Part 221.

               Section 3.13. Name Changes, Mergers, Acquisitions.

               (a)  Except as set forth on  Schedule  3.13  hereto,  none of the
                    Borrowers  has  within  the  six-year   period   immediately
                    preceding the date of this Agreement  changed its name, been
                    the  surviving  entity  of a  merger  or  consolidation,  or
                    acquired  all or  substantially  all of  the  assets  of any
                    Person.

               (b)  To the  best  of the  Borrowers'  knowledge,  no  Collateral
                    constituting  personal  property  having an  aggregate  fair
                    market  value in excess of $50,000  covered by the  Security
                    Documents  has,  at any time  during the  four-month  period
                    immediately preceding the date hereof, been located anywhere
                    other than at its location on the date hereof.

               Section 3.14. Full Disclosure.

     None of the Financial  Statements,  the  Projections,  nor any certificate,
opinion, or any other statement made or furnished in writing to the Agent or any
Bank by or on behalf of the Borrowers in connection  with this  Agreement or the
transactions  contemplated  herein,  contains any untrue statement of a material
fact,  or  omits  to  state a  material  fact  necessary  in  order  to make the
statements  contained  therein  or herein  not  misleading,  as of the date such
statement was made. There is no fact known to any Borrower that has, or would in
the now  foreseeable  future have, a Material  Adverse  Effect on such Borrower,
which  fact has not been set forth  herein,  in the  Financial  Statements,  the
Projections,  or any certificate,  opinion or other written statement so made or
furnished to the Agent or the Banks.

               Section 3.15. Licenses and Approvals.

               (a)  Each  Borrower  has  all  necessary  licenses,  permits  and
                    governmental authorizations,  including, without limitation,
                    licenses,   permits  and  authorizations  arising  under  or
                    relating to Environmental  Laws and Regulations,  to own and
                    operate its  properties  and to carry on its business as now
                    conducted,  except for licenses,  permits and authorizations
                    the  absence  of which  would  not have a  Material  Adverse
                    Effect on the Borrowers on a consolidated basis.

               (b)  To the best of Omega's knowledge, no violation exists of any
                    applicable  law  pertaining to the ownership or operation of
                    any Facility  constituting  the Collateral that would have a
                    reasonable  likelihood  of  leading  to  revocation  of  any
                    license necessary for the operation of such Facility.

               Section 3.16. ERISA.

               (a)  Except as set forth on  Schedule  3.16  hereto,  no Employee
                    Benefit Plan is  maintained  or has ever been  maintained by
                    any Loan  Party  or any  ERISA  Affiliate,  nor has any Loan
                    Party  or  any  ERISA   Affiliate  ever   contributed  to  a
                    Multiemployer Plan.

               (b)  There are no agreements  which will provide  payments to any
                    officer,   employee,   shareholder  or  highly   compensated
                    individual which will be "parachute  payments" under 280G of
                    the Code that are  nondeductible to any Loan Party and which
                    will be subject to tax under  Section 4999 of the Code which
                    could have a Material Adverse Effect on the Borrowers.

               Section 3.17. REIT Status.

     Omega  currently  has REIT  Status  and has  maintained  REIT  Status  on a
continuous  basis  since  its  formation.  None  of the  Subsidiaries  of  Omega
currently  has  REIT  Status,  but  each  is  designated  as  a  qualified  REIT
subsidiary.

     Article 4. Conditions to the Loans and Letters of Credit.

               Section 4.1. Conditions to Initial Loan(s).

     The  obligation of each Bank to make the initial  Credit Loan to be made by
it hereunder  shall be subject to the  fulfillment  (to the  satisfaction of the
Agent) of the following conditions precedent:

               (a)  Each Borrower shall have executed and delivered to each Bank
                    its Tranche A Note and its Tranche B Note.

               (b)  Each of the Grantors shall have:

                    (i)  executed  and  delivered  to  the  Agent  the  Borrower
                         Security Agreement;

                    (ii) duly  filed   appropriate   Uniform   Commercial   Code
                         financing  statements  in order to enable  the Agent to
                         perfect  and  preserve  its  security  interest  in the
                         Collateral;

                    (iii)delivered to the Agent  acknowledgment  copies  thereof
                         evidencing such filings;

                    (iv) delivered to the Agent:  (A) copies of  certificates of
                         the  issuing  companies  with  respect to  policies  of
                         insurance  owned by the  Operators  covering  or in any
                         manner relating to the Collateral  naming the Borrower,
                         in its capacity as such, as  additional  insured as its
                         interests   may  appear;   and  (B)   evidence  of  the
                         Borrowers'  and  the  Operators'   liability  insurance
                         policies;

                    (v)  executed  and  delivered  to the  Agent,  the  Borrower
                         Mortgages  to be  executed  by it, in  proper  form for
                         recording,  and  delivered to the Agent such  mortgagee
                         title insurance policies,  or commitments to issue such
                         policies,  issued by such title insurance companies, in
                         such  amounts  and with  only such  exceptions,  all as
                         shall be required by and satisfactory to the Agent; and

                    (vi) otherwise  duly  complied  with  all of the  terms  and
                         conditions of the Security  Documents to be executed by
                         it.

               (c)  The Collateral  covered by the Security  Documents  shall be
                    the Eligible  Healthcare  Assets set forth on Schedule  2.10
                    (the "Initial Collateral").  In the event that the Appraised
                    Value of the Initial  Collateral  is less than  $262,500,000
                    additional  Collateral  consisting  of  Additional  Eligible
                    Healthcare  Assets  shall  be  pledged  to  the  Agent  (the
                    "Additional  Collateral")  such that after giving  effect to
                    such pledge,  the Appraised Value of all Collateral  pledged
                    to the Agent pursuant to the Security Documents shall not be
                    less than $262,500,000.

               (d)  The Agent  shall  have  received  documentation  in form and
                    substance  satisfactory  to it that (i)  Explorer  Holdings,
                    L.P. has  purchased,  or shall  concurrently  purchase,  for
                    $100,000,000 (the "Equity  Contribution") Series C Preferred
                    Stock of Omega,  substantially on the terms set forth in the
                    Investment Agreement, and the Senior Notes shall either have
                    been,  or  shall  concurrently  be,  paid in  full or  funds
                    sufficient   to  pay  the   Senior   Notes  in  full   shall
                    concurrently  be  deposited  in  escrow  (in  a  manner  and
                    pursuant to  documentation  reasonably  satisfactory  to the
                    Agent) and then utilized to repay the Senior Notes; and (ii)
                    the  Additional  Equity  Contribution  shall be available to
                    repay,  at least  five days  prior to the  required  payment
                    date,  or earlier  as  required  by the Equity  Contribution
                    Documents,  the Debentures;  it being expressly  agreed that
                    the Tranche B Credit Loans shall not be  available  for this
                    purpose and that the Borrowers  shall utilize the Additional
                    Equity Contribution for such repayment in the event that the
                    Borrowers  do not have other  sources  available  (except as
                    provided in subsection 2.6(d) hereof).

               (e)  The Agent and the Banks shall have received general releases
                    from each  Borrower in their favor and in form and substance
                    satisfactory to the Agent and the Banks.

               (f)  The Agent shall have conducted,  at the Borrowers'  expense,
                    an 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.

               (g)  (i) The  Borrowers  shall  have paid to the  Agent,  for the
                    benefit of the Banks, the Origination Fee.

               (h)  The Borrowers  shall have paid to the Agent,  the Agency Fee
                    and the Arrangement Fee.

               (i)  Counsel to the  Borrowers  shall have  delivered its opinion
                    to, and in form and substance satisfactory to, the Agent.

               (j)  The  Agent  shall  have  received  complete  copies  of  the
                    Financial Statements and the Projections,  each certified as
                    such in a  certificate  executed by an executive  officer of
                    Omega.

               (k)  The Agent shall have received copies of the following:

                    (i)  All of the consents,  approvals and waivers referred to
                         on Schedule 3.2 hereto  (except  only those  which,  as
                         stated on Schedule 3.2, shall not be delivered);

                    (ii) All of the  Mortgages  and the  Leases  covered  by the
                         Borrower  Mortgages  and  such  agreements  and  Leases
                         covered  by the other  Security  Documents  as shall be
                         specifically requested by the Agent;

                    (iii)The  certificates of  incorporation  or the articles or
                         certificates   of   organization   of  each   Borrower,
                         certified by the Secretary of State of their respective
                         states of incorporation or organization;

                    (iv) The by-laws,  operating  agreements or  regulations  or
                         other similar documents of each Borrower,  certified by
                         their respective secretaries ;

                    (v)  An incumbency  certificate  (with specimen  signatures)
                         with respect to each Borrower; and

                    (vi) Good  standing  certificates  as of dates not more than
                         sixty (60) days prior to the date of the initial  Loan,
                         with respect to each  Borrower,  from the  Secretary of
                         State of their  respective  states of  incorporation or
                         organization  and each  state in which  each of them is
                         qualified to do business; and

                    (vii)All corporate  action taken by each of the Borrowers to
                         authorize the  execution,  delivery and  performance of
                         each of the Loan  Documents  to which it is a party and
                         the  transactions  contemplated  thereby,  certified by
                         their respective secretaries.

               (l)  (i) Each of the Borrowers shall have complied and shall then
                    be in  compliance  with  all of  the  terms,  covenants  and
                    conditions of this Agreement;

                    (ii) After giving  effect to the initial  Loan,  there shall
                         exist no Default or Event of Default hereunder; and

                    (iii)The   representations   and  warranties   contained  in
                         Article 3 hereof  shall be true and correct on the date
                         hereof;

and the Agent shall have received a Compliance Certificate dated the date hereof
certifying,  inter alia, that the conditions set forth in this subsection 4.1(l)
are satisfied on such date.

               (m)  All legal  matters  incident to the  initial  Loans shall be
                    satisfactory to counsel to the Agent.

               Section 4.2. Conditions to Subsequent Loans.

     The  obligation  of the Banks to make each  Credit Loan  subsequent  to its
initial Loan shall be subject to the  fulfillment  (to the  satisfaction  of the
Agent) of the following conditions precedent:

               (a)  The  Agent  shall  have  received  a  Borrowing   Notice  in
                    accordance with Section 2.3 hereof.

               (b)  The Agent shall have received a Compliance Certificate dated
                    the date of such Loan and effective as of such date, and the
                    matters certified therein,  including,  without  limitation,
                    the  absence of any  Default or Event of  Default,  shall be
                    true as of such date.

               (c)  All  legal   matters   incident   to  such  Loan   shall  be
                    satisfactory to counsel for the Agent.

               Section 4.3. Conditions to Issuance of L/Cs.

     The  obligation  of the L/C  Issuer to issue an L/C shall be subject to the
fulfillment  (to the  satisfaction  of the L/C Issuer) of (a) the conditions set
forth  in  Section  4.1  hereof,  and (b) the  following  additional  conditions
precedent:

               (a)  The  Borrower(s)  shall have  delivered to the L/C Issuer an
                    Issuance Request pursuant to subsection  2.2(a)(iii) hereof,
                    together with all other  documents  required to be delivered
                    in connection  therewith and all  Applications,  and the L/C
                    Issuer  shall  have  been  paid any and all fees then due in
                    connection therewith.

               (b)  The Agent shall have received a Compliance Certificate dated
                    the date of the issuance of the L/C  Documents and effective
                    as  of  such  date,  and  the  matters  certified   therein,
                    including, without limitation, the absence of any Default or
                    Event of Default, shall be true as of such date.

               (c)  All legal  matters  incident to the L/C  Documents  shall be
                    reasonably satisfactory to counsel for the Agent.

               Section 4.4. Termination of this Agreement.

     The Borrowers, the Banks and the Agent hereby acknowledge that:

               (a)  the 1997  Loan  Agreement  will  continue  to remain in full
                    force and effect  until  such time as all of the  conditions
                    precedent   set  forth  in  Section  4.1  hereof  have  been
                    fulfilled in accordance with the terms thereof; and

               (b)  in the event that any of the conditions  precedent set forth
                    in Section  4.1 hereof has not been waived or  fulfilled  in
                    accordance  with the terms  thereof prior to August 15, 2000
                    or such later date to which all the parties  hereto agree in
                    writing,  then (i) this  Agreement  shall  terminate and the
                    parties hereto shall be relieved of all further  obligations
                    hereunder,  and (ii) the 1997 Loan Agreement  shall continue
                    to remain and full force and effect in  accordance  with its
                    terms.

          Article  5.  Delivery  of  Financial  Reports,   Documents  and  Other
     Information

                  While the Commitments are  outstanding,  and, in the event any
Loan remains  outstanding,  so long as any of the  Borrowers are indebted to the
Banks or the Agent and until  payment in full of the Notes and full and complete
performance  of all of its other  obligations  arising  hereunder,  Omega  shall
deliver to each Bank:

               Section 5.1. Annual Financial Statements

     Annually,  as soon as  available,  but in any event within ninety (90) days
after the last day of each of its fiscal years, a consolidated and consolidating
balance  sheet of Omega and its  Subsidiaries  as at such last day of the fiscal
year,  and  consolidated  and  consolidating  statements  of income and retained
earnings and  statements  of cash flow,  for such fiscal year,  each prepared in
accordance with generally accepted accounting  principles  consistently applied,
in reasonable detail, and, as to the consolidated statements,  certified without
qualification  by Ernst & Young or  another  nationally  recognized  independent
public  accounting  firm  or by  any  other  certified  public  accounting  firm
satisfactory to the Agent, and certified, as to the consolidating statements, by
the chief  financial  officer  of  Omega,  as fairly  presenting  the  financial
position and results of operations of Omega and its  Subsidiaries  as at and for
the year ending on its date and as having been prepared in accordance with GAAP;
provided,  however,  that,  Omega may  satisfy  its  obligations  to deliver the
consolidated financial statements described in this Section 5.1 by furnishing to
the Banks a copy of its annual  report on Form 10-K in  respect  of such  fiscal
year  together with the financial  statements  required to be attached  thereto,
provided  Omega is  required  to file such  annual  report on Form 10-K with the
Securities and Exchange Commission and such filing is actually made.

               Section 5.2. Quarterly Financial Statements.

     As soon as available,  but in any event within  forty-five  (45) days after
the end of each of Omega's fiscal  quarters,  a consolidated  and  consolidating
balance sheet of Omega and the  Subsidiaries  as of the last day of such quarter
and consolidated and  consolidating  statements of income and retained  earnings
and  statements  of cash flow,  for such  quarter,  and on a  comparative  basis
figures for the corresponding  period of the immediately  preceding fiscal year,
all in reasonable  detail,  each such statement to be certified in a certificate
of the chief financial  officer of Omega as accurately  presenting the financial
position and the results of operations of Omega and its  Subsidiaries  as at its
date and for such quarter and as having been  prepared in  accordance  with GAAP
(subject to year-end audit  adjustments);  provided,  however,  that,  Omega may
satisfy  its  obligations  to  deliver  the  consolidated  financial  statements
described in this Section 5.2 by furnishing to the Banks a copy of its quarterly
report  on Form  10-Q in  respect  of such  fiscal  quarter  together  with  the
financial statements required to be attached thereto, provided Omega is required
to file such  quarterly  report on Form 10-Q with the  Securities  and  Exchange
Commission and such filing is actually made.

               Section 5.3. Compliance Information.

     Promptly after a written  request  therefor,  such other  financial data or
information  evidencing compliance with the requirements of this Agreement,  the
Notes and the other Loan Documents, as any Bank may reasonably request from time
to time.

               Section 5.4. No Default Certificate.

     At the same time as it delivers the financial statements required under the
provisions of Sections 5.1 and 5.2 hereof,  a certificate of the chief executive
officer  or chief  financial  officer  of Omega to the  effect  that no Event of
Default  hereunder  and that no default  under any other  material  agreement to
which any Borrower is a party or by which it is bound,  or by which, to the best
knowledge of Omega or any other Borrower, any of its properties or assets, taken
as a whole, may be materially  affected,  and no event which, with the giving of
notice or the lapse of time, or both,  would constitute such an Event of Default
or default, exists, or, if such cannot be so certified, specifying in reasonable
detail the exceptions,  if any, to such  statement.  Such  certificate  shall be
accompanied by a detailed calculation  indicating  compliance with the covenants
contained in Section 6.9 hereof in the form annexed hereto as Exhibit C together
with supporting documentation evidencing any pro forma adjustments.

               Section 5.5. Certificate of Accountants.

     At the same time as it delivers the financial statements required under the
provisions of Section 5.1 hereof,  a certificate  of the  independent  certified
public  accountants of Omega addressed  specifically to both Omega and the Agent
to the effect that during the course of their audit of the  operations  of Omega
and its Subsidiaries and its condition as of the end of the fiscal year, nothing
has come to their  attention  which would indicate that a Default or an Event of
Default  hereunder has occurred or that there was any violation of the covenants
of Omega and its  Subsidiaries  contained  in  Section  6.9 or Article 7 of this
Agreement,  or, if such cannot be so certified,  specifying in reasonable detail
the exceptions, if any, to such statement.

               Section 5.6. Intentionally Omitted.

               Section 5.7. Business Plan and Budget.

     Not later than January 31st in each fiscal year, copies of Omega's business
plan and budget for such fiscal year on a quarterly  basis (together with a copy
in  writing  of the  assumptions  on which such  business  plan and budget  were
based),  each prepared by Omega's chief financial  officer and  illustrating the
projected  income  statements,  balance sheets and statements of changes in cash
flow on a consolidated basis.

               Section 5.8. Quarterly Operator Reports.

                    (a)  As  soon as  available  after  the  end of each  fiscal
                         quarter  of  Omega,  a  copy  of the  quarterly  report
                         submitted  by Omega  to its  Board  of  Directors  with
                         respect to the financial  condition of Operators  which
                         quarterly report shall include a discussion of Operator
                         performance  and a summary of coverage and occupancy by
                         each such Operator.

                    (b)  Such  other   information   regarding   the   financial
                         condition  of the  Operators as the Agent may from time
                         to time reasonably request.

               Section 5.9. Accountants' Reports.

     Promptly upon receipt  thereof,  copies of all other  reports  submitted to
Omega by its  independent  accountants in connection  with any annual or interim
audit  or  review  of the  books  of  Omega  or its  Subsidiaries  made  by such
accountants.

               Section 5.10. Copies of Documents.

     Promptly  upon  their  becoming  available,  copies of any:  (i)  financial
statements,  non-routine reports,  notices (other than routine  correspondence),
requests for waivers and proxy statements,  in each case,  delivered by Omega or
any other Borrower to any of their respective  existing lending  institutions or
creditors;  (ii)  correspondence  or notices received by Omega from any federal,
state or local governmental  authority that regulates the operations of Omega or
any  of  its  Subsidiaries,  relating  to an  actual  or  threatened  change  or
development that would be materially  adverse to Omega and its Subsidiaries on a
consolidated  basis;  (iii)  registration  statements  and  any  amendments  and
supplements  thereto,  and any regular and periodic  reports,  if any,  filed by
Omega  or any of its  Subsidiaries  with  any  securities  exchange  or with the
Securities and Exchange Commission or any governmental  authority  succeeding to
any or all of the functions of the said  Commission;  (iv) letters of comment or
correspondence  sent to Omega by any such securities exchange or such Commission
in relation to Omega or any of its  Subsidiaries  and its  affairs;  (v) written
reports submitted by Omega to its independent accountants in connection with any
annual or interim audit of the books of Omega or its  Subsidiaries  made by such
accountants;   and  (vi)  any  appraisals  received  by  Omega  or  any  of  its
Subsidiaries with respect to the Collateral during the term of this Agreement.

               Section 5.11. Notices of Defaults.

     Promptly,  notice of the occurrence of any Default or Event of Default,  or
any event  that  would  constitute  or cause a  Material  Adverse  Effect in the
condition,   financial  or  otherwise,  or  the  operations  of  Omega  and  its
Subsidiaries on a consolidated basis.

               Section 5.12. ERISA Notices and Requests.

                    (a)  Concurrently with such filing, a copy of each Form 5500
                         that is filed  with  respect to each Plan with the IRS;
                         and

                    (b)  Promptly, upon their becoming available, copies of: (i)
                         all  correspondence  with the PBGC,  the  Secretary  of
                         Labor or any  representative of the IRS with respect to
                         any Plan, relating to an actual or threatened change or
                         development  that  would be  materially  adverse to the
                         Borrower(s);  (ii) all actuarial valuations received by
                         the Borrower(s) with respect to any Plan; and (iii) any
                         notices   of  Plan   termination   filed  by  any  Plan
                         Administrator  (as those  terms are used in ERISA) with
                         the  PBGC  and of any  notices  from  the  PBGC  to the
                         Borrower(s)  with  respect to the intent of the PBGC to
                         institute involuntary termination proceedings.

               Section 5.13. Additional Information.

     Such other material additional information regarding the business,  affairs
and  condition of the  Borrowers  as the Agent may from time to time  reasonably
request,  including,  without  limitation,  quarterly  schedules,  in  form  and
substance  satisfactory  to the Agent,  with respect to Omega on a  consolidated
basis, of recorded liabilities, unfunded commitments, contingent liabilities and
other similar material items. In addition,  the Borrowers shall notify the Agent
in writing of any dividend policy revisions  relating to Omega concurrently with
public notice or disclosure thereof.

          Article 6. Affirmative Covenants.

                  While the Commitments are  outstanding,  and, in the event any
Loan or L/C Obligation remains outstanding,  so long as any Borrower is indebted
to the Banks or the Agent,  and until  payment in full of the Notes and full and
complete  performance of all of its other obligations  arising  hereunder,  each
Borrower shall:

               Section 6.1. Books and Records.

     Keep proper books of record and account in a manner reasonably satisfactory
to the Agent in which full and true  entries  shall be made of all  dealings  or
transactions in relation to its business and activities.

               Section 6.2. Inspections and Audits; Appraisals.

                    (a)  Permit the Banks to make or cause to be made  (prior to
                         an Event of  Default,  at the Banks'  expense and after
                         the  occurrence  of and  during the  continuance  of an
                         Event  of   Default,   at  the   Borrowers'   expense),
                         inspections and audits of any books, records and papers
                         of Omega or any  other  Borrower  and to make  extracts
                         therefrom and copies  thereof,  or to make  appraisals,
                         inspections  and  examinations  of any  properties  and
                         facilities of Omega or any other Borrower on reasonable
                         notice,  at all such  reasonable  times and as often as
                         any Bank may  reasonably  require,  in order to  assure
                         that the Borrowers  are and will be in compliance  with
                         their  obligations  under  the  Loan  Documents  or  to
                         evaluate the Banks'  investment in the then outstanding
                         Notes.

                    (b)  Upon the  occurrence  of an Event  of  Default  arising
                         under Section 8.2 as a result of the Borrowers' failure
                         to comply  with  Section  6.9,  the Agent  may,  at the
                         expense  of the  Borrowers,  obtain an  Appraisal  with
                         respect to each  Facility  included  in the  Collateral
                         and, in the event that based on any such Appraisal, the
                         LTV Ratio is greater  than  0.667:1.00,  the  Borrowers
                         shall  within  five  (5)  Business  Days  of any of the
                         Borrowers  obtaining  knowledge  thereof,   prepay  the
                         Credit  Loans  or grant to the  Agent  for the  ratable
                         benefit   of  the   Banks,   in  order  to  secure  the
                         Obligations,  a valid  perfected first Lien (subject to
                         no prior or equal  Lien  except  as  permitted  by this
                         Agreement) on such  additional or substituted  Eligible
                         Healthcare   Assets  pursuant  to  such  documents  and
                         instruments  as  shall  be  satisfactory  in  form  and
                         substance to the Agent,  such that after giving  effect
                         to such  prepayment or such grant,  the LTV Ratio shall
                         again be equal to or less than 0.667:1.000.

               Section 6.3. Maintenance and Repairs.

     Cause to be maintained in good repair, working order and condition, subject
to normal wear and tear,  all material  properties  and assets from time to time
owned by Omega or any other  Borrower and used in or necessary for the operation
of its  businesses,  and  make or  cause  to be  made  all  reasonable  repairs,
replacements, additions and improvements thereto.

               Section 6.4. Continuance of Business.

     Do, or cause to be done,  all things  reasonably  necessary to preserve and
keep in full force and effect the  corporate  existence  of Omega and each other
Borrower and all permits, rights and privileges necessary for the proper conduct
of its business,  and continue to engage in the same line of business and comply
in all material respects with all applicable laws, regulations and orders.

               Section 6.5. Copies of Corporate Documents.

     Subject to the  prohibitions  set forth in  Section  7.6  hereof,  promptly
deliver  to  the  Agent  copies  of  any  amendments  or  modifications  to  the
certificate  of  incorporation  and  by-laws of Omega and each  other  Borrower,
certified with respect to the certificate of  incorporation  by the Secretary of
State of its state of  incorporation  and,  with respect to the by-laws,  by the
secretary or assistant secretary of such corporation.

               Section 6.6. Perform Obligations.

     Pay and discharge all of the  obligations and liabilities of Omega and each
other  Borrower,  including,  without  limitation,  all taxes,  assessments  and
governmental  charges upon its income and properties when due, unless and to the
extent  only  that  such  obligations,   liabilities,   taxes,  assessments  and
governmental  charges  shall  be  contested  in good  faith  and by  appropriate
proceedings  and that, to the extent required by generally  accepted  accounting
principles then in effect,  proper and adequate book reserves  relating  thereto
are established by Omega or any other Borrower, as applicable,  and then only to
the extent that a bond is filed in cases where the filing of a bond is necessary
to avoid the creation of a Lien against any of its properties.

               Section 6.7. Notice of Litigation.

     Promptly notify the Agent in writing of any litigation, legal proceeding or
dispute,  other than disputes in the ordinary  course of business or, whether or
not in the  ordinary  course of  business,  involving  amounts in excess of Five
Million ($5,000,000)  Dollars,  affecting Omega or any other Borrower whether or
not fully covered by insurance,  and  regardless of the subject  matter  thereof
(excluding,  however,  any actions relating to workers'  compensation  claims or
negligence  claims  relating  to use of  motor  vehicles,  if fully  covered  by
insurance, subject to deductibles).

               Section 6.8. Insurance.

                    (a)  (i)  Maintain  with  responsible   insurance  companies
                         acceptable  to the Agent such  insurance on such of the
                         properties  of Omega and each other  Borrower,  in such
                         amounts  and  against  such  risks  as  is  customarily
                         maintained  by  similar   businesses   and  cause  each
                         Operator  to do so;  (ii) file with the Agent  upon its
                         request  a  detailed  list  of the  insurance  then  in
                         effect,  stating the names of the insurance  companies,
                         the  amounts and rates of the  insurance,  the dates of
                         the  expiration  thereof and the  properties  and risks
                         covered  thereby;  and (iii) within ten (10) days after
                         notice  in  writing   from  the  Agent,   obtain   such
                         additional   insurance  as  the  Agent  may  reasonably
                         request; and

                    (b)  Carry all insurance  available  through the PBGC or any
                         private insurance companies covering its obligations to
                         the PBGC.

               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, Tangible Net Worth (after the Initial
                         Equity  Contribution of  $100,000,000) of not less than
                         $445,000,000, plus 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 Initial
                         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.

                    (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
                         200%.

                    (d)  Omega, on a consolidated  basis,  shall not incur a Net
                         Loss in any fiscal year commencing with the fiscal year
                         ending December 31, 2001.

                    (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.

                    (f)  Have or  maintain  as at the  last  day of each  fiscal
                         quarter of Omega,  a Leverage Ratio of not greater than
                         5.00:1.00.

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

               Section 6.10. Notice of Certain Events

                    (a)  Promptly  notify the Agent in writing of the occurrence
                         of any Reportable  Event, as defined in Section 4043 of
                         ERISA, if a notice of such Reportable Event is required
                         under ERISA to be  delivered to the PBGC within 30 days
                         after  the   occurrence   thereof,   together   with  a
                         description of such Reportable Event and a statement of
                         the  action  the  Borrower(s)  or the  ERISA  Affiliate
                         intends to take with respect  thereto,  together with a
                         copy of the notice thereof given to the PBGC.

                    (b)  Promptly notify the Agent in writing if the Borrower(s)
                         or ERISA Affiliate receives an assessment of withdrawal
                         liability  in  connection  with a  complete  or partial
                         withdrawal  with  respect  to any  Multiemployer  Plan,
                         together  with a  statement  of the  action  that  such
                         Borrower(s)  or ERISA  Affiliate  intends  to take with
                         respect thereto.

                    (c)  Promptly  notify the Agent in  writing if any  Borrower
                         receives:   (i)  any   notice  of  any   violation   or
                         administrative  or judicial  complaint  or order having
                         been filed or about to be filed  against such  Borrower
                         alleging   violations  of  any  Environmental  Law  and
                         Regulation,  or (ii) any notice  from any  governmental
                         body or any other Person alleging that such Borrower is
                         or may be subject to any Environmental  Liability;  and
                         promptly upon receipt thereof, provide the Agent with a
                         copy of such notice  together  with a statement  of the
                         action  such  Borrower  intends  to take  with  respect
                         thereto.

               Section 6.11. Comply with ERISA

     Materially comply with all applicable  provisions of ERISA and the Code now
or hereafter in effect.

               Section 6.12. Environmental Compliance.

     Operate all property owned, operated or leased by it in compliance with all
Environmental Laws and Regulations,  such that no Environmental Liability arises
under any  Environmental  Laws and Regulations,  which would result in a Lien on
any property of any Borrower.

               Section 6.13. Maintenance of REIT Status.

     Maintain its REIT Status.

          Article 7. Negative Covenants.

     While the  Commitments are  outstanding,  and, in the event any Loan or L/C
Obligation remains outstanding, so long as any Borrower is indebted to the Banks
or the  Agent  and until  payment  in full of the  Notes  and full and  complete
performance  of all of its  other  obligations  arising  hereunder,  none of the
Borrowers shall do, agree to do, or permit to be done, any of the following:

               Section 7.1. Indebtedness.

                           Create,  incur,  permit to exist or have  outstanding
any Indebtedness, except:

                    (a)  Indebtedness  of the  Borrowers  to the  Banks  and the
                         Agent under this Agreement and the Notes;

                    (b)  Taxes,    assessments   and    governmental    charges,
                         non-interest   bearing  accounts  payable  and  accrued
                         liabilities, in any case not more than 90 days past due
                         from the original due date  thereof,  and  non-interest
                         bearing  deferred  liabilities  other than for borrowed
                         money (e.g., deferred compensation and deferred taxes),
                         in each case  incurred and  continuing  in the ordinary
                         course of business;

                    (c)  Indebtedness secured by the security interests referred
                         to in subsection 7.2(b) hereof;

                    (d)  Indebtedness   consisting  of  contingent   obligations
                         permitted by Section 7.3 hereof;

                    (e)  As set forth on Schedule 7.1 hereto; and

                    (f)  Indebtedness,  the terms of which shall not require any
                         principal  payments  thereon  prior  to  the  Revolving
                         Credit Commitment Termination Date.

               Section 7.2. Liens.

     Create,  or assume or permit to exist, any Lien on any of the properties or
assets of Omega or any other Borrower,  whether now owned or hereafter acquired,
except:

                    (a)  Permitted Liens;

                    (b)  Purchase  money Liens on  Property  acquired or held by
                         Omega or its  Subsidiaries  in the  ordinary  course of
                         business, securing Indebtedness incurred or assumed for
                         the purpose of financing all or any part of the cost of
                         acquiring  such Property;  provided,  that (i) any such
                         Lien  attaches to such  Property  concurrently  with or
                         within twenty (20) days after the acquisition  thereof,
                         (ii)  such Lien  attaches  solely  to the  Property  so
                         acquired in such  transaction,  and (iii) the principal
                         amount of the debt secured thereby does not exceed 100%
                         of the cost of such Property;

                    (c)  Liens on assets securing  Indebtedness  permitted under
                         subsection 7.1(e) hereof; and

                    (d)  As set forth on Schedule 7.2 hereto.

               Section 7.3. Guaranties.

     Assume, endorse, be or become liable for, or guarantee,  the obligations of
any Person, except (i) by the endorsement of negotiable  instruments for deposit
or collection in the ordinary  course of business,  (ii) if, after giving effect
to the proposed guarantee, the aggregate amount of all obligations guaranteed by
the  Borrowers,  or any of them,  would  not  exceed  Two  Million  ($2,000,000)
Dollars,  (iii)  guarantees  made in the ordinary course of business by Omega of
obligations of any of the Borrowers,  provided those  obligations  are otherwise
permitted  under this  Agreement,  and (iv) as set forth on Schedule 7.1 hereto.
For the purposes  hereof,  the term  "guarantee"  shall  include any  agreement,
whether such agreement is on a contingency or otherwise, to purchase, repurchase
or otherwise acquire  Indebtedness of any other Person, or to purchase,  sell or
lease, as lessee or lessor, property or services, in any such case primarily for
the purpose of enabling  another person to make payment of  Indebtedness,  or to
make any payment (whether as an advance,  capital  contribution,  purchase of an
equity  interest or otherwise) to assure a minimum equity,  asset base,  working
capital or other balance sheet or financial  condition,  in connection  with the
Indebtedness of another Person, or to supply funds to or in any manner invest in
another Person in connection with such Person's Indebtedness.

               Section 7.4. Mergers, Acquisitions.

     Except as expressly permitted by this Agreement,  merge or consolidate with
any Person,  or,  acquire all or  substantially  all of the assets or any of the
capital  stock of any Person unless (a) Omega is the  surviving  entity,  (b) no
Default or Event of Default  exists or will occur after giving  effect  thereto,
and (c) the consideration paid in connection with any such merger or acquisition
does not exceed an amount  equal to  twenty-five  (25%)  percent  of  Healthcare
Assets as at the date of the consummation of such  transaction,  prior to giving
effect to such transaction.

               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 Bonds have been paid in
                    full or the  Required  Banks are  satisfied  that sources of
                    funds are and will  remain  available  to repay the Bonds 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 in its common stock;

                    (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, when
                         added to the cash  dividends  paid with  respect to the
                         three (3) immediately  preceding fiscal quarters,  that
                         does not  exceed  ninety-five  (95%)  percent of 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; and

                    (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.

               Section 7.6. Changes in Structure.

     Except for  supplemental  issuance of Omega's  authorized  common stock and
preferred stock and as otherwise expressly permitted under Sections 7.5 and 7.8,
make any changes in the equity capital structure of Omega or any other Borrower,
or amend its certificate of  incorporation or by-laws in a manner which would be
reasonably likely to cause a Material Adverse Effect.

               Section 7.7. Disposition of Assets.

     Make any  Disposition  of Property,  or enter into any  agreement to do so,
unless (a) the  Disposition is at fair market value,  and (b) at the time of the
Disposition,  and after giving  effect  thereto,  no Event of Default  exists or
would exist.

               Section 7.8. Investments.

     Make, or suffer to exist, any Investment in any Person, including,  without
limitation,  any shareholder,  director,  officer or employee of Omega or any of
its Subsidiaries, except:

               (a)  Investments in:

                    (i)  obligations  issued or  guaranteed by the United States
                         of America;

                    (ii) certificates of deposit,  bankers acceptances and other
                         "money market  instruments" issued by any bank or trust
                         company  organized  under the laws of the United States
                         of America or any State thereof and having  capital and
                         surplus  in  an  aggregate  amount  of  not  less  than
                         $100,000,000;

                    (iii)open market commercial paper bearing the highest credit
                         rating  issued by Standard & Poor's  Corporation  or by
                         another nationally recognized credit rating agency;

                    (iv) repurchase  agreements  entered  into  with any bank or
                         trust  company  organized  under the laws of the United
                         States of  America  or any  State  thereof  and  having
                         capital and surplus in an aggregate  amount of not less
                         than $100,000,000  relating to United States of America
                         government obligations; and

                    (v)  shares of "money market funds",  each having net assets
                         of not less than $100,000,000;

     in each case  maturing  or being due or  payable  in full not more than 180
days after the Borrower's acquisition thereof.

               (b)  The  acquisition  by  Omega  and  its  Subsidiaries,   on  a
                    consolidated  basis,  of  Healthcare  Assets  consisting  of
                    Facilities  and  Mortgages  which do not exceed  twenty-five
                    (25%) percent of Healthcare Assets in any single transaction
                    or  series  of  related  transactions  as  at  any  date  of
                    determination  thereof,  prior to giving  effect to any such
                    acquisition.

               (c)  Investments  for working  capital  purposes in  Subsidiaries
                    that are operating  one or more  Facilities as a consequence
                    of a foreclosure,  deed-in-lieu of foreclosure,  termination
                    of a lease or similar  event,  such  investments  of working
                    capital to be limited to the amounts reasonably necessary to
                    maintain the  Facilities in compliance  with all  applicable
                    laws  and  to  maintain  the  Facilities'   eligibility  for
                    reimbursement  as a provider of health care  services  under
                    the  Medicare  and  Medicaid   programs  or  any  equivalent
                    government insurance program that is a successor thereto.

               (d)  (i)  Investments in  subsidiaries in an amount equal to that
                    amount, if any, by which One Hundred Million  ($100,000,000)
                    Dollars  exceeds the portion of the  "Liquidity  Commitment"
                    (as defined in the Investment Agreement) actually funded and
                    applied to pay the Debentures, provided such Investments may
                    only be made  from  and  after  the  payment  in full of the
                    Debentures  or,  if  prior  to the  payment  in  full of the
                    Debentures,  upon  satisfaction to the Banks that sources of
                    funds  are and will  remain  available  to repay in full the
                    Debentures,  and  (ii)  Investments  in  Subsidiaries  in an
                    amount   not   to   exceed   Two   Hundred   Fifty   Million
                    ($250,000,000)   in  the  aggregate,   in  each  case,  such
                    subsidiaries or Subsidiaries  established for the purpose of
                    acquiring  Facilities  leased  to one or more  operators  or
                    making loans to  operators  secured by mortgages in favor of
                    such  subsidiaries  or  Subsidiaries,  as the  case  may be;
                    provided,  however,  that in no event  shall  the  aggregate
                    amount of  Investments  made  under this  subsection  7.8(d)
                    exceed $250,000,0000.

               (e)  In addition to other  Investments  permitted by this Section
                    7.8, other  Investments  by Omega on a  consolidated  basis,
                    which  do  not  exceed  Twenty-Five  Million   ($25,000,000)
                    Dollars in the aggregate at any time.

               (f)  As set forth on Schedule 7.8 hereto.

For purposes of this Section 7.8, "Investments" shall mean, by any Person:

                    (i)  the amount paid or committed  to be paid,  or the value
                         of property or services  contributed or committed to be
                         contributed,  by such Person for or in connection  with
                         the  acquisition  by such  Person of any stock,  bonds,
                         notes,  debentures,   partnership  or  other  ownership
                         interests or other securities of any other Person; and

                    (ii) the amount of any advance,  loan or extension of credit
                         by such  Person,  to any other  Person,  or guaranty or
                         other similar obligation of such Person with respect to
                         any  Indebtedness  of such other  Person,  and (without
                         duplication)  any  amount  committed  to  be  advanced,
                         loaned, or extended by such Person to any other Person,
                         or any amount the payment of which is  committed  to be
                         assured by a guaranty  or  similar  obligation  by such
                         Person for the benefit of, such other Person.

               Section 7.9. Fiscal Year.

                           Change its fiscal year.

               Section 7.10. ERISA Obligations.

     Permit the establishment of any Employee Benefit Plan or amend any Employee
Benefit Plan which  establishment  or amendment could result in liability to any
Loan Party or increase the obligation for  post-retirement  welfare  benefits of
any Loan Party which  liability or increase,  individually  or together with all
similar  liabilities  and increases,  has a Material  Adverse Effect on any Loan
Party.

               Section 7.11. Capital Expenditures.

     Except as otherwise  permitted under this  Agreement,  make or be or become
obligated to make Capital  Expenditures for corporate  purposes of the Borrowers
in the aggregate for the Borrowers on a consolidated  basis,  during each fiscal
year of the  Borrowers,  in  excess of Two  Hundred  Fifty  Thousand  ($250,000)
Dollars.

               Section 7.12. Use of Cash.

     Use, or permit to be used, in any manner or to any extent,  each Borrower's
Cash from  operations for the benefit of any Person,  except:  (a) in connection
with the payment or  prepayment  of expenses  (other than Capital  Expenditures)
directly  incurred  for the  benefit of each  Borrower  in the  maintenance  and
operation  of its  business,  in each  case only in the  ordinary  course of its
business,  (b) for the payment of scheduled,  required payments of principal and
interest on  Indebtedness  of each Borrower  permitted to exist  hereunder,  (c)
payments or prepayments  of (i)  Indebtedness  for borrowed  money  permitted to
exist  hereunder  provided the final maturity of such  Indebtedness is not later
than the Revolving  Credit  Commitment  Termination  Date;  and (ii) any loan or
loans made by The Provident  Bank pursuant to a Loan  Agreement  dated March 31,
1999  between  Omega  and The  Provident  Bank,  as the  same has been or may be
amended  from time to time during the term of this  Agreement,  and (c) for uses
that are otherwise specifically permitted by this Agreement.

               Section 7.13. Transactions with Affiliates.

     Except as expressly  permitted by this  Agreement,  directly or indirectly:
(a) make any Investment in an Affiliate;  (b) transfer,  sell, lease,  assign or
otherwise  dispose of any assets to an Affiliate;  (c) merge into or consolidate
with or purchase  or acquire  assets  from an  Affiliate;  or (d) enter into any
other  transaction  directly  or  indirectly  with  or for  the  benefit  of any
Affiliate  (including,   without  limitation,   guarantees  and  assumptions  of
obligations  of  an  Affiliate);   provided,  however,  that:  (i)  payments  on
Investments  expressly  permitted  by Section  7.8 hereof may be made,  (ii) any
Affiliate who is a natural  person may serve as an employee or director of Omega
or any Subsidiary and receive  reasonable  compensation for his services in such
capacity,  and  (iii)  any  Borrower  may  enter  into any  transaction  with an
Affiliate  providing  for the leasing of property,  the  rendering or receipt of
services or the purchase or sale of product,  inventory  and other assets in the
ordinary  course of business if the monetary or business  consideration  arising
therefrom  would  be  substantially  as  advantageous  to such  Borrower  as the
monetary or  business  consideration  that would  obtain in a  comparable  arm's
length transaction with a Person not an Affiliate.

               Section 7.14. Hazardous Material.

     Cause or permit: (i) any Hazardous Material to be placed,  held, located or
disposed of, on, under or at any Facility or any part  thereof,  except for such
Hazardous  Materials that are necessary for Omega's or any  Subsidiary's  or any
Operator's  operation of its business  thereon and which shall be used,  stored,
treated and disposed of in compliance with all applicable Environmental Laws and
Regulations  or  (ii)  such  Facility  or  any  part  thereof  to be  used  as a
collection,  storage,  treatment or disposal  site for any  Hazardous  Material.
Omega and each Subsidiary  acknowledges  and agrees that the Agent and the Banks
shall have no liability or responsibility for either:

                    (i)  damage, loss or injury to human health, the environment
                         or natural resources caused by the presence,  disposal,
                         release or threatened release of Hazardous Materials on
                         any part of such Facility; or

                    (ii) abatement and/or clean-up required under any applicable
                         Environmental  Laws  and  Regulations  for  a  release,
                         threatened   release  or  disposal  of  any   Hazardous
                         Materials  located  at any  Facility  or  used by or in
                         connection with the Omega's or any  Subsidiary's or any
                         Operator's business.

               Section 7.15. Interest Rate Protection.

     Permit more than  twenty-five  (25%)  percent of  Indebtedness  (other than
outstanding  Credit Loans),  on a consolidated  basis, to bear interest at other
than fixed  rates;  provided,  however,  that if and to the extent that any such
Indebtedness is subject to an Interest Rate Contract, such Indebtedness shall be
deemed to bear interest at a fixed rate.

               Section 7.16. Double Negative Pledge.

     Enter into any agreement  which prohibits or limits the ability of Omega to
create,  incur,  assume or suffer to exist any Lien upon any of the  issued  and
outstanding capital stock of the other Grantors.

          Article 8. Events of Default.

     If any one or more of the  following  events  ("Events of  Default")  shall
occur and be continuing,  the Commitments  shall terminate and the entire unpaid
balance of the principal of and interest on the Notes  outstanding and all other
obligations and Indebtedness of each of the Borrowers to the Banks and the Agent
arising  hereunder and under the other Loan Documents shall  immediately  become
due and payable upon written notice to that effect given to each Borrower by the
Agent  (except  that in the  case of the  occurrence  of any  Event  of  Default
described in Section 8.6 no such notice shall be required),  without presentment
or demand for  payment,  notice of  non-payment,  protest  or further  notice or
demand of any kind, all of which are expressly waived by each Borrower:

                    Section 8.1. Payments.

     Failure by any  Borrower  to make any  payment or  mandatory  repayment  of
principal or interest  upon any Note or to make any payment of any Fee when due;
or

                    Section 8.2. Certain Covenants.

     Failure by any  Borrower to perform or observe any of the  agreements  of a
Borrower contained in Section 6.9 or Article 7 hereof; or

                    Section 8.3. Other Covenants.

     Failure by any Borrower to perform or observe any other term,  condition or
covenant of this  Agreement or of any of the other Loan Documents to which it is
a party,  which shall remain  unremedied  for a period of thirty (30) days after
notice thereof shall have been given to such Borrower by the Agent; or

               Section 8.4. Other Defaults.

               (a)  Failure by any  Borrower  to  perform  or observe  any term,
                    condition  or covenant of any bond,  note,  debenture,  loan
                    agreement, indenture, guaranty, trust agreement, mortgage or
                    similar  instrument to which it is a party or by which it is
                    bound,  or by which any of its  properties  or assets may be
                    affected   including,   without   limitation,   any  of  the
                    subordinated  notes  or other  agreements  or  evidences  of
                    Indebtedness covered by any Subordination Agreement (a "Debt
                    Instrument"),  so that,  as a result of any such  failure to
                    perform,  the  Indebtedness  included  therein or secured or
                    covered thereby may be declared due and payable prior to the
                    date on which such  Indebtedness  would otherwise become due
                    and payable; or

               (b)  Any event or  condition  referred to in any Debt  Instrument
                    shall occur or fail to occur,  so that, as a result thereof,
                    the  Indebtedness  included  therein  or  secured or covered
                    thereby may be declared due and payable prior to the date on
                    which  such  Indebtedness  would  otherwise  become  due and
                    payable; or

               (c)  Failure to pay any  Indebtedness  for borrowed  money due at
                    final   maturity  or  pursuant  to  demand  under  any  Debt
                    Instrument;

provided,  however,  that  the  provisions  of this  Section  8.4  shall  not be
applicable  to any Debt  Instrument  that on the date  this  Section  8.4  would
otherwise  be  applicable  thereto,  relates to or evidences  Indebtedness  in a
principal amount of less than $5,000,000; or

               Section 8.5. Representations and Warranties.

     Any representation or warranty made in writing to the Banks or the Agent in
any of the Loan Documents or in connection  with the making of the Loans, or any
certificate,  statement  or report made or  delivered  in  compliance  with this
Agreement, shall have been false or misleading in any material respect when made
or delivered, which in any event results in a Material Adverse Effect; or

               Section 8.6. Bankruptcy.

               (a)  Any  Borrower  shall make an  assignment  for the benefit of
                    creditors,  file a petition in  bankruptcy,  be  adjudicated
                    insolvent,  petition  or  apply  to  any  tribunal  for  the
                    appointment of a receiver,  custodian, or any trustee for it
                    or a substantial  part of its assets,  or shall commence any
                    proceeding    under    any    bankruptcy,    reorganization,
                    arrangement,    readjustment   of   debt,   dissolution   or
                    liquidation law or statute of any jurisdiction,  whether now
                    or  hereafter  in  effect,  or any  Borrower  shall take any
                    corporate action to authorize any of the foregoing  actions;
                    or  there  shall  have  been  filed  any  such  petition  or
                    application,   or  any  such  proceeding   shall  have  been
                    commenced against it, that remains  undismissed for a period
                    of thirty (30) days or more;  or any order for relief  shall
                    be entered in any such  proceeding;  or any  Borrower by any
                    act or omission shall  indicate its consent to,  approval of
                    or  acquiescence  in  any  such  petition,   application  or
                    proceeding or the  appointment  of a custodian,  receiver or
                    any  trustee  for it or any  substantial  part of any of its
                    properties, or shall suffer any custodianship,  receivership
                    or  trusteeship  to  continue  undischarged  for a period of
                    thirty (30) days or more; or

               (b)  Any Borrower shall generally not pay its debts as such debts
                    become due; or

               (c)  Any Borrower shall have concealed,  removed, or permitted to
                    be  concealed  or removed,  any part of its  property,  with
                    intent to hinder,  delay or defraud its  creditors or any of
                    them or made or suffered a transfer  of any of its  property
                    that may be  fraudulent  under  any  bankruptcy,  fraudulent
                    conveyance  or similar  law; or shall have made any transfer
                    of its  property  to or for the  benefit of a creditor  at a
                    time when other creditors  similarly  situated have not been
                    paid; or shall have suffered or permitted,  while insolvent,
                    any  creditor  to  obtain a Lien  upon  any of its  property
                    through legal  proceedings  or distraint that is not vacated
                    within thirty (30) days from the date thereof; or

               Section 8.7. Judgments.

     Any  judgment  against any  Borrower or any  attachment,  levy or execution
against  any of its  properties  for any  amount in excess of  $2,500,000  shall
remain unpaid, unstayed on appeal,  undischarged,  unbonded or undismissed for a
period of thirty (30) days or more; or

               Section 8.8. ERISA.

               (a)  The  termination of any Plan or the  institution by the PBGC
                    of proceedings for the involuntary  termination of any Plan,
                    in either  case,  by reason  of,  or that  results  or could
                    result in, a "material accumulated funding deficiency" under
                    Section 412 of the Code; or

               (b)  Failure by any Borrower to make required  contributions,  in
                    accordance with the applicable  provisions of ERISA, to each
                    of the Plans hereafter established or assumed by it; or

               Section 8.9. Material Adverse Effect.

                    There shall occur a Material Adverse Effect; or

               Section 8.10. Ownership.

               (a)  Any  Person,  or a group  of  related  Persons,  other  than
                    Explorer Holdings, L.P., or any successor or assign thereof,
                    shall acquire (i)  beneficial  ownership in excess of 25% of
                    the  outstanding  stock of Omega  or other  voting  interest
                    having  ordinary  voting  powers to elect a majority  of the
                    directors,  managers or trustees of Omega  (irrespective  of
                    whether  at the time  stock of any  other  class or  classes
                    shall  have or might  have  voting  power by  reason  of the
                    happening of any  contingency) or (ii) all or  substantially
                    all of the  Investments  of Omega,  or (b) a majority of the
                    Board of Directors of Omega, at any time,  shall be composed
                    of Persons  other than (i) Persons  who were  members of the
                    Board of  Directors on the date of this  Agreement,  or (ii)
                    Persons  who  subsequently  become  members  of the Board of
                    Directors on the date of this  Agreement,  or (iii)  Persons
                    who  subsequently  become  members of the Board of Directors
                    and who either (x) are appointed or recommended for election
                    with the affirmative  vote of a majority of the directors in
                    office as of the date of this Agreement or (y) are appointed
                    or recommended for election with the  affirmative  vote of a
                    majority of the Board of  Directors of Omega then in office;
                    or

               Section 8.11. REIT Status, Etc.

     Omega shall at any time fail to maintain its REIT  Status,  or Omega or any
other  Borrower  shall  lose,  through  suspension,  termination,   impoundment,
revocation,  failure to renew or  otherwise,  any license or permit if such loss
could result in a Material  Adverse  Effect on Omega and its  Subsidiaries  on a
consolidated basis; or

               Section 8.12. Environmental.

     Omega or any of its  Facilities  shall become  subject to one or more liens
for costs or damages in excess of  $5,000,000  individually  or in the aggregate
under any  Environmental  Laws and  Regulations  and such liens shall  remain in
place for 30 days after the creation thereof; or

               Section 8.13. Default by Operator.

     Ninety (90) days after the  occurrence of any default by an Operator in the
payment of amounts  which are due and owing under any lease,  note,  mortgage or
deed of trust (or  related  security  documents)  between  an  Operator  and any
Borrower  or any other  event of default  by an  Operator  under the  applicable
lease,  note,  mortgage or deed of trust (or  related  security  document)  as a
result of which such Borrower accelerates the obligations of such Operator, with
respect in each case to an Operator whose  aggregate Lease Rental Expense and/or
Mortgage  Expense  accounts for 15% or more of the aggregate amount of all Lease
Rental  Expense  and/or  Mortgage  Expense  owing  to  the  Borrowers  from  all
Operators; or

               Section 8.14. Liens.

     Any of the Liens  created and granted to the Agent for the ratable  benefit
of the Banks  under  the  Security  Documents  shall  fail to be  valid,  first,
perfected  Liens,  subject to no prior or equal  Lien,  except as  permitted  by
Section  7.2  hereof,  other than as a result of the  Agent's  failure to record
and/or  file  where   and/or   when   appropriate   (based  on  the   Borrowers'
representations)   the  Security   Documents   and  any  required   continuation
statements.

     Article 9. The Agent.

               Section 9.1. Appointment, Powers and Immunities.

     Each Bank hereby  irrevocably  appoints and  authorizes the Agent to act as
its  agent  hereunder  and the other  Loan  Documents  with  such  powers as are
specifically delegated to the Agent by the terms of this Agreement and the other
Loan  Documents  together  with such other powers as are  reasonably  incidental
thereto.  The  Agent  shall  have no  duties or  responsibilities  except  those
expressly set forth in this Agreement and the other Loan Documents and shall not
be a trustee for any Bank.  The Agent shall not be  responsible to the Banks for
any  recitals,  statements,  representations  or  warranties  contained  in this
Agreement  or the other Loan  Documents  in any  certificate  or other  document
referred to or provided for in, or received by any of them under, this Agreement
or  the  other  Loan  Documents,  or for  the  value,  validity,  effectiveness,
genuineness,  enforceability  or sufficiency of this Agreement or the other Loan
Documents or any other document referred to or provided for herein or therein or
for the collectibility of the Loans or for the validity,  effectiveness or value
of any interest or security  covered by the Security  Documents or for the value
of any  Collateral  or for the  validity  or  effectiveness  of any  assignment,
mortgage,   pledge,  security  agreement,   financing  statement,   document  or
instrument, or for the filing, recording,  re-filing, continuing or re-recording
of any  thereof  or for  any  failure  by any  Borrower  to  perform  any of its
obligations  hereunder or under the other Loan  Documents.  The Agent may employ
agents and attorneys-in-fact and shall not be answerable,  except as to money or
securities  received  by it or its  authorized  agents,  for the  negligence  or
misconduct  of  any  such  agents  or  attorneys-in-fact  selected  by  it  with
reasonable care. Neither the Agent nor any of its directors, officers, employees
or agents shall be liable or  responsible  for any action taken or omitted to be
taken by it or them  hereunder  or the other  Loan  Documents  or in  connection
herewith or therewith,  except for its or their own gross  negligence or willful
misconduct.

               Section 9.2. Reliance by Agent.

     The Agent shall be entitled to rely upon any certification, notice or other
communication  (including  any thereof by telephone,  telex,  telegram or cable)
believed  by it to be genuine  and correct and to have been signed or sent by or
on behalf of the proper  person or persons,  and upon advice and  statements  of
legal counsel,  independent accountants and other experts selected by the Agent.
As to any matters not expressly provided for by this Agreement or the other Loan
Documents,  the Agent  shall in all cases be fully  protected  in acting,  or in
refraining from acting, hereunder or the other Loan Documents in accordance with
instructions signed by the Required Banks, and such instructions of the Required
Banks and any action taken or failure to act pursuant  thereto  shall be binding
on all of the Banks.

               Section 9.3. Events of Default.

     The Agent  shall not be deemed to have  knowledge  of the  occurrence  of a
Default (other than the non-payment of principal of or interest on Loans) unless
the  Agent has  received  notice  from a Bank or the  Borrower  specifying  such
Default and stating that such notice is a "Notice of Default". In the event that
the Agent receives such a notice of the occurrence of a

<PAGE>

Default,  the Agent shall give notice  thereof to the Banks (and shall give each
Bank notice of each such  non-payment).  The Agent shall (subject to Section 9.7
hereof)  take such action with  respect to such  Default as shall be directed by
the Required Banks.

               Section 9.4. Rights as a Bank.

     With respect to its  Commitment  and the Loans made by it, the Agent in its
capacity as a Bank hereunder shall have the same rights and powers  hereunder as
any other  Bank and may  exercise  the same as though it were not  acting as the
Agent,  and the term  "Bank" or  "Banks"  shall,  unless the  context  otherwise
indicates,  include  the Agent in its  individual  capacity.  The Agent,  in its
individual capacity,  and its Affiliates may (without having to account therefor
to any Bank) accept  deposits  from,  lend money to and generally  engage in any
kind of banking,  trust or other business with each Borrower or its  Affiliates,
as if it were not acting as the Agent,  and the Agent may accept  fees and other
consideration  from each Borrower or its Affiliates,  for services in connection
with this  Agreement or any of the other Loan  Documents  or  otherwise  without
having to account for the same to the Banks.

               Section 9.5. Indemnification.

     The Banks shall  indemnify the Agent (to the extent not  reimbursed by each
Borrower  under Sections 10.1 and 10.2 hereof),  ratably in accordance  with the
aggregate  principal  amount of the Loans made by the Banks (or, if no Loans are
at  the  time   outstanding,   ratably  in  accordance  with  their   respective
Commitments),  for  any  and  all  liabilities,  obligations,  losses,  damages,
penalties,  actions,  judgments,  suits, costs, expenses or disbursements of any
kind and nature  whatsoever  that may be imposed  on,  incurred  by or  asserted
against the Agent in any way relating to or arising out of this Agreement or any
of the other Loan Documents or any other  documents  contemplated by or referred
to herein or therein or the  transactions  contemplated by or referred to herein
or therein or the  transactions  contemplated  hereby  and  thereby  (including,
without  limitation,  the costs and expenses  that each Borrower is obligated to
pay under  Sections 10.1 and 10.2 hereof,  but  excluding,  unless a Default has
occurred and is continuing, normal administrative costs and expenses incident to
the performance of its agency duties hereunder or under the Security  Documents)
or the enforcement of any of the terms hereof or of the Security  Documents,  or
of any such other  documents,  provided  that no Bank shall be liable for any of
the  foregoing  to the extent  they arise from the gross  negligence  or willful
misconduct of the party to be indemnified.

               Section 9.6. Non-Reliance on Agent and other Banks.

     Each Bank agrees  that it has,  independently  and without  reliance on the
Agent or any other Bank, and based on such  documents and  information as it has
deemed  appropriate,  made its own credit analysis of each Borrower and decision
to  enter  into  this  Agreement  and that it will,  independently  and  without
reliance  upon the Agent or any other  Bank,  and  based on such  documents  and
information as it shall deem  appropriate at the time,  continue to make its own
analysis and  decisions in taking or not taking  action under this  Agreement or
the other  Loan  Documents.  The  Agent  shall not be  required  to keep  itself
informed as to the  performance or observance by each Borrower of this Agreement
or the other Loan  Documents or any other  document  referred to or provided for
herein or therein or to inspect the properties or books of each Borrower. Except
for notices,  reports and other documents and information  expressly required to
be  furnished to the Banks by the Agent  hereunder or the other Loan  Documents,
the Agent shall not have any duty or responsibility to provide any Bank with any
credit or other  information  concerning  the  affairs,  financial  condition or
business of each Borrower, that may come into the possession of the Agent or any
of its Affiliates.

               Section 9.7. Failure to Act.

     Except for action expressly  required of the Agent hereunder,  or under the
Security  Documents,  the Agent shall in all cases be fully justified in failing
or refusing to act hereunder or thereunder unless it shall be indemnified to its
satisfaction  by the Banks against any and all liability and expense that may be
incurred by it by reason of taking or continuing to take any such action.

               Section 9.8. Resignation or Removal of Agent.

     Subject to the  appointment and acceptance of a successor Agent as provided
below,  the Agent may resign at any time by giving not less than 10 days'  prior
written  notice  thereof  to the  Banks and each  Borrower  and the Agent may be
removed at any time with or without cause by the Required  Banks.  Upon any such
resignation  or removal,  the  Required  Banks shall have the right to appoint a
successor  Agent.  If no  successor  Agent shall have been so  appointed  by the
Required Banks and shall have accepted such appointment within 30 days after the
retiring  Agent's giving of notice of resignation or the Required Banks' removal
of the  retiring  Agent,  then the  retiring  Agent may, on behalf of the Banks,
after consultation with each Borrower,  appoint a successor Agent which shall be
a bank  that has an office in New York,  New York with a  combined  capital  and
surplus of at least  $100,000,000.  Upon the  acceptance of any  appointment  as
Agent  hereunder or under the  Security  Documents  by a successor  Agent,  such
successor  Agent  shall  thereupon  succeed  to and become  vested  with all the
rights,  powers,  privileges and duties of the retiring Agent,  and the retiring
Agent shall be discharged  from its duties and  obligations  hereunder and under
the  Security  Documents.  After any  retiring  Agent's  resignation  or removal
hereunder as Agent,  the  provisions of this Article 9 shall  continue in effect
for its  benefit in respect  of any  actions  taken or omitted to be taken by it
while it was acting as the Agent.

               Section 9.9. Sharing of Payments.

               (a)  Prior to any  acceleration by the Agent and the Banks of the
                    Obligations:

                    (i)  in the event  that any Bank  shall  obtain  payment  in
                         respect  of  a  Note,  or  interest  thereon,   whether
                         voluntarily or  involuntarily,  and whether through the
                         exercise  of a  right  of  banker's  lien,  set-off  or
                         counterclaim  against each Borrower or otherwise,  in a
                         greater  proportion  than any such payment  obtained by
                         any other  Bank in respect  of the  corresponding  Note
                         held by it,  then the Bank so  receiving  such  greater
                         proportionate  payment shall purchase for cash from the
                         other  Bank or Banks  such  portion  of each such other
                         Bank's or Banks'  Loan as shall be  necessary  to cause
                         such Bank  receiving the  proportionate  overpayment to
                         share the excess payment with each Bank; and

                    (ii) in the event  that any Bank  shall  obtain  payment  in
                         respect of any  Interest  Rate  Contract  to which such
                         Bank is a party,  whether voluntarily or involuntarily,
                         and whether through the exercise of a right of banker's
                         lien, set-off or counterclaim  against each Borrower or
                         otherwise,  such Bank shall be  permitted to retain the
                         full  amount of such  payment and shall not be required
                         to share such payment with any other Bank.

               (b)  Upon or  following  any  acceleration  by the  Agent and the
                    Banks of the  Obligations,  in the event that any Bank shall
                    obtain  payment in respect of a Note,  or  interest  or Fees
                    thereon, or in respect of an Interest Rate Contract to which
                    such Bank is a party,  or receive any Collateral or proceeds
                    thereof  with  respect  to any  Note  or any  Interest  Rate
                    Contract  to  which it is a party,  whether  voluntarily  or
                    involuntarily,  and whether  through the exercise of a right
                    of  banker's  lien,  set-off or  counterclaim  against  each
                    Borrower or otherwise, in a greater proportion than any such
                    payment  obtained  by  any  other  Bank  in  respect  of the
                    aggregate amount of the corresponding Note held by such Bank
                    and any  Interest  Rate  Contract  to which  such  Bank is a
                    party, then the Bank so receiving such greater proportionate
                    payment or such greater  proportionate amount of Collateral,
                    shall  purchase  for cash from the other  Bank or Banks such
                    portion of each such other Bank's or Banks'  Loan,  or shall
                    provide  the  other  Banks  with  the  benefits  of any such
                    Collateral,  or the proceeds thereof,  as shall be necessary
                    to cause such Bank receiving the  proportionate  overpayment
                    to share the excess  payment or benefits of such  Collateral
                    or proceeds ratably with each Bank. For the purposes of this
                    subsection  9.9(b),  payments on Notes received by each Bank
                    and receipt of  Collateral by each Bank shall be in the same
                    proportion  as the  proportion  of:  (A) the sum of: (x) the
                    Obligations  owing to such Bank in  respect of the Note held
                    by such Bank, plus (y) the Obligations owing to such Bank in
                    respect of  Interest  Rate  Contracts  to which such Bank is
                    party, if any, to (B) the sum of: (x) the Obligations  owing
                    to all of the Banks in respect of all of the Notes, plus (y)
                    the Obligations  owing to all of the Banks in respect of all
                    Interest  Rate  Contracts  to  which  any  Bank is a  party;
                    provided,   however,   that,  with  respect  to  subsections
                    9.9(a)(i)  and  (b)  above,  if all or any  portion  of such
                    excess payment or benefits is thereafter  recovered from the
                    Bank  that  received  the  proportionate  overpayment,  such
                    purchase  of Loans or payment of  benefits,  as the case may
                    be, shall be rescinded,  and the purchase price and benefits
                    returned,  to the  extent  of  such  recovery,  but  without
                    interest   unless  the  Bank  from  which  such  payment  is
                    recovered is required to pay interest thereon, in which case
                    each Bank  returning  funds to such  Bank  shall pay its pro
                    rata share of such interest.

     Article 10. Miscellaneous Provisions.

               Section 10.1. Fees and Expenses; Indemnity.

     The  Borrowers  will  promptly pay all costs of the Agent in preparing  the
Loan  Documents and all costs and expenses of the issue of the Notes and of each
Borrower's  performance  of and  compliance  with all  agreements and conditions
contained  herein  on its part to be  performed  or  complied  with  (including,
without limitation,  the reasonable fees of any consultants to the Agent and the
Banks,  and all  costs  of  filing  or  recording  any  assignments,  mortgages,
financing  statements  and other  documents and all appraisal and  environmental
review  fees  and  expenses),   and  the   reasonable   fees  and  expenses  and
disbursements  of  counsel  to the  Agent in  connection  with the  preparation,
execution and delivery,  administration,  interpretation and enforcement of this
Agreement,  the other Loan Documents and all other  agreements,  instruments and
documents  relating to this  transaction,  the  consummation of the transactions
contemplated by all such documents,  the preservation of all rights of the Banks
and the Agent,  the  negotiation,  preparation,  execution  and  delivery of any
amendment,  modification or supplement of or to, or any consent or waiver under,
any such document (or any such  instrument that is proposed but not executed and
delivered) and with any claim or action threatened,  made or brought against any
of the Banks or the  Agent  arising  out of or  relating  to any  extent to this
Agreement,  the other Loan Documents or the transactions  contemplated hereby or
thereby  (other  than a claim or action  resulting  from the  gross  negligence,
willful  misconduct,  or  intentional  violation  of law by the Agent and or the
Banks).  In addition,  the  Borrowers  will  promptly pay all costs and expenses
(including,  without  limitation,  reasonable fees and disbursements of counsel)
suffered or  incurred by each Bank in  connection  with its  enforcement  of the
payment of the Notes held by it or any other sum due to it under this  Agreement
or any of the other  Loan  Documents  or any of its other  rights  hereunder  or
thereunder.  In addition to the foregoing,  the Borrowers  shall  indemnify each
Bank and the Agent and each of their respective directors,  officers, employees,
attorneys,  agents and Affiliates against,  and hold each of them harmless from,
any loss, liabilities, damages, claims, costs and expenses (including reasonable
attorneys' fees and  disbursements)  suffered or incurred by any of them arising
out of, resulting from or in any manner connected with, the execution,  delivery
and  performance  of each  of the  Loan  Documents,  the  Loans  and any and all
transactions  related to or consummated in connection with the Loans (other than
as a result of the gross negligence, willful misconduct or intentional violation
of law by the party seeking  indemnification),  including,  without  limitation,
losses, liabilities, damages, claims, costs and expenses suffered or incurred by
any Bank or the Agent or any of their respective directors, officers, employees,
attorneys,  agents or Affiliates  arising out of or related to any Environmental
Liability or  Environmental  Proceeding,  or in  investigating,  preparing  for,
defending  against,  or providing  evidence,  producing  documents or taking any
other   action  in  respect  of  any   commenced   or   threatened   litigation,
administrative  proceeding or investigation  under any federal securities law or
any other statute of any  jurisdiction,  or any regulation,  or at common law or
otherwise  against  the Agent,  the Banks or any of their  officers,  directors,
affiliates,  agents or  Affiliates,  that is alleged to arise out of or is based
upon: (i) any untrue  statement or alleged untrue statement of any material fact
of any Borrower and its  affiliates  in any document or schedule  filed with the
Securities  and Exchange  Commission or any other  governmental  body;  (ii) any
omission or alleged omission to state any material fact required to be stated in
such document or schedule,  or necessary to make the statements made therein, in
light of the  circumstances  under which made, not  misleading;  (iii) any acts,
practices or omission or alleged acts, practices or omissions of any Borrower or
its  agents  related  to the making of any  acquisition,  purchase  of shares or
assets pursuant thereto,  financing of such purchases or the consummation of any
other transactions  contemplated by any such acquisitions that are alleged to be
in violation of any federal  securities law or of any other statute,  regulation
or  other  law  of  any  jurisdiction  applicable  to the  making  of  any  such
acquisition, the purchase of shares or assets pursuant thereto, the financing of
such purchases or the consummation of the other transactions contemplated by any
such  acquisition;  or (iv) any withdrawals,  termination or cancellation of any
such proposed  acquisition  for any reason  whatsoever.  The indemnity set forth
herein  shall be in  addition to any other  obligations  or  liabilities  of any
Borrower to the Agent and the Banks hereunder or at common law or otherwise. The
provisions  of this Section 10.1 shall  survive the payment of the Notes and the
termination of this Agreement.

               Section 10.2. Taxes.

     If,  under  any law in  effect  on the  date  of the  closing  of any  Loan
hereunder,  or under any retroactive  provision of any law subsequently enacted,
it shall be  determined  that any  Federal,  state or local  tax is  payable  in
respect  of the  issuance  of any  Note,  or in  connection  with the  filing or
recording  of  any  assignments,   mortgages,  financing  statements,  or  other
documents (whether measured by the amount of Indebtedness  secured or otherwise)
as contemplated by this Agreement,  then each Borrower will pay any such tax and
all interest and  penalties,  if any, and will indemnify the Banks and the Agent
against and save each of them harmless from any loss or damage resulting from or
arising out of the  nonpayment  or delay in payment of any such tax. If any such
tax or taxes shall be assessed or levied against any Bank or any other holder of
a Note,  such Bank,  or such other  holder,  as the case may be, may notify each
Borrower and make immediate payment thereof, together with interest or penalties
in connection  therewith,  and shall  thereupon be entitled to and shall receive
immediate  reimbursement therefor from each Borrower.  Notwithstanding any other
provision  contained in this  Agreement,  the  covenants  and  agreements of the
Borrowers  in this  Section  10.2  shall  survive  payment  of the Notes and the
termination of this Agreement.

               Section 10.3. Payments.

     As set forth in Article 2 hereof,  all payments by each Borrower on account
of principal, interest, fees and other charges (including any indemnities) shall
be made to the Agent at the  Principal  Office of the Agent,  in lawful money of
the United States of America in immediately available funds, by wire transfer or
otherwise, not later than 11:00 A.M. New York City time on the date such payment
is due.  Any such  payment  made on such date but after such time shall,  if the
amount paid bears  interest,  be deemed to have been made on, and interest shall
continue to accrue and be payable thereon until,  the next  succeeding  Business
Day. Except as otherwise provided in the definition of "Interest Period", if any
payment of principal or interest becomes due on a day other than a Business Day,
such payment may be made on the next succeeding  Business Day and such extension
shall be included in computing  interest in connection  with such  payment.  All
payments  hereunder  and  under  the  Notes  shall be made  without  set-off  or
counterclaim  and in such  amounts  as may be  necessary  in order that all such
payments shall not be less than the amounts otherwise specified to be paid under
this  Agreement and the Notes (after  withholding  for or on account of: (i) any
present or future taxes,  levies,  imposts,  duties or other similar  charges of
whatever nature imposed by any government or any political subdivision or taxing
authority  thereof,  other than any tax (except those referred to in clause (ii)
below) on or measured by the net income of the Bank to which any such payment is
due pursuant to applicable  federal,  state and local income tax laws,  and (ii)
deduction of amounts equal to the taxes on or measured by the net income of such
Bank  payable  by such Bank with  respect  to the  amount by which the  payments
required to be made under this sentence exceed the amounts  otherwise  specified
to be paid in this  Agreement  and the Notes).  Upon payment in full of any Note
issued to any Bank and/or termination of any Bank's Commitment, the Bank holding
such Note shall mark the Note "Paid" and return it to the Borrower  specified on
such Note.

               Section  10.4.   Survival  of  Agreements  and   Representations;
                    Construction.

     All  agreements,  representations  and warranties made herein shall survive
the  delivery  of  this  Agreement  and the  Notes.  The  headings  used in this
Agreement  and the table of contents are for  convenience  only and shall not be
deemed to constitute a part hereof.  All uses herein of the masculine  gender or
of singular or plural  terms shall be deemed to include  uses of the feminine or
neuter gender, or plural or singular terms, as the context may require.

               Section 10.5. Lien on and Set-off of Deposits.

     As security  for the due payment and  performance  of all the  Obligations,
each Borrower hereby grants to Agent for the ratable benefit of the Banks a Lien
on any and all  deposits  or other sums at any time  credited by or due from the
Agent or any Bank to the  Borrower,  whether in  regular  or special  depository
accounts or otherwise, and any and all monies,  securities and other property of
the Borrower,  and the proceeds thereof, now or hereafter held or received by or
in  transit  to any Bank or the Agent  from or for such  Borrower,  whether  for
safekeeping,  custody,  pledge,  transmission,  collection or otherwise, and any
such deposits,  sums,  monies,  securities and other  property,  may at any time
after the  occurrence  and  during  the  continuance  of any Event of Default be
set-off,  appropriated  and applied by any Bank or the Agent  against any of the
Obligations, whether or not any of such Obligations is then due or is secured by
any collateral.  or, if it is so secured,  whether or not the collateral held by
the Agent is  considered  to be  adequate,  all as set forth in and  pursuant to
Section 2.20 hereof.

               Section  10.6.   Modifications,   Consents  and  Waivers;  Entire
                    Agreement

     No modification, amendment or waiver of or with respect to any provision of
this  Agreement,  any Notes,  or any of the other Loan  Documents  and all other
agreements,  instruments and documents delivered pursuant hereto or thereto, nor
consent to any  departure  by any Borrower  from any of the terms or  conditions
thereof,  shall in any  event be  effective  unless it shall be in  writing  and
signed by the Agent and each Bank except that: (i) any modification or amendment
of, or waiver or consent  with  respect  to,  Article 4 shall be  required to be
signed only by the Agent and the Required  Banks  (provided,  however,  that the
consummation  of a Loan by a Bank  shall be  deemed,  with  respect to such Loan
only,  to have the  effect  of the  execution  by such  Bank of a waiver  of, or
consent to a departure  from,  any term or  provision  of Article 4 that has not
been satisfied as of the date of the  consummation  of such Loan);  and (ii) any
modification  or amendment of, or waiver or consent with respect to,  Articles 1
(other than the  definitions  of  "Alternate  Base Rate",  "Applicable  Margin",
"Commitment",  "Commitment  Fee  Percentage",  "Federal  Funds Rate",  "Interest
Period",  "L/C Fee",  "L/C Fee  Percentage",  "LIBOR Base Rate",  "LIBOR  Rate",
"Post-Default Rate", "Prime Rate", "Quarterly Dates", "Required Banks", "Reserve
Requirement",   "Revolving  Credit  Commitment",  "Revolving  Credit  Commitment
Termination  Date",  "Total Revolving Credit  Commitment",  "Tranche A Revolving
Credit  Commitment",  and "Tranche B Revolving Credit  Commitment"),  5, 6, 7, 8
(other than the  preamble to Article 8 or Section 8.1 hereof) and 10 (other than
this Section 10.6) may be signed only by the Agent and the Required  Banks.  Any
such waiver or consent shall be effective only in the specific  instance and for
the purpose for which given. No consent to or demand on any Borrower in any case
shall, of itself, entitle it to any other or further notice or demand in similar
or other  circumstances.  This Agreement and the other Loan Documents embody the
entire agreement and understanding  among the Banks, the Agent and the Borrowers
and supersede all prior  agreements and  understandings  relating to the subject
matter hereof.

               Section 10.7. Remedies Cumulative; Counterclaims.

     Each and every right granted to the Agent and the Banks  hereunder or under
any other document delivered hereunder or in connection herewith,  or allowed it
by law or equity, shall be cumulative and may be exercised from time to time. No
failure  on the  part of the  Agent  or any  Bank or the  holder  of any Note to
exercise,  and no delay in  exercising,  any  right  shall  operate  as a waiver
thereof,  nor shall any single or partial  exercise  of any right  preclude  any
other or future  exercise  thereof or the exercise of any other  right.  The due
payment  and  performance  of the  Obligations  shall be  without  regard to any
counterclaim,  right of offset or any other claim  whatsoever  that any Borrower
may  have  against  any  Bank or the  Agent  and  without  regard  to any  other
obligation of any nature  whatsoever  that any Bank or the Agent may have to any
Borrower,  and no such  counterclaim or offset shall be asserted by any Borrower
(unless such counterclaim or offset would,  under applicable law, be permanently
and  irrevocably  lost if not  brought in such  action) in any  action,  suit or
proceeding instituted by any Bank or the Agent for payment or performance of the
Obligations .

               Section 10.8. Further Assurances.

     At any time and from time to time,  upon the  request  of the  Agent,  each
Borrower  shall  execute,  deliver  and  acknowledge  or cause  to be  executed,
delivered and  acknowledged,  such further documents and instruments and do such
other  acts and  things as the Agent may  reasonably  request  in order to fully
effect the purposes of this  Agreement,  the other Loan  Documents and any other
agreements, instruments and documents delivered pursuant hereto or in connection
with the Loans.

               Section 10.9. Notices.

     All notices,  requests,  reports and other communications  pursuant to this
Agreement shall be in writing, either by letter (delivered by hand or commercial
messenger  service or sent by certified mail, return receipt  requested,  except
for routine  reports  delivered in compliance with Article 5 hereof which may be
sent by  ordinary  first-class  mail) or  telegram  or  telecopy,  addressed  as
follows:

               (a) If to the Borrowers:

                    c/o Omega Healthcare Investors,  Inc.
                    900 Victors Way, Suite 350
                    Ann Arbor,  Michigan 48108
                    Attention:  Essel W. Bailey,Jr., President
                    Susan  Allene  Kovach,   General  Counsel
                    Telecopier No: (734) 887-0201

                    with a copy to:

                    Dykema  Gossett PLLC
                    1577 North  Woodward  Avenue/Suite  300
                    Bloomfield Hills,  Michigan  48304-282
                    Attention:  Fred J.Fechheimer, Esq.
                    Telecopier No.: (810) 540-0763

               (b)  If to any Bank:

                    To its  address  set forth  below its name on the  signature
                    pages hereof, with a copy to the Agent; and

               (c) If to the Agent:

                    Fleet Bank,  N.A.,  as Agent
                    1185 Avenue of the Americas
                    New York,  New York 1003
                    Attention:  Mr.  Christian J. Covello
                    Telecopier No.: (212) 819-4120

                    with a copy (other than in the case of Borrowing Notices and
                    reports and other  documents  delivered in  compliance  with
                    Article 5 hereof) to:

                    Emmet,  Marvin & Martin, LLP
                    120 Broadway
                    New York, New York 10271
                    Attention:  Richard S. Talesnick, Esq.
                    Telecopier No.: (212) 238-3100

     Any  notice,  request,  demand or other  communication  hereunder  shall be
deemed to have  been  given on:  (x) the day on which it is  telecopied  to such
party at its telecopier  number  specified  above (provided such notice shall be
effective  only if  followed by one of the other  methods of delivery  set forth
herein) or delivered by receipted hand or such commercial  messenger  service to
such party at its address  specified  above,  or (y) on the third  Business  Day
after the day deposited in the mail, postage prepaid, if sent by mail, or (z) on
the day it is delivered to the telegraph  company,  addressed as  aforesaid,  if
sent by telegraph. Any party hereto may change the Person, address or telecopier
number to whom or which notices are to be given hereunder,  by notice duly given
hereunder;  provided, however, that any such notice shall be deemed to have been
given  hereunder  only  when  actually  received  by the  party  to  which it is
addressed.

               Section 10.10. Counterparts.

     This  Agreement may be signed in any number of  counterparts  with the same
effect as if the signatures thereto and hereto were upon the same instrument.

               Section 10.11. Severability.

     The  provisions  of this  Agreement  are  severable,  and if any  clause or
provision  hereof shall be held invalid or  unenforceable in whole or in part in
any  jurisdiction,  then such invalidity or  unenforceability  shall affect only
such clause or provision, or part thereof, in such jurisdiction and shall not in
any manner  affect such clause or  provision in any other  jurisdiction,  or any
other  clause or provision in this  Agreement in any  jurisdiction.  Each of the
covenants,  agreements and conditions contained in this Agreement is independent
and compliance by the Borrower with any of them shall not excuse  non-compliance
by the  Borrower  with  any  other.  All  covenants  hereunder  shall  be  given
independent  effect so that if a particular action or condition is not permitted
by any of such  covenants,  the fact that it would be  permitted by an exception
to, or be otherwise  within the limitations of, another covenant shall not avoid
the  occurrence  of a Default or an Event of Default if such  action is taken or
condition exists.

               Section 10.12.  Binding  Effect;  No  Assignment or Delegation by
                    Borrowers.

     This  Agreement  shall be binding  upon and inure to the benefit of each of
the Borrowers and their  respective  successors  and to the benefit of the Banks
and the Agent and their  respective  successors  and  assigns.  The  rights  and
obligations  of each  Borrower  under this  Agreement  shall not be  assigned or
delegated without the prior written consent of the Agent and the Required Banks,
and any purported assignment or delegation without such consent shall be void.

               Section 10.13. Assignments and Participations by Banks.

               (a)  Each Bank may assign to one or more banks or other  entities
                    all or a portion of its rights  and  obligations  under this
                    Agreement (including,  without limitation,  all or a portion
                    of its  Commitment,  the Loans  owing to it, and the Note or
                    Notes  held  by  it);  provided,   however,  that:  (i)  the
                    Borrowers  (unless an Event of Default has occurred) and the
                    Agent must give  prior  written  consent to such  assignment
                    (unless  such  assignment  is to an Affiliate of such Bank),
                    which consent shall not be unreasonably withheld or delayed,
                    (ii) the parties to each such  assignment  shall execute and
                    deliver to the Agent an  Assignment  and  Acceptance,  and a
                    processing  fee of  $3,500.00,  (iii)  each such  assignment
                    shall be of a constant, and not a varying, percentage of all
                    of the assigning  Bank's rights and  obligations  under this
                    Agreement,   (iv)  the  amount  of  the   Revolving   Credit
                    Commitment of the assigning Bank being assigned  pursuant to
                    each  such  assignment  (determined  as of the  date  of the
                    Assignment and Acceptance  with respect to such  assignment)
                    shall in no event be less  than  $5,000,000  and shall be an
                    integral  multiple of $1,000,000,  (v) each such  assignment
                    shall  be  to an  Eligible  Assignee,  and  (vi)  each  such
                    assignment  shall be on a pro rata  basis  according  to the
                    amount  of  the  assigning  Bank's  Commitment.   Upon  such
                    execution,  delivery  and  acceptance,  from and  after  the
                    effective date specified in each  Assignment and Acceptance,
                    which  effective  date shall be at least  five (5)  Business
                    Days  after  the   execution   thereof:   (x)  the  assignee
                    thereunder  shall be a party  hereto and, to the extent that
                    rights and  obligations  hereunder  have been assigned to it
                    pursuant to such Assignment and Acceptance,  have the rights
                    and  obligations  of a Bank  hereunder,  and  (y)  the  Bank
                    assignor  thereunder  shall,  to the extent  that rights and
                    obligations  hereunder  have been assigned by it pursuant to
                    such Assignment and Acceptance, relinquish its rights and be
                    released from its obligations  under this Agreement (and, in
                    the case of an Assignment and Acceptance covering all or the
                    remaining   portion  of  an  assigning   Bank's  rights  and
                    obligations  under this Agreement,  such Bank shall cease to
                    be a party hereto).

               (b)  By executing and  delivering an Assignment  and  Acceptance,
                    the Bank  assignor  thereunder  and the assignee  thereunder
                    confirm to and agree  with each other and the other  parties
                    hereto  as  follows:  (i)  other  than as  provided  in such
                    Assignment  and  Acceptance,  such  assigning  Bank makes no
                    representation  or warranty  and  assumes no  responsibility
                    with   respect   to   any    statements,    warranties    or
                    representations made in or in connection with this Agreement
                    or  the  execution,   legality,  validity,   enforceability,
                    genuineness,  sufficiency  or value of this Agreement or any
                    other instrument or document furnished pursuant hereto; (ii)
                    such assigning Bank makes no  representation or warranty and
                    assumes no  responsibility  with  respect  to the  financial
                    condition of each Borrower or the  performance or observance
                    by  each  Borrower  of  any of its  obligations  under  this
                    Agreement  or any other  instrument  or  document  furnished
                    pursuant  hereto;  (iii) such assignee  confirms that it has
                    received a copy of this  Agreement,  together with copies of
                    such  financial  statements  and such  other  documents  and
                    information  as it has  deemed  appropriate  to make its own
                    credit  analysis and decision to enter into such  Assignment
                    and Acceptance;  (iv) such assignee will,  independently and
                    without reliance upon the Agent,  such assigning Bank or any
                    other Bank and based on such documents and information as it
                    shall deem appropriate at the time, continue to make its own
                    credit  decisions in taking or not taking  action under this
                    Agreement; (v) such assignee confirms that it is an Eligible
                    Assignee;  (vi) such assignee  appoints and  authorizes  the
                    Agent to take  such  action  as agent on its  behalf  and to
                    exercise  such powers under this  Agreement as are delegated
                    to the Agent by the terms hereof,  together with such powers
                    as  are  reasonably   incidental  thereto;  and  (vii)  such
                    assignee  agrees  that it will  perform in  accordance  with
                    their  terms  all of the  obligations  which by the terms of
                    this Agreement are required to be performed by it as a Bank.

               (c)  Upon its receipt of an Assignment and Acceptance executed by
                    an assigning Bank and an assignee representing that it is an
                    Eligible  Assignee,  together  with any Note subject to such
                    assignment,  the Agent shall: (i) accept such Assignment and
                    Acceptance,  and (ii)  give  prompt  notice  thereof  to the
                    Borrowers.  Within five  Business  Days after its receipt of
                    such notice,  the  Borrowers,  at their own  expense,  shall
                    execute  and  deliver  to the  Agent  in  exchange  for  the
                    surrendered  Note(s)  a new  Note(s)  to the  order  of such
                    Eligible Assignee in an amount equal to the Revolving Credit
                    Commitment  assumed by it  pursuant to such  Assignment  and
                    Acceptance  and,  if  the  assigning  Bank  has  retained  a
                    Revolving Credit Commitment hereunder,  a new Note(s) to the
                    order  of the  assigning  Bank  in an  amount  equal  to the
                    Revolving Credit Commitment  retained by it hereunder.  Such
                    new Note(s) shall be in an aggregate  principal amount equal
                    to  the  aggregate  principal  amount  of  such  surrendered
                    Note(s),   shall  be  dated  the  effective   date  of  such
                    Assignment  and   Acceptance  and  shall   otherwise  be  in
                    substantially the form of Exhibit A hereto.

               (d)  Each Bank may,  without the prior consent of the Agent,  the
                    other Banks or the Borrowers,  sell participations to one or
                    more  banks or other  entities  in all or a  portion  of its
                    rights  and  obligations  under this  Agreement  (including,
                    without limitation, all or a portion of its Revolving Credit
                    Commitment,  the Loans owing to it, and the Note(s)  held by
                    it;  provided,  however,  that: (i) such Bank's  obligations
                    under this Agreement  (including,  without  limitation,  its
                    Revolving   Credit   Commitment   hereunder)   shall  remain
                    unchanged, (ii) such Bank shall remain solely responsible to
                    the  other  parties  hereto  for  the  performance  of  such
                    obligations,  (iii) such Bank shall remain the holder of any
                    such  Note(s) for all  purposes of this  Agreement,  and the
                    Borrowers,  the Agent and the other Banks shall  continue to
                    deal solely and directly with such Bank in  connection  with
                    such Bank's rights and obligations under this Agreement.

               (e)  Any  Bank  may,  in  connection   with  any   assignment  or
                    participation   or  proposed   assignment  or  participation
                    pursuant to this Section 10.13,  disclose to the assignee or
                    participant  or  proposed   assignee  or  participant,   any
                    information  relating to any Borrower furnished to such Bank
                    by or on behalf of such Borrower;  provided  that,  prior to
                    any such disclosure, the assignee or participant or proposed
                    assignee  or   participant   shall  agree  to  preserve  the
                    confidentiality of any confidential  information relating to
                    such Borrower received by it from such Bank.

               (f)  Anything   in   this   Section   10.13   to   the   contrary
                    notwithstanding,  any Bank may  assign and pledge all or any
                    portion  of its Loans and its Notes to any  Federal  Reserve
                    Bank (and its transferees) as collateral  security  pursuant
                    to  Regulation  A of the Board of  Governors  of the Federal
                    Reserve  System and any  Operating  Circular  issued by such
                    Federal Reserve Bank. No such  assignment  shall release the
                    assigning Bank from its obligations hereunder.

               Section 10.14. Delivery of Tax Forms.

     Each Bank that is not  organized  under the laws of the United  States or a
state thereof shall:

               (a)  deliver to the Borrowers  and the Agent,  on or prior to the
                    date of the execution and delivery of this  Agreement or the
                    date on which it becomes a Bank hereunder,  (i) two accurate
                    and duly completed executed copies of United States IRS Form
                    1001 or 4224, or successor  applicable form, as the case may
                    be, and (ii) an accurate  and  complete IRS Form W-8 or W-9,
                    or successor applicable form, as the case may be;

               (b)  deliver to the Borrowers and the Agent two further  accurate
                    and   complete   executed   copies   of  any  such  form  or
                    certification  on or  before  the date that any such form or
                    certification  expires  or  becomes  obsolete  and after the
                    occurrence  of any  event  requiring  a  change  in the most
                    recent form previously delivered by it to the Borrowers; and

               (c)  obtain  such  extensions  of time for filing and  completing
                    such forms or  certifications as may reasonably be requested
                    by the Borrowers or the Agent;

     unless in any such case under clause (b) above an event (including, without
limitation,  any change in treaty,  law or regulation) has occurred prior to the
date on which any such delivery  would  otherwise be required  which renders all
such forms  inapplicable  or which would prevent such Bank from duly  completing
and  delivering  any such form with  respect to it and such Bank so advises  the
Borrowers  and the  Agent.  Such Bank  shall  certify  (i) in the case of a Form
W-8BEN or Form W-8ECUI that is provided pursuant to Section 10.14(a), that it is
entitled  to  receive  payments  under  this  Agreement   without  deduction  or
withholding of any United States  Federal  income taxes;  (ii) in the case of an
IRS  Form  W-8BEN  or Form  W-8ECUI  that is  provided  pursuant  to  subsection
10.14(b),  to the extent  legally  entitled  to do so,  that it is  entitled  to
receive  payments  under  this  Agreement  without,  or at a  reduced  rate  of,
deduction or withholding  of any United States  Federal income taxes;  and (iii)
and in the case of a Form W-8 or W-9,  that it is entitled to an exemption  from
United States backup  withholding  tax. Each Person not organized under the laws
of the United  States or a state  thereof that is an assignee  hereunder  shall,
prior to the effectiveness of the related  transfer,  be required to provide all
of the forms and statements required pursuant to this Section 10.14.

               Section 10.15. GOVERNING LAW; CONSENT TO JURISDICTION;  WAIVER OF
                    TRIAL BY JURY.

               (a)  THIS  AGREEMENT,  THE  OTHER  LOAN  DOCUMENTS  AND ALL OTHER
                    DOCUMENTS   AND   INSTRUMENTS   EXECUTED  AND  DELIVERED  IN
                    CONNECTION HEREWITH AND THEREWITH, SHALL BE GOVERNED BY, AND
                    CONSTRUED AND  INTERPRETED  IN ACCORDANCE  WITH, THE LAWS OF
                    THE STATE OF NEW YORK WITHOUT REGARD TO ITS RULES PERTAINING
                    TO CONFLICTS OF LAWS.

               (b)  EACH BORROWER  IRREVOCABLY CONSENTS THAT ANY LEGAL ACTION OR
                    PROCEEDING AGAINST IT UNDER, ARISING OUT OF OR IN ANY MANNER
                    RELATING TO THIS AGREEMENT, AND EACH OTHER LOAN DOCUMENT MAY
                    BE BROUGHT IN ANY COURT OF THE STATE OF NEW YORK,  COUNTY OF
                    NEW YORK,  OR IN THE UNITED  STATES  DISTRICT  COURT FOR THE
                    SOUTHERN  DISTRICT  OF  NEW  YORK.  EACH  BORROWER,  BY  THE
                    EXECUTION  AND  DELIVERY OF THIS  AGREEMENT,  EXPRESSLY  AND
                    IRREVOCABLY ASSENTS AND SUBMITS TO THE PERSONAL JURISDICTION
                    OF ANY OF SUCH COURTS IN ANY SUCH ACTION OR PROCEEDING. EACH
                    BORROWER FURTHER IRREVOCABLY  CONSENTS TO THE SERVICE OF ANY
                    COMPLAINT,  SUMMONS, NOTICE OR OTHER PROCESS RELATING TO ANY
                    SUCH ACTION OR PROCEEDING BY DELIVERY  THEREOF TO IT BY HAND
                    OR BY  MAIL  IN THE  MANNER  PROVIDED  FOR IN  SECTION  10.9
                    HEREOF.  EACH  BORROWER  HEREBY  EXPRESSLY  AND  IRREVOCABLY
                    WAIVES ANY CLAIM OR DEFENSE IN ANY SUCH ACTION OR PROCEEDING
                    BASED ON ANY ALLEGED LACK OF PERSONAL JURISDICTION, IMPROPER
                    VENUE OR FORUM NON  CONVENIENS  OR ANY SIMILAR  BASIS.  EACH
                    BORROWER  SHALL  NOT BE  ENTITLED  IN  ANY  SUCH  ACTION  OR
                    PROCEEDING  TO ASSERT ANY DEFENSE GIVEN OR ALLOWED UNDER THE
                    LAWS OF ANY STATE  OTHER  THAN THE STATE OF NEW YORK  UNLESS
                    SUCH  DEFENSE  IS ALSO  GIVEN OR  ALLOWED BY THE LAWS OF THE
                    STATE OF NEW  YORK.  NOTHING  IN THIS  SECTION  10.14  SHALL
                    AFFECT OR IMPAIR IN ANY MANNER OR TO ANY EXTENT THE RIGHT OF
                    ANY BANK TO COMMENCE LEGAL  PROCEEDINGS OR OTHERWISE PROCEED
                    AGAINST THE BORROWER IN ANY JURISDICTION OR TO SERVE PROCESS
                    IN ANY MANNER PERMITTED BY LAW.

                (c) EACH  BORROWER,  THE BANKS AND THE AGENT WAIVE TRIAL BY JURY
                    IN  ANY   LITIGATION  IN  ANY  COURT  WITH  RESPECT  TO,  IN
                    CONNECTION  WITH, OR ARISING OUT OF, THIS AGREEMENT,  ANY OF
                    THE OTHER LOAN  DOCUMENTS,  OR ANY  INSTRUMENT  OR  DOCUMENT
                    DELIVERED  PURSUANT  TO  THIS  AGREEMENT,  OR THE  VALIDITY,
                    PERFECTION,   INTERPRETATION,   COLLECTION  OR   ENFORCEMENT
                    THEREOF.

<PAGE>

                    Section 10.16. Joint and Several Obligations.

     All   of  the   Obligations,   indebtedness,   liabilities,   undertakings,
representations  and  warranties of the Borrowers  hereunder  shall be joint and
several obligations of the Borrowers.

                           [Signature Pages to Follow]

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the date first above written.

                                                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  /s/ Susan  Allene  Kovach,
                                              ------------------------------
     as an  executive  officer  of  all  of the aforementioned  entities,  has
     executed  this Loan  Agreement and intending that all  entities above named
     are  bound and are to be bound by the one signature as if he had executed
     this Loan Agreement  separately for each of the above named entities.

           Signature Page to Loan Agreement dated June 15, 2000 among
       Omega Healthcare Investors, Inc., and certain of its Subsidiaries,
             the Banks party thereto, and Fleet Bank, N.A. as Agent

<PAGE>

Tranche A
Revolving Credit Commitment:
----------------------------
$21,434,240.16                                FLEET BANK, N.A., as Agent
                                              and as a Bank
                                          By /s/ Christian J. Covello
Tranche B                                   ----------------------------
Revolving Credit Commitment:                     Vice President
----------------------------
$7,003,259.84

                    Lending Office for Prime Rate Loans and LIBOR Loans:

                    1185 Avenue of the Americas New York, New York 10036

                    Attention: Mr. Christian J. Covello

                    Address for Notices:

                    Fleet Bank, N.A.
                    1185 Avenue of the Americas
                    New York, New York 10036

                    Attention: Mr. Christian J. Covello

                    Telecopier: (212) 819-4110

<PAGE>

Tranche A
Revolving Credit Commitment:
----------------------------
$14,839,089.34                                DRESDNER BANK AG, NEW YORK BRANCH
                                              and GRAND CAYMAN BRANCH
                                              By:/s/ Andrew P. Nesi
Tranche B                                        ---------------------
Revolving Credit Commitment:                     Name: Andrew P. Nesi
----------------------------                     Title:First Vice President
$4,848,410.66

                                               By:/s/ Debra A. Ritzler
                                               -----------------------
                                               Name: Debra A. Ritzler
                                               Title: Assistant Vice President

                                          Lending Office for Prime Rate Loans:

                                          Dresdner Bank AG, Grand Cayman Branch,
                                          c/o Dresdner Bank AG, New York Branch
                                          75 Wall Street
                                          New York, New York 10005
                                          Attn:

                                          Lending Office for LIBOR Loans:

                                          Dresdner Bank AG, New York Branch
                                          and Grand Cayman Branch
                                          75 Wall Street
                                          New York, New York 10005
                                          Attn:

                                          Address for Notices:

                                          Dresdner Bank AG, New York Branch
                                          75 Wall Street
                                          New York, New York 10005
                                          Attn:

                                          Telecopier No.: (212) 429-2130

<PAGE>

Tranche A
Revolving Credit Commitment:
----------------------------
$14,839,089.34                             HARRIS TRUST AND SAVINGS BANK

                                           By:/s/ Kirby M. Law
Tranche B                                     -------------------
Revolving Credit Commitment:                      Vice President
----------------------------
$4,848,410.66

                                          Lending Office for Prime Rate Loans
                                          and LIBOR Loans:

                                          111 West Monroe Street
                                          Chicago, Illinois 60603

                                          Attention:  Mr. Jeffrey Nicholson

                                          Address for Notices:

                                          Harris Trust and Savings Bank
                                          111 West Monroe Street
                                          Chicago, Illinois 60603

                                          Attention:  Mr. Jeffrey Nicholson

                                          Telecopier: (312) 461-5225

<PAGE>

Tranche A
Revolving Credit Commitment:
----------------------------
$28,029,390.97                            BANK ONE, MICHIGAN

                                      By: /s/ J. Greg Mickens
Tranche B                                 ------------------------
Revolving Credit Commitment:                  Vice President
----------------------------
$9,158,109.03
                                          Lending Office for Prime Rate Loans
                                          and LIBOR Loans:

                                          611 Woodward Avenue
                                          Detroit, Michigan  48226

                                          Attention:

                                          Address for Notices:

                                          Bank One, Michigan
                                          611 Woodward Avenue
                                          Detroit, Michigan  48226

                                          Attention:

                                          Telecopier:  (313) 226-0857

<PAGE>

Tranche A
Revolving Credit Commitment:
----------------------------
$13,190,301.63                            FOOTHILL INCOME TRUST, L.P.
                                          By FIT-GP, LLC

Tranche B                                 By: /s/ M. Edward Stearns
                                              -------------------------
Revolving Credit Commitment:                      Managing Member
----------------------------
$4,309,698.37

                                           Lending Office for Prime Rate Loans
                                             and LIBOR Loans:

                                           11111 Santa Monica Boulevard
                                           Suite 1500
                                           Los Angeles, California  90025-3333
                                           Attention: Mr. M. Edward Stearns

                                           Address for Notices:

                                           11111 Santa Monica Boulevard
                                           Suite 1500
                                           Los Angeles, California  90025-3333
                                           Attention: Mr. M. Edward Stearns

                                           Telecopier:

<PAGE>

Tranche A
Revolving Credit Commitment:
----------------------------
$9,892,726.23                               MICHIGAN NATIONAL BANK

                                       By: /s/ Draga B. Palincas
Tranche B                                  ----------------------
Revolving Credit Commitment:                    Vice President
----------------------------

$3,232,273.77

                                            Lending Office for Prime Rate Loans
                                               and LIBOR Loans:

                                            Michigan National Bank
                                            27777 Inkster Road
                                            Farmington Hills, MI 48333-9065

                                            Attention: Ms. Draga Palincas

                                            Address for Notices:

                                            Michigan National Bank
                                            27777 Inkster Road
                                            Farmington Hills, MI 48333-9065

                                            Attention: Ms. Draga Palincas

                                            Telecopier:  (810) 473-4345

<PAGE>

Tranche A
Revolving Credit Commitment:
----------------------------
$9,892,726.23                               LASALLE BANK NATIONAL ASSOCIATION

Tranche B                                   By /s/ Jody Staszesky
                                               ----------------------
Revolving Credit Commitment:                   Senior Vice President
----------------------------

$3,232,273.77
                                            Lending Office for Prime Rate Loans
                                               and LIBOR Loans:

                                            LaSalle Bank National Association
                                            135 South LaSalle Street
                                            Chicago, Illinois 60603

                                            Attention: Ms. Jody Staszesky

                                            Address for Notices:
                                            LaSalle Bank National Association
                                            135 South LaSalle Street
                                            Chicago, Illinois 60603

                                            Attention: Ms. Jody Staszesky

                                            Telecopier:  (312) 904-6457

<PAGE>

Tranche A
Revolving Credit Commitment:
----------------------------
$11,871,271.47                             BHF (USA) CAPITAL CORPORATION

                                             By: /s/ Richard Cameron
Tranche B                                    ---------------------
Revolving Credit Commitment:                 Vice President
----------------------------
$3,878,728.53

                                            Lending Office for Prime Rate Loans
                                               and LIBOR Loans:

                                            BHF (USA) Capital Corporation
                                            590 Madison Avenue
                                            New York, New York 10022-2540

                                            Attention: Mr. John Zapalac

                                            Address for Notices:

                                            BHF (USA) Capital Corporation
                                            590 Madison Avenue
                                            New York, New York 10022-2540

                                            Attention: Mr. John Zapalac

                                            Telecopier:  (212) 756-5536

<PAGE>

Tranche A
Revolving Credit Commitment:
----------------------------
$7,914,180.98                                KBC N.V.
                                             By: /s/ Robert Snauffer
                                             -----------------------
                                                 Vice President

                                             By /s/ Raymond Murray
Tranche B                                    ---------------------
Revolving Credit Commitment:                    First Vice President
----------------------------
$2,585,819.02
                                            Lending Office for Prime Rate Loans:

                                            KBC N.V.
                                            125 West 55th Street
                                            New York, New York 10019
                                            Attention:

                                            Lending Office for LIBOR Loans:

                                            KBC N.V.
                                            125 West 55th Street
                                            New York, New York 10019
                                            Attention:

                                            Address for Notices:

                                            KBC N.V.
                                            125 West 55th Street
                                            New York, New York 10019
                                            Attention:

                                            Telecopier: (212) 541-0657

<PAGE>

                            EXHIBITS AND SCHEDULES TO
                                 LOAN AGREEMENT
                                  BY AND AMONG
                        OMEGA HEALTHCARE INVESTORS, INC.
                        AND CERTAIN OF ITS SUBSIDIARIES,
                           THE BANKS SIGNATORY HERETO
                                       AND
                           FLEET BANK, N.A., AS AGENT

EXHIBITS
--------

1          List of Borrowers

2          List of Approved Operators

A-1        Form of Tranche A Note

A-2        Form of Tranche B Note

B          Form of Assignment and Acceptance

C          Form of Compliance Certificate

SCHEDULES
---------

2.10       Collateral Facilities

3.1        States of Incorporation, Organization and Qualification,
           and Capitalization of Borrowers and Subsidiaries

3.2        Required Consents

3.6        Judgments, Actions, Proceedings

3.7        Existing Defaults

3.8        Burdensome Documents

3.9        Material  Liabilities  and  Obligations  in  Addition  to those
             Disclosed  on the  Company's  Financial Statements

3.13       Name Changes, Mergers, Acquisitions

3.16       Employee Benefit Plans

7.1        Permitted Indebtedness and Guaranties

7.2        Permitted Liens

7.8        Permitted Investments

<PAGE>

                                    EXHIBIT 1
                                TO LOAN AGREEMENT
                                  BY AND AMONG
                        OMEGA HEALTHCARE INVESTORS, INC.
                         AND CERTAIN OF ITS SUBSIDIARIES
                           THE BANKS SIGNATORY HERETO
                                       AND
                           FLEET BANK, N.A., AS AGENT
                           --------------------------

                                LIST OF BORROWERS
                                -----------------

Name of Borrower                                   State of Organization
----------------                                   ---------------------
Omega Healthcare Investors, Inc.                       Maryland
Delta Investors I, LLC                                 Maryland
Delta Investors II, LLC                                Maryland
Jefferson Clark, Inc.                                  Maryland
NRS Ventures, L.L.C.                                   Kentucky
OHI (Clemmons), Inc.                                   North Carolina
OHI (Florida), Inc.                                    Florida
OHI (Greensboro), Inc.                                 North Carolina
OHI (Illinois), Inc.                                   Illinois
OHI (Iowa), Inc.                                       Iowa
OHI (Kansas), Inc.                                     Kansas
OHI of Texas, Inc.                                     Maryland
Omega (Kansas), Inc.                                   Kansas
OS Leasing Company                                     Kentucky
Sterling Acquisition Corp.                             Kentucky
Sterling Acquisition Corp. II                          Kentucky

<PAGE>

                                    EXHIBIT 2
                                TO LOAN AGREEMENT
                                  BY AND AMONG
                        OMEGA HEALTHCARE INVESTORS, INC.
                         AND CERTAIN OF ITS SUBSIDIARIES
                           THE BANKS SIGNATORY HERETO
                                       AND
                           FLEET BANK, N.A., AS AGENT
                           --------------------------

                           LIST OF APPROVED OPERATORS
                           --------------------------

                          Essex Healthcare Corporation
                               HQM of Floyd County
                        Integrated Health Services, Inc.
                         Lyric Health Care Holdings, LLC
                           Peak Medical of Idaho, Inc.
                           Sun Healthcare Group, Inc.
                           Tiffany Care Centers, Inc.
                        TLC Health care of Illinois, Inc.
                                     Genesis
                                     Vencor
                                 Washington N&R

<PAGE>

                                   EXHIBIT A-1
                                TO LOAN AGREEMENT
                                  BY AND AMONG
                        OMEGA HEALTHCARE INVESTORS, INC.
                        AND CERTAIN OF ITS SUBSIDIARIES,
                           THE BANKS SIGNATORY HERETO
                                       AND
                           FLEET BANK, N.A., AS AGENT
                           --------------------------

                             FORM OF TRANCHE A NOTE
                             ----------------------

$____________                                               Dated: _______, 2000

         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 Tranche A 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 Bank,
N.A., as Agent (the "Agent") on behalf of the Bank, at its office  determined in
accordance  with the Agreement in  immediately  available  funds.  The Tranche A
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 Tranche 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,
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.

<PAGE>

<TABLE>
<CAPTION>
<S>                                            <C>    <C>    <C>    <C>    <C>    <C>

                                                                                                         Schedule A

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

                                                PRINCIPAL PAYMENTS

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

                                 Note dated _______, 2000 payable to the order of
                                                      [Bank]

------------ ----------------- ------------ --------------------------- ------------------ ------------------ --------------
             Principal                      Interest  Period (if
             Amount of                      other than a Prime Rate                        Unpaid Principal
             Tranche A           Type of    Loan)  and Interest         Amount of                               Notation
                                                   --------------                          ------
Date         Credit Loan          Loan      Rate                        Principal Repaid   Balance               Made By
----         -----------          ----      ------                      -----------------  ------------          -------
------------ ----------------- ------------ --------------------------- ------------------ ------------------ --------------
------------ ----------------- ------------ --------------------------- ------------------ ------------------ --------------

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

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

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

</TABLE>

<PAGE>

                                   EXHIBIT A-2
                                TO LOAN AGREEMENT
                                  BY AND AMONG
                        OMEGA HEALTHCARE INVESTORS, INC.
                        AND CERTAIN OF ITS SUBSIDIARIES,
                           THE BANKS SIGNATORY HERETO
                                       AND
                           FLEET BANK, N.A., AS AGENT
                           --------------------------

                             FORM OF TRANCHE B NOTE
                             ----------------------

$____________                                              Dated: _______, 2000

         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 Tranche B 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 Bank,
N.A., as Agent (the "Agent") on behalf of the Bank, at its office  determined in
accordance  with the Agreement in  immediately  available  funds.  The Tranche B
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 Tranche B 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,
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.

<PAGE>

<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

                                                                                                         Schedule A

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

                                                PRINCIPAL PAYMENTS

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

                                 Note dated _______, 2000 payable to the order of
                                                      [Bank]

------------ ----------------- ------------ --------------------------- ------------------ ------------------ --------------
             Principal                      Interest  Period (if
             Amount of                      other than a Prime Rate                        Unpaid Principal
             Tranche B           Type of    Loan)  and Interest         Amount of                               Notation
                                                   --------------                          ------
Date         Credit Loan          Loan      Rate                        Principal Repaid   Balance               Made By
----         -----------          ----      ------                      -----------------  ------------          -------
------------ ----------------- ------------ --------------------------- ------------------ ------------------ --------------
------------ ----------------- ------------ --------------------------- ------------------ ------------------ --------------

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

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

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

</TABLE>

<PAGE>

                                    EXHIBIT B
                                TO LOAN AGREEMENT
                                  BY AND AMONG
                        OMEGA HEALTHCARE INVESTORS, INC.
                        AND CERTAIN OF ITS SUBSIDIARIES,
                           THE BANKS SIGNATORY HERETO
                                       AND
                           FLEET BANK, N.A., AS AGENT
                           --------------------------

                        FORM OF ASSIGNMENT AND ACCEPTANCE
                        ---------------------------------

                                                              Dated ___________

         Reference is hereby made to the Loan Agreement  dated June 15, 2000 (as
amended prior to the Effective Date referred to below, the "Loan  Agreement") by
and among Omega  Healthcare  Investors,  Inc.  and  certain of its  Subsidiaries
(collectively,  the "Borrowers"), the Banks signatory thereto (collectively, the
"Banks")  and Fleet Bank,  N.A. in its  capacity as agent for the Banks (in such
capacity,  the "Agent").  Capitalized  terms used herein that are defined in the
Loan Agreement  that are not otherwise  defined herein shall have the respective
meanings ascribed thereto in the Loan Agreement.

_______________________________, a  __________________ (the "Assignor")  and
_______________________________________, a ________________,  (the "Assignee")
agree as follows:

         1. The  Assignor  hereby  sells and  assigns to the  Assignee,  and the
Assignee hereby purchases and assumes from the Assignor,  a __ % interest in and
to all of the Assignor's rights and obligations under the Loan Agreement and the
other Loan  Documents as of the Effective  Date (as defined  below)  (including,
without  limitation,  such  percentage  interest  in the  Assignor's  Tranche  A
Revolving  Credit  Commitment  as in effect  on the  Effective  Date,  Tranche B
Revolving Credit Commitment as in effect on the Effective Date, Tranche A Credit
Loans owing to the Assignor on the Effective Date,  Tranche B Credit Loans owing
to the Assignor on the Effective  Date,  Tranche A Note held by the Assignor and
Tranche B Note held by the Assignor).

         2. The Assignor:  (i)  represents and warrants that as of the Effective
Date its  Tranche  A  Revolving  Credit  Commitment  (without  giving  effect to
assignments  thereof that have not yet become  effective)  is  $__________,  its
Tranche B Revolving  Credit  Commitment  (without  giving effect to  assignments
thereof  that have not yet  become  effective)  is  $__________,  the  aggregate
outstanding  principal  amount of Tranche A Credit  Loans  owing to it  (without
giving  effect to  assignments  thereof that have not yet become  effective)  is
$_____________,  and the  aggregate  outstanding  principal  amount of Tranche B
Credit Loans owing to it (without giving effect to assignments thereof that have
not yet become  effective) is $__________;  (ii) represents and warrants that it
is  the  legal  and  beneficial  owner  of the  interest  being  assigned  by it
hereunder,  and that such interest is free and clear of any adverse claim; (iii)
makes no representation  or warranty and assumes no responsibility  with respect
to any statements,  warranties or representations  made in or in connection with
the Loan  Agreement  or any other  instrument  or  document  furnished  pursuant
thereto;   and  (iv)  makes  no   representation  or  warranty  and  assumes  no
responsibility  with respect to the financial  condition of the Borrowers or any
other Loan Party or the  performance or observance by the Borrowers or any other
Loan Party of any of their  respective  obligations  under the Loan Agreement or
any other instrument or document  furnished  pursuant thereto;  and (v) attaches
the Notes  referred to in paragraph 1 above and requests that the Agent exchange
such Notes for new Notes as follows:  [a Tranche A Note dated the Effective Date
(as such term is defined below) in the principal amount of $________  payable to
the order of the  Assignee,  a Tranche B Note  dated the  Effective  Date in the
principal amount of $________ payable to the order of the Assignee,  a Tranche A
Note in the principal amount of $________  payable to the order of the Assignor,
and a  Tranche  B Note  dated  the  Effective  Date in the  principal  amount of
$_________ payable to the order of the Assignor].

         3. The  Assignee:  (i) confirms that it has received a copy of the Loan
Agreement,  together  with copies of such  financial  statements  and such other
documents and  information  as it has deemed  appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance;  (ii) agrees
that it will, independently and without reliance upon the Agent, the Assignor or
any other  Bank and based on such  documents  and  information  as it shall deem
appropriate at the time,  continue to make its own credit decisions in taking or
not  taking  action  under  the Loan  Agreement;  (iii)  confirms  that it is an
Eligible Assignee; (iv) appoints and authorizes the Agent to take such action as
its agent on its behalf and to exercise such powers under the Loan  Agreement as
are  delegated to the Agent by the terms  thereof,  together with such powers as
are reasonably incidental thereto; (v) agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Loan Agreement
are  required  to be  performed  by it as a  Bank;  and  (vi)  specifies  as its
addresses  for Prime Rate Loans and LIBOR Loans (and  address for  notices)  the
offices set forth beneath its name on the signature pages hereof.

         4. The  effective  date for this  Assignment  and  Acceptance  shall be
________________  (the  "Effective  Date").  Following  the  execution  of  this
Assignment and  Acceptance,  it will be delivered to the Agent for acceptance by
the Agent, together with a processing fee of $3,500.

         5. Upon such  acceptance,  as of the Effective  Date:  (i) the Assignee
shall be a party to the Loan  Agreement  and,  to the  extent  provided  in this
Assignment and Acceptance,  have the rights and obligations of a Bank thereunder
and (ii) the  Assignor  shall,  to the extent  provided in this  Assignment  and
Acceptance, relinquish its rights and be released from its obligations under the
Loan Agreement.

         6. Upon such  acceptance,  from and after the Effective Date, the Agent
shall make all payments under the Loan Agreement and the Notes in respect of the
interest  assigned  hereby  (including,  without  limitation,  all  payments  of
principal,  interest and commitment fees with respect  thereto) to the Assignee.
The Assignor and Assignee  shall make all  appropriate  adjustments  in payments
under the Loan  Agreement and the Notes for periods prior to the Effective  Date
directly between themselves.

         7. This  Assignment and Acceptance  shall be governed by, and construed
in accordance with, the laws of the State of New York.

                               [NAME OF ASSIGNOR]

                               By_________________________________
                                           Title

                               [NAME OF ASSIGNEE]

                               By_________________________________
                                            Title

                              Lending Office for Prime Rate Loans:

                              Lending Office for LIBOR Loans:

                              Attention:

                              Address for Notices:

                                                     Attention:

                                 Telephone No.:
                                 Telecopier No.:

Accepted this ___ day
of ______________, ______

FLEET BANK, N.A., as Agent

By___________________________
          Title

<PAGE>

                                    EXHIBIT C
                                TO LOAN AGREEMENT
                                  BY AND AMONG
                        OMEGA HEALTHCARE INVESTORS, INC.
                        AND CERTAIN OF ITS SUBSIDIARIES,
                           THE BANKS SIGNATORY HERETO
                                       AND
                           FLEET BANK, N.A., AS AGENT
                           --------------------------

                         FORM OF COMPLIANCE CERTIFICATE
                         ------------------------------

          Section 6.9 (Financial Covenants) : Omega Healthcare  Investors,  Inc.
               Loan Agreement

          Compliance Certificate: Quarter Ended (date)

          (a)  Maximum  Indebtedness  to Tangible  Net Worth of Not Greater Than
               1.50: 1.00:

          As   of: (date) in thousands

          Indebtedness                                 $
          Shareholders' Equity                         $
           less: Goodwill and Noncompete Agreements
                 Unamortized Deferred Costs
                 Treasury Stock
          Tangible Net Worth                           $
                                        Ratio  _______          COMPLIANCE
                                                                ----------
************************************************************************
(b)      Minimum  Tangible Net Worth (after the Initial Equity  Contribution) of
         Not Less Than  $445,000,000  plus 50% of (i) Net Issuance  Proceeds and
         (ii) Equity Issued Upon the Conversion of convertible Indebtedness:

         As of: (date) in thousands

         Tangible Net Worth                            $
             plus:  Net Equity  Proceeds
                     (excluding Initial Equity
                      Contribution and DRIP)
                    Equity Issued Upon Conversion
                      of convertible Indebtedness

                           Total Tangible Net Worth    $
                                                                COMPLIANCE
************************************************************************

(c) Minimum EBITDA/Interest Expense of Not Less than 200% (rolling four quarters
basis):

        Last Four Quarters EBITDA:
                    September, 2000                                $
                    December, 2000                                 $
                    March, 2001                                    $
                    June, 2001                                     $
        Rolling Four Quarter EBITDA                                       $
        Last Four Quarters Interest Expense on All Indebtedness:
                    September, 2000                                $
                    December, 2000                                 $
                    March, 2001                                    $
                    June, 2001                                     $
        Rolling Four Quarter Interest                                     $
                                                 Ratio        _____   COMPLIANCE
************************************************************************
(d) No Net Loss in any fiscal year commencing from and after January 1, 2001:

                                             No Net Loss      _____   COMPLIANCE
************************************************************************
(e) Minimum  Omega's Fixed Charge  Coverage of Not Less Than 1.00:1.00  (rolling
four quarters):

        Rolling Four Quarter EBITDA (Above)                                $
        Rolling Four Quarter Interest (Above)                              $
        Cash Dividends Paid for Quarter Ended:
                    September, 2000                                $
                    December, 2000                                 $
                    March, 2001                                    $
                    June, 2001                                     $
        Rolling Four Quarter Cash Dividends Paid                           $
                                Sub-Total                                  $
                                                     Ratio  ________  COMPLIANCE
************************************************************************

<PAGE>

(f) Maximum Leverage Ratio of Not Greater Than 5.00:1.00  (rolling four quarters
basis):

         As of: (date) in thousands

         Funded Indebtedness                                           $________

        Last Four Quarters Adjusted EBITDA:
                    September, 2000                                $
                    December, 2000                                 $
                    March, 2001                                    $
                    June, 2001                                     $
        Rolling Four Quarter Adjusted EBITDA                           $
                                                 Ratio    _____      COMPLIANCE
************************************************************************
(g) Minimum Collateral Coverage of 1.40:1.00 (rolling four quarters basis):

         The sum of Lease Rental Expense and Mortgage Expense payments  received
         from Operators  (other than from an Investment  which is delinquent for
         30 days or more in  payments  (after the  application  of any  security
         deposit
         with respect thereto))                                    $__________

         All interest paid or payable on Credit
         Loans                                                     $__________

                                                  Ratio    _____     COMPLIANCE

<PAGE>

               EXHIBIT C - FORM OF COMPLIANCE CERTIFICATE (CONT'D)

                              OFFICER'S CERTIFICATE

I hereby certify that:

(a) Omega Healthcare Investors,  Inc. is in compliance with the covenants as set
forth above  pursuant to Section 6.9 of the Loan  Agreement  dated June 15, 2000
(the "Loan Agreement") among Omega Healthcare Investors, Inc. and certain of its
subsidiaries,  the banks party  thereto  (the  "Banks") and you as agent for the
Banks,  and that all the  above  computations  of the  financial  covenants  are
correct and  complete as of the close of business  [Date] and are in  conformity
with the terms and conditions of the Loan Agreement.

(b) The  representations  and  warranties  contained  in  Article  3 of the Loan
Agreement  are  true  and  correct  and with the  same  effect  as  though  such
representations   and  warranties  were  made  on  the  original  date  of  such
certificate,  except for changes in the  ordinary  course of  business,  none of
which either  singly or in the  aggregate,  have a Material  Adverse  Effect (as
defined in the Loan Agreement).

(c) No Event of Default and no Default (as  defined in the Loan  Agreement)  has
occurred and is continuing.

                        OMEGA HEALTHCARE INVESTORS, INC.

                     By:___________________________________
                            Chief Financial Officer

Date:

<PAGE>

                                  SCHEDULE 2.10
                                TO LOAN AGREEMENT
                                  BY AND AMONG
                        OMEGA HEALTHCARE INVESTORS, INC.
                        AND CERTAIN OF ITS SUBSIDIARIES,
                           THE BANKS SIGNATORY HERETO
                                       AND
                           FLEET BANK, N.A., AS AGENT

                              COLLATERAL FACILITIES

<TABLE>
<CAPTION>
Property Name                                                   City                  State
-------------                                                   ----                  -----
<S>     <C>    <C>    <C>    <C>    <C>    <C>
HQM of Floyd County, Inc.

      Mountain Manor of Pikeville                              Pikeville               KY
      Mountain Manor of Prestonsburg                           Prestonsburg            KY
      Riverview Manor                                          Prestonsburg            KY

    Lyric I (1/13/98)
      Crestwood Care Center                                    Shelby                  OH
      IHS at Chestnut Hill                                     Glenside                PA
      IHS at Claremont                                         Claremont               NH
      IHS at Gainesville                                       Gainesville             FL
      IHS at Governors Park                                    Barrington              IL

Peak Medical of Idaho, Inc.
      Idaho Falls Care Center                                  Idaho Falls             ID
      Twin Falls Care Center                                   Twin Falls              ID

Sun Healthcare Group, Inc. - Delta II
      Olive Vista                                              Pomona                  CA
      Shandin Hills Behavior Therapy Center                    San Bernardino          CA
      SunBridge Care & Rehab - Intercommunity                  Norwalk                 CA
      SunBridge Care & Rehab for Newport Beach                 Newport Beach           CA
      SunBridge Care & Rehab for Pico Rivera                   Pico Rivera             CA
      SunBridge Care & Rehab. for Dunbar                       Dunbar                  WV
      SunBridge Care & Rehab. for Lexington                    Lexington               NC
      SunBridge Care & Rehab. for Marion                       Marion                  OH
      SunBridge Care & Rehab. for Parkersberg                  Parkersburg             WV
      SunBridge Care & Rehab. for Salem                        Salem                   WV
      SunBridge Care & Rehabilitation for Weed                 Weed                    CA
      SunBridge Care Center for Claremont                      Pomona                  CA
      SunBridge Care Center for Coalinga                       Coalinga                CA
      SunBridge Care Center for Fullerton                      Fullerton               CA
      SunBridge Care Ctr for Santa Monica-17th                 Santa Monica            CA
      SunHealth Robert H. Ballard Rehab Hosp.                  San Bernardino          CA
      Vista Knoll Specialized Care Facility                    Vista                   CA

TLC Health Care, Inc. (1/7/99)
      Paris Health Care Center                                 Paris                   IL
      Park Avenue Health Care Home                             Herrin                  IL

TLC Health Care, Inc. (1/7/99)
      Cedarcrest Manor Nursing Home                            Washington              MO
      Cherry Street Annex                                      Paris                   TX
      Cherry Street Manor                                      Paris                   TX
      Dallas Health and Rehabilitation Center                  Dallas                  TX
      Fountain Manor Care Center                               Hicksville              OH
      Grandview Healthcare Center                              Washington              MO
      Parkview Convalescent Center                             Paris                   TX

Essex Healthcare Corporation

      Canton Healthcare                                        Canton                  OH
      Essex of Salem I                                         Salem                   OH
      Essex of Salem II                                        Salem                   OH
      Essex of Salem III                                       Salem                   OH
      Meridian Arms Living Center                              Youngstown              OH
      St. Marys                                                St. Mary's              OH

      Integrated $12M Note (03/13/1998) (161)
        Bonterra Nursing Center                                East Point              GA
        Parkview Manor - Atlanta                               Atlanta                 GA

Integrated Health Services, Inc.
      IHS at Brandon                                           Brandon                 FL
      IHS at Central Park Village                              Orlando                 FL
      IHS of Dallas at Treemont                                Dallas                  TX
      IHS of Florida at West Palm Beach                        West Palm Beach         FL
      IHS of Lakeland at Oakbridge                             Lakeland                FL
      IHS of Sarasota at Beneva                                Sarasota                FL
      The Vintage                                              Denton                  TX

Tiffany Care Centers, Inc.
      King City Manor                                          King City               MO
      McLarney Manor                                           Brookfield              MO
      Nodaway Nursing Home                                     Maryville               MO
      Oregon Care Center                                       Oregon                  MO
      Tiffany Heights                                          Mound City              MO

TLC Health Care, Inc.
      ProCare Development Center                               Gaston                  IN

</TABLE>

<PAGE>

                                  SCHEDULE 3.1
                                TO LOAN AGREEMENT
                                  BY AND AMONG
                        OMEGA HEALTHCARE INVESTORS, INC.
                        AND CERTAIN OF ITS SUBSIDIARIES,
                           THE BANKS SIGNATORY HERETO
                                       AND
                           FLEET BANK, N.A., AS AGENT

                      STATES OF INCORPORATION, ORGANIZATION
               AND QUALIFICATION, AND CAPITALIZATION OF BORROWERS

For each Borrower:

         Name

         (i)      State of Incorporation/Organization
         (ii)     Capitalization
         (iii)    Business
         (iv)     States of Qualification
         (v)      Subsidiaries

Omega Healthcare Investors, Inc. ("OHI")
----------------------------------------

         (i)      Maryland
         (ii)     100,000,000  common  shares,  $.10 par,  20,127,957  o/s as of
                  March  31,  2000;  10,000,000  preferred  shares,  $1.00  par,
                  2,000,000 Series A o/s, 2,300,000 Series B o/s
         (iii)    Investing  in, or  providing  financing  to,  income-producing
                  properties in the  healthcare  industry,  particularly  in the
                  long-term care segment
         (iv)     None other than Maryland
         (v)      Each of the Borrowers listed below, plus: Bayside Street,
                  Inc., OHI (Connecticut),  Inc., OHI of Kentucky, Inc., OHIMA,
                  Inc. and Omega Healthcare of Apalachicola, Inc.

Delta Investors I, LLC
----------------------

         (i)      Maryland
         (ii)     OHI is the sole member and manager
         (iii)    Purchase (and/or otherwise acquire) ownership and/or leasehold
                  interests in one or more  nursing  homes,  and assume  (and/or
                  otherwise  incur) any such  obligations,  and conduct any such
                  operations,  as  shall be  incidental  or  reasonably  related
                  thereto
         (iv)     None other than Maryland
         (v)      None

Delta Investors II, LLC
-----------------------

         (i)      Maryland
         (ii)     OHI is the sole member and manager
         (iii)    Purchase (and/or otherwise acquire) ownership and/or leasehold
                  interests in one or more  nursing  homes,  and assume  (and/or
                  otherwise  incur) any such  obligations,  and conduct any such
                  operations,  as  shall be  incidental  or  reasonably  related
                  thereto
         (iv)     None other than Maryland
         (v)      None

Jefferson Clark, Inc.
---------------------

         (i)      Maryland
        (ii)      1,000 shares authorized, $100 par, 1 share o/s issued to OHI
       (iii)      Ownership of real property and mortgages secured by interests
                  in real property
        (iv)      None other than Maryland
         (v)      Windmere Realty  Corporation  (the general partner of Windmere
                  Associates, a limited partnership that owns certain  interests
                  in  the   Kearny,   New  Jersey  postal  facility);   Morepost
                  Associates,   a  limited   partnership  that,   together  with
                  Jefferson Clark,  Inc.,  are the general partners of  Baltpost
                  Limited  Partnership,  which  owns  the   Baltimore,  Maryland
                  postal facility;  Jefferson Clark, Inc.  also owns 100% of the
                  limited    partnership    interests    in   Baltpost   Limited
                  Partnership

NRS Ventures, L.L.C.
--------------------

         (i)      Kentucky
         (ii)     OHI is the sole member
         (iii)    Investing  in, or  providing  financing  to,  income-producing
                  properties in the  healthcare  industry,  particularly  in the
                  long-term care segment
         (iv)     None other than Kentucky
         (v)      None

OHI (Clemmons), Inc.
--------------------

         (i)      North Carolina
         (ii)     1,000 shares authorized, $1.00 par, 1,000 shares o/s issued to
                  OHI
         (iii)    Investing  in, or  providing  financing  to,  income-producing
                  properties in the  healthcare  industry,  particularly  in the
                  long-term care segment
         (iv)     None other than North Carolina
         (v)      None

OHI (Florida), Inc.
-------------------

         (i)      Florida
         (ii)     1,000 shares authorized, $1.00 par, 1,000 shares o/s issued to
                  OHI
         (iii)    Investing  in, or  providing  financing  to,  income-producing
                  properties in the  healthcare  industry,  particularly  in the
                  long-term care segment
         (iv)     None other than Florida
         (v)      None

OHI (Greensboro), Inc.
----------------------

         (i)      North Carolina
         (ii)     1,000 shares authorized, $1.00 par, 1,000 shares o/s issued to
                  OHI
         (iii)    Investing  in, or  providing  financing  to,  income-producing
                  properties in the  healthcare  industry,  particularly  in the
                  long-term care segment
         (iv)     None other than North Carolina
         (v)      None

OHI (Illinois), Inc.
--------------------

         (i)      Illinois
         (ii)     1,000 shares authorized, $1.00 par, 1,000 shares o/s issued to
                  OHI
         (iii)    Investing  in, or  providing  financing  to,  income-producing
                  properties in the  healthcare  industry,  particularly  in the
                  long-term care segment
         (iv)     None other than Illinois
         (v)      None

OHI (Iowa), Inc.
----------------

         (i)      Iowa
         (ii)     1,000 shares authorized, no par, 1,000 shares o/s issued to
                  OHI
         (iii)    Investing  in, or  providing  financing  to,  income-producing
                  properties in the  healthcare  industry,  particularly  in the
                  long-term care segment
         (iv)     None other than Iowa
         (v)      None

OHI (Kansas), Inc.
------------------

         (i)      Kansas
         (ii)     1,000 shares authorized, $1.00 par, 1,000 shares o/s issued to
                  OHI
         (iii)    Investing  in, or  providing  financing  to,  income-producing
                  properties in the  healthcare  industry,  particularly  in the
                  long-term care segment
         (iv)     None other than Kansas
         (v)      None

OHI of Texas, Inc.
------------------

         (i)      Maryland
         (ii)     5,000 shares authorized, no par, 1,000 shares o/s issued to
                  OHI
         (iii)    Investing  in, or  providing  financing  to,  income-producing
                  properties in the  healthcare  industry,  particularly  in the
                  long-term care segment
         (iv)     Maryland and Texas
         (v)      None

Omega (Kansas), Inc.
--------------------

         (i)      Kansas
         (ii)     1,000 shares authorized, $.01 par, 1 share o/s issued to OHI
         (iii)    Investing  in, or  providing  financing  to,  income-producing
                  properties in the  healthcare  industry,  particularly  in the
                  long-term care segment
         (iv)     None other than Kansas
         (v)      None

OS Leasing Company
------------------

         (i)      Kentucky
         (ii)     1,000 shares authorized, $.01 par, 100 issued to OHI
         (iii)    Investing  in, or  providing  financing  to,  income-producing
                  properties in the  healthcare  industry,  particularly  in the
                  long-term care segment
         (iv)     None other than Kentucky
         (v)      None

Sterling Acquisition Corp.
--------------------------

         (i)      Kentucky
         (ii)     1,000 shares authorized, $.01 par, 100 issued to OHI
         (iii)    Investing  in, or  providing  financing  to,  income-producing
                  properties in the  healthcare  industry,  particularly  in the
                  long-term care segment
         (iv)     None other than Kentucky
         (v)      None

Sterling Acquisition Corp. II
-----------------------------

         (i)      Kentucky
         (ii)     1,000 shares authorized, $.01 par, 100 issued to OHI
         (iii)    Investing  in, or  providing  financing  to,  income-producing
                  properties in the  healthcare  industry,  particularly  in the
                  long-term care segment
         (iv)     None other than Kentucky
         (v)      None

<PAGE>

                                  SCHEDULE 3.2
                                TO LOAN AGREEMENT
                                  BY AND AMONG
                        OMEGA HEALTHCARE INVESTORS, INC.
                        AND CERTAIN OF ITS SUBSIDIARIES,
                           THE BANKS SIGNATORY HERETO
                                       AND
                           FLEET BANK, N.A., AS AGENT
                           --------------------------

                                REQUIRED CONSENTS
                                -----------------

The Consent of Explorer Holdings, L.P. under the Investment Agreement

<PAGE>

                                  SCHEDULE 3.6
                                TO LOAN AGREEMENT
                                  BY AND AMONG
                        OMEGA HEALTHCARE INVESTORS, INC.
                        AND CERTAIN OF ITS SUBSIDIARIES,
                           THE BANKS SIGNATORY HERETO
                                       AND
                           FLEET BANK, N.A., AS AGENT
                           --------------------------

                         JUDGMENTS, ACTIONS, PROCEEDINGS
                         -------------------------------

Res-Care Inc. v. Omega  Healthcare  Investors,  Inc.,  United  States  District
-----------------------------------------------------
Court for the Western  District of Kentucky, Civil Action No. 95-42-LS):

     Claim: Res Care claims that Omega was obligated to reduce the rents payable
          by Res Care under leases of four  facilities in Indiana as a result of
          alleged  changes in federal or state  medicare/medicaid  reimbursement
          after execution of the leases. Omega claims that (a) its obligation to
          renegotiate  the  lease  was not  triggered,  because  no  change  had
          occurred  after  execution  of the  leases,  (b)  even if  Omega  were
          obligated to  renegotiate,  the language of the leases did not require
          that the renegotiation  result in a reduction in rent and (c) Res Care
          mooted its claim by exercising its option to purchase the facilities.

     Status:  In late  1999,  the  judge  granted  Omega's  motion  for  summary
          judgment,  holding that the case was mooted.  In early 1999, the judge
          reversed himself,  but found that (a) the obligation to renegotiate is
          merely an  agreement  to agree and does not result in an  agreement to
          reduce the rents;  (b) as a result,  the court cannot  substitute  its
          judgment as to the rent  payable;  and (c) the only  issues  remaining
          were whether Omega  breached its good faith  obligation to renegotiate
          and, if so, what damages flow from that breach.

Omega Healthcare Investors, Inc. v. Res-Care, Inc.
--------------------------------------------------

     Claim: Omega  claims  that,  by  turning  in to the  State of  Indiana  the
          licenses  to operate  four  ICF/MRDD  facilities  located in  Indiana,
          Res-Care breached its obligations under the leases of those facilities
          to return the facilities to Omega,  upon expiration of the leases,  in
          the condition required under the leases.

     Status: The case is in the discovery phase.

Karrington Health, Inc. v. Omega Healthcare Investors, Inc.
-----------------------------------------------------------

          Claim: Karrington  Health,  Inc.  ("KHI") claims that Omega breached a
               commitment  to provide $95 million in  construction  financing to
               KHI. Omega contends,  among other things,  that it did not have a
               contractual obligation to provide such financing.

     Status: The matter currently is in the discovery phase.

<PAGE>

                                  SCHEDULE 3.7
                                TO LOAN AGREEMENT
                                  BY AND AMONG
                        OMEGA HEALTHCARE INVESTORS, INC.
                        AND CERTAIN OF ITS SUBSIDIARIES,
                           THE BANKS SIGNATORY HERETO
                                       AND
                           FLEET BANK, N.A., AS AGENT
                           --------------------------

                                EXISTING DEFAULTS
                                -----------------

Defaults  in certain  financial  covenants  set forth in the Second  Amended and
Restated  Loan  Agreement  between  Fleet  Bank,  as Agent,  and the Company and
certain of its subsidiaries, which defaults have been waived.

<PAGE>

                                  SCHEDULE 3.8
                                TO LOAN AGREEMENT
                                  BY AND AMONG
                        OMEGA HEALTHCARE INVESTORS, INC.
                        AND CERTAIN OF ITS SUBSIDIARIES,
                           THE BANKS SIGNATORY HERETO
                                       AND
                           FLEET BANK, N.A., AS AGENT
                           --------------------------

                              BURDENSOME DOCUMENTS
                              --------------------

Investment  Agreement  dated May 11,  2000  between  the  Company  and  Explorer
Holdings, L.P.

<PAGE>

                                  SCHEDULE 3.9
                                TO LOAN AGREEMENT
                                  BY AND AMONG
                        OMEGA HEALTHCARE INVESTORS, INC.
                        AND CERTAIN OF ITS SUBSIDIARIES,
                           THE BANKS SIGNATORY HERETO
                                       AND
                           FLEET BANK, N.A., AS AGENT
                           --------------------------

                MATERIAL LIABILITIES AND OBLIGATIONS IN ADDITION
            TO THOSE DISCLOSED ON THE COMPANY'S FINANCIAL STATEMENTS
            --------------------------------------------------------

1.       Any liability associated with any litigation described in Schedule 3.6.

2.       Future Currency  Contract  assigned by the Company to Omega  Worldwide,
         Inc.  on April 2,  1998  with  respect  to the  requirement  to sell 20
         million pbs for $31,740,000 on October 7, 2007.

3.       Guaranty  by the Company of  obligations  of Omega  Worldwide,  Inc. to
         Fleet Bank, as Agent, pursuant to Guaranty dated November 20, 1998.

4.       Guaranty  by  the  Company  of  the   obligations  of  certain  of  its
         Subsidiaries   (and   Subsidiaries  of  Bayside  Street  II,  Inc.)  to
         Healthcare  Personnel  Associates  with respect to employees of Company
         Properties recovered from RainTree Healthcare Corporation

5.       Obligations  to fund  operations  and capital  expenditures  at Company
         Properties  recovered from The Frontier Group, Inc. and its affiliates,
         RainTree Healthcare  Corporation,  Extendacare or Sun Healthcare Group,
         Inc.;  potential  liabilities  (other than liabilities  associated with
         failure  by the  Company  to  maintain  its  qualification  as a  REIT)
         associated  with the operation by  Subsidiaries  (and  Subsidiaries  of
         Bayside Street II, Inc.) of Company Properties  recovered from RainTree
         Healthcare  Corporation,  The Frontier Group,  Inc. and its affiliates,
         Extendacare or Sun Healthcare Group, Inc.

6.       Obligations to fund under Loan Agreement dated October 2, 1998 between
         the Company and Madison/OHI Liquidity Investors LLC

7.       Obligations to fund working capital pursuant to loan documents  between
         the Company and Subsidiaries and Essex  Healthcare  Corporation,  Metro
         Health/Indiana, Inc. and Metro Health/Indiana III, Inc.

8.       Mortgages, deeds of trust and/or related security interests encumbering
         any assets  that secure from time to time any loan or loans made by The
         Provident  Bank  pursuant  to a Loan  Agreement  dated  March 31,  1999
         between Omega and The Provident Bank.

9.       Indemnification  obligations  with respect to any assets disposed of or
         relet by the Company or any Subsidiary,  including any  indemnification
         obligations  in  connection  with  the  sale  of  facilities  to  Metro
         Health/Indiana

10.      Obligations  to employees and directors  under  employee  benefit plans
         described in Schedule 3.16 and change of control agreements dated March
         22, 2000 between the Company and each of Essel W. Bailey, Jr., F. Scott
         Kellman, Susan Allene Kovach, Laurence D. Rich and David A. Stover.

11.      Extraordinary  obligations  for  legal  expenses  and  consulting  fees
         (including fees of the Company's  financial  advisor) incurred from and
         after January 1, 2000.

12.      Guaranty of obligations  of Essex  Healthcare  Corporation  under lease
         between  American  Healthcare (or an affiliate  thereof) and Essex with
         respect to facilities on which Omega holds fee and leasehold mortgages.

<PAGE>

                                  SCHEDULE 3.13
                                TO LOAN AGREEMENT
                                  BY AND AMONG
                        OMEGA HEALTHCARE INVESTORS, INC.
                        AND CERTAIN OF ITS SUBSIDIARIES,
                           THE BANKS SIGNATORY HERETO
                                       AND
                           FLEET BANK, N.A., AS AGENT
                           --------------------------

                       NAME CHANGES, MERGERS, ACQUISITIONS
                       -----------------------------------

1.       Name Changes:     None

2.       Mergers and Acquisitions of Substantially All Assets:

          (a)  On October 1, 1994, Omega completed its merger with Health Equity
               Properties,  Inc.  (NYSE:  EQP). In connection  with this merger,
               Omega was the  surviving  entity of the parent  company,  and OHI
               (Clemmons), Inc., OHI (Greensboro), Inc., OHI (Florida), Inc. and
               OHI (Illinois),  Inc. were the surviving entities of mergers with
               various subsidiaries of Health Equity Properties, Inc.

          (b)  As of October  31,  1997,  Omega's  wholly-owned  subsidiary  OHI
               (Iowa),  Inc. completed its merger with four entities  affiliated
               with  JoAnn  Webb and Five Star Care  Corporation.  The  entities
               merged into OHI (Iowa), Inc. were Clarion Care Center, Inc., Dows
               Care Center,  Inc.,  Quality Care, Inc. and Urbandale Health Care
               Center, Inc.  Concurrently  therewith,  OHI (Iowa), Inc. acquired
               substantially  all of the  assets of Earlham  Manor Care  Center,
               Inc. and Embassy Manor Care Center, Inc.

          (c)  Omega, through its wholly-owned  subsidiaries OS Leasing Company,
               Sterling  Acquisition  Corp. and Sterling  Acquisition  Corp. II,
               completed  during  1994  the  acquisition  of  the  nursing  home
               facilities of Sterling Healthcare of Ashland, Kentucky.

          (d)  Prior to the filing of  bankruptcy  proceedings  by affiliates of
               The  Frontier  Group,  Inc.  ("Frontier")  in July  1999,  Omega,
               through its subsidiaries OHIMA, Inc. and OHI (Connecticut),  Inc.
               acquired, by deed in lieu of foreclosure,  twelve (12) healthcare
               facilities previously owned and operated by Frontier.

          (e)  In  connection  with  the  bankruptcy   proceedings  of  Raintree
               Healthcare  Corporation  ("Raintree"),  Omega,  through  numerous
               subsidiaries, acquired in March 2000 thirty (30) nursing home and
               assisted living facilities previously operated by Raintree.

<PAGE>

                                  SCHEDULE 3.16
                                TO LOAN AGREEMENT
                                  BY AND AMONG
                        OMEGA HEALTHCARE INVESTORS, INC.
                        AND CERTAIN OF ITS SUBSIDIARIES,
                           THE BANKS SIGNATORY HERETO
                                       AND
                           FLEET BANK, N.A., AS AGENT
                           --------------------------

                             EMPLOYEE BENEFIT PLANS
                             ----------------------

            Metropolitan Life Insurance Company Life Insurance Policy
         Metropolitan Life Insurance Company Long-Term Disability Policy
                     Principal Financial Group Dental Policy
            Blue Cross/Blue Shield Traditional Health Insurance Plan
         Blue Cross/Blue Shield Preferred Provider Health Insurance Plan
                   Company-Sponsored 401-K Profit Sharing Plan
                         1993 Deferred Compensation Plan
        1997 Amended and Restated Stock Option and Restricted Stock Plan
                                Section 125 Plan

<PAGE>

                                  SCHEDULE 7.1
                                TO LOAN AGREEMENT
                                  BY AND AMONG
                        OMEGA HEALTHCARE INVESTORS, INC.
                        AND CERTAIN OF ITS SUBSIDIARIES,
                           THE BANKS SIGNATORY HERETO
                                       AND
                           FLEET BANK, N.A., AS AGENT
                           --------------------------

                      PERMITTED INDEBTEDNESS AND GUARANTIES
                      -------------------------------------
<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

10% Senior  Unsecured  Notes  issued  October 16, 1995 and                        $44,316,000
due July 15, 2000
7.4% Senior  Unsecured  Notes issued November 19, 1995 and                        $19,586,312
due July 15, 2000
7.4% Senior  Unsecured  Notes issued December 28, 1995 and                        $17,479,000
due July 15, 2000
8.5%  Subordinated  Convertible  Debentures issued January                        $48,405,000
24, 1996 and due February 1, 2001
6.95% Senior  Unsecured Notes issued June 10, 1998 and due                       $125,000,000
June 1, 2002
6.95% Senior  Unsecured Notes issued July 31, 1997 and due                       $100,000,000
August 1, 2007
Industrial  Revenue Bonds (Salem, WV) issued September 30,                         $1,885,000
1996 and due September 1, 2010
Industrial  Revenue Bonds (Beckley,  WV) issued  September                         $2,760,000
30, 1996 and due September 1, 2012

</TABLE>

Obligations  of a Borrower  in  connection  with a lease of a  Facility  if such
Borrower has  subleased  the Facility or assigned the lease,  or right to lease,
the Facility to an Operator.  Such obligations  shall be treated as Indebtedness
if and to the extent the Operator,  during any fiscal year of the Borrowers,  is
not obligated to fulfill such obligations.

Obligations  of a Borrower  incurred in connection  with, or as a result of, the
exercise by such Borrower or any Subsidiary of its remedies under any agreements
evidencing any lease or mortgage with an operator or any other  obligations of a
Borrower  incurred  in  connection  with,  or as a result of,  attempts  by such
Borrower or a Subsidiary to preserve the value of its property or collateral.

Guaranty  by Omega to Fleet Bank,  N.A.,  as Agent of the  obligations  of Omega
Worldwide, Inc. under that certain Loan Agreement dated November 20, 1998.

Each of the borrowings described on Schedule 7.2

Any other  borrowings  by a Borrower,  provided  that at any time the  aggregate
amount of Indebtedness of Omega and its Subsidiaries,  on a consolidated  basis,
does not exceed 60% of the sum ("Adjusted Total Assets") of (a) the total assets
of Omega and its  Subsidiaries  (defined  as the sum of the  original  cost plus
capital improvements of real estate assets of Omega and its Subsidiaries on such
date, before depreciation and amortization),  determined on a consolidated basis
as of the end of the calendar  quarter  covered in Omega's Annual Report on Form
10-K or Quarterly  Report on Form 10-Q, as the case may be, most recently  filed
with the Securities and Exchange Commission prior to date of determination;  and
(b) the purchase  price of any real estate  assets or  mortgages or  receivables
acquired,  and the amount of any securities  offering  proceeds received (to the
extent  that  such  proceeds  were not used to  acquire  real  estate  assets or
mortgages or receivables used to reduce indebtedness) by Omega or any Subsidiary
since the end of such calendar quarter.

<PAGE>

                                  SCHEDULE 7.2
                                TO LOAN AGREEMENT
                                  BY AND AMONG
                        OMEGA HEALTHCARE INVESTORS, INC.
                        AND CERTAIN OF ITS SUBSIDIARIES,
                           THE BANKS SIGNATORY HERETO
                                       AND
                           FLEET BANK, N.A., AS AGENT
                           --------------------------

                                 PERMITTED LIENS
                                 ---------------

1.       Mortgages,  deeds of trust and/or related security  interests  securing
         any other Indebtedness, provided that the aggregate principal amount of
         all outstanding Indebtedness of Omega and its Subsidiaries,  determined
         on a consolidated basis, that is secured by any mortgage, lien, charge,
         pledge or security interest of any kind does not exceed 40% of Adjusted
         Total  Assets (as defined on  Schedule  7.1),  which  include the liens
         described in paragraphs 2 and 3 below.

2.       Mortgages, deeds of trust and/or related security interests encumbering
         any  assets  that  secure  from  time to time  any loan or loans in the
         aggregate principal amount of up to $50,000,000 at any time outstanding
         made by The Provident Bank pursuant to a Loan Agreement dated March 31,
         1999 and maturing March 31, 2002 between Omega and The Provident  Bank,
         as the same has  heretofore  been amended from time to time through the
         date hereof  and/or  pursuant to a mortgage  loan made by The Provident
         Bank in the original  principal  amount of $9,000,000  (encumbering the
         Advocat facilities  commonly known as Carter Healthcare  Center,  South
         Shore Nursing & Rehab Center and Wurtland Health Care Center).

3.  Mortgages,  deeds of trust or financing  leases  securing the following bond
financings:

<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

                                                                              Loan/Lease
Operator              Facility                    Bond Issue                   Maturity
--------              --------                    ----------                   --------
Advocat               Laurel Manor Health         IRB South Trust            2017/2002
                      Center (New Tazwell)        Alabama
Advocat               Manor House of Dover        IRB South Trust            2011/2002
                                                  Alabama
Sun Healthcare        SunRise Care & Rehab for    IRB South Trust            2016/2006
Group                 La Follette                 Alabama
Sun Healthcare        SunRise Care & Rehab for    IRB Bank of New York       2014/2006
Group                 Maynardville

</TABLE>

<PAGE>

                                  SCHEDULE 7.8
                                TO LOAN AGREEMENT
                                  BY AND AMONG
                        OMEGA HEALTHCARE INVESTORS, INC.
                        AND CERTAIN OF ITS SUBSIDIARIES,
                           THE BANKS SIGNATORY HERETO
                                       AND
                           FLEET BANK, N.A., AS AGENT
                           --------------------------

                              PERMITTED INVESTMENTS
                              ---------------------
<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

                                                                          Investment at
Core Real Estate Investments:                                            March 31, 2000
-----------------------------                                            --------------
Advocat Inc.                                                              $111,458,133
Alden Management Services Inc.                                              31,327,356
Alterra Healthcare Corporation                                              34,085,000
Covenant Care, Inc.                                                          1,974,471
Emerald Healthcare, Inc.                                                    11,029,945
Essex Healthcare Corporation                                                16,546,165
Eldorado Care Center, Inc. & Magnolia Manor, Inc.                            5,100,000
HQM of Floyd County, Inc.                                                   10,250,000
Hunter Management Group, Inc.                                                8,150,866
Integrated Health Services, Inc.                                           161,121,991
Kansas & Missouri, Inc.                                                      2,500,000
Liberty Assisted Living Centers, LP                                          5,995,490
Mariner Post-Acute Network                                                  58,800,000
Peak Medical of Idaho, Inc.                                                 10,500,000
Rocky Mountain Health Care                                                   1,882,756
Senior Care Properties, Inc.                                                 6,336,243
Sun Healthcare Group, Inc.                                                 240,537,208
Tenet Healthcare Corp.                                                      30,031,250
Texas Health Enterprises/HEA Mgmt. Group, Inc.                               6,423,049
Tiffany Care Centers, Inc.                                                   5,091,914
TLC Healthcare, Inc.                                                        41,307,735
Tutera Evergreen, LLC                                                          750,000
USA Healthcare, Inc.                                                        17,212,798
                                                                            ----------
Total Core Real Estate Investments                                        $818,412,370
                                                                          ============

Assets Held For Sale
--------------------
ExtendaCare, Inc.                                                          $20,647,603
Emerald Healthcare, Inc.                                                       899,845
RainTree Healthcare Corporation                                              6,756,596
Res-Care, Inc.                                                              11,097,215
Sun Healthcare Group, Inc.                                                   6,344,721
Senior Care Properties, Inc.                                                 4,442,322
OHIMA, Inc. and OHI(CT), Inc.                                                6,166,262
                                                                             ---------
Total Assets Held For Sale                                                 $56,354,564
                                                                           ===========

Other Real Estate:
------------------
Sunrise                                                                       $798,051
OHIMA, Inc. and OHI(CT), Inc.                                               60,809,900
RainTree Healthcare Corporation, Including Bayside
  Street, Inc. and Bayside Street II, Inc.                                  76,323,715
Meadowbrook Healthcare of N.C.                                               7,500,000
                                                                             ---------
Total Other Real Estate                                                   $145,431,666
                                                                          ============

Other Investments:
------------------
Investment in Omega Worldwide, Inc.                                         $7,688,392
Investment in Principal Healthcare Finance Limited                           1,615,083
Investment in Principal Healthcare Finance Trust                             1,266,000
American Healthcare Centers, Inc.                                            7,542,676
Investment in Partnerships - Post Offices                                   15,445,085
                                                                            ----------
Total Other Investments                                                    $33,557,236
                                                                           ===========

Notes Receivable:
-----------------
Metro Health I                                                              $1,800,000
Metro Health III                                                             1,070,000
Metro-Health/Indiana                                                         2,569,292
Essex Healthcare Corporation                                                 3,250,000
Madison/OHI Liquidity Investors, LLC                                         7,265,782
Five Star                                                                    1,672,150
BJ Development - Warren Park                                                 1,292,366
BJ Development - Southeastern                                                  438,275
Oakwood Living Centers                                                       6,000,000
Parkview Hospice                                                                40,000
TLC                                                                            300,000
                                                                               -------
Total Notes Receivable                                                     $25,697,865
                                                                           ===========
</TABLE>

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00013-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00013-of-00352.parquet"}]]