FACILITY LEASE AGREEMENT

     This FACILITY LEASE AGREEMENT ("Lease") is dated as of the 7th day of
August, 1998 and is between CCC OF NEW JERSEY, INC. ("Lessor"), a Delaware
corporation having its principal office at 197 First Avenue, Needham Heights,
Massachusetts 02194, and CAREMATRIX OF PRINCETON (SNF), INC. ("Lessee"), a
Delaware corporation, having its principal office at 197 First Avenue, Needham
Heights, Massachusetts 02194.


                                    ARTICLE 1
                                    ---------

                 LEASED PROPERTY; TERM; CONSTRUCTION; EXTENSIONS
                 -----------------------------------------------

     1.1 Leased Property. Upon and subject to the terms and conditions
hereinafter set forth, the Lessor leases to the Lessee and the Lessee rents and
leases from the Lessor all of the Lessor's rights and interests in and to the
following real and personal property (collectively, the "Leased Property"):

     (a) the real property described in EXHIBIT A-1 attached hereto (the
"Land");

     (b) all buildings, structures, Fixtures (as hereinafter defined) and other
improvements of every kind including, but not limited to, alleyways and
connecting tunnels, sidewalks, utility pipes, conduits and lines, and parking
areas and roadways appurtenant to such buildings and structures presently or
hereafter situated upon the Land (collectively, the "Leased Improvements");

     (c) all easements, rights and appurtenances of every nature and description
now or hereafter relating to or benefiting any or all of the Land and the Leased
Improvements;

     (d) all equipment, machinery, building fixtures, and other items of
property (whether realty, personalty or mixed), including all components
thereof, now or hereafter located in, on or used in connection with, and
permanently affixed to or incorporated into the Leased Improvements, including,
without limitation, all furnaces, boilers, heaters, electrical equipment,
heating, plumbing, lighting, ventilating, refrigerating, incineration, air and
water pollution control, waste disposal, air-cooling and air-conditioning
systems and apparatus, sprinkler systems and fire and theft protection
equipment, and built-in oxygen and vacuum systems, all of which, to the greatest
extent permitted by law, are hereby deemed by the parties hereto to constitute
real estate, together with all replacements, modifications, alterations and
additions thereto, but specifically excluding all items included within the
category of Tangible Personal Property (as hereinafter defined) which are not
permanently affixed to or incorporated in the Leased Property (collectively, the
"Fixtures");

     (e) those portions of the Building Systems (as hereinafter defined) not
situated upon the Land or located in or on the Leased Improvements that
exclusively serve the Facility (as

<PAGE>

hereinafter defined), including, without limitation, any meter solely
determining utility consumption by the Facility; and

     (f) the Lessor's Personal Property (as hereinafter defined);

RESERVING THEREFROM THE FOLLOWING IN FAVOR OF THE LESSOR DURING THE TERM OF THIS
LEASE:

     (i)     Access to the Leased Property at such reasonable times, and only to
             the extent reasonably necessary, to repair, replace, renovate,
             alter, and modify those portions of the Utility Systems, and the
             pipes, flues, conduits and other appurtenances to the gas-fired hot
             water heating production equipment, domestic hot water boiler
             equipment and air conditioning production equipment which may now
             or hereafter be located within the Facility and which are necessary
             for the full use and enjoyment of the Medical Center;

     (ii)    The right to enter upon the Leased Property from time to time and
             at any time as may be necessary in case of emergency to preserve
             life and/or property located in the Medical Center; and

     (iii)   The following non-exclusive rights in favor of Lessor, its
             officers, employees, agents, contractors, tenants, subtenants,
             servants, visitors, business invitees and licensees, as rights
             appurtenant to the Medical Center:

                  (x)  vehicular and pedestrian ingress and egress in connection
                       with the full use and enjoyment of the Medical Center
                       over and across: (a) Evergreen Drive and Windrow Drive
                       and all sidewalks appurtenant thereto and located on the
                       Leased Property, as the same may from time to time be
                       constructed and maintained, for all purposes for which
                       public roads and sidewalks are used in the Township of
                       Plainsboro, New Jersey, and (b) those driveway areas,
                       parking lot aisles, and all sidewalks and foot paths,
                       whether or not appurtenant to such driveway areas, on the
                       Leased Property, as the same may from time to time be
                       constructed and maintained, for all purposes for which
                       public roads and sidewalks are used in the Township of
                       Plainsboro, New Jersey; and

                  (y)  the parking of vehicles upon any of the parking areas on
                       the Leased Property, as the same may from time to time be
                       constructed and maintained for such use.

     The Leased Property is leased in its present condition, AS IS, without
representation or warranty of any kind, express or implied, by the Lessor and
subject to: (i) the rights of parties in possession; (ii) the existing state of
title including all covenants, conditions, Liens (as hereinafter

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defined) and other matters of record (including, without limitation, the matters
set forth in EXHIBIT B); (iii) all applicable laws and (iv) all matters, whether
or not of a similar nature, which would be disclosed by an inspection of the
Leased Property or by an accurate survey thereof.

     1.2 Term. The term of this Lease shall consist of: the "Initial Term",
which shall commence on August 7, 1998 (the "Commencement Date") and end on
August 6, 2013 (the "Expiration Date"); provided, however, that this Lease may
be sooner terminated as hereinafter provided. In addition, the Lessee shall have
the option(s) to extend the Term (as hereinafter defined) as provided for in
Section 1.3.

     1.3 Extended Terms. Provided that this Lease has not been previously
terminated, and as long as there exists no Lease Default (as hereinafter
defined) at the time of exercise and on the last day of the Initial Term or the
then current Extended Term (as hereinafter defined), as the case may be, the
Lessee is hereby granted the option to extend the Initial Term of this Lease for
three (3) additional periods (collectively, the "Extended Terms") as follows:
three (3) successive five (5) year periods for a maximum Term, if all such
options are exercised, which ends on August 6, 2028. The Lessee's extension
options shall be exercised by the Lessee by giving written notice to the Lessor
of each such extension at least one hundred eighty (180) days, but not more than
three hundred sixty (360) days, prior to the termination of the Initial Term or
the then current Extended Term, as the case may be. The Lessee shall have no
right to rescind any such notice once given. The Lessee may not exercise its
option for more than one Extended Term at a time. During each effective Extended
Term, all of the terms and conditions of this Lease shall continue in full force
and effect.


                                    ARTICLE 2
                                    ---------

                      DEFINITIONS AND RULES OF CONSTRUCTION
                      -------------------------------------

     2.1 Definitions. For all purposes of this Lease and the other Lease
Documents (as hereinafter defined), except as otherwise expressly provided or
unless the context otherwise requires, (i) the terms defined in this Article
have the meanings assigned to them in this Article and include the plural as
well as the singular and (ii) all references in this Lease or any of the other
Lease Documents to designated "Articles", "Sections" and other subdivisions are
to the designated Articles, Sections and other subdivisions of this Lease or the
other applicable Lease Document.

     Access Easement Areas: As defined in the Service, Maintenance and Easement
Agreement.

     Accounts: As defined in the UCC.

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     Accreditation Body: All Persons now or hereafter having or claiming
jurisdiction over the accreditation, certification, evaluation or operation of
the Facility.

     Act: As defined in Section 11.4.

     Additional Charges: As defined in Article 3.

     Additional Debt Service Payments: All payments, other than the Debt Service
Rental Payments, due and payable under any Fee Mortgage Loan Documents,
including, without limitation, all reserves, deposits and other costs, expenses
and charges due and payable thereunder (including, without limitation, any other
costs, expenses and late charges incurred by the Lessor as a result of any
failure by Lessee to satisfy, on a timely basis, the obligations set forth under
Section 3.1 and Section 3.3), but, specifically excluding (i) any so-called
"balloon payments" due at the maturity of any loan evidenced by any Fee Mortgage
Loan Documents and all costs and expenses incurred in connection with any
refinancing thereof and (ii) any payments, reserves, deposits and other costs,
expenses and charges due and payable with respect to the CMC Land (and/or any
other real property owned by the Lessor), including, without limitation all
amounts due under the CMC Note and the ALF Note as such terms are defined under
the MMI Loan Documents.

     Additional Land: As defined in Section 9.3.

     Additional Rent: As defined in Section 3.3.

     Affiliate: With respect to any Person (i) any other Person which, directly
or indirectly, controls or is controlled by or is under common control with such
Person, (ii) any other Person that owns, beneficially, directly or indirectly,
five percent (5%) or more of the outstanding capital stock, shares or equity
interests of such Person or (iii) any officer, director, employee, general
partner or trustee of such Person, or any other Person controlling, controlled
by, or under common control with, such Person (excluding trustees and Persons
serving in a fiduciary or similar capacity who are not otherwise an Affiliate of
such Person); provided, however, that notwithstanding the foregoing, in no event
shall any of the following entities be deemed to be an Affiliate of the Lessee:
(i) PhyMatrix Corp., a Delaware corporation and its wholly-owned Subsidiaries
and (ii) Sun Healthcare Group, Inc., a Delaware corporation. For the purposes of
this definition, "control" (including the correlative meanings of the terms
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
through the ownership of voting securities, partnership interests, membership
interests or other equity interests.

     Air Conditioning System: The electric air-conditioning production equipment
located in the Medical Center and serving the Facility only, as well as all
pipes, flues, conduits and other

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appurtenances located in the Building and serving such production equipment
and/or delivering chilled water therefrom, including all additions,
substitutions and replacements thereto.

     Appurtenant Agreements: Collectively, all instruments, documents and other
agreements that now or hereafter create any utility, access or other rights or
appurtenances benefiting or relating to the Leased Property.

     Assisted Living Facility: The 83-unit assisted living facility located on
real property owned by the Lessor adjoining the SNF/CMC Land and more
particularly shown as New Lot 3.07 on the Subdivision Plan.

     Assignment and Assumption Agreement: The Assignment and Assumption
Agreement of even date herewith by and among the Seller, the Lessor and MMI.

     Award: All compensation, sums or anything of value awarded, paid or
received on a total or partial Condemnation.

     Bankruptcy Code: Subsection 365(h) of the United States Bankruptcy Code, 11
U.S.C. ss.365(h), as the same may hereafter be amended and including any
successor provision thereto.

     Base Debt Service Rental Payments: As defined in Section 3.1.

     Base Rent: As defined in Article 3.

     Billable Facility Heating Amount: The product of (i) the total number of
BTUs delivered by the Heating System to the Facility for heating during the
applicable period, determined by reference to the BTU meter on the forced hot
water line serving only the Facility, multiplied by (ii) an efficiency factor of
1.25.

     Building: Collectively, the Facility, the Assisted Living Facility and the
Medical Center.

     Building Systems: Collectively, the Heating System, the Hot Water System,
the Air Conditioning System and the Utility Systems.

     Business Day: Any day which is not a Saturday or Sunday or a public holiday
under the laws of the United States of America, the Commonwealth of
Massachusetts, the State or the state in which the Lessor's depository bank is
located.

     Capital Additions: Collectively, all new buildings and additional
structures annexed to any portion of any of the Leased Improvements and material
expansions of any of the Leased Improvements which are constructed on any
portion of the Land during the Term, including, without limitation, the
construction of a new wing or new story, the renovation of any of the Leased
Improvements on the Leased Property in order to provide a functionally new
facility that

                                      -5-
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is needed or used to provide services not previously offered and any expansion,
construction, renovation or conversion or in order to (i) increase the bed or
unit capacity of the Facility, (ii) change the purpose for which such beds or
units are utilized and/or (iii) change the utilization of any material portion
of any of the Leased Improvements.

     Capital Addition Cost: The cost of any Capital Addition made by the Lessee
whether paid for by the Lessee or the Lessor. Such cost shall include all costs
and expenses of every nature whatsoever incurred directly or indirectly in
connection with the development, permitting, construction and financing of a
Capital Addition as reasonably determined by, or to the reasonable satisfaction
of, the Lessor.

     CARF: The Commission on Accreditation of Rehabilitation Facilities.

     Cash Flow: The Consolidated Net Income (or Consolidated Net Loss), arising
solely from the operation of the Leased Property, before federal and state
income taxes for any period plus (i) the amount of the provision for
depreciation and amortization actually deducted on the books of the applicable
Person for the purposes of computing such Consolidated Net Income (or
Consolidated Net Loss) for the period involved, plus (ii) Rent.

     Casualty: As defined in Section 13.1.

     Champus: The Civilian Health and Medical Program of the Uniform Service, a
program of medical benefits covering retirees and dependents of members or
former members of a uniformed service provided, financed and supervised by the
United States Department of Defense and established by 10 USC ss.ss.1071 et seq.

     CMC Land: The real property comprising that portion of the SNF/CMC Land on
which the Medical Center is located, which property contains approximately
20,205 square feet of land and is more particularly described on EXHIBIT A-2
attached hereto.

     Chattel Paper: As defined in the UCC.

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

     Commencement Date: As defined in Section 1.2.

     Common Work: As defined in Section 8.1.4.

     Common Work Costs: As defined in Section 4.4.3.

     Condemnation: With respect to the Leased Property or any interest therein
or right accruing thereto or use thereof (i) the exercise of any Governmental
Authority, whether by legal proceedings or otherwise, by a Condemnor or (ii) a
voluntary sale or transfer by the Lessor to any

                                      -6-
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Condemnor, either under threat of Condemnation or Taking or while legal
proceedings for Condemnation or Taking are pending.

     Condemnor: Any public or quasi-public authority, or private corporation or
individual, having the power of condemnation.

     Consolidated and Consolidating: The consolidated and consolidating accounts
of the relevant Person and its Subsidiaries consolidated in accordance with
GAAP.

     Consolidated Financials: For any fiscal year or other accounting period for
any Person and its consolidated Subsidiaries, statements of earnings and
retained earnings and of changes in financial position for such period and for
the period from the beginning of the respective fiscal year to the end of such
period and the related balance sheet as at the end of such period, together with
the notes thereto, all in reasonable detail and setting forth in comparative
form the corresponding figures for the corresponding period in the preceding
fiscal year, and prepared in accordance with GAAP, and disclosing all
liabilities of such Person and its consolidated Subsidiaries, including, without
limitation, contingent liabilities.

     Consultants: Collectively, the architects, engineers, inspectors, surveyors
and other consultants that are engaged from time to time by the Lessor to
perform services for the Lessor in connection with this Lease.

     Consumer Price Index: The Consumer Price Index for Urban Wage Earners and
Clerical Workers, All Items-U.S. Cities Average (1982-84=100), published by the
Bureau of Labor Statistics, U.S. Department of Labor; provided, that, if the
compilation of the Consumer Price Index in its present form and calculated on
its present basis is discontinued or transferred to any other Governmental
Authority, then, the index most similar to the Consumer Price Index published by
the Bureau of Labor Statistics shall be used. If there is no such similar index,
a substitute index which is then generally recognized as being similar to the
Consumer Price Index shall be used, with such substitute index to be reasonably
selected by the Lessor and the Lessee.

     Contracts: All agreements (including, without limitation, Provider
Agreements and Patient Admission Agreements), contracts, (including without
limitation, construction contracts, subcontracts, and architects' contracts,)
contract rights, warranties and representations, franchises, and records and
books of account benefiting, relating to or affecting the Leased Property or the
ownership, construction, development, maintenance, management, repair, use,
occupancy, possession, or operation thereof, or the operation of any programs or
services in conjunction with the Leased Property and all renewals, replacement
and substitutions therefor, now or hereafter issued by or entered into with any
Governmental Authority, Accreditation Body or Third Party Payor or maintained or
used by any member of the Leasing Group or entered into by any member of the
Leasing Group with any third Person.

                                      -7-
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     Date of Taking: The date the Condemnor has the right to possession of the
property being condemned.

     Debt Service: All payments due and payable under any promissory note
secured by a Fee Mortgage, including, without limitation, principal, interest,
additional interest and any other costs, expenses and late charges incurred by
the Lessor as a result of any failure by Lessee to satisfy, on a timely basis,
the obligations set forth under Section 3.1, but specifically excluding any
so-called "balloon payments" due at the maturity thereof and all costs and
expenses incurred in connection with any refinancing thereof.

     Debt Service Rental Payments: As defined in Section 3.1.

     Deed: As defined in Section 18.3.

     Documents: As defined in the UCC.

     Encumbrance: As defined in Section 20.3.

     Environmental Enforcement Actions: Collectively, all actions or orders
instituted, threatened or required by any Governmental Authority and all claims
made or threatened by any Person against Lessee or the Leased Property (or any
other occupant, prior occupant or prior owner thereof or any other Person),
arising out of or in connection with any of the Environmental Laws or the
assessment, monitoring, clean-up, containment, remediation or removal of, or
damages caused or alleged to be caused by, any Hazardous Substances (i) located
on or under the Leased Property, (ii) emanating from the Leased Property or
(iii) generated, stored, transported, utilized, disposed of, managed or released
by Lessee or any other occupant of the Leased Property.

     Environmental Laws: Collectively, all Legal Requirements applicable to (i)
environmental conditions on, under or emanating from the Leased Property and
(ii) the generation, storage, transportation, utilization, disposal, management
or release (whether or not on, under or from the Leased Property) of Hazardous
Substances by the Lessee.

     ERISA: The Employment Retirement Income Security Act of 1974, as amended.

     Event of Default: As defined in Article 16.

     Expiration Date: As defined in Section 1.2.

     Extended Terms: As defined in Section 1.3.

     Facility: The 180-bed skilled nursing facility known as The Forrestal
Skilled Nursing & Rehabilitation Center (together with related parking and other
amenities).

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     Failure to Perform: As defined Article 16.

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

     Fair Market Base Rent: As defined in SCHEDULE 3.1.

     Fair Market Value of the Capital Addition: The amount by which the Fair
Market Value of the Leased Property upon the completion of a particular Capital
Addition exceeds the Fair Market Value of the Leased Property just prior to the
construction of the particular Capital Addition.

     Fair Market Value of the Leased Property: The fair market value of the
Leased Property, including all Capital Additions, and including the Land and all
other portions of the Leased Property, and (a) assuming the same is unencumbered
by this Lease, (b) determined in accordance with the appraisal procedures set
forth in Section 18.2 or in such other manner as shall be mutually acceptable to
the Lessor and the Lessee (including, without limitation, as a negotiated
percentage of total project costs) and (c) not taking into account any reduction
in value resulting from any Lien to which the Leased Property is subject and
which Lien the Lessee or the Lessor is otherwise required to remove at or prior
to closing of the transaction. However, the positive or negative effect on the
value of the Leased Property attributable to the interest rate, amortization
schedule, maturity date, prepayment provisions and other terms and conditions of
any Lien on the Leased Property which is not so required or agreed to be removed
shall be taken into account in determining the Fair Market Value of the Leased
Property. The Fair Market Value of the Leased Property shall be determined as
the overall value based on due consideration of the "income" approach, the
"comparable sales" approach, and the "replacement cost" approach.

     Fair Market Value of the Material Structural Work: The amount by which the
Fair Market Value of the Leased Property upon the completion of any particular
Material Structural Work exceeds the Fair Market Value of the Leased Property
just prior to the construction of the applicable Material Structural Work.

     Fee Mortgage: As defined in Section 20.3.

     Fee Mortgage Loan Documents: Collectively, all documents, instruments and
agreements now or hereafter executed by the Lessor evidencing and/or securing
any loan secured by any Fee Mortgage, as the same may be amended, modified or
extended from time to time.

     Fee Mortgagee: As defined in Section 20.3.

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     Financing Party: Any Person who is or may be participating with the Lessor
in any way in connection with the financing of any Capital Addition.

     Fiscal Quarter: Each of the three (3) month periods commencing on January
1st, April 1st, July 1st and October 1st.

     Fiscal Year: The twelve (12) month period from January 1st to 
December 31st.

     Fixtures: As defined in Article 1.

     GAAP: Generally accepted accounting principles, consistently applied
throughout the relevant period.

     General Intangibles: As defined in the UCC.

     Governmental Authorities: Collectively, all agencies, authorities, bodies,
boards, commissions, courts, instrumentalities, legislatures, and offices of any
nature whatsoever of any government, quasi-government unit or political
subdivision, whether with a federal, state, county, district, municipal, city or
otherwise and whether now or hereinafter in existence.

     Gross Revenues: Collectively, all revenues generated by reason of the
operation of the Leased Property (including any Capital Additions), whether or
not directly or indirectly received or to be received by the Lessee, including,
without limitation, all revenues received or receivable for the use of, or
otherwise by reason of, all rooms, beds, units and other facilities provided,
meals served, services performed, space or facilities subleased or goods sold on
or from the Leased Property and further including, without limitation, except as
otherwise specifically provided below, any consideration received under any
subletting, licensing, or other arrangements with any Person relating to the
possession or use of the Leased Property and all revenues from all ancillary
services provided at or relating to the Leased Property; provided, however, that
Gross Revenues shall not include non-operating revenues such as interest income
or gain from the sale of assets not sold in the ordinary course of business and
shall not include the proceeds of any loan received by the Lessee; and provided,
further, that there shall be excluded or deducted (as the case may be) from such
revenues:

     (i) contractual allowances (relating to any period during the Term of this
Lease and thereafter until the Rent hereunder is paid in full) for billings not
paid by or received from the appropriate Governmental Agencies or Third Party
Payors,

     (ii) allowances according to GAAP for uncollectible accounts,

     (iii) all proper patient and/or resident billing credits and adjustments
according to GAAP relating to health care accounting,

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     (iv) federal, state or local sales, use, gross receipts and excise taxes
and any tax based upon or measured by said Gross Revenues which is added to or
made a part of the amount billed to the patient, resident or other recipient of
such services or goods, whether included in the billing or stated separately,

     (v) provider discounts for hospital or other medical facility utilization
contracts,

     (vi) the cost of any federal, state or local governmental program imposed
specially to provide or finance indigent patient and/or resident care (other
than Medicare, Medicaid and the like), and

     (vii) deposits refundable to residents of the Facility.

     To the extent that the Leased Property is subleased or occupied by an
Affiliate of the Lessee which is a wholly-owned subsidiary of the Guarantor,
Gross Revenues calculated for all purposes of this Lease shall include the Gross
Revenues of such Sublessee with respect to the premises demised under the
applicable Sublease (i.e., the Gross Revenues generated from the operations
conducted on such subleased portion of the Leased Property) and the rent
received or receivable from such Sublessee pursuant to such Subleases shall be
excluded from Gross Revenues for all such purposes. As to any other Sublease,
only the rental actually received by the Lessee from such non-Affiliate shall be
included in Gross Revenues.

     Guarantor: CareMatrix Corporation, a Delaware corporation.

     Guaranty: The Guaranty of even date executed by the Guarantor in favor of
the Lessor.

     Hazardous Substances: Collectively, (a) any "hazardous material,"
"hazardous substance," "hazardous waste," "oil," "regulated substance," "toxic
substance," "restricted hazardous waste", "special waste" or words of similar
import as defined under any of the Environmental Laws; (b) asbestos in any form;
(c) urea formaldehyde foam insulation; (d) polychlorinated biphenyls; (e) radon
gas; (f) flammable explosives; (g) radioactive materials; (h) any chemical,
containment, solvent, material, pollutant or substance that may be dangerous or
detrimental to the Leased Property, the environment, or the health and safety of
the patients and other occupants of the Leased Property or of the owners or
occupants of any other real property nearby the Leased Property and (i) any
substance, the generation, storage, transportation, utilization, disposal,
management, release or location of which, on, under or from the Leased Property
is prohibited or otherwise regulated pursuant to any of the Environmental Laws.

     Notwithstanding the foregoing, the term Hazardous Substances as defined
herein shall not include (i) pharmaceuticals and cleaning agents of the types
and in the quantities and concentrations normally stocked by health care
providers similar to the Facility, (ii) oil in de minimis amounts typically
associated with the use of certain portions of the Leased Property for driving
and parking motor vehicles or (iii) medical wastes generated at the Facility;
provided that

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the foregoing are used, stored, transported and/or disposed of in accordance
with all Legal Requirements.

     Heating System: Collectively, the gas-fired hot water heating production
equipment located in the Medical Center, as well as all pipes, flues, conduits
and other appurtenances located in the Building and serving such production
equipment and/or delivering heat therefrom, including all additions,
substitutions and replacements thereto.

     Hot Water System: Collectively, the domestic hot water boiler equipment
located in the Medical Center and serving the Facility only, as well as all
pipes, conduits and other appurtenances located in the Building and serving such
equipment and/or delivering domestic hot water therefrom, including all
additions, substitutions and replacements thereto.

     Impositions: Collectively, all taxes (including, without limitation, all
capital stock and franchise taxes of the Lessor, all ad valorem, property,
sales, use, single business, gross receipts, transaction privilege, rent or
similar taxes), 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 within the Term), ground
rents, water and sewer rents, water charges or other rents and charges, excises,
tax levies, fees (including, without limitation, license, permit, inspection,
authorization and similar fees), transfer taxes and recordation taxes imposed as
a result of this Lease or any extensions hereof, and all other governmental
charges, in each case whether general or special, ordinary or extraordinary, or
foreseen or unforeseen, of every character in respect of either or both of the
Leased Property and the Rent (including all interest and penalties thereon due
to any failure in payment by the Lessee), which at any time prior to, during or
in respect of the Term hereof and thereafter until the Leased Property is
surrendered to the Lessor as required by the terms of this Lease, may be
assessed or imposed on or in respect of or be a Lien upon (a) the Lessor or the
Lessor's interest in the Leased Property, (b) the Leased Property or any rent
therefrom or any estate, right, title or interest therein, or (c) any occupancy,
operation, use or possession of, sales from, or activity conducted on, or in
connection with, the Leased Property or the leasing or use of the Leased
Property. Notwithstanding the foregoing, nothing contained in this Lease shall
be construed to require the Lessee to pay (1) any tax based on net income
(whether denominated as a franchise or capital stock or other tax) imposed on
the Lessor or any other Person, except the Lessee or its successors, (2) any net
revenue tax of the Lessor or any other Person, except the Lessee and its
successors, (3) any tax imposed with respect to the proceeds, or any portion
thereof, received by the Lessor as a result of the sale, exchange or other
disposition by the Lessor of the Leased Property or the proceeds thereof, except
any sale, transfer, exchange or other disposition of the Leased Property to the
Lessee, or (4) except as expressly provided elsewhere in this Lease, any
principal or interest on any Encumbrance on the Leased Property; provided,
however, the provisos set forth in clauses (1) and (2) of this sentence shall
not be applicable to the extent that any tax, assessment, tax levy or charge
which the Lessee is obligated to pay pursuant to the first sentence of this
definition and which is in effect at any time during the Term hereof is totally
or partially repealed, and a tax, assessment, tax levy or charge set forth in
clause (1) or (2) is levied,

                                      -12-
<PAGE>

assessed or imposed expressly in lieu thereof. In computing the amount of any
franchise tax or capital stock tax which may be or become an Imposition, the
amount payable by the Lessee shall be equitably apportioned based upon all
properties owned by the Lessor that are located within the particular
jurisdiction subject to any such tax.

     Indebtedness: The total of all obligations of a Person, whether current or
long-term, which in accordance with GAAP would be included as liabilities upon
such Person's balance sheet at the date as of which Indebtedness is to be
determined, and shall also include (i) all capital lease obligations and (ii)
all guarantees, endorsements (other than for collection of instruments in the
ordinary course of business), or other arrangements whereby responsibility is
assumed for the obligations of others, whether by agreement to purchase or
otherwise acquire the obligations of others, including any agreement contingent
or otherwise to furnish funds through the purchase of goods, supplies or
services for the purpose of payment of the obligations of others.

     Indemnified Parties: As defined in Section 12.2.

     Initial Appraisers: As defined in SCHEDULE 3.1.

     Initial Term: As defined in Section 1.2.

     Instruments: As defined in the UCC.

     Insurance Requirements: All terms of any insurance policy required by this
Lease, all requirements of the issuer of any such policy with respect to the
Leased Property and the activities conducted thereon and the requirements of any
insurance board, association or organization or underwriters' regulations
pertaining to the Leased Property.

     Land: As defined in Article 1.

     Lease: As defined in the preamble of this Lease.

     Lease Default: The occurrence of any default or breach of condition
continuing beyond any applicable notice and/or grace periods under this Lease
and/or any of the other Lease Documents.

     Lease Documents: Collectively, this Lease, the Guaranty, the Pledge
Agreement, the Security Agreement, the Permits Assignment and any and all other
instruments, documents, certificates or agreements now or hereafter (i) executed
or furnished by any member of the Leasing Group in connection with the
transactions evidenced by this Lease and/or any of the foregoing documents
and/or (ii) evidencing or securing any of the Lessee's obligations relating to
the Leased Property, including, without limitation, the Lessee's obligations
hereunder, as the

                                      -13-
<PAGE>

same maybe amended from time to time. Without limiting the foregoing, the Lease
Documents include the Guaranty.

     Lease Obligations: Collectively, all indebtedness, covenants, liabilities,
obligations, agreements and undertakings (other than the Lessor's obligations)
under this Lease and the other Lease Documents.

     Lease Year: A twelve-month period ending on July 31st of each year;
provided, that the first Lease Year shall begin on the Commencement Date and
shall end on July 31, 1999.

     Leased Improvements: As defined in Article 1.

     Leased Property: As defined in Article 1.

     Leasing Group: Collectively, the Lessee, the Guarantor, any Sublessee and
any Manager.

     Legal Requirements: Collectively, all statutes, ordinances, by-laws, codes,
rules, regulations, restrictions, orders, judgments, decrees and injunctions
(including, without limitation, all applicable building, health code, zoning,
subdivision, and other land use and health-care licensing statutes, ordinances,
by-laws, codes, rules and regulations), whether now or hereafter enacted,
promulgated or issued by any Governmental Authority, Accreditation Body or Third
Party Payor affecting the Lessor, any member of the Leasing Group or the Leased
Property or the ownership, construction, development, maintenance, management,
repair, use, occupancy, possession or operation thereof or the operation of any
programs or services in connection with the Leased Property, including, without
limitation, any of the foregoing which may (i) require repairs, modifications or
alterations in or to the Leased Property, (ii) in any way affect (adversely or
otherwise) the use and enjoyment of the Leased Property or (iii) require the
assessment, monitoring, clean-up, containment, removal, remediation or other
treatment of any Hazardous Substances on, under or from the Leased Property.
Without limiting the foregoing, the term Legal Requirements includes all
Environmental Laws and shall also include all Permits and Contracts issued or
entered into by any Governmental Authority, any Accreditation Body and/or any
Third Party Payor and all Permitted Encumbrances.

     Lessee: As defined in the preamble of this Lease and its successors and
assigns.

     Lessee's Election Notice: As defined in Section 14.3.

     Lessee's Pro-Rata Share: The percentage derived by dividing the gross floor
area of the Facility by the gross floor area of the Building. In determining
gross floor area, garages, basements, attics and similar uninhabitable areas
shall be excluded. As of the date hereof, the Lessor and the Lessee agree that
the Lessee's Pro-Rata Share is equal to 50.8%.

                                      -14-
<PAGE>

     Lessor: As defined in the preamble of this Lease and its successors and
assigns.

     Lessor Entities: Collectively, Lessor and any other Affiliate of Lessor
which may now or hereafter be a party to any Related Party Agreement.

     Lessor's Investment: The sum of (a) SIXTEEN MILLION EIGHTY-TWO THOUSAND
THIRTY-EIGHT DOLLARS ($16,082,038) plus (b) the aggregate amount of all
Subsequent Investments.

     Lien: With respect to any real or personal property, any mortgage,
easement, restriction, lien, pledge, collateral assignment, hypothecation,
charge, security interest, title retention agreement, levy, execution, seizure,
attachment, garnishment or other encumbrance of any kind in respect of such
property, whether or not choate, vested or perfected.

     Limited Parties: As defined in Section 11.5; provided, however, in no event
shall the term Limited Parties include any Person in its capacity as a
shareholder of a public entity, unless such shareholder is a member of the
Leasing Group or an Affiliate of any member of the Leasing Group.

     Managed Care Plans: All health maintenance organizations, preferred
provider organizations, individual practice associations, competitive medical
plans, and similar arrangements.

     Management Agreement: Any agreement, whether written or oral, between the
Lessee or any Sublessee and any other Person pursuant to which the Lessee or
such Sublessee provides any payment, fee or other consideration to any other
Person to operate or manage the Facility, including, without limitation, the
Current Management Agreement.

     Manager: Any Person who has entered into a Management Agreement with the
Lessee or any Sublessee.

     Material Structural Work: Any (i) structural alteration, (ii) structural
repair or (iii) structural renovation to the Leased Property that would require
(a) the design and/or involvement of a structural engineer and/or architect
and/or (b) the issuance of a Permit.

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

     Medical Center: The community medical center located on the CMC Land,
containing approximately 21,837 square feet and approximately 17,000 net
rentable square feet.

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

                                      -15-
<PAGE>

     MMI: Meditrust Mortgage Investments, Inc., a Delaware corporation.

     MMI Loan: That certain loan in the original principal amount of ELEVEN
MILLION EIGHT HUNDRED FOUR THOUSAND TWO HUNDRED SEVEN DOLLARS ($11,804,207) made
by MMI to the Lessor and the Seller, as affected by the Assignment and
Assumption Agreement.

     MMI Loan Documents: As defined in Section 24.14.

     Monthly Deposit Date: As defined in Section 4.6.

     Net Income (or Net Loss): The net income (or net loss, expressed as a
negative number) of a Person for any period, after all taxes actually paid or
accrued and all expenses and other charges determined in accordance with GAAP.

     Obligations: Collectively, the Lease Obligations and the Related Party
Obligations.

     Officer's Certificate: A certificate of the Lessee signed on behalf of the
Lessee by the Chairman of the Board of Directors, the President, any Vice
President or the Treasurer of the Lessee, or another officer authorized to so
sign by the Board of Directors or By-Laws of the Lessee, or any other Person
whose power and authority to act has been authorized by delegation in writing by
any of the Persons holding the foregoing offices.

     Overdue Rate: On any date, a rate of interest per annum equal to the
greater of: (i) a variable rate of interest per annum equal to one hundred
twenty percent (120%) of the Prime Rate, or (ii) eighteen percent (18%) per
annum; provided, however, in no event shall the Overdue Rate be greater than the
maximum rate then permitted under applicable law to be charged by the Lessor.

     Patient Admission Agreements: All contracts, agreements and consents
executed by or on behalf of any patient or other Person seeking services at the
Facility, including, without limitation, assignments of benefits and guarantees.

     PBGC: Pension Benefit Guaranty Corporation.

     Permits: Collectively, all permits, licenses, approvals, qualifications,
rights, variances, permissive uses, accreditations, certificates,
certifications, consents, agreements, contracts, contract rights, franchises,
interim licenses, permits and other authorizations of every nature whatsoever
required by, or issued under, applicable Legal Requirements benefiting, relating
or affecting the Leased Property or the construction, development, maintenance,
management, use or operation thereof, or the operation of any programs or
services in conjunction with the Leased Property and all renewals, replacements
and substitutions therefor, now or hereafter required or

                                      -16-
<PAGE>

issued by any Governmental Authority, Accreditation Body or Third Party Payor to
any member of the Leasing Group, or maintained or used by any member of the
Leasing Group, or entered into by any member of the Leasing Group with any third
Person.

     Permits Assignment: The Collateral Assignment of Permits and Contracts of
even date granted by the Lessee to the Lessor.

     Permitted Encumbrances: Collectively, those agreements, covenants and Liens
to which this Lease is expressly subject, whether presently existing, as are
listed on EXHIBIT B or which may hereafter be created in accordance with the
terms hereof.

     Permitted Prior Security Interests: As defined in Section 6.1.

     Person: Any individual, corporation, general partnership, limited
partnership, joint venture, stock company or association, company, bank, trust,
trust company, land trust, business trust, unincorporated organization,
unincorporated association, Governmental Authority or other entity of any kind
or nature.

     Plans and Specifications: As defined in Section 13.1.

     Pledge Agreement: The Stock Pledge Agreement of even date by and among the
Guarantor, the Lessee and the Lessor.

     Primary Intended Use: The use of the Facility as a skilled nursing facility
with 180 beds or such additional number of beds as may hereafter be permitted
under this Lease, and such ancillary uses as are permitted by law and may be
necessary in connection therewith or incidental thereto.

     Prime Rate: The variable rate of interest per annum from time to time
announced by the Reference Bank as its prime rate of interest and in the event
that the Reference Bank no longer announces a prime rate of interest, then the
Prime Rate shall be deemed to be the variable rate of interest per annum which
is the prime rate of interest or base rate of interest from time to time
announced by any other major bank or other financial institution reasonably
selected by the Lessor.

     Principal Place of Business: As defined in Section 10.1.

     Proceeds: As defined in the UCC.

     Provider Agreements: All participation, provider and reimbursement
agreements or arrangements now or hereafter in effect for the benefit of the
Lessee or any Sublessee in connection with the operation of the Facility
relating to any right of payment or other claim

                                      -17-
<PAGE>

arising out of or in connection with the Lessee's or such Sublessee's
participation in any Third Party Payor Program.

     Purchase Option: As defined in Section 18.3.

     Purchase Price: As defined in Section 18.3.

     Purchaser: As defined in Section 11.5.

     Receivables: Collectively, all (i) Instruments, Documents, Accounts,
Proceeds, General Intangibles and Chattel Paper and (ii) rights to payment for
goods sold or leased or services rendered by the Lessee or any other party,
whether now in existence or arising from time to time hereafter and whether or
not yet earned by performance, including, without limitation, obligations
evidenced by an account, note, contract, security agreement, chattel paper, or
other evidence of indebtedness.

     Reference Bank: Fleet Bank of Connecticut, N.A.

     Related Parties: Collectively, each Person that may now or hereafter be a
party to any Related Party Agreement other than the Lessor Entities.

     Related Party Agreement: Any agreement, document or instrument now or
hereafter evidencing or securing any Related Party Obligation.

     Related Party Default: The occurrence of a default or breach of condition
continuing beyond the expiration of any applicable notice and grace periods, if
any, under the terms of any Related Party Agreement.

     Related Party Obligations: Collectively, all indebtedness, covenants,
liabilities, obligations, agreements and undertakings due to, or made for the
benefit of, Lessor or any of the other Lessor Entities by Lessee or any other
member of the Leasing Group or any of their respective Affiliates; whether such
indebtedness, covenants, liabilities, obligations, agreements and/or
undertakings are direct or indirect, absolute or contingent, liquidated or
unliquidated, due or to become due, joint, several or joint and several, primary
or secondary, now existing or hereafter arising.

     Rent: Collectively, the Base Rent, the Additional Rent, Additional Charges
and all other sums payable under this Lease and the other Lease Documents.

     Rent Adjustment Date: The first day of each Extended Term.

     Rent Coverage Ratio: The ratio of Cash Flow for each applicable period to
the total of all Debt Service Rental Payments paid or payable during such period
or accrued for such period.

                                      -18-
<PAGE>

     Rent Insurance Proceeds: As defined in Section 13.8.

     Rent Roll: As defined in Section 18.3.

     Retainage: As defined in Section 13.1.

     Security Agreement: The Security Agreement of even date herewith by and
between the Lessee and the Lessor.

     Seller: Mediplex of New Jersey, Inc., a Delaware corporation.

     Service, Maintenance and Easement Agreement: The Service, Maintenance and
Easement Agreement dated as of March 15, 1996, by and between the Seller and the
Lessor, recorded in the Middlesex County Clerk's Office on April 2, 1996 in Deed
Book 4315 Page 28.

     Sewer Bill: The periodic bill for the Building presented to the Lessor by
the South Brunswick Sanitary Sewage Authority, another applicable Governmental
Authority or a private utility provider.

     SNF/CMC Land: The real property shown as New Lot 3.06 on the Subdivision
Plan, and more particularly described in EXHIBIT A-3 attached hereto.

     SNF Conversion Date: As defined in the MMI Loan Documents.

     State: The state or commonwealth in which the Leased Property is located.

     Subdivision Plan: That certain plan entitled: "Final Subdivision Plan Phase
1 & 2 of the Windrows At Princeton Forrestal Property of Trustees of Princeton
University," dated April 5, 1995, last revised September 18, 1995, prepared by
Van Note-Harvey Associates, P.C., Consulting Engineers, Planners, and Land
Surveyors, and filed with the Middlesex County Clerk's Office on April 2, 1996
as Map #4 File 1945.

     Sublease: Collectively, all subleases, licenses, use agreements, concession
agreements, tenancy at will agreements, room rentals, rentals of other
facilities of the Leased Property and all other occupancy agreements of every
kind and nature (but excluding Patient Admission Agreements), whether oral or in
writing, now in existence or subsequently entered into by the Lessee,
encumbering or affecting the Leased Property.

     Sublessee: Any sublessee, licensee, concessionaire, tenant or other
occupant under any of the Subleases.

                                      -19-
<PAGE>

     Subsequent Investments: The aggregate amount of all sums expended and
liabilities incurred by the Lessor in connection with Capital Additions.

     Subsidiary or Subsidiaries: With respect to any Person, any corporation or
other entity of which such Person, directly, or indirectly, through another
entity or otherwise, owns, or has the right to control or direct the voting of,
fifty percent (50%) or more of the outstanding capital stock or other ownership
interest having general voting power (under ordinary circumstances).

     Surrounding Property: Any real property that abuts the Leased Property or
any portion thereof.

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

     Tangible Net Worth: An amount determined in accordance with GAAP equal to
the total assets of any Person, excluding the total intangible assets of such
Person, minus the total liabilities of such Person. Total intangible assets
shall be deemed to include, but shall not be limited to, the excess of cost over
book value of acquired businesses accounted for by the purchase method,
formulae, trademarks, trade names, patents, patent rights and deferred expenses
(including, but not limited to, unamortized debt discount and expense,
organizational expense and experimental and development expenses).

     Tangible Personal Property: All machinery, equipment, furniture,
furnishings, movable walls or partitions, computers or trade fixtures, goods,
inventory, supplies, and other personal property owned or leased (pursuant to
equipment leases) by the Lessee and used in connection with the operation of the
Leased Property.

     Term: Collectively, the Initial Term and each Extended Term which has
become effective pursuant to Section 1.3, as the context may require, unless
earlier terminated pursuant to the provisions hereof.

     Third Appraiser: As defined in SCHEDULE 3.1.

     Third Party Payor Programs: Collectively, all third party payor programs in
which the Lessee or any Sublessee presently or in the future may participate,
including without limitation, Medicare, Medicaid, Champus, Blue Cross and/or
Blue Shield, Managed Care Plans, other private insurance plans and employee
assistance programs.

     Third Party Payors: Collectively, Medicare, Medicaid, Blue Cross and/or
Blue Shield, private insurers and any other Person which presently or in the
future maintains Third Party Payor Programs.

                                      -20-
<PAGE>

     UCC: The Uniform Commercial Code as in effect from time to time in the
Commonwealth of Massachusetts.

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

     United States Treasury Securities: The uninsured treasury securities issued
by the United States Federal Reserve Bank.

     Unsuitable For Its Primary Intended Use: As used anywhere in this Lease,
the term "Unsuitable For Its Primary Intended Use" shall mean that, by reason of
Casualty, or a partial or temporary Taking by Condemnation, in the good faith
judgment of the Lessor, the Facility cannot be operated on a commercially
practicable basis for the Primary Intended Use, taking into account, among other
relevant factors, the number of usable beds and/or units affected by such
Casualty or partial or temporary Taking.

     Utility Systems: Collectively, the domestic water, common water, sanitary
sewer, cable television, gas and electric lines, wires, flues, conduits and
utility lines, including all additions, substitutions and replacements thereto,
now or hereafter located in the Building.

     Water Bill: The monthly or other periodic bill for the Building presented
to the Lessor by the Elizabethtown Water Company, another applicable
Governmental Authority or a private utility provider.

     Water Fraction: A fraction, the numerator of which is the number of gallons
used by the Facility during the period reflected in the Water Bill, determined
by reference to the water meter located in the Medical Center that measures the
amount of water consumed by the Facility only, and the denominator of which is
the number of gallons of water used by the Building reported in the Water Bill.

     Work: As defined in Section 13.1.

     Work Certificates: As defined in Section 13.1.

     2.2 Rules of Construction. The following rules of construction shall apply
to the Lease and each of the other Lease Documents: (a) references to "herein",
"hereof" and "hereunder" shall be deemed to refer to this Lease or the other
applicable Lease Document, and shall not be limited to the particular text or
section or subsection in which such words appear; (b) the use of any gender
shall include all genders and the singular number shall include the plural and
vice versa as the context may require; (c) references to the Lessor's attorneys
shall be deemed

                                      -21-
<PAGE>

to include, without limitation, special counsel and local counsel for the
Lessor; (d) reference to attorneys' fees and expenses shall be deemed to include
all costs for administrative, paralegal and other support staff; (e) references
to Leased Property shall be deemed to include references to all of the Leased
Property and references to any portion thereof; (f) references to the Lease
Obligations shall be deemed to include references to all of the Lease
Obligations and references to any portion thereof; (g) references to the
Obligations shall be deemed to include references to all of the Obligations and
references to any portion thereof; (h) the term "including", when following any
general statement, will not be construed to limit such statement to the specific
items or matters as provided immediately following the term "including" (whether
or not non-limiting language such as "without limitation" or "but not limited
to" or words of similar import are also used), but rather will be deemed to
refer to all of the items or matters that could reasonably fall within the
broadest scope of the general statement; (i) any requirement that financial
statements be Consolidated in form shall apply only to such financial statements
as relate to a period during any portion of which the relevant Person has one or
more Subsidiaries; (j) all accounting terms not specifically defined in the
Lease Documents shall be construed in accordance with GAAP, (k) all exhibits
annexed to any of the Lease Documents as referenced therein shall be deemed
incorporated in such Lease Document by such annexation and/or reference, (l) all
references to any Fee Mortgage Loan Documents shall mean such Fee Mortgage Loan
Documents as may then be in force and effect and (m) all references to any Fee
Mortgagee shall mean the holder of any Fee Mortgage that is then in force and
effect.


                                    ARTICLE 3
                                    ---------

                                      RENT
                                      ----

     3.1 Rent for Land, Leased Improvements, Related Rights and Fixtures. During
the Initial Term, the Lessee will pay to the Lessor, in lawful money of the
United States of America, at the Lessor's address set forth herein or at such
other place or to such other Person as the Lessor from time to time may
designate in writing, a base rent (the "Base Rent") per annum that is equal to
the aggregate amount of Debt Service payments due and payable with respect to
each calendar year (the "Debt Service Rental Payments"), which Base Rent shall
be payable in arrears in consecutive monthly installments due on the first day
of each calendar month (subject to adjustment in accordance with any adjustment
to Debt Service), except with respect to the Base Rent due for the month of
August, 1998, which shall be due and payable concurrently with the execution
hereof; provided, however, that in the event that the terms of any promissory
note secured by any Fee Mortgage requires Debt Service from the Lessor to be
paid on any basis other than monthly in arrears, the Lessee's obligation to make
monthly payments of the Debt Service Rental Payments shall be adjusted
accordingly to coincide with the schedule of payments.

     The Lessor reserves the right to refinance any Fee Mortgage now or
hereafter encumbering the Leased Property and no such refinancing will limit or
otherwise affect the Lessee's obligation to make the Debt Service Rental
Payments; provided, that (x) the terms and

                                      -22-
<PAGE>

conditions of any such refinancing reflect the terms and conditions that are
then customary and prevailing for commercial loan transactions secured by real
property of similar value and nature to the Leased Property and (y) the original
principal amount of any such refinancing does not exceed the then current Fair
Market Value of the Leased Property minus the Fair Market Added Value.

     In the event that, during the Initial Term of this Lease, any applicable
Fee Mortgage Loan is paid in full and is not refinanced (so that no Fee Mortgage
Loan is then in effect), the Lessee shall continue to pay to the Lessor, as the
Base Rent due hereunder, an amount equal to the Debt Service Rental Payments
that were otherwise payable hereunder immediately prior to the payment in full
of the applicable Fee Mortgage, until such time, if any, prior to the expiration
of the Initial Term, that the Lessor obtains a new Fee Mortgage Loan (in
accordance with the terms hereof). From and after such time, if any, that a new
Fee Mortgage Loan is in effect, the Base Rent (and thus the Debt Service Rental
Payments) due hereunder will be calculated based upon the actual Debt Service
due from the Lessor to the holder of such Fee Mortgage.

     On each Rent Adjustment Date, if no Fee Mortgage Loan is then in effect,
the Base Rent payable hereunder shall be adjusted so that the Lessee shall
continue to pay to the Lessor, as the Base Rent per annum due hereunder, an
amount equal to the lesser of (i) the then Fair Market Base Rent determined in
accordance with SCHEDULE 3.1 hereof, or (ii) the sum of (A) the Debt Service
Rental Payments payable (x) during the first Lease Year, if the applicable Rent
Adjustment Date occurs on the first day of the first Extended Term or (y) during
the last Lease Year of the immediately preceding Extended Term, if the
applicable Rent Adjustment Date occurs on the first day of the second or third
Extended Term plus (B) the product of (x) fifty (50%) percent multiplied by (y)
a fraction the numerator of which shall be the Consumer Price Index in effect on
the applicable Rent Adjustment Date minus the Consumer Price Index in effect on
the Commencement Date and the denominator of which shall be the Consumer Price
Index in effect on the Commencement Date, multiplied by (z) the Debt Service
Rental Payments payable (i) during the first Lease Year, if the applicable Rent
Adjustment Date occurs on the first day of the first Extended Term or (ii)
during the last Lease Year of the immediately preceding Extended Term, if the
applicable Rent Adjustment Date occurs on the first day of the second or third
Extended Term, until such time, if any, prior to the expiration of the Term,
that the Lessor obtains a new Fee Mortgage Loan (in accordance with the terms
hereof). Notwithstanding the foregoing, in no event shall the Base Rent due
hereunder as determined on any Rent Adjustment Date be less than the Base Rent
that was otherwise payable hereunder as of the date immediately prior to such
Rent Adjustment Date. From and after such time, if any, that a new Fee Mortgage
Loan is in effect (in accordance with the terms hereof), the Base Rent (and thus
the Debt Service Rental Payments) due hereunder shall be calculated based upon
the actual Debt Service due from the Lessor to the holder of such Fee Mortgage.

     The Lessee will pay the Debt Service Rental Payments, in lawful money of
the United States of America, directly to the applicable Fee Mortgagee (at the
address that the Lessor or the Fee Mortgagee shall from time to time designate
in writing to the Lessee). If no Fee Mortgage

                                      -23-
<PAGE>

Loan is then in effect, the Lessee will pay to the Lessor, in lawful money of
the United States of America, at the Lessor's address set forth herein or at
such other place or to such other Person as the Lessor from time to time may
designate in writing, the Base Rent.

     The Base Rent due and payable hereunder for any fractional month during the
Term shall be prorated accordingly.

     3.2 Intentionally Omitted.

     3.3 Additional Rent. In addition to the Base Rent due and payable
hereunder, the Lessee shall pay, as additional rent (the "Additional Rent") an
amount equal to the Additional Debt Service Payments then due and payable under
any applicable Fee Mortgage Loan Documents. The Additional Rent shall be due and
payable when and if the Additional Debt Service Payments are due and payable
under the applicable Fee Mortgage Loan Documents. The Lessee will pay the
Additional Rent, in lawful money of the United States of America,

                                      -24-
<PAGE>

directly to the applicable Fee Mortgagee (at the address that the Lessor or the
Fee Mortgagee shall from time to time designate in writing the Lessee).

     Additional Rent due and payable hereunder for any fractional month during
the terms shall be prorated accordingly.

     3.4 Service, Maintenance and Easement Agreement. The Lessor shall pay and
perform all of the obligations imposed on the Seller, and each successor owner
of the SNF/CMC Land, under the Service, Maintenance and Easement Agreement,
provided, that, the Lessee shall pay and perform all of the obligations imposed
on the owner of the SNF/CMC Land thereunder relating to or affecting the Access
Easement Areas.

     3.5 Additional Charges. Subject to the rights to contest as set forth in
Article 15, in addition to the Base Rent and Additional Rent, (a) the Lessee
will also pay and discharge as and when due and payable all Impositions, all
amounts, liabilities and obligations under the Appurtenant Agreements due from
or payable by the owner of the Leased Property, all amounts, liabilities and,
except as provided in Section 3.3, obligations under the Permitted Encumbrances
due from or payable by the owner of the Leased Property and all other amounts,
liabilities and obligations which the Lessee assumes or agrees to pay under this
Lease, and (b) in the event of any failure on the part of the Lessee to pay any
of those items referred to in clause (a) above, the Lessee will also promptly
pay and discharge every fine, penalty, interest and cost which may be added for
non-payment or late payment of such items (the items referred to in clauses (a)
and (b) above being referred to herein collectively as the "Additional
Charges"), and the Lessor shall have all legal, equitable and contractual
rights, powers and remedies provided in this Lease, by statute or otherwise, in
the case of non-payment of the Additional Charges, as well as the Base Rent and
the Additional Rent. To the extent that the Lessee pays any Additional Charges
to the Lessor pursuant to any requirement of this Lease, the Lessee shall be
relieved of its obligation to pay such Additional Charges to any other Person to
which such Additional Charges would otherwise be due.

     3.6 Net Lease. The Rent shall be paid absolutely net to the Lessor, so that
this Lease shall yield to the Lessor the full amount of the installments of Base
Rent, Additional Rent and Additional Charges throughout the Term, without
reduction abatement or offset, except as may be expressly provided herein.

     3.7      No Lessee Termination or Offset.

     3.7.1    No Termination. Except as may be otherwise specifically and
expressly provided in this Lease, the Lessee, to the extent not prohibited by
applicable law, shall remain bound by this Lease in accordance with its terms
and shall neither take any action without the consent of the Lessor to modify,
surrender or terminate the same, nor seek nor be entitled to any abatement,
deduction, deferment or reduction of Rent, or set-off against the Rent, nor
shall the respective obligations of the Lessor and the Lessee be otherwise
affected by reason of (a)

                                      -25-
<PAGE>

any Casualty or any Taking of the Leased Property, (b) the lawful or unlawful
prohibition of, or restriction upon, the Lessee's use of the Leased Property or
the interference with such use by any Person (other than the Lessor, except to
the extent permitted hereunder) or by reason of eviction by paramount title; (c)
any claim that the Lessee has or might have against the Lessor, (d) any default
or breach of any warranty by the Lessor or any of the other Lessor Entities
under this Lease or any other Lease Document or any Related Party Agreement, (e)
any bankruptcy, insolvency, reorganization, composition, readjustment,
liquidation, dissolution, winding up or other proceedings affecting the Lessor
or any assignee or transferee of the Lessor or (f) any other cause whether
similar or dissimilar to any of the foregoing, other than a discharge of the
Lessee from any of the Lease Obligations as a matter of law.

         3.7.2  Waiver.  The  Lessee to the  fullest  extent not  prohibited  by
applicable law, hereby specifically waives all rights, arising from any
occurrence whatsoever, which may now or hereafter be conferred upon it by law to
(a) modify,  surrender or terminate  this Lease or quit or surrender  the Leased
Property or (b) entitle the Lessee to any  abatement,  reduction,  suspension or
deferment of the Rent or other sums payable by the Lessee  hereunder,  except as
otherwise specifically and expressly provided in this Lease.

         3.7.3  Independent  Covenants.  The  obligations  of the Lessor and the
Lessee hereunder shall be separate and independent  covenants and agreements and
the Rent and all other sums payable by the Lessee hereunder shall continue to be
payable in all events unless the obligations to pay the same shall be terminated
pursuant to the express  provisions of this Lease or (except in those  instances
where the obligation to pay expressly survives the termination of this Lease) by
termination of this Lease other than by reason of an Event of Default.

     3.8   Abatement of Rent Limited. There shall be no abatement of Rent on
account of any Casualty, Taking or other event, except that in the event of a
partial Taking or a temporary Taking as described in Section 14.3, the Base Rent
shall be abated as follows: (a) in the case of such a partial Taking, Base Rent
then due during the Lease Year in which such Taking occurs shall be reduced to
equal the product of (i) the then current Base Rent multiplied by (ii) the
difference between one minus a fraction the numerator of which is the Award, the
denominator of which is the Fair Market Value of the Leased Property, and (b) in
the case of such a temporary Taking, by reducing the Base Rent for the period of
such a temporary Taking, by the net amount of the Award received by the Lessor.

     For the purposes of this Section 3.8, the "net amount of the Award received
by the Lessor" shall mean the Award paid to the Lessor on account of such
Taking, minus all costs and expenses incurred by the Lessor in connection
therewith, and minus any amounts paid to or for the account of the Lessee to
reimburse for the costs and expenses of reconstructing the Facility following
such Taking in order to create a viable and functional Facility under all of the
circumstances.

                                      -26-
<PAGE>

                                    ARTICLE 4
                                    ---------

                         IMPOSITIONS; TAXES; UTILITIES;
                         ------------------------------
                               INSURANCE PAYMENTS
                               ------------------

     4.1   Payment of Impositions.

     4.1.1 Lessee To Pay. Subject to the provisions of Section 4.1.2 and Article
15, the Lessee will pay or cause to be paid all Impositions before any fine,
penalty, interest or cost may be added for non-payment, such payments to be made
directly to the taxing authority where feasible, and the Lessee will promptly
furnish the Lessor copies of official receipts or other satisfactory proof
evidencing payment not later than the last day on which the same may be paid
without penalty or interest. Subject to the provisions of Article 15 and Section
4.1.2, the Lessee's obligation to pay such Impositions shall be deemed
absolutely fixed upon the date such Impositions become a lien upon the Leased
Property or any part thereof. Notwithstanding the foregoing, if any Impositions
are not separately assessed against the Leased Premises and include all or any
portion of the CMC Land or any portion of the Building or other improvements
thereon, the Lessee shall pay to the Lessor, within ten (10) days of receipt of
an invoice from the Lessor, together with a copy of the applicable bill from the
Governmental Authority or other Person to whom the Imposition is payable, the
Lessee's pro-rata share of the applicable Imposition, which for each Imposition,
shall equal the amount of the Imposition multiplied by a fraction, the numerator
of which shall equal the area of the Land, and the denominator of which shall
equal the area of the SNF/CMC Land or such portion thereof affected by the
applicable Imposition. If the Lessee shall receive any invoices for Impositions
covering any portion of the CMC Land, the Lessee shall, within seven (7) days of
receipt of such invoice, deliver the same to the Lessor along with the Lessee'
pro-rata share of the Imposition set forth on such invoice calculated in
accordance with the immediately preceding sentence.

     4.1.2 Installment Elections. If any Imposition that is assessed or imposed
against only the Leased Property (and no other real or personal property not
included in the Leased Property) may, at the option of the taxpayer, lawfully be
paid in installments (whether or not interest shall accrue on the unpaid balance
of such Imposition), the Lessee may exercise the option to pay the same (and any
accrued interest on the unpaid balance of such Imposition) in installments and,
in such event, shall pay such installments during the Term hereof (subject to
the Lessee's right to contest pursuant to the provisions of Section 4.1.5 below)
as the same respectively become due and before any fine, penalty, premium,
further interest or cost may be added thereto.

     4.1.3 Returns and Reports. The Lessor, at its expense, shall, to the extent
permitted by applicable law, prepare and file all tax returns and reports as may
be required by Governmental Authorities in respect of the Lessor's net income,
gross receipts, franchise taxes and taxes on its capital stock, and the Lessee,
at its expense, shall, to the extent permitted by applicable laws and
regulations, prepare and file all other tax returns and reports in respect of
any Imposition as may be required by Governmental Authorities. The Lessor and
the Lessee shall,

                                      -27-
<PAGE>

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 that any Governmental
Authority classifies any property covered by this Lease as personal property,
the Lessee shall file all personal property tax returns in such jurisdictions
where it may legally so file. The Lessor, to the extent it possesses the same,
and the Lessee, to the extent it possesses the same, will provide the other
party, upon request, with cost and depreciation records necessary for filing
returns for any portion of Leased Property so classified as personal property.
Where the Lessor is legally required to file personal property tax returns, if
the Lessee notifies the Lessor of the obligation to do so in each year at least
thirty (30) days prior to the date any protest must be filed, the Lessee will be
provided with copies of assessment notices so as to enable the Lessee to file a
protest.

     4.1.4 Refunds. If no Lease Default shall have occurred and be continuing,
subject to the terms of any Fee Mortgage Loan Documents, any refund due from any
taxing authority in respect of any Imposition paid by the Lessee shall be paid
over to or retained by the Lessee. If a Lease Default shall have occurred and be
continuing, at the Lessor's or the Fee Mortgagee's option, exercisable by
written notice to the Lessee, such funds shall be paid over to the Lessor or the
Fee Mortgagee or shall be retained by the Lessor and, in any such event, shall
be applied toward the Obligations in accordance with the Lease Documents and/or
any Related Party Agreement.

     4.1.5 Protest. Upon giving notice to the Lessor, at the Lessee's option and
sole cost and expense, and subject to compliance with the provisions of Article
15 and the terms of any of the Fee Mortgage Loan Documents, the Lessee may
contest, protest, appeal, or institute such other proceedings as the Lessee may
deem appropriate to effect a reduction of any Imposition and the Lessor, at the
Lessee's cost and expense as aforesaid, shall fully cooperate in a reasonable
manner with the Lessee in connection with such protest, appeal or other action;
provided, however, that the Lessee's right to contest, protest, appeal or take
any such other action regarding any Imposition that includes the CMC Land or any
portion of the Building or other improvements thereon, shall require the
Lessor's prior written consent, which consent may not be unreasonably withheld.

     4.2   Notice of Impositions. The Lessor shall give prompt notice to the
Lessee of all Impositions payable by the Lessee hereunder of which the Lessor at
any time has knowledge, but the Lessor's failure to give any such notice shall
in no way diminish the Lessee's obligations hereunder to pay such Impositions.

     4.3   Adjustment of Impositions. Impositions imposed in respect of the
period during which the expiration or earlier termination of the Term occurs
shall be adjusted and prorated between the Lessor and the Lessee, whether or not
such Impositions are imposed before or after such expiration or termination, and
the Lessee's obligation to pay its prorated share thereof shall survive such
expiration or termination.

                                      -28-
<PAGE>

     4.4   Utilities.

     4.4.1 Utility Services. Certain air conditioning, heating, hot water
production equipment, other portions of the Building Systems and other equipment
designed to serve the Facility are located in the Medical Center or on the CMC
Land. During the Term, the Lessor shall, at such times and in such amounts as
reasonably shall be requested by the Lessee, provide (a) forced hot water to the
heating portion of the Heating System located in the Facility, in an amount not
less than shall be sufficient to maintain a constant interior temperature of
70(degree) Fahrenheit, with an exterior temperature of 0(degree) Fahrenheit, (b)
air conditioning to the Facility when reasonably required by the Lessee, (c)
domestic water to the cold water portion of the Utility Systems located in the
Facility, (d) fire sprinkler water to the fire sprinkler water portion of the
Utility Systems located in the Facility, (e) domestic hot water to the domestic
hot water portion of the Utility Systems located in the Facility, and (f)
electric power to the Facility including, without limitation, emergency
electrical power, in such amount not less than the service requirements set
forth on the electrical drawings and specifications for the operation of the
Facility previously approved by the Lessor and the Lessee. The Lessee also shall
have the right to use the sanitary sewage lines in the Medical Center for
disposal of sanitary sewage in such reasonable quantities in accordance with the
Primary Intended Use from the Facility through sanitary sewage lines in the
Facility that connect to such lines in the Medical Center. The Lessor shall
provide dumpsters and a trash compactor on the CMC Land for the reasonable use
by the Lessee.

     The Lessor shall not, except as specifically provided in this Section 4.4.1
and Section 8.1.4, be required to provide utility services, equipment or any
other services, of any nature or description, to the Lessee or the Leased
Property.

     4.4.2 Utility Charges. The Lessee shall pay to the Lessor the Lessee's
share of the cost of the utility services provided by the Lessor under Section
4.4.1, calculated in the following manner:

     (a) The Lessee's contribution to the cost of all water provided to the
Building shall equal an amount, with reference to each Water Bill, determined by
multiplying the amount due under the applicable Water Bill by the Water
Fraction.

     (b) The Lessee's contribution to the cost of all sanitary sewage disposed
from the Building shall equal an amount, with reference to each Sewer Bill,
determined by multiplying the amount due under the applicable Sewer Bill by the
Water Fraction (as determined by reference to the Water Bill for the same period
covered by the Sewer Bill).

     (c) The Lessee's contribution to the cost of all fuel provided by the
Lessor for the generation of emergency electrical power to the Building shall
equal an amount, with reference to each electric bill for the Building presented
to the Lessor, determined by multiplying the amount due under the applicable
bill by the Lessee's Pro-Rata Share.

                                      -29-
<PAGE>

     (d) The Lessee's contribution to the cost of all heat provided to the
Building shall equal an amount, with reference to each heating bill for the
Building presented to the Lessor, determined by multiplying the Billable
Facility Heating Amount by a rate mutually agreed to by the Lessor and the
Lessee.

     (e) The Lessee's contribution to the cost of all trash removal from the
Building shall equal an amount, with reference to each trash removal bill for
the Building presented to the Lessor, determined by multiplying the amount due
under the applicable bill by the Lessee's Pro-Rata Share.

     4.4.3 Common Work Costs. The Lessee's contribution to the reasonable costs,
expenses and fees incurred by the Lessor in performing the Common Work
(collectively, the "Common Work Costs") shall equal an amount determined by
multiplying the Common Work Costs for the applicable period by the Lessee's
Pro-Rata Share.

     4.4.4 Method of Payment. The Lessee shall pay to the Lessor, within ten
(10) days after delivery by the Lessor to the Lessee of an invoice therefor, the
Lessee's Pro-Rata Share of the Common Work Costs and the Lessee's share
(calculated in the manner set forth in Section 4.4.2) of the cost of all other
all utility services provided by the Lessor hereunder. The Lessee shall pay or
cause to be paid directly to the applicable Governmental Authority or utility
service provider all other charges for electricity, power, gas, oil, water,
telephone and other utilities used in the Leased Property (whether or not
provided by the Lessor hereunder) during the Term and thereafter until the
Lessee surrenders the Leased Property in the manner required by this Lease,
including, without limitation, charges for utilities serving the Air
Conditioning System and the Hot Water System.

     4.5   Insurance Premiums. The Lessee will pay or cause to be paid all
premiums for the insurance coverage required to be maintained pursuant to
Article 12 during the Term, and thereafter until the Lessee yields up the Leased
Property in the manner required by this Lease. All such premiums shall be paid
annually in advance and the Lessee shall furnish the Lessor with evidence
satisfactory to the Lessor that all such premiums have been so paid prior to the
commencement of the Term and thereafter at least thirty (30) days prior to the
due date of each premium which thereafter becomes due. Notwithstanding the
foregoing, the Lessee may pay such insurance premiums to the insurer in monthly
installments so long as the applicable insurer is contractually obligated to
give the Lessor not less than a thirty (30) days notice of non-payment and so
long as no Lease Default has occurred and is continuing. In the event of the
failure of the Lessee either to comply with the insurance requirements in
Article 12, or to pay the premiums for such insurance, or to deliver such
policies or certificates thereof to the Lessor at the times required hereunder,
the Lessor shall be entitled, but shall have no obligation, to effect such
insurance and pay the premiums therefor, which premiums shall be a demand
obligation of the Lessee to the Lessor.

                                      -30-
<PAGE>

     4.6   Deposits.

     4.6.1 Lessor's Option. At the option of the Lessor, which may be exercised
at any time, the Lessee shall, upon written request of the Lessor, on the first
day on the calendar month immediately following such request, and on the first
day of each calendar month thereafter during the Term (each of which dates is
referred to as a "Monthly Deposit Date"), pay to and deposit with the Lessor a
sum equal to one-twelfth (1/12th) of the Impositions to be levied, charged,
filed, assessed or imposed upon or against the Leased Property within one (1)
year after said Monthly Deposit Date and a sum equal to one-twelfth (1/12th) of
the premiums for the insurance policies required pursuant to Article 12 which
are payable within one (1) year after said Monthly Deposit Date. If the amount
of the Impositions to be levied, charged, assessed or imposed or insurance
premiums to be paid within the ensuing one (1) year period shall not be fixed
upon any Monthly Deposit Date, such amount for the purpose of computing the
deposit to be made by the Lessee hereunder shall be estimated by the Lessor with
an appropriate adjustment to be promptly made between the Lessor and the Lessee
as soon as such amount becomes determinable. In addition, the Lessor may, at its
option, from time to time require that any particular deposit be greater than
one-twelfth (1/12th) of the estimated amount payable within one (1) year after
said Monthly Deposit Date, if such additional deposit is required in order to
provide to the Lessor a sufficient fund from which to make payment of all
Impositions on or before the next due date of any installment thereof, or to
make payment of any required insurance premiums not later than the due date
thereof.

     4.6.2 Use of Deposits. The sums deposited by the Lessee under this Section
4.6 shall be held by the Lessor and shall be applied in payment of the
Impositions or insurance premiums, as the case may be, when due. Any such
deposits may be commingled with other assets of the Lessor, and shall be
deposited by the Lessor at such bank as the Lessor may, from time to time
select, and the Lessor shall not be liable to the Lessee or any other Person (a)
based on the Lessor's (or such bank's) choice of investment vehicles, (b) for
any consequent loss of principal or interest or (c) for any unavailability of
funds based on such choice of investment. Furthermore, the Lessor shall bear no
responsibility for the financial condition of, nor any act or omission by, the
Lessor's depository bank. The income from such investment or interest on such
deposit shall be paid to the Lessee on a semi-annual basis as long as no Lease
Default has occurred and is then continuing, and as long as no fact or
circumstance exists which, with the giving of notice and/or the passage of time,
would constitute a Lease Default. The Lessee shall give not less than ten (10)
days prior written notice to the Lessor in each instance when an Imposition or
insurance premium is due, specifying the Imposition or premium to be paid and
the amount thereof, the place of payment, and the last day on which the same may
be paid in order to comply with the requirements of this Lease. If the Lessor,
in violation of its obligations under this Lease, does not pay any Imposition or
insurance premium when due, for which a sufficient deposit exists, the Lessee
shall not be in default hereunder by virtue of the failure of the Lessor to pay
such Imposition or such insurance premium and the Lessor shall pay any interest
or fine assessed by virtue of the Lessor's failure to pay such Imposition or
insurance premium.

                                      -31-
<PAGE>

     4.6.3 Deficits. If for any reason any deposit held by the Lessor under this
Section 4.6 shall not be sufficient to pay an Imposition or insurance premium
within the time specified therefor in this Lease, then, within ten (10) days
after demand by the Lessor, the Lessee shall deposit an additional amount with
the Lessor, increasing the deposit held by the Lessor so that the Lessor holds
sufficient funds to pay such Imposition or premium in full (or in installments
as otherwise provided for herein), together with any penalty or interest due
thereon. The Lessor may change its estimate of any Imposition or insurance
premium for any period on the basis of a change in an assessment or tax rate or
on the basis of a prior miscalculation or for any other good faith reason; in
which event, within ten (10) days after demand by the Lessor, the Lessee shall
deposit with the Lessor the amount in excess of the sums previously deposited
with the Lessor for the applicable period which would theretofore have been
payable under the revised estimate.

     4.6.4 Other Properties. If any Imposition shall be levied, charged, filed,
assessed, or imposed upon or against the Leased Property, and if such Imposition
shall also be a levy, charge, assessment, or imposition upon or for any other
real or personal property that does not constitute a part of the Leased Property
(other than Impositions against the CMC Land or any portion of the Building or
any other improvement thereon), then the computation of the amounts to be
deposited under this Section 4.6 shall be based upon the entire amount of such
Imposition and the Lessee shall not have the right to apportion any deposit with
respect to such Imposition.

     4.6.5 Transfers. In connection with any assignment of the Lessor's interest
under this Lease, the original Lessor named herein and each successor in
interest shall have the right to transfer all amounts deposited pursuant to the
provisions of this Section 4.6 then in its possession to such assignee (as the
subsequent holder of the Lessor's interest in this Lease) and upon such
transfer, the original Lessor named herein or the applicable successor in
interest transferring the deposits shall thereupon be completely released from
all liability with respect to such deposits so transferred and the Lessee shall
look solely to said assignee, as the subsequent holder of the Lessor's interest
under this Lease, in reference thereto. The original Lessor named herein or the
applicable successor in interest transferring the deposits shall provide written
notice to the Lessee of such transfer.

     4.6.6 Security. All amounts deposited with the Lessor pursuant to the
provisions of this Section 4.6 shall be held by the Lessor as additional
security for the payment and performance of the Obligations and, upon the
occurrence of any Lease Default, the Lessor may, in its sole and absolute
discretion, apply said amounts towards payment or performance of such
Obligations.

     4.6.7 Return. Upon the expiration or earlier termination of this Lease,
provided, that, all of the Lease Obligations have been fully paid and performed,
any sums then held by the Lessor under this Section 4.6 shall be refunded to the
Lessee; unless a Related Party Default has occurred, in which event such sums
may be applied toward the Obligations.

                                      -32-
<PAGE>

     4.6.8 Receipts. The Lessee shall deliver to the Lessor copies of all
notices, demands, claims, bills and receipts in relation to the Impositions and
insurance premiums immediately upon receipt thereof by the Lessee.


                                    ARTICLE 5
                                    ---------

               OWNERSHIP OF LEASED PROPERTY AND PERSONAL PROPERTY;
               ---------------------------------------------------
                    INSTALLATION, REMOVAL AND REPLACEMENT OF
                    ----------------------------------------
                                PERSONAL PROPERTY
                                -----------------

     5.1 Ownership of the Leased Property. The Lessee acknowledges that the
Leased Property is the property of the Lessor and that, subject to the Permitted
Encumbrances, the Lessee has only the right to the exclusive possession and use
of the Leased Property upon the terms and conditions of this Lease.

     5.2 Personal Property; Removal and Replacement of Personal Property.

     5.2.1 Lessee To Equip Facility. The Lessee, at its sole cost and expense,
shall install, affix or assemble or place on the Leased Property, sufficient
items of Tangible Personal Property, in addition to the Lessor's Personal
Property, to enable the Leased Property to be operated, in accordance with the
requirements of this Lease for the Primary Intended Use, and such Tangible
Personal Property and replacements thereof, shall be at all times the property
of the Lessee.

     5.2.2 Sufficient Personal Property. The Lessee shall maintain, during the
entire Term, the Tangible Personal Property and the Lessor's Personal Property
in good order and repair and shall provide at its expense all necessary
replacements thereof, as may be necessary in order to operate the Leased
Property in compliance with all applicable Legal Requirements and Insurance
Requirements and otherwise in accordance with customary practice in the industry
for the Primary Intended Use. In addition, the Lessee shall (a) furnish all
necessary replacements of obsolete items of the Tangible Personal Property and
the Lessor's Personal Property during the Term, unless the Lessee provides the
Lessor with an explanation (reasonably acceptable to the Lessor) as to why such
Tangible Personal Property and/or the Lessor's Personal Property is no longer
required in connection with the operation of the Leased Property and (b) at
least once a year, and more frequently if requested by the Lessor, deliver to
the Lessor, a detailed inventory of all such Tangible Personal Property and the
Lessor's Personal Property.

     5.2.3 Removal and Replacement; Lessor's Option to Purchase. The Lessee
shall not remove from the Leased Property any one or more items of Tangible
Personal Property (whether now owned or hereafter acquired), the fair market
value of which exceeds TWENTY-FIVE THOUSAND DOLLARS ($25,000), individually or
ONE HUNDRED THOUSAND DOLLARS ($100,000.00) collectively, except if such Tangible
Personal Property is simultaneously suitably replaced or the Lessee provides the
Lessor with an explanation

                                      -33-
<PAGE>

(reasonably satisfactory to the Lessor) as to why such Tangible Personal
Property is no longer required in connection with the operation of the Leased
Property. At its sole cost and expense, the Lessee shall restore the Leased
Property to the condition required by Article 8, including repair of all damage
to the Leased Property caused by the removal of the Tangible Personal Property,
whether effected by the Lessee or the Lessor. Upon the expiration or earlier
termination of this Lease, the Lessor shall have the option, which may be
exercised prior to or within sixty (60) days following such expiration or
termination, of (a) acquiring the Tangible Personal Property (pursuant to a bill
of sale and assignments of any equipment leases, all in such forms as are
reasonably satisfactory to the Lessor) upon payment of its book value (the
Lessee's cost, minus depreciation), but not in excess of its fair market value
or (b) requiring the Lessee to remove the Tangible Personal Property. If the
Lessor exercises its option to purchase the Tangible Personal Property, the
price to be paid by the Lessor shall be (i) reduced by the amount of all
payments due on any equipment leases or any other Permitted Prior Security
Interests assumed by the Lessor and (ii) applied to the Lease Obligations before
any payment to the Lessee. If the Lessor requires the removal of the Tangible
Personal Property, then all of the Tangible Personal Property that is not
removed by the Lessee within ten (10) days following such request shall be
considered abandoned by the Lessee and may be appropriated, sold, destroyed or
otherwise disposed of by the Lessor upon first giving notice thereof to the
Lessee, without any payment to the Lessee and without any obligation to account
therefor.


                                    ARTICLE 6
                                    ---------

                         SECURITY FOR LEASE OBLIGATIONS
                         ------------------------------

     6.1   Security for Lessee's Obligations.

     6.1.1 Security. In order to secure the payment and performance of all of
the Obligations, the Lessee agrees to provide or cause there to be provided,
among other things, the following security:

     (a) a first lien and exclusive security interest in the Tangible Personal
Property and certain other Collateral as more particularly provided for in the
Security Agreement;

     (b) a first lien and exclusive pledge of all of the capital stock of the
Lessee all as more particularly set forth in the Pledge Agreements. If any
Person other than the Lessee shall ever operate the Facility, a pledge of all
capital stock of, or partnership or other ownership interests, in such Person
shall also be provided pursuant to a pledge and security agreement substantially
similar to the Pledge Agreements; and

     (c) a first lien and exclusive pledge and assignment of, and security
interest in, all Permits and Contracts, as more particularly provided for in the
Permits Assignment.

                                      -34-
<PAGE>

     Notwithstanding anything to the contrary set forth herein, in no event
shall the Lessee be required to grant to the Lessor any security interest in
Receivables; provided, however, upon any Lease Default or the expiration or
earlier termination of this Lease, the Lessee shall provide the Lessor with
copies of its books and records relating to Receivables, even if excluded from
the security granted to the Lessor, so as to facilitate continuity of patient
and/or resident care and billing.

     6.1.2 Purchase-Money Security Interests and Equipment Leases.
Notwithstanding any other provision hereof regarding the creation of Liens, but
subject to Section 11.3.2, the Lessee may grant priority purchase money security
interests in items of Tangible Personal Property or lease Tangible Personal
Property from equipment lessors without the consent of the Lessor as long as the
total amount of the obligations of the Lessee outstanding in connection
therewith do not exceed ONE HUNDRED THOUSAND DOLLARS ($100,000) in the aggregate
and the Lessee may grant purchase money security interests in Tangible Personal
Property and lease Tangible Personal Property from equipment lessors in excess
of such limit, as long as, in each instance, (i) the secured party or equipment
lessor enters into an intercreditor agreement with, and satisfactory to, the
Lessor, pursuant to which, without limiting the foregoing, (x) the Lessor shall
be afforded the option of curing defaults and the option of succeeding to the
rights of the Lessee and (y) the Lessor's security interest in Tangible Personal
Property shall be subordinated to the security interest granted to such secured
party, (ii) all of the terms, conditions and provisions of the purchase money
security agreements or equipment leases evidencing the financing arrangement are
reasonably acceptable to the Lessor, (iii) promptly after the execution thereof,
the Lessee provides to the Lessor true and complete copies, as executed, of all
such purchase money security agreements and equipment leases (and all amendments
thereto) and (iv) no such purchase money security interest or equipment lease
shall be cross-defaulted or cross-collateralized with any other obligation.
Security interests granted by the Lessee in full compliance with the provisions
of this Section 6.1.2 are referred to as "Permitted Prior Security Interests."


                                    ARTICLE 7
                                    ---------

                      CONDITION AND USE OF LEASED PROPERTY;
                      -------------------------------------
                              MANAGEMENT AGREEMENTS
                              ---------------------

     7.1   Condition of the Leased Property. The Lessee acknowledges receipt and
delivery of possession of the Leased Property and that the Lessee has examined
and otherwise has acquired knowledge of the condition of the Leased Property
prior to the execution and delivery of this Lease and has found the same to be
in good order and repair and satisfactory for its purposes hereunder. The Lessee
is leasing the Leased Property "AS-IS" in its present condition. The Lessee
waives any claim or action against the Lessor in respect of the condition of the
Leased Property. THE LESSOR MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, WITH RESPECT TO THE LEASED

                                      -35-
<PAGE>

PROPERTY, EITHER AS TO ITS FITNESS FOR ANY PARTICULAR PURPOSE OR USE, ITS DESIGN
OR CONDITION OR OTHERWISE, OR AS TO DEFECTS IN THE QUALITY OF THE MATERIAL OR
WORKMANSHIP THEREIN, LATENT OR PATENT; IT BEING AGREED THAT ALL RISKS RELATING
TO THE DESIGN, CONDITION AND/OR USE OF THE LEASED PROPERTY ARE TO BE BORNE BY
THE LESSEE. THE LESSEE HEREBY ASSUMES ALL RISK OF THE PHYSICAL CONDITION OF THE
LEASED PROPERTY, THE SUITABILITY OF THE LEASED PROPERTY FOR THE LESSEE'S
PURPOSES, AND THE COMPLIANCE OR NON-COMPLIANCE OF THE LEASED PROPERTY WITH ALL
APPLICABLE REQUIREMENTS OF LAW, INCLUDING BUT NOT LIMITED TO ENVIRONMENTAL LAWS
AND ZONING OR LAND USE LAWS.

     Upon the request of the Lessor, at any time and from time to time during
the Term, the Lessee shall engage one (1) or more independent professional
consultants, engineers and inspectors, qualified to do business in the State and
acceptable to the Lessor to perform any environmental and/or structural
investigations and/or other inspections of the Leased Property and the Facility
as the Lessor may reasonably request in order to detect (a) any structural
deficiencies in the Leased Improvements or the utilities servicing the Leased
Property or (b) the presence of any condition that (i) may be harmful or present
a health hazard to the patients and/or residents and other occupants of the
Leased Property or (ii) constitutes a breach or violation of any of the Lease
Documents. In the event that the Lessor reasonably determines that the results
of such testing or inspections are unsatisfactory, within thirty (30) days of
notice from the Lessor, the Lessee shall commence such appropriate remedial
actions as may be reasonably requested by the Lessor to correct such
unsatisfactory conditions and, thereafter, shall diligently and continuously
prosecute such remedial actions to completion within the time limits prescribed
in this Lease or the other Lease Documents.

     7.2   Use of the Leased Property; Compliance; Management.

     7.2.1 Obligation to Operate. The Lessee shall continuously operate the
Leased Property in accordance with the Primary Intended Use and maintain its
qualifications for licensure and accreditation as required by all applicable
Legal Requirements and Insurance Requirements.

     7.2.2 Permitted Uses. During the entire Term, the Lessee shall use the
Leased Property, or permit the Leased Property to be used, only for the Primary
Intended Use. The Lessee shall not use the Leased Property or permit the Leased
Property to be used for any other use without the prior written consent of the
Lessor, which consent may be withheld in the Lessor's sole and absolute
discretion.

     7.2.3 Compliance With Insurance Requirements. No use shall be made or
permitted to be made of the Leased Property and no acts shall be done which will
cause the cancellation of any insurance policy covering the Leased Property, nor
shall the Lessee, any Manager or any

                                      -36-
<PAGE>

other Person sell or otherwise provide to any patients and/or residents, other
occupants or invitees therein, or permit to be kept, used or sold in or about
the Leased Property, any article which may be prohibited by any Legal
Requirement or by any of the Insurance Requirements. Furthermore, the Lessee
shall, at its sole cost and expense, take whatever other actions that may be
necessary to comply with and to insure that the Leased Property complies with
all Insurance Requirements.

     7.2.4 No Waste. The Lessee shall not commit or suffer to be committed any
waste on, in or under the Leased Property, nor shall the Lessee cause or permit
any nuisance thereon.

     7.2.5 No Impairment. The Lessee shall neither suffer nor permit the Leased
Property to be used in such a manner as (a) might reasonably tend to impair the
Lessor's title thereto or (b) may reasonably make possible a claim or claims of
adverse usage or adverse possession by the public or of implied dedication of
the Leased Property.

     7.2.6 No Liens. Except as permitted pursuant to Section 6.1.2, the Lessee
shall not permit or suffer any Lien to exist on the Tangible Personal Property
and shall in no event cause, permit or suffer any Lien to exist with respect to
the Leased Property other than as set forth in Section 11.5.2.

     7.3   Compliance with Legal Requirements. The Lessee covenants and agrees
that the Leased Property shall not be used for any unlawful purpose and that the
Lessee, at its sole cost and expense, will promptly (a) comply with, and shall
cause every other member of the Leasing Group to comply with, all Legal
Requirements relating to the use, operation, maintenance, repair and restoration
of the Leased Property, whether or not compliance therewith shall require
structural change in any of the Leased Property or interfere with the use and
enjoyment of the Leased Property and (b) procure, maintain and comply with (in
all material respects), and shall cause every other member of the Leasing Group
to procure, maintain and comply with (in all material respects), all Contracts
and Permits necessary or desirable in order to operate the Leased Property for
the Primary Intended Use, and for compliance with all of the terms and
conditions of this Lease. Unless a Lease Default has occurred or any event has
occurred which, with the passage of time and/or the giving of notice would
constitute a Lease Default, the Lessee may, upon prior written notice to the
Lessor, contest any Legal Requirement to the extent permitted by, and in
accordance with, Article 15.

     7.4   Management Agreements. From and after the Commencement Date, neither
the Lessee, nor any Sublessee (other than any Sublessee that is not an Affiliate
of the Lessee) shall enter into any Management Agreement, without the prior
written approval of the Lessor and the Fee Mortgagee (to the extent that any
such approval from any Fee Mortgagee is required under any Fee Mortgage Loan
Documents), in each instance, which approval from the Lessor shall not be
unreasonably withheld. The Lessee shall not, without the prior written approval
of the Lessor, in each instance, which approval shall not be unreasonably
withheld, agree to or allow: (a) any change in the ownership or control of the
Manager to the extent that, pursuant to the

                                      -37-
<PAGE>

Management Agreement, any such change is prohibited or subject to the Lessee's
approval, (b) the termination of any Management Agreement, except (i) if either
party thereto exercises any right to terminate the Management Agreement in
accordance with its terms (unrelated to an allegation of default) or (ii) in
connection with the exercise by the Lessee of any of its remedies under the
Management Agreement as a result of any default by the Manager thereunder), (c)
any assignment by the Manager of its interest under the Management Agreement or
(d) any material amendment of the Management Agreement. In addition, the Lessee
and every Sublessee (other than any Sublessee that is not an Affiliate of the
Lessee) shall, at their sole cost and expense, promptly and fully perform or
cause to be performed every covenant, condition, promise and obligation of the
licensed operator of the Leased Property under any Management Agreement.

     Each Management Agreement shall provide that the Lessor shall be provided
notice of any defaults thereunder and, at the Lessor's option, an opportunity to
cure such default. The Lessee and any Sublessee (other than any Sublessee that
is not an Affiliate of the Lessee) shall furnish to the Lessor, within three (3)
days after receipt thereof, or after the mailing or service thereof by the
Lessee or such Sublessee, as the case may be, a copy of each notice of default
which the Lessee or such Sublessee shall give to, or receive from any Person,
based upon the occurrence, or alleged occurrence, of any default in the
performance of any covenant, condition, promise or obligation under any
Management Agreement.

     Whenever and as often as the Lessee or any Sublessee (other than any
Sublessee that is not an Affiliate of the Lessee) shall fail to perform,
promptly and fully, at its sole cost and expense, any covenant, condition,
promise or obligation on the part of the licensed operator of the Leased
Property under and pursuant to any Management Agreement, the Lessor, or a
lawfully appointed receiver of the Leased Property, or, subject to the terms of
any applicable Fee Mortgage Loan Documents, any Fee Mortgagee may, at their
respective options (and without any obligation to do so), after five (5) days'
prior notice to the Lessee (except in the case of an emergency) enter upon the
Leased Property and perform, or cause to be performed, such work, labor,
services, acts or things, and take such other steps and do such other acts as
they may deem advisable, to cure such defaulted covenant, condition, promise or
obligation, and any amount so paid or advanced by the Lessor, such receiver or
such Fee Mortgagee and all costs and expenses reasonably incurred in connection
therewith (including, without limitation, attorneys' fees and expenses), shall
be a demand obligation of the Lessee to the Lessor, such receiver or such Fee
Mortgagee, and, such parties shall have the same rights and remedies for failure
to pay such costs on demand as for the Lessee's failure to pay any other sums
due hereunder.

                                      -38-
<PAGE>

                                    ARTICLE 8
                                    ---------

                              REPAIRS; RESTRICTIONS
                              ---------------------

     8.1   Maintenance and Repair.

     8.1.1 Lessee's Responsibility. The Lessee, at its sole cost and expense,
shall keep the Leased Property and all private roadways, sidewalks and curbs
appurtenant thereto which are under the Lessee's control in good order and
repair (whether or not the need for such repairs occurs as a result of the
Lessee's use, any prior use, the elements or the age of the Leased Property or
such private roadways, sidewalks and curbs or any other cause whatsoever) and,
subject to Articles 9, 13 and 14, the Lessee shall promptly, with the exercise
of all reasonable efforts, undertake and diligently complete all necessary and
appropriate repairs, replacements, renovations, restorations, alterations and
modifications thereof of every kind and nature, whether interior or exterior,
structural or non-structural, ordinary or extraordinary, foreseen or unforeseen
or arising by reason of a condition (concealed or otherwise) existing prior to
the commencement of, or during, the Term and thereafter until the Lessee
surrenders the Leased Property in the manner required by this Lease. In
addition, the Lessee, at its sole cost and expense, shall make all repairs,
modifications, replacements, renovations and alterations of the Leased Property
(and such private roadways, sidewalks and curbs) that are necessary to comply
with all applicable Legal Requirements and Insurance Requirements so that the
Leased Property can be legally operated for the Primary Intended Use. All
repairs, replacements, renovations, alterations, and modifications required by
the terms of this Section 8.1 shall be (a) performed in a good and workmanlike
manner in compliance with all Legal Requirements, Insurance Requirements and the
requirements of Article 9 hereof and any applicable Fee Mortgage Loan Documents,
using new materials well suited for their intended purpose and (b) consistent
with the operation of the Leased Property in a first class manner. The Lessee
will not take or omit to take any action the taking or omission of which might
materially impair the value or the usefulness of the Leased Property for the
Primary Intended Use. To the extent that any of the repairs, replacements,
renovations, alterations or modifications required by the terms of this Section
8.1 constitute Material Structural Work, the Lessee shall obtain the Lessor's
prior written approval (which approval shall not be unreasonably withheld) of
the specific repairs, replacements, renovations, alterations and modifications
to be performed by or on behalf of the Lessee in connection with such Material
Structural Work. Notwithstanding the foregoing, in the event of a bona fide
emergency during which the Lessee is unable to contact the appropriate
representatives of the Lessor, the Lessee may commence such Material Structural
Work as may be necessary in order to address such emergency without the Lessor's
prior approval; provided, however; that the Lessee shall immediately thereafter
advise the Lessor and any Fee Mortgagee of such emergency and the nature and
scope of the Material Structural Work commenced and shall obtain the Lessor's
approval of the remaining Material Structural Work to be completed. The Lessee
shall have the right to access the Medical Center at such reasonable times, and
only to the extent reasonably necessary, to perform the Lessee's obligations
under this Section 8.1 with respect to that portion of the Leased Property
constituting a portion of the Building Systems located in the Medical

                                      -39-
<PAGE>

Center, provided, that, notwithstanding anything to the contrary set forth
herein, the Lessee shall perform its obligations (including, without limitation,
the obligations under this Section 8.1), and shall not exercise any right or
take or omit to take any action, under this Lease that would in any manner
unreasonably interfere with the use or operation, or detract from the value or
operating efficiency, of the CMC Land or those portions of the Building and
other improvements thereon, or otherwise adversely affect the CMC Land or such
portions of the Building and other improvements.

     8.1.2 No Lessor Obligation. The Lessor shall not, under any circumstances,
be required to build or rebuild any improvements on the Leased Property (or any
private roadways, sidewalks or curbs appurtenant thereto or any other portion of
the Building or Building Systems), or to make any repairs, replacements,
renovations, alterations, restorations, modifications, or renewals of any nature
or description to the Leased Property (or any private roadways, sidewalks or
curbs appurtenant thereto or any other portion of the Building or, except as
hereinafter specifically provided in this Section 8.1, the Building Systems),
whether ordinary or extraordinary, structural or non-structural, foreseen or
unforeseen, or to make any expenditure whatsoever with respect thereto in
connection with this Lease, or to maintain the Leased Property (or any private
roadways, sidewalks or curbs appurtenant thereto or any other portion of the
Building or, except as hereinafter specifically provided in this Section 8.1,
the Building Systems) in any way.

     8.1.3 Lessee May Not Obligate Lessor. Nothing contained herein nor any
action or inaction by the Lessor shall be construed as (a) constituting the
consent or request of the Lessor, express or implied, to any contractor,
subcontractor, laborer, materialman or vendor to or for the performance of any
labor or services for any construction, alteration, addition, repair or
demolition of or to the Leased Property or (b) giving the Lessee any right,
power or permission to contract for or permit the performance of any labor or
services or the furnishing of any materials or other property in such fashion as
would permit the making of any claim against the Lessor for the payment thereof
or to make any agreement that may create, or in any way be the basis for, any
right, title or interest in, or Lien or claim against, the estate of the Lessor
in the Leased Property. Without limiting the generality of the foregoing, the
right, title and interest of the Lessor in and to the Leased Property shall not
be subject to liens or encumbrances for the performance of any labor or services
or the furnishing of any materials or other property furnished to the Leased
Property at or by the request of the Lessee or any other Person other than the
Lessor. The Lessee shall notify any contractor, subcontractor, laborer,
materialman or vendor providing any labor, services or materials to the Leased
Property of this provision.

     8.1.4 Lessor's Common Work: The Lessor shall perform or cause to be
performed the following work (the "Common Work"):

     (a) replace, repair and maintain those portions of the Building Systems
located within the Building that do not exclusively serve the Facility,
including, without limitation, the meters used to determine shared costs of
utility services, in a condition sufficient for the Lessor to provide the
services required under Section 4.4; and

                                      -40-
<PAGE>

     (b) replace, repair and maintain, or cause the applicable provider to
replace, repair and maintain, the dumpsters and trash compactor in a condition
sufficient for the Lessee's reasonable use.

     8.1.5 Party Wall. The central common wall dividing the Medical Center from
the Facility, the center of said wall being a portion of the common boundary
dividing the Land from the CMC Land, is hereby established as a party wall.
Neither the Lessor nor the Lessee shall use such party wall in any manner that
will interfere with the equal use of the other half of the party wall. The
Lessee shall maintain, repair and replace such party wall in accordance with the
provisions of Section 8.1.1.

     8.2   Encroachments; Title Restrictions. If any of the Leased Improvements
shall, at any time, encroach upon any property, street or right-of-way adjacent
to the Leased Property, or shall violate the agreements or conditions contained
in any lawful restrictive covenant or other Lien now or hereafter affecting the
Leased Property, or shall impair the rights of others under any easement,
right-of-way or other Lien to which the Leased Property is now or hereafter
subject, then promptly upon the request of the Lessor, the Lessee shall, at its
sole cost and expense, subject to the Lessee's right to contest the existence of
any encroachment, violation or impairment as set forth in Article 15, (a) obtain
valid and effective waivers or settlements of all claims, liabilities and
damages resulting from each such encroachment, violation or impairment or (b)
make such alterations to the Leased Improvements, and take such other actions,
as the Lessee in the good faith exercise of its judgment deems reasonably
practicable, to remove such encroachment, or to end such violation or
impairment, including, if necessary, the alteration of any of the Leased
Improvements. Notwithstanding the foregoing, the Lessee shall, in any event,
take all such actions as may be reasonably necessary in order to be able to
continue the operation of the Leased Improvements for the Primary Intended Use
substantially in the manner and to the extent that the Leased Improvements were
operated prior to the assertion of such encroachment, violation or impairment
and nothing contained herein shall limit the Lessee's obligations to operate the
Leased Property in accordance with its Primary Intended Use. Any such alteration
made pursuant to the terms of this Section 8.2 shall be completed in conformity
with the applicable requirements of Section 8.1 and Article 9. The Lessee's
obligations under this Section 8.2 shall be in addition to and shall in no way
discharge or diminish any obligation of any insurer under any policy of title or
other insurance.


                                    ARTICLE 9
                                    ---------

                          MATERIAL STRUCTURAL WORK AND
                          ----------------------------
                                CAPITAL ADDITIONS
                                -----------------

     9.1   Lessor's Approval. Without the prior written consent of the Lessor,
which consent may be withheld by the Lessor, in its sole and absolute
discretion, the Lessee shall make no Capital Addition or Material Structural
Work to the Leased Property (including, without

                                      -41-
<PAGE>

limitation, any change in the size, bed and/or unit capacity of the Facility),
except as may be otherwise expressly required pursuant to Article 8.

     9.2   General Provisions as to Capital Additions and Certain Material
Structural Work. As to any Capital Addition or Material Structural Work (other
than such Material Structural Work that is required to be performed pursuant to
the terms of Section 8.1) for which the Lessor has granted its prior written
approval, the following terms and conditions shall apply unless otherwise
expressly set forth in the Lessor's written approval.

     9.2.1 No Liens. The Lessee shall not be permitted to create any Lien on the
Leased Property in connection with any Capital Addition or Material Structural
Work. Without limiting the foregoing, nothing herein shall be construed as
constituting the permission of the Lessor for any mechanic, materialman or
subcontractor to file any Lien against the Leased Property, and the Lessee
agrees to secure the immediate removal of any such Lien purported to be filed,
by payment or otherwise as provided by law.

     9.2.2 Lessee's Proposal Regarding Capital Additions and Material Structural
Work. If the Lessee desires to undertake any Capital Addition or Material
Structural Work, the Lessee shall submit to the Lessor in writing a proposal
setting forth in reasonable detail any proposed Capital Addition or Material
Structural Work and shall provide to the Lessor copies of, or information
regarding, the applicable plans and specifications, Permits, Contracts and any
other materials concerning the proposed Capital Addition or Material Structural
Work, as the case may be, as the Lessor may reasonably request. Without limiting
the generality of the foregoing, each such proposal pertaining to any Capital
Addition shall indicate the approximate projected cost of constructing such
Capital Addition, the use or uses to which it will be put and a good faith
estimate of the change, if any, in the Gross Revenues that the Lessee
anticipates will result from the construction of such Capital Addition.

     9.2.3 Lessor's Options Regarding Capital Additions and Material Structural
Work. The Lessor shall have the options of: (a) denying permission for the
construction of the applicable Capital Addition or Material Structural Work, (b)
offering to finance the construction of the Capital Addition or Material
Structural Work pursuant to Section 9.3, (c) allowing the Lessee to pay for or
separately finance the construction of the Capital Addition or Material
Structural Work, subject to compliance with the terms and conditions of Section
9.2.1, Section 9.4, Section 13.1, all Legal Requirements and all other
requirements of this Lease and to such other terms and conditions as the Lessor
may in its discretion impose or (d) any combination of the foregoing. Unless the
Lessor notifies the Lessee in writing of a contrary election within forty-five
(45) days of the Lessee's request, the Lessor shall be deemed to have denied the
request for the Capital Addition or Material Structural Work.

     9.2.4 Lessor May Elect to Finance Capital Additions or Material Structural
Work. If the Lessor elects to offer financing for the proposed Capital Addition
or Material Structural Work, the provisions of Section 9.3 shall apply.

                                      -42-
<PAGE>

     9.2.5 Legal Requirements; Quality of Work. All Capital Additions and/or
Material Structural Work shall be performed in full compliance with all
applicable Legal Requirements and shall be performed in a good and workmanlike
manner.

     9.3   Capital Additions and Material Structural Work Financed by Lessor.

     9.3.1 Lessee's Financing Request. The Lessee may request that the Lessor
provide or arrange financing for a Capital Addition or Material Structural Work
by providing to the Lessor such information about the Capital Addition or
Material Structural Work as he Lessor may reasonably request, including, without
limitation, all information referred to in Section 9.2 above. The Lessee
understands, however, that the Lessor shall be under no obligation to agree to
such request. Nevertheless, the Lessor shall use reasonable efforts to notify
the Lessee, within forty-five (45) days of receipt of such information, as to
whether the Lessor will finance the proposed Capital Addition or Material
Structural Work and, if so, the terms and conditions upon which it would do so,
including the terms of any amendment to this Lease (including, without
limitation, an increase in Base Rent to compensate the Lessor for the additional
funds advanced by it). The Lessee may withdraw its request by notice to the
Lessor at any time before such time as the Lessee accepts the Lessor's terms and
conditions. All advances of funds for any such financing shall be made in
accordance with the requirements and procedures applicable to Work under Section
13.1.

     9.3.2 Lessor's General Requirements. If the Lessor agrees to finance the
proposed Capital Addition or Material Structural Work and the Lessee accepts the
Lessor's proposal therefor, in addition to all other items which the Lessor or
any applicable Financing Party may reasonably require, the Lessee shall provide
to the Lessor the following:

     (a) prior to any advance of funds, (i) any information, opinions,
certificates, Permits or documents reasonably requested by the Lessor or any
applicable Financing Party which are necessary to confirm that the Lessee will
be able to use the Capital Addition upon the completion thereof or the
applicable portion of the Facility upon the completion of the Material
Structural Work in accordance with the Primary Intended Use and (ii) evidence
satisfactory to the Lessor and any applicable Financing Party that all Permits
required for the construction and use of the Capital Addition or the applicable
portion of the Facility have been obtained, are in full force and effect and are
not subject to appeal, except only for those Permits which cannot in the normal
course be obtained prior to commencement or completion of the construction;
provided, that the Lessor and any applicable Financing Party are furnished with
reasonable evidence that the same will be available in the normal course of
business without unusual condition;

     (b) prior to any advance of funds, an Officer's Certificate and, if
requested, a certificate from the Lessee's architect, setting forth in
reasonable detail the projected (or actual, if available) Capital Addition Cost
or the cost of the Material Structural Work;

                                      -43-
<PAGE>

     (c) bills of sale, instruments of transfer and other documents required by
the Lessor so as to vest title to the Capital Addition or the applicable
Material Structural Work in the Lessor free and clear of all Liens, and
amendments to this Lease and any recorded notice or memorandum thereof, duly
executed and acknowledged, in form and substance reasonably satisfactory to the
Lessor, providing for any changes required by the Lessor including, without
limitation, changes in the Base Rent and the legal description of the Land;

     (d) upon payment therefor, a deed conveying to the Lessor title to any land
acquired for the purpose of constructing the Capital Addition or the applicable
Material Structural Work ("Additional Land") free and clear of any Liens except
those approved by the Lessor;

     (e) upon completion of the Capital Addition or the Material Structural
Work, a final as-built survey thereof reasonably satisfactory to the Lessor, if
required by the Lessor;

     (f) during and following the advance of funds and the completion of the
Capital Addition or the Material Structural Work, endorsements to any
outstanding policy of title insurance covering the Leased Property satisfactory
in form and substance to the Lessor and any Financing Party (i) updating the
same without any additional exception except as may be reasonably permitted by
the Lessor, (ii) if applicable, including the Additional Land in the premises
covered by such title insurance policy and (iii) increasing the coverage thereof
by an amount equal to any amount paid by the Lessor for the Additional Land plus
the Fair Market Value of the Capital Addition or the Fair Market Value of the
Material Structural Work (except to the extent covered by the owner's policy of
title insurance referred to in subparagraph (g) below);

     (g) simultaneous with the initial advance of funds, if appropriate, (i) an
owner's policy of title insurance insuring fee simple title to any Additional
Land conveyed to the Lessor pursuant to subparagraph (d) free and clear of all
Liens except those approved by the Lessor and (ii) a lender's policy of title
insurance reasonably satisfactory in form and substance to any applicable
Financing Party;

     (h) following the completion of the Capital Addition or the Material
Structural Work, if reasonably deemed necessary by the Lessor, an appraisal of
the Leased Property by an M.A.I. appraiser acceptable to the Lessor, which
states that the Fair Market Value of the Leased Property upon completion of the
Capital Addition or the Material Structural Work exceeds the Fair Market Value
of the Leased Property prior to the commencement of the construction of such
Capital Addition or Material Structural Work by an amount not less than one
hundred twenty-five percent (125%) of the Capital Addition Cost or the cost of
the Material Structural Work; and

     (i) during or following the advancement of funds, prints of architectural
and engineering drawings relating to the Capital Addition or the Material
Structural Work and such other materials, including, without limitation,
endorsements to the title insurance policies (insuring the Lessor and any
applicable Financing Party with respect to the Leased Property)

                                      -44-
<PAGE>

contemplated by subsection (f) above, opinions of counsel, appraisals, surveys,
certified copies of duly adopted resolutions of the board of directors of the
Lessee authorizing the execution and delivery of the lease amendment and any
other documents and instruments as may be reasonably required by the Lessor and
any applicable Financing Party.

     9.3.3 Payment of Costs. By virtue of making a request to finance a Capital
Addition or any Material Structural Work, whether or not such financing is
actually consummated, the Lessee shall be deemed to have agreed to pay, upon
demand, all costs and expenses reasonably incurred by the Lessor and any Person
participating with the Lessor in any way in the financing of the Capital
Addition or Material Structural Work, including, but not limited to (a) fees and
expenses of their respective attorneys, (b) all photocopying expenses, if any,
(c) the amount of any filing, registration and recording taxes and fees, (d)
documentary stamp taxes and intangible taxes and (e) title insurance charges and
appraisal fees.

     9.4   General Limitations. Without in any way limiting the Lessor's options
with respect to proposed Capital Additions or Material Structural Work: (a) no
Capital Addition or Material Structural Work shall be completed that could, upon
completion, significantly alter the character or purpose or detract from the
value or operating efficiency of the Leased Property, or significantly impair
the revenue-producing capability of the Leased Property, or adversely affect the
ability of the Lessee to comply with the terms of this Lease, (b) no Capital
Addition or Material Structural Work shall be completed which would tie in or
connect any Leased Improvements on the Leased Property with any other
improvements on property adjacent to the Leased Property (and not part of the
Land covered by this Lease) including, without limitation, tie-ins of buildings
or other structures or utilities, unless the Lessee shall have obtained the
prior written approval of the Lessor, which approval may be withheld in the
Lessor's sole and absolute discretion and (c) all proposed Capital Additions and
Material Structural Work shall be architecturally integrated and consistent with
the Leased Property.

     9.5   Non-Capital Additions. The Lessee shall have the obligation and right
to make repairs, replacements and alterations which are not Capital Additions as
required by the other Sections of this Lease, but in so doing, the Lessee shall
always comply with and satisfy the conditions of Sections 9.2.1, 9.2.5 and 9.4,
mutatis, mutandis. The Lessee shall have the right, from time to time, to make
additions, modifications or improvements to the Leased Property which do not
constitute Capital Additions or Material Structural Work as it may deem to be
desirable or necessary for its uses and purposes, subject to the same limits and
conditions imposed under Sections 9.2.1, 9.2.5 and 9.4. The cost of any such
repair, replacement, alteration, addition, modification or improvement shall be
paid by the Lessee and the results thereof shall be included under the terms of
this Lease and become a part of the Leased Property, without payment therefor by
the Lessor at any time. Notwithstanding the foregoing, all such additions,
modifications and improvements which affect the structure of any of the Leased
Improvements, or which involve the expenditure of more than FIFTY THOUSAND
DOLLARS ($50,000.00), shall be undertaken only upon compliance with the
provisions of Section 13.1, all Legal Requirements and all other applicable
requirements of this Lease; provided, however, that in the

                                      -45-
<PAGE>

event of a bona fide emergency during which the Lessee is unable to contact the
appropriate representatives of the Lessor, the Lessee may commence such
additions, modifications and improvements as may be necessary in order to
address such emergency without the Lessor's prior approval, as long as the
Lessee immediately thereafter advises the Lessor of such emergency and the
nature and scope of the additions, modifications and improvements performed and
obtains the Lessor's approval of the remaining work to be completed.


                                   ARTICLE 10
                                   ----------

                         WARRANTIES AND REPRESENTATIONS
                         ------------------------------

     10.1  Representations and Warranties. The Lessee hereby represents and
warrants to, and covenants and agrees with, the Lessor that:

     10.1.1 Existence; Power; Qualification.

     The Lessee is a corporation duly organized, validly existing and in good
standing under the laws of Delaware. The Lessee has all requisite corporate
power to own and operate its properties and to carry on its business as now
conducted and as proposed to be conducted and is duly qualified to transact
business and is in good standing in each jurisdiction where such qualification
is necessary or desirable in order to carry out its business as presently
conducted and as proposed to be conducted;

     10.1.2 Valid and Binding. The Lessee is duly authorized to make and enter
into all of the Lease Documents to which the Lessee is a party and to carry out
the transactions contemplated therein. All of the Lease Documents to which the
Lessee is a party have been duly executed and delivered by the Lessee, and each
is a legal, valid and binding obligation of the Lessee, enforceable in
accordance with its terms.

     10.1.3 Single Purpose. The Lessee is, and during the entire time that this
Lease remains in force and effect shall be, engaged in no business, trade or
activity other than the operation of the Leased Property for the Primary
Intended Use.

     10.1.4 No Violation. The execution, delivery and performance of the Lease
Documents and the consummation of the transactions thereby contemplated shall
not result in any breach of, or constitute a default under, or result in the
acceleration of, or constitute an event which, with the giving of notice or the
passage of time, or both, could result in default or acceleration of any
obligation of any member of the Leasing Group under any of the Permits or
Contracts or any other contract, mortgage, lien, lease, agreement, instrument,
franchise, arbitration award, judgment, decree, bank loan or credit agreement,
trust indenture or other instrument to which any member of the Leasing Group is
a party or by which any member of the Leasing Group or the

                                      -46-
<PAGE>

Leased Property may be bound or affected and do not violate or contravene any
Legal Requirement.

     10.1.5 Consents and Approvals. Except as already obtained or filed, as the
case may be, no consent or approval or other authorization of, or exemption by,
or declaration or filing with, any Person and no waiver of any right by any
Person is required to authorize or permit, or is otherwise required as a
condition of the execution and delivery of any of the Lease Documents by any
member of the Leasing Group and the performance of such member's obligations
thereunder or as a condition to the validity (assuming the due authorization,
execution and delivery by the Lessor of the Lease Documents to which it is a
party).

     10.1.6 No Liens or Insolvency Proceedings. Each member of the Leasing Group
is financially solvent and there are no actions, suits, investigations or
proceedings including, without limitation, outstanding federal or state tax
liens, garnishments or insolvency or bankruptcy proceedings, pending or, to the
best of the Lessee's knowledge and belief, threatened:

     (a) against or affecting any member of the Leasing Group, which if
adversely resolved to such member of the Leasing Group, would materially
adversely affect the ability of any of the foregoing to perform their respective
obligations under the Lease Documents; or

     (b) which may involve or affect the validity, priority or enforceability of
any of the Lease Documents, at law or in equity, or before or by any arbitrator
or Governmental Authority.

     10.1.7 No Burdensome Agreements. The Lessee is a party to any agreement the
terms of which now have, or, as far as can be reasonably foreseen, may have, a
material adverse affect on its respective financial condition or business or on
the operation of the Leased Property.

     10.1.8 Commercial Acts. The Lessee's performance of and compliance with the
obligations and conditions set forth herein and in the other Lease Documents
will constitute commercial acts done and performed for commercial purposes.

     10.1.9 Adequate Capital, Not Insolvent. After giving effect to the
consummation of the transactions contemplated by the Lease Documents, each
member of the Leasing Group:

     (a) will be able to pay its debts as they become due;

     (b) will have sufficient funds and capital to carry on its business as now
conducted or as contemplated to be conducted (in accordance with the terms of
the Lease Documents);

     (c) will own property having a value both at fair valuation and at present
fair salable value greater than the amount required to pay its debts as they
become due; and

     (d) will not be rendered insolvent as determined by applicable law.

                                      -47-
<PAGE>

     10.1.10 Not Delinquent. No member of the Leasing Group is delinquent or
claimed to be delinquent under any obligation for the payment of borrowed money.

     10.1.11 No Affiliate Debt. The Lessee has not created, incurred,
guaranteed, endorsed, assumed or suffered to exist any liability (whether direct
or contingent) for borrowed money from the Guarantor (or any of its Affiliates)
or any Affiliate of the Lessee that is not fully subordinated to the Lease
Obligations pursuant to the Affiliated Party Subordination Agreement.

     10.1.12 Taxes Current. Each member of the Leasing Group has filed all
federal, state and local tax returns which are required to be filed as to which
extensions are not currently in effect and have paid all taxes, assessments,
impositions, fees and other governmental charges (including interest and
penalties) which have become due pursuant to such returns or pursuant to any
assessment or notice of tax claim or deficiency received by each such member of
the Leasing Group. No tax liability has been asserted by the Internal Revenue
Service against any member of the Leasing Group or any other federal, state or
local taxing authority for taxes, assessments, impositions, fees or other
governmental charges (including interest or penalties thereon) in excess of
those already paid.

     10.1.13 Intentionally Omitted.

     10.1.14 Pending Actions, Notices and Reports.

     (a) There is no action or investigation pending or, to the best knowledge
and belief of the Lessee, threatened, anticipated or contemplated (nor, to the
knowledge of the Lessee, is there any reasonable basis therefor) against or
affecting any member of the Leasing Group (or any Affiliate thereof) before any
Governmental Authority, Accreditation Body or Third Party Payor which could
prevent or hinder the consummation of the transactions contemplated hereby or
call into question the validity of any of the Lease Documents or any action
taken or to be taken in connection with the transactions contemplated thereunder
or which in any single case or in the aggregate might result in any material
adverse change in the business, prospects, condition, affairs or operations of
any such member of the Leasing Group or the Leased Property (including, without
limitation, any action to revoke, withdraw or suspend any Permit necessary or
desirable for the operation of the Leased Property in accordance with its
Primary Intended Use and any action to transfer or relocate any such Permit to a
location other than the Leased Property) or any material impairment of the right
or ability of any such member of the Leasing Group to carry on its operations as
proposed to be conducted or which may materially adversely impact reimbursement
to any such member of the Leasing Group for services rendered to beneficiaries
of Third Party Payor Programs.

     (b) Neither the Facility nor any member of the Leasing Group has received
any notice of any claim, requirement or demand of any Governmental Authority,
Accreditation Body, Third Party Payor or any insurance body having or claiming
any licensing, certifying, supervising, evaluating or accrediting authority over
the Leased Property to rework or redesign the Leased 

                                      -48-
<PAGE>

Property, its professional staff or its professional services, procedures or
practices in any material respect or to provide additional furniture, fixtures,
equipment or inventory or to otherwise take action so as to make the Leased
Property conform to or comply with any Legal Requirement; and

     (c) The most recent utilization reviews relating to the Leased Property by
all applicable Third Party Payors, Accreditation Bodies and Governmental
Authorities and reviews or scrutiny by any managed care or utilization review
companies have not had a material adverse impact on the utilization of beds,
units or programs at any of the Leased Property. No claims or assertions have
been made in any utilization review that any of the practices or procedures used
at the Leased Property are improper or inappropriate other than such claims or
assertions which singly and in the aggregate will not have a material adverse
impact on the Leased Property.

     10.1.15 Compliance with Legal Requirements. The Lessee has obtained all
Permits that are necessary or desirable to operate the Leased Property in
accordance with its Primary Intended Use and all such Permits are in full force
and effect.

     10.1.16 Intentionally Omitted.

     10.1.17 Intentionally Omitted.

     10.1.18 Intentionally Omitted.

     10.1.19 Rate Limitations. Except as disclosed on EXHIBIT C, the State
currently imposes no restrictions or limitations on rates which may be charged
to private pay patients and/or residents receiving services at the Facility.

     10.1.20 Free Care. Except as disclosed on EXHIBIT D, there are no
Contracts, Permits or Legal Requirements which require that a percentage of
beds, slots or units in any program at the Facility be reserved for Medicaid or
Medicare eligible patients and/or residents or that the Facility provide a
certain amount of welfare, free or charity care or discounted or government
assisted patient and/or resident care.

     10.1.21 No Proposed Changes. The Lessee has no actual knowledge of any
Legal Requirements which have been enacted, promulgated or issued within the
eighteen (18) months preceding the date of this Lease or any proposed Legal
Requirements currently pending in the State which may materially adversely
affect rates at the Facility (or any program operated in conjunction with the
Facility) or may result in the likelihood of increased competition at the
Facility or the imposition of Medicaid, Medicare, charity, free care, welfare or
other discounted or government assisted patients at the Facility or require that
the Lessee or the Facility obtain a certificate of need, Section 1122 approval
or the equivalent, which the Lessee or the Facility does not currently possess.

                                      -49-
<PAGE>

     10.1.22 ERISA. No employee pension benefit plan maintained by any member of
the Leasing Group has any accumulated funding deficiency within the meaning of
the ERISA, nor does any member of the Leasing Group have any material liability
to the PBGC established under ERISA (or any successor thereto) in connection
with any employee pension benefit plan (or other class of benefit which the PBGC
has elected to insure), and there have been no "reportable events" (not waived)
or "prohibited transactions" with respect to any such plan, as those terms are
defined in Section 4043 of ERISA and Section 4975 of the Internal Revenue Code
of 1986, as now or hereafter amended, respectively.

     10.1.23 No Broker. No member of the Leasing Group nor any of their
respective Affiliates has dealt with any broker or agent in connection with the
transactions contemplated by the Lease Documents.

     10.1.24 No Improper Payments. No member of the Leasing Group nor any of
their respective Affiliates has:

     (a) made any contributions, payments or gifts of its funds or property to
or for the private use of any government official, employee, agent or other
Person where either the payment or the purpose of such contribution, payment or
gifts is illegal under the laws of the United States, any state thereof or any
other jurisdiction (foreign or domestic);

     (b) established or maintained any unrecorded fund or asset for any purpose
or has made any false or artificial entries on any of its books or records for
any reason;

     (c) made any payments to any Person with the intention or understanding
that any part of such payment was to be used for any other purpose other than
that described in the documents supporting the payment; or

     (d) made any contribution, or has reimbursed any political gift or
contribution made by any other Person, to candidates for public office, whether
federal, state or local, where such contribution would be in violation of
applicable law.

     10.1.25 Nothing Omitted. Neither this Lease, nor any of the other Lease
Documents, nor any certificate, agreement, statement or other document,
including, without limitation, any financial statements concerning the financial
condition of any member of the Leasing Group, furnished to or to be furnished to
the Lessor or its attorneys in connection with the transactions contemplated by
the Lease Documents, contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary in order to
prevent all statements contained herein and therein from being misleading. There
is no fact within the special knowledge of the Lessee which has not been
disclosed herein or in writing to the Lessor that materially adversely affects,
or in the future, insofar as the Lessee can reasonably foresee, may materially
adversely affect the business, properties, assets or condition, financial or
otherwise, of any member of the Leasing Group or the Leased Property.

                                      -50-
<PAGE>

     10.1.26 No Margin Security. The Lessee is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System). The Lessee is not an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.

     10.1.27 No Default. No event or state of facts which constitutes, or which,
with notice or lapse of time, or both, could constitute, a Lease Default has
occurred and is continuing.

     10.1.28 Principal Place of Business. The principal place of business and
chief executive office of the Lessee is located at 197 First Avenue, Needham
Heights, Massachusetts 02194 (the "Principal Place of Business").

     10.1.29 Intentionally Omitted.

     10.1.30 Intellectual Property. The Lessee is duly licensed or authorized to
use all (if any) copyrights, rights of reproduction, trademarks, trade-names,
trademark applications, service marks, patent applications, patents and patent
license rights, (all whether registered or unregistered, U.S. or foreign),
inventions, franchises, discoveries, ideas, research, engineering, methods,
practices, processes, systems, formulae, designs, drawings, products, projects,
improvements, developments, know-how and trade secrets which are used in or
necessary for the operation of the Facility in accordance with its Primary
Intended Use, without conflict with or infringement of any, and subject to no
restriction, lien, encumbrance, right, title or interest in others.

     10.1.31 Management Agreements. There is no Management Agreement in force
and effect as of the date hereof, other than the Current Management Agreement.

     10.2  Continuing Effect of Representations and Warranties. All
representations and warranties contained in this Lease and the other Lease
Documents shall constitute continuing representations and warranties which shall
remain true, correct and complete throughout the Term. Notwithstanding the
provisions of the foregoing sentence but without derogation from any other terms
and provisions of this Lease, including, without limitation, those terms and
provisions containing covenants to be performed or conditions to be satisfied on
the part of the Lessee, the representations and warranties contained in Sections
10.1.6, 10.1.7, 10.1.10, 10.1.14, 10.1.19, 10.1.20, 10.1.21, 10.1.22, 10.1.28,
and in the second sentence of Section 10.1.12, shall not constitute continuing
representations and warranties throughout the Term.

                                      -51-
<PAGE>

                                   ARTICLE 11
                                   ----------

                          FINANCIAL AND OTHER COVENANTS
                          -----------------------------

     11.1  Status Certificates. At any time, and from time to time, upon request
from the Lessor, the Lessee shall furnish to the Lessor, within ten (10)
Business Days' after receipt of such request, an Officer's Certificate
certifying that this Lease is unmodified and in full force and effect (or that
this Lease is in full force and effect as modified and setting forth the
modifications) and the dates to which the Rent has been paid. Any Officer's
Certificate furnished pursuant to this Section shall be addressed to any
prospective purchaser or mortgagee of the Leased Property as the Lessor may
request and may be relied upon by the Lessor and any such prospective purchaser
or Fee Mortgagee.

     11.2  Financial Statements; Reports; Notice and Information.

     11.2.1 Obligation To Furnish. The Lessee will furnish and shall cause to be
furnished to the Lessor the following statements, information and other
materials:

     (a) Annual Statements. Within ninety (90) days after the end of each of
their respective fiscal years, (i) a copy of the Consolidated Financials for
each of (x) the Lessee and (y) any Sublessee for the preceding fiscal year,
certified and audited by, and with the unqualified opinion of, independent
certified public accountants acceptable to the Lessor and certified as true and
correct by the Lessee or the applicable Sublessee, as the case may be (and,
without limiting anything else contained herein, the Consolidated Financials for
the Lessee and for each such Sublessee shall include a detailed balance sheet
for Leased Property as of the last day of such fiscal year and a statement of
earnings from the Leased Property for such fiscal year showing, among other
things, all rents and other income therefrom and all expenses paid or incurred
in connection with the operation of the Leased Property); (ii) separate
statements, certified as true and correct by the Lessee and each Sublessee,
stating whether, to the best of the signer's knowledge and belief after making
due inquiry, the Lessee or such Sublessee, as the case may be, is in default in
the performance or observance of any of the terms of this Lease or any of the
other Lease Documents and, if so, specifying all such defaults, the nature
thereof and the steps being taken to immediately remedy the same; (iii) a copy
of all letters from the independent certified accountants engaged to perform the
annual audits referred to above, directed to the management of the Lessee or any
Sublessee, as the case may be, regarding the existence of any reportable
conditions or material weaknesses and (iv) a statement certified as true and
correct by the Lessee setting forth all Subleases as of the last day of such
fiscal year, the respective areas demised thereunder, the names of the
Sublessees thereunder, the respective expiration dates of such Subleases, the
respective rentals provided for therein, and such other information pertaining
to such Subleases as may be reasonably requested by the Lessor.

     (b) Monthly Statements of Lessee. Within twenty (20) days after the end of
each calendar month during the pendency of this Lease, (i) an unaudited,
detailed month and year to

                                      -52-
<PAGE>

date income and expense statement for the Leased Property which shall include a
comparison to corresponding budget figures, occupancy statistics (including the
actual number of patients, the number of beds available and total patient days
for such month) for the Facility and patient mix breakdowns (for each patient
day during such month classifying patients by the type of care required and
source of payment) for the Facility and (ii) an express written calculation
showing the compliance or non-compliance, as the case may be, with the specific
financial covenants set forth in Section 11.3 for the applicable period,
including, with respect to the calculation of the Lessee's Rent Coverage Ratio,
a schedule substantially in the form attached hereto as EXHIBIT E.

     (c) Quarterly Statements. Within twenty (20) days after the end of each
Fiscal Quarter, unaudited Consolidated Financials for the Lessee certified as
true and correct by the Lessee.

     (d) Permits and Contracts. Promptly after the issuance or the execution
thereof, as the case may be, true and complete copies of (i) all Permits which
constitute operating licenses for the Facility issued by any Governmental
Authority having jurisdiction over health care matters and (ii) Contracts
(involving payments in the aggregate in excess of $100,000 per annum),
including, without limitation, all Provider Agreements.

     (e) Contract Notices. Promptly after the receipt thereof, true and complete
copies of any notices, consents, terminations or statements of any kind or
nature relating to any of the Contracts (involving payments in the aggregate in
excess of $100,000 per annum) other than those issued in the ordinary course of
business.

     (f) Permit or Contract Defaults. Promptly after the receipt thereof, true
and complete copies of all surveys, follow-up surveys, licensing surveys,
complaint surveys, examinations, compliance certificates, inspection reports,
statements (other than those statements that are issued in the ordinary course
of business), terminations and notices of any kind (other than those notices
that are furnished in the ordinary course of business) issued or provided to the
Lessee or any Sublessee that is an Affiliate of the Lessee by any Governmental
Authority, Accreditation Body or any Third Party Payor, including, without
limitation, any notices pertaining to any delinquency in, or proposed revision
of, the Lessee's or any such Sublessee's obligations under the terms and
conditions of any Permits or Contracts now or hereafter issued by or entered
into with any Governmental Authority, Accreditation Body or Third Party Payor
and the response(s) thereto made by or on behalf of the Lessee or any such
Sublessee.

     (g) Official Reports. Upon completion or filing thereof, complete copies of
all applications (other than those that are furnished in the ordinary course of
business), notices (other than those that are furnished in the ordinary course
of business), statements, annual reports, cost reports and other reports or
filings of any kind (other than those that are furnished in the ordinary course
of business) provided by the Lessee or any Sublessee that is an Affiliate of the
Lessee to

                                      -53-
<PAGE>

any Governmental Authority, Accreditation Body or any Third Party Payor with
respect to the Leased Property.

     (h) Other Information. With reasonable promptness, such other information
as the Lessor may from time to time reasonably request respecting (i) the
financial condition and affairs of each member of the Leasing Group and the
Leased Property and (ii) the licensing and operation of the Leased Property;
including, without limitation, audited financial statements, certificates and
consents from accountants and all other financial and licensing/operational
information as may be required or requested by any Governmental Authority.

     (i) Default Conditions. As soon as possible, and in any event within five
(5) days after the occurrence of any Lease Default, or any event or circumstance
which, with the giving of notice or the passage of time, or both, could
constitute a Lease Default, a written statement of the Lessee setting forth the
details of such Lease Default, event or circumstance and the action which the
Lessee proposes to take with respect thereto.

     (j) Official Actions. Promptly after the commencement thereof, notice of
all actions, suits and proceedings before any Governmental Authority or
Accreditation Body which could have a material adverse effect on (i) any member
of the Leasing Group to perform any of its obligations under any of the Lease
Documents or (ii) the Leased Property.

     (k) Audit Reports. Promptly after receipt, a copy of all audits or reports
submitted to any member of the Leasing Group by any independent public
accountant in connection with any annual, special or interim audits of the books
of any such member of the Leasing Group and, if requested by the Lessor, any
letter of comments directed by such accountant to the management of any such
member of the Leasing Group.

     (l) Adverse Developments. Promptly after the Lessee acquires knowledge
thereof, written notice of:

         (i) the potential termination of any Permit or Provider Agreement
necessary for the operation of the Leased Property;

         (ii) any loss, damage or destruction to or of the Leased Property in
excess of FIFTY THOUSAND DOLLARS ($50,000) (regardless of whether the same is
covered by insurance);

         (iii) any material controversy involving the Lessee or any Sublessee
and (x) Facility administrator or Facility employee of similar stature or (y)
any labor organization;

         (iv) any controversy that calls into question the eligibility of the
Lessee or the Facility for the participation in any Medicaid, Medicare or other
Third Party Payor Program;

                                      -54-
<PAGE>

         (v) any refusal of reimbursement by any Third Party Payor which,
singularly or together with all other such refusals by any Third Party Payors,
could have a material adverse effect on the financial condition of the Lessee or
any Sublessee; and

         (vi) any fact within the special knowledge of any member of the Leasing
Group, or any other development in the business or affairs of any member of the
Leasing Group, which may be materially adverse to the business, properties,
assets or condition, financial or otherwise, of any member of the Leasing Group
or the Leased Property.

     (m) Responses To Inspection Reports. Within thirty (30) days after receipt
of an inspection report relating to the Leased Property from the Lessor, a
written response describing in detail prepared plans to address concerns raised
by the inspection report.

     (n) Public Information. Upon the completion or filing, mailing or other
delivery thereof, complete copies of all financial statements, reports, notices
and proxy statements, if any, sent by any member of the Leasing Group (which is
a publicly held corporation) to its shareholders and of all reports, if any,
filed by any member of the Leasing Group (which is a publicly held corporation)
with any securities exchange or with the Securities Exchange Commission.

     (o) Annual Budgets. At least thirty (30) days prior to the end of each
Fiscal Year, the Lessee, any Sublessee and/or any Manager shall submit to the
Lessor a preliminary annual financial budget for the Facility for the next
Fiscal Year, a preliminary capital expenditures budget for the Facility for the
next Fiscal Year and a report detailing the capital expenditures made in the
then current Fiscal Year and on or before the end of the first month of each
Fiscal Year, the Lessee, any applicable Sublessee and/or any Manager shall
submit to the Lessor revised finalized versions of such budgets and report.

     (p) Financial Information Required Under Any Fee Mortgage Loan Documents.
The Lessee shall provide to any Fee Mortgagee any information that is required
to be delivered to such Fee Mortgagee pursuant to any Fee Mortgage Loan
Documents respecting (i) the financial condition and affairs of each member of
the Leasing Group and the Leased Property and (ii) the licensing and operation
of the Leased Property; including, without limitation, audited financial
statements, certificates and consents from accountants and all other financial
and licensing/operational information.

     11.2.2 Responsible Officer. Any certificate, instrument, notice, or other
document to be provided to the Lessor hereunder by any member of the Leasing
Group shall be signed by an executive officer of such member (in the event that
any of the foregoing is not an individual), having a position of Vice President
or higher and with respect to financial matters, any such certificate,
instrument, notice or other document shall be signed by the chief financial
officer of such member.

                                      -55-
<PAGE>

     11.2.3 No Material Omission. No certificate, instrument, notice or other
document, including without limitation, any financial statements furnished or to
be furnished to the Lessor pursuant to the terms hereof or of any of the other
Lease Documents shall contain any untrue statement of a material fact or shall
omit to state any material fact necessary in order to prevent all statements
contained therein from being misleading.

     11.2.4 Confidentiality. The Lessor shall afford any information received
pursuant to the provisions of the Lease Documents the same degree of
confidentiality that the Lessor affords similar information proprietary to the
Lessor; provided, however, that the Lessor does not in any way warrant or
represent that such information received from any member of the Leasing Group
shall remain confidential (and shall not be liable in any way for any subsequent
disclosure of such information by any Person that the Lessor has provided such
information in accordance with the terms hereof) and provided, further, that the
Lessor shall have the unconditional right to (a) disclose any such information
as the Lessor deems necessary or appropriate in connection with any sale,
transfer, conveyance, participation or assignment of the Leased Property or any
of the Lease Documents or any interest therein and (b) use such information in
any litigation or arbitration proceeding between the Lessor and any member of
the Leasing Group. Without limiting the foregoing, the Lessor may also utilize
any information furnished to it hereunder as and to the extent (i) counsel to
the Lessor determines that such utilization is necessary pursuant to 15 U.S.C.
77a-77aa or 15 U.S.C. 78a-78jj and the rules and regulations promulgated
thereunder, (ii) the Lessor is required or requested by any Governmental
Authority to disclose any such information and/or (iii) the Lessor is requested
to disclose any such information by any of its lenders or potential lenders. The
Lessor shall not be liable in any way for any subsequent disclosure of such
information by any Person to whom the Lessor provided such information in
accordance with the terms hereof. Nevertheless, in connection with any such
disclosure, the Lessor shall inform the recipient of any such information of the
confidential nature thereof. The Lessor shall observe any prohibitions or
limitations on the disclosure of any such information under applicable
confidentiality law or regulations, to the extent that the same are applicable
to such information, including, without limitation, any duly enacted "Patients'
Bill of Rights" or similar legislation, including such limitations as may be
necessary to preserve the confidentiality of the facility-patient/resident
relationship and the physician-patient privilege.

     11.3  Financial Covenants. The Lessee covenants and agrees that, throughout
the Term and as long as the Lessee is in possession of the Leased Property:

     11.3.1 Rent Coverage Ratio of Lessee. For each fiscal quarter commencing
with the seventh fiscal quarter after the SNF Conversion Date, the Lessee shall
maintain a Rent Coverage Ratio equal to or greater than 1.2 to 1.

     11.3.2 No Indebtedness. The Lessee shall not create, incur, assume or
suffer to exist any liability for borrowed money except (i) Indebtedness to the
Lessor under the Lease Documents and, (ii) Impositions allowed pursuant to the
provisions of the Lease, (iii) unsecured normal trade debt incurred upon
customary terms in the ordinary course of business,

                                      -56-
<PAGE>

(iv) Indebtedness created in connection with any financing of any Capital
Addition, provided, that each such financing has been approved by the Lessor in
accordance with the terms of Article 9 hereof, (v) Indebtedness to any
Affiliate, provided, that, such Indebtedness is fully subordinated to the Lease
Obligations pursuant to the Affiliated Party Subordination Agreement and (vi)
other Indebtedness of the Lessee in the aggregate amount not to exceed TWO
HUNDRED FIFTY THOUSAND DOLLARS ($250,000) incurred, for the exclusive use of the
Leased Property, on account of purchase money indebtedness or finance lease
arrangements, each of which shall not exceed the fair market value of the assets
or property acquired or leased and shall not extend to any assets or property
other than those purchased or leased and purchase money security interests in
equipment and equipment leases which comply with the provisions of Section
6.1.2.

     11.3.3 No Guaranties. The Lessee shall not assume, guarantee, endorse,
contingently agree to purchase or otherwise become directly or contingently
liable (including, without limitation, liable by way of agreement, contingent or
otherwise, to purchase, to provide funds for payment, to supply funds to or
otherwise to invest in any debtor or otherwise to assure any creditor against
loss) in connection with any Indebtedness of any other Person, except by the
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business.

     11.4  Affirmative Covenants. The Lessee covenants and agrees that
throughout the Term and any periods thereafter that the Lessee remains in
possession of the Leased Property:

     11.4.1 Maintenance of Existence. If the Lessee is a corporation, trust or
partnership, during the entire time that this Lease remains in full force and
effect, the Lessee shall keep in effect its existence and rights as a
corporation, trust or partnership under the laws of the state of its
incorporation or formation and its right to own property and transact business
in the State.

     11.4.2 Materials. Except as provided in Section 6.1.2, the Lessee shall not
suffer the use in connection with any renovations or other construction relating
to the Leased Property of any materials, fixtures or equipment intended to
become part of the Leased Property which are purchased upon lease or conditional
bill of sale or to which the Lessee does not have absolute and unencumbered
title, and the Lessee covenants to cause to be paid punctually all sums becoming
due for labor, materials, fixtures or equipment used or purchased in connection
with any such renovations or construction, subject to the Lessee's right to
contest to the extent provided for in Article 15.

     11.4.3 Compliance With Legal Requirements And Applicable Agreements. The
Lessee and the Leased Property and all uses thereof shall comply with (i) all
Legal Requirements, (ii) all Permits and Contracts, (iii) all Insurance
Requirements, (iv) the Lease Documents, (v) the Permitted Encumbrances, (vi) the
Appurtenant Agreements and (vii) the Fee Mortgage Loan Documents.

                                      -57-
<PAGE>

     11.4.4 Books And Records. The Lessee shall cause to be kept and maintained,
and shall permit the Lessor, any Fee Mortgagee and their respective
representatives to inspect at all reasonable times, accurate books of accounts
in which complete entries will be made in accordance with GAAP reflecting all
financial transactions of the Lessee (showing, without limitation, all materials
ordered and received and all disbursements, accounts payable and accounts
receivable in connection with the operation of the Leased Property).

     In addition and without limiting the foregoing or any other provision set
forth herein, the Lessee agrees to maintain such books and records and make them
available for inspection, audit, and copying in such manner and for such time as
required by applicable laws and responsible businesses practices. As a
subcontractor that may be subject to Section 1861(v) (1) (I) of the Social
Security Act (the "Act"), the Lessee shall, upon written request and in
accordance with the above-mentioned section of the Act and regulations
promulgated pursuant thereto, make available to the Comptroller General, the
Secretary of Health and Human Services, and their duly authorized
representatives, a copy of this Lease and access to the Lessee's books,
documents, and records necessary to verify the nature and extent of the costs of
services provided to the Lessor. Such access will be available until the
expiration of four (4) years after the services to which the costs are related
have been furnished.

     The provisions of this Section shall apply only if this Lease is covered by
the Act and such provisions shall become void and shall be of no further force
or effect if, at the time a request is made, this Lease is not subject to the
Act. The Lessee agrees that if it carries out any of the duties of this Lease
through a subcontract with a related organization which subcontract has a value
or cost of TEN THOUSAND DOLLARS ($10,000) or more over a twelve (12) month
period, the Lessee will obtain an identical access requirement in such
subcontract.

     11.4.5 Participation in Third Party Payor Programs. The Lessee and each
Sublessee shall participate in all Third Party Payor Programs (which would be
participated in by a prudent operator in the good faith exercise of commercially
reasonable business judgment), in accordance with all requirements thereof
(including, without limitation, all applicable Provider Agreements), and shall
remain eligible to participate in such Third Party Payor Programs, all as shall
be necessary for the prudent operation of the Facility in the good faith
exercise of commercially reasonable business judgment.

     11.4.6 Conduct of its Business. The Lessee will maintain, and cause any
Sublessee and any Manager, as applicable, to maintain, experienced and competent
professional management with respect to its business and with respect to the
Leased Property. The Lessee, any Sublessee and any Manager shall conduct, in the
ordinary course, the operation of the Facility, and the Lessee and any such
Sublessee shall not enter into any other business or venture during the Term or
such time as the Lessee or any such Sublessee is in possession of the Leased
Property.

     11.4.7 Address. The Lessee shall provide the Lessor thirty (30) days' prior
written notice of any change of its Principal Place of Business from its current
Principal Place of Business. The Lessee shall maintain all books and records
relating to its business, solely at its Principal Place of

                                      -58-
<PAGE>

Business and at the Leased Property. The Lessee shall not (a) remove any books
or records relating to the Lessee's business from either the Leased Property or
the Lessee's Principal Place of Business or (b) relocate its Principal Place of
Business until after receipt of a certificate from the Lessor, signed by an
officer thereof, stating that the Lessor has, to its satisfaction, obtained all
documentation that it deems necessary or desirable to obtain, maintain, perfect
and confirm the first priority security interests granted in the Lease
Documents.

     11.4.8 Subordination of Affiliate Transactions. Without limiting the
provisions of any other Section of this Lease or the Affiliated Party
Subordination Agreement, any payments to be made by the Lessee to (a) any member
of the Leasing Group (or any Affiliate of any such member of the Leasing Group)
or (b) any Affiliate of the Lessee, in connection with any transaction between
the Lessee and such Person, including, without limitation, the purchase, sale or
exchange of any property, the rendering of any service to or with any such
Person (including, without limitation, all allocations of any so-called
corporate or central office costs, expenses and charges of any kind or nature)
or the making of any loan or other extension of credit or the making of any
equity investment, shall be subordinate to the complete payment and performance
of the Lease Obligations; provided, however, that, subject to any limitations
set forth under any applicable Fee Mortgage Loan Documents, all such
subordinated payments may be paid at any time unless: (x) after giving effect to
such payment, the Lessee shall be unable to comply with any of its obligations
under any of the Lease Documents or (y) a Lease Default has occurred and is
continuing and has not been expressly waived in writing by the Lessor or an
event or state of facts exists, which, with the giving of notice or the passage
of time, or both, would constitute a Lease Default.

     11.4.9 Inspection. At reasonable times and upon reasonable notice, the
Lessee shall permit the Lessor, any Fee Mortgagee and their respective f
authorized representatives (including, without limitation, the Consultants) to
inspect the Leased Property as provided in Section 7.1 above.

     11.4.10 Additional Property. In the event that at any time during the Term,
the Lessee holds the fee title to or a leasehold interest in any real property
and/or personal property which is used as an integral part of the operation of
the Leased Property (but is not subject to this Lease), the Lessee shall (i)
provide the Lessor with prior notice of such acquisition and (ii) shall take
such actions and enter into such agreements as the Lessor shall reasonably
request in order to grant the Lessor a first priority mortgage or other security
interest in such real property and personal property, subject only to the
Permitted Encumbrances and other Liens reasonably acceptable to the Lessor.

     11.5  Additional Negative Covenants. The Lessee covenants and agrees that,
throughout the Term and such time as the Lessee remains in possession of the
Leased Property:

                                      -59-
<PAGE>

     11.5.1 Restrictions Relating to Lessee. Except as may otherwise be
expressly provided in any of the Lease Documents, the Lessee shall not, without
the prior written consent of the Lessor, in each instance, which consent may be
withheld in the sole and absolute discretion of the Lessor:

     (a)   convey, assign, hypothecate, transfer, dispose of or encumber, or
permit the conveyance, assignment, transfer, hypothecation, disposal or
encumbrance of all or any part of any legal or beneficial interest in this
Lease, its other assets or the Leased Property; provided, however, that this
restriction shall not apply to (i) the Permitted Encumbrances that may be
created after the date hereof pursuant to the Lease Documents; (ii) Liens
created in accordance with Section 6.1.2 against Tangible Personal Property
securing Indebtedness permitted under Section 11.3.2(v) relating to equipment
leasing or financing for the exclusive use of the Leased Property; (iii) the
sale, conveyance, assignment, hypothecation, lease or other transfer of any
material asset or assets (whether now owned or hereafter acquired), the fair
market value of which equals or is less than FIFTY THOUSAND DOLLARS ($50,000),
individually, or TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000) collectively;
(iv) without limitation as to amount, the disposition in the ordinary course of
business of any obsolete, worn out or defective fixtures, furnishings or
equipment used in the operation of the Leased Property provided that the same
are replaced with fixtures, furnishings or equipment of equal or greater utility
or value or the Lessee provides the Lessor with an explanation (reasonably
satisfactory to the Lessor) as to why such fixtures, furnishings or equipment is
no longer required in connection with the operation of the Leased Property; (v)
without limitation as to amount, any sale of inventory by the Lessee in the
ordinary course of business and (vi) subject to the terms of the Pledge
Agreement and the Affiliated Party Subordination Agreement, distributions to the
shareholders of the Lessee;

     (b)   permit the use of the Facility for any purpose other than the Primary
Intended Use; or

     (c)   liquidate, dissolve or merge or consolidate with any other Person.

     11.5.2 No Liens. The Lessee will not directly or indirectly create or allow
to remain and will promptly discharge at its expense any Lien, title retention
agreement or claim upon or against the Leased Property (including the Lessee's
interest therein) or the Lessee's interest in this Lease or any of the other
Lease Documents, or in respect of the Rent, excluding (a) this Lease and any
permitted Subleases, (b) the Permitted Encumbrances, (c) Liens which are
consented to in writing by the Lessor, (d) Liens for those taxes of the Lessor
which the Lessee is not required to pay hereunder, (e) Liens of mechanics,
laborers, materialmen, suppliers or vendors for sums either not yet due or being
contested in strict compliance with the terms and conditions of Article 15, (f)
any Liens which are the responsibility of the Lessor pursuant to the provisions
of Article 20, (g) Liens for Impositions which are either not yet due and
payable or which are in the process of being contested in strict compliance with
the terms and conditions of Article 15 and (h) involuntary Liens caused by the
actions or omissions of the Lessor.

                                      -60-
<PAGE>

     11.5.3 Limits on Affiliate Transactions. The Lessee shall not enter into
any transaction with any Affiliate, including, without limitation, the purchase,
sale or exchange of any property, the rendering of any service to or with any
Affiliate and the making of any loan or other extension of credit, except in the
ordinary course of, and pursuant to the reasonable requirements of, the Lessee's
business and upon fair and reasonable terms no less favorable to the Lessee than
would be obtained in a comparable arms'-length transaction with any Person that
is not an Affiliate.

     11.5.4 Best Efforts To Maximize. The Lessee covenants that the operation of
the Facility shall be conducted in a manner consistent with the prevailing
standards and practices recognized in the health care industry as those
customarily utilized by first class business operations. Subject to any
applicable Legal Requirements, the members of the Leasing Group shall use their
best efforts to maximize the Facility's Gross Revenues, and to that end, but
without limiting the foregoing, (a) a full staff of employees shall be
maintained at the Facility and (b) a maximum amount of space in the Facility
shall be devoted to revenue producing activities and only such part thereof
shall be devoted for office, storage and non-revenue producing purposes as shall
be reasonably necessary.

     11.5.5 No Default. The Lessee shall not commit any default or breach under
any of the Lease Documents.

     11.5.6 Intentionally Omitted.

     11.5.7 Intentionally Omitted.

     11.5.8 ERISA. The Lessee shall not establish or permit any Sublessee to
establish any new pension or defined benefit plan or modify any such existing
plan for employees subject to ERISA, which plan provides any benefits based on
past service without the advance consent of the Lessor to the amount of the
aggregate past service liability thereby created.

     11.5.9 Forgiveness of Indebtedness. The Lessee will not waive, or permit
any sublessee or Manager which is an Affiliate to waive any debt or claim,
except in the ordinary course of its business.

     11.5.10 Value of Assets. Except as disclosed in the financial statements
provided to the Lessor as of the date hereof, the Lessee will not write up (by
creating an appraisal surplus or otherwise) the value of any assets of the
Lessee above their cost to the Lessee, less the depreciation regularly allowable
thereon.

     11.5.11 Changes in Fiscal Year and Accounting Procedures. The Lessee shall
not, without the prior written consent of the Lessor, in each instance, which
consent may be withheld in the Lessor's reasonable discretion (a) change its
fiscal year or capital structure or (b) change, alter, amend or in any manner
modify, except in accordance with GAAP, any of its current

                                      -61-
<PAGE>

accounting procedures related to the method of revenue recognition, billing
procedures or determinations of doubtful accounts or bad debt expenses nor will
the Lessee permit any of its Subsidiaries to change its fiscal year or suffer or
permit any circumstance to exist in which any Subsidiary is not wholly-owned,
directly or indirectly, by the Lessee.


                                   ARTICLE 12
                                   ----------

                             INSURANCE AND INDEMNITY
                             -----------------------

     12.1  General Insurance Requirements. During the Term of this Lease and
thereafter until the Lessee surrenders the Leased Property in the manner
required by this Lease, the Lessee shall at its sole cost and expense keep the
Leased Property and the Tangible Personal Property and the Lessor's Personal
Property located thereon and the business operations conducted on the Leased
Property insured as set forth below.

     12.1.1 Types and Amounts of Insurance. The Lessee's insurance shall include
the following:

     (a)   property loss and physical damage insurance on an all-risk basis
(with only such exceptions as the Lessor may in its reasonable discretion
approve) covering the Leased Property (exclusive of Land) for its full
replacement cost, which cost shall be reset once a year at the Lessor's option,
with an agreed-amount endorsement and a deductible not in excess of TEN THOUSAND
DOLLARS ($10,000.00). Such insurance shall include, without limitation, the
following coverages: (i) increased cost of construction, (ii) cost of
demolition, (iii) the value of the undamaged portion of the Facility and (iv)
contingent liability from the operation of building laws, less exclusions
provided in the normal "All Risk" insurance policy. During any period of
construction, such insurance shall be on a builder's-risk, completed value,
non-reporting form with permission to occupy;

     (b)   flood insurance (if the Leased Property or any portion thereof is
situated in an area which is considered a flood risk area by the U.S. Department
of Housing and Urban Development or any other Governmental Authority that may in
the future have jurisdiction over flood risk analysis) in limits reasonably
acceptable to the Lessor;

     (c)   boiler and machinery insurance (including related electrical
apparatus and components) under a standard comprehensive form, providing
coverage against loss or damage caused by explosion of steam boilers, pressure
vessels or similar vessels, now or hereafter installed on or exclusively serving
the Leased Property, in limits reasonably acceptable to the Lessor;

     (d)   earthquake insurance (if deemed necessary by the Lessor) in limits
and with deductibles reasonably acceptable to the Lessor;

                                      -62-
<PAGE>

     (e)   intentionally omitted;

     (f)   business interruption and/or rent loss insurance in an amount equal
to the annual Base Rent due hereunder plus the aggregate sum of the Impositions
relating to the Leased Property due and payable during one year;

     (g)   comprehensive general public liability insurance including coverages
commonly found in the Broad Form Commercial Liability Endorsements with amounts
not less than FIVE MILLION DOLLARS ($5,000,000) per occurrence with respect to
bodily injury and death and THREE MILLION DOLLARS ($3,000,000) for property
damage and with all limits based solely upon occurrences at the Leased Property
without any other impairment;

     (h)   professional liability insurance in an amount not less than TEN
MILLION DOLLARS ($10,000,000) for each medical incident;

     (i)   physical damage insurance on an all-risk basis (with only such
exceptions as the Lessor in its reasonable discretion shall approve) covering
the Tangible Personal Property for the full replacement cost thereof and with a
deductible not in excess of one percent (1%) of the full replacement cost
thereof;

     (j)   Workers' Compensation and Employers' Liability Insurance providing
protection against all claims arising out of injuries to all employees of the
Lessee or of any Sublessee (employed on the Leased Property or any portion
thereof) in amounts equal for Workers' Compensation, to the statutory benefits
payable to employees in the State and for Employers' Liability, to limits of not
less than ONE HUNDRED THOUSAND DOLLARS ($100,000) for injury by accident, ONE
HUNDRED THOUSAND DOLLARS ($100,000) per employee for disease and FIVE HUNDRED
THOUSAND DOLLARS ($500,000) disease policy limit; and

     (k)   such other insurance as the Lessor from time to time may reasonably
require and also, as may from time to time be required by applicable Legal
Requirements and/or by any Fee Mortgagee.

     12.1.2 Insurance Company Requirements. All such insurance required by this
Lease or the other Lease Documents shall be issued and underwritten by insurance
companies licensed to do insurance business by, and in good standing under the
laws of, the State and which companies have and maintain a rating of A-X or
better by A.M. Best Co.

     12.1.3 Policy Requirements. Every policy of insurance from time to time
required under this Lease or any of the other Lease Documents (other than
worker's compensation) shall name the Lessor as owner, loss payee, secured party
(to the extent applicable) and additional named insured as its interests may
appear. If an insurance policy covers properties other than the Leased Property,
then the Lessor shall be so named with respect only to the Leased Property. Each
such policy, where applicable or appropriate, shall:

                                      -63-
<PAGE>

     (a)   include an agreed amount endorsement and loss payee, additional named
insured and secured party endorsements, in forms acceptable to the Lessor in its
sole and absolute discretion;

     (b)   include mortgagee, secured party, loss payable and additional named
insured endorsements reasonably acceptable to each Fee Mortgagee;

     (c)   provide that the coverages may not be canceled or materially modified
except upon thirty (30) days' prior written notice to the Lessor and any Fee
Mortgagee;

     (d)   be payable to the Lessor and any Fee Mortgagee notwithstanding any
defense or claim that the insurer may have to the payment of the same against
any other Person holding any other interest in the Leased Property;

     (e)   be endorsed with standard noncontributory clauses in favor of and in
form reasonably acceptable to the Lessor and any Fee Mortgagee;

     (f)   expressly waive any right of subrogation on the part of the insurer
against the Lessor, any Fee Mortgagee or the Leasing Group; and

     (g)   otherwise be in such forms as shall be reasonably acceptable to the
Lessor and any Fee Mortgagee.

     12.1.4 Notices; Certificates and Policies. The Lessee shall promptly
provide to the Lessor copies of any and all notices (including notice of
non-renewal), claims and demands which the Lessee receives from insurers of the
Leased Property. At least ten (10) days prior to the expiration of any insurance
policy required hereunder, the Lessee shall deliver to the Lessor certificates
and evidence of insurance relating to all renewals and replacements thereof,
together with evidence, satisfactory to the Lessor, of payment of the premiums
thereon. The Lessee shall deliver to the Lessor original counterparts or copies
certified by the insurance company to be true and complete copies, of all
insurance policies required hereunder not later than the earlier to occur of (a)
thirty (30) days after the effective date of each such policy and (b) ten (10)
days after receipt thereof by the Lessee.

     12.1.5 Lessor's Right to Place Insurance. If the Lessee shall fail to
obtain any insurance policy required hereunder by the Lessor, or shall fail to
deliver the certificate and evidence of insurance relating to any such policy to
the Lessor, or if any insurance policy required hereunder (or any part thereof)
shall expire or be canceled or become void or voidable by reason of any breach
of any condition thereof, or if the Lessor determines that such insurance
coverage is unsatisfactory by reason of the failure or impairment of the capital
of any insurance company which wrote any such policy, upon demand by the Lessor,
the Lessee shall promptly obtain new or additional insurance coverage on the
Leased Property, or for those risks required to be insured by the provisions
hereof, satisfactory to the Lessor, and, at its option, the Lessor may

                                      -64-
<PAGE>

obtain such insurance and pay the premium or premiums therefor; in which event,
any amount so paid or advanced by the Lessor and all costs and expenses incurred
in connection therewith (including, without limitation, attorneys' fees and
expenses), shall be a demand obligation of the Lessee to the Lessor, payable as
an Additional Charge.

     12.1.6 Payment of Proceeds. All insurance policies required hereunder
(except for general public liability, professional liability and workers'
compensation and employers liability insurance) shall provide that in the event
of loss, injury or damage, subject to the rights of any Fee Mortgagee, all
proceeds shall be paid to the Lessor alone (rather than jointly to the Lessee
and the Lessor). The Lessor is hereby authorized to adjust and compromise any
such loss with the consent of the Lessee or, following any Lease Default,
whether or not cured, without the consent of the Lessee, and to collect and
receive such proceeds in the name of the Lessor and the Lessee, and the Lessee
appoints the Lessor (or any agent designated by the Lessor) as the Lessee's
attorney-in-fact with full power of substitution, to endorse the Lessee's name
upon any check in payment thereof. Subject to the provisions of Article 13, such
insurance proceeds shall be applied first toward reimbursement of all costs and
expenses reasonably incurred by the Lessor in collecting said insurance
proceeds, then toward payment of the Lease Obligations or any portion thereof,
then due and payable, in such order as the Lessor determines, and then in whole
or in part toward restoration, repair or reconstruction of the Leased Property
for which such insurance proceeds shall have been paid.

     12.1.7 Irrevocable Power of Attorney. The power of attorney conferred on
the Lessor pursuant to the provisions of this Section 12.1, being coupled with
an interest, shall be irrevocable for as long as this Lease is in effect or any
Lease Obligations are outstanding, shall not be affected by any disability or
incapacity which the Lessee may suffer and shall survive the same. Such power of
attorney, is provided solely to protect the interests of the Lessor and shall
not impose any duty on the Lessor to exercise any such power, and neither the
Lessor nor such attorney-in-fact shall be liable for any act, omission, error in
judgment or mistake of law, except as the same may result from its gross
negligence or willful misconduct.

     12.1.8 Blanket Policies. Notwithstanding anything to the contrary contained
herein, the Lessee's obligations to carry the insurance provided for herein may
be brought within the coverage of a so-called blanket policy or policies of
insurance carried and maintained by the Lessee and its Affiliates; provided,
however, that the coverage afforded to the Lessor shall not be reduced or
diminished or otherwise be different from that which would exist under a
separate policy meeting all other requirements of this Lease by reason of the
use of such blanket policy of insurance, and provided, further that the
requirements of this Section 12.1 are otherwise satisfied.

     12.1.9 No Separate Insurance. The Lessee shall not, on the Lessee's own
initiative or pursuant to the request or requirement of any other Person, take
out separate insurance concurrent in form or contributing in the event of loss
with the insurance required hereunder to be furnished by the Lessee, or increase
the amounts of any then existing insurance by securing an additional policy or
additional policies, unless (a) all parties having an insurable interest in the

                                      -65-
<PAGE>

subject matter of the insurance, including the Lessor, are included therein as
additional insureds and (b) losses are payable under said insurance in the same
manner as losses are required to be payable under this Lease. The Lessee shall
immediately notify the Lessor of the taking out of any such separate insurance
or of the increasing of any of the amounts of the then existing insurance by
securing an additional insurance policy or policies.

     12.1.10 Assignment of Unearned Premiums. The Lessee hereby assigns to the
Lessor all rights of the Lessee in and to any unearned premiums allocable to the
Leased Property on any insurance policy required hereunder to be furnished by
the Lessee which may become payable or are refundable after the occurrence of an
Event of Default hereunder. In the event that this Lease is terminated for any
reason (other than the purchase of the Leased Property by the Lessee or the
expiration of this Lease at the end of the Term), the insurance policies
required to be maintained hereunder, including all right, title and interest of
the Lessee thereunder, shall become the absolute property of the Lessor.

     12.2  Indemnity.

     12.2.1 Indemnification. Except with respect to the gross negligence or
willful misconduct of the Lessor or any of the other Indemnified Parties, as to
which no indemnity is provided, the Lessee hereby agrees to defend with counsel
acceptable to the Lessor, indemnify and hold harmless the Lessor and each of the
other Indemnified Parties from and against all damages, losses, claims,
liabilities, obligations, penalties, causes of action, costs and expenses
(including, without limitation, attorneys' fees, court costs and other expenses
of litigation) suffered by, or claimed or asserted against, the Lessor or any of
the other Indemnified Parties, directly or indirectly, based on, arising out of
or resulting from (a) the use and occupancy of the Leased Property or any
business conducted therein, (b) any act, fault, omission to act or misconduct by
(i) any member of the Leasing Group, (ii) any Affiliate of the Lessee or (iii)
any employee, agent, licensee, business invitee, guest, customer, contractor or
sublessee of any of the foregoing parties, relating to, directly or indirectly,
the Leased Property, (c) any accident, injury or damage whatsoever caused to any
Person, including, without limitation, any claim of malpractice, or to the
property of any Person in or about the Leased Property or outside of the Leased
Property where such accident, injury or damage results or is claimed to have
resulted from any act, fault, omission to act or misconduct by any member of the
Leasing Group or any Affiliate of the Lessee or any employee, agent, licensee,
contractor or sublessee of any of the foregoing parties, (d) any Lease Default,
(e) any claim brought or threatened against any of the Indemnified Parties by
any member of the Leasing Group or by any other Person on account of (i) the
Lessor's relationship with any member of the Leasing Group pertaining in any way
to the Leased Property and/or the transaction evidenced by the Lease Documents
and/or (ii) the Lessor's negotiation of, entering into and/or performing any of
its obligations and/or exercising any of its right and remedies under any of the
Lease Documents, (f) any attempt by any member of the Leasing Group or any
Affiliate of the Lessee to transfer or relocate any of the Permits to any
location other than the Leased Property and/or (g) the enforcement of this
indemnity. All amounts which become payable by the Lessee under this Section
12.2.1 shall be a demand

                                      -66-
<PAGE>

obligation of the Lessee to the Lessor, payable as an Additional Charge. The
indemnity provided for in this Section 12.2.1 shall survive any termination of
this Lease. Notwithstanding anything to the contrary contained in this Section
12.2.1, no payment for any indemnified claim brought or threatened against any
of the Indemnified Parties shall be due unless and until the earlier to occur of
(x) an agreement by the relevant parties to settle the claim at issue or (y) a
final decision is issued by a court of competent jurisdiction in favor of the
applicable Indemnified Parties and all appeal periods have lapsed or been
exhausted.

     12.2.2 Indemnified Parties. As used in this Lease the term "Indemnified
Parties" shall mean Lessor, any Fee Mortgagee and their respective successors,
assigns, employees, servants, agents, attorneys, officers, directors,
shareholders, partners and owners.

     12.2.3 Limitation on Lessor Liability. Neither the Lessor nor any Affiliate
of the Lessor shall be liable to any member of the Leasing Group or any
Affiliate of any member of the Leasing Group, or to any other Person whatsoever
for any damage, injury, loss, compensation, or claim (including, but not limited
to, any claim for the interruption of or loss to any business conducted on the
Leased Property) based on, arising out of or resulting from any cause
whatsoever, including, but not limited to, the following: (a) repairs to the
Leased Property, (b) interruption in use of the Leased Property; (c) any
accident or damage resulting from the use or operation of the Leased Property or
any business conducted thereon; (d) the termination of this Lease by reason of
Casualty or Condemnation, (e) any fire, theft or other casualty or crime, (f)
the actions, omissions or misconduct of any other Person, (g) damage to any
property, or (h) any damage from the flow or leaking of water, rain or snow. All
Tangible Personal Property and the personal property of any other Person on the
Leased Property (including, without limitation, the Lessor's Personal Property)
shall be at the sole risk of the Lessee and the Lessor shall not in any manner
be held responsible therefor. Notwithstanding the foregoing, the Lessor shall
not be released from liability for any injury, loss, damage or liability
suffered directly by the Lessee to the extent caused directly by the gross
negligence or willful misconduct of the Lessor, its servants, employees or
agents acting within the scope of their authority on or about the Leased
Property or in regards to the Lease; provided, however, that in no event shall
the Lessor, its servants, employees or agents have any liability based on any
loss with respect to or interruption in the operation of any business at the
Leased Property or for any indirect or consequential damages.

     12.2.4 Risk of Loss. During the Term of this Lease, the risk of loss or of
decrease in the enjoyment and beneficial use of the Leased Property in
consequence of any damage or destruction thereof by fire, the elements,
casualties, thefts, riots, wars or otherwise, or in consequence of foreclosures,
levies or executions of Liens (other than those created by the Lessor in
accordance with the provisions of Article 20) is assumed by the Lessee and, in
the absence of the gross negligence or willful misconduct as set forth in
Section 12.2.3, the Lessor shall in no event be answerable or accountable
therefor (except for the obligation to account for insurance proceeds and Awards
to the extent provided for in Articles 13 and 14) nor shall any of

                                      -67-
<PAGE>

the events mentioned in this Section entitle the Lessee to any abatement of Rent
(except for an abatement, if any, as specifically provided for in Section 3.8).


                                   ARTICLE 13
                                   ----------

                                FIRE AND CASUALTY
                                -----------------

     13.1  Restoration Following Fire or Other Casualty.

     13.1.1 Following Fire or Casualty. In the event of any damage or
destruction to the Leased Property by reason of fire or other hazard or casualty
(a "Casualty"), the Lessee shall give immediate written notice thereof to the
Lessor and any Fee Mortgagee and, subject to the terms of this Article 13 and
any applicable Fee Mortgage Loan Documents, the Lessee shall proceed with
reasonable diligence, in full compliance with all applicable Legal Requirements,
to perform such repairs, replacement and reconstruction work (referred to herein
as the "Work") to restore the Leased Property to the condition it was in
immediately prior to such damage or destruction and to a condition adequate to
operate the Facility for the Primary Intended Use and in compliance with Legal
Requirements and any applicable Fee Mortgage Loan Documents. All Work shall be
performed and completed in accordance with all Legal Requirements and the other
requirements of this Lease within one hundred twenty (120) days following the
occurrence of the damage or destruction plus a reasonable time to compensate for
Unavoidable Delays (including for the purposes of this Section, delays in
obtaining Permits and in adjusting insurance losses), but in no event beyond two
hundred seventy (270) days following the occurrence of the Casualty.

     13.1.2 Procedures. In the event that any Casualty results in non-structural
damage to the Leased Property in excess of FIFTY THOUSAND DOLLARS ($50,000) or
in any structural damage to the Leased Property, regardless of the extent of
such structural damage, prior to commencing the Work, the Lessee shall comply
with the requirements of any applicable Fee Mortgage Loan Documents and the
following requirements:

     (a)   The Lessee shall furnish to the Lessor complete plans and
specifications for the Work (collectively, the "Plans and Specifications"), for
the Lessor's approval, in each instance, which approval shall not be
unreasonably withheld. The Plans and Specifications shall bear the signed
approval thereof by an architect, licensed to do business in the State,
reasonably satisfactory to the Lessor and shall be accompanied by a written
estimate from the architect, bearing the architect's seal, of the entire cost of
completing the Work, and to the extent feasible, the Plans and Specifications
shall provide for Work of such nature, quality and extent, that, upon the
completion thereof, the Leased Property shall be at least equal in value and
general utility to its value and general utility prior to the Casualty and shall
be adequate to operate the Leased Property for the Primary Intended Use;

                                      -68-
<PAGE>

     (b)   The Lessee shall furnish to the Lessor certified or photostatic
copies of all Permits and Contracts required by all applicable Legal
Requirements in connection with the commencement and conduct of the Work;

     (c)   The Lessee shall furnish to the Lessor a cash deposit or a payment
and performance bond sufficient to pay for completion of and payment for the
Work in an amount not less than the architect's estimate of the entire cost of
completing the Work, less the amount of property insurance proceeds, if any,
then held by the Lessor and which the Lessor shall be required to apply toward
restoration of the Leased Property as provided in Section 13.2;

     (d)   The Lessee shall furnish to the Lessor such insurance with respect to
the Work (in addition to the insurance required under Section 12.1 hereof) in
such amounts and in such forms as is reasonably required by the Lessee; and

     (e)   The Lessee shall not commence any of the Work until the Lessee shall
have complied with the requirements set forth in clauses (a) through (d)
immediately above, as applicable, and, thereafter, the Lessee shall perform the
Work diligently, in a good and workmanlike fashion and in good faith in
accordance with (i) the Plans and Specifications referred to in clause (a)
immediately above, (ii) the Permits and Contracts referred to in clause (b)
immediately above and (iii) all applicable Legal Requirements and other
requirements of this Lease; provided, however, that in the event of a bona fide
emergency during which the Lessee is unable to contact the appropriate
representatives of the Lessor, the Lessee may commence such Work as may be
necessary in order to address such emergency without the Lessor's prior
approval, as long as the Lessee immediately thereafter advises the Lessor and
any applicable Fee Mortgagee of such emergency and the nature and scope of the
Work performed and obtains the Lessor's approval of the remaining Work to be
completed.

     13.1.3 Disbursement of Insurance Proceeds. Subject to the terms of any
applicable Fee Mortgage Loan Documents, if, as provided in Section 13.2, the
Lessor is required to apply any property insurance proceeds toward repair or
restoration of the Leased Property, then as long as the Work is being diligently
performed by the Lessee in accordance with the terms and conditions of this
Lease, the Lessor shall disburse such insurance proceeds from time to time
during the course of the Work in accordance with and subject to satisfaction of
the following provisions and conditions. The Lessor shall not be required to
make disbursements more often than at thirty (30) day intervals. The Lessee
shall submit a written request for each disbursement at least ten (10) Business
Days in advance and shall comply with the following requirements in connection
with each disbursement:

     (a)   Prior to the commencement of any Work, the Lessee shall have received
the Lessor's and any applicable Fee Mortgagee's written approval (to the extent
that any such approval from such Fee Mortgagee is required under any applicable
Fee Mortgage Loan Documents) of the Plans and Specifications (which approval
shall not be unreasonably withheld)

                                      -69-
<PAGE>

and the Work shall be supervised by an experienced construction manager with the
consultation of an architect or engineer qualified and licensed to do business
in the State.

     (b)   Each request for payment shall be accompanied by (x) a certificate of
the architect or engineer, bearing the architect's or engineer's seal, and (y) a
certificate of the general contractor, qualified and licensed to do business in
the State, that is performing the Work (collectively, the "Work Certificates"),
each dated not more than ten (10) days prior to the application for withdrawal
of funds, and each stating:

           (i) that all of the Work performed as of the date of the certificates
has been completed in compliance with the approved Plans and Specifications,
applicable Contracts and all applicable Legal Requirements;

           (ii) that the sum then requested to be withdrawn has been paid by the
Lessee or is justly due to contractors, subcontractors, materialmen, engineers,
architects or other Persons, whose names and addresses shall be stated therein,
who have rendered or furnished certain services or materials for the Work, and
the certificate shall also include a brief description of such services and
materials and the principal subdivisions or categories thereof and the
respective amounts so paid or due to each of said Persons in respect thereof and
stating the progress of the Work up to the date of said certificate;

           (iii) that the sum then requested to be withdrawn, plus all sums
previously withdrawn, does not exceed the cost of the Work insofar as actually
accomplished up to the date of such certificate;

           (iv) that the remainder of the funds held by the Lessor will be
sufficient to pay for the full completion of the Work in accordance with the
Plans and Specifications;

           (v) that no part of the cost of the services and materials described
in the applicable Work Certificate has been or is being made the basis of the
withdrawal of any funds in any previous or then pending application; and

           (vi) that, except for the amounts, if any, specified in the
applicable Work Certificate to be due for services and materials, there is no
outstanding indebtedness known, after due inquiry, which is then due and payable
for work, labor, services or materials in connection with the Work which, if
unpaid, might become the basis of a vendor's, mechanic's, laborer's or
materialman's statutory or other similar Lien upon the Leased Property.

     (c) The Lessee shall deliver to the Lessor satisfactory evidence that the
Leased Property and all materials and all property described in the Work
Certificates are free and clear of Liens, except (i) Liens, if any, securing
indebtedness due to Persons (whose names and addresses and the several amounts
due them shall be stated therein) specified in an applicable Work Certificate,
which Liens shall be discharged upon disbursement of the funds then being

                                      -70-
<PAGE>

requested, (ii) any Fee Mortgage and (iii) the Permitted Encumbrances. The
Lessor shall accept as satisfactory evidence of the foregoing lien waivers in
customary form from the general contractor and all subcontractors performing the
Work, together with an endorsement of its title insurance policy (relating to
the Leased Property) in form acceptable to the Lessor, dated as of the date of
the making of the then current disbursement, confirming the foregoing.

     (d)   If the Work involves alteration or restoration of the exterior of any
Leased Improvement that changes the footprint of any Leased Improvement, the
Lessee shall deliver to the Lessor, upon the request of the Lessor, an
"as-built" survey of the Leased Property dated as of a date within ten (10) days
prior to the making of the first and final advances (or revised to a date within
ten (10) days prior to each such advance) showing no encroachments other than
such encroachments, if any, by the Leased Improvements upon or over the
Permitted Encumbrances as are in existence as of the date hereof.

     (e)   The Lessee shall deliver to the Lessor (i) an opinion of counsel
(satisfactory to the Lessor both as to counsel and as to the form of opinion)
prior to the first advance opining that all necessary Permits for the repair,
replacement and/or restoration of the Leased Property have been obtained and
that the Leased Property, if repaired, replaced or rebuilt in accordance, in all
material respects, with the approved Plans and Specifications and such Permits,
shall comply with all applicable Legal Requirements and (ii) an architect's
certificate (satisfactory to the Lessor both as to the architect and as to the
form of the certificate) prior to the final advance, certifying that the Leased
Property was repaired, replaced or rebuilt in accordance, in all material
respects, with the approved Plans and Specifications and complies with all
applicable Legal Requirements, including, without limitation, all Permits
referenced in the foregoing clause (i).

     (f)   There shall be no Lease Default or any state of facts or circumstance
existing which, with the giving of notice and/or the passage of time, would
constitute any Lease Default.

The Lessor, at its option, may waive any of the foregoing requirements in whole
or in part in any instance. Upon compliance by the Lessee with the foregoing
requirements (except for such requirements, if any, as the Lessor may have
expressly elected to waive), and to the extent of (x) the insurance proceeds, if
any, which the Lessor may be required to apply to restoration of the Leased
Property pursuant to the provisions of this Lease and (y) all other cash
deposits made by the Lessee, the Lessor shall make available for payment to the
Persons named in the Work Certificate the respective amounts stated in said
certificate(s) to be due, subject to a retention of ten percent (10%) as to all
hard costs of the Work (the "Retainage"). It is understood that the Retainage is
intended to provide a contingency fund to assure the Lessor that the Work shall
be fully completed in accordance with the Plans and Specifications and the
requirements of the Lessor. Upon the full and final completion of all of the
Work in accordance with the provisions hereof, the Retainage shall be made
available for payment to those Persons entitled thereto.

Upon completion of the Work, and as a condition precedent to making any further
advance, in addition to the requirements set forth above, the Lessee shall
promptly deliver to the Lessor:

                                      -71-
<PAGE>

           (i) written certificates of the architect or engineer, bearing the
architect's or engineer's seal, and the general contractor, certifying that the
Work has been fully completed in a good and workmanlike manner in material
compliance with the Plans and Specifications and all Legal Requirements;

           (ii) an endorsement of its title insurance policy (relating to the
Leased Property) in form reasonably acceptable to the Lessor insuring the Leased
Property against all mechanic's and materialman's liens accompanied by the final
lien waivers from the general contractor and all subcontractors;

           (iii) a certificate by the Lessee in form and substance reasonably
satisfactory to the Lessor, listing all costs and expenses in connection with
the completion of the Work and the amount paid by the Lessee with respect to the
Work; and

           (iv) a temporary certificate of occupancy (if obtainable) and all
other applicable Permits and Contracts (that have not previously been delivered
to the Lessor) issued by or entered into with any Governmental Authority with
respect to the Leased Property and the Primary Intended Use and by the
appropriate Board of Fire Underwriters or other similar bodies acting in and for
the locality in which the Leased Property is situated; provided, that within
thirty (30) days after completion of the Work, the Lessee shall obtain and
deliver to the Lessor a permanent certificate of occupancy for the Leased
Property.

     Upon completion of the Work and delivery of the documents required pursuant
to the provisions of this Section 13.1, the Lessor shall pay the Retainage to
the Lessee or to those Persons entitled thereto and if there shall be insurance
proceeds or cash deposits, other than the Retainage, held by the Lessor in
excess of the amounts disbursed pursuant to the foregoing provisions, then
provided that no Lease Default has occurred and is continuing, nor any state of
facts or circumstances which, with the giving of notice and/or the passage of
time would constitute a Lease Default, the Lessor shall pay over such proceeds
or cash deposits to the Lessee.

     No inspections or any approvals of the Work during or after construction
shall constitute a warranty or representation by the Lessor, or any of its
agents or Consultants, as to the technical sufficiency, adequacy or safety of
any structure or any of its component parts, including, without limitation, any
fixtures, equipment or furnishings, or as to the subsoil conditions or any other
physical condition or feature pertaining to the Leased Property. All acts,
including any failure to act, relating to the Lessor are performed solely for
the benefit of the Lessor to assure the payment and performance of the Lease
Obligations and are not for the benefit of the Lessee or the benefit of any
other Person.

     13.2  Disposition of Insurance Proceeds.

     13.2.1 Proceeds To Be Released to Pay For Work. In the event of any
Casualty, except as provided for in Section 13.2.2, but, subject to the terms of
any applicable Fee Mortgage

                                      -72-
<PAGE>

Loan Documents, the Lessor shall release proceeds of property insurance held by
it to pay for the Work in accordance with the provisions and procedures set
forth in this Article 13, only if:

     (a)   all of the terms, conditions and provisions of Sections 13.1 and
13.2.1 are satisfied;

     (b)   there does not then exist any Lease Default or any state of facts or
circumstance which, with the giving of notice and/or the passage of time, would
constitute such a Lease Default;

     (c)   The Lessee demonstrates to the Lessor's satisfaction that the Lessee
has the financial ability to satisfy the Lease Obligations during such repair or
restoration; and

     (d)   no Sublease material to the operation of the Facility immediately
prior to such damage or taking shall have been canceled or terminated, nor
contain any still exercisable right to cancel or terminate, due to such Casualty
if and to the extent that the income from such Sublease is necessary in order to
avoid the violation of any of the financial covenants set forth in this Lease or
otherwise to avoid the creation of an Event of Default.

     13.2.2 Proceeds Not To Be Released. If, as the result of any Casualty, the
Leased Property is damaged to the extent it is rendered Unsuitable For Its
Primary Intended Use and if either: (a) the Lessee, after exercise of diligent
efforts, cannot within a reasonable time (not in excess of ninety (90) days)
obtain all necessary Permits in order to be able to perform all required Work
and to again operate the Facility for its Primary Intended Use within two
hundred seventy (270) days from the occurrence of the damage or destruction in
substantially the manner as immediately prior to such damage or destruction or
(b) such Casualty occurs during the last twenty-four (24) months of the Term and
would reasonably require more than nine (9) months to obtain all Permits and
complete the Work, then the Lessee may either (i) acquire the SNF/CMC Land and
all improvements located thereon from the Lessor for a purchase price equal to
the greater of (x) the Lessor's Investment and (y) the sum of (A) the Fair
Market Value of the Leased Property minus the Fair Market Added Value and (B)
the Fair Market Value of the CMC Land and any improvements located thereon, with
the Fair Market Value and the Fair Market Added Value to be determined as of the
day immediately prior to such Casualty and prior to any other Casualty which has
not been fully repaired, restored or replaced, in which event, the Lessee shall
be entitled upon payment of the full purchase price to receive all property
insurance proceeds (less any costs and expenses incurred by the Lessor in
collecting the same), or (ii) terminate this Lease, in which event, the Lessor
shall be entitled to receive and retain the insurance proceeds; provided,
however, that the Lessee shall only have such right of termination effective
upon payment to the Lessor of all Rent and other sums due under this Lease and
the other Lease Documents through the date of termination plus an amount, which
when added to the sum of (1) the Fair Market Value of the Leased Property as
affected by all unrepaired or unrestored damage due to any Casualty (and giving
due regard for delays, costs and expenses incident to completing all repair or
restoration required to fully repair or restore the same) plus (2) the

                                      -73-
<PAGE>

amount of insurance proceeds actually received by the Lessor (net of costs and
expenses incurred by the Lessor in collecting the same) equals (3) the Fair
Market Value of the Leased Property minus the Fair Market Added Value, with the
Fair Market Value and the Fair Market Added Value to be determined as of the day
immediately prior to such Casualty and prior to any other Casualty which has not
been fully repaired. Any acquisition of the Leased Property pursuant to the
terms of this Section 13.2.2 shall be consummated in accordance with the
provisions of Article 18, mutatis, mutandis.

     13.2.3 Lessee Responsible for Short-Fall. If the cost of the Work exceeds
the amount of proceeds received by the Lessor from the property insurance
required under Article 12 (net of costs and expenses incurred by the Lessor in
collecting the same), the Lessee shall be obligated to contribute any excess
amount needed to repair or restore the Leased Property and pay for the Work.
Such amount shall be paid by the Lessee to the Lessor together with any other
property insurance proceeds for application to the cost of the Work.

     13.3  Tangible Personal Property. All insurance proceeds payable by reason
of any loss of or damage to any of the Tangible Personal Property shall be paid
to the Lessor as secured party, subject to the rights of the holders of any
Permitted Prior Security Interests, and, thereafter, provided that no Lease
Default, nor any fact or circumstance which with the giving of notice and/or the
passage of time could constitute a Lease Default, has occurred and is
continuing, the Lessor shall pay such insurance proceeds to the Lessee to
reimburse the Lessee for the cost of repairing or replacing the damaged Tangible
Personal Property, subject to the terms and conditions set forth in the other
provisions of this Article 13, mutatis mutandis.

     13.4  Restoration of Certain Improvements and the Tangible Personal
Property. If the Lessee is required or elects to restore the Facility, the
Lessee shall either (a) restore (i) all alterations and improvements to the
Leased Property made by the Lessee and (ii) the Tangible Personal Property or
(b) replace such alterations and improvements and the Tangible Personal Property
with improvements or items of the same or better quality and utility in the
operation of the Leased Property.

     13.5  No Abatement of Rent. In no event shall any Rent abate as a result of
any Casualty.

     13.6  Termination of Certain Rights. Any termination of this Lease pursuant
to this Article 13 shall cause any right of the Lessee to extend the Term of
this Lease, granted to the Lessee herein and any right of the Lessee to purchase
the Leased Property contained in this Lease to be terminated and to be without
further force or effect.

     13.7  Waiver. The Lessee hereby waives any statutory rights of termination
which may arise by reason of any damage or destruction to the Leased Property
due to any Casualty which the Lessee is obligated to restore or may restore
under any of the provisions of this Lease.

                                      -74-
<PAGE>

     13.8  Application of Rent Loss and/or Business Interruption Insurance.
Subject to the applicable provisions of any Fee Mortgage Loan Documents, all
proceeds of rent loss and/or business interruption insurance (collectively,
"Rent Insurance Proceeds") shall be paid to the Lessor and dealt with as
follows:

     (a)   if the Work has been promptly and diligently commenced by the Lessee
and is in the process of being completed in accordance with this Lease and no
fact or condition exists which constitutes, or which with the giving of notice
and/or the passage of time would constitute, a Lease Default, the Lessor shall
each month pay to the Lessee out of the Rent Insurance Proceeds a sum equal to
that amount, if any, of the Rent Insurance Proceeds paid by the insurer which is
allocable to the rental loss and/or business interruption for the preceding
month minus an amount equal to the sum of the Rent due hereunder for such month
plus any Impositions relating to the Leased Property then due and payable;

     (b)   if the Work has not been promptly and diligently commenced by the
Lessee or is not in the process of being completed in accordance with this
Lease, the Rent Insurance Proceeds shall be applied to any Rent then due, and,
to the extent sufficient therefor, an amount equal to Base Rent, Impositions and
insurance premiums payable for the next twelve (12) months, as reasonably
projected by the Lessor, shall be held by the Lessor as security for the Lease
Obligations and applied to the payment of Rent as it becomes due; and

     (c)   if such Rent Insurance Proceeds received by the Lessor (net of costs
and expenses incurred by the Lessor in collecting the same) exceed the amounts
required under clauses (a) and (b) above, the excess shall be paid to the
Lessee, provided no fact or circumstance exists which constitutes, or with
notice, or passage of time, or both, would constitute, a Lease Default.

Notwithstanding the foregoing, the Lessor may at its option use or release the
Rent Insurance Proceeds to pay for the Work and, if a Lease Default exists, the
Lessor may apply all such insurance proceeds towards the Lease Obligations or
hold such proceeds as security therefor.

     13.9  Obligation To Account. Upon the Lessee's written request, which may
not be made not more than once in any three (3) month period, the Lessor shall
provide the Lessee with a written accounting of the application of all insurance
proceeds received by the Lessor.


                                   ARTICLE 14
                                   ----------

                                  CONDEMNATION
                                  ------------

     14.1  Parties' Rights and Obligations. If during the Term there is any
Taking of all or any part of the Leased Property or any interest in this Lease,
the rights and obligations of the parties shall be determined by this Article
14.

                                      -75-
<PAGE>

     14.2  Total Taking. If there is a permanent Taking of all or substantially
all of the Leased Property, this Lease shall terminate on the Date of Taking.

     14.3  Partial or Temporary Taking. If there is a permanent Taking of a
portion of the Leased Property, or if there is a temporary Taking of all or a
portion of the Leased Property, this Lease shall remain in effect so long as the
Leased Property is not thereby rendered permanently Unsuitable For Its Primary
Intended Use or temporarily Unsuitable For Its Primary Intended Use for a period
not likely to, or which does not, exceed two hundred and seventy (270) days. If,
however, the Leased Property is thereby so rendered permanently or temporarily
Unsuitable For Its Primary Intended Use: (a) the Lessee shall have the right to
restore the Leased Property, at its own expense, (subject to the right under
certain circumstances as provided for in Section 14.4 to receive the net
proceeds of an Award for reimbursement) to the extent possible, to substantially
the same condition as existed immediately before the partial or temporary Taking
or (b) the Lessee shall have the right to acquire the Leased Property from the
Lessor (i) upon payment of all Rent due through the date that the purchase price
is paid, for a purchase price equal to the greater of (x) the Lessor's
Investment or (y) the sum of (A) the Fair Market Value of the Leased Property
minus the Fair Market Added Value and (B) the Fair Market Value of the CMC Land
and any improvements located thereon, with the Fair Market Value and the Fair
Market Added Value to be determined as of the day immediately prior to such
partial or temporary Taking and (ii) in accordance with the terms and conditions
set forth in Article 18; in which event, this Lease shall terminate upon payment
of such purchase price and the consummation of such acquisition. Notwithstanding
the foregoing, the Lessor may overrule the Lessee's election under clause (a) or
(b) and instead either (1) terminate this Lease as of the date when the Lessee
is required to surrender possession of the portion of the Leased Property so
taken or (2) compel the Lessee to keep the Lease in full force and effect and to
restore the Leased Property as provided in clause (a) above, but only if the
Leased Property may be operated for at least eighty percent (80%) of the
licensed bed capacity of the Facility if operated in accordance with its Primary
Intended Use. The Lessee shall exercise its election under this Section 14.3 by
giving the Lessor notice thereof ("Lessee's Election Notice") within sixty (60)
days after the Lessee receives notice of the Taking. The Lessor shall exercise
its option to overrule the Lessee's election under this Section 14.3 by giving
the Lessee notice of the Lessor's exercise of its rights under Section 14.3
within thirty (30) days after the Lessor receives the Lessee's Election Notice.
If, as the result of any such partial or temporary Taking, this Lease is not
terminated as provided above, the Lessee shall be entitled to an abatement of
Rent, but only to the extent, if any, provided for in Section 3.8, effective as
of the date upon which the Leased Property is rendered Unsuitable For Its
Primary Intended Use.

     14.4  Restoration. If there is a partial or temporary Taking of the Leased
Property and this Lease remains in full force and effect pursuant to Section
14.3, the Lessee shall accomplish all necessary restoration and the Lessor shall
release the net proceeds of such Award to reimburse the Lessee for the actual
reasonable costs and expenses thereof, subject to all of the conditions and
provisions set forth in Article 13 as though the Taking was a Casualty and the
Award was insurance proceeds. If the cost of the restoration exceeds the amount
of the Award (net of costs and expenses incurred in obtaining the Award), the
Lessee shall be obligated to contribute any

                                      -76-
<PAGE>

excess amount needed to restore the Facility or pay for such costs and expenses.
To the extent that the cost of restoration is less than the amount of the Award
(net of cost and expenses incurred in obtaining the Award), the remainder of the
Award shall be retained by the Lessor and Rent shall be abated as set forth in
Section 3.8.

     14.5  Award Distribution. In the event the Lessee completes the purchase of
the Leased Property, as described in Section 14.3, the entire Award shall, upon
payment of the purchase price and all Rent and other sums due under this Lease
and the other Lease Documents, belong to the Lessee and the Lessor agrees to
assign to the Lessee all of the Lessor's rights thereto. In any other event,
subject to any Fee Mortgage Loan Documents, the entire Award shall belong to and
be paid to the Lessor.

     14.6  Control of Proceedings. Subject to the rights of any Fee Mortgagee
under any applicable Fee Mortgage Loan Documents, unless and until the Lessee
completes the purchase of the Leased Property as provided in Section 14.3, all
proceedings involving any Taking and the prosecution of claims arising out of
any Taking against the Condemnor shall be conducted, prosecuted and settled by
the Lessor; provided, however, that the Lessor shall keep the Lessee apprised of
the progress of all such proceedings and shall solicit the Lessee's advice with
respect thereto and shall give due consideration to any such advice. In
addition, the Lessee shall reimburse the Lessor (as an Additional Charge) for
all costs and expenses, including reasonable attorneys' fees, appraisal fees,
fees of expert witnesses and costs of litigation or dispute resolution, in
relation to any Taking, whether or not this Lease is terminated.


                                   ARTICLE 15
                                   ----------

                               PERMITTED CONTESTS
                               ------------------

     15.1  Lessee's Right to Contest. To the extent of the express references
made to this Article 15 in other Sections of this Lease, but, subject to the
applicable provisions of any applicable Fee Mortgage Loan Documents, the Lessee,
any Sublessee or any Manager on their own or on the Lessor's behalf (or in the
Lessor's name), but at their sole cost and expense, may contest, by appropriate
legal proceedings conducted in good faith and with due diligence (until the
resolution thereof), the amount, validity or application, in whole or in part,
of any Imposition, Legal Requirement, the decision of any Governmental Authority
related to the operation of the Leased Property for its Primary Intended Use or
any Lien or claim relating to the Leased Property not otherwise permitted by
this Lease; provided, that (a) prior written notice of such contest is given to
the Lessor, (b) in the case of an unpaid Imposition, Lien or claim, the
commencement and continuation of such proceedings shall suspend the collection
thereof from the Lessor and/or compliance by any applicable member of the
Leasing Group with the contested Legal Requirement or other matter may be
legally delayed pending the prosecution of any such proceeding without the
occurrence or creation of any Lien, charge or liability of any kind against the
Leased Property, (c) neither the Leased Property nor any rent therefrom would be
in any

                                      -77-
<PAGE>

immediate danger of being sold, forfeited, attached or lost as a result of such
proceeding, (d) in the case of a Legal Requirement, neither the Lessor nor any
member of the Leasing Group would be in any immediate danger of civil or
criminal liability for failure to comply therewith pending the outcome of such
proceedings, (e) in the event that any such contest shall involve a sum of money
or potential loss in excess of FIFTY THOUSAND DOLLARS ($50,000), the Lessee
shall deliver to the Lessor an Officer's Certificate and opinion of counsel, if
the Lessor deems the delivery of an opinion to be appropriate, certifying or
opining, as the case may be, as to the validity of the statements set forth to
the effect set forth in clauses (b), (c) and (d), to the extent applicable, (f)
the Lessee shall give such cash security as may be demanded in good faith by the
Lessor to insure ultimate payment of any fine, penalty, interest or cost and to
prevent any sale or forfeiture of the affected portion of the Leased Property by
reason of such non-payment or non-compliance, (g) if such contest is finally
resolved against the Lessor or any member of the Leasing Group, the Lessee shall
promptly pay, as Additional Charges due hereunder, the amount required to be
paid, together with all interest and penalties accrued thereon and/or comply
(and cause any Sublessee and any Manager to comply) with the applicable Legal
Requirement, and (h) no state of facts or circumstance exists which constitutes,
or with the passage of time and/or the giving of notice, could constitute a
Lease Default; provided, however, the provisions of this Article 15 shall not be
construed to permit the Lessee to contest the payment of Rent or any other sums
payable by the Lessee to the Lessor under any of the Lease Documents.

     15.2  Lessor's Cooperation. The Lessor, at the Lessee's sole cost and
expense, shall execute and deliver to the Lessee such authorizations and other
documents as may reasonably be required in any such contest, so long as the same
does not expose the Lessor or any Fee Mortgagee to any civil or criminal
liability, and, if reasonably requested by the Lessee or if the Lessor so
desires, the Lessor shall join as a party therein.

     15.3  Lessee's Indemnity. The Lessee, as more particularly provided for in
Section 12.2, shall indemnify, defend (with counsel acceptable to the Lessor)
and save the Lessor harmless against any liability, cost or expense of any kind,
including, without limitation, attorneys' fees and expenses that may be imposed
upon the Lessor in connection with any such contest and any loss resulting
therefrom and in the enforcement of this indemnification.


                                   ARTICLE 16
                                   ----------

                                     DEFAULT
                                     -------

     16.1  Events of Default. Each of the following shall constitute an "Event
of Default" hereunder and shall entitle the Lessor to exercise its remedies
hereunder and under any of the other Lease Documents:

     (a)   any failure of the Lessee to pay any amount due hereunder or under
any of the other Lease Documents within ten (10) days following the date when
such payment was due;

                                      -78-
<PAGE>

     (b)   any failure in the observance or performance of any other covenant,
term, condition or warranty provided in this Lease or any of the other Lease
Documents, other than the payment of any monetary obligation and other than as
specified in subsections (c) through (v) below (a "Failure to Perform"),
continuing for thirty (30) days after the giving of notice by the Lessor to the
Lessee specifying the nature of the Failure to Perform; except as to matters not
susceptible to cure within thirty (30) days, provided that with respect to such
matters, (i) the Lessee commences the cure thereof within thirty (30) days after
the giving of such notice by the Lessor to the Lessee, (ii) the Lessee
continuously prosecutes such cure to completion, (iii) such cure is completed
within ninety (90) days after the giving of such notice by the Lessor to the
Lessee and (iv) such Failure to Perform does not impair the value of, or the
Lessor's rights with respect to, the Leased Property;

     (c)   the occurrence of any default or breach of condition continuing
beyond the expiration of the applicable notice and grace periods, if any, under
any of the other Lease Documents;

     (d)   if any representation, warranty or statement contained herein or in
any of the other Lease Documents proves to be untrue in any material respect as
of the date when made or at any time during the Term if such representation or
warranty is a continuing representation or warranty pursuant to Section 10.2;

     (e)   if the Lessee or the Guarantor shall (i) voluntarily be adjudicated a
bankrupt or insolvent, (ii) seek or consent to the appointment of a receiver or
trustee for itself or for the Leased Property, (iii) file a petition seeking
relief under the bankruptcy or other similar laws of the United States, any
state or any jurisdiction, (iv) make a general assignment for the benefit of
creditors, (v) make or offer a composition of its debts with its creditors or
(vi) be unable to pay its debts as such debts mature;

     (f)   if any court shall enter an order, judgment or decree appointing,
without the consent of the Lessee or the Guarantor, a receiver or trustee for
the Lessee or the Guarantor or for any of their respective property and such
order, judgment or decree shall remain in force, undischarged or unstayed, sixty
(60) days after it is entered;

     (g)   if a petition is filed against the Lessee or the Guarantor which
seeks relief under the bankruptcy or other similar laws of the United States,
any state or any other jurisdiction, and such petition is not dismissed within
sixty (60) days after it is filed;

     (h)   in the event that, without the prior written consent of the Lessor,
in each instance, which consent may be withheld by the Lessor in its sole and
absolute discretion, if any of the outstanding capital stock of the Lessee,
shall be, on any one or more occasions, directly or indirectly, sold, assigned,
hypothecated or otherwise transferred (whether by operation of law or
otherwise);

                                      -79-
<PAGE>

           (i) the liquidation, dissolution or termination of existence of the
any member of the Lessee or the merger or consolidation of the Guarantor;
provided, however, that notwithstanding the foregoing, a merger or consolidation
involving the Guarantor shall not constitute an Event of Default so long as (i)
the surviving entity relating to such merger has a Tangible Net Worth equal to
or greater than the Tangible Net Worth of the Guarantor immediately prior to
such merger or consolidation, (ii) the Lessor receives at least fifteen (15)
days prior written notice of such merger and (iii) the Lessor receives such
assurances, estoppels, assumptions and confirmations that it reasonably requires
with respect to such merger or consolidation;

           (j) if, without the prior written consent of the Lessor, in each
instance, which consent may be withheld by the Lessor in its sole and absolute
discretion, the Lessee's or any Sublessee's interest in the Leased Property
shall be, directly or indirectly, mortgaged, encumbered (by any voluntary or
involuntary Lien other than the Permitted Encumbrances), subleased, sold,
assigned, hypothecated or otherwise transferred (whether by operation of law or
otherwise);

           (k) the occurrence of a default or breach of condition continuing
beyond the expiration of the applicable notice and grace periods, if any, in
connection with the payment or performance of any other material obligation of
the Lessee or any Sublessee (other than any Sublessee that is not an Affiliate
of the Lessee), whether or not the applicable creditor or obligee elects to
declare the obligations of the Lessee or the applicable Sublessee under the
applicable agreement due and payable or to exercise any other right or remedy
available to such creditor or obligee, if such creditor's or obligee's rights
and remedies may involve or result in (i) the taking of possession of the Leased
Property or (ii) the assertion of any other right or remedy that, in the
Lessor's reasonable opinion, may impair the Lessee's ability punctually to
perform all of its material obligations under this Lease and the other Lease
Documents, may impair such Sublessee's ability punctually to perform all of its
obligations under its Sublease or may materially impair the Lessor's security
for the Lease Obligations; provided, however, that in any event, the election by
the applicable creditor or obligee to declare the obligations of the Lessee
under the applicable agreement due and payable or to exercise any other right or
remedy available to such creditor or obligee shall be an Event of Default
hereunder only if such obligations, individually or in the aggregate, are in
excess of ONE HUNDRED THOUSAND DOLLARS ($100,000);

           (l) the occurrence of a Related Party Default;

           (m) the occurrence of any default or breach of condition continuing
beyond the expiration of the applicable notice and grace periods, if any, under
any credit agreement, loan agreement or other agreement establishing a major
line of credit (or any documents executed in connection with such lines of
credit) on behalf of any member of the Leasing Group (other than any Sublessee
that is not an Affiliate of the Lessee) whether or not the applicable creditor
has elected to declare the indebtedness due and payable under such line of
credit or to exercise any other right or remedy available to it. For the
purposes of this provision, a major line of credit

                                      -80-
<PAGE>

shall mean and include any line of credit established in an amount equal to or
greater than FIVE HUNDRED THOUSAND DOLLARS ($500,000);

     (n)   except as a result of Casualty or a partial or complete Condemnation,
if the Lessee or any Sublessee ceases operation of the Facility for a period in
excess of thirty (30) days;

     (o)   if one or more judgments against the Lessee or any Sublessee (other
than any Sublessee that is not an Affiliate of the Lessee) or attachments
against the Lessee's interest or any such Sublessee's interest in the Leased
Property, which in the aggregate exceed ONE HUNDRED THOUSAND DOLLARS ($100,000)
or which may materially and adversely interfere with the operation of the
Facility, remain unpaid, unstayed on appeal, undischarged, unbonded or
undismissed for a period of thirty (30) days;

     (p)   if any malpractice award or judgment exceeding any applicable
professional liability insurance coverage by more than FIVE HUNDRED THOUSAND
DOLLARS ($500,000) shall be rendered against any member of the Leasing Group and
either (i) enforcement proceedings shall have been commenced by any creditor
upon such award or judgment or (ii) such award or judgment shall continue
unsatisfied and in effect for a period of ten (10) consecutive days without an
insurance company satisfactory to the Lessor (in its sole and absolute
discretion) having agreed to fund such award or judgment in a manner
satisfactory to the Lessor (in its sole and absolute discretion) and in either
case such award or judgment shall, in the reasonable opinion of the Lessor, have
a material adverse affect on the ability of any such member of the Leasing Group
to operate the Facility;

     (q)   if any Provider Agreement material to the operation or financial
condition of any member of the Leasing Group shall be terminated prior to the
expiration of the term thereof or, without the prior written consent of the
Lessor, in each instance, which consent may be withheld in the Lessor's
reasonable discretion, shall not be renewed or extended upon the expiration of
the stated term thereof;

     (r)   if, after the Lessee or any Sublessee has obtained approval for
participation in the Medicare and/or Medicaid programs with regard to the
operation of the Facility, a final unappealable determination is made by the
applicable Governmental Authority that the Lessee or any such Sublessee shall
have failed to comply with applicable Medicare and/or Medicaid regulations in
the operation of the Facility, as a result of which failure the Lessee or such
Sublessee is declared ineligible to continue its participation in the Medicare
and/or Medicaid programs;

     (s)   if any member of the Leasing Group receives notice of a final
unappealable determination by applicable Governmental Authorities of the
revocation of any Permit required for the lawful operation of the Facility in
accordance with the Primary Intended Use or the loss of any Permit under any
other circumstances under which any such member of the Leasing Group is required
to cease the operation of the Facility in accordance with the Primary Intended
Use;

                                      -81-
<PAGE>

     (t)   any failure to maintain the insurance required pursuant to Section 12
of this Lease in force and effect at all times until the Lease Obligations are
fully paid and performed;

     (u)   the appointment of a temporary manager (or operator) for the Leased
Property by any Governmental Authority; or

     (v)   the entry of an order by a court with jurisdiction over the Leased
Property to close the Facility, to transfer one or more patients or residents
from the Facility as a result of an allegation of abuse or neglect or to take
any action to eliminate an emergency situation then existing at the Facility.

     16.2  Remedies.

     (a)   If any Lease Default shall have occurred, the Lessor may at its
option terminate this Lease by giving the Lessee not less than ten (10) days'
notice of such termination, or exercise any one or more of its rights and
remedies under this Lease or any of the other Lease Documents, or as available
at law or in equity and upon the expiration of the time fixed in such notice,
the Term shall terminate (but only if the Lessor shall have specifically elected
by a written notice to so terminate the Lease) and all rights of the Lessee
under this Lease shall cease. Notwithstanding the foregoing, in the event of the
Lessee's failure to pay Rent, if such Rent remains unpaid beyond ten (10) days
from the due date thereof, the Lessor shall not be obligated to give ten (10)
days notice of such termination or exercise of any of its other rights and
remedies under this Lease, or the other Lease Documents, or otherwise available
at law or in equity, and the Lessor shall be at liberty to pursue any one or
more of such rights or remedies without further notice. No taking of possession
of the Leased Property by or on behalf of the Lessor, and no other act done by
or on behalf of the Lessor, shall constitute an acceptance of surrender of the
Leased Property by the Lessee or reduce the Lessee's obligations under this
Lease or the other Lease Documents, unless otherwise expressly agreed to in a
written document signed by an authorized officer or agent of the Lessor.

     (b)   To the extent permitted under applicable law, the Lessee shall pay as
Additional Charges all costs and expenses (including, without limitation,
attorneys' fees and expenses) reasonably incurred by or on behalf of the Lessor
as a result of any Lease Default.

     (c)   If any Lease Default shall have occurred, whether or not this Lease
has been terminated pursuant to Paragraph (a) of this Section, the Lessee shall,
to the extent permitted under applicable law, if required by the Lessor so to
do, upon not less than ten (10) days' prior notice from the Lessor, immediately
surrender to the Lessor the Leased Property pursuant to the provisions of
Paragraph (a) of this Section and quit the same, and the Lessor may enter upon
and repossess the Leased Property by reasonable force, summary proceedings,
ejectment or otherwise, and may remove the Lessee and all other Persons and any
and all of the Tangible Personal Property from the Leased Property, subject to
the rights of any residents or patients of the Facility and any Sublessees who
are not Affiliates of any member of the Leasing Group and

                                      -82-
<PAGE>

to any requirements of applicable law, or the Lessor may claim ownership of the
Tangible Personal Property as set forth in Section 5.2.3 hereof or the Lessor
may exercise its rights as secured party under the Security Agreement. The
Lessor shall use reasonable, good faith efforts to relet the Leased Property or
otherwise mitigate damages suffered by the Lessor as a result of the Lessee's
breach of this Lease.

     (d)   In addition to all of the rights and remedies of the Lessor set forth
in this Lease and the other Lease Documents, if the Lessee shall fail to pay any
rental or other charge due hereunder (whether denominated as Base Rent,
Additional Rent, Additional Charges or otherwise) within ten (10) days after
same shall have become due and payable, then and in such event the Lessee shall
also pay to the Lessor (i) a late payment service charge (in order to partially
defray the Lessor's administrative and other overhead expenses) equal to two
hundred-fifty ($250) dollars and (ii) to the extent permitted by applicable law,
interest on such unpaid sum at the Overdue Rate; it being understood, however,
that nothing herein shall be deemed to extend the due date for payment of any
sums required to be paid by the Lessee hereunder or to relieve the Lessee of its
obligation to pay such sums at the time or times required by this Lease.

     16.3  Damages. None of (a) the termination of this Lease pursuant to
Section 16.2, (b) the eviction of the Lessee or the repossession of the Leased
Property, (c) the failure or inability of the Lessor, notwithstanding reasonable
good faith efforts, to relet the Leased Property, (d) the reletting of the
Leased Property or (e) the failure of the Lessor to collect or receive any
rentals due upon any such reletting, shall relieve the Lessee of its liability
and obligations hereunder, all of which shall survive any such termination,
repossession or reletting. In any such event, the Lessee shall forthwith pay to
the Lessor all Rent due and payable with respect to the Leased Property to and
including the date of such termination, repossession or eviction. Thereafter,
the Lessee shall forthwith pay to the Lessor, at the Lessor's option, either:

           (i) the sum of: (x) all Rent that is due and unpaid at later to occur
of termination, repossession or eviction, together with interest thereon at the
Overdue Rate to the date of payment, plus (y) the worth (calculated in the
manner stated below) of the amount by which the unpaid Rent for the balance of
the Term after the later to occur of the termination, repossession or eviction
exceeds the fair market rental value of the Leased Property for the balance of
the Term, plus (z) any other amount necessary to compensate the Lessor for all
damage proximately caused by the Lessee's failure to perform the Lease
Obligations or which in the ordinary course would be likely to result therefrom;
or

           (ii) each payment of Rent as the same would have become due and
payable if the Lessee's right of possession or other rights under this Lease had
not been terminated, or if the Lessee had not been evicted, or if the Leased
Property had not been repossessed which Rent, to the extent permitted by law,
shall bear interest at the Overdue Rate from the date when due until the date
paid, and the Lessor may enforce, by action or otherwise, any other term or
covenant of this Lease. There shall be credited against the Lessee's obligation
under this clause (ii) amounts actually collected by the Lessor from another
tenant to whom the Leased Property may have

                                      -83-
<PAGE>

actually been leased or, if the Lessor is operating the Leased Property for its
own account, the actual net cash flow of the Leased Property.

     In making the determinations described in subparagraph (i) above, the
"worth" of unpaid Rent shall be determined by a court having jurisdiction
thereof using the lowest rate of capitalization (highest present worth)
reasonably applicable at the time of such deter mination and allowed by
applicable law.

     16.4  Lessee Waivers. If this Lease is terminated pursuant to Section 16.2,
the Lessee waives, to the extent not prohibited by applicable law, (a) any right
of redemption, re-entry or repossession, (b) any right to a trial by jury in the
event of summary proceedings to enforce the remedies set forth in this Article
16, and (c) the benefit of any laws now or hereafter in force exempting property
from liability for rent or for debt.

     16.5  Application of Funds. Any payments otherwise payable to the Lessee
which are received by the Lessor under any of the provisions of this Lease
during the existence or continuance of any Lease Default shall be applied to the
Lease Obligations in the order which the Lessor may reasonably determine or as
may be required by the laws of the State.

     16.6  Intentionally Omitted.

     16.7  Lessor's Right to Cure. If the Lessee shall fail to make any payment,
or to perform any act required to be made or performed under this Lease and to
cure the same within the relevant time periods provided in Section 16.1, the
Lessor, after five (5) Business Days' prior notice to the Lessee (except in an
emergency when such shorter notice shall be given as is reasonable under the
circumstances), and without waiving or releasing any obligation or Event of
Default, may (but shall be under no obligation to) at any time thereafter make
such payment or perform such act for the account and at the expense of the
Lessee, and may, to the extent permitted by law, enter upon the Leased Property
for such purpose and take all such action thereon as, in the Lessor's opinion,
may be necessary or appropriate therefor. No such entry shall be deemed an
eviction of the Lessee. All sums so paid by the Lessor and all costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses, in each case, to the extent permitted by law) so incurred shall be
paid by the Lessee to the Lessor on demand as an Additional Charge. The
obligations of the Lessee and rights of the Lessor contained in this Article
shall survive the expiration or earlier termination of this Lease.

     16.8  No Waiver By Lessor. The Lessor shall not by any act, delay, omission
or otherwise (including, without limitation, the exercise of any right or remedy
hereunder) be deemed to have waived any of its right or remedies hereunder or
under any of the other Lease Documents unless such waiver is in writing and
signed by the Lessor, and then, only to the extent specifically set forth
therein. No waiver at any time of any of the terms, conditions, covenants,
representations or warranties set forth in any of the Lease Documents
(including, without limitation, any of the time periods set forth therein for
the performance of the Lease Obligations)

                                      -84-
<PAGE>

shall be construed as a waiver of any other term, condition, covenant,
representation or warranty of any of the Lease Documents, nor shall such a
waiver in any one instance or circumstances be construed as a waiver of the same
term, condition, covenant, representation or warranty in any subsequent instance
or circumstance. No such failure, delay or waiver shall be construed as creating
a requirement that the Lessor must thereafter, as a result of such failure,
delay or waiver, give notice to the Lessee or any other Person that the Lessor
does not intend to, or may not, give a further waiver or to refrain from
insisting upon the strict performance of the terms, conditions, covenants,
representations and warranties set forth in the Lease Documents before the
Lessor can exercise any of its rights or remedies under any of the Lease
Documents or before any Lease Default can occur, or as establishing a course of
dealing for interpreting the conduct of and agreements between the Lessor and
the Lessee or any other Person.

     The acceptance by the Lessor of any payment that is less than payment in
full of all amounts then due under any of the Lease Documents at the time of the
making of such payment shall not: (a) constitute a waiver of the right to
exercise any of the Lessor's remedies at that time or at any subsequent time,
(b) constitute an accord and satisfaction or (c) nullify any prior exercise of
any remedy, without the express written consent of the Lessor. Any failure by
the Lessor to take any action under this Lease or any of the other Lease
Documents by reason of a default hereunder or thereunder, any acceptance of a
past due installment, or any indulgence granted from time to time shall not be
construed (i) as a novation of this Lease or any of the other Lease Documents,
(ii) as a waiver of any right of the Lessor thereafter to insist upon strict
compliance with the terms of this Lease or any of the other Lease Documents or
(iii) to prevent the exercise of any right of acceleration or any other right
granted hereunder or under applicable law; and to the maximum extent not
prohibited by applicable law, the Lessor hereby expressly waives the benefit of
any statute or rule of law or equity now provided, or which may hereafter be
provided, which would produce a result contrary to or in conflict with the
foregoing.

     16.9  Right of Forbearance. Whether or not for consideration paid or
payable to the Lessor and, except as may be otherwise specifically agreed to by
the Lessor in writing, no forbearance on the part of the Lessor, no extension of
the time for the payment of the whole or any part of the Obligations, and no
other indulgence given by the Lessor to the Lessee or any other Person, shall
operate to release or in any manner affect the original liability of the Lessee
or such other Persons, or to limit, prejudice or impair any right of the Lessor,
including, without limitation, the right to realize upon any collateral, or any
part thereof, for any of the Obligations evidenced or secured by the Lease
Documents; notice of any such extension, forbearance or indulgence being hereby
waived by the Lessee and all those claiming by, through or under the Lessee.

     16.10 Cumulative Remedies. The rights and remedies set forth under this
Lease are in addition to all other rights and remedies afforded to the Lessor
under any of the other Lease Documents or at law or in equity, all of which are
hereby reserved by the Lessor, and this Lease is made and accepted without
prejudice to any such rights and remedies. All of the rights and

                                      -85-
<PAGE>

remedies of the Lessor under each of the Lease Documents shall be separate and
cumulative and may be exercised concurrently or successively in the Lessor's
sole and absolute discretion.


                                   ARTICLE 17
                                   ----------

               SURRENDER OF LEASED PROPERTY OR LEASE; HOLDING OVER
               ---------------------------------------------------

     17.1  Surrender. The Lessee shall, upon the expiration or prior termination
of the Term (unless the Lessee has concurrently purchased the Leased Property in
accordance with the terms hereof), vacate and surrender the Leased Property to
the Lessor in good repair and condition, in compliance with all Legal
Requirements, all Insurance Requirements, and in compliance with the provisions
of Article 8, except for: (a) ordinary wear and tear (subject to the obligation
of the Lessee to maintain the Leased Property in good order and repair during
the entire Term of the Lease), (b) damage caused by the gross negligence or
willful acts of the Lessor, and (c) any damage or destruction resulting from a
Casualty or Taking that the Lessee is not required by the terms of this Lease to
repair or restore.

     17.2  Transfer of Permits and Contracts. In connection with the expiration
or any earlier termination of this Lease (unless the Lessee has concurrently
purchased the Leased Property in accordance with the terms hereof), upon any
request made from time to time by the Lessor, the Lessee shall (a) promptly and
diligently use its best efforts to (i) transfer and assign all Permits and
Contracts necessary or desirable for the operation of the Leased Property in
accordance with its Primary Intended Lease to the Lessor, any Fee Mortgagee or
any of their respective designees and/or (ii) arrange for the transfer or
assignment of such Permits and Contracts to the Lessor, any Fee Mortgagee or any
such designee, all to the extent the same may be transferred or assigned under
applicable law and (b) cooperate in every respect (and to the fullest extent
possible) and assist the Lessor, any Fee Mortgagee or any such designee in
obtaining such Permits and Contracts (whether by transfer, assignment or
otherwise). Such efforts and cooperation on the part of the Lessee shall
include, without limitation, the execution, delivery and filing with appropriate
Governmental Authorities, Accreditation Bodies and Third Party Payors of any
applications, petitions, statements, notices, requests, assignments and other
documents or instruments requested by the Lessor, any Fee Mortgagee or any such
designee. Furthermore, the Lessee shall not take any action or refrain from
taking any action which would defer, delay or jeopardize the process of the
Lessor, any Fee Mortgagee or any such designee obtaining said Permits and
Contracts (whether by transfer, assignment or otherwise). Without limiting the
foregoing, the Lessee shall not seek to transfer or relocate any of said Permits
or Contracts to any location other than the Leased Property. The provisions of
this Section 17.2 shall survive the expiration or earlier termination of this
Lease.

     The Lessee hereby appoints the Lessor as its attorney-in-fact, with full
power of substitution to take such actions, in the event that the Lessee fails
to comply with any request made by the Lessor hereunder, as the Lessor (in its
sole absolute discretion) may deem necessary

                                      -86-
<PAGE>

or desirable to effectuate the intent of this Section 17.2. The power of
attorney conferred on the Lessor by the provisions of this Section 17.2, being
coupled with an interest, shall be irrevocable until the Lease Obligations are
fully paid and performed and shall not be affected by any disability or
incapacity which the Lessee may suffer and shall survive the same. Such power of
attorney is provided solely to protect the interests of the Lessor and shall not
impose any duty on the Lessor to exercise any such power and neither the Lessor
nor such attorney-in-fact shall be liable for any act, omission, error in
judgment or mistake of law, except as the same may result from its gross
negligence or willful misconduct.

     17.3  No Acceptance of Surrender. Except at the expiration of the Term in
the ordinary course, no surrender to the Lessor of this Lease or of the Leased
Property or any interest therein shall be valid or effective unless agreed to
and accepted in writing by the Lessor and no act by the Lessor or any
representative or agent of the Lessor, other than such a written acceptance by
the Lessor, shall constitute an acceptance of any such surrender.

     17.4  Holding Over. If, for any reason, the Lessee shall remain in
possession of the Leased Property after the expiration or any earlier
termination of the Term, such possession shall be as a tenant at sufferance
during which time the Lessee shall pay as rental each month, one and one-half
times the aggregate of (i) one-twelfth of the aggregate Base Rent and Additional
Rent payable at the time of such expiration or earlier termination of the Term;
(ii) all Additional Charges accruing during the month and (iii) all other sums,
if any, payable by the Lessee pursuant to the provisions of this Lease with
respect to the Leased Property. During such period of tenancy, the Lessee 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 law to tenants at sufferance, to continue its occupancy and use
of the Leased Property. Nothing contained herein shall constitute the consent,
express or implied, of the Lessor to the holding over of the Lessee after the
expiration or earlier termination of this Lease.


                                   ARTICLE 18
                                   ----------

                         PURCHASE OF THE LEASED PROPERTY
                         -------------------------------

     18.1  Purchase of the Leased Property. In the event the Lessee purchases
the Leased Property from the Lessor pursuant to Article 13 or Article 14 of this
Lease, the Lessor shall, upon receipt from the Lessee of the applicable purchase
price, together with full payment of any unpaid Rent due and payable with
respect to any period ending on or before the date of the purchase, deliver to
the Lessee a bargain and sale deed with covenants only against acts of the
Lessor conveying the entire interest of the Lessor in and to the Leased Property
(other than those portions of the Leased Property constituting Building Systems
not situated upon the Land, or located in or on the Leased Improvements, that
exclusively serve the Facility) to the Lessee subject to all Legal Requirements,
all of the matters described in clauses (a), (b), (c), (e) and (g) of Section
11.5.2, Impositions, any Liens created by the Lessee, any Liens created in
accordance

                                      -87-
<PAGE>

with the terms of this Lease or consented to by the Lessee, the claims of all
Persons claiming by through or under the Lessee, any other matters assented to
by the Lessee and all matters for which the Lessee has responsibility under any
of the Lease Documents, but otherwise not subject to any other Lien created by
the Lessor from and after the Commencement Date (other than an Encumbrance
permitted under Article 20 which the Lessee elects to assume). The applicable
purchase price shall be paid in cash to the Lessor, or as the Lessor may direct,
in federal or other immediately available funds except as otherwise mutually
agreed by the Lessor and the Lessee. All expenses of such conveyance, including,
without limitation, title examination costs, standard (and extended) coverage
title insurance premiums, attorneys' fees incurred by the Lessor in connection
with such conveyance, recording and transfer taxes and recording fees and other
similar charges shall be paid by the Lessee.

     18.2  Appraisal.

     18.2.1 Designation of Appraisers. In the event that it becomes necessary to
determine the Fair Market Value of the Leased Property for any purpose of this
Lease, the party required or permitted to give notice of such required
determination shall include in the notice the name of a Person selected to act
as appraiser on its behalf. Within ten (10) days after receipt of any such
notice, the Lessor (or the Lessee, as the case may be) shall by notice to the
Lessee (or the Lessor, as the case may be) appoint a second Person as appraiser
on its behalf.

     18.2.2 Appraisal Process. The appraisers thus appointed, each of whom must
be a member of the American Institute of Real Estate Appraisers (or any
successor organization thereto), shall, within forty-five (45) days after the
date of the notice appointing the first appraiser, proceed to appraise the
Leased Property to determine the Fair Market Value of the Leased Property as of
the relevant date (giving effect to the impact, if any, of inflation from the
date of their decision to the relevant date); provided, however, that if only
one appraiser shall have been so appointed, or if two appraisers shall have been
so appointed but only one such appraiser shall have made such determination
within fifty (50) days after the making of the Lessee's or the Lessor's request,
then the determination of such appraiser shall be final and binding upon the
parties. If two appraisers shall have been appointed and shall have made their
determinations within the respective requisite periods set forth above and if
the difference between the amounts so determined shall not exceed ten per cent
(10%) of the lesser of such amounts, then the Fair Market Value of the Leased
Property shall be an amount equal to fifty percent (50%) of the sum of the
amounts so determined. If the difference between the amounts so determined shall
exceed ten percent (10%) of the lesser of such amounts, then such two appraisers
shall have twenty (20) days to appoint a third appraiser, but if such appraisers
fail to do so, then either party may request the American Arbitration
Association or any successor organization thereto to appoint an appraiser within
twenty (20) days of such request, and both parties shall be bound by any
appointment so made within such twenty (20) day period. If no such appraiser
shall have been appointed within such twenty (20) days or within ninety (90)
days of the original request for a determination of Fair Market Value of the
Leased Property, whichever is earlier, either the Lessor or the Lessee may apply
to any court having jurisdiction to

                                      -88-
<PAGE>

have such appointment made by such court. Any appraiser appointed by the
original appraisers, by the American Arbitration Association or by such court
shall be instructed to determine the Fair Market Value of the Leased Property
within thirty (30) days after appointment of such Appraiser. The determination
of the appraiser which differs most in terms of dollar amount from the
determinations of the other two appraisers shall be excluded, and fifty percent
(50%) of the sum of the remaining two determinations shall be final and binding
upon the Lessor and the Lessee as the Fair Market Value of the Leased Property.

     18.2.3 Specific Enforcement and Costs. This provision for determination by
appraisal shall be specifically enforceable to the extent such remedy is
available under applicable law, and any determination hereunder shall be final
and binding upon the parties except as otherwise provided by applicable law. The
Lessor and the Lessee shall each pay the fees and expenses of the appraiser
appointed by it and each shall pay one-half of the fees and expenses of the
third appraiser and one-half of all other cost and expenses incurred in
connection with each appraisal.

     18.3  Lessee's Option to Purchase.

     18.3.1 Conditions to Option. On the conditions (which conditions the Lessor
may waive, at its sole option, by notice to the Lessee at any time) that (a) at
the time of exercise of the Purchase Option and on the applicable Purchase
Option Date, there then exists no Lease Default, nor any state of facts or
circumstance which constitutes, or with the passage of time and/or the giving of
notice, would constitute a Lease Default and (b) the Lessee strictly complies
with the provisions of this Section 18.3, then the Lessee shall have the option
to purchase the SNF/CMC Land and all of the improvements located thereon, at the
price and upon the terms hereinafter set forth (the "Purchase Option").

     18.3.2 Exercise of Option. The Purchase Option shall permit the Lessee to
purchase the SNF/CMC Land and all of the improvements located thereon (a) on the
last day of the Initial Term or (b) on the last day of any Extended Term
effectively exercised by the Lessee (each of such dates are referred to herein
as a "Purchase Option Date") and shall be exercised by notice given by the
Lessee to the Lessor (the "Lessee's Purchase Option Notice") at least one
hundred eighty (180) days (but not more than two hundred seventy (270) days)
prior to the relevant Purchase Option Date. Once given, the Lessee shall have no
right to rescind the Lessee's Purchase Option Notice. In order to determine
whether or not to exercise the Purchase Option, the Lessee may request that the
Lessor provide to the Lessee (within 10 Business Days after any such request) a
rent roll (the "Rent Roll"), in form and substance reasonably acceptable to the
Lessee, (i) identifying each lease in effect relating to any portion of the CMC
Land, (ii) attaching a true and correct copy of each such lease and (iii)
identifying the term of each such lease, the rent payable thereunder, the
security deposit and/or other deposits (if any) held by the landlord thereunder,
whether there are any defaults then existing thereunder, the date through which
rent has been paid thereunder and any other information reasonably requested by
the Lessee. From and after the date of the exercise of the Purchase Option in
accordance with the terms hereof, the

                                      -89-
<PAGE>

Lessor shall not enter into any lease relating to all or any portion of the
SNF/CMC Land without the Lessee's prior consent, which consent may not
unreasonably withheld.

     18.3.3 Conveyance. If the Purchase Option is exercised by the Lessee in
accordance with the terms hereof, the SNF/CMC Land and all improvements located
thereon shall be conveyed by a good and sufficient deed with covenants only
against acts of the Lessor (the "Deed") running to the Lessee or to such grantee
as the Lessee may designate by notice to the Lessor at least seven (7) days
before the Time of Closing. At the Closing, (a) the Lessor shall assign to the
Lessee (or the Lessee's nominee), and the Lessee (or such nominee) shall assume,
all of the Lessor's right, title and interest in all leases relating to the CMC
Land pursuant to an Assignment and Assumption Agreement, in form and substance
reasonably acceptable to the Lessor and the Lessee (which Assignment and
Assumption Agreement shall include mutual indemnifications relating to the
obligations of the landlord under the leases being assigned and assumed), (b)
the Lessor shall deliver to the Lessee (or its nominee) an updated Rent Roll and
(c) the Lessor shall transfer to the Lessee (or its nominee) all security
deposits and other deposits held by the Lessor under the leases being assigned
and assumed.

     18.3.4 Calculation of Purchase Price. The price to be paid by the Lessee
for the acquisition of the Leased Property pursuant to this Purchase Option (the
"Purchase Price") shall be equal to the lesser of (a) an amount equal to the sum
of (i) the Fair Market Value of the Leased Property minus the Fair Market Added
Value plus (ii) the Fair Market Value of the CMC Land and the improvements
located thereon or (b) the sum of (i) the Lessor's Investment plus (ii) the
product of (x) fifty (50%) percent multiplied by (y) a fraction the numerator of
which shall be the Consumer Price Index in effect on the applicable Purchase
Option Date minus the Consumer Price Index in effect on the Commencement Date
and the denominator of which shall be the Consumer Price Index in effect on the
Commencement Date multiplied by (z) the Lessor's Investment. Notwithstanding the
foregoing, in no event shall the Purchase Price due hereunder be less than the
Lessor's Investment.

     18.3.5 Payment of Purchase Price. The Purchase Price shall be paid by the
Lessee at the Time of Closing by certified, cashier's, treasurer's or bank
check(s) or wire transfer pursuant to instructions received from the Lessor.

     18.3.6 Place and Time of Closing. If the Purchase Option is exercised, the
closing shall occur and the Deed shall be delivered (the "Closing") at the
office of the Lessor at 12:00 o'clock noon (E.S.T.) on the applicable Purchase
Option Date (such time, as the same may be extended by mutual written agreement
of the Lessor and the Lessee, being hereinafter referred to as the "Time of
Closing"). It is agreed that time is of the essence of the Purchase Option.

     18.3.7 Condition of Leased Property. The Leased Property is to be purchased
"AS IS" and "WHERE IS" as of the Time of Closing.

                                      -90-
<PAGE>

     18.3.8 Quality of Title. If the Lessor shall be unable to give title or to
make conveyance, as stipulated in this Section 18.3, then, at the Lessor's
option, the Lessor shall use reasonable efforts to remove all defects in title
and the applicable Purchase Option Date and Time of Closing shall be extended
for period of thirty (30) days. The Lessor shall not be required to expend more
than FIFTY THOUSAND DOLLARS ($50,000) (inclusive of attorney's fees) in order to
have used "reasonable efforts."

     18.3.9 Lessor's Inability to Perform. If at the expiration of the extended
time the Lessor shall have failed so to remove any such defects in title, then
all other obligations of all parties hereto under Section 18.3 shall cease and
Section 18.3 shall be void and without recourse to the parties hereto.
Notwithstanding the foregoing, the Lessee shall have the election, at either the
original or extended Purchase Option Date and Time of Closing, to accept such
title as the Lessor can deliver to the Leased Property in its then condition and
to pay therefor the Purchase Price without reduction, in which case the Lessor
shall convey such title; provided, that, in the event of such conveyance, if any
portion of the Leased Property shall have been taken by Condemnation prior to
the applicable Purchase Option Date and Time of Closing, the Lessor shall pay
over or assign to the Lessee at the Time of Closing, all Awards recovered on
account of such Taking, less any amounts reasonably expended by the Lessor in
obtaining such Awards, or, to the extent such Awards have not been recovered as
of the applicable Purchase Option Date and Time of Closing, the Lessor shall
assign to the Lessee all its rights with respect to any claim therefor.

     18.3.10 Merger by Deed. The acceptance of the Deed by the Lessee or the
grantee designated by the Lessee, as the case may be, shall be deemed to be a
full

                                      -91-
<PAGE>

performance and discharge of every agreement and obligation to be performed by
the Lessor contained or expressed in this Lease.

     18.3.11 Use of Purchase Price to Clear Title. To enable the Lessor to make
conveyance as provided in this Section, the Lessor may, at the Time of Closing,
use the Purchase Price or any portion thereof to clear the title of any Lien,
provided that all instruments so procured are recorded contemporaneously with
the Closing or reasonable arrangements are made for a recording subsequent to
the Time of Closing in accordance with customary conveyancing practices.

     18.3.12 Lessee's Default. If the Lessee delivers the Lessee's Purchase
Option Notice and fails to consummate the purchase of the Leased Property in
accordance with the terms hereof for any reason other than the Lessor's willful
and unexcused refusal to deliver the Deed, (a) the Lessee shall thereafter have
no further right to purchase the Leased Property pursuant to this Section,
although this Lease shall otherwise continue in full force and effect and (b)
the Lessor shall have the right to sue for specific performance of the Lessee's
obligations to purchase the Leased Property provided such suit for specific
performance is commenced within one (1) year after the applicable Purchase
Option Date on which such sale was supposed to occur.


                                   ARTICLE 19
                                   ----------

                            SUBLETTING AND ASSIGNMENT
                            -------------------------

     19.1  Subletting and Assignment. The Lessee may not, without the prior
written consent of the Lessor and any Fee Mortgagee (if any such consent from
the Fee Mortgagee is required under the Fee Mortgage Loan Documents), which
consent may be withheld in the Lessor's sole and absolute discretion, assign or
pledge all or any portion of its interest in this Lease or any of the other
Lease Documents (whether by operation of law or otherwise) or sublet all or any
part of the Leased Property. For purposes of this Section 19.1 the term "assign"
shall be deemed to include, but not be limited to, any one or more sales,
pledges, hypothecations or other transfers (including, without limitation, any
transfer by operation of law) of any of the capital stock of or partnership
interests in the Lessee or sales, pledges, hypothecations or other transfers
(including, without limitation, any transfer by operation of law) of the capital
or the assets of the Lessee. Any such assignment, pledge, sale, hypothecation or
other transfer made without the Lessor's consent shall be void and of no force
and effect.

     19.2  Intentionally Omitted.

     19.3  Attornment. The Lessee shall insert in each Sublease provisions to
the effect that (a) such Sublease is subject and subordinate to all of the terms
and provisions of this Lease and to the rights of the Lessor hereunder, (b) in
the event this Lease shall terminate before the expiration of such Sublease, the
Sublessee thereunder will, at the Lessor's option, attorn to the

                                      -92-
<PAGE>

Lessor and waive any right the Sublessee may have to terminate the Sublease or
to surrender possession thereunder, as a result of the termination of this Lease
and (c) in the event the Sublessee receives a written notice from the Lessor
stating that the Lessee is in default under this Lease, the Sublessee shall
thereafter be obligated to pay all rentals accruing under said Sublease directly
to the Lessor or as the Lessor may direct. All rentals received from the
Sublessee by the Lessor shall be credited against the amounts owing by the
Lessee under this Lease.

     19.4  Permitted Transfers. Notwithstanding anything to the contrary set
forth herein, the Lessee's legal or beneficial interest in this Lease or the
Leased Property and/or all of the outstanding capital stock of the Lessee may be
indirectly transferred in connection with (a) any merger of the Guarantor with
or into any other Person, (b) any sale of all or substantially all of the
Guarantor's assets to any other Person or (c) any transfer of all or
substantially all of the outstanding capital stock of the Guarantor to any other
Person; provided, that, in connection with (i) any such merger, the terms of
Section 16 (i) are satisfied and (ii) any such sale or transfer, the acquiring
Person (x) has a Tangible Net Worth equal to or greater than the Guarantor
immediately prior to such sale or transfer and (y) executes and delivers to the
Lessor, concurrently with such sale or transfer, a guaranty in form and
substance substantially similar to the Guaranty and an opinion, in form and
substance reasonably acceptable to the Lessor, rendered by counsel reasonably
acceptable to the Lessor, evidencing the due authorization and enforceability of
such guaranty.


                                   ARTICLE 20
                                   ----------

                   TITLE TRANSFERS AND LIENS GRANTED BY LESSOR
                   -------------------------------------------

     20.1  No Merger of Title. There shall be no merger of this Lease or of the
leasehold estate created hereby with the fee estate in the Leased Property by
reason of the fact that the same Person may acquire, own or hold, directly or
indirectly (a) this Lease or the leasehold estate created hereby or any interest
in this Lease or such leasehold estate and (b) the fee estate in the Leased
Property.

     20.2  Transfers By Lessor. If the original Lessor named herein or any
successor in interest shall convey the Leased Property in accordance with the
terms hereof, other than as security for a debt, and the grantee or transferee
of the Leased Property shall expressly assume all obligations of the Lessor
hereunder arising or accruing from and after the date of such conveyance or
transfer, the original Lessor named herein or the applicable successor in
interest so conveying the Leased Property shall thereupon be released from all
future liabilities and obligations of the Lessor under this Lease arising or
accruing from and after the date of such conveyance or other transfer as to the
Leased Property and all such future liabilities and obligations shall thereupon
be binding upon the new owner.

                                      -93-
<PAGE>

     20.3  Lessor May Grant Liens. Without the consent of the Lessee, but
subject to the terms and conditions set forth below in this Section 20.3, the
Lessor may, from time to time, directly or indirectly, create or otherwise cause
to exist any lien, encumbrance or title retention agreement upon the Leased
Property or any interest therein ("Encumbrance"), whether to secure any
borrowing or other means of financing or refinancing; provided, that, except as
may otherwise be expressly provided herein or in any Fee Mortgage Loan Documents
to which the Lessee is a party, the Lessee shall have no obligation to make
payments under such Encumbrances. The Lessee shall subordinate this Lease to the
lien of any such Encumbrance, on the condition that the beneficiary or holder of
such Encumbrance executes a non-disturbance agreement in conformity with the
provisions of Section 20.4. To the extent that any such Encumbrance or any other
Permitted Encumbrance consists of a mortgage or deed of trust on the Lessor's
interest in the Leased Property the same shall be referred to herein as a "Fee
Mortgage" and the holder thereof shall be referred to herein as a "Fee
Mortgagee".

     20.4  Subordination and Non-Disturbance. Concurrently with the execution
and delivery of any Fee Mortgage entered into after the date hereof, provided
that the Lessee executes and delivers an agreement of the type described in the
following paragraph, the Lessor shall obtain and deliver to the Lessee an
agreement by the holder of such Fee Mortgage, pursuant to which, (a) the
applicable Fee Mortgagee consents to this Lease and (b) agrees that,
notwithstanding the terms of the applicable Fee Mortgage held by such Fee
Mortgagee, or any default, expiration, termination, foreclosure, sale, entry or
other act or omission under or pursuant to such Fee Mortgage or a transfer in
lieu of foreclosure, (i) the Lessee shall not be disturbed in peaceful enjoyment
of the Leased Property nor shall this Lease be terminated or canceled at any
time, except in the event that the Lessor shall have the right to terminate this
Lease under the terms and provisions expressly set forth herein, (ii) the
Lessee's options to purchase the Leased Property pursuant to Articles 13, 14 and
18 of this Lease shall remain in force and effect pursuant to the terms hereof
and (iii) in the event that the Lessee elects its option to purchase the Leased
Property pursuant to this Lease and performs all of its obligations hereunder in
connection with any such election, the holder of the Fee Mortgage shall release
its Fee Mortgage upon payment by the Lessee of the purchase price required
hereunder, provided, that (1) such purchase price is paid to the holder of the
Fee Mortgage, in the event that the Indebtedness secured by the applicable Fee
Mortgage is equal to or greater than the purchase price or (2) in the event that
the purchase price is greater than the Indebtedness secured by the Fee Mortgage,
a portion of the purchase price equal to the Indebtedness secured by the Fee
Mortgage is paid to the Fee Mortgagee and the remainder of the purchase price is
paid to the Lessor.

     At the request from time to time by any Fee Mortgagee, the Lessee shall (a)
subordinate this Lease and all of the Lessee's rights and estate hereunder to
the Fee Mortgage held by such Fee Mortgagee and (b) agree that the Lessee will
attorn to and recognize such Fee Mortgagee or the purchaser at any foreclosure
sale or any sale under a power of sale contained in any such Fee Mortgage as the
Lessor under this Lease for the balance of the Term then remaining. To effect
the intent and purpose of the immediately preceding sentence, the Lessee agrees
to execute and


                                      -94-
<PAGE>

deliver such instruments in recordable from as are reasonably requested by the
Lessor or the applicable Fee Mortgagee; provided, however, that such Fee
Mortgagee simultaneously executes, delivers and records a written agreement of
the type described in the preceding paragraph.


                                   ARTICLE 21
                                   ----------

                               LESSOR OBLIGATIONS
                               ------------------

     21.1  Quiet Enjoyment. As long as the Lessee shall pay all Rent and all
other sums due under any of the Lease Documents as the same become due and shall
fully comply with all of the terms of this Lease and the other Lease Documents
and fully perform its obligations thereunder, the Lessee shall peaceably and
quietly have, hold and enjoy the Leased Property throughout the Term, free of
any claim or other action by the Lessor or anyone claiming by, through or under
the Lessor, but subject to the Permitted Encumbrances and such Liens as may
hereafter be consented to by the Lessee. No failure by the Lessor to comply with
the foregoing covenant shall give the Lessee any right to cancel or terminate
this Lease, or to fail to perform any other sum payable under this Lease, or to
fail to perform any other obligation of the Lessee hereunder. Notwithstanding
the foregoing, the Lessee shall have the right by separate and independent
action to pursue any claim it may have against the Lessor as a result of a
breach by the Lessor of the covenant of quiet enjoyment contained in this
Article 21.

     21.2  Memorandum of Lease. The Lessor and the Lessee shall, promptly upon
the request of either, enter into a short form memorandum of this Lease, in form
suitable for recording under the laws of the State, in which reference to this
Lease and all options contained herein shall be made. The Lessee shall pay all
recording costs and taxes associated therewith.

     21.3  Default by Lessor. The Lessor shall be in default of its obligations
under this Lease only if the Lessor shall fail to observe or perform any term,
covenant or condition of this Lease on its part to be performed and such failure
shall continue for a period of thirty (30) days after notice thereof from the
Lessee (or such shorter time as may be necessary in order to protect the health
or welfare of any patients and/or residents of the Facility or to insure the
continuing compliance of the Facility with the applicable Legal Requirements),
unless such failure cannot with due diligence be cured within a period of thirty
(30) days, in which case such failure shall not be deemed to continue if the
Lessor, within said thirty (30) day period, proceeds promptly and with due
diligence to cure the failure and diligently completes the curing thereof. The
time within which the Lessor shall be obligated to cure any such failure shall
also be subject to extension of time due to the occurrence of any Unavoidable
Delay.

                                      -95-
<PAGE>

                                   ARTICLE 22
                                   ----------

                                     NOTICES
                                     -------

     Any notice, request, demand, statement or consent made hereunder or under
any of the other Lease Documents shall be in writing and shall be deemed duly
given if personally delivered, sent by certified mail, return receipt requested,
or sent by a nationally recognized commercial overnight delivery service with
provision for a receipt, postage or delivery charges prepaid, and shall be
deemed given when so personally delivered or postmarked or placed in the
possession of such mail or delivery service and addressed as follows:

<TABLE>
<S>                                 <C>
If to the Lessee:                   CareMatrix of Princeton (SNF), Inc.
                                    197 First Avenue
                                    Needham Heights, Massachusetts 02194
                                    Attention:  President

With a copies to:                   CareMatrix of Princeton (SNF), Inc.
                                    197 First Avenue
                                    Needham Heights, Massachusetts 02194
                                    Attention:  General Counsel

                                    Meditrust Mortgage Investments, Inc.
                                    197 First Avenue
                                    Needham Heights, Massachusetts 02194
                                    Attention:  General Counsel

If to the Lessor:                   CCC of New Jersey, Inc.
                                    197 First Avenue
                                    Needham Heights, Massachusetts 02194
                                    Attention: President

With copies to:                     CCC of New Jersey, Inc.
                                    197 First Avenue
                                    Needham Heights, Massachusetts 02194
                                    Attention:  General Counsel

                                    Meditrust Mortgage Investments, Inc.
                                    197 First Avenue
                                    Needham Heights, Massachusetts 02194
                                    Attention:  General Counsel
</TABLE>

or such other address as the Lessor or the Lessee shall hereinafter from time to
time designate by a written notice to the others given in such manner. Any
notice given to the Lessee by the Lessor at any time shall not imply that such
notice or any further or similar notice was or is required.

                                      -96-
<PAGE>

                                   ARTICLE 23
                                   ----------

                              ENVIRONMENTAL MATTERS
                              ---------------------

     23.1  Maintenance of Leased Property. The Lessee covenants that, as long as
this Lease shall remain in force and effect, the Lessee:

           (a) shall not generate, store, transport, utilize, dispose of,
     manage, release or locate, any Hazardous Substances on, under or from the
     Leased Property in compliance with all applicable Environmental Laws or
     permit the generation, storage, transportation, utilization, disposal,
     management, release or threat of release, or location of any Hazardous
     Substances on, under or from the Leased Property, but only in compliance
     with all applicable Environmental Laws; and

           (b) shall not permit any Lien arising under or related to any of the
     Environmental Laws to attach to the Leased Property and remain undischarged
     or not adequately bonded to the reasonable satisfaction of the Lessor for
     more than sixty (60) days.

     In addition to all other covenants contained herein, the Lessee agrees that
the Leased Property shall be maintained in compliance with the Environmental
Laws and in compliance with any provisions set forth under any Fee Mortgage Loan
Documents pertaining to the generation, storage, transportation, utilization,
management or release of hazardous Substances on, under or from the Leased
Property.

     23.2  Notice of Environmental Conditions. The Lessee shall provide the
Lessor and any Fe Mortgagee with immediate written notice: (a) upon the Lessee
becoming aware of (i) the presence of, any release or any threat of release of
any Hazardous Substances on, under or from the Leased Property (whether or not
caused by the Lessee) and (ii) any Environmental Enforcement Action instituted
or threatened and (b) upon receipt by the Lessee of any notice relating to the
Leased Property or any Hazardous Substance allegedly originating on, under or
from the Leased Property, from any Governmental Authority pursuant to any of the
Environmental Laws.

     23.3  The Lessee's Agreement To Take Remedial Actions. Upon the Lessee
becoming aware of the presence of, any release, or any threat of release of any
Hazardous Substances on, under or from the Leased Property caused by the Lessee,
its officers, agents, employees, Sublessees, licensees, concessionaires and/or
invitees or any other occupant of the

                                      -97-
<PAGE>

Leased Property during the term of this Lease, the Lessee shall immediately take
all such actions to arrange for the assessment, monitoring, clean-up,
containment, removal, remediation or restoration of the Leased Property as are
required pursuant to any of the Environmental Laws or by any Governmental
Authority.

     Upon the Lessee becoming aware of the presence of, any release, or any
threat of release of any Hazardous Substances on any Surrounding Property, but
only to the extent that the presence of any Hazardous Substances on the
Surrounding Property originated on, under or from the Leased Property and such
release or threat of release was caused by the Lessee, its officers, agents,
employees, Sublessees, licensees, concessionaires and/or invitees or any other
occupant of the Leased Property during the term of this Lease, the Lessee shall
immediately take all such actions to arrange for the assessment, monitoring,
clean-up, containment, removal, remediation or restoration of the Surrounding
Property, as are required pursuant to any of the Environmental Laws or by any
Governmental Authority.

     23.4  The Lessor's Rights To Inspect The Leased Property and Take Remedial
Actions. So long as this Lease shall remain in force and effect, the Lessor
shall have the right, but not the obligation, to enter upon the Leased Property,
to expend funds to:

           (a) cause one or more environmental assessments of the Leased
     Property to be undertaken. Such environmental assessments may include,
     without limitation, (i) detailed visual inspections of the Leased Property,
     including, without limitation, all storage areas, storage tanks, drains,
     dry wells and leaching areas, (ii) the taking of soil and surface water
     samples, (iii) the performance of soil and ground water analyses and (iv)
     the performance of such other investigations or analyses as are necessary
     or appropriate and consistent with sound professional environmental
     engineering practice in order for the Lessor to obtain a complete
     assessment of the compliance of the Leased Property and the use thereof
     with all Environmental Laws and to make a determination as to whether there
     is any risk of contamination (x) to the Leased Property resulting from
     Hazardous Substances originating on, under or from any Surrounding Property
     or (y) to any Surrounding Property resulting from Hazardous Substances
     originating on, under or from the Leased Property;

           (b) cure any breach of the conditions and covenants contained in this
     Article 6;

           (c) take any actions as are necessary to (i) prevent the migration of
     Hazardous Substances on, under or from the Leased Property to any other
     property, (ii) clean-up, contain, remediate or remove any Hazardous
     Substances on, under or from any other property, which Hazardous Substances
     originated on, under or from the Leased Property or (iii) prevent the
     migration of any Hazardous Substances on, under or from any other property
     to the Leased Property;

                                      -98-
<PAGE>

           (d) comply with, settle or otherwise satisfy any Environmental
     Enforcement Action (including, without limitation, the payment of any fines
     or penalties imposed by any Governmental Authority); and

           (e) correct or abate any environmental condition on or under the
     Leased Property which could cause degradation, damage or injury to the
     Leased Property, any Surrounding Property or any Person.

     Any amounts paid or advanced by the Lessor (or any Fee Mortgagee) and all
costs and expenses incurred in connection with any action taken pursuant to the
terms of this Article 6 (including, without limitation, environmental
consultants' and experts' fees and expenses, reasonable attorneys' fees and
expenses, court costs and all costs of assessment, monitoring, clean-up,
containment, remediation, removal and restoration), shall be a demand obligation
of the Lessee to the Lessor, but only to the extent that such amounts paid or
advanced and cost and expenses incurred arose out of and/or relate to the
presence of, any release, or any threat of release of any Hazardous Substances
on, under or from the Leased Property caused by the Lessee, its officers,
agents, employees, Sublessees, licensees, concessionaires and/or invitees or any
other occupant of the Leased Property during the term of this Lease, and if such
sums are not paid within ten (10) days after demand, such sums shall thereafter
(to the extent permitted by applicable law) bear interest at the Overdue Rate
until the date of payment.

     The Lessor (or any Fee Mortgagee), by making any such payment or incurring
any such costs, shall be subrogated to all rights of the Lessee or any other
occupant of the Leased Property to seek reimbursement from any Person,
including, without limitation, any prior owner or operator of the Leased
Property, who may be a "responsible party" under any of the Environmental Laws,
in connection with the presence of Hazardous Substances on, under or from the
Leased Property.

     Any partial exercise by the Lessor (or any Fee Mortgagee) of any of the
rights and remedies set forth in this Article 23, including, without limitation,
any partial undertaking on the part of the Lessor (or such Fee Mortgagee) to
cure any failure by the Lessee or the Leased Property (or any other occupant) to
comply with any of the Environmental Laws, shall not obligate the Lessor (or
such Fee Mortgagee) to complete such actions taken or require the Lessor to
expend further sums to cure such non-compliance.

     23.5  Environmental Indemnification. Without limiting any of the other
indemnity provisions set forth in this Lease, the Lessee shall and hereby agrees
to indemnify, exonerate, defend (with counsel acceptable to the Lessor) and hold
the Indemnified Parties harmless from and against any claim, liability, loss,
cost, damage or expense (including, without limitation, environmental
consultants' and experts' fees and expenses, reasonable attorneys' fees and
expenses, court costs and all costs of assessment, monitoring, clean-up,
containment, removal, remediation and restoration) arising out of or in
connection with (a) any breach of any of the conditions and covenants hereunder,
(b) the Lessor's exercise of any of its rights and remedies

                                      -99-
<PAGE>

hereunder or (c) the enforcement of the aforesaid indemnification agreement;
excluding, however, with respect to each Indemnified Party, any matters
resulting from the gross negligence or willful misconduct of such Indemnified
Party. Notwithstanding the foregoing, the Lessor shall have the option of
conducting its defense with counsel of the Lessor's choice, but at the expense
of the Lessee as aforesaid.

     The matters covered by the foregoing indemnity with respect to any property
other than the Leased Property shall not include any costs incurred as a result
of the clean-up, containment, remediation or removal of Hazardous Substances on,
under or from such other property or the restoration thereof if such Hazardous
Substances did not originate on, under or from the Leased Property. The Lessee
acknowledges and agrees that its obligations pursuant to the provisions hereof
are in addition to any and all other legal liabilities and responsibilities (at
law or in equity) that the Lessee may otherwise have as an "owner" or "operator"
of the Leased Property or a "responsible party" within the meaning of any of the
Environmental Laws, as the case may be.

     23.6  Survival. The Lessee's liability for a breach of the provisions of
this Article shall survive any termination of this Lease.


                                   ARTICLE 24
                                   ----------

                            MISCELLANEOUS PROVISIONS
                            ------------------------

     24.1  Broker's Fee Indemnification. The Lessee shall and hereby agrees to
indemnify, defend (with counsel reasonably acceptable to the Lessor) and hold
the Lessor harmless from and against any and all claims for premiums or other
charges, finder's fees, taxes, brokerage fees or commissions and other similar
compensation due in connection with any of the transactions contemplated by the
Lease Documents. Notwithstanding the foregoing, the Lessor shall have the option
of conducting its own defense against any such claims with counsel of the
Lessor's choice, but at the expense of the Lessee, as aforesaid. This
indemnification shall include, without limitation, all reasonable attorneys'
fees and expenses and court costs reasonably incurred by the Lessor in
connection with the defense against any such claims and the enforcement of this
indemnification agreement and shall survive the termination of this Lease.

     24.2  No Joint Venture or Partnership. Neither anything contained in any of
the Lease Documents, nor the acts of the parties hereto, shall create, or be
construed to create, a partnership or joint venture between the Lessor and the
Lessee. The Lessee is not the agent or representative of the Lessor and nothing
contained herein or in any of the other Lease Documents shall make, or be
construed to make, the Lessor liable to any Person for goods delivered to the
Lessee, services performed with respect to the Leased Property at the direction
of the Lessee or for debts or claims accruing against the Lessee.

                                     -100-
<PAGE>

     24.3  Amendments, Waivers and Modifications. Except as otherwise expressly
provided for herein or in any other Lease Document, none of the terms,
covenants, conditions, warranties or representations contained in this Lease or
in any of the other Lease Documents may be renewed, replaced, amended, modified,
extended, substituted, revised, waived, consolidated or terminated except by an
agreement in writing signed by (a) all parties to this Lease or the other
applicable Lease Document, as the case may be, with regard to any such renewal,
replacement, amendment, modification, extension, substitution, revision,
consolidation or termination and (b) the Person against whom enforcement is
sought with regard to any waiver. The provisions of this Lease and the other
Lease Documents shall extend and be applicable to all renewals, replacements,
amendments, extensions, substitutions, revisions, consolidations and
modifications of any of the Lease Documents, the Management Agreements, the Fee
Mortgage Loan Documents, the Related Party Agreements, the Permits and/or the
Contracts. References herein and in the other Lease Documents to any of the
Lease Documents, the Management Agreements, the Fee Mortgage Loan Documents, the
Related Party Agreements, the Permits and/or the Contracts shall be deemed to
include any renewals, replacements, amendments, extensions, substitutions,
revisions, consolidations or modifications thereof.

     Notwithstanding the foregoing, any reference contained in any of the Lease
Documents, whether express or implied, to any renewal, replacement, amendment,
extension, substitution, revisions, consolidation or modification of any of the
Lease Documents or any Management Agreement, Permit and/or the Contract is not
intended to constitute an agreement or consent by the Lessor to any such
renewal, replacement, amendment, substitution, revision, consolidation or
modification; but, rather as a reference only to those instances where the
Lessor may give, agree or consent to any such renewal, replacement, amendment,
extension, substitution, revision, consolidation or modification as the same may
be required pursuant to the terms, covenants and conditions of any of the Lease
Documents.

     24.4  Captions and Headings. The captions and headings set forth in this
Lease and each of the other Lease Documents are included for convenience and
reference only, and the words contained therein shall in no way be held or
deemed to define, limit, describe, explain, modify, amplify or add to the
interpretation, construction or meaning of, or the scope or intent of, this
Lease, any of the other Lease Documents or any parts hereof or thereof.

     24.5  Time is of the Essence. Time is of essence of each and every term,
condition, covenant and warranty set forth herein and in the other Lease
Documents.

     24.6  Counterparts. This Lease may be executed in one or more counterparts,
each of which taken together shall constitute an original and all of which shall
constitute one and the same instrument.

     24.7  Entire Agreement. This Lease and the other Lease Documents set forth
the entire agreement of the parties with respect to the subject matter.

                                     -101-
<PAGE>

     24.8  WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE
LAW, THE LESSOR AND THE LESSEE HEREBY MUTUALLY, KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT WHICH ANY PARTY HERETO MAY NOW OR HEREAFTER HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THE LEASE OR ANY OF THE LEASE DOCUMENTS. The Lessee hereby
certifies that neither the Lessor nor any of the Lessor's representatives,
agents or counsel has represented expressly or otherwise that the Lessor would
not, in the event of any such suit, action or proceeding seek to enforce this
waiver to the right of trial by jury and acknowledges that the Lessor has been
induced by this waiver (among other things) to enter into the transactions
evidenced by this Lease and the other Lease Documents and further acknowledges
that the Lessee (a) has read the provisions of this Lease, and in particular,
the paragraph containing this waiver, (b) has consulted legal counsel, (c)
understands the rights that it is granting in this Lease and the rights that it
waiving in this paragraph in particular and (d) makes the waivers set forth
herein knowingly, voluntarily and intentionally.

     24.9  Successors and Assigns. This Lease and the other Lease Documents
shall be binding and inure to the benefit of (a) upon the Lessee and the
Lessee's legal representatives and permitted successors and assigns and (b) the
Lessor and any other Person who may now or hereafter hold the interest of the
Lessor under this Lease and their respective successors and assigns.
Notwithstanding the foregoing, the Lessee shall not assign any of its rights or
obligations hereunder or under any of the other Lease Documents without the
prior written consent of the Lessor, in each instance, which consent may be
withheld in the Lessor's sole and absolute discretion.

     24.10 No Third Party Beneficiaries. This Lease and the other Lease
Documents are solely for the benefit of the Lessor, its successors, assigns and
participants (if any), the Indemnified Parties, the Lessee, the other members of
the Leasing Group and their respective permitted successors and assigns, and,
except as otherwise expressly set forth in any of the Lease Documents, nothing
contained therein shall confer upon any Person other than such parties any right
to insist upon or to enforce the performance or observance of any of the
obligations contained therein. Without limiting the foregoing, it is
acknowledged and agreed that for such time as any Fee Mortgage may remain in
effect, it is intended that the applicable Fee Mortgagee holding such Fee
Mortgage be a third party beneficiary of the terms and conditions set forth
under this Lease and, from and after the exercise by such Fee Mortgagee of its
rights an remedies under any Fee Mortgage (or any assignment of leases and rents
granted by the Lessor to such Fee Mortgagee) in accordance with the terms
thereto (so that such Fee Mortgage has succeeded to the interest of the Lessor
in the Leased Property and/or the Lease), such Fee Mortgagee shall be entitled
(subject to and in accordance with the terms of any applicable Fee Mortgage Loan
Documents) to enforce the terms and conditions of this Lease to the fullest
extent, and in all respects, as if such Fee Mortgagee were a party hereto.
Notwithstanding the foregoing, it is not intended that any of the terms and
conditions set forth herein expand or be deemed to expand the benefits, rights
and/or remedies of the Fee Mortgagee under the Fee Mortgage Loan Documents

                                     -102-
<PAGE>

beyond the terms and conditions set forth therein other than providing to such
Fee Mortgagee the Lessee's agreement to terms and conditions set forth in such
Fee Mortgage Loan Documents to the extent that such terms and conditions relate
to the Lessee and/or the Leased Property. All conditions to the obligations of
the Lessor to advance or make available proceeds of insurance or Awards, or to
release any deposits held for Impositions or insurance premiums are imposed
solely and exclusively for the benefit of the Lessor, its successors and assigns
and any Fee Mortgagee. No other Person shall have standing to require
satisfaction of such conditions in accordance with their terms, and no other
Person shall, under any circumstances, be a beneficiary of such conditions, any
or all of which may be freely waived in whole or in part by the Lessor at any
time, if, in the Lessor's sole and absolute discretion, the Lessor deems it
advisable or desirable to do so.

     24.11 Governing Law. This Lease shall be construed and the rights and
obligations of the Lessor and the Lessee shall be determined in accordance with
the laws of the State.

     The Lessee hereby consents to personal jurisdiction in the courts of the
State and the United States District Court for the District in which the Leased
Property is situated as well as to the jurisdiction of all courts from which an
appeal may be taken from the aforesaid courts, for the purpose of any suit,
action or other proceeding arising out of or with respect to any of the Lease
Documents, the negotiation and/or consummation of the transactions evidenced by
the Lease Documents, the Lessor's relationship of any member of the Leasing
Group in connection with the transactions evidenced by the Lease Documents
and/or the performance of any obligation or the exercise of any remedy under any
of the Lease Documents and expressly waives any and all objections the Lessee
may have as to venue in any of such courts.

     24.12 General. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, the Lessee or the
Lessor arising prior to any date of termination of this Lease or any of the
other Lease Documents shall survive such termination.

     If any provision of this Lease or any of the other Lease Documents or any
application thereof shall be invalid or unenforceable, the remainder of this
Lease or the other applicable Lease Document, as the case may be, and any other
application of such term or provision shall not be affected thereby.
Notwithstanding the foregoing, it is the intention of the parties hereto that if
any provision of any of this Lease is capable of two (2) constructions, one of
which would render the provision void and the other of which would render the
provision valid, then such provision shall be construed in accordance with the
construction which renders such provision valid.

     If any late charges provided for in any provision of this Lease or any of
the other Lease Documents are based upon a rate in excess of the maximum rate
permitted by applicable law, the parties agree that such charges shall be fixed
at the maximum permissible rate.

                                     -103-
<PAGE>

     The Lessee waives all presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, and notices
of acceptance and waives all notices of the existence, creation, or incurring of
new or additional obligations, except as to all of the foregoing as expressly
provided for herein.

     24.13 Consents. In the event that the Lessor's consent is required by the
terms hereof or of any other Lease Document for any purpose whatsoever, it is
understood and agreed that (a) the Lessor's consent shall be subject to the
consent of any Fee Mortgagee to the extent that such consent from any Fee
Mortgage is required under the terms of the applicable financing documents
(which consent the Lessor shall seek to obtain) and (b) notwithstanding anything
to the contrary set forth herein, it shall not be deemed unreasonable for the
Lessor to withhold its consent in any given circumstance based upon the Lessor's
inability to obtain any required consent from any Fee Mortgagee.

     24.14 MMI Loan. Without limiting the provisions of Section 24.13, in the
event of any conflict between the provisions hereof and the provisions of any of
the documents evidencing and/or securing the MMI Loan (collectively, the "MMI
Loan Documents"), the MMI Loan Documents shall control.







                                     -104-
<PAGE>

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

<TABLE>
<S>                                                 <C>
WITNESS:                                  LESSEE:
--------                                  -------

                                          CAREMATRIX OF PRINCETON (SNF),
                                          INC., a Delaware corporation


                                          By: /s/ James M. Clary III
--------------------------------              ------------------------
Name:         Name:
                                              Title: Executive Vice President


WITNESS:                                  LESSOR:
--------                                  -------

                                          CCC OF NEW JERSEY, INC., a
                                          Delaware corporation


                                          By: /s/ James M. Clary III
--------------------------------              ------------------------
Name:         Name:
                                             Title: Vice President
</TABLE>


                                     -105-
<PAGE>

                                   EXHIBIT A-1
                                   -----------

                          LEGAL DESCRIPTION OF THE LAND
                          -----------------------------

     The land with the improvements thereon located in Plainsboro, Middlesex
County, New Jersey, described as follows:

     Lot 3.06, containing 6.710 acres more or less, shown on a Plan entitled
"Final Subdivision Plan Phase I and II of the Windrows at Princeton Forrestal,
Property of Trustees of Princeton University, Plainsboro Twp., Middlesex Co.,
NJ, April 5, 1995", last revised 9/18/95, prepared by Van Note-Harvey
Associates, P.C., Consulting Engineers, Planners and Land Surveyors, 777
Alexander Road, Princeton, NJ, 08540, said Plan being filed in the Middlesex
County Clerk's Office on April 2, 1996 as Map No. 4, File 1945 and which is more
particularly bounded and described on the legal description attached hereto as
Exhibit A-1.

     The above-described premises are also shown as Lot 3.06, in Block 3, on
Sheet 2, of the Plainsboro Twp. Tax Map.

     EXCEPTING AND EXCLUDING THEREFROM that portion of said premises on which
the Community Medical Center is located, shown as "PROPOSED GROUND LEASE,
Containing 0.464 Ac., 20,205 sq. ft." on a Plan entitled "Ground Lease Plan for
Mediplex of New Jersey, Inc.," dated March 15, 1996, prepared by Nassau
Surveying, 777 Alexander Road, Princeton, New Jersey 08540, and recorded in the
Middlesex County Clerk's Office as an Exhibit to that certain Notice of Ground
Lease dated as of March 29, 1996 by and between Mediplex of New Jersey, Inc.,
and CCC of New Jersey, Inc., which Notice of Ground Lease is recorded in said
Clerk's Office at Book 4315, Page 050.

<PAGE>

                                   EXHIBIT A-2
                                   -----------

                           DESCRIPTION OF THE CMC LAND
                           ---------------------------

     The land with the improvements thereon located in Plainsboro, Middlesex
County, New Jersey, described as follows:

     That portion of the SNF/CMC Land on which the Community Medical Center is
located, shown as "PROPOSED GROUND LEASE, Containing 0.464 Ac., 20,205 sq. ft."
on a Plan entitled "Ground Lease Plan for Mediplex of New Jersey, Inc.," dated
March 15, 1996, prepared by Nassau Surveying, 777 Alexander Road, Princeton, New
Jersey 08540, and recorded in the Middlesex County Clerk's Office as an Exhibit
to that certain Notice of Ground Lease dated as of March 29, 1996 by and between
Mediplex of New Jersey, Inc., and CCC of New Jersey, Inc., which Notice of
Ground Lease is recorded in said Clerk's Office at Book 4315, Page 050.

<PAGE>

                                   EXHIBIT A-3
                                   -----------

                         DESCRIPTION OF THE SNF/CMC LAND
                         -------------------------------

     The land with the improvements thereon located in Plainsboro, Middlesex
County, New Jersey, described as follows:

     Lot 3.06, containing 6.710 acres more or less, shown on a Plan entitled
"Final Subdivision Plan Phase I and II of the Windrows at Princeton Forrestal,
Property of Trustees of Princeton University, Plainsboro Twp., Middlesex Co.,
NJ, April 5, 1995", last revised 9/18/95, prepared by Van Note-Harvey
Associates, P.C., Consulting Engineers, Planners and Land Surveyors, 777
Alexander Road, Princeton, NJ, 08540, said Plan being filed in the Middlesex
County Clerk's Office on April 2, 1996 as Map No. 4, File 1945 and which is more
particularly bounded and described on the legal description attached hereto as
Exhibit A-1.

     The above-described premises are also shown as Lot 3.06, in Block 3, on
Sheet 2, of the Plainsboro Twp. Tax Map.

<PAGE>

                                    EXHIBIT B
                                    ---------

                             PERMITTED ENCUMBRANCES
                             ----------------------

<TABLE>
<S>     <C>
1.      Conservation and Maintenance Easement recorded in Deed Book 3459 Page
        278 and as amended by Agreement dated 3/15/96 and recorded in the
        Middlesex County Clerk's Office on 4/2/96 in Deed Book 4314 Page 876.

2.      Utility Easement recorded in Deed Book 3622 Page 19, and as affected by
        a certain Consent and Approval dated August 16, 1995 and recorded in the
        Middlesex County Clerk's Office on 4/2/96 in Deed Book 4314 Page 576.

3.      Agreements as recorded in Deed Book 3352 Page 810 and Deed Book 3470
        Page 642, as amended by Deed Book 3598 Page 976 and Deed Book 3598 Page
        982.

4.      Terms and conditions as set forth in a certain Drainage Easement between
        the Congregation of the Mission of St. Vincent De Paul in Princeton, New
        Jersey (grantor), the Lessor and the Seller dated 1/13/96 and recorded
        in the Middlesex County Clerk's Office on 4/2/96 in Deed book 4314 Page
        814. (Affects only appurtenant rights in said Easement).

5.      Terms and conditions as set forth in a certain Agreement between Gale &
        Wentworth Princeton Partners, L.P., the Lessor and the Seller dated
        2/15/96 and recorded in the Middlesex County Clerk's office on 4/2/96 in
        Deed Book 4315 Page 1. (Affects only appurtenant rights in said
        Agreement)

6.      Ingress, Egress, Regress and Utility Easement Agreement between the
        Seller (grantor), The Trustees of Princeton University and the Lessor
        (grantees) dated 3/28/96, recorded in the Middlesex County Clerk's
        Office on 4/2/96 in Deed Book 4314 Page 744.

7.      Terms and conditions other than those set forth in paragraph 9(i) as set
        forth in a certain Ingress, Egress and Regress Easement Agreement
        between Forrestal Center Corporation, (grantor) and the Seller (grantee)
        dated 3/15/96 and recorded in the Middlesex County Clerk's office on
        4/2/96 in Deed Book 4314 Page 716. (Affects only appurtenant rights in
        said Agreement)

8.      Declaration of Easements, Covenants, Conditions and Restrictions by the
        Trustees of Princeton University, dated 3/28/96 and recorded in the
        Middlesex County Clerk's Office on 4/2/96 in Deed Book 4314 Page 601.

9.      Terms and conditions as set forth in a certain Grant of Easement
        (Sanitary Sewer) between the Trustees of Princeton University (grantor),
        the Lessor and the Seller (grantees), dated 3/28/96 and recorded in the
        Middlesex County Clerk's Office on 4/2/96 in Deed Book 4314 Page 831.
        (Affects only appurtenant rights in said Easement)

<PAGE>

<S>     <C>
10.     The Service, Maintenance and Easement Agreement.

11.     Restrictive Covenant in favor of the County of Middlesex, dated March
        1996 and recorded in the Middlesex County Clerk's Office on 4/2/96 in
        Deed Book 4314 Page 868.

12.     Terms and conditions as set forth in a certain Grant of Easement
        (Drainage) between The Trustees of Princeton University (grantor), the
        Seller and the Lessor (grantees) dated March 1996 and recorded in the
        Middlesex County Clerk's Office on 4/2/96 in Deed Book 4314 Page 792.
        (Affects only appurtenant rights in said Easement)

13.     Terms and conditions of Temporary Access Easement between Princeton
        Forrestal Associates, The Lessor and The Seller dated 3/28/96 and
        recorded in the Middlesex County Clerk's Office on 4/2/96 in Deed Book
        4314 Page 854. (Affects only appurtenant rights in said Easement)

14.     Inchoate or statutory liens for taxes not yet delinquent.

15.     Resident Agreements now or hereafter in effect.

16.     Any other matter of record as of the date hereof.
</TABLE>

<PAGE>

                                    EXHIBIT C
                                    ---------

                                RATE LIMITATIONS
                                ----------------


                                      None


<PAGE>

                                    EXHIBIT D
                                    ---------

                             FREE CARE REQUIREMENTS
                             ----------------------


                                      None


<PAGE>

                                    EXHIBIT E
                                    ---------

                       CALCULATION OF RENT COVERAGE RATIO
                       ----------------------------------



<PAGE>

                                  SCHEDULE 3.1
                                  ------------

                      CALCULATION OF FAIR MARKET BASE RENT
                      ------------------------------------

     For the purposes of Section 3.1, "Fair Market Base Rent" shall be as
reasonably determined by the Lessor to be the annual rental charge on a
so-called "triple net" basis (including without limitation Base Rent and
Additional Charges) as of the applicable Rent Adjustment Date, for new leases
then being negotiated or executed for comparable skilled nursing facilities in
the area surrounding Princeton, New Jersey for terms commencing on or about the
date of commencement of each Extension Term. In determining Fair Market Base
Rent, the Lessor shall take into consideration the size of the premises,
location of the premises, lease term, condition and location of the applicable
skilled nursing facility, services and amenities provided by the Lessor, rental
concessions and other comparable factors. Bona fide written offers to lease
comparable space received by the Lessor from third parties (at arm's length) may
be used by the Lessor as an indication of the Fair Market Base Rent.

     The Lessor shall notify the Lessee of its determination of Fair Market Base
Rent within ten (10) days after the Lessor's receipt of the Lessee's notice
exercising its option to extend and the Lessor shall furnish data in support of
such determination. If the Lessor does not receive written notice from the
Lessee of the Lessee's disagreement with the Lessor's determination of the Fair
Market Base Rent within ten (10) days after the Lessee's receipt of said
determination, the Lessee shall be deemed to have accepted said determination by
the Lessor. If the Lessee disagrees with the Lessor's determination of the Fair
Market Base Rent, the Lessee shall have the right, by written notice given to
the Lessor within thirty (30) days after the Lessee has received notice of the
Lessor's determination, to request that such Fair Market Base Rent be determined
by appraisal in accordance with the provisions of this EXHIBIT 3.1. In such
event, the Fair Market Base Rent shall be determined by impartial MAI
appraisers, one to be chosen by the Lessor, one to be chosen by the Lessee
(collectively, the "Initial Appraisers"), and, if necessary, a third to be
selected as provided below. The Lessor and the Lessee shall each notify the
other of its selected appraiser within ten (10) days following giving of the
Lessee's request for appraisal as provided above. Each appraiser shall be
independent, have at least five (5) years experience with commercial properties
in the area, and be familiar with skilled nursing facilities and leases and
rents in Princeton, New Jersey (and the surrounding area) and experienced in
making real estate appraisals. The cost of each Initial Appraiser shall be paid
by the party selecting such Initial Appraiser. The appraisers shall render their
written appraisal of the Fair Market Base Rent for the applicable Extension Term
within thirty (30) days following the appointment of both such appraisers. If
the appraisals determined by the Initial Appraisers are less than five percent
(5%) apart (i.e., the higher appraisal is less than 105% of the lower
appraisal), then the Fair Market Base Rent shall be determined by taking the
average of the two appraisals. In the event that the appraisals determined by
the Initial Appraisers are five percent (5%) or more apart, the Initial
Appraisers shall promptly select a third appraiser who meets the same criteria
as required of the Initial Appraisers ("Third Appraiser"). The Third Appraiser
shall submit to the Lessor and the Lessee, within twenty-one (21) days after its
appointment, its written appraisal of the Fair Market Base Rent with respect to
the Leased Property as of the commencement date of the applicable Extension
Term, which appraisal shall be binding upon the Lessor and the Lessee. The cost
of the Third Appraiser shall be borne equally by the Lessor and the Lessee.

<PAGE>



                            FACILITY LEASE AGREEMENT





                             CCC OF NEW JERSEY, INC.

                                       as
                                     Lessor


                                       AND


                       CAREMATRIX OF PRINCETON (SNF), INC.

                                       as
                                     Lessee



                           Dated as of August 7, 1998


                             For Premises Located At

                             Plainsboro, New Jersey



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                                TABLE OF CONTENTS

<TABLE>
<S>               <C>                                                                                            <C>
ARTICLE 1         LEASED PROPERTY; TERM; CONSTRUCTION; EXTENSIONS ..............................................  1
         1.1      Leased Property ..............................................................................  1
         1.2      Term .........................................................................................  3
         1.3      Extended Terms ...............................................................................  3

ARTICLE 2         DEFINITIONS AND RULES OF CONSTRUCTION ........................................................  3
         2.1      Definitions ..................................................................................  3
         2.2      Rules of Construction ........................................................................ 21

ARTICLE 3         RENT ......................................................................................... 22
         3.1      Rent for Land, Leased Improvements, Related Rights and Fixtures .............................. 22
         3.2      Intentionally Omitted ........................................................................ 24
         3.3      Additional Rent .............................................................................. 24
         3.4      Service, Maintenance and Easement Agreement .................................................. 25
         3.5      Additional Charges ........................................................................... 25
         3.6      Net Lease .................................................................................... 25
         3.7      No Lessee Termination or Offset .............................................................. 25
                  3.7.1    No Termination ...................................................................... 25
                  3.7.2    Waiver .............................................................................. 26
                  3.7.3    Independent Covenants ............................................................... 26
         3.8      Abatement of Rent Limited .................................................................... 26

ARTICLE 4         IMPOSITIONS; TAXES; UTILITIES; INSURANCE PAYMENTS ............................................ 27
         4.1      Payment of Impositions ....................................................................... 27
                  4.1.1    Lessee To Pay ....................................................................... 27
                  4.1.2    Installment Elections ............................................................... 27
                  4.1.3    Returns and Reports ................................................................. 27
                  4.1.4    Refunds ............................................................................. 28
                  4.1.5    Protest ............................................................................. 28
         4.2      Notice of Impositions ........................................................................ 28
         4.3      Adjustment of Impositions .................................................................... 28
         4.4      Utilities .................................................................................... 29
                  4.4.1    Utility Services .................................................................... 29
                  4.4.2    Utility Charges ..................................................................... 29
                  4.4.3    Common Work Costs ................................................................... 30
                  4.4.4    Method of Payment ................................................................... 30
         4.5      Insurance Premiums ........................................................................... 30
         4.6      Deposits ..................................................................................... 31
                  4.6.1    Lessor's Option ..................................................................... 31
                  4.6.2    Use of Deposits ..................................................................... 31
                  4.6.3    Deficits ............................................................................ 32
                  4.6.4    Other Properties .................................................................... 32
                  4.6.5    Transfers ........................................................................... 32

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                  4.6.6    Security ............................................................................ 32
                  4.6.7    Return .............................................................................. 32
                  4.6.8    Receipts............................................................................. 33

ARTICLE 5         OWNERSHIP OF LEASED PROPERTY AND PERSONAL PROPERTY;
                  INSTALLATION, REMOVAL AND REPLACEMENT OF
                  PERSONAL PROPERTY............................................................................. 33
         5.1      Ownership of the Leased Property.............................................................. 33
         5.2      Personal Property; Removal and Replacement of Personal Property............................... 33
                  5.2.1    Lessee To Equip Facility............................................................. 33
                  5.2.2    Sufficient Personal Property......................................................... 33
                  5.2.3    Removal and Replacement; Lessor's Option to Purchase................................. 33

ARTICLE 6         SECURITY FOR LEASE OBLIGATIONS................................................................ 34
         6.1      Security for Lessee's Obligations............................................................. 34
                  6.1.1    Security............................................................................. 34
                  6.1.2    Purchase-Money Security Interests and Equipment Leases............................... 35

ARTICLE 7         CONDITION AND USE OF LEASED PROPERTY;
                  MANAGEMENT AGREEMENTS......................................................................... 35
         7.1      Condition of the Leased Property.............................................................. 35
         7.2      Use of the Leased Property; Compliance; Management............................................ 36
                  7.2.1    Obligation to Operate................................................................ 36
                  7.2.2    Permitted Uses....................................................................... 36
                  7.2.3    Compliance With Insurance Requirements............................................... 36
                  7.2.4    No Waste............................................................................. 37
                  7.2.5    No Impairment........................................................................ 37
                  7.2.6    No Liens............................................................................. 37
         7.3      Compliance with Legal Requirements............................................................ 37
         7.4      Management Agreements......................................................................... 37

ARTICLE 8         REPAIRS; RESTRICTIONS......................................................................... 39
         8.1      Maintenance and Repair........................................................................ 39
                  8.1.1  Lessee's Responsibility................................................................ 39
                  8.1.2  No Lessor Obligation................................................................... 40
                  8.1.3  Lessee May Not Obligate Lessor......................................................... 40
                  8.1.4  Lessor's Common Work .................................................................. 40
                  8.1.5  Party Wall ............................................................................ 41
         8.2      Encroachments; Title Restrictions............................................................. 41

ARTICLE 9         MATERIAL STRUCTURAL WORK AND CAPITAL ADDITIONS................................................ 41
         9.1      Lessor's Approval............................................................................. 41
         9.2      General Provisions as to Capital Additions and Certain Material Structural
                  Work.......................................................................................... 42
                  9.2.1    No Liens............................................................................. 42

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<S>               <C>                                                                                            <C>

                  9.2.2    Lessee's Proposal Regarding Capital Additions and Material
                           Structural Work...................................................................... 42
                  9.2.3    Lessor's Options Regarding Capital Additions and Material
                           Structural Work...................................................................... 42
                  9.2.4    Lessor May Elect to Finance Capital Additions or Material
                           Structural Work...................................................................... 42
                  9.2.5    Legal Requirements; Quality of Work ................................................. 43
         9.3      Capital Additions and Material Structural Work Financed by Lessor............................. 43
                  9.3.1    Lessee's Financing Request........................................................... 43
                  9.3.2    Lessor's General Requirements........................................................ 43
                  9.3.3    Payment of Costs..................................................................... 45
         9.4      General Limitations........................................................................... 45
         9.5      Non-Capital Additions......................................................................... 45

ARTICLE 10        WARRANTIES AND REPRESENTATIONS................................................................ 46
         10.1     Representations and Warranties................................................................ 46
                  10.1.1   Existence; Power; Qualification...................................................... 46
                  10.1.2   Valid and Binding.................................................................... 46
                  10.1.3   Single Purpose....................................................................... 46
                  10.1.4   No Violation......................................................................... 46
                  10.1.5   Consents and Approvals............................................................... 47
                  10.1.6   No Liens or Insolvency Proceedings................................................... 47
                  10.1.7   No Burdensome Agreements............................................................. 47
                  10.1.8   Commercial Acts...................................................................... 47
                  10.1.9   Adequate Capital, Not Insolvent...................................................... 47
                  10.1.10           Not Delinquent.............................................................. 48
                  10.1.11           No Affiliate Debt........................................................... 48
                  10.1.12           Taxes Current............................................................... 48
                  10.1.13           Intentionally Omitted....................................................... 48
                  10.1.14           Pending Actions, Notices and Reports........................................ 48
                  10.1.15           Compliance with Legal Requirements.......................................... 49
                  10.1.16           Intentionally Omitted....................................................... 49
                  10.1.17           Intentionally Omitted....................................................... 49
                  10.1.18           Intentionally Omitted....................................................... 49
                  10.1.19           Rate Limitations............................................................ 49
                  10.1.20           Free Care................................................................... 49
                  10.1.21           No Proposed Changes......................................................... 49
                  10.1.22           ERISA....................................................................... 50
                  10.1.23           No Broker................................................................... 50
                  10.1.24           No Improper Payments........................................................ 50
                  10.1.25           Nothing Omitted............................................................. 50
                  10.1.26           No Margin Security.......................................................... 51
                  10.1.27           No Default.................................................................. 51
                  10.1.28           Principal Place of Business................................................. 51

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                  10.1.29           Intentionally Omitted....................................................... 51
                  10.1.30           Intellectual Property....................................................... 51
                  10.1.31           Management Agreements....................................................... 51
         10.2     Continuing Effect of Representations and Warranties........................................... 51

ARTICLE 11        FINANCIAL AND OTHER COVENANTS................................................................. 52
         11.1     Status Certificates........................................................................... 52
         11.2     Financial Statements; Reports; Notice and Information......................................... 52
                  11.2.1   Obligation To Furnish................................................................ 52
                  11.2.2   Responsible Officer.................................................................. 55
                  11.2.3   No Material Omission................................................................. 56
                  11.2.4   Confidentiality...................................................................... 56
         11.3     Financial Covenants........................................................................... 56
                  11.3.1   Rent Coverage Ratio of Lessee........................................................ 56
                  11.3.2   No Indebtedness...................................................................... 56
                  11.3.3   No Guaranties........................................................................ 57
         11.4     Affirmative Covenants......................................................................... 57
                  11.4.1   Maintenance of Existence............................................................. 57
                  11.4.2   Materials............................................................................ 57
                  11.4.3   Compliance With Legal Requirements And Applicable
                                    Agreements.................................................................. 57
                  11.4.4   Books And Records.................................................................... 58
                  11.4.5   Participation in Third Party Payor Programs.......................................... 58
                  11.4.6   Conduct of its Business.............................................................. 58
                  11.4.7   Address.............................................................................. 58
                  11.4.8   Subordination of Affiliate Transactions.............................................. 59
                  11.4.9   Inspection........................................................................... 59
                  11.4.10           Additional Property......................................................... 59
         11.5     Additional Negative Covenants................................................................. 59
                  11.5.1   Restrictions Relating to Lessee...................................................... 60
                  11.5.2   No Liens............................................................................. 60
                  11.5.3   Limits on Affiliate Transactions..................................................... 61
                  11.5.4   Best Efforts To Maximize............................................................. 61
                  11.5.5   No Default........................................................................... 61
                  11.5.6   Intentionally Omitted................................................................ 61
                  11.5.7   Intentionally Omitted................................................................ 61
                  11.5.8   ERISA................................................................................ 61
                  11.5.9   Forgiveness of Indebtedness.......................................................... 61
                  11.5.10           Value of Assets............................................................. 61
                  11.5.11           Changes in Fiscal Year and Accounting Procedures............................ 61

ARTICLE 12        INSURANCE AND INDEMNITY....................................................................... 62
         12.1     General Insurance Requirements................................................................ 62

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<S>                        <C>                                                                                   <C>
                  12.1.1   Types and Amounts of Insurance....................................................... 62
                  12.1.2   Insurance Company Requirements....................................................... 63
                  12.1.3   Policy Requirements.................................................................. 63
                  12.1.4   Notices; Certificates and Policies................................................... 64
                  12.1.5   Lessor's Right to Place Insurance.................................................... 64
                  12.1.6   Payment of Proceeds.................................................................. 65
                  12.1.7   Irrevocable Power of Attorney........................................................ 65
                  12.1.8   Blanket Policies..................................................................... 65
                  12.1.9   No Separate Insurance................................................................ 65
                  12.1.10           Assignment of Unearned Premiums............................................. 66
         12.2     Indemnity..................................................................................... 66
                  12.2.1   Indemnification...................................................................... 66
                  12.2.2   Indemnified Parties.................................................................. 67
                  12.2.3   Limitation on Lessor Liability....................................................... 67
                  12.2.4   Risk of Loss......................................................................... 67

ARTICLE 13        FIRE AND CASUALTY............................................................................. 68
         13.1     Restoration Following Fire or Other Casualty.................................................. 68
                  13.1.1   Following Fire or Casualty........................................................... 68
                  13.1.2   Procedures........................................................................... 68
                  13.1.3   Disbursement of Insurance Proceeds................................................... 69
         13.2     Disposition of Insurance Proceeds............................................................. 72
                  13.2.1   Proceeds To Be Released to Pay For Work.............................................. 72
                  13.2.2   Proceeds Not To Be Released.......................................................... 73
                  13.2.3   Lessee Responsible for Short-Fall.................................................... 74
         13.3     Tangible Personal Property.................................................................... 74
         13.4     Restoration of Certain Improvements and the Tangible Personal Property........................ 74
         13.5     No Abatement of Rent.......................................................................... 74
         13.6     Termination of Certain Rights................................................................. 74
         13.7     Waiver........................................................................................ 74
         13.8     Application of Rent Loss and/or Business Interruption Insurance............................... 75
         13.9     Obligation To Account......................................................................... 75

ARTICLE 14        CONDEMNATION.................................................................................. 75
         14.1     Parties' Rights and Obligations............................................................... 75
         14.2     Total Taking.................................................................................. 76
         14.3     Partial or Temporary Taking................................................................... 76
         14.4     Restoration................................................................................... 76
         14.5     Award Distribution............................................................................ 77
         14.6     Control of Proceedings........................................................................ 77

ARTICLE 15        PERMITTED CONTESTS............................................................................ 77
         15.1     Lessee's Right to Contest..................................................................... 77


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         15.2     Lessor's Cooperation.......................................................................... 78
         15.3     Lessee's Indemnity............................................................................ 78

ARTICLE 16        DEFAULT....................................................................................... 78
         16.1     Events of Default............................................................................. 78
         16.2     Remedies...................................................................................... 82
         16.3     Damages....................................................................................... 83
         16.4     Lessee Waivers................................................................................ 84
         16.5     Application of Funds.......................................................................... 84
         16.6     Intentionally Omitted......................................................................... 84
         16.7     Lessor's Right to Cure........................................................................ 84
         16.8     No Waiver By Lessor........................................................................... 84
         16.9     Right of Forbearance.......................................................................... 85
         16.10    Cumulative Remedies........................................................................... 85

ARTICLE 17        SURRENDER OF LEASED PROPERTY OR LEASE; HOLDING OVER........................................... 86
         17.1     Surrender..................................................................................... 86
         17.2     Transfer of Permits and Contracts............................................................. 86
         17.3     No Acceptance of Surrender.................................................................... 87
         17.4     Holding Over.................................................................................. 87

ARTICLE 18        PURCHASE OF THE LEASED PROPERTY............................................................... 87
         18.1     Purchase of the Leased Property............................................................... 87
         18.2     Appraisal..................................................................................... 88
                  18.2.1   Designation of Appraisers............................................................ 88
                  18.2.2   Appraisal Process.................................................................... 88
                  18.2.3   Specific Enforcement and Costs....................................................... 89
         18.3     Lessee's Option to Purchase.  ................................................................ 89
                  18.3.1   Conditions to Option................................................................. 89
                  18.3.2   Exercise of Option................................................................... 89
                  18.3.3   Conveyance........................................................................... 90
                  18.3.4   Calculation of Purchase Price........................................................ 90
                  18.3.5   Payment of Purchase Price............................................................ 90
                  18.3.6   Place and Time of Closing............................................................ 90
                  18.3.7   Condition of Leased Property......................................................... 90
                  18.3.8   Quality of Title..................................................................... 91
                  18.3.9   Lessor's Inability to Perform........................................................ 91
                  18.3.10           Merger by Deed.............................................................. 91
                  18.3.11           Use of Purchase Price to Clear Title........................................ 92
                  18.3.12           Lessee's Default............................................................ 92

ARTICLE 19        SUBLETTING AND ASSIGNMENT..................................................................... 92
         19.1     Subletting and Assignment..................................................................... 92


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         19.2     Intentionally Omitted......................................................................... 92
         19.3     Attornment.................................................................................... 92
         19.4     Permitted Transfers........................................................................... 93

ARTICLE 20        TITLE TRANSFERS AND LIENS GRANTED BY LESSOR................................................... 93
         20.1     No Merger of Title............................................................................ 93
         20.2     Transfers By Lessor........................................................................... 93
         20.3     Lessor May Grant Liens........................................................................ 94
         20.4     Subordination and Non-Disturbance............................................................. 94

ARTICLE 21        LESSOR OBLIGATIONS............................................................................ 95
         21.1     Quiet Enjoyment............................................................................... 95
         21.2     Memorandum of Lease........................................................................... 95
         21.3     Default by Lessor............................................................................. 95

ARTICLE 22        NOTICES....................................................................................... 96

ARTICLE 23        ENVIRONMENTAL MATTERS......................................................................... 97
         23.1     Maintenance of Leased Property................................................................ 97
         23.2     Notice of Environmental Conditions............................................................ 97
         23.3     The Lessee's Agreement To Take Remedial Actions............................................... 97
         23.4     The Lessor's Rights To Inspect The Leased Property and Take Remedial
                  Actions....................................................................................... 98
         23.5     Environmental Indemnification................................................................. 99
         23.6     Survival......................................................................................100

ARTICLE 24        MISCELLANEOUS PROVISIONS......................................................................100
         24.1     Broker's Fee Indemnification..................................................................100
         24.2     No Joint Venture or Partnership...............................................................100
         24.3     Amendments, Waivers and Modifications.........................................................101
         24.4     Captions and Headings.........................................................................101
         24.5     Time is of the Essence........................................................................101
         24.6     Counterparts..................................................................................101
         24.7     Entire Agreement..............................................................................101
         24.8     WAIVER OF JURY TRIAL..........................................................................102
         24.9     Successors and Assigns........................................................................102
         24.10    No Third Party Beneficiaries..................................................................102
         24.11    Governing Law.................................................................................103
         24.12    General.......................................................................................103
         24.13    Consents......................................................................................104
         24.14    MMI Loan......................................................................................104
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<TABLE>
<S>                        <C>
EXHIBIT A-1                LEGAL DESCRIPTION OF THE LAND
EXHIBIT A-2                DESCRIPTION OF THE CMC LAND
EXHIBIT A-3                DESCRIPTION OF THE SNF/CMC LAND
EXHIBIT B                  PERMITTED ENCUMBRANCES
EXHIBIT C                  RATE LIMITATIONS
EXHIBIT D                  FREE CARE REQUIREMENTS
EXHIBIT E                  CALCULATION OF RENT COVERAGE RATIO
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