Document:

OMEGA HEALTHCARE INVESTORS, INC.
                           CHANGE IN CONTROL AGREEMENT

         This Change in Control  Agreement (the "Agreement") is made as of March
22, 2000 (the "Effective Date") by and between  ______________  (the "Officer"),
and OMEGA HEALTHCARE INVESTORS, INC., a Maryland corporation.

         WHEREAS,  the Officer  presently serves at the pleasure of the Board of
Directors  of the Company as  __________________  of the  Company  and  performs
significant strategic and management responsibilities necessary to the continued
conduct of the Company's business and operations.

         WHEREAS,  the Board of Directors of the Company has determined  that it
is in the best interests of the Company and its  stockholders to assure that the
Company  will have the  continued  dedication  and  objectivity  of the Officer,
notwithstanding the possibility or occurrence of a Change in Control (as defined
below) of the Company.

         NOW,  THEREFORE,  in  consideration  of  the  mutual  covenants  herein
contained,  and in consideration of the continuing  employment of Officer by the
Company, the parties agree as follows:

1.       Definitions.  For purposes of this Agreement, the following terms shall
have the meanings set forth in this Section 1:

                  (a)      "Board"  means the Board of Directors of the Company.

                  (b)  "Cause"  means  (i)  willful  refusal  to follow a lawful
         written  order  of the  Board;  (ii)  willful  misconduct  or  reckless
         disregard of his or her duties by the Officer;  (iii) any act of fraud,
         misappropriation, dishonesty or moral turpitude; or (iv) the conviction
         of the Officer of any felony.

                  (c) "Change in  Control"  means the  occurrence  of any of the
         following events:

                            (i)     A change  in  control  of the  Company  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 as in
                                    effect  on the date  hereof  (the  "Exchange
                                    Act"),  or,  if Item  6(e) is no  longer  in
                                    effect,   any   regulation   issued  by  the
                                    Securities and Exchange  Commission pursuant
                                    to the  Exchange  Act which  serves  similar
                                    purposes.

                           (ii)     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 Company  representing more
                                    than  fifty  percent  (50%) of the  combined
                                    voting  power  or  value  of  the  surviving
                                    entity's  then  outstanding   voting  equity
                                    securities.

                          (iii)     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
                                    an  Incumbent Director if that  director was
                                    elected  to  such board of directors  on the
                                    recommendation,  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;

                           (iv)     the  approval  by  the  shareholders  of the
                                    Company  of a merger,  consolidation,  share
                                    exchange  or other  reorganization  in which
                                    the shareholders of the Company  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;

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

                           (vi)     a dissolution or liquidation of the Company.

                  (d)  "Code"  means  the  Internal  Revenue  Code of  1986,  as
          amended.

                  (e)      "Company" means Omega Healthcare Investors, Inc.

                  (f) "Compensation  Committee" means the Compensation Committee
         of the Board.

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

                  (h)  "Disability"  has the same  meaning  as  provided  in the
         long-term disability plan or policy maintained or, if applicable,  most
         recently  maintained,  by the Company for the Officer.  If no long-term
         disability plan or policy was ever maintained on behalf of the Officer,
         Disability means that condition described in Code Section 22(e)(3),  as
         amended from time to time. In the event of a dispute, the determination
         of  Disability  shall be made by the Board and  shall be  supported  by
         advice of a physician  competent  in the area to which such  Disability
         relates.

                  (i) "Fair Market Value of  Restricted  Stock  Awards" means an
         amount  equal to the value per  share of  common  stock of the  Company
         multiplied  by  the  number  of  shares  of  common  stock  subject  to
         restricted  stock awards  granted to the Officer during the twelve (12)
         full months (excluding any partial month in which the Change in Control
         occurs) immediately  preceding termination of the Officer's employment.
         The value per share will be equal to:

                           (i) the closing price per share at which sales of the
                  common  stock of the Company  shall have been sold on the most
                  recent trading date immediately  prior to the date of grant of
                  the restricted  stock award,  as reported by any such exchange
                  or system  selected  by the  Company  on which  the  shares of
                  common stock are then traded;

                           (ii) if such market information is not published, the
                  price of one  share of  common  stock in the  over-the-counter
                  market on the most  recent  trading  date prior to the date of
                  grant of the  restricted  stock  award  that is  available  as
                  reported by the Nasdaq Stock Market or, if not so reported, by
                  a generally accepted reporting service; or

                           (iii) if no such information is available,  the value
                  of one  share of  common  stock as of the date of grant of the
                  restricted  stock award,  as  determined  in good faith by the
                  Company with due consideration  being given to the most recent
                  independent   appraisal  of  the  Company  and  the  valuation
                  methodology used in the appraisal.

                  (j) "Quit With Good  Reason"  mean the  Officer's  resignation
         within  ninety  (90)  days  following  the  occurrence  of  any  of the
         following events which (except as to Subsection (j)(vi)) occurs without
         the Officer's written consent:

                           (i)  the failure of the Board to reelect the Officer
                  to his or her then existing office;

                           (ii) a diminution in the Officer's  title,  position,
                  authority or  responsibility  or the assignment to the Officer
                  of duties or work responsibilities which are inconsistent with
                  his or her title, position, authority or responsibility;

                           (iii) any  reduction  in the  Officer's  base salary,
                  bonus  opportunity  or  other  compensation,   or  a  material
                  reduction in employee benefits;

                           (iv) a change in the  position  to which the  Officer
                  reports or the positions which report to the Officer;

                           (v) the relocation of the Company's  headquarters  or
                  the  primary  place at which the  Officer is to perform his or
                  her duties to a  location  more than fifty (50) miles from the
                  location at which the Officer previously  performed his or her
                  duties; or

                           (vi) the  expiration of one hundred eighty (180) days
                  after the  occurrence  of a Change in Control,  regardless  of
                  whether the Officer consented to the Change in Control.

                  Each separate event meeting the above  requirements will allow
         the Officer to terminate his or her  employment due to a Quit With Good
         Reason  and the  failure of the  Officer  to do so within  one  hundred
         eighty (180) days from the  occurrence  of such event in any given case
         will not prevent the Officer from terminating his or her employment due
         to a Quit With Good Reason if a later event occurs  which  entitles the
         Officer to do so.

                  (k) "Period of Employment" means the number of months that the
         Officer  has been an  employee  of the  Company.  Prior  service may be
         included  within  "Period  of  Employment"  at  the  discretion  of the
         Compensation   Committee.   "Period  of   Employment"   shall   include
         disability,  sick leave,  vacation and  military  leaves of absence but
         exclude  other leaves of absence  unless such leaves of absence are for
         the  convenience  of the Company and are  approved by the  Compensation
         Committee.

                  (l) "Termination Payment" means a payment under this Agreement
         equal to  [three  (3)  times or five (5)  times]  the  Officer's  Total
         Compensation less one dollar ($1.00).

                  (m) "Total Compensation" means that amount paid to the Officer
         by the Company  during the last twelve (12) full months  (excluding any
         partial  month in which  the  Change  in  Control  occurs)  immediately
         preceding  termination  of  Officer's  employment  equal  to  aggregate
         compensation (salary, inclusive of any elective salary reductions, such
         as  contributions  to a plan  described in Code Section  401(k) or to a
         nonqualified  deferred compensation plan, plus any cash bonus) plus the
         Fair  Market  Value of  Restricted  Stock  Awards  (whether or not such
         awards are vested).

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

         2.  Eligibility.   Unless  otherwise  determined  by  the  Compensation
Committee,  no Termination  Payment shall be paid to the Officer unless,  at the
time that the Change in Control  occurs,  his or her Period of  Employment is at
least two (2) years.

         3. Severance Benefits Upon Termination Of Employment.  If, within three
(3) years after a Change in Control,  the Officer's  employment is terminated by
the Company without Cause or by the Officer due to a Quit With Good Reason,  the
Company  shall pay to the  Officer,  a  Termination  Payment  in a lump sum cash
payment within thirty (30) days following the later of the Officer's termination
of employment or the  occurrence of the Change in Control.  Payments made to the
Officer  hereunder  as a  Termination  Payment  shall be subject  to  applicable
federal,  state  and  local  tax  withholding  requirements.  If  the  Officer's
employment is terminated due to his death or Disability, that will not be deemed
a termination of employment by the Company  without Cause or by a Quit With Good
Reason.

         4.  Death  Of  Officer.  If  the  Officer  is  entitled  to  receive  a
Termination  Payment and dies before  receiving  the  Termination  Payment,  the
Company will pay the Termination Payment to his or her beneficiary as designated
in writing by the Officer or, in the absence of such written designation, his or
her  estate.   The  Officer  shall   designate  in  writing  a  beneficiary   or
beneficiaries  to receive the  Termination  Payment  hereunder.  The Officer may
revoke or change his or her  designation of a beneficiary at any time by written
notice to the Company.

         5. Other  Company  Employment  Benefits.  If the Officer is entitled to
receive a Termination  Payment,  the Officer shall be entitled to participate in
certain  employee  insurance  plans  (as  described  below)  for three (3) years
following the date of termination (the "Termination  Coverage  Period").  During
the Termination  Coverage  Period,  the officer shall be treated as a continuing
employee  for  purposes of  participation  in and accrual of rights and benefits
under all of the Company's life,  accident,  medical and dental  insurance plans
for Officer and his or her spouse. If such  participation in one or more of such
plans is not possible,  Company  shall arrange to provide  Officer with benefits
substantially  similar to those  which the Officer  would have been  entitled to
receive if he or she had  continued  as an  employee  at the Total  Compensation
level. Benefits of continued  participation in the Company deferred compensation
plan and any  retirement  plans  hereafter  adopted  in which  the  Officer  was
entitled  to  participate  prior  to the  date of  termination  shall  continue;
provided,  however,  that if Officer's  continued  participation is not possible
under the general terms and provisions of the foregoing plans, the Company shall
arrange to provide  Officer with benefits  substantially  similar to those which
the Officer would have been entitled to receive under the foregoing  plans if he
or she had  continued  as an  employee  of the  Company  during the  Termination
Coverage Period.

         6. Tax Indemnity  Payment.  Should any of the payments or benefits that
are  provided  for  hereunder  to be paid to or for the  benefit  of  Officer or
payments or benefits  under any other plan,  agreement  or  arrangement  between
Officer and the Company,  be determined or alleged to be subject to an excise or
similar  purpose tax  pursuant to Code  Section  4999 or any  successor or other
comparable  federal,  state or local  tax  laws,  the  Company  shall pay to the
Officer such additional  compensation as is necessary (after taking into account
all federal,  state and local income taxes payable by the Officer as a result of
the receipt of such  additional  compensation)  to place the Officer in the same
after-tax position (including federal,  state and local taxes) the Officer would
have been in had no such  excise or  similar  purpose  tax (or any  interest  or
penalties thereon) been paid or incurred.  The Company hereby agrees to pay such
additional compensation within ten (10) business days after the Officer notifies
the  Company  that the  Officer  intends  to file a tax return  which  takes the
position that such excise or similar  purpose tax is due and payable in reliance
upon a written  opinion of the  Officer's  tax  counsel  (such tax counsel to be
chosen solely by the Officer), that is more likely than not that such excise tax
is due and payable.  The costs of obtaining such tax counsel's  opinion shall be
borne by the Company,  and as long as such tax counsel was chosen by the Officer
in good faith,  the conclusions  reached in such opinion shall not be challenged
or disputed by the  Company.  If the  Officer  intends to make any payment  with
respect to any such excise or similar  purpose tax as a result of an  adjustment
to the Officer's tax liability by any federal, state or local tax authority, the
Company will pay such additional  compensation by delivering its cashier's check
payable in such amount to the Officer  within ten (10)  business  days after the
Officer  notifies  the Company of his  intention to make such  payment.  Without
limiting the obligation of the Company  hereunder,  the Officer  agrees,  in the
event the Officer  makes any  payment  pursuant to the  preceding  sentence,  to
negotiate  with the Company in good faith with respect to procedures  reasonably
requested  by the Company  which would afford the Officer the ability to contest
the imposition of such excise tax; provided,  however, that the Officer will not
be required to afford the Company any right to contest the  applicability of any
such excise tax to the extent that the Officer reasonably determines (based upon
the  opinion of his tax  counsel)  that such  contest is  inconsistent  with the
overall tax interests of the Officer.

         7. No  Mitigation.  No  amounts  or  benefits  payable  to the  Officer
hereunder  shall be subject to mitigation or reduction by income or benefits the
Officer receives from other sources.

         8. Nondisclosure Of Confidential Information. The Officer agrees not to
disclose,   directly  or  indirectly  to  any  third  person  any   Confidential
Information,  Trade  Secrets or customer  list  relating to  Company's  business
within three (3) years following payment of the Termination Payment.

         9.  Continued  Employment.  Nothing  herein  shall  entitle  Officer to
continued  employment  with the Company or to  continued  tenure in any specific
office or position.

         10. Sole Remedy. The Termination Payment provided hereby supersedes and
replaces any and all other termination compensation to which Officer is or might
become  entitled,  except  termination  compensation  covered by an agreement in
effect  on  the  Effective  Date  that  has  separately  been  approved  by  the
Compensation Committee or by the Board.

         11.  Assignment.  The rights and  obligations of the Company under this
Agreement  shall inure to the benefit of the Company's  successors  and assigns.
This  Agreement  may be assigned by the  Company to any legal  successor  to the
Company or to an entity which purchases all or  substantially  all of the assets
of the Company.  In the event the Company assigns this Agreement as permitted by
this Agreement and the Officer remains  employed by the assignee,  the "Company"
as defined  herein will refer to the assignee and the Officer will not be deemed
to have terminated  employment hereunder until the Officer terminates employment
from the assignee.

         12.  Attorneys'  Fees. If the Officer (or the  Officer's  estate in the
event of his or her death)  brings any action at law or in equity to enforce any
of the provisions or rights hereunder, the Company shall pay all costs, expenses
and reasonable attorneys' fees incurred by the Officer.

         13.  Headings.  Sections  or other  headings  contained  herein are for
reference  purposes  only  and  shall  not  affect  in any  way the  meaning  or
interpretation of this Agreement.

         14. Entire Agreement.  This Agreement contains the entire understanding
of the parties with respect to the subject matter hereof.

         15. Supersedes Prior Agreement.  This Agreement  completely  supersedes
the Change in Control Agreement dated  ___________,  19___,  between the Company
and the Officer, which agreement is hereby terminated and void.

         16.  Severability.  In the event that one or more of the  provisions of
this  Agreement  shall be or become  invalid,  illegal or  unenforceable  in any
respect,  the validity,  legality and enforceability of the remaining provisions
contained herein shall not be affected thereby.

         17.  Governing Law. To the full extent  controllable  by stipulation of
the parties,  this Agreement  shall be  interpreted  and enforced under Michigan
law.

         18.   Amendment.   This   Agreement  may  not  be  modified,   amended,
supplemented or terminated except by a written agreement between the Company and
the Officer.

         IN WITNESS WHEREOF,  each of the parties has executed this Agreement as
of the date and year first above written.

                                    COMPANY:

                                    OMEGA HEALTHCARE INVESTORS, INC.,
                                    a Maryland corporation

                                    By:_________________________________________
                                    Its:________________________________________

                                    OFFICER:

                                    _________________________________________INVESTMENT AGREEMENT

         INVESTMENT  AGREEMENT (this "Agreement"),  dated as of May 11, 2000, by
and  among  Omega  Healthcare  Investors,  Inc.,  a  Maryland  corporation  (the
"Company"),   and  Explorer  Holdings,  L.P.,  a  Delaware  limited  partnership
("Purchaser").

                               I. SHARE PURCHASE

     1.1 Share Purchase.

     (a) The Board of Directors of the Company has  authorized  the issuance and
     sale to Purchaser  hereunder of 1,000,000  newly issued  shares of Series C
     Preferred  Stock of the  Company,  par value $1.00 per share (the "Series C
     Preferred Stock" and such shares,  the "Shares"),  having the designations,
     voting powers, preferences and relative, participating,  optional and other
     special rights,  qualifications,  limitations and restrictions thereof, set
     forth in the  Articles  Supplementary  attached  hereto  as  Exhibit A (the
     "Series C Articles Supplementary").

     (b) On the terms and subject to the conditions  hereinafter  set forth,  at
     the Closing,  the Company will issue and sell to  Purchaser,  and Purchaser
     will  purchase  from the Company,  for an  aggregate  price equal to $100.0
     million (the "Purchase Price"), the Shares.

     (c) As an  inducement  for the Company and the Purchaser to enter into this
     Agreement and to consummate the transactions contemplated hereby, Purchaser
     will under certain  circumstances  make  available to the Company,  and the
     Company will under certain circumstances issue and sell to Purchaser, up to
     $50.0 million  (which may be increased by $50.0 million by Purchaser  under
     certain  circumstances)  in Common Stock or newly issued shares of Series C
     Preferred Stock (provided,  however,  if at the time of such issuance,  the
     Fair Market  Value (as defined in the Series C Articles  Supplementary)  of
     one share of  Common  Stock is less than  $6.25  (as  adjusted  to the same
     extent  the  Conversion  Price  for the  Series C  Preferred  issued on the
     Closing Date has been  previously  adjusted  pursuant to Section 8.4 of the
     Series  C  Articles  Supplementary)  such  additional  shares  of  Series C
     Preferred Stock shall be issued as a sub-series of Series C Preferred Stock
     with a Conversion Price (as defined in the Series C Articles Supplementary)
     equal to the Fair Market Value of one share of Common Stock  calculated  as
     of the date of issuance of such Series C Preferred), in each such case such
     issuance  to be on the  terms  and  subject  to the  conditions  and use of
     proceeds  limitations  set  forth  on  Exhibit  B (the  "Additional  Equity
     Financing").  Notwithstanding  any  other  provision  hereof,  the  parties
     acknowledge that (i) until the entire amount of Additional Equity Financing
     otherwise  available under this Section 1.1(c) shall have been invested or,
     if applicable,  the period  therefor shall have expired,  the Company shall
     not  arrange any  alternative  source or form of equity  financing  for any
     Acquisition  (defined  in  Exhibit B) if  Purchaser  would be  required  to
     purchase  Common  Stock in  respect  of such  Acquisition  pursuant  to the
     Initial Growth Equity Commitment or the Increased  Additional Growth Equity
     Commitment,  if any and (ii) the  Company  shall  use the  proceeds  of any
     Additional  Equity Financing solely for Acquisitions in accordance with the
     limitations  in Exhibit B and will not,  directly or  indirectly,  use such
     proceeds for,  without  limitation,  paying or refinancing any indebtedness
     (other than  indebtedness  of the acquired  entity) or for working  capital
     purposes,  except  solely on the terms and  subject  to the  conditions  of
     Section 2 of Exhibit B.

     1.2  Purchase  Price.  The Purchase  Price will be payable on the terms and
          subject  to the  conditions  hereof in cash by bank wire  transfer  of
          immediate  available funds to an account of the Company  designated by
          the Company by written  notice to Purchaser at least two Business Days
          prior to the Closing Date.

     1.3  Closing.  The closing (the  "Closing") of the purchase and sale of the
          Shares will take place at the offices of Jones,  Day,  Reavis & Pogue,
          599 Lexington  Avenue,  New York, New York at 10:00 a.m. local time on
          the second Business Day after satisfaction or waiver of the conditions
          (other  than the  conditions  to be  satisfied  concurrently  with the
          Closing) set forth in Article V (or such other date, time and place to
          which the parties may agree).  The date on which the Closing occurs is
          the "Closing Date."

     1.4  Closing  Deliveries.

     (a)  At or prior to the Closing, Purchaser will deliver to the Company:

          (i)  the Purchase  Price,  in  accordance  with  Section  1.2;

          (ii) a  certificate  executed  by the  general  partner  of  Purchaser
               certifying  that the  conditions set forth in Section 5.2(a) have
               been satisfied;

          (iii)a Stockholders Agreement in the form attached hereto as Exhibit C
               (the "Stockholders Agreement"), duly executed by Purchaser

          (iv) a Registration  Rights  Agreement in the form attached  hereto as
               Exhibit D (the "Registration Rights Agreement"), duly executed by
               Purchaser; and

          (v)  an Advisory  Agreement in the form  attached  hereto as Exhibit E
               (the  "Advisory  Agreement"),  duly  executed by an  Affiliate of
               Purchaser.

     (b)  At or prior to the Closing, the Company will deliver to Purchaser:

          (i)  such number of validly issued stock  certificates  evidencing the
               Shares as Purchaser  requests at least two  Business  Days before
               the Closing Date;

          (ii) a certificate executed by each of the Chief Executive Officer and
               Chief  Financial  Officer  of the  Company  certifying  that  the
               conditions set forth in Section 5.3(a) have been satisfied;

          (iii) the  Stockholders  Agreement  duly executed by the Company; (iv)
               the  Registration  Rights Agreement duly executed by the Company;
               (v) the Advisory Agreement, duly executed by the Company;

          (vi) an  Indemnification  Agreement  in the form  attached  hereto  as
               Exhibit F, duly executed by the Company;

          (vii) Director  Indemnification Agreements in the form attached hereto
               as Exhibit G for each director  designee of the  Purchaser,  duly
               executed by the Company; and

          (viii) the legal  opinion of Powell,  Goldstein,  Frazer & Murphy LLP,
               counsel to the Company,  addressed  to Purchaser  and dated as of
               the  Closing  Date,  generally  as to the  matters  set  forth in
               Sections  2.1 (as to the  Company  only),  2.2,  2.3(a),  2.4 and
               2.7(a)(i) and (ii).

      (c)  At or  prior to the  Closing,  the  Company  and  Purchaser  will
           deliver  to  each  other  such  other  supporting  documents  and
           certificates as the other party may reasonably request.

     1.5  Use of Proceeds.  The Company shall use the proceeds from the issuance
          and sale of the Series C Preferred  sold at the Closing (i) first,  to
          pay all amounts  outstanding under the Senior Unsecured Notes and (ii)
          second, for general working capital purposes.

               II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         The Company hereby represents and warrants to Purchaser,  except as set
forth in the  letter,  dated the date  hereof,  from the  Company  to  Purchaser
specifically  referencing this Agreement and delivered prior to the execution of
this  Agreement  and initialed by the parties  hereto (the  "Company  Disclosure
Letter"),  as follows:

          2.1  Existence;  Good Standing;  Corporate Authority. The Company is a
               corporation  duly  incorporated,  validly  existing  and in  good
               standing under the laws of the State of Maryland.  The Company is
               duly   licensed  or   qualified  to  do  business  as  a  foreign
               corporation  and is in good standing under the laws of each state
               in which the character of the properties owned or leased by it or
               in which the transaction of its business makes such qualification
               necessary,  except  where the failure to be so qualified or to be
               in good  standing  would  not  have a  Company  Material  Adverse
               Effect.  The  Company  has  all  requisite  corporate  power  and
               authority to own,  operate and lease its  properties and carry on
               its  business  as now  conducted.  The  copies  of the  Company's
               articles of incorporation and bylaws previously made available to
               Purchaser  are  true,  correct  and  complete.  As  used  in this
               Agreement,  the term "Company  Material Adverse Effect" means any
               change,  effect,  event  or  condition  that  has  had  or  could
               reasonably be expected to (i) have a material  adverse  effect on
               the business, results of operations or financial condition of the
               Company and its  Subsidiaries,  taken as a whole, or (ii) prevent
               or  materially  delay the  Company's  ability to  consummate  the
               transactions contemplated hereby; provided, however, that without
               waiving any representation, warranty or covenant in no event will
               any  of the  following  constitute  a  Company  Material  Adverse
               Effect:  (a) a  change  in  the  trading  prices  of  any  of the
               Company's  securities,  in and of itself;  (b) effects,  changes,
               events,  circumstances  or  conditions  generally  affecting  the
               long-term care or real estate finance  industries or arising from
               changes in general business or economic conditions, provided that
               the effect  thereof  is not  materially  disproportionate  on the
               Company  and  its  Subsidiaries  than  the  effect  on  similarly
               situated companies; (c) effects,  changes, events,  circumstances
               or conditions  directly  attributable to  out-of-pocket  fees and
               expenses   (including  without   limitation  legal,   accounting,
               investigatory,  investment  banking and other fees and  expenses)
               incurred in connection with the transactions  contemplated by the
               Transaction  Documents;   (d)  any  effects,   changes,   events,
               circumstances  or conditions  resulting from the  announcement or
               pendency  of  any  of  the  transactions   provided  for  in  the
               Transaction  Documents;   (e)  any  effects,   changes,   events,
               circumstances   or  conditions   resulting  from   compliance  by
               Purchaser  or the Company with the terms of, or the taking of any
               actions  specifically  required  to be taken in, the  Transaction
               Documents;  (f) the  effect  of the  financial  condition  of any
               operator of any of the Company  Properties  described  in Section
               2.1 of the  Company  Disclosure  Letter;  (g) the  effect  of any
               operator  of  any  of  the  Company   Properties   in  bankruptcy
               proceedings  as of the date  hereof  rejecting  leases to Company
               Properties  or  Material  Contacts;  and  (h) the  effect  of any
               matters  specifically  disclosed in the Company Disclosure Letter
               except  with  respect  to  items 1 and 9 of  Section  2.10 of the
               Company  Disclosure  Letter to the extent the ultimate  liability
               associated  therewith shall exceed $15.0 million in the aggregate
               after  application  of  any  available   insurance  proceeds  and
               reimbursement  available  to the Company as a result of rights of
               contribution,   subrogation   and  other   similar   sources   of
               reimbursement  for such liabilities and provided,  however,  that
               any change,  effect,  event or condition  arising  after the date
               hereof  in any  of  the  matters  specifically  disclosed  in the
               Company   Disclosure  Letter  shall  not  be  excluded  from  the
               definition  of Company  Material  Adverse  Effect for purposes of
               Section 5.3. As used in this Agreement, the term "Subsidiary" (i)
               when used with  respect to any party,  means any  corporation  or
               other organization,  whether  incorporated or unincorporated,  of
               which such party  directly or  indirectly  owns or controls  more
               than 50% of the  securities  or other  interests  having by their
               terms  ordinary  voting power to elect a majority of the board of
               directors or others  performing  similar  functions and (ii) when
               used with respect to the Company,  shall also include each of the
               following  entities:  (1)  Bayside  Street II,  Inc.,  a Delaware
               corporation,  (2) Bayside  Alabama  Healthcare  Second,  Inc., an
               Alabama corporation, (3) Bayside Arizona Healthcare Second, Inc.,
               an  Arizona  corporation,  and (4)  Bayside  Colorado  Healthcare
               Second, Inc., a Colorado corporation.

          2.2  Authorization,  Validity and Effect of Agreement. The Company has
               the  requisite  corporate  power and  authority  to  execute  and
               deliver  this   Agreement  and  all   agreements   and  documents
               contemplated  hereby to be  executed  and  delivered  by it. This
               Agreement and the consummation by the Company of the transactions
               contemplated  hereby have been duly  authorized  by all requisite
               corporate  action.  This  Agreement  has been  duly  and  validly
               executed and  delivered by the Company and  constitutes,  and the
               Stockholders  Agreement,  the Registration Rights Agreement,  the
               Indemnification Agreement, the Director Indemnification Agreement
               and  the  Advisory  Agreement   (together  with  this  Agreement,
               referred  to   collectively  as  the   "Transaction   Documents")
               contemplated  hereby to be executed and  delivered by the Company
               (when executed and delivered  pursuant  hereto) will  constitute,
               the valid and binding  obligations  of the  Company,  enforceable
               against the Company in accordance  with their  respective  terms,
               except that (i) such  enforceability may be subject to applicable
               bankruptcy,  insolvency or other similar laws now or  hereinafter
               in  effect  affecting  creditors'  rights  generally,   (ii)  the
               availability of the remedy of specific  performance or injunctive
               or other forms of  equitable  relief may be subject to  equitable
               defenses  and would be  subject  to the  discretion  of the court
               before which any  proceeding  therefor may be brought,  and (iii)
               rights  to  indemnification  may  be  limited  by  public  policy
               considerations.

          2.3  Capitalization;  Rights  Agreement.  (a) The  authorized  capital
               stock  of the  Company  consists  of  100,000,000  shares  of the
               Company's  common  stock,  par value $0.10 per share (the "Common
               Stock"),  2,300,000 shares of 9.25% Series A Preferred Stock, par
               value $1.00 per share (the "Series A Preferred Stock"), 2,000,000
               shares of 8.625%  Series B Preferred  Stock,  par value $1.00 per
               share (the  "Series B Preferred  Stock"),  and 100,000  shares of
               Series A Junior  Participating  Preferred  Stock, par value $1.00
               per share.  As of the close of business on the last  Business Day
               immediately  preceding the date hereof (the "Measurement  Date"),
               (i)   20,129,626   shares  of  Common   Stock  were   issued  and
               outstanding,  each of which was duly authorized,  validly issued,
               fully paid and  nonassessable  and issued free of any  preemptive
               rights,  (ii) 1,100,000  shares of Common Stock were reserved for
               issuance  under the stock  option  plans listed in Section 2.3 of
               the Company  Disclosure Letter (the "Stock Option Plans"),  (iii)
               options to purchase not more than 349,000  shares of Common Stock
               in the aggregate were outstanding under the Stock Option Plans as
               more  particularly  described  in  Section  2.3  of  the  Company
               Disclosure Letter (including the holders thereof,  the expiration
               date, the exercise  prices thereof and the dates of grant),  (iv)
               an aggregate of not more than 42,600 Deferred  Compensation Units
               are  issued  and  outstanding  pursuant  to  the  Company's  1993
               Deferred  Compensation  Plan,  (v)  2,300,000  shares of Series A
               Preferred  Stock were issued and  outstanding,  each of which was
               duly authorized, validly issued, fully paid and nonassessable and
               issued free of any preemptive  rights,  (vi) 2,000,000  shares of
               Series B  Preferred  Stock were issued and  outstanding,  each of
               which  was  duly  authorized,  validly  issued,  fully  paid  and
               nonassessable and issued free of any preemptive rights, and (vii)
               $48,405,000  principal  amount of the Company's 8.5%  Convertible
               Debentures  due  January  24,  2001  (the  "Company   Convertible
               Debentures"),  were issued and outstanding. Since the Measurement
               Date, no  additional  shares of capital stock of the Company have
               been issued and no other  options,  warrants  or other  rights to
               acquire shares of the Company's capital stock (collectively,  the
               "Rights To Acquire")  have been  granted.  Except as described in
               the second  preceding  sentence,  the Company has no  outstanding
               bonds,  debentures,  notes or other securities or obligations the
               holders  of  which  have the  right to vote or which  are or were
               convertible into or exercisable for, voting  securities,  capital
               stock or other equity ownership interests in the Company.  Except
               as set forth in Section  2.3 of the  Company  Disclosure  Letter,
               there are not at the date of this Agreement any existing options,
               warrants, calls,  subscriptions,  convertible securities or other
               Rights  To  Acquire  which  obligate  the  Company  or any of its
               Subsidiaries to issue,  exchange,  transfer or sell any shares of
               capital  stock of the  Company or any of its  Subsidiaries  other
               than shares of Common Stock issuable under the Stock Option Plans
               or awards  granted  pursuant  thereto.  There are no  outstanding
               contractual  or legal  obligations  of the  Company or any of its
               Subsidiaries (x) to repurchase,  redeem or otherwise  acquire any
               shares  of   capital   stock  of  the   Company  or  any  of  its
               Subsidiaries,  or (y) to vote or to  dispose of any shares of the
               capital stock of any of its Subsidiaries.  Except as contemplated
               by this Agreement or the transactions  contemplated hereby, after
               the purchase of the Shares by  Purchaser,  none of the Company or
               any of its  Subsidiaries  will  have  any  obligation  to  issue,
               transfer  or sell  any  shares  of the  capital  stock  or  other
               securities of the Company.

          (b)  The Company has taken all  necessary  action so that  neither the
               execution,  delivery and  performance  of this  Agreement nor the
               consummation of the  transactions  contemplated  hereby shall (i)
               cause  Purchaser or any of its Affiliates to become an "Acquiring
               Person" or (ii) result in the occurrence of a "Triggering  Event"
               or "Distribution  Date" (as such terms are defined in the Company
               Rights  Agreement,  dated as of May 12, 1999 (the "Company Rights
               Agreement"), between the Company and First Chicago Trust Company,
               as rights  agent).  The board of  directors  of the Company  (the
               "Company Board") has approved,  and the Company and First Chicago
               Trust  Company  have  entered  into,  an amendment to the Company
               Rights  Agreement  having such  effect,  a copy of which has been
               delivered to Purchaser (the "Rights Amendment").  Pursuant to the
               Rights  Amendment,  among other  things,  neither the  execution,
               delivery and  performance of this Agreement nor the  consummation
               of the  transactions  contemplated  hereby will (x) result in the
               distribution of separate  certificates  representing  Rights, (y)
               cause  the  Rights to become  exercisable,  or (z)  result in the
               occurrence of a "Triggering  Event" or a "Distribution  Date" (as
               such terms are defined the Company Rights Agreement).

          2.4  Validity  of  Shares,  Etc.  Each of the  Shares  have  been duly
               authorized  for issuance  and,  when issued to Purchaser  for the
               consideration set forth herein and as otherwise  provided herein,
               will be duly and validity issued, fully paid,  non-assessable and
               free of  preemptive  rights.  Upon  conversion of the Shares from
               time to time, Purchaser will acquire good and valid title to such
               shares of  Common  Stock,  free and  clear of any and all  liens,
               claims, security interests, encumbrances,  restrictions on voting
               or alienation or otherwise,  or adverse interests  (collectively,
               "Liens"),  except as may be created by Purchaser, the Transaction
               Documents or by applicable securities Laws.

          2.5  Subsidiaries.  Section 2.5 of the Company Disclosure Letter lists
               all of the  Subsidiaries  of the Company.  Each of the  Company's
               Subsidiaries is a corporation,  partnership or limited  liability
               company duly  organized,  validly  existing and in good  standing
               under  the  laws  of  its   jurisdiction  of   incorporation   or
               organization, has the corporate, partnership or similar power and
               authority to own its  properties  and to carry on its business as
               it is now being  conducted,  and is duly qualified to do business
               and is in  good  standing  in  each  jurisdiction  in  which  the
               ownership of its property or the conduct of its business requires
               such  qualification,  except  for  jurisdictions  in  which  such
               failure to be so  qualified or to be in good  standing  would not
               have  a  Company  Material  Adverse  Effect.  The  Company  owns,
               directly or indirectly,  all of the outstanding shares of capital
               stock  (or  other  ownership  interests  having  by  their  terms
               ordinary  voting power to elect a majority of directors or others
               performing  similar functions with respect to such Subsidiary) of
               each of the Company's Subsidiaries,  free and clear of all Liens,
               except  as set forth in  Section  2.5 of the  Company  Disclosure
               Letter.  Each of the outstanding shares of capital stock (or such
               other ownership interests) of each of the Company's  Subsidiaries
               is duly authorized, validly issued, fully paid and nonassessable.
               Section  2.5 of the  Company  Disclosure  Letter  sets  forth the
               following information for each Subsidiary of the Company: (i) its
               jurisdiction  of   incorporation   or   organization,   (ii)  its
               authorized  capital stock or share capital,  and (iii) the number
               and  holder of record of all  issued  and  outstanding  shares of
               capital stock, share capital or other equity interests.

          2.6  Other   Interests.   Except  for   interests  in  the   Company's
               Subsidiaries  and as set  forth  in  Section  2.5 of the  Company
               Disclosure  Letter,  neither the Company nor any of the Company's
               Subsidiaries  owns,  directly  or  indirectly,  any  interest  or
               investment  (whether  equity or debt) in any  domestic or foreign
               corporation, company, partnership, joint venture, business, trust
               or entity,  other than  investments  of less than $2.0 million in
               the aggregate.

          2.7  No Conflict;  Required  Filings and  Consents.  (a) Except as set
               forth  in  Section  2.7 of the  Company  Disclosure  Letter,  the
               execution,  delivery  and  performance  of this  Agreement by the
               Company  do  not,  and the  consummation  by the  Company  of the
               transactions  contemplated  hereby will not, (i) conflict with or
               violate the  articles of  incorporation  or bylaws or  equivalent
               organizational   documents   of  the   Company   or  any  of  its
               Subsidiaries,  (ii)  subject to the Company  making any  filings,
               notifications  or  registrations   and  obtaining  any  approvals
               identified  in  Section  2.7(b),  conflict  with or  violate  any
               domestic  or foreign  statute,  rule,  regulation  or other legal
               requirement  ("Law")  or order,  judgment,  injunction  or decree
               ("Order") applicable to the Company or any of its Subsidiaries or
               by which  any  property  or asset  of the  Company  or any of its
               Subsidiaries is bound or affected,  or (iii) result in any breach
               of or  constitute  a default  (or an event  which with or without
               notice or lapse of time or both would  become a  default)  under,
               result in the loss of a material benefit under, or give to others
               any  right of  purchase  or sale,  or any  right of  termination,
               amendment,  acceleration,  increased payments or cancellation of,
               or result in the  creation of a Lien on any  property or asset of
               the  Company or any of its  Subsidiaries  pursuant  to, any note,
               bond, mortgage,  indenture,  contract, agreement, lease, license,
               permit,  franchise or other instrument or obligation to which the
               Company  or any of its  Subsidiaries  is a party or by which  the
               Company or any of its  Subsidiaries  or any  property or asset of
               the  Company  or any of its  Subsidiaries  is bound or  affected,
               except,  in the  case of  clauses  (ii) and  (iii),  for any such
               conflicts,   violations,   breaches,  defaults,  events,  losses,
               rights,   payments,   cancellations,    encumbrances   or   other
               occurrences  that,  individually  or in the aggregate,  would not
               have a Company  Material  Adverse  Effect,  or (iv) result in the
               loss of the Company's  status as a real estate  investment  trust
               ("REIT") under Section 856 of the Internal  Revenue Code of 1986,
               as amended (the "Code").

          (b)  The execution and delivery of this  Agreement by the Company does
               not, and the  performance of this Agreement and the  consummation
               by the Company of the transactions  contemplated hereby will not,
               require any  consent,  approval,  authorization  or permit of, or
               filing with or  notification  to, any  governmental or regulatory
               authority,  domestic or foreign, including without limitation any
               quasi-governmental,   supranational,   statutory,   environmental
               entity and any stock  exchange,  court or  arbitral  body (each a
               "Governmental   Entity"),   except   (i)   for   (A)   applicable
               requirements,  if any, of the Securities Exchange Act of 1934, as
               amended (the "Exchange  Act"),  (B) the  applicable  notification
               requirements of the Hart-Scott-Rodino  Antitrust Improvements Act
               of 1976,  as  amended,  if any,  and the  rules  and  regulations
               thereunder (the "HSR Act"),  and (C) the consents,  approvals and
               authorizations set forth in Section 2.7 of the Company Disclosure
               Letter,  and (ii) where the  failure to obtain any such  consent,
               approval,  authorization or permit, or to make any such filing or
               notification, would not, individually or in the aggregate, have a
               Company Material Adverse Effect.

          2.8  Compliance  with Laws.  Except as set forth in Section 2.8 of the
               Company  Disclosure  Letter,  neither  the Company nor any of its
               Subsidiaries  is in conflict with, or in default or violation of,
               (a) any Law or  Order  applicable  to the  Company  or any of its
               Subsidiaries  or by which any property or asset of the Company or
               any of its  Subsidiaries  is bound or affected  (provided that no
               representation  or  warranty  is made in this  Section  2.8  with
               respect to Environmental  Laws) or (b) any note, bond,  mortgage,
               indenture, contract, agreement, lease, license, permit, franchise
               or other  instrument or obligation to which the Company or any of
               its Subsidiaries is a party or by which the Company or any of its
               Subsidiaries  or any  property  or asset of the Company or any of
               its  Subsidiaries  is bound or affected,  and to the Knowledge of
               the Company,  neither the Company nor any of its  Subsidiaries is
               under  review  or  investigation  with  respect  to or  has  been
               threatened to be charged with or given notice of any violation of
               any  Law or  Order,  except  in each  case  for  such  conflicts,
               defaults,  violations,  reviews or investigations that would not,
               individually or in the aggregate, have a Company Material Adverse
               Effect.  The  Company  and its  Subsidiaries  hold all  licenses,
               permits   orders,    registrations   and   other   authorizations
               ("Permits") and have taken all actions required by applicable Law
               or  regulations  of any  Governmental  Entity in connection  with
               their  business  as now  conducted,  except  where the failure to
               obtain  any  such  item or to take  any such  action  would  not,
               individually or in the aggregate, have a Company Material Adverse
               Effect.

          2.9  SEC  Documents.  (a) The  Company  has  timely  filed all  forms,
               reports  and  documents  required  to be  filed  by it  with  the
               Securities and Exchange  Commission  (the "SEC") since January 1,
               1997  (collectively,   the  "Company   Reports").   As  of  their
               respective dates, the Company Reports and any such reports, forms
               and other  documents  filed by the Company with the SEC after the
               date of this  Agreement  and until the Closing Date (i) complied,
               or will comply,  in all  material  respects  with the  applicable
               requirements  of the  Securities  Act of 1933,  as  amended  (the
               "Securities Act"), the Exchange Act and the rules and regulations
               thereunder  and (ii) did not,  and will not,  contain  any untrue
               statement  of a material  fact or omit to state a  material  fact
               required to be stated therein or necessary to make the statements
               made therein,  in the light of the circumstances under which they
               were made, not misleading.  The  representation in clause (ii) of
               the  preceding  sentence  does not apply to any  misstatement  or
               omission  in any Company  Report  filed prior to the date of this
               Agreement  which was  superseded by a subsequent  Company  Report
               filed prior to the date of this  Agreement.  No Subsidiary of the
               Company is required  to file any  periodic  reports  with the SEC
               under the Exchange Act.

          (b)  Each of the financial  statements  included in or incorporated by
               reference into the Company  Reports  (including the related notes
               and  schedules)  (the "Company  Financial  Statements")  presents
               fairly,  in all material  respects,  the  consolidated  financial
               position of the Company and its  Subsidiaries as of its date and,
               to the extent  applicable,  the results of  operations,  retained
               earnings  or cash  flows,  as the case may be, of the Company and
               its Subsidiaries for the periods set forth therein  (subject,  in
               the case of unaudited  statements,  to normal recurring  year-end
               audit  adjustments,  none of which  will be  material  in kind or
               amount),  in each case in accordance with United States generally
               accepted  accounting  principles  consistently  applied  ("GAAP")
               during the periods involved, except as may be noted therein.

          2.10 No  Undisclosed  Material  Liabilities.  There  are  no  material
               liabilities   or  obligations  of  the  Company  or  any  of  its
               Subsidiaries of any kind whatsoever, whether accrued, contingent,
               absolute, determined, determinable or otherwise that would result
               in such a liability,  other than (a)  liabilities  or obligations
               disclosed in the Company Financial  Statements or in Section 2.10
               of  the  Company   Disclosure   Letter  and  (b)  liabilities  or
               obligations   incurred  in  the   ordinary   course  of  business
               consistent  with past practices  since January 1, 2000 that would
               not have,  individually or in the aggregate,  a Company  Material
               Adverse Effect.

          2.11 Litigation.  Except as  disclosed  in Section 2.11 of the Company
               Disclosure  Letter or such of the  following  as would not have a
               Company Material  Adverse Effect,  and other than personal injury
               and other  routine  tort  litigation  arising  from the  ordinary
               course of  operations of the Company and its  Subsidiaries  which
               are  covered  by  adequate  insurance,  as of the  date  of  this
               Agreement,  there are no actions,  suits or proceedings  pending,
               publicly   announced   or,  to  the  Knowledge  of  the  Company,
               threatened  against  or  affecting  the  Company  or  any  of its
               Subsidiaries and there are no Orders of any  Governmental  Entity
               outstanding against the Company or any of its Subsidiaries.

          2.12 Absence of Certain  Changes.  From April 1, 2000 through the date
               of  this  Agreement,   the  Company  and  its  Subsidiaries  have
               conducted  their  respective  businesses  in the ordinary  course
               consistent  with  past  practice  and  there has not been (a) any
               Company  Material  Adverse Effect or (b) any action that if taken
               after the date hereof would be a violation of Section 4.1.

          2.13 Taxes.  (a)  Each of the  Company  and its  Subsidiaries  and any
               consolidated,  combined,  unitary  or  aggregate  group  for  tax
               purposes of which the Company or any Subsidiary of the Company is
               or has been a member has timely filed all Tax Returns required to
               be filed by it (after  giving  effect to any  extension  properly
               granted by a Tax  Authority  having  authority  to do so) and has
               timely  paid (or the  Company  has timely paid on its behalf) all
               material Taxes required to be paid by it (whether or not shown on
               such Tax Returns),  except Taxes that are being contested in good
               faith by appropriate proceedings and for which the Company or the
               applicable  Subsidiary of the Company shall have set aside on its
               books  adequate  reserves.  Each such Tax Return is complete  and
               accurate  in all  material  respects.  The  most  recent  audited
               financial  statements contained in the Company Reports reflect an
               adequate  reserve for all material  Taxes  payable by the Company
               and its Subsidiaries for all taxable periods and portions thereof
               through the date of such  financial  statements.  The Company has
               incurred no material  liability for Taxes under Sections  857(b),
               857(f),  860(c) or 4981 of the Code, including without limitation
               any Tax on net income  from  foreclosure  property  described  in
               Section  857(b)(4)  of the  Code  or  arising  from a  prohibited
               transaction  described  in  Section  857(b)(6)  of the Code,  and
               neither the Company nor any of its  Subsidiaries has incurred any
               material liability for Taxes other than in the ordinary course of
               business. No event has occurred, and no condition or circumstance
               exists,  which  would  present  a  risk  that  any  material  Tax
               described  in the  preceding  sentence  will be imposed  upon the
               Company  or  any   Subsidiary   of  the   Company.   No  material
               deficiencies  for any  Taxes  have  been  proposed,  asserted  or
               assessed in writing  against the Company or any Subsidiary of the
               Company,  and no  requests  for waivers of the time to assess any
               such Taxes are  pending and no  extensions  of time to assess any
               such Taxes are in effect and no Tax Returns of the Company or any
               of its Subsidiaries are currently being audited by any applicable
               Tax Authority or are threatened with any such audit. All material
               Taxes required to be withheld, collected and paid over to any Tax
               Authority by the Company and any  Subsidiary  of the Company have
               been timely  withheld,  collected and paid over to the proper Tax
               Authority.  No Tax  Authority  has  imposed  a Lien  against  the
               Company or any of its  Subsidiaries  or any Company  Property for
               any Taxes  payable  pending  actions  or  proceedings  by any Tax
               Authority  for  assessment  or  collection  of any Tax.  Complete
               copies of all federal,  state and local  income or franchise  Tax
               Returns  that have been filed by the Company and each  Subsidiary
               of the  Company  for all  taxable  years  beginning  on or  after
               January 1, 1996, all extensions filed with any Tax Authority that
               are currently in effect and all written communications with a Tax
               Authority  relating thereto have been made available to Purchaser
               and its representatives.  No written claim has been made by a Tax
               Authority in a  jurisdiction  where the Company or any Subsidiary
               of the  Company  does not file Tax  Returns  that it is or may be
               subject to taxation by the jurisdiction.  Neither the Company nor
               any  Subsidiary of the Company  holds any material  asset (A) the
               disposition of which would be subject to rules similar to Section
               1374 of the  Code  as a  result  of an  election  under  Internal
               Revenue  Service Notice 88-19 or (B) that is subject to a consent
               filed pursuant to Section 341(f) of the Code and the  regulations
               thereunder. The Company has no C corporation earnings and profits
               and did not have any C  corporation  earnings  and profits at the
               end of any REIT tax year.  Neither the Company nor any Subsidiary
               of the Company is obligated to make after the Closing any payment
               that would not be deductible  under  Section  162(m) of the Code.
               Neither the Company  nor any  Subsidiary  of the Company is party
               to, nor has any liability under (including liability with respect
               to any predecessor entity),  any  indemnification,  allocation or
               sharing agreement with respect to Taxes.

          (b)  The Company (i) for all taxable years commencing with its initial
               taxable year through December 31, 1999, has been properly subject
               to  taxation  as a REIT  within the meaning of Section 856 of the
               Code  and has  qualified  as a REIT  for  such  years,  (ii)  has
               operated since December 31, 1999, and will continue to operate to
               the Closing, in such a manner as to qualify as a REIT (determined
               without regard to the dividends paid deduction  requirements  for
               the current year) for the taxable year beginning  January 1, 2000
               determined  as if the  taxable  year of the REIT  ended as of the
               Closing,  and (iii) has not taken or  omitted  to take any action
               that would  result in loss of or a  challenge  to its status as a
               REIT,  and no such  challenge  is  pending  or, to the  Company's
               Knowledge,  threatened.  Each Subsidiary of the Company that is a
               partnership,  joint venture or limited liability company has been
               since its  formation  and  continues  to be treated  for  federal
               income tax purposes as a partnership or disregarded as a separate
               entity,  as the case may be, and has not been treated for federal
               income tax purposes as a corporation or an association taxable as
               a corporation. Neither the Company, any Subsidiary of the Company
               that  is  a  partnership,  joint  venture  or  limited  liability
               company,  nor any Subsidiary  that is a qualified REIT subsidiary
               has owned any assets (including, without limitation,  securities)
               that could cause the Company to violate Section  856(c)(4) of the
               Code.  The  Company  has  complied,  and  reasonably  expects  to
               continue complying,  with the income  qualification tests set out
               in Section 856(c)(2) and (3) of the Code. Neither the Company nor
               any  Subsidiary has received,  or reasonably  expects to receive,
               any  material  rent that  does not  qualify  as "rents  from real
               property"  within  the  meaning  of  Section  856(d) of the Code,
               including rent  attributable  to personal  property under Section
               856(d)(1)(C),  any contingent rent under Section  856(d)(2)(A) of
               the Code, or any rent from a  related-party  tenant under Section
               856(d)(2)(B) of the Code.  Neither the Company nor any Subsidiary
               has received,  or reasonably  expects to receive,  any contingent
               interest that does not qualify as "interest" under Section 856(f)
               of the Code or any income from a shared  appreciation  provision,
               as described under Section 856(j) of the Code, that is subject to
               the prohibited transaction tax under Section 857(b)(6).  The fair
               market value of the real  property  securing  each  mortgage loan
               held by the  Company or any  Subsidiary  at the time the loan was
               entered  into has  exceeded  the  highest  outstanding  principal
               balance of the loans at any time.  The Company has not elected to
               pay Tax on any capital  gain  recognized  on or after  January 1,
               2000. Each Subsidiary of the Company that is a corporation and of
               which the Company  owns more than 9.9% of the  capital  stock has
               been since it became a  Subsidiary  a qualified  REIT  subsidiary
               under Section 856(i) of the Code.

          (c)  For  purposes of this  Agreement,  (i)  "Taxes"  means all taxes,
               charges,  fees, levies or other assessments imposed by any United
               States  Federal,  state,  or  local  taxing  authority  or by any
               non-U.S. taxing authority, including, but not limited to, income,
               gross receipts, excise, property, sales, use, transfer,  payroll,
               license, ad valorem, value added,  withholding,  social security,
               national insurance (or other similar  contributions or payments),
               franchise,   estimated,   severance,   stamp,   and  other  taxes
               (including   any   interest,   fines,   penalties   or  additions
               attributable  to or imposed on or with respect to any such taxes,
               charges,  fees, levies or other  assessments),  (ii) "Tax Return"
               means any return,  report,  information  return or other document
               (including  any  related or  supporting  information  and,  where
               applicable,  profit and loss  accounts  and balance  sheets) with
               respect  to  Taxes,  and (iii)  "Tax  Authority"  shall  mean the
               Internal  Revenue  Service  and any  other  domestic  or  foreign
               bureau,  department,  entity, agency or other Governmental Entity
               responsible for the administration of any Tax.

          2.14 Properties.  (a)  Except  as would  not have a  Company  Material
               Adverse  Effect,  the  Company  or one of its  Subsidiaries  owns
               marketable  fee simple or  leasehold  title to, or a valid  first
               priority  mortgage  Lien on, the real  properties  identified  in
               Section 2.14 of the Company Disclosure Letter  (collectively with
               all buildings,  structures and other  improvements  thereon,  the
               "Company  Properties" and each,  collectively with all buildings,
               structures and other improvements thereon, a "Company Property"),
               which are all of the real  properties that are owned or leased by
               the Company and its Subsidiaries, or on which the Company holds a
               mortgage Lien, in either case as of the date hereof.  The Company
               Properties  are  not  subject  to  any  rights  of  way,  written
               agreements,  Laws,  ordinances and regulations affecting building
               use  or  occupancy  or  reservations  of  an  interest  in  title
               (collectively, "Property Restrictions") or Liens (including Liens
               for Taxes),  mortgages or deeds of trust,  claims  against title,
               charges which are Liens, security interests or other encumbrances
               on  title  (the   "Encumbrances"),   except   for  (i)   Property
               Restrictions  and  Encumbrances  set forth in Section 2.14 of the
               Company Disclosure Letter, (ii) Property  Restrictions imposed or
               promulgated  by Law or any  Governmental  Entity with  respect to
               real  property,  including  zoning  regulations,   which  do  not
               adversely  affect in any material  respect the current use of the
               applicable  property,   (iii)  Encumbrances  and  other  Property
               Restrictions  disclosed  on  existing  title  reports  or current
               surveys (in either case copies of which title reports and surveys
               have  been  delivered  or  made  available  to  Purchaser),  (iv)
               mechanics',  carriers',  workmen's,  repairmen's  Liens and other
               Encumbrances   and   Property   Restrictions,   if  any,   which,
               individually and in the aggregate, are not substantial in amount,
               do not  materially  interfere  with the present use of any of the
               Company  Properties  subject thereto or affected thereby,  and do
               not otherwise  materially impair business operations conducted by
               the Company  and its  Subsidiaries,  and (v) such other  Property
               Restrictions  and Encumbrances  that,  together with all Property
               Restrictions  and  Encumbrances  described in clauses (i) through
               (iv) in this Section  2.14(a),  would not have a Company Material
               Adverse Effect.

          (b)  Except for such  exceptions as would not have a Company  Material
               Adverse Effect, the Company has obtained title insurance insuring
               the Company's or the applicable  Company  Subsidiary's fee simple
               title to each of the Company Properties owned by it and leasehold
               title to each of the Company's  Properties  leased by it, in each
               case, subject only to the matters disclosed in such policies,  in
               clause (a) above and in Section  2.14 of the  Company  Disclosure
               Letter,  the Company has not received any written notice that any
               such policy is not in full force and effect.  Except as set forth
               in Section 2.14(b) of the Company Disclosure Letter, no claim has
               been made against any such policy in excess of $100,000.

          (c)  Each   material   certificate,   permit  or   license   from  any
               Governmental  Entity having  jurisdiction over any of the Company
               Properties and each  agreement,  easement or other right which is
               necessary to permit the lawful use and operation of the buildings
               and  improvements  on any of the Company  Properties  or which is
               material to the  operation of the property have been obtained and
               are in full  force  and  effect,  except to the  extent  that the
               failure  to  obtain or  maintain  any such  certificate,  permit,
               license,  agreement,  easement  or other  right  would not have a
               Company Material  Adverse Effect.  Neither the Company nor any of
               its  Subsidiaries has received written notice of any violation of
               any Law with  respect  to any of the  Company  Properties  which,
               individually or in the aggregate,  would have a Company  Material
               Adverse Effect. To the Knowledge of the Company,  no Governmental
               Entity  having  jurisdiction  over any Company  Properties  under
               development  has  denied  or  rejected  any  applications  by the
               Company for a certificate, permit or license with respect to such
               Company  Property,  except  to the  extent  that  the  denial  or
               rejection of such  application  would not have a Company Material
               Adverse Effect.

          (d)  Neither the Company nor any of its  Subsidiaries has received any
               written notice with respect to any Company Property to the effect
               that any  condemnation  or  rezoning  proceedings  are pending or
               threatened,  except as set forth in Section  2.14 of the  Company
               Disclosure Letter.

          2.15 Contracts;  Debt Instruments.  (a) There have been made available
               to  Purchaser  true,  correct and  complete  copies of all of the
               following  contracts to which Company or any of its  Subsidiaries
               is a party or by which  any of them is bound  (collectively,  the
               "Material  Contracts"):  (i) the agreements pursuant to which the
               Company or its Subsidiaries  holds or grants a leasehold interest
               in or otherwise  has an economic  interest in any real  property;
               (ii)  contracts with any current or former officer or director of
               the Company or any of its  Subsidiaries;  (iii) contracts (A) for
               the sale of any of the  material  assets of the Company or any of
               its  Subsidiaries  or the  acquisition of any material  amount of
               assets by the  Company  or any of its  Subsidiaries,  other  than
               contracts entered into in the ordinary course of business, or (B)
               for the grant to any person of any rights to purchase  any of its
               material assets; (iv) contracts which restrict the Company or any
               of its  Subsidiaries  from  competing  in any line of business or
               with any person in any  geographical  area in any material manner
               or which  restrict  any  other  person  from  competing  with the
               Company or any of its  Subsidiaries in any line of business or in
               any  geographical   area  in  any  material   manner;   (v)  loan
               commitments,  indentures, credit agreements, security agreements,
               mortgages,  guarantees,  promissory  notes,  letters  of  credit,
               hedging obligations,  capitalized lease obligations,  take or pay
               contracts and other contracts  relating to Indebtedness  (whether
               owed by or held by the Company or any Subsidiary) in an amount in
               excess of  $1,000,000  (each note and  mortgage  of such type,  a
               "Mortgage");  (vi) all joint  venture  agreements;  and (vii) any
               material  contract not made in the  ordinary  course of business.
               For  purposes  of this  Section  2.15,  "Indebtedness"  means (i)
               indebtedness  for borrowed  money,  whether secured or unsecured,
               (ii) obligations  under conditional sale or other title retention
               agreements  relating to property purchased by such Person,  (iii)
               capitalized  lease  obligations,  (iv) obligations under interest
               rate cap, swap, collar or similar transaction or currency hedging
               transactions  (valued at the termination value thereof),  and (v)
               guarantees  of  any  such   indebtedness   of  any  other  Person
               (including any Subsidiary).

          (b)  All of the  Material  Contracts  are in full force and effect and
               are the  legal,  valid and  binding  obligations  of the  Company
               and/or its Subsidiaries,  enforceable  against them in accordance
               with their respective  terms,  subject to applicable  bankruptcy,
               insolvency, reorganization, moratorium and similar Laws affecting
               creditors'   rights  and  remedies   generally   and  to  general
               principles of equity (regardless of whether enforcement is sought
               in a  proceeding  at law or in  equity).  Except  as set forth in
               Section  2.15  of the  Company  Disclosure  Letter,  neither  the
               Company nor any of its Subsidiaries is in breach or default under
               any Material  Contract nor, to the  Knowledge of the Company,  is
               any other  party to any  Material  Contract  in breach or default
               thereunder,  in either case except for such breaches and defaults
               of  any  Material  Contract,   either   individually  or  in  the
               aggregate, that would not have a Company Material Adverse Effect.

          (c)  Each Mortgage (or equivalent  document)  related to  Indebtedness
               held by the  Company or any  Subsidiary  creates in such entity a
               valid security interest in the property described therein. Except
               as would  not  have a  Company  Material  Adverse  Effect,  valid
               policies of title  insurance have been issued  insuring the first
               priority  mortgage of the Company or a wholly owned Subsidiary of
               the Company in each Mortgage and equivalent documents relating to
               a Mortgage.  To the Knowledge of the Company,  the borrower under
               each  Mortgage  has no valid  defense  that  prevents  the holder
               thereof or its assigns  from  enforcing  the  payment  provisions
               thereof, or from foreclosing against the property subject to such
               Mortgage.  To the Knowledge of the Company,  such Mortgage is not
               subject  to any valid  right of  rescission,  setoff,  abatement,
               diminution,  counterclaim  or defense  that  prevents  the holder
               thereof or its assigns from  enforcing the payment  provisions of
               the Mortgage,  if any, or from foreclosing  against the mortgaged
               property  subject to such Mortgage,  and no such claims have been
               asserted.  Except as set forth on  Schedule  2.15 of the  Company
               Disclosure  Letter,  the  Company or the  Subsidiary  is the sole
               owner of and holds legal title to each Mortgage,  and no Mortgage
               has been  assigned or pledged  and each  Mortgage is owned by the
               Company or the Subsidiary  free and clear of any right,  interest
               or claim of any third party.

          2.16 Environmental Matters. (a) Except as disclosed in Section 2.16 of
               the Company  Disclosure  Letter and for such exceptions to any of
               the following that,  individually or in the aggregate,  would not
               have a Company Material  Adverse Effect,  (A) none of the Company
               nor any of its  Subsidiaries  nor any other  Person has caused or
               permitted (i) the presence of any Hazardous  Substances on any of
               the Company's Properties,  (ii) any spills, releases,  discharges
               or  disposal  of  Hazardous  Substances  to have  occurred  or be
               presently occurring on or from the Company Properties as a result
               of any  construction  on or  operation  and  use  of the  Company
               Properties,  (B)  (i)  the  Company  and  its  Subsidiaries  have
               complied   with  all   applicable   local,   state  and   federal
               Environmental  Laws,  including all  regulations,  ordinances and
               administrative  and judicial  orders  relating to the generation,
               recycling, reuse, sale, storage, handling, transport and disposal
               of  any   Hazardous   Substances,   (ii)  the   Company  and  its
               Subsidiaries have obtained,  currently maintain and, as currently
               operating are in compliance with, all Permits necessary under any
               Environmental  Law  ("Environmental  Permits") for the conduct of
               the business and  operations of the Company and its  Subsidiaries
               in  the  manner  now  conducted,  and,  to the  knowledge  of the
               Company,   there  are  no  actions  or  proceedings   pending  or
               threatened to revoke or materially modify such Permits;  (iii) no
               Hazardous  Substances  have  been  used,  stored,   manufactured,
               treated,  processed  or  transported  to or from any such Company
               Property by the Company and its Subsidiaries or any other Person,
               except as necessary to the  customary  conduct of business and in
               compliance  with Law and in a manner  that  does  not  result  in
               liability under applicable  Environmental  Laws; (iv) the Company
               and its  Subsidiaries  have not  received  any written  notice of
               potential responsibility,  letter of inquiry or written notice of
               alleged liability from any Person regarding such Company Property
               or the business conducted thereon;  (v) no investigation,  action
               or  review  is  pending  or,  to the  Knowledge  of the  Company,
               threatened by any  Governmental  Entity or other Person under any
               Environmental Law, and (vi) all underground storage tanks located
               on any Company Property have been removed or closed to the extent
               required under any applicable Environmental Law. For the purposes
               of this Section 2.16 only,  "Company  Properties" shall be deemed
               to include all property formerly owned, operated or leased by the
               Company or its current or former Subsidiaries,  solely,  however,
               as to the  period  of  time  when  such  property  was so  owned,
               operated  or  leased  by the  Company  or its  current  or former
               Subsidiaries.  Except as described in Section 2.16 of the Company
               Disclosure  Letter,  the Company has previously made available to
               Purchaser  complete copies of all final versions of environmental
               investigations  and testing or  analysis  (other than those which
               have been  superseded by more recent  investigations,  testing or
               analyses) that are in the  possession,  custody or control of any
               of the  Company or any of its  Subsidiaries  with  respect to the
               environmental condition of the Company Properties.

          (b)  For purposes of this Agreement, the term (i) "Environmental Laws"
               means  any  national,  federal,  state or local  Law  (including,
               without  limitation,  common law), Order, Permit or any agreement
               with any  Governmental  Entity  or  other  third  party  (whether
               domestic  or foreign)  relating  to: (A)  releases or  threatened
               releases  of  Hazardous   Substances   or  materials   containing
               Hazardous   Substances;   (B)   the   manufacture,    processing,
               distribution,  handling,  transport,  use, treatment,  storage or
               disposal  of  Hazardous   Substances   or  materials   containing
               Hazardous  Substances;  or (C) pollution of the environment,  and
               (ii)  "Hazardous   Substances"   means:   (A)  those   materials,
               pollutants  and/or  substances  defined in or regulated under the
               following federal statutes and their state counterparts,  as each
               may be amended from time to time, and all regulations thereunder:
               the Hazardous Materials  Transportation Act of 1980, the Resource
               Conservation  and Recovery Act, the  Comprehensive  Environmental
               Response,  Compensation  and Liability  Act, the Clean Water Act,
               the Safe  Drinking  Water Act, the Atomic Energy Act, the Federal
               Insecticide,  Fungicide and Rodenticide Act, the Toxic Substances
               Control Act and the Clean Air Act; (B)  petroleum  and  petroleum
               products  including  crude  oil and any  fractions  thereof;  (C)
               natural gas,  synthetic gas and any mixtures thereof;  (D) radon;
               (E) asbestos;  (F) any other contaminant;  and (G) any materials,
               pollutants   and/or   substance   with   respect   to  which  any
               Governmental   Entity   requires   environmental   investigation,
               monitoring, reporting or remediation.

          2.17 Company Benefit Plans; ERISA Compliance.  (a) Except as disclosed
               in Section 2.17(a) of the Company Disclosure Letter, there are no
               compensation,    bonus,   pension,   profit   sharing,   deferred
               compensation,  incentive  compensation,  stock  ownership,  stock
               purchase,  stock  option or other stock  related  rights,  fringe
               benefit,   retirement,   vacation,   disability,  death  benefit,
               supplemental  unemployment  benefits,  hospitalization,  medical,
               dental, life, severance,  post-employment benefits or other plan,
               agreement,  arrangement, policies or understanding, or employment
               severance,  retention,  consulting,  change of control or similar
               agreement whether formal or informal, oral or written,  providing
               benefits to any current or former employee,  officer, director or
               shareholder of the Company or any of its Subsidiaries or to which
               the Company or any of its  Subsidiaries  contributes or is or was
               obligated  to  contribute  (collectively,  the  "Company  Benefit
               Plans," which will include each  "employee  benefit plan" (within
               the meaning of Section  3(3) of the  Employee  Retirement  Income
               Security  Act of 1974,  as  amended  ("ERISA")),  whether  or not
               subject to ERISA,  but shall not include any  Multiemployer  Plan
               (as defined  below)).  Section 2.17(a) of the Company  Disclosure
               Letter  contains a true and complete  list of all  agreements  or
               plans  providing for termination or severance pay to any officer,
               director or employee of the Company.

          (b)  Each Company  Benefit Plan has been  administered  in  accordance
               with its terms,  all  applicable  Laws,  including  ERISA and the
               Code,  except to the extent that the failure to so administer the
               applicable plan would not have a Company Material Adverse Effect.
               Each Company  Benefit Plan is in compliance  with all  applicable
               Laws, including the applicable provisions of ERISA, and the Code.
               Each Company  Benefit Plan that is intended to be qualified under
               Section  401(a) or 401(k)  of the Code is so  qualified  and each
               trust  established  in connection  with any Company  Benefit Plan
               that is intended to be exempt from federal income  taxation under
               Section  501(a)  of the Code is so  exempt.  No fact or event has
               occurred  which is  reasonably  likely  to affect  adversely  the
               qualified  status of any such Company  Benefit Plan or the exempt
               status of any such trust,  except for any  occurrence  that would
               not,  individually or in the aggregate,  have a Company  Material
               Adverse  Effect.  All  contributions  to, and payments from, each
               Company Benefit Plan and Multiemployer  Plan that are required to
               be made  in  accordance  with  such  Plans  and  applicable  Laws
               (including ERISA and the Code) have been timely made.

          (c)  No  Company  Benefit  Plan is or at any time was (i)  subject  to
               Title  IV of  ERISA  or  (ii)  subject  to  the  minimum  funding
               standards  of Section  302 of ERISA or  Section  412 of the Code.
               Except as set forth in Section 2.17(c) of the Company  Disclosure
               Letter,   neither  the  Company  nor  any  of  its   Subsidiaries
               contributes  to any  "multiemployer  plan"  within the meaning of
               Section 3(37) of ERISA or a "multiple  employer  plan" within the
               meaning of Section 3(40) of ERISA (each a "Multiemployer Plan").

          (d)  No Company Benefit Plan provides medical benefits (whether or not
               insured) with respect to current or former employees, officers or
               directors after retirement or other termination of service.

          (e)  Except as set forth on Section 2.17(e) of the Company  Disclosure
               Letter, the consummation of the transactions contemplated by this
               Agreement will not,  either alone or in combination  with another
               event,  (i) entitle any  current or former  employee,  officer or
               director  of  the   Company  to   severance   pay,   unemployment
               compensation  or any other payment or (ii) accelerate the time of
               payment or  vesting,  or  increase  the  amount of  compensation,
               equity  rights or  benefits  due any such  employee,  officer  or
               director.

          (f)  With  respect to each  Company  Benefit  Plan,  the  Company  has
               delivered or made available to Purchaser a true and complete copy
               of: (A) each writing  constituting a part of such Company Benefit
               Plan,  including  without  limitation  all Company  Benefit  Plan
               documents and trust agreements; (B) the most recent Annual Report
               (Form 5500  Series) and  accompanying  schedule,  if any; (C) the
               most recent annual financial  report, if any; (D) the most recent
               actuarial report,  if any; and (E) the most recent  determination
               letter from the IRS, if any.

          (g)  With respect to each  Company  Benefit  Plan,  there have been no
               prohibited  transactions or breaches of any of the duties imposed
               on  "fiduciaries"  (within the meaning of Section 3(21) of ERISA)
               by ERISA with  respect to the  Company  Benefit  Plans that would
               result in any liability or excise tax under ERISA or the Code.

          (h)  There has been no  amendment  to,  written  interpretation  of or
               announcement  (whether  or not  written) by the Company or any of
               its Subsidiaries relating to, or change in employee participation
               or coverage under,  any Company Benefit Plan which would increase
               materially the expense of maintaining  such Company  Benefit Plan
               above the level of the expense  incurred  in respect  thereof for
               the 12 months ended on the date of the most recent  balance sheet
               for the Company and its Subsidiaries.

          (i)  All  contributions  and payments  due under each Company  Benefit
               Plan  have  either  been  discharged  and paid or are  adequately
               reflected as a liability on the most recent balance sheet for the
               Company and its Subsidiaries in accordance with GAAP.

          (j)  Except as set forth on Section 2.17(j) of the Company  Disclosure
               Letter,  (i) neither the Company nor any of its Subsidiaries is a
               party  to  or  subject  to  any  union   contract  or  collective
               bargaining  agreement,  (ii) the Company and its Subsidiaries are
               in  compliance  in  all  material  respects  with  all  currently
               applicable laws respecting  employment and employment  practices,
               terms and conditions of employment  and wages and hours,  and are
               not engaged in any unfair  labor  practice  that would affect the
               Company in any  material  respect,  and (iii)  there is no unfair
               labor  practice  complaint  pending or, to the  Knowledge  of the
               Company,   threatened   against   the   Company  or  any  of  its
               Subsidiaries before the National Labor Relations Board that would
               affect the Company in any material respect.

          (k)  The  execution,  delivery  or  performance  of  the  transactions
               contemplated by the Transaction Documents does not constitute (i)
               a "Change  in  Control"  as defined  in the  Company's  Change in
               Control Agreements, dated as of March 22, 2000, with any of Essel
               W. Bailey, David A. Stover, F. Scott Kellman, Laurence D. Rich or
               Susan  Allene  Kovach   (collectively,   the  "Senior   Executive
               Officers"  and such  agreements,  the "Company  Change in Control
               Agreements") or (ii) "Change of Control" as defined in any of the
               Stock Option Plans, in each case as in effect on the date of this
               Agreement.  2.18 Related Party  Transactions.  Except for such of
               the following as were filed as Exhibits to the  Company's  Annual
               Report on Form 10-K for the year  ended  December  31,  1999 (the
               "1999  Company  10-K"),  set forth in Section 2.18 of the Company
               Disclosure  Letter  is  a  list  of  all  written   arrangements,
               agreements  and  contracts  entered into by the Company or any of
               its Subsidiaries  with any Person who is an officer,  director or
               Affiliate of the Company,  or any lineal descendent of any of the
               foregoing,  or any  entity in which any of the  foregoing  has an
               economic interest (excluding ownership of stock of publicly owned
               companies), except those of a type described in Section 2.17.

          2.19 No  Brokers.  The  Company  has not  entered  into any  contract,
               arrangement  or  understanding  with any Person or firm which may
               result in the  obligation  of the Company or Purchaser to pay any
               investment  banker's  or  finder's  fees,  brokerage  or  agent's
               commissions  or  other  like  payments  in  connection  with  the
               negotiations leading to this Agreement or the consummation of the
               transactions  contemplated  hereby,  except  that the Company has
               retained  J.P.  Morgan  &  Co.,  Incorporated  as  its  financial
               advisor,  the  arrangements  with  which have been  disclosed  to
               Purchaser  prior to the date  hereof.  The  Company  will pay all
               amounts owed pursuant to the foregoing arrangements.

          2.20 Proxy  Statement.  The  proxy  statement  to  be  mailed  to  the
               stockholders  of the  Company  (the  "Company  Stockholders")  in
               connection  with the meeting of the  Stockholders  to approve the
               issuance of the Shares to  Purchaser  on the Closing Date and the
               shares of Common Stock and Series C Preferred  Stock  pursuant to
               the Additional Equity Financing, to elect the Purchaser Designees
               and the  Independent  Director to the Company  Board  pursuant to
               Section 4.10, and to authorize the Additional  Option Shares (the
               "Company  Stockholders  Meeting",  and such proxy  statement,  as
               amended  or  supplemented,  the "Proxy  Statement"),  at the date
               mailed to the Company Stockholders and at the time of the Company
               Stockholders  Meeting  (i) will comply in all  material  respects
               with the  applicable  requirements  of the  Exchange  Act and the
               rules and  regulations  thereunder  and (ii) will not contain any
               untrue statement of a material fact or omit to state any material
               fact required to be stated  therein or necessary in order to make
               the statements therein, in light of the circumstances under which
               they were made, not misleading.

          2.21 Voting  Requirements.  The  affirmative  vote of no more than the
               holders of a majority  of the  issued and  outstanding  shares of
               Common  Stock,   voting  as  a  single  class,   at  the  Company
               Stockholders  Meeting to approve  the  issuance  of the Shares to
               Purchaser  on the  Closing  Date and  shares of Common  Stock and
               Series C Preferred Stock to Purchaser  pursuant to the Additional
               Equity  Financing,  to  elect  the  Purchaser  Designees  and the
               Independent  Director  to the Company  Board  pursuant to Section
               4.10, and to authorize the Additional Option Shares (the "Company
               Stockholder  Approval"),  is the only vote of the  holders of any
               class or series  of the  Company's  capital  stock  necessary  to
               approve the transactions contemplated hereby.

          2.22 State   Takeover   Statues.    The   limitations   on   "business
               combinations"  (as  defined  in  Subtitle  6 of  Title  3 of  the
               Maryland General Corporation Law ("MGCL")) and the limitations on
               voting  rights of shares of stock  acquired  in a "control  share
               acquisition"  (as  defined in  Subtitle 7 of Title 3 of the MGCL)
               are not applicable to the transactions contemplated hereby. There
               is no other  provision  of the MGCL or the  Company's  bylaws  or
               charter under which special voting or waiting period requirements
               would  become  applicable,  or  Purchaser  would not have  rights
               possessed  by  other  stockholders,  had the  Company  issued  to
               Purchaser all Company securities contemplated herein prior to the
               date hereof.

          2.23 Statements  True and  Correct.  The  representations  made by the
               Company pursuant to this Agreement,  the certificate provided for
               in Section 1.4(b)(ii) and the Company Disclosure Letter do not or
               will not  contain  as of the date made any  untrue  statement  of
               material fact or do not omit or will not omit to state a material
               fact  necessary to make the statements  therein,  in light of the
               circumstances under which they were made, not misleading.

                III. REPRESENTATIONS AND WARRANTIES OF PURCHASER

         Purchaser represents and warrants to the Company as follows:
          3.1  Existence;  Good Standing;  Corporate  Authority.  Purchaser is a
               limited  partnership  duly formed,  validly  existing and in good
               standing  under the laws of the State of  Delaware.  Purchaser is
               duly   licensed  or   qualified  to  do  business  as  a  limited
               partnership and is in good standing in each jurisdiction in which
               the character of the properties owned or leased by it or in which
               the   transaction  of  its  business  makes  such   qualification
               necessary,  except  where the failure to be so qualified or to be
               in good  standing  would not have a  Purchaser  Material  Adverse
               Effect.  A "Purchaser  Material Adverse Effect" means any change,
               effect,  event or condition  that has had or could  reasonably be
               expected to (i) have a material  adverse  effect on the business,
               results of operations or financial condition of Purchaser and its
               Subsidiaries,  taken as a whole, provided, however, that no event
               referred to in clauses (b), (c), (d) or (e) of the proviso to the
               definition of Company Material Adverse Effect will, as applied to
               Purchaser,  constitute a Purchaser  Material  Adverse Effect,  or
               (ii)  prevent  or  materially   delay   Purchaser's   ability  to
               consummate the transactions  contemplated  hereby.  Purchaser has
               all  requisite  limited  partnership  power and authority to own,
               operate and lease its properties and carry on its business as now
               conducted.

          3.2  Authorization,  Validity and Effect of  Agreement.  Purchaser has
               all requisite limited  partnership power and authority to execute
               and deliver  this  Agreement  and all  agreements  and  documents
               contemplated  hereby and thereby to be executed  respectively  by
               it. This  Agreement  and the  consummation  by  Purchaser  of the
               transactions  contemplated  hereby  have  been  duly and  validly
               authorized by the general partner of Purchaser and the applicable
               governing  body of  Purchaser's  general  partner,  and no  other
               action on the part of Purchaser or Purchaser's general partner is
               necessary  to  authorize  this  Agreement  or to  consummate  the
               transactions  contemplated  hereby  or  thereby.  This  Agreement
               constitutes, and all Transaction Documents contemplated hereby to
               be  executed  and  delivered  by  Purchaser  (when  executed  and
               delivered pursuant hereto) will constitute, the valid and binding
               obligations  of Purchaser,  enforceable  against it in accordance
               with their respective terms,  except that (i) the  enforceability
               hereof  and  thereof  may be subject  to  applicable  bankruptcy,
               insolvency  or other  similar laws now or  hereinafter  in effect
               affecting  creditors' rights generally,  (ii) the availability of
               the remedy of specific  performance  or injunctive or other forms
               of  equitable  relief may be subject to  equitable  defenses  and
               would be subject to the  discretion of the court before which any
               proceeding   therefor  may  be  brought,   and  (iii)  rights  to
               indemnification may be limited by public policy considerations.

          3.3  No Conflict; Required Filings and Consents. (a) The execution and
               delivery  of  this   Agreement  by  Purchaser  do  not,  and  the
               consummation by Purchaser of the transactions contemplated hereby
               will  not,  (i)   conflict   with  or  violate  the  articles  of
               incorporation,  bylaws or other similar constituent  documents of
               Purchaser or any of its  Subsidiaries,  (ii) subject Purchaser to
               making any filings,  notifications or registrations and obtaining
               any approvals,  consents or authorizations  identified in Section
               3.3(b),  conflict with or violate any Law or Order  applicable to
               Purchaser or any of its  Subsidiaries or by which any property or
               asset  of  Purchaser  or any  of its  Subsidiaries  is  bound  or
               affected,  or (iii)  result  in any  breach  of or  constitute  a
               default  (or an event  which with notice or lapse of time or both
               would become a default)  under,  result in the loss of a material
               benefit  under,  or give to  others  any  right  of  termination,
               amendment,  acceleration,  increased payments or cancellation of,
               or result in the  creation of a Lien on any  property or asset of
               Purchaser or any of its Subsidiaries pursuant to, any note, bond,
               mortgage, indenture, contract, agreement, lease, license, permit,
               franchise or other instrument or obligation to which Purchaser or
               any of its  Subsidiaries  is a party or by which Purchaser or any
               of its  Subsidiaries or any property or asset of Purchaser or any
               of its  Subsidiaries is bound or affected,  except in the case of
               clauses  (ii)  and  (iii),  for any such  conflicts,  violations,
               breaches,    defaults,    events,   losses,   rights,   payments,
               cancellations,  encumbrances or other occurrences that would not,
               individually  or in  the  aggregate,  have a  Purchaser  Material
               Adverse Effect.

          (b)  The  execution and delivery of this  Agreement by Purchaser  does
               not, and the  performance of this Agreement and the  consummation
               of the transactions  contemplated  hereby by it will not, require
               any consent, approval, authorization or permit of, or filing with
               or notification to, any Governmental  Entity,  except (i) for (A)
               applicable requirements, if any, of the Exchange Act, and (B) the
               applicable  notification  requirements  of the HSR Act,  and (ii)
               where failure to obtain such consents, approvals,  authorizations
               or permits, or to make such filings or notifications,  would not,
               individually  or in  the  aggregate,  have a  Purchaser  Material
               Adverse Effect.

          3.4  No  Brokers.   Purchaser  has  not  entered  into  any  contract,
               arrangement  or  understanding  with any Person or firm which may
               result in the  obligation of the Company or any Subsidiary of the
               Company  to  pay  any  investment   banker's  or  finder's  fees,
               brokerage  or  agent's  commissions  or other  like  payments  in
               connection with the negotiations leading to this Agreement or the
               consummation of the transactions  contemplated  hereby,  any such
               amounts to be the sole liability of Purchaser.

          3.5  Proxy Statement. None of the information provided by Purchaser or
               its  officers,  directors,  representatives,  agents or employees
               specifically  for inclusion in the Proxy  Statement  will, on the
               date  the  Proxy   Statement  is  first  mailed  to  the  Company
               Stockholders or at the time of the Company Stockholders  Meeting,
               contain any untrue  statement of a material fact, or will omit to
               state  any  material  fact  required  to  be  stated  therein  or
               necessary in order to make the  statements  therein,  in light of
               the circumstances under which they were made, not misleading.

          3.6  Sufficient Funds. After giving effect to the payment by Purchaser
               of the  Purchase  Price  which will be funded  pursuant to valid,
               binding and enforceable commitments in effect on the date hereof,
               Purchaser  will have  sufficient  funds  available to (a) pay all
               amounts  required to be paid pursuant to this  Agreement when due
               and (b) pay all nonreimbursable fees, costs and expenses incurred
               by  Purchaser  in   connection   with  this   Agreement  and  the
               transactions contemplated herein.

          3.7  Investment  Intent.  Purchaser  is  purchasing  the  Shares to be
               purchased by it for its own account and for investment  purposes,
               and does not  intend to  redistribute  the  Shares  (except  in a
               transaction or transactions  exempt from  registration  under the
               federal and state  securities  laws or  pursuant to an  effective
               registration  statement under such laws).  Purchaser acknowledges
               that the Shares have not been registered under the Securities Act
               or any state blue sky or securities Laws and that the transfer of
               the  Shares  may be  subject  to  compliance  with  such Laws (in
               addition  to the  restrictions  set  forth  in  the  Stockholders
               Agreement).

          3.8  Investor   Sophistication;   Etc.  Purchaser  is  an  "accredited
               investor" as defined in Regulation D under the Securities Act and
               has such knowledge and experience in financial  business  matters
               that it is  capable  of  evaluating  the  merits  and risks of an
               investment in the Shares. Purchaser is not an "investment company
               within the  meaning of the  Investment  Company  Act of 1940,  as
               amended.

                               IV. COVENANTS
          4.1  Conduct of  Business by the  Company.  During the period from the
               date of this Agreement to the Closing Date, the Company will, and
               will  cause  its  Subsidiaries  to,  carry  on  their  respective
               businesses  in  the  usual,   regular  and  ordinary   course  in
               substantially the same manner as heretofore conducted and, to the
               extent  consistent  therewith,  use all  commercially  reasonable
               efforts to keep available the services of their current  officers
               and other key employees and preserve their relationships with all
               key  customers,  suppliers  and  other  Persons  having  business
               dealings  with them to the end that their  goodwill  and  ongoing
               businesses  will not be materially  impaired at the Closing Date.
               The  Company  will  confer  on a regular  basis  with one or more
               representatives  of  Purchaser to report  operational  matters of
               materiality and any proposals to engage in material transactions.
               Without  limiting  the  generality  or effect  of the  foregoing,
               except as  specifically  described  in Section 4.1 of the Company
               Disclosure  Letter or as  expressly  provided by this  Agreement,
               during the period from the date of this  Agreement to the Closing
               Date,  the  Company  will  not,  and will not  permit  any of its
               Subsidiaries to, without the prior written consent of Purchaser:

          (a)  other than  dividends and  distributions  (including  liquidating
               distributions) by a direct or indirect wholly owned Subsidiary of
               the  Company  to its  parent  and  quarterly  distributions  with
               respect to the  Series A  Preferred  Stock or Series B  Preferred
               Stock in the amounts  provided for in the Articles  Supplementary
               in respect of such Series A Preferred Stock or Series B Preferred
               Stock,  as the case may be, and consistent with past practice and
               regular  quarterly  dividends not in excess of $0.25 per share of
               Common  Stock  which shall  commence no earlier  than the regular
               dividend pay date in the third quarter of 2000, (i) declare,  set
               aside or pay any dividends on, or make any other distributions in
               respect of, any of its  capital  stock,  (ii)  split,  combine or
               reclassify  any of its capital  stock or issue or  authorize  the
               issuance of any other  securities in respect of, in lieu of or in
               substitution  for shares of its capital stock or (iii)  purchase,
               redeem or  otherwise  acquire any shares of capital  stock of the
               Company  or any  of its  Subsidiaries  or  any  other  securities
               thereof or any  rights,  warrants  or options to acquire any such
               shares or other securities; provided, however, that the foregoing
               restrictions  shall not apply to the extent a distribution by the
               Company is necessary  for the Company to maintain  REIT status or
               to prevent  the  Company  from  having to pay  federal  income or
               excise tax;

          (b)  except for the issuance of securities pursuant to the exercise of
               options  that are  outstanding  on the  Measurement  Date and are
               listed in Section 2.3 of the Company  Disclosure  Letter,  issue,
               deliver,  sell,  pledge or  otherwise  encumber any shares of its
               capital  stock,  any other voting  securities  or any  securities
               convertible into, or any rights,  warrants or options to acquire,
               any such shares, voting securities or convertible securities;

          (c)  except for filing  the Series C Articles  Supplementary  with the
               Maryland  Secretary of State, amend its articles of incorporation
               or bylaws;

          (d)  acquire by merging or consolidating with, or by purchasing all or
               substantially  all of the assets of, or in any other manner,  any
               business  or  any   corporation,   limited   liability   company,
               partnership,   joint  venture,   association  or  other  business
               organization  or division  thereof in a transaction  or series of
               related transactions involving a total purchase price (determined
               in accordance with GAAP) in excess of $1,000,000;

          (e)  sell, lease,  license,  mortgage or otherwise encumber or subject
               to any Lien or  otherwise  dispose  of any of its  properties  or
               assets,  other than sales of assets which do not  individually or
               in the aggregate exceed $1,000,000;

          (f)  incur any  indebtedness  for borrowed money or guarantee any such
               indebtedness of another Person, issue or sell any debt securities
               or warrants or other rights to acquire any debt securities of the
               Company or any of its Subsidiaries, guarantee any debt securities
               of another Person,  enter into any "keep well" or other agreement
               to maintain any financial  statement  condition of another Person
               or enter into any  arrangement  having the economic effect of any
               of the foregoing or enter into any "keep well" or other agreement
               to maintain any financial  statement  condition of another Person
               or enter into any  arrangement  having the economic effect of any
               of the  foregoing,  other than in any such case  pursuant  to the
               Company's existing contractual  obligations or in accordance with
               the  Company's  2000  operating  plan   previously   provided  to
               Purchaser;

          (g)  make  any  loans,   advances  or  capital  contributions  to,  or
               investments  in, any other  Person,  other than to the Company or
               any wholly  owned  Subsidiary  of the Company or to officers  and
               employees of the Company or any of its  Subsidiaries  for travel,
               business  or  relocation  expenses  in  the  ordinary  course  of
               business;

          (h)  except in  accordance  with the  Company's  2000  operating  plan
               previously provided to Purchaser,  make any capital expenditures,
               unless required in order to cause any Company  Property to comply
               with   applicable  Law  or  to  maintain   Medicare  or  Medicaid
               certification.

          (i)  make  any  change  to  its  accounting  methods,   principles  or
               practices,  except as may be required by GAAP,  or make or change
               any Tax  election  or  settle  or  compromise  any  material  Tax
               liability or refund;

          (j)  except as required  by Law or  contemplated  hereby,  enter into,
               adopt or amend in any material  respect or terminate  any Company
               Benefit Plan or any other agreement, plan or policy involving the
               Company  or any of its  Subsidiaries  and one or  more  of  their
               directors, officers or employees;

          (k)  hire or terminate the employment of any executive  officer or key
               employee or increase the compensation of any director,  executive
               officer or other key  employee  or pay any  benefit or amount not
               required  by a plan or  arrangement  as in  effect on the date of
               this Agreement to any such Person;

          (l)  increase  the  compensation  of any  employee  other  than in the
               ordinary course of business;

          (m)  pay,  discharge or settle any  material  claims,  liabilities  or
               obligations   (absolute,   accrued,   asserted   or   unasserted,
               contingent  or  otherwise)  other than in the ordinary  course of
               business  consistent  with past  practice and not in an amount in
               excess  of the  amount  reserved  for in  the  Company  Financial
               Statements;

          (n)  authorize, recommend, propose or announce an intention to adopt a
               plan of complete or partial  liquidation  or  dissolution  of the
               Company or any of its Subsidiaries;

          (o)  amend  the terms  of,  relinquish  any  material  right  under or
               terminate  any  Material  Contract,  other  than in the  ordinary
               course of business;

          (p)  enter into any material  agreement not in the ordinary  course of
               business;.

          (q)  make,  rescind or revoke any material  express or deemed election
               relative  to  Taxes  (unless  required  by  law or  necessary  to
               preserve  the  Company's  status  as a REIT or the  status of any
               Subsidiary of the Company as a partnership for federal income tax
               purposes or as a qualified REIT  subsidiary  under Section 856(i)
               of the Code, as the case may be); or

          (r)  authorize,  or  commit  or agree to  take,  any of the  foregoing
               actions  or  take  any  action   which  would  make  any  of  the
               representations  or warranties  of the Company  contained in this
               Agreement untrue in any material respect as of the date when made
               or as of a future date.

          4.2  No Solicitation.  (a) Prior to the earlier of (i) the Closing and
               (ii) the  termination  of this  Agreement in accordance  with its
               terms, the Company, its Affiliates and their respective officers,
               directors, employees, representatives and agents will immediately
               cease any existing discussions or negotiations,  if any, with any
               parties  with  respect  to any  Alternative  Proposal,  take  the
               necessary  steps  to  inform  such  parties  of  the  obligations
               undertaken  in this  Section  4.2,  and request that such parties
               promptly return all documents (and all copies thereof)  furnished
               to them by the Company or its  representatives in connection with
               such  discussions  and  negotiations  or  certify  that  any such
               materials have been rendered unusable.  The Company will not, nor
               will  it  permit  any  of its  Subsidiaries,  nor  any  of  their
               respective officers,  directors,  employees,  investment bankers,
               financial    advisors,    attorneys,    accountants    or   other
               representatives,   directly  or   indirectly   to,  (i)  solicit,
               initiate,  encourage  (including  without  limitation  by  way of
               furnishing information or providing access to the books, records,
               properties or assets of the Company or any of its  Subsidiaries),
               or  knowingly   facilitate  the  making  of  any  proposal  which
               constitutes  an  Alternative  Proposal,  (ii)  participate in any
               discussions or negotiations  regarding any Alternative  Proposal,
               or (iii)  grant any waiver or  release  under any  standstill  or
               similar  agreement with respect to any class of equity securities
               of the  Company or any of its  Subsidiaries;  provided,  however,
               that if, at any time prior to the Closing Date, the Company Board
               determines  in good faith  that it has  received  an  Alternative
               Proposal that the Company Board  determines is reasonably  likely
               to result in a Superior  Proposal,  the Company  may, (A) furnish
               information   with   respect  to  the  Company  and  any  of  its
               Subsidiaries  to  such  Person  following   compliance  with  its
               obligations  under this  Section  4.2(b)  pursuant to a customary
               confidentiality  agreement and (B) participate in discussions and
               negotiations   with  such  Person   regarding  such   Alternative
               Proposal. For purposes of this Agreement,  "Alternative Proposal"
               means (1) any  proposal or offer from any Person  relating to any
               direct or indirect acquisition or purchase of assets or equity or
               debt securities (or rights to purchase such  securities),  of the
               Company and its  Subsidiaries  for  aggregate  gross  proceeds in
               excess of $35 million  individually or when aggregated with other
               proposals,  offers or transactions,  any tender offer or exchange
               offer for any class of equity securities of the Company or any of
               its  Subsidiaries,   or  any  merger,   consolidation,   business
               combination,   recapitalization,   liquidation,   dissolution  or
               similar   transaction   involving  the  Company  or  any  of  its
               Subsidiaries,  other than the  transactions  contemplated by this
               Agreement,  the  incurrence of more than $25 million in principal
               amount of  indebtedness  (other  than  indebtedness  incurred  in
               connection  with the  permitted  acquisition  of  assets  that is
               secured   only  by  the  assets   acquired  and  other  than  any
               transaction   described  in  Schedule  4.2)  and  (2)  any  other
               transaction  that is  conditioned  upon the  termination  of this
               Agreement or that would be reasonably  expected,  if consummated,
               to frustrate  the  completion  of the  transactions  contemplated
               hereby,  other than any such  transactions  described on Schedule
               4.2. "Superior Proposal" means any bona fide, unsolicited written
               Alternative  Proposal  that did not result  from a breach of this
               Section 4.2 and that involves  payment of consideration to all of
               the  Company's  stockholders  in respect of the Common  Stock and
               other terms and conditions  that,  taken as a whole,  the Company
               Board determines in good faith, after consulting with a financial
               advisor of  nationally  recognized  reputation,  and taking  into
               account all the terms and conditions of the Alternative Proposal,
               including  the nature and amount of any  consideration,  interest
               rates,  break-up  fees,  expense  reimbursement  provisions,  the
               conditions to consummation and the likelihood of completion,  are
               more  favorable  and  provide  greater  value  to  the  Company's
               stockholders than as provided  hereunder and for which financing,
               to the extent required, is then fully committed or available. The
               Company  shall notify  Purchaser  promptly (but in no event later
               than  24  hours)  after  receipt  by the  Company  (or any of its
               advisors) of any  Alternative  Proposal or any request for access
               to the  business,  properties,  assets,  books or  records of the
               Company  or any of its  Subsidiaries  by any  Person  that may be
               considering  making,  or has made, an Alternative  Proposal.  The
               Company shall provide such notice orally and in writing and shall
               identify in reasonable detail the Person making, and the material
               terms  and   conditions  of,  any  such   Alternative   Proposal,
               indication  or request.  The Company shall keep  Purchaser  fully
               informed,  on a current basis, of the status and material details
               of any such Alternative Proposal, indication or request. Prior to
               furnishing   confidential   information   to,  or  entering  into
               discussions or negotiations  with, any other Persons with respect
               to an  Alternative  Proposal,  the Company  must obtain from such
               other Persons an executed confidentiality agreement with terms no
               more  favorable  to  such  Person  than  those  contained  in the
               confidentiality  agreement  between the Company and Affiliates of
               Purchaser,  but which  confidentiality  agreement may not include
               any provision  calling for an exclusive  right to negotiate  with
               such Persons, and the Company must advise Purchaser of the nature
               of such confidential  information  delivered to such other Person
               reasonably  promptly  following  its  delivery to the  requesting
               party.

          (b)  Except as expressly permitted by this Section 4.2(b), neither the
               Company  Board nor any  committee  thereof  may (i)  withdraw  or
               modify,  or propose  publicly to withdraw or modify,  in a manner
               adverse to  Purchaser,  the  approval  or  recommendation  by the
               Company  Board  or  such  committee  of  this  Agreement  or  the
               transactions  contemplated hereby, (ii) approve or recommend,  or
               propose  publicly  to  approve  or  recommend,   any  Alternative
               Proposal,  or (iii) cause the Company to enter into any letter of
               intent,  agreement in principle or other agreement related to any
               Alternative    Proposal    (each,    a   "Company    Agreement").
               Notwithstanding  the  foregoing,  in the event  that prior to the
               Closing Date, the Company has received a Superior  Proposal,  the
               Company Board may, subject to Section 7.5(b),  withdraw or modify
               its  approval  or   recommendation   of  this  Agreement  or  the
               transactions contemplated hereby, approve or recommend a Superior
               Proposal or terminate this Agreement  pursuant to Section 7.3(c),
               provided,  however,  that not fewer than five Business Days prior
               to such termination, the Company will (i) notify Purchaser of its
               intention to take such  action,  (ii)  provide  Purchaser  with a
               reasonable   opportunity  to  respond  to  any  such  Alternative
               Proposal,  and (iii)  negotiate in good faith with Purchaser with
               respect to any modification to the terms of this Agreement.

          (c)  Nothing  contained in this Section 4.2 will prohibit the Company,
               following  its  receipt of a Superior  Proposal,  from taking and
               disclosing  to its  Stockholders  a  position  required  by  law,
               including  pursuant  to  Rule  14e-2(a)   promulgated  under  the
               Exchange Act.

          4.3  Filings,  Reasonable  Efforts.  Upon the terms and subject to the
               conditions set forth in this Agreement,  each of the parties will
               use all commercially  reasonable  efforts to take, or cause to be
               taken, all actions, and to do, or cause to be done, and to assist
               and  cooperate  with the  other  parties  in  doing,  all  things
               necessary,  proper or advisable to consummate and make effective,
               in the most  expeditious  manner  practicable,  the  transactions
               contemplated by this Agreement,  including without limitation (i)
               obtaining  of  all  necessary  actions  or  nonactions,  waivers,
               consents and approvals from  Governmental  Entities and making of
               all necessary  registrations and filings  (including filings with
               Governmental  Entities) and taking of all reasonable steps as may
               be necessary to obtain an approval or waiver from, or to avoid an
               action or proceeding by, any Governmental Entity, (ii) obtaining,
               in writing, of all necessary consents,  approvals or waivers from
               third parties in form reasonably satisfactory to Purchaser, (iii)
               performing its  obligations  under the Amended Fleet Facility and
               (iv)  execution  and  delivery  of  any  additional   instruments
               necessary to consummate the transactions  contemplated by, and to
               fully carry out the purposes of, this Agreement.

          4.4  Inspection of Records.  From the date hereof to the Closing Date,
               the Company will (i) allow all  designated  officers,  attorneys,
               accountants  and other  representatives  of Purchaser  reasonable
               access at all  reasonable  times to the officers,  key employees,
               accountants  and other  representatives  of the  Company  and its
               Subsidiaries  and the books and  records of the  Company  and its
               Subsidiaries,   (ii)  furnish  to  Purchaser   and  its  counsel,
               financial advisors, auditors and other authorized representatives
               such financial and operating  data and other  information as such
               Persons may reasonably request,  and (iii) allow a representative
               of  Purchaser  to  attend  each  meeting  of the  Company  Board,
               provided that such representative  shall not be allowed to attend
               at any time in which  the  Company  Board is  discussing  matters
               relating  to  Purchaser,   the  Transaction   Documents,   or  an
               Alternative Proposal.

          4.5  Publicity.  The initial press release  relating to this Agreement
               will be in the form of a joint press  release  previously  agreed
               between  Purchaser and the Company and thereafter the Company and
               Purchaser will,  subject to their  respective  legal  obligations
               (including  requirements  of stock  exchanges  and other  similar
               regulatory  bodies),  consult with each other, and use reasonable
               efforts  to  agree  upon the text of any  press  release,  before
               issuing  any  such  press  release  or  otherwise  making  public
               statements with respect to the transactions  contemplated  hereby
               and in making any filings  with any  Governmental  Entity or with
               any national securities exchange with respect thereto.

          4.6  Proxy  Statement;  NYSE  Listing.  (a) The Company will  promptly
               prepare the Proxy  Statement  and file it with the SEC as soon as
               practicable  after the date hereof and will use its  commercially
               reasonable  best efforts to have the Proxy  Statement  cleared by
               the SEC on or prior to June 14, 2000 and promptly  thereafter and
               after  Purchaser has waived the  conditions set forth in Sections
               5.3(g) and 5.3(h)  will mail the Proxy  Statement  to the Company
               Stockholders  in order for the  Company  Stockholders  Meeting to
               occur  on or  prior  to July  14,  2000.  Purchaser  will use its
               commercially  reasonable  best  efforts  to  cooperate  with  the
               Company  in  the  preparation  and   finalization  of  the  Proxy
               Statement.  Any Proxy Statement will disclose the  recommendation
               of the  Company  Board as of the  date  hereof  that the  Company
               Stockholders   approve  the  transactions   contemplated  hereby,
               including the issuance and sale of the Shares to Purchaser on the
               Closing Date and the possible  subsequent  shares of Common Stock
               and Series C  Preferred  Stock to the  Purchaser  pursuant to the
               Additional Equity Financing  (subject to the conditions set forth
               in Exhibit B), the election of the  Purchaser  Designees  and the
               Independent  Director to the  Company  Board in  accordance  with
               Section  4.10 and an  increase  in the number of shares of Common
               Stock  reserved  for  issuance  under the Stock Option Plans (the
               "Additional  Option Shares").  The Company agrees not to mail the
               Proxy Statement to the Stockholders until Purchaser confirms that
               the information  provided by Purchaser  continues to be accurate.
               If at any time  prior to the  Company  Stockholders  Meeting  any
               event  or  circumstance  relating  to the  Company  or any of its
               Subsidiaries or Affiliates,  or its or their respective  officers
               or  directors,  should  be  discovered  by the  Company  that  is
               required to be set forth in a supplement to any Proxy  Statement,
               the  Company  will  inform   Purchaser,   supplement  such  Proxy
               Statement and mail such  supplement to the Company  Stockholders.
               The Company  will  promptly  advise the  Purchaser of any oral or
               written  comments  to the  Proxy  Statement  from  the SEC or the
               issuance of any stop order with  respect to the Proxy  Statement.
               The Company  will  provide the  Purchaser  and its counsel with a
               reasonable  opportunity  to  review  and  comment  on  the  Proxy
               Statement and any amendment or supplement thereto prior to filing
               such with the SEC, and will provide the Purchaser  with a copy of
               all such filings made with the SEC.

          (b)  The Company  will use its best efforts to cause the shares of the
               Common  Stock to be issued  upon the  conversion  of the Series C
               Preferred  Stock to be approved for listing on the NYSE,  subject
               to official notice of issuance, prior to the Closing Date.

          4.7  Company  Stockholders  Meeting.  The Company will take all action
               necessary in accordance  with  applicable Law and its articles of
               incorporation  and bylaws to duly call, give notice of, after the
               Purchaser has waived the conditions set forth in Sections  5.3(g)
               and  5.3(h),  convene  and hold a special  meeting of the Company
               Stockholders  as promptly as  practicable  (but in no event later
               than July 14, 2000) and to include for  consideration and vote at
               the Company  Stockholders Meeting the approval of the issuance of
               the Shares to Purchaser on the Closing Date,  the  reservation of
               the Additional  Option Shares for issuance under the Stock Option
               Plans, the possible  subsequent  issuance of the Common Stock and
               the Series C Preferred  Stock pursuant to the  Additional  Equity
               Financing (subject to the conditions set forth in Exhibit B), and
               the  election  of the  Purchaser  Designees  and the  Independent
               Director to the Company Board  pursuant to Section 4.10.  Subject
               to Section 4.2, the Company  Board will  recommend  such approval
               and  adoption  and the  Company  will take all  lawful  action to
               solicit  such  approval,   including  without  limitation  timely
               mailing of the Proxy Statement.

          4.8  Reserved.

          4.9  REIT-Related  Matters.  (a) The  Company  will take such  further
               actions  and engage in such  further  transactions  as  Purchaser
               reasonably  requests to preserve the  Company's  status as a REIT
               under the Code  (including  with respect to the period  following
               the  Closing  Date) and to avoid the  payment of any Taxes  under
               Sections 857(b),  859(f), 860(c) or 4981 of the Code. The Company
               will not make or rescind any express or deemed election  relative
               to Taxes  (unless  required by Law or  necessary  to preserve the
               Company's  status as a REIT or the status of any  Subsidiary as a
               partnership  for  federal  income Tax  purposes or as a qualified
               REIT subsidiary under Section 856(i) of the Code, as the case may
               be).

          (b)  The Company Board will take no action that would render Section 4
               of  Article  V  of  the  Company's   articles  of   incorporation
               applicable  to, and will not  exercise any right  provided  under
               such section with  respect to,  Purchaser or to the  transactions
               contemplated by this Agreement.

          4.10 Company Board. (a) The Company shall take all necessary action so
               that, as of the Closing,  the Company Board shall be  constituted
               as follows:  (i) Essel  Bailey,  (ii) three  individuals  who are
               directors  of the Company on the date of this  Agreement  and who
               are acceptable to Purchaser, (iii) four individuals designated by
               Purchaser (the  "Purchaser  Designees"),  and (iv) one additional
               person  acceptable to Purchaser and the existing  Board who shall
               satisfy  the  qualification   requirements  as  an  "independent"
               director  and as a  member  of the  audit  committee  of both the
               Company and Purchaser  under the rules and regulations of the New
               York Stock Exchange (assuming for such purpose that Purchaser was
               a NYSE-listed company) (the "Independent Director"). In the event
               the Independent  Director or any of the Purchaser Designees shall
               be unable to serve as a director as of the Closing, a replacement
               for such  director  shall be  designated  by the same party which
               designated such individual and in the same manner as set forth in
               this Section 4.10.

          (b)  Effective as of the Closing, the Company will amend its bylaws to
               provide  that (i) each  committee  of the  Company  Board will be
               comprised  of that  number of  Purchaser  Designees  equal to the
               product  (rounded to the nearest whole number in accordance  with
               established  mathematical  convention) of the number of directors
               on such  committee  multiplied  by a fraction,  the  numerator of
               which is the number of Purchaser Designees and the denominator of
               which is the number of  directors  on the entire  Company  Board;
               provided,  however,  that the number of Purchaser Designees shall
               not constitute a majority of the members of any committee  unless
               the Purchaser Designees also constitute a majority of the members
               of the Company Board, and (ii) the total number of directors will
               not exceed nine. Such amendment may not be further amended by the
               Company Board without the approval of a majority of the Purchaser
               Designees.

          (c)  On the Closing Date, in the event any of the Purchaser  Designees
               or the  Independent  Director  shall not have been elected to the
               Company Board at the Company  Stockholders  Meeting,  the Company
               shall use its best efforts to cause the  directors of the Company
               or any  Subsidiaries of the Company to submit their  resignations
               from such  positions as may be necessary to appoint the Purchaser
               Designees  and the  Independent  Director to the Company Board in
               accordance with Section 4.10, effective as of the Closing Date.

          4.11 Additional  Rights.  From and after the date hereof,  neither the
               Company  nor the Company  Board will  declare or  distribute  any
               additional  Rights or take any other action that would  adversely
               discriminate  against  Purchaser based on its ownership of shares
               of capital stock of the Company.

          4.12 Further  Action.   Each  of  the  parties  hereto  will  use  all
               commercially  reasonable  efforts to take,  or cause to be taken,
               all  appropriate  action,  do or  cause  to be  done  all  things
               reasonably  necessary,  proper or advisable under applicable law,
               and execute and deliver such  documents and other papers,  as may
               be required to carry out the provisions of this Agreement and the
               other  documents  contemplated  hereby  and  consummate  and make
               effective the transactions contemplated hereby and thereby.

          4.13 Amended Fleet  Facility;  Management  Compensation  Arrangements;
               Provident  Waiver.  The Company will use commercially  reasonable
               efforts to enter into the Amended Fleet Facility,  the Management
               Compensation  Arrangements  and the  Provident  Waiver within ten
               Business Days after the date of this Agreement and, in any event,
               prior to mailing the Proxy Statement to the Company Stockholders.

                                 V. CONDITIONS TO CLOSING

          5.1  Conditions   to  Each   Party's   Obligations.   The   respective
               obligations  of  each  party  to  consummate   the   transactions
               contemplated  by this Agreement are subject to the fulfillment at
               or prior to the Closing Date of the following conditions:

          (a)  The Company Stockholder Approval shall have been obtained; and

          (b)  No Order or Law enacted, entered, promulgated, enforced or issued
               by any  court of  competent  jurisdiction  or other  Governmental
               Entity or other legal  restraint or  prohibition  preventing  the
               consummation of the  transactions  contemplated by this Agreement
               shall be in effect.

          5.2  Conditions to Obligations of the Company.  The obligations of the
               Company  to  consummate  the  transactions  contemplated  by this
               Agreement are subject to the satisfaction or waiver,  at or prior
               to the Closing of each of the following conditions:

          (a)  Representations,  Warranties and Covenants.  The  representations
               and  warranties of Purchaser  contained in this  Agreement  shall
               have  been  true and  correct  when  made  and  shall be true and
               correct in all material  respects  (other than those qualified by
               materiality or Purchaser Material Adverse Effect,  which shall be
               true and correct in all  respects)  as of the  Closing,  with the
               same  force and effect as if made as of the  Closing,  other than
               such  representations  and  warranties  as are made as of another
               date  (which  shall be so true and correct as of such other date)
               (provided that the foregoing  condition shall be deemed satisfied
               so long as any failures of such representations and warranties to
               be true and correct,  taken together,  would not, individually or
               in the  aggregate,  reasonably  be  expected  to  have a  Company
               Material  Adverse  Effect),  and  the  covenants  and  agreements
               contained in this  Agreement to be complied  with by Purchaser as
               of or before the Closing  Date shall have been  complied  with in
               all material respects.

          (b)  Deliveries.  All items set forth in Section  1.4(a)  hereof shall
               have been delivered to the Company.

          5.3  Conditions  to  Obligations  of  Purchaser.  The  obligations  of
               Purchaser to consummate  the  transactions  contemplated  by this
               Agreement are subject to the satisfaction or waiver,  at or prior
               to the Closing of each of the following conditions:

          (a)  Representations,  Warranties and Covenants.  The  representations
               and warranties of the Company  contained in this Agreement  shall
               have  been  true and  correct  when  made  and  shall be true and
               correct in all material  respects  (other than those qualified by
               materiality or Company  Material  Adverse Effect,  which shall be
               true and correct in all  respects)  as of the  Closing,  with the
               same  force and effect as if made as of the  Closing,  other than
               such  representations  and  warranties  as are made as of another
               date  (which  shall be so true and correct as of such other date)
               (provided that the foregoing  condition shall be deemed satisfied
               so long as any failures of such representations and warranties to
               be true and correct,  taken together,  would not, individually or
               in the  aggregate,  reasonably  be  expected  to  have a  Company
               Material  Adverse  Effect),  and  the  covenants  and  agreements
               contained in this Agreement to be complied with by the Company as
               of or before the Closing  Date shall have been  complied  with in
               all material respects.

          (b)  Litigation.  No  action,  suit  or  proceeding  shall  have  been
               commenced  or  threatened  in  writing  by or before any court or
               other Governmental  Entity against Purchaser,  the Company or any
               of their respective Affiliates, seeking to restrain or materially
               and adversely alter the  transactions  contemplated  hereby or by
               the other documents  contemplated hereby, which (i) is reasonably
               likely to render it  impossible  or  unlawful to  consummate  the
               transactions  contemplated  hereby or  thereby,  (ii) in the good
               faith judgment of Purchaser could  reasonably be expected to have
               a Company Material Adverse Effect or materially limit or restrict
               the rights of the Purchaser under the Transaction  Documents,  or
               (iii) seeks material damages.

          (c)  Consents  and  Approvals.  Purchaser  and the Company  shall have
               received, each in form and substance satisfactory to Purchaser in
               its  reasonable  good faith  determination,  all  authorizations,
               consents,   orders,  permits,   licenses  and  approvals  of  all
               Governmental  Entities  and all third party  consents and waivers
               set forth on Schedule  5.3(c),  including a permanent waiver from
               The Provident Bank (the  "Provident  Waiver") of the  requirement
               that the Company  apply any proceeds from the sale of any company
               securities  (including,  without  limitation,  securities sold to
               Purchaser  pursuant to this  Agreement)  to the  repayment of any
               indebtedness  of the Company or to apply such proceeds other than
               as set forth in Section 1.5.

          (d)  No Material Adverse Effect.  Except as specifically  disclosed in
               the Company Reports filed prior to the date hereof, since January
               1, 2000,  no event or events shall have  occurred with respect to
               the Company or any Subsidiary,  or be reasonably  likely to occur
               with respect to any thereof,  which could  reasonably be expected
               to have a Company Material Adverse Effect.

          (e)  Deliveries.  All items set forth in Section  1.4(b)  hereof shall
               have been delivered to Purchaser.

          (f)  Rights  Amendment.  The Rights  Amendment shall continue to be in
               effect and no "Triggering  Event,"  "Distribution Date" or "Stock
               Acquisition  Date" shall have occurred pursuant to and as defined
               in the Company Rights Agreement.

          (g)  Amended  Fleet  Facility.   The  Company  and  Fleet  Bank,  N.A.
               ("Fleet") shall have entered into agreements  contemplated by the
               commitment letter of Fleet, dated May 5, 2000, attached hereto as
               Exhibit H (the  "Amended  Fleet  Facility")  containing,  without
               limitation,  terms previously disclosed in writing to the Company
               by Purchaser,  all the terms of the Amended Fleet  Facility to be
               acceptable to Purchaser in Purchaser's sole discretion;  provided
               that if  Purchaser  has not  delivered  to the  Company a written
               waiver,  on or before 5:30 p.m. (New York City time) on the third
               Business Day after  receipt by Purchaser of a written  request by
               the Company to waive in writing the  condition  set forth in this
               Section  5.3(g)  as  it  applies  to  the  final  and  definitive
               documentation  for the  Amended  Fleet  Facility  received by the
               Company,  (i) the  restrictions  set forth in Section 4.2 of this
               Agreement  and  (ii) the  Purchaser's  right  to  terminate  this
               Agreement   pursuant   to  Section   7.4(c)   shall  be  rendered
               inapplicable  and of no force and effect  until a written  waiver
               from the Purchaser  with respect to this Section  5.3(g) has been
               delivered to the Company which written waiver may be given at any
               time within or after such  three-day  period,  in which event the
               foregoing Sections will, without further action, be reinstated.

          (h)  Management Compensation Arrangements. The Company and each of the
               Senior Executive Officers shall have entered into salary,  bonus,
               severance and incentive compensation arrangements approved by the
               Compensation  Committee of the Company Board and the full Company
               Board and on terms  acceptable to Purchaser in  Purchaser's  sole
               discretion (the "Management Compensation Arrangements"); provided
               that if  Purchaser  has not  delivered  to the  Company a written
               waiver,  on or before 5:30 p.m. (New York City time) on the third
               Business Day after  receipt by Purchaser of a written  request by
               the Company to waive in writing the  condition  set forth in this
               Section  5.3(h)  as  it  applies  to  the  final  and  definitive
               agreements evidencing the Management  Compensation  Arrangements,
               (i) the  restrictions  set forth in Section 4.2 of this Agreement
               and  (ii)  the  Purchaser's  right to  terminate  this  Agreement
               pursuant to Section 7.4(c) shall be rendered  inapplicable and of
               no force and effect  until a written  waiver  from the  Purchaser
               with  respect to this  Section  5.3(h) has been  delivered to the
               Company which  written  waiver may be given at any time within or
               after  such  three-day  period,  in  which  event  the  foregoing
               Sections will, without further action, be reinstated.

          (i)  REIT  Matters.  (i) There  shall  have not been a "change of law"
               such that the Company  would not  qualify  (prior to or after the
               Closing Date) as a REIT.  For this  purpose,  the term "change of
               law"  will  mean  any  amendment  to  or  change  (including  any
               announced  prospective change having a proposed effective date at
               or prior to the  Closing  Date)  in the  federal  tax laws of the
               United  States,  including  any statute,  regulation  or proposed
               regulation   or   any   official   administrative   pronouncement
               (consisting of the issuance or revocation of any revenue  ruling,
               revenue  procedure,  notice,  private  letter ruling or technical
               advice  memorandum) or any judicial  decision  interpreting  such
               federal tax laws (whether or not such  pronouncement  or decision
               is issued to, or in connection  with, a proceeding  involving the
               Company or a Subsidiary of the Company or is subject to review or
               appeal)  and (ii)  Purchaser  shall have  received  an opinion of
               Argue, Pearson, Harbison & Myers, LLP Purchaser,  dated as of the
               Closing Date,  in the form  attached  hereto as Exhibit I, to the
               effect that (A) commencing with its taxable year ended the end of
               the Company's  first REIT tax year, the Company was organized and
               has   operated   in   conformity   with  the   requirements   for
               qualification  as a REIT under the Code and (B) the  transactions
               contemplated  by this Agreement will not prevent the Company from
               continuing to operate in  conformity  with the  requirements  for
               qualification as a REIT under the Code.

          (j)  NYSE Listing. The NYSE shall have approved for listing the Common
               Stock issuable upon conversation of the Series C Preferred Stock,
               subject to official notice of issuance.

          (k)  Company Board. The Company Board shall have been reconstituted in
               the manner described in Section 4.10 and the Purchaser  Designees
               and the  Independent  Director  shall  have been  elected  to the
               Company Board at the Company  Stockholders  Meeting or shall have
               been  appointed to the Company Board in  accordance  with Section
               4.10,  and such  election  shall have been  approved  by at least
               two-thirds of the Incumbent  Directors (as defined in the Company
               Change in Control Agreements).

          (l)  Fleet  Loan  Closing.  The  transactions  contemplated  under the
               Amended   Fleet   Facility   shall  have  closed   prior  to,  or
               simultaneously  on,  the  Closing  Date.  (m)  Series C  Articles
               Supplementary.  The  Series C Articles  Supplementary  shall have
               been filed and  accepted for record by the  appropriate  Maryland
               governmental  authority,  and  shall  have  become  effective  in
               accordance with the laws of the State of Maryland.

                               VI. INDEMNIFICATION

          6.1  Indemnification  of  Purchaser.  (a)  Right  of  Indemnification.
               Subject to the terms of this  Article VI, the  Company  covenants
               and agrees to indemnify  and hold  harmless each of Purchaser and
               its Affiliates and their respective partners,  members, officers,
               directors, employees, attorneys, advisors and agents controlling,
               and any  person or  entity  controlling,  controlled  by or under
               common control with,  any of the foregoing  within the meaning of
               either  Section  15 of the  Securities  Act or  Section 20 of the
               Exchange Act,  including without  limitation  [Hampstead] and its
               Affiliates  (collectively,  the "Indemnified Parties"),  from and
               against  all  losses,   claims,   liabilities,   damages,   costs
               (including without limitation costs of preparation and reasonable
               attorneys' fees and charges) and reasonable  expenses  (including
               without   limitation   expenses   incurred  in  connection   with
               investigating,  preparing  or  defending  any  action,  claim  or
               proceeding,   whether  or  not  in  connection  with  pending  or
               threatened  litigation in which any Indemnified Party is a party)
               or actions in respect thereof (each such individual occurrence is
               hereinafter  referred  to  as  a  "Loss"  and  collectively,   as
               "Losses")  suffered  by  any  Indemnified   Party,   directly  or
               indirectly, arising out of (i) any inaccuracy in or breach of any
               of the representations,  warranties, covenants or agreements made
               by  the  Company  in  this  Agreement  or in any  other  document
               contemplated  hereby  or (ii)  any  actual  or  threatened  claim
               against such  Indemnified  Party by a person or entity related to
               or  arising  out of or in  connection  with this  Agreement,  the
               Registration  Rights  Agreement,   the  Advisory  Agreement,  the
               Stockholders  Agreement or any other transaction  document or any
               actions taken by any Indemnified Party pursuant hereto or thereto
               or in connection  with the  transactions  contemplated  hereby or
               thereby (whether or not the transactions  contemplated  hereby or
               thereby are consummated) (collectively, "Transactional Losses").

          (b)  Transactional  Losses.  The  Company  will not be  liable  to any
               Indemnified Party for any Transactional Losses to the extent, but
               only to the extent, that it is finally judicially determined by a
               court  of  competent  jurisdiction  (which  determination  is not
               subject  to  appeal)  that  such  Transactional  Losses  resulted
               primarily  from  (i)  such  Indemnified  Party's  breach  of this
               Agreement  or (ii) a  misstatement  or  omission  contained  in a
               report filed by such  Indemnified  Party pursuant to the Exchange
               Act, the Securities Act or any other Law unless such misstatement
               or omission  relates to information  furnished or confirmed by or
               on behalf of the Company. The indemnification  provisions of this
               Section 6.1 are expressly intended to cover Transactional  Losses
               relating to an Indemnified  Party's own  negligence.  The Company
               will  promptly  reimburse  each  Indemnified  Party  for all such
               Transactional  Losses  as they  are  incurred.  If the  foregoing
               indemnity is unavailable to any Indemnified Party or insufficient
               to hold any  Indemnified  Party  harmless,  then the Company will
               contribute  to the amount  paid or  payable  by such  Indemnified
               Party as a result of such  Transactional  Loss in such proportion
               as is  appropriate  to reflect the relative fault of the Company,
               on the one hand, and such  Indemnified  Party,  on the other,  as
               well as any other relevant equitable considerations. The relative
               fault of the Company, on the one hand, and any Indemnified Party,
               on the other,  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 to state a material fact, has been taken by, or
               relates  to   information   supplied  by,  the  Company  or  such
               Indemnified  Party, and the parties' relative intent,  knowledge,
               access to information  and  opportunity to correct or prevent any
               such action, statement or omission. The amount paid or payable by
               a party as a result of any Transactional Losses will be deemed to
               include any reasonable  legal or other fees or expenses  incurred
               by such party in connection with any action,  suit or proceeding.
               The parties  hereto agree that it would not be just and equitable
               if  contribution  pursuant to this paragraph  were  determined by
               prorata allocation or by any other method of allocation that does
               not take  account of the  equitable  considerations  referred  to
               above. No person or entity 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.

          (c)  Threshold.   No   Indemnified   Party   will   be   entitled   to
               indemnification  pursuant to this Section 6.1 with respect to any
               Losses in respect of breaches of  representations  and warranties
               until  the  aggregate  amount  of all  such  Losses  suffered  by
               Indemnified  Parties  in  the  aggregate  exceeds  $500,000  (the
               "Threshold"),  whereupon  Indemnified Parties will be entitled to
               indemnification pursuant to this Section 6.1 from the Company for
               the  full  amount  of all such  Losses  suffered  by  Indemnified
               Parties  (regardless of the  Threshold) up to an aggregate  total
               amount of the  Purchase  Price and any amounts  paid by Purchaser
               pursuant to the  Additional  Equity  Financing  (the "Cap").  The
               foregoing provision of this Section 6.1(c)  notwithstanding,  the
               Threshold  and the Cap will not apply with respect to any Loss or
               Losses  relating  directly or  indirectly to claims of any nature
               whatsoever (i) relating to,  resulting from or arising out of any
               breach of any covenant or  agreement  made by the Company in this
               Agreement  or in any  Transaction  Documents  or (ii) against any
               Indemnified Party or Parties made by or on behalf of any director
               or officer of the Company or any of its Subsidiaries.

          (d)  Survival.  No Indemnified Party will be entitled to give a Notice
               of Claim with  respect  to any  actual or  alleged  breach of any
               representation  or warranty herein after the third anniversary of
               the date of the Closing.

          6.2  Procedure  for  Claims.  (a)  Notice  of Claim.  After  obtaining
               knowledge  of any  claim or demand  which  has given  rise to, or
               could reasonably give rise to, a claim for indemnification  under
               this  Article  VI  (referred  to  herein  as an  "Indemnification
               Claim"),  an  Indemnified  Party will be required to give written
               notice to the Company of such  Indemnification  Claim ("Notice of
               Claim").  A Notice of Claim  will be given  with  respect  to all
               Indemnification  Claims,  whether or not the  Threshold  has been
               reached;  provided,  however,  that the failure to give Notice of
               Claim  to the  Company  will not  relieve  the  Company  from any
               liability that it may have to an Indemnified  Party  hereunder to
               the extent that the Company is not  prejudiced  by such  failure.
               The Notice of Claim will be  required to set forth the amount (or
               a reasonable  estimate) of the Loss or Losses suffered,  or which
               may be  suffered,  by an  Indemnified  Party as a result  of such
               Indemnification  Claim,  whether  or not the  Threshold  has been
               reached, and a brief description of the facts giving rise to such
               Indemnification  Claim. The Indemnified Party will furnish to the
               Company such information (in reasonable  detail) it may have with
               respect to such  Indemnification  Claim (including  copies of any
               summons,  complaint or other  pleading which may have been served
               on it and any written claim,  demand,  invoice,  billing or other
               document evidencing or asserting the same).

          (b)  Third  Party  Claim.  (i) If the claim or demand set forth in the
               Notice of Claim is a claim or demand asserted by a third party (a
               "Third  Party  Claim"),  the Company  will have 15 calendar  days
               after the date of receipt  by the  Company of the Notice of Claim
               (the "Notice Date") to notify the Indemnified  Parties in writing
               of the election by the Company to defend the Third Party Claim on
               behalf of the Indemnified Parties,  provided,  however,  that the
               Company  will be entitled to assume the defense of any such Third
               Party Claim only if it unconditionally and irrevocably undertakes
               to indemnify all Indemnified  Parties in respect thereof (subject
               to any applicable limitations set forth in Section 6.1).

          (ii) If the Company  elects to defend a Third Party Claim on behalf of
               the  Indemnified  Parties,  the  Indemnified  Parties  will  make
               available to the Company and their agents and representatives all
               records  and  other  materials  in  their  possession  which  are
               reasonably  required in the defense of the Third Party Claim, and
               the Company will pay all expenses  payable in connection with the
               defense of the Third Party Claim as they are incurred (subject to
               any applicable limitations set forth in Section 6.1).

          (iii) In no event may the Company settle or compromise any Third Party
               Claim without the Indemnified Parties' consent,  which may not be
               unreasonably withheld, provided, however, that if a settlement is
               presented by the Company to the Indemnified  Parties for approval
               and the Indemnified Parties withhold their consent thereto,  then
               any  amount  by which  the  final  Losses  (including  reasonable
               attorneys' fees and charges) resulting from the resolution of the
               matter  exceeds the sum of the  rejected  settlement  amount plus
               attorneys'  fees  incurred to such date will be excluded from the
               amount  covered  by the  indemnification  provided  for  in  this
               Agreement and shall be borne by the Indemnified Parties.

          (iv) If the  Company  elects  to  defend  a  Third  Party  Claim,  the
               Indemnified  Parties  will have the right to  participate  in the
               defense of the Third Party  Claim,  at the  Indemnified  Parties'
               expense  (and  without  the  right  to  indemnification  for such
               expense  under  this  Agreement),  provided,  however,  that  the
               reasonable   fees  and  expenses  of  counsel   retained  by  the
               Indemnified  Parties will be at the expense of the Company if (A)
               the use of the  counsel  chosen by the Company to  represent  the
               Indemnified Parties would present such counsel with a conflict of
               interest;  (B)  the  parties  to  such  proceeding  include  both
               Indemnified  Parties  and the  Company  and  there  may be  legal
               defenses  available to  Indemnified  Parties  which are different
               from or additional to those available by the Company;  (C) within
               10  calendar  days  after  being  advised  by the  Company of the
               identity  of  counsel to be  retained  to  represent  Indemnified
               Parties,  they  shall  have  objected  to the  retention  of such
               counsel  for valid  reasons  (which  shall be stated in a written
               notice to the  Company),  and the Company shall not have retained
               different counsel satisfactory to the Indemnified Parties; or (D)
               the Company  shall have  authorized  the  Indemnified  Parties to
               retain a single  separate  counsel at the expense of the Company,
               such  authorization  to be  made  by the  directors  who  are not
               designees of Purchaser or its Affiliates.

          (v)  If the Company does not elect to defend a Third Party  Claim,  or
               does  not  defend  a  Third  Party  Claim  in  good  faith,   the
               Indemnified Parties will have the right, in addition to any other
               right or remedy it may have hereunder,  at the sole and exclusive
               expense of the Company, to defend such Third Party Claim.

          (c)  Cooperation in Defense.  The  Indemnified  Parties will cooperate
               with the  Company in the  defense of a Third Party Claim and make
               reasonably available the facts relating to the Third Party Claim.
               Subject to the foregoing,  (i) no Indemnified Party will have any
               obligation  to  participate  in the  defense  of or to defend any
               Third Party Claim and (ii) no Indemnified Parties' defense of, or
               their participation in, the defense of any Third Party Claim will
               in any way diminish or lessen their right to  indemnification  as
               provided in this Agreement.

          6.3  Indemnification of the Company. Purchaser will indemnify and hold
               harmless  the  Company  and  its  current  and  future  officers,
               directors,  employees  and  agents  from and  against  all Losses
               suffered  by any of  them as a  result  of any  inaccuracy  in or
               breach of any of the  representations,  warranties  or  covenants
               made by Purchaser  hereunder.  The  procedures  for and limits on
               indemnification  in respect of the obligations of Purchaser under
               this  Section  6.3 will be the same as those set forth in Section
               6.1 and 6.2.

          6.4  Non-Exclusivity of Indemnification. The rights of any Indemnified
               Party  hereunder  will  not be  exclusive  of the  rights  of any
               Indemnified  Party under any other  agreement  or  instrument  to
               which the Company is a party.  Nothing in such other agreement or
               instrument will be interpreted as limiting or otherwise adversely
               affecting an Indemnified  Party's rights hereunder and nothing in
               this  Agreement  will be  interpreted  as limiting  or  otherwise
               adversely affecting the Indemnified Party's 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. The indemnity,  contribution and expense
               reimbursement obligation of the Company in this Agreement will be
               in addition to any liability the Company may otherwise  have. The
               obligations  of the  Company  to each  Indemnified  Party will be
               separate  obligations,  and the  liability  of the Company to any
               Indemnified  Party will not be  extinguished  solely  because any
               other   Indemnified   Party  is  not  entitled  to  indemnity  or
               contribution  hereunder.

          6.5  Survival of  Indemnification.  The  provisions of this Article VI
               will  survive  notwithstanding  any  termination  hereof  or  the
               Closing of any of the transactions contemplated hereby.

                        VII. TERMINATION AND WAIVER

          7.1  Termination by Mutual  Consent.  This Agreement may be terminated
               at any time prior to the Closing Date, whether or not the Company
               Stockholder Approval has been obtained,  by the mutual consent of
               Purchaser and the Company.

          7.2  Termination by Either Purchaser or Company. This Agreement may be
               terminated  by  action  of the  Board of  Directors  (or  similar
               governing  body) of either  Purchaser or the Company,  whether or
               not the Company Stockholder Approval has been obtained, if:

          (a)  the Closing  shall not have occurred on or before August 31, 2000
               (the  "Outside  Date");  provided,  however,  that no  party  may
               terminate this Agreement  pursuant to this Section 7.2(a) if such
               party's  failure to  fulfill  any of its  obligations  under this
               Agreement  shall have been the reason that the Closing  shall not
               have occurred on or before said date; or

          (b)  the Company  Stockholder  Approval  shall not have been  obtained
               upon the taking of such vote at the Company  Stockholder  Meeting
               or at any adjournment thereof; or

          (c)  any  Governmental  Entity  shall have issued an order,  decree or
               ruling  or  taken  any  other   action   permanently   enjoining,
               restraining or otherwise  prohibiting  the  consummation  of this
               Agreement or any of the other  transactions  contemplated by this
               Agreement and such order,  decree or ruling or other action shall
               have become final and nonappealable.

          7.3  Termination  by Company.  This Agreement may be terminated at any
               time prior to the Closing  Date by action of the  Company  Board,
               if:

          (a)  Purchaser  shall have  materially  breached any provision of this
               Agreement and as a result thereof the conditions to the Company's
               obligations  set forth in Section  5.2(a) shall not be capable of
               being   fulfilled;   provided   that   any   breach(s)   of   any
               representation  or warranty that individually or in the aggregate
               shall  give  rise to a  Purchaser  Material  Adverse  Effect  and
               providing  the basis for such  termination  is not curable or, if
               curable,  is not cured  within ten  calendar  days after  written
               notice of such breach is given by the Company to Purchaser; or

          (b)  there has been a material  breach or failure to perform of any of
               the  covenants  set  forth  in  this  Agreement  on the  part  of
               Purchaser,  which  breach is not curable  or, if curable,  is not
               cured  within  ten  calendar  days after  written  notice of such
               breach is given by the Company to Purchaser; or

          (c)  (i) the Company Board shall have authorized the Company,  subject
               to complying  with the terms of this  Agreement,  to enter into a
               Company  Agreement  with  respect to a Superior  Proposal and the
               Company shall have complied  with its  obligations  under Section
               4.2(b),  (ii) Purchaser shall not have made, within five Business
               Days of  receipt of the  Company's  written  notification  of its
               intention  to enter into a Company  Agreement  with  respect to a
               Superior Proposal,  an offer that the Company Board determines in
               good faith, after consultation with its financial advisors, is at
               least as  favorable,  from a  financial  point  of  view,  to the
               Stockholders  as such  Superior  Proposal,  and (iii) the Company
               prior to such termination  pursuant to this clause (c) shall have
               paid  to  Purchaser  in  immediately  available  funds  the  fees
               required to be paid pursuant to Section 7.5; or

          (d)  The  Company  shall  have  complied  with its  obligations  under
               Sections  5.3(g),  5.3(h) and 4.13, and Purchaser  shall not have
               waived the  conditions  set forth in  Sections  5.3(g) and 5.3(h)
               within ten Business  Days after  written  request to do so by the
               Company.

          7.4  Termination by Purchaser. This Agreement may be terminated at any
               time prior to the Closing Date by action of Purchaser, if:

          (a)  the Company shall have materially  breached any provision of this
               Agreement and as a result  thereof the  conditions to Purchaser's
               obligations  set forth in Section  5.3(a) shall not be capable of
               being   fulfilled;   provided   that   any   breach(s)   of   any
               representation  or warranty that individually or in the aggregate
               shall  give  rise  to  a  Company  Material  Adverse  Effect  and
               providing  the basis for such  termination  is not curable or, if
               curable,  is not cured  within ten  calendar  days after  written
               notice of such breach is given by Purchaser to the Company; or

          (b)  there has been a material  breach or failure to perform of any of
               the  covenants  set  forth in this  Agreement  on the part of the
               Company, which breach is not curable or, if curable, is not cured
               within ten calendar days after  written  notice of such breach is
               given by Purchaser to the Company; or

          (c)  (i) the Company  Board or any  committee  thereof  shall have (A)
               following receipt of an Alternative Proposal, failed to reconfirm
               within ten Business Days of a written  request by Purchaser to do
               so, or at any time  withdrawn or modified in a manner  adverse to
               Purchaser,  its approval or  recommendation of this Agreement and
               the   transactions   contemplated   hereby  or  (B)  approved  or
               recommended,  or proposed  publicly to approve or recommend,  any
               Alternative  Proposal  or shall  have  resolved  to do any of the
               foregoing,  or (ii) the Company shall have entered into a Company
               Agreement or the Company Board shall have  authorized the Company
               to do so; or

          (d)  (i) any person,  entity or group (as defined in Section  13(d)(3)
               of the Exchange Act) shall have acquired beneficial  ownership of
               more than 10% of the voting securities of the Company through the
               acquisition  of voting  securities,  the  formation of a group or
               otherwise,  or shall  have  been  granted  any  option,  right or
               warrant,   conditional  or  otherwise,   to  acquire   beneficial
               ownership  of  more  than  10% of the  voting  securities  of the
               Company and (ii) the Company  Board shall not have  exercised its
               rights under Section 4 of Article V of the Company's  articles of
               incorporation  to limit such ownership  within five Business Days
               after notice of such acquisition; or

          (e)  the  indebtedness  under the Senior  Unsecured  Notes  shall have
               matured and become due prior to the  Closing  Date or there shall
               have  been a  default  or event of  default  as to more than $1.0
               million  of  the  Company's   indebtedness,   including   without
               limitation the indebtedness under the Fleet Loan Documents, which
               is not then  subject  to a valid  and  binding  agreement  of the
               lenders thereof waiving such default or event of default.

          7.5  Effect of Termination and  Abandonment;  Termination  Fee. (a) In
               the  event of  termination  of this  Agreement  pursuant  to this
               Article  VII,  all   obligations   of  the  parties  hereto  will
               terminate, except the obligations of the parties pursuant to this
               Section 7.5, Section 4.5, Article VI and Article VIII.

          (b)  The Company will pay to Purchaser an amount equal to $6.0 million
               (the "Company Termination Fee") plus the Purchaser Expenses if:

          (i)  this Agreement is terminated pursuant to Section 7.3(c),  Section
               7.4(c), or Section 7.4(d); or

          (ii) this Agreement is terminated pursuant to Section 7.2(b),  Section
               7.4(a) or  Section  7.4(b) and each of the  following  shall have
               occurred:

          (A)  at any time after the date of this Agreement and at or before the
               date of the Company Stockholder  Meeting, an Alternative Proposal
               shall have been publicly announced or publicly communicated (a
               "Prior Alternative Proposal"); and

          (B)  within  18  months  of  the  date  of  the  termination  of  this
               Agreement,  the Company  enters into a definitive  agreement with
               respect  to (1) such  Prior  Alternative  Proposal  or any  other
               Alternative Proposal with any party or Affiliate of any party who
               made a Prior Alternative Proposal or (2) any Alternative Proposal
               with any other Person; or

          (iii)(A) this  Agreement is terminated  pursuant to Section 7.3(d) and
               (B)  within  18  months  of the date of the  termination  of this
               Agreement,  the Company  enters into a definitive  agreement with
               respect to an Alternative Proposal.

          (c)  The Company  acknowledges  that the agreements  contained in this
               Section 7.5 are an integral part of the transactions contemplated
               by this Agreement, and that, without these agreements,  Purchaser
               would not enter into this Agreement;  accordingly, if the Company
               fails  promptly to pay any amount due  pursuant  to this  Section
               7.5, and, in order to obtain such payment,  Purchaser commences a
               suit which  results in a judgment  against  the  Company  for any
               amounts set forth in this  Section  7.5,  the Company will pay to
               Purchaser its costs and expenses  (including  attorneys' fees and
               expenses) in connection with such suit, together with interest on
               the  amount of the fee at the prime  rate of  Citibank,  N.A.  in
               effect on the date such  payment was required to be made plus two
               percent.  This Section 7.5 will survive any  termination  of this
               Agreement.

          (d)  As used in  this  Agreement,  "Purchaser  Expenses"  shall  be an
               amount equal to all out-of-pocket costs and expenses of Purchaser
               and  Purchaser's   partners  incurred  in  connection  with  this
               Agreement  and  the  transactions  contemplated  hereby  and  any
               litigation associated therewith  (including,  without limitation,
               all  fees  and   expenses   payable  to   accountants,   counsel,
               consultants and due diligence  expenses,  but expressly excluding
               the costs of Purchaser's employees and Purchaser's overhead), not
               to exceed $2.5  million in the  aggregate.  "Purchaser  Expenses"
               shall  not  include  any  out-of-pocket  costs  and  expenses  of
               Purchaser   for   which    Purchaser   would   be   entitled   to
               indemnification pursuant to Article VI.

                          VIII. GENERAL PROVISIONS

          8.1  Notices.  Any notice or other communication  required to be given
               hereunder  shall be in  writing,  and sent by  reputable  courier
               service (with proof of service), by hand delivery or by facsimile
               (followed  on the same day by delivery by courier  service  (with
               proof of delivery) or by hand delivery), addressed as follows:

         If to Purchaser:

                  Explorer Holdings, L.P.
                  4200 Texas Commerce Tower West
                  2200 Ross Avenue
                  Dallas, Texas  75201
                  Attn:  William T. Cavanaugh, Jr.
                  Fax No.:  (214) 220-4949

         With copies to:

                  Jones, Day, Reavis & Pogue
                  599 Lexington Avenue
                  New York, New York 10022
                  Attn:  Thomas W. Bark
                  Fax No.:  (212) 755-7306

         If to the Company:

                  Omega Healthcare Investors, Inc.
                  900 Victors Way, Suite 350
                  Ann Arbor, Michigan  48108
                  Attn:  Susan Allene Kovach
                  Fax No.: (734) 887-0322

         With copies to:

                  Powell,  Goldstein,  Frazer & Murphy LLP 191 Peachtree Street,
                  N.E.
                  Suite 1600
                  Atlanta, Georgia 30303
                  Attn:  Rick Miller or Eliot Robinson
                  Fax No.: (404) 572-6999

or to such other  address as any party will specify by written  notice so given,
and  such  notice  will be  deemed  to have  been  delivered  as of the  date so
telecommunicated  or  personally  delivered.

          8.2  Assignment; Binding Effect. Neither this Agreement nor any of the
               rights,  interests or  obligations  hereunder will be assigned by
               any party  hereto  (whether  by  operation  of Law or  otherwise)
               without the prior written consent of the other party, except that
               Purchaser will have the right to assign to any direct or indirect
               wholly  owned  subsidiary  of  Purchaser  or to the  partners  of
               Purchaser any and all rights and  obligations of Purchaser  under
               this  Agreement,  provided,  that  any such  assignment  will not
               relieve  Purchaser  from any of its  obligations  hereunder.  Any
               assignment not granted in accordance  with the foregoing shall be
               null and void. Subject to the first sentence of this Section 8.2,
               this Agreement will be binding upon and will inure to the benefit
               of  the  parties  hereto  and  their  respective  successors  and
               assigns.  Notwithstanding anything contained in this Agreement to
               the contrary, except for the provisions of Article VI, nothing in
               this  Agreement,  expressed or implied,  is intended to confer on
               any Person  other  than the  parties  hereto or their  respective
               heirs,  successors,  executors,  administrators  and  assigns any
               rights,  remedies,  obligations or liabilities under or by reason
               of this Agreement.

          8.3  Entire Agreement.  This Agreement,  the Company Disclosure Letter
               and any documents delivered by the parties in connection herewith
               or therewith,  constitute the entire  agreement among the parties
               with respect to the subject matter hereof and supersede all prior
               agreements  and  understandings  among the parties  with  respect
               thereto,  including,  without  limitation,  any  draft  letter of
               intent with respect to the transactions contemplated herein.

          8.4  Amendment.  This Agreement may be amended by the parties  hereto,
               by action taken by their respective Boards of Directors, or other
               equivalent governing bodies, at any time before or after approval
               of matters presented to the Company  Stockholders,  but after any
               such Company  Stockholder  approval,  no  amendment  will be made
               which  by Law  requires  the  further  approval  of  the  Company
               Stockholders  without  obtaining  such  further  approval.   This
               Agreement  may not be amended  except by an instrument in writing
               signed on behalf of each of the parties hereto.

          8.5  Governing  Law. This  Agreement will be governed by and construed
               in  accordance  with the laws of the State of  Delaware,  without
               regard to its conflict of laws principles.

          8.6  Counterparts.  This  Agreement  may be  executed  by the  parties
               hereto in separate  counterparts,  each of which when so executed
               and delivered will be an original, but all such counterparts will
               together constitute one and the same instrument. Each counterpart
               may consist of a number of copies hereof each signed by less than
               all,  but  together  signed  by  all  of the  parties  hereto.  A
               facsimile  copy of a  signature  page  shall be  deemed  to be an
               original signature page.

          8.7  Headings. Headings of the Articles and Sections of this Agreement
               are for the convenience of the parties only, and will be given no
               substantive or interpretive effect whatsoever.

          8.8  Certain  Definitions/Interpretations.  (a) For  purposes  of this
               Agreement:

          (i)  An "Affiliate" of any Person means another Person that,  directly
               or indirectly,  through one or more intermediaries,  controls, is
               controlled  by,  or is under  common  control  with,  such  first
               Person;

          (ii) "Business Day" means any day other than a Saturday, Sunday or day
               on which banks in New York,  New York are  authorized or required
               by Law to close;

          (iii) "Fleet Loan Documents" means the "Loan Documents" (as defined in
               the Second Amended and Restated Loan Agreement among the Company,
               the Banks  signatory  thereto and Fleet, as agent for such Banks,
               as amended).

          (iv) "key  employee"  means any  employee  whose  current  base salary
               exceeds $100,000 per annum;

          (v)  "Knowledge"  of any Person which is not an  individual  means the
               actual   knowledge  of  any  of  such  Person's   officers  after
               reasonable inquiry

          (vi) "Person" means an individual,  corporation,  partnership, limited
               liability   company,   joint   venture,    association,    trust,
               unincorporated organization or other entity; and

          (vii) "Senior Unsecured Notes" means the Company's 7.4% and 10% senior
               unsecured notes due July 15, 2000.

          (b)  When a  reference  is  made  in  this  Agreement  to an  Article,
               Section,  Exhibit or Annex,  such reference will be to an Article
               or Section of, or an Annex or Exhibit to, this  Agreement  unless
               otherwise indicated.  Whenever the words "include," "includes" or
               "including" are used in this Agreement, they will be deemed to be
               followed by the words "without  limitation."  The words "hereof,"
               "herein" and "hereunder" and words of similar import when used in
               this Agreement will refer to this Agreement as a whole and not to
               any particular provision of this Agreement. All terms used herein
               with initial capital  letters have the meanings  ascribed to them
               herein  and all terms  defined in this  Agreement  will have such
               defined  meanings when used in any  certificate or other document
               made  or  delivered  pursuant  hereto  unless  otherwise  defined
               therein.   The  definitions   contained  in  this  Agreement  are
               applicable  to the  singular as well as the plural  forms of such
               terms and to the  masculine as well as to the feminine and neuter
               genders  of such  term.  Any  agreement,  instrument  or  statute
               defined or referred to herein or in any  agreement or  instrument
               that is referred to herein means such  agreement,  instrument  or
               statute as from time to time amended,  modified or  supplemented,
               including (in the case of agreements or instruments) by waiver or
               consent and (in the case of statutes) by succession of comparable
               successor statutes and references to all attachments  thereto and
               instruments incorporated therein. References to a Person are also
               to its permitted successors and assigns.

          8.9  Waivers.  Except as provided in this  Agreement,  no action taken
               pursuant to this  Agreement,  including  without  limitation  any
               investigation  by or on  behalf of any  party,  will be deemed to
               constitute a waiver by the party taking such action of compliance
               with any  representations,  warranties,  covenants or  agreements
               contained in this Agreement.  The waiver by any party hereto of a
               breach  of  any  provision  hereunder  will  not  operate  or  be
               construed  as a waiver of any prior or  subsequent  breach of the
               same or any other provision  hereunder.  At any time prior to the
               Closing  Date,  any party  hereto may (a) extend the time for the
               performance of any of the  obligations or other acts of the other
               parties hereto, (b) waive any inaccuracies in the representations
               and  warranties  contained  herein or in any  document  delivered
               pursuant  hereto,  and  (c)  waive  compliance  with  any  of the
               agreements or conditions  contained herein. Any such extension or
               waiver  shall be valid  only if set  forth  in an  instrument  in
               writing signed by the party or parties to be bound thereby.

          8.10 Severability.  Any term or provision of this  Agreement  which is
               invalid or  unenforceable  in any  jurisdiction  will, as to that
               jurisdiction,  be ineffective to the extent of such invalidity or
               unenforceability  without  rendering invalid or unenforceable the
               remaining terms and provisions of this Agreement or affecting the
               validity or  enforceability  of any of the terms or provisions of
               this  Agreement in any other  jurisdiction.  If any  provision of
               this Agreement is so broad as to be unenforceable,  the provision
               will be interpreted to be only so broad as is enforceable.

          8.11 Enforcement   of  Agreement.   The  parties   hereto  agree  that
               irreparable  damage  would  occur  in the  event  that any of the
               provisions of this Agreement was not performed in accordance with
               its specific terms or was otherwise  breached.  It is accordingly
               agreed that the parties  will be  entitled  to an  injunction  or
               injunctions to prevent  breaches of this Agreement and to enforce
               specifically  the  terms and  provisions  hereof,  this  being in
               addition to any other remedy to which they are entitled at law or
               in equity.

          8.12 Expenses.  Without limiting the generality or effect of any other
               provision hereof, including without limitation Section 6.1 or any
               agreement or instrument  contemplated hereby,  whether or not the
               Closing  occurs,  the Company will from time to time upon request
               by  Purchaser  promptly  reimburse  Purchaser  for all  Purchaser
               Expenses,  such reimbursement not to exceed $1.0 million prior to
               the earlier of the Closing or the termination of this Agreement.

          8.13 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 Chancery Court
               of the State of Delaware (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 a
               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 a 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 third
               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 a Delaware Court to another  jurisdiction,  (ii)
               consolidate  any such  suit,  action or  proceeding  brought in a
               Delaware  Court  with a suit,  action or  proceeding  in  another
               jurisdiction,   or  (iii)  dismiss  any  such  suit,   action  or
               proceeding  brought  in a  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 a 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.

          8.14 WAIVER OF JURY  TRIAL.  EACH OF THE  PARTIES  HERETO  IRREVOCABLY
               WAIVES  ANY AND  ALL  RIGHT  TO  TRIAL  BY  JURY  IN ANY  ACTION,
               PROCEEDING,  CLAIM OR COUNTERCLAIM,  WHETHER IN CONTRACT OR TORT,
               AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATED TO THIS
               AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

          8.15 No Strict  Construction.  The parties  hereto  have  participated
               jointly in the negotiation and drafting of this Agreement. In the
               event an  ambiguity  or  question  of  intent  or  interpretation
               arises,  this Agreement  shall be construed as if drafted jointly
               by the  parties  hereto,  and no  presumption  or burden of proof
               shall arise  favoring or  disfavoring  any party by virtue of the
               authorship of any of the provisions of this Agreement.

                                         [Remainder of page intentionally blank]
<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly  delivered on their behalf on the day and year first written
above.

                                            OMEGA HEALTHCARE INVESTORS, INC.

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

                                             EXPLORER HOLDINGS, L.P.

                                             By:  Explorer Holdings GenPar, LLC,
                                                   its General Partner

                                             By: /s/ William T. Cavanaugh
                                                 ------------------------
                                                    William T. Cavanaugh
                                                    Vice President

<PAGE>
                                                                       Exhibit A
                        OMEGA HEALTHCARE INVESTORS, INC.
                         FORM OF ARTICLES SUPPLEMENTARY
                    FOR SERIES C CONVERTIBLE PREFERRED STOCK

                  OMEGA HEALTHCARE INVESTORS,  INC., a Maryland corporation (the
"Company"), hereby certifies to the State Department of Assessments and Taxation
of Maryland that:

                  FIRST:  Pursuant to authority  contained in the charter of the
Company (the  "Charter"),  2,000,000 shares of authorized but unissued shares of
the  Company's  Preferred  Stock  have  been  duly  classified  by the  Board of
Directors of the Company (the "Board") as authorized but unissued  shares of the
Company's Series C Preferred Stock.

                  SECOND:  A  description of the Series C Preferred Stock is  as
follows:

1. Designation and Number. A series of Preferred Stock, designated the "Series C
Convertible  Preferred  Stock"  (the  "Series  C  Preferred  Stock"),  is hereby
established.  The  number of shares of the  Series C  Preferred  Stock  shall be
2,000,000  subject  to  automatic  increase  in the event the  Company  pays any
dividend in shares of Series C Preferred  Stock in accordance with Section 4.

2.Maturity.  The Series C Preferred  Stock has no stated  maturity.

3. Rank. The Series C Preferred  Stock will, with respect to dividend rights and
rights upon liquidation,  dissolution  or winding up of the Company,  rank (i)
senior to all
classes or series of Common Stock of the Company,  and to all equity  securities
ranking junior to the Series C Preferred  Stock with respect to dividend  rights
or rights upon liquidation,  dissolution or winding up of the Company, (ii) on a
parity with the Series A Preferred Stock, Series B Preferred Stock and all other
equity securities issued by the Company the terms of which specifically  provide
that such equity  securities  rank on a parity with the Series C Preferred Stock
with  respect to dividend  rights or rights  upon  liquidation,  dissolution  or
winding  up of the  Company,  and  (iii)  junior  to  all  existing  and  future
indebtedness  of the  Company.  The term  "equity  securities"  does not include
convertible  debt  securities,  which will rank senior to the Series C Preferred
Stock  prior to  conversion.

4. Dividends.  (a) Except as set forth in Section 4(b), holders of shares of the
Series C Preferred Stock are entitled to receive, out of funds legally available
for the payment of dividends,  preferential  cumulative dividends at the greater
of (i) 10% per annum of the  Liquidation  Preference per share  (equivalent to a
fixed annual amount of $10.00 per share)and  (ii) the amount per share  declared
or paid or set aside for payment  based on the number of shares of Common  Stock
into which  such  shares of Series C  Preferred  Stock are then  convertible  in
accordance  with  Section  8  (disregarding  Section  8.17  for  such  purpose).
Dividends  on each share of the Series C  Preferred  Stock  shall be  cumulative
commencing  from the date of issuance of such share of Series C Preferred  Stock
and shall be payable in  arrears  for each  period  ended July 31,  October  31,
January 31 and April 30 (each a "Dividend  Period")on  or before the 15th day of
August, November,  February and May of each year, or, if not a Business Day, the
next  succeeding  Business  Day (each,  a "Dividend  Payment  Date").  The first
dividend  will be  paid  on  November  15,  2000,  with  respect  to the  period
commencing on the date of first issuance of Series C Preferred Stock (the "Issue
Date") and ending on October 31,  2000.  Any  dividend  payable on shares of the
Series C Preferred  Stock for any partial  period will be computed  based on the
actual  number  of days  elapsed  (commencing  with  and  including  the date of
issuance of such shares) and on the basis of a 360-day year consisting of twelve
30-day months.  Dividends will be payable to holders of record as they appear in
the stock  records of the  Company at the close of  business  on the  applicable
record date,  which shall be the last day of the preceding  calendar month prior
to the applicable  Dividend Payment Date or on such other date designated by the
Board  that is not more  than 30 nor less  than 10 days  prior to such  Dividend
Payment Date (each, a "Dividend Record Date").

     (b) For any Dividend  Period  ending  prior to February 1, 2001,  dividends
will be payable,  at the  election of the Board,  (i) by the  issuance as of the
relevant Dividend Payment Date of additional shares of fully paid, nonassessable
Series C Preferred Stock having an aggregate liquidation preference equal to the
amount of such accrued  dividends or (ii) in cash.  In the event that  dividends
are declared and paid pursuant to clause (i), (A) such  dividends will be deemed
paid in full and will not accumulate and (B) the number of authorized  shares of
Series C Preferred Stock will be deemed, without further action, to be increased
by the  number  of shares so  issued.  The  Company  will  deliver  certificates
representing  shares of Series C Preferred  issued pursuant to this Section 4(b)
promptly  after the relevant  Dividend  Payment  Date.  For any Dividend  Period
ending after February 1, 2001, dividends will be payable in cash.

     (c) No dividends on shares of Series C Preferred Stock shall be declared by
the Board or paid or set apart for  payment  by the  Company at such time as the
terms and  provisions of any  agreement of the Company,  including any agreement
relating to its  indebtedness,  prohibits such  declaration,  payment or setting
apart for payment or provides  that such  declaration,  payment or setting apart
for payment would  constitute a breach  thereof or a default  thereunder,  or if
such declaration or payment shall be restricted or prohibited by law.

     (d)  Notwithstanding  the  foregoing,  dividends  on the Series C Preferred
Stock will accrue whether or not the Company has earnings,  whether or not there
are funds legally available for the payment of such dividends and whether or not
such  dividends  are  declared.  Accrued  but unpaid  dividends  on the Series C
Preferred  Stock will not bear  interest  and  holders of the Series C Preferred
Stock will not be entitled  to any  distributions  in excess of full  cumulative
distributions  described  above.  Except as set forth in the next  sentence,  no
dividends will be declared or paid or set apart for payment on any capital stock
of the Company or any other series of Preferred Stock ranking,  as to dividends,
on a parity  with or  junior  to the  Series C  Preferred  Stock  (other  than a
dividend in shares of the Company's Common Stock or in shares of any other class
of stock ranking junior to the Series C Preferred Stock as to dividends and upon
liquidation)  for any  period  unless  full  cumulative  dividends  have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment  thereof is set apart for such  payment on the Series C Preferred  Stock
for all  past  dividend  periods  and the then  current  dividend  period.  When
dividends are not paid in full (or a sum sufficient for such full payment is not
so set  apart)  upon the  Series C  Preferred  Stock and the shares of any other
series of Preferred  Stock ranking on a parity as to dividends with the Series C
Preferred  Stock,  all dividends  declared upon the Series C Preferred Stock and
any other series of Preferred Stock ranking on a parity as to dividends with the
Series C  Preferred  Stock  shall be  declared  pro rata so that the  amount  of
dividends  declared per share of Series C Preferred  Stock and such other series
of  Preferred  Stock  shall in all cases  bear to each other the same ratio that
accrued  dividends  per share on the  Series C  Preferred  Stock and such  other
series of  Preferred  Stock  (which  shall not include any accrual in respect of
unpaid  dividends for prior dividend  periods if such  Preferred  Stock does not
have a cumulative dividend) bear to each other.

(e) Except as  provided in the  immediately  preceding  paragraph,
unless full  cumulative  dividends on the Series C Preferred  Stock have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment  thereof is set apart for payment for all past dividend  periods and the
then current dividend period, no dividends (other than in shares of Common Stock
or other shares of capital stock ranking junior to the Series C Preferred  Stock
as to dividends and upon liquidation) shall be declared or paid or set aside for
payment  nor shall any other  distribution  be  declared or made upon the Common
Stock,  or any other  capital  stock of the  Company  ranking  junior to or on a
parity with the Series C Preferred  Stock as to dividends  or upon  liquidation,
nor shall any shares of Common  Stock,  or any other shares of capital  stock of
the Company  ranking junior to or on a parity with the Series C Preferred  Stock
as to dividends or upon liquidation be redeemed, purchased or otherwise acquired
for any  consideration (or any moneys be paid to or made available for a sinking
fund for the redemption of any such shares) by the Company (except by conversion
into or exchange for other  capital stock of the Company  ranking  junior to the
Series C Preferred  Stock as to dividends and upon  liquidation or redemption or
for the  purpose of  preserving  the  Company's  qualification  as a real estate
investment trust under the Internal  Revenue Code of 1986, as amended).  Holders
of shares of the Series C Preferred Stock shall not be entitled to any dividend,
whether  payable  in cash,  property  or stock,  in  excess  of full  cumulative
dividends  on the Series C  Preferred  Stock as  provided  above.  Any  dividend
payment  made on shares of the Series C Preferred  Stock shall first be credited
against the earliest accrued but unpaid dividend due with respect to such shares
which  remains  payable.

5.  Liquidation  Preference.  Upon any  voluntary  or  involuntary  liquidation,
dissolution  or winding up of the affairs of the Company,  the holders of shares
of Series C  Preferred  Stock are  entitled  to be paid out of the assets of the
Company legally  available for  distribution to its shareholders the Liquidation
Preference (as defined in Section 10) before any  distribution of assets is made
to holders of Common Stock or any other class or series of capital  stock of the
Company  that ranks  junior to the Series C  Preferred  Stock as to  liquidation
rights.  The Company will promptly  provide to the holders of Series C Preferred
Stock  written  notice  of any  event  triggering  the  right  to  receive  such
Liquidation  Preference.  After  payment of the full  amount of the  Liquidation
Preference,  plus any accrued and unpaid  dividends to which they are  entitled,
the  holders of Series C  Preferred  Stock will have no right or claim to any of
the remaining assets of the Company.  The consolidation or merger of the Company
with or into any other corporation,  trust or entity or of any other corporation
with or into the  Company in a manner that  constitutes  a Change in Control (as
defined in Section 10), or the sale, lease or conveyance of all or substantially
all of the property or business of the Company,  shall be deemed to constitute a
liquidation, dissolution or winding up of the Company.

In determining  whether a distribution (other than upon voluntary or involuntary
liquidation) by dividend,  redemption or other acquisition of shares of stock of
the Company or otherwise is permitted under the Maryland General Corporation Law
(the  "MGCL"),  no effect  shall be given to amounts that would be needed if the
Company  would be  dissolved  at the time of the  distribution,  to satisfy  the
preferential  rights  upon  distribution  of  holders  of shares of stock of the
Company  whose  preferential  rights  upon  distribution  are  superior to those
receiving the distribution.

6. Redemption.  The Series C Preferred Stock is not redeemable subject, however,
to the provisions in paragraph (9) of these Articles Supplementary.

7. Voting Rights.  (a) Holders of the Series C Preferred Stock will not have any
voting rights, except as set forth below. Notwithstanding the provisions of this
Section 7, no holder of Series C  Preferred  Stock shall be entitled to vote any
shares of Series C Preferred  Stock that would  result in such holder and any of
its  affiliates  controlled  by it or any group (as such term is used in Section
13(d)(3) of the Exchange  Act) of which any of them is a member voting in excess
of 49.9% of the then-outstanding Voting Stock, except in any separate class vote
consisting solely of any one or more classes of preferred stock.

(b) Each  holder of shares of Series C  Preferred  Stock  shall be  entitled  to
notice of any  stockholder  meeting in accordance with the bylaws of the Company
(the  "Bylaws"),  shall be  entitled to a number of votes equal to the number of
shares of Common Stock into which the shares of Series C Preferred Stock held by
such holder could then be converted  pursuant to Section 8 (giving effect to the
limitations on conversion in Section 8.17),  shall have voting rights and powers
equal to the voting rights and powers of the holders of Common Stock,  and shall
vote  together  as a single  class  with  holders  of  Common  Stock,  except as
expressly  required by law.  Fractional  votes shall not be  permitted,  and any
fractional  voting  rights  resulting  from the right of any  holder of Series C
Preferred Stock to vote on an as converted  basis (after  aggregating the shares
into which all shares of Series C  Preferred  Stock  held such  holder  could be
converted)  shall be rounded to the nearest  whole number (with  one-half  being
rounded upward).  The holders of Series C Preferred Stock shall have no separate
class or series  vote on any matter  except as  expressly  required by law or as
otherwise set forth in these Articles Supplementary.

(c)  Whenever  dividends  on any shares of Series C Preferred  Stock shall be in
arrears for four or more Dividend Periods (a "Preferred Dividend Default"),  the
number  of  directors  then  constituting  the  Board  shall  be  increased,  if
necessary, by such number that would, if such number were added to the number of
directors  already  designated  by the holders of the Series C  Preferred  Stock
(whether  pursuant to the  Stockholders  Agreement or  otherwise),  constitute a
majority of the Board (if not already increased by reason of a similar arrearage
with respect to any Parity Preferred (as hereinafter  defined)).  The holders of
such shares of Series C Preferred  Stock (voting  separately as a class with all
other series of Preferred  Stock ranking on a parity with the Series C Preferred
Stock as to dividends or upon liquidation  ("Parity  Preferred") upon which like
voting rights have been conferred and are exercisable)  will be entitled to vote
separately as a class, in order to fill the vacancies  thereby created,  for the
election of such additional number directors of the Company determined  pursuant
to the first  sentence of this Section  7(c) (the  "Additional  Preferred  Stock
Directors") at a special meeting called by the holders of record of at least 20%
of the Series C Preferred  Stock or the holders of record of at least 20% of any
series of Parity  Preferred so in arrears  (unless such request is received less
than 90 days before the date fixed for the next annual or special meeting of the
shareholders)  or at the  next  annual  meeting  of  shareholders,  and at  each
subsequent  annual  meeting  until all dividends  accumulated  on such shares of
Series C Preferred Stock and Parity  Preferred for the past dividend periods and
the dividend for the then current  dividend period shall have been fully paid or
declared and a sum  sufficient  for the payment  thereof set aside.  In any such
election for additional  directors,  each holder of shares of Series C Preferred
Stock or share of Parity  Preferred  will be entitled to one vote for each $1.00
amount of Liquidation  Preference  attributable to the aggregate  number of such
shares  held by such  holder.  In the event the  directors  of the  Company  are
divided into classes,  each such vacancy shall be apportioned  among the classes
of directors to prevent  stacking in any one class and to insure that the number
of directors in each of the classes of directors, are as equal as possible. Each
Additional  Preferred  Stock Director,  as a qualification  for election as such
(and  regardless  of how  elected)  shall  submit to the Board a duly  executed,
valid,  binding and  enforceable  letter of  resignation  from the Board,  to be
effective  upon the date upon which all dividends  accumulated on such shares of
Series C Preferred Stock and Parity  Preferred for the past dividend periods and
the dividend for the then current  dividend period shall have been fully paid or
declared  and a sum  sufficient  for the payment  thereof set aside for payment,
whereupon  the terms of office of all persons  elected as  Additional  Preferred
Stock  Directors  by the holders of the Series C Preferred  Stock and any Parity
Preferred  shall,  upon  the  effectiveness  of  their  respective   letters  of
resignation,  forthwith terminate, and the number of directors then constituting
the Board  shall be reduced  accordingly.  A quorum for any such  meeting  shall
exist if at least a majority  of the  outstanding  shares of Series C  Preferred
Stock and shares of Parity  Preferred  upon which like  voting  rights have been
conferred  and are  exercisable  are  represented  in person or by proxy at such
meeting.  Such  Additional  Preferred  Stock Directors shall be elected upon the
affirmative  vote of a plurality  of the shares of Series C Preferred  Stock and
such Parity Preferred  present and voting in person or by proxy at a duly called
and held  meeting  at which a quorum  is  present.  If and when all  accumulated
dividends and the dividend for the then current  dividend period on the Series C
Preferred  Stock shall have been paid in full or declared  and a sum  sufficient
for the payment  thereof in full shall have been set aside the  holders  thereof
shall be divested of the foregoing  voting  rights  (subject to revesting in the
event of each and every  Preferred  Dividend  Default)  and, if all  accumulated
dividends and the dividend for the then current  dividend  period have been paid
in full or sufficient  funds shall have been set aside,  on all series of Parity
Preferred upon which like voting rights have been conferred and are exercisable,
the term of office of each Additional  Preferred Stock Director so elected shall
terminate.  Any Additional  Preferred  Stock Director may be removed at any time
with or without  cause by, and shall not be removed  otherwise  than by the vote
of, the holders of record of a majority of the outstanding  shares of the Series
C  Preferred  Stock when they have the voting  rights  described  above  (voting
separately as a class with all series of Parity Preferred upon which like voting
rights have been conferred and are exercisable). So long as a Preferred Dividend
Default shall  continue,  any vacancy in the office of an  Additional  Preferred
Stock  Director  may be filled by written  consent of the  Additional  Preferred
Stock Directors  remaining in office, or if none remains in office, by a vote of
the  holders  of  record of a  majority  of the  outstanding  shares of Series C
Preferred  Stock  when they  have the  voting  rights  described  above  (voting
separately as a class with all series of Parity Preferred upon which like voting
rights have been conferred and are exercisable).  The Additional Preferred Stock
Directors shall each be entitled to one vote per director on any matter.  (d) So
long as any shares of Series C Preferred Stock remain  outstanding,  the Company
will not,  without  the  affirmative  vote or consent of the holders of at least
two-thirds  of the shares of the Series C  Preferred  Stock  outstanding  at the
time,  given in person or by proxy,  either in writing  or at a meeting  (voting
separately  as a class  together  with any  other  classes  of  preferred  stock
adversely affected in the same manner), amend, alter or repeal the provisions of
the Charter or the Articles Supplementary,  whether by merger,  consolidation or
otherwise (an  "Event"),  so as to  materially  and adversely  affect any right,
preference,  privilege  or voting  power of the Series C Preferred  Stock or the
holders thereof,  including  without  limitation,  the creation of any series of
Preferred  Stock ranking senior to the Series C Preferred  Stock with respect to
payment of dividends or the distribution of assets upon liquidation, dissolution
or winding up, but not including the creation or issuance of Parity Preferred.
(e) Except as expressly  stated in these  Articles  Supplementary,  the Series C
Preferred  Stock shall not have any relative,  participating,  optional or other
special  voting  rights and powers and the consent of the holders  thereof shall
not be  required  for the  taking of any  corporate  action,  including  but not
limited to, any merger or  consolidation  involving the Corporation or a sale of
all or substantially  all of the assets of the Corporation,  irrespective of the
effect  that  such  merger,  consolidation  or sale  may have  upon the  rights,
preferences or voting power of the holders of the Series C Preferred  Stock.

8. Conversion.  The holders of Series C Preferred Stock shall have the following
conversion rights with respect to such shares:

8.1 Optional  Conversion.  Subject to the  limitations  on conversion in Section
8.17, each share of Series C Preferred  Stock  (including all accrued and unpaid
dividends thereon, to the extent declared) may be converted,  at any time at the
option of the holder thereof, into fully paid and nonassessable shares of Common
Stock (and any other securities or property  expressly  provided in this Section
8) as set forth in this Section 8.

8.2 Conversion Price.  Subject to the limitations on conversion in Section 8.17,
each share of Series C  Preferred  Stock may be  converted  into such  number of
shares of Common  Stock as is equal to the  quotient  obtained by  dividing  the
Original Issue Price for such share by the  Conversion  Price (as defined below)
in effect at the time of conversion.  The Conversion  Price  initially  shall be
equal to the $6.25 per share of Common Stock, subject to adjustment from time to
time as provided below (the "Conversion Price").

8.3 Mechanics of Conversion. A holder of Series C Preferred Stock who desires to
convert  the  same  into  Common  Stock  shall   surrender  the  certificate  or
certificates  representing  such  shares,  duly  endorsed,  at the office of the
Company or at the office of any transfer agent for the Series C Preferred  Stock
or Common  Stock,  and shall give  written  notice to the Company at such office
that such holder  elects to convert the same and shall  state  therein  both the
number of shares of Series C  Preferred  Stock being  converted  and the name or
names in which the holder  wishes the  certificate  or  certificates  for Common
Stock to be  issued.  The  Company  shall,  as soon as  practicable  after  such
surrender,  issue and  deliver at such office to such  holder a  certificate  or
certificates  representing  the  number of shares of Common  Stock to which such
holder is entitled and a new certificate or certificates representing the number
of  shares  of  Series C  Preferred  Stock  represented  by the  certificate  or
certificates  surrendered  by the holder  minus the number of Series C Preferred
Stock so converted by the holder.  Such conversion  shall be deemed to have been
made immediately prior to the close of business on the date of such surrender of
the certificate  representing the Series C Preferred Stock to be converted,  and
the Person  entitled to receive the Common Stock  issuable upon such  conversion
shall be treated for all  purposes as the record  holder of such Common Stock on
such date.  Any Series C Preferred  Stock  converted  into Common Stock shall be
retired and may not be reissued by the Company.

8.4 Adjustment for Stock Splits and Combinations.  If the Company at any time or
from time to time after the Issue Date effects a subdivision of the  outstanding
Common  Stock,  the  Conversion  Price then in effect  immediately  before  that
subdivision shall be proportionately  decreased, and conversely,  if the Company
at any time or from time to time after the Issue Date  combines the  outstanding
Common  Stock into a smaller  number of  shares,  the  Conversion  Price then in
effect immediately  before the combination shall be  proportionately  increased.
Any  adjustment  under this Section 8.4 shall  become  effective at the close of
business on the date such subdivision or combination becomes effective.

8.5 Adjustment for Certain  Dividends and  Distributions.  If the Company at any
time or from time to time after the Issue Date makes, or fixes a record date for
the determination of holders of Common Stock entitled to receive,  a dividend or
other  distribution  payable in additional  Common Stock,  then and in each such
event the  Conversion  Price then in effect shall be decreased as of the time of
such  issuance  or, in the event such record  date is fixed,  as of the close of
business on such record date, by multiplying the Conversion Price then in effect
by a fraction (1) the numerator of which is the total number of shares of Common
Stock issued and outstanding  immediately  prior to the time of such issuance or
the close of business  on such record  date,  and (2) the  denominator  of which
shall be the total  number of shares of  Common  Stock  issued  and  outstanding
immediately  prior to the time of such issuance or the close of business on such
record  date plus the number of shares of Common  Stock  issuable  in payment of
such dividend or distribution;  provided,  however,  that if such record date is
fixed and such dividend is not fully paid or if such  distribution  is not fully
made on the date  fixed  therefor,  the  Conversion  Price  shall be  recomputed
accordingly  as of the close of business on such record date and  thereafter the
Conversion  Price shall be adjusted  pursuant to this Section 8.5 as of the time
of actual payment of such dividends or distributions.

8.6 Adjustments for Other Dividends and Distributions.  In the event the Company
at any time or from time to time after the Issue Date  makes,  or fixes a record
date for the  determination  of holders of Common Stock  entitled to receive,  a
dividend or other  distribution  payable in securities of the Company other than
Common  Stock or other  assets or property of the Company  (other than  ordinary
cash  dividends  and any special  dividends  necessary to preserve the Company's
qualification as a REIT), then and in each such event provision shall be made so
that the  holders of Series C  Preferred  Stock shall  receive  upon  conversion
thereof,  in  addition  to the  number  of shares  of  Common  Stock  receivable
thereupon,  the amount of  securities of the Company or other assets or property
of the Company which they would have received had their Series C Preferred Stock
been  converted  into  Common  Stock  on the  date of such  event  and had  they
thereafter,  during the period from the date of such event to and  including the
conversion  date,  retained  such  securities or other assets or property of the
Company receivable by them as aforesaid during such period, subject to all other
adjustments  called for during such period  under this Section 8 with respect to
the rights of the holders of the Series C Preferred Stock.

8.7 Adjustment for  Reclassification,  Exchange and  Substitution.  In the event
that at any time or from time to time after the Issue Date,  the Common Stock or
other securities as provided herein issuable upon the conversion of the Series C
Preferred Stock are changed into the same or a different number of shares of any
class or classes  of stock,  whether by  recapitalization,  reclassification  or
otherwise  (other than a subdivision  or combination of shares or stock dividend
or a  reorganization,  merger,  consolidation  or sale of assets,  provided  for
elsewhere in this Section 8), then and in any such event each holder of Series C
Preferred  Stock  shall  have the right  thereafter  to  convert  such  Series C
Preferred  Stock  into the kind and  amount of stock and  other  securities  and
property  receivable  upon  such  recapitalization,  reclassification  or  other
change,  by holders of Common Stock or other  securities as provided herein into
which  such  shares of  Series C  Preferred  Stock  could  have  been  converted
immediately  prior to such  recapitalization,  reclassification  or change,  all
subject to further adjustment as provided herein.

8.8 Reorganizations,  Mergers,  Consolidations or Transfers of Assets. If at any
time or from time to time after the Issue Date there is a capital reorganization
of the Common Stock or other  securities  issuable  upon  conversion of Series C
Preferred Stock as provided herein (other than a recapitalization,  subdivision,
combination,  reclassification  or exchange of shares  provided for elsewhere in
this Section 8) or a merger or consolidation or statutory binding share exchange
of  the  Company  with  or  into  another  Person,  or  the  transfer  of all or
substantially all of the Company's properties and assets to any other person and
such  capital  reorganization,   merger,  consolidation  or  transfer  does  not
constitute a Change in Control, then, as a part of such capital  reorganization,
merger,  consolidation,  exchange or  transfer  (subject  to the  provisions  of
Section  9),  provision  shall  be made so that  the  holders  of the  Series  C
Preferred  Stock shall  thereafter  be entitled to receive  upon  conversion  of
Series C Preferred Stock the number of shares of stock or other securities, cash
or property to which a holder of the number of Common Stock or other  securities
deliverable   upon   conversion   would  have  been  entitled  on  such  capital
reorganization,  merger, consolidation,  exchange or transfer. In any such case,
appropriate  adjustment  shall be made in the  application  of the provisions of
this  Section 8 with  respect  to the  rights  of the  holders  of the  Series C
Preferred  Stock  after  the  capital  reorganization,   merger,  consolidation,
exchange or transfer to the end that the provisions of this Section 8 (including
adjustment  of the  Conversion  Price  then in effect  and the  number of shares
receivable upon conversion of the Series C Preferred  Stock) shall be applicable
after that event and be as nearly equivalent as may be practicable.

8.9 Sale of Shares Below Fair Market  Value.  (a) If at any time or from time to
time after the Issue  Date,  the  Company  issues or sells,  or is deemed by the
express  provisions of this  subsection  (i) to have issued or sold,  Additional
Common Stock (as defined below),  other than as a dividend or other distribution
on any class of stock as  provided  in  Section  8.5 above and other than upon a
subdivision or combination of Common Stock as provided in Section 8.4 above, for
an Effective Price (as defined below) less than the Fair Market Value,  then and
in each such case the then existing Conversion Price shall be reduced, as of the
opening of business on the date of such issue or sale, to a price  determined by
multiplying that Conversion Price by a fraction (i) the numerator of which shall
be equal to the sum of (A) the  number  of shares of  Common  Stock  issued  and
outstanding at the close of business on the Business Day  immediately  preceding
the date of such issue or sale,  (B) the number of shares of Common  Stock which
the aggregate  consideration  received (or by the express  provisions  hereof is
deemed to have been  received)  by the Company for the total number of shares of
Additional  Common  Stock so issued or sold would  purchase  at such Fair Market
Value,  (C) the  number of shares of Common  Stock  into  which all  outstanding
Series C  Preferred  Stock  are  convertible  at the  close of  business  on the
Business Day  immediately  preceding the date of such issuance or sale,  and (D)
the number of shares of Common Stock  underlying all Convertible  Securities (as
defined  below)  at the  close  of  business  on the  Business  Day  immediately
preceding  the date of such  issue or sale,  and (ii) the  denominator  of which
shall be equal to the sum of (A) the number of shares of Common Stock issued and
outstanding  at the close of business on the date of such issuance or sale after
giving  effect to such  issuance or sale of  Additional  Common  Stock,  (B) the
number of shares of Common Stock into which all  outstanding  Series C Preferred
Stock are  convertible at the close of business on the Business Day  immediately
preceding  the date of such  issuance  or sale,  and (C) the number of shares of
Common Stock  underlying all Convertible  Securities at the close of business on
the Business Day immediately preceding the date of such issuance or sale.

     (b) For the purpose of making any  adjustment  required  under this Section
8.9, the consideration for any issue or sale of securities shall be deemed to be
(A) to the extent it  consists of cash,  equal to the gross  amount paid in such
issuance or sale,  (B) to the extent it  consists  of property  other than cash,
equal to the Fair Market Value of that  property,  and (C) if Additional  Common
Stock,  Convertible  Securities  (as  defined  below) or rights  or  options  to
purchase either Additional Common Stock or Convertible  Securities are issued or
sold  together  with other  stock,  securities  or assets of the  Company  for a
consideration  which covers both, that portion of the  consideration so received
that is determined in good faith by the Board to be allocable to such Additional
Common Stock, Convertible Securities or rights or options.

     (c) For the purpose of the  adjustment  required under this Section 8.9, if
the Company  issues or sells any rights or options for the purchase of, or stock
or  other  securities  convertible  into or  exchangeable  or  exercisable  for,
Additional  Common Stock (such  convertible or exchangeable or exercisable stock
or securities being hereinafter referred to as "Convertible  Securities") and if
the Effective Price of such Additional Common Stock is less than the Fair Market
Value,  then in each case the Company  shall be deemed to have (i) issued at the
time of the  issuance of such rights or options or  Convertible  Securities  the
number of shares of Additional  Common Stock issuable upon exercise,  conversion
or exchange  thereof  irrespective of whether the holders thereof have the fully
vested legal right to exercise,  convert or exchange the Convertible  Securities
for Additional  Common Stock and (ii) received as consideration for the issuance
of such  Additional  Common  Stock an amount  equal to the  total  amount of the
consideration,  if any,  received by the Company for the issuance of such rights
or  options  or  Convertible  Securities,  plus,  in the case of such  rights or
options, the consideration,  if any, payable to the Company upon the exercise of
such  rights  or  options,  plus,  in the case of  Convertible  Securities,  the
consideration,  if any,  payable to the Company (other than by  cancellation  of
liabilities or obligations  evidenced by such  Convertible  Securities) upon the
exercise,   conversion  or  exchange  thereof.  No  further  adjustment  of  the
Conversion  Price,  as adjusted  upon the  issuance of such  rights,  options or
Convertible  Securities,  shall be made as a result of the  actual  issuance  of
Additional  Common  Stock on the  exercise  of any such rights or options or the
conversion or exchange of any such Convertible Securities. If any such rights or
options  or the  conversion  or  exchange  privilege  represented  by  any  such
Convertible   Securities  shall  expire  without  having  been  exercised,   the
Conversion  Price as  adjusted  upon the  issuance  of such  rights,  options or
Convertible  Securities  shall be readjusted to the Conversion Price which would
have  been in effect  had an  adjustment  been  made on the basis  that the only
shares of Additional Common Stock so issued were the shares of Additional Common
Stock, if any, actually issued or sold on the exercise of such rights or options
or rights of conversion  or exchange of such  Convertible  Securities,  and such
shares  of  Additional  Common  Stock,  if any,  were  issued  or  sold  for the
consideration  actually  received by the Company  upon such  exercise,  plus the
consideration,  if any, actually received by the Company for the granting of the
rights or options whether or not exercised,  plus the consideration received for
issuing or selling the Convertible  Securities  actually converted or exchanged,
plus the consideration,  if any, actually received by the Company (other than by
cancellation  of  liabilities  or  obligations  evidenced  by  such  Convertible
Securities) on the conversion or exchange of such Convertible Securities.

     (d)  "Additional  Common  Stock"  shall  mean all  Common  Stock  issued or
issuable  by the  Company  after the Issue  Date,  whether  or not  subsequently
reacquired  or retired by the  Company,  other than (i) Common  Stock  issued or
issuable  upon  conversion  of, or as a dividend on, any  sub-series of Series C
Preferred Stock,  (ii) Common Stock issued or issuable  pursuant to any employee
benefit plan or similar plan or arrangement intended to provide compensation and
other benefits to officers, directors,  employees and consultants of the Company
provided that such plans and any grants or awards  thereunder have been approved
by the Board or a committee  thereof,  (iii) securities issued by the Company in
payment of a purchase  price to the seller or any Person who  beneficially  owns
equity  securities of such seller for any  acquisition  of assets or a business,
which acquisition is approved by the Board, or pursuant to the Additional Equity
Financing (as defined in the Investment  Agreement dated as of May 11, 2000 (the
"Investment  Agreement"),  by  and  between  Explorer  Holdings,  L.P.  and  the
Company), and (iv) securities issued pursuant to the Rights Offering (as defined
in Exhibit B to the Investment  Agreement).  The "Effective Price" of Additional
Common Stock shall mean the quotient  determined by dividing the total number of
shares of Additional  Common Stock issued or sold, or deemed to have been issued
or sold by the Company, by the aggregate  consideration  received,  or deemed to
have been received,  by the Company for such Additional  Common Stock. The share
numbers in this  Section  8.9(d) shall be  appropriately  adjusted for any stock
dividends,  combinations,  splits, reverse splits, recapitalizations and similar
events affecting the securities of the Company.

8.10 Certificate of Adjustment. In each case of an adjustment or readjustment of
the Conversion Price or the number of shares of Common Stock or other securities
issuable upon conversion of the Series C Preferred  Stock,  the Company,  at its
expense,  shall cause the Chief Financial Officer of the Company to compute such
adjustment or readjustment in accordance with the provisions  hereof and prepare
a  certificate  showing such  adjustment  or  readjustment,  and shall mail such
certificate,  by first class mail, postage prepaid, to each registered holder of
the Series C Preferred  Stock at the holder's  address as shown in the Company's
books. The certificate shall set forth such adjustment or readjustment,  showing
in detail  the facts  upon  which  such  adjustment  or  readjustment  is based,
including a statement of (1) the consideration received or deemed to be received
by the Company for any Additional  Common Stock issued or sold or deemed to have
been issued or sold, (2) the Conversion Price in effect immediately prior to the
occurrence of the event giving rise to such adjustment, (3) the number of shares
of  Additional  Common  Stock  and (4) the type  and  amount,  if any,  of other
property  which at the time would be received  upon  conversion  of the Series C
Preferred Stock.

8.11 Notices of Record Date.  In the event of (i) any taking by the Company of a
record of the holders of any class of securities  for the purpose of determining
the  holders  thereof  who  are  entitled  to  receive  any  dividend  or  other
distribution,   or  (ii)  any  capital   reorganization  of  the  Company,   any
reclassification or  recapitalization  of the capital stock of the Company,  any
merger or  consolidation  of the Company with or into any other  entity,  or any
transfer of all or  substantially  all of the assets of the Company to any other
person or any voluntary or involuntary dissolution, liquidation or winding up of
the Company,  the Company shall mail to each holder of Series C Preferred  Stock
at  least  ten  days  prior  to the  record  date  specified  therein,  a notice
specifying  (1) the date on which any such record is to be taken for the purpose
of  such  dividend  or  distribution  and a  description  of  such  dividend  or
distribution,  (2) the date on which any such reorganization,  reclassification,
transfer,  consolidation,  merger,  dissolution,  liquidation  or  winding up is
expected to become effective,  and (3) the date, if any, that is to be fixed, as
to when the  holders of record of Common  Stock (or other  securities)  shall be
entitled to exchange their Common Stock (or other  securities) for securities or
other property deliverable upon such reorganization, reclassification, transfer,
consolidation, merger, dissolution, liquidation or winding up.

8.12  Fractional  Shares.  No fractional  shares of Common Stock shall be issued
upon conversion of Series C Preferred  Stock. In lieu of any fractional share to
which the holder would  otherwise be entitled,  the Company shall pay cash equal
to the product of such fraction multiplied by the Fair Market Value of one share
of Common Stock on the date of conversion.

8.13  Reservation  of Stock Issuable Upon  Conversion.  The Company shall at all
times  reserve and keep  available  out of its  authorized  but unissued  Common
Stock,  solely  for the  purpose of  effecting  the  conversion  of the Series C
Preferred Stock, such number of shares of its Common Stock and other securities,
if any, issuable upon conversion  thereof as expressly  provided in Section 8 as
shall  from  time  to  time  be  sufficient  to  effect  the  conversion  of all
outstanding Series C Preferred Stock.

8.14 Notices.  Any notice required or permitted by this Section 8 to be given to
a holder of Series C Preferred  Stock or to the Company  shall be in writing and
be deemed  given upon the earlier of actual  receipt or five days after the same
has been  deposited in the United States mail, by certified or registered  mail,
return receipt requested,  postage prepaid,  and addressed (i) to each holder of
record at the address of such holder  appearing on the books of the Company,  or
(ii) to the  Company at its  registered  office,  or (iii) to the Company or any
holder,  at any other address  specified in a written  notice given to the other
for the giving of notice.

8.15  Payment of Taxes.  The Company  will pay all taxes (other than taxes based
upon income) and other governmental  charges that may be imposed with respect to
the issue and  delivery of Common  Stock upon  conversion  of Series C Preferred
Stock,  including  without  limitation  any  tax  or  other  charge  imposed  in
connection with the issue and delivery of Common Stock or other  securities,  if
any,  issuable upon conversion  thereof as expressly  provided in Section 8 in a
name other than that in which the Series C  Preferred  Stock so  converted  were
registered.

8.16  Cancellation  of Shares.  Any shares of Series C Preferred Stock which are
converted in  accordance  with Section 8 or which are redeemed,  repurchased  or
otherwise acquired by the Company, shall be canceled and added to the authorized
but  undesignated  Preferred  Stock of the  Company but shall not be reissued as
Series C Preferred Stock.

8.17 Limitations on Conversions.  Notwithstanding the provisions of this Section
8, no holder of Series C Preferred  Stock shall be permitted to convert a number
of its shares of Series C Preferred  Stock which would result in such holder and
its  Affiliates  or any group (as such term is used in Section  13(d)(3)  of the
Exchange  Act) of which  any of them is a member  having  beneficial  ownership,
after   giving   effect  to  such   conversion,   of  more  than  49.9%  of  the
then-outstanding Voting Stock.

9.  Restrictions  on Ownership  and Transfer.  Once there is a completed  public
offering of the Series C Preferred Stock, if the Board shall, at any time and in
good faith, be of the opinion that actual or constructive  ownership of at least
9.9% or more of the value of the outstanding capital stock of the Company has or
may  become  concentrated  in the hands of one owner,  the Board  shall have the
power (i) by means  deemed  equitable  by the  Board,  and  pursuant  to written
notice,  to call for the purchase  from any  shareholder  of the  corporation  a
number of shares of Series C Preferred Stock  sufficient,  in the opinion of the
Board, to maintain or bring the direct or indirect  ownership of such beneficial
owner to no more than 9.9% of the value of the outstanding  capital stock of the
corporation,  and (ii) to  refuse  to  transfer  or  issue  shares  of  Series C
Preferred Stock to any person whose acquisition of such Series C Preferred Stock
would, in the opinion of the Board,  result in the direct or indirect  ownership
by that person of more than 9.9% of the value of the  outstanding  capital stock
of the Company.  The purchase  price for any shares of Series C Preferred  Stock
shall be equal to the fair market  value of the shares  reflected in the closing
sales price for the shares, if then listed on a national securities exchange, or
if the  shares  are not then  listed  on a  national  securities  exchange,  the
purchase price shall be equal to the redemption price of such shares of Series C
Preferred Stock.  Payment of the purchase price shall be made within thirty days
following  the date set forth in the notice of call for  purchase,  and shall be
made in such manner as may be determined  by the Board.  From and after the date
fixed for purchase by the Board,  as set forth in the notice,  the holder of any
shares so called for purchase  shall cease to be entitled to  distributions  and
other benefits with respect to such shares,  excepting only the right to payment
of the  purchase  price fixed as  aforesaid.  Any transfer of Series C Preferred
Shares that would  create an actual or  constructive  owner of more than 9.9% of
the value of the  outstanding  shares of capital  stock of this Company shall be
deemed void ab initio and the intended  transferee shall be deemed never to have
had an interest therein.  If the foregoing provision is determined to be void or
invalid by virtue of any legal decision,  statute, rule or regulation,  then the
transferee of such Series C Preferred  Shares shall be deemed,  at the option of
the Company,  to have acted as agent on behalf of the Company in acquiring  such
shares and to hold such shares on behalf of the Company.

Notwithstanding  anything  herein to the contrary,  the Company and its transfer
agent may refuse to  transfer  any shares of Series C Preferred  Stock,  passing
either by  voluntary  transfer,  by operation of law, or under the last will and
testament of any  shareholder if such transfer would or might, in the opinion of
the Board or counsel to the  Company,  disqualify  the  Company as a Real Estate
Investment Trust under the Internal Revenue Code. Nothing herein contained shall
limit  the  ability  of the  Company  to  impose  or to seek  judicial  or other
imposition  of  additional  restrictions  if deemed  necessary  or  advisable to
preserve the Company's tax status as a qualified Real Estate  Investment  Trust.
Nothing herein  contained shall preclude  settlement of any transaction  entered
into through the facilities of the New York Stock Exchange.

10. Certain Defined Terms.  In addition to the terms defined  elsewhere in these
Articles  Supplementary  or the  Charter,  the  following  terms  will  have the
following meanings when used herein with initial capital letters:

     (a)  "Business  Day" means any day (other  than a day which is a  Saturday,
Sunday or legal  holiday in New York City, or any day on which banks in New York
City are authorized by law to close).

     (b) "Change in Control"  means the  acquisition  of the Company by means of
any  transaction  or  series  of  related   transactions   (including,   without
limitation,  any  reorganization,   merger,   consolidation  or  other  business
combination  transaction),  unless  the  Company's  stockholders  of  record  as
constituted  immediately prior to such acquisition will,  immediately after such
acquisition (by virtue of securities  issued as consideration  for the Company's
acquisition  or  otherwise),  hold  at  least  50% of the  voting  power  of the
surviving or acquiring  entity in  approximately  the same relative  percentages
after such acquisition or sale as before such acquisition or sale.

          (c) "Fair Market Value" of any security or other asset means:

      (i) in the case of any security:

          (A) if the security is traded on a securities  exchange,  the weighted
     average  trading  volume of the per share closing prices of the security on
     such  exchange  over the five trading day period  ending three trading days
     prior to the date on which such value is measured;

          (B) if the security is traded  over-the-counter,  the weighted average
     trading volume of the per share closing bid prices of the security over the
     five  trading day period  ending  three  trading  days prior to the date on
     which such value is measured; or

          (C) if there is no public  market  for such  security  that  meets the
     criteria set forth in (A) or (B) above,  the Fair Market Value shall be the
     per share fair market  value of such  security as of the date on which such
     value is measured, as determined in good faith by the Board.

    (ii) In  the  case  of  assets  other than securities, the Fair Market Value
shall  be  the fair  market value of such assets, as determined in good faith by
the Board.

          (d) "Liquidation  Preference" measured per share of Series C Preferred
     Stock as of any date in question  (the  "Relevant  Date"),  means an amount
     equal to the  Original  Issue  Price of such  share plus any  declared  but
     unpaid dividends,  but without interest, at the rate set forth in Section 4
     hereof,  if any, for such share of Series C Preferred  Stock. In connection
     with the determination of the Liquidation Preference of a share of Series C
     Preferred Stock upon liquidation, dissolution or winding up of the Company,
     the Relevant Date shall be the date of  distribution  of amounts payable to
     stockholders  in  connection  with any  such  liquidation,  dissolution  or
     winding up.

          (e) "Original  Issue Price" means $100 per share of Series C Preferred
     Stock,  subject to appropriate  adjustment to reflect any stock  dividends,
     combinations,  splits, reverse splits,  recapitalizations or similar events
     affecting the Series C Preferred Stock after the Issue Date.

          (f) "Person" means any  individual,  firm,  corporation,  partnership,
     limited liability company, group (within the meaning of Section 13(d)(3) of
     the Securities Exchange Act of 1934, as amended.

          (g) "Stockholders  Agreement" means the Stockholders  Agreement by and
     between Explorer Holdings, L.P. and the Company, dated the Issue Date.

          (h) "Voting Stock" means,  with respect to the Company,  the shares of
     any class or kind  ordinarily  having the power to vote for the election of
     directors  or other  members  of the  governing  body of the  Company.  For
     avoidance  of doubt,  (i) Common  Stock and Series C  Preferred  Stock both
     constitute Voting Stock of the Company and (ii) no class of Preferred Stock
     shall be deemed to be Voting  Stock by virtue of the rights of such  holder
     upon any Preferred Dividend Default. 11. Effect of Mergers,  Consolidations
     and Other Business  Combination  Transactions.  In the event of any merger,
     consolidation or other business combination transaction, the limitations on
     conversion  in Section 8.17 and the  limitations  on voting in Section 7(a)
     shall not impair,  reduce or  otherwise  modify the rights of any holder of
     Series C Preferred in such merger,  consolidation  or business  combination
     transaction,  such holder being  entitled to receive upon  consummation  of
     such merger, consolidation or other transaction in respect of all shares of
     Series C Preferred  then held the  consideration  that is  receivable  with
     respect  to  each  share  of  Series  C  Preferred  without  regard  to any
     limitation otherwise imposed by Section 7(a) or 8.17.

                  THIRD: The classification of authorized but unissued shares as
set forth in these  Articles  Supplementary  does not  increase  the  authorized
capital of the Company or the aggregate par value thereof.

                  FOURTH:  These Articles Supplementary have been approved by
the Board in the manner and by the vote required by law.

                  FIFTH:   The   undersigned   Vice  President  of  the  Company
acknowledges these Articles Supplementary to be the corporate act of the Company
and,  as to all  matters  or facts  required  to be  verified  under  oath,  the
undersigned Vice President of the Company  acknowledges  that to the best of his
or her knowledge,  information  and belief,  these matters and facts are true in
all material  respects and that this  statement is made under the  penalties for
perjury.

<PAGE>

                  IN WITNESS  WHEREOF,  the  Company has caused  these  Articles
Supplementary  to be  executed  under  seal in its name and on its behalf by its
Vice President and attested to by its Secretary on this ___ day of  ___________,
2000.

ATTEST                                         OMEGA HEALTHCARE INVESTORS, INC.

By:_________________________                   By:________________________
   Secretary                                        Vice President

<PAGE>

                                                                  EXHIBIT B

                       Form of Additional Equity Financing

         1. Equity Capital for  Acquisitions.  If the Company desires to acquire
additional skilled nursing,  assisted living or healthcare assets or securities,
whether by purchase, merger or otherwise (collectively,  an "Acquisition"),  but
excluding  any  Acquisition  in  which  the  Company  shall  pay   consideration
consisting  entirely of the Company's  capital  stock,  and the Company does not
have cash from  operations  and asset sales  sufficient  to fund the cash equity
capital  required to effect such  Acquisition  and is unable to borrow such cash
under credit facilities then available to the Company on terms deemed acceptable
by the  Board of  Directors,  then  the  Company  will  sell to  Purchaser,  and
Purchaser will purchase from the Company,  Common Stock ("Additional  Stock") in
an amount not to exceed $50.0 million, less any amount previously drawn pursuant
to the Liquidity Commitment (as defined below), to fund the portion of such cash
equity  capital  requirement  that the Company is not  otherwise so able to fund
(the "Initial Growth Equity Commitment", together with the Liquidity Commitment,
the  "Additional  Equity  Commitment").   Purchaser's   obligation  to  purchase
Additional Stock pursuant to the Initial Growth Equity  Commitment is subject to
satisfaction of the following conditions:

          (i) the issuance of such Additional Stock must occur on or before July
     1, 2001;

          (ii) the proceeds from such sale of Additional  Stock must be escrowed
     or otherwise set aside and directly applied to fund the cash equity capital
     required to effect such Acquisition and, without limiting the generality or
     effect of any other provision  hereof or of the Investment  Agreement,  may
     not be used to  refinance  or repay  any  indebtedness  or to fund  working
     capital requirements;

          (iii)  the  Acquisition  must  have  been  approved  by the  Board  of
     Directors  of the  Company  and the  Company  expressly  acknowledges  that
     applicable  law does not preclude all  Purchaser  Designees  from voting on
     such Acquisition and no Purchaser  Designees shall have been precluded from
     voting on such  Acquisition  (unless  the  Purchaser  Designees  shall have
     themselves  determined not to vote or that they are not so eligible to vote
     in which event this condition shall not apply);

          (iv) the Company  shall not be in default  under any  Indebtedness  or
     Material Contract and no event of default, circumstance, act or omission by
     the  Company  shall have  occurred  that,  with the  passing of time or the
     giving of notice or both would  become a default or event of default  under
     any such  Indebtedness  or Material  Contract,  including  this  Agreement,
     unless such default,  event of default,  circumstance,  act or omission (or
     the effect  thereof)  would not have a Company  Material  Adverse Effect or
     would be cured in all material  respects as a result of the  application of
     the proceeds  received from  Purchaser's  purchase of such Additional Stock
     (if such proceeds may be used for this purpose or the permitted application
     thereof would otherwise have such effect); and

          (v)  Purchaser  shall  have made a good faith  determination  that the
     Company  has  available   adequate   sources  to  repay  or  refinance  all
     Indebtedness  coming due on or before  December  31,  2001,  which  funding
     sources may include unused portions of the Liquidity Commitment.

All Additional Stock issued and sold by the Company to Purchaser pursuant to the
Initial  Growth Equity  Commitment  and the Increased  Additional  Growth Equity
Commitment  (as  defined  below) will be issued and sold to  Purchaser  at a per
share price equal to the Fair Market  Value (as defined in the Series C Articles
Supplementary) of the Common Stock,  determined immediately prior to the date of
first public announcement or the date of consummation of the subject Acquisition
for which such Additional Stock is issued and sold, whichever is lower, less (i)
a discount  that is  mutually  determined  by  Purchaser  and the  Company to be
consistent with the discount from Fair Market Value that typically  applies to a
rights offering by a company to its  shareholders to subscribe for shares of its
capital stock to its  stockholders or (ii) if the parties are unable to agree on
such amount, 6%. The Company will provide Purchaser written notice of its intent
to draw on the Initial Growth Equity  Commitment at least 30 calendar days prior
to the closing date of the Acquisition (a "Capital Call Notice"). The closing of
the issuance and sale of the subject  Additional Stock shall occur no later than
60 calendar days following the date of the Capital Call Notice. In the event the
closing of the  Acquisition  does not occur  within such 60 calendar day period,
Purchaser  will be  entitled  to return to its  investors  the amount of capital
called in the Capital Call Notice ("Returned  Capital").  If Purchaser is unable
to re-draw any Returned  Capital,  the Initial Growth Equity Commitment shall be
reduced by such amount of Returned Capital.

         2.  Capital  for  Certain   Refinancings.   Notwithstanding  any  other
provision  hereof or of the  Investment  Agreement,  if the Company is unable to
fund any portion of the Company's  Convertible  Debentures due January 2001 (the
"Convertible  Debentures") or the Company's Senior Unsecured Notes due July 2000
(the "Senior  Unsecured  Notes") at the maturity  thereof in accordance with the
terms  thereof,  then the  Company  must  request  Purchaser  to  purchase,  and
Purchaser must purchase, such amount of a sub-series of Series C Preferred Stock
as  is  required  to  provide   sufficient  funds  to  discharge  the  Company's
obligations  arising  pursuant  to the  Convertible  Debentures  or  the  Senior
Unsecured  Notes,  not to  exceed  $50.0  million,  less the sum of any  amounts
previously  drawn under the Initial  Growth  Equity  Commitment  or by which the
Initial  Growth  Equity  Commitment  has  been  reduced  under  Section  1  (the
"Liquidity Commitment"), provided the following conditions have been satisfied:

          (i) the  issuance of such  Series C  Preferred  Stock must occur on or
     before February 1, 2001;

          (ii) the proceeds  from such sale of Series C Preferred  Stock must be
     escrowed or otherwise set aside and directly  applied to fund the discharge
     of the Company's obligations arising pursuant to the Convertible Debentures
     or the Senior Unsecured Notes;

          (iii) the Company  shall not be in default under any  Indebtedness  or
     Material Contract and no event of default, circumstance, act or omission by
     the  Company  shall have  occurred  that,  with the  passing of time or the
     giving of notice or both would  become a default or event of default  under
     any such  Indebtedness  or Material  Contract,  including  this  Agreement,
     unless such default,  event of default,  circumstance,  act or omission (or
     the effect  thereof)  would not have a Company  Material  Adverse Effect or
     would be cured in all material  respects as a result of the  application of
     the proceeds received from Purchaser's  purchase of such Series C Preferred
     Stock  (if such  proceeds  may be used for this  purpose  or the  permitted
     application thereof would otherwise have such effect);

          (iv)  Purchaser  shall have made a good faith  determination  that the
     Company  has  adequate   available   sources  to  repay  or  refinance  all
     Indebtedness  coming due on or before  December  31,  2001  (other than any
     Indebtedness  being repaid as a result of the  application  of the proceeds
     received from Purchaser's  purchase of such Series C Preferred Stock),  the
     Purchaser  expressly  acknowledging  that such funding  sources may include
     unused portions of the Liquidity Commitment; and

          (v)  Purchaser  shall  have made a good faith  determination  that the
     Company has liquidity and current assets  adequate to enable the Company to
     carry on its business in a manner consistent with past practice  (including
     the payment of a quarterly dividend of $0.25 per share of Common Stock).

The  closing of the  issuance  and sale of the  subject  sub-series  of Series C
Preferred  Stock shall occur no sooner than 30 calendar  days, and not more than
60 calendar  days,  after delivery by the Company to Purchaser of written notice
stating  the  Company's  intent  to draw on the  Liquidity  Commitment  upon the
issuance of such Series C Preferred in the name of  Purchaser  or any  Affiliate
designated by Purchaser  against  payment by Purchaser of the required amount by
wire transfer to an account designated by the Company. All such shares of Series
C Preferred  Stock shall be issued with a Conversion  Price that is the lower of
(i) the Fair Market Value of the Common Stock  determined  immediately  prior to
the date of the  issuance of such  Series C  Preferred  Stock and (ii) $6.25 (as
adjusted  to the same  extent the  Conversion  Price for the Series C  Preferred
issued on the Closing Date has been previously  adjusted pursuant to Section 8.4
of the Series C Articles Supplementary).

         3.  Purchaser  Option.  Purchaser  will have the right to increase  the
Additional  Equity Commitment by up to an additional $50 million (such increased
amount, the "Increased  Additional Equity  Commitment") on written notice to the
Company  given not later than 30 calendar days after the earlier of (i) the date
on which the entire  Additional Equity Commitment shall have been invested under
Sections 1 or 2 of this  Exhibit B and (ii) July 1, 2001 (the earlier such date,
the "Extension Date"), in which event the Increased Additional Equity Commitment
will  be  available  to  fund  Acquisitions  on the  terms  and  subject  to the
conditions  of  Section 1 of this  Exhibit B (but not for uses  contemplated  by
Section 2 of this Exhibit B), provided,  however,  that for all purposes thereof
the July 1, 2001 date in Section 1 of this  Exhibit B will be extended to a date
that is 365 days after the Extension Date.

         4. Rights Offerings.  (a) If Purchaser  exercises its option to provide
the Increased  Additional  Equity  Commitment  during the 90 calendar day period
commencing  on the first to occur of 365 days after the  Extension  Date and the
funding in full by Purchaser of the Initial  Growth Equity  Commitment  (or such
earlier time to which the parties  agree that  initiating  a rights  offering is
appropriate  given  Purchaser's  additional  investments  in the  Company),  the
Company shall be permitted,  in the Company's  sole  discretion,  to initiate an
offering of non-transferable  rights (the "Initial Rights Offering") pursuant to
which the  holders  of shares of Common  Stock  (other  than  Purchaser  and its
Affiliates)  will be entitled to purchase  shares of Common Stock at a price per
share  equal to the per share price paid by  Purchaser  in  connection  with the
issuance  and  sale of  Common  Stock  pursuant  to the  Initial  Growth  Equity
Commitment.  In the event that Purchaser  shall have funded multiple draws under
the  Initial  Growth  Equity  Commitment,  the per share price to be paid in the
Initial Rights Offering shall equal the weighted average price per share paid by
Purchaser in connection  therewith.  The number of shares available for purchase
pursuant  to the Initial  Rights  Offering  shall equal the product  obtained by
multiplying  the number of shares of  Additional  Stock  acquired  by  Purchaser
pursuant to the Initial Growth Equity Commitment by a fraction, the numerator of
which  will be the  number of shares of Common  Stock  owned by all  holders  of
Common Stock (other than Purchaser and its  Affiliates)  and the  denominator of
which  shall be the  total  number  of  Voting  Securities  (as  defined  in the
Stockholders  Agreement)  outstanding,  in each case calculated as of the record
date for the  relevant  Rights  Offering.  Each holder of Common  Stock shall be
entitled  to  purchase  his or her pro rata share of the shares of Common  Stock
available for purchase in the Initial Rights Offering, excluding for purposes of
such  calculation  shares of Common Stock owned by Purchaser and its Affiliates.
The net proceeds received by the Company in the Initial Rights Offering shall be
used to repurchase shares of Common Stock acquired by Purchaser  pursuant to the
Initial  Growth  Equity  Commitment  at a per share price equal to the price per
share paid by Purchaser,  or, in the event there shall have been multiple  draws
under the Initial Growth Equity Commitment, the weighted average price per share
paid by Purchaser plus, in either case, interest on the amount paid in an amount
equal to 10% per annum commencing on the date of Purchaser's acquisition of such
Common Stock to the date of repurchase by the Company  (calculated  on the basis
of a 360 day calendar year and based on the actual number of days elapsed).

         (b) If  Purchaser  exercises  its  option to  provide  the  Incremental
Additional Equity Commitment,  then during the 90 calendar day period commencing
on the first to occur of 365 days  after the  Extension  Date or the  funding in
full by Purchaser of the Increased Additional Equity Commitment (or such earlier
time to which the parties agree that initiating a rights offering is appropriate
given Purchaser's  additional  investments in the Company), the Company shall be
permitted  to  initiate  in  the  Company's  sole  discretion,  an  offering  of
non-transferable  rights (the "Second  Rights  Offering")  pursuant to which the
holders of shares of Common Stock (other than Purchaser and its Affiliates) will
be entitled to purchase shares of Common Stock at a price per share equal to the
per share price paid by Purchaser  pursuant to the Increased  Additional  Equity
Commitment or, in the case of multiple draws  thereunder,  the weighted  average
price per share paid by Purchaser. The Second Rights Offering shall be conducted
in accordance  with the procedures and methodology set forth above regarding the
Initial Rights Offering.

         (c) In the  Initial  or  Second  Rights  Offering,  the  Company  shall
distribute to each record holder of shares of its  outstanding  Common Stock, as
of the close of business on a record date determined by the Company (the "Record
Date"),  at no cost to the  record  holder,  a number  of rights  determined  as
provided  hereinabove (the "Rights").  The Rights shall be non-transferable  and
shall   be   evidenced   by   subscription   certificates   (the   "Subscription
Certificates").

         (d) No fractional  Rights or cash in lieu of fractional Rights shall be
issued or paid,  and the number of Rights  distributed  to each record holder of
Common Stock shall be rounded up to the nearest  whole number.  No  Subscription
Certificate  may be divided  in such a way as to permit  the  record  holders of
Common Stock to receive a greater number of Rights than the number to which such
Subscription  Certificate entitles its holder,  except that a depositary,  bank,
trust company or securities  broker or dealer  holding Common Stock of record on
the Record Date for more than one  beneficial  owner may, upon proper showing to
the Company designated  subscription agent (the "Subscription Agent"),  exchange
its Subscription Certificate to obtain a Subscription Certificate for the number
of Rights to which all such  beneficial  owners in the aggregate would have been
entitled  had each been a holder on the Record  Date.  The Company may refuse to
issue  any  such  Subscription  Certificate,  if  such  issuance  would,  in the
Company's  sole and absolute  discretion,  be  inconsistent  with the principles
underlying the Initial or Second Rights Offering.

         (e) The  Rights  shall  expire at 5:00 p.m.,  New York time,  on a date
determined by the Company (the "Expiration Date"), which shall not be fewer than
30 days or more than 60 days  after the  Rights  Offering  commences.  After the
Expiration  Date,  all  unexercised  Rights shall be null and void.  The Company
shall not be obligated to honor any purported exercise of Rights received by the
Subscription  Agent after the Expiration Date,  regardless of when the documents
relating to such exercise were sent.

         (f) The  Subscription  Price  shall be payable in full by check or bank
draft  drawn upon a U.S.  bank or postal,  telegraphic  or express  money  order
payable to the Subscription Agent.

         (g) Rights may be exercised by delivering to the Subscription Agent, on
or prior to 5:00 p.m.,  New York time,  on the  Expiration  Date,  the  properly
completed and executed Subscription  Certificate evidencing such Rights with any
required signature guaranties, together with payment in full of the Subscription
Price for the number of shares of Common  Stock being  acquired  pursuant to the
exercise of such  Rights.  The  Subscription  Price shall be deemed to have been
received by the  Subscription  Agent only upon (i) clearance of any  uncertified
checks or (ii) receipt by the Subscription  Agent of any certified check or bank
draft drawn upon a U.S.  bank or of any  postal,  telegraphic  or express  money
order.

         (h) Subject to the terms hereof, the Rights Offering shall contain such
other terms as the Company shall in good faith determine to be appropriate.

<PAGE>

                                                                     EXHIBIT C

                                     FORM OF
                             STOCKHOLDERS AGREEMENT

         STOCKHOLDERS  AGREEMENT  (this  "Agreement"),  dated as of ________ __,
2000,   between  Explorer  Holdings,   L.P.,  a  Delaware  limited   partnership
("Purchaser" and together with its Permitted Transferees,  the "Investor"),  and
Omega Healthcare Investors, Inc., a Maryland corporation (the "Company").

         A. The Company and Purchaser have entered into an Investment Agreement,
dated as of May 11, 2000 (the "Investment Agreement"),  pursuant to which, among
other things, on the terms and subject to the conditions thereof, Purchaser will
acquire shares of Series C Preferred  Stock,  par value $1.00 per share,  of the
Company (the "Series C Preferred"),  and shares of common stock, par value $0.10
per share, of the Company (the "Common Stock").

         B. The Company  and  Purchaser  desire to make  certain  provisions  in
respect of their relationship.

         NOW, THEREFORE,  in consideration of the foregoing,  the parties hereto
agree as follows:

                                 I. DEFINITIONS

1.1 Definitions.  Capitalized terms used herein and not defined herein will have
the  meaning  set forth in the  Investment  Agreement.  In addition to the terms
defined elsewhere herein,  the following terms have the following  meanings when
used herein with initial capital letters:

          (a) "Affiliate" of any Person means any other Person,  that,  directly
     or indirectly through one or more intermediaries, controls or is controlled
     by, or is under common control with, such Person;  and, for the purposes of
     this  definition  only,   "control"  (including  the  terms  "controlling",
     "controlled  by" and "under  common  control  with") means the  possession,
     direct or  indirect,  of the power to direct or cause the  direction of the
     management,  policies  or  activities  of  a  Person  whether  through  the
     ownership of securities, by contract or agency or otherwise.

          (b)   "Assumption   Agreement"   means  an  agreement  in  writing  in
     substantially  the form of  Exhibit  A hereto  pursuant  to which the party
     thereto agrees to be bound by the terms and provisions of this Agreement.

          (c) A Person  will be deemed  the  "beneficial  owner" of, and will be
     deemed  to  "beneficially  own",  and will be  deemed  to have  "beneficial
     ownership" of:

            (i)   any  securities  that  such  Person  or any of  such  Person's
                  Affiliates is deemed to "beneficially  own" within the meaning
                  of Rule 13d-3 under the Exchange Act, as in effect on the date
                  of this Agreement; and

            (ii)  any securities (the "underlying  securities") that such Person
                  or any of such  Person's  Affiliates  has the right to acquire
                  (whether such right is  exercisable  immediately or only after
                  the passage of time) pursuant to any agreement, arrangement or
                  understanding  (written  or  oral),  or upon the  exercise  of
                  conversion  rights,   exchange  rights,  rights,  warrants  or
                  options,  or otherwise (it being  understood  that such Person
                  will  also  be  deemed  to be  the  beneficial  owner  of  the
                  securities convertible into or exchangeable for the underlying
                  securities).

          (d) "Board" means the Board of Directors of the Company.

          (e) "Board  Approval"  means the approval of a majority of the members
     of the Board who neither (i) have been designated for election to the Board
     by Purchaser  pursuant to Article III hereof or the Articles  Supplementary
     setting forth the terms of the Series C Preferred  nor (ii) are  Affiliates
     or associates of the Investors.

          (f)  "Closing  Date" means the date on which the first  closing of the
     transactions contemplated by the Investment Agreement occurs.

          (g)  "Exchange  Act" means the  Securities  Exchange  Act of 1934,  as
     amended, and the rules and regulations promulgated thereunder.

          (h)  "Permitted  Acquisition"  means  (i) any  acquisition  of  Voting
     Securities  pursuant to or as  contemplated  by the  Investment  Agreement,
     including without limitation upon the conversion of the Series C Preferred,
     (ii)  any  additional  acquisition  of up to 5% of the  outstanding  Voting
     Securities,  and (iii) any other  acquisition  of Voting  Securities  after
     Purchaser has received prior Board Approval of such acquisition.

          (i) "Permitted Transferees" means any Person to whom Voting Securities
     are  Transferred  in a Transfer not in violation of this  Agreement,  which
     includes  any Person to whom a Permitted  Transferee  of any Investor (or a
     Permitted Transferee of a Permitted Transferee) so further Transfers Voting
     Securities  and who is required to, and does,  become bound by the terms of
     this Agreement.

          (j) "Person" means an  individual,  a  corporation,  a partnership,  a
     limited partnership,  a limited liability company, an association,  a trust
     or other entity or organization,  including without limitation a government
     or political subdivision or an agency or instrumentality thereof.

          (k) "Public  Offering" means the sale of shares of any class of Voting
     Securities to the public  pursuant to an effective  registration  statement
     (other than a  registration  statement on Form S-4 or S-8 or any similar or
     successor form) filed under the Securities Act.

          (l)  "Registration  Rights  Agreement" means the  Registration  Rights
     Agreement,  dated as of the date hereof,  between Purchaser and the Company
     and any other registration rights agreement entered into in accordance with
     Article V hereof.

          (m) "Securities Act" means the Securities Act of 1933, as amended, and
     the rules and regulations promulgated thereunder.

          (n)  "Standstill  Period"  means the period  commencing on the date of
     this Agreement and ending on the fifth anniversary thereof.

          (o)   "Transfer"   means  a  transfer,   sale,   assignment,   pledge,
     hypothecation or disposition.

          (p) "Voting Securities" means the Common Stock, the Series C Preferred
     (on an as-converted basis), all other securities of the Company entitled to
     vote  generally in the election of directors of the Company,  and all other
     securities  convertible into,  exchangeable for or exercisable for any such
     securities (whether immediately or otherwise).

                                 II. STANDSTILL

2.1 Additional  Ownership.  Except in connection  with a Permitted  Acquisition,
during the Standstill  Period,  Purchaser will not purchase or otherwise acquire
beneficial ownership of any Voting Security.

2.2 Other  Restrictions.  Without  prior  Board  Approval,  except as  otherwise
permitted hereunder, no Investor will do any of the following:

          (a)  solicit  proxies  from  other  stockholders  of  the  Company  in
     opposition to, or prior to the issuance of, a  recommendation  of the Board
     for any matter to be  considered at any meeting of holders of securities of
     the Company,  except matters on which a class vote of Series C Preferred is
     required;

          (b) knowingly  form, join or participate in or encourage the formation
     of a "group"  (within the meaning of Section  13(d)(3) of the Exchange Act)
     with  respect  to  any  securities  of the  Company,  other  than  a  group
     consisting solely of Affiliates of Purchaser;

          (c)  deposit any  securities  of the  Company  into a voting  trust or
     subject any such securities to any arrangement or agreement with respect to
     the voting thereof, other than any such trust, arrangement or agreement (i)
     the only  parties  to, or  beneficiaries  of,  which are  Affiliates  of an
     Investor;  and (ii) the terms of which do not require or  expressly  permit
     any party thereto to act in a manner inconsistent with this Agreement; or

          (d) tender any  securities  in any tender offer  involving the Company
     unless such tender offer has received Board Approval.

2.3 Voting Cap.  Without prior Board  Approval,  the Purchaser will not vote any
Voting Securities, whether at a meeting of stockholders or pursuant to a written
consent of stockholders, to the extent the aggregate amount of Voting Securities
beneficially  owned  by  Purchaser  and  its  Affiliates  exceeds  49.9%  of the
outstanding Voting Securities.

                    III. BOARD REPRESENTATION; CONSULTATION

3.1 Nomination and Voting for Purchaser Designees and Independent Director.  (a)
Effective as of the Closing Date,  Purchaser  will be entitled to designate from
time to time such number of directors to the Board (the  "Purchaser  Designees")
based on the  percentage of the Company's  total issued and  outstanding  Voting
Securities  beneficially  owned by  Purchaser  that were  acquired by  Purchaser
pursuant to the Investment Agreement, as set forth in the table below:

        Percentage of Voting
       Securities Beneficially
         Owned by Purchaser                  Number of Purchaser Designees
         -------------------                 ------------------------------

          Less than 5.0%                                  0
          5.00% - 16.67%                                  1
          16.67% - 27.78%                                 2
          27.78% - 38.89%                                 3
          Greater than 38.89%                             4

For as  long as  Purchaser  beneficially  owns  at  least  25% of the  Series  C
Preferred  issued on the date hereof (or the Common Stock issued upon conversion
of the Series C  Preferred)  the Company  shall use its best efforts to cause an
Independent  Director selected in accordance with Section 4.10 of the Investment
Agreement  to serve on the  Company  Board.  The  Company,  at each  meeting  of
stockholders  of the Company at which directors are elected or pursuant to which
such action is to be taken by written  consent,  will  nominate  for election as
directors  of the Company the  Purchaser  Designees  Purchaser  is  permitted to
designate  pursuant to this Section  3.1(a).  Ninety  calendar days prior to any
such meeting or action by written  consent,  Purchaser  will provide the Company
with the information  required pursuant to Regulation 14A under the Exchange Act
with respect to each Purchaser  Designee.  The Company will solicit proxies from
its stockholders for such nominees,  vote all proxies in favor of such nominees,
except  for  such  proxies  that  specifically  indicate  to the  contrary,  and
otherwise use its best efforts to cause such nominees to be elected to the Board
as herein contemplated.

          (b) Notwithstanding  anything in this Section 3.1 to the contrary, (i)
     for so long as the Purchaser and its Affiliates  beneficially  own at least
     50% of the Series C Preferred  issued on the date of this Agreement (or the
     Common  Stock  issued  upon  conversion  of the  Series C  Preferred),  the
     Purchaser  shall be entitled to designate at least two Purchaser  Designees
     and (ii) for so long as the Purchaser and its Affiliates  beneficially  own
     at least 25% of the Series C Preferred issued on the date of this Agreement
     (or the Common Stock issued upon conversion of the Series C Preferred), the
     Purchaser shall be entitled to designate at least one Purchaser Designee.

          (c) The Company  will take all actions as may be  necessary  to obtain
     the approval of at least two thirds of the Incumbent  Directors (as defined
     in the Company Change of Control Agreements) to the election, reelection or
     nomination of any  Purchaser  Designee or the  Independent  Director to the
     Company Board.

          (d) The  Purchaser  Designees  will be  apportioned  among  the  three
     classes of directors as equal as possible;  provided,  however, that in the
     event that the number of Purchaser Designees determined pursuant to Section
     3.1(a) is not evenly divisible by three, such additional Purchaser Designee
     or Designees  shall be nominated to the class or classes of directors  with
     the longest term of office.  Each  Purchaser  Designee will serve until his
     successor  is  elected  and  qualified  or until his  earlier  resignation,
     retirement, disqualification, removal from office, or death.

          (e) If any Purchaser  Designee  ceases to be a director of the Company
     for any reason,  the Company  will  promptly  upon the request of Purchaser
     cause a  person  designated  by  Purchaser  to  replace  such  director  if
     Purchaser is so entitled.

          (f) Purchaser agrees to cause a Purchaser  Designee to promptly resign
     in the event Purchaser's beneficial ownership of Voting Securities declines
     such that  Purchaser  would no  longer  have the  right to  designate  such
     person.

          (g) The Company  covenants  that (i) the total  number of seats on the
     Board  (including  any vacant  seats) will in no event exceed nine and (ii)
     the  directors  that  are  not  Purchaser   Designees  will  be  reasonably
     acceptable to both Purchaser and a majority of the current directors.

          (h) At all times after the date  hereof,  the  Company  will take such
     action to ensure  that the  Purchaser  Designees  are  represented  on each
     committee of the Board in proportion to their  representation on the entire
     Board and that each  committee  will  consist  of at least  three  members;
     provided,  however, that for so long as the provisions of Article II are in
     effect, in no event shall the Purchaser Designees  constitute a majority of
     any such committee.

3.2 Voting for Company Nominees.  Each Investor shall vote all Voting Securities
that it  beneficially  owns  for the  election  of  directors  nominated  by the
Nominating Committee of the Board at each stockholder meeting at which directors
are elected,  or shall execute written  consents for such purpose at the request
of the  Company;  provided  that no  Investor  shall be  required to perform its
obligations  under  this  Section  3.2  during  any  period  in which any of the
Purchaser Designees or the Independent  Director required to be nominated to the
Board is not so elected to the Board.

3.3 Other Voting Rights.  Purchaser and the Company agree that under  applicable
law, including without limitation Section 2-419 of the MGCL, and pursuant to the
Company's  constituent  documents,  neither  the  Purchaser  nor  the  Purchaser
Designees  would be  precluded,  and the Company  agrees that it will not assert
that the Purchaser or any of the Purchaser  Designees is precluded,  from voting
with respect to any  acquisition  or investment by the Company by virtue of such
acquisition  or  investment  being funded in whole or in part with proceeds from
the Additional  Equity  Financing or any other  transaction  contemplated by the
Transaction Documents following appropriate  disclosure to the then directors of
any circumstances that could provide the basis for an assertion of a conflict of
interest.

3.4 Access.  The Company will, and will cause its  subsidiaries  and each of the
Company's  and  its  subsidiaries'  officers,   directors,   employees,  agents,
representatives,  accountants and counsel to: (a) afford the officers, employees
and   authorized   agents,   accountants,   counsel,   financing   sources   and
representatives of Purchaser reasonable access, during normal business hours, to
the offices,  properties, other facilities, books and records of the Company and
each subsidiary and to those officers, directors, employees, agents, accountants
and  counsel  of the  Company  and of each  subsidiary  who have  any  knowledge
relating  to the  Company or any  subsidiary  and (b)  furnish to the  officers,
employees and authorized  agents,  accountants,  counsel,  financing sources and
representatives of Purchaser,  such additional  financial and operating data and
other information  regarding the assets,  properties and goodwill of the Company
and its  subsidiaries  (or legible copies thereof) as Purchaser may from time to
time reasonably  request (other than information and material from the Company's
counsel which is subject to the attorney/client privilege, which information and
material shall be made available to the Purchaser Designees in their capacity as
members of the Board).

                           IV. TRANSFER OF SECURITIES

4.1  Transferability.  (a) Each  Investor  agrees  that such  Investor  will not
Transfer  any  Voting  Securities  beneficially  owned by it,  except  in strict
compliance with the terms of this Article IV.

          (b) Any Investor may Transfer all or any part of the Voting Securities
     beneficially  owned by it at any time, without compliance with Section 4.2,
     to any Affiliate of such Investor;  provided that,  prior to such Transfer,
     (i) notice of such  Transfer is given to the Company and (ii) the Affiliate
     to  whom  such  Voting  Securities  are to be  Transferred  enters  into an
     Assumption Agreement.

          (c) From and after the first  anniversary  of the  Closing  Date,  any
     Investor may Transfer all or any part of the Voting Securities beneficially
     owned by it,  without  compliance  with Section  4.2,  pursuant to a Public
     Offering  or in  open-market  sales in  accordance  with Rule 144 under the
     Securities Act.

          (d) Subject to compliance with the requirements of Section 4.2 hereof,
     from and after July 1, 2001,  any  Investor may Transfer all or any part of
     the Voting Securities  beneficially owned by it, following  compliance with
     Section 4.2, to a "qualified  institutional buyer" (as defined in Rule 144A
     of the Securities  Act);  provided,  that with respect to any such Transfer
     involving 9.9% or more of the outstanding Voting Securities,  such Transfer
     shall be  conditioned  on the  Transferee  agreeing  (i) to be bound by the
     provisions of Article II of this Agreement for a period ending on the fifth
     anniversary of the Closing Date and (ii) not to acquire more than 2% of the
     outstanding Voting Securities during any twelve-month period.

          (e) In the event of any  purported  Transfer  by any  Investor  of any
     Voting  Security  not  made in  compliance  with  this  Section  4.1,  such
     purported  Transfer  will be void and of no effect and the Company will not
     give effect to such  Transfer.  The Company  shall be entitled to treat the
     prior  owner  as the  holder  of any such  securities  not  Transferred  in
     accordance with this Agreement.

          (f) Each  certificate  representing  Voting  Securities  issued to any
     Investor  will  bear a legend  on the  face  thereof  substantially  to the
     following  effect (with such  additions  thereto or changes  therein as the
     Company may be advised by counsel are required by law (the "Legend")):

                  "THE  SHARES  OF STOCK  REPRESENTED  BY THIS  CERTIFICATE  ARE
         SUBJECT TO A  STOCKHOLDERS  AGREEMENT  BETWEEN THE COMPANY AND EXPLORER
         HOLDINGS,  L.P.,  A COPY OF WHICH IS ON FILE WITH THE  SECRETARY OF THE
         COMPANY. NO TRANSFER, SALE, ASSIGNMENT,  PLEDGE, HYPOTHECATION OR OTHER
         DISPOSITION OF THE SECURITIES  REPRESENTED BY THIS  CERTIFICATE  MAY BE
         MADE EXCEPT IN  ACCORDANCE  WITH THE  PROVISIONS  OF SUCH  STOCKHOLDERS
         AGREEMENT."

                  "THE SHARES OF STOCK  REPRESENTED BY THIS CERTIFICATE HAVE NOT
         BEEN  REGISTERED  UNDER  THE  SECURITIES  ACT OF  1933  AND  MAY NOT BE
         TRANSFERRED OR OTHERWISE  DISPOSED OF UNLESS THEY HAVE BEEN  REGISTERED
         UNDER  THAT  ACT OR ANY  OTHER  APPLICABLE  LAW  OR AN  EXEMPTION  FROM
         REGISTRATION IS AVAILABLE."

The  Legend  will be  removed  by the  Company  by the  delivery  of  substitute
certificates  without  such Legend in the event of (i) a Transfer  permitted  by
Section  4.1 to any  Person  who is not  required  to enter  into an  Assumption
Agreement  as a  condition  to such  Transfer  or (ii) the  termination  of this
Article IV pursuant to the terms of this Agreement,  provided, however, that the
second  paragraph  of such  Legend  will only be removed if at such time a legal
opinion from counsel to the  Transferee  shall have been  obtained to the effect
that such legend is no longer  required  for purposes of  applicable  securities
laws. In connection with the foregoing,  the Company agrees that, if the Company
is required to file reports  under the  Exchange  Act, for so long as and to the
extent necessary to permit any Investor to sell any Voting  Securities  pursuant
to Rule 144, the Company will use its  reasonable  efforts to file,  on a timely
basis,  all reports  required to be filed with the SEC by it pursuant to Section
13 of the  Exchange  Act,  furnish  to the  Investors  upon  request  a  written
statement  as  to  whether  the  Company  has  complied   with  such   reporting
requirements during the 12 months preceding any proposed sale under Rule 144 and
otherwise use its reasonable efforts to permit such sales pursuant to Rule 144.

4.2  Right of First  Offer.  (a)  Prior to any  Investor  effecting  a  Transfer
described in Section 4.1(d) (a "Third-Party Sale"), such Investor (the "Offering
Stockholder")  will deliver to the Company a written Notice (an "Offer  Notice")
specifying  the  amount  of  consideration  (the  "Offer  Price")  and the other
material  terms  pertaining  to such  Third  Party  Sale for which the  Offering
Stockholder  proposes to sell the  Securities to be offered in such  Third-Party
Sale (the  "Offered  Stock")  and,  to the  extent  known or  contemplated,  the
proposed purchaser of the Offered Stock.

          (b) If the Company  delivers  to the  Offering  Stockholder  a written
     notice (an  "Acceptance  Notice") within 20 calendar days of receipt of the
     Offer Notice  (such 20 calendar day period being  referred to herein as the
     "ROFO  Acceptance  Period")  stating that the Company or its designee  (the
     "ROFO  Purchaser")is  willing to purchase all of the Offered  Stock for the
     Offer  Price and on the other  terms  set  forth in the Offer  Notice,  the
     Offering  Stockholder  will  sell  all of the  Offered  Stock  to the  ROFO
     Purchaser,  and the  Company  will  purchase  such  Offered  Stock from the
     Offering  Stockholder,  on the proposed terms and subject to the conditions
     set forth below.

          (c) The  consummation of any purchase of the Offered Stock by the ROFO
     Purchaser  pursuant to this Section 4.2 (the "ROFO  Closing") will occur no
     more than 45 calendar days following the delivery of the Acceptance  Notice
     (such 45 calendar day period being  referred to herein as the "ROFO Closing
     Period") at 10:00 a.m.  (Eastern Time) at the Company's  offices or at such
     other time of day and place as may be mutually  agreed upon by the Offering
     Stockholder  and the  ROFO  Purchaser.  At the ROFO  Closing,  (i) the ROFO
     Purchaser  will deliver to the Offering  Stockholder by wire transfer to an
     account  designated by the Offering  Stockholder  an amount in  immediately
     available  funds equal to the Offer Price,  (ii) the  Offering  Stockholder
     will  deliver  one or  more  certificates  evidencing  the  Offered  Stock,
     together with such other duly executed  instruments or documents  (executed
     by the Offering  Stockholder)  as may be  reasonably  requested by the ROFO
     Purchaser  to  acquire  the  Offered  Stock  free and  clear of any and all
     claims, liens, pledges, charges, encumbrances, security interests, options,
     trusts,   commitments  and  other   restrictions  of  any  kind  whatsoever
     (collectively,  "Encumbrances"),  except for  Encumbrances  created by this
     Agreement, or federal or state securities laws ("Permitted  Encumbrances"),
     and (iii) in  connection  with  foregoing  the  Offering  Stockholder  will
     represent  and  warrant to the Company  that,  upon the ROFO  Closing,  the
     Offering  Stockholder  will convey and the Company  will acquire the entire
     record  and  beneficial  ownership  of,  and good and valid  title to,  the
     Offered  Stock,  free and  clear of any and all  Encumbrances,  except  for
     Permitted Encumbrances.

          (d) If no Acceptance Notice relating to the proposed  Third-Party Sale
     is delivered to the Offering  Stockholder  prior to the  expiration  of the
     ROFO  Acceptance  Period,  or an  Acceptance  Notice is so delivered to the
     Offering  Stockholder  but the ROFO  Closing  fails  to occur  prior to the
     expiration of the ROFO Closing Period (unless the ROFO Purchaser was ready,
     willing  and able prior to the  expiration  of the ROFO  Closing  Period to
     consummate the  transactions to be consummated by the ROFO Purchaser at the
     ROFO Closing),  the Offering  Stockholder  may, during the 360 calendar day
     period  immediately  following the expiration of the ROFO Acceptance Period
     (in the  event  that no  Acceptance  Notice  was  timely  delivered  to the
     Offering  Stockholder) or the 360 calendar day period immediately following
     the  expiration of the ROFO Closing Period (in the event that an Acceptance
     Notice  was  timely  delivered  to the  Offering  Stockholder  but the ROFO
     Closing  failed  timely to occur other than as a result of a failure by the
     Offering  Stockholder  to perform  its  obligations  under  Section  4.2(c)
     hereof)  at a gross  price at least  equal to the  Offer  Price and on such
     other terms no more favorable to the Transferee than those set forth in the
     Offer Notice,  consummate the  Third-Party  Sale in accordance with Section
     4.1(d).  After the  applicable  360-day  period,  any Transfer  pursuant to
     Section  4.1(d) shall not be made unless the Investor  again  complies with
     the provisions of this Section 4.2.

          (e) For purposes of this  Section 4.2, the value of any  consideration
     other than cash that is payable or  receivable in the Third Party Sale will
     be as determined by the Board in good faith or, if the Offering Stockholder
     gives the Company  written notice of its  disagreement  with such valuation
     within ten  Business  Days after  receipt of written  notice of such value,
     such value will be determined in accordance  with the appraisal  procedures
     set forth on Exhibit B. The various time periods  described  above relating
     to any  actions  regarding  the  exercise of a right of first offer will be
     extended  for the duration of any period in which the value of any non-cash
     consideration is subject to dispute pursuant to Section 4.2(e).

                             V. REGISTRATION RIGHTS

         Upon consummation of any Transfer of Securities constituting 5% or more
of the Voting Securities to one Transferee (or one Transferee  together with its
Affiliates)  (other than a Transfer in a Public Offering or pursuant to Rule 144
under the Securities Act) that is permitted by this  Agreement,  the Company and
the  Transferee  thereof  will  enter  into  a  registration   rights  agreement
substantially  in the  form of the  Registration  Rights  Agreement,  with  such
modifications  thereto  as  are  acceptable  to  such  Transferee  that  do  not
materially increase the Company's obligations  thereunder (excluding the effects
of multiple parties).

                                VI. TERMINATION

6.1  Termination.   The  provisions  of  this  Agreement  specified  below  will
terminate,  and be of no further  force or effect  (other  than with  respect to
prior breaches),  as follows:

          (a) Articles II and IV will terminate (but in the case of subparagraph
     (ii)  through  (iv),  only as to the  Investor  that has given  the  notice
     contemplated thereby), upon the earliest to occur of the following dates or
     events:

          (i) five years after the date of this Agreement;

          (ii)  notice  that  an  Investor  has  determined  to  terminate  this
     Agreement at any time following the  consummation of a transaction that has
     Board  Approval that provides for or involves (A) the merger of the Company
     with or into any other entity,  (B) the sale of all or substantially all of
     the assets of the  Company,  (C) a tender  offer for at least a majority of
     the Common Stock, (D) the reorganization or liquidation of the Company,  or
     (E) any  similar  transaction  or event that is subject to  approval by the
     stockholders  of the  Company  as a  result  of  which,  in the case of any
     merger, consolidation,  reorganization,  recapitalization,  tender offer or
     similar  transaction or event,  the  Stockholders  of the Company shall not
     hold at least a majority of the outstanding Voting Securities following the
     closing of such transaction;

          (iii)  notice  that an  Investor  has  determined  to  terminate  this
     Agreement  following the failure by the Board or the Company to observe any
     of the provisions of this  Agreement  hereof which breach has continued for
     at  least 20  calendar  days  after  notice  thereof  to the  Company  from
     Purchaser, which notice shall specify with particularity the basis for such
     alleged failure or breach; or

          (iv)  notice  that  an  Investor  has  determined  to  terminate  this
     Agreement  following  either  (A) the  failure of the  stockholders  of the
     Company to elect any director designated under this Agreement by Purchaser,
     (B) the  removal of any such  recommended  director  from the Board and the
     failure to replace  such removed  director  with a designee  designated  by
     Purchaser,  (C) the failure of the Board to replace any director designated
     by an Investor with a person designated by Purchaser, or (D) the failure of
     the Board to effect without  unreasonable  delay and maintain the committee
     appointments  required  under Section 3.1(g) which failure shall (a) not be
     due to any Purchaser  Designee failing to qualify to serve as a director of
     the Company due to  existence of any  applicable  law,  rule or  regulation
     imposing or creating  standards or  eligibility  criteria  for  individuals
     serving as  directors  of  organizations  such as the  Company and (b) have
     continued for at least 30 calendar  days  following  notice  thereof to the
     Company,  which notice shall specify with  particularity the basis for such
     alleged failure;

          (b) Article III will terminate on the tenth anniversary of the date of
     this Agreement; and

          (c) Any portion or all of this  Agreement  will terminate and be of no
     further  force and effect upon a written  agreement  of the parties to that
     effect.

                               VII. MISCELLANEOUS

7.1 Specific  Performance.  The parties  agree that any breach by any of them of
any  provision of this  Agreement  would  irreparably  injure the Company or the
Investor,  as the case may be, and that  money  damages  would be an  inadequate
remedy therefor.  Accordingly,  the parties agree that the other parties will be
entitled to one or more  injunctions  enjoining  any such  breach and  requiring
specific  performance  of this  Agreement and consent to the entry  thereof,  in
addition to any other remedy to which such other  parties are entitled at law or
in equity,  provided,  however, that in the event the Company is legally excused
from and does not in fact comply with its  obligations  under  Section  3.1, the
obligations of the Investors under Articles II and IV will immediately terminate
without further action.

7.2 Notices.  All notices,  requests  and other  communications  to either party
hereunder will be in writing (including telecopy or similar writing) and will be
given:

                  If to the Company, to:
                  ----------------------

                           Omega Healthcare Investors, Inc.
                           900 Victors Way, Suite 350
                           Ann Arbor, Michigan 48108
                           Attention:  Susan Allene Kovach
                           Fax: (734) 887-0322

                  with a copy to:
                  ---------------

                           Powell, Goldstein,  Frazer & Murphy LLP 191 Peachtree
                           Street, N.E.
                           Suite 1600
                           Atlanta, Georgia 30303
                           Attention:  Rick Miller or
                           Eliot Robinson
                           Fax: (404) 572-6999

                  If to Purchaser, to:
                  --------------------

                           Explorer Holdings, L.P.
                           c/o The Hampstead Group, L.L.C.
                           4200 Texas Commerce Tower West
                           2200 Ross Avenue
                           Dallas, Texas 75801
                           Attention:  William T. Cavanaugh
                           Fax: (214) 220-4949

                  with a copy to:
                  ---------------

                           Jones, Day, Reavis & Pogue
                           599 Lexington Avenue
                           New York, New York  10022
                           Attention:  Thomas W. Bark
                           Fax:  (212) 755-7306

or such other address or telecopier  number as such party may hereafter  specify
by  notice  to the other  party  hereto.  Each  such  notice,  request  or other
communication  shall be effective  only when  actually  delivered at the address
specified in this Section 7.2, if delivered  prior to 5:00 (local time) and such
day is a  Business  Day,  and  if  not,  then  such  notice,  request  or  other
communication shall not be effective until the next succeeding Business Day.

7.3 Amendments:  No Waivers.  (a) Any provision of this Agreement may be amended
or waived if, and only if, such amendment or waiver is in writing and signed, in
the case of an  amendment,  by the  Company  and  Purchaser  (who shall have the
authority  to bind all  Investors),  or in the case of a  waiver,  by the  party
against whom the waiver is to be effective.

          (b) No failure or delay by any party in exercising any right, power or
     privilege  hereunder  will operate as a waiver thereof nor shall any single
     or partial  exercise thereof preclude any other or further exercise thereof
     or the  exercise of any other  right,  power or  privilege.  The rights and
     remedies herein provided will be cumulative and not exclusive of any rights
     or remedies provided by law.

7.4  Successors  and Assigns.  The  provisions of this Agreement will be binding
upon and  inure to the  benefit  of the  parties  hereto  and  their  respective
successors and assigns, provided,  however, that none of the parties may assign,
delegate or otherwise  transfer any of their  rights or  obligations  under this
Agreement without the written consent of the other parties hereto.  Neither this
Agreement nor any  provision  hereof is intended to confer upon any Person other
than the parties hereto any rights or remedies hereunder.

7.5 Counterparts;  Effectiveness.  This Agreement may be signed in any number of
counterparts,  each of which will be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Agreement will
become effective when each party hereto shall have received a counterpart hereof
signed by the other party hereto.

7.6 Entire Agreement. This Agreement, the Investment Agreement, the Registration
Rights Agreement and the documents  contemplated  thereby (and all schedules and
exhibits thereto) constitute the entire agreement among the parties with respect
to the subject matter hereof and supersede all prior agreements,  understandings
and  negotiations,  both  written and oral,  between the  parties  with  respect
thereto.

7.7 Governing  Law.  This  Agreement  shall be construed in accordance  with and
governed  by the laws of the State of  Delaware,  without  giving  effect to the
principles of conflict of laws thereof.

7.8  Calculation of Beneficial  Ownership.  Any provision in this Agreement that
refers to a percentage of Voting  Securities  shall be  calculated  based on the
aggregate number of issued and outstanding shares of Common Stock at the time of
such  calculation  (including  any  shares of Common  Stock  that  would then be
issuable  upon the  conversion  of the  Series C  Preferred  or any  outstanding
convertible security), but shall not include any shares of Common Stock issuable
upon any options,  warrants or other  securities that are exercisable for Common
Stock.

7.9 Severability.  In the event that any one or more of the provisions contained
herein,  or the  application  thereof  in any  circumstances,  is held  invalid,
illegal or unenforceable in any respect for any reason,  the validity,  legality
and  enforceability  of any such  provision  in every  other  respect and of the
remaining  provisions contained herein shall not be in any way impaired thereby,
it being  intended that all of the rights and  privileges of the parties  hereto
shall be enforceable to the fullest extent permitted by law.

7.10  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 the  District  of  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.

         (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.

7.11 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY  ACTION,  PROCEEDING,  CLAIM OR  COUNTERCLAIM,
WHETHER IN CONTRACT OR TORT,  AT LAW OR IN EQUITY,  ARISING OUT OF OR IN ANY WAY
RELATED TO THIS AGREEMENT.

7.12 No Strict Construction. The parties hereto have participated jointly in the
negotiation  and  drafting  of this  Agreement.  In the  event an  ambiguity  or
question of intent or interpretation  arises,  this Agreement shall be construed
as if drafted  jointly by the parties  hereto,  and no  presumption or burden of
proof shall arise favoring or disfavoring  any party by virtue of the authorship
of any of the provisions of this Agreement.

                            [Signature page follows]
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly  executed by their  respective  authorized  officers as of the day and year
first above written.

                         EXPLORER HOLDINGS, L.P.

                    By:    EXPLORER HOLDINGS GENPAR, L.L.C., its General Partner

                    By:
                    Name:
                    Title:

                    OMEGA HEALTHCARE INVESTORS, INC.

                     By:
                     Name:
                     Title:

<PAGE>

                                    EXHIBIT A

                          Form of Assumption Agreement

         The  undersigned  hereby  agrees,  effective as of the date hereof,  to
become a party to, and be bound by the provisions of, that certain  Stockholders
Agreement (the "Agreement")  dated as of ________ ___, 2000 by and between Omega
Healthcare,  Inc.  and the Explorer  Holdings,  L.P. and for all purposes of the
Agreement,  the  undersigned  shall be included  within the term  "Investor" (as
defined in the Agreement). The address and facsimile number to which notices may
be sent to the undersigned is as follows:

Facsimile No._______________

                                     [Name]

                                By:  _____________________________
                                Name:
                                Title:

<PAGE>

                                    EXHIBIT B

                              Appraisal Procedures

         If the ROFO Purchaser gives the Offering  Stockholder written notice of
its  disagreement as to the valuation of any non-cash  consideration  payable or
receivable  in a Third  Party  Sale  in  accordance  with  Section  4.2(e)  (the
"Agreement  Deadline"),  then  appraisals  hereunder  shall be undertaken by two
Appraisers  (as  defined  below),  one  selected by the ROFO  Purchaser  and one
selected by the Offering Stockholder,  which appointment shall be made within 15
calendar  days  after the  Agreement  Deadline.  Such  Appraisers  shall have 30
calendar days following the appointment of the last Appraiser to be appointed to
agree  upon the  value of the  consideration  other  than  cash  proposed  to be
received in the Third Party Sale pursuant to Section 4.2 of this  Agreement (the
"Consideration Value"). In the event that such Appraisers cannot so agree within
such period of time, (x) if such Appraisers' valuations do not vary by more than
20%, then the Consideration Value shall be the average of the two valuations and
(y) if such  Appraisers'  valuations  differ by more than 20%,  such  Appraisers
shall mutually agree on a third Appraiser who shall calculate the  Consideration
Value independently.  In the event that the two original Appraisers cannot agree
upon a third  Appraiser  within 30 calendar days following the end of the 30-day
period  referred  to above,  then the third  Appraiser  shall be  determined  by
lottery from a group of two  Appraisers,  one of whom will be  designated by the
ROFO  Purchaser and one of whom will be designated by the Offering  Stockholder.
The third  Appraiser  shall make its  determination  as to  Consideration  Value
within 30 calendar days of its appointment. The third Appraiser's valuation will
be the  Consideration  Value for all purposes  hereof and will not be subject to
appeal or challenge by either the ROFO Purchaser or the Offering Stockholder.

         For  purposes  of  this  Exhibit  B,  "Appraiser"  means  a  nationally
recognized  investment  banking firm that (a) does not have a direct or indirect
material financial  interest in the ROFO Purchaser or the Offering  Stockholder,
(b) has not  received in excess of $250,000 in fees or other  compensation  from
the  ROFO  Purchaser,  the  Offering  Stockholder  or  any of  their  respective
subsidiaries in the preceding 360 days, and (c) is otherwise qualified to render
an appraisal of the Consideration Value.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00010-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00010-of-00352.parquet"}]]