<PAGE>

Exhibit 10.2

                             MASTER LEASE AGREEMENT


                                     BETWEEN


                        PENNSYLVANIA BCC PROPERTIES, INC.

                             HCN BCC HOLDINGS, INC.


                                       AND


                        BALANCED CARE TENANT (HCN), INC.


                                 January 1, 2002



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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
SECTION                                                                                                               PAGE
<S>                                                                                                                   <C>
ARTICLE 1:  LEASED PROPERTY, TERM AND DEFINITIONS................................................................       1
         1.1          Leased Property............................................................................       1
         1.2          Indivisible Lease..........................................................................       1
         1.3          Term.......................................................................................       2
         1.4          Definitions................................................................................       2
         1.5          Landlord As Agent..........................................................................      14

ARTICLE 2:  RENT.................................................................................................      14
         2.1          Base Rent..................................................................................      14
         2.2          Increase of Lease Rate and Base Rent.......................................................      15
                      2.2.1       Rent Adjustments - Additional Lease Advances...................................      15
         2.3          Additional Rent............................................................................      15
         2.4          Payment of Rent............................................................................      15
         2.5          Net Lease..................................................................................      16
         2.6          No Termination, Abatement, Etc.............................................................      16
         2.7          Computational Method.......................................................................      17

ARTICLE 3:  IMPOSITIONS AND UTILITIES............................................................................      17
         3.1          Payment of Impositions.....................................................................      17
         3.2          Definition of Impositions..................................................................      18
         3.3          Escrow of Impositions......................................................................      19
         3.4          Utilities..................................................................................      19
         3.5          Discontinuance of Utilities................................................................      20
         3.6          Business Expenses..........................................................................      20
         3.7          Permitted Contests.........................................................................      20

ARTICLE 4:  INSURANCE............................................................................................      21
         4.1          Property Insurance.........................................................................      21
         4.2          Liability Insurance........................................................................      22
         4.3          Builder's Risk Insurance...................................................................      23
         4.4          Insurance Requirements.....................................................................      23
         4.5          Replacement Value..........................................................................      24
         4.6          Blanket Policy.............................................................................      24
         4.7          No Separate Insurance......................................................................      24
         4.8          Waiver of Subrogation......................................................................      25
         4.9          Mortgages..................................................................................      25
         4.10         Escrows....................................................................................      25

ARTICLE 5:  INDEMNITY............................................................................................      26
         5.1          Tenant's Indemnification...................................................................      26
                      5.1.1       Notice of Claim................................................................      27
                      5.1.2       Survival of Covenants..........................................................      27
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                                      (i)
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<TABLE>
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<S>                                                                                                                    <C>
                      5.1.3       Reimbursement of Expenses......................................................      27
         5.2          Environmental Indemnity; Audits............................................................      27
         5.3          Limitation of Landlord's Liability.........................................................      28

ARTICLE 6:  USE AND ACCEPTANCE OF PREMISES.......................................................................      28
         6.1          Use of Leased Property.....................................................................      28
         6.2          Acceptance of Leased Property..............................................................      28
         6.3          Conditions of Use and Occupancy............................................................      29

ARTICLE 7:  MAINTENANCE AND MECHANICS' LIENS.....................................................................      29
         7.1          Maintenance................................................................................      29
         7.2          Required Alterations.......................................................................      30
         7.3          Mechanic's Liens...........................................................................      30
         7.4          Replacements of Fixtures and Landlord's Personal Property..................................      31

ARTICLE 8:  DEFAULTS AND REMEDIES................................................................................      32
         8.1          Events of Default..........................................................................      32
         8.2          Remedies...................................................................................      34
         8.3          Right of Set-Off...........................................................................      38
         8.4          Performance of Tenant's Covenants..........................................................      39
         8.5          Late Payment Charge........................................................................      39
         8.6          Interest...................................................................................      39
         8.7          Attorneys' Fees............................................................................      39
         8.8          Escrows and Application of Payments........................................................      40
         8.9          Remedies Cumulative........................................................................      40
         8.10         Waivers....................................................................................      40

ARTICLE 9:  DAMAGE AND DESTRUCTION...............................................................................      41
         9.1          Notice of Casualty.........................................................................      41
         9.2          Substantial Destruction....................................................................      41
         9.3          Partial Destruction........................................................................      43
         9.4          Restoration................................................................................      43
         9.5          Insufficient Proceeds......................................................................      44
         9.6          Not Trust Funds............................................................................      44
         9.7          Landlord's Inspection......................................................................      44
         9.8          Landlord's Costs...........................................................................      45
         9.9          No Rent Abatement..........................................................................      45

ARTICLE 10:  CONDEMNATION........................................................................................      45
         10.1         Total Taking...............................................................................      45
         10.2         Partial Taking.............................................................................      45
         10.3         Condemnation Proceeds Not Trust Funds......................................................      46

ARTICLE 11:  TENANT'S PROPERTY...................................................................................      46
         11.1         Tenant's Property..........................................................................      46
         11.2         Requirements for Tenant's Property.........................................................      46

</TABLE>
                                      (ii)

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<TABLE>
<CAPTION>
<S>                                                                                                                    <C>
ARTICLE 12:  RENEWAL OPTIONS.....................................................................................      48
         12.1         Renewal Options............................................................................      48
         12.2         Effect of Renewal..........................................................................      48
         12.3         Effect of Non-Renewal or Expiration of Lease...............................................      50

ARTICLE 13:  OPTION TO PURCHASE..................................................................................      50
         13.1         Option to Purchase.........................................................................      50
         13.2         Option Price...............................................................................      50
         13.3         Fair Market Value..........................................................................      51
         13.4         Closing....................................................................................      53
         13.5         Failure to Close Option....................................................................      53
         13.6         Failure to Exercise Option to Purchase and Renewal Option..................................      53
         13.7         Early Option Periods.......................................................................      54
                      13.7.1      First Early Option Period......................................................      54
                      13.7.2      Second Early Option Period.....................................................      54
                      13.7.3      Option Price...................................................................      55
         13.8         Assignment.................................................................................      55

ARTICLE 14:  NEGATIVE COVENANTS..................................................................................      55
         14.1         No Debt....................................................................................      55
         14.2         No Liens...................................................................................      55
         14.3         No Guaranties..............................................................................      56
         14.4         No Transfer................................................................................      56
         14.5         No Dissolution.............................................................................      56
         14.6         No Change in Management or Operation.......................................................      56
         14.7         No Investments.............................................................................      56
         14.8         Contracts..................................................................................      57
         14.9         Subordination of Payments to Affiliates....................................................      57
         14.10        Change of Location or Name.................................................................      57

ARTICLE 15:  AFFIRMATIVE COVENANTS...............................................................................      57
         15.1         Perform Obligations........................................................................      57
         15.2         Proceedings to Enjoin or Prevent Construction..............................................      57
         15.3         Documents and Information..................................................................      58
                      15.3.1      Furnish Documents..............................................................      58
                      15.3.2      Furnish Information............................................................      58
                      15.3.3      Further Assurances and Information.............................................      58
                      15.3.4      Material Communications........................................................      59
                      15.3.5      Requirements for Financial Statements..........................................      59
         15.4         Compliance With Laws.......................................................................      59
         15.5         Broker's Commission........................................................................      60
         15.6         Existence and Change in Ownership..........................................................      60
         15.7         Financial Covenants........................................................................      60
                      15.7.1      Definitions....................................................................      60
                      15.7.2      Rent Coverage Ratio............................................................      61
                      15.7.3      Aggregate Cash Flow Benchmarks.................................................      61
         15.8         Facility Licensure and Certification.......................................................      62
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                                     (iii)
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<TABLE>
<CAPTION>
<S>                                                                                                                    <C>
         15.9         Transfer of License and Facility Operations................................................      62
                      15.9.1      Licensure......................................................................      62
                      15.9.2      Facility Operations............................................................      63
                      15.9.3      Power of Attorney..............................................................      63
         15.10        Bed Operating Rights.......................................................................      64

ARTICLE 16:  ALTERATIONS, CAPITAL IMPROVEMENTS, AND SIGNS........................................................      64
         16.1         Prohibition on Alterations and Improvements................................................      64
         16.2         Approval of Alterations....................................................................      64
         16.3         Permitted Alterations......................................................................      65
         16.4         Requirements for Permitted Alterations.....................................................      65
         16.5         Ownership and Removal of Permitted Alterations.............................................      66
         16.6         Minimum Qualified Capital Expenditures.....................................................      66
         16.7         Signs......................................................................................      67

ARTICLE 17:  [RESERVED]..........................................................................................      67

ARTICLE 18:  ASSIGNMENT AND SALE OF LEASED PROPERTY..............................................................      67
         18.1         Prohibition on Assignment and Subletting...................................................      67
         18.2         Requests for Landlord's Consent to Assignment, Sublease or Management Agreement............      68
         18.3         Agreements with Residents..................................................................      69
         18.4         Sale of Leased Property....................................................................      70
         18.5         Assignment by Landlord.....................................................................      70

ARTICLE 19:  HOLDOVER AND SURRENDER..............................................................................      70
         19.1         Holding Over...............................................................................      70
         19.2         Surrender..................................................................................      71
         19.3         Indemnity..................................................................................      71

ARTICLE 20:  LETTER OF CREDIT....................................................................................      71
         20.1         Terms of Letter of Credit..................................................................      71
         20.2         Replacement Letter of Credit...............................................................      71
         20.3         Draws......................................................................................      72
         20.4         Substitute Letter of Credit................................................................      72
         20.4         Return of Letter of Credit.................................................................      73

ARTICLE 21:  QUIET ENJOYMENT, SUBORDINATION, ATTORNMENT AND ESTOPPEL CERTIFICATES................................      73
         21.1         Quiet Enjoyment............................................................................      73
         21.2         Subordination..............................................................................      73
         21.3         Attornment.................................................................................      74
         21.4         Estoppel Certificates......................................................................      74

ARTICLE 22:  REPRESENTATIONS AND WARRANTIES......................................................................      76
         22.1         Organization and Good Standing.............................................................      76
         22.2         Power and Authority........................................................................      76
         22.3         Enforceability.............................................................................      76
</TABLE>

                                      (iv)

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<TABLE>
<CAPTION>
<S>                                                                                                                    <C>
         22.4         Government Authorizations..................................................................      76
         22.5         Financial Statements.......................................................................      77
         22.6         Condition of Facility......................................................................      77
         22.7         Compliance with Laws.......................................................................      77
         22.8         No Litigation..............................................................................      78
         22.9         Consents...................................................................................      78
         22.10        No Violation...............................................................................      78
         22.11        Reports and Statements.....................................................................      79
         22.12        ERISA......................................................................................      79
         22.13        Chief Executive Office.....................................................................      79
         22.14        Other Name or Entities.....................................................................      79
         22.15        Parties in Possession......................................................................      80
         22.16        Access.....................................................................................      80
         22.17        Utilities..................................................................................      80
         22.18        Condemnation and Assessments...............................................................      80
         22.19        Zoning.....................................................................................      80
         22.20        Pro Forma Statement........................................................................      81
         22.21        Environmental Matters......................................................................      81
         22.22        Leases and Contracts.......................................................................      82
         22.23        No Default.................................................................................      82
         22.24        Tax Status.................................................................................      82

ARTICLE 23: RESERVED.............................................................................................      82

ARTICLE 24:  SECURITY INTEREST...................................................................................      82
         24.1         Collateral.................................................................................      82
         24.2         Additional Documents.......................................................................      83
         24.3         Notice of Sale.............................................................................      84
         24.4         Recharacterization.........................................................................      84

ARTICLE 25:  MISCELLANEOUS.......................................................................................      84
         25.1         Notices....................................................................................      84
         25.2         Advertisement of Leased Property...........................................................      85
         25.3         Entire Agreement...........................................................................      85
         25.4         Severability...............................................................................      85
         25.5         Captions and Headings......................................................................      85
         25.6         Governing Law..............................................................................      85
         25.7         Memorandum of Lease........................................................................      86
         25.8         Waiver.....................................................................................      86
         25.9         Binding Effect.............................................................................      86
         25.10        No Offer...................................................................................      86
         25.11        Modification...............................................................................      86
         25.12        Landlord's Modification....................................................................      87
         25.13        No Merger..................................................................................      87
         25.14        Laches.....................................................................................      87
         25.15        Limitation on Tenant's Recourse............................................................      87
         25.16        Construction of Lease......................................................................      87
         25.17        Counterparts...............................................................................      88
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                                      (v)
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<TABLE>
<CAPTION>
<S>                                                                                                                    <C>
         25.18        Lease Guaranty.............................................................................      88
         25.19        Custody of Escrow Funds....................................................................      88
         25.20        Landlord's Status as a REIT................................................................      88
         25.21        Exhibits...................................................................................      88
         25.22        WAIVER OF JURY TRIAL.......................................................................      88
         25.23        CONSENT TO JURISDICTION....................................................................      88
         25.24        Attorney's Fees and Expenses...............................................................      89
         25.25        Survival...................................................................................      89
         25.26        Time.......................................................................................      90
         25.27        Manager....................................................................................      90
         25.28        Company....................................................................................      90
         25.29        Access to Records..........................................................................      90
         25.30        Granting of Easements and Rights-of-Way....................................................      91
</TABLE>



<TABLE>
<CAPTION>
<S>                 <C>
SCHEDULE 1:              INITIAL RENT SCHEDULE

EXHIBIT A:          LEGAL DESCRIPTIONS

EXHIBIT B:          PERMITTED EXCEPTIONS

EXHIBIT C:          FACILITY INFORMATION

EXHIBIT D:          LANDLORD'S PERSONAL PROPERTY

EXHIBIT E:          DOCUMENTS TO BE DELIVERED

EXHIBIT F:          TENANT'S CERTIFICATE AND FACILITY FINANCIAL REPORTS

EXHIBIT G:          GOVERNMENT AUTHORIZATIONS TO BE OBTAINED; ZONING PERMITS

EXHIBIT H:          PENDING LITIGATION

EXHIBIT I:          LIST OF LEASES AND CONTRACTS

EXHIBIT J:          METHOD OF CALCULATING DEPRECIATED BOOK VALUE

EXHIBIT K:          AGGREGATE CASH FLOW BENCHMARKS

EXHIBIT L:          [INTENTIONALLY DELETED]

EXHIBIT M:          COVENANT EXCEPTIONS

EXHIBIT N:          OTHER NAMES OR ENTITIES
</TABLE>
                                      (vi)
<PAGE>
                             MASTER LEASE AGREEMENT


                  This Master Lease Agreement ("Lease") is made effective as of
January 1, 2002 (the "Effective Date") between PENNSYLVANIA BCC PROPERTIES,
INC., a corporation organized under the laws of the Commonwealth of Pennsylvania
("HCRI - PA/BCC" and a "Landlord" as further defined in Section1.4 below),
having its principal office located at One SeaGate, Suite 1500, P.O. Box 1475,
Toledo, Ohio 43603-1475, HCN BCC HOLDINGS, INC., a corporation organized under
the laws of the State of Delaware ("HCRI - HCN/BCC" and a "Landlord" as further
defined in Section1.4 below), having its principal office located at One
SeaGate, Suite 1500, P.O. Box 1475, Toledo, Ohio 43603-1475, and BALANCED CARE
TENANT (HCN), INC., a corporation organized under the laws of the State of
Delaware ("Tenant"), having its chief executive office located at 1215 Manor
Drive, Mechanicsburg, Pennsylvania 17055.

                                 R E C I T A L S

                  A. HCRI - PA/BCC, HCRI - HCN/BCC, and Health Care REIT, Inc.
("HCRI") previously entered into leases with Affiliates of Tenant for the
Facility (defined below). As a result of Events of Default occurring under such
leases, HCRI - PA/BCC, HCRI - HCN/BCC, and HCRI terminated the leases.
Subsequently, Balanced Care Corporation and HCRI entered into the Commitment
(defined below). Under the Commitment, the parties agreed to enter into a new
master lease between Landlord and Tenant for the Facility with Tenant then
entering into management agreements with the current licensed operators of each
Facility.

                  B. Landlord desires to lease the Leased Property to Tenant and
Tenant desires to lease the Leased Property from Landlord upon the terms set
forth in this Lease.

                  NOW, THEREFORE, Landlord and Tenant agree as follows:

                ARTICLE 1: LEASED PROPERTY, TERM AND DEFINITIONS

                  1.1 Leased Property. Landlord hereby leases to Tenant and
Tenant hereby leases from Landlord the Leased Property, subject, however, to the
Permitted Exceptions and subject to the terms and conditions of this Lease.

                  1.2 Indivisible Lease. This Lease constitutes one indivisible
lease of the entire Leased Property. The Leased Property constitutes one
economic unit and the Base Rent and all
<PAGE>
other provisions have been negotiated and agreed to based on a lease of all of
the Leased Property as a single, composite, inseparable transaction and would
have been materially different had separate leases or a divisible lease been
intended. Except as expressly provided herein for specific, isolated purposes
(and then only to the extent expressly otherwise stated) all provisions of this
Lease shall apply equally and uniformly to all the Leased Property as one unit
and any Event of Default with respect to any Leased Property or Facility is an
Event of Default as to the entire Leased Property except as expressly provided
herein. The parties intend that the provisions of this Lease shall at all times
be construed, interpreted and applied so as to carry out their mutual objective
to create a single indivisible lease of all the Leased Property and, in
particular, but without limitation, that for purposes of any assumption,
rejection or assignment of this Lease under the Bankruptcy Code, this is one
indivisible and non-severable lease and executory contract dealing with one
legal and economic unit which must be assumed, rejected or assigned as a whole
with respect to all (and only all) the Leased Property covered hereby. The
parties agree that the existence of more than one Landlord under this Lease does
not affect the indivisible, non-severable nature of this Lease. The parties may
amend this Lease from time to time to include or remove one or more Facility
Properties as part of the Leased Property and such future addition to or removal
of a portion of the Leased Property shall not in any way change the indivisible
and non-severable nature of this Lease and all of the foregoing provisions shall
continue to apply in full force.

                  1.3 Term. The initial term ("Initial Term") of this Lease
commences on the Effective Date and expires at 12:00 Midnight Eastern Time on
December 31, 2016 (the "Expiration Date"); provided, however, that [i] Tenant
has one or more options to renew the Lease pursuant to Article 12, and [ii] that
any addition to the Leased Property pursuant to amendment of this Lease shall
extend the Initial Term so that the Initial Term shall expire on the Amended
Expiration Date as set forth in such amendment.

                  1.4 Definitions. Except as otherwise expressly provided, [i]
the terms defined in this section have the meanings assigned to them in this
section and include the plural as well as the singular; [ii] all accounting
terms not otherwise defined herein have the meanings assigned to them in
accordance with generally accepted accounting principles as of the time
applicable; and [iii] the words "herein," "hereof," and


                                      -2-
<PAGE>
"hereunder" and similar words refer to this Lease as a whole and not to any
particular section.

                  "ADA" means the federal statute entitled Americans with
Disabilities Act, 42 U.S.C.Section12101, et seq.

                  "Affiliate" means any person, corporation, partnership,
limited liability company, trust, or other legal entity that, directly or
indirectly, controls, or is controlled by, or is under common control with
Tenant or Company. "Control" (and the correlative meanings of the terms
"controlled by" and "under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such entity. "Affiliate" includes, without limitation, each
Company.

                  "Aggregate Cash Flow" has the meaning set forth in
Section 15.7.1(b).

                  "Aggregate Cash Flow Benchmarks" has the meaning set forth in
Section 15.7.3.

                  "Allocated Lease Amount" means the portion of the Lease Amount
allocated to a specific Facility as set forth on the attached Exhibit C.

                  "Amended Expiration Date" means the Expiration Date as amended
pursuant to the most recent amendment of this Lease in effect at such time.

                  "Annual Company Budget" means Company's projection of its
financial statement for the next fiscal year.

                  "Annual Facility Budget" means Tenant's projection of the
Facility Financial Statement for the next fiscal year (or the 12-month rolling
forward period, if applicable).

                  "Annual Financial Statements" means [i] for Tenant, an
unaudited balance sheet and statement of income; [ii] for each Facility, an
unaudited Facility Financial Statement for the most recent fiscal year; [iii]
for each Manager, if such Manager is or includes a corporation, partnership or
limited liability company, an unaudited balance sheet and statement of income
for the most recent fiscal year; and [iv] for Company, an audited balance sheet
and statement of income for the most recent fiscal year with consolidating
schedules.

                                      -3-
<PAGE>

                  "Bankruptcy Code" means the United States Bankruptcy Code set
forth in 11 U.S.C. Section 101, et. seq., as amended from time to time.

                  "Base Rent" has the meaning set forth in Section 2.1, as
increased from time to time pursuant to Section 2.2.

                  "BCC Obligations" means all payment and performance
obligations of Tenant, Manager and Company to Landlord or any Landlord
Affiliate, including, but not limited to, all obligations under this Lease, any
loans extended to Tenant, Manager or Company by Landlord or any Landlord
Affiliate and all documents executed by Tenant, Manager or Company in connection
with this Lease, or any loan or any other obligation in favor of Landlord or any
Landlord Affiliate. BCC Obligations do not include the loans assigned by HCRI
and Landlord to IPC.

                  "Business Day" means any day other than a Saturday, Sunday, or
national holiday.

                  "Cash Flow Cure Period" has the meaning set forth in
Section 15.7.4.

                  "Cash Flow Default" has the meaning set forth in Section 20.1.

                  "CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time.

                  "Closing" means the closing of the lease of the Leased
Property to Tenant.

                  "Collateral" has the meaning set forth in Section 24.1.

                  "Commencement Date" means the Effective Date if such date is
the first day of a month, and if it is not, the first day of the first month
following the Effective Date.

                  "Commitment" means the Master Lease Offer dated as of December
21, 2001.

                  "Company" means Balanced Care Corporation, a corporation
organized under the laws of the State of Delaware.

                  "Coverage Amount" has the meaning set forth in
Section 15.7.2(b).

                                      -4-
<PAGE>

                  "CPI" means the United States Department of Labor, Bureau of
Labor Statistics Revised Consumer Price Index for All Urban Consumers
(1998-2000=100), U.S. City Average, All Items, or, if that index is not
available at the time in question, the index designated by such Department as
the successor to such index, and if there is no index so designated, an index
for an area in the United States that most closely corresponds to the entire
United States, published by such Department, or if none, by any other
instrumentality of the United States.

                  "DBV" has the meaning set forth in Section 13.7.2.

                  "Early Option Periods" has the meaning set forth in
Section 13.7.

                  "Effective Date" means the date of this Lease.

                  "Environmental Laws" means all federal, state, and local laws,
ordinances and policies the purpose of which is to protect human health and the
environment, as amended from time to time, including, but not limited to, [i]
CERCLA; [ii] the Resource Conservation and Recovery Act; [iii] the Hazardous
Materials Transportation Act; [iv] the Clean Air Act; [v] Clean Water Act; [vi]
the Toxic Substances Control Act; [vii] the Occupational Safety and Health Act;
[viii] the Safe Drinking Water Act; and [ix] analogous state laws and
regulations.

                  "Event of Default" has the meaning set forth in Section 8.1.

                  "Expiration Date" has the meaning set forth in Section 1.3.

                  "Extended Term" has the meaning set forth in Section 12.3(a).

                  "Facility" means each facility located on a portion of the
Land, including the Facility Property associated with such Facility. References
in this Lease to "the Facility" shall mean each Facility individually unless
expressly stated otherwise.

                  "Facility Financial Statement" means a financial statement for
each Facility which shall include the balance sheet, statement of income,
occupancy census data (including payor mix), and a comparison of the actual
financial data versus the Annual Facility Budget for the applicable period.

                  "Facility Name" means the name under which a Facility has done
business during the Term. The Facility Name in use by each Facility on the
Effective Date is set forth on the attached Exhibit C.

                                      -5-
<PAGE>
                  "Facility Property" means the portion of the Land on which a
Facility is located, the legal description of which is set forth beneath the
applicable Facility Name on Exhibit A, the Improvements on such portion of the
Land, the Related Rights with respect to such portion of the Land, and
Landlord's Personal Property with respect to such Facility.

                  "Facility State" means the State in which a respective
Facility is located.

                  "Facility States" means, collectively, the States in which the
Leased Property is located.

                  "Facility Uses" means the uses relating to the operation of a
Facility as a facility of the type and operating the number of beds and units
set forth on Exhibit C with respect to such Facility.

                  "Fair Market Value" has the meaning set forth in Section13.3.

                  "Financial Statements" means [i] the annual, quarterly and
year to date financial statements of Tenant and Company; and [ii] all operating
statements for each Facility, that were submitted to Landlord prior to the
Effective Date.

                  "First Early Option Period" has the meaning set forth in
Section13.7.1.

                  "Fixtures" means all permanently affixed equipment, machinery,
fixtures and other permanently affixed items of real and/or personal property
(excluding Landlord's Personal Property), including all components thereof, now
and hereafter located in, on or used in connection with, and permanently affixed
to or incorporated into the 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, built-in oxygen and vacuum
systems, towers and other devices for the transmission of radio, television and
other signals, all of which, to the greatest extent permitted by law, are hereby
deemed by the parties hereto to constitute real estate, together with all
replacements, modifications, alterations and additions thereto.

                                      -6-
<PAGE>
                  "Government Authorizations" means all permits, licenses,
approvals, consents, and authorizations required to comply with all Legal
Requirements, including, but not limited to, [i] zoning permits, variances,
exceptions, special use permits, conditional use permits, and consents; [ii] the
permits, licenses, provider agreements and approvals required for licensure and
operation of each Facility in accordance with its respective Facility Uses and
certified as a provider under the federal Medicare and state Medicaid programs;
[iii] environmental, ecological, coastal, wetlands, air, and water permits,
licenses, and consents; [iv] curb cut, subdivision, land use, and planning
permits, licenses, approvals and consents; [v] building, sign, fire, health, and
safety permits, licenses, approvals, and consents; and [vi] architectural
reviews, approvals, and consents required under restrictive covenants.

                  "Guarantor" means Company and Manager, individually and
collectively.

                  "Guaranty" means the Unconditional and Continuing Lease
Guaranty entered into by Guarantor to guarantee payment and performance of the
BCC Obligations and any amendments thereto or substitutions or replacements
therefor.

                  "Hazardous Materials" means any substance [i] the presence of
which poses a hazard to the health or safety of persons on or about the Land,
including, but not limited to, asbestos containing materials; [ii] which
requires removal or remediation under any Environmental Law, including, without
limitation, any substance which is toxic, explosive, flammable, radioactive, or
otherwise hazardous; or [iii] which is regulated under or classified under any
Environmental Law as hazardous or toxic, including, but not limited to, any
substance within the meaning of "hazardous substance," "hazardous material,"
"hazardous waste," "toxic substance," "regulated substance," "solid waste," or
"pollutant" as defined in any Environmental Law.

                  "HCRI" means Health Care REIT, Inc., a corporation organized
under the laws of the State of Delaware.

                  "HCRI - HCN/BCC" means HCN BCC Holdings, Inc., a corporation
organized under the laws of the State of Delaware.

                  "HCRI - PA/BCC" means Pennsylvania BCC Holdings, Inc., a
corporation organized under the laws of the Commonwealth of Pennsylvania.

                                      -7-
<PAGE>

                  "HIPDB" means the Healthcare Integrity and Protection Data
Bank maintained by the Department of Health and Human Services.

                  "Impositions" has the meaning set forth in Section 3.2.

                  "Improvements" means all buildings, structures, Fixtures and
other improvements of every kind on the Land, including, but not limited to,
alleys, sidewalks, utility pipes, conduits and lines (on-site and off-site),
parking areas and roadways appurtenant to such buildings and structures, now or
hereafter situated upon the Land.

                  "Increaser Rate" means 20 basis points for any Lease Year in
which the CPI increases by less than 20% and 30 basis points for all other Lease
Years.

                  "Initial Lease Advance" means $26,201,082.00.

                  "Initial Term" has the meaning set forth in Section 1.3.

                  "IPC" means IPC Advisors S.a.r.l., a corporation organized
under the laws of Luxembourg.

                  "Issuer" means a financial institution, reasonably
satisfactory to Landlord issuing a Letter of Credit and such Issuer's successors
and assigns. Any "Issuer" shall have a Lace Financial Service Rating of "C+" or
higher at all times throughout the Term.

                  "Land" means the real property described in Exhibit A attached
hereto.

                  "Landlord" means HCRI-PA/BCC and HCRI-HCN/BCC,
individually and collectively.

                  "Landlord Affiliate" means any person, corporation,
partnership, limited liability company, trust, or other legal entity that,
directly or indirectly, controls, or is controlled by, or is under common
control with Landlord. "Control" (and the correlative meanings of the terms
"controlled by" and "under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such entity. "Landlord Affiliate" includes, without limitation,
HCRI Texas Properties, Ltd., HCRI Pennsylvania Properties, Inc., HCRI Nevada
Properties, Inc., HCRI Properties, Inc., HCRI North Carolina Properties, LLC,
HCRI Louisiana Properties, L.P., HCRI Indiana Properties, LLC, HCRI


                                      -8-
<PAGE>
Massachusetts Properties Trust, HCRI Massachusetts Properties Trust II, and
HCRI.

                  "Landlord's Personal Property" means all Personal Property
owned by Landlord on the Effective Date, including, without limitation, all
personal property listed on the attached Exhibit D, together with any and all
replacements thereof, and all Personal Property that pursuant to the terms of
this Lease becomes the property of Landlord during the Term.

                  "Lease" means this Master Lease Agreement, as amended from
time to time.

                  "Lease Advance" means any advance of funds by Landlord to
Tenant pursuant to the terms of this Lease.

                  "Lease Advance Amount" means the amount of any Lease Advance.
The first Lease Advance Amount is the Lease Amount on the Effective Date.

                  "Lease Advance Date" means the date on which Landlord makes a
Lease Advance.

                  "Lease Amount" is an aggregate concept and means the sum of
the Lease Advance Amounts outstanding at the applicable time. As of the
Effective Date, the Lease Amount is $26,201,082.00.

                  "Lease Documents" means this Lease and all documents executed
by Landlord and Tenant relating to this Lease or the Facility.

                  "Lease Payments" means the sum of the Base Rent payments (as
increased from time to time) for the applicable period.

                  "Lease Rate" means the annual rate used to determine Base Rent
for each Lease Advance. The Lease Rate is 10.61%, computed using the 365/360
method. The Lease Rate includes any accrued Increaser Rate. On the Renewal Date,
the Lease Rate will be the Renewal Rate.

                  "Lease Year" means each consecutive period of 365 or 366 days
throughout the Term. The first Lease Year commences on the Commencement Date and
expires on the day before the first anniversary of the Commencement Date.

                                      -9-
<PAGE>
                  "Leased Property" means all of the Land, Improvements, Related
Rights and Landlord's Personal Property.

                  "Legal Requirements" means all laws, regulations, rules,
orders, writs, injunctions, decrees, certificates, requirements, agreements,
conditions of participation and standards of any federal, state, county,
municipal or other governmental entity, administrative agency, insurance
underwriting board, architectural control board, private third-party payor,
accreditation organization, or any restrictive covenants applicable to the
development, construction, condition and operation of the Facility by Tenant,
including, but not limited to, [i] zoning, building, fire, health, safety, sign,
and subdivision regulations and codes; [ii] certificate of need laws (if
applicable); [iii] licensure to operate as each Facility in accordance with its
respective Facility Uses; [iv] Medicare and Medicaid certification requirements
(if applicable); [v] the ADA; [vi] any Environmental Laws; and [vii]
requirements, conditions and standards for participation in third-party payor
insurance programs.

                  "Letter of Credit" means, individually and collectively, any
irrevocable and transferable Letter of Credit issued by Issuer in favor of
Landlord in a form acceptable to Landlord that may be delivered to Landlord
pursuant to the terms of SectionSection15.7.2(b) or 15.7.3(b) of this Lease, and
any amendments thereto or replacements or substitutions therefor.

                  "Licensed Operator" means the Manager that holds the license
to operate a Facility as shown on Exhibit C.

                  "Manager" means Financial Care Investors of Lebanon, LLC,
Balanced Care at Lebanon, Inc., Financial Care Investors of Loyalsock, LLC,
Balanced Care at Loyalsock, Inc., Financial Care Investors of Sagamore Hills,
LLC, Balanced Care at Sagamore Hills, Inc., and Balanced Care at Saxonburg,
Inc., Balanced Care at Bloomsburg II, Inc., individually and collectively.
References in this Lease to "Manager" shall mean each Manager individually and
shall relate to such Manager's respective Facility unless expressly stated
otherwise. Exhibit C contains a listing of each Manager and the Facility it
manages.

                  "Material Obligation" means [i] any indebtedness of Tenant or
Manager secured by a security interest in or a lien, deed of trust or mortgage
on any of the Leased Property (or any part thereof, including any Personal
Property) and any agreement relating thereto; [ii] any obligation or agreement
of Tenant or

                                      -10-
<PAGE>
Manager that is material to the construction or operation of the Facility or
that is material to Tenant's business or financial condition, in each case,
taken as a whole; [iii] any indebtedness (excluding loans assigned by HCRI and
Landlord to IPC) or capital lease of Tenant or Manager that has an outstanding
principal balance or obligation of at least $100,000.00 and any agreement
relating thereto; [iv] any indebtedness or lease of Manager that has an
outstanding principal balance or obligation of at least $250,000.00; [v] any
obligation to or agreement with the Issuer relating to the Letter of Credit; and
[vi] any material sublease of the Leased Property, exclusive of occupancy
agreements with residents of the Leased Property.

                  "Monetary Default" has the meaning set forth in Section 20.1.

                  "Net Worth" has the meaning set forth in Section 15.7.1.

                  "Ohio Facility" means each Facility located in the State of
Ohio.

                  "Option Price" has the meaning set forth in Section 13.2.

                  "Option to Purchase" has the meaning set forth in Section
13.1.

                  "Organization State" means the State in which an entity is
incorporated.

                  "Organizational Documents" means [i] for a corporation, its
Articles of Incorporation certified by the Secretary of State of the
Organization State, as amended to date, and its Bylaws certified by such entity,
as amended to date; [ii] for a partnership, its Partnership Agreement certified
by such entity, as amended to date, and the Partnership Certificate, certified
by the appropriate authority, as amended to date; and [iii] for a limited
liability company, its Articles of Organization certified by the Secretary of
State of the Organization State, as amended to date, and its Operating Agreement
certified by such entity, as amended to date.

                  "Overdue Rate" has the meaning set forth in Section 8.6.

                  "Pennsylvania Facility" means each Facility located in the
Commonwealth of Pennsylvania.

                  "Periodic Financial Statements" means [i] for Tenant, an
unaudited balance sheet and statement of income of Tenant for

                                      -11-
<PAGE>
the most recent quarter; [ii] for the Facility, an unaudited Facility Financial
Statement for the most recent month; and [iii] for Guarantor, if Guarantor is or
includes a corporation, partnership, or limited liability company, an unaudited
balance sheet and statement of income of Guarantor for the most recent quarter.

                  "Permitted Exceptions" means all easements, liens,
encumbrances, restrictions, agreements and other title matters existing as of
the Effective Date, including, without limitation, [i] the exceptions to title
set forth on Exhibit B attached hereto; [ii] any sublease of any portion of the
Leased Property made in complete accordance with Article 18; and [iii] any
easements or rights of way made in accordance with Section 25.32.

                  "Permitted Liens" means [i] liens, security interests,
pledges, and/or encumbrances granted to Landlord; [ii] liens customarily
incurred by Tenant or Manager in the ordinary course of business for items not
delinquent, including, without limitation, mechanic's liens and deposits and
charges under workers' compensation laws; [iii] liens for taxes and assessments
not yet due and payable; [iv] any lien, charge, or encumbrance which is being
contested in good faith pursuant to Section 3.7 of this Lease; [v] the Permitted
Exceptions; and [vi] purchase money financing and capitalized equipment leases
for the acquisition of personal property provided, however, that Landlord
obtains a non-disturbance agreement from the purchase money lender or equipment
lessor in form and substance as may be reasonably satisfactory to Landlord if
[a] the original cost of the equipment exceeds $75,000.00 or [b] the equipment
constitutes any part of the Start-Up Property.

                  "Personal Property" means all machinery, equipment, furniture,
furnishings, movable walls or partitions, computers (and all associated
software), trade fixtures and other personal property (but excluding consumable
inventory and supplies owned by Tenant) used in connection with the Leased
Property, together with all replacements and alterations thereof and additions
thereto, except items, if any, included within the definition of Fixtures or
Improvements.

                  "Pro Forma Statement" means a financial forecast for the
Facility for the next three-year period prepared by Tenant.

                  "Purchase Notice" has the meaning set forth in Section 13.1.

                                      -12-
<PAGE>

                  "Qualified Capital Expenditures" means the expenditures
capitalized on the books of Tenant or Manager for any of the following:
replacement of furniture, fixtures and equipment, including refrigerators,
ranges, major appliances, bathroom fixtures, doors (exterior and interior),
central air conditioning and heating systems (including cooling towers, water
chilling units, furnaces, boilers and fuel storage tanks) and major replacement
of siding; major roof replacements, including major replacements of gutters,
downspouts, eaves and soffits; major repairs and replacements or repairs of
plumbing and sanitary systems; overhaul of elevator systems; major repaving,
resurfacing and sealcoating of sidewalks, parking lots and driveways; repainting
of entire building exterior; but excluding major alterations, renovations,
additions and normal maintenance and repairs.

                  "Receivables" means [i] all of Tenant's or Manager's rights to
receive payment for providing resident care and services as set forth in any
accounts, contract rights, and instruments, and [ii] those documents, chattel
paper, inventory proceeds, provider agreements, participation agreements, ledger
sheets, files, records, computer programs, tapes, and agreements relating to
Tenant's or Manager's rights to receive payment for providing resident care
services.

                  "Related Rights" means all easements, rights (including bed
operating rights) and appurtenances relating to the Land and the Improvements.

                  "Renewal Date" means the first day of each Renewal Term.

                  "Renewal Option" has the meaning set forth in Section 12.1.

                  "Renewal Rate" means the Lease Rate established for any
Renewal Date as set forth in Section 12.2(c).

                  "Renewal Term" has the meaning set forth in Section 12.1.

                  "Rent" has the meaning set forth in Section 2.3.

                  "Rent Coverage Ratio" has the meaning set forth in
Section 15.7.1(c).

                  "Rent Schedule" means the schedule issued by Landlord to
Tenant showing the Base Rent to be paid by Tenant pursuant to the terms of this
Lease, as such schedule is amended from time to time by Landlord. The initial
Rent Schedule is attached to

                                      -13-
<PAGE>
this Lease as Schedule 1 or will be attached following Closing if the Rent
Schedule cannot be determined until the day of Closing.

                  "Replacement Operator" has the meaning set forth in
Section 15.9.1.

                  "Second Early Option Period" has the meaning set forth in
Section 13.7.2.

                  "Secured Parties" has the meaning set forth in Section 24.1.

                  "Start-Up Property" has the meaning set forth in Section 11.1.

                  "Tenant" means Balanced Care Tenant (HCN), Inc., a corporation
organized under the laws of the State of Delaware.

                  "Term" means the Initial Term and each Renewal Term.

                  1.5 Landlord As Agent. With respect to each Facility,
HCRI-PA/BCC and HCRI-HCN/BCC each appoint HCRI as the agent and lawful
attorney-in-fact of HCRI-PA/BCC and HCRI-HCN/BCC to act for HCRI-PA/BCC and
HCRI-HCN/BCC for all purposes and actions of Landlord under this Lease. All
notices, consents, waivers and all other documents and instruments executed by
HCRI pursuant to this Lease from time to time and all other actions of HCRI in
connection with this Lease shall be binding upon HCRI-PA/BCC and HCRI-HCN/BCC
and Tenant and Company shall be entitled to rely on such actions of HCRI as
agent. All Rent payable under this Lease shall be paid to HCRI. Tenant and
Company shall have no responsibility for distribution of Rent beyond payment to
HCRI as agent.

                                 ARTICLE 2: RENT

                  2.1 Base Rent. Tenant shall pay Landlord base rent ("Base
Rent") in advance in consecutive monthly installments payable on the first day
of each month during the Term commencing on the Commencement Date. If the
Effective Date is not the first day of a month, Tenant shall pay Landlord Base
Rent on the Effective Date for the partial month, i.e., for the period
commencing on the Effective Date and ending on the day before the Commencement
Date. The Base Rent for the Initial Term will be computed monthly and will be
equal to 1/12th of the sum of the products of each Lease Advance times the Lease
Rate for each Lease Advance as shown on the Rent Schedule. The Base


                                      -14-
<PAGE>
Rent for each Renewal Term will be computed in accordance with Section 12.2.

                  2.2 Increase of Lease Rate and Base Rent. Commencing on the
first anniversary of the Commencement Date and on each anniversary of the
Commencement Date thereafter throughout the Term (including any Renewal Term and
Extended Term), the Lease Rate will increase by the applicable Increaser Rate.
On each date that the Lease Rate is increased, the Base Rent will be increased
accordingly and will be equal to 1/12th of the sum of the products of each Lease
Advance times the Lease Rate (including the applicable Increaser Rate) for each
Lease Advance. The Rent Schedule will include the Increaser Rate adjustment
based on the Lease Amount at the time the Rent Schedule is issued.

                  2.2.1 Rent Adjustments - Additional Lease Advances. If
Landlord makes a Lease Advance other than the initial Lease Advance, the Base
Rent will be increased effective on the Lease Advance Date that an additional
Lease Advance is made and based upon the applicable Lease Rate. Until Tenant
receives a revised Rent Schedule from Landlord, Tenant shall for each month [i]
continue to make installments of Base Rent according to the Rent Schedule in
effect on the day before the Lease Advance Date; and [ii] within 10 days
following Landlord's issuance of an invoice, pay the difference between the
installment of Base Rent that Tenant paid to Landlord for such month and the
installment of Base Rent actually due to Landlord for such month as a result of
the additional Lease Advance. On the first day of the month following receipt of
the revised Rent Schedule, Tenant shall pay the monthly installment of Base Rent
specified in the revised Rent Schedule.

                  2.3 Additional Rent. In addition to Base Rent, Tenant shall
pay all other amounts, liabilities, obligations and Impositions which Tenant
assumes or agrees to pay under this Lease and any fine, penalty, interest,
charge and cost which may be added for nonpayment or late payment of such items
(collectively the "Additional Rent"). The Base Rent and Additional Rent are
hereinafter referred to as "Rent". Landlord shall have all legal, equitable and
contractual rights, powers and remedies provided either in this Lease or by
statute or otherwise in the case of nonpayment of the Rent.

                  2.4 Payment of Rent. Tenant shall make all payments of Rent by
wire transfer in accordance with the wire transfer instructions provided by
Landlord to Tenant.

                                      -15-
<PAGE>

                  2.5 Net Lease. This Lease shall be deemed and construed to be
an "absolute net lease," and Tenant shall pay all Rent and other charges and
expenses in connection with the Leased Property throughout the Term, without
abatement, deduction, recoupment or set-off.

                  2.6 No Termination, Abatement, Etc. Except as otherwise
specifically provided in this Lease, Tenant shall remain bound by this Lease in
accordance with its terms. Tenant shall not, without the consent of Landlord,
modify, surrender or terminate the Lease, nor seek nor be entitled to any
abatement, deduction, deferment or reduction of Rent, or set-off or recoupment
against the Rent. Except as expressly provided in this Lease, the obligations of
Landlord and Tenant shall not be affected by reason of [i] any damage to, or
destruction of, the Leased Property or any part thereof from whatever cause or
any Taking (as hereinafter defined) of the Leased Property or any part thereof;
[ii] the lawful or unlawful prohibition of, or restriction upon, Tenant's use of
the Leased Property, or any part thereof, the interference with such use by any
person, corporation, partnership or other entity, or by reason of eviction by
paramount title; [iii] any claim which Tenant has or might have against Landlord
or by reason of any default or breach of any warranty by Landlord under this
Lease or any other agreement between Landlord and Tenant, or to which Landlord
and Tenant are parties; [iv] any bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding up or other
proceeding affecting Landlord or any assignee or transferee of Landlord; or [v]
any other cause, whether similar or dissimilar to any of the foregoing, other
than a discharge of Tenant from any such obligations as a matter of law. Except
as otherwise specifically provided in this Lease and to the extent permitted by
law, Tenant hereby specifically waives all rights, arising from any occurrence
whatsoever, which may now or hereafter be conferred upon it by law [a] to
modify, surrender or terminate this Lease or quit or surrender the Leased
Property or any portion thereof; or [b] entitling Tenant to any abatement,
reduction, suspension or deferment of the Rent or other sums payable by Tenant
hereunder. The obligations of Landlord and Tenant hereunder shall be separate
and independent covenants and agreements and the Rent and all other sums payable
by Tenant hereunder shall continue to be payable in all events unless the
obligations to pay the same shall be terminated pursuant to the express
provisions of this Lease or by termination of this Lease other than by reason of
an Event of Default (unless otherwise agreed to by Landlord).

                                      -16-
<PAGE>

                  2.7 Computational Method. Landlord and Tenant acknowledge that
all rates under this Lease will be computed based on the actual number of days
elapsed over a 360-day year (365/360 method).

                      ARTICLE 3: IMPOSITIONS AND UTILITIES

                  3.1 Payment of Impositions. Tenant shall pay, as Additional
Rent, all Impositions that may be levied or become a lien on the Leased Property
or any part thereof at any time (whether prior to or during the Term), without
regard to prior ownership of said Leased Property, before any fine, penalty,
interest, or cost is incurred; provided, however, Tenant may contest any
Imposition in accordance with Section 3.7. Tenant shall deliver to Landlord [i]
not more than five days after the due date of each Imposition, copies of the
invoice for such Imposition and the check delivered for payment thereof; and
[ii] not more than 45 days after the due date of each Imposition, a copy of the
official receipt evidencing such payment or other proof of payment satisfactory
to Landlord. Tenant's obligation to pay such Impositions shall be deemed
absolutely fixed upon the date such Impositions become a lien upon the Leased
Property or any part thereof. Tenant, at its expense, shall prepare and file all
tax returns and reports in respect of any Imposition as may be required by
governmental authorities. Tenant shall be entitled to any refund due from any
taxing authority if no Event of Default shall have occurred hereunder and be
continuing and if Tenant shall have paid all Impositions due and payable prior
to any penalty period as of the date of the refund. Landlord shall be entitled
to any refund from any taxing authority if an Event of Default has occurred and
is continuing. Any refunds retained by Landlord due to an Event of Default shall
be applied as provided in Section 8.8. 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 governmental authorities
classify any property covered by this Lease as personal property, Tenant shall
file all personal property tax returns in such jurisdictions where it may
legally so file. Landlord, to the extent it possesses the same, and Tenant, to
the extent it possesses the same, will provide the other party, upon request,
with cost and depreciation records necessary for filing returns for any property
so classified as personal property. Where Landlord is legally required to file
personal property tax returns, Tenant will be provided with copies of assessment
notices indicating a value in excess of the

                                      -17-
<PAGE>
reported value in sufficient time for Tenant to file a protest. Tenant may, upon
notice to Landlord, at Tenant's option and at Tenant's sole cost and expense,
protest, appeal, or institute such other proceedings as Tenant may deem
appropriate to effect a reduction of real estate or personal property
assessments and Landlord, at Tenant's expense as aforesaid, shall fully
cooperate with Tenant in such protest, appeal, or other action. Tenant shall
reimburse Landlord for all personal property taxes paid by Landlord within 30
days after receipt of billings accompanied by copies of a bill therefor and
payments thereof which identify the personal property with respect to which such
payments are made. Impositions imposed in respect to the tax-fiscal period
during which the Term terminates shall be adjusted and prorated between Landlord
and Tenant, whether or not such Imposition is imposed before or after such
termination, and Tenant's obligation to pay its prorated share thereof shall
survive such termination.

                  3.2 Definition of Impositions. "Impositions" means,
collectively, [i] taxes (including, without limitation, all capital stock and
franchise taxes of Landlord imposed by the Facility State or any governmental
entity in the Facility State due to this lease transaction or Landlord's
ownership of the Leased Property and the income arising therefrom, or due to
Landlord being considered as doing business in the Facility State because of
Landlord's ownership of the Leased Property or lease thereof to Tenant but only
to the extent Tenant would have been obligated to pay such taxes if Tenant
rather than Landlord was the owner of the Leased Property), all real estate and
personal property ad valorem, sales and use, business or occupation, single
business, gross receipts, transaction privilege, rent or similar taxes; [ii]
assessments (including, without limitation, all assessments for public
improvements or benefits, whether or not commenced or completed prior to the
date hereof and whether or not to be completed with the Term); [iii] ground
rents, water, sewer or other rents and charges, excises, tax levies, and fees
(including, without limitation, license, permit, inspection, authorization and
similar fees); [iv] all taxes imposed on Tenant's operations of the Leased
Property, including, without limitation, employee withholding taxes, income
taxes and intangible taxes; [v] all taxes imposed by the Facility State or any
governmental entity in the Facility State with respect to the conveyance of the
Leased Property by Landlord to Tenant or Tenant's designee, including, without
limitation, conveyance taxes and capital gains taxes; and [vi] all other
governmental charges, in each case whether general or special, ordinary or
extraordinary, or foreseen or

                                      -18-
<PAGE>
unforeseen, of every character in respect of the Leased Property or any part
thereof and/or the Rent (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 or Landlord's interest in the Leased Property or any part
thereof; [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. Tenant shall not, however, be required to pay any tax based [y] on
income or assets imposed on Landlord by any governmental entity other than the
capital stock and franchise taxes described in clause [i] above or [z] based on
the transfer of Landlord's interest in the Leased Property or equity of Landlord
to a party other than Company unless the transfer occurs pursuant to an Event of
Default.

                  3.3 Escrow of Impositions. If an Event of Default occurs and
while it remains uncured, Tenant shall, at Landlord's election, deposit with
Landlord on the first day of each month a sum equal to 1/12th of the Impositions
assessed against the Leased Property for the preceding tax year, which sums
shall be used by Landlord toward payment of such Impositions. Tenant, on demand,
shall pay to Landlord any additional funds necessary to pay and discharge the
obligations of Tenant pursuant to the provisions of this section. The receipt by
Landlord of the payment of such Impositions by and from Tenant shall only be as
an accommodation to Tenant, the mortgagees, and the taxing authorities, and
shall not be construed as rent or income to Landlord, Landlord serving, if at
all, only as a conduit for delivery purposes.

                  3.4 Utilities. Tenant shall pay, as Additional Rent, all
taxes, assessments, charges, deposits, and bills for utilities, including,
without limitation, charges for water, gas, oil, sanitary and storm sewer,
electricity, telephone service, and trash collection, which may be charged
against the occupant of the Improvements during the Term. If an Event of Default
occurs and while it remains uncured, Tenant shall, at Landlord's election,
deposit with Landlord on the first day of each month a sum equal to 1/12th of
the amount of the annual utility expenses for the preceding Lease Year, which
sums shall be used by Landlord to pay such utilities. Tenant shall, on demand,
pay to Landlord any additional amount needed to pay such utilities. Landlord's
receipt of such payments shall only be an

                                      -19-
<PAGE>
accommodation to Tenant and the utility companies and shall not constitute rent
or income to Landlord. Tenant shall at all times maintain that amount of heat
necessary to ensure against the freezing of water lines. Tenant hereby agrees to
indemnify and hold Landlord harmless from and against any liability or damages
to the utility systems and the Leased Property that may result from Tenant's
failure to maintain sufficient heat in the Improvements.

                  3.5 Discontinuance of Utilities. Landlord will not be liable
for damages to person or property or for injury to, or interruption of, business
for any discontinuance of utilities nor will such discontinuance in any way be
construed as an eviction of Tenant or cause an abatement of rent or operate to
release Tenant from any of Tenant's obligations under this Lease unless Tenant
had deposited funds with Landlord to pay the utilities pursuant to Section 3.4
and Landlord fails to pay.

                  3.6 Business Expenses. Tenant shall promptly pay all expenses
and costs incurred in connection with the operation of the Facility on the
Leased Property, including, without limitation, employee benefits, employee
vacation and sick pay, consulting fees, and expenses for inventory and supplies.

                  3.7 Permitted Contests. Tenant, on its own or on Landlord's
behalf (or in Landlord's name), but at Tenant's expense, may contest, by
appropriate legal proceedings conducted in good faith and with due diligence,
the amount or validity or application, in whole or in part, of any Imposition or
any Legal Requirement or insurance requirement or any lien, attachment, levy,
encumbrance, charge or claim provided that [i] in the case of an unpaid
Imposition, lien, attachment, levy, encumbrance, charge or claim, the
commencement and continuation of such proceedings shall suspend the collection
thereof from Landlord and from the Leased Property; [ii] neither the Leased
Property nor any Rent therefrom nor any part thereof or interest therein would
be in any immediate danger of being sold, forfeited, attached or lost; [iii] in
the case of a Legal Requirement, Landlord would not be in any immediate danger
of civil or criminal liability for failure to comply therewith pending the
outcome of such proceedings; [iv] in the case of a Legal Requirement and/or an
Imposition, lien, encumbrance or charge in excess of $50,000.00, Tenant shall
give such reasonable security as may be demanded by Landlord to insure ultimate
payment of the same and to prevent any sale or forfeiture of the affected Leased
Property or the Rent by reason of such nonpayment or noncompliance; provided,
however, the provisions of this section shall not be construed to permit Tenant
to contest the payment

                                      -20-
<PAGE>
of Rent (except as to contests concerning the method of computation or the basis
of levy of any Imposition or the basis for the assertion of any other claim) or
any other sums payable by Tenant to Landlord hereunder; [vi] in the case of an
insurance requirement, the coverage required by Article 4 shall be maintained;
and [vii] if such contest be finally resolved against Landlord or Tenant, Tenant
shall, as Additional Rent due hereunder, promptly pay the amount required to be
paid, together with all interest and penalties accrued thereon, or comply with
the applicable Legal Requirement or insurance requirement. Landlord, at Tenant's
expense, shall execute and deliver to Tenant such authorizations and other
documents as may be reasonably required in any such contest, and, if reasonably
requested by Tenant or if Landlord so desires, Landlord shall join as a party
therein. Tenant hereby agrees to indemnify and save Landlord harmless from and
against any liability, cost or expense of any kind that may be imposed upon
Landlord in connection with any such contest and any loss resulting therefrom.

                              ARTICLE 4: INSURANCE

                  4.1 Property Insurance. At Tenant's expense, Tenant shall
maintain in full force and effect a property insurance policy or policies
insuring the Leased Property against the following:

                           (a) Loss or damage commonly covered by a "Special
Form" policy insuring against physical loss or damage to the Improvements and
Personal Property, including, but not limited to, risk of loss from fire and
other hazards, collapse, transit coverage, vandalism, malicious mischief, theft,
earthquake (if the Leased Property is in earthquake zone 1 or 2) and sinkholes
(if usually recommended in the area of the Leased Property). The policy shall be
in the amount of the full replacement value (as defined in Section 4.5) of the
Improvements and Personal Property and shall contain a deductible amount
acceptable to Landlord. Landlord shall be named as an additional insured. The
policy shall include a stipulated value endorsement or agreed amount endorsement
and endorsements for contingent liability for operations of building laws,
demolition costs, and increased cost of construction.

                           (b) If applicable, loss or damage by explosion of
steam boilers, pressure vessels, or similar apparatus, now or hereafter
installed on the Leased Property, in commercially reasonable amounts acceptable
to Landlord.

                                      -21-
<PAGE>
                           (c) Consequential loss of rents and income coverage
insuring against all "Special Form" risk of physical loss or damage with limits
and deductible amounts acceptable to Landlord covering risk of loss during the
first nine months of reconstruction, and containing an endorsement for extended
period of indemnity of at least 160 days, and shall be written with a stipulated
amount of coverage if available at a reasonable premium.

                           (d) If the Leased Property is located, in whole or in
part, in a federally designated 100-year flood plain area, flood insurance for
the Improvements in an amount equal to the lesser of [i] the full replacement
value of the Improvements; or [ii] the maximum amount of insurance available for
the Improvements under all federal and private flood insurance programs.

                           (e) Loss or damage caused by the breakage of plate
glass in commercially reasonable amounts acceptable to Landlord.

                           (f) Loss or damage commonly covered by blanket crime
insurance, including employee dishonesty, loss of money orders or paper
currency, depositor's forgery, and loss of property of patients accepted by
Tenant for safekeeping, in commercially reasonable amounts acceptable to
Landlord.

                 4.2 Liability Insurance. At Tenant's expense, Tenant shall
maintain liability insurance against the following:

                           (a) Claims for personal injury or property damage
commonly covered by comprehensive general liability insurance with endorsements
for incidental malpractice, contractual, personal injury, owner's protective
liability, voluntary medical payments, products and completed operations, broad
form property damage, and extended bodily injury, with commercially reasonable
amounts for bodily injury, property damage, and voluntary medical payments
acceptable to Landlord, but with a combined single limit of not less than
$1,000,000.00 per occurrence and $3,000,000.00 in the aggregate per Facility.

                           (b) Claims for personal injury and property damage
commonly covered by comprehensive automobile liability insurance, covering all
owned and non-owned automobiles, with commercially reasonable amounts for bodily
injury, property damage, and for automobile medical payments acceptable to
Landlord, but with a combined single limit of not less than $1,000,000.00 per
occurrence.

                                      -22-
<PAGE>

                           (c) Claims for personal injury commonly covered by
medical malpractice insurance in commercially reasonable amounts acceptable to
Landlord.

                           (d) Claims commonly covered by workers' compensation
insurance for all persons employed by Tenant on the Leased Property. Such
workers' compensation insurance shall be in accordance with the requirements of
all applicable local, state, and federal law.

                  4.3 Builder's Risk Insurance. In connection with any
construction, Tenant shall maintain in full force and effect a builder's
completed value risk policy ("Builder's Risk Policy") of insurance in a
nonreporting form insuring against all "Special Form" risk of physical loss or
damage to the Improvements, including, but not limited to, risk of loss from
fire and other hazards, collapse, transit coverage, vandalism, malicious
mischief, theft, earthquake (if any portion of the Leased Property is in
earthquake zone 1 or 2) and sinkholes (if usually recommended in the area of the
Leased Property). The Builder's Risk Policy shall include endorsements providing
coverage for building materials and supplies and temporary premises. The
Builder's Risk Policy shall be in the amount of the full replacement value of
the Improvements and shall contain a deductible amount acceptable to Landlord.
Landlord shall be named as an additional insured. The Builder's Risk Policy
shall include an endorsement permitting initial occupancy.

                 4.4 Insurance Requirements. The following provisions shall
apply to all insurance coverages required hereunder:

                           (a) The form and substance of all policies shall be
subject to the approval of Landlord, which approval will not be unreasonably
withheld.

                           (b) The carriers of all policies shall have a Best's
Rating of "A" or better and a Best's Financial Category of XII or higher and
shall be authorized to do insurance business in the State.

                           (c) Tenant shall be the "named insured" and Landlord
shall be an "additional insured" on each policy.

                           (d) Tenant shall deliver to Landlord certificates or
policies showing the required coverages and endorsements. The policies of
insurance shall provide that the policy may not be cancelled or not renewed, and
no material

                                      -23-
<PAGE>
change or reduction in coverage may be made, without at least 30 days' prior
written notice to Landlord.

                           (e) The policies shall contain a severability of
interest and/or cross-liability endorsement, provide that the acts or omissions
of Tenant or Landlord will not invalidate the coverage of the other party, and
provide that Landlord shall not be responsible for payment of premiums.

                           (f) All loss adjustment shall require the written
consent of Landlord and Tenant, as their interests may appear.

                           (g) At least 10 days prior to the expiration of each
insurance policy, Tenant shall deliver to Landlord a certificate showing renewal
of such policy and payment of the annual premium therefor and a current
Certificate of Compliance (in the form delivered at the time of Closing)
completed and signed by Tenant's insurance agent.

                 4.5 Replacement Value. The term "full replacement value" means
the actual replacement cost thereof from time to time, including increased cost
of construction endorsement, with no reductions or deductions, subject to a
sublimit of $1,000,000.00. Tenant shall, in connection with each annual policy
renewal, deliver to Landlord a redetermination of the full replacement value by
the insurer or an endorsement indicating that the Leased Property is insured for
its full replacement value. If Tenant makes any Permitted Alterations (as
hereinafter defined) to the Leased Property, Landlord may have such full
replacement value redetermined at any time after such Permitted Alterations are
made, regardless of when the full replacement value was last determined.

                  4.6 Blanket Policy. Notwithstanding anything to the contrary
contained in this Article 4, Tenant may [i] carry the insurance required by this
Article under a blanket policy of insurance, provided that the coverage afforded
Tenant will not be reduced or diminished or otherwise be different from that
which would exist under a separate policy meeting all of the requirements of
this Lease; and [ii] Tenant may meet the limits of liability for insurance by
maintaining a portion thereof as "excess" insurance under an umbrella policy.

                  4.7 No Separate Insurance. Tenant shall not take out separate
insurance concurrent in form or contributing in the event of loss with that
required in this Article, or increase the amounts of any then existing
insurance, by securing an

                                      -24-
<PAGE>
additional policy or additional policies, unless all parties having an insurable
interest in the subject matter of the insurance, including Landlord and any
mortgagees, are included therein as additional insureds or loss payees, the loss
is payable under said insurance in the same manner as losses are payable under
this Lease, and such additional insurance is not prohibited by the existing
policies of insurance. Tenant shall immediately notify Landlord of the taking
out of such separate insurance or the increasing of any of the amounts of the
existing insurance by securing an additional policy or additional policies.

                  4.8 Waiver of Subrogation. Each party hereto hereby waives any
and every claim which arises or may arise in its favor and against the other
party hereto during the Term for any and all loss of, or damage to, any of its
property located within or upon, or constituting a part of, the Leased Property,
which loss or damage is covered by valid and collectible insurance policies, to
the extent that such loss or damage is recoverable under such policies. Said
mutual waiver shall be in addition to, and not in limitation or derogation of,
any other waiver or release contained in this Lease with respect to any loss or
damage to property of the parties hereto. Inasmuch as the said waivers will
preclude the assignment of any aforesaid claim by way of subrogation (or
otherwise) to an insurance company (or any other person), each party hereto
agrees immediately to give each insurance company which has issued to it
policies of insurance, written notice of the terms of said mutual waivers, and
to have such insurance policies properly endorsed, if necessary, to prevent the
invalidation of said insurance coverage by reason of said waivers, so long as
such endorsement is available at a reasonable cost.

                  4.9 Mortgages. The following provisions shall apply if
Landlord now or hereafter places a mortgage on the Leased Property or any part
thereof: [i] Tenant shall obtain a standard form of lender's loss payable clause
insuring the interest of the mortgagee; [ii] Tenant shall deliver evidence of
insurance to such mortgagee; [iii] loss adjustment shall require the consent of
the mortgagee; and [iv] Tenant shall provide such other information and
documents as may be required by the mortgagee.

                 4.10 Escrows. After an Event of Default occurs hereunder,
Tenant shall make such periodic payments of insurance premiums in accordance
with Landlord's requirements after receipt of notice thereof from Landlord.



                                      -25-
<PAGE>
                              ARTICLE 5: INDEMNITY

            5.1 Tenant's Indemnification. Tenant hereby indemnifies and agrees
to hold harmless Landlord, any successors or assigns of Landlord, and Landlord's
and such successor's and assign's directors, officers, employees and agents from
and against any and all demands, claims, causes of action, fines, penalties,
damages (including consequential damages), losses, liabilities (including strict
liability), judgments, and expenses (including, without limitation, reasonable
attorneys' fees, court costs, and the costs set forth in Section 8.7) incurred
in connection with or arising from: [i] the use or occupancy of the Leased
Property by Tenant or any persons claiming under Tenant; [ii] any activity,
work, or thing done, or permitted or suffered by Tenant in or about the Leased
Property; [iii] any acts, omissions, or negligence of Tenant or any person
claiming under Tenant, or the contractors, agents, employees, invitees, or
visitors of Tenant or any such person; [iv] any breach, violation, or
nonperformance by Tenant or any person claiming under Tenant or the employees,
agents, contractors, invitees, or visitors of Tenant or of any such person, of
any term, covenant, or provision of this Lease or any law, ordinance, or
governmental requirement of any kind, including, without limitation, any failure
to comply with any applicable requirements under the ADA; [v] any injury or
damage to the person, property or business of Tenant, its employees, agents,
contractors, invitees, visitors, or any other person entering upon the Leased
Property; and [vi] any construction, alterations, changes or demolition of the
Facility performed by or contracted for by Tenant or its employees, agents or
contractors, provided, however, in no event shall Landlord be indemnified or
held harmless for items listed in subsections [i] through [vi] if the claim or
loss has resulted from the grossly negligent or willful acts of Landlord, its
employees and agents. If any action or proceeding is brought against Landlord,
its employees, or agents by reason of any such claim, Tenant, upon notice from
Landlord, will defend the claim at Tenant's expense with counsel reasonably
satisfactory to Landlord. All amounts payable to Landlord under this section
shall be payable on written demand and any such amounts which are not paid
within 10 days after demand therefor by Landlord shall bear interest at the
Overdue Rate. In case any action, suit or proceeding is brought against Tenant
by reason of any such occurrence, Tenant shall use its commercially reasonable
best efforts to defend such action, suit or proceeding.



                                     - 26 -
<PAGE>
            5.1.1 Notice of Claim. Landlord shall notify Tenant in writing of
any claim or action brought against Landlord in which indemnity may be sought
against Tenant pursuant to this section. Such notice shall be given in
sufficient time to allow Tenant to defend or participate in such claim or
action, but the failure to give such notice as soon as practicable but in any
event in sufficient time shall not constitute a defense hereunder nor in any way
impair the obligations of Tenant under this section unless the failure to give
such notice precludes Tenant's defense of any such action.

            5.1.2 Survival of Covenants. The covenants of Tenant contained in
this section shall remain in full force and effect after the termination of this
Lease until the expiration of the period stated in the applicable statute of
limitations during which a claim or cause of action may be brought and payment
in full or the satisfaction of such claim or cause of action and of all expenses
and charges incurred by Landlord relating to the enforcement of the provisions
herein specified.

            5.1.3 Reimbursement of Expenses. Unless prohibited by law, Tenant
hereby agrees to pay to Landlord all of the reasonable fees, charges and
reasonable out-of-pocket expenses related to the Facility and required hereby,
or incurred by Landlord in enforcing the provisions of this Lease.

            5.2 Environmental Indemnity; Audits. Tenant hereby indemnifies and
agrees to hold harmless Landlord, any successors to Landlord's interest in this
Lease, and Landlord's and such successors' directors, officers, employees and
agents from and against any losses, claims, damages (including consequential
damages), penalties, fines, liabilities (including strict liability), costs
(including cleanup and recovery costs), and expenses (including expenses of
litigation and reasonable consultants' and attorneys' fees) incurred by Landlord
or any other indemnitee or assessed against any portion of the Leased Property
by virtue of any claim or lien by any governmental or quasi-governmental unit,
body, or agency, or any third party, for cleanup costs or other costs pursuant
to any Environmental Law. Tenant's indemnity shall survive the termination of
this Lease. Provided, however, Tenant shall have no indemnity obligation with
respect to [i] Hazardous Materials first introduced to the Leased Property
subsequent to the date that Tenant's occupancy of the Leased Property shall have
fully terminated; or [ii] Hazardous Materials introduced to the Leased Property
by Landlord, its agent, employees, successors or assigns. If at any time during
the Term of this Lease any governmental authority notifies Landlord or Tenant of
a




                                     - 27 -
<PAGE>
violation of any Environmental Law or Landlord reasonably believes that a
Facility may violate any Environmental Law, Landlord may require one or more
environmental audits of such portion of the Leased Property, in such form, scope
and substance as specified by Landlord, at Tenant's expense. Tenant shall,
within 30 days after receipt of an invoice from Landlord, reimburse Landlord for
all costs and expenses incurred in reviewing any environmental audit, including,
without limitation, reasonable attorneys' fees and costs.

            5.3 Limitation of Landlord's Liability. Except for the grossly
negligent or willful acts or omissions of Landlord, its employees or agents,
Landlord, its agents, and employees, will not be liable for any loss, injury,
death, or damage (including consequential damages) to persons, property, or
Tenant's business occasioned by theft, act of God, public enemy, injunction,
riot, strike, insurrection, war, court order, requisition, order of governmental
body or authority, fire, explosion, falling objects, steam, water, rain or snow,
leak or flow of water (including water from the elevator system), rain or snow
from the Leased Property or into the Leased Property or from the roof, street,
subsurface or from any other place, or by dampness or from the breakage,
leakage, obstruction, or other defects of the pipes, sprinklers, wires,
appliances, plumbing, air conditioning, or lighting fixtures of the Leased
Property, or from construction, repair, or alteration of the Leased Property or
from any acts or omissions of any other occupant or visitor of the Leased
Property, or from any other cause beyond Landlord's control.

                  ARTICLE 6: USE AND ACCEPTANCE OF PREMISES

            6.1 Use of Leased Property. Tenant shall use and occupy the Leased
Property exclusively for the Facility Uses specified for each Facility and for
all lawful and licensed ancillary uses, and for no other purpose without the
prior written consent of Landlord. Tenant shall obtain and maintain (or cause to
be obtained and maintained) all approvals, licenses, and consents needed to use
and operate the Leased Property as herein permitted. Tenant shall deliver to
Landlord complete copies of surveys, examinations, certification and licensure
inspections, compliance certificates, and other similar reports issued to Tenant
by any governmental agency within 10 days after Tenant's receipt of each item.

            6.2 Acceptance of Leased Property. Tenant acknowledges that [i]
Tenant and its agents have had an opportunity to inspect the Leased Property;
[ii] Tenant has




                                     - 28 -
<PAGE>
found the Leased Property fit for Tenant's use; [iii] Landlord
will deliver the Leased Property to Tenant in "as-is" condition; [iv] Landlord
is not obligated to make any improvements or repairs to the Leased Property; and
[v] the roof, walls, foundation, heating, ventilating, air conditioning,
telephone, sewer, electrical, mechanical, elevator, utility, plumbing, and other
portions of the Leased Property are in good working order. Tenant waives any
claim or action against Landlord with respect to the condition of the Leased
Property. 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, OR AS
TO QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING
AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT.

            6.3 Conditions of Use and Occupancy. Tenant agrees that during the
Term it shall use and keep the Leased Property in a careful, safe and proper
manner; not commit or suffer waste thereon; not use or occupy the Leased
Property for any unlawful purposes; not use or occupy the Leased Property or
permit the same to be used or occupied, for any purpose or business deemed
extrahazardous on account of fire or otherwise; keep the Leased Property in such
repair and condition as may be required by the Board of Health, or other city,
state or federal authorities, free of all cost to Landlord; not permit any acts
to be done which will cause the cancellation, invalidation, or suspension of any
insurance policy; and permit Landlord and its agents to enter upon the Leased
Property at all reasonable times to examine the condition thereof. Landlord
shall have the right to have an annual inspection of the Leased Property
performed and Tenant shall pay an inspection fee of $250.00 per Facility plus
Landlord's reasonable out-of-pocket expenses within 30 days after receipt of
Landlord's invoice.

                 ARTICLE 7: MAINTENANCE AND MECHANICS' LIENS

            7.1 Maintenance. Tenant shall maintain, repair, and replace the
Leased Property, including, without limitation, all structural and nonstructural
repairs and replacements to the roof, foundations, exterior walls, HVAC systems,
equipment, parking areas, sidewalks, water, sewer and gas connections, pipes and
mains. Tenant shall pay, as Additional Rent, the full cost of maintenance,
repairs, and replacements. Tenant shall maintain all drives, sidewalks, parking
areas, and lawns on or about the Leased Property in a clean and orderly
condition, free of accumulations of dirt, rubbish, snow and ice. Tenant shall at
all times maintain, operate and otherwise manage the Leased




                                     - 29 -
<PAGE>
Property on a basis and in a manner consistent with the standards of the highest
quality competing facilities in the market areas served by the Leased Property.
All repairs shall, to the extent reasonably achievable, be at least equivalent
in quality to the original work or the property to be repaired shall be
replaced. Tenant will not take or omit to take any action the taking or omission
of which might materially impair the value or the usefulness of the Leased
Property or any parts thereof for the Facility Uses. Tenant shall permit
Landlord to inspect the Leased Property at all reasonable times, and if Landlord
gives Tenant notice of material and chronic maintenance problem areas, Tenant
shall deliver to Landlord a plan of correction within 10 Business Days after
receipt of the notice. Tenant shall diligently pursue correction of all problem
areas within 60 days after receipt of the notice and, upon expiration of the
60-day period, shall deliver evidence of completion to Landlord or, if
completion is not feasible within such 60-day period, an interim report
evidencing Tenant's diligent progress towards completion and, at the end of an
additional 60-day period, evidence of satisfactory completion. Upon completion,
Landlord shall have the right to re-inspect the Facility and Tenant shall pay a
re-inspection fee of $150.00 per Facility inspected plus Landlord's reasonable
out-of-pocket expenses within 30 days after receipt of Landlord's invoice. At
each inspection of the Leased Property by Landlord, the Facility employee in
charge of maintenance shall be available to tour the Facility with Landlord and
answer questions.

            7.2 Required Alterations. Tenant shall, at Tenant's sole cost and
expense, make any additions, changes, improvements or alterations to the Leased
Property, including structural alterations, which may be required by any
governmental authorities, including those required to maintain licensure or
certification under the Medicare and Medicaid programs (if so certified),
whether such changes are required by Tenant's use, changes in the law,
ordinances, or governmental regulations, defects existing as of the date of this
Lease, or any other cause whatever. All such additions, changes, improvements or
alterations shall be deemed to be Permitted Alterations and shall comply with
all laws requiring such alterations and with the provisions of Section 16.4.

            7.3 Mechanic's Liens. Tenant shall have no authority to permit or
create a lien against Landlord's interest in the Leased Property, and Tenant
shall post notices or file such documents as may be required to protect
Landlord's interest in the Leased Property against liens. Tenant hereby agrees
to




                                     - 30 -
<PAGE>
defend, indemnify, and hold Landlord harmless from and against any mechanic's
liens against the Leased Property by reason of work, labor, services or
materials supplied or claimed to have been supplied on or to the Leased
Property. Subject to Tenant's right to contest such lien pursuant to Section 3.7
of this Lease, Tenant shall remove, bond-off, or otherwise obtain the release of
any mechanic's lien filed against the Leased Property at Landlord's request
within 20 days after the filing thereof. Tenant shall pay all expenses in
connection therewith, including, without limitation, damages, interest, court
costs and reasonable attorneys' fees.

            7.4 Replacements of Fixtures and Landlord's Personal Property.
Tenant shall not remove Fixtures and Landlord's Personal Property from the
Leased Property except to replace the Fixtures and Landlord's Personal Property
by other similar items of equal quality and value. Items being replaced by
Tenant may be removed and shall become the property of Tenant and items
replacing the same shall be and remain the property of Landlord. Tenant shall
execute, upon written request from Landlord, any and all documents reasonably
necessary to evidence Landlord's ownership of Landlord's Personal Property and
replacements therefor. Tenant may finance replacements for the Fixtures and
Landlord's Personal Property by equipment lease or by a security agreement and
financing statement if [i] Landlord has consented to the terms and conditions of
the equipment lease or security agreement which consent shall not be
unreasonably withheld, conditioned, or delayed; and [ii] for Fixtures and
Personal Property [a] having a cost in excess of $75,000.00 or [b] constituting
any part of the Start-Up Property, the equipment lessor or lender has entered
into a non-disturbance agreement with Landlord upon terms and conditions
reasonably acceptable to Landlord, including, without limitation, the following:
[a] Landlord shall have the right (but not the obligation) to assume such
security agreement or equipment lease upon the occurrence of an Event of Default
under this Lease; [b] the equipment lessor or lender shall notify Landlord of
any default by Tenant under the equipment lease or security agreement and give
Landlord a reasonable opportunity to cure such default; and [c] Landlord shall
have the right to assign its rights under the equipment lease, security
agreement, or non-disturbance agreement. Tenant shall, within 30 days after
receipt of an invoice from Landlord, reimburse Landlord for all reasonable costs
and expenses incurred in reviewing and approving the equipment lease, security
agreement, and non-disturbance agreement, including, without limitation,
reasonable attorneys' fees and costs. Tenant shall use its




                                     - 31 -
<PAGE>
commercially reasonable best efforts to obtain the provisions listed in this
section from an equipment lessor, and Landlord shall be commercially reasonable
in negotiating such non-disturbance agreement.

                        ARTICLE 8: DEFAULTS AND REMEDIES

            8.1 Events of Default. The occurrence of any one or more of the
following shall be an event of default ("Event of Default") hereunder without
any advance notice to Tenant unless specified herein:

                  (a) Tenant fails to pay in full any installment of Base Rent,
any Additional Rent or any other monetary obligation payable by Tenant under
this Lease (including the Option Price), within 10 days after such payment is
due.

                  (b) Tenant, Manager or Company (where applicable) fails to
comply with any covenant set forth in Article 14, Section 15.6, Section 15.8 or
Article 20 of this Lease.

                  (c) Tenant or Manager fails to comply with the cure provisions
set forth in Sections 15.7.2.(b) and 15.7.3(b).

                  (d) Tenant fails to observe and perform any other covenant,
condition or agreement under this Lease to be performed by Tenant and [i] such
failure continues for a period of 30 days after written notice thereof is given
to Tenant by Landlord; or [ii] if, by reason of the nature of such default it
cannot be remedied within 30 days, Tenant fails to proceed with diligence
reasonably satisfactory to Landlord after receipt of the notice to cure the
default or, in any event, fails to cure such default within 75 days after
receipt of the notice. The foregoing notice and cure provisions do not apply to
any Event of Default otherwise specifically described in any other subsection of
Section 8.1.

                  (e) Except as set forth in Section 14.5, Tenant or Manager
abandons or vacates any Facility Property or any material part thereof, ceases
to operate any Facility, ceases to do business or ceases to exist for any reason
for five or more days and Tenant or Manager has not implemented the necessary
steps to cure.

                  (f) [i] The filing by Tenant, Manager or Company of a petition
under the Bankruptcy Code or the commencement of a bankruptcy or similar
proceeding by Tenant, Manager or Company; [ii] the failure by Tenant, Manager or
Company within 60 days to




                                     - 32 -
<PAGE>
dismiss an involuntary bankruptcy petition or other commencement of a
bankruptcy, reorganization or similar proceeding against such party, or to lift
or stay any execution, garnishment or attachment of such consequence as will
impair its ability to carry on its operation at the Leased Property; [iii] the
entry of an order for relief under the Bankruptcy Code in respect of Tenant,
Manager or Company; [iv] any assignment by Tenant, Manager or Company for the
benefit of its creditors; [v] the entry by Tenant, Manager or Company into an
agreement of composition with its creditors; [vi] the approval by a court of
competent jurisdiction of a petition applicable to Tenant, Manager or Company in
any proceeding for its reorganization instituted under the provisions of any
state or federal bankruptcy, insolvency, or similar laws; [vii] appointment by
final order, judgment, or decree of a court of competent jurisdiction of a
receiver of a whole or any substantial part of the properties of Tenant, Manager
or Company (provided such receiver shall not have been removed or discharged
within 60 days of the date of his qualification).

                  (g) [i] Any receiver, administrator, custodian or other person
takes possession or control of any of the Leased Property and continues in
possession for 60 days; [ii] any writ against any of the Leased Property is not
released within 60 days; [iii] any final nonappealable judgment is rendered or
proceedings are instituted against the Leased Property, Tenant or Manager which
affect the Leased Property or any part thereof, which is not dismissed for 60
days (except as otherwise provided in this section); [iv] all or a substantial
part of the assets of Tenant, Manager or Company are attached, seized, subjected
to a writ or distress warrant, or are levied upon, or come into the possession
of any receiver, trustee, custodian, or assignee for the benefit of creditors;
[v] Tenant, Manager or Company is enjoined, restrained, or in any way prevented
by court order, or any proceeding is filed or commenced seeking to enjoin,
restrain or in any way prevent Tenant, Manager or Company from conducting all or
a substantial part of its business or affairs; or [vi] except as otherwise
permitted hereunder, a final notice of lien, levy or assessment is filed of
record with respect to all or any part of the Leased Property or any property of
Tenant or Manager located at the Leased Property and is not dismissed,
discharged, or bonded-off within 30 days.

                  (h) Any representation or warranty made by Tenant, Manager or
Company in this Lease or any other document executed in connection with this
Lease, any guaranty of or other security for this Lease, or any report,
certificate,




                                     - 33 -
<PAGE>
application, financial statement or other instrument furnished by
Tenant, Manager or Company pursuant hereto or thereto shall prove to be false,
misleading or incorrect in any material respect as of the date made and has a
material adverse effect on the financial condition of Tenant, Manager or Company
or the operations of the Leased Property.

                  (i) Tenant, any Guarantor, or any Affiliate defaults on any
BCC Obligation, including, without limitation, any lease with Landlord or any
Landlord Affiliate, or the occurrence of a default under any Material
Obligation, and any applicable grace or cure period with respect to default
under such indebtedness or obligation expires without such default having been
cured. This provision applies to all such indebtedness, obligations and
agreements as they may be amended, modified, extended, or renewed from time to
time.

                  (j) Any guarantor of this Lease files a petition in
bankruptcy, or is adjudicated insolvent under the Bankruptcy Code or any other
insolvency law, or fails to comply with any covenant or requirement of such
guarantor set forth in this Lease or in the guaranty of such guarantor, and in
the case of the death or incompetency of an individual guarantor only, Tenant
fails within 30 days to deliver to Landlord a substitute guaranty or other
collateral reasonably satisfactory to Landlord.

                  (k) The license for the Facility or any other Government
Authorization is cancelled, suspended, reduced to provisional or temporary, or
otherwise invalidated, or license revocation or decertification proceedings are
commenced against Tenant or Manager, or any reduction occurs in the number of
licensed beds or units at the Facility in excess of 5% of the licensed beds or
units at any one Facility, or an admissions ban is issued for the Facility.

            8.2 Remedies. Upon the occurrence of an Event of Default under this
Lease or any Lease Document, and at any time thereafter until Landlord waives
the default in writing or acknowledges cure of the default in writing, at
Landlord's option, without declaration, notice of nonperformance, protest,
notice of protest, notice of default, notice to quit or any other notice or
demand of any kind, Landlord may exercise any and all rights and remedies
provided in this Lease or any Lease Document, including, without limitation, any
one or more of the following remedies:

                  (a) Landlord may re-enter and take possession of the Leased
Property or any portion thereof without terminating




                                     - 34 -
<PAGE>
this Lease, and lease such Leased Property for the account of Tenant, holding
Tenant liable for all costs of Landlord in reletting such Leased Property and
for the difference in the amount received by such reletting and the amounts
payable by Tenant under the Lease.

                  (b) Landlord may terminate this Lease with respect to all or
any portion of the Leased Property, exclude Tenant from possession of such
Leased Property and use efforts to lease such Leased Property to others, holding
Tenant liable for the difference in the amounts received from such reletting and
the amounts payable by Tenant under this Lease.

                  (c) Landlord may re-enter the Leased Property or any portion
thereof and have, repossess and enjoy such Leased Property as if this Lease had
not been made, and in such event, Tenant and its successors and assigns shall
remain liable for any contingent or unliquidated obligations or sums owing at
the time of such repossession.

                  (d) Landlord may have access to and inspect, examine and make
copies of the books and records and any and all accounts, data and income tax
and other returns of Tenant insofar as they pertain to the Leased Property.

                  (e) Landlord may accelerate all of the unpaid Rent hereunder
so that the aggregate Rent for the unexpired term of this Lease becomes
immediately due and payable, subject to Landlord's obligations under law to
leave Tenant in possession of the Leased Property.

                  (f) Landlord may take whatever action at law or in equity as
may appear necessary or desirable to collect the Rent and other amounts payable
under this Lease then due and thereafter to become due, or to enforce
performance and observance of any obligations, agreements or covenants of Tenant
under this Lease.

                  (g) With respect to the Collateral or any portion thereof and
Secured Parties' security interest therein, Secured Parties may exercise all of
their rights as secured parties under Article 9 of the Uniform Commercial Code
as adopted in the State. Secured Parties may sell the Collateral by public or
private sale upon five days notice to Tenant or Manager. Tenant and Manager
agree that a commercially reasonable manner of disposition of the Collateral
shall include, without limitation and at the option of Secured




                                     - 35 -
<PAGE>
Parties, a sale of the Collateral, in whole or in part, concurrently with the
sale of the Leased Property.

                  (h) Secured Parties may obtain control over and collect the
Receivables and apply the proceeds of the collections to satisfaction of the BCC
Obligations unless prohibited by law. Tenant and Manager appoint HCRI or its
designee as attorney for Tenant and Manager with powers [i] to receive, to
endorse, to sign and/or to deliver, in Tenant's or Manager's name or Secured
Parties' name, any and all checks, drafts, and other instruments for the payment
of money relating to the Receivables, and to waive demand, presentment, notice
of dishonor, protest, and any other notice with respect to any such instrument;
[ii] to sign Tenant's or Manager's name on any invoice or bill of lading
relating to any Receivable, drafts against account debtors, assignments and
verifications of Receivables, and notices to account debtors; [iii] to send
verifications of Receivables to any account debtor; and [iv] to do all other
acts and things necessary to carry out this Lease. Except for willful acts or
omissions, Secured Parties shall not be liable for any omissions, commissions,
errors of judgment, or mistakes in fact or law made in the exercise of any such
powers. At Secured Parties' option, Tenant and Manager shall [i] provide Secured
Parties a full accounting of all amounts received on account of Receivables with
such frequency and in such form as Secured Parties may require, either with or
without applying all collections on Receivables in payment of the BCC
Obligations or [ii] deliver to Secured Parties on the day of receipt all such
collections in the form received and duly endorsed by Tenant or Manager, as
applicable. At Secured Parties' request, Tenant and Manager shall institute any
action or enter into any settlement determined by Secured Parties to be
necessary to obtain recovery or redress from any account debtor in default of
Receivables. Secured Parties may give notice of their security interest in the
Receivables to any or all account debtors with instructions to make all payments
on Receivables directly to Secured Parties, thereby terminating Tenant's and
Manager's authority to collect Receivables. After terminating Tenant's and
Manager's authority to enforce or collect Receivables, Secured Parties shall
have the right to take possession of any or all Receivables and records thereof
and are hereby authorized to do so, and only Secured Parties shall have the
right to collect and enforce the Receivables. Prior to the occurrence of an
Event of Default, at Tenant's and Manager's cost and expense, but on behalf of
Secured Parties and for Secured Parties' account, Tenant and Manager shall
collect or otherwise enforce all amounts unpaid on Receivables and hold all such
collections in trust for Secured




                                     - 36 -
<PAGE>
Parties, but Tenant and Manager may commingle such collections with Tenant's and
Manager's own funds, until Tenant's and Manager's authority to do so has been
terminated, which may be done only after an Event of Default. Notwithstanding
any other provision hereof, Secured Parties do not assume any of Tenant's or
Manager's obligations under any Receivable, and Secured Parties shall not be
responsible in any way for the performance of any of the terms and conditions
thereof by Tenant or Manager.

                  (i) Without waiving any prior or subsequent Event of Default,
Landlord may waive any Event of Default or, with or without waiving any Event of
Default, remedy any default.

                  (j) Landlord may terminate its obligation, if any, to disburse
Lease Advances.

                  (k) Landlord may enter and take possession of the Land or any
portion thereof and any one or more Facilities without terminating the Lease and
complete construction and renovation of the Improvements (or any part thereof)
and perform the obligations of Tenant under the Lease Documents. Without
limiting the generality of the foregoing and for the purposes aforesaid, Tenant
hereby appoints Landlord its lawful attorney-in-fact with full power to do any
of the following: [i] complete construction, renovation and equipping of the
Improvements in the name of Tenant; [ii] use unadvanced funds remaining under
the Lease Amount, or funds that may be reserved, escrowed, or set aside for any
purposes hereunder at any time, or to advance funds in excess of the Lease
Amount, to complete the Improvements; [iii] make changes in the plans and
specifications that shall be necessary or desirable to complete the Improvements
in substantially the manner contemplated by the plans and specifications; [iv]
retain or employ new general contractors, subcontractors, architects, engineers,
and inspectors as shall be required for said purposes; [v] pay, settle, or
compromise all existing bills and claims, which may be liens or security
interests, or to avoid such bills and claims becoming liens against the Facility
or security interest against fixtures or equipment, or as may be necessary or
desirable for the completion of the construction and equipping of the
Improvements or for the clearance of title; [vi] execute all applications and
certificates, in the name of Tenant, that may be required in connection with any
construction; [vii] do any and every act that Tenant might do in its own behalf,
to prosecute and defend all actions or proceedings in connection with the
Improvements; and [viii] to execute, deliver and file all applications and other
documents and take any and all




                                     - 37 -
<PAGE>
actions necessary to transfer the operations of the Facility to Landlord or
Landlord's designee. This power of attorney is a power coupled with an interest
and cannot be revoked.

                  (l) Landlord may apply, with or without notice to Tenant, for
the appointment of a receiver ("Receiver") for Tenant or Tenant's business or
for the Leased Property. Unless prohibited by law, such appointment may be made
either before or after termination of Tenant's possession of the Leased
Property, without notice, without regard to the solvency or insolvency of Tenant
at the time of application for such Receiver and without regard to the then
value of the Leased Property, and Landlord may be appointed as Receiver. After
the occurrence of an Event of Default, Landlord shall be entitled to appointment
of a receiver as a matter of right and without the need to make any showing
other than the existence of an Event of Default. The Receiver shall have the
power to collect the rents, income, profits and Receivables of the Leased
Property during the pendency of the receivership and all other powers which may
be necessary or are usual in such cases for the protection, possession, control,
management and operation of the Leased Property during the whole of said
proceeding. All sums of money received by the Receiver from such rents and
income, after deducting therefrom the reasonable charges and expenses paid or
incurred in connection with the collection and disbursement thereof, shall be
applied to the payment of the Rent or any other monetary obligation of Tenant
under this Lease, including, without limitation, any losses or damages incurred
by Landlord under this Lease. Tenant, if requested to do so, will consent to the
appointment of any such Receiver as aforesaid.

                  (m) Landlord may terminate any management agreement with
respect to any of the Leased Property and shall have the right to retain one or
more managers for the Leased Property, such manager(s) to serve for such term
and at such compensation as Landlord reasonably determines is necessary under
the circumstances.

            8.3 Right of Set-Off. Landlord may, and is hereby authorized by
Tenant to, at any time and from time to time without advance notice to Tenant
(any such notice being expressly waived by Tenant), set-off or recoup and apply
any and all sums held by Landlord, any indebtedness of Landlord to Tenant, and
any claims by Tenant against Landlord, against any obligations of Tenant
hereunder and against any claims by Landlord against Tenant, whether or not such
obligations or claims of Tenant are matured and whether or not Landlord has
exercised any other remedies hereunder. The rights of Landlord




                                     - 38 -
<PAGE>
under this section are in addition to any other rights and remedies Landlord may
have against Tenant.

            8.4 Performance of Tenant's Covenants. Landlord may perform any
obligation of Tenant which Tenant has failed to perform within five days after
Landlord has sent a written notice to Tenant informing it of its specific
failure. Tenant shall reimburse Landlord on demand, as Additional Rent, for any
expenditures thus incurred by Landlord and shall pay interest thereon at the
Overdue Rate (as defined in Section 8.6).

            8.5 Late Payment Charge. Tenant acknowledges that any default in the
payment of any installment of Rent payable hereunder will result in loss and
additional expense to Landlord in servicing any indebtedness of Landlord secured
by the Leased Property, handling such delinquent payments, and meeting its other
financial obligations, and because such loss and additional expense is extremely
difficult and impractical to ascertain, Tenant agrees that in the event any Rent
payable to Landlord hereunder is not paid within 10 days after the due date,
Tenant shall pay a late charge of 5% of the amount of the overdue payment as a
reasonable estimate of such loss and expenses, unless applicable law requires a
lesser charge, in which event the maximum rate permitted by such law may be
charged by Landlord. The 10-day grace period set forth in this section shall not
extend the time for payment of Rent or the period for curing any default or
constitute a waiver of such default.

            8.6 Interest. In addition to the late payment charge, any payment
not made by Tenant within 10 days after the due date shall thereafter bear
interest at the rate (the "Overdue Rate") of the greater of [i] 18.5% per annum;
or [ii] 2.5% per annum above the Lease Rate then in effect; provided, however,
that at no time will Tenant be required to pay interest at a rate higher than
the maximum legal rate and, provided further, that if a court of competent
jurisdiction determines that any other charges payable under this Lease are
deemed to be interest, the Overdue Rate shall be adjusted to ensure that the
aggregate interest payable under this Lease does not accrue at a rate in excess
of the maximum legal rate. Tenant shall not be required to pay interest upon any
late payment fees assessed pursuant to Section 8.5.

            8.7 Attorneys' Fees. Tenant shall pay all reasonable costs and
expenses incurred by Landlord in enforcing or preserving Landlord's rights under
this Lease, whether or not an Event of Default has actually occurred or has been
declared and




                                     - 39 -
<PAGE>
thereafter cured, including, without limitation, [i] the reasonable
fees, expenses, and costs of any litigation, appellate, receivership,
administrative, bankruptcy, insolvency or other similar proceeding; [ii]
reasonable attorney, paralegal, consulting and witness fees and disbursements,
whether in-house counsel or outside counsel; and [iii] the reasonable expenses,
including, without limitation, lodging, meals, and transportation, of Landlord
and its employees, agents, attorneys, and witnesses in preparing for litigation,
administrative, bankruptcy, insolvency or other similar proceedings and
attendance at hearings, depositions, and trials in connection therewith. All
such reasonable costs, expenses, charges and fees payable by Tenant shall be
deemed to be Additional Rent under this Lease.

            8.8 Escrows and Application of Payments. As security for the
performance of the BCC Obligations, Tenant hereby assigns to Landlord all its
right, title, and interest in and to all monies escrowed with Landlord under
this Lease and all deposits with utility companies, taxing authorities and
insurance companies; provided, however, that Landlord shall not exercise its
rights hereunder until an Event of Default has occurred. Any payments received
by Landlord under any provisions of this Lease during the existence or
continuance of an Event of Default shall be applied to the BCC Obligations in
the order which Landlord may determine.

            8.9 Remedies Cumulative. Except as otherwise provided herein, the
remedies of Landlord herein are cumulative to and not in lieu of any other
remedies available to Landlord at law or in equity. The use of any one remedy
shall not be taken to exclude or waive the right to use any other remedy.

            8.10 Waivers. Tenant waives [i] any notice required by statute or
other law as a condition to bringing an action for possession of, or eviction
from, any of the Leased Property, [ii] any right of re-entry or repossession,
[iii] any right to a trial by jury in any action or proceeding arising out of or
relating to this Lease, [iv] any objections, defenses, claims or rights with
respect to the exercise by Landlord of any rights or remedies, [v] any right of
redemption whether pursuant to statute, at law or in equity, [vi] all
presentments, demands for performance, notices of nonperformance, protest,
notices of protest, notices of dishonor, notices to quit and any other notice or
demand of any kind, and [vii] all notices of the existence, creation or
incurring of any obligation or advance under this Lease before or after this
date.



                                     - 40 -
<PAGE>
                        ARTICLE 9: DAMAGE AND DESTRUCTION

            9.1 Notice of Casualty. If the Leased Property shall be destroyed,
in whole or in part, or damaged by fire, flood, windstorm or other casualty in
excess of $100,000.00 (a "Casualty"), Tenant shall give written notice thereof
to Landlord within one Business Day after the occurrence of the Casualty. Within
15 days after the occurrence of the Casualty or as soon thereafter as such
information is reasonably available to Tenant, Tenant shall provide the
following information to Landlord: [i] the date of the Casualty; [ii] the nature
of the Casualty; [iii] a description of the damage or destruction caused by the
Casualty, including the type of Leased Property damaged and the area of the
Improvements damaged; [iv] a preliminary estimate of the cost to repair,
rebuild, restore or replace the Leased Property; [v] a preliminary estimate of
the schedule to complete the repair, rebuilding, restoration or replacement of
the Leased Property; [vi] a description of the anticipated property insurance
claim, including the name of the insurer, the insurance coverage limits, the
deductible amount, the expected settlement amount, and the expected settlement
date; and [vii] a description of the business interruption claim, including the
name of the insurer, the insurance coverage limits, the deductible amount, the
expected settlement amount, and the expected settlement date. Within five days
after request from Landlord, Tenant will provide Landlord with copies of all
correspondence to the insurer and any other information reasonably requested by
Landlord.

            9.2   Substantial Destruction.

            9.2.1 If any Facility's Improvements are substantially destroyed at
any time other than during the final 18 months of the Initial Term or any
Renewal Term, Tenant shall promptly rebuild and restore such Improvements in
accordance with Section 9.4 and Landlord shall make the insurance proceeds
available to Tenant for such restoration. The term "substantially destroyed"
means any casualty resulting in the loss of use of 50% or more of the licensed
beds at any one Facility.

            9.2.2 If any Facility's Improvements are substantially destroyed
during the final 18 months of the Initial Term or any Renewal Term, Landlord may
elect to terminate this Lease with respect to the entire Leased Property and
retain the insurance proceeds unless Tenant exercises its option to renew as set
forth in Section 9.2.3 or exercises its option




                                     - 41 -
<PAGE>
to purchase as set forth in Section 9.2.4. If Landlord elects to terminate,
Landlord shall give notice ("Termination Notice") of its election to terminate
this Lease within 30 days after receipt of Tenant's notice of the damage. If
Tenant does not exercise its option to renew under Section 9.2.3 or its option
to purchase under Section 9.2.4 within 15 days after delivery of the Termination
Notice, this Lease shall terminate on the 15th day after delivery of the
Termination Notice. If this Lease is so terminated, Tenant shall be liable to
Landlord for all Rent and all other obligations accrued under this Lease through
the effective date of termination.

            9.2.3 If any Facility's Improvements are substantially destroyed
during the final 18 months of the Initial Term or the first or second Renewal
Term and Landlord gives the Termination Notice, Tenant shall have the option to
renew this Lease with respect to the entire Leased Property (but not any part
thereof). Tenant shall give Landlord irrevocable notice of Tenant's election to
renew within 15 days after delivery of the Termination Notice. If Tenant elects
to renew, the Renewal Term will be in effect for the balance of the then current
Term plus a 5-year period. The Renewal Term will commence on the third day
following Landlord's receipt of Tenant's notice of renewal. All other terms of
this Lease for the Renewal Term shall be in accordance with Article 12. The
Improvements will be restored by Tenant in accordance with the provisions of
this Article 9 regarding partial destruction.

            9.2.4 If any Facility's Improvements are substantially destroyed
during the final 18 months of the Initial Term or any Renewal Term and Landlord
gives the Termination Notice, Tenant shall have the option to purchase the
entire Leased Property (but not any part thereof). Tenant shall give Landlord
notice of Tenant's election to purchase within 15 days after delivery of the
Termination Notice. If Tenant elects to purchase the Leased Property, the Option
Price will be determined in accordance with Section 13.2 and the Fair Market
Value will be determined in accordance with Section 13.3 except as otherwise
provided in this section. For purposes of determining the Fair Market Value, the
Leased Property will be valued as if it had been restored to be equal in value
to the Leased Property existing immediately prior to the occurrence of the
damage. All other terms of the option to purchase shall be in accordance with
Article 13. Landlord shall hold the insurance proceeds until the closing of the
purchase of the Leased Property and at closing shall deliver the proceeds to
Tenant.



                                     - 42 -
<PAGE>
            9.3 Partial Destruction. If any Facility's Improvements are not
substantially destroyed, then Tenant shall comply with the provisions of
Section 9.4 and Landlord shall make the insurance proceeds available to Tenant
for such restoration.

            9.4 Restoration. Tenant shall promptly repair, rebuild, or restore
the damaged Leased Property, at Tenant's expense, so as to make the Leased
Property at least equal in value to the Leased Property existing immediately
prior to such occurrence and as nearly similar to it in character as is
practicable and reasonable. Before beginning such repairs or rebuilding, or
letting any contracts in connection with such repairs or rebuilding, Tenant will
submit for Landlord's approval, which approval Landlord will not unreasonably
withhold or delay, plans and specifications meeting the requirements of
Section 16.2 for such repairs or rebuilding. Promptly after receiving Landlord's
approval of the plans and specifications and receiving the proceeds of
insurance, Tenant will begin such repairs or rebuilding and will prosecute the
repairs and rebuilding to completion with diligence, subject, however, to
strikes, lockouts, acts of God, embargoes, governmental restrictions, and other
causes beyond Tenant's reasonable control. Landlord will make available to
Tenant the net proceeds of any fire or other casualty insurance paid to Landlord
for such repair or rebuilding as the same progresses, after deduction of any
costs of collection, including attorneys' fees. Payments will be made against
properly certified vouchers of a competent architect in charge of the work and
approved by Landlord. Payments for deposits for the repairing or rebuilding or
delivery of materials to the Facility will be made upon Landlord's receipt of
evidence satisfactory to Landlord that such payments are required in advance.
Prior to commencing the repairing or rebuilding, Tenant shall deliver to
Landlord for Landlord's approval a schedule setting forth the estimated monthly
draws for such work. Landlord will contribute to such payments out of the
insurance proceeds an amount equal to the proportion that the total net amount
received by Landlord from insurers bears to the total estimated cost of the
rebuilding or repairing, multiplied by the payment by Tenant on account of such
work. Landlord may, however, withhold 10% from each payment until the work is
completed and proof has been furnished to Landlord that no lien or liability has
attached or will attach to the Leased Property or to Landlord in connection with
such repairing or rebuilding. Upon the completion of rebuilding and the
furnishing of such proof, the balance of the net proceeds of such insurance
payable to Tenant on account of such repairing or rebuilding will be paid to
Tenant. Tenant will




                                     - 43 -
<PAGE>
obtain and deliver to Landlord a temporary or final certificate of occupancy
before the damaged Leased Property is reoccupied for any purpose. Tenant shall
complete such repairs or rebuilding free and clear of mechanic's or other liens,
and in accordance with the building codes and all applicable laws, ordinances,
regulations, or orders of any state, municipal, or other public authority
affecting the repairs or rebuilding, and also in accordance with all
requirements of the insurance rating organization, or similar body. Any
remaining proceeds of insurance after such restoration will be Tenant's
property.

            9.5 Insufficient Proceeds. If the proceeds of any insurance
settlement are not sufficient to pay the costs of Tenant's repair, rebuilding or
restoration under Section 9.4 in full, Tenant shall deposit with Landlord at
Landlord's option, and within 10 days of Landlord's request, an amount
sufficient in Landlord's reasonable judgment to complete such repair, rebuilding
or restoration. Tenant shall not, by reason of the deposit or payment, be
entitled to any reimbursement from Landlord or diminution in or postponement of
the payment of the Rent.

            9.6 Not Trust Funds. Notwithstanding anything herein or at law or
equity to the contrary, none of the insurance proceeds paid to Landlord as
herein provided shall be deemed trust funds, and Landlord shall be entitled to
dispose of such proceeds as provided in this Article 9. Tenant expressly assumes
all risk of loss, including a decrease in the use, enjoyment or value, of the
Leased Property from any casualty whatsoever, whether or not insurable or
insured against.

            9.7 Landlord's Inspection. During the progress of such repairs or
rebuilding, Landlord and its architects and engineers may, from time to time,
inspect the Leased Property and will be furnished, if required by them, with
copies of all plans, shop drawings, and specifications relating to such repairs
or rebuilding. Tenant will keep all plans, shop drawings, and specifications at
the building, and Landlord and its architects and engineers may examine them at
all reasonable times. If, during such repairs or rebuilding, Landlord and its
architects and engineers determine that the repairs or rebuilding are not being
done in accordance with the approved plans and specifications, Landlord will
give prompt notice in writing to Tenant, specifying in detail the particular
deficiency, omission, or other respect in which Landlord claims such repairs or
rebuilding do not accord with the approved plans and specifications. Upon the
receipt of any such notice, Tenant will cause corrections to be made to any
deficiencies,




                                     - 44 -
<PAGE>
omissions, or such other respect. Tenant's obligations to supply insurance,
according to Article 4, will be applicable to any repairs or rebuilding under
this section.

            9.8 Landlord's Costs. Tenant shall, within 30 days after receipt of
an invoice from Landlord, pay the reasonable costs, expenses, and fees of any
architect or engineer employed by Landlord to review any plans and
specifications and to supervise and approve any construction, or for any
services rendered by such architect or engineer to Landlord as contemplated by
any of the provisions of this Lease, or for any services performed by Landlord's
attorneys in connection therewith.

            9.9   No Rent Abatement.  Rent will not abate pending the repairs
or rebuilding of the Leased Property, but shall not be offset against any
rental insurance proceeds received by Landlord.

                            ARTICLE 10: CONDEMNATION

            10.1 Total Taking. If, by exercise of the right of eminent domain or
by conveyance made in response to the threat of the exercise of such right
("Taking"), any entire Facility Property is taken, or so much of any Facility
Property is taken that the Facility Property cannot be used by Tenant for the
purposes for which it was used immediately before the Taking, then this Lease
will end with respect to such Facility Property only on the earlier of the
vesting of title to the Facility Property in the condemning authority or the
taking of possession of the Facility Property by the condemning authority. Upon
such termination, the Lease Amount shall be reduced by the Allocated Lease
Amount for such Facility Property and Rent hereunder shall be reduced
accordingly unless there is only one Facility Property subject to this Lease in
which case the Lease will terminate. All damages awarded for such Taking under
the power of eminent domain shall be the property of Landlord, whether such
damages shall be awarded as compensation for diminution in value of the
leasehold or the fee of the Facility Property.

            10.2 Partial Taking. If, after a Taking, so much of a Facility
Property remains that the Facility Property can be used for substantially the
same purposes for which it was used immediately before the Taking, then [i] this
Lease will end as to the part taken on the earlier of the vesting of title to
such Leased Property in the condemning authority or the taking of possession of
such Leased Property by the condemning authority and the Rent will be adjusted
accordingly; [ii] at its cost,




                                     - 45 -
<PAGE>
Tenant shall restore so much of the Facility Property as remains to a sound
architectural unit substantially suitable for the purposes for which it was used
immediately before the Taking, using good workmanship and new, first-class
materials; [iii] upon completion of the restoration, Landlord will pay Tenant
the lesser of the net award made to Landlord on the account of the Taking (after
deducting from the total award, attorneys', appraisers', and other fees and
costs incurred in connection with the obtaining of the award and amounts paid to
the holders of mortgages secured by the Facility Property), or Tenant's actual
out-of-pocket costs of restoring the Facility Property; and [iv] Landlord shall
be entitled to the balance of the net award and the Lease Amount shall be
reduced by the amount retained by Landlord. The restoration shall be completed
in accordance with Sections 9.4, 9.5, 9.7, 9.8 and 9.9 with such provisions
deemed to apply to condemnation instead of casualty.

            10.3 Condemnation Proceeds Not Trust Funds. Notwithstanding anything
in this Lease or at law or equity to the contrary, none of the condemnation
award paid to Landlord shall be deemed trust funds, and Landlord shall be
entitled to dispose of such proceeds as provided in this Article 10. Tenant
expressly assumes all risk of loss, including a decrease in the use, enjoyment,
or value, of the Leased Property from any Condemnation.

                          ARTICLE 11: TENANT'S PROPERTY

            11.1 Tenant's Property. Tenant shall install, place, and use on the
Leased Property such fixtures, furniture, equipment, inventory and other
personal property in addition to Landlord's Personal Property as may be required
or as Tenant may, from time to time, deem necessary or useful to operate the
Leased Property for its permitted purposes. All fixtures, furniture, equipment,
inventory, and other personal property installed, placed, or used on the Leased
Property which is owned by Tenant or leased by Tenant from third parties is
hereinafter referred to as "Tenant's Property." Those items of Tenant's Property
that were or are acquired as parts of the initial equipping of the Facility
shall be called the "Start-Up Property".

            11.2  Requirements for Tenant's Property.  Tenant shall comply
with all of the following requirements in connection with Tenant's Property:

                  (a) Tenant shall, at Tenant's sole cost and expense, maintain,
repair, and replace Tenant's Property.



                                     - 46 -
<PAGE>
                  (b) Tenant shall, at Tenant's sole cost and expense, keep
Tenant's Property insured against loss or damage by fire, vandalism and
malicious mischief, sprinkler leakage, earthquake (if any part of the Leased
Property is in earthquake zone 1 or 2), and other physical loss perils commonly
covered by fire and extended coverage, boiler and machinery, and difference in
conditions insurance in an amount not less than 90% of the then full replacement
cost thereof. Tenant shall use the proceeds from any such policy for the repair
and replacement of Tenant's Property. The insurance shall meet the requirements
of Section 4.3.

                  (c) Tenant shall pay all taxes applicable to Tenant's
Property.

                  (d) If Tenant's Property is damaged or destroyed by fire or
any other cause, Tenant shall promptly repair or replace Tenant's Property
unless Landlord elects to terminate this Lease pursuant to Section 9.2.2.

                  (e) Unless an Event of Default or any event which, with the
giving of notice or lapse of time, or both, would constitute an Event of Default
has occurred, Tenant may remove Tenant's Property from the Leased Property from
time to time provided that [i] the items removed are not required to operate the
Leased Property for the Facility Uses (unless such items are being replaced by
Tenant); and [ii] Tenant repairs any damage to the Leased Property resulting
from the removal of Tenant's Property.

                  (f) Tenant shall not, without the prior written consent of
Landlord or as otherwise provided in this Lease, remove any Tenant's Property or
Leased Property. Tenant shall, at Landlord's option, remove Tenant's Property
upon the termination or expiration of this Lease and shall repair any damage to
the Leased Property resulting from the removal of Tenant's Property. If Tenant
fails to remove Tenant's Property within 30 days after request by Landlord, then
Tenant shall be deemed to have abandoned Tenant's Property, Tenant's Property
shall become the property of Landlord, and Landlord may remove, store and
dispose of Tenant's Property. In such event, Tenant shall have no claim or right
against Landlord for such property or the value thereof regardless of the
disposition thereof by Landlord. Tenant shall pay Landlord, upon demand, all
expenses incurred by Landlord in removing, storing, and disposing of Tenant's
Property and repairing any damage caused by such removal. Tenant's obligations
hereunder shall survive the termination or expiration of this Lease.



                                     - 47 -
<PAGE>
                  (g) Tenant shall perform its obligations under any equipment
lease or security agreement for Tenant's Property. For equipment loans or leases
for equipment having an original cost in excess of $75,000.00, and for equipment
constituting any part of the Start-Up Property, Tenant shall cause such
equipment lessor or lender to enter into a non-disturbance agreement with
Landlord upon terms and conditions acceptable to Landlord, including, without
limitation, the following: [i] Landlord shall have the right (but not the
obligation) to assume such equipment lease or security agreement upon the
occurrence of an Event of Default by Tenant hereunder; [ii] such equipment
lessor or lender shall notify Landlord of any default by Tenant under the
equipment lease or security agreement and give Landlord a reasonable opportunity
to cure such default; and [iii] Landlord shall have the right to assign its
interest in the equipment lease or security agreement and non-disturbance
agreement. Tenant shall, within 30 days after receipt of an invoice from
Landlord, reimburse Landlord for all costs and expenses incurred in reviewing
and approving the equipment lease, security agreement and non-disturbance
agreement, including, without limitation, reasonable attorneys' fees and costs.

                           ARTICLE 12: RENEWAL OPTIONS

            12.1 Renewal Options. Tenant has the option to renew ("Renewal
Option") this Lease for 3 five-year renewal terms (each a "Renewal Term").
Tenant can exercise the Renewal Option only upon satisfaction of the following
conditions:

                  (a) There shall be no uncured Event of Default, or any event
which with the passage of time or giving of notice would constitute an Event of
Default, at the time Tenant exercises its Renewal Option nor on the date the
Renewal Term is to commence.

                  (b) Tenant shall give Landlord irrevocable written notice of
renewal no later than the date which is [i] 90 days prior to the expiration date
of the then current Term; or [ii] 15 days after Landlord's delivery of the
Termination Notice as set forth in Section 9.2.3.

            12.2  Effect of Renewal.  The following terms and conditions will
be applicable if Tenant renews the Lease:

                  (a) Effective Date. Except as otherwise provided in Section
9.2.3, the effective date of any Renewal Term will be the first day after the
expiration date of the then current




                                     - 48 -
<PAGE>
Term. The first day of each Renewal Term is also referred to as the Renewal
Date.

                  (b) Lease Amount. Effective as of the Renewal Date, a single
Lease Amount will be computed by summing all Lease Advance Amounts.

                  (c) Lease Rate. Effective as of the Renewal Date, a single
Lease Rate will be computed equal to the Renewal Rate. The Renewal Rate for each
Renewal Term shall be greater of [i] the sum of [a] the Lease Rate in effect
during the then current Lease Year plus [b] the Increaser Rate, or [ii] the fair
market rental lease rate for the Facility as determined according to the
provisions of this section. Landlord and Tenant shall attempt to determine the
fair market rental lease rate for the Facility by mutual agreement 90 days prior
to the expiration date for the then current Term. If the parties do not agree on
such lease rate within a 15 day period, appraisers shall be chosen as provided
in Section 13.3.2 to determine the fair market rental lease rate. The appraisers
shall be instructed to appraise the fair market value lease rate as an operating
lease rate for a health care facility of the same type as the Facility and shall
take into account the lease rate then being charged by Landlord to tenants of
comparable creditworthiness for comparable facilities. The appraised rates
submitted by the three appraisers shall be ranked from highest to lowest, the
rate (highest or lowest) which is furthest from the middle rate shall be
discarded, and the remaining two appraised rates shall be averaged to arrive at
the fair market rental lease rate.

                  (d) Base Rent. Effective as of the Renewal Date, Landlord
shall calculate Base Rent for the Renewal Term based upon the Renewal Rate and
shall issue a new Rent Schedule reflecting the Base Rent increase. Until Tenant
receives a revised Rent Schedule from Landlord, Tenant shall for each month [i]
continue to make installments of Base Rent according to the Rent Schedule in
effect on the day before the Renewal Date; and [ii] within 10 days following
Landlord's issuance of an invoice, pay the difference between the installment of
Base Rent paid to Landlord for such month and the installment of Base Rent
actually due for such month as a result of the renewal of the Lease.

                  (e) Other Terms and Conditions. Except for the modifications
set forth in this Section 12.2, all other terms and conditions of the Lease will
remain the same for the Renewal Term. The Lease Rate and Base Rent will increase
annually as set forth in Section 2.2.



                                     - 49 -
<PAGE>
            12.3 Effect of Non-Renewal or Expiration of Lease. The following
terms and conditions will be applicable if Tenant does not renew this Lease or
exercise its Option to Purchase by the expiration date for the then current
Term:

                  (a) Extension of Current Term. The current Term will be
extended (the "Extended Term") for 120 days; provided, however, that the
Extended Term will expire on such earlier date of the closing of the sale
pursuant to the Option to Purchase.

                  (b) Lease Payments. During the Extended Term, Tenant shall
continue to make monthly payments of Rent (including Base Rent) based upon the
then existing Lease Rate.

                         ARTICLE 13: OPTION TO PURCHASE

            13.1 Option to Purchase. Landlord hereby grants to Tenant an option
to purchase ("Option to Purchase") all of the Leased Property (but not any part
thereof) in accordance with the terms and conditions of this Article 13. Tenant
may exercise its Option to Purchase only by giving an irrevocable notice of
Tenant's election to purchase the Leased Property ("Purchase Notice") in
accordance with the following:

                  (a) During the Initial Term or any Renewal Term, Tenant must
give a Purchase Notice no earlier than the date which is 180 days, and no later
than the date which is 90 days, prior to the expiration date of the then current
Term of this Lease.

                  (b) If any Facility's Improvements are substantially destroyed
during the final 18 months of the Initial Term or any Renewal Term, Tenant must
give a Purchase Notice within 15 days after Landlord gives the Termination
Notice pursuant to Section 9.2.4.

                  (c) If any Facility Property is taken during the final 18
months of the Initial Term or any Renewal Term by exercise of the right of
eminent domain or by conveyance made in response to the threat of the exercise
of such right, Tenant must give a Purchase Notice within 30 days after delivery
of the notice of Landlord's intent to terminate pursuant to Section 10.1.1.

Tenant shall have no right to exercise the Option to Purchase other than in
accordance with subparagraphs (a) - (c).

            13.2 Option Price. The option price ("Option Price") will be an
amount equal to the greater of [i] the Lease Amount;




                                     - 50 -
<PAGE>
or [ii] the Fair Market Value at the time of the option exercise. In addition to
the Option Price, Tenant shall pay all closing costs and expenses in connection
with the transfer of the Leased Property to Tenant, including, but not limited
to, the following: [a] real property conveyance or transfer fees or deed stamps;
[b] title search fees, title insurance commitment fees, and title insurance
premiums; [c] survey fees; [d] environmental assessment fees; [e] recording
fees; [f] attorneys' fees of Landlord's counsel; [g] fees of any escrow agent;
and [h] all amounts, costs, expenses, charges, Additional Rent and other items
payable by Tenant to Landlord, including, but not limited to, enforcement costs
as set forth in Section 8.7.

            13.3  Fair Market Value.  The fair market value (the "Fair Market
Value") of the Leased Property shall be determined as follows.

            13.3.1 The parties shall attempt to determine the Fair Market Value
by mutual agreement within 15 days after giving the Purchase Notice. However, if
the parties do not agree on the Fair Market Value within such 15-day period, the
following provisions shall apply.

            13.3.2 Landlord and Tenant shall each give the other party notice of
the name of an acceptable appraiser 15 days after giving of the Purchase Notice.
The two appraisers will then select a third appraiser within an additional five
days. Each appraiser must demonstrate to the reasonable satisfaction of both
Landlord and Tenant that it has significant experience in appraising properties
similar to the Leased Property. Within five days after designation, each
appraiser shall submit a resume to Landlord and Tenant setting forth such
appraiser's qualifications, including education and experience with similar
properties. A notice of objections to the qualifications of any appraiser shall
be given within 10 days after receipt of such resume. If a party fails to timely
object to the qualifications of an appraiser, then the appraiser shall be
conclusively deemed satisfactory. If a party gives a timely notice of objection
to the qualifications of an appraiser, then the disqualified appraiser shall be
replaced by an appraiser selected by the qualified appraisers or, if all
appraisers are disqualified, then by an appraiser selected by a commercial
arbitrator acceptable to Landlord and Tenant.

            13.3.3 The Fair Market Value shall be determined by the appraisers
within 45 days after the selection of the appraisers as follows. Each of the
appraisers shall be




                                     - 51 -
<PAGE>
instructed to prepare an appraisal of the Leased Property in accordance with the
following instructions:

            The Leased Property is to be valued upon the three conventional
            approaches to estimate value known as the Income, Sales Comparison
            and Cost Approaches. Once the approaches are completed, the
            appraiser correlates the individual approaches into a final value
            conclusion.

The three approaches to estimate value are summarized as follows:

            Income Approach: This valuation approach recognizes that the value
            of the operating tangible and intangible assets can be represented
            by the expected economic viability of the business giving returns on
            and of the assets.

            Sales Comparison Approach: This valuation approach is based upon the
            principle of substitution. When a facility is replaceable in the
            market, the market approach assumes that value tends to be set at
            the price of acquiring an equally desirable substitute facility.
            Since healthcare market conditions change and frequently are subject
            to regulatory and financing environments, adjustments need to be
            considered. These adjustments also consider the operating
            differences such as services and demographics.

            Cost Approach:  This valuation approach estimates the
            value of the tangible assets only.  Value is
            represented by the market value of the land plus the
            depreciated reproduction cost of all improvements and
            equipment.

In general, the Income and Sales Comparison Approaches are considered the best
representation of value because they cover both tangibles and intangible assets,
consider the operating characteristics of the business and have the most
significant influence on attracting potential investors.



                                     - 52 -
<PAGE>
The appraised values submitted by the three appraisers shall be ranked from
highest value to middle value to lowest value, the appraised value (highest or
lowest) which is furthest from the middle appraised value shall be discarded,
and the remaining two appraised values shall be averaged to arrive at the Fair
Market Value.

            13.3.4 In the event of any condemnation, similar taking or threat
thereof with respect to any part of the Leased Property or any insured or
partially insured casualty loss to any part of the Leased Property after Tenant
has exercised an Option to Purchase, but before settlement, the Fair Market
Value of the Leased Property shall be redetermined as provided in this
Section 13.3 to give effect to such condemnation, taking or loss and shall take
into account all available condemnation awards and insurance proceeds.

            13.3.5 Tenant shall pay, or reimburse Landlord for, all costs and
expenses in connection with the appraisals.

            13.4 Closing. When the Option to Purchase is exercised during the
Early Option Periods, the Purchase of the Leased Property shall close on a date
agreed to by Landlord and Tenant which shall be not less than 60 days after
Landlord's receipt of the Purchase Notice provided, however, that Landlord may
extend the 60 days up to 90 days if additional time is needed to facilitate
investment of the sale proceeds. If the Option to Purchase is not exercised
during the Early Option Periods, the purchase of the Leased Property by Tenant
shall close on a date agreed to by Landlord and Tenant which shall be not less
than 60 days after Landlord's receipt of the Purchase Notice and not more than
75 days after the Fair Market Value of the Leased Property has been determined.
At the closing, Tenant shall pay the Option Price and all reasonable closing
costs in immediately available funds and Landlord shall convey title to the
Leased Property to Tenant by a transferable and recordable special warranty deed
and special warranty bill of sale.

            13.5 Failure to Close Option. If Tenant for any reason fails to
purchase the Leased Property after Tenant has given the Purchase Notice, then
Tenant shall pay Landlord all costs and expenses incurred by Landlord as a
result of the failure to close. Tenant shall continue to be obligated as lessee
hereunder for the remainder of the Term (including the Extended Term as set
forth in Section 12.3).

            13.6 Failure to Exercise Option to Purchase and Renewal Option. If
Tenant for any reason does not exercise its


                                     - 53 -
<PAGE>
Option to Purchase or Renewal Option in accordance with the terms and conditions
of this Lease before the expiration of the then current Term, Tenant shall be
deemed to have forfeited all of Tenant's rights to exercise the Option to
Purchase and Renewal Option.

            13.7 Early Option Periods. Notwithstanding any provision to the
contrary contained in this Article 13, Tenant may exercise the Option to
Purchase the Facility prior to the end of the Initial Term or any Renewal Term
as provided in Section 13.7.1-13.7.3 ("Early Option Periods"). Except
during the Early Option Periods, Tenant's Option to Purchase shall be governed
solely by Section 13.1-Section 13.6.

            13.7.1 First Early Option Period. Tenant may exercise the Option to
Purchase the Facility during the period April 1, 2002 - March 31, 2004,
inclusive ("First Early Option Period") subject to the same terms and conditions
of this Article 13 except as follows.

            [i]   The required Purchase Notice shall be given at any time during
                  the First Early Option Period.

            [ii]  The Option Price for the Facility shall be equal to the sum of
                  the Lease Amount at the time of the closing.

            13.7.2 Second Early Option Period. Tenant may exercise the Option to
Purchase the Facility during the period April 1, 2004 - March 31, 2006,
inclusive ("Second Early Option Period") subject to the same terms and
conditions of this Article 13 except as follows.

            [i]   The required Purchase Notice shall be given at any time during
                  the Second Early Option Period.

            [ii]  The Option Price for the Facility shall be equal to the sum
                  of the following:

                  [A] An amount equal to the greater of [1] the Allocated Lease
                  Amount for each Pennsylvania Facility or [2] the sum of the
                  depreciated book value of each Pennsylvania Facility as
                  calculated by Landlord according to the method shown on
                  Exhibit J ("DBV") (including straight-line lease amortization)
                  plus 33% of the amount by which the Fair Market Value of each
                  Pennsylvania Facility


                                     - 54 -
<PAGE>
                  exceeds the DBV of the respective Pennsylvania Facility; plus

                  [B] An amount equal to the greater of [1] the Allocated Lease
                  Amount for the Ohio Facility or [2] the sum of the DBV
                  (excluding straight-line lease amortization) of the Ohio
                  Facility plus 33% of the amount by which the Fair Market Value
                  of the Ohio Facility exceeds the DBV of the Ohio Facility.

            [iii] The determination of Fair Market Value using the Income
                  Approach under Section 13.3.3 shall utilize an imputed
                  management fee equal to 6% of the gross revenues of the
                  Facility being valued.

            [iv]  There shall be no uncured Event of Default under Section 8.1
                  or if an Event of Default does exist under Section 8.1, Tenant
                  agrees to satisfy the monetary obligation on or before the
                  closing of the Option to Purchase.

            13.7.3 Option Price. The calculation of the Option Price shall be
based on the Lease Amount, Allocated Lease Amounts, and DBV as of the date of
the closing.  The Fair Market Value shall be determined at the time of the
option exercise.

            13.8 Assignment. Tenant may assign the Option to Purchase the
Facility to IPC or an affiliate of IPC.  Tenant shall provide notice of any such
assignment to Landlord.

                         ARTICLE 14: NEGATIVE COVENANTS

            Until the BCC Obligations shall have been performed in full, Tenant,
Manager and Company covenant and agree that Tenant and Manager (and Company
where applicable) shall not do any of the following without the prior written
consent of Landlord:

            14.1 No Debt. Tenant and Manager shall not create, incur, assume, or
permit to exist any indebtedness other than [i] trade debt incurred in the
ordinary course of business; [ii] indebtedness to HCRI; [iii] indebtedness
relating to the Letter of Credit; and [iv] indebtedness that is secured by any
Permitted Lien.

            14.2 No Liens. Tenant and Manager shall not create, incur, or permit
to exist any lien, charge, encumbrance, easement or restriction upon the Leased
Property or any lien


                                     - 55 -
<PAGE>
upon or pledge of any interest in Tenant or Manager, except for Permitted Liens
and except for a pledge of the stock or membership interest of Tenant and
Managers in favor of IPC or an affiliate of IPC.

            14.3 No Guaranties. Tenant and Manager shall not create, incur,
assume, or permit to exist any guarantee of any loan or other indebtedness
except for the endorsement of negotiable instruments for collection in the
ordinary course of business and except for guaranties in favor of any Landlord
or any Landlord Affiliate.

            14.4 No Transfer. Except as permitted under Section 18.1 and
18.3, Tenant and Manager shall not sell, lease, sublease, mortgage, convey,
assign or otherwise transfer any legal or equitable interest in the Leased
Property or any part thereof, except for transfers made in connection with any
Permitted Lien without the prior written consent of Landlord, which consent
shall not be unreasonably withheld.

            14.5 No Dissolution. Except as specified in Exhibit M, Tenant,
Manager, or Company shall not dissolve, liquidate, merge, consolidate or
terminate its existence or sell, assign, lease, or otherwise transfer (whether
in one transaction or in a series of transactions) all or substantially all of
its assets (whether now owned or hereafter acquired). Notwithstanding the
forgoing, Company may merge with another entity provided that [i] Company is the
surviving corporation or if the Company is not the surviving corporation,
Landlord consents to the surviving corporation, which consent shall not be
unreasonably withheld; and [ii] following the merger, the surviving corporation
has a Net Worth equal to or greater than Company's Net Worth prior to the
merger.

            14.6 No Change in Management or Operation. Each Manager shall remain
the manager of the Facility as specified on Exhibit C. Each Licensed Operator
shall remain the licensed operator of the Facility as specified on Exhibit C.

            14.7 No Investments. Tenant and Manager shall not purchase or
otherwise acquire, hold, or invest in securities (whether capital stock or
instruments evidencing indebtedness) of or make loans or advances to any person,
including, without limitation, any Company, any Affiliate, or any shareholder,
member or partner of Tenant, Company or any Affiliate, except for cash balances
temporarily invested in short-term or money market securities.

                                     - 56 -
<PAGE>
            14.8 Contracts. Tenant and Manager shall not execute or modify any
material contracts or agreements with respect to the Facility except for
contracts and modifications approved by Landlord. Contracts made in the ordinary
course of business and in an amount less than $250,000.00 per Facility shall not
be considered "material" for purposes of this paragraph.

            14.9 Subordination of Payments to Affiliates. After the occurrence
of an Event of Default and until such Event of Default is cured, Tenant, Manager
and Company shall not make any payments or distributions (including, without
limitation, salary, bonuses, fees, principal, interest, dividends, liquidating
distributions, management fees, cash flow distributions or lease payments) to
Company, Manager, any Affiliate, or any shareholder, member or partner of
Tenant, Company, Manager or any Affiliate. Notwithstanding the foregoing,
Tenant, Manager, and Company shall be permitted to make the payments or
distributions specified in Exhibit M.

            14.10 Change of Location or Name. Tenant and Manager shall not
change any of the following without giving Landlord 30 days prior written
notice: [i] the location of the principal place of business or chief executive
office of Tenant or Manager, or any office where any of Tenant's or Manager's
books and records are maintained; or [ii] the name under which Tenant or Manager
conducts any of its business or operations.

                        ARTICLE 15: AFFIRMATIVE COVENANTS

            15.1 Perform Obligations. Tenant and Manager shall each perform or
cause to be performed all of its obligations under this Lease, the Government
Authorizations, the Permitted Exceptions, and all Legal Requirements. If
applicable, Tenant and each Manager shall take all necessary action to obtain
all Government Authorizations required for the operation of the Facility as soon
as possible after the Effective Date.

            15.2 Proceedings to Enjoin or Prevent Construction. If any
proceedings are filed seeking to enjoin or otherwise prevent or declare invalid
or unlawful Tenant's construction, occupancy, maintenance, or operation of the
Facility or any portion thereof, Tenant will cause such proceedings to be
vigorously contested in good faith, and in the event of an adverse ruling or
decision, prosecute all allowable appeals therefrom, and will, without limiting
the generality of the foregoing, resist the entry or seek the stay of any
temporary or permanent injunction that may be entered, and use all reasonable


                                     - 57 -
<PAGE>
commercial efforts to bring about a favorable and speedy disposition of all such
proceedings and any other proceedings.

            15.3  Documents and Information.

            15.3.1 Furnish Documents. Company and each Manager shall
periodically during the term of the Lease deliver to Landlord the Annual
Financial Statements, Periodic Financial Statements, Annual Facility Budget,
Annual Company Budget and all other documents, reports, schedules and copies
described on Exhibit E within the specified time periods. With each delivery of
Annual Financial Statements and Periodic Financial Statements (other than the
monthly Facility Financial Statement) to Landlord, Company shall also deliver to
Landlord a certificate signed by the Chief Executive Officer or Chief Accounting
Officer, general partner or managing member (as applicable) of Company, an
Annual Facility Financial Report or Quarterly Facility Financial Report, as
applicable, and a Quarterly Facility Accounts Receivable Aging Report all in the
form of Exhibit F or a comparable format. In addition, Company and each Manager
shall deliver to Landlord the applicable Annual Facility Financial Report and
the applicable Quarterly Facility Accounts Receivable Aging Report (based upon
internal financial statements) within 60 days after the end of each fiscal year.
After the occurrence of an Event of Default and receipt of Landlord's written
request, Tenant shall deliver to Landlord an updated Annual Facility Budget and
Annual Company Budget within 10 Business Days after receipt of Landlord's
request.

            15.3.2 Furnish Information. Tenant and each Manager shall [i]
promptly supply Landlord with such information concerning its financial
condition, affairs and property, as Landlord may reasonably request from time to
time hereafter; [ii] promptly notify Landlord in writing of any condition or
event that constitutes a breach or event of default of any term, condition,
warranty, representation, or provisions of this Lease or any other agreement
executed in connection with this Lease, and of any material adverse change in
its financial condition; [iii] maintain a standard and modern system of
accounting; [iv] permit Landlord or any of its agent or representatives to have
access to and to examine all of its books and records regarding the financial
condition of the Facility at any time or times hereafter during business hours
and after reasonable oral or written notice; and [v] permit Landlord to copy and
make abstracts from any and all of said books and records.

            15.3.3 Further Assurances and Information. Tenant shall, on request
of Landlord from time to time, execute,


                                     - 58 -
<PAGE>
deliver, and furnish documents as may be necessary to fully consummate the
transactions contemplated under this Lease. Within 15 days after a request from
Landlord, Tenant and each Manager shall provide to Landlord such additional
information regarding Tenant, Tenant's financial condition, Manager, each
Manager's financial condition or the Facility as Landlord, or any existing or
proposed creditor of Landlord, or any auditor or underwriter of Landlord, may
require from time to time, including, without limitation, a current Tenant's
Certificate and Facility Financial Report in the form of Exhibit F. Upon
Landlord's request, but not more than once every three years, Tenant shall
provide to Landlord, at Tenant's expense, an appraisal prepared by an MAI
appraiser setting forth the current fair market value of the Leased Property.

            15.3.4 Material Communications. Tenant and each Manager shall
transmit to Landlord, within five days after receipt thereof, any material
communication affecting a Facility, this Lease, the Legal Requirements or the
Government Authorizations, and Tenant and each Manager will promptly respond to
Landlord's inquiry with respect to such information. Tenant and each Manager
shall notify Landlord in writing within five days after Tenant or any Manager
has knowledge of any potential, threatened or existing litigation or proceeding
against, or investigation of, Tenant, Manager, Company, or the Facility that [i]
may affect the right to operate the Facility or Landlord's title to the Facility
or Tenant's interest therein; and [ii] is in excess of $25,000.00 and not
covered by applicable insurance.

            15.3.5 Requirements for Financial Statements. Tenant shall meet the
following requirements in connection with the preparation of the financial
statements: [i] all audited financial statements shall be prepared in accordance
with general accepted accounting principles consistently applied; [ii] all
unaudited financial statements shall be prepared in a manner substantially
consistent with prior audited and unaudited financial statements submitted to
Landlord; [iii] all financial statements shall fairly present the financial
condition and performance for the relevant period in all material respects; [iv]
the audited financial statements shall include all notes to the financial
statements and a complete schedule of contingent liabilities and transactions
with Affiliates; and [v] the audited financial statements shall contain an
unqualified opinion.

            15.4 Compliance With Laws. Tenant and each Manager shall comply with
all Legal Requirements and keep all Government


                                     - 59 -
<PAGE>
Authorizations in full force and effect. Tenant and each Manager shall pay when
due all taxes and governmental charges of every kind and nature that are
assessed or imposed upon Tenant and each Manager, respectively, at any time
during the term of the Lease, including, without limitation, all income,
franchise, capital stock, property, sales and use, business, intangible,
employee withholding, and all taxes and charges relating to Tenant's and each
Manager's respective business and operations. Tenant and each Manager shall be
solely responsible for compliance with all Legal Requirements, including the
ADA, and Landlord shall have no responsibility for such compliance.

            15.5 Broker's Commission. Tenant shall indemnify Landlord from
claims of brokers arising by the execution hereof or the consummation of the
transactions contemplated hereby and from expenses incurred by Landlord in
connection with any such claims (including attorneys' fees).

            15.6 Existence and Change in Ownership. Except as provided in
Section 14.5, Tenant, Manager, and Company shall maintain its existence
throughout the term of this Lease. Any change in the ownership of Tenant or
Manager, directly or indirectly, shall require Landlord's prior written consent.
A change in the ownership of Company shall not constitute an indirect change in
the ownership of Tenant or Manager. Landlord's consent to a change in ownership
shall not be unreasonably withheld with respect to Tenant or Manager.

            15.7 Financial Covenants. The defined terms used in this section are
defined in Section 15.7.1. The method of calculating Net Worth and valuing
assets shall be consistent with the Financial Statements. The following
financial covenants shall be met throughout the term of this Lease:

            15.7.1 Definitions.

                  (a) "Net Worth" means an amount equal to the total
consolidated fair market value of the tangible assets of the person (excluding
good will and other intangible assets) minus the total consolidated liabilities
of such person.

                  (b) "Aggregate Cash Flow" means the result of the following
calculated for a one month period: the revenue of Manager as reflected on the
income statement of Manager less [i] operating expenses (excluding Base Rent);
less [ii] an imputed management fee equal to 5% of the gross revenues of the
Facility; less [iii] an imputed replacement reserve of $250.00 per licensed bed
at the Facility per year; plus [iv] marketing


                                     - 60 -
<PAGE>
expenses; and plus [v] the amount of provision for depreciation and
amortization.

                  (c) "Rent Coverage Ratio" is the ratio of [i] Aggregate Cash
Flow for each applicable period; to [ii] the Base Rent payments under this Lease
for the applicable period.

            15.7.2 Rent Coverage Ratio. Commencing with Lease Year 4, Tenant
shall maintain for each fiscal quarter a Rent Coverage Ratio of not less than
1.25 to 1.00.

                  (a) If Tenant fails to achieve the Rent Coverage Ratio
required under Section 15.7.2 above, [i] such failure shall not be an Event of
Default hereunder if on the measurement date, Tenant has achieved a Rent
Coverage Ratio of at least 1.10 to 1.00; and [ii] Landlord shall have the right
to engage a consultant at Tenant's cost to review and make recommendations
concerning the operations of the Facility. Landlord and Tenant shall mutually
determine which recommendations of the consultant shall be implemented by
Tenant.

                  (b) If the Rent Coverage Ratio is less than 1.10, such failure
shall not be an Event of Default hereunder if on the measurement date, Tenant
either [i] pays Landlord an amount equal to that which would cause the Rent
Coverage Ratio to be equal to 1.10 ("Coverage Amount") which payment will be
applied by Landlord to reduce the Lease Amount, or [ii] provides a Letter of
Credit to Landlord in an amount equal to the Coverage Amount. Landlord's rights
in connection with the Letter of Credit shall be governed by Article 20 of this
Lease. Upon Tenant's achievement of a Rent Coverage Ratio of at least 1.10 to
1.00, Landlord shall return any Letter of Credit delivered to Landlord pursuant
to this Section 15.7.2(b) to Tenant.

            15.7.3 Aggregate Cash Flow Benchmarks. During Lease Years 1-3,
inclusive, the Facility shall maintain for each fiscal quarter an Aggregate Cash
Flow on an aggregate basis equal to or greater than the amounts set forth on
Exhibit K ("Aggregate Cash Flow Benchmarks").

                  (a) If Tenant fails to achieve the Aggregate Cash Flow
Benchmarks required under Section 15.7.3 above, such failure shall not be an
Event of Default hereunder if on the measurement date, Tenant has achieved a
Rent Coverage Ratio greater than or equal to 1.10 to 1.00.

                  (b) If Tenant fails to achieve the Aggregate Cash Flow
Benchmarks under Section 15.7.3 and fails to satisfy the


                                     - 61 -
<PAGE>
requirements of Section 15.7.3(a), Tenant's failure shall not be an Event of
Default [i] until such failure has continued for six months ("Cash Flow Cure
Period"); or [ii] if the failure is not cured by the end of the Cash Flow Cure
Period, Tenant provides a Letter of Credit in an amount equal to lesser of [a]
10 times the cumulative cash flow shortfall for the Cash Flow Cure Period or [b]
the total Base Rent due during months 4-6, inclusive, of the Cash Flow Cure
Period. Landlord's rights in connection with the Letter of Credit shall be
governed by Article 20 of this Lease. Upon Tenant's compliance with the
Aggregate Cash Flow Benchmarks or a Rent Coverage Ratio of 1.10 to 1.00,
Landlord shall return the Letter of Credit delivered to Landlord pursuant to
this Section 15.7.3(b) to Tenant.

            15.8 Facility Licensure and Certification. Tenant and each Manager,
as applicable, shall [i] give written notice to Landlord within 10 days after an
inspection of the Facility with respect to health care licensure or
certification has occurred; and [ii] deliver to Landlord copies of each of the
reports, notices, correspondence and all other items and documents listed under
item no. 18 of Exhibit E within 20 days after receipt thereof. Tenant and
Manager acknowledge that each has reviewed Exhibit E and agrees to the foregoing
obligation. If Tenant or Manager receives a Facility survey or inspection report
with material deficiencies, notice of failure to comply with a plan of
correction or an HIPDB adverse action report, Tenant and the respective Manager
shall cure all deficiencies and implement all corrective actions within the
earlier of [a] the date required by the regulatory authority, or [b] 30 days
after receipt of such notice and shall deliver evidence of same to Landlord.

            15.9 Transfer of License and Facility Operations. If this Lease is
terminated due to expiration of the Term, pursuant to an Event of Default or for
any reason other than Tenant's purchase of the Leased Property (or any part
thereof), or if Tenant or Manager vacates the Leased Property without
termination of this Lease (except as provided in Section 8.12), the following
provisions shall be immediately effective:

            15.9.1 Licensure. Tenant and each Manager shall execute, deliver and
file all documents and statements requested by Landlord to effect the transfer
of the Facility license and Government Authorizations to a replacement operator
designated by Landlord ("Replacement Operator"), subject to any required
approval of governmental regulatory authorities, and Tenant and each Manager
shall provide to Landlord all information and records required by Landlord in
connection with the transfer of the license and Government Authorizations.

                                     - 62 -
<PAGE>
            15.9.2 Facility Operations. In order to facilitate a responsible and
efficient transfer of the operations of the Facility, Tenant and Manager shall,
if and to the extent requested by Landlord, [i] deliver to Landlord the most
recent updated reports, notices, schedules and documents listed under item nos.
17, 18, 19, 20 and 21 of Exhibit E; [ii] continue and maintain the operation of
the Facility in the ordinary course of business, including retention of all
residents at the Facility to the fullest extent practicable and consistent with
applicable laws and regulations, until transfer of the Facility operations to
the Replacement Operator is completed; [iii] enter into such management
agreements, operations transfer agreements and other types of agreements that
may be reasonably requested by Landlord or the Replacement Operator; and [iv]
provide reasonable access for Landlord and its agents to show the Facility to
potential replacement operators. Tenant and Manager consent to the distribution
by Landlord to potential replacement operators of Facility of financial
statements, licensure reports, financial and property due diligence materials
and other documents, materials and information relating to the Facility as are
reasonably required. The provisions of this section do not create or establish
any rights in Tenant, Manager or any third party and Landlord reserves all
rights and remedies relating to termination of this Lease.

            15.9.3 Power of Attorney. Tenant and Manager hereby irrevocably and
unconditionally appoint Landlord, or Landlord's authorized officer, agent,
employee or designee, as Tenant's and Manager's true and lawful
attorney-in-fact, to act for Tenant and Manager in Tenant's and Manager's
respective name, place, and stead, to execute, deliver and file all applications
and any and all other necessary documents and statements to effect the issuance,
transfer, reinstatement, renewal and/or extension of the Facility license and
all Governmental Authorizations issued to Tenant and Manager or applied for by
Tenant and Manager in connection with Tenant's and Manager's operation of the
Facility, to permit any designee of Landlord or any other transferee to operate
the Facility under the Governmental Authorizations, and to do any and all other
acts incidental to any of the foregoing. Tenant and Manager irrevocably and
unconditionally grant to Landlord as their respective attorney-in-fact full
power and authority to do and perform every act necessary and proper to be done
in the exercise of any of the foregoing powers as fully as Tenant and Manager
might or could do if personally present or acting, with full power of
substitution, hereby ratifying and confirming all that said attorney shall
lawfully do or cause to be done by virtue hereof.


                                     - 63 -
<PAGE>
This power of attorney is coupled with an interest and is irrevocable prior to
Tenant's purchase of the Leased Property. Except in the case of an emergency,
Landlord shall give Tenant and Manager, as applicable, three Business Days prior
written notice before acting on behalf of Tenant or Manager, as applicable,
pursuant to this power of attorney.

            15.10 Bed Operating Rights. Tenant and Manager acknowledge and agree
that the rights to operate the beds located at the Facility as long term care
beds under the law of the Facility State, to relocate such bed operating rights
to another location or locations, and to transfer such bed operating rights to
third parties, are property of the Landlord and are an integral part of the real
and personal property that constitutes the Leased Property. Tenant and Manager
have only the right to use of such rights during the term of this Lease and
subject to its terms and conditions. All operating rights shall automatically
revert to Landlord upon the expiration or termination of this Lease for any
reason whatsoever (other than Tenant's purchase of the Leased Property) without
any requirement of a transfer or the payment of additional consideration.

           ARTICLE 16: ALTERATIONS, CAPITAL IMPROVEMENTS, AND SIGNS

            16.1 Prohibition on Alterations and Improvements. Except for
Permitted Alterations (as hereinafter defined), Tenant shall not make any
structural or nonstructural changes, alterations, additions and/or improvements
(hereinafter collectively referred to as "Alterations") to the Leased Property.

            16.2 Approval of Alterations. If Tenant desires to perform any
Permitted Alterations, Tenant shall deliver to Landlord plans, specifications,
drawings, and such other information as may be reasonably requested by Landlord
(collectively the "Plans and Specifications") showing in reasonable detail the
scope and nature of the Alterations that Tenant desires to perform. It is the
intent of the parties hereto that the level of detail shall be comparable to
that which is referred to in the architectural profession as "design development
drawings" as opposed to working or biddable drawings. Landlord agrees not to
unreasonably delay its review of the Plans and Specifications. Within 30 days
after receipt of an invoice, Tenant shall reimburse Landlord for all costs and
expenses incurred by Landlord in reviewing and, if required, approving or
disapproving the Plans and Specifications, inspecting the Leased Property, and
otherwise monitoring


                                     - 64 -
<PAGE>
compliance with the terms of this Article 16. Tenant shall comply with the
requirements of Section 16.4 in making any Permitted Alterations.

            16.3 Permitted Alterations. Permitted Alterations means any one of
the following: [i] Alterations approved by Landlord; [ii] Alterations required
under Section 7.2; [iii] Alterations having a total cost of less than
$250,000.00 per Facility; or [iv] repairs, rebuilding and restoration required
or undertaken pursuant to Section 9.4.

            16.4  Requirements for Permitted Alterations.  Tenant shall
comply with all of the following requirements in connection with any
Permitted Alterations:

                  (a) The Permitted Alterations shall be made in accordance with
the Plans and Specifications, approved by Landlord, if applicable.

                  (b) The Permitted Alterations and the installation thereof
shall comply with all applicable legal requirements and insurance requirements.

                  (c) The Permitted Alterations shall be done in a good and
workmanlike manner, shall not impair the value or the structural integrity of
the Leased Property, and shall be free and clear of all mechanic's liens.

                  (d) For any Permitted Alterations having a total cost of
$250,000.00 or more, Tenant shall deliver to Landlord a payment and performance
bond, with a surety acceptable to Landlord, in an amount equal to the estimated
cost of the Permitted Alterations, guaranteeing the completion of the work free
and clear of liens and in accordance with the approved Plans and Specifications,
and naming Landlord and any mortgagee of Landlord as joint obligees on such
bond.

                  (e) Tenant shall, at Tenant's expense, obtain a builder's
completed value risk policy of insurance insuring against all risks of physical
loss, including collapse and transit coverage, in a nonreporting form, covering
the total value of the work performed, and equipment, supplies, and materials,
and insuring initial occupancy. Landlord and any mortgagee of Landlord shall be
additional insureds of such policy. Landlord shall have the right to approve the
form and substance of such policy.

                                     - 65 -
<PAGE>
                  (f) Tenant shall pay the premiums required to increase the
amount of the insurance coverages required by Article 4 to reflect the increased
value of the Improvements resulting from installation of the Permitted
Alterations, and shall deliver to Landlord a certificate evidencing the increase
in coverage.

                  (g) Tenant shall, not later than 60 days after completion of
the Permitted Alterations, deliver to Landlord a revised "as-built" survey of
the respective Facility if the Permitted Alterations altered the Land or
"footprint" of the Improvements and an "as-built" set of Plans and
Specifications for the Permitted Alterations in form and substance satisfactory
to Landlord.

                  (h) Tenant shall, not later than 30 days after Landlord sends
an invoice, reimburse Landlord for any reasonable costs and expenses, including
attorneys' fees and architects' and engineers' fees, incurred in connection with
reviewing and approving the Permitted Alterations and ensuring Tenant's
compliance with the requirements of this section. The daily fee for Landlord's
consulting engineer is $750.00.

            16.5 Ownership and Removal of Permitted Alterations. The Permitted
Alterations shall become a part of the Leased Property, owned by Landlord, and
leased to Tenant subject to the terms and conditions of this Lease. Tenant shall
not be required or permitted to remove any Permitted Alterations.

            16.6 Minimum Qualified Capital Expenditures. During each fiscal year
of the Tenant, Tenant shall expend at least $250.00 per bed at the Bloomsburg
and Saxonburg Facilities, $200.00 per bed at the Lebanon and Loyalsock
Facilities, and $100.00 per bed at the Sagamore Hills Facility for Qualified
Capital Expenditures to improve the Facilities (provided that as to any Facility
with respect to which a certificate of occupancy was not issued prior to the end
of the first fiscal year following Closing, the minimum qualified capital
expenditures required by this section shall be waived until the fiscal year
immediately following the fiscal year in which such certificate of occupancy is
issued). Thereafter throughout the Term, Tenant shall expend such amount each
fiscal year, increased annually in proportion to increases in the CPI. At least
annually, at the request of Landlord, Landlord and Tenant shall review capital
expenditures budgets, if available, and agree on modifications, if any, required
by changed circumstances and the changed conditions of the Leased Property.

                                     - 66 -
<PAGE>
            16.7 Signs. Tenant may, at its own expense, erect and maintain
identification signs at the Leased Property, provided such signs comply with all
laws, ordinances, and regulations. Upon the termination or expiration of this
Lease, Tenant shall, within 30 days after notice from Landlord, remove the signs
and restore the Leased Property to its original condition.

                            ARTICLE 17: [RESERVED]

              ARTICLE 18: ASSIGNMENT AND SALE OF LEASED PROPERTY

            18.1 Prohibition on Assignment and Subletting. Tenant acknowledges
that Landlord has entered into this Lease in reliance on the personal services
and business expertise of Tenant. Tenant may not assign, sublet, mortgage,
hypothecate, pledge, grant a right of first refusal or transfer any interest in
this Lease, or in the Leased Property, in whole or in part, without the prior
written consent of Landlord, which Landlord may withhold in its sole and
absolute discretion. The following transactions will be deemed an assignment or
sublease requiring Landlord's prior written consent: [i] an assignment by
operation of law; [ii] an imposition (whether or not consensual) of a lien,
mortgage, or encumbrance upon Tenant's interest in the Lease except for any
Permitted Liens; [iii] an arrangement (including, but not limited to, management
agreements, concessions, licenses, and easements) which allows the use or
occupancy of all or part of the Leased Property by anyone other than Tenant or
Manager (other than in the ordinary course of business); and [iv] a change of
ownership of Tenant (provided, however, that a change in the ownership of
Company shall not constitute an indirect change in the ownership of Tenant).
Landlord's consent to any assignment, right of first refusal or sublease will
not release Tenant (or any guarantor) from its payment and performance
obligations under this Lease, but rather Tenant, any guarantor, and Tenant's
assignee or sublessee will be jointly and severally liable for such payment and
performance. An assignment, right of first refusal or sublease without the prior
written consent of Landlord will be void at Landlord's option. Landlord's
consent to one assignment, right of first refusal or sublease will not waive the
requirement of its consent to any subsequent assignment or sublease.
Notwithstanding the foregoing, [a] Tenant may enter into a Sublease with each
Manager, if necessary, for each Facility provided that each Sublease complies
with Section 18.2; [b] Tenant or Manager may enter into subleases for therapy
services without Landlord's prior consent provided that [x] Tenant provides
Landlord a copy of the executed agreement; [y] the agreement follows the form
previously approved by Landlord; and [z] the


                                     - 67 -
<PAGE>
terms and circumstances of the sublease are substantially similar to those
approved by Landlord in other transactions with Tenant, Manager or Affiliates,
and [c] Tenant or Manager may enter into vendor contracts in the ordinary course
of business that permit the temporary use and occupancy of the Facility, such as
beautician services contracts, pharmacy services contracts, etc. provided that
Tenant provides Landlord a copy of the executed agreement and the stated term of
the contract is not more than 1 year. Landlord has approved the Management
Agreements.

            18.2 Requests for Landlord's Consent to Assignment, Sublease or
Management Agreement. If Tenant is required to obtain Landlord's consent to a
specific assignment, sublease, or management agreement, Tenant shall give
Landlord [i] the name and address of the proposed assignee, subtenant or
manager; [ii] a copy of the proposed assignment, sublease or management
agreement; [iii] reasonably satisfactory information about the nature, business
and business history of the proposed assignee, subtenant, or manager and its
proposed use of the Leased Property; and [iv] banking, financial, and other
credit information, and references about the proposed assignee, subtenant or
manager sufficient to enable Landlord to determine the financial responsibility
and character of the proposed assignee, subtenant or manager. Any assignment,
sublease or management agreement shall contain provisions to the effect that [a]
such assignment, sublease or management agreement is subject and subordinate to
all of the terms and provisions of this Lease and to the rights of Landlord and
that the assignee, subtenant or manager shall comply with all applicable
provisions of this Lease; [b] such assignment, sublease or management agreement
may not be modified without the prior written consent of Landlord not to be
unreasonably withheld or delayed; [c] if this Lease shall terminate before the
expiration of such assignment, sublease or management agreement, the assignee,
subtenant or manager thereunder will, solely at Landlord's option and only upon
the express written notice of attornment from Landlord, attorn to Landlord and
waive any right the assignee, subtenant or manager may have to terminate the
assignment, sublease or management agreement or surrender possession thereunder
as a result of the termination of this Lease; and [d] if the assignee, subtenant
or manager receives a written notice from Landlord stating that Tenant is in
default under this Lease, the assignee, subtenant or manager shall thereafter
pay all rentals or payments under the assignment, sublease or management
agreement directly to Landlord until such default has been cured. Any attempt or
offer by an assignee, subtenant or


                                     - 68 -
<PAGE>
manager to attorn to Landlord shall not be binding or effective without the
express written consent of Landlord. Tenant hereby collaterally assigns to
Landlord, as security for the performance of its obligations hereunder, all of
Tenant's right, title, and interest in and to any assignment, sublease or
management agreement now or hereafter existing for all or part of the Leased
Property. Tenant shall, at the request of Landlord, execute such other
instruments or documents as Landlord may request to evidence this collateral
assignment. If Tenant is required to obtain Landlord's consent to a specific
assignment, and if Landlord, in its sole and absolute discretion, consents to
such assignment, sublease, or management agreement, such consent shall not be
effective until [i] a fully executed copy of the instrument of assignment,
sublease or management agreement has been delivered to Landlord; [ii] in the
case of an assignment, Landlord has received a written instrument in which the
assignee has assumed and agreed to perform all of Tenant's obligations under the
Lease; and [iii] Tenant has paid to Landlord a fee in the amount of $2,500.00
(applies only to consent requests after the Closing); and [iv] Landlord has
received reimbursement from Tenant or the assignee for all attorneys' fees and
expenses and all other reasonable out-of-pocket expenses incurred in connection
with determining whether to give its consent, giving its consent and all matters
relating to the assignment (applies only to consent requests after the Closing).
Notwithstanding the foregoing, payment of the $2,500.00 fee shall not be
required if Tenant is entering into an agreement that follows substantially the
same form previously approved by Landlord and the circumstances underlying the
agreement are substantially similar to those existing at the time Landlord
previously gave its approval.

            18.3 Agreements with Residents. Notwithstanding Section 18.1, Tenant
and Manager may enter into an occupancy agreement with residents of the Leased
Property without the prior written consent of Landlord provided that [i] the
agreement does not provide for lifecare services; [ii] the agreement does not
contain any type of rate lock provision or rate guaranty for more than one
calendar year; [iii] the agreement does not provide for any rent reduction or
waiver other than for an introductory period not to exceed six months; [iv]
Tenant and Manager may not collect rent for more than one month in advance; and
[v] all residents of the Leased Property are accurately shown in accounting
records for the Facility. Tenant and Manager shall provide to Landlord a copy of
any changes to the form of resident occupancy agreement that was submitted to
Landlord prior to implementation.

                                     - 69 -
<PAGE>
            18.4 Sale of Leased Property. If Landlord or any subsequent owner of
the Leased Property sells the Leased Property, its liability for the performance
of its agreements in this Lease will end on the date of the sale of the Leased
Property, and Tenant will look solely to the purchaser for the performance of
those agreements. For purposes of this section, any holder of a mortgage or
security agreement which affects the Leased Property at any time, and any
landlord under any lease to which this Lease is subordinate at any time, will be
a subsequent owner of the Leased Property when it succeeds to the interest of
Landlord or any subsequent owner of the Leased Property.

            18.5 Assignment by Landlord. Landlord may transfer, assign,
mortgage, collaterally assign, or otherwise dispose of Landlord's interest in
this Lease or the Leased Property.

                       ARTICLE 19: HOLDOVER AND SURRENDER

            19.1 Holding Over. If Tenant, with or without the express or implied
consent of Landlord, continues to hold and occupy the Leased Property (or any
part hereof) after the expiration of the Term or earlier termination of this
Lease (other than pursuant to Tenant's purchase of the Leased Property), such
holding over beyond the Term and the acceptance or collection of Rent in the
amount specified below by Landlord shall operate and be construed as creating a
tenancy from month-to-month and not for any other term whatsoever. Said
month-to-month tenancy may be terminated by Landlord by giving Tenant five days'
written notice, and at any time thereafter Landlord may re-enter and take
possession of the Leased Property. If Tenant continues after the expiration of
the Term or earlier termination of this Lease to hold and occupy the Leased
Property whether as a month-to-month tenant or a tenant at sufferance or
otherwise, Tenant shall pay Rent for each month in an amount equal to the sum of
[i] one and one-half (1-1/2) times the Base Rent payable during the month in
which such expiration or termination occurs, plus [ii] all Additional Rent
accruing during the month, plus [iii] any and all other sums payable by Tenant
pursuant to this Lease. During any continued tenancy after the expiration of the
Term or earlier termination of this Lease, Tenant shall be obligated to perform
and observe all of the terms, covenants and conditions of this Lease, but shall
have no rights hereunder other than the right, to the extent given by applicable
law, to continue its occupancy and use of the Leased Property until the tenancy
is terminated. Nothing contained herein shall constitute the consent, express or


                                     - 70 -
<PAGE>
implied, of Landlord to the holding over of Tenant after the expiration or
earlier termination of this Lease.

            19.2 Surrender. Except for [i] Permitted Alterations; [ii] normal
and reasonable wear and tear (subject to the obligation of Tenant to maintain
the Leased Property in good order and repair during the Term); and [iii] damage
and destruction not required to be repaired by Tenant, Tenant shall surrender
and deliver up the Leased Property at the expiration or termination of the Term
in as good order and condition as of the Commencement Date.

            19.3 Indemnity. If Tenant fails to surrender the entire Leased
Property or any part thereof upon the expiration or termination of this Lease in
a timely manner and in accordance with the provisions of this Lease, in addition
to any other liabilities to Landlord accruing therefrom, Tenant shall defend,
indemnify and hold Landlord, its principals, officers, directors, agents, and
employees harmless from loss or liability resulting from such failure,
including, without limiting the generality of the foregoing, loss of rental with
respect to any new lease in which the rental payable thereunder exceeds the Rent
collected by Landlord pursuant to this Lease during Tenant's hold-over and any
claims by any proposed new tenant founded on Tenant's failure to surrender the
Leased Property. The provisions of this Article 19 shall survive the expiration
or termination of this Lease.

                          ARTICLE 20: LETTER OF CREDIT

            20.1 Terms of Letter of Credit. Any Letter of Credit required to be
provided pursuant to Section 15.7.2(b) or 15.7.3(b) shall permit partial
and full draws and shall permit drawing upon presentation of a draft drawn on
the issuer and a certificate signed by Landlord stating that an Event of Default
has occurred under Section 15.7.2 or 15.7.3 of this Lease ("Cash Flow
Default") and an Event of Default has occurred under Section 8.1 ("Monetary
Default"). Each Letter of Credit shall be for an initial term of one year and
shall be automatically renewed annually for successive terms of at least one
year unless Landlord receives notice from the Issuer, by certified mail, at
least 60 days prior to the expiry date then in effect that such Letter of Credit
will not be extended for an additional one-year period.

            20.2 Replacement Letter of Credit. Tenant shall provide a
replacement Letter of Credit which satisfies the requirements of Section 20.1
from an Issuer reasonably acceptable to


                                     - 71 -
<PAGE>
Landlord within 30 days after the occurrence of any of the following: [i]
Landlord's receipt of notice from the Issuer that the Letter of Credit will not
be extended for an additional one-year period; [ii] Landlord gives notice to
Tenant that the Lace Financial Service Rating (or rating of a comparable rating
service) of the Issuer is less than a "C+" (or the comparable rating of such
other rating service); [iii] Landlord gives notice to Tenant of the admission by
Issuer in writing of its inability to pay its debts generally as they become
due, or Issuer's filing of a petition in bankruptcy or petitions to take
advantage of any insolvency act, making an assignment for the benefit of its
creditors, consenting to the appointment of a receiver of itself or of the whole
or any substantial part of its property, or filing a petition or answer seeking
reorganization or arrangement under the federal bankruptcy laws or any other
applicable law, regulation, or statute of the United States of America or any
state thereof; or [iv] Issuer is at any time determined not to be at least
"adequately capitalized", as that term is defined and used in the "Prompt
Corrective Action" statute 12 U.S.C. Section 1831o, and implementing
regulations. Tenant's failure to comply with the requirements of this section
shall be an immediate Event of Default without any notice (other than as
provided for in this section), cure or grace period. Upon such Event of Default,
Landlord shall be entitled to draw upon the Letter of Credit and Landlord may,
solely at its option and without any obligation to do so, require Tenant to
obtain a replacement Letter of Credit satisfactory to Landlord with the Letter
of Credit proceeds made available to Tenant solely to secure Tenant's
reimbursement obligation for the replacement Letter of Credit.

            20.3 Draws. Upon the occurrence of both a Cash Flow Default and a
Monetary Default, Landlord shall make a partial or full draw on the Letter of
Credit in an amount not to exceed the amount of Tenant's monetary obligations
under this Lease then past due. Landlord's application of the proceeds from such
partial or full draw on the Letter of Credit to payment of all of Tenant's
monetary obligations then past due shall cure the Monetary Default. If the
available Letter of Credit proceeds are not sufficient to pay all of the
monetary obligations, such proceeds shall be applied against the obligations but
shall not cure the Monetary Default or the Cash Flow Default.

            20.4 Substitute Letter of Credit. Tenant may, from time to time,
deliver to Landlord a substitute Letter of Credit meeting the requirements of
this Lease and issued by an Issuer acceptable to Landlord. Upon Landlord's
approval of the


                                     - 72 -
<PAGE>
substitute Letter of Credit, Landlord shall release the previous Letter of
Credit to Tenant.

            20.5  Return of Letter of Credit.  The Letter of Credit shall be
returned to Tenant as provided in Section 15.7.2(b) and 15.7.3(b).

     ARTICLE 21: QUIET ENJOYMENT, SUBORDINATION, ATTORNMENT AND ESTOPPEL
                                  CERTIFICATES

            21.1 Quiet Enjoyment. So long as Tenant performs all of its
obligations under this Lease, Tenant's possession of the Leased Property will
not be disturbed by Landlord or any party claiming by, through or under
Landlord.

            21.2 Subordination. Subject to the terms and conditions of this
section, this Lease and Tenant's rights under this Lease are subordinate to any
ground lease or underlying lease, first mortgage, first deed of trust, or other
first lien against the Leased Property, together with any renewal,
consolidation, extension, modification or replacement thereof, which now or at
any subsequent time affects the Leased Property or any interest of Landlord in
the Leased Property, except to the extent that any such instrument expressly
provides that this Lease is superior. The foregoing subordination provision is
expressly conditioned upon any lessor or mortgagee being obligated and bound to
recognize Tenant as the tenant under this Lease, and such lessor or mortgagee
shall have no right to disturb Tenant's possession, use and occupancy of the
Leased Property or Tenant's enjoyment of its rights under this Lease unless and
until an Event of Default occurs hereunder. Any foreclosure action or proceeding
by any mortgagee with respect to the Leased Property shall not affect Tenant's
rights under this Lease and shall not terminate this Lease unless and until an
Event of Default occurs hereunder. The foregoing provisions will be
self-operative, and no further instrument will be required in order to effect
them. However, Tenant shall execute, acknowledge and deliver to Landlord, at any
time and from time to time upon demand by Landlord, such documents as may be
requested by Landlord or any mortgagee or any holder of any mortgage or other
instrument described in this section, to confirm or effect any such
subordination, provided that any such document shall include a non-disturbance
provision as set forth in this section satisfactory to Tenant. Any mortgagee of
the Leased Property shall be deemed to be bound by the non-disturbance provision
set forth in this section. If Tenant fails or refuses to execute, acknowledge,
and deliver any such document within 20 days after written demand, Landlord may


                                     - 73 -
<PAGE>
execute acknowledge and deliver any such document on behalf of Tenant as
Tenant's attorney-in-fact. Tenant hereby constitutes and irrevocably appoints
Landlord, its successors and assigns, as Tenant's attorney-in-fact to execute,
acknowledge, and deliver on behalf of Tenant any documents described in this
section. This power of attorney is coupled with an interest and is irrevocable.

            21.3 Attornment. If any holder of any mortgage, indenture, deed of
trust, or other similar instrument described in Section 21.2 succeeds to
Landlord's interest in the Leased Property, Tenant will pay to such holder all
Rent subsequently payable under this Lease. Tenant shall, upon request of anyone
succeeding to the interest of Landlord, automatically become the tenant of, and
attorn to, such successor in interest without changing this Lease. The successor
in interest will not be bound by [i] any payment of Rent for more than one month
in advance; [ii] any amendment or modification of this Lease thereafter made
without its consent as provided in this Lease; [iii] any claim against Landlord
arising prior to the date on which the successor succeeded to Landlord's
interest; or [iv] any claim or offset of Rent against Landlord. Upon request by
Landlord or such successor in interest and without cost to Landlord or such
successor in interest, Tenant will execute, acknowledge and deliver an
instrument or instruments confirming the attornment. If Tenant fails or refuses
to execute, acknowledge, and deliver any such instrument within 20 days after
written demand, then Landlord or such successor in interest will be entitled to
execute, acknowledge, and deliver any document on behalf of Tenant as Tenant's
attorney-in-fact. Tenant hereby constitutes and irrevocably appoints Landlord,
its successors and assigns, as Tenant's attorney-in-fact to execute,
acknowledge, and deliver on behalf of Tenant any such document. This power of
attorney is coupled with an interest and is irrevocable.

            21.4 Estoppel Certificates. At the request of Landlord or any
mortgagee or purchaser of the Leased Property, Tenant shall execute,
acknowledge, and deliver an estoppel certificate, in recordable form, in favor
of Landlord or any mortgagee or purchaser of the Leased Property certifying to
Tenant's knowledge, the following: [i] that the Lease is unmodified and in full
force and effect, or if there have been modifications that the same is in full
force and effect as modified and stating the modifications; [ii] the date to
which Rent and other charges have been paid; [iii] whether Tenant or Landlord is
in default or whether there is any fact or condition


                                     - 74 -
<PAGE>
which, with notice or lapse of time, or both, would constitute a default, and
specifying any existing default, if any; [iv] that Tenant has accepted and
occupies the Leased Property; [v] that Tenant has no defenses, set-offs,
deductions, credits, or counterclaims against Landlord, if that be the case, or
specifying such that exist; and [vi] such other information as may reasonably be
requested by Landlord or any mortgagee or purchaser. Any purchaser or mortgagee
may rely on this estoppel certificate. If Tenant fails to deliver the estoppel
certificates to Landlord within 20 days after the request of Landlord, then
Tenant shall be deemed to have certified that to Tenant's knowledge [a] the
Lease is in full force and effect and has not been modified, or that the Lease
has been modified as set forth in the certificate delivered to Tenant; [b]
Tenant has not prepaid any Rent or other charges except for the current month;
[c] Tenant has accepted and occupies the Leased Property; [d] neither Tenant nor
Landlord is in default nor is there any fact or condition which, with notice or
lapse of time, or both, would constitute a default; and [e] Tenant has no
defenses, set-offs, deductions, credits, or counterclaims against Landlord.
Tenant hereby irrevocably appoints Landlord as Tenant's attorney-in-fact to
execute, acknowledge, and deliver on Tenant's behalf any estoppel certificate to
which Tenant does not object within 20 days after Landlord sends the certificate
to Tenant. This power of attorney is coupled with an interest and is
irrevocable. At the request of Tenant, Landlord shall execute, acknowledge, and
deliver an estoppel certificate, in recordable form, in favor of Tenant
certifying, to Landlord's knowledge, the following: [i] that the Lease is
unmodified and in full force and effect, or if there have been modifications
that the same is in full force and effect as modified and stating the
modifications; [ii] the date to which Rent and other charges have been received
by Landlord; [iii] whether Tenant or Landlord is in default or whether there is
any fact or condition which, with notice or lapse of time, or both, would
constitute a default, and specifying any existing default, if any; [iv] that
Landlord has no defenses, set-offs, deductions, credits, or counterclaims
against Tenant, if that be the case, or specifying such that exist; and [vi]
such other information as may reasonably be requested by Tenant. If Landlord
fails to deliver the estoppel certificate to Tenant within 20 days after the
request of the Tenant, then Landlord shall be deemed to have certified that to
Landlord's knowledge, [a] the Lease is in full force and effect and has not been
modified, or that the Lease has been modified as set forth in the certificate
delivered to Landlord; [b] Landlord has not received any prepaid Rent or other
charges except for the current month; [c] neither Tenant nor Landlord is in
default nor is there


                                     - 75 -
<PAGE>
any fact or condition which, with notice or lapse of time,
or both, would constitute a default; and [d] Landlord has no defenses, set-offs,
deductions, credits, or counterclaims against Tenant. Landlord hereby
irrevocably appoints Tenant as Landlord's attorney-in-fact to execute,
acknowledge, and deliver on Landlord's behalf any estoppel certificate to which
Landlord does not object within 20 days after Tenant sends the certificate to
Landlord. This power of attorney is coupled with an interest and is irrevocable.

                  ARTICLE 22: REPRESENTATIONS AND WARRANTIES

            Tenant and Manager hereby make the following representations and
warranties, as of the Effective Date, to Landlord and acknowledge that Landlord
is granting the Lease in reliance upon such representations and warranties.
Tenant's and Manager's representations and warranties shall survive the Closing
and, except to the extent made as of a specific date, shall continue in full
force and effect until the BCC Obligations have been performed in full.

            22.1 Organization and Good Standing. Tenant is a corporation, duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Each Manager is a corporation or limited liability company, duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Tenant and each Manager are qualified to do business in and are in
good standing under the laws of the Facility State.

            22.2 Power and Authority. Tenant and Manager have the power and
authority to execute, deliver and perform this Lease. Tenant and Manager have
taken all requisite action necessary to authorize the execution, delivery and
performance of their respective obligations under this Lease.

            22.3 Enforceability. This Lease constitutes a legal, valid, and
binding obligation of Tenant and Manager, as applicable, enforceable in
accordance with its terms, except as enforceability may be limited by creditor's
rights laws, equitable principles, and the effect of judicial discretion.

            22.4 Government Authorizations. To Tenant's and Manager's knowledge,
the Facility is in compliance with all Legal Requirements. All Government
Authorizations are in full force and effect. To the best of Tenant's and
Manager's knowledge, except as otherwise noted in Exhibit G, Tenant or the
respective Manager holds all Government Authorizations necessary


                                     - 76 -
<PAGE>
for the operation of the Facility in accordance with the Facility Uses. Upon the
Closing, Manager will be authorized to operate the Facility in accordance with
the Facility Uses. No prior notice to or approval from any licensure authority
is required in connection with the Lease or the change of the entity holding the
leasehold interest in the Leased Property to Landlord.

            22.5 Financial Statements. Tenant has furnished Landlord with true,
correct, and complete copies of the Financial Statements. The Financial
Statements fairly present the financial position of the Facility Tenant and
Guarantor as applicable, as of the respective dates and the results of
operations for the periods then ended in conformance with generally accepted
accounting principles applied on a basis consistent with prior periods (except
with respect to any impact of costs of services previously performed at the
Company level, which costs are incorporated in the Aggregate Cash Flow
Benchmarks on Exhibit K). The Financial Statements and other information
furnished to Landlord are true, complete and correct and, as of the Effective
Date, no material adverse change has occurred since the furnishing of such
statements and information. As of the Effective Date, the Financial Statements
and other information do not contain any untrue statement or omission of a
material fact and are not misleading in any material respect. Tenant and Manager
are solvent, and no bankruptcy, insolvency, or similar proceeding is pending or
contemplated by or, to the knowledge of Tenant, against Tenant, Manager or
Company.

            22.6 Condition of Facility. To the best of Tenant's and Manager's
knowledge, all of the mechanical and electrical systems, heating and
air-conditioning systems, plumbing, water and sewer systems, and all other items
of mechanical equipment or appliances are in good working order, condition and
repair, are of sufficient size and capacity to service the Facility for the
Facility Uses and conform with all applicable ordinances and regulations, and
with all building, zoning, fire, safety, and other codes, laws and orders. The
Improvements, including the roof and foundation, are structurally sound and free
from leaks and other defects.

            22.7 Compliance with Laws. To the best of Tenant's and Manager's
knowledge, there is no violation of, or noncompliance with, [i] any laws,
orders, rules or regulations, ordinances or codes of any kind or nature
whatsoever relating to the Facility or the ownership or operation thereof
(including, without limitation, building, fire, health, occupational safety


                                     - 77 -
<PAGE>
and health, zoning and land use, planning and environmental laws, orders, rules
and regulations); [ii] any covenants, conditions, restrictions or agreements
affecting or relating to the ownership, use or occupancy of the Facility; or
[iii] any order, writ, regulation or decree relating to any matter referred to
in [i] or [ii] above.

            22.8 No Litigation. As of the Effective Date and except as disclosed
on Exhibit H, [i] there are no actions or suits, or any proceedings or
investigations by any governmental agency or regulatory body pending against
Tenant, Manager, Company or the Facility in excess of $25,000.00 and not covered
by insurance; [ii] no HIPDB adverse action reports have been issued to Tenant,
Manager, Company or the Facility; [iii] no one has received notice of any
threatened actions, suits, proceedings or investigations in excess of $25,000.00
and not covered by insurance against Tenant, Manager, Company or the Facility at
law or in equity, or before any governmental board, agency or authority which,
if determined adversely to Tenant, Manager or Company, would materially and
adversely affect the Facility or title to the Facility (or any part thereof),
the right to operate the Facility as presently operated, or the financial
condition of Tenant or Guarantor; [iv] there are no unsatisfied or outstanding
judgments against Tenant, Guarantor or the Facility; [v] there is no labor
dispute materially and adversely affecting the operation or business conducted
by Tenant, Guarantor, or the Facility; and [vi] to the best of Tenant's
knowledge, there are no facts or circumstances which might reasonably form the
basis for any such action, suit, or proceeding.

            22.9 Consents. The execution, delivery and performance of this Lease
will not require any consent, approval, authorization, order, or declaration of,
or any filing or registration with, any court, any federal, state, or local
governmental or regulatory authority, or any other person or entity, the absence
of which would materially impair the ability of Tenant or Manager to operate the
Facility for the Facility Uses except for the post-acquisition filing for
licensure of the Facility.

            22.10 No Violation. The execution, delivery and performance of this
Lease [i] do not and will not conflict with, and do not and will not result in a
breach of Tenant's or Manager's Organizational Documents; [ii] do not and will
not conflict with, and do not and will not result in a breach of, and do not and
will not constitute a default under (or an event which, with or without notice
or lapse of time, or both, would


                                     - 78 -
<PAGE>
constitute a default under), any of the terms, conditions or provisions of any
agreement or other instrument or obligation to which Tenant or Manager is a
party or by which its assets are bound; and [iii] do not and will not violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
Tenant, Manager or the Facility.

            22.11 Reports and Statements. All reports, statements, certificates
and other data furnished by or on behalf of Tenant or Guarantor to Landlord in
connection with this Lease, and all representations and warranties made herein
or in any certificate or other instrument delivered in connection herewith and
therewith, are true and correct in all material respects and do not omit to
state any material fact or circumstance necessary to make the statements
contained herein or therein, in light of the circumstances under which they are
made, not misleading as of the date of such report, statement, certificate or
other data. The copies of all agreements and instruments submitted to Landlord,
including, without limitation, all agreements relating to management of the
Facility, and Tenant's working capital are true, correct and complete copies and
include all amendments and modifications of such agreements.

            22.12 ERISA. All plans (as defined in Section 4021(a) of the
Employee Retirement Income Security Act of 1974, as amended or supplemented from
time to time ("ERISA")) for which Tenant or Manager is an "employer" or a
"substantial employer" (as defined in Section 3(5) and 4001(a)(2) of ERISA,
respectively) are in compliance with ERISA and the regulations and published
interpretations thereunder. To the extent Tenant or Manager maintains a
qualified defined benefit pension plan: [i] there exists no accumulated funding
deficiency; [ii] no reportable event and no prohibited transaction has occurred;
[iii] no lien has been filed or threatened to be filed by the Pension Benefit
Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA;
and [iv] Tenant and Manager have not been deemed to be a substantial employer.

            22.13 Chief Executive Office.  Tenant and Manager each maintain
its respective chief executive office and its books and records at Tenant's
address set forth in the introductory paragraph of this Lease.

            22.14 Other Name or Entities. Except as disclosed on Exhibit N, none
of Tenant's or Manager's business is conducted through any subsidiary,
unincorporated association or other entity and neither Tenant nor Manager have,
within the six


                                     - 79 -
<PAGE>
years preceding the date of this Lease [i] changed its name, [ii] used any name
other than the name stated at the beginning of this agreement, or [iii] merged
or consolidated with, or acquired any of the assets of, any corporation or other
business.

            22.15 Parties in Possession. Except as disclosed on Exhibit B and
except for each Manager and the residents of the Facility, there are no parties
in possession of any Leased Property or any portion thereof as managers,
lessees, tenants at sufferance, or trespassers.

            22.16 Access. Except as disclosed in writing to Landlord, access to
the Land is directly from a dedicated public right-of-way without any easement.
To the knowledge of Tenant and Manager, there is no fact or condition which
would result in the termination or reduction of the current access to and from
the Land to such right-of-way.

            22.17 Utilities. Except as disclosed in writing to Landlord, there
are available at the Land gas, municipal water, and sanitary sewer lines, storm
sewers, electrical and telephone services in operating condition which are
adequate for the operation of the Facility at a reasonable cost. Except as
disclosed in writing to Landlord, the Land has direct access to utility lines
located in a dedicated public right-of-way without any easement. As of the
Effective Date, there is no pending or, to the knowledge of Tenant or Manager,
threatened governmental or third party proceeding which would impair or result
in the termination of such utility availability.

            22.18 Condemnation and Assessments. As of the Effective Date,
neither Tenant nor Manager has received notice of, and there are no pending or,
to the best of Tenant's and Manager's knowledge, threatened, condemnation,
assessment or similar proceedings affecting or relating to the Facility, or any
portion thereof, or any utilities, sewers, roadways or other public improvements
serving the Facility.

            22.19 Zoning. As of the Effective Date, [i] except as disclosed in
writing to Landlord, the use and operation of the Facility for the Facility Uses
is a permitted use under the applicable zoning code; [ii] except as disclosed on
Exhibit G hereto, no special use permits, conditional use permits, variances, or
exceptions have been granted or are needed for such use of the Facility; [iii]
the Land is not located in any special districts such as historical districts or
overlay districts; and [iv] the Facility has been constructed in


                                     - 80 -
<PAGE>
accordance with and complies with all applicable zoning laws, including, but not
limited to, dimensional, parking, setback, screening, landscaping, sign and curb
cut requirements.

            22.20 Pro Forma Statement. Tenant has delivered to Landlord a true,
correct and complete copy of the Pro Forma Statement. The Pro Forma Statement
shows Tenant's reasonable expectation of the most likely results of Facility
operations for the next five-year period.

            22.21 Environmental Matters. During the period of Tenant's or
Manager's ownership or possession of the Leased Property and, to the best of
Tenant's and Manager's knowledge after diligent inquiry, for the period prior to
Tenant's and Manager's ownership or possession of the Leased Property, [i] the
Leased Property is in compliance with all Environmental Laws; [ii] there were no
releases or threatened releases of Hazardous Materials on, from, or under the
Leased Property, except in compliance with all Environmental Laws; [iii] no
Hazardous Materials have been, are or will be used, generated, stored, or
disposed of at the Leased Property, except in compliance with all Environmental
Laws; [iv] asbestos has not been and will not be used in the construction of any
Improvements; [v] no permit is or has been required from the Environmental
Protection Agency or any similar agency or department of any state or local
government for the use or maintenance of any Improvements; [vi] underground
storage tanks on or under the Land, if any, have been and currently are being
operated in compliance with all applicable Environmental Laws; [vii] any
closure, abandonment in place or removal of an underground storage tank on or
from the Land was performed in compliance with applicable Environmental Laws and
any such tank had no release contaminating the Leased Property or, if there had
been a release, the release was remediated in compliance with applicable
Environmental Laws to the satisfaction of regulatory authorities; [viii] no
summons, citation or inquiry has been made by any such environmental unit, body
or agency or a third party demanding any right of recovery for payment or
reimbursement for costs incurred under CERCLA or any other Environmental Laws
and the Land is not subject to the lien of any such agency; and [ix] to the best
of Tenant's and Manager's knowledge, the environmental assessment of the
Facility (and all follow-up reports, supplements and amendments) that was
delivered to Landlord by Tenant in connection with the closing of this Lease is
true, complete and accurate. "Disposal" and "release" shall have the meanings
set forth in CERCLA.

                                     - 81 -
<PAGE>
            22.22 Leases and Contracts. As of the Effective Date, except as
disclosed on Exhibit I and to the best of Tenant's and Manager's knowledge,
there are no leases or contracts (including, but not limited to, insurance
contracts, maintenance contracts, construction contracts, employee benefit
plans, employment contracts, equipment leases, security agreements, architect
agreements, and management contracts) to which Tenant or Guarantor is a party
relating to any part of the ownership, operation, possession, construction,
management or administration of the Land or the Facility.

            22.23 No Default. As of the Effective Date, [i] there is no existing
Event of Default under this Lease; and [ii] no event has occurred which, with
the giving of notice or the passage of time, or both, would constitute or result
in such an Event of Default.

            22.24 Tax Status. If Tenant or Manager is a partnership or limited
liability company that has two or more members, it is taxable as a partnership
under the Internal Revenue Code and all applicable state tax laws.

                            ARTICLE 23: [RESERVED]

                          ARTICLE 24: SECURITY INTEREST

            24.1 Collateral. Tenant and each Manager hereby grant to each
Landlord and HCRI (collectively called "Secured Parties") a security interest in
the following described property, whether now owned or hereafter acquired by
Tenant or any Manager (the "Collateral"), to secure the payment and performance
of the BCC Obligations:

                  (a) All machinery, furniture, equipment, trade fixtures,
appliances, inventory and all other goods (as "equipment," "inventory" and
"goods" are defined for purposes of Article 9 ("Article 9") of the Uniform
Commercial Code as adopted in Tenant's and Manager's respective Organization
State) and any leasehold interest of Tenant or any Manager in any of the
foregoing, now or hereafter located in or on or used or usable in connection
with the Land, Improvements, or Fixtures and replacements, additions, and
accessions thereto, including, without limitation, those items which are to
become fixtures or which are building supplies and materials to be incorporated
into an Improvement or Fixture.

                  (b) All accounts, contract rights, general intangibles,
instruments, documents, and chattel paper [as


                                     - 82 -
<PAGE>
"accounts," "contract rights," "general intangibles," "instruments,"
"documents," and "chattel paper," are defined for purposes of Article 9] now or
hereafter arising in connection with the business located in or on or used or
usable in connection with the Land, Improvements, or Fixtures, and replacements,
additions, and accessions thereto.

                  (c) All franchises, permits, licenses, operating rights,
certifications, approvals, consents, authorizations and other general
intangibles regarding the use, occupancy or operation of the Improvements, or
any part thereof, including, without limitation, certificates of need, state
health care facility licenses, and Medicare and Medicaid provider agreements, to
the extent permitted by law.

                  (d) Unless expressly prohibited by the terms thereof, all
contracts, agreements, contract rights and materials relating to the design,
construction, operation or management of the Improvements, including, but not
limited to, plans, specifications, drawings, blueprints, models, mock-ups,
brochures, flyers, advertising and promotional materials and mailing lists.

                  (e) All subleases, occupancy agreements, license agreements
and concession agreements, written or unwritten, of any nature, covering all of
the Leased Property or any part thereof, now or hereafter entered into, and all
right, title and interest of Tenant thereunder, including, without limitation,
Tenant's right, if any, to cash or securities deposited thereunder whether or
not the same was deposited to secure performance by the subtenant, occupants,
licensees and concessionaires of their obligations thereunder, including the
right to receive and collect the rents, revenues, and other charges thereunder.

                  (f) All ledger sheets, files, records, computer programs,
tapes, other electronic data processing materials, and other documentation
relating to the preceding listed property or otherwise used or usable in
connection with the Land and Improvements.

                  (g) The products and proceeds of the preceding listed
property, including, without limitation, cash and non-cash proceeds, proceeds of
proceeds, and insurance proceeds.

            24.2 Additional Documents. At the request of Secured Parties, Tenant
and each Manager shall execute additional security agreements, financing
statements, and such other


                                     - 83 -
<PAGE>
documents as may be requested by Secured Parties to maintain and perfect such
security interest.

            24.3 Notice of Sale. With respect to any sale or other disposition
of any of the Collateral after the occurrence of an Event of Default, Secured
Parties, Tenant and each Manager agree that the giving of five days' notice by
Secured Parties, sent by overnight delivery, postage prepaid, to Tenant's or
Manager's notice address designating the time and place of any public sale or
the time after which any private sale or other intended disposition of such
Collateral is to be made, shall be deemed to be reasonable notice thereof and
Tenant and each Manager waive any other notice with respect thereto. Tenant and
each Manager authorize Secured Parties to file financing statements describing
the Collateral to perfect and maintain the security interest granted hereunder
without the signature or any further authorization of Tenant or any Manager.

            24.4 Recharacterization. Landlord and Tenant intend this Lease to be
a true lease. However, if despite the parties' intent, it is determined or
adjudged by a court for any reason that this Lease is not a true lease or if
this Lease is recharacterized as a financing arrangement, then this Lease shall
be considered a secured financing agreement and Landlord's title to the Leased
Property shall constitute a perfected first priority lien in Landlord's favor on
the Leased Property to secure the payment and performance of all the BCC
Obligations.

                            ARTICLE 25: MISCELLANEOUS

            25.1 Notices. Landlord, Tenant, and Manager hereby agree that all
notices, demands, requests, and consents (hereinafter "notices") required to be
given pursuant to the terms of this Lease shall be in writing, shall be
addressed to the addresses set forth in the introductory paragraph of this
Lease, and shall be served by [i] personal delivery; [ii] certified mail, return
receipt requested, postage prepaid; or [iii] nationally recognized overnight
courier. Notices to any Manager should be sent c/o Tenant at Tenant's address
set forth in the introductory paragraph. As a courtesy, Landlord shall send a
copy of any notice sent to Tenant to IPC at 28 Rue Jean Baptise Frescz, L-1542,
Luxembourg, Attention: J.B. Unsworth, but failure to send such a copy to IPC
shall not be a default of Landlord's obligations under this Lease nor shall such
failure render any notice to Tenant or Manager invalid or ineffective. All
notices shall be deemed to be given upon the earlier of actual receipt or three
days after mailing, or one Business Day after deposit with the overnight
courier. Any notices meeting the requirements of this section shall be
effective, regardless of whether or not actually received. Landlord, Tenant,
Manager or IPC may change its notice address at any time by giving the other
parties notice of such change.

                                     - 84 -
<PAGE>
            25.2 Advertisement of Leased Property. In the event the parties
hereto have not executed a renewal Lease within 120 days prior to the expiration
of this Lease, or Tenant has not exercised its Option to Purchase, then Landlord
or its agent shall have the right to enter the Leased Property at all reasonable
times for the purpose of exhibiting the Leased Property to others and to place
upon the Leased Property for and during the period commencing 120 days prior to
the expiration of this Lease, "for sale" or "for rent" notices or signs.

            25.3 Entire Agreement. This Lease and the Commitment contain the
entire agreement between Landlord and Tenant with respect to the subject matter
hereof. No representations, warranties, and agreements have been made by
Landlord except as set forth in this Lease. No oral agreements or understandings
between Landlord and Tenant, Company, and Guarantor or any Manager shall survive
execution of this Lease.

            25.4 Severability. If any term or provision of this Lease is held or
deemed by Landlord to be invalid or unenforceable, such holding shall not affect
the remainder of this Lease and the same shall remain in full force and effect,
unless such holding substantially deprives Tenant of the use of the Leased
Property or Landlord of the rents herein reserved, in which event this Lease
shall forthwith terminate as if by expiration of the Term.

            25.5 Captions and Headings. The captions and headings are inserted
only as a matter of convenience and for reference and in no way define, limit or
describe the scope of this Lease or the intent of any provision hereof.

            25.6 Governing Law. This Lease shall be governed by and construed in
accordance with the laws of the State of Ohio, except as to matters under which
the laws of a Facility State, or under applicable procedural conflicts of laws
rules, require the application of laws of such other state, in which case the
laws or conflicts of laws rules, as the case may be, of such state shall govern
to the extent required. The chief executive office of Landlord is located in the
State of Ohio. The Lease Advances will be made from Landlord's Ohio office and
Rent payments under this Lease will be received in Landlord's Ohio office.
Tenant acknowledges that the foregoing constitutes a sufficient nexus with the
State of Ohio such that the choice of law set forth in this section shall be
enforceable in all state and federal courts, including any court located in the
Facility State, and Tenant waives any claim or defense that such choice of law
is not enforceable.

                                     - 85 -
<PAGE>
            25.7 Memorandum of Lease. Tenant shall not record this Lease. Tenant
shall, however, record a memorandum of lease approved by Landlord upon
Landlord's request.

            25.8 Waiver. No waiver by Landlord of any condition or covenant
herein contained, or of any breach of any such condition or covenant, shall be
held or taken to be a waiver of any subsequent breach of such covenant or
condition, or to permit or excuse its continuance or any future breach thereof
or of any condition or covenant, nor shall the acceptance of Rent by Landlord at
any time when Tenant or Manager is in default in the performance or observance
of any condition or covenant herein be construed as a waiver of such default, or
of Landlord's right to terminate this Lease or exercise any other remedy granted
herein on account of such existing default.

            25.9  Binding Effect.  This Lease will be binding upon and inure
to the benefit of the heirs, successors, personal representatives, and
permitted assigns of Landlord, Tenant and Manager.

            25.10 No Offer. Landlord's submission of this Lease to Tenant is not
an offer to lease the Leased Property, or an agreement by Landlord to reserve
the Leased Property for Tenant. Landlord will not be bound to Tenant until
Tenant has duly executed and delivered duplicate original leases to Landlord,
and Landlord has duly executed and delivered one of these duplicate original
leases to Tenant.

            25.11 Modification. This Lease may only be modified by a writing
signed by both Landlord and Tenant. All references to this Lease, whether in
this Lease or in any other document or instrument, shall be deemed to
incorporate all amendments, modifications and renewals of this Lease, made after
the date hereof. If Landlord's consent is required in connection with any change
in ownership, merger or consolidation of Tenant or Guarantor, any assumption of
the Lease, or any modification of the Lease and Tenant requests such consent,
Tenant shall provide Landlord all relevant information and documents sufficient
to enable Landlord to evaluate the request. In connection with any such request,
Tenant shall pay to Landlord a fee in the amount of $2,000.00 and shall pay all
of Landlord's reasonable attorney's fees and expenses and other reasonable
out-of-pocket expenses incurred in connection with Landlord's evaluation of
Tenant's request, the preparation of any documents and amendments, the
subsequent amendment of any documents between Landlord and its collateral pool
lenders (if applicable), and all related matters.

                                     - 86 -
<PAGE>
            25.12 Landlord's Modification. Tenant acknowledges that Landlord
may, subject to Article 21, mortgage the Leased Property or use the Leased
Property as collateral for a collateralized mortgage obligations or Real Estate
Mortgage Investment Companies (REMICS). If any mortgage lender of Landlord
desires any modification of this Lease, Tenant agrees to consider such
modification in good faith and to execute an amendment of this Lease if Tenant
finds such modification acceptable.

            25.13 No Merger. The surrender of this Lease by Tenant or the
cancellation of this Lease by agreement of Tenant and Landlord or the
termination of this Lease on account of Tenant's default will not work a merger,
and will, at Landlord's option, terminate any subleases or operate as an
assignment to Landlord of any subleases. Landlord's option under this paragraph
will be exercised by notice to Tenant and all known subtenants of the Leased
Property.

            25.14 Laches. No delay or omission by either party hereto to
exercise any right or power accruing upon any noncompliance or default by the
other party with respect to any of the terms hereof shall impair any such right
or power or be construed to be a waiver thereof.

            25.15 Limitation on Tenant's Recourse. Tenant's sole recourse
against Landlord, and any successor to the interest of Landlord in the Leased
Property, is to the interest of Landlord, and any such successor, in the Leased
Property. Tenant will not have any right to satisfy any judgment which it may
have against Landlord, or any such successor, from any other assets of Landlord,
or any such successor. In this section, the terms "Landlord" and "successor"
include the shareholders, venturers, and partners of "Landlord" and "successor"
and the officers, directors, and employees of the same. The provisions of this
section are not intended to limit Tenant's right to seek injunctive relief or
specific performance.

            25.16 Construction of Lease. This Lease has been prepared by
Landlord and its professional advisors and reviewed by Tenant and its
professional advisors. Landlord, Tenant, and their advisors believe that this
Lease is the product of all their efforts, that it expresses their agreement,
and agree that it shall not be interpreted in favor of either Landlord or Tenant
or against either Landlord or Tenant merely because of their efforts in
preparing it.

                                     - 87 -
<PAGE>
            25.17 Counterparts.  This Lease may be executed in multiple
counterparts, each of which shall be deemed an original hereof.

            25.18 Lease Guaranty. The payment of Rent and the performance of
Tenant's obligations arising under this Lease are guaranteed by Guarantor
pursuant to a Lease Guaranty of even date and secured by a stock pledge made by
Guarantor in favor of Landlord pursuant to a Stock Pledge Agreement of even
date.

            25.19 Custody of Escrow Funds. Except as otherwise specifically
provided in this Lease, any funds paid to Landlord in escrow hereunder may be
held by Landlord or, at Landlord's election, by a financial institution, the
deposits or accounts of which are insured or guaranteed by a federal or state
agency. The funds shall not be deemed to be held in trust, may be commingled
with the general funds of Landlord or such other institution, and shall not bear
interest.

            25.20 Landlord's Status as a REIT. Tenant acknowledges that Landlord
(or a Landlord Affiliate) has now and may hereafter elect to be taxed as a real
estate investment trust ("REIT") under the Internal Revenue Code.

            25.21 Exhibits.  All of the exhibits referenced in this Lease are
attached hereto and incorporated herein.

            25.22 WAIVER OF JURY TRIAL. LANDLORD, TENANT, AND MANAGER WAIVE
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY ONE OF
THEM AGAINST ONE OR MORE OF THE OTHERS ON ALL MATTERS ARISING OUT OF THIS LEASE
OR THE USE AND OCCUPANCY OF THE LEASED PROPERTY (EXCEPT CLAIMS FOR PERSONAL
INJURY OR PROPERTY DAMAGE). IF LANDLORD COMMENCES ANY SUMMARY PROCEEDING FOR
NONPAYMENT OF RENT, TENANT AND MANAGER WILL NOT INTERPOSE, AND WAIVE THE RIGHT
TO INTERPOSE, ANY COUNTERCLAIM IN ANY SUCH PROCEEDING.

            25.23 CONSENT TO JURISDICTION. TENANT AND MANAGER HEREBY IRREVOCABLY
SUBMIT AND CONSENT TO THE NONEXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR
FEDERAL COURT HAVING JURISDICTION OVER LUCAS COUNTY, OHIO OR ANY COUNTY IN WHICH
A FACILITY IS LOCATED FOR ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
MATTER ARISING FROM OR RELATED TO [I] THE COMMITMENT; [II] THIS LEASE; OR [III]
ANY DOCUMENT EXECUTED BY TENANT AND MANAGER IN CONNECTION WITH THIS LEASE.
TENANT AND MANAGER HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT TENANT AND
MANAGER MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING.


                                     - 88 -
<PAGE>
TENANT AND MANAGER AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.

            TENANT AND MANAGER AGREE NOT TO INSTITUTE ANY LEGAL ACTION OR
PROCEEDING AGAINST LANDLORD OR ANY DIRECTOR, OFFICER, EMPLOYEE, AGENT OR
PROPERTY OF LANDLORD, CONCERNING ANY MATTER ARISING OUT OF OR RELATING TO THE
COMMITMENT, THIS LEASE OR ANY RELATED DOCUMENT IN ANY COURT OTHER THAN A STATE
OR FEDERAL COURT HAVING JURISDICTION OVER LUCAS COUNTY, OHIO.

            TENANT AND MANAGER HEREBY CONSENT TO SERVICE OF PROCESS BY LANDLORD
IN ANY MANNER AND IN ANY JURISDICTION PERMITTED BY LAW. NOTHING HEREIN SHALL
AFFECT OR IMPAIR LANDLORD'S RIGHT TO SERVE LEGAL PROCESS IN ANY MANNER PERMITTED
BY LAW, OR LANDLORD'S RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST TENANT,
MANAGER OR THE PROPERTY OF TENANT OR MANAGER IN THE COURTS OF ANY OTHER
JURISDICTION.

            25.24 Attorney's Fees and Expenses. Tenant shall pay to Landlord all
reasonable costs and expenses incurred by Landlord in administering this Lease
and the security for this Lease, enforcing or preserving Landlord's rights under
this Lease and the security for this Lease, and in all matters of collection,
whether or not an Event of Default has actually occurred or has been declared
and thereafter cured, including, but not limited to, [a] reasonable attorney's
and paralegal's fees and disbursements; [b] the fees and expenses of any
litigation, administrative, bankruptcy, insolvency, receivership and any other
similar proceeding; [c] court costs; [d] the expenses of Landlord, its
employees, agents, attorneys and witnesses in preparing for litigation,
administrative, bankruptcy, insolvency and other proceedings and for lodging,
travel, and attendance at meetings, hearings, depositions, and trials; and [e]
consulting and witness fees and expenses incurred by Landlord in connection with
any litigation or other proceeding; provided, however, Landlord's internal
bookkeeping and routine lease servicing costs are not payable by Tenant.

            25.25 Survival. The following provisions shall survive termination
of the Lease: Article 9 (Damage and Destruction); Article 10 (Condemnation);
Section 15.9 (Transfer of License and Facility Operations); Section 15.10 (Bed
Operating Rights); Section 18.2 (Assignment or Sublease); Article 19 (Holdover
and Surrender); Article 24 (Security Interest); and Section 25.25 (Survival).

                                     - 89 -
<PAGE>
            25.26 Time.  Time is of the essence in the performance of this
Lease.

            25.27 Manager. Each Manager has joined in the execution of this
Lease to acknowledge that Manager is subject to and bound by the terms of the
Lease applicable to Manager, including, without limitation, the grant of a
security interest under Article 24.

            25.28 Company. Company has joined in the execution of this Lease to
acknowledge that Company is subject to and bound by the terms of the Lease
applicable to Company.

            25.29 Access to Records. To the extent required by law, Landlord
shall (and, if Landlord carries out any of the duties under this Lease, whether
on Landlord's, Tenant's, or Manager's behalf, through a subcontract with a
related organization and such subcontract has a value or cost of Ten Thousand
Dollars ($10,000) or more during any twelve (12) month period, such subcontract
shall contain a clause to the effect that the subcontractor shall, until the
expiration of four (4) years after the furnishing of services pursuant to this
Lease, make available, upon request by the Secretary of Health and Human
Services or upon the request by the U.S. Comptroller General, or any duly
authorized representative of either of them, the books, documents and records of
Landlord (or such subcontractor) that are necessary to verify the nature and
extent of such costs in connection with said services.

                                     - 90 -
<PAGE>
            25.30 Granting of Easements and Rights-of-Way. From time to time at
the request of Tenant or Manager (but at no cost to Landlord), Landlord shall
execute and deliver, in recordable form, such easements, rights-of-way and
similar agreements as may be necessary or desirable for the provision of utility
and other services to the Facility.


           [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

                                     - 91 -
<PAGE>
            IN WITNESS WHEREOF, the parties hereto have executed this Lease
or caused the same to be executed by their respective duly authorized officers
as of the date first set forth above.


Signed and acknowledged in the presence   PENNSYLVANIA BCC PROPERTIES, INC.
of:
                                          By:/s/Erin C. Ibele
Signature/s/Rita J. Rogge
Print Name Rita J. Rogge                     Title: Vice President and
                                                    Corporate Secretary
Signature/s/Kathleen A. Sullivan
Print Name Kathleen A. Sullivan


                                          HCN BCC HOLDINGS, INC.

Signature/s/Rita J. Rogge                 By:/s/Erin C. Ibele
Print Name Rita J. Rogge
                                             Title: Vice President and
Signature/s/Kathleen A. Sullivan                    Corporate Secretary
Print Name Kathleen A. Sullivan



                                          HEALTH CARE REIT, INC.

Signature/s/Rita J. Rogge                 By:/s/Erin C. Ibele
Print Name Rita J. Rogge
                                             Title: Vice President and
Signature/s/Kathleen A. Sullivan                   Corporate Secretary
Print Name Kathleen A. Sullivan
                                          (signing for purposes of accepting
                                          Section 1.5 appointment of agency only
                                          and agreeing to Secured Party
                                          obligations)
<PAGE>
                                          BALANCED CARE TENANT (HCN), INC.

Signature/s/Theresa M. Haddad             By:/s/Robin L. Barber
Print Name Theresa M. Haddad                   Robin L. Barber
                                               Vice President and
Signature/s/Barbara Davis                      Secretary
Print Name Barbara Davis
                                          Tax I.D. No.:

                                          FINANCIAL CARE INVESTORS OF LEBANON,
                                          LLC

Signature/s/Theresa M. Haddad             By:/s/Robin L. Barber
Print Name Theresa M. Haddad                   Robin L. Barber
                                               Vice President and
Signature/s/Barbara Davis                      Secretary
Print Name Barbara Davis
                                          Tax I.D. No.:  25-1824382


                                          FINANCIAL CARE INVESTORS OF
                                          LOYALSOCK, LLC

Signature/s/Theresa M. Haddad             By:/s/Robin L. Barber
Print Name Theresa M. Haddad                   Robin L. Barber
                                               Vice President and
Signature/s/Barbara Davis                      Secretary
Print Name Barbara Davis
                                          Tax I.D. No.:  25-1824381


                                          FINANCIAL CARE INVESTORS OF SAGAMORE
                                          HILLS, LLC

Signature/s/Theresa M. Haddad             By:/s/Robin L. Barber
Print Name Theresa M. Haddad                   Robin L. Barber
                                               Vice President and
Signature/s/Barbara Davis                      Secretary
Print Name Barbara Davis
                                          Tax I.D. No.:  25-1824378

                                     - 2 -
<PAGE>
                                          BALANCED CARE AT SAXONBURG, INC.

Signature/s/Theresa M. Haddad             By:/s/Robin L. Barber
Print Name Theresa M. Haddad                   Robin L. Barber
                                               Vice President and
Signature/s/Barbara Davis                      Secretary
Print Name Barbara Davis
                                          Tax I.D. No.:  23-2927779


                                          BALANCED CARE AT BLOOMSBURG II, INC.

Signature/s/Theresa M. Haddad             By:/s/Robin L. Barber
Print Name Theresa M. Haddad                   Robin L. Barber
                                               Vice President and
Signature/s/Barbara Davis                      Secretary
Print Name Barbara Davis
                                          Tax I.D. No.:  23-2933845


                                          BALANCED CARE AT LEBANON, INC.

Signature/s/Theresa M. Haddad             By:/s/Robin L. Barber
Print Name Theresa M. Haddad                   Robin L. Barber
                                               Vice President and
Signature/s/Barbara Davis                      Secretary
Print Name Barbara Davis
                                          Tax I.D. No.:  25-1808403



                                          BALANCED CARE AT LOYALSOCK, INC.

Signature/s/Theresa M. Haddad             By:/s/Robin L. Barber
Print Name Theresa M. Haddad                   Robin L. Barber
                                               Vice President and
Signature/s/Barbara Davis                      Secretary
Print Name Barbara Davis
                                          Tax I.D. No.:  25-1808434

                                     - 3 -
<PAGE>
                                          BALANCED CARE AT SAGAMORE HILLS, INC.

Signature/s/Theresa M. Haddad             By:/s/Robin L. Barber
Print Name Theresa M. Haddad                   Robin L. Barber
                                               Vice President and
Signature/s/Barbara Davis                      Secretary
Print Name Barbara Davis
                                          Tax I.D. No.:  25-1808426

                                     - 4 -
<PAGE>
                         EXHIBIT M: COVENANT EXCEPTIONS


Exceptions to Section 14.5:

1.    Financial Care Investors of Lebanon, LLC and Balanced Care at Lebanon,
Inc. may merge.

2.    Financial Care Investors of Loyalsock, LLC and Balanced Care at
Loyalsock, Inc. may merge.

3.    Financial Care Investors of Sagamore Hills, LLC and Balanced Care at
Sagamore Hills, Inc. may merge.

4. Notwithstanding Section 14.5 of the Lease or anything else to the contrary
contained in the Lease or any of the other Lease Documents, Landlord hereby
acknowledges and agrees that [i] Company may be merged, consolidated or
otherwise combined with, or [ii] Company's assets may be sold, assigned, leased
or otherwise transferred to, or [iii] Company's Voting Stock (as defined below)
may be sold, assigned or otherwise transferred to, any of the Reichmann Entities
(as defined below), whether in one transaction or a series of transactions, and
whether now owned or hereafter acquired.

      As used herein, the term "Reichmann Entities" shall mean any of the
following, acting separately or in concert:

            (a)   Paul Reichmann or any member of his family or any entity
                  controlled by him or any of them.

            (b)   any trust for the benefit of Paul Reichmann or any one or
                  more members of his family or any entity controlled by such
                  a trust, including without limitation RH Investments
                  Limited, a Cayman Islands corporation ("RH"), VXM
                  Investments Limited, a Cayman Islands corporation ("VXM"),
                  LXB Investments Limited, a Cayman Islands corporation
                  ("LXB"), IPC Advisors S.a.r.l., a Luxembourg corporation
                  ("IPC"), and/or any Affiliate of VXM, RH, LXB or IPC.

      As used herein, the term "Voting Stock" shall collectively mean [i] any
and all classes of capital stock of a corporation to which any voting rights are
ascribed to the holders thereof, at law or by contract, together with [ii] any
contracts for the purchase of such stock already issued by that corporation,


                                     - 5 -
<PAGE>
[iii] subscriptions for the purchase of such stock to be issued by that
corporation, [iv] options to purchase such stock, [v] warrants for such stock,
[vi] securities convertible into such stock, [vii] voting trusts, proxies, or
other agreements or understandings with respect to the voting of such stock, or
[viii] purchase rights, exchange rights, or other contracts or commitments that
could require that corporation to sell, transfer, or otherwise dispose of any
such stock or that could require that corporation to issue, sell, or otherwise
cause to become outstanding any of such stock.

Exceptions to Section 14.9:

1. Company shall be permitted to pay dividends to shareholders and regularly
scheduled salary and bonus payments (but no extraordinary salary, bonuses, or
other compensation).

                                     - 6 -