This excerpt taken from the OHI 8-K filed Oct 25, 2006.


WHEREAS, the Borrowers, the lenders from time to time party thereto (the “Lenders”) and the Administrative Agent, are party to that certain Credit Agreement dated as of March 31, 2006, as amended by that certain First Amendment to Credit Agreement dated as of June 30, 2006 (as amended, restated, supplemented or otherwise modified from time to time, the “Existing Credit Agreement”);

WHEREAS, Omega Healthcare Investors, Inc. (the “Parent”) determined that it may have to restate certain of its annual and quarterly financial statements, including but not limited to, the 2005 Audited Financial Statements and the first two quarters of fiscal year 2006 (the “Applicable Restatements”) as a result of the possible recharacterization of the Advocat restructuring that occurred in November, 2000 (the “Advocat Recharacterization”);

WHEREAS, the Parent is engaged in work to determine the financial results as they relate to the Advocat Recharacterization and, although the review and investigation are not concluded, at this time the Parent believes that it may be responsible for taxes and tax penalties in an amount of up to $8,000,000;

WHEREAS, pursuant to Section 4.02, upon any request for an Extension of Credit, the Parent (on behalf of itself and the Borrowers) makes certain representations and warranties, including representations pursuant to Sections 5.01(a), 5.01(c), 5.16 and 5.20, relating to (i) the extent to which the Audited Financial Statements as well as the most recent financial statements furnished to the Administrative Agent pursuant to Section 6.01 are prepared in accordance with GAAP and present fairly the consolidated financial condition, results of operations and cash flows of the Consolidated Parties as of the dates thereof and for the periods covered thereby (the “Financial Statement Representations”), (ii) payment of all Federal, state and other material taxes and other governmental charges (the “Taxes Representations”), and (iii) all matters having been disclosed and no misstatements or omissions existing on materials furnished by each Credit Party (the “Disclosure Representations”);


WHEREAS, following the completion of the Applicable Restatements, it may be determined that one or more Events of Default had previously occurred under (i) Section 8.01(b) as a result of the Borrowers’ failure to comply with the covenants set forth in Sections 6.01(b) and 6.06, (ii) Section 8.01(c) as a result of the Borrowers’ failure to comply with the covenants set forth in Section 6.09 and (iii) Section 8.01(d) as a result of the inaccuracy of the Financial Statement Representations, the Taxes Representations and the Disclosure Representations (collectively, the “Restatement Defaults”);

WHEREAS, the Parent and the Borrowers have requested that the Lenders (i) waive the inaccuracy of the Financial Statement Representations, the Taxes Representations and the Disclosure Representations solely with respect to the financial statements that are the subject of the Applicable Restatements (the “Specified Prior Financial Statements”) and the Advocat Recharacterization, and any corresponding certifications otherwise made or deemed made pursuant to the Existing Credit Agreement with respect to the Specified Prior Financial Statements, in each case to the extent of the Applicable Restatements and only to the extent related to the Advocat Recharacterization, and (ii) waive the Restatement Defaults (if and to the extent any shall have occurred), in each case, as of the Amendment No. 2 Effective Date (as defined in Subpart 5.1); and

WHEREAS, the Required Lenders have directed the Administrative Agent to execute this Amendment, subject to the terms and conditions set forth herein.

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