<PAGE>
                                                                   Exhibit 10.70

                                                                SHERMAN OAKS, CA

                                 LEASE AGREEMENT

                            MPT OF SHERMAN OAKS, LLC,
                      a Delaware limited liability company

                                     Lessor

                                       AND

                        PRIME HEALTHCARE SERVICES II, LLC
                      a Delaware limited liability company

                                     Lessee

                                    Property:

         One Hundred Fifty-Three (153)-Bed Acute Care Hospital Facility
               (Commonly referred to as the Sherman Oaks Hospital)
                             4929 Van Nuys Boulevard
               Sherman Oaks, Los Angeles County, California 91403

                               December 30, 2005
                               -----------------
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                                Table of Contents

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ARTICLE I LEASED PROPERTY; TERM..........................................     1

ARTICLE II DEFINITIONS...................................................     2

ARTICLE III RENT.........................................................    11
   3.1         Base Rent.................................................    11
   3.2         Additional Charges........................................    11
   3.3         Absolute Net Lease........................................    12
   3.4         Lease Deposit.............................................    12
   3.5         Adjustments...............................................    12
   3.6         Rent and Payments under Air Space Agreement...............    12
   3.7         Rent and Payments under the Parking Space Lease...........    12

ARTICLE IV IMPOSITIONS...................................................    12
   4.1         Payment of Impositions....................................    12
   4.2         Adjustment of Impositions.................................    13
   4.3         Utility Charges...........................................    13
   4.4         Insurance Premiums........................................    13

ARTICLE V NO TERMINATION.................................................    14
   5.1         Acknowledgement...........................................    14

ARTICLE VI OWNERSHIP OF LEASED PROPERTY AND PERSONAL PROPERTY............    14
   6.1         Ownership of the Leased Property..........................    14
   6.2         Lessee's Personal Property................................    14

ARTICLE VII CONDITION AND USE OF LEASED PROPERTY.........................    15
   7.1         Condition of the Leased Property..........................    15
   7.2         Use of the Leased Property................................    15
   7.3         Lessor to Grant Easements.................................    16

ARTICLE VIII LEGAL AND INSURANCE REQUIREMENTS............................    16
   8.1         Compliance with Legal and Insurance Requirements..........    16
   8.2         Legal Requirement Covenants...............................    17
   8.3         Hazardous Materials.......................................    17
   8.4         Healthcare Laws...........................................    17
   8.5         Representations and Warranties............................    18
   8.6         Single Purpose Entity.....................................    18
   8.7         Organizational Documents..................................    18

ARTICLE IX REPAIRS; RESERVE; RESTRICTIONS................................    18
   9.1         Maintenance and Repair....................................    18
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   9.2         Reserves for Extraordinary Repairs........................    19
   9.3         Encroachments; Restrictions...............................    20

ARTICLE X CAPITAL ADDITIONS..............................................    21
   10.1        Construction of Capital Additions to the Leased
               Property..................................................    21
   10.2        Capital Additions Financed by Lessee......................    21
   10.3        Capital Additions Financed by Lessor......................    22
   10.4        Salvage...................................................    24

ARTICLE XI LIENS.........................................................    24

ARTICLE XII PERMITTED CONTESTS...........................................    25

ARTICLE XIII INSURANCE...................................................    25
   13.1        General Insurance Requirements............................    25
   13.2        Additional Insurance......................................    28
   13.3        Waiver of Subrogation.....................................    28
   13.4        Form of Insurance.........................................    28
   13.5        Increase in Limits........................................    28
   13.6        Blanket Policy............................................    29
   13.7        No Separate Insurance.....................................    29

ARTICLE XIV FIRE AND CASUALTY............................................    29
   14.1        Insurance Proceeds........................................    29
   14.2        Reconstruction in the Event of Damage or Destruction
               Covered by Insurance......................................    29
   14.3        Reconstruction in the Event of Damage or Destruction Not
               Covered by Insurance......................................    30
   14.4        Lessee's Personal Property................................    30
   14.5        Restoration of Lessee's Property..........................    31
   14.6        No Abatement of Rent......................................    31
   14.7        Damage Near End of Term...................................    31
   14.8        Termination of Right to Purchase..........................    31
   14.9        Waiver....................................................    31

ARTICLE XV CONDEMNATION..................................................    31
   15.1        Definitions...............................................    31
   15.2        Parties' Rights and Obligations...........................    31
   15.3        Total Taking..............................................    31
   15.4        Partial Taking............................................    32
   15.5        Restoration...............................................    32
   15.6        Award Distribution........................................    32
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   15.7        Temporary Taking..........................................    32

ARTICLE XVI DEFAULT......................................................    32
   16.1        Events of Default.........................................    32
   16.2        Events of Default in Financial Covenants..................    37
   16.3        Additional Expenses.......................................    38
   16.4        Intentionally Omitted.....................................    38
   16.5        Waiver....................................................    38
   16.6        Application of Funds......................................    38
   16.7        Notices by Lessor.........................................    38
   16.8        Lessor's Contractual Security Interest....................    38

ARTICLE XVII LESSOR'S RIGHT TO CURE......................................    40

ARTICLE XVIII PURCHASE OF THE LEASED PROPERTY............................    40

ARTICLE XIX HOLDING OVER.................................................    40

ARTICLE XX INTENTIONALLY OMITTED.........................................    41

ARTICLE XXI INTENTIONALLY OMITTED........................................    41

ARTICLE XXII RISK OF LOSS................................................    41

ARTICLE XXIII INDEMNIFICATION............................................    41

ARTICLE XXIV ASSIGNMENT, SUBLETTING AND SUBLEASE SUBORDINATION...........    42
   24.1        Assignment and Subletting.................................    42
   24.2        Sublease Limitations......................................    42
   24.3        Sublease Subordination and Non-Disturbance................    43

ARTICLE XXV OFFICER'S CERTIFICATES; FINANCIAL STATEMENTS; NOTICES AND
   OTHER CERTIFICATES....................................................    43

ARTICLE XXVI INSPECTION..................................................    44

ARTICLE XXVII NO WAIVER..................................................    45

ARTICLE XXVIII REMEDIES CUMULATIVE.......................................    45

ARTICLE XXIX SURRENDER...................................................    45
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ARTICLE XXX NO MERGER OF TITLE...........................................    45

ARTICLE XXXI TRANSFERS BY LESSOR.........................................    45

ARTICLE XXXII QUIET ENJOYMENT............................................    46

ARTICLE XXXIII NOTICES...................................................    46

ARTICLE XXXIV APPRAISAL..................................................    47

ARTICLE XXXV PURCHASE RIGHTS.............................................    48
   35.1        Lessee's Option to Purchase...............................    48
   35.2        Lessee's Option to Petition For Purchase..................    48
   35.3        Lessor's Option to Purchase Lessee's Personal Property....    48
   35.4        Lessee's Option to Purchase Upon Other Events.............    48

ARTICLE XXXVI INTENTIONALLY OMITTED......................................    49

ARTICLE XXXVII FINANCING OF THE LEASED PROPERTY..........................    49
   37.1        Financing by Lessor.......................................    49

ARTICLE XXXVIII SUBORDINATION AND NON-DISTURBANCE........................    49

ARTICLE XXXIX LICENSES...................................................    50

ARTICLE XL COMPLIANCE WITH HEALTHCARE LAWS...............................    51

ARTICLE XLI LESSOR'S RIGHT TO SELL.......................................    52

ARTICLE XLII MISCELLANEOUS...............................................    52
   42.1        General...................................................    52
   42.2        Lessor's Expenses.........................................    52
   42.3        Assets Purchased Pursuant to Purchase Options.............    52
   42.4        Entire Agreement; Modifications...........................    52
   42.5        Lease Guaranty............................................    53
   42.6        Future Financing..........................................    53
   42.7        Letter of Credit..........................................    53
   42.8        Change in Ownership/Control...............................    53
   42.9        Lessor Securities Offering and Filings....................    53
   42.10       Non-Recourse as to Lessor.................................    53
   42.11       Prime A Investments, L.L.C.'s Right to Exercise Purchase
               Options...................................................    54
   42.12       Management Agreements.....................................    54
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   42.13       Governing Law.............................................    54
   42.14       Jurisdiction and Venue....................................    54
   42.15       Counterparts..............................................    55

ARTICLE XLIII  MEMORANDUM OF LEASE.......................................    55
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                                        v

<PAGE>

                                 LEASE AGREEMENT

     This LEASE AGREEMENT (the "Lease") is dated as of the 30th day of
December, 2005, and is between MPT OF SHERMAN OAKS, LLC, a Delaware limited
liability company ("Lessor"), having its principal office at 1000 Urban Center
Drive, Suite 501, Birmingham, Alabama 35242, and PRIME HEALTHCARE SERVICES II,
LLC, a Delaware limited liability company ("Lessee"), having its principal
office at 16850 Bear Valley Road, Victorville, California 92392.

                                   WITNESSETH:

     WHEREAS, Lessor is the current owner of that certain real property located
in Sherman Oaks, Los Angeles County, California, which real property is more
particularly described on EXHIBIT A attached hereto and incorporated herein by
reference, and all improvements located thereon;

     WHEREAS, pursuant to that certain Assignment and Assumption of Amended and
Restated Air Space Agreement dated and delivered to Lessor as of the date
hereof, whereby Prime A Investments, L.L.C. assigned to Lessor, and Lessor
assumed from Prime, all of Prime's right, title and interest under that certain
Amended and Restated Air Space Agreement dated March 1, 1995 (the "Air Space
Agreement"), Lessor holds an interest in certain rights and has certain
obligations pursuant to the Air Space Agreement;

     WHEREAS, pursuant to that certain Assignment and Assumption of Parking
Space Lease Agreement dated and delivered to Lessor as of the date hereof,
whereby Prime assigned to Lessor, and Lessor assumed from Prime, all of Prime's
right, title and interest under that certain Parking Space Lease Agreement dated
January 1, 2002 (the "Parking Space Lease"), Lessor holds an interest in certain
rights and has certain obligations pursuant to the Parking Space Lease; and

     WHEREAS, Lessor and Lessee desire to enter into this Lease on the terms and
conditions hereinafter provided.

     NOW, THEREFORE, the parties hereto hereby agree as follows:

                                    ARTICLE I

                              LEASED PROPERTY; TERM

     Lessor and Lessee acknowledge and agree that this Lease is subject to
Lessor's continued leasehold interest and rights in the Air Space Agreement and
the Parking Space Lease and Lessee accepts, assumes and agrees to perform and
observe all of the terms, conditions, provisions, limitations and obligations
contained in the Air Space Agreement and the Parking Space Lease, except as
expressly modified and limited herein. Upon and subject to the foregoing and the
terms and conditions hereinafter set forth, and subject to the rights of any
tenants, subtenants, lessees or sublessees under any Existing Leases as
described in Section 24.1 below, Lessor leases to Lessee and Lessee rents from
Lessor all of Lessor's rights and interest in and to the following property
(collectively, the "Leased Property"):

          (a) the real property described on EXHIBIT A attached hereto (the
     "Land");

          (b) the Air Space Agreement and the Parking Space Lease;

          (c) the Facility and all buildings, structures, Fixtures (as
     hereinafter defined) and other improvements of every kind, alleyways and
     connecting tunnels, sidewalks, utility pipes, conduits and lines (on-site
     and off-site), parking areas and roadways appurtenant to such buildings and
     structures presently or hereafter situated upon the Land, and Capital
     Additions (hereinafter defined) financed by Lessor (collectively, the
     "Leased Improvements");


                                        1

<PAGE>

          (d) all easements, rights and appurtenances relating to the Land and
     the Leased Improvements;

          (e) all site plans, surveys, soil and substrata studies, architectural
     drawings, plans and specifications, inspection reports, engineering and
     environmental plans and studies, title reports, floor plans, landscape
     plans and other plans relating to the Land and Leased Improvements; and

          (f) all permanently affixed non-medical equipment, machinery,
     fixtures, and other items of real and/or personal property, including all
     components thereof, now and hereafter located in, on or used in connection
     with, and permanently affixed to or incorporated into the Leased
     Improvements, including, without limitation, all furnaces, boilers,
     heaters, electrical equipment, heating, plumbing, lighting, ventilating,
     refrigerating, incineration, air and water pollution control, waste
     disposal, air-cooling and air-conditioning systems and apparatus, sprinkler
     systems and fire and theft protection equipment, and built-in oxygen and
     vacuum systems, all of which, to the greatest extent permitted by law, are
     hereby deemed by the parties hereto to constitute real estate, together
     with all replacements, modifications, alterations and additions thereto,
     but specifically excluding all items included within the category of
     Lessee's Personal Property as defined in Article II below (collectively the
     "Fixtures").

SUBJECT, HOWEVER, to the matters set forth on EXHIBIT B attached hereto (the
"Permitted Exceptions"); Lessee shall have and hold the Leased Property for a
fixed term (the "Fixed Term") commencing on the date hereof (the "Commencement
Date") and ending at midnight on the last day of the one hundred and eightieth
(180th) month period after the Commencement Date, unless sooner terminated as
herein provided.

     So long as Lessee is not in default, and no event has occurred which with
the giving of notice or the passage of time or both would constitute a default,
under any of the terms and conditions of this Lease, Lessee shall have the
option to extend the Fixed Term of this Lease on the same terms and conditions
set forth herein for three (3) additional periods of five (5) years each (each
an "Extension Term"). Lessee may exercise each such option by giving written
notice to the Lessor at least three hundred sixty five (365) days prior to the
expiration of the Fixed Term or Extension Term, as applicable (the "Extension
Notice"). If during the period following the delivery of the Extension Notice to
Lessor, a default or breach by Lessee shall occur under this Lease, and such
default or breach is not cured within the applicable time periods as provided
herein, Lessee shall be deemed to have forfeited all Extension Options. If
Lessee elects not to exercise its option to extend, all subsequent options to
extend shall be deemed to have lapsed.

                                   ARTICLE II

                                   DEFINITIONS

     For all purposes of this Lease, except as otherwise expressly provided or
unless the context otherwise requires, (a) the terms defined in this Article
have the meanings assigned to them in this Article and include the plural as
well as the singular, (b) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with GAAP as at the time applicable,
(c) all references in this Lease to designated "Articles", "Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Lease, and (d) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Lease as a whole and not to any particular
Article, Section or other subdivision:

     Added Value Additional: As defined in Section 10.2.

     Additional Charges: As defined in Section 3.2.

     Adjustment Date: January 1 of each year commencing on January 1, 2007.

     Affiliate: When used with respect to any corporation, limited liability
company, or partnership, the term "Affiliate" shall mean any person,
corporation, limited liability company, partnership or other legal entity,
which,


                                        2

<PAGE>

directly or indirectly, controls or is controlled by or is under common control
with such corporation, limited liability company, or partnership. For the
purposes of this definition, "control" (including the correlative meanings of
the terms "controlled by" and "under common control with"), as used with respect
to any person, corporation, limited liability company, partnership or other
legal entity, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such person,
corporation, limited liability company, partnership or other legal entity,
through the ownership of voting securities, partnership interests or other
equity interests.

     Air Space Agreement: As defined in the Preamble.

     Applicable Seismic Laws: As defined in Section 10.3(e).

     Award: As defined in Section 15.1.

     Base Rent: As defined in Section 3.1.

     Business: The operation of the Facility and the engagement in and pursuit
and conduct of any business venture or activity related thereto.

     Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday which is
not a day on which money centers in the City of New York, New York are
authorized, or obligated, by law or executive order, to close.

     Capital Additions: One or more new buildings or one or more additional
structures, annexed to any portion of any of the Leased Improvements, which are
constructed on any parcel or portion of the Land during the Term, including,
without limitation, the construction of a new wing or new story and any Seismic
Upgrades.

     Capital Addition Cost: The cost of any Capital Additions proposed to be
made by Lessee whether or not paid for by Lessee or Lessor. Such cost shall
include (a) the cost of construction of the Capital Additions, including site
preparation and improvement, materials, labor, supervision and certain related
design, engineering and architectural services, the cost of any fixtures, the
cost of construction financing and miscellaneous costs approved by Lessor, (b)
if agreed to by Lessor in writing in advance, the cost of any land contiguous to
the Leased Property purchased for the purpose of placing thereon the Capital
Additions or any portion thereof or for providing means of access thereto, or
parking facilities therefor, including the cost of surveying the same, (c) the
cost of insurance, real estate taxes, water and sewage charges and other
carrying charges for such Capital Additions during construction, (d) the cost of
title insurance, (e) reasonable fees and expenses of legal counsel, (f) filing,
registration and recording taxes and fees, (g) documentary stamp taxes, if any,
and (h) all reasonable costs and expenses of Lessor and any Lending Institution
which has committed to finance the Capital Additions, including, but not limited
to, (i) the reasonable fees and expenses of their respective legal counsel, (ii)
all printing expenses, (iii) the amount of any filing, registration and
recording taxes and fees, (iv) documentary stamp taxes, if any, (v) title
insurance charges, appraisal fees, if any, (vi) rating agency fees, if any, and
(vii) commitment fees, if any, charged by any Lending Institution advancing or
offering to advance any portion of the financing for such Capital Additions.

     Capital Improvement Reserve: As defined in Section 9.1(e).

     CERCLA: As defined in Article II.

     Code: The Internal Revenue Code of 1986, as amended.

     Collateral: As defined in Section 16.8.

     Commencement Date: The date hereof.

     Commitment Letter: The commitment letter between Lessor and Prime
Healthcare Services, Inc. (or their Affiliates) dated August 1, 2005, as
amended.


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     Condemnation, Condemnor: As defined in Section 15.1.

     Consolidated Net Worth: At any time, the sum of the following for
Guarantors or Lessee and their respective consolidated subsidiaries on a
consolidated basis determined in accordance with GAAP.

          (a) the amount of capital or stated capital (after deducting the cost
     of any treasury shares), plus

          (b) the amount of capital surplus and retained earnings (or, in the
     case of a capital surplus or retained earnings deficit, minus the amount of
     such deficit), minus

          (c) the sum of the following (without duplication of deductions in
     respect of items already deducted in arriving at surplus and retained
     earnings): (i) unamortized debt discount and expense and (ii) any write-up
     in book value of assets resulting from a revaluation thereof pursuant to
     generally accepted accounting principles subsequent to the most recent
     Statements of Cash Flow prior to the date thereof, except any net write-up
     in value of foreign currency in accordance with GAAP; any write-up
     resulting from reversal of a reserve for bad debts or depreciation; and any
     write-up resulting from a change in methods of accounting for inventory.

     Consumer Price Index: The Consumer Price Index, all urban consumers, all
items, U.S. City Average, published by the United States Department of Labor,
Bureau of Labor Statistics, in which 1982-1984 equals one hundred (100). If the
Consumer Price Index is discontinued or revised during the term of this Lease,
such other governmental index or computation with which it is replaced shall be
used in order to obtain substantially the same result as would be obtained if
the Index had not been discontinued or revised.

     Contracts: As defined in Article XXXII.

     Covenant Commencement Date: As defined in Section 16.2(a).

     CPI: The Consumer Price Index.

     Credit Enhancements: All security deposits, security interests, letters of
credit, pledges, guaranties, prepaid rent or other sums, deposits or interests
held by Lessee, if any, with respect to the Leased Property, the Tenant Leases
or the Tenants.

     DHS: As defined in Article XXXIX.

     Date of Taking: As defined in Section 15.1.

     EBITDAR: Earnings before the deduction of interest, taxes, depreciation,
amortization and rent, as determined in accordance with GAAP.

     Encumbrances: As defined in Article XXXVII.

     Equity Investment: The Purchase Price.

     Events of Default: As defined in Section 16.1 and Section 16.2.

     Existing Leases: As defined in Section 24.1.

     Expansion: As defined in Section 10.3(f).

     Expansion Amount: Such amount as may be disbursed from time to time to
Lessee, for use in financing certain improvements and expansions of the
Facility, said amount not to exceed Five Million Dollars ($5,000,000).


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<PAGE>

     Extension Notice: As defined in Article I.

     Extension Term: As defined in Article I.

     Extraordinary Repairs: All repairs to the Facility of every kind and
nature, whether interior or exterior, structural or non-structural (including,
without limitation, all parking decks and parking lots) which are considered to
be extraordinary in nature (as opposed to being ordinary or normal in nature),
as Lessee and/or Lessor may determine to be necessary or appropriate from time
to time during the Term.

     Facility: The licensed one hundred fifty-three (153)-bed acute care
hospital facility and all improvements in connection therewith operated on the
Land.

     Facility Instrument: A note (whether secured or unsecured), loan agreement,
credit agreement, guaranty, security agreement, mortgage, deed of trust or other
security agreement pursuant to which a Facility Lender has provided financing to
Lessor in connection with the Leased Property or any part thereof, or financing
provided to Lessee, if such financing is provided by Lessor or any Affiliate of
Lessor, to Lessee, and any and all renewals, replacements, modifications,
supplements, consolidations, spreaders and extensions thereof.

     Facility Lender: A holder (which may include any Affiliate of Lessor) of
any Facility Instrument.

     Fair Market Added Value: The Fair Market Value (as hereinafter defined) of
the Leased Property (including all Capital Additions) less the Fair Market Value
of the Leased Property determined as if no Capital Additions paid for by Lessee
had been constructed.

     Fair Market Value: The Fair Market Value of the Leased Property, including
all Capital Additions, (a) and shall be determined in accordance with the
appraisal procedures set forth in Article XXXIV or in such other manner as shall
be mutually acceptable to Lessor and Lessee, (b) and shall not take into account
any reduction in value resulting from any indebtedness to which the Leased
Property is subject and which encumbrance Lessee or Lessor is otherwise required
to remove pursuant to any provision of this Lease or agrees to remove at or
prior to the closing of the transaction as to which such Fair Market Value
determination is being made. The positive or negative effect on the value of the
Leased Property attributable to the interest rate, amortization schedule,
maturity date, prepayment penalty and other terms and conditions of any
Encumbrance on the Leased Property, which is not so required or agreed to be
removed shall be taken into account in determining such Fair Market Value.
Notwithstanding anything contained herein to the contrary, any appraisal of the
Leased Property shall assume the Lease is in place for a term of fifteen (15)
years, and based solely on the rents and other revenues generated and to be
generated pursuant to this Lease without any regard to the Lessee's operations.

     Fair Market Value Purchase Price: The Fair Market Value of the Leased
Property less the Fair Market Added Value.

     Fiscal Year: The fiscal year for this Lease shall be the twelve (12) month
period from January 1 to December 31.

     Fixed Charges: The sum of Lease Payments and required principal and
interest payments with respect to Total Debt as reduced for any inter-company
transactions.

     Fixed Term: As defined in Article I.

     Fixtures: As defined in Article I.

     Full Replacement Cost: As defined in Section 13.1.

     GAAP: Generally accepted accounting principles in the United States,
consistently applied.


                                        5

<PAGE>

     Governmental Entity: Any national, federal, regional, state, local,
provincial, municipal, foreign or multinational court or other governmental or
regulatory authority, administrative body or government, department, board,
body, tribunal, instrumentality or commission of competent jurisdiction.

     Guarantors: Jointly and severally, Prime Healthcare Services, Inc., a
Delaware corporation, Desert Valley Medical Group, Inc., a California
corporation, Prime A Investments, L.L.C., a Delaware limited liability company
and Desert Valley Hospital, Inc., a California corporation.

     Hazardous Materials: Any substance, including without limitation, asbestos
or any substance containing asbestos and deemed hazardous under any Hazardous
Materials Law, the group of organic compounds known as polychlorinated
biphenyls, flammable explosives, radioactive materials, infectious wastes,
biomedical and medical wastes, chemicals known to cause cancer or reproductive
toxicity, pollutants, effluents, contaminants, emissions or related materials
and any items included in the definition of hazardous or toxic wastes, materials
or substances under any Hazardous Materials Laws.

     Hazardous Materials Laws: All local, state and federal laws relating to
environmental conditions and industrial hygiene, including, without limitation,
the Resource Conservation and Recovery Act of 1976 ("RCRA"), the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), as
amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"),
the Hazardous Materials Transportation Act, the Federal Water Pollution Control
Act, the Clean Air Act, the Clean Water Act, the Toxic Substances Control Act,
the Safe Drinking Water Act, and all similar federal, state and local
environmental statutes, ordinances and the regulations, orders, or decrees now
or hereafter promulgated thereunder.

     Healthcare Laws: All rules and regulations under the False Claims Act (31
U.S.C. Section 3729 et seq.), the Anti-Kickback Act of 1986 (41 U.S.C. Section
51 et seq.), the Federal Health Care Programs Anti-Kickback statute (42 U.S.C.
Section 1320a-7a(b)), the Ethics in Patient Referrals Act of 1989, as amended
(Stark Law) (42 U.S.C. 1395nn), the Civil Money Penalties Law (42 U.S.C. Section
1320a-7a), or the Truth in Negotiations (10 U.S.C. Section 2304 et seq.), Health
Care Fraud (18 U.S.C. 1347), Wire Fraud (18 U.S.C. 1343), Theft or Embezzlement
(18 U.S.C. 669), False Statements (18 U.S.C. 1001), False Statements (19 U.S.C.
1035), and Patient Inducement Statute, and equivalent state statutes and any and
all rules or regulations promulgated by governmental entities with respect to
any of the foregoing.

     HIPPA: As defined in Article XXV.

     Impositions: Collectively, all civil monetary penalties, fines and
overpayments imposed by state and federal regulatory authorities, all taxes
(including, without limitation, all capital stock and franchise taxes of Lessor,
all ad valorem, sales and use, single business, gross receipts, transaction
privilege, rent or similar taxes), assessments (including, without limitation,
all assessments, charges and costs imposed under the Permitted Exceptions, all
assessments for public improvements or benefits, whether or not commenced or
completed prior to the date hereof and whether or not to be completed within the
Term), ground rents, water, sewer or other rents and charges, excises, tax
levies, fees (including, without limitation, license, permit, inspection,
authorization and similar fees), and all other governmental charges, in each
case whether general or special, ordinary or extraordinary, or foreseen or
unforeseen, of every character in respect of the Leased Property and/or the Rent
(including all interest and penalties thereon due to any failure in payment by
Lessee), and all other fees, costs and expenses which at any time prior to,
during or in respect of the Term hereof may be charged, assessed or imposed on
or in respect of or be a lien upon (a) Lessor or Lessor's interest in the Leased
Property, (b) the Leased Property or any part thereof or any rent therefrom or
any estate, right, title or interest therein, or (c) any occupancy, operation,
use or possession of, sales from, or activity conducted on, or in connection
with, the Leased Property or the leasing or use of the Leased Property or any
part thereof; provided, however, nothing contained in this Lease shall be
construed to require Lessee to pay (1) any tax based on net income (whether
denominated as a franchise or capital stock, financial institutions or other
tax) imposed on Lessor, or (2) any transfer or net revenue tax of Lessor, or (3)
any tax imposed with respect to the sale, exchange or other disposition by
Lessor of any portion of the Leased Property or the proceeds thereof, or (4)
except as expressly provided elsewhere in this Lease, any principal or interest
on any Encumbrance on the Leased Property,


                                        6

<PAGE>

except to the extent that any tax, assessment, tax levy or charge which Lessee
is obligated to pay pursuant to the first sentence of this definition and which
is in effect at any time during the Term hereof is totally or partially
repealed, and a tax, assessment, tax levy or charge set forth in clause (1) or
(2) is levied, assessed or imposed expressly in lieu thereof, in which case
Lessee shall pay.

     Initial Purchase Price: A price equal to the purchase price paid by Lessor
(and its Affiliates, including, without limitation, MPT Operating Partnership,
L.P.) for the Leased Property pursuant to the Purchase Agreement, plus all costs
and expenses incurred in association with the purchase and lease of such Leased
Property, including, but not limited to, legal, appraisal, title, survey,
environmental, seismic, engineering and other fees and expenses paid in
connection with the inspection of the Leased Property and site visits, and fees
paid to advisors and brokers, except to the extent such items are paid by
Lessee.

     Insurance Premiums: As defined in Section 4.4.

     Insurance Requirements: All terms of any insurance policy required by this
Lease and all requirements of the issuer of any such policy, and such additional
insurance which the Lessor may reasonably require.

     Land: As defined in Article I.

     Lease: As defined in the Preamble.

     Lease Amendment: As defined in Section 10.3.

     Lease Assignment: That certain Assignment of Rents and Leases to be
effective the Commencement Date executed and delivered by Lessee to Lessor,
pursuant to the terms of which Lessee has assigned to Lessor each of the Tenant
Leases and Credit Enhancements, if any, as security for the obligations of
Lessee under this Lease (as this Lease may be amended, modified and/or restated
from time to time), the obligations of Guarantors under the Lease Guaranty and
any other obligations of Lessee to Lessor, any Guarantor or any Affiliate of
Lessee or any Guarantor to Lessor or any Affiliate of Lessor.

     Lease Guaranty: That certain Lease Guaranty to be effective on the
Commencement Date executed and delivered by Guarantors in favor of Lessor
contemporaneously herewith.

     Lease Payments: The payments of Base Rent of the Lessee required pursuant
to this Lease.

     Lease Rate: A per annum rate initially equal to ten and one-half percent
(10.5%), as adjusted by the escalator described in Section 3.1(b) hereof; such
rate (as escalated) to be decreased by one-half percent (0.5%) at such time as
the Facility has generated a total lease coverage from EBITDAR (based on
trailing twelve (12) months) of at least two hundred fifty percent (250%) for
two (2) consecutive twelve-month periods.

     Lease Year: A twelve (12) month period commencing on the Commencement Date
or on each anniversary date thereof, as the case may be.

     Leased Improvements; Leased Property: Each as defined in Article I.

     Legal Requirements: All federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting the Lessee's operation of its business on the
Leased Property, along with the Leased Property or the construction, use or
alteration thereof (including, without limitation, the Americans With
Disabilities Act and Section 504 of the Rehabilitation Act of 1973) whether now
or hereafter enacted and in force, including any which may (a) require repairs,
modifications, or alterations in or to the Leased Property, or (b) in any way
adversely affect the use and enjoyment thereof, and all permits, licenses,
authorizations and regulations relating thereto, and all covenants, agreements,
restrictions and encumbrances contained in any instruments, either of record or
known to Lessee (other than encumbrances created by Lessor without the consent
of Lessee), at any time in force affecting the Leased Property.


                                        7

<PAGE>

     Lending Institution: Any insurance company, federally insured commercial or
savings bank, national banking association, savings and loan association,
employees' welfare, pension or retirement fund or system, corporate
profit-sharing or pension trust, college or university, or real estate
investment trust, including any corporation qualified to be treated for federal
tax purposes as a real estate investment trust, having a net worth of at least
Fifty Million Dollars ($50,000,000).

     Lessee: Prime Healthcare Services II, LLC, a Delaware limited liability
company, and its successors and permitted assigns, which, if required by Lessor,
shall at all times during the term of this Lease be a Single Purpose Entity
created and to remain in good standing as required hereunder for the sole
purpose of leasing and operating the Facility.

     Lessee's Notice: As defined in Section 42.6.

     Lessee's Personal Property: All machinery, equipment, medical equipment
(including all medical equipment affixed to the Leased Property), furniture,
furnishings, trailers, movable walls or partitions, computers, trade fixtures,
consumable inventory and supplies and all other personal property currently
owned or acquired after the execution of this Lease, and used or useful in the
operation of the Facility, including without limitation, all items of furniture,
furnishings, equipment, supplies and inventory, and Lessee's operating licenses,
but excluding Lessee's accounts receivable and any items included within the
definition of Fixtures.

     Lessor: MPT of Sherman Oaks, LLC, a Delaware limited liability company, and
its successors and assigns.

     Lessor's Notice: As defined in Section 42.6.

     Lessor's Notice Address: As defined in Section 13.4.

     Licenses: As defined in Article XXXIX.

     LOC Amount: As defined in Section 42.7.

     Management Agreement: Any contracts and agreements for the management of
any part of the Leased Property, including, without limitation, the real estate
and the Leased Improvements and the operations of the Facility.

     Management Company: Any person, firm, corporation or other entity or
individual who or which will manage any part of the Leased Property.

     Market Value of Lessee: An amount equal to the EBITDAR of Lessee, on a
trailing twelve (12) months basis, multiplied by four (4).

     Medicaid : The medical assistance program established by Title XIX of the
Social Security Act (42 U.S.C. Sections 1396 et seq.) and any statute succeeding
thereto.

     Medicare: The health insurance program for the aged and disabled
established by Title XVIII of the Social Security Act (42 U.S.C. Sections 1395
et seq.) and any statute succeeding thereto.

     MPT: Medical Properties Trust, Inc., an Affiliate of Lessor.

     MPT Development Services: MPT Development Services, Inc., an Affiliate of
Lessor.

     Officer's Certificate: A certificate of Lessee signed by the Chairman of
the Board of Directors, the President, any Vice President or the Treasurer of
Lessee or another officer or representative authorized to so sign by the Board
of Directors or other governing body of Lessee, or any other person whose power
and authority to act has been authorized by delegation in writing by any of the
persons holding the foregoing offices.


                                        8

<PAGE>

     Option Price: As defined in Section 35.1.

     Organizational Documents: As defined in Section 8.7.

     Other Lease: Any other lease entered into between Lessor or any Affiliate
of Lessor, on one hand, and Lessee, any Guarantor, or any of their respective
Affiliates, on the other hand.

     Overdue Rate: On any date, a rate per annum equal to four (4%) percent.

     Parking Space Lease: As defined in the Preamble.

     Payment Date: Any due date for the payment of the installments of Base
Rent, Additional Rent, or any other sums payable under this Lease.

     Permitted Exceptions: As defined in Article I.

     Primary Intended Use: As defined in Article VII.

     Primary Lender: As defined in Section 16.8.

     Primary Lien of Lessee's Primary Lender: As defined in Section 16.8.

     Prime Rate: The annual rate announced by Citibank in New York, New York, to
be the prime rate for 90-day unsecured loans to its United States corporate
borrowers of the highest credit standing, as in effect from time to time.

     Purchase Agreement: That certain Purchase and Sale Agreement dated of even
date herewith, by and among Lessor, Lessee, the Guarantors and MPT Operating
Partnership, L.P.

     Purchase Price: The Initial Purchase Price, plus all costs and expenses not
included in the Initial Purchase Price incurred or paid in connection with the
purchase and lease of the Leased Property, including, but not limited to, legal,
appraisal, title, survey, environmental, seismic, engineering and other fees and
expenses paid in connection with the inspection of the Leased Property, and paid
to advisors and brokers (except to the extent such items are paid by Lessee),
and shall include the costs of Capital Additions financed by Lessor (and
Lessor's Affiliates) as provided in Section 10.3 of this Lease (collectively the
"Purchase Price Adjustment").

     Purchase Price Adjustment: As defined in the above definition of "Purchase
Price."

     RCRA: As defined in Article II.

     Real Estate Taxes: All real estate taxes, assessments and special
assessments and dues which shall be levied or imposed upon the Leased Property
during the Term.

     Removal Notice: As defined in Section 16.2.

     Rent: Collectively, the Base Rent (as increased in accordance with the
provisions of Section 3.1(b) hereof) and the Additional Charges.

     Request: As defined in Section 10.3(a).

     Reserve: As defined in Section 9.2.

     SARA: As defined in Article II.


                                        9

<PAGE>

     Security Agreement: That certain Security Agreement to be effective the
Commencement Date executed and delivered by Lessee to Lessor, pursuant to the
terms of which Lessee has granted to Lessor a first lien and security interest
in all of Lessee's rights under this Lease (as this Lease may be amended,
modified and/or restated from time to time), to all of Lessee's Personal
Property (excluding accounts receivable) and to all of the Licenses.

     Seismic Upgrades: Those certain upgrades and renovations to the Leased
Property required for compliance with the State of California laws and
regulations governing seismic structural integrity, the costs of which are
anticipated to be approximately Seven Million Two Hundred Thousand Dollars
($7,200,000.00).

     Sherman Oaks: As defined in Section 24.2.

     Sherman Oaks Sublease: As defined in Section 24.2.

     Single Purpose Entity: An entity which (i) exists solely for the purpose of
owning and/or leasing all or any portion of the Facility and conducting the
operation of the Business, (ii) conducts business only in its own name, (iii)
does not engage in any business other than the ownership and/or leasing all or
any portion of the Facility and the operation of the Business, (iv) does not
hold, directly or indirectly, any ownership interest (legal or equitable) in any
entity or any real or personal property other than the interest in the Facility
which it owns in the Facility and the other assets incident to the operation of
the Business, (v) does not have any debt other than as permitted by this Lease
or arising in the ordinary course of the Business and does not guarantee or
otherwise obligate itself with respect to the debts of any other person or
entity, other than as approved by Lessor, (vi) has its own separate books,
records, accounts, financial statements and tax returns (with no commingling of
funds or assets), (vii) holds itself out as being a company separate and apart
from any other entity, and (viii) maintains all corporate formalities
independent of any other entity.

     Statements of Cash Flow: For any fiscal year or other accounting period for
Lessee or Guarantors and their respective consolidated subsidiaries, statements
of earnings and retained earnings and of changes in financial position for such
period and for the period from the beginning of the respective Fiscal Year to
the end of such period and the related balance sheet as at the end of such
period, together with the notes thereto, all in reasonable detail and setting
forth in comparative form the corresponding figures for the corresponding period
in the preceding fiscal year, and prepared in accordance with GAAP.

     Taking: A taking or voluntary conveyance during the Term hereof of all or
part of the Leased Property, or any interest therein or right accruing thereto
or use thereof, as the result of, or in settlement of, any Condemnation or other
eminent domain proceeding affecting the Leased Property whether or not the same
shall have actually been commenced.

     Tenant: The lessees or tenants under the Tenant Leases, if any.

     Tenant Leases: All leases, subleases, pharmacy leases and other rental
agreements (written or verbal, now or hereafter in effect), if any, including,
without limitation, the Existing Leases as described in Section 24.1 hereof,
that grant a possessory interest in and to any space in or any part of the
Leased Property, or that otherwise have rights with regard to the Leased
Property, and all Credit Enhancements, if any, held in connection therewith.

     Term: The actual duration of this Lease, including the Fixed Term and the
Extension Terms (if exercised by the Lessee) and taking into account any
termination.

     Test Rate: As defined in Section 10.2.

     Total Capitalization: Total Debt plus all capital account or stated capital
balances according to GAAP.

     Total Debt: All indebtedness which, in accordance with GAAP, will be
included in determining total liabilities as shown on the liability side of a
balance sheet, including any such indebtedness represented by


                                       10

<PAGE>

obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, but excluding any nonrecourse
indebtedness and excluding any current liabilities.

     Unavoidable Delays: Delays due to strikes, lockouts, inability to procure
materials, power failure, acts of God, governmental restrictions, enemy action,
civil commotion, fire, unavoidable casualty or other causes beyond the control
of the party responsible for performing an obligation hereunder, provided that
lack of funds shall not be deemed a cause beyond the control of either party
hereto unless such lack of funds is caused by the failure of the other party
hereto.

     Unsuitable for Its Use or Unsuitable for Its Primary Intended Use: As used
anywhere in this Lease, the terms "Unsuitable for Its Use" or "Unsuitable for
Its Primary Intended Use" shall mean that, by reason of damage or destruction,
or a partial Taking by Condemnation, the Facility cannot be operated on a
commercially practicable basis for its Primary Intended Use, taking into
account, all relevant factors, and the effect of such damage or destruction or
partial Taking.

     Upgrade EBITDAR Covenant: As defined in Section 10.3(e).

                                  ARTICLE III

                                      RENT

     3.1 BASE RENT. During the Term, Lessee shall pay to Lessor, in advance and
without notice, demand, set off or counterclaim, in lawful money of the United
States of America, at Lessor's address set forth herein or at such other place
or to such other person, firm or entity as Lessor from time to time may
designate in writing, Base Rent as follows:

          (a) BASE RENT: Subject to adjustment as provided herein, Lessee shall
     pay Lessor base rent (the "Base Rent") in a per annum amount equal to ten
     and one-half percent (10.5%) multiplied by the Purchase Price, which as of
     the date hereof is an annual amount of Two Million, One Hundred Thousand
     and 00/100 Dollars ($2,100,000.00). Base Rent shall be payable in advance
     in equal, consecutive monthly installments on or before the 10th day of
     each calendar month during the Term, commencing on the Commencement Date
     (prorated as to any partial month based upon a three hundred sixty (360)
     day year).

          (b) ADJUSTMENT OF BASE RENT: Commencing on January 1, 2007, and on
     each January 1 thereafter (each an "Adjustment Date") during the term of
     this Lease, the Base Rent shall be increased, if any, by an amount equal to
     the greater of (A) two percent (2%) per annum of the prior year's Base
     Rent, or (B) the percentage by which the CPI on the Adjustment Date shall
     have increased over the CPI figure in effect on the immediately preceding
     January 1. If the previous year's Base Rent is for a partial year, Base
     Rent shall be annualized based on the highest annual rate effective during
     the preceding year. Notwithstanding anything contained herein to the
     contrary, the parties hereto acknowledge and agree that all calculations of
     Base Rent as specified herein have been made by multiplying the Initial
     Purchase Price by the Lease Rate. In the event the Initial Purchase Price
     or Lease Rate is adjusted, then all calculations of Base Rent shall be
     adjusted accordingly.

     3.2 ADDITIONAL CHARGES. In addition to the Base Rent (a) Lessee will also
pay and discharge as and when due and payable all other amounts, liabilities,
obligations and Impositions which Lessee assumes or agrees to pay under this
Lease, and all other amounts, liabilities, obligations and Impositions related
to the ownership, use, possession and operation of the Leased Property,
including, without limitation, all costs of owning and operating the Facility,
all Real Estate Taxes, Insurance Premiums, maintenance and capital improvements,
all licensure violations, violations of and defaults under any of the Permitted
Exceptions, civil monetary penalties and fines, and (b) in the event of any
failure on the part of Lessee to pay any of those items referred to in clause
(a) above, Lessee will also promptly pay and reimburse Lessor for all such
amounts paid by Lessor and promptly pay and discharge every fine, penalty,
interest and cost which may be added for non-payment or late payment of such
items (the items referred to


                                       11

<PAGE>

in clauses (a) and (b) above being referred to herein collectively as the
"Additional Charges"), and Lessor shall have all legal, equitable and
contractual rights, powers and remedies provided in this Lease, by statute or
otherwise, in the case of non-payment of the Additional Charges, as in the case
of the Base Rent. If any installment of Base Rent or Additional Charges (but
only as to those Additional Charges which are payable directly to Lessor) shall
not be paid within five (5) Business Days after its due date, Lessee will pay
Lessor on demand, as Additional Charges, a late charge (to the extent permitted
by law) computed at the Overdue Rate (or at the maximum rate permitted by law,
whichever is less) on the amount of such installment, from the due date of such
installment to the date of payment thereof. To the extent that Lessee pays any
Additional Charges to Lessor pursuant to any requirement of this Lease, Lessee
shall be relieved of its obligation to pay such Additional Charges to the entity
to which they would otherwise be due. At any time during the Term, Lessor may
require Lessee to pay to Lessor or its Facility Lender estimates of Real Estate
Taxes and Insurance Premiums and Lessee shall pay to Lessor (or directly to a
Facility Lender, if requested by Lessor), upon written request from Lessor, such
amounts as and when required by Lessor (or the Facility Lender). All sums paid
into escrow or deposits shall not bear interest and may be commingled with
Lessor's books, accounts and funds; however, upon an Event of Default under this
Lease, the escrowed funds or deposits may be applied by Lessor (or the Facility
Lender) to all sums owed by Lessee to Lessor (or to sums owed to Facility
Lender).

     3.3 ABSOLUTE NET LEASE. The Rent shall be paid absolutely net to Lessor, so
that this Lease shall yield to Lessor the full amount of the installments of
Base Rent and the payments of Additional Charges throughout the Term, but
subject to any other provisions of this Lease which expressly provide for
adjustment of Rent or other charges. Lessee further acknowledges and agrees that
all charges, assessments or payments of any kind due and payable without notice,
demand, set off or counterclaim under the Permitted Exceptions shall be paid by
Lessee as they become due and payable.

     3.4 LEASE DEPOSIT. Intentionally Omitted.

     3.5 ADJUSTMENTS. Lessor and Lessee acknowledge that to the extent Lessee
fails to reimburse to Lessor, any costs and expenses which otherwise would be
included in the definition of Purchase Price, then the Lessor shall recalculate
the Purchase Price to include such unreimbursed costs and expenses and deliver
to Lessee a letter confirming the Base Rent to be paid hereunder and such letter
shall constitute an amendment to the provisions of this Lease.

     3.6 RENT AND PAYMENTS UNDER AIR SPACE AGREEMENT. Lessee shall pay all rents
and other payments due as required under the Air Space Agreement (a copy of
which has been provided to Lessee) as and when such payments become due and
payable, and Lessee shall provide Lessor with reasonable evidence of payment
each month confirming that the rents and payments have been timely paid or, at
Lessor's request, Lessee shall pay the rents and payments due under the Air
Space Agreement directly to Lessor at least five (5) business days prior to its
due date under the Air Space Agreement.

     3.7 RENT AND PAYMENTS UNDER THE PARKING SPACE LEASE. Lessee shall pay all
rents and other payments due as required under the Parking Space Lease (a copy
of which has been provided to Lessee) as and when such payments become due and
payable, and Lessee shall provide Lessor with reasonable evidence of payment
each month confirming that the rents and payments have been timely paid or, at
Lessor's request, Lessee shall pay the rents and payments due under the Parking
Space Lease directly to Lessor at least five (5) business days prior to its due
date under the Parking Space Lease.

                                   ARTICLE IV

                                   IMPOSITIONS

     4.1 PAYMENT OF IMPOSITIONS. Subject to Article XII relating to permitted
contests, Lessee will pay, or cause to be paid, all Impositions before any fine,
penalty, interest or cost may be added for non-payment, such


                                       12

<PAGE>

payments to be made directly to the taxing or assessing authorities unless, in
the case of escrows and deposits required to be paid to Lessor or Facility
Lender as provided in Section 3.2 hereof, and Lessee will promptly, upon
request, furnish to Lessor copies of official receipts or other satisfactory
proof evidencing such payments. Lessee's obligation to pay such Impositions
shall be deemed absolutely fixed upon the date such Impositions become a lien
upon the Leased Property or any part thereof. If any such Imposition may, at the
option of the Lessor, lawfully be paid in installments (whether or not interest
shall accrue on the unpaid balance of such Imposition), Lessee may exercise the
option to pay the same (and any accrued interest on the unpaid balance of such
Imposition) in installments and, in such event, shall pay such installments
during the Term hereof (subject to Lessee's right of contest pursuant to the
provisions of Article XII; and subject to the requirement to pay the full amount
of escrows and deposits as required under Section 3.2 hereof) as the same
respectively become due and before any fine, penalty, premium, further interest
or cost may be added thereto. Lessor, at its expense, shall, to the extent
permitted by applicable law, prepare and file all tax returns and reports as may
be required by governmental authorities in respect of Lessor's net income, gross
receipts, franchise taxes and taxes on its capital stock, and Lessee, at its
expense, shall, to the extent permitted by applicable laws and regulations,
prepare and file all other tax returns and reports in respect of any Imposition
as may be required by governmental authorities. If any refund shall be due from
any taxing authority in respect of any Imposition paid by Lessee, the same shall
be paid over to or retained by Lessee if no Event of Default shall have occurred
hereunder and be continuing. Any such funds retained by Lessor due to an Event
of Default shall be applied as provided in Article XVI. Lessor and Lessee shall,
upon request of the other, provide such data as is maintained by the party to
whom the request is made with respect to the Leased Property as may be necessary
to prepare any required returns and reports. In the event governmental
authorities classify any property covered by this Lease as personal property,
Lessee shall file all personal property tax returns in such jurisdictions where
it may legally so file. Lessor, to the extent it possesses the same, and Lessee,
to the extent it possesses the same, will provide the other party, upon request,
with cost and depreciation records necessary for filing returns for any property
so classified as personal property. Where Lessor is legally required to file
personal property tax returns, Lessee will be provided with copies of assessment
notices indicating a value in excess of the reported value in sufficient time
for Lessee to file a protest. Lessee may, upon giving notice to Lessor, at
Lessee's option and at Lessee's sole cost and expense, protest, appeal, or
institute such other proceedings as Lessee may deem appropriate to effect a
reduction of real estate or personal property assessments and Lessor, at
Lessee's expense as aforesaid, shall fully cooperate with Lessee in such
protest, appeal, or other action. Billings for reimbursement by Lessee to Lessor
of personal property taxes shall be accompanied by copies of a bill therefor and
payments thereof which identify the personal property with respect to which such
payments are made.

     4.2 ADJUSTMENT OF IMPOSITIONS. Impositions imposed in respect of the
tax-fiscal period during which the Term terminates, unless Lessee purchases the
Leased Property pursuant to the purchase options expressly provided herein,
shall be adjusted and prorated between Lessor and Lessee, whether or not such
Imposition is imposed before or after such termination, and Lessee's obligation
to pay its prorated share thereof shall survive such termination.

     4.3 UTILITY CHARGES. Lessee will contract for, in its own name, and will
pay or cause to be paid when due all charges for electricity, power, gas, oil,
water and other utilities used in connection with the Leased Property during the
Term, including, without limitation, all impact and tap fees necessary for the
operation of the Facility.

     4.4 INSURANCE PREMIUMS. Lessee will contract for in its own name and will
pay or cause to be paid when due all premiums for the insurance coverage
required to be maintained pursuant to Article XIII during the Term (the
"Insurance Premiums"); provided, however, that if required by Lessor, such
premiums shall be paid as required under Section 3.2 hereof. At Lessor's option
and provided that the costs of such coverages collectively do not exceed the
costs of such insurance obtained by Lessee, Lessor may obtain the insurance
coverages required herein and, in such event, Lessee shall reimburse Lessor for
the costs of such coverages immediately upon request by Lessor.


                                       13

<PAGE>

                                   ARTICLE V

                                 NO TERMINATION

     5.1 ACKNOWLEDGEMENT. The parties hereto understand, acknowledge and agree
that this is an absolute triple net lease. Lessee shall remain bound by this
Lease in accordance with its terms and shall neither take any action without the
consent of Lessor to modify, surrender or terminate the same, nor seek nor be
entitled to any abatement, deduction, deferment or reduction of Rent, or set-off
against the Rent, nor shall the respective obligations of Lessor and Lessee be
otherwise affected by reason of (a) any damage to, or destruction of, any Leased
Property or any portion thereof from whatever cause or any Taking of the Leased
Property or any portion thereof, (b) the lawful or unlawful prohibition of, or
restriction upon, Lessee's use of the Leased Property, or any portion thereof,
or the interference with such use by any person, corporation, partnership or
other entity, or by reason of eviction by paramount title; (c) any claim which
Lessee has or might have against Lessor or by reason of any default or breach of
any warranty by Lessor under this Lease or any other agreement between Lessor
and Lessee, or to which Lessor and Lessee are parties, (d) any bankruptcy,
insolvency, reorganization, composition, readjustment, liquidation, dissolution,
winding up or other proceedings affecting Lessor or any assignee or transferee
of Lessor, or (e) for any other cause whether similar or dissimilar to any of
the foregoing other than a discharge of Lessee from any such obligations as a
matter of law. Lessee hereby specifically waives all rights, arising from any
occurrence whatsoever, which may now or hereafter be conferred upon it by law to
(i) modify, surrender or terminate this Lease or quit or surrender the Leased
Property or any portion thereof, or (ii) entitle Lessee to any abatement,
reduction, suspension or deferment of the Rent or other sums payable by Lessee
hereunder, except as otherwise specifically provided in this Lease. The
obligations of Lessor and Lessee hereunder shall be separate and independent
covenants and agreements and the Rent and all other sums payable by Lessee
hereunder shall continue to be payable in all events unless the obligations to
pay the same shall be terminated pursuant to the express provisions of this
Lease or by termination of this Lease other than by reason of an Event of
Default.

                                   ARTICLE VI

               OWNERSHIP OF LEASED PROPERTY AND PERSONAL PROPERTY

     6.1 OWNERSHIP OF THE LEASED PROPERTY. Lessee acknowledges that the Leased
Property is the property of Lessor (except for the rights under the Air Space
Agreement with respect to which Lessor holds a leasehold interest pursuant to
the Air Space Agreement and except for the rights under the Parking Space Lease
with respect to which Lessor holds a leasehold interest pursuant to the Parking
Space Lease) and that Lessee has only the right to the possession and use of the
Leased Property upon the terms and conditions of this Lease, the Air Space
Agreement and the Parking Space Lease.

     6.2 LESSEE'S PERSONAL PROPERTY. Lessee, at its expense, shall install,
affix, assemble and place on the Leased Property, the Lessee's Personal
Property, which Lessee's Personal Property shall be subject to the security
interests and liens as provided in Section 16.8 of this Lease. Lessee shall not,
without the prior written consent of Lessor (which consent may be withheld in
the event Lessee is in default hereunder) remove any of the Lessee's Personal
Property from the Leased Property. Lessee shall provide and maintain during the
entire Term all such Lessee's Personal Property as shall be necessary in order
to operate the Facility in compliance with all licensure and certification
requirements, in compliance with all applicable Legal Requirements and Insurance
Requirements and otherwise in accordance with customary practice in the industry
for the Primary Intended Use. If removal is authorized by Lessor as provided
herein, all of Lessee's Personal Property not removed by Lessee within seven (7)
days following the expiration or earlier termination of this Lease shall be
considered abandoned by Lessee and may be appropriated, sold, destroyed or
otherwise disposed of by Lessor without first giving notice thereof to Lessee,
without any payment to Lessee and without any obligation to Lessee to account
therefor. Lessee will, at its expense, restore the Leased Property and repair of
all damage to the Leased Property caused by the removal of Lessee's Personal
Property, whether effected by Lessee, Lessor, any Lessee lender, or any Lessor
lender.


                                       14

<PAGE>

                                  ARTICLE VII

                      CONDITION AND USE OF LEASED PROPERTY

     7.1 CONDITION OF THE LEASED PROPERTY. Lessee acknowledges receipt and
delivery of possession of the Leased Property and that Lessee has examined and
otherwise has acquired knowledge of the condition of the Leased Property prior
to the execution and delivery of this Lease and has found the same to be in good
order and repair and satisfactory for its purpose hereunder. Lessee is leasing
the Leased Property "as is" in its present condition. Lessee waives any claim or
action against Lessor in respect of the condition of the Leased Property. Lessee
warrants and represents that to the best of its knowledge (a) the Leased
Property is in compliance with all of the requirements, restrictions and
conditions as set forth in the Permitted Exceptions, and (b) the use of the
Leased Property for the Primary Intended Use will not violate any of the
Permitted Exceptions. LESSOR MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, IN RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS
FITNESS FOR USE, SUITABILITY, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR
PURPOSE OR OTHERWISE, AS TO QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN,
LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY LESSEE.
LESSEE ACKNOWLEDGES THAT THE LEASED PROPERTY HAS BEEN INSPECTED BY LESSEE AND IS
SATISFACTORY TO IT.

     7.2 USE OF THE LEASED PROPERTY.

          (a) Lessee covenants that it will obtain and maintain throughout the
     entire Term all approvals and requirements needed to use and operate the
     Leased Property and the Facility for the Primary Intended Use, as defined
     below, under applicable local, state and federal law, including but not
     limited to all requirements relating to parking (including, without
     limitation, the parking requirements and agreements as set forth in the
     parking certification affidavits and agreements which are a part of the
     Permitted Exceptions), licensure approvals and Medicare and/or a Medicaid
     certifications, provider numbers, certificates of need, governmental
     approvals, and full accreditation from all applicable governmental
     authorities, if any, that are necessary for the operation of the Facility
     as a one hundred fifty-three (153) bed acute care hospital facility.

          (b) Beginning on the Commencement Date and during the entire Term,
     Lessee shall use the Leased Property and the improvements thereon only as a
     one hundred fifty-three (153) bed acute care hospital facility and for such
     other legal ancillary uses as may be necessary in connection with or
     incidental to such uses, subject to any covenants, restrictions and
     easements relating to the Facility (the "Primary Intended Use"). Lessee
     shall not use the Leased Property or any portion thereof for any other use,
     nor change the number or type of beds within the Facility, nor reconfigure
     or rearrange any portion of the Leased Property or the Facility without the
     prior written consent of Lessor, which consent Lessee agrees may be
     withheld in Lessor's sole discretion. No use shall be made or permitted to
     be made of the Leased Property and no acts shall be done which will cause
     the cancellation of any insurance policy covering the Leased Property or
     any part thereof, nor shall Lessee sell or otherwise provide to residents
     or patients therein, or permit to be kept, used or sold in or about the
     Leased Property any article which may be prohibited by law or by the
     standard form of fire insurance policies, any other insurance policies
     required to be carried hereunder, or fire underwriters regulations. Lessee
     shall, at its sole cost, comply with all of the requirements, covenants and
     restrictions pertaining to the Leased Property, including, without
     limitation, all of the Permitted Exceptions, and other requirements of any
     insurance board, association, organization or company necessary for the
     maintenance of the insurance, as herein provided, covering the Leased
     Property and Lessee's Personal Property.

          (c) Lessee covenants and agrees that during the Term it will
     continuously operate the Leased Property only as a provider of healthcare
     services in accordance with the Primary Intended Use and Lessee


                                       15

<PAGE>

     shall maintain its certifications for reimbursement and licensure and all
     accreditations necessary to maintain its Medicare and Medicaid
     certifications.

          (d) Lessee shall not commit or suffer to be committed any waste on the
     Leased Property, or in the Facility, nor shall Lessee cause or permit any
     nuisance thereon.

          (e) Lessee shall neither suffer nor permit the Leased Property or any
     portion thereof, including any Capital Addition whether or not financed by
     Lessor, or Lessee's Personal Property, to be used in such a manner as (i)
     might reasonably tend to impair Lessor's (or Lessee's, as the case may be)
     title thereto or to any portion thereof, or (ii) may reasonably make
     possible a claim or claims of adverse usage or adverse possession by the
     public, as such, or of implied dedication of the Leased Property or any
     portion thereof.

          (f) Lessee agrees that during the entire term of this Lease, Lessor
     shall have the right and option to erect a sign on the Leased Property
     stating that the Leased Property is owned by the Lessor. Such sign shall be
     in a size, and shall be erected in a location, reasonably acceptable to
     Lessor and approved by Lessee, which approval shall not be unreasonably
     withheld, conditioned or delayed.

     7.3 LESSOR TO GRANT EASEMENTS. Lessor will, from time to time so long as no
default, and no event has occurred which with the giving of notice or the
passage of time or both would constitute a default, has occurred and is
continuing under this Lease, at the request of Lessee and at Lessee's cost and
expense, but subject to the approval of Lessor (a) grant easements and other
rights in the nature of easements, (b) release existing easements or other
rights in the nature of easements which are for the benefit of the Leased
Property, (c) dedicate or transfer unimproved portions of the Leased Property
for road, highway or other public purposes, (d) execute petitions to have the
Leased Property annexed to any municipal corporation or utility district, (e)
execute amendments to any covenants and restrictions affecting the Leased
Property and (f) execute and deliver to any person any instrument appropriate to
confirm or effect such grants, releases, dedications and transfers (to the
extent of its interest in the Leased Property), but only upon delivery to Lessor
of an Officer's Certificate stating (and such other information as Lessor may
reasonably require confirming) that such grant, release, dedication, transfer,
petition or amendment is required for and not detrimental to the proper conduct
of the Primary Intended Use on the Leased Property and does not reduce its
value.

                                  ARTICLE VIII

                        LEGAL AND INSURANCE REQUIREMENTS

     8.1 COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS. Subject to Article
XII relating to permitted contests, Lessee, at its expense, will promptly (a)
comply with all Legal Requirements and Insurance Requirements in respect of the
use, operation, maintenance, repair and restoration of the Leased Property,
whether or not compliance therewith shall require structural change in any of
the Leased Improvements or interfere with the use and enjoyment of the Leased
Property, and (b) procure, maintain and comply with all licenses, certificates
of need, Medicare and Medicaid provider agreements, accreditations and other
authorizations required for any use of the Leased Property and Lessee's Personal
Property then being made, and for the proper erection, installation, operation
and maintenance of the Leased Property or any part thereof, including without
limitation, any Capital Additions. Upon Lessor's request, Lessee shall deliver
copies of all such licenses, certificates of need, agreements and other
authorizations. Lessee hereby agrees to indemnify and defend, at Lessee's sole
cost and expense, and hold Lessor, its successors and assigns harmless from and
against, and to reimburse Lessor and its successors and assigns with respect to
any and all claims, demands, actions, causes of action, losses, damages,
liabilities, costs and expenses (including, without limitation, reasonable
attorneys' fees and court costs) of any and every kind or character, known or
unknown, fixed or contingent, asserted against or incurred by Lessor, its
successors and assigns, at any time and from time to time by reason or arising
out of any breach by Lessee of any of the representations and warranties set
forth in this Section 8.1.


                                       16

<PAGE>

     8.2 LEGAL REQUIREMENT COVENANTS. Lessee covenants and agrees that the
Leased Property and Lessee's Personal Property shall not be used for any
unlawful purpose. Lessee shall use its best efforts to have tenants acquire and
maintain all licenses, certificates, permits, provider agreements and other
authorizations and approvals needed to operate the Leased Property and all
equipment and machinery used in or in connection with the Leased Property in its
customary manner for the Primary Intended Use and any other use conducted on the
Leased Property as may be permitted from time to time hereunder. Lessee further
covenants and agrees that Lessee's use of the Leased Property, the use of all
equipment and machinery used in connection with the Leased Property, and the
maintenance, alteration, and operation of the same, and all parts thereof, shall
at all times conform to all applicable local, state and federal laws,
ordinances, rules and regulations.

     8.3 HAZARDOUS MATERIALS. Except for Hazardous Materials generated in the
normal course of business regarding the Primary Intended Use (which Hazardous
Materials shall be handled and disposed of in compliance with all Hazardous
Materials Laws), no Hazardous Materials shall be installed, used, generated,
manufactured, treated, handled, refined, produced, processed, stored or disposed
of, or otherwise present in, on or under the Leased Property. No activity shall
be undertaken on the Leased Property which would cause (i) the Leased Property
to become a treatment, storage or disposal facility of hazardous waste,
infectious waste, biomedical or medical waste, within the meaning of, or
otherwise bring the Leased Property within the ambit of RCRA or any Hazardous
Materials Laws, (ii) a release or threatened release of Hazardous Material from
the Leased Property within the meaning of, or otherwise bring the Leased
Property within the ambit of, CERCLA or SARA or any Hazardous Materials Laws or
(iii) the discharge of Hazardous Material into any watercourse, surface or
subsurface of body of water or wetland, or the discharge into the atmosphere of
any Hazardous Material which would require a permit under any Hazardous
Materials Laws. No activity shall be undertaken with respect to the Leased
Property which would cause a violation or support a claim under RCRA, CERCLA,
SARA or any Hazardous Materials Laws. No investigation, administrative order,
litigation or settlement with respect to any Hazardous Material is, to the best
of the Lessee's knowledge, threatened or in existence with respect to the Leased
Property. No notice has been served on Lessee from any entity, governmental body
or individual claiming any violation of any Hazardous Materials Laws, or
requiring compliance with any Hazardous Materials Laws, or demanding payment or
contribution for environmental damage or injury to natural resources. Lessee has
not obtained and Lessee has no knowledge of any reason Lessee will be required
to obtain any permits, licenses, or similar authorizations to occupy, operate or
use the Improvements or any part of the Leased Property by reason of any
Hazardous Materials Laws. Lessee hereby agrees to indemnify and defend, at its
sole cost and expense, and hold Lessor, its successors and assigns, harmless
from and against and to reimburse Lessor with respect to any and all claims,
demands, actions, causes of action, losses, damages, liabilities, costs and
expenses (including, without limitation, reasonable attorney's fees and court
costs) of any and every kind or character, known or unknown, fixed or
contingent, asserted against or incurred by Lessor at any time and from time to
time by reason or arising out of any breach or violation of any Hazardous
Materials Laws. Lessee shall, at its sole cost, expense, risk and liability,
remove or cause to be removed from the Leased Property all Hazardous Materials
generated in connection with the Primary Intended Use and as found in hospital
and healthcare facilities, including, without limitation, all infectious waste
materials, syringes, needles and any materials contaminated with bodily fluids
of any type, character or description of whatsoever nature in accordance with
all Hazardous Materials Laws. Lessee shall not dispose of any such infectious
waste and Hazardous Materials in any receptacles used for the disposal of normal
refuse.

     8.4 HEALTHCARE LAWS. Lessee warrants and represents that this Lease and all
subleases are, and at all times during the term of this Lease will be, in
compliance with all Healthcare Laws. Lessee agrees to add to all of its third
party agreements relating to the Leased Property, including, without limitation,
all subleases, that in the event it is determined that such agreement and/or
sublease is in violation of the Healthcare Laws, such agreement and/or sublease
shall be renegotiated so that same are in compliance with all Healthcare Laws.
Lessee agrees promptly to notify Lessor in writing of receipt of any notice of
investigation of any alleged Healthcare Law violations. Lessee hereby agrees to
indemnify and defend, at Lessee's sole cost and expense, and hold Lessor, its
successors and assigns harmless from and against and to reimburse Lessor and its
successors and assigns with respect to any and all claims, demands, actions,
causes of action, losses, damages, liabilities, costs and expenses (including,
without limitation, reasonable attorneys' fees and court costs) of any and every
kind or character, known


                                       17

<PAGE>

or unknown, fixed or contingent, asserted against or incurred by Lessor, its
successors and assigns, at any time and from time to time by reason or arising
out of any breach by Lessee of any of the representations and warranties set
forth in this Section 8.4.

     8.5 REPRESENTATIONS AND WARRANTIES. Lessee represents and warrants to
Lessor that as of the date hereof: (i) Lessee is a limited liability company
duly organized and existing under the laws of the State of Delaware and is duly
authorized to enter into, deliver and perform this Lease and the other documents
referred to herein and such agreements constitute the valid and binding
obligations of Lessee, enforceable in accordance with their terms, (ii) neither
the entering into this Lease or the other documents referred to herein nor the
performance by Lessee of its obligations hereunder or under the other documents
referred to herein will violate any provision of law or any agreement,
indenture, note or other instrument binding upon Lessee, (iii) no authority from
or approval by any governmental body, commission or agency or consent of any
third party is required in connection with the making or validity of and the
execution, delivery and performance of this Lease or the other documents
referred to herein, (iv) there are no actions, suits or proceedings pending
against or, to the knowledge of Lessee, threatened against or affecting Lessee
or any of its Affiliates, in any court or before or by any governmental
department, agency or instrumentality, an adverse decision in which could
materially and adversely affect the financial condition, business or operations
of Lessee or the ability of Lessee to perform its obligations under this Lease
or the other documents referred to herein, (v) Lessee and each of its Affiliates
is in compliance in all material respects with all applicable laws, ordinances,
rules, regulations and requirements of governmental authorities, and (vi) Lessee
has obtained and delivered copies thereof to Lessor on the Commencement Date all
certificates of need, Medicare billing numbers, other licenses and agreements
required for the operation of the Facility.

     8.6 SINGLE PURPOSE ENTITY. Except as otherwise set forth on SCHEDULE 8.6,
Lessee represents, warrants, covenants and agrees that Lessee has always been,
is, and shall remain at all times during the term of this Lease, a Single
Purpose Entity created and to remain in good standing for the sole purpose of
leasing and operating the Facility in accordance with the terms of this Lease.
Simultaneously with the execution of this Lease, and as requested by Lessor at
other times during the term of this Lease, Lessee shall provide Lessor evidence
that Lessee is a Single Purpose Entity and is in good standing in the state of
its organization and in the state in which the Leased Property is located.

     8.7 ORGANIZATIONAL DOCUMENTS. Lessee shall not permit or suffer, without
the prior written consent of Lessor an amendment or modification of its
Organizational Documents (as defined below), or the organizational documents of
any constituent entity within the Lessee, which changes Lessee's status as a
single purpose entity, (ii) any dissolution or termination of its existence, or
(iii) change in its state of formation or incorporation or its name. Lessee has,
simultaneously with the execution of this Lease, delivered to Lessor a true and
complete copy of its articles of organization and operating agreement creating
Lessee, and all other documents creating and governing the Lessee (collectively,
the "Organizational Documents"). Lessee warrants and represents that the
Organizational Documents (i) were duly executed and delivered, (ii) are in full
force and effect and binding upon and enforceable in accordance with their
terms, (iii) constitute the entire understanding among the shareholders,
partners and members of Lessee, and (iv) no breach exists under the
Organizational Documents and no act has occurred and no condition exists which,
with the giving of notice or the passage of time or both would constitute a
breach under the Organizational Documents.

                                   ARTICLE IX

                         REPAIRS; RESERVE; RESTRICTIONS

     9.1 MAINTENANCE AND REPAIR.

          (a) Lessee, at its expense, will keep the Leased Property and all
     private roadways, sidewalks and curbs appurtenant thereto (and Lessee's
     Personal Property) in good first class order and repair (whether or not the
     need for such repairs occurs as a result of Lessee's use, any prior use,
     the elements, the age of the


                                       18

<PAGE>

     Leased Property or any portion thereof) and, except as otherwise provided
     in Articles XIV and XV, with reasonable promptness, will make all necessary
     and appropriate repairs thereto of every kind and nature, whether interior
     or exterior, structural or non-structural, ordinary or extraordinary,
     foreseen or unforeseen or arising by reason of a condition existing prior
     to the commencement of the Term of this Lease (concealed or otherwise),
     including, without limitation, all required seismic repairs, replacements
     and upgrades. All repairs shall, to the extent reasonably achievable, be at
     least equivalent in quality to the original work. Lessee will not take or
     omit to take any action the taking or omission of which might materially
     impair the value or the usefulness of the Leased Property or any part
     thereof for the Primary Intended Use. Notwithstanding anything contained
     herein to the contrary, Lessee shall make additions, modifications and
     remodeling to the Leased Property which are not Capital Additions from time
     to time which are necessary for the Primary Intended Use and which permit
     the Lessee to comply fully with its obligations set forth in this Lease,
     provided that any such action will be undertaken expeditiously, in a
     workmanlike manner and will not significantly alter the character or
     purpose or detract from the value or operating efficiency of the Leased
     Property and will not significantly impair the revenue producing capability
     of the Leased Property or adversely affect the ability of the Lessee to
     comply with the provisions of this Lease. Such additions, modifications and
     remodeling shall, without payment by Lessor at any time, be included under
     the terms of this Lease and shall be the property of Lessor. Lessee shall
     notify the Lessor of any and all repairs, improvements, additions,
     modifications and remodeling made to the Leased Property in excess of
     Twenty-Five Thousand and 00/100 Dollars ($25,000.00) and obtain consent
     from Lessor prior to making such repairs, improvements, additions,
     modifications and remodeling.

          (b) Lessor shall not under any circumstances be required to build or
     rebuild any improvements on the Leased Property, or to make any repairs,
     replacements, alterations, restorations, or renewals of any nature or
     description to the Leased Property, whether ordinary or extraordinary,
     structural or non-structural, foreseen or unforeseen, or to make any
     expenditure whatsoever with respect thereto in connection with this Lease,
     or to maintain the Leased Property in any way.

          (c) Nothing contained in this Lease and no action or inaction by
     Lessor shall be construed as (i) constituting the consent or request of
     Lessor, expressed or implied, to any contractor, subcontractor, laborer,
     materialman or vendor to or for the performance of any labor or services or
     the furnishing of any materials or other property for the construction,
     alteration, addition, repair or demolition of or to the Leased Property or
     any part thereof, or (ii) giving Lessee any right, power or permission to
     contract for or permit the performance of any labor or services or the
     furnishing of any materials or other property in such fashion as would
     permit the making of any claim against Lessor in respect thereof or to make
     any agreement that may create, or in any way be the basis for, any right,
     title, interest, lien, claim or other encumbrance upon the estate of Lessor
     in the Leased Property or any portion thereof.

          (d) Unless Lessor shall convey any of the Leased Property to Lessee
     pursuant to the provisions of this Lease, Lessee will, upon the expiration
     or prior termination of the Term, vacate and surrender the Leased Property
     to Lessor in the condition in which the Leased Property was originally
     received from Lessor, except as improved, repaired, rebuilt, restored,
     altered or added to as permitted or required by the provisions of this
     Lease and except for ordinary wear and tear (subject to the obligation of
     Lessee to maintain the Leased Property in good order and repair during the
     entire Term of the Lease), damage caused by the gross negligence or willful
     acts of Lessor and damage or destruction described in Article XIV or
     resulting from a Taking described in Article XV which Lessee is not
     required by the terms of this Lease to repair or restore.

     9.2 RESERVES FOR EXTRAORDINARY REPAIRS. Commencing on the Commencement
Date, with respect to the initial payment, and on or before the last day of each
calendar quarter thereafter, beginning with the quarter ending March 31, 2006,
Lessee shall make quarterly deposits to a reserve (the "Reserve") at a financial
institution of the Lessor's choosing, provided, however, that the first such
deposit on the Commencement Date, shall be prorated based upon a three hundred
sixty (360) day year. Subject to the immediately preceding sentence, each
deposit to be


                                       19

<PAGE>

made pursuant to this Section 9.2 shall be equal to the sum of Two Thousand Five
Hundred and 00/100 Dollars ($2,500.00) per bed per annum. For the period
commencing on the Commencement Date and ending on December 31, 2005, the number
of beds shall be assumed to be one hundred fifty-three (153). Beginning on
January 1, 2006, and on each January 1 thereafter, the number of beds shall be
determined by the actual number of beds placed in service or certified to be
available for use in the Facility, which shall not be reduced without the prior
written consent of Lessor. The account to which such payments are made shall
require the signature of an officer of Lessee and Lessor to make withdrawals.
Beginning on January 1, 2007, and on each January 1 thereafter during the entire
Lease Term, such payment into the Reserve shall be increased by two percent (2%)
per annum. Notwithstanding anything contained herein to the contrary, Lessee
shall pay into the Reserve any amounts needed in excess of such required
payments as provided herein. The amounts in the Reserve, including interest,
shall be used to pay for Extraordinary Repairs on the Facility, or, in the event
Lessee fails to make any required non-Extraordinary Repairs, Lessor may use
funds in the Reserve for that purpose as well, without the necessity of
obtaining the signature of an officer of Lessee. Lessee shall replenish amounts
drawn from the Reserve at the rate of one-twelfth (1/12th) of the total amount
withdrawn per month, until completely replenished. Lessee hereby grants to
Lessor a security interest in all monies deposited into the Reserve and Lessee
shall, within fifteen (15) days from the Commencement Date, execute all
documents necessary for Lessor to perfect its security interest in the Reserve.
Lessor and Lessee agree that the first dollars of all expenditures for
Extraordinary Repairs made in each year during the Term shall be funded from the
Reserve account to the full extent of such account; provided, however, that if
Lessor, in its reasonable discretion, determines at any time that the balance
then remaining in the Reserve account is insufficient to pay in full for the
present and future anticipated Extraordinary Repairs on the Facility, Lessor
shall retain funds in the Reserve account in an amount sufficient to pay in full
for Extraordinary Repairs and Lessee will deposit additional sums into the
account from time to time, upon the written request of Lessor, in amounts equal
to the difference between the then balance in the Reserve account and the cost
to complete the present and future Extraordinary Repairs so that at all times
there is an adequate amount in the Reserve account to pay for such items on a
going forward basis. So long as no default has occurred under any of the terms
hereof, and no event has occurred which with the giving of notice or the passage
of time or both would constitute a default hereunder, any amounts remaining in
the Reserve, after the payment of and the reimbursement for the Extraordinary
Repairs on the Facility, at the expiration of this Lease shall be returned to
Lessee. Lessee consents to Lessor's pledge of the Reserve to any Facility
Lender, subject to Lessor's obligation to return any remaining amounts in the
Reserve to Lessee pursuant to this Section 9.2.

     9.3 ENCROACHMENTS; RESTRICTIONS. If any of the Leased Improvements shall,
at any time, encroach upon any property, street or right-of-way adjacent to the
Leased Property, or shall violate the agreements or conditions contained in any
federal, state or local law, restrictive covenant or other agreement affecting
the Leased Property, or any part thereof, or shall impair the rights of others
under any easement or right-of-way to which the Leased Property is subject, then
promptly upon the request of Lessor, Lessee shall, at its expense, subject to
its right to contest the existence of any encroachment, violation or impairment,
(a) obtain valid and effective waivers or settlements of all claims, liabilities
and damages resulting from each such encroachment, violation or impairment,
whether the same shall affect Lessor or Lessee or (b) make such changes in the
Leased Improvements, and take such other actions, as Lessor in the good faith
exercise of its judgment deems reasonably practicable, to remove such
encroachment, or to end such violation or impairment, including, if necessary,
the alteration of any of the Leased Improvements, and in any event take all such
actions as may be necessary in order to be able to continue the operation of the
Facility without such violation, encroachment or impairment. Any such alteration
shall be made in conformity with the applicable requirements of Article X.
Lessee's obligations under this Section 9.3 shall be in addition to and shall in
no way discharge or diminish any obligation of any insurer under any policy of
title or other insurance and Lessee shall be entitled to a credit for any sums
paid by Lessee and recovered by Lessor under any such policy of title or other
insurance.


                                       20

<PAGE>

                                    ARTICLE X

                                CAPITAL ADDITIONS

     10.1 CONSTRUCTION OF CAPITAL ADDITIONS TO THE LEASED PROPERTY.

          (a) If no Event of Default shall have occurred or be continuing under
     this Lease and the Tenant Leases, Lessee shall have the right, upon and
     subject to the terms and conditions set forth below, to construct or
     install Capital Additions on the Leased Property without the prior written
     consent of Lessor, provided, however, except as expressly provided in
     Section 10.2(d) hereof, Lessee shall not be permitted to create any
     Encumbrance on the Leased Property, in connection with such Capital
     Addition. Prior to commencing construction of any Capital Addition, Lessee
     shall, at Lessee's sole cost and expense (i) submit to Lessor in writing a
     proposal setting forth in reasonable detail any proposed Capital Addition,
     (ii) submit to Lessor such plans and specifications, certificates of need
     and other approvals, permits, licenses, contracts and other information
     concerning the proposed Capital Addition as Lessor may reasonably request,
     and (iii) obtain all necessary certificates of need, state licensure
     surveys and all regulatory approvals of architectural plans. Without
     limiting the generality of the foregoing, such proposal shall indicate the
     approximate projected cost of constructing such Capital Addition, and the
     use or uses to which it will be put.

          (b) Prior to commencing construction of any Capital Addition, Lessee
     shall first request Lessor to provide funds to pay for such Capital
     Addition in accordance with the provisions of Section 10.3. If Lessor
     declines or is unable to provide such financing on terms acceptable to
     Lessee, the provisions of Section 10.2 shall apply. Notwithstanding any
     other provision of this Article X to the contrary, no Capital Additions
     shall be made without the consent of Lessor, which consent shall not be
     unreasonably withheld or delayed, if the Capital Addition Cost of such
     proposed Capital Addition, when aggregated with the costs of all Capital
     Additions made by Lessee, would exceed twenty-five percent (25%) of the
     then Fair Market Value of the Leased Property or would diminish the value
     of the Leased Property. Furthermore, no Capital Addition shall be made
     which would tie in or connect the Leased Property and/or any Leased
     Improvements on the Leased Property with any other improvements on property
     adjacent to the Leased Property (and not part of the Land covered by this
     Lease) including, without limitation, tie-ins of buildings or other
     structures or utilities, unless Lessee shall have obtained the prior
     written approval of Lessor, which approval in Lessor's sole discretion may
     be granted or withheld. All proposed Capital Additions shall be
     architecturally integrated and consistent with the Leased Property.

     10.2 CAPITAL ADDITIONS FINANCED BY LESSEE. If Lessee provides or arranges
to finance any Capital Addition, this Lease shall be and hereby is amended to
provide as follows:

          (a) The above referenced proportion of the Fair Market Added Value of
     Capital Additions paid for by Lessee to the Fair Market Value of the entire
     Leased Property expressed as a percentage is referred to herein as the
     "Added Value Additional". The Added Value Additional determined as provided
     above for each Capital Addition financed or paid for by Lessee shall remain
     in effect until any subsequent Capital Addition.

          (b) There shall be no adjustment in the Base Rent by reason of any
     such Capital Addition.

          (c) Upon the expiration or earlier termination of this Lease, except
     by reason of the default by Lessee hereunder, Lessor shall, if Lessee does
     not purchase the Leased Property as provided herein, compensate Lessee for
     all Capital Additions paid for or financed by Lessee in any of the
     following ways, determined in the sole discretion of Lessor:


                                       21

<PAGE>

               (i) By purchasing all Capital Additions paid for by Lessee from
          Lessee for cash in the amount of the Fair Market Added Value of all
          such Capital Additions paid for or financed by Lessee; or

               (ii) By purchasing such Capital Additions from Lessee by
          delivering to Lessee Lessor's purchase money promissory note in the
          amount of said Fair Market Added Value, due and payable not later than
          eighteen (18) months after the date of expiration or other termination
          of this Lease, bearing interest at the test rate applicable under
          Section 1272 of the Code or any successor section thereto ("Test
          Rate") or, if no such Test Rate exists, at the Prime Rate, which
          interest shall be payable monthly, and which note shall be secured by
          a mortgage on the Leased Property, subject to all mortgages and
          encumbrances on the Leased Property at the time of such purchase; or

               (iii) Such other arrangement regarding such compensation as shall
          be mutually acceptable to Lessor and Lessee.

          (d) Lessor and Lessee agree that Lessee's lender for Capital Additions
     shall have the right to secure its loan by a mortgage upon the Leased
     Property provided such mortgage (i) shall not exceed the cost of the
     Capital Additions being made with the proceeds of such loan, (ii) shall be
     subordinate to Lessor's acquisition cost and any Capital Additions paid for
     by the Lessor of the Leased Property, (iii) shall be subordinate to any
     mortgage or encumbrance now existing or hereinafter created, including,
     without limitation, Facility Instruments, (iv) the term of the loan shall
     not extend beyond the term of this Lease, (v) such lender executes all
     subordination and other documents and certificates reasonably required by
     the Facility Lenders, and (vi) shall be limited solely to Lessee's interest
     in the Leased Property.

     10.3 CAPITAL ADDITIONS FINANCED BY LESSOR.

          (a) Lessee shall request that Lessor provide or arrange financing for
     a Capital Addition by providing to Lessor such information about the
     Capital Addition as Lessor may request (a "Request"), including without
     limitation, all information referred to in Section 10.1 above. Lessor may,
     but shall be under no obligation to, obtain the funds necessary to meet the
     Request. Within thirty (30) days of receipt of a Request, Lessor shall
     notify Lessee as to whether it will finance the proposed Capital Addition
     and, if so, the terms and conditions upon which it would do so, including
     the terms of any amendment to this Lease. In no event shall the portion of
     the projected Capital Addition Cost comprised of land, if any, materials,
     labor charges and fixtures be less than ninety percent (90%) of the total
     amount of such cost. Lessee may withdraw its Request by notice to Lessor at
     any time before or after receipt of Lessor's terms and conditions.

          (b) If Lessor agrees to finance the proposed Capital Addition, Lessee
     shall provide Lessor with the following prior to any advance of funds:

               (i) all customary or other required loan documentation, if the
          Capital Addition is to be financed through the incurrence of debt;

               (ii) any information, certificates of need, regulatory approvals
          of architectural plans and other certificates, licenses, permits or
          documents requested by either Lessor or any lender with whom Lessor
          has agreed or may agree to provide financing which are necessary to
          confirm that Lessee will be able to use the Capital Addition upon
          completion thereof in accordance with the Primary Intended Use,
          including all required federal, state or local government licenses and
          approvals;


                                       22

<PAGE>

               (iii) an Officer's Certificate and, if requested, a certificate
          from Lessee's architect, setting forth in reasonable detail the
          projected (or actual, if available) cost of the proposed Capital
          Addition;

               (iv) an amendment to this Lease, duly executed and acknowledged,
          in form and substance satisfactory to Lessor (the "Lease Amendment"),
          and containing such provisions as may be necessary or appropriate,
          including without limitation, any appropriate changes in the legal
          description of the Land, the Fair Market Value and the Rent, which
          shall be increased to take into account an adjustment to the Purchase
          Price in an amount equal to the equity contributed by Lessor to
          finance the Capital Addition or, in the case of debt financing, the
          principal and interest on the debt incurred by Lessor to finance the
          Capital Addition;

               (v) a grant deed conveying title to Lessor to any land acquired
          for the purpose of constructing the Capital Addition, free and clear
          of any liens or encumbrances except those approved by Lessor and, both
          prior to and following completion of the Capital Addition, an as-built
          survey thereof satisfactory to Lessor;

               (vi) endorsements to any outstanding policy of title insurance
          covering the Leased Property and any additional land referred to in
          subparagraph (v) above, or a supplemental policy of title insurance
          covering the Leased Property and any additional land referred to in
          subparagraph (v) above, satisfactory in form and substance to Lessor
          (A) updating the same without any additional exceptions, except as may
          be permitted by Lessor; and (B) increasing the coverage thereof by an
          amount equal to the Fair Market Value of the Capital Addition (except
          to the extent covered by the owner's policy of title insurance
          referred to in subparagraph

               (vii) below); (vii) if required by Lessor, (A) an owner's policy
          of title insurance insuring fee simple title to any land conveyed to
          Lessor pursuant to subparagraph (v), free and clear of all liens and
          encumbrances except those approved by Lessor and (B) a lender's policy
          of title insurance satisfactory in form and substance to Lessor and
          the Lending Institution advancing any portion of the Capital Addition
          Cost;

               (viii) if required by Lessor, prior to commencing the Capital
          Addition, an M.A.I. appraisal of the Leased Property indicating that
          the value of the Leased Property upon completion of the Capital
          Addition will exceed the Fair Market Value of the Leased Property
          prior thereto by an amount not less than one hundred percent (100%) of
          the Capital Addition Costs; and

               (ix) such other certificates (including, but not limited to,
          endorsements increasing the insurance coverage, if any, at the time
          required by Section 13.1), documents, contracts, opinions of counsel,
          appraisals, surveys, certified copies of duly adopted resolutions of
          the governing body of Lessee authorizing the execution and delivery of
          the Lease Amendment and any other instruments as may be reasonably
          required by Lessor and any Lending Institution advancing or
          reimbursing Lessee for any portion of the Capital Addition Cost.

          (c) Lessor and Lessee agree that Lessor shall have the right, in the
     exercise of its reasonable discretion and after consulting with Lessee, to
     designate the general contractor, developer, architect, construction
     company, engineer and other parties which will participate in the
     development of the Capital Addition. Lessor and Lessee further agree that
     Lessor shall control the preparation and negotiation of the definitive
     agreements with such parties and Lessor will give Lessee an opportunity to
     review such definitive agreements prior to their execution.

          (d) Upon making a Request to finance a Capital Addition, whether or
     not such financing is actually consummated, Lessee shall pay or agree to
     pay, upon demand, all reasonable costs and expenses


                                       23

<PAGE>

     of Lessor and any Lending Institution which has committed to finance such
     Capital Addition which have been paid or incurred by them in connection
     with the financing of the Capital Addition, including, but not limited to,
     (i) the fees and expenses of their respective counsel, (ii) all printing
     expenses, (iii) the amount of any filing, registration and recording taxes
     and fees, (iv) documentary stamp taxes, if any, (v) title insurance
     charges, appraisal fees, if any, rating agency fees, if any, and (vi)
     commitment fees, if any, and (vii) costs of obtaining regulatory and
     governmental approvals, including but not limited to any required
     certificates of need, for the construction, operation, use or occupancy of
     the Capital Addition.

          (e) Lessor and Lessee acknowledge that, in order for the Leased
     Property to comply with State of California laws and regulations governing
     seismic structural integrity requirements (the "Applicable Seismic Laws"),
     certain renovations and upgrades to the Land and the Facility must be made
     prior to the effective date of such Applicable Seismic Laws requiring such
     upgrades, the costs of which are expected to be approximately Seven Million
     Two Hundred Thousand ($7,200,000.00) (the "Seismic Upgrades"). Subject to
     the terms and conditions set forth in this Section 10.3, Lessee agrees to
     renovate and upgrade the Leased Property as necessary to comply with the
     Applicable Seismic Laws and Lessor agrees to provide the funding for the
     same as a Capital Addition under this Section 10.3, provided (i) each
     Seismic Upgrade is completed at least eighteen (18) months prior to the
     effective date of the Applicable Seismic Law requiring such an upgrade, and
     (ii) after taking into account the incurrence of such costs, EBITDAR shall
     continue to equal or exceed two hundred twenty-five percent (225%) of Lease
     Payments (the "Upgrade EBITDAR Covenant"), it being understood and agreed
     that, to the extent that the Upgrade EBITDAR Covenant is not satisfied,
     Lessee shall fund the costs of the Seismic Upgrades as a Capital Addition
     under Section 10.2 hereof to the extent necessary to remain in compliance
     with the Upgrade EBITDAR Covenant.

          (f) Lessor and Lessee acknowledge that Lessor has agreed to provide
     funding up to the Expansion Amount for certain improvements and expansions
     to the Facility (the "Expansion"), and the parties agree that such
     Expansion shall be funded as a Capital Addition pursuant to and subject to
     the provisions of this Section 10.3. The parties further agree to use
     commercially reasonable efforts to enter into an expansion agreement, as
     soon as practicable following the Commencement Date, but in no event later
     than fifteen (15) business days following the Commencement Date, regarding
     the terms and the timing of such Expansion. Upon execution of a development
     agreement relating to the Expansion, as contemplated by the expansion
     agreement, Lessee shall pay Lessor a commitment fee equal to One-Half of
     One Percent (0.5%) of the Expansion Amount.

     10.4 SALVAGE. All materials which are scrapped or removed in connection
with the making of either Capital Additions permitted by Section 10.1 or repairs
required by Article IX shall be or become the property of Lessor.

                                   ARTICLE XI

                                      LIENS

     Subject to the provisions of Article XII relating to permitted contests,
Lessee will not directly or indirectly create or allow to remain and will
promptly discharge at its expense any lien, encumbrance, attachment, title
retention agreement or claim upon the Leased Property or any attachment, levy,
claim or encumbrance in respect of the Rent, not including, however, (a) this
Lease, (b) the matters, if any, set forth in EXHIBIT B, (c) restrictions, liens
and other encumbrances which are consented to in writing by Lessor, or any
easements granted pursuant to the provisions of Section 7.3 of this Lease, (d)
liens for those taxes of Lessor which Lessee is not required to pay hereunder,
(e) liens for Impositions or for sums resulting from noncompliance with Legal
Requirements so long as (1) the same are not yet payable or are payable without
the addition of any fine or penalty or (2) such liens are in the process of
being contested as permitted by Article XII, (f) liens of mechanics, laborers,
materialmen, suppliers or vendors for sums either disputed or not yet due,
provided that (1) the payment of such sums shall not be postponed for more than
sixty (60) days after the completion of the action giving rise to such lien and
such reserve or other


                                       24

<PAGE>

appropriate provisions as shall be required by law or generally accepted
accounting principles shall have been made therefor or (2) any such liens are in
the process of being contested as permitted by Article XII, and (g) any liens
which are the responsibility of Lessor pursuant to the provisions of Article
XXXVII of this Lease. Unless otherwise expressly provided herein, Lessee shall
not mortgage or grant any interest or security interest in, or otherwise assign,
any part of Lessee's rights and interests in this Lease, the Leased Property,
Lessee's Personal Property, or any permits, licenses, certificates of need (if
any) or any other approvals required to operate the Leased Property during the
Term without the prior written consent of Lessor, which may be withheld at
Lessor's sole discretion.

                                   ARTICLE XII

                               PERMITTED CONTESTS

     Lessee, on its own or on Lessor's behalf (or in Lessor's name), but at
Lessee's expense, after two (2) business days' prior written notice to Lessor,
may contest, by appropriate legal proceedings conducted in good faith and with
due diligence, the amount, validity or application, in whole or in part, of any
Imposition, Legal Requirement, Insurance Requirement, lien, attachment, levy,
encumbrance, charge or claim not otherwise permitted by Article XI, provided
that (a) in the case of an unpaid Imposition, lien, attachment, levy,
encumbrance, charge or claim, the commencement and continuation of such
proceedings shall suspend the collection thereof from Lessor and from the Leased
Property, (b) neither the Leased Property nor any Rent therefrom nor any part
thereof or interest therein would be in any immediate danger of being sold,
forfeited, attached or lost, (c) in the case of a Legal Requirement, Lessor
would not be in any immediate danger of civil or criminal liability for failure
to comply therewith pending the outcome of such proceedings, (d) in the event
that any such contest shall involve a sum of money or potential loss in excess
of Fifty Thousand Dollars ($50,000), then, in any such event, (i) provided the
Consolidated Net Worth of Lessee and/or Guarantors is then in excess of Fifty
Million Dollars ($50,000,000), Lessee shall deliver to Lessor an Officer's
Certificate to the effect set forth in clauses (a), (b) and (c), to the extent
applicable, or (ii) in the event the Consolidated Net Worth of Lessee and/or
Guarantors is not then in excess of Fifty Million Dollars ($50,000,000), then
Lessee shall deliver to Lessor and its counsel an opinion of Lessee's counsel to
the effect set forth in clauses (a), (b) and (c), to the extent applicable, (e)
in the case of a Legal Requirement and/or an Imposition, lien, encumbrance or
charge, Lessee shall give such reasonable security as may be demanded by Lessor
to insure ultimate payment of the same and to prevent any sale or forfeiture of
the affected portion of the Leased Property or the Rent by reason of such
non-payment or non-compliance; provided, however, the provisions of this Article
XII shall not be construed to permit Lessee to contest the payment of Rent
(except as to contests concerning the method of computation or the basis of levy
of any Imposition or the basis for the assertion of any other claim) or any
other sums payable by Lessee to Lessor hereunder, (f) in the case of an
Insurance Requirement, the coverage required by Article XIII shall be
maintained, and (g) if such contest be finally resolved against Lessor or
Lessee, Lessee shall, as Additional Charges due hereunder, promptly pay the
amount required to be paid, together with all interest and penalties accrued
thereon, or comply with the applicable Legal Requirement or Insurance
Requirement. Lessor, at Lessee's expense, shall execute and deliver to Lessee
such authorizations and other documents as may reasonably be required in any
such contest and, if reasonably requested by Lessee or if Lessor so desires,
Lessor shall join as a party therein. Lessee shall indemnify and save Lessor
harmless against any liability, cost or expense of any kind that may be imposed
upon Lessor in connection with any such contest and any loss resulting
therefrom.

                                  ARTICLE XIII

                                    INSURANCE

     13.1 GENERAL INSURANCE REQUIREMENTS. During the Term of this Lease, Lessee
shall at all times keep the Leased Property and all property located in or on
the Leased Property, including Lessee's Personal Property, insured against loss
or damage from such causes as are customarily insured against, by prudent owners
of similar facilities. Without limiting the generality of the foregoing, Lessee
shall obtain and maintain in effect throughout the Lease Term, the kinds and
amounts of insurance deemed necessary by the Lessor and as described below.
After


                                       25

<PAGE>

prior written notice to Lessee, Lessor may, at Lessor's option, obtain the
insurance coverages required from Lessee herein (excluding coverages for
worker's compensation and professional liability) provided that (i) the
insurance coverages obtained by Lessee may be terminated without penalty or cost
to Lessee, (ii) the costs of such coverages obtained by Lessor collectively do
not exceed the costs of the insurance obtained by Lessee and (iii) the coverages
obtained by Lessor are comparable to that obtained or to be obtained by Lessee
hereunder. In the event Lessor obtains such insurance coverages, Lessee shall
reimburse Lessor for the costs of such coverages immediately upon request by
Lessor. The insurance shall be written by insurance companies (i) acceptable to
the Lessor, (ii) that are rated at least an "A-VII" or better by Best's
Insurance Guide and Key Ratings and a claim payment rating by Standard & Poor's
Corporation of A or better, and (iii) authorized, licensed and qualified to do
insurance business in the state in which the Leased Property is located.
Notwithstanding the foregoing or any other provision of this Article XIII,
Lessor acknowledges and agrees that the insurance coverages required under
subparagraphs (d), (e), (h) and (g) for professional and general liability
umbrella coverage of this Section 13.1 are being handled through a captive
insurance company, the identity of which has been disclosed to the Lessee and
Lessor. The aggregate amount of coverage by a single company must not exceed
five percent (5%) of the insurance company's policyholders' surplus. The
policies must name Lessor (and any other entities as Lessor may deem necessary)
as an additional insured and losses shall be payable to Lessor and/or Lessee as
provided in Article XIV. Each insurance policy required hereunder must (i)
provide primary insurance without right of contribution from any other insurance
carried by Lessor, (ii) contain an express waiver by the insurer of any right of
subrogation, setoff or counterclaim against any insured party thereunder
including Lessor, (iii) permit Lessor to pay premiums at Lessor's discretion,
and (iv) as respects any third party liability claim brought against Lessor,
obligate the insurer to defend Lessor as an additional insured thereunder. In
addition, the policies shall name as an additional insured by way of a standard
form of mortgagee's loss payable endorsement. Any loss adjustment shall require
the written consent of Lessor and each affected Facility Lender(s). Evidence of
insurance and/or Impositions shall be deposited with Lessor and, if requested,
with any Facility Lender(s). If any provision of any Facility Instrument
requires deposits of insurance to be made with such Facility Lender, Lessee
shall either pay to Lessor monthly the amounts required and Lessor shall
transfer such amounts to such Facility Lender or, pursuant to written direction
by Lessor, Lessee shall make such deposits directly with such Facility Lender.
The policies on the Leased Property, including the Leased Improvements, the
Fixtures and Lessee's Personal Property, shall insure against the following
risks:

          (a) All Risks or Special Form Property insurance against loss or
     damage to the building and improvements, including but not limited to,
     perils of fire, lightning, water, wind, theft, vandalism and malicious
     mischief, plate glass breakage, and perils typically provided under an
     Extended Coverage Endorsement and other forms of broadened risk perils, and
     insured on a "replacement cost" value basis to the extent of the full
     replacement value of the Leased Property. The policy shall include coverage
     for subsidence. The deductible amount thereunder shall be borne by the
     Lessee in the event of a loss and the deductible must not exceed Ten
     Thousand and 00/100 Dollars ($10,000.00) per occurrence. Further, in the
     event of a loss, Lessee shall abide by all provisions of the insurance
     contract, including proper and timely notice of the loss to the insurer,
     and Lessee further agrees that it will notify the Lessor of any loss in the
     amount of Twenty-Five Thousand and 00/100 Dollars ($25,000.00) or greater
     and that no claim at or in excess of Twenty-Five Thousand and 00/100
     Dollars ($25,000.00) shall be settled without the prior written consent of
     Lessor, which consent shall not be unreasonably withheld or delayed.

          (b) Flood and earthquake insurance shall be required only in the event
     that the Leased Property is located in a flood plain or earthquake zone.
     Such insurance to be in an amount equal to the Full Replacement Cost value
     of the Facility, subject to no more than a Twenty-Five Thousand Dollars
     ($25,000) per occurrence deductible and such policy shall include coverage
     for subsidence.

          (c) Insurance against loss of earnings in an amount sufficient to
     cover not less than twelve (12) months' lost earnings and written in an
     "all risks" form, either as an endorsement to the insurance required under
     subparagraph (a) above, or under a separate policy.


                                       26

<PAGE>

          (d) Worker's compensation insurance covering all employees in amounts
     that are customary for the Lessee's industry.

          (e) Commercial General Liability in a primary amount of at least Three
     Million and 00/100 Dollars ($3,000,000.00) per occurrence, bodily injury
     for injury or death of any one person and One Hundred Thousand and 00/100
     Dollars ($100,000.00) for Property Damage for damage to or loss of property
     of others, subject to a Three Million and 00/100 Dollars ($3,000,000.00)
     annual aggregate policy limit for all bodily injury and property damage
     claims, occurring on or about the Leased Property or in any way related to
     the Leased Property, including but not limited to, any swimming pools or
     other rehabilitation and recreational facilities or areas that are located
     on the Leased Property otherwise related to the Leased Property. Such
     policy shall include coverages of a Broad Form nature, including, but not
     limited to, Explosion, Collapse and Underground (XCU), Products Liability,
     Completed Operations, Broad Form Contractual Liability, Broad Form Property
     Damage, Personal Injury, Incidental Malpractice Liability, and Host Liquor
     Liability.

          (f) Automobile and vehicle liability insurance coverage for all owned,
     non-owned, leased or hired automobiles and vehicles in a primary limit
     amount of One Million and 00/100 Dollars ($1,000,000.00) per occurrence for
     bodily injury; One Hundred Thousand and 00/100 Dollars ($100,000.00) per
     occurrence for property damage; subject to an annual aggregate policy limit
     of One Million and 00/100 Dollars ($1,000,000.00).

          (g) Umbrella liability insurance in the minimum amount of Seven
     Million and 00/100 Dollars ($7,000,000.00) for each occurrence and
     aggregate combined single limit for all liability, with a Ten Thousand and
     00/100 Dollar ($10,000.00) self-insured retention (Fifty Thousand and
     00/100 Dollar ($50,000.00) for professional liability) for exposure not
     covered in underlying primary policies. The umbrella liability policy shall
     name in its underlying schedule the policies of professional liability,
     commercial general liability, garage keepers liability, automobile/vehicle
     liability and employer's liability under the workers compensation policy.

          (h) Professional liability insurance for any physician employed or
     other employee or agent of the Lessee providing services at the Leased
     Property in an amount not less than Three Million and 00/100 Dollars
     ($3,000,000.00) per individual claim and Three Million and 00/100 Dollars
     ($3,000,000.00) annual aggregate, subject to a deductible of no more than
     Fifty Thousand and 00/100 ($50,000.00) per individual claim.

          (i) A commercial blanket bond covering all employees of the Lessee,
     including its officers and the individual owners of the insured business
     entity, whether a joint-venture, partnership, proprietorship or
     incorporated entity, against loss as a result of their dishonesty. Policy
     limit shall be in an amount of at least One Million and 00/100 Dollars
     ($1,000,000.00) subject to a deductible of no more than Ten Thousand and
     00/100 Dollars ($10,000.00) per occurrence.

     The term "Full Replacement Cost" as used herein, shall mean the actual
     replacement cost thereof from time to time, including increased cost of
     construction endorsement, less exclusions provided in the normal fire
     insurance policy. In the event either Lessor or Lessee believes that the
     Full Replacement Cost has increased or decreased at any time during the
     Term, it shall have the right to have such Full Replacement Cost
     re-determined by the fire insurance company which is then providing the
     largest amount of fire insurance carried on the Leased Property,
     hereinafter referred to as the "impartial appraiser". The party desiring to
     have the Full Replacement Cost so re-determined shall forthwith, on receipt
     of such determination by such impartial appraiser, give written notice
     thereof to the other party hereto. The determination of such impartial
     appraiser shall be final and binding on the parties hereto, and Lessee
     shall forthwith increase, or may decrease, the amount of the insurance
     carried pursuant to this Article, as the case


                                       27

<PAGE>

     may be, to the amount so determined by the impartial appraiser. Lessee
     shall pay the fee, if any, of the impartial appraiser.

     13.2 ADDITIONAL INSURANCE. In addition to the insurance described above,
Lessee shall maintain such additional insurance, including, without limitation,
adequate loss of rents insurance with respect to casualty or condemnation events
to the extent the coverage set forth in Section 3.1(c) is not adequate, as may
be required from time to time by any Facility Lender and shall further at all
times maintain adequate worker's compensation insurance coverage for all persons
employed by Lessee on the Leased Property, in accordance with the requirements
of applicable local, state and federal law.

     13.3 WAIVER OF SUBROGATION. All insurance policies to be obtained by Lessee
as required hereunder, including, without limitation, insurance policies
covering the Leased Property, the Fixtures, the Facility, and/or Lessee's
Personal Property, including without limitation, contents, fire and casualty
insurance, shall expressly waive any right of subrogation on the part of the
insurer against the Lessor. Lessee shall obtain insurance policies which will
include such a waiver clause or endorsement regardless of whether same is
obtainable without extra cost, and in the event of such an extra charge Lessee
shall pay the same.

     13.4 FORM OF INSURANCE. All of the policies of insurance referred to in
this Section shall be written in form satisfactory to Lessor and by insurance
companies satisfactory to Lessor. Lessee shall pay all of the premiums therefor,
and shall deliver such original policies, or in the case of a blanket policy, a
copy of the original policy certified in writing by a duly authorized agent for
the insurance company as a "true and certified" copy of the policy, to the
Lessor effective with the Commencement Date and furnished annually thereafter
(and, with respect to any renewal policy, at least fifteen (15) days prior to
the expiration of the existing policy) and in the event of the failure of Lessee
either to obtain such insurance in the names herein called for or to pay the
premiums therefor, or to deliver such policies or certified copies of such
policies (if allowed hereunder) to Lessor at the times required, Lessor shall be
entitled, but shall have no obligation, to obtain such insurance and pay the
premiums therefor, which premiums shall be repayable to Lessor upon written
demand therefor, and failure to repay the same shall constitute an Event of
Default within the meaning of Section 16.1(c). Each insurer mentioned in this
Section shall agree, by endorsement on the policy or policies issued by it, or
by independent instrument furnished to Lessor, that it will give to Lessor sixty
(60) days' prior written notice (at Lessor's notice address as specified in this
Lease (the "Lessor's Notice Address")) before the policy or policies in question
shall be altered, allowed to expire or canceled. The parties hereto agree that
all insurance policies, endorsements and certificates which provide that the
insurer will "endeavor to" give notice before same may be altered, allowed to
expire or canceled will not be acceptable to Lessor. Notwithstanding anything
contained herein to the contrary, all policies of insurance required to be
obtained by the Lessee hereunder shall provide (i) that such policies will not
lapse, terminate, be canceled, or be amended or modified to reduce limits or
coverage terms unless and until Lessor has received not less than sixty (60)
days' prior written notice at the Lessor's Notice Address, with a simultaneous
copy to MPT Operating Partnership, LP, Attention: Its President, 1000 Urban
Center Drive, Suite 501, Birmingham, Alabama 35242, and (ii) that in the event
of cancellation due to non-payment of premium, the insurer will provide not less
than ten (10) days' prior written notice to the Lessor at the Lessor's Notice
Address, with a simultaneous copy to MPT Operating Partnership, LP, Attention:
Its President, 1000 Urban Center Drive, Suite 501, Birmingham, Alabama 35242.

     13.5 INCREASE IN LIMITS. In the event that Lessor shall at any time in its
reasonable discretion deem the limits of the personal injury, property damage or
general public liability insurance then carried to be insufficient, the parties
shall endeavor to agree on the proper and reasonable limits for such insurance
to be carried and such insurance shall thereafter be carried with the limits
thus agreed on until further change pursuant to the provisions of this Section.
If the parties shall be unable to agree thereon, the proper and reasonable
limits for such insurance to be carried shall be determined by an impartial
third party selected by the parties. Nothing herein shall permit the amount of
insurance to be reduced below the amount or amounts required by any of the
Facility Instruments.


                                       28

<PAGE>

     13.6 BLANKET POLICY. Notwithstanding anything to the contrary contained in
this Section, Lessee's obligations to carry the insurance provided for herein
may be brought within the coverage of a so-called blanket policy or policies of
insurance carried and maintained by Lessee provided that

          (a) Any such blanket policy or policies are acceptable to and have
     been approved by the Lessor;

          (b) Any such blanket policy or policies shall not be changed, altered
     or modified without the prior written consent of the Lessor; and

          (c) Any such blanket policy or policies shall otherwise satisfy the
     insurance requirements of this Article XIII (including the requirement of
     thirty (30) days' written notice before the expiration or cancellation of
     such policies as required by Section 13.4 hereof) and shall provide for
     deductibles in amounts acceptable to Lessor.

     13.7 NO SEPARATE INSURANCE. Lessee shall not, on Lessee's own initiative or
pursuant to the request or requirement of any third party, take out separate
insurance concurrent in form or contributing in the event of loss with that
required in this Article to be furnished by, or which may reasonably be required
to be furnished by, Lessee, or increase the amounts of any then existing
insurance by securing an additional policy or additional policies, unless all
parties having an insurable interest in the subject matter of the insurance,
including in all cases Lessor and all Facility Lenders, are included therein as
additional insureds and the loss is payable under said insurance in the same
manner as losses are required to be payable under this Lease. Lessee shall
immediately notify Lessor of the taking out of any such separate insurance or of
the increasing of any of the amounts of the then existing insurance by securing
an additional policy or additional policies.

                                   ARTICLE XIV

                                FIRE AND CASUALTY

     14.1 INSURANCE PROCEEDS. All proceeds payable by reason of any loss or
damage to the Leased Property, or any portion thereof, and insured under any
policy of insurance required by Article XIII of this Lease shall be paid to
Lessor and held by Lessor in trust (subject to the provisions of Section 14.7)
and shall be made available for reconstruction or repair, as the case may be, of
any damage to or destruction of the Leased Property, or any portion thereof, and
shall be paid out by Lessor from time to time for the reasonable cost of such
reconstruction or repair. Any excess proceeds of insurance remaining after the
completion of the restoration or reconstruction of the Leased Property (or in
the event neither Lessor nor Lessee is required or elects to repair and restore,
all such insurance proceeds) shall be retained by Lessor free and clear upon
completion of any such repair and restoration except as otherwise specifically
provided below in this Article XIV. All salvage resulting from any risk covered
by insurance shall belong to Lessor except that any salvage relating to Capital
Additions paid for by Lessee or to Lessee's Personal Property shall belong to
Lessee.

     14.2 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION COVERED BY
INSURANCE.

          (a) Except as provided in Section 14.7, if during the Term, the Leased
     Property is totally or partially destroyed from a risk covered by the
     insurance described in Article XIII and the Facility thereby is rendered
     Unsuitable for its Primary Intended Use, Lessee shall have the option, by
     giving written notice to Lessor within sixty (60) days following the date
     of such destruction, to (i) restore the Facility to substantially the same
     condition as existed immediately before the damage or destruction, or (ii)
     so long as Lessee is not in monetary or payment default of any kind, and no
     event has occurred which with the giving of notice or the passage of time,
     or both, would constitute such a default, under this Lease and the Tenant
     Leases, purchase the Leased Property (including Lessor's interests and
     rights under the Air Space Agreement and the Parking Space Lease) from
     Lessor for a purchase price equal to the Option Price as defined in Section
     35.1 (less the amount of any insurance proceeds held by Lessor), or (iii)
     so long as the


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<PAGE>

     damage or destruction was not caused by the negligence of Lessee, its
     agents, servants, employees or contractors, terminate this Lease and, in
     this event, Lessor shall be entitled to retain the insurance proceeds, and
     Lessee shall pay to Lessor on demand, the amount of any deductible or
     uninsured loss arising in connection therewith. In the event Lessee
     purchases the Leased Property pursuant to this Section 14.2(a), the terms
     set forth in Article XVIII shall apply and the sale/purchase must be closed
     within ninety (90) days after the date of the written notice from Lessee to
     Lessor of Lessee's intent to purchase, unless a different closing date is
     agreed upon in writing by Lessor and Lessee.

          (b) If during the Term, the Leased Improvements and/or the Fixtures
     are totally or partially destroyed from a risk covered by the insurance
     described in Article XIII, but the Facility is not thereby rendered
     Unsuitable for its Primary Intended Use, Lessee shall restore the Facility
     to substantially the same condition as existed immediately before the
     damage or destruction. Such damage or destruction shall not terminate this
     Lease; provided, however, if Lessee cannot within a reasonable time obtain
     all necessary governmental approvals, including building permits, licenses,
     conditional use permits and any certificates of need, after diligent
     efforts to do so, in order to be able to perform all required repair and
     restoration work and to operate the Facility for its Primary Intended Use
     in substantially the same manner as immediately prior to such damage or
     destruction, so long as Lessee is not in monetary or payment default of any
     kind, and no event has occurred which with the giving of notice or the
     passage of time or both would constitute such a default, under the terms of
     this Lease and the Tenant Leases, Lessee shall have the option, by giving
     written notice to Lessor within sixty (60) days following the date of such
     damage or destruction, to purchase the Leased Property (including Lessor's
     interests and rights under the Air Space Agreement and the Parking Space
     Lease) for a purchase price equal to the Option Price as defined in Section
     35.1 (less the amount of any insurance proceeds held by Lessor). In the
     event Lessee purchases the Leased Property pursuant to this Section
     14.2(b), the terms set forth in Article XVIII shall apply and the
     sale/purchase must be closed within ninety (90) days after the date of the
     written notice from Lessee to Lessor of Lessee's intent to purchase, unless
     a different closing date is agreed upon in writing by Lessor and Lessee.

          (c) If the cost of the repair or restoration exceeds the amount of
     proceeds received by Lessor from the insurance required under Article XIII,
     Lessee shall be obligated to contribute any excess amount needed to restore
     the Facility prior to use of the insurance proceeds. Such amount shall be
     paid by Lessee to Lessor (or a Facility Lender if required) to be held in
     trust together with any other insurance proceeds for application to the
     cost of repair and restoration.

          (d) In the event Lessee purchases the Leased Property, this Lease
     shall terminate upon payment of the Option Price (less the amount of any
     insurance proceeds held by Lessor) and Lessor shall remit to Lessee all
     insurance proceeds being held in trust by Lessor or the Facility Lender if
     applicable.

     14.3 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION NOT COVERED BY
INSURANCE. Except as provided in Section 14.7 below, if during the Term, the
Facility is totally or materially destroyed from a risk not covered by the
insurance described in Article XIII but that would have been covered if Lessee
carried the insurance customarily maintained by, and generally available to, the
operators of reputable health care facilities in the region in which the
Facility is located, then, whether or not such damage or destruction renders the
Facility Unsuitable for its Use, Lessee shall, at its sole cost and expense,
restore the Facility to substantially the same condition it was in immediately
before such damage or destruction and such damage or destruction shall not
terminate this Lease. If such damage or destruction is not material, Lessee
shall restore the Leased Property at Lessee's expense.

     14.4 LESSEE'S PERSONAL PROPERTY. All insurance proceeds payable by reason
of any loss of or damage to any of Lessee's Personal Property or Capital
Additions financed by Lessee shall be paid to Lessor and Lessor shall hold such
insurance proceeds in trust to pay the cost of repairing or replacing the damage
to Lessee's Personal Property or the Capital Additions financed by Lessee.


                                       30

<PAGE>

     14.5 RESTORATION OF LESSEE'S PROPERTY. If Lessee is required or elects to
restore the Facility as provided in Sections 14.2 or 14.3, Lessee shall also
restore all alterations and improvements made by Lessee, Lessee's Personal
Property and all Capital Additions paid for by Lessee.

     14.6 NO ABATEMENT OF RENT. This Lease shall remain in full force and effect
and Lessee's obligation to make rental payments and to pay all other charges
required by this Lease shall remain unabated during any period required for
repair and restoration.

     14.7 DAMAGE NEAR END OF TERM. Notwithstanding any provisions of Sections
14.2 or 14.3 to the contrary but subject to the option of Lessee to purchase the
Leased Property as provided in Section 35.1 by giving Lessor written notice
within sixty (60) days following the date of such damage or destruction, if
damage to or destruction of the Facility occurs during the last twenty-four (24)
months of the Term, and if such damage or destruction cannot be fully repaired
and restored within six (6) months immediately following the date of loss,
either party shall have the right to terminate this Lease by giving notice to
the other within sixty (60) days after the date of damage or destruction, in
which event Lessor shall be entitled to retain the insurance proceeds and Lessee
shall pay to Lessor on demand the amount of any deductible or uninsured loss
arising in connection therewith; provided, however, that any such notice given
by Lessor shall be void and of no force and effect if Lessee exercises an
available option to extend the Term for one Extended Term within thirty (30)
days following receipt of such termination notice.

     14.8 TERMINATION OF RIGHT TO PURCHASE. Any termination of this Lease
pursuant to this Article XIV shall cause any right to purchase under any other
provisions of this Lease granted to Lessee under this Lease to be terminated and
to be without further force and effect.

     14.9 WAIVER. Lessee hereby waives any statutory or common law rights of
termination which may arise by reason of any damage or destruction of the
Facility.

                                   ARTICLE XV

                                  CONDEMNATION

     15.1 DEFINITIONS.

          (a) "Condemnation" means (i) the exercise of any governmental power,
     whether by legal proceedings or otherwise, by a Condemnor or (ii) a
     voluntary sale or transfer by Lessor to any Condemnor, either under threat
     of Condemnation or while legal proceedings for Condemnation are pending.

          (b) "Date of Taking" means the date the Condemnor has the right to
     possession of the property being condemned.

          (c) "Award" means all compensation, sums or anything of value awarded,
     paid or received on a total or partial Condemnation.

          (d) "Condemnor" means any public or quasi-public authority, or private
     corporation or individual, having the power of Condemnation.

     15.2 PARTIES' RIGHTS AND OBLIGATIONS. If during the Term there is any
Taking of all or any part of the Leased Property or any interest in this Lease
by Condemnation, the rights and obligations of the parties shall be determined
by this Article XV.

     15.3 TOTAL TAKING. If there is a Taking of all of the Leased Property by
Condemnation, this Lease shall terminate on the Date of Taking.


                                       31

<PAGE>

     15.4 PARTIAL TAKING. If there is a Taking of a portion of the Leased
Property by Condemnation, this Lease shall remain in effect if the Facility is
not thereby rendered Unsuitable for its Primary Intended Use. If, however, the
Facility is thereby rendered Unsuitable for its Primary Intended Use, Lessee
shall have the option (a) to restore the Facility, at its own expense, to the
extent possible, to substantially the same condition as existed immediately
before the partial Taking, or (b) so long as Lessee is not in monetary or
payment default of any kind, and no event has occurred which with the giving of
notice or the passage of time or both would constitute such a default, under the
terms of this Lease, the Other Leases and the Tenant Leases to acquire the
Leased Property (including Lessor's interests and rights in the Air Space
Agreement and the Parking Space Lease) from Lessor for a purchase price equal to
the Option Price as defined in Section 35.1, in which event this Lease shall
terminate upon payment of the Option Price. Lessee shall exercise its option by
giving Lessor notice thereof within sixty (60) days after Lessee receives notice
of the Taking. In the event Lessee exercises the option to purchase the Leased
Property pursuant to this Section 15.4, the terms set forth in Article XVIII
shall apply and the sale/purchase must be closed within thirty (30) days after
the date of the written notice from Lessee to Lessor of Lessee's intent to
purchase, unless a different closing date is agreed upon in writing by Lessor
and Lessee.

     15.5 RESTORATION. If there is a partial Taking of the Leased Property and
this Lease remains in full force and effect pursuant to Section 15.4, Lessee
shall accomplish all necessary restoration.

     15.6 AWARD DISTRIBUTION. In the event Lessee exercises the purchase option
as described in clause (b) of Section 15.4, the entire Award shall belong to
Lessee provided no Event of Default is continuing and Lessor agrees to assign to
Lessee all of its rights thereto. In any other event, the entire Award shall
belong to and be paid to Lessor, except that, if this Lease is terminated, and
subject to the rights of the Facility Lender, Lessee shall be entitled to
receive from the Award, if and to the extent such Award specifically includes
such items, the following:

          (a) A sum attributable to the Capital Additions for which Lessee would
     be entitled to reimbursement at the end of the Term pursuant to the
     provisions of Section 10.2(c) and the value, if any, of the leasehold
     interest of Lessee under this Lease; and

          (b) A sum attributable to Lessee's Personal Property and any
     reasonable removal and relocation costs included in the Award.

If Lessee is required or elects to restore the Facility, Lessor agrees that,
subject to the rights of the Facility Lenders, its portion of the Award shall be
used for such restoration and it shall hold such portion of the Award in trust,
for application to the cost of the restoration. Notwithstanding any provision of
this Lease to the contrary, any Award retained by Lessor and not used for
restoration shall be taken into account as an amount received by Lessor for
purposes of calculating the Option Price as defined in Section 35.1.

     15.7 TEMPORARY TAKING. The Taking of the Leased Property, or any part
thereof, by military or other public authority shall constitute a Taking by
Condemnation only when the use and occupancy by the Taking authority has
continued for longer than six (6) months. During any such six (6) month period
all the provisions of this Lease shall remain in full force and effect and the
Base Rent shall not be abated or reduced during such period of Taking.

                                   ARTICLE XVI

                                     DEFAULT

     16.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following
events (individually, an "Event of Default") shall constitute Events of Default
or defaults hereunder:

          (a) if Lessee defaults under the Air Space Agreement and such default
     is not cured within the applicable cure period as provided therein, or


                                       32

<PAGE>

          (b) if Lessee defaults under the Parking Space Lease and such default
     is not cured within the applicable cure period as provided therein, or

          (c) if Lessee shall fail to make a payment of the Rent or any other
     monetary payment due and payable by Lessee under this Lease when the same
     becomes due and payable, or

          (d) if Lessee shall fail to observe or perform any other term,
     covenant or condition of this Lease and such failure is not cured by Lessee
     within a period of thirty (30) days after receipt by Lessee of written
     notice thereof from Lessor (provided, however, in no event shall Lessor be
     required to give more than one (1) written notice per calendar year for a
     non-monetary default), unless such failure cannot with due diligence be
     cured within a period of thirty (30) days, in which case such failure shall
     not be deemed to continue if Lessee proceeds promptly and with due
     diligence to cure the failure and diligently completes the curing thereof
     within sixty (60) days after receipt by Lessee of Lessor's notice of
     default, or

          (e) if Lessee or any Guarantor shall:

               (i) admit in writing its inability to pay its debts generally as
          they become due,

               (ii) file a petition in bankruptcy or a petition to take
          advantage of any insolvency act,

               (iii) make an assignment for the benefit of its creditors,

               (iv) consent to the appointment of a receiver of itself or of the
          whole or any substantial part of its property, or

               (v) file a petition or answer seeking reorganization or
          arrangement under the Federal bankruptcy laws or any other applicable
          law or statute of the United States of America or any state thereof,
          or

               (vi) if Lessee's license as defined in Article XXXIX or
          participation or certification in Medicare, Medicaid or other
          governmental payor programs is terminated, or

               (vii) if Lessee admits in writing that it cannot meet its
          obligations as they become due; or is declared insolvent according to
          any law; or assignment of Lessee's property is made for the benefit of
          creditors; or a receiver or trustee is appointed for Lessee or its
          property; or the interest of Lessee under this Lease is levied on
          under execution or other legal process; or any petition is filed by or
          against Lessee to declare Lessee bankrupt or to delay, reduce or
          modify Lessee's capital structure if Lessee be a corporation or other
          entity (provided that no such levy, execution, legal process or
          petition filed against Lessee shall constitute a breach of this Lease
          if Lessee shall vigorously contest the same by appropriate proceedings
          and shall remove or vacate the same within thirty (30) days from the
          date of its creation, service or filing); or

               (viii) the abandonment or vacation of the Leased Property by
          Lessee (Lessee's absence from the Leased Property for thirty (30)
          consecutive days shall constitute abandonment), or Lessee fails to
          continuously operate the Facility in accordance with the terms of this
          Lease.

          (f) if the Lessee or any Guarantor shall, after a petition in
     bankruptcy is filed against it, be adjudicated a bankrupt or if a court of
     competent jurisdiction shall enter an order or decree appointing, without
     the consent of Lessee or such Guarantor, as the case may be, a receiver of
     Lessee or such Guarantor or of the whole or substantially all of its
     property, or approving a petition filed against it seeking reorganization
     or arrangement of Lessee or such Guarantor under the federal bankruptcy
     laws or any other


                                       33

<PAGE>

     applicable law or statute of the United States of America or any state
     thereof, and such judgment, order or decree shall not be vacated or set
     aside or stayed within ninety (90) days from the date of the entry thereof,
     or

          (g) if Lessee or any Guarantor shall be liquidated or dissolved, or
     shall begin proceedings toward such liquidation or dissolution, or shall,
     in any manner, permit the sale or divestiture of substantially all of its
     assets other than in connection with a merger or consolidation of Lessee or
     such Guarantor into, or a sale of substantially all of Lessee's or such
     Guarantor's assets to, another corporation, provided that if the survivor
     of such merger or the purchaser of such assets shall assume all of Lessee's
     obligations under this Lease by a written instrument, in form and substance
     reasonably satisfactory to Lessor, accompanied by an opinion of counsel,
     reasonably satisfactory to Lessor and addressed to Lessor stating that such
     instrument of assumption is valid, binding and enforceable against the
     parties thereto in accordance with its terms (subject to usual bankruptcy
     and other creditors' rights exceptions), and provided, further, that if,
     immediately after giving effect to any such merger, consolidation or sale,
     Lessee or such other corporation (if not the Lessee) surviving the same,
     together with Guarantors, shall have a Consolidated Net Worth not less than
     the Consolidated Net Worth of Lessee or Guarantors immediately prior to
     such merger, consolidation or sale, all as to be set forth in an Officer's
     Certificate delivered to Lessor within thirty (30) days of such merger,
     consolidation or sale, an Event of Default shall not be deemed to have
     occurred, or

          (h) if the estate or interest of Lessee in the Leased Property or any
     part thereof shall be levied upon or attached in any proceeding and the
     same shall not be vacated or discharged within the later of ninety (90)
     days after commencement thereof or thirty (30) days after receipt by Lessee
     of written notice thereof from Lessor (unless Lessee shall be contesting
     such lien or attachment in good faith in accordance with Article XII
     hereof), or

          (i) if, except as a result of damage, destruction or a partial or
     complete Condemnation, Lessee voluntarily ceases operations on the Leased
     Property for a period in excess of ninety (90) days, or

          (j) if any of the representations or warranties made by Lessee or any
     of the Sellers named in the Purchase Agreement or in the certificates
     delivered in connection therewith are or become untrue in any material
     respect, and which is not cured within ten (10) days after notice from
     Lessor, or

          (k) a default shall occur under the Lease Guaranty, or

          (l) a default or event of default shall occur under the Lease
     Assignment, Purchase Agreement, Security Agreement or any other agreement
     between Lessor or any Affiliate of Lessor, on the one hand, and Lessee, any
     Guarantor, or any of their respective Affiliates, on the other hand, which
     is not cured within the cure period as provided therein, or

          (m) if Lessee defaults under the Tenant Leases or fails or refuses to
     enforce the terms and conditions of the Tenant Leases, or

          (n) if a payment default occurs with respect to any of Lessee's or any
     Guarantor's debt or other leases or is declared to be in material default
     by any of its lenders and such default is not cured within the applicable
     cure periods provided therefor.

Notwithstanding anything contained herein to the contrary, a default under any
Other Leases or a default under any guaranty executed by the guarantors
guaranteeing the obligations of the lessee under any Other Leases shall not
constitute a default under this Lease.

If an Event of Default shall have occurred, Lessor may pursue any one or more of
the remedies set forth in Sections 16.1A through D below and in Section 16.2
hereof, in addition to any remedies which may be permitted by law or


                                       34

<PAGE>

by other provisions of this Lease, without notice or demand, except as
hereinafter provided. Lessor may exercise these remedies at the time of an Event
of Default or at any time thereafter; provided, however, that if Lessor fails to
exercise any such remedy within six (6) months following the occurrence of such
Event of Default, Lessee may cure such default, provided such cure occurs prior
to Lessor's exercise of such remedy and, provided further, that any cure by
Lessee within such six (6) month period shall have no effect on Lessor's right
to exercise any such remedy within such six (6) month period.

     A. Without any notice or demand whatsoever, Lessor may take any one or more
of the actions permissible at law to insure performance by Lessee of Lessee's
covenants and obligations under this Lease. In this regard, it is agreed that if
Lessee deserts or vacates the Leased Property, Lessor may enter upon and take
possession of such Leased Property in order to protect it from deterioration and
continue to demand from Lessee the monthly rentals and other charges provided in
this Lease, without any obligation to relet; but that if Lessor does, at its
sole discretion, elect to relet the Leased Property, such action by Lessor shall
not be deemed as an acceptance of Lessee's surrender of the Leased Property
unless Lessor expressly notifies Lessee of such acceptance in writing pursuant
to subsection B of this Section 16.1, Lessee hereby acknowledging that Lessor
shall otherwise be reletting as Lessee's agent and Lessee furthermore hereby
agreeing to pay to Lessor on demand any deficiency that may arise between the
monthly rentals and other charges provided in this Lease and that are actually
collected by Lessor. It is further agreed in this regard that in the event of
any default described in this Section 16.1, Lessor shall have the right to enter
upon the Leased Property without being liable for prosecution or any claim for
damages therefor, and do whatever Lessee is obligated to do under the terms of
this Lease; and Lessee agrees to reimburse Lessor on demand for any expenses
which Lessor may incur in thus effecting compliance with Lessee's obligations
under this Lease, and Lessee further agrees that Lessor shall not be liable for
any damages resulting to the Lessee from such action.

     B. Lessor may terminate this Lease by written notice to Lessee, in which
event Lessee shall immediately surrender the Leased Property to Lessor, and if
Lessee fails to do so, Lessor may, without prejudice to any other remedy which
Lessor may have for possession or arrearages in rent (including any interest
which may have accrued pursuant to Section 3.3 of this Lease), enter upon and
take possession of the Leased Property and expel or remove Lessee and any other
person who may be occupying said premises or any part thereof without being
liable of prosecution or any claim for damages therefor. Lessee hereby waives
any statutory requirement of prior written notice for filing eviction or damage
suits for nonpayment of rent. In addition, Lessee agrees to pay to Lessor on
demand the amount of all loss and damage which Lessor may suffer by reason of
any termination effected pursuant to this subsection B, said loss and damage to
be determined by:

               (i) The worth at the time of award of the unpaid rent which had
          been earned at the time of termination;

               (ii) The worth at the time of award of the amount by which the
          unpaid rent which would have been earned after termination until the
          time of award exceeds the amount of such rental loss that the Lessee
          proves could have been reasonably avoided;

               (iii) The worth at the time of award of the amount by which the
          unpaid rent for the balance of the term after the time of award
          exceeds the amount of such rental loss that the Lessee proves could be
          reasonably avoided; and

               (iv) Any other amount necessary to compensate the Lessor for all
          the detriment proximately caused by the Lessee's failure to perform
          its obligations under this Lease or which in the ordinary course of
          things would be likely to result therefrom, including, but not limited
          to, all reasonable legal expenses and other related costs incurred by
          Lessor following an Event of Default, all costs incurred by Lessor in
          recovering the Leased Property and restoring the Leased Property to
          good order and condition, and/or in remodeling, renovating or
          otherwise preparing the Leased Property for reletting, and all costs
          (including, without limitation, any brokerage commissions and
          reasonable attorneys' fees) incurred by Lessor in reletting the Leased
          Premises.


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<PAGE>

     The "worth at the time of award" of the amounts referred to in
subparagraphs (i) and (ii) above is computed by allowing interest at a rate
equal to the lowest rate of capitalization (highest present worth) reasonably
applicable at the time of such determination and allowed by applicable law. The
worth at the time of award of the amount referred to in subparagraph (iii) above
is computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus one percent (1%).

     C. In addition to other rights and remedies Lessor may have hereunder and
at law and in equity, if an Event of Default occurs under this Lease, (i) Lessee
is deemed to have assigned to Lessor, at Lessor's sole option, all service
agreements (including, without limitation, all medical director agreements);
(ii) to the extent permitted by law, Lessee is deemed, at Lessor's sole
discretion, to have transferred and assigned to Lessor all Licenses and
agreements, including, without limitation, all Medicare and Medicaid provider
numbers, and (iii) to the extent permitted by law, if required by Lessor,
transfer to the Lessor all of the Licenses, including, without limitation, all
Medicare and Medicaid provider numbers. In the event there are legal limitations
on any of the foregoing remedies, Lessee further hereby covenants and agrees
that it will take all actions necessary to orderly transfer the operations and
occupancy of the Leased Property to the Lessor, including cooperating with
respect to the transfer to Lessor of Licenses, provider numbers and other
agreements.

     D. In addition to the above remedies, in the Event of any Default hereunder
by Lessee, Lessor, at its option, may have one or more of the following remedies
in addition to all other legal rights and remedies:

               (i) Lessor may serve upon Lessee notice that its Lease and the
          then unexpired term hereof shall terminate and become absolutely void
          on a date specified in such notice, which shall be the date of such
          notice or such later date as may be required by law, and the Lease,
          and well as the right, title, and interest of Lessee hereunder shall,
          except as to the rights and remedies of Lessor upon termination as
          provided herein, terminate and become void in the same manner and with
          the same force and effect as if the date filed in such notice were the
          date originally specified for the expiration of the Lease term; and
          Lessee shall then immediately quit and surrender to Lessor the Leased
          Property, including any and all buildings and improvements thereon,
          and Lessor may then or at any time thereafter, without judicial
          proceedings of any kind, enter into and repossess the Leased Property,
          and may remove all occupants and any property thereon without being
          liable for any action or prosecution of any kind for such entry or the
          manner thereof, or loss of or damage to any property upon the Leased
          Property. In the event of any such termination of this Lease, and in
          addition to any other rights and remedies Lessor may have, Lessor
          shall have all of the rights and remedies of a Lessor provided by
          Section 1951.2 of the California Civil Code.

               (ii) In addition, Lessor shall have all the rights and remedies
          described in Section 1951.4 of the California Civil Code (Lessor may
          continue the Lease in effect after Lessee's breach and abandonment and
          recover rent as it becomes due, if Lessee has the right to sublease or
          assign subject only to reasonable limitations).

               (iii) Lessor may immediately terminate Lessee's right of
          possession of the Leased Property, but not terminate the Lease, and
          without notice or demand enter upon the Leased Property or any part
          thereof and take absolute possession of the same, and at Lessor's sole
          option may relet the Leased Property or any part thereof for such
          terms and such rents as Lessor may reasonable elect. In the event
          Lessor shall elect to so relet, then rent received by Lessor from such
          reletting shall be applied first, to the payment of any indebtedness
          other than Rent due hereunder from Lessee to Lessor, second, to the
          payment of any cost of such reletting, including, without limitation,
          refurbishing costs and leasing commissions, and third, to the payment
          of Rent due and unpaid hereunder, and Lessee shall satisfy and pay any
          deficiency upon demand therefor from time to time. Any entry into and
          possession of the Leased Property by Lessor shall be without liability
          or responsibility to Lessee and shall not be in lieu of or in
          substitution for any other legal rights of Lessor hereunder. Lessee
          further agrees that Lessor may file suit to recover any sums due under
          the terms of this Lease and that no recovery of any portion due Lessor
          hereunder shall


                                       36

<PAGE>

          be any defense to any subsequent action brought for any amount not
          therefore reduced to judgment in favor of Lessor. Reletting of the
          Leased Property shall not be construed as an election on the part of
          Lessor to terminate this Lease and, notwithstanding any such reletting
          without termination, Lessor may at any time thereafter elect to
          terminate this Lease for default.

     16.2 EVENTS OF DEFAULT IN FINANCIAL COVENANTS.

          (a) FIRST TIER DEFAULTS. Beginning with the date on which the Lease
Guaranty is terminated (the "Covenant Commencement Date"), the failure or breach
of any one or more of the following shall constitute a default and breach of
this Section 16.2(a) and the Lessor shall have the rights and remedies provided
for herein:

               (i) EBITDAR fails to equal or exceed one hundred seventy-five
               percent (175%) of Fixed Charges;

               (ii) Total Debt of Lessee shall not exceed fifty percent (50%) of
               the greater of (A) the Total Capitalization of Lessee or (B) the
               Market Value of Lessee; or

               (iii) EBITDAR fails to equal or exceed two hundred fifty percent
               (250%) of Lease Payments.

     The covenants described in this Section 16.2(a) (i) -- (iii) shall first
become effective at the end of the first full calendar quarter subsequent to the
Covenant Commencement Date and shall be tested at the end of each subsequent
calendar quarter. All operating measures shall be calculated on a trailing
twelve (12) month basis.

     Upon the occurrence of any of the items set forth in Section 16.1 or in
subparagraph (a) items (i) through (iii) of this Section 16.2(a), Lessor may, at
its option, upon five (5) days' written notice to Lessee (any such notice
requiring such termination being herein referred to as the "Removal Notice"),
require Lessee to terminate the engagement of any Management Company managing
the Facility and replace such Management Company with a manager chosen by Lessor
(or, if there is no Management Company managing the Facility at that time,
Lessor may require the Lessee to engage a Management Company acceptable to
Lessor and enter into a contract with such Management Company upon terms and
conditions acceptable to Lessor).

          (b) SECOND TIER DEFAULTS. Beginning on the Covenant Commencement Date,
the failure or breach of any one or more of the following covenants shall
constitute a default and breach of this Section 16.2(b) and Lessor shall have
the rights and remedies provided for herein:

               (i) Total Debt of Lessee shall not exceed eighty percent (80%) of
               the greater of (A) the Total Capitalization of Lessee or (B) the
               Market Value of Lessee;

               (ii) Lessee shall not experience six (6) consecutive quarters of
               falling net revenue and generate a EBITDAR of less than two
               hundred percent (200%) of the Lease Payments; or

               (iii) Neither Lessee nor any of the Guarantors shall be in
               payment default on any of its corporate debt or other leases or
               be declared to be in material default by any of its corporate
               lenders, unless such default is cured within the cure periods
               provided for therein.

     The covenants described in this Section 16.2(b) (i) - (iii) shall first
become effective at the end of the first full calendar quarter subsequent to the
Covenant Commencement Date and shall be tested at the end of each subsequent
calendar quarter. All operating measures shall be calculated on a trailing
twelve (12) month basis.


                                       37

<PAGE>

     Upon the occurrence of any of the items set forth in Section 16.1 or in
subparagraph (b) items (i) through (iii) of this Section 16.2(b), Lessor may, at
its option, upon delivery of the Removal Notice, require Lessee to terminate the
engagement of the Management Company managing the Facility and replace such
Management Company with manager chosen by Lessor (or, if there is no Management
Company managing the facility at that time, Lessor may require the Lessee to
engage a Management Company acceptable to Lessor and enter into a contract with
such Management Company upon terms and conditions acceptable to Lessor), and
Lessor may, at its option, proceed with all other remedies Lessor deems
necessary, including, without limitation, terminating this Lease and pursuing
all other customary remedies available at law and in equity.

     16.3 ADDITIONAL EXPENSES. It is further agreed that, in addition to
payments required pursuant to subsections A and B of Section 16.1 above, Lessee
shall compensate Lessor for (i) all administrative expenses, (ii) all expenses
incurred by Lessor in repossessing the Leased Property (including among other
expenses, any increase in insurance premiums caused by the vacancy of the Leased
Property), (iii) all expenses incurred by Lessor in reletting (including among
other expenses, repairs, remodeling, replacements, advertisements and brokerage
fees), (iv) all concessions granted to a new tenant or tenants upon reletting
(including among other concessions, renewal options), (v) Lessor's reasonable
attorneys' fees and expenses, (vi) all losses incurred by Lessor as a direct or
indirect result of Lessee's default (including among other losses any adverse
action by mortgagees), and (vii) a reasonable allowance for Lessor's
administrative efforts, salaries and overhead attributable directly or
indirectly to Lessee's default and Lessor's pursuing the rights and remedies
provided herein and under applicable law.

     16.4 Intentionally Omitted.

     16.5 WAIVER. If this Lease is terminated pursuant to Section 16.1, Lessee
waives, to the extent permitted by applicable law, (a) any right of redemption,
re-entry or repossession, (b) any right to a trial by jury in the event of
summary proceedings to enforce the remedies set forth in this Article XVI, and
(c) the benefit of any laws now or hereafter in force exempting property from
liability for rent or for debt.

     16.6 APPLICATION OF FUNDS. Any payments otherwise payable to Lessee which
are received by Lessor under any of the provisions of this Lease during the
existence or continuance of any Event of Default shall be applied to Lessee's
obligations in the order which Lessor may reasonably determine or as may be
prescribed by the laws of the state in which the Facility is located.

     16.7 NOTICES BY LESSOR. The provisions of this Article XVI concerning
notices shall be liberally construed insofar as the contents of such notices are
concerned, and any such notice shall be sufficient if reasonably designed to
apprise Lessee of the nature and approximate extent of any default, it being
agreed that Lessee is in good or better position than Lessor to ascertain the
exact extent of any default by Lessee hereunder.

     16.8 LESSOR'S CONTRACTUAL SECURITY INTEREST. Subject to the Prior Lien of
Lessee's Primary Lender (as such terms are defined herein), to secure the
payment of all rent due and to become due hereunder and the faithful performance
of this Lease by Lessee and to secure all other indebtedness, obligations and
liabilities of Lessee to Lessor now existing or hereafter incurred, and all
Obligations (as defined in the Security Agreement), Lessee hereby gives to
Lessor an express first and prior contract lien and security interest in all
property which may be placed on the Leased Property (including trailers and all
equipment affixed therein, fixtures, equipment (including medical equipment
whether or not affixed to the Leased Property), chattels and merchandise) and
also upon all proceeds of any insurance which may accrue to Lessee by reason of
destruction of or damage to any such property and also upon all of Lessee's
interest as lessee and rights and options to purchase fixtures, equipment and
chattels placed on the Leased Property (in case of fixtures, equipment and
chattels leased to Lessee which are placed on the Leased Property). All
exemption laws are hereby waived in favor of such lien and security interest and
in favor of Lessor's statutory landlord lien. This lien and security interest
are given in addition to any statutory landlord lien and shall be cumulative
thereto. Except as limited in favor of the Primary Lender as set forth in this
Section 16.8, Lessor shall have at all times a valid security interest to secure
payment of all rentals and other sums of money becoming due hereunder from
Lessee, and to secure payment of any damages or loss which Lessor may suffer by
reason of the


                                       38

<PAGE>

breach by Lessee of any covenant, agreement or condition contained herein, upon
all inventory, merchandise, goods, wares, equipment (including medical equipment
whether or not affixed to the Leased Property), fixtures, furniture,
improvements and other tangible personal property of Lessee presently, or which
may hereafter be, situated in or about the Leased Property, and all proceeds
therefrom and accessions thereto and, except as a result of sales made in the
ordinary course of Lessee's business, such property shall not be removed without
the consent of Lessor until all arrearages in rent as well as any and all other
sums of money then due to Lessor or to become due to Lessor hereunder shall
first have been paid and discharged and all the covenants, agreements and
conditions hereof have been fully complied with and performed by Lessee. Upon
the occurrence of an Event of Default by Lessee, Lessor may, in addition to any
other remedies provided herein, enter upon the Leased Property and take
possession of any and all inventory, merchandise, goods, wares, equipment,
fixtures, furniture, improvements and other personal property of Lessee situated
in or about the Leased Property, without liability for trespass or conversion,
and sell the same at public or private sale, with or without having such
property at the sale, after giving Lessee reasonable notice of the time and
place of any public sale of the time after which any private sale is to be made,
at which sale the Lessor or its assigns may purchase unless otherwise prohibited
by law. Unless otherwise provided by law, and without intending to exclude any
other manner of giving Lessee reasonable notice, the requirement of reasonable
notice shall be met, if such notice is given in the manner prescribed in this
Lease at least seven (7) days before the time of sale. Any sale made pursuant to
the provision of this paragraph shall be deemed to have been a public sale
conducted in commercially reasonable manner if held in the above-described
premises or where the property is located after the time, place and method of
sale and a general description of the types of property to be sold have been
advertised in a daily newspaper published in the county in which the property is
located, for five (5) consecutive days before the date of the sale. The proceeds
from any such disposition, less any and all expenses connected with the taking
of possession, holding and selling of the property (including reasonable
attorney's fees and legal expenses), shall be applied as a credit against the
indebtedness secured by the security interest granted in this paragraph. Any
surplus shall be paid to Lessee or as otherwise required by law; the Lessee
shall pay any deficiencies forthwith. Upon request by Lessor, Lessee agrees to
execute (if required by law; provided, however, Lessor shall have the right to
file a UCC-1 financing statement (and all amendments, modifications and
extensions thereto) at any time as provided in the Security Agreement) and
deliver to Lessor a financing statement in form sufficient to perfect the
security interest of Lessor in the aforementioned property and proceeds thereof
under the provision of the Uniform Commercial Code (or corresponding state
statute or statutes) in force in the state in which the Leased Property is
located, as well as any other state the laws of which Lessor may at any time
consider to be applicable.

     As used herein, the term "Primary Lien of Lessee's Primary Lender" means
any first priority lien granted by Lessee in any of Lessee's machinery,
equipment (including medical equipment whether or not affixed to the Leased
Property), furniture, furnishings, tools, movable walls or partitions,
computers, signage, trade fixtures, supplies, inventory, or any other tangible
personal property placed on the Leased Property and used or useful in Lessee's
business conducted at or on the Leased Property (the "Collateral"), which may be
given in connection with Lessee's lender (the "Primary Lender") providing
financing for Lessee to purchase such items of Collateral or in connection with
the refinancing of any such items of Collateral, including, without limitation,
the first priority lien of HFG Healthco-4 LLC in inventory and those intangibles
necessary to collect accounts receivable. In the event Lessee obtains financing
from a Primary Lender or refinances such items of Collateral, Lessee shall use
commercially reasonable efforts to obtain from its Primary Lender a consent to a
secondary lien on such Collateral in favor of Lessor, in form and content
reasonably acceptable to the Primary Lender and the Lessor. Lessee covenants and
agrees not to place or allow any other liens to be placed on the Collateral.
Lessee covenants and agrees that all indebtedness (except for the indebtedness
owed to the Primary Lender) owed by Lessee under all agreements executed in
connection with the Lessee's financing of Lessee's Personal Property to be used
in connection with the operation of the Facility shall be subordinate to all
monetary obligations under this Lease and Lessee shall not to place or allow any
other liens to be placed on the Lessee's Personal Property. At the request of
Lessor from time to time, Lessee shall execute and shall obtain from all parties
to such financing arrangements executed written confirmation of such
subordination (in form and content as is acceptable to Lessor), which shall be
delivered to Lessor within ten (10) days from Lessor's request.


                                       39

<PAGE>

                                  ARTICLE XVII

                             LESSOR'S RIGHT TO CURE

     If Lessee shall fail to make any payment, or to perform any act required to
be made or performed under this Lease and to cure the same within the relevant
time periods provided in Section 16.1, Lessor, without waiving or releasing any
obligation or Event of Default, may (but shall be under no obligation to) at any
time thereafter make such payment or perform such act for the account and at the
expense of Lessee, and may, to the extent permitted by law, enter upon the
Leased Property for such purpose and take all such action thereon as, in
Lessor's opinion, may be necessary or appropriate therefor. No such entry shall
be deemed an eviction of Lessee. All sums so paid by Lessor and all costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses, in each case, to the extent permitted by law) so incurred, together
with a late charge thereon (to the extent permitted by law) at the Overdue Rate
from the date on which such sums or expenses are paid or incurred by Lessor,
shall be paid by Lessee to Lessor on demand. The obligations of Lessee and
rights of Lessor contained in this Article shall survive the expiration or
earlier termination of this Lease.

                                  ARTICLE XVIII

                         PURCHASE OF THE LEASED PROPERTY

     In the event Lessee or Prime purchases the Leased Property from Lessor
pursuant to any of the terms of this Lease, including, without limitation
Section 35.1, Lessor shall, upon receipt from Lessee of the applicable purchase
price, together with full payment of any unpaid Rent due and payable with
respect to any period ending on or before the date of the purchase, deliver to
Lessee an appropriate special warranty deed, assignment agreement or other
instrument of conveyance conveying the entire interest of Lessor in and to the
Leased Property to Lessee in the condition as received from Lessee, free and
clear of all encumbrances other than (a) those that Lessee has agreed hereunder
to pay or discharge, (b) those mortgage liens, if any, which Lessee has agreed
in writing to accept and to take title subject to, (c) any other Encumbrances
permitted to be imposed on the Leased Property under the provisions of Article
XXXVII which are assumable at no cost to Lessee or to which Lessee may take
subject without cost to Lessee, and (d) any matters affecting the Leased
Property on or as of the Commencement Date. The difference between the
applicable purchase price and the total of the encumbrances assigned or taken
subject to shall be paid in cash to Lessor, or as Lessor may direct, in federal
or other immediately available funds except as otherwise mutually agreed by
Lessor and Lessee. The closing of any such sale shall be contingent upon and
subject to Lessee obtaining all required governmental consents and approvals for
such transfer and if such sale shall fail to be consummated by reason of the
inability of Lessee to obtain all such approvals and consents, any options to
extend the Term of this Lease which otherwise would have expired during the
period from the date when Lessee elected or became obligated to purchase the
Leased Property until Lessee's inability to obtain the approvals and consents is
confirmed shall be deemed to remain in effect for thirty (30) days after the end
of such period. All expenses of such conveyance, including, without limitation,
the cost of title examination or standard coverage title insurance, survey,
attorneys' fees incurred by Lessor in connection with such conveyance, transfer
taxes, prepayment penalties and any other fees with respect to any Facility
Instrument, recording fees and similar charges shall be paid for by Lessee.

                                   ARTICLE XIX

                                  HOLDING OVER

     If Lessee shall for any reason remain in possession of the Leased Property
after the expiration of the Term or any earlier termination of the Term hereof,
such possession shall be as a tenancy at will during which time Lessee shall pay
as rental each month, one and one-half times the aggregate of (a) one-twelfth of
the aggregate Base Rent payable with respect to the last complete Lease Year
prior to the expiration of the Term; (b) all Additional Charges accruing during
the month and (c) all other sums, if any, payable by Lessee pursuant to the
provisions of this Lease with respect to the Leased Property. During such period
of tenancy, Lessee shall be obligated to perform and


                                       40

<PAGE>

observe all of the terms, covenants and conditions of this Lease, but shall have
no rights hereunder other than the right, to the extent given by law to
tenancies at will, to continue its occupancy and use of the Leased Property.
Nothing contained herein shall constitute the consent, express or implied, of
Lessor to the holding over of Lessee after the expiration or earlier termination
of this Lease.

                                   ARTICLE XX

                              INTENTIONALLY OMITTED

                                   ARTICLE XXI

                              INTENTIONALLY OMITTED

                                  ARTICLE XXII

                                  RISK OF LOSS

     During the Term of this Lease, the risk of loss or of decrease in the
enjoyment and beneficial use of the Leased Property in consequence of the damage
or destruction thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise, or in consequence of foreclosures, attachments, levies or executions
(other than by Lessor and those claiming from, through or under Lessor) is
assumed by Lessee and, Lessor shall in no event be answerable or accountable
therefor nor shall any of the events mentioned in this Section entitle Lessee to
any abatement of Rent except as specifically provided in this Lease.

                                  ARTICLE XXIII

                                 INDEMNIFICATION

     NOTWITHSTANDING THE EXISTENCE OF ANY INSURANCE OR SELF INSURANCE PROVIDED
FOR IN ARTICLE XIII, AND WITHOUT REGARD TO THE POLICY LIMITS OF ANY SUCH
INSURANCE OR SELF INSURANCE, LESSEE WILL PROTECT, INDEMNIFY, SAVE HARMLESS AND
DEFEND LESSOR FROM AND AGAINST ALL LIABILITIES, OBLIGATIONS, CLAIMS, DAMAGES,
PENALTIES, CAUSES OF ACTION, COSTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION,
REASONABLE ATTORNEYS' FEES AND EXPENSES), TO THE EXTENT PERMITTED BY LAW,
IMPOSED UPON OR INCURRED BY OR ASSERTED AGAINST LESSOR BY REASON OF: (A) ANY
ACCIDENT, INJURY TO OR DEATH OF PERSONS OR LOSS OF PERCENTAGE TO PROPERTY
OCCURRING ON OR ABOUT THE LEASED PROPERTY OR ADJOINING SIDEWALKS, INCLUDING
WITHOUT LIMITATION ANY CLAIMS OF MALPRACTICE, (B) ANY USE, MISUSE, NO USE,
CONDITION, MAINTENANCE OR REPAIR BY LESSEE OF THE LEASED PROPERTY, (C) ANY
IMPOSITIONS (WHICH ARE THE OBLIGATIONS OF LESSEE TO PAY PURSUANT TO THE
APPLICABLE PROVISIONS OF THIS LEASE), (D) ANY FAILURE ON THE PART OF LESSEE TO
PERFORM OR COMPLY WITH ANY OF THE TERMS OF THIS LEASE, AND (E) THE
NON-PERFORMANCE OF ANY OF THE TERMS AND PROVISIONS OF ANY AND ALL EXISTING AND
FUTURE SUBLEASES OF THE LEASED PROPERTY TO BE PERFORMED BY THE LANDLORD (LESSEE)
THEREUNDER. ANY AMOUNTS WHICH BECOME PAYABLE BY LESSEE UNDER THIS SECTION SHALL
BE PAID WITHIN FIFTEEN (15) DAYS AFTER LIABILITY THEREFOR ON THE PART OF LESSOR
IS DETERMINED BY LITIGATION OR OTHERWISE AND, IF NOT TIMELY PAID, SHALL BEAR A
LATE CHARGE (TO THE EXTENT PERMITTED BY LAW) AT THE OVERDUE RATE FROM THE DATE
OF SUCH DETERMINATION TO THE DATE OF PAYMENT. LESSEE, AT ITS EXPENSE, SHALL
CONTEST, RESIST AND DEFEND ANY SUCH CLAIM, ACTION OR PROCEEDING ASSERTED OR
INSTITUTED AGAINST LESSOR OR MAY COMPROMISE OR OTHERWISE DISPOSE OF THE SAME AS
LESSEE SEES FIT. NOTHING HEREIN SHALL BE CONSTRUED AS INDEMNIFYING LESSOR
AGAINST ITS OWN NEGLIGENT ACTS OR OMISSIONS OR WILLFUL MISCONDUCT. LESSEE'S
LIABILITY FOR A BREACH OF THE PROVISIONS OF THIS ARTICLE SHALL SURVIVE ANY
TERMINATION OF THIS LEASE.


                                       41

<PAGE>

                                  ARTICLE XXIV

                ASSIGNMENT, SUBLETTING AND SUBLEASE SUBORDINATION

     24.1 ASSIGNMENT AND SUBLETTING. Lessee shall not assign this Lease or
sublease any portion of the Leased Property without Lessor's prior written
consent. Lessor shall not unreasonably withhold its consent to any subletting or
assignment, provided that (a) in the case of a subletting, the sublease and the
sublessee shall comply with the provisions of this Article XXIV, (b) in the case
of an assignment, the assignee shall assume in writing and agree to keep and
perform all of the terms of this Lease on the part of Lessee to be kept and
performed and shall be and become jointly and severally liable with Lessee for
the performance thereof, (c) an original counterpart of each such sublease and
assignment and assumption, duly executed by Lessee and such sublessee or
assignee, as the case may be, in form and substance satisfactory to Lessor,
shall be delivered promptly to Lessor, and (d) in case of either an assignment
or subletting, Lessee shall remain primarily liable, as principal rather than as
surety, for the prompt payment of the Rent and for the performance and
observance of all of the obligations, covenants and conditions to be performed
by Lessee hereunder and under all of the other documents executed in connection
herewith. Notwithstanding anything contained herein to the contrary, Lessor and
Lessee acknowledge that there currently exists certain leases or subleases on
the Leased Property as described on EXHIBIT C attached hereto (collectively the
"Existing Leases"). Any modifications, amendments and restatements of the
Existing Leases must be approved by Lessor in accordance with this Article XXIV.
Notwithstanding anything contained herein to the contrary, any proposed assignee
of Lessee and any proposed sublessee or subtenant must each have an equal or
stronger credit rating than the Lessee on the Commencement Date. Lessor's
failure or refusal to approve an assignment to an assignee or a subletting to a
sublessee or subtenant without the required credit rating shall be reasonable.
Within ten (10) business days following the Commencement Date, Lessor shall
obtain from the sublessees under the Existing Leases estoppel certificates in
form and substance acceptable to Lessor.

     24.2 SUBLEASE LIMITATIONS. In addition to the sublease limitations as set
forth in Section 24.1 above, anything contained in this Lease to the contrary
notwithstanding, Lessee shall not sublet the Leased Property on any basis such
that the rental to be paid by the sublessee or subtenant thereunder would be
based, in whole or in part, on either (a) the income or profits derived by the
business activities of the sublessee or subtenant, or (b) any other formula such
that any portion of the sublease rental received by Lessor would fail to qualify
as "rents from real property" within the meaning of Section 856(d) of the Code,
or any similar or successor provision thereto. Provided also, Lessee shall not
sublet any portion of the Leased Property for a term extending beyond the Fixed
Term hereof without the express consent of Lessor. In addition, all subleases
shall comply with the Healthcare Laws. Lessor and Lessee acknowledge and agree
that all subleases entered into relating to the Leased Property, whether or not
approved by Lessor, shall not, without the prior written consent of Lessor, be
deemed to be a direct lease between Lessor and any sublessee or subtenant.
Lessee agrees that all subleases submitted for Lessor approval as provided
herein must include provisions to the effect that (a) such sublease is subject
and subordinate to all of the terms and provisions of this Lease, to the rights
of Lessor hereunder, and to all financing documents relating to any Lessor
financing in connection with the Facility, (b) in the event this Lease shall
terminate or be terminated before the expiration of the sublease, the sublessee
or subtenant will, at Lessor's option, attorn to Lessor and waive any right the
sublessee or subtenant may have to terminate the sublease or to surrender
possession thereunder, as a result of the termination of this Lease, (c) at
Lessor's option, the sublease may be terminated or left in place by Lessor in
the event of a termination of this Lease, (d) the obligations and performance of
the sublessee or subtenant must be guaranteed by guarantors acceptable to
Lessor, (e) sublessee or subtenant shall from time to time upon request of
Lessee or Lessor furnish within ten (10) days from request an estoppel
certificate in form and content acceptable to Lessor or its lender relating to
the sublease, (f) in the event the sublessee or subtenant receives a written
notice from Lessor or Lessor's assignees, if any, stating that Lessee is in
default under this Lease, the sublessee or subtenant shall thereafter be
obligated to pay all rentals accruing under said sublease directly to the party
giving such notice, or as such party may direct (all rentals received from the
sublessee by Lessor or Lessor's assignees, if any, as the case may be, shall be
credited against the amounts owing by Lessee under this Lease), (g) and that
such sublease shall at all times be subject to the obligations and requirements
as set forth in this Article XXIV, and (h) sublessee or subtenant shall provide
to Lessor upon written request such officer's certificates and financial
statements as Lessor may


                                       42

<PAGE>

request from time to time. Notwithstanding anything contained herein to the
contrary, Lessor acknowledges that Lessee has entered into that certain Interim
Lease between Lessee, as landlord, and Sherman Oaks Health System, a California
non-profit public benefit corporation ("Sherman Oaks"), as tenant (the "Sherman
Oaks Sublease"). In the event the Sherman Oaks Sublease terminates before Lessee
obtains all licenses, permits and provider numbers necessary to operate the
Facility, then this Lease shall automatically terminate upon the termination of
the Sherman Oaks Sublease.

     24.3 SUBLEASE SUBORDINATION AND NON-DISTURBANCE. Within ten (10) days after
request by Lessor, Lessee shall cause any subtenant or sublessee to execute and
deliver to Lessor a subordination agreement relating to the sublease of such
subtenant or sublessee, which subordination agreement shall be in such form and
content as is acceptable to Lessor. At the request from time to time by any
Facility Lender, within ten (10) days from the date of request, Lessee shall
cause any subtenant or sublessee of the Leased Property to execute and deliver
within such ten (10) day period, to such Facility Lender a written agreement in
a form reasonably acceptable to such Facility Lender whereby such subtenant or
sublessee subordinates the sublease and all of its rights and estate thereunder
to each Facility Instrument and agrees with each such Facility Lender that such
subtenant or sublessee will attorn to and recognize such Facility Lender or the
purchaser at any foreclosure sale or any sale under a power of sale contained in
any such Facility Instrument, as Lessor under this Lease for the balance of the
Term then remaining, subject to all of the terms and provisions of the sublease.

                                  ARTICLE XXV

  OFFICER'S CERTIFICATES; FINANCIAL STATEMENTS; NOTICES AND OTHER CERTIFICATES

          (a) At any time and from time to time within twenty (20) days
     following written request by Lessor, Lessee will furnish to Lessor an
     Officer's Certificate certifying that this Lease is unmodified and in full
     force and effect (or that this Lease is in full force and effect as
     modified and setting forth the modifications) and the dates to which the
     Rent has been paid. Any such Officer's Certificate furnished pursuant to
     this Article may be relied upon by Lessor and any prospective purchaser of
     the Leased Property.

          (b) Lessee will furnish, or cause to be furnished, the following
     statements to Lessor, which must be in such form and detail as Lessor may
     from time to time, but not unreasonably, request:

               (i) within ninety (90) days after the end of each year, audited
     financial statements of Lessee, the Guarantors and, if Lessee owns any
     assets or conducts any other operations other than for the Facility, the
     Facility separately, prepared by a nationally recognized accounting firm or
     an independent certified public accounting firm reasonably acceptable to
     Lessor, which statements shall include a balance sheet and statement of
     income and expenses and changes in cash flow all in accordance with
     generally accepted accounting principles for the year then ended (it being
     agreed that Lessor shall bear the cost of any premium over normal charges
     that such accounting firm may charge in order to prepare such statements on
     an expedited basis (so long as Lessee has ordered such statements in a
     timely manner)), and

               (ii) within forty-five (45) days after the end of each quarter,
     current financial statements of Lessee, the Guarantors and, if Lessee owns
     any assets or conducts any other operations other than for the Facility,
     the Facility separately, certified to be true and correct by an officer of
     Lessee, and

               (iii) within thirty (30) days after the end of each month current
     operating statements of the Facility, including, but not limited to
     operating statistics, certified to be true and correct by an officer of the
     Lessee, and

               (iv) within ten (10) days of receipt, any and all notices
     (regardless of form) from any and all licensing and/or certifying agencies
     that any license or certification, including, without limitation,


                                       43

<PAGE>

     the Medicare and/or Medicaid certification and/or managed care contract of
     the Facility is being downgraded to a substandard category, revoked, or
     suspended, or that action is pending or being considered to downgrade to a
     substandard category, revoke, or suspend such Facility's license or
     certification, and

               (v) with reasonable promptness, such other information respecting
     the financial condition and affairs of Lessee and the Guarantors as Lessor
     may reasonably request from time to time.

          (c) Upon Lessor's request, Lessee will furnish to Lessor a certificate
     in form acceptable to Lessor certifying that no Event of Default, as
     defined herein, then exists and no event has occurred (that has not been
     cured) and no condition currently exists that would, but for the giving of
     any required notice or expiration of any applicable cure period, constitute
     such an Event of Default.

          (d) Within two (2) business days of receipt, Lessee shall furnish to
     Lessor copies of all notices and demands from any third party payor,
     including, without limitation, Medicare and/or Medicaid, concerning
     overpayment which will or may result in a repayment or a refund in excess
     of One Million Dollars ($1,000,000). Lessee hereby agrees that in the event
     of receipt of such notices or demands Lessor shall have the right, at
     Lessor's option, to participate in the appeal of such notices and demands.

          (e) Lessee shall furnish to Lessor on a monthly basis ongoing status
     reports (in form and content acceptable to Lessor) of any governmental
     investigations of the Lessee, the Guarantors, or any of their respective
     Affiliates, or the Facility, conducted by the United States Attorney, State
     Attorney General, the Office of the Inspector General of the Department of
     Health and Human Services, or any other Governmental Entity.

          (f) Lessee shall furnish to Lessor immediately upon receipt thereof
     copies of all notices of adverse events or deficiencies as defined by
     regulations or standards of the American Osteopathic Association or the
     equivalent of the accrediting body relied upon by the Lessee in the
     operation of the Facility or any part thereof.

          (g) Lessee shall furnish to Lessor immediately upon receipt thereof
     copies of all notices that the Lessee and/or the Guarantors are not in
     compliance with the Standards for Privacy of Individually Identifiable
     Health Information and the Transaction and Code Set Standards which were
     promulgated pursuant to the Health Insurance Portability and Accountability
     Act of 1996 ("HIPAA").

          (h) Lessor reserves the right to (A) require such other financial
     information from Lessee, and (B) require the Lessee to provide such other
     financial information from the Guarantors, at such other times as it shall
     deem reasonably necessary. All financial statements and information must be
     in such form and detail as Lessor shall from time to time, but not
     unreasonably, request.

          Subject to the rights of Lessor as provided in Section 42.8 of this
     Lease, Lessor and Lessee agree that all financial information disclosed
     pursuant to this Article XXV shall be kept in strictest confidence and
     shall not be disclosed to any person or entity.

                                  ARTICLE XXVI

                                   INSPECTION

     Lessee shall permit Lessor and its authorized representatives to inspect
the Leased Property and the Power Generation Facility during usual business
hours subject to any security, health, safety or confidentiality requirements of
Lessee, any governmental agency, any Insurance Requirements relating to the
Leased Property, or imposed by law or applicable regulations. Lessor shall use
every effort to avoid disturbing the patient care being provided at the
Facility. Lessor recognizes the importance of patient privacy. Beginning on the
Commencement Date and on each


                                       44

<PAGE>

anniversary thereof throughout the Term of this Lease, Lessee shall pay to
Lessor, or its designated Affiliate, an annual inspection fee equal to Seven
Thousand Five Hundred Dollars ($7,500), increased each January 1st by two and
one-half percent (2.5%).

                                 ARTICLE XXVII

                                   NO WAIVER

     No failure by Lessor or Lessee to insist upon the strict performance of any
term hereof or to exercise any right, power or remedy consequent upon a breach
thereof, and no acceptance of full or partial payment of Rent during the
continuance of any such breach, shall constitute a waiver of any such breach or
any such term. To the extent permitted by law, no waiver of any breach shall
affect or alter this Lease, which shall continue in full force and effect with
respect to any other then existing or subsequent breach.

                                 ARTICLE XXVIII

                               REMEDIES CUMULATIVE

     To the extent permitted by law, each legal, equitable or contractual right,
power and remedy of Lessor or Lessee now or hereafter provided either in this
Lease or by statute or otherwise shall be cumulative and concurrent and shall be
in addition to every other right, power and remedy and the exercise or beginning
of the exercise by Lessor or Lessee of any one or more of such rights, powers
and remedies shall not preclude the simultaneous or subsequent exercise by
Lessor or Lessee of any or all of such other rights, powers and remedies.

                                  ARTICLE XXIX

                                    SURRENDER

     No surrender to Lessor of this Lease or of the Leased Property or any part
of any thereof, or of any interest therein, shall be valid or effective unless
agreed to and accepted in writing by Lessor and no act by Lessor or any
representative or agent of Lessor, other than such a written acceptance by
Lessor, shall constitute an acceptance of any such surrender.

                                  ARTICLE XXX

                               NO MERGER OF TITLE

     There shall be no merger of this Lease or of the leasehold estate created
hereby by reason of the fact that the same person, firm, corporation or other
entity may acquire, own or hold, directly or indirectly, (a) this Lease or the
leasehold estate created hereby or any interest in this Lease or such leasehold
estate and (b) the fee estate in the Leased Property.

                                  ARTICLE XXXI

                               TRANSFERS BY LESSOR

     If Lessor or any successor owner of the Leased Property shall convey the
Leased Property in accordance with the terms hereof, other than as security for
a debt, and the grantee or transferee of the Leased Property shall expressly
assume all obligations of Lessor hereunder arising or accruing from and after
the date of such conveyance or transfer, and shall be reasonably capable of
performing the obligations of Lessor hereunder, Lessor or such successor owner,
as the case may be, shall thereupon be released from all future liabilities and
obligations of the Lessor under this Lease arising or accruing from and after
the date of such conveyance or other transfer as to the Leased Property and all
such future liabilities and obligations shall thereupon be binding upon the new
owner.


                                       45

<PAGE>

                                 ARTICLE XXXII

                                QUIET ENJOYMENT

     So long as Lessee shall pay all Rent as the same becomes due and shall
fully comply with all of the terms of this Lease and fully perform its
obligations hereunder, Lessee shall peaceably and quietly have, hold and enjoy
the Leased Property for the Term hereof, free of any claim or other action by
Lessor or anyone claiming by, through or under Lessor, but subject to all liens
and encumbrances of record as of the date hereof or hereafter consented to by
Lessee. No failure by Lessor to comply with the foregoing covenant shall give
Lessee any right to cancel or terminate this Lease, or to fail to pay any other
sum payable under this Lease, or to fail to perform any other obligation of
Lessee hereunder. Notwithstanding the foregoing, Lessee shall have the right by
separate and independent action to pursue any claim it may have against Lessor
as a result of a breach by Lessor of the covenant of quiet enjoyment contained
in this Article.

     Notwithstanding anything contained herein to the contrary, Lessor and
Lessee acknowledge that the Lessee has received and reviewed copies of the
Existing Leases. Lessee agrees that it will not disturb the rights of the
tenants under the Existing Leases.

     Lessee agrees that it will not disturb the rights of the tenants under the
Tenant Leases, if any, and will enforce all of the obligations of the tenants
under such Tenant Leases and will pay and perform all of the obligations to be
performed under the Tenant Leases as if Lessee is the lessor or landlord
thereunder. In addition, Lessor and Lessee acknowledge that the Lessee has taken
an assignment of certain contracts relating to the operation of the facility
located on the Leased Property (the "Contracts"), which Contracts require that
certain space in the Leased Property be provided as more particularly described
in the Contracts. Lessee agrees to abide by the terms and perform the
obligations under the Contracts. Lessee hereby agrees to indemnify and hold
Lessor harmless from any liabilities and damages incurred by the Lessor as a
result of the Lessee's default under the Tenant Leases and the Contracts.

                                 ARTICLE XXXIII

                                     NOTICES

     All notices, demands, consents, approvals, requests and other
communications under this Lease shall be in writing and shall be either (a)
delivered in person, (b) sent by certified mail, return receipt requested, (c)
delivered by a recognized over-night delivery service or (d) sent by facsimile
transmission and addressed as follows:

     (a) if to Lessee:   Prime Healthcare Services II, LLC
                         16850 Bear Valley Road
                         Victorville, California 92392
                         Attention: Lex Reddy
                         Fax: (760) 242-8220

         with a copy to: Desert Valley Hospital, Inc.
                         16850 Bear Valley Road
                         Victorville, California 92392
                         Attention: Richard Hayes, Esq.
                         Fax: (951) 346-3873


                                       46

<PAGE>

     (b) if to Lessor:   MPT of Sherman Oaks, LLC
                         1000 Urban Center Drive, Suite 501
                         Birmingham, Alabama 35242
                         Attn: Michael G. Stewart, Esq.
                         Fax: (205) 969-3756

         with a copy to: Baker, Donelson, Bearman, Caldwell & Berkowitz
                         1600 SouthTrust Tower
                         Birmingham, Alabama 35203
                         Attn: Thomas O. Kolb, Esq.
                         Fax: (205) 322-8007

or to such other address as either party may hereafter designate, and shall be
effective upon receipt. A notice, demand, consent, approval, request and other
communication shall be deemed to be duly received if delivered in person or by a
recognized delivery service, when left at the address of the recipient and if
sent by facsimile, upon receipt by the sender of an acknowledgment or
transmission report generated by the machine from which the facsimile was sent
indicating that the facsimile was sent in its entirety to the recipient's
facsimile number; provided that if a notice, demand, consent, approval, request
or other communication is served by hand or is received by facsimile on a day
which is not a Business Day, or after 5:00 p.m. on any Business Day at the
addressee's location, such notice or communication shall be deemed to be duly
received by the recipient at 9:00 a.m. on the first Business Day thereafter.

                                 ARTICLE XXXIV

                                   APPRAISAL

     In the event that it becomes necessary to determine the Fair Market Value,
Fair Market Value Purchase Price or Fair Market Added Value of the Leased
Property for any purpose of this Lease, the party required or permitted to give
notice of such required determination shall include in the notice the name of a
person selected to act as an appraiser on its behalf. Lessor and Lessee agree
that any appraisal of the Leased Property shall be without regard to the
termination of this Lease or any purchase options contained herein and shall
assume the Lease is in place for a term of fifteen (15) years, and based solely
on the rents and other revenues generated and to be generated pursuant to this
Lease without any regard to Lessee's operations. Within ten (10) days after
receipt of any such notice, Lessor (or Lessee, as the case may be) shall by
notice to Lessee (or Lessor, as the case may be) appoint a second person as an
appraiser on its behalf. The appraisers thus appointed (each of whom must be a
member of the American Institute of Real Estate Appraisers or any successor
organization thereto) shall, within forty-five (45) days after the date of the
notice appointing the first (1st) appraiser, proceed to appraise the Leased
Property to determine the Fair Market Value, Fair Market Value Purchase Price or
Fair Market Added Value thereof as of the relevant date (giving effect to the
impact, if any, of inflation from the date of their decision to the relevant
date); provided, however, that if only one (1) appraiser shall have been so
appointed, or if two (2) appraisers shall have been so appointed but only one
(1) such appraiser shall have made such determination within fifty (50) days
after the making of Lessee's or Lessor's request, then the determination of such
appraiser shall be final and binding upon the parties. If two (2) appraisers
shall have been appointed and shall have made their determinations within the
respective requisite periods set forth above and if the difference between the
amounts so determined shall not exceed ten percent (10%) of the lesser of such
amounts, then the Fair Market Value, Fair Market Value Purchase Price or Fair
Market Added Value shall be an amount equal to fifty percent (50%) of the sum of
the amounts so determined. If the difference between the amounts so determined
shall exceed ten percent (10%) of the lesser of such amounts, then such two (2)
appraisers shall have twenty (20) days to appoint a third (3rd) appraiser, but
if such appraisers fail to do so, then either party may request the American
Arbitration Association or any successor organization thereto to appoint an
appraiser within twenty (20) days of such request, and both parties shall be
bound by any appointment so made within such 20-day period. If no such appraiser
shall have been appointed within such twenty (20) days or


                                       47

<PAGE>

within ninety (90) days of the original request for a determination of Fair
Market Value, Fair Market Value Purchase Price or Fair Market Added Value,
whichever is earlier, either Lessor or Lessee may apply to any court having
jurisdiction to have appointment made by such court. Any appraiser appointed, by
the American Arbitrator Association or by such court shall be instructed to
determine the Fair Market Value, Fair Market Value Purchase Price or Fair Market
Added Value within thirty (30) days after appointment of such appraiser. The
determination of the appraiser which differs most in terms of dollar amount from
the determinations of the other two (2) appraisers shall be excluded, and fifty
percent (50%) of the sum of the remaining two (2) determinations shall be final
and binding upon Lessor and Lessee as the Fair Market Value, Fair Market Value
Purchase Price or Fair Market Added Value for such interest. This provision for
determination by appraisal shall be specifically enforceable to the extent such
remedy is available under applicable law, and any determination hereunder shall
be final and binding upon the parties except as otherwise provided by applicable
law. Lessor and Lessee shall each pay the fees and expenses of the appraiser
appointed by it and each shall pay one-half of the fees and expenses of the
third appraiser and one-half of all other costs and expenses incurred in
connection with each appraisal.

                                  ARTICLE XXXV

                                 PURCHASE RIGHTS

     35.1 LESSEE'S OPTION TO PURCHASE. So long as Lessee is not in monetary or
payment default of any kind, or no event has occurred which with the giving of
notice or the passage of time or both would constitute such a default (except as
otherwise expressly provided in Section 16.2) under the terms of this Lease and
the Tenant Leases, at any time from and after the tenth anniversary of the
Commencement Date, Prime shall have the option, to be exercised by ninety (90)
days' prior written notice to the Lessor, to purchase the Leased Property
(including Lessor's interests and rights under the Air Space Agreement and the
Parking Space Lease) at a purchase price sufficient to cause Lessor to receive,
on an unleveraged basis, a sum equal to (i) the Purchase Price of the Leased
Property and (ii) an amount sufficient to yield to Lessor an internal rate of
return thereon that is equal to eleven percent (11%) per year, taking into
account all payments of Base Rent received by Lessor prior to the closing date
of such purchase (the "Option Price"), provided, however, in no event shall the
Option Price be less than the Purchase Price. Unless expressly otherwise
provided in this Section 35.1, in the event the option to purchase the Leased
Property is exercised, (i) the terms set forth in Article XVIII shall apply,
(ii) Lessee shall continue paying Rent as required under this Lease until the
purchase is closed, and (iii) the sale/purchase must be closed within ninety
(90) days after the date of the written notice from Lessee to Lessor of Prime's
intent to purchase, unless a different closing date is agreed upon in writing by
Lessor and Prime. If Prime declines to exercise the option provided herein, then
Lessee shall have the option to purchase on the same terms and conditions, but
without an extension of the time to close the purchase.

     35.2 LESSEE'S OPTION TO PETITION FOR PURCHASE. Subject to the terms and
conditions of Section 35.1, at anytime during the Term of this Lease while the
Lease Guaranty is in effect, and has not been terminated pursuant to the terms
therein, Prime shall have the right and option to petition Lessor for the
purchase of the Leased Property from Lessor at the Option Price. Upon such
petition by Lessee, Lessor shall have the option of either (a) agreeing to
Lessee's purchase of the Leased Property in accordance with the provisions of
this Section 35.2 or (b) releasing the Guarantors from their joint and several
obligations under the Lease Guaranty, but retaining possession of the Leased
Property. In the event Lessor agrees to Lessee's purchase of the Leased
Property, (i) the terms set forth in Article XVIII shall apply, (ii) Lessee
shall continue paying Rent as required under this Lease until the purchase is
closed, and (iii) the sale/purchase must be closed within ninety (90) days after
the date of Lessee's petition to Lessor for purchase of the property, unless a
different closing date is agreed upon in writing by Lessor and Lessee.

     35.3 LESSOR'S OPTION TO PURCHASE LESSEE'S PERSONAL PROPERTY. Effective on
not less than ninety (90) days' prior written notice given at any time within
one hundred eighty (180) days prior to the expiration of the Term of this Lease,
but not later than ninety (90) days prior to such expiration, or such shorter
notice as shall be appropriate if this Lease is terminated prior to its
expiration date, Lessor shall have the option to purchase all (but not less than
all) of Lessee's Personal Property, if any, at the expiration or termination of
this Lease, for an amount


                                       48

<PAGE>

equal to the net sound insurable value thereof (current replacement cost less
accumulated depreciation on the books of Lessee pertaining thereto), subject to,
and with appropriate price adjustments for, all equipment leases, conditional
sale contracts, security interests and other encumbrances to which Lessee's
Personal Property is subject. Notwithstanding anything contained in this Section
35.2 to the contrary, the options to purchase granted under this Section 35.2 do
not pertain to any of the Licenses, it being understood and agreed that all
matters relating to the transfer of the Licenses are addressed in Article XXXIX
hereof.

     35.4 LESSEE'S OPTION TO PURCHASE UPON OTHER EVENTS. In the event that
Lessor seeks to terminate this Lease for any reason other than (i) a failure of
Lessee to pay the Base Rent or any other monetary obligation under this Lease or
(ii) an intentional breach of this Lease by Lessee, and such termination is
contested by Lessee, then Prime shall have the option, to be exercised by ninety
(90) days prior written notice to the Lessor and within thirty (30) days
following notice by Lessor of its intention to terminate, to purchase the Leased
Property (including Lessor's interests and rights under the Air Space Agreement
and the Parking Space Lease) at the Option Price (which, for this purpose, shall
be calculated using an internal rate of return rate of twelve and one-half
percent (12.5%)) and on the terms provided in Section 35.1.

                                 ARTICLE XXXVI

                             INTENTIONALLY OMITTED

                                 ARTICLE XXXVII

                        FINANCING OF THE LEASED PROPERTY

     37.1 FINANCING BY LESSOR. Lessor agrees that, if it grants or creates any
mortgage, lien, encumbrance or other title retention agreement ("Encumbrances")
upon the Leased Property, Lessor will use reasonable efforts to obtain an
agreement from the holder of each such Encumbrance whereby such holder agrees
(a) to give Lessee the same notice, if any, given to Lessor of any default or
acceleration of any obligation underlying any such Encumbrance or any sale in
foreclosure of such Encumbrance, (b) to permit Lessee, after twenty (20) days
prior written notice, to cure any such default on Lessor's behalf within any
applicable cure period, in which event Lessor agrees to reimburse Lessee for any
and all reasonable out-of-pocket costs and expenses incurred to effect any such
cure (including reasonable attorneys' fees), (c) to permit Lessee to appear with
its representatives and to bid at any foreclosure sale with respect to any such
Encumbrance, (d) that, if subordination by Lessee is requested by the holder of
each such Encumbrance, to enter into an agreement with Lessee containing the
provisions described in Article XXXVIII of this Lease, and (e) Lessor further
agrees that no such Encumbrance shall in any way prohibit, derogate from, or
interfere with Lessee's right and privilege to collaterally assign its leasehold
and contract rights hereunder provided such collateral assignment and rights
granted to the assignee thereunder shall be subordinate to the rights of the
holder of an Encumbrance as provided in Article XXXVIII hereof.

                                ARTICLE XXXVIII

                        SUBORDINATION AND NON-DISTURBANCE

     At the request from time to time by one or more Facility Lenders, within
ten (10) days from the date of request, Lessee shall execute and deliver to such
Facility Lender a written agreement in a form reasonably acceptable to such
Facility Lender whereby Lessee subordinates this Lease and all of its rights and
estate hereunder (except for Lessee's purchase options as expressly provided in
this Lease) to each Facility Instrument that encumbers the Leased Property or
any part thereof and agrees with each such Facility Lender that Lessee will
attorn to and recognize such Facility Lender or the purchaser at any foreclosure
sale or any sale under a power of sale contained in any such Facility
Instrument, as the case may be, as Lessor under this Lease for the balance of
the Term then


                                       49

<PAGE>

remaining, subject to all of the terms and provisions of this Lease; provided,
however, that each such Facility Lender simultaneously executes and delivers a
written agreement consenting to this Lease and agreeing that, notwithstanding
any such other mortgage, deed of trust, right, title or interest, or any
default, expiration, termination, foreclosure, sale, entry or other act or
omission under, pursuant to or affecting any of the foregoing, Lessee shall not
be disturbed in peaceful enjoyment of the Leased Property nor shall this Lease
be terminated or canceled at any time, except in the event Lessee is in default
under this Lease.

                                 ARTICLE XXXIX

                                    LICENSES

     Lessee shall maintain at all times during the Term hereof and any holdover
period all federal, state and local governmental licenses, approvals,
qualifications, variances, certificates of need, franchises, accreditations,
certificates, certifications, consents, permits and other authorizations and all
contracts, including contracts with governmental or quasi-governmental entities
which may be necessary or useful in the operation of the Facility (collectively,
the "Licenses"), and shall qualify and comply with all applicable laws as they
may from time to time exist, including those applicable to certification and
participation as a provider under Medicare and Medicaid legislation and
regulations.

     Lessee shall not, without the prior written consent of Lessor, which may be
granted or withheld in its sole discretion, effect or attempt to effect any
change in the license category or status of the Facility or any part thereof.
Under no circumstances shall Lessee have the right to transfer any of the
Licenses to any location other than the Facility or to any other person or
entity (except to Lessor as contemplated herein), whether before, during or
after the Term hereof. Following the termination of this Lease, Lessee shall
retain no rights whatsoever to the Licenses, and Lessee will not move or attempt
to move the Licenses to any other location. To the extent that Lessee has or
will extend any right, title, or claim of right whatsoever in and to the
Licenses or the right to operate the Facility, all such right, title, or claim
of right shall automatically revert to the Lessor or to Lessor's designee upon
termination of this Lease, to the extent permitted by law. Upon any termination
of this Lease or any breach or default by Lessee hereunder (which breach or
default is not cured within any applicable grace period and which results in
Lessor terminating this Lease), to the extent permitted by law, Lessor shall
have the sole, complete, unilateral, absolute and unfettered right to cause all
Licenses to be reissued in Lessor's name or in the name of Lessor's designee
upon application therefor to the issuing authority, and to further have the
right to have any and all provider and/or third party payor agreements as a
provider in the Medicare and/or Medicaid and other federal healthcare programs
issued in Lessor's name or in the name of Lessor's designee.

     Upon the termination of this Lease and for reasonable periods of time
immediately before and after such termination, Lessee shall use its best
efforts, without additional consideration to Lessee, to facilitate an orderly
transfer of the operation and occupancy of the Facility to Lessor or any new
lessee or operator selected by Lessor, it being understood and agreed that such
cooperation shall include, without limitation, (a) Lessee's transfer and
assignment, if and to the extent permitted by law, to Lessor, Lessor's nominee
or Lessor's new lessee or operator of any and all Licenses, (b) Lessee's use of
best efforts to maintain, to the maximum extent allowed by applicable law, the
effectiveness of any and all such Licenses until such time as any new Licenses
necessary for any new Lessee or operator to operate the Facility have been
issued, and (c) the taking of such other actions as are required by applicable
law or as are reasonably requested by Lessor. Upon any termination of this Lease
or any breach or default by Lessee hereunder (which breach or default is not
cured within any applicable grace period and which results in Lessor terminating
this Lease), to the extent permitted by law, Lessor shall have the sole,
complete, unilateral, absolute and unfettered right to cause any and all
Licenses to be reissued in Lessor's name or in the name of Lessor's designee
upon application therefor to the appropriate authority, if required, and to
further have the right, to the extent permitted by law, to have any and all
Medicare and Medicaid and any other provider and/or third party payor agreements
issued in Lessor's name or in the name of Lessor's designee. The provisions of
this Section are in addition to the other provisions of this Lease.


                                       50

<PAGE>

     It is an integral condition of this Lease that Lessee covenants and agrees
not to sell, move, modify, cancel, surrender, transfer, assign, sell, relocate,
pledge, secure, convey or in any other manner encumber any License or any
governmental or regulatory approval, consent or authorization of any kind to
operate the Facility. To the extent permitted by law, Lessee hereby grants to
Lessor a landlord's lien on the Licenses.

     Lessee shall immediately (within two (2) business days) notify Lessor in
writing of any notice, action or other proceeding or inquiry of any governmental
agency, bureau or other authority whether federal, state, or local, of any kind,
nature or description, which could adversely affect any material License or
Medicare and/or Medicaid-certification status, or accreditation status of the
Facility, or the ability of Lessee to maintain its status as the licensed and
accredited operator of the Facility or which alleges noncompliance with any law.
Lessee shall immediately (within two (2) business days) upon Lessee's receipt,
furnish Lessor with a copy of any and all such notices and Lessor shall have the
right, but not the obligation, to attend and/or participate, in Lessor's sole
and absolute discretion, in any such actions or proceedings. Lessee shall act
diligently to correct any deficiency or deal effectively with any "adverse
action" or other proceedings, inquiry or other governmental action, so as to
maintain the licensure and Medicare and/or Medicaid-certification status stated
herein in good standing at all times. Lessee shall not agree to any settlement
or other action with respect to such proceedings or inquiry which affects the
use of the Leased Property or any portion thereof as provided herein without the
prior written consent of Lessor, which consent shall not be unreasonably
withheld or delayed. Lessee agrees to sign, acknowledge, provide and deliver to
Lessor (and if Lessee fails to do so upon request of Lessor, Lessee hereby
irrevocably appoints Lessor, as agent of Lessee for such express purposes) any
and all documents, instruments or other writings which are or may become
necessary, proper and/or advisable to cause any and all hospital licenses
required for the Primary Intended Use, Department of Human Services of the State
of California ("DHS") provider agreements, and/or state or federal Title XVIII
and/or Title XIX provider agreements to be obtained (either in total or
individually) in the name of Lessor or the name of Lessor's designee in the
event that Lessor reasonably determines in good faith that (irrespective of any
claim, dispute or other contention or challenge of Lessee) there is any breach,
default or other lapse in any representation, warranty, covenant or other
delegation of duty to Lessee (beyond any applicable grace or cure period) and
the issuing government agency has threatened or asserted that such license or
provider agreement will terminate or has lapsed or that Lessee's license or
certification or accreditation status is in jeopardy. This power is coupled with
the ownership interest of Lessor in and to the Facility and all incidental
rights attendant to any and all of the foregoing rights.

                                   ARTICLE XL

                         COMPLIANCE WITH HEALTHCARE LAWS

     Lessee hereby covenants, warrants and represents to Lessor that as of the
Commencement Date and throughout the Term: (i) Lessee shall be, and shall
continue to be validly licensed, Medicare and/or Medicaid certified, and, if
required, accredited to operate the Facility in accordance with the applicable
rules and regulations of the State of California, federal governmental
authorities and accrediting bodies, including, but not limited to, the United
States Department of Health and Human Services, DHSS, DHS and CMS; and/or (ii)
Lessee shall be, and shall continue to be, certified by and the holder of valid
provider agreements with Medicare/Medicaid issued by DHHS, DHS and/or CMS and
shall remain so certified and shall remain such a holder in connection with its
operation of the Primary Intended Use on the Leased Property as a licensed and
Medicare and/or Medicaid certified acute care hospital facility; (iii) Lessee
shall be, and shall continue to be in substantial compliance with and shall
remain in substantial compliance with all state and federal laws, rules,
regulations and procedures with regard to the operation of the Facility,
including, without limitation, substantial compliance under HIPAA; (iv) Lessee
shall operate the Facility in a manner consistent with high quality acute care
services and sound reimbursement principles under the Medicare and/or Medicaid
programs and as required under state and federal law; and (v) Lessee shall not
abandon, terminate, vacate or fail to renew any license, certification,
accreditation, certificate, approval, permit, waiver, provider agreement or any
other authorization which is required for the lawful and proper operation of the
Facility or in any way commit any act which will or may cause any such license,
certification, accreditation,


                                       51

<PAGE>

certificate, approval, permit, waiver, provider agreement or other authorization
to be revoked by any federal, state or local governmental authority or
accrediting body having jurisdiction thereof.

                                   ARTICLE XLI

                             LESSOR'S RIGHT TO SELL

     Lessee understands that Lessor may sell its interest in the Leased Property
in whole or in part at any time, subject to this Lease and the rights of Lessee
as expressly provided in this Lease. The Lessee agrees that any purchaser may
exercise any and all rights of Lessor as fully as if such had made the purchase
of the Leased Property directly from the Lessee as set out in the Purchase
Agreement. Lessor may divulge to any such purchaser all information, reports,
financial statements, certificates and documents obtained by it from Lessee.

                                  ARTICLE XLII

                                  MISCELLANEOUS

     42.1 GENERAL. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, Lessee or Lessor
arising prior to any date of expiration or termination of this Lease shall
survive such expiration or termination. If any term or provision of this Lease
or any application thereof shall be invalid or unenforceable, the remainder of
this Lease and any other application of such term or provision shall not be
affected thereby. If any late charges provided for in any provision of this
Lease are based upon a rate in excess of the maximum rate permitted by
applicable law, the parties agree that such charges shall be fixed at the
maximum permissible rate. Neither this Lease nor any provision hereof may be
changed, waived, discharged or terminated except by an instrument in writing and
in recordable form signed by Lessor and Lessee. All the terms and provisions of
this Lease shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. The headings in this Lease are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

     42.2 LESSOR'S EXPENSES. In addition to other provisions herein, Lessee
agrees and shall pay and/or reimburse Lessor's reasonable costs and expenses,
including legal fees, incurred or resulting from and relating to (a) requests by
Lessee for approval or consent under this Lease Agreement; (b) requests by
Lessor for approval or consent under this Lease and all other documents executed
between Lessor and Lessee in connection herewith, (c) any circumstances or
developments which give rise to Lessor's right of consent or approval, (d)
circumstances resulting from any action or inaction by Lessee contrary to the
lease provisions, and (e) a request for changes including, but not limited to,
(i) the permitted use of the Leased Property, (ii) alterations and improvements
to the Leased Improvements, (iii) subletting or assignment, and (iv) any other
changes in the terms, conditions or provisions of this Lease. Such expenses and
fees shall be paid by Lessee within thirty (30) days of the submission of a
statement for the same or such amount(s) shall become Additional Charges and
subject to the Overdue Rate after the 30 days.

     42.3 ASSETS PURCHASED PURSUANT TO PURCHASE OPTIONS. In connection with any
purchase options granted to Lessee hereunder, in the event Lessee exercises such
purchase options, the term "Leased Property" shall also include any "Assets" as
such term is defined in the Purchase Agreement.

     42.4 ENTIRE AGREEMENT; MODIFICATIONS. This Lease embodies and constitutes
the entire understanding between the parties with respect to the transactions
contemplated herein, and all prior to contemporaneous agreements,
understandings, representations and statements (oral or written) are merged into
this Lease. Neither this Lease nor any provision hereof may be modified or
amended except by an instrument in writing signed by Lessor and Lessee.


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<PAGE>

     42.5 LEASE GUARANTY. Lessee shall cause to be delivered to Lessor
simultaneously herewith the fully executed Lease Guaranty.

     42.6 FUTURE FINANCING. Lessee hereby agrees that if at any time during the
Term Lessee purchases, expands or renovates or contemplates the purchase,
expansion or renovation of a facility or property to be used for the operation
of a business for the Primary Intended Use, Lessee shall notify Lessor in
writing ("Lessee's Notice") of such purchase, expansion or renovation or
contemplated purchase, expansion or renovation, and Lessor shall have the first
opportunity to provide financing for such purchase, expansion or renovation upon
terms mutually agreeable to Lessor and Lessee. Lessor shall notify Lessee in
writing on or before the expiration of twenty (20) business days after receipt
of Lessee's Notice whether Lessor is interested in providing such financing. If
Lessor agrees to provide the financing, the terms and conditions of such
financing will be contingent upon, among other things, performance benchmarks
acceptable to Lessor and the Lessor's satisfaction and approval of other due
diligence requirements.

     42.7 LETTER OF CREDIT. Intentionally Omitted.

     42.8 CHANGE IN OWNERSHIP/CONTROL. So long as this Lease remains in effect,
the aggregate ownership of the current members of Lessee and the Guarantors
shall not be reduced below fifty-one (51%) percent.

     42.9 LESSOR SECURITIES OFFERING AND FILINGS. Notwithstanding anything
contained herein to the contrary, Lessee shall cooperate with Lessor or MPT in
connection with any securities offerings and filings, or MPT's efforts to
procure or maintain financing for or related to the Leased Property and
Facility, and in connection therewith, the Lessee shall furnish MPT, or cause
its accountants to furnish MPT, with such financial and other information as MPT
shall request, including, without limitation, audited and unaudited financial
statements of Lessee and Guarantors, and any necessary consents of accountants
of Lessee and Guarantors, provided, however, that Lessee and Guarantors shall
use their best efforts to furnish any consents of accountants of Lessee and
Guarantors. MPT shall reimburse Lessee and Guarantors for any and all
incremental costs (i.e. costs not otherwise incurred by Lessee or Guarantors
with respect to the normal preparation of such financial statements for other
purposes) incurred in furnishing, or causing its accountants to furnish, such
financial statements and consents. MPT shall protect, indemnify, save harmless
and defend Lessee and Guarantors from and against all liabilities, obligations,
claims, damages, penalties, causes of action, costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses, but excluding any
such liabilities arising from any fraud on the part of Lessee, any Guarantor or
the accountants of Lessee or any Guarantor) imposed upon or incurred by or
asserted against Lessee by reason of the inclusion of any such financial
statements or consents in any securities offerings and filings of MPT. MPT may
disclose that Lessor has entered into this Lease with Lessee and Prime and may
provide and disclose information regarding this Lease, the Lessee, the
Guarantors, the Leased Property and the Facility, and such additional
information which MPT may reasonably deem necessary, to its proposed investors
in such public offering or private offering of securities, or any current or
prospective lenders with respect to such financing. Upon reasonable advance
notice, MPT and any lender providing financing for the Leased Property shall
have the right, subject to the execution of a written confidentiality agreement
on terms reasonably acceptable to MPT, such lender and Lessee, to access,
examine and copy all agreements, records, documentation and information relating
to the Lessee and Guarantors, the Leased Property and Facility, and to discuss
such affairs and information with the officers, employees and independent public
accountants of the Lessee and Guarantors as often as may reasonably be desired.

     42.10 NON-RECOURSE AS TO LESSOR. Anything contained herein to the contrary
notwithstanding, any claim based on or in respect of any liability of Lessor
under this Lease shall be enforced only against the Leased Property and not
against any other assets, properties or funds of (i) Lessor, (ii) any director,
officer, general partner, shareholder, limited partner, beneficiary, employee or
agent of Lessor or any general partner of Lessor or any of its general partners
(or any legal representative, heir, estate, successor or assign of any thereof),
(iii) any predecessor or successor partnership or corporation (or other entity)
of Lessor or any of its general partners, shareholders, officers, directors,
employees or agents, either directly or through Lessor or its general partners,
shareholders, officers,


                                       53

<PAGE>

directors, employees or agents or any predecessor or successor partnership or
corporation (or other entity), or (iv) any person affiliated with any of the
foregoing, or any director, officer, employee or agent of any thereof.

     42.11 PRIME A INVESTMENTS, L.L.C.'S RIGHT TO EXERCISE PURCHASE OPTIONS.
Lessor hereby consents to and agrees that Prime may exercise any of Lessee's
rights and options to purchase as set forth under this Lease not otherwise
granted to Prime pursuant to the same terms and conditions provided to Lessee
under this Lease. Prime shall be deemed to be a third party beneficiary of this
Lease with respect to the right of such options.

     42.12 MANAGEMENT AGREEMENTS. Lessee shall not engage any Management Company
or allow any tenants, subtenants or sublessees of the Facility to engage any
Management Company, without Lessor's prior written consent, which consent shall
not be unreasonably withheld; provided, however, Lessor's rights relating to any
Management Company as set forth in Section 16.2 hereof shall be at Lessor's sole
and absolute discretion. Lessee shall, if required by Lessor, assign all of
Lessee's rights under the Management Agreements to Lessor and Lessor shall be
entitled to assign same to Lessor's lender. At the request of the Lessor from
time to time, Lessee shall execute and deliver (and require the tenants,
subtenants or sublessees to execute and deliver, if applicable) an assignment
and/or subordination agreement relating to the Management Agreements, which
assignment and/or subordination agreement shall be in such form and content as
reasonably acceptable to Lessor and/or any lender providing financing to Lessor,
and shall be delivered to Lessor within ten (10) days after Lessor's request.
Lessee hereby agrees that all payments and fees payable under the Management
Agreements are and shall be subordinate to the payment of the obligations under
this Lease and all other documents executed in connection with this Lease and
the Purchase Agreement. Lessee agrees that all Management Agreements entered
into in connection with the Leased Property shall expressly contain provisions
acceptable to Lessor which (i) require an assignment of the Management
Agreements to Lessor upon request by Lessor, (ii) confirm and warrant that all
sums due and payable under the Management Agreements are subordinate to this
Lease, (iii) grant Lessor the right to terminate the Management Agreement
(individually or collectively, if more than one (1)) upon a default hereunder or
upon a default under such applicable Management Agreement, (iv) require the
Management Company to execute and deliver to Lessor within ten (10) days from
Lessor's request an estoppel certificate, assignment and/or subordination
agreement as required by Lessor and/or Lessor's lender providing financing to
Lessor, in such form and content as is acceptable to Lessor and/or its lender,
and (v) all fees due and payable under any Management Agreements, shall be
subordinate to all monetary obligations under this Lease. At the request of the
Lessor from time to time, Lessee shall execute and obtain from all parties
subject to such Management Agreements executed written confirmation of such
assignment or subordination, which shall be delivered to Lessor within ten (10)
days from Lessor's request.

     42.13 GOVERNING LAW. THIS LEASE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS
EXECUTED AND PERFORMED IN SUCH STATE, WITHOUT GIVING EFFECT TO CONFLICTS OF LAW
PRINCIPLES.

     42.14 JURISDICTION AND VENUE. LESSOR AND LESSEE CONSENT TO PERSONAL
JURISDICTION IN THE STATE OF DELAWARE. LESSOR AND LESSEE AGREE THAT ANY ACTION
OR PROCEEDING ARISING FROM OR RELATED TO THIS LEASE SHALL BE BROUGHT AND TRIED
EXCLUSIVELY IN THE STATE OR FEDERAL COURTS OF THE STATE OF DELAWARE. EACH OF THE
PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF
VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT. LESSEE
EXPRESSLY ACKNOWLEDGES THAT DELAWARE IS A FAIR, JUST AND REASONABLE FORUM AND
LESSEE AGREES NOT TO SEEK REMOVAL OR TRANSFER OF ANY ACTION FILED BY LESSOR IN
SAID COURTS. FURTHER, LESSOR AND LESSEE IRREVOCABLY AND UNCONDITIONALLY WAIVE
ANY CLAIM THAT SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN ANY
INCONVENIENT FORUM. SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY
CERTIFIED MAIL ADDRESSED TO A PARTY AT THE ADDRESS DESIGNATED PURSUANT TO
ARTICLE XXXIII HEREOF SHALL BE EFFECTIVE SERVICE OF PROCESS AGAINST SUCH PARTY
FOR ANY ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT. A FINAL JUDGMENT IN ANY
SUCH ACTION OR


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<PAGE>

PROCEEDING BROUGHT IN ANY SUCH COURT MAY BE ENFORCED IN ANY OTHER COURT TO WHOSE
JURISDICTION ANY OF THE PARTIES IS OR MAY BE SUBJECT.

     42.15 COUNTERPARTS. This Lease may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.

                                  ARTICLE XLIII

                               MEMORANDUM OF LEASE

     Lessor and Lessee shall, promptly upon the request of either, enter into a
short form memorandum of this Lease, in form suitable for recording under the
laws of the state in which the Leased Property is located in which reference to
this Lease, and all options contained herein, shall be made.

                       [Signatures on the following pages]


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<PAGE>

IN WITNESS WHEREOF, the parties have caused this Lease to be executed and their
respective corporate seals to be hereunto affixed and attested by their
respective officers thereunto duly authorized.

                                        LESSOR:

                                        MPT OF SHERMAN OAKS, LLC

                                        BY: MPT OPERATING PARTNERSHIP, L.P.
                                        ITS: SOLE MEMBER


                                        By: /s/ Edward K. Aldag, Jr.
                                            ------------------------------------
                                        Name: Edward K. Aldag, Jr.
                                        Its: President and
                                             Chief Executive Officer

STATE OF ALABAMA
JEFFERSON COUNTY

     On this ______ day of ___________, 20__, before me, the undersigned
authority, a Notary Public of said State, duly commissioned and sworn,
personally appeared EDWARD K. ALDAG, JR., personally known to me (or proved to
me on the basis of satisfactory evidence) to be the person who executed the
within instrument as President and Chief Executive Officer of MPT Operating
Partnership, L.P., the Sole Member of MPT OF SHERMAN OAKS, LLC, a Delaware
limited liability company, and acknowledged to me that such limited partnership,
as the Sole Member of such limited liability company executed the same.

     IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day
and year in this certificate first above written.


                                        ----------------------------------------
                                        NOTARY PUBLIC
                                        Printed Name:
                                                      --------------------------
                                        My Commission Expires:
                                                               -----------------
                                        [AFFIX NOTARY SEAL]


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<PAGE>

                                        LESSEE:

                                        PRIME HEALTHCARE SERVICES II, LLC


                                        By: /s/ Lex Reddy
                                            ------------------------------------
                                        Name: Lex Reddy
                                              ----------------------------------
                                        Its: President/CEO
                                             -----------------------------------

STATE OF CALIFORNIA
_____________ COUNTY

     On this ______ day of ___________, 20__, before me, the undersigned
authority, a Notary Public of said State, duly commissioned and sworn,
personally appeared ____________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person who executed the within
instrument as ____________ of Prime Healthcare Services II, LLC, a California
limited liability company, and acknowledged to me that such company executed the
same.

     IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day
and year in this certificate first above written.


                                        ----------------------------------------
                                        NOTARY PUBLIC
                                        Printed Name:
                                                      --------------------------
                                        My Commission Expires:
                                                               -----------------

[AFFIX NOTARY SEAL]


                                       57

<PAGE>

                                  SCHEDULE 8.6

                EXCEPTIONS TO SINGLE PURPOSE ENTITY REQUIREMENTS

                                      None.


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<PAGE>

                                    EXHIBIT A

                                LEGAL DESCRIPTION

PARCEL 1:

Lot(s) 1 of Tract No. 19339, in the City of Los Angeles, County of Los Angeles,
State of California, as per Map recorded in Book 535, Page(s) 1 of Maps, in the
Office of the County Recorder of said County.

PARCEL 1A:

An easement for ingress and egress and parking for 57 motor vehicles over the
North 200 feet of the West 114 feet of Lot 1 of Tract 15587, in the City of Los
Angeles, County of Los Angeles, State of California, as per Map recorded in Book
346, Page(s) 30 and 31 of Maps, in the Office of the County Recorder of said
County, to be used in conjunction with the operation of the building located on
Parcel 1.

PARCEL 2:

Lot(s) 1 of Tract No. 23375, in the City of Los Angeles, County of Los Angeles,
State of California, as per Map recorded in Book 628, Page(s) 83 of Maps, in the
Office of the County Recorder of said County.

PARCEL 3:

Lot(s) 1 of Tract No. 19397, in the City of Los Angeles, County of Los Angeles,
State of California, as per Map filed in Book 610, Page(s) 76 of Maps, in the
Office of the County Recorder of said County, together with that portion of Lots
1, 2, 3 and 4 of Tract No. 6595, in said City, County and State, as per Map
recorded in Book 70, Page(s) 88 of Maps, records of said County, described as
follows:

Beginning at the Northeast corner of said Lot 1 of Tract No. 19397; thence
Northerly along the prolongation of the Easterly line of said last mentioned Lot
25 feet more or less, to the Southerly line of the Northerly 75.00 feet of said
Lot 3; thence Westerly along said Southerly line 145 feet to the Westerly line
of the Easterly 150.00 feet of said Lot 3; thence Northerly along said Westerly
line to and along the Westerly line of the Easterly 150.00 feet of said Lot 2;
to and along the Westerly line of the Easterly 150.00 feet of said Lot 1, of
Tract No. 6595 to the Northerly line of last said Lot 1; thence Westerly along
said Northerly line 200 feet more or less to the Easterly line of the Westerly
50.00 feet of said Lot 4; thence Southerly along last said Easterly line 300
feet more or less to the Westerly prolongation of the Northerly line of said Lot


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<PAGE>

1 of Tract 19397 being also the Southerly line of said Lot 4; thence Easterly
along said Westerly prolongation to and along last said Northerly line to the
point of beginning.

Except therefrom that certain air space lying within the boundary line of Lots
1, 2, 3 and 4 of Tract No. 6595 in the City of Los Angeles, County of Los
Angeles, State of California, as per Map filed in Book 70, Page(s) 88 of Maps,
in the Office of the County Recorder of said County, more particularly described
as follows:

Beginning at a point in the Westerly line of the East 150.00 feet of said Lots
1, 2 and 3 distant Southerly along said line 10.00 feet from the Northerly line
of said Lot 1; thence Westerly, parallel to said Northerly line 195 feet more or
less to a line parallel with and distant Easterly 5.00 feet measured at right
angles from the Easterly line of the West 50 feet of said Lot 4; thence
Southerly along last said parallel line 209.50 feet; thence Easterly parallel
with said Northerly line 191.00 feet more or less to a line parallel with and
distant Westerly 4.00 feet measured at right angles from said Westerly line of
the East 150.00 feet of Lots 1, 2 and 3; thence Southerly along said parallel
line 11.50 feet; thence Easterly at right angles 4.00 feet to said Westerly
line; thence Northerly along said Westerly line to the point of beginning.

The lower limit of said air space is an inclined place sloping upward to the
South at a rate of 1.002 percent from the horizontal and passing through the
Northerly line of said above described Parcel at an elevation of 667.22 feet
above mean sea level as established by the Los Angeles City Engineer's Precise
Level Loop, 1960 Adjustment.

The upper limit of said air space is an inclined place sloping upward to the
South at a rate of 1.002 percent from the horizontal and passing through last
Northerly line at an elevation of 702.22 feet above said mean sea level.

PARCEL 4:

The Northerly 25 feet of the Southerly 50 feet of the Easterly 150 feet of Lot
3, of Tract 6595, in the City of Los Angeles, County of Los Angeles, State of
California, as per Map thereof recorded in Book 70, Page(s) 88 of Maps, in the
Office of the County Recorder of said County.

PARCEL 5:

Parcel B of Parcel Map L.A. No. 1398, in the City of Los Angeles, County of Los
Angeles, State of California, as per Map filed in Book 18, Page(s) 57 of Parcel
Recorder of said County.


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<PAGE>

PARCEL 5A:

An easement for ingress and egress over the South 28 feet of the North 30 feet
of the East 150 feet of Lot 3, of Tract No. 6595, in the City of Los Angeles,
County of Los Angeles, State of California, as per Map recorded in Book 70,
Page(s) 88 of Maps, in the Office of the County Recorder of said County, as
shown in a document recorded June 6, 1968, as Instrument No. 1820 of Official
Records.


                                       61

<PAGE>

                                    EXHIBIT B

                              PERMITTED EXCEPTIONS


                                       62

<PAGE>

                                    EXHIBIT C

                                 EXISTING LEASES


                                       63