10-K: Annual report pursuant to Section 13 and 15(d)

ADVISORY AGREEMENT


THIS ADVISORY AGREEMENT, dated as of July 14, 2000 (this "Agreement") is
made and entered into between Omega Healthcare Investors, Inc., a Maryland
corporation (the "Company"), and The Hampstead Group, L.L.C., a Texas limited
liability company (the "Advisor").

A. Explorer Holdings, L.P. (the "Purchaser"), an affiliate of the Advisor,
has made a substantial equity investment in the Company pursuant to an
Investment Agreement, dated as of the date hereof, between Purchaser and the
Company (the "Investment Agreement");

B. The Advisor, by and through itself, its affiliates and their respective
officers, employees and representatives, has expertise in the areas of
management, finance, strategy, investment and acquisitions relating to the
business of the Company; and

C. Pursuant to the terms of the Investment Agreement, the Company may
desire to avail itself, during the term of this Agreement, of the expertise of
the Advisor in the aforesaid areas and the Advisor may wish to provide the
services to the Company as herein set forth.

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

1. Advisory Services. (a) The Advisor may, from time to time, consider
advising and assisting the Company in connection with the development of its
strategic plan, including acquisitions, divestitures, new development and
financing matters. The precise nature of the services to be performed hereunder
by the Advisor will be determined from time to time by mutual agreement of the
Advisor and the Company. The Company hereby acknowledges that the persons
performing the foregoing services are full-time employees of the Advisor or
other entities and will not be expected to devote substantially all of their
efforts to the Company but rather only so much of their efforts as, from time to
time, the Advisor determines in its reasonable discretion to be appropriate in
the circumstances. The Advisor will disclose to the Company any material
interest of the Advisor, or its affiliates or designees providing services
hereunder, in matters that are the subject of the advisory services contemplated
hereby, other than the Advisor's interest as a shareholder of the Company and
designees as directors of the Company.

(b) The Advisor and the individuals acting on its behalf that are actually
providing the services contemplated hereby will be independent contractors,
rather than employees or agents, and will have only such authority as is
incident to the discharge of the duties herein contemplated or specifically
authorized from time to time by the Board of Directors of the Company (the
"Board").

2. Consideration. In consideration for the services provided by the Advisor
under this Agreement, the Company will pay to the Advisor such customary
advisory fees (the "Fees") based upon the type and amount of services provided
by the Advisor and as are agreed upon by the Advisor and a majority of those
members of the Board who are "independent directors" having no material
affiliation or relationships with the Purchaser, the Advisor or the Company.

3. Reimbursements. In addition to the Fees, the Company will pay directly
or reimburse the Advisor for its Out-of-Pocket Expenses. Promptly following the
Company's request therefor, the Advisor will provide written substantiation in
reasonable detail relating to any Out-of-Pocket Expenses to be paid or
reimbursed by the Company pursuant to this Agreement. For the purposes of this
Agreement, the term "Out-of-Pocket Expenses" means the out-of-pocket costs and
expenses that are actually and reasonably incurred by the Advisor or its
affiliates in connection with the services rendered hereunder. All
reimbursements for Out-of-Pocket Expenses will be made promptly upon or as soon
as practicable after presentation by the Advisor to the Company of a written
statement therefor.

4. Indemnification. (a) The Company will indemnify and hold harmless the
Advisor, its affiliates, and their respective partners (both general and
limited), members (both managing and otherwise), officers, directors, employees,
agents and representatives (each such person being an "Indemnified Party") from
and against any and all losses, claims, damages and liabilities, whether joint
or several (the "Indemnifiable Losses"), related to, arising out of or in
connection with the services contemplated by this Agreement or the engagement of
the Advisor pursuant to, and the performance by the Advisor of the services
contemplated by, this Agreement, whether or not pending or threatened, whether
or not an Indemnified Party is a party and whether or not such action, claim,
suit, investigation or proceeding (a "Claim") is initiated or brought by the
Company directly, derivatively or otherwise, including without limitation any
action, suit, proceeding or investigation arising out of any action or failure
to take action by the Company or any of its subsidiaries, whether or not based
on a theory of primary or secondary liability, and will reimburse any
Indemnified Party for all reasonable costs and expenses (including reasonable
attorneys' fees and expenses) as they are incurred in connection with
investigating, preparing, pursuing, defending or assisting in the defense of any
Claim for which the Indemnified Party would be entitled to indemnification under
the terms of this sentence, or any action or proceeding arising therefrom,
whether or not such Indemnified Party is a party thereto, provided that, subject
to the following sentence, the Company, upon execution of a written undertaking
reasonably satisfactory to the Advisor confirming the Company's indemnity
obligations hereunder (without any reservation of rights other then as permitted
elsewhere herein) and expressly releasing all Indemnified Parties from any and
all liability related to the matter in question subject to the limitations
contained herein (such undertaking, an "Indemnity Undertaking") will be entitled
to assume the defense thereof at its own expense, with counsel satisfactory to
such Indemnified Party in its reasonable judgment. Any Indemnified Party may, at
its own expense, retain separate counsel to participate in such defense, and in
any Claim in which both the Company and/or one or more of its subsidiaries, on
the one hand, and an Indemnified Party, on the other hand, is, or is reasonably
likely to become, a party, such Indemnified Party will have the right to employ
separate counsel at the expense of the Company and to control its own defense of
such Claim if, in the reasonable opinion of counsel to such Indemnified Party, a
conflict or potential conflict exists between the Company, on the one hand, and
such Indemnified Party, on the other hand, that would make such separate
representation advisable. The Indemnified Party shall give prompt notice to the
Company of any actual or asserted event or occurrence that could reasonably be
expected to give rise to a Claim. The failure by an Indemnified Party to notify
the Company of a Claim will not relieve the Company from any liability hereunder
unless, and only to the extent that, the Company did not learn of such Claim and
such failure shall materially prejudice the ability of the Company to defend
such Claim or otherwise perfect rights to any insurance coverage relating
thereto. The Company will not, without the prior written consent of the
applicable Indemnified Party, settle, compromise or consent to the entry of any
judgment in any pending or threatened Claim relating to the matters contemplated
hereby (if any Indemnified Party is a party thereto or has been threatened to be
made a party thereto) unless such settlement, compromise or consent includes an
unconditional release of the applicable Indemnified Party from all liability
arising or that may arise out of such Claim. Provided the Company is not in
breach of its indemnification obligations hereunder, no Indemnified Party may
settle or compromise any Claim subject to indemnification hereunder without the
consent of the Company provided that prior thereto such Indemnified Party has
been furnished with an Indemnity Undertaking.

(b) If any indemnification sought by any Indemnified Party pursuant to this
Section is unavailable for any reason or is insufficient to hold the Indemnified
Party harmless against any Indemnifiable Losses referred to herein, then the
Company will contribute to the Indemnifiable Losses for which such
indemnification is held unavailable or insufficient in such proportion as is
appropriate to reflect the relative benefits received (or anticipated to be
received) by the Company, on the one hand, and the Advisor, on the other hand,
in connection with the transactions which gave rise to such Indemnifiable Losses
or, if such allocation is not permitted by applicable law, not only such
relative benefits but also the relative faults of the Company, on the one hand,
and the Advisor, on the other hand, as well as any other equitable
considerations, subject to the limitation that in any event the aggregate
contribution by the Indemnified Parties to all Indemnifiable Losses with respect
to which contribution is available hereunder will not exceed the Fees paid
through the date on which (or, if more than one date, the last date on which the
conduct occurred that gave rise to the Indemnifiable Loss).

(c) Notwithstanding any other provision hereof, none of the Advisor nor any
employee, officer, director or other related person or entity will have any
liability or obligation by reason of this Agreement for performance or
nonperformance of services contemplated hereby except and solely to the extent
that it is judicially determined by a court of competent jurisdiction that such
person intentionally breached or caused to be breached a material provision of
this Agreement. The parties hereto hereby expressly disclaim any liability or
obligation of the Advisor and its affiliates or any of their respective
employees, officers, directors and other related persons or entities for actual
or alleged negligence of any character in connection with the services
contemplated by this Agreement.

(d) The provisions of this Section 4 will be in addition to and in no
manner limit or otherwise affect any other right that the Advisor or any other
Indemnified Party may have, whether by contract, or arising as a matter of law
or the constituent documents of any other entity.

5. Term. This Agreement will terminate by (i) mutual consent of the parties
or (ii) on or after July 1, 2001, by either the Company or the Advisor with or
without cause on 60 calendar days prior notice to the other. The termination or
expiration of the term of this Agreement will not affect the Advisor's rights
(i) under Sections 3 or 4 hereof (which will survive any termination or
expiration of this Agreement) and (ii) under Section 2 to receive the amount of
Fees pro rated based upon the portion of services performed prior to such
termination.

6. Miscellaneous. (a) No amendment or waiver of any provision of this
Agreement, or consent to any departure by either party hereto from any such
provision, shall be effective unless the same shall be in writing and signed by
each of the parties hereto. Any amendment, waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given. The
waiver by any party of any breach of this Agreement shall not operate as or be
construed to be a waiver by such party of any subsequent breach.

(b) Any notices or other communications required or permitted hereunder
shall be sufficiently given if delivered personally or sent by facsimile,
Federal Express or other nationally recognized overnight courier, addressed as
follows or to such other address of which the parties may have given notice:

If to the Advisor: The Hampstead Group, L.L.C.
4200 Texas Commerce Tower West
2000 Ross Avenue
Dallas, Texas 75201
Attention: William T. Cavanaugh, Jr.
Facsimile: (214) 220-4949

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

Unless otherwise specified herein, such notices or other communications shall be
deemed received (i) on the date delivered, if delivered personally or sent by
facsimile, and (ii) one business day after being sent by Federal Express or
other overnight courier.

(c) This Agreement shall be governed by, and construed and interpreted in
accordance with, the laws of the State of Delaware. This Agreement shall inure
to the benefit of, and be binding upon, the parties hereto and their respective
successors and assigns. The provisions of Section 4 shall inure to the benefit
of each Indemnified Party.

(d) This Agreement may be executed by one or more parties to this Agreement
on any number of separate counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.

(e) The waiver by any party of any breach of this Agreement shall not
operate as or be construed to be a waiver by such party of any subsequent
breach.

(f) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall be not invalidate or render unenforceable such provision in
any other jurisdiction.

(g) For purposes of this Agreement, (i) "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 and
(ii) "person" means an individual, corporation, partnership, limited liability
company, joint venture, association, trust, unincorporated organization or other
entity.

(h) When a reference is made in this Agreement to an Article, Section,
Exhibit or Schedule, such reference is to a Section of 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 defined in this
Agreement will have the 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. References to a person are also to its
permitted successors and assigns.

(i) This Agreement (including the documents and instruments referred to
herein) (i) constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter of this Agreement and (ii) except for the
provisions of Section 4, are not intended to confer upon any person other than
the parties any rights or remedies.

(j) Neither this Agreement nor any of the rights, interests or obligations
under this Agreement may be assigned, in whole or in part, by operation of law
or otherwise by either of the parties hereto without the prior written consent
of the other party; provided however, that the Advisor may assign its rights and
obligations under this Agreement to an Affiliate of Advisor without the consent
of the Company provided that no such assignment shall relieve Advisor of its
obligations under this Agreement. Any assignment in violation of the preceding
sentence will be void. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.

(k) The parties agree that irreparable damage would occur and that the
parties would not have any adequate remedy at law in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were 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 of this
Agreement in any federal court located in the State of Delaware or in Delaware
state court, this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any federal court
located in the State of Delaware and or any Delaware state court in the event
any dispute arises out of this Agreement or any of the transactions contemplated
by this Agreement, (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
and (c) agrees that it will not bring any action relating to this Agreement or
any of the transactions contemplated by this Agreement in any court other than a
federal court sitting in the State of Delaware or a Delaware state court.



[Signature page follows]







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


OMEGA HEALTHCARE INVESTORS, INC.


By: /s/ Susan Allene Kovach
---------------------------
Name: Susan Allene Kovach
Title: Vice President


THE HAMPSTEAD GROUP, L.L.C.


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