LEASE




                               HHC BEACHWOOD, INC.

                                   as LANDLORD



                                       AND




                   HARBORSIDE OF CLEVELAND LIMITED PARTNERSHIP




                                    as TENANT




                                TABLE OF CONTENTS
                                   (continued)



                                      -iv-

                                TABLE OF CONTENTS



                                       -i-

ARTICLE 1.        Definitions...............................................1

         1.1        Definitions.............................................1

ARTICLE 2.        Lease of Premises.........................................6

         2.1        Lease of Premises.......................................6

         2.2        Landlord's Title........................................6

ARTICLE 3.        Conduct of Business by Tenant.............................6

         3.1        Conduct of Business by Tenant...........................6

ARTICLE 4.        Initial  Term and Extension Terms.........................8

         4.1        Initial Term............................................8

         4.2        Extension Terms.........................................8

ARTICLE 5.        Rent......................................................8

         5.1        Annual Base Rent........................................8

         5.2        Payment of Rent.........................................9

         5.3        Net Lease...............................................9

         5.4        Operating Lease........................................10

         5.5        Continuing Obligation of Tenant........................10

         5.6        Initial Replacement Reserve............................10

ARTICLE 6.        Payment of Taxes, Assessments, Etc.......................10

         6.1        Payment of Impositions.................................10

         6.2        Excluded and Substituted Taxes, etc....................11

         6.3        Delivery of Real Estate Tax Bills to
                    Tenant................................................ 11

         6.4        Contest of Impositions.................................11

         6.5        Joinder by Landlord....................................12

         6.6        Appointment of Tenant as Landlord's
                    Attorney-in-Fact.......................................12

         6.7        Funding of Fee Mortgage Reserve
                    Requirements...........................................13

ARTICLE 7.        Additional Covenants of Landlord.........................14

         7.1        Certificate of Need....................................14

         7.2        Fee Mortgage...........................................14

         7.3        Cooperation............................................14

         7.4        Notices................................................14

ARTICLE 8.        Compliance with Laws.....................................14

         8.1        Tenant's Compliance....................................14

         8.2        Right To Contest Applicable Laws.......................15

ARTICLE 9.        Insurance and Indemnification............................15

         9.1        Building Insurance.....................................15

         9.2        Liability Insurance....................................16

         9.3        Professional Liability Insurance.......................16

         9.4        Rental Value Insurance.................................16

         9.5        Coverage Changes; Other Insurance......................16

         9.6        Insurance Criteria.....................................16

         9.7        Evidence of Insurance..................................17

         9.8        Waiver of Subrogation..................................17

         9.9        Indemnification........................................18

ARTICLE 10.       Utilities................................................19

         10.1       Utilities..............................................19

         10.2       Landlord's Services and Repairs........................19

ARTICLE 11.       Control and Repairs......................................19

         11.1       Possession and Control.................................19

         11.2       Tenant's Repair Obligations............................19

         11.3       Applicable Standard for Repairs........................19

         11.4       Equipment, Furniture and Fixtures......................19

ARTICLE 12.       Alterations and Additions................................20

         12.1       Alterations and Additions to the
                    Improvements...........................................20

ARTICLE 13.       Landlord's Right to Perform
                  Tenant's Covenants.......................................22

         13.1       Landlord's Right to Perform............................22

         13.2       Reimbursement By Tenant................................22

ARTICLE 14.       Damage and Destruction of the Premises...................22

         14.1       Cancellation Due To Casualty...........................22

         14.2       Damage.................................................23

         14.3       Insurance Proceeds.....................................23

ARTICLE 15.       Condemnation.............................................24

         15.1       Cancellation Due to Event of a Taking..................24

         15.2       Award..................................................24

         15.3       Restoration............................................24

ARTICLE 16.       Assignment and Subletting................................25

         16.1       Assignments, etc.......................................25

         16.2       Partial Subleases......................................25

         16.3       Assignment to Permitted Assignees......................25

ARTICLE 17.       Fee Mortgages............................................26

         17.1       Fee Mortgages..........................................26

         17.2       Subordination..........................................26

         17.3       Nondisturbance.........................................26

         17.4       Subordination of Fee Mortgagee.........................26

         17.5       Payments By Tenant on Behalf of Landlord...............26

ARTICLE 18.       Default..................................................27

         18.1       Default by Tenant......................................27

         18.2       Cancellation of Lease by FHA Commissioner..............29

         18.3       Tenant Bankruptcy Provisions...........................29

ARTICLE 19.       Quiet Enjoyment..........................................30

         19.1       Quiet Enjoyment........................................30

ARTICLE 20.       Estoppel Certificates....................................30

         20.1       Tenant's Certificate...................................30

         20.2       Landlord's Certificate.................................31

ARTICLE 21.       Surrender; Holding Over..................................31

         21.1       Surrender..............................................31

         21.2       Holding Over...........................................31

ARTICLE 22.       Right of First Offer.....................................31

         22.1       Tenant's Right of First Offer..........................31

ARTICLE 23.       General Provisions.......................................32

         23.1       Severability...........................................32

         23.2       Notices................................................32

         23.3       Waiver of Jury Trial...................................33

         23.4       Consent of Either Party................................33

         23.5       Payments Under Protest.................................34

         23.6       No Oral Modification...................................34

         23.7       Covenants To Bind and Benefit Respective
                    Parties................................................34

         23.8       Captions and Table of Contents.........................34

         23.9       Memorandum of Lease....................................34

         23.10      Waiver.................................................34

         23.11      Governing Law..........................................34
         23.12      Business Days..........................................34

         23.13      Time of the Essence....................................34

         23.14      Delays.................................................35

         23.15      No Broker..............................................35

         23.16      Authority..............................................35

         23.17      Attorneys' Fees and Litigation.........................35

         23.18      Further Assurances.....................................35

         23.19      Counterparts...........................................35

         23.20      Landlord's Exculpation.................................35




                                       -1-





                                      LEASE

  THIS  LEASE  (the  "Lease")  dated this 26th day of  September,  2000,  by and
between HHC ----- BEACHWOOD, INC., a Delaware corporation (the "Landlord"),  and
HARBORSIDE OF CLEVELAND LIMITED PARTNERSHIP, a Massachusetts limited partnership
(the "Tenant").


                             PRELIMINARY STATEMENT:
                              ---------------------

         Capitalized  terms used but not defined in this  Preliminary  Statement
have the meanings set forth in Article 1 hereof or otherwise in this Lease.

         Landlord is the owner of the land located at 3800 Park East, Beachwood,
Ohio and legally described in Exhibit A attached hereto (the "Land").

         The Land is currently  improved  with a 274-bed  nursing home  facility
currently known as Harborside Healthcare - Beachwood (the "Facility").

         Landlord  desires to lease to Tenant,  and Tenant desires to lease from
Landlord, the Premises.

         Concurrent  with the execution of this Lease,  Landlord and Tenant have
entered into an Option to Purchase  Agreement  with regard to the Premises  (the
"Option Agreement").

         NOW, THEREFORE, FOR AND IN CONSIDERATION of the foregoing recitals, the
mutual covenants and agreements  herein contained and of other good and valuable
consideration, Landlord and Tenant hereby agree as follows:


ARTICLE 1.

                                   Definitions

1.1  Definitions. For the purposes of this Lease, the following terms shall have
     the following meanings:

(a)  "Affiliate" means any Person which,  directly or indirectly,  controls,  is
     controlled by, or is under common control with Tenant or Harborside.

(b)  "Annual Base Rent" is defined in Section 5.1 hereof.

(c)  "Applicable Laws" is defined in Section 8.1 hereof.

(d)  "Appurtenant Rights" means the right, title and interest of Landlord in and
     to:

(i)  Any strips and gores of land adjoining the Land on any side thereof;

(ii) Any land lying in the bed of any street or avenue abutting the Land, to the
     center line thereof; and

(iii)Any  easements  or  other  rights  in  property  adjoining  the Land to the
     benefit of Landlord by reason of Landlord's ownership of the Land.

(e)  "Control" (including "controlled by" and "under common control with"), used
     with respect to any Person,  means the possession,  directly or indirectly,
     of the power to direct or cause the direction of the  management and policy
     of a particular Person, whether through the ownership of voting securities,
     by contract, or otherwise.

(f)  "Consumer Price Adjustment  Factor" means:  the difference  between (i) the
     fraction,  the numerator of which is the Consumer  Price Index in effect as
     of the  first  day of a Lease  Year for  which  Annual  Base  Rent is being
     calculated  and the  denominator  of which is the  Consumer  Price Index in
     effect as of the first day of the  immediately  preceding  Lease Year,  and
     (ii) 1.0.

(g)  "Consumer  Price  Index"  means 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 Landlord.

(h)  "Date of Taking" is defined in Section 15.1 hereof.

(i)  "Default" is defined in Section 18.1 hereof.

(j)  "Excess Equipment" is defined in Section 11.4 hereof.

(k)  "Extension Terms" is defined in Section 4.2 hereof.

(l)  "FF&E" means the fixtures, furnishings,  furniture, equipment and machinery
     owned by Landlord and used in or in  connection  with the  operation of the
     Facility as of the Lease Commencement Date,  together will all replacements
     thereof  acquired by Tenant during the Term in accordance with Section 11.4
     hereof.

(m)  "Facility" is defined in the Preliminary Statement.

(n)  "Fee Mortgage" is defined in Section 17.1 hereof.

(o)  "Fee  Mortgage  Debt  Service"  means the monthly  principal  and  interest
     payments then due and owing under any Fee Mortgage.

(p)  "Fee Mortgage  Obligations" means the Fee Mortgage Debt Service and the Fee
     Mortgage Reserve Requirements, if any.

(q)  "Fee  Mortgage  Reserves"  means the reserves or escrows,  if any, for real
     estate taxes, insurance,  property replacement costs and mortgage insurance
     premiums which are from time to time  established and maintained by any Fee
     Mortgagee under any Fee Mortgage.

(r)  "Fee Mortgage  Reserve  Requirements"  means the monthly or other  periodic
     payments required to be made into any Fee Mortgage Reserves.

(s)  "Harborside"   means   Harborside   Healthcare   Corporation,   a  Delaware
     corporation,   and  any   Successor   Company  of   Harborside   Healthcare
     Corporation.

(t)  "Indemnified Party" is defined in Section 9.9 hereof.

(u)  "Indemnifying Party" is defined in Section 9.9 hereof.

(v)  "Initial Fee Mortgage" is defined in Section 17.1 hereof.


(w)  "Initial Fee Mortgagee" means Beacon Hill Mortgage Corp.

(x)  "Impositions" is defined in Section 6.1 hereof.

(y)  "Improvements"  means the  buildings and  improvements  erected on the Land
     (including,  without limitation,  the Facility),  all replacements thereof,
     all new or additional  buildings  erected on the Land, and all alterations,
     additions and  improvements  made to the Land or such buildings  during the
     Term title to which vests in the Landlord.

(z)  "Initial Term" is defined in Section 4.1 hereof.

(aa) "Land" is defined in the Preliminary Statement.`

(bb) "Landlord" is defined in the Preamble of the Lease.

(cc) Intentionally Deleted

(dd) "Landlord's Transfer Terms" is defined in Section 22.1 hereof.

(ee) "Lease" is defined in the Preamble of this Lease.

(ff) "Lease Commencement Date" means September 26, 2000.

(gg) "Lease Year" means each  consecutive  twelve  month period  during the Term
     beginning on the Lease Commencement Date.

(hh) "Net Award" is defined in Section 15.2 hereof.

(ii) "Net Insurance Proceeds" is defined in Section 14.3 hereof.

(jj) "Option Agreement" is defined in the Preliminary Statement.

(kk) "Optionee"  means Tenant or its permitted  assignee,  as optionee under the
     Option Agreement.

(ll) "Optionor"  means the Landlord or its  successor  in interest,  as optionor
     under the Option Agreement.

(mm) "Other  Leases" means (i) that certain Lease of even date herewith  between
     HHC Westbay,  Inc. and Tenant with respect to the premises  currently known
     as  Harborside  Healthcare  -  Westlake  I and  Westlake  II, and (ii) that
     certain Lease of even date herewith between HHC Broadview,  Inc. and Tenant
     with respect to the premises  currently  known as  Harborside  Healthcare -
     Broadview  Heights,   each  as  the  same  may  be  amended,   modified  or
     supplemented from time to time.

(nn) "Permitted Assignee" means any Affiliate, Subsidiary, Successor Company, or
     Qualified Assignee.

(oo) "Permitted Encumbrances" means the encumbrances,  mortgages, liens, charges
     and security interests set forth in Exhibit B attached hereto.

(pp)     "Permitted Use" is defined in Section 3.1 hereof.

(qq) "Person" means any individual, partnership,  corporation, limited liability
     company or partnership,  association,  trust, joint venture, unincorporated
     organization, or entity, and any department, agency or subdivision thereof.

(rr) "Premises" means the Land, Improvements, Appurtenant Rights and FF&E.

(ss) "Purchase  Option"  means the option to purchase  the  Premises  granted by
     Optionor to Optionee pursuant to the Option Agreement.

(tt) "Qualified  Assignee"  means any Person  with the  financial  capacity  and
     operating  experience  necessary to operate the  Facility as a  first-class
     nursing  home (other than  Harborside,  an  Affiliate,  a  Subsidiary  or a
     Successor Company)  designated by Tenant, with the prior written consent of
     Landlord, not to be unreasonably withheld or delayed.

(uu) "Qualifying Non-Disturbance Agreement" is defined in Section 17.3 hereof.

(vv) "Reference Rate" means twelve percent (12%) per annum.

(ww) ""Rental Adjustment" is defined in Section 5.1 hereof.

(xx) "Revised Expiration Date" is defined in Section 14.1 hereof.

(yy) "State" means the State of Ohio.

(zz) "Subsidiary"  means any Person (i) controlled by Tenant or Harborside,  and
     (ii) not less than fifty  percent  (50%) of whose  outstanding  vote stock,
     partnership  interests or other beneficial ownership interests shall at the
     time be owned, directly or indirectly by Tenant or Harborside.

(aaa)"Successor  Company"  means any  Person  with the  financial  capacity  and
     operating  experience  necessary to operate the  Facility as a  first-class
     nursing home (i) resulting  from the merger or  consolidation  with or into
     Harborside,  and (ii) that acquires all or substantially  all of the assets
     or capital stock of Harborside.

(bbb) "Tenant" is defined in the Preamble of this Lease.

(ccc) "Tenant's Transfer Terms" is defined in Section 22.1 hereof.


(ddd) "Term" is defined in Section 4.2 hereof.


(eee) "Termination Date" means the conclusion of the last day of the Term.

(fff)"Threshold  Amount" means  $250,000.00,  which amount shall be increased on
     each anniversary of the Lease Commencement Date by the increase, if any, in
     the  Consumer  Price  Index using the first Lease Year as the base year for
     comparison purposes.

(ggg)"Transfer"   means  the  sale,   lease,   conveyance,   transfer  or  other
     disposition of all of the Premises or any part of the Premises  required by
     Tenant  for the  lawful  operation  of the  Facility  (other  than upon the
     foreclosure of any Fee Mortgage) or the transfer of a controlling  interest
     in the  Landlord,  whether  by stock  transfer,  merger,  consolidation  or
     otherwise.

(hhh) "Transfer Notice" is defined in Section 22.1 hereof.


(iii) "Trustee" is defined in Section 14.3 hereof.


ARTICLE 2.

                                Lease of Premises

2.1 Lease of Premises.  Landlord  hereby leases and demises to Tenant and Tenant
hereby leases and takes from Landlord,  for the Term, at the rental and upon the
covenants and conditions hereinafter set forth, the Premises.

2.2  Landlord's   Title  .  Landlord   represents   and  warrants,   upon  which
representations and warranties Tenant has relied in the execution of this Lease,
that (i) Landlord is the owner of the Premises in fee simple absolute,  free and
clear of all liens and  encumbrances  except the  Permitted  Encumbrances;  (ii)
Landlord has full right and power to execute and perform this Lease and to grant
the estate demised herein; and (iii) the Premises include all of the real estate
which is owned by Landlord in or around the Facility or contiguous thereto.  The
Premises  are leased in "AS IS,"  "WHERE IS"  condition  as of the date  hereof,
subject to all defects, structural or non-structural,  latent or patent, know or
unknown,  including (i) the presence of materials and/or  substances which do or
may  violate  any  future  building  codes,  (ii)  the  existing  state of title
including  all  covenants,  conditions,  and all  matters of record  (including,
without  limitation,  the matters set forth on Exhibit B hereto),  and (iii) all
Applicable  Laws,  and all matters,  whether or not of a similar  nature,  which
would be disclosed  by an  inspection  of the Premises or by an accurate  survey
thereof.  Without limiting the foregoing,  Tenant agrees that, regardless of the
physical or environmental condition of the Premises, Tenant shall have no claim,
or right of action,  against Landlord under this Lease or otherwise at law or in
equity  pertaining to, or arising from, the nature or condition of the Premises,
except as expressly provided in this Lease.

ARTICLE 3.

                          Conduct of Business by Tenant

3.1  Conduct of Business by Tenant.  Tenant covenants and agrees during the Term
     that:

(a)  Tenant shall continuously use the Premises as a nursing home with 274 beds,
     or such other number of beds as Tenant may determine  appropriate,  subject
     to the prior written consent of Landlord,  not to be unreasonably  withheld
     or delayed,  and, at Tenant's  election,  for the  provision  of such other
     health care  services as may be permitted  under  Applicable  Law which are
     ancillary  to  Tenant's  operation  of  the  Premises  as a  nursing  home,
     including,  without  limitation,  the provision of subacute care  services,
     home health care services,  and outpatient therapy services, and Tenant may
     locate on the Premises such  physician  and other health care  professional
     and administrative offices as may be ancillary to Tenant's operation of the
     Premises as a nursing home (collectively,  the "Permitted Use"); and Tenant
     shall not use the Premises for any other purposes without the prior written
     consent of Landlord, which consent may be withheld at the sole and absolute
     discretion of Landlord.  Notwithstanding the foregoing,  any portion of the
     Premises not used by Tenant as of the Lease Commencement Date in connection
     with  the  operation  of the  Facility  may be  used  for any  purpose  not
     inconsistent with Tenant's use of the Premises to operate the Facility as a
     nursing home, subject to Applicable Law.

(b)  Tenant  shall   maintain   good   standing   and  all  material   licenses,
     certifications and approvals from federal, state and local governmental and
     administrative  agencies having  jurisdiction and authority over Tenant and
     the  operation  of  the  Facility  as a  nursing  home,  including  without
     limitation,  all  nursing  home  licenses  required  from the State and all
     licenses  required for any material  ancillary  uses for which the Premises
     are used.  Upon request,  Tenant shall provide  Landlord with copies of the
     aforesaid  licenses,   certifications  and  approvals.  Tenant  also  shall
     promptly provide Landlord with notice of any delicensure or decertification
     proceedings affecting Tenant's operation of the Facility.

(c)  To the extent the Premises are subject to a Fee Mortgage that is insured or
     otherwise supported by an agency of the Federal, state or local government,
     such as HUD or FHA, Tenant will comply with all  requirements  imposed with
     respect  to the  use,  occupancy  and  operation  of the  Premises  by such
     governmental  agencies,  including but not limited to submitting  certified
     financial statements and reports,  maintaining reserves and escrow accounts
     required of Tenant under  Tenant's  regulatory  agreement with HUD, if any,
     and Tenant shall enter into such regulatory agreements,  covenants and like
     contracts  applicable  to Tenant as  lessee of the  Premises  if and to the
     extent prescribed by such governmental agencies.

(d)  Tenant shall not use, occupy or permit the Premises to be used or occupied,
     nor do or  permit  anything  to be done in or on any of the  Premises  in a
     manner  which would (i) violate  any  present  (or,  after a change of use,
     future) certificate of occupancy or equivalent certificate affecting any of
     the Premises,  (ii) make void or voidable any insurance then in effect with
     respect to any of the Premises,  (iii)  materially and adversely  affect in
     any manner the ability of Tenant to obtain fire and other  insurance  which
     Tenant is required to furnish hereunder, (iv) cause any injury or damage to
     the Improvements (excluding reasonable wear and tear resulting from nursing
     home operations),  or (v) constitute a public or private nuisance or waste;
     provided  that  all of the  foregoing  shall  be  qualified  to the  extent
     otherwise provided elsewhere in this Lease.

ARTICLE 4.

                        Initial Term and Extension Terms

4.1 Initial Term. Tenant shall have and hold the Premises, subject to the terms,
covenants, agreements, provisions, conditions and limitations hereof, for a term
of fifteen (15) years (the "Initial Term") commencing on the Lease  Commencement
Date and  ending  on the last day of the  month in which  the  fifteenth  (15th)
anniversary of the Lease  Commencement Date falls,  unless such term is extended
pursuant  to Section  4.2  hereof or unless  such term is sooner  terminated  as
provided for herein.

4.2 Extension Terms. Upon the expiration of the Initial Term and provided Tenant
is not in default  hereunder at the  expiration  of the Initial Term or the then
existing  Extension Term (as defined herein),  this Lease may be extended at the
sole  option of Tenant  for two (2)  additional  five (5) year terms  (each,  an
"Extension  Term", and  collectively  the "Extension  Terms") upon Tenant giving
written  notice to Landlord at least two hundred  seventy  (270) days before the
expiration of the Initial Term or the then existing Extension Term (but not more
than three hundred  sixty-five  (365) days before the  expiration of the Initial
Term or the then existing  Extension  Term) of Tenant's  intention to extend the
Lease at the end of the Initial Term or the then  existing  Extension  Term,  in
which event the Lease shall be extended  for the  applicable  Extension  Term in
accordance  with the terms and conditions  set forth in this Lease.  The Initial
Term and the Extension  Terms,  if any, are hereinafter  sometimes  collectively
referred  to herein as the  "Term".  Notwithstanding  anything  to the  contrary
herein,  in the event the Tenant  exercises the Purchase Option under the Option
Agreement,  the Term shall  automatically  be extended  through the Closing Date
under the Option  Agreement in accordance with the same terms and conditions set
forth in this Lease.

ARTICLE 5.

                                      Rent

5.1 Annual Base Rent . Tenant  shall pay to  Landlord,  in such  currency of the
United  States of America,  as at the time of payment  shall be legal tender for
payment of private and public debts,  annual base rent (the "Annual Base Rent").
The  Annual  Base Rent  shall be in the  amount  of Two  Million  Seven  Hundred
Thousand Seven Hundred Eighty-Seven Dollars ($2,700,787) per annum for the first
(1st) Lease Year;  and  commencing in the second (2nd) Lease Year and continuing
through  the  remainder  of the  Initial  Term,  the  Annual  Base Rent for each
applicable  Lease Year shall be an amount  equal to the lesser of (i) the Annual
Base Rent for the immediately  preceding Lease Year increased by an amount equal
the Rental Adjustment applicable to such Lease Year as set forth below, and (ii)
the product  obtained by  multiplying  the Annual Base Rent for the  immediately
preceding  Lease Year by the product of five (5)  multiplied  by the  applicable
Consumer  Price  Adjustment  Factor.  The Annual Base Rent payable in each Lease
Year of the first  Extension  Term shall be an amount  equal to the fair  market
value thereof as determined jointly by Landlord and Tenant;  provided,  however,
that such Annual  Base Rent shall be not less than the Annual Base Rent  payable
for the last Lease Year of the Initial  Term.  The Annual  Base Rent  payable in
each  Lease Year of the second  Extension  Term shall be an amount  equal to the
fair  market  value  thereof as  determined  jointly  by  Landlord  and  Tenant;
provided,  however, that such Annual Base Rent shall be not less than the Annual
Base Rent payable for last Lease Year of the first  Extension  Term.  The Rental
Adjustment  for each Lease Year  commencing in the second Lease Year through the
remainder of the Initial Term shall be as follows:

                     Lease Year                    Rental Adjustment

                          2                            $48,614
                          3                            $46,740
                          4                            $44,738
                          5                            $42,613
                          6                            $40,369
                          7                            $38,010
                          8                            $35,542
                          9                            $32,972
                          10                           $30,304
                          11                           $30,607
                          12                           $30,913
                          13                           $31,222
                          14                           $31,534
                          15                           $31,850

5.2      Payment of Rent.  Annual Base Rent shall be paid:
         ---------------

(a)  in equal monthly  installments,  in advance, on the first day of each month
     of the  Term;  provided  that if the Term does not begin or end on the last
     day of a month,  the  Annual  Base  Rent for that  partial  month  shall be
     prorated by  multiplying  the monthly rent by a fraction,  the numerator of
     which is the number of days of the partial  month  included in the Term and
     the  denominator  of which is the total number of days in the full calendar
     month; and,

(b)  to  Landlord,  at the  address  set forth in  Section  23.2  hereof,  or as
     Landlord  otherwise  may specify in writing to Tenant;  provided,  however,
     that Landlord shall have the right,  by written  instruction to Tenant,  to
     require Tenant to pay any Fee Mortgage Obligations then due and payable (up
     to the amount of the Annual Base Rent then due and payable) directly to the
     Fee Mortgagee,  and if Landlord exercises such right, the amount of the Fee
     Mortgage Debt Service (but not the Fee Mortgage Reserve  Requirements) paid
     by Tenant  directly  to the Fee  Mortgagee  shall be  credited  against and
     applied toward  Tenant's  Annual Base Rent  obligations  hereunder.  Tenant
     shall  provide  Landlord  with a copy of each  payment of any Fee  Mortgage
     Obligation  made by Tenant  directly to the Fee Mortgagee  concurrent  with
     Tenant's making of such payment to the Fee Mortgagee.  Landlord may rescind
     the rights  granted Tenant under this Section 5.2(b) at any time on 30 days
     written notice.

5.3 Net Lease.  It is the intent of the  parties  that this is an  absolute  net
lease and that the Annual  Base Rent  shall,  except as  otherwise  specifically
provided herein, be absolutely net to Landlord,  so that this Lease shall yield,
net to Landlord,  the Annual Base Rent specified  herein during the Term free of
any  charges,  assessments,  impositions,  taxes or  deductions  of any kind and
without abatement,  deduction,  or set-off whatsoever and under no circumstances
or conditions,  whether now existing or hereafter arising, or whether beyond the
present contemplation of the parties,  shall Landlord be expected or required to
make any payment of any kind whatsoever,  and all costs,  capital  improvements,
reserves,  escrows,  impositions,  taxes, expenses and obligations of every kind
whatsoever  relating to the  Premises,  which may arise or become due during the
Term of this  Lease  (excluding  any Fee  Mortgage  Debt  Service  and any other
amounts  payable by  Landlord  under any Fee  Mortgage  other than Fee  Mortgage
Reserve  Requirements)  shall be paid by Tenant and deemed to be additional rent
due hereunder; it being understood that nothing herein shall be in derogation of
Landlord's rights or Tenant's obligations under Section 5.2 (b) hereof.

5.4  Operating  Lease.  Landlord  and  Tenant  agree to treat  this  Lease as an
operating lease for tax and all other reporting purposes.

5.5 Continuing  Obligation of Tenant.  Tenant shall remain  obligated under this
Lease in  accordance  with its terms and shall not take any action to terminate,
rescind,  avoid  or  surrender  this  Lease,   notwithstanding  any  action  for
bankruptcy,  insolvency,  reorganization,   liquidation,  dissolution  or  other
proceeding  affecting  Landlord  or any  assignee of Landlord or any action with
respect to this Lease which may be taken by any trustee,  receiver or liquidator
or by any court.  Except as  expressly  provided  in this Lease,  Tenant  hereby
waives all right to any abatement,  deferment,  reduction, set-off, counterclaim
or defense with respect to any Annual Base Rent or other rent payable hereunder.
Tenant shall remain  obligated under this Lease in accordance with its terms and
Tenant hereby waives any and all rights now or hereafter conferred by statute or
otherwise to modify or to avoid strict  compliance  with its  obligations  under
this Lease. Notwithstanding any such statute or otherwise, Tenant shall be bound
by all the terms and provisions contained in this Lease.

5.6 Initial Replacement Reserve. Tenant shall deposit with Landlord on the Lease
Commencement Date an amount equal to the initial replacement reserve requirement
set  forth in that  certain  HUD firm  commitment  letter  dated  June 29,  2000
relating to FHA Project # 042-22023 (Beachwood), as the same may be from time to
time amended by HUD (the "Initial Replacement Reserve"). Landlord shall have the
right to use the Initial  Replacement  Reserve solely for the purpose of funding
Landlord's initial replacement reserve requirement under the HUD firm commitment
letter  for FHA  Project #  042-22023,  and such funds  shall be used  solely in
accordance with the replacement  reserve provisions set forth in the Initial Fee
Mortgage and other  agreements among Landlord,  HUD and the Fee Mortgagee.  Upon
the  earlier to occur of the (i)  release by the Fee  Mortgagee  of the  Initial
Replacement  Reserve,  (ii)  discharge  of the  Initial Fee  Mortgage,  or (iii)
termination of this Lease,  the outstanding  balance of the Initial  Replacement
Reserve, if any, shall be paid over to Tenant, provided no Default by the Tenant
has occurred and is then continuing.

ARTICLE 6.

                       Payment of Taxes, Assessments, Etc.

6.1 Payment of  Impositions.  Tenant shall provide proof to Landlord that it has
paid or cause to be paid and discharged directly to the appropriate governmental
authorities  (subject to any Fee Mortgage  reserve or escrow  requirements),  as
additional rent  hereunder,  before any fine,  penalty,  interest or cost may be
added  thereto (or, if the bills  therefor are directed to Landlord and Landlord
fails to submit same to Tenant in a timely manner sufficient to permit Tenant to
comply with the foregoing,  then within ten (10) business days after  Landlord's
submission of such bills to Tenant),  all real estate taxes,  personal  property
taxes,  any other taxes,  sewer rents,  water meter and water charges,  excises,
levies,  license and permit fees,  occupancy and rent taxes,  charges for public
utilities,  special charges, including one-time or special assessments,  and all
other charges or burdens of whatsoever  kind and nature,  and whether general or
special,  ordinary or extraordinary,  foreseen or unforeseen,  which at any time
during the Term may be assessed, levied, confirmed,  imposed upon, or become due
and  payable out of, or in regard of, or become a lien on the  Premises,  or any
part thereof or any  appurtenance  thereto,  excluding  any tax,  assessment  or
charge   described   in  Section   6.2  hereof   (hereinafter   referred  to  as
"Impositions",  and any one of the  same  being  hereinafter  referred  to as an
"Imposition"); provided, however, that:

(a)  if, by law,  any  Imposition  may at the option of the  taxpayer be paid in
     installments (whether or not interest shall accrue on the unpaid balance of
     such Imposition), Tenant may exercise the option to pay the same, including
     any  accrued  interest  on  the  unpaid  balance  of  such  Imposition,  in
     installments and, in such event,  shall pay such installments as may become
     due during the Term; and

(b)  all  Impositions  for the fiscal or tax years in which the Term  begins and
     ends shall be  apportioned  so that  Tenant  shall pay only those  portions
     thereof which  correspond  with the portion of said years as are within the
     Term.

6.2 Excluded and Substituted  Taxes,  etc. Nothing in this Lease contained shall
require Tenant to pay municipal,  county, state or federal income taxes assessed
against Landlord, or municipal,  state or federal capital levy, gift, franchise,
estate,  succession,  inheritance or transfer  taxes of Landlord,  or any income
excess  profits  imposed upon Landlord or any income,  profits,  or revenue tax,
assessment  or charge  imposed upon the Annual Base Rent payable by Tenant under
this Lease; provided, however, that, if at any time during the Term, the methods
of taxation prevailing on the Commencement Date shall be altered so that in lieu
of,  as a  substitute  for the  whole  or any  part of,  or an  addition  to any
Imposition now levied,  assessed or imposed on real estate and the  improvements
thereon,  there shall be levied,  assessed and imposed a tax, assessment,  levy,
imposition or charge,  wholly or partially as a capital  levy, or otherwise,  on
the rents  received  therefrom,  or,  by or based in whole or in part,  upon the
Premises, and imposed upon Landlord, then all such taxes or assessments,  or the
part  thereof so  measured or based,  shall be deemed to be included  within the
term  "Impositions" for the purposes hereof to the extent that the same would be
payable if the  Premises  were the only  property  of  Landlord  subject to such
Impositions,  and Tenant shall pay and discharge the same as herein  provided in
respect of the payment of other "Impositions".

6.3  Delivery of Real Estate Tax Bills to Tenant .  Landlord  shall  request the
appropriate  taxing authority to mail any and all real estate tax bills covering
the  Premises  to Tenant  with  copies to  Landlord.  Tenant  shall pay the same
directly to said taxing  authorities as  hereinabove  provided and shall furnish
Landlord with proof of payment when the same is paid; or if such real estate tax
bill is to be paid by the Fee  Mortgagee,  Landlord  shall mail such bill to the
Fee  Mortgagee,  with a copy to  Tenant.  Within  ten (10)  days of  receipt  by
Landlord  of any  notice  relating  to the  assessment  or  reassessment  of any
Imposition  relating to the  Premises,  Landlord  shall  deliver  such notice to
Tenant.

6.4 Contest of  Impositions.  Upon giving prior  written  notice to Landlord and
subject to the  provisions of any Fee  Mortgage,  Tenant shall have the right to
seek a reduction  in the  valuation  or an  exemption  of the  Premises  for tax
purposes and to contest or review the amount or  validity,  in whole or in part,
of any Imposition by appropriate  proceedings or such other manner as Tenant may
deem suitable and is permitted under applicable laws.  Tenant shall conduct such
contest or review at Tenant's  own cost and  expense and in a diligent  and good
faith manner. Any settlement reached by Tenant under this Section 6.4 is subject
to Landlord's  reasonable  written approval.  Tenant's rights under this Section
6.4 shall be subject to the following:

(a)  If by the  terms of any  such  Imposition,  payment  thereof,  pending  the
     contest or review thereof, may legally be delayed without the incurrence of
     any lien,  charge or liability of any kind against the Premises or any part
     thereof,  or any  diminution  in the  value of the  Premises,  and  without
     subjecting Tenant or Landlord or any Fee Mortgagee to any liability,  civil
     or criminal,  for failure to pay such Imposition,  and without constituting
     or resulting in any  violation of any Fee Mortgage  affecting the Premises,
     Tenant may delay payment  thereof until the final  determination  resulting
     from such  contest or review of the amount or validity of such  Imposition;
     or
(b)  If any charge or civil  liability  would be  incurred by reason of any such
     delay, Tenant nevertheless may contest as aforesaid and delay as aforesaid,
     provided that such delay would not subject Landlord or any Fee Mortgagee to
     criminal liability or fine, or any diminution in the value of the Premises,
     Tenant prosecutes the contest with due diligence, and, if and to the extent
     required by Landlord or any Fee  Mortgagee,  Tenant  delivers to Landlord a
     bond or  other  security  in form and  amount  reasonably  satisfactory  to
     Landlord to secure  payment of such  contested  amount and any  interest or
     penalties thereon.

6.5 Joinder by Landlord.  Landlord shall join in any proceedings  referred to in
Section 6.4 (or permit the same to be brought in its name) if the  provisions of
any applicable  law, rule or regulation at the time in effect shall require that
such  proceedings  be brought by or in the name of  Landlord or any owner of the
Premises,  in which event Tenant shall  reimburse  Landlord  upon demand for all
costs  of  Landlord  incurred  in  connection  therewith,   including,   without
limitation,  attorneys fees.  Provided that Landlord has approved the settlement
in question, and no Default has occurred and is then continuing, Tenant shall be
entitled to any refund of any  Imposition  and  penalties  or  interest  thereon
received by Landlord which have been paid by Tenant,  or which have been paid by
Landlord but previously reimbursed in full by Tenant; provided that if a Default
has occurred and is then  continuing,  such refund shall be retained by Landlord
until and if Tenant cures said Default.

6.6  Appointment  of  Tenant as  Landlord's  Attorney-in-Fact.  Landlord  hereby
appoints Tenant the attorney-in-fact of Landlord,  coupled with an interest, for
the purpose of making all  payments to be made by Tenant  pursuant to any of the
provisions  of this Lease to persons or  entities  other than  Landlord.  In the
event any person or entity to whom any sum is directly  payable by Tenant  under
any of the  provisions of this Lease shall refuse to accept  payment of such sum
from Tenant,  Tenant shall give written  notice of such fact to Landlord and pay
such sum  directly to Landlord at the address  specified in Section 23.2 hereof,
whereupon Landlord shall promptly pay such sum in the same manner as provided in
Section 6.1 for proof by Tenant of payment of  Impositions.  Landlord may revoke
the rights  granted to Tenant under this Section 6.6 at any time during the Term
upon thirty (30) days written notice to Tenant.

6.7 Funding of Fee Mortgage Reserve  Requirements.  Tenant shall pay or cause to
be paid all Fee Mortgage Reserve Requirements of Landlord that accrue during the
Term under any Fee Mortgage, as additional rent hereunder. Tenant shall pay such
Fee Mortgage  Reserve  Requirements  to Landlord or, if Landlord so elects under
Section 5.2(b), to the Fee Mortgagee. Subject to the terms and conditions of the
Fee  Mortgage,  all Fee Mortgage  Reserves  shall be used by Landlord and Tenant
exclusively  to pay (i) real  estate  tax  bills  covering  the  Premises,  (ii)
property insurance  premiums for insurance on the Premises  maintained by Tenant
under Section 9.1 hereof,  (iii) costs of repair and maintenance of the Premises
and  improvements  to the  Premises  by Tenant  under  Article  11 or Article 12
hereof,  and (iv) mortgage insurance premium reserves required under the Initial
Fee  Mortgage.  Tenant has  reviewed  and  accepts  the terms of the Initial Fee
Mortgage related to reserves.

                  Upon  the  discharge  of any  Fee  Mortgage,  the  outstanding
balance of any Fee  Mortgage  Reserves  shall be  applied  first to fund any Fee
Mortgage Reserve Requirements under any successor Fee Mortgage,  and provided no
Default by Tenant has  occurred  and is then  continuing,  the  balance,  to the
extent the same were actually paid by Tenant,  and  interest,  if any,  shall be
paid over to Tenant.  Upon the Termination Date, Landlord shall pay to Tenant an
amount equal to the then outstanding balance of the Fee Mortgage Reserves,  less
(i) the  amount of any unpaid  real  estate  taxes for any  period  prior to the
Termination Date (i.e., pro-rated through the Termination Date), (ii) the amount
of any unpaid  property  insurance  premiums to maintain the property  insurance
coverage  required  hereunder  through the Termination Date, (iii) the amount of
any deferred  maintenance  and repair  costs  related to the Premises to satisfy
Tenant's  repair  obligations  hereunder,  (iv) any  unpaid  mortgage  insurance
premium for any period  through the  Termination  Date,  (v) any unpaid  reserve
amounts applicable during the period of Tenant's occupancy of the Premises,  and
(vi) any  outstanding  obligations  hereunder,  plus (i) the  amount  of any Fee
Mortgage Reserves previously applied to the payment of real estate taxes for any
period after the Termination  Date, (ii) the amount of any Fee Mortgage Reserves
previously  applied to the payment of property  insurance  premiums for property
insurance  coverage  during any period  after the  Termination  Date,  and (iii)
overpayment of any mortgage  insurance  premium,  and (iv) the amount remaining,
plus applicable interest, of the Initial Replacement Reserve.

ARTICLE 7.

                        Additional Covenants of Landlord

7.1 Certificate of Need.  Landlord shall not independently  transfer,  convey or
encumber the certificate of need for the Facility  ("CON") or any rights therein
or thereunder to any Person other than a Fee Mortgagee or a transferee of all or
substantially  all  of  the  Premises,  and  Landlord  shall  take  all  actions
reasonably  necessary and appropriate to maintain the validity of the CON during
the Term.  Each party shall  provide the other with copies of all notices  from,
and correspondence with, any State authorities regarding the CON, promptly after
receipt thereof.

7.2  Fee Mortgage.  Landlord  shall comply with the terms and provisions of each
     Fee Mortgage and any Regulatory  Agreement for Multifamily Housing Projects
     with HUD to which Landlord is a party.

7.3 Cooperation.  Landlord shall at all times  cooperate,  at Tenant's sole cost
and  expense,  in all  reasonable  respects  and  take  all  reasonable  actions
necessary  on its part to obtain  and  maintain  in full  force and  effect  all
waivers,  licenses, permits and governmental approvals which may be necessary to
permit  Tenant to lease the Premises and operate the Facility for the  Permitted
Use;  provided  nothing  herein shall  require  Landlord to take any action that
would  materially  increase  Landlord's  obligations or  liabilities  hereunder,
unless the same are fully assumed and paid by Tenant,  or that would  materially
decrease  Landlord's rights hereunder,  unless the same are fully compensated by
Tenant.

7.4 Notices.  Landlord and Tenant shall promptly notify each other in writing of
any notice received by the other (oral or written) during the Term to the effect
that (i) all or any part of the Premises is in violation of any  Applicable  Law
or in violation of any covenant of any Permitted Encumbrance,  (ii) there exists
any condition or event  pertaining to the Premises,  which after notice or lapse
of  time,  or  both,  would  be held to so  violate  or  give  rise to any  such
violation,  (iii) there is any  violation  or alleged  violation of any federal,
state, or local environmental laws, rules, standards or regulations,  including,
with  limitation,  those related to  waste-management,  air  pollution  control,
waste-water  treatment or noise  abatement,  or (iv) there are any substances or
conditions in or on the Premises  which would support a claim or cause of action
under such environmental laws, rules, standards or regulations.

ARTICLE 8.

                              Compliance with Laws

8.1 Tenant's Compliance.  During the Term, Tenant, at its sole cost and expense,
shall  comply with all the laws,  ordinances,  orders,  rules,  regulations  and
requirements  of  all  federal,   state  and  municipal  governments  which  are
applicable  to the Premises or to Tenant's  Permitted  Use of the Premises  (the
"Applicable  Laws"),  and Tenant shall, at its sole cost and expense,  make such
improvements or alterations to the Premises as may from time to time be required
during the Term by any  Applicable  Law.  This  undertaking  shall not be deemed
breached by the existence of correctable  violations disclosed upon licensure or
certification  surveys by any  federal,  state or local  governmental  authority
provided that Tenant proceeds promptly to correct same upon notice or demand and
completion  of such  corrections  occurs  within  a  reasonable  period  of time
thereafter, but in no event later than six (6) months after such notice.

8.2 Right To Contest  Applicable  Laws. So long as no Default has occurred or is
continuing beyond any applicable cure period,  Tenant shall have the right, upon
written  notice  to  Landlord,  to  contest  by  appropriate  legal  proceedings
diligently  conducted in good faith,  in the name of Tenant or Landlord or both,
without  cost or  expense  to  Landlord,  the  validity  or  application  of any
Applicable Laws, subject to the following:

(a)  If by the terms of any such Applicable Laws,  compliance  therewith pending
     the  prosecution of any such  proceeding may legally be delayed without the
     incurrence  of any  lien,  charge  or  liability  of any kind  against  the
     Premises or any part thereof or any material diminution in the value of the
     Premises and without  subjecting Tenant or Landlord or any Fee Mortgagee to
     any liability,  civil or criminal,  for failure so to comply  therewith and
     without  constituting  or  resulting  in any  violation of any Fee Mortgage
     affecting the Premises,  Tenant may delay  compliance  therewith  until the
     final determination of such proceeding; or

(b)  If any charge or civil  liability  would be  incurred by reason of any such
     delay, Tenant nevertheless may contest as aforesaid and delay as aforesaid,
     provided that such delay would not subject Landlord or any Fee Mortgagee to
     criminal liability or fine, or any material  diminution in the value of the
     Premises,  Tenant prosecutes the contest with due diligence, and, if and to
     the extent  required by Landlord or any Fee Mortgagee,  Tenant  delivers to
     Landlord  a  bond  or  other   security  in  form  and  amount   reasonably
     satisfactory  to Landlord  or any Fee  Mortgagee  to secure  payment of any
     contested amount and any interest or penalties thereon.

Landlord,  without  cost,  expense or  liability  to it,  shall,  subject to the
foregoing, execute and deliver, in a timely manner, any appropriate papers which
may be  necessary  or  proper  to  permit  Tenant to  contest  the  validity  or
application of any such Applicable Laws.

ARTICLE 9.

                          Insurance and Indemnification

9.1 Building  Insurance.  Tenant shall obtain and maintain in force at all times
during the Term hereof,  at its own cost and expense,  a policy of standard form
fire  insurance,   together  with  an  "all  risk"  endorsement  and  any  other
endorsements which may be a condition of an all-risk  endorsement,  covering the
buildings and  improvements  on the Premises and all  equipment and  furnishings
included therein to the extent of the full  replacement  value thereof in amount
sufficient to prevent the Landlord or Tenant from being or becoming a co-insurer
within  the  terms of the  policy  in  question,  but in no event  less than the
coverage  requirements  under  any  Fee  Mortgage.   Landlord  shall  reasonably
determine the amount of coverage required under this Section 9.1

9.2 Liability Insurance.  Tenant shall obtain and maintain in force at all times
during the Term  hereof,  at its own cost and  expense,  a policy of  commercial
general liability,  including public liability and property damage, in an amount
of at least One  Million  Dollars  ($1,000,000)  for each  person,  Two  Million
Dollars  ($2,000,000)  for  each  accident,  and One  Hundred  Thousand  Dollars
($100,000)  for  property  damage,  but in no event  less  than  the  reasonable
coverage requirements under any Fee Mortgage.

9.3 Professional Liability Insurance.  Tenant shall obtain and maintain in force
at all times  during the Term hereof,  at its own cost and expense,  a policy of
professional   liability  or  "malpractice"   insurance  customarily  issued  in
connection  with nursing home  operations in an amount not less than One Million
Dollars ($1,000,000) per occurrence with excess coverage or "umbrella" insurance
of not less than Ten Million  Dollars  ($10,000,000),  but in no event less than
the reasonable coverage requirements under any Fee Mortgage.

9.4 Rental  Value  Insurance.  Tenant  shall obtain and maintain in force at all
times  during the Term hereof,  at its own cost and expense,  a policy of rental
value  insurance  against  loss of  income  derived  from the  operation  of the
Premises due to the risks  referred to in Section 9.1 in an amount not less than
the  Annual  Base Rent for one Lease  Year due  hereunder.  Tenant  may,  at its
election,   carry  such  insurance  as  a  coverage   contained  in  a  business
interruption insurance policy.

9.5 Coverage  Changes;  Other  Insurance.  Landlord  shall have the right,  upon
thirty (30) days prior written  notice to Tenant,  to require Tenant to increase
the amount(s) of any insurance  coverage required under Article 9 hereof, and to
change the deductibles  applicable  thereto,  such that the coverage amounts and
deductibles maintained by Tenant hereunder shall be substantially  comparable to
the coverage amounts and deductibles  usually maintained by companies engaged in
the same or a similar  business in Ohio.  Tenant  shall  obtain and  maintain in
force at all times  during the Term hereof,  at its own cost and  expense,  such
other policies of insurance (and in such amounts) as may be reasonably  required
by Landlord or under any Fee Mortgage, including, without limitation,  workmen's
compensation  insurance,   automobile  insurance,  boiler  insurance  and  flood
insurance,  but in no event shall any policy be maintained in amounts lower than
required by the Fee Mortgagee.

9.6  Insurance  Criteria.  Insurance  policies  required  by this Lease shall be
     subject to the  applicable  terms and conditions of the Fee Mortgage and to
     the extent not prohibited by the Fee Mortgage shall:

(a)  be issued by insurance companies of recognized  responsibility (except that
     Tenant shall have the right to self insure or maintain  coverage  through a
     captive insurer in accordance with Section 9.6(e) below);

(b)  name the  Landlord,  the Fee  Mortgagee,  and  other  persons  or  entities
     reasonably  designated  by  Landlord  or  Tenant,  as the case  may be,  as
     additional  insureds as their  interests  may appear;  other  landlords  or
     tenants may also be added as additional insureds in a blanket policy;

(c)  provide that the  insurance  not be canceled or  materially  reduced in the
     scope or amount of coverage  unless thirty (30) days or more advance notice
     is  given  to  the   Landlord   and  Fee   Mortgagee,   provided   that  if
     notwithstanding  Tenant's  best  efforts,  Tenant is unable to obtain  such
     commitment  from the insurer,  then Tenant shall assume the  obligation  to
     notify  Landlord  and Fee  Mortgage at least  thirty (30) days prior to any
     cancellation or material reduction in the scope or amount of coverage;

(d)  be primary policies not as contributing with, or in excess of, the coverage
     that the other party may carry;

(e)  be permitted to be carried through one or more of the following:

(i)  a "blanket policy";

(ii) "umbrella" coverage;

(iii)self  insurance  by  Tenant  or  an  affiliate  of  Tenant,  the  financial
     capability  and other terms of which are approved by Landlord,  in its sole
     and absolute discretion; or

(iv) captive  insurance  program  through a captive  insurance  company in which
     Tenant  participates,  if the financial condition loss experience and other
     terms  of  which  are  approved  by  Landlord,  in its  sole  and  absolute
     discretion.

(f) expressly  waive any right of subrogation on the part of the insurer against
  Landlord, Fee Mortgagee, or Tenant.
9.7 Evidence of Insurance. Upon request of the Landlord or Fee Mortgagee, Tenant
shall promptly give  certificates of insurance to the Landlord and Fee Mortgagee
evidencing the insurance coverage required to be maintained by Tenant under this
Article 9. In addition, evidence of renewal of each insurance policy required to
be maintained by Tenant hereunder shall, upon Landlord's  request,  be delivered
to Landlord not less than thirty (30) days prior to expiration of such policy.

9.8  Waiver of  Subrogation.  It is agreed  that  neither  Tenant (or any of its
assignees or sublessees  from time to time) nor Landlord shall be liable for any
loss or damage to each  other's  property to the extent that such loss or damage
is covered by insurance carried by either party. This agreement shall constitute
the  parties'  respective  waivers  for all  insurance  policies  which  contain
provisions  to the  effect  that to the extent the  insured  may have  waived by
express  agreement  prior to any loss any right of recovery from others for loss
to the  property  described  in any  policy  or  extended  coverage  endorsement
thereon,  then the insurance  company or companies waive their right of recovery
under the  subrogation  clauses in the  insurance  policies.  Each party  hereby
waives for itself and on behalf of its  insurer the right to recover any loss or
damage covered by insurance carried by either party.

9.9      Indemnification.
         ---------------


(a)  To the extent the insurance coverage  maintained by Tenant hereunder is not
     available  in whole or in part to pay the same,  Tenant  agrees to  defend,
     protect,  indemnify and save harmless  Landlord,  its successors,  assigns,
     partners,  shareholders,  directors  and  officers  from  and  against  all
     liability  to third  parties  (including  but not limited to the  officers,
     agents,  contractors,  and  business  associates  of Tenant)  with  counsel
     acceptable  to Landlord  arising from (i) Tenant's use and occupancy of the
     Premises (other than liability  arising from Landlord's  failure to perform
     or observe any covenant or  condition  required to be performed or observed
     by  Landlord  under  this  Lease or any  gross  negligence  or  intentional
     misconduct  on  the  part  of  Landlord  or  Landlord's  servants,  agents,
     employees,   contractors,   suppliers,   workers  or  invitees),  (ii)  the
     negligence or  intentional  willful  misconduct of Tenant and its servants,
     agents, employees,  contractors,  suppliers, workers and invitees, or (iii)
     Tenant's failure to perform or observe in any material respect any covenant
     or  condition  required to be  performed  or observed by Tenant  under this
     Lease.

(b)  To the extent the insurance coverage  maintained by Tenant hereunder is not
     available in whole or in part to pay the same,  Landlord  agrees to defend,
     protect,  indemnify  and save harmless  Tenant,  its  successors,  assigns,
     partners,  shareholders,  directors  and  officers  from  and  against  all
     liability  to third  parties  (including  but not limited to the  officers,
     agents and contractors of Landlord)  arising from (i) the gross  negligence
     or  intentional  willful  misconduct  of Landlord or  Landlord's  servants,
     agents,  employees,  contractors,  suppliers,  workers or  invitees  acting
     within the scope of their respective authority,  or (ii) Landlord's failure
     to perform or observe in any  material  respect any  covenant or  condition
     required to be performed or observed by Landlord under this Lease.

(c)  If any claim is  asserted or any action is  commenced  against a party (the
     "Indemnified Party") in respect of which such Indemnified Party is entitled
     to seek indemnification hereunder, such Indemnified Party shall give prompt
     notice to the other party (the  "Indemnifying  Party").  Such  Indemnifying
     Party shall have the right, with counsel approved by such Indemnified Party
     (not to be unreasonably  withheld),  to assume the defense of such claim or
     action,  provided that if counsel is selected by the Indemnifying Party, no
     settlement  of such  claim or action  shall be  entered  into  without  the
     written consent of the  Indemnified  Party or a full written release of the
     Indemnified  Party. If the Indemnifying  Party shall so assume such defense
     then it  shall  not be  responsible  for the fees of any  separate  counsel
     retained by the Indemnified Party.

ARTICLE 10.

                                    Utilities

10.1  Utilities.  Tenant  shall pay or cause to be paid all charges  (including,
without limitation,  all deposits and connection charges) for water, gas, sewer,
electricity, light, heat, air conditioning, power, telephone, and other services
used by or rendered or supplied to Tenant in  connection  with the  Premises and
shall contract for the same in Tenant's own name.

10.2 Landlord's Services and Repairs.  Landlord shall not be required to furnish
to Tenant any  facilities  or services of any kind  whatsoever  during the Term,
including  but  without   limitation,   water,  steam,  heat,  gas,  hot  water,
electricity,  light and power.  Landlord  shall have no  obligation  to make any
alterations,  rebuildings,  replacements,  changes,  additions,  improvements or
repairs to the Premises during the Term.

ARTICLE 11.

                               Control and Repairs

11.1 Possession and Control.  Tenant shall have exclusive possession and control
of, and  responsibility  for,  the  Premises  during the Term upon the terms and
conditions of this Lease.

11.2 Tenant's Repair  Obligations.  Subject to Section 12.1, Tenant, at its sole
cost and expense,  shall keep the  Improvements  neat and clean, in good repair,
order and condition, and shall make all repairs thereto,  interior and exterior,
structural  and  non-structural,   ordinary  and  extraordinary,   foreseen  and
unforeseen,  as are necessary to keep the Improvements in substantially the same
condition as the Improvements are in on the Lease  Commencement Date (reasonable
wear and tear excepted).  When used in this Article 11, the term "repairs" shall
include all necessary  replacement and renewals,  including,  but not limited to
roof replacement,  structural work, parking lot repair and replacement, heating,
ventilation and air conditioning  systems,  plumbing and electrical systems, and
any surface or subsurface work. All repairs to the  Improvements  made by Tenant
shall be at least equal in quality and class to the original work.  Tenant shall
not permit or commit  any waste to the  Improvements,  reasonable  wear and tear
excepted.  Additionally,  Tenant,  at its sole cost and expense,  shall make all
repairs, alterations and modifications of any kind and nature that are necessary
to comply with Applicable  Laws and insurance  requirements so that the Facility
can be operated legally for the Permitted Use.

11.3 Applicable Standard for Repairs.  The necessity for and adequacy of repairs
to the Improvements pursuant to Section 11.2 or to the equipment,  furniture and
fixtures,  pursuant to the Section 11.4 shall be measured by the standard  which
is appropriate for Improvements of similar construction, use and class or by the
standard  which is  appropriate  for personal  property of similar make, use and
class, but, in any event, shall meet the standards established or imposed by any
governmental  authority  having  jurisdiction  over the Premises or the business
conducted thereat.

11.4  Equipment,  Furniture and Fixtures.  Tenant shall install and place on the
Premises,  free of any  liens  except as  permitted  hereunder,  such  fixtures,
furnishings,  furniture  and equipment as Tenant deems  reasonably  necessary or
convenient  from time to time for the Permitted  Use of the Premises;  provided,
however,  that the costs  and  expenses  therefor  are paid for by  Tenant.  Any
equipment,  furniture and fixtures (whether located on the Premises on the Lease
Commencement  Date or added  thereto or  substituted  therefor  at a later date)
(other than  equipment  leased by Tenant from third parties) shall be and remain
the property of Landlord.  Upon the expiration of the Term of this Lease, unless
Tenant or its assignee shall have acquired the Premises,  Tenant shall redeem or
retire all outstanding  leases of any equipment,  furniture and fixtures so that
all such  equipment,  furniture  and  fixtures  shall  become  the  property  of
Landlord.  Tenant  agrees upon  request of Landlord to execute and to deliver to
Landlord  at any time  and  from  time to time  during  the  Term of this  Lease
documentation  evidencing  Landlord's ownership of the equipment,  furniture and
fixtures located on the Premises.

ARTICLE 12.

                            Alterations and Additions

12.1 Alterations and Additions to the Improvements.  Subject to the terms of the
Fee  Mortgage,  Tenant  may  make  any  changes  or  alterations  in or  to  the
Improvements,  and may erect and build any and all additions to the Improvements
or erect any new Improvements upon the Land which it desires, provided:

(i)  Any such change, alteration, addition or replacement, the estimated cost of
     which shall exceed the Threshold Amount, shall not be commenced without, as
     a condition  precedent,  Tenant  obtaining  written  approval from Landlord
     (which  approval  shall not be  unreasonably  withheld or delayed and shall
     specify if Tenant is required to remove such  improvement at the end of the
     Term) and, if required, by the Fee Mortgagee, after Tenant has furnished to
     Landlord and, if required, the Fee Mortgagee,  plans and specifications for
     such improvement, repair, addition or replacement;

(ii) Tenant shall have procured and paid for, so far as the same may be required
     from  time  to  time,  all  permits  and  authorizations  of all  municipal
     departments and governmental subdivisions having jurisdiction;

(iii)Any change or alteration or addition or replacement,  the estimated cost of
     which  shall  exceed the  Threshold  Amount  shall be  conducted  under the
     supervision of an architect or engineer  selected by Tenant and approved in
     writing by Landlord (which  approval shall not be unreasonably  withheld or
     delayed)  and, if  required,  by the Fee  Mortgagee,  and no such change or
     alteration  shall be made  except in  accordance  with  detailed  plans and
     specifications  and cost estimates prepared and approved in writing by such
     architect or engineer;

(iv) The change or alteration shall,  when completed,  be of such a character as
     not to reduce the value of the Improvements  below their value  immediately
     before such change or  alteration,  and such change or alteration  shall be
     consistent with the quality and appearances of the Premises;

(v)  General liability  insurance and workmen's  compensation  insurance for the
     mutual  benefit of Tenant and Landlord  against  claims for bodily  injury,
     death or  property  damage in the sums as  specified  and  provided  for in
     Article 9 of this Lease  shall be in place  before  work is  commenced  and
     maintained  by Tenant at  Tenant's  sole cost and expense at all times when
     any work is in process in connection with any change or alteration;

(vi) In making any change or  alteration,  as in this Article  provided,  Tenant
     agrees that:

(A)  Tenant  will at all times  fully  comply and  continue  to comply  with the
     foregoing conditions;

(B)  Any such change or alteration shall be made in good and workmanlike  manner
     and in compliance with all applicable  permits and other laws,  ordinances,
     orders,  rules,  regulations and  requirements of all federal,  state,  and
     municipal governments,  department, commissions, board and officers, and in
     accordance with the orders,  rules and regulations of the National Board of
     Fire  Underwriters,  the local Board of Fire Underwriters or any other body
     or bodies hereafter exercising similar functions; and

     (C)  The cost of any such change or  alteration,  including but not limited
          to all insurance premiums, labor and material, shall be paid by Tenant
          so that the Premises shall at all times be free of liens for labor and
          materials supplied or claimed to have been supplied to the Premises or
          for any other  item or matter in  connection  with the  making of said
          alteration or repair.

         Upon request of Tenant, but at Tenant's sole cost and expense, Landlord
shall join in Tenant's  application for any building permit or license  required
in connection with such  alteration  and/or  addition to the  Improvements  and,
subject to the prior written  consent of the Fee Mortgagee,  if required,  shall
grant  such  utility  easements  as may be  required  in  connection  therewith;
provided  nothing  herein shall  require  Landlord to take any action that would
materially increase Landlord's obligations and liabilities hereunder, unless the
same are fully  assumed and paid by Tenant,  or that would  materially  decrease
Landlord's rights hereunder, unless the same are fully compensated by Tenant.

ARTICLE 13.

                 Landlord's Right to Perform Tenant's Covenants.

13.1  Landlord's  Right to Perform.  If Tenant shall at any time fail to pay any
Imposition in accordance  with the provisions of Section 6.1 or to take out, pay
for, maintain or deliver any of the insurance policies or certificates  therefor
as provided for in Article 9, or shall fail to make any other payment or perform
any  other  act on its  part to be  made or  performed,  or  shall  fail to make
necessary  repairs in accordance with the provisions of Section 11.2,  Landlord,
after providing Tenant with the notice required pursuant to Section 23.2 of this
Lease,  and without  waiving or releasing  Tenant from any  obligation of Tenant
contained  in this  Lease or from any  Default  by Tenant  and  without  waiving
Landlord's right to take such action as may be permissible under this Lease as a
result of such Default, may (but shall be under no obligation to):

     (a)  pay any  Imposition  payable by Tenant  pursuant to the  provisions of
          Section 6.1 or

     (b)  take out, pay for and maintain any of the insurance  policies provided
          for in Article 9, or

     (c)  make any other payment or perform any other act on Tenant's part to be
          made or performed as in this Lease  provided,  and, upon giving Tenant
          at least 24 hours advance notice (except in any emergency),  may enter
          upon the  Premises  for any  such  purpose,  and take all such  action
          thereon,  as may be necessary  therefor,  causing the least  practical
          interference with Tenant's business.

                  In  furtherance  of  Landlord's   right  to  perform  Tenant's
covenants  hereunder,  Tenant  hereby  grants to Landlord an exclusive  power of
attorney and appoints  Landlord its exclusive true and lawful  attorney in fact,
coupled with an interest,  to take each of the actions  specified in subsections
(a) through (c) above for and on behalf of and in the name of Tenant  throughout
the Term of this Lease and thereafter as necessary.

13.2  Reimbursement By Tenant.  All costs and expenses actually paid by Landlord
pursuant to Section  13.1  hereof,  including,  without  limitation,  reasonable
attorney's fees and expenses, and court costs, together with interest thereon at
the Reference  Rate from the date of the payment  thereof by Landlord,  shall be
paid by Tenant to  Landlord  not later than ten (10) days after  written  demand
therefor by Landlord to Tenant.

ARTICLE 14.

                     Damage and Destruction of the Premises.

14.1 Cancellation Due To Casualty. Notwithstanding anything in this Lease to the
contrary,  subject to the terms of the Fee Mortgage,  if, at any time during the
Term, the Facility shall be destroyed or damaged by fire or any other cause, and
if  the  Facility,   in  the  reasonable  judgment  of  Tenant,   could  not  be
substantially  restored  or  repaired  and ready for full  occupancy  within two
hundred  seventy  (270)  days  of  the  event,  Tenant  shall  have  the  right,
exercisable  within sixty (60) days of such event,  to  terminate  this Lease by
written  notice to  Landlord.  Tenant  shall  notify  Landlord in writing of its
determination  of the  feasibility of restoring or repairing the Facility within
thirty (30) days of such event.  In the event Tenant  elects to  terminate  this
Lease  pursuant  to this  Section  14,  this Lease and the Term shall  cease and
expire as of the date of such damage or  destruction  (the  "Revised  Expiration
Date") with the same force and effect as if the Revised Expiration Date were the
date  originally  set forth in this Lease for the  expiration of the Term except
that  Tenant  shall  have no  obligation  to  repair,  replace  or  rebuild  any
buildings,  structures,  improvements  or  equipment,  and the  proceeds  of all
insurance shall be paid to and belong to Landlord,  subject to the rights of the
holder of any Fee Mortgage.

14.2 Damage.  If, during the Term, the buildings,  improvements or the equipment
on, in or  appurtenant  to the  Premises  on the  Lease  Commencement  Date,  or
thereafter  erected or  installed  thereon or  therein,  shall be  destroyed  or
damaged  in  whole  or in part by fire or  other  cause,  and  Tenant  does  not
terminate this Lease pursuant to Section 14.1, Tenant shall, except as otherwise
hereinafter provided, use the Net Insurance Proceeds to promptly repair, replace
and rebuild the same with buildings,  structures,  improvements and equipment of
equal or better character,  quality and condition than existed immediately prior
to such occurrence.  Tenant's obligation to repair,  replace or rebuild shall be
limited to the amount of the Net  Insurance  Proceeds  made  available to Tenant
plus the amount of any deductible under such insurance, and any other funds that
Landlord may (but shall not be obligated to) contribute for such purpose.

14.3 Insurance Proceeds.  To the extent permitted under the Fee Mortgage, in the
event of a loss in excess of the Threshold Amount, the proceeds of any insurance
applicable to the particular casualty (net of any deductible), less any cost and
expense incurred in adjusting or collecting such proceeds (hereinafter sometimes
referred to as the "Net Insurance  Proceeds")  shall be deposited in an interest
bearing  account with a bank or trust company having a capital and surplus of at
least  $500,000,000,  in trust, and such party  (hereinafter  referred to as the
"Trustee")  shall make available such Net Insurance  Proceeds upon the terms and
conditions  hereinafter set forth. The Net Insurance Proceeds shall be disbursed
from time to time at the request of and at the  direction of Tenant and upon the
reasonable  approval of Landlord after approval of any work, to the parties whom
Tenant may employ to perform the restoration work, as same shall progress, or to
Tenant,  if Tenant shall make or pay for the cost of any  restoration  work,  in
reimbursement for the fair value of the work and materials actually incorporated
in the Premises.  Such payments shall be made by such Trustee from time to time,
upon the  written  request of Tenant,  by a duly  authorized  officer of Tenant,
which shall be accompanied by a  certificate,  addressed to the Trustee,  and to
Landlord and to the holder of any Fee Mortgage,  of the architect or engineer in
charge of the restoration work,  setting forth that the amount then requested to
be withdrawn  either has been paid by Tenant or is properly due to  contractors,
subcontractors,  materialmen,  engineers,  architects, or other persons who have
rendered  services or furnished  materials in connection  with such  restoration
work. In the event of a loss equal to or less than the Threshold Amount, the Net
Insurance  Proceeds  relating  thereto  shall be  assigned  or paid  directly to
Tenant,  to be  applied  by Tenant in  accordance  with the  provisions  of this
Section 14.

ARTICLE 15.

                                  Condemnation

15.1  Cancellation  Due to Event of a  Taking.  Upon  the  taking  of all of the
Premises  or any  part  thereof  which  materially  and  adversely  affects  the
operation of the Facility or results in a decrease in the number of nursing home
beds that Tenant may legally  operate at the Facility in or by  condemnation  or
other eminent domain proceedings (or by conveyance in lieu thereof),  this Lease
and the Term shall  terminate and expire on the date of vesting of title in such
taking (which date is hereinafter referred to as the "Date of Taking"), in which
case the  obligations  and  liabilities  of Tenant  under this Lease  which have
accrued on or prior to the Date of Taking,  and the Base Rent  provided  in this
Lease to be paid by Tenant shall be  apportioned  and paid by Tenant through the
Date of Taking.  Upon the taking of less than  substantially all of the Premises
in or by condemnation  or other eminent domain  proceedings (or by conveyance in
lieu thereof),  Tenant shall have the right to terminate this Lease by notice to
Landlord if Tenant  determines  in its  reasonable  business  judgment that such
taking  materially  interferes  with  Tenant's  ability to continue its business
operations at the Premises in substantially the same manner as immediately prior
to the  taking,  in which case all rights and  obligations  of Tenant  hereunder
shall expire and terminate  other than  obligations  and  liabilities  of Tenant
under this Lease which have  accrued on or prior to the Date of Taking,  and the
Base Rent provided in this Lease to be paid by Tenant shall be  apportioned  and
paid by Tenant through the Date of Taking.

15.2 Award.  Subject to Section 15.3 below, if at any time while Landlord is the
fee owner of the Premises  the whole or any part of the Premises  shall be taken
for any public or  quasi-public  purpose by any lawful power or authority by the
exercise of the right of  condemnation  or eminent  domain (or by  conveyance in
lieu  thereof),  Landlord  shall be  entitled  to and shall  receive any and all
awards  and  payments  that may be made in any  such  proceeding.  Any  award of
payment that may be made in any such proceeding,  after deducting the reasonable
cost and expense incurred in connection with the establishment and collection of
such  award or  payment,  is  herein  called  the "Net  Award".  Notwithstanding
anything else in this Section,  Tenant may claim and recover from the condemning
authority a separate award for Tenant's moving  expenses,  business  dislocation
damages,  the  unamortized  costs  of  leasehold   improvements  (that  are  not
replacements of Facility  improvements  existing on the Lease Commencement Date)
paid for by Tenant,  and any other award that would not reduce the award payable
to Landlord. Each party shall seek its own award, as limited by this Section, at
its own  expense,  and  neither  shall  have any right to the award  made to the
other.

15.3  Restoration.  If a  portion  of  the  Premises  shall  be  taken  in or by
condemnation  or other  eminent  domain  proceedings  (or by  conveyance in lieu
thereof),  and  this  Lease  shall  not be  terminated  in  accordance  with the
provisions of Section 15.1, Tenant shall after any such partial taking,  use the
Net Award to promptly and diligently  commence and complete the restoration work
for the Premises as nearly as practicable  to the condition  which existed prior
to such partial taking. In the event the Net Award is in excess of the Threshold
Amount, the Net Award shall be deposited in an interest bearing account in trust
with the Trustee,  and the Trustee shall make  available such Net Award upon the
same terms and  conditions as set forth in Section 14  substituting  "Net Award"
for "Net Insurance  Proceeds" as used therein.  Tenant's obligation to undertake
any  restoration  work  shall be  limited  to the  amount of the Net Award  made
available  to Tenant  and any other  funds that  Landlord  may (but shall not be
obligated to) contribute for such purpose.

ARTICLE 16.

                            Assignment and Subletting

16.1  Assignments,  etc.  Except as otherwise  permitted  under  Section 16.2 or
Section  16.3  hereof,  and  subject  to the terms of any Fee  Mortgage  and the
Regulatory Agreement between HUD and Tenant,  Tenant shall not assign this Lease
or any of Tenant's interest hereunder,  or sublease any portion of the Premises,
without the prior  written  consent of the Landlord  which  consent  shall be in
Landlord's sole and absolute  discretion.  For purposes hereof,  the transfer of
any direct or indirect interest in Tenant shall constitute an assignment of this
Lease.

16.2  Partial  Subleases.  Tenant shall have the right to sublease any part (but
not  all) of the  Premises  to any  Permitted  Assignee  (or in the  case of the
medical office space located on the first floor of the Facility, to any provider
of medical,  clinical or ancillary  services not inconsistent with the Permitted
Use of the  Premises,  subject  to  Applicable  Laws)  for  any use  which  is a
Permitted  Use,  provided that (i) such sublease and the rights of the sublessee
thereunder  shall be expressly  made subject to and  subordinate at all times to
this  Lease  and to any  Fee  Mortgage  now or  hereafter  existing,  and to all
amendments, modifications, renewals, extensions, consolidations and replacements
of this Lease and each Fee Mortgage;  (ii) the term of any such  sublease  shall
not extend beyond the Term; and (iii) Tenant shall furnish  Landlord with a copy
of such  sublease  not less  than ten (10)  days  prior to  entering  into  such
sublease.  No such sublease shall affect Tenant's  obligations under this Lease.
In the  event  this  Lease  shall  terminate  prior  to the  expiration  of such
sublease,  the sublessee  shall,  at Landlord's  option,  attorn to Landlord and
waive any right  sublessee  may have to terminate  the sublease or surrender the
Premises.

16.3 Assignment to Permitted  Assignees.  As long as no Default has occurred and
is then  continuing  beyond any applicable  grace period,  Tenant shall have the
right to assign all or any part of Tenant's right,  title and interest as lessee
under this Lease to any Permitted  Assignee.  Nothing  herein shall  prohibit or
limit  Tenant's right or authority to assign,  pledge,  hypothecate or otherwise
transfer  any  accounts  or accounts  receivable  of Tenant  resulting  from the
operation  of  the  Facility.  Any  assignment  of  this  Lease  shall  be by an
instrument in writing and shall be executed by the assignor and the assignee, in
each instance,  as the case may be. Each such transferee or assignee shall agree
in writing for the benefit of Landlord to assume, to be bound by, and to perform
the terms, covenants and conditions of this Lease to be done, kept and performed
by Tenant. So long as the Fee Mortgagee is insured by HUD, Tenant shall not make
any Assignment of this Lease without any required  prior written  consent of the
FHA Commissioner.

ARTICLE 17.

                                 Fee Mortgages

17.1  Fee  Mortgages.  As of  the  Lease  Commencement,  the  Premises  will  be
encumbered with a fee mortgage as more particularly described on the Schedule of
Permitted  Encumbrances  attached  hereto  as  Exhibit  B (as  the  same  may be
hereafter  amended,  modified,  renewed,  extended,  consolidated  or  replaced,
hereinafter referred to as the "Initial Fee Mortgage"). The Initial Fee Mortgage
and any other  mortgage  or other  security  device  permitted  hereunder  which
encumbers all or any part of the  Landlord's  interest in the Premises is herein
called a "Fee  Mortgage" and the holder of any such  mortgage or other  security
device is herein called a "Fee Mortgagee".

17.2     Subordination.  Subject to the provisions of Section 17.3:

(a)  Tenant,  for itself and its successors and assigns,  agrees that this Lease
     and the rights of Tenant  hereunder shall be and are hereby  expressly made
     subject  to and  subordinate  at all  times  to each  Fee  Mortgage  now or
     hereafter  existing  (including without limitation the Initial Fee Mortgage
     and the rights of the FHA  Commissioner  under that certain HUD  Regulatory
     Agreement  described  in Exhibit B) and to all  amendments,  modifications,
     renewals,  extensions,  consolidations  and  replacements  of  each  of the
     foregoing,  and to all  advances  made or  hereafter  to be made  upon  the
     security thereof; and

(b)  such  subordination  shall be automatic and shall require no further action
     by Landlord or Tenant for its effectiveness.

17.3  Nondisturbance.  Notwithstanding the provisions of Sections 17.1 and 17.2,
this Lease and the rights of Tenant  hereunder  shall not be  subordinate to any
Fee Mortgage,  other than the Initial Fee Mortgage or any other  HUD-insured Fee
Mortgage,  unless  the Fee  Mortgagee  shall  execute  and  deliver  to Tenant a
nondisturbance  agreement  substantially  in the form of Exhibit C or such other
form which is  reasonable  acceptable to Tenant (a  "Qualifying  Non-Disturbance
Agreement").  Tenant agrees to execute and return any Qualifying Non-Disturbance
Agreement within twenty (20) days of its receipt thereof.

17.4  Subordination of Fee Mortgagee.  Notwithstanding  anything to the contrary
contained  herein,  any Fee Mortgagee may  subordinate  its Fee Mortgage to this
Lease by sending  Tenant  notice in writing  subordinating  such Fee Mortgage to
this Lease,  and Tenant  agrees to execute and deliver to such Fee  Mortgagee an
instrument consenting to or confirming the subordination of such Fee Mortgage to
this Lease within twenty (20) days of its receipt of such notice.

17.5 Payments By Tenant on Behalf of Landlord.  Except as provided  otherwise in
Section  5.2(b) above,  Landlord  hereby  covenants to pay all amounts due under
each Fee  Mortgage  when and as due and to keep same  current at all  times.  If
there  shall be a default by Landlord in the payment of any amount due under any
Fee Mortgage,  Tenant shall have the right to pay the amount so in default,  and
the reasonable  costs and expense,  if any, of any  foreclosure  action or other
suit or proceeding  instituted by the Fee Mortgagee upon such default,  and upon
making such payment Tenant shall be entitled to full reimbursement  thereof from
Landlord upon demand, and, in addition to other remedies,  be entitled to offset
and deduct the amount so paid,  together with interest  thereon at the Reference
Rate from the date of the payment thereof by Tenant,  from any rent then due, or
thereafter  falling  due,  under this Lease or any of the Other Leases until the
amount of such payment shall have been repaid therefrom by Landlord to Tenant.

ARTICLE 18.

                                     Default

18.1 Default by Tenant.  If (a) Tenant defaults in the payment of rent or in the
payment of any sum due under this Lease,  and such  default  shall  continue for
five (5) days after notice  thereof in writing by Landlord to Tenant,  or (b) if
Tenant defaults in the prompt and full  performance of any covenant,  condition,
agreement or provision of this Lease (including,  without  limitation,  Tenant's
compliance   obligations  under  Section  3.1(c)  hereof  and  Tenant's  payment
obligations under Section 5.2(b) hereof to the extent Landlord has exercised its
right to require Tenant to pay any Fee Mortgage Obligations then due and payable
directly to the Fee  Mortgagee)  and such default shall continue for thirty (30)
days after notice thereof in writing by Landlord to Tenant,  provided,  however,
that in the case of a default  which cannot with  reasonable  diligence be cured
within said period of thirty (30) days after the notice,  Tenant shall have such
additional time to cure the same as may reasonably be necessary (provided Tenant
is  proceeding  with  reasonable  diligence to cure the same),  or (c) if Tenant
shall abandon the Premises for any period of thirty (30) consecutive days during
the Term of this Lease, or (d) if Tenant shall cease to operate the Premises for
the Permitted Use for a period of thirty (30)  consecutive days (other than as a
result of a  casualty  or  taking),  or (e) if  Tenant  shall  file a  voluntary
petition in bankruptcy or shall be  adjudicated a bankrupt in any  bankruptcy or
insolvency proceedings and such petition or adjudication shall not be vacated or
stayed  within  sixty  (60)  days,  or (f) if any  court  shall  enter an order,
judgment  or decree  appointing  a  receiver  or  trustee  for  Tenant or any of
Tenant's property in a bankruptcy or other proceeding,  and such order, judgment
or decree shall remain in force,  undischarged or unstayed,  for sixty (60) days
after  it is  entered,  or (g)  if any  representation,  warranty  or  statement
contained herein proves to be untrue in any material respect as of the date when
made  or at  any  time  if  such  representation  or  warranty  is a  continuing
representation  or warranty,  or (h) if either the state  license to operate the
Facility as a nursing home or the  certification  of the Facility to participate
in the Medicare and Medicaid programs is revoked or terminated, or (i) if Tenant
is in Default under any of the Other  Leases,  then in any such event of default
(hereinafter  a "Default") as herein  described,  Landlord may, at its option at
any time during the continuation of such Default:

(A)  give  written  notice to Tenant  stating  that this Lease is at an end, and
     thereafter,  re-enter,  repossess and enjoy the Premises  together with all
     additions,  alterations and improvements thereto,  subject to any notice or
     waiting period and/or governmental approval process established or required
     under   applicable   federal  or  state  licensure   and/or   certification
     regulations pertaining to a change of licensee or ownership of the Facility
     and in any event in a manner which ensures the safe transfer of care of the
     patients resident in the Facility,  in which case Tenant shall be liable to
     Landlord for all rent accrued to the date of such termination of this Lease
     and any expenses actually incurred by Landlord,  including  attorneys fees,
     as a result of Tenant's Default hereunder; or

(B)  re-enter  the  Premises  and  without  terminating  this  Lease,  relet the
     Premises  or any part or parts  thereof  (subject  to any notice or waiting
     period and/or  governmental  approval process established or required under
     applicable  federal or state  licensure  and/or  certification  regulations
     pertaining  to a change of licensee or ownership of the Facility and in any
     event in a manner which  ensures the safe  transfer of care of the patients
     resident in the  Facility)  on such terms and  conditions  as Landlord  may
     determine  for the account of Tenant,  and receive and collect the rents or
     revenues therefrom, applying the same, first, (x) to any costs and expenses
     actually incurred by Landlord  (including,  without limitation,  attorneys'
     fees and  expenses) as a result of Tenant's  Default,  (y) to any costs and
     expenses  actually  incurred by Landlord in connection  with  reletting the
     Premises  (including,  without limitation,  brokerage  commissions,  tenant
     improvement costs and other capital expenditures), and (z) to any costs and
     expenses  actually  incurred by Landlord in connection  with  operating and
     maintaining   the  Premises   (including,   without   limitation,   capital
     expenditures  and  any  Fee  Mortgage   Reserves),   and,  second,  to  the
     fulfillment of the rental  obligations  of Tenant under this Lease.  Tenant
     shall remain  obligated  to Landlord  until the end of the Initial Term (if
     the Default  occurs  during the Initial  Term) or the end of the  Extension
     Term then in effect (if the Default  occurs  during an Extension  Term) for
     all rent and other charges required to be paid by Tenant under the terms of
     this  Lease,  reduced by rents or revenues  received  by Landlord  from any
     reletting  during the Term (less all costs and  expenses  described  in the
     immediately preceding sentence); or

(C)  at the option of Landlord  exercised at any time,  recover from Tenant,  as
     liquidated  damages,  in addition to any other proper claims but in lieu of
     and not in  addition  to any amount  which  would  thereafter  have  become
     payable by Tenant  under the  preceding  clause (B), an amount equal to the
     sum of (x) all  Annual  Base  Rent  that is due and  unpaid at the later to
     occur of  termination,  repossession  or eviction,  together  with interest
     thereon at the Reference  Rate,  plus (y) the present value  (calculated in
     the manner stated below) of the amount by which the unpaid Annual Base Rent
     for the  balance  of the Term  after  the  later  to occur of  termination,
     repossession or eviction  exceeds the fair market rental value (taking into
     account brokerage commissions and other costs and expenses of reletting the
     Premises) of the  Premises for the balance of the Term,  plus (z) any other
     amount necessary to compensate  Landlord for all damages proximately caused
     by Tenant's  failure to perform its  obligations  and covenants  under this
     Lease (including,  without limitation,  the costs and expenses of operating
     and  maintaining  the  Premises,  including,  without  limitation,  capital
     expenditures  and any Fee  Mortgage  Reserves);  the  determination  of the
     "present value" of unpaid Annual Base Rent to be based upon a discount rate
     of ten percent (10%) per year to present worth; it being  understood by the
     parties hereto that  Landlord's  damages upon a Tenant Default would not be
     subject  to  accurate  calculation  and the  amount  established  hereby as
     liquidated  damages is a  reasonable  estimate  of the  damages,  but not a
     penalty, which would be incurred by Landlord.

                  Anything contained herein to the contrary notwithstanding,  if
any  termination  of this Lease shall be stayed by an order of any court  having
jurisdiction over any proceeding  described in Section 18.1(e) or (f) hereof, or
by federal or state statute, then, following the expiration of any such stay, or
if  the  trustee  appointed  in  any  such  proceeding,   Tenant  or  Tenant  as
debtor-in-possession  shall fail to assume Tenant's  obligation under this Lease
within the period prescribed  therefor by law or within one hundred twenty (120)
days after  entry of the order for relief or as may be allowed by the court,  or
if said trustee, Tenant or Tenant as debtor-in-possession  shall fail to provide
adequate  protection  of  Landlord's  right,  title and  interest  in and to the
Premises or adequate assurance of the complete and continuous future performance
of Tenant's obligations under this Lease,  Landlord,  to the extent permitted by
law or by leave of the court having  jurisdiction  over such  proceeding,  shall
have the  right,  at its  election,  to  terminate  this Lease on five (5) days'
notice to Tenant,  Tenant as  debtor-in-possession  or said trustee and upon the
expiration  of said five (5) day  period  this Lease  shall  cease and expire as
aforesaid  and Tenant,  Tenant as  debtor-in-possession  or said  trustee  shall
immediately  quit and  surrender  the  Premises  as  aforesaid  and be liable to
Landlord as provided above upon a termination of this Lease.

18.2 Cancellation of Lease by FHA Commissioner.  Notwithstanding anything to the
contrary  herein set forth,  this Lease may be  cancelled  upon thirty (30) days
prior written notice by the FHA Commissioner  given to Landlord and Tenant for a
violation  by  Tenant  of any of the  provisions  set  forth  in the  Regulatory
Agreement  executed by Tenant dated as of  September  26,  2000;  provided  that
Termination  of the Lease on such  grounds  shall be  deemed to be a Default  by
Tenant  hereunder,  and Landlord shall have all the rights  accorded to Landlord
upon a Default by Tenant under  Section 18.1 hereof.  Nothing  contained in this
Lease  shall be deemed to grant  Tenant  more than  thirty (30) days to cure any
violation upon which the FHA Commissioner has given notice to the Tenant.

18.3     Tenant Bankruptcy Provisions

(A)  If a default occurs under Section  18.1(e) or (f) hereof and Tenant assumes
     this Lease and proposes to assign the same  pursuant to the  provisions  of
     the Bankruptcy  Code to any Person who shall have made a bona fide offer to
     accept an assignment of this Lease on terms acceptable to Tenant,  then, in
     such event,  notice of such proposed  assignment (an  "Assignment  Notice")
     shall be given to  Landlord  by Tenant no later than twenty (20) days after
     receipt  by  Tenant,  but in any event no later than (10) days prior to the
     date  that  Tenant  shall  make   application   to  a  court  of  competent
     jurisdiction  for authority and approval to enter into such  assignment and
     assumption. Such Assignment Notice shall set forth (a) the name and address
     of such Person,  (b) all of the terms and conditions of such offer, and (c)
     adequate  assurance of future performance by such Person under the Lease as
     set forth in  paragraph  (B)  below,  including,  without  limitation,  the
     assurance referred to in Section 365(b)(3) of the Bankruptcy Code. Landlord
     shall have the prior right and option, to be exercised by written notice to
     Tenant  given with ten (10) days of  Landlord's  receipt of the  Assignment
     Notice,  to accept an  assignment  of this  Lease  upon the same  terms and
     conditions and for the same  consideration,  if any, as the bona fide offer
     made by such Person,  less any brokerage  commissions which would otherwise
     be payable by Tenant out of the  consideration to be paid by such Person in
     connection  with the assignment of this Lease.  For purposes of this Lease,
     "Bankruptcy  Code" shall mean 11 U.S.C.  ss. 101 et. seq.,  as amended from
     time to time.

(B)  The term "adequate assurance of further  performance" as used in this Lease
     shall mean that any proposed assignee shall,  among other things: (a) agree
     to cure all material  defaults under this Lease;  (b) furnish Landlord with
     financial statements of such assignee for the prior three (3) fiscal years,
     as finally  determined  after an audit by a  certified  public  accountant,
     which  financial  statements  shall  show  a net  worth  of  such  assignee
     reasonably  necessary  for the assignee to fully perform this Lease and, to
     the extent  they are to be  assigned to the  proposed  assignee,  the Other
     Leases for each of such three (3) years,  all as  reasonably  determined by
     Landlord,  provided,  however, that such net worth shall not be required to
     exceed  four times (4x) the then  Annual Base Rent under this Lease and, to
     the extent  they are to be  assigned to the  proposed  assignee,  the Other
     Leases for each of such three (3) years;  (c) grant to  Landlord a security
     interest in such tangible  property of the proposed assignee located at the
     Premises  as  Landlord  shall  reasonably  deem  necessary  to secure  such
     assignee's future  performance under this Lease; and (d) provide such other
     information  or take such action as Landlord,  in its  reasonable  judgment
     shall  determine  is  necessary  to  provide  adequate   assurance  of  the
     performance by such assignee of its obligations under this Lease.


ARTICLE 19.

                                 Quiet Enjoyment

19.1 Quiet Enjoyment. Upon payment of the Annual Base Rent and all other charges
herein  provided for, and provided  Tenant complies with the terms of this Lease
and performs its obligations hereunder,  Tenant shall quietly have and enjoy the
Premises  during the Term without  hindrance or  interruption  by Landlord or by
anyone claiming by, through or under Landlord subject, however, to the terms and
conditions of this Lease.

ARTICLE 20.

                              Estoppel Certificates

20.1 Tenant's  Certificate.  Tenant shall,  without charge, at any time and from
time to time,  within  fifteen (15) days after  request by Landlord,  certify by
written instrument,  duly executed,  acknowledged and delivered, to Landlord, or
any other person, firm or corporation specified by Landlord in substantially the
form as Exhibit E annexed hereto and made a part hereof.

20.2 Landlord's  Certificate.  Landlord shall,  without charge,  at any time and
from time to time,  but in no event  more than  three (3) times in any  calendar
year,  within  fifteen (15)  business  days after  request by Tenant  certify by
written  instrument,  duly executed,  acknowledged and delivered,  to the effect
that this Lease is  unmodified  and in full force and effect (or if there  shall
have been  modifications that the same is in full force and effect as unmodified
and stating the  modifications)  and the dates to which the Annual Base Rent and
other charges have been paid,  the date of  expiration of the current Term,  the
Annual Base Rent then payable under this Lease,  and stating  whether or not, to
the best  knowledge  of the  officer  executing  such  certificate  on behalf of
Landlord,  Tenant is in default in  performance  of any  covenant,  agreement or
condition  contained in this Lease and, if so,  specifying  each such default of
which the person executing such certificate may have knowledge.

ARTICLE 21.

                             Surrender; Holding Over

21.1  Surrender.  Tenant  shall  and  will on the  Termination  Date or upon any
earlier  termination of this Lease,  well and truly  surrender and deliver up to
Landlord the Premises  without delay and subject to the provisions of Article 11
hereof,  in good order,  condition  and repair,  and in  substantially  the same
condition as on the Lease  Commencement Date, with such changes and improvements
thereto as Landlord shall have approved (without  specifically  requiring Tenant
to remove the same at the end of the Term), reasonable wear and tear excepted.

21.2 Holding  Over.  If Tenant  fails or refuses to surrender  and deliver up to
Landlord the Premises upon the Termination Date or upon any earlier  termination
of this Lease,  without Landlord's consent,  then Landlord may at its option and
in addition to its other remedies,  treat Tenant as a Tenant-at-sufferance.  The
rent due to Landlord from Tenant  during such  holdover  period shall be one and
one half (1 1/2) times the then Annual Base Rent.

ARTICLE 22.

                              Right of First Offer

22.1  Tenant's  Right of First Offer.  Prior to  marketing  the Premises for any
Transfer of the Premises,  Landlord shall first give written notice to Tenant (a
"Transfer  Notice")  of  Landlord's  desire to  transfer  the  Premises  and the
specific  terms and conditions  that would be acceptable to Landlord,  including
but not limited to price,  closing conditions and time for closing  ("Landlord's
Transfer  Terms").  Tenant shall have the right (but not the obligation)  during
the fifteen  (15) day period after  receipt of the  Transfer  Notice in which to
give  Landlord  either (1) written  notice of Tenant's  agreement to  Landlord's
Transfer  Terms,  in which event Landlord shall transfer the Premises to Tenant,
and Tenant  shall  acquire  the  Premises  from  Landlord,  in  accordance  with
Landlord's  Transfer  Terms,  or (2)  written  notice  of such  other  terms and
conditions  on which  Tenant  would be  willing  to acquire  the  Premises  from
Landlord,  including but not limited to price,  closing  conditions and time for
closing ("Tenant's  Transfer Terms"), in which event Landlord shall have fifteen
(15) days after receipt of Tenant's  Transfer Terms to accept or reject Tenant's
Transfer  Terms by  written  notice to  Tenant.  If  Landlord  accepts  Tenant's
Transfer Terms, Landlord shall transfer the Premises to Tenant, and Tenant shall
acquire the Premises from Landlord,  in accordance with Tenant's  Transfer Terms
and such other  terms as are  mutually  acceptable  to Landlord  and Tenant.  If
Landlord rejects Tenant's  Transfer Terms,  Landlord shall be free, for a period
of one hundred  eighty (180) days after its written  notice to Tenant  rejecting
Tenant's  Transfer  Terms,  to  transfer  the  Premises  to any other  Person on
Landlord's  Transfer  Terms or such other terms and  conditions  as Landlord may
determine,  provided that such terms and conditions  shall provide Landlord with
at least 95% of the purchase price included in Tenant's  Transfer Terms.  Tenant
shall have the right to review all  agreements  between  Landlord  and any other
Person  governing  the  Transfer of the  Premises to confirm  that the terms and
conditions  thereof are not less  favorable  than Tenant's  Transfer  Terms.  If
Landlord  does not so Transfer the Premises  within the  applicable  one hundred
eighty (180) day period,  the Premises shall  forthwith  again become subject to
Tenant's Right of First Offer hereunder. In the event Tenant fails to respond to
any Transfer  Notice  within  thirty (30) days after  receipt of same,  Landlord
shall be free,  for a period of one hundred  eighty (180) days after such 30-day
period  expires,  to Transfer the Premises to any other Person on such terms and
conditions as Landlord, in its sole discretion,  may determine. If Landlord does
not so Transfer the Premises  within the applicable one hundred eighty (180) day
period,  the Premises shall  forthwith again become subject to Tenant's Right of
First Offer hereunder.

                  Notwithstanding  Tenant's  failure  for any reason to purchase
the  Premises  from  Landlord  pursuant to this Section  22.1,  this Lease shall
remain in effect in accordance  with its terms and any Person that purchases the
Premises  from  Landlord  shall take  ownership of the Premises  subject to this
Lease, including,  without limitation,  Tenant's Right of First Offer hereunder,
which shall apply to any future  transfer of the  Premises by said  purchaser or
its successors or assigns.

ARTICLE 23.

                               General Provisions

23.1  Severability.  If any term or provision  of this Lease or the  application
thereof to any  person or  circumstances  shall,  to any  extent,  be invalid or
unenforceable,  the remainder of this Lease,  or the application of such term or
provision  to persons or  circumstances  other than those as to which it is held
invalid  or  unenforceable,  shall not be  affected  thereby,  and each term and
provision  of this Lease shall be valid and be  enforced  to the fullest  extent
permitted by law.

23.2  Notices.  All  notices,  requests  and other  communications  to any party
hereunder shall be in writing (including facsimile or similar writing) and shall
be given to such party at the following address or facsimile number:

         To Landlord:               HHC Beachwood, Inc.
                                    c/o Investcorp International
                                    280 Park Avenue
                                    New York, NY  10017
                                    Attn:  Lars C. Haegg and F. Jonathan Dracos
                                    Fax: (212)

         With a copy to:            David Furman, Esq.
                                    Gibson, Dunn & Crutcher
                                    200 Park Avenue
                                    New York, NY  10166
                                    Fax: (212) 351-4035

         To Tenant:                 Harborside of Cleveland Limited Partnership
                                    c/o Harborside Healthcare
                                    One Beacon Street
                                    Boston, MA 02108
                                    Attn:   President
                                    Fax:  (617) 646-5439

         With a copy to:            Martin R. Leinwand, Esq.
                                    McDermott, Will & Emery
                                    28 State Street
                                    Boston, MA  02109
                                    Fax:  (617) 535-3800

or such other address or facsimile number as such party may hereafter specify to
Landlord and Tenant for purposes of notice.  Each such notice,  request or other
communication  may be given by counsel  and shall be  effective  (a) if given by
facsimile,  when such facsimile is transmitted to the facsimile number specified
in this  Section,  (b) if given by mail,  72 hours after such  communication  is
deposited in the mails with first class postage prepaid, addressed as aforesaid,
(c) if given by a nationally  recognized overnight delivery carrier, on the next
business day after delivery to such carrier, or (d) if given by any other means,
when delivered at the address specified in this Section.

23.3 Waiver of Jury Trial.  The parties  hereto waive a trial by jury of any and
all issues arising in any action or proceeding  between them or their successors
under or connected with this Lease or any of its provisions, any negotiations in
connection therewith, or Tenant's use or occupation of the Premises.

23.4     Consent of Either Party.
         -----------------------

(a)  Where any  provision  of this Lease  requires  the  consent or  approval of
     either  party,  each party  agrees  that  except as  specifically  provided
     otherwise in this Lease,  it will not  unreasonably  withhold or delay such
     consent or approval.

(b)  If either  party  shall  request the  consent,  approval  or  statement  of
     satisfaction of the other party with respect to any matter  hereunder then,
     except as specifically  provided otherwise in this Lease, a failure by such
     party to reply to such request within twenty (20) business days  thereafter
     shall be deemed to be consent, approval or statement of satisfaction as the
     case may be.

23.5 Payments Under Protest.  In case of any dispute between Landlord and Tenant
with  respect to the amount of money  payable  by Tenant to  Landlord  under the
provisions  of this Lease,  Tenant shall be  privileged  to make  payment  under
protest and, in such event,  shall be privileged to assert and prosecute a claim
or claims for the recovery of the sum, or any part thereof, that shall have been
so paid by Tenant under protest.

23.6 No Oral Modification. This Lease, the exhibits attached hereto or forming a
part hereof,  and the Purchase Option set forth all of the covenants,  promises,
agreements, conditions and understandings between Landlord and Tenant concerning
the Premises. Except as otherwise provided herein, this Lease may not be changed
or terminated  orally or in any manner other than by an agreement in writing and
signed by the party against whom  enforcement  of the change or  termination  is
sought.

23.7 Covenants To Bind and Benefit  Respective  Parties.  The terms,  covenants,
provisions  and  agreements  herein  contained  shall be  construed as covenants
running with the Land and shall bind and inure to the benefit of  Landlord,  its
successors and assigns, and Tenant, its permitted successors and assigns.

23.8  Captions  and  Table of  Contents.  The  captions  of this  Lease  are for
convenience and reference only and in no way define, limit or describe the scope
or intent of this Lease nor in any way affect this Lease.  The table of contents
preceding  this Lease but under the same cover is for the purpose of convenience
and  reference  only and is not to be deemed or construed in any as part of this
Lease, nor as supplemental thereto or amendatory thereof.

23.9 Memorandum of Lease. Landlord and Tenant agree to execute concurrently with
the execution of this Lease and to cause to be recorded in the public records of
Cuyahoga  County,  Ohio a memorandum of this Lease  substantially in the form of
Exhibit  D.  Tenant  agrees to  execute,  deliver  and  record a  memorandum  of
termination of this Lease upon  termination of this Lease in accordance with its
terms.

23.10 Waiver. The failure of either party to exercise any of its rights is not a
waiver of those  rights.  A party waives only those rights  specified in writing
and signed by the party waiving its rights.

23.11  Governing  Law.  This Lease shall be governed by the laws of the State of
Ohio. Tenant hereby consents to personal  jurisdiction in the courts of Ohio and
the United  States  District  Court for the  District  in which the  Facility 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 this Lease and expressly waives any
and all obligations Tenant may have as to venue in any of such courts.

23.12  Business  Days.  Business  days means Monday  through  Friday  inclusive,
excluding  holidays.  Throughout  this Lease,  wherever "days" are used the term
shall refer to calendar days. Wherever the term "business days" is used the term
shall refer to business days.

23.13  Time of the  Essence.  Time  shall be of the  essence as to the dates and
times of performance of each and every  warranty,  item,  condition and covenant
under this Lease.

23.14  Delays.  In any case where  either  party hereto fails to comply with any
term or provision of this Lease or to perform any act required  under this Lease
as a result of a delay  caused by or  resulting  from  acts of God,  war,  civil
commotion,  fire, flood or other casualty,  strikes,  inability to obtain labor,
materials or equipment,  government  regulations,  unusually severe weather,  or
other causes beyond such party's reasonable control, the performance of such act
shall be excused for the period of such delay, and the period for performance of
any such act shall be extended for a period equal to the period of such delay.

23.15 No Broker.  Tenant represents that it has not dealt with any agent, broker
or similar person with respect to this Lease,  and hereby  indemnifies  Landlord
against  any and all  parties who claim to have dealt with Tenant with regard to
this Lease.  Landlord represents that it has not dealt with any agent, broker or
similar person with respect to this Lease, and hereby indemnifies Tenant against
any and all parties  who claim to have dealt with  Tenant  with  respect to this
Lease.

23.16 Authority. Tenant is duly authorized to make and enter into this Lease and
to carry out the transactions  contemplated herein.  Landlord is duly authorized
to make and enter into this Lease and to carry out the transactions contemplated
herein.

23.17  Attorneys'  Fees and Litigation.  In the event of litigation  between the
parties to this Lease,  the  non-prevailing  party in any such litigation  shall
bear the full cost of such  litigation,  including  the  attorneys'  fees of the
prevailing party; it being understood and agreed that the determination of which
party is the  prevailing  party shall be  included in the matters  which are the
subject of such action or suit.

23.18 Further Assurances. Each party from time to time shall execute and deliver
to the other such additional  documents and provide such additional  information
as such  party may  reasonably  require  to carry  out the terms of this  Lease;
provided  nothing  herein shall  require  Landlord to take any action that would
materially increase Landlord's obligations or liabilities hereunder,  unless the
same are full  assumed  and paid by Tenant,  or that would  materially  decrease
Landlord's rights hereunder, unless the same are fully compensated by Tenant.

23.19  Counterparts.  This Lease may be executed  and  delivered  in one or more
counterparts,  each of which shall constitute an original, but all of which when
taken together shall constitute but one and the same agreement.

23.20 Landlord's Exculpation.  Notwithstanding  anything contained herein to the
contrary, Tenant shall look solely to Landlord to enforce Landlord's obligations
hereunder and no member, partner,  shareholder,  director,  officer,  principal,
employee  or agent,  directly or  indirectly,  of  Landlord  (collectively,  the
"Exculpated  Parties")  shall  be  personally  liable  for  the  performance  of
Landlord's  obligations  under this  Lease.  Tenant  shall not seek any  damages
against any of the  Exculpated  Parties.  The  obligations of the Landlord named
herein (or of any subsequent  landlord) under this Lease accruing from and after
the sale, conveyance, assignment or transfer by the Landlord named herein (or by
any  subsequent  landlord) of its interest in the Premises  shall not be binding
upon the  Landlord  named  herein  after the  sale,  conveyance,  assignment  or
transfer of the interest in the  Premises of the Landlord  named herein (or upon
any subsequent  landlord after the sale,  conveyance,  assignment or transfer of
the interest in the Premises of such subsequent  landlord);  and in the event of
any such sale, conveyance,  assignment or transfer, Landlord shall be and hereby
is entirely  freed and relieved of all  covenants  and  obligations  of Landlord
hereunder  that  accrue  from and after such  sale,  conveyance,  assignment  or
transfer of Landlord's  interest in the Premises.  The liability of Landlord for
Landlord's  obligations  under  this  Lease  shall in all  cases be  limited  to
Landlord's  interest in the  Premises  and its other assets and Tenant shall not
look to any other property or assets of any Exculpated Parties in seeking either
to enforce Landlord's  obligations under this Lease or to satisfy a judgment for
Landlord's failure to perform such obligations.

                                                       ****






                  IN WITNESS WHEREOF,  the undersigned have caused this Lease to
be executed on the date and year first above written.


In the presence of:                                      TENANT:


HARBORSIDE OF CLEVELAND LIMITED PARTNERSHIP
________________________________           By:  Harborside Health I Corporation,
                                           its duly authorized general partner
Print Name_______________________

________________________________           By:_________________________________
Print Name ______________________             Bruce J. Beardsley
                                               its Vice President

                                           LANDLORD:


                                           HHC BEACHWOOD, INC.
-------------------------------
Print Name ______________________          By: ________________________________
                                               Lars C. Haegg
                                                its Vice President
--------------------------------
Print Name ______________________





STATE OF                                    )
                                                              )
COUNTY OF                                   )


                  BEFORE ME, a Notary  Public in and for said  County and State,
personally  appeared HHC  BEACHWOOD,  INC., a Delaware  corporation,  by Lars C.
Haegg, its Vice President,  who  acknowledged  that he did execute the foregoing
instrument and such execution is his free act and deed and the free act and deed
of such corporation.

         IN TESTIMONY  WHEREOF, I have hereunto set my hand and official seal at
____________, _______ this _____ day of September, 2000.

                                                --------------------------------
                                                     Notary Public




STATE OF                                    )
                                                              )
COUNTY OF                                   )

         BEFORE ME, a Notary Public in and for said County and State  personally
appeared  HARBORSIDE OF CLEVELAND  LIMITED  PARTNERSHIP,  by Harborside Health I
Corporation,  its  corporate  general  partner,  by  Bruce  Beardsley,  its Vice
President,  who  acknowledged  that he did execute the  foregoing  instrument on
behalf of said  corporation  and limited  partnership  and such execution is his
free act and deed and the free act and deed of such  corporate  general  partner
and limited partnership.

         IN TESTIMONY  WHEREOF, I have hereunto set my hand and official seal at
_____________, ___________ this _____ day of September, 2000.

                                                     ---------------------------
                                                     Notary Public









                                List of Exhibits


Exhibit A                           Legal Description of Land
Exhibit B                           Permitted Encumbrances
Exhibit C                           Form of Qualifying Non-Disturbance Agreement
Exhibit D                           Form of Memorandum of Lease
Exhibit E                           Form of Tenant's Certificate




                                                   -iii-
                                       -1-


                                    EXHIBIT A

                            LEGAL DESCRIPTION OF LAND

                                                       ( BEACHWOOD )

         Situated  in the City of  Beachwood,  County of  Cuyahoga  and State of
         Ohio; And known as being part of Original Warrensville Township Lot No.
         60, and being further bounded and described as follows:  Beginning at a
         point on the center line of Richmond Road, at the southwesterly  corner
         of land conveyed to the Anshe Emeth Congregation by deed dated November
         28, 1910 and recorded in Volume 1314,  Page 423 of Cuyahoga County Deed
         Records;  said  point  also  being  the  southwesterly  corner  of said
         Original  Warrensville Township Lot No. 60; Thence South 89(Degree) 56'
         52" East along the southerly  lines of said Original Lot No. 60 and the
         Anshe Emeth Congregations's land, a distance of 536.23 feet to a point;

         Thence  North  0(Degree)  03' 08" East,  a distance  of 50.00 feet to a
         point,  said point being the principal place of beginning of the parcel
         herein intended to be described;

         Thence South  89(Degree)  56' 52" East and parallel  with the southerly
         lines of said  Original  Lot No. 60 and the Anshe  Emeth  Congregations
         land, a distance of 377.47 feet to a point of curvature;

         Thence  Northeasterly along the arc of a circle deflecting to the left,
         having a radius of 75.00 feet,  an arc distance of 117.69  feet,  and a
         chord distance of 105.98 feet which bears North 45(Degree) 05' 54" East
         to point of  tangency on the  southerly  prolongation  of the  westerly
         sideline of Park East Drive,  60 feet wide, as shown by the  Dedication
         Plat recorded in Volume 219, Page 35 of Cuyahoga County Map Records;

         Thence  North   0(Degree)  08'  40"  East  along  the  said   southerly
         prolongation of the westerly sideline of Park East Drive, a distance of
         260.11 feet to the  southwesterly  corner of existing  Park East Drive;
         said point  also being on the  northerly  line of land so  conveyed  to
         Anshe Emeth  Congregation;  Thence North  89(Degree) 56' 52" West along
         the said  northerly  line of the Anshe  Emeth  Congregation's  land,  a
         distance  of 452.89 feet to a point;  Thence  South  0(Degree)  03' 08"
         West, a distance of 334.99 feet to the principal place of beginning, be
         the same more or less, but subject to all legal highways.

      and bearing permanent parcel number: 742-28-011.






                                    EXHIBIT B

                              PERMITTED ENCUMBANCES


1.   Open-End  Mortgage  Deed from HHC  Beachwood,  Inc. to Beacon Hill Mortgage
     Corp., in the original amount of $20,017,500.00,  dated September 26, 2000,
     filed for record September 26, 2000, recorded in Document No. __________ of
     Cuyahoga County Records.

2.   Financing Statement from HHC Beachwood, Inc. to Beacon Hill Mortgage Corp.,
     dated September 26, 2000, filed for record on September 26, 2000 at _______
     and recorded as Cuyahoga County Financing Statement No. ______________.

3.   Covenants  and  Restrictions  contained  in an  instrument  from  The  Park
     Synagogue,  formerly known as Anshe Emeth Beth Tefilo Congregation to North
     Coast Beachwood Limited Partnership,  dated June 20, 1986, filed for record
     June 20,  1986,  recorded in Volume  86-3744,  Page 14 of  Cuyahoga  County
     Records.

4.   Covenants  and  Restrictions  contained in an  instrument  from North Coast
     Beachwood  Limited  Partnership to Park Partners,  dated December 31, 1987,
     filed for record January 1, 1988,  recorded in Volume  88-0095,  Page 13 of
     Cuyahoga County Records.

5.   Assignment  of  Leases  by and  between  Associated  Healthcare  Management
     Company, Inc. and Beachwood Care Center Limited Partnership, dated June 28,
     1996, filed for record July 1, 1996,  recorded in Volume 96-06293,  Page 52
     of Cuyahoga  County  Records.  Assignment  and  Assumption of Leases by and
     between  Beachwood  Care  Center  Limited  Partnership  and  Harborside  of
     Cleveland Limited Partnership, dated July 1, 1996, filed for record July 1,
     1996, recorded in Volume 96-06294, Page 9 of Cuyahoga County Records.

6.   Memorandum of Lease by and between HHC  Beachwood,  Inc. and  Harborside of
     Cleveland Limited  Partnership,  dated September 26, 2000, filed for record
     September 26, 2000,  recorded as Document No.  _________ of Cuyahoga County
     Records.






                                    EXHIBIT C

                  FORM OF QUALIFYING NON-DISTURBANCE AGREEMENT

                                See Attached Form





             SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT

         THIS  SUBORDINATION,  NONDISTURBANCE  AND  ATTORNMENT  AGREEMENT  (THIS
"Agreement")  is made and entered  into as of the _____ day of  _______________,
______, by and between [NAME OF LENDER], a  ________________________  ("Lender")
and  HARBORSIDE  OF  CLEVELAND  LIMITED  PARTNERSHIP,  a  Massachusetts  limited
partnership ("Tenant').

                                    RECITALS:

A.   Lender has made a loan or is about to make a loan to HHC  BEACHWOOD  INC, a
     Delaware corporation  ("Landlord"),  secured by a mortgage (the "Mortgage")
     covering the land situated in Beachwood,  Ohio, more particularly described
     on Exhibit A  attached  hereto and made a part  hereof,  together  with the
     improvements  now or hereafter  erected thereon (said land and improvements
     thereon being hereinafter collectively referred to as the "Real Property").

B.   By a certain lease  identified on Exhibit B attached  hereto (the lease and
     all amendments,  extensions and renewals thereto are hereinafter called the
     "Lease"), Landlord leased all or a portion of the Real Property to Tenant.

C.   As a condition precedent to Lender's disbursement of loan proceeds,  Lender
     has required  that Tenant  certify and confirm  certain  matters  about the
     Lease to lender  and  subordinate  the Lease and its  interest  in the Real
     Property in all respects to the lien of the Mortgage.

D.   As a condition  precedent to Tenant's  subordinating  the Lease,  Tenant is
     requiring  that  Lender  agree not to disturb  its  tenancy in the event of
     foreclosure of the Mortgage.

         NOW,  THEREFORE,  in  consideration  of the  foregoing  and the  mutual
covenants  herein  contained,  the sum of One Dollar and other good and valuable
consideration,  the receipt and sufficiency  whereof are hereby  acknowledged by
each of the  parties  hereto,  the Lender and  Tenant,  intending  to be legally
bound, hereby agree as follows:

1.   Representations and Warranties of Tenant. Tenant represents and warrants to
     Lender, as of the date hereof,  that Tenant is entitled to no credit and no
     offset or  deduction  in rent,  and  Tenant  has no claims or  defenses  to
     enforcement of the Lease.

2.   Subordination.  The Lease, the leasehold  estate created  thereby,  and the
     rights of Tenant  in,  to or under  the  Lease and the Real  Property,  are
     hereby  subjected and subordinated and shall remain in all respects and for
     all purposes  subject,  subordinate and junior to the lien of the Mortgage,
     as fully  and  with  the  same  effect  as if the  Mortgage  had been  duly
     executed,  acknowledged and recorded,  and the indebtedness secured thereby
     had been fully disbursed, prior to the execution of the Lease or possession
     of any  portion of the Real  Property  by Tenant,  or its  predecessors  in
     interest.

3.   Reliance by Lender.  The parties  further  agree that the  disbursement  by
     Lender of all or any substantial part of the indebtedness  shall constitute
     conclusive  reliance  by Lender  upon this  instrument  and the  provisions
     hereof and the subordination effected hereby.

4.   Tenant Not to Be Disturbed.  So long as Tenant attorns to Lender and is not
     in  Default,  as  defined  in the Lease,  Tenant's  rights  under the Lease
     including  but not limited to quiet  enjoyment  and  possession of the Real
     Property,  shall not be diminished or interfered with by Lender, and Lender
     shall not transfer or otherwise  convey the  Certificate of Need applicable
     to the nursing home located on the Real Property  except to a party to whom
     it conveys the Real Property.

5.   Tenant  to  Attorn  to  Lender.  If the  interests  of  Landlord  shall  be
     transferred  to and  owned by Lender  by  reason  of  foreclosure  or other
     proceedings  brought by it in lieu of or pursuant to a  foreclosure,  or by
     any other manner, and Lender succeeds to the interest of the Landlord under
     the  Lease,  Tenant  shall be  bound  to  Lender  under  all of the  terms,
     covenants  and  conditions of the Lease for the balance of the term thereof
     remaining and any extensions or renewals thereof which may be with the same
     force and effect as if Lender were the landlord under the Lease; and Tenant
     shall attorn to Lender,  as its landlord,  said  attornment to be effective
     and self-operative immediately upon Lender sending written notice to Tenant
     advising  that Lender has succeeded to the interest of Landlord in the Real
     property  without the execution of any further  instruments  on the part of
     any of the parties hereto. Except in the event of default by Landlord under
     the Mortgage and notice thereof from Lender, and without affecting Lender's
     security  interest  in rent due under the Lease,  Tenant  shall be under no
     obligation to pay rent to Lender until Tenant receives  written notice from
     Lender that it has  succeeded to the interest of Landlord  under the Lease.
     The  respective  rights and  obligations  of Tenant  and  Lender  upon such
     attornment,  to the extent of the then remaining balance of the term of the
     Lease and any such  extensions  and renewals,  shall be and are the same as
     now set forth  therein,  it being the  intention of the parties  hereto for
     this purpose to  incorporate  the Lease in this Agreement by reference with
     the same force and effect as if set forth in length herein.

6.   Lender Not Bound by Certain  Acts of Landlord.  If Lender shall  succeed to
     the  interest of Landlord  under the Lease,  Lender shall not (a) be liable
     for any act or  omission of any  landlord  (including  Landlord)  occurring
     prior to  Lender's  succession;  (b) be subject to any  offsets or defenses
     which Tenant might have against landlord (including Landlord) arising prior
     to Lender's  succession;  (c) be bound by any  security  deposits or by any
     rent or additional rent (excluding the Initial  Replacement  Reserve) which
     Tenant might have paid for more than one month in advance; nor (d) be bound
     by any amendment or modification of the Lease or any release from liability
     of any party  liable  for the  obligations  of Tenant  under the Lease made
     after the date of this Agreement without Lender's consent.

7.   Notice  and Cure of  Landlord's  Default.  No notice by Tenant to  Landlord
     under the Lease shall be binding on Lender unless a copy thereof is sent to
     Lender.  Tenant  agrees to send  Lender a copy of any notice  relating to a
     breach or default  under the Lease at the same time any such notice is sent
     to Landlord. Tenant agrees that if any such notice relates to the breach or
     default by Landlord  under the Lease,  then Lender,  at its sole option and
     without  obligation so to do, may cure any such default within a reasonable
     period,  but in no event less than any period of time as would be available
     to Landlord, but measured from the date that Tenant delivers a copy of such
     notice to Lender.

8.   No Modification.  No modification,  amendment, or release or any provisions
     of this Agreement, or of any right,  obligation,  claim, or cause of action
     arising  hereunder  shall be valid or binding  for any  purpose  whatsoever
     unless in writing and executed by the party against whom the same is sought
     to be asserted.

9.   Notices.  All  notices  required  to be given  hereunder  shall be given in
     writing to the appropriate party or parties at the following addresses:

         To Landlord:               HHC Beachwood, Inc.
                                    c/o Investcorp International
                                    280 Park Avenue
                                    New York, NY  10017
                                    Attn:  Lars C. Haegg and F. Jonathan Dracos
                                    Fax: (212)

         With a copy to:            David Furman, Esq.
                                    Gibson, Dunn & Crutcher
                                    200 Park Avenue
                                    New York, NY  10166
                                    Fax: (212) 351-4035

         To Tenant:                 Harborside of Cleveland Limited Partnership
                                    c/o Harborside Healthcare
                                    One Beacon Street
                                    Boston, MA 02108
                                    Attn:   President
                                    Fax:  (617) 646-5439

         With a copy to:   Martin R. Leinwand, Esq.
                                    McDermott, Will & Emery
                                    28 State Street
                                    Boston, MA  02109
                                    Fax:  (617) 535-3800

         To Lender:                 _______________________________
                                    ===============================
                                    -------------------------------


or at such  other  place as such  party may  designate  in  writing to the other
party.  All notices shall be deemed to have been  delivered (a) upon delivery if
hand-delivered,  (b) on the next  business  day after  deposit with a recognized
overnight  courier,  or (c) on the date shown on the return receipt if delivered
by registered mail, return receipt requested.

10.  Landlord's  Consent.  Landlord is joining  herein solely for the purpose of
     consenting to the terms and  conditions of this Agreement and agreeing that
     Tenant may rely upon any and all notices from Lender relating to the rights
     of Lender hereunder and under the Mortgage.

11.  Successors  and  Assigns.  This  Agreement  and  each and  every  covenant,
     agreement  and other  provisions  hereof  shall be binding upon the parties
     hereto and their heirs,  administrators,  representatives,  successors  and
     assigns,  including  without  limitation  each  and  every  holder  of  the
     landlord's or the tenants interest in the Lease,  including purchasers at a
     foreclosure sale and any other person having an interest therein, and shall
     inure to the benefit of Lender and its successors and assigns.

12.  Choice of Law. This Agreement shall be constructed  and enforced  according
     to, and  governed  by, the laws of the State of Ohio  without  reference to
     conflicts of laws provisions  which, but for this provision,  would require
     the application of the law of any other jurisdiction.

13.  Captions and Headings. The captions and headings of the various sections of
     this  Agreement  are for  convenience  only and are not to be  construed as
     confining  or  limiting  in any way the scope or  intent of the  provisions
     hereof.  Whenever  the  context  requires or permits,  the  singular  shall
     include  the  plural,  the  plural  shall  include  the  singular  and  the
     masculine, feminine and neuter shall be freely interchangeable.

14.  Counterparts.  This Agreement may be executed in any number of counterparts
     for the convenience of the parties,  all of which,  when taken together and
     after  execution by all parties hereto,  shall  constitute one and the same
     Agreement.




         IN WITNESS WHEREOF,  the parties hereto have each caused this Agreement
to be executed as of the date first above written.

In the presence of:                         TENANT:

                                            HARBORSIDE OF CLEVELAND
LIMITED PARTNERSHIP


___________________________________         By: Harborside Health I Corporation,
Print Name: _______________________         its duly authorized general partner.
___________________________________         By:  ___________________________
Print Name: _______________________                Its _____________________


In the presence of:                                           LENDER:

-----------------------------------         --------------------------------
Print Name: _______________________         By _____________________________
                                            Its ____________________________
-----------------------------------
Print Name: _______________________

         The  foregoing  Agreement  is  hereby  consented  and  agreed to by the
undersigned as set forth in Section 10 hereof.

In the presence of :                        HHC BEACHWOOD, INC.

_________________________________           By:____________________________
Print Name: _______________________         Its__________________________

---------------------------------
Print Name: _______________________








                            Acknowledgement of Lender

STATE OF                                    )
                                                     )        SS.
COUNTY OF                                            )

         Before me, a Notary Public in and for said County and State, personally
appeared the  above-named  [NAME OF LENDER],  by  ________________________,  its
___________________,  who acknowledged that he did sign the foregoing instrument
for and on  behalf  of said  corporation,  and that the same is the free act and
deed of said corporation and his free act and deed individually.
         IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
 ___________, ____________, this______ day of ______________, ______.

                                                     -------------------------
                                                     Notary Public


                           Acknowledgement of Landlord

STATE OF                                    )
                                            )        SS.
COUNTY OF                                   )


         Before me, a Notary Public in and for said County and State, personally
appeared  the  above-named  [NAME  OF  LANDLORD]  by  ____________________,  its
____________, who acknowledged that he did sign the foregoing instrument for and
on  behalf  of said  corporation,  and that the same is the free act and deed of
said corporation and his free act and deed individually.

         IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
 ________________, _______________this _______ day of ____________, ________.


                                                     ------------------------
                                                     Notary Public




                            Acknowledgment of Tenant


STATE OF                                             )
                                                     )        SS.
COUNTY OF                                            )


         Before me, a Notary Public in and for said County and State, personally
appeared  the  above-named  Harborside  of  Cleveland  Limited  Partnership,  by
Harborside   Health  I   Corporation,   its   corporate   general   partner   by
____________________________,    its   ______________,    ______________,    who
acknowledged that he did sign the foregoing instrument for and on behalf of said
corporate general partner and limited partnership, and that the same is the free
act and deed of said corporate  general partner and limited  partnership and his
free act and deed individually.

         IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
 _________________, this _______day of _____________, ___________.


                                                           --------------------
                                                              Notary Public












                                      -iv-


                                    EXHIBIT D

                           FORM OF MEMORANDUM OF LEASE

                                See Attached Form






                                       -1-


                               MEMORANDUM OF LEASE



         THIS  MEMORANDUM OF LEASE,  dated this 26th day of September,  2000, by
and between HHC BEACHWOOD,  INC.,  having its principal office at c/o Investcorp
International,  280 Park  Avenue,  New York,  New York 10017  ("Landlord"),  and
HARBORSIDE OF CLEVELAND LIMITED PARTNERSHIP, a Massachusetts limited partnership
having  its  principal  office c/o  Harborside  Healthcare,  One Beacon  Street,
Boston, Massachusetts 02108, ("Tenant").

                                          WITNESSETH:
                                          ----------


         1. For and in  consideration  of One Dollar  ($1.00) and other good and
valuable  consideration paid by Tenant to Landlord and in further  consideration
of the rents reserved and the covenants and  conditions  more  particularly  set
forth in that certain  Lease  between  Landlord and Tenant dated  September  26,
2000, (the "Lease"),  the Landlord demised and let unto Tenant and Tenant leased
and took from the  Landlord  that  certain  parcel of land and the  improvements
thereon  described  in Exhibit "A"  attached  hereto and made a part hereof (the
"Premises").

         2. The term of the  Lease  commenced  September  26,  2000,  and  shall
terminate  September 30, 2015,  provided that the term is subject to the rental,
covenants,  provisions  and  conditions  contained in the Lease.  Tenant has the
right to extend the term of the Lease for two five-year  renewal terms.  Subject
to the terms of the Lease, Tenant also has the right of first offer in the event
Landlord decides to market the Premises.

         3. This Memorandum of Lease is executed in simplified short form solely
for the  convenience  of the parties and for the purpose of recording  the same.
This  Memorandum  of Lease  shall not have the  effect of in any way  modifying,
supplementing  or abridging  the Lease or any of its  provisions as the same are
now or may hereafter be in force and effect.






         IN  WITNESS  WHEREOF,  the  parties  hereto  have  set  their  hands to
duplicate hereof the day and year first above written.

WITNESS:                         LANDLORD:

_______________________________  HHC BEACHWOOD, INC.,
Name:                            a Delaware Corporation

_______________________________  By: ________________________________
Name:                                 Lars C. Haegg, its Vice President

                                 TENANT:

                                 HARBORSIDE OF CLEVELAND LIMITED PARTNERSHIP, a
______________________________   Massachusetts limited partnership
Name:
                                 By: HARBORSIDE HEALTH I CORPORATION, a Delaware
                                                         corporation
-------------------------------
Name:                            By: _______________________________
                                     Bruce J. Beardsley, its Vice President





                           ACKNOWLEDGEMENT OF LANDLORD


STATE OF                                             )
                                                     )        SS:
COUNTY OF                                            )


         BEFORE ME, the undersigned,  a Notary Public in and for said County and
State, personally appeared Lars C. Haegg known to me to be the Vice President of
HHC BEACHWOOD,  INC. a Delaware corporation,  the corporation which executed the
foregoing instrument, and acknowledged to me that he did sign said instrument in
the name and on  behalf of said  corporation,  and that the same is his free act
and deed and the free act and deed of said corporation.

         IN TESTIMONY  WHEREOF, I have hereunto set my hand and official seal at
_______________, ______________ this ______ day of September 2000.


                                                ----------------------------
                                                        Notary Public


                                                 ACKNOWLEDMENT OF TENANT


STATE OF                                             )
                                                     )        SS:
COUNTY OF                                            )


         BEFORE ME, the undersigned,  a Notary Public in and for said County and
State, personally appeared Bruce J. Beardsley,  the Vice President of HARBORSIDE
HEALTH I CORPORATION, a Delaware corporation,  the general partner of HARBORSIDE
OF CLEVELAND  LIMITED  PARTNERSHIP,  a Massachusetts  limited  partnership,  the
Limited Partnership which executed the foregoing instrument, and acknowledged to
me  that  he did  sign  said  instrument  in the  name  and on  behalf  of  said
corporation  as corporate  general  partner of said Limited  Partnership,  being
thereunto duly authorized by all necessary corporate and partnership action; and
that such  signing  is his free act and deed  individually  and the free act and
deed of said corporate general partner and said Limited Partnership.

         IN TESTIMONY  WHEREOF, I have hereunto set my hand and official seal at
__________________, __________ this ______ day of September 2000.


                                                --------------------------
                                                        Notary Public





                                       -v-

                                    EXHIBIT E

                          FORM OF TENANT'S CERTIFICATE

                                See Attached Form









                            ESTOPPEL CERTIFICATE FORM

         The   undersigned,   HARBORSIDE   OF  CLEVELAND   LIMITED   PARTNERSHIP
("Tenant"),  is (a) the tenant  under that  certain  Lease dated as of September
___, 2000 (which,  together with all amendments,  modifications  and supplements
thereto,  is  attached  hereto  and  made  a part  hereof  as  Exhibit  A and is
hereinafter  referred to as the "Lease") between Tenant and HHC BEACHWOOD,  INC.
(the  "Landlord"),  for the space known as and by the street  address  3800 Park
East, Beachwood,  Ohio (the "Leased Premises"),  and (b) the optionee under that
certain  Option to Purchase  Agreement  dated as of September  ___, 2000 (which,
together with all amendments, modifications and supplements thereto, is attached
hereto and made a part hereof as Exhibit B and is hereinafter referred to as the
"Option Agreement"),  between Tenant and the Landlord with respect to the Leased
Premises.

         [With the  understanding  that  ________________  ("Purchaser") and its
lenders, successors and assigns including  _____________________("Lender")  will
rely on the representations  made herein in connection (i) Purchaser's  purchase
of the  Building and other  property,  (ii) the  assignment  to Purchaser of the
Lease,  and (iii)  Lender's  financing of the purchase of the Building and other
property],1  Tenant hereby  represents,  warrants and certifies to the Landlord,
[Purchaser and Lender] that, except as otherwise  disclosed in writing by Tenant
on Schedule I attached hereto,  the following  statements are true,  correct and
complete as of the date hereof:

1.   The Lease and Option Agreement,  in the form attached hereto (i) is in full
     force and effect and is the legal,  valid and binding obligation of Tenant,
     (ii) is enforceable  against Tenant in accordance with its terms, and (iii)
     has not been modified,  supplemented,  canceled, or amended in any respect,
     except as follows:

2.   The term of the Lease commenced on and shall expire on _______,  subject to
     the exercise of any of the  options,  if any,  described  in paragraph  (3)
     below.

3.   Tenant has  options  to renew the term of the  Lease,  each for a period of
     years. Tenant has not exercised any of the options except as follows:

4.   There  are  currently  no  actions  or  proceedings   (including,   without
     limitation,  arbitrations) between Landlord and Tenant (or their respective
     affiliates) affecting the Lease and/or the Option Agreement.

5.   Tenant is not in default  under the Lease or the Option  Agreement,  Tenant
     has not  received  any  notices  of  default  under the Lease or the Option
     Agreement  which has not been  cured.  Tenant has no claims,  counterclaim,
     defenses or rights of offset  against any rents or other amounts due and/or
     payable to Landlord under the Lease.

6.   The monthly rent ("Rent") for the Leased Premises is currently $ , the Rent
     is now fully accruing under the Lease, and the Rent has been paid through .
     Further,  no Rent has been  prepaid  more than thirty (30) days in advance.
     Tenant is obligated  to pay for all  utilities,  taxes and other  operating
     expenses incurred at the Building.

7.   Tenant is in  possession  of,  and is  occupying  the Leased  Premises  and
     conducting business therein. The Lease has not been assigned,  by operation
     of law or  otherwise,  and no sublease,  concession  agreement,  or license
     covering  the Leased  Premises,  or any portion  thereof,  has been entered
     into.

8.   The undersigned,  the Landlord has not defaulted under the Lease and/or the
     Option  Agreement,  and no event  has  occurred  that,  with the  giving of
     notices or the passage of time or both could result in a default  under the
     Lease and/or the Option Agreement.

9.   Tenant is not entitled to any rent  concessions,  free rent,  allowances or
     other similar compensation relating to the Leased Premises.

10.  There are no actions,  whether  voluntary  or  otherwise,  pending  against
     Tenant under the bankruptcy or insolvency  laws of the United States or any
     state thereof.

11.  Tenant  has  accepted  completed  possession  of the Leased  Premises,  all
     improvements  thereon or thereto  required to be made by Landlord,  if any,
     have been completed to the satisfaction of Tenant, all cash allowances,  if
     any, due Tenant for the leasing and the initial  construction of the Leased
     Premises  have been  completed  to the  satisfaction  of  Tenant,  all cash
     allowances, if any, due Tenant for the leasing and the initial construction
     of the Leased Premises have been paid in full in accordance with the Lease,
     and Landlord has no obligation to assume Tenant's  liabilities under leases
     of other premises  (whether within the Building,  on the Leased Premises or
     elsewhere).

12.  Tenant has not received any notice of any violation of any federal,  state,
     county or municipal  laws,  regulations,  ordinances,  orders or directives
     relating to the use, operation or condition of the Leased Premises.

13.  The  address  for notices to be sent to Tenant is as set forth in the Lease
     or as set forth below.

14.  Tenant,  its agents,  employees,  guests and invitees,  do not store,  use,
     produce,  or  dispose  of,  and have at no time in the past  stored,  used,
     produced or disposed of, any substance at the Leased Premises,  exposure to
     which is regulated by any federal,  state or local  environmental or health
     law, rule or regulation, and Tenant has no knowledge of the storage, use or
     disposal thereof on the Leased Premises or the Building.

15.  This certificate and the  representations  made herein shall be governed by
     the laws of the State of Ohio.

16.  [Tenant  acknowledges  that the  Landlord has the right to assign the Lease
     (and all  rents  and  other  performance  due from  Tenant  thereunder)  to
     Purchaser. Tenant agrees that upon its receipt of written notification from
     the Landlord of the sale of the Leased  Premises to Purchaser,  Tenant will
     tender all further  performance due from it to Purchaser or its nominee and
     will otherwise attorn to said party.]

         IN  WITNESS  WHEREOF,  this  certificate  has been  duly  executed  and
delivered by the authorized officer of the undersigned as of ___________, ____.


HARBORSIDE OF CLEVELAND LIMITED PARTNERSHIP
By: Harborside Health I Corporation,
       its general partner


By:  __________________________
         Name:
         Title:








                                    Exhibit A

                                    THE LEASE







                                    Exhibit B

                              THE OPTION AGREEMENT










1  The bracketed language to be added in connection with a sale or financing.