Document:

FIRST AMENDMENT TO THE
                        OMEGA HEALTHCARE INVESTORS, INC.
                   1993 STOCK OPTION AND RESTRICTED STOCK PLAN
                    AS AMENDED AND RESTATED DECEMBER 19, 1997

         THIS FIRST AMENDMENT is made as of March 22, 2000, by Omega Healthcare
Investors, Inc., a Maryland corporation (the "Corporation").

         WHEREAS,  the Corporation  maintains the Omega  Healthcare  Investors,
Inc. Stock Option and Restricted Stock Plan As Amended and Restated December 19,
1997 (the "Plan"); and

         WHEREAS,  the  Corporation  desires  to amend  the Plan to  modify  the
definition of change of control and the vesting provisions for stock options and
restricted stock awards.

         NOW, THEREFORE,  BE IT RESOLVED, that the Corporation does hereby amend
the Plan as follows:

     1. By adding the following new subsection (o) to Section 2 of the Plan:

                  (o) "Performance-Based  Restricted Stock. This term shall mean
         those shares of Restricted  Stock granted to executive  officers of the
         Company on February 10, 2000."

     2.  By deleting the existing Section 8(a) of the Plan and  substituting
         therefor the following new Section 8(a):

                  "(a) Certain Terms.  Subject to Section 19 hereof,  the shares
         of  Restricted  Stock  granted to a Grantee shall be released to him in
         accordance  with  such  schedule  as the  Plan  Committee,  in its sole
         discretion,  shall  determine  at the  time of  grant.  All  shares  of
         Restricted  Stock shall be fully released not later than ten (10) years
         from the date of grant.  Except for normal  retirement,  or pursuant to
         the terms of the written  agreement with a non-employee  director,  the
         Grantee shall have no vested  interest in the  unreleased  stock of any
         grant in the  event of his  termination  with the  Corporation  for any
         reason (unless the Plan Committee,  in its sole discretion,  decides to
         terminate  the  forfeiture  restriction  following the  termination  of
         employment of such Grantee and  accelerate the release of the shares of
         Restricted  Stock in  accordance  with  Section 19 of the Plan) and the
         unreleased stock certificates  shall be canceled.  During the Grantee's
         continued  employment or affiliation,  however, he shall have the right
         to vote all shares and to receive  all  dividends  as though all shares
         granted were his without restrictions."

     3.  By deleting the third paragraph of Section 19 of the Plan and
         substituting therefor the following new third paragraph:

                  "Notwithstanding  the  preceding  two  paragraphs or any other
         provision  of this  Plan,  in the  event of a  Change  of  Control,  as
         hereinafter defined, all Restricted Stock granted under the Plan (other
         than Performance-Based  Restricted Stock) which has not previously been
         forfeited shall immediately vest as of the effective date of the Change
         of Control and all Stock Options  granted under the Plan which have not
         previously been forfeited  shall be immediately  vested and exercisable
         in full as of the effective date of the Change of Control. For purposes
         of this Plan,  `Change of Control'  shall mean the occurrence of any of
         the following events:

                           (a) a  change  in  control  of the  Corporation  of a
                  nature  that would be  required  to be reported in response to
                  Item  6(e)  of  Schedule   14A,   Regulation   240,   14a-101,
                  promulgated  under the  Securities  Exchange  Act of 1934 (the
                  "Exchange  Act") as in effect on the date hereof,  or, if Item
                  6(e) is no  longer in  effect,  any  regulation  issued by the
                  Securities  Exchange  Commission  pursuant to the Exchange Act
                  which serves similar purposes;

                           (b) any  "Person"  (as defined in Section  3(a)(9) of
                  the Exchange  Act as modified  and used in Sections  13(d) and
                  14(d) of the  Exchange  Act),  is or becomes  the  "beneficial
                  owner"  (as  defined  in  Rule  13d-3  of the  Exchange  Act),
                  directly  or   indirectly,   of  equity   securities   of  the
                  Corporation  representing more than fifty percent (50%) of the
                  combined voting power or value of the surviving  entity's then
                  outstanding voting equity securities;

                           (c)  during  any  period  of not  more  than  two (2)
                  consecutive  years,  not  including  any  period  prior to the
                  Effective  Date,  individuals  who at the  beginning  of  such
                  period constitute the Board (the `Incumbent Directors'), cease
                  for any  reason to  constitute  at least a  majority  thereof;
                  provided, however, that any director who was not a director as
                  of the Effective Date shall be deemed to be Incumbent Director
                  if that director was elected to such board of directors on the
                  recommendation of or with the approval of, at least two-thirds
                  (2/3)  of  the  directors  who  then  qualified  as  Incumbent
                  Directors; and provided further that no director whose initial
                  assumption  of  office  is in  connection  with an  actual  or
                  threatened  election  contest  relating  to  the  election  of
                  directors shall be deemed to be an Incumbent Director;

                           (d)  the  approval  by   the  shareholders   of  the
                  Corporation  of  a  merger,  consolidation,  share exchange or
                  other  reorganization   in  which  the  shareholders  of  the
                  Corporation immediately prior to  the transaction do  not own
                  equity  securities  of  the surviving  entity  representing at
                  least fifty percent (50%)of the combined voting power or value
                  of the surviving  entity's then  outstanding voting securities
                  immediately  after  the  transaction;

                           (e) the sale or transfer  of more than fifty  percent
                  (50%) of the  value of the  assets  of the  Corporation,  in a
                  single transaction, in a series of related transactions, or in
                  a series of transactions over any one year period; or

                           (f) a dissolution or liquidation of the Corporation.

         Notwithstanding  any  other  provision  of the  Plan or any  applicable
agreement  documenting an award under the Plan, in the event of a termination of
a Grantee's or Optionee's  employment,  other than a  termination  for cause (as
defined in  Section  15 of the Plan),  the Plan  Committee  may  accelerate  the
vesting of any shares of  Restricted  Stock or Stock  Option  granted  under the
Plan."

      4. By deleting the existing second  paragraph of Section 20 of the Plan
         in its entirety.

         Except as specifically  amended hereby, the remaining provisions of the
Plan  shall  remain in full force and  effect as prior to the  adoption  of this
First Amendment.

         IN WITNESS WHEREOF,  the Corporation has caused this First Amendment to
be executed, effective as of the date first above written.

ATTEST:                                     OMEGA HEALTHCARE INVESTORS, INC.

By:  /s/ Susan A. Kovach                   By: /s/ Essel W. Bailey, Jr.
     -------------------                       ------------------------

Title: Corporate Secretary                Title: Chief Executive OfficerOMEGA HEALTHCARE INVESTORS, INC.
                           900 Victors Way, Suite 350
                            Ann Arbor, Michigan 48108

                                  May 11, 2000

First Chicago Trust Company
525 Washington Blvd., 3rd Floor
Suite 4660
Jersey City, New Jersey 07310

Attention:  Corporate Actions Administrator

                     Re: Amendment No. 1 to Rights Agreement

Ladies and Gentlemen:

         Pursuant  to  Section  27  of  the  Rights   Agreement   (the   "Rights
Agreement"),  dated as of May 12, 1999, between Omega Healthcare Investors, Inc.
(the "Company"),  and First Chicago Trust Company, as rights agent, the Company,
by  resolution  adopted  by its Board of  Directors,  hereby  amends  the Rights
Agreement as follows:

          1.   Section 1 of the Rights Agreement is hereby amended by adding the
               following new subsection to Section 1:

                  "`Investment  Agreement' shall mean the Investment  Agreement,
                  dated as of May __,  2000,  by and  between  the  Company  and
                  Explorer  Holdings,   L.P.,  a  Delaware  limited  partnership
                  (`Purchaser')."

                  "`Stockholders Agreement' shall mean the Stockholders
                  Agreement to be entered into by Purchaser
                  and the Company pursuant to the Investment Agreement'."

          2.   Section 1 of the Rights Agreement is hereby amended by adding the
               following  sentence at the end of the  definition  of  "Acquiring
               Person":

                  "Notwithstanding  any other provision hereof,  (i) in no event
                  will  Purchaser  (together  with its  successors,  assigns and
                  Permitted   Transferees   (as  defined  in  the   Stockholders
                  Agreement),  and  their  respective  successors,  assigns  and
                  Permitted Transferees,  `Authorized Holder'),  individually or
                  together with any other Person in which Authorized Holder has,
                  directly or  indirectly,  an  ownership  interest  (such other
                  Persons,  `Related Companies'),  or any Affiliate,  Associate,
                  director,  officer, employer, partner, member or other related
                  Person   of   Authorized   Holder   or   a   Related   Company
                  (collectively,   a  `Related   Person'  and,   together   with
                  Authorized Holder and the Related Companies,  `Acquiror'),  be
                  deemed to be an "Acquiring  Person" for purposes  hereof,  nor
                  shall  a  Distribution  Date,  a  Stock  Acquisition  Date,  a
                  Triggering  Event  or any  other  event  hereunder  occur as a
                  result of Acquiror's Beneficial Ownership of Common Stock (any
                  such event, an `Acquiror  Triggering Event') acquired pursuant
                  to the Investment  Agreement and in accordance  with the terms
                  of the Stockholders  Agreement and (ii) no Acquiror Triggering
                  Event  will be deemed to have  occurred  unless  and until (A)
                  Acquiror  shall have received  written notice from the Company
                  that,  notwithstanding  the foregoing,  the Board of Directors
                  has determined that Acquiror  constitutes an Acquiring  Person
                  hereunder and, within 30 calendar days after receipt of notice
                  of such  determination  from the Company,  Acquiror  shall not
                  have divested  itself of Common Stock,  cured any breach under
                  the   Stockholders   Agreement   resulting  in  such  Acquiror
                  Triggering  Event or taken such other action as it determines,
                  after  consultation  with counsel,  is sufficient,  so that an
                  Acquiror  Triggering  Event  is no  longer  continuing  or (B)
                  during  any  period  of  twelve  consecutive  calendar  months
                  commencing  on the  date  the  Permitted  Transferee  acquired
                  Beneficial   Ownership  of  Common   Stock   pursuant  to  the
                  Stockholders Agreement, such Permitted Transferee who would be
                  an Acquiring  Person but for the preceding  sentence  acquired
                  Beneficial Ownership of more than 2% of the outstanding Common
                  Stock."

          3.   Section 1 of the Rights Agreement is hereby amended by adding the
               following new sentence at the end of that Section:

                  "Notwithstanding  anything in this  Agreement to the contrary,
                  Acquiror shall not be deemed an Acquiring Person and none of a
                  Distribution  Date, a Stock  Acquisition Date, or a Triggering
                  Event  shall be deemed to occur or to have  occurred,  and the
                  Rights will not become separable, distributable,  unredeemable
                  or exercisable, in each such case, by reason or as a result of
                  the  approval,   execution  or  delivery  of  the   Investment
                  Agreement or the consummation of the transactions contemplated
                  by the Investment  Agreement  (including,  without limitation,
                  the  consummation  of  the  Additional  Equity  Financing  (as
                  defined in the Investment Agreement))."

          4.   The Rights  Agreement  shall not  otherwise  be  supplemented  or
               amended  by  virtue  of  this  Amendment  No.  1  to  the  Rights
               Agreement, but shall remain in full force and effect.

          5.   Capitalized terms used without other definition in this Amendment
               No. 1 to the  Rights  Agreement  shall be used as  defined in the
               Rights Agreement.

          6.   This Amendment No. 1 to the Rights  Agreement  shall be deemed to
               be a contract  made under the laws of the State of  Maryland  and
               for all purposes shall be governed by and construed in accordance
               with the laws of such State  applicable  to  contracts to be made
               and  performed  entirely  within  such  State,  except that those
               provisions  of  this  Amendment  No.  1 to the  Rights  Agreement
               affecting  the rights,  duties and  responsibility  of the Rights
               Agent shall be governed by and construed in  accordance  with the
               laws of the State of Illinois.

          7.   This  Amendment No. 1 to the Rights  Agreement may be executed in
               any number of counterparts  and each of such  counterparts  shall
               for all  purposes  be  deemed  to be an  original,  and all  such
               counterparts  shall  together  constitute  but one  and the  same
               instrument.

          8.   This Amendment No. 1 to the Rights  Agreement  shall be effective
               as of, and  immediately  prior to, the  execution and delivery of
               the  Investment  Agreement,  and  all  references  to the  Rights
               Agreement  shall,  from and  after  such  time,  be  deemed to be
               references to the Rights Agreement as amended hereby.

          9.   Exhibits A and B to the Rights  Agreement shall be deemed amended
               in a manner  consistent  with this  Amendment No. 1 to the Rights
               Agreement.

                                                      Very truly yours,

                                                OMEGA HEALTHCARE INVESTORS, INC.

                                           By:   /s/ Essel W. Bailey, JR.
                                                 ------------------------
                                                 Name:  Essel W. Bailey, Jr.
                                                 Title: Chief Executive Officer

Accepted and agreed to as of the effective time specified above:

FIRST CHICAGO TRUST COMPANY

By:  /s/ Craig Broomfield
     --------------------
      Name:  Craig Broomfield
      Title: Senior Account Manager

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