OMEGA HEALTHCARE INVESTORS INC
COMPENSATION AGREEMENT WITH LAURENCE RICH
<DOCUMENT>
<TYPE>EX-10.10
<SEQUENCE>13
<FILENAME>0013.txt
<DESCRIPTION>COMPENSATION AGREEMENT WITH LAURENCE RICH
<TEXT>



                             COMPENSATION AGREEMENT



         This  Agreement  is made this 15th day of June,  2000,  by and  between
Omega Healthcare  Investors,  Inc., a Maryland corporation (the "Company"),  and
Laurence D. Rich (the "Officer" or "you") and describes certain compensation and
benefits to which you will become  entitled  following the purchase on or before
August 31, 2000, by Explorer Holdings,  L.P. from the Company of preferred stock
for at least $100,000,000 (the "Transaction").

     1.   Effectiveness.  The effectiveness of this Agreement is contingent upon
          the  completion of the  Transaction  and the approval of the Company's
          shareholders  of the "2000 Plan" (as defined in paragraph  10) and the
          approval of the  Compensation  Committee  contemplated by paragraphs 5
          and 6 below.  You must be employed on the date of the  Transaction  to
          receive  any  of  the  compensation  or  benefits  described  in  this
          Agreement.  The compensation and benefits  pursuant to this Agreement,
          including  without  limitation the transaction bonus and severance pay
          provided  herein,  are in part  consideration  for your  agreement  to
          terminate  the Change in Control  Agreement  described  in paragraph 9
          hereof as of the date of the occurrence of the Transaction.

     2.   Continued Services. The compensation and benefits under this Agreement
          are to be provided to you, in part, to assure your continued services.
          Accordingly, you agree that you will work for the Company for at least
          six  months  after  the  Transaction,  except  if your  employment  is
          terminated by the Company  without Cause or you Quit with Good Reason,
          or  die  or  become  disabled  (within  the  meaning  of  any  Company
          disability plan or policy).

     3.   Transaction  Bonus.  You will  receive a cash  bonus of  $40,000  upon
          completion of the Transaction.

     4.   Annual  Salary and Annual  Bonus.  As of the date of the  Transaction,
          your  annual  salary  will be  $155,000  with an  increase to at least
          $175,000  effective  January  1,  2001.  Your  annual  salary  will be
          reviewed by the Compensation  Committee for possible  adjustment as of
          January 1, 2002,  and will be reviewed by the  Compensation  Committee
          for possible adjustment at least annually thereafter. You will have an
          annual bonus  opportunity  for up to 100% of annual salary.  The bonus
          criteria for 2000 will generally be consistent  with past practice and
          will not be offset by the  Transaction  Bonus.  The bonus criteria for
          2001 and thereafter will be established by the Compensation Committee,
          in  consultation  with you,  within the first  ninety (90) days of the
          fiscal year for which the bonus is earned.

     5.   Stock Option.  A nonqualified  stock option will be granted to you, in
          substantially  the form  attached  hereto as an  Exhibit,  subject  to
          shareholder  approval  of the  2000  Plan and  Compensation  Committee
          approval of the option, and completion of the Transaction, to purchase
          227,500 shares of common stock of the Company. The option will vest as
          to  30%  of  the  shares  at  December  31,  2001,  and  as to  1/60th
          (one-sixtieth)  of the shares  each month  thereafter,  provided  that
          (except as provided in  paragraph  10 below) no further  vesting  will
          occur after the date your employment is terminated. The exercise price
          will be the  greater  of the  opening  trading  price per share of the
          Company's common stock as of the date of closing of the Transaction or
          the dollar  amount per share of common  stock into which each share of
          the  Series  C  preferred   stock  purchased  in  the  Transaction  is
          convertible  as of  the  date  of  the  closing  of  the  Transaction.
          Notwithstanding  any  other  provision  hereof,  in the  event  of any
          inconsistency between the terms of this Agreement and the stock option
          agreement,  the terms of the stock option  agreement will govern.  The
          Company  will  register  the 2000 Plan with the SEC pursuant to a Form
          S-8 or other  registration  within a reasonable  period (no later than
          six months) following the date of the Transaction.

     6.   Dividend Equivalent Rights. Dividend equivalent rights will be granted
          to you, in  substantially  the form attached hereto as an Exhibit,  at
          the same date as the stock  option in paragraph 5 hereof is granted to
          you,  and  subject  to  shareholder  approval  of the  2000  Plan  and
          Compensation  Committee  approval of the dividend  equivalent  rights,
          with respect to 227,500  shares of common  stock of the  Company.  The
          dividend  equivalent  rights  will  be  subject  to the  same  vesting
          schedule as applies to the stock  option in  paragraph  5 hereof.  The
          dividend equivalent right with respect to each such share will entitle
          you to accrue the  dividends  per share of common stock of the Company
          paid to common  shareholders  of the  Company in  accordance  with the
          terms of the dividend equivalent rights agreement,  provided that your
          dividend  equivalent  rights per share will not exceed the  greater of
          the opening trading price of the Company's common stock as of the date
          of closing of the Transaction or the dollar amount per share of common
          stock into which each share of the Series C preferred  stock purchased
          in the Transaction is convertible as of the date of the closing of the
          Transaction.  Your dividend  equivalent  rights will not accrue in, or
          with respect to dividends  paid in, a fiscal quarter of the Company if
          the  Company  does  not  achieve  the  "DER  Performance  Goal" in the
          preceding four fiscal  quarters.  The DER Performance  Goal means that
          funds from  operations  available to holders of the  Company's  common
          stock and Class C preferred  stock as a  percentage  of the  Company's
          average  common and Class C preferred  equity  (calculated in a manner
          consistent with NAREIT guidelines,  historical practices in presenting
          reports to the Board of Directors  and in  establishing  budget plans)
          equals or exceeds 6%. The accrued dividend  equivalent  rights will be
          payable in cash and will be terminated in accordance with the terms of
          the dividend  equivalent rights agreement.  Notwithstanding  any other
          provision of this Agreement, in the event of any inconsistency between
          the  terms  of this  Agreement  and  the  dividend  equivalent  rights
          agreement,  the terms of the dividend equivalent rights agreement will
          govern.

     7.   Restricted Stock Vesting. This Agreement confirms that your restricted
          stock  grant for 17,269  shares that you  received as of February  10,
          2000 will be 25% vested as of August  10,  2000 and will be 50% vested
          as of  February  10,  2001 as a result of the  stock's  trading  price
          reaching  the $8  level  for  the  required  period,  subject  to your
          satisfying the service requirements (i.e., you work for the Company at
          least through the applicable date, a "Change of Control" as defined in
          the Company's 1993 Stock Option and Restricted Stock Plan, as amended,
          occurs before then,  or you become vested  pursuant to paragraph 10 of
          this Agreement).

     8.   Other Incentive  Compensation.  You will be eligible to participate in
          all incentive  compensation plans and programs that the Company offers
          to all or substantially all of its executive officers.

     9.   Change in Control  Agreement.  You and the  Company  agree  that:  the
          occurrence of the Transaction does not cause a "Change in Control" (as
          defined in the  Change in  Control  Agreement  dated  March 22,  2000,
          between you and the Company  (the  "Change in Control  Agreement"),  a
          "Change of Control" (as defined in the Company's 1993 Stock Option and
          Restricted  Stock Plan),  or a change in control under any other plan,
          program, or arrangement of the Company, to occur; such occurrence will
          not be deemed to result in a Change in Control,  Change of Control, or
          change  in  control,  respectively,  thereunder;  and you  will not be
          entitled to any payment or  benefits  thereunder.  You and the Company
          agree that if you remain employed by the Company as of the date of the
          occurrence  of the  Transaction,  and the  approval  of the  Company's
          shareholders  of the 2000 Plan and the  approval  of the  Compensation
          Committee  contemplated by paragraphs 5 and 6 above are obtained,  the
          Change  in  Control  Agreement  is  terminated  and is void  and of no
          further  force  and  effect  as of  the  date  of  occurrence  of  the
          Transaction.

     10.  Severance.  In the event your  employment is terminated by the Company
          without  Cause,  or you Quit with Good Reason,  in either event within
          five years after the date of the  Transaction,  you will  receive,  in
          part  as  severance  pay  and in  part  for  the  consulting  services
          described in  paragraph 11 hereof,  200% of an amount equal to the sum
          of your  highest  rate of annual  base  salary  within the three years
          prior to your  termination  of  employment  plus the  average  of your
          annual  bonuses  paid or  payable  (determined  without  regard to any
          portion  thereof  that you may have  elected  to  defer)  in the three
          fiscal  years  immediately  before  the  date of your  termination  of
          employment.  The amount of your annual  bonus for any such fiscal year
          will not  include any amount  attributable  to the  transaction  bonus
          described in paragraph 3 hereof,  or the  dividend  equivalent  rights
          described in  paragraph 6 hereof,  or the portion of the Cash Value of
          the Restricted  Stock Award with respect to the restricted stock award
          described  in  paragraph  7 hereof as to which the  price  hurdle  for
          vesting  has not been met,  but will  include  the Cash  Value of such
          Restricted  Stock  Award as to which the price  hurdle for vesting has
          been met, the Cash Value of the Restricted Stock Award with respect to
          any other  restricted  stock award you  received  that was paid before
          June 5,  2000  and  during  such  year,  and  the  Cash  Value  of the
          Restricted  Stock  Award with  respect to any other  restricted  stock
          award you  received  that was paid after June 4, 2000 and during  such
          year to the extent that the Compensation Committee determines prior to
          your receiving such award that the award directly  offsets your annual
          cash  bonus that  otherwise  would have been paid to you. A portion of
          your  severance  pay in an amount equal to your highest rate of annual
          base salary within the three years prior to your  termination  will be
          paid  to you in  substantially  equal  installments  according  to the
          Company's normal payroll cycle in the 12 months after your termination
          of  employment  and the balance of your  severance pay will be paid to
          you in a lump sum within  fifteen days following your execution of the
          general release  described  below.  In addition,  all of your deferred
          compensation  units under the  Company's  1993  Deferred  Compensation
          Plan, as amended ("Deferred Compensation Units"),  unvested restricted
          stock  grants  (other than any portion of the  restricted  stock grant
          described  in  paragraph  7 hereof as to which the  price  hurdle  for
          vesting is not met),  stock  options and  dividend  equivalent  rights
          under the Company's  1993 Stock Option and  Restricted  Stock Plan, as
          amended (the "1993 Plan") or the Company's  2000 Stock  Incentive Plan
          (the "2000  Plan")  (and unless  prohibited  by the terms of any other
          plan or agreement,  unvested restricted stock grants and stock options
          under such plan or agreement)  will be fully vested in such event.  In
          such event,  your stock  options will be  exercisable  for such period
          after your termination of employment as may be established pursuant to
          the terms of the  applicable  stock option  agreement.  Your  Deferred
          Compensation  Units  will be paid  pursuant  to the  terms of the 1993
          Deferred Compensation Plan, as amended.

         The  payment  of all of the  severance  pay and  vesting  of all of the
         benefits  provided for in this  paragraph 10 are  expressly  contingent
         upon your executing and returning to the Company, within such period as
         may be designated by the Company,  a general  release of all claims and
         covenant not to sue in favor of the Company,  its officers,  directors,
         shareholders,  affiliates,  successors  and assigns  and other  related
         parties  designated by the Company,  in such form as may be provided to
         you by the Company and your not revoking  such  release  within a seven
         day  revocation  period  to be  provided  for  under  the terms of such
         release. Such release will not apply to any of the payments or benefits
         to which you are entitled to hereunder, under any employee benefit plan
         (within the meaning of the Employee  Retirement  Income Security Act of
         1974), or any rights to indemnification that you may have as an officer
         or former officer of the Company.

     11.  Consulting Services. In the event your employment is terminated by you
          or the Company in  circumstances  entitling  you to severance  pay and
          benefits  pursuant to paragraph  10 hereof,  you agree to be available
          for  consultation at times mutually  convenient to you and the Company
          for a period  of up to one year  following  the date  your  employment
          terminates.  The  consideration  in  paragraph  10  hereof  is in part
          consideration for services and in part severance pay.

     12.  Gross-Up  Payment.  In the event a  severance  payment  is made to you
          under  paragraph 10 of this  Agreement and it is  determined  that any
          payment  (other than the  Gross-Up  Payments  provided  for herein) or
          distribution  by the Company or any of its  affiliates  to or for your
          benefit,  whether  paid or payable  or  distributed  or  distributable
          pursuant to the terms of this Agreement or otherwise pursuant to or by
          reason of any other agreement,  policy,  plan, program or arrangement,
          or the lapse or termination of any  restriction  on, or the vesting or
          exercisability of any of the foregoing (a "Payment"), would be subject
          to the excise tax imposed by Section 4999 of the Internal Revenue Code
          of 1986, as amended (the "Code") (or any successor  provision thereto)
          by reason of being "contingent on a change in ownership or control" of
          the  Company,  within the meaning of Section  280G of the Code (or any
          successor provision thereto) or to any similar tax imposed by state or
          local law, or any  interest or  penalties  with respect to such excise
          tax (such tax or taxes, together with any such interest and penalties,
          are hereafter  collectively referred to as the "Excise Tax"), then you
          will be  entitled  to receive an  additional  payment or  payments  (a
          "Gross-Up  Payment") in an amount such that,  after  payment by you of
          all taxes (including any interest or penalties imposed with respect to
          such  taxes),  including  any Excise Tax,  imposed  upon the  Gross-Up
          Payment,  you retain an amount of the  Gross-Up  Payment  equal to the
          Excise Tax imposed upon the Payments.  For purposes of calculating the
          Gross-Up  Payment,  it will be assumed  that all taxable  Payments you
          receive are taxed at the highest  marginal federal income tax rate and
          the highest  state  income tax rate in which you  reside,  but without
          regard  to  any   reduction  in  personal   exemptions  or  deductions
          associated with your level of income. All  determinations  required to
          be made under this  paragraph 12,  including  whether an excise tax is
          payable  by you and the  amount of such  excise  tax and any  Gross-Up
          Payment,  will be made by a  nationally  recognized  firm of certified
          public accountants selected by the Company in its sole discretion.

     13.  Nonduplication.  This  Agreement  is not  intended  to  duplicate  any
          compensation  or  benefits to which you are  entitled  under any other
          plan, program,  agreement or arrangement.  Therefore, in the event you
          are  entitled  to any  similar  payments  under the terms of any other
          plan, program, agreement, or arrangement of the Company, your payments
          under this Agreement will be correspondingly reduced.

     14.  No Mitigation.  Except as provided in paragraph 13 hereof,  no amounts
          or benefits payable to you hereunder shall be subject to mitigation or
          reduction by income or benefits you receive from other sources.

     15.  Nondisclosure Of Confidential Information.  You agree not to disclose,
          directly  or  indirectly  to any  third  person  any (a)  Confidential
          Information  relating to  Company's  business  during the term of your
          employment  and for two years after  termination  or (b) Trade Secrets
          for so long as they may be protected by Michigan law.

     16.  Return of Materials.  All Trade Secrets and Confidential  Information,
          including  documents or tangible or  intangible  materials,  including
          computer  data,  provided  to or  obtained by you during the course of
          employment by the Company which contain Trade Secrets and Confidential
          Information,  are  the  property  of the  Company  (collectively,  the
          "Materials").  You will not remove from the Company's premises or copy
          or reproduce any Materials  (except as your  employment by the Company
          shall require), and at the termination of your employment,  regardless
          of the reason for such  termination,  you will leave with the Company,
          or  immediately  return to the  Company,  all  Materials  or copies or
          reproductions thereof in your possession, custody or control.

     17.  Not an Employment  Agreement.  This  Agreement  does not constitute an
          employment  agreement  or an  agreement to employ you for any definite
          period, and you will remain an employee at-will.

     18.  Assignment.  The  rights and  obligations  of the  Company  under this
          Agreement  shall inure to the benefit of the Company's  successors and
          assigns.  This  Agreement  may be assigned by the Company to any legal
          successor  to the  Company  or to an  entity  which  purchases  all or
          substantially  all of the  assets  of the  Company.  In the  event the
          Company  assigns this Agreement as permitted by this Agreement and you
          remain employed by the assignee,  the "Company" as defined herein will
          refer to the  assignee  and you will not be deemed to have  terminated
          employment hereunder until you terminate employment from the assignee.

     19.  Attorneys' Fees. If you prevail in such dispute,  the Company will pay
          and be financially  responsible for all costs, expenses and reasonable
          attorneys'  fees  incurred by you (or your estate in the event of your
          death)  in   connection   with  any   dispute   associated   with  the
          interpretation,  enforcement  or  defense  of your  rights  under this
          Agreement by litigation or otherwise.

     20.  Withholding  of Taxes.  The  Company  may  withhold  from any  amounts
          payable under this Agreement all federal,  state,  city or other taxes
          as the  Company  is  required  to  withhold  pursuant  to  any  law or
          government regulation or ruling.

     21.  Entire Agreement.  This Agreement contains the entire understanding of
          the parties with respect to the subject matter hereof.

     22.  Severability.  In the event that one or more of the provisions of this
          Agreement shall be or become invalid,  illegal or unenforceable in any
          respect,  the validity,  legality and  enforceability of the remaining
          provisions contained herein shall not be affected thereby.

     23.  Governing Law. To the full extent  controllable  by stipulation of the
          parties,  this  Agreement  shall be  interpreted  and  enforced  under
          Michigan law.

     24.  Amendment. This Agreement may not be modified,  amended,  supplemented
          or terminated  except by a written  agreement  between the Company and
          you.

     25.  Definitions.  The  capitalized  terms used in this  Agreement have the
          meanings set forth below.

         "Cause" means

               (i)  willful  refusal  to  follow a lawful  written  order of the
                    Board of Directors of the Company;

               (ii) willful  misconduct or reckless  disregard of your duties or
                    of the interest or property of the Company;

               (iii) intentional  disclosure  to  an   unauthorized   person  of
                    Confidential  Information  or Trade  Secrets,  which  causes
                    material harm to the Company;

               (iv) any  act  of  fraud,  misappropriation,  dishonesty  or  act
                    involving moral turpitude; or

               (v)  conviction of a felony.

         "Quit  With Good  Reason"  means you  resign  within  ninety  (90) days
         following the  occurrence  of any of the following  events which occurs
         without your written consent:

               (i)  the  failure  of the Board of  Directors  of the  Company to
                    reelect you to your then existing office;

               (ii) a substantial diminution in your title, position,  authority
                    or responsibility or assignment to you of substantial duties
                    or substantial work responsibilities  which are inconsistent
                    with your title, position, authority or responsibility;

               (iii) any reduction in your base salary, annual bonus opportunity
                    or a material reduction in employee benefits; or

               (iv) the relocation of the Company's  headquarters or the primary
                    place at which you perform  your  duties to a location  more
                    than  fifty  (50)  miles  from the  location  at  which  you
                    previously performed your duties;

         provided, however, that you must give the Company written notice within
         thirty (30) days  following the occurrence of the event and the Company
         will have fifteen (15) days to cure the same.  If you fail to give such
         notice or if the Company  provides such cure,  you will not be entitled
         to terminate your employment due to a Quit with Good Reason.

         Each separate  event meeting the above  requirements  will allow you to
         terminate  your  employment  due to a Quit  With Good  Reason  and your
         failure to do so within  ninety (90) days from the  occurrence  of such
         event in any  given  case  will act as a waiver  with  respect  to your
         rights to terminate your employment due to a Quit with Good Reason with
         respect to the occurrence of that specific event,  but will not prevent
         you from  terminating your employment due to a Quit With Good Reason if
         a later event occurs which entitles you to do so, subject to the notice
         and cure provisions.

         "Cash Value of the Restricted  Stock Award" means the trading price per
         share of the  class of stock  subject  to the  restricted  stock  award
         determined as of the grant date,  multiplied by the number of shares of
         restricted stock subject to that grant.

         "Confidential  Information" means data and information  relating to the
         business of the  Company  (which does not rise to the status of a Trade
         Secret)  which is or has  been  disclosed  to you or of  which  the you
         became aware as a consequence  of or through your  relationship  to the
         Company and which has value to the Company and is not  generally  known
         to its competitors. Confidential Information shall not include any data
         or information that has been voluntarily disclosed to the public by the
         Company  (except  where  such  public  disclosure  has been made by you
         without  authorization)  or that has been  independently  developed and
         disclosed by others, or that otherwise enters the public domain through
         lawful means.

         "Trade Secrets" means Company  information  including,  but not limited
         to, technical or nontechnical data, formulas,  patterns,  compilations,
         programs, devices, methods, techniques,  drawings, processes, financial
         data,  financial  plans,  product plans or lists of actual or potential
         customers or suppliers  which:  (i) derives  economic value,  actual or
         potential,  from not being  generally  known to, and not being  readily
         ascertainable by proper means by, other persons who can obtain economic
         value from its  disclosure  or use;  and (ii) is the subject of efforts
         that are reasonable under the circumstances to maintain its secrecy.

         Agreed to as of the date first set forth above.



                                   By:  /s/ Essel W. Bailey, Jr.
                                        --------------------------
                                         Essel W. Bailey, Jr.
                                         President and Chief Executive Officer
                                         Omega Healthcare Investors, Inc.


                                   By:  /s/ Laurence D. Rich
                                        --------------------------
                                        Laurence D. Rich


</TEXT>
</DOCUMENT>
