3
                                   EXHIBIT 10.5
                                 Lease Agreement
                                     between
                          CNL Health Care Partners, LP
                                       and
                               BG Orland Park, LLC



<PAGE>








                                 LEASE AGREEMENT


                           DATED AS OF APRIL 20, 2000


                                 BY AND BETWEEN


                          CNL HEALTH CARE PARTNERS, LP,
                         a Delaware limited partnership,
                                  AS LANDLORD,


                                       AND


                              BG ORLAND PARK, LLC,
                                    AS TENANT



<PAGE>


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>


ARTICLE 1.........................................................................................................1

<S><C>

ARTICLE 2.........................................................................................................4
   2.1 Leased Property............................................................................................4
   2.2 Condition of Leased Property...............................................................................4
   2.3 Fixed Term.................................................................................................4
   2.4 Extended Term..............................................................................................4

ARTICLE 3.........................................................................................................4
   3.1 Rent.......................................................................................................4
   3.2 Late Payment of Rent, Etc..................................................................................4
   3.3 Net Lease..................................................................................................4
   3.4 Security for Tenant's Performance..........................................................................4

ARTICLE 4.........................................................................................................4
   4.1 Permitted Use..............................................................................................4
   4.2 Compliance with Legal/Insurance Requirements, Etc..........................................................4
   4.3 Environmental Matters......................................................................................4

ARTICLE 5.........................................................................................................4
   5.1 Maintenance and Repair.....................................................................................4
   5.2 Tenant's Personal Property.................................................................................4
   5.3 Yield Up...................................................................................................4

ARTICLE 6.........................................................................................................4
   6.1 Improvements to the Leased Property........................................................................4
   6.2 Salvage....................................................................................................4
   6.3 Equipment Leases...........................................................................................4

ARTICLE 7.........................................................................................................4

ARTICLE 8.........................................................................................................4

ARTICLE 9.........................................................................................................4
   9.1 General Insurance Requirements.............................................................................4
   9.2 Waiver of Subrogation......................................................................................4
   9.3 General Provisions.........................................................................................4
   9.4 Blanket Policy.............................................................................................4
   9.5 Indemnification of Landlord................................................................................4

ARTICLE 10........................................................................................................4
   10.1 Insurance Proceeds........................................................................................4
   10.2 Damage or Destruction.....................................................................................4
   10.3 Damage Near End of Term...................................................................................4
   10.4 Tenant's Property.........................................................................................4
   10.5 Restoration of Tenant's Property..........................................................................4
   10.6 No Abatement of Rent......................................................................................4
   10.7 Waiver....................................................................................................4

ARTICLE 11........................................................................................................4
   11.1 Total Condemnation, Etc...................................................................................4
   11.2 Partial Condemnation......................................................................................4
   11.3 Disbursement of Award.....................................................................................4
   11.4 Abatement of Rent.........................................................................................4
   11.5 Temporary Condemnation....................................................................................4
   11.6 Allocation of Award.......................................................................................4

ARTICLE 12........................................................................................................4
   12.1 Events of Default.........................................................................................4
   12.2 Remedies..................................................................................................4
   12.3 Waiver of Jury Trial......................................................................................4
   12.4 Application of Funds......................................................................................4
   12.5 Landlord's Right to Cure Tenant's Default.................................................................4
   12.6 Security Deposit..........................................................................................4
   12.7 Good Faith Dispute........................................................................................4

ARTICLE 13........................................................................................................4

ARTICLE 14........................................................................................................4
   14.1 Landlord Notice Obligation................................................................................4
   14.2 Landlord's Default........................................................................................4
   14.3 Special Remedies for Landlord Funding Default.............................................................4
   14.4 Special Remedy under Section 10.1 and 11.3................................................................4

ARTICLE 15........................................................................................................4
   15.1 Transfer of Leased Property...............................................................................4
   15.2 Conditions of Transfer....................................................................................4
   15.3 Transfer of Interest in Landlord..........................................................................4

ARTICLE 16........................................................................................................4
   16.1 Subletting and Assignment.................................................................................4
   16.2 Required Sublease Provisions..............................................................................4
   16.3 Permitted Sublease and Assignment.........................................................................4
   16.4 Sublease Limitation.......................................................................................4

ARTICLE 17........................................................................................................4
   17.1 Estoppel Certificates.....................................................................................4
   17.2 Financial Statements......................................................................................4
   17.3 General Operations........................................................................................4

ARTICLE 18........................................................................................................4

ARTICLE 19........................................................................................................4
   19.1 Negotiation...............................................................................................4
   19.2 Arbitration...............................................................................................4

ARTICLE 20........................................................................................................4
   20.1 Landlord May Grant Liens..................................................................................4
   20.2 Subordination of Lease....................................................................................4
   20.3 Notices...................................................................................................4

ARTICLE 21........................................................................................................4
   21.1 Conduct of Business.......................................................................................4
   21.2 Maintenance of Accounts and Records.......................................................................4
   21.3 Certain Debt Prohibited...................................................................................4
   21.4 Special Purpose Entity Requirements.......................................................................4
   21.5 Distributions, Payments to Affiliated Persons, Etc........................................................4
   21.6 Compliance with Operating Agreement.......................................................................4

ARTICLE 22........................................................................................................4
   22.1 Limitation on Payment of Rent.............................................................................4
   22.2 No Waiver.................................................................................................4
   22.3 Remedies Cumulative.......................................................................................4
   22.4 Severability..............................................................................................4
   22.5 Acceptance of Surrender...................................................................................4
   22.6 No Merger of Title........................................................................................4
   22.7 Conveyance by Landlord....................................................................................4
   22.8 Quiet Enjoyment...........................................................................................4
   22.9 Memorandum of Lease.......................................................................................4
   22.10 Notices..................................................................................................4
   22.11 Construction; Nonrecourse................................................................................4
   22.12 Counterparts; Headings...................................................................................4
   22.13 Applicable Law, Etc......................................................................................4
   22.14 Right to Make Agreement..................................................................................4
   22.15 Disclosure of Information................................................................................4
   22.16 Trademarks, Trade Names and Service Marks................................................................4
   22.17 Competing Facilities.....................................................................................4

</TABLE>


<PAGE>



                                    EXHIBITS

                           A -      Minimum Rent
                           B -      The Land
                           C -      Property Expenses


<PAGE>


                                 LEASE AGREEMENT


         THIS  LEASE  AGREEMENT  is  entered  into as of this 20th day of April,
2000,  by  and  between  CNL  HEALTH  CARE  PARTNERS,  LP,  a  Delaware  limited
partnership,  as  landlord  ("Landlord"),  and BG ORLAND  PARK,  LLC, a Delaware
limited liability company, as tenant ("Tenant").

                                               W I T N E S S E T H :


         WHEREAS,  Landlord has acquired fee simple title to the Leased Property
(this and other  capitalized  terms used and not otherwise defined herein having
the meanings ascribed to such terms in Article 1) which is improved by a 120 bed
assisted living and dementia facility; and

         WHEREAS,  Landlord  desires to lease the Leased  Property to Tenant and
Tenant desires to lease the Leased  Property from  Landlord,  all subject to and
upon the terms and conditions herein set forth;

         NOW,  THEREFORE,  in  consideration  of  the  mutual  covenants  herein
contained  and other good and  valuable  consideration,  the mutual  receipt and
legal sufficiency of which are hereby  acknowledged,  Landlord and Tenant hereby
agree as follows:

                                    ARTICLE 1

                                   DEFINITIONS

         For all  purposes  of this  Agreement,  except as  otherwise  expressly
provided or unless the context otherwise requires, (i) the terms defined in this
Article shall have the meanings assigned to them in this Article and include the
plural as well as the singular,  (ii) all accounting terms not otherwise defined
herein shall have the meanings  assigned to them in accordance with GAAP,  (iii)
all references in this Agreement to designated  "Articles," "Sections" and other
subdivisions are to the designated Articles,  Sections and other subdivisions of
this  Agreement,  and (iv) the words "herein,"  "hereof,"  "hereunder" and other
words of  similar  import  refer  to this  Agreement  as a whole  and not to any
particular Article, Section or other subdivision.

         "Accounting  Period" shall mean each four (4) week accounting period of
Tenant,  except that an Accounting  Period may, from time to time,  include five
(5) weeks in order to conform  Tenant's  accounting  system to  Tenant's  Fiscal
Year. If Tenant shall,  for a bona fide business  reason,  change its Accounting
Period  during the Term,  appropriate  adjustments,  if any,  shall be made with
respect to the timing of certain  accounting and reporting  requirements of this
Agreement;  provided,  however,  that,  in no event  shall  any such  change  or
adjustment  alter the amount or  frequency of payment of Minimum Rent within any
Fiscal Year, or alter the  frequency of payment of Percentage  Rent to less than
four (4) times  within any Fiscal  Year,  or  otherwise  increase  or reduce any
monetary  obligation  under this Agreement.  In the event that the  Commencement
Date is not the first day of  Tenant's  four (4) week  accounting  periods,  the
first  Accounting  Period  under this Lease shall  consist of the first four (4)
week accounting  period of Tenant commencing after the Commencement Date and the
period from the Commencement  Date until the commencement of such first four (4)
week accounting period.

         "Accounting  Year" shall mean each period of thirteen  (13)  Accounting
Periods of which the first Accounting  Period shall commence on the first day of
the first full  Accounting  Period and ending upon the expiration of twelve (12)
Accounting Periods after such first Accounting Period. Each successor Accounting
Period shall be each period of thirteen (13) Accounting Periods thereafter.

         "Additional  Charges" shall have the meaning given such term in Section
3.1.3.

         "Affiliated  Person" shall mean, with respect to any Person, (a) in the
case of any such Person which is a partnership, any partner in such partnership,
(b) in the case of any such Person  which is a limited  liability  company,  any
member of such company, (c) any other Person which is a Parent, a Subsidiary, or
a  Subsidiary  of a Parent with  respect to such Person or to one or more of the
Persons  referred to in the preceding  clauses (a) and (b), (d) any other Person
who is an officer,  director, trustee or employee of, or partner in, such Person
or any Person referred to in the preceding clauses (a), (b) and (c), and (e) any
other  Person who is a member of the  Immediate  Family of such Person or of any
Person referred to in the preceding clauses (a) through (d); provided,  however,
that, notwithstanding the foregoing, in no event shall Host Marriott Corporation
or Sodexho  Marriott  Services,  Inc., or any of their  Affiliated  Persons,  be
deemed an Affiliated Person as to Tenant or the Guarantor.

         "Agreement"  shall mean this Lease  Agreement,  including  all Exhibits
hereto, as it and they may be amended from time to time as herein provided.

         "Applicable   Laws"   shall  mean  all   applicable   laws,   statutes,
regulations,  rules, ordinances,  codes, licenses, permits and orders, from time
to time in existence,  of all courts of competent  jurisdiction  and  Government
Agencies, and all applicable judicial and administrative and regulatory decrees,
judgments and orders, including common law rulings and determinations,  relating
to injury to, or the  protection  of, real or personal  property or human health
(except those requirements  which, by definition,  are solely the responsibility
of employers) or the Environment,  including,  without limitation, all valid and
lawful  requirements  of courts  and other  Government  Agencies  pertaining  to
reporting,  licensing,  permitting,  investigation,  remediation  and removal of
underground  improvements (including,  without limitation,  treatment or storage
tanks,  or water,  gas or oil  wells),  or  emissions,  discharges,  releases or
threatened releases of Hazardous  Substances,  chemical substances,  pesticides,
petroleum or petroleum products, pollutants,  contaminants or hazardous or toxic
substances, materials or wastes whether solid, liquid or gaseous in nature, into
the Environment, or relating to the manufacture,  processing, distribution, use,
treatment,  storage,  disposal,  transport or handling of Hazardous  Substances,
underground  improvements (including,  without limitation,  treatment or storage
tanks, or water, gas or oil wells), or pollutants,  contaminants or hazardous or
toxic  substances,  materials  or wastes,  whether  solid,  liquid or gaseous in
nature.

         "Applicable  Percentage"  shall mean,  with  respect to any  Accounting
Period,  or portion  thereof,  (i) one percent  (1%) with  respect to the period
beginning  on the  Commencement  Date and  ending on the last day of the  fourth
(4th) full  Accounting  Year,  (ii) two percent (2%),  with respect to the fifth
(5th) through eighth (8th) full Accounting Years,  (iii) three percent (3%) with
respect to the ninth (9th) through  twentieth (20th) full Accounting  Years, and
(iv) with respect to each Accounting Year thereafter, three and one-half percent
(3.5%).

         "Award" shall mean all compensation,  sums or other value awarded, paid
or received by virtue of a total or partial  Condemnation of the Leased Property
(after  deduction of all reasonable  legal fees and other  reasonable  costs and
expenses,  including,  without  limitation,  expert  witness  fees,  incurred by
Landlord, in connection with obtaining any such award).

         "Base Facility  Revenues"  shall mean,  when used with reference to any
Lease  Year,  Total  Facility  Revenues  for the Base Year  and,  when used with
reference to the first, second or third Fiscal Quarters of any Fiscal Year, 3/13
of Total  Facility  Revenues for the Base Year and, when used with  reference to
the fourth Fiscal Quarter of any Fiscal Year,  4/13 of Total  Facility  Revenues
for the Base Year.

         "Base Year" shall mean the first period of four (4) consecutive  Fiscal
Quarters in which the Facility  achieves an average (on a daily basis) occupancy
of at least ninety-three percent (93%) of the beds in the Facility. For purposes
hereof,  a bed shall be deemed  occupied for an entire month if Tenant  receives
payment of an occupancy fee for such entire month  notwithstanding the fact that
such bed was not occupied for the entire period during such month.

         "Business Day" shall mean any day other than Saturday,  Sunday,  or any
other day on which banking  institutions in the State of Florida or the State of
Maryland are authorized by law or executive action to close.

         "Capital  Expenditure"  shall mean any expenditure  with respect to the
Leased Property treated as capital in nature in accordance with GAAP.

         "Case Goods" shall mean furniture and furnishings  used in the Facility
including, without limitation:  chairs, beds, chests, headboards,  decks, lamps,
tables, television sets, mirrors, pictures, wall decorations and similar items.

         "Cash  Available  for Lease  Payments"  shall mean the remainder of (i)
Total  Facility  Revenues  during the  applicable  calculation  period less (ii)
Property Expenses for the same calculation period.

         "CHCLP"  shall mean CNL Health Care  Partners,  LP, a Delaware  limited
partnership.

         "CHCLP and CHCP Guaranty" shall mean the guaranty  agreement,  dated as
of the date hereof,  made by CHCLP and CHCP for the benefit of Tenant, as may be
amended from time to time.

         "CHCP"  shall  mean  CNL  Health  Care  Properties,  Inc.,  a  Maryland
corporation.

         "Claim" shall have the meaning given such term in Article 8.

         "Code" shall mean the Internal  Revenue Code of 1986 and, to the extent
applicable,  the Treasury Regulations  promulgated  thereunder,  each as amended
from time to time.

         "Commencement Date" shall mean the date of this Agreement.

         "Competitor" shall mean a Person that owns or has an equity interest in
an assisted living facility brand, tradename,  system or chain (a "Brand") which
is comprised of at least ten (10) assisted living facilities; provided that such
Person  shall not be deemed a  Competitor  if it holds its  interest  in a Brand
merely as a mere  passive  investor  that has no control or  influence  over the
business  decisions of the Brand at issue,  such as a mere limited  partner in a
partnership,  a mere  shareholder  in a corporation or a mere payee of royalties
based on a prior sale  transaction.  A mere passive investor that is represented
by a Mere Director on the board of directors of a Competitor shall not be deemed
to have control or influence over the business decisions of that Competitor.

         "Condemnation"  shall mean (a) the exercise of any  governmental  power
with respect to the Leased Property,  whether by legal proceedings or otherwise,
by a Condemnor of its power of condemnation, (b) a voluntary sale or transfer of
the Leased  Property  by  Landlord  to any  Condemnor,  either  under  threat of
condemnation or while legal  proceedings for condemnation are pending,  or (c) a
taking or voluntary  conveyance  of all or part of the Leased  Property,  or any
interest therein,  or right accruing thereto or use thereof, as the result 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.

         "Condemnor" shall mean any public or quasi-public  authority, or Person
having the power of Condemnation.

         "Controlling  Interest"  shall mean (a) as to a corporation  shall mean
the right to exercise,  directly or indirectly, more than fifty percent (50%) of
the voting rights attributable to the shares of the Entity (through ownership of
such  shares or by  contract),  and (b) as to an Entity not a  corporation,  the
possession,  directly  or  indirectly,  of the  power to  direct  or  cause  the
direction of the management or policies of the Entity.

         "Corporate  Transfer" shall have the meaning given such term in Section
16.1.

         "Date of  Taking"  shall mean the date the  Condemnor  has the right to
possession of the Leased Property,  or any portion thereof, in connection with a
Condemnation.

         "Default"  shall mean any event or  condition  existing  which with the
giving of notice and/or lapse of time would ripen into an Event of Default.

         "Disbursement  Rate" shall mean an annual rate of interest equal to the
greater of, as of the date of determination,  (i) the Interest Rate and (ii) the
per annum rate for ten (10) year U.S.  Treasury  Obligations as published in The
Wall Street  Journal (or successor  publication)  plus three hundred (300) basis
points.

         "Distribution"  shall  mean  (a)  any  declaration  or  payment  of any
dividend (except  dividends  payable in common stock of Tenant) on or in respect
of any  shares  of any  class  of  capital  stock  of  Tenant,  if  Tenant  is a
corporation,  or  any  cash  distributions  in  respect  of any  partnership  or
membership  interests in Tenant, if Tenant is a partnership or limited liability
company,  (b) any purchase,  redemption  retirement or other  acquisition of any
shares of any class of capital stock of Tenant,  if Tenant is a corporation,  or
any purchase, redemption,  retirement or other acquisition of any partnership or
membership  interests in Tenant, if Tenant is a partnership or limited liability
company,  (c) any other distribution on or in respect of any shares of any class
of  capital  stock  of  Tenant,  if  Tenant  is  a  corporation,  or  any  other
distribution in respect of any partnership or membership interests in Tenant, if
Tenant is a partnership  or a limited  liability  company,  or (d) any return of
capital to shareholders of Tenant, if Tenant is a corporation,  or any return of
capital to partners or members in Tenant,  if Tenant is a partnership or limited
liability company.

         "Encumbrance" shall have the meaning given such term in Section 20.1.

         "Entity" shall mean any  corporation,  general or limited  partnership,
limited  liability  company,  limited  liability  partnership,  stock company or
association,  joint venture,  association,  company, trust, bank, trust company,
land trust, business trust,  cooperative,  any government or agency or political
subdivision thereof or any other entity.

         "Environment"  shall mean soil,  surface waters,  ground waters,  land,
streams, sediments, surface or subsurface strata and ambient air.

         "Environmental  Notice"  shall  have the  meaning  given  such  term in
Section 4.3.1.

         "Environmental  Obligation"  shall have the meaning  given such term in
Section 4.3.1.

         "Event of Default"  shall have the  meaning  given such term in Section
12.1.

         "Excess  Facility  Revenues" shall mean, with respect to any Lease Year
or Fiscal  Quarter,  or  portion  thereof,  as  applicable,  the amount of Total
Facility  Revenues for such period,  in excess of Base Facility Revenues for the
equivalent period.

         "Extended Terms" shall have the meaning given such term in Section 2.4.

         "Facility"  shall mean the assisted living and dementia  facility being
operated on the Leased Property.

         "Facility  Mortgage" shall mean any Encumbrance  placed upon the Leased
Property in accordance with Article 20.

         "Facility Mortgagee" shall mean the holder of any Facility Mortgage.

         "FAS" shall mean all items  included  within  "Property and  Equipment"
under the Uniform  System of  Accounts,  including,  but not limited to,  linen,
china,  glassware,  tableware,  uniforms  and  similar  items,  whether  used in
connection with public space or guest rooms.

         "Fiscal  Quarter"  shall mean,  with  respect to the first,  second and
third quarter of any Fiscal Year,  Accounting Periods one (1) through three (3),
four (4) through six (6) and seven (7) through nine (9),  respectively,  of such
Fiscal  Year and,  with  respect  to the  fourth  quarter  of any  Fiscal  Year,
Accounting Periods ten (10) through thirteen (13) of such Fiscal Year.

         "Fiscal  Year" shall mean each fiscal year of Tenant,  each such fiscal
year to consist of thirteen Accounting Periods. If Tenant shall, for a bona fide
business   reason,   change  its  Fiscal  Year  during  the  Term,   appropriate
adjustments,  if any,  shall be made  with  respect  to the  timing  of  certain
accounting and reporting  requirements  of this  Agreement;  provided,  however,
that,  in no event  shall any such change or  adjustment  increase or reduce any
monetary obligation under this Agreement.

         "Fixed Term" shall have the meaning given such term in Section 2.3.

         "FF&E" means furniture, furnishings,  fixtures, Soft Goods, Case Goods,
vehicles  and  equipment  (including,  but not  limited  to,  telephone  sysems,
facsimile machines,  communications and computer systems hardware) but shall not
include FAS or any Software.

          "Fixtures" shall have the meaning given such term in Section 2.1(d).

         "Force  Majeure  Event"  means  any  act  of  God,  act of  war,  civil
disturbance,  governmental  action (including the revocation or refusal to grant
licenses or permits, where such revocation or refusal is not due to the fault of
the party whose  performance  is to be excused  for  reasons of Force  Majeure),
strikes,  lockouts,  fire, unavoidable casualties or any other causes beyond the
reasonable control of either party.

         "GAAP" shall mean generally accepted accounting principles consistently
applied.

         "Government  Agencies" shall mean any court, agency,  authority,  board
(including, without limitation,  environmental protection, planning and zoning),
bureau,  commission,   department,  office  or  instrumentality  of  any  nature
whatsoever of any governmental or  quasi-governmental  unit of the United States
or the State or any county or any political subdivision of any of the foregoing,
whether now or hereafter in existence,  having  jurisdiction  over Tenant or the
Leased Property or any portion thereof or the Facility operated thereon.

         "Guarantor"  shall  mean  Marriott  International,   Inc.,  a  Delaware
corporation, its successors and assigns.

         "Hazardous Substances" shall mean any substance:

                  (a) the presence of which  requires or may  hereafter  require
         notification,  investigation or remediation under any federal, state or
         local statute, regulation, rule, ordinance, order, action or policy; or

                  (b)  which  is or  becomes  defined  as a  "hazardous  waste",
         "hazardous  material"  or  "hazardous   substance"  or  "pollutant"  or
         "contaminant"  under  any  present  or future  federal,  state or local
         statute, regulation, rule or ordinance or amendments thereto including,
         without   limitation,   the   Comprehensive   Environmental   Response,
         Compensation  and  Liability  Act (42 U.S.C.  et seq.) and the Resource
         Conservation and Recovery Act (42 U.S.C.  Section 6901 et seq.) and the
         regulations promulgated thereunder; or

                  (c)  which  is   toxic,   explosive,   corrosive,   flammable,
         infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous
         and is or becomes  regulated  by any  governmental  authority,  agency,
         department,  commission, board, agency or instrumentality of the United
         States,  any state of the United States,  or any political  subdivision
         thereof; or

                  (d) the  presence  of which on the Leased  Property  causes or
         materially  threatens  to cause an  unlawful  nuisance  upon the Leased
         Property or to adjacent properties or poses or materially  threatens to
         pose a hazard  to the  Leased  Property  or to the  health or safety of
         persons on or about the Leased Property; or

                  (e) without limitation,  which contains gasoline,  diesel fuel
         or other petroleum hydrocarbons or volatile organic compounds; or

                  (f)  without   limitation,   which  contains   polychlorinated
         biphenyls (PCBs) or asbestos or urea formaldehyde foam insulation; or

                  (g) without  limitation,  which contains or emits  radioactive
         particles, waves or material; or

                  (h) without limitation, constitutes materials which are now or
         may hereafter be subject to regulation  pursuant to the Material  Waste
         Tracking  Act  of  1988,  or any  Applicable  Laws  promulgated  by any
         Government Agencies.

         "Immediate  Family" shall mean,  with respect to any  individual,  such
individual's spouse, parents, brothers,  sisters, children (natural or adopted),
stepchildren,  grandchildren,  grandparents,  parents-in-law,   brothers-in-law,
sisters-in-law, nephews and nieces.

         "Impositions"  shall mean collectively,  all taxes (including,  without
limitation,  all taxes imposed under the laws of the State,  as such laws may be
amended from time to time, and all ad valorem,  sales and use, single  business,
gross receipts,  transaction privilege, rent or similar taxes as the same relate
to or are imposed  upon  Landlord,  Tenant or the  business  conducted  upon the
Leased Property),  assessments (including,  without limitation,  all assessments
for public improvements or benefit,  whether or not commenced or completed prior
to the date  hereof),  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 or the business
conducted thereon by Tenant (including all interest and penalties thereon due to
any  failure  in payment by  Tenant),  which at any time prior to,  during or in
respect of the Term  hereof may be assessed or imposed on or in respect of or be
a lien upon (a)  Landlord'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, or
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 by Tenant;
provided,  however,  that nothing contained herein shall be construed to require
Tenant to pay (i) any tax based on net income,  net worth or capital  imposed on
Landlord, (ii) any net revenue tax of Landlord,  (iii) any transfer fee or other
tax imposed with respect to the sale,  exchange or other disposition by Landlord
of the Leased Property or the proceeds thereof, (iv) any single business,  gross
receipts  tax (from any source  other than the rent  received by  Landlord  from
Tenant),  or similar  taxes as the same relate to or are imposed upon  Landlord,
except to the extent  that any tax,  assessment,  tax levy or charge  that would
otherwise be an Imposition  under this definition 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 (i) or (ii) preceding is levied, assessed
or imposed  expressly in lieu thereof,  (v) any interest or penalties imposed on
Landlord  as a result of the  failure of  Landlord  to file any return or report
timely and in the form prescribed by law or to pay any tax or imposition, except
to the extent such failure is a result of a breach by Tenant of its  obligations
pursuant to Section 3.1.3,  (vi) any Impositions  imposed on Landlord that are a
result of Landlord not being  considered a "United  States person" as defined in
Section  7701(a)(30)  of the Code,  (vii) any  Impositions  that are  enacted or
adopted by their express  terms as a substitute  for any tax that would not have
been  payable by Tenant  pursuant to the terms of this  Agreement  or (viii) any
Impositions  imposed as a result of a breach of  covenant or  representation  by
Landlord in any agreement entered into by Landlord governing  Landlord's conduct
or operation or as a result of the negligence or willful misconduct of Landlord.

         "Indebtedness"  shall mean all  obligations,  contingent  or otherwise,
which in accordance with GAAP should be reflected on the obligor's balance sheet
as liabilities.

         "Index" shall mean the Consumer  Price Index for Urban Wage Earners and
Clerical Workers,  All-Cities,  All Items (November 1996 = 100), as published by
the Bureau of Labor Statistics or, in the event  publication  thereof ceases, by
reference to whatever  index then  published by the United States  Department of
Labor at that time is most nearly  comparable as a measure of general changes in
price levels for urban areas, as reasonably determined by Landlord and Tenant.

         "Insurance  Requirements"  shall mean all terms of any insurance policy
required by this Agreement and all requirements of the issuer of any such policy
and all orders, rules and regulations and any other requirements of the National
Board of Fire  Underwriters  (or any other body  exercising  similar  functions)
binding upon Landlord, Tenant or the Leased Property.

         "Interest Rate" shall mean ten percent (10%) per annum.

         "Inventories"  shall  mean  "Inventories"  as  defined  by GAAP such as
provisions  in  storerooms,   refrigerators,   pantries  and  kitchens;  medical
supplies;  other  merchandise  intended  for sale;  fuel;  mechanical  supplies;
stationery; and other expensed supplies and similar items.

         "Land" shall have the meaning given such term in Section 2.1(a).

         "Landlord"  shall have the meaning  given such term in the preambles to
this Agreement and shall include its permitted successors and assigns.

         "Landlord  Default"  shall have the meaning  given such term in Section
14.2.

         "Landlord  Liens" shall mean liens on or against the Leased Property or
any  payment  of Rent (a) which  result  from any act of, or any claim  against,
Landlord or any owner  (other than  Tenant) of a direct or indirect  interest in
the Leased Property, or which result from any violation by Landlord of any terms
of this Agreement or the Purchase  Agreement,  or (b) which result from liens in
favor of any taxing  authority  by reason of any tax owed by Landlord or any fee
owner of a  direct  or  indirect  interest  in the  Leased  Property;  provided,
however,  that "Landlord Lien" shall not include any lien resulting from any tax
for which Tenant is obligated to pay or indemnify  Landlord  against  until such
time as Tenant  shall have  already  paid to or on behalf of Landlord the tax or
the required indemnity with respect to the same.

         "Landlord Rent" shall mean Minimum Rent and Percentage Rent
collectively.

         "Lease Year" shall mean any Fiscal Year during the Term and any partial
Fiscal Year at the beginning or end of the Term.

         "Leased Improvements" shall have the meaning given such term in Section
2.1(b).

         "Leased  Intangible  Property"  shall mean all Intangible  Property (as
defined  therein)  acquired  by  Landlord  with  respect to the Leased  Property
pursuant to the Purchase Agreement.

         "Leased  Personal  Property"  shall have the meaning given such term in
Section 2.1(e).

         "Leased  Property"  shall have the  meaning  given such term in Section
2.1.

         "Legal Requirements" shall mean all federal,  state, county,  municipal
and other governmental statutes, laws, rules, orders,  regulations,  ordinances,
judgments,  decrees  and  injunctions  affecting  the  Leased  Property  or  the
maintenance,  construction,  alteration  or  operation  thereof,  whether now or
hereafter  enacted  or in  existence,  including,  without  limitation,  (a) all
permits,  licenses,  authorizations,  certificates and regulations  necessary to
operate  the Leased  Property  for its  Permitted  Use,  and (b) all  covenants,
agreements,  declarations,   restrictions  and  encumbrances  contained  in  any
instruments  at any time in force  affecting the Leased  Property as of the date
hereof,  or to which Tenant has consented or required to be granted  pursuant to
Applicable  Laws,  including  those  which  may (i)  require  material  repairs,
modifications  or  alterations  in or to the Leased  Property or (ii) in any way
materially and adversely affect the use and enjoyment thereof, but excluding any
requirements  arising  as a result of  Landlord's  or any  Affiliated  Person of
Landlord's status as a real estate investment trust.

         "Lien" shall mean any mortgage,  security interest,  pledge, collateral
assignment, or other encumbrance, lien or charge of any kind, or any transfer of
property  or assets for the  purpose of  subjecting  the same to the  payment of
Indebtedness  or performance  of any other  obligation in priority to payment of
its general creditors.

         "Limited Rent Guaranty" shall mean the limited rent guaranty agreement,
dated as of the date hereof, made by the Guarantor in favor of Landlord,  as may
be amended from time to time.

         "Major Capital  Expenditures  shall have the meaning given such term in
Section 5.1.3(a).

         "Marriott  Companies"  shall  mean  Marriott  International,   Inc.,  a
Delaware corporation ("Marriott") and (i) any Subsidiary or Affiliated Person of
Marriott,  (ii) a partnership in which Marriott, or any Subsidiary or Affiliated
Person of  Marriott,  is a general  partner,  and  (iii) any  limited  liability
company in which Marriott or a any  Subsidiary or Affiliated  Person of Marriott
is a managing member.

         "Marriott  Retirement  Community  System" shall mean at any  particular
time the entire system or group of Brighton Gardens retirement  communities then
owned and/or  operated or managed by Operator (or one or more of its  Affiliated
Persons), under the "Marriott" name.

         "Membership  Interest  Pledge  Agreement"  shall  mean  the  Membership
Interest Pledge Agreement, of even date herewith, made by Marriott Senior Living
Services, Inc. in favor of Landlord, as may be amended from time to time.

         "Mere Director" shall mean a Person who holds the office of director of
a  corporation  and who, as such  director,  has the right to vote not more than
twelve and one-half  percent  (12.5%) of the total voting rights on the board of
directors of such  corporation,  and who  represents or acts on behalf of a mere
passive  investor  which  neither (i) owns more than three  percent  (3%) of the
total  voting  rights  attributable  to all shares or  ownership  interests of a
Competitor, nor (ii) otherwise has the power to direct or cause the direction of
the management or policies of a Competitor.

         "Minimum Rent" shall mean, with respect to each Accounting  Period, the
sum set forth on Exhibit A, subject to adjustment  pursuant to the terms of this
Agreement.

         "Notice" shall mean a notice given in accordance with Section 22.10.

         "Operating  Agreement" shall mean the Operating Agreement,  dated as of
the date hereof,  between Tenant and Marriott  Senior Living  Services,  Inc., a
Delaware corporation, with respect to the Facility, as amended and replaced from
time to time,  subject to  Landlord's  consent  if and to the extent  Landlord's
consent is required pursuant to Section 21.6.

         "Operator"  shall mean the person  designated by and acting as Operator
pursuant to the Operating Agreement.

         "Overdue  Rate" shall mean,  on any date,  a per annum rate of interest
equal to the lesser of (i) twelve  percent  (12%) or (ii) the maximum  rate then
permitted under applicable law.

         "Owner  Agreement"  shall mean the Owner  Agreement  pertaining  to the
Leased Property,  dated as of the date hereof, among Landlord,  the Operator and
Tenant, as may be amended from time to time.

         "Parent"  shall  mean,  with  respect to any Person,  any Person  which
directly,  or indirectly through one or more Subsidiaries or Affiliated Persons,
(i) owns  fifty-one  percent (51%) or more of the voting or beneficial  interest
in, or (ii)  otherwise  has the right or power  (whether  by  contract,  through
ownership of securities or otherwise) to control, such Person.

         "Percentage  Rent"  shall have the  meaning  given such term in Section
3.1.2(a).

         "Permitted  Encumbrances"  shall  mean all  rights,  restrictions,  and
easements  of record  set  forth on  Schedule  B to the  applicable  owner's  or
leasehold  title insurance  policy issued to Landlord  effective on or about the
date hereof,  plus any other such  encumbrances as may have been consented to in
writing by Landlord from time to time.

         "Permitted  Use" shall mean any use of the  Leased  Property  permitted
pursuant to Section 4.1.1(a) or (b).

         "Person" shall mean any individual or Entity, and the heirs, executors,
administrators,  legal  representatives,  successors  and assigns of such Person
where the context so admits.

         "Product Standard(s)" shall have the meaning given such term in Section
5.1.2(c).

         "Property Expenses" is defined in Exhibit C attached hereto.

         "Proprietary  Information"  shall mean (a) all  computer  software  and
accompanying   documentation  (including  all  future  upgrades,   enhancements,
additions,  substitutions and modifications  thereof),  other than that which is
commercially available, which are used by Tenant in connection with the property
management  system, and all future electronic systems developed by Tenant or any
Affiliated Person of Tenant for use in the Facility, (b) all manuals,  brochures
and  directives  used by Tenant at the Facility  regarding  the  procedures  and
techniques  to be used in operating the Facility,  (c) customer  lists,  and (d)
employee records which must remain  confidential either under Legal Requirements
or under reasonable  corporate policies of Tenant or any Affiliated Person as to
Tenant.

         "Purchase Agreement" shall mean the Purchase and Sale Agreement,  dated
as of March ___, 2000, by and between Landlord as purchaser, and Marriott Senior
Living Services, Inc., as seller, as may be amended from time to time.

         "Rent" shall mean, collectively,  the Minimum Rent, Percentage Rent and
Additional Charges.

         "Request  Notice"  shall  have the  meaning  given such term in Section
16.1.

         "Reserve" shall have the meaning given such term in Section 5.1.2(a).

         "Reserve  Estimate"  shall have the meaning  given such term in Section
5.1.2(c).

         "Response  Notice"  shall mean the  meaning  given such term in Section
16.1.

         "SEC" shall mean the Securities and Exchange Commission.

         "Security Deposit" shall have the meaning ascribed to it in Section
          3.4.

         "Soft  Goods"  shall mean all  fabric,  textile  and  flexible  plastic
products (not  including  items which are  classified as "Fixed Asset  Supplies"
under the Uniform System of Accounts) which are used in furnishing the Facility,
including,  without limitation:  carpeting,  drapes, bedspreads,  wall and floor
coverings, mats, shower curtains and similar items.

         "Software" means all computer  software and accompanying  documentation
(including  all future  upgrades,  enhancements,  additions,  substitutions  and
modifications  thereof),  other than  computer  software  which is  commercially
available,  which are used by Operator in connection  with its operations at the
Facility.

         "State" shall mean the State of Illinois.

         "Subsidiary"  shall mean,  with  respect to any  Person,  any Entity in
which such Person directly,  or indirectly  through one or more  Subsidiaries or
Affiliated  Persons,  (a) owns fifty-one  percent (51%) or more of the voting or
beneficial interest or (b) which such Person otherwise has the right or power to
control (whether by contract,  through ownership of securities or otherwise); it
being  understood  and agreed  that,  as of the date  hereof,  (x) neither  Host
Marriott Corporation or Sodexho Marriott Services Corporation is a Subsidiary of
the  Guarantor  and (y)  the  Guarantor  is not a  Subsidiary  of Host  Marriott
Corporation or Sodexho Marriott Services, Inc.

         "Successor  Landlord" shall have the meaning given such term in Section
20.2.

         "System  Standards"  shall mean from time to time both the  operational
standards (for example,  staffing levels, resident care and health care policies
and procedures,  and accounting and financial reporting policies and procedures)
and the physical  standards  (for  example,  quality of FF&E,  frequency of FF&E
replacement)  that are then  generally and  consistently  (but not  necessarily,
absolutely or without exception) applied at or to retirement  communities in the
Marriott Retirement Community System which are of comparable type, size, age and
market orientation as the Facility.

         "Tenant" shall have the meaning given such term in the preamble to this
Agreement and shall include its permitted successors and assigns.

         "Tenant's   Personal   Property"   shall   mean  all  motor   vehicles,
Inventories,  FAS and any other tangible  personal  property of Tenant,  if any,
acquired by Tenant at its  election and with its own funds on and after the date
hereof and located at the Leased  Property  or used in Tenant's  business at the
Leased Property and all modifications,  replacements,  alterations and additions
to such  personal  property  installed at the expense of Tenant,  other than any
items included within the definition of Proprietary Information.

         "Term" shall mean, collectively, the Fixed Term and the Extended Terms,
to the extent  properly  exercised  pursuant to the  provisions  of Section 2.4,
unless sooner terminated pursuant to the provisions of this Agreement.

         "Total  Facility  Revenues"  shall mean, for the  applicable  period of
time,  all gross  revenues  and  receipts of every kind derived by Tenant or any
Affiliate  of Tenant  from  operating  or causing  the  operation  of the Leased
Property and parts thereof, including, but not limited to: income from both cash
and credit transactions (after reasonable deductions for bad debts and discounts
for prompt or cash payments and refunds) from monthly  occupancy fees,  entrance
fees, health care fees and ancillary  services fees received pursuant to various
agreements  with  residents  of the  Facility;  rental  of space of every  kind;
license,  lease and concession  fees and rentals (not  including  gross receipts
received  directly  by  licensees,  lessees  and  concessionaires);  income from
vending  machines and video  machines;  food and beverage  sales;  wholesale and
retail sales of merchandise  (other than proceeds from the sale of  furnishings,
fixture and  equipment  no longer  necessary to the  operation of the  Facility,
which shall be deposited in the  Reserve);  service  charges,  to the extent not
distributed  to the employees at the Facility as  gratuities;  and proceeds from
business  interruption or other loss of income insurance (but only to the extent
that it reimburses  Landlord or Tenant for lost income and not for additional or
other expenses), all determined in accordance with GAAP; provided, however, that
Total Facility Revenues shall not include the following:  gratuities to Facility
employees;  federal, state or municipal excise, sales, occupancy, use or similar
taxes collected directly from occupants,  guests or invitees or included as part
of the sales price of any goods or services;  insurance  proceeds (other than as
aforesaid);  Award  proceeds  (other  than for a  temporary  Condemnation);  any
proceeds  from any sale of the Leased  Property or from the  refinancing  of any
debt  encumbering  the  Leased  Property;   proceeds  from  the  disposition  of
furnishings,  fixture and equipment no longer necessary for the operation of the
Facility;  interest which accrues on amounts deposited in the Reserve;  any cash
refunds,  rebates or discounts to residents of the Facility,  or cash  discounts
and  credits  of a similar  nature  given,  paid or  returned  in the  course of
obtaining Total Facility Revenues or components thereof; security deposits until
such time as the same are  applied to  current  fees and other  charges  due and
payable;  awards of damages,  settlement proceeds and other payments received by
Landlord in respect of any litigation or  administrative  proceeding  other than
any  litigation or proceeding to collect fees due for services or goods provided
from the  Facility;  any  "Shortfall  Payment"  made by  Operator  to  Tenant or
Landlord  pursuant to Section  4.03B of the  Operating  Agreement;  and payments
under any policy of title insurance.

         "Uniform  System of Accounts" shall mean Uniform System of Accounts for
the Lodging  Industry,  Ninth Revised  Edition,  1996, as published by the Hotel
Association of New York City.

         "Unsuitable  for Its Permitted  Use" shall mean a state or condition of
the Facility  such that (a) following  any damage or  destruction  involving the
Facility,  the Facility cannot be operated in the reasonable  judgment of Tenant
on a  commercially  practicable  basis  for  its  Permitted  Use  and it  cannot
reasonably  be expected to be restored to  substantially  the same  condition as
existed immediately before such damage or destruction, and as otherwise required
by Section 10.2.4,  within nine (9) months  following such damage or destruction
or such shorter  period of time as to which business  interruption  insurance is
available to cover Rent and other costs related to the Leased Property following
such  damage  or  destruction,  or (b) as the  result  of a  partial  taking  by
Condemnation,  the Facility  cannot be operated,  in the reasonable  judgment of
Tenant on a commercially  and economically  practicable  basis for its Permitted
Use in light of then existing circumstances.

         "Work" shall have the meaning given such term in Section 10.2.4.


                                    ARTICLE 2

                            LEASED PROPERTY AND TERM

         2.1......Leased  Property. Upon and subject to the terms and conditions
hereinafter set forth, Landlord leases to Tenant and Tenant leases from Landlord
all of  Landlord's  right,  title and  interest  in and to all of the  following
(collectively, the "Leased Property"):

                  (a) the land that is more particularly described in Exhibit B,
         attached hereto and made a part hereof (the "Land");

                  (b) all buildings,  structures and other improvements of every
         kind  including,  but not  limited  to,  the  Facility,  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   situated   upon   the   Land
         (collectively, the "Leased Improvements");

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

                  (d) all  equipment,  machinery,  fixtures,  and other items of
         property,  now or hereafter 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,
         all of which, to the maximum 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
         Tenant's Personal Property (collectively, the "Fixtures");

                  (e) all machinery, equipment, furniture, furnishings, moveable
         walls or partitions,  computers or trade fixtures  located on or in the
         Leased Improvements, and all modifications,  replacements,  alterations
         and additions to such property,  except items, if any,  included within
         the category of Fixtures, but specifically excluding all items included
         within the category of Tenant's  Personal Property  (collectively,  the
         "Leased Personal Property"); and

                  (f)      all of the Leased Intangible Property.

         2.2  Condition  of Leased  Property.  Tenant  acknowledges  receipt and
delivery of  possession  of the Leased  Property  and Tenant  accepts the Leased
Property  in its  "as  is"  condition,  subject  to the  rights  of  parties  in
possession,  the existing state of title,  including all covenants,  conditions,
restrictions,  reservations,  mineral  leases,  easements  and other  matters of
record or that are visible or apparent on the Leased  Property,  all  applicable
Legal Requirements,  the lien of any financing instruments,  mortgages and deeds
of trust permitted by the terms of this Agreement,  and such other matters which
would be disclosed by an inspection of the Leased  Property and the record title
thereto  or by an  accurate  survey  thereof.  TENANT  REPRESENTS  THAT  IT  HAS
INSPECTED  THE  LEASED  PROPERTY  AND ALL OF THE  FOREGOING  AND HAS  FOUND  THE
CONDITION  THEREOF  SATISFACTORY  AND IS NOT  RELYING ON ANY  REPRESENTATION  OR
WARRANTY OF LANDLORD OR  LANDLORD'S  AGENTS OR EMPLOYEES  WITH RESPECT  THERETO,
EXCEPT AS  EXPRESSLY  SET FORTH  HEREIN,  AND TENANT  WAIVES ANY CLAIM OR ACTION
AGAINST LANDLORD IN RESPECT OF THE CONDITION OF THE LEASED  PROPERTY.  EXCEPT AS
EXPRESSLY  SET FORTH  HEREIN,  LANDLORD  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,  DESIGN OR CONDITION FOR ANY PARTICULAR USE OR
PURPOSE OR OTHERWISE,  AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN,
LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT.
To the maximum  extent  permitted by law,  however,  Landlord  hereby assigns to
Tenant all of Landlord's  rights to proceed  against any  predecessor  in title,
contractors and materialmen for breaches of warranties or representations or for
latent  defects in the Leased  Property.  Landlord  shall fully  cooperate  with
Tenant in the  prosecution  of any such claims,  in Landlord's or Tenant's name,
all at Tenant's sole cost and expense. Tenant shall indemnify,  defend, and hold
harmless  Landlord  from  and  against  any  loss,  cost,  damage  or  liability
(including  reasonable  attorneys' fees) incurred by Landlord in connection with
such cooperation.

         2.3 Fixed Term.  The initial term of this  Agreement (the "Fixed Term")
shall commence on the Commencement  Date and shall expire on the last day of the
Accounting  Period in which  occurs  the  fifteenth  (15th)  anniversary  of the
Commencement Date.

         2.4  Extended  Term.  Provided  that no Event  of  Default  shall  have
occurred and be continuing,  the Term of this Agreement  shall be  automatically
extended for four (4) renewal  terms of five (5) years each (each such five year
renewal term being  herein  referred to as an "Extended  Term"),  unless  Tenant
shall give Landlord Notice, in Tenant's sole and absolute discretion,  not later
than two (2) years prior to the scheduled  expiration of the then Fixed Term (in
the case of the first Extended Term) or the then existing  Extended Term (in the
case of any Extended Term after the first Extended Term), that Tenant elects not
so to extend the Term of this  Agreement  (and time shall be of the essence with
respect to the giving of such  Notice) in which case the Term of this Lease will
expire at the end of the then current Term. Each Extended Term shall commence on
the day succeeding  the  expiration of the Fixed Term or the preceding  Extended
Term,  as the case may be. All of the terms,  covenants  and  provisions of this
Agreement  shall apply to each such Extended Term,  except that (a) Tenant shall
have no right to extend the Term  beyond  the  expiration  of the  fourth  (4th)
Extended  Term,  (b) the Minimum Rent payable  during such  Extended  Term shall
equal one hundred two percent  (102%) of the sum of (i) the Minimum Rent payable
by Tenant for the Accounting  Period  immediately  preceding the commencement of
such  Extended  Term and (ii) one  thirteenth  (1/13th) of the  Percentage  Rent
payable by Tenant for the last Fiscal Year ending prior to the  commencement  of
such Extended Term,  and (c) the Base Year for purposes of computing  Percentage
Rent payable  during such  Extended Term shall mean the first Fiscal Year ending
after the  commencement  of such Extended Term. If Tenant shall give Notice that
it elects not to extend the Term, this Agreement shall  automatically  terminate
at the end of the Term then in effect and Tenant shall have no further option to
extend the Term of this  Agreement.  Otherwise,  the extension of this Agreement
shall  be  automatically  effected  without  the  execution  of  any  additional
documents;  it being  understood and agreed,  however,  that Tenant and Landlord
shall  execute such  documents and  agreements as either party shall  reasonably
require to evidence the same.

                                    ARTICLE 3

                                      RENT

         3.1 Rent.  Tenant  shall pay, in lawful  money of the United  States of
America which shall be legal tender for the payment of public and private debts,
without  offset,  abatement,  demand or deduction  (unless  otherwise  expressly
provided in this  Agreement),  Minimum Rent and Percentage  Rent to Landlord and
Additional  Charges to the party to whom such  Additional  Charges are  payable,
during the Term.  All  payments  to Landlord  shall be made by wire  transfer of
immediately  available federal funds or by other means acceptable to Landlord in
its sole discretion.

                  3.1.1    Minimum Rent.

                           (a) Payment of Minimum  Rent.  Minimum  Rent shall be
         paid in advance on the first  Business Day of each  Accounting  Period;
         provided,  however,  that the first  payment of  Minimum  Rent shall be
         payable on the  Commencement  Date (and,  if  applicable,  such payment
         shall  be  prorated  as  provided  in the  following  sentence  of this
         paragraph Section  3.1.1(a)).  Minimum Rent for any partial  Accounting
         Period shall be prorated on a per diem basis.

                           (b)    Adjustments    of   Minimum   Rent   Following
         Disbursements Under Sections 5.1.4(b),  10.2 or 11.2.  Effective on the
         date  of  each  disbursement  to pay  for  the  cost  of  any  repairs,
         maintenance, renovations or replacements pursuant to Sections 5.1.4(b),
         10.2 or 11.2, the Minimum Rent shall be increased by an amount equal to
         the  quotient  obtained by dividing (i) a per annum amount equal to the
         Disbursement  Rate,  determined  as of the date of  Tenant's  Notice to
         Landlord  identifying  the amount of and requirement for the applicable
         funds,  times the amount so disbursed,  by (ii)  thirteen  (13). If any
         such  disbursement is made during any Accounting  Period on a day other
         than  the  first  day of an  Accounting  Period,  Tenant  shall  pay to
         Landlord  on the  first  day of the  immediately  following  Accounting
         Period (in  addition to the amount of Minimum Rent payable with respect
         to such Accounting  Period, as adjusted pursuant to this paragraph (b))
         the amount by which Minimum Rent for the preceding  Accounting  Period,
         as adjusted  for such  disbursement  on a per diem basis,  exceeded the
         amount of  Minimum  Rent  actually  paid by Tenant  for such  preceding
         Accounting Period.

                  3.1.2    Percentage Rent.

                           (a) Amount.  For each Fiscal Year or portion  thereof
         commencing  with the first full  Accounting  Period  following the Base
         Year, Tenant shall pay percentage rent ("Percentage Rent") with respect
         to such Fiscal Year (or portion  thereof),  in an amount equal to seven
         percent  (7%) of Excess  Facility  Revenues  for such  Fiscal  Year (or
         portion thereof).

                           (b)   Quarterly    Installments.    Installments   of
         Percentage  Rent for  each  Fiscal  Year or  portion  thereof  shall be
         calculated  and paid each Fiscal  Quarter in  arrears.  Payment of each
         such installment shall be made within thirty (30) days after the end of
         each Fiscal  Quarter and shall be  accompanied  by a statement  setting
         forth the  calculation  of  Percentage  Rent due and  payable  for such
         Fiscal  Quarter,  together  with a statement by the  controller  of the
         Facility  that,  to the best of his or her  knowledge  and belief,  and
         subject to year-end audit and adjustment,  such statement of Percentage
         Rent is true and correct in all  material  respects.  Installments  due
         with respect to each Fiscal  Quarter  shall be equal to the  Percentage
         Rent for all Fiscal Quarters elapsed during the applicable  Fiscal Year
         less amounts  previously  paid with respect  thereto by Tenant.  If the
         Percentage  Rent for such elapsed Fiscal  Quarters as shown on the last
         quarterly  statement  is less  than the  amount  previously  paid  with
         respect  thereto  by Tenant,  Tenant  shall be  entitled  to offset the
         amount of such  difference  against  Rent next  coming  due under  this
         Agreement,  such  offset to be applied  together  with  interest at the
         Disbursement Rate accruing from the date of payment by Tenant until the
         date the offset is applied.

                           (c)  Reconciliation  of Percentage Rent. In addition,
         on or before March 31 of each year,  commencing  March 31 following the
         Base Year,  Tenant shall deliver to Landlord a statement  setting forth
         the Total Facility  Revenues for such preceding  Fiscal Year,  together
         with an audit of Total Facility Revenues for the preceding Fiscal Year,
         conducted by Arthur Andersen LLP, or another  so-called "Big Five" firm
         of  independent  certified  public  accountants  proposed by Tenant and
         approved by Landlord (which approval shall not be unreasonably withheld
         or delayed). Landlord shall reimburse Tenant for the reasonable cost of
         such audit.

         If the annual  Percentage Rent for such preceding  Fiscal Year as shown
         in the annual statement exceeds the amount previously paid with respect
         thereto by Tenant,  Tenant  shall pay such  excess to  Landlord at such
         time as the annual  statement is  delivered,  together with interest at
         the  Disbursement  Rate,  which  interest shall accrue from the Accrual
         Date (as hereinafter  defined) until the date that such  certificate is
         required  to be  delivered  (or,  if sooner,  the date Tenant pays such
         excess to Landlord) and, thereafter,  such interest shall accrue at the
         Overdue  Rate,  until the  amount of such  difference  shall be paid or
         otherwise  discharged.  In the case of any  underpayment  of Percentage
         Rent by Tenant  arising out of incorrect  reporting on any statement of
         Percentage  Rent,  the Accrual Date  therefor  shall be the payment due
         date for the respective  installment of Percentage Rent with respect to
         which the  underpayment  occurred.  In the case of any  underpayment of
         Percentage  Rent arising out of variation  in Total  Facility  Revenues
         from Fiscal  Quarter to Fiscal  Quarter,  the Accrual Date shall be the
         payment due date for the final  installment of Percentage Rent for such
         preceding Fiscal Year. If the annual Percentage Rent for such preceding
         Fiscal  Year as shown in the annual  statement  is less than the amount
         previously  paid  with  respect  thereto  by  Tenant,  Tenant  shall be
         entitled  to offset the  amount of such  difference  against  Rent next
         coming  due under  this  Agreement,  such  payment or credit to be made
         together with interest at the  Disbursement  Rate, which interest shall
         accrue from the date of payment of Tenant until the date such offset is
         applied.  If such  offset  cannot be made  because the Term has expired
         prior to application in full thereof,  Landlord shall pay the unapplied
         balance  of such  offset  to  Tenant,  together  with  interest  at the
         Disbursement Rate, which interest shall accrue from the date of payment
         by Tenant until the date of payment by Landlord.

                           (d)  Confirmation  of Percentage  Rent.  Tenant shall
         utilize,  or cause to be utilized,  an accounting system for the Leased
         Property in accordance  with its usual and  customary  practices and in
         accordance with GAAP,  which will accurately  record all Total Facility
         Revenues  and Tenant shall  retain,  for at least three (3) years after
         the  expiration  of  each  Lease  Year,   reasonably  adequate  records
         conforming  to  such  accounting  system  showing  all  Total  Facility
         Revenues for such Fiscal Year.  Landlord,  at its own expense except as
         provided  hereinbelow,  shall have the right,  exercisable by Notice to
         Tenant given within one hundred  eighty (180) days after receipt of the
         applicable annual statement,  by its accountants or  representatives to
         commence  within such 180-day  period an audit of the  information  set
         forth in such annual  statement  referred to in subparagraph  (c) above
         and, in  connection  with such  audit,  to examine  Tenant's  books and
         records with respect thereto  (including  supporting data and sales and
         excise tax returns);  provided,  however, that if Landlord has credible
         evidence that Tenant has  intentionally  misrepresented  Total Facility
         Revenues on any such annual  statement,  the said 180-day  period shall
         commence to run on the date Landlord  obtained  such credible  evidence
         that Tenant has intentionally misrepresented Total Facility Revenues on
         any such  annual  statement.  If  Landlord  does not  commence an audit
         within such one hundred eighty (180) day period,  such annual statement
         shall be deemed  conclusively to be accepted by Landlord as correct and
         Landlord  shall have no further right to challenge  the same.  Landlord
         shall use commercially reasonable efforts to complete any such audit as
         soon as  practicable.  If any such audit  discloses a deficiency in the
         payment of Percentage Rent, and either Tenant agrees with the result of
         such  audit  or  the  matter  is  otherwise  determined,  Tenant  shall
         forthwith  pay to  Landlord  the amount of the  deficiency,  as finally
         agreed or determined,  together with interest at the Disbursement Rate,
         from the date such payment should have been made to the date of payment
         thereof.  If  such  deficiency,   as  agreed  upon  or  compromised  as
         aforesaid,  is more  than  three  percent  (3%) of the  Total  Facility
         Revenues  reported  by Tenant for such  Fiscal  Year and,  as a result,
         Landlord  did not  receive at least  ninety-five  percent  (95%) of the
         Percentage Rent payable with respect to such Fiscal Year,  Tenant shall
         pay the  reasonable  cost of such  audit and  examination.  If any such
         audit  discloses that Tenant paid more  Percentage  Rent for any Fiscal
         Year than was due hereunder, and either Landlord agrees with the result
         of such audit or the matter is  otherwise  determined  Tenant  shall be
         entitled to a credit  equal to the amount of such  overpayment  against
         Rent next  coming  due in the  amount of such  difference,  as  finally
         agreed or determined,  together with interest at the Disbursement Rate,
         which  interest  shall  accrue from the time of payment by Tenant until
         the date such credit is applied or paid,  as the case may be. If such a
         credit  cannot be made  because the Term has expired  before the credit
         can be applied in full Landlord shall pay the unapplied balance of such
         credit to Tenant,  together  with  interest at the  Disbursement  Rate,
         which  interest  shall  accrue from the date of payment by Tenant until
         the date of payment from Landlord.

                  3.1.3 Additional  Charges. In addition to the Minimum Rent and
         Percentage Rent payable hereunder,  Tenant shall pay to the appropriate
         parties and  discharge  as  and  when  due  and  payable  the
         following  (collectively, "Additional Charges"):

                           (a)  Impositions.  Subject to  Article 8 relating  to
         permitted  contests,  Tenant  shall  pay,  or  cause  to be  paid,  all
         Impositions before any fine, penalty,  interest or cost (other than any
         opportunity  cost as a result of a  failure  to take  advantage  of any
         discount for early payment) may be added for non-payment, such payments
         to be made directly to the taxing authorities where feasible, and shall
         promptly, upon request, furnish to Landlord copies of official receipts
         or other reasonably satisfactory proof evidencing such payments. If any
         such Imposition may, at the option of the taxpayer, lawfully be paid in
         installments  (whether  or not  interest  shall  accrue  on the  unpaid
         balance of such Imposition),  Tenant 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 as the same  become  due and  before any
         fine, penalty,  premium, further interest or cost may be added thereto.
         Landlord, at its expense, shall, to the extent required or permitted by
         Applicable Law,  prepare and file all tax returns and pay all taxes due
         in respect of Landlord's  net income,  gross  receipts (from any source
         other than the Rent received by Landlord  from Tenant),  sales and use,
         single business,  ad valorem,  franchise taxes and taxes on its capital
         stock,  and Tenant,  at its expense,  shall,  to the extent required or
         permitted by  Applicable  Laws,  prepare and file all other tax returns
         and  reports  in  respect  of any  Imposition  as may  be  required  by
         Government  Agencies.  If any  refund  shall  be due  from  any  taxing
         authority in respect of any Imposition  paid by Tenant,  the same shall
         be paid over to or retained by Tenant.  Landlord and Tenant 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
         Government  Agencies classify any property covered by this Agreement as
         personal property,  Tenant shall file all personal property tax returns
         in such  jurisdictions  where it may legally so file. Each party shall,
         to the extent it possesses the same,  provide the other,  upon request,
         with cost and depreciation records necessary for filing returns for any
         property so classified as personal property.  Where Landlord is legally
         required to file personal  property tax returns for property covered by
         this  Agreement  and/or gross receipts tax returns for Rent received by
         Landlord  from  Tenant,  Landlord  shall file the same with  reasonable
         cooperation  from Tenant.  Landlord shall provide Tenant with copies of
         assessment  notices in sufficient  time for Tenant to prepare a protest
         which Landlord shall file, at Tenant's written request. All Impositions
         assessed  against such  personal  property  shall be  (irrespective  of
         whether  Landlord or Tenant  shall file the  relevant  return)  paid by
         Tenant  not  later  than  the last  date on which  the same may be made
         without interest or penalty.

         Landlord shall give prompt Notice to Tenant of all Impositions  payable
         by  Tenant  hereunder  of which  Landlord  at any  time has  knowledge;
         provided,  however,  that  Landlord's  failure to give any such  notice
         shall in no way  diminish  Tenant's  obligation  hereunder  to pay such
         Impositions (except that Landlord shall be responsible for any interest
         or penalties  incurred as a result of  Landlord's  failure  promptly to
         forward the same).

                           (b) Utility Charges.  Tenant shall pay or cause to be
         paid all charges for  electricity,  power,  gas,  oil,  water and other
         utilities used in connection with the Leased Property.

                           (c) Insurance Premiums.  Tenant shall pay or cause to
         be  paid  all  premiums  for  the  insurance  coverage  required  to be
         maintained pursuant to Article 9.
                           (d) Other  Charges.  Tenant  shall pay or cause to be
         paid  all  other  amounts,   liabilities  and  obligations  arising  in
         connection with the Leased Property except those obligations  expressly
         assumed by Landlord  pursuant to the  provisions  of this  Agreement or
         expressly  stated not to be an  obligation  of Tenant  pursuant to this
         Agreement. Without limitation, Tenant shall pay or cause to be paid all
         amounts,  liabilities  and  obligations  arising in connection with the
         Contracts, as defined in the Purchase Agreement.

                           (e) Reimbursement for Additional  Charges.  If Tenant
         pays or causes to be paid property taxes or similar or other Additional
         Charges attributable to periods after the end of the Term, whether upon
         expiration or sooner termination of this Agreement,  Tenant may, within
         a reasonable time after the end of the Term, provide Notice to Landlord
         of its estimate of such  amounts.  Landlord  shall  promptly  reimburse
         Tenant  for all  payments  of such taxes and other  similar  Additional
         Charges  that are  attributable  to any  period  after the Term of this
         Agreement.

         3.2 Late  Payment of Rent,  Etc. If any  installment  of Minimum  Rent,
Percentage Rent or Additional  Charges (but only as to those Additional  Charges
which are payable  directly to Landlord)  shall not be paid within ten (10) days
after its due  date,  Tenant  shall pay  Landlord,  within  five (5) days  after
Landlord's written demand therefor, as Additional Charges, a late charge (to the
extent  permitted  by law)  computed at the  Overdue  Rate on the amount of such
installment,  from  the due  date of such  installment  to the  date of  payment
thereof.  To the extent  that  Tenant pays any  Additional  Charges  directly to
Landlord  or  any  Facility  Mortgagee  pursuant  to  any  requirement  of  this
Agreement,  Tenant shall be relieved of its  obligation  to pay such  Additional
Charges to the Entity to which they would  otherwise be due and  Landlord  shall
pay when due, or cause the applicable  Facility  Mortgagee to pay when due, such
Additional  Charges to the Entity to which they are due. If any payment due from
Landlord  to Tenant  shall not be paid  within ten (10) days after its due date,
Landlord shall pay to Tenant,  on demand, a late charge (to the extent permitted
by law) computed at the Overdue Rate on the amount of such  installment from the
due date of such installment to the date of payment thereof.

                  In the event of any  failure  by Tenant to pay any  Additional
Charges when due, except as expressly  provided in Section 3.1.3(a) with respect
to permitted  contests  pursuant to Article 8, Tenant shall promptly pay (unless
payment  thereof is in good faith being  contested  and  enforcement  thereof is
stayed) and discharge, as Additional Charges, every fine, penalty,  interest and
cost which may be added for non-payment or late payment of such items.  Landlord
shall have all legal,  equitable  and  contractual  rights,  powers and remedies
provided  either in this  Agreement  or by statute or  otherwise  in the case of
non-payment  of the  Additional  Charges  as in the case of  non-payment  of the
Minimum Rent and Percentage Rent.

         3.3 Net Lease.  The Rent shall be  absolutely  net to  Landlord so that
this Agreement  shall yield to Landlord the full amount of the  installments  or
amounts of the Rent throughout the Term, subject to any other provisions of this
Agreement which expressly  provide  otherwise,  including,  without  limitation,
those provisions for adjustment, refunding or abatement of such Rent and for the
funding of  Landlord's  obligations  pursuant to Sections  5.1.4 and 14.3.  This
Agreement is a net lease and, except to the extent otherwise expressly specified
in this  Agreement,  it is agreed and intended  that Rent  payable  hereunder by
Tenant shall be paid without notice, demand, counterclaim,  setoff, deduction or
defense and without abatement,  suspension,  deferment,  diminution or reduction
and that Tenant's  obligation to pay all such amounts,  throughout  the Term and
all applicable  Extended Terms is absolute and  unconditional  and except to the
extent  otherwise  expressly   specified  in  this  Agreement,   the  respective
obligations and liabilities of Tenant and Landlord  hereunder shall in no way be
released,  discharged or otherwise  affected for any reason,  including  without
limitation: (a) any defect in the condition, merchantability, design, quality or
fitness for use of the Leased  Property or any part  thereof,  or the failure of
the Leased Property to comply with all Applicable Laws,  including any inability
to occupy or use the Leased  Property by reason of such  noncompliance;  (b) any
damage to, removal, abandonment,  salvage, loss, condemnation,  theft, scrapping
or  destruction of or any  requisition  or taking of the Leased  Property or any
part thereof,  or any  environmental  conditions  on the Leased  Property or any
property in the vicinity of the Leased Property; (c) any restriction, prevention
or curtailment  of or  interference  with any use of the Leased  Property or any
part  thereof  including  eviction;  (d) any defect in title to or rights to the
Leased Property or any lien on such title or rights to the Leased Property;  (e)
any change, waiver, extension,  indulgence or other action or omission or breach
in  respect  of any  obligation  or  liability  of or by  any  Person;  (f)  any
bankruptcy, insolvency,  reorganization,  composition,  adjustment, dissolution,
liquidation or other like proceedings relating to Tenant or any other Person, or
any action  taken with  respect to this  Agreement by any trustee or receiver of
Tenant or any other Person,  or by any court,  in any such  proceeding;  (g) any
right or claim that  Tenant  has or might have  against  any  Person,  including
without  limitation  Landlord  (other  than a monetary  default)  or any vendor,
manufacturer,  contractor of or for the Leased Property;  (h) any failure on the
part of Landlord or any other  Person to perform or comply with any of the terms
of  this   Agreement,   or  of  any  other   agreement;   (i)  any   invalidity,
unenforceability,  rejection or  disaffirmance of this Agreement by operation of
law  or  otherwise  against  or by  Tenant  or any  provision  hereof;  (j)  the
impossibility  of performance by Tenant or Landlord,  or both; (k) any action by
any  court,   administrative  agency  or  other  Government  Agencies;  (l)  any
interference,  interruption  or  cessation  in  the  use,  possession  or  quiet
enjoyment  of the Leased  Property  or  otherwise;  or (m) any other  occurrence
whatsoever,  whether similar or dissimilar to the foregoing, whether foreseeable
or  unforeseeable,  and whether or not Tenant  shall have notice or knowledge of
any of the foregoing;  provided,  however, that the foregoing shall not apply or
be construed to restrict  Tenant's rights in the event of any act or omission by
Landlord constituting  negligence or willful misconduct.  Except as specifically
set forth in this Agreement,  this Agreement shall be  noncancellable  by Tenant
for any reason  whatsoever and, except as expressly  provided in this Agreement,
Tenant, to the extent now or hereafter  permitted by Applicable Laws, waives all
rights now or hereafter conferred by statute or otherwise to quit,  terminate or
surrender  this Agreement or to any  diminution,  abatement or reduction of Rent
payable hereunder.  Except as specifically set forth in this Agreement, under no
circumstances  or conditions  shall Landlord be expected or required to make any
payment of any kind hereunder or have any  obligations  with respect to the use,
possession,  control, maintenance,  alteration,  rebuilding,  replacing, repair,
restoration or operation of all or any part of the Leased  Property,  so long as
the Leased Property or any part thereof is subject to this Agreement, and Tenant
expressly waives the right to perform any such action at the expense of Landlord
pursuant to any law.

         3.4      Security for Tenant's Performance.

                  (a)  Simultaneously  with  the  execution  of this  Agreement,
         Tenant shall deposit with Landlord the sum of Five Hundred  Fifty-Three
         Thousand  Nine Hundred  Fifty-Six  Dollars  ($553,956)  (the  "Security
         Deposit"). Landlord may commingle the Security Deposit with other funds
         of Landlord. All interest, if any, earned on the Security Deposit shall
         be the sole  property of Landlord and shall not be part of the Security
         Deposit.

                  (b) Tenant  acknowledges that the Security Deposit constitutes
         security for the faithful  observance and  performance by Tenant of all
         the terms,  covenants and  conditions of this Agreement by Tenant to be
         observed  and  performed.  If any Event of Default  shall  occur and be
         continuing  under  this  Agreement,  Landlord  may,  at its  option and
         without  prejudice  to any  other  remedy  which  Landlord  may have on
         account  thereof,  appropriate  and  apply the  amount of the  Security
         Deposit as may be necessary to compensate  Landlord  toward the payment
         of the Rent or other sums due Landlord under this Agreement as a result
         of such breach by Tenant. It is understood and agreed that the Security
         Deposit is not to be considered  as prepaid rent,  nor shall damages be
         limited to the amount of the Security  Deposit.  Upon the expiration or
         sooner  termination  of this  Agreement,  any unapplied  balance of the
         Security Deposit shall be paid by wire transfer to Tenant.

                                    ARTICLE 4

                           USE OF THE LEASED PROPERTY

         4.1      Permitted Use.

                  4.1.1    Permitted Use.

                           (a) Tenant shall, at all times during the Term and at
         any  other  time  that  Tenant  shall be in  possession  of the  Leased
         Property,  continuously  use and  operate  the  Leased  Property  as an
         assisted living facility, which may include a dementia facility and any
         uses incidental thereto.  Subject to Section 16.3, Tenant shall not use
         the Leased  Property or any  portion  thereof for any other use without
         the  prior  written  consent  of  Landlord.  No use  shall  be  made or
         permitted  to be made of the Leased  Property and no acts shall be done
         thereon  which  will cause the  cancellation  of any  insurance  policy
         covering  the  Leased  Property  or any part  thereof  (unless  another
         adequate  policy is  available),  nor shall  Tenant  sell or  otherwise
         provide  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,  or any  other  insurance  policies
         required to be carried hereunder,  or fire  underwriter's  regulations.
         Tenant shall, at its sole cost (except as expressly provided in Section
         5.1.4(b)),  comply with all  Insurance  Requirements.  Tenant shall not
         take or omit to take  any  action,  the  taking  or  omission  of which
         materially  impairs the value or the usefulness of the Leased  Property
         or any part thereof for its Permitted Use.

                           (b) Notwithstanding the foregoing, in the event that,
         in the  reasonable  determination  of  Tenant,  it shall no  longer  be
         economically  practical  to operate the Leased  Property as an assisted
         living  facility,  Tenant shall give  Landlord  Notice  thereof,  which
         Notice  shall set forth in  reasonable  detail  the  reasons  therefor.
         Thereafter,  Landlord and Tenant shall negotiate in good faith to agree
         on an alternative use for the Leased Property,  appropriate adjustments
         to  the  Percentage  Rent,  the  Reserve  and  other  related  matters;
         provided,  however,  in no such event shall the Minimum Rent be reduced
         or abated. Upon agreement by Landlord and Tenant on an alternative use,
         Landlord shall use commercially  reasonable  efforts,  at Tenant's cost
         and  expense,  to obtain any  approvals or waivers  needed  pursuant to
         Legal Requirements. In the event that operating the Leased Property for
         such  alternative  use  shall  be  outside  of  Tenant's  expertise  as
         reasonably  determined  by  Tenant,  Tenant  may  engage a  third-party
         Manager, reasonably acceptable to Landlord, for such purpose.

                  4.1.2 Necessary  Approvals.  Tenant shall proceed with all due
diligence and exercise  commercially  reasonable  efforts to obtain and maintain
all approvals  necessary to use and operate,  for its Permitted  Use, the Leased
Property and the Facility located thereon under  applicable law.  Landlord shall
cooperate with Tenant in this regard,  including  executing all applications and
consents  required  to be signed by  Landlord  in order for Tenant to obtain and
maintain such approvals.

                  4.1.3  Lawful  Use,  Etc.  Tenant  shall  not use or suffer or
permit the use of the Leased Property or Tenant's Personal Property, if any, for
any unlawful  purpose.  Tenant  shall not commit or suffer to be  committed  any
waste on the Leased  Property,  or in the  Facility,  nor shall  Tenant cause or
permit any  unlawful  nuisance  thereon or therein.  Tenant shall not suffer nor
permit the Leased Property,  or any portion thereof, to be used in such a manner
as (i) might  reasonably  impair  Landlord's  title  thereto  or to any  portion
thereof,  or (ii) may  reasonably  allow a claim or claims for adverse  usage or
adverse  possession  by the public,  as such,  or of implied  dedication  of the
Leased Property or any portion thereof.

         4.2 Compliance with Legal/Insurance  Requirements,  Etc. Subject to the
provisions  of Article 8,  Tenant,  at its sole  expense,  shall (i) comply with
Legal Requirements and Insurance  Requirements in respect of the use, operation,
maintenance, repair, alteration and restoration of the Leased Property, and (ii)
comply with all appropriate  licenses,  and other  authorizations and agreements
required for any use of the Leased Property and Tenant's Personal  Property,  if
any,  then  being made and which are  material  to the  operation  of the Leased
Property  as an  assisted  living  facility,  and for the proper  operation  and
maintenance of the Leased Property or any part thereof.

         4.3      Environmental Matters.

                  4.3.1  Restriction  on Use,  Etc. If, at any time prior to the
termination of this Agreement, Hazardous Substances (other than those maintained
in accordance  with  Applicable  Laws) are  discovered  on the Leased  Property,
subject to Tenant's  right to contest  the same in  accordance  with  Article 8,
Tenant  shall  take  all  actions  and  incur  any and all  expenses,  as may be
reasonably  necessary and as may be required by any  Government  Agency,  (i) to
clean up and remove from and about the Leased Property all Hazardous  Substances
thereon, (ii) to contain and prevent any further release or threat of release of
Hazardous Substances on or about the Leased Property and (iii) to use good faith
efforts to  eliminate  any  further  release  or threat of release of  Hazardous
Substances  on or about the Leased  Property.  Tenant shall  promptly:  (a) upon
receipt of notice or  knowledge,  notify  Landlord  in  writing of any  material
change in the nature or extent of Hazardous  Substances at the Leased  Property,
(b) transmit to Landlord a copy of any  Community  Right to Know report which is
required to be filed by Tenant with respect to the Leased  Property  pursuant to
SARA Title III or any other  Applicable  Law, (c) transmit to Landlord copies of
any citations,  orders, notices or other governmental communications received by
Tenant or its agents or  representatives  with  respect  thereto  (collectively,
"Environmental  Notice"), which Environmental Notice requires a written response
or any action to be taken  and/or if such  Environmental  Notice gives notice of
and/or presents a material risk of any material  violation of any Applicable Law
and/or  presents a material risk of any material cost,  expense,  loss or damage
(an "Environmental Obligation"), (d) observe and comply with all Applicable Laws
relating to the use,  maintenance  and disposal of Hazardous  Substances and all
orders  or  directives   from  any  official,   court  or  agency  of  competent
jurisdiction  relating  to the use or  maintenance  or  requiring  the  removal,
treatment,  containment or other disposition  thereof,  and (e) pay or otherwise
dispose of any fine, charge or Imposition  related thereto,  unless Tenant shall
contest the same in good faith and by appropriate  proceedings  and the right to
use and the  value  of the  Leased  Property  is not  materially  and  adversely
affected thereby.

Tenant's  liability and obligations  pursuant to the terms of this Section 4.3.1
are  subject  to the  provisions  of  Sections  5.1.3 and  5.1.4 and  Landlord's
compliance with its funding obligations under Section 5.1.4.

                  4.3.2 Indemnification. Tenant and Landlord shall each protect,
indemnify  and hold  harmless  the other,  its  trustees,  directors,  officers,
agents,  employees and beneficiaries,  and any of their respective successors or
assigns with respect to this Agreement  (collectively,  the  "Indemnitees"  and,
individually,  an "Indemnitee") for, from and against any and all debts,  liens,
claims,  causes of  action,  administrative  orders or  notices,  costs,  fines,
penalties or expenses (including, without limitation, reasonable attorney's fees
and  expenses)  imposed  upon,  incurred by or asserted  against any  Indemnitee
resulting from, either directly or indirectly,  the presence during the Term in,
upon or under the soil or ground water of the Leased  Property or any properties
surrounding the Leased Property of any Hazardous  Substances in violation of any
Applicable Law or otherwise, provided that any of the foregoing arises by reason
of the gross negligence or willful misconduct of the indemnifying  party, except
to the extent the same arise from the gross negligence or willful  misconduct of
the other party or any other Indemnitee.  This duty includes, but is not limited
to, costs  associated with personal injury or property damage claims as a result
of the presence  prior to the  expiration or sooner  termination of the Term and
the surrender of the Leased Property to Landlord in accordance with the terms of
this  Agreement  of  Hazardous  Substances  in, upon or under the soil or ground
water of the Leased  Property in violation of any  Applicable  Law.  Upon Notice
from the indemnified  party and any other of the  Indemnitees,  the indemnifying
party  shall  undertake  the  defense,  at its  sole  cost and  expense,  of any
indemnification  duties set forth herein, in which event, the indemnifying party
shall not be liable for payment of any  duplicative  attorneys' fees incurred by
the other party or any Indemnitee.

                  4.3.3  Survival.  As to  conditions  which  exist prior to the
expiration  or sooner  termination  of this  Agreement,  the  provisions of this
Section 4.3 shall survive the expiration or sooner termination of this Agreement
for a period of one (1) year after such expiration or termination.

                                    ARTICLE 5

                             MAINTENANCE AND REPAIRS

         5.1      Maintenance and Repair.

                  5.1.1 Tenant's Obligations.

                           (a)  Tenant  shall,  at its  sole  cost  and  expense
         (except as expressly provided in Sections 5.1.2 and 5.1.3(b)), keep the
         Leased Property and all private  roadways,  sidewalks and curbs located
         thereon in good order and repair,  reasonable  wear and tear  excepted,
         and shall  promptly  make all  necessary  and  appropriate  repairs and
         replacements  thereto of every kind and  nature,  whether  interior  or
         exterior,  structural  or  nonstructural,  ordinary  or  extraordinary,
         foreseen or  unforeseen  or arising by reason of a  condition  existing
         prior to the  commencement  of the Term. All repairs shall be made in a
         good,  workmanlike  manner,  consistent  with the System  Standards and
         industry standards for like assisted living facilities in like locales,
         in accordance  with all applicable  federal,  state and local statutes,
         ordinances,  by-laws, codes, rules and regulations relating to any such
         work. Tenant's obligations under this Section 5.1.1(a) shall be limited
         in the event of any casualty or  Condemnation  as set forth in Sections
         10.2  and 11.2 and  Tenant's  obligations  with  respect  to  Hazardous
         Substances are as set forth in Section 4.3.

                  5.1.2    Reserve.

                           (a) Tenant  shall  establish,  or cause  Operator  to
         establish,  an interest  bearing  reserve  account (the "Reserve") in a
         bank  designated  by Landlord and  reasonably  approved by Tenant.  All
         interest  earned on the Reserve  shall be added to and remain a part of
         the Reserve.  Except as set forth in Section 5.1.2(e),  Tenant shall be
         the only party entitled to withdraw funds from the Reserve. The purpose
         of the Reserve is to cover the cost of:

                                    (i)     Replacements, renewals and additions
                                            to the Facility's FF&E;

                                    (ii)   Repairs,    renovations,    renewals,
                    additions,  alterations,  improvements or  replacements  and
                    maintenance to the Leased Property, all of which are routine
                    or non-major and which are normally  capitalized under GAAP,
                    such  as  exterior  and  interior  repainting,   resurfacing
                    building  walls,   floors,  roofs  and  parking  areas,  and
                    replacing folding walls and the like; and

                                    (iii) At Tenant's option, lease payments for
                    communications  equipment  and one  maintenance  or  shuttle
                    vehicle  used  in  connection  with  the  operation  of  the
                    Facility.

                           (b)  Commencing  with  the   Commencement   Date  and
         continuing throughout the Term, Tenant shall transfer (as of the end of
         each Accounting Period of the Term) into the Reserve an amount equal to
         the  Applicable   Percentage  of  Total  Facility   Revenues  for  such
         Accounting Period;  provided,  however, that for each of the Accounting
         Years during the period  commencing on the Commencement Date and ending
         on the last day of the fourth (4th) full  Accounting  Year,  the amount
         transferred  by Tenant into the  Reserve  shall not be less than Thirty
         Thousand  Dollars  ($30,000) for each such Accounting Year. At the time
         Tenant  provides  Landlord  the  documentation   described  in  Section
         3.1.2(c),  Tenant  shall also  deliver to Landlord a statement  setting
         forth the total amount of deposits  made to and  expenditures  from the
         Reserve for the preceding Fiscal Year.

                           (c) On or  before  December  1 of  each  Lease  Year,
         Tenant shall prepare an estimate  (the  "Reserve  Estimate") of Reserve
         expenditures  anticipated  during  the  ensuing  Fiscal  Year and shall
         submit such Reserve  Estimate to Landlord for its review.  Tenant shall
         in good faith consider suggestions and comments to the Reserve Estimate
         made by Landlord  within thirty (30) days after delivery of the Reserve
         Estimate to Landlord.  All expenditures  from the Reserve for the items
         described in Section  5.1.2(a)  shall be (as to both the amount of each
         such  expenditure  and the timing  thereof) (i)  required,  in Tenant's
         reasonable  judgment,  to keep the Leased  Property  in a  first-class,
         competitive,  efficient and economical  operating  condition or to keep
         the Leased  Property in a condition  consistent  with the standards set
         forth in this Agreement or the Operating Agreement; or (ii) required by
         reason of any Legal  Requirement  imposed by any  Government  Agency or
         otherwise required (as determined by Tenant in its reasonable judgment)
         for the continued  safe and orderly  operation of the Leased  Property,
         (subsections (i) and (ii) each individually,  a "Product Standard" and,
         collectively, the "Product Standards").

                           (d) Tenant shall from time to time make  expenditures
         from the  Reserve as it deems  necessary  in  accordance  with  Section
         5.1.2(a) and (c).  Tenant shall provide to Landlord,  within forty (40)
         Business  Days after the end of each  Accounting  Period,  a  statement
         setting forth Reserve expenditures made to date during the Fiscal Year.
         Expenditures  from the  Reserve  shall  not be  subject  to  Landlord's
         approval.

                           (e) All funds in the  Reserve,  all  interest  earned
         thereon and all property purchased with funds from the Reserve shall be
         and remain the property of Landlord.  Following  expiration  or earlier
         termination  of this  Agreement  and  payment in full on all  contracts
         entered into prior to such  expiration  or  termination  for work to be
         done or furniture,  furnishings,  fixtures and equipment to be supplied
         in accordance with this Section 5.1.2 out of the Reserve,  control over
         the Reserve shall be transferred from Tenant to Landlord.

                           (f) It is  understood  and  agreed  that the  Reserve
         pursuant  to this  Agreement  shall be  maintained  and used  solely in
         connection with the Leased Property.

                           (g) If Landlord  wishes to grant a security  interest
         in or create another encumbrance on the Reserve, all or any part of the
         existing  or  future  funds  therein,  or  any  general  intangible  in
         connection therewith, the instrument granting such security interest or
         creating  such other  encumbrance  shall  expressly  provide  that such
         security  interest  or  encumbrance  is subject to the rights of Tenant
         with respect to the Reserve as set forth herein. The form and substance
         of such provision shall be subject to Tenant's prior written  approval,
         which  approval  shall  not  be  unreasonably   withheld,   delayed  or
         conditioned.

                    5.1.3  Major Capital Expenditures.

                           (a) On or  before  December  1 of  each  Lease  Year,
         Tenant shall deliver to Landlord,  for Landlord's approval, an estimate
         (the  "Building  Estimate")  of the  expenses  necessary  for  repairs,
         alterations, improvements, renewals, replacements and additions, all of
         which are  non-routine or major, to the Leased  Improvements  which are
         not covered under Section  5.1.2(a) and which are normally  capitalized
         under  GAAP  such  as  repairs,  alterations,  improvements,  renewals,
         replacements and additions to the structure,  the exterior facade,  the
         mechanical,   electrical,   heating,   ventilating,  air  conditioning,
         plumbing   and   vertical   transportation   elements   of  the  Leased
         Improvements ("Major Capital Expenditures"). Major Capital Expenditures
         shall also include all costs associated with any removal or remediation
         of Hazardous Substances (except those treated as Tenant's sole cost and
         expense under Section  5.1.4(b)),  regardless of whether such costs are
         normally  capitalized  under  GAAP.  Landlord  shall not  withhold  its
         approval  to  such  Major  Capital  Expenditures  as are  required,  in
         Tenant's  reasonable  judgment,  for the Leased Property to comply with
         the  Product  Standards  or for costs  associated  with the  removal or
         remediation of Hazardous Substances.  If Tenant does not receive Notice
         of Landlord's  disapproval of the Building  Estimate within twenty (20)
         Business Days after delivery of the Building Estimate to Landlord, then
         Landlord shall be deemed to have approved the Building Estimate. In the
         event Landlord  disapproves the Building  Estimate,  Landlord's  Notice
         shall  identify  disputed  items  on  a  line  item  basis.  Items  not
         identified  as  disputed  in such  Landlord's  Notice  shall be  deemed
         approved.

                           (b) In  the  event  Major  Capital  Expenditures  are
         required  as a result  of the  receipt  by  Tenant  of an order  from a
         Government Agency or other  circumstances  described in subsection (ii)
         of Section  5.1.2(c)  (including  costs  associated with the removal or
         remediation  of Hazardous  Substances),  Tenant shall be  authorized to
         take  appropriate  remedial action without first  receiving  Landlord's
         approval (i) due to an emergency  threatening the Leased Property,  its
         guests,  invitees or employees,  or (ii) if the continuation of a given
         condition  will  subject  Tenant  or  Landlord  to  civil  or  criminal
         liability.  Major  Capital  Expenditures  made pursuant to this Section
         5.1.3(b) shall be deemed approved by Landlord.

                           (c) The  cost of all  approved,  deemed  approved  or
         non-approvable Major Capital Expenditures shall be borne by Landlord in
         accordance with the provisions of Section 5.1.4(b).

                           (d) In the  event  Landlord  timely  disapproves  any
         Building  Estimate  or any item  within any  Building  Estimate,  then,
         following the negotiation  period specified in Section 19.1, Tenant may
         submit the matter for resolution by arbitrators in accordance  with the
         provisions of Section 19.2, and the arbitrators shall determine whether
         or not Tenant acted reasonably in determining that the disputed item or
         items are needed for the Leased  Property  to comply  with the  Product
         Standards or for the costs  associated  with the removal or remediation
         of Hazardous Substances.

                    5.1.4  Landlord's Funding Obligations.

                           (a) Landlord shall not, under any  circumstances,  be
         required to build or rebuild any improvement 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  nonstructural,  foreseen or
         unforeseen,  to maintain the Leased  Property in any way, or, except as
         provided in Section 5.1.4(b),  to make any expenditure  whatsoever with
         respect  thereto.  Except  as  otherwise  expressly  provided  in  this
         Agreement,  Tenant hereby waives,  to the maximum  extent  permitted by
         law, the right to make  repairs at the expense of Landlord  pursuant to
         any law in effect on the date  hereof or  hereafter  enacted.  Landlord
         shall have the right to give, record and post, as appropriate,  notices
         of  nonresponsibility  under any mechanic's  lien laws now or hereafter
         existing.

                           (b) If, at any time,  funds in the  Reserve  shall be
         insufficient  or are reasonably  projected by Tenant to be insufficient
         for  necessary  and  permitted   expenditures  thereof  or  funding  is
         necessary for approved, deemed approved or non-approvable Major Capital
         Expenditures  (other than costs related to Hazardous  Substances  under
         Section  4.3  resulting  from  Tenant's  gross  negligence  or  willful
         misconduct,  which  costs  shall be  Tenant's  sole cost and  expense),
         Tenant may, at its election, give Landlord Notice thereof, which Notice
         shall set forth,  in reasonable  detail,  the nature of the required or
         permitted action and the estimated cost thereof. Landlord shall, within
         ten (10) Business Days after such Notice, or such later dates as Tenant
         may direct by reasonable prior Notice,  disburse such required funds to
         Tenant (or, if Tenant  shall so elect,  directly to the Operator or any
         other Person performing the required work) and, upon such disbursement,
         the Minimum  Rent shall be  adjusted  as provided in Section  3.1.1(b);
         provided,  however,  that if the  disbursement  of funds relates to the
         Hazardous  Substances under Section 4.3 resulting from Landlord's gross
         negligence or willful  misconduct,  there shall be no adjustment to the
         Minimum  Rent.  If Landlord  disputes its  obligation  to disburse such
         funds,  it shall give  Tenant  Notice of such  dispute  within such ten
         (10)-Business  Day period,  and  failure to give Tenant  Notice of such
         dispute  shall be deemed a waiver of any  right to  dispute  Landlord's
         obligation to disburse such funds.  In the event that any dispute shall
         arise with  respect to  Landlord's  obligation  to  disburse  any funds
         pursuant to this Section  5.1.4(b),  then,  following  the  negotiation
         period specified in Section 19.1,  either party may submit such dispute
         for  resolution by  arbitrators  in accordance  with the  provisions of
         Section 19.2, and the arbitrators shall determine whether or not Tenant
         acted  reasonably  in  requesting  such  additional  funds  in order to
         maintain the Leased Property in accordance  with the Product  Standards
         or to cover costs  associated  with removal or remediation of Hazardous
         Substances. To the extent reasonably possible,  Landlord shall identify
         disputed  items on a line item  basis.  In no event  shall  Landlord be
         entitled to dispute the request for funds for any expenditure which was
         approved  or deemed  approved  pursuant  to the  provisions  of Section
         5.1.3(a) and (b).

                    5.1.5  Nonresponsibility of Landlord,  Etc. All materialmen,
contractors, artisans, mechanics and laborers and other persons contracting with
Tenant with  respect to the Leased  Property,  or any part  thereof,  are hereby
charged with notice that liens on the Leased Property or on Landlord's  interest
therein  are  expressly  prohibited  and that they must look solely to Tenant to
secure  payment  for any work done or  material  furnished  by Tenant or for any
other  purpose  during the term of this  Agreement.  Nothing  contained  in this
Agreement shall be deemed or construed in any way as constituting the consent or
request of  Landlord,  express or implied,  by inference  or  otherwise,  to any
contractor,  subcontractor,  laborer or materialmen  for the  performance of any
labor  or  the  furnishing  of  any  materials  for  any  alteration,  addition,
improvement  or repair to the Leased  Property or any part  thereof or as giving
Tenant any right,  power or authority to contract for or permit the rendering of
any  services or the  furnishing  of any  materials  that would give rise to the
filing of any lien  against  the  Leased  Property  or any part  thereof  nor to
subject  Landlord's  estate  in the  Leased  Property  or any  part  thereof  to
liability  under  any  Mechanic's  Lien Law of the  State  in any way,  it being
expressly  understood  Landlord's  estate  shall  not be  subject  to  any  such
liability.

                    5.1.6   Limitation   on   Tenant's   Obligations.   Tenant's
obligations  under  Section 5.1 shall be limited in the event of any casualty or
Condemnation  as set forth in Sections  10.2 and 11.2 and  Tenant's  obligations
with respect to Hazardous Substances are as set forth in Section 4.3.

         5.2 Tenant's Personal Property. At the expiration or sooner termination
of the Term, Landlord may, in its sole and absolute discretion, elect either (i)
to give Tenant  Notice that Tenant shall be required,  within ten (10)  Business
Days after such  expiration or  termination,  to remove all FAS and  Inventories
from the Leased  Property  or (ii) to purchase  from Tenant at a purchase  price
equal to Tenant's book value all such FAS and Inventories  other than those that
Landlord does not have the right to use under Section 22.16. Failure of Landlord
to make such election shall be deemed an election to proceed in accordance  with
clause (ii) preceding.

         5.3  Yield  Up.  Upon the  expiration  or  sooner  termination  of this
Agreement, Tenant shall vacate and surrender the Leased Property, to Landlord in
substantially  the same  condition  in which the Leased  Property  was in on the
Commencement Date, except as repaired,  replaced,  rebuilt, restored, altered or
added  to as  permitted  or  required  by  the  provisions  of  this  Agreement,
reasonable wear and tear and  Condemnation  (and casualty  damage,  in the event
that this  Agreement  is  terminated  following  a casualty in  accordance  with
Article 10) excepted,  together with the FAS and  Inventories  then existing but
excluding  any FAS and  Inventories  with  Proprietary  Marks (as defined in the
Operating Agreement) acquired by Tenant or the Operator.

                    In addition,  as of the expiration or earlier termination of
this Agreement,  Tenant shall, at Landlord's sole cost and expense, use its good
faith,  commercially  reasonable  efforts  to  transfer  to and  cooperate  with
Landlord  or  Landlord's  nominee  in  connection  with  the  processing  of all
applications   for   licenses,   operating   permits   and  other   governmental
authorizations  and all contracts  entered into by Tenant,  including  contracts
with governmental or quasi-governmental  Entities which may be necessary for the
use and  operation  of the  Facility as then  operated,  but  excluding  (i) all
insurance  contracts  and  multi-property  contracts not limited in scope to the
Collective  Leased  Properties,  the  Leases  for  which  are  being  terminated
simultaneously,(ii)  all contracts  and leases with  Affiliated  Persons,  (iii)
utility deposits and (iv) telephone  numbers.  Landlord shall indemnify and hold
Tenant  harmless  for all  claims,  costs  and  expenses  (including  reasonable
attorneys' fees) arising from acts or omissions by Landlord under such contracts
subsequent  to the date of  transfer  thereof  to  Landlord;  and  Tenant  shall
indemnify  and  hold  Landlord  harmless  for all  claims,  costs  and  expenses
(including  reasonable  attorney's fees) arising from acts or omission by Tenant
under such contracts prior to the date of transfer thereof to Landlord.

                                    ARTICLE 6

                               IMPROVEMENTS, ETC.

         6.1 Improvements to the Leased  Property.  Tenant shall not finance the
cost of any  construction  by the granting of a lien on or security  interest in
the Leased Property,  or Tenant's  interest  therein,  without the prior written
consent of  Landlord,  which  consent may be withheld by Landlord in  Landlord's
sole  discretion.  Any such  improvements  shall,  upon the expiration or sooner
termination  of this  Agreement,  remain or pass to and become the  property  of
Landlord, free and clear of all encumbrances other than Permitted Encumbrances.

         6.2 Salvage. Other than Tenant's Personal Property, all materials which
are scrapped or removed in connection  with the making of repairs,  alterations,
improvements,  renewals,  replacements and additions pursuant to Article 5 shall
be  disposed  of by  Tenant  and the net  proceeds  thereof,  if any,  shall  be
deposited in the Reserve.

         6.3  Equipment  Leases.  Landlord  shall  enter  into  such  leases  of
equipment and personal  property as Tenant may  reasonably  request from time to
time,  provided  that  the  form  and  substance  thereof  shall  be  reasonably
satisfactory to Landlord.  Tenant shall prepare and deliver to Landlord all such
lease documents for which  Landlord's  execution is necessary and Landlord shall
promptly,  upon approval thereof,  execute and deliver such documents to Tenant.
Tenant  shall,  throughout  the  Term,  be  responsible  for  performing  all of
Landlord's  obligations  under  all such  documents  and  agreements,  including
without limitation, all Contracts, as defined in the Purchase Agreement.

                                    ARTICLE 7

                                      LIENS

         Subject to Article 8, Tenant shall not, directly or indirectly,  create
or allow to remain  and shall  promptly  discharge,  at its  expense,  any lien,
attachment,  title  retention  agreement  or claim upon the Leased  Property  or
Tenant's  leasehold   interest  therein  or  any  attachment,   levy,  claim  or
encumbrance in respect of the Rent, other than (a) Permitted  Encumbrances,  (b)
restrictions,  liens and other encumbrances which are consented to in writing by
Landlord,  (c) liens for those taxes of Landlord which Tenant is not required to
pay hereunder,  (d) subleases permitted by Article 16, (e) liens for Impositions
or for sums resulting from  noncompliance with Legal Requirements so long as (i)
the same are not yet due and payable,  or (ii) are being contested in accordance
with  Article 8, (f) liens of  mechanics,  laborers,  materialmen,  suppliers or
vendors  incurred in the  ordinary  course of business  that are not yet due and
payable  (but  will be paid in full by  Tenant)  or are for sums  that are being
contested in  accordance  with  Article 8, (g) any  Facility  Mortgages or other
liens which are the  responsibility  of Landlord  pursuant to the  provisions of
Article 20 and (h) Landlord Liens.

                                    ARTICLE 8

                               PERMITTED CONTESTS

         Tenant  shall have the right to contest  the amount or  validity of any
Imposition, Legal Requirement, Insurance Requirement,  Environmental Obligation,
lien, attachment, levy, encumbrance, charge or claim (collectively, "Claims") as
to the Leased  Property,  by appropriate  legal  proceedings,  conducted in good
faith and with due diligence, provided that (a) the foregoing shall in no way be
construed as relieving,  modifying or extending  Tenant's  obligation to pay any
Claims required hereunder to be paid by Tenant as finally  determined,  (b) such
contest shall not cause  Landlord or Tenant to be in default under any mortgage,
deed of trust or other  agreement  encumbering  the Leased  Property or any part
thereof  (Landlord  agreeing  that  any  such  mortgage,  deed of trust or other
agreement  shall permit Tenant to exercise the rights  granted  pursuant to this
Article 8) or any interest  therein or result in a lien  attaching to the Leased
Property,  unless  such lien is fully  bonded  or is  otherwise  secured  to the
reasonable  satisfaction of Landlord, (c) no part of the Leased Property nor any
Rent therefrom shall be in any immediate danger of sale, forfeiture,  attachment
or loss, and (d) Tenant hereby  indemnifies and holds harmless Landlord from and
against  any cost,  claim,  damage,  penalty or  reasonable  expense,  including
reasonable attorneys' fees, incurred by Landlord in connection therewith or as a
result  thereof.  Landlord  agrees to join in any such  proceedings  if required
legally to prosecute  such contest,  provided that Landlord shall not thereby be
subjected to any liability  therefor  (including,  without  limitation,  for the
payment of any costs or expenses in connection  therewith)  unless Tenant agrees
to assume and  indemnify  Landlord  with  respect to the same.  Tenant  shall be
entitled to any refund of any Claims and such charges and  penalties or interest
thereon  which have been paid by Tenant or paid by  Landlord  to the extent that
Landlord has been reimbursed by Tenant. If Tenant shall fail (x) to pay or cause
to be paid  any  Claims  when  finally  determined,  (y) to  provide  reasonable
security  therefor,  or (z) to  prosecute  or  cause to be  prosecuted  any such
contest  diligently and in good faith,  Landlord may, upon Notice to Tenant, pay
such charges, together with interest and penalties due with respect thereto, and
Tenant shall reimburse Landlord therefor, upon demand, as Additional Charges.

                                    ARTICLE 9

                                    INSURANCE

         9.1 General Insurance  Requirements.  Tenant shall, at all times during
the Term and at any other  time  Tenant  shall be in  possession  of the  Leased
Property,  keep the Leased Property and all property located therein or thereon,
insured against the risks and in the amounts as follows:

                    (a)  "All-risk"   property  insurance  (and  to  the  extent
         applicable, Builder's Risk Insurance) on the Improvements and all items
         of  business  personal  property,  including  but not limited to signs,
         awnings,  canopies,  gazebos,  fences and retaining walls, and all FAS,
         including without limitation, insurance against loss or damage from the
         perils under "All Risk"  (Special)  form,  including but not limited to
         the  following:  fire,  windstorm,  sprinkler  leakage,  vandalism  and
         malicious mischief, water damage, explosion of steam boilers,  pressure
         vessels  and  other  similar  apparatus,  and other  hazards  generally
         included under extended coverage, all in an amount equal to one hundred
         percent (100%) of the replacement value of the Improvements  (excluding
         excavation and foundation  costs),  business personal property and FAS,
         without a  co-insurance  provision,  and shall  include an Agreed Value
         endorsement and a Law and Ordinance endorsement;

                    (b)  Ordinance or Law Coverage  with limits of not less than
         the Improvements  for Coverage A (Loss to the undamaged  portion of the
         building),  limits not less than  $500,000 for  Coverage B  (Demolition
         Cost  Coverage),  and  limits  not less than  $500,000  for  Coverage C
         (Increased Cost of Construction Coverage);

                    (c) Business income  insurance to be written on Special Form
         (and on Earthquake and Flood forms if such insurance for those risks is
         required)   including   Extra   Expense,   without  a   provision   for
         co-insurance,  including  an amount  sufficient  to pay at least twelve
         (12)  months of  Landlord  Rent for the  benefit  of  Landlord,  as its
         interest may appear,  and at least twelve (12) months of Cash Available
         for Lease Payments less Landlord Rent for the benefit of Tenant;

                    (d)  Occurrence   form   comprehensive   general   liability
         insurance,   including  bodily  injury  and  property  damage,   liquor
         liability, fire legal liability,  contractual liability and independent
         contractor's hazard and completed  operations coverage in an amount not
         less than $1,000,000 per occurrence/$2,000,000 aggregate;

                    (e) Umbrella coverage which shall be on a following form for
         the General Liability,  Automobile Liability, Employers' Liability, and
         Liquor  Liability,  with  limits  of  not  less  than  $50,000,000  per
         occurrence/aggregate;

                    (f) Flood  insurance  (if the Leased  Property is located in
         whole or in part within an area  identified  as an area having  special
         flood hazards under the National Flood Insurance Program);

                    (g) Worker's  compensation coverage for all persons employed
         by Tenant on the Leased Property with statutory limits,  and Employers'
         Liability   insurance  in  an  amount  of  at  least   $1,000,000   per
         accident/disease;

                    (h)  To  the  extent  applicable,  business  auto  liability
         insurance,  including owned,  non-owned and hired vehicles for combined
         single  limit of bodily  injury  and  property  damage of not less than
         $1,000,000 per occurrence;

                    (i) To the extent applicable, garage keepers legal liability
         insurance covering both comprehensive and collision-type  losses with a
         limit  of  liability  in  an  amount  not  less  than   $1,000,000  per
         occurrence; and

                    (j) Such additional insurance as may be reasonably required,
         from  time  to  time,  by  Landlord  (including,   without  limitation,
         insurance  requirements  in  the  Operating  Agreement,  any  mortgage,
         security  agreement or other  financing  permitted  hereunder  and then
         affecting the Leased Property,  as well as any ground lease or easement
         agreement) or any Facility Mortgagee,  provided the same is customarily
         carried  by a majority  of  comparable  high  quality  assisted  living
         facilities in the area.

         9.2 Waiver of Subrogation.  Landlord and Tenant agree that with respect
to any  property  loss  which is  covered by  insurance  then  being  carried by
Landlord  or  Tenant,  respectively,  the  party  carrying  such  insurance  and
suffering  said  loss  releases  the other of and from any and all  claims  with
respect to such loss;  and they further  agree that their  respective  insurance
companies  shall  have no right of  subrogation  against  the  other on  account
thereof.

         9.3   General   Provisions.   The   individual   Facility's   allocated
chargeback/deductible for general liability insurance and workmen's compensation
insurance  shall not exceed  $100,000 unless such greater amount is agreeable to
both  Landlord  and  Tenant.  The  individual   Facility's   property  insurance
deductible shall not exceed $ 250,000 unless such greater amount is agreeable to
both Landlord and Tenant, or if a higher deductible for high hazard risks (i.e.,
wind or flood) is mandated by the insurance carrier; provided, however, that the
aforesaid  figure of  $250,000  shall be  reduced  to  $25,000 if and during any
period of time that neither the Tenant nor the Operator is the  Guarantor or any
successor Guarantor under the Limited Rent Guaranty dated as of the same date as
this Lease executed by Guarantor in favor of Landlord nor any Affiliated  Person
as to Guarantor or any such successor Guarantor. All insurance policies pursuant
to this Article 9 shall be issued by insurance  carriers having a general policy
holder's rating of no less than A-/VII in Best's latest rating guide,  and shall
contain  clauses or  endorsements  to the effect that (a) Landlord  shall not be
liable  for  any  insurance  premiums  thereon  or  subject  to any  assessments
thereunder,  and (b) the  coverages  provided  thereby  will be primary  and any
insurance carried by any additional insured shall be excess and non-contributory
to the extent of the  indemnification  obligation pursuant to Section 9.5 below.
All such policies  described in Sections 9.1(a) through (d) shall name Landlord,
CNL Health  Care  Properties,  Inc.,  CNL Health  Care  Corp.  and any  Facility
Mortgagee as additional insureds, loss payees, or mortgagees, as their interests
may appear and to the extent of their indemnity.  All loss adjustments  shall be
payable as provided in Article 10. Tenant shall deliver  certificates thereof to
Landlord prior to their effective date (and, with respect to any renewal policy,
prior to the expiration of the existing policy),  which certificates shall state
the nature and level of coverage reported thereby,  as well as the amount of the
applicable deductible. Upon Landlord's request, original copies of said policies
shall be made available for Landlord's review at Tenant's corporate headquarters
during normal business hours.  All such policies shall provide Landlord (and any
Facility  Mortgagee  if  required by the same)  thirty  (30) days prior  written
notice of any  material  change or  cancellation  of such  policy.  In the event
Tenant  shall  fail to effect  such  insurance  as herein  required,  to pay the
premiums  therefor or to deliver such  certificates  to Landlord or any Facility
Mortgagee  at the times  required,  Landlord  shall have the right,  but not the
obligation, subject to the provisions of Section 12.5, to acquire such insurance
and pay the premiums therefor,  which amounts shall be payable to Landlord, upon
demand,  as Additional  Charges,  together with interest  accrued thereon at the
Overdue Rate from the date such payment is made until (but  excluding)  the date
repaid.

         9.4 Blanket Policy.  Notwithstanding anything to the contrary contained
in this Article 9, Tenant's obligation to maintain the insurance herein required
may be brought within the coverage of a so-called  blanket policy or policies of
insurance  carried  and  maintained  by  Tenant or any  Affiliated  Person as to
Tenant.

         9.5  Indemnification of Landlord.  Except as expressly provided herein,
Tenant shall protect, indemnify and hold harmless Landlord for, from and against
all liabilities,  obligations,  claims,  damages,  penalties,  causes of action,
costs  and  reasonable  expenses  (including,  without  limitation,   reasonable
attorneys'  fees),  to the maximum  extent  permitted  by law,  imposed  upon or
incurred by or asserted against Landlord by reason of: (a) any accident,  injury
to or death  of  persons  or loss of or  damage  to  property  of third  parties
occurring during the Term on or about the Leased Property or adjoining sidewalks
or rights of way under Tenant's  control,  and (b) any use,  misuse,  condition,
management,  maintenance or repair by Tenant or anyone  claiming under Tenant of
the  Leased  Property  or  Tenant's  Personal  Property  during  the Term or any
litigation,  proceeding or claim by  governmental  entities to which Landlord is
made a party or participant relating to such use, misuse, condition, management,
maintenance,  or repair  thereof to which  Landlord  is made a party;  provided,
however,  that Tenant's obligations  hereunder shall not apply to any liability,
obligation,  claim,  damage,  penalty,  cause of action, cost or expense arising
from any gross  negligence  or willful  misconduct of Landlord,  its  employees,
agents,  contractors or invitees.  Tenant, at its expense, shall defend any such
claim,  action or proceeding  asserted or instituted  against  Landlord  covered
under  this  indemnity  (and  shall  not  be  responsible  for  any  duplicative
attorneys' fees incurred by Landlord) or may compromise or otherwise  dispose of
the  same.  Notwithstanding  the  foregoing,  indemnification  with  respect  to
Hazardous Substances is governed by Section 4.3. The obligations of Tenant under
this Section 9.5 shall survive the termination of this Agreement for a period of
three (3) years.

                                   ARTICLE 10

                                    CASUALTY

         10.1 Insurance Proceeds.  Except as provided in the last clause of this
sentence,  all  proceeds  payable  by reason of any loss or damage to the Leased
Property,  or any portion  thereof,  and insured  under any  property  policy of
insurance  required  by  Article  9 (other  than the  proceeds  of any  business
interruption  insurance,  which shall be payable directly to Landlord and Tenant
as their interests may appear) shall be paid directly to Landlord,  any Facility
Mortgagee,  and Tenant,  who shall all be required to deposit such proceeds with
an escrow agent  reasonably  satisfactory  to them pursuant to a mutually agreed
upon form of escrow  agreement  (subject to the  provisions of Section 10.2) and
all loss  adjustments  with respect to property  losses  payable to Tenant shall
require the prior written consent of Landlord;  provided, however, that all such
proceeds  less than or equal to (i) Five  Hundred  Thousand  Dollars  ($500,000)
(which amount shall be adjusted  upward  annually based on changes in the Index)
if the Leased Property is insured under Marriott International, Inc.'s insurance
program,  or (ii) Two Hundred Fifty Thousand  Dollars  ($250,000)  (which amount
shall be adjusted  upward  annually based on changes in the Index) if the Leased
Property is insured other than under Marriott  International,  Inc.'s  insurance
program,  shall be paid  directly  to Tenant  and such  losses  may be  adjusted
without Landlord's  consent.  If Tenant is required to reconstruct or repair the
Leased  Property as provided  herein,  such  proceeds  shall be paid out by such
escrow agent from time to time for the  reasonable  costs of  reconstruction  or
repair of the  Leased  Property  necessitated  by such  damage  or  destruction,
subject  to and in  accordance  with  the  provisions  of  Section  10.2.4.  Any
unexpended  deductible  amount and excess proceeds of insurance  remaining after
the completion of the  restoration  shall be retained by Tenant or, if escrowed,
paid to  Tenant.  In the  event  that  the  provisions  of  Section  10.2.1  are
applicable,  the  insurance  proceeds  shall be retained  by the party  entitled
thereto pursuant to Section 10.2.1.  All salvage resulting from any risk covered
by insurance shall belong to Landlord, provided any rights to the same have been
waived by the insurer.

         10.2     Damage or Destruction.

                    10.2.1 Damage or Destruction of Leased Property.  If, during
the Term, the Leased  Property  shall be totally or partially  destroyed and the
Facility located thereon is thereby  rendered  Unsuitable for Its Permitted Use,
Tenant  may,  by the  giving of  Notice  thereof  to  Landlord,  terminate  this
Agreement,  whereupon,  this  Agreement  shall  terminate and Landlord  shall be
entitled to retain the insurance proceeds payable on account of such damage.

                    10.2.2 Partial Damage or  Destruction.  If, during the Term,
the  Leased  Property  shall be  partially  destroyed  but the  Facility  is not
rendered  Unsuitable  for Its Permitted  Use,  Tenant shall,  subject to Section
10.2.3, promptly restore the Facility as provided in Section 10.2.4.

                    10.2.3 Insufficient  Insurance Proceeds.  If the cost of the
repair or restoration of the Leased  Property  exceeds the sum of the deductible
and the amount of insurance proceeds received by Landlord and Tenant pursuant to
Article 9(a), (c), (d) or, if applicable, (e), Tenant shall give Landlord Notice
thereof  which  notice shall set forth in  reasonable  detail the nature of such
deficiency and whether Tenant shall pay and assume the amount of such deficiency
(Tenant  having no  obligation  to do so,  except that, if Tenant shall elect to
make such funds  available,  the same shall become an irrevocable  obligation of
Tenant pursuant to this  Agreement).  In the event Tenant shall elect not to pay
and assume the amount of such deficiency, Landlord shall have the right (but not
the  obligation),  exercisable at Landlord's  sole election by Notice to Tenant,
given within sixty (60) days after Tenant's notice of the  deficiency,  to elect
to make  available  for  application  to the cost of repair or  restoration  the
amount  of  such  deficiency;   provided,  however,  in  such  event,  upon  any
disbursement by Landlord thereof, the Minimum Rent shall be adjusted as provided
in Section  3.1.1(b).  In the event that neither Landlord nor Tenant shall elect
to make such deficiency available for restoration, either Landlord or Tenant may
terminate this Agreement by Notice to the other, whereupon, this Agreement shall
terminate as provided in Section 10.2.1. It is expressly  understood and agreed,
however,  that,  notwithstanding  anything in this  Agreement  to the  contrary,
Tenant  shall be strictly  liable and solely  responsible  for the amount of any
deductible.

                    10.2.4  Repairs.  In the event Tenant is required to restore
the Leased Property pursuant to Section 10.2, Tenant shall commence promptly and
continue diligently to perform the repair and restoration of the Leased Property
(hereinafter  called the  "Work"),  so as to  restore  the  Leased  Property  in
compliance with all Legal Requirements and so that the Leased Property shall be,
to the extent practicable, substantially equivalent in value and general utility
to  its  general  utility  and  value   immediately  prior  to  such  damage  or
destruction.  Subject to the terms hereof, the escrow agent shall be required to
advance the insurance  proceeds and any additional  amounts  payable by Landlord
pursuant to Section 10.2.3 to Tenant regularly during the repair and restoration
period so as to permit payment for the cost of any such  restoration and repair.
Any such advances  shall be made not more than monthly  within ten (10) Business
Days after Tenant submits to Landlord a written  requisition and  substantiation
therefor  on AIA Forms  G702 and G703 (or on such  other form or forms as may be
reasonably acceptable to Landlord).  Landlord may, at its option, require, prior
to advancement of said insurance proceeds and other amounts by the escrow agent,
(i)  approval  of plans  and  specifications  by an  architect  satisfactory  to
Landlord (which approval shall not be  unreasonably  withheld or delayed),  (ii)
general   contractors'   estimates,   (iii)   architect's   certificates,   (iv)
unconditional lien waivers of general contractors, if available, (v) evidence of
approval by all  governmental  authorities  and other  regulatory  bodies  whose
approval is required, (vi) deposit by Tenant of the applicable deductible amount
with the escrow  agent,  and (vii) such other terms as a Facility  Mortgagee  or
lender of Landlord may reasonably  require.  Tenant's  obligation to restore the
Leased  Property  pursuant to this Article 10 shall be subject to the release of
available  insurance proceeds by the applicable Facility Mortgagee to the escrow
agent or directly to Tenant and, in the event such  proceeds  are  insufficient,
Landlord electing to make such deficiency  available  therefor (and placement of
such deficiency with the escrow agent).

         10.3 Damage Near End of Term. Notwithstanding any provisions of Section
10.1 or 10.2 to the contrary, if damage to or destruction of the Leased Property
occurs during the last  twenty-four  (24) months of the then Term (including any
exercised  Extended Term) and if such damage or destruction cannot reasonably be
expected to be fully repaired and restored prior to the date that is twelve (12)
months prior to the end of such Term  (including any exercised  Extended  Term),
the provisions of Section 10.2.1 shall apply as if the Leased  Property had been
totally or partially  destroyed  and the Facility  rendered  Unsuitable  for its
Permitted Use.

         10.4 Tenant's Property. All insurance proceeds payable by reason of any
loss of or damage to any of Tenant's  Personal  Property shall be paid solely to
Tenant  and,  to the extent  necessary  to repair or replace  Tenant's  Personal
Property in  accordance  with Section  10.5,  Tenant shall hold such proceeds in
trust  to pay the cost of  repairing  or  replacing  damaged  Tenant's  Personal
Property.

         10.5 Restoration of Tenant's Property. If Tenant is required to restore
the Leased Property as hereinabove provided, Tenant shall either (i) restore all
alterations and improvements made by Tenant and Tenant's Personal  Property,  or
(ii) replace such alterations and improvements  and Tenant's  Personal  Property
with  improvements  or items of the same or better  quality  and  utility in the
operation of the Leased Property.

         10.6 No Abatement of Rent.  This  Agreement  shall remain in full force
and effect and Tenant's  obligation  to make all payments of Rent and to pay all
other charges as and when required  under this Agreement  shall remain  unabated
during  the Term  notwithstanding  any  damage  involving  the  Leased  Property
(provided  that Landlord  shall credit against such payments any amounts paid to
Landlord  as a  consequence  of such  damage  under  any  business  interruption
insurance obtained by Tenant hereunder). The provisions of this Article 10 shall
be considered an express agreement  governing any cause of damage or destruction
to the Leased Property and, to the maximum extent  permitted by law, no local or
State statute,  laws,  rules,  regulation or ordinance in effect during the Term
which provide for such a contingency shall have any application in such case.

         10.7 Waiver.  Tenant hereby waives any statutory  rights of termination
which may arise by reason of any damage or destruction of the Leased Property.

                                   ARTICLE 11

                                  CONDEMNATION

         11.1  Total  Condemnation,  Etc.  If either (i) the whole of the Leased
Property shall be taken by  Condemnation or (ii) a Condemnation of less than the
whole of the Leased  Property  renders the Leased  Property  Unsuitable  for Its
Permitted Use, this Agreement shall terminate and Tenant and Landlord shall seek
the Award for their  interests  in the Leased  Property  as  provided in Section
11.6.

         11.2 Partial Condemnation.  In the event of a Condemnation of less than
the whole of the Leased  Property such that the Leased  Property is not rendered
Unsuitable for Its Permitted Use,  Tenant shall,  to the extent of the Award and
any additional amounts disbursed by Landlord as hereinafter  provided,  commence
promptly and continue  diligently  to restore the untaken  portion of the Leased
Improvements  so that such  Leased  Improvements  shall  constitute  a  complete
architectural unit of the same general character and condition (as nearly as may
be  possible  under  the  circumstances)  as the  Leased  Improvements  existing
immediately  prior to such  Condemnation,  in full  compliance  with  all  Legal
Requirements, subject to the provisions of this Section 11.2. If the cost of the
repair or  restoration of the Leased  Property  exceeds the amount of the Award,
Tenant  shall give  Landlord  Notice  thereof  which  notice  shall set forth in
reasonable detail the nature of such deficiency and whether Tenant shall pay and
assume the amount of such  deficiency  (Tenant  having no  obligation  to do so,
except that if Tenant shall elect to make such funds  available,  the same shall
become an irrevocable  obligation of Tenant pursuant to this Agreement).  In the
event  Tenant  shall elect not to pay and assume the amount of such  deficiency,
Landlord  shall  have  the  right  (but  not  the  obligation),  exercisable  at
Landlord's  sole election by Notice to Tenant given within sixty (60) days after
Tenant's Notice of the deficiency, to elect to make available for application to
the cost of repair or  restoration  the  amount  of such  deficiency;  provided,
however, in such event,  following any disbursement by Landlord thereof and upon
completion  of such  repairs,  the Minimum Rent shall be adjusted as provided in
Section  3.1.1(b).  In the event that neither Landlord nor Tenant shall elect to
make such deficiency  available for  restoration,  either Landlord or Tenant may
terminate this Agreement and the entire Award shall be retained by Landlord.

         11.3  Disbursement  of Award.  Subject to the terms  hereof,  Landlord,
Tenant and any Facility  Mortgagee shall transfer any part of the Award received
by them, respectively, together with severance and other damages awarded for the
taken Leased  Improvements  and any deficiency  Landlord or Tenant has agreed to
pay, to an escrow agent  reasonably  satisfactory to all parties  pursuant to an
escrow agreement that is reasonably satisfactory to all parties, for the purpose
of funding the cost of the repair or restoration.  Landlord may require,  at its
option,  prior to  advancement  of such  Award and other  amounts  to the escrow
agent, (i) approval of plans and specifications by an architect  satisfactory to
Landlord (which approval shall not be  unreasonably  withheld or delayed),  (ii)
general   contractors'   estimates,   (iii)   architect's   certificates,   (iv)
unconditional  lien  waivers  of  general  contractors,  if  available,  and (v)
evidence of approval by all governmental authorities and other regulatory bodies
whose approval is required.  Obligations under this Section 11.3 to disburse the
Award and such other amounts shall be subject to (x) the collection  thereof and
(y) the release of such Award by the  applicable  Facility  Mortgagee.  Tenant's
obligation to restore the Leased  Property shall be subject to the  availability
of the Award to fund the cost of such repair or restoration  upon its compliance
with this Section 11.3.

         11.4  Abatement of Rent.  Other than as  specifically  provided in this
Agreement,  this  Agreement  shall  remain in full force and effect and Tenant's
obligation to make all payments of Rent and to pay all other charges as and when
required  under  this   Agreement   shall  remain   unabated   during  the  Term
notwithstanding any Condemnation  involving the Leased Property.  The provisions
of this  Article 11 shall be  considered  an  express  agreement  governing  any
Condemnation  involving the Leased Property and, to the maximum extent permitted
by law, no local or State statute,  law, rule, regulation or ordinance in effect
during the Term which provides for such a contingency shall have any application
in such case.

         11.5 Temporary Condemnation. In the event of any temporary Condemnation
of the Leased  Property or  Tenant's  interest  therein,  this  Agreement  shall
continue  in full  force and effect and Tenant  shall  continue  to pay,  in the
manner and on the terms herein  specified,  the full amount of the Rent.  Tenant
shall  continue to perform and observe all of the other terms and  conditions of
this  Agreement  on the part of the Tenant to be  performed  and  observed.  The
entire amount of any Award made for such temporary Condemnation allocable to the
Term,  whether  paid by way of  damages,  rent or  otherwise,  shall  be paid to
Tenant.  Tenant  shall,  promptly  upon the  termination  of any such  period of
temporary  Condemnation,  at its  sole  cost and  expense,  restore  the  Leased
Property to the condition that existed  immediately prior to such  Condemnation,
in full compliance with all Legal Requirements,  unless such period of temporary
Condemnation  shall extend  beyond the  expiration  of the Term,  in which event
Tenant  shall not be required  to make such  restoration.  For  purposes of this
Section  11.5, a  Condemnation  shall be deemed to be temporary if the period of
such Condemnation is not expected to, and does not, exceed twelve (12) months.

         11.6  Allocation  of Award.  Except as provided in Section 11.5 and the
second  sentence  of this  Section  11.6,  the total  Award  shall be solely the
property  of and  payable  to  Landlord.  Any  portion of the Award made for the
taking of Tenant's leasehold  interest in the Leased Property,  loss of business
during the remainder of the Term, the taking of Tenant's Personal  Property,  or
Tenant's  removal  and  relocation  expenses  shall be the sole  property of and
payable  to  Tenant  (subject  to  the  provisions  of  Section  11.2).  In  any
Condemnation  proceedings,  Landlord and Tenant shall each seek its own Award in
conformity herewith, at its own expense.

                                   ARTICLE 12

                              DEFAULTS AND REMEDIES

         12.1  Events  of  Default.  The  occurrence  of any  one or more of the
following events shall constitute an "Event of Default" hereunder:

                    (a) should  Tenant fail to make any payment of Minimum  Rent
         or Percentage Rent within three (3) Business Days after Notice thereof,
         or fail to make payment of any other Rent or any other sum  (including,
         but not limited to, funding of the Reserve), payable hereunder when due
         and such  failure  shall  continue  for a period of ten (10) days after
         Notice thereof; or

                    (b) should Tenant fail to maintain the  insurance  coverages
         required  under Article 9 and such failure shall continue for three (3)
         Business Days after Notice thereof; or

                    (c)  subject to Article 8 relating  to  permitted  contests,
         should Tenant  default in the due  observance or  performance of any of
         the terms,  covenants or agreements contained herein to be performed or
         observed by it (other than as  specified  in clauses (a) and (b) above)
         and such default shall  continue for a period of thirty (30) days after
         Notice thereof from Landlord to Tenant; provided, however, that if such
         default is  susceptible  of cure but such cure  cannot be  accomplished
         with due  diligence  within  such  period of time and if, in  addition,
         Tenant  commences  to cure or  cause to be cured  such  default  within
         fifteen (15) days after Notice  thereof  from  Landlord and  thereafter
         prosecutes  the curing of such  default  with all due  diligence,  such
         period of time shall be  extended to such period of time (not to exceed
         one hundred eighty (180) days) as may be necessary to cure such default
         with all due diligence; or

                    (d) should Tenant  generally not be paying its debts as they
         become due or should Tenant make a general  assignment  for the benefit
         of creditors; or

                    (e) should any petition be filed by or against  Tenant under
         the  Federal  bankruptcy  laws,  or  should  any  other  proceeding  be
         instituted by or against  Tenant seeking to adjudicate it a bankrupt or
         insolvent,   or  seeking  liquidation,   reorganization,   arrangement,
         adjustment or  composition of it or its debts under any law relating to
         bankruptcy,  insolvency  or  reorganization  or relief of  debtors,  or
         seeking  the  entry of an order  for  relief  or the  appointment  of a
         receiver,  trustee,  custodian or other similar  official for Tenant or
         for any substantial  part of the property of Tenant and such proceeding
         is not dismissed within ninety (90) days after institution  thereof, or
         should Tenant take any action to authorize any of the actions set forth
         above in this paragraph; or

                    (f) should Tenant cause or institute any  proceeding for its
         dissolution or termination; or

                    (g) should an event of default occur and be continuing under
         any  mortgage or deed of trust  which is secured by Tenant's  leasehold
         interest  hereunder  or should the  mortgagee  under any such  mortgage
         accelerate the  indebtedness  secured thereby or commence a foreclosure
         action in connection with said mortgage and such default shall continue
         for a period of thirty (30) days after notice  thereof from Landlord to
         Tenant; provided,  however, that if such default is susceptible of cure
         but such cure cannot be  accomplished  with due  diligence  within such
         period of time and if, in addition,  Tenant  commences to cure or cause
         to be cured such default  within fifteen (15) days after Notice thereof
         from Landlord and thereafter prosecutes the curing of such default with
         all due diligence, such period of time shall be extended to such period
         of  time  as may be  necessary  to  cure  such  default  with  all  due
         diligence; or

         (h) unless Tenant shall be  contesting  such lien or attachment in good
         faith in  accordance  with  Article 8, should the estate or interest of
         Tenant in the Leased  Property  or any part  thereof be levied  upon or
         attached  in  any  proceeding  and  the  same  shall  not  be  vacated,
         discharged  or fully  bonded or  otherwise  secured  to the  reasonable
         satisfaction of Landlord within the later of (x) one hundred and twenty
         (120) days after such attachment or levy,  unless the amount in dispute
         is less  than  $500,000  (as  adjusted  each year by  increases  in the
         Index),  in which case  Tenant  shall give  notice to  Landlord  of the
         dispute but Tenant may defend in any suitable  way, and (y) thirty (30)
         days after receipt by Tenant of Notice thereof from Landlord;  it being
         understood and agreed that Tenant may commence a contest of such matter
         pursuant to Article 8 above following such Notice from Landlord;  then,
         and in any such event,  Landlord,  in  addition  to all other  remedies
         available to it, may terminate  this Agreement by giving Notice thereof
         to Tenant and upon the  expiration of the time fixed in such Notice but
         in any event not less than seventy-five (75) days, this Agreement shall
         terminate  and all rights of Tenant under this  Agreement  shall cease.
         Landlord shall have and may exercise all rights and remedies  available
         at law and in equity to Landlord as a result of Tenant's breach of this
         Agreement.

         Landlord hereby agrees and consents to any cure of any Default or Event
         of Default tendered or performed by the Guarantor  (whether prior to or
         after expiration of any guaranty provided by Guarantor) within the same
         cure period afforded to Tenant herein.

         12.2 Remedies.  None of (a) the termination of this Agreement  pursuant
to Section  12.1,  (b) the  repossession  of the Leased  Property or any portion
thereof,  (c) the  failure of  Landlord  to re-let the  Leased  Property  or any
portion  thereof,  nor (d) the  re-letting  of all or any  portion of the Leased
Property,  shall relieve Tenant of its liability and obligations hereunder,  all
of which shall survive any such termination,  repossession or re-letting. In the
event  of  any  such  termination,  repossession  or  re-letting,  Tenant  shall
forthwith  pay to Landlord  all Rent due and payable  with respect to the Leased
Property  through and including the date of such  termination,  repossession  or
re-letting.  Thereafter,  Tenant, until the end of what would have been the Term
of this Agreement  (assuming no extension beyond the  then-current  Term) in the
absence of such termination,  repossession or re-letting, and whether or not the
Leased Property or any portion  thereof shall have been re-let,  shall be liable
to Landlord  for, and shall pay to Landlord,  as current  damages,  the Rent and
other charges which would be payable hereunder for the remainder of the Term had
such  termination,  repossession  or  re-letting  not  occurred,  less  the  net
proceeds, if any, of any re-letting of the Leased Property,  after deducting all
reasonable  expenses in  connection  with such  re-letting,  including,  without
limitation,  all  repossession  costs,  brokerage  commissions,  legal expenses,
attorneys'  fees,  advertising,  expenses  of  employees,  alteration  costs and
expenses of preparation  for such  re-letting  (such expenses being  hereinafter
referred to as the "Re-letting Expenses"). Tenant shall pay such current damages
to  Landlord  monthly  on the days on which the  Minimum  Rent  would  have been
payable  hereunder if this Agreement had not been so terminated  with respect to
such of the Leased Property.

                    At  any  time  after  such   termination,   repossession  or
re-letting, in addition to Landlord's right to receive any Rent owing and due up
to and including the date of termination,  repossession or re-letting  under the
preceding paragraph,  Tenant shall pay to Landlord,  at Landlord's election,  as
liquidated  final  damages  incurred  beyond  the  date  of  such   termination,
repossession  or  re-letting  and in lieu of  Landlord's  right to  receive  any
further damages due to the such  termination,  repossession  or re-letting,  the
Re-letting Expenses incurred to date (and not theretofore paid by Tenant) and an
amount  equal to the present  value  (discounted  at the  Interest  Rate) of the
excess,  if any, of the Rent and other charges which would be payable  hereunder
from the date of such  termination,  repossession or re-letting  (assuming that,
for the  purposes  of this  paragraph,  annual  payments by Tenant on account of
Impositions and Percentage  Rent would be the same as payments  required for the
immediately  preceding  thirteen  Accounting  Periods,  or if less than thirteen
Accounting  Periods  have  expired  since the  Commencement  Date,  the payments
required for such lesser period projected to an annual amount) for what would be
the then  unexpired  Term of this  Agreement  (assuming no extension  beyond the
then-current  Term) if the same remained in effect,  over the fair market rental
for the same  period;  provided,  however,  that  Tenant  shall be entitled to a
credit from  Landlord  in the amount of any  unapplied  balance of the  Security
Deposit  applied by  Landlord  to its damages  under this  Agreement,  whereupon
Landlord  shall have no further  obligation  to pay the portion of the  Security
Deposit so  credited  to Tenant.  Nothing  contained  in this  Agreement  shall,
however,  limit or  prejudice  the  right of  Landlord  to prove  and  obtain in
proceedings  for bankruptcy or insolvency an amount equal to the maximum allowed
by any  statute or rule of law in effect at the time  when,  and  governing  the
proceedings in which, the damages are to be proved, whether or not the amount be
greater than,  equal to, or less than the amount of the loss or damages referred
to above.

                    In case of any Event of  Default,  re-entry,  expiration  or
dispossession by summary  proceedings or otherwise,  Landlord may (a) re-let the
Leased Property or any part or parts thereof,  either in the name of Landlord or
otherwise, for a term or terms which may at Landlord's option, be equal to, less
than or exceed the period which would otherwise have  constituted the balance of
the Term and may grant  concessions  or free rent to the  extent  that  Landlord
considers  advisable  and  necessary  to re-let the same,  and (b) may make such
reasonable  alterations,  repairs and  decorations in the Leased Property or any
portion  thereof as  Landlord,  in its sole and absolute  discretion,  considers
advisable and necessary for the purpose of re-letting the Leased  Property;  and
the making of such alterations,  repairs and decorations shall not operate or be
construed to release  Tenant from liability  hereunder as aforesaid.  Subject to
the last sentence of this paragraph, Landlord shall in no event be liable in any
way  whatsoever  for any  failure  to re-let  all or any  portion  of the Leased
Property,  or, in the event that the Leased  Property is re-let,  for failure to
collect the rent under such re-letting.  To the maximum extent permitted by law,
Tenant hereby  expressly  waives any and all rights of redemption  granted under
any present or future laws in the event of Tenant being evicted or dispossessed,
or in the event of Landlord  obtaining  possession  of the Leased  Property,  by
reason of the  occurrence  and  continuation  of an Event of Default  hereunder.
Landlord   covenants  and  agrees,   in  the  event  of  any  such  termination,
repossession or re-letting as a result of an Event of Default, to use reasonable
efforts to mitigate its damages.

         12.3 Waiver of Jury Trial.  Landlord and Tenant  hereby  waive,  to the
maximum  extent  permitted  by  Applicable  Laws,  trial by jury in any  action,
proceeding or  counterclaim  brought by either of the parties hereto against the
other  or in  respect  of any  matter  whatsoever  arising  out of or in any way
connected  with  this  Agreement,   the  relationship  of  Landlord  and  Tenant
hereunder,  Tenant's  occupancy  of the  Leased  Property,  and/or any claim for
injury or damage.

         12.4 Application of Funds. Any payments  received by Landlord under any
of the provisions of this  Agreement  during the existence or continuance of any
Event of Default (and any payment made to Landlord rather than Tenant due to the
existence of any Event of Default) shall be applied to Tenant's current and past
due obligations  under this Agreement in such order as Landlord may determine or
as may be prescribed by the laws of the State.

         12.5 Landlord's Right to Cure Tenant's Default.  If an Event of Default
shall have occurred and be continuing,  Landlord,  after Notice to Tenant (which
Notice shall not be required if Landlord shall  reasonably  determine  immediate
action is necessary to protect person or property), without waiving or releasing
any obligation of Tenant and without  waiving or releasing any Event of Default,
may (but shall not be obligated to), at any time  thereafter,  make such payment
or perform  such act for the account  and at the expense of Tenant,  and may, to
the  maximum  extent  permitted  by law,  enter upon the Leased  Property or any
portion  thereof  for such  purpose  and take all such  action  thereon  as,  in
Landlord's  sole  and  absolute  discretion,  may be  necessary  or  appropriate
therefor.  No such entry shall be deemed an eviction of Tenant.  All  reasonable
costs and expenses (including,  without limitation,  reasonable attorneys' fees)
incurred by Landlord in connection therewith, together with interest thereon (to
the extent  permitted  by law) at the  Overdue  Rate from the date such sums are
paid by Landlord until repaid, shall be paid by Tenant to Landlord, on demand.

         12.6  Security  Deposit.  Notwithstanding  any term or provision to the
contrary  herein,  in the event that this  Agreement is  terminated  pursuant to
Section 12.1 or 12.2, Landlord shall be entitled to credit any unapplied balance
of the Security  Deposit (in  accordance  with Section  3.4(b)) to any claims or
damages to which  Landlord is entitled and to the extent that any portion of the
Security Deposit remains after such credit,  Landlord shall promptly refund such
portion  of the  Security  Deposit  to  Tenant.  Upon  any  expiration  or other
termination of this  Agreement,  Landlord  shall  promptly  refund any remaining
portion (that is, after crediting any unapplied  balance of the Security Deposit
(in accordance with Section 3.4(b)),  to any claims or damages to which Landlord
is entitled) of the Security Deposit to Tenant.

         12.7 Good Faith  Dispute.  If Tenant  shall in good faith  dispute  the
occurrence of any Default and Tenant,  before the  expiration of the  applicable
cure period, shall give Notice thereof to Landlord, setting forth, in reasonable
detail,  the basis therefor and,  provided Tenant shall escrow disputed amounts,
if any, pursuant to an escrow arrangement  reasonably acceptable to Landlord and
Tenant, no Event of Default shall be deemed to have occurred; provided, however,
that in the event of any  eventual  adverse  determination,  Tenant shall pay to
Landlord interest on any disputed funds at the Disbursement  Rate, from the date
demand  for such  funds was made by  Landlord  until  the date of final  adverse
determination and, thereafter, at the Overdue Rate until paid.

                                   ARTICLE 13

                                  HOLDING OVER

         Any holding over by Tenant after the  expiration or sooner  termination
of this  Agreement  shall be treated as a daily  tenancy at sufferance at a rate
equal  to one and  one-half  (1.50)  times  the Rent and  other  charges  herein
provided  (prorated  on a daily  basis).  Tenant  shall also pay to Landlord all
damages  (direct or  indirect)  sustained  by reason of any such  holding  over.
Otherwise,  such holding over shall be on the terms and  conditions set forth in
this  Agreement,  to the  extent  applicable.  Nothing  contained  herein  shall
constitute the consent,  express or implied,  of Landlord to the holding over of
Tenant after the expiration or earlier termination of this Agreement.

                                   ARTICLE 14

                 LANDLORD'S NOTICE OBLIGATIONS; LANDLORD DEFAULT

         14.1 Landlord Notice  Obligation.  Landlord shall give prompt Notice to
Tenant and the Manager of any materially  adverse  matters  affecting the Leased
Property of which Landlord receives written notice or actual, conscious, present
knowledge and, to the extent Tenant  otherwise has no notice or actual knowledge
thereof, Landlord shall be liable for any liabilities,  costs, damages or claims
(including  reasonable attorneys' fees) arising from the failure to deliver such
Notice to Tenant.  Subject to Article 20, Landlord shall not enter into or amend
any  agreement  directly  affecting  the  operation of Leased  Property  without
Tenant's  prior  written  consent.  As  used  in  this  Agreement,   "Landlord's
knowledge"  or  words  of  similar   import  shall  mean  the  actual  (and  not
constructive or imputed),  conscious,  present  knowledge,  without  independent
investigation or inquiry of Phillip M. Anderson,  Jr. or any subsequent  officer
or employee of Landlord, or any Affiliated Person as to Landlord,  having direct
oversight responsibility for the transactions contemplated in this Agreement.

         14.2  Landlord's  Default.  Subject to Landlord's  right to dispute its
obligation in accordance with Section 5.1.4(b), if (i) Landlord shall default in
the  performance or observance of any of its covenants or obligations  set forth
in this  Agreement,  or (ii) CHCLP and/or CHCP shall default in its  obligations
under the CHCLP and CHCP  Guaranty  and any such  default  shall  continue for a
period of ten (10) days after Notice thereof with respect to monetary  defaults,
and thirty (30) days after Notice thereof with respect to non-monetary defaults,
from  Tenant  to  Landlord  and  any  applicable  Facility  Mortgagee,  or  such
additional period as may be reasonably  required to correct the same, Tenant may
declare  the  occurrence  of a  "Landlord  Default"  by  giving  Notice  of such
declaration to Landlord and to such Facility Mortgagee.  Thereafter,  Tenant may
(but shall have no obligation  to) cure the same and,  subject to the provisions
of the following  paragraph,  invoice Landlord for costs and expenses (including
reasonable  attorneys'  fees and court  costs)  incurred by Tenant in curing the
same,  together with interest thereon from the date Landlord  receives  Tenant's
invoice,  at the Overdue Rate. Except as otherwise  expressly provided herein to
the  contrary,  Tenant shall have no right to terminate  this  Agreement for any
default by Landlord  hereunder and no right, for any such default,  to offset or
counterclaim against any Rent or other charges due hereunder.

                    If Landlord  shall in good faith  dispute the  occurrence of
any Landlord Default and Landlord,  before the expiration of the applicable cure
period,  shall give  Notice  thereof to Tenant,  setting  forth,  in  reasonable
detail, the basis therefor, no Landlord Default shall be deemed to have occurred
and Landlord shall have no obligation  with respect  thereto until final adverse
determination thereof; provided,  however, that in the event of any such adverse
determination,  Landlord  shall pay to Tenant  interest on any disputed funds at
the  Disbursement  Rate,  from the date demand for such funds was made by Tenant
until the date of final adverse  determination and,  thereafter,  at the Overdue
Rate until paid.  Notwithstanding the foregoing,  the provisions of Section 14.3
shall control in the event of a default under Section 5.1.4(b).

         14.3 Special Remedies for Landlord Funding Default. In the event of any
Landlord Default arising under Section 5.1.4(b), Tenant shall have the right, in
Tenant's sole discretion, in addition to all other remedies of Tenant hereunder,
to exercise any one or more of the following remedies:
                    (a) Tenant  may fund the  deficient  amounts  and offset the
         aggregate amount thereof plus interest thereon from the date of funding
         at the Disbursement  Rate against any Rent payable by Tenant subsequent
         to the date of advance pursuant to this Agreement until recouped;

                    (b) Tenant may,  notwithstanding  the  provisions of Article
         16,  assign this  Agreement  or sublease all (but not less than all) of
         the Leased  Property to a Person who is not an Affiliated  Person as to
         Tenant; or

                    (c) Tenant may terminate this Agreement  whereupon,  (i) the
         Limited Rent Guaranty shall terminate and (ii) Landlord shall refund to
         Tenant any unapplied balance of the Security Deposit.

         14.4  Special  Remedy under  Section 10.1 and 11.3.  If Landlord or any
Facility Mortgagee shall fail to deposit insurance proceeds with an escrow agent
as  required by Section  10.1 or if Landlord  shall fail to deposit any Award or
any  deficiency  as required by Section 11.3 with an escrow agent as required by
Section  11.3,  Tenant shall be entitled,  in addition to all other  remedies of
Tenant  hereunder,  to the  remedies  listed in Sections  14.3(a)  through  (d),
without the requirement of arbitration as described in Section 5.1.4(b).

                                   ARTICLE 15

                              TRANSFERS BY LANDLORD

         15.1 Transfer of Leased  Property.  Except for liens,  encumbrances  or
title  retention  agreements  which are  governed  by Article 20, and except for
normal and customary  easements  reasonably required for the development and use
of the Leased Property for assisted living facility purposes and uses incidental
thereto,  Landlord shall not, without the prior written consent of Tenant, which
consent  may be given or  withheld  by  Tenant  in  Tenant's  sole and  absolute
discretion,   sell,  assign,  transfer,   convey  or  otherwise  dispose  of  (a
"Transfer") the Leased  Property,  or any portion  thereof or interest  therein,
directly or  indirectly  (other than an  interest,  directly or  indirectly,  in
Landlord  which is governed by Section 15.3),  to any Person which,  in Tenant's
reasonable judgment:  (i) is not a Person in which CHCP owns and holds, directly
or indirectly,  a Controlling  Interest and does not have  sufficient  financial
resources  to fulfill  Landlord's  obligations  hereunder;  (ii) is known in the
community as being of bad moral character  and/or is in control of or controlled
by Persons who have been  convicted  of felonies in any state or federal  court;
(iii)  itself is, or any of its  Affiliated  Persons is, a  Competitor;  or (iv)
fails  expressly to assume,  in writing,  the obligations of Landlord under this
Agreement. For purposes of this Section 15.1, a Person shall not be deemed to be
a  Competitor  solely  by  virtue  of  (x)  the  ownership  of  assisted  living
facilities,  either  directly or  indirectly  through  Subsidiaries,  Affiliated
Persons and Entities,  or (y) holding a mortgage or mortgages  secured by one or
more assisted living facilities. Otherwise, subject to the provisions of Section
15.2,  Landlord  may  Transfer the Leased  Property,  or any portion  thereof or
interest  therein,  to any Person without the consent of, but upon not less than
sixty (60) days prior  Notice to,  Tenant.  Within five (5) days  following  any
request by Tenant, Landlord shall provide Tenant such information concerning the
proposed transferee's  financial condition,  affiliations,  ownership,  business
interests, and operations as may be reasonably necessary or appropriate in order
for Tenant to determine if such proposed  Transfer is consistent  with the above
provisions.

                    Notwithstanding  anything to the contrary herein  contained,
in the event of a transfer of Tenant's  interest in this Agreement to any Entity
in which the Guarantor does not have a Controlling Interest,  and if at any time
thereafter Landlord is, for any reason, not satisfied with the performance under
this  Agreement by such  transferee of Tenant,  then Landlord may, upon not less
than sixty  (60) days  prior  Notice to  Tenant,  elect to  Transfer  the Leased
Property,  and the  restriction  set forth in  subclause  (iii) in clause (a) of
Section 15.1 (that is, a Transfer to any Person  which,  in Tenant's  reasonable
judgment,  itself is, or any of its Affiliated  Persons is, a Competitor)  shall
not apply to any such Transfer of the Leased  Property;  it being understood and
agreed,  however,  that nothing herein shall prejudice or preclude the Guarantor
from  exercising  any of its  rights or  remedies  under  Section 4 of the Owner
Agreement  as a result of, or with  respect to, any such  Transfer of the Leased
Property.

         15.2  Conditions  of  Transfer.  Any  Transfer  of the Leased  Property
permitted  by  Section  15.1  shall be  subject  to the  prior  or  simultaneous
satisfaction of the following conditions:

                    (a)  Landlord  shall  transfer  its rights  hereunder to the
         Security  Deposit to the  successor  landlord and the Security  Deposit
         with respect to the Leased  Property  shall  continue to be held by the
         successor  landlord in  accordance  with the terms and  conditions  set
         forth in Section 3.5;

                    (b) Any  transferee of Landlord  pursuant to this Article 15
         shall expressly assume, in writing  reasonably  satisfactory to Tenant,
         the  obligations  of  Landlord  under  this  Agreement,  and the  Owner
         Agreement and, upon such  assumption and so long as such  transferee is
         not an Affiliated  Person of Landlord or CHCP,  then Landlord  shall be
         released from all liabilities and obligations of the landlord hereunder
         accruing after the date of the transfer, assignment and assumption;

                    (c) Any  overpayments  of Rent (to the extent  determinable)
         held by Landlord shall be refunded to Tenant prior to such Transfer;

                    (d) If the transferee is an Affiliated Person of Landlord or
         CHCP,  then  Landlord  and CHCP shall  expressly  guarantee  in writing
         reasonably  satisfactory  to Tenant,  or confirm in writing  reasonably
         satisfactory to Tenant their  continuing  guarantee of, the obligations
         of such transferee under this Agreement and the Owner Agreement; and

                    (e) Any amounts  owed by Landlord to Tenant shall be paid in
full.

         15.3 Transfer of Interest in Landlord. For purposes of this Article 15,
any sale,  assignment,  transfer or other  disposition,  for value or otherwise,
voluntary or involuntary,  by merger, operation of law or otherwise, in a single
transaction  or a series of  transactions,  of any  interest  in Landlord or any
Person  having an interest in  Landlord,  directly or  indirectly,  shall be and
constitute a Transfer of the Leased  Property;  provided,  however,  that if the
proposed  transferee is not, in Tenant's reasonable  judgment,  (i) known in the
community  as being of bad moral  character  or in which any Person who has been
convicted  of a  felony  in any  state  or  federal  court  holds a  Controlling
Interest,  or (ii) itself a Competitor,  and none of its Affiliated Persons is a
Competitor,  then, so long as the interest to be transferred to such  transferee
is less than a Controlling  Interest,  and so long as immediately following such
transfer CHCP,  directly or indirectly,  continues to own and hold a Controlling
Interest in Landlord, the other restrictions set forth in Section 15.1 shall not
apply to such transfer;  and provided further,  however,  that the provisions of
Section 15.1 shall not apply to any  transfer of interests in CHCP,  directly or
indirectly,  or in any  Entity  that  has  an  interest  in  CHCP,  directly  or
indirectly,  so long as CHCP is a publicly  traded company  (whether or not such
interests  are  traded  on a  public  stock  exchange),  if and so  long as such
transfer  does not result,  directly or  indirectly,  in a  Competitor  owning a
Controlling  Interest in CHCP, nor shall the provisions of Section 15.1 apply to
any transfer of interests in Landlord,  directly or indirectly (or in any Entity
that has an interest in Landlord,  directly or indirectly),  to any Person which
is not an Affiliated Person of Landlord or CHCP, if and so long as such transfer
does not result in or entail, directly or indirectly, either concurrent with the
transfer or subsequent  thereto,  CHCP or a  wholly-owned  Subsidiary of CHCP no
longer  continuing  to possess the sole power,  as the sole  general  partner of
Landlord,  to direct or cause the  direction of the  management  and policies of
Landlord,  whether such cessation of power occurs by contract,  by conversion of
the general partner interest of CHCP or its wholly-owned  Subsidiary in Landlord
to a limited  partner  interest,  by conversion of Landlord to a corporation  or
other Entity, or otherwise. Landlord shall deliver to Tenant at least sixty (60)
days prior Notice of any transfer of interests herein  contemplated,  other than
transfers of limited partner interests in Landlord  (specifically  excluding any
general partner interests in Landlord), and other than transfers of interests in
any  publicly  traded  company  (whether or not such  interests  are traded on a
public stock exchange).

                    Notwithstanding anything to the contrary herein contained, a
voluntary sale, assignment, transfer or other disposition, for value, by merger,
operation of law or otherwise,  in a single  transaction  or a related series of
transactions,  of all or substantially all of the interests in Landlord or CHCP,
or all or substantially  all of the assets of Landlord or CHCP (in either event,
a "Sale of the Entity"),  shall not be deemed a Transfer of the Leased Property;
it being understood and agreed,  however, that nothing herein shall prejudice or
preclude  the  Guarantor  from  exercising  any of its rights or remedies  under
Section 4 of the Owner  Agreement,  as a result of, or with respect to, any such
Sale of the Entity. For purposes hereof,  "substantially all of the interests in
Landlord"  shall mean all of the  general  partner  interests  and not less than
ninety   percent   (90%)  of  the  limited   partner   interests   in  Landlord;
"substantially  all of the  interests  in CHCP"  shall mean not less than ninety
percent (90%) of the outstanding  capital stock of CHCP; and  "substantially all
of the assets of Landlord or CHCP" shall mean not less than ninety percent (90%)
of the respective total assets owned by Landlord or CHCP, respectively.


                                   ARTICLE 16

                            SUBLETTING AND ASSIGNMENT

         16.1     Subletting and Assignment.

                    (a) Except as provided in Section  16.3 and in this  Section
         16.1,  Tenant shall not,  without  Landlord's  prior  written  consent,
         assign, mortgage, pledge,  hypothecate,  encumber or otherwise transfer
         this  Agreement or sublease  (which term shall be deemed to include the
         granting of concessions, licenses and the like), all or any part of the
         Leased  Property or suffer or permit this  Agreement  or the  leasehold
         estate  created hereby or any other rights arising under this Agreement
         to  be  assigned,  transferred,  mortgaged,  pledged,  hypothecated  or
         encumbered, in whole or in part, whether voluntarily,  involuntarily or
         by  operation  of law,  or permit  the use or  operation  of the Leased
         Property  by anyone  other than  Tenant,  or the Leased  Property to be
         offered or advertised for assignment or subletting;  provided, however,
         that Tenant may, without Landlord's consent, sell, transfer,  assign or
         convey  its  interest  in  this  Agreement  to  a  direct  or  indirect
         Subsidiary of the Guarantor,  which  Subsidiary of the Guarantor  shall
         expressly  assume the obligations of Tenant under this  Agreement,  and
         the transferor  Tenant shall thereupon be released from all liabilities
         and  obligations of Tenant  accruing  hereunder  after the date of such
         transfer by the transferor Tenant if either (i) the Membership Interest
         Pledge  Agreement  has been  terminated  by reason of a transfer of the
         Leased  Property by Landlord which  terminates the Membership  Interest
         Pledge  Agreement  or (ii)  the  owner of all of the  direct  ownership
         interests in such  Subsidiary of the Guarantor  executes and delivers a
         new Pledge  Agreement to Landlord,  in form which meets with Landlord's
         reasonable satisfaction, that pledges all of the ownership interests of
         such  Subsidiary to Landlord upon  substantive  terms  identical to the
         Membership  Interest  Pledge  Agreement.  For  purposes of this Section
         16.1, an assignment  of this  Agreement  shall be deemed to include the
         following (for purposes of this Section 16.1, a "Corporate  Transfer"):
         any direct or  indirect  transfer  of any  interest in Tenant such that
         Tenant  shall  cease  to be a  direct  or  indirect  Subsidiary  of the
         Guarantor  or any  transaction  pursuant  to which  Tenant is merged or
         consolidated  with  another  Entity  which  is not the  Guarantor  or a
         Subsidiary of the  Guarantor or pursuant to which all or  substantially
         all of Tenant's assets are transferred to any other Entity,  as if such
         change in control or  transaction  were an assignment of this Agreement
         but shall not include any involuntary liens or attachments contested by
         Tenant in good faith in accordance with Article 8.

                    (b) Notwithstanding the foregoing,  Landlord's consent shall
         not  be  required  for  a  Corporate  Transfer  or  a  sale,  transfer,
         assignment or other  conveyance of Tenant's  interest in this Agreement
         if, after giving effect to such Corporate  Transfer,  Tenant, or all or
         substantially all of Tenant's assets, would be owned or controlled by a
         Person who would, in connection therewith, acquire all or substantially
         all of the assisted living  facility  business of the Guarantor and its
         direct and indirect Subsidiaries.

                    (c) Notwithstanding the foregoing,  Landlord's consent shall
         not  be  required  for  a  Corporate  Transfer  or  a  sale,  transfer,
         assignment or other  conveyance of Tenant's  interest in this Agreement
         that occurs  following the third (3rd)  anniversary of the Commencement
         Date so long as (i) the Leased  Property  will be operated by Guarantor
         or a  wholly-owned  Subsidiary  of  Guarantor  pursuant to an Operating
         Agreement,  the  term of  which  shall  coincide  with the term of this
         Agreement,  including extensions;  (ii) the party to whom such transfer
         is  made  is not,  in  Landlord's  reasonable  judgment,  known  in the
         community as being of bad moral  character  and/or is not in control of
         or  controlled  by persons who have been  convicted  of felonies in any
         state or federal court;  (iii) following such transfer,  the new Tenant
         satisfies  the  requirements  set forth in Section  21.4;  and (iv) the
         transferee of this Lease shall assume the  obligations  of Tenant under
         this Lease accruing after the effective date of such transfer either by
         an express  written  agreement or by operation of law.  Upon a transfer
         described in this Section 16.1(c), and so long as the transferee is not
         an Affiliated Person of Tenant or Guarantor,  the transferor Tenant and
         all of its  Affiliated  Persons shall be released from all  liabilities
         and  obligations of Tenant  accruing  hereunder  after the date of such
         transfer.  Tenant shall deliver notice of any such proposed transfer to
         Landlord  at least  thirty  (30) days  prior to any such  transfer  and
         shall, within five (5) days following any request by Landlord,  provide
         Landlord such information as may be reasonably necessary or appropriate
         in order  for  Landlord  to  determine  if such  proposed  transfer  is
         consistent with the above  provisions.  Notwithstanding  the foregoing,
         this Section  16.1(c)  shall not apply to any  transfer  that meets the
         requirements of Section 16.1(b).

                    (d) If this Agreement is assigned or if the Leased  Property
         or any part  thereof  are sublet  (or  occupied  by anybody  other than
         Tenant) Landlord may collect the rents from such assignee, subtenant or
         occupant, as the case may be, and apply the net amount collected to the
         Rent herein  reserved,  but no such collection shall be deemed a waiver
         of the  provisions  set forth in the first  paragraph  of this  Section
         16.1,  the  acceptance  by  Landlord  of such  assignee,  subtenant  or
         occupant,  as the case may be, as a tenant, or a release of Tenant from
         the  future  performance  by Tenant  of its  covenants,  agreements  or
         obligations contained in this Agreement.

                    (e) Except as set forth in Section 16.1(c), no subletting or
         assignment shall in any way impair the continuing  primary liability of
         Tenant hereunder (unless Landlord and Tenant expressly  otherwise agree
         that Tenant shall be released from all obligations  hereunder),  and no
         consent to any subletting or assignment in a particular  instance shall
         be deemed to be a waiver of the  prohibition  set forth in this Section
         16.1. No assignment, subletting or occupancy shall affect any Permitted
         Use. Any subletting,  assignment or other transfer of Tenant's interest
         under this  Agreement  in  contravention  of this Section 16.1 shall be
         voidable at Landlord's  option. Any assignee of this Lease shall assume
         the obligations of Tenant under this Lease accruing after the effective
         date of such assignment  either by an express  written  agreement or by
         operation of law.

                    (f) Following a transfer  described in Section 16.1(c) above
         by the original Tenant under this Agreement,  when giving notice to the
         transferee  Tenant (the "New Tenant") with respect to any default under
         the provisions of this Agreement,  Landlord will also deliver a copy of
         such  notice  to  the  original  Tenant  (the  "Transferor"),  and  the
         Transferor  or the Operator will have the same period of time after the
         giving of such  notice in which to  remedy  or cure the  default  as is
         given to the New Tenant under this Agreement;  it being  understood and
         agreed  that  the  Transferor  and the  Operator  will  have no duty or
         obligation to remedy or cure such default.  Further,  any Subsidiary or
         Affiliated Person of the Guarantor,  including without limitation,  the
         Transferor  if it is then a  Subsidiary  or  Affiliated  Person  of the
         Guarantor  (in either case, a "Qualified  Transferee"),  may become the
         Tenant under this Agreement,  by an assignment from the New Tenant.  If
         prior  to such  assignment  from the New  Tenant,  Landlord  elects  to
         terminate  this  Agreement by virtue of such  default,  Landlord  shall
         deliver to the Transferor and the Manager  written notice of Landlord's
         election to so terminate this Agreement which notice shall be delivered
         at least ten (10)  Business  Days prior to the  effective  date of such
         termination or exercise.  Within such ten  (10)-Business  Day period, a
         Qualified  Transferee  may  elect by  written  notice  to  Landlord  to
         immediately enter into a new lease of the Leased Property for a term of
         thirty (30) days,  at the Rent  (payable  on a prorated  basis for said
         30-day  period in advance upon the full  execution  and delivery of the
         new lease),  and otherwise  upon the  covenants,  terms and  provisions
         herein  contained.  Prior to the  expiration of the said 30-day term of
         the new lease, the Qualified  Transferee may elect by written notice to
         Landlord,  accompanied  by  payment  to  Landlord  of all  amounts  due
         Landlord under this Agreement,  to extend the term of the new lease for
         the  remainder  of the  Term  which  would  have  existed  but for such
         termination,  at the Rent and upon the covenants,  terms and provisions
         herein contained. It is expressly understood and agreed that the rights
         and  privileges  under  this  Section  16.1(f)  shall not accrue to any
         Tenant,  except as to a Qualified  Transferee  which becomes the Tenant
         under this Agreement.

         16.2 Required Sublease  Provisions.  Any sublease of all or any portion
of the Leased  Property  entered into on or after the date hereof shall  provide
(a) that it is subject and  subordinate  to this Agreement and to the matters to
which this  Agreement  is or shall be subject  or  subordinate;  (b) that in the
event of termination of this Agreement or reentry or  dispossession of Tenant by
Landlord  under this  Agreement,  Landlord  may, at its option,  terminate  such
sublease  or take  over all of the  right,  title and  interest  of  Tenant,  as
sublessor under such sublease,  and,  except as provided  below,  such subtenant
shall, at Landlord's  option,  attorn to Landlord pursuant to the then executory
provisions  of such  sublease,  except that  neither  Landlord  nor any Facility
Mortgagee,  as holder of a mortgage or as Landlord under this Agreement, if such
mortgagee succeeds to that position, shall (i) be liable for any act or omission
of Tenant  under such  sublease,  (ii) be subject to any  credit,  counterclaim,
offset or defense which  theretofore  accrued to such subtenant  against Tenant,
(iii)  be bound  by any  previous  prepayment  of more  than one (1)  Accounting
Period,  (iv) be bound by any  covenant of Tenant to  undertake  or complete any
construction work on the Leased Property or any portion thereof, (v) be required
to account for any  security  deposit of the  subtenant  other than any security
deposit  actually  delivered  to  Landlord  by  Tenant,  (vi)  be  bound  by any
obligation  to make any payment to such  subtenant or grant any credits,  except
for  services,  repairs,  maintenance  and  restoration  provided  for under the
sublease  that  are  performed  after  the  date of such  attornment,  (vii)  be
responsible for any monies owing by Tenant to the credit of such  subtenant,  or
(viii) be  required  to remove any Person  occupying  any  portion of the Leased
Property;  and (c), in the event that such  subtenant  receives a written Notice
from  Landlord or any  Facility  Mortgagee  stating that an Event of Default has
occurred and is continuing,  such subtenant shall thereafter be obligated to pay
all rentals  accruing  under such  sublease  directly  to the party  giving such
Notice or as such party may direct.  All rentals received from such subtenant by
Landlord  or the  Facility  Mortgagee,  as the  case may be,  shall be  credited
against the amounts owing by Tenant under this Agreement and such sublease shall
provide that the subtenant thereunder shall, at the request of Landlord, execute
a suitable  instrument in confirmation of such agreement to attorn.  An original
counterpart  of each such sublease  duly  executed by Tenant and such  subtenant
shall be delivered  promptly to Landlord and Tenant shall remain  liable for the
payment  of the  Rent  and  for the  performance  and  observance  of all of the
covenants and conditions to be performed by Tenant hereunder.  The provisions of
this  Section 16.2 shall not be deemed a waiver of the  provisions  set forth in
Section  16.1(a).  No subtenant that is an Affiliated  Person of Tenant shall be
required to attorn to Landlord as set forth above in this Section 16.2.

         16.3 Permitted Sublease and Assignment.  Notwithstanding the foregoing,
but subject to the  provisions of Section 16.4 and any other express  conditions
or  limitations  set forth  herein,  Tenant  may,  without  Landlord's  consent,
sublease  space at the Leased  Property so long as such subleases do not demise,
in the  aggregate,  in excess of six  hundred  (600)  square  feet of area.  Any
sublease of space to any  Affiliated  Person of Tenant or Guarantor  shall be on
commercially reasonable terms; provided,  however, that any sublease of space to
or for use by Guarantor or any  Affiliated  Person of  Guarantor  for  marketing
activities shall not be required to be on commercially reasonable terms.

         16.4  Sublease  Limitation.  For so long as Landlord or any  Affiliated
Person as to Landlord shall seek to qualify as a real estate  investment  trust,
anything  contained in this  Agreement to the contrary  notwithstanding,  Tenant
shall not  sublet the  Leased  Property  on any basis such that the rental to be
paid by any sublessee  thereunder would be based, in whole or in part, on either
(a) the income or profits derived by the business  activities of such sublessee,
or (b) any other  formula  such that any portion of such  sublease  rental 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.

                                   ARTICLE 17

                 ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS

         17.1 Estoppel Certificates. At any time and from time to time, upon not
less  than ten (10)  Business  Days  prior  Notice by  either  party,  the party
receiving such Notice shall furnish to the other a certificate  certifying  that
this  Agreement  is  unmodified  and in full  force  and  effect  (or that  this
Agreement  is in full  force  and  effect  as  modified  and  setting  forth the
modifications),  the date to which the Rent has been paid, that to its knowledge
no  Default  or an Event of  Default  by the  other  party has  occurred  and is
continuing  or, if a Default or an Event of Default  shall exist,  specifying in
reasonable  detail the nature  thereof,  and the steps being taken to remedy the
same, and such  additional  information  as the requesting  party may reasonably
request. If such additional  information  reasonably requires more than ten (10)
Business  Days to  provide,  the  party  furnishing  such  information  shall be
entitled  to  such  additional  period  to  respond  to such  request  as may be
reasonably  required under the  circumstances.  Any such  certificate  furnished
pursuant to this Section 17.1 may be relied upon by the  requesting  party,  its
lenders and any prospective purchaser or mortgagee of the Leased Property or the
leasehold estate created hereby.

         17.2  Financial  Statements.  Within  thirty (30) days after the end of
each Accounting Period,  Tenant shall furnish to Landlord an unaudited operating
statement  for  the  Facility,  including  until  the  first  Accounting  Period
commencing  after the  occurrence of the Base Year,  occupancy  percentages.  In
addition,  Tenant shall provide Landlord with information relating to Tenant and
its  operation  of the Leased  Property  that (a) may be  required  in order for
Landlord to prepare  financial  statements in accordance  with GAAP or to comply
with applicable  securities  laws and  regulations and the SEC's  interpretation
thereof and (b) is of the type that the  Guarantor  and its  Affiliated  Persons
customarily  prepare  for  other  assisted  living  facility  owners;  provided,
however,  that (i) Tenant  reserves the right,  in good faith,  to challenge and
require  Landlord  to use  commercially  reasonable  efforts  to  challenge  any
assertion by the SEC, any other applicable regulatory  authority,  or Landlord's
independent public accountants that applicable law,  regulations or GAAP require
the provision or  publication of  Proprietary  Information,  (ii) Landlord shall
not, without Tenant's consent (which consent shall not be unreasonably withheld,
delayed  or  conditioned),  acquiesce  to any such  challenged  assertion  until
Landlord  has  exhausted  all  reasonable  available  avenues of  administrative
review,  and (iii)  Landlord  shall  consult  with Tenant in  pursuing  any such
challenge and will allow Tenant to participate therein if and to the extent that
Tenant so elects.  Landlord  acknowledges that the foregoing does not constitute
an agreement by Tenant either to join in any Landlord  filing with or appearance
before the SEC or any other  regulatory  authority  or to take or consent to any
other  action  which would cause  Tenant to be liable to any third party for any
statement or information  other than those statements  incorporated by reference
pursuant to clause (a) above. Any and all costs and expenses incurred by Tenant,
including  without  limitation   reasonable  attorneys  fees  and  expenses,  in
connection  with  providing  information  to  Landlord  in  connection  with any
challenge to an SEC assertion (including Tenant's  consultation or participation
with  Landlord  in respect of same)  shall be  reimbursed  to Tenant by Landlord
within ten (10) days following written demand by Tenant. If Landlord fails to so
reimburse  Tenant  within said 10-day  period Tenant shall be entitled to offset
against Rent thereafter  coming due any such  unreimbursed  sums,  together with
interest  thereon at the  Disbursement  Rate from the date of such demand to the
date actually paid or offset.

                    Subject  to  any  Facility   Mortgagee  entering  into  such
confidentiality agreement with Tenant as Tenant may reasonably require, Landlord
may at any time,  and from time to time,  provide any  Facility  Mortgagee  with
copies of any of the foregoing statements.

                    In  addition,  Landlord  shall have the right,  from time to
time at  Landlord's  sole  cost and  expense,  upon  reasonable  Notice,  during
Tenant's  customary  business  hours,  to cause  Tenant's books and records with
respect to the Leased Property to be audited by auditors selected by Landlord at
the place where such books and  records are  customarily  kept,  provided  that,
prior to  conducting  such audit,  Landlord  shall enter into a  confidentiality
agreement  with Tenant,  such  agreement to be in form and substance  reasonably
satisfactory to Landlord,  Tenant and the Guarantor. The cost of any audit shall
be borne by Landlord.

         17.3 General  Operations.  Tenant shall  furnish to Landlord,  not less
than seventy-five (75) days after the commencement of any Fiscal Year,  proposed
annual budgets in a form  consistent  with the then standards for the same brand
of assisted living facilities as the Facility setting forth projected income and
costs and  expenses  projected  to be incurred by Tenant in  managing,  leasing,
maintaining and operating the Facility during the then current Fiscal Year.

                                   ARTICLE 18

                           LANDLORD'S RIGHT TO INSPECT

         Tenant shall  permit  Landlord and its  authorized  representatives  to
inspect the Leased  Property at  reasonable  times of the day upon not less than
twenty-four  (24)  hours'  Notice,  and to make  such  repairs  as  Landlord  is
permitted or required to make pursuant to the terms of this Agreement,  provided
that any  inspection  or  repair by  Landlord  or its  representatives  will not
unreasonably  interfere  with Tenant's use and operation of the Leased  Property
and  further  provided  that in the  event of an  emergency,  as  determined  by
Landlord in its reasonable discretion, prior Notice shall not be necessary.

                                   ARTICLE 19

                         ALTERNATIVE DISPUTE RESOLUTION

         19.1 Negotiation.  Any and all disputes or disagreements arising out of
or relating  to  Landlord's  disapproval  of any  Building  Estimate or any item
within any Building  Estimate  pursuant to Section  5.1.3 above,  or  Landlord's
obligations to disburse funds  pursuant to Section  5.1.4(b),  shall be resolved
through  negotiations or, at the election of either party, if the dispute is not
so  resolved  within 30 days after  Notice  from either  party  commencing  such
negotiations,  through binding arbitration  conducted in accordance with Section
19.2.

         19.2     Arbitration.

                    (a) The party electing  arbitration pursuant to Section 19.1
         as a result of a dispute  described  in  Section  5.1.3(d)  or  Section
         5.1.4(b)  shall give Notice to that effect to the other party and shall
         in such  Notice  appoint an  individual  as  arbitrator  on its behalf.
         Within 15 days after such  Notice,  the other  party,  by Notice to the
         initiating  party,  shall appoint a second  individual as arbitrator on
         its  behalf.  The  arbitrators  thus  appointed  shall  appoint a third
         individual,  and such three  arbitrators  shall as promptly as possible
         determine such dispute; provided, however, that:

                           (i) if the  second  arbitrator  shall  not have  been
                    appointed as aforesaid,  the first  arbitrator shall proceed
                    to determine such dispute; and

                           (ii)  if the  two (2)  arbitrators  appointed  by the
                    parties  shall be unable to agree,  within 15 days after the
                    appointment of the second  arbitrator,  upon the appointment
                    of a third arbitrator, they shall give written Notice to the
                    parties of such  failure to agree,  and, if the parties fail
                    to agree upon the selection of a third arbitrator  within 15
                    days after the  arbitrators  appointed  by the parties  give
                    Notice as aforesaid,  then either of the parties upon Notice
                    to the other party may request such  appointment by the then
                    Chief  Judge of the  United  States  District  Court for the
                    District  within the State in which the Leased  Property  is
                    located,  or in such Judge's  absence,  refusal,  failure or
                    inability to act, may apply for a court  appointment of such
                    third arbitrator.

                    (b) Each arbitrator shall be a fit and impartial  nationally
         recognized  consulting  firm with at least  ten  years'  experience  in
         consulting with owners,  operators,  lenders, and/or franchisors in the
         operation  of assisted  living  properties  operated  under  nationally
         recognized name brands.

                    (c) The arbitration  shall be conducted  within the State in
         which the Leased Property is located and, to the extent consistent with
         this  Section  19.2,  in  accordance  with the  rules  of the  American
         Arbitration Association. The arbitrators shall render their decision in
         accordance with Section  5.1.3(d) or Section  5.1.4(b),  as applicable,
         upon the  concurrence  of at least two of their number,  within 30 days
         after  the  appointment  of the  third  arbitrator  (or,  if  only  one
         arbitrator,  pursuant to 19.2(a)(i),  then by such arbitrator within 45
         days of his or her  appointment).  Such  decision and award shall be in
         writing and shall be final, binding and enforceable against the parties
         and shall be  non-appealable,  and counterpart  copies thereof shall be
         delivered to each of the parties. In rendering such decision and award,
         the arbitrators shall not add to, subtract from or otherwise modify the
         provisions of this  Agreement.  Judgment may be had on the decision and
         award of the  arbitrator(s)  so  rendered  in any  court  of  competent
         jurisdiction.

                    (d) Each party shall pay the fees and expenses of the one of
         the two original  arbitrators  appointed by or for such party,  and the
         fees and expenses of the third  arbitrator (or the one  arbitrator,  if
         only one arbitrator is appointed  pursuant to Section  19.2(a)(i))  and
         all  other  expenses  of the  arbitration  (other  than  the  fees  and
         disbursements  of attorneys or witnesses for each party) shall be borne
         by the parties equally.

                                   ARTICLE 20

                               FACILITY MORTGAGES

         20.1     Landlord May Grant Liens.

                    (a)  Without  the  consent  of  Tenant  but  subject  to the
         provisions of Section  20.1(b),  Landlord may, subject to the terms and
         conditions set forth in this Section 20.1, from time to time,  directly
         or indirectly, create or otherwise cause to exist any lien, encumbrance
         or title retention agreement  ("Encumbrance") upon the Leased Property,
         or any  portion  thereof  or  interest  therein,  whether to secure any
         borrowing or other means of financing or refinancing, provided that any
         such Encumbrance  shall not secure a maximum principal amount in excess
         of the greater of seventy five  percent  (75%) of the fair market value
         of Landlord's interest in the Leased Property,  or seventy five percent
         (75%) of the Purchase Price (as defined in the Purchase  Agreement) for
         the  Leased  Property  pursuant  to the  Purchase  Agreement.  Any such
         Encumbrance  shall provide (subject to Section 20.2) that it is subject
         to the rights of Tenant under this Agreement.  Landlord shall not cross
         collateralize  the Leased  Property with any other  property.  Landlord
         agrees not to enter into any Encumbrance  that would allow the Facility
         Mortgagee to apply any insurance  proceeds or Award to the debt secured
         by the  Encumbrance  but may enter into an Encumbrance  that allows the
         Facility Mortgagee to hold and disburse insurance proceeds or any Award
         to be used, pursuant to the terms of this Agreement, to repair, rebuild
         or  restore  the  Leased  Property  according  to usual  and  customary
         procedures  (which  procedures shall be subject to Tenant's  reasonable
         approval) for disbursement of construction loan proceeds.  For purposes
         hereof,  the fair  market  value of  Landlord's  interest in the Leased
         Property  shall be based only on the  valuation  of the rental or other
         income  owing to  Landlord  pursuant  to the  terms of this  Agreement,
         assuming this Agreement  will remain in place in perpetuity  regardless
         of the expiration date thereof. Tenant may dispute the determination of
         the fair market value of Landlord's interest in the Leased Property, in
         which case the fair market value of  Landlord's  interest in the Leased
         Property  shall be  determined  by  mutual  agreement  between  two (2)
         appraisers,   each  with  at  least  ten  (10)  years  of  professional
         experience as an appraiser of comparable  assisted  living  facilities,
         one  appointed by Landlord and the other  appointed by Tenant  promptly
         following  Tenant's  notice of dispute.  If the two (2)  appraisers  so
         appointed  are  unable  to agree  upon such fair  market  value  within
         forty-five (45) days after their appointment,  then they shall promptly
         appoint a third appraiser with like  qualifications  who shall complete
         his  appraisal  within  thirty  (30) days  after  appointment,  and the
         decision of the third  appraiser shall be final and binding on Landlord
         and  Tenant.  The  fees  and  expenses  of  each of the  first  two (2)
         appraisers shall be paid by the party appointing the appraiser, and the
         fees and expenses of the third appraiser, if appointed, shall be shared
         equally by Landlord and Tenant.

                    (b) Prior to  creating  or  otherwise  causing  to exist any
         Encumbrance  on the Leased  Property,  Landlord  shall  give  Notice to
         Tenant  of  its  proposal  with  regard  to  an  Encumbrance  including
         reasonably  adequate  information  for Tenant to determine  whether the
         loan  to  value  limitations  set  forth  in  Section  20.1(a)  will be
         satisfied.

         20.2  Subordination of Lease.  Subject to Section 20.1 and this Section
20.2, upon Notice from Landlord,  Tenant shall execute and deliver an agreement,
in  form  and  substance   reasonably   satisfactory  to  Landlord  and  Tenant,
subordinating  this Agreement to any Encumbrance  permitted  pursuant to Section
20.1;  provided,  however,  that  such  subordination  shall  be on the  express
condition that the terms of this Agreement  shall be recognized by the mortgagee
or holder of the deed of trust and any  purchaser of the Leased  Property at any
foreclosure sale (a "Successful  Purchaser") and that such mortgagee,  holder or
Successful  Purchaser  shall  honor  and be bound by this  Agreement  and  that,
notwithstanding   any  default  by  Landlord  under  such   Encumbrance  or  any
foreclosure  thereof,  Tenant's possession of the Leased Property and rights and
obligations  under  this  Agreement  shall  not be  affected  thereby  and  this
Agreement shall not be terminated  other than in accordance with its terms.  The
foregoing agreements shall be binding on any purchaser of the Leased Property at
foreclosure.  Any mortgage or deed of trust to which this  Agreement  is, at the
time referred to, subject and subordinate,  is herein called "Superior Mortgage"
and the holder,  trustee or beneficiary of a Superior  Mortgage is herein called
"Superior  Mortgagee".  Tenant  shall  have no  obligations  under any  Superior
Mortgage  other than those  expressly  set forth in this  Section  20.2.  If any
Superior  Mortgagee or the nominee or designee of any Superior  Mortgagee or any
Successful  Purchaser,  shall  succeed  to the  rights of  Landlord  under  this
Agreement (any such person, "Successor Landlord"), whether through possession or
foreclosure  action or  delivery  of a new  lease or deed,  or  otherwise,  such
Successor  Landlord  shall  recognize  Tenant's  rights under this  Agreement as
herein provided and Tenant shall attorn to and recognize the Successor  Landlord
as Tenant's  landlord under this Agreement and Tenant shall promptly execute and
deliver any instrument  that such Successor  Landlord may reasonably  request to
evidence such attornment (provided that such instrument does not alter the terms
of this Agreement),  whereupon,  this Agreement shall continue in full force and
effect as a direct lease between the  Successor  Landlord and Tenant upon all of
the terms,  conditions and covenants as are set forth in this Agreement,  except
that the Successor  Landlord  (unless formerly the landlord under this Agreement
or its nominee or designee) shall not be (a) liable in any way to Tenant for any
act or omission, neglect or default on the part of any prior Landlord under this
Agreement,  (b) responsible for any monies owing by or on deposit with any prior
Landlord  to the  credit  of  Tenant  (except  to the  extent  actually  paid or
delivered to the  Successor  Landlord),  (c) bound by any  modification  of this
Agreement subsequent to such Superior Mortgage, or by any previous prepayment of
Minimum  Rent or  Percentage  Rent for more than one (1) month in advance of the
date due hereunder,  which was not approved in writing by the Superior Mortgagee
thereto,  (d) liable to Tenant beyond the Successor  Landlord's  interest in the
Leased Property and the rents, income,  receipts,  revenues,  issues and profits
issuing from the Leased Property, or (e) required to remove any Person occupying
the  Leased  Property  or any part  thereof,  except if such  person  claims by,
through or under the  Successor  Landlord;  provided,  however,  that any offset
rights of Tenant  pursuant to Section  14.3(a) that,  prior thereto,  accrued in
Tenant's  favor  shall  continue  and  Tenant  shall be  entitled  to offset the
remaining  balance of such deficient amounts plus interest therein from the date
of funding  at the  Disbursement  Rate  against  Rent  payable by Tenant to such
Successor Landlord. Tenant agrees at any time and from time to time to execute a
suitable  instrument  in  confirmation  of  Tenant's  agreement  to  attorn,  as
aforesaid  and  Landlord   agrees  to  provide  Tenant  with  an  instrument  of
nondisturbance  and  attornment  from each such  Superior  Mortgagee in form and
substance  reasonably  satisfactory  to Tenant.  Notwithstanding  the foregoing,
Landlord,  any Successor  Landlord and/or Superior  Mortgagee shall be liable to
pay to Tenant any  portions  of  insurance  proceeds  or Awards  received by the
Landlord,  Successor  Landlord  and/or  Superior  Mortgagee,  respectively,  and
required  to be paid to  Tenant  or  otherwise  applied  to the cost of  repair,
restoration or rebuilding of the Leased  Property  pursuant to the terms of this
Agreement,  and, as a condition to any mortgage, lien or lease in respect of the
Leased Property, and the subordination of this Agreement thereto, the mortgagee,
lienholder or lessor,  as applicable,  shall expressly agree, for the benefit of
Tenant,  to  make  such  payments,  which  agreement  shall  be  embodied  in an
instrument in form reasonably satisfactory to Tenant.

         20.3  Notices.  Subsequent  to the  receipt  by Tenant  of Notice  from
Landlord as to the  identity  of any  Facility  Mortgagee  which  complies  with
Section 20.1 (which  Notice  shall be  accompanied  by a copy of the  applicable
mortgage or lease),  no notice from Tenant to Landlord as to the Leased Property
shall be effective unless and until a copy of the same is given to such Facility
Mortgagee at the address set forth in the above described Notice, and the curing
of any of  Landlord's  defaults by such Facility  Mortgagee  shall be treated as
performance by Landlord.

                                   ARTICLE 21

                         ADDITIONAL COVENANTS OF TENANT

         21.1 Conduct of Business. Tenant shall not engage in any business other
than the leasing and operation of the Leased Property and activities  incidental
thereto and shall do or cause to be done all things necessary to preserve, renew
and keep in full force and effect and in good  standing  its  existence  and its
rights and licenses necessary to conduct such business.

         21.2  Maintenance  of  Accounts  and  Records.  Tenant  shall keep true
records and books of account of Tenant in which full,  true and correct  entries
will be made of  dealings  and  transactions  in relation  to the  business  and
affairs of Tenant and the Facility in accordance  with GAAP.  Provided  Landlord
shall  give to  Tenant  at least  ten  (10)  Business  Days  written  notice  of
Landlord's desire to audit such accounts and records,  Landlord, at its expense,
shall have the right to audit such accounts and records  during normal  business
hours.  Not more than one (1) such audit  shall be  conducted  within any twelve
(12) month period.  Landlord shall keep in confidence all  information  which it
might gain or gather  from the  examination  or audit of Tenant's  accounts  and
records,  unless  required to disclose such  information  pursuant to Applicable
Laws.

         21.3     Certain Debt Prohibited.  Tenant shall not incur any
Indebtedness except the following:

                    (a)  Indebtedness of Tenant to Landlord under this Agreement
         or to Operator under the Operating Agreement;

                    (b) Indebtedness of Tenant in respect of loans, the proceeds
         of which are used to pay  amounts  owed  under  this  Agreement  or the
         Operating Agreement, and which are by their terms expressly subordinate
         to the  payment and  performance  of  Tenant's  obligations  under this
         Agreement;

                    (c)  Indebtedness of Tenant for  Impositions,  to the extent
         that  payment  thereof  shall not at the time be required to be made in
         accordance with the provisions of Article 8;

                    (d) Indebtedness of Tenant in respect of judgments or awards
         (i) which have been in force for less than the applicable appeal period
         and in  respect  of which  execution  thereof  shall  have been  stayed
         pending  such  appeal or  review,  or (ii)  which are fully  covered by
         insurance  payable to Tenant,  or (iii)  which are for an amount not in
         excess of $750,000 in the aggregate at any one time outstanding and (x)
         which  have been in force for not  longer  than the  applicable  appeal
         period, so long as execution is not levied thereunder or (y) in respect
         of which an  appeal  or  proceedings  for  review  shall at the time be
         prosecuted in good faith in accordance  with the  provisions of Article
         8, and in respect of which  execution  thereof  shall have been  stayed
         pending such appeal or review;

                    (e)  unsecured  borrowings  of  Tenant  from its  Affiliated
         Persons which are by their terms  expressly  subordinate to the payment
         and performance of Tenant's obligations under this Agreement; or

                    (f)  Indebtedness  for purchase  money  financing  and other
         indebtedness  incurred in the  ordinary  course of  Tenant's  business,
         including the leasing of personal property;

         21.4  Special  Purpose  Entity  Requirements.  Following  any  transfer
described  in Section  16.1(c)  and  continuing  for so long as Tenant is not an
Affiliated Person of Guarantor, Tenant shall comply with the following:

                    (a)  Tenant  will be a  special  purpose  entity,  either  a
         corporation,  a limited  partnership,  or a limited  liability  company
         whose  purpose  will be  limited to leasing  and  operating  the Leased
         Property.

                    (b)  Tenant's  organizational   documents  shall  limit  the
         ability to incur any Indebtedness except as permitted by Section 21.3.

                    (c) Tenant's organizational  documents will provide that the
         favorable  vote of an  independent  director  shall be required for the
         following  matters:  (i)  filing,  or  consenting  to the  filing of, a
         bankruptcy or insolvency petition or otherwise  instituting  insolvency
         proceedings; (ii) dissolution,  liquidation,  consolidation,  merger or
         sale of all or substantially all of its controlling assets (unless such
         entity is merged or consolidated  with,  acquired by, or its assets are
         sold  to,  Guarantor  or an  Affiliated  Person  of  Guarantor);  (iii)
         engaging in any unrelated  business  activities;  and (iv) amending its
         organizational  documents  in a  way  that  would  change  any  of  the
         requirements provided herein.

                    (d) Tenant  shall  observe and  maintain  its  business  and
         affairs  separate  and  independent  of the business and affairs of any
         Affiliated  Person  of  Tenant,   including  without  limitation:   (i)
         maintaining  books and records  separate from any Affiliated  Person of
         Tenant;  (ii)  maintaining  its accounts  separate from any  Affiliated
         Person of Tenant;  (iii) not  co-mingling  its assets with those of any
         Affiliated  Person of Tenant;  (iv)  conducting its own business in its
         own name; (v) not guaranteeing,  or becoming obliged for, debts for any
         other  Person or holding out its credit as being  available  to satisfy
         the   obligations  of  any  other  Person  (except  to  the  extent  of
         indemnities and other obligations,  if any, arising under any Operating
         Agreement or credit  arrangements for the Leased Property or arising in
         the  ordinary  course  of  its  business);   and  (vi)  using  separate
         stationery, invoices and checks.

         21.5 Distributions,  Payments to Affiliated Persons,  Etc. Tenant shall
not declare,  order, pay or make, directly or indirectly,  any Distributions if,
at the time of such proposed action, or immediately after giving effect thereto,
any Event of Default with respect to the payment of Rent shall have occurred and
be  continuing;   provided,   however,   that  Tenant  may  resume  making  such
Distributions if (i) Landlord shall not commence,  within ninety (90) days after
Notice by Landlord to Tenant of the occurrence of any such Event of Default,  to
enforce its rights and remedies arising on account of such Event of Default with
respect to the payment of Rent, and diligently pursue enforcement of such rights
and remedies  thereafter,  and (ii) no other Event of Default (i.e., an Event of
Default arising from a cause other than the non-payment of Rent) has occurred as
to which  Landlord has commenced  enforcing and is  continuously  and diligently
pursuing the  enforcement  of its rights and remedies  arising on account of any
such Event of Default.

         21.6 Compliance with Operating  Agreement.  Tenant shall  substantially
comply with all material terms and provisions of the Operating Agreement (or any
replacement thereof) to be complied with by Tenant, subject to Tenant's right to
pursue all available remedies, at law and in equity, with respect to any alleged
default by Tenant in the  performance  of its duties and  obligations  under the
Operating Agreement, or otherwise contest, in good faith and with due diligence,
any such alleged default by Tenant; provided,  however, that in the event of any
casualty or  condemnation or other event or  circumstances,  Tenant shall not be
obligated to expend its own funds in excess of such amounts that Tenant would be
obligated  pursuant  to the Lease to expend  under such event or  circumstances.
Unless   required  by  Applicable   Laws,   Tenant  shall  not  enter  into  any
modifications or amendments of the Operating Agreement, nor, except as otherwise
expressly set forth in this Agreement or the Owner Agreement, terminate the same
prior to the expiration thereof,  without Landlord's prior written consent;  nor
shall Tenant  enter into any  replacement  of the  Operating  Agreement  without
Landlord's prior written  consent.  To the extent required by this Section 21.6,
Landlord's consent shall not be unreasonably  withheld or conditioned so long as
any such  modification,  amendment,  termination or replacement of the Operating
Agreement does not materially and adversely affect the duties and obligations of
the parties  thereunder.  Notwithstanding  the foregoing,  in the event that the
Operating  Agreement  is  terminated  by  reason of a  default  by the  Operator
thereunder, Landlord shall not unreasonably withhold or condition its consent to
the  selection by Tenant of another  Operator  with  experience  in the assisted
living facility business and the execution of a new Operating  Agreement in form
and substance satisfactory to Tenant and such new Operator. To the extent Tenant
receives any notices,  budgets, reports or other documents or materials from the
Operator  that the  Operator is  required  to provide to Tenant  pursuant to the
Operating Agreement, Tenant will promptly forward a copy of the same to Landlord
if the Operator has not sent the same to Landlord.

                                   ARTICLE 22

                                  MISCELLANEOUS

         22.1 Limitation on Payment of Rent. All agreements between Landlord and
Tenant herein are hereby  expressly  limited so that in no  contingency or event
whatsoever,  whether by reason of acceleration of Rent, or otherwise,  shall the
Rent or any other amounts  payable to Landlord under this  Agreement  exceed the
maximum  permissible under Applicable Laws, the benefit of which may be asserted
by Tenant as a defense, and if, from any circumstance whatsoever, fulfillment of
any provision of this Agreement, at the time performance of such provision shall
be due, shall involve  transcending the limit of validity  prescribed by law, or
if from any  circumstances  Landlord  should ever receive as fulfillment of such
provision such an excessive amount,  then, ipso facto, the amount which would be
excessive  shall be applied to the  reduction of the  installment(s)  of Minimum
Rent next due and not to the payment of such  excessive  amount.  This provision
shall control every other  provision of this Agreement and any other  agreements
between Landlord and Tenant.

         22.2 No Waiver.  No failure by  Landlord  or Tenant 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 of any such term. To the maximum extent  permitted by law, no
waiver of any breach shall affect or alter this Agreement,  which shall continue
in full force and effect with respect to any other then  existing or  subsequent
breach.

         22.3 Remedies Cumulative.  To the maximum extent permitted by law, each
legal,  equitable or contractual  right, power and remedy of Landlord or Tenant,
now or hereafter  provided  either in this Agreement 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
Landlord or Tenant (as applicable) of any one or more of such rights, powers and
remedies shall not preclude the simultaneous or subsequent  exercise by Landlord
of any or all of such other rights, powers and remedies.

         22.4  Severability.   Any  clause,  sentence,   paragraph,  section  or
provision  of this  Agreement  held by a court of competent  jurisdiction  to be
invalid,  illegal or  ineffective  shall not impair,  invalidate  or nullify the
remainder of this Agreement,  but rather the effect thereof shall be confined to
the clause,  sentence,  paragraph,  section or  provision so held to be invalid,
illegal  or  ineffective,  and  this  Agreement  shall be  construed  as if such
invalid, illegal or ineffective provisions had never been contained therein.

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

         22.6 No Merger of Title. It is expressly  acknowledged  and agreed that
it is the intent of the parties that there shall be no merger of this  Agreement
or of the leasehold  estate  created  hereby by reason of the fact that the same
Person may acquire,  own or hold,  directly or indirectly  this Agreement or the
leasehold estate created hereby and the fee estate or ground landlord's interest
in the Leased Property.

         22.7 Conveyance by Landlord.  If Landlord or any successor owner of all
or any  portion of the Leased  Property  shall  convey all or any portion of the
Leased  Property in accordance  with the terms of this  Agreement  (specifically
including  Article  15) other than as  security  for a debt,  and the grantee or
transferee of such of the Leased Property shall expressly assume all obligations
of  Landlord  hereunder  arising  or  accruing  from and  after the date of such
conveyance or transfer,  Landlord or such successor  owner,  as the case may be,
shall  thereupon be released  from all future  liabilities  and  obligations  of
Landlord  under this  Agreement  with  respect  to such of the  Leased  Property
arising or accruing from and after the date of such conveyance or other transfer
and all such future  liabilities and obligations shall thereupon be binding upon
the new owner.

         22.8 Quiet  Enjoyment.  Provided  that no Event of  Default  shall have
occurred and be continuing,  Tenant shall  peaceably and quietly have,  hold and
enjoy the Leased  Property for the Term,  free of hindrance  or  molestation  by
Landlord or anyone  claiming by, through or under  Landlord,  but subject to (a)
any Encumbrance  permitted under Article 20 or otherwise permitted to be created
by  Landlord  hereunder,  (b)  all  Permitted  Encumbrances,  (c)  liens  as  to
obligations of Landlord that are either not yet due or which are being contested
in good faith and by proper  proceedings,  provided  the same do not  materially
interfere with Tenant's  ability to operate the Facility and (d) liens that have
been  consented to in writing by Tenant.  Except as  otherwise  provided in this
Agreement,  no failure by Landlord to comply with the foregoing  covenant  shall
give Tenant the right to cancel or terminate this Agreement or abate,  reduce or
make a deduction  from or offset against the Rent or any other sum payable under
this Agreement, or to fail to perform any other obligation of Tenant hereunder.

         22.9 Memorandum of Lease. Neither Landlord nor Tenant shall record this
Agreement.  However, Landlord and Tenant shall promptly, upon the request of the
other,  enter into a short form memorandum of this  Agreement,  in form suitable
for recording  under the laws of the State in which reference to this Agreement,
and all options contained herein, shall be made. The parties shall share equally
all costs and expenses of recording such memorandum;  provided, however, that in
no event shall the  non-requesting  party's  share of such  recording  costs and
expenses exceed $25,000.

         22.10    Notices.

                    (a) Any  and  all  notices,  demands,  consents,  approvals,
         offers,  elections and other communications required or permitted under
         this Agreement shall be deemed  adequately  given if in writing and the
         same shall be  delivered  either in hand,  by  telecopier  with written
         acknowledgment  of  receipt,  or by mail or Federal  Express or similar
         expedited commercial carrier, addressed to the recipient of the notice,
         postpaid and registered or certified with return receipt  requested (if
         by mail), or with all freight charges prepaid (if by Federal Express or
         similar carrier).

                    (b) All notices  required or permitted to be sent  hereunder
         shall be deemed to have been given for all  purposes of this  Agreement
         upon  the date of  acknowledged  receipt,  in the  case of a notice  by
         telecopier,  and,  in all  other  cases,  upon the date of  receipt  or
         refusal,  except that whenever  under this Agreement a notice is either
         received  on a day which is not a  Business  Day or is  required  to be
         delivered on or before a specific day which is not a Business  Day, the
         day of receipt or required delivery shall  automatically be extended to
         the next Business Day.

                    (c)    All such notices shall be addressed,

         if to Landlord to:

                    CNL Health Care Partners, LP
                    CNL Center at City Commons
                    450 South Orange Avenue
                    Orlando, FL  32801-3336
                    Attn:  Mr. Phillip M. Anderson or Chief Operating Officer
                    Telecopier No. (407) 835-3232

         with a copy to:

                    Lowndes Drosdick Doster Kantor and Reed, P.A.
                    215 North Eola Drive
                    P.O. Box 2809
                    Orlando, FL  32809
                    Attn:  David G. Williford, Esq.
                    Telecopier No. (407) 843-4444

         if to Tenant to:

                    c/o Marriott International, Inc.
                    10400 Fernwood Road, Dept. 52-924.04
                    Bethesda, Maryland  20817
                    Attn:  Treasury
                    Telecopier No. (301) 380-5067

           with a copy to:

                    Marriott International, Inc.
                    10400 Fernwood Road, Dept. 52/923.24
                    Bethesda, Maryland  20817
                    Attn:  Kevin E. Montano, Esquire
                             Law Department
                    Telecopier No. (301) 380-6727

                    (d) By notice given as herein  provided,  the parties hereto
         and their  respective  successors and assigns shall have the right from
         time to time  and at any time  during  the  term of this  Agreement  to
         change their respective  addresses  effective upon receipt by the other
         parties of such  notice and each shall have the right to specify as its
         address any other address within the United States of America.

         22.11 Construction;  Nonrecourse.  Anything contained in this Agreement
to the contrary notwithstanding,  all claims against, and liabilities of, Tenant
or Landlord  arising  prior to any date of  termination  or  expiration  of this
Agreement with respect to the Leased Property shall survive such  termination or
expiration.  Neither this  Agreement  nor any  provision  hereof may be changed,
waived,  discharged or terminated  except by an instrument in writing  signed by
all the parties thereto. All the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns. Each term or provision of this Agreement to be
performed by Tenant shall be construed as an independent covenant and condition.
Time is of the essence  with  respect to the exercise of any rights of Tenant or
Landlord under this Agreement.  Except as otherwise set forth in this Agreement,
any  obligations  arising prior to the expiration or sooner  termination of this
Agreement of Tenant  (including  without  limitation,  any monetary,  repair and
indemnification obligations) and Landlord shall survive the expiration or sooner
termination  of this  Agreement;  provided,  however,  that each party  shall be
required  to give  the  other  Notice  of any  such  surviving  and  unsatisfied
obligations  within one year after the expiration or sooner  termination of this
Agreement.  Except as otherwise  expressly provided with respect to the Security
Deposit,  nothing  contained in this  Agreement  shall be construed to create or
impose any  liabilities  or obligations  and no such  liabilities or obligations
shall be  imposed  on any of the  shareholders,  beneficial  owners,  direct  or
indirect,  officers,  directors,  trustees,  employees  or agents of Landlord or
Tenant for the payment or  performance  of the  obligations  or  liabilities  of
Landlord or Tenant hereunder. Further, in the event Landlord shall be in default
under this  Agreement,  and if as a consequence  of such  default,  Tenant shall
recover a money judgment against Landlord, such judgment shall be satisfied only
out of the proceeds of sale received upon execution of such judgment against the
right, title and interest of Landlord in the Leased Property; provided, however,
that  nothing  herein shall be construed or operate to affect or diminish in any
way  whatsoever  the  liability  of CHCLP  and/or  CHCP under the CHCLP and CHCP
Guaranty  for  such  deficiency   and/or  the  full  performance  of  Landlord's
obligations under this Agreement.

         22.12 Counterparts;  Headings. This Agreement may be executed in two or
more counterparts,  each of which shall constitute an original,  but which, when
taken together,  shall  constitute but one instrument and shall become effective
as of the date hereof when copies hereof,  which, when taken together,  bear the
signatures  of each of the parties  hereto shall have been  signed.  Headings in
this  Agreement are for purposes of reference only and shall not limit or affect
the meaning of the provisions hereof.

         22.13  Applicable  Law,  Etc.  This  Agreement  shall  be  interpreted,
construed,  applied  and  enforced  in  accordance  with the  laws of the  State
applicable to contracts between residents of the State which are to be performed
entirely within the State, regardless of (i) where this Agreement is executed or
delivered;  or (ii) where any  payment  or other  performance  required  by this
Agreement  is made or  required  to be made;  or (iii)  where any  breach of any
provision of this Agreement occurs, or any cause of action otherwise accrues; or
(iv) where any action or other  proceeding is instituted or pending;  or (v) the
nationality, citizenship, domicile, principal place of business, or jurisdiction
of organization or  domestication  of any party; or (vi) whether the laws of the
forum  jurisdiction  otherwise would apply the laws of a jurisdiction other than
the State; or (vii) any combination of the foregoing.

                    To the maximum  extent  permitted  by  applicable  law,  any
action  to  enforce,  arising  out of,  or  relating  in any way to,  any of the
provisions  of this  Agreement  may be brought and  prosecuted  in such court or
courts  located in the State as is provided by law;  and the parties  consent to
the  jurisdiction of said court or courts located in the State and to service of
process by registered  mail,  return receipt  requested,  or by any other manner
provided by law.

         22.14 Right to Make  Agreement.  Each party  warrants,  with respect to
itself,  that neither the execution of this Agreement,  nor the  consummation of
any transaction  contemplated hereby, shall violate any provision of any law, or
any judgment,  writ,  injunction,  order or decree of any court or  governmental
authority having  jurisdiction  over it; nor result in or constitute a breach or
default under any indenture,  contract, other commitment or restriction to which
it is a party or by which it is bound; nor require any consent, vote or approval
which has not been given or taken,  or at the time of the  transaction  involved
shall not have been given or taken.  Each party  covenants  that it has and will
continue  to have  throughout  the  term of this  Agreement  and any  extensions
thereof, the full right to enter into this Agreement and perform its obligations
hereunder.

         22.15    Disclosure of Information.

                    (a) Any  Proprietary  Information  obtained by Landlord with
         respect to Tenant pursuant to the provisions of this Agreement shall be
         treated as  confidential,  except  that such  information  may be used,
         subject to confidentiality  safeguards  mutually acceptable to Landlord
         and Tenant,  in any  litigation  between the parties and except further
         that, subject to the terms of Section 22.16, Landlord may disclose such
         information to its  prospective  lenders,  provided that Landlord shall
         direct and obtain  the  agreement  of such  lenders  to  maintain  such
         information as confidential.

                    (b) The parties  hereto  agree that the matters set forth in
         this  Agreement  and any revenue,  expense,  net profit,  fee rates and
         occupancy  information  provided  by  Tenant  or any of its  Affiliated
         Persons are strictly confidential and each party will make every effort
         to ensure that the  information  is not disclosed to any Person that is
         not an Affiliated  Person as to any party (including the press) without
         the prior written consent of the other party, except as may be required
         by law and as may be reasonably  necessary to obtain licenses,  permits
         and other public approvals necessary for the refurbishment or operation
         of the Facility,  or, subject to the  restrictions of Section  22.15(c)
         relative  to the  contents  of any  Prospectus,  in  connection  with a
         Landlord financing,  a sale of the Facility, or a sale of a controlling
         interest in Landlord, Tenant or the Guarantor.

                    (c) No reference to Tenant or any of its Affiliated  Persons
         will be made in any prospectus, private placement memorandum,  offering
         circular or offering documentation related thereto  (collectively,  the
         "Prospectus"),  issued by  Landlord or any of its  Affiliated  Persons,
         which is designed  to interest  potential  investors  in the  Facility,
         unless Tenant has previously received a copy of all such references. No
         Prospectus  shall  include  fee rate  and  occupancy  data or  revenue,
         expense  or  net  profit   information   pertaining  to  the  Facility.
         Regardless  of whether  Tenant so  receives  a copy of the  Prospectus,
         neither Tenant nor its  Affiliated  Persons will be deemed a sponsor of
         the  offering  described  in the  Prospectus,  nor  will  it  have  any
         responsibility  for the  Prospectus,  and the Prospectus will so state.
         Unless Tenant agrees in advance,  the  Prospectus  will not include any
         trademark, symbols, logos or designs of Tenant or any of its Affiliated
         Persons. Landlord shall indemnify, defend and hold Tenant harmless from
         and against all loss, costs, liability and damage (including reasonable
         attorneys' fees and expenses,  and all cost of litigation)  arising out
         of  any  Prospectus  or  the  offering  described  therein;   and  this
         obligation of Landlord shall survive termination of this Agreement.

                    (d) The obligations of Tenant and Landlord contained in this
         Section 22.15 shall survive the  expiration or earlier  termination  of
         this  Agreement and shall  supersede  any previous  agreement or letter
         between the parties regarding the substance of this Section 22.15.

         22.16    Trademarks, Trade Names and Service Marks.

                    (a) The names "Marriott" and "Brighton Gardens" (each of the
         foregoing names,  together with any combination thereof,  collectively,
         the "Trade  Names") when used alone or in connection  with another word
         or words,  and the Marriott and Brighton  Gardens  trademarks,  service
         marks,  other trade  names,  symbols,  logos and  designs  shall in all
         events  remain the  exclusive  property of Guarantor or its  Affiliated
         Persons,  and  nothing  contained  in this  Agreement  shall  confer on
         Landlord  the right to use any of the Trade  Names,  or the Marriott or
         Brighton Gardens trademarks, service marks, other trade names, symbols,
         logos or designs other than in strict accordance with the terms of this
         Agreement.  Upon termination of this Agreement,  any use of or right to
         use any of the Trade Names, or any of the Marriott or Brighton  Gardens
         trademarks, service marks, other trade names, symbols, logos or designs
         by Landlord shall be governed by the Operating  Agreement  and/or Owner
         Agreement,  upon  termination of this Agreement,  and, if the Operating
         Agreement  or a  replacement  Operating  Agreement  will not  remain in
         effect,  Landlord shall promptly  remove from the Facility any signs or
         similar items which contain any of the Trade Names, trademarks, service
         marks, other trade names,  symbols,  logos or designs.  If Landlord has
         not removed such signs or similar  items within ten (10)  Business Days
         after termination of this Agreement,  Tenant shall have the right to do
         so at Landlord's expense.  Included under the terms of this section are
         all trademarks,  service marks, trade names, symbols,  logos or designs
         used in conjunction with the Facility, whether or not the marks contain
         the  "Marriott"  name or the "Brighton  Gardens" name. The right to use
         such trademarks,  service marks, trade names, symbols, logos or designs
         belongs exclusively to Tenant and its Affiliated  Persons,  and the use
         thereof  inures to the  benefit  of Tenant and its  Affiliated  Persons
         whether or not the same are  registered and regardless of the source of
         the  same.  The  provisions  of this  Section  22.16(a)  shall  survive
         termination of this Agreement.

                    (b)  Any   computer   software   (including   upgrades   and
         replacements)  at the Facility owned by Tenant or any of its Affiliated
         Persons, or the licensor of any of them is proprietary to Tenant or any
         of its Affiliated  Persons, or the licensor of any of them and shall in
         all  events  remain  the  exclusive  property  of  Tenant or any of its
         Affiliated  Persons or the licensor of any of them, as the case may be,
         and nothing  contained in this  Agreement  shall confer on Landlord the
         right to use any of such  software.  Tenant  shall  have  the  right to
         remove from the Facility without  compensation to Landlord any computer
         software  (including  upgrades and  replacements),  including,  without
         limitation,  the  system  software,  owned  by  Tenant  or  any  of its
         Affiliated  Persons  or the  licensor  of any of  them.  Further,  upon
         termination of this Agreement,  Tenant shall be entitled to remove from
         the Facility  without  compensation to Landlord any computer  equipment
         utilized  as part of a  centralized  reservation  system  or owned by a
         party other than the Landlord.

22.17 Competing  Facilities.  Neither this Agreement nor anything implied by the
relationship  between  Landlord  and Tenant  shall  prohibit any of the Marriott
Companies from constructing,  operating, promoting, and/or authorizing others to
construct,  operate,  or promote one or more assisted  living  facilities or any
other  business  operations of any type,  at any location,  including a location
proximate to the Land.  Landlord  acknowledges,  accepts and agrees further that
the  Marriott  Companies  retain the right,  from time to time,  to construct or
operate,  or both,  or promote or acquire,  or authorize  or  otherwise  license
others to  construct  or operate,  or both,  or promote or acquire any  assisted
living  facilities  or  other  business   operations  of  any  type  whatsoever,
including,  but not by way of  limitation,  those listed above,  at any location
including one or more sites which may be adjacent, adjoining or proximate to the
Land,  which business  operations may be in direct  competition  with the Leased
Improvements  and that any such exercise may  adversely  affect the operation of
the Leased Improvements.

         IN WITNESS  WHEREOF,  the parties  have  executed  this  Agreement as a
sealed instrument as of the date above first written.

                                LANDLORD:

                                CNL HEALTH CARE PARTNERS, LP,
                                a Delaware limited partnership

                                By:      CNL Health Care GP Corp.,
                                         a Delaware corporation,
                                         general partner


                                By:      _____________________________
                                         Phillip M. Anderson
                                         Executive Vice President


                                TENANT:

                                BG ORLAND PARK, LLC,
                                a Delaware limited liability company

                                By:      Marriott Senior Living Services, Inc.,
                                         its sole Member

                                By:      _____________________________
                                         Timothy J. Grisius
                                         Agent







<PAGE>




                                    EXHIBIT A

                                  Minimum Rent



DURING THE PERIOD FROM THE  COMMENCEMENT  DATE TO THE LAST DAY OF THE ACCOUNTING
PERIOD IN WHICH THE THRESHOLD ACHIEVEMENT DATE OCCURS, THE MINIMUM RENT FOR EACH
ACCOUNTING  PERIOD SHALL BE ONE HUNDRED THREE THOUSAND  EIGHT HUNDRED  SIXTY-SIX
DOLLARS AND SEVENTY-FIVE CENTS ($103,866.75).

DURING THE PERIOD FROM THE FIRST DAY OF THE FIRST  ACCOUNTING  PERIOD  FOLLOWING
THE THRESHOLD ACHIEVEMENT DATE AND CONTINUING  THEREAFTER,  THE MINIMUM RENT FOR
EACH  ACCOUNTING  PERIOD SHALL BE ONE HUNDRED SIX THOUSAND  FIVE HUNDRED  THIRTY
DOLLARS ($106,530).

FOR PURPOSES HEREOF,  THE THRESHOLD  ACHIEVEMENT DATE SHALL MEAN THE LAST DAY OF
THE SECOND FULL ACCOUNTING YEAR.



<PAGE>




                                    EXHIBIT B

                                    The Land

LOT 1 IN MARRIOTT'S  BRIGHTON  GARDENS OF ORLAND PARK, A SUBDIVISION  OF PART OF
THE NORTHWEST 1/4 OF THE NORTHWEST 1/4 OF SECTION 22,  TOWNSHIP 36 NORTH,  RANGE
12, EAST OF THE THIRD PRINCIPAL MERIDIAN, ACCORDING TO THE PLAT THEREOF RECORDED
JULY 22, 1998 AS DOCUMENT 98638801, IN COOK COUNTY, ILLINOIS.




<PAGE>


                                      C - 2

                                    EXHIBIT C



                                PROPERTY EXPENSES



         "Property Expenses" shall mean any or all, as the context requires,
of the following:

                  1. All costs of operating the Facility  incurred in accordance
with this Agreement,  including, without limitation, all salaries, wages, fringe
benefits,  payroll  taxes and other costs related to the  Facility's  employees,
Employee  Claims (as  defined in the  Operating  Agreement  except to the extent
specifically  set  forth to the  contrary  in  Section  14.01  of the  Operating
Agreement), all departmental expenses,  administrative and general expenses, the
cost of advertising and business promotion for the Facility, heat, light, power,
electricity,  gas,  telephone,  cable and other utilities,  and routine repairs,
maintenance and minor alterations that are not the type of expenditures  payable
out of the Reserve;

                  2.       The cost of Inventories and FAS consumed in the
operation of the Facility;

                  3.       A  reasonable  reserve  for  uncollectible  accounts
 receivable  as  determined  by the Operator under the Operating Agreement;

                  4. All reasonable  costs and fees of audit,  legal,  technical
and other  independent  professionals or other third parties who are retained by
Tenant or are  retained by Operator to perform  services  required or  permitted
under the Operating Agreement;

                  5. The  reasonable  cost and expense of technical  consultants
and operational  experts who are employees of Operator or one of its Affiliates,
and who perform  specialized  services in connection with  non-routine  Facility
work; provided,  however,  that the costs and expenses so incurred shall only be
Property  Expenses  to the extent such costs and  expenses  are  reasonable  and
competitively priced, as compared to similar work done by outside consultants or
experts;

                  6.       Costs and expenses  for  preparation  of Medicare and
Medicaid  cost reports and billing
submissions;

                  7.       The Base Fee payable under the Operating Agreement;

                  8.       The Central Administrative Services Fee payable
under the Operating Agreement;

                  9.       Insurance costs and expenses as provided in
Article 12;

                  10.      All Additional Charges;

                  11.      Payments  into the Reserve pursuant to Section 5.1.2;

                  12.  Such other  non-capital  costs and  expenses  incurred by
Tenant or Operator as are specifically  provided for elsewhere in this Agreement
or are otherwise  reasonably necessary for the proper and efficient operation of
the Facility in  accordance  with the System  Standards;  all as  determined  in
accordance with GAAP;

                  13.      Lease payments for any lease of shuttle vans or
communications equipment; and

                  14.      All other payments required to be paid by Tenant
pursuant to this Agreement.
                  15.      All  other  amounts  treated  as  "Operating
Expenses"  under  the  provisions  of  the Operating Agreement.

                  It is understood  that the term "Property  Expenses" shall not
include:  (i) debt service  payments  pursuant to any  Encumbrance  or any other
loans or  borrowings of Landlord;  nor (ii) except as set forth above,  payments
pursuant  to  equipment  leases or other  forms of  financing  obtained  for the
furniture,  fixtures and  equipment  located in or  connected  with the Facility
(such  payments  shall be paid out of the  Reserve in  accordance  with  Section
5.1.2),  nor (iii) rental  payments  pursuant to any ground lease,  nor (iv) any
other payments which are  designated as Landlord's  responsibility  under any of
the  provisions of this  Agreement,  all of which shall be paid by Landlord from
its own funds, and not from Total Facility Revenues nor from the Reserve. Unless
otherwise  specifically set forth in this Agreement,  all the costs and expenses
of the Facility shall be Operating Expenses.