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

OMEGA HEALTHCARE INVESTORS, INC.

2000 STOCK INCENTIVE PLAN






















OMEGA HEALTHCARE INVESTORS, INC.

2000 STOCK INCENTIVE PLAN

TABLE OF CONTENTS

PAGE

SECTION I. DEFINITIONS........................................................1

1.1 DEFINITIONS...........................................................1
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SECTION 2 THE STOCK INCENTIVE PLAN............................................5

2.1 PURPOSE OF THE PLAN...................................................5
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2.2 STOCK SUBJECT TO THE PLAN.............................................5
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2.3 ADMINISTRATION OF THE PLAN............................................5
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2.4 ELIGIBILITY AND LIMITS................................................5
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2.5 NON-EMPLOYEE DIRECTOR STOCK OPTION GRANTS.............................6
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SECTION 3 TERMS OF STOCK INCENTIVES...........................................6

3.1 TERMS AND CONDITIONS OF ALL STOCK INCENTIVES..........................6
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3.2 TERMS AND CONDITIONS OF OPTIONS.......................................7
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(A) OPTION PRICE.................................................7
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(B) OPTION TERM..................................................8
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(C) PAYMENT......................................................8
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(D) CONDITIONS TO THE EXERCISE OF AN OPTION......................8
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(E) TERMINATION OF INCENTIVE STOCK OPTION........................8
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(F) SPECIAL PROVISIONS FOR CERTAIN SUBSTITUTE OPTIONS............9
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3.3 TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS.....................9
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(A) SETTLEMENT...................................................9
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(B) CONDITIONS TO EXERCISE.......................................9
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3.4 TERMS AND CONDITIONS OF STOCK AWARDS.................................10
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3.5 TERMS AND CONDITIONS OF DIVIDEND EQUIVALENT RIGHTS...................10
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(A) PAYMENT.....................................................10
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(B) CONDITIONS TO PAYMENT.......................................10
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3.6 TERMS AND CONDITIONS OF PERFORMANCE UNIT AWARDS......................10
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(A) PAYMENT.....................................................10
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(B) CONDITIONS TO PAYMENT.......................................11
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3.7 TERMS AND CONDITIONS OF PHANTOM SHARES...............................11
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(A) PAYMENT.....................................................11
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(B) CONDITIONS TO PAYMENT.......................................11
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3.8 TREATMENT OF AWARDS UPON TERMINATION OF EMPLOYMENT...................11
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SECTION 4 RESTRICTIONS ON STOCK..............................................11

4.1 ESCROW OF SHARES.....................................................11
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4.2 RESTRICTIONS ON TRANSFER.............................................12
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SECTION 5 GENERAL PROVISIONS.................................................12

5.1 WITHHOLDING..........................................................12
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5.2 CHANGES IN CAPITALIZATION; MERGER; LIQUIDATION.......................13
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5.3 CASH AWARDS..........................................................14
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5.4 COMPLIANCE WITH CODE.................................................14
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5.5 RIGHT TO TERMINATE EMPLOYMENT........................................14
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5.6 NON-ALIENATION OF BENEFITS...........................................14
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5.7 RESTRICTIONS ON DELIVERY AND SALE OF SHARES; LEGENDS.................14
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5.8 LISTING AND LEGAL COMPLIANCE.........................................14
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5.9 TERMINATION AND AMENDMENT OF THE PLAN................................15
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5.10 STOCKHOLDER APPROVAL...............................................15
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5.11 CHOICE OF LAW......................................................15
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5.12 EFFECTIVE DATE OF PLAN.............................................15
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OMEGA HEALTHCARE INVESTORS, INC.

2000 STOCK INCENTIVE PLAN

SECTION I. DEFINITIONS

1.1 DEFINITIONS. Whenever used herein, the masculine pronoun will be
deemed to include the feminine, and the singular to include the
plural, unless the context clearly indicates otherwise, and the
following capitalized words and phrases are used herein with the
meaning thereafter ascribed:

(a) "AFFILIATE" means:

(1) Any Subsidiary or Parent,

(2) An entity that directly or through one or more
intermediaries controls, is controlled by, or is under
common control with the Company, as determined by the
Company, or

(3) Any entity in which the Company has such a significant
interest that the Company determines it should be
deemed an "Affiliate", as determined in the sole
discretion of the Company.

(b) "BOARD OF DIRECTORS" means the board of directors of the
Company.

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


(d) "COMMITTEE" means the Compensation Committee of the Board of
Directors.

(e) "COMPANY" means Omega Healthcare Investors, Inc., a Maryland
corporation.

(f) "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 or, if
applicable, any Affiliate of the Company for the
Participant. If no long-term disability plan or policy was
ever maintained on behalf of the Participant or, if the
determination of Disability relates to an Incentive Stock
Option, 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 will be made
by the Committee and will be supported by advice of a
physician competent in the area to which such Disability
relates.

(g) "DIVIDEND EQUIVALENT RIGHTS" means certain rights to receive
cash payments as described in Section 3.5.


(h) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time.

(i) "FAIR MARKET VALUE" with regard to a date means:


(1) the price at which Stock shall have been sold on that
date or the last trading date prior to that date as
reported by the national securities exchange selected
by the Committee on which the shares of Stock are then
actively traded or, if applicable, as reported by the
NASDAQ Stock Market.

(2) if such market information is not published on a
regular basis, the price of Stock in the
over-the-counter market on that date or the last
business day prior to that date as reported by the
NASDAQ Stock Market or, if not so reported, by a
generally accepted reporting service.

(3) if Stock is not publicly traded, as determined in good
faith by the Committee with due consideration being
given to (i) the most recent independent appraisal of
the Company, if such appraisal is not more than twelve
months old and (ii) the valuation methodology used in
any such appraisal.

For purposes of Paragraphs (1), (2), or (3) above, the Committee may
use the closing price as of the applicable date, the average of the
high and low prices as of the applicable date or for a period certain
ending on such date, the price determined at the time the transaction
is processed, the tender offer price for shares of Stock, or any other
method which the Committee determines is reasonably indicative of the
fair market value.

(j) "INCENTIVE STOCK OPTION" means an incentive stock option
within the meaning of Section 422 of the Internal Revenue
Code.

(k) "OPTION" means a Non-Qualified Stock Option or an Incentive
Stock Option.


(l) "OVER 10% OWNER" means an individual who at the time an
Incentive Stock Option is granted owns Stock possessing more
than 10% of the total combined voting power of the Company
or one of its Subsidiaries, determined by applying the
attribution rules of Code Section 424(d).

(m) "NON-QUALIFIED STOCK OPTION" means a stock option that is
not an Incentive Stock Option.


(n) "PARENT" means any corporation (other than the Company) in
an unbroken chain of corporations ending with the Company
if, with respect to Incentive Stock Options, at the time of
the granting of the Option, each of the corporations other
than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one
of the other corporations in such chain. A Parent shall
include any entity other than a corporation to the extent
permissible under Section 424(f) or regulations and rulings
thereunder.

(o) "PARTICIPANT" means an individual who receives a Stock
Incentive hereunder.


(p) "PERFORMANCE GOALS" means the measurable performance
objectives, if any, established by the Committee for a
Performance Period that are to be achieved with respect to a
Stock Incentive granted to a Participant under the Plan.
Performance Goals may be described in terms of Company-wide
objectives or in terms of objectives that are related to
performance of the division, Affiliate, department or
function within the Company or an Affiliate in which the
Participant receiving the Stock Incentive is employed or on
which the Participant's efforts have the most influence. The
achievement of the Performance Goals established by the
Committee for any Performance Period will be determined
without regard to the effect on such Performance Goals of
any acquisition or disposition by the Company of a trade or
business, or of substantially all of the assets of a trade
or business, during the Performance Period and without
regard to any change in accounting standards by the
Financial Accounting Standards Board or any successor
entity. The Performance Goals established by the Committee
for any Performance Period under the Plan will consist of
one or more of the following:

(i) earnings per share and/or growth in earnings per share
in relation to target objectives, excluding the effect
of extraordinary or nonrecurring items;

(ii) operating cash flow and/or growth in operating cash
flow in relation to target objectives;

(iii) cash available in relation to target objectives;

(iv) net income and/or growth in net income in relation to
target objectives, excluding the effect of
extraordinary or nonrecurring items;

(v) revenue and/or growth in revenue in relation to target
objectives;

(vi) total shareholder return (measured as the total of the
appreciation of and dividends declared on the Common
Stock) in relation to target objectives;

(vii)return on invested capital in relation to target
objectives;

(viii) return on shareholder equity in relation to target
objectives;

(ix) return on assets in relation to target objectives; and


(x) return on common book equity in relation to target
objectives

If the Committee determines that, as a result of a change in the
business, operations, corporate structure or capital structure of the
Company, or the manner in which the Company conducts its business, or
any other events or circumstances, the Performance Goals are no longer
suitable, the Committee may in its discretion modify such Performance
Goals or the related minimum acceptable level of achievement, in whole
or in part, with respect to a period as the Committee deems appropriate
and equitable, except where such action would result in the loss of the
otherwise available exemption of the Stock Incentive under Section
162(m) of the Code. In such case, the Committee will not make any
modification of the Performance Goals or minimum acceptable level of
achievement.

(q) "PERFORMANCE PERIOD" means, with respect to a Stock Incentive, a
period of time within which the Performance Goals relating to
such Stock Incentive are to be measured. The Performance Period
will be established by the Committee at the time the Stock
Incentive is granted.

(r) "PERFORMANCE UNIT AWARD" refers to a performance unit award as
described in Section 3.6.


(s) "PHANTOM SHARES" refers to the rights described in Section 3.7.


(t) "PLAN" means the Omega Healthcare Investors, Inc. 2000 Stock
Incentive Plan.


(u) "STOCK" means Company's common stock.


(v) "STOCK APPRECIATION RIGHT" means a stock appreciation right
described in Section 3.3.


(w) "STOCK AWARD" means a stock award described in Section 3.4.


(x) "STOCK INCENTIVE AGREEMENT" means an agreement between the
Company and a Participant or other documentation evidencing an
award of a Stock Incentive.

(y) "STOCK INCENTIVE PROGRAM" means a written program established by
the Committee, pursuant to which Stock Incentives are awarded
under the Plan under uniform terms, conditions and restrictions
set forth in such written program.

(z) "STOCK INCENTIVES" means, collectively, Dividend Equivalent
Rights, Incentive Stock Options, Non-Qualified Stock Options,
Phantom Shares, Stock Appreciation Rights and Stock Awards and
Performance Unit Awards.

(aa) "SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at
the time of the granting of the Option, each of the corporations
other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain. A
"Subsidiary" shall include any entity other than a corporation to
the extent permissible under Section 424(f) or regulations or
rulings thereunder.

(bb) "TERMINATION OF EMPLOYMENT" means the termination of the
employee-employer relationship between a Participant and the
Company and its Affiliates, regardless of whether severance or
similar payments are made to the Participant for any reason,
including, but not by way of limitation, a termination by
resignation, discharge, death, Disability or retirement. The
Committee will, in its absolute discretion, determine the effect
of all matters and questions relating to a Termination of
Employment, including, but not by way of limitation, the question
of whether a leave of absence constitutes a Termination of
Employment.

SECTION 2 THE STOCK INCENTIVE PLAN

2.1 PURPOSE OF THE PLAN. The Plan is intended to (a) provide incentive to
officers, key employee, directors and consultants of the Company and
its Affiliates to stimulate their efforts toward the continued success
of the Company and to operate and manage the business in a manner that
will provide for the long-term growth and profitability of the
Company; (b) encourage stock ownership by officers, key employees,
directors and consultants by providing them with a means to acquire a
proprietary interest in the Company, acquire shares of Stock, or to
receive compensation which is based upon appreciation in the value of
Stock; and (c) provide a means of obtaining, rewarding and retaining
officers, key personnel, directors, and consultants.

2.2 STOCK SUBJECT TO THE PLAN. Subject to adjustment in accordance with
Section 5.2, three million five hundred thousand (3,500,000) shares of
Stock (the "Maximum Plan Shares") are hereby reserved exclusively for
issuance upon exercise or payment pursuant to Stock Incentives. The
shares of Stock attributable to the nonvested, unpaid, unexercised,
unconverted or otherwise unsettled portion of any Stock Incentive that
is forfeited or cancelled or expires or terminates for any reason
without becoming vested, paid, exercised, converted or otherwise
settled in full will again be available for purposes of the Plan.

2.3 ADMINISTRATION OF THE PLAN. The Plan is administered by the Committee.
The Committee has full authority in its discretion to determine the
officers, key employees, directors and consultants of the Company or
its Affiliates to whom Stock Incentives will be granted and the terms
and provisions of Stock Incentives, subject to the Plan. Subject to
the provisions of the Plan, the Committee has full and conclusive
authority to interpret the Plan; to prescribe, amend and rescind rules
and regulations relating to the Plan; to determine the terms and
provisions of the respective Stock Incentive Agreements and to make
all other determinations necessary or advisable for the proper
administration of the Plan. The Committee's determinations under the
Plan need not be uniform and may be made by it selectively among
persons who receive, or are eligible to receive, awards under the Plan
(whether or not such persons are similarly situated). The Committee's
decisions are final and binding on all Participants.

2.4 ELIGIBILITY AND LIMITS. Stock Incentives may be granted only to
officers, and key employees, directors, and consultants of the
Company, or any Affiliate of the Company; provided, however, that an
Incentive Stock Option may only be granted to an employee of the
Company or any Subsidiary. In the case of Incentive Stock Options, the
aggregate Fair Market Value (determined as at the date an Incentive
Stock Option is granted) of stock with respect to which stock options
intended to meet the requirements of Code Section 422 become
exercisable for the first time by an individual during any calendar
year under all plans of the Company and its Subsidiaries may not
exceed $100,000; provided further, that if the limitation is exceeded,
the Incentive Stock Option(s) which cause the limitation to be
exceeded will be treated as Non-Qualified Stock Option(s).

2.5 NON-EMPLOYEE DIRECTOR STOCK OPTION GRANTS. A Non-Qualified Stock
Option with respect to 10,000 shares of stock shall be made to each
non-employee director upon his election as a non-employee director. An
additional Non-qualified Stock Option grant with respect to 1,000
shares shall be made to each non-employee director on or after each
anniversary of the initial grant. Each Stock Option granted to a
non-employee director will vest with respect to 1/3 of the grant on
the first anniversary of the grant, with respect to an additional 1/3
of the grant on the second anniversary of the grant, and with respect
to the final 1/3 on the third anniversary of the grant; provided that
a optionee will cease to vest when he or she ceases to provide
services to the Company as an Employee, Consultant, or director.

Non-employee directors are not eligible for further grants of Stock
Options.

SECTION 3 TERMS OF STOCK INCENTIVES

3.1 TERMS AND CONDITIONS OF ALL STOCK INCENTIVES.

(a) The number of shares of Stock as to which a Stock Incentive may
be granted will be determined by the Committee in its sole
discretion, subject to the provisions of Section 2.2 as to the
total number of shares available for grants under the Plan and
subject to the limits on Options and Stock Appreciation Rights in
the following sentence. On such date as required by Section
162(m) of the Code and the regulations thereunder for
compensation to be treated as qualified performance based
compensation, the maximum number of shares of Stock with respect
to which Options or Stock Appreciation Rights may be granted
during any one year period to any employee may not exceed
1,100,000. If, after grant, an Option is cancelled, the cancelled
Option shall continue to be counted against the maximum number of
shares for which options may be granted to an employee as
described in this Section 3.1. If, after grant, the exercise
price of an Option is reduced or the base amount on which a Stock
Appreciation Right is calculated is reduced, the transaction
shall be treated as the cancellation of the Option or the Stock
Appreciation Right, as applicable, and the grant of a new Option
or Stock Appreciation Right, as applicable. If an Option or Stock
Appreciation Right is deemed to be cancelled as described in the
preceding sentence, the Option or Stock Appreciation Right that
is deemed to be canceled and the Option or Stock Appreciation
Right that is deemed to be granted shall both be counted against
the maximum number of shares for which Options or Stock
Appreciation Rights may be granted to an employee as described in
this Section 3.1.

(b) Each Stock Incentive will either be evidenced by a Stock
Incentive Agreement in such form and containing such terms,
conditions and restrictions as the Committee may determine to be
appropriate, including without limitation, Performance Goals that
must be achieved as a condition to vesting or payment of the
Stock Incentive, or be made subject to the terms of a Stock
Incentive Program, containing such terms, conditions and
restrictions as the Committee may determine to be appropriate,
including without limitation, Performance Goals that must be
achieved as a condition to vesting or payment of the Stock
Incentive. Each Stock Incentive Agreement or Stock Incentive
Program is subject to the terms of the Plan and any provisions
contained in the Stock Incentive Agreement or Stock Incentive
Program that are inconsistent with the Plan are null and void.

(c) The date a Stock Incentive is granted will be the date on which
the Committee has approved the terms and conditions of the Stock
Incentive and has determined the recipient of the Stock Incentive
and the number of shares covered by the Stock Incentive, and has
taken all such other actions necessary to complete the grant of
the Stock Incentive.

(d) Any Stock Incentive may be granted in connection with all or any
portion of a previously or contemporaneously granted Stock
Incentive. Exercise or vesting of a Stock Incentive granted in
connection with another Stock Incentive may result in a pro rata
surrender or cancellation of any related Stock Incentive, as
specified in the applicable Stock Incentive Agreement or Stock
Incentive Program.

(e) Stock Incentives are not transferable or assignable except by
will or by the laws of descent and distribution and are
exercisable, during the Participant's lifetime, only by the
Participant; or in the event of the Disability of the
Participant, by the legal representative of the Participant; or
in the event of death of the Participant, by the legal
representative of the Participant's estate or if no legal
representative has been appointed, by the successor in interest
determined under the Participant's will; provided, however, that
the Committee may waive any of the provisions of this Section or
provide otherwise as to any Stock Incentives other than Incentive
Stock Options.

3.2 TERMS AND CONDITIONS OF OPTIONS. Each Option granted under the Plan
must be evidenced by a Stock Incentive Agreement. At the time any
Option is granted, the Committee will determine whether the Option is
to be an Incentive Stock Option described in Code Section 422 or a
Non-Qualified Stock Option, and the Option must be clearly identified
as to its status as an Incentive Stock Option or a Non-Qualified Stock
Option. Incentive Stock Options may only be granted to employees of
the Company or any Subsidiary. At the time any Incentive Stock Option
granted under the Plan is exercised, the Company will be entitled to
legend the certificates representing the shares of Stock purchased
pursuant to the Option to clearly identify them as representing the
shares purchased upon the exercise of an Incentive Stock Option. An
Incentive Stock Option may only be granted within ten (10) years from
the earlier of the date the Plan is adopted or approved by the
Company's stockholders.

(a) OPTION PRICE. Subject to adjustment in accordance with Section
5.2 and the other provisions of this Section 3.2, the exercise
price (the "Exercise Price") per share of Stock purchasable under
any Option must be as set forth in the applicable Stock Incentive
Agreement, but in no event may it be less than the Fair Market
Value on the date the Option is granted with respect to an
Incentive Stock Option. With respect to each grant of an
Incentive Stock Option to a Participant who is an Over 10% Owner,
the Exercise Price may not be less than 110% of the Fair Market
Value on the date the Option is granted.

(b) OPTION TERM. Any Incentive Stock Option granted to a Participant
who is not an Over 10% Owner is not exercisable after the
expiration of ten (10) years after the date the Option is
granted. Any Incentive Stock Option granted to an Over 10% Owner
is not exercisable after the expiration of five (5) years after
the date the Option is granted. The term of any Non-Qualified
Stock Option must be as specified in the applicable Stock
Incentive Agreement.

(c) PAYMENT. Payment for all shares of Stock purchased pursuant to
exercise of an Option will be made in any form or manner
authorized by the Committee in the Stock Incentive Agreement or
by amendment thereto, including, but not limited to, cash or, if
the Stock Incentive Agreement provides:

(i) by delivery to the Company of a number of shares of Stock
which have been owned by the holder for at least six (6)
months prior to the date of exercise having an aggregate
Fair Market Value of not less than the product of the
Exercise Price multiplied by the number of shares the
Participant intends to purchase upon exercise of the Option
on the date of delivery;

(ii) in a cashless exercise through a broker; or

(iii)by having a number of shares of Stock withheld, the Fair
Market Value of which as of the date of exercise is
sufficient to satisfy the Exercise Price.

In its discretion, the Committee also may authorize (at the time an
Option is granted or thereafter) Company financing to assist the
Participant as to payment of the Exercise Price on such terms as may be
offered by the Committee in its discretion. Payment must be made at the
time that the Option or any part thereof is exercised, and no shares
may be issued or delivered upon exercise of an option until full
payment has been made by the Participant. The holder of an Option, as
such, has none of the rights of a stockholder.

(d) CONDITIONS TO THE EXERCISE OF AN OPTION. Each Option granted
under the Plan is exercisable by the Participant or any other
designated person, at such time or times, or upon the occurrence
of such event or events, and in such amounts, as the Committee
specifies in the Stock Incentive Agreement; provided, however,
that subsequent to the grant of an Option, the Committee, at any
time before complete termination of such Option, may accelerate
the time or times at which such Option may be exercised in whole
or in part, including, without limitation, upon a Change in
Control as defined in the Stock Incentive Agreement and may
permit the Participant or any other designated person to exercise
the Option, or any portion thereof, for all or part of the
remaining Option term, notwithstanding any provision of the Stock
Incentive Agreement to the contrary.

(e) TERMINATION OF INCENTIVE STOCK OPTION. With respect to an
Incentive Stock Option, in the event of Termination of Employment
of a Participant, the Option or portion thereof held by the
Participant which is unexercised will expire, terminate, and
become unexercisable no later than the expiration of three (3)
months after the date of Termination of Employment; provided,
however, that in the case of a holder whose Termination of
Employment is due to death or Disability, one (1) year will be
substituted for such three (3) month period; provided, further
that such time limits may be exceeded by the Committee under the
terms of the grant, in which case, the Incentive Stock Option
will be a Non-Qualified Option if it is exercised after the time
limits that would otherwise apply. For purposes of this
Subsection (e), Termination of Employment of the Participant will
not be deemed to have occurred if the Participant is employed by
another corporation (or a parent or subsidiary corporation of
such other corporation) which has assumed the Incentive Stock
Option of the Participant in a transaction to which Code Section
424(a) is applicable.

(f) SPECIAL PROVISIONS FOR CERTAIN SUBSTITUTE OPTIONS.
Notwithstanding anything to the contrary in this Section 3.2, any
Option issued in substitution for an option previously issued by
another entity, which substitution occurs in connection with a
transaction to which Code Section 424(a) is applicable, may
provide for an exercise price computed in accordance with such
Code Section and the regulations thereunder and may contain such
other terms and conditions as the Committee may prescribe to
cause such substitute Option to contain as nearly as possible the
same terms and conditions (including the applicable vesting and
termination provisions) as those contained in the previously
issued option being replaced thereby.

3.3 TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS. Each Stock
Appreciation Right granted under the Plan must be evidenced by a Stock
Incentive Agreement. A Stock Appreciation Right entitles the
Participant to receive the excess of (1) the Fair Market Value of a
specified or determinable number of shares of the Stock at the time of
payment or exercise over (2) a specified or determinable price which,
in the case of a Stock Appreciation Right granted in connection with
an Option, may not be less than the Exercise Price for that number of
shares subject to that Option. A Stock Appreciation Right granted in
connection with a Stock Incentive may only be exercised to the extent
that the related Stock Incentive has not been exercised, paid or
otherwise settled.

(a) SETTLEMENT. Upon settlement of a Stock Appreciation Right, the
Company must pay to the Participant the appreciation in cash or
shares of Stock (valued at the aggregate Fair Market Value on the
date of payment or exercise) as provided in the Stock Incentive
Agreement or, in the absence of such provision, as the Committee
may determine.

(b) CONDITIONS TO EXERCISE. Each Stock Appreciation Right granted
under the Plan is exercisable or payable at such time or times,
or upon the occurrence of such event or events, and in such
amounts, as the Committee specifies in the Stock Incentive
Agreement; provided, however, that subsequent to the grant of a
Stock Appreciation Right, the Committee, at any time before
complete termination of such Stock Appreciation Right, may
accelerate the time or times at which such Stock Appreciation
Right may be exercised or paid in whole or in part.

3.4 TERMS AND CONDITIONS OF STOCK AWARDS. The number of shares of Stock
subject to a Stock Award and restrictions or conditions on such
shares, if any, will be as the Committee determines, and the
certificate for such shares will bear evidence of any restrictions or
conditions. Subsequent to the date of the grant of the Stock Award,
the Committee has the power to permit, in its discretion, an
acceleration of the expiration of an applicable restriction period
with respect to any part or all of the shares awarded to a
Participant. The Committee may require a cash payment from the
Participant in an amount no greater than the aggregate Fair Market
Value of the shares of Stock awarded determined at the date of grant
in exchange for the grant of a Stock Award or may grant a Stock Award
without the requirement of a cash payment.

3.5 TERMS AND CONDITIONS OF DIVIDEND EQUIVALENT RIGHTS. A Dividend
Equivalent Right entitles the Participant to receive payments from the
Company in an amount determined by reference to any cash dividends
paid on a specified number of shares of Stock to Company stockholders
of record during the period such rights are effective. The Committee
may impose such restrictions and conditions on any Dividend Equivalent
Right as the Committee in its discretion shall determine, including
the date any such right shall terminate and may reserve the right to
terminate, amend or suspend any such right at any time.

(a) PAYMENT. Payment in respect of a Dividend Equivalent Right may be
made by the Company in cash or shares of Stock (valued at Fair
Market Value as of the date payment is owed) as provided in the
Stock Incentive Agreement or Stock Incentive Program, or, in the
absence of such provision, as the Committee may determine.

(b) CONDITIONS TO PAYMENT. Each Dividend Equivalent Right granted
under the Plan is payable at such time or times, or upon the
occurrence of such event or events, and in such amounts, as the
Committee specifies in the applicable Stock Incentive Agreement
or Stock Incentive Program; provided, however, that subsequent to
the grant of a Dividend Equivalent Right, the Committee, at any
time before complete termination of such Dividend Equivalent
Right, may accelerate the time or times at which such Dividend
Equivalent Right may be paid in whole or in part.

3.6 TERMS AND CONDITIONS OF PERFORMANCE UNIT AWARDS. A Performance Unit
Award shall entitle the Participant to receive, at a specified future
date, payment of an amount equal to all or a portion of the value of a
specified or determinable number of units (stated in terms of a
designated or determinable dollar amount per unit) granted by the
Committee. At the time of the grant, the Committee must determine the
base value of each unit, the number of units subject to a Performance
Unit Award, and the Performance Goals applicable to the determination
of the ultimate payment value of the Performance Unit Award. The
Committee may provide for an alternate base value for each unit under
certain specified conditions.

(a) PAYMENT. Payment in respect of Performance Unit Awards may be
made by the Company in cash or shares of Stock (valued at Fair
Market Value as of the date payment is owed) as provided in the
applicable Stock Incentive Agreement or Stock Incentive Program
or, in the absence of such provision, as the Committee may
determine.

(b) CONDITIONS TO PAYMENT. Each Performance Unit Award granted under
the Plan shall be payable at such time or times, or upon the
occurrence of such event or events, and in such amounts, as the
Committee shall specify in the applicable Stock Incentive
Agreement or Stock Incentive Program; provided, however, that
subsequent to the grant of a Performance Unit Award, the
Committee, at any time before complete termination of such
Performance Unit Award, may accelerate the time or times at which
such Performance Unit Award may be paid in whole or in part.

3.7 TERMS AND CONDITIONS OF PHANTOM SHARES. Phantom Shares shall entitle
the Participant to receive, at a specified future date, payment of an
amount equal to all or a portion of the Fair Market Value of a
specified number of shares of Stock at the end of a specified period.
At the time of the grant, the Committee will determine the factors
which will govern the portion of the phantom shares so payable,
including, at the discretion of the Committee, any performance
criteria that must be satisfied as a condition to payment. Phantom
Share awards containing performance criteria may be designated as
performance share awards.

(a) PAYMENT. Payment in respect of Phantom Shares may be made by the
Company in cash or shares of Stock (valued at Fair Market Value
as of the date payment is owed) as provided in the applicable
Stock Incentive Agreement or Stock Incentive Program, or, in the
absence of such provision, as the Committee may determine.

(b) CONDITIONS TO PAYMENT. Each Phantom Share granted under the Plan
is payable at such time or times, or upon the occurrence of such
event or events, and in such amounts, as the Committee specify in
the applicable Stock Incentive Agreement or Stock Incentive
Program; provided, however, that subsequent to the grant of a
Phantom Share, the Committee, at any time before complete
termination of such Phantom Share, may accelerate the time or
times at which such Phantom Share may be paid in whole or in
part.

3.8 TREATMENT OF AWARDS UPON TERMINATION OF EMPLOYMENT. Except as
otherwise provided by Plan Section 3.2(e), any award under this Plan
to a Participant who has experienced a Termination of Employment may
be cancelled, accelerated, paid or continued, as provided in the
applicable Stock Incentive Agreement or Stock Incentive Program, or,
in the absence of such provision, as the Committee may determine. The
portion of any award exercisable in the event of continuation or the
amount of any payment due under a continued award may be adjusted by
the Committee to reflect the Participant's period of service from the
date of grant through the date of the Participant's Termination of
Employment or such other factors as the Committee determines are
relevant to its decision to continue the award.

SECTION 4 RESTRICTIONS ON STOCK

4.1 ESCROW OF SHARES. Any certificates representing the shares of Stock
issued under the Plan will be issued in the Participant's name, but,
if the applicable Stock Incentive Agreement or Stock Incentive Program
so provides, the shares of Stock will be held by a custodian
designated by the Committee (the "Custodian"). Each applicable Stock
Incentive Agreement or Stock Incentive Program providing for transfer
of shares of Stock to the Custodian must appoint the Custodian as the
attorney-in-fact for the Participant for the term specified in the
applicable Stock Incentive Agreement or Stock Incentive Program, with
full power and authority in the Participant's name, place and stead to
transfer, assign and convey to the Company any shares of Stock held by
the Custodian for such Participant, if the Participant forfeits the
shares under the terms of the applicable Stock Incentive Agreement or
Stock Incentive Program. During the period that the Custodian holds
the shares subject to this Section, the Participant is entitled to all
rights, except as provided in the applicable Stock Incentive Agreement
or Stock Incentive Program, applicable to shares of Stock not so held.
Any dividends declared on shares of Stock held by the Custodian must
provide in the applicable Stock Incentive Agreement or Stock Incentive
Program, to be paid directly to the Participant or, in the
alternative, be retained by the Custodian or by the Company until the
expiration of the term specified in the applicable Stock Incentive
Agreement or Stock Incentive Program and shall then be delivered,
together with any proceeds, with the shares of Stock to the
Participant or to the Company, as applicable.

4.2 RESTRICTIONS ON TRANSFER. The Participant does not have the right to
make or permit to exist any disposition of the shares of Stock issued
pursuant to the Plan except as provided in the Plan or the applicable
Stock Incentive Agreement or Stock Incentive Program. Any disposition
of the shares of Stock issued under the Plan by the Participant not
made in accordance with the Plan or the applicable Stock Incentive
Agreement or Stock Incentive Program will be void. The Company will
not recognize, or have the duty to recognize, any disposition not made
in accordance with the Plan and the applicable Stock Incentive
Agreement or Stock Incentive Program, and the shares so transferred
will continue to be bound by the Plan and the applicable Stock
Incentive Agreement or Stock Incentive Program.

SECTION 5 GENERAL PROVISIONS

5.1 WITHHOLDING. The Company must deduct from all cash distributions under
the Plan any taxes required to be withheld by federal, state or local
government. Whenever the Company proposes or is required to issue or
transfer shares of Stock under the Plan or upon the vesting of any
Stock Award, the Company has the right to require the recipient to
remit to the Company an amount sufficient to satisfy any federal,
state and local tax withholding requirements prior to the delivery of
any certificate or certificates for such shares or the vesting of such
Stock Award. A Participant may pay the withholding obligation in cash,
or, if the applicable Stock Incentive Agreement or Stock Incentive
Program provides, a Participant may elect to have the number of shares
of Stock he is to receive reduced by, or with respect to a Stock
Award, tender back to the Company, the smallest number of whole shares
of Stock which, when multiplied by the Fair Market Value of the shares
of Stock determined as of the Tax Date (defined below), is sufficient
to satisfy federal, state and local, if any, withholding obligation
arising from exercise or payment of a Stock Incentive (a "Withholding
Election"). A Participant may make a Withholding Election only if both
of the following conditions are met:

(a) The Withholding Election must be made on or prior to the date on
which the amount of tax required to be withheld is determined
(the "Tax Date") by executing and delivering to the Company a
properly completed notice of Withholding Election as prescribed
by the Committee; and

(b) Any Withholding Election made will be irrevocable except on six
months advance written notice delivered to the Company; however,
the Committee may in its sole discretion disapprove and give no
effect to the Withholding Election.

5.2 CHANGES IN CAPITALIZATION; MERGER; LIQUIDATION.

(a) The number of shares of Stock reserved for the grant of Options,
Dividend Equivalent Rights, Performance Unit Awards, Phantom
Shares, Stock Appreciation Rights and Stock Awards; the number of
shares of Stock reserved for issuance upon the exercise or
payment, as applicable, of each outstanding Option, Dividend
Equivalent Right, Phantom Share and Stock Appreciation Right and
upon vesting or grant, as applicable, of each Stock Award; the
Exercise Price of each outstanding Option and the specified
number of shares of Stock to which each outstanding Dividend
Equivalent Right, Phantom Share and Stock Appreciation Right
pertains must be proportionately adjusted for any increase or
decrease in the number of issued shares of Stock resulting from a
subdivision or combination of shares or the payment of a stock
dividend in shares of Stock to holders of outstanding shares of
Stock or any other increase or decrease in the number of shares
of Stock outstanding effected without receipt of consideration by
the Company.

(b) In the event of a merger, consolidation, reorganization,
extraordinary dividend, spin-off, sale of substantially all of
the Company's assets, other change in capital structure of the
Company, tender offer for shares of Stock, or a change in control
of the Company (as defined by the Committee in the applicable
Stock Incentive Agreement) the Committee may make such
adjustments with respect to awards and take such other action as
it deems necessary or appropriate to reflect such merger,
consolidation, reorganization or tender offer, including, without
limitation, the substitution of new awards, or the adjustment of
outstanding awards, the acceleration of awards, the removal of
restrictions on outstanding awards, or the termination of
outstanding awards in exchange for the cash value determined in
good faith by the Committee of the vested and/or unvested portion
of the award. Any adjustment pursuant to this Section 5.2 may
provide, in the Committee's discretion, for the elimination
without payment therefor of any fractional shares that might
otherwise become subject to any Stock Incentive, but except as
set forth in this Section may not otherwise diminish the then
value of the Stock Incentive.

(c) The existence of the Plan and the Stock Incentives granted
pursuant to the Plan must not affect in any way the right or
power of the Company to make or authorize any adjustment,
reclassification, reorganization or other change in its capital
or business structure, any merger or consolidation of the
Company, any issue of debt or equity securities having
preferences or priorities as to the Stock or the rights thereof,
the dissolution or liquidation of the Company, any sale or
transfer of all or any part of its business or assets, or any
other corporate act or proceeding.

5.3 CASH AWARDS. The Committee may, at any time and in its discretion,
grant to any holder of a Stock Incentive the right to receive, at such
times and in such amounts as determined by the Committee in its
discretion, a cash amount which is intended to reimburse such person
for all or a portion of the federal, state and local income taxes
imposed upon such person as a consequence of the receipt of the Stock
Incentive or the exercise of rights thereunder.

5.4 COMPLIANCE WITH CODE. All Incentive Stock Options to be granted
hereunder are intended to comply with Code Section 422, and all
provisions of the Plan and all Incentive Stock Options granted
hereunder must be construed in such manner as to effectuate that
intent.

5.5 RIGHT TO TERMINATE EMPLOYMENT. Nothing in the Plan or in any Stock
Incentive confers upon any Participant the right to continue as an
employee or officer of the Company or any of its Affiliates or affect
the right of the Company or any of its Affiliates to terminate the
Participant's employment or services at any time.

5.6 NON-ALIENATION OF BENEFITS. Other than as provided herein, no benefit
under the Plan may be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or charge;
and any attempt to do so shall be void. No such benefit may, prior to
receipt by the Participant, be in any manner liable for or subject to
the debts, contracts, liabilities, engagements or torts of the
Participant.

5.7 RESTRICTIONS ON DELIVERY AND SALE OF SHARES; LEGENDS. Each Stock
Incentive is subject to the condition that if at any time the
Committee, in its discretion, shall determine that the listing,
registration or qualification of the shares covered by such Stock
Incentive upon any securities exchange or under any state or federal
law is necessary or desirable as a condition of or in connection with
the granting of such Stock Incentive or the purchase or delivery of
shares thereunder, the delivery of any or all shares pursuant to such
Stock Incentive may be withheld unless and until such listing,
registration or qualification shall have been effected. If a
registration statement is not in effect under the Securities Act of
1933 or any applicable state securities laws with respect to the
shares of Stock purchasable or otherwise deliverable under Stock
Incentives then outstanding, the Committee may require, as a condition
of exercise of any Option or as a condition to any other delivery of
Stock pursuant to a Stock Incentive, that the Participant or other
recipient of a Stock Incentive represent, in writing, that the shares
received pursuant to the Stock Incentive are being acquired for
investment and not with a view to distribution and agree that the
shares will not be disposed of except pursuant to an effective
registration statement, unless the Company shall have received an
opinion of counsel that such disposition is exempt from such
requirement under the Securities Act of 1933 and any applicable state
securities laws. The Company may include on certificates representing
shares delivered pursuant to a Stock Incentive such legends referring
to the foregoing representations or restrictions or any other
applicable restrictions on resale as the Company, in its discretion,
shall deem appropriate.

5.8 LISTING AND LEGAL COMPLIANCE. The Committee may suspend the exercise
or payment of any Stock Incentive so long as it determines that
securities exchange listing or registration or qualification under any
securities laws is required in connection therewith and has not been
completed on terms acceptable to the Committee.

5.9 TERMINATION AND AMENDMENT OF THE PLAN. The Board of Directors at any
time may amend or terminate the Plan without stockholder approval;
provided, however, that the Board of Directors may condition any
amendment on the approval of stockholders of the Company if such
approval is necessary or advisable with respect to tax, securities or
other applicable laws. No such termination or amendment without the
consent of the holder of a Stock Incentive may adversely affect the
rights of the Participant under such Stock Incentive.

5.10 STOCKHOLDER APPROVAL. The Plan must be submitted to the stockholders
of the Company for their approval within twelve (12) months before or
after the adoption of the Plan by the Board of Directors of the
Company. If such approval is not obtained, any Stock Incentive granted
hereunder will be void.

5.11 CHOICE OF LAW. The laws of the State of Maryland shall govern the
Plan, to the extent not preempted by federal law, without reference to
the principles of conflict of laws.

5.12 EFFECTIVE DATE OF PLAN. This Plan was approved by the Board of
Directors as of June 14, 2000.



OMEGA HEALTHCARE INVESTORS, INC.

By: /s/ Essel W. Bailey, Jr.
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Title: President
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