Exhibit










	
						
	 	MASTER AGREEMENT TO LEASE


between


NATIONAL HEALTH INVESTORS, INC., Landlord


and


NATIONAL HEALTHCORP L.P., Tenant


Dated: October 17, 1991



	 
	 
	 
	 
	 
	 
	 
	 
	 
















	
							
	Table of Contents

	 
	 
	 
	 

	 
	 
	 
	Page

	ARTICLE I:
	SEPARATE LEASE AGREEMENTS; PREMISES AND TERM
	1

	 
	1.01
	Separate Lease Agreements
	1

	 
	1.02
	Leased Property
	2

	 
	1.03
	Term
	2

	 
	1.05
	Holding Over
	3

	 
	1.06
	Surrender
	3

	 
	 
	 
	 

	ARTICLE II:
	RENT
	3

	 
	2.01
	Base Rent
	3

	 
	2.02
	Additional Rent
	4

	 
	2.03
	Place(s) of Payment of Rent; Direct
	 

	 
	 
	    Payment of Additional Rent
	4

	 
	2.04
	Net Lease
	5

	 
	2.05
	No Termination, Abatement, Etc
	5

	 
	2.06
	Percentage Rent
	6

	 
	 
	 
	 

	ARTICLE III:
	IMPOSITIONS AND UTILITIES
	7

	 
	3.0l
	Payment of Impositions
	7

	 
	3.02
	Definition of Impositions
	9

	 
	3.03
	Escrow of Impositions
	9

	 
	3.04
	Utilities
	10

	 
	3.05
	Discontinuance of Utilities
	11

	 
	 
	 
	 

	ARTICLE IV:
	INSURANCE
	11

	 
	4.01
	Property Insurance
	11

	 
	4.02
	Liability Insurance
	12

	 
	4.03
	Insurance Requirements
	12

	 
	4.04
	Replacement Cost
	13

	 
	4.05
	Blanket Policy
	13

	 
	4.06
	No Separate Insurance
	13

	 
	4.07
	Waiver of Subrogation
	14

	 
	4.08
	Mortgages
	14

	 
	4.09
	Escrows
	14

	 
	 
	 
	 

	ARTICLE V:
	INDEMNITY; HAZARDOUS SUBSTANCES
	14

	 
	5.01
	Tenant's Indemnification
	14

	 
	5.02
	Hazardous Substances or Materials
	15

	 
	5.03
	Limitation of Landlord's Liability
	16

	 
	 
	 
	 

	ARTICLE VI:
	USE AND ACCEPTANCE OF PREMISES
	16

	 
	6.01
	Use of Leased Property
	16

	 
	6.02
	Acceptance of Leased Property
	16

	 
	6.03
	Conditions of Use and Occupancy
	17

	 
	6.04
	Financial Statements
	17

	i















	
				
	 
	 
	 
	 

	ARTICLE VII:
	REPAIRS, COMPLIANCE WITH LAWS,
	 

	 
	    AND MECHANICS' LIENS
	17

	 
	7.01
	Maintenance
	17

	 
	7.02
	Compliance With Laws
	18

	 
	7.03
	Required Alterations
	18

	 
	7.04
	Mechanic's Liens
	18

	 
	7.05
	Replacements of Fixtures
	19

	 
	 
	 
	 

	ARTICLE VIII:
	ALTERATIONS AND SIGNS
	19

	 
	8.01
	Prohibition on Alterations and Improvements
	19

	 
	8.02
	Requirements for Permitted Alterations
	20

	 
	8.03
	Ownership and Removal of Permitted Alterations
	21

	 
	8.04
	Signs
	21

	 
	 
	 
	 

	ARTICLE IX:
	DEFAULTS AND REMEDIES
	21

	 
	9.01
	Events of Default
	21

	 
	9.02
	Remedies
	23

	 
	9.03
	Right of Set-Off
	26

	 
	9.04
	Performance of Tenant's Covenants
	26

	 
	9.05
	Late Charge
	26

	 
	9.06
	Litigation; Attorneys' Fees
	26

	 
	9.07
	Remedies Cumulative
	27

	 
	9.08
	Escrows and Application of Payments
	27

	 
	9.09
	Power of Attorney
	27

	 
	 
	 
	 

	ARTICLE X:
	DAMAGE AND DESTRUCTION
	27

	 
	10.01      
	General
	27

	 
	10.02      
	Landlord's Inspection
	28

	 
	10.03      
	Landlord's Costs
	29

	 
	10.04      
	Rent Abatement
	29

	 
	10.05      
	Substantial Damage During Lease Term
	29

	 
	 
	 
	 

	ARTICLE XI:
	CONDEMNATION
	 

	 
	11.01      
	Total Taking
	30

	 
	11.02      
	Partial Taking
	30

	 
	 
	 
	 

	ARTICLE XII:
	TENANT'S PROPERTY
	31

	 
	12.01
	Tenant's Property
	31

	 
	12.02      
	Requirements for Tenant's Property
	31

	 
	 
	 
	 

	ARTICLE XIII:
	TENANT'S RIGHTS OF FIRST REFUSAL
	32

	 
	13.01      
	Rights of First Refusal
	 

	 
	 
	 
	 

	ARTICLE XIV:
	ASSIGNMENT AND SUBLETTING; ATTORNMENT
	34

	 
	14.01      
	Subletting and Assignment; Attornment
	34

	 
	14.02      
	Attornment
	34

	 
	14.03      
	Sublease Limitation
	34

	ii















	
					
	 
	 
	 
	 

	ARTICLE XVI:
	ARBITRATION
	35

	 
	 
	 

	 
	16.01
	Arbitration
	35

	 
	16.02
	Appointment of
	35

	 
	16.03
	Third Arbitrator
	36

	 
	16.04
	Arbitration Procedure
	36

	 
	16.05
	Expenses
	36

	 
	 
	 
	 

	ARTICLE XVII:
	QUIET ENJOYMENT, SUBORDINATION, ATTORNMENT,
	 

	 
	 
	       BOND FINANCING AND ESTOPPEL CERTIFICATES
	36

	 
	17.01
	Quiet Enjoyment
	36

	 
	17.02
	Subordination
	36

	 
	17.03
	Attornment; Non-Disturbance
	37

	 
	17.04
	Estoppel Certificates
	37

	 
	 
	 
	 

	ARTICLE XVIII:
	MISCELLANEOUS
	38

	 
	18.01
	Notices
	38

	 
	18.02
	Advertisement of Leased Property
	39

	 
	18.03
	Entire Agreement
	39

	 
	18.04
	Severability
	39

	 
	18.05
	Captions and Headings
	40

	 
	18.06
	Governing Law
	40

	 
	18.07
	Recording of Lease
	40

	 
	18.08
	Waiver
	40

	 
	18.09
	Binding Effect
	40

	 
	18.10
	Authority
	40

	 
	18.11
	Transfer of Permits, Etc
	40

	 
	18.12
	Modification
	41

	 
	18.13
	Incorporation by Reference
	41

	 
	18.14
	No Merger
	41

	 
	18.15
	Laches
	41

	 
	18.16
	Waiver of Jury Trial
	41

	 
	18.18
	Permitted Contests
	42

	 
	18.19
	Construction of Lease
	43

	 
	18.20
	Counterparts
	43

	 
	18.21
	Relationship of Landlord and Tenant
	43

	 
	18.22
	Custody of Escrow Funds
	43

	 
	18.23
	Landlord's Status as a REIT
	43

	 
	18.24
	Sale of Real Estate Assets
	43

	 
	18.25
	Use of Tenant's Name
	44

	iii



















                                       MASTER AGREEMENT TO LEASE




             AGREEMENT dated as of the ___ day of ________, 1991 by and between
NATIONAL HEALTH INVESTORS, INC., a Maryland corporation, ("Landlord") and 
NATIONAL HEALTHCORP L.P., a Delaware limited partnership ("Tenant").


                                    RECITALS


             WHEREAS, Tenant has concurrently conveyed to Landlord various
properties upon which Tenant engages in the business of operating nursing homes
and healthcare facilities, which properties are listed on Schedule A attached
hereto (the "Real Estate Conveyance"), and Landlord and Tenant desire to provide
for the lease by Landlord back to the Tenant of such properties; and


             WHEREAS, Landlord may from time to time lease additional properties
that Landlord may acquire to Tenant; and


             WHEREAS, Landlord and Tenant desire that each of the properties
listed on Schedule A and each additional property that Landlord may lease to
Tenant shall be the subject of a separate and individual Lease Agreement
describing said property, the rent and various other terms of said lease (each
such Lease Agreement referred to individually as a "Lease" and the property that
is the subject of an individual Lease being referred to as "Leased Property");
and


             WHEREAS, Landlord and Tenant desire to set forth in this Agreement
certain terms and conditions applicable to all Leases of all Leased Properties,
except as any individual Lease with respect to a particular Leased Property may
otherwise provide;


             NOW, THEREFORE, in consideration of the premises and of their
respective agreements and undertakings herein and in each Lease, Landlord and
Tenant agree as follows:


             ARTICLE I: SEPARATE LEASE AGREEMENTS; PREMISES AND TERM


             1.01 Separate Lease Agreements. Landlord and Tenant are
concurrently entering into a separate Lease for each of the Leased Properties
referred to in Schedule A hereto, and may in the future enter into one or more
additional separate Leases for one or more additional Leased Properties. Except
as specifically set forth in a separate Lease, or any amendment, supplement,
schedule or exhibit thereto, all of the provisions of this Agreement shall be
deemed to be incorporated into and made a part of each such separate Lease made
between the Landlord as landlord (or lessor) and the Tenant as tenant (or
Lessee) during the Term of such separate Lease.














                                                      1















         1.02 Leased Property. Except as set forth in an individual Lease
(including any schedule or exhibit thereto), the property that is the subject of
each Lease and that shall be considered as leased by the Landlord to the Tenant
thereunder shall consist of:


                    (a) The land described in the Lease ("Land");


                    (b) All buildings, structures, and other improvements,
         including without limitation sidewalks, alleys, utility pipes,
         conduits, and lines, parking areas, and roadways, now or hereafter
         situated upon the Land ("Improvements");


                    (c) All easements, rights and other appurtenances relating
         to the Land and Improvements ("Appurtenances");


                    (d) All permanently affixed equipment, machinery, fixtures,
         and other items of real property, including all components thereof,
         located in, or used in connection with, and permanently affixed to or
         incorporated into the Improvements, including without limitation, all
         furnaces, boilers, heaters, electrical equipment, heating, plumbing,
         lighting, ventilating, refrigerating (but not movable refrigerators),
         incineration, air and water pollution control, waste disposal
         air-cooling and air-conditioning systems and apparatus, sprinkler
         systems and fire and theft protection equipment, and built-in oxygen
         and vacuum systems, all of which, to the greatest extent permitted by
         law, are hereby deemed by the parties hereto to constitute real estate,
         together with all replacements, modifications, alterations and
         additions thereto, but specifically excluding items within the category
         of "Tenant's Property" defined in Section 12.01 hereof (collectively
         the "Fixtures").


The Land, Improvements, Appurtenances and Fixtures are hereinafter referred to
as the "Leased Property".


         SUBJECT, HOWEVER, to the easements, liens, encumbrances, restrictions,
agreements, and other title matters listed or specifically referred to in any
individual Lease ("Permitted Exceptions").


         1.03 Term. To have and to hold, unless otherwise provided in an
individual Lease, the initial term (the "Initial Term") of each Lease is ten
(10) years and three (3) months commencing on October 1, 1991, (the
"Commencement Date") and expiring on December 31, 2001. Provided that no Event
of Default has occurred and that Tenant gives Landlord notice on or before
December 31, 2000, Tenant shall have the option to renew all (but except as
Landlord shall otherwise specifically agree in writing not less than all) Leases
for one (1) additional five (5) year term commencing January 1, 2002 (the "First
Renewal Term") on the same terms (other than with respect to renewal) as the
Initial Term; and provided that no Event






                                                               2















of Default has occurred and that Tenant gives Landlord notice on or before
December 31, 2005, Tenant shall have the option to renew all (but except as
Landlord shall otherwise specifically agree in writing not less than all) Leases
for one (1) further five (5) year term commencing January 1, 2007 (the "Second
Renewal Term") on the same terms (other than with respect to renewal and except
that Base Rent shall be determined in accordance with Section 2.01.01). The term
"Term" means the Initial Term and each Renewal Term as appropriate. The term
"Lease Year" means each twelve (12) month period during the Term commencing on
January 1 and ending on December 31, except the first Lease Year shall be the
period from the Commencement Date through the following December 31, and the
last Lease Year shall end on the date of termination of the Lease if a day other
than December 31.


         1.05 Holding Over. Should Tenant, without the express consent of
Landlord, continue to hold and occupy the Leased Property after the expiration
of the Term, such holding over beyond the Term and the acceptance or collection
of Rent by the Landlord shall operate and be construed as creating a tenancy
from month-to-month and not for any other term whatsoever. During any such
holdover period Tenant shall pay to Landlord for each month Tenant remains in
the Leased Property one hundred fifty (150%) percent of the Base Rent in effect
on the expiration date. Said month-to-month tenancy may be terminated by
Landlord by giving Tenant ten (10) days written notice, and at any time
thereafter Landlord may re-enter and take possession of the Leased Property.


         1.06 Surrender. Except for (i) Permitted Alterations; (ii) normal and
reasonable wear and tear (subject to the obligation of Tenant to maintain the
Leased Property in good order and repair during the Term); and (iii) casualty,
taking or other damage and destruction not required to be repaired by Tenant,
Tenant shall surrender and deliver up the Leased Property at the expiration or
termination of the Term broom clean, free of all Tenant's equipment and personal
property, and in as good order and condition as of the Commencement Date.


                                ARTICLE II: RENT


         2.01 Base Rent. Unless otherwise provided in an individual Lease and
subject to the provisions of Section 2.01.01 with respect to Base Rent in the
Second Renewal Term (if any), Tenant shall pay Landlord base rent for each
Property that is the subject of a Lease in the amount specified therein (the
"Base Rent") for the Term in consecutive monthly installments payable in advance
on the Commencement Date of each Lease and thereafter on the first day of each
month during the Term, in accordance with the Base Rent Schedule set forth in or
attached to each individual Lease.


         2.01.01 Base Rent During Second Renewal Term.  The Base Rent for each 
Leased Property during the Second Renewal Term shall be






                                                               3















the then fair rental value of such Leased Property as negotiated between the
parties and determined without including any value attributable to improvements
to the Leased Property voluntarily made by Tenant at its expense.


         2.02  Additional Rent.  The Tenant shall pay Additional Rent
consisting of the Assumed Mortgage Debt Service Rent and Other
Additional Debt described in this Section 2.02.


         2.02.01 Assumed Mortgage Debt Service Rent. Landlord and Tenant
acknowledge that, in connection with the Real Estate Conveyance, Landlord has
purchased the Leased Property subject to all existing mortgages, deeds of trust
and other debt instruments which were incurred by Tenant or on behalf of Tenant
on or prior to the closing of the Real Estate Conveyance (or through any
refinancing of the same) as more specifically described in the Permitted
Exceptions (hereinafter collectively referred to as "Assumed Mortgage Debt"). In
connection with the Assumed Mortgage Debt, arrangements have been made with the
various holders of the Assumed Mortgage Debt with respect to the continuing
payment of the same directly by Tenant, and the amount so payable from time to
time is herein called "Assumed Mortgage Debt Service Rent." "Assumed Mortgage
Debt" also includes the amount of any Assumed Mortgage Debt secured by a Leased
Property that is refinanced because such Assumed Mortgage Debt matures or the
maker of such Debt is required to pay it in its entirety during the Term of a
Lease. In the event that Landlord shall for any reason itself discharge
(including by prepayment) any Assumed Mortgage Debt, Tenant shall thereafter pay
the relevant Assumed Mortgage Debt Service Rent directly to Landlord in
accordance with the original payment terms of the Assumed Mortgage Debt so
discharged.


         2.02.02 Other Additional Rent. In addition to Base Rent, Assumed
Mortgage Service Debt Rent and Percentage Rent (as hereinafter defined in
Section 2.06), Tenant shall pay all other amounts, liabilities, obligations and
Impositions (as hereinafter defined) which Tenant assumes or agrees to pay under
this Agreement or any Lease and any fine, penalty, interest, charge and cost
which may be added for nonpayment or late payment of such items (collectively
the "Other Additional Rent").


         2.03 Place(s) of Payment of Rent; Direct Payment of Additional Rent.
The Base Rent, Percentage Rent, and Additional Rent are hereinafter referred to
as "Rent". Landlord shall have all legal, equitable and contractual rights,
powers and remedies provided either in this Agreement, in any Lease or by
statute or otherwise in the case of nonpayment of the Rent. Tenant shall make
all payments of Base Rent and of Percentage Rent at Landlord's principal place
of business or as Landlord may otherwise from time to time direct in writing,
and all payments of Assumed Mortgage Debt Service Rent and of Other Additional
Rent directly to the person or persons to whom such amount is owing at the time
and


                                                               4















times when such payments are due, and shall give to Landlord such evidence of
such direct payments as Landlord shall reasonably request.


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


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






                                                               5















         2.06 Percentage Rent. In addition to the Base Rent, with respect to
each Lease Year after 1992 Tenant shall pay Landlord percentage rent
("Percentage Rent") in accordance with this Section 2.06 equal to three percent
(3%) of the amount by which the Gross Revenues (as defined in Section 2.06.01)
of each Leased Property in the applicable Lease Year exceed the Gross Revenues
of each Leased Property during 1992.


         2.06.01 "Gross Revenues" means all revenues received or receivable by
the Tenant from or by reason of the operation of the Leased Property, or any
other use of the Leased Property, as calculated in accordance with generally
accepted accounting principles and as adjusted as set forth in this Section
2.06.01. Gross Revenues shall not include non-operating revenues such as
interest income or income from the sale of assets other than in the ordinary
course of business. Gross Revenues shall be adjusted by the following items: [i]
contractual allowances (difference between customary charges and amounts
receivable based on contract) relating to any period during the Term of the
Lease; [ii] all proper patient billing credits and adjustments (including
adjustments for bad debts) according to generally accepted accounting principles
relating to health care accounting; and [iii] federal, state or local excise
taxes and any tax based upon or measured by said revenues which is added to or
made a part of the amount billed to the patient or other recipient of such
services or goods, whether included in the billing or stated separately. To the
extent that the Leased Property is subleased by Tenant, Gross Revenues shall be
calculated for purposes of the Lease by including the rent received or
receivable by the Tenant if the space rental does not replace an operating bed
and is for not more than 10% of the square footage of the Leased Property.
Otherwise, Gross Revenues shall be calculated by including the Gross Revenues of
such sub-lessees with respect to the subleased property, i.e., the Gross
Revenues generated from the operations conducted on such subleased portion of
the Leased Property shall be included directly in the Gross Revenues for the
purpose of determining percentage rent payable under this Lease and the rent
received or receivable by Tenant under such subleases shall be excluded from
Gross Revenues for such purpose.


         2.06.02 On or before March 31, 1993 with respect to the year ended
December 31, 1992 and on or before each following March 31 with respect to each
Lease Year thereafter, Tenant shall deliver to Landlord a notarized, sworn
statement (the "Tenant's Certification") setting forth the Gross Revenues for
the prior year. Annually a certificate from a nationally reputable accounting
firm satisfactory to Landlord shall be delivered to Landlord which certificate
shall state that, in the course of the regular audit of Tenant's financial
statements, such firm has reviewed Tenant's calculations of the amount of Gross
Revenues for each of the Leased Properties as set forth in Tenant's






                                                               6















Certification and that nothing has come to its attention to make such firm
believe the Tenant's Certification is incorrect in any material respect (and/or
stating, if applicable, any proposed audit adjustments with respect to Gross
Revenue which Tenant elected not to record and set forth in Tenant's
Certification). In addition to the Tenant's Certification and upon the request
of Landlord, Tenant shall deliver the following: [i] any reports sent to any
reimbursement agency, including, but not limited to Medicaid Cost Reports; [ii]
copies of Medicare Cost Reports; [iii] copies of interim or final cost
settlements with Medicare authorities concerning Medicare receivables with a
debit or credit balance; [iv] patient census data by type of patient on a
quarterly basis within thirty (30) days after the end of each calendar quarter
beginning January 31, 1991; [v] copies of changes in rates for Medicare,
Medicaid, private payor or any other provider paying for patients in the Leased
Property; and [vi] Tenant's calculation supporting any estimated contractual
allowances in the Financial Statements.


         2.06.03 In each Lease Year commencing 1994, Tenant shall for such Lease
Year make anticipated payments of Percentage Rent monthly at the time of paying
installments of Base Rent, which payments shall be equal to one-twelfth (1/12th)
of the Percentage Rent determined for the preceding Lease Year, subject to final
determination and adjustment in payment by March 31 of the following year.


         2.06.04 Landlord or its duly authorized representatives may, upon
reasonable notice and on any business day and during reasonable office hours,
inspect Tenant's records of Gross Revenues, either at the Leased Property or
elsewhere as reasonably designated by Tenant, provided such inspection is made
within twelve months after a Tenant's Certification is furnished to Landlord by
Tenant. Any claim by Landlord for a revision of any Tenant's Certification must
be made in writing to Tenant within twelve (12) months after the date such
Tenant's Certification is furnished to Landlord; otherwise it shall be deemed
waived by Landlord. If Landlord inspects Tenant's records and such inspection
shows an error(s) in the Tenant's Certification which results in an
understatement of Gross Revenues of five percent (5%) or more for any Leased
Property, then in addition to paying the additional Percentage Rent on demand,
Tenant shall pay Landlord, on demand, the reasonable cost of such inspection as
Additional Rent.


                     ARTICLE III: IMPOSITIONS AND UTILITIES


         3.0l Payment of Impositions. Subject to the adjustments set forth
herein, Tenant shall pay, as Additional Rent, all Impositions (as hereinafter
defined) that may be levied or become a lien on the Leased Property or any part
thereof at any time (whether prior to or during the Term), without regard to
prior ownership of said






                                                               7















Leased Property, before any fine, penalty, interest, or cost is incurred. Tenant
shall, upon request from Landlord, promptly furnish to Landlord copies of
official receipts or other satisfactory proof evidencing such payments. Tenant's
obligation to pay such Impositions shall be deemed absolutely fixed upon the
date such Impositions become a lien upon the Leased Property or any part
thereof. Tenant, at its expense, shall prepare and file all tax returns and
reports in respect of any Imposition as may be required by governmental
authorities. Tenant shall be entitled to any refund due from any taxing
authority if no Event of Default (as hereinafter defined) shall have occurred
hereunder and be continuing. Landlord shall be entitled to any refund from any
taxing authority if an Event of Default has occurred and is continuing. Any
refunds retained by Landlord due to an Event of Default shall be applied as
provided in Section 9.08. Landlord and Tenant shall, upon request of the other,
provide such data as is maintained by the party to whom the request is made with
respect to the Leased Property as may be necessary to prepare any required
returns and reports. In the event governmental authorities classify any property
covered by this Lease as personal property, Tenant shall file all personal
property tax returns in such jurisdictions where it may legally so file.
Landlord, to the extent it possesses the same, and Tenant, to the extent it
possesses the same, will provide the other party, upon request, with cost and
depreciation records necessary for filing returns for any property so classified
as personal property. Where Landlord is legally required to file personal
property tax returns, Tenant will be provided with copies of assessment notices
indicating a value in excess of the reported value in sufficient time for Tenant
to file a protest. Tenant may, upon notice to Landlord, at Tenant's option and
at Tenant's sole cost and expense, protest, appeal, or institute such other
proceedings as Tenant may deem appropriate to effect a reduction of real estate
or personal property assessments and Landlord, at Tenant's expense as aforesaid,
shall fully cooperate with Tenant in such protest, appeal, or other action.
Tenant shall promptly reimburse Landlord for all personal property taxes paid by
Landlord upon receipt of billings accompanied by copies of a bill therefor and
payments thereof which identify the personal property with respect to which such
payments are made. Impositions imposed in respect to the tax-fiscal period
during which the Term commences and terminates shall be adjusted and prorated
between Landlord and Tenant on a per diem basis, with Tenant being obligated to
pay its pro rata share from and including the Commencement Date to and including
the expiration or termination date of the Term, whether or not such Imposition
is imposed before or after such commencement or termination, and Tenant's
obligation to pay its prorated share thereof shall survive such termination.
Tenant shall also pay to Landlord a sum equal to the amount which Landlord may
be caused to pay of any privilege tax, sales tax, gross receipts tax, rent tax,
occupancy tax or like tax (excluding any tax based on net income), hereinafter
levied, assessed, or imposed by any federal, state,






                                                               8















county or municipal governmental authority, or any subdivision thereof, upon or
measured by or rent or other consideration required to be paid by Tenant under
this Lease.


         3.02 Definition of Impositions. "Impositions" means, collectively, [i]
taxes (including without limitation, all real estate and personal property ad
valorem (whether assessed as part of the real estate or separately assessed as
unsecured personal property, sales and use, business or occupation, single
business, gross receipts, transaction privilege, rent or similar taxes, but not
including income or franchise or excise taxes payable with respect to Landlord's
receipt of Rent); [ii] assessments (including without limitation, all
assessments for public improvements or benefits, whether or not commenced or
completed prior to the date hereof and whether or not to be completed with the
Term); [iii] ground rents, water, sewer or other rents and charges, excises, tax
levies, and fees (including without limitation, license, permit, inspection,
authorization and similar fees); [iv] to the extent they may become a lien on
the Leased Property all taxes imposed on Tenant's operations of the Leased
Property including without limitation, employee withholding taxes, income taxes
and intangible taxes; and [v] all other governmental charges, in each case
whether general or special, ordinary or extraordinary, or foreseen or
unforeseen, of every character in respect of the Leased Property or any part
thereof and/or the Rent (including all interest and penalties thereon due to any
failure in payment by Tenant), which at any time prior to, during or in respect
of the Term hereof may be assessed or imposed on or in respect of or be a lien
upon [a] Landlord or Landlord's interest in the Leased Property or any part
thereof; [b] the Leased Property or any part thereof or any rent therefrom or
any estate, right, title or interest therein; or [c] any occupancy, operation,
use or possession of, or sales from, or activity conducted on, or in connection
with the Leased Property or the leasing or use of the Leased Property or any
part thereof. Tenant shall not, however, be required to pay [i] any tax based on
net income (whether denominated as a franchise or capital stock or other tax)
imposed on Landlord; or [ii] except as provided in Section 13.01, any tax
imposed with respect to the sale, exchange or other disposition by Landlord of
any Leased Property or the proceeds thereof; provided, however, that if any tax,
assessment, tax levy or charge which Tenant is obligated to pay pursuant to the
first sentence of this definition and which is in effect at any time during the
Term hereof is totally or partially repealed, and a tax, assessment, tax levy or
charge set forth in clause [i] or [ii] immediately above is levied, assessed or
imposed expressly in lieu thereof Tenant shall then pay such tax, levy, or
charge set forth in said clause [i] or [ii].


         3.03 Escrow of Impositions. If Landlord's lender requires Landlord to
escrow real property taxes or other Impositions on a periodic basis during the
Term, Tenant, on notice from Landlord indicating this requirement, shall pay a
sum of money toward its




                                                               9















liability under this Article to lender on a periodic basis in accordance with
the lender's requirements. Landlord shall escrow the payments received from
Tenant in accordance with the requirements of its lender, and shall furnish
Tenant with a copy of the lender's requirements for escrow. Further, if an Event
of Default occurs hereunder which is not cured within any applicable grace
period, Tenant shall thereafter, at Landlord's election, deposit with Landlord
on the first day of each month during the remaining Term hereof and any extended
Term, a sum equal to one-twelfth (1/12th) of the Impositions assessed against
the Leased Property for the preceding tax year, which sums shall be used by
Landlord toward payment of such Impositions. If, at the end of any applicable
tax year, any such funds held by Landlord are insufficient to make full payment
of taxes or other Impositions for which such funds are held, Tenant, on demand,
shall pay to Landlord any additional funds necessary to pay and discharge the
obligations of Tenant pursuant to the provisions of this section. If, however,
at the end of any applicable tax year, such funds held by Landlord are in excess
of the total payment required to satisfy taxes or other Impositions for which
such funds are held, Landlord shall apply such excess amounts to Tenant's tax
and Imposition escrow fund for the next tax year. If any such excess of funds
occurs at the end of the final Lease Year, and subject to Section 9.08 below,
Landlord shall promptly refund such excess amounts to Tenant. The receipt by
Landlord of the payment of such Impositions by and from Tenant shall only be as
an accommodation to Tenant, the mortgagees, and the taxing authorities, and
shall not be construed as rent or income to Landlord, Landlord serving, if at
all, only as a conduit for delivery purposes.


         3.04 Utilities. Tenant shall pay, as Additional Rent all taxes,
assessments, charges/deposits, and bills for utilities, including without
limitation charges for water, gas, oil, sanitary and storm sewer, electricity,
telephone service, and trash collection, which may be charged against the
occupant of the Improvements during the Term. If an Event of Default occurs
hereunder and is not cured within any applicable grace period, Tenant shall
thereafter, at Landlord's election, deposit with Landlord on the first day of
each month during the remaining Term, a sum equal to one-twelfth (1/12th) of the
amount of the annual utility expenses for the preceding Lease Year, which sums
shall be used by Landlord to pay such utilities. If, at any time during the
Lease Year, such funds held by Landlord are insufficient to cover monthly,
annual, or other periodic charges for utilities, Tenant shall, on demand pay to
Landlord any additional amount needed to pay such utilities. Landlord's receipt
of such payments shall only be an accommodation to Tenant and the utility
companies and shall not constitute rent or income to Landlord. If, at any time
during the Lease Year, such funds held by Landlord are in excess of the total
monthly, annual or other periodic payment necessary to satisfy utility costs,
such excess amounts shall be applied to Tenant's escrow fund for the next
payment of such utilities. If




                                                               10













any such excess exists following the expiration or earlier termination of the
Lease and after all utility bills and accounts have been settled, Landlord
shall, subject to Section 9.08 below, promptly refund such amounts to Tenant.
Tenant shall at all times maintain that amount of heat necessary to ensure
against the freezing of water lines. Tenant hereby agrees to indemnify and hold
Landlord harmless from and against any liability or damages to the utility
systems and the Leased Property that may result from Tenant's failure to
maintain sufficient heat in the Improvements.


         3.05 Discontinuance of Utilities. Landlord will not be liable for
damages to person or property or for injury to, or interruption of, business for
any discontinuance of utilities nor will such discontinuance in any way be
construed as an eviction of Tenant or cause an abatement of Rent or operate to
release Tenant from any of Tenant's obligations under this Lease.


                              ARTICLE IV: INSURANCE


         4.01 Property Insurance. Tenant shall, at Tenant's expense, keep the
Improvements, Fixtures, and other components of the Leased Property insured
against the following risks:


                    (a) Loss or damage by fire, vandalism and malicious
         mischief, sprinkler leakage and all other physical loss perils commonly
         covered by "All Risk" insurance in an amount not less than one hundred
         percent (100%) of the then full replacement cost thereof (as
         hereinafter defined). Such policy shall include an agreed amount
         endorsement if available at a reasonable cost. Such policy shall also
         include endorsements for contingent liability for operation of building
         laws, demolition costs, and increased cost of construction.


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


                    (c) Loss of rent under a rental value insurance policy
         covering risk of loss during the first nine (9) months of
         reconstruction necessitated by the occurrence of any hazards described
         in Sections 4.01(a) or 4.01(b) above, in an amount sufficient to
         prevent Landlord or Tenant from becoming a co-insurer, containing
         endorsements for extended period of indemnity and premium adjustment,
         and written with an agreed amount clause, if the insurance provided for
         in this clause (c) is available at a reasonable cost.


                    (d) If the Land is located in whole or in part within a
         designated flood plain area, loss or damage caused by flood in
         commercially reasonable amounts acceptable to Landlord.






                                                               11


        











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


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


                    (a) Claims for personal injury or property damage commonly
         covered by comprehensive general liability insurance with endorsements
         for nursing home or comparable professional malpractice, blanket
         contractual, personal injury, owner's protective liability, real
         property fire damage legal liability, voluntary medical payments,
         products and completed operations, broad form property damage, and
         extended bodily injury, with commercially reasonable amounts for bodily
         injury, property damage, and voluntary medical payments acceptable to
         Landlord, but with a combined single limit of not less than One Million
         Dollars ($1,000,000.00) per occurrence, One Million Dollars
         ($1,000,000.00) per location. If malpractice insurance coverage is
         unavailable generally or is unreasonably expensive, Landlord and Tenant
         will consult in good faith regarding an alternative.


                    (b) Claims for personal injury and property damage commonly
         covered by comprehensive automobile liability insurance, covering all
         owned and nonowned automobiles, with commercially reasonable amounts
         for bodily injury, property damage, and for automobile medical payments
         acceptable to Landlord, but with a combined single limit of not less
         than One Million Dollars ($1,000,000.00) per occurrence, Three Million
         Dollars ($3,000,000.00) aggregate.


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


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


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


                    (b) The carriers of all policies shall have a Best's Rating
         of "A-" or better and a Best's Financial Category of XII or larger and
         shall be authorized to do insurance business in the state in which the
         Leased Property is located.




                                                               12




 











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


                    (d) Tenant shall deliver to Landlord certificates or
         policies showing the required coverages and endorsements. The policies
         of insurance shall provide that the policy may not be cancelled or not
         renewed, and no material change or reduction in coverage may be made,
         without at least thirty (30) days' prior written notice to Landlord.


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


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


                    (g) At least thirty (30) days prior to the expiration of
         each policy, Tenant shall deliver to Landlord a certificate showing
         renewal of such policy and payment of the annual premium therefor.


         4.04 Replacement Cost. The term "full replacement cost" means the
actual replacement cost thereof from time to time including increased cost of
construction, with no reductions or deductions. Tenant shall, not later than
thirty (30) days after the anniversary of each Lease Year of the Term, increase
the amount of the replacement cost endorsement for the Improvements. If Tenant
makes any Permitted Alterations (as hereinafter defined) to the Leased Property,
Landlord may have such full replacement cost redetermined at any time after such
Permitted Alterations are made, regardless of when the full replacement cost was
last determined.


         4.05 Blanket Policy. Tenant may carry the insurance required by this
Article under a blanket policy of insurance, provided that the coverage afforded
Tenant will not be reduced or diminished or otherwise be different from that
which would exist under a separate policy meeting all of the requirements of
this Agreement.


         4.06 No Separate Insurance. Tenant shall not take out separate
insurance concurrent in form or contributing in the event of loss with that
required in this Article, or increase the amounts of any then existing insurance
by securing an additional policy or additional policies, unless all parties
having an insurable interest in the subject matter of the insurance, including
Landlord and any mortgagees, are included therein as additional named insureds
or loss payees, the loss is payable under said insurance in the same manner as
losses are payable under this Agreement, and such additional insurance is not
prohibited by the existing policies of insurance. Tenant shall immediately
notify Landlord






                                                               13













of the taking out of such separate insurance or the increasing of any of the
amounts of the existing insurance by securing an additional policy or additional
policies. The term "mortgages" as used in this Agreement includes Deeds of Trust
and the term "mortgagees" includes trustees and beneficiaries under a Deed of
Trust.


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


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


         4.09 Escrows. If Landlord's lender requires the Landlord to escrow
insurance premiums on a periodic basis, or if an Event of Default occurs
hereunder, Tenant, after notice from Landlord, shall make such periodic payments
in accordance with the lender's or Landlord's requirements.


                   ARTICLE V: INDEMNITY; HAZARDOUS SUBSTANCES


         5.01 Tenant's Indemnification. Subject to Section 4.07, Tenant hereby
agrees to indemnify and hold harmless Landlord, its agents, and employees from
and against any and all demands, claims, causes of action, fines, penalties,
damages (including consequential damages), losses, liabilities (including strict
liability), judgments, and expenses (including, without limitation,






                                                               14















attorneys' fees, court costs, and the costs set forth in Section 9.07) incurred
in connection with or arising from: [i] the use or occupancy of each Leased
Property by Tenant or any persons claiming under Tenant; [ii] any activity,
work, or thing done, or permitted or suffered by Tenant in or about the Leased
Property; [iii] any acts, omissions, or negligence of Tenant or any person
claiming under Tenant, or the contractors, agents, employees, invitees, or
visitors of Tenant or any such person; [iv] any breach, violation, or
nonperformance by Tenant or any person claiming under Tenant or the employees,
agents, contractors, invitees, or visitors of Tenant or of any such person, of
any term, covenant, or provision of this Agreement or any Lease or any law,
ordinance, or governmental requirement of any kind; and [v] any injury or damage
to the person, property or business of Tenant, its employees, agents,
contractors, invitees, visitors, or any other person entering upon the Leased
Property under the express or implied invitation of Tenant. If any action or
proceeding is brought against Landlord, its employees, or agents by reason of
any such claim, Tenant, upon notice from Landlord, will defend the claim at
Tenant's expense with counsel reasonably satisfactory to Landlord.


         5.02 Hazardous Substances or Materials. Tenant shall not, either with
or without negligence, injure, overload, deface, damage or otherwise harm any
Leased Property or any part or component thereof; commit any nuisance; permit
the emission of any hazardous agents or substances; allow the release or other
escape of any biologically or chemically active or other hazardous substances or
materials so as to impregnate, impair or in any manner affect, even temporarily,
any element or part of any Leased Property, or allow the storage or use of such
substances or materials in any manner not sanctioned by law or by the highest
standards prevailing in the industry for the storage and use of such substances
or materials; nor shall Tenant bring onto any Leased Property any such materials
or substances; permit the occurrence of objectionable noise or odors; or make,
allow or suffer any waste whatsoever to any Leased Property. Landlord may
inspect the Leased Property from time to time, and Tenant will cooperate with
such inspections. Without limitation, "hazardous substances" for the purposes of
this Section 5.02 shall include such substances described in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. 9601 et seq. and the regulations adopted thereunder, and hazardous
materials shall include such materials as are described in the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. 6901 et seq.; and hazardous
substances or hazardous materials shall also include any substance or material
described in any applicable statute of any state in which Leased Properties are
located, and in any regulations adopted under any of these acts. Upon request by
Landlord, Tenant shall submit to Landlord quarterly reports regarding Tenant's
use, storage, and disposal of any of the foregoing materials, said reports to
include information regarding continued hazardous materials inspections,
personal interviews, and federal, state and local agency listings.








                                                               15













In addition, Tenant shall execute affidavits, representations and the like from
time to time at Landlord's request concerning Tenant's best knowledge and belief
regarding the presence or absence of hazardous materials on the Leased Property.
In all events, Tenant shall indemnify Landlord and all mortgagees of any Leased
Property from any release of hazardous materials on the Leased Property
occurring while Tenant is in possession, all costs and expenses and claims
arising from the release of, or discovery of the existence of, or need to clean
up or remove, or arising from any prior release or removal of any hazardous
substances or materials on or from any Leased Property, whether such release,
discovery or removal occurs during the Term or occurred prior to the
commencement of the Term. (At the request of Landlord, Tenant will from time to
time confirm such indemnity to mortgagees directly with such mortgagees.)


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


                   ARTICLE VI: USE AND ACCEPTANCE OF PREMISES


         6.01 Use of Leased Property. Tenant shall use and occupy each Leased
Property exclusively as a nursing home, healthcare facility or other purpose for
which the Leased Property is being used at the Commencement Date of the Term,
and for no other purpose without the prior written consent of the Landlord,
which consent will not be unreasonably withheld. Tenant shall obtain and
maintain all approvals, licenses, and consents needed to use and operate each
Leased Property for such purposes. Tenant shall promptly deliver to Landlord
complete copies of surveys, examinations, certification and licensure
inspections, compliance certificates, and other similar reports issued to Tenant
by any governmental agency.


         6.02 Acceptance of Leased Property.  Except as otherwise specifically 
provided in this Agreement or in any individual Lease,






                                                               16















Tenant acknowledges that [i] Tenant and its agents have had an opportunity to
inspect the Leased Property; [ii] Tenant has found the Leased Property fit for
Tenant's use; [iii] delivery of the Leased Property to Tenant is in "as-is"
condition; [iv] Landlord is not obligated to make any improvements or repairs to
the Leased Property; and [v] the roof, walls, foundation, heating, ventilating,
air conditioning, telephone, sewer, electrical, mechanical, utility, plumbing,
and other portions of the Leased Property are in good working order. Tenant
waives any claim or action against Landlord with respect to the condition of the
Leased Property. LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, IN RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS
FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR
OTHERWISE, AS TO QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR
PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT.


         6.03 Conditions of Use and Occupancy. Tenant agrees that during the
Term it shall use and keep the Leased Property in a careful, safe and proper
manner; not commit or suffer waste thereon; not use or occupy the Leased
Property for any unlawful purposes; not use or occupy the Leased Property or
permit the same to be used or occupied, for any purpose or business deemed extra
hazardous on account of fire or otherwise; keep the Leased Property in such
repair and condition as may be required by the local board of health, or other
city, state or federal authorities, free of all cost to Landlord; not permit any
acts to be done which will cause the cancellation, invalidation, or suspension
of any insurance policy; and permit Landlord and its agents to enter upon the
Leased Property at all reasonable times after notice to Tenant to examine the
condition thereof.


         6.04 Financial Statements. Within one hundred twenty (120) days after
the end of each fiscal year, Tenant shall deliver to Landlord audited
consolidated financial statements of Tenant, certified by a nationally
recognized accounting firm. The financial statements shall include a complete
schedule of contingent liabilities and transactions with affiliates. Within
forty-five (45) days after the end of each calendar quarter, Tenant shall
deliver to Landlord unaudited profit and loss statements.


                   ARTICLE VII: REPAIRS, COMPLIANCE WITH LAWS,
                              AND MECHANICS' LIENS


         7.01 Maintenance. Tenant shall maintain, repair, and replace each
Leased Property, including without limitation, all structural and nonstructural
repairs and replacements to the roof, foundations, exterior walls, building
systems, HVAC systems, parking areas, sidewalks, water, sewer, and gas
connections, pipes, and mains. Tenant shall pay as Additional Rent, the full
cost of maintenance, repairs, and replacements. Tenant shall maintain all
drives, sidewalks, parking areas, and lawns on or about the Leased






                                                               17















Property in a clean and orderly condition, free of accumulations of dirt,
rubbish, snow and ice. Tenant shall permit Landlord to inspect the Leased
Property at all reasonable times, and shall implement all reasonable suggestions
of the Landlord as to the maintenance and replacement of the Leased Property.


         7.02 Compliance With Laws. Tenant shall comply with all laws,
ordinances, orders, rules, regulations, and other governmental requirements
relating to the use, condition, or occupancy of each Leased Property, including
without limitation, [i] licensure requirements for operation as a nursing home
or medical facility, [ii] certification requirements needed to obtain
reimbursement under the Medicare and state Medicaid programs unless Tenant,
after notice to Landlord, determines to discontinue participation in such
programs; [iii] requirements of the board of fire insurance underwriters or
insurance service office or any other similar body having jurisdiction over the
Leased Property, and [iv] all zoning and building codes and Environmental Laws.
At Landlord's request, from time to time, Tenant shall deliver to Landlord
copies of certificates or permits evidencing compliance with such laws,
including without limitation, copies of the nursing home or health care facility
license, provider agreements, certificates of occupancy and building permits.
Tenant hereby agrees to defend, indemnify and hold Landlord harmless from and
against any loss, liability (including strict liability), claim, damage
(including consequential damages), cost and expense (including attorneys' fees)
resulting from any failure by Tenant to comply with any laws, ordinances, rules,
regulations, and other governmental requirements.


         7.03 Required Alterations. Tenant shall, at Tenant's sole cost and
expense, make any additions, changes, improvements or alterations to each Leased
Property, including structural alterations, which may be required by any
governmental authorities, including those required to continue certification
under the Medicare and Medicaid programs (unless Tenant has elected not to
participate in such programs), whether such changes are required by Tenant's
use, changes in the law, ordinances, or governmental regulations, defects
existing as of the date of this Lease, or any other cause whatever. All such
additions, changes, improvements or alterations shall be deemed to be Permitted
Alterations and shall comply with all laws requiring such alterations and with
the provisions of Section 8.02.


         7.04 Mechanic's Liens. Tenant shall have no authority to permit or
create a lien against Landlord's interest in the Leased Property, and Tenant
shall post notices or file such documents as may be required to protect
Landlord's interest in the Leased Property against liens. Tenant hereby agrees
to defend, indemnify, and hold Landlord harmless from and against any mechanic's
liens against the Leased Property by reason of work, labor services or materials
supplied or claimed to have been supplied on or to the






                                                                18















Leased Property. Tenant shall immediately remove, bond-off, or otherwise obtain
the release of any mechanic's lien filed against the Leased Property. Tenant
shall pay all expenses in connection therewith, including without limitation,
damages, interest, court costs and reasonable attorneys' fees.


         7.05 Replacements of Fixtures. Tenant shall not remove Fixtures from
any Leased Property except to replace the Fixtures by other similar items of
equal quality and value. Items being replaced by Tenant may be removed and shall
become the property of Tenant and items replacing the same shall be and remain
the property of Landlord. Tenant shall execute, upon written request from
Landlord, any and all documents necessary to evidence Landlord's ownership of
the Fixtures and replacements therefor. Tenant may finance replacements for the
Fixtures by equipment lease or by a security agreement and financing statement;
provided, however, that for any item of Fixtures or Personal Property having a
cost greater than or equal to Ten Thousand Dollars ($10,000.00), Tenant may not
finance replacements by security agreement or equipment lease unless [i]
Landlord has consented to the terms and conditions of the equipment lease or
security agreement; [ii] the equipment lessor or lender has entered into a
nondisturbance agreement with Landlord upon terms and conditions acceptable to
Landlord, including without limitation, the following: [a] Landlord shall have
the right (but not the obligation) to assume such security agreement or
equipment lease upon the occurrence of an Event of Default by Tenant under this
Lease; [b] the equipment lessor or lender shall notify Landlord of any default
by Tenant under the equipment lease or security agreement and give Landlord a
reasonable opportunity to cure such default; and [c] Landlord shall have the
right to assign its rights under the equipment lease, security agreement, or
nondisturbance agreement; and [iii] Tenant shall, within thirty (30) days after
receipt of an invoice from Landlord, reimburse Landlord for all costs and
expenses incurred in reviewing and approving the equipment lease, security
agreement, and nondisturbance agreement, including without limitation,
reasonable attorneys' fees and costs.


                       ARTICLE VIII: ALTERATIONS AND SIGNS


         8.01 Prohibition on Alterations and Improvements. Except for [i]
alterations required by Section 7.03; [ii] replacements of Fixtures provided for
in Section 7.05; and [iii] alterations at any Leased Property having an
aggregate cost of less than One hundred fifty thousand dollars ($150,000.00) in
any Lease Year, Tenant shall not make any structural or nonstructural changes,
alterations, additions and/or improvements (hereinafter collectively referred to
as "Alterations") to the Leased Property without the prior written consent of
Landlord which consent will not be unreasonably withheld. If Tenant desires to
perform any Alterations, Tenant shall deliver to Landlord plans, specifications,
drawings, and such other information as may be






                                                               19















reasonably requested by Landlord (collectively the "Plans and Specifications")
showing the Alterations that Tenant desires to perform. Landlord agrees not to
unreasonably delay its review of the Plans and Specifications. Tenant shall
comply with the requirements of Section 8.02 in making any Alterations approved
by Landlord (the "Permitted Alterations").


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


                    (a) The Permitted Alterations shall be made in accordance
         with the approved Plans and Specifications.


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


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


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


                    (e) Tenant shall, at Tenant's expense, obtain a builder's
         completed value risk policy of insurance insuring against all risks of
         physical loss, including collapse and transit coverage, in a
         nonreporting form, covering the total value of the work performed, and
         equipment, supplies, and materials, and insuring initial occupancy.
         Landlord and any mortgagee of Landlord shall be additional named
         insureds of such policy. Landlord shall have the right to approve the
         form and substance of such policy, which approval shall not be
         unreasonably withheld or delayed.


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


                    (g) If the alterations are structural or additions, Tenant
         shall, not later than sixty (60) days after completion of the Permitted
         Alterations, deliver to Landlord a






                                                               20

















         certificate of substantial completion, certified by Tenant's architect
         or engineer, in the form of AIA-G704, or in any other form reasonably
         satisfactory to Landlord.


                    (h) Tenant shall not later than thirty (30) days after
         completion of the Permitted Alterations, reimburse Landlord for any
         costs and expenses, including attorneys' fees and architects' and
         engineers' fees, reasonably incurred in connection with reviewing and
         approving the Permitted Alterations and ensuring Tenant's compliance
         with the requirements of this Section.


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


         8.04 Signs. Tenant may, at its own expense, erect and maintain
identification signs at the Leased Property, provided such signs comply with all
laws, ordinances, and regulations. Upon the occurrence of an Event of Default or
the termination or expiration of this Lease, Tenant shall, within thirty (30)
days after notice from Landlord, remove the signs and restore the Leased
Property to its original condition.


                        ARTICLE IX: DEFAULTS AND REMEDIES


         9.01 Events of Default. The occurrence of any one or more of the
following shall be an an event of default ("Event of Default") hereunder:


                    (a) Tenant fails to pay in full any installment of Rent, or
         any other monetary obligation payable by Tenant to Landlord (or to the
         holder of any Assumed Mortgage Debt Service, as applicable) under this
         Lease, within ten (10) business days after notice of nonpayment from
         Landlord.


                    (b) Landlord gives three (3) or more notices of nonpayment
         of Rent to Tenant in any Lease Year; provided, however, that such shall
         not be an Event of Default if Landlord fails to exercise its remedies
         under Section 9.02 within sixty (60) days after the last of such
         notices. Notice of the same default with respect to more than one Lease
         or Leased Property shall constitute only one notice for purposes of
         this Section 9.01(b).


                    (c) Tenant fails to observe and perform any other covenant,
         condition or agreement under this Agreement or the Lease to be
         performed by Tenant (except those described in Section 9.01(a) and
         9.01(b) of this Agreement) and [i] such failure continues for a period
         of thirty (30) days after






                                                               21















         written notice thereof is given to Tenant by Landlord; or [ii] if, by
         reason of the nature of such default, the same cannot be remedied
         within said thirty (30) days, Tenant fails to proceed with reasonable
         diligence (satisfactory to Landlord) after receipt of the notice to
         cure the same.


                    (d) Tenant ceases operations at any Leased Property for a
         period in excess of one-hundred eighty (180) days during the Term
         except pursuant to damage described in Section 10.05 or condemnation
         pursuant to Article XI (other than Section 11.02) of this Agreement.


                    (e) [i] The filing by Tenant of a petition under 11 U.S.C.
         or the commencement of a bankruptcy or similar proceeding by Tenant;
         [ii] the failure by Tenant within ninety (90) days to dismiss an
         involuntary bankruptcy petition or other commencement of a bankruptcy,
         reorganization or similar proceeding against Tenant, or to lift or stay
         any execution, garnishment or attachment of such consequence as will
         impair its ability to carry on its operation at the Leased Property;
         [iii] the entry of an order for relief under 11 U.S.C. in respect of
         Tenant; [iv] any assignment by Tenant for the benefit of its creditors;
         [v] the entry by Tenant into an agreement of composition with its
         creditors; [vi] the approval by a court of competent jurisdiction of a
         petition applicable to Tenant in any proceeding for its reorganization
         instituted under the provisions of any state or federal bankruptcy,
         insolvency, or similar laws; [vii] appointment by final order,
         judgement, or decree of a court of competent jurisdiction of a receiver
         of a whole or any substantial part of the properties of Tenant
         (provided such receiver shall not have been removed or discharged
         within sixty (60) days of the date of his qualification).


                    (f) [i] any administrator, custodian, trustee or other
         legally authorized person takes possession or control of any Leased
         Property or part thereof and continues in possession for ninety (90)
         days; [ii] any writ against any of the Leased Property is not released
         or bonded off within ninety (90) days; [iii] any judgment is rendered
         or proceedings are instituted against any Leased Property or Tenant
         which affect any Leased Property or any part thereof (other than a
         condemnation proceeding) which is not dismissed for ninety (90) days
         (except as otherwise provided in this Section); [iv] all or a
         substantial part of the assets of Tenant are attached, seized,
         subjected to a writ or distress warrant, or are levied upon, or come
         into the possession of any receiver, trustee, custodian, or assignee
         for the benefit of creditors and is not dismissed within sixty (60)
         days; [v] Tenant is enjoined, restrained, or in any way prevented by
         court order, or any proceeding is filed or commenced seeking to enjoin,
         restrain or in any way prevent Tenant from conducting all or






                                                               22



















         a substantial part of its business or affairs and is not dismissed
         within sixty (60) days; or [vi] except as permitted by Section 18.18, a
         notice of lien, levy or assessment is filed of record with respect to
         all or any part of the property of Tenant and is not dismissed or
         bonded off within sixty (60) days.


                    (g) Tenant or any Affiliate defaults on any material
         obligation to Landlord, Tenant defaults on any material obligation
         under any debt associated with the Leased Properties or any debt
         co-guaranteed by Landlord and Tenant. As used herein, "Affiliate" means
         any person, corporation, partnership, trust, or other legal entity
         that, directly or indirectly, controls or is controlled by, or is under
         common control with, Tenant. "Control" (and the correlative meanings of
         the terms "controlled by" and "under common control with") means the
         possession, directly or indirectly, of the power to direct or cause a
         direction of the management and policies of such entity.


         9.02 Remedies. Landlord may exercise any one or more of the following
remedies upon the occurrence of an Event of Default:


                    (a) Landlord may terminate the applicable Lease, exclude
         Tenant from possession of the Leased Property and use reasonable
         efforts to lease the Leased Property to others. If any Lease is
         terminated pursuant to the provisions of this subparagraph (a), Tenant
         will remain liable to Landlord for damages in an amount equal to the
         Rent and other sums which would have been owing by Tenant under the
         Lease for the balance of the Term if the Lease had not been terminated,
         less the net proceeds, if any, of any re-letting of the Leased Property
         by Landlord subsequent to such termination, after deducting all
         Landlord's expenses in connection with such reletting, including
         without limitation, the expenses set forth in Section 9.02(b)(2) below.
         Landlord will be entitled to collect such damages from Tenant monthly
         on the days on which the Rent and other amounts would have been payable
         under the Lease if the Lease had not been terminated and Landlord will
         be entitled to receive such damages from Tenant on each such day.
         Alternatively, at the option of Landlord, if the Lease is terminated,
         Landlord will be entitled to recover from Tenant (A) the worth at the
         time of award of the unpaid Rent which had been earned at the time of
         termination; (B) the worth at the time of award of the amount by which
         the unpaid Rent which would have been earned after termination until
         the time of awards exceeds the amount of such Rent loss that Tenant
         proves could reasonably have been avoided; (C) the worth at the time of
         award of the amount by which the unpaid Rent for the balance of the
         Term of the Lease after the time of award exceeds the amount of such
         Rent loss that Tenant proves could reasonably be avoided; and (D) any
         other amount




                                                               23




     











    necessary to compensate Landlord for all the detriment proximately
         caused by Tenant's failure to perform its obligations under the Lease
         or which in the ordinary course of things would be likely to result
         from such failure. The "worth at the time of award" of the amount
         referred to in clauses (A) and (B) is computed at "present value" using
         New York Prime Rate. For purposes of this Agreement, "New York Prime
         Rate" shall mean that rate of interest identified as prime or national
         prime by the Wall Street Journal, or if not published or found, then
         the rate of interest charged by the American bank with the greatest
         number of assets on ninety (90) day unsecured notes to its preferred
         customers. The worth at the time of award of the amount referred to in
         clause (C) is computed by discounting such amount at the discount rate
         of the Federal Reserve Bank of New York at the time of award. For the
         purpose of determining unpaid Rent under clause (C), the Rent reserved
         in the Lease will be deemed to be the sum of the following: [i] the
         Base Rent computed pursuant to Section 2.01; [ii] the then outstanding
         full balance of the Assumed Mortgage Debt; [iii] the Other Additional
         Rent pursuant to Section 2.02.02 based upon the amount of such Other
         Additional Rent for the month preceding the date of termination; and
         [iv] the Percentage Rent pursuant to Section 2.06 based upon the amount
         of the annualized Gross Revenues for the then Lease Year increased by
         three percent (3%) per annum, to the date on which the Lease would have
         expired if Landlord had not terminated the Lease, but not to exceed the
         product of one (1%) percent of the initial Base Rent multiplied by the
         number of years since 1992.


                    (b) (1) Without demand or notice, Landlord may re-enter and
         take possession of the Leased Property or any part of the Leased
         Property; and repossess the Leased Property as of the Landlord's former
         estate; and expel the Tenant and those claiming through or under Tenant
         from the Leased Property; and, remove the effects of both or either,
         without being deemed guilty of any manner of trespass and without
         prejudice to any remedies for arrears of Rent or preceding breach of
         covenants or conditions. If Landlord elects to re-enter, as provided in
         this paragraph (b) or if Landlord takes possession of the Leased
         Property pursuant to legal proceedings or pursuant to any notice
         provided by law, Landlord may, from time to time, without terminating
         this Lease, re-let the Leased Property or any part of the Leased
         Property, either alone or in conjunction with other portions of the
         Improvements of which the Leased Property are a part, in Landlord's
         name but for the account of Tenant, for such term or terms (which may
         be greater or less than the period which would otherwise have
         constituted the balance of the Term of this Lease) and on such terms
         and conditions (which may include concessions of free rent, and the
         alteration and repair of the Leased Property) as Landlord, in its






                                                               24















         uncontrolled discretion, may determine. Landlord may collect and
         receive the Rents for the Leased Property. Landlord will not be
         responsible or liable for any failure to re-let the Leased Property, or
         any part of the Leased Property, or for any failure to collect any Rent
         due upon such re-letting. No such re-entry or taking Possession of the
         Leased Property by Landlord will be construed as an election on
         Landlord's part to terminate this Lease unless a written notice of such
         intention is given to Tenant. No notice from Landlord under this Lease
         or under a forcible entry and detainer statute or similar law will
         constitute an election by Landlord to terminate this Lease unless such
         notice specifically says so. Landlord reserves the right following any
         such re-entry or re-letting, or both, to exercise its right to
         terminate this Lease by giving Tenant such written notice, and, in that
         event the Lease will terminate as specified in such notice.


                    (b) (2) If Landlord elects to take possession of the Leased
         Property according to this subparagraph (b) without terminating the
         Lease, Tenant will pay Landlord (i) the Rent and other sums which would
         be payable under the Lease if such repossession had not occurred, less
         (ii) the net proceeds, if any, of any re-letting of the Leased Property
         after deducting all of Landlord's expenses incurred in connection with
         such re-letting, including without limitation, all repossession costs,
         brokerage commissions, legal expenses, attorneys' fees, expenses of
         employees, alteration, remodeling, repair costs, and expenses of
         preparation for such re-letting. If, in connection with any reletting,
         the new Lease term extends beyond the existing Term or the Leased
         Property covered by such re-letting include areas which are not part of
         the Lease Property, a fair apportionment of the Rent received from such
         re-letting and the expenses incurred in connection with such re-letting
         will be made in determining the net proceeds received from such
         re-letting. In addition, in determining the net proceeds from such
         re-letting, any rent concessions will be apportioned over the term of
         the new Lease. Tenant will pay such amounts to Landlord monthly on the
         days on which the Rent and all other amounts owing under this Agreement
         or the Lease would have been payable if possession had not been
         retaken, and Landlord will be entitled to receive the rent and other
         amounts from Tenant on each such day.


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


                    (d) Landlord may have access to and inspect, examine and
         make copies of the books and records and any and all






                                                               25

















         accounts, data and income tax and other returns of Tenant insofar as
         they pertain to the Leased Property.


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


         9.03 Right of Set-Off. Landlord may, and is hereby authorized by
Tenant, at any time and from time to time, after advance notice to Tenant, to
set-off and apply any and all sums held by Landlord, any indebtedness of
Landlord to Tenant, and any claims by Tenant against Landlord, against any
obligations of Tenant under this Agreement or any Lease and against any claims
by Landlord against Tenant, whether or not Landlord has exercised any other
remedies hereunder. The rights of Landlord under this Section are in addition to
any other rights and remedies Landlord may have against Tenant.


         9.04 Performance of Tenant's Covenants. Landlord may perform any
obligation of Tenant which Tenant has failed to perform within two (2) days
after Landlord has sent a written notice to Tenant informing it of its specific
failure. Tenant shall reimburse Landlord on demand, as Additional Rent, for any
expenditures thus incurred by Landlord and shall pay interest thereon at the
overdue Rate (as hereinafter defined).


         9.05 Late Charge. Any payment not made by Tenant for more than ten (10)
days after the due date shall be subject to a late charge payable by tenant as
Rent of three percent (3%) of the amount of such overdue payment.


         9.06 Litigation; Attorneys' Fees. Within ten (10) days after Tenant has
knowledge of any litigation or other proceeding that may be instituted against
Tenant, against the Leased Property to secure or recover possession thereof, or
that may affect the title to or the interest of Landlord in the Leased Property,
Tenant shall give written notice thereof to Landlord. Tenant shall pay all
reasonable costs and expenses incurred by Landlord in enforcing or preserving
Landlord's rights under this Agreement and each Lease, whether or not an Event
of Default has actually occurred or has been declared and thereafter cured,
including without limitation, [i] the fees, expenses, and costs of any
litigation, receivership, administrative, bankruptcy, insolvency or other
similar proceeding; [ii] reasonable attorney, paralegal, consulting and witness
fees and disbursements; and [iii] the expenses, including without limitation,
lodging, meals, and transportation, of Landlord and its employees, agents.
attorneys, and witnesses in preparing for litigation, administrative,
bankruptcy, insolvency or other similar proceedings and attendance at hearings,
depositions, and trials in






                                                               26















connection therewith. All such costs, charges and fees as incurred shall be
deemed to be Additional Rent under this Lease.


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


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


         9.09 Power of Attorney. Tenant hereby irrevocably and unconditionally
appoints Landlord, or Landlord's authorized officer, agent, employee or
designee, as Tenant's true and lawful attorney-in-fact, to act, after an Event
of Default, for Tenant in Tenant's name, place, and stead, and for Tenant's and
Landlord's use and benefit, to execute, deliver and file all applications and
any and all other necessary documents or things, to effect a transfer,
reinstatement, renewal and/or extension of any and all licenses and other
governmental authorizations issued to Tenant in connection with Tenant's
operation of the Leased Property, and to do any and all other acts incidental to
any of the foregoing. Tenant irrevocably and unconditionally grants to Landlord
as its attorney-in-fact full power and authority to do and perform every act
necessary and proper to be done in the exercise of any of the foregoing powers
as fully as Tenant might or could do if personally present or acting, with full
power of substitution, hereby ratifying and confirming all that said attorney
shall lawfully do or cause to be done by virtue hereof. This power of attorney
is coupled with an interest and is irrevocable prior to the full performance of
the Tenant's obligations under this Agreement and each Lease.


                        ARTICLE X: DAMAGE AND DESTRUCTION


   10.01 General. Tenant shall notify Landlord if any of the Leased Property is
damaged or destroyed by reason of fire or any other cause. Tenant shall promptly
repair, rebuild, or restore the Leased Property, at Tenant's expense, so as to
make the Leased Property at least equal in value to the Leased Property existing
immediately prior to such occurrence and as nearly similar to it in character as
is practicable and reasonable. Before beginning such repairs or rebuilding, or
letting any contracts in connection






                                                               27















with such repairs or rebuilding, Tenant will submit for Landlord's approval,
which approval Landlord will not unreasonably withhold or delay, complete and
detailed plans and specifications for such repairs or rebuilding. Promptly after
receiving Landlord's approval of the plans and specifications, Tenant will begin
such repairs or rebuilding and will prosecute the repairs and rebuilding to
completion with diligence, subject, however, to strikes, lockouts, acts of God,
embargoes, governmental restrictions, and other causes beyond Tenant's
reasonable control. Landlord will make available to Tenant the net proceeds of
any fire or other casualty insurance paid to Landlord for such repair or
rebuilding as the same progresses, after deduction of any costs of collection,
including attorneys' fees. Payments will be made against properly certified
vouchers of a competent architect in charge of the work and approved by
Landlord. Prior to commencing the repairing or rebuilding, Tenant shall deliver
to Landlord for Landlord's approval a schedule setting forth the estimated
monthly draws for such work. Landlord will contribute to such payments out of
the insurance proceeds an amount equal to the proportion that the total net
amount received by Landlord from insurers bears to the total estimated cost of
the rebuilding or repairing, multiplied by the payment by Tenant on account of
such work. Landlord may, however, withhold ten percent (10%) from each payment
until the work of repairing or rebuilding is completed and proof has been
furnished to Landlord that no lien or liability has attached or will attach to
the Leased Property or to Landlord in connection with such repairing or
rebuilding. Upon the completion of rebuilding and the furnishing of such proof,
the balance of the net proceeds of such insurance payable to Tenant on account
of such repairing or rebuilding will be paid to Tenant. Tenant will obtain and
deliver to Landlord a temporary or final certificate of occupancy before the
Leased Property is reoccupied for any purpose. Tenant shall complete such
repairs or rebuilding free and clear of mechanic's or other liens, and in
accordance with the building codes and all applicable laws, ordinances,
regulations, or orders of any state, municipal, or other public authority
affecting the repairs or rebuilding, and also in accordance with all
requirements of the insurance rating organization, or similar body. Any
remaining proceeds of insurance after such restoration will be Tenant's
property.


   10.02 Landlord's Inspection. During the progress of such repairs or
rebuilding, Landlord and its architects and engineers may, from time to time,
inspect the Leased Property and will be furnished, if required by them, with
copies of all plans, shop drawings, and specifications relating to such repairs
or rebuilding. Tenant will keep all plans, shop drawings, and specifications at
the building, and Landlord and its architects and engineers may examine them at
all reasonable times. If, during such repairs or rebuilding, Landlord and its
architects and engineers determine that the repairs or rebuilding are not being
done in accordance with the approved plans and specifications,






                                                               28















Landlord will give prompt notice in writing to Tenant, specifying in detail the
particular deficiency, omission, or other respect in which Landlord claims such
repairs or rebuilding do not accord with the approved plans and specifications.
Upon the receipt of any such notice, Tenant will cause corrections to be made to
any deficiencies, omissions, or such other respect. Tenant's obligations to
supply insurance, according to Article IV, will be applicable to any repairs or
rebuilding under this Section.


   10.03 Landlord's Costs. Tenant shall, within thirty (30) days after receipt
of an invoice from Landlord, pay the reasonable costs, expenses, and fees of any
architect or engineer employed by Landlord to review any plans and
specifications and to supervise and approve any construction, or for any
services rendered by such architect or engineer to Landlord as contemplated by
any of the provisions of this Lease, or for any services performed by Landlord's
attorneys in connection therewith; provided, however, that Landlord will consult
with Tenant and notify Tenant of the estimated amount of such expenses.


   10.04 Rent Abatement. In the event that the provisions of Section 10.01 above
shall become applicable, the Base Rent, real estate taxes and other Impositions
shall be abated or reduced proportionately during any period in which, by reason
of such damage or destruction, there is substantial interference with the
operation of the business of Tenant in the Leased Property, having regard to the
extent to which Tenant may be required to discontinue its business in the Leased
Property, and such abatement or reduction shall continue for the period
commencing with such destruction or damage and ending with the substantial
completion (defined below) by Tenant of such work or repair and/or
reconstruction. Nothing in this section shall be construed to abate or reduce
Percentage Rent. In the event that only a portion of the Leased Property is
rendered untenantable or incapable of such use, the Base Rent and all real
estate taxes and other Impositions payable hereunder shall be reduced on a pro
rata basis for the number of licensed nursing home beds which were rendered
incapable of occupancy because of such damage or destruction in proportion to
the total amount of licensed nursing home beds available for occupancy in the
Leased Property prior to such damage or destruction. For purposes of this
paragraph, substantial completion shall occur upon the earlier of (i) nine (9)
months from the date of the first disbursement of insurance proceeds, or (ii)
the issuance of a certificate of occupancy for the Leased Property.


   10.05 Substantial Damage During Lease Term. Provided Tenant has fully
complied with Section 4.01 hereof (including actually maintaining in effect
rental value insurance provided for in clause (c) thereof), if, at any time
during the Term of the Lease, the Leased Property is so damaged by fire or
otherwise that more than fifty (50%) percent of the licensed nursing home beds
at the Leased




                                                               29















Property are rendered unusable, Tenant may, within thirty (30) days after such
damage, give notice of its election to terminate the Lease subject to the
particular Leased Property and, subject to the further provisions of this
Section, such Lease will cease on the tenth (lOth) day after the delivery of
such notice. If the Lease is so terminated, Tenant will have no obligation to
repair, rebuild or replace the Leased Property, and the entire insurance
proceeds will belong to Landlord. If the Lease is not so terminated, Tenant
shall rebuild the Leased Property in accordance with Section 10.01.


                            ARTICLE XI: CONDEMNATION


   11.01 Total Taking. If, by exercise of the right of eminent domain or by
conveyance made in response to the threat of the exercise of such right
("Taking"), the entire Leased Property that is the subject of any Lease is
taken, or so much of the Leased Property is taken that the Leased Property
cannot be used by Tenant for the purposes for which it was used immediately
before the Taking, then the Lease will terminate on the earlier of the vesting
of title to the Leased Property in the condemning authority or the taking of
possession of the Leased Property by the condemning authority. All damages
awarded for such Taking under the power of eminent domain shall be the property
of the Landlord, except for damages awarded as compensation for diminution in
value of the leasehold in contrast to diminution in the value of the fee of the
Leased Property. Tenant shall also be entitled to any specific award made for
loss of business or the relocation thereof.


   11.02 Partial Taking. If, after a Taking, so much of the Leased Property that
is the subject of any Lease remains that the Leased Property can be used for
substantially the same purposes for which it was used immediately before the
Taking, then [i] the Lease will end as to the part taken on the earlier of the
vesting of title to the Leased Property in the condemning authority or the
taking of possession of the Leased Property by the condemning authority; [ii]
Base Rent for so much of the Leased Property as remains will be reduced on a pro
rata basis by an amount equal to the difference between the number of available
nursing beds remaining after the Taking and the number of available nursing beds
before the Taking; [iii] at its cost, Tenant shall restore so much of the Leased
Property as remains to a sound architectural unit substantially suitable for the
purposes for which it was used immediately before the Taking, using good
workmanship and new, first-class materials; [iv] upon completion of the
restoration, or upon Tenant's request at intervals during the restoration
process, in accordance with the procedure set forth in Section 10.01, Landlord
will pay Tenant the lesser of the net award made to Landlord on the account of
the Taking (after deducting from the total award, attorneys', appraisers', and
other fees and costs incurred in connection with the obtaining of the award and
amounts paid to the holders of mortgages secured by the Leased Property), or
Tenant's actual out-of-pocket costs of restoring the Leased






                                                               30















Property; and [v] Landlord shall be entitled to the balance of the net award.


                         ARTICLE XII: TENANT'S PROPERTY


   12.01 Tenant's Property. Tenant shall install, place, and use on the Leased
Property such fixtures, furniture, equipment, inventory and other personal
property in addition to the Fixtures as may be required or as Tenant may, from
time to time, deem necessary or useful to operate the Leased Property as a
nursing home or assisted living medical care facility. All fixtures, furniture, 
equipment, inventory, and other personal property installed, placed, or used on
the Leased Property which is owned by Tenant or leased by Tenant from third
parties is hereinafter referred to as "Tenant's Property".


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


                    (a) Tenant shall notify Landlord within one hundred twenty
         (120) days after each anniversary of any Lease of any additions,
         substitutions, or replacements of any item of Tenant's Property which
         individually has a cost of more than $10,000.00 and shall furnish
         Landlord with such other information as Landlord may reasonably request
         from time to time.


                    (b) Tenant's Property shall be installed in a good and
         workmanlike manner, in compliance with all governmental laws,
         ordinances, rules, and regulations and all insurance requirements, and
         be installed free and clear of any mechanic's liens.


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


                    (d) Tenant shall, at Tenant's sole cost and expense, keep
         Tenant's Property insured against loss or damage by fire, vandalism and
         malicious mischief, sprinkler leakage, and other physical loss perils
         commonly covered by fire and extended coverage, boiler and machinery,
         and difference in conditions insurance in an amount not less than
         ninety percent (90%) of the then full replacement cost thereof. Tenant
         shall use the proceeds from any such policy for the repair and
         replacement of Tenant's Property. The insurance shall meet the
         requirements of Section 4.03.


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




                                                               31


 











                   (f) If Tenant's Property is damaged or destroyed by fire or
         any other cause, Tenant shall promptly repair or replace Tenant's
         Property unless Tenant is entitled to and elects to terminate the Lease
         pursuant to Section 10.05.


                    (g) Unless an Event of Default (or any event which, with the
         giving of notice or lapse of time, or both, would constitute an Event
         of Default) has occurred and remains uncured beyond any applicable
         grace period, Tenant may remove Tenant's property from the Leased
         Property from time to time provided that [i] the items removed are not
         required to operate the Leased Property as a licensed nursing home
         facility (unless such items are being replaced by Tenant); and [ii)
         Tenant repairs any damage to the Leased Property resulting from the
         removal of Tenant's Property.


                    (h) Tenant shall remove Tenant's Property upon the
         termination or expiration of the Lease and shall repair any damage to
         the Leased Property resulting from the removal of Tenant's Property. If
         Tenant fails to remove Tenant's Property within ninety (90) days after
         the termination or expiration of the Lease, then Tenant shall be deemed
         to have abandoned Tenant's Property, Tenant's Property shall become the
         property of Landlord, and Landlord may remove, store and dispose of
         Tenant's Property. In such event, Tenant shall have no claim or right
         against Landlord for such property or the value thereof regardless of
         the disposition thereof by Landlord. Tenant shall pay Landlord, upon
         demand, all expenses incurred by Landlord in removing, storing, and
         disposing of Tenant's Property and repairing any damage caused by such
         removal. Tenant's obligations hereunder shall survive the termination
         or expiration of the Lease.


                    (i) Tenant shall perform its obligations under any equipment
         lease or security agreement for Tenant's Property.


                 ARTICLE XIII: TENANT'S RIGHTS OF FIRST REFUSAL


   13.01  Rights of First Refusal.


                    (a) Subject to the terms and conditions set forth in this
         Section 13.01, Tenant shall have a right of first refusal to purchase
         any Leased Property (the "Purchase Refusal Right"). If during the Term
         or for a period of six (6) months following termination of the Lease,
         Landlord receives a bona fide third party offer to purchase any Leased
         Property, Landlord shall, prior to accepting such third party offer,
         send written notice thereof to Tenant ("Landlord's Notice") along with
         a copy of such offer, and further setting forth in detail all of the
         terms and conditions of such third party offer, including the price,
         time for closing, and any contingencies. Tenant shall have fifteen (15)
         days after






                                                               32

















         receipt of Landlord's Notice to exercise Tenant's Purchase Refusal
         Right, by giving Landlord written notice thereof. Failure of Tenant to
         exercise the Purchase Refusal Right within such time period set forth
         above shall be deemed to extinguish the Purchase Refusal Right.
         Thereafter, Landlord may sell such Leased Property to such third party
         on the same terms and conditions as set forth in the Landlord's Notice.
         Tenant's Purchase Refusal Right shall revive in the event that Landlord
         fails to close such third party offer. In the event that Tenant elects
         to exercise the Purchase Refusal Right and to purchase the Leased
         Property thereby, (a) Tenant shall purchase such Leased Property on the
         same terms and conditions and subject to all time periods and other
         limitations as provided in Landlord's Notice, and (b) concurrently with
         such purchase, the Lease of such Leased Property shall terminate (but
         Tenant shall remain liable to pay any unpaid Rent with respect to such
         Leased Property and all indemnifications and other provisions that
         survive the expiration of any Lease or of this Agreement shall continue
         in effect), and this Agreement shall be appropriately amended to
         reflect the termination of such Lease.


                    (b) Subject to the terms and conditions set forth in this
         Section 13.01, Tenant shall have a right of first refusal to lease any
         Leased Property (the "Lease Refusal Right"). If during the Term or
         within six (6) months thereafter Landlord receives a bona fide third
         party offer to lease any Leased Property after expiration of the Lease
         to Tenant, Landlord shall, prior to accepting such third party offer,
         send written notice thereof to Tenant ("Landlord's Notice") along with
         a copy of such offer, and further setting forth in detail all of the
         terms and conditions of such third party offer, including the rent.
         Tenant shall thereafter have thirty (30) days after the date of
         Landlord's Notice to exercise Tenant's Lease Refusal Right, by giving
         Landlord written notice thereof. Failure of Tenant to exercise the
         Lease Refusal Right within such time period set forth above shall be
         deemed to extinguish the Lease Refusal Right. Thereafter, Landlord may
         lease such Leased Property to such third party on the same terms and
         conditions as set forth in the Landlord's Notice. Tenant's Lease
         Refusal Right shall revive in the event that Landlord fails to close
         such third party offer. In the event that Tenant elects to exercise the
         Lease Refusal Right and to lease the Leased Property thereby, Tenant
         shall lease such Leased Property on the same terms and conditions and
         subject to all time periods and other limitations as provided in
         Landlord's Notice.








                                                               33















               ARTICLE XIV: ASSIGNMENT AND SUBLETTING; ATTORNMENT


   14.01 Subletting and Assignment; Attornment. Subject to the provisions of
Section 14.03 below and any other express conditions or limitations set forth
herein, Tenant may, without the consent of Landlord, (i) assign this Agreement
or any Lease or sublet all or any part of the Leased Property to any Affiliate
of Tenant, or (ii) sublet all or any part of the Leased Property (a) in the
normal course of the conduct of Tenant's business on the Leased Property (such
as but not limited to leasing of space for major moveable equipment or
functional departments such as pathology, pharmacy and radiology), or (b) as to
less than an aggregate of 20% of the rentable square footage of the buildings on
any Leased Property, to concessionaires or other third party users or operators
of portions of the Leased Property which are reasonably related to the
health-care industry or which provide direct services for patients or employees
of the Leased Property. Landlord shall not unreasonably withhold its consent to
any other or further subletting or assignment, provided that (a) in the case of
a subletting, the sublessee shall comply with the provisions of Section 14.02,
(b) in the case of an assignment, the assignee shall assume in writing and agree
to keep and perform all of the terms of this Lease 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, (c) an original counterpart of each such
sublease and assignment and assumption, duly executed by Tenant and such
sublessee or assignee, as the case may be, in form and substance satisfactory to
the Landlord, shall be delivered promptly to Landlord, and (d) 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.


   14.02 Attornment. Tenant shall insert in each sublease permitted under
Section 14.01 provisions to the effect that (a) such sublease is subject and
subordinate to all of the terms and provisions of the Lease (including this
Agreement) and to the rights of Landlord hereunder, (b) in the event the Lease
shall terminate before the expiration of such sublease, the sublessee thereunder
will, at Landlord's option, attorn to Landlord and waive any right the sublessee
may have to terminate the sublease or to surrender possession thereunder, as a
result of the termination of the Lease, and (c) in the event the sublessee
receives a written notice from Landlord or Landlord's assignees, if any, stating
that Tenant is in Default under the Lease, the sublessee shall thereafter be
obligated to pay all rentals accruing under said sublease directly to the party
giving such notice, or as such party may direct. All rentals received from the
sublessee by Landlord or Landlord's assignees, if any, as the case may be, shall
be credited against the amounts owing by Tenant under the Lease.






                                                               34















         14.03 Sublease Limitation. Anything contained in this Agreement or any
Lease to the contrary notwithstanding, Tenant shall not sublet the Leased
Property on any basis such that the rental to be paid by the sublessee
thereunder would be based, in whole or in part, on either (i) the income or
profits derived by the business activities of the sublessee, or (ii) any other
manner such that any portion of the sublease rental received by Landlord would
fail to qualify as "rents from real property" within the meaning of Section
856(d) of the Internal Revenue Code of 1986 as amended (the "Code"), or any
similar or successor provisions thereto.




                    ARTICLE XV: LIMITED RIGHT OF SUBSTITUTION


   15.01 Substitution Upon Condemnation. With respect to any Leased Property or
Leased Properties whose Base Rent does not exceed in the aggregate five percent
(5%) of the Base Rent for all Leased Properties listed on Schedule A hereto
that, following notice received from any governmental authority not later than
December 31, 1994, is taken in its entirety by eminent domain or conveyed in its
entirety to such governmental authority in response to the threat of the
exercise of such governmental authority's right of eminent domain ("Condemned
Property"), Tenant shall have an option to acquire such Leased Property in
exchange for a reasonably satisfactory new Leased Property ("Substituted
Property") on terms reasonably acceptable to Landlord. Such terms with respect
to the Substituted Property shall include comparable fair rental value, a
tax-free exchange opinion and an opinion that the transaction will not
disqualify Landlord as a real estate investment trust for tax purposes.




                            ARTICLE XVI: ARBITRATION


   16.01 Arbitration. Except with respect to the payment of Base Rent hereunder,
in case any controversy shall arise between the parties hereto as to any of the
requirements of this Lease or the performance thereof, which the parties shall
be unable to settle by agreement or as otherwise provided herein, such
controversy shall be determined by arbitration to be initiated and conducted as
provisions of this Article XVI.


   16.02 Appointment of Arbitrators. The party or parties requesting arbitration
shall serve upon the other a demand therefor, in writing, specifying the matter
to be submitted to arbitration, and nominating some competent disinterested
person to act as an arbitrator; within twenty (20) days after receipt of such
written demand and notification, the other party shall, in writing, nominate a
competent disinterested person and the two (2) arbitrators so designated shall,
within ten (10) days thereafter, select a third arbitrator and give immediate
written notice of such




                                                               35















selection to the parties and shall fix in said notice a time and place for the
first meeting of the arbitrators, which meeting shall be held as soon as
conveniently possible after the selection of all arbitrators at which time and
place the parties to the controversy may appear and be heard.


   16.03 Third Arbitrator. In case the notified party or parties shall fail to
make a selection upon notice, as aforesaid, or in case the first two (2)
arbitrators selected shall fail to agree upon a third arbitrator within ten (10)
days after their selection, then such arbitrator or arbitrators, may, upon
application made by either of the parties to the controversy, after twenty (20)
days' written notice thereof to the other party or parties, be appointed by the
Senior Judge of the United States District Court having jurisdiction of
controversies litigated in Nashville Tennessee.


   16.04 Arbitration Procedure. Said arbitrators shall give each of the parties
not less than ten (10) days' written notice of the time and place of each
meeting at which the parties or any of them may appear and be heard and after
hearing the parties in regard to the matter in dispute and taking such other
testimony and making such other examinations and investigations as justice shall
require and as the arbitrators may deem necessary, they shall decide the
question submitted to them; and the decision of said arbitrators in writing
signed by a majority of them shall be final and binding upon the parties to such
controversy. In rendering such decision and award, the arbitrators shall not add
to, subtract from or otherwise modify the provisions of this Agreement or of any
applicable Lease.


   16.05 Expenses. The expenses of such arbitration shall be divided between
Landlord and Tenant unless otherwise specified in award. Each party in interest
shall pay the fees and expenses of its own counsel.


            ARTICLE XVII: QUIET ENJOYMENT, SUBORDINATION, ATTORNMENT,
                    BOND FINANCING AND ESTOPPEL CERTIFICATES


   17.01 Quiet Enjoyment. So long as Tenant performs all of its obligations
under this Agreement and each Lease, Tenant's possession of the Leased Property
will not be disturbed by or through Landlord.


   17.02 Subordination.  This Agreement and each Lease and Tenant's rights under
this Agreement and each Lease are subordinate to any ground lease or underlying
lease, first mortgage, first deed of trust, or other first lien against the
Leased Property, together with any renewal, consolidation, extension,
modification or replacement thereof, which now or at any subsequent time affects
the Leased Property or any interest of Landlord in the Leased Property, except
to the extent that any such instrument expressly provides that this Agreement
and each Lease is superior. This






                                                               36















provision will be self-operative, and no further instrument or subordination
will be required in order to effect it. However, Tenant shall execute,
acknowledge and deliver to Landlord, at any time and from time to time upon
demand by Landlord, such documents as may be requested by Landlord or any
mortgagee or any holder of any mortgage or other instrument described in this
Section, to confirm or effect any such subordination. If Tenant fails or refuses
to execute, acknowledge, and deliver any such document within twenty (20) days
after written demand, Landlord may execute, acknowledge and deliver any such
document on behalf of Tenant as Tenant's attorney-in-fact. Tenant hereby
constitutes and irrevocably appoints Landlord, its successors and assigns, as
Tenant's attorney-in-fact to execute, acknowledge, and deliver on behalf of
Tenant any documents described in this Section. This power of attorney is
coupled with an interest and is irrevocable.


   17.03 Attornment; Non-Disturbance. If any holder of any mortgage, indenture,
deed of trust, or other similar instrument described in Section 17.02 succeeds
to Landlord's interest in the Leased Property, Tenant will pay to such holder
all Rent subsequently payable under this Lease. Tenant shall, upon request of
anyone succeeding to the interest of Landlord, automatically become the tenant
of, and attorn to, such successor in interest without changing this Lease. The
successor in interest will not be bound by [i] any payment of Rent for more than
one (1) month in advance; [ii] any amendment or modification of this Lease made
without its written consent; [iii] any claim against Landlord arising prior to
the date on which the successor succeeded to Landlord's interest; or [iv] any
claim or offset of Rent against the Landlord. Upon request by Landlord or such
successor in interest and without cost to Landlord or such successor in
interest, Tenant will execute, acknowledge and deliver an instrument or
instruments confirming the attornment. If Tenant fails or refuses to execute,
acknowledge, and deliver any such instrument within twenty (20) days after
written demand, then Landlord or such successor in interest will be entitled to
execute, acknowledge, and deliver any document on behalf of Tenant as Tenant's
attorney-in-fact. Tenant hereby constitutes and irrevocably appoints Landlord,
its successors and assigns, as Tenant's attorney-in-fact to execute,
acknowledge, and deliver on behalf of Tenant any such document. This power of
attorney is coupled with an interest and is irrevocable.


         Landlord shall use reasonable efforts to obtain a non-disturbance
agreement from any such party referred to above which provides that in the event
such party succeeds to Landlord's interest under the Lease and provided that no
Event of Default by Tenant exists, such party will not disturb Tenant's
possession, use or occupancy of the Leased Property.


   17.04 Estoppel Certificates.  At the request of Landlord or any mortgagee or 
purchaser of the Leased Property, Tenant shall






                                                               37













execute, acknowledge, and deliver an estoppel certificate, in recordable form,
in favor of Landlord or any mortgagee or purchaser of the Leased Property
certifying the following: [i] that the Lease is unmodified and in full force and
effect, or if there have been modifications that the same is in full force and
effect as modified and stating the modifications; [ii] the date to which Rent
and other charges have been paid; [iii] that neither Tenant nor Landlord is in
default nor is there any fact or condition which, with notice or lapse of time,
or both, would constitute a default, if that be the case, or specifying any
existing default; [iv] that Tenant has accepted and occupies the Leased
Property; [v] that Tenant has no defenses, set-offs, deductions, credits, or
counterclaims against Landlord, if that be the case, or specifying such that
exist; [vi] that the Landlord has no outstanding construction or repair
obligations; and [vii] such other information as may reasonably be requested by
Landlord or any mortgagee or purchaser. Any purchaser or mortgagee may rely on
this estoppel certificate. If Tenant fails to deliver the estoppel certificates
to Landlord within ten (10) days after the request of the Landlord, then Tenant
shall be deemed to have certified that [a] the Lease is in full force and effect
and has not been modified, or that the Lease has been modified as set forth in
the certificate delivered to Tenant; [b] Tenant has not prepaid any Rent or
other charges except for the current month; [c] Tenant has accepted and occupies
the Leased Property; [d] neither Tenant nor Landlord is in default nor is there
any fact or condition which, with notice or lapse of time, or both, would
constitute a default; [e] Landlord has no outstanding construction or repair
obligation, and [f] Tenant has no defenses, set-offs, deductions, credits, or
counterclaims against Landlord. Tenant hereby irrevocably appoints Landlord as
Tenant's attorney-in-fact to execute, acknowledge and deliver on Tenant's behalf
any estoppel certificate which Tenant does not object to within twenty (20) days
after Landlord sends the certificate to Tenant. This power of attorney is
coupled with an interest and is irrevocable.


                          ARTICLE XVIII: MISCELLANEOUS


   18.01 Notices. Landlord and Tenant hereby agree that all notices, demands,
requests, and consents (hereinafter "notices") required to be given pursuant to
the terms of this Lease shall be in writing shall be addressed as follows:


         If to Tenant:               National HealthCorp L.P.
                                     100 Vine Street
                                     Suite 1400, City Center
                                     Murfreesboro, Tennessee 37130








                                                               38





















         With a copy to:               Richard F. LaRoche, Jr.
                                       Senior Vice President and Secretary
                                       National HealthCorp L.P.
                                       100 Vine Street
                                       Suite 1400, City Center
                                       Murfreesboro, Tennessee 37130


         If to Landlord:               National Health Investors, Inc.
                                       100 Vine Street
                                       Suite 1400, City Center
                                       Murfreesboro, Tennessee 37130


         With a copy to:               Ernest E. Hyne, II, Esq.
                                       Harwell Martin & Stegall, P.C.
                                       P.O. Box 2960
                                       Nashville, Tennessee 37219;


and shall be served by [i] personal delivery, [ii] certified mail, return
receipt requested, postage prepaid, or [iii] nationally recognized overnight
courier. All notices shall be deemed to be given upon the earlier of actual
receipt or three (3) days after mailing, or one (1) business day after deposit
with the overnight courier. Any notices meeting the requirements of this Section
shall be effective, regardless of whether or not actually received. Landlord or
Tenant may change its notice address at any time by giving the other party
notice of such change.


   18.02 Advertisement of Leased Property. In the event the parties hereto have
not executed a renewal lease of any Leased Property within ninety (90) days
prior to the expiration of the Term, then Landlord or its agent shall have the
right to enter such Leased Property at all reasonable times for the purpose of
exhibiting the Leased Property to others and to place upon the Leased Property
for and during the period commencing one hundred eighty (180) days prior to the
expiration of the Term "for sale" or "for rent" notices or signs.


   18.03 Entire Agreement. This Agreement and the individual Leases contain the
entire agreement between Landlord and Tenant with respect to the subject matter
hereof and thereof. No representations, warranties, and agreements have been
made by Landlord except as set forth in this Lease.


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




                                                               39















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


   18.06 Governing Law.  This Lease shall be construed under the laws of the 
State of Tennessee.


   18.07 Recording of Lease. Tenant shall not record this Agreement. Tenant may,
however, record the Lease approved by Landlord with respect to each Leased
Property; provided, however, such lease shall not disclose the Base Rent of
other economic terms of the Lease.


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


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


   18.10 Authority. The persons executing this Agreement or any Lease on behalf
of Tenant warrant that [i] Tenant has the power and authority to enter into this
Agreement or such Lease; [ii] Tenant is qualified to do business in the state in
which the Leased Property is located; and [iii] they are authorized to execute
this Lease on behalf of Tenant. Tenant shall, at the request of Landlord,
provide evidence satisfactory to Landlord confirming these representations.


   18.11 Transfer of Permits, Etc. Upon the expiration or earlier termination of
the Term of any Lease (whether pursuant to the provisions of this Agreement of
such Lease), Tenant shall to transfer and relinquish to Landlord or Landlord's
nominee and to cooperate with Landlord or Landlord's nominee in connection with
the processing by Landlord or such nominee of all licenses, operating permits,
certificates of need and other governmental authorization and all contracts,
including without limitation, a Certificate of Need, the nursing home and/or
health care facility license, and any other contracts with governmental or
quasi-governmental entities which may be necessary or appropriate for the
operation by Landlord or such nominee of the Leased




                                                               40















Property for the purposes of operating a nursing home and health care facility;
provided that the costs and expenses of any such transfer or the processing of
any such application shall be paid by Landlord or Landlord's nominee. Any such
permits, licenses, certificates and contracts which are held in Landlord's name
now or at the termination of the Lease shall remain the property of Landlord. To
the extent permitted by law, Tenant hereby irrevocably appoints Landlord, its
successors and assigns and any nominee or nominees specifically designated by
Landlord or any successor or assign as Tenant's attorney-in-fact to execute,
acknowledge, deliver and file all documents appropriate to such transfer or
processing of any such application on behalf of Tenant; this power of attorney
is coupled with an interest and is irrevocable.


   18.12 Modification. This Agreement and any Lease may only be modified by a
writing signed by both Landlord and Tenant.


   18.13 Incorporation by Reference. All schedules and exhibits referred to in
this Agreement are incorporated into this Agreement, and all schedules and
exhibits referred to in any Lease (as well as the provisions of this Agreement,
except to the extent specifically excluded from or inconsistent with the terms
of such Lease) are incorporated into such Lease.


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


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


   18.16 Waiver of Jury Trial. To the extent that there is any claim by one
party against the other that is not to be settled by arbitration as provided in
Article XVI hereof, Landlord and Tenant waive trial by jury in any action,
proceeding or counterclaim brought by either of them against the other on all
matters arising out of this Lease or the use and occupancy of the Leased
Property (except claims for personal injury or property damage). If Landlord
commences any summary proceeding for nonpayment of Rent, Tenant will not
interpose, and waives the right to interpose, any counterclaim in any such
proceeding.






                                                               41















   18.17 Guarantee Fee Credit. Provided that no claim has been made against
Landlord under its subordinated guarantee of any letter of credit outstanding as
of the date of this Agreement (together with any renewal or replacement of such
letter of credit, "LOC") guaranteed primarily by Tenant, which LOC was issued to
secure indebtedness in connection with healthcare facilities managed by Tenant
and not constituting any of the Leased Properties, and which guarantee by
Landlord ("Managed Facility LOC Guarantee") is issued concurrently with and as
provided in the Contribution and Assumption Agreement of even date between
Tenant and Landlord (which provides among other things for the Real Estate
Conveyance), Tenant shall be entitled to a credit against the aggregate Base
Rent payable pursuant to Section 2.01 of this Agreement in an amount equal to
the full amount of any fees actually received by Landlord in consideration of
Landlord's Managed Facility LOC Guarantees. However, no portion of credit
provided for in this Section 18.17 shall be considered as a set-off or credit
against any rent payable under any individual Lease of any Leased Property, and
this Section 18.17 shall not be incorporated into or deemed to be a part of any
such Lease.


   18.18 Permitted Contests. Tenant, on its own or on Landlord's behalf (or in
Landlord's name), but at Tenant's expense, may contest, by appropriate legal
proceedings conducted in good faith and with due diligence, the amount or
validity or application, in whole or in part, of any Imposition or any legal
requirement or insurance requirement or any lien, attachment, levy, encumbrance,
charge or claim provided that [i] in the case of an unpaid Imposition, lien,
attachment, levy, encumbrance, charge or claim, the commencement and
continuation of such proceedings shall suspend the collection thereof from
Landlord and from the Leased Property; [ii] neither the Leased Property nor any
Rent therefrom nor any part thereof or interest therein would be in any
immediate danger of being sold, forfeited, attached or lost; [iii] in the case
of a legal requirement, Landlord would not be in any immediate danger of civil
or criminal liability for failure to comply therewith pending the outcome of
such Proceedings; [iv] in the event that any such contest shall involve a sum of
money or potential loss in excess of Fifty Thousand Dollars ($50,000.00), Tenant
shall deliver to Landlord and its counsel an opinion of Tenant's counsel to the
effect set forth in clauses [i], [ii] and [iii], to the extent applicable; [v]
in the case of a legal requirement and/or an Imposition, lien, encumbrance, or
charge, Tenant shall give such reasonable security as may be demanded by
Landlord to insure ultimate payment of the same and to prevent any sale or
forfeiture of the affected Leased Property or the Rent by reason of such
nonpayment or noncompliance; provided, however, the provisions of this Section
shall not be construed to permit Tenant to contest the payment of Rent (except
as to contests concerning the method of computation or the basis of levy of any
Imposition or the basis for the assertion of any other claim) or any other sums
payable by Tenant to Landlord hereunder; [vi] in the case of an insurance






                                                               42













requirement, the coverage required by Article IV shall be maintained: and [vii]
if such contest be finally resolved against Landlord or Tenant, Tenant shall, as
Additional Rent due hereunder, promptly pay the amount required to be paid,
together with all interest and penalties accrued thereon, or comply with the
applicable legal requirement or insurance requirement. Landlord, at Tenant's
expense, shall execute and deliver to Tenant such authorizations and other
documents as may be reasonably required in any such contest, and, if reasonably
requested by Tenant or if Landlord so desires, Landlord shall join as a party
therein. Tenant hereby agrees to indemnify and save Landlord harmless from and
against any liability, cost or expense of any kind that may be imposed upon
Landlord in connection with any such contest and any loss resulting therefrom.


   18.19 Construction of Lease. This Agreement and each of the Leases for Leased
Properties described on Schedule A hereto have been prepared by Landlord and its
professional advisors and reviewed by Tenant and its professional advisors.
Landlord, Tenant, and their advisors believe that this Agreement and such Leases
are the product of all their efforts, that they express their agreement, and
agree that they shall not be interpreted in favor of either Landlord or Tenant
or against either Landlord or Tenant merely because of their efforts in
preparing such documents.


   18.20 Counterparts. This Agreement and each Lease may be executed in
duplicate counterparts, each of which shall be deemed an original hereof or
thereof.


   18.21 Relationship of Landlord and Tenant. The relationship of Landlord and
Tenant is the relationship of lessor and lessee. Landlord and Tenant are not
partners, joint venturers, or associates.


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


   18.23 Landlord's Status as a REIT. Tenant acknowledges that Landlord intends
to elect to be taxed as a real estate investment trust ("REIT") under the Code.
Tenant shall not do anything which would adversely affect Landlord's status as a
REIT. Tenant hereby agrees to modifications of this Lease which do not
materially adversely affect Tenant's rights and liabilities if such
modifications are required to retain or clarify Landlord's status as a REIT.






                                                               43















   18.24 Sale of Real Estate Assets. Notwithstanding any other provision of this
Agreement or of any Lease, Landlord shall not be required to sell or transfer
Leased Property, or any portion thereof, which is a real estate asset as defined
in Section 856(c)(6) of the Code, to Tenant if Landlord's counsel advises
Landlord that such sale or transfer may not be a sale of property described in
Section 857(b)(6)(C) of the Code. If Landlord determines not to sell such
property pursuant to the above sentence, Tenant's right, if any, to purchase the
Leased Property shall continue and be exercisable at such time as the
transaction, upon the advice of Landlord's counsel, would be a sale of property
described in Section 857(b)(6)(C) of the Code.


   18.25 Use of Tenant's Name. Following the expiration or earlier termination
of this Agreement and of all of the Leases, Landlord shall use its best efforts,
if requested by Tenant within 12 months of such expiration or termination, to
cause its name to be changed to a name that does not include the word "National"
or any variation thereof.


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




                                    NATIONAL HEALTH INVESTORS, INC.






                                    By: 
                                       -----------------------------
                                    Title: Secretary








                                    NATIONAL HEALTHCORP L.P.
                                    By its Managing General Partner,
                                    NHC, Inc.










                                    By: 
                                       -----------------------------


                                    Title: President


                                 














              AMENDMENT NO. 1 TO MASTER AGREEMENT TO LEASE


      This Amendment No. 1 (hereinafter "Amendment") is made to that certain
Master Agreement to Lease between National Health Investors, Inc. (Landlord) and
National HealthCorp L.P. ("Tenant") dated October 17, 1991, (hereinafter "Master
Lease"), and is entered into effective this 2nd day of June, 1993.


      WHEREAS, pursuant to the terms of the Master Lease, National HealthCorp
L.P. ("NHC") has heretofore agreed to lease certain licensed nursing homes or
retirement centers in 40 geographical locations as identified on Exhibit A to
said Master Lease; and


      WHEREAS, NHC has obtained Certificates of Need to expand the number of
licensed beds in three of said projects, namely the licensed nursing homes in
Hudson and Plant City, Florida, and in Anniston, Alabama; and


      WHEREAS, pursuant to Board resolution of today's date, the Board of
National Health Investors, Inc. ("NHI") has agreed to finance said expansions
and NHC has agreed to pay an increased lease rate thereon, all on the following
terms and conditions; and


      NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES, the parties do hereby
amend the Master Lease by the addition of the following as paragraph 2.07:


      2.07: Expanded Projects. Landlord and Tenant hereby agree that Tenant is
      granted the right to increase the licensed bed capacity at the Leased
      Property located in Hudson and Plant City, Florida, and Anniston, Alabama,
      so long as its expansions are authorized with a certificate of need from
      the appropriate governmental authority and are constructed in a
      substantially similar manner as the existing Leased Property. Landlord
      agrees (at the request of Tenant, and after the issuance of a certificate
      of occupancy on the Expanded Project) to reimburse Tenant for such hard
      costs, including land, construction, landscaping, fixtures or
      appurtenances, as Tenant may have incurred in the expansion of the
      project. At such time as this reimbursement is sought by Tenant, Tenant
      agrees to amend the individual lease for that Leased Property, and to
      increase the base rent thereon by an annual factor equal to 10% times the
      expenses reimbursed by Landlord.


      The parties further agree that the Additional Rent provided for in
      paragraph 2.02 above shall commence on that part of the Leased Property
      expanded pursuant to the terms of this paragraph 2.07 effective the first
      day of January of the calendar year commencing no sooner than six months
      after the date of the commencement of Tenant's lease obligation on the
      expanded property.


      All the rest and residue of the Master Lease and the individual leases on
the Leased Properties located in Hudson and Plant City, Florida, and Anniston,
Alabama, are hereby ratified and affirmed. Executed this the 2nd day of June,
1993.


                                    NATIONAL HEALTH INVESTORS, INC.


                                    /s/ Richard F. LaRoche, Jr.
                                    Richard F. LaRoche, Jr., Vice President


                                    NATIONAL HEALTHCORP L.P.


                                    /s/ Robert G. Adams
                                    Robert G. Adams, Senior Vice President














                  AMENDMENT NO. 2 TO MASTER AGREEMENT TO LEASE


      This Amendment No. 2 (hereinafter "Amendment 2") is made to that certain
Master Agreement to Lease between National Health Investors, Inc. ("Landlord")
and National HealthCare L.P. (formerly National HealthCorp L.P., now known as
"Tenant") dated October 17, 1991, (hereinafter "Master Lease"), and is entered
into effective this 15th day of January, 1996.


      PRELIMINARY STATEMENTS:


      WHEREAS, pursuant to the terms of the Master Lease, National HealthCare
L.P. ("NHC") has heretofore agreed to lease certain licensed nursing homes or
retirement centers in 40 geographical locations as identified on Exhibit A to
said Master Lease; and


      WHEREAS, NHC has agreed to pay as additional rent for these facilities
certain "Assumed Mortgage Debt,"; and


      WHEREAS, certain of the Mortgage Debt has, as of today, been repaid,
defeased, refunded or otherwise changed; and


      WHEREAS, the parties agree to amend the Master Lease to reflect how NHC's
obligations pursuant to the Master Lease are to be handled hereinafter;


      NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES, the parties do hereby
amend the Master Lease by deleting the last sentence of Section 2.02.01 and
substituting in lieu thereof the following:


            In the event that Landlord shall for any reason itself discharge
      (including by prepayment) any Assumed Mortgage Debt, Tenant shall
      thereafter pay the relevant Assumed Mortgage Debt Service Rent as follows:


            a) If the parties cannot otherwise reach agreement, Tenant shall
      thereafter pay the relevant Assumed Mortgage Debt Service Rent directly to
      Landlord in accordance with the original payment terms of the Assumed
      Mortgage Debt so discharged, or by agreement only


            b) At that interest rate as paid by Landlord on any secured or
      unsecured indebtedness, excluding the Line of Credit Note with Bank of
      Tokyo, issued in a transaction occurring within 30 days or more before or
      after the date of Landlord's prepayment with the principal of the Assumed
      Mortgage Debt to be paid as directed by Landlord to Tenant from time to
      time; provided further that in no event shall the principal payments on
      the Assumed Mortgage Debt be greater than the principal payments that were
      assumed at the time of the execution of the original Master Lease. To the
      extent that any prepayment by Landlord has the effect of prepaying debt
      owed by Tenant outside of its Assumed Mortgage Debt obligations under this
      Master Lease, then Tenant agrees to repay NHI said amount by its
      promissory note with a rate of interest as calculated in 2.02.01(b), with
      interest to only accrue during the calendar year in which the prepayment
      occurred and thereafter with principal and interest to be made in 180
      equal monthly payments of principal and interest with said note to balloon
      on December 31, 2006, unless the Master lease is renewed in whole or part,
      in which case said note shall not balloon until December 31, 2011.


            The parties agree to amend the individual leases for the various











      Lease Properties from time to time in order to reflect Landlord's
      designated payment of the principal and rent component pursuant to this
      Section 2.02.01(b).


      All the rest and residue of the Master Lease is hereby ratified and
affirmed this the 15th day of January, 1996.


                                   NATIONAL HEALTH INVESTORS, INC.


                                   /s/ Richard F. LaRoche, Jr.
                                   Richard F. LaRoche, Jr., Vice President


                                   NATIONAL HEALTHCARE L.P.


                                   /s/ W. Andrew Adams
                                   W. Andrew Adams, President
















             AMENDMENT NO. 3 TO MASTER AGREEMENT TO LEASE


      This Amendment No. 3 (hereinafter "Amendment 3") is made to that certain
Master Agreement to Lease between National Health Investors, Inc. ("Landlord")
and National HealthCare L.P. ("Tenant") dated October 17, 1991, (hereinafter
"Master Lease"), and is entered into effective this 22nd day of July, 1997.


      WHEREAS, pursuant to the terms of the Master Lease, National HealthCare
L.P. ("NHC") has heretofore agreed to lease certain licensed nursing homes or
retirement centers in 43 locations as identified on Exhibit A to said Master
Lease; and


      WHEREAS, NHC has obtained a Certificate of Need to expand the number of
licensed beds or has constructed ancillary space in fourteen of said projects,
namely eight licensed nursing homes in Tennessee -- Athens, Scott, Colonial Hill
Retirement, Milan, Nashville, Pulaski, Sequatchie, Smithville, two in Missouri
-- Joplin and St. Charles, two in South Carolina -- Laurens and Anderson,
Merritt Island in Florida and Glasgow in Kentucky; and


      WHEREAS, pursuant to Board resolution of today's date, the Board of
National Health Investors, Inc. ("NHI") has agreed to finance said expansions
and NHC has agreed to pay an increased lease rate thereon, all on the following
terms and conditions; and


      NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES, the parties do hereby
amend the Master Lease by the addition of the following as paragraph 2.07:


      2.07: Expanded Projects. Landlord and Tenant hereby agree that Tenant is
      granted the right to increase the licensed bed capacity and/or create
      revenue producing ancillary space at the Leased Property located in
      Athens, NHC/Scott in Lawrenceburg, Colonial Hill Retirement in
      Chattanooga, Milan, Nashville, Pulaski, Sequatchie, and Smithville,
      Tennessee; Glasgow, Kentucky; Joplin and St. Charles, Missouri, Laurens
      and Anderson, South Carolina; and Merritt Island, Florida, so long as its
      expansions are either exempt from or authorized with a certificate of need
      from the appropriate governmental authority and are constructed in a
      substantially similar manner as the existing Leased Property. Landlord
      agrees at the request of Tenant from time to time to reimburse Tenant for
      such hard costs, including land, construction, landscaping, fixtures or
      appurtenances, as Tenant may have incurred in the expansion of the
      Project. At such time as this reimbursement is sought by Tenant, Tenant
      agrees to amend the individual lease for that Leased Property, and to
      increase the base rent thereon by an annual factor equal to 9.5% times the
      expenses reimbursed by Landlord.


      The parties further agree that the Additional Rent provided for in
      paragraph 2.02 above shall commence on that part of the Leased Property
      expanded pursuant to the terms of this paragraph 2.07 effective the first
      day of January of 1999, with 1998 as the Base Year.


      All the rest and residue of the Master Lease and the individual lease on
the Leased Properties located in Athens, NHC/Scott in Lawrenceburg, Colonial
Hill Retirement in Chattanooga, Milan, Nashville, Pulaski, Sequatchie, and
Smithville, Tennessee; Glasgow, Kentucky; Joplin and St. Charles, Missouri,
Laurens and Anderson, South Carolina; and Merritt Island, Florida, are hereby
ratified and affirmed. Executed effective this 22nd day of July, 1997.















                          NATIONAL HEALTH INVESTORS, INC.


                          /s/ Richard F. LaRoche, Jr.
                          Richard F. LaRoche, Jr., Vice President


                          NATIONAL HEALTHCARE L.P.


                          /s/ Robert G. Adams
                          Robert G. Adams, Senior Vice President






















                  AMENDMENT NO. 4 TO MASTER AGREEMENT TO LEASE


      This Amendment No. 4 (hereinafter "Amendment 4") is made to that certain
Master Agreement to Lease between National Health Investors, Inc. ("Landlord")
and National HealthCare L.P. ("Tenant") dated October 17, 1991, (hereinafter
"Master Lease"), and is entered into effective the 31st day of December, 1997.


      WHEREAS, pursuant to the terms of the Master Lease, National HealthCare
L.P. ("NHC") has heretofore agreed to lease certain licensed nursing homes or
retirement centers in 43 locations as identified on Exhibit A to said Master
Lease; and


      WHEREAS, NHC has obtained a Certificate of Need to expand the number of
licensed beds and ancillary space in the project located in Hendersonville, TN;
and


      WHEREAS, pursuant to resolution, the Board of National Health Investors,
Inc. ("NHI") has agreed to finance said expansions and NHC has agreed to pay an
increased lease rate thereon, all on the following terms and conditions; and


      NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES, the parties do hereby
amend the Master Lease by the addition of the following as paragraph 2.07:


      2.07: Expanded Project. Landlord and Tenant hereby agree that Tenant is
      granted the right to increase the licensed bed capacity and/or create
      revenue producing ancillary space at the Leased Property located in
      Hendersonville, TN, so long as the expansion is authorized with a
      certificate of need from the appropriate governmental authority and is
      constructed in a substantially similar manner as the existing Leased
      Property. Landlord agrees, at the request of Tenant from time to time, to
      reimburse Tenant for such hard costs, including land, construction,
      landscaping, fixtures or appurtenances, and capitalized interest incurred
      during construction as Tenant may have incurred in the expansion of the
      Project. At such time as this reimbursement is sought by Tenant, Tenant
      agrees to amend the individual lease for that Leased Property, and to
      increase the base rent thereon by an annual factor equal to 9.5% times the
      cost and expense reimbursed by Landlord.


      The parties further agree that the Additional Rent provided for in
      paragraph 2.02 above shall commence on that part of the Leased Property
      expanded pursuant to the terms of this paragraph 2.07 effective the first
      day of January of 1999, with 1998 as the Base Year.


      All the rest and residue of the Master Lease and the individual lease on
the Leased Property located in Hendersonville, TN, is hereby ratified and
affirmed. Executed effective this the 31st day of December, 1997.


      LANDLORD:         NATIONAL HEALTH INVESTORS, INC.


                        /s/ Richard F. LaRoche, Jr.
                        Richard F. LaRoche, Jr., Vice President


      TENANT:           NATIONAL HEALTHCARE L.P.


                        /s/ Robert G. Adams
                        Robert G. Adams, Senior Vice President