Explorer Holdings, L.P.
4200 Texas Commerce Tower West
2200 Ross Avenue
Dallas, Texas
November 15, 2000
Omega Healthcare Investors, Inc.
900 Victors Way, Suite 350
Ann Arbor, Michigan 48108
Attn.: Susan Allene Kovach
Dear Susan:
By signing in the space provided below, Explorer Holdings,
L.P. ("Explorer") hereby consents to the extension of the Dividend Payment Date
applicable to the Series C Preferred Stock of Omega Healthcare Investors, Inc.
("OHI") for the Dividend Period ended October 31, 2000 (the "October 2000
Dividend Period"), until April 2, 2001 (the "Due Date"). Explorer also waives
its right to demand pursuant to Section 4(d) of the Articles that any dividends
paid on OHI's issued and outstanding Series A Preferred Stock and Series B
Preferred Stock for the dividend period ending October 31, 2000, be paid on a
pro rata basis together with the accrued and unpaid dividend on the Series C
Preferred Stock for the October 2000 Dividend Period and consents to the payment
in full by OHI of the accrued dividends on such Series A Preferred Stock and
Series B Preferred Stock in accordance with the terms thereof. Explorer also (i)
waives the application of the provisions of Section 4(e) of the Articles solely
with respect to the deferral by OHI of the payment of the October 2000 Dividend
Period Amount (as defined below), (ii) consents to the payment by OHI of a
dividend in respect of the October 2000 Dividend Period on the issued and
outstanding Common Stock on November 15, 2000 in the amount of $0.25 per share,
and (iii) acknowledges and agrees that the October 2000 Dividend Period Amount
will not be deemed to be an unpaid dividend for a past Dividend Period for the
purpose set forth in the first sentence of Section 4(e) of the Articles.
Notwithstanding the foregoing, OHI expressly acknowledges and agrees that,
without the written consent of Explorer, nothing herein will be deemed to be a
waiver of Explorer's rights (or a consent to a deferral of payment of dividends
other than those in respect of the October 2000 Dividend Period) under Section 4
of the Articles with respect to the Series C Preferred Stock for any future
Dividend Period in which the dividend relating to such Dividend Period is not
paid in accordance with the requirements of Section 4 thereof.
Subject to the immediately following paragraph, in
consideration of Explorer's consent, OHI hereby agrees to pay, no later than the
Due Date, out of funds legally available for the payment of dividends, cash in
an aggregate amount equal to $4,667,000 million which OHI and Explorer expressly
acknowledge and agree constitutes the total unpaid preferential cumulative
dividend for the October 2000 Dividend Period with respect to the Series C
Preferred Stock (the "October 2000 Dividend Period Amount"), plus a waiver fee
on the amount of the daily unpaid principal balance of the October 2000 Dividend
Period Amount from November 15, 2000 until the October 2000 Dividend Period
Amount shall have been paid in full, which waiver fee shall be payable at a rate
of 10% per annum, compounded annually and calculated on the basis of a 360 day
year based on the actual number of days elapsed.
Furthermore, in the event that (i) funds are not legally
available to OHI to pay all or any of the October 2000 Dividend Period Amount
plus the wavier fee as provided hereinabove or (ii) OHI elects pursuant to the
first sentence of Section 4(b) of the Articles not to pay all or any of the
October 2000 Dividend Period Amount plus the waiver fee in cash, OHI hereby
agrees that any portion of the October 2000 Dividend Period Amount (including
any accrued and unpaid waiver fee) which is not paid in cash on or prior to the
Due Date (the "Unpaid Amount") will be payable by the issuance as of the Due
Date of additional shares of fully paid, nonassessable Series C Preferred Stock
having an aggregate liquidation preference equal to such Unpaid Amount (with the
amount of any fractional share that might otherwise be issuable being paid in
cash). In the event that any dividends (including any accrued and unpaid waiver
fee) are paid in shares of Series C Preferred Stock pursuant to the immediately
preceding sentence, OHI agrees to take such actions as are necessary to increase
the number of authorized shares of Series C Preferred Stock by the number of
shares to be issued pursuant hereto, including but not limited to the filing of
Articles Supplementary with the State Department of Assessments and Taxation of
Maryland in accordance with Article VII of the OHI Charter. OHI will deliver
certificates representing shares of Series C Preferred Stock issued pursuant to
this paragraph promptly after the Due Date. Any payments by OHI of cash pursuant
to this letter agreement shall be applied first to the payment of any then
accrued but unpaid waiver fee with respect to the October 2000 Dividend Period
Amount and thereafter to the payment of the October 2000 Dividend Period Amount.
OHI and Explorer represent and warrant to each other that (i)
it has the requisite power and authority to execute and deliver this letter
agreement, (ii) the execution and delivery of this letter agreement has been
duly authorized by all necessary corporate or partnership action, as
appropriate, and (iii) this letter agreement has been duly and validly executed
and delivered by it and constitutes its valid and binding obligation,
enforceable against it in accordance with the terms hereof except that (y) such
enforceability may be subject to applicable bankruptcy, insolvency or other
similar laws now or hereinafter in effect affecting creditors' rights generally
and (z) the availability of the remedy of specific performance or injunctive or
other forms of equitable relief may be subject to equitable defenses and would
be subject to the discretion of the court before which any proceeding therefore
may be brought.
This letter agreement will be governed by and construed in
accordance with the laws of the State of Delaware, without regard to its
conflict of laws principles, and may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto. Capitalized terms used
in this letter agreement and not defined shall have the respective meanings set
forth in the Articles Supplementary for Series C Convertible Preferred Stock.
This letter agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered will be an original,
but all such counterparts will together constitute one and the same instrument.
A facsimile copy of a signature page shall be deemed to be an original signature
page.
By signing in the space below, OHI expressly acknowledges and
agrees to take any and all actions as are necessary to implement the foregoing
obligations. The provisions hereof will be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns and until such
time as the October 2000 Dividend Period Amount and all waiver fees accrued
thereon are paid in full, Explorer will either cause the certificates
representing the shares of Series C Preferred Stock to be legended to reference
the existence of this letter agreement or will cause a copy of this letter
agreement to be physically attached to all such certificates.
Very truly yours,
EXPLORER HOLDINGS, L.P.
By: Explorer Holdings GenPar, LLC,
its General Partner
By: /s/ William T. Cavanaugh, Jr.
-----------------------------
William T. Cavanaugh, Jr.
Vice President
Agreed to and accepted as of this 15th day of November, 2000.
OMEGA HEALTHCARE
INVESTORS, INC.
By: /s/ Susan Allene Kovach
------------------------
Susan Allene Kovach
Vice President