S-11/A: Registration statement for securities to be issued by real estate companies

EXHIBIT 10.43

AMENDMENT NO. 3 TO LOAN AGREEMENT

AMENDMENT NO. 3 TO LOAN AGREEMENT (this "AMENDMENT NO. 3"), made and
executed this 21st day of December, 2001, by and among:

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

The lenders that have executed the signature pages hereto
(individually, a "LENDER" and collectively, the "LENDERS"); and

THE PROVIDENT BANK, an Ohio banking corporation, as Agent for the
Lenders (in such capacity, together with its successors in such capacity, the
"AGENT").

PRELIMINARY STATEMENTS

(A) The Borrowers have entered into a certain Loan Agreement dated
August 11, 2000, as amended by that certain Amendment No. 1 to Loan Agreement
dated November 30, 2000 and that certain Amendment No. 2 dated December 31, 2000
(hereinafter referred to, as amended, as the "LOAN AGREEMENT") with the Agent
and the Lenders; and

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

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

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

2. CERTAIN WAIVERS.


2.1 Borrowers have advised Agent of the following matter (the
"Aggregate EBITDAR Default") which constitutes an Event of Default under the
Loan Agreement:

2.1.1 Notwithstanding the provisions of Section 7.9(c)(i) of
the Loan Agreement, the Aggregate EBITDAR for the Properties constituting the
Real Property Collateral has been less than $16,300,000.

2.2 Borrowers have also advised Agent of the following matters
(collectively, the "Specified Events of Default") which constitute Events of
Default under the Loan Agreement:

2.2.1 Notwithstanding the requirements of Section 7.9(a)(iv)
of the Loan Agreement, Omega's Interest Coverage has been less than 200%.


2.2.2 Notwithstanding the requirements of Section 7.9(a)(v) of
the Loan Agreement, Omega's Leverage Ratio has been greater than 5.50:1.00.

2.3 Borrowers have also advised Agent of the following contemplated
matters (collectively, the "Contemplated December 31 Defaults") which constitute
Events of Default under the Loan Agreement:

2.3.1 Notwithstanding the requirements of Section 7.9(a)(ii)
of the Loan Agreement, Borrowers contemplate that Omega will have failed to
maintain Tangible Net Worth of not less than $445,000,000, as adjusted as
provided in such Section, as of December 31, 2001.

2.3.2 Notwithstanding the requirements of Section 7.9(b) of
the Loan Agreement, Borrowers contemplate that Omega will incur a Net Loss for
its fiscal year ending December 31, 2001.

2.4 Agent and Lenders hereby (i) waive the Aggregate EBITDAR Default
for the period from December 15, 2001 through December 31, 2001, (ii) waive the
Specified Events of Default for the period from December 15, 2001 through the
earlier of February 28, 2002 and the "Effective Date" (as defined in Section 5
of this Amendment No. 3), and (iii) agree to forbear exercising any rights and
remedies with respect to the Contemplated December 31 Defaults for the period
commencing on December 31, 2001 through and including the earlier of February
28, 2002 and the Effective Date; PROVIDED, HOWEVER, that the waivers and
forbearance granted pursuant to this Section 2.4 (a) are limited to the matters
expressly stated above and only for the periods stated above, (b) shall not be
deemed to be a waiver of, or forbearance with respect to, any violations of any
other provisions of the Loan Agreement, and (c) prior to the Effective Date are
subject to your agreement and acknowledgment that notwithstanding such waivers
and forbearance, Borrowers shall not request and the Lenders are under no
obligation to continue to make, any Loans under the Loan Agreement, irrespective
of whether Borrowers repay or prepay any outstanding Loans.

3. CERTAIN AMENDMENTS TO THE LOAN AGREEMENT. Subject to the terms and
conditions of this Amendment No. 3, the Loan Agreement shall be amended as of
the "Effective Date" (as defined in Section 5 of this Amendment No. 3) as
follows:

3.1 Article 1, Section 1.2, of the Loan Agreement is hereby amended by
adding the following new defined terms thereto:

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

3.1.2 "FIFTY MILLION DOLLAR EQUITY CONTRIBUTION" means
aggregate equity purchases and/or contributions to Omega of not less than
$50,000,000 in cash (before payment of the direct costs of the issuance of the
securities in connection therewith) pursuant to documentation in form and
substance satisfactory to Agent.

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3.1.3 "FLEET DOCUMENTS" mean all agreements, documents and
instruments entered into in connection with the Fleet Obligations.

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

3.1.5 "KARRINGTON LAWSUIT means that certain lawsuit styled
KARRINGTON HEALTH, INC. V. OMEGA HEALTHCARE INVESTORS, INC. originally filed in
the Common Pleas Court of Franklin County, Ohio, and subsequently removed to the
United States District Court for the Southern District of Ohio, Eastern
Division, which lawsuit and all claims arising therefrom were settled in full by
Omega on August 31, 2001 without admission of any liability or fault by Omega.

3.1.6 "RONCALLI PREPAYMENT" means a voluntary prepayment on
the Loans in the principal amount of $6,000,000 made by Borrowers in order to
remove any of the Roncalli Properties from the Real Property Collateral pursuant
to Section 3.5 of this Agreement. In no event shall any portion of the Ten
Million Dollar Prepayment which may be made be considered as part of the
Roncalli Prepayment.

3.1.7 "RONCALLI PROPERTIES" mean Borrowers' Roncalli Health
Centers located in New Haven, West Haven and Griswold, Connecticut.

3.1.8 "TEN MILLION DOLLAR PREPAYMENT" means a mandatory
prepayment on the Loans in the principal amount of $10,000,000 pursuant to
Section 2.6(e) of this Agreement. In no event shall any portion of the Roncalli
Prepayment which may be made be considered as part of the Ten Million Dollar
Prepayment.

3.2 The definition of "Fleet Obligations" contained in Article 1,
Section 1.2, of the Loan Agreement shall be amended and restated to read in its
entirety as follows:

"FLEET OBLIGATIONS" means the obligations of Omega and certain of its
Affiliates under the Loan Agreement dated as of June 15, 2000, among Omega and
certain of its Affiliates, the "Banks" named therein, and Fleet Bank, N.A., as
Agent for such Banks, as amended by an Amendment No. 1 dated August 15, 2000, an
Amendment No. 2 dated November 20, 2000, an Amendment No. 3 dated January 30,
2001, and an Amendment No. 4 dated December 21, 2001, and under the other
agreements, documents and instruments entered into in connection therewith.

3.3 The definition of "Maximum Commitment" contained in Article 1,
Section 1.2, of the Loan Agreement shall be amended and restated to read in its
entirety as follows:

"MAXIMUM COMMITMENT" means (i) Sixty-Five Million and 00/100 Dollars
($65,000,000.00) with respect to Revolving Loan A, (ii) Ten Million and 00/100
Dollars ($10,000,000.00) with respect to Revolving Loan B, (iii) Seventy-Five
Million and 00/100 Dollars ($75,000,000.00) with respect to the Loans on and
after the Closing Date and prior to the Termination Date of Revolving Loan B,
and (iv) Sixty-Five Million and 00/100 Dollars ($65,000,000.00) on and after the
Termination Date of Revolving Loan B and prior to the Termination Date of
Revolving Loan A; PROVIDED, HOWEVER, that (1) the Revolving Loan A Commitment
and/or Revolving Loan B Commitment of each Lender shall be permanently


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reduced by the principal prepayments of Revolving Loan A and/or Revolving Loan B
received by such Lender pursuant to Section 2.8 of this Agreement in connection
with the Ten Million Dollar Prepayment and/or the Roncalli Prepayment, (2) the
Maximum Commitment and the aggregate Loan Commitments of the Lenders shall be
permanently reduced by the amount of any Ten Million Dollar Prepayment and/ or
Roncalli Prepayment made pursuant to the terms of this Agreement, and (3) to the
extent that such commitments are permanently reduced as provided herein,
Borrowers shall not be permitted to reborrow such amounts notwithstanding any
provisions contained in this Agreement to the contrary.

3.4 Section 2.3(b) of the Loan Agreement shall be amended and restated
to read in its entirety as follows:

(b) On and after the Closing Date and prior to the Termination
Date of Revolving Loan B (or earlier prepayment in full of Revolving
Loan B in connection with the Ten Million Dollar Prepayment and/or the
Roncalli Prepayment), the amount of each advance made under this
Agreement shall be allocated 86.67% to Revolving Loan A and 13.33% to
Revolving Loan B. Thereafter, the amount of each advance under this
Agreement shall be allocated 100% to Revolving Loan A. Agent shall
promptly notify each Lender of its Pro Rata Share of each requested
Loans advance and the date of such advance. On the borrowing date
specified in such notice, each Lender shall make its share of the
advance available at the Head Office of Agent for deposit to such
account as Agent shall designate, no later than 1:00 p.m. Cincinnati
time in Federal or other immediately available funds.

3.5 Section 2.6(a) of the Loan Agreement shall be amended and restated
to read in its entirety as follows:

(a) VOLUNTARY REPAYMENTS ON THE LOANS. Borrowers shall have
the right to repay the principal of the Loans in full or in part at any
time and from time to time (including, without limitation by way of the
Roncalli Prepayment), without any penalty or premium except as provided
in Section 2.7(a) hereof.

3.6 Section 2.6(d) of the Loan Agreement shall be amended and restated
to read in its entirety as follows:

(d) NET ISSUANCE PROCEEDS. If any Borrower shall make any
public or private issuance of Indebtedness or equity (other than in
connection with any dividend reinvestment program(s), the Investment
Agreement, the Fleet Obligations, the Fifty Million Dollar Equity
Contribution or the Preferred Dividend Payment Indebtedness (provided
that such Indebtedness by its terms matures later than December 31,
2003)), Borrowers shall promptly notify Agent of such issuance and,
immediately upon receipt of such Net Issuance Proceeds, repay the Loans
as follows: (i) if and to the extent that pursuant to the Fleet
Obligations any Borrower is required to apply Net Issuance Proceeds to
repay the Fleet Obligations and the Net Issuance Proceeds exceed the
amount necessary to reduce the then outstanding Fleet Obligations to
zero or (ii) the Fleet Obligations have been terminated not in
connection with or as a result of replacement financing. If the Fleet
Obligations are terminated in connection with or as a result of
replacement financing (whether secured or unsecured), then any
subsequent Net Issuance Proceeds shall be applied, on a pro rata basis
(in accordance with the relative aggregate commitments of the lenders
under the replacement financing and the aggregate commitments of

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Lenders under this Agreement), to repay the then outstanding
obligations under the replacement financing and the Loans.

3.7 Section 2.6 of the Loan Agreement shall be amended by adding the
following new Subsection (e) thereto:

(e) TEN MILLION DOLLAR PREPAYMENT. Upon receipt by Borrowers
of commitments to make the Fifty Million Dollar Equity Contribution,
Borrowers shall make the Ten Million Dollar Prepayment on the Loans,
and the proceeds of such prepayment shall be applied to the Loans as
provided in Section 2.8 of this Agreement.

3.8 Section 2.8(b)(i) of the Loan Agreement shall be amended and
restated to read in its entirety as follows:

(i) NO DEFAULT. If the Notes have not been accelerated
pursuant to Section 9.1 and if no Event of Default shall have occurred
and be continuing at the time Agent receives such funds, in the
following manner: (a) first, to the payment of all reasonable fees,
charges and other sums (with the exception of principal and interest)
due and payable to Agent or Lenders under the Notes, this Agreement or
the other Loan Documents at such time; (b) second, if the payment is
the Ten Million Dollar Prepayment, to payment of all interest accrued
on the Revolving Loan B Notes, then to payment of all principal
outstanding under the Revolving Loan B Notes until the Revolving Loan B
Notes are paid in full, then to payment of all interest accrued on the
Revolving Loan A Notes, then to payment of principal outstanding under
the Revolving Loan A Notes, in accordance with each Lender's Pro Rata
Share; (c) third, if the payment is made on the Termination Date of
Revolving Loan B, such date is not also the Termination Date of
Revolving Loan A, and Revolving Loan B has not been paid in full by way
of the Ten Million Dollar Prepayment, to the payment of all interest
accrued on the principal of the Revolving Loan B Notes, then to the
payment of all principal outstanding under the Revolving Loan B Notes
until the Revolving Loan B Notes are paid in full, in accordance with
each Lender's Pro Rata Share; (d) fourth, if Revolving Loan B has not
been paid in full, (A) 86.67% to the payment of all interest due and
payable on the principal of the Revolving Loan A Notes, in accordance
with each Lender's Pro Rata Share of Revolving Loan A, and (B) 13.33%
to the payment of all interest due and payable on the principal of the
Revolving Loan B Notes, in accordance with each Lender's Pro Rata Share
of Revolving Loan B; (e) fifth, if Revolving Loan B has not been paid
in full, (I) 86.67% to the payment of the outstanding principal amount
of the Revolving Loan A Notes, in accordance with each Lender's Pro
Rata Share of Revolving Loan A, and (II) 13.33% to the payment of the
outstanding principal amount of the Revolving Loan B Notes, in
accordance with each Lender's Pro Rata Share of Revolving Loan B; (f)
sixth, if Revolving Loan B has been paid in full, to the payment of all
interest accrued on the principal of the Revolving Loan A Notes, then
to payment of all principal outstanding under the Revolving Loan A
Notes, in accordance with each Lender's Pro Rata Share; (g), seventh,
to the other Obligations in such amounts and in such order and priority
as Agent, in its sole discretion may determine; and (h) eighth, to
Borrowers.

3.9 Section 2.10 of the Loan Agreement shall be amended and restated to
read in its entirety as follows:

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Section 2.10 PERMITTED USES OF LOAN PROCEEDS. Borrowers
represent, warrant and covenant to Agent and each Lender that all proceeds of
the Loans shall be used by the Borrower solely for the purpose of repayment of
existing Indebtedness for Borrowed Money of Borrowers (including the payments
required under Section 5.1(i) of this Agreement), and for general corporate and
working capital purposes (including without limitation those contemplated by
Sections 8.2, 8.10 and 8.15 of this Agreement); provided, however, that in no
event shall any proceeds of the Loans be used to pay Accrued Catch-Up Dividends
if a Default or Event of Default shall then exist or would exist after giving
effect to any such payment.

3.10 Section 3.5 of the Loan Agreement shall be amended by adding the
following new Subsection (g) thereto:

(g) Notwithstanding anything contained in this Agreement to
the contrary, in no event shall Borrowers be entitled to have any of
the Roncalli Properties removed from serving as Real Property
Collateral hereunder unless and until the Roncalli Prepayment shall
have been made in full, in addition to satisfying the other conditions
in this Agreement for such removal.

3.11 Section 7.9(a)(ii) of the Loan Agreement shall be amended and
restated to read in its entirety as follows:

(ii) Tangible Net Worth (after all Equity Contributions under
the Investment Agreement and the Fifty Million Dollar Equity
Contribution) of not less than (A) $400,000,000 before March 31, 2002,
(B) $425,000,000 on and after March 31, 2002 and before September 30,
2002, and (C) $430,000,000 on and after September 30, 2002, plus 50% of
(i) the Net Issuance Proceeds received by Omega (or any of its
Subsidiaries) in connection with the issuance of any equity interest in
Omega (or any of its Subsidiaries) other than any such equity interests
issued in connection with Equity Contributions under the Investment
Agreement, in connection with the Fifty Million Dollar Equity
Contribution and in connection with any dividend reinvestment
program(s), and (ii) the value (determined in accordance with GAAP) of
any capital stock issued by Omega upon the conversion of convertible
Indebtedness; and

3.12 Section 7.9(a)(iv) of the Loan Agreement shall be amended and
restated to read in its entirety as follows:

(iv) Interest Coverage of not less than (A) 200% as of March
31, 2002, (B) 225% as of June 30, 2002 and September 30, 2002, (C) 250%
as of December 31, 2002, and (D) 275% as of March 31, 2003 and as of
the end of each fiscal quarter thereafter; and

3.13 Section 7.9(a)(v) of the Loan Agreement shall be amended and
restated to read in its entirety as follows:

(v) A Leverage Ratio of (A) not greater than 5.50:1.00 on and
before March 31, 2002; (B) not greater than 5.00:1.00 after March 31,
2002 and before September 30, 2002; and (C) not greater than 4.75:1.00
on September 30, 2002 and thereafter.

3.14 Section 7.9(b) of the Loan Agreement shall be amended and restated
to read in its entirety as follows:

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(b) [RESERVED]

3.15 Section 7.9(e) of the Loan Agreement is amended and restated to
read in its entirety as follows

(e) For purposes of computing the financial covenants contained in
Section 7.9 of the Loan Agreement, the following will be excluded from the
calculation of "Adjusted EBITDA" provided that Borrowers shall have submitted
documentation in form and substance satisfactory to Agent evidencing such
exclusions:

(i) A one time charge of $4,664,861, incurred by Omega during
the third quarter of 2000, in connection with severance and consulting costs
arising from the consummation of certain transactions contemplated by the
Investment Agreement;

(ii) A one time charge of $11,000,000 related to the settlement
of the Karrington Lawsuit (including up to $1,000,000 in legal expenses already
incurred as of the date of Amendment No. 3 to this Agreement);

(iii) $5,000,000 constituting expenses related to the
relocation of Omega's headquarters to Baltimore, Maryland, including severance
costs incurred in connection therewith;

(iv) Up to $31,000,000 in the aggregate for certain loss/
impairment charges satisfactory to Agent related to certain of Omega's
investments;

(v) $5,000,000 in the aggregate in connection with litigation
settlement charges (in addition to settlement charges relating to the Karrington
Lawsuit referred to in (ii) above) and Medicare charges;

(vi) Up to $12,000,000 in connection with the costs associated
with collections of, and reserves taken against, accounts receivable associated
with certain Facilities which are owned and operated by Omega and/or certain of
its Subsidiaries;

(vii) Up to $5,000,000 in the aggregate related to one-time
charges incurred by Borrowers in connection with the termination of certain
third-party leases; and

(viii) Non-cash charges related to changes in the effect of a
change occurring in GAAP or in the application thereof on derivatives (FASB
Statement No. 133).

3.16 Section 7.9 of the Loan Agreement shall be amended by adding the
following new Subsection (f) thereto:

(f) For purposes of computing the financial covenant contained
in Subsection 7.9(a)(ii) above, from and after the Catch-Up Date, the
amount of Accrued Catch-Up Dividends shall be added to Tangible Net
Worth to the extent such amount(s) have been externally financed
(provided the calculation of Accrued Catch-Up Dividends shall be set
forth in writing delivered to and in form and substance satisfactory to
Agent, which shall include a description of the source of payment
therefor).

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3.17 Section 7.9 of the Loan Agreement shall be amended by adding the
following new Subsection (g) thereto:

(g) For purposes of computing the financial covenant contained
in Subsection 7.9(a)(iii) above, from and after the Catch-Up Date,
there shall be subtracted from the computation of "Cash dividends", the
amount of the Accrued Catch-Up Dividends to the extent that such
amounts have been externally financed (provided the calculation of
Accrued Catch-Up Dividends shall be set forth in writing delivered to
and in form and substance satisfactory to Agent, which shall include a
description of the source of payment therefor).

3.18 Section 8.11(b) of the Loan Agreement shall be amended and
restated to read in its entirety as follows:

(b) The Fleet Obligations; provided, however, that
notwithstanding anything contained in this Agreement or any Schedule
thereto to the contrary, in no event shall any material amendment or
modification to or supplement of any of the Fleet Obligations
(including, without limitation, with respect to commitment and/or
principal amount, interest rate, payment terms, maturity, fees,
collateral and/or covenants) be permitted without the prior written
consent of Agent and Lenders, which consent shall not be unreasonably
withheld;

3.19 Section 8.11(g) of the Loan Agreement shall be amended and
restated to read in its entirety as follows:

(g) Indebtedness, the terms of which (i) shall not require or
permit any principal payments thereon prior to payment in full of the
Obligations, and (ii) shall not cause a violation of the restriction
contained in the last paragraph of Schedule 8.11 to this Agreement.

3.20 Section 8.15 of the Loan Agreement shall be amended and restated
to read in its entirety as follows:

Section 8.15 REDEMPTIONS; DISTRIBUTIONS. No Borrower shall:

(a) Purchase, redeem, retire or otherwise acquire, directly or
indirectly, or make any sinking fund payments with respect to, any shares of any
class of stock of Omega or any Subsidiary now or hereafter outstanding or set
apart any sum for such purpose unless (i) the June 2002 Notes have been paid in
full or the Requisite Lenders are satisfied that sources of funds are and will
remain available to repay the June 2002 Notes in full, and (ii) after giving
effect thereto (A) no Event of Default shall exist, (B) there shall be at least
$15,000,000 available under the Revolving Loan A Commitment or the Credit
Commitment under the Fleet Obligations or any other line of credit or similar
facility; and (C) the aggregate amount of all such purchases, redemptions and
payments shall be less than $15,000,000; or

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

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

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(ii) Omega may declare and make "payment in kind"
dividends to Explorer Holdings, L.P. in respect of the Series C Convertible
Preferred Stock of Omega as contemplated under the Investment Agreement;

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

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

(v) Omega may pay the Accrued Catch-Up Dividends provided
that (A) no Default or Event of Default exists or would be caused by such
payment, (B) the June 2002 Notes have been paid in full or the Requisite Lenders
are satisfied that sources of funds will remain available to pay the June 2002
Notes in full, and (C) Borrowers shall deliver to Agent in reasonable written
detail a calculation of the amount thereof which shall include a description of
the source of payment therefor.

4. REPRESENTATIONS AND WARRANTIES. In order to induce the Lenders and
the Agent to enter into this Amendment No. 3, each of the Borrowers hereby
represents and warrants to the Lenders and the Agent, as to itself with respect
to the Loan Documents to which it is a party, as of the date hereof and as of
the Effective Date (as defined in Section 5 of this Amendment No. 3) that:

4.1 NO DEFAULT. After giving effect to this Amendment No. 3, no Default
or Event of Default shall have occurred or be continuing.

4.2 EXISTING REPRESENTATIONS AND WARRANTIES. After giving effect to
this Amendment No. 3, each and every one of the representations and warranties
set forth in the Loan Documents are true, accurate and complete in all respects
and with the same effect as though made on the date hereof, and each is hereby
incorporated herein in full by reference as if restated herein in its entirety,
except for changes in the ordinary course of business which are not prohibited
by the Loan Agreement (as amended hereby) and which do not, either singly or in
the aggregate, have a Material Adverse Effect.

4.3 AUTHORITY; ENFORCEABILITY. (i) The execution, delivery and
performance by each Borrower of this Amendment No. 3 are within its
organizational powers and have been duly authorized by all necessary action
(corporate or otherwise) on the part of each Borrower, (ii) this

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Amendment No. 3 is the legal, valid and binding obligation of each Borrower,
enforceable against each Borrower in accordance with its terms, and (iii) this
Amendment No. 3 and the execution, delivery and performance by each Borrower
hereof does not: (A) contravene the terms of any Borrower's organization
documents, (B) conflict with or result in any breach or contravention of, or the
creation of any Lien under, any document evidencing any contractual obligation
to which any Borrower is a party or any order, injunction, writ or decree to
which any Borrower or its property is subject, or (C) violate any requirement of
law.

5. CONDITIONS TO EFFECTIVENESS OF WAIVERS AND AMENDMENTS. The
amendments in Section 3 of this Amendment No. 3 shall become effective on the
date (the "Effective Date") that the following conditions precedent have been
fulfilled to the satisfaction of Agent (which in any event shall be no later
than February 28, 2002):

5.1 Agent shall have received this Amendment No.3 duly executed by a
duly authorized officer or officers of each Borrower, Agent and each Lender.

5.2 Borrowers shall have executed and delivered Fleet Documents with
respect to the Fleet Obligations, in form and substance satisfactory to Agent,
and shall have delivered true and complete copies of all Fleet Documents to
Agent, including, without limitation evidence satisfactory to Agent and Lenders
of the borrowing availability under the Fleet Documents.

5.3 Agent shall have received documentation, in form and substance
satisfactory to Agent, that the Fifty Million Dollar Equity Contribution has
been consummated.

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

5.5 The Agent shall have received a certificate of the Secretary or
Assistant Secretary of each Borrower (i) attaching a true and complete copy of
the resolutions of its Board of Directors and of all documents evidencing all
necessary corporate action (in form and substance satisfactory to Agent) taken
by it to authorize this Amendment No. 3, (ii) certifying that its certificate of
incorporation and bylaws have not been amended since August 11, 2000, or, if so,
setting forth the same, and (iii) setting forth the incumbency of its officer or
officers who may sign this Amendment, including therein a signature specimen of
such officer or officers.

5.6 Agent shall have received such other documents as it shall
reasonably request.

6. REFERENCE TO AND EFFECT UPON THE LOAN AGREEMENT.

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

6.2 NO WAIVER; REFERENCES. The execution, delivery and effectiveness of
this Amendment No. 3 shall not operate as a waiver of any right, power or remedy
of the Agent or any Lender under the Loan Agreement, nor constitute a waiver of
any provision of the Loan Agreement, except as specifically set forth herein.
Upon the effectiveness of this Amendment No. 3, each reference in:

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

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

6.2.3 the Loan Documents to the "Loan Documents" shall be
deemed to include this Amendment No. 3.

7. MISCELLANEOUS.

7.1 EXPENSES. The Borrowers agree to pay the Agent upon demand for all
reasonable expenses, including reasonable attorneys' fees and expenses of the
Agent, incurred by the Agent in connection with the preparation, negotiation and
execution of this Amendment No. 3.

7.2 LAW. THIS AMENDMENT NO. 3 SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF OHIO.

7.3 SUCCESSORS. This Amendment No. 3 shall be binding upon the
Borrowers, the Lenders and the Agent and their respective successors and
assigns, and shall inure to the benefit of the Borrowers, the Lenders and the
Agent and the successors and assigns of the Lenders and the Agent.

7.4 EXECUTION IN COUNTERPARTS. This Amendment No. 3 may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute one and the same
instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 3
to be executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.

LENDERS AND AGENT:

THE PROVIDENT BANK, as Lender and Agent


By: ___________________________________________

Its: ________________________________________



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BB&T (Successor by merger to One Valley Bank)


By: ______________________________________________

Its: ___________________________________________


GREAT AMERICAN INSURANCE COMPANY


By: ______________________________________________

Its: ___________________________________________

GREAT AMERICAN LIFE INSURANCE COMPANY


By: ______________________________________________

Its: ___________________________________________



BORROWERS:

OMEGA HEALTHCARE INVESTORS, INC.

STERLING ACQUISITION CORP.

DELTA INVESTORS I, LLC

OHI (CONNECTICUT) INC.


By: ______________________________________________

Its: ___________________________________________


___________________, as an executive officer of all of the
aforementioned Borrowers, has executed this Amendment No. 3 and intending that
all of the Borrowers above named are bound and are to be bound by the one
signature as if (s)he had executed this Amendment No. 3 separately for each of
the above named Borrowers.

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