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                                  EXHIBIT 10.2

                               Advisory Agreement

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                               ADVISORY AGREEMENT

      THIS ADVISORY AGREEMENT, dated as of May 3, 2004 is between CNL RETIREMENT
PROPERTIES, INC., a corporation organized under the laws of the State of
Maryland (the "Company") and CNL RETIREMENT CORP., a corporation organized under
the laws of the State of Florida (the "Advisor").

                               W I T N E S S E T H

      WHEREAS, the Company filed with the Securities and Exchange Commission
("SEC") a Registration Statement (No. 333-47411) on Form S-11 covering
15,500,000 of its common shares, par value $.01 per share ("Shares"), to be
offered to the public ("Initial Offering");

      WHEREAS, the Company filed with the SEC a Registration Statement (No.
333-37480) on Form S-11 covering 15,500,000 of its Shares, to be offered to the
public (the "2000 Offering");

      WHEREAS, the Company filed with the SEC a Registration Statement (No.
333-76538) on Form S-11 covering 45,000,000 of its Shares, to be offered to the
public (the "2002 Offering");

      WHEREAS, the Company filed with the SEC a Registration Statement (No.
333-100347) on Form S-11 covering 175,000,000 of its Shares, to be offered to
the public (the "2003 Offering");

      WHEREAS, the Company filed with the SEC a Registration Statement (No.
333-107486) on Form S-11 covering 400,000,000 of its Shares, to be offered to
the public (the "2004 Offering"), and the Company may subsequently issue
securities other than such Shares ("Securities") or otherwise raise additional
capital;

      WHEREAS, the Initial Offering was terminated on September 18, 2000 and the
2000 Offering of 15,500,000 Shares commenced;

      WHEREAS, the 2000 Offering was terminated on May 24, 2002 and the 2002
Offering of 45,000,000 Shares commenced;

      WHEREAS, the 2002 Offering was terminated on April 3, 2003 and the 2003
Offering of 175,000,000 Shares commenced;

      WHEREAS, the Company intends to commence the 2004 Offering of 400,000,000
Shares at such time that the 2003 Offering of 175,000,000 Shares is terminated;

      WHEREAS, the Company is currently qualified as a REIT (as defined below),
and intends to continue to invest its funds in investments permitted by the
terms of the Registration Statement and Sections 856 through 860 of the Code (as
defined below);

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      WHEREAS, the Company desires to avail itself of the experience, sources of
information, advice, assistance and certain facilities available to the Advisor
and to have the Advisor undertake the duties and responsibilities hereinafter
set forth, on behalf of, and subject to the supervision, of the Board of
Directors of the Company all as provided herein; and

      WHEREAS, the Advisor is willing to undertake to render such services,
subject to the supervision of the Board of Directors, on the terms and
conditions hereinafter set forth;

      NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements contained herein, the parties hereto agree as follows:

      (1)   DEFINITIONS. As used in this Advisory Agreement (the "Agreement"),
the following terms have the definitions hereinafter indicated:

      Acquisition Expenses. Any and all expenses incurred by the Company, the
Advisor, or any Affiliate of either in connection with the selection or
acquisition of any Property or the making of any Mortgage Loan, whether or not
acquired or made, including, without limitation, legal fees and expenses, travel
and communication expenses, costs of appraisals, nonrefundable option payments
on property not acquired, accounting fees and expenses, and title insurance.

      Acquisition Fees. Any and all fees and commissions, exclusive of
Acquisition Expenses, paid by any Person or entity to any other Person or entity
(including any fees or commissions paid by or to any Affiliate of the Company or
the Advisor) in connection with making or investing in Mortgage Loans or the
purchase, development or construction of a Property, including, without
limitation, real estate commissions, acquisition fees, finder's fees, selection
fees, Development Fees, Construction Fees, nonrecurring management fees,
consulting fees, loan fees, points, the Secured Equipment Lease Servicing Fee,
or any other fees or commissions of a similar nature. Excluded shall be
development fees and construction fees paid to any Person or entity not
Affiliated with the Advisor in connection with the actual development and
construction of any Property.

      Advisor. CNL Retirement Corp., a Florida corporation, any successor
Advisor to the Company, or any Person or entity to which CNL Retirement Corp. or
any successor advisor subcontracts substantially all of its functions. The
Advisor will have responsibility for the day-to-day operations of the Company.

      Affiliate or Affiliated. As to any individual, corporation, partnership,
trust or other association (other than the Excess Shares Trust), (i) any Person
or entity directly or indirectly through one or more intermediaries controlling,
controlled by, or under common control with another person or entity; (ii) any
Person or entity, directly or indirectly owning, controlling or holding with
power to vote ten percent (10%) or more of the outstanding voting securities of
another Person or entity; (iii) any officer, director, partner, or trustee of
such Person or entity; (iv) any Person ten percent (10%) or more of whose
outstanding voting securities are directly or indirectly owned, controlled, or
held, with power to vote, by such other Person; and (v) if such other Person or
entity is an officer, director, partner, or trustee of a Person or entity, the
Person or entity for which such Person or entity acts in any such capacity.

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      Appraised Value. Value according to an appraisal made by an Independent
Appraiser.

      Articles of Incorporation. The Articles of Incorporation of the Company,
as amended from time to time.

      Asset Management Fee. The fee payable to the Advisor for day-to-day
professional management services in connection with the Company and its
investments in Properties and Mortgage Loans pursuant to this Agreement.

      Assets. Properties, Mortgage Loans and Secured Equipment Leases,
collectively.

      Average Invested Assets. For a specified period, the average of the
aggregate book value of the assets of the Company invested, directly or
indirectly, in equity interests in and loans secured by real estate before
reserves for depreciation or bad debts or other similar non-cash reserves,
computed by taking the average of such values at the end of each month during
such period.

      Board of Directors or Board. The persons holding such office, as of any
particular time, under the Articles of Incorporation of the Company, whether
they be the Directors named therein or additional or successor Directors.

      Bylaws. The bylaws of the Company, as the same are in effect and may be
amended from time to time.

      Cause. With respect to the termination of this Agreement, fraud, criminal
conduct, willful misconduct or willful or negligent breach of fiduciary duty by
the Advisor, breach of this Agreement, a default by the Sponsor under the
guarantee by the Sponsor to the Company or the bankruptcy of the Sponsor.

      Change of Control. A change of control of the Company of such a nature
that would be required to be reported in response to the disclosure requirements
of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act
of 1934, as amended, as enacted and in force on the date hereof (the "Exchange
Act"), whether or not the Company is then subject to such reporting
requirements; provided, however, that, without limitation, a change of control
shall be deemed to have occurred if: (i) any "person" (within the meaning of
Section 13(d) of the Exchange Act) is or becomes the "beneficial owner" (as that
term is defined in Rule 13d-3, as enacted and in force on the date hereof, under
the Exchange Act) of securities of the Company representing 8.5% or more of the
combined voting power of the Company's securities then outstanding; (ii) there
occurs a merger, consolidation or other reorganization of the Company which is
not approved by the Board of Directors of the Company; (iii) there occurs a
sale, exchange, transfer or other disposition of substantially all of the assets
of the Company to another entity, which disposition is not approved by the Board
of Directors of the Company; or (iv) there occurs a contested proxy solicitation
of the Stockholders of the Company that results in the contesting party electing
candidates to a majority of the Board of Directors' positions next up for
election.

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      Code. Internal Revenue Code of 1986, as amended from time to time, or any
successor statute thereto. Reference to any provision of the Code shall mean
such provision as in effect from time to time, as the same may be amended, and
any successor provision thereto, as interpreted by any applicable regulations as
in effect from time to time.

      Company. CNL Retirement Properties, Inc., a corporation organized under
the laws of the State of Maryland.

      Company Property. Any and all property, real, personal or otherwise,
tangible or intangible, including Mortgage Loans and Secured Equipment Leases,
which is transferred or conveyed to the Company (including all rents, income,
profits and gains therefrom), and which is owned or held by, or for the account
of, the Company.

      Competitive Real Estate Commission. A real estate or brokerage commission
for the purchase or sale of property, which is reasonable, customary, and
competitive in light of the size, type, and location of the property. The total
of all real estate commissions paid by the Company to all Persons (including the
Subordinated Disposition Fee payable to the Advisor) in connection with any Sale
of one or more of the Company's Properties shall not exceed the lesser of (i) a
Competitive Real Estate Commission or (ii) six percent of the gross sales price
of the Property or Properties.

      Construction Fee. A fee or other remuneration for acting as a general
contractor and/or construction manager to construct improvements, supervise and
coordinate projects or provide major repairs or rehabilitation on a Property.

      Contract Purchase Price. The amount actually paid or allocated (as of the
date of purchase) to the purchase, development, construction or improvement of
property, exclusive of Acquisition Fees and Acquisition Expenses.

      Contract Sales Price. The total consideration received by the Company for
the sale of Company Property.

      Development Fee. A fee for such activities as negotiating and approving
plans and undertaking to assist in obtaining zoning and necessary variances and
necessary financing for a specific Property, either initially or at a later
date.

      Director. A member of the Board of Directors of the Company.

      Distributions. Any distribution of money or other property by the Company
to owners of Equity Shares, including distributions that may constitute a return
of capital for federal income tax purposes.

      Equipment. The furniture, fixtures and equipment used at Retirement
Facilities by operators of Retirement Facilities.

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      Equity Interest. The stock of or other interests in, or warrants or other
rights to purchase the stock of or other interests in, any entity that has
borrowed money from the Company or that is a tenant of the Company or that is a
parent or controlling Person of any such borrower or tenant.

      Equity Shares. This term shall have the same meaning as the definition of
"Equity Shares" in the Company's Articles of Incorporation.

      Excess Shares Trust. This term shall have the same meaning as the
definition of "Excess Shares Trust" in the Company's Articles of Incorporation.

      Gross Proceeds. The aggregate purchase price of all Shares sold for the
account of the Company through the 2004 Offering, without deduction for volume
or other discounts. For the purpose of computing Gross Proceeds, the purchase
price of any Share for which a reduced purchase price is paid (where net
proceeds to the Company are not reduced) shall be deemed to be the full offering
price of the Shares, with the exception of Shares purchased pursuant to the
Company's reinvestment plan, which will be factored into the calculation of
Gross Proceeds using their actual purchase price.

      Independent Appraiser. A qualified appraiser of real estate as determined
by the Board. Membership in a nationally recognized appraisal society such as
the Appraisal Institute ("M.A.I.") or the Society of Real Estate Appraisers
("S.R.E.A.") shall be conclusive evidence of such qualification.

      Independent Director. A Director who is not and within the last two years
has not been directly or indirectly associated with the Advisor by virtue of (i)
ownership of an interest in the Advisor or its Affiliates, (ii) employment by
the Advisor or its Affiliates, (iii) service as an officer or director of the
Advisor or its Affiliates, (iv) performance of services, other than as a
Director, for the Company, (v) service as a director or trustee of more than
three real estate investment trusts advised by the Advisor, or (vi) maintenance
of a material business or professional relationship with the Advisor or any of
its Affiliates. A business or professional relationship is considered material
if the gross revenue derived by the Director from the Advisor and Affiliates
exceeds 5% of either the Director's annual gross revenue during either of the
last two years or the Director's net worth on a fair market value basis. An
indirect relationship shall include circumstances in which a Director's spouse,
parents, children, siblings, mothers- or fathers-in-law, sons- or
daughters-in-law, or brothers- or sisters-in-law are or have been associated
with the Advisor, any of its Affiliates, or the Company.

      Independent Expert. A Person or entity with no material current or prior
business or personal relationship with the Advisor or the Directors and who is
engaged to a substantial extent in the business of rendering opinions regarding
the value of assets of the type held by the Company.

      Initial Offering. The initial public offering of up to 15,500,000 Shares
that was terminated on September 18, 2000.

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      Invested Capital. The amount calculated by multiplying the total number of
Shares purchased by stockholders by the issue price, without deduction for
volume or other discounts (which price per Share, in the case of Shares
purchased pursuant to the Company's reinvestment plan, shall be deemed to be the
actual purchase price), reduced by the portion of any Distribution that is
attributable to Net Sales Proceeds and by any amounts paid by the Company to
repurchase Shares pursuant to the Company's plan for redemption of Shares.

      Joint Ventures. The joint venture or general partnership arrangements in
which the Company is a co-venturer or general partner which are established to
acquire Properties.

      Line of Credit. One or more lines of credit in an aggregate amount up to
$125,000,000 (or such greater amount as shall be approved by the Board of
Directors), the proceeds of which will be used to acquire Properties and make
Mortgage Loans and Secured Equipment Leases and for any other authorized
purpose. The Line of Credit may be in addition to any Permanent Financing.

      Listing. The listing of the Shares of the Company on a national securities
exchange or over-the-counter market.

      Managing Dealer. CNL Securities Corp., an Affiliate of the Advisor, or
such entity selected by the Board of Directors to act as the managing dealer for
the 2004 Offering. CNL Securities Corp. is a member of the National Association
of Securities Dealers, Inc.

      Mortgage Loans. In connection with mortgage financing provided by the
Company, the notes or other evidence of indebtedness or obligations which are
secured or collateralized by real estate, owned by the borrowers.

      Net Income. For any period, the total revenues applicable to such period,
less the total expenses applicable to such period excluding additions to
reserves for depreciation, bad debts or other similar non-cash reserves;
provided, however, Net Income for purposes of calculating total allowable
Operating Expenses (as defined herein) shall exclude the gain from the sale of
the Company's assets.

      Net Sales Proceeds. In the case of a transaction described in clause
(i)(A) of the definition of Sale, the proceeds of any such transaction less the
amount of all real estate commissions and closing costs paid by the Company. In
the case of a transaction described in clause (i)(B) of such definition, Net
Sales Proceeds means the proceeds of any such transaction less the amount of any
legal and other selling expenses incurred in connection with such transaction.
In the case of a transaction described in clause (i)(C) of such definition, Net
Sales Proceeds means the proceeds of any such transaction actually distributed
to the Company from the Joint Venture. In the case of a transaction or series of
transactions described in clause (i)(D) of the definition of Sale, Net Sales
Proceeds means the proceeds of any such transaction less the amount of all
commissions and closing costs paid by the Company. In the case of a transaction
described in clause (ii) of the definition of Sale, Net Sales Proceeds means the
proceeds of such transaction or series of transactions less all amounts
generated thereby and reinvested in one or more Properties within 180 days
thereafter and less the amount of any real estate commissions,

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closing costs, and legal and other selling expenses incurred by or allocated to
the Company in connection with such transaction or series of transactions. Net
Sales Proceeds shall also include, in the case of any lease of a Property
consisting of a building only, any Mortgage Loan or any Secured Equipment Lease,
any amounts from tenants, borrowers or lessees that the Company determines, in
its discretion, to be economically equivalent to proceeds of a Sale. Net Sales
Proceeds shall not include, as determined by the Company in its sole discretion,
any amounts reinvested in one or more Properties, Mortgage Loans, or Secured
Equipment Leases, to repay outstanding indebtedness, or to establish reserves.

      Offering Expenses. Any and all costs and expenses (other than selling
commissions, the marketing support fee, due diligence expense reimbursements
and, in connection with the 2000 Offering, any Soliciting Dealer Servicing Fees)
incurred by the Company, the Advisor or any Affiliate of either in connection
with the qualification and registration of the Company and the marketing and
distribution of Shares, including, without limitation, the following: legal,
accounting and escrow fees; printing, amending, supplementing, mailing and
distributing costs; filing, registration and qualification fees and taxes;
telegraph and telephone costs; and all advertising and marketing expenses,
including the costs related to investor and broker-dealer sales meetings.

      Operating Expenses. All costs and expenses incurred by the Company, as
determined under generally accepted accounting principles, which in any way are
related to the operation of the Company or to Company business, including (a)
advisory fees, (b) in connection with the 2000 Offering, any Soliciting Dealer
Servicing Fees, (c) the Asset Management Fee, (d) the Performance Fee and (e)
the Subordinated Incentive Fee, but excluding (i) the expenses of raising
capital such as Offering Expenses, legal, audit, accounting, underwriting,
brokerage, listing, registration, and other fees, printing and other such
expenses and tax incurred in connection with the issuance, distribution,
transfer, registration and Listing of the Shares, (ii) interest payments, (iii)
taxes, (iv) non-cash expenditures such as depreciation, amortization and bad
loan reserves, (v) the Advisor's subordinated 10% share of Net Sales Proceeds,
and (vi) Acquisition Fees and Acquisition Expenses, real estate commissions on
the sale of property, and other expenses connected with the acquisition, and
ownership of real estate interests, mortgage loans or other property (such as
the costs of foreclosure, insurance premiums, legal services, maintenance,
repair and improvement of property).

      Performance Fee. The fee payable to the Advisor upon termination of this
Agreement under certain circumstances if certain performance standards have been
met and the Subordinated Incentive Fee has not been paid.

      Permanent Financing. The financing (i) to acquire Assets, (ii) to pay the
Secured Equipment Lease Servicing Fee, (iii) to pay a fee of 4.0% of any
Permanent Financing, excluding amounts to fund Secured Equipment Leases, as
Acquisition Fees, and (iv) to refinance outstanding amounts on the Line of
Credit. Permanent Financing may be in addition to any borrowing under the Line
of Credit.

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      Person. An individual, corporation, partnership, estate, trust (including
a trust qualified under Section 401(a) or 501(c)(17) of the Code), a portion of
a trust permanently set aside for or to be used exclusively for the purposes
described in Section 642(c) of the Code, association, private foundation within
the meaning of Section 509(a) of the Code, joint stock company or other entity,
or any government or any agency or political subdivision thereof, and also
includes a group as that term is used for purposes of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended, but does not include an underwriter
that participates in a public offering of Equity Shares for a period of sixty
(60) days following the initial purchase by such underwriter of such Equity
Shares in such public offering, provided that the foregoing exclusion shall
apply only if the ownership of such Equity Shares by an underwriter would not
cause the Company to fail to qualify as a REIT by reason of being "closely held"
within the meaning of Section 856(a) of the Code or otherwise cause the Company
to fail to qualify as a REIT.

      Property or Properties. (i) The real properties, including the buildings
located thereon, or (ii) the real properties only, or (iii) the buildings only,
which are acquired by the Company, either directly or through joint venture
arrangements or other partnerships.

      Prospectus. "Prospectus" means the same as that term as defined in Section
2(10) of the Securities Act of 1933, as amended, including a preliminary
prospectus, an offering circular as described in Rule 253 of the General Rules
and Regulations under the Securities Act of 1933 or, in the case of an
intrastate offering, any document by whatever name known, utilized for the
purpose of offering and selling securities to the public.

      Real Estate Asset Value. The amount actually paid or allocated to the
purchase, development, construction or improvement of a Property, exclusive of
Acquisition Fees and Acquisition Expenses.

      Registration Statement. The Registration Statement (No. 333-107486)on Form
S-11 registering the Shares to be sold in the 2004 Offering.

      REIT. A "real estate investment trust" under Sections 856 through 860 of
the Code.

      Retirement Facilities. Facilities at which health care services are
provided, including, but not limited to, congregate living, assisted living, and
skilled nursing facilities, continuing care retirement communities and life care
communities, specialty clinics, medical office buildings and walk-in clinics.

      Sale or Sales. (i) Any transaction or series of transactions whereby: (A)
the Company sells, grants, transfers, conveys, or relinquishes its ownership of
any Property or portion thereof, including the lease of any Property consisting
of the building only, and including any event with respect to any Property which
gives rise to a significant amount of insurance proceeds or condemnation awards;
(B) the Company sells, grants, transfers, conveys, or relinquishes its ownership
of all or substantially all of the interest of the Company in any Joint Venture
in which it is a co-venturer or partner; (C) any Joint Venture in which the
Company as a co-venturer or partner sells, grants, transfers, conveys, or
relinquishes its ownership of any Property or portion thereof, including any
event with respect to any Property which gives rise to insurance claims or

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condemnation awards; or (D) the Company sells, grants, conveys or relinquishes
its interest in any Mortgage Loan or Secured Equipment Lease or portion thereof,
including any event with respect to any Mortgage Loan or Secured Equipment Lease
which gives rise to a significant amount of insurance proceeds or similar
awards, but (ii) not including any transaction or series of transactions
specified in clause (i)(A), (i)(B), or (i)(C) above in which the proceeds of
such transaction or series of transactions are reinvested in one or more
Properties within 180 days thereafter.

      Secured Equipment Leases. The Equipment financing made available by the
Company to operators of Retirement Facilities pursuant to which the Company will
finance, through loans or direct financing leases, the Equipment.

      Secured Equipment Lease Servicing Fee. The fee payable to the Advisor by
the Company out of the proceeds of the Line of Credit or Permanent Financing for
negotiating Secured Equipment Leases and supervising the Secured Equipment Lease
program equal to 2% of the purchase price of the Equipment subject to each
Secured Equipment Lease and paid upon entering into such lease or loan.

      Securities. Any Equity Shares, Excess Shares, (as such terms are defined
in the Company's Articles of Incorporation), any other stock, shares or other
evidences of equity or beneficial or other interests, voting trust certificates,
bonds, debentures, notes or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general any instruments
commonly known as "securities" or any certificates of interest, shares or
participations in, temporary or interim certificates for, receipts for,
guarantees of, or warrants, options or rights to subscribe to, purchase or
acquire, any of the foregoing.

      Shares. The common shares of the Company.

      Soliciting Dealers. Broker-dealers that are members of the National
Association of Securities Dealers, Inc., or that are exempt from broker-dealer
registration, and that, in either case, enter into participating broker or other
agreements with the Managing Dealer to sell Shares.

      Soliciting Dealer Servicing Fee. An annual fee of .20% of Invested Capital
(calculated using Shares sold only in the 2000 Offering) on December 31 of each
year, commencing in 2003, payable to the Managing Dealer, which in turn may
reallow all or a portion of such fee to the Soliciting Dealers whose clients
hold Shares purchased in the 2000 Offering on such date.

      Sponsor. Any Person directly or indirectly instrumental in organizing,
wholly or in part, the Company or any Person who will control, manage or
participate in the management of the Company, and any Affiliate of such Person.
Not included is any Person whose only relationship with the Company is that of
an independent property manager of Company assets, and whose only compensation
is as such. Sponsor does not include independent third parties such as
attorneys, accountants, and underwriters whose only compensation is for
professional services. A Person may also be deemed a Sponsor of the Company by:

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      a.    taking the initiative, directly or indirectly, in founding or
            organizing the business or enterprise of the Company, either alone
            or in conjunction with one or more other Persons;

      b.    receiving a material participation in the Company in connection with
            the founding or organizing of the business of the Company, in
            consideration of services or property, or both services and
            property;

      c.    having a substantial number of relationships and contacts with the
            Company;

      d.    possessing significant rights to control the Company Properties;

      e.    receiving fees for providing services to the Company which are paid
            on a basis that is not customary in the industry; or

      f.    providing goods or services to the Company on a basis which was not
            negotiated at arms length with the Company.

      Stockholders. The registered holders of the Company's Equity Shares.

      Stockholders' 8% Return. As of each date, an aggregate amount equal to an
8% cumulative, noncompounded, annual return on Invested Capital.

      Subordinated Disposition Fee. The Subordinated Disposition Fee as defined
in Paragraph 9(c).

      Subordinated Incentive Fee. The fee payable to the Advisor under certain
circumstances if the Shares are listed on a national securities exchange or
over-the-counter market. The Subordinated Incentive Fee will not be paid if
Listing occurs on the Pink Sheets or the OTC Bulletin Board.

      Termination Date. The date of termination of this Agreement.

      Total Proceeds. The Gross Proceeds plus loan proceeds from Permanent
Financing and amounts outstanding on the Line of Credit, if any, at the time of
Listing, but excluding loan proceeds used to finance Secured Equipment Leases.

      Total Property Cost. With regard to any Company Property, an amount equal
to the sum of the Real Estate Asset Value of such Property plus the Acquisition
Fees paid in connection with such Property.

      2%/25% Guidelines. The requirement pursuant to the guidelines of the North
American Securities Administrators Association, Inc. that, in any 12 month
period, total Operating Expenses may not exceed the greater of 2% of the
Company's Average Invested Assets during such 12 month period or 25% of the
Company's Net Income over the same 12 month period.

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      2000 Offering. The 2000 public offering of 15,500,000 Shares that
commenced upon completion of the Initial Offering.

      2002 Offering. The 2002 public offering of 45,000,000 Shares that
commenced upon completion of the 2000 Offering.

      2003 Offering. The 2003 public offering of 175,000,000 Shares that
commenced upon completion of the 2002 Offering.

      2004 Offering. The 2004 public offering of 400,000,000 Shares that the
Company commenced upon completion of the 2003 Offering.

      Valuation. An estimate of value of the Assets of the Company as determined
by an Independent Expert.

      (2)   APPOINTMENT. The Company hereby appoints the Advisor to serve as its
advisor on the terms and conditions set forth in this Agreement, and the Advisor
hereby accepts such appointment.

      (3)   DUTIES OF THE ADVISOR. The Advisor undertakes to use its best
efforts to present to the Company potential investment opportunities and to
provide a continuing and suitable investment program consistent with the
investment objectives and policies of the Company as determined and adopted from
time to time by the Directors. In performance of this undertaking, subject to
the supervision of the Directors and consistent with the provisions of the
Registration Statement, Articles of Incorporation and Bylaws of the Company, the
Advisor shall, either directly or by engaging an Affiliate:

            (a)   serve as the Company's investment and financial advisor and
                  provide research and economic and statistical data in
                  connection with the Company's assets and investment policies;

            (b)   provide the daily management of the Company and perform and
                  supervise the various administrative functions reasonably
                  necessary for the management of the Company;

            (c)   investigate, select, and, on behalf of the Company, engage and
                  conduct business with such Persons as the Advisor deems
                  necessary to the proper performance of its obligations
                  hereunder, including but not limited to consultants,
                  accountants, correspondents, lenders, technical advisors,
                  attorneys, brokers, underwriters, corporate fiduciaries,
                  escrow agents, depositaries, custodians, agents for
                  collection, insurers, insurance agents, banks, builders,
                  developers, property owners, mortgagors, and any and all
                  agents for any of the foregoing, including Affiliates of the
                  Advisor, and Persons acting in any other capacity deemed by
                  the Advisor necessary or desirable for the performance of any
                  of the services herein, including but

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                  not limited to entering into contracts in the name of the
                  Company with any of the foregoing;

            (d)   consult with the officers and Directors of the Company and
                  assist the Directors in the formulation and implementation of
                  the Company's financial policies, and, as necessary, furnish
                  the Directors with advice and recommendations with respect to
                  the making of investments consistent with the investment
                  objectives and policies of the Company and in connection with
                  any borrowings proposed to be undertaken by the Company;

            (e)   subject to the provisions of Paragraphs 3(g) and 4 hereof, (i)
                  locate, analyze and select potential investments in
                  Properties, Mortgage Loans, potential lessees of Secured
                  Equipment Leases and other investments, (ii) structure and
                  negotiate the terms and conditions of transactions pursuant to
                  which investment in Properties, Mortgage Loans and other
                  investments will be made and Secured Equipment Leases will be
                  offered by the Company; (iii) make investments in Properties,
                  Mortgage Loans and other investments and enter into Secured
                  Equipment Leases on behalf of the Company in compliance with
                  the investment objectives and policies of the Company; (iv)
                  arrange for financing and refinancing and make other changes
                  in the asset or capital structure of, and dispose of, reinvest
                  the proceeds from the sale of, or otherwise deal with the
                  investments in, Properties, Mortgage Loans, Secured Equipment
                  Leases and other investments; and (v) enter into leases and
                  service contracts for Company Property and, to the extent
                  necessary, perform all other operational functions for the
                  maintenance and administration of such Company Property;

            (f)   provide the Directors with periodic reports regarding
                  prospective investments and prospective lessees or borrowers
                  of Secured Equipment Leases;

            (g)   obtain the prior approval of the Directors for any and all
                  investments in Properties, Mortgage Loans and other
                  investments and in connection with the offering of Secured
                  Equipment Leases (the vote of a majority of all Independent
                  Directors must also be obtained with respect to Mortgage Loans
                  and Secured Equipment Leases);

            (h)   negotiate on behalf of the Company with banks or lenders for
                  loans to be made to the Company and negotiate on behalf of the
                  Company with investment banking firms and broker-dealers or
                  negotiate private sales of Shares and Securities or obtain
                  loans for the Company, but in no event in such a way so that
                  the Advisor shall be acting as broker-dealer or underwriter;
                  and provided, further, that any fees and costs payable to
                  third

                                       12
<PAGE>

                  parties incurred by the Advisor in connection with the
                  foregoing shall be the responsibility of the Company;

            (i)   obtain reports (which may be prepared by the Advisor or its
                  Affiliates), where appropriate, concerning the value of
                  investments or contemplated investments of the Company;

            (j)   from time to time, or at any time reasonably requested by the
                  Directors, make reports to the Directors of its performance of
                  services to the Company under this Agreement;

            (k)   provide the Company with all necessary cash management
                  services;

            (l)   do all things necessary to assure its ability to render the
                  services described in this Agreement;

            (m)   deliver to or maintain on behalf of the Company copies of all
                  appraisals obtained in connection with the investments in
                  Properties and Mortgage Loans;

            (n)   notify the Board of all proposed material transactions before
                  they are completed; and

            (o)   administer the Secured Equipment Lease program on behalf of
                  the Company.

      (4)   AUTHORITY OF ADVISOR.

            (a)   Pursuant to the terms of this Agreement (including the
restrictions included in this Paragraph 4 and in Paragraph 7), and subject to
the continuing and exclusive authority of the Directors over the management of
the Company, the Directors hereby delegate to the Advisor the authority to (1)
locate, analyze and select investment opportunities, (2) structure the terms and
conditions of transactions pursuant to which investments will be made or
acquired for the Company, (3) acquire Properties, make Mortgage Loans and other
investments and offer Secured Equipment Leases in compliance with the investment
objectives and policies of the Company, (4) arrange for financing or refinancing
with respect to Properties, Mortgage Loans and Secured Equipment Leases, (5)
enter into leases and service contracts for the Company's Property, and perform
other property management services, (6) oversee non-affiliated property managers
and other non-affiliated Persons who perform services for the Company; and (7)
undertake accounting and other record-keeping functions at the Property level.

            (b)   Notwithstanding the foregoing, any investment in Properties or
Mortgage Loans; or extension of a Secured Equipment Lease, (whether directly or
indirectly), including any acquisition of a Property by the Company (as well as
any financing acquired by the Company in connection with such acquisition), will
require the prior approval of the Directors

                                       13
<PAGE>

(including a majority of the Independent Directors with respect to investments
in Mortgage Loans and Secured Equipment Leases).

            (c)   If a transaction requires approval by the Independent
Directors, the Advisor will deliver to the Independent Directors all documents
required by them to properly evaluate the proposed investment in the Property,
Mortgage Loan or Secured Equipment Lease.

      The prior approval of a majority of the Independent Directors and a
majority of the Directors not otherwise interested in the transaction will be
required for each transaction with the Advisor or its Affiliates.

      The Directors may, at any time upon the giving of notice to the Advisor,
modify or revoke the authority set forth in this Paragraph 4. If and to the
extent the Directors so modify or revoke the authority contained herein, the
Advisor shall henceforth submit to the Directors for prior approval such
proposed transactions involving investments as thereafter require prior
approval, provided, however, that such modification or revocation shall be
effective upon receipt by the Advisor and shall not be applicable to investment
transactions to which the Advisor has committed the Company prior to the date of
receipt by the Advisor of such notification.

      (5)   BANK ACCOUNTS. The Advisor may establish and maintain one or more
bank accounts in its own name for the account of the Company or in the name of
the Company and may collect and deposit into any such account or accounts, and
disburse from any such account or accounts, any money on behalf of the Company,
under such terms and conditions as the Directors may approve, provided that no
funds shall be commingled with the funds of the Advisor; and the Advisor shall
from time to time render appropriate accountings of such collections and
payments to the Directors and to the auditors of the Company.

      (6)   RECORDS; ACCESS. The Advisor shall maintain appropriate records of
all its activities hereunder and make such records available for inspection by
the Directors and by counsel, auditors and authorized agents of the Company, at
any time or from time to time during normal business hours. The Advisor shall at
all reasonable times have access to the books and records of the Company.

      (7)   LIMITATIONS ON ACTIVITIES. Anything else in this Agreement to the
contrary notwithstanding, the Advisor shall refrain from taking any action
which, in its sole judgment made in good faith, would (a) adversely affect the
status of the Company as a REIT, (b) subject the Company to regulation under the
Investment Company Act of 1940, or (c) violate any law, rule, regulation or
statement of policy of any governmental body or agency having jurisdiction over
the Company, its Equity Shares or its Securities, or otherwise not be permitted
by the Articles of Incorporation or Bylaws of the Company, except if such action
shall be ordered by the Directors, in which case the Advisor shall notify
promptly the Directors of the Advisor's judgment of the potential impact of such
action and shall refrain from taking such action until it receives further
clarification or instructions from the Directors. In such event the Advisor
shall have no liability for acting in accordance with the specific instructions
of the Directors so given. Notwithstanding the foregoing, the Advisor, its
directors, officers, employees and stockholders, and stockholders, directors and
officers of the Advisor's Affiliates shall not be liable to the

                                       14
<PAGE>

Company or to the Directors or Stockholders for any act or omission by the
Advisor, its directors, officers or employees, or stockholders, directors or
officers of the Advisor's Affiliates except as provided in Paragraphs 19 and 20
of this Agreement.

      (8)   RELATIONSHIP WITH DIRECTORS. Directors, officers and employees of
the Advisor or an Affiliate of the Advisor or any corporate parents of an
Affiliate, or directors, officers or stockholders of any director, officer or
corporate parent of an Affiliate may serve as a Director and as officers of the
Company, except that no director, officer or employee of the Advisor or its
Affiliates who also is a Director or officer of the Company shall receive any
compensation from the Company for serving as a Director or officer of the
Company other than reasonable reimbursement for travel and related expenses
incurred in attending meetings of the Directors of the Company.

      (9)   FEES.

            (a)   Asset Management Fee. The Company shall pay to the Advisor as
compensation for the advisory services rendered to the Company under Paragraph 3
above a monthly fee in an amount equal to 0.05% of the Company's Real Estate
Asset Value and the outstanding principal amount of the Mortgage Loans (the
"Asset Management Fee"), as of the end of the preceding month. Specifically,
Real Estate Asset Value equals the amount invested in the Properties wholly
owned by the Company, determined on the basis of cost, plus, in the case of
Properties owned by any Joint Venture or partnership in which the Company is a
co-venturer or partner, the portion of the cost of such Properties paid by the
Company, exclusive of Acquisition Fees and Acquisition Expenses. The Asset
Management Fee shall be payable monthly on the last day of such month, or the
first business day following the last day of such month. The Asset Management
Fee, which will not exceed fees which are competitive for similar services in
the same geographic area, may or may not be taken, in whole or in part as to any
year, in the sole discretion of the Advisor. All or any portion of the Asset
Management Fee not taken as to any fiscal year shall be deferred without
interest and may be taken in such other fiscal year as the Advisor shall
determine.

            (b)   Acquisition Fees. The Company shall pay the Advisor a fee in
the amount of 4.0% of Total Proceeds as Acquisition Fees. Acquisition Fees shall
be reduced to the extent that, and, if necessary to limit, the total
compensation paid to all persons involved in the acquisition of any Property to
the amount customarily charged in arm's-length transactions by other persons or
entities rendering similar services as an ongoing public activity in the same
geographical location and for comparable types of Properties and to the extent
that other acquisition fees, finder's fees, real estate commissions, or other
similar fees or commissions are paid by any person in connection with the
transaction. In addition, Acquisition Fees shall be reduced to 1.0% of Gross
Proceeds in connection with sales in excess of 500,000 shares to a "purchaser"
(as such term is defined in the section of the Prospectus titled "The Offering
-- Plan of Distribution"), provided all such shares are purchased through the
same registered investment adviser, Soliciting Dealer or the Managing Dealer.
The total of all Acquisition Fees and any Acquisition Expenses shall be limited
in accordance with the Articles of Incorporation.

                                       15
<PAGE>

            (c)   Subordinated Disposition Fee. If the Advisor or an Affiliate
provides a substantial amount of the services (as determined by a majority of
the Independent Directors) in connection with the Sale of one or more
Properties, the Advisor or an Affiliate shall receive a Subordinated Disposition
Fee equal to the lesser of (i) one-half of a Competitive Real Estate Commission
or (ii) 3% of the sales price of such Property or Properties. The Subordinated
Disposition Fee will be paid only if Stockholders have received total
Distributions in an amount equal to or greater than the sum of their aggregate
Invested Capital and their aggregate Stockholders' 8% Return. To the extent that
Subordinated Disposition Fees are not paid by the Company on a current basis due
to the foregoing limitation, the unpaid fees will be accrued and paid at such
time as the subordination conditions have been satisfied. The Subordinated
Disposition Fee may be paid in addition to real estate commissions paid to
non-Affiliates, provided that the total real estate commissions paid to all
Persons by the Company (including the Subordinated Disposition Fee) shall not
exceed an amount equal to the lesser of (i) 6% of the Contract Sales Price of a
Property or (ii) the Competitive Real Estate Commission. In the event this
Agreement is terminated prior to such time as the Stockholders have received
total Distributions in an amount equal to 100% of Invested Capital plus an
amount sufficient to pay the Stockholders' 8% Return through the Termination
Date, an appraisal of the Properties then owned by the Company shall be made and
the Subordinated Disposition Fee on Properties previously sold will be deemed
earned if the Appraised Value of the Properties then owned by the Company plus
total Distributions received prior to the Termination Date equals or is greater
than 100% of Invested Capital plus an amount sufficient to pay the Stockholders'
8% Return through the Termination Date. Upon Listing, if the Advisor has accrued
but not been paid such Subordinated Disposition Fee, then for purposes of
determining whether the subordination conditions have been satisfied,
Stockholders will be deemed to have received a Distribution in the amount equal
to the product of the total number of Shares outstanding and the average closing
price of the Shares over a period, beginning 180 days after Listing, of 30 days
during which the Shares are traded.

            (d)   Subordinated Share of Net Sales Proceeds. The Subordinated
Share of Net Sales Proceeds shall be payable to the Advisor in an amount equal
to or greater than 10% of Net Sales Proceeds from Sales of Assets of the Company
after the Stockholders have received Distributions equal to the sum of the
Stockholders' 8% Return and 100% of Invested Capital. Following Listing, no
Subordinated Share of Net Sales Proceeds will be paid to the Advisor.

            (e)   Subordinated Incentive Fee. Upon Listing (other than on the
Pink Sheets or the OTC Bulletin Board), the Advisor shall be paid the
Subordinated Incentive Fee in an amount equal to 10% of the amount by which (i)
the market value of the Company, measured by taking the average closing price or
average of bid and asked price, as the case may be, over a period of 30 days
during which the Shares are traded, with such period beginning 180 days after
Listing (the "Market Value"), plus the total Distributions paid to Stockholders
from the Company's inception until the date of Listing, exceeds (ii) the sum of
(A) 100% of Invested Capital and (B) the total Distributions required to be paid
to the Stockholders in order to pay the Stockholders' 8% Return from inception
through the date the Market Value is determined. The Company shall have the
option to pay such fee in the form of cash, Securities, a promissory note or any
combination of the foregoing. The Subordinated Incentive Fee will be reduced by
the amount of

                                       16
<PAGE>

any prior payment to the Advisor of a deferred, Subordinated Share of Net Sales
Proceeds from Sales of assets of the Company.

            (f)   Secured Equipment Lease Servicing Fee. The Company shall pay
to the Advisor out of the Proceeds of the Line of Credit or Permanent Financing
as compensation for negotiating its respective Secured Equipment Leases and
supervising the Secured Equipment Lease program a fee equal to 2% of the
purchase price of the Equipment subject to each Secured Equipment Lease upon
entering into such lease or loan.

            (g)   Loans from Affiliates. If any loans are made to the Company by
an Affiliate of the Advisor, the maximum amount of interest that may be charged
by such Affiliate shall be the lesser of (i) 1% above the prime rate of interest
charged from time to time by The Bank of New York and (ii) the rate that would
be charged to the Company by unrelated lending institutions on comparable loans
for the same purpose. The terms of any such loans shall be no less favorable
than the terms available between non-Affiliated Persons for similar commercial
loans.

            (h)   Changes to Fee Structure. In the event of Listing, the Company
and the Advisor shall negotiate in good faith to establish a fee structure
appropriate for a perpetual-life entity. A majority of the Independent Directors
must approve the new fee structure negotiated with the Advisor. In negotiating a
new fee structure, the Independent Directors shall consider all of the factors
they deem relevant, including, but not limited to: (i) the amount of the
advisory fee in relation to the asset value, composition and profitability of
the Company's portfolio; (ii) the success of the Advisor in generating
opportunities that meet the investment objectives of the Company; (iii) the
rates charged to other REITs and to investors other than REITs by advisors
performing the same or similar services; (iv) additional revenues realized by
the Advisor and its Affiliates through their relationship with the Company,
including loan administration, underwriting or broker commissions, servicing,
engineering, inspection and other fees, whether paid by the Company or by others
with whom the Company does business; (v) the quality and extent of service and
advice furnished by the Advisor; (vi) the performance of the investment
portfolio of the Company, including income, conversion or appreciation of
capital, and number and frequency of problem investments; and (vii) the quality
of the Property, Mortgage Loan and Secured Equipment Lease portfolio of the
Company in relationship to the investments generated by the Advisor for its own
account. The new fee structure can be no more favorable to the Advisor than the
current fee structure.

      (10)  EXPENSES.

            (a)   In addition to the compensation paid to the Advisor pursuant
to Paragraph 9 hereof, the Company shall pay directly or reimburse the Advisor
for all of the expenses paid or incurred by the Advisor in connection with the
services it provides to the Company pursuant to this Agreement, including, but
not limited to:

                  (i)   the Company's Offering Expenses;

                  (ii)  Acquisition Expenses incurred in connection with the
selection and acquisition of Properties or the making of Mortgage Loans, for
goods and services provided by

                                       17
<PAGE>

the Advisor at the lesser of the actual cost or 90% of the competitive rate
charged by unaffiliated persons providing similar goods and services in the same
geographic location;

                  (iii) the actual cost of goods and materials used by the
Company and obtained from entities not affiliated with the Advisor, other than
Acquisition Expenses, including brokerage fees paid in connection with the
purchase and sale of securities;

                  (iv)  interest and other costs for borrowed money, including
discounts, points and other similar fees;

                  (v)   taxes and assessments on income or Property and taxes as
an expense of doing business;

                  (vi)  costs associated with insurance required in connection
with the business of the Company or by the Directors;

                  (vii) expenses of managing and operating Properties owned by
the Company, whether payable to an Affiliate of the Company or a non-affiliated
Person;

                  (viii) all expenses in connection with payments to the
Directors and meetings of the Directors and Stockholders;

                  (ix)  expenses associated with Listing or with the issuance
and distribution of Shares and Securities, such as selling commissions and fees,
advertising expenses, taxes, legal and accounting fees and Listing and
registration fees;

                  (x)   expenses connected with payments of Distributions in
cash or otherwise made or caused to be made by the Directors to the
Stockholders;

                  (xi)  expenses of organizing, revising, amending, converting,
modifying, or terminating the Company or the Articles of Incorporation;

                  (xii) expenses of maintaining communications with
Stockholders, including the cost of preparation, printing, and mailing annual
reports and other Stockholder reports, proxy statements and other reports
required by governmental entities;

                  (xiii) expenses related to negotiating and servicing Mortgage
Loans and Secured Equipment Leases;

                  (xiv) expenses related to negotiating and servicing Secured
Equipment Leases and administering the Secured Equipment Lease program;

                  (xv)  administrative service expenses (including personnel
costs; provided, however, that no reimbursement shall be made for costs of
personnel to the extent that such personnel perform services in transactions for
which the Advisor receives a separate fee at

                                       18
<PAGE>

the lesser of actual cost or 90% of the competitive rate charged by unaffiliated
persons providing similar goods and services in the same geographic location);
and

                  (xvi) audit, accounting and legal fees.

            (b)   Expenses incurred by the Advisor on behalf of the Company and
payable pursuant to this Paragraph 10 shall be reimbursed no less than monthly
to the Advisor. The Advisor shall prepare a statement documenting the expenses
of the Company during each quarter, and shall deliver such statement to the
Company within 45 days after the end of each quarter.

      (11)  OTHER SERVICES. Should the Directors request that the Advisor or any
director, officer or employee thereof render services for the Company other than
set forth in Paragraph 3, such services shall be separately compensated at such
rates and in such amounts as are agreed by the Advisor and the Independent
Directors of the Company, subject to the limitations contained in the Articles
of Incorporation, and shall not be deemed to be services pursuant to the terms
of this Agreement.

      (12)  REIMBURSEMENT TO THE ADVISOR. The Company shall not reimburse the
Advisor at the end of any fiscal quarter for Operating Expenses that, in the
four consecutive fiscal quarters then ended (the "Expense Year") exceed the
greater of 2% of Average Invested Assets or 25% of Net Income (the "2%/25%
Guidelines") for such year. Within 60 days after the end of any fiscal quarter
of the Company for which total Operating Expenses for the Expense Year exceed
the 2%/25% Guidelines, the Advisor shall reimburse the Company the amount by
which the total Operating Expenses paid or incurred by the Company exceed the
2%/25% Guidelines. The Company will not reimburse the Advisor or its Affiliates
for services for which the Advisor or its Affiliates are entitled to
compensation in the form of a separate fee. All figures used in the foregoing
computation shall be determined in accordance with generally accepted accounting
principles applied on a consistent basis.

      (13)  OTHER ACTIVITIES OF THE ADVISOR. Nothing herein contained shall
prevent the Advisor from engaging in other activities, including, without
limitation, the rendering of advice to other Persons (including other REITs) and
the management of other programs advised, sponsored or organized by the Advisor
or its Affiliates; nor shall this Agreement limit or restrict the right of any
director, officer, employee, or stockholder of the Advisor or its Affiliates to
engage in any other business or to render services of any kind to any other
partnership, corporation, firm, individual, trust or association. The Advisor
may, with respect to any investment in which the Company is a participant, also
render advice and service to each and every other participant therein. The
Advisor shall report to the Directors the existence of any condition or
circumstance, existing or anticipated, of which it has knowledge, which creates
or could create a conflict of interest between the Advisor's obligations to the
Company and its obligations to or its interest in any other partnership,
corporation, firm, individual, trust or association. The Advisor or its
Affiliates shall promptly disclose to the Directors knowledge of such condition
or circumstance. If the Sponsor, Advisor, Director or Affiliates thereof have
sponsored other investment programs with similar investment objectives which
have investment funds available at the same time as the Company, it shall be the
duty of the Directors (including

                                       19
<PAGE>

the Independent Directors) to adopt the method set forth in the Registration
Statement or another reasonable method by which properties are to be allocated
to the competing investment entities and to use their best efforts to apply such
method fairly to the Company.

      The Advisor shall be required to use its best efforts to present a
continuing and suitable investment program to the Company which is consistent
with the investment policies and objectives of the Company, but neither the
Advisor nor any Affiliate of the Advisor shall be obligated generally to present
any particular investment opportunity to the Company even if the opportunity is
of the character which, if presented to the Company, could be taken by the
Company. The Advisor or its Affiliates may make such an investment in a property
only after (i) such investment has been offered to the Company and all public
partnerships and other investment entities affiliated with the Company with
funds available for such investment and (ii) such investment is found to be
unsuitable for investment by the Company, such partnerships and investment
entities.

      In the event that the Advisor or its Affiliates is presented with a
potential investment which might be made by the Company and by another
investment entity which the Advisor or its Affiliates advises or manages, the
Advisor and its Affiliates shall consider the investment portfolio of each
entity, cash flow of each entity, the effect of the acquisition on the
diversification of each entity's portfolio, rental payments during any renewal
period, the estimated income tax effects of the purchase on each entity, the
policies of each entity relating to leverage, the funds of each entity available
for investment and the length of time such funds have been available for
investment. In the event that an investment opportunity becomes available which
is suitable for both the Company and a public or private entity which the
Advisor or its Affiliates are Affiliated, then the entity which has had the
longest period of time elapse since it was offered an investment opportunity
will first be offered the investment opportunity.

      (14)  RELATIONSHIP OF ADVISOR AND COMPANY. The Company and the Advisor are
not partners or joint venturers with each other, and nothing in this Agreement
shall be construed to make them such partners or joint venturers or impose any
liability as such on either of them.

      (15)  TERM; TERMINATION OF AGREEMENT. This Agreement shall continue in
force until May 3, 2005, subject to an unlimited number of successive one-year
renewals upon mutual consent of the parties. It is the duty of the Directors to
evaluate the performance of the Advisor annually before renewing the Agreement,
and each such agreement shall have a term of no more than one year.

      (16)  TERMINATION BY EITHER PARTY. This Agreement may be terminated upon
60 days written notice without Cause or penalty, by either party, or by the
mutual consent of the parties (by a majority of the Independent Directors of the
Company or a majority of the Board of Directors of the Advisor, as the case may
be).

      (17)  ASSIGNMENT TO AN AFFILIATE. This Agreement may be assigned by the
Advisor to an Affiliate with the approval of a majority of the Directors
(including a majority of the Independent Directors). The Advisor may assign any
rights to receive fees or other payments under this Agreement without obtaining
the approval of the Directors. This Agreement shall not

                                       20
<PAGE>

be assigned by the Company without the consent of the Advisor, except in the
case of an assignment by the Company to a corporation or other organization
which is a successor to all of the assets, rights and obligations of the
Company, in which case such successor organization shall be bound hereunder and
by the terms of said assignment in the same manner as the Company is bound by
this Agreement.

      (18)  SUBCONTRACTS WITH AFFILIATES. The Advisor may subcontract with an
Affiliate for a portion of the services and duties to be performed under this
Agreement without obtaining the approval of the Directors to the extent such
services or duties are primarily administrative in nature. The Advisor may
further subcontract any rights to receive fees or other payments for such
services or duties under this Agreement without obtaining the approval of the
Directors.

      (19)  PAYMENTS TO AND DUTIES OF ADVISOR UPON TERMINATION. Payments to the
Advisor pursuant to this Paragraph (19) shall be subject to the 2%/25%
Guidelines to the extent applicable.

            (a)   After the Termination Date, the Advisor shall not be entitled
to compensation for further services hereunder except it shall be entitled to
receive from the Company within 30 days after the effective date of such
termination all unpaid reimbursements of expenses and all earned but unpaid fees
payable to the Advisor prior to termination of this Agreement, exclusive of
disputed items arising out of possible unauthorized transactions.

            (b)   Upon termination, the Advisor shall be entitled to payment of
the Performance Fee if performance standards satisfactory to a majority of the
Board of Directors, including a majority of the Independent Directors, when
compared to (a) the performance of the Advisor in comparison with its
performance for other entities, and (b) the performance of other advisors for
similar entities, have been met. If Listing has not occurred, the Performance
Fee, if any, shall equal 10% of the amount, if any, by which (i) the appraised
value of the assets of the Company on the Termination Date, less the amount of
all indebtedness secured by such assets, plus the total Distributions paid to
stockholders from the Company's inception through the Termination Date, exceeds
(ii) Invested Capital plus an amount equal to the Stockholders' 8% Return from
inception through the Termination Date. The Advisor shall be entitled to receive
all accrued but unpaid compensation and expense reimbursements in cash within 30
days of the Termination Date. All other amounts payable to the Advisor in the
event of a termination shall be evidenced by a promissory note and shall be
payable from time to time.

            (c)   The Performance Fee shall be paid in 12 equal quarterly
installments without interest on the unpaid balance, provided, however, that no
payment will be made in any quarter in which such payment would jeopardize the
Company's REIT status, in which case any such payment or payments will be
delayed until the next quarter in which payment would not jeopardize REIT
status. Notwithstanding the preceding sentence, any amounts which may be deemed
payable at the date the obligation to pay the Performance Fee is incurred which
relate to the appreciation of the Company's assets shall be an amount which
provides compensation to the terminated Advisor only for that portion of the
holding period for the respective assets during which the Advisor provided
services to the Company.

                                       21
<PAGE>

            (d)   If Listing occurs, the Performance Fee, if any, payable
thereafter will be as negotiated between the Company and the Advisor. The
Advisor shall not be entitled to payment of the Performance Fee in the event
this Agreement is terminated because of failure of the Company and the Advisor
to establish, pursuant to Paragraph 9(h) hereof, a fee structure appropriate for
a perpetual-life entity at such time, if any, as Listing occurs. The Performance
Fee, to the extent payable at the time of Listing, will not be payable in the
event the Subordinated Incentive Fee is paid.

            (e)   The Advisor shall promptly upon termination:

                  (i)   pay over to the Company all money collected and held for
the account of the Company pursuant to this Agreement, after deducting any
accrued compensation and reimbursement for its expenses to which it is then
entitled;

                  (ii)  deliver to the Directors a full accounting, including a
statement showing all payments collected by it and a statement of all money held
by it, covering the period following the date of the last accounting furnished
to the Directors;

                  (iii) deliver to the Directors all assets, including
Properties, Mortgage Loans, and Secured Equipment Leases, and documents of the
Company then in the custody of the Advisor; and

                  (iv)  cooperate with the Company to provide an orderly
management transition.

      (20)  INDEMNIFICATION BY THE COMPANY. The Company shall indemnify and hold
harmless the Advisor and its Affiliates, including their respective officers,
directors, partners and employees, from all liability, claims, damages or losses
arising in the performance of their duties hereunder, and related expenses,
including reasonable attorneys' fees, to the extent such liability, claims,
damages or losses and related expenses are not fully reimbursed by insurance,
subject to any limitations imposed by the laws of the State of Maryland or the
Articles of Incorporation of the Company. Notwithstanding the foregoing, the
Advisor shall not be entitled to indemnification or be held harmless pursuant to
this Paragraph 20 for any activity for which the Advisor shall be required to
indemnify or hold harmless the Company pursuant to Paragraph 21. Any
indemnification of the Advisor may be made only out of the net assets of the
Company and not from Stockholders.

      (21)  INDEMNIFICATION BY ADVISOR. The Advisor shall indemnify and hold
harmless the Company from contract or other liability, claims, damages, taxes or
losses and related expenses including attorneys' fees, to the extent that such
liability, claims, damages, taxes or losses and related expenses are not fully
reimbursed by insurance and are incurred by reason of the Advisor's bad faith,
fraud, misconduct or negligence, but the Advisor shall not be held responsible
for any action of the Board of Directors in following or declining to follow any
advice or recommendation given by the Advisor.

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      (22)  NOTICES. Any notice, report or other communication required or
permitted to be given hereunder shall be in writing unless some other method of
giving such notice, report or other communication is required by the Articles of
Incorporation, the Bylaws, or accepted by the party to whom it is given, and
shall be given by being delivered by hand or by overnight mail or other
overnight delivery service to the addresses set forth herein:

To the Directors and to the Company:    CNL Retirement Properties, Inc.
                                        CNL Center at City Commons
                                        450 South Orange Avenue
                                        Orlando, Florida  32801

To the Advisor:                         CNL Retirement Corp.
                                        CNL Center at City Commons
                                        450 South Orange Avenue
                                        Orlando, Florida  32801

Either party may at any time give notice in writing to the other party of a
change in its address for the purposes of this Paragraph 22.

      (23)  MODIFICATION. This Agreement shall not be changed, modified,
terminated, or discharged, in whole or in part, except by an instrument in
writing signed by both parties hereto, or their respective successors or
assignees.

      (24)  SEVERABILITY. The provisions of this Agreement are independent of
and severable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part.

      (25)  CONSTRUCTION. The provisions of this Agreement shall be interpreted,
construed and enforced in all respects in accordance with the laws of the State
of Florida applicable to contracts to be made and performed entirely in said
state.

      (26)  ENTIRE AGREEMENT. This Agreement contains the entire agreement and
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements, understandings,
inducements and conditions, express or implied, oral or written, of any nature
whatsoever with respect to the subject matter hereof. The express terms hereof
control and supersede any course of performance and/or usage of the trade
inconsistent with any of the terms hereof. This Agreement may not be modified or
amended other than by an agreement in writing.

      (27)  INDULGENCES, NOT WAIVERS. Neither the failure nor any delay on the
part of a party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any

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occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver shall be effective unless it is
in writing and is signed by the party asserted to have granted such waiver.

      (28)  GENDER. Words used herein regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine or neuter, as the
context requires.

      (29)  TITLES NOT TO AFFECT INTERPRETATION. The titles of paragraphs and
subparagraphs contained in this Agreement are for convenience only, and they
neither form a part of this Agreement nor are they to be used in the
construction or interpretation hereof.

      (30)  EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the
signatories.

      (31)  NAME. CNL Retirement Corp. has a proprietary interest in the name
"CNL." Accordingly, and in recognition of this right, if at any time the Company
ceases to retain CNL Retirement Corp. or an Affiliate thereof to perform the
services of Advisor, the Directors of the Company will, promptly after receipt
of written request from CNL Retirement Corp., cease to conduct business under or
use the name "CNL" or any diminutive thereof and the Company shall use its best
efforts to change the name of the Company to a name that does not contain the
name "CNL" or any other word or words that might, in the sole discretion of the
Advisor, be susceptible of indication of some form of relationship between the
Company and the Advisor or any Affiliate thereof. Consistent with the foregoing,
it is specifically recognized that the Advisor or one or more of its Affiliates
has in the past and may in the future organize, sponsor or otherwise permit to
exist other investment vehicles (including vehicles for investment in real
estate) and financial and service organizations having "CNL" as a part of their
name, all without the need for any consent (and without the right to object
thereto) by the Company or its Directors.

      (32)  INITIAL INVESTMENT. The Advisor has contributed to the Company
$200,000 in exchange for 20,000 Equity Shares (the "Initial Investment"). The
Advisor may not sell these shares while the Advisory Agreement is in effect,
although the Advisor may transfer such shares to Affiliates. The restrictions
included above shall not apply to any Equity Shares, other than the Equity
Shares acquired through the Initial Investment, acquired by the Advisor or its
Affiliates. The Advisor shall not vote any Equity Shares it now owns, or
hereafter acquires, in any vote for the removal of Directors or any vote
regarding the approval or termination of any contract with the Advisor or any of
its Affiliates.

                                       24
<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.

                                       CNL RETIREMENT PROPERTIES, INC.

                                       By: /s/ James M. Seneff, Jr.
                                           ------------------------
                                       Name:   James M. Seneff, Jr.
                                       Its:    Chairman of the Board

                                       CNL RETIREMENT CORP.

                                       By: /s/ Thomas J. Hutchison III
                                           ---------------------------
                                       Name:   Thomas J. Hutchison III
                                       Its:    Chief Executive Officer
                                               and President

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