<PAGE>   1
                               
                                                                   EXHIBIT 10.27

                             MASTER LEASE AGREEMENT


                              DATED JUNE 16, 1997

                                 BY AND BETWEEN


                     CRESCENT REAL ESTATE FUNDING VII, L.P.
                                  AS LANDLORD,


                                      AND


                     CHARTER BEHAVIORAL HEALTH SYSTEMS, LLC

           AND EACH OF THE FACILITY SUBSIDIARIES LISTED ON EXHIBIT B,
                                   AS TENANT





<PAGE>   2

                               TABLE OF CONTENTS

<TABLE>
<S>                                                      <C>
ARTICLE 1 DEFINITIONS.....................................1         
 1.1 "Additional Charges".................................1         
 1.2 "Additional Rent"....................................1         
 1.3 "Affiliated Person"..................................1         
 1.4 "Agreement"..........................................2         
 1.5 "Allowance"..........................................2         
 1.6 "Applicable Laws"....................................2         
 1.7 "Award"..............................................2         
 1.8 "Business Day".......................................2          
 1.9 "Capital Addition"...................................2           
 1.10 "Capital Additions Cost"............................3           
 1.11 "Capital Expenditure"...............................3            
 1.12 "Change in Control".................................3            
 1.13 "Code"..............................................3            
 1.14 "Collective Leased Properties"......................4            
 1.15 "Commencement Date".................................4            
 1.16 "Comparable Facility"...............................4            
 1.17 "Condemnation"......................................4            
 1.18 "Condemnor".........................................4            
 1.19 "Contractor"........................................4            
 1.20 "Contractor's"......................................4            
 1.21 "Default"...........................................4            
 1.22 "Designated Leased Property"........................4            
 1.23 "Encumbrance".......................................4            
 1.24 "Entity"............................................4            
 1.25 "Environment".......................................5            
 1.26 "Environmental Notice"..............................5             
 1.27 "Environmental Obligation"..........................5
 1.28 "Environmental Report"..............................5
 1.29 "Event of Default"..................................5            
 1.30 "Extended Terms"....................................5            
 1.31 "Facility"..........................................5            
 1.32 "Facility Mortgage".................................5            
</TABLE>

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<PAGE>   3

<TABLE>
 <S>                                                     <C>
 1.33 "Facility Mortgagee"................................5            
 1.34 "Facility Subsidiaries".............................5            
 1.35 "Facility Trade Name"...............................5             
 1.36 "Fair Market Rental"................................5             
 1.37 "Fair Market Value".................................5             
 1.38 "Financial Officer's Certificate"...................6             
 1.39 "Financials"........................................6             
 1.40 "Fiscal Year".......................................6             
 1.41 "Fixed Term"........................................6             
 1.42 "Fixtures"..........................................6             
 1.43 "Franchise Agreement"...............................6             
 1.44 "Franchise Fees"....................................6             
 1.45 "Franchise Subordination Agreement".................6             
 1.46 "Franchisor"........................................6             
 1.47 "GAAP"..............................................6             
 1.48 "Government Agencies"...............................6             
 1.49 "Hazardous Substances"..............................7              
 1.50 "Impositions" ......................................7              
 1.51 "Indebtedness"......................................8              
 1.52 "Insurance Requirements"............................8              
 1.53 "Land"..............................................8              
 1.54 "Landlord"..........................................8        
 1.55 "Lease Year"........................................8        
 1.56 "Leased Improvements"...............................8        
 1.57 "Leased Personal Property"..........................8        
 1.58 "Leased Property"...................................9        
 1.59 "Legal Requirements"................................9        
 1.60 "Lending Institution"...............................9        
 1.61 "Lien"..............................................9        
 1.62 "Management Agreement"..............................9        
 1.63 "Manager"...........................................9        
 1.64 "Minimum Rent"......................................9        
 1.65 "Notice"...........................................10       
 1.66 "Non-Priority Additional Rent".....................10       
 1.67 "Officer's Certificate"............................10       
</TABLE>
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<TABLE>
<S>                                                      <C>
 1.68 "OpCo".............................................10       
 1.69 "Overdue Rate".....................................10       
 1.70 "Parent"...........................................10       
 1.71 "Permitted Encumbrances"...........................10       
 1.72 "Person"...........................................10    
 1.73 "Philadelphia Facility"............................10    
 1.74 "Primary Intended Use".............................10    
 1.75 "Prime Rate".......................................11    
 1.76 "Priority Additional Rent Base Amount".............11    
 1.77 "Purchase Agreement"...............................11    
 1.78 "Qualified Affiliate"..............................11    
 1.79 "Qualified Appraiser"..............................11    
 1.80 "Regulated Medical Wastes".........................12    
 1.81 "Rent".............................................12    
 1.82 "SEC"..............................................12    
 1.83 "State"............................................12    
 1.84 "Subordinated Creditor"............................12    
 1.85 "Subordination Agreement"..........................12    
 1.86 "Subsidiary".......................................12    
 1.87 "Substitute Leased Property".......................12    
 1.88 "Substitution Date"................................12    
 1.89 "Tenant"...........................................12    
 1.90 "Tenant's Personal Property".......................12    
 1.91 "Term".............................................13    
 1.92 "Unsuitable for Its Primary Intended Use"..........13    
 1.93 "Work".............................................13    
ARTICLE 2 COLLECTIVE LEASED PROPERTIES AND TERM..........13    
 2.1 Collective Leased Properties........................13    
 2.2 Condition of Collective Leased Properties...........14    
 2.3 Fixed Term..........................................15    
 2.4 Extended Term.......................................15    
 2.5 Determination of Minimum Rent for Extended Terms....16    
ARTICLE 3 RENT...........................................16    
 3.1 Rent................................................16    
 3.2 Late Payment of Rent................................18    
</TABLE>
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<TABLE>
<S>                                                      <C>  
 3.3 Net Lease...........................................19    
 3.4 No Termination, Abatement, Etc......................19    
 3.5 Annual Allowance....................................19    
ARTICLE 4  USE OF THE COLLECTIVE LEASED PROPERTIES.......20    
 4.1 Permitted Use.......................................20    
 4.2 Compliance with Legal and Insurance 
     Requirements, Etc...................................22    
 4.3 Compliance with Medicaid and Medicare 
     Requirements........................................22    
 4.4 Environmental Matters...............................22    
 4.5 Tenant's Right to Close Facilities..................24    
ARTICLE 5 MAINTENANCE AND REPAIRS........................25    
 5.1 Maintenance and Repair..............................25    
 5.2 Tenant's Personal Property..........................26    
 5.3 Yield Up............................................27    
 5.4 Encroachments, Restrictions, Etc....................28    
 5.5 Landlord to Grant Easements, Etc....................28    
 5.6 Philadelphia Facility...............................29    
ARTICLE 6 CAPITAL ADDITIONS, ETC.........................29    
 6.1 Construction of Capital Additions to 
     the Leased Property.................................29    
 6.2 Financing of Capital Additions......................29    
 6.3 Capital Additions Financed by Landlord..............30    
 6.4 Non-Capital Additions...............................31    
 6.5 Salvage.............................................31    
 6.6 Landlord's Right of First Refusal to 
     Provide Financing for Capital Additions.............31
ARTICLE 7 LIENS..........................................32   
 7.1 Liens...............................................32   
 7.2 Landlord's Lien.....................................32   
ARTICLE 8 PERMITTED CONTESTS.............................33   
ARTICLE 9 INSURANCE AND INDEMNIFICATION..................34   
 9.1 General Insurance Requirements......................34   
 9.2 Replacement Cost....................................35   
 9.3 Waiver of Subrogation...............................35   
 9.4 Form Satisfactory, Etc..............................35   
 9.5 Blanket Policy......................................36   
 9.6 No Separate Insurance...............................36   
 9.7 Indemnification of Landlord.........................37   
</TABLE>
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<TABLE>
<S>                                                      <C>
 9.8 Independent Contractor..............................37   
ARTICLE 10 CASUALTY......................................38   
 10.1 Insurance Proceeds.................................38   
 10.2 Damage or Destruction..............................38   
 10.3 Tenant's Property..................................39   
 10.4 Restoration of Tenant's Property...................39   
 10.5 No Abatement of Rent...............................39   
 10.6 Waiver.............................................39    
ARTICLE 11 CONDEMNATION..................................40    
 11.1 Total Condemnation, Etc............................40    
 11.2 Partial Condemnation...............................40    
 11.3 Abatement of Rent..................................41    
 11.4 Temporary Condemnation.............................41    
 11.5 Allocation of Award................................41    
ARTICLE 12 DEFAULTS AND REMEDIES.........................41    
 12.1 Events of Default..................................41    
 12.2 Remedies...........................................44    
 12.3 Tenant's Waiver....................................45    
 12.4 Application of Funds...............................46    
 12.5 Landlord's Right to Cure Tenant's Default..........46    
 12.6 Landlord's Right to Assume Contracts...............46    
ARTICLE 13 HOLDING OVER..................................47    
ARTICLE 14 LANDLORD'S DEFAULT............................47    
ARTICLE 15 LANDLORD FINANCING............................47    
ARTICLE 16 SUBLETTING AND ASSIGNMENT.....................48    
 16.1 Subletting and Assignment..........................48    
 16.2 Required Sublease Provisions.......................48    
 16.3 Permitted Assignments and Subleases................49    
 16.4 Sublease Limitation................................50    
 16.5 Tenant's Right to Mortgage its Leasehold...........50    
ARTICLE 17 ESTOPPEL CERTIFICATES AND 
 FINANCIAL STATEMENTS....................................50    
 17.1 Estoppel Certificates..............................50    
 17.2 Financial Statements...............................51    
 17.3 General Operations.................................51    
ARTICLE 18 LANDLORD'S RIGHT TO INSPECT...................52    
</TABLE>

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<PAGE>   7
<TABLE>
<S>                                                      <C>
ARTICLE 19 APPRAISAL.....................................53    
ARTICLE 20 FACILITY MORTGAGES............................55    
 20.1 Landlord May Grant Liens...........................55    
 20.2 Subordination of Lease.............................55    
 20.3 Notice to Mortgagee and Ground Landlord............56    
ARTICLE 21 ADDITIONAL COVENANTS OF TENANT................56    
 21.1 Conduct of Business................................56    
 21.2 Maintenance of Accounts and Records................56    
 21.3 Payments to Franchisor.............................57    
 21.4 Management of Collective Leased Properties.........57    
 21.5 Liens and Encumbrances.............................57    
ARTICLE 22 MISCELLANEOUS.................................58    
 22.1 Limitation on Payment of Rent......................58    
 22.2 No Waiver..........................................58    
 22.3 Remedies Cumulative................................58    
 22.4 Severability.......................................58    
 22.5 Acceptance of Surrender............................59    
 22.6 No Merger of Title.................................59    
 22.7 Conveyance by Landlord.............................59    
 22.8 Quiet Enjoyment....................................59    
 22.9 Landlord's Consent.................................60    
 22.10 Memorandum of Lease...............................60    
 22.11 Notices...........................................60    
 22.12 Construction......................................61    
 22.13 Counterparts; Headings............................62    
 22.14 Applicable Law, Etc...............................62    
 22.15 Substitution of Leased Properties.................62    
 22.16 No Broker.........................................64    
 22.17 Confidentiality...................................65    
</TABLE>

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<PAGE>   8

                             MASTER LEASE AGREEMENT

         THIS MASTER LEASE AGREEMENT is entered into as of the 16th day of
June, 1997, by and between CRESCENT REAL ESTATE FUNDING VII, L.P., a Delaware
limited partnership, having its principal office at 777 Main Street, Suite
2100, Fort Worth, Texas 76102  ("LANDLORD"), CHARTER BEHAVIORAL HEALTH SYSTEMS,
LLC, a Delaware limited liability company, having its principal office at Suite
900, 3414 Peachtree Rd., N.E., Atlanta, GA 30326 ("OPCO"), and each of the
entities listed on Exhibit B attached hereto.

                             W I T N E S S E T H :

         WHEREAS, Landlord owns fee simple title to the Collective Leased
Properties (this and other capitalized terms used and not otherwise defined
herein having the meanings ascribed to such terms in Article 1); and 

        WHEREAS, Landlord wishes to lease the Collective Leased Properties to 
Tenant and Tenant wishes to lease the Collective Leased Properties from 
Landlord, all subject to and upon the terms and conditions herein set forth; 

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

                                   ARTICLE 1
                                  DEFINITIONS

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

         1.1  "ADDITIONAL CHARGES" shall have the meaning given such term in
Section 3.1.3.

         1.2  "ADDITIONAL RENT" shall mean the monthly sum of One Million Six
Hundred and Sixty-Six Thousand Six Hundred Sixty-Seven Dollars ($1,666,667.00).

         1.3  "AFFILIATED PERSON" shall mean, with respect to any Person, (a)
in the case of any such Person which is a partnership, any partner in such
partnership, (b) in the case of any such Person which is a limited liability
company, any member of such company, and (c) any other Person which is a
Parent, a Subsidiary, or a Subsidiary of a Parent with respect to such Person
or to one or more of the Persons referred to in the preceding clauses (a) and
(b).





<PAGE>   9

         1.4  "AGREEMENT" shall mean this Master Lease Agreement, including
Exhibits A  and B hereto, as it and they may be amended from time to time as
herein provided.

         1.5  "ALLOWANCE" shall mean an annual amount with respect to each
Lease Year not to exceed the additional rent for each such Lease Year.  The
Allowance shall be paid by Landlord to Tenant pursuant to Section 3.5 hereof.

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

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

         1.8  "BUSINESS DAY" shall mean any day other than Saturday, Sunday, or
any other day on which banking institutions in the states of Texas, Georgia and
the State are authorized by law or executive action to close.

         1.9  "CAPITAL ADDITION" shall mean one or more new buildings, or one
or more additional structures annexed to any portion of any of the Leased
Improvements with respect to any of the Collective Leased Properties, or the
material expansion of existing improvements, which are constructed on any
parcel or portion of the Land during the Term, including the construction of a
new wing or new story, the renovation of existing improvements on any of the
Collective Leased Properties in order to provide a functionally new facility
needed to provide services not previously offered, or any  material expansion,
construction, renovation or conversion in order to increase by more than 10%
the bed capacity of any Facility, to change the purpose for which such beds are
utilized or to improve materially the quality of any Facility.




                                     - 2 -
<PAGE>   10

         1.10  "CAPITAL ADDITIONS COST" shall mean the cost of any Capital
Addition proposed to be made by Tenant at any of the Collective Leased
Properties, whether paid for by Tenant or Landlord.  Such cost shall include
(a) the cost of construction of the Capital Addition, including site
preparation and improvement, materials, labor, supervision, developer and
administrative fees, legal fees, and related design, engineering and
architectural services, the cost of any fixtures, the cost of equipment and
other personalty, the cost of construction financing (including, but not
limited to, capitalized interest) and other miscellaneous costs approved by
Landlord, (b) if agreed to by Landlord in writing, in advance, the cost of any
land (including all related acquisition costs incurred by Tenant) contiguous to
the applicable Leased Property which is to become a part of such Leased
Property purchased for the purpose of placing thereon a Capital Addition or any
portion thereof or for providing means of access thereto, or parking facilities
therefor, including the cost of surveying the same, (c) the cost of insurance,
real estate taxes, water and sewage charges and other carrying charges for such
Capital Addition during construction, (d) title insurance charges, (e) filing,
registration and recording taxes and fees, (f) documentary stamp or transfer
taxes, and (g) all actual and reasonable costs and expenses of Landlord and
Tenant and, if agreed to by Landlord in writing, in advance, any Lending
Institution committed to finance the Capital Addition relating to financing for
the Capital Addition, including, but not limited to, all (i) reasonable
attorneys' fees and expenses, (ii) printing expenses, (iii) filing,
registration and recording taxes and fees, (iv) documentary stamp or transfer
taxes, (v) title insurance charges and appraisal fees, (vi) rating agency fees,
and (vii) commitment fees charged by any Lending Institution advancing or
offering to advance any portion of any financing to which Landlord has
consented in writing for such Capital Addition.

         1.11  "CAPITAL EXPENDITURE" shall mean any expenditure with respect to
the Collective Leased Properties that is properly categorized as a capital
expenditure in accordance with GAAP.

         1.12  "CHANGE IN CONTROL" shall mean the acquisition by any Person, or
two or more Persons acting in concert, of beneficial ownership (within the
meaning of Rule 13d-3 of the SEC) of 50% or more, or rights, options or
warrants to acquire 50% or more, of the outstanding shares of voting stock of
Tenant or any Facility Subsidiary, as the case may be, or the merger or
consolidation of Tenant or any Facility Subsidiary (except with OpCo, a
Facility Subsidiary or a wholly-owned Subsidiary of OpCo), as the case may be
with or into any other Person or any one or a series of related sales or
conveyances to any Person (except to OpCo, a Facility Subsidiary or a
wholly-owned subsidiary of OpCo) of all or substantially all of the assets of
Tenant or any Facility Subsidiary, as the case may be.  In the case of OpCo,
only the following shall constitute a Change in Control; (i) a sale or
conveyance in one or a related series of transactions of all or substantially
all the assets of OpCo to any Person and (ii) a merger or consolidation in
which OpCo is not the surviving or resulting entity or of which the holders of
the equity interests of OpCo immediately prior to the merger or consolidation
do not own more than 50% of the equity interests in the surviving or resulting
entity immediately after the merger or consolidation.

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





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         1.14  "COLLECTIVE LEASED PROPERTIES" shall have the meaning given such
term in Section 2.1.

         1.15  "COMMENCEMENT DATE" shall mean June 17, 1997.

         1.16  "COMPARABLE FACILITY" shall mean a facility having as its
primary use the Primary Intended Use and which is reasonably acceptable to
Landlord, with an expected future profitability substantially equivalent to or
greater than that of the Designated Leased Property which Tenant proposes that
it replace, both immediately prior to such substitution and as reasonably
projected over the term of this Agreement, taking into account any cash paid or
received in connection with the substitution and any other relevant factors.

         1.17  "CONDEMNATION" shall mean, with respect to any of the Collective
Leased Properties, (a) the exercise of any governmental power with respect to
such Leased Property, whether by legal proceedings or otherwise, by a Condemnor
of its power of condemnation, (b) a voluntary sale or transfer of such Leased
Property by Landlord to any Condemnor, either under threat of condemnation or
while legal proceedings for condemnation are pending, and (c) a taking or
voluntary conveyance of all or part of such Leased Property, or any interest
therein, or right accruing thereto or use thereof, as the result or in
settlement of any Condemnation or other eminent domain proceeding affecting
such Leased Property, whether or not the same shall have actually been
commenced.

         1.18  "CONDEMNOR" shall mean any public or quasi-public authority, or
private corporation or individual, having the power of Condemnation.

         1.19  "CONTRACTOR" shall have the meaning given such term in Section
9.8.

         1.20  "CONTRACTOR'S" Insurance Certificate" shall have the meaning
given such term in Section 9.8.

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

         1.22  "DESIGNATED LEASED PROPERTY" shall mean a property designated by
Tenant pursuant to Section 22.15 on which there exists a Comparable Facility
which Tenant proposes to substitute for a Leased Property.

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

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





                                     - 4 -
<PAGE>   12

         1.25  "ENVIRONMENT" shall mean soil, surface waters, ground waters,
land, stream, sediments, surface or subsurface strata, ambient air, physical
structures and equipment, and where radon gas is present, the interior air of
buildings.

         1.26  "ENVIRONMENTAL NOTICE" shall have the meaning given such term in
Section 4.4.1.

         1.27  "ENVIRONMENTAL OBLIGATION" shall have the meaning given such
term in Section 4.4.1.

         1.28  "ENVIRONMENTAL REPORT" shall have the meaning given such term in
Section 4.4.2.

         1.29  "EVENT OF DEFAULT" shall have the meaning given such term in
Section 12.1.

         1.30  "EXTENDED TERMS" shall have the meaning given such term in
Section 2.4.

         1.31  "FACILITY" shall mean, with respect to any of the Collective
Leased Properties, the facility offering health care or related services being
operated or proposed to be operated on such Leased Property.

         1.32  "FACILITY MORTGAGE" shall mean, with respect to any of the
Collective Leased Properties, any Encumbrance placed upon such Leased Property
in accordance with Article 20.

         1.33  "FACILITY MORTGAGEE" shall mean the holder of any Facility
Mortgage.

         1.34  "FACILITY SUBSIDIARIES" shall mean the Entities listed on
Exhibit B attached hereto, each of which is a wholly owned Subsidiary of OpCo.

         1.35  "FACILITY TRADE NAME" shall mean, with respect to any Facility,
any name under which Tenant has conducted the business of operating such
Facility at any time during the Term.

         1.36  "FAIR MARKET RENTAL" shall mean, with respect to any of the
Collective Leased Properties, the rental which a willing tenant not compelled
to rent would pay a willing landlord not compelled to lease for the use and
occupancy of such Leased Property (including all Capital Additions) on the
terms and conditions of this Agreement for the term in question , assuming
Tenant is not in default hereunder and determined by agreement between Landlord
and Tenant or, failing agreement, in accordance with the appraisal procedures
set forth in Article 19.

         1.37  "FAIR MARKET VALUE" shall mean, with respect to any of the
Collective Leased Properties, the price that a willing buyer not compelled to
buy would pay a willing seller not compelled to sell for such Leased Property
(without taking into account any reduction in value resulting from any
indebtedness to which such Leased Property is subject), assuming the same is
unencumbered by this Agreement and determined by agreement between Landlord and
Tenant or, failing agreement, the appraisal procedures set forth in Article 19.





                                     - 5 -
<PAGE>   13

         1.38  "FINANCIAL OFFICER'S CERTIFICATE" shall mean, as to any Person,
a certificate of the chief financial officer of such Person, duly authorized,
accompanying the financial statements required to be delivered by such Person
pursuant to Section 17.2, in which such officer shall certify (a) that such
statements have been properly prepared in accordance with GAAP and fairly
present in all material respects the financial condition of such Person at and
as of the dates thereof and the results of its and their operations for the
periods covered thereby, (except that, in the case of financial statements
delivered pursuant to Sections 17.2(a) and 17.2(c), the certificate shall state
the extent to which such financial statements are not in accordance with GAAP)
and (b) certify that such officer has reviewed this Agreement and has no
knowledge of any Default or Event of Default hereunder.

         1.39  "FINANCIALS" shall mean, for any Fiscal Year or other accounting
period of OpCo, annual audited and quarterly unaudited financial statements for
OpCo, including OpCo's balance sheet and the related statements of income and
cash flows, all in reasonable detail, and setting forth in comparative form the
corresponding figures for the corresponding period in the preceding Fiscal
Year, and prepared in accordance with GAAP throughout the periods reflected,
except to the extent GAAP is customarily not complied with by OpCo in preparing
quarterly unaudited financial statements.

         1.40  "FISCAL YEAR" shall mean the twelve (12) month period from
October 1 to September 30.

         1.41  "FIXED TERM" shall have the meaning given such term in Section
2.3.

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

         1.43  "FRANCHISE AGREEMENT" shall mean, collectively, that certain
Franchise Agreement of even date herewith by and between Franchisor, as
franchisor, and OpCo, as franchisee, and those certain Franchise Agreements of
even date herewith by and between Franchisor, as franchisor, and each of the
Facility Subsidiaries, as franchisee.

         1.44  "FRANCHISE FEES" shall mean all amounts payable by Tenant to
Franchisor under the Franchise Agreement.

         1.45  "FRANCHISE SUBORDINATION AGREEMENT" shall mean that certain
Subordination Agreement of even date herewith, as the same may be amended from
time to time, by and among OpCo, Landlord and Franchisor.

         1.46  "FRANCHISOR" shall mean, collectively, Magellan Health Services,
Inc., a Delaware corporation, and Charter Franchise Services, LLC, a Delaware
limited liability company.

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

         1.48  "GOVERNMENT AGENCIES" shall mean any court, agency, authority,
board (including, without limitation, environmental protection, planning and
zoning), bureau, commission,





                                     - 6 -
<PAGE>   14

department, office or instrumentality of any nature whatsoever of any
governmental unit of the United States or the State or any county or any
political subdivision of any of the foregoing, whether now or hereafter in
existence, having jurisdiction over Tenant or the Collective Leased Properties
or any portion thereof or the Facilities operated thereon.

         1.49  "HAZARDOUS SUBSTANCES" shall mean any substance:

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

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

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

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

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

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

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

           (h)  without limitation, constitutes Regulated Medical Wastes.

         1.50  "IMPOSITIONS" shall mean, with respect to any of the Collective
Leased Properties, collectively, all taxes (including, without limitation, all
taxes imposed under the laws of the State, as such laws may be amended from
time to time, and all ad valorem, sales and use, single business, gross
receipts, transaction privilege, rent or similar taxes as the same relate to or
are imposed upon Landlord, Tenant or the business conducted upon such Leased
Property), assessments (including, without limitation, all assessments for
public improvements or benefit,





                                     - 7 -
<PAGE>   15

whether or not commenced or completed prior to the date hereof and whether or
not to be completed within the Term), ground rents, water, sewer or other rents
and charges, excises, tax levies, fees (including, without limitation, license,
permit, inspection, authorization and similar fees) and all other governmental
charges, in each case whether general or special, ordinary or extraordinary, or
foreseen or unforeseen, of every character in respect of such Leased Property
or the business conducted thereon by Tenant (including all interest and
penalties thereon due to any failure in payment by Tenant), which at any time
prior to, during or in respect of the Term hereof may be assessed or imposed on
or in respect of or be a lien upon (a) Landlord's interest in such Leased
Property, (b) such Leased Property or any part thereof or any rent therefrom or
any estate, right, title or interest therein, or (c) any occupancy, operation,
use or possession of, or sales from, or activity conducted on, or in connection
with such Leased Property or the leasing or use of such Leased Property or any
part thereof by Tenant; provided, however, that nothing contained herein shall
be construed to require Tenant to pay (i) any tax based on net income imposed
on Landlord, (ii) any net revenue tax of Landlord, (iii) any transfer fee or
other tax imposed with respect to the sale, exchange, financing, mortgaging, or
other disposition by Landlord of the applicable Leased Property or the proceeds
thereof (other than in connection with the sale, exchange or other disposition
to, or in connection with a transaction involving, Tenant), or (iv) any single
business, franchise fees, gross receipts (other than a tax on any rent received
by Landlord from Tenant), transaction privilege, rent or similar taxes as the
same relate to or are imposed upon Landlord, except to the extent that any tax,
assessment, tax levy or charge that Tenant is obligated to pay pursuant to the
first sentence of this definition and that is in effect at any time during the
Term hereof is totally or partially repealed, and a tax, assessment, tax levy
or charge set forth in clause (i) or (ii) preceding is levied, assessed or
imposed expressly in lieu thereof.

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

         1.52  "INSURANCE REQUIREMENTS" shall mean all terms of any insurance
policy required by this Agreement and all requirements of the issuer of any
such policy.

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

         1.54  "LANDLORD" shall have the meaning given such term in the
preamble to this Agreement.

         1.55  "LEASE YEAR" shall mean any consecutive annual period starting
on the Commencement Date and ending on the day prior to the anniversary
thereof; provided that if the Commencement Date is not the first day of a
calendar month then the first (1st) Lease Year shall end on the last day of the
calendar month in which occurs the date which would otherwise be the last day
of such Lease Year.

         1.56  "LEASED IMPROVEMENTS" shall have the meaning given such term in
Section 2.1(b).

         1.57  "LEASED PERSONAL PROPERTY" shall have the meaning given such
term in Section 2.1(e).





                                     - 8 -
<PAGE>   16

         1.58  "LEASED PROPERTY" shall mean any one of the Collective Leased
Properties.

         1.59  "LEGAL REQUIREMENTS" shall mean, with respect to any of the
Collective Leased Properties, all federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting such Leased Property or the maintenance,
construction, alteration or operation thereof, whether now or hereafter enacted
or in existence, including, without limitation, (a) all permits, licenses,
certificates of need, authorizations and regulations necessary to operate such
Leased Property for its Primary Intended Use, and (b) all covenants,
agreements, restrictions and encumbrances contained in any instruments at any
time in force affecting such Leased Property, including those which may (i)
require material repairs, modifications or alterations in or to such Leased
Property or (ii) in any way adversely affect the use and enjoyment thereof.

         1.60  "LENDING INSTITUTION" shall mean any insurance company,
federally insured commercial or savings bank, national banking association,
savings and loan association, employees' welfare, pension or retirement fund or
system, syndicated lenders' group, commercial finance company, leasing company,
corporate profit sharing or pension trust, college or university, or real
estate investment trust, including any corporation qualified to be treated for
federal tax purposes as a real estate investment trust, such trust having a net
worth of at least $50,000,000.

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

         1.62  "MANAGEMENT AGREEMENT" shall mean any agreement whether written
or oral entered into between Tenant and any other party (including any
Affiliated Person as to Tenant) pursuant to which management services are
provided to all or substantially all of any Facility, together with all
amendments, modifications or supplements thereto.

         1.63  "MANAGER" shall mean the management party under any Management
Agreement

         1.64  "MINIMUM RENT" shall mean the following monthly sums with
respect to the Fixed Term:

<TABLE>
<CAPTION>
         Lease Year                                          Minimum Rent  
              <S>                                            <C>
              1                                              $3,476,666.67  

              2                                              $3,650,500.00  
                                                                            
              3                                              $3,833,025.00  
                                                                            
              4                                              $4,024,676.25  

              5                                              $4,225,910.06  



</TABLE>



                                     - 9 -
<PAGE>   17

<TABLE>
              <S>                                            <C>              
              6                                              $4,437,205.56 
                                                                             
              7                                              $4,659,065.84 

              8                                              $4,892,019.13 
                                                                             
              9                                              $5,136,620.09 
                                                                             
             10                                              $5,393,451.09 

             11                                              $5,663,123.64 
                                                                             
             12                                              $5,946,279.82

</TABLE>

With respect to each Extended Term, the Minimum Rent shall be an amount
determined in accordance with Section 2.5.

         1.65  "NOTICE" shall mean a notice given in accordance with Section
22.11.

         1.66  "NON-PRIORITY ADDITIONAL RENT" shall mean the installments of
additional rent with respect to any Lease Year in excess of the Priority
Additional Rent Base Amount.

         1.67  "OFFICER'S CERTIFICATE" shall mean a certificate signed by an
officer of Tenant.

         1.68  "OPCO" shall have the meaning given such term in the preamble to
this Agreement.

         1.69  "OVERDUE RATE" shall mean, on any date, a per annum rate of
interest equal to the lesser of the Prime Rate plus six (6) percentage points
and the maximum rate then permitted under applicable law.

         1.70  "PARENT" shall mean, with respect to any Person, any Person
which owns directly, or indirectly through one or more Subsidiaries, more than
fifty percent (50%) of beneficial equity interest in such Person.

         1.71  "PERMITTED ENCUMBRANCES" shall mean, with respect to any of the
Collective Leased Properties, all rights, restrictions, and easements of record
set forth on Schedule B to the applicable owner's or leasehold title insurance
policy issued to Landlord on the date hereof, plus any other such encumbrances
as may have been consented to in writing by Landlord from time to time, plus
items that constitute Permitted Exceptions under and as that term is defined in
the Purchase Agreement.

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

         1.73  "PHILADELPHIA FACILITY" shall mean the "Charter Fairmount"
Facility currently under renovation and located in Philadelphia, Pennsylvania.

         1.74  "PRIMARY INTENDED USE" shall have the meaning given such term in
Section 4.1.1.





                                     - 10 -
<PAGE>   18

         1.75  "PRIME RATE" shall mean the rate of interest per annum publicly
announced from time to time by The Chase Manhattan Bank (or its successor) as
its prime rate in effect at its principal office in New York City, New York.

         1.76  "PRIORITY ADDITIONAL RENT BASE AMOUNT" for any Lease Year shall
mean an amount of Additional Rent equal to Ten Million Dollars ($10,000,000);
provided, however, that if Landlord funds, or makes an irrevocable commitment
to fund, Capital Expenditures for any Lease Year in an amount in excess of Ten
Million Dollars ($10,000,000) at Tenant's request, then the Priority Additional
Rent Base Amount for such Lease Year shall be increased to the amount of
Capital Expenditures funded or committed to be funded by Landlord for such
Lease Year.  Notwithstanding the foregoing, in the event that, and for so long
as, the accrued and unpaid Franchise Fees, including interest thereon, if any,
equal or exceed Fifteen Million Dollars ($15,000,000), then the Priority
Additional Rent Base Amount for any such Lease Year shall be reduced to $0.00;
provided, however, that if Landlord funds, or makes an irrevocable commitment
to fund, Capital Expenditures for any Lease Year in any amount at Tenant's
request, then the Priority Additional Rent Base Amount for such Lease Year
shall be increased from $0.00 to the amount of Capital  Expenditures funded or
committed to be funded by Landlord for such Lease Year.  The Priority
Additional Rent Base Amount shall be computed monthly in advance of the payment
of Rent due hereunder for the next succeeding month.  Such calculation shall be
made on the 25th  day of the month, unless the 25th  day of the month is not a
Business Day, in which event such calculation for such month shall be made on
the first Business Day following such 25th day.  Notwithstanding anything set
forth above to the contrary, if any request by Tenant to Landlord for a
disbursement of the Allowance in any Fiscal Year is for an amount in excess of
the amount budgeted for capital expenditures in Tenant's approved annual budget
for such Fiscal Year, then the Priority Additional Rent Base Amount shall not
be increased as provided above to the extent that the amount of such request is
above the budgeted amount unless such request is accompanied by Franchisor's
consent to such requested amount.

         1.77  "PURCHASE AGREEMENT" shall have the meaning given such term in
Section 22.15 hereof.

         1.78  "QUALIFIED AFFILIATE" shall mean any (x) Parent or Subsidiary of
OpCo, or (y) partnership or limited liability company in which OpCo has an
ownership interest of not less than 25%, whether or not such interest is
controlling.

         1.79  "QUALIFIED APPRAISER" shall mean an appraiser who is not in
control of, controlled by or under common control with either Landlord or
Tenant and has not been an employee of Landlord or Tenant or any Affiliated
Person with respect to either of Landlord or Tenant at any time, who is
qualified to appraise commercial real estate in the State and is a member of
the American Institute of Real Estate Appraisers (or any successor association
or body of comparable standing if such Institute is not then in existence) and
who has held his or her certificate as an M.A.I, or its equivalent for a period
of not less than three (3) years, and has been actively engaged in the
appraisal of commercial real estate in such area for a period of not less than
five (5) years, immediately preceding his or her appointment hereunder.





                                     - 11 -
<PAGE>   19

         1.80  "REGULATED MEDICAL WASTES" shall mean all materials generated by
Tenant, subtenants, patients, occupants or the operators of the Collective
Leased Properties which are now or may hereafter be subject to regulation
pursuant to the Material Waste Tracking Act of 1988, or any Applicable Laws
promulgated by any Government Agencies.

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

         1.82  "SEC" shall mean the Securities and Exchange Commission.

         1.83  "STATE" shall mean, as to each Leased Property, the state in
which such Leased Property is located.

         1.84  "SUBORDINATED CREDITOR" shall mean any creditor of Tenant which
is a party to a Subordination Agreement in favor of Landlord.

         1.85  "SUBORDINATION AGREEMENT" shall mean any agreement executed by a
Subordinated Creditor pursuant to which the payment and performance of Tenant's
obligations to such Subordinated Creditor are subordinated to the payment and
performance of Tenant's obligations to Landlord under this Agreement.

         1.86  "SUBSIDIARY" shall mean, with respect to any Person, any Entity
in which such Person owns directly, or indirectly through one or more
Subsidiaries,  more  than fifty percent (50%) of the beneficial equity interest
of such Person.

         1.87  "SUBSTITUTE LEASED PROPERTY" shall have the meaning given such
term in Section 22.15 hereof.

         1.88  "SUBSTITUTION DATE" shall have the meaning given such term in
Section 22.15 hereof.

         1.89  "TENANT" shall mean OpCo and the Facility Subsidiaries listed in
Exhibit B, jointly and severally.

         1.90  "TENANT'S PERSONAL PROPERTY" shall mean all tangible personal
property now owned or hereafter acquired by Tenant on or after the date hereof
and located at any of the Collective Leased Properties or used in connection
with Tenant's business at any of the Collective Leased Properties, including,
without limitation, all motor vehicles and consumable inventory and supplies,
furniture, furnishings, movable walls and partitions, equipment and machinery
and all other tangible personal property of Tenant, and all modifications,
replacements, alterations and additions to such personal property installed at
the expense of Tenant.





                                     - 12 -
<PAGE>   20

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

         1.92  "UNSUITABLE FOR ITS PRIMARY INTENDED USE" shall mean, with
respect to any Facility, a state or condition of such Facility such that (a)
following any damage or destruction involving such Leased Property, such Leased
Property cannot reasonably be expected to be restored to substantially the same
condition as existed immediately before such damage or destruction, and as
otherwise required by Section 10.2.3, within six (6) months following such
damage or destruction or such shorter period of time as to which business
interruption insurance is available to cover Rent and other costs related to
such Leased Property following such damage or destruction, or (b) as the result
of a partial taking by Condemnation, such Facility cannot be operated, in the
good faith judgment of OpCo, on a commercially practicable basis for its
Primary Intended Use taking into account, among other relevant factors, the
number of usable beds, the amount of square footage, or the revenues affected
by such damage or destruction or partial taking.

         1.93  "WORK" shall have the meaning given such term in Section 10.2.3.

                                   ARTICLE 2
                     COLLECTIVE LEASED PROPERTIES AND TERM

         2.1  Collective Leased Properties.

         Upon and subject to the terms and conditions hereinafter set forth,
Landlord leases to Tenant and Tenant leases from Landlord all of the following
(collectively, the "COLLECTIVE LEASED PROPERTIES"):

           (a)  those certain tracts, pieces and parcels of land conveyed to
         Landlord pursuant to Deeds dated on or about the date hereof, the
         common names and street addresses of which are set forth in Exhibit A
         attached hereto (the "LAND");

           (b)  all buildings, structures, Fixtures and other improvements of
         every kind including, but not limited to, alleyways and connecting
         tunnels, sidewalks, utility pipes, conduits and lines (on-site and
         off-site), parking areas and roadways appurtenant to such buildings
         and structures presently situated upon the Land and all Capital
         Additions (collectively, the "LEASED IMPROVEMENTS");

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

           (d)  all equipment, machinery, fixtures, and other items of property,
         now or hereafter permanently affixed to or incorporated into the
         Leased Improvements, including, without limitation, all furnaces,
         boilers, heaters, electrical equipment, heating, plumbing, lighting,
         ventilating, refrigerating, incineration, air and water pollution
         control,





                                     - 13 -
<PAGE>   21

         waste disposal, air-cooling and air-conditioning systems and 
         apparatus, sprinkler systems and fire and theft protection
         equipment, all of which, to the maximum extent permitted by law, are
         hereby deemed by the parties hereto to constitute real estate,
         together with all replacements, modifications, alterations and
         additions thereto, but specifically excluding Tenant's Personal
         Property (collectively, the "FIXTURES");

           (e)  all machinery, equipment, furniture, furnishings, moveable walls
         or partitions, computers or trade fixtures or other personal property
         of any kind or description used or useful in Tenant's business on or
         in the Leased Improvements, and located on or in the Leased
         Improvements, including, without limitation, all "Personal Property"
         as defined in the Purchase Agreement, and all modifications,
         replacements, alterations and additions to such personal property,
         except items, if any, included within the category of Fixtures, but
         specifically excluding  Tenant's Personal Property (collectively, the
         "LEASED PERSONAL PROPERTY"); and

           (f)  all leases of space (including any security deposits held by
         Tenant pursuant thereto) in the Leased Improvements to tenants
         thereof.

         Landlord hereby assigns to Tenant, and Tenant hereby assumes, all of
the leases described in clause (f) immediately preceding, such assumption being
to the full extent set forth in the Assignment of Leases executed at the
closing pursuant to the Purchase Agreement.  In connection therewith, Tenant
agrees to perform any and all covenants of landlord thereunder, past, present
and future.  Notwithstanding the foregoing, such leases shall, without the
necessity of further documentation, be deemed reassigned to Landlord upon the
expiration or earlier termination of the Term.  In connection with any
reassignment thereof occurring following an Event of Default hereunder, such
reassignment shall not release Tenant from any liability thereunder with
respect to the period ending prior to the expiration of the Term.

         2.2  Condition of Collective Leased Properties.

         Tenant acknowledges receipt and delivery of possession of the
Collective Leased Properties and Tenant accepts the Collective Leased
Properties in their "as is" condition, subject to the rights of all occupants
and parties in possession, the existing state of title, including all
covenants, conditions, restrictions, reservations, mineral leases, easements
and other matters of record or that are visible or apparent on the Collective
Leased Properties, all applicable Legal Requirements, the lien of financing
instruments, mortgages and deeds of trust, and such other matters which would
be disclosed by an inspection of the Collective Leased Properties and the
record title thereto or by an accurate survey thereof.  TENANT REPRESENTS THAT
IT HAS INSPECTED THE COLLECTIVE LEASED PROPERTIES AND ALL OF THE FOREGOING AND
HAS FOUND THE CONDITION THEREOF SATISFACTORY AND IS NOT RELYING ON ANY
REPRESENTATION OR WARRANTY OF LANDLORD OR LANDLORD'S AGENTS OR EMPLOYEES WITH
RESPECT THERETO, AND TENANT WAIVES ANY CLAIM OR ACTION AGAINST LANDLORD IN
RESPECT OF THE CONDITION OF THE COLLECTIVE LEASED PROPERTIES.  LANDLORD MAKES
NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE COLLECTIVE
LEASED PROPERTIES OR ANY PART THEREOF, EITHER AS TO ITS





                                     - 14 -
<PAGE>   22

FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR
OTHERWISE, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT
OR PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT.  To
the maximum extent permitted by law, however, Landlord hereby assigns to Tenant
all of Landlord's rights to proceed against any predecessor in title for
breaches of warranties or representations or for latent defects in the
Collective Leased Properties.  Landlord shall fully cooperate with Tenant in
the prosecution of any such claims, in Landlord's or Tenant's name, all at
Tenant's sole cost and expense.  Tenant shall indemnify, defend, and hold
harmless Landlord from and against any loss, cost, damage or liability
(including reasonable attorneys' fees) incurred by Landlord in connection with
such cooperation.

         2.3  Fixed Term.

         The initial term of this Agreement (the "FIXED TERM") shall commence
at 12:01 a.m. on the Commencement Date and shall expire at 11:59 p.m. on the
last day of the twelfth (12th) Lease Year.

         2.4  Extended Term.

         Provided that no Default or Event of Default shall have occurred and
be continuing and this Agreement shall be in full force and effect, Tenant
shall, subject to Section 2.5 below, have the right to extend the Term for each
of four (4) consecutive five (5)-year renewal terms (collectively, the
"EXTENDED TERMS") for all, and not less than all, of the Collective Leased
Properties.

         Each Extended Term shall commence on the day succeeding the expiration
of the Fixed Term or the preceding Extended Term, as the case may be.  All of
the terms, covenants and provisions of this Agreement (including but not
limited to those with respect to Additional Rent and payments of the Allowance)
shall apply to each such Extended Term, except that (x) the Minimum Rent for
each Extended Term shall be the Fair Market Rental for such Extended Term and
shall be determined pursuant to Section 2.5 below and (y) Tenant shall have no
right to extend the Term beyond the expiration of the Extended Terms.  If
Tenant shall elect to exercise any of the aforesaid options, it shall do so by
giving Landlord Notice thereof not later than one (1) year prior to the
scheduled expiration of the then current Term of this Agreement (Fixed Term or
Extended Term, as the case may be), it being understood and agreed that time
shall be of the essence with respect to the giving of such Notice.  Tenant may
not exercise its option for more than one such Extended Term at a time.  If
Tenant shall fail to give any such Notice, this Agreement shall automatically
terminate at the end of the Term then in effect and Tenant shall have no
further option to extend the Term of this Agreement.  If Tenant shall give such
Notice, the extension of this Agreement shall be automatically effected without
the execution of any additional documents, it being understood and agreed,
however, that Tenant and Landlord shall execute such documents and agreements
as either party shall reasonably require to evidence the same.  Notwithstanding
the provisions of the foregoing sentence, if, subsequent to the giving of such
Notice, an Event of Default shall occur and be continuing, unless Landlord
shall otherwise consent in writing, the extension of this Agreement shall cease
to take effect and this Agreement





                                     - 15 -
<PAGE>   23

shall automatically terminate at the end of the Term then in effect and Tenant
shall have no further option to extend the Term of this Agreement.

         2.5  Determination of Minimum Rent for Extended Terms.

         The Minimum Rent for each Extended Term shall be equal to the amount
set forth in clause (x) in Section 2.4 above and shall be determined by the
mutual agreement of Landlord and Tenant within thirty (30) days after Landlord
receives Tenant's Notice exercising its option to extend with respect to such
Extended Term, but in no event earlier than twelve (12) months prior to the
commencement of the applicable Extended Term.  In the event Landlord and Tenant
are unable to agree on the Minimum Rent for such Extended Term within such
period, such Minimum Rent shall be determined pursuant to appraisal in
accordance with Article 19.

                                   ARTICLE 3
                                      RENT

         3.1  Rent.

         Tenant shall pay to Landlord, in lawful money of the United States of
America which shall be legal tender for the payment of public and private
debts, without offset, abatement, demand or deduction, Minimum Rent, Additional
Rent and Additional Charges, during the Term, except as hereinafter expressly
provided.  All payments to Landlord shall be made by wire transfer of
immediately available federal funds or by other means acceptable to Landlord
and Tenant, each in its sole discretion.  Rent for any partial month shall be
prorated on a per diem basis based on a 365-day year and the actual number of
days elapsed.

         3.1.1  Minimum Rent.

         Minimum Rent shall be paid in advance on the first day of each
calendar month; provided, however, that the first monthly installment of
Minimum Rent shall be payable on the Commencement Date.

                 3.1.2  Additional Rent.

         Additional Rent shall be paid in advance on the first day of each
calendar month; provided, however, that the first monthly installment of
Additional Rent shall be payable on the Commencement Date.  Except as otherwise
set forth in Section 12.1(a) hereof, Tenant's failure to pay Additional Rent
shall not constitute a Default or Event of Default hereunder.

                 3.1.3  Additional Charges.

         In addition to the Minimum Rent and Additional Rent payable hereunder,
Tenant shall pay and discharge as and when due and payable the following
(collectively, "ADDITIONAL CHARGES"):





                                     - 16 -
<PAGE>   24

           (a)  Impositions.  Subject to Article 8 relating to Permitted
         Contests, Tenant shall pay, or cause to be paid, all Impositions
         before any fine, penalty, interest or cost (other than any opportunity
         cost as a result of a failure to take advantage of any discount for
         early payment) may be added for non-payment, such payments to be made
         directly to the taxing authorities where feasible, and shall promptly,
         upon request, furnish to Landlord copies of official receipts or other
         satisfactory proof evidencing such payments.  If any such Imposition
         may, at the option of the taxpayer, lawfully be paid in installments
         (whether or not interest shall accrue on the unpaid balance of such
         Imposition), Tenant may exercise the option to pay the same (and any
         accrued interest on the unpaid balance of such Imposition) in
         installments and, in such event, shall pay such installments during
         the Term as the same become due and before any fine, penalty, premium,
         further interest or cost may be added thereto.  Landlord, at its
         expense, shall, to the extent required or permitted by applicable law,
         prepare and file all tax returns in respect of Landlord's net income,
         gross receipts, sales and use, single business, transaction privilege,
         rent, ad valorem, franchise taxes and taxes on its capital stock, and
         Tenant, at its expense, shall, to the extent required or permitted by
         applicable laws and regulations, prepare and file all other tax
         returns and reports in respect of any Imposition as may be required by
         any government or Government Agency.  Provided no Default or Event of
         Default shall have occurred and be continuing, if any refund shall be
         due from any taxing authority in respect of any Imposition paid by
         Tenant, the same shall be paid over to or retained by Tenant.
         Landlord and Tenant shall, upon request of the other, provide such
         data as is maintained by the party to whom the request is made with
         respect to the Collective Leased Properties as may be necessary to
         prepare any required returns and reports.  In the event Government
         Agencies classify any property covered by this Agreement as personal
         property, Tenant shall file all personal property tax returns in such
         jurisdictions where it may legally so file.  Each party shall, to the
         extent it possesses the same, provide the other, upon request, with
         cost and depreciation records necessary for filing returns for any
         property so classified as personal property.  Where Landlord is
         legally required to file personal property tax returns, Landlord shall
         provide Tenant with copies of assessment notices in sufficient time
         for Tenant to file a protest.  All Impositions assessed against such
         personal property shall be (irrespective of whether Landlord or Tenant
         shall file the relevant return) paid by Tenant not later than the last
         date on which the same may be made without interest or penalty.  If
         the provisions of any Facility Mortgage require deposits on account of
         Impositions to be made with such Facility Mortgagee, provided the
         Facility Mortgagee has not elected to waive such provision, Tenant
         shall either pay Landlord the monthly amounts required at the time and
         place that payments of Minimum Rent are required and Landlord shall
         transfer such amounts to such Facility Mortgagee or, pursuant to
         written direction by Landlord, Tenant shall make such deposits
         directly with such Facility Mortgagee. Landlord shall, however, use
         commercially reasonable best efforts to cause any Facility Mortgagee
         not to impose such obligation on Tenant.

         Landlord shall give prompt Notice to Tenant of all Impositions payable
by Tenant hereunder of which Landlord at any time has knowledge; provided,
however, that Landlord's failure to give any such Notice shall in no way
diminish Tenant's obligation hereunder to pay such Impositions, except that
Landlord shall (unless Tenant itself knew, or should have known,





                                     - 17 -
<PAGE>   25

about the existence of such Impositions obligation) pay all penalties, fines
and other expenses arising out of Landlord's failure to give such Notice.

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

           (c)  Insurance Premiums.  Tenant shall pay or cause to be paid all
         premiums for the insurance coverage required to be maintained pursuant
         to Article 9.

           (d)  Other Charges.  Tenant shall pay or cause to be paid all other
         amounts, liabilities and obligations which Tenant assumes or agrees to
         pay under this Agreement, including, without limitation, all
         agreements to indemnify Landlord under Sections 4.4 and 9.7.

           (e)  Prorations.  Tenant shall pay or cause to be paid all amounts
         required to be paid by OpCo under Section 10.4 of the Purchase
         Agreement.

           (f)  Reimbursement for Additional Charges.  If Tenant pays or causes
         to be paid property taxes or similar Additional Charges attributable
         to periods after the end of the Term, whether upon expiration or
         sooner termination of this Agreement (other than termination following
         an Event of Default), Tenant may, within sixty (60) days of the end of
         the Term, provide Notice to Landlord of its estimate of such amounts.
         Landlord shall promptly reimburse Tenant for all payments of such
         taxes and other similar Additional Charges that are attributable to
         any period after the Term of this Agreement (unless this Agreement
         shall have been terminated following an Event of Default).  Tenant
         acknowledges that it has no claims against Landlord for Additional
         Charges attributable to the periods prior to the first day of the
         Term.

         3.2  Late Payment of Rent.

         If any installment of (i) Minimum Rent, (ii) Additional Rent (with
respect to which Landlord has made a disbursement of the Allowance) or (iii)
Additional Charges (but only as to those Additional Charges which are payable
directly to Landlord) shall not be paid on its due date, Tenant shall pay
Landlord, on demand, as Additional Charges, a late charge (to the extent
permitted by law) computed at the Overdue Rate on the amount of such
installment, from the due date of such installment to the date of payment
thereof.  To the extent that Tenant pays any Additional Charges directly to
Landlord or any Facility Mortgagee pursuant to any requirement of this
Agreement, Tenant shall be relieved of its obligation to pay such Additional
Charges to the Entity to which they would otherwise be due.

         In the event of any failure by Tenant to pay any Additional Charges
when due, Tenant shall promptly pay and discharge, as Additional Charges, every
fine, penalty, interest and cost which may be added for non-payment or late
payment of such items.  Landlord shall have all legal, equitable and
contractual rights, powers and remedies provided either in this Agreement or by
statute or otherwise in the case of





                                     - 18 -
<PAGE>   26

non-payment of the Additional Charges as in the case of non-payment of the
Minimum Rent and Additional Rent, except as otherwise specifically provided in
this Agreement.

         3.3  Net Lease.

         The Minimum Rent shall be absolutely net to Landlord so that this
Agreement shall yield to Landlord the full amount of the installments or
amounts of Minimum Rent throughout the Term, subject to any other provisions of
this Agreement which expressly provide for adjustment of such Minimum Rent.

         3.4  No Termination, Abatement, Etc.

         Except as otherwise specifically provided in this Agreement, Tenant,
to the maximum extent permitted by law, shall remain bound by this Agreement in
accordance with its terms and shall neither take any action without the consent
of Landlord to modify, surrender or terminate this Agreement, nor seek, nor be
entitled to any abatement, deduction, deferment or reduction of the Rent, or
set-off against the Rent, nor shall the respective obligations of Landlord and
Tenant be otherwise affected by reason of (a) any damage to or destruction of
any of the Collective Leased Properties or any portion thereof from whatever
cause or any Condemnation; (b) the lawful or unlawful prohibition of, or
restriction upon, Tenant's use of any of the Collective Leased Properties, or
any portion thereof, or the interference with such use by any Person or by
reason of eviction by paramount title; (c) any claim which Tenant may have
against Landlord by reason of any default or breach of any warranty by Landlord
under this Agreement or any other agreement between Landlord and Tenant, or to
which Landlord and Tenant are parties; (d) any bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution, winding up
or other proceedings affecting Landlord or any assignee or transferee of
Landlord; or (e) for any other cause whether similar or dissimilar to any of
the foregoing.  Tenant hereby waives all rights arising from any occurrence
whatsoever, which may now or hereafter be conferred upon it by law, to (i)
modify, surrender or terminate this Agreement or quit or surrender any of the
Collective Leased Properties or any portion thereof, or (ii) entitle Tenant to
any abatement, reduction, suspension or deferment of the Rent or other sums
payable or other obligations to be performed by Tenant hereunder, except as
otherwise specifically provided in this Agreement.  The obligations of Tenant
hereunder shall be separate and independent covenants and agreements, and the
Rent and all other sums payable by Tenant hereunder shall continue to be
payable in all events unless the obligations to pay the same shall be
terminated pursuant to the express provisions of this Agreement.

         3.5  Annual Allowance.

         Provided no Default or Event of Default pursuant to Section 12.1(a)
hereof has occurred and is continuing and this Agreement shall be in full force
and effect, Landlord shall pay the Allowance to, or at the direction of, Tenant
during each Lease Year of the Term.  At least Ten Million Dollars ($10,000,000)
of the Allowance shall be used to pay for Capital Expenditures made  during
such Lease Year.  At Tenant's election, Tenant shall have the right to use up
to Ten Million Dollars ($10,000,000) of the Allowance to pay for Impositions,
premiums for insurance required pursuant to Article 9 hereof  and franchise
fees due and owing under the Franchise





                                     - 19 -
<PAGE>   27

Agreement.  Anything in this Agreement to the contrary notwithstanding, any and
all assets paid for (or which are the subject of reimbursements to Tenant) by
disbursements of the Allowance with respect to Capital Expenditures shall
immediately be the property of Landlord and constitute part of the Collective
Leased Properties.  Any portion of the Allowance not utilized in a particular
Lease Year shall, subject to the sentence immediately following, remain
available for use in subsequent Lease Years.  Notwithstanding the foregoing (x)
in the event less than $10,000,000 of the Allowance for any Lease Year is used
to pay for Capital Expenditures, then a portion of any amount remaining to be
used in subsequent Lease Years shall be used only for Capital Expenditures,
such portion being equal to the amount by which Capital Expenditures funded
with the Allowance for such Lease Year were less than $10,000,000 and (y) in
the event any portion of the Allowance (including amounts accrued from prior
Lease Years) is not utilized as of the last day of the Term, such amount shall
be deemed forfeited and Tenant will receive no payment or credit with respect
thereto.

         In order to receive a disbursement of the Allowance, Tenant shall
submit to Landlord (but not more often than twice monthly) a statement,
certified pursuant to an Officer's Certificate transmitted therewith, setting
forth in reasonable detail a description of the Capital Expenditures,
impositions, premiums for insurance required pursuant to Article 9 hereof, and
Franchise Fees incurred or owing during such Lease Year and for which an
Allowance disbursement is sought.  Such Officer's Certificate shall certify
that the expenditures for which reimbursement is sought are either within
Tenant's approved annual budget or have been approved by Franchisor.   Within
five (5) Business Days after receipt thereof, Landlord shall reimburse to
Tenant (or, upon Tenant's written direction, included along with such certified
statement, pay third-party contractors or vendors identified therein)
appropriate amounts requested. Upon two (2) Business Days prior Notice Landlord
shall have the right to audit Tenant's books and records to confirm the
accuracy of any such statement.

         The foregoing provision hereof notwithstanding, in no event shall
Landlord be obligated (x) to make disbursements in any Lease Year in excess of
Ten Million Dollars ($10,000,000) with respect to impositions, premiums for
insurance required pursuant to Article 9 hereof, and Franchise Fees, except to
the extent that any amounts carry over from previous years pursuant to the
first paragraph of Section 3.5, (y) to make disbursements with respect to any
Lease Year in excess of the Additional Rent theretofore paid for such Lease
Year, except to the extent that any amounts carry over from previous years
pursuant to the first paragraph of Section 3.5 or (z) to make any disbursements
of the Allowance if Tenant has failed to pay any monthly installments of
Additional Rent at least equal to such disbursements.





                                     - 20 -
<PAGE>   28

                                   ARTICLE 4
                    USE OF THE COLLECTIVE LEASED PROPERTIES

         4.1  Permitted Use.

                 4.1.1  Primary Intended Use.

                 Tenant shall, at all times during the Term and at any other 
time that Tenant shall be in possession of any Leased Property, subject to 
Section 4.5 hereof, continuously use each of the Collective Leased Properties
for the operation of a licensed acute or chronic care psychiatric hospital;
licensed residential treatment center; licensed subacute hospital; licensed
substance abuse, neurological, geriatric, correctional, juvenile justice or
other healthcare service facility providing inpatient care; outpatient
facility; or any combination of the foregoing; and the healthcare services
provided by or at a Leased Property may  include inpatient hospitalization,
partial hospitalization programs, outpatient therapy, intensive outpatient
therapy, ambulatory detoxification, behavioral modification programs and
related services (provided such related services constitutes services intended
to be provided as part of the "Franchised Business," as such term is defined in
the Franchise Agreement),  and for such other uses as may be incidental or
necessary thereto, including the operation of any medical office buildings
located on any such Leased Property (such use being hereinafter referred to as
such Leased Property's "PRIMARY INTENDED USE").  Tenant shall not use any of
the Collective Leased Properties or any portion thereof for any other use
without the prior written consent of Landlord.  No use shall be made or
permitted to be made of any of the Collective Leased Properties and no acts
shall be done thereon which will cause the cancellation of any insurance policy
covering any of the Collective Leased Properties or any part thereof (unless
another adequate policy is available), nor shall Tenant sell or otherwise
provide to residents or patients therein, or permit to be kept, used or sold in
or about any of the Collective Leased Properties any article which may be
prohibited by law or by the standard form of fire insurance policies, or any
other insurance policies required to be carried hereunder, or fire
underwriter's regulations.  Tenant shall, at its sole cost, comply with all of
the requirements pertaining to the Collective Leased Properties of any
insurance board, association, organization or company necessary for the
maintenance of insurance, as herein provided, covering the Collective Leased
Properties and Tenant's Personal Property, including, without limitation, the
Insurance Requirements.  Tenant shall not take or omit to take any action, the
taking or omission of which materially impairs the value or the usefulness of
any of the Collective Leased Properties or any part thereof for its Primary
Intended Use.

                 4.1.2  Necessary Approvals.

                 Tenant shall proceed with all due diligence and exercise best
efforts to obtain and maintain all approvals necessary to use and operate, for
its Primary Intended Use, each of the Collective Leased Properties and each
Facility located thereon under applicable law and, without limiting the
foregoing, shall use its commercially reasonable best efforts to maintain
appropriate licensure and participation in those reimbursement programs for
which a Facility is eligible and in which management of the Facility desires to
participate.

                 4.1.3  Lawful Use, Etc.

                 Tenant shall not use or suffer or permit the use of any of the
Collective Leased Properties or Tenant's Personal Property for any unlawful
purpose.  Tenant shall not commit or suffer to be committed any waste on any of
the Collective Leased Properties, or in any Facility, nor shall Tenant cause or
permit any nuisance thereon or therein.  Tenant shall neither suffer nor permit
any of the Collective Leased Properties or any portion thereof, including any
Capital Addition or Tenant's Personal Property, to be used in such a manner as
(i) might reasonably tend





                                     - 21 -
<PAGE>   29

to impair Landlord's (or Tenant's, as the case may be) title thereto or to any
portion thereof, or (ii) may reasonably make possible a claim or claims for
adverse usage or adverse possession by the public, as such, or of implied
dedication of the applicable Leased Property or any portion thereof.

         4.2  Compliance with Legal and Insurance Requirements, Etc.

         Subject to the provisions of Article 8, Tenant, at its sole expense,
shall (i) comply in all material respects with Legal Requirements and Insurance
Requirements in respect of the use, operation, maintenance, repair, alteration
and restoration of all of the Collective Leased Properties, and (ii) procure,
maintain and comply in all material respects with all appropriate licenses,
certificates of need, permits, and other authorizations and agreements required
for any use of the Collective Leased Properties and Tenant's Personal Property
then being made, and for the proper erection, installation, operation and
maintenance of the Collective Leased Properties or any part thereof, including,
without limitation, any Capital Additions.

         4.3  Compliance with Medicaid and Medicare Requirements.

         Tenant shall, at its sole cost and expense, make whatever improvements
(capital or ordinary) as are required to conform each of the Collective Leased
Properties to such standards as may, from time to time, be required by Federal
Medicare (Title 18) or Medicaid (Title 19), to the extent Tenant is a
participant in such programs, or any other applicable programs or legislation,
or capital improvements required by any other governmental agency having
jurisdiction over such Leased Property as a condition of the continued
operation of such Leased Property for its Primary Intended Use.

         4.4  Environmental Matters.

                 4.4.1  Restriction on Use, Etc.

                 Tenant shall not store, spill upon, dispose of or transfer to
or from the Collective Leased Properties any Hazardous Substance, except that
Tenant may store, transfer and dispose of Hazardous Substances in compliance
with all Applicable Laws.  Tenant shall maintain the Collective Leased
Properties at all times free of any Hazardous Substance (except such Hazardous
Substances as are maintained in compliance with all Applicable Laws).  Tenant
shall promptly: (a) notify Landlord in writing of any material change in the
nature or extent of Hazardous Substances at any of the Collective Leased
Properties, (b) transmit to Landlord a copy of any Community Right to Know
report which is required to be filed by Tenant with respect to any of the
Collective Leased Properties pursuant to SARA Title III or any other Applicable
Law, (c) transmit to Landlord copies of any demand letters, complaints or other
documents initiating legal action, citations, orders, notices or other material
communications asserting claims by private parties or government agencies with
respect to Hazardous Substances received by Tenant or its agents or
representatives (collectively, "ENVIRONMENTAL NOTICE"), which Environmental
Notice requires a written response or any action to be taken and/or if such
Environmental Notice gives notice of and/or could give rise to a material
violation of any Applicable Law and/or could give rise to any material cost,
expense, loss or damage (an "ENVIRONMENTAL OBLIGATION"), (d)





                                     - 22 -
<PAGE>   30

observe and comply with all Applicable Laws relating to the use, maintenance
and disposal of Hazardous Substances and all orders or directives from any
official, court or agency of competent jurisdiction relating to the use or
maintenance or requiring the removal, treatment, containment or other
disposition thereof, and (e) pay or otherwise dispose of any fine, charge or
Imposition related thereto, unless Tenant shall contest the same in good faith
and by appropriate proceedings and the right to use and the value of any of the
Collective Leased Properties is not materially and adversely affected thereby.

         If at any time  Hazardous Substances are discovered in violation of
Applicable Laws on any of the Collective Leased Properties, Tenant shall take
all actions and incur any and all expenses, as may be necessary or as may be
required by any Government Agency, (i) to clean up and remove from and about
such Leased Properties all Hazardous Substances thereon, (ii) to contain and
prevent any further release or threat of release of Hazardous Substances on or
about such Leased Properties and (iii) to use good faith efforts to eliminate
any further release or threat of release of Hazardous Substances on or about
such Leased Properties.

                 4.4.2  Environment Report.

                 Six (6) months prior to expiration of the Term, Tenant  shall
designate a qualified environmental engineer, satisfactory to Landlord in its
sole discretion, which engineer shall conduct an environmental investigation of
the Collective Leased Properties and prepare an environmental site assessment
report (the "ENVIRONMENTAL REPORT") with respect thereto.  The scope of such
Environmental Report shall include, without limitation, review of relevant
records, interviews with persons knowledgeable about the Collective Leased
Properties and relevant governmental agencies, a site inspection of the
Collective Leased Properties, any buildings, the fencelines of the Collective
Leased Properties and adjoining properties (Phase I) and shall otherwise be
reasonably satisfactory in form and substance to Landlord.  If such
investigation, in the opinion of the performing engineer, indicates that any of
the Collective Leased Properties are not environmentally sound and free from
oil, asbestos, radon and other Hazardous Substances (except in compliance with
Applicable Laws), such investigation shall also include a more detailed
physical site inspection, appropriate testing, subsurface and otherwise, and
review of historical records (Phase II) to demonstrate the compliance of such
of the Collective Leased Properties with Applicable Laws and the absence of
Hazardous Substances except in compliance with Applicable Laws.

         All Environmental Reports, and supplements and amendments thereto,
shall be provided to Landlord contemporaneously with delivery thereof to
Tenant.  With respect to any recommendations contained in the Environmental
Report, violations of Applicable Laws and/or the existence of any conditions at
any of the Collective Leased Properties which could give rise to an
Environmental Obligation, Tenant shall promptly give Notice thereof to
Landlord, together with a description, setting forth in reasonable detail, all
actions Tenant proposes to take in connection therewith and Tenant shall
promptly take all actions, and incur any and all expenses, as may be required
by Applicable Law or by any Government Agency or, in the case of conditions
that could give rise to an Environmental Obligation, as may be reasonably
required by Landlord, (i) to clean up, remove or remediate from and about the
Collective Leased Properties all Hazardous Substances thereon, (ii) to contain,
prevent and eliminate any further release or





                                     - 23 -
<PAGE>   31

threat of release of Hazardous Substances on or about the Collective Leased
Properties, and (iii) otherwise to eliminate such violation or condition from
the Collective Leased Properties in accordance with Applicable Law .

         Landlord shall, provided no Event of Default has occurred and is
continuing, Landlord shall, upon receipt of a bill, along with reasonable
substantiation thereof, promptly reimburse Tenant for the reasonable
out-of-pocket costs incurred in the preparation of the Phase I Environmental
Report.  In no event shall Landlord be obligated to pay or reimburse Tenant for
the costs incurred in connection with any Phase II Report or in connection with
any actions taken or proposed to be taken by Tenant as described in the
immediately preceding paragraph.

                 4.4.3  Indemnification of Landlord.

                 Tenant shall protect, indemnify and hold harmless Landlord and
each Facility Mortgagee, their trustees, officers, agents, employees and
beneficiaries, and any of their respective successors or assigns (hereafter the
"INDEMNITEES," and when referred to singly, an "INDEMNITEE") for, from and
against any and all debts, liens, claims, causes of action, administrative
orders or notices, costs, fines, penalties or expenses (including, without
limitation, reasonable attorneys' fees and expenses) imposed upon, incurred by
or asserted against any Indemnitee resulting from, either directly or
indirectly, the presence in, the Environment or any properties surrounding any
of the Collective Leased Properties of any Hazardous Substances.  Tenant's duty
herein includes, but is not limited to, indemnification for costs associated
with personal injury or property damage claims as a result of the presence of
Hazardous Substances in, upon or under the soil or ground water of any of the
Collective Leased Properties in violation of any Applicable Law.  Upon Notice
from Landlord, Tenant shall undertake the defense, at Tenant's sole cost and
expense, of any indemnification duties set forth herein.  The foregoing
provisions hereof notwithstanding, Tenant's indemnification of any Facility
Mortgagee pursuant to this Section 4.4.3 shall not extend to or include the
investigation and defense expenses (including, but not limited to, legal and
consulting fees and expenses) incurred by such Facility Mortgagee.

         Tenant shall, upon demand, pay to Landlord, as an Additional Charge,
any cost, expense, loss or damage (including, without limitation, reasonable
attorneys' fees) incurred by Landlord in asserting any right under this Section
4.4, including without limitation any right of indemnity under this Section
4.4.3 or otherwise  arising from a failure of Tenant strictly to observe and
perform the foregoing requirements, which amounts shall bear interest from the
date incurred until paid by Tenant to Landlord at the Overdue Rate.

                 4.4.4  Survival.

                 The provisions of this Section 4.4 shall survive the 
expiration or sooner termination of this Agreement.





                                     - 24 -
<PAGE>   32

         4.5  Tenant's Right to Close Facilities.

         Provided that no Default or Event of Default (except pursuant to
Section 12.1(e)) shall have occurred and be continuing, Tenant shall have the
right at any time and from time to time, to cease its operations in any or all
of the Facilities.  Nothing herein shall entitle Tenant to any reduction in
Rent or diminish any of Tenant's other obligations, including without
limitation obligations to (x) maintain and insure any and all facilities, and
(y) surrender each Facility upon expiration or sooner termination of the Term
with all Tenant's Personal Property in place.

                                   ARTICLE 5
                            MAINTENANCE AND REPAIRS

         5.1  Maintenance and Repair.

                 5.1.1  Tenant's Obligations.

                 Tenant shall, at its sole cost and expense, keep each of the
Collective Leased Properties and all private roadways, sidewalks and curbs
appurtenant thereto (and Tenant's Personal Property) in good order and repair,
reasonable wear and tear excepted (whether or not the need for such repairs
occurs as a result of Tenant's use, any prior use, the elements or the age of
the Collective Leased Properties or Tenant's Personal Property, or any portion
thereof), and shall promptly make all necessary and appropriate repairs and
replacements thereto of every kind and nature, whether interior or exterior,
structural or nonstructural, ordinary or extraordinary, foreseen or unforeseen
or arising by reason of a condition existing prior to the commencement of the
Term necessary for the Primary Intended Use (concealed or otherwise); provided,
however, that Tenant shall be permitted to prosecute claims against Landlord's
predecessors in title for breach of any representation or warranty made to or
on behalf of Landlord or for any latent defects in the Collective Leased
Properties.  All repairs shall be made in a good, workmanlike and first-class
manner, in accordance with all applicable federal, state and local statutes,
ordinances, by-laws, codes, rules and regulations relating to any such work.
Except as permitted by Section 4.5, Tenant shall not take or omit to take any
action, the taking or omission of which materially impairs the value or the
usefulness of any of the Collective Leased Properties or any part thereof for
its respective Primary Intended Use.  Tenant's obligations under this Section
5.1.1 as to any of the Collective Leased Properties shall be limited, in the
event of any casualty or Condemnation involving such Leased Property, as set
forth in Sections 10.2 and 11.2.  Notwithstanding any provisions of this
Section 5.1 to the contrary, Tenant's obligations with respect to Hazardous
Substances are as set forth in Section 4.4.

                 5.1.2  Landlord's Obligations.

                 Landlord shall not, under any circumstances, be required to 
build or rebuild any improvement on the Collective Leased Properties, or to
make any repairs, replacements, alterations, restorations or renewals of any
nature or description to the Collective Leased Properties, whether ordinary or
extraordinary, structural or nonstructural, foreseen or unforeseen, or to make
any expenditure whatsoever with respect thereto, or to maintain the Collective
Leased Properties in any way, except as specifically provided herein.  Tenant
hereby waives, to the maximum extent permitted by law, the right to make
repairs at the expense of Landlord pursuant





                                     - 25 -
<PAGE>   33

to any law in effect on the date hereof or hereafter enacted.  Landlord shall
have the right to give, record and post, as appropriate, notices of
nonresponsibility under any mechanic's lien laws now or hereafter existing.

                 5.1.3  Nonresponsibility of Landlord; No Mechanics Liens.

                 Landlord's interest in the Collective Leased Properties shall
not be subject to liens for Capital Additions made by Tenant, and Tenant shall
have no power or authority to create any lien or permit any lien to attach to
any of the Collective Leased Properties or the present estate, reversion or
other estate of Landlord in the Collective Leased Properties or on the building
or other improvements thereon as a result of Capital Additions made by Tenant
or for any other cause or reason.  All materialmen, contractors, artisans,
mechanics and laborers and other persons contracting with Tenant with respect
to the Collective Leased Properties, or any part thereof, are hereby charged
with notice that such liens are expressly prohibited and that they must look
solely to Tenant to secure payment for any work done or material furnished for
Capital Additions by Tenant or for any other purpose during the term of this
Agreement.

         Nothing contained in this Agreement shall be deemed or construed in
any way as constituting the consent or request of Landlord, express or implied,
by inference or otherwise, to any contractor, subcontractor, laborer or
materialmen for the performance of any labor or the furnishing of any materials
for any alteration, addition, improvement or repair to any of the Collective
Leased Properties or any part thereof or as giving Tenant any right, power or
authority to contract for or permit the rendering of any services or the
furnishing of any materials that would give rise to the filing of any lien
against any of the Collective Leased Properties or any part thereof nor to
subject Landlord's estate in any of the Collective Leased Properties or any
part thereof to liability under any Mechanic's Lien Law of the State in any
way, it being expressly understood that Landlord's estate shall not be subject
to any such liability.

         5.2  Tenant's Personal Property.

         Tenant may (and shall as provided hereinbelow), at its expense,
install, affix or assemble or place on any parcels of the Land or in any of the
Leased Improvements any items of Tenant's Personal Property, and Tenant may,
subject to Section 7.2 and the conditions set forth below, remove and replace
the same at any time in the ordinary course of business, provided that no
Default or Event of Default has occurred and is continuing.  Tenant shall
provide and maintain throughout the Term all such Tenant's Personal Property as
shall be necessary in order to operate all of the Facilities located at the
Collective Leased Properties in compliance in all material respects with all
applicable licensure and certification requirements, in compliance with
applicable Legal Requirements and Insurance Requirements and otherwise in
accordance with customary practice in the industry for such Primary Intended
Use.  All of Tenant's Personal Property (except that removed and replaced in
the ordinary course of business as permitted above, but including supplies and
inventory that are equivalent, on an aggregate basis, in amount and value
similar to that reasonably established for use by the Facilities in the
immediately preceding Lease Year) shall remain at the Collective Leased
Properties at the expiration or earlier termination of this Agreement without
the necessity of any payment by Landlord to Tenant and without any obligation
to account therefor.





                                     - 26 -
<PAGE>   34

         If Tenant uses any material item of tangible personal property on, or
in connection with, any Leased Property which belongs to anyone other than
Tenant, Tenant shall use its commercially reasonable best efforts to require
the agreement permitting such use to provide that Landlord or its designee may
assume Tenant's rights under such agreement upon management or operation of the
applicable Facility by Landlord or its designee.

         5.3  Yield Up.

         Upon the expiration or sooner termination of this Agreement, Tenant
shall vacate and surrender each of the Collective Leased Properties to Landlord
in the condition in which each of the Collective Leased Properties was in on
the Commencement Date, except as repaired, rebuilt, restored, altered or added
to as permitted or required by the provisions of this Agreement, reasonable
wear and tear excepted (and Condemnation, in the event that this Agreement is
terminated with respect to any of the Collective Leased Properties following a
Condemnation in accordance with Article 11).  Rents, real estate taxes and
utilities shall be prorated in the same manner as set forth in Section 10.4 of
the Purchase Agreement.  Along therewith Tenant shall surrender to Landlord any
and all records and documents related to the Collective Leased Properties and
Tenant's Personal Property (i.e., but not, subject to Section 12.6 hereof,
documents primarily related to Tenant's business operated therein) including
documents and records obtained by Tenant pursuant to Section 10.2 of the
Purchase Agreement.  Landlord (or its designee) shall have the right, but not
the obligation, to assume any or all contracts relating to the Collective
Leased Properties and Tenant's Personal Property (i.e., contracts not primarily
related to the business operated therein).  In no event shall Landlord (or its
designee) have any liability under such contracts for obligations or
liabilities accruing under such contracts prior to the date of such assumption
by such party.  Tenant shall deliver to Landlord keys and security deposits
(for assumed leases) in the same fashion as described in Sections 10.2(e) and
10.4(d) of the Purchase Agreement.

         In addition, upon the expiration or earlier termination of this
Agreement, Tenant shall, at Landlord's sole cost and expense, use its
commercially reasonable best efforts to transfer to and cooperate with Landlord
or Landlord's nominee in connection with the processing of all applications for
licenses, operating permits and other governmental authorizations and all
contracts, including contracts with governmental or quasi-governmental entities
which may be necessary for the operation of the Facilities located on the
Collective Leased Properties.  If requested by Landlord, Tenant will continue
to manage any such Facility after the expiration or sooner termination of the
Term and for as long thereafter as is necessary (but not to exceed six (6)
months following the date of such expiration or sooner termination) to obtain
all necessary licenses, operating permits and other governmental
authorizations, on such reasonable terms as Landlord shall request, but in any
event Landlord shall pay to Tenant a management fee equal to the sum of (i)
reasonable out-of-pocket costs and expenses of Tenant in providing management
services, (ii) reasonable allocated internal costs of Tenant in providing
management services (including but not limited to a reasonably allocated
portion of the salaries and benefits costs of Tenant personnel who provide such
services), and (iii) 10% of the sum of (i) and (ii).  In connection with any
such management arrangement, Tenant will, use its commercially reasonable best
efforts to the extent reasonable necessary, maintain in effect during the
period of its management arrangement, those contracts, including (for sixty
(60) days after such expiration





                                     - 27 -
<PAGE>   35

or sooner termination, but after sixty (60) days, only if the Franchise
Agreement has been assumed pursuant to Section 12.6) the Franchise Agreement,
necessary for the performance of such management responsibilities and for the
operation of the Facilities for the Primary Intended Use.

         5.4  Encroachments, Restrictions, Etc.

         If any of the Leased Improvements shall, at any time, encroach upon
any property, street or right-of-way adjacent to the affected Leased Property,
or shall violate the agreements or conditions contained in any lawful
restrictive covenant or other agreement affecting any of the Collective Leased
Properties, or any part thereof, or shall impair the rights of others under any
easement or right-of-way to which any of the Collective Leased Properties is
subject, upon the request of Landlord (but only as to any encroachment,
violation or impairment that is not a Permitted Encumbrance) or of any Person
affected by any such encroachment, violation or impairment, Tenant shall, at
its sole cost and expense, subject to its right to contest the existence of any
encroachment, violation or impairment in accordance with the provisions of
Article 8, either (a) obtain valid and effective waivers or settlements of all
claims, liabilities and damages resulting from each such encroachment,
violation or impairment, whether the same shall affect Landlord or Tenant, or
(b) make such changes in the Leased Improvements and take such other actions as
are reasonably practicable to remove such encroachment and to end such
violation or impairment, including, if necessary, the alteration of any of the
Leased Improvements and, in any event, take all such actions as may be
necessary in order to ensure the continued operation of the affected Leased
Improvements for their respective Primary Intended Use substantially in the
manner and to the extent such Leased Improvements were operated prior to the
assertion of such violation, impairment or encroachment.  Any such alteration
shall be made in conformity with the applicable requirements of this Article 5.
Tenant's obligations under this Section 5.4 shall be in addition to and shall
in no way discharge or diminish any obligation of any insurer under any policy
of title or other insurance.

         5.5  Landlord to Grant Easements, Etc.

         Landlord shall from time to time, so long as no Default or Event of
Default shall have occurred and be continuing, at the request of Tenant and at
Tenant's sole cost and expense, (a) grant easements and other rights in the
nature of easements with respect to any of the Collective Leased Properties to
third parties, (b) release existing easements or other rights in the nature of
easements which are for the benefit of any of the Collective Leased Properties,
(c) dedicate or transfer unimproved portions of any of the Collective Leased
Properties for road, highway or other public purposes, (d) execute petitions to
have any of the Collective Leased Properties annexed to any municipal
corporation or utility district, (e) execute amendments to any covenants and
restrictions affecting any of the Collective Leased Properties and (f) execute
and deliver to any Person any instrument appropriate to confirm or effect such
grants, release, dedications, transfers, petitions and amendments (to the
extent of its interests in such Leased Property); provided, however, that
Landlord shall have first determined that such grant, release, dedication,
transfer, petition or amendment is not detrimental to the operation of the
applicable Leased Property for its Primary Intended Use and does not materially
reduce the value of such





                                     - 28 -
<PAGE>   36

Leased Property, and Landlord shall have received an Officer's Certificate
confirming such determination, together with such additional information as
Landlord may request.

         5.6  Philadelphia Facility.

         In the event Franchisor does not complete the
renovation/reconstruction of the Philadelphia Facility in a timely manner as
required by the Purchase Agreement for any reason (whether or not such failure
constitutes a breach of covenant by Franchisor pursuant to Section 7.1(q) of
the Purchase Agreement), Tenant shall promptly do so at its sole cost. Tenant
shall permit Franchisor to have access to the property on which the
Philadelphia Facility is to be constructed for the purpose of performing such
obligation.

                                   ARTICLE 6
                            CAPITAL ADDITIONS, ETC.

         6.1  Construction of Capital Additions to the Leased Property.

         Tenant shall not construct or install Capital Additions on any of the
Collective Leased Properties without obtaining Landlord's prior written
consent, which consent shall not be unreasonably withheld, provided that no
consent shall be required for any Capital Addition so long as (a) the Capital
Additions Costs for such Capital Addition are less than $1,000,000, (b) such
construction or installation would not adversely affect or violate any Legal
Requirement or Insurance Requirement applicable to the applicable Leased
Property and (c) Landlord shall have received an Officer's Certificate
certifying as to the satisfaction of the conditions set out in clauses (a) and
(b) above.  If Landlord's consent is required, prior to commencing construction
of any Capital Addition, Tenant shall submit to Landlord, in writing, a
proposal setting forth, in reasonable detail, any proposed Capital Addition and
shall provide to Landlord such plans and specifications, permits, licenses,
contracts and other information concerning the proposed Capital Addition as
Landlord may reasonably request.  Landlord shall have thirty (30) days to
review all materials submitted to Landlord in connection with any such
proposal.  Failure of Landlord to respond to Tenant's proposal within thirty
(30) days after receipt of all information and materials requested by Landlord
in connection with the proposed Capital Addition shall be deemed to constitute
approval of such proposed Capital Addition.  Without limiting the generality of
the foregoing, such proposal shall indicate the approximate projected cost of
constructing such Capital Addition and the use or uses to which it will be put.
No Capital Addition shall be made which would tie in or connect any Leased
Improvement on the applicable Leased Property with any other improvements on
property adjacent to such Leased Property (and not part of the Land) including,
without limitation, tie-ins of buildings or other structures or utilities.  Any
Capital Additions shall, upon the expiration or sooner termination of this
Agreement, pass to and become the property of Landlord, free and clear of all
encumbrances other than Permitted Encumbrances.

         6.2  Financing of Capital Additions.

         Tenant may arrange for financing for Capital Additions from a Lending
Institution; provided, however, that (i) any security interests in any property
of Tenant, including, without





                                     - 29 -
<PAGE>   37

limitation, Tenant's leasehold interest in the Collective Leased Properties,
shall be expressly and fully subordinated to this Agreement and to the interest
of Landlord in the Collective Leased Properties and to the rights of any then
or thereafter existing Facility Mortgagee; and (ii) Landlord shall have a right
of first refusal to provide financing for Capital Additions in accordance with
Section 6.6.

         6.3  Capital Additions Financed by Landlord.

         If Landlord shall, (i) at the request of Tenant and in Landlord's sole
discretion, or (ii) in the exercise of its rights of first refusal to provide
financing pursuant to Section 6.6 hereof, elect to finance any proposed Capital
Addition, Tenant shall provide Landlord with such information as Landlord may
from time to time request, including, without limitation, the following:

           (a)  Evidence that such Capital Addition will be and, upon
         completion, has been, completed in compliance with the applicable
         requirements of State and federal law with respect to capital
         expenditures for health care facilities;

           (b)  Copies of all building, zoning and land use permits and
         approvals and, upon completion of such Capital Addition, a copy of the
         certificate of occupancy for such Capital Addition, if required;

           (c)  Such information, certificates, licenses, permits or other
         documents necessary to confirm that Tenant will be able to use the
         Capital Addition upon completion thereof in accordance with the
         Primary Intended Use, including all required federal, State or local
         government licenses and approvals;

           (d)  An Officer's Certificate and a certificate from Tenant's
         architect setting forth, in reasonable detail, the projected (or
         actual, if available) Capital Additions Cost, and invoices and lien
         waivers from Tenant's contractors for such work;

           (e)  A deed conveying to Landlord title to any land acquired for the
         purpose of constructing the Capital Addition free and clear of any
         liens or encumbrances, except those approved by Landlord, and, upon
         completion of the Capital Addition, a final as-built survey thereof
         reasonably satisfactory to Landlord;

           (f)  Endorsements to any outstanding policy of title insurance
         covering the applicable Leased Property, or a commitment therefor,
         satisfactory in form and substance to Landlord, (i) updating such
         policy without any additional exceptions except as approved by
         Landlord, and (ii) increasing the coverage thereof by an amount equal
         to the Fair Market Value of the Capital Addition (except to the extent
         covered by the owner's policy of title insurance referred to in
         subparagraph (g) below);

           (g)  If appropriate, (i) an owner's policy of title insurance
         insuring fee simple title to any land conveyed to Landlord pursuant to
         subparagraph (e) above, free and clear of all liens and encumbrances,
         except those approved by Landlord, and (ii) a lender's policy





                                     - 30 -
<PAGE>   38

         of title insurance, reasonably satisfactory in form and substance to
         Landlord and any Facility Mortgagee;

           (h)  An appraisal of the applicable Leased Property by a Qualified
         Appraiser, acceptable to Landlord, and/or an Officer's Certificate
         stating that the value of the applicable Leased Property upon
         completion of the Capital Addition exceeds the Fair Market Value
         thereof prior to the commencement of such Capital Addition by an
         amount not less than 80% of the Capital Additions Cost; and

           (i)  Prints of architectural and engineering drawings relating to
         such Capital Addition and such other certificates, documents, opinions
         of counsel, appraisals, surveys, certified copies of duly adopted
         resolutions of the board of directors of Tenant authorizing the
         execution and delivery of any lease amendment, or other instruments as
         may be reasonably required by Landlord, any Facility Mortgagee and any
         Lending Institution advancing or reimbursing Landlord or Tenant for
         any portion of the Capital Additions Cost.  

         If Landlord shall finance the proposed Capital Addition, Landlord may 
elect (with Tenant's consent, such consent not to be unreasonably withheld) to
obtain repayment of amounts so financed by an increase in the Rent payable 
hereunder.

         6.4  Non-Capital Additions.

         Tenant shall have the right, at Tenant's sole cost and expense, to
make additions, modifications or improvements to the Collective Leased
Properties which are not Capital Additions ("NON-CAPITAL ADDITIONS") from time
to time as Tenant, in its discretion, may deem desirable for the applicable
Primary Intended Use, provided that any such Non-Capital Addition will not
materially detract from the value, operating efficiency or revenue-producing
capability of the applicable Leased Property or adversely affect the ability of
Tenant to comply with the provisions of this Agreement, and, without limiting
the foregoing, will not violate any Legal Requirement or Insurance Requirement
applicable to the applicable Leased Property.  All such Non-Capital Additions
shall, upon expiration or earlier termination of this Agreement, pass to and
become the property of Landlord, free and clear of all liens and encumbrances,
other than Permitted Encumbrances.

         6.5  Salvage.

         All materials which are scrapped or removed in connection with the
making of either Capital Additions or Non-Capital Additions or repairs required
by Article 5 shall be the property of the Landlord.

         6.6  Landlord's Right of First Refusal to Provide Financing for
              Capital Additions.

         In the event that at any time during the Term Tenant shall elect to
obtain construction financing in excess of $1,000,000 for any Capital
Additions, Tenant shall give Notice thereof to Landlord, which notice shall set
forth in reasonable detail the terms of such financing, shall





                                     - 31 -
<PAGE>   39

identify the source thereof and shall include a copy of a final form of
commitment letter therefor.  Landlord shall have the right, exercisable by the
giving of Notice to Tenant within thirty (30) days after such notice from
Tenant, to provide a final form of commitment for such financing on the same
terms and conditions as described in the Notice given to Landlord.  In the
event that Landlord shall exercise such option, Tenant shall be obligated to
obtain such financing from Landlord on the terms and conditions set forth in
the Notice to Landlord.  In the event that Landlord shall decline to provide
such financing or shall fail to give such notice to Tenant, Tenant shall be
free to obtain such financing from the party identified in, and on the terms
and conditions set forth in, the Notice given to Landlord with respect thereto.

                                   ARTICLE 7
                                     LIENS

         7.1  Liens.

         Subject to Article 8 and Section 16.5, Tenant shall not, directly or
indirectly, create or allow to remain and shall promptly discharge, at its
expense, any lien, encumbrance, attachment, title retention agreement or claim
upon the Collective Leased Properties or a non-consensual lien against Tenant's
leasehold interest therein or any attachment, levy, claim or encumbrance in
respect of the Rent, other than (a) Permitted Encumbrances, (b) restrictions,
liens and other encumbrances which are consented to in writing by Landlord, (c)
liens for those taxes of Landlord which Tenant is not required to pay
hereunder, (d) subleases permitted by Article 16, (e) liens for Impositions or
for sums resulting from noncompliance with Legal Requirements so long as (i)
the same are not yet payable, or (ii) are being contested in accordance with
Article 8, (f) liens of mechanics, laborers, materialmen, suppliers or vendors
incurred in the ordinary course of business that are not yet due and payable or
are for sums that are being contested in accordance with Article 8, and (g) any
Facility Mortgages or other liens which are the responsibility of Landlord
pursuant to the provisions of Article 20.

         7.2  Landlord's Lien.

         In addition to any statutory landlord's lien and in order to secure
payment of the Rent and all other sums payable hereunder by Tenant and the
performance of all of Tenant's other obligations hereunder, and to secure
payment of any loss, cost or damage which Landlord may suffer by reason of
Tenant's breach of this Agreement, Tenant hereby grants unto Landlord a
security interest in and an express contractual lien upon Tenant's Personal
Property, and all proceeds therefrom, subject to any Permitted Encumbrances;
and such Tenant's Personal Property shall not be removed from the Collective
Leased Properties at any time when a Default or an Event of Default has
occurred and is continuing as otherwise permitted pursuant to Section 5.2.  In
addition, Tenant hereby grants unto Landlord a security interest in those
contracts described in Section 12.6 hereof.

         Upon Landlord's request, Tenant shall execute and deliver to Landlord
financing statements in form sufficient to perfect the security interest of
Landlord in (x) Tenant's Personal Property and the proceeds thereof, and (y)
the contracts described in Section 12.6 hereof, in





                                     - 32 -
<PAGE>   40

accordance with the provisions of the applicable laws of the State.  The
security interest herein granted is in addition to any statutory lien for the
Rent.

                                   ARTICLE 8
                               PERMITTED CONTESTS

         Tenant shall have the right to contest the amount or validity of any
Imposition, Legal Requirement, Insurance Requirement, lien, attachment, levy,
encumbrance, charge or claim (collectively, "CLAIMS") as to any of the
Collective Leased Properties, by appropriate legal proceedings, conducted in
good faith and with due diligence, provided that (a) the foregoing shall in no
way be construed as relieving, modifying or extending Tenant's obligation to
pay any Claims as finally determined, (b) such contest shall not cause Landlord
or Tenant to be in default under any mortgage or deed of trust (except with
respect to any Facility Mortgage, the terms of which have not been fully
disclosed to Tenant) encumbering such Leased Property or any interest therein
or result in or reasonably be expected to result in a lien attaching to such
Leased Property, (c) no part of such Leased Property nor any Rent therefrom
shall be in any immediate danger of sale, forfeiture, attachment or loss, and
(d) Tenant shall indemnify and hold harmless Landlord from and against any
cost, claim, damage, penalty or reasonable expense, including reasonable
attorneys' fees, incurred by Landlord in connection therewith or as a result
thereof.  Upon Landlord's request made as a result of a requirement of any
Facility Mortgagee, Tenant shall either (i) provide a bond or other assurance
reasonably satisfactory to Landlord that all Claims which may be assessed
against any of the Collective Leased Properties, together with all interest and
penalties thereon will be paid, or (ii) deposit within the time otherwise
required for payment with a bank or trust company, as trustee, as security for
the payment of such Claims, an amount sufficient to pay the same, together with
interest and penalties in connection therewith and all Claims which may be
assessed against or become a Claim on any of the Collective Leased Properties,
or any part thereof, in connection with any such contest.  Tenant shall furnish
Landlord and any Facility Mortgagee with reasonable evidence of such deposit
within five (5) days after request therefor.  Landlord agrees, however, to use
commercially reasonable best efforts to cause any Facility Mortgagee not to
require any bond or deposit by Tenant as hereinabove provided.  Landlord agrees
to join in any such proceedings if required legally to prosecute such contest,
provided that Landlord shall not thereby be subjected to any liability therefor
(including, without limitation, for the payment of any costs or expenses in
connection therewith).  Tenant shall be entitled to any refund of any Claims
and such charges and penalties or interest thereon which have been paid by
Tenant or paid by Landlord and for which Landlord has been fully reimbursed by
Tenant.  If Tenant shall fail (x) to pay any Claims when finally determined,
(y) to provide security therefor as provided in this Article 8, or (z) to
prosecute any such contest diligently and in good faith, Landlord may, upon
reasonable notice to Tenant (which notice may be oral and shall not be required
if Landlord shall reasonably determine that the same is not practicable), pay
such charges, together with interest and penalties due with respect thereto,
and Tenant shall reimburse Landlord therefor, upon demand, as Additional
Charges.





                                     - 33 -
<PAGE>   41

                                   ARTICLE 9
                         INSURANCE AND INDEMNIFICATION

         9.1  General Insurance Requirements.

         Tenant shall, at all times during the Term and at any other time
Tenant shall be in possession of any of the Collective Leased Properties, keep
each of the Collective Leased Properties and Tenant's Personal Property insured
against the risks and in the amounts as follows and shall maintain (for so long
as such insurance is commercially available) the following insurance:

           (a)  "All-risk" property insurance, including insurance against loss
         or damage by fire, vandalism and malicious mischief, explosion of
         steamboilers, pressure vessels or other similar apparatus, now or
         hereafter installed in the Facility located at such Leased Property,
         extended coverage perils, earthquake (providing annual aggregate
         limits of One Hundred Million Dollars ($100,000,000) as to all
         locations outside of California and annual aggregate limits of Fifty
         Million Dollars ($50,000,000) as to all locations within California)
         and all physical loss perils insurance, including, but not limited to,
         sprinkler leakage, in an amount (subject to Section 9.5) equal to one
         hundred percent (100%) of the then full Replacement Cost thereof (as
         defined in Section 9.2), with the usual extended coverage
         endorsements, including a Replacement Cost Endorsement and Builder's
         Risk Coverage during the continuance of any construction at such
         Leased Property;

           (b)  Business interruption and blanket earnings plus extra expense
         under a rental value insurance policy covering risk of loss during the
         lesser of the first twelve (12) months of reconstruction or the actual
         reconstruction period necessitated by the occurrence of any of the
         hazards described in subparagraphs (a) and (b) above in such amounts
         as may be customary for comparable properties in the area and in an
         amount sufficient to prevent Landlord or Tenant from becoming a
         co-insurer;

           (c)  Comprehensive general liability insurance, including bodily
         injury and property damage (on the broadest form available, including
         broad form contractual liability, fire legal liability and completed
         operations coverage) having policy limits as to claims with respect to
         the Collective Leased Properties of at least One Million Dollars
         ($1,000,000) per occurrence, Three Million Dollars ($3,000,000)
         aggregate per location, subject to a Five Million Dollar ($5,000,000)
         aggregate limit as to all locations, and with respect to claims
         arising out of malpractice in an amount not less than One Million
         Dollars ($1,000,000) per occurrence, subject to a Five  Million
         Dollars ($5,000,000) aggregate limit as to all Facilities, provided
         that such limits shall be modified to conform to any required
         underlying statutory coverage, such as State Patient Compensation
         Funds, or the like, and Umbrella coverage shall be provided having
         limits of Twenty Million Dollars ($20,000,000) per occurrence and in
         the aggregate and attaching in excess of policy limits as to general
         liability, malpractice, Patient Compensation Fund programs, where
         applicable, and employer's liability coverage;





                                     - 34 -
<PAGE>   42

           (d)  Flood (when the applicable Leased Property is located in whole
         or in part within an area identified as an area having special flood
         hazards and in which flood insurance has been made available under the
         National Flood Insurance Act of 1968, as amended, or the Flood
         Disaster Protection Act of 1973, as amended (or any successor acts
         thereto)) and such other hazards and in such amounts as may be
         customary for comparable properties in the area, said coverage to be
         in an amount equal to the lesser of the full Replacement Cost of the
         applicable Leased Property or the maximum amount available;

           (e)  Worker's compensation insurance coverage for all persons
         employed by Tenant on the applicable Leased Property with statutory
         limits and otherwise with limits of and provisions in accordance with
         the requirements of applicable local, State and federal law, and
         employer's liability insurance having a limit of $1,000,000; and

           (f)  Such additional insurance and endorsements (and/or increased
         amounts of insurance hereinabove required) as may be reasonably
         required, from time to time, by Landlord.

         9.2  Replacement Cost.

         "REPLACEMENT COST" as used herein, shall mean the actual replacement
cost of the property requiring replacement from time to time, including an
increased cost of construction endorsement, less exclusions provided in the
standard form of fire insurance policy.  In the event either party believes
that the then full Replacement Cost has increased or decreased at any time
during the Term, such party, at its own cost, shall have the right to have such
full Replacement Cost redetermined by an accredited appraiser approved by the
other, which approval shall not be unreasonably withheld or delayed.  The party
desiring to have the full Replacement Cost so redetermined shall forthwith, on
receipt of such determination by such appraiser, give written notice thereof to
the other.  The determination of such appraiser shall be final and binding on
the parties hereto, and Tenant shall forthwith conform the amount of the
insurance carried to the amount so determined by the appraiser.

         9.3  Waiver of Subrogation.

         Landlord and Tenant agree that (insofar as and to the extent that such
agreement may be effective without invalidating or making it impossible to
secure insurance coverage from responsible insurance companies doing business
in the State) with respect to any property loss which is covered by insurance
then being carried by Landlord or Tenant, respectively, the party carrying such
insurance and suffering said loss releases the other of and from any and all
claims with respect to such loss; and they further agree that their respective
insurance companies shall have no right of subrogation against the other on
account thereof, even though extra premium may result therefrom.  In the event
that any extra premium is payable by Tenant as a result of this provision,
Landlord shall not be liable for reimbursement to Tenant for such extra
premium.





                                     - 35 -
<PAGE>   43

         9.4  Form Satisfactory, Etc.

         All insurance policies and endorsements required pursuant to this
Article 9 shall be fully paid for, nonassessable and shall contain such
provisions and expiration dates and be in such form and amounts and issued by
insurance carriers authorized to do business in the State, having a general
policy holder's rating of at least A-in Best's latest rating guide (or such
other comparable rating or such other customarily used rating agency as may be
required by any Facility Mortgagee), and otherwise as shall be approved by
Landlord.  Without limiting the foregoing, such policies shall include only
deductibles reasonably approved by Landlord and shall name Landlord and any
Facility Mortgagee as additional insureds.  All losses shall be payable to
Landlord or Tenant as provided in Article 10.  Any loss adjustment shall
require the prior written consent of Landlord and Tenant.  Tenant shall pay all
insurance premiums and deliver policies or certificates thereof to Landlord
prior to their effective date (and, with respect to any renewal policy, thirty
(30) days prior to the expiration of the existing policy), and, in the event
Tenant shall fail to effect such insurance as herein required, to pay the
premiums therefor or to deliver such policies or certificates to Landlord or
any Facility Mortgagee at the times required, Landlord shall have the right,
but not the obligation, to acquire such insurance and pay the premiums
therefor, which amounts shall be payable to Landlord, upon demand, as
Additional Charges, together with interest accrued thereon at the Overdue Rate
from the date such payment is made until the date repaid.  All such policies
shall provide Landlord (and any Facility Mortgagee, if required by the same)
thirty (30) days' prior written notice of any material modification, expiration
or cancellation of such policy.  Tenant may satisfy its insurance obligations
through the use of (i) a risk retention group or purchasing group or captive
insurance company with a capital structure reasonably approved by Landlord or
(ii) a self insurance program with retention limits reasonably approved by
Landlord and an excess policy or policies provided by an insurer meeting the
requirements of this Agreement.

         9.5  Blanket Policy.

         Notwithstanding anything to the contrary contained in this Article 9,
Tenant's obligation to maintain the insurance herein required may be brought
within the coverage of a so-called blanket policy or policies of insurance
carried and maintained by Tenant, provided that (a) the coverage thereby
afforded will not be reduced or diminished from that which would exist under a
separate policy meeting all other requirements of this Agreement, except that
the blanket all-risk policy may provide coverage as to the Collective Leased
Properties to a limit of Two Hundred Million Dollars ($200,000,000) per
occurrence and (b) the requirements of this Article 9 are otherwise satisfied.

         9.6  No Separate Insurance.

         Tenant shall not take out separate insurance concurrent in form or
contributing in the event of loss with that required by this Article 9, or
increase the amount of any existing insurance by securing an additional policy
or additional policies, unless all parties having an insurable interest in the
subject matter of such insurance, including Landlord and all Facility
Mortgagees, are included therein as additional insureds and the loss is payable
under such insurance in the same manner as losses are payable under the
insurance required to be carried pursuant to this Agreement.  In the event
Tenant shall take out any such separate insurance or increase any of the
amounts of the then existing insurance, Tenant shall give Landlord prompt
Notice thereof.





                                     - 36 -
<PAGE>   44

         9.7  Indemnification of Landlord.

         Notwithstanding the existence of any insurance provided for herein and
without regard to the policy limits of any such insurance, Tenant shall
protect, indemnify and hold harmless Landlord for, from and against all
liabilities, obligations, claims, damages, penalties, causes of action, costs
and reasonable expenses (including, without limitation, reasonable attorneys'
fees), to the maximum extent permitted by law, imposed upon or incurred by or
asserted against Landlord by reason of: (a) any accident, injury to or death of
persons or loss of or damage to property occurring on or about the Collective
Leased Properties or adjoining sidewalks or rights of way, including, without
limitation, any claims of malpractice, (b) any past, present or future use,
misuse, non-use, condition, management, maintenance or repair of the Collective
Leased Properties or Tenant's Personal Property or any litigation, proceeding
or claim by governmental entities or other third parties to which Landlord is
made a party or participant relating to the Collective Leased Properties or
Tenant's Personal Property or such use, misuse, non-use, condition, management,
maintenance, or repair thereof, including failure to perform obligations (other
than Condemnation proceedings), to which Landlord is made a party, (c) any
Impositions (which are the obligations of Tenant to pay pursuant to the
applicable provisions of this Agreement), and (d) any failure on the part of
Tenant or anyone claiming under Tenant to perform or comply with any of the
terms of this Agreement.  Tenant shall pay all amounts payable under this
Section 9.7 within ten (10) days after demand therefor and, if not timely paid,
such amounts shall bear interest at the Overdue Rate from the date of
determination to the date of payment.  Tenant, at its expense, shall contest,
resist and defend any such claim, action or proceeding asserted or instituted
against Landlord or may compromise or otherwise dispose of the same, with
Landlord's prior written consent (which consent may not be unreasonably
withheld or delayed).  The obligations of Tenant under this Section 9.7 are in
addition to the obligations set forth in Section 4.4 and shall survive the
termination of this Agreement.

         9.8  Independent Contractor.

         Tenant shall cause any person or company (each a "CONTRACTOR")
entering upon any of the Collective Leased Properties to provide any
installation, construction or repair which (x) constitutes a Capital Addition
or (y) has an anticipated cost in excess of $250,000 to:  (a) have in full
force and effect Contractor's Liability Coverage (hereafter defined) effective
throughout the period said Contractor is upon said Leased Property and (b)
deliver a certificate ("CONTRACTOR'S INSURANCE CERTIFICATE") evidencing
compliance with subpart (a) to Tenant prior to the Contractor's first entry
upon said Leased Property.  As used herein the term Contractor's Liability
Coverage means a comprehensive general liability insurance policy meeting the
requirements of this Article 9 (as if required to be provided by Tenant) except
the minimum policy limit shall be $500,000 per occurrence and $1,000,000 in the
aggregate.  Within thirty (30) days after delivery of Landlord's written
request, Tenant shall deliver copies of all Contractor's Certificates to
Landlord.





                                     - 37 -
<PAGE>   45

                                   ARTICLE 10
                                    CASUALTY

         10.1  Insurance Proceeds.

         All proceeds payable by reason of any loss or damage to the Collective
Leased Properties, or any portion thereof, and insured under any policy of
property or casualty insurance required by Article 9 (other than proceeds of
business interruption insurance) in excess of $1,000,000 shall be paid directly
to Landlord and retained by Landlord (subject to the provisions of Section
10.2).  If Tenant is required to reconstruct or repair any of the Collective
Leased Properties as provided herein, such proceeds shall be paid out by
Landlord from time to time for the reasonable costs of reconstruction or repair
of such Leased Property necessitated by such damage or destruction, subject to
the provisions of Section 10.2.3.  Provided no Default or Event of Default has
occurred and is continuing, any excess proceeds of insurance remaining after
the completion of the restoration shall be paid to Tenant.  All salvage
resulting from any risk covered by insurance shall belong to Landlord.

         10.2  Damage or Destruction.

                 10.2.1  Obligation to Restore.  If, during the Term, any of
the Collective Leased Properties shall be totally or partially destroyed Tenant
shall promptly restore such Facility as provided in Section 10.2.3.

                 10.2.2  Insufficient Insurance Proceeds.  If the cost of the
repair or restoration of the applicable Leased Property exceeds the amount of
insurance proceeds received by Landlord pursuant to Article 10, upon the demand
of Landlord, Tenant shall contribute any excess amounts needed to restore such
Leased Property.  Such difference shall be paid by Tenant to Landlord and held
by Landlord, together with any other insurance proceeds, for application to the
cost of repair and restoration.

                 10.2.3  Disbursement of Proceeds. Tenant shall, at its sole
cost and expense, commence promptly and continue diligently to perform the
repair and restoration of such Leased Property (hereinafter called the "WORK"),
or shall cause the same to be done, so as to restore such Leased Property in
full compliance with all Legal Requirements and so that such Leased Property
shall be at least equal in value and general utility to its general utility and
value immediately prior to such damage or destruction.  Subject to the terms
hereof, Landlord shall advance such property and casualty  insurance proceeds
and the amounts paid to it pursuant to Section 10.2.2 to Tenant regularly
during the repair and restoration period so as to permit payment for the cost
of any such restoration and repair.  Any such advances shall be for not less
than $100,000 (or such lesser amount as equals the entire balance of the repair
and restoration) and Tenant shall submit to Landlord a written requisition and
substantiation therefor on such form or forms as may be reasonably acceptable
to Landlord.  Landlord may, at its option, condition advancement of said
insurance proceeds and other amounts on (i) the absence of any Default or Event
of Default, (ii) its approval of plans and specifications of an architect
satisfactory to Landlord, (iii) general contractors' estimates, (iv)
architect's certificates, (v) unconditional lien waivers of general
contractors, (vi) evidence of approval by all governmental authorities and
other regulatory





                                     - 38 -
<PAGE>   46

bodies whose approval is required and (vii) such other certificates as Landlord
may, from time to time, reasonably require.   Landlord's obligation to disburse
insurance proceeds under this Article 10 shall be subject to the release of
such proceeds by the applicable Facility Mortgagee to Landlord.

         Tenant's obligation to restore the applicable Leased Property pursuant
to this Article 10 shall be subject to the release of available insurance
proceeds by the applicable Facility Mortgagee to Landlord; provided, however,
that Tenant shall be entitled to cease operations at such Facility pursuant to
and in accordance with Section 4.5 above. In the event Tenant elects to close
such Facility as aforesaid, Tenant shall, as Additional Charges, pay to
Landlord all property or casualty insurance proceeds received in connection
therewith, along with any deductible or retention, but in no event shall Tenant
pay to Landlord less than the full Replacement Cost of such Facility, including
Tenant's Personal Property.

         10.3  Tenant's Property.

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

         10.4  Restoration of Tenant's Property.

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

         10.5  No Abatement of Rent.

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

         10.6  Waiver.

         Tenant hereby waives any statutory rights of termination which may
arise by reason of any damage or destruction of any of the Collective Leased
Properties.





                                     - 39 -
<PAGE>   47

                                   ARTICLE 11
                                  CONDEMNATION

         11.1  Total Condemnation, Etc.

         If either (i) the whole of any of the Collective Leased Properties
shall be taken by Condemnation or (ii) a Condemnation of less than the whole of
any of the Collective Leased Properties renders such Leased Property Unsuitable
for Its Primary Intended Use, this Agreement shall terminate with respect to
such Leased Property, Tenant and Landlord shall seek the Award for their
interests in such Leased Property as provided in Section 11.5 and the Minimum
Rent thereafter payable shall be reduced by one-twelfth (1/12th) of the product
of  (x) ten percent (10%), and (y) the Award received by Landlord with respect
to such Leased Property, net of all expenses incurred by Landlord in obtaining
the same, including reasonable attorneys' fees.

         11.2  Partial Condemnation.

         In the event of a Condemnation of less than the whole of any of the
Collective Leased Properties such that such Leased Property is still suitable
for its Primary Intended Use, Tenant shall, at its sole cost and expense,
commence promptly and continue diligently to restore the untaken portion of the
Leased Improvements on such Leased Property so that such Leased Improvements
shall constitute a complete architectural unit of the same general character
and condition (as nearly as may be possible under the circumstances) as the
Leased Improvements existing immediately prior to such Condemnation, in full
compliance with all Legal Requirements.  Subject to the terms hereof, Landlord
shall contribute to the cost of restoration that part of the Award necessary to
complete such repair or restoration, together with severance and other damages
awarded for the taken Leased Improvements, to Tenant regularly during the
restoration period so as to permit payment for the cost of such repair or
restoration.  Landlord may, at its option, condition advancement of such Award
and other amounts on (i) the absence of any continuing Event of Default, (ii)
its approval of plans and specifications of an architect satisfactory to
Landlord (which approval shall not be unreasonably withheld or delayed), (iii)
general contractors' estimates, (iv) architect's certificates, (v)
unconditional lien waivers of general contractors, (vi) evidence of approval by
all governmental authorities and other regulatory bodies whose approval is
required and (vii) such other certificates as Landlord may, from time to time,
reasonably require.  Landlord's obligation under this Section 11.2 to disburse
the Award and such other amounts shall be subject to (x) the collection thereof
by Landlord and (y) the satisfaction of any applicable requirements of any
Facility Mortgage, and the release of such Award by the applicable Facility
Mortgagee.  Tenant's obligation to restore the applicable Leased Property shall
be subject to the release of the Award by the applicable Facility Mortgagee to
Landlord.  If the cost of the restoration of the applicable Leased Property
exceeds that part of the Award necessary to complete such restoration, together
with severance and other damages awarded for the taken Leased Improvements,
Tenant shall contribute upon the demand of Landlord any excess amounts needed
to restore such Leased Property.  Such difference shall be paid by Tenant to
Landlord and held by Landlord, together with such part of the Award and such
severance and other damages, for application to the cost of restoration.





                                     - 40 -
<PAGE>   48

         11.3  Abatement of Rent.

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

         11.4  Temporary Condemnation.

         In the event of any temporary Condemnation of all or any part of the
Collective Leased Properties or Tenant's interest therein, this Agreement shall
continue in full force and effect, and Tenant shall continue to pay, in the
manner and on the terms herein specified, the full amount of the Rent.  Tenant
shall continue to perform and observe all of the other terms and conditions of
this Agreement on the part of Tenant to be performed and observed.  Provided no
Default or Event of Default has occurred and is continuing, the entire amount
of any Award made for such temporary Condemnation allocable to the Term,
whether paid by way of damages, rent or otherwise, shall be paid to Tenant.
Tenant shall, promptly upon the termination of any such period of temporary
Condemnation, at its sole cost and expense, restore such Leased Property to the
condition that existed immediately prior to such Condemnation, in full
compliance with all Legal Requirements, unless such period of temporary
Condemnation shall extend beyond the expiration of the Term, in which event
Tenant shall not be required to make such restoration.  For purposes of this
Section 11.4, a Condemnation shall be deemed to be temporary if the period of
such Condemnation is not expected to, and does not, exceed twenty-four (24)
months.

         11.5  Allocation of Award.

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

                                   ARTICLE 12
                             DEFAULTS AND REMEDIES

         12.1  Events of Default.

         The occurrence of any one or more of the following events shall
constitute an "EVENT OF DEFAULT" hereunder:





                                     - 41 -
<PAGE>   49

           (a)  Tenant fails (i) to make any payment of the Rent payable
         hereunder when due and such failure continues for a period of ten (10)
         days after the date due, or (ii) to make any required payments of real
         estate taxes by the earlier of (a)  ten (10) days following Notice
         from Landlord that such payment is due and owing and unpaid, and (b)
         the date which is 30 days prior to the date on which a Government
         Authority has the right to sell or initiate the process for selling
         the applicable Leased Property due to a failure to pay the real estate
         taxes.  The foregoing provisions hereof notwithstanding, (x) Tenant's
         failure to pay Additional Rent shall not constitute an Event of
         Default, except if Tenant fails to pay Additional Rent in at least the
         amount of the Allowance disbursed to date by Landlord, and (y) with
         respect to the failure to pay Additional Charges that are amounts owed
         to third parties (other than real estate taxes), the failure to pay
         such amounts shall not constitute an Event of Default under this
         Section 12.1(a) if Tenant pays the same in full, along with all
         interest, penalties and late charges due and owing to such third
         parties, no later than ten (10) days following Notice from Landlord
         that such sum is due and owing.  In the event Landlord gives Notice of
         such circumstances to Tenant twice in any Lease Year, then on each
         subsequent occasion for the remainder of such Lease Year when Landlord
         gives Tenant any such Notice, Tenant shall pay to Landlord, as
         Additional Charges (whether or not Tenant pays such third party within
         ten (10) days as aforesaid), the sum of One Thousand Five Hundred
         Dollars ($1,500).

           (b)  Tenant fails to maintain the insurance coverages required under
         Article 9 within five (5) days after Notice thereof from Landlord.

           (c)  Tenant defaults in the due observance or performance of any of
         the terms, covenants or agreements contained herein to be performed or
         observed by it (other than as specified in clauses (a) and (b) above),
         and, in either case, such default continues for a period of thirty
         (30) days after Notice thereof from Landlord to Tenant (provided that
         no such Notice shall be required if Landlord reasonably determines
         that immediate action is necessary to protect person or property);
         provided, however, that if such default is susceptible of cure but
         such cure cannot be accomplished with due diligence within such period
         of time and if, in addition, Tenant commences to cure such default
         within thirty (30) days after Notice thereof from Landlord and
         thereafter prosecutes the curing of such default with all due
         diligence, such period of time shall be extended to such period of
         time (not to exceed an additional one hundred eighty (180) days in the
         aggregate) as may be necessary to cure such default with all due
         diligence.

           (d)  Any obligation of Tenant in respect of any Indebtedness in a
         principal amount in excess of $10,000,000 for money borrowed or for
         the deferred purchase price of any material property or services, is
         declared to be, or as a result of acceleration becomes, due and
         payable prior to the stated maturity thereof.

           (e)  There occurs a final unappealable determination by applicable
         federal or State authorities of the revocation or limitation of any
         license, permit, certification, certificate of need or approval
         required for the lawful operation of any of the Facilities in
         accordance with its Primary Intended Use or the loss or limitation of
         any license, permit,





                                     - 42 -
<PAGE>   50

         certification, certificate of need or approval under any other
         circumstances under which Tenant is required to cease its operation of
         such Facility in accordance with its Primary Intended Use at the time
         of such loss or limitation, provided, however, that if Tenant ceases
         its operations in such Facility pursuant to and in accordance with its
         right to do so under Section 4.5 hereof, the closing thereof shall
         cause such Event of Default to be deemed no longer continuing.

           (f)  Any representation or warranty made by or on behalf of Tenant
         under or in connection with this Agreement, or in any document,
         certificate, or agreement delivered in connection herewith proves to
         have been false or misleading in any material respect on the date when
         made or deemed made.

           (g)  Tenant is generally not paying its debts as they become due, or
         Tenant makes a general assignment for the benefit of creditors.

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

           (i)  Tenant causes or institutes any proceeding for its dissolution
         or termination.

           (j)  subject to Section 4.5 hereof, Tenant voluntarily ceases
         operation of any of the Collective Leased Properties for its Primary
         Intended Use for a period in excess of thirty (30) consecutive days,
         except as a result of damage, destruction or partial or complete
         Condemnation.

           (k)  The estate or interest of Tenant in any of the Collective
         Leased Properties or any part thereof is levied upon or attached in
         any proceeding and the same is not vacated or discharged within the
         later of (x) one hundred and twenty (120) days after commencement
         thereof, unless the amount in dispute is less than $100,000 in which
         case Tenant shall give notice to Landlord of the dispute but Tenant
         may defend in any suitable way, and (y) thirty (30) days after receipt
         by Tenant of Notice thereof from Landlord (unless Tenant shall be
         contesting such lien or attachment in good faith in accordance with
         Article 8).

           (l)  Any Change in Control of Tenant occurs.

In any such event, Landlord, in addition to all other remedies available to it,
may terminate this Agreement with respect to all but not less than all of the
Collective Leased Properties by giving Notice thereof to Tenant and upon the
expiration of the time, if any, fixed in such Notice, this





                                     - 43 -
<PAGE>   51

Agreement shall terminate and all rights of Tenant under this Agreement shall
cease.  Landlord shall have and may exercise all rights and remedies available
at law and in equity to Landlord as a result of Tenant's breach of this
Agreement.

         Upon the occurrence of an Event of Default, Landlord may, in addition
to any other remedies provided herein, enter upon the Collective Leased
Properties and take possession of, and either (i) retain any and all of
Tenant's Personal Property on any such Leased Property, without liability for
trespass or conversion (Tenant hereby waiving any right to Notice or hearing
prior to such taking of possession by Landlord) or (ii) sell the same at public
or private sale, after giving Tenant reasonable Notice of the time and place of
any public or private sale, at which sale Tenant or its assigns may purchase
all or any portion of Tenant's Personal Property.  Unless otherwise provided by
law and without intending to exclude any other manner of giving Tenant
reasonable notice, the requirement of reasonable Notice shall be met if such
Notice is given at least five (5) days before the date of sale.  The proceeds
from any such disposition shall belong to Landlord and shall not be applied as
a credit against the indebtedness which is secured by the security interest
granted in Section 7.2.

         The foregoing provisions hereof notwithstanding, Landlord shall have
no right to assert any remedy hereunder, and an Event of Default shall be
deemed to no longer exist, if Tenant cures an Event of Default (A) under
Section 12.1(a) prior to the earlier of  (x) the commencement by Landlord of
the exercise of any remedy under this Agreement by Landlord or (y) Landlord's
Notice to Tenant stating that an Event of Default exists and further stating
Landlord's intention to assert one or more remedies hereunder; and (B) under
any of Section 12.(b)-(l), prior to the commencement by Landlord of the
exercise of any remedy under this Agreement by Landlord.

         12.2  Remedies.

         None of (a) the termination of this Agreement pursuant to Section
12.1, (b) the repossession of the Collective Leased Properties, (c) the failure
of Landlord to re-let any or all of the Collective Leased Properties, or (d)
the reletting of any or all of the Collective Leased Properties, shall relieve
Tenant of its liability and obligations hereunder, all of which shall survive
any such termination, repossession or re-letting.  In the event of any such
termination, Tenant shall forthwith pay to Landlord all Rent due and payable
with respect to the Collective Leased Properties through and including the date
of such termination.  Thereafter, Tenant, until the end of what would have been
the Term of this Agreement in the absence of such termination, and whether or
not any of the Collective Leased Properties or any portion thereof shall have
been re-let, shall be liable to Landlord for, and shall pay to Landlord, as
current damages, the Rent and other charges which would be payable hereunder
for the remainder of the Term had such termination not occurred, less the net
proceeds, if any, of any re-letting of the Collective Leased Properties, after
deducting all expenses in connection with such reletting, including, without
limitation, all repossession costs, brokerage commissions, legal expenses,
attorneys' fees, advertising, expenses of employees, alteration costs and
expenses of preparation for such reletting.  Tenant shall pay such current
damages to Landlord monthly on the days on which the Minimum Rent would have
been payable hereunder if this Agreement had not been so terminated.




                                    - 44 -
<PAGE>   52

         At any time after such termination, whether or not Landlord shall have
collected any such current damages, as liquidated final damages beyond the date
of such termination, at Landlord's election, Tenant shall pay to Landlord
either (a) an amount equal to the excess, if any, of the Rent and other charges
which would be payable hereunder from the date of such termination (assuming
that, for the purposes of this paragraph, annual payments by Tenant on account
of Impositions would be the same as payments required for the immediately
preceding twelve calendar months, or if less than twelve calendar months have
expired since the Commencement Date, the payments required for such lesser
period projected to an annual amount) for what would be the then unexpired term
of this Agreement if the same remained in effect, over the Fair Market Rental
for the same period, or (b) an amount equal to the lesser of (i) the Rent and
other charges that would have been payable for the balance of the Term had it
not been terminated, and (ii) the aggregate of the Rent and other charges
accrued in the twelve (12) months ended next prior to such termination (without
reduction for any free rent or other concession or abatement).  In the event
this Agreement is so terminated prior to the expiration of the first full year
of the Term, the liquidated damages which Landlord may elect to recover
pursuant to clause (b)(ii) of this paragraph shall be calculated as if such
termination had occurred on the first anniversary of the Commencement Date.
Nothing contained in this Agreement shall, however, limit or prejudice the
right of Landlord to prove and obtain in proceedings for bankruptcy or
insolvency an amount equal to the maximum allowed by any statute or rule of law
in effect at the time when, and governing the proceedings in which, the damages
are to be proved, whether or not the amount be greater than, equal to, or less
than the amount of the loss or damages referred to above.

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

         12.3  Tenant's Waiver.

         IF THIS AGREEMENT IS TERMINATED PURSUANT TO SECTION 12.1 OR 12.2,
TENANT WAIVES, TO THE EXTENT PERMITTED BY LAW, ANY RIGHT TO A TRIAL BY JURY IN
THE EVENT OF SUMMARY PROCEEDINGS TO ENFORCE THE





                                     - 45 -
<PAGE>   53

REMEDIES SET FORTH IN THIS ARTICLE 12 AND THE BENEFIT OF ANY LAWS NOW OR
HEREAFTER IN FORCE EXEMPTING PROPERTY FROM LIABILITY FOR RENT OR FOR DEBT.

         12.4  Application of Funds.

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

         12.5  Landlord's Right to Cure Tenant's Default.

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

         12.6  Landlord's Right to Assume Contracts.

         In the event Landlord elects to terminate this Agreement or otherwise
obtains possession of the Collective Leased Properties following an Event of
Default, Landlord (or its designee) shall have the right, at its sole and
absolute discretion, upon Notice to Tenant within sixty (60) days after
Landlord terminates this Agreement or otherwise obtains possession following an
Event of Default, to assume all (but not less than all) of the contracts
utilized by Tenant in the operation of its business, including the Franchise
Agreement, and Tenant will cooperate in effecting such assumption.  In no event
will Landlord (or its designee) have any liability under such contracts for
obligations or liabilities accruing under such contracts prior to the date of
such assumption by such party.





                                     - 46 -
<PAGE>   54

                                   ARTICLE 13
                                  HOLDING OVER

         Any holding over by Tenant after the expiration or sooner termination
of this Agreement shall be treated as a daily tenancy at sufferance at a rate
equal to two (2) times the Minimum Rent  then in effect plus Additional Charges
and other charges herein provided (prorated on a daily basis).  Tenant shall
also pay to Landlord all damages (direct or indirect) sustained by reason of
any such holding over.  Otherwise, such holding over shall be on the terms and
conditions set forth in this Agreement, to the extent applicable.  Nothing
contained herein shall constitute the consent, express or implied, of Landlord
to the holding over of Tenant after the expiration or earlier termination of
this Agreement.
                                   ARTICLE 14
                               LANDLORD'S DEFAULT

         If Landlord shall default in the performance or observance of any of
its covenants or obligations set forth in this Agreement and such default shall
continue for a period of thirty (30) days after Notice thereof from Tenant to
Landlord and any applicable Facility Mortgagee, or such additional period as
may be reasonably required to correct the same, Tenant may declare the
occurrence of a "Landlord Default" by a second Notice to Landlord and to such
Facility Mortgagee.  Thereafter, Tenant may forthwith cure the same and,
subject to the provisions of the following paragraph, invoice Landlord for
costs and expenses (including reasonable attorneys' fees and court costs)
incurred by Tenant in curing the same, together with interest thereon from the
date Landlord receives Tenant's invoice, at the Overdue Rate.  Tenant shall
have no right to terminate this Agreement for any default by Landlord hereunder
and no right, for any such default, to offset or counterclaim against any Rent
or other charges due hereunder.

         If Landlord shall in good faith dispute the occurrence of any Landlord
Default and Landlord, before the expiration of the applicable cure period,
shall give Notice thereof to Tenant, setting forth, in reasonable detail, the
basis therefor, no Landlord Default shall be deemed to have occurred and
Landlord shall have no obligation with respect thereto until final adverse
determination thereof.  If Tenant and Landlord shall fail, in good faith, to
resolve any such dispute within ten (10) days after Landlord's Notice of
dispute, either may submit the matter for resolution to a court of competent
jurisdiction.

                                   ARTICLE 15
                               LANDLORD FINANCING

         In the event that at any time during the Term, OpCo, or any Subsidiary
of OpCo, shall elect to obtain financing for any health care related facilities
owned or leased or to be owned or leased by OpCo, or such Subsidiary, OpCo
shall give (or cause such Subsidiary to give, as the case may be) Notice
thereof to Landlord, which notice shall set forth in reasonable detail the
terms of such financing, shall identify the source thereof and shall include a
copy of an applicable commitment letter.  Landlord shall have the right,
exercisable by the giving of Notice to OpCo (or such Subsidiary, as the case
may be) within thirty (30) days after such Notice from





                                     - 47 -
<PAGE>   55

OpCo (or such Subsidiary, as the case may be), to provide such financing on the
same terms and conditions as described in the Notice given to Landlord.  In the
event that Landlord shall exercise such option, OpCo (or such Subsidiary, as
the case may be) shall be obligated to obtain such financing from Landlord on
the terms and conditions set forth in the Notice to Landlord.  In the event
that Landlord shall decline to provide such financing or shall fail to give
such Notice to OpCo (or such Subsidiary, as the case may be), OpCo (or such
Subsidiary, as the case may be) shall be free to obtain such financing from the
party identified in, and on the terms and conditions set forth in, the Notice
given to Landlord with respect thereto.  Notices to OpCo and any Subsidiary
shall be given as if a Notice to Tenant.

                                   ARTICLE 16
                           SUBLETTING AND ASSIGNMENT

         16.1  Subletting and Assignment.

         Except as provided in Sections 16.3 and 16.5 below, Tenant shall not,
without the prior written consent of Landlord (which consent may be given or
withheld in its sole and absolute discretion), assign, mortgage, pledge,
hypothecate, encumber or otherwise transfer this Agreement or sublease (which
term shall be deemed to include the granting of concessions, licenses and the
like), all or any part of the Collective Leased Properties or suffer or permit
this Agreement or the leasehold estate created hereby or any other rights
arising under this Agreement to be assigned, transferred, mortgaged, pledged,
hypothecated or encumbered, in whole or in part, whether voluntarily,
involuntarily or by operation of law, or permit the use or occupancy of any of
the Collective Leased Properties by anyone other than Tenant, or any of the
Collective Leased Properties to be offered or advertised for assignment or
subletting.  For purposes of this Section 16.1, an assignment of this Agreement
shall be deemed to include any Change in Control of Tenant.

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

         No subletting or assignment shall in any way impair the continuing
primary liability of Tenant hereunder, and no consent to any subletting or
assignment in a particular instance shall be deemed to be a waiver of the
prohibition set forth in this Section 16.1.  No assignment, subletting or
occupancy shall affect any Primary Intended Use.  Any subletting, assignment or
other transfer of Tenant's interest under this Agreement in contravention of
this Section 16.1 shall be voidable at Landlord's option.





                                     - 48 -
<PAGE>   56

         16.2  Required Sublease Provisions.

         Any sublease of all or any portion of any of the Collective Leased
Properties shall provide (a) that it is subject and subordinate to this
Agreement and to the matters to which this Agreement is or shall be subject or
subordinate; (b) that in the event of termination of this Agreement or reentry
or dispossession of Tenant by Landlord under this Agreement, Landlord may, at
its option, terminate such sublease or take over all of the right, title and
interest of Tenant, as sublessor under such sublease, and such subtenant shall,
at Landlord's option, attorn to Landlord pursuant to the then executory
provisions of such sublease, except that neither Landlord nor any Facility
Mortgagee, as holder of a mortgage or as Landlord under this Agreement, if such
mortgagee succeeds to that position, shall (i) be liable for any act or
omission of Tenant under such sublease, (ii) be subject to any credit,
counterclaim, offset or defense which theretofore accrued to such subtenant
against Tenant, (iii) be bound by any previous modification of such sublease
not consented to in writing by Landlord or by any previous prepayment of more
than one (1) month's Rent, (iv) be bound by any covenant of Tenant to undertake
or complete any construction of such Leased Property or any portion thereof,
(v) be required to account for any security deposit of the subtenant other than
any security deposit actually delivered to Landlord by Tenant, (vi) be bound by
any obligation to make any payment to such subtenant or grant any credits,
except for services, repairs, maintenance and restoration provided for under
the sublease that are to be performed after the date of such attornment, (vii)
be responsible for any monies owing by Tenant to the credit of such subtenant,
or (viii) be required to remove any Person occupying any portion of the
Collective Leased Properties; and (c), in the event that such subtenant
receives a written Notice from Landlord or any Facility Mortgagee stating that
an Event of Default has occurred and is continuing, such subtenant shall
thereafter be obligated to pay all rentals accruing under such sublease
directly to the party giving such Notice or as such party may direct.  All
rentals received from such subtenant by Landlord or the Facility Mortgagee, as
the case may be, shall be credited against the amounts owing by Tenant under
this Agreement and such sublease shall provide that the subtenant thereunder
shall, at the request of Landlord, execute a suitable instrument in
confirmation of such agreement to attorn.  An original counterpart of each such
sublease and assignment and assumption, duly executed by Tenant and such
subtenant or assignee, as the case may be, in form and substance reasonably
satisfactory to Landlord, shall be delivered promptly to Landlord upon request
and (a) in the case of an assignment, the assignee shall assume in writing and
agree to keep and perform all of the terms of this Agreement on the part of
Tenant to be kept and performed and shall be, and become, jointly and severally
liable with Tenant for the performance thereof and (b) in case of either an
assignment or subletting, Tenant shall remain primarily liable, as principal
rather than as surety, for the prompt payment of the Rent and for the
performance and observance of all of the covenants and conditions to be
performed by Tenant hereunder.

         The provisions of this Section 16.2 shall not be deemed a waiver of
the provisions set forth in the first paragraph of Section 16.1.

         16.3  Permitted Assignments and Subleases.

         Notwithstanding the requirements set forth in Section 16.1 that
Landlord's prior written consent be obtained in connection with any assignment,
mortgage, pledge, encumbrance or other transfer of this Lease or any sublease
of all or any part of the Collective Leased Properties, but subject to the
provisions of Section 16.4 and any other express conditions or limitations set
forth





                                     - 49 -
<PAGE>   57

in this Article 16, Tenant may, in each instance, (x) after Notice to Landlord,
sublease any or all of the Collective Leased Properties, or assign this
Agreement,  to any Qualified Affiliate and (y) sublease space at any of the
Collective Leased Properties for laundry, commissary, child care or medical
office or other purposes in furtherance of the applicable Primary Intended Use,
so long as such sublease will not violate or affect any Legal Requirement or
Insurance Requirement, and Tenant shall provide such additional insurance
coverage applicable to the activities to be conducted in such subleased space
as Landlord may require.  In connection with any sublease of any Leased
Property, or assignment of this Agreement, any and all Facilities affected by
or the subject of such transaction shall continue to be operated under and
pursuant to the Franchise Agreement, and Tenant shall provide to Landlord, upon
request, documentation confirming that the operation thereof, in such manner,
has the approval and consent of Franchisor.

         16.4  Sublease Limitation.

         Anything contained in this Agreement to the contrary notwithstanding,
Tenant shall not sublet any of the Collective Leased Properties on any basis
such that all or any part of the Rent would fail to qualify as "rents from real
property" within the meaning of Section 856(d) of the Code, or any similar or
successor provision thereto.  This limitation shall include, but not be limited
to, situations where (a) the rental to be paid by any sublessee thereunder
would be based, in whole or in part, on the income or profits derived by the
business activities of such sublessee, or (b) the sublessee would have a
relationship to Crescent Real Estate Equities, Inc., described in Section
856(d)(2)(B) of the Code, or any similar or successor provision thereto.

         16.5  Tenant's Right to Mortgage its Leasehold.

         Tenant may, subject to Article 15 and Section 6.6 hereof, assign its
interest in this Agreement to a Lending Institution as collateral for
Indebtedness, provided, however, any security interests in any property of
Tenant, including without limitation Tenant's leasehold interest in the
Collective Leased Properties, shall be expressly and fully subordinated to this
Agreement and to the interest of Landlord in the Collective Leased Properties
and to the rights of any then or thereafter existing Facility Mortgagee.

                                   ARTICLE 17
                 ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS

         17.1  Estoppel Certificates.

         At any time and from time to time, upon not less than ten (10) days
prior Notice by Landlord, Tenant shall furnish to Landlord an Officer's
Certificate certifying that this Agreement is unmodified and in full force and
effect (or that this Agreement is in full force and effect as modified and
setting forth the modifications), the date to which the Rent has been paid,
that no Default or an Event of Default has occurred and is continuing or, if a
Default or an Event of Default shall exist, specifying in reasonable detail the
nature thereof, and the steps being taken to remedy the same, and such
additional information as Landlord may reasonably request.  Any such
certificate furnished pursuant to this Section 17.1 may be relied upon by
Landlord, any





                                     - 50 -
<PAGE>   58

Facility Mortgagee and any prospective purchaser or mortgagee of any of the
Collective Leased Properties.

         17.2  Financial Statements.

          OpCo shall furnish the following statements to Landlord:

           (a)  within forty-five (45) days after each of the first three
         quarters of any Fiscal Year, the most recent Financials and the most
         recent unaudited financial statements of OpCo accompanied by the
         Financial Officer's Certificate;

           (b)  within one hundred twenty (120) days after the end of each
         Fiscal Year, the most recent Financials for such Fiscal Year,
         including the most recent financial statements of OpCo audited and
         reported upon by an independent certified public accountant reasonably
         satisfactory to Landlord and accompanied by a Financial Officer's
         Certificate;

           (c)  within thirty (30) days after the end of each calendar month,
         an unaudited statement of income of OpCo, accompanied by a Financial
         Officer's Certificate;

           (d)  promptly after the sending or filing thereof,  copies of all
         periodic reports which  OpCo files with the SEC or any stock exchange
         on which its shares are listed or traded;

           (e)  promptly after the delivery thereof to OpCo, a copy of any
         management letter or written report prepared by the certified public
         accountants with respect to the financial condition, operations,
         business or prospects of OpCo, as the case may be; and

           (f)  at the expense of Landlord, at any time and from time to time
         upon not less than forty-five (45) days Notice from Landlord, any
         Financials or any other financial reporting information required to be
         filed by Landlord with any securities and exchange commission, the SEC
         or any successor agency, or any other governmental authority, or
         required pursuant to any order issued by any court, governmental
         authority or arbitrator in any litigation to which Landlord is a
         party, for purposes of compliance therewith, promptly, upon Notice
         from Landlord, such other information concerning the business,
         financial condition and affairs of Tenant as Landlord may reasonably
         request from time to time.

         Landlord may at any time, and from time to time, provide any Facility
Mortgagee with copies of any of the foregoing statements, provided that such
Facility Mortgagee has executed and delivered a confidentiality  agreement
reasonably satisfactory to Tenant.

         17.3  General Operations.

         Tenant covenants and agrees to furnish to Landlord within thirty (30)
days after written request therefor:





                                     - 51 -
<PAGE>   59

                 17.3.1  Reimbursement, Licensure, Etc.

                 Within thirty (30) days after receipt or modification thereof:

           (a)  copies of all material licenses and certificates of need
         authorizing Tenant to operate each Facility for its Primary Intended
         Use;

           (b)  a list of all Medicare and Medicaid certifications and all
         related participating provider agreements; and

           (c)  copies of all reports of surveys, statements of deficiencies,
         plans of correction, and all material correspondence relating thereto,
         including, without limitation, all reports and material correspondence
         concerning compliance with or enforcement of licensure,
         Medicare/Medicaid, and accreditation requirements, including physical
         environment and Life Safety Code survey reports (excluding, however,
         correspondence which may be subject to any attorney-client privilege).
         Upon Notice from Landlord from time to time, Tenant shall make
         available for inspection and copying by Landlord, where such records
         are kept and maintained in the normal course of business:

           (d)  all Medicare and Medicaid certifications, together with all
         participating provider agreements and all material correspondence
         relating thereto with respect to each Facility (excluding, however,
         correspondence which may be subject to any attorney-client privilege);
         and

           (e)  such other confirmation as to the licensure and Medicare and
         Medicaid participation of Tenant as Landlord may reasonably request
         from time to time.

                 17.3.2  Annual Budgets.

                 Not less than sixty (60) days after the commencement of any 
Fiscal Year, proposed annual income and ordinary expense and capital
improvement budgets setting forth projected income and costs and expenses
projected to be incurred by Tenant in managing, owning, maintaining and
operating the Facilities during the next succeeding Fiscal Year.

                                   ARTICLE 18
                         LANDLORD'S RIGHT TO INSPECT

         Tenant shall permit Landlord and its authorized representatives to
inspect the Collective Leased Properties during usual business hours upon not
less than twenty-four (24) hours' notice (provided that no such notice shall be
required if Landlord shall reasonably determine immediate action is necessary
to protect person or property), and to make such repairs as Landlord is
permitted or required to make pursuant to the terms of this Agreement, provided
that any inspection or repair by Landlord or its representatives will not
unreasonably interfere with





                                     - 52 -
<PAGE>   60

Tenant's use and operation of the applicable Leased Property and further
provided that in the event of an emergency, as determined by Landlord in its
sole discretion, prior Notice shall not be necessary.

                                   ARTICLE 19
                                   APPRAISAL

         In the event that it becomes necessary to determine the Fair Market
Value or Fair Market Rental of any of the Collective Leased Properties for any
purpose of this Agreement and the parties cannot agree thereon, such Fair
Market Value or Fair Market Rental, as the case may be, shall be determined
upon the written demand of either party in accordance with the following
procedure.

         The party requesting an appraisal, by Notice given to the other, shall
propose and unilaterally approve a Qualified Appraiser.  The other party, by
Notice given within fifteen (15) days after receipt of such Notice appointing
the first Qualified Appraiser, may appoint a second Qualified Appraiser.  If
the other party fails to appoint the second Qualified Appraiser within such
fifteen (15)-day period, such party shall have waived its right to appoint a
Qualified Appraiser, the first Qualified Appraiser shall appoint a second
Qualified Appraiser within fifteen (15) days thereafter, and the Fair Market
Value or Fair Market Rental, as the case may be, shall be determined by the
Qualified Appraisers as set forth below.

         The two Qualified Appraisers shall thereupon endeavor to agree upon
the Fair Market Value or Fair Market Rental, as the case may be.  If the two
Qualified Appraisers so named cannot agree upon such value or rental, as the
case may be, within thirty (30) days after the designation of the second such
appraiser, each such appraiser shall, within five (5) days after the expiration
of such thirty (30)-day period, submit his appraisal of fair market value to
the other appraiser in writing, and if the fair market values set forth in such
appraisals vary by five percent (5%) or less of the greater value, the fair
market value shall be determined by calculating the average of the two fair
market values determined by the two appraisers.

         If the fair market values set forth in the two appraisals vary by more
than five percent (5%) of the greater value, the two Qualified Appraisers shall
select a third Qualified Appraiser within an additional fifteen (15) days
following the expiration of the aforesaid five (5)-day period.  If the two
appraisers are unable to agree upon the appointment of a third appraiser within
such fifteen (15)-day period, either party may, upon written notice to the
other, request that such appointment be made by the then President (or
equivalent officer) of the State's Chapter of the American Institute of Real
Estate Appraisers, or his or her designee or, if there is no such organization
or if such individual declines to make such appointment, by any state or
Federal court of competent jurisdiction for the State.

         In the event that all three of the appraisers cannot agree upon Fair
Market Value or Fair Market Rental, as the case may be, within twenty (20) days
following the selection of the third appraiser, each appraiser shall, within
ten (10) days thereafter, submit his appraisal of fair market value to the
other two appraisers in writing, and the fair market value shall be determined
by





                                     - 53 -
<PAGE>   61

calculating the average of the two numerically closest values (or, if the
values are equidistant, the average of all three values) determined by the
three appraisers.

         In the event that any appraiser appointed hereunder does not or is
unable to perform his or her obligation hereunder, then the party or the
appraisers appointing such appraiser shall have the right to propose and
approve unilaterally a substitute Qualified Appraiser, but if the party or the
appraisers who have the right to appoint a substitute Qualified Appraiser fail
to do so within ten (10) days after written notice from the other party (or
either party in the event such appraiser was appointed by the other
appraisers), either party may, upon written notice to the party having the
right to appoint a substitute Qualified Appraiser, request that such
appointment be made by such officer of the American Institute of Real Estate
Appraisers or court of competent jurisdiction as described above; provided,
however, that a party who has the right to appoint an appraiser or a substitute
appraiser shall have the right to make such appointment only up until the time
such appointment is made by such officer or court.

         In connection with the appraisal process, Tenant shall provide the
appraisers full access during normal business hours to examine the applicable
Leased Property, the books, records and files of Tenant and all agreements,
leases and other operating agreements relating to the applicable Leased
Property.

         The costs (other than Landlord's counsel fees) of each such appraisal
shall be borne by Tenant and shall be included as part of the Additional
Charges.  Upon determining such value, the appraisers shall promptly notify
Landlord and Tenant in writing of such determination.  If any party shall fail
to appear at the hearings appointed by the appraisers, the appraisers may act
in the absence of such party.

         The determination of the Qualified Appraisers made in accordance with
the foregoing provisions shall be final and binding upon the parties, such
determination may be entered as an award in arbitration in a court of competent
jurisdiction, and judgment thereon may be entered.

         Notwithstanding anything in this Agreement to the contrary, (x) the
parties agree that the Minimum Rent for the Fixed Term provided for in Section
1.64 hereof shall not be evidence of the Fair Market Rental for any Extended
Term, and (y) if  Minimum Rent for any Extended Term as determined by appraisal
pursuant to this Article 19 is not satisfactory to Landlord, in Landlord's sole
discretion, or Franchisor elects to void Tenant's extension of the Franchise
Agreement with respect to such Extended Term pursuant to the Franchise
Agreement, then Landlord shall have the right to render void Tenant's election
to extend the Term with respect to such Extended Term upon Notice given to
Tenant no later than thirty (30) days following the later of the determination
of the Minimum Rent pursuant to this Article 19, or Franchisor's election to
render void the extension of the Franchise Agreement pursuant to the Franchise
Agreement, in which event this Agreement shall expire on the last day of the
Fixed Term or the then current Extended Term, as applicable.





                                     - 54 -
<PAGE>   62

                                   ARTICLE 20
                               FACILITY MORTGAGES

         20.1  Landlord May Grant Liens.

         Without the consent of Tenant, Landlord may, subject to the terms and
conditions set forth in this Section 20.1, from time to time, directly or
indirectly, create or otherwise cause to exist any lien, encumbrance or title
retention agreement ("ENCUMBRANCE") upon any of the Collective Leased
Properties, or any portion thereof or interest therein, whether to secure any
borrowing or other means of financing or refinancing.  Any such Encumbrance
shall include the right to prepay (whether or not subject to a prepayment
penalty) and shall provide (subject to Section 20.2 below) that it is subject
to the rights of Tenant under this Agreement.

         20.2  Subordination of Lease.

         Subject to Section 20.1, this Agreement, any and all rights of Tenant
hereunder, are and shall be subject and subordinate to any ground or master
lease, and all renewals, extensions, modifications and replacements thereof,
and to all mortgages and deeds of trust, which may now or hereafter affect the
Collective Leased Properties, or any of them, or any improvements thereon
and/or any of such leases, whether or not such mortgages or deeds of trust
shall also cover other lands and/or buildings and/or leases, to each and every
advance made or hereafter to be made under such mortgages and deeds of trust,
and to all renewals, modifications, replacements and extensions of such leases
and such mortgages and deeds of trust and all consolidations of such mortgages
and deeds of trust.  This section shall be self-operative and no further
instrument of subordination shall be required.  In confirmation of such
subordination, (i) Tenant shall promptly execute, acknowledge and deliver any
instrument that Landlord, the lessor under any such lease or the holder of any
such mortgage or the trustee or beneficiary of any deed of trust or any of
their respective successors in interest may reasonably request to evidence such
subordination, and (ii) the lessor under any such lease or the holder of any
such mortgage or the trustee or beneficiary of any such deed of trust shall
execute and deliver to Tenant a Non-Disturbance Agreement reasonably
satisfactory to Tenant (taking into account, however, the reasonable
requirements of the lessor or lender, including a lender becoming such in
connection with a non-recourse securitized loan), including provisions with
respect to insurance and casualty matters.

         Any lease to which this Agreement is, at the time referred to, subject
and subordinate is herein called "SUPERIOR LEASE" and the lessor of a Superior
Lease or its successor in interest at the time referred to, is herein called
"SUPERIOR LANDLORD" and any mortgage or deed of trust to which this Agreement
is, at the time referred to, subject and subordinate, is herein called
"SUPERIOR MORTGAGE" and the holder, trustee or beneficiary of a Superior
Mortgage is herein called "SUPERIOR MORTGAGEE."

         If any Superior Landlord or Superior Mortgagee or the nominee or
designee of any Superior Landlord or Superior Mortgagee shall succeed to the
rights of Landlord under this Agreement with respect to one or more of the
Collective Leased Properties, whether through possession or foreclosure action
or delivery of a new lease or deed, or otherwise, then at the





                                     - 55 -
<PAGE>   63

request of such party so succeeding to Landlord's rights (herein called
"SUCCESSOR LANDLORD") and upon such Successor Landlord's written agreement to
accept Tenant's attornment, Tenant shall attorn to and recognize such Successor
Landlord as Tenant's landlord under this Agreement with respect to one or more
of the Collective Leased Properties, and shall promptly execute and deliver any
instrument that such Successor Landlord may reasonably request to evidence such
attornment.  Upon such attornment, this Agreement shall continue in full force
and effect as a direct lease between the Successor Landlord and Tenant upon all
of the terms, conditions and covenants as are set forth in this Agreement,
except that the Successor Landlord (unless formerly the landlord under this
Agreement or its nominee or designee) shall not be (a) liable in any way to
Tenant for any act or omission, neglect or default on the part of Landlord
under this Agreement, (b) responsible for any monies owing by or on deposit
with Landlord to the credit of Tenant, (c) subject to any counterclaim or
setoff which theretofore accrued to Tenant against Landlord, (d) bound by any
modification of this Agreement subsequent to such Superior Lease or Mortgage,
or by any previous prepayment of Minimum Rent or Additional Rent for more than
one (1) month, which was not approved in writing by the Superior Landlord or
the Superior Mortgagee thereto, (e) liable to Tenant beyond the Successor
Landlord's interest in the applicable Leased Property and the rents, income,
receipts, revenues, issues and profits issuing from such Leased Property, (f)
responsible for the performance of any work to be done by the Landlord under
this Agreement to render the applicable Leased Property ready for occupancy by
Tenant, or (g) required to remove any Person occupying the applicable Leased
Property or any part thereof, except if such person claims by, through or under
the Successor Landlord.  Tenant agrees at any time and from time to time to
execute a suitable instrument in confirmation of Tenant's agreement to attorn,
as aforesaid.

         20.3  Notice to Mortgagee and Ground Landlord.

         Subsequent to the receipt by Tenant of notice from any Person that it
is a Facility Mortgagee or that it is the ground lessor under a lease with
Landlord, as ground lessee, which includes the applicable Leased Property as
part of the demised premises, no notice from Tenant to Landlord as to the
applicable Leased Property shall be effective unless and until a copy of the
same is given to such Facility Mortgagee or ground lessor, and the curing of
any of Landlord's defaults by such Facility Mortgagee or ground lessor shall be
treated as performance by Landlord.

                                   ARTICLE 21
                         ADDITIONAL COVENANTS OF TENANT

         21.1  Conduct of Business.

         Tenant shall do or cause to be done all things necessary to preserve,
renew and keep in full force and effect and in good standing its corporate
existence and its rights and licenses necessary to conduct such business.





                                     - 56 -
<PAGE>   64

         21.2  Maintenance of Accounts and Records.

         Tenant shall keep records and books of account in which full, true and
correct entries in  all material respects will be made of dealings and
transactions in relation to the business and affairs of Tenant.

         21.3  Payments to Franchisor.

         All payments by Tenant of Franchise Fees under the Franchise Agreement
shall be subordinated to payments of Rent (other than Non-Priority Additional
Rent) due to Landlord to the extent and on the terms provided in the Franchise
Subordination Agreement, and Tenant shall not make any payment of the Franchise
Fees, directly or indirectly, or set apart any sum or property therefor, or
agree to do so, other than as permitted in and by the Franchise Subordination
Agreement.

         21.4  Management of Collective Leased Properties.

         Tenant shall not enter into any Management Agreement unless the terms
thereof have been previously approved in writing by Landlord, which approval
may be given or withheld in Landlord's sole and absolute discretion, except for
Management Agreements between OpCo and a Facility Subsidiary.  All management
fees, payments in connection with any extension of credit and fees for services
provided in connection with the operation of the applicable Leased Property,
payable by Tenant or any Affiliated Person as to Tenant shall be subordinated
to all of the obligations of Tenant due under this Agreement pursuant to a
Subordination Agreement.  Tenant shall not agree to any change in the Manager
of any of the Collective Leased Properties and/or any Facility, to any change
in any Management Agreement, terminate any Management Agreement or permit any
Manager to assign any Management Agreement without the prior written approval
of Landlord in each instance, which approval may be given or withheld in
Landlord's sole and absolute discretion.  Any Management Agreement shall
provide that Landlord shall be provided notice of any defaults thereunder and,
at Landlord's option, an opportunity to cure such defaults and shall otherwise
be in form and substance satisfactory to Landlord in its sole and absolute
discretion.  If Landlord shall cure any of Tenant's defaults under any
Management Agreement, the cost of such cure shall be payable upon demand by
Tenant to Landlord with interest accruing from the demand date at the Overdue
Rate and Landlord shall have the same rights and remedies for failure to pay
such costs on demand as for Tenant's failure to pay Minimum Rent.  Tenant shall
deliver to Landlord any instrument requested by Landlord to implement the
intent of the foregoing provision.

         21.5  Liens and Encumbrances.

         Except as permitted by Sections 7.1 and 16.5, Tenant shall not create
or incur or suffer to be created or incurred or to exist any Lien on this
Agreement or Tenant's Personal Property now or at any time hereafter owned,
other than:

           (a)  Security interests securing the purchase price of equipment or
         personal property acquired after the Commencement Date; provided,
         however, that (i) such Lien shall at all times be confined solely to
         the asset in question; and (ii) the aggregate





                                     - 57 -
<PAGE>   65

         principal amount of Indebtedness secured by any such Lien shall not
         exceed the cost of acquisition or construction of the property subject
         thereto; and

           (b)  Permitted Encumbrances.

                                   ARTICEL 22
                                 MISCELLANEOUS

         22.1  Limitation on Payment of Rent.

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

         22.2  No Waiver.

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

         22.3  Remedies Cumulative.

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

         22.4  Severability.

         Any clause, sentence, paragraph, section or provision of this
Agreement held by a court of competent jurisdiction to be invalid, illegal or
ineffective shall not impair, invalidate or nullify the remainder of this
Agreement, but rather the effect thereof shall be confined to the clause,





                                     - 58 -
<PAGE>   66

sentence, paragraph, section or provision so held to be invalid, illegal or
ineffective, and this Agreement shall be construed as if such invalid, illegal
or ineffective provisions had never been contained therein.

         22.5  Acceptance of Surrender.

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

         22.6  No Merger of Title.

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

         22.7  Conveyance by Landlord.

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

         22.8  Quiet Enjoyment.

         So long as Tenant shall pay the Rent as the same becomes due and shall
comply with all of the terms of this Agreement, Tenant shall peaceably and
quietly have, hold and enjoy the Collective Leased Properties for the Term,
free of hindrance or molestation by Landlord or anyone claiming by, through or
under Landlord, but subject to (a) any Encumbrance permitted under Article 20
or otherwise permitted to be created by Landlord hereunder, (b) all Permitted
Encumbrances, (c) liens as to obligations of Landlord that are either not yet
due or which are being contested in good faith and by proper proceedings, and
(d) liens that have been consented to in writing by Tenant.  Except as
otherwise provided in this Agreement, no failure by Landlord to comply with the
foregoing covenant shall give Tenant any right to cancel or terminate this
Agreement or abate, reduce or make a deduction from or offset against the Rent
or any other sum payable under this Agreement, or to fail to perform any other
obligation of Tenant hereunder.





                                     - 59 -
<PAGE>   67

         22.9  Landlord's Consent.

         Where provision is made in this Agreement for Landlord's consent and
Landlord shall fail or refuse to give such consent, Tenant shall not be
entitled to any damages for any withholding by Landlord of its consent, it
being intended that Tenant's sole remedy shall be an action for specific
performance or injunction, and that such remedy shall be available only in
those cases where Landlord has expressly agreed in writing not unreasonably to
withhold its consent.

         22.10  Memorandum of Lease.

         Neither Landlord nor Tenant shall record this Agreement.  However,
Landlord and Tenant shall promptly, upon the request of the other, enter into a
short form memorandum of this Agreement, in form suitable for recording under
the laws of the State in which reference to this Agreement, and all options
contained herein, shall be made.  Tenant shall pay all costs and expenses of
recording such memorandum.

         22.11  Notices.

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

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

           (c)  All such notices shall be addressed:

              if to Landlord to:

                          Gerald W. Haddock, Esq.
                          Chief Executive Officer and President
                          CRE Management VII Corp.
                          777 Main Street
                          Suite 2100
                          Forth Worth, Texas  76102
                          Facsimile:  (817) 878-0429





                                     - 60 -
<PAGE>   68

              with copies to:

                          David M. Dean, Esq.
                          Senior Vice President, Law
                          CRE Management VII Corp.
                          777 Main Street
                          Suite 2100
                          Forth Worth, Texas  76102
                          Facsimile:  (817) 878-0429

                          and

                          Wendelin A. White, Esq.
                          Shaw, Pittman, Potts & Trowbridge
                          2300 N Street, N.W.
                          Washington, DC  20037
                          Facsimile:  (202) 663-8007


              If to Tenant to:

                          Steve J. Davis, Esq.
                          Executive Vice President,
                            Administrative Services and General Counsel
                          3414 Peachtree Road, N.E.
                          Suite 1400
                          Atlanta, Georgia  30326
                          Facsimile:  (404) 814-5793

              with a copy to:

                          Robert W. Miller, Esq.
                          King & Spalding
                          191 Peachtree Street
                          Atlanta, Georgia  30303-1763
                          Facsimile:  (404) 572-5100

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

         22.12  Construction.

         Anything contained in this Agreement to the contrary notwithstanding,
all claims against, and liabilities of, Tenant or Landlord arising prior to any
date of termination or expiration of this





                                     - 61 -
<PAGE>   69

Agreement with respect to any of the Collective Leased Properties shall survive
such termination or expiration.  In no event shall Landlord be liable for any
consequential damages suffered by Tenant as the result of a breach of this
Agreement by Landlord.  Neither this Agreement nor any provision hereof may be
changed, waived, discharged or terminated except by an instrument in writing
signed by the party to be charged.  All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.  Each term or provision of this
Agreement to be performed by Tenant shall be construed as an independent
covenant and condition.  Time is of the essence with respect to the exercise of
any rights of Tenant under this Agreement.  Except as otherwise set forth in
this Agreement, any obligations of Tenant and Landlord (including without
limitation, any monetary, repair and indemnification obligations) shall survive
the expiration or sooner termination of this Agreement.

         22.13  Counterparts; Headings.

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

         22.14  Applicable Law, Etc.

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

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





                                     - 62 -
<PAGE>   70

         22.15  Substitution of Leased Properties.

         Provided no Default or Event of Default has occurred and is continuing
at the time of exercise of the right provided for in this Section 22.15, Tenant
shall have the right, from time to time, to substitute for a Designated Leased
Property another parcel of improved real property meeting criteria hereinafter
set forth and otherwise acceptable to Landlord (the "SUBSTITUTE LEASED
PROPERTY").  If Tenant makes such election, Tenant shall give Notice to
Landlord of Tenant's intention proposing a substitution closing date (the
"SUBSTITUTION DATE") not less than sixty (60) days or more than one-hundred
twenty (120) days from the date of such Notice and offering to Landlord a
proposed Substitute Leased Property meeting the following criteria:  the
Substitute Leased Property shall be improved with a Comparable Facility; shall
have a total value equal to or greater than the total value of the Designated
Leased Property to Landlord (each as reasonably determined by Landlord); shall
be freely transferable to Landlord unencumbered by any existing lease,
mortgage, or other encumbrance; and shall be subject to no other exceptions to
title except those approved by Landlord, which approval shall not be
unreasonably withheld. Tenant shall convey the Substitute Leased Property to
Landlord in exchange for the Designated Leased Property, Landlord shall
simultaneously exchange the Designated Leased Property, for the Substitute
Leased Property, and the parties shall simultaneously execute and deliver an
amendment to this Lease.  The Landlord shall have thirty (30) days following
receipt of such Notice within which to accept or reject such offer; provided,
however, that Landlord shall have at least ten (10) days following receipt of
any appraisal of the Substitute Leased Property or the Designated Leased
Property (or both) requested by Landlord within which to accept or reject such
offer.   If Landlord accepts  the proposed Substitute Leased Property, the
substitution shall proceed in a manner (a) intended to qualify such
substitution as a "like-kind" exchange within the meaning of Section 1031 of
the Internal Revenue Code of 1986, as amended (the "CODE") with respect to
Landlord, and (b) which will satisfy Landlord's requirements related to
taxation as a real estate investment trust.  Landlord may demand, at Tenant's
expense, a reasonably acceptable opinion of counsel or private letter ruling
from the Internal Revenue Service indicating that the substitution will have no
material adverse tax consequences to Landlord.  After closing, the Substitute
Leased Property shall be deemed a Leased Property for all purposes.
Substitution hereunder and the closing shall be made on the following terms and
shall be subject to the following conditions:

           (a)  on the Substitution Date, Tenant shall execute, acknowledge and
         deliver to Landlord a warranty deed in the customary form for the
         relevant jurisdiction conveying to Landlord, free and clear of any
         title exceptions except those approved by Landlord as set forth above,
         title to the Substitute Leased Property, and Landlord shall
         simultaneously execute, acknowledge and deliver to Tenant a warranty
         deed conveying to Tenant, free and clear of title exceptions, except
         Permitted Encumbrances and those approved by Tenant (based on the same
         criteria for approval as for Landlord), title to the Designated Leased
         Property; provided, however, that in no event shall Landlord have any
         obligation to cure or remove title exceptions affecting the Designated
         Leased Property, Tenant's only recourse being to designate an
         alternative Designated Leased Property for substitution or to rescind
         its Notice of election to substitute a Substitute Leased Property.

           (b)  on or prior to the Substitution Date, Landlord and Tenant shall
         have executed, acknowledged and delivered an amendment to this Lease
         (the "AMENDMENT TO LEASE") (the Lease, as amended, herein referred to
         as the "AMENDED LEASE") which shall provide





                                     - 63 -
<PAGE>   71

         for the deletion of the legal description of the Designated Leased
         Property and the substitution of the legal description of the
         Substitute Leased Property therefor.

           (c)  Tenant shall have provided Landlord, at Tenant's sole cost,
         with a title insurance policy satisfactory in form and substance to
         Landlord, effective on the date of exchange, covering the Substitute
         Leased Property and containing no exceptions to title to the
         Substitute Leased Property other than encumbrances approved by
         Landlord as provided herein, and having such affirmative insurance and
         endorsements as may be required by Landlord.

           (d)  Tenant shall have provided Landlord with representations and
         warranties with respect to the Substitute Leased Property reasonably
         satisfactory to Landlord (unless otherwise reasonably required,
         generally similar to the representations and warranties contained in
         Section 6.1 of that certain Real Estate Purchase and Sale Agreement
         dated as of January 29, 1997, as amended through the date hereof by
         and between Magellan Health Services, Inc., as seller, and Crescent
         Real Estate Equities Limited Partnership, predecessor in interest of
         Landlord, as purchaser (the "PURCHASE AGREEMENT")), such
         representations and warranties shall survive the closing and Landlord
         shall have the same remedies for breach thereof as are provided for in
         the Purchase Agreement.

           (e)  Tenant shall provide Landlord with documentation satisfactory
         to Landlord confirming that Tenant has the right to operate the
         Substitute Leased Property in accordance with the Primary Intended Use
         and under and pursuant to the Franchise Agreement.

           (f)  Tenant shall reimburse Landlord, as Additional Charges, for any
         and all costs and expenses incurred by Landlord, including Landlord's
         reasonable attorneys' fees, in effecting the substitution proposed
         (whether or not closing occurs).

         Landlord and Tenant hereby covenant that once the Notice of intent to
substitute a Substitute Leased Property for the Designated Leased Property
described therein has been delivered and Landlord accepts the Substitute Leased
Property identified therein, each party will promptly perform all acts and
deliver all documents required on its part to be delivered or to satisfy the
conditions of closing set forth herein.  In the event that the Substitute
Leased Property has not been exchanged for the Designated Leased Property
within thirty (30) days after the Substitution Date specified in Tenant's
Notice of its intention to substitute by reason of the acts or omissions of one
party, then the other party shall have the right to elect not to proceed with
the substitution.

         Tenant covenants that, following the closing of the exchange of the
Substitute Leased Property, neither it nor any of its Affiliated Persons will
use the Designated Leased Property as a facility having as its primary use the
Primary Intended Use  for at least one year after the Substitution Date.





                                     - 64 -
<PAGE>   72

         22.16  No Broker.

         Each party hereby represents and warrants to the other that it has not
engaged, dealt with or otherwise discussed this transaction with any broker,
agent or finder.  Each party agrees to indemnify and hold the other harmless
from and against any claim arising out of a breach of the foregoing agreement
and representation and warranty.

         22.17  Confidentiality.

         Landlord shall maintain the confidentiality of information provided by
Tenant pursuant to Sections 17.2 and 17.3 hereof or otherwise under this
Agreement.  Landlord may, however, disclose such information to its attorneys,
consultants, partners, directors, officers and employees, and lenders and
purchasers (actual and potential). As a condition of such disclosure to any
lender or purchaser (actual or potential), such lender or purchaser shall be
obligated to execute a Confidentiality Agreement reasonably satisfactory to
Tenant.  The provisions of this Section 22.18 shall not be applicable to
disclosure of information required by applicable law, rule or regulation or the
order of any court.

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

                                         LANDLORD:
                                         CRESCENT REAL ESTATE FUNDING VII, L.P.

Attest:                                  By: CRE Management VII Corp.

/s/ Sylvia M. Mahaffey                   By: /s/David M. Dean
Name:  Sylvia M. Mahaffey                    David M. Dean
Title:  Assistant Secretary                  Senior Vice President, Law





                                     - 65 -
<PAGE>   73

                                         TENANT:

Attest:                                  CHARTER BEHAVIORAL HEALTH SYSTEMS, LLC

/s/ Jay P. Moran                         By: /s/ Mark Ford
Name: Jay P. Moran                       Name: Mark Ford
Title:                                   Title: Secretary


Attest:                                  FACILITY SUBSIDIARIES

/s/ Jay P. Moran                         By: /s/ John R. Hamilton III   
Name: Jay P. Moran                           John R. Hamilton III
Title:                                       Executive Vice President of each 
                                             of the Limited Liability Companies
                                             and of each Sole General Partner 
                                             of each of the Limited Partnerships
                                             listed on Exhibit B attached 
                                             hereto, on behalf of each of the
                                             said Limited Liability Companies 
                                             and Limited Partnerships





                                     - 66 -
<PAGE>   74


                                   EXHIBIT A

                                    The Land

                               [Exhibit omitted]





                                     - 67 -
<PAGE>   75
                                        

                                   EXHIBIT B

                             Facility Subsidiaries

                               [Exhibit omitted]





                                     - 68 -
<PAGE>   76


                    FIRST AMENDMENT TO MASTER LEASE AGREEMENT


        This First Amendment to Master Lease Agreement (this "Amendment No. 1")
is entered into as of the 30th day of September, 1997 by and between CRESCENT
REAL ESTATE FUNDING VII, L.P., a Delaware limited partnership ("LANDLORD") and
CHARTER BEHAVIORAL HEALTH SYSTEMS, LLC, a Delaware limited liability company
("OPCO"), and each of the entities listed on Exhibit A attached hereto (the
"Facility Subsidiaries").


                              W I T N E S S E T H:


        WHEREAS, by the Master Lease Agreement dated June 16, 1997 (the "MASTER
LEASE"), Landlord leased to OpCo and each of the Facility Subsidiaries the
collective leased properties (as defined therein); and


        WHEREAS, pursuant to that letter agreement dated September 29, 1997 (the
"LETTER AGREEMENT") among OpCo, Charter Sioux Falls Behavioral Health System,
LLC, being one of the Facility Subsidiaries ("CHARTER SIOUX FALLS"), and
Landlord, OpCo and Charter Sioux Falls instructed and authorized Landlord, and
Landlord agreed, to sell one of the Collective Leased Properties, being that
described on Exhibit A to the Master Lease (the "PROPERTY EXHIBIT") as No. 75,
2812 South Louise Avenue, Sioux Falls, South Dakota (the "SIOUX FALLS
PROPERTY"); and


        WHEREAS, pursuant to the Letter Agreement, Landlord entered into that
certain Agreement of Purchase and Sale (the "PURCHASE AGREEMENT") dated as of
September 29, 1997 with Sioux Valley Hospital ("SVH") with respect to the Sioux
Falls Property; and


        WHEREAS, pursuant to the Purchase Agreement, the closing for the sale of
the Sioux Falls Property to SVH is to occur on September 30, 1997; and


        WHEREAS, in connection with the sale of the Sioux Falls Property, the
parties desire to amend the Master Lease to exclude the Sioux Falls Property
therefrom effective as of the date hereof;


        WHEREAS, pursuant to that Assignment and Assumption of Master Lease
Agreement, dated July 30, 1997 (the "PTC ASSIGNMENT"), by and between OpCo, each
of the Facility Subsidiaries (collectively, "ASSIGNOR"), and Charter Behavioral
Health System at Pinellas Treatment Center, LP ("PTC ASSIGNEE"), Assignor
assigned to PTC Assignee all of Assignor's right, title and interest in the
Master Lease with respect to that portion of the Collective Leased Properties
located at 12895 Seminole Boulevard, Largo, Florida, identified as No. 23 on the
Property Exhibit (the "PTC PROPERTY"), pursuant to the terms and conditions set
forth in the PTC Assignment, a copy of which is attached hereto as Exhibit B;
and


        WHEREAS, pursuant to that Assignment and Assumption of Master Lease
Agreement, dated August 14, 1997 (the "LAUREL HEIGHTS ASSIGNMENT"), by and
between Assignor


<PAGE>   77

and Schizophrenia Treatment and Rehabilitation, LLC ("STAR ASSIGNEE"), Assignor
assigned to STAR Assignee all of Assignor's right, title and interest in the
Master Lease with respect to those portions of the Collective Leased Properties
located at: (i) 204 Church Street, Decatur, Georgia; (ii) 1332 Weston Drive,
Decatur, Georgia; and (iii) 450 S. Susan Creek Drive, Stone Mountain, Georgia,
identified as Nos. 34, 35 and 36, respectively (collectively, the "LAUREL
HEIGHTS PROPERTIES"), pursuant to the terms and conditions set forth in the
Laurel Heights Assignment, a copy of which is attached hereto as Exhibit C; and


        WHEREAS, in connection with the PTC Assignment and the Laurel Heights
Assignment, the parties hereto desire to amend the Master Lease to reflect such
assignments;


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


        1.      Defined terms used herein with an initial capital letter(s) and
not otherwise defined herein shall have the meanings given them in the Master
Lease.


        2.      Effective as of September 30, 1997 (the "PARTIAL TERMINATION
DATE"), the Master Lease shall be and is hereby terminated solely with respect
to the Sioux Falls Property, so that the Master Lease shall be of no further
force and effect thereafter solely with respect to the Sioux Falls Property,
subject to the conditions otherwise set forth herein. Effective as of the
Partial Termination Date, the defined term "Collective Leased Properties" shall
not include the Sioux Falls Property. Accordingly, the Property Exhibit shall be
and is hereby amended to delete all references to the Sioux Falls Property. An
amended copy of the Property Exhibit is attached hereto as Exhibit D. Tenant
shall remain responsible for all obligations relating to the Sioux Falls
Property pursuant to the Master Lease accruing or arising through the Partial
Termination Date. The Master Lease shall remain in full force and effect with
respect to all of the other Collective Leased Properties.


        3.      Exhibit B to the Master Lease (the "FACILITY SUBSIDIARIES
EXHIBIT") shall be and is hereby amended to reflect (i) PTC Assignee as the
lessee, in conjunction with Assignor, of the PTC Property pursuant to the terms
and conditions set forth in the PTC Assignment and (ii) STAR Assignee as the
lessee, in conjunction with Assignor, of the Laurel Heights Properties pursuant
to the terms and conditions set forth in the Laurel Heights Assignment.
Assignor, PTC Assignee and Star Assignee are all jointly and severally liable
for all of Tenant's obligations under the Master Lease. An amended copy of the
Facility Subsidiaries Exhibit is attached hereto as Exhibit E.


        4.      Except as amended hereby, the Master Lease remains in full force
and effect, including, without limitation, those provisions relating to the
payment of Minimum Rent. If any provision of the original Master Lease conflicts
with this Amendment No. 1, this Amendment No. 1 shall control.


<PAGE>   78

        5.      The provisions of this Amendment No. 1 shall be binding upon and
inure to the benefit of the parties hereto and each of their respective
successors and assigns.


        6.      This Amendment No. 1 may be executed in counterpart copies, each
complete set of which shall constitute an original instrument.


        IN WITNESS WHEREOF, the parties hereto have executed this Amendment
No. 1 as a sealed instrument as of the date first above written.


                                       LANDLORD:
                                       CRESCENT REAL ESTATE FUNDING VII, L.P.

Attest:                                By: CRE Management VII Corp.
/s/ Shannon Gilbert                    By: /s/ Bruce A. Picker
Name: Shannon Gilbert                      Name: Bruce A. Picker
Title: Assistant General Counsel           Title: Vice President, Treasurer


                                       TENANT:
Attest:                                CHARTER BEHAVIORAL HEALTH SYSTEMS, LLC
/s/ Mark Ford                          By: /s/ Ramie Little
Name: Mark Ford                        Name: Ramie Little
Title: Secretary                       Title: Vice President, 
                                              Business Development


Attest:                                FACILITY SUBSIDIARIES
/s/ Joseph M. Coburn                   By: /s/ John R. Hamilton III
Name: Joseph M. Coburn                     John R. Hamilton
Title: Assistant Secretary                 Executive Vice President of each of
                                           the Limited Liability Companies and
                                           of each sole General Partner of each
                                           of the Limited Partnerships listed on
                                           Exhibit A attached hereto, PTC
                                           Assignee and STAR Assignee, on behalf
                                           of each of the said Limited Liability
                                           companies and Limited Partnerships



<PAGE>   79


                                    EXHIBIT A


                              Facility Subsidiaries


                                [Exhibit omitted]




<PAGE>   80


                                   EXHIBIT B


                                 PTC Assignment


                               [Exhibit omitted]


<PAGE>   81


                                   EXHIBIT C


                           Laurel Heights Assignment


                               [Exhibit omitted]


<PAGE>   82


                                   EXHIBIT D


                            Amended Property Exhibit


                               [Exhibit omitted]


<PAGE>   83


                                   EXHIBIT E


                           Amended Facilities Exhibit


                               [Exhibit omitted]


<PAGE>   84
                   SECOND AMENDMENT TO MASTER LEASE AGREEMENT


        This Second Amendment to Master Lease Agreement (this "Amendment No. 2")
is entered into as of the 30th day of December, 1997 by and between CRESCENT
REAL ESTATE FUNDING VII, L.P., a Delaware limited partnership ("LANDLORD") and
CHARTER BEHAVIORAL HEALTH SYSTEMS, LLC, a Delaware limited liability company
("OPCO"), and each of the entities listed on Exhibit A attached hereto (the
"Facility Subsidiaries").


                              W I T N E S S E T H:


        WHEREAS, by the Master Lease Agreement dated June 16, 1997, as amended
by the First Amendment to Master Lease Agreement dated September 30, 1997 (the
"MASTER LEASE"), Landlord leased to OpCo and each of the Facility Subsidiaries
the collective leased properties (as defined therein); and


        WHEREAS, pursuant to that letter agreement dated October 28, 1997 (the
"LETTER AGREEMENT") among OpCo, Charter Behavioral Health System of Lake
Charles, LLC, being one of the Facility Subsidiaries ("CHARTER LAKE CHARLES"),
and Landlord, OpCo and Charter Lake Charles instructed and authorized Landlord,
and Landlord agreed, to sell one of the Collective Leased Properties, being that
described on Exhibit A to the Master Lease (the "PROPERTY EXHIBIT") as No. 53,
Lake Charles, 4250 Fifth Avenue, South, Lake Charles, Calcasieu County,
Louisiana (the "LAKE CHARLES PROPERTY"); and


        WHEREAS, pursuant to the Letter Agreement, Landlord entered into that
certain Agreement of Purchase and Sale (the "PURCHASE AGREEMENT") dated as of
November 3, 1997 with St. Patrick Hospital of Lake Charles ("SPH") with respect
to the Lake Charles Property; and


        WHEREAS, pursuant to the Purchase Agreement, the closing for the sale of
the Lake Charles Property to SPH is to occur on or before December 30, 1997; and


        WHEREAS, in connection with the sale of the Lake Charles Property, the
parties desire to amend the Master Lease to exclude the Lake Charles Property
therefrom effective as of the date hereof;


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


        1.      Defined terms used herein with an initial capital letter(s) and
not otherwise defined herein shall have the meanings given them in the Master
Lease.


        2.      Effective as of December 30, 1997 (the "PARTIAL TERMINATION
DATE"), the Master Lease shall be and is hereby terminated solely with respect
to the Lake


<PAGE>   85

Charles Property, so that the Master Lease shall be of no further force and
effect thereafter solely with respect to the Lake Charles Property, subject to
the conditions otherwise set forth herein. Effective as of the Partial
Termination Date, the defined term "Collective Leased Properties" shall not
include the Lake Charles Property. Accordingly, the Property Exhibit shall be
and is hereby amended to delete all references to the Lake Charles Property.
Tenant shall remain responsible for all obligations relating to the Lake Charles
Property pursuant to the Master Lease accruing or arising through the Partial
Termination Date. The Master Lease shall remain in full force and effect with
respect to all of the other Collective Leased Properties.


        3.      Except as amended hereby, the Master Lease remains in full force
and effect, including, without limitation, those provisions relating to the
payment of Minimum Rent. If any provision of the original Master Lease conflicts
with this Amendment No. 2, this Amendment No. 2 shall control.


        4.      The provisions of this Amendment No. 2 shall be binding upon and
inure to the benefit of the parties hereto and each of their respective
successors and assigns.


        5.      This Amendment No. 2 may be executed in counterpart copies, each
complete set of which shall constitute an original instrument.


        IN WITNESS WHEREOF, the parties hereto have executed this Amendment
No. 2 as a sealed instrument as of the date first above written.


                                       LANDLORD:
                                       CRESCENT REAL ESTATE FUNDING VII, L.P.

Attest:                                By: CRE Management VII Corp.
/s/ David M. Dean                      By: /s/ Bruce A. Picker
Name: David M. Dean                        Name: Bruce A. Picker
Title: Senior Vice President, Law          Title: Vice President, Treasurer


                                       TENANT:
Attest:                                CHARTER BEHAVIORAL HEALTH SYSTEMS, LLC
/s/ Mark Ford                          By: /s/ Ramie C. Little
Name: Mark Ford                        Name: Ramie C. Little
Title: Vice President                  Title: Vice President


Attest:                                FACILITY SUBSIDIARIES

/s/ Mark Ford                          By: /s/ John R. Hamilton III
Name: Mark Ford                            John R. Hamilton
Title: Vice President                      Executive Vice President of each of
                                           the Limited Liability Companies and
                                           of each sole General Partner of each
                                           of the Limited Partnerships listed on
                                           Exhibit A attached hereto


<PAGE>   86


                                    EXHIBIT A


                              Facility Subsidiaries


                                [Exhibit omitted]