SCHEDULE 14A
                                 (Rule 14a-101)

                     INFORMATION REQUIRED IN PROXY STATEMENT

                            SCHEDULE 14A INFORMATION
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                              Exchange Act of 1934

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                        Omega Healthcare Investors, Inc.

                  (Name of Registrant as Specified in Charter)

    (Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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                        OMEGA HEALTHCARE INVESTORS, INC.

                          9690 Deereco Road, Suite 100
                            Timonium, Maryland 21093
                                 (410) 427-1700

                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
                                  May 30, 2002

To our Stockholders:

     The Annual Meeting of  Stockholders  of Omega  Healthcare  Investors,  Inc.
("Omega")  will  be  held  at the  Holiday  Inn  Select,  Baltimore-North,  2004
Greenspring Drive,  Timonium,  Maryland on Thursday, May 30, 2002, at 10:00 A.M.
EST, for the following purposes:

     1.   To elect four members to the Board of Directors;

     2.   To amend our  Articles of  Incorporation  and Bylaws to  increase  the
          maximum  size  of  our  Board  of  Directors  from  nine  to  thirteen
          directors.  The Board of  Directors  has  approved the increase of the
          current size of the Board of  Directors by one seat and has  nominated
          C. Taylor Pickett,  our Chief Executive Officer, to fill the resulting
          vacancy.

     3.   To  transact  such other  business  as may  properly  come  before the
          meeting or any adjournment thereof.

     The nominees for election as directors  are Thomas W.  Erickson,  Harold J.
Kloosterman  and Donald J. McNamara,  each of whom presently serve as a director
of Omega, and C. Taylor Pickett.

     The Board of Directors has fixed the close of business on April 12, 2002 as
the record date for the determination of stockholders who are entitled to notice
of and to vote at the meeting or any adjournments thereof.

     We encourage  you to attend the meeting.  Whether you are able to attend or
not,  we urge you to  indicate  your  vote on the  enclosed  proxy  card FOR the
election of directors and FOR the  amendments  to our Articles of  Incorporation
and Bylaws as set forth in the attached Proxy  Statement.  Please sign, date and
return the proxy  card  promptly  in the  enclosed  envelope.  If you attend the
meeting, you may vote in person even if you previously have mailed a proxy card.

                                             By order of the Board of Directors,


                                             C. Taylor Pickett
                                             Chief Executive Officer

April 15, 2002
Timonium, Maryland




     YOUR VOTE IS IMPORTANT.  Please sign, date and mail the proxy card promptly
in the enclosed  envelope  whether or not you plan to attend the meeting.  It is
important  that you return the proxy  card  promptly  whether or not you plan to
attend the meeting, so that your shares are properly voted.

     If you hold  shares  through a broker,  bank or other  nominee  (in "street
name"),  you may also have the ability to vote by  telephone  or the Internet in
accordance with instructions that they will include with this mailing. In either
event, we urge you to vote promptly.


                        OMEGA HEALTHCARE INVESTORS, INC.

                          9690 Deereco Road, Suite 100
                            Timonium, Maryland 21093
                                 (410) 427-1700

                                 PROXY STATEMENT
                                       FOR
                         ANNUAL MEETING OF STOCKHOLDERS
                                  May 30, 2002

     The  accompanying  proxy is solicited by our Board of Directors to be voted
at the Annual  Meeting of  Stockholders  to be held at the  Holiday  Inn Select,
Baltimore-North, 2004 Greenspring Drive, Timonium, Maryland at 10:00 A.M. EST on
Thursday,  May 30, 2002, and any adjournments of the meeting.  It is anticipated
that this proxy material will be mailed on or about April 19, 2002 to our common
stockholders of record on April 12, 2002.

     A copy of our Annual Report for the year ended December 31, 2001, including
financial statements, is enclosed.

     A stockholder  giving a proxy has the power to revoke it at any time before
it is  exercised.  A proxy may be revoked  by filing  with our  Secretary  (i) a
signed  instrument  revoking the proxy or (ii) a duly  executed  proxy bearing a
later  date.  A proxy also may be revoked if the person  executing  the proxy is
present  at the  meeting  and  elects  to vote in  person.  If the  proxy is not
revoked, it will be voted by those named in the proxy.


                                VOTING SECURITIES

     Our  outstanding  voting  securities as of April 12, 2002, the record date,
consisted of  37,127,456  shares of common  stock,  par value $.10 per share and
1,048,420  shares of Series C Convertible  Preferred  Stock ("Series C preferred
stock").  Each holder of record of common stock and Series C preferred  stock as
of the close of  business on April 12, 2002 is entitled to notice of and to vote
at the Annual  Meeting or any  adjournments  thereof.  Each  holder of shares of
common stock is entitled to one vote per share on all matters  properly  brought
before the Annual Meeting.  The holder of our Series C preferred stock will vote
as a single class with holders of common stock on all matters  properly  brought
before the Annual  Meeting on an  as-converted  basis.  The 1,048,420  shares of
Series C preferred stock  outstanding as of April 12, 2002 are convertible  into
16,774,720  shares of common stock and  accordingly  an aggregate of  53,902,176
votes  are  entitled  to be cast by the  holders  of common  stock and  Series C
preferred stock at the meeting.

                                     VOTING

     The presence at the Annual Meeting of shares representing a majority of the
voting power associated with our issued and outstanding  common stock and Series
C preferred  stock will be  necessary  to  establish a quorum for the conduct of
business at the Annual  Meeting.  Under our Bylaws,  directors  are elected by a
plurality  of the votes cast at the Annual  Meeting.  The  proposal to amend our
Articles of  Incorporation  and Bylaws to increase the maximum number of members
of the  Board  of  Directors  from  nine to  thirteen  must be  approved  by the
affirmative vote of at least 80% of the shares of issued and outstanding  common
stock  and  Series  C  preferred  stock,  voting  together  as  a  class  on  an
as-converted basis.

     As of the record date,  our directors and executive  officers  beneficially
owned  30,563,715  shares of our common stock  (representing  56.7% of the votes
entitled to be cast at the meeting),  including  29,113,030 shares  beneficially
owned by directors as a result of their  affiliation  with  Explorer.  Excluding
shares  beneficially  owned by Explorer,  shares held by directors and executive
officers  of our company  entitle  them to  exercise  approximately  2.7% of the
voting  power  of the  shares  entitled  to vote  at the  Annual  Meeting  on an
as-converted basis.

     Brokers  holding  shares in "street  name" may vote the shares  only if the
beneficial  owner  provides  instructions  on how to vote.  Brokers will provide
beneficial owners  instructions on how to direct the brokers to vote the shares.
Brokers  holding shares for beneficial  owners cannot vote on Proposal 2 without
the beneficial  owners' specific  instructions.  A so-called  "broker  non-vote"
occurs when a broker,  holding common stock as nominee,  does not receive voting
instructions  from  the  beneficial  owner.  With  respect  to the  election  of
directors,  broker non-votes and the decision to withhold  authority to vote for
any or all of the  director  nominees  named  above  will  have no impact on the
outcome of the  voting.  With  respect to  Proposal 2 to amend the  Articles  of
Incorporation  and the Bylaws,  abstentions  and broker  non-votes will have the
same effect as a vote against the proposal.  There are no rights of appraisal or
similar  dissenter's rights with respect to any matter to be acted upon pursuant
to this Proxy Statement.

     We urge  stockholders  to vote  promptly  either  by  signing,  dating  and
returning the enclosed proxy card in the enclosed envelope,  or for stockholders
who own their shares in street name  through a broker,  in  accordance  with the
telephone  or Internet  voting  instructions  your broker may include  with this
mailing.

                       PROPOSAL 1 -- ELECTION OF DIRECTORS

Director Nominees and Voting Requirements.

     Our Board of Directors  currently  consists of nine directors.  Pursuant to
our  Articles of  Incorporation,  the  directors  have been  divided  into three
groups.  At this year's Annual  Meeting,  four directors will be elected to hold
office  for a term of three  years  or, in each  case,  until  their  respective
successors have been duly elected and qualified.

     The nominees for election as directors  are Thomas W.  Erickson,  Harold J.
Kloosterman,  Donald J. McNamara and C. Taylor Pickett.  Mr. Pickett,  our Chief
Executive Officer,  has been nominated to fill the vacancy that would be created
upon the increase in the total number of directors  described in Proposal 2, and
therefore  his election is subject to the approval of Proposal 2. The holders of
our Series A and Series B preferred stock are entitled to call a special meeting
of preferred  stockholders  to elect two additional  directors when dividends on
the Series A and Series B preferred stock are in arrears for 18 months or more.

     Unless   authority  to  vote  for  the  election  of  directors   has  been
specifically  withheld,  the persons named in the accompanying proxy card intend
to vote FOR the  election  of the  nominees  named  above to hold office for the
terms  indicated  above or until  their  respective  successors  have  been duly
elected and qualified.

     Under our Bylaws, directors are elected by a plurality of the votes cast at
the Annual Meeting.  As a result,  broker non-votes and the decision to withhold
authority to vote for any or all of the director  nominees named above will have
no impact on the outcome of the voting.

     If any  nominee  becomes  unavailable  for any reason  (which  event is not
anticipated), the shares represented by the enclosed proxy may (unless the proxy
contains instructions to the contrary) be voted for such other person or persons
as may be determined by the holders of the proxies.  In no event would the proxy
be voted for more than four nominees.

Stockholders' Agreement with Explorer Holdings, L.P.

     On July 14,  2000,  Explorer  Holdings,  L.P.  ("Explorer"),  completed  an
investment  (the  "Series C  Investment")  of $100.0  million  in  exchange  for
1,000,000  shares of  Omega's  Series C  preferred  stock.  In  connection  with
Explorer's  Series C Investment,  Omega entered into a  Stockholders'  Agreement
with  Explorer  dated  July  14,  2000  (the  "Stockholders'  Agreement").  As a
condition to the closing of Explorer's  additional  $31.3 million  investment in
February 2002, we amended our  Stockholders'  Agreement with Explorer (the "2002
Stockholders'  Agreement") to permit Explorer to designate a number of directors
that  would  generally  be  proportionate  to  Explorer's  ownership  of  voting
securities,  not to exceed five directors (six following an increase in the size
of the  Board of  Directors  to ten  directors).  Under  the 2002  Stockholders'
Agreement,  Omega agreed to appoint C. Taylor  Pickett to the Board of Directors
following approval of an increase in the size of the Board of Directors.  If Mr.
Pickett  is  appointed  as a member  of the Board of  Directors,  he will not be
serving in the capacity of one of Explorer's designated directors.  Explorer has
determined not to designate any  additional  directors at this time (although it
has the right to do so under the 2002 Stockholders' Agreement as a result of its
present  ownership  of a majority of our voting  stock).  Explorer  reserves the
right at any time during the term of the 2002 Stockholders' Agreement and during
which it owns a majority of our voting  stock to request the Board of  Directors
to increase the size of the Board of Directors to permit Explorer to designate a
majority of the directors. Under the 2002 Stockholders' Agreement, the number of
directors on the Board of  Directors  may not exceed nine without the consent of
Explorer (thirteen following stockholder approval of the increase in the size of
the Board of  Directors).  We have agreed to take  appropriate  action to ensure
generally  that  Explorer's  representation  on all  committees  of the Board of
Directors is proportionate to its representation on the entire board, other than
any special committee  established to consider transactions in which Explorer or
any of its affiliates  may have a conflict of interest.  Explorer is entitled to
designate at least one director of Omega's Board of Directors as long as it owns
at least five percent (5%) of the total voting power of Omega and to approve one
"independent  director" as long as it owns at least twenty-five percent (25%) of
the shares it  acquired at the time it  completed  the Series C  Investment  (or
common stock issued upon the conversion of the Series C preferred stock acquired
by Explorer at such time).  Explorer has the right to elect additional preferred
stock  directors if the dividends on shares of the Series C preferred  stock are
in arrears for four or more  dividend  periods.  Explorer  has waived such right
through  December  31, 2002  provided  that  dividends on any shares of Series C
preferred stock are not in arrears for six or more dividend periods from January
31, 2001  through  December  31,  2002.  See  "Certain  Transactions  - Explorer
Holdings,  L.P.,  Dividend and Governance Right Deferral."  Explorer's  director
designation   rights  will   terminate   upon  the  fifth   anniversary  of  the
Stockholders' Agreement.

Information Regarding Directors

     The following information relates to the nominees for election as directors
of Omega and the other  persons  whose terms as  directors  continue  after this
meeting.  Individuals  not  standing  for  election  at the Annual  Meeting  are
presented under the heading "Continuing Directors."


Director Nominees

                              Year First
                               Became a                                                                                    Term to
 Directors                     Director         Business Experience During Past 5 Years                                   Expire in
 ---------                     --------         ---------------------------------------                                   ---------
                                                                                                                    

Thomas W. Erickson*(51)......    2000           Mr. Erickson served as our Interim President and Chief Executive            2005
                                                Officer from October 1, 2000 to June 12, 2001.  Mr. Erickson has
                                                also served as President and Chief Executive Officer of CareSelect
                                                Group, Inc., an operator of physician clinics, from 1994 through
                                                2001 and ECG Ventures, Inc., a healthcare venture capital firm,
                                                since 1987.

Harold J. Kloosterman (60)....   1992           Mr. Kloosterman currently serves as President of Cambridge Partners,        2005
                                                Inc., a company he formed in 1985.  He has been involved in the
                                                development and management of commercial, apartment and condominium
                                                projects in Grand Rapids and Ann Arbor, Michigan and in the Chicago
                                                area. Mr. Kloosterman was formerly a Managing Director of Omega
                                                Capital from 1986 to 1992.  Mr. Kloosterman has been involved in the
                                                acquisition, development and management of commercial and multifamily
                                                properties since 1978.  He has also been a senior officer of LaSalle
                                                Partners, Inc.

Donald J. McNamara*(49).......   2000           Mr. McNamara is the founder of The Hampstead Group, L.L.C.                  2005
                                                ("Hampstead"), a privately-held equity investment firm based in
                                                Dallas, Texas, and has served as its Chairman since its inception
                                                in 1989.  He has served as Chairman of the Board of Directors of
                                                FelCor Lodging Trust (NYSE:FCH) since its merger with Bristol Hotel
                                                Company in July 1998. Mr. McNamara has also served as a director of
                                                Franklin Covey Co. (NYSE:FC) since May 1999. Mr. McNamara also
                                                currently serves as a trustee of St. Mark's School in Texas and a
                                                trustee of the Virginia Tech Foundation.

C. Taylor Pickett (40)........                  Mr. Pickett is our Chief Executive Officer and has served in that           2005
                                                capacity since June 12, 2001.  He served as the Executive Vice
                                                President and Chief Financial Officer of Integrated Health Services,
                                                Inc., a public company specializing in post-acute healthcare
                                                services, from January 1998 to June 2001.  Mr. Pickett also served
                                                as the President of Symphony Health Services, Inc. from January 1996
                                                to May 1997.


Daniel A. Decker*(49).........   2000           Mr. Decker is Chairman of the Board of Directors and has served in          2003
                                                this capacity since October 2000. Mr. Decker also served as Executive
                                                Chairman from March 2001 to June 12, 2001.  Mr. Decker has been a
                                                partner of The Hampstead Group, L.L.C., a privately-held equity
                                                investment firm based in Dallas, Texas, since 1990.  Mr. Decker has
                                                served as a director of various other public companies, including
                                                Bristol Hotel Company (NYSE), Wyndham Hotel Company (NYSE:WYN) and
                                                the Forum Group (NASDAQ:FOUR).

Thomas F. Franke (72).........   1992           Mr. Franke is Chairman and principal owner of Cambridge Partners,           2003
                                                Inc., an owner, developer and manager of multifamily housing in
                                                Grand Rapids and Ann Arbor, Michigan.  He is also the principal
                                                owner of private healthcare firms operating in the United States
                                                and the United Kingdom and is a principal owner of a private hotel
                                                firm in the United Kingdom.  Mr. Franke is a director of Principal
                                                Healthcare Finance Limited.

Bernard J. Korman (70)........   1993           Mr. Korman is Chairman of the Board of Trustees of Philadelphia             2003
                                                Health Care Trust, a private healthcare foundation, and has served
                                                in this capacity since December 1995.  He was formerly President,
                                                Chief Executive Officer and Director of MEDIQ Incorporated (health
                                                care services) from 1977 to 1995.  Mr. Korman also is a director of
                                                the following public companies:  The New America High Income Fund,
                                                Inc. (financial services), The Pep Boys, Inc. (auto supplies), Kramont
                                                Realty Trust (real estate investment trust), NutraMax Products, Inc.
                                                (consumer health care products) and Omega Worldwide, Inc.

Edward Lowenthal (57).........   1995           Mr. Lowenthal was President and Chief Executive Officer of                  2004
                                                Wellsford Real Properties, Inc. (AMEX:WRP), a real estate Merchant
                                                bank from 1997 to 2002 and was President of the predecessor of
                                                Wellsford Real Properties, Inc. since 1986. Mr. Lowenthal is a member
                                                of the Board of Equity Residential Properties Trust and Reis, Inc., a
                                                privately held real estate market information and analytics company.

Christopher W. Mahowald*(40)..   2000           Mr. Mahowald is Managing Partner of the EFO Realty Sponsor Funds, a         2004
                                                series of real estate private equity funds, and has served in this
                                                capacity since January 1997.  In this capacity, he is responsible for
                                                the origination, analysis, structuring and execution of new investment
                                                activity and asset management relating to the Funds' existing real estate
                                                assets.  Mr. Mahowald also serves as a director of Integroup Realty Trust
                                                (a privately held off-campus student housing company), Aureus Group (a
                                                privately held assisted living company) and previously served as a
                                                director of IMPAC Commercial Holdings (NYSE:ICH), a mortgage REIT.

Stephen D. Plavin**(42).......   2000           Mr. Plavin is Chief Operating Officer of Capital Trust, Inc., a New         2004
                                                York City-based specialty finance and investment management company
                                                and has served in this capacity since 1998.  In this role, Mr. Plavin
                                                is responsible for all of the lending, investing and portfolio
                                                management activities of Capital Trust, Inc.


*Director designated by Explorer pursuant to the Stockholders' Agreement
**Independent Director approved by Explorer pursuant to the Stockholders' Agreement.


                                 RECOMMENDATION

     The Board of  Directors  unanimously  recommends a vote FOR the election of
Messrs. Erickson, Kloosterman, McNamara and Pickett.



    PROPOSAL 2 - APPROVAL OF THE AMENDMENTS TO THE ARTICLES OF INCORPORATION
              AND BYLAWS INCREASING THE MAXIMUM NUMBER OF DIRECTORS

     Article V,  Section 3 of our  Articles of  Incorporation  and Article  III,
Section 1 of our Bylaws  currently  provide  that Omega shall have not less than
five nor more than nine  directors.  Any  increase  in the number of  authorized
directors  requires the affirmative  vote of the holders of 80% of the shares of
our common stock and Series C preferred stock,  voting together as a class on an
as-converted  basis. The Board of Directors has approved and recommends that you
approve  amendments  to our  Articles  of  Incorporation  and to our Bylaws that
increase the maximum number of directors  from nine to thirteen,  subject to the
rights of preferred  stockholders to designate  additional  directors in certain
events under the terms of the preferred stock.

     The purpose of these amendments to our Articles of Incorporation and to our
Bylaws  is to enable  Omega to take  timely  advantage  of the  availability  of
well-qualified  candidates  and to increase our ability to attract  high-quality
individuals  to serve as directors of Omega.  The Board of Directors  has deemed
these  amendments  to be in the best  interest of Omega because it believes that
the presence of additional  talented  individuals with industry  experience will
enhance  our  ability  to  meet  the  challenges  we  face  in  an  increasingly
competitive  market.  Furthermore,  increasing  the maximum size of the Board of
Directors to thirteen  will enable  Explorer to exercise its  governance  rights
under the 2002 Stockholders'  Agreement and, if appropriate,  under the terms of
the Series C preferred  stock  without the need to have any  incumbent  director
resign.

     Accordingly, it is proposed that the last paragraph of Article V, Section 3
of our Articles of Incorporation be amended to read as follows:

     "The number of Directors may be increased or decreased from time to time in
     such manner as may be provided in the Bylaws,  provided  that the number of
     Directors  constituting  the full Board of Directors shall not be less than
     five (5) nor more than thirteen (13),  subject, at all times, to the rights
     of the holders of any class of the  Corporation's  preferred stock to elect
     directors in certain  circumstances  pursuant to the express  terms of such
     preferred stock."

     Accordingly,  it is proposed  that the first two  sentences of Article III,
Section 1 of our Bylaws be amended to read as follows:

     "The number of Directors  constituting the full Board of Directors shall be
     not less  than  five (5) nor more  than  thirteen  (13)  until  changed  by
     amendment  of these  Bylaws,  subject,  at all times,  to the rights of the
     holders  of any  class  of  the  Corporation's  preferred  stock  to  elect
     directors in certain  circumstances  pursuant to the express  terms of such
     preferred  stock.  The exact number of Directors within such range shall be
     fixed  from time to time by  resolution  of the Board of  Directors  or the
     stockholders."

Any person who is  appointed  as a director by the Board of  Directors to fill a
vacancy  resulting from an increase in the size of the Board of Directors  would
stand for re-election at the next annual meeting of  stockholders  following his
or her appointment.

     The Board of Directors has fixed the number of directors  constituting  the
full Board of  Directors  at ten  directors  as of the  effective  date of these
amendments  and subject to the rights of  preferred  stockholders  to  designate
additional  directors in certain events under the terms of the preferred  stock.
C. Taylor Pickett has been nominated to fill the vacancy  created  thereby.  See
"Proposal 1 - Election of Directors."

Required Vote for Approval of the Amendment to our Articles of Incorporation and
Bylaws

     The affirmative vote of the holders of 80% of the shares of the outstanding
common  stock and Series C  preferred  stock,  voting  together as a class on an
as-converted  basis,  is required to approve the  amendments  to our Articles of
Incorporation  and our  Bylaws  to  increase  the  maximum  size of the Board of
Directors.

                                 RECOMMENDATION

     The Board of  Directors  unanimously  recommends a vote FOR the approval of
the  amendment  to our  Articles of  Incorporation  and Bylaws to  increase  the
maximum size of the Board of Directors from nine to thirteen members.

                             PRINCIPAL STOCKHOLDERS

The following table sets forth information regarding beneficial ownership of our
capital  stock as of March 31, 2002,  except for Hampstead  Investment  Partners
III, L.P., Daniel A. Decker and Donald J. McNamara as to which the date is April
18, 2002, by:

     o    each of our directors and the named  executive  officers  appearing in
          the table under  "Executive  Compensation--Compensation  of  Executive
          Officers,"  except for those executive  officers no longer employed by
          us;

     o    each of the four new  executive  officers  who have joined Omega since
          June 2001;

     o    all  directors  and  executive  officers as a group,  except for those
          executive officers no longer employed by us; and

     o    all persons known to us to be the beneficial  owner of more than 5% of
          our outstanding common stock.

     Except as indicated in the  footnotes to this table,  the persons  named in
the table have sole voting and  investment  power with  respect to all shares of
our common  stock  shown as  beneficially  owned by them,  subject to  community
property  laws where  applicable.  The  business  address of the  directors  and
executive  officers is 9690 Deereco Road, Suite 100,  Timonium,  Maryland 21093.
Information  regarding the beneficial  ownership of the Series C preferred stock
is set forth in footnote 3 to the table below.



                                                   Common Stock                 Series A Preferred        Series B Preferred
                                                   ------------                 ------------------        ------------------
                                               Number of        Percent of     Number of     Percent of  Number of   Percent of
           Beneficial Owner                     Shares           Class(1)       Shares       Class(15)     Shares    Class(16)
           ----------------                     ------           --------       ------       ---------     ------    ---------
                                                                                                      

C. Taylor Pickett....................            73,256 (2)        0.1%           --             --           --         --
Robert O. Stephenson.................             1,466              *            --             --           --         --
Daniel J. Booth......................                --              *            --             --           --         --
R. Lee Crabill, Jr...................                --              *            --             --           --         --
Daniel A. Decker.....................        29,121,337 (3)(4)    54.0%           --             --           --         --
Thomas W. Erickson...................            95,201 (5)        0.2%           --             --           --         --
Thomas F. Franke.....................            61,516 (6)(7)     0.1%        4,000              *           --         --
Harold J. Kloosterman................            88,676 (6)(8)     0.2%           --             --           --         --
Bernard J. Korman....................           541,095 (9)        1.0%          200              *        1,300          *
Edward Lowenthal.....................            19,236 (10)(11)     *            --             --          100          *
Christopher W. Mahowald..............            10,201 (4)          *            --             --           --         --
Donald J. McNamara...................        29,654,559(3)(4)(12) 55.0%        3,600 (14)         *        4,300          *
Stephen D. Plavin....................            10,202 (4)          *            --             --           --         --
Directors and executive officers as
a group (13 persons).................        30,563,715 (13)      56.7%        7,800              *        5,700          *

5% Beneficial Owners:
Hampstead Investment Partners III, L.P.
   (through Explorer Holdings, L.P.)
4200 Texas Commerce Tower West
2200 Ross Avenue
Dallas, TX 75201.....................        29,113,030 (3)       54.0%

-----------


*    Less than 0.10%

(1)  Based on 53,902,176  shares of our common stock outstanding as of March 31,
     2002,  including  16,774,720  shares  of our  common  stock  issuable  upon
     conversion of Series C preferred stock. See Note (3) below.

(2)  Includes 50,000 unvested shares of Restricted Stock granted in July 2001.

(3)  Based on  Amendment  No. 7 to Schedule  13D filed by  Hampstead  Investment
     Partners III, L.P. on April 18, 2002. Represents shares of our common stock
     issuable upon  conversion of 1,048,420  shares of Series C preferred  stock
     and 12,338,310  shares of common stock owned by Explorer.  Hampstead  holds
     the ultimate controlling interest in Explorer.  Messrs. McNamara and Decker
     disclaim  beneficial  ownership  of the  Series C  preferred  stock and the
     common stock, which they may be deemed to beneficially own because of their
     ownership  interests in  Hampstead,  which holds the  ultimate  controlling
     interest in Explorer.

(4)  Includes stock options that are exercisable within 60 days to acquire 3,666
     shares.

(5)  Includes  stock  options  that are  exercisable  within 60 days to  acquire
     88,666 shares.

(6)  Includes stock options that are exercisable within 60 days to acquire 4,999
     shares.

(7)  Includes 47,141 shares owned by a family limited  liability company (Franke
     Family LLC) of which Mr. Franke is a Member.

(8)  Includes  shares owned jointly by Mr.  Kloosterman and his wife, and 30,246
     shares held solely in Mrs. Kloosterman's name.

(9)  Includes stock options that are exercisable within 60 days to acquire 4,332
     shares.

(10) Includes 2,000 shares held in a private profit sharing plan for the benefit
     of Mr. Lowenthal.

(11) Includes stock options that are exercisable within 60 days to acquire 7,333
     shares.

(12) Includes  367,745 shares held by a partnership  established by Mr. McNamara
     for the benefit of certain members of Mr. McNamara's  family,  7,546 shares
     held by a charitable  foundation  established  by Mr.  McNamara,  and 1,466
     shares held by a trust  established by Mr. McNamara for non-family  members
     of which Mr. McNamara is the trustee. Mr. McNamara disclaims any beneficial
     ownership of the shares held by the  partnership,  the  foundation  and the
     trust.

(13) Includes 50,000 unvested shares of restricted  stock and stock options that
     are exercisable  within 60 days to acquire 124,993 shares.  Includes shares
     of our common stock  issuable upon  conversion of Series C preferred  stock
     and shares of common stock owned by Explorer. See Note (3).

(14) Includes  800  shares  held  by a trust  established  by Mr.  McNamara  for
     non-family  members of which Mr.  McNamara  is the  trustee.  Mr.  McNamara
     disclaims any beneficial ownership of the shares held by the trust.

(15) Based on 2,300,000 shares of Series A preferred stock  outstanding on March
     31, 2002.

(16) Based on 2,000,000 shares of Series B preferred stock  outstanding on March
     31, 2002.


                      DIRECTORS AND OFFICERS OF OUR COMPANY

Board of Directors and Committees of the Board

     The Board of Directors held eleven meetings during 2001. All members of the
Board of Directors attended more than 75% of the Board of Directors or Committee
meetings held during 2001.

     The  Board  of  Directors  has an Audit  Committee  consisting  of  Messrs.
Kloosterman,  Korman and Plavin, a Compensation  Committee consisting of Messrs.
Franke,  Kloosterman and McNamara, an Independent Directors Committee consisting
of Messrs. Franke,  Kloosterman,  Korman, Lowenthal and Plavin, and an Executive
Committee consisting of Messrs. Decker and Korman.

     The Board of Directors  does not have a standing  Nominating  Committee and
the functions that would  typically be performed by this Committee are performed
by the  entire  Board  of  Directors,  except  that  each  nominee  that  is not
designated  by  Explorer  pursuant  to  the  Stockholders'   Agreement  will  be
designated by the Independent Directors Committee.

     The Audit  Committee met twice in 2001.  Its primary  function is to assist
the Board of Directors in fulfilling its oversight responsibilities with respect
to (i) the annual  financial  information to be provided to stockholders and the
Securities and Exchange Commission ("SEC"); (ii) the system of internal controls
that  management  has  established;  and (iii) the external  audit  process.  In
addition,  the Audit Committee provides an avenue for communication  between the
independent accountants, financial management and the Board of Directors.

     The   Compensation   Committee   met  five  times   during   2001  and  has
responsibility  for  the  compensation  of  our  key  management  personnel  and
administration   of  our  2000  Stock  Incentive  Plan  and  our  1993  Deferred
Compensation Plan. The Compensation  Committee also administered our Amended and
Restated  Stock  Option and  Restricted  Stock Plan (the  "Amended  and Restated
Plan") prior to its termination in 2000.

     The  Independent  Directors  Committee  met eight times during 2001 and has
responsibility  for passing  upon those  issues with respect to which a conflict
may exist  between us and  Explorer  and/or  Hampstead,  including  issues  with
respect to the  allocation  of costs  between us and  Explorer  pursuant  to the
Advisory  Agreement  between Omega and  Explorer.  See "Certain  Transactions  -
Explorer Holdings, L.P., Advisory Agreement."

     The  Executive  Committee,   which  did  not  meet  during  2001,  has  the
responsibility to act on behalf of the Board of Directors in between meetings of
the Board of Directors.

Compensation of Directors

     For the year ended December 31, 2001, each non-employee director received a
cash payment  equal to $10,000 per year,  payable in quarterly  installments  of
$2,500. Each non-employee  director also received a quarterly grant of shares of
common  stock equal to the number of shares  determined  by dividing  the sum of
$2,500  by the  fair  market  value  of the  common  stock  on the  date of each
quarterly  grant,  currently set at February 15, May 15, August 15, and November
15. In addition, each non-employee director is entitled to receive fees equal to
$1,000 per meeting for  attendance at each  regularly  scheduled  meeting of the
Board of Directors.  For each  teleconference  or called special  meeting of the
Board of Directors,  each non-employee director will receive $1,000 for meetings
with a duration in excess of 15 minutes and $500 for meetings with a duration of
less than 15 minutes.  In  addition,  we  reimbursed  the  directors  for travel
expenses  incurred  in  connection  with  their  duties as  directors.  Employee
directors received no compensation for service as directors.

     The cash compensation, not including reimbursement for expenses, paid by us
in  consideration  of Mr.  Decker's and Mr.  McNamara's  service on the Board of
Directors  as  Explorer  designees  was paid  directly  to  Hampstead  under the
advisory  agreement.  Mr.  Erickson is compensated  through  payments made to an
entity  controlled  by him  under a  management  services  agreement.  Under the
management  services  agreement,  Mr.  Erickson may also receive awards of stock
options  and  dividend   equivalent  rights.  See  "Compensation  and  Severance
Agreements -- Thomas W. Erickson Management Services Agreement."

     Directors are eligible to  participate  in our 2000 Stock  Incentive  Plan.
Directors  received  option  grants under our amended and restated plan prior to
its  termination in 2000.  Each  non-employee  director was awarded options with
respect  to  10,000  shares  at the date the plan was  adopted  or on his or her
subsequent  election  as a  director,  and each  non-employee  director  will be
granted an additional  option grant with respect to 1,000 shares on January 1 of
each year  they  serve as a  director.  All  grants  have been and will be at an
exercise price equal to 100% of the fair market value of our common stock on the
date of the grant.  Non-employee director options vest one third after each year
for three years.

Compensation Committee Interlocks and Insider Participation

     Mr. Decker,  the Chairman of the Board of Directors,  and Mr. Erickson were
previously  members  of our  compensation  committee.  Both Mr.  Decker  and Mr.
Erickson have resigned from the compensation committee as of March 30, 2001. Mr.
McNamara is currently a member of the compensation committee. Messrs. Decker and
McNamara are affiliates of Explorer and  Hampstead,  and therefore may be deemed
to have an interest in the agreements and transactions  described under "Certain
Transactions - Explorer  Holdings,  L.P." Mr.  Erickson can be deemed to have an
interest  in  payments  made by us under  the terms of the  management  services
agreement,  the terms of which are described under  "Compensation  and Severance
Agreements--Thomas W. Erickson Management Services Agreement."


                             EXECUTIVE COMPENSATION

Compensation Committee Report

     The  Compensation  Committee (the  "Committee")  administers our 2000 Stock
Incentive Plan and 1993 Deferred  Compensation  Plan, and has responsibility for
other incentive and benefit plans. The Committee  determines the compensation of
our  executive  officers and reviews with the Board of Directors  all aspects of
compensation for our executive officers.

     Historically,  our policy and the guidelines followed by the Committee have
been directed toward providing  compensation to our executive  officers in order
to achieve the following objectives:

     1)   Assist  in  attracting  and  retaining   talented  and  well-qualified
          executives.

     2)   Reward performance and initiative.

     3)   Be competitive with other healthcare real estate investment trusts.

     4)   Be  significantly  related to  accomplishments  and our short-term and
          long-term successes, particularly measured in terms of growth in funds
          from operations on a per share basis.

     5)   Encourage  executives to achieve meaningful levels of ownership of our
          stock.

     Our  historical  compensation  practices  have embodied the principle  that
annual bonuses should be based  primarily on achieving  objectives  that enhance
long-term  stockholder value, and that meaningful stock ownership by management,
including  participation  in various  benefit plans providing for stock options,
restricted  stock and  retirement,  is  desirable  in aligning  stockholder  and
management interests.

     Our  approach  to base  compensation  levels has been to offer  competitive
salaries in  comparison  with  prevailing  market  practices.  The Committee has
annually  examined  market  compensation  levels and trends.  Additionally,  the
Committee has also  considered the pool of executives who currently are employed
in similar positions in public companies, with emphasis on salaries paid by real
estate investment trusts.

     The  Committee  has  evaluated   executive   officer  salary  decisions  in
connection  with an annual  review and based on input from the  Chairman  of the
Board of Directors and our Chief  Executive  Officer.  In undertaking the annual
review, the Committee  considered the  decision-making  responsibilities of each
position and the experience,  work performance and team-building  skills of each
incumbent.  The  Committee  has  viewed  work  performance  as the  single  most
important   measurement   factor,   followed   by   team-building   skills   and
decision-making responsibilities.

     For  executives  other  than the Chief  Executive  Officer  of  Omega,  the
Committee has given  consideration  to both overall company  performance and the
performance  of the specific areas of the company under the  incumbent's  direct
control.   It  was  the  Committee's  view  that  this  balance   supported  the
accomplishment of overall  objectives and rewarded  individual  contributions by
executive officers. Individual annual bonuses for each named executive have been
consistent with market  practices for positions with comparable  decision-making
responsibilities.

     In  connection  with  retaining  the services of Mr.  Pickett to act as our
Chief Executive Officer, we entered into an Employment  Agreement dated June 12,
2001, with Mr. Pickett.  The Committee believes that the terms of the Employment
Agreement are consistent with the duties and scope of responsibilities  assigned
to Mr.  Pickett  as Chief  Executive  Officer.  In order to align Mr.  Pickett's
interests  with the long-term  interests of Omega,  Mr.  Pickett's  compensation
package includes significant equity-based compensation,  including stock options
and restricted stock. For a detailed  description of the terms of the Employment
Agreement  see  "Compensation  and  Severance  Agreements  - C.  Taylor  Pickett
Employment Agreement" below.

     The SEC requires  that this report  comment upon our policy with respect to
Section 162(m) of the Internal  Revenue Code.  From time to time,  Mr.  McNamara
recused himself from the Compensation Committee meetings to enable the Committee
to qualify as a committee of outside directors as set forth in Section 162(m) of
the  Internal  Revenue  Code.  Section  162(m)  disallows  a federal  income tax
deduction  for  compensation  over $1.0  million  to any of the named  executive
officers  unless  the   compensation  is  paid  pursuant  to  a  plan  which  is
performance-related,   non-discretionary   and   has   been   approved   by  our
stockholders.  We did not pay any compensation during 2001 that would be subject
to  Section  162(m).  We  believe  that,  because we qualify as a REIT under the
Internal  Revenue Code and therefore are not subject to federal  income taxes on
our income to the extent distributed,  the payment of compensation that does not
satisfy the  requirements  of Section  162(m) will not generally  affect our net
income,  although to the extent that compensation does not qualify for deduction
under  Section  162(m) a larger  portion  of  stockholder  distributions  may be
subject to federal  income  taxation  as dividend  income  rather than return of
capital.  We do not  believe  that  Section  162(m) will  materially  affect the
taxability of stockholder  distributions,  although no assurance can be given in
this regard due to the variety of factors  that affect the tax  position of each
stockholder. For these reasons, the Compensation Committee's compensation policy
and practices are not directly governed by Section 162(m).

                                           Compensation Committee of the Board

                                           /s/ Thomas F. Franke
                                           /s/ Harold J. Kloosterman
                                           /s/ Donald J. McNamara



Compensation of Executive Officers

     The following table sets forth, for the years ended December 31, 2001, 2000
and 1999,  the  compensation  for  services in all  capacities  to Omega of each
person who served as chief executive  officer during the year ended December 31,
2001, the four most highly  compensated  executive  officers serving at December
31, 2001, and three former executive officers.



                                                                                Long-Term Compensation
                                           Annual Compensation                   Award(s)               Payouts
                                                                        Restricted      Securities        All
                                                                          Stock         Underlying       LTIP           Other
          Name and                                                       Award(s)        Options/       Payouts      Compensation
     Principal Position        Year      Salary($)       Bonus($)          ($)            SARs(#)         ($)           ($)(1)
     ------------------        ----      ---------       --------          ---            -------         ---           ------
                                                                                                    

C. Taylor Pickett..........    2001       250,673        250,500        116,000(2)     1,120,000          --               --
Chief Executive Officer
(from June 12, 2001)

Thomas W. Erickson.........    2001       507,044(3)     250,000(3)          --           51,000(4)       --           31,499(5)
Interim Chief Executive        2000       127,055(3)          --             --           45,000(6)       --           12,000(5)
Officer (10/1/2000 through
6/12/2001)

Daniel J. Booth............    2001        58,349         30,000             --          350,000          --               --
Chief Operating Officer
(from October 15, 2001)

R. Lee Crabill, Jr.........    2001        91,237         45,500             --          245,000          --            21,851(7)
Senior Vice President
(from July 30, 2001)

Robert O. Stephenson.......    2001        89,583         45,500             --          325,000          --               --
Chief Financial Officer
(from August 30, 2001)

Richard M. FitzPatrick.....    2001       322,866(8)     250,000             --               --          --               --
Chief Financial Officer        2000       139,634(9)          --             --               --          --               --
(7/14/2000 through 7/31/2001)

F. Scott Kellman...........    2001       300,000        300,000(11)         --               --          --          386,230(12)
Chief Operating Officer        2000       266,651        325,000(13)    212,400(14)      500,000(15)      --           10,743
(prior to 10/15/2001)(10)      1999       245,000         55,000         55,000(14)       27,500          --          (19,559)

Laurence D. Rich...........    2001       175,000        205,000(11)         --               --          --          119,426(18)
Vice President (16)            2000       139,833        115,000(13)    104,000(17)      227,500(15)      --            3,239
                               1999       120,000         27,500         27,500(17)       15,000          --            9,664

-----------


(1)  Consists  of  our  contributions  to our  401(k)  Profit-Sharing  Plan  and
     provisions for each participant under our 1993 Deferred  Compensation Plan,
     except as follows or as  otherwise  noted in  footnotes  appearing  in this
     column:  with  respect to Mr.  Kellman,  such amount  includes a payment of
     $8,036 for consideration of acceleration of certain options in 1999.

(2)  Represents a restricted stock award of 50,000 shares of our common stock to
     Mr. Pickett on June 12, 2001, with shares vesting on June 12, 2003.

(3)  Represents amounts paid to a company controlled by Mr. Erickson pursuant to
     the terms of the  Management  Services  Agreement in  consideration  of the
     services  performed by Mr. Erickson as our Interim Chief Executive Officer.
     See "Compensation and Severance  Agreements--Thomas  W. Erickson Management
     Services Agreement."

(4)  Includes  50,000 shares subject to an option granted to Mr.  Erickson under
     the terms of the Management  Services Agreement and 1,000 shares subject to
     an option  granted to Mr.  Erickson as a director.  See  "Compensation  and
     Severance Agreements--Thomas W. Erickson Management Services Agreement."

(5)  Includes  stock  grants  for  payment  of  director  fees in 2001  and cash
     payments for director fees of $21,500 in 2001 and $12,000 in 2000.

(6)  Includes  35,000 shares subject to an option granted to Mr.  Erickson under
     the terms of the Management Services Agreement and 10,000 shares subject to
     an option granted to Mr. Erickson in  consideration of becoming a director.
     See "Compensation and Severance  Agreements--Thomas  W. Erickson Management
     Services Agreement."

(7)  Represents   compensation  to  Mr.  Crabill  for  reimbursement  of  moving
     expenses.

(8)  Includes  amounts payable to Mr.  FitzPatrick by Hampstead in consideration
     of Mr.  FitzPatrick  serving as our Chief Financial Officer from January 1,
     2001 through April 30, 2001. Pursuant to the Advisory Agreement,  we agreed
     to reimburse  Explorer for the services provided to us by Mr.  FitzPatrick.
     See "Certain Transactions--Explorer Holdings, L.P., Advisory Agreement."

(9)  Represents   compensation  payable  to  Mr.  FitzPatrick  by  Hampstead  in
     consideration  of Mr.  FitzPatrick  serving as our Chief Financial  Officer
     through December 31, 2000. Pursuant to the Advisory Agreement, we agreed to
     reimburse Explorer for the services provided to us by Mr. FitzPatrick.  See
     "Certain Transactions--Explorer Holdings, L.P., Advisory Agreement."

(10) See "F. Scott Kellman Retention, Severance and Release Agreement" below.

(11) Represents cash bonuses paid under a Severance and Release Agreement.

(12) Consists of $250,000 settlement of dividend equivalent rights in connection
     with the cancellation of options,  $131,130 payment under our 1993 Deferred
     Compensation Plan and contributions to our 401(k)  Profit-Sharing  Plan for
     Mr. Kellman.

(13) Includes a special  bonus paid in  connection  with the Series C Investment
     pursuant  to a  compensation  agreement  entered  into  between  the  named
     individuals and us.

(14) Represents restricted stock awards of 35,258 shares and 7,097 shares of our
     common stock made to Mr. Kellman on February 10, 2000 and January 31, 2000,
     respectively.  The  February  10,  2000 award was a  prospective  award for
     service in fiscal 2000. The January 31, 2000 award represents  compensation
     earned in fiscal 1999. With respect to the February 10, 2000 grant,  25% of
     the shares  vested 180 days  following the grant date and 25% of the shares
     vest on each anniversary of the grant date for the next three years.  Under
     the February  10, 2000 award,  17,629  shares were  awarded  subject to the
     price of our common stock meeting certain performance hurdles. The price of
     our common stock did not satisfy the required  performance hurdles, and the
     17,629 shares referred to above were forfeited in accordance with the terms
     of the grant. With respect to the January 31, 2000 grant, 50% of the shares
     vested 180 days following the grant date,  with the balance  vesting on the
     anniversary of the grant date. Mr. Kellman  receives  dividends on unvested
     shares. The number of unvested shares and value of Mr. Kellman's restricted
     stock  awards at the end of last year were 647  shares  and $3,895 of which
     all were released in January 2002.

(15) Represents  special  grant of  options  in  connection  with  the  Series C
     Investment  pursuant to the terms of a Compensation  Agreement  between the
     named  individual and us. Such options were cancelled in 2001 and a payment
     was made to the named  individuals  in  settlement  of dividend  equivalent
     rights in connection with the cancellation of these options. See Notes (12)
     and (18).

(16) See "Laurence D. Rich Retention, Severance and Release Agreement" below.

(17) Represents restricted stock awards of 17,269 shares and 3,548 shares of our
     common  stock made to Mr. Rich on February  10, 2000 and January 31,  2000,
     respectively.  The  February  10,  2000 award was a  prospective  award for
     service in fiscal 2000. The January 31, 2000 award represents  compensation
     earned in fiscal 1999. With respect to the February 10, 2000 grant,  25% of
     the shares  vested 180 days  following the grant date and 25% of the shares
     vest on each anniversary of the grant date for the next three years.  Under
     the February 10, 2000 award, 8,634 shares were awarded subject to the price
     of our common stock meeting certain performance  hurdles.  The price of our
     common  stock did not satisfy the  required  performance  hurdles,  and the
     8,634 shares  referred to above were forfeited in accordance with the terms
     of the grant. With respect to the January 31, 2000 grant, 50% of the shares
     vested 180 days following the grant date,  with the balance  vesting on the
     anniversary  of the grant date.  Mr. Rich  receives  dividends  on unvested
     shares.  The number of unvested  shares and value of Mr. Rich's  restricted
     stock  awards  at the end of the last year were 215  shares  and  $1,294 of
     which all were released in January 2002.

(18) Consists of $113,750 settlement of dividend equivalent rights in connection
     with the  cancellation  of  options,  provisions  under  our 1993  Deferred
     Compensation Plan and contributions to our 401(k)  Profit-Sharing  Plan for
     Mr. Rich.


Compensation and Severance Agreements

C. Taylor Pickett Employment Agreement

     We entered into an employment  agreement with C. Taylor Pickett dated as of
June 12, 2001,  to be our Chief  Executive  Officer.  The term of the  agreement
expires on June 12, 2005.

     Mr.  Pickett's base salary is $450,000 per year,  subject to increase by us
and  provides  that he will be eligible for an annual bonus of up to 100% of his
base salary based on criteria  determined by the  Compensation  Committee of our
Board of Directors. We issued Mr. Pickett 50,000 shares of our restricted common
stock on June 12, 2001,  which vest after he has completed two years of service.
Additionally,  Mr.  Pickett was granted an  incentive  stock  option to purchase
172,413 shares of our common stock and a  nonqualified  stock option to purchase
627,587 shares of our common stock. The incentive stock option will be vested as
to 25% of the shares on December 31,  2002;  as to an  additional  25% after Mr.
Pickett  completes two years of service;  as to an  additional  25% ratably on a
monthly basis in 2004; and as to the final 25% ratably on a monthly basis in the
first six months of 2005,  in each case provided Mr.  Pickett  continues to work
for us on the applicable vesting date. The nonqualified stock option will become
vested as to 50% of the shares after Mr. Pickett  completes two years of service
and will become  ratably  vested as to the  remainder of the shares on a monthly
basis over the next 24 months of service following that two year anniversary.

     If we terminate Mr. Pickett's employment without cause or if he resigns for
good  reason,  he will be entitled to payment of his base salary for a period of
12 months  or,  if  shorter,  for the  remainder  of the term of the  agreement.
Additionally,  Mr. Pickett will be entitled to payment of an amount equal to the
bonus paid in the prior year, payable in 12 monthly installments. Mr. Pickett is
required to execute a release of claims against us as a condition to the payment
of severance  benefits.  The vesting of Mr. Pickett's  options may be subject to
acceleration  upon the occurrence of certain events such as termination  without
cause or resignation for good reason and will become fully vested if, within one
year  following a change of control,  he is terminated  without cause or resigns
for good reason.

     Mr. Pickett is restricted  from using any of our  confidential  information
during  his  employment  and for two years  thereafter  or from  using any trade
secrets  during  his  employment  and for as long  thereafter  as  permitted  by
applicable  law.  Mr.  Pickett is subject to covenants  which  prohibit him from
competing  with us and from  soliciting  our customers or employees  while he is
employed by us and for 12 months following his termination of employment.

Daniel J. Booth Employment Agreement

     We entered into an employment  agreement with Daniel J. Booth  effective as
of  October  15,  2001,  to be our  Chief  Operating  Officer.  The  term of the
agreement expires on January 1, 2006.

     Mr.  Booth's base salary is $275,000  per year,  subject to increase by us,
and he is eligible  for an annual bonus of up to 50% of his base salary based on
criteria  determined  by the  Compensation  Committee.  Mr. Booth was granted an
incentive  stock  option to purchase  166,666  shares of our common  stock and a
nonqualified  stock option to purchase  83,334 shares of our common  stock.  The
incentive stock option will vest as to 20% of the shares on each of December 31,
2002, October 1, 2003, October 1, 2004, October 1, 2005 and January 1, 2006, and
the nonqualified  stock option will vest on January 1, 2003,  provided Mr. Booth
continues to work for us on the applicable vesting date.

     Our agreement  with Mr. Booth  contains  severance and  accelerated  option
vesting provisions similar to those in Mr. Pickett's  agreement described above.
Mr.  Booth is required to execute a release of claims  against us as a condition
to the payment of severance benefits.  He is also subject to restrictions on his
use of confidential information and our trade secrets that are the same as those
in our agreement with Mr. Pickett described above.

Robert O. Stephenson Employment Agreement

     We entered into an employment agreement with Robert O. Stephenson effective
as of August  30,  2001,  to be our  Chief  Financial  Officer.  The term of the
agreement expires on January 1, 2006.

     Mr.  Stephenson's base salary is $215,000 per year,  subject to increase by
us, and he is eligible for an annual bonus of up to 50% of his base salary based
on criteria determined by the Compensation Committee. Mr. Stephenson was granted
an incentive  stock option to purchase  181,155 shares of our common stock and a
nonqualified  stock option to purchase  18,845 shares of our common  stock.  The
incentive stock option will vest as to 20% of the shares on each of December 31,
2002,  August 1, 2003,  August 1, 2004,  August 1, 2005 and January 1, 2006, and
the  nonqualified  stock  option  will  vest on  August 1,  2003,  provided  Mr.
Stephenson continues to work for us on the applicable vesting date.

     Our agreement with Mr. Stephenson contains severance and accelerated option
vesting provisions similar to those in Mr. Pickett's  agreement described above.
Mr.  Stephenson  is  required  to  execute a release  of claims  against us as a
condition  to  the  payment  of  severance  benefits.  He  is  also  subject  to
restrictions on his use of  confidential  information and our trade secrets that
are the same as those in our agreement with Mr. Pickett described above.

R. Lee Crabill, Jr. Employment Agreement

     We entered into an employment  agreement with R. Lee Crabill, Jr. effective
as of July 30, 2001, to be our Senior Vice President of Operations.  The term of
the agreement expires on July 30, 2005.

     Mr. Crabill's base salary is $215,000 per year,  subject to increase by us,
and he is eligible  for an annual bonus of up to 50% of his base salary based on
criteria  determined by the Compensation  Committee.  Mr. Crabill was granted an
incentive  stock  option to purchase  133,333  shares of our common  stock and a
nonqualified  stock option to purchase  41,667 shares of our common  stock.  The
incentive stock option will vest as to 25% of the shares on each of December 31,
2002,  August 1, 2003,  August 1, 2004 and August 1, 2005, and the  nonqualified
stock option will vest as to 50% of the shares after Mr.  Crabill  completes two
years of service  and will  become  ratably  vested as to the  remainder  of the
shares on a monthly basis over the next 24 months of service  following that two
year  anniversary,  provided  Mr.  Crabill  continues  to  work  for  us on  the
applicable vesting date.

     Our agreement with Mr. Crabill  contains  severance and accelerated  option
vesting provisions similar to those in Mr. Pickett's  agreement described above.
Mr. Crabill is required to execute a release of claims against us as a condition
to the payment of severance benefits.  He is also subject to restrictions on his
use of confidential information and our trade secrets that are the same as those
in our agreement with Mr. Pickett described above.

Thomas W. Erickson Management Services Agreement

     We entered into a management  services  agreement  with ECG Ventures,  Inc.
("ECG  Ventures")  dated as of October 1, 2000, to obtain the services of Thomas
W. Erickson as our Interim Chief Executive  Officer.  Mr. Erickson  continued to
provide  services  following the  appointment of Mr. Pickett as Chief  Executive
Officer  to  facilitate  a  transition.  The term of the  agreement  expired  on
December 31, 2001.

     We paid ECG  Ventures  $41,667  per  month  and  granted  them an option to
purchase  50,000  shares of our common  stock which was fully vested on December
31, 2001.  We also  reimbursed  ECG  Ventures  for the  premiums for  healthcare
coverage for Mr. Erickson and his dependents.  We paid ECG Ventures $250,000 for
Mr. Erickson to continue to provide  transitional  services through December 31,
2001.  Mr.  Erickson and ECG Ventures are subject to customary  restrictions  on
their use of our confidential information and trade secrets.

Richard M. FitzPatrick Employment Agreement

     We  entered  into an  employment  agreement  with  Richard  M.  FitzPatrick
effective as of May 1, 2001, to be our Interim Chief Financial Officer. The term
of the agreement expired on January 31, 2002.

     Mr.  FitzPatrick's  base salary was $250,000 per year and provided  that he
was  eligible  for an  annual  bonus of up to 100% of his base  salary  based on
criteria  determined  by the  compensation  committee.  We  agreed  to  pay  Mr.
FitzPatrick an amount equal to $125,000 plus 50% of his actual bonus for 2001 if
he continued to work for us for three months  following  the  expiration  of his
agreement to facilitate a transition to Mr.  Stephenson.  We also reimbursed The
Hampstead Group, L.L.C. for the amount of Mr.  FitzPatrick's annual compensation
paid by Hampstead  during the period from January 1, 2001 to May 1, 2001,  since
Mr.  FitzPatrick  worked as our interim Chief  Financial  Officer on a full-time
basis during that period prior to the effectiveness of his employment agreement.
Following termination of Mr. FitzPatrick's employment, Mr. FitzPatrick agreed to
provide  consulting  services  to us  for a  period  of  three  months,  and  in
consideration for such services,  we will pay to Mr. FitzPatrick an amount equal
to his base salary and bonus on a pro rata basis.

     Mr. FitzPatrick was required to execute a release of claims against us as a
condition to the payment of severance  benefits and his use of our  confidential
information and trade secrets is subject to customary restraints.

F. Scott Kellman Retention, Severance and Release Agreement

     We entered into a retention,  severance and release agreement with F. Scott
Kellman,  our former Chief Operating  Officer,  effective as of October 9, 2001,
which provided that Mr. Kellman  continued his employment  with us until January
31, 2002. Mr. Kellman was paid his regular base salary through January 31, 2002,
and  received a cash bonus of $300,000  which was paid on  February 1, 2002.  In
addition, Mr. Kellman also received a retention bonus of $930,000 which was paid
on February 1, 2002. We will pay Mr. Kellman's premiums for eligible health care
insurance benefits,  less required employee contributions for premiums,  through
December 31, 2002.  As a condition to payment of the amounts under the retention
grant,  Mr.  Kellman was required to execute a  comprehensive  release of claims
against us.

     If any of the  payments  to Mr.  Kellman  are  subject  to an excise tax on
"excess parachute payments" under the Internal Revenue Code, he will be entitled
to receive a payment in an amount that puts him in the same  after-tax  position
as if no excise tax had been  imposed.  Mr.  Kellman has agreed to maintain  the
confidentiality  of our  information  for a period  of two (2)  years  after the
resignation date.

Laurence D. Rich Retention, Severance and Release Agreement

     We entered into a retention,  severance and release agreement with Laurence
D. Rich  effective as of August 1, 2001,  which provided that Mr. Rich continued
his employment until January 31, 2002. Mr. Rich was paid his regular base salary
through  January 31, 2002,  and received a cash bonus of $205,000 which was paid
on February  1, 2002.  In  addition,  Mr.  Rich  received a  retention  bonus of
$530,000 which was paid on February 1, 2002. We will pay Mr. Rich's premiums for
eligible heath care insurance benefits, less required employee contributions for
premiums,  through  December 31, 2002.  As a condition to payment of the amounts
under the retention agreement,  Mr. Rich was required to execute a comprehensive
release of claims against us.

     If any of the  payments to Mr. Rich are subject to an excise tax on "excess
parachute  payments"  under the Internal  Revenue  Code,  he will be entitled to
receive a payment in an amount that puts him in the same  after-tax  position as
if no  excise  tax had  been  imposed.  Mr.  Rich has  agreed  to  maintain  the
confidentiality  of our  information  for a period  of two (2)  years  after his
termination of employment.

Retention, Severance, and Release Agreements for Other Employees

     In August 2001 we entered into retention,  severance and release agreements
with a total of 23 of our  employees  (excluding  Mr.  Kellman and Mr. Rich) who
were not expected to work for us at our new  headquarters in Maryland.  Pursuant
to these agreements, each employee agreed to continue his or her employment with
us until January 31, 2002. Pursuant to the agreement, each employee was paid his
or her regular base salary through  January 31, 2002, and received a cash bonus,
which was paid on February 1, 2002. In addition,  the employee will also receive
a specified retention bonus to be paid in equal monthly  installments  beginning
on February 1, 2002 over a specified  retention  bonus period ranging from three
to nine  months.  The total  amount of all  bonuses  and  retention  bonuses are
$514,320 and $495,490, respectively.

     During the retention bonus period, we will pay the employee's  premiums for
eligible health care insurance  benefits,  less required employee  contributions
for premiums,  and we will also provide  outplacement  services for a reasonable
period of time after the  resignation  date.  As a  condition  to the payment of
these severance benefits, the employees were required to execute a comprehensive
release of claims against us.

Option Grants/SAR Grants

     The following table sets forth certain  information  concerning options and
stock  appreciation  rights  ("SARs")  granted  during 2001 to Messrs.  Pickett,
Erickson, Booth, Crabill and Stephenson.  Messrs. FitzPatrick,  Kellman and Rich
did not receive any option grants during 2001 and therefore do not appear in the
table below.



                                                                                            Potential Realizable Value
                                                                                            at Assumed Annual Rates of
                                                                                           Stock Price Appreciation for
                                     Individual Grants                                            Option Term (1)
                                Number of         % of Total
                               Securities        Options/SARs    Exercise
                               Underlying         Granted to      or Base
                              Options/SARs       Employees in      Price      Expiration
            Name               Granted(2)         Fiscal Year    ($/Share)       Date           5%($)         10%($)
            ----               ----------         -----------    ---------       ----           -----         ------
                                                                                             

C. Taylor Pickett.........       800,000 (3)                      $2.3200      06/12/11      $1,168,000    $2,960,000
                                 320,000 (4)                       3.1700      10/25/11         636,800     1,616,000
                              --------------                                               ------------------------------
                               1,120,000             49.89%                                   1,804,800     4,576,000
                              ==============                                               ==============================

Thomas W. Erickson........         1,000 (5)                       3.8125      01/01/12           2,400         6,080
                                  50,000 (6)                       2.1500      11/01/05          27,000        59,000
                              --------------                                               ------------------------------
                                  51,000              2.27%                                      29,400        65,080
                              ==============                                               ==============================

Daniel J. Booth...........       250,000 (7)                       3.0000      10/15/11         472,500     1,195,000
                                 100,000 (4)                       3.1700      10/25/11         199,000       505,000
                              --------------                                               ------------------------------
                                 350,000             15.59%                                     671,500     1,700,000
                              ==============                                               ==============================

R. Lee Crabill, Jr........       175,000 (8)                       3.0000      07/30/11         330,750       836,500
                                  70,000 (4)                       3.1700      10/25/11         139,300       353,500
                              --------------                                               ------------------------------
                                 245,000             10.91%                                     470,050     1,190,000
                              ==============                                               ==============================

Robert O. Stephenson......       200,000 (9)                       2.7600      08/30/11         348,000       880,000
                                 125,000 (4)                       3.1700      10/25/11         248,750       631,250
                              --------------                                               ------------------------------
                                 325,000             14.48%                                     596,750     1,511,250
                              ==============                                               ==============================
-----------


(1)  The assumed annual rates of  appreciation of 5% and 10% would result in the
     price of our stock  increasing,  at the expiration date of the options,  to
     between  $0.54 and $2.40 at the 5% rate and between  $1.18 and $6.08 at the
     10% rate for the various grants.  We cannot assure you that our stock price
     will appreciate at such rates.

(2)  Represents  grants of incentive  and  nonqualified  options which expire 10
     years after the date of grant.

(3)  As to 627,587 options, options are exercisable as to 50% of the award after
     optionee  has  performed  two  years of  service  (June  12,  2003) and the
     remaining  50%  will  become  exercisable  ratably  over the 24  months  of
     optionee's  service following the second  anniversary of the grant date. As
     to 172,413 options, options are exercisable as to 43,103 shares on December
     31, 2002, as to 43,103 shares on June 12, 2003, as to 43,103 shares ratably
     over the twelve  months of service in 2004 and as to the  remaining  43,104
     shares ratably over the first six months of service in 2005.

(4)  Vests as to 50% after the optionee has performed two years of service,  and
     the  remaining  50%  ratably  over  the 24  months  of  optionee's  service
     following the second anniversary of the grant date.

(5)  Vests in equal increments of 1/3rd on each anniversary of the grant date of
     January 2, 2001.

(6)  Shares  vested  December  31,  2001  pursuant  to the  management  services
     agreement.

(7)  Options are  exercisable  as to 33,333 shares on each of December 31, 2002,
     October 1, 2004, October 1, 2005 and January 1, 2006 and 116,668 on October
     1, 2003.

(8)  Options are  exercisable  as to 33,333 shares on each of December 31, 2002,
     August 1,  2003,  August 1, 2004 and  August 1, 2005 and 41,667 on July 30,
     2003.

(9)  Options are exercisable as to 36,231 on December 31, 2002; 55,076 on August
     1, 2003;  36,231 on August 1, 2004;  36,231 on August 1, 2005 and 36,231 on
     January 1, 2006.

Aggregated  Options/  SAR  Exercises  in Last  Fiscal  Year and Fiscal  Year-End
Option/ SAR Values

The  following table summarizes options and stock appreciation  rights exercised
     during  2001 and  presents  the  value of  unexercised  options  and  stock
     appreciation  rights held by the named  executive  officers at December 31,
     2001. Mr. FitzPatrick and Mr. Rich did not have any outstanding  options or
     stock appreciation  rights at December 31, 2001 and therefore do not appear
     in the table below.



                                                                      Number of Securities      In-the-Money
                                                 Shares              Underlying Unexercised    Options/SARs at
                                                Acquired                Options/ SARs at           Fiscal
                                                   on       Value      Fiscal Year-End(#)        Year-End($)
                                                Exercise   Realized     Unexercisable(U)      Unexercisable(U)
                           Name                   (#)        ($)         Exercisable(E)        Exercisable(E)
                           ----                   ---        ---         --------------        --------------
                                                                                       

            C. Taylor Pickett.................     --         --            1,120,000(U)        $3,872,000(U)

            Thomas W. Erickson................     --         --                7,667(U)            $2,208(U)
                                                   --         --               88,333(E)          $193,500(E)

            Daniel J. Booth...................     --         --              350,000(U)        $1,040,000(U)

            R. Lee Crabill, Jr................     --         --              245,000(U)          $728,000(U)

            Robert O. Stephenson..............     --         --              325,000(U)        $1,008,250(U)

            F. Scott Kellman..................     --         --               27,880(E)                --(E)


Long-Term Incentive Plan

     For the  period  from  August 14,  1992,  the date of  commencement  of our
operations, through December 31, 2001, we have had no long-term incentive plans.

Defined Benefit or Actuarial Plan

     For the  period  from  August 14,  1992,  the date of  commencement  of our
operations, through December 31, 2001, we have had no pension plans.


                     COMPARISON OF CUMULATIVE TOTAL RETURN*

Among: Omega Healthcare Investors, Inc.
Hybrid REIT Index**
S&P 500 Index


                           OHI INDEX      HYBRID REITS     S&P INDEX

                12/31/96       100           100            100
                 3/31/97       96             96            103
                 6/30/97       103           104            121
                 9/30/97       117           111            130
                12/31/97       129           111            133
                 3/31/98       143           103            152
                 6/30/98       138            96            157
                 9/30/98       132            79            141
                12/31/98       124            73            171
                 3/31/99       97             62            180
                 6/30/99       113            69            193
                 9/30/99       95             59            181
                12/31/99       60             47            208
                 3/31/00       32             46            212
                 6/30/00       23             53            207
                 9/30/00       33             55            205
                12/31/00       21             52            189
                 3/31/01       12             63            166
                 6/30/01       17             76            176
                 9/30/01       18             74            150
                12/31/01       33             79            166
----------

*    Total return assumes reinvestment of dividends.

**   The Hybrid REIT Index is published by National  Association  of Real Estate
     Investment Trusts,  Inc.  ("NAREIT"),  Washington,  D.C. It is comprised of
     Hybrid REITs (REITs who both own  properties  and make loans to real estate
     owners  and  operators)  traded  on the New  York  Stock  Exchange  and the
     American Stock  Exchange.  A list of those REITs is available by request to
     us or NAREIT.

     THIS  GRAPH  REPRESENTS  HISTORICAL  STOCK  PRICE  PERFORMANCE  AND  IS NOT
NECESSARILY INDICATIVE OF ANY FUTURE STOCK PRICE PERFORMANCE.

     THE REPORTS OF THE  COMPENSATION  COMMITTEE AND THE AUDIT COMMITTEE AND THE
PERFORMANCE  GRAPH  THAT  APPEARS  ABOVE  SHALL NOT BE  DEEMED TO BE  SOLICITING
MATERIAL OR TO BE FILED WITH THE  SECURITIES AND EXCHANGE  COMMISSION  UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934 OR INCORPORATED BY
REFERENCE IN ANY DOCUMENT SO FILED.


CERTAIN TRANSACTIONS

Explorer Holdings, L.P.

     Hampstead,  through its affiliate  Explorer  Holdings,  L.P.  ("Explorer"),
indirectly  owned  1,048,420  shares of Series C preferred  stock and 12,338,310
shares of our common stock,  representing  54.0% of our outstanding voting power
as of April 19, 2002. Daniel A. Decker,  our Chairman of the Board of Directors,
is a partner of Hampstead. Donald J. McNamara, the Chairman of Hampstead, is one
of our  directors.  Christopher W. Mahowald is one of our directors and holds an
equity investment in Explorer.

Series C Investment Agreement.  Under the terms of an investment agreement dated
May 11, 2000 between us and Explorer in connection with  Explorer's  purchase of
Series C preferred  stock and an  investment  agreement  dated  October 25, 2001
between us and Explorer in connection with Explorer's additional investment,  we
agreed to reimburse  Explorer for its  out-of-pocket  expenses,  up to a maximum
amount of $2.5 million,  incurred in connection with the Series C Investment and
up to $1.0 million incurred in connection with Explorer's additional investment.
To date, we have reimbursed  Explorer for  approximately  $1.77 million of these
expenses.

Advisory  Agreement.  Under  the  terms  of an  amended  and  restated  advisory
agreement dated October 4, 2000 between us and Hampstead,  we have agreed to pay
Explorer an advisory fee if Hampstead  provides  assistance  to us in connection
with the evaluation of growth  opportunities or other financing matters. On June
1, 2001, in connection with Hampstead's  agreement to provide certain  specified
financial  advisory,  consulting  and  operational  services,  including but not
limited to  assistance  in our  efforts to  refinance,  repay or extend  certain
indebtedness and assist in efforts to manage our  capitalization  and liquidity,
we agreed to pay  Hampstead  a fee  equal to 1% of the  aggregate  amount of our
indebtedness that is refinanced, repaid or extended, based on the maximum amount
available  to be drawn  in the  case of  revolving  credit  facilities,  up to a
maximum fee of $3.1  million.  The advisory fee is payable  five  business  days
following the  completion of the  refinancing,  repayment or extension of any of
our  indebtedness,  but as amended no fee will be payable  prior to December 31,
2001.  Upon the closing of the rights  offering  and  Explorer's  investment  on
February 21, 2002,  Hampstead  had fulfilled  all of its  obligations  under the
agreement,  but the advisory fee will only be payable at such time as all of the
conditions  to payment of the advisory fee  contained in the advisory  agreement
are met.

Direct  Expenses.  In addition to the Series C Investment costs and the advisory
fee costs of $3.1 million, we agreed to reimburse Explorer for Explorer's direct
expenses.  To date, we have reimbursed  Explorer for approximately $0.54 million
of such direct expenses.

     Dividend and  Governance  Right  Deferral.  We and Explorer  entered into a
dividend  deferral  letter  agreement  dated  November 15, 2000  relating to the
extension  of the  dividend  payment  payable  in  connection  with our Series C
preferred  stock for the dividend  period ended  October 31, 2000.  The deferral
period expired on April 2, 2001. The amount of the deferred dividend payment was
$4.67 million representing the total unpaid preferential cumulative dividend for
the October 2000 dividend.  In exchange for the deferral,  we also agreed to pay
Explorer a fee equal to 10% of the daily unpaid principal  balance of the unpaid
dividend  amount from  November  15,  2000 until the  dividend  was paid.  Under
certain  circumstances,  the portion of the unpaid dividend amount and fee which
is not paid in cash may be payable with additional  shares of Series C preferred
stock.  Shares of Series C preferred stock issued pursuant to this agreement are
valued at $100 per share, the stated per share liquidation  preference,  and are
convertible  into our common stock at $6.25 per share. In  consideration  of the
payment of the deferral  fee,  Explorer  agreed that the deferral of the subject
dividend  would not be  considered  an unpaid  dividend  and,  as a result,  the
October 31, 2000 dividend  period will not be included in the  determination  of
when Explorer's right to elect additional directors will vest.

     In full  payment of our  obligations  under the  dividend  deferral  letter
agreement,  we issued 48,420  shares of Series C preferred  stock to Explorer on
April 2, 2001.

Right of Explorer to Appoint Directors

On July 14, 2000,  Explorer  completed an investment (the "Series C Investment")
of $100.0 million in exchange for 1,000,000 shares of Omega's Series C preferred
stock. In connection with Explorer's  Series C Investment,  Omega entered into a
Stockholders'  Agreement with Explorer  dated July 14, 2000 (the  "Stockholders'
Agreement").  As a  condition  to the  closing of  Explorer's  additional  $31.3
million  investment  in the  company  on  February  21,  2002,  we  amended  our
Stockholders'  Agreement with Explorer (the "2002  Stockholders'  Agreement") to
permit  Explorer to  designate a number of  directors  that would  generally  be
proportionate to Explorer's  ownership of voting securities,  not to exceed five
directors  (six  following  an increase in the size of the Board of Directors to
ten directors).  Under the 2002 Stockholders' Agreement, Omega agreed to appoint
C. Taylor Pickett to the Board of Directors following approval of an increase in
the size of the Board of Directors. If Mr. Pickett is elected as a member of the
Board of Directors,  he will not be serving in the capacity of one of Explorer's
designated  directors.  Explorer has  determined not to designate any additional
directors  at this  time  (although  it has the  right to do so  under  the 2002
Stockholders'  Agreement  as a result of its present  ownership of a majority of
our voting  stock).  Explorer  reserves the right at any time during the term of
the 2002  Stockholders'Agreement  and  during  which it owns a  majority  of our
voting stock to request the Board of Directors to increase the size of the Board
of Directors to permit Explorer to designate a majority of the directors.  Under
the 2002  Stockholders'  Agreement,  the  number  of  directors  on the Board of
Directors  may not exceed nine  without the consent of Explorer  (ten  following
stockholder approval of the increase in the size of the Board of Directors).  We
have  agreed to take  appropriate  action to ensure  generally  that  Explorer's
representation  on all committees of the Board of Directors is  proportionate to
its  representation  on the  entire  board,  other  than any  special  committee
established to consider  transactions in which Explorer or any of its affiliates
may have a conflict of interest.  Explorer is entitled to designate at least one
director of Omega's  Board of Directors as long as it owns at least five percent
(5%) of the  total  voting  power  of  Omega  and to  approve  one  "independent
director" as long as it owns at least twenty-five percent (25%) of the shares it
acquired  at the time it  completed  the Series C  Investment  (or common  stock
issued upon the conversion of the Series C preferred  stock acquired by Explorer
at such  time).  Explorer  has the  right to elect  additional  preferred  stock
directors  if the  dividends  on shares of the Series C  preferred  stock are in
arrears for four or more dividend periods.

     The 2002  Stockholders'  Agreement  requires Explorer to vote its shares in
favor of three independent directors, as defined under the rules of the New York
Stock Exchange, who are not affiliated with Explorer so long as it owns at least
15.0% of our voting  securities.  Upon the  increase of the size of the Board of
Directors to ten  directors,  Explorer will vote its shares in favor of a fourth
director who is not  affiliated  with Explorer.  The fourth  director will be C.
Taylor Pickett,  our Chief Executive Officer.  The 2002 Stockholders'  Agreement
expires on February 21, 2007.

     The terms of the Series C preferred  stock  provide that Explorer will have
the  right to elect  two  additional  directors  if  dividends  on the  Series C
preferred  stock are in arrears  for four or more  dividend  periods.  By letter
dated January 31, 2001, Explorer waived its right to elect additional  preferred
stock  directors  through  December 31, 2002  provided that the dividends on any
shares of Series C  preferred  stock  would  not be in  arrears  for six or more
dividend periods from January 31, 2001 through and including December 31, 2002.

Omega Worldwide

Fleet Credit Guaranty.  We guaranteed  repayment of borrowings of our affiliate,
Omega  Worldwide,  Inc.  ("Omega  Worldwide"),  pursuant to a  revolving  credit
facility with a bank group, of which Fleet Bank, N.A. acts as agent, in exchange
for an initial 1% fee and an annual facility fee of 0.25%. At December 31, 2001,
no  borrowings  were  outstanding  under  Omega  Worldwide's   revolving  credit
facility.  No  further  borrowings  may be made by  Omega  Worldwide  under  its
revolving credit facility.  We were required to provide collateral in the amount
of up to $8.8 million related to the guarantee of Omega Worldwide's obligations.
Upon repayment by Omega Worldwide of the remaining outstanding balance under its
revolving  credit  facility,  the subject  collateral was released in connection
with the termination of our guarantee.

Opportunity  Agreement.  We and Omega Worldwide have entered into an opportunity
agreement to provide each other with rights to participate in  transactions  and
make  investments.  The  opportunity  agreement  provides that each company will
offer the other a right of first  refusal  to  participate  in  transactions  or
investments of which it becomes  aware.  In addition,  both  companies  agree to
jointly pursue certain  transactions  and investments upon the request of either
company. The terms upon which each of us elect to participate in any transaction
or investment  will be negotiated in good faith and must be mutually  acceptable
to our  respective  boards  of  directors,  with  the  affirmative  votes of the
independent  directors  of each of the  boards  of  directors.  The  opportunity
agreement  has a term of ten  years  and  automatically  renews  for  successive
five-year terms, unless terminated.

Services  Agreement.  We and  Omega  Worldwide  have  entered  into  a  services
agreement  which provides for the allocation of indirect costs incurred by us to
Omega  Worldwide.  The  allocation  of  indirect  costs  has  been  based on the
relationship  of assets  under our  management  to the  combined  total of those
assets and assets under Omega  Worldwide's  management.  Upon expiration of this
agreement on June 30, 2000, we entered into a new agreement  requiring quarterly
payments   from  Omega   Worldwide  of  $37,500  for  the  use  of  offices  and
administrative  and financial services provided by us. Upon the reduction of our
accounting  staff, the service  agreement was renegotiated  again on November 1,
2000  requiring  quarterly  payments  from Omega  Worldwide  of  $32,500.  Costs
allocated to Omega Worldwide for 2001, 2000 and 1999 were $130,000, $404,000 and
$754,000,  respectively.  The former  services  agreement  has expired and Omega
Worldwide is paying monthly invoices for services rendered.

Other

Relocation Loan. In connection with the 1994 relocation of F. Scott Kellman, our
former Chief Operating Officer,  from the Philadelphia  metropolitan area to Ann
Arbor,  Michigan, we loaned him $220,000 to enable him to purchase a home in Ann
Arbor.  At January  1, 2000 the  outstanding  principal  balance on the loan was
$67,000.  The loan was secured by a lien on Mr.  Kellman's  residence,  and bore
interest at 7.05% per annum.  Mr.  Kellman  paid the balance of the  mortgage in
full on January 29, 2001.

Loan to Oakwood.  On December 30,  1998,  we made a $6.0 million loan to Oakwood
Living Centers of  Massachusetts,  Inc., an affiliate of Oakwood Living Centers,
Inc., of which James E. Eden, a former  director of Omega,  also is Chairman and
Chief Executive Officer. The loan bears interest at 14% per annum and is secured
by a first mortgage lien on accounts  receivable  and a second  mortgage lien on
six skilled nursing facilities located in Massachusetts.


                             AUDIT COMMITTEE MATTERS

     The  Board of  Directors  has  adopted  a  written  charter  for the  Audit
Committee,  a copy of which is included with our definitive  proxy statement for
the 2001 Annual Meeting of Stockholders,  which was filed on April 18, 2001 with
the Securities and Exchange  Commission pursuant to Regulation 14A. The Board of
Directors reviews and approves changes to the Audit Committee Charter annually.

     Each of the  members  of our Audit  Committee  meets the  requirements  for
independence as defined by the standards of the New York Stock Exchange.

Audit Committee Report

     The Audit  Committee,  with  respect to the audit of Omega's  2001  audited
Consolidated Financial Statements, reports as follows:

     1)   The Audit  Committee has reviewed and  discussed  Omega's 2001 audited
          Consolidated Financial Statements with the company's management;

     2)   The Audit  Committee has discussed  with Ernst & Young LLP the matters
          required to be discussed by SAS 61, which include,  among other items,
          matters  related to the  conduct of the audit of Omega's  Consolidated
          Financial Statements;

     3)   The Audit  Committee has received  written  disclosures and the letter
          from Ernst & Young LLP required by ISB  Standard No. 1 (which  relates
          to the auditor's independence from Omega and its related entities) and
          has discussed with Ernst & Young LLP its independence from Omega; and

     4)   Based on reviews and discussions of Omega's 2001 audited  Consolidated
          Financial  Statements  with  management and  discussions  with Ernst &
          Young LLP, the Audit  Committee  recommended to the Board of Directors
          that  Omega's  2001  audited  Consolidated   Financial  Statements  be
          included in the company's Annual Report on Form 10-K.

                                                     Audit Committee

                                                     /s/ Bernard J. Korman
                                                     /s/ Harold J. Kloosterman
                                                     /s/ Stephen D. Plavin


Independent Auditors

     Ernst & Young LLP audited our  financial  statements  for each of the years
ended December 31, 1999, 2000 and 2001. Representatives of Ernst & Young LLP are
expected to be present at the Annual  Meeting and will be given the  opportunity
to make a statement if they desire to do so. It is also  expected that they will
be available to respond to appropriate questions from stockholders at the Annual
Meeting.

Audit Fees

     In connection with services  rendered in conjunction  with the audit of our
annual financial statements and the review of our interim financial  statements,
we have  estimated  that  our  total  audit  fees  for  fiscal  year  2001  were
approximately  $193,000.  This  figure is based on an  estimate  provided by our
accountants,  Ernst & Young LLP, and includes fees for services that were billed
to us in fiscal year 2002 in connection with the 2001 fiscal year audit.

Financial Information Systems Design and Implementation Fees

     We did not retain  Ernst & Young LLP to perform any  financial  information
systems design or implementation services in fiscal year 2001.

Other Fees

     During fiscal year 2001,  we were billed  $178,615 by Ernst & Young LLP for
services not described above.

Determination of Auditor Independence

     The Audit  Committee has considered the provision of non-audit  services by
our principal accountants and has determined that the provision of such services
was consistent with maintaining the independence of Ernst & Young LLP.

                              STOCKHOLDER PROPOSALS

     January 21, 2003 is the date by which proposals of stockholders intended to
be presented at the 2003 Annual Meeting of  Stockholders  must be received by us
for inclusion in our proxy statement and form of proxy relating to that meeting.

     In  addition,  our Bylaws  provide that in order for business to be brought
before the Annual Meeting,  a stockholder must deliver or mail written notice to
our Secretary at our principal  executive offices not less than 60 days nor more
than 90 days  prior to the first  anniversary  of the  preceding  year's  Annual
Meeting. The notice must state the stockholder's name, address, class and number
of shares of our stock and briefly  describe the  business to be brought  before
the meeting,  the reasons for conducting  such business at the meeting,  and any
material  interest of the  stockholder  and of the beneficial  owner, if any, on
whose  behalf the  proposal is made.  If the  stockholder  intends to nominate a
candidate for election as a director,  in addition to the the  requirements  set
forth above, the notice should include the name of the nominee for election as a
director,  the age of the nominee, the nominee's business address and experience
during the past five years, the number of shares of our stock  beneficially held
by the nominee,  and such other  information  concerning the nominee as would be
required to be included in a proxy statement soliciting proxies for the election
of the nominee.  The notice must also include a description of all  arrangements
or  understandings  between such  stockholder and each proposed  nominee and any
other  person  pursuant  to  which  the  nominations  are  to be  made  by  such
stockholder,  a representation that such stockholder intends to appear in person
or by proxy at the meeting to nominate the person  named in the notice,  and the
consent of the nominee to serve as a director.

                            EXPENSES OF SOLICITATION

     The total cost of this solicitation will be borne by us. In addition to use
of the mails,  proxies may be solicited by our  directors,  officers and regular
employees of Omega  personally  and by  telephone,  telex or  facsimile.  We may
reimburse  persons  holding  shares  in their  own  names or in the names of the
nominees  for  expenses  such  persons  incur  in  obtaining  instructions  from
beneficial  owners of such shares.  We have also engaged  Georgeson  Shareholder
Communications,  Inc. to solicit  proxies for a fee not to exceed  $8,000,  plus
out-of-pocket expenses.

             SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

To our  knowledge,  all  filings  required  under  Section 16 of the  Securities
Exchange Act of 1934 were made on a timely basis.

                                  OTHER MATTERS

     The Board of  Directors  knows of no other  business to be presented at the
Annual Meeting, but if other matters do properly come before the Annual Meeting,
it is intended  that the persons named in the proxy will vote on said matters in
accordance with their best judgment.


                                                     C. TAYLOR PICKETT
                                                     Chief Executive Officer


April 15, 2002
Timonium, Maryland




                        OMEGA HEALTHCARE INVESTORS, INC.
           THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

PROXY

The  undersigned  hereby  appoints  Robert O. Stephenson and Thomas Peterson and
each of them,  as  proxies,  each with the power to appoint  his  substitute  to
represent  and to vote as  designated  below,  all the shares of common stock of
Omega Healthcare Investors,  Inc. ("Omega") held of record by the undersigned on
April 12, 2002 at the Annual Meeting of  Stockholders to be held on May 30, 2002
or any adjournment thereof.

This Proxy when properly executed will be voted in the manner directed herein by
the undersigned. If no specification is made, this Proxy will be voted FOR:

     1.   The Election of Directors
          NOMINEES:
          Thomas W. Erickson, Harold J. Kloosterman, Donald J. McNamara and
          C. Taylor Pickett.


     2.   The  amendments  to our  Articles of  Incorporation  and our Bylaws to
          increase  the  maximum  size of the  Board of  Directors  from nine to
          thirteen members.

In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the meeting and at any adjournment thereof.

       (Continued, and to be marked, dated and signed, on the other side)

                                SEE REVERSE SIDE

                           -- FOLD AND DETACH HERE --




[X]  (Please mark your votes as in this example.)

     The Directors recommend a vote "FOR" Proposals 1 and 2.


                                                                                             FOR    AGAINST   ABSTAIN
                                                                                                       
1.   The Election of Directors                                                               [  ]     [  ]      [  ]
     NOMINEES:  Thomas W. Erickson, Harold J. Kloosterman, Donald J. McNamara and
     C. Taylor Pickett.

     (Instruction:  To withhold  authority to vote for any  individual  nominee,
     write that nominee's name here.)


2.   The amendments to our Articles of Incorporation  and our Bylaws to increase             [  ]     [  ]      [  ]
     the maximum size of the Board of Directors from nine to thirteen members.

--------------------------------------------------------------------------------



NOTE:  Please sign exactly as your name  appears on this Proxy.  When shares are
held by joint  tenants,  both should sign.  When signing as attorney,  executor,
administrator,  trustee  or  guardian,  please  give  full  title as such.  If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.

Please check the box if you plan to attend the Annual Meeting in person. [  ]


SIGNATURE(S)                                         DATE



NOTE:Please sign exactly as your name appears  hereon.  Joint owners should each
     sign.  When  signing  as  attorney,  executor,  administrator,  trustee  or
     guardian,  please  give full title as such.  This proxy will not be used if
     you attend the meeting in person and so request.

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                           -- FOLD AND DETACH HERE --