Document:

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                                                                  Exhibit 10.1.2

                             MASTER LEASE AGREEMENT

                                       BY

                       VENTAS REALTY, LIMITED PARTNERSHIP,

                                   AS LANDLORD

                                       AND

    THI OF OHIO AT CHARDON, LLC, THI OF OHIO AT GREENBRIAR NORTH, LLC, TRANS
HEALTHCARE OF OHIO, INC., THI OF OHIO ALFS AT THE COMMONS, LLC, THI OF MARYLAND
AT SOUTH RIVER, LLC, MILLENNIUM HEALTH AND REHABILITATION CENTER OF FORESTVILLE,
   LLC, AND MILLENNIUM HEALTH AND REHABILITATION CENTER OF ELLICOTT CITY, LLC

                                    AS TENANT

                          DATED AS OF NOVEMBER 1, 2002

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                                TABLE OF CONTENTS

1.    Leased Property; Term....................................................2
      1.1     Leased Property..................................................2
      1.2     Term.............................................................3
      1.3     Exercise of Renewal Options......................................3

2.    Definitions..............................................................4

3.    Rent....................................................................19
      3.1     Fixed Rent......................................................19
      3.2     Additional Rent.................................................21
      3.3     Escrow Deposits.................................................22
      3.4     Security Deposit................................................24
      3.5     Survival........................................................26
      3.6     Net Lease.......................................................26
      3.7     Lease Guaranty..................................................27

4.    Impositions.............................................................27
      4.1     Payment of Impositions..........................................27
      4.2     Notice of Impositions...........................................27
      4.3     Adjustment of Impositions.......................................28

5.    No Termination, Abatement, etc..........................................28

6.    Premises; Tenant's Personal Property....................................28
      6.1     Ownership of the Premises.......................................28
      6.2     Tenant's Personal Property......................................29

7.    Condition and Use of Each Leased Property...............................29
      7.1     Condition of Each Leased Property...............................29
      7.2     Use of Each Leased Property.....................................29
      7.3     Security Agreement..............................................30
      7.4     Granting of Easements, etc......................................31

8.    Negative and Affirmative Covenants of Tenant............................31
      8.1     Negative Covenants..............................................31
      8.2     Affirmative Covenants...........................................35
      8.3     Authorization Non-Compliance....................................38

9.    Maintenance of Facilities...............................................38
      9.1     Maintenance and Repair..........................................38
      9.2     Encroachments...................................................39

10.   Tenant's Representations and Warranties.................................40
      10.1    Organization and Good Standing..................................40
      10.2    Power and Authority.............................................40
      10.3    Enforceability..................................................40

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      10.4    Consents........................................................40
      10.5    No Violation....................................................40
      10.6    Reports and Statements..........................................40
      10.7    No Default......................................................41
      10.8    Adverse Matters.................................................41
      10.9    Certification...................................................41
      10.10   Transition Permits..............................................41
      10.11   Facility Provider Agreements....................................41
      10.12   No Reimbursement Audits or Appeals..............................42
      10.13   No Recoupments Efforts..........................................42
      10.14   Professional Liability Reserves.................................42
      10.15   Primary Intended Use............................................42
      10.16   Compliance with Laws............................................42
      10.17   Ownership of Authorizations.....................................42
      10.18   Third Party Payor Programs......................................43

11.   Alterations.............................................................43
      11.1    Alterations.....................................................43
      11.2    Construction Requirements for all Alterations...................43
      11.3    Capital Expenditures Accounts...................................45

12.   Liens...................................................................46

13.   Permitted Contests......................................................47

14.   Insurance...............................................................47
      14.1    General Insurance Requirements..................................47
      14.2    Policies; Certificates..........................................50
      14.3    Blanket Policies................................................50
      14.4    Additional Insured..............................................50
      14.5    Policy Requirements.............................................51
      14.6    Evidence of Compliance..........................................51
      14.7    Foreclosure; Transfer...........................................51
      14.8    Insurance Company...............................................51

15.   Damage and Destruction..................................................52
      15.1    Notice of Casualty..............................................52
      15.2    Substantial Destruction.........................................52
      15.3    Partial Destruction.............................................52
      15.4    Restoration.....................................................53
      15.5    Disbursement of Insurance Proceeds..............................54
      15.6    Insufficient Proceeds/Risk of Loss..............................54
      15.7    Excess Proceeds.................................................54
      15.8    Landlord's Inspection...........................................54

16.   Condemnation............................................................55
      16.1    Parties' Rights and Obligations.................................55

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      16.2    Total Taking....................................................55
      16.3    Partial Taking..................................................55
      16.4    Restoration.....................................................55
      16.5    Award-Distribution..............................................55
      16.6    Temporary Taking................................................56
      16.7    Facility Mortgagee..............................................56

17.   Default.................................................................56
      17.1    Events of Default...............................................56
      17.2    Existence and Continuation......................................60
      17.3    Remedy Election.................................................60
      17.4    Certain Remedies................................................60
      17.5    Damages.........................................................61
      17.6    Waiver..........................................................62
      17.7    Application of Funds............................................62
      17.8    Nature of Remedies..............................................62
      17.9    Deletion of Properties..........................................62

18.   Landlord's Right to Cure Tenant's Default...............................63

19.   Holding Over............................................................64

20.   Subordination...........................................................64
      20.1    Subordination...................................................64
      20.2    Attornment......................................................64
      20.3    Mortgagee Cure Rights...........................................65
      20.4    Modifications...................................................65

21.   Property Collateral.....................................................65
      21.1    Landlord's Security Interest....................................65
      21.2    Accounts Receivable Financing...................................66

22.   Risk of Loss............................................................67

23.   Indemnification.........................................................67

24.   Assignment; Sublease....................................................68
      24.1    Prohibition.....................................................68
      24.2    Change of Control of Trans......................................68
      24.3    Permitted Assignments and Subleases.............................69
      24.4    Rights of Landlord..............................................69

25.   Financial Statements and Reporting......................................70
      25.1    Maintenance of Books and Records................................70
      25.2    Annual Financial Statements.....................................70
      25.3    Quarterly Financial Information.................................70
      25.4    Certification of Compliance with Financial Covenants............71
      25.5    Reports of Material Adverse Events..............................71

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      25.6    Report of Compliance with Authorizations........................72
      25.7    Weekly and Monthly Cash Flow and Census Reports.................72
      25.8    Quarterly Deficiency Reports....................................72
      25.9    Reduction in Licensed Beds......................................72
      25.10   Notices from Governmental Authorities...........................72
      25.11   Medicare and Medicaid Filings...................................72
      25.12   Medicare and Medicaid Deficiency Reports........................73
      25.13   Annual Budgets..................................................73
      25.14   Financial Statements of Guarantor...............................73
      25.15   Estoppel Certification..........................................73
      25.16   SEC Reports.....................................................75
      25.17   Supplemental Information........................................75
      25.18   Weekly and Monthly Cash Flow and Census Information.............75
      25.19   Quarterly Meetings; Facility Level Meetings and Reviews.........75
      25.20   Authorizations..................................................76
      25.21   Format..........................................................76

26.   Landlord's Right to Inspect.............................................76

27.   No Waiver...............................................................76

28.   Single Lease............................................................76

29.   Acceptance of Surrender.................................................77

30.   No Merger of Title......................................................77

31.   Conveyance by Landlord..................................................77

32.   Quiet Enjoyment.........................................................78

33.   Notices.................................................................78

34.   Appraisals..............................................................79
      34.1    Appraisals......................................................79
      34.2    Appointment of Appraisers.......................................79
      34.3    Qualifications of Appraisers....................................80
      34.4    Binding Nature..................................................80
      34.5    Costs...........................................................81

35.   General REIT Provisions.................................................81

36.   Landlord's Option to Purchase the Tenant's Personal Property............81

37.   Compliance With Environmental Laws......................................82
      37.1    Hazardous Substances............................................82
      37.2    Remediation; Notification.......................................82
      37.3    Indemnity.......................................................83

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      37.4    Environmental Inspection........................................83
      37.5    Removal.........................................................83

38.   Tenant's Option to Purchase the Leased Property.........................84

39.   Operational Transfer....................................................84
      39.1    Exercise; Transfer of Authorizations............................84
      39.2    Reasonable Assistance...........................................86
      39.3    Facility Termination; Limited Extension.........................86

40.   Non-Recourse............................................................87

41.   Combination of Leases...................................................87
      41.1    Section 41 Lease................................................87
      41.2    Additional Properties...........................................88
      41.3    Combination Lease...............................................89
      41.4    Section 41 Date.................................................89
      41.5    Additional Actions..............................................89

42.   New Lease...............................................................89
      42.1    New Lease Terms.................................................89
      42.2    Modifications to this Lease.....................................91
      42.3    Effective Date..................................................91
      42.4    Other Undertakings..............................................91

43.   Expansion of Lease......................................................91

44.   Restrictive Covenant....................................................91

45.   Miscellaneous...........................................................92
      45.1    Survival........................................................92
      45.2    Maximum Rate....................................................92
      45.3    Headings........................................................92
      45.4    Integration.....................................................92
      45.5    Severability....................................................92
      45.6    Subject to Law..................................................92
      45.7    Waivers.........................................................92
      45.8    Binding Character...............................................92
      45.9    Modification....................................................93
      45.10   Forbearance.....................................................93

LIST OF SCHEDULES AND EXHIBITS

Schedule 1    -   Primary Intended Use
Schedule 2    -   Tenant's Proportionate Shares

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Schedule 3.1.1            -   Wiring Instructions
Schedule 7.3              -   Authorization Collateral
Schedule 17.1.12          -   Licensed Beds
Exhibit A                 -   Addresses of the Leased Properties
Exhibit A-1 through A-6   -   Legal Descriptions to the Land
Exhibit B                 -   Intentionally Omitted
Exhibit B-1               -   Guarantor
Exhibit C                 -   Base Year Operating Income
Exhibit D                 -   The Option
Exhibit E                 -   Restrictive Covenant
Exhibit F                 -   Form SNDA

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                             MASTER LEASE AGREEMENT

     This MASTER LEASE AGREEMENT (together with all exhibits and schedules
attached hereto, and as it may be modified, amended, renewed, supplemented,
extended, or replaced by the parties hereto from time to time, this "Lease") is
made and entered into as of November 1, 2002, between VENTAS REALTY, LIMITED
PARTNERSHIP, a Delaware limited partnership (together with its successors and
assigns, "Landlord"), and each of the entities identified on Schedule 1 attached
hereto and made a part hereof, as the same may be modified from time to time
pursuant to Section 17, Section 41 or Section 43 of this Lease (together with
their permitted successors and assigns, collectively, "Tenant").

                                    RECITALS:

     WHEREAS, Landlord owns the parcels of real property and all improvements
located thereon and all appurtenances thereto, described by the common addresses
set forth on Exhibit A attached hereto and made a part hereof and legally
described in Exhibits "A-1" to "A-6" attached hereto; and

     WHEREAS, each Tenant shall lease and operate the applicable Facility (as
hereinafter defined) allocated to such Tenant on Schedule 1 attached hereto and
made a part hereof; and

     WHEREAS, Landlord desires to lease the Premises (as hereinafter defined) to
Tenant, and Tenant desires to lease the Premises from Landlord; and

     WHEREAS, the parties desire to enter into this Lease to set forth their
rights and obligations relating to the Premises; and

     WHEREAS, Landlord acquired the Premises pursuant to that certain Purchase
and Sale Agreement between Landlord and Trans Healthcare of Ohio, Inc., dated
November 1, 2002 (the "P&S Agreement"); and

     WHEREAS, simultaneously with the execution and delivery of this Lease,
Trans Healthcare, Inc. and its affiliates and subsidiaries identified on Exhibit
B-1 attached hereto and made a part hereof (collectively, "Guarantor") have
unconditionally guaranteed the obligations of Tenant under this Lease for the
benefit of Landlord pursuant to that certain Guaranty (the "Lease Guaranty")
dated as of an event date herewith; and

     WHEREAS, simultaneously with the execution and delivery of this Lease,
Landlord, has made: (i) a loan to certain Affiliates of Tenant (collectively,
"Borrower") in the original principal amount of $55,000,000 (the "Primary
Loan"); and (ii) a mezzanine loan to Borrower in the original principal amount
of $22,000,000 (the "Mezzanine Loan," together with the Primary Loan, the "Loan
Transaction") provided that pursuant to the terms of that certain Cooperation
Agreement between Borrower and Landlord, the principal amounts of the Primary
Loan and the Mezzanine Loan may be resized in accordance with the terms of such
Cooperation Agreement; and

     WHEREAS, Guarantor has, on a joint and several basis, unconditionally
guaranteed the obligations of Borrower pursuant to the Loan Transaction (the
"Loan Guaranty"); and

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     WHEREAS, the obligations of Guarantor with respect to the Loan Guaranty are
included in the Lease Guaranty.

     NOW, THEREFORE, in consideration of the mutual covenants, conditions and
agreements set forth herein, and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree that, by entering into this Lease, Landlord leases and demises the
Premises to Tenant, and Tenant takes and hires the Premises from Landlord, for
the Term (as hereinafter defined), upon the terms and conditions of this Lease.

     1. Leased Property; Term.

          1.1 Leased Property. Effective as of November 1, 2002, upon and
subject to the terms and conditions hereinafter set forth, Landlord hereby
leases to Tenant, and Tenant hereby leases from Landlord, all of the following:

               1.1.1 Land. The tracts, pieces and parcels of land more
particularly described in Exhibits "A-1" through "A-6" attached hereto together
with all rights, easements and interests appurtenant thereto, including, but not
limited to, any streets or other public ways adjacent to such tracts, pieces and
parcels of land, and any water or mineral rights with respect to such tracts,
pieces and parcels of land owned by Landlord (collectively, the "Land"; each
parcel of Land described in such Exhibits "A-1" through "A-6", as amended from
time to time, and together with such appurtenances and rights with respect to
such parcel, being referred to herein as a "Leased Land").

               1.1.2 Leased Improvements. All buildings (including, but not
limited to, the facilities described by the common addresses set forth on
Exhibit A attached hereto and made a part hereof), structures, Fixtures (as
hereinafter defined) and other improvements of every kind, including, but not
limited to, alleyways and connecting tunnels, sidewalks, utility pipes, conduits
and lines (on-site and off-site), parking areas and roadways appurtenant to such
buildings and structures situated upon the Land as of the date hereof and
Capital Alterations upon the Land (collectively, the "Leased Improvements"); and

     (a) Intangible Property. The interest, if any, of Landlord in and to any of
the following intangible property owned by Landlord in connection with the Land
and the Improvements (collectively, the "Intangibles"): (i) the identity or
business of the Facilities as a going concern, including without limitation, any
names or trade names by which the Facilities or any part thereof may be known,
and all registrations for such names, if any, excluding, however, the names
Millennium, Trans Healthcare, THI or derivations thereof; (ii) to the extent
assignable or transferable, the interest, if any, of Landlord in and to each and
every bond, guaranty and warranty concerning the Leased Improvements, including,
without limitation, any roofing, air conditioning, heating, elevator and other
bond, guaranty and warranty relating to the construction, maintenance or
replacement of the Leased Improvements or any portion thereof; and (iii) the
interest, if any, of Landlord in and to all Authorizations to the extent the
same can be assigned or transferred in accordance with applicable law; provided,
however, that the foregoing shall not include any CON issued to or held by
Landlord which shall only be licensed to Tenant on a temporary basis, which
license shall be revocable at any time by Landlord. If the law of any

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State in which a Facility is located requires that a CON for the applicable
Facility be issued to the applicable Tenant, such CON shall remain the property
and possession of Landlord held, in trust, for the benefit of Landlord by Tenant
pursuant to the revocable license herein contained and any Tenant shall take
such actions as are necessary or desirable to convey such CON to Landlord as and
when required by Landlord.

     SUBJECT, HOWEVER, to the Permitted Encumbrances (as hereinafter defined).

     Notwithstanding anything contained herein to the contrary, each Tenant
shall be jointly and severally liable for the obligations, agreements,
undertakings and other liabilities of each other Tenant hereunder; provided,
however, that, without limitation of the joint and several nature of the
obligations of each Tenant hereunder, the possessory and leasehold rights
conveyed to each Tenant shall be limited and confined to the applicable Facility
identified as being leased and operated by such Tenant on Schedule 1 attached
hereto and made a part hereof and the Leased Property on which such Facility is
located.

          1.2 Term. Landlord hereby leases the Premises to Tenant for an initial
term (the "Initial Term") of ten (10) years commencing as of November 1, 2002
and expiring at midnight on October 31, 2012 (the "Initial Expiration Date").
Subject to the terms of Section 1.3 below, Tenant shall have two (2) options
(each a "Renewal Option") to extend the Initial Term of this Lease for five (5)
years each (collectively, the "Extended Terms" and, each, individually, an
"Extended Term"). Landlord shall also have the limited right to extend the
Initial Term or any Extended Term to facilitate the Operational Transfer as to
one or more Leased Properties, as more particularly described and discussed in
Section 38 below or pursuant to Section 39 (each, a "Landlord Extension"). The
Initial Term, together with any Extended Term timely and properly exercised by
Tenant hereunder and any Landlord Extension are herein collectively referred to
as the "Term"; the Initial Expiration Date as extended by any such Renewal
Options or Landlord Extensions, is herein referred to as the "Expiration Date".

          1.3 Exercise of Renewal Options. Tenant may exercise a Renewal Option
with respect to all, but not less than all, of the Premises by providing written
notice to Landlord of each such renewal (a "Renewal Notice") at least one (1)
year but not more than eighteen (18) months prior to the expiration of the
Initial Term or the first Extended Term, as applicable, on the express condition
that, at the time Tenant gives a Renewal Notice as set forth above and at the
commencement of the applicable Extended Term, no Event of Default shall have
occurred and be continuing under this Lease. During each Extended Term, all of
the terms and conditions of this Lease shall continue in full force and effect,
except that the Fixed Rent for the initial Lease Year of any Extended Term shall
be the greater of: (a) then current Fixed Rent in effect at the expiration of
the Initial Term or the first Extended Term, as applicable, increased and
adjusted upwards pursuant to the formula contained in Section 3.1.2 hereof; or
(b) Fair Market Rental. The Fixed Rent payable by Tenant to Landlord for any
subsequent Lease Year during an Extended Term shall escalate pursuant to, and in
accordance with, Section 3.1.2 hereof. Within ninety (90) days after receipt by
Landlord from Tenant of a Renewal Notice, the Fair Market Rental of each Leased
Property shall be determined pursuant to the appraisal procedure described in
Section 34 below.

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     2. Definitions. For all purposes of this Lease, except as otherwise
expressly provided or unless the context otherwise requires, (i) the terms
defined in this Section have the meanings assigned to them in this Section and
include the plural as well as the singular, (ii) all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
generally accepted accounting principles consistently applied at the time
applicable, (iii) all references in this Lease to designated "Sections",
"Subsections" and other subdivisions are to the designated Sections, Subsections
and other subdivisions of this Lease and (iv) the words "herein", "hereof" and
"hereunder" and other words of similar import refer to this Lease as a whole and
not to any particular Section, Subsection or other subdivision:

     "Actuarial Correspondence" shall mean any and all correspondence, analysis,
reports, studies or other information to or from any Tenant or any Guarantor or
their respective insurance carriers, reinsurance providers, accountants, or from
any Governmental Authorities or any Third Party Payor Program providers
concerning such Tenant's malpractice or professional liability insurance or its
reserves for expenses relating to malpractice or professional liability claims.

     "Actuarial Reports" shall mean any and all written reports, studies,
analyses or reviews prepared by or behalf of any Tenant or any Guarantor or
their respective insurance providers or carriers, whether quarterly or
otherwise, concerning any Tenant's malpractice or professional liability
insurance or such Tenant's reserves for expenses relating to malpractice or
professional liability claims.

     "Additional Property" shall have the meaning set forth in Section 41.

     "Additional Rent" shall have the meaning set forth in Section 3.2.

     "Adjusted Base Year Operating Income" shall mean the Base Year Operating
Income adjusted to reflect the removal or deletion of any Leased Property from
this Lease.

     "Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including, but not limited to, all partners,
directors, officers and members of such Person), controlled by or under direct
or indirect common control with any such Person. A Person shall be deemed to
control a corporation, a partnership, a trust, or a limited liability company if
such Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such Person, through the ownership
of voting securities, partnership interests or other equity interests.

     "Alterations" shall have the meaning set forth in Section 11.1.

     "Allocated Base Year Operating Income" shall mean, for any Leased Property,
the Base Year Operating Income for the applicable Leased Property set forth on
Exhibit C attached hereto and made a part hereof.

     "Annual Capital Expenditure Budget" shall have the meaning set forth in
Section 11.3.2.

     "AR Financing" shall have the meaning set forth in Section 21.2.

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     "Assigned Authorizations" shall have the meaning set forth in Section
39.1.2.

     "Assigned Contracts" shall have the meaning set forth in Section 39.1.2.

     "Authorizations" shall mean any and all licenses, operating permits,
Provider Agreements, CONs, certificates of exemption, approvals, waivers,
variances and other governmental or "quasi-governmental" authorizations
necessary or advisable for the use of any Facility for its Primary Intended Use
and receipt of reimbursement or other payments under Medicare, Medicaid and any
Third Party Payor Programs.

     "Authorization Collateral" shall have the meaning set forth in Section 7.3.

     "Award" shall mean all compensation, sums or anything of value awarded,
paid or received in respect of a total or partial Condemnation.

     "BLS" shall mean Bureau of Labor Statistics, U.S. Department of Labor or
any successor thereto.

     "Base Year Operating Income" shall mean the aggregate Operating Income for
all of the Leased Properties for the period from September 1, 2001 through
August 31, 2002, which Operating Income has been reduced by an amount equal to
any and all so-called "CLIFF" adjustments (increases in Operating Income
resulting from payment adjustments by CMS under the Balanced Budget Refinement
Act of 1999 and the Medicare, Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000). Base Year Operating Income is set forth in Exhibit C
attached hereto and made a part hereof on an aggregate basis and for each Leased
Property. In the event that the number of licensed beds at any Facility is
reduced at any time from and after the date hereof, the Base Year Operating
Income (and the Allocated Base Year Operating Income for the applicable
Facility) shall be reduced proportionally to reflect such reduction in the
number of licensed beds as if such licensed beds had not been part of the
Facility for the period from September 1, 2001 through August 31, 2002

     "Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which national banks in the City of New York, New
York are authorized, or obligated, by law or executive order, to close.

     "Capital Alterations" shall mean, with respect to any Leased Property: (i)
the addition of one or more new buildings, or (ii) the annexation of one or more
additional structures to any portion of any of the Leased Improvements on such
Leased Property, or (iii) the expansion or contraction of the Leased
Improvements on such Leased Property, or (iv) any alteration or modification
affecting the foundation, floor slab, roof or roof structure, curtain wall,
structural columns, beams or shafts or other structural components of any of the
Leased Improvements on such Leased Property, or (v) any alteration or
modification affecting any of the electrical, plumbing, life safety, heating,
ventilating, air conditioning, elevator, conveyor or other operating systems
serving any of the Leased Improvements on such Leased Property. "Capital
Alterations" shall include, without limitation, (1) the construction of a new
wing or new story on a Leased Property, (2) the repair, replacement,
restoration, remodeling or rebuilding of the existing Leased Improvements on a
Leased Property or any portion thereof, where the purpose and effect of such
work is to provide a functionally new facility needed to provide services not

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previously offered, and (3) any expansion, construction, renovation or
conversion to increase or change the bed capacity of the Facility located on a
Leased Property, to change the purpose for which such beds are utilized or to
improve materially the quality of such Facility.

     "Capital Expenditure Account" shall have the meaning set forth in Section
11.3.1.

     "Capital Expenditure Deposits" shall have the meaning set forth in Section
11.3.1.

     "Capital Expenditure Difference" shall have the meaning set forth in
Section 11.3.1.

     "Cash Flow" shall mean the net income of any Tenant arising from the
applicable Facility as reflected on the income statement of Tenant plus (i) the
provision for depreciation and amortization in such income statement; plus (ii)
the provision for management fees in such income statement; plus (iii) the
provision for income taxes in such income statement; plus (iv) the provision for
Fixed Rent payments allocated to such Facility and interest and lease payments,
if any, relating to such Facility in such income statement; minus (v) an imputed
management fee equal to five percent (5%) of gross revenues of such Facility
(net of contractual allowances); and minus (vi) a replacement reserve of $300.00
per licensed bed at such Facility per year (unless such Facility is a hospital,
in which event the replacement reserve amount shall be $500 per licensed bed at
such Facility per year).

     "Casualty" shall mean damage to one or more Leased Properties by fire,
flood, windstorm, earthquake, act of God or other casualty.

     "Casualty Insurance Proceeds" shall have the meaning set forth in Section
15.2.

     "Census Information" shall have the meaning set forth in Section 25.3.

     "Change of Control" shall have the meaning set forth in the Lease Guaranty.

     "CMS" shall mean the United States Department of Health, Centers for
Medicare and Medicaid Services or any successor agency thereto.

     "Code" shall mean the Internal Revenue Code of 1986, as amended.

     "Combination Lease" shall have the meaning set forth in Section 41.

     "CON" shall mean a certificate of need or similar permit or approval (not
including conventional building permits) from a Governmental Authority related
to the construction and/or operation of the Facility at any Leased Property for
the use of a specified number of beds in a nursing facility, assisted living
facility and/or rehabilitation hospital, or alteration of any such Facility or
modifications of services provided at a Facility used as a nursing facility,
assisted living facility and/or rehabilitation hospital.

     "Condemnation" shall mean, as to any Leased Property, (i) the exercise of
any governmental power on such Leased Property, whether by legal proceedings or
otherwise, by a Condemnor, (ii) a voluntary sale or transfer by Landlord to any
Condemnor, either under threat of condemnation or while legal proceedings for
condemnation are pending and (iii) a taking or

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voluntary conveyance of all or part of such Leased Property, or any interest
therein, or right accruing thereto or use thereof, as the result or in
settlement of any condemnation or other eminent domain proceeding affecting such
Leased Property whether or not the same shall have been actually commenced.

     "Condemnor" shall mean any public or quasi-public authority, or private
corporation or individual, having the power of condemnation.

     "Conforming Appraisal" shall have the meaning set forth in Section 34.2.

     "Consent Expenses" shall have the meaning set forth in Section 3.2.6.

     "Cost of Living Index" shall mean the Consumer Price Index for All Urban
Consumers, U.S. City Average (1982-1984 = 100), published by the BLS, or such
other renamed index. If the BLS changes the publication frequency of the Cost of
Living Index so that a Cost of Living Index is not available to make a
cost-of-living adjustment as specified herein, the cost-of-living adjustment
shall be based on the percentage difference between the Cost of Living Index for
the closest preceding month for which a Cost of Living Index is available and
the Cost of Living Index for the comparison month as required by this Lease. If
the BLS changes the base reference period for the Cost of Living Index from
1982-84 = 100, the cost-of-living adjustment shall be determined with the use of
such conversion formula or table as may be published by the BLS. If the BLS
otherwise substantially revises, or ceases publication of, the Cost of Living
Index, then a substitute index for determining cost-of-living adjustments,
issued by the BLS or by a reliable governmental or other nonpartisan
publication, shall be reasonably selected by Landlord and Tenant.

     "Covenant Replacement Event" shall have the meaning set forth in the Lease
Guaranty.

     "Coverage Ratio" shall mean the ratio of (i) Cash Flow of any Facility for
the applicable period; to (ii) the Fixed Rent payments allocated to such
Facility and all other debt service and lease payments relating to such Facility
for the applicable period.

     "CPI Increase" shall mean, for a particular Lease Year, the percentage
increase (rounded to two (2) decimal places), if any, in (i) the Cost of Living
Index published for the month that is two (2) months prior to the commencement
of such Lease Year, over (ii) the Cost of Living Index published for the month
that is two (2) months prior to the commencement of the immediately preceding
Lease Year.

     "Date of Taking" means, as to the applicable Leased Property, the date the
Condemnor has the right to possession of such Leased Property, or any portion
thereof, in connection with a Condemnation.

     "Deleted Properties" shall mean any Leased Property for which this Lease is
terminated pursuant to Section 15, 16 or 17.2 hereof; provided, however, that
Deleted Properties shall not include any Leased Property removed herefrom
pursuant to Section 42.

     "Deletion Notice" shall have the meaning set forth in Section 17.9.

                                       7

<PAGE>

     "Early Termination Event" shall mean, as to any Leased Property, the
termination of this Lease prior to the stated Expiration Date hereof or the
dispossession of the applicable Tenant as a result of an Event of Default.

     "Earnest Money Deposit" shall have the meaning set forth in Section 38.

     "Environmental Costs" shall mean costs of response, removal, remedial
action, containment, cleanup, investigation, design, engineering and
construction, damages for personal injuries and for injury to, destruction of or
loss of property or natural resources, relocation or replacement costs,
penalties, fines, charges or expenses, attorney's fees, expert fees,
consultation fees, and court costs, and all amounts paid in investigating,
defending or settling any of the foregoing, in connection with any Hazardous
Substance.

     "Environmental Laws" shall mean any and all laws, order, rules or
regulations pertaining to Hazardous Substances or that otherwise deal with, or
relate to, air or water quality, air emissions, soil, contamination or pollution
or protection of the environment.

     "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.

     "Escrow Account" shall have the meaning set forth in Section 3.3.2.

     "Escrow Commencement Date" shall have the meaning set forth in Section
3.3.1.

     "Estoppel Certificate" shall have the meaning set forth in Section 25.15.

     "Event of Default" shall have the meaning set forth in Section 17.1.

     "Expiration Date" shall have the meaning set forth in Section 1.2.

     "Extended Term" shall have the meaning set forth in Section 1.2.

     "Facility" shall mean the facility or facilities located on the applicable
Leased Property.

     "Facility Mortgage" shall mean any mortgage, deed of trust, or other
security agreement securing any encumbrance placed on the applicable Leased
Property in accordance with the provisions of Section 31.

     "Facility Mortgagee" shall mean the holder of any Facility Mortgage.

     "Facility Provider Agreements" shall mean Provider Agreements issued to or
held by Tenant pursuant to which the Facilities are licensed, certified,
approved or eligible to receive reimbursement under Medicare, Medicaid or any
Third Party Payor Program.

     "Facility Termination" shall have the meaning set forth in Section 39.3.1.

     "Fair Market Rental" shall mean, as determined by the appraisal procedures
set forth in Section 34, the amount per annum that an uncompelled, willing
tenant would pay, and an uncompelled, willing landlord would accept, at arm's
length, for leasing of the Premises (or, if

                                       8

<PAGE>

applicable, any one or more, but less than all, of the Leased Properties) for
the period of the Term (including, without limitation, any Extended Terms)
remaining from and after the date as of which the Fair Market Rental is being
determined. In addition to such other market factors as may be applicable in
determining the Fair Market Rental, the Fair Market Rental shall be determined
on the basis, and on the assumptions, that: (i) the Fair Market Rental may not
include therein any rent, or method of rent calculation, that would adversely
affect any landlord by virtue of it being a REIT or the ability of any such
landlord to satisfy the requirements for maintaining its status as a REIT, (ii)
Fixed Rent for the applicable Leased Properties will escalate pursuant to the
provisions of Sections 1.3 and 3.1.2 hereof, (iii) all of the Leased Properties
are in material compliance with any and all applicable laws, codes, ordinances
and regulations and other Legal Requirements (and Insurance Requirements) and
have in full force and effect, for the benefit of the aforesaid tenant, the
Facilities and the applicable Leased Properties, any and all necessary or
appropriate material permits, approvals, licenses, Provider Agreements and other
consents comparable to the Authorizations necessary or advisable for use thereof
in accordance with the respective Primary Intended Uses applicable thereto, (iv)
the respective Facilities as to which Fair Market Rental is being determined
have been repaired, maintained and otherwise kept in a condition contemplated
and required by Section 9.1 hereof such that the Leased Properties are in a
first class condition without any deferred maintenance or necessary capital
repairs or replacements, (v) no allowance for, or reduction in, the Fair Market
Rental shall be made on account of the absence of leasing commissions, tenant
improvement allowances and other comparable inducements that may be typically or
often payable to a replacement tenant rather than an existing tenant, and (vi)
the aforesaid tenant shall have available to it, with respect to each Leased
Property as to which the Fair Market Rental is being determined, the Term that
then remains, and such number of Extended Terms as then remain unexercised, with
respect to such Leased Properties under the terms of this Lease.

     "Fair Market Value" shall mean the price that a willing buyer not compelled
to buy (but ready, willing and able to operate the applicable Leased Properties
for their Primary Intended Uses) would pay a willing seller not compelled to
sell for the applicable Leased Properties, including all Capital Alterations,
and (i) assuming the same are unencumbered by this Lease but that the buyer has
available and in good standing all of the permits, approvals, licenses, Provider
Agreements and other consents comparable to the Authorizations necessary or
advisable for the use and operation of the applicable Leased Properties for
their respective Primary Intended Uses, (ii) determined in accordance with the
appraisal procedures set forth in Section 34; (iii) not taking into account any
reduction in value resulting from any indebtedness to which such Leased
Properties are subject except as expressly provided herein below; (iv) not
determined based solely on the replacement costs of the applicable Leased
Properties, (v) assuming the Leased Properties are in compliance with any and
all material laws, ordinances, rules and regulations of any Governmental
Authorities (including, but not limited to, all Legal Requirements) and any and
all Insurance Requirements; and (vi) assuming the Leased Properties are in a
first class condition and repair with no deferred maintenance items or capital
repair or replacements required and the Tenant has timely and completely
satisfied its repair, maintenance and replacement obligations hereunder. In
determining such Fair Market Value, the positive or negative effect on the value
of the Leased Properties attributable to the interest rate, amortization
schedule, maturity date, prepayment penalty and other terms and conditions of
any encumbrance that is not removed, or to be removed, at or prior to the
closing of the transaction as to which

                                       9

<PAGE>

such Fair Market Value determination is being made shall be taken into account.
Fair Market Value shall be determined as of the projected date of the Option
Closing.

     "Fiscal Year" shall mean the twelve (12) month period from January 1 to
December 31.

     "First Lease Year" shall mean the period from November 4, 2002 through
October 31, 2003.

     "Fixed Rent" shall mean, for the period from November 4, 2002 through the
Expiration Date, rent at an annual rate of Five Million Nine Hundred Sixty-Two
Thousand Five Hundred and No/100 Dollars ($5,962,500), as such amount shall be
increased from time to time during the Term as set forth in Section 1.3 and
Section 3.1.2 or, in the case of any New Lease, as such amount shall be adjusted
pursuant to Section 42.1.1.

     "Fixtures" shall mean all permanently affixed equipment, machinery,
elevators, conveyors, fixtures, commercial kitchen equipment, laundry equipment
and other items of real and/or personal property, including, without limitation,
all components thereof, now and hereafter located in, on or used in connection
with, and permanently affixed to or incorporated into the Leased Improvements,
including, without limitation, all furnaces, boilers, heaters, electrical
equipment, heating, plumbing, lighting, ventilating, refrigeration,
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 property, together with all replacements, modifications,
alterations and additions thereto.

     "Form SNDA" shall have the meaning set forth in Section 20.1.

     "Full Replacement Cost" shall mean the actual replacement cost of the
applicable property including an increased cost of construction endorsement,
without reduction or deduction for depreciation, as determined for any
applicable property by an accredited appraiser approved by Landlord, and at
Tenant's sole cost and expense, hereinafter referred to as "impartial
appraiser", every five years during the Term, and at such other times that
either party believes that the full replacement cost of such property has
increased or decreased. Tenant shall forthwith, on receipt of such determination
by such impartial appraiser, give written notice thereof to Landlord. The
determination of such impartial appraiser shall be final and binding on the
parties hereto.

     "GAAP" shall mean generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the accounting profession), or in such
other statements by such entity as may be in general use by significant segments
of the U.S. accounting profession.

     "Governmental Authority" shall mean any court, board, agency, licensing
agency, commission, office or authority or any governmental unit (federal,
state, county, district, municipal, city or otherwise) whether now or hereafter
in existence, including, without

                                       10

<PAGE>

limitation, CMS, the United States Department of Health and Human Services, any
state licensing agency and/or any state Medicaid agency and any
quasi-governmental authorities.

     "Hazardous Substances" shall mean and include Hazardous Waste, medical
waste and any hazardous substance defined as such in the Occupational Safety &
Health Act, the Toxic Substances Control Act, or any other federal, state or
local statute, law, ordinance, code, rule, regulation, order or decree
regulating, relating to, or imposing liability or standards of conduct
concerning, any hazardous substance or material, as now or at anytime hereafter
in effect.

     "Hazardous Waste" shall mean and include any material that is defined as a
hazardous waste under RCRA as now or at any time hereafter in effect.

     "Health Department" shall mean any federal, state or local health
department, licensing agency, governing body or comparable agency.

     "Identification Period" shall have the meaning set forth in Section 24.2.

     "Impositions" shall mean, for each applicable Leased Property,
collectively, all taxes (including, without limitation, all taxes imposed under
the laws of the State in which the Leased Property is located), as such laws may
be amended from time to time, and all ad valorem, sales and use, single
business, gross receipts, transaction privilege, rent or similar taxes as the
same relate to, or are imposed upon, any rents from the applicable Leased
Property or upon Tenant or its business conducted upon the applicable Leased
Property (but excluding any tax based on the net income or net profit of
Landlord derived from any such rents), assessments (including, without
limitation, all assessments for public improvements or benefits, whether or not
commenced or completed prior to the date hereof and whether or not to be
completed within the Term), water, sewer or other rents and charges, excises,
tax levies, fees (including, without limitation, license, permit, inspection,
authorization and similar fees), and all other governmental charges, in each
case whether general or special, ordinary or extraordinary, or foreseen or
unforeseen, of every character in respect of the applicable Leased Property or
any rents therefrom or the business conducted thereon by Tenant (including all
interest and penalties thereon due to any failure in payment by Tenant), which
at any time prior to (including, without limitation, a "roll-back" of any such
taxes or charges for periods prior to the date hereof), 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 such Leased Property, (b) such
Leased Property or any part thereof or any rent therefrom or any estate, right,
title or interest therein, or (c) any occupancy, operation, use or possession
of, or sales from, or activity conducted on, or in connection with, such Leased
Property or the leasing or use of such Leased Property or any part thereof by
Tenant; provided, however, nothing contained in this Lease shall be construed to
require Tenant to pay any tax based on net income imposed on Landlord or any
other Person.

     "Initial Expiration Date" shall have the meaning set forth in Section 1.2.

     "Insurance Premiums" shall have the meaning set forth in Section 14.2.

     "Insurance Requirements" shall mean all terms of any insurance policy
required by this Lease with respect to the applicable Leased Property(ies) and
all requirements of the issuer of any such policy.

                                       11

<PAGE>

     "Intangibles" shall have the meaning set forth in Section 1.1.2(a).

     "Land" shall have the meaning set forth in Section 1.1.1.

     "Landlord Appraiser Notice" shall have the meaning set forth in Section
34.2.

     "Landlord's Appraiser" shall have the meaning set forth in Section 34.2.

     "Landlord Determination" shall have the meaning set forth in Section 34.1.

     "Landlord Indemnified Parties" shall mean Landlord's Affiliates and
Landlord's and its Affiliates' agents, employees, owners, partners, members,
managers, contractors, representatives, consultants, attorneys, auditors,
officers and directors.

     "Landlord's Representatives" shall mean Landlord's agents, employees,
contractors, consultants, attorneys, auditors, architects and other
representatives.

     "LC Election" shall have the meaning set forth in Section 3.4.2.

     "Lease" shall have the meaning set forth in the preamble hereof.

     "Lease Guaranty" shall have the meaning set forth in the recitals hereto.

     "Lease Year" shall mean the First Lease Year and each twelve (12) month
period of the Term after the First Lease Year.

     "Leased Improvements" shall have the meaning set forth in Section 1.1.

     "Leased Property" shall mean a parcel of Leased Land, the Leased
Improvements located thereon and the Intangibles and the Easement Rights
associated therewith from time to time leased by Landlord to Tenant hereunder.

     "Leased Property Condition Report" shall have the meaning set forth in
Section 9.1.1.

     "Legal Requirements" shall mean, as to any Leased Property or Facility, all
federal, state, county, parish, municipal and other governmental statutes, laws,
rules, orders, regulations, guidelines, ordinances, judgments, decrees and
injunctions affecting such Leased Property and/or Tenant's Personal Property or
the maintenance, construction, use, operation or alteration thereof, whether now
or hereafter enacted and in force, including, without limitation, (i)
Authorizations, (ii) building codes and zoning regulations and (iii) any
statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and
injunctions that (x) require repairs, modifications or alterations in or to such
Leased Property, (y) adversely affect the use thereof or (z) regulate the
transport, handling, use, storage or disposal or require the cleanup or other
treatment of any Hazardous Substances.

     "Lending Institution" shall mean any insurance company, federally insured
commercial or savings bank, national banking association, savings and loan
association, credit union, employees' welfare, pension or retirement fund or
system, corporate profit sharing or pension

                                       12

<PAGE>

trust, college or university, endowment fund, REIT, investment bank, commercial
credit lending corporation, or other institutional lender or financial
enterprise, in each case acting on its own behalf or as agent on behalf of other
Lending Institutions.

     "Letter of Credit" shall have the meaning set forth in Section 3.4.2.

     "Limited Termination Election" shall have the meaning set forth in Section
17.2.

     "Litigation Costs" shall mean all costs reasonably incurred by Landlord or
any Landlord Indemnified Parties in connection with the enforcement of any
provision of this Lease and/or in connection with any third-party claim against
Landlord, any Landlord Indemnified Parties or any Leased Property arising on
account of or in connection with any default or Event of Default hereunder by
Tenant, including, without limitation, costs reasonably incurred by Landlord or
any Landlord Indemnified Parties in investigating, settling and/or prosecuting
claims and for reasonable attorneys' and legal assistant fees and expenses,
court costs and fees and reasonable consultant and witness fees and expenses.

     "Loan Guaranty" shall have the meaning set forth in the recitals hereto.

     "Loan Documents" shall have the meaning set forth in Section 17.1.20.

     "Loan Transaction" shall have the meaning set forth in the recitals hereto.

     "Losses" shall mean all claims, demands, expenses, actions, judgments,
damages, penalties, fines, liabilities, losses of every kind and nature, suits,
administrative proceedings, costs and fees, including, without limitation,
reasonable attorneys' and reasonable consultants' fees and expenses, and
Environmental Costs.

     "Medicaid" shall mean that certain program of medical assistance, funded
jointly by the federal government and the states for impoverished individuals
who are aged, blind and/or disabled, and for members of families with dependent
children, which program is more fully described in Title XIX of the Social
Security Act (42 U.S.C. (S)(S) 1396 et seq.) and the regulations promulgated
thereunder.

     "Medicare" shall mean that certain federal program providing health
insurance for eligible elderly and other individuals, under which physicians,
hospitals, nursing facilities, home health care and other providers are
reimbursed for certain covered services they provide to the beneficiaries of
such program, which program is more fully described in Title XVIII of the Social
Security Act (42 U.S.C. (S)(S) 1395 et seq.) and the regulations promulgated
thereunder.

     "Mezzanine Loan" shall have the meaning set forth in the recitals hereto.

     "Mezzanine Loan Agreement" shall have the meaning set forth in the Lease
Guaranty.

     "Mezz Security" shall have the meaning set forth in Section 3.4.1.

     "Minimum Purchase Price" shall have the meaning set forth in Exhibit D
attached hereto and made a part hereof.

                                       13

<PAGE>

     "Mortgage Loan Agreement" shall have the meaning set forth in the Lease
Guaranty.

     "Net Operating Income" shall mean, for any period, the amount by which
Operating Income for such period exceeds Operating Expenses for such period.

     "Net Worth" shall mean an amount equal to the total consolidated book value
of the assets of the Tenant or each Tenant, as applicable minus the total
consolidated liabilities of the Tenant or each Tenant, as applicable.

     "New Lease" shall have the meaning set forth in Section 42.1.

     "Notice" shall mean any note, notice, or report of any suit, proceeding,
investigation, order, consent order, injunction, writ, award, or action related
to or affecting or indicating the treatment, storage, handling, disposal,
generation, spill, release or discharge of any Hazardous Substances in, on,
under, about or affecting any of the Leased Properties or any violation of
Environmental Laws as they apply to any Leased Property.

     "Officer's Certificate" shall mean a certificate of Tenant collectively, or
each Tenant, as applicable, signed by the chairman of the board of directors,
the president, the chief operating officer, the chief financial officer, the
general counsel or the general partner or managing member, as applicable, of
each Tenant in the case of a certificate of Tenant collectively, or of such
particular Tenant in the case of a certificate of an individual Tenant.

     "Operating Expenses" shall mean, with respect to any or all of the Leased
Properties, and without duplication, all costs and expenses incurred by Tenant
determined on an accrual basis, relating to the operation, maintenance, repair,
use and management of such Leased Property(ies), including, without limitation,
utilities, repairs and maintenance, insurance, Impositions, advertising
expenses, payroll and related taxes, equipment lease payments and actual
management fees, but excluding (i) Fixed Rent, (ii) depreciation, amortization
and other non-cash expenses of the Leased Property(ies); provided, however, that
such costs and expenses shall be subject to reasonable adjustment by Landlord to
normalize such costs and expenses, and (iii) capital expenditures.

     "Operating Income" shall mean all revenue derived from the operation of any
or all of the Leased Properties or a Leased Property, as the case may be, by
Tenant from whatever source, determined on an accrual basis, including, but not
limited to, Patient Revenues, but excluding (a) sales, use and occupancy or
other taxes on receipts required to be accounted for by Tenant to any
Governmental Authority, (b) non-recurring revenues as reasonably determined by
Landlord (e.g. proceeds from a sale of assets or refinancing), (c) Casualty
Insurance Proceeds and Awards (other than business interruption or other loss of
income insurance related to business interruption or loss of income for the
Leased Property(ies) in question), and (d) any proceeds from the permitted sale
or refinancing of any Leased Property or recapitalization of the applicable
Tenant(s). In addition, if required by Landlord, income accrued but not paid in
cash during an accounting period shall be adjusted for an allowance for doubtful
accounts in a manner consistent with historical net realizable value.

     "Operational Transfer" shall have the meaning set forth in Section 39.1.2.

                                       14

<PAGE>

     "Operator Reports" shall have the meaning set forth in Section 8.2.3.5.

     "Option" shall have the meaning set forth in Section 38.

     "Option Closing" shall have the meaning set forth in Section 38.

     "Option Exercise Date" shall have the meaning set forth in Section 38.

     "Option Purchase Price" shall have the meaning set forth in Section 38.

     "Overdue Rate" shall mean on any date, a rate equal to four percent (4%)
per annum above the Prime Rate, but in no event greater than the maximum rate
then permitted under applicable law. Interest at the aforesaid rates shall be
determined for actual days elapsed based upon a 360 day year.

     "P&S Agreement" shall have the meaning set forth in the recitals hereto.

     "Patient Revenues" shall mean any and all revenue and income derived from a
Facility or the Facilities, as applicable, in the ordinary course of business
from the provision of medical services or therapeutic care (exclusive of patient
deposits).

     "Per Bed Allocation" shall have the meaning set forth in Section 11.3.1.

     "Permitted Encumbrances" shall mean (a) all easements, covenants,
conditions, restrictions, agreements and other matters with respect to the
Premises that are of record as of the date hereof; (b) all easements, covenants,
conditions, restrictions, agreements and other matters with respect to the
Premises, whether or not of record, of which Tenant has knowledge as of the date
hereof or that are executed by Tenant or approved or consented to by Tenant; (c)
any easements, covenants, conditions, restrictions or utility agreements entered
into by Landlord with respect to a Leased Property after the date hereof; (d)
any agreement required pursuant to any Legal Requirement entered into by
Landlord with respect to a Leased Property after the date hereof; (e) any real
estate taxes, assessments and other governmental levies, fees or charges imposed
with respect to a Leased Property(ies) that are not yet due and payable; (f) any
zoning, building codes and other land use laws regulating the use or occupancy
of any Leased Property(ies); (g) occupancy rights of residents and patients of
the Facilities; and (h) any other matters affecting title to the Premises or any
portion thereof caused by Tenant or its assignees or sublessees or their
respective agents or employees.

     "Person" shall mean any individual, sole proprietorship, corporation,
general partnership, limited partnership, limited liability company or
partnership, joint venture, association, joint stock company, bank, trust,
estate, unincorporated organization, Governmental Authority, endowment fund or
other form of entity.

     "Plans and Specifications" shall have the meaning set forth in Section
11.2.1.

     "Policies" shall have the meaning set forth in Section 14.2.

                                       15

<PAGE>

     "Portfolio Coverage Ratio" shall mean the ratio of (i) the Cash Flow for
all of the Facilities for the applicable period; to (ii) Fixed Rent and all
other debt service and lease payments relating to such Facilities for the
applicable period.

     "Premises" shall mean all of the Land, the Leased Improvements and the
Intangibles from time to time leased hereunder by Landlord to Tenant.

     "Prior Period Fixed Rent" shall mean, for any Lease Year, the Fixed Rent
for the immediately preceding Lease Year.

     "Prior Period Operating Income" shall mean, for any Lease Year, the
Operating Income for the period commencing two (2) months prior to the
commencement of the preceding Lease Year and expiring two (2) months prior to
the Lease Year for which the Prior Period Operating Income is being determined
generated by Tenant for all of the Leased Properties that are subject to this
Lease during such period. By way of illustration only, if the Prior Period
Operating Income were being determined for the Lease Year commencing as of
November 1, 2005 and expiring October 31, 2006, the Prior Period Operating
Income applicable to such Lease Year would be determined for the period
commencing as of September 1, 2004 and expiring August 31, 2005 on the basis of
the Leased Properties subject to this Lease during such period.

     "Primary Intended Use" shall mean, as to each Facility, the type of
healthcare facility corresponding to such Facility on Schedule 1 attached hereto
and made a part hereof.

     "Primary Loan" shall have the meaning set forth in the recitals hereto.

     "Prime Rate" shall mean, on any date, a rate equal to the annual rate on
such date announced by the Wall Street Journal to be the "prime rate."

     "Property Removal Date" shall have the meaning set forth in Section 17.9.

     "Property Transfer Date" shall have the meaning set forth in Section 42.1.

     "Property Collateral" shall have the meaning set forth in Section 21.1.1.

     "Provider Agreements" shall mean any agreements under which healthcare
facilities are eligible to receive payment under Medicare, Medicaid or any Third
Party Payor Program from Governmental Authorities or non-public entities.

     "Rating Agencies" shall mean each of S&P, Moody's and Fitch or any other
nationally recognized statistical rating agency that has been designated by
Landlord.

     "RCRA" shall mean the Resource Conservation and Recovery Act and the
Comprehensive Environmental Response, Compensation and Liability act, in either
case as amended from time to time.

     "Reimbursement Period" shall have the meaning set forth in Section 39.3.2.

     "REIT" shall mean a real estate investment trust.

                                       16

<PAGE>

     "REIT Requirements" shall have the meaning set forth in Section 35.

     "Renewal Option" shall have the meaning set forth in Section 1.2.

     "Rent" shall mean collectively, Fixed Rent and Additional Rent.

     "Rent Escalation Condition" shall mean, as to any Lease Year, that: the
Prior Period Operating Income determined for such Lease Year equals or exceeds
seventy-five percent (75%) of the Adjusted Base Year Operating Income determined
on the basis of those Leased Properties that are subject to this Lease during
the period for which the Prior Period Operating Income is determined. By way of
illustration only, for purposes of determining whether the Rent Escalation
Condition has been satisfied for the Lease Year commencing as of November 1,
2005 and expiring as of October 31, 2006, the Prior Period Operating Income for
the period commencing as of September 1, 2004 and expiring as of August 31, 2005
would be compared to the Adjusted Base Year Operating Income for such period for
the Leased Properties that are subject to this Lease during such period to
determine whether such Prior Period Operating Income equals or exceeds
seventy-five percent (75%) of the Adjusted Base Year Operating Income for such
period.

     "Replacement Operator" shall have the meaning set forth in Section 24.2.

     "Reserve Event" shall have the meaning set forth in Section 8.2.3.2.

     "Restoration Plans and Specifications" shall have the meaning set forth in
Section 15.4.1.

     "Section 41 Date" shall have the meaning set forth in Section 41.

     "Section 41 Lease" shall have the meaning set forth in Section 41.

     "Security Amount" shall have the meaning set forth in Section 3.4.1.

     "Security Deposit" shall have the meaning set forth in Section 3.4.1.

     "Service Guarantors" shall have the meaning set forth in the Lease
Guaranty.

     "SEC" shall mean the Securities and Exchange Commission or any successor
thereto.

     "Successor Operator" shall have the meaning set forth in Section 39.1.2.

     "Tax Credit" shall have the meaning set forth in the P&S Agreement.

     "Tenant" shall have the meaning set forth in the preamble hereof.

     "Tenant Org Docs" shall have the meaning set forth in Section 10.1.

     "Tenant Parties" shall mean any Tenant's agents, employees, Affiliates,
invitees, visitors, patients, contractors, subcontractors, physicians,
licensees, officers, directors, representatives and comparable parties.

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     "Tenant's Appraiser" shall have the meaning set forth in Section 34.2.

     "Tenant's Personal Property" shall mean all motor vehicles, machinery,
equipment, furniture, furnishings, movable walls or partitions, computers or
trade fixtures or all other personal property, and consumable inventory and
supplies, now owned or hereafter acquired by Tenant and located on the
applicable Leased Property or used in Tenant's business on such Leased Property,
including, without limitation, all modifications, replacements, alterations and
additions to such personal property installed at the expense of Tenant, except
items, if any, included within the definition of Fixtures.

     "Tenant's Proportionate Share" shall mean each Tenant's allocable share of
the Rent obligations set forth hereunder, which Tenant's Proportionate Share is
expressed as a percentage and set forth on Schedule 2 attached hereto and made a
part hereof and subject to adjustment as described in Sections 17.9, 41 and 42.

     "Term" shall have the meaning set forth in Section 1.2.

     "Terminated Lease Properties" shall have the meaning set forth in Section
17.2.

     "Third Appraiser" shall have the meaning set forth in Section 34.2.

     "Third Party Payor Programs" shall mean any third party payor programs
pursuant to which healthcare facilities qualify for payment or reimbursement for
medical or therapeutic cure or other goods or services rendered, supplied or
administered to any admittee, occupant, resident or patient by or from any
Governmental Authority, bureau, corporation, agency, commercial insurer,
non-public entity, "HMO," "PPO" or any comparable party.

     "Transfer Authorization" shall have the meaning set forth in Section
39.1.2.

     "Transfer" shall have the meaning set forth in Section 24.1.

     "Transfer Criteria" shall have the meaning set forth in Section 24.2.

     "Transferred Premises" shall have the meaning set forth in Section 41.

     "Trans" shall mean Trans Healthcare, Inc., i.e. the "Parent" as defined in
the Lease Guaranty.

     "Transition Authorizations" shall have the meaning set forth in Section
10.10.

     "Transition Notice" shall have the meaning set forth in Section 39.1.1.

     "Transition Property" shall have the meaning set forth in Section 39.1.1.

     "UCC" shall have the meaning set forth in Section 11.3.1.

     "Unsuitable For Its Primary Intended Use" shall mean a state or condition
of the Facility(ies) located at the applicable Leased Property such that, by
reason of Casualty or Condemnation, in the reasonable judgment of Landlord, the
Facility(ies) cannot be operated for

                                       18

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its (their) primary intended use(s) taking into account, among other relevant
factors, the number of usable beds affected by such Casualty or Condemnation;
provided, however that such Facility(ies) shall not be deemed to be "Unsuitable
For Its Primary Intended Use" if such Facility(ies) can, within eighteen (18)
months after the occurrence of such Casualty or Condemnation, be restored to
substantially the same state and condition as existed immediately prior to such
Casualty or Condemnation.

     "Work" shall have the meaning set forth in Section 15.4.1.

     3. Rent.

          3.1 Fixed Rent.

               3.1.1 Rental Payments Tenant shall pay to Landlord, in advance
and without demand, on or prior to the fifteenth (15th) day of each calendar
month during the Term in lawful money of the United States of America, by wire
transfer and pursuant to the wiring instructions attached hereto as Schedule
3.1.1, or at such place or to such person(s), firm(s) or corporation(s) as
Landlord from time to time may designate in writing, Fixed Rent. Landlord may,
by written notice to Tenant at any time and from time to time, elect to require
that Rent (or portions thereof designated by Landlord) that is payable to
Landlord hereunder be paid to a lock box. Fixed Rent (and Additional Rent in
those instances described in Section 3.3 below) shall be paid by Tenant to
Landlord in advance of the fifteenth (15th) day of each calendar month during
the Term in equal, consecutive monthly installments; provided, however, that the
first payment of Fixed Rent (and Additional Rent in those instances described in
Section 3.3 below) shall be payable on November 4, 2002 and prorated for the
period from and including November 4, 2002 through November 14, 2002, and the
last monthly payment of Fixed Rent (and Additional Rent in those instances
described in Section 3.3 below) shall be prorated as to any partial month.

               3.1.2 Rental Amounts. Fixed Rent for the First Lease Year shall
be $5,962,500 per annum, payable by Tenant to Landlord in equal monthly
installments of $496,875. Each Tenant's allocable share of Fixed Rent shall be
equal to the product of (i) the Tenant's Proportionate Share for such Tenant set
forth on Schedule 2 attached hereto and made a part thereof; and (ii) the Fixed
Rent due hereunder, as applicable. Notwithstanding anything contained herein to
the contrary, the existence of a Tenant's Proportionate Share and the allocation
of Fixed Rent described in the preceding sentence or elsewhere in this Lease
does not change the joint and several nature of the obligation of each Tenant to
pay Rent hereunder and otherwise perform the duties and obligations of Tenant
hereunder (it being acknowledged that each Tenant shall be jointly and severally
liable for any and all obligations of each other Tenant hereunder, including,
but not limited to, each individual Tenant's obligations to pay Rent).
Commencing upon the second (2nd) Lease Year of the Initial Term, and upon the
commencement of each Lease Year to occur thereafter during the Term (including
during Extended Terms except as noted below with respect to the first Lease Year
in any Extended Term), the Fixed Rent for such Lease Year shall be an amount
equal to the sum of (i) the Prior Period Fixed Rent applicable to such Lease
Year and (ii) the product of (a) the Prior Period Fixed Rent applicable to such
Lease Year and (b) the amount equal to the greater of (x) three percent (3%) or
(y) fifty percent (50%) of the CPI Increase, expressed as a percentage, for such
Lease Year for which

                                       19

<PAGE>

such calculation is being performed; provided, however, that (i) the Fixed Rent
for the first Lease Year of any Extended Term shall be in the amount determined
and described in Section 1.3 above; and (ii) if the Rent Escalation Condition
has not been satisfied with respect to such Lease Year (i.e. the Prior Period
Operating Income for such Lease Year does not equal or exceed seventy-five
percent (75%) of the Adjusted Base Year Operating Income allocable to the period
for which the Prior Period Operating Income has been determined), the Fixed Rent
for such Lease Year shall be equal to the Prior Period Fixed Rent.
Notwithstanding anything contained herein to the contrary, if the Rent
Escalation Condition fails with respect to any one or more Lease Years, the
Fixed Rent determined for the next Lease Year with respect to which the Rent
Escalation Condition is satisfied shall be determined as if the Rent Escalation
Condition had been satisfied for all previous Lease Years and the Fixed Rent had
been escalated pursuant to, and in accordance with, the terms of this Section
3.1.2 for all prior Lease Years. By way of illustration only, if: (xx) the Rent
Escalation Condition has failed for both the Lease Year commencing as of
November 1, 2006 and expiring as of October 31, 2007 and the Lease Year
commencing as of November 1, 2007 and expiring October 31, 2008; but (yy) the
Rent Escalation Condition is satisfied for the Lease Year commencing as of
November 1, 2008 and expiring as of October 31, 2009, the Fixed Rent for the
Lease Year commencing as of November 1, 2008 and expiring as of October 31, 2009
shall be determined as if the Rent Escalation Condition for the two preceding
Lease Years (and all other Lease Years) had been satisfied such that the Fixed
Rent for the Lease Year commencing as of November 1, 2008 and expiring as of
October 31, 2009 shall include, and be determined on the basis of, the
escalations for all prior Lease Years which would have occurred pursuant to this
Section 3.1.2 had the Rent Escalation Condition for all prior Lease Years been
satisfied.

               3.1.3 Fixed Rent Determinations. Except with respect to the first
Lease Year of any Extended Term, promptly after the publication of the Cost of
Living Index for the tenth (10th) month during any Lease Year, Landlord shall
calculate the CPI Increase and the Fixed Rent for the next Lease Year and submit
its determination of Fixed Rent for the next Lease Year for Tenant's review and
approval, which determination shall be deemed approved absent written notice
from Tenant setting forth in reasonable specificity and detail any errors in
such determination by Landlord and within five (5) Business Days after its
submission to Tenant. The determination of Fixed Rent by Landlord shall be
deemed correct and approved by Tenant absent manifest error in its determination
on the part of Landlord. In the event Landlord and Tenant are unable to
determine Fixed Rent for any Lease Year on or prior to the commencement of such
Lease Year, Tenant shall pay Fixed Rent for such Lease Year assuming a three
percent (3%) increase over Prior Period the Fixed Rent applicable to such Lease
Year until the correct Fixed Rent is determined for such Lease Year. If the
Fixed Rent ultimately determined for any such Lease Year exceeds the assumed
amount, Tenant shall pay any deficiency, together with interest thereon, at the
Prime Rate, with the first installment of Fixed Rent owing after such
determination is made. If the Fixed Rent ultimately determined for any such
Lease Year is less than the assumed amount, any excess amounts paid by Tenant on
account of the Fixed Rent for such Lease Year shall be credited against the next
installment of Fixed Rent due and owing hereunder. At either party's written
request, following the determination of Fixed Rent for a particular Lease Year,
both parties shall execute and enter into an amendment to this Lease
memorializing the Fixed Rent payable with respect to such Lease Year promptly,
and in any event within five (5) Business Days, after receipt of such request by
the non-requesting party.

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<PAGE>

          3.2 Additional Rent. In addition to Fixed Rent payable with respect to
the Premises, Tenant shall pay and discharge as and when due and payable the
following (collectively "Additional Rent") (any costs or expenses paid or
incurred by Landlord on behalf of Tenant that constitute Additional Rent shall
be reimbursed by Tenant to Landlord promptly, and in any event within ten (10)
Business Days, after the presentation by Landlord to Tenant of invoices
therefor):

               3.2.1 Impositions. Subject to the escrow provisions contained in
Section 3.3 below, Tenant shall pay all Impositions when due, and regardless of
the period to which they relate, and in any event before any fine, penalty,
interest or cost may be added for non-payment, such payments to be made directly
to the taxing authorities where feasible, and shall, promptly upon request,
furnish to Landlord copies of official receipts or other satisfactory proof
evidencing such payments. If any such Imposition may, at the option of the
taxpayer, lawfully be paid in installments (whether or not interest shall accrue
on the unpaid balance of such Imposition), Tenant may exercise the option to pay
same (and any accrued interest on the unpaid balance of such Imposition) in
installments (provided no such installments shall extend beyond the Term) and,
in such event, shall pay such installments during the Term before any fine,
penalty, premium, further interest or cost may be added thereto.

               3.2.2 Utility Charges. Tenant shall pay any and all charges for
electricity, power, gas, oil, water, sanitary and storm sewer, refuse
collection, medical waste disposal and other utilities used or consumed in
connection with each Leased Property during the Term. In the event Landlord is
billed directly by any utility company for any utilities or services supplied to
Tenant during the Term, Landlord shall send Tenant the bill and Tenant shall pay
the same before it is due. Landlord shall have no obligation or liability with
respect to any interruption or failure in the supply of any such utilities.

               3.2.3 Insurance Premiums. Tenant shall pay all premiums for the
insurance coverage required to be maintained pursuant to Section 14 hereof.

               3.2.4 Other Charges. Tenant shall pay all other amounts,
liabilities, obligations, costs and expenses paid or incurred with respect to
the ownership, repair, replacement, restoration, maintenance and operation of
the Premises.

               3.2.5 Late Payment of Rent. If any installment of Fixed Rent or
Additional Rent (but only as to those Additional Rent payments that are payable
directly to Landlord or Landlord's agent or assignee) shall not be paid on its
due date, Tenant will pay to Landlord for such overdue installment, on demand,
(i) interest computed at the Overdue Rate on the amount of such installment,
from the due date of such installment to the date of payment thereof and (ii) an
administrative fee of One Thousand Dollars ($1,000.00). In the event of any
failure by Tenant to pay any Additional Rent when due, Tenant shall promptly pay
and discharge, as Additional Rent, every fine, penalty, interest and cost that
may be added for non-payment or late payment of such items. Landlord shall have
all legal, equitable and contractual rights, powers and remedies provided either
in this Lease or by statute or otherwise in the case of non-payment of Rent.

                                       21

<PAGE>

               3.2.6 Consent Expenses. Tenant shall pay, as Additional Rent, on
behalf of Landlord, or reimburse Landlord for, any and all of the costs and
expenses paid or incurred by Landlord, including, without limitation, reasonable
attorneys' fees, in connection with any of the following activities undertaken
by or on behalf of Landlord under this Lease: (i) the review by Landlord or
Landlord's Representatives of any notices, reports or other information required
to be submitted to Landlord by Tenant pursuant to the terms hereof, including,
without limitation, financial statements, Annual Capital Expenditure Budgets,
Officer's Certificates, Estoppel Certificates, Annual Budgets and Operator
Reports; (ii) any inspection performed by Landlord or any of Landlord's
Representatives of one or more Leased Properties pursuant to any inspection
rights granted hereunder; (iii) the exercise by Tenant of the Option, whether or
not the purchase and sale of the Premises is consummated; (iv) the review,
execution, negotiation or delivery of any consent, waiver, estoppel,
subordination agreement or approval requested of Landlord by Tenant hereunder,
including, without limitation, any request for consent to Alterations, any
so-called "landlord's waiver", or the negotiation and approval of the terms of,
and instruments associated with, any AR Financing; (v) the review by Landlord or
Landlord's Representatives of any Plans and Specifications or Restoration Plans
and Specifications; (vi) the review by Landlord or Landlord's Representatives,
of any request by Tenant for any other approval or consent hereunder, or any
waiver of any obligation of Tenant hereunder; (vii) the negotiation by Landlord
or Landlord's Representatives of the terms of instruments requested by Landlord
of Tenant in connection with any Facility Mortgage; (viii) any assistance
provided by Landlord in connection with a permitted contest pursuant to Section
13; (ix) any review by Landlord of invoices, bills, receipts and other documents
required to be reviewed by Landlord, in its reasonable discretion, to monitor
Tenant's compliance with the terms of this Lease in respect of Impositions,
utility charges, insurance premiums or any other provisions hereunder requiring
Tenant to make payments to any third party; (x) the establishment and
maintenance by Landlord or any Facility Mortgagee of any bank or investment
account pursuant to Section 3.3 or 11.3; and (xi) any other negotiation, request
or other activity comparable to any of the foregoing (collectively, such
expenses, "Consent Expenses"). Tenant shall reimburse Landlord for (or pay on
behalf of Landlord) any Consent Expenses promptly, and in any event within
fifteen (15) Business Days, after the presentation by Landlord to Tenant of
invoices therefor.

          3.3 Escrow Deposits.

               3.3.1 Escrow. Tenant shall, on the first day of the first
calendar month commencing after the date on which the aggregate amount of
Impositions and insurance premiums payable from and after November 4, 2002 is
greater than or equal to the Tax Credit (the "Escrow Commencement Date"), and on
the first day of each calendar month thereafter during the Term, pay to and
deposit with Landlord a sum equal to one twelfth (1/12th) of the Impositions to
be levied, charged, filed, assessed or imposed upon or against the Premises
within one (1) year after the Escrow Commencement Date (or any subsequent twelve
(12) month period) and a sum equal to-one-twelfth (1/12th) of the premiums for
the insurance policies required pursuant to Section 14 hereof that are payable
within one (1) year after said Escrow Commencement Date (or any subsequent
twelve (12) month period). If the amount of the Impositions to be levied,
charged, assessed or imposed or insurance premiums to be paid within the one (1)
year period following the Escrow Commencement Date (or any subsequent twelve
(12) month period) hereunder cannot be determined as of the Escrow Commencement
Date (or

                                       22

<PAGE>

the commencement of any subsequent twelve (12) month period), such amount for
the purpose of computing the deposit to be made by Tenant hereunder shall be
estimated by Landlord with an appropriate adjustment to be promptly made between
Landlord and Tenant as soon as such amount becomes determinable. Landlord may,
at its option, from time to time require that any particular deposit be greater
than one-twelfth (1/12th) of the estimated Imposition and/or insurance premium
amount payable within one (1) year after the Escrow Commencement Date (or the
commencement of any subsequent twelve (12) month period), if such additional
deposit is required to provide a sufficient fund from which to make payment of
all Impositions on or before the next due date of any installment thereof, or to
make payment of any required insurance premiums not later than the due date
thereof. Tenant shall deliver to Landlord copies of all notices, demands,
claims, bills and receipts in relation to the Impositions and insurance premiums
promptly upon receipt thereof by Tenant. The actual or estimated amounts on
account of Impositions and insurance premiums shall be adjusted annually.

               3.3.2 Landlord's Deposit. On the date hereof, Landlord shall
deposit, in an account (the "Escrow Account") with Lending Institution
satisfactory to Landlord or any Facility Mortgagee, in the sole discretion of
Landlord or such Facility Mortgagee, an amount equal to the Tax Credit. The Tax
Credit and escrow deposits made by Tenant pursuant to this Section 3.3 may be
commingled with other assets of Landlord or such Facility Mortgagee. The Tax
Credit shall be applied by Landlord or such Facility Mortgagee pursuant to the
terms of this Section 3.3, in the same manner and fashion as an escrow deposit
made by Tenant to Landlord pursuant to Section 3.3.3 for purposes of the payment
of Impositions and insurance premiums.

               3.3.3 Use of Deposits. Tenant shall pay any and all Impositions
and insurance premiums when due and regardless of whether or not the funds then
held in the Escrow Account are sufficient to reimburse Tenant therefor. The Tax
Credit and the sums deposited by Tenant under this Section 3.3 shall be held by
Landlord or any Facility Mortgagee, and, provided that no Event of Default
exists hereunder, shall be used to reimburse Tenant for any Impositions and/or
insurance premiums, as applicable, paid by Tenant, upon delivery by Tenant to
Landlord or such Facility Mortgagee, as applicable, of documentation evidencing
the payment of such Impositions and/or insurance premiums, which reimbursement
shall be provided within thirty (30) days after the presentation of such
evidence. Any such deposits may be commingled with other assets of Landlord or
such Facility Mortgagee, and shall be deposited in the Escrow Account and
Landlord shall not be liable to Tenant or any other person for any consequent
loss of principal or interest of funds held in the Escrow Account. Furthermore,
Landlord and its Facility Mortgagee shall bear no responsibility for the
financial condition of, nor any act or omission by, the Lending Institution at
which the Escrow Account is located. The interest from such deposits shall be
retained in the Escrow Account to be applied in accordance with the terms of
this Section 3.3. If Tenant fails to pay any Impositions or insurance premiums
when due and owing hereunder to the applicable taxing authority or insurance
carrier, Landlord or any Facility Mortgagee may, but shall not be obligated to,
pay such Impositions or insurance premiums from the funds in the Escrow Account
pursuant to this Section 3.3. Upon the occurrence of any Event of Default,
Landlord or any Facility Mortgagee may apply any funds held in the Escrow
Account to cure such Event of Default or on account any damages suffered or
incurred by Landlord in connection therewith.

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<PAGE>

               3.3.4 Deficits. Landlord shall have no liability whatsoever to
Tenant if any deposits held by Landlord under this Section 3.3 are not
sufficient to reimburse Tenant for any Imposition or insurance premium paid by
Tenant. Landlord may change its estimate of any Imposition or insurance premium
for any period on the basis of a change in an assessment or tax rate or on the
basis of a prior miscalculation or for any other good faith reason. In such
event, Tenant shall deposit with Landlord the amount in excess of the sums
previously deposited with Landlord for the applicable period within ten (10)
days after written request therefor from Landlord.

               3.3.5 Transfers; Refund. In connection with any assignment of the
Landlord's interest under this Lease, the original Landlord named herein and
each successor in interest shall have the right to transfer all amounts
deposited pursuant to the provisions of this Section 3.3 and still in its
possession to such assignee (as the subsequent holder of Landlord's interest in
this Lease) and upon such transfer, the original Landlord named herein or the
applicable successor in interest transferring the deposits shall thereupon be
completely released from all liability with respect to such deposits so
transferred, and Tenant shall look solely to said assignee, as the subsequent
holder of Landlord's interest under this Lease, in reference thereto. As of the
Expiration Date, any sums held by Landlord under this Section 3.3 (exclusive of
interest) shall be: (i) first, applied to any credit owing from Tenant to
Landlord pursuant to Section 4.3 on account of Impositions; and (ii) second,
returned to Tenant, only as and when the conditions of Section 3.4.3 for the
return of the Security Deposit have been met and provided that any and all
Impositions or insurance premiums due and owing hereunder have been paid in
full.

          3.4 Security Deposit.

               3.4.1 Cash Security Deposit; Application. Unless Landlord has
made the LC Election, Tenant has paid Landlord upon the delivery of this Lease
an amount equal to six (6) months of Fixed Rent (the "Security Amount") as
security (the "Security Deposit") for the full and faithful performance by
Tenant of each and every term, provision, covenant and condition of this Lease.
Upon the occurrence of a Covenant Replacement Event, the Security Amount (and
the Security Deposit) shall be increased by Tenant to an amount equal to two (2)
years of Fixed Rent (determined from time to time as two (2) times the then
applicable annual Fixed Rent), which Security Amount and Security Deposit shall
be held, treated and applied in accordance with this Lease for all relevant
purposes. Landlord may elect, in its sole discretion, to allow all or some
portion of the Security Deposit to act as security for the Mezzanine Loan. Such
unilateral election on the part of Landlord shall be made by written notice from
Landlord to Tenant designating the portion of the Security Deposit that shall
act as security for the Mezzanine Loan. Landlord may at any time, and from time
to time, in its sole discretion, revoke such election or revise the portion of
the Security Deposit that shall act as security for the Mezzanine Loan (the
portion of the Security Deposit from time to time acting as security for the
Mezzanine Loan, the "Mezz Security"). Promptly after any such election on the
part of Landlord, Tenant shall execute such instruments, acknowledgements or
agreements as Lender or Landlord shall reasonably require to govern the
application, use, refund and replenishment of the Mezz Security. Notwithstanding
anything contained herein to the contrary, Landlord shall have no liability or
obligation to return that portion of the Security Deposit that constitutes any
Mezz Security if and to the extent applied with respect to the Mezzanine Loan or
such return is

                                       24

<PAGE>

prevented by the terms of any agreement relative thereto. Upon the occurrence of
an Event of Default, Landlord may, but shall not be required to, use, apply or
retain the whole or any part of the Security Deposit (whether by drawing upon
the Letter of Credit, or applying the cash Security Deposit held by it) for the
payment of any Rent in default or for any other sum that Landlord may expend or
be required to expend by reason of Tenant's default, including any damages or
deficiency in the reletting of the Premises, whether such damages or deficiency
accrue before or after summary proceedings or other re-entry by Landlord. Tenant
shall not be entitled to any interest on the Security Deposit and Landlord may
commingle the Security Deposit with its other funds. In case of a sale or
transfer of the Premises by Landlord, or any cessation of Landlord's interest
therein, whether in whole or in part, Landlord may pay over any unapplied part
of the Security Deposit (or, in the case of any such partial transfer or
cessation, such portion as Landlord allocates to such part of the Premises, in
its reasonable discretion) or transfer the Letter of Credit if the LC Election
has been made, with any fees incident to such transfer being paid by Tenant
(which transfer, in the case of any such partial transfer or cessation, shall
require Tenant to cause the Letter Credit to be reissued as separate Letters of
Credit satisfying the requirements of Section 3.4.2 as to the remaining Leased
Properties) to the successor owner of the Premises, and from and after such
payment, Landlord shall be relieved of all liability with respect thereto. The
provisions of the preceding sentence shall apply to every subsequent sale or
transfer of the Premises or any part thereof.

               3.4.2 LC Election. At any time, and from time to time, Landlord
may elect (such election, an "LC Election"), in its sole discretion and by
written notice to Tenant, to cause Tenant to post the Security Deposit in the
form of an irrevocable, standby Letter of Credit with a face value of the full
Security Amount (the "Letter of Credit"). Promptly, and in any event within
thirty (30) days after notice of the LC Election, Tenant shall deliver to
Landlord a Letter of Credit satisfying the requirements of this Section 3.4.2 in
the place and stead of the cash Security Deposit, whereupon Landlord shall
return any portion of a cash Security Deposit made by Tenant to Landlord not
previously applied by Landlord. The Letter of Credit shall: (a) be in form and
substance acceptable to Landlord in its sole discretion; (b) name Landlord as
its sole beneficiary; (c) expressly allow Landlord to draw upon it at any time,
or from time to time, in whole or in part, by delivering to the issuer, at an
office of the issuer located in New York, New York, Louisville, Kentucky or
Chicago, Illinois, as set forth on the face of the Letter of Credit, written
notice that Landlord is entitled to draw thereon pursuant to the terms of this
Lease; (d) be issued by an FDIC-insured Lending Institution that is reasonably
satisfactory to Landlord, but shall in all events have a credit rating of "AA"
(or the equivalent) or higher from one of the Rating Agencies; and (e) be
expressly unconditional, irrevocable and fully transferable. The Letter of
Credit (and any renewals or replacements thereof) shall be for a term of not
less than one (1) year. Tenant agrees that it shall from time to time, as
necessary, (i) renew or replace the original and any subsequent Letter of Credit
not less than thirty (30) days prior to its stated expiration date so that it
will remain in full force and effect until the later of sixty (60) days after
the last day of the Term or the date on which Tenant's obligations under this
Lease are satisfied in full or (ii) deliver a cash Security Deposit in the
Security Amount not less than thirty (30) days prior to the stated expiration
date of such Letter of Credit. If Tenant fails to furnish such renewal or
replacement at least 30 days prior to the stated expiration date of the Letter
of Credit, Landlord, or its successor, may immediately draw upon such Letter of
Credit and hold the proceeds thereof as a portion of the Security Deposit
pursuant to the terms of this Lease. Any renewal of or replacement for the
original or any subsequent Letter of Credit shall

                                       25

<PAGE>

be in an amount not less than the Security Amount and shall otherwise meet the
requirements for the original Letter of Credit as set forth above.

               3.4.3 Increase; Replacement of Security Deposit. Tenant, within
five (5) Business Days after any increase in Fixed Rent hereunder, shall deposit
with Landlord cash in, or increase the face amount of the Letter of Credit by,
the amount necessary to ensure the Security Deposit hereunder continues to be
equal to six (6) months' annual Fixed Rent based upon the increased Fixed Rent
from time to time due hereunder (or two (2) times Fixed Rent in the event a
Covenant Replacement Event has occurred). The Security Deposit (or any portion
thereof) may be applied (or drawn upon from time to time in full or partial
amounts in the case of the Letter of Credit and any renewals or replacements
thereof) by Landlord for purposes of curing any Event of Default or Events of
Default of Tenant hereunder (or as otherwise expressly provided in this Section
3.4), in which event Tenant shall replenish said Security Deposit in full,
within ten (10) days after demand therefor, by paying to Landlord the amount so
applied or drawn, or, in the case of the Letter of Credit, restoring the Letter
of Credit to its full amount. Tenant's failure to timely restore the Security
Deposit as aforesaid shall be an Event of Default. If: (a) no Event of Default
has occurred and is continuing hereunder, (b) either (i) Landlord has not
applied (or drawn upon) the Security Deposit to cure an Event of Default or (ii)
Landlord has applied (or drawn upon) the Security Deposit to cure an Event of
Default and Tenant has replenished or restored the same, and (c) Tenant has
fully performed and satisfied all of its obligations under the Lease (including,
without limitation and as applicable, its obligations relative to an Operational
Transfer), then the Security Deposit, or such applicable portion thereof, shall
be paid or returned to Tenant within sixty (60) days after the expiration or
termination of this Lease and the surrender of the Premises to Landlord in the
condition required hereunder; provided, however, that Landlord may retain an
amount, as it shall reasonably determine, to secure the payment of any Rent, the
amount of which Landlord is then unable to determine finally (and Landlord shall
return any such retained amount to Tenant promptly following the final
determination of such Rent amount and the full payment to Landlord of such
Rent). The Security Deposit shall not be deemed an advance payment of Rent or a
measure of Landlord's damages for any default hereunder by Tenant, nor shall it
be a bar or defense to any action that Landlord may at any time commence against
Tenant.

          3.5 Survival. Tenant's obligation to pay any Rent owing hereunder with
respect to any period on or prior to the expiration or termination of this Lease
(including, without limitation, any Extended Terms), as this Lease applies to
any or all of the Premises, shall survive any such expiration or termination.

          3.6 Net Lease. The Rent shall be paid absolutely net to Landlord, free
of all Impositions, utility charges, operating expenses, insurance premiums or
any other charge or expense in connection with the Premises, without any rights
of deduction, set-off or abatement, so that this Lease shall yield to Landlord
the full amount of the installments of Fixed Rent, throughout the Term
(including, without limitation, any Extended Terms). This Lease is intended to
be and shall be construed as an absolutely net lease pursuant to which Landlord
shall not, under any circumstances or conditions, whether presently existing or
hereafter arising, and whether foreseen or unforeseen by the parties, be
required to make any payment or expenditure of any kind whatsoever or be under
any other obligation or liability whatsoever, except as expressly set forth
herein. Notwithstanding the provisions of this Section 3.6, Tenant shall retain

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the right to bring lawsuits against Landlord with respect to alleged defaults by
Landlord of its obligations hereunder or under other agreements to which Tenant
and Landlord are parties.

          3.7 Lease Guaranty. On the date hereof, Tenant shall cause to be
delivered to Landlord the Lease Guaranty made by Guarantor guaranteeing all of
Tenant's obligations under this Lease.

     4. Impositions.

          4.1 Payment of Impositions. Subject to Section 13 relating to
permitted contests, Tenant shall pay all Impositions payable during the Term as
set forth in Section 3.2.1 and for any tax period occurring during the Term,
irrespective of whether the Impositions for such tax period are due and payable
after the Term. 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. If any refund shall be due from any taxing
authority in respect of any Imposition paid by Tenant during the Term, the same
shall be paid over to or retained by Tenant but only if no Event of Default
shall have occurred hereunder and be continuing. If an Event of Default shall
exist hereunder, such refund shall be paid over to and retained by Landlord. If
Tenant nevertheless receives such refund, Tenant shall, upon receipt,
immediately pay such refund over to Landlord in full. Any such funds retained by
Landlord due to an Event of Default shall be applied as Landlord shall determine
in its sole discretion. In the event any Governmental Authority classifies 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. Subject to the terms of Section 13, Tenant may, upon notice to Landlord,
at Tenant's option and at Tenant's sole cost and expense, protest, appeal, or
institute tax contests to effect a reduction of real estate or personal property
assessments and Landlord, at Tenant's expense as aforesaid, shall cooperate with
Tenant in such protest, appeal, or other action to the extent required by law
and reasonably requested by Tenant.

          4.2 Notice of Impositions. Landlord or Landlord's designee shall use
reasonable efforts to give prompt notice to Tenant of all Impositions payable by
Tenant hereunder of which Landlord at any time has knowledge (which notice shall
be deemed properly given if given pursuant to Section 33 hereof or by an e-mail
notification to Tenant at cminer@thicare.com), and, if Tenant has not otherwise
received notice or become aware of the applicable Impositions, Landlord's
failure to give any such notice shall temporarily suspend Tenant's obligations
hereunder to pay such Impositions only until such time as Tenant receives notice
or otherwise becomes aware of such Impositions; provided, however, that if
Landlord reasonably believes that Tenant is aware of such payable Impositions,
then Landlord shall have no such obligation to notify Tenant thereof. In the
event that Landlord fails to timely notify Tenant of any Impositions payable by
Tenant of which Landlord has knowledge and of which Tenant has not otherwise
received notice or become aware, then Landlord shall pay any fine or late fee
resulting from the late payment of such Impositions, but only to the extent that
such fine or late fee is due to delay in payment caused by such failure by
Landlord to so advise Tenant. Tenant shall deliver to Landlord, not more than
five (5) days prior to the due date of each Imposition, copies of the invoice
for such Imposition, the check delivered for payment thereof and an original
receipt evidencing such payment or other proof of payment satisfactory to
Landlord.

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<PAGE>

          4.3 Adjustment of Impositions. Any Imposition imposed in respect of
the tax-fiscal period during which the Term terminates or expires shall be
adjusted and prorated between Landlord and Tenant, whether or not such
Imposition is imposed before or after such termination or expiration, and
Tenant's obligation to pay its prorated share thereof shall survive such
termination or expiration.

     5. No Termination, Abatement, etc. Tenant, to the extent permitted by law,
shall remain bound by this Lease in accordance with its terms and shall neither
take any action without the consent of Landlord to modify, surrender or
terminate the same, nor seek nor be entitled to any abatement, deduction,
deferment or reduction of Rent, or set-off against the Rent, nor shall the
respective obligations of Landlord and Tenant be otherwise affected by reason of
(a) any damage to, or destruction of, any Leased Property or any portion
thereof, from whatever cause, or any Condemnation of any Leased Property or any
portion thereof (except as otherwise expressly and specifically provided in
Section 15 or Section 16), (b) the interruption or discontinuation of any
service or utility servicing any Leased Property, (c) the lawful or unlawful
prohibition of, or restriction upon, Tenant's use of any Leased Property, or any
portion thereof, the interference with such use by any person, corporation,
partnership or other entity, or eviction by paramount title, (d) any claim that
Tenant has or might have against Landlord or any default or breach of any
warranty by Landlord under this Lease or any other agreement between Landlord
and Tenant, or to which Landlord and Tenant are parties, (e) any bankruptcy,
insolvency, reorganization, composition, readjustment, liquidation, dissolution,
winding up or other proceedings affecting Landlord or any assignee or transferee
of Landlord, (f) revocation, suspension or non-renewal of any license, permit,
approval or other Authorization necessary to operate any Facility, (g) any
withholding, non-payment, reduction or other adverse change respecting any
Facility Provider Agreement, Medicare, Medicaid or other Third Party Payor
Program, (h) any admissions hold under Medicare, Medicaid or any Third Party
Payor Program, or (i) for 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. Tenant hereby specifically waives all rights, arising from any
occurrence whatsoever, which may now or hereafter be conferred upon it by law to
(i) modify, surrender or terminate this Lease or quit or surrender any Leased
Property or any portion thereof, or (ii) entitle 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 and to the
extent the obligations to pay the same shall be terminated by termination of
this Lease as to any Leased Property other than by reason of an Event of
Default.

     6. Premises; Tenant's Personal Property.

          6.1 Ownership of the Premises. Tenant acknowledges that the Premises
are the property of Landlord and that Tenant has only the right to the
possession and use of the Premises upon and subject to the terms and conditions
of this Lease. Notwithstanding anything to the contrary contained in this Lease,
in the case of any easement or other rights that are appurtenant to any Leased
Property, Tenant agrees that Landlord does not make any representation or
warranty relative to Landlord's title thereto or whether such appurtenances are

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encumbered. Tenant agrees that such appurtenances shall constitute Permitted
Encumbrances, as to which Tenant shall have the obligations set forth in Section
8.2.7 and Section 23.

          6.2 Tenant's Personal Property. Tenant may (and shall as provided
herein below), at its sole expense, install, affix or assemble or place on any
parcels of the Land or in any of the Leased Improvements, any items of Tenant's
Personal Property and Tenant shall, subject to the terms of Section 21.1.1 and
the conditions set forth below, and except for any Tenant's Personal Property
that is purchased by Landlord pursuant to Section 36, remove the same upon the
expiration or any prior termination of the Term as it relates to any Leased
Property(ies) upon which the same are located. Tenant shall provide and maintain
during the entire Term all such Tenant's Personal Property as shall be necessary
to maintain the Authorizations in effect and to operate each Facility in
compliance with all licensure and certification requirements, in compliance with
all applicable and material Legal Requirements and Insurance Requirements and
otherwise in accordance with customary practice in the industry for the Primary
Intended Use of each Leased Property. All of Tenant's Personal Property not
removed on or prior to the expiration or earlier termination of this Lease shall
be considered abandoned by Tenant and may be appropriated, sold, destroyed or
otherwise disposed of by Landlord without first giving notice thereof to Tenant
and without any payment to Tenant and without any obligation to account therefor
or otherwise dispose of the same in accordance with applicable law. Pursuant to
the terms of Section 9.1.3, Tenant shall, at its expense, restore the Premises
to the condition required by Section 9.1.3, including, without limitation,
repair of all damage to the Premises caused by the removal of Tenant's Personal
Property, whether effected by Tenant or Landlord.

     7. Condition and Use of Each Leased Property.

          7.1 Condition of Each Leased Property. Tenant acknowledges receipt and
delivery of possession of each Leased Property and that Tenant has examined and
otherwise has knowledge of the condition of each Leased Property prior to the
execution and delivery of this Lease and has found each Leased Property to be in
good order and repair and satisfactory for its purposes hereunder. Tenant is
leasing each Leased Property "as is" "where is" and Tenant waives any claim or
action against Landlord in respect of the condition of each Leased Property.
LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF
ANY LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS, DESIGN OR
CONDITION FOR ANY PARTICULAR USE OR PURPOSE AS TO THE QUALITY OF THE MATERIAL OR
WORKMANSHIP THEREIN, LATENT OR PATENT, OR OTHERWISE, IT BEING AGREED THAT ALL
SUCH RISKS ARE TO BE BORNE BY TENANT. TENANT ACKNOWLEDGES THAT EACH LEASED
PROPERTY HAS BEEN INSPECTED BY TENANT AND IS SATISFACTORY TO IT.

          7.2 Use of Each Leased Property.

               7.2.1 Primary Intended Use. During the entire Term, Tenant shall
use each Facility (including, without limitation, the Leased Improvements
thereon) solely for its Primary Intended Use and shall operate each Facility in
a manner consistent with a first class, high quality healthcare facility and
sound reimbursement principles under Medicare, Medicaid and any applicable Third
Party Payor Programs. Tenant shall not use any Leased Property or any portion
thereof for any use other than the Primary Intended Use(s) of the Facility(ies)
located

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<PAGE>

thereon without the prior written consent of Landlord, which consent shall not
be unreasonably withheld. No use shall be made or permitted to be made of any
Leased Property, and no acts shall be done, that would cause the cancellation of
any insurance policy covering such Leased Property or any part thereof, nor
shall Tenant sell or otherwise provide to occupants or patients therein, or
permit to be kept, used or sold in or about such Leased Property, any article
that may be prohibited by any Legal Requirements or by the standard form of fire
insurance policies, or any other insurance policies required to be carried
hereunder, or fire underwriters' regulations. The Authorizations for any
Facility shall, to the maximum extent permitted by law, relate and apply
exclusively to such Facility.

               7.2.2 Authorizations Appurtenant. Tenant acknowledges and agrees
that, subject to all applicable Legal Requirements, the Authorizations, are
appurtenant to the Facilities to which they apply, both during and following the
termination or expiration of the Term. In jurisdictions where the CONs or any
other Authorizations are issued to a Tenant or its subtenant, as the Facility
operator, Tenant agrees that, in connection with an Operational Transfer, it
shall cooperate with Landlord, in accordance with Section 39.1 hereof, to turn
over all of Tenant's rights in connection with such CONs or other Authorizations
to Landlord or Successor Operator, as applicable. This Section 7.2.2 shall
survive the expiration or earlier termination of this Lease.

          7.3 Security Agreement. To the fullest extent permitted by applicable
law, Tenant hereby grants to Landlord a first and best security interest in, and
lien upon, subordinate to no other lien, all Authorizations issued to, leased or
licensed to, or held by, Tenant, including, but not limited to, Tenant's
interest in and rights under all Facility Provider Agreements, with respect to
the Facilities and any CONs issued, leased or licensed to any Tenant
(collectively, "Authorization Collateral") to secure the performance of all of
Tenant's obligations under this Lease, including, but not limited to, its
obligation to engage in, assist with and facilitate any Operational Transfer.
Tenant represents and warrants to Landlord that attached hereto on Schedule 7.3
is a detailed list and description of all of the Authorization Collateral. In
connection with an Event of Default or an Operational Transfer, Landlord shall
have, as to each Leased Property, all the rights and remedies of a secured party
under the laws of the State in which such Leased Property is located with
respect to the Authorization Collateral for the Facility(ies) located on such
Leased Property. Tenant, as debtor, shall (i) execute (if appropriate or
necessary) and deliver to Landlord, as the secured party, upon execution of this
Lease by Tenant, UCC-1 financing statements in proper form, and thereafter, from
time to time, execute and deliver to Landlord such extensions and/or updates of
such financing statements as are required for the purpose of perfecting and
maintaining the priority of the security interest and lien granted to Landlord
herein, (ii) execute such additional security agreements, fixture filings and
other documents as Landlord may reasonably require, and (iii) perform any other
acts reasonably necessary to the perfection of such security interest and lien.
Tenant consents to the filing of such financing statements by Landlord and
agrees that the provisions of this Section 7.3 shall constitute a security
agreement for the purposes contemplated hereby. Notwithstanding anything
contained herein to the contrary, Tenant shall not (under any circumstances)
grant any lien upon, security interest in and to or otherwise pledge, encumber,
hypothecate, transfer or assign, in whole or in part, the Authorization
Collateral to any Person, irrespective of the priority of such security
interest, pledge or hypothecation. The security interest and lien granted by
this

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<PAGE>

Section 7.3 shall be in addition to any lien of Landlord that may now or at any
time hereafter be provided by law.

          7.4 Granting of Easements, etc. Landlord may, from time to time, with
respect to any Leased Property: (i) grant easements, covenants and restrictions,
and other rights in the nature of easements, covenants and restrictions, (ii)
release existing easements, covenants and restrictions or other rights in the
nature of easements, covenants or restrictions that are for the benefit of the
applicable Leased Property, (iii) dedicate or transfer unimproved portions of
the applicable Leased Property for road, highway or other public purposes, (iv)
execute petitions to have the applicable Leased Property annexed to any
municipal corporation or utility district, (v) execute amendments to any
easements, covenants and restrictions affecting the applicable Leased Property
and (vi) execute and deliver to any person any instrument appropriate to confirm
or effect such grants, releases, dedications and transfers (to the extent of its
interests in the applicable Leased Property) without the necessity of obtaining
Tenant's consent provided that such easement or other instrument is not
materially detrimental to the conduct of the business of Tenant on the
applicable Leased Property. If any easement, covenant, release or comparable
instrument contemplated by this Section 7.4 is materially detrimental to the
conduct of business by the applicable Tenant(s) at a Leased Property, Landlord
shall obtain Tenant's prior written consent to the proposed easement, covenant
or restriction or comparable instrument, which consent shall not be unreasonably
withheld (and which consent shall be deemed given if not expressly denied by
Tenant, in writing, within ten (10) Business Days of Tenant's receipt of such
request).

     8. Negative and Affirmative Covenants of Tenant.

          8.1 Negative Covenants. Tenant covenants and agrees with Landlord
that:

               8.1.1 Due on Sale and Encumbrance; Transfers of Interests.
Without the prior written consent of Landlord, neither any Tenant nor any Person
having a direct or indirect interest, ownership or beneficial interest in any
Tenant or any Guarantor shall sell, convey, mortgage, grant, bargain, encumber,
pledge, assign or otherwise transfer any interest, direct or indirect, in any
Tenant, any Guarantor (except as may otherwise be expressly and specifically
permitted in the Lease Guaranty with respect to Trans and certain Service
Guarantors), any of the Leased Properties or any part thereof, whether
voluntarily or involuntarily.

               8.1.2 Liens; Waste. No Tenant shall create, incur, assume or
suffer to exist any lien, charge, encumbrance, easement or restriction on any
portion of any of the Leased Properties except for Permitted Encumbrances. No
Tenant shall commit or suffer to be committed any waste on any Leased Property,
nor shall any Tenant cause or permit any material nuisance thereon.

               8.1.3 Issuance of Equity Interests. No Tenant shall issue or
allow to be created any stocks or shares or partnership or membership interests
in any Tenant, or other ownership interests other than the stocks, shares,
partnership or membership interests and other ownership interests that are
outstanding or exist on the date hereof or any security or other instrument that
by its terms is convertible into or exercisable or exchangeable for stock,
shares,

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<PAGE>

partnership or membership interests or other ownership interests in any Tenant
that are outstanding or exist on the date hereof.

               8.1.4 Change in Business. No Tenant (exclusive of Trans
Healthcare of Ohio, Inc.) shall cease to be a single-purpose entity existing for
the sole purpose of operating the applicable Leased Property(ies) for its/their
Primary Intended Use(s), or make any material change in the scope or nature of
its business objectives, purposes or operations, or undertake or participate in
activities other than in continuance of its present business. No Tenant shall
amend, modify or alter its Tenant Org Docs in any material respect without
Landlord's prior written consent, which consent may be given or withheld in
Landlord's sole discretion.

               8.1.5 Primary Intended Use. No Tenant shall (i) change, consent
to, or otherwise acquiesce in, the change of the Primary Intended Use of any
Facility; or (ii) reduce, or consent to, or otherwise acquiesce in, the
reduction of the number of licensed beds at any Facility without Landlord's
prior written consent, which consent shall not be unreasonably withheld.

               8.1.6 Debt Cancellation. No Tenant shall cancel or otherwise
forgive or release any claim or debt owed to any Tenant by any Person, except
for adequate consideration and in the ordinary course of such Tenant's business.

               8.1.7 Affiliate Transactions. No Tenant shall enter into, or be a
party to, any transaction with an Affiliate of any Tenant or any of the
partners, members or shareholders of any Tenant except in the ordinary course of
business and on terms that are fully disclosed to Landlord in advance and are no
less favorable to any Tenant or such Affiliate than would be obtained in a
comparable arm's-length transaction with an unrelated third party.

               8.1.8 Zoning. No Tenant shall initiate or consent to any zoning
reclassification of any portion of any of the Leased Properties or seek any
variance under any existing zoning ordinance or use (or permit the use of) any
portion of any of the Leased Properties in any manner that could result in such
use becoming a non-conforming use under any zoning ordinance or any other
applicable land use law, rule or regulation, without the prior consent of
Landlord.

               8.1.9 Assets; Investing. No Tenant (exclusive of Trans Healthcare
of Ohio, Inc. in accordance with the Lease Guaranty only) shall purchase or own
any property other than property necessary for, or incidental to, the operation
of the applicable Facility(ies) for its/their Primary Intended Use(s). No Tenant
(exclusive of Trans Healthcare of Ohio, Inc. to the extent expressly and
specifically permitted under the Loan Documents and the Lease Guaranty) shall
purchase or otherwise acquire, hold, or invest in securities (whether capital
stock or instruments evidencing indebtedness) of any Person. No Tenant
(exclusive of Trans Healthcare of Ohio, Inc. to the extent expressly and
specifically permitted under the Loan Documents and the Lease Guaranty) shall
make loans or advances to, any Person (other than any Guarantor provided no
Event of Default then exists), except for cash balances temporarily invested in
short-term or money market securities.

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<PAGE>

               8.1.10 Contracts. No Tenant shall execute or modify any material
contracts or agreements with respect to any Facility except for contracts and
modifications approved by Landlord (which approval shall not be unreasonably
withheld). Contracts made in the ordinary course of business and in an amount
less than $100,000.00 shall not be considered "material" for purposes of this
Section.

               8.1.11 Subordination of Payments to Affiliates. After the
occurrence of an Event of Default and until such Event of Default is cured, no
Tenant shall make any payments or distributions (including, without limitation,
salary, bonuses, fees, principal, interest, dividends, liquidating
distributions, management fees, cash flow distributions or lease payments) to
any Guarantor or any Affiliate of any Tenant or any Guarantor, or any
shareholder, member, partner or other equity interest holder of Tenant, any
Guarantor or any Affiliate of any Tenant or Guarantor.

               8.1.12 No Joint Assessment. No Tenant shall suffer, permit or
initiate the joint assessment of any Leased Property (i) with any other real
property constituting a tax lot separate from such Leased Property, or (ii) with
any portion of such Leased Property that may be deemed to constitute personal
property, or any other procedure whereby the lien of any taxes that may be
levied against such personal property shall be assessed or levied or charged to
such Leased Property.

               8.1.13 Principal Place of Business. No Tenant shall change its
principal place of business without first giving Landlord thirty (30) days prior
notice. No Tenant shall change its jurisdiction of organization or its name
without first obtaining the written consent of Landlord.

               8.1.14 ERISA.

                    8.1.14.1 No Tenant shall engage in any transaction that
would cause any obligation, or action taken or to be taken, hereunder (or the
exercise by Landlord of any of its rights under this Lease) to be a non-exempt
(under a statutory or administrative class exemption) prohibited transaction
under ERISA.

                    8.1.14.2 Each Tenant shall deliver to Landlord such
certifications or other evidence from time to time throughout the Term, as
requested by Landlord in its sole discretion, that (A) such Tenant is not and
does not maintain an "employee benefit plan" as defined in Section 3(3) of
ERISA, that is subject to Title I of ERISA, or a "governmental plan" within the
meaning of Section 3(3) of ERISA; (B) such Tenant is not subject to state
statutes regulating investments and fiduciary obligations with respect to
governmental plans; and (C) one or more of the following circumstances is true:

               (i) equity interests in such Tenant are publicly offered
     securities, within the meaning of 29 C.F.R. (S) 2510.3-101(b)(2);

               (ii) less than twenty-five percent (25%) of each outstanding
     class of equity interests in such Tenant are held by "benefit plan
     investors" within the meaning of 29 C.F.R. (S) 2510.3-101(f)(2); or

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<PAGE>

               (iii) such Tenant qualifies as an "operating company" or a "real
     estate operating company" within the meaning of 29
     C.F.R. (S) 2510.3-101(c) or (e).

               8.1.15 Other Indebtedness. No Tenant shall create, incur, assume,
or permit to exist any indebtedness other than (i) trade debt incurred in the
ordinary course of Tenant's business (which shall not include so-called
"accounts receivable" financing, which shall be governed by the terms of Section
21.2); or (ii) any AR Financing pursuant to Section 21.2.

               8.1.16 Guaranties. Except in connection with the Loan
Transaction, no Tenant shall create, incur, assume, or permit to exist any
guarantee of any loan or other indebtedness except for the endorsement of
negotiable instruments for collection in the ordinary course of business.

               8.1.17 Use-Specific Negative Covenants. No Tenant shall:

                    8.1.17.1 Transfer any Authorizations to any location other
than the Facility operated by such Tenant or as otherwise required by the terms
of this Lease nor pledge any Authorizations as collateral security for any loan
or indebtedness except as required by the terms of this Lease.

                    8.1.17.2 Rescind, withdraw, revoke, amend, modify,
supplement, or otherwise alter the nature, tenor or scope of (i) any
Authorization for any Facility or (ii) any applicable Facility Provider
Agreement for any Facility.

                    8.1.17.3 Amend or otherwise change any Facility's authorized
bed capacity and/or the number or type of beds, and/or licensing category or
type and/or the number of beds participating in governmental payment programs
approved by the applicable state licensing agency, CMS or other Governmental
Authority without (x) Landlord's prior written consent, which may be given or
denied in Landlord's sole discretion and, (y) in connection with any temporary
reduction of the number of beds, written evidence from each applicable
Governmental Authority that such reduction is temporary.

                    8.1.17.4 Replace or transfer all or any part of any
Facility's licensed beds to another site or location, change the type of
licensed beds at any Facility or reduce the number of licensed beds at any
Facility.

                    8.1.17.5 Apply for approval to (i) move any licensed beds to
another site or location, (ii) change the type of licensed beds at any Facility
or (iii) reduce the number of licensed beds at any Facility.

                    8.1.17.6 Jeopardize in any manner any Tenant's participation
in Medicare, Medicaid or any Third Party Payor Programs to which any Tenant is
subject at any time during the Term.

                    8.1.17.7 Pledge any receivables as collateral security for
any loan or indebtedness other than as specifically permitted by the terms of
Section 7.3 of this Lease.

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<PAGE>

                    8.1.17.8 Enter into any patient or resident care agreements
with patients or residents or with any other Persons that deviate in any
material respect from the standard form customarily used by any Tenant at the
applicable Facility.

                    8.1.17.9 Change the terms of any Facility Provider
Agreement, any Third Party Payor Program or its normal billing payment or
reimbursement policies and procedures with respect thereto (including, without
limitation, the amount and timing of finance charges, fees and write-offs);
provided that a Tenant may enter into changes that do not have a material
adverse effect on (x) the business or financial position or results of
operations of such Tenant, (y) the ability of such Tenant to perform, or of
Landlord to enforce, the terms of this Lease or the value of the Leased
Properties taken as a whole.

                    8.1.17.10 Assign or transfer any of its interest in any
Authorization or assign, pledge, hypothecate, transfer or remove, or permit any
other person to assign, transfer, pledge, hypothecate or remove, any records
pertaining to any Facility including, without limitation, patient records and
medical and clinical records (except for removal of such patient records as
directed by the patients owning such records).

          8.2 Affirmative Covenants. Until all of Tenant's obligations hereunder
have been performed and discharged in full, Tenant covenants and agrees to and
for the benefit of Landlord as follows:

               8.2.1 Perform Obligations. Tenant shall perform or cause to be
performed, as and when due, all of its obligations under this Lease, the
Authorizations (including, but not limited to, any Facility Provider
Agreements), any Permitted Encumbrances, any Insurance Requirements and any
material Legal Requirements. Prior to the date hereof, Tenant has taken all
necessary action to obtain all Authorizations (including, but not limited to,
the Facility Provider Agreements) required for the operation of each of the
Facilities for its Primary Intended Use and shall take all necessary action to
maintain such Authorizations (including, but not limited to, the Facility
Provider Agreements) during the Term.

               8.2.2 Proceedings to Enjoin or Prevent Construction. If any
proceedings are filed seeking to enjoin or otherwise prevent or declare invalid
or unlawful Tenant's construction, occupancy, maintenance, or operation of any
Facility or any portion thereof for its Primary Intended Use, Tenant will cause
such proceedings to be vigorously contested in good faith, and will, without
limiting the generality of the foregoing, use all reasonable commercial efforts
to bring about a favorable and speedy disposition of all such proceedings and
any other proceedings.

               8.2.3 Documents and Information.

                    8.2.3.1 Furnish Documents. Tenant shall timely deliver to
Landlord such financial statements, reports, certificates and other information
as is required pursuant to the terms of Section 25 hereof, including, but not
limited to, the Census Information and Operator Reports, within the applicable
time periods specified in Section 25.

                    8.2.3.2 Furnish Information. Tenant shall (i) promptly
supply Landlord with such information concerning its financial condition,
licensing, affairs and

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<PAGE>

property as Landlord may reasonably request from time to time hereafter and in
the format reasonably designated by Landlord; (ii) promptly notify Landlord in
writing of any condition or event that constitutes a breach of any term,
condition, warranty, representation, or provision of this Lease or any other
agreement between Landlord or its Affiliates and Tenant, Guarantor or any of
their Affiliates, and of any adverse change in the financial condition of any
Tenant, Guarantor or any Affiliate of Tenant or Guarantor and of any Event of
Default; (iii) maintain a standard and modern system of accounting; (iv) permit
Landlord or any of Landlord's Representatives to have reasonable access to and
to examine all of its books and records regarding the financial condition of any
or all of the Facilities at any time or times hereafter during business hours
and after two (2) Business Days' prior oral or written notice; and (v) permit
Landlord, at Landlord's expense, to copy and make abstracts from any and all of
said books and records. Tenant shall notify Landlord, in writing and within five
(5) Business Days, if any Tenant is advised, in writing, formally or informally,
by its insurance carrier, reinsurance provider, accountants, actuary, any
Governmental Authority, or any Third Party Payor Program provider of any actual,
pending, threatened or contemplated increase in its reserves for expenses
relating to malpractice or professional liability claims or any material
increase in the premium costs for malpractice or professional liability
insurance (any of the foregoing, a "Reserve Event").

                    8.2.3.3 Further Assurances and Information. Tenant shall,
upon request of Landlord from time to time, execute, deliver, and furnish such
documents as may be necessary or appropriate to consummate fully the
transactions contemplated under this Lease. Promptly, and in any event, within
ten (10) days after a request from Landlord, Tenant shall provide to Landlord
such additional information regarding Tenant, Tenant's financial condition or
the Facilities as Landlord, or any existing or proposed creditor of Landlord or
Ventas, Inc. (including, without limitation, any existing or proposed Facility
Mortgagee), or any auditor or underwriter of Landlord or Ventas, Inc., may
require from time to time.

                    8.2.3.4 Material Communications. Tenant shall transmit to
Landlord, within two (2) Business Days after receipt thereof (or immediately
with respect to any correspondence related to an "immediate jeopardy" event),
any Actuarial Correspondence and material communication affecting one or more
Facilities, Tenant, Guarantor, any Affiliate of Tenant or Guarantor, this Lease,
the Legal Requirements, the Insurance Requirements, the Facility Provider
Agreements or the Authorizations, and Tenant shall promptly respond to inquiries
by Landlord with respect to such information. Tenant shall notify Landlord in
writing promptly after Tenant obtains knowledge of any potential, threatened or
existing litigation or proceeding against, or investigation of, any Tenant, any
Guarantor, any affiliate of any Tenant or any Guarantor or any Facility that may
affect the right to operate one or more of the Facilities, any Facility Provider
Agreements, any of the Authorizations, the right to receive regular
reimbursement under Medicare, Medicaid or any other Third Party Payor Program or
Landlord's title to any Facility or Tenant's interest therein.

                    8.2.3.5 Operator Reporting; Actuarial Reports. Tenant shall
provide Landlord with accurate and complete copies of any and all of the census
information concerning the number of licensed beds occupied by bona fide
residents or patients, all cost reports, surveys, survey deficiency reports,
monthly financial statements and other reports, materials and information
concerning Tenant, the Facilities and each Tenant's business

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operations and compliance with material laws, ordinances, rules, regulations,
Authorizations and Facility Provider Agreements that are submitted by Tenant to
any Governmental Authorities or any provider pursuant to any Third Party Payor
Program (including any Health Department or CMS), for any of the Facilities (the
"Operator Reports") promptly, and in any event, within three (3) Business Days,
after the submission thereof. Tenant shall provide Landlord with any and all
Actuarial Reports received by, or prepared by or on behalf of, Landlord within
ten (10) Business Days after the receipt or submission thereof by or to any
Tenant. All Operator Reports shall be accurate in all material respects as of
the date of such Operator Reports.

               8.2.4 Compliance With Laws. Tenant shall comply with all
Insurance Requirements and all material Legal Requirements, and keep all
Authorizations and Facility Provider Agreements in full force and effect. Except
as otherwise provided in Section 3.3, Tenant shall pay when due all Impositions
of every kind and nature that due and payable by Tenant at any time during the
Term. Tenant shall be solely responsible for compliance with all material Legal
Requirements and Landlord shall have no responsibility for such compliance.

               8.2.5 Existence and Change in Ownership. Each Tenant shall
maintain its respective existence throughout the Term. Any change in the
ownership of Tenant, directly or indirectly, in whole or in part, shall require
Landlord's prior written consent. Landlord's consent to a change in ownership
may be given or withheld in Landlord's sole discretion.

               8.2.6 Financial Covenants. The following financial covenants
shall be met throughout the term of this Lease:

                    8.2.6.1 Coverage Ratio. Tenant shall maintain for each
fiscal quarter a Coverage Ratio with respect to each Facility of not less than
1.00 to 1.00.

                    8.2.6.2 Net Worth. Each Tenant shall maintain for each
fiscal quarter a Net Worth of not less than the net worth on the day of
"closing" minus $500,000. Tenant shall maintain during each fiscal quarter an
aggregate Net Worth of not less than net worth at the date of closing less
$2,000,000.

                    8.2.6.3 Portfolio Coverage Ratio. Tenant shall maintain for
each fiscal quarter a Portfolio Coverage Ratio of not less than 1.25 to 1.00.

                    8.2.6.4 Minimum Occupancy. Each Tenant shall maintain a
minimum occupancy rate in the applicable Facility of seventy-five percent (75%)
by patients for which full reimbursement is provided in accordance with the
terms of the applicable Facility Provider Agreements. Tenant shall maintain an
aggregate minimum occupancy rate in all of the Facilities for each quarter of
eighty percent (80%) by patients for which full reimbursement is provided in
accordance with the terms of the applicable Facility Provider Agreements.

               8.2.7 Permitted Encumbrances. Tenant shall, at its own cost and
expense, fully observe, perform and comply with all Permitted Encumbrances as
the same apply to or bind Landlord or the Premises. No Tenant shall cause, or
permit its respective Tenant Parties to cause, whether by act or omission, any
breach of, default under or termination of any Permitted Encumbrance applicable
to or binding upon Landlord or the Premises.

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<PAGE>

          8.3 Authorization Non-Compliance. In the event that Tenant shall
receive a complaint or notice from a private party to any Third Party Payor
Program or Governmental Authority alleging, asserting or suggesting that Tenant
is not in substantial compliance with any Legal Requirement, license, permit,
approval, CON, certification for reimbursement under Medicare or Medicaid
(including any Facility Provider Agreement) or other Authorization, Tenant shall
within two (2) Business Days, send notice to Landlord, whereupon Tenant shall
remedy any condition causing such complaint noncompliance, as applicable,
promptly, and in any case within any cure period allowed therefor by the
applicable agency or authority, in the case of such non-compliance.

     9. Maintenance of Facilities.

          9.1 Maintenance and Repair.

               9.1.1 Facility Repair. Tenant, at its sole expense, shall keep
each Leased Property (and Tenant's Personal Property) in good and safe order and
repair, except for ordinary wear and tear and damage by Casualty and
Condemnation (whether or not the need for such repairs occurs as a result of
Tenant's use, any prior use, the elements or the age of such Leased Property,
Tenant's Personal Property, or any portion thereof). Without limitation of the
foregoing, Tenant shall promptly make all necessary and appropriate repairs and
replacements (capital and otherwise) to each Facility, of every kind and nature,
whether interior or exterior, structural or non-structural, ordinary or
extraordinary, foreseen or unforeseen or arising by reason of a condition
existing prior to the commencement of the Term (concealed or otherwise),
including, but not limited to, any roof repairs or replacements or parking lot
repairs or replacements, such that the Leased Properties are maintained in a
first class operating and structural condition. Tenant shall maintain, repair
and replace each Facility such that no material deferred maintenance items exist
at, in or on any Leased Property at any time and all systems, components, and
elements (structural and otherwise) have a useful life determined in the
exercise of Landlord's reasonable judgment that exceeds the then applicable
Expiration Date by not less than three (3) years (and not less than seven (7)
years as to structural items). Tenant shall have in place service and
maintenance contracts with duly licensed contractors or repair services (which
contractors or repair services shall be acceptable to Landlord in its sole
discretion) providing for regular maintenance and repair of any and all major
systems serving any Leased Property, including, but not limited to, the HVAC
systems, life safety systems, plumbing systems and elevator and conveyor
systems. Landlord may from time to time as to any one or more Leased Properties,
and at Tenant's sole expense (but no more than once every two (2) years at
Tenant's expense), cause an engineer designated by Landlord in its sole
discretion, to inspect one or more Leased Properties and issue a report (a
"Leased Property Condition Report") with respect to the condition of any such
Leased Properties. Tenant shall, at its own cost and expense, make any and all
repairs or replacements recommended by such Leased Property Condition Report
that are required to be performed by this Section 9.1. All repairs shall be made
in a good and workmanlike manner and in accordance with all Legal Requirements
relating to such work. Tenant will not take or omit to take any action the
taking or omission of which might materially impair the value or usefulness of
the applicable Leased Property or any part thereof for its Primary Intended Use.
Landlord shall not under any circumstances be required to repair, replace, build
or rebuild any improvements on any Leased Property, or to make any repairs,
replacements, alterations, restorations or renewals of any nature or description
to any Leased

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<PAGE>

Property, whether ordinary or extraordinary, structural or non-structural,
foreseen or unforeseen, or to make any expenditure whatsoever with respect
thereto, in connection with this Lease, or to maintain any Leased Property in
any way. Tenant hereby waives, to the extent permitted by law, the right to make
repairs at the expense of Landlord pursuant to any law in effect at the time of
the execution of this Lease or thereafter enacted.

               9.1.2 Notice of Non-Responsibility. Except as expressly set forth
in this Lease, nothing contained in this Lease and no action or inaction by
Landlord shall be construed as: (i) constituting the consent or request of
Landlord, express or implied, to any contractor, subcontractor, laborer,
materialman or vendor to, or for the performance of, any labor or services or
the furnishing of any materials or other property for the construction,
alteration, addition, repair or demolition of or to any Leased Property or any
part thereof; or (ii) giving Tenant any right, power or permission to contract
for or permit the performance of any labor or services or the furnishing of any
materials or other property in such fashion as would permit the making of any
claim against Landlord in respect thereof or to make any agreement that might
create, or in any way be the basis for, any right, title, interest, lien, claim
or other encumbrance upon the estate of Landlord in any Leased Property, or any
portion thereof. Landlord may post, at Tenant's sole cost, such notices of
non-responsibility upon, or of record against, any Leased Property to prevent
the lien of any contractor, subcontractor, laborer, materialmen or vendor
providing work, services or supplies to Tenant from attaching against the
Premises. Tenant agrees to promptly execute and record any such notice of
non-responsibility at Tenant's sole cost.

               9.1.3 Vacation and Surrender. Tenant shall, upon the expiration
or sooner termination of the Term as to any Leased Property, vacate and
surrender the applicable Leased Property to Landlord in a first class condition
consistent with the requirements of Section 9.1.1, except as repaired, rebuilt,
restored, altered or added to as permitted or required by the provisions of this
Lease and except for ordinary wear and tear and damage from Casualty or
Condemnation. Any Leased Property shall be returned to Landlord in a broom clean
condition, free and clear of Tenant's Personal Property (subject to the terms of
Section 21.1.1 and except for Tenant's Personal Property that Landlord elects to
acquire pursuant to Section 36 hereof) but including any and all Alterations,
which shall be and remain the property of Landlord as part of such Leased
Property (except for Alterations that Landlord requests, in writing, that Tenant
remove, which Alterations shall be promptly and completely removed by Tenant).
Tenant shall repair, at Tenant's sole cost, any damage to a Leased Property
resulting from the removal of any Alterations or Tenant's Personal Property
therefrom, whether effected by Tenant or Landlord.

          9.2 Encroachments. If any of the Leased Improvements on any Leased
Property shall, at any time, encroach upon any property, street or right-of-way
adjacent to such Leased Property, then, promptly upon the request of Landlord,
Tenant shall, at its expense, subject to its right to contest the existence of
any encroachment and, in such case, in the event of any adverse final
determination, either (i) obtain valid waivers or settlements of all claims,
liabilities and damages resulting from each such encroachment, whether the same
shall affect Landlord or Tenant, or (ii) make such changes in the Leased
Improvements, and take such other actions, as Tenant, in good faith exercise of
its judgment deems reasonably practicable, to remove such encroachment,
including, if necessary, the alteration of any of the Leased Improvements, and
in any event take all such actions as may be necessary in order to be able to

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<PAGE>

continue the operation of the Leased Improvements for the Primary Intended Use
substantially in the manner and to the extent the Leased Improvements were
operated prior to the assertion of such encroachment. Any such alteration shall
be made in conformity with the applicable requirements of Section 11. Tenant's
obligations under this Section 9.2 shall be in addition to and shall in no way
discharge or diminish any obligation of any insurer under any policy of title or
other insurance and Tenant shall not be entitled to a credit for any sums
recovered by Landlord under any such policy of title or other insurance.

     10. Tenant's Representations and Warranties. Tenant hereby makes the
following representations and warranties, as of the date hereof, to Landlord and
acknowledges that Landlord is granting the Lease in reliance upon such
representations and warranties. Tenant's representations and warranties shall
survive and, except to the extent otherwise specifically limited, shall continue
in full force and effect until Tenant's obligations hereunder have been
performed in full.

          10.1 Organization and Good Standing. Each Tenant other than Trans
Healthcare of Ohio, Inc. is a limited liability company, duly organized, validly
existing and in good standing under the laws of the State of Delaware or
Maryland. Trans Healthcare of Ohio, Inc. is a Delaware corporation, duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Each Tenant is qualified to do business in and is in good standing
under the laws of the State in which the Facility operated by such Tenant is
located. Each Tenant other than Trans Healthcare of Ohio, Inc. is a single
member limited liability company, the sole members of which are identified on
Schedule 1 attached hereto. Tenant has delivered true and complete copies of the
documents, certificates and agreements pursuant to which each Tenant is
organized to do business (the "Tenant Org Docs").

          10.2 Power and Authority. Each Tenant has the power and authority to
execute, deliver and perform this Lease and to make itself jointly and severally
liable for the obligations of each of other Tenant. Each Tenant has taken all
requisite action necessary to authorize the execution, delivery and performance
of such Tenant's obligations under this Lease.

          10.3 Enforceability. This Lease constitutes a legal, valid, and
binding obligation of each Tenant enforceable in accordance with its terms.

          10.4 Consents. The execution, delivery and performance of this Lease
will not require any consent, approval, authorization, order, or declaration of,
or any filing or registration with, any court, any Governmental Authority, or
any other person or entity.

          10.5 No Violation. The execution, delivery and performance of this
Lease (i) do not and will not conflict with, and do not and will not result in a
breach of, any Tenant Org Docs; and (ii) do not and will not violate any order,
writ, injunction, decree, statute, rule or regulation applicable to any Tenant
or any of the Facilities.

          10.6 Reports and Statements. All reports, statements (financial or
otherwise), certificates and other data furnished by or on behalf of Tenant or
any Guarantor to Landlord in connection with this Lease, and all representations
and warranties made herein or in any certificate or other instrument delivered
in connection herewith, are true and correct in all

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<PAGE>

material respects and do not omit to state any material fact or circumstance
necessary to make the statements contained herein or therein, in light of the
circumstances under which they are made, not misleading as of the date of such
report, statement, certificate or other data.

          10.7 No Default. As of the date hereof, (i) there is no existing Event
of Default under this Lease; and (ii) no event has occurred which, with the
giving of notice or the passage of time, or both, would constitute or result in
such an Event of Default.

          10.8 Adverse Matters. No Tenant nor any of their respective
representatives, officers, directors, members, contractors, subcontractors,
agents or employees have been disqualified from participating in either the
Medicare or Medicaid programs. Without limitation of the foregoing, no Tenant
nor any of their respective officers, directors, members or managing employees
or other contractors, subcontractors, employees or agents has engaged in any
activities that are prohibited under criminal law, or are cause for civil
penalties or mandatory or permissive exclusion from Medicare, or any other state
health care program. There is no, and there shall continue to be no, threatened,
existing or pending revocation, suspension, termination, probation, restriction,
limitation or nonrenewal affecting any Tenant or any Facility with regard to
participation in Medicare, Medicaid or any Third Party Payor Programs or the
applicable Authorizations to which any Tenant or Facility presently or at any
time hereafter is/are subject.

          10.9 Certification. Each Tenant has obtained, or will obtain pursuant
to the terms of the P&S Agreement, within thirty (30) days and one hundred
twenty (120) days with respect to the Facility Provider Agreement for Medicare,
any and all Authorizations necessary or advisable to operate its Facility for
its Primary Intended Use. Each Tenant has obtained, or will obtain pursuant to
the terms of the P&S Agreement within thirty (30) days and one hundred twenty
(120) days with respect to the Facility Provider Agreement for Medicare, all of
the Authorizations, including, but not limited to, the Facility Provider
Agreements, necessary to be, and to continue to be, validly licensed and
Medicare and Medicaid certified to operate its applicable Facility in accordance
with the applicable rules and regulations of the State in which the applicable
Facility is located and federal Governmental Authorities, including, but not
limited to, CMS.

          10.10 Transition Permits. As to those Authorizations necessary or
advisable for the operation of each Facility for its Primary Intended Use that
the Tenant operating such Facility has not received as of the date hereof
(contemplated and characterized by the P&S Agreement as Transition Permits),
such Tenant has obtained from the prior owner or operator of the applicable
Facility the right to rely upon, use and employ such consents, approvals,
licenses, permits or permissions from any Governmental Authorities and any
providers under any Third Party Payor Programs (the "Transition Authorizations")
as are necessary or advisable to allow such Tenant to operate the applicable
Facility(ies) until replacement Authorizations are obtained and to receive
regular reimbursement under Medicaid, Medicare, and any other Third Party Payor
Programs until such Tenant receives the Authorizations necessary to replace such
Transition Authorizations.

          10.11 Facility Provider Agreements. Each Tenant is (or will be,
pursuant to the terms of the P&S Agreement within thirty (30) days after the
date hereof), and shall continue

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<PAGE>

to be, certified, by and the holder of, valid Facility Provider Agreements with
Medicare and Medicaid, issued by the applicable Health Departments and/or CMS.

          10.12 No Reimbursement Audits or Appeals. There are no current,
pending or outstanding reimbursement audits regarding Medicaid, Medicare or
Third Party Payor Programs nor any appeals pending at any Facility that (x) are
not applicable in the ordinary course to skilled nursing facilities, hospitals
or assisted living facilities, as applicable, comparable to the Facilities and
(y) could result in a material adverse effect on the results from operations for
the applicable Facility.

          10.13 No Recoupments Efforts. There are no current or pending
recoupment efforts regarding Medicaid, Medicare or Third Party Payor Programs at
(or with respect to) any Facility that (x) are not applicable in the ordinary
course to skilled nursing facilities, hospitals or assisted living facilities,
as applicable, comparable to the Facilities and (y) could result in a material
adverse effect on the results of operations of the applicable Facility. Tenant
is not a participant in any federal program whereby any Governmental Authority
may have the right to recover funds by reason of the advance of federal funds.

          10.14 Professional Liability Reserves. For each Facility, the
applicable Tenant has made reserves for expenses relating to malpractice and
professional liability claims that are adequate and complete in the exercise of
commercially reasonable judgment and normal commercial practice, which reserves
have been approved by its independent auditors and its independent actuary.

          10.15 Primary Intended Use. Each Facility is being operated for its
Primary Intended Use and contains the number of licensed beds described on
Schedule 1 attached hereto and made a part hereof.

          10.16 Compliance with Laws. Each Tenant is in substantial compliance
with all applicable federal, state and local laws, regulations and guidelines
(including any government payment program requirements and disclosure of
ownership and related information requirements), quality and safety standards,
accepted professional standards and principles that apply to professionals
providing services to nursing facilities, assisted living facilities and/or
rehabilitation hospitals, in each case, as applicable, accreditation standards,
and requirements of the applicable state licensing agency, CMS and all other
Governmental Authorities including, without limitation, those requirements
relating to the physical structure and environment of each Leased Property,
licensing, quality and adequacy of medical care, distribution of
pharmaceuticals, rate setting, equipment, personnel, operating policies,
additions to facilities and services and fee splitting. No Tenant has committed
any act which may give any Governmental Authority the right to cause Tenant to
lose any applicable Authorizations.

          10.17 Ownership of Authorizations. The Authorizations, including
without limitation, each CON:

               (i) are not and have not been, transferred to any location other
     than the Leased Property to which such Authorizations relate;

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<PAGE>

               (ii) are not and have not been, pledged as collateral security
     for any loan or indebtedness other than pursuant to the terms of this
     Lease; and

               (iii) are held free from restrictions or known conflicts that
     would materially impair the use or operation of each Facility for its
     Primary Intended Use, and are not provisional, probationary or restricted
     in any way.

          10.18 Third Party Payor Programs. There is no threatened or pending
revocation, suspension, termination, probation, restriction, limitation, fine,
civil monetary penalty, recoupment or non-renewal affecting any Tenant or any
Leased Property in respect of any Third Party Payor Programs to which Tenant or
any Facility presently is subject. All Medicaid, Medicare, and private insurance
cost reports and financial reports submitted by any Tenant have been and will be
materially accurate and complete and have not been and will not be misleading in
any material respects. No cost reports or financial reports for any Leased
Property remain "open" or unsettled.

     11. Alterations.

          11.1 Alterations. Without the prior written consent of Landlord, which
consent may be given or withheld in Landlord's sole discretion, Tenant shall not
(x) make any Capital Alterations on or to any Leased Property, (y) enlarge or
reduce the size of any Facility and/or (z) make any Capital Alterations or other
Alterations that would tie in or connect with any improvements on property
adjacent to the Land. Tenant may, without Landlord's prior written consent, make
any alterations, additions, or improvements (collectively, with the alterations
described in items (x) - (z) of the preceding sentence, "Alterations") to any
Leased Property if such Alterations are not of the type described in either
clause (x), (y) or (z) above, so long as in each case: (i) the same do not (A)
decrease the value of the Leased Property, (B) affect the exterior appearance of
the Leased Property, or (C) affect the structural components of the Leased
Property or the main electrical, mechanical, plumbing or ventilating and air
conditioning systems for any Facility, (ii) the same are consistent in terms of
style, quality and workmanship to the original Leased Property and Fixtures,
(iii) the same are constructed and performed in accordance with the provisions
of Section 11.2 below and (iv) the cost thereof does not exceed, in the
aggregate, $200,000.00 for any consecutive twelve (12) month period with respect
to any single Facility. Except for those limited Alterations that expressly do
not require Landlord's consent pursuant to the preceding sentence, all
Alterations shall be subject to Landlord's prior written consent, which Landlord
may give or withhold in its sole discretion. To the extent Landlord's prior
written consent shall be required in connection with any Alterations, Landlord
may impose such conditions thereon in connection with its approval thereof as
Landlord deems appropriate. Notwithstanding the foregoing, Landlord agrees that
painting, landscaping, and replacement of floor, wall and window coverings shall
be deemed Alterations that do not require Landlord's consent, regardless of the
cost thereof, so long as the same meet the requirements of clauses (ii) and
(iii) above.

          11.2 Construction Requirements for all Alterations. Whether or not
Landlord's review and approval is required, for all Alterations of any Leased
Property, the following shall apply and shall be in addition to and not in lieu
of any other requirements that Landlord may impose on Tenant in connection with
the making of any Alterations:

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<PAGE>

               11.2.1 Plans and Specifications. Prior to commencing any
Alterations, Tenant shall have submitted to Landlord a written proposal setting
forth in reasonable detail such Alteration and shall provide to Landlord for
approval, such plans and specifications, permits, licenses, construction budgets
and other information (collectively, the "Plans and Specifications") as Landlord
shall request, showing in reasonable detail the scope and nature of the
Alteration that Tenant desires to construct.

               11.2.2 Permits. Such construction shall not commence until Tenant
shall have procured and paid for all municipal and other governmental permits
and authorizations required therefor (as well as any permits or approvals
required in connection with any Permitted Encumbrance), and Landlord shall join
in the application for such permits or authorizations whenever such action is
necessary; provided, however, that (i) any such joinder shall be at no
liability, cost or expense to Landlord; and (ii) any Plans and Specifications
required to be filed in connection with any such application that require the
approval of Landlord as hereinabove provided shall have been so approved by
Landlord.

               11.2.3 No Impairment. Such construction shall not, and prior to
commencement of such construction Tenant's licensed architect or engineer shall
certify to Landlord that such construction shall not, impair the structural
strength of any component of the applicable Facility or overburden or impair the
operating efficiency of the electrical, water, plumbing, HVAC or other building
systems of any such component.

               11.2.4 Compliance Certification. Prior to commencing any
Alterations, Tenant's licensed architect or engineer shall certify to Landlord
that the Plans and Specifications conform to and comply with all Insurance
Requirements and all applicable building, subdivision and zoning codes, laws,
ordinances, regulations and other Legal Requirements imposed by any Governmental
Authorities having jurisdiction over the Leased Property.

               11.2.5 Parking. During and following completion of such
construction, the parking that is located at the applicable Facility or on the
Land relating to such Facility shall remain adequate for the operation of such
Facility for its Primary Intended Use and in no event shall such parking be less
than is required by any applicable Legal Requirements or was required by any
applicable Legal Requirements or was located in such Facility or on the Land
relating to such Facility prior to such construction.

               11.2.6 Materials; Quality. All work done in connection with such
construction shall be done promptly and in a good and workmanlike manner using
first-class materials and in conformity with all Legal Requirements.

               11.2.7 As-Builts. Promptly following the completion of the
construction of any Alterations, Tenant shall deliver to Landlord: (i) "as
built" drawings of such Capital Alterations, certified as accurate by the
licensed architect or engineer selected by Tenant to supervise such work, and
copies of any new or revised certificates of occupancy; and (ii) a certificate
from Tenant's licensed architect or engineer certifying to Landlord that such
Alterations or Capital Alterations have been completed in compliance with the
Plans and Specifications and all applicable Legal Requirements.

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<PAGE>

               11.2.8 Certificate of Occupancy. If, by reason of the
construction of any Capital Alteration, a new certificate of occupancy for any
component of the applicable Facility is required, Tenant shall obtain such
certificate in compliance with all applicable Legal Requirements and furnish a
copy of the same to Landlord promptly upon receipt thereof.

               11.2.9 Lien Waivers. Upon completion of any Alteration or Capital
Alteration, Tenant shall promptly deliver to Landlord final lien waivers from
each and every general contractor and subcontractor that provided goods or
services in connection with such Alteration or Capital Alteration indicating
that such contractor or subcontractor has been paid in full for such goods or
services, together with such other evidence as Landlord may reasonably require
to satisfy Landlord that no liens have been created in connection with such
Alteration or Capital Alteration.

          11.3 Capital Expenditures Accounts.

               11.3.1 Capital Expenditure Account. Commencing on the fifteenth
(15th) day of the first full month of the first Lease Year and on every
fifteenth (15th) day of each month to occur thereafter during the Term, Tenant
shall deposit (the "Capital Expenditure Deposits") in an interest-bearing
account (the "Capital Expenditure Account") under the sole dominion and control
of Landlord (or any Facility Mortgagee) entitled "capital expenditure holdback
account", an amount for each Leased Property equal to one-twelfth (1/12) of the
product of (x) $300.00 in the case of each Facility for which the Primary
Intended Use is "Senior Nursing Facility" or "Assisted Living Facility" or
$500.00 in the case of each Facility for which the Primary Intended Use is
"Hospital" (the "Per Bed Allocation"); and (y) the aggregate number of patient
beds in such Leased Property. Landlord may reasonably increase the Per Bed
Allocation by written notice to Tenant, which reasonable increase shall occur
not more than once every two (2) years. The Capital Expenditure Account shall be
maintained with a Lending Institution reasonably satisfactory to Landlord (or
any Facility Mortgagee) and Tenant hereby grants to Landlord a first priority
security interest in the Capital Expenditure Account pursuant to the Uniform
Commercial Code (the "UCC") of the State which governs the protection of such
security interest. The Capital Expenditure Account shall be used for funding
repairs, replacements and capital improvements to be made on any Leased Property
from time to time, but in no event shall the Capital Expenditure Account be used
for funding repairs or additions to, or replacement of, any of Tenant's Personal
Property. All such repairs, replacements and capital improvements funded by the
Capital Expenditure Account shall be deemed to be a part of the Premises and be
performed subject to the terms of Sections 11.1 and 11.2 relative to
Alterations. On the express condition that no Event of Default then exists
hereunder, Tenant may request, by written notice to Landlord, that Landlord
disburse monies deposited in the Capital Expenditures Account for the purpose of
making repairs, replacements and capital improvements on any Leased Property and
Landlord shall disburse monies on account of such repairs, replacements and
capital improvements promptly after the presentation of invoices therefor
provided that: (i) such repairs, replacements and capital improvements are
contemplated by the Annual Capital Expenditure Budget; (ii) such repairs,
replacements and capital improvements have been completed in a good, workmanlike
and lien-free fashion and in compliance with all Legal Requirements and the
terms of Section 11.2 applicable to any Alterations; and (iii) Tenant has paid
for any Capital Expenditure Difference. Any repairs, replacements or capital
improvements that are not contemplated by the Annual Capital Expenditure Budget
shall be subject to

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<PAGE>

Landlord's reasonable approval. If Tenant's capital expenditures at the Premises
in any Lease Year shall exceed the Capital Expenditure Deposits for such Lease
Year (the "Capital Expenditure Difference"), Tenant shall fund the remaining
cost of such Capital Expenditure Difference. Any interest that accrues on the
funds in the Capital Expenditure Account shall at all times remain in the
Capital Expenditure Account. At the expiration of the Term, any funds remaining
in the Capital Expenditure Account shall become the property of Landlord unless
Landlord determines, in its sole discretion, that no capital repairs or
replacements are necessary from and after the Expiration Date to place the
Leased Properties in the condition required by Section 9.1 hereof, in which
event such funds shall be returned to Tenant.

               11.3.2 Annual Capital Expenditure Budget. Within ninety (90) days
prior to the commencement of each calendar year, Tenant shall deliver to
Landlord, at Tenant's expense, a budget (the "Annual Capital Expenditure
Budget") setting forth Tenant's reasonable estimate of the repairs, replacements
and capital improvements to the Premises that Tenant anticipates will be
necessary in such calendar year to comply with the maintenance, repair and
replacement obligations contained in Section 8 hereto and maintain the Leased
Properties in a first class condition. The Capital Expenditure Budget shall be
subject to Landlord's review and approval (which approval shall not be
unreasonably withheld) for purposes of determining and confirming that the
repairs, replacements and capital improvements are sufficient to satisfy
Tenant's obligations pursuant to Section 8 hereof; provided, however, that the
grant by Landlord of its approval to any Annual Capital Expenditure Budget shall
not be deemed a consent, acknowledgement or agreement on Landlord's part that
such repairs, replacements or capital improvements are sufficient to satisfy
Tenant's obligations pursuant to Section 8 hereunder. Tenant shall perform any
and all repairs, replacements or capital improvements contemplated by the Annual
Capital Expenditure Budget within twenty-four (24) months after the commencement
of the Lease Year to which such Annual Capital Expenditure Budget relates. If
Tenant has not completed such repairs, replacements or capital improvements
within such twenty-four (24) month period, Landlord may, but shall not be
obligated to, complete such repairs, replacements or capital improvements, in
which case, Landlord may disburse funds from the Capital Expenditure Account
sufficient to pay for such repairs, replacements or capital improvements and
Tenant shall pay the cost of any deficiency.

     12. Liens. Subject to the provisions of Section 13 below governing a
permitted contest by Tenant, Tenant will not, directly or indirectly, create or
allow to remain, and will promptly discharge at its expense, any lien,
encumbrance, attachment, title retention agreement or claim upon any Leased
Property or any attachment, levy, claim or encumbrance in respect of the Rent,
not including, however, (a) Permitted Encumbrances consented to in writing by
Landlord in its sole discretion, (b) restrictions, liens and other encumbrances
that are consented to in writing by Landlord, or any easements permitted to be
granted pursuant to the provisions of this Lease, (c) liens for those taxes of
Landlord that Tenant is not required to pay hereunder, (d) liens for Impositions
or for sums resulting from noncompliance with Legal Requirements, so long as (1)
the same are not yet payable or (2) such liens are in the process of being
contested as permitted by Section 13, (e) liens of mechanics, laborers,
materialmen, suppliers or vendors for sums either disputed in good faith or not
yet due, provided that (1) the payment of such sums shall not be postponed under
any related contract for more than sixty (60) days after the completion of the
work giving rise to such lien and such reserve or other appropriate provisions
as shall be required by law or generally accepted accounting principles shall
have been made

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<PAGE>

therefor or (2) any such liens are in the process of being contested as
permitted by Section 13, and (f) any liens that are expressly the responsibility
of Landlord hereunder. Notwithstanding the foregoing, Tenant shall bond over any
lien affecting the applicable Leased Property if Landlord shall request, or if
any applicable Facility Mortgagee shall so require.

     13. 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,
validity or application, in whole or in part, of any Imposition or any lien,
attachment, levy, encumbrance, charge or claim not otherwise permitted by
Section 12, provided that (a) 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 applicable Leased Property, (b) neither the applicable
Leased Property nor any Rent therefrom nor any part thereof or interest therein
would be reasonably likely to be in danger of being sold, forfeited, attached or
lost, (c) Tenant shall indemnify and hold harmless Landlord from and against any
Losses incurred by Landlord and the Landlord Indemnified Parties in connection
therewith or as a result thereof, (d) Tenant shall give such security as may be
demanded by Landlord to insure ultimate payment of, or compliance with, the same
and to prevent any sale or forfeiture of the affected Leased Property or the
Rent by reason of such non-payment or non-compliance; provided, however, the
provisions of this Section 13 shall not be construed to permit Tenant to contest
the payment of Rent or any other sums payable by Tenant to Landlord hereunder,
(e) in the case of the contest of an Insurance Requirement, the coverage
required by Section 14 shall be maintained, and (f) if such contest is resolved
against Landlord or Tenant, Tenant shall, as Additional Rent due hereunder, pay
to the appropriate payee the amount required to be paid, together with all
interest and penalties accrued thereon, within ten (10) days after such
determination (or within such shorter period as may be required by the terms of
such determination), and comply, within any cure period allowed therefor by the
applicable agency or authority (or if no such cure period shall be allowed or
specified by the applicable agency or authority, promptly and diligently
following the effective date of such determination); provided, however, that
this subsection (f) is not intended, and shall not be construed, to afford
Tenant any cure or grace period beyond the effective date of any final
unappealable determination. Landlord, at Tenant's expense, shall execute and
deliver to Tenant such authorizations and other documents as may reasonably be
required in any such contest, and, if reasonably requested by Tenant or if
Landlord so desires, Landlord shall join as a party therein. Tenant shall
indemnify and save Landlord and the Landlord Indemnified Parties harmless
against any Losses of any kind that may be imposed upon Landlord in connection
with any such contest and any loss resulting therefrom. The terms of this
Section 13 shall survive the expiration or sooner termination of this Lease.

     14. Insurance.

          14.1 General Insurance Requirements. Tenant shall obtain and maintain,
or cause to be maintained, insurance for Tenant and the Leased Properties
providing at least the following coverages:

               14.1.1 Coverage for loss or damage by fire, lightning, wind and
such other perils as are included in a standard "all risk" or "special causes of
loss" endorsement and

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<PAGE>

against loss or damage by other risks and hazards covered by a standard property
insurance policy including, without limitation, riot, civil commotion,
vandalism, malicious mischief, burglary and theft on the Leased Improvements and
of the Tenant's Personal Property at each Leased Property, including contingent
liability from "Operation of Building Laws", "Demolition Costs" and "Increased
Cost of Construction" endorsements, in each case (A) in an amount equal to one
hundred percent (100%) of the Full Replacement Cost of such Leased Property; (B)
containing an agreed amount endorsement with respect to the Leased Improvements
and Tenant's Personal Property at the Leased Properties waiving all co-insurance
provisions; (C) providing for no deductible in excess of Ten Thousand and No/100
Dollars ($10,000.00) for all such insurance coverage; and (D) containing (a) an
"Ordinance or Law Coverage" or "Enforcement" endorsement and (b) "demolition"
insurance (in an amount equal to at least ten percent (10%) of the value of the
Leased Improvements at any Leased Property) and "increased cost of construction"
insurance (equal to at least twenty-five percent (25%) of the value of the
Leased Improvements), if any of the Leased Improvements or the use of any Leased
Property shall at any time constitute legal non-conforming structures or uses.
In addition, each Tenant shall obtain: (y) if any portion of the Leased
Improvements at any Leased Property is currently or at any time in the future
located in a federally designated "special flood hazard area", flood hazard
insurance in an amount equal to the lesser of (1) the Full Replacement Cost of
such portion of such Leased Improvements or (2) the maximum amount of such
insurance available under the National Flood Insurance Act of 1968, the Flood
Disaster Protection Act of 1973 or the National Flood Insurance Reform Act of
1994, as each may be amended; and (z) earthquake insurance in amounts and in
form and substance satisfactory to Landlord in the event that any Leased
Property is located in an area with a high degree of seismic activity, provided
that the insurance pursuant to clauses (y) and (z) hereof shall be on terms
consistent with the comprehensive all risk insurance policy required under this
Section 14.1.1.

               14.1.2 Commercial general liability insurance against claims for
personal injury, bodily injury, death or damage to the Leased Properties
occurring upon, in or about each Leased Property, such insurance (A) to be on
the so-called "occurrence" form with a combined limit, excluding umbrella
coverage, of not less than One Million and No/100 Dollars ($1,000,000.00) per
occurrence with a minimum Two Million and No/100 Dollars ($3,000,000.00) general
aggregate with limits applying on a "per location" basis; (B) to continue at not
less than the aforesaid limit until required to be changed by Landlord by reason
of changed economic conditions making such protection inadequate; (C) to cover
at least the following: (1) premises and operations; (2) products and completed
operations on an "if any" basis; (3) independent contractors; (4) blanket
contractual liability for all legal contracts; (5) contractual liability
covering indemnities, if any, given by Tenant contained in the Facility
Mortgage, if any, applicable to the Leased Property, to the extent the same is
available; (6) broad form property damage; (7) personal injury (including death
resulting therefrom); (8) healthcare professional liability and (9) a liquor
liability endorsement if alcoholic beverages are sold at any Leased Property;
and (D) providing for a deductible not in excess of Ten Thousand and No/100
Dollars ($10,000.00).

               14.1.3 Business interruption insurance (A) with loss payable to
Landlord; (B) covering all risks required to be covered by the insurance
provided for in Section 14.1.1 above and Section 14.1.11 below; (C) in an amount
sufficient to avoid any co-insurance penalty and to provide proceeds that will
cover a period of not less than eighteen (18) months

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<PAGE>

from the date of casualty or loss; (D) containing an extended period of
indemnity endorsement that provides that after the physical loss to the
applicable Leased Property has been repaired, the continued loss of income will
be insured until such income returns to the same level it was prior to the loss,
or the expiration twenty-four (24) months from the date of the loss, whichever
first occurs, and notwithstanding that the policy may expire prior to the end of
such period. The amount of coverage shall be an annual aggregate amount equal to
the projected gross revenue from the Leased Properties, assuming the aggregate
occupancy at the Facilities equals ninety-five percent (95%). The amount of
coverage shall be adjusted annually by Landlord to reflect the projected gross
revenue during the succeeding eighteen (18) month period.

               14.1.4 At all times during which Alterations or structural
construction or repairs are being made with respect to any of the Leased
Improvements, and only if the Leased Properties' coverage form does not
otherwise apply, (A) owner's contingent or protective liability insurance
covering claims not covered by or under the terms or provisions of the above
mentioned commercial general liability insurance policy; and (B) the insurance
provided for in Section 14.1.1 above written in a so-called builder's risk
completed value form (1) on a non-reporting basis, (2) against all risks insured
against pursuant to Section 14.1.1 above, (3) including permission to occupy the
Leased Properties, and (4) with an agreed amount endorsement waiving
co-insurance provisions.

               14.1.5 Workers' compensation, subject to the statutory limits of
the State in which the applicable Leased Property is located, and employer's
liability insurance with a limit of at least One Hundred Thousand and No/100
Dollars ($100,000.00) per accident and per disease, per employee, and Five
Hundred Thousand and No/100 Dollars ($500,000.00) aggregate in respect of any
work or operations on or about any Leased Property, or in connection with Leased
Property or its operation (if applicable).

               14.1.6 Broad form boiler and machinery insurance (without
exclusion for explosion) covering all boilers or other pressure vessels,
machinery, and equipment located in, on or about any Leased Property (including
"system breakdown coverage") in an amount equal to or greater than the repair
and full replacement cost of such equipment and insurance against loss of
occupancy or use arising from any breakdown of such equipment in such amounts as
are generally required by institutional lenders for properties comparable to the
Leased Properties.

               14.1.7 Umbrella liability insurance in addition to primary
coverage in an amount not less than Twenty-Five Million and No/100 Dollars
($25,000,000.00) per occurrence on terms consistent with the commercial general
liability insurance policy required under Section 14.1.2 above that cover all
claims typically covered by an umbrella liability policy including all legal
liability imposed upon the applicable Tenant and all court costs and attorneys'
fees in connection with the operation and maintenance of the Leased Properties.

               14.1.8 Motor vehicle liability coverage for all owned and
non-owned vehicles, including rented and leased vehicles containing minimum
limits per occurrence, including umbrella coverage, of One Million and No/100
Dollars ($1,000,000.00).

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<PAGE>

               14.1.9 If alcoholic beverages are sold at any Leased Property,
so-called "dramshop" insurance or other liability insurance required in
connection with the sale of alcoholic beverages.

               14.1.10 Insurance against employee dishonesty in an amount not
less than six (6) months of gross revenue from the Leased Properties and with a
deductible not greater than Ten Thousand and No/100 Dollars ($10,000.00).

               14.1.11 If the insurance required under Section 14.1.1 above
excludes coverage for acts of terrorism, Tenant shall provide terrorism
insurance coverage in an amount equal to the lesser of (1) the Full Replacement
Cost of the Leased Properties or (2) the maximum amount of such insurance that
is reasonably commercially available, unless at the time of determination: (A)
it is not available at commercially reasonable rates; (B) terrorism insurance is
not commonly maintained by owners of other similar properties and (C) terrorism
insurance is not required for loans similar to the Primary Loan and secured by
property similar to the Leased Properties.

               14.1.12 Such other reasonable insurance and in such reasonable
amounts as Landlord or any Facility Mortgagee, if applicable, from time to time
may reasonably request against such other insurable hazards or casualties that
at the time are commonly insured against for property similar to the Leased
Properties located in or around the region in which the Leased Properties are
located including, without limitation, sinkhole, mine subsidence and
environmental insurance, due regard being given to the height and type of the
applicable Leased Property, construction, location, use and occupancy.

          14.2 Policies; Certificates. All insurance provided for in Section
14.1 above shall be obtained under valid and enforceable policies (the
"Policies") and, to the extent not specified above, shall be subject to the
approval of Landlord as to deductibles, loss payees and insureds. Not less than
ten (10) days prior to the expiration dates of the Policies theretofore
furnished to Landlord, certificates of insurance evidencing the Policies
accompanied by evidence satisfactory to Landlord of payment of the premiums then
due thereunder (the "Insurance Premiums"), shall be delivered by Tenant to
Landlord. Tenant shall deliver certified copies of the Policies to Landlord
within thirty (30) days of the date hereof and thereafter upon request. All
Policies must have a term of not less than one (1) year.

          14.3 Blanket Policies. Any blanket Policy shall specifically allocate
to each Leased Property the amount of coverage from time to time required
hereunder and shall otherwise provide the same protection as would a separate
Policy insuring only such Leased Property in compliance with the provisions of
Section 14.1.

          14.4 Additional Insured. All Policies provided for or contemplated by
Section 14.1 above, except for the Policy referenced in Section 14.1.5, shall
name each applicable Tenant as the insured and Landlord and any Facility
Mortgagee and its/their successors and/or assigns as the additional insured, as
its/their interests may appear, and in the case of property damage, terrorism
insurance, boiler and machinery, flood and earthquake insurance, shall contain a
so-called New York standard non-contributing mortgagee clause in

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<PAGE>

favor of Landlord or any Facility Mortgagee, as applicable, providing that the
loss thereunder shall be payable to Landlord or such Facility Mortgagee, as
applicable.

          14.5 Policy Requirements. All Policies of insurance provided for in
Section 14.1 shall contain clauses or endorsements to the effect that:

          (i) no act or negligence of Tenant or any Tenant Party, or failure to
     comply with the provisions of any Policy, which might otherwise result in a
     forfeiture of the insurance or any part thereof, shall in any way affect
     the validity or enforceability of the insurance insofar as Landlord or any
     Facility Mortgagee is concerned;

          (ii) the Policy shall not be materially changed (other than to
     increase the coverage provided thereby) or canceled without at least thirty
     (30) days' written notice to Landlord, any Facility Mortgagee and any other
     party named therein as an additional insured;

          (iii) neither Landlord nor any Facility Mortgagee shall be liable for
     any Insurance Premiums thereon or subject to any assessments thereunder;
     and

          (iv) to the extent available at commercially reasonable rates, a
     waiver of subrogation rights as to Landlord and any Facility Mortgagee.

          14.6 Evidence of Compliance. If at any time Landlord is not in receipt
of written evidence that all insurance required hereunder is in full force and
effect, Landlord shall have the right, without notice to Tenant, to take such
action as Landlord deems necessary to protect its interest in the Leased
Properties, including, without limitation, the obtaining of such insurance
coverage as Landlord in its sole discretion deems appropriate and all premiums
incurred by Landlord in connection with such action or in obtaining such
insurance and keeping it in effect shall be paid by Tenant to Landlord upon
demand and until paid and shall bear interest at the Overdue Rate.

          14.7 Foreclosure; Transfer. In the event of foreclosure of any
Facility Mortgage or other transfer of title to any Leased Property, all right,
title and interest of the applicable Tenant in and to the Policies that are not
blanket Policies then in force concerning the Leased Properties and all proceeds
payable thereunder shall thereupon vest in the purchaser at such foreclosure or
Landlord, Facility Mortgagee or other transferee in the event of such other
transfer of title.

          14.8 Insurance Company. The Policies shall be issued by one or more
domestic primary insurance companies, duly qualified in the jurisdictions where
the Leased Properties are located and rated A: VII or better by A.M. Best and
having a claims-paying ability of at least "AA" or its equivalent by each of the
Rating Agencies, or by a syndicate of insurers through which at least
seventy-five percent (75%) of the coverage (if there are four (4) or fewer
members of the syndicate) or at least sixty percent (60%) of the coverage (if
there are five (5) or more members of the syndicate) is with carriers having
such claims-paying ability ratings (provided that all such carriers shall have
claims-paying ability ratings of not less than "A" or the equivalent by each of
the Rating Agencies).

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<PAGE>

     15. Damage and Destruction.

          15.1 Notice of Casualty. If any Leased Property shall be destroyed, in
whole or in part, or damaged by Casualty, Tenant shall give prompt written
notice thereof to Landlord and any Facility Mortgagee, in no event more than
three (3) Business Days after the occurrence of a Casualty. Within fifteen (15)
days after the occurrence of a Casualty, or as soon thereafter as such
information is reasonably available to Tenant, Tenant shall provide the
following information to Landlord: (i) the date of the Casualty; (ii) the nature
of the Casualty; (iii) a description of the damage or destruction caused by the
Casualty, including, but not limited to, the type of Leased Property damaged,
the area of the Leased Improvements damaged and the general extent of such
damage; (iv) a preliminary estimate of the cost to repair, rebuild, restore or
replace the Leased Property; (v) a preliminary estimate of the schedule to
complete the repair, rebuilding, restoration or replacement of the Leased
Property; (vi) a description of the anticipated property insurance claim,
including, but not limited to, the name of the insurer, the insurance coverage
limits, the deductible amounts, the expected settlement amount and the expected
settlement date; and (vii) a description of the business interruption claim,
including, but not limited to, the name of the insurer, the insurance coverage
limits, the deductible amounts, the expected settlement amount and the expected
settlement date. Tenant shall provide Landlord with copies of any and all
material correspondence to and from the insurance provider within five (5)
Business Days after Tenant's receipt or submission thereof and provide any other
information reasonably requested by Landlord.

          15.2 Substantial Destruction. Except as otherwise set forth herein, if
a Facility is substantially destroyed or rendered Unsuitable For Its Primary
Intended Use by a Casualty at any time during the Term, Landlord may elect to
terminate this Lease with respect to the Leased Property on which such Facility
is located by providing written notice to Tenant within ninety (90) days of the
date upon which Tenant notifies Landlord of the Casualty, which termination
shall be effective as of the date of Tenant's receipt of such notice. If
Landlord elects to terminate, then, subject to the requirements of any Facility
Mortgage binding upon or secured by the Leased Property, Landlord shall receive
any and all of the insurance proceeds payable by reason of the Casualty (the
"Casualty Insurance Proceeds") and Tenant shall immediately pay to Landlord an
amount equal to any uninsured deductible, and as of the date of such
termination, the applicable Leased Property shall be deleted from this Lease and
the provisions of Section 17.9 governing a deletion of a Leased Property after
Casualty shall be applicable. If Landlord does not elect to terminate, then
Tenant shall promptly rebuild and restore the Leased Property in accordance with
Section 15.4 below and Landlord shall make the Casualty Insurance Proceeds
available to Tenant for such restoration only pursuant to, and in accordance
with, Section 15.5 below. The term "substantially destroyed" means any Casualty
resulting in the loss of use of fifty percent (50%) or more of the licensed beds
at the Facility located on the relevant Leased Property or that would require
more than fifty percent (50%) of the value of the Leased Improvements to
restore.

          15.3 Partial Destruction. If a Leased Property is damaged by a
Casualty but the Facility(ies) located on such Leased Property is not
substantially destroyed or rendered Unsuitable For Its Primary Intended Use,
then, subject to the requirements of any Facility Mortgage binding upon, or
secured by, the Leased Property, Tenant shall restore the Leased Property in
accordance with the requirements of Section 15.4 below and Landlord shall make
the

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<PAGE>

Casualty Insurance Proceeds available to Tenant for such restoration pursuant to
Section 15.5 below. Notwithstanding the foregoing, if such Casualty shall occur
during the final two (2) Lease Years of the Term, then Landlord shall have the
right to terminate this Lease with respect to such Leased Property and retain
any Casualty Insurance Proceeds, by delivering notice of such election to Tenant
within ninety (90) days of its receipt of notice from Tenant of such Casualty,
which termination shall be effective as of the date such notice of termination
from Landlord is received by Tenant, whereupon Tenant shall immediately pay to
Landlord the amount of any uninsured deductible and the applicable Leased
Property shall be deleted herefrom pursuant to Section 17.9 below governing the
deletion of a Leased Property in connection with a Casualty.

          15.4 Restoration.

               15.4.1 Commencement of Restoration. Within forty-five (45) days
after the soonest to occur of (i) Tenant's receipt of notice from Landlord
directing Tenant to restore a Leased Property damaged or destroyed by a
Casualty, (ii) in the case of a Casualty that results in Landlord having the
option to terminate this Lease as to the affected Leased Property pursuant to
Section 15.2 or 15.3, the expiration of the period in which Landlord may
exercise such option to terminate if Landlord fails to affirmatively elect to
terminate this Lease with respect to such Leased Property, or (iii) in the case
of damage to a Leased Property by Casualty that does not result in the
substantial destruction or the rendering Unsuitable For Its Primary Intended Use
of the applicable Facility(ies), and that does not occur during the final two
Lease Years of the Term, the date of such Casualty, Tenant shall furnish to
Landlord complete plans and specifications (the "Restoration Plans and
Specifications") describing the work Tenant intends to undertake to restore the
applicable Leased Property (the "Work") for Landlord's review and approval,
which approval shall not be unreasonably withheld. The Restoration Plans and
Specifications shall be prepared in accordance with good and customary
construction and design practices and bear the signed approval thereof by an
architect licensed to do business in the State where the applicable Leased
Property is located and shall be accompanied by a written estimate from the
architect containing the projected cost of completing the Work. The Restoration
Plans and Specifications shall contemplate Work of such nature, quality and
extent that, upon the completion thereof, the Leased Property shall be at least
equal in value and general utility to its value and general utility prior to the
Casualty and shall be adequate to operate the applicable Facility(ies) for its
Primary Intended Use. Prior to commencing any Work, Tenant shall satisfy all of
the terms and conditions set forth in Sections 11.2.1 through 11.2.4 hereof
relative to Alterations as to the Work and the Restoration Plans and
Specifications.

               15.4.2 Permits. Prior to the commencement of the Work, Tenant
shall furnish to Landlord certified or photostatic copies of all permits and
contracts required by any and all applicable Legal Requirements or Insurance
Requirements in connection with the commencement and conduct of the Work.

               15.4.3 Conduct of Work. Upon satisfaction of the requirements set
forth in Section 15.4.1 and Section 15.4.2 above, Tenant shall perform the Work
diligently and in a good, workmanlike and lien-free fashion, in accordance with
(i) the Restoration Plans and Specifications; (ii) the permits and contracts
referred to in Section 15.4.2 above; and (iii) all applicable Legal Requirements
and other requirements of this Lease.

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<PAGE>

          15.5 Disbursement of Insurance Proceeds. Tenant shall use its best
efforts to complete the Work on or prior to the estimated completion date
provided by its architect. If Landlord is required or elects to apply any
Casualty Insurance Proceeds toward repair or restoration of the applicable
Facility, provided Tenant is diligently performing the Work in accordance with
this Lease, Landlord shall disburse such Casualty Insurance Proceeds as and when
required by Tenant in accordance with normal and customary practice for the
payment of a general contractor in connection with construction projects similar
in scope and nature to the Work, including, at Landlord's option, the
withholding of 10% of each disbursement of such Casualty Insurance Proceeds
until the Work is completed as evidenced by a certificate of occupancy or
similar evidence issued upon an inspection by the applicable Governmental
Authority and proof has been furnished to Landlord that no lien or liability has
attached or will attach to the applicable Leased Property or to Landlord in
connection with the Work. Upon the completion of the Work and the furnishing of
such proof, the balance of the Casualty Insurance Proceeds payable to Tenant on
account of the Work shall be paid to Tenant as and when the terms of Sections
15.4.1 through 15.4.3 have been complied with. Prior to any final disbursement
of Casualty Insurance Proceeds, Tenant shall satisfy all of the conditions set
forth in Sections 11.2.5 through 11.2.9 relative to Alterations as to the Work,
as well as provide evidence reasonably satisfactory to Landlord that any amounts
required to be paid by Tenant in connection with such Work pursuant to Section
15.6 below have been paid in full. Notwithstanding anything contained herein to
the contrary, any Facility Mortgagee may retain and disburse the Casualty
Insurance Proceeds and Tenant shall comply with the requests and requirements of
such Facility Mortgagee in connection with the Work and the disbursement of
Casualty Insurance Proceeds.

          15.6 Insufficient Proceeds/Risk of Loss. If the Casualty Insurance
Proceeds are not sufficient to pay the costs of the Work in full, Tenant shall
be responsible, at its sole cost and expense, to complete the Work. Tenant
expressly assumes all risk of loss, including, without limitation, a decrease in
the use, enjoyment or value, of the Leased Property from any Casualty
whatsoever, whether or not insurable or insured against. Tenant shall pay any
insurance deductible and any other uninsured Losses.

          15.7 Excess Proceeds. Provided no Event of Default exists and this
Lease is not terminated pursuant to Section 15 with respect to the Leased
Property on which the applicable Facility is located, Tenant shall be entitled
to any amount by which the Casualty Insurance Proceeds exceed the amount
necessary to complete the Work, which excess Casualty Insurance Proceeds shall
be promptly paid by Landlord to Tenant only following the disbursement of
Casualty Insurance Proceeds necessary to complete the Work in accordance with
Section 15.5.

          15.8 Landlord's Inspection. During the progress of the Work, Landlord
and Landlord's Representatives may, from time to time, inspect the Work and the
Leased Property. If, during such inspection or otherwise, Landlord and
Landlord's Representatives determine that the Work is not being done in
accordance with the Restoration Plans and Specifications, this Lease or any
Legal Requirements, Landlord will give prompt written notice to Tenant, setting
forth in reasonable specificity and detail any defect in the Work. Upon the
receipt of any such notice, Tenant will cause corrections to be made to any such
defect.

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     16. Condemnation.

          16.1 Parties' Rights and Obligations. If during the Term there is any
Condemnation of all or any part of any Leased Property, the rights and
obligations of the parties shall be determined by this Section 16.

          16.2 Total Taking. If any Leased Property is totally taken by
Condemnation, this Lease shall terminate as to such Leased Property on the Date
of Taking, in which event the provisions of Section 17.9 governing the deletion
of one or more Leased Properties from this Lease upon a Condemnation shall
apply.

          16.3 Partial Taking. If any portion of any Leased Property is taken by
Condemnation, this Lease shall remain in effect as to such Leased Property if
the Facility(ies) located thereon is not thereby rendered Unsuitable For Its
Primary Intended Use as reasonably determined by Landlord, but if the
Facility(ies) is/are thereby rendered Unsuitable For Its Primary Intended Use,
this Lease shall terminate as to such Leased Property on the Date of Taking, in
which event the provisions of Section 17.9 governing the deletion of one or more
Leased Properties from this Lease upon a Condemnation shall apply. If, as a
result of any such partial taking by Condemnation, this Lease is not terminated
as provided above, Tenant's obligation to make payments of Rent and to pay all
other charges required under this Lease shall remain unabated during the Term
notwithstanding such Condemnation (provided that Landlord shall credit against
such payments any amount of any Award specifically attributable to Tenant
pursuant to Section 16.5).

          16.4 Restoration. If there is a partial taking by Condemnation of any
Leased Property and this Lease remains in full force and effect pursuant to
Section 16.3, Tenant at its cost shall accomplish all necessary restoration,
which restoration activities shall be performed in accordance with the terms and
conditions applicable to Work under Section 15.

          16.5 Award-Distribution.

               16.5.1 Partial Taking. In the event of any partial taking by
Condemnation of any Leased Property, the entire Award shall belong to and be
paid to Landlord, except that, subject to the rights of the Facility Mortgagees,
Tenant shall be entitled to receive from the Award, if and to the extent such
Award specifically includes such item, the following:

                    (i) a sum specifically attributable to Tenant's Personal
     Property and any reasonable removal and relocation costs included in the
     Award; and

                    (ii) a sum specifically attributable to the cost of
     restoring the Leased Property in accordance with Section 16.4 hereof; and

                    (iii) a sum specifically attributable to the interruption of
     business operations, which sum shall be credited against payments of Rent
     and other charges due from Tenant to Landlord under this Lease.

               16.5.2 Total Taking. In the event of a total taking by
Condemnation of any Leased Property, the Award shall be solely the property of
Landlord, whether such

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damages shall be awarded as compensation for diminution in value of the
leasehold or the fee estate of the Premises, provided, however, Tenant shall be
entitled to any damages specifically attributable to reasonable removal and
relocation costs included in the Award.

          16.6 Temporary Taking. The taking of any Leased Property, or any part
thereof, by military or other public authority shall constitute a taking by
Condemnation only when the use and occupancy by the Condemnor has continued for
longer than four (4) months. During any such four (4) month period all the
provisions of this Lease shall remain in full force and effect and Rent shall
not be abated or reduced during such period of taking.

          16.7 Facility Mortgagee. Notwithstanding anything contained herein to
the contrary, in the event that any Facility Mortgagee elects to require that
any Casualty Insurance Proceeds in connection with any Casualty, or the Award in
connection with any Condemnation, be applied by Landlord to reduce the
outstanding principal balance of any loan secured by any Leased Property,
Landlord may elect, in its sole discretion and by written notice to Tenant,
delivered promptly after the receipt of written notice by Landlord of such
election from Facility Mortgagee, to terminate this Lease as to the Leased
Property affected by such Casualty or Condemnation, in which event the
provisions of Section 17.9 governing a deletion of one or more Leased Properties
from this Lease after a Casualty or Condemnation shall apply. Notwithstanding
anything contained in Section 15 or Section 16 hereof, Tenant shall remain
liable for any uninsured portion of any Casualty or the cost of any restoration
not covered by an Award in the event this Lease is terminated as to the
applicable Leased Property pursuant to Section 15 or Section 16 hereof.

     17. Default.

          17.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default" under this Lease:

               17.1.1 Payment Default. Tenant fails to make payment of the Rent
or any other sum payable under or pursuant to the terms of this Lease when the
same becomes due and payable.

               17.1.2 Certain Covenant Defaults. Tenant fails to observe or
perform any term, covenant or agreement on its part to be performed or observed
pursuant to Section 3.4.3, Section 8.1.17, Section 8.2.1, Section 8.2.6, Section
8.3, Section 14.2, Section 14.5, Section 12, item (f) of Section 13, or Section
14.1.

               17.1.3 General Covenant Defaults. Tenant fails to observe or
perform any material term, covenant or condition of this Lease not specifically
provided for in this Section 17.1 and such failure is not cured within a period
of thirty (30) days after receipt of notice from Landlord.

               17.1.4 Licensure, Authorization or Facility Provider Agreement
Defaults. The receipt of written notice or formal notice of any pending,
threatened or contemplated, or the occurrence of any, (i) determination by
applicable Governmental Authorities of Tenant's non-compliance with Legal
Requirements applicable to any Leased Property, or (ii) revocation of any
license, permit, approval or other Authorization (including,

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without limitation, any CON) required for the lawful operation of a Leased
Property in accordance with its Primary Intended Use, or (iii) other
circumstances under which (a) Tenant is, or may be, required by a determination
of any such Governmental Authority to cease operations of such Facility in
accordance with its Primary Intended Use or (b) any Facility Provider Agreement
or reimbursement agreement, or certification of Tenant under Medicare or
Medicaid pursuant thereto, is, or may be, terminated, in whole or in part, prior
to the expiration of the term thereof or, without the prior written consent of
Landlord in each instance (which consent may be withheld in Landlord's sole and
absolute discretion), is not (or may not be) renewed or extended, in whole or in
part, upon the expiration of the stated term thereof. The receipt by any
Facility of any "Level A" (or its equivalent) violation under Medicare or
Medicaid, as applicable, or the statement of charges or deficiencies with
respect to such Facility under Medicare or Medicaid.

               17.1.5 Representations and Warranties. Any representation or
warranty made by or on behalf of Tenant under or in connection with this Lease
or any document, financial statement, certificate or agreement delivered by or
on behalf of Tenant in connection with this Lease (including, but not limited
to, any Officer's Certificate or Estoppel Certificate) proves to have been false
or misleading in any material respect on the day when made or deemed made.

               17.1.6 Bankruptcy. Any Tenant, Guarantor or any Affiliate of
Tenant or Guarantor:

                    (i) admits in writing its inability to pay its debts
     generally as they become due;

                    (ii) files a petition in bankruptcy or a petition to take
     advantage of any bankruptcy, reorganization or insolvency act;

                    (iii) makes an assignment for the benefit of its creditors;

                    (iv) consents to the appointment of a receiver for itself or
     for the whole or any substantial part of its property; or

                    (v) files a petition or answer seeking reorganization or
     arrangement under the federal bankruptcy laws or any other applicable law
     or statute of the United States of America or any state thereof.

               17.1.7 Bankruptcy Petition. Any petition is filed by or against
any Tenant, any Guarantor or any Affiliate of any Tenant or any Guarantor either
under federal bankruptcy laws, or any other proceeding is instituted by or
against any Tenant, any Guarantor or any Affiliate of Tenant or any Guarantor
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
reorganization, arrangement, adjustment or composition of it or its debts under
any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, custodian or other similar official for any Tenant, Guarantor
or any Affiliate of any Tenant or any Guarantor, or for any substantial part of
the property of any Tenant, any Guarantor or any Affiliate of any Tenant or any
Guarantor, and such proceeding is not dismissed within sixty (60) days after
institution thereof, or any Tenant, any Guarantor or any Affiliate of any Tenant
or any Guarantor

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shall take any action to authorize or effect any of the actions set forth above
in this Section 17.1.7.

               17.1.8 Liquidation. Any Tenant, any Guarantor or any Affiliate of
any Tenant or any Guarantor is liquidated or dissolved, or shall begin
proceedings toward such liquidation or dissolution.

               17.1.9 Levy. The estate or interest of any Tenant in any Leased
Property or any part thereof is levied upon or attached in any proceeding and
the same shall not be vacated or discharged within the later of sixty (60) days
after commencement thereof or thirty (30) days after receipt by such Tenant of
notice thereof from Landlord or any other Person (unless such Tenant shall be
contesting such lien or attachment in good faith in accordance with Section 13
hereof).

               17.1.10 Receiver. Any receiver, trustee, custodian or other
similar official is appointed for any Tenant, any Guarantor or any of the
Facilities and any such appointment is not dismissed within sixty (60) days
after the date of such appointment and prior to the entry of a final,
unappealable order approving such appointment.

               17.1.11 Final Unappealable Determination. If a final unappealable
determination shall have been made by any applicable Governmental Authority of
any Tenant's non-compliance with material Legal Requirements applicable to any
Facility, or of the revocation of any Authorization required for the operation
of any Facility for its Primary Intended Use, or any other circumstances under
which any Tenant is required by a final unappealable determination of any such
Governmental Authority to cease operations of such Leased Property for its
Primary Intended Use.

               17.1.12 Reduction in Number of Licensed Beds. There is a
reduction in the number of licensed beds set forth on Schedule 17.1.12 attached
hereto or a change in the type of licensed beds for any Facility in violation of
the requirements of this Lease.

               17.1.13 Failure to Correct Deficiencies. Any Tenant shall fail to
correct, within the time deadlines set by any Medicare, Medicaid, licensing or
similar agency, any deficiency that justifies either of the following actions by
such agency with respect to any Facility and such agency commences either of the
following actions:

               (1)  a termination of any Facility Provider Agreement or Third
                    Party Payor Program; or

               (2)  a ban on new admissions generally or on admission of
                    patients otherwise qualifying for Medicaid or Medicare
                    coverage.

               17.1.14 Material Fines. Any Leased Property is assessed material
fines or penalties by any state or any Medicare, Medicaid, health,
reimbursement, licensing or similar agency having jurisdiction over any Tenant
or any Leased Property.

               17.1.15 Determination of Deficiency. With respect to any
Facility, any Governmental Authority (a) makes a substandard quality of care
determination regarding

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such Facility, which determination is not corrected within ninety (90) days
provided that (i) if the determination in question is of such a nature that it
cannot be reasonably cured within ninety (90) days; and (ii) Tenant is
diligently pursuing a cure, such ninety (90) day cure period may be reasonably
extended to up to one hundred eighty (180) days in the aggregate); (b) makes a
determination that such Facility is not in substantial compliance with any
applicable regulatory requirements, which determination is not corrected within
ninety (90) days provided that (i) if the determination in question is of such a
nature that it cannot be reasonably cured within ninety (90) days; and (ii)
Tenant is diligently pursing a cure, such ninety (90) day cure period may be
reasonably extended to up to one hundred eighty (180) days in the aggregate);
(c) designates any portion of such Facility or the entirety of such Facility as
part of a "poor performing chain"; (d) cites deficiencies at the scope or
severity of "G", "H" or higher with respect to such Facility and for which no
plan of correction is in place within ten (10) days of receipt of such
deficiency statement; (e) cites deficiencies at the scope and severity of "G",
"H" or higher with respect to such Facility for which a plan of correction has
been filed but not approved by such Governmental Authority, with such
designation, determination or action continuing unremedied for a period of
ninety (90) days provided that (i) if the designation, determination or action
in question is of such a nature that it cannot be reasonably cured within ninety
(90) days; and (ii) Tenant is diligently pursuing a cure, such ninety (90) day
cure period may be reasonably extended to up to one hundred eighty (180) days in
the aggregate) (ten (10) days for immediate jeopardy deficiencies) following any
Tenant's first receipt of notice of such designation, determination or action;
or (f) takes adverse regulatory action with respect to such Facility, including,
without limitation, the imposing of civil money penalties, with such
designation, determination or action continuing unremedied for a period of sixty
(60) days (ten (10) days for immediate jeopardy deficiencies) following any
Tenant's receipt of notice of such designation, determination or action.

               17.1.16 Cessation of Services. Except pursuant to the terms
hereof, any cessation of operations at any Facility.

               17.1.17 Reporting Obligations. Any Tenant fails to observe or
perform any term, covenant or other obligation of Tenant set forth in Section
8.2.6 or Section 25 hereof and such failure is not cured within a period of five
(5) days after receipt of notice thereof from Landlord.

               17.1.18 Admissions Hold. Any ban or limitation upon the admission
of patients or residents to any Facility by any Governmental Authority having
jurisdiction over the licensure of Medicare or Medicaid certification of such
Facility is imposed and such ban or limitation is not removed within ten (10)
days (three (3) days for immediate jeopardy deficiencies); provided, however,
that if Tenant files a plan of correction with respect to such ban or limitation
within ten (10) days of the imposition of such ban or limitation, the
continuance of such ban or limitation shall not mature into an Event of Default
until sixty (60) days after the imposition of such ban or limitation.

               17.1.19 Encumbrances. An Encumbrance Event of Default as
described in Section 8.2.7 occurs.

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               17.1.20 Lease Guaranty; Cross Default. (i) Any Guarantor shall be
in material default pursuant to the Lease Guaranty beyond applicable notice and
cure periods (if any) therein contained; (ii) Tenant, Guarantor or any borrower
pursuant to the Loan Transaction shall be in material default beyond applicable
notice and cure periods pursuant to any of the loan agreements, notes,
mortgages, deeds of trust or other security instruments evidencing or securing
the Loan Transaction (such documents, the "Loan Documents"); or (iii) Tenant,
Guarantor or any Affiliate of Tenant or Guarantor shall be in default beyond any
applicable notice and cure periods pursuant to the terms of any note, mortgage,
deed of trust, security agreement and/or loan agreement evidencing or securing a
loan or financial accommodation provided by Landlord or any Affiliate of
Landlord to any such parties.

               17.1.21 Reserve Event. The occurrence of any Reserve Event.

          17.2 Existence and Continuation. An Event of Default shall be deemed
to be existing and continuing if Landlord shall have, prior to any cure of such
Event of Default by Tenant, exercised, or informed Tenant in writing of its
intent to exercise, any remedy available to Landlord with respect to such Event
of Default pursuant to Section 17.3 or otherwise, regardless of whether or not
Tenant shall have remedied such Event of Default subsequent to such exercise or
notification by Landlord.

          17.3 Remedy Election. Upon the occurrence of any Event of Default,
Landlord may, at its option and by written notice to Tenant, terminate this
Lease (i) as to the Premises or (ii) as to any one or more of the Leased
Property(ies) (selected in Landlord's sole discretion and by written notice to
Tenant), upon receipt of which notice by Tenant, Tenant shall have no right to
cure the Event of Default in question, all rights of Tenant under this Lease
shall cease as to the Leased Property(ies) so specified, and, if the Leased
Property(ies) so specified is/are less than all of the Premises, the provisions
of Section 17.9 shall apply. Notwithstanding any Limited Termination Election,
Tenant shall pay, to the maximum extent permitted by law, as Additional Rent,
all Litigation Costs as a result of any Event of Default hereunder. Landlord
shall have all rights at law and in equity available to Landlord as a result of
an Event of Default or Tenant's material breach of this Lease. As to any Event
of Default, Landlord may elect, in its sole discretion, to (i) exercise its
rights pursuant to Section 39 relative to an Operational Transfer by delivering
a Transition Notice to Tenant as to any Leased Property(ies) that is/are the
subject of an Event of Default; and (ii) terminate (a "Limited Termination
Election") this Lease as to less than all of the Leased Properties (the Leased
Property(ies) as to which Landlord elects to terminate this Lease, the
"Terminated Lease Properties"). If Landlord exercises a Limited Termination
Election, each remaining Tenant shall be liable for any and all damages owing
from Tenant applicable to a Terminated Lease Property pursuant to this Section
17. Without limitation of the foregoing, if Landlord makes a Limited Termination
Election, the provisions of Section 17.9 governing a deletion of one or more
Leased Properties from this Lease shall apply to the Terminated Lease
Properties; provided, however, that the deletion of such Terminated Lease
Properties from this Lease shall be absolutely without limitation upon Tenant's
obligation (on a joint and several basis) for the damages and other amounts
owing on account of the Event of Default giving rise to the deletion herefrom of
the Terminated Lease Properties.

          17.4 Certain Remedies. If an Event of Default shall have occurred,
Tenant shall, to the maximum extent permitted by law, if and to the extent
required by Landlord so to

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do, immediately surrender to Landlord the Leased Property(ies) specified by
Landlord and as to which the Lease has been or may be terminated pursuant to
Section 17.2 or otherwise and quit the same, and Landlord may enter upon and
repossess such Leased Property(ies) by reasonable force, summary proceedings,
ejectment or otherwise, and may remove Tenant and all other persons and any and
all personal property from such Leased Property(ies) subject to the rights of
any occupants or patients and to any requirement of law.

          17.5 Damages. To the extent permitted by law, neither (a) the
termination of this Lease pursuant to Section 17.2, (b) the repossession of any
or all of the Leased Properties or any portion thereof, (c) the failure of
Landlord to relet any or all of the Leased Properties or any portion thereof,
(d) the reletting of any or all of the Leased Properties or any portion thereof,
(e) the failure of Landlord to collect or receive any rentals due upon any such
reletting, nor (f) the election by Landlord not to terminate the Lease but
rather to seek all damages provided at law or in equity, shall relieve Tenant of
any of its liabilities or obligations hereunder, all of which shall survive any
such termination, repossession or reletting. In the event of any such
termination of this Lease (or any termination of this Lease as to less than all
of the Leased Properties in the event of a Limited Termination Election or the
election by Landlord not to terminate this Lease as to such Leased Properties,
but rather to pursue its damages at law or in equity), without limitation of
Section 17.6 and Section 19 below, Tenant shall forthwith pay to Landlord, at
Landlord's option, as liquidated damages with respect to Rent for the Premises
(or the Terminated Lease Properties in the event of any Limited Termination
Election), either:

          (A) the sum of:

               (i) the unpaid Rent that had been earned at the time of
     termination (or the unpaid Rent as to the Terminated Lease Properties in
     the event of a Limited Termination Election), which Rent shall bear
     interest at the Overdue Rate from the date of such termination; and

               (ii) the then net present value (computed using a discount rate
     equal to the Prime Rate) of the amount of unpaid Rent (or the unpaid Rent
     as to the Terminated Lease Properties in the event of a Limited Termination
     Election) for the balance of the Term not previously collected pursuant to
     clause (B) below following the date of termination (excluding, however, any
     period following termination on account of which Landlord previously
     collected Rent pursuant to clause (B) below) without any obligation or
     deemed obligation on the part of Landlord to mitigate damages, or

          (B) each installment of Rent hereof and other sums payable hereunder
(or such Rent and other sums as to the Terminated Lease Properties in the event
of a Limited Termination Election) as the same becomes due and payable, to the
extent that such Rent and other sums exceed the rent and other sums actually
collected by Landlord for the corresponding period pursuant to any reletting
(without any obligation or deemed obligation on the part of Landlord to mitigate
damages) of the Premises (or the Terminated Properties in the event of a Limited
Termination Election).

     Notwithstanding anything contained herein to the contrary, in the event
that Landlord elects damages pursuant to clause (A) or clause (B) above,
Landlord may subsequently elect to

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collect damages pursuant to the other of clause (A) and clause (B) above. In
case of any Event of Default, Landlord may, with or without terminating this
Lease, (x) relet any or all of the Premises or any part or parts thereof, either
in the name of Landlord or otherwise, for a term or terms that may, at
Landlord's option, be equal to, less than or exceed the period that would
otherwise have constituted the balance of the Term and may grant concessions or
free rent to the extent that Landlord considers advisable or necessary to relet
the same, and (y) make such reasonable alterations, repairs and decorations in
the applicable Leased Property(ies) or any portion thereof as Landlord, in its
reasonable judgment, considers advisable or necessary for the purpose of
reletting the applicable Leased Property(ies); and such reletting and the making
of such alterations, repairs and decorations shall not operate or be construed
to release Tenant from liability hereunder as aforesaid. Landlord shall in no
event be liable in any way whatsoever for failure to relet any Leased Property,
or, in the event that any Leased Property is relet, for failure to collect the
rent under such reletting. To the fullest extent permitted by law, Tenant hereby
expressly waives any and all rights of redemption granted under any present or
future laws in the event of Tenant's being evicted or dispossessed, or in the
event of Landlord's obtaining possession of any Leased Property, by reason of
the violation by Tenant of any of the covenants and conditions of this Lease or
any other Event of Default.

          17.6 Waiver. If this Lease is terminated pursuant to this Section 17,
whether in whole or, in the case of any Limited Termination Election, in part,
Tenant waives, to the maximum extent permitted by applicable law, (a) any right
of redemption, re-entry or repossession, (b) any right to a trial by jury in the
event of proceedings to enforce the remedies set forth in this Section 17, and
(c) the benefit of any moratorium laws or any laws now or hereafter in force
exempting property from liability for rent or for debt.

          17.7 Application of Funds. Any payments received by Landlord under any
of the provisions of this Lease during the existence or continuance of any Event
of Default (if and such payment is made to Landlord rather than Tenant due to
the existence of an Event of Default) shall be applied to Tenant's obligations
in the order that Landlord may determine.

          17.8 Nature of Remedies. To the extent permitted by law, the rights
and remedies of Landlord under this Lease, at law and in equity shall be
cumulative and may be exercised concurrently or successively, on one or more
occasions, as Landlord deems appropriate in its sole discretion, as often as
occasion therefor arises. To the extent permitted by law, each such right and
remedy shall be in addition to all other such rights and remedies, and the
exercise by Landlord of any one or more of such rights and remedies shall not
preclude the simultaneous or subsequent exercise of any or all other such rights
and remedies. Without limiting the generality of the foregoing, liquidated
damages in respect of Rent provided for in clauses (A) and (B) of Section 17.5
hereof, and in Section 19 hereof, shall be payable by Tenant in addition to, and
not in lieu of, any other damages suffered by Landlord in connection with any
default or Event of Default by Tenant (including, without limitation, Litigation
Costs and costs of reletting).

          17.9 Deletion of Properties. In the event that this Lease is
terminated as to one or more Deleted Properties (but not all of the Premises)
pursuant to Section 17.2 or as to one or more Leased Properties (but not all of
the Premises) in connection with a Casualty or Condemnation, the provisions of
this Section 17.9 shall be applicable. Without necessity of any

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further action of the parties, this Lease shall terminate as to the Deleted
Property(ies), and the Deleted Property(ies) shall be separated and removed
herefrom, at such time (such date, the "Property Removal Date") as Landlord
delivers written notice to Tenant (or Tenant delivers written notice to Landlord
in certain limited instances herein expressly set forth) exercising its
termination rights pursuant to Section 15, Section 16 or Section 17.2 (any of
the foregoing, a "Deletion Notice"). As of the applicable Property Removal Date,
this Lease shall be automatically and ipso facto amended to: (i) delete and
eliminate the Deleted Property(ies) herefrom; (ii) exclude the applicable
Deleted Properties from the definition of Premises; (iii) reduce the Fixed Rent
payable hereunder by an amount equal to the product of: (x) the aggregate
Tenant's Proportionate Share(s) applicable to all of the Deleted Properties; and
(y) the aggregate Fixed Rent in effect under this Lease as of the Property
Removal Date; (iv) Exhibit C attached hereto and made a part hereof and the Base
Year Operating Income shall be amended and reduced, respectively, to delete and
eliminate the Deleted Property(ies) therefrom and reduce the Base Year Operating
Income(s) applicable to the remaining Leased Property(ies) by the amount of the
Allocated Base Year Operating Income applicable to the Deleted Properties for
the purposes of determining whether the Rent Escalation Condition has been
satisfied and otherwise; and (v) Schedule 2 attached hereto and made a part
hereof shall be revised to remove the allocation of rents and the Tenant's
Proportionate Share(s) for all of the Deleted Property(ies), and the Tenant's
Proportionate Shares applicable to the remaining Facilities set forth on
Schedule 2 attached hereto shall be recalculated so that each such Tenant shall
have a Tenant's Proportionate Share equal to the percentage that the Fixed Rent
for the Facility(ies) operated by such Tenant comprises of the aggregate Fixed
Rent for all Facilities remaining under this Lease such that the aggregate of
all of the remaining Tenant's Proportionate Shares equals one hundred percent
(100%). With respect to any Terminated Lease Property(ies), the terms of items
(iii) and (v) above shall be without limitation upon the liability of Tenant
(joint and several) for the rental amounts allocated to the Terminated Lease
Property(ies), and, (a) in case of any termination of this Lease as a result of
any Event of Default, any damages resulting from the Event of Default that
resulted in the deletion of such Terminated Lease Property(ies) herefrom; and
(b) in case of any termination of this Lease pursuant to Section 15 or Section
16 hereof, any obligations owed by Tenant to Landlord on account of such
termination under Section 15 or Section 16 hereof. Tenant shall execute and
enter into an amendment to this Lease reflecting the elimination of any Deleted
Property(ies) herefrom promptly (and in any event within ten (10) Business Days
after) after Landlord submits such amendment to Tenant for execution.

     18. Landlord's Right to Cure Tenant's Default. If an Event of Default shall
have occurred and be continuing, Landlord, without waiving or releasing any
obligation of Tenant or the Event of Default, may (but shall be under no
obligation to) at any time thereafter make such payments or perform such acts
for the account and at the expense of Tenant, and may, to the extent permitted
by law, enter upon any or each Leased Property or any portion thereof for the
purpose of curing such Event of Default and take all such action thereon as, in
Landlord's opinion, may be necessary or appropriate in connection with curing
such Event of Default. No such entry shall be deemed an eviction of Tenant. All
sums so paid or advanced by Landlord and all costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses) so incurred,
together with interest thereon (to the maximum extent permitted by law) as
Additional Rent hereunder at the Overdue Rate from the date on which such sums
or expenses are paid or incurred by Landlord, shall be paid by Tenant to
Landlord on demand. The

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obligations of Tenant and rights of Landlord contained in this Section 18 and in
Section 17 above shall survive the expiration or earlier termination of this
Lease.

     19. Holding Over. If Tenant shall, for any reason, remain in possession of
any Leased Property after the expiration or earlier termination of the Term as
to such Leased Property, such possession shall, at the option of Landlord, in
its sole discretion as to each such Leased Property, be as a month-to-month
tenant during which time Tenant shall pay as rental each month (which rental
constitutes liquidated damages with respect to Rent, and not a penalty for the
period to which it relates), two (2) times the aggregate of the Fixed Rent
payable by Tenant pursuant to the provisions of this Lease, in each case, with
respect to the Leased Property(ies) in question (determined on the basis of the
aggregate Tenant's Proportionate Share of each applicable Tenant for the
affected Leased Properties without adjustment or removal of the Tenant's
Proportionate Share for such Leased Property pursuant to Section 17.9 hereof).
During such period of month-to-month tenancy, Tenant shall be obligated to
perform and observe all of the terms, covenants and conditions of this Lease
with respect to the Leased Property(ies) in question (including, but not limited
to, its obligation to pay Additional Rent), but shall have no rights hereunder
other than the right, to the extent given by law to month-to-month tenancies, to
continue its occupancy and use of the applicable Leased Property(ies). Landlord
shall have the right to terminate Tenant's month-to-month tenancy at any time
after giving Tenant ten (10) days' prior written notice, and at any time
thereafter, Landlord may re-enter and take possession of the Premises. Nothing
contained herein shall constitute the consent, express or implied, of Landlord
to the holding over of Tenant after the expiration or earlier termination of
this Lease. The terms of this Section 19 shall be without limitation upon any
other right Landlord may have hereunder, at law or in equity, on account of any
holdover with respect to the applicable Leased Property(ies). The obligations of
Tenant and the rights of Landlord contained in this Section 19 shall survive the
expiration or earlier termination of this Lease.

     20. Subordination.

          20.1 Subordination. This Lease and all rights of Tenant hereunder are
subject and subordinate to all Facility Mortgages that may now or hereafter
affect Landlord's interest in any Leased Property, and to all renewals,
modifications, consolidations, replacements and extensions of all Facility
Mortgages; provided, however, that such subordination is conditioned upon the
delivery by Landlord and the applicable Facility Mortgagee of a normal and
customary Subordination, Non-Disturbance and Attornment Agreement. Tenant
acknowledges that the form of Subordination, Non-Disturbance and Attornment
Agreement attached hereto as Exhibit F (the "Form SNDA") is a commercially
reasonable and customary subordination, non-disturbance and attornment
agreement. Tenant shall execute and enter into the Form SNDA within five (5)
Business Days after the submission thereof by Landlord or any Facility Mortgagee
to Tenant. In confirmation of the subordination of this Lease, Tenant also
agrees to execute and deliver promptly (and in any event within ten (10)
Business Days) any other commercially reasonable and customary agreement (in
recordable form, if requested) that Landlord or any Facility Mortgagee may
request to evidence such subordination.

          20.2 Attornment. If the interests of Landlord under this Lease are
transferred by reason of, or assigned in lieu of, foreclosure or other
proceedings for enforcement of a Facility Mortgage, then Tenant shall, at the
option of such purchaser or assignee, as the case may

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be, (x) attorn to such party and perform for its benefit all the terms,
covenants and conditions of this Lease on Tenant's part to be performed with the
same force and effect as if such party were the landlord originally named in
this Lease, or (y) enter into a New Lease with such party, as landlord, pursuant
to Section 41 hereof for the remaining Term and otherwise on the same terms and
conditions of this Lease, except that such successor landlord shall not be (i)
liable for any previous act, omission, breach, default or negligence of Landlord
under this Lease; (ii) subject to any counterclaim, defense or offset that
theretofore shall have accrued to Tenant against Landlord; (iii) bound by any
previous modification or amendment of this Lease or by any previous prepayment
of more than one month's rent, unless such modification, amendment or prepayment
shall have been approved in writing by the Facility Mortgagee through or by
reason of which, such successor landlord shall have succeeded to the rights of
Landlord under this Lease or, in case of any such prepayment, such prepayment of
rent has actually been delivered to such successor landlord; or (iv) liable for
any security deposited pursuant to this Lease unless such security has actually
been delivered to such successor landlord. Nothing contained in this Section
20.2 shall be construed to impair any right otherwise exercisable by any such
owner, holder or lessee.

          20.3 Mortgagee Cure Rights. If any act or omission by Landlord would
give Tenant the right, immediately or after lapse of time, to cancel or
terminate this Lease or to claim a partial or total eviction, or abatement of
Rent, setoff or counterclaim not otherwise expressly permitted by the terms of
this Lease, or to declare a default hereunder, Tenant will not exercise any such
right until (i) it has given written notice of such act or omission to each
Facility Mortgagee whose name and address shall have previously been furnished
to Tenant, (ii) Landlord shall have failed to cure the same after the delivery
of such notice as may be herein required and within the time limits set forth in
this Lease, and (iii) following the giving of such notice to each Facility
Mortgagee, no Facility Mortgagee shall have remedied such act or omission (x) in
the case of an act or omission that is capable of being remedied without
possession of the applicable Leased Property, within the cure period available
to Landlord under this Lease plus thirty (30) days; and (y) in the case of any
act or omission that is incapable of being remedied without possession of the
applicable Leased Property, within thirty (30) days following the date on which
possession is obtained (either by such Facility Mortgagee or by a receiver in an
action commenced by such Facility Mortgagee).

          20.4 Modifications. Tenant shall execute any modification of this
Lease reasonably requested by any Facility Mortgagee or prospective Facility
Mortgagee to cause the terms of this Lease to conform with customary and
reasonable mortgage financing requirements, provided that such modifications (i)
do not materially adversely increase the obligations of Tenant hereunder or
materially diminish Tenant's rights under this Lease, (ii) do not increase Rent
payable hereunder, and (iii) are requested by any such Facility Mortgagee or
prospective Facility Mortgagee only at the time of its initial loan advance or
any subsequent extension of the maturity date of its loan or material
modification of the terms of its loan.

     21. Property Collateral.

          21.1 Landlord's Security Interest. The parties intend that, if an
Event of Default occurs and is continuing under this Lease, Landlord will
control Tenant's Personal Property so that Landlord or its designee or nominee
can operate, sell or re-let each Facility for

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its Primary Intended Use. Accordingly, to implement such intention, and for the
purpose of securing the payment and performance obligations of Tenant hereunder,
Landlord and Tenant agree as follows:

               21.1.1 Property Collateral. Tenant, as debtor, hereby grants to
Landlord, as secured party, a security interest and an express contractual lien
upon all of Tenant's right, title and interest in and to Tenant's Personal
Property and any and all products, rents, proceeds and profits thereof in which
Tenant now owns or hereafter acquires an interest or right, including, but not
limited to, any leased Tenant's Personal Property (collectively, the "Property
Collateral"). This Lease constitutes a security agreement pursuant to and in
accordance with the UCC covering all such Tenant's Personal Property. The
security interest granted to Landlord in this Section 21.1 with respect to
Tenant's Personal Property may be subordinated (in Landlord's sole discretion)
to any security interest granted in connection with the financing or leasing
(e.g., title retention agreements) from a Lending Institution of all or any
portion of the Tenant's Personal Property, provided, however, that in connection
with such financing and/or leasing, Landlord shall furnish Tenant's financiers'
with an intercreditor agreement in form and substance acceptable to Landlord in
its sole discretion. This security agreement and the security interest created
herein shall survive the expiration or earlier termination of this Lease. Tenant
hereby authorizes Landlord to file such financing statements, continuation
statements and other documents as may be necessary or desirable to perfect or
continue the perfection of Landlord's security interest in the Property
Collateral pursuant to the UCC. In addition, if required by Landlord at any time
during the Term, Tenant shall execute and deliver to Landlord, in form
reasonably satisfactory to Landlord, additional security agreements, financing
statements, fixture filings and such other documents as Landlord may reasonably
require to perfect or continue the perfection of Landlord's security interest in
the Property Collateral. Upon the occurrence of an Event of Default, Landlord
shall be entitled to exercise any and all rights or remedies available to a
secured party under the UCC, or available to a landlord under the laws of the
State(s) where the applicable Leased Property(ies) is (are) located, with
respect to Tenant's Personal Property, including the right to sell the same at
public or private sale.

               21.1.2 Name Change. Tenant shall give Landlord at least thirty
(30) days' prior written notice of any change in any Tenant's name, identity,
jurisdiction of organization or corporate structure. With respect to any such
change, Tenant will promptly execute and deliver such instruments, documents and
notices and take such actions, as Landlord deems necessary or desirable to
create, perfect and protect the security interests of Landlord in the Property
Collateral.

          21.2 Accounts Receivable Financing. Tenant may obtain so-called
"Accounts Receivable" financing with respect to any Facility (or its operations
therein) ("AR Financing") provided (i) the terms and conditions of this Section
21 have been satisfied; (ii) Tenant obtains Landlord's consent to the terms
thereof; and (ii) no Event of Default exists hereunder. Landlord shall not
unreasonably withhold its consent to any AR Financing provided that the amount
of such AR Financing is reasonable given the financial condition of Tenant and
the applicable Leased Properties and Landlord is presented with an intercreditor
agreement on terms acceptable to it in its reasonable discretion.

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     22. Risk of Loss. During the Term, the risk of loss or of decrease in the
enjoyment and beneficial use of each Leased Property in consequence of the
damage or destruction thereof by fire, the elements, act of terrorism,
casualties, thefts, riots, wars or otherwise, or in consequence of foreclosures,
attachments, levies or executions (other than by Landlord and those claiming
from, through or under Landlord) is assumed by Tenant, and Landlord shall in no
event be answerable or accountable therefor nor shall any of the events
mentioned in this Section entitle Tenant to any abatement of Rent.

     23. Indemnification. Notwithstanding the existence of any insurance
provided for herein, and without regard to the policy limits of any such
insurance, Tenant shall protect, indemnify, save harmless and defend Landlord
and the Landlord Indemnified Parties from and against all Losses (including,
without limitation, Litigation Costs), to the maximum extent permitted by law,
imposed upon or incurred by, or asserted or alleged against, Landlord or any
Landlord Indemnified Parties by reason of: (a) any accident, injury to, or death
of, persons or loss of, or damage to, property occurring on or about any Leased
Property (except to the extent caused by the gross negligence or willful
misconduct of Landlord); (b) any use, misuse, non-use, condition, maintenance or
repair of any Leased Property by Tenant, any Tenant Parties or anyone claiming
under Tenant or any Tenant Parties; (c) any Impositions; (d) any failure on the
part of Tenant, any Tenant Parties or anyone claiming under Tenant or any Tenant
Parties to perform or comply with any of the terms of this Lease; (e) claims for
work or labor performed or materials supplied to Tenant or any Tenant Parties;
(f) any material breach by Tenant of any of its representations and warranties
hereunder; (g) any breach or default under any Authorization by any Tenant (or
any Facility) or any revocation of any Authorizations (including, but not
limited to, any Facility Provider Agreement); (h) any negligence or misconduct
on the part of Tenant or any Tenant Parties; (i) the non-performance of any of
the terms and provisions of any and all existing and future subleases of any
Leased Property to be performed by the subtenant thereunder; and/or (j) the
claims of any broker or finder made in connection with this Lease except to the
extent claiming under the written agreements of Landlord. Any amounts that
become payable by Tenant under this Section 23 shall be paid within ten (10)
Business Days after demand by Landlord, and if not timely paid, shall bear
interest at the Overdue Rate from the date of such demand to the date of
payment. Tenant, at its expense, shall contest, resist and defend any such
claim, action or proceeding asserted or instituted against Landlord or any
Landlord Indemnified Parties with counsel acceptable to Landlord in its
reasonable discretion and shall not, under any circumstances, compromise or
otherwise dispose of any suit, action or proceeding without obtaining Landlord's
written consent. Tenant shall have the right to control the defense or
settlement of any claim provided that (A) Tenant shall first confirm in writing
to Landlord that such claim is within the scope of this indemnity and that
Tenant shall pay any and all amounts required to be paid in respect of such
claim; and (B) any compromise or settlement shall require the prior written
approval of Landlord, which approval shall not be unreasonably withheld provided
Landlord (or the applicable Landlord Indemnified Parties) are irrevocably
released from all liabilities in connection with such claim as part of such
settlement or compromise. Landlord shall have the right to approve counsel
engaged to defend such claim and, at its election and sole cost and expense,
shall have the right, but not the obligation, to participate in the defense of
any claim. If Tenant does not act promptly and completely to satisfy its
indemnification obligations hereunder, Landlord may resist and defend any such
claims or causes of action against Landlord or any Landlord Indemnified Party at
Tenant's sole cost. The terms of this Section 23 shall survive the expiration or
sooner termination of this Lease.

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     24. Assignment; Sublease.

          24.1 Prohibition. Tenant shall not, without Landlord's prior written
consent, which may be withheld in Landlord's sole discretion, either directly or
indirectly, or through one or more step transactions or tiered transactions,
voluntarily or by operation of law, (a) assign, convey, sell, pledge, mortgage,
hypothecate or otherwise encumber, transfer or dispose of all or any part of
this Lease or any Tenant's leasehold estate hereunder, (b) sublease all or any
part of any Leased Property; (c) engage the services of any Person for the
management or operation of all or any part of any Leased Property; (d) convey,
sell, assign, transfer, pledge, hypothecate, encumber or otherwise dispose of
any stock or partnership, membership or other interests (whether equity or
otherwise) in any Tenant (which shall include any conveyance, sale, assignment,
transfer, pledge, hypothecation, encumbrance or disposition of any stock or
partnership, membership or other interests (whether equity or otherwise) in any
controlling Person(s)), if such conveyance, sale, assignment, transfer or
disposition results, directly or indirectly, in a change in control of such
Tenant (or of such controlling Person(s)); (e) dissolve, merge or consolidate
any Tenant (which shall include any dissolution, merger or consolidation of any
controlling Person(s)) with any other Person, if such dissolution, merger or
consolidation, directly or indirectly, results in a change in control of such
Tenant (or in such controlling Person(s)); (f) sell, convey, assign, or
otherwise transfer all or substantially all of the assets of any Tenant (which
shall include any sale, conveyance, assignment, or other transfer of all or
substantially all of the assets of any controlling Person(s)); (g) sell, convey,
assign, or otherwise transfer any of the assets of any Tenant if the
consolidated net worth of such Tenant immediately following such transaction is
not at least equal to the greater of (1) the consolidated net worth of such
Tenant immediately prior to such transaction and (2) the consolidated net worth
of such Tenant; or (h) enter into or permit to be entered into any agreement or
arrangement to do any of the foregoing or to grant any option or other right to
any Person to do any of the foregoing (each of the aforesaid acts referred to in
clauses (a) through (h) being referred to herein as a "Transfer"). Without
limitation of the foregoing, a Transfer shall include a Change of Control of
Trans.

          24.2 Change of Control of Trans. Without limitation of the terms of
the Section 24.1, a Change of Control of Trans shall be a Transfer within the
meaning of Section 24.1 of this Lease requiring the prior written consent of
Landlord, which consent may be withheld in Landlord's sole discretion. By way of
illustration only, and without limitation of Landlord's rights hereunder, for
purposes of determining whether to consent (or deny its consent) to a Change of
Control of Trans or any Replacement Operator, Landlord may consider any or all
of the following criteria and factors ("Transfer Criteria"): (i) the operating
history of the acquiring Person or the Replacement Operator (or their respective
principals and Affiliates) with respect to healthcare facilities comparable to
the Facility as well as its (and their) general expertise and experience as an
operator of healthcare facilities; (ii) the number of licensed beds operated by
the acquiring Person or the Replacement Operator (or their respective
Affiliates), as the case may be, in the State of Maryland and the State of Ohio;
(iii) the general reputation and character of the acquiring Person or the
Replacement Operator (or their respective principals and Affiliates); (iv) the
ability or inability of the acquiring Person or the Replacement Operator, as the
case may be, to accurately provide and make the representations and warranties
contained in Section 10.8 of this Lease as to the acquiring Person or the
Replacement Operator, as the case may be, as well as their respective Affiliates
and principals; and (v) the solvency and

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creditworthiness of the acquiring Person or Replacement Operator, as the case
may be. If Landlord does not consent, in writing, to a Change of Control of
Trans, Tenant shall have the right, but not the obligation, to attempt for a
period of sixty (60) days after its receipt of such determination from Landlord
(the "Identification Period") to locate, identify and submit to Landlord a
replacement operator (or replacement operators) (a "Replacement Operator") for
all (but not less than all) of the Facilities to assume and accept Tenant's
obligations hereunder pursuant to an assignment of this Lease by Tenant to such
Replacement Operator. On or prior to the expiration of the Identification
Period, Tenant may submit to Landlord for its review and consideration a list
prospective Replacement Operators to accept an assignment of the Lease and
operate the Facilities on behalf of Tenant. Any assignment of this Lease to a
Replacement Operator shall be a Transfer within the meaning of Section 24.1 of
this Lease, which Transfer shall require Landlord's prior written consent.
Landlord may consent, or deny its consent, to an assignment of this Lease to a
Replacement Operator in its sole discretion, and, no such assignment shall be
effective absent such consent. Landlord may (but shall not be obligated to)
consider the Transfer Criteria for purposes of evaluating any such proposed
assignment to a Replacement Operator. Landlord shall notify Tenant as to whether
Landlord has elected to approve or disapprove such Transfer within fifteen (15)
Business Days after receipt of notice of the prospective Replacement Operators
and the failure by Landlord to provide such notice shall be deemed a denial of
its consent to such Transfer. If Landlord approves any such Transfer to a
Replacement Operator, Landlord shall also approve the Change of Control of Trans
at such time as: (i) the conditions to the approval of Landlord to such Change
of Control in Section 2.4.2(d) of the Mezzanine Loan Agreement and Section
2.4.2.2(b) or Section 8.2(b) of the Mortgage Loan Agreement have been satisfied;
and (ii) Tenant and Replacement Operator have executed assignment instruments
evidencing such Transfer acceptable to Landlord.

          24.3 Permitted Assignments and Subleases. Any purported Transfer made
without the prior written consent of Landlord shall be absolutely null and void.
If Landlord consents to any Transfer, such Transfer shall not be effective and
valid unless and until the applicable transferee executes and delivers to
Landlord any and all documentation reasonably required by Landlord. Any consent
by Landlord to a particular Transfer shall not constitute consent or approval of
any subsequent Transfer, and Landlord's written approval shall be required in
all such instances. No consent by Landlord to any Transfer shall be deemed to
release any Tenant from its obligations hereunder and such Tenant shall remain
fully liable for payment and performance of all obligations under this Lease.

          24.4 Rights of Landlord. If this Lease is assigned, or if the Premises
(or any part thereof) are sublet or used or occupied by anyone other than
Tenant, whether or not in violation of this Lease, Landlord may (without
prejudice to, or waiver of its rights), collect rent from the assignee,
subtenant or occupant. Landlord may apply the net amount collected to the Rent
herein required to be paid by Tenant, but no such assignment, subletting,
occupancy or collection shall be deemed a waiver of any of the provisions of
this Section 24. With respect to the allocable portion of the Premises sublet,
in the event that the total rent and any other considerations received under any
sublease by Tenant is greater than the total Fixed Rent required to be paid,
from time to time, under this Lease, Tenant shall pay to Landlord sixty-five
percent (65%) of such excess received from any subtenant and such amount shall
be deemed a component of the Additional Rent.

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     25. Financial Statements and Reporting.

          25.1 Maintenance of Books and Records. Tenant shall keep and maintain,
or cause to be kept and maintained, proper and accurate books and records, in
accordance with GAAP in all material respects, reflecting the financial affairs
of each Tenant. Landlord shall have the right from time to time during normal
business hours upon reasonable notice to the applicable Tenant to examine such
books and records at the office of such Tenant or other Person maintaining such
books and records and to make such copies or extracts thereof as Landlord shall
request.

          25.2 Annual Financial Statements. As soon as available, and in any
event within one hundred twenty (120) days after the close of each Fiscal Year,
Tenant shall furnish to Landlord, in hard copy and electronic format, and
presented on a consolidated and consolidating as well as on a
property-by-property basis, financial statements prepared for such Fiscal Year
with respect to Tenant, including a balance sheet and operating statement as of
the end of such Fiscal Year, together with related statements of income and
members' or partners' capital for such Fiscal Year, audited by a "Big Four"
accounting firm or a nationally recognized, independent certified public
accounting firm reasonably satisfactory to Landlord, whose opinion shall be to
the effect that such financial statements have been prepared in accordance with
GAAP, applied on a consistent basis, and shall not be qualified as to the scope
of the audit or as to the status of any Tenant as a going concern. Together with
Tenant's annual financial statements, Tenant shall furnish to Landlord an
Officer's Certificate certifying as of the date thereof whether, to the best of
Tenant's knowledge, there exists an event or circumstance that constitutes an
Event of Default or that, with the giving of notice or the passage of time, or
both, would constitute an Event of Default, and if such Event of Default or
latent Event of Default exists, the nature thereof, the period of time it has
existed and the action then being taken to remedy the same. Together with
Tenant's annual financial statements, Tenant shall furnish to Landlord, in hard
copy and electronic format:

               (i) a statement of cash flows for each Leased Property; and

               (ii) such other information as Landlord shall reasonably request.

          25.3 Quarterly Financial Information. As soon as available, and in any
event within forty-five (45) days after the end of each fiscal quarter (based on
a Fiscal Year), Tenant shall furnish to Landlord, in hard copy and electronic
format, and presented on a consolidated and consolidating as well as a
property-by-property basis, quarterly and year-to-date unaudited financial
statements prepared for such fiscal quarter with respect to Tenant, including a
balance sheet and operating statement as of the end of such fiscal quarter,
together with related statements of income, members' or partners' capital and
cash flows for such fiscal quarter and for the portion of the Fiscal Year ending
with such fiscal quarter, which statements shall be accompanied by (i) an
Officer's Certificate certifying that the same are true and correct and were
prepared in accordance with GAAP, applied on a consistent basis, subject to
changes resulting from audit and normal year-end audit adjustments and (ii) an
Officer's Certificate certifying as of the date thereof whether, to the best of
Tenant's knowledge, there exists an event or circumstance that constitutes an
Event of Default or that, with the giving of notice or the passage of time, or
both, would constitute an Event of Default and if such Event of Default or

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latent Event of Default exists, the nature thereof, the period of time it has
existed and the action then being taken to remedy the same. Each such quarterly
statement shall show the separate operations of each Leased Property, including,
without limitation, (1) a breakdown of Patient Revenues and other revenues
itemized by payor type and a reasonably detailed breakdown of operating expenses
and (2) patient census information by payor type (collectively, "Census
Information"). Each such quarterly report shall be accompanied by the following,
in hard copy and electronic format:

               (i) a statement in reasonable detail showing the calculation of
     Net Operating Income for each Facility for the trailing four fiscal
     quarters, in each case, ending at the end of such fiscal quarter;

               (ii) a then current occupancy report for each Facility; and

               (iii) such other information as Landlord shall reasonably
     request.

          25.4 Certification of Compliance with Financial Covenants.
Simultaneously with the delivery of the quarterly and annual financial
statements contemplated by Sections 25.2 and 25.3, and as part of the applicable
Officer's Certificate, Tenant shall certify to and for the benefit of Landlord
that (i) Tenant (or each Tenant, as applicable) is in compliance with the
covenants contained in Section 8.2.6 for the applicable period, or a list of
such covenants with which such Tenant is not in compliance for the applicable
period and (ii) a clear, reasonably detailed explanation of the calculations of
Coverage Ratio, Net Worth, Portfolio Coverage Ratio, debt to equity ratio and
the minimum occupancy rates for the relevant period, as applicable.

          25.5 Reports of Material Adverse Events. As soon as available, and in
any event within thirty (30) days after the end of each calendar month, Tenant
shall furnish a report describing in reasonable detail the occurrence during
such calendar month of any event that is reasonably likely to result in a
material adverse effect on the ability of Tenant to perform any material
provision of this Lease, or the value, use or enjoyment of any of the Leased
Properties or the operation thereof. Tenant shall, simultaneously with
delivering such report, furnish, in hard copy and electronic format and
presented on a consolidated and consolidating as well as a property-by-property
basis, monthly and year-to-date unaudited financial statements prepared for the
applicable month with respect to Tenant, including a balance sheet and operating
statement as of the end of such month, together with related statements of
income, members' or partners' capital and cash flows for such month and for the
portion of the Fiscal Year ending with such month, which statements shall be
accompanied by (i) an Officer's Certificate certifying that the same are true
and correct and were prepared in accordance with GAAP, applied on a consistent
basis, subject to changes resulting from audit and normal year-end audit
adjustments and (ii) an Officer's Certificate certifying as to any material
variances from the approved Annual Budget on a line-item basis. Each monthly
report shall show the separate operations of each Leased Property, including,
without limitation, the Census Information for such Leased Property. Each such
monthly report shall be accompanied by the following in hard copy and electronic
format:

               (i) a statement setting forth in reasonable detail the
     calculation of Net Operating Income for each Facility for the trailing
     twelve (12) months, in each case, ending at the end of that month;

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               (ii) then current occupancy report for each Facility; and

               (iii) such other information as Landlord shall reasonably
     request.

          25.6 Report of Compliance with Authorizations. As soon as available,
and in any event within ninety (90) days after the end of each calendar year,
Tenant shall furnish to Landlord true and complete copies of a report regarding
the compliance of each Facility with all Authorizations for such Facility.

          25.7 Weekly and Monthly Cash Flow and Census Reports. Upon Landlord's
written request, as soon as available, and in any event within five (5) days
after preparation thereof, each Tenant shall furnish to Landlord the weekly and
monthly consolidated cash flow reports of each Tenant and consolidated patient
census reports for each Tenant.

          25.8 Quarterly Deficiency Reports. As soon as available, and in any
event no later than thirty (30) days after the end of each fiscal quarter,
Tenant shall furnish to Landlord (i) the quarterly consolidated survey
deficiency summary report, indicating for each Facility, whether any survey,
citation or report alleging any deficiency with respect to such Facility has
been issued during the prior month and, if so, setting forth the identity of the
Governmental Authority that issued such survey, citation or report, a
description of the alleged deficiency and the timetable or deadline for
remedying same and the applicable Tenant's plan for curing such deficiency and
(ii) to the extent existing, all actuarial reports relating to all professional
liability claims. Tenant shall also deliver to Landlord promptly after request
therefor by Landlord any other Facility specific survey reports reasonably
requested by Landlord.

          25.9 Reduction in Licensed Beds. As soon as available, and in any
event within forty-five (45) days after the end of each calendar quarter, Tenant
shall deliver to Landlord copies of Officer's Certificates, setting forth
whether any Event(s) of Default has/have occurred and is/are continuing with
respect to the reduction of the number of licensed beds at any Facility or the
revocation of certification for reimbursement under Medicare or Medicaid with
respect to any Facility.

          25.10 Notices from Governmental Authorities. As soon as available, and
in any event within ten (10) days of receipt, Tenant shall deliver to Landlord
any and all notices (regardless of form) from any Governmental Authority (i)
that any Authorization for any Facility or the Medicare certification or
Medicaid certification of any Facility is the subject of any enforcement action,
revocation or suspension, or is subject to assessment for civil monetary
penalties or is the subject of any overpayment claim or recoupment claim or (ii)
that action is pending or being considered to revoke or suspend any
Authorization or to institute enforcement actions of any kind.

          25.11 Medicare and Medicaid Filings. Upon the request of Landlord,
within five (5) days of the earlier of (i) the date of the required filing of
cost reports for any Facility with the Medicaid agency or (ii) the date of
actual filing of such cost report for any Facility with such agency, Tenant
shall furnish to Landlord a complete and accurate copy of the annual Medicaid
cost report for each Facility, which will be prepared by an independent
certified public accountant or by an experienced cost report preparer acceptable
to Landlord in its sole discretion,

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and promptly furnish to Landlord any amendments filed with respect to such
reports and all responses, audit reports or inquiries with respect to such
reports.

          25.12 Medicare and Medicaid Deficiency Reports. As soon as available,
and in any event within two (2) days of receipt, Tenant shall deliver to
Landlord a copy of any Medicare, Medicaid or other Governmental Authority survey
or report and any statement of deficiencies, and within the time period required
by the particular agency for furnishing a plan of correction, shall also furnish
or cause to be furnished to Landlord, a copy of the plan of correction generated
from such survey or report for a Facility, and correct or cause to be corrected
any deficiency, the curing of which is a condition of continued licensure or for
full participation in Medicare or Medicaid for existing patients or for new
patients to be admitted with Medicare or Medicaid coverage, by the date required
for cure by such agency (plus any extensions of time granted by such agency).

          25.13 Annual Budgets. Tenant has previously delivered to Landlord the
Annual Budget for each Leased Property for the 2002 Fiscal Year. At least thirty
(30) days prior to the commencement of each subsequent Fiscal Year during the
Term, Tenant shall deliver to Landlord for approval an Annual Budget presented
on a consolidated and consolidating as well as a property-by-property basis for
the ensuing Fiscal Year and, promptly after preparation thereof, any subsequent
revisions to the Annual Budget.

          25.14 Financial Statements of Guarantor. As soon as available, and in
any event within one hundred (100) days after the close of each Fiscal Year,
Tenant shall cause Guarantor to furnish to Landlord, in hard copy and electronic
format and presented on a consolidated and consolidating as well as an
individual entity basis, financial statements prepared for such year with
respect to Guarantor, including a balance sheet and operating statement as of
the end of such year, together with related statements of income and members' or
partners' capital for such Fiscal Year, audited by a "Big Four" accounting firm
or a nationally recognized, independent certified public accounting firm
reasonably satisfactory to Landlord, whose opinion shall be to the effect that
such financial statements have been prepared in accordance with GAAP, applied on
a consistent basis, and shall not be qualified as to the scope of the audit or
as to the status of any Guarantor as a going concern. Together with Guarantor's
annual financial statements, Tenant shall cause Guarantor to furnish to Landlord
an Officer's Certificate certifying as of the date thereof whether, to the best
of Tenant's knowledge, there exists an event or circumstance that constitutes an
Event of Default or that, with the giving of notice or the passage of time, or
both, would constitute an Event of Default by any Guarantor under the Lease
Guaranty, and if such Event of Default or latent Event of Default exists, the
nature thereof, the period of time it has existed and the action then being
taken to remedy the same.

          25.15 Estoppel Certification. Together with every Officer's
Certificate required to be provided hereunder, or otherwise upon request by
Landlord in connection with a proposed sale or refinancing of any Leased
Property(ies) by Landlord or otherwise (in any such case within five (5)
Business Days), Tenant shall provide an "Estoppel Certificate" certifying to
Landlord and Landlord's designees (which certificate may be relied upon by
Landlord and any prospective purchaser or prospective Facility Mortgagee of any
Leased Property or any other designee) the following information:

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               (i) this Lease is unmodified and is in full force and effect (or
     that this Lease is in full force and effect as modified and setting forth
     the modifications);

               (ii) the dates to which Rent has been paid, each Tenant's
     Proportionate Share and the amount of Rent by Facility;

               (iii) all Facilities are in good standing with respect to all
     necessary federal, state and local licenses, permits and other
     Authorizations (including, but not limited to, all of the Facility Provider
     Agreements);

               (iv) each Facility that participates in the Medicare program is
     in compliance with the terms of its Facility Provider Agreement relative to
     Medicare and in good standing with the Medicare program;

               (v) each Facility that participates in the Medicaid program is in
     compliance with the terms of its Facility Provider Agreement relative to
     Medicaid and in good standing with the Medicaid program;

               (vi) each Facility that participates in any Third Party Payor
     Program is in compliance with the terms of such program and is in good
     standing thereunder;

               (vii) the current number of licensed beds at each Facility;

               (viii) Tenant is not in default in the performance of its
     obligations under this Lease or, if a default or an Event of Default
     exists, specifying the same in reasonable detail;

               (ix) Landlord is not in default pursuant to the terms of this
     Lease;

               (x) the representations and warranties of Tenant contained in
     Section 10 of the Lease are true and correct in all material respects;

               (xi) such other information, certifications and assurances as
     Landlord (or any prospective purchaser or prospective Facility Mortgagee)
     shall reasonably require or request as part of an Estoppel Certificate or
     otherwise;

               (xii) no Facility has a TAG of "G" or higher or is the subject of
     any admissions hold; and

               (xiii) no Facility or Tenant is the subject of any litigation,
     investigation, suit or proceeding for which adequate insurance coverage is
     not available under existing insurance policies maintained by Tenant.

Any Estoppel Certificate shall, at Landlord's request, be delivered together
with complete and accurate copies (originals of which shall be made available
for inspection upon request by Landlord) of all licenses, permits and other
Authorizations necessary to operate the Facilities in accordance with all
applicable laws.

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          25.16 SEC Reports. As soon as reasonably available, copies of any
Forms 10K, 10Q and 8K, and any other annual, quarterly, monthly or other
reports, copies of all registration statements and any other public information
that any Tenant, Guarantor or Affiliate of Tenant or Guarantor files with the
SEC or any other Governmental Authority. Promptly upon the furnishing thereof to
the shareholders of any Tenant, Guarantor or Affiliate of Tenant or Guarantor,
copies of all statements, reports, notices and proxy statements so furnished.

          25.17 Supplemental Information. Such supplements to the foregoing
documents and such other information and reports (including, without limitation,
non-financial information), as any Landlord or Facility Mortgagee may reasonably
request, provided such supplements, and such information and reports, are
consistent with the types of supplements, reports and information generally
utilized by such institutions within the financing industry.

          25.18 Weekly and Monthly Cash Flow and Census Information. On a weekly
basis to the extent requested by Landlord, (a) a weekly cash flow report of each
Tenant and (b) a weekly patient census report (reported separately for hospitals
and nursing centers and broken down by payor source) for each Tenant, in form
reasonably acceptable to Landlord. On a monthly basis during the Term, (i) a
monthly cash flow report for each Tenant; (ii) a monthly patient census report
for each Tenant; (iii) a monthly survey deficiency summary report in form
reasonably acceptable to Landlord and listing each of the Facility with an
indication of whether any survey, citation or report alleging a deficiency in
relation to such Facility has been issued with respect thereto during the period
covered by such report and, if so, setting forth the identity of the agency or
Governmental Authority that issued such citation or report, a description of the
alleged deficiency, the proposed plan for remedying such deficiency and the
timetable or deadline for curing the same; and (iv) a monthly summary of
accounts receivable with respect to each Facility and all of the Facilities in
form acceptable to Landlord.

          25.19 Quarterly Meetings; Facility Level Meetings and Reviews. On a
quarterly basis, Tenant shall permit, and upon request by Landlord, shall make
appropriate arrangements for, Landlord and/or Landlord's Representatives to
discuss the affairs, operations, finances and accounts of Tenant, Guarantor and
their respective Affiliates with, and be advised as to the same by, senior
officers of Tenant (and such of Tenant's independent accountants and other
financial advisors as would be relevant to the topic(s) of the particular
meeting), all as Landlord may deem appropriate for the purpose of verifying any
report(s) delivered by Tenant to Landlord under this Lease or for otherwise
ascertaining compliance with this Lease by Tenant or the business, operational
or financial condition of Tenant, Guarantor and/or their respective Affiliates
and/or any of their respective Facilities. Without limitation of the foregoing,
from time to time promptly following receipt of written notice from Landlord to
Tenant (and in any event within five (5) Business Days of such receipt), Tenant
shall permit, and shall make appropriate arrangements for, Landlord and/or
Landlord's Representatives to discuss the business, operational and financial
condition of specific Facility(ies) designated by Landlord with, and be advised
as to the same by, appropriate personnel of Tenant and its Affiliates having
operational and accounting responsibilities for the Facility(ies) so specified
by Landlord and to review, and make abstracts from and copies of, the books,
accounts and records of Tenant and its Affiliates relative to any such
Facility(ies), in each case provided, and on the condition, that any such
discussions or reviews, abstracting or copying shall not materially interfere
with Tenant's business operations relative to any affected Facility(ies). Unless
otherwise agreed in writing by

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Landlord and Tenant, all of the discussions, reviews, abstracting and copying
referenced in this Section 25.19 shall occur during normal business hours.

          25.20 Authorizations. Not later than thirty (30) days after the
commencement of any Fiscal Year during the Term, Tenant shall submit accurate
and complete copies of any and all Authorizations (together with any renewals or
extensions thereof) certified by Tenant as accurate and complete in an Officer's
Certificate.

          25.21 Format. Notwithstanding anything contained herein to the
contrary, Tenant shall submit the financial information, reports, operating
budgets and other financial data contemplated by Section 25 to Landlord in paper
and electronic form, in a format acceptable to Landlord in the exercise of its
reasonable discretion.

     26. Landlord's Right to Inspect. Tenant shall permit Landlord, Landlord's
Representatives, any then current or prospective Facility Mortgagee or other
lender to Landlord, any then current or prospective investment banker, mortgage
broker or other professional engaged by Landlord, any prospective purchaser of
any Leased Property or any investor in Landlord or any Affiliate of Landlord
and/or, any prospective lessee, and its and their respective authorized
representatives, to enter upon and conduct a physical inspection of any Leased
Property during normal business hours and, except in an emergency, upon not less
than three (3) Business Days' prior written notice, subject to any security,
health, safety or confidentiality requirements of any Governmental Authority
relating to the Premises, or imposed by law or applicable regulations or any
insurance requirement, and provided that no such entry or inspection shall
materially interfere with Tenant's business operations within the affected
Leased Property(ies). Landlord shall use reasonable efforts not to interfere, or
allow any person entering upon any Leased Property pursuant to the rights
granted to Landlord under this Section 26 to interfere, with the conduct of
Tenant's business operations at the applicable Leased Property in the exercise
of Landlord's rights pursuant to this Section 26. Landlord shall, and does
hereby indemnify, defend and hold Tenant and Tenant's agents, employees and
officers harmless from and against any Losses actually suffered or incurred by
Tenant or Tenant's agents, employees or officers as a result of any injury to,
or death of, persons, or damage to property, resulting from any entry upon the
Leased Properties by Landlord (or any Person entering thereon pursuant to the
rights granted to Landlord under this Section 26) pursuant to this Section 26.
Nothing contained in this Section 26 shall limit or impair Landlord's right to
immediately enter upon and inspect the Premises, or any of Landlord's other
rights or remedies, upon the occurrence of any Event of Default by Tenant.

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

     28. Single Lease. Tenant hereby acknowledges that the agreement between
Landlord and Tenant to treat this as single lease in all respects, was and is of
primary importance to Landlord, and Landlord would not have entered into this
Lease without there being such an

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agreement and such treatment of this Lease. All rights and obligations under
this Lease relating to the Premises shall apply to each Leased Property and any
default under this Lease pertaining to a single Leased Property or to the
Premises or any portion thereof shall be an Event of Default pertaining to the
Premises; provided, however, that in connection with any Event of Default,
Landlord may elect to exercise its rights only as to one or more of the Leased
Properties. Without limiting the generality of the foregoing, the parties hereto
acknowledge that this Lease constitutes a single lease of the Premises and is
not divisible notwithstanding any references herein to any individual Leased
Property and notwithstanding the possibility that certain individual Leased
Properties may be deleted herefrom pursuant to the express provisions of this
Lease under certain limited circumstances. The parties hereto expressly intend
that this Lease, notwithstanding the possibility that certain individual Leased
Properties may be deleted herefrom under certain limited circumstances expressly
provided for in this Lease, be treated as a single lease for all purposes
whatsoever, including Extended Terms, any assignment of the leasehold estate by
Tenant (as approved by Landlord), and in the context of Tenant's attempted
rejection, assumption and/or assignment of this Lease in any bankruptcy or other
insolvency proceeding affecting any Tenant, in which case the parties hereto
intend for such rejection to terminate this Lease with respect to the entire
Premises or such assumption to apply with respect to the entire Premises, i.e.,
all but not less than all of the Leased Properties. Notwithstanding anything
contained herein to the contrary, the existence of Tenant's Proportionate Share
and the allocation of Rent described in Section 3.1.2 hereof and elsewhere does
not change the joint and several nature of each Tenant's obligation to pay Rent
hereunder (it being acknowledged that each Tenant shall be jointly and severally
liable for any and all obligations of each other Tenant hereunder, including,
but not limited to, each individual Tenant's obligation to pay Rent hereunder).
This Lease does not constitute, and may not be enforced (except at Landlord's
sole discretion in connection with a Limited Termination Election) or treated
as, a separate lease for any individual Leased Property. Notwithstanding the
foregoing, the right of possession and leasehold right granted to each Tenant
hereunder is limited to the applicable Facility operated by such Tenant as
specified on Schedule 1 attached hereto and made a part hereof and the Leased
Property on which such Facility is located.

     29. Acceptance of Surrender. No surrender to Landlord of this Lease or of
any Leased Property or any part of any thereof, or of any interest herein or
therein, shall be valid or effective unless agreed to and accepted in writing by
Landlord, and no act by Landlord or any representative or agent of Landlord,
other than such a written acceptance by Landlord, shall constitute an acceptance
of any such surrender.

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

     31. Conveyance by Landlord. Landlord may, without the consent or approval
of Tenant, sell, transfer, assign, pledge, encumber, hypothecate, convey or
otherwise dispose of all or any portion of the Premises. If Landlord or any
successor owner of any Leased Property shall sell, transfer, assign, convey or
otherwise dispose of any Leased Property in accordance with the terms hereof
other than as security for a debt, and the purchaser, grantee, assignee or
transferee

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of the Leased Property(ies) shall expressly assume all obligations of Landlord
hereunder with respect to such Leased Property(ies) arising or accruing from and
after the date of such sale, conveyance, transfer, assignment or other
disposition, Landlord or such successor owner, as the case may be, shall
thereupon be released from all future liabilities and obligations of Landlord
under this Lease with respect to such Leased Property(ies) arising or accruing
from and after the date of such sale, conveyance, transfer, assignment or other
disposition as to such Leased Property(ies) and all such future liabilities and
obligations with respect to such Leased Property(ies) shall thereupon be binding
upon such purchaser, grantee, assignee or transferee. In the event of any such
sale, transfer, assignment, conveyance or other disposition (other than as
security for a debt) of less than all of the Premises, the provisions of Section
41 hereof governing New Leases shall apply.

     32. Quiet Enjoyment. So long as Tenant shall pay all Rent as the same
becomes due and shall fully comply with all of the terms of this Lease and fully
perform its obligations hereunder, Tenant shall peaceably and quietly have, hold
and enjoy each Leased Property for the Term hereof, free of any claim,
interruption or other action by Landlord or anyone claiming by, through or under
Landlord, but subject to all Permitted Encumbrances. No failure by Landlord to
comply with the foregoing covenant shall give Tenant any right to abate, reduce
or make a deduction from or offset against the Rent or any other sum payable
under this Lease, or to fail to perform any other obligation of Tenant
hereunder. Notwithstanding the foregoing, Tenant shall have all rights and
remedies available at law or in equity, except as otherwise provided herein, by
separate and independent action, to pursue any claim or claims it may have
against Landlord as a result of any breach by Landlord of the covenant of quiet
enjoyment contained in this Section 32.

     33. Notices. All notices, demands, requests, consents, approvals and other
communications hereunder shall be in writing and delivered by mail (registered
or certified mail, return receipt requested), in which case such notice shall be
deemed received three (3) Business Days after its deposit, by confirmed
facsimile, in which case such notice shall be deemed received the same day, or
by reputable nationally recognized overnight courier service, in which case such
notice shall be deemed received the next Business Day, addressed to the
respective parties, as follows:

          (a)  if to any Tenant:

               c/o Trans Healthcare, Inc.
               4660 Trindle Road
               Suite 103
               Harrisburg, Pennsylvania  17011
               Attention:  President, CEO
               Facsimile:  (717) 730-8722

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          with a copy to:

               Latsha Davis & Yohe, P.C.
               4720 Old Gettysburg Road
               Suite 101
               Harrisburg, Pennsylvania  17108-0825
               Attention:  Douglas C. Yohe
               Facsimile:  (717) 761-2286

          (b)  if to Landlord:

               Ventas Realty, Limited Partnership
               c/o Ventas, Inc.
               333 West Wacker Drive
               Suite 2700
               Chicago, Illinois 60606
               Attention:  Asset Manager
               Facsimile:  (312) 596-3850

          with a copy to:

               Ventas, Inc.
               4360 Brownsboro Road
               Suite 115
               Louisville, Kentucky 40207
               Attention:  General Counsel
               Facsimile:  (502) 357-9001

or to such other address as either party may hereunder designate in writing.

     34. Appraisals.

          34.1 Appraisals. If Tenant timely and properly exercises the Option or
a Renewal Option, Landlord promptly shall deliver to Tenant its determination
of: (i) Fair Market Value and the Option Purchase Price; or (ii) Fair Market
Rental and Fixed Rent for the first Lease Year of the applicable Extended Term,
as the case may be (the "Landlord Determination"). If Tenant reasonably and in
good faith disputes or disagrees with any Landlord Determination, Landlord and
Tenant shall act mutually, reasonably and in good faith for a period of thirty
(30) days to agree upon the Fair Market Value or the Fair Market Rental, as the
case may be. If Landlord and Tenant are unable to agree upon the Fair Market
Rental (and the resultant Fixed Rent for the first Lease Year of the applicable
Extended Term) or the Fair Market Value (and the resultant Option Purchase
Price) of any Leased Property(ies) for purposes of Section 36 or Section 1.3,
respectively, such amounts shall be determined pursuant to the appraisal
procedures set forth in Sections 34.2 through 34.5 below.

          34.2 Appointment of Appraisers. Within ten (10) Business Days after
the expiration of the thirty (30) day negotiation period described in Section
34.1 above, Landlord

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shall, by written notice to Tenant, propose an appraiser meeting the
requirements of Section 34.3 below (the "Landlord Appraiser Notice", and such
identified appraiser, "Landlord's Appraiser"). Within five (5) Business Days
after its receipt of the Landlord Appraiser Notice, Tenant shall, by written
notice to Landlord, either accept or contest Landlord's Appraiser as the sole
and final appraiser for the purposes of determining the Fair Market Rental or
the Fair Market Value, as the case may be. If Tenant accepts Landlord's
Appraiser as the sole and final appraiser for such purposes, then Landlord's
Appraiser shall perform the necessary appraisal and determine the Fair Market
Rental or the Fair Market Value, as the case may be, in accordance with the
appraisal requirements set forth in the definition of "Fair Market Rental", or
"Fair Market Value", as applicable (a "Conforming Appraisal"). The results of
such Conforming Appraisal made by Landlord's Appraiser shall thereupon
constitute the final determination of Fair Market Rental or Fair Market Value,
as the case may be. If Tenant contests Landlord's Appraiser as the sole and
final appraiser for the purposes of determining the Fair Market Rental or the
Fair Market Value, as the case may be, then: (i) Tenant shall, within five (5)
Business Days after its receipt of the Landlord Appraiser Notice, appoint an
appraiser meeting the requirements of Section 34.3 below ("Tenant's Appraiser")
and notify Landlord in writing of such appointment, and (ii) Landlord's
Appraiser and Tenant's Appraiser shall perform independent Conforming Appraisals
within fifteen (15) Business Days thereafter. If Tenant fails to timely appoint
Tenant's Appraiser, Tenant shall be deemed to have accepted Landlord's Appraiser
as the sole and final appraiser for the purpose of determining Fair Market
Rental or Fair Market Value, as the case may be, and the Conforming Appraisal of
Landlord's Appraiser shall control. If the results of such Conforming Appraisals
differ by less than five percent (5%) of the lower of such results, then Fair
Market Value or Fair Market Rental, as the case may be, shall be deemed to be
the arithmetic average of such results. If the results of such Conforming
Appraisals differ by five percent (5%) or more of the lower of such results,
then Landlord's Appraiser and Tenant's Appraiser shall, within five (5) Business
Days of the completion of such Conforming Appraisals, select a third appraiser
meeting the requirements of Section 34.3 below (the "Third Appraiser"), which
Third Appraiser shall perform a Conforming Appraisal within fifteen (15)
Business Days thereafter. Upon completion of such third Conforming Approval, the
Fair Market Rental or Fair Market Value shall be determined as follows: the
result of such Conforming Appraisals that differs the most (either higher or
lower) from the middle result shall be discarded and Fair Market Value or Fair
Market Rental, as the case may be, shall be deemed to be the arithmetic average
of the results contained in the two (2) remaining Conforming Appraisals.

          34.3 Qualifications of Appraisers. Each of Landlord's Appraiser,
Tenant's Appraiser and any Third Appraiser must (a) be a member of the American
Institute of Real Estate Appraisers (or any successor organization thereto)
and/or a person employed by an accounting firm that, at the time of such
appointment, is one of the four (4) largest public accounting firms in the
United States and (b) have not less than five (5) years experience, including
substantial expertise, in valuing hospitals and nursing centers and/or
determining the fair market rental value of hospitals and nursing centers.

          34.4 Binding Nature. The determination of Fair Market Rental or Fair
Market Value pursuant to this Section 34 shall be final and binding upon the
parties for purposes of determining Fair Market Rental (and the resultant Fixed
Rent for the first Lease Year of any

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Extended Term) or the Fair Market Value (and resultant Option Purchase Price),
as applicable, and shall not be subject to judicial review.

          34.5 Costs. Tenant shall pay the actual fees and expenses of all of
the appraisers appointed hereunder, which costs shall be Consent Expenses for
all relevant purposes.

     35. General REIT Provisions. Tenant understands that, in order for
Landlord's general partner, Ventas, Inc., to qualify as a REIT, certain
requirements (the "REIT Requirements") must be satisfied, including, without
limitation, the provisions of Section 856 of the Code. Accordingly, Tenant
agrees, and agrees to cause its Affiliates, permitted subtenants, if any, and
any other parties subject to its control by ownership or contract, to reasonably
cooperate with Landlord to ensure that the REIT Requirements are satisfied,
including, but not limited to, providing Landlord or Ventas, Inc. with
information about the ownership of Tenant and its Affiliates. Tenant agrees, and
agrees to cause its Affiliates, upon request by Landlord or Ventas, Inc., to
take all action reasonably necessary to ensure compliance with the REIT
Requirements.

     36. Landlord's Option to Purchase the Tenant's Personal Property. Effective
on not less than ninety (90) days' prior written notice given at any time within
one hundred eighty (180) days prior to the expiration of the Term, but not later
than ninety (90) days prior to such expiration, or within thirty (30) days after
the termination of this Lease if this Lease is terminated in whole or in part,
or within thirty (30) days after the dispossession of Tenant of any of the
Leased Properties prior to the expiration of the Term, Landlord or any Successor
Operator shall have the option to purchase all or any portion of Tenant's
Personal Property located at the Leased Property(ies) in question, if any, for a
purchase price equal to the unamortized portion of the original cost based upon
the economic useful life, as defined by the American Hospital Guide (or, if such
guide ceases to be published by the American Hospital Association, a substitute
guide or other economic useful life reference book mutually agreed upon by
Landlord and Tenant, each acting reasonably), subject to, and with appropriate
price adjustments for, all equipment leases, conditional sale contracts, UCC-1
financing statements and other encumbrances to which such Tenant's Personal
Property is subject. The notice from Landlord or any Successor Operator
exercising such right shall specify that portion of the Tenant's Personal
Property that Landlord or any Successor Operator have elected to acquire.
Promptly following demand by Landlord (but in any event within thirty (30) days
following such demand), Tenant shall deliver to Landlord a computation and
statement, in form, content and detail reasonably satisfactory to Landlord, of
the purchase price described above as of the date of such expiration,
termination or dispossession, as the case may be, for all of Tenant's Personal
Property located at the Leased Property(ies) in question. If Landlord reasonably
and in good faith disputes or disagrees with Tenant's calculation of such
purchase price, Landlord shall so notify Tenant in writing, whereupon the
parties shall act mutually, reasonably and in good faith for a period of ten
(10) days to agree upon such purchase price. If the parties are unable to agree
upon such purchase price, then Landlord's calculation, absent manifest error,
shall control and be binding on the parties. Tenant shall execute and deliver
such assignments, conveyance documents, bills of sale and other instruments as
Landlord shall reasonably require to evidence such conveyance and otherwise
reasonably assist Landlord with such conveyance.

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     37. Compliance With Environmental Laws.

          37.1 Hazardous Substances. Tenant shall not place or hold any
Hazardous Substances on or at any of the Leased Properties, except as is
necessary or reasonable in the ordinary course of its business. If Tenant's
business requires the use of any Hazardous Substances, other than such cleaning
materials as are typically found in healthcare facilities, Tenant shall notify
Landlord in writing and shall comply in all material respects with hazard
communication and notification requirements of the Occupational Safety and
Health Act and any other Environmental Laws with respect to such Hazardous
Substances. Tenant shall comply in all material respects with any and all
Environmental Laws in connection with its use, operation and management of the
Leased Properties. Tenant shall not cause or allow any asbestos to be
incorporated into any Leased Improvements or Alterations that it makes or causes
to be made on or to any of the Leased Improvements where the presence of such
asbestos would pose a risk to human health or safety or result in a violation of
Environmental Laws. Tenant shall not place, hold or dispose of any Hazardous
Substances on, under or at any of the Leased Properties except as specifically
allowed pursuant to this Section 37.1. Tenant further agrees that it shall not
use any of the Leased Properties as a treatment, storage, or disposal (whether
permanent or temporary) facility for Hazardous Waste as defined under RCRA. If
Tenant, in the ordinary course of its business, generates Hazardous Waste, then
Tenant shall comply in all material respects with any and all Environmental Laws
relating to the appropriate use, storage, transportation and disposal of
Hazardous Waste. Tenant further agrees that it shall properly, and in material
compliance with all Environmental Laws, dispose of all "infectious waste" such
as, without limitation, laboratory waste, pathological waste, blood specimens or
products, resident or patient waste including, without limitation, bandages and
disposable gowns, sharp waste and any material generated by the production or
testing of biological agents. All of the terms, covenants, warranties and
indemnifications contained in this Section 37 shall survive the expiration or
sooner termination of this Lease.

          37.2 Remediation; Notification. If Tenant becomes aware of a material
violation of any Environmental Laws relating to any Hazardous Substance or
otherwise in, on, under or about any Leased Property or any adjacent property
thereto, or if Tenant, Landlord or a Leased Property becomes subject to any
order of any federal, state or local agency to repair, close, detoxify,
decontaminate or otherwise remediate such Leased Property, Tenant shall promptly
notify Landlord of such event and, at its sole cost and expense, cure such
violation or effect such repair, closure, detoxification, decontamination or
other remediation, which activities shall in all events be performed in
accordance with any and all applicable Environmental Laws and shall be subject
to Landlord's written approval as to their scope, process, content and standard
for completion prior to their commencement, such approval not to be unreasonably
withheld or delayed. If Tenant fails to implement and diligently pursue any such
cure, repair, closure, detoxification, decontamination or other remediation
pursuant to the terms of this Section 37.2, Landlord shall have the right, but
not the obligation, to carry out such action and to recover from Tenant all of
Landlord's costs and expenses incurred in connection therewith. Tenant shall
promptly notify Landlord upon becoming aware (or being notified) of (i) any
claims, suits, proceedings, investigations or demands, or any enforcement,
cleanup or other regulatory or judicial action, threatened, made, or initiated
against or involving Tenant and relating to the Leased Properties pursuant to
Environmental Laws, including, without limitation, those relating to the
presence, treatment, storage, handling, disposal, generation, spill, release or

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discharge of any Hazardous Substances on, at, in, under or about the Leased
Properties or the migration thereof from or to any other property; and (ii) the
imposition of any lien arising under Environmental Laws on the Leased
Properties. Landlord shall promptly notify Tenant upon becoming aware of (i) any
claims, suits, proceedings, investigations or demands, or any enforcement,
cleanup or other regulatory or judicial action, threatened, made, or initiated
against or involving Landlord and relating to the Leased Properties pursuant to
Environmental Laws, including, without limitation, those relating to the
presence, treatment, storage, handling, disposal, generation, spill, release or
discharge of any Hazardous Substances on the Leased Properties or the migration
thereof from or to any other property; and (ii) the imposition of any lien
arising under Environmental Laws on the Leased Properties.

          37.3 Indemnity. Tenant shall indemnify, defend, protect, save, hold
Landlord and all of the Landlord Indemnified Parties harmless from and against
any and all Losses (including, but not limited to, losses of use or economic
benefit or diminution in value) suffered or incurred by Landlord or any Landlord
Indemnified Parties in connection with, arising out of, resulting from or
incident to: (i) the production, use, generation, storage, treatment,
transporting, disposal, discharge, release or other handling or disposition of
any Hazardous Substances from, in, on or about any of the Leased Properties,
whenever caused, arising or occurring, except to the extent caused by Landlord
or any of the Landlord Indemnified Parties from and after the date hereof; (ii)
the presence of any Hazardous Substances in, on, under or about any Leased
Properties (x) before the date hereof or (y) during the Term as a result of the
actions or omissions of Tenant or any Tenant Parties; (iii) the violation of any
Environmental Laws by (x) Tenant or any Tenant Parties during the Term or (y)
the Leased Properties prior to the date hereof; and (iv) a breach by Tenant or
any Tenant Parties of this Section 37.

          37.4 Environmental Inspection. Upon reasonable belief that Tenant has
not satisfied its obligations pursuant to this Section 37 and otherwise not more
than once annually, Landlord shall have the right, and upon not less than five
(5) days' written notice to Tenant, except in the case of an emergency, in which
event no notice shall be required, to conduct an inspection of any Leased
Property to determine the existence or presence of Hazardous Substances at, in,
on, under or about any Leased Property in material violation of any
Environmental Laws or the existence at any Leased Property of any material
violation of any Environmental Laws. Landlord shall have the right to enter and
inspect any Leased Property, conduct any testing, sampling and analyses
reasonably necessary and shall have the right to inspect materials brought into
any Leased Property. Landlord may, in its discretion, retain such experts to
conduct the inspection, or perform the tests, referred to herein, and to prepare
a written report in connection therewith. Landlord shall have the right to
inspect the Leased Properties with regard to the management and disposal of
Hazardous Substances and Hazardous Waste at all reasonable times during the
Term. All reasonable costs and expenses incurred by Landlord under this Section
37.4 shall be paid by Tenant as Consent Expenses.

          37.5 Removal. Upon the expiration of the Term, or the earlier
termination thereof as to one or more Leased Properties, whichever shall be the
first to occur, Tenant shall forthwith remove all Hazardous Substances from any
portion of the Leased Properties as to which such expiration or termination
relates, to the extent caused by Tenant or any Tenant Parties, or brought upon
any such Leased Properties by Tenant or any Tenant Parties, from and

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after the date hereof, which removal shall be performed in accordance with any
Environmental Laws and to Landlord's reasonable satisfaction.

     38. Tenant's Option to Purchase the Leased Property. Provided no Event of
Default exists, and is continuing hereunder at the time Tenant exercises the
Option or at the closing of the sale of the Premises to Tenant, Tenant shall
have the option (the "Option") to purchase all (but not less than all) of the
Premises upon the expiration of the Initial Term (but not any Extended Term), at
the greater of (i) the Minimum Purchase Price or (ii) the Fair Market Value (the
"Option Purchase Price"). Tenant may exercise such Option by giving written
notice to Landlord of its exercise of the Option (an "Option Exercise Notice")
no earlier than eighteen (18) months and not less than fifteen (15) months prior
to the expiration of the Initial Term and depositing with Landlord twenty
percent (20%) of the Minimum Purchase Price (the "Earnest Money Deposit")
simultaneously with the delivery of the Option Exercise Notice. Any exercise by
Tenant of the Option shall void all Renewal Options (including any previously
exercised Renewal Options). Landlord shall have thirty (30) days after Tenant's
exercise of the Option to elect, in its sole discretion, to expand the Premises
to include one or more Additional Properties pursuant to, and in accordance
with, Section 41 hereof. For purposes of the exercise of the Option, any such
Additional Properties shall be included in the Premises for all relevant
purposes, including, but not limited to, the calculation of the Option Purchase
Price. Landlord and Tenant shall proceed to the closing (the "Option Closing")
on the date that is nine (9) months after the exercise of the Option. If Tenant
fails to proceed to the Option Closing for any reason other than a default by
Landlord with respect to its obligations pursuant to the terms of Exhibit D
relative to the Option and the Option Closing, Landlord shall have the
unconditional right to: (i) retain the Earnest Money Deposit, as fixed and
liquidated damages (and not as a penalty); and (ii) either: (x) declare an
immediate Event of Default hereunder; or (y) extend the Initial Term for a
period of one (1) year on and subject to the terms of this Lease, in which case
the Fixed Rent for such extension period shall be subject to the escalation
pursuant to Section 3.1.2 hereof applicable to any other Lease Year during the
Term. The Option shall be exercised subject to, and in accordance with, the
terms and conditions applicable to the exercise of the Option set forth in
Exhibit D attached hereto.

     39. Operational Transfer.

          39.1 Exercise; Transfer of Authorizations.

               39.1.1 Exercise. Upon (a) the expiration of this Lease as to any
Leased Property in accordance with its terms as of the Expiration Date specified
herein or (b) the occurrence of an Early Termination Event as to any Leased
Property (including any Deleted Property), Landlord shall have the unequivocal
and unilateral right to require an Operational Transfer with respect to such
Leased Property (any Leased Property with respect to which Landlord elects to
require an Operational Transfer, a "Transition Property") by delivery of written
notice to Tenant specifying such election (a "Transition Notice"). Landlord may
elect (in its sole discretion) to exercise its right to require an Operational
Transfer with respect to any Leased Property with respect to which the Lease
will terminate by its terms as of the Expiration Date stated herein by
delivering written notice of such election to Tenant on or prior to ten (10)
days prior to the Expiration Date. In the event of an Early Termination Event as
to one or more

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Leased Properties, Landlord may exercise (in its sole discretion) its right to
require an Operational Transfer at any time by delivering a Transition Notice to
Tenant.

               39.1.2 Transfer of Permits. Provided that Landlord exercises its
unilateral right to require an Operational Transfer with respect to any Leased
Property, Tenant shall take any and all necessary actions; file such
applications, petitions, and transfer notices; make such assignments,
conveyances and transfers of permits, licenses, approvals and Facility Provider
Agreements issued to Tenant to and for the benefit of Landlord and/or any
Landlord's designee (any such designee, a "Successor Operator"); and cause such
permits, licenses, approvals and Provider Agreements to be issued to and for the
benefit of Landlord and/or any Successor Operator, in any and all such cases, as
are necessary, desirable, or advisable, such that the day-to-day operations of
the Transition Property for the Primary Intended Use(s) of the Facility(ies)
located on such Transition Property) are transferred and transitioned,
practically and legally, to the Landlord and/or any Successor Operator
simultaneously with the termination or earlier expiration of this Lease as to
the Transition Property(ies) without interruption of the business activities
therein, regulatory or otherwise (such transfer of operations, the "Operational
Transfer"). Without limitation of the foregoing, as part of any Operational
Transfer, Tenant shall, to the extent permitted by applicable law, (i) sell,
transfer, convey and assign to Landlord and/or any Successor Operator, as
applicable, those of the Authorizations that Landlord elects to assume and
accept (or cause Successor Operator to assume and accept) (the "Assigned
Authorizations"); (ii) cooperate in all respects with Landlord and/or any
Successor Operator, and use its unconditional, best efforts to enable Landlord
and/or Successor Operator to apply for and obtain any and all licenses,
operating permits, Provider Agreements, provider status, certificates of need,
certificates of exemption, approvals, waivers, variances and other governmental,
quasi-governmental and private authorizations necessary or advisable for the
continuous operation of the Facility(ies) located on any Transition Property for
its/their Primary Intended Use(s) (collectively, "Transfer Authorizations"); and
(iii) assign to Landlord or any Successor Operator, as applicable, such
assignable patient, vendor, service provider and other contracts relating to the
Facility(ies) located on any Transition Property as Landlord or Successor
Operator may request (the "Assigned Contracts"). The costs and expenses incident
to any Operational Transfer including, but not limited to, any costs incident to
assigning the Assigned Authorizations, obtaining Transfer Authorizations and
assigning the Assigned Contracts shall be paid entirely by Tenant, which costs
and expenses shall be Consent Expenses. It is the express intention of the
parties that, at the expiration or earlier termination of the Term as to any
Transition Property, and upon any dispossession of Tenant in connection with any
Event of Default as to any Facility(ies) located on such Transition Property,
any and all Authorizations needed to operate each Transition Property as to
which the Term is expired or terminated, or as to which Tenant has been
dispossessed, for its/their Primary Intended Use(s) shall, to the maximum extent
permitted by applicable law, and if Landlord so elects, remain with such
Facility(ies) and shall be transferred into the name of Landlord and/or
Successor Operator, as applicable, regardless of whether such Authorization is
in the name of Tenant at any time during the Term. Without limiting the
generality of the foregoing, Tenant shall furnish to Landlord or Successor
Operator, as applicable, complete and accurate documents and information in
Tenant's possession, custody or control necessary or reasonably requested by
Landlord or Successor Operator in connection with any Operational Transfer and
the completion and processing of any applications for the assignment of the
Assigned Authorizations or the Assigned Contracts or obtaining Transfer
Authorizations.

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          39.2 Reasonable Assistance. In anticipation of the expiration of this
Lease as to any Leased Property, or upon any Early Termination Event as to any
Leased Property, Tenant shall cooperate with Landlord in all respects to
facilitate and effectuate an Operational Transfer if Landlord elects to require
an Operational Transfer. Such cooperation shall include, without limitation: (i)
furnishing to Landlord or any prospective Successor Operator complete and
accurate books, records, files, documents and information in Tenant's
possession, custody or control necessary or reasonably requested by Landlord or
Successor Operator in connection with the assessment and/or assumption of the
operations of any Transition Properties; and (ii) facilitating the evaluation
and employment by Landlord or any prospective Successor Operator of such
employees of Tenant or its Affiliates (or any third party employment agency with
whom Tenant or its Affiliates has an agreement pursuant to which such agency
employs such parties) as Landlord or Successor Operator may elect to evaluate or
employ, including, without limitation, to the extent permitted by law, affording
Landlord or Successor Operator, as applicable, access to all relevant personnel
files, records, documents and information in Tenant's or its Affiliates'
possession, custody or control.

          39.3 Facility Termination; Limited Extension.

               39.3.1 Facility Termination. Notwithstanding anything to the
contrary contained in this Lease, Tenant shall not, prior to the tenth (10th)
day preceding the stated Expiration Date as to any Leased Property, commence to
wind up and terminate the operations of the Facility(ies) operated thereon (a
"Facility Termination"). In no event, and under no circumstances, shall any
Tenant relocate the patients or occupants of any Facility to any other
healthcare facility without obtaining Landlord's prior written consent (which
consent may be withheld in Landlord's sole discretion); provided, however, that
if Landlord has not delivered a Transition Notice to Tenant prior to the tenth
(10th) day preceding the stated Expiration Date of this Lease as to a Leased
Property, then Tenant may commence the Facility Termination (involving the
relocation of patients) as to the Facility(ies) located on such Leased Property
and, upon the expiration of this Lease as to such Leased Property and
Facility(ies), Tenant shall vacate such Leased Property and surrender possession
thereof to Landlord in accordance with all of the applicable requirements of
this Lease. If, prior to the tenth (10th) day preceding the stated Expiration
Date of this Lease as to a Leased Property, Landlord elects to require an
Operational Transfer by delivering a Transition Notice to Tenant, Tenant shall
not commence or otherwise engage in a Facility Termination with respect to the
Facility(ies) located on such Leased Property. In the event of an Early
Termination Event, Tenant shall in no event commence a Facility Termination in
connection with the applicable Leased Property unless and until Landlord
affirmatively elects, in writing and in its sole discretion, not to deliver a
Transition Notice with respect to such Leased Property.

               39.3.2 Limited Extension. In the event Landlord delivers a
Transition Notice, Tenant shall thereafter operate the Facility(ies) located on
such Transition Property in accordance with all of the requirements of this
Lease until the earliest to occur of (i) the date (on or after the expiration of
this Lease as to such Transition Property and Facility(ies)) on which Landlord
or Successor Operator, as applicable, will assume the operation of such
Facility(ies), as specified in a written notice from Landlord to Tenant given
not less than fifteen (15) days prior to the date of such assumption; (ii) the
date that is ninety (90) days after the stated Expiration Date of this Lease as
to such Transition Property and Facility(ies) (except that

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in connection with any Early Termination Event, such ninety (90) day period
shall not commence until Landlord delivers a Transition Notice as to the
applicable Leased Property); and (iii) the date (on or after the stated
expiration of this Lease as to any Transition Property and Facility(ies)) that
is ninety (90) days after Tenant receives written notice from Landlord that,
notwithstanding the foregoing, Tenant may commence the Facility Termination, on
which earliest date, Tenant shall vacate the Leased Property in question and
surrender possession thereof to Landlord in accordance with all of the
applicable requirements of this Lease. In the event Landlord sends Tenant a
Transition Notice with respect to only a Leased Property as to which the Lease
has terminated as of the Expiration Date (i.e. not in the case of an Early
Termination Event), and, as a result thereof, Tenant operates one or more
Facilities beyond the aforesaid Expiration Date applicable thereto, then, from
and after the expiration of this Lease as to such Facility(ies) and until the
earliest to occur of the dates described in clauses (i), (ii) and (iii) above
(the "Reimbursement Period"), Landlord shall provide Tenant with an operating
budget and shall reimburse Tenant for any operating deficits with respect to
such Facility(ies) that Tenant may be required to fund out-of-pocket on account
of operating losses and expenses of such Facility(ies) incurred by Tenant by
reason of, or arising out of compliance with, such budget with respect to the
Reimbursement Period. Any such reimbursement shall be due from Landlord to
Tenant within thirty (30) days after written request by Tenant, provided that
Tenant shall furnish such documentation of any operating deficits, losses and
expenses as Landlord may reasonably request. The terms of this Section 39 shall
survive the expiration or sooner termination of this Lease.

     40. Non-Recourse. Tenant specifically agrees to look solely to Landlord's
and any successor owner's interest in the then applicable Premises for recovery
of any judgment from Landlord, it being specifically agreed that neither
Landlord, any such successor owner, nor any officer, director, employee, lender,
agent or Affiliate of Landlord or any such successor owner shall ever be
personally liable for any such judgment or for the payment of any monetary
obligation to Tenant. Tenant shall have no recourse against any other property
or assets of Landlord or any successor owner, or against any property or assets
of any officer, director, shareholder, partner, member, lender, agent or
Affiliate of Landlord or any successor owner. Furthermore, in no event shall
Landlord (original or successor) ever be liable to Tenant for any special,
indirect or consequential damages suffered by Tenant from whatever cause.

     41. Combination of Leases. If Landlord is the lessor under both this Lease
and any New Lease, Landlord shall have the right, at any time during the Term,
by written notice to Tenant, to require that this Lease and such New Lease (the
"Combination Lease") be combined into a single lease and to require Tenant to
execute an amendment to this Lease whereby (a) if this Lease is the Section 41
Lease, the Leased Properties covered by the Combination Lease ("Additional
Properties") are added as Leased Properties under this Lease and otherwise
merged into this Lease or (b) if the Combination Lease is the Section 41 Lease,
the Leased Properties covered by this Lease are added as Leased Properties under
the Combination Lease and otherwise merged into the Combination Lease, in each
case subject to the following terms and conditions:

          41.1 Section 41 Lease. References in this Lease to the "Section 41
Lease" shall mean and refer to whichever of this Lease or the Combination Lease
is chosen by Lessor to be the Section 41 Lease.

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          41.2 Additional Properties. If this Lease is the Section 41 Lease,
effective as of the date specified in Section 41.4 below (the "Section 41
Date"), this Lease shall be deemed to be modified and amended as follows:

               41.2.1 The Additional Properties shall be included as Leased
Properties under this Lease and the appropriate exhibits to this Lease shall be
modified to add the addresses and legal descriptions of such Additional
Properties.

               41.2.2 Fixed Rent under this Lease shall be the combination of
the respective amounts of the Fixed Rent under this Lease and the Combination
Lease.

               41.2.3 Any rental escalations that are to be made with respect to
the Leased Properties under this Lease shall also be made with respect to the
Additional Properties as if such Additional Properties had been Leased
Properties under this Lease since the beginning of the Term.

               41.2.4 Schedule 2 to this Lease shall be modified and amended so
as to add thereto the Tenant's Proportionate Share(s) relative to the Tenant(s)
under the Combination Lease that was/were previously included in Schedule 2 to
the Combination Lease, and the Tenant's Proportionate Share(s) of the Tenants
included in this Lease (including, without limitation, the additional Tenant(s)
from the Combination Lease) shall be recalculated so that each such Tenant shall
have a Tenant's Proportionate Share equal to the percentage that the Fixed Rent
allocable to the Facility operated by such Tenant (which allocable portion of
Fixed Rent shall remain equal to the share of Fixed Rent that was allocated to
such Facility under this Lease or the Combination Lease, as applicable, prior to
the combination of the Leases pursuant to this Section 41) comprises of the
aggregate Fixed Rents for all Leased Properties included in this Lease
(including, without limitation, the Additional Properties) and so that the
aggregate of all Tenant's Proportionate Shares equals 100%.

               41.2.5 Tenant under this Lease shall be responsible for the
payment, performance and satisfaction of all duties, obligations and liabilities
arising under the Combination Lease, insofar as they relate to the Additional
Properties, that were not paid, performed and satisfied in full prior to the
Section 41 Date, and, without limitation of the foregoing, (x) any Event of
Default that had occurred, arisen or accrued under the Combination Lease prior
to the Section 41 Date shall be, and shall be deemed to be, an Event of Default
under this Lease, as to which the rights and remedies and other provisions of
this Lease shall be applicable, (y) any breach or default that had occurred,
arisen or accrued under the Combination Lease prior to the Section 41 Date but
had not yet become an Event of Default under the Combination Lease as of the
Section 41 Date shall be, and be deemed to be, a breach or default under this
Lease, as to which the cure periods, rights and remedies and other provisions of
this Lease shall be applicable, and (z) with respect to any breach or default
described in subsection (y) above, although the cure periods, rights and
remedies and other provisions of this Lease shall be applicable, the portion of
any cure period under the Combination Lease that had elapsed as of the Section
41 Date shall be counted in determining whether and when the applicable cure
period under this Lease has expired.

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               41.2.6 The Additional Properties shall otherwise be incorporated
into this Lease as Leased Properties included under this Lease the same as if
this Lease, from the inception of the Lease, had included such Leased Properties
as Leased Properties hereunder on the rent, lease terms and other economic terms
described in the Combination Lease.

               41.2.7 Exhibit C attached hereto and made a part hereof and the
Base Year Operating Income shall thereafter be amended and increased,
respectively, to include the Additional Properties and increase the Base Year
Operating Income by the amount of the Allocated Base Year Operating Income
applicable to the Additional Properties.

          41.3 Combination Lease. If this Lease is not the Section 41 Lease,
effective as of the Section 41 Date, this Lease shall be modified and amended as
necessary (x) to incorporate into the Combination Lease as Leased Properties
thereunder the Leased Properties covered by this Lease the same as if the Leased
Properties covered by this Lease had, from the inception of this Lease, been
included in the Combination Lease as Leased Properties thereunder on the rent,
lease terms and other economic terms described in this Lease and (y) otherwise
to comply with the requirements of Section 41 of the Combination Lease, as the
Section 41 Lease thereunder. Tenant acknowledges and agrees that, without
limitation of Section 41.2.5 above, the modification and amendment referenced in
this Section 41.2.7 shall not result in Tenant being released from any duties,
liabilities or obligations that had accrued under this Lease through the Section
41 Date.

          41.4 Section 41 Date. In the case of any combination of leases
pursuant to this Section 41, such combination shall be effective on the date
that is the earlier of (x) the date the required modifications and amendments to
the Lease and the Combination Lease are fully executed and delivered by the
parties thereto and (y) the date specified in the written notice from Landlord
to Tenant requiring a combination of this Lease and the Combination Lease as
described above, which date shall be no sooner than ten (10) days, nor later
than sixty (60) days, after the date such notice is issued.

          41.5 Additional Actions. Landlord and each Tenant shall take such
actions and execute and deliver such documents, including, without limitation,
required modifications and amendments to this Lease and the Combination Lease,
as are reasonably necessary and appropriate to effectuate fully the provisions
and intent of this Section 41.

     42. New Lease. Landlord shall have the right, at any time and from time to
time during the Term, by written notice to Tenant, to require Tenant to execute
an amendment to this Lease whereby one or more Leased Properties (individually,
a "Transferred Premises" or collectively, "Transferred Premises") are separated
and removed from this Lease, and simultaneously to execute a substitute lease
with respect to such Transferred Premises, in which case:

          42.1 New Lease Terms. Landlord and Tenant shall execute a new lease
(the "New Lease") for such Transferred Premises, effective as of the date
specified in Section 42.3 below (the "Property Transfer Date"), in the same form
and substance as this Lease, but with the following changes thereto:

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               42.1.1 Fixed Rent. The initial Fixed Rent for such Transferred
Premises shall be an amount equal to the product of (x) the sum of Tenant's
Proportionate Shares applicable to all of the Facilities located on the
Transferred Premises, and (y) aggregate Fixed Rent in effect under this Lease on
the Property Transfer Date. The allocable share of Fixed Rent for each Tenant
under the New Lease shall be equal to the product of (i) Tenant's Proportionate
Share for the Facility(ies) located on such Transferred Premises under the New
Lease, as calculated pursuant to Section 42.1.2 and (ii) Fixed Rent under the
New Lease. Any rental escalations required under this Lease shall be made under
the New Lease on the same date and in the same manner as is required under this
Lease, in the full amount required as if such Transferred Premises had been
under the New Lease for a full year, notwithstanding that the period from the
Property Transfer Date to the rent escalation date may be less than one full
year. The Base Year Operating Income applicable to the Transferred Premises for
purposes of determining whether the Rent Escalation Condition under such New
Lease has been satisfied shall be equal to the aggregate of the Allocated Base
Year Operating Incomes for all of the Transferred Premises.

               42.1.2 Proportionate Shares. An exhibit to such New Lease
comparable to Schedule 2 attached to this Lease shall include Tenant's
Proportionate Share for each Facility located on the Transferred Premises
covered by the New Lease, equal to the percentage that the Fixed Rent for such
Facility under the New Lease comprises of the aggregate Fixed Rent for all
Facilities located on all the Transferred Premises under such New Lease (and the
aggregate of all such Tenant's Proportionate Shares under such New Lease shall
equal 100%).

               42.1.3 Liabilities and Obligations. The New Lease shall provide
that each Tenant thereunder shall be responsible for the payment, performance
and satisfaction of all duties, obligations and liabilities arising under this
Lease, insofar as they relate to the Transferred Premises subject to the New
Lease, that were not paid, performed and satisfied in full prior to the
commencement date of the New Lease (and Tenant under this Lease shall also be
responsible for the payment, performance and satisfaction of the aforesaid
duties, obligations and liabilities not paid, performed and satisfied in full
prior to the commencement date of such New Lease), and shall further provide
that the Tenant thereunder shall not be responsible for the payment, performance
or satisfaction of any duties, obligations and liabilities of Tenant under this
Lease arising after the Property Transfer Date.

               42.1.4 Single Leased Property. If the New Lease relates to a
single Leased Property, all references to multiple Leased Properties in the New
Lease shall be eliminated.

               42.1.5 REIT Provisions. At the election of Landlord, any one or
more of the provisions of the New Lease pertaining to the REIT status of Ventas,
Inc. status shall be deleted. In addition, Landlord may delete and eliminate
from such New Lease such provisions herein as it elects, provided such deletion
and elimination does not materially and adversely affect the Tenant under such
New Lease.

               42.1.6 Security Deposit; Escrow Deposits. Such New Lease shall
contemplate both a security deposit and escrow deposits in the same manner or
fashion as

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contemplated by this Lease, which amounts shall initially be funded by Landlord,
on a proportional basis, from the Security Deposit and the escrow deposits held
by Landlord hereunder.

          42.2 Modifications to this Lease. Upon execution of such New Lease,
and effective as of the Property Transfer Date, this Lease shall be deemed to be
modified and amended as follows: (i) the Transferred Premises shall be excluded
from the Premises hereunder; (ii) Fixed Rent hereunder shall be reduced by the
amount of the Fixed Rent allocable to the Transferred Premises; (iii) Exhibit C
attached hereto and made a part hereof and the Base Year Operating Income shall
be amended and reduced, respectively, to delete and eliminate the Transferred
Premises therefrom and reduce the Base Year Operating Income by the amount of
the Allocated Base Year Operating Income(s) applicable to the Transferred
Premises for purposes of determining whether the Rent Escalation Condition has
been satisfied or otherwise under this Lease; and (iv) Schedule 2 attached
hereto shall be modified so as to remove the Tenant's Proportionate Shares for
the Transferred Premises, and the Tenant's Proportionate Shares for the Leased
Properties remaining under this Lease shall be recalculated so that each such
Facility shall have a Tenant's Proportionate Share equal to the percentage that
the Fixed Rent for such Facility comprises of the aggregate Fixed Rents for all
Premises remaining under this Lease, and so that the aggregate of all Tenant's
Proportionate Shares remaining under this Lease equals 100%. Such revisions may,
at Landlord's election, be reflected in a formal amendment to this Lease, which
amendment shall be promptly executed by Tenant.

          42.3 Effective Date. Any New Lease shall be effective on the date
which is the earlier of: (i) the date the New Lease is fully executed and
delivered by the parties thereto and (ii) the date specified in the written
notice from Landlord to Tenant requiring a New Lease as described above, which
date shall be no sooner than ten (10) days, nor later than sixty (60) days,
after the date such notice is issued.

          42.4 Other Undertakings. Tenant shall take such actions and execute
and deliver such documents, including without limitation the New Lease and new
or amended Memorandum(s) of Lease and, if requested by Landlord, an amendment to
this Lease, as are reasonably necessary and appropriate to effectuate fully the
provisions and intent of this Section 41, and Landlord shall execute and deliver
such new or amended Memorandum(s) of Lease as are reasonably necessary and
appropriate to effectuate fully the provisions and intent of this Section 41 and
an amendment of this Lease in accordance with Section 42.2 above, as applicable.

     43. Expansion of Lease. If at any time during the Term, Tenant, Guarantor
or any Affiliate of Tenant or Guarantor desire to acquire, construct or assume
any additional healthcare facilities, the terms of that certain side letter
agreement between Tenant, Landlord and Guarantor governing "Expansion" shall be
applicable.

     44. Restrictive Covenant. Tenant, Guarantor and its Affiliates shall be
subject to the restrictive covenants and conditions governing the ownership,
leasing, management or operation of additional healthcare facilities contained
in Exhibit E attached hereto.

                                       91

<PAGE>

     45. Miscellaneous.

          45.1 Survival. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, Tenant or Landlord
arising prior to any date of termination or expiration of this Lease shall
survive such termination or expiration.

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

          45.3 Headings. The headings in this Lease are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

          45.4 Integration. This Lease contains the entire agreement between
Landlord and Tenant with respect to the subject matter hereof. No
representations, warranties or agreements have been made by Landlord except as
set forth in this Lease.

          45.5 Severability. If any term or provision of this Lease is held or
deemed to be invalid or unenforceable, such term or provision shall be modified
as slightly as possible so as to render it valid and enforceable; if such term
or provision, as modified, shall be held or deemed invalid or unenforceable,
such holding shall not affect the remainder of this Lease and same shall remain
in full force and effect.

          45.6 Subject to Law. All rights, powers and remedies provided herein
may be exercised only to the extent that the exercise thereof, including those
that do not require the giving of notice, does not violate any applicable law,
and are intended to be limited to the extent necessary so that they will not
render this Lease invalid or unenforceable under any applicable law. All
waivers, consents, confessions and releases provided for in this Lease are
effective only to the extent permitted by applicable law. This Lease was
negotiated in the State of Illinois, which State the parties agree has a
substantial relationship to the parties and to the underlying transaction
embodied hereby. In all respects, the law of the State of Illinois shall govern
the validity of and enforceability of the obligations of the parties set forth
herein, but all provisions hereof relating to the creation of the leasehold
estate and remedies set forth in Section 17 shall be governed by the laws of the
State in which each applicable Leased Property that is the subject of dispute is
located, and the parties hereto will submit to jurisdiction and the laying of
venue for any suit on this Lease in the Commonwealth of Kentucky.

          45.7 Waivers. No waiver 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 Landlord's right to
terminate this Lease or exercise any other remedy granted herein on account of
such existing default.

          45.8 Binding Character. This Lease shall be binding upon and shall
inure to the benefit of the heirs, successors, personal representatives, and
permitted assigns of Landlord and Tenant.

                                       92

<PAGE>

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

          45.10 Forbearance. 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.

            [The remainder of this page is intentionally left blank]

                                       93

<PAGE>

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

                                       LANDLORD:

Witness:                               VENTAS REALTY, LIMITED PARTNERSHIP,
                                       a Delaware limited partnership

/s/ BRETT FEINBERG                     By:  Ventas, Inc., a Delaware corporation
------------------------------------
Name: Brett Feinberg
     -------------------------------

                                            By: /s/ T. RICHARD RINEY
                                               ---------------------------------
/s/ JOSEPH D. LAMBERT                       Name: T. Richard Riney
------------------------------------             -------------------------------
Name: Joseph D. Lambert                     Title: Executive Vice President
     -------------------------------              ------------------------------

                                       TENANT:

Witness:                               THI OF OHIO AT CHARDON, LLC

/s/ ROBIN K. PARTRIDGE                 THI OF OHIO AT GREENBRIAR NORTH, LLC
------------------------------------
Name: Robin K. Partridge               TRANS HEALTHCARE OF OHIO, INC.
     -------------------------------

/s/ VINNIE CROMWELL                    THI OF OHIO ALFs AT THE COMMONS, LLC
------------------------------------
Name: Vinnie Cromwell                  THI OF MARYLAND AT SOUTH RIVER, LLC
     -------------------------------

                                       MILLENNIUM HEALTH AND REHABILITATION
                                       CENTER OF FORESTVILLE, LLC

                                       MILLENNIUM HEALTH AND REHABILITATION
                                       CENTER OF ELLICOTT CITY, LLC

                                       By:  /s/ ANTHONY MISITANO
                                           -------------------------------------
                                       Name: Anthony Misitano
                                            ------------------------------------
                                       Title: President
                                             -----------------------------------

                                       S-1

<PAGE>

State of New York

County of New York

     Before me a notary public in and for said county, personally appeared T.
Richard Riney known to me to be the person who, as Executive Vice President of
the Corporation which executed the foregoing instrument, signed the same, and
acknowledged to me that (s)he did so sign said instrument in the name and upon
behalf of said Corporation as such officer; that the same is his/her free act
and deed as such officer, and the free and corporate act and deed of said
Corporation on behalf of said limited partnership.

     In testimony whereof, I have hereunto subscribed my name and affixed my
official seal (if official has one) at New York, NY this 30 day of October,
2002.

(Seal)

                                              /s/ PAUL EDWARD CLAYTON
                                    --------------------------------------------
                                     (signature of person taking acknowledgment)
                                                                 (Title or rank)
                                                         (Serial number, if any)

State of New York                             [Notary Seal]

County of New York

     Before me a notary public in and for said county, personally appeared
Anthony Misitano known to me to be the person who, as President of the entities
which executed the foregoing instrument, signed the same, and acknowledged to me
that (s)he did so sign said instrument in the name and upon behalf of said
entities as such officer; that the same is his/her free act and deed as such
officer, and the free and corporate act and deed of said entities.

     In testimony whereof, I have hereunto subscribed my name and affixed my
official seal (if official has one) at New York, NY this 30 day of October,
2002.

(Seal)

                                              /s/ PAUL EDWARD CLAYTON
                                    --------------------------------------------
                                     (signature of person taking acknowledgment)
                                                                 (Title or rank)
                                                         (Serial number, if any)

                                              [Notary Seal]

                                       S-2<PAGE>

                                                                  Exhibit 10.2.1

                                 LOAN AGREEMENT

                          Dated as of November 1, 2002

                                      Among

             THOSE ENTITIES LISTED AS A "BORROWER" ON SCHEDULE III,
                           collectively, as Borrowers

                                       and

                       VENTAS REALTY, LIMITED PARTNERSHIP,
                                    as Lender

<PAGE>

ARTICLE I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION.............................1

Section 1.1.     Definitions...................................................1
Section 1.2.     Principles of Construction...................................24

ARTICLE II. THE LOAN..........................................................24

Section 2.1.     The Loan.....................................................24
Section 2.2.     Interest Rate................................................25
Section 2.3.     Loan Payments................................................26
Section 2.4.     Prepayments..................................................29
Section 2.5.     Extension of Loan............................................30
Section 2.6.     Supplemental Mortgage Affidavits.............................31

ARTICLE III. REPRESENTATIONS AND WARRANTIES...................................31

Section 3.1.     Borrower Representations.....................................31
Section 3.2.     Survival of Representations..................................41

ARTICLE IV. BORROWER COVENANTS................................................41

Section 4.1.     Borrower Affirmative Covenants...............................41
Section 4.2.     Borrower Negative Covenants..................................49

ARTICLE V. INSURANCE, CASUALTY AND CONDEMNATION...............................52

Section 5.1.     Insurance....................................................52
Section 5.2.     Casualty and Condemnation....................................56
Section 5.3.     Delivery of Net ProceedS.....................................57

ARTICLE VI. ACCOUNTS..........................................................61

Section 6.1.     Cash Management Account/Collection Account...................61
Section 6.2.     Distributions from Cash Management Account...................62
Section 6.3.     Tax and Insurance Escrow Account.............................64
Section 6.4.     Debt Service Account.........................................65
Section 6.5.     Operating Expense Reserve Account............................65
Section 6.6.     Capital Expenditure Reserve Account..........................66
Section 6.7.     Deferred Maintenance and Environmental Escrow Account........66
Section 6.8.     Net Proceeds Account.........................................67
Section 6.9.     Excess Cash Reserve Account..................................67
Section 6.10.    Intentionally Deleted........................................68
Section 6.11.    Account Collateral...........................................68
Section 6.12.    Permitted Investments........................................68
Section 6.13.    Bankruptcy...................................................69
Section 6.14.    Letters of Credit............................................69
Section 6.15.    Provisions Regarding Letters of Credit.......................70

                                       i

<PAGE>

ARTICLE VII. PROPERTY MANAGEMENT..............................................71

Section 7.1.     The Management Agreement.....................................71
Section 7.2.     Prohibition Against Termination or Modification..............71
Section 7.3.     Replacement of Manager.......................................72

ARTICLE VIII. TRANSFERS.......................................................72

Section 8.1.     Transfer of the Properties...................................72
Section 8.2.     Transfer of Equity Interests.................................72
Section 8.3.     Lender's Consent Rights......................................72

ARTICLE IX. SALE AND SECURITIZATION OF MORTGAGE...............................73

Section 9.1.     Sale of Mortgages and Securitization.........................73
Section 9.2.     Securitization Indemnification...............................74

ARTICLE X. DEFAULTS...........................................................77

Section 10.1.    Event of Default.............................................77
Section 10.2.    Remedies.....................................................80
Section 10.3.    Remedies Cumulative..........................................82

ARTICLE XI. MISCELLANEOUS.....................................................82

Section 11.1.    Successors and Assigns.......................................82
Section 11.2.    Lender's Discretion..........................................82
Section 11.3.    Governing Law................................................82
Section 11.4.    Modification, Waiver in Writing..............................84
Section 11.5.    Delay Not a Waiver...........................................84
Section 11.6.    Notices......................................................84
Section 11.7.    Waiver of Right to Trial by Jury.............................85
Section 11.8.    Headings.....................................................86
Section 11.9.    Severability.................................................86
Section 11.10.   Preferences..................................................86
Section 11.11.   Waiver of Notice.............................................86
Section 11.12.   Remedies of Borrower.........................................86
Section 11.13.   Expenses; Indemnity..........................................87
Section 11.14.   Schedules Incorporated.......................................88
Section 11.15.   Offsets, Counterclaims and Defenses..........................88
Section 11.16.   No Joint Venture or Partnership; No Third Party
                    Beneficiaries.............................................88
Section 11.17.   Publicity....................................................88
Section 11.18.   Waiver of Marshalling of Assets..............................89
Section 11.19.   Waiver of Offsets/Defenses/Counterclaims.....................89
Section 11.20.   Conflict; Construction of Documents; Reliance................89
Section 11.21.   Brokers and Financial Advisors...............................89

                                       ii

<PAGE>

Section 11.22.   Exculpation..................................................90
Section 11.23.   Prior Agreements.............................................92
Section 11.24.   Servicer.....................................................92
Section 11.25.   Duplicate Originals; Counterparts............................92
Section 11.26.   Cross Collateralization......................................92
Section 11.27.   Joint and Several Liability..................................93

                                      iii

<PAGE>

SCHEDULES

Schedule I      - Operating Leases

Schedule II     - Intentionally Deleted

Schedule III    - Borrowers, Fee Owners, Operators, Licensed Beds

Schedule IV     - Organizational Chart

Schedule V      - Allocated Loan Amount

Schedule VI     - Amortization

Schedule VII    - Intentionally deleted

Schedule VIII   - Guarantors

Schedule IX     - Insurance Claims

Schedule X      - Waivers of Physical Plant Standards

Schedule XI     - Pending Audits

Schedule XII    - Waivers in Connection with Licensed Beds

Schedule XIII   - Proceedings and Notices

Schedule XIV    - Enforcement Actions

EXHIBITS

Exhibit A       - Payor Notice (Medicare and Medicaid Third Party Payors)

Exhibit B       - Interest Rate Cap Requirements

Exhibit C       - Form of Nonconsolidation Opinion

Exhibit D       - Material Agreements

                                       iv

<PAGE>

                                 LOAN AGREEMENT

          THIS LOAN AGREEMENT, dated as of November 1, 2002 (as amended,
restated, replaced, supplemented or otherwise modified from time to time, this
"Agreement"), among VENTAS REALTY, LIMITED PARTNERSHIP, a Delaware limited
partnership, having an address at 4360 Brownsboro Road, Suite 115, Louisville,
Kentucky 40207 (together with its successors and assigns "Lender") and THOSE
ENTITIES LISTED AS A "BORROWER" ON SCHEDULE III attached hereto, each a Delaware
limited liability company and each having an address at 4660 Trindle Road, Suite
103, Camp Hill, Pennsylvania 17011 (each, a "Borrower" and collectively, the
"Borrowers").

          All capitalized terms used herein shall have the respective meanings
set forth in Article I hereof.

                              W I T N E S S E T H :

          WHEREAS, Borrowers desire to obtain a loan in the maximum principal
amount of $55,000,000 from Lender; and

          WHEREAS, Lender is willing to make the Loan to Borrower, subject to
and in accordance with the conditions and terms of this Agreement and the other
Loan Documents.

          NOW, THEREFORE, in consideration of the covenants set forth in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree,
represent and warrant as follows:

               ARTICLE I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION

          Section 1.1. Definitions.

          For all purposes of this Agreement, except as otherwise expressly
provided:

          "Acceptable Interest Rate Cap Agreement" means an interest rate cap
agreement (together with the confirmation, definitions and schedules relating
thereto) acceptable to Lender among Borrowers and a financial institution cap
provider with a LIBOR strike price no higher than seven percent (7%) per annum
and a notional amount equal to the Maximum Principal Loan Amount, and otherwise
satisfying the requirements set forth on Exhibit B.

          "Account Collateral" means, collectively, the Collateral Accounts and
all sums at any time held, deposited or invested therein, together with any
interest or other earnings thereon, and all proceeds thereof (including proceeds
of sales and other dispositions), whether accounts, general intangibles, chattel
paper, deposit accounts, instruments, documents or securities.

          "Accreditation" means certification by a generally recognized
independent agency or other organization that a facility fully complies with the
standards set by such agency or organization for operation of such a facility.

<PAGE>

          "Affiliate" of any specified Person means any other Person
controlling, controlled by or under common control with such specified Person.
For the purposes of this Agreement, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities or other beneficial interests, by contract or otherwise; and the
terms "controls," "controlling" and "controlled" have the meanings correlative
to the foregoing.

          "Agreement" means this Loan Agreement, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.

          "Allocated Loan Amount" means the portion of the Loan Amount allocated
to each Property as set forth on Schedule V, as such amounts shall be adjusted
from time to time as hereinafter set forth. Upon each adjustment in the amount
of Debt due to (A) a regular payment of monthly Debt Service pursuant to Section
2.3.1, each Allocated Loan Amount shall be decreased by an amount equal to the
product of (i) the amount of such payment and (ii) a fraction, the numerator of
which is the applicable Allocated Loan Amount (prior to the adjustment in
question) and the denominator of which is the total of all Allocated Loan
Amounts (prior to the adjustment in question) or (B) an adjustment of the Loan
Amount as a result of a reallocation of the aggregate principal balance of the
Loan and the Mezzanine Loan pursuant to Section 2 of the Cooperation Agreement,
each Allocated Loan Amount shall be decreased or increased by an amount equal to
the product of (i) the amount by which the Loan Amount is to be decreased or
increased in connection with a reallocation pursuant to Section 2 of the
Cooperation Agreement and (ii) a fraction, the numerator of which is the
applicable Allocated Loan Amount (prior to the adjustment in question) and the
denominator of which is the total of all Allocated Loan Amounts (prior to the
adjustment in question). Notwithstanding the foregoing sentence to the contrary,
when the Debt is reduced as the result of Lender's receipt of proceeds with
respect to a Condemnation or Casualty affecting one hundred percent (100%) of a
Property, the Allocated Loan Amount for such Property with respect to which the
insurance proceeds or Award were received shall, at Lender's sole discretion, be
reduced to zero (such Allocated Loan Amount prior to reduction being referred to
as the "Withdrawn Allocated Amount"), and each other Allocated Loan Amount
shall, if the Withdrawn Allocated Amount exceeds the proceeds (such excess being
referred to as the "Proceeds Deficiency"), be increased by an amount equal to
the product of (1) the Proceeds Deficiency and (2) a fraction, the numerator of
which is the applicable Allocated Loan Amount (prior to the adjustment in
question) and the denominator of which is the aggregate of all of the Allocated
Loan Amounts (prior to the adjustment in question) other than the Withdrawn
Allocated Amount.

          "ALTA" means American Land Title Association, or any successor
thereto.

          "Alteration Threshold" means (a) with respect to any Property, the
greater of (i) five percent (5%) of the Allocated Loan Amount for such Property
or (ii) $200,000 and (b) with respect to the Properties, two percent (2%) of the
Loan Amount.

          "Annual Budget" means the operating and capital budget for the
Properties on a combined basis and for each Property setting forth, in
reasonable detail, (i) Borrowers' good faith estimate of the anticipated results
of operations, including Operating Income, Operating Expenses, and Capital
Expenditures for the applicable Fiscal Year and (ii) a breakdown of

                                       2

<PAGE>

projected Patient Revenues and other revenues of each Operator and its
Affiliates itemized by payor type.

          "Assignment of Leases" means, with respect to each Property, that
certain first priority Assignment of Leases and Rents and Contracts, dated as of
the date hereof, from the applicable Borrower, as assignor, to Lender, as
assignee, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time, and "Assignments of Leases and Rents"
means all such instruments collectively.

          "Assisted Living Facility" means a residential or facility-based
program that provides housing and supportive services, supervision, personalized
assistance, health-related services or a combination thereof which meets the
needs of individuals who are unable to perform or who need assistance in
performing the activities of daily living, whether licensed as an assisted
living facility, a residential care facility or adult care facility.

          "Assignment of Management Agreement" means that certain Assignment of
Management Agreement and Subordination of Management Fees dated the date hereof
among Borrowers, Manager and Lender, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time, and "Assignments
of Management Agreements" means all such instruments collectively.

          "Award" means any compensation paid by any Governmental Authority in
connection with a Condemnation in respect of all or any part of a Property.

          "Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as amended from time to time, and any successor statute or
statutes and all rules and regulations from time to time promulgated thereunder,
and any comparable foreign laws relating to bankruptcy, insolvency or creditors'
rights.

          "Basic Carrying Costs" means, with respect to each Property, the sum
of the following costs associated with such Property: (i) Taxes, (ii) Insurance
Premiums and (iii) ground rents, if any.

          "Borrower" and "Borrowers" each has the meaning set forth in the first
paragraph of this Agreement.

          "Borrower Party" means each Borrower and any entity which held any
Regulatory Permit relating to any Property prior to transferring same to a
Borrower.

          "Breakage Costs" has the meaning set forth in Section 2.3.8.

          "Business Day" means any day other than a Saturday, a Sunday or a
legal holiday on which national banks are not open for general business in the
State of New York or the State where the Cash Management Bank is located.

          "Capital Expenditure Reserve Account" shall have the meaning set forth
in Section 6.6(a).

                                       3

<PAGE>

          "Capital Expenditures" means, with respect to each Property, hard and
soft costs incurred by any Borrower with respect to replacements and capital
repairs made to the Property (including repairs to, and replacements of,
structural components, roofs, building systems, parking garages and parking
lots), in each case to the extent capitalized in accordance with GAAP and to the
extent not paid for by Net Proceeds.

          "Cash Management Account" has the meaning set forth in Section 6.1(a).

          "Cash Management Agreement" means that certain Cash Management
Agreement of even date herewith among Lender, Borrowers and Cash Management
Bank, as the same may from time to time be modified, amended or replaced.

          "Cash Management Bank" means The Bank of New York, a New York banking
institution, and any other Eligible Institution from time to time selected in
accordance with Section 6.1(c).

          "Cash Management Event" means at any time the Debt Service Coverage
Ratio falls below 1.35:1.00.

          "Cash Management Period" means the period of time commencing on the
occurrence of a Cash Management Event and ending on the Payment Date following
the date that the Debt Service Coverage Ratio is at or above 1.35:1.00 for two
(2) consecutive quarters.

          "Casualty" means the occurrence of any casualty, damage or injury, by
fire or otherwise, to a Property or any part thereof.

          "Casualty Consultant" has the meaning set forth in Section 5.3.2(c).

          "Casualty Retainage" has the meaning set forth in Section 5.3.2(d).

          "Closing Date" means the date of funding the Loan.

          "CMS" means the Centers for Medicare and Medicaid Services (formerly
known as the Health Care Financing Administration ("HCFA")).

          "Code" means the Internal Revenue Code of 1986, as amended, and as it
may be further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.

          "Collateral Accounts" means, collectively, the Cash Management
Account, the Collection Account, the Tax and Insurance Escrow Account, the Debt
Service Account, the Net Proceeds Account, the Capital Expenditure Reserve
Account, the Operating Expense Reserve Account, the Excess Cash Reserve Account
and the Deferred Maintenance and Environmental Escrow Account.

          "Collateral Assignment of Interest Rate Cap" means, that certain
Collateral Assignment of Interest Rate Cap Agreement, dated the date hereof,
from Borrowers, as assignors, to Lender, as assignee, as the same may be
amended, restated, replaced, supplemented

                                       4

<PAGE>

or otherwise modified from time to time and any other Collateral Assignment of
Interest Rate Cap Agreement hereafter delivered.

          "Collection Account" has the meaning set forth in Section 6.1.

          "Collection Account Agreement" means that certain Collection Account
Agreement of even date herewith among Lender, Borrowers and Collection Account
Bank, as the same may from time to time be modified, amended or replaced.

          "Collection Account Bank" means First Union National Bank or any other
Eligible Institution from time to time selected in accordance with Section
6.1(c).

          "CON" means a certificate of need or similar permit or approval (not
including conventional building permits) from a Governmental Authority related
to the construction and/or operation of Improvements at any Property for use for
a specified number of beds in a Nursing Facility, Assisted Living Facility
and/or Specialty Hospital, or alteration of any such Improvements or
modifications of services provided at a Property used as a Nursing Facility,
Assisted Living Facility and/or Specialty Hospital.

          "Condemnation" means a temporary or permanent taking by any
Governmental Authority as the result or in lieu or in anticipation of the
exercise of the right of condemnation or eminent domain, of all or any part of a
Property, or any interest therein or right accruing thereto, including any right
of access thereto or any change of grade affecting the applicable Property or
any part thereof.

          "Cooperation Agreement" means that certain Cooperation Agreement of
even date herewith among Lender, Borrowers, Mezzanine Borrowers and Guarantors,
as the same may from time to time be modified, amended or replaced.

          "Debt" means the outstanding principal amount of the Loan together
with all interest accrued and unpaid thereon and all other sums (including,
without limitation, the Spread Maintenance Premium, the Prepayment Fee payable
pursuant to Section 2.4.1 hereof, any Breakage Costs and any of Lender's costs
and expenses for which any Borrower is responsible under the terms of any of the
Loan Documents) due to Lender in respect of the Loan under the Note, this
Agreement, the Mortgages, the Environmental Indemnity or any other Loan
Document.

          "Debt Constant" means eleven and thirty-three one hundredths percent
(11.33%).

          "Debt Service" means, with respect to any particular period of time,
scheduled principal and interest payments under the Note.

          "Debt Service Account" has the meaning set forth in Section 6.4.

          "Debt Service Coverage Ratio" shall mean, for any twelve (12) calendar
month period, the ratio of (i) the Pro Forma Net Operating Income for all
Properties for such period immediately preceding the date of calculation to (ii)
Debt Service plus the Mezzanine Debt Service for the twelve (12) calendar month
period following the date of calculation assuming, as

                                       5

<PAGE>

to the Debt Service, an interest rate equal to the greater of the Debt Constant
and the Interest Rate in effect on the date of such calculation.

          "Default" means the occurrence of any event hereunder or under any
other Loan Document which, but for the giving of notice or passage of time, or
both, would be an Event of Default.

          "Default Rate" means, with respect to the Loan, a rate per annum equal
to the lesser of (i) the Maximum Legal Rate, or (ii) four percent (4%) above the
Interest Rate.

          "Deferred Maintenance Amount" means $179,456.25.

          "Deferred Maintenance and Environmental Escrow Account" has the
meaning set forth in Section 6.7(a).

          "Deferred Maintenance Conditions" means those items described in the
property condition reports delivered to Lender in connection with the Loan.

          "Disclosure Document" has the meaning set forth in Section 9.2(a).

          "Eligible Account" means a separate and identifiable account from all
other funds held by the holding institution that is either (i) an account or
accounts maintained with a federal or state-chartered depository institution or
trust company which complies with the definition of Eligible Institution or (ii)
a segregated trust account or accounts maintained with a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity which, in the case of a state chartered depository institution or trust
company is subject to regulations substantially similar to 12 C.F.R. (S)
9.10(b), having in either case a combined capital and surplus of at least fifty
million dollars ($50,000,000) and subject to supervision or examination by
federal and state authority. An Eligible Account will not be evidenced by a
certificate of deposit, passbook or other instrument.

          "Eligible Institution" means a depository institution or trust company
insured by the Federal Deposit Insurance Corporation the short term unsecured
debt obligations or commercial paper of which are rated at least A-1 by S&P, P-1
by Moody's, and F-1+ by Fitch in the case of accounts in which funds are held
for thirty (30) days or less or, in the case of Letters of Credit or accounts in
which funds are held for more than thirty (30) days, the long term unsecured
debt obligations of which are rated at least "AA-" by Fitch and S&P and "Aa2" by
Moody's.

          "Embargoed Person" has the meaning set forth in Section 3.1.37.

          "Environmental Indemnity" means that certain Environmental Indemnity
Agreement dated as of the date hereof executed by Borrowers and Guarantors in
connection with the Loan for the benefit of Lender.

          "Equipment" has the meaning set forth in the Granting Clause of the
Mortgages.

          "ERISA" has the meaning set forth in Section 4.2.11.

                                       6

<PAGE>

          "Event of Default" has the meaning set forth in Section 10.1.

          "Excess Cash Reserve Account" has the meaning set forth in Section
6.9(a).

          "Exchange Act" has the meaning set forth in Section 9.2(a).

          "Extension Fee" means one percent (1%) of the outstanding principal
balance of the Loan as of the Maturity Date (or, with respect to the second one
(1) year extension option, the Maturity Date as previously extended).

          "Fee Owner" means, with respect to a Property, the applicable Borrower
identified as "owner" on Schedule III attached hereto, in its capacity as fee
owner of such Property, or its successors or permitted assigns hereunder.

          "Fiscal Year" means each twelve (12) month period commencing on
January 1 and ending on December 31 during each year of the term of the Loan.

          "Fitch" means Fitch, Inc.

          "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the accounting profession), or in such
other statements by such entity as may be in general use by significant segments
of the U.S. accounting profession.

          "Governmental Authority" means any court, board, agency, commission,
office or authority of any nature whatsoever or any governmental unit (federal,
state, county, district, municipal, city or otherwise) whether now or hereafter
in existence, including, without limitation, CMS, the United States Department
of Health and Human Services, any state licensing agency and/or any state
Medicaid agency.

          "Guarantors" means, collectively, Trans Healthcare, Inc., a Delaware
corporation, and each of its subsidiaries shown in the attached Schedule VIII
and "Guarantor" shall mean each such entity.

          "Guaranty (Recourse Obligations)" means that certain Guaranty of
Recourse Obligations of even date herewith from Guarantors for the benefit of
Lender.

          "Improvements" has the meaning set forth in the Granting Clause of the
Mortgages.

          "Indebtedness" means, for any Person, without duplication: (i) all
indebtedness of such Person for borrowed money, for amounts drawn under a letter
of credit, or for the deferred purchase price of property for which such Person
or its assets is liable, (ii) all unfunded amounts under a loan agreement,
letter of credit, or other credit facility for which such Person would be liable
if such amounts were advanced thereunder, (iii) all amounts required to be paid
by such Person as a guaranteed payment to partners or a preferred or special
dividend, including any

                                       7

<PAGE>

mandatory redemption of shares or interests, (iv) all Indebtedness of others
guaranteed by such Person, directly or indirectly, (v) all obligations under
leases that constitute capital leases for which such Person is liable, and (vi)
all obligations of such Person under interest rate swaps, caps, floors, collars
and other interest hedge agreements, in each case whether such Person is liable
contingently or otherwise, as obligor, guarantor or otherwise, or in respect of
which obligations such Person otherwise assures a creditor against loss.

          "Indemnified Liabilities" has the meaning set forth in Section
11.13(b).

          "Independent Director" means a duly appointed member of the board of
directors (or with respect to a Single Member LLC, its board of managers) of the
relevant entity who shall not have been, at the time of such appointment or at
any time while serving as a director of the relevant entity and may not have
been at any time in the preceding five (5) years, (a) a direct or indirect legal
or beneficial owner in such entity or any of its affiliates, (b) a creditor,
supplier, employee, officer, director, family member, manager, or contractor of
such entity or any of its affiliates, or (c) a person who controls (whether
directly, indirectly, or otherwise) such entity or its affiliates or any
creditor, supplier, employee, officer, director, manager, or contractor of such
entity or its affiliates.

          "Insolvency Opinion" means that certain bankruptcy nonconsolidation
opinion letter substantially in the form attached hereto as Exhibit C delivered
by Kirkland & Ellis in connection with the Securitization, provided that the
assumptions set forth in such form upon which such opinions are based are true
and correct as of the date such opinion is to be delivered.

          "Insurance Premiums" has the meaning set forth in Section 5.1.1(b).

          "Interest Accrual Period" means, subject to the proviso in the
definition of the defined term "Payment Date," each period of time running from
and including the fifteenth (15th) day of a calendar month to and including the
fourteenth (14th) day of the following calendar month during the term of the
Loan. If the Closing Date shall occur prior to the fifteenth (15th) day of a
calendar month, the first Interest Accrual Period shall commence on and include
the Closing Date and end on and include the fourteenth (14th) day of the
calendar month in which the Closing Date occurs. If the Closing Date shall occur
after the fourteenth (14th) day of a calendar month, the first Interest Accrual
Period shall commence on the Closing Date and end on and include the fourteenth
(14th) day of the calendar month following the month in which the Closing Date
occurs. If the Closing Date shall occur on the fourteenth (14th) day of a
calendar month, the first Interest Accrual Period shall consist of a one (1) day
period consisting of the Closing Date.

          "Interest Rate" means six percent (6%) per annum for the initial
Interest Accrual Period and with respect to any subsequent Interest Accrual
Period, an annual rate of interest that is the sum of (i) LIBOR on the
applicable LIBOR Determination Date plus (ii) the Spread. Each determination by
Lender of the Interest Rate shall be conclusive and binding absent manifest
error.

          "Inventory" means all "inventory," as such term is defined in the UCC
and, to the extent not included in such definition, any goods now owned or
hereafter acquired by any Borrower intended for sale or lease, or to be used in
connection with services furnished by any

                                       8

<PAGE>

Borrower in connection with any Property, including without limitation, all
inventories held by each Borrower for sale or use at or from any Property, and
all other such goods, wares, merchandise, and materials and supplies of every
nature owned by any Borrower and all such other goods returned to or repossessed
by any Borrower.

          "Lease" means any lease, sublease, sub-sublease or other agreement or
arrangement affecting the use or occupancy of all or any portion of any Property
now in effect or hereafter entered into (including, without limitation, any
Operating Lease, patient admission and resident care agreement, letting,
sublease, license, concession, tenancy or other occupancy agreement covering or
encumbering all or any portion of such Property), together with any guarantee,
supplement, amendment, modification, extension or renewal of the same, and any
additional remainder, reversion, or other right and estate appurtenant thereto.

          "Legal Requirements" means, with respect to each Borrower and each
Property, all federal, state, county, municipal and other governmental statutes,
laws, rules, orders, regulations, guidelines, ordinances, judgments, decrees and
injunctions of Governmental Authorities affecting such Borrower or such Property
or any part thereof or the construction, use, alteration or operation thereof,
or any part thereof, whether now or hereafter enacted and in force, including,
without limitation, (i) the Americans with Disabilities Act of 1990, (ii) all
zoning, subdivision and land use laws, regulations and ordinances, health, fire,
building codes and parking laws, (iii) skilled nursing facility, residential
care, personal care, adult care, boarding home and/or assisted living facility
laws, rules, regulations and guidelines, including, without limitation, Medicare
Regulations and Medicaid Regulations and (iv) any licensure requirements or
certification requirements under applicable federal and/or state cost
reimbursement programs, including, without limitation, Medicare and Medicaid,
and all permits, licenses and authorizations and regulations relating thereto,
and all covenants, agreements, restrictions and encumbrances contained in any
instruments, either of record or known to any Borrower, at any time in force
affecting such Property or any part thereof, including, without limitation, any
which may (i) require repairs, modifications or alterations in or to such
Property or any part thereof, or (ii) in any way limit the use and enjoyment
thereof.

          "Lender" means Ventas Realty, Limited Partnership, a Delaware limited
partnership, together with its successors and assigns.

          "Lender Indemnities" has the meaning set forth in Section 11.13(b).

          "Letter of Credit" means a clean, irrevocable, unconditional,
transferable evergreen letter of credit with respect to which no Borrower has
any reimbursement obligation, payable on sight draft only, in favor of Lender
and entitling Lender to draw thereon in New York, New York, issued by an
Eligible Institution. A Letter of Credit must expressly provide that (i) partial
draws are permitted thereunder, (ii) it is freely transferable to any successor
or assign of Lender without cost, and (iii) Lender is entitled to draw on it
immediately and without further notice (a) upon the occurrence and during the
continuance of a Default or Event of Default, (b) if any Borrower fails to
deliver to Lender, no less than thirty (30) days prior to the termination of a
Letter of Credit (including any renewal or extension thereof), a renewal or
extension of such Letter of Credit or a replacement Letter of Credit, or (c) if
the issuing bank is

                                       9

<PAGE>

no longer an Eligible Institution and Borrowers fail to deliver to Lender a
replacement Letter of Credit within ten (10) days of the date that the issuing
bank is no longer an Eligible Institution.

          "Liabilities" has the meaning set forth in Section 9.2(b).

          "LIBOR" means, for each Interest Accrual Period, the rate for deposits
in United States dollars for a one-month period which appears on the display
designated as "Page 3750" on the Dow Jones Telerate Service (or such other page
as may replace 3750 on that service or such other service as may be nominated by
the British Bankers' Association as the information vendor for the purpose of
displaying British Bankers' Association Interest Settlement Rates for U.S.
dollar deposits) as of 11:00 a.m. London time on the LIBOR Determination Date.
If no such rate appears on Telerate Page 3750 as described above, LIBOR for the
applicable Interest Accrual Period will be determined on the basis of the rates
at which deposits in United States dollars are offered by four major banks in
the London interbank market selected by the Lender (the "Reference Banks") at
approximately 11:00 a.m., London time, on the applicable LIBOR Determination
Date to prime banks in the London interbank market for a one-month period (each
a "Reference Bank Rates"). The Lender shall request the principal London office
of each of the Reference Ban to provide a quotation of its Reference Bank Rate.
If at least two such quotations are provided, LIBOR for such Interest Accrual
Period will be the arithmetic mean of such quotations. If fewer than two
quotations are provided, LIBOR for such Interest Accrual Period will be the
arithmetic mean of the rates quoted by major banks in New York City, selected by
the Lender, at approximately 11:00 a.m., New York City time, on such date for
loans in United States dollars to leading European banks for a one-month period.
If, on any LIBOR Determination Date, the Lender is required but unable to
determine LIBOR in the manner provided herein, LIBOR for the next Interest
Accrual Period shall be LIBOR as determined on the previous LIBOR Determination
Date. Notwithstanding the foregoing, in no event shall LIBOR be less than the
LIBOR Floor Rate.

          "LIBOR Determination Date" means, with respect to any Interest Accrual
Period and subject to the proviso in the definition of the term "Payment Date",
the date that is two London Business Days prior to the first day of such
Interest Accrual Period.

          "LIBOR Floor Rate" means a rate equal to three percent (3%) per annum.

          "Lien" means, with respect to each Property, any mortgage, deed of
trust, lien, pledge, hypothecation, assignment, security interest, or any other
encumbrance, charge or transfer of, on or affecting such Property or any portion
thereof or any Borrower or any interest therein, including, without limitation,
any conditional sale or other title retention agreement, any financing lease
having substantially the same economic effect as any of the foregoing, the
filing of any financing statement, and mechanic's, materialmen's and other
similar liens and encumbrances.

          "Loan" means the loan made by Lender to Borrowers pursuant to this
Agreement.

          "Loan Amount" shall mean the outstanding principal balance of the
Loan, as the same may be increased or decreased as a result of the Re-sizing,
prepayment or otherwise from time to time.

                                       10

<PAGE>

          "Loan Documents" means, collectively, this Agreement, the Note, the
Mortgages, the Assignments of Leases, the Cash Management Agreement, the
Collection Account Agreement, the Guaranty (Recourse Obligations), Master
Guaranty, the Environmental Indemnity, the Assignment of Management Agreement,
the Collateral Assignment of Interest Rate Cap and any other document pertaining
to the Properties as well as all other documents now or hereafter executed
and/or delivered in connection with the Loan as such documents may be amended,
restated, replaced, supplemented or otherwise modified from time to time.

          "Lockout Date" means the date that is eighteen (18) months after the
Re-sizing Date.

          "London Business Day" means any day on which commercial banks are open
for business (including dealings in foreign exchange and foreign currency
deposits) in London, England.

          "Management Agreement" means the Management Services Agreement, dated
as of the date hereof, between the Operators, as operator, and the Manager, as
manager, pursuant to which such manager is to provide management and other
services with respect to all of the Properties.

          "Manager" means Trans Health Management, Inc., a Delaware corporation
, in its capacity as manager under the Management Agreement, or its successors
or permitted assigns thereunder.

          "Maryland Borrowers" means each of the Borrowers that owns or leases a
Property in the State of Maryland.

          "Maryland Staff Leasing Agreement" means the Staff Leasing Agreement
dated the date hereof between certain of the Maryland Borrowers and the Ohio
Staff Provider, as staff provider, pursuant to which the Maryland Staff Provider
is to provide personnel for all the Properties located in the State of Maryland.

          "Maryland Staff Provider" means THI Services of Maryland, Inc., a
Delaware corporation.

          "Master Guaranty" means that certain Master Guaranty, dated as of the
date hereof, from the Guarantors to Lender, Mezzanine Lender and Sale/Leaseback
Lessor, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.

          "Master Guaranty Pledge" means that certain Guarantor Pledge and
Security Agreement, dated as of the date hereof, from the Guarantors to Lender,
Mezzanine Lender and Sale/Leaseback Lessor, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.

          "Material Adverse Effect" means a material adverse effect upon (i) the
ability of any Borrower to perform, or of Lender to enforce, any material
provision of any Loan Document, (ii) the enforceability of any material
provision of any Loan Document, or (iii) the

                                       11

<PAGE>

value, Net Operating Income, use or enjoyment of any Property or the operation
thereof. In determining whether any individual event would result in a Material
Adverse Effect, notwithstanding that such event does not of itself have such
effect, a Material Adverse Effect shall be deemed to have occurred if the
cumulative effect of such event and all other then occurring events and existing
conditions would result in a Material Adverse Effect.

          "Material Agreement" means each contract or agreement (including the
Operating Lease) relating to the ownership, management, development, use,
operation, leasing maintenance, repair or improvement of a Property, or
otherwise imposing obligations on a Borrower, under which a Borrower would have
the obligation to pay more than $50,000 per annum or which cannot be terminated
by a Borrower without cause upon ninety (90) days notice or less without the
payment of a termination fee.

          "Maturity Date" means November 15, 2005, as the same may be extended
pursuant to Section 2.5 hereof, or such other date on which the final payment of
principal of the Note becomes due and payable as therein or herein provided,
whether at such stated maturity date, by declaration of acceleration, or
otherwise. At Lender's option, the Maturity Date may be changed from November
15, 2005 to the Re-sizing Maturity Date in accordance with the Cooperation
Agreement.

          "Maximum Legal Rate" means the maximum nonusurious interest rate, if
any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the indebtedness evidenced by the Note and as
provided for herein or the other Loan Documents, under the laws of such state or
states whose laws are held by any court of competent jurisdiction to govern the
interest rate provisions of the Loan.

          "Maximum Loan Amount" means $55,000,000.

          "Medicaid" means that certain program of medical assistance, funded
jointly by the federal government and the states for impoverished individuals
who are aged, blind and/or disabled, and for members of families with dependent
children, which program is more fully described in Title XIX of the Social
Security Act (42 U.S.C. 1396 et seq.) and the regulations promulgated
thereunder.

          "Medicaid Certification" means, with respect to any Person, health
care facility, or Nursing Facility, certification by CMS or a state agency or
entity under contract with CMS that such Person, facility or Nursing Facility,
as applicable, complies with the conditions of participation set forth in
Medicaid Regulations or any similar certification issued by CMS or a state
agency.

          "Medicaid Regulations" means, collectively, (i) all federal statutes
(whether set forth in Title XIX of the Social Security Act (42 U.S.C. (S)(S)
1396 et seq.) or elsewhere) affecting the medical assistance program established
by Title XIX of the Social Security Act; (ii) all applicable provisions of all
federal rules, regulations, manuals, orders and administrative, reimbursement
and other guidelines of all Governmental Authorities (whether or not having the
force of law) promulgated pursuant to or in connection with the statutes
described in clause (i) above; (iii) all state statutes enacted and all state
plans for medical assistance, and state plan

                                       12

<PAGE>

amendments filed by the state with CMS in connection with the statutes and
provisions described in clauses (i) and (ii) above; and (iv) all applicable
provisions of all rules, regulations, manuals, orders and administrative,
reimbursement, and other guidelines of all Governmental Authorities (whether or
not having the force of law) promulgated pursuant to or in connection with any
of the foregoing, in each case as may be amended, supplemented or otherwise
modified from time to time.

          "Medicare" means that certain federal program providing health
insurance for eligible elderly and other individuals, under which physicians,
hospitals, Nursing Facilities, home health care and other providers are
reimbursed for certain covered services they provide to the beneficiaries of
such program, which program is more fully described in Title XVIII of the Social
Security Act (42 U.S.C. (S)(S) 1395 et seq.) and the regulations promulgated
thereunder.

          "Medicare Certification" means, with respect to any Person, health
care facility, or Nursing Facility, certification by CMS or a state agency or
entity under contract with CMS that such Person, facility or Nursing Facility,
as applicable, complies with the conditions of participation set forth in
Medicare Regulations or any similar certification issued by CMS or a state
agency.

          "Medicare Regulations" means, collectively, all federal statutes
(whether set forth in Title XVIII of the Social Security Act (42 U.S.C. (S)(S)
1395 et seq.) or elsewhere) affecting the health insurance program for the aged
and disabled established by Title XVIII of the Social Security Act, together
with all applicable provisions of all rules, regulations, manuals, orders and
administrative, reimbursement and other guidelines of all Governmental
Authorities promulgated pursuant to or in connection with any of the foregoing
(whether or not having the force of law), as each may be amended, supplemented
or otherwise modified from time to time.

          "Mezzanine Borrowers" means, collectively, THI of Ohio SNFs, LLC, THI
of Ohio ALFs I, LLC, THI of Maryland SNFs I, LLC, THI of Maryland SNFs II, LLC,
THI of Maryland at Franklin Square, LLC, THI of Maryland at Fort Washington,
LLC, THI of Ohio at Kent, LLC, THI of Ohio at Cortland, LLC and THI of Ohio at
Berea, LLC, each a Delaware limited liability company and "Mezzanine Borrower"
means each such entity individually.

          "Mezzanine Cash Management Account" means that certain cash management
account established pursuant to the terms of the Mezzanine Loan Agreement.

          "Mezzanine Cash Management Period" means the "Cash Management Period"
as defined in the Mezzanine Loan Agreement.

          "Mezzanine Debt Service" means, with respect to any particular period
of time, scheduled principal and interest payments under the Mezzanine Loan.

          "Mezzanine Lender " means Ventas Realty, Limited Partnership, a
Delaware limited partnership, and its successors and assigns.

          "Mezzanine Loan" means that certain loan in the original principal
amount of Twenty Two Million and No/100 Dollars ($22,000,000) of even date
herewith made by Mezzanine Lender to Mezzanine Borrowers, together with any
permitted refinancing thereof.

                                       13

<PAGE>

          "Mezzanine Loan Agreement" means that certain Mezzanine Loan Agreement
of even date herewith among Mezzanine Borrowers, as borrowers and Mezzanine
Lender, as lender, as the same may be amended, restated, replaced, supplemented
or otherwise modified from time to time.

          "Mezzanine Payment Date" means the "Payment Date" as defined in the
Mezzanine Loan Agreement.

          "Monthly Capital Expenditure Reserve Amount" means $35,050.

          "Moody's" means Moody's Investors Service, Inc.

          "Mortgage" means, (a) with respect to each Property located in the
State of Ohio, a first priority Open-Ended Fee and Leasehold Mortgage and
Security Agreement or (b) with respect to each Property located in the State of
Maryland, a first priority Deed of Trust and Security Agreement, or similar
security instrument, dated the date hereof, executed and delivered by a Borrower
as security for the Loan and encumbering such Property, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time, and "Mortgages" means all such instruments collectively.

          "Net Operating Income" means, for any period, the amount by which
Operating Income exceed Operating Expenses.

          "Net Proceeds" means: (i) the net amount of all insurance proceeds
payable as a result of a Casualty to a Property, after deduction of reasonable
costs and expenses (including, but not limited to, reasonable attorneys' fees),
if any, in collecting such insurance proceeds and taxes, if any, payable by a
Borrower with respect to such proceeds, or (ii) the net amount of the Award,
after deduction of reasonable costs and expenses (including, but not limited to,
reasonable attorneys' fees), if any, in collecting such Award and taxes, if any,
payable by a Borrower with respect to such proceeds.

          "Net Proceeds Account" has the meaning set forth in Section 6.8(a).

          "Net Proceeds Deficiency" has the meaning set forth in Section
5.3.2(f).

          "Note" has the meaning set forth in Section 2.1.3.

          "Notice" has the meaning set forth in Section 11.6.

          "Nursing Facility" means a facility (including any Alzheimer's or
dementia care unit of sub acute unit), which offers nonacute inpatient care to
patients who suffer from a disease, chronic illness, or disability requiring
nursing care without continuous hospital services, and who require medical
services and nursing services rendered by or under the supervision of a licensed
medical professional, together with convalescent or restorative services now or
hereafter located on a Property.

          "Officer's Certificate" means a certificate delivered to Lender by a
Borrower which is signed by an authorized senior officer of such Borrower.

                                       14

<PAGE>

          "Ohio Borrowers" means each of the Borrowers that owns or leases a
Property in Ohio.

          "Ohio Staff Leasing Agreement" means the Staff Leasing Agreement,
dated the date hereof, between certain of the Ohio Borrowers and the Ohio Staff
Provider, as staff provider, pursuant to which the Ohio Staff Provider is to
provide personnel for all the Properties located in the State of Ohio.

          "Ohio Staff Provider" means THI Services Corp., a Delaware
corporation.

          "Operating Expense Reserve Account" shall have the meaning set forth
in Section 6.5(a).

          "Operating Expenses" means, with respect to a Property (or the
Properties) and without duplication, all costs and expenses incurred by a
Borrower determined on an accrual basis, relating to the operation, maintenance,
repair, use and management of such Property (or the Properties), including,
without limitation, utilities, repairs and maintenance, insurance, property
taxes and assessments, advertising expenses, payroll and related taxes,
equipment lease payments, actual management fees but excluding (i) rent payments
made by any Operator under an Operating Lease and principal, interest and other
payments made by a Borrower under the Loan Documents, (ii) depreciation,
amortization and other non-cash expenses of the Properties; provided, however,
such costs and expenses shall be subject to reasonable adjustment by Lender to
normalize such costs and expenses and (iii) capital expenditures.

          "Operating Income" means, without duplication, all revenue derived
from the ownership and/or operation of a Property (or Properties) by any
Borrower (other than Rents received from any Operator under any Operating Lease)
from whatever source determined on an accrual basis, including, but not limited
to, (i) Rents, including, but not limited to, Patient Revenues received by any
Operator or by any subtenant or licensee which is an Affiliate of any Operator
(but excluding any revenues received by any subtenant or licensee which is not
an Affiliate of any Operator) and (ii) Rents received by any Operator from any
subtenant or licensee which is not an Affiliate of any Operator (but excluding
any rents received from any subtenant or licensee which is an Affiliate of any
Operator); but excluding (a) sales, use and occupancy or other taxes on receipts
required to be accounted for by any Borrower to any governmental authority, (b)
non-recurring revenues as reasonably determined by Lender (e.g. proceeds from a
sale of assets or refinancing), (c) security deposits (except to the extent
determined by Lender to be properly utilized to offset a loss of rent received
by any Operator), (d) proceeds of casualty insurance and condemnation awards
(other than business interruption or other loss of income insurance related to
business interruption or loss of income for the period in question) and (e) any
proceeds from the sale or refinancing of any Property or recapitalization of any
Borrower. In addition, if required by Lender, income accrued but not paid in
cash during an accounting period shall be adjusted for an allowance for doubtful
accounts in a manner consistent with historical net realizable value.

          "Operating Lease" means, with respect to each Property, the Operating
Lease Agreement, dated as of the date hereof, between the applicable Fee Owner,
as lessor, and the

                                       15

<PAGE>

applicable Operator, as lessee, as the same may be modified or amended from time
to time in accordance with the terms and conditions of this Agreement.

          "Operator" means, with respect to a Property, the applicable Borrower
identified as "operator" on Schedule III attached hereto (if any), in its
capacity as: (i) the licensee entitled to deliver health care services at such
Property, (ii) as the provider under all Third Party Payor Programs, including,
but not limited to, Medicare and Medicaid and (iii) as the lessee under the
applicable Operating Lease, or its successors or permitted assigns thereunder.

          "Other Charges" means all ground rents, maintenance charges,
impositions other than Taxes, and any other charges, including, without
limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining the Properties, now or hereafter levied or assessed or
imposed against the Properties or any part thereof.

          "Other Taxes" has the meaning set forth in Section 2.3.6.

          "Parent" means Trans Healthcare, Inc., a Delaware corporation

          "Patient Revenues" means revenues generated from the sale of goods or
services at or through the Properties, whether by an Operator or any subtenant
or licensee of such Operator, or any other party, which revenues are primarily
derived from services provided to patients (including, without limitation,
revenues received or receivable for the use of or otherwise by reason of all
rooms, beds and other facilities provided, meals served, services performed or
goods sold at the Properties), including but not limited to, Self-Pay
Receivables and all other income, consideration, issues, accounts, profits or
benefits of any nature arising from the ownership, possession, use or operation
of such Property, including, without limitation, all rights to payment from the
Medicare and Medicaid programs or similar state or federal programs, boards,
bureaus or agencies (to the extent legally assignable under applicable law) and
rights to payment from patients or private insurers, arising from the operation
of such Property and all revenues, receipts, income, receivables and accounts
relating to or arising from rentals, rent equivalent income, income and profits
from guest rooms, meeting rooms, food and beverage facilities, vending machines,
telephone and television systems, guest laundry, and the provision or sale of
other goods and services.

          "Payment Date" means the fifteenth (15th) day of every calendar month
occurring during the term of the Loan; provided, however, in connection with a
Securitization of the Loan, Lender may change the Payment Date, the LIBOR
Determination Date and the Interest Accrual Period. Each Borrower shall promptly
execute an amendment to this Agreement to evidence any such change and any
necessary amendment to the Acceptable Interest Rate Cap Agreement as approved by
the Lender and the Rating Agencies.

          "Payor Notice" has the meaning set forth in Section 6.1(b).

          "Permitted Debt" means as to a Property or Borrower (x) (i) unsecured
trade payables incurred in the ordinary course of business relating to the
ownership and operation of such Property which are paid within ninety (90) days
of the date incurred and (ii) financing of Equipment or vehicles used in the
ordinary course of operating and owning a Property (including capitalized leases
of such Equipment and vehicles) and (y) which unsecured trade payables and

                                       16

<PAGE>

financing do not exceed at any one time an aggregate amount as to all Borrowers
and their Properties on an aggregate basis of $3,500,000.

          "Permitted Encumbrances" means, with respect to each Property,
collectively, (i) the Liens and security interests created by the Loan
Documents, (ii) all Liens, encumbrances and other matters disclosed in the Title
Insurance Policies relating to such Property or any part thereof, (iii) Liens,
if any, for Taxes imposed by any Governmental Authority not yet due or
delinquent, (iv) such other title and survey exceptions as Lender has approved
or may approve in writing in Lender's sole discretion, none of which adversely
affect the use, value or operation of such Property, (v) Liens on the Equipment
or vehicles used in the ordinary course of business of operating and owning such
Property which are the subject of a financing of such Equipment or vehicles
(including capitalized leases of such Equipment or vehicles) which financing
complies with the terms of the definition of the term "Permitted Debt" and (vi)
the Operating Lease and the Leases consisting of Borrowers' standard form
patient admission and resident care agreements.

          "Permitted Investments" has the meaning set forth in the Cash
Management Agreement.

          "Person" means any individual, corporation, partnership, limited
liability company, joint venture, estate, trust, unincorporated association, any
other entity, any federal, state, county or municipal government or any bureau,
department or agency thereof and any fiduciary acting in such capacity on behalf
of any of the foregoing.

          "Physical Plant Standards" has the meaning set forth in Section
3.1.40(g).

          "Policies" has the meaning specified in Section 5.1.1(b).

          "Prepayment Fee" has the meaning set forth in Section 2.4.1.

          "Prepayment Notice" has the meaning set forth in Section 2.4.1.

          "Pro Forma Net Operating Income" means with respect to a Property, Net
Operating Income for any period for such Property adjusted as follows: (i) if
the actual occupancy percentage of such Property is greater than ninety-five
percent (95%), Operating Income for such Property shall be reduced by the
product of (1) the difference between the actual occupancy percentage of such
Property and ninety-five percent (95%) times (2) the Operating Income for such
Property, (ii) Operating Income for such Property shall be reduced by (x) a bad
debt expense for such Property equal to the greater of (A) the actual bad debt
expense and (B) six-tenths of one percent (0.6%) of Operating Income for such
Property for such period (after deducting the vacancy factor as calculated
above, if any); (y) a management fee for such Property equal to the greater of
(A) the actual management fee and (B) five percent (5%) of Operating Income for
such Property for such period (after deducting any vacancy factor and for bad
debt expenses as calculated above, as applicable); (z) a reserve for Capital
Expenditures equal to $300 per annum per licensed bed at each Property
consisting of a Nursing Facility or Assisted Living Facility and for each
Property which does not constitute a Nursing Facility or Assisted Living
Facility such per bed per annum amount as reasonably determined by the Lender;
provided, however, that Lender may further adjust Pro Forma Net Operating Income
as

                                       17

<PAGE>

Lender deems reasonably necessary based upon the occurrence of tangible events
that Lender reasonably determines may have a material effect on any Borrower or
Property.

          "Property" means each parcel of real property, the Improvements
thereon and all personal property owned by any Borrower and encumbered by a
Mortgage, together with all rights pertaining to such property and Improvements,
all as more particularly described in the Granting Clauses of such Mortgage, and
"Properties" means all such parcels and other properties collectively.

          "Qualified Equity Transferee" means an entity (i) with a minimum of
five (5) years experience operating Nursing Facilities, Assisted Living
Facilities and/or Specialty Hospitals similar to the Properties in the
jurisdictions in which the Properties are located with a minimum of 1,000 beds
in such facilities, (ii) which entity makes representations and warranties as
reasonably requested by Lender as to such entity's operations but shall at a
minimum make such representations and warranties substantially similar to those
set forth in Article III hereof and (iii) as to which a Rating Agency
Confirmation is delivered.

          "Rating Agencies" means, prior to the final Securitization of the
Loan, each of S&P, Moody's and Fitch or any other nationally-recognized
statistical rating agency which has been designated by Lender and, after the
final Securitization of the Loan, shall mean any of the foregoing that have
rated any of the Securities.

          "Rating Agency Confirmation" means a written affirmation from each of
the Rating Agencies that the credit rating of the Securities rated by such
Rating Agency immediately prior to the occurrence of the event with respect to
which such Rating Agency Confirmation is sought will not be qualified,
downgraded or withdrawn as a result of the occurrence of such event, which
affirmation may be granted or withheld in such Rating Agency's sole and absolute
discretion.

          "Re-sizing" has the meaning set forth in the Cooperation Agreement.

          "Re-sizing Date" means the earlier of (i) the Payment Date upon which
the Re-sizing shall occur or (ii) February 15, 2003.

          "Re-sizing Maturity Date" means the date that is the third anniversary
of the Re-sizing Date.

          "Reference Bank Rate" has the meaning set forth in the definition of
LIBOR.

          "Reference Banks" has the meaning set forth in the definition of LIBOR

          "Registration Statement" has the meaning set forth in Section 9.2(b).

          "Regulatory Permits" has the meaning set forth in Section 3.1.40(b).

          "Reimbursement Contracts" means all third party reimbursement
contracts for the Properties which are now or hereafter in effect with respect
to residents or patients qualifying for coverage under the same, including,
without limitation, Medicare, Medicaid and private

                                       18

<PAGE>

insurance agreements, and any successor program or other similar reimbursement
program and/or private insurance agreements.

          "Rents" means, with respect to each Property, (x) all receipts, rents
(whether denoted as advance rent, minimum rent, percentage rent, additional rent
or otherwise), issues, income, royalties, profits, revenues (including, without
limitation, Patient Revenues and Self-Pay Receivables), proceeds, bonuses,
deposits (whether denoted as security deposits, utility deposits or otherwise),
lease termination fees or payments, rejection damages, buy-out fees and any
other fees made or to be made in lieu of rent, any award made hereafter to any
Borrower in any court proceeding involving any tenant, lessee, licensee or
concessionaire under any of the Leases in any bankruptcy, insolvency or
reorganization proceedings in any state or federal court, and all other
payments, rights and benefits of whatever nature from time to time due under any
of the Leases, including, without limitation, rights to payment earned under the
Leases for space in the Improvements for the operation of ongoing businesses,
such as restaurants, news stands, barber shops, beauty shops and pharmacies;
provided, however, "Rents" shall not include "patient trust accounts" or
"patient needs funds."

          "Restoration" has the meaning set forth in Section 5.2.1.

          "Restoration Threshold" means (a) with respect to any Property, the
greater of (i) five percent (5%) of the Allocated Loan Amount for such Property
or (ii) $200,000 and (b) with respect to the Properties, two percent (2%) of the
Loan Amount.

          "S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.

          "Sale/Leaseback Lessor" means Ventas Realty, Limited Partnership, a
Delaware limited partnership, in its capacity as lessor under the Lease
Documents (as defined in the Master Guaranty).

          "SAP Completion Date" has the meaning set forth in the Cooperation
Agreement.

          "Secondary Market Transaction" has the meaning set forth in Section
9.1(a).

          "Securities" has the meaning set forth in Section 9.1(a).

          "Securities Act" has the meaning set forth in Section 9.2(a).

          "Securitization" has the meaning set forth in Section 9.1(a).

          "Self-Pay Receivables" means those receivables whereby an individual
or resident of a Property is the payor of such receivables.

          "Servicer" has the meaning set forth in Section 11.24.

          "Servicing Agreement" has the meaning set forth in Section 11.24.

          "Severed Loan Documents" has the meaning set forth in Section 10.2(c).

                                       19

<PAGE>

          "Single Member LLC" means a limited liability company that (i) is
either (a) a single member limited liability company or (b) a multiple member
limited liability company that does not have a Single-Purpose Entity that owns
at least 1% of the equity interests in such limited liability company as its
managing member, and (ii) is organized under the laws of the State of Delaware.

          "Single-Purpose Entity" means a corporation, limited partnership, or
limited liability company which, at all times since its formation and thereafter
(i) was and will be organized solely for the purpose of (x) owning or operating
the applicable Property or (y) acting as the managing member of the limited
liability company which owns or operates a Property or (z) acting as the general
partner of a limited partnership which owns or operates a Property, (ii) has not
and will not engage in any business unrelated to (x) the ownership or operation
of the applicable Property or (y) acting as a member of a limited liability
company which owns or operates such Property or (z) acting as a general partner
of a limited partnership which owns or operates such Property, (iii) has not and
will not have any assets other than (x) those related to the applicable Property
or (y) its memberbership interest in the limited liability company which owns or
operates such Property or (z) its general partnership interest in the limited
partnership which owns or operates such Property, as applicable, (iv) has not
and will not engage in, seek or consent to any dissolution, winding up,
liquidation, consolidation or merger, and, except as otherwise expressly
permitted by this Agreement, has not and will not engage in, seek or consent to
any asset sale, transfer of partnership or membership or shareholder interests,
or amendment of its limited partnership agreement, articles of incorporation,
articles of organization, certificate of formation or operating agreement (as
applicable), (v) if such entity is a limited partnership, has and will have as
its only general partners, general partners which are and will be Single-Purpose
Entities which are corporations, (vi) if such entity is a corporation, at all
relevant times, has and will have at least two Independent Directors, (vii) the
board of directors of such entity has not taken and will not take any action
requiring the unanimous affirmative vote of one hundred percent (100%) of the
members of the board of directors unless all of the directors, including without
limitation all Independent Directors, shall have participated in such vote,
(viii) has not and will not fail to correct any known misunderstanding regarding
the separate identity of such entity, (ix) if such entity is a limited liability
company, is either a Single Member LLC or has and will have at least one member
that is and will be a Single-Purpose Entity which is and will be a corporation,
and such corporation is and will be the managing member of such limited
liability company, (x) without the unanimous consent of all of the partners,
directors or managers (including without limitation all Independent Directors)
or members, as applicable, has not and will not with respect to itself or to any
other entity in which it has a direct or indirect legal or beneficial ownership
interest (w) file a bankruptcy, insolvency or reorganization petition or
otherwise institute insolvency proceedings or otherwise seek any relief under
any laws relating to the relief from debts or the protection of debtors
generally; (x) seek or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator, custodian or any similar official for such
entity or all or any portion of such entity's properties; (y) make any
assignment for the benefit of such entity's creditors; or (z) take any action
that might cause such entity to become insolvent, (xi) has maintained and will
maintain its accounts, books and records separate from any other person or
entity (except that, for accounting and reporting purposes, each Borrower may be
included in the consolidated financial statements of any equity owner of such
Borrower in accordance with GAAP provided that such financials will contain
detailed notes stating that such entity is a separate legal entity that owns its
own assets and has creditors that

                                       20

<PAGE>

have a security interest in such assets and that, as to each Fee Owner, the
applicable Property has been sold to such Fee Owner), (xii) has maintained and
will maintain its books, records, resolutions and agreements as official
records, (xiii) has not commingled and will not commingle its funds or assets
with those of any other entity, (xiv) has held and will hold its assets in its
own name, (xv) has conducted and will conduct its business in its name, (xvi)
has maintained and will maintain its financial statements, accounting records
and other entity documents separate from any other person or entity (except
that, for accounting and reporting purposes, each Borrower may be included in
the consolidated financial statements of any equity owner of such Borrower in
accordance with GAAP), (xvii) has paid and will pay its own liabilities out of
its own funds and assets, (xviii) has observed and will observe all partnership,
corporate or limited liability company formalities as applicable, (xix) has
maintained and will maintain an arms-length relationship with its affiliates,
(xx) if (x) such entity owns or operates a Property, has and will have no
Indebtedness other than (A) the Debt and (B) Permitted Debt, or (y) such entity
acts as the general partner of a limited partnership which owns or operates such
Property, has and will have no indebtedness other than unsecured trade payables
in the ordinary course of business relating to acting as general partner of the
limited partnership which owns or operates such Property which (1) do not
exceed, at any time, Ten Thousand Dollars ($10,000.00) and (2) are paid within
ninety (90) days of the date incurred, or (z) such entity acts as a managing
member of a limited liability company which owns or operates such Property, has
and will have no indebtedness other than unsecured trade payables in the
ordinary course of business relating to acting as a member of the limited
liability company which owns or operates such Property which (1) do not exceed,
at any time, Ten Thousand Dollars ( $10,000.00) and (2) are paid within ninety
(90) days of the date incurred, (xxi) has not and will not assume or guarantee
or become obligated for the debts of any other entity or hold out its credit as
being available to satisfy the obligations of any other entity except for the
Debt, (xxii) has not acquired and will not acquire obligations or securities of
its partners, members or shareholders, (xxiii) has allocated and will allocate
fairly and reasonably shared expenses, including, without limitation, shared
office space and use separate stationery, invoices and checks and has and will
maintain office space separate from any other entity (which may be a separately
identified area in office space shared with one or more entity) and maintain a
separate sign in the office directory, (xxiv) except for the Liens granted
pursuant to the Loan Documents, has not and will not pledge its assets for the
benefit of any other person or entity, (xxv) has held and identified itself and
will hold itself out and identify itself as a separate and distinct legal entity
under its own name and not as a division or part of any other person or entity
so as not to mislead others with whom it is dealing (except that, for accounting
and reporting purposes, each Borrower may be included in the consolidated
financial statements of any equity owner of such Borrower in accordance with
GAAP provided that such financials will contain detailed notes stating that such
entity is a separate legal entity that owns its own assets and has creditors
that have a security interest in such assets and that, as to each Fee Owner, the
applicable Property has been sold to such Fee Owner), (xxvi) has not made and
will not make loans to any person or entity, (xxvii) has not and will not
identify its partners, members or shareholders, or any affiliates of any of them
as a division or part of it, (xxviii) if such entity is a limited liability
company (other than a Single Member LLC), such entity shall dissolve only upon
the bankruptcy of the managing member, and such entity's articles of
organization, certificate of formation and/or operating agreement, as
applicable, shall contain such provision, (xxiv) has not entered and will not
enter into or be a party to, any transaction with its partners, members,
shareholders or its affiliates except in the ordinary course of its business and
on terms

                                       21

<PAGE>

which are intrinsically fair and are no less favorable to it than would
be obtained in a comparable arms-length transaction and on a commercially
reasonably basis with an unrelated third party, (xxx) has paid and will pay the
salaries of its own employees from its own funds and has and will maintain a
sufficient number of employees in light of its contemplated business operations,
(xxxi) has maintained and will maintain adequate capital in light of its
contemplated business operations (xxxii) if such entity is a limited liability
company (other than a Single Member LLC) or limited partnership, and such entity
has one or more managing members or general partners, as applicable, then such
entity shall continue (and not dissolve) for so long as a solvent managing
member or general partner, as applicable, exists and such entity's
organizational documents shall contain such provision; (xxxiii) if such entity
is a Single Member LLC, its organizational documents shall provide that, as long
as any portion of the Debt remains outstanding, upon the occurrence of any event
that causes the sole member of such Single Member LLC to cease to be a member of
such Single Member LLC (other than (y) upon an assignment by such member of all
of its limited liability company interest in such Single Member LLC and the
admission of the transferee, if permitted pursuant to the organizational
documents of such Single Member LLC and the Loan Documents, or (z) the
resignation of such member and the admission of an additional member of such
Single Member LLC, if permitted pursuant to the organizational documents of such
Single Member LLC and the Loan Documents) at least one individual acting as an
Independent Director of such Single Member LLC shall, without any action of any
Person and simultaneously with the sole member of the Single Member LLC ceasing
to be a member of the Single Member LLC, automatically be admitted as the sole
member of the Single Member LLC (the "Special Member") and shall preserve and
continue the existence of the Single Member LLC without dissolution; (xxxiv) if
such entity is a Single Member LLC, its organizational documents shall provide
that for so long as any Obligation is outstanding, no Special Member may resign
or transfer its rights as Special Member unless (y) a successor Special Member
has been admitted to such Single Member LLC as a Special Member, and (z) such
successor Special Member has also accepted its appointment as an Independent
Director; and (xxxv) has and shall maintain its assets in a manner that will not
be costly or difficult to segregate, ascertain or identify its individual assets
for those of any other entity.

          "Special Member" has the meaning set forth in the definition of
Single-Purpose Entity.

          "Specialty Hospital" means a facility that is operated as a special
hospital for providing specialized services, including but not limited to
rehabilitation services, on an inpatient basis. For purposes of this Agreement,
the term "Specialty Hospital" shall include "rehabilitation hospital" and
"long-term acute care hospital" as those terms are defined under applicable
Medicare Regulations.

          "Spread" means three hundred (300) basis points; provided, the Spread
shall be (i) four hundred (400) basis points commencing on December 1, 2002 if
the SAP Completion Date shall not have occurred on or prior to November 30,
2002, (ii) five hundred (500) basis points commencing on January 1, 2003 if the
SAP Completion Date shall not have occurred on or prior to December 31, 2002 and
(iii) six hundred (600) basis points commencing on February 1, 2003 if the SAP
Completion Date shall not have occurred on or prior to January 31, 2003.
Notwithstanding the foregoing, upon completion of the Securitization Accounting
Procedures,

                                       22

<PAGE>

commencing on the Payment Date first occurring after such completion, the Spread
shall be three hundred (300) basis points.

          "Spread Maintenance Premium" means, if all or any portion of the Note
is prepaid (other than a permitted prepayment hereunder) or accelerated, an
amount equal to the present value, discounted at LIBOR on the most recent LIBOR
Determination Date, of all future installments of interest which would have been
due hereunder through and including the Lockout Date on the portion of the
outstanding principal balance of the Loan being prepaid as if interest accrued
on such portion of the principal balance being prepaid at an interest rate per
annum equal to the Spread; provided, however, under no circumstances shall the
Spread Maintenance Premium be less than four percent (4%) of the principal
amount of the Loan being repaid. The calculation of the Spread Maintenance
Premium shall be made by Lender and shall, absent manifest error, be final,
conclusive and binding upon all parties.

          "Staff Leasing Agreement" means the Ohio Staff Leasing Agreement or
the Maryland Staff Leasing Agreement, as the case may be.

          "Staff Provider" means the Ohio Staff Provider or the Maryland Staff
Provider, as the case may be.

          "State" means, with respect to a Property, the State or Commonwealth
in which such Property or any part thereof is located.

          "Tax and Insurance Escrow Account" has the meaning set forth in
Section 6.3(a).

          "Taxes" means all real estate and personal property taxes,
assessments, water rates or sewer rents, now or hereafter levied or assessed or
imposed against any of the Properties or part thereof, together with all
interest and penalties thereon.

          "Third Party Payor" means any state, federal or municipal boards,
bureaus, corporations or agencies and any private commercial insurers remitting
payments to any Borrower pursuant to Medicare, Medicaid, Blue Cross and/or Blue
Shield or other insurance, health plan, managed care or employee assistance
programs.

          "Third Party Payor Programs" has the meaning set forth in Section
3.1.40(e).

          "Title Insurance Policy" means, with respect to each Property, an ALTA
mortgagee title insurance policy in the form reasonably acceptable to Lender
issued with respect to such Property and insuring the lien of the Mortgage
encumbering such Property.

          "Transfer" means any voluntary or involuntary sale, conveyance,
mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer of: (a)
all or any part of a Property or the Properties or any estate or interest
therein including, but not be limited to, (i) an installment sales agreement
wherein any Borrower agrees to sell a Property or the Properties or any part
thereof for a price to be paid in installments, (ii) an agreement by any
Borrower leasing all or a substantial part of a Property or the Properties, for
other than actual occupancy by a tenant (other than the Operator pursuant to the
Operating Lease) thereunder and its affiliates or (iii) a sale, assignment or
other transfer of, or the grant of a security interest in, any Borrower's right,
title

                                       23

<PAGE>

and interest in and to any Leases or any Rents; or (b) any ownership interest in
(i) any Borrower or any Guarantor or (ii) any corporation, partnership, limited
liability company, trust or other Person owning, directly or indirectly, any
interest in any Borrower or any Guarantor.

          "Trustee" means any trustee holding the Loan in a Securitization.

          "UCC" or "Uniform Commercial Code" means the Uniform Commercial Code
as in effect in the State.

          "Underwriter Group" has the meaning set forth in Section 9.2(b).

          "Updated Information" has the meaning set forth in Section 9.1(b)(i).

          "U.S. Obligations" means direct full faith and credit obligations of
the United States of America that are not subject to prepayment, call or early
redemption.

          "U.S. Person" means a United States person within the meaning of
Section 7701(a)(30) of the Code.

          "U.S. Tax" means any present or future tax, assessment or other charge
or levy imposed by or on behalf of the United States of America or any taxing
authority thereof.

          "Ventas Group" has the meaning set forth in Section 9.2(b).

          Section 1.2. Principles of Construction.

          All references to sections and schedules are to sections and schedules
in or to this Agreement unless otherwise specified. Unless otherwise specified,
the words "hereof," "herein" and "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. Unless otherwise specified, all meanings
attributed to defined terms herein shall be equally applicable to both the
singular and plural forms of the terms so defined. Whenever the context may
require, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural and vice versa.

                              ARTICLE II. THE LOAN

          Section 2.1. The Loan.

          2.1.1. Agreement to Lend and Borrow. Subject to and upon the terms and
conditions set forth herein, Lender shall make the Loan to Borrowers and
Borrowers shall accept the Loan from Lender on the Closing Date.

          2.1.2. Single Disbursement to Borrowers. Borrowers shall receive only
one borrowing hereunder in respect of the Loan and any amount borrowed and
repaid hereunder in respect of the Loan may not be reborrowed. Notwithstanding
the foregoing, the parties acknowledge that the Loan Amount may be increased or
decreased as a result of the Re-sizing.

                                       24

<PAGE>

          2.1.3. The Note. The Loan shall be evidenced by that certain
Promissory Note of even date herewith, in the maximum principal amount of Fifty
Five Million and No/100 Dollars ($55,000,000) executed by Borrowers and payable
to the order of Lender in evidence of the Loan (as the same may hereafter be
amended, supplemented, restated, componitized, split, increased, extended or
consolidated, the "Note") and shall be repaid in accordance with the terms of
this Agreement and the Note.

          2.1.4. Use of Proceeds. Borrowers shall use proceeds of the Loan to
(i) pay and discharge any existing loans relating to certain of the Properties
and to acquire certain of the Properties, (ii) pay all past-due Basic Carrying
Costs, if any, in respect of the Properties, (iii) deposit the initial required
amounts into the Collateral Accounts, (iv) pay costs and expenses incurred in
connection with the closing of the Loan, including, but not limited to, Lender's
costs and expenses, all as approved by Lender, (v) fund any working capital
requirements of the Properties, as approved by Lender and (vi) pay any
recoupment of deposits or expenses in connection with the acquisition of any of
the Properties or in any failed financing in the past nine (9) months.

          Section 2.2. Interest Rate.

          2.2.1. Interest Rate. Interest on the outstanding principal balance of
the Loan shall accrue from the Closing Date up to but excluding the Maturity
Date at the Interest Rate.

          2.2.2. Default Rate. In the event that, and for so long as, any Event
of Default shall have occurred and be continuing, the outstanding principal
balance of the Loan and, to the extent permitted by law, overdue interest in
respect of the Loan, shall accrue interest at the Default Rate, calculated from
the date on which the default which gave rise to the Event of Default occurred
without regard to any grace or cure periods contained herein.

          2.2.3. Interest Calculation. Interest on the outstanding principal
balance of the Loan shall be calculated by multiplying (a) the actual number of
days elapsed in the applicable Interest Accrual Period by (b) a daily rate based
on a three hundred sixty (360) day year (that is, the Interest Rate or the
Default Rate, as the case may be, divided by three hundred sixty (360)) by (c)
the outstanding principal balance.

          2.2.4. Usury Savings. This Agreement and the other Loan Documents are
subject to the express condition that at no time shall Borrowers be required to
pay interest on the principal balance of the Loan at a rate which could subject
Lender to either civil or criminal liability as a result of being in excess of
the Maximum Legal Rate. If by the terms of this Agreement or the other Loan
Documents, any Borrower is at any time required or obligated to pay interest on
the principal balance due hereunder at a rate in excess of the Maximum Legal
Rate, the Interest Rate or the Default Rate, as the case may be, shall be deemed
to be immediately reduced to the Maximum Legal Rate and all previous payments in
excess of the Maximum Legal Rate shall be deemed to have been payments in
reduction of principal and not on account of the interest due hereunder. All
sums paid or agreed to be paid to Lender for the use, forbearance, or detention
of the sums due under the Loan, shall, to the extent permitted by applicable
law, be amortized, prorated, allocated, and spread throughout the full stated
term of the Loan until payment in full so that the rate or amount of interest on
account of the Loan does

                                       25

<PAGE>

not exceed the Maximum Legal Rate from time to time in effect and applicable to
the Loan for so long as the Loan is outstanding.

          Section 2.3. Loan Payments.

          2.3.1. Payment Before Maturity Date. Borrowers shall make a payment to
Lender of interest only on the Closing Date for the period from the Closing Date
through the last day of the Interest Accrual Period in which the Closing Date
occurs (unless the Closing Date is the fifteenth (15th) day of a calendar month,
in which case no such separate payment of interest shall be due) (the "Stub
Interest Payment"). Notwithstanding the foregoing, Lender will waive the
requirement of payment of the Stub Interest Payment on the Closing Date and the
Borrowers hereby agree and covenant to pay the Stub Interest Payment on November
15, 2002. Borrowers shall make a payment to Lender of monthly interest on the
Loan on the Payment Date occurring in December, 2002 and on each Payment Date
thereafter to and including the Maturity Date. Together with each monthly
payment of interest, Borrowers shall make a payment of principal to Lender in
the amount set forth on the amortization schedule attached hereto as Schedule
VI. Notwithstanding the foregoing, if any Re-sizing or adjustment in the Loan
Amount shall have occurred pursuant to the Cooperation Agreement, Borrowers
shall make a payment of principal to Lender in the amount set forth on any
replacement amortization schedule hereafter delivered in connection with such
Re-sizing or adjustment. All payments to Lender by Borrowers under this Loan
Agreement shall be made by wire transfer of funds to an account designated by
Lender.

          2.3.2. Payment on Maturity Date. Borrowers shall pay to Lender on the
Maturity Date the outstanding principal balance of the Loan, all accrued and
unpaid interest and all other amounts due hereunder and under the Note, the
Mortgages and the other Loan Documents.

          2.3.3. Late Payment Charge. If any principal, interest or any other
sum due under the Loan Documents (excluding the principal payment due on the
Maturity Date) is not paid by any Borrower on the date on which it is due,
Borrowers shall pay to Lender upon demand an amount equal to the lesser of five
percent (5%) of such unpaid sum or the maximum amount permitted by applicable
law in order to defray the expense incurred by Lender in handling and processing
such delinquent payment and to compensate Lender for the loss of the use of such
delinquent payment. Any such amount shall be secured by the Mortgages and the
other Loan Documents.

          2.3.4. Method and Place of Payment.

               (a) Except as otherwise specifically provided herein, all
payments and prepayments under this Agreement and the Note shall be made to
Lender or Lender's designee not later than 11:00 A.M., New York City time, on
the date when due and shall be made in lawful money of the United States of
America in immediately available funds at Lender's office or such other place as
Lender shall direct, and any funds received by Lender after such time shall, for
all purposes hereof, be deemed to have been paid on the next succeeding Business
Day.

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<PAGE>

               (b) Whenever any payment to be made hereunder or under any other
Loan Document shall be stated to be due on a day which is not a Business Day,
the due date thereof shall be the preceding Business Day.

               (c) All payments required to be made by Borrowers hereunder or
under the Note or the other Loan Documents shall be made irrespective of, and
without deduction for, any setoff, claim or counterclaim and shall be made
irrespective of any defense thereto.

          2.3.5. Acceptable Interest Rate Cap Agreement. Borrowers shall obtain
and maintain an Acceptable Interest Rate Cap Agreement throughout the term of
the Loan, including any extension thereof contemplated herein, and shall cause
such Acceptable Interest Rate Cap Agreement to be collaterally assigned to
Lender pursuant to the terms set forth in the Collateral Assignment of Interest
Rate Cap. Each Borrower shall comply with all of its obligations under the terms
and provisions of each Acceptable Interest Rate Cap Agreement. All amounts paid
by the cap provider under an Acceptable Interest Rate Cap Agreement shall be
deposited directly by the cap provider into the Cash Management Account. Each
Borrower shall take all actions reasonably requested by Lender to enforce
Lender's rights under the Acceptable Interest Rate Cap Agreement in the event of
a default by the cap provider thereunder and shall not waive, amend or otherwise
modify any of its rights or any provisions thereunder without Lender's consent
and Rating Agency Confirmation.

          2.3.6. Other Taxes. (a) All payments made by any Borrower hereunder
shall be made free and clear of, and without reduction for or on account of,
income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions, reserves or withholdings imposed, levied, collected, withheld or
assessed by any Governmental Authority, which are imposed, enacted or become
effective after the date hereof excluding income and franchise taxes of the
United States of America or any political subdivision or taxing authority
thereof or therein (such non-excluded taxes being referred to collectively as
"Other Taxes"). If any Other Taxes are required to be withheld from any amounts
payable to Lender hereunder, the amounts so payable to Lender shall be increased
to the extent necessary to yield to Lender (after payment of all Other Taxes)
interest or any such other amounts payable hereunder at the rate or in the
amounts specified hereunder. Whenever any Other Taxes are payable pursuant to
applicable law by any Borrower, as promptly as possible thereafter, such
Borrower shall send to Lender an original official receipt, if available, or
certified copy thereof showing payment of such Other Taxes. Each Borrower hereby
indemnifies Lender for any incremental taxes, interest or penalties that may
become payable by Lender which may result from any failure by such Borrower to
pay any such Other Taxes when due to the appropriate taxing authority or any
failure by any Borrower to remit to Lender the required receipts or other
required documentary evidence.

          (b) If any Borrower is required by law to withhold or deduct any
amount from any payment hereunder in respect of any U.S. Tax, such Borrower
shall withhold or deduct the appropriate amount, remit such amount to the
appropriate Governmental Authority and pay to each Person to whom there has been
an assignment or participation of the Loan and who is not a U.S. Person such
additional amounts as are necessary in order that the net payment of any amount
due to such non-U.S. Person hereunder after deduction for or withholding in
respect of any U.S. Tax imposed with respect to such payment (or in lieu
thereof, payment of such U.S.

                                       27

<PAGE>

Tax by such non-U.S. Person), will not be less than the amount stated herein to
be then due and payable; provided that the foregoing obligation to pay such
additional amounts shall not apply (i) to any assignee that has not complied
with the obligations contained in Section 9.1(d), (ii) to any U.S. Taxes imposed
solely by reason of the failure by such Person (or, if such Person is not the
beneficial owner of the Loan, such beneficial owner) to comply with applicable
certification, information, documentation or other reporting requirements
concerning the nationality, residence, identity or connections with the United
States of America of such Person (or beneficial owner, as the case may be) if
such compliance is required by statute or regulation of the United States of
America as a precondition to relief or exemption from such U.S. Taxes; or (iii)
with respect to any Person who is a fiduciary or partnership or other than the
sole beneficial owner of such payment, to any U.S. Tax imposed with respect to
payments made under the Note to a fiduciary or partnership to the extent that
the beneficial owner or member of the partnership would not have been entitled
to the additional amounts if such beneficial owner or member of the partnership
had been the holder of the Note.

          2.3.7. Regulatory Change. In the event that any change in any
requirement of law or in the interpretation or application thereof, or
compliance by Lender with any request or directive (whether or not having the
force of law) hereafter issued from any central bank or other Governmental
Authority, including, without limitation, any imposition of or increase in any
reserve requirement with respect to a LIBOR-based loan: (i) shall hereafter have
the effect of reducing the rate of return on Lender's capital as a consequence
of its obligations hereunder to a level below that which Lender could have
achieved but for such adoption, change or compliance (taking into consideration
Lender's policies with respect to capital adequacy) by any amount deemed by
Lender to be material; or (ii) shall hereafter impose on Lender any other
condition and the result of any of the foregoing is to increase the cost to
Lender of making, renewing or maintaining loans or extensions of credit or to
reduce any amount receivable hereunder; then, in any such case, Borrowers shall
promptly pay Lender, upon demand, any additional amounts necessary to compensate
Lender for such additional cost or reduced amount receivable which Lender deems
to be material as determined by Lender. Lender shall take reasonable steps to
minimize or eliminate such additional costs. If Lender becomes entitled to claim
any additional amounts pursuant to this Section, Lender shall provide Borrowers
with not less than thirty (30) days written notice specifying in reasonable
detail the event by reason of which it has become so entitled and the additional
amount required to fully compensate Lender for such additional cost or reduced
amount. A certificate as to any additional costs or amounts payable pursuant to
the foregoing sentence, executed by an authorized signatory of Lender and
submitted by Lender to any Borrower shall be conclusive in the absence of
manifest error. If Lender shall fail to notify Borrowers of any such event
within 180 days following the end of the month during which such event occurred,
each Borrower's liability for any amounts described in this Section incurred by
such Lender as a result of such event shall be limited to those attributable to
the period occurring subsequent to the 180th day prior to the date upon which
such Lender actually notified Borrowers of the occurrence of such event. This
Section shall survive payment of the Note and the satisfaction of all other
obligations of any Borrower under this Agreement and the Loan Documents.

          2.3.8. Breakage Costs. Each Borrower agrees to indemnify Lender and to
hold Lender harmless from any loss or expense which Lender sustains or incurs as
a consequence of (i) any default by any Borrower in payment of the Loan,
including, without limitation, any loss

                                       28

<PAGE>

or expense arising from interest or fees payable by Lender to lenders of funds
obtained by it in order to maintain a LIBOR-based loan hereunder, and (ii) any
prepayment (whether voluntary or mandatory) of the Loan on a day that is not a
Payment Date, including, without limitation, such loss or expense arising from
interest or fees payable by Lender to lenders of funds obtained by it in order
to maintain the Loan, unless such prepayment includes interest on the amount
being prepaid through the next Payment Date (the amounts referred to in clauses
(i) and (ii) are herein referred to collectively as the "Breakage Costs").
Whenever in this Section the term "interest or fees payable by Lender to lenders
of funds obtained by it" is used and no such funds were actually obtained from
such lenders, it shall include interest or fees which would have been payable by
Lender if it had obtained funds from lenders in order to maintain a LIBOR-based
loan hereunder. Lender will provide to Borrowers a statement detailing such
Breakage Costs and the calculation thereof.

          2.3.9. Survival. The provisions of Sections 2.3.6 through 2.3.8 shall
survive payment of the Note in full and the satisfaction of all other
obligations of any Borrower under this Agreement and the other Loan Documents.

          Section 2.4. Prepayments.

          2.4.1. Voluntary Prepayments. Except as otherwise provided herein, no
Borrower shall have the right to prepay the Loan in whole or in part prior to
the Lockout Date. Beginning on the Lockout Date or on any Business Day
thereafter, any Borrower may, at its option, prepay the Debt in whole, but not
in part. Any prepayment made on or after the Lockout Date shall be accompanied
by a prepayment fee (a "Prepayment Fee") equal to (i) four percent (4%) of the
outstanding principal balance if the prepayment occurs on or after the Lockout
Date but prior to the second anniversary of the Re-sizing Date or (ii) two
percent (2%) of the outstanding principal balance if the prepayment occurs on or
after the second anniversary of the Re-sizing Date. In addition, if any Borrower
prepays the Loan on any date other than a Payment Date, Borrowers shall pay to
Lender on the date of such prepayment an amount equal to the interest that would
have accrued on the Loan through the next Payment Date. As a condition to any
voluntary prepayment, each Borrower shall give Lender written notice (a
"Prepayment Notice") of its intent to prepay, which notice must be given not
later than thirty (30) days prior to the date on which such prepayment is to be
made and must specify the Business Day on which such prepayment is to be made.

          2.4.2. Mandatory Prepayments. (a) On each date on which Lender
actually receives a distribution of Net Proceeds, and if Lender does not make
such Net Proceeds available to any Borrower for a Restoration of the applicable
Property, Borrowers shall, at Lender's option, prepay the outstanding principal
balance of the Note in an amount equal to one hundred percent (100%) of such Net
Proceeds together with interest that would have accrued on such amounts through
the next Payment Date. The Allocated Loan Amount with respect to such Property
will be reduced in an amount equal to such prepayment. No Prepayment Fee or
Spread Maintenance Premium shall be due in connection with any prepayment made
pursuant to this Section 2.4.2. Any prepayment received by Lender pursuant to
this Section 2.4.2 on a date other than a Payment Date shall be held by Lender
as collateral security for the Loan in the Net Proceeds Account, and shall be
applied by Lender on the next Payment Date.

                                       29

<PAGE>

               (b) In the event, prior to a Securitization, the equity holders
of the Parent propose a Change of Control (as defined in the Master Guaranty) to
the Parent, as a condition to such Change of Control, in connection with the
mandatory prepayment of the Mezzanine Loan as set forth in Section 2.4.2(d) of
the Mezzanine Loan, Borrowers shall prepay the entire outstanding principal
balance of the Loan together with interest that would have accrued on the
principal balance of the Mortgage Loan through the next Payment Date (in the
event the prepayment occurs on a date other than a Payment Date) plus the
Prepayment Fee.

          2.4.3. Prepayments After Default. If after an Event of Default,
payment of all or any part of the principal of the Loan is tendered by any
Borrower, a purchaser at foreclosure or any other Person, such tender shall be
deemed an attempt to circumvent the prohibition against prepayment set forth in
Section 2.4.1 and Borrowers, such purchaser at foreclosure or other Person shall
pay the Spread Maintenance Premium, in addition to the outstanding principal
balance, all accrued and unpaid interest and other amounts payable under the
Loan Documents.

          Section 2.5. Extension of Loan. Borrowers shall have the option to
extend the original Maturity Date of the Loan on the same terms and conditions
in effect during the initial term, for two additional one (1) year periods
subject to satisfaction as of the Maturity Date (or, with respect to the second
one (1) year extension option, the Maturity Date as previously extended) of each
of the terms and conditions set forth in this Section. Borrowers shall give
Lender written notice of its exercise of the option to extend, not less than
sixty (60) days prior to the Maturity Date (or, with respect to the second one
(1) year extension option, the Maturity Date as previously extended). Each of
the following conditions must be satisfied prior to any extension:

               (a) No Default or Event of Default shall have occurred and be
continuing under the Loan Documents;

               (b) The Debt Service Coverage Ratio as of the Maturity Date (or,
with respect to the second one (1) year extension option, the Maturity Date as
previously extended) shall be no less than one hundred and three percent (103%)
of the Debt Service Coverage Ratio as of the Closing Date.

               (c) Borrowers shall obtain and maintain throughout the extended
term an Acceptable Interest Rate Cap Agreement with a term equal to the extended
term and collaterally assign the same pursuant to a Collateral Assignment of
Interest Rate Cap;

               (d) Each Borrower shall pay all reasonable costs and expenses,
including reasonable legal fees, actually incurred by Lender or otherwise
involved in extending the Maturity Date;

               (e) Each Borrower shall execute and/or deliver to Lender any
other documentation reasonably requested by Lender, including, without
limitation, security agreements, financing statements, opinions of counsel and
title endorsements, all of which shall be reasonably satisfactory in form and
substance to Lender;

               (f) All Regulatory Permits with respect to the Properties shall
be in full force and effect; and

                                       30

<PAGE>

               (g) Borrowers shall pay the Extension Fee.

          Section 2.6 Supplemental Mortgage Affidavits. The Liens created by
each Mortgage are intended to encumber the Property described therein to the
full extent of Borrowers' obligations under the Loan Documents. As of the
Closing Date, Borrowers shall have paid all state, county and municipal
recording and all other taxes imposed upon the execution and recordation of the
Mortgages. Notwithstanding anything contained herein to the contrary, if at any
time Lender determines, based on Lender's estimation of market value and
applicable law, that Lender is not being afforded the maximum amount of security
available from any Property as a direct, or indirect, result of applicable taxes
not having been paid with respect to the related Mortgage, Lender may request,
and each Borrower agrees that it (i) will execute, acknowledge and deliver to
Lender, within a reasonable period of time after Lender's request, supplemental
affidavits increasing the amount of Indebtedness for which all applicable taxes
have been or are required to be paid under the related Mortgage to an amount
determined by Lender, in its reasonable discretion, to be appropriate and (ii)
will pay any and all applicable recording, intangible or similar taxes.

                   ARTICLE III. REPRESENTATIONS AND WARRANTIES

          Section 3.1. Borrower Representations.

          Each Borrower represents and warrants that:

          3.1.1. Organization. Each Borrower is duly organized, validly existing
and in good standing with full power and authority to own its assets and conduct
its business, and is duly qualified in all jurisdictions in which the ownership
or lease of its property or the conduct of its business requires such
qualification. Each Borrower has taken all necessary action to authorize the
execution, delivery and performance of this Agreement and the other Loan
Documents by it, and has the full power and authority to execute, deliver and
perform under this Agreement, the other Loan Documents and all the transactions
contemplated hereby. Each Borrower's exact and correct legal name as it appears
on file with the Secretary of State of Delaware is as set forth in Schedule III
attached hereto. Each Borrower is a limited liability company organized under
the laws of the State of Delaware. Each Borrower's organization identification
number assigned by the state of its organization is as set forth opposite such
Borrower's name on Schedule III. Borrower's federal tax identification number is
as set forth opposite such Borrower's name on Schedule III.

          3.1.2. Proceedings. This Agreement and the other Loan Documents have
been duly authorized, executed and delivered by each Borrower and, as
applicable, each Guarantor and constitute a legal, valid and binding obligation
of each Borrower and, as applicable, each Guarantor, enforceable against each
Borrower and, as applicable, each Guarantor in accordance with their respective
terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally, and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

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<PAGE>

          3.1.3. No Conflicts. The execution and delivery of this Agreement and
the other Loan Documents by each Borrower and, as applicable, each Guarantor,
and the performance of its obligations hereunder and thereunder will not
conflict with or violate any provision of any law, or regulation to which or
each Guarantor is subject, or conflict with, result in a breach of, or
constitute a default, including due notice or lapse of time or both, under, any
of the terms, conditions or provisions of any of any Borrower's or any
Guarantor's organizational documents or any agreement or instrument to which any
Borrower or any Guarantor is a party or by which it is bound, or any order or
decree applicable to any Borrower or any Guarantor, or result in the creation or
imposition of any lien on any of any Borrower's or any Guarantor's assets or
property (other than pursuant to the Loan Documents) or otherwise materially and
adversely affect performance of its respective duties.

          3.1.4. Litigation. There is no action, suit, proceeding arbitration or
investigation pending or, to such Borrower's knowledge, threatened against any
Borrower, any Borrower Party, any Guarantor, Manager or any of the Properties in
any court or by or before any other Governmental Authority which could
reasonably be expected to have a Material Adverse Effect.

          3.1.5. Agreements. No Borrower Party is in default with respect to any
order or decree of any court or any order, regulation or demand of any
Governmental Authority, which default might have consequences that would
materially and adversely affect the condition (financial or other) or operations
of any Borrower or any of the Properties or might have consequences that would
adversely affect its performance hereunder.

          3.1.6. Consents. No consent, approval, authorization, order or filings
of or with any court or Governmental Authority is required for the execution,
delivery and performance by any Borrower of, or compliance by any Borrower with,
this Agreement or the consummation of the transactions contemplated hereby
except those the absence of which would not have a Material Adverse Effect,
other than those which have been obtained by such Borrower; provided, however,
Borrowers will obtain within sixty (60) days (or, in the case of Medicare
provider agreements only, one hundred and eighty (180) days) of the Closing Date
the state licenses for the operation of each Property as a Nursing Facility or
Assisted Living Facility, as applicable, and the Medicare and Medicaid provider
agreements in the names of each applicable Borrower which have not been obtained
as of the Closing Date.

          3.1.7. Title. Each Fee Owner has good, marketable and insurable fee
title to the real property comprising the applicable Property and each Operator
has a valid leasehold interest to the real property comprising the applicable
Property and good title to the balance of such Property, in each case, free and
clear of all Liens whatsoever except the Permitted Encumbrances. Each Mortgage,
when properly recorded in the appropriate records, together with any Uniform
Commercial Code financing statements required to be filed in connection
therewith, will create (i) a valid, and enforceable first priority, perfected
Lien on the applicable Property, subject only to Permitted Encumbrances and (ii)
valid and enforceable perfected security interests in and to, and perfected
collateral assignments of, all personalty (including the Leases), all in
accordance with the terms thereof, in each case subject only to any Permitted
Encumbrances. There are no mechanics', materialman's or other similar Liens or
claims which have been filed for work, labor or materials affecting any Property
which are or may be Liens prior to, or equal or coordinate with, the Lien of the
related Mortgage or for which Borrower has

                                       32

<PAGE>

not provided title insurance over such Lien. None of the Permitted Encumbrances,
individually or in the aggregate, materially interfere with the benefits of the
security intended to be provided by the Mortgages and this Agreement, materially
and adversely affect the value of the Properties, impair the intended use or
operations of the Properties or impair any Borrower's ability to pay its
obligations in a timely manner.

          3.1.8. No Plan Assets. As of the date hereof and throughout the term
of the Loan (a) no Borrower is and will be an "employee benefit plan," as
defined in Section 3(3) of ERISA, subject to Title I of ERISA, or a "plan," as
defined in Section 4975(e)(1) of the Code, subject to Code Section 4975, (b) no
Borrower is and will be a "governmental plan" within the meaning of Section
3(32) of ERISA, (c) none of the assets of any Borrower constitutes or will
constitute "plan assets" of one or more of any such plans within the meaning of
29 C.F.R. Section 2510.3-101, and (d) transactions by or with any Borrower are
not and will not be subject to state statutes regulating investment of, and
fiduciary obligations with respect to, governmental plans.

          3.1.9. Compliance. Each Borrower Party and each of the Properties and
the use thereof is in substantial compliance with all applicable Legal
Requirements, including, without limitation, building and zoning ordinances and
codes. No Borrower Party is in default or violation of any order, writ,
injunction, decree or demand of any Governmental Authority, the violation of
which might materially adversely affect the condition (financial or otherwise)
or business of any Borrower. No Borrower Party has committed any act which may
give any Governmental Authority the right to cause any Borrower to forfeit any
of the Properties or any part thereof or any monies paid in performance of any
Borrower's obligations under any of the Loan Documents.

          3.1.10. Financial Information. All financial data, including, without
limitation, the statements of cash flow and income and operating expense, that
have been delivered to Lender in respect of the Properties and each Borrower
Party (i) are true, complete and correct in all material respects, (ii)
accurately represent the financial condition of the Properties as of the date of
such reports, and (iii) have been prepared in accordance with GAAP throughout
the periods covered, except as disclosed therein. No Borrower Party has any
contingent liabilities, liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable commitments
that are known to any Borrower and reasonably likely to have a materially
adverse effect on the Properties or the operation thereof, except as referred to
or reflected in said financial statements. Since the date of the financial
statements, there has been no material adverse change in the financial
condition, operations or business of a Borrower Party or the Properties from
that set forth in said financial statements.

          3.1.11. Condemnation. No Condemnation or other proceeding is pending
or, to such Borrower's knowledge, is threatened with respect to all or any
portion of any of the Properties or for the relocation of roadways providing
access to any of the Properties.

          3.1.12. Utilities and Public Access. Except as denoted on the
application Survey or Title Policy, each Property has adequate rights of access
to public ways and is served by utilities, including, without limitation,
adequate water, sewer, electricity, gas, telephone, sanitary sewer and storm
drain facilities. All public utilities necessary to the continued use and
enjoyment of each Property as presently used and enjoyed are located in the
public right-of-way

                                       33

<PAGE>

abutting such Property, and all such utilities are connected
so as to serve such Property without passing over other property. All roads
necessary for the full utilization of each Property for its current purpose have
been completed and dedicated to public use and accepted by all governmental
authorities or are the subject of access easements for the benefit of such
Property.

          3.1.13. Separate Lots. Except as denoted by the applicable Title
Policy, each Property is comprised of one (1) or more parcels which constitute
separate tax lots and do not constitute a portion of any other tax lot not a
part of the applicable Property.

          3.1.14. Assessments. There are no pending or, to Borrower's knowledge,
proposed special or other assessments for public improvements or otherwise
affecting any of the Properties, nor are there any contemplated improvements to
any of the Properties that may result in such special or other assessments.

          3.1.15. Enforceability. The Loan Documents are not subject to any
right of rescission, set-off, counterclaim or defense by any Borrower or, as
applicable, any Guarantor, including the defense of usury, nor would the
operation of any of the terms of the Loan Documents, or the exercise of any
right thereunder, render the Loan Documents unenforceable, and neither any
Borrower nor any Guarantor has not asserted any right of rescission, set-off,
counterclaim or defense with respect thereto.

          3.1.16. Assignment of Leases. Each Assignment of Leases creates a
valid assignment of, or a valid security interest in, certain rights under the
related Leases, subject only to a license granted to the applicable Borrower to
exercise certain rights and to perform certain obligations of the lessor under
such Leases, including the right to operate the related Property. No Person
other than Lender has any interest in or assignment of the Leases or any portion
of the Rents due and payable or to become due and payable thereunder.

          3.1.17. Insurance. Each Borrower has obtained and has delivered to
Lender original or certified copies of all of the Policies for each Property,
with all premiums prepaid thereunder, reflecting the insurance coverages,
amounts and other requirements set forth in this Agreement. Except as set forth
in Schedule IX, no claims have been made by any Borrower under any of the
Policies which remain unresolved, and no Person, including each Borrower, has
done, by act or omission, anything which would impair the coverage of any of the
Policies.

          3.1.18. Licenses. All permits, authorizations, licenses and approvals
(including, without limitation, CONs, Accreditations, Medicaid Provider
Agreements and Certifications, Medicare Participation Agreements and
Certifications and certificates of occupancy) required by any Governmental
Authority for the use, occupancy and operation of each Property in the manner in
which such Property is currently being used, occupied and operated have been
obtained, except those the absence of which would not mean a Material Adverse
Effect and are valid and in full force and effect; provided, however, Borrowers
will obtain within sixty (60) days (or in the case of Medicare provider
agreements only, one hundred eighty (180) days) of the Closing Date the state
licenses for operation of each Property as a Nursing Facility or Assisted Living
Facility, as applicable, and the Medicare and Medicaid provider agreements in
the names of the applicable Borrowers which have not been obtained as of the
Closing Date.

                                       34

<PAGE>

          3.1.19. Flood Zone. None of the Improvements on any of the Properties
are located in an area identified by the Federal Emergency Management Agency as
a special flood hazard area.

          3.1.20. Physical Condition. Except as set forth on the applicable
Property Condition Report, each Property, including, without limitation, all
buildings, improvements, parking facilities, sidewalks, storm drainage systems,
roofs, plumbing systems, HVAC systems, fire protection systems, electrical
systems, equipment, elevators, exterior sidings and doors, landscaping,
irrigation systems and all structural components, are in good condition, order
and repair in all material respects; there exists no structural or other
material defects or damages in any of the Properties, whether latent or
otherwise, and no Borrower has received notice from any insurance company or
bonding company of any defects or inadequacies in any of the Properties, or any
part thereof, which would materially and adversely affect the insurability of
the same or cause the imposition of extraordinary premiums or charges thereon or
of any termination or threatened termination of any policy of insurance or bond.

          3.1.21. Boundaries. Except as denoted on the applicable Survey, all of
the improvements which were included in determining the appraised value of each
Property lie wholly within the boundaries and building restriction lines of such
Property, and no improvements on adjoining properties encroach upon such
Property, and no easements or other encumbrances affecting the applicable
Property encroach upon any of the improvements, so as to affect the value or
marketability of the applicable Property except those which are insured against
by title insurance.

          3.1.22. Leases. Each Borrower represents and warrants to Lender with
respect to the Leases that: (a) the list of Operating Leases described on
Schedule I attached hereto is true, complete and correct and none of the
Properties are subject to any Leases other than (i) such Operating Leases and
(ii) the resident care agreements entered into by the Operators and the
residents of the Properties, (b) the Operating Leases are in full force and
effect and there are no defaults thereunder by either party, (c) the copies of
the Operating Leases delivered to Lender are true and complete, and there are no
oral agreements with respect thereto, (d) no Rent (including security deposits)
has been paid more than one (1) month in advance of its due date, (e) all work
to be performed by any Borrower under each Lease has been performed as required
and has been accepted by the applicable tenant, and (f) any payments, free rent,
partial rent, rebate of rent or other payments, credits, allowances or
abatements required to be given by any Borrower to any tenant has already been
received by such tenant.

          3.1.23. Filing and Recording Taxes. All transfer taxes, deed stamps,
intangible taxes or other amounts in the nature of transfer taxes required to be
paid under applicable Legal Requirements in connection with the transfer of the
Properties to any Borrower have been paid or will be paid at closing. All
mortgage, mortgage recording, stamp, intangible or other similar tax required to
be paid under applicable Legal Requirements in connection with the execution,
delivery, recordation, filing, registration, perfection or enforcement of any of
the Loan Documents, including, without limitation, the Mortgages, have been paid
or are being paid simultaneously herewith. All taxes and governmental
assessments due and owing in respect of the Properties have been paid, or an
escrow of funds in an amount sufficient to cover such

                                       35

<PAGE>

payments has been established hereunder or are insured against by the title
insurance policy to be issued in connection with the Mortgages.

          3.1.24. Single Purpose. Each Borrower hereby represents and warrants
to, and covenants with, Lender that each Borrower has been at all times since
its formation, and will continue to be a Single-Purpose Entity.

          3.1.25. Tax Filings; Payroll Taxes. Each Borrower and each Guarantor
has filed (or have obtained effective extensions for filing) all federal, state
and local tax returns required to be filed and have paid or made adequate
provision for the payment of all federal, state and local taxes, charges and
assessments payable by any Borrower and any Guarantor. Each Borrower believes
that its tax returns and those of each Guarantor properly reflect the income and
taxes of each Borrower and each Guarantor for the periods covered thereby,
subject only to reasonable adjustments required by the Internal Revenue Service
or other applicable tax authority upon audit. Each of each Borrower and each
Guarantor have paid all payroll taxes required to be paid by any such party by
any Governmental Authorities.

          3.1.26. Solvency. Each Borrower (a) has not entered into the
transaction or any Loan Document with the actual intent to hinder, delay, or
defraud any creditor and (b) received reasonably equivalent value in exchange
for its obligations under the Loan Documents. Giving effect to the Loan, the
fair saleable value of each Borrower's assets exceeds and will, immediately
following the making of the Loan, exceed such Borrower's total liabilities,
including, without limitation, subordinated, unliquidated, disputed and
contingent liabilities. The fair saleable value of each Borrower's assets is and
will, immediately following the making of the Loan, be greater than such
Borrower's probable liabilities, including the maximum amount of its contingent
liabilities on its debts as such debts become absolute and matured. Each
Borrower's assets do not and, immediately following the making of the Loan will
not, constitute unreasonably small capital to carry out its business as
conducted or as proposed to be conducted. Each Borrower does not intend to, and
does not believe that it will, incur Indebtedness and liabilities (including
contingent liabilities and other commitments) beyond its ability to pay such
Indebtedness and liabilities as they mature (taking into account the timing and
amounts of cash to be received by such Borrower and the amounts to be payable on
or in respect of obligations of such Borrower).

          3.1.27. Federal Reserve Regulations. No part of the proceeds of the
Loan will be used for the purpose of purchasing or acquiring any "margin stock"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System or for any other purpose which would be inconsistent with such
Regulation U or any other Regulations of such Board of Governors, or for any
purposes prohibited by Legal Requirements or by the terms and conditions of this
Agreement or the other Loan Documents.

          3.1.28. Organizational Chart. The organizational chart attached as
Schedule IV hereto, relating to Borrowers and certain Affiliates and other
parties, is true, complete and correct on and as of the date hereof.

          3.1.29. Bank Holding Company. Each Borrower is not a "bank holding
company" or a direct or indirect subsidiary of a "bank holding company" as
defined in the Bank

                                       36

<PAGE>

Holding Company Act of 1956, as amended, and Regulation Y thereunder of the
Board of Governors of the Federal Reserve System.

          3.1.30. No Other Debt. Each Borrower has not borrowed or received debt
financing (other than permitted pursuant to this Agreement) that has not been
heretofore repaid in full.

          3.1.31. Investment Company Act. Each Borrower is not (1) an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended; (2) a
"holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of either a "holding company" or a "subsidiary company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended; or (3)
subject to any other federal or state law or regulation which purports to
restrict or regulate its ability to borrower money.

          3.1.32. No Bankruptcy Filing. Each Borrower is not contemplating
either the filing of a petition by it under any state or federal bankruptcy or
insolvency laws or the liquidation of its assets or property, and each Borrower
does not have any knowledge of any Person contemplating the filing of any such
petition against it or any Guarantor and the Properties are not the subject of,
and each Borrower and each Guarantor are not a debtor in, any state or federal
bankruptcy, insolvency or similar proceeding.

          3.1.33. Full and Accurate Disclosure. No information contained in this
Agreement, the other Loan Documents, or any written statement furnished by or on
behalf of any Borrower pursuant to the terms of this Agreement contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained herein or therein not misleading in light of
the circumstances under which they were made. There is no fact or circumstance
presently known to any Borrower which has not been disclosed to Lender and which
materially adversely affects, or is reasonably likely to materially adversely
affect, any of the Properties, any Borrower or its business, operations or
condition (financial or otherwise).

          3.1.34. Foreign Person. Each Borrower is not a "foreign person" within
the meaning of Section 1445(f)(3) of the Code.

          3.1.35. No Change in Facts or Circumstances; Disclosure. There has
been no material adverse change in any condition, fact, circumstance or event
that would make the financial statements, rent rolls, reports, certificates or
other documents submitted in connection with the Loan inaccurate, incomplete or
otherwise misleading in any material respect or that otherwise materially and
adversely affects the business operations or the financial condition of any
Borrower or any of the Properties.

          3.1.36. Security Deposits. Each Borrower Party is and each Borrower
will continue to be in substantial compliance in all material respects with all
Legal Requirements relating to security deposits and resident trust funds. Each
Borrower is and will continue to hold all related security deposits and resident
trust funds collected in connection with each of the Properties in segregated
Eligible Accounts.

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<PAGE>

          3.1.37. Embargoed Person. (a) None of the funds or other assets of any
Borrower or any Guarantor constitute property of, or are beneficially owned,
directly or indirectly, by any person, entity or government subject to trade
restrictions under U.S. law, including but not limited to, the International
Emergency Economic Powers Act, 50 U.S.C.(S)(S) 1701 et seq., The Trading with
the Enemy Act, 50 U.S.C. App. 1 et seq. , and any Executive Orders or
regulations promulgated thereunder with the result that the investment in any
Borrower or any Guarantor, as applicable (whether directly or indirectly), is
prohibited by law or the Loan made by the Lender is in violation of law
("Embargoed Person"); (b) no Embargoed Person has any interest of any nature
whatsoever in any Borrower or any Guarantor, as applicable (whether directly or
indirectly), is prohibited by law or the Loan is in violation of law; and (c)
none of the funds of any Borrower or any Guarantor, as applicable, have been
derived from any unlawful activity with the result that the investment in any
Borrower or any Guarantor, as applicable (whether directly or indirectly), is
prohibited by law or the Loan is in violation of law.

          3.1.38. Intentionally deleted.

          3.1.39. Management Agreement/Staff Leasing Agreement. Each Management
Agreement and Staff Leasing Agreement is in full force and effect and there is
no default, breach or violation existing thereunder by any party thereto and no
event has occurred that, with the passage of time or the giving of notice, or
both, would constitute a default, breach or violation by any party thereunder.

          3.1.40. Use-Specific Representations.

               (a) Compliance with Laws. Each Borrower Party and each Property
are in substantial compliance with all applicable federal, state and local laws,
regulations and guidelines (including any government payment program
requirements and disclosure of ownership and related information requirements),
quality and safety standards, accepted professional standards and principles
that apply to professionals providing services to Nursing Facilities and/or
Assisted Living Facilities, in each case, as applicable, accreditation
standards, and requirements of the applicable state licensing agency, CMS and
all other Governmental Authorities including, without limitation, those
requirements relating to the physical structure and environment of each
Property, licensing, quality and adequacy of medical care, distribution of
pharmaceuticals, rate setting, equipment, personnel, operating policies,
additions to facilities and services and fee splitting except for any
non-compliance with any of the foregoing that could have a Material Adverse
Effect. No Borrower Party has committed any act which may give any Governmental
Authority the right to cause any Borrower to lose any applicable Regulatory
Permits the loss of which could have a Material Adverse Effect.

               (b) Regulatory Permits. All governmental licenses, permits,
regulatory agreements or other approvals or agreements necessary or desirable
for the use or operation of each Property as intended are held by the applicable
Borrower and are in full force and effect, including, without limitation,
approved provider participation status in any provider payment program
(including, but not limited to, Medicare and Medicaid), and a valid CON or
similar certificate, license, or approval issued by the applicable state and/or
federal agency for the requisite number and type of beds (collectively, the
"Regulatory Permits") except for any Regulatory Permits the failure to hold or
maintain in full force or effect could have a Material

                                       38

<PAGE>

Adverse Effect; provided, however, Borrower will obtain within sixty (60) days
or, in the case of Medicare provider agreements only, one hundred and eighty
(180) days of the Closing Date the state licenses for the operation of each
Property as a Nursing Facility or Assisted Living Facility, as applicable, and
the Medicare and Medicaid provider agreements in the names of the applicable
Borrowers which have not been obtained as of the Closing Date.

               (c) Ownership of Regulatory Permits. The Regulatory Permits,
including without limitation, each CON:

                         (i) are not and have not been, transferred to any
     location other than the Property to which such Regulatory Permits relate;

                         (ii) are not and have not been, pledged as collateral
     security for any loan or indebtedness other than the Loan; and

                         (iii) are held free from restrictions or known
     conflicts which would materially impair the use or operation of each
     Property as intended, and are not provisional, probationary or restricted
     in any way.

               (d) Medicare and Medicaid Compliance. To the extent applicable,
each Borrower Party and each Property is in substantial compliance with all
requirements for participation in Medicare and Medicaid, including without
limitation, the Medicare and Medicaid Patient and Program Protection Act of
1987. To the extent applicable, each Borrower Party and each Property is in
conformance in all material respects with all conditions of participation,
reimbursement and cost reporting requirements, and each applicable Borrower has
a current provider agreement which is in full force and effect under Medicare
and Medicaid for the number and type of beds.

               (e) Third Party Payor Programs. There is no threatened or pending
revocation, suspension, termination, probation, restriction, limitation, fine,
civil monetary penalty, recoupment or non-renewal affecting any Borrower Party
or any Property in respect of any participation or provider agreement with any
third-party payor, including, without limitation, Medicare, Medicaid, Blue Cross
and/or Blue Shield, and any other private commercial insurance managed care and
employee assistance program (collectively, the "Third Party Payor Programs") to
which any Borrower presently is subject. All Medicaid, Medicare, and private
insurance cost reports and financial reports submitted by any Borrower Party are
and will be materially accurate and complete and have not been and will not be
misleading in any material respects. No cost reports or financial reports for
any Property remain "open" or unsettled except for those reports that remain
open for the current period.

               (f) Governmental Proceedings and Notices. Except as described on
the attached Schedule XIII, no Borrower Party and no Property is currently the
subject of any proceeding by any Governmental Authority, and no notice of any
violation or subpoena or inquiry of any nature has been received from a
Governmental Authority that would, directly or indirectly, or with the passage
of time:

                         (i) have a material adverse impact on any Borrower's
     ability to accept and/or retain patients or result in the imposition of a
     fine, a sanction, an

                                       39

<PAGE>

     administrative or criminal action, a lower rate certification or a lower
     reimbursement rate for services rendered to eligible patients;

                         (ii) modify, limit or annul or result in the transfer,
     suspension, revocation or imposition of probationary use on any Regulatory
     Permit the absence of which would have a Material Adverse Effect;

                         (iii) affect any Borrower's continued participation in
     Medicare, Medicaid or other Third Party Payor Programs, as applicable, or
     any successor programs thereto, at current rate certifications.

               (g) Physical Plant Standards. Each Property and the use thereof
complies in all material respects with all applicable local, state and federal
building codes, fire codes, life safety codes, health care, nursing facility and
other similar regulatory requirements, including, without limitation,
participation requirements in Medicare and Medicaid (collectively, the "Physical
Plant Standards") and, except as described on the attached Schedule X, no
waivers of the Physical Plant Standards exist at such Property.

               (h) Past Violations. Except as set forth on the attached Schedule
XIV, here have been no penalty enforcement actions undertaken by any
Governmental Authority during the last three (3) calendar years or during the
last survey cycle against any Property, against any Borrower Party, or against
any partner, member, officer, director, stockholder or Affiliate of any Borrower
Party which enforcement action could have a Material Adverse Effect. There have
been no violations over the past three (3) years that have threatened any
Property's or any Borrower's certification for participation in any Medicare,
Medicaid or other Third Party Payor Programs. No Borrower Party has been the
subject of a "double G" determination for the last three (3) calendar years or
since January 14, 2000, whichever date is later.

               (i) Audits. Except as set forth on the attached Schedule XI,
there are no current, pending or outstanding reimbursement audits regarding
Medicaid, Medicare or other Third Party Payor Programs nor any appeals pending
at any Property that (x) are not applicable in the ordinary course to Nursing
Facilities or Assisted Living Facilities, as applicable, comparable to the
Properties and (y) could have a Material Adverse Effect.

               (j) Recoupment. There are no current or pending recoupment
efforts regarding Medicaid, Medicare or other Third Party Payor Programs at (or
with respect to) any Property that (x) are not applicable in the ordinary course
to Nursing Facilities or Assisted Living Facilities, as applicable, comparable
to any Property and (y) could have a Material Adverse Effect. No Borrower is a
participant in any federal program whereby any Governmental Authority may have
the right to recover funds by reason of the advance of federal funds.

               (k) Pledges of Receivables. No Borrower Party has pledged its
receivables or any Rents as collateral security for any outstanding loan or
indebtedness other than the Loan.

               (l) Patient Care Agreements. There are no patient or resident
care agreements with patients or residents or with any other persons that
deviate in any material adverse respect from the standard form customarily used
at each Property.

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<PAGE>

               (m) Patient Records. All patient and resident records at each
Property, and all patient and resident trust fund accounts, are maintained in
substantial compliance with all regulatory requirements and are true and correct
in all respects.

               (n) Reimbursement Contracts. All Reimbursement Contracts
applicable to any Borrower Party or any Property are in good standing with all
applicable Governmental Authorities, Regulatory Permits, Medicare Certifications
and/or Medicaid Certifications. Each Borrower Party is current in the payment of
all so-called provider specific taxes, bed taxes or other assessments with
respect to any Reimbursement Contracts.

               (o) Licensed Beds. The number and category of licensed beds at
each Property is as set forth on Schedule III attached hereto. Except as set
forth in Schedule XII, no waivers of any laws, rules, regulations or
requirements (including, without limitation minimum square foot requirements per
bed) are required for each Property to operate at the licensed bed capacities
listed on Schedule III and to operate in substantial compliance with applicable
Legal Requirements. No Borrower Party has been granted nor has any Borrower
Party requested the right, to reduce the number of licensed beds at any
Property. No Borrower Party has applied for approval to move any and all of the
licensed beds at any Property to any other location.

               (p) Intentionally deleted.

          3.1.41. Material Agreements. There are no Material Agreements except
as described in Exhibit D. Each Borrower has made available to Lender true and
complete copies of all Material Agreements. Each Material Agreement has been
entered into at arm's length in the ordinary course of business by or on behalf
of a Borrower.

          Section 3.2 Survival of Representations.

          The representations and warranties set forth in Section 3.1 shall
survive for so long as any amount remains payable to Lender under this Agreement
or any of the other Loan Documents.

                         ARTICLE IV. BORROWER COVENANTS

          Section 4.1 Borrower Affirmative Covenants.

          Until all amounts are paid in full under the Loan Documents (excluding
contingent indemnity obligations that survive repayment), each Borrower hereby
covenants and agrees with Lender that:

          4.1.1. Existence; Compliance with Legal Requirements. Each Borrower
shall do or cause to be done all things necessary to preserve, renew and keep in
full force and effect its existence, rights, licenses, permits and franchises
except to the extent such preservation, renewal and effectiveness could not have
a Material Adverse Effect, and substantially comply with all Legal Requirements
applicable to it and the Properties.

          4.1.2. Taxes and Other Charges. Each Borrower shall pay all Taxes and
Other Charges and payroll taxes now or hereafter levied or assessed or imposed
against the Properties

                                       41

<PAGE>

or any part thereof or any Borrower as the same become due and payable;
provided, however, each Borrower's obligation to directly pay Taxes shall be
suspended for so long as such Borrower complies with the terms and provisions of
Section 6.3 hereof and there are adequate funds in the Tax and Insurance Escrow
Account. Each Borrower shall furnish to Lender receipts for the payment of the
Taxes and the Other Charges prior to the date the same shall become delinquent;
provided, however, that each Borrower is not required to furnish such receipts
for payment of Taxes in the event that such Taxes have been paid by Lender
pursuant to Section 6.3 hereof. Each Borrower shall not permit or suffer and
shall promptly discharge any liens or charges against the Properties, except
Permitted Encumbrances. After prior notice to Lender, each Borrower, at its own
expense, may contest by appropriate legal proceeding, conducted in good faith
and with due diligence, the amount or validity of any Taxes or Other Charges,
provided that (i) no Default or Event of Default has occurred and remains
uncured; (ii) such proceeding shall be permitted under and be conducted in
accordance with all applicable statutes, laws and ordinances; (iii) none of the
Properties nor any part thereof or interest therein will be in danger of being
sold, forfeited, terminated, canceled or lost; (iv) each Borrower shall promptly
upon final determination thereof pay the amount of any such Taxes or Other
Charges, together with all costs, interest and penalties which may be payable in
connection therewith; (v) such proceeding shall suspend the collection of Taxes
or Other Charges from the applicable Property; and (vi) upon request of Lender,
each Borrower shall deposit with Lender cash, or other security as may be
approved by Lender, in an amount equal to one hundred twenty-five percent (125%)
of the contested amount, to insure the payment of any such Taxes or Other
Charges, together with all interest and penalties thereon. Lender may pay over
any such cash or other security held by Lender to the claimant entitled thereto
at any time when, in the judgment of Lender, the entitlement of such claimant is
established.

          4.1.3. Litigation. Each Borrower shall give prompt notice to Lender of
any litigation or governmental proceedings pending or threatened against any
Borrower which might materially adversely affect any of the Properties or any
Borrower's ability to perform its obligations hereunder or under the other Loan
Documents.

          4.1.4. Access to Properties. Each Borrower shall permit agents,
representatives and employees of Lender to inspect each Property or any part
thereof at reasonable hours upon reasonable advance written notice. Lender shall
not unreasonably interfere with any Borrowers' business operations during such
inspection.

          4.1.5. Further Assurances. Each Borrower shall, at such Borrower's
sole cost and expense, from time to time as reasonably requested by Lender,
execute, acknowledge, record, register, file and/or deliver to Lender such other
instruments, agreements, certificates and documents (including UCC financing
statements and amended or replacement mortgages) as Lender may reasonably
request to evidence, confirm, perfect and maintain the liens securing or
intended to secure the obligations of any Borrower under the Loan Documents or
to facilitate a replacement of the Cash Management Bank or Collection Account
Bank if requested by Lender, and do and execute all such further lawful and
reasonable acts, conveyances and assurances for the better and more effective
carrying out of the intents and purposes of this Agreement and the other Loan
Documents as Lender shall reasonably require from time to time. Each Borrower
hereby authorizes and appoints Lender as its attorney-in-fact to execute,
acknowledge, record, register and/or file such instruments, agreements,
certificates and documents, and to do and

                                       42

<PAGE>

execute such acts, conveyances and assurances, should any Borrower fail to do so
itself in violation of this Agreement following written request from Lender, in
each case without the signature of any Borrower. The foregoing grant of
authority is a power of attorney coupled with an interest and such appointment
shall be irrevocable for the term of this Agreement. Each Borrower hereby
ratifies all actions that such attorney shall lawfully take or cause to be taken
in accordance with this Section.

          4.1.6. Financial Reporting.

               (a) Each Borrower shall keep and maintain or will cause to be
kept and maintained proper and accurate books and records, in accordance with
GAAP in all material respects, reflecting the financial affairs of each
Borrower. Lender shall have the right from time to time during normal business
hours upon reasonable notice to the applicable Borrower to examine such books
and records at the office of such Borrower or other Person maintaining such
books and records and to make such copies or extracts thereof as Lender shall
desire.

               (b) As soon as available, and in any event within one hundred
twenty (120) days after the close of each Fiscal Year, each Borrower shall
furnish to Lender, in hard copy and electronic format and presented on a
consolidated as well as a property-by-property basis, financial statements
prepared for such year with respect to Borrowers, including a balance sheet and
operating statement as of the end of such year, together with related statements
of income and members' or partners' capital for such Fiscal Year, audited by a
"Big Four" accounting firm or a nationally recognized, independent certified
public accounting firm reasonably satisfactory to Lender whose opinion shall be
to the effect that such financial statements have been prepared in accordance
with GAAP applied on a consistent basis and shall not be qualified as to the
scope of the audit or as to the status of each Borrower as a going concern.
Together with each Borrower's annual financial statements, such Borrower shall
furnish to Lender an Officer's Certificate certifying as of the date thereof
whether to the best of such Borrower's knowledge there exists an event or
circumstance which constitutes a Default or Event of Default by any Borrower
under the Loan Documents and if such Default or Event of Default exists, the
nature thereof, the period of time it has existed and the action then being
taken to remedy the same. Together with each Borrower's annual financial
statements, such Borrower shall furnish to Lender, in hard copy and electronic
format:

                    (i) a statement of cash flows for each Property; and

                    (ii) such other information as Lender shall reasonably
     request.

               (c) As soon as available, and in any event within forty-five (45)
days after the end of each fiscal quarter (based on Borrrower's Fiscal Year),
each Borrower shall furnish to Lender, in hard copy and electronic format and
presented on a consolidated as well as a property-by-property basis, quarterly
and year-to-date unaudited financial statements prepared for such fiscal quarter
with respect to Borrowers, including a balance sheet and operating statement as
of the end of such fiscal quarter, together with related statements of income,
members' or partners' capital and cash flows for such fiscal quarter and for the
portion of the Fiscal Year ending with such fiscal quarter,which statements
shall be accompanied by (i) an

                                       43

<PAGE>

Officer's Certificate certifying that the same are true and correct and were
prepared in accordance with GAAP applied on a consistent basis, subject to
changes resulting from audit and normal year-end audit adjustments and (ii) an
Officer's Certificate certifying as of the date thereof whether to the best of
such Borrower's knowledge there exists an event or circumstance which
constitutes a Default or Event of Default by any Borrower under the Loan
Documents and if such Default or Event of Default exists, the nature thereof,
the period of time it has existed and the action then being taken to remedy the
same. Each such quarterly statement shall show the separate operations of each
Property, including, without limitation, (1) a breakdown of Patient Revenues and
other revenues itemized by payor type and a reasonably detailed breakdown of
operating expenses and (2) patient census by payor type. Each such quarterly
report shall be accompanied by the following, in hard copy and electronic
format:

                    (i) a statement in reasonable detail which calculates Net
     Operating Income for each Property for the trailing four fiscal quarters,
     in each case, ending at the end of such fiscal quarter;

                    (ii) then current occupancy report for each Property; and

                    (iii) such other information as Lender shall reasonably
     request.

               (d) As soon as available, and in any event within thirty (30)
days after the end of each calendar month, each Borrower shall furnish (x) a
report describing in reasonable detail the occurrence during such calendar month
of any of the following: the termination, cancellation or entry into, or default
by any party under, any Operating Lease at any of the Properties or any event
which is reasonably likely to result in a material adverse effect on the the
ability of any Borrower to perform any material provision of any Loan
Document,or the value, use or enjoyment of any of the Properties or the
operation thereof and (y) such Borrower's calculation of Debt Service Coverage
Ratio and adequate back-up to support such calculation.

               (e) Until the occurrence of a Securitization or series of
Securitizations, which, in the aggregate, shall have securitized the entire
Loan, each Borrower shall, simultaneously with delivering the report described
in the foregoing clause (d), furnish, in hard copy and electronic format and
presented on a consolidated as well as a property-by-property basis, monthly and
year-to-date unaudited financial statements prepared for the applicable month
with respect to Borrowers, including a balance sheet and operating statement as
of the end of such month, together with related statements of income, members'
or partners' capital and cash flows for such month and for the portion of the
Fiscal Year ending with such month, which statements shall be accompanied by (i)
an Officer's Certificate certifying that the same are true and correct and were
prepared in accordance with GAAP applied on a consistent basis, subject to
changes resulting from audit and normal year-end audit adjustments and (ii) an
Officer's Certificate certifying as to any material variances from the approved
Annual Budget on a line-item basis. Each monthly report shall show the separate
operations of each Property, including, without limitation, (1) a breakdown of
Patient Revenues and other revenues itemized by payor type and a reasonably
detailed breakdown of operating expenses and (2) patient census by payor

                                       44

<PAGE>

type. Each such monthly report shall be accompanied by the following in hard
copy and electronic format:

                    (i) a statement in reasonable detail which calculates Net
  Operating Income for each Property for the trailing twelve (12) months, in
  each case, ending at the end of that month;

                    (ii) then current occupancy report for each Property; and

                    (iii) such other information as Lender shall reasonably
  request.

               (f) As soon as available, and in any event within ninety (90)
days after the end of each calendar year, each Borrower shall furnish to Lender
true and complete copies of a report regarding the compliance of the Properties
with all Regulatory Permits.

               (g) Upon Lender's written request, as soon as available, and in
any event within five (5) days after preparation thereof, each Borrower shall
furnish to Lender the weekly and monthly consolidated cash flow reports of each
Operator and consolidated patient census reports for each Operator.

               (h) As soon as available, and in any event no later than thirty
(30) days after the end of each fiscal quarter, each Borrower shall furnish to
Lender (i) the quarterly consolidated survey deficiency summary report,
indicating for each Property whether any survey, citation or report alleging any
deficiency with respect to such Property has been issued during the prior month
and, if so, setting forth, the identity of the Governmental Authority that
issued such survey, citation or report, a description of the alleged deficiency
and the timetable or deadline for same and the applicable Borrower's plan for
curing such deficiency and (ii) to the extent existing, all actuarial reports
relating to all professional liability claims. Each Borrower shall also deliver
to Lender promptly after request therefor by Lender any other Property specific
survey reports reasonably requested by Lender.

               (i) As soon as available, and in any event within forty-five (45)
days after the end of each calendar quarter, each Borrower shall deliver to
Lender copies of the Officer's Certificates, setting forth whether any event(s)
of default has occurred and is continuing with respect to the reduction of the
number of licensed beds at any Property or the revocation of certification for
reimbursement under Medicare or Medicaid with respect to any Property.

               (j) As soon as available, and in any event within ten (10) days
of receipt, each Borrower shall deliver to Lender any and all notices
(regardless of form) from any licensing and/or certifying agency (i) that any
Regulatory Permit for any Property or the Medicare Certification or Medicaid
Certification of any Property is the subject of any enforcement action,
revocation or suspension, or is subject to assessment for civil monetary
penalties or is the subject of any overpayment claim or recoupment claim or (ii)
that action is pending or being considered to revoke or suspend any Regulatory
Permit or to institute enforcement actions of any kind.

                                       45

<PAGE>

               (k) Upon the request of Lender, within five (5) days of the
earlier of (i) the date of the required filing of cost reports for any Property
with the Medicaid agency or (ii) the date of actual filing of such cost report
for any Property with such agency, each Borrower shall furnish to Lender a
complete and accurate copy of the annual Medicaid cost report for each Property,
which will be prepared by an independent certified public accountant or by an
experienced cost report preparer acceptable to Lender in its sole discretion,
and promptly furnish to Lender any amendments filed with respect to such reports
and all responses, audit reports or inquiries with respect to such reports.

               (l) As soon as available, and in any event within five (5) days
of receipt, each Borrower shall deliver to Lender a copy of any Medicare,
Medicaid or other licensing agency survey or report and any statement of
deficiencies, and within the time period required by the particular agency for
furnishing a plan of correction, shall also furnish or cause to be furnished to
Lender, a copy of the plan of correction generated from such survey or report
for a Property,and correct or cause to be corrected any deficiency, the curing
of which is a condition of continued licensure or for full participation in
Medicare or Medicaid for existing patients or for new patients to be admitted
with Medicare or Medicaid coverage, by the date required for cure by such agency
(plus any extensions of time granted by such agency).

               (m) Borrowers have previously delivered to Lender the Annual
Budget for each Property for the 2002 Fiscal Year. At least thirty (30) days
prior to the commencement of each subsequent Fiscal Year during the term of the
Loan, Borrowers shall deliver to Lender for approval an Annual Budget presented
on a consolidated as well as a property-by-property basis for the ensuing Fiscal
Year and, promptly after preparation thereof, any subsequent revisions to the
Annual Budget.

               (n) As soon as available, and in any event within one hundred
twenty(120) days after the close of each Fiscal Year, each Borrower shall cause
each Guarantor to furnish to Lender, in hard copy and electronic format and
presented on a consolidated as well as a property-by-property basis, financial
statements prepared for such year with respect to Guarantors, including a
balance sheet and operating statement as of the end of such year, together with
related statements of income and members' or partners' capital for such Fiscal
Year, audited by a "Big Four" accounting firm or a nationally recognized,
independent certified public accounting firm reasonably satisfactory to Lender
whose opinion shall be to the effect that such financial statements have been
prepared in accordance with GAAP applied on a consistent basis and shall not be
qualified as to the scope of the audit or as to the status of each Guarantor as
a going concern. Together with each Guarantor's annual financial statements,
each Borrower shall cause each Guarantor to furnish to Lender an Officer's
Certificate certifying as of the date thereof whether to the best of such
Guarantor's knowledge there exists an event or circumstance which constitutes a
Default or Event of Default by any Guarantor under any guaranty and if such
Default or Event of Default exists, the nature thereof, the period of time it
has existed and the action then being taken to remedy the same.

               (o) Notwithstanding the foregoing, in the event the Parent makes
a public offering of its stock and becomes subject to public record disclosure,
Mortgage Borrowers shall provide Lender with copies of all financial statements
filed by Parent with the Securities and Exchange Commission within two (2) days
of such filing.

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<PAGE>

          4.1.7. Title to the Properties. Each Borrower will warrant and defend
the validity and priority of the Liens of the Mortgages and the Assignments of
Leases on the Properties against the claims of all Persons whomsoever, subject
only to Permitted Encumbrances.

          4.1.8. Estoppel Statement.

               (a) After request by Lender, each Borrower shall within ten (10)
Business Days furnish Lender with a statement, duly acknowledged and certified,
stating (i) the unpaid principal amount of the Note, (ii) the Interest Rate of
the Note, (iii) the date installments of interest and/or principal were last
paid, (iv) any offsets or defenses to the payment of the Debt, if any, and (v)
that this Agreement and the other Loan Documents have not been modified or if
modified, giving particulars of such modification.

               (b) Each Borrower shall deliver to Lender, upon request, an
estoppel certificate from each tenant under any Lease (other than tenants under
patient admission and resident care agreements) at any of the Properties;
provided that such certificate may be in the form required under such Lease;
provided further that each Borrower shall not be required to deliver such
certificates more frequently than two (2) times in any calendar year.

          4.1.9. Operating Leases. Without the prior written consent of Lender
and without delivery of a Rating Agency Confirmation, each Borrower shall not
(i) cancel or terminate any Operating Lease in whole or in part, (ii) approve
any assignment of any Operating Lease, (iii) amend or modify any economic terms
or otherwise amend or modify or waive any provisions of any Operating Lease,
(iv) cancel or modify any guaranty, or release any security deposit, letter of
credit or other item constituting security pertaining to such Operating Lease.
Each Borrower agrees to take all necessary action requested by Lender to
facilitate the transfer of all Regulatory Permits to Lender, its designee or
assignee, or any subsequent purchaser, provided that (i) the number of beds and
the scope of services provided are not changed and (ii) Lender, its designee or
assignee, or subsequent purchaser submits prior notification of such change to
the applicable regulatory agency.

          4.1.10. Alterations. Lender's prior approval shall be required in
connection with any alterations to any Improvements on any Property (a) that may
have a material adverse effect on any Borrower's financial condition, the value
of the related Property or the Net Operating Income or (b) the cost of which
(including any related alteration, improvement or replacement) is reasonably
anticipated to exceed the Alteration Threshold. If the total unpaid amounts
incurred and to be incurred with respect to such alterations to the Improvements
shall at any time exceed the Alteration Threshold, Borrowers shall promptly
deliver to Lender as security for the payment of such amounts and as additional
security for each Borrowers' obligations under the Loan Documents any of the
following: (i) cash, (ii) U.S. Obligations, (iii) other securities acceptable to
Lender, provided that Lender shall have received a Rating Agency Confirmation as
to the form and issuer of same, or (iv) a completion bond, provided that Lender
shall have received a Rating Agency Confirmation as to the form and issuer of
same. Such security shall be in an amount equal to the excess of the total
unpaid amounts incurred and to be incurred with respect to such alterations to
the Improvements on the applicable Property (other

                                       47

<PAGE>

than such amounts to be paid or reimbursed by Tenants under the Leases) over the
Alteration Threshold.

          4.1.11. Use-Specific Covenants.

               (a) Each Borrower shall:

                    (i) operate each Property or cause each Property to be
     operated in substantial compliance with the laws and requirements referred
     to in Section 3.1.40 hereof;

                    (ii) operate each Property or cause each Property to be
     operated in a manner such that the Regulatory Permits shall remain in full
     force and effect;

                    (iii) maintain or cause to be maintained the number and type
     of licensed beds at each Property at the licensure/certification levels set
     forth in Schedule III; provided, however, a Borrower may remove from
     service a number of licensed beds at its Property by not more than the
     greater of ten (10) beds and ten percent (10%) of the number of licensed
     beds at such Property immediately prior to the proposed reduction provided
     such removal from service is on a temporary basis and Borrower delivers to
     Lender from each applicable Governmental Authority written evidence that
     such removal from service is on a temporary, and not permanent, basis and
     that such beds may be placed back into service without approval from any
     Governmental Authority; and provided further that the Borrower shall not
     adjust the number of licensed beds at the facility; and

                    (iv) to the extent applicable, substantially comply with all
     requirements for participation in Medicare, Medicaid and any other Third
     Party Payor Programs, and shall keep in full force and effect a current
     provider agreement under Medicare, Medicaid and any other Third Party Payor
     Programs as are financially prudent.

               (b) Each Borrower shall cause the operation of each Property to
be conducted at all times in a manner consistent with the following:

                    (i) to maintain or cause to be maintained the standard of
     operations at each Property at all times at a level necessary to insure a
     level of quality for each Property consistent with similar facilities in
     the same competitive market;

                    (ii) to maintain or cause to be maintained a standard of
     care in the storage, use, transportation and disposal of all medical
     equipment, medical supplies, medical products and medical waste, of any
     kind and in any form, that is in accordance at least, with that of the
     highest prudent industry standard and in substantial conformity with all
     applicable Legal Requirements;

                    (iii) to operate or cause each Property to be operated in a
     prudent manner in substantial compliance in all respects with applicable
     Legal Requirements and requirements of the Policies relating thereto and,
     except where the

                                       48

<PAGE>

     failure to maintain their effectiveness could not have a Material Adverse
     Effect, cause all licenses, Regulatory Permits, and any other agreements
     necessary for the continued use and operation of such Property or for
     participation in the Medicare, Medicaid or other Third Party Payor Programs
     to remain in full force and effect;

                    (iv) to maintain or cause to be maintained sufficient
     Inventory and Equipment of types and quantities at each Property to enable
     the applicable Borrower to operate such Property.

          4.1.12. Material Agreements. No Borrower shall amend, modify,
surrender or waive any material rights or remedies under, or enter into or
terminate, any Material Agreement unless any such amendment, modification,
surrender, waiver, entry or termination would not have a Material Adverse
Effect.

          Section 4.2. Borrower Negative Covenants.

          Until all amounts are paid in full under the Loan Documents (excluding
contingent indemnity obligations that survive repayment), each Borrower
covenants and agrees with Lender that:

          4.2.1. Due on Sale and Encumbrance; Transfers of Interests. Without
the prior written consent of Lender, neither any Borrower nor any Person having
a direct or indirect interest ownership or beneficial interest in any Borrower
or any Guarantor shall sell, convey, mortgage, grant, bargain, encumber, pledge,
assign or otherwise Transfer any interest, direct or indirect in any Borrower,
any Guarantor, any of the Properties or any part thereof, whether voluntarily or
involuntarily, in violation of the covenants and conditions set forth in the
Mortgages, this Agreement or the Master Guaranty; provided, that this Section
shall not prohibit transfers of equity interest in the Parent permitted under
Section 8.2.

          4.2.2. Liens. Each Borrower shall not create, incur, assume or suffer
to exist any Lien on any portion of any of the Properties except for Permitted
Encumbrances.

          4.2.3. Issuance of Equity Interests. Each Borrower shall not issue or
allow to be created any stocks or shares or shareholder, partnership or
membership interests in any Borrower, or other ownership interests other than
the stocks, shares, shareholder, partnership or membership interests and other
ownership interests which are outstanding or exist on the Closing Date or any
security or other instrument which by its terms is convertible into or
exercisable or exchangeable for stock, shares, shareholder, partnership or
membership interests or other ownership interests in any Borrower.

          4.2.4. Change in Business. Each Borrower shall not cease to be a
Single-Purpose Entity or make any material change in the scope or nature of its
business objectives, purposes or operations, or undertake or participate in
activities other than the continuance of its present business provided, however,
with the prior written consent of the Lender, not to be unreasonably withheld,
and, after a Securitization of the Loan, a Rating Agency Confirmation, a
Borrower may amend its business operations at a Property to include a Specialty
Hospital (in which event Schedule III hereto shall be amended to reflect such
amendment).

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<PAGE>

          4.2.5. Debt Cancellation. Each Borrower shall not cancel or otherwise
forgive or release any claim or debt (other than termination of Leases in
accordance herewith) owed to any Borrower by any Person, except for adequate
consideration and in the ordinary course of any Borrower's business.

          4.2.6. Affiliate Transactions. Each Borrower shall not enter into, or
be a party to, any transaction with an Affiliate of any Borrower or any of the
partners of any Borrower except in the ordinary course of business and on terms
that are no less favorable to any Borrower or such Affiliate than would be
obtained in a comparable arm's-length transaction with an unrelated third party.

          4.2.7. Zoning. Each Borrower shall not initiate or consent to any
zoning reclassification of any portion of any of the Properties or seek any
variance under any existing zoning ordinance or use or permit the use of any
portion of any of the Properties in any manner that could result in such use
becoming a non-conforming use under any zoning ordinance or any other applicable
land use law, rule or regulation, without the prior consent of Lender.

          4.2.8. Assets. Each Borrower shall not purchase or own any properties
other than the Properties and any other property necessary or incidental for the
operation of the Properties.

          4.2.9. No Joint Assessment. Each Borrower shall not suffer, permit or
initiate the joint assessment of any Property (i) with any other real property
constituting a tax lot separate from such Property, and (ii) with any portion of
such Property which may be deemed to constitute personal property, or any other
procedure whereby the lien of any taxes which may be levied against such
personal property shall be assessed or levied or charged to such Property.

          4.2.10. Principal Place of Business. Each Borrower shall not change
its jurisdiction of organization or its name without first obtaining the written
consent of Lender.

          4.2.11. ERISA.

               (a) Each Borrower shall not engage in any transaction which would
cause any obligation, or action taken or to be taken, hereunder (or the exercise
by Lender of any of its rights under the Note, this Agreement or the other Loan
Documents) to be a non-exempt (under a statutory or administrative class
exemption) prohibited transaction under the Employee Retirement Income Security
Act of 1974, as amended ("ERISA").

               (b) Each Borrower shall deliver to Lender such certifications or
other evidence from time to time throughout the term of the Loan, as requested
by Lender in its sole discretion, that (A) such Borrower is not and does not
maintain an "employee benefit plan" as defined in Section 3(3) of ERISA, which
is subject to Title I of ERISA, or a "governmental plan" within the meaning of
Section 3(3) of ERISA; (B) such Borrower is not subject to state statutes
regulating investments and fiduciary obligations with respect to governmental
plans; and (C) one or more of the following circumstances is true:

                    (i) Equity interests in such Borrower are publicly offered
     securities, within the meaning of 29 C.F.R.(S)2510.3-101(b)(2);

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<PAGE>

                    (ii) Less than twenty-five percent (25%) of each outstanding
     class of equity interests in such Borrower are held by "benefit plan
     investors" within the meaning of 29 C.F.R.(S)2510.3-101(f)(2); or

                    (iii) Such Borrower qualifies as an "operating company" or a
     "real estate operating company" within the meaning of 29
     C.F.R.(S)2510.3-101(c) or (e).

          4.2.12. Other Indebtedness. Each Borrower shall not incur, create,
assume or become liable in any manner with respect to any Indebtedness, except
the Debt and the Permitted Debt.

          4.2.13. Use-Specific Negative Covenants: Each Borrower shall not and
shall not allow the Manager, if any, to:

               (a) transfer any Regulatory Permits to any location other than
the related Property nor pledge any Regulatory Permits as collateral security
for any loan or indebtedness other than the Loan;

               (b) rescind, withdraw, revoke, amend, modify, supplement, or
otherwise alter the nature, tenor or scope of (i) any Regulatory Permit for any
Property or (ii) any applicable provider payment program participation for any
Property;

               (c) except as permitted by the proviso to Section 4.1.11(a)(iii),
amend or otherwise change any Property's authorized bed capacity and/or the
number or type of beds, and/or licensing category or type and/or the number of
beds participating in governmental payment programs approved by the applicable
state licensing agency, CMS or other Governmental Authority without Lender's
prior written consent which may be given or denied in Lender's sole discretion;

               (d) replace or transfer all or any part of any Property's
licensed beds to another site or location, change the type of licensed beds at
any Property or reduce the number of licensed beds at any Property;

               (e) apply for approval to (i) move any licensed beds to another
site or location, (ii) change the type of licensed beds at any Property or (iii)
reduce the number of licensed beds at any Property;

               (f) jeopardize in any manner any Borrower's participation in any
Third Party Payor Programs to which any Borrower is subject as of the Closing
Date; provided, to the extent financially prudent and consistent with the terms
of the Loan Agreements, each Borrower may terminate participation in any Third
Party Payor Program with any private commercial insurance to the extent such
termination could not have a Material Adverse Effect;

               (g) pledge any receivables as collateral security for any loan or
indebtedness other than the Loan;

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<PAGE>

               (h) enter into any patient or resident care agreements with
patients or residents or with any other persons which deviate in any material
respect from the standard form customarily used by any Borrower at any Property;

               (i) change the terms of any of the Third Party Payors' Programs
or its normal billing payment or reimbursement policies and procedures with
respect thereto (including without limitation the amount and timing of finance
charges, fees and write-offs); provided a Borrower may enter into changes which
do not have a Material Adverse Effect; or

               (j) assign or transfer any of its interest in any Regulatory
Permit or Reimbursement Contract (including any right to payment thereunder) or
assign, transfer or remove or permit any other person to assign, transfer or
remove any records pertaining to any Property including, without limitation,
patient records, medical and clinical records (except for removal of such
patient records as directed by the patients owning such records).

                 ARTICLE V. INSURANCE, CASUALTY AND CONDEMNATION

          Section 5.1. Insurance.

          5.1.1. Insurance Policies.

               (a) Each Borrower shall obtain and maintain, or cause to be
maintained, insurance for such Borrower and each Property providing at least the
following coverages:

                    (i) coverage for loss or damage by fire, lightning, wind and
     such other perils as are included in a standard "all risk" or "special
     causes of loss" endorsement and against loss or damage by other risks and
     hazards covered by a standard property insurance policy including, without
     limitation, riot, civil commotion, vandalism, malicious mischief, burglary
     and theft on the Improvements and the personal property at the Property,
     including contingent liability from Operation of Building Laws, Demolition
     Costs and Increased Cost of Construction Endorsements, in each case (A) in
     an amount equal to one hundred percent (100%) of the "Full Replacement
     Cost," which for purposes of this Agreement shall mean actual replacement
     value (exclusive of costs of excavations, foundations, underground
     utilities and footings) with a waiver of depreciation, but the amount shall
     in no event be less than the Allocated Loan Amount of the Property; (B)
     containing an agreed amount endorsement with respect to the Improvements
     and personal property at the Property waiving all co-insurance provisions;
     (C) providing for no deductible in excess of Ten Thousand and No/100
     Dollars ($10,000) for all such insurance coverage; and (D) containing (a)
     an "Ordinance or Law Coverage" or "Enforcement" endorsement and (b)
     "demolition" insurance (in an amount equal to ten percent (10%) of the
     value of the Improvements) and "increased cost of construction" insurance
     (equal to twenty-five percent (25%) of the value of the Improvements, or
     such other amount approved by Lender, if any of the Improvements or the use
     of the applicable Property shall at any time constitute legal
     non-conforming structures or uses. In addition, each Borrower shall obtain:
     (y) if any portion of the Improvements is currently or at any time in the
     future located in a federally designated "special flood

                                       52

<PAGE>

     hazard area", flood hazard insurance in an amount equal to the lesser of
     (1) the "Full Replacement Cost" (defined above) but no less than the
     Allocated Loan Amount of the applicable Property or (2) the maximum amount
     of such insurance available under the National Flood Insurance Act of 1968,
     the Flood Disaster Protection Act of 1973 or the National Flood Insurance
     Reform Act of 1994, as each may be amended; and (z) earthquake insurance in
     amounts and in form and substance satisfactory to Lender in the event the
     applicable Property is located in an area with a high degree of seismic
     activity, provided that the insurance pursuant to clauses (y) and (z)
     hereof shall be on terms consistent with the comprehensive all risk
     insurance policy required under this subsection (i).

                    (ii) commercial general liability insurance against claims
     for personal injury, bodily injury, death or property damage occurring
     upon, in or about the Property, such insurance (A) to be on the so-called
     "occurrence" (or claims made form if the "occurrence" form is not available
     at commercially reasonable prices) form with a combined limit, excluding
     umbrella coverage, of not less than One Million and No/100 Dollars
     ($1,000,000) per occurrence with a minimum Three Million and No/100 Dollars
     ($3,000,000) general aggregate; (B) to continue at not less than the
     aforesaid limit until required to be changed by Lender by reason of changed
     economic conditions making such protection inadequate; and (C) to cover at
     least the following hazards: (1) premises and operations; (2) products and
     completed operations on an "if any" basis; (3) independent contractors; (4)
     blanket contractual liability for all legal contracts; (5) contractual
     liability covering the indemnities contained in Article 9 of the related
     Mortgage to the extent the same is available; (6) broad form property
     damage; (7) personal injury (including death resulting therefrom); (8)
     healthcare professional liability and (9) a liquor liability endorsement if
     alcoholic beverages are sold at the Property and (B) with a deductible of
     no more than $10,000.

                    (iii) business interruption insurance (A) with loss payable
     to Lender; (B) covering all risks required to be covered by the insurance
     provided for in subsection (i) above and (xi) below; (C) in an amount
     sufficient to avoid any co-insurance penalty and to provide proceeds which
     will cover a period of not less than eighteen (18) months from the date of
     casualty or loss; (D) containing an extended period of indemnity
     endorsement which provides that after the physical loss to the Property has
     been repaired, the continued loss of income will be insured until such
     income returns to the same level it was prior to the loss, or the
     expiration twenty-four (24) months from the date of the loss, whichever
     first occurs, and notwithstanding that the policy may expire prior to the
     end of such period. The amount of coverage shall be no less than
     $12,000,000;

                    (iv) at all times during which structural construction,
     repairs or alterations are being made with respect to the Improvements, and
     only if the applicable Property's coverage form does not otherwise apply,
     (A) owner's contingent or protective liability insurance covering claims
     not covered by or under the terms or provisions of the above mentioned
     commercial general liability insurance policy; and (B) the insurance
     provided for in subsection (i) above written in a so-called builder's risk
     completed value form (1) on a non-reporting basis, (2) against all risks
     insured against

                                       53

<PAGE>

     pursuant to subsection (i) above, (3) including permission to occupy the
     applicable Property, and (4) with an agreed amount endorsement waiving
     co-insurance provisions;

                    (v) workers' compensation, subject to the statutory limits
     of the state in which the applicable Property is located, and employer's
     liability insurance with a limit of at least One Hundred Thousand and
     No/100 Dollars ($100,000) per accident and per disease per employee, and
     Five Hundred Thousand and No/100 Dollars ($500,000) aggregate in respect of
     any work or operations on or about the Property, or in connection with the
     applicable Property or its operation (if applicable);

                    (vi) broad form boiler and machinery insurance (without
     exclusion for explosion) covering all boilers or other pressure vessels,
     machinery, and equipment located in, on or about any Property (including
     "system breakdown coverage") in an amount equal to or greater than the
     repair and full replacement cost of such equipment and insurance against
     loss of occupancy or use arising from any breakdown of such equipment in
     such amounts as are generally required by institutional lenders for
     properties comparable to the Properties;

                    (vii) umbrella liability insurance in addition to primary
     coverage in an aggregate amount not less than Nine Million and No/100
     Dollars ($9,000,000) on terms consistent with the commercial general
     liability insurance policy required under subsection (ii) above that cover
     all claims typically covered by an umbrella liability policy including all
     legal liability imposed upon any Borrower and all court costs and
     attorneys' fees connection with the ownership, operation and maintenance of
     the Properties;

                    (viii) motor vehicle liability coverage for all owned and
     non-owned vehicles, including rented and leased vehicles containing minimum
     limits per occurrence, including umbrella coverage, of One Million and
     No/100 Dollars ($1,000,000);

                    (ix) if alcoholic beverages are sold at the applicable
     Property, so-called "dramshop" insurance or other liability insurance
     required in connection with the sale of alcoholic beverages;

                    (x) insurance against employee dishonesty in an amount not
     less than $100,000 and with a deductible not greater than Ten Thousand and
     No/100 Dollars ($10,000);

                    (xi) If the insurance required under clause (i) above
     excludes coverage for acts of terrorism, each Borrower shall provide
     terrorism insurance coverage in an amount equal to the lesser of (1) the
     "Full Replacement Cost" (defined above) but no less than the Loan Amount or
     (2) the maximum amount of such insurance which is commercially reasonably
     available, unless at the time of determination: (i) it is not available at
     commercially reasonable rates; (ii) no Affiliates of Borrower are
     maintaining terrorism insurance with respect to another property; (iii)
     terrorism insurance is not commonly maintained by owners of other similar
     properties and (iv) terrorism

                                       54

<PAGE>

     insurance is not required for securitized loans similar to the Loan and
     secured by property similar to the Properties and with similar ratings as
     the Loan in the commercial mortgage-backed securities market; and

                    (xii) such other reasonable insurance and in such reasonable
     amounts as Lender from time to time may reasonably request against such
     other insurable hazards or casualties which at the time are commonly
     insured against for property similar to the Properties located in or around
     the region in which the Properties are located including, without
     limitation, sinkhole, mine subsidence and environmental insurance, due
     regard being given to the height and type of property, construction,
     location, use and occupancy.

               (b) All insurance provided for in Section 5.1.1(a) shall be
obtained under valid and enforceable policies (collectively, the "Policies" or
in the singular, the "Policy") and, to the extent not specified above, shall be
subject to the approval of Lender as to deductibles, loss payees and insureds.
Not less than ten (10) days prior to the expiration dates of the Policies
theretofore furnished to Lender, certificates of insurance evidencing the
Policies accompanied by evidence satisfactory to Lender of payment of the
premiums then due thereunder (the "Insurance Premiums"), shall be delivered by
Borrowers to Lender. Borrowers shall deliver certified copies of the Policies to
Lender within thirty (30) days of the Closing Date and thereafter upon request.
All Policies must have a term of not less than one (1) year.

               (c) Intentionally deleted.

               (d) All Policies of insurance provided for or contemplated by
Section 5.1.1(a), except for the Policy referenced in Section 5.1.1(a)(v), shall
name each applicable Borrower as the insured and Lender and its successors
and/or assigns as the additional insured, as its interests may appear, and in
the case of property damage, terrorism insurance, boiler and machinery, flood
and earthquake insurance, shall contain a so-called New York standard
non-contributing mortgagee clause in favor of Lender providing that the loss
thereunder shall be payable to Lender.

               (e) All Policies of insurance provided for in Section 5.1.1(a)
shall contain clauses or endorsements to the effect that:

                    (i) no act or negligence of any Borrower, or anyone acting
     for any Borrower, or of any tenant or other occupant, or failure to comply
     with the provisions of any Policy, which might otherwise result in a
     forfeiture of the insurance or any part thereof, shall in any way affect
     the validity or enforceability of the insurance insofar as Lender is
     concerned;

                    (ii) the Policy shall not be materially changed (other than
     to increase the coverage provided thereby) or canceled without at least
     thirty (30) days' written notice to Lender and any other party named
     therein as an additional insured;

                    (iii) Lender shall not be liable for any Insurance Premiums
     thereon or subject to any assessments thereunder; and

                                       55

<PAGE>

                    (iv) to the extent available at commercially reasonable
     rates, a waiver of subrogation rights as to Lender.

               (f) If at any time Lender is not in receipt of written evidence
that all insurance required hereunder is in full force and effect, Lender shall
have the right, without notice to any Borrower, to take such action as Lender
deems necessary to protect its interest in the Properties, including, without
limitation, the obtaining of such insurance coverage as Lender in its sole
discretion deems appropriate and all premiums incurred by Lender in connection
with such action or in obtaining such insurance and keeping it in effect shall
be paid by Borrowers to Lender upon demand and until paid shall be secured by
the Mortgages and shall bear interest at the Default Rate.

               (g) In the event of foreclosure of any Mortgage or other transfer
of title to any Property in extinguishment in whole or in part of the Debt, all
right, title and interest the applicable Borrower in and to the Policies that
are not blanket Policies then in force concerning the Properties and all
proceeds payable thereunder shall thereupon vest in the purchaser at such
foreclosure or Lender or other transferee in the event of such other transfer of
title.

          5.1.2. Insurance Company. The Policies shall be issued by one or more
domestic primary insurance companies, duly qualified in the jurisdiction where
the Properties are located and rated A: VII or better by A.M. Best and having a
claims-paying ability of at least "AA" or its equivalent by each of the Rating
Agencies, or by a syndicate of insurers through which at least seventy-five
percent (75%) of the coverage (if there are four (4) or fewer members of the
syndicate) or at least sixty percent (60%) of the coverage (if there are five
(5) or more members of the syndicate) is with carriers having such claims-paying
ability ratings (provided that all such carriers shall have claims-paying
ability ratings of not less than "A" or the equivalent by each of the Rating
Agencies).

          Section 5.2 Casualty and Condemnation.

          5.2.1. Casualty. If a Property shall sustain a Casualty, each Borrower
shall give prompt notice of such Casualty to Lender (provided that notice shall
not need to be required for a Casualty which causes less than $50,000 worth of
damage to a Property) and, provided Lender permits the applicable Borrower to
utilize the Net Proceeds, if any, for any such Restoration, shall promptly
commence and diligently prosecute to completion the repair and restoration of
any Property as nearly as possible to the condition such Property was in
immediately prior to such Casualty (a "Restoration") and otherwise in accordance
with Section 5.3. Borrowers shall pay all costs of such Restoration whether or
not such costs are covered by insurance. Lender may, but shall not be obligated
to, make proof of loss if not made promptly by any Borrower. In the event of a
Casualty where the loss does not exceed the Restoration Threshold, a Borrower
may settle and adjust such claim; provided that (a) no Event of Default has
occurred and is continuing and (b) such adjustment is carried out in a
commercially reasonable and timely manner. In the event of a Casualty where the
loss exceeds the Restoration Threshold or if an Event of Default then exists, a
Borrower may settle and adjust such claim only with the consent of Lender (which
consent shall not be unreasonably withheld or delayed) and Lender shall have the
opportunity to participate, at Borrowers' cost, in any such adjustments.
Notwithstanding any

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Casualty, each Borrower shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note and in this Agreement.

          5.2.2. Condemnation. Each Borrower shall give Lender prompt notice of
any actual or threatened Condemnation by any Governmental Authority of all or
any part of any Property (provided that notice shall not be required for a
Condemnation which could result in less than $50,000 in Condemnation Proceeds)
and shall deliver to Lender a copy of any and all papers served in connection
with such proceedings. Provided no Event of Default has occurred and is
continuing, in the event of a Condemnation where the amount of the taking does
not exceed the Restoration Threshold, a Borrower may settle and compromise such
Condemnation; provided that the same is effected in a commercially reasonable
and timely manner. In the event a Condemnation where the amount of the taking
exceeds the Restoration Threshold or if an Event of Default then exists, a
Borrower may settle and compromise the Condemnation only with the consent of
Lender (which consent shall not be unreasonably withheld or delayed) and Lender
shall have the opportunity to participate, at Borrowers' cost, in any litigation
and settlement discussions in respect thereof and each Borrower shall from time
to time deliver to Lender all instruments requested by Lender to permit such
participation. Each Borrower shall, at its expense, diligently prosecute any
such proceedings, and shall consult with Lender, its attorneys and experts, and
cooperate with them in the carrying on or defense of any such proceedings.
Notwithstanding any Condemnation, each Borrower shall continue to pay the Debt
at the time and in the manner provided for its payment in the Note and in this
Agreement. Lender shall not be limited to the interest paid on the Award by any
Governmental Authority but shall be entitled to receive out of the Award
interest at the rate or rates provided herein or in the Note. If any Property or
any portion thereof is taken by any Governmental Authority and provided Lender
permits the applicable Borrowers to utilize the Net Proceeds, if any, for the
Restoration of the applicable Property, each Borrower shall promptly commence
and diligently prosecute the Restoration of such Property and otherwise comply
with the provisions of Section 5.3. If such Property is sold, through
foreclosure or otherwise, prior to the receipt by Lender of the Award, Lender
shall have the right, whether or not a deficiency judgment on the Note shall
have been sought, recovered or denied, to receive the Award, or a portion
thereof sufficient to pay the Debt.

          Section 5.3 Delivery of Net Proceeds.

          5.3.1. Minor Casualty or Condemnation. If a Casualty or Condemnation
has occurred to a Property and the Net Proceeds shall be less than the
Restoration Threshold and the costs of completing the Restoration shall be less
than the Restoration Threshold, and provided no Event of Default shall have
occurred and remain uncured, the Net Proceeds will be disbursed by Lender to the
applicable Borrower. Promptly after receipt of the Net Proceeds, such Borrower
shall commence and satisfactorily complete with due diligence the Restoration in
accordance with the terms of this Agreement. If any Net Proceeds are received by
any Borrower and may be retained by such Borrower pursuant to the terms hereof,
such Net Proceeds shall, until completion of the Restoration, be held in trust
for Lender and shall be segregated from other funds of such Borrower to be used
to pay for the cost of Restoration in accordance with the terms hereof.

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          5.3.2. Major Casualty or Condemnation.

               (a) If a Casualty or Condemnation has occurred to a Property and
the Net Proceeds are equal to or greater than the Restoration Threshold or the
costs of completing the Restoration is equal to or greater than the Restoration
Threshold, Lender shall make the Net Proceeds available for the Restoration,
provided that each of the following conditions are met:

                    (i) no Event of Default shall have occurred and be
     continuing;

                    (ii) (A) in the event the Net Proceeds are insurance
     proceeds, less than twenty-five percent (25%) of the total floor area of
     the Improvements at the applicable Property has been damaged, destroyed or
     rendered unusable as a result of such Casualty or (B) in the event the Net
     Proceeds are an Award, less than ten percent (10%) of the land constituting
     applicable Property is taken, and such land is located along the perimeter
     or periphery of the Property, and no portion of the Improvements is the
     subject of the Condemnation;

                    (iii) (A) in the event of a Casualty, the Casualty resulted
     in an actual or constructive loss of less than twenty-five percent (25%) of
     the fair market value of the applicable Property or (B) in the event of a
     Condemnation, the Condemnation resulted in an actual or constructive loss
     of less than ten percent (10%) of the fair market value of the applicable
     Property.

                    (iv) Intentionally Omitted.

                    (v) The applicable Borrower shall commence the Restoration
     as soon as reasonably practicable (but in no event later than sixty (60)
     days after such Casualty or Condemnation or such longer period, not to
     exceed 120 days, as is reasonably necessary to adjust the claim or receive
     the award; provided, however, with respect to each Property the use of
     which is a legal non-conforming use under applicable Legal Requirements,
     the Restoration shall be commenced within such period as required by such
     Legal Requirements to maintain such status) and shall diligently pursue the
     same to satisfactory completion and in any event, as to each Property the
     use of which is a legal non-conforming use under applicable Legal
     Requirements, within such period as required by such Legal Requirements to
     maintain such status;

                    (vi) Lender shall be satisfied that any operating deficits
     and all payments of principal and interest under the Note will be paid
     during the period required for Restoration from (A) the Net Proceeds, or
     (B) other funds of the applicable Borrower;

                    (vii) Lender shall be satisfied that the Restoration will be
     completed on or before the earliest to occur of (A) the date six (6) months
     prior to the Maturity Date, (B) such time as may be required under
     applicable Legal Requirements in order to repair and restore the applicable
     Property to the condition it was in immediately prior to such Casualty or
     to as nearly as possible the condition it was in immediately prior

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     to such Condemnation, as applicable or (C) the expiration of the insurance
     coverage referred to in Section 5.1.1(a)(iii);

                    (viii) Lender shall be satisfied that after the Restoration,
     the fair market value of the applicable Property will be at least equal to
     the fair market value of such Property prior to the Casualty or
     Condemnation;

                    (ix) the applicable Property and the use thereof after the
     Restoration will be in substantial compliance with and permitted under all
     applicable Legal Requirements;

                    (x) the Restoration shall be done and completed by the
     applicable Borrower in an expeditious and diligent fashion and in
     substantial compliance with all applicable Legal Requirements; and

                    (xi) such Casualty or Condemnation, as applicable, does not
     result in the loss of access to the applicable Property or the related
     Improvements.

               (b) The Net Proceeds shall be paid directly to Lender and held by
Lender in the Net Proceeds Account, and until disbursed in accordance with the
provisions of this Section 5.3.2, shall constitute additional security for the
Debt. The Net Proceeds shall be disbursed by Lender to, or as directed by, the
applicable Borrower from time to time during the course of the Restoration, upon
receipt of evidence satisfactory to Lender that (A) all requirements set forth
in Section 5.3.2(a) have been satisfied, (B) all materials installed and work
and labor performed (except to the extent that they are to be paid for out of
the requested disbursement) in connection with the Restoration have been paid
for in full, and (C) there exist no notices of pendency, stop orders, mechanic's
or materialman's liens or notices of intention to file same, or any other liens
or encumbrances of any nature whatsoever on the applicable Property arising out
of the Restoration which have not either been fully bonded to the satisfaction
of Lender and discharged of record or in the alternative fully insured to the
reasonable satisfaction of Lender by the title company issuing the Title
Insurance Policy.

               (c) All plans and specifications required in connection with the
Restoration shall be subject to prior approval of Lender and an independent
architect selected by Lender (the "Casualty Consultant"). The plans and
specifications shall require that the Restoration be completed in a first-class
workmanlike manner at least equivalent to the quality and character of the
original work in the Improvements (provided, however, that in the case of a
partial Condemnation, the Restoration shall be done to the extent reasonably
practical after taking into account the consequences of such partial
Condemnation), so that upon completion thereof, the applicable Property is
restored to be of at least equal value and of substantially the same character
as prior to the Casualty. The applicable Borrower shall restore all Improvements
such that when they are fully restored and/or repaired, such Improvements and
their contemplated use substantially comply with all applicable material Legal
Requirements. The identity of the contractors, subcontractors and materialmen
engaged in the Restoration, as well as the contracts under which they have been
engaged, shall be subject to reasonable approval of Lender and the Casualty
Consultant. All costs and expenses incurred by Lender in connection with
recovering, holding and advancing the Net Proceeds for the Restoration
including, without

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limitation, reasonable attorneys' fees and disbursements and the Casualty
Consultant's fees and disbursements, shall be paid by Borrowers.

               (d) In no event shall Lender be obligated to make disbursements
of the Net Proceeds in excess of an amount equal to the costs actually incurred
from time to time for work in place as part of the Restoration, as certified by
the Casualty Consultant, less the Casualty Retainage. The term "Casualty
Retainage" shall mean, as to each contractor, subcontractor or materialman
engaged in the Restoration, an amount equal to ten percent (10%) of the costs
actually incurred for work in place as part of the Restoration, as certified by
the Casualty Consultant, until the Restoration has been completed. The Casualty
Retainage shall in no event, and notwithstanding anything to the contrary set
forth above in this Section 5.3.2(d), be less than the amount actually held back
by the applicable Borrower from contractors, subcontractors and materialmen
engaged in the Restoration. The Casualty Retainage shall not be released until
the Casualty Consultant certifies to Lender that the Restoration has been
completed in accordance with the provisions of this Section 5.3.2(d) and that
all approvals necessary for the re-occupancy and use of the applicable Property
have been obtained from all appropriate Governmental Authorities, and Lender
receives evidence satisfactory to Lender that the costs of the Restoration have
been paid in full or will be paid in full out of the Casualty Retainage;
provided, however, that Lender will release the portion of the Casualty
Retainage being held with respect to any contractor, subcontractor or
materialman engaged in the Restoration as of the date upon which the Casualty
Consultant certifies to Lender that the contractor, subcontractor or materialman
has satisfactorily completed all work and has supplied all materials in
accordance with the provisions of the contractor's, subcontractor's or
materialman's contract, the contractor, subcontractor or materialman delivers
the lien waivers and evidence of payment in full of all sums due to the
contractor, subcontractor or materialman as may be reasonably requested by
Lender or by the title company issuing the Title Insurance Policy, and Lender
receives an endorsement to the Title Insurance Policy insuring the continued
priority of the lien of the related Mortgage and evidence of payment of any
premium payable for such endorsement. If required by Lender, the release of any
such portion of the Casualty Retainage shall be approved by the surety company,
if any, which has issued a payment or performance bond with respect to the
contractor, subcontractor or materialman.

               (e) Lender shall not be obligated to make disbursements of the
Net Proceeds more frequently than once every calendar month.

               (f) If at any time the Net Proceeds or the undisbursed balance
thereof shall not, in the opinion of Lender in consultation with the Casualty
Consultant, be sufficient to pay in full the balance of the costs which are
reasonably estimated by the Casualty Consultant to be incurred in connection
with the completion of the Restoration, Borrowers shall deposit the deficiency
(the "Net Proceeds Deficiency") with Lender before any further disbursement of
the Net Proceeds shall be made. The Net Proceeds Deficiency deposited with
Lender shall be held by Lender in the Net Proceeds Account and shall be
disbursed for costs actually incurred in connection with the Restoration on the
same conditions applicable to the disbursement of the Net Proceeds, and until so
disbursed pursuant to this Section 5.3.2 shall constitute additional security
for the Debt.

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               (g) The excess, if any, of the Net Proceeds and the remaining
balance, if any, of the Net Proceeds Deficiency deposited with Lender after the
Casualty Consultant certifies to Lender that the Restoration has been completed
in accordance with the provisions of this Section 5.3.2, and the receipt by
Lender of evidence satisfactory to Lender that all costs incurred in connection
with the Restoration have been paid in full, shall be remitted by Lender to the
applicable Borrower, provided no Event of Default shall have occurred and shall
be continuing under any of the Loan Documents.

               (h) All Net Proceeds not required (i) to be made available for
the Restoration or (ii) to be returned to a Borrower as excess Net Proceeds
pursuant to Section 5.3.2(g) may be retained and applied by Lender toward the
payment of the Debt, whether or not then due and payable, in such order,
priority and proportions as Lender in its sole discretion shall deem proper
without any Prepayment Fee or Spread Maintenance Premium, or, at the discretion
of Lender, the same may be paid, either in whole or in part, to a Borrower for
such purposes as Lender shall designate.

                              ARTICLE VI. ACCOUNTS

          Section 6.1. Cash Management Account/Collection Account.

               (a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Cash Management Bank an account for the
collection of all income from each Property (the "Cash Management Account"). As
a condition precedent to the closing of the Loan, Borrowers shall cause the Cash
Management Bank to execute and deliver the Cash Management Agreement, which
provides, inter alia, that no party other than Lender and Servicer shall have
the right to withdraw funds from the Cash Management Account. The fees and
expenses of the Cash Management Bank shall be paid by Borrower. On or prior to
the Closing Date, the Borrowers shall establish and thereafter maintain with the
Collection Account Bank a lockbox account (the "Collection Account"). As a
conditon precedent to the closing of the Loan, Borrowers shall cause the
Collection Account Bank to execute and deliver the Collection Account Agreement,
which provides, inter alia, that no party other than Lender and Servicer shall
have the right to withdraw funds from the Collection Account. The fees and
expenses of the Collection Account Bank shall be paid by the Borrowers.

               (b) On the Closing Date, each Borrower shall deliver a written
notice (a "Payor Notice") in the form of Exhibit A to each Third Party Payor
that is under Medicare and Medicaid, which notice shall provide that (A) all
payments from such Third Party Payor shall thereafter be transmitted directly by
it to, and deposited directly into, the Collection Account and (B) such
instruction may not be rescinded unless and until such Third Party Payor
receives from a Borrower or Lender a copy of Lender's written consent to such
rescission. Each Borrower shall send a copy of each such written notice to
Lender and shall re-deliver such notices to each Third Party Payor until such
time as such Third Party Payor complies therewith. Each Borrower covenants to
cause all Rents relating to the Properties and all other money received by each
Borrower or Manager with respect to the Properties, including, but not limited
to, payments from all other Third Party Payors excluding Medicare and Medicaid
("Private Third Party Payors") and Self-Pay Receivables to be deposited in the
Collection Account by the end of the first (1st) Business Day following any
Borrower's or Manager's receipt thereof; and each Borrower shall

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be permitted to deposit in the Collection Account such additional amounts as any
Borrower may elect. Notwithstanding the foregoing, the parties acknowledge and
agree that with respect to each Property, the payments from the Private Third
Party Payors and the Self-Pay Receivables constituting checks will be remitted
by each Borrower once such Borrower has accumulated $1,000.00 worth of such
checks by overnight delivery to Manager. Manager shall hold such checks in trust
and will deposit such checks within one (1) Business Day of receipt thereof into
the Collection Account.

               (c) Lender shall have the right to replace the Cash Management
Bank or request the Borrower to replace the Collection Account Bank with any
other Eligible Institution in which Eligible Accounts may be maintained which
will promptly execute and deliver to Lender a Cash Management Agreement or
Collection Account Agreement, (and each Borrower shall cooperate with Lender in
connection with such transfer) in the event that (i) at any time the Cash
Management Bank or the Collection Account Bank ceases to be an Eligible
Institution or (ii) the Cash Management Bank or the Collection Account Bank
resigns or otherwise fails to comply with the Cash Management Agreement, as
applicable or (iii) there is a default by the Cash Management Bank or the
Collection Account Bank, as applicable under its Cash Management Agreement or
Collection Account Agreement. Notwithstanding the foregoing, Lender shall have
the right to hold the Collateral Accounts at any other Eligible Institution.

          Section 6.2. Distributions From Cash Management Account.

               (a) At the end of each Business Day, the Collection Account Bank
shall remit all available funds in the Collection Account to the Cash Management
Account.

               (b) On each Business Day, provided no Event of Default has
occurred and no Cash Management Period or Mezzanine Cash Management Period
exists, the Cash Management Bank shall withdraw all available funds in the Cash
Management Account and shall disburse such funds in the following order of
priority until such time as the maximum amount required to be deposited in each
Collateral Account has been so deposited:

                    (i) intentionally deleted;

                    (ii) to the Tax and Insurance Escrow Account, the amount
     required to be deposited therein pursuant to Section 6.3;

                    (iii) to the Debt Service Account, the amount required to be
     deposited therein pursuant to Section 6.4;

                    (iv) to the Capital Expenditure Reserve Account, the amount
     required to be deposited therein pursuant to Section 6.6; and

                    (v) any remaining amounts to the Mezzanine Cash Management
     Account; provided, however, if the Mezzanine Loan shall have been paid in
     full, any remaining amounts shall be disbursed to such account as the
     applicable Borrower may direct.

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               (c) If a Cash Management Period or Mezzanine Cash Management
Period exists but no Event of Default has occurred and is continuing, the Cash
Management Bank shall withdraw on each Business Day all available funds in the
Cash Management Account and shall disburse such funds in the following order of
priority until such time as the maximum amount required to be deposited in each
Collateral Account has been so deposited:

                    (i) intentionally deleted;

                    (ii) to the Tax and Insurance Escrow Account, the amount
     required to be deposited therein pursuant to Section 6.3;

                    (iii) to the Debt Service Account, the amount required to be
     deposited therein pursuant to Section 6.4;

                    (iv) to the Operating Expense Reserve Account, the amount
     required to be deposited therein pursuant to Section 6.5;

                    (v) to the Capital Expenditure Reserve Account, the amount
     required to be deposited therein pursuant to Section 6.6; and

                    (vi) any remaining amounts to be disbursed as follows:

                    (1) if no Cash Management Period exists and the Mezzanine
                    Loan is outstanding, to the Mezzanine Cash Management
                    Account;

                    (2) if a Cash Management Period exists and the Mezzanine
                    Loan is outstanding, to the Mezzanine Cash Management
                    Account in an amount equal to the Mezzanine Debt Service due
                    on the next Mezzanine Payment Date, with any amounts in
                    excess thereof, to the Excess Cash Reserve Account; or

                    (3) if a Cash Management Period exists and the Mezzanine
                    Loan is not outstanding, all remaining amounts to the Excess
                    Cash Reserve Account.

               (d) If an Event of Default has occurred and is continuing, Lender
shall promptly notify Cash Management Bank of such Event of Default and Lender
may, in addition to all other rights and remedies provided for under the Loan
Documents, disburse and apply the amounts in the Cash Management Account toward
the payment of the Debt and/or toward the payment of Basic Carrying Costs,
Operating Expenses or Capital Expenditures, in such sequence as Lender shall
elect in its sole discretion.

               (e) If on any Payment Date, any Collateral Account has not been
fully funded in the applicable amount described in Section 6.2(b) or Section
6.2(c), as applicable, Borrowers shall deposit into the Cash Management Account
on such Payment Date the amount of such deficiency. If Borrowers shall fail to
make such deposit, the same shall constitute an

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Event of Default and, in addition to all other rights and remedies provided for
under the Loan Documents, Lender may disburse and apply the amounts in the Cash
Management Account toward the payment of the Debt and/or toward the payment of
Basic Carrying Costs, Operating Expenses or Capital Expenditures, in such
sequence as Lender shall elect in its sole discretion.

          Section 6.3. Tax and Insurance Escrow Account.

               (a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Cash Management Bank an account for the purpose
of reserving amounts payable by any Borrower in respect of Taxes and Insurance
Premiums for each Property (the "Tax and Insurance Escrow Account").

               (b) On or prior to the Closing Date, the Tax and Insurance Escrow
Account shall be funded in an amount equal to the sum of (i) an amount
sufficient to pay all Taxes for the Properties by the thirtieth (30th) day prior
to the date they come due, assuming subsequent monthly fundings on Payment Dates
of one-twelfth (1/12th) of projected annual Taxes, plus (ii) an amount
sufficient to pay all Insurance Premiums for the Properties by the thirtieth
(30th) day prior to the date they come due, assuming subsequent monthly fundings
on Payment Dates of one-twelfth (1/12th) of projected Insurance Premiums.

               (c) On each subsequent Business Day during an Interest Accrual
Period, the Cash Management Bank shall withdraw all available funds in the Cash
Management Account and shall disburse such funds into the Tax and Insurance
Escrow Account in accordance with the provisions set forth in Section 6.2 until
an amount equal to the sum of:

                    (A) one-twelfth (1/12th) of the Taxes for the Properties
     that Lender reasonably estimates, based on information provided by
     Borrowers, will be payable during the next ensuing twelve (12) months, plus

                    (B) one-twelfth (1/12th) of the Insurance Premiums for the
     Properties that Lender reasonably estimates, based on information provided
     by Borrowers, will be payable during the next ensuing twelve (12) months;

has been deposited into the Tax and Insurance Escrow Account provided, however,
that if at any time Lender reasonably determines that the amount in the Tax and
Insurance Escrow Account will not be sufficient to accumulate (upon payment of
subsequent monthly amounts in accordance with the provisions of this Agreement)
the full amount of all installments of Taxes and Insurance Premiums for the
Properties by the date on which such amounts come due, then Lender shall notify
Borrowers of such determination and Borrowers shall increase the monthly
payments to the Tax and Insurance Escrow Account by the amount that Lender
reasonably estimates is sufficient to achieve such accumulation.

               (d) Each Borrower shall provide Lender with copies of all tax and
insurance bills relating to each Property promptly after the applicable
Borrower's receipt thereof. Lender will apply amounts in the Tax and Insurance
Escrow Account toward the purposes for which such amounts are deposited therein.
In connection with the making of any payment from the Tax and Insurance Escrow
Account, Lender may cause such payment to be made according to any bill,
statement or estimate procured from the appropriate public office or insurance
carrier,

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without inquiry into the accuracy of such bill, statement or estimate or into
the validity of any tax, assessment, sale, forfeiture, tax lien or title or
claim thereof unless given written advance notice by a Borrower of such
inaccuracy, invalidity or other contest.

          Section 6.4. Debt Service Account.

               (a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Cash Management Bank an account for the purpose
of reserving amounts payable by Borrowers in respect of Debt Service (the "Debt
Service Account").

               (b) On each Business Day during an Interest Accrual Period, the
Cash Management Bank shall withdraw all available funds in the Cash Management
Account and shall disburse such funds into the Debt Service Account in
accordance with the provisions set forth in Section 6.2 until an amount equal to
the amount of all scheduled or delinquent interest on the Loan and other amounts
due and payable under the Loan Documents on the next Payment Date has been
deposited into the Debt Service Account. To the extent Lender receives any
prepayments of the Debt in an Interest Accrual Period on a date other than a
Payment Date, the total amount of such prepayment shall be deposited into the
Debt Service Account, together with all other sums payable with respect to such
prepayment including, but not limited to, any Prepayment Fee and all interest
that would have accrued from the date of such prepayment through the applicable
Payment Date. Any Net Proceeds actually received by Lender shall be deposited
directly into the Net Proceeds Account pursuant to Section 6.8 hereof.

          Section 6.5. Operating Expense Reserve Account.

               (a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Cash Management Bank an account for the purpose
of reserving amounts in respect of Operating Expenses (the "Operating Expense
Reserve Account").

               (b) On each Business Day during a Cash Management Period or a
Mezzanine Cash Management Period, the Cash Management Bank shall withdraw all
available funds in the Cash Management Account and shall disburse such funds
into the Operating Expense Reserve Account in accordance with the provisions set
forth in Section 6.2 until an amount equal to the funds necessary to pay all
Operating Expenses which are (A) to be incurred during the applicable Interest
Accrual Period in accordance with the Annual Budget, or (B) certified by
Borrowers from time to time and approved by Lender in its sole discretion, has
been deposited into the Operating Expense Reserve Account.

               (c) Upon the request of a Borrower at any time, provided that no
Event of Default has occurred, Lender shall remit to such Borrower from the
Operating Expense Reserve Account amounts to permit such Borrower to pay (or to
reimburse such Borrower) for Operating Expenses incurred by such Borrower in
connection with any of the Properties, provided that:

                    (i) Such Borrower shall deliver to Lender invoices
     evidencing that the costs for which such disbursements are requested are
     due and payable;

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                    (ii) Such Borrower shall deliver to Lender an Officer's
     Certificate confirming that all such costs are within the limits of the
     Annual Budget and all such costs have been previously paid by such Borrower
     or will be paid from the proceeds of the requested disbursement; and

                    (iii) Lender may condition the making of a requested
     disbursement on reasonable evidence establishing that each Borrower has
     applied any amounts previously received by it in accordance with this
     Section for the expenses to which specific draws made hereunder relate.

          Section 6.6. Capital Expenditure Reserve Account.

               (a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Cash Management Bank an account for the purpose
of reserving amounts in respect of Capital Expenditures (the "Capital
Expenditure Reserve Account").

               (b) On each Business Day, the Cash Management Bank shall withdraw
all available funds in the Cash Management Account and shall disburse such funds
into the Capital Expenditure Reserve Account in accordance with the provisions
set forth in Section 6.2 until an amount equal to the Monthly Capital
Expenditure Reserve Amount has been deposited therein.

               (c) Upon the request of any Borrower at any time (but not more
often than once per calendar month), provided no Event of Default has occurred
and is continuing, Lender shall remit to such Borrower from the Capital
Expenditure Reserve Account amounts to permit such Borrower to pay (or to
reimburse such Borrower) for Capital Expenditures made in accordance herewith;
provided that:

                    (i) Such Borrower shall deliver to Lender invoices
     evidencing that the costs for which such disbursements are requested are
     due and payable;

                    (ii) Such Borrower shall deliver to Lender an Officer's
     Certificate confirming that all such costs have been previously paid by
     such Borrower or will be paid from the proceeds of the requested
     disbursement; and

                    (iii) Lender may condition the making of a requested
     disbursement on (1) reasonable evidence establishing that each Borrower has
     applied any amounts previously received by it in accordance with this
     Section for the expenses to which specific draws made hereunder relate, (2)
     a reasonably satisfactory site inspection, and (3) receipt of lien releases
     and waivers from any contractors, subcontractors and others in connection
     with such amounts.

          Section 6.7. Deferred Maintenance and Environmental Escrow Account.

               (a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Cash Management Bank an account for the purpose
of reserving

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amounts anticipated to be required to correct Deferred Maintenance Conditions
(the "Deferred Maintenance and Environmental Escrow Account").

               (b) On the Closing Date, Borrowers shall deposit into the
Deferred Maintenance and Environmental Escrow Account, from the proceeds of the
Loan, an amount equal to the Deferred Maintenance Amount.

               (c) Borrowers shall correct the Deferred Maintenance Conditions
in a diligent, workmanlike manner and shall complete the same within twelve (12)
months of the Closing Date. Upon the request of a Borrower at any time (but not
more often than once per calendar month), provided no Event of Default has
occurred and is continuing, Lender shall disburse to such Borrower from the
Deferred Maintenance and Environmental Escrow Account amounts to permit such
Borrower to pay (or to reimburse such Borrower) for reasonable costs and
expenses incurred in order to correct Deferred Maintenance Conditions; provided
that:

                    (i) Such Borrower shall deliver to Lender invoices
     evidencing that the costs for which such disbursements are requested are
     due and payable;

                    (ii) Such Borrower shall deliver to Lender an Officer's
     Certificate confirming that all such costs have been previously paid by
     Borrower or will be paid from the proceeds of the requested disbursement;

                    (iii) Lender may condition the making of a requested
     disbursement on (1) reasonable evidence establishing that each Borrower has
     applied any amounts previously received by it in accordance with this
     Section for the expenses to which specific draws made hereunder relate, (2)
     a reasonably satisfactory site inspection, and (3) receipt of lien releases
     and waivers from any contractors, subcontractors and others with respect to
     such amounts; and

                    (iv) as to any Deferred Maintenance Condition, the
     applicable Borrower shall only be entitled to a disbursement of the amount
     which equals the cost for such Deferred Maintenance Condition.

          Section 6.8. Net Proceeds Account.

               (a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Cash Management Bank an account for the purpose
of depositing any Net Proceeds (the "Net Proceeds Account") from the Properties.

               (b) Provided no Event of Default has occurred, funds in the Net
Proceeds Account shall be applied in accordance with Section 5.3.

          Section 6.9. Excess Cash Reserve Account.

               (a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Cash Management Bank an account for the purpose
of depositing

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any amounts remaining in the Cash Management Account after the deposits required
by Section 6.2(c)(i) through (v) have been made (the "Excess Cash Reserve
Account").

               (b) Provided no Event of Default exists, if there are
insufficient funds in the Cash Management Account for the deposits required
pursuant to Section 6.2(c)(i) through (v), the Cash Management Bank, at the
direction of Lender or Servicer, shall withdraw funds from the Excess Cash
Reserve Account in the amount of such insufficiency for payment of same in the
order and priority required by Section 6.2(c)(i) through (v). Provided no Event
of Default exists, any funds remaining in the Excess Cash Reserve Account shall
be released upon the expiration of the Cash Management Period as follows : (i)
if no Mezzanine Cash Management Period exists, to the Borrowers or (ii) if a
Mezzanine Cash Management Period exists, to the Mezzanine Cash Management
Account.

          Section 6.10. Intentionally deleted.

          Section 6.11. Account Collateral.

               (a) Each Borrower hereby grants a perfected first-priority
security interest in favor of Lender in and to the Account Collateral (other
than the Collection Account) as security for the Debt, together with all rights
of a secured party with respect thereto. Each Collateral Account shall be an
Eligible Account under the sole dominion and control of Lender and shall be in
the name of Borrowers, as pledgors, and Lender, as pledgee. Each Borrower shall
have no right to make withdrawals from any of the Collateral Accounts. Funds in
the Collateral Accounts shall not be commingled with any other monies at any
time. Each Borrower shall execute any additional documents that Lender in its
reasonable discretion may require and shall provide all other evidence
reasonably requested by Lender to evidence or perfect its first-priority
security interest in the Account Collateral (other than the Collection Account).

               (b) The insufficiency of amounts contained in the Collateral
Accounts shall not relieve any Borrower from its obligation to fulfill all
covenants contained in the Loan Documents.

               (c) During the continuance of an Event of Default, Lender may, in
its sole discretion, apply funds in the Collateral Accounts, and funds resulting
from the liquidation of Permitted Investments contained in the Collateral
Accounts, toward the payment of the Debt and/or toward the payment of Basic
Carrying Costs, Operating Expenses or Capital Expenditures in such sequence as
Lender shall elect in its sole discretion.

          Section 6.12. Permitted Investments.

               (a) So long as no Event of Default shall be continuing, Borrowers
shall be permitted to direct the investment of the funds from time to time held
in the Collateral Accounts (other than the Collection Account) in Permitted
Investments and to sell or liquidate such Permitted Investments and reinvest
proceeds from such sale or liquidation in other Permitted Investments (but
Lender shall have no liability whatsoever in respect of any failure by the Cash
Management Bank to do so), with all such proceeds and reinvestments to be held
in the applicable Collateral Account; provided, however, that the maturity of an
adequate portion of the Permitted Investments on deposit in the Collateral
Accounts shall be no later than the Business

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Day immediately preceding the date on which such funds are required to be
withdrawn therefrom pursuant to this Agreement, and provided further that
Borrowers shall remit into the applicable Collateral Account an amount equal to
any losses realized on Permitted Investments contained therein within five (5)
Business Days of the date of such loss. Funds in the Collection Account shall
not be invested. No Permitted Investment shall be liquidated at a loss at the
direction of any Borrower except to the extent necessary to make a required
payment to Lender on a Payment Date.

               (b) All income and gains from the investment of funds in the
Collateral Accounts shall be retained in the Collateral Accounts from which they
were derived. As between Borrowers and Lender, Borrowers shall treat all income,
gains and losses from the investment of amounts in the Collateral Accounts as
its income or loss for federal, state and local income tax purposes.

               (c) After the Debt has been paid in full, the Collateral Accounts
shall be closed and the balances therein, if any, shall be paid to Borrowers.

          Section 6.13. Bankruptcy.

          Each Borrower and Lender acknowledge and agree that upon the filing of
a bankruptcy petition by or against any Borrower under the Bankruptcy Code, the
Account Collateral and the Operating Income (whether then already in the
Collateral Accounts, or then due or becoming due thereafter) shall be deemed not
to be property of such Borrower's bankruptcy estate within the meaning of
Section 541 of the Bankruptcy Code. However, if a court of competent
jurisdiction determines that, notwithstanding the foregoing characterization of
the Account Collateral and the Operating Income by any Borrower and Lender, the
Account Collateral and/or the Operating Income do constitute property of such
Borrower's bankruptcy estate, then Borrowers and Lender further acknowledge and
agree that all such Operating Income, whether due and payable before or after
the filing of the petition, are and shall be cash collateral of Lender. Each
Borrower acknowledges that Lender does not consent to any Borrower's use of such
cash collateral and that, in the event Lender elects (in its sole discretion) to
give such consent, such consent shall only be effective if given in writing
signed by Lender. Except as provided in the immediately preceding sentence, each
Borrower shall not have the right to use or apply or require the use or
application of such cash collateral (i) unless the applicable Borrower shall
have received a court order authorizing the use of the same, and (ii) the
applicable Borrower shall have provided such adequate protection to Lender as
shall be required by the bankruptcy court in accordance with the Bankruptcy
Code.

          SECTION 6.14. Letters of Credit.

               (a) In lieu of making the payments to any of the Collateral
Accounts (other than the Debt Service, Operating Expense Reserve Account or
Excess Cash Reserve Account), Borrowers may deliver to Lender a Letter of Credit
in accordance with the provisions of this Section. Additionally, Borrowers may
deliver to Lender a Letter of Credit in accordance with the provisions of this
Section in lieu of deposits previously made to the Collateral Accounts (other
than the Debt Service, Operating Expense Reserve Account or Excess Cash Reserve
Account). The aggregate amount of any Letter of Credit and cash on deposit with
respect to any

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of such Collateral Accounts shall at all times be at least equal to the
aggregate amount which each Borrower is required to have on deposit in such
Collateral Account pursuant to this Agreement through the end of the calendar
year in which the Letter of Credit is delivered, as reasonably estimated by
Lender (and in the case of Taxes and Insurance Premiums in no event less than an
amount equal to one year of Insurance Premiums and estimated Taxes for the
Properties). In determining the aggregate amount of any Letter of Credit and
cash required to be delivered to Lender in respect of the Capital Expenditure
Reserve Account, such aggregate amounts shall equal all amounts required to be
deposited hereunder through the end of the calendar year in which the Letter of
Credit is delivered, less amounts expended by any Borrower for Capital
Expenditures for which any Borrower has satisfied the conditions to withdrawal
from the Capital Expenditure Reserve Account. In the event that a Letter of
Credit is delivered in lieu of any deposits to the Tax and Insurance Reserve
Account, Borrowers shall be responsible for the payment of Taxes or Insurance
Premiums for the Properties, as applicable, and Lender shall not be responsible
therefor.

               (b) Borrowers shall give Lender no less than thirty (30) days
notice of a Borrower's election to deliver a Letter of Credit and Borrowers
shall pay to Lender all of Lender's reasonable out-of-pocket costs and expenses
in connection therewith. Each Borrower shall not be entitled to draw from any
such Letter of Credit. Upon thirty (30) days notice to Lender, a Borrower may
replace a Letter of Credit with a cash deposit to the applicable Collateral
Account if a Letter of Credit has been outstanding for more than six (6) months.
Prior to the return of a Letter of Credit, Borrowers shall deposit an amount
equal to the amount that would have accumulated in the applicable Collateral
Account and not been disbursed in accordance with this Agreement if such Letter
of Credit had not been delivered.

               (c) Each Borrower shall provide Lender with notice of any
increases in the annual payments for Taxes, Insurance Premiums or Capital
Expenditures for any of the Properties thirty (30) days prior to the effective
date of any such increase and any applicable Letter of Credit shall be increased
by such increased amount at least ten (10) days prior to the effective date of
such increase.

          Section 6.15. Provisions Regarding Letters of Credit.

          6.15.1. Security for Debt. Each Letter of Credit delivered under this
Agreement shall be additional security for the payment of the Debt. Upon the
occurrence of a Default or an Event of Default, Lender shall have the right, at
its option, to draw on any Letter of Credit and to apply all or any part thereof
to the payment of the items for which such Letter of Credit was established or
to apply each such Letter of Credit to payment of the Debt in such order,
proportion or priority as Lender may determine. Any such application to the Debt
shall be subject to the Spread Maintenance Premium.

          6.15.2. Additional Rights of Lender. In addition to any other right
Lender may have to draw upon a Letter of Credit pursuant to the terms and
conditions of this Agreement, Lender shall have the additional rights to draw in
full any Letter of Credit: (a) if Lender has received a notice from the issuing
bank that the Letter of Credit will not be renewed and a substitute Letter of
Credit is not provided at least thirty (30) days prior to the date on which the
outstanding Letter of Credit is scheduled to expire; (b) upon receipt of notice
from the issuing

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bank that the Letter of Credit will be terminated (except if the termination of
such Letter of Credit is permitted pursuant to the terms and conditions of this
Agreement or a substitute Letter of Credit is provided); or (c) if the bank
issuing the Letter of Credit shall cease to be an Eligible Institution and any
Borrower fails to deliver a replacement Letter of Credit within ten (10) days of
the date that the issuing bank is no longer an Eligible Institution.
Notwithstanding anything to the contrary contained in the above, Lender is not
obligated to draw any Letter of Credit upon the happening of an event specified
in (a), (b) or (c) above and shall not be liable for any losses sustained by any
Borrower due to the insolvency of the bank issuing the Letter of Credit if
Lender has not drawn the Letter of Credit.

                        ARTICLE VII. PROPERTY MANAGEMENT

          Section 7.1. The Management Agreement.

          Each Borrower shall cause Manager to manage the Properties in
accordance in all material respects with the Management Agreements. Each
Borrower shall (i) diligently perform and observe in all material respects all
of the terms, covenants and conditions of the Management Agreements on the part
of any Borrower to be performed and observed (ii) promptly notify Lender of any
default by Manager under the provisions of the Management Agreements and (iii)
promptly notify Lender of any notice to any Borrower of any default by any
Borrower in the performance or observance of any of the terms, covenants or
conditions of the Management Agreements on the part of any Borrower to be
performed and observed. If any Borrower shall default in the performance or
observance of any material term, covenant or condition of any Management
Agreement on the part of any Borrower to be performed or observed, then, without
limiting Lender's other rights or remedies under this Agreement or the other
Loan Documents, and without waiving or releasing any Borrower from any of its
obligations hereunder or under such Management Agreement, Lender shall have the
right, but shall be under no obligation, to pay any sums and to perform any act
as may be appropriate to cause all the material terms, covenants and conditions
of such Management Agreement on the part of any Borrower to be performed or
observed.

          Section 7.2. Prohibition Against Termination or Modification.

          Each Borrower shall not surrender, terminate, cancel, amend, modify,
renew or extend any Management Agreement, or enter into any other agreement
relating to the management or operation of any Property with any Manager or any
other Person, or consent to the assignment by any Manager of its interest under
the relevant Management Agreement, in each case without the express consent of
Lender, which consent may be granted or denied in Lender's sole discretion;
provided, however, with respect to a new manager such consent may be conditioned
upon Borrowers delivering a Rating Agency Confirmation as to such new manager
and management agreement. If at any time Lender consents to the appointment of a
new manager, such new manager and Borrowers shall, as a condition of Lender's
consent, execute a subordination of management agreement in the form then used
by Lender. The management fees and other fees reserved under the Management
Agreements shall not exceed in the aggregate the prevailing rate for properties
of comparable size, quality and tenant mix in the market in which the Properties
are located. In no event shall such fees exceed seven percent (7%) of the
Operating Income.

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          Section 7.3. Replacement of Manager.

          Lender shall have the right to require any Borrower to terminate any
Management Agreement and to replace any Manager with a Person chosen by a
Borrower and approved by Lender, upon the occurrence of any one or more of the
following events: (i) at any time following the occurrence of an Event of
Default, (ii) if a Manager shall be in default under the relevant Management
Agreement or the relevant Assignment of Management Agreement beyond any
applicable notice and cure period, (iii) if at any time a Manager has engaged in
gross negligence, malfeasance, fraud or willful misconduct and (iv) if the Debt
Service Coverage Ratio is less than 1.25:1.00.

                             ARTICLE VIII. TRANSFERS

          Section 8.1. Transfer of the Properties.

          Each Borrower may not transfer all of the Properties to another party
(i) unless Lender shall have consented in writing to such transfer which consent
may be granted or denied in Lender's sole discretion, (ii) after a
Securitization has occurred, Rating Agency Confirmation is obtained, (iii)
acceptable opinions relating to such transfer shall have been delivered by
Borrowers to Lender and to the Rating Agencies (including without limitation tax
and non-consolidation opinions), (iv) the transferee assumes in writing all
obligations of the transferor under the Loan Documents and executes and delivers
such other documentation as may be required by Lender or the Rating Agencies,
(v) Borrowers pay an assumption fee equal to one half of one percent (.5%) of
the Loan Amount and (vi) Borrowers pay all reasonable expenses incurred by
Lender in connection with such transfer.

          Section 8.2. Transfer of Equity Interests.

               (a) ny transfer of any direct or indirect equity interests in any
Borrower shall be prohibited unless (i) Lender shall have consented in writing
to such transfer or transfers which may be granted or denied in Lender's sole
discretion, (ii) Rating Agency Confirmation is obtained, (iii) acceptable
opinions relating to such transfer or transfers shall have been delivered by
Borrowers to Lender and the Rating Agencies (including, without limitation, tax
and non-consolidation opinions), and (iv) Borrowers pay all reasonable expenses
incurred by Lender in connection with such transfer or transfers.

               (b) Notwithstanding the foregoing clause (a): (i) if the equity
owners of the Parent desire to cause a Change of Control (as defined in the
Master Guaranty) in the Parent after a Securitization has occurred, subject to
the terms of the Master Guaranty, transfers of equity interests in the Parent to
a Qualified Equity Transferee shall be permitted and (ii) transfers of equity
interests in the Parent which do not constitute a Change of Control (as defined
in the Master Guaranty), to the extent permitted under the Master Guaranty,
shall be permitted..

          Section 8.3. Lender's Consent Rights.

          Lender shall not be required to demonstrate any actual impairment of
its security or any increased risk of default hereunder in order to declare the
Debt immediately due and payable upon a Transfer without Lender's consent. This
provision shall apply to every Transfer,

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<PAGE>

other than any Transfer permitted pursuant to Sections 8.1 and 8.2, regardless
of whether voluntary or not, or whether or not Lender has consented to any
previous Transfer.

                 ARTICLE IX. Sale and Securitization of Mortgage

          Section 9.1. Sale of Mortgages and Securitization.

               (a) Lender shall have the right (i) to sell or otherwise transfer
the Loan or any portion thereof as a whole loan, (ii) to sell participation
interests in the Loan or (iii) to securitize the Loan or any portion thereof in
a single asset securitization or a pooled loan securitization. (The transaction
referred to in clauses (i), (ii) and (iii) shall hereinafter be referred to
collectively as "Secondary Market Transactions" and the transactions referred to
in clause (iii) shall hereinafter be referred to as a "Securitization." Any
certificates, notes or other securities issued in connection with a
Securitization are hereinafter referred to as "Securities").

               (b) If requested by Lender, each Borrower shall assist Lender in
satisfying the market standards to which Lender customarily adheres or which may
be reasonably required in the marketplace or by the Rating Agencies in
connection with any Secondary Market Transactions, including, without
limitation, to:

                    (i) (A) provide updated financial and other information with
     respect to the Properties, the business operated at the Properties, each
     Borrower and the Managers, (B) provide updated budgets relating to the
     Properties and (C) provide updated appraisals, market studies,
     environmental assessments (Phase I's and, if appropriate, Phase II's),
     property condition reports and other due diligence investigations of the
     Properties (the "Updated Information"), together, if customary, with
     appropriate verification of the Updated Information through letters of
     auditors or opinions of counsel acceptable to Lender and the Rating
     Agencies;

                    (ii) provide opinions of counsel, which may be relied upon
     by Lender, the Rating Agencies and their respective counsel, agents and
     representatives, as to non-consolidation or any other opinion customary in
     Secondary Market Transactions or required by the Rating Agencies with
     respect to the Properties and Borrowers and Affiliates, which counsel and
     opinions shall be satisfactory to Lender and the Rating Agencies;

                    (iii) provide updated, as of the closing date of the
     Secondary Market Transaction, representations and warranties made in the
     Loan Documents and such additional representations and warranties as the
     Rating Agencies may require; and

                    (iv) execute amendments to the Loan Documents and any
     Borrower's organizational documents reasonably requested by Lender;
     provided, however, that such Borrower shall not be required to modify or
     amend any Loan Document if such modification or amendment would (A) change
     the interest rate, the stated maturity or the amortization of principal as
     set forth herein or in the Note, or (B) modify or amend any other material
     economic term of the Loan.

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<PAGE>

               (c) Each Borrower acknowledges that the Loan may be further
divided into two or more separate notes (or components) that correspond to one
or more tranches of certificates created in a Securitization and each Borrower
agrees to cooperate with Lender in connection therewith. Such notes or note
components may be assigned different interest rates, so long as the weighted
average of such interest rates equals the applicable Interest Rate; provided,
that each Borrower recognizes that, in the case of partial prepayments
associated with principal reduction funded from Net Proceeds, the application of
amounts to principal following an Event of Default under the Loan, or any other
prepayment of a portion of the Loan by any Borrower, the weighted average
interest rate of the Loan may increase because principal may be applied
sequentially, starting with the most senior tranche of certificates. In
addition, each Borrower acknowledges and agrees that Lender shall have the right
to split the Note into an "A" note and a "B" note and each Borrower agrees to
cooperate with Lender in connection therewith in connection with the foregoing
so long as the weighted average interest rate of the "A" note and the "B" note
equals the applicable Interest Rate; provided, that each Borrower recognizes
that, in the case of partial prepayments associated with principal reduction
funded from Net Proceeds, the application of amounts to principal following an
Event of Default under the Loan, or any other prepayment of a portion of the
Loan by any Borrower, the weighted average interest rate of the Loan may
increase because in certain circumstances principal may be applied sequentially
to the "A" and the "B" note.

               (d) If, pursuant to this Section, any interest in this Agreement
or the Note is transferred to any transferee that is not a U.S. Person, the
Lender shall cause such transferee, concurrently with the effectiveness of such
transfer, to furnish to the Lender and Borrowers either Form W-8BEN or Form
W-8ECI or any other form in order to establish an exemption from, or reduction
in the rate of, U.S. withholding tax on all interest payments hereunder, and to
agree (for the benefit of Lender and Borrowers) to provide the Lender a new Form
W-8BEN or Form W-8ECI or any forms reasonably requested in order to establish an
exemption, or reduction in the rate of, U.S. withholding tax upon the expiration
or obsolescence of any previously delivered form and comparable statements in
accordance with applicable U.S. laws and regulations and amendments duly
executed and completed by such transferee, and to comply from time to time with
all applicable U.S. laws and regulations with regard to such withholding tax
exemption.

          Section 9.2. Securitization Indemnification.

               (a) Each Borrower understands that information provided to Lender
by any Borrower and its agents, counsel and representatives may be included in
disclosure documents in connection with the Securitization, including, without
limitation, an offering circular, a prospectus, prospectus supplement, private
placement memorandum or other offering document (each, an "Disclosure Document")
and may also be included in filings with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the "Securities Act"), or
the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and
may be made available to investors or prospective investors in the Securities,
the Rating Agencies, and service providers relating to the Securitization.

               (b) Upon request, each Borrower shall provide in connection with
each of (i) a preliminary and a final private placement memorandum or (ii) a
preliminary and final

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prospectus or prospectus supplement, as applicable, an agreement (A) certifying
that each Borrower has examined such Disclosure Documents specified by Lender
and that each such Disclosure Document, as it relates to each Borrower, Borrower
Affiliates, the Properties, Manager and all other aspects of the Loan (the
"Relevant Material"), does not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements made,
in the light of the circumstances under which they were made, not misleading,
(B) indemnifying Lender (and for purposes of this Section 9.2, Lender hereunder
shall include its officers and directors and each Person that controls Lender
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, collectively, the "Ventas Group"), the party that has filed the
registration statement relating to the Securitization (the "Registration
Statement"), each of its directors, each of its officers who have signed the
Registration Statement and each Person that controls such party within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
(collectively, the "Underwriter Group") for any losses, claims, damages or
liabilities (collectively, the "Liabilities") to which Lender, Ventas Group or
the Underwriter Group may become subject insofar as the Liabilities arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Relevant Material or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated in the Relevant Material or necessary in order to make the
statements in the Relevant Material, in light of the circumstances under which
they were made, not misleading and (C) agreeing to reimburse Lender, the Ventas
Group and/or the Underwriter Group for any legal or other expenses reasonably
incurred by Lender, the Ventas Group and the Underwriter Group in connection
with investigating or defending the Liabilities; provided, however, that each
Borrower will be liable in any such case under clauses (B) or (C) above only to
the extent that any such loss claim, damage or liability arises out of or is
based upon any such untrue statement or omission made therein in reliance upon
and in conformity with information furnished to Lender by or on behalf of any
Borrower in connection with the preparation of the Disclosure Document or in
connection with the underwriting or closing of the Loan, including, without
limitation, financial statements of any Borrower, operating statements, rent
rolls, appraisals, market studies, environmental site assessment reports and
property condition reports with respect to the Properties. This indemnity will
be in addition to any liability which any Borrower may otherwise have.

               (c) In connection with Exchange Act Filings, each Borrower shall
(i) indemnify Lender, the Ventas Group and the Underwriter Group for Liabilities
to which Lender, the Ventas Group or the Underwriter Group may become subject
insofar as the Liabilities arise out of or are based upon the omission or
alleged omission to state in the Disclosure Document a material fact required to
be stated in the Disclosure Document in order to make the statements in the
Disclosure Document, in light of the circumstances under which they were made,
not misleading and (ii) reimburse Lender, the Ventas Group or the Underwriter
Group for any legal or other expenses reasonably incurred by Lender, the Ventas
Group or the Underwriter Group in connection with defending or investigating the
Liabilities.

               (d) Promptly after receipt by an indemnified party under this
Section 9.2 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 9.2, notify the indemnifying party in writing of the
commencement thereof, but the omission to so notify the indemnifying party will
not relieve the indemnifying party from any liability which the

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<PAGE>

indemnifying party may have to any indemnified party hereunder except to the
extent that failure to notify causes prejudice to the indemnifying party. In the
event that any action is brought against any indemnified party, and it notifies
the indemnifying party of the commencement thereof, the indemnifying party will
be entitled, jointly with any other indemnifying party, to participate therein
and, to the extent that it (or they) may elect by written notice delivered to
the indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. After notice from the indemnifying party
to such indemnified party under this Section 9.2, such indemnified party shall
pay for any legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable costs of
investigation; provided, however, if the defendants in any such action include
both the indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there are any legal defenses available to
it and/or other indemnified parties that are different from or additional to
those available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to assert such legal defenses
and to otherwise participate in the defense of such action on behalf of such
indemnified party at the cost of the indemnifying party. The indemnifying party
shall not be liable for the expenses of more than one separate counsel unless an
indemnified party shall have reasonably concluded that there may be legal
defenses available to it that are different from or additional to those
available to another indemnified party.

               (e) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 9.2(b) or
(c) is for any reason held to be unenforceable as to an indemnified party in
respect of any losses, claims, damages or liabilities (or action in respect
thereof) referred to therein which would otherwise be indemnifiable under
Section 9.2(b) or (c), the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such losses, claims,
damages or liabilities (or action in respect thereof); provided, however, that
no Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation. In determining the
amount of contribution to which the respective parties are entitled, the
following factors shall be considered: (i) the applicable indemnified party's
and each Borrower's relative knowledge and access to information concerning the
matter with respect to which the claim was asserted; (ii) the opportunity to
correct and prevent any statement or omission; and (iii) any other equitable
considerations appropriate in the circumstances. Lender and each Borrower hereby
agree that it would not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation.

               (f) The liabilities and obligations of both Borrowers and Lender
under this Section 9.2 shall survive the termination of this Agreement and the
satisfaction and discharge of the Debt.

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                               ARTICLE X. DEFAULTS

          Section 10.1. Event of Default.

               (a) Each of the following events shall constitute an event of
default hereunder (an "Event of Default"):

                    (i) if any portion of the Debt is not paid when due or if
     any Borrower fails to pay any other amount payable pursuant to this
     Agreement (including, without limitation, any deposits or payments to the
     Collateral Accounts) or any other Loan Document when due and payable in
     accordance with the provisions hereof or thereof, as the case may be;

                    (ii) subject to Borrowers' right to contest Taxes and Other
     Charges pursuant to Section 4.1.2 and provided Borrower is complying with
     the terms of such Section, if any of the Taxes or Other Charges are not
     paid when due;

                    (iii) if the Policies are not kept in full force and effect;

                    (iv) if any Borrower breaches or permits or suffers a breach
     of Article 6 of any Mortgage;

                    (v) if any representation or warranty made by any Borrower
     herein or in any other Loan Document, or in any report, certificate,
     financial statement or other instrument, agreement or document furnished to
     Lender shall have been false or misleading in any material respect as of
     the date the representation or warranty was made;

                    (vi) if any Borrower shall make an assignment for the
     benefit of creditors;

                    (vii) if a receiver, liquidator or trustee shall be
     appointed for any Borrower or if any Borrower shall be adjudicated a
     bankrupt or insolvent, or if any petition for bankruptcy, reorganization or
     arrangement pursuant to federal bankruptcy law, or any similar federal or
     state law, shall be filed by or against, consented to, or acquiesced in by,
     any Borrower, or if any proceeding for the dissolution or liquidation of
     any Borrower shall be instituted; provided, however, if such appointment,
     adjudication, petition or proceeding was involuntary and not consented to
     by any Borrower, upon the same not being discharged, stayed or dismissed
     within thirty (30) days;

                    (viii) if any Borrower attempts to assign its rights under
     this Agreement or any of the other Loan Documents or any interest herein or
     therein in contravention of the Loan Documents;

                    (ix) if any of the assumptions contained in the Insolvency
     Opinion, or in any other non-consolidation opinion delivered to Lender in

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     connection with the Loan, or in any other non-consolidation delivered
     subsequent to the closing of the Loan, is or shall become untrue in any
     material respect;

                    (x) if any Borrower breaches any representation, warranty or
     covenant contained in Section 3.1.24 hereof or if any Borrower is not a
     Single-Purpose Entity or if any provision of any organizational document of
     any Borrower is amended or modified in any respect without the prior
     written consent of Lender;

                    (xi) if any Borrower shall continue to be in Default under
     any of the other terms, covenants or conditions of this Agreement not
     specified in subsections (i) to (x) above, for ten (10) days after notice
     to any Borrower from Lender, in the case of any Default which can be cured
     by the payment of a sum of money, or for thirty (30) days after notice from
     Lender in the case of any other Default; provided, however, that if such
     non-monetary Default is susceptible of cure but cannot reasonably be cured
     within such 30-day period and provided further that a Borrower shall have
     commenced to cure such Default within such 30-day period and thereafter
     diligently and expeditiously proceeds to cure the same, such 30-day period
     shall be extended for such time as is reasonably necessary for such
     Borrower in the exercise of due diligence to cure such Default, such
     additional period not to exceed sixty (60) days; (xii) if there shall be
     default under any of the other Loan Documents beyond any applicable cure
     periods contained in such Loan Documents, whether as to any Borrower or any
     of the Properties, or if any other such event shall occur or condition
     shall exist, if the effect of such event or condition is to accelerate the
     maturity of any portion of the Debt or to permit Lender to accelerate the
     maturity of all or any portion of the Debt;

                    (xiii) if any Guarantor breaches any covenant, warranty or
     representation contained in any Loan Document to which it is a party,
     including, but not limited to, the Master Guaranty and Master Guaranty
     Pledge which is not remedied within any grace period; or

                    (xiv) if Borrowers shall fail to maintain an Acceptable
     Interest Rate Cap Agreement collaterally assigned to Lender pursuant to the
     Collateral Assignment of Interest Rate Cap or is in default of its
     obligations under any interest rate cap agreement delivered in connection
     with the Loan beyond any applicable notice and cure period, or if any such
     interest rate cap agreement shall be void or unenforceable; or

                    (xv) if a final unappealable determination shall have been
     made by any applicable Governmental Authority of any Borrower's
     non-compliance with material Legal Requirements applicable to any Property,
     or of the revocation of any material license, permit or approval required
     for the lawful operation of any Property, or any other circumstances under
     which any Borrower is required by a final unappealable determination of any
     such Governmental Authority to cease operations of such Property as a
     Nursing Facility, Assisted Living Facility or Specialty Hospital, in each
     case as

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     described on the attached Schedule III (as such Schedule may be amended to
     show any change of use of any Property);

                    (xvi) if an "Event of Default" occurs under any Operating
     Lease;

                    (xvii) if there is a reduction in the number of licensed
     beds or a change in the type of licensed beds for any Property in violation
     of the requirements of this Agreement; or

                    (xviii) if any Borrower shall fail to correct, within the
     time deadlines set by any Medicare, Medicaid, health, reimbursement,
     licensing or similar agency, any deficiency that justifies either of the
     following actions by such agency with respect to any Property and such
     agency commences either of the following actions:

                    (1) a termination of any Medicare contract, Medicaid
                    contract or Regulatory Permit;

                    (2) a ban on new admissions generally or on admission of
                    patients otherwise qualifying for Medicaid or Medicare
                    coverage which ban is not lifted within sixty (60) days or
                    as to which a Borrower fails to file a plan of correction
                    within ten (10) days of such ban;

                    (xix) if any Property is assessed material fines or
     penalties by any state or any Medicare, Medicaid, health, reimbursement,
     licensing or similar agency having jurisdiction over any Borrower or any
     Property;

                    (xx) except as may be permitted pursuant to this Agreement,
     as to each Property, if any Borrower ceases to operate, or changes the use
     of, such Property as or from a Nursing Facility, Assisted Living Facility
     or Rehabilitation Hospital in each case as described on the attached
     Schedule III (as such Schedule may be amended to show any change of use of
     any Property) or terminates such business for any reason whatsoever (other
     than a temporary cessation in connection with any renovations); or

                    (xxi) if, with respect to any Property, any Governmental
     Authority (a) makes a substandard quality of care determination regarding
     such Property which determination is not corrected in sixty (60) days (or
     if incapable of being cured within such sixty (60) days period, within one
     hundred twenty (120) days provided Borrowers are taking all appropriate
     actions to correct such determination); (b) makes a determination that such
     Property is not in substantial compliance with any applicable regulatory
     requirements which determination is not corrected in sixty (60) days (or if
     incapable of being cured within such sixty (60) days period, within one
     hundred twenty (120) days, provided Borrowers are taking all appropriate
     actions to correct such determination); (c) designates any portion of such
     Property or the entirety of such Property as part of a "poor performing
     chain"; (d) cites deficiencies at the scope or

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<PAGE>

     severity of "G", "H" or higher with respect to such Property and for which
     no plan of correction is in place within ten (10) days of receipt of such
     deficiency statement; (e) cites deficiencies at the scope and severity of
     "G", "H" or higher with respect to such Property for which a plan of
     correction has been filed but not approved by such Governmental Authority,
     with such designation, determination or action continuing unremedied for a
     period of sixty (60) days (or if incapable of being cured within such sixty
     (60) days period, within one hundred twenty (120) days, provided Borrowers
     are taking all appropriate actions to correct such determination) (or ten
     (10) days for immediate jeopardy deficiencies) following any Borrower's
     first receipt of notice of such designation, determination or action; or
     (f) takes adverse regulatory action with respect to such Property,
     including, without limitation, the imposing of civil money penalties, with
     such designation, determination or action continuing unremedied for a
     period of sixty (60) days (or if incapable of being cured within such sixty
     (60) days period, within one hundred twenty (120) days, provided Borrowers
     are taking all appropriate actions to correct such determination) (ten (10)
     days for immediate jeopardy deficiencies) following any Borrower's receipt
     of notice of such designation, determination or action.

               (b) Upon the occurrence of an Event of Default (other than an
Event of Default described in clauses (vi), (vii) or (viii) above) and at any
time thereafter Lender may, in addition to any other rights or remedies
available to it pursuant to this Agreement and the other Loan Documents or at
law or in equity, take such action, without notice or demand, that Lender deems
advisable to protect and enforce its rights against any Borrower and in and to
any or all of the Properties, including, without limitation, declaring the Debt
to be immediately due and payable, and Lender may enforce or avail itself of any
or all rights or remedies provided in the Loan Documents against any Borrower
and any or all of the Properties, including, without limitation, all rights or
remedies available at law or in equity; and upon any Event of Default described
in clauses (vi), (vii) or (viii) above, the Debt and all other obligations of
each Borrower hereunder and under the other Loan Documents shall immediately and
automatically become due and payable, without notice or demand, and each
Borrower hereby expressly waives any such notice or demand, anything contained
herein or in any other Loan Document to the contrary notwithstanding.

          Section 10.2. Remedies.

               (a) Upon the occurrence and during the continuance of an Event of
Default, all or any one or more of the rights, powers, privileges and other
remedies available to Lender against any Borrower under this Agreement or any of
the other Loan Documents executed and delivered by, or applicable to, any
Borrower or at law or in equity may be exercised by Lender at any time and from
time to time, whether or not all or any of the Debt shall be declared due and
payable, and whether or not Lender shall have commenced any foreclosure
proceeding or other action for the enforcement of its rights and remedies under
any of the Loan Documents with respect to any or all of the Properties. Any such
actions taken by Lender shall be cumulative and concurrent and may be pursued
independently, singly, successively, together or otherwise, at such time and in
such order as Lender may determine in its sole discretion, to the fullest extent
permitted by law, without impairing or otherwise affecting the other rights and
remedies of Lender permitted by law, equity or contract or as set forth herein
or in the other Loan Documents. Without limiting the generality of the
foregoing, if an Event of

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Default is continuing (i) Lender is not subject to any "one action" or "election
of remedies" law or rule to the face extent allowed by applicable law, and (ii)
all liens and other rights, remedies or privileges provided to Lender shall
remain in full force and effect until Lender has exhausted all of its remedies
against the Properties and each Mortgage has been foreclosed, sold and/or
otherwise realized upon in satisfaction of the Debt or the Debt has been paid in
full.

               (b) Upon the occurrence and during the continuance of an
Event of Default, Lender shall have the right from time to time to partially
foreclose the Mortgages in any manner and for any amounts secured by the
Mortgages then due and payable as determined by Lender in its sole discretion
including, without limitation, the following circumstances: (i) in the event any
Borrower defaults beyond any applicable grace period in the payment of one or
more scheduled payments of principal and interest, Lender may foreclose one or
more of the Mortgages to recover such delinquent payments, or (ii) in the event
Lender elects to accelerate less than the entire outstanding principal balance
of the Loan, Lender may foreclose one or more the Mortgages to recover so much
of the principal balance of the Loan as Lender may accelerate and such other
sums secured by one or more of the Mortgages as Lender may elect.
Notwithstanding one or more partial foreclosures, the Properties shall remain
subject to the Mortgages to secure payment of sums secured by the Mortgages and
not previously recovered.

               (c) Upon the occurrence and during the continuance of an Event of
Default, Lender shall have the right from time to time to sever the Note and the
other Loan Documents into one or more separate notes, mortgages and other
security documents (the "Severed Loan Documents") in such denominations as
Lender shall determine in its sole discretion for purposes of evidencing and
enforcing its rights and remedies provided hereunder. Each Borrower shall
execute and deliver to Lender from time to time, promptly after the request of
Lender, a severance agreement and such other documents as Lender shall request
in order to effect the severance described in the preceding sentence, all in
form and substance reasonably satisfactory to Lender. Each Borrower hereby
absolutely and irrevocably appoints Lender as its true and lawful attorney,
coupled with an interest, in its name and stead to make and execute all
documents necessary or desirable to effect the aforesaid severance, each
Borrower ratifying all that its said attorney shall do by virtue thereof;
provided, however, Lender shall not make or execute any such documents under
such power until three (3) days after notice has been given to any Borrower by
Lender of Lender's intent to exercise its rights under such power. Except as may
be required in connection with a Securitization pursuant to Section 9.1 hereof,
(i) each Borrower shall not be obligated to pay any costs or expenses incurred
in connection with the preparation, execution, recording or filing of the
Severed Loan Documents, and (ii) the Severed Loan Documents shall not contain
any representations, warranties or covenants not contained in the Loan Documents
and any such representations and warranties contained in the Severed Loan
Documents will be given by each Borrower only as of the Closing Date.

               (d) Any amounts recovered from the Properties or any other
collateral for the Loan after an Event of Default may be applied by Lender
toward the payment of any interest and/or principal of the Loan and/or any other
amounts due under the Loan Documents in such order, priority and proportions as
Lender in its sole discretion shall determine.

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          Section 10.3. Remedies Cumulative.

          The rights, powers and remedies of Lender under this Agreement shall
be cumulative and not exclusive of any other right, power or remedy which Lender
may have against any Borrower pursuant to this Agreement or the other Loan
Documents, or existing at law or in equity or otherwise. Lender's rights, powers
and remedies may be pursued singly, concurrently or otherwise, at such time and
in such order as Lender may determine in Lender's sole discretion. No delay or
omission to exercise any remedy, right or power accruing upon an Event of
Default shall impair any such remedy, right or power or shall be construed as a
waiver thereof, but any such remedy, right or power may be exercised from time
to time and as often as may be deemed expedient. A waiver of one Default or
Event of Default with respect to any Borrower shall not be construed to be a
waiver of any subsequent Default or Event of Default by any Borrower or to
impair any remedy, right or power consequent thereon.

                            ARTICLE XI. MISCELLANEOUS

          Section 11.1. Successors and Assigns.

          All covenants, promises and agreements in this Agreement, by or on
behalf of any Borrower, shall inure to the benefit of the legal representatives,
successors and assigns of Lender.

          Section 11.2. Lender's Discretion.

          Whenever pursuant to this Agreement Lender exercises any right given
to it to approve or disapprove, or any arrangement or term is to be satisfactory
to Lender, the decision of Lender to approve or disapprove or to decide whether
arrangements or terms are satisfactory or not satisfactory shall (except as is
otherwise specifically herein provided) be in the sole discretion of Lender and
shall be final and conclusive. Prior to a Securitization, whenever pursuant to
this Agreement the Rating Agencies are given any right to approve or disapprove,
or any arrangement or term is to be satisfactory to the Rating Agencies, the
decision of Lender to approve or disapprove or to decide whether arrangements or
terms are satisfactory or not satisfactory, based upon Lender's determination of
Rating Agency criteria, shall be substituted therefore.

          Section 11.3. Governing Law.

               (a) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, AND
MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND THE
PROCEEDS OF THE NOTE DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF
NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE
PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS,
INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH
STATE (WITHOUT

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REGARD TO PRINCIPLES OF CONFLICT LAWS) AND ANY APPLICABLE LAW OF THE UNITED
STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION,
PERFECTION, AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS CREATED PURSUANT
HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND
CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE APPLICABLE PROPERTY IS
LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF
SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION,
VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS
ARISING HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY LAW,
BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT
THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THE NOTE, AND THIS
AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW.

               (b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR
BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY AT LENDER'S OPTION BE
INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW
YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND
BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE
AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT,
ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT:

          CT CORPORATION SYSTEM
          111 EIGHTH AVENUE
          NEW YORK, NEW YORK  10011

AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE
MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN
EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER, IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT
NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II)
MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT
WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE
DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL
PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED

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AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT
LEAVING A SUCCESSOR.

          Section 11.4. Modification, Waiver in Writing.

          No modification, amendment, extension, discharge, termination or
waiver of any provision of this Agreement or of any other Loan Document, nor
consent to any departure by any Borrower therefrom, shall in any event be
effective unless the same shall be in a writing signed by the party against whom
enforcement is sought, and then such waiver or consent shall be effective only
in the specific instance, and for the purpose, for which given. Except as
otherwise expressly provided herein, no notice to, or demand on any Borrower,
shall entitle any Borrower to any other or future notice or demand in the same,
similar or other circumstances.

          Section 11.5. Delay Not a Waiver.

          Neither any failure nor any delay on the part of Lender in insisting
upon strict performance of any term, condition, covenant or agreement, or
exercising any right, power, remedy or privilege hereunder, or under any other
Loan Document, shall operate as or constitute a waiver thereof, nor shall a
single or partial exercise thereof preclude any other future exercise, or the
exercise of any other right, power, remedy or privilege. In particular, and not
by way of limitation, by accepting payment after the due date of any amount
payable under this Agreement or any other Loan Document, Lender shall not be
deemed to have waived any right either to require prompt payment when due of all
other amounts due under this Agreement or the other Loan Documents, or to
declare a default for failure to effect prompt payment of any such other amount.

          Section 11.6. Notices.

          All notices, demands, requests, consents, approvals or other
communications (any of the foregoing, a "Notice") required, permitted, or
desired to be given hereunder shall be in writing sent by telefax (with answer
back acknowledged) or by registered or certified mail, postage prepaid, return
receipt requested, or delivered by hand or reputable overnight courier addressed
to the party to be so notified at its address hereinafter set forth, or to such
other address as such party may hereafter specify in accordance with the
provisions of this Section 11.6. Notice to any Borrower shall be deemed notice
as to all Borrowers and the Lender shall not be required to deliver any Notice
to all Borrowers as long as such Notice is delivered to any one Borrower. Any
Notice shall be deemed to have been received: (a) three (3) days after the date
such Notice is mailed, (b) on the date of sending by telefax if sent during
business hours on a Business Day (otherwise on the next Business Day), (c) on
the date of delivery by hand if delivered during business hours on a Business
Day (otherwise on the next Business Day), and (d) on the next Business Day if
sent by an overnight commercial courier, in each case addressed to the parties
as follows:

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          If to Lender:       Ventas Realty, Limited Partnership
                              c/o Ventas, Inc.
                              4360 Brownsboro Road, Suite 115
                              Louisville, Kentucky 40207
                              Attention:  Chief Financial Officer
                              Facsimile No. (502)-357-9001

          with a copy to:     Ventas Realty, Limited Partnership
                              c/o Ventas, Inc.
                              4360 Brownsboro Road, Suite 115
                              Louisville, Kentucky 40207
                              Attention:  General Counsel
                              Facsimile No. (502)-357-9001

          with a copy to:     Dechert
                              4000 Bell Atlantic Tower
                              1717 Arch Street
                              Philadelphia, Pennsylvania  19103
                              Attention: David W. Forti
                              Facsimile No. (215) 994-2222

          If to a Borrower:   c/o Trans Healthcare, Inc.
                              4660 Trindle Road, Suite 103
                              Camp Hill, Pennsylvania 17011
                              Attention: Anthony Misitano
                              Facsimile No. (717) 730-8722

          with a copy to:     Latsha Davis & Yohe, P.C.
                              4720 Old Gettysburg Road, Suite 101
                              Harrisburg, Pennsylvania 17108
                              Attention: Douglas C. Yohe
                              Facsimile No. (717) 761-2286

          Section 11.7. Waiver of Right to Trial by Jury.

          BORROWER AND LENDER EACH HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF
ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY
TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO
THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN
CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY
AND VOLUNTARILY BY BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE. BORROWER AND LENDER ARE EACH HEREBY AUTHORIZED TO
FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS
WAIVER.

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          Section 11.8. Headings.

          The Article and/or Section headings and the Table of Contents in this
Agreement are included herein for convenience of reference only and are not to
be construed as defining or limiting the scope or intent of the provisions
hereof.

          Section 11.9. Severability.

          Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.

          Section 11.10. Preferences.

          Lender shall have the continuing and exclusive right to apply or
reverse and reapply any and all payments by any Borrower to any portion of the
obligations of any Borrower hereunder. To the extent any Borrower makes a
payment or payments to Lender, which payment or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds received, the obligations hereunder or
part thereof intended to be satisfied shall be revived and continue in full
force and effect, as if such payment or proceeds had not been received by
Lender.

          Section 11.11. Waiver of Notice.

          To the extent permitted by applicable law, each Borrower shall not be
entitled to any notices of any nature whatsoever from Lender except with respect
to matters for which this Agreement or the other Loan Documents specifically and
expressly provide for the giving of notice by Lender to a Borrower and except
with respect to matters for which any Borrower is not, pursuant to applicable
Legal Requirements, permitted to waive the giving of notice to the full extent
permitted by applicable law. Each Borrower hereby expressly waives the right to
receive any notice from Lender with respect to any matter for which this
Agreement or the other Loan Documents do not specifically and expressly provide
for the giving of notice by Lender to a Borrower.

          Section 11.12. Remedies of Borrower.

          In the event that a claim or adjudication is made that Lender or its
agents have acted unreasonably or unreasonably delayed acting in any case where,
by law or under this Agreement or the other Loan Documents, Lender or such
agent, as the case may be, has an obligation to act reasonably or promptly,
neither Lender nor its agents shall be liable for any monetary damages, and a
Borrower's sole remedy shall be limited to commencing an action seeking
injunctive relief or declaratory judgment. Any action or proceeding to determine
whether Lender has acted reasonably shall be determined by an action seeking
declaratory

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judgment. Any expedited procedure legally available with such a declaratory
judgment action or action for injunctive relief may be utilized to the extent
possible.

          Section 11.13. Expenses; Indemnity.

               (a) Each Borrower shall pay or, if any Borrower fails to pay,
reimburse Lender upon receipt of notice from Lender, for all reasonable costs
and expenses (including reasonable attorneys' fees and disbursements) incurred
by Lender in connection with (i) any Borrower's ongoing performance of and
compliance with any Borrower's agreements and covenants contained in this
Agreement, the Cooperation Agreement and the other Loan Documents on its part to
be performed or complied with after the Closing Date, including, without
limitation, confirming compliance with environmental and insurance requirements;
(ii) Lender's ongoing performance of and compliance with all agreements and
covenants contained in this Agreement and the other Loan Documents on its part
to be performed or complied with after the Closing Date; (iii) the negotiation,
preparation, execution, delivery and administration of any consents, amendments,
waivers or other modifications to this Agreement and the other Loan Documents
and any other documents or matters requested by any Borrower; (iv) the filing
and recording fees and expenses, title insurance and reasonable fees and
expenses of counsel for providing to Lender all required legal opinions, and
other similar expenses incurred, in creating and perfecting the Liens in favor
of Lender pursuant to this Agreement and the other Loan Documents; (v) enforcing
or preserving any rights, in response to third party claims or the prosecuting
or defending of any action or proceeding or other litigation, in each case
against, under or affecting any Borrower, this Agreement, the other Loan
Documents, the Properties, or any other security given for the Loan; (vi) the
Re-sizing and (vii) enforcing any obligations of or collecting any payments due
from any Borrower under this Agreement, the other Loan Documents or with respect
to the Properties or in connection with any refinancing or restructuring of the
credit arrangements provided under this Agreement in the nature of a "work-out"
or of any insolvency or bankruptcy proceedings; provided, however, that each
Borrower shall not be liable for the payment of any such costs and expenses to
the extent the same arise by reason of the gross negligence, illegal acts, fraud
or willful misconduct of Lender. Any costs due and payable to Lender may be paid
to Lender pursuant to the Cash Management Agreement.

               (b) Each Borrower shall indemnify, defend and hold harmless
Lender and its officers, directors, agents and employees (and the successors and
assigns of the foregoing (the "Lender Indemnitees")) from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, the reasonable fees and disbursements
of counsel for Lender Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
Lender Indemnitees shall be designated a party thereto), that may be imposed on,
incurred by, or asserted against Lender Indemnitees in any manner relating to or
arising out of (i) any breach by any Borrower of its obligations under, or any
material misrepresentation by any Borrower contained in, this Agreement or the
other Loan Documents, or (ii) the use or intended use of the proceeds of the
Loan (collectively, the "Indemnified Liabilities"); provided, however, that each
Borrower shall not have any obligation to Lender Indemnitees hereunder to the
extent that such Indemnified Liabilities arise from the gross negligence,
illegal acts, fraud or willful misconduct of Lender Indemnitees. To the extent
that the undertaking to indemnify, defend and hold harmless set forth in the
preceding sentence

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<PAGE>

may be unenforceable because it violates any law or public policy, Borrowers
shall pay the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by Lender Indemnitees.

          Section 11.14. Schedules Incorporated.

          The Schedules annexed hereto are hereby incorporated herein as a part
of this Agreement with the same effect as if set forth in the body hereof.

          Section 11.15. Offsets, Counterclaims and Defenses.

          Any assignee of Lender's interest in and to this Agreement and the
other Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses which are unrelated to such documents which any
Borrower may otherwise have against any assignor of such documents, and no such
unrelated counterclaim or defense shall be interposed or asserted by any
Borrower in any action or proceeding brought by any such assignee upon such
documents and any such right to interpose or assert any such unrelated offset,
counterclaim or defense in any such action or proceeding is hereby expressly
waived by each Borrower.

          Section 11.16. No Joint Venture or Partnership; No Third Party
Beneficiaries.

               (a) Each Borrower and Lender intend that the relationships
created hereunder and under the other Loan Documents be solely that of borrower
and lender. Nothing herein or therein is intended to create a joint venture,
partnership, tenancy-in-common, or joint tenancy relationship between any
Borrower and Lender nor to grant Lender any interest in the Properties other
than that of mortgagee, beneficiary or lender.

               (b) This Agreement and the other Loan Documents are solely for
the benefit of Lender and nothing contained in this Agreement or the other Loan
Documents shall be deemed to confer upon anyone other than Lender any right to
insist upon or to enforce the performance or observance of any of the
obligations contained herein or therein. All conditions to the obligations of
Lender to make the Loan hereunder are imposed solely and exclusively for the
benefit of Lender and no other Person shall have standing to require
satisfaction of such conditions in accordance with their terms or be entitled to
assume that Lender will refuse to make the Loan in the absence of strict
compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender's sole
discretion, Lender deems it advisable or desirable to do so.

          Section 11.17. Publicity.

          All news releases, publicity or advertising by any Borrower or its
Affiliates through any media intended to reach the general public which refers
to the Loan Documents or the financing evidenced by the Loan Documents, to
Lender or any of its Affiliates shall be subject to the prior approval of
Lender.

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<PAGE>

          Section 11.18. Waiver of Marshalling of Assets.

          To the fullest extent permitted by law, each Borrower, for itself and
its successors and assigns, waives all rights to a marshalling of the assets of
any Borrower, any Borrower's partners and others with interests in any Borrower,
and of the Properties, and shall not assert any right under any laws pertaining
to the marshalling of assets, the sale in inverse order of alienation, homestead
exemption, the administration of estates of decedents, or any other matters
whatsoever to defeat, reduce or affect the right of Lender under the Loan
Documents to a sale of the Properties for the collection of the Debt without any
prior or different resort for collection or of the right of Lender to the
payment of the Debt out of the net proceeds of the Properties in preference to
every other claimant whatsoever.

          Section 11.19. Waiver of Offsets/Defenses/Counterclaims.

          To the extent permitted by applicable law, each Borrower hereby waives
the right to assert a counterclaim, other than a mandatory or compulsory
counterclaim, in any action or proceeding brought against it by Lender or its
agents or otherwise to offset any obligations to make the payments required by
the Loan Documents. No failure by Lender to perform any of its obligations
hereunder shall be a valid defense to, or result in any offset against, any
payments which any Borrower is obligated to make under any of the Loan
Documents.

          Section 11.20. Conflict; Construction of Documents; Reliance.

          In the event of any conflict or inconsistency between the provisions
of this Agreement and any of the other Loan Documents, the provisions of this
Agreement shall control. The parties hereto acknowledge that they were
represented by competent counsel in connection with the negotiation, drafting
and execution of the Loan Documents and that such Loan Documents shall not be
subject to the principle of construing their meaning against the party which
drafted same. Each Borrower acknowledges that, with respect to the Loan, each
Borrower shall rely solely on its own judgment and advisors in entering into the
Loan without relying in any manner on any statements, representations or
recommendations of Lender or any parent, subsidiary or Affiliate of Lender.
Lender shall not be subject to any limitation whatsoever in the exercise of any
rights or remedies available to it under any of the Loan Documents or any other
agreements or instruments which govern the Loan by virtue of the ownership by it
or any parent, subsidiary or Affiliate of Lender of any equity interest any of
them may acquire in any Borrower, and each Borrower hereby irrevocably waives
the right to raise any defense or take any action on the basis of the foregoing
with respect to Lender's exercise of any such rights or remedies. Each Borrower
acknowledges that Lender engages in the business of real estate financings and
other real estate transactions and investments which may be viewed as adverse to
or competitive with the business of any Borrower or its Affiliates.

          Section 11.21. Brokers and Financial Advisors.

          Each Borrower hereby represents that it has dealt with no financial
advisors, brokers, underwriters, placement agents, agents or finders in
connection with the transactions contemplated by this Agreement. Each Borrower
shall indemnify, defend and hold Lender Indemnitees harmless from and against
any and all claims, liabilities, costs and expenses of any

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<PAGE>

kind (including attorneys' fees and expenses) in any way relating to or arising
from a claim by any Person that such Person acted on behalf of any Borrower or
Lender Indemnitees in connection with the transactions contemplated herein. The
provisions of this Section 11.21 shall survive the expiration and termination of
this Agreement and the payment of the Debt.

          Section 11.22. Exculpation.

          Subject to the qualifications below, Lender shall not enforce the
liability and obligation of any Borrower to perform and observe the obligations
contained in the Note, this Agreement, the Mortgages or the other Loan Documents
by any action or proceeding wherein a money judgment shall be sought against any
Borrower, except that Lender may bring a foreclosure action, an action for
specific performance or any other appropriate action or proceeding to enable
Lender to enforce and realize upon its interest under the Note, this Agreement,
the Mortgages and the other Loan Documents, or in the Properties, the Rents, or
any other collateral given to Lender pursuant to the Loan Documents; provided,
however, that, except as specifically provided herein, any judgment in any such
action or proceeding shall be enforceable against Borrowers only to the extent
of Borrowers' interest in the Properties, in the Rents and in any other
collateral given to Lender, and Lender, by accepting the Note, this Agreement,
the Mortgages and the other Loan Documents, shall not sue for, seek or demand
any deficiency judgment against any Borrower in any such action or proceeding
under or by reason of or under or in connection with the Note, this Agreement,
the Mortgages or the other Loan Documents. The provisions of this Section shall
not, however, (a) constitute a waiver, release or impairment of any obligation
evidenced or secured by any of the Loan Documents; (b) impair the right of
Lender to name any Borrower as a party defendant in any action or suit for
foreclosure and sale under any of the Mortgages; (c) affect the validity or
enforceability of any guaranty made in connection with the Loan, the Mezzanine
Loan, the Sale/Leaseback Transaction or any of the rights and remedies of Lender
thereunder; (d) impair the right of Lender to obtain the appointment of a
receiver; (e) impair the enforcement of any of the Assignments of Leases; (f)
constitute a prohibition against Lender to seek a deficiency judgment against
any Borrower in order to fully realize the security granted by each of the
Mortgages or to commence any other appropriate action or proceeding in order for
Lender to exercise its remedies against all of the Properties; or (g) constitute
a waiver of the right of Lender to enforce the liability and obligation of any
Borrower, by money judgment or otherwise, to the extent of any loss, damage,
cost, expense, liability, claim or other obligation incurred by Lender
(including attorneys' fees and costs reasonably incurred) arising out of or in
connection with the following:

                    (i) fraud or intentional misrepresentation by any Borrower
     or any guarantor in connection with the Loan;

                    (ii) the gross negligence or willful misconduct of any
     Borrower;

                    (iii) the breach of any representation, warranty, covenant
     or indemnification provision in the Environmental Indemnity concerning
     environmental laws, hazardous substances and asbestos and any
     indemnification of Lender with respect thereto contained in the
     Environmental Indemnity;

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<PAGE>

                    (iv) the removal or disposal of any portion of the
     Properties after an Event of Default;

                    (v) the misapplication or conversion by any Borrower of (A)
     any insurance proceeds paid by reason of any loss, damage or destruction to
     the Properties, (B) any Awards or other amounts received in connection with
     the Condemnation of all or a portion of the Properties, or (C) any Rents
     following an Event of Default;

                    (vi) failure to pay charges for labor or materials or other
     charges that can create Liens on any portion of the Properties;

                    (vii) any security deposits, advance deposits or any other
     deposits collected with respect to the Properties which are not delivered
     to Lender upon a foreclosure of the Properties or action in lieu thereof,
     except to the extent any such security deposits were applied in accordance
     with the terms and conditions of any of the Leases prior to the occurrence
     of the Event of Default that gave rise to such foreclosure or action in
     lieu thereof;

                    (viii) each Borrower's indemnification of Lender set forth
     in Section 9.2 hereof; and

                    (ix) the failure to deposit all Rents into the Cash
     Management Account in accordance with the provisions hereof.

          Notwithstanding anything to the contrary in this Agreement, the Note
or any of the Loan Documents, (A) Lender shall not be deemed to have waived any
right which Lender may have under Section 506(a), 506(b), 1111(b) or any other
provisions of the Bankruptcy Code to file a claim for the full amount of the
Debt or to require that all collateral shall continue to secure all of the Debt
owing to Lender in accordance with the Loan Documents, and (B) the Debt shall be
fully recourse to each Borrower (1) prior to a Securitization and (2) in the
event that: (i) any Borrower fails to permit on-site inspections of the
Properties, fails to provide financial information, fails to maintain its status
as a Single-Purpose Entity or fails to appoint a new property manager upon the
request of Lender after an Event of Default or other event that would give rise
to the right of Lender to request any Borrower to appoint a new property
manager, each as required by, and in accordance with the terms and provisions
of, this Agreement and the other Loan Documents; (iii) any Borrower fails to
obtain Lender's prior consent to any subordinate financing, mezzanine financing
or other voluntary Lien encumbering the Properties; (iv) any Borrower fails to
obtain Lender's prior consent to any Transfer to the extent such consent is
required herein or in the Mortgages; (v) any Borrower files a voluntary petition
under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency
law; (vi) an Affiliate, officer, director, or representative which controls,
directly or indirectly, any Borrower files, or joins in the filing of, an
involuntary petition against any Borrower under the Bankruptcy Code or any other

                                       91

<PAGE>

Federal or state bankruptcy or insolvency law, or solicits or causes to be
solicited petitioning creditors for any involuntary petition against any
Borrower from any Person; (vii) any Borrower files an answer consenting to or
otherwise acquiescing in or joining in any involuntary petition filed against
it, by any other Person under the Bankruptcy Code or any other Federal or state
bankruptcy or insolvency law, or solicits or causes to be solicited petitioning
creditors for any involuntary petition from any Person; (viii) any Affiliate,
officer, director, or representative which controls any Borrower consents to or
acquiesces in or joins in an application for the appointment of a custodian,
receiver, trustee, or examiner for any Borrower or any portion of the
Properties; or (ix) any Borrower makes an assignment for the benefit of
creditors, or admits, in writing or in any legal proceeding, its insolvency or
inability to pay its debts as they become due.

          Section 11.23. Prior Agreements.

          This Agreement and the other Loan Documents contain the entire
agreement of the parties hereto and thereto in respect of the transactions
contemplated hereby and thereby, and all prior agreements among or between such
parties, whether oral or written, including, without limitation, the loan
commitment dated October 2, 2002, and all attachments thereto including, but not
limited to, the term sheet between Borrowers and Lender, are superseded by the
terms of this Agreement and the other Loan Documents.

          Section 11.24. Servicer.

          At the option of Lender, the Loan may be serviced by a servicer
including, but not limited to any sub-servicers or master servicer (the
"Servicer") selected by Lender and Lender may delegate all or any portion of its
responsibilities under this Agreement and the other Loan Documents to the
Servicer pursuant to a servicing agreement (the "Servicing Agreement") between
Lender and Servicer. Borrowers shall be responsible for any reasonable set-up
fees or any other initial costs relating to or arising under the Servicing
Agreement; provided, however, that Borrowers shall not be responsible for
payment of the monthly servicing fee due to the Servicer under the Servicing
Agreement.

          Section 11.25. Duplicate Originals; Counterparts.

          This Agreement may be executed in any number of duplicate originals
and each such duplicate original shall be deemed to be an original. This
Agreement may be executed in several counterparts, each of which counterparts
shall be deemed an original instrument and all of which together shall
constitute a single Agreement. The failure of any party hereto to execute this
Agreement, or any counterpart hereof, shall not relieve the other signatories
from their obligations hereunder.

          Section 11.26. Cross Collateralization.

          Without limitation to any other right or remedy provided to Lender in
this Agreement or any of the other Loan Documents, each Borrower acknowledges
and agrees that to the full extent permitted under applicable law, upon the
occurrence of an Event of Default (i) Lender shall have the right to pursue all
of its rights and remedies in one proceeding, or separately and independently in
separate proceedings which it, as Lender, in its sole and absolute discretion,
shall determine from time to time, (ii) Lender is not required to either
marshall assets, sell any of the collateral for the Loan in any inverse order of
alienation, or be subjected to any "one action" or "election of remedies" law or
rule, (iii) the exercise by Lender of any remedies against any of the collateral
for the Loan will not impede Lender from subsequently or

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<PAGE>

simultaneously exercising remedies against other collateral for the Loan, (iv)
all Liens and other rights, remedies and privileges provided to Lender in this
Agreement and in the other Loan Documents or otherwise shall remain in full
force and effect until Lender has exhausted all of its remedies against the
collateral for the Loan and all of the collateral for the Loan has been
foreclosed, sold and/or otherwise realized upon and (v) all of the Properties
shall be security for the performance of all of each Borrower's obligations
hereunder.

          Section 11.27. Joint and Several Liability.

          If more than one Person has executed this Agreement as "Borrower," the
representations, covenants, warranties and obligations of all such Persons
hereunder shall be joint and several.

                         [NO FURTHER TEXT ON THIS PAGE]

                                       93

<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be duly executed by their duly authorized representatives, all as of the day
and year first above written.

                          LENDER:

                          VENTAS REALTY, LIMITED PARTNERSHIP,
                          a Delaware limited partnership

                          By: Ventas, Inc.
                              a Delaware corporation,
                              its sole general partner

                              By:   /s/ T. RICHARD RINEY
                                 -----------------------------------------------
                                 Name:  T. Richard Riney
                                 Title: Executive Vice President/General Counsel

                     [Signatures continue on following page]

<PAGE>

                          BORROWER:

                          THI OF OHIO REAL ESTATE HOLDING COMPANY, LLC,
                          a Delaware limited liability company

                          By:    /s/ JOHN E. BAUER
                              --------------------------------------------------
                              Name:  John E. Bauer
                              Title: Vice-President

                          THI OF OHIO AT COLUMBUS, LLC,
                          a Delaware limited liability company

                          By:    /s/ JOHN E. BAUER
                              --------------------------------------------------
                              Name:  John E. Bauer
                              Title: Vice-President

                          THI OF OHIO AT VALLEY VIEW, LLC,
                          a Delaware limited liability company

                          By:    /s/ JOHN E. BAUER
                              --------------------------------------------------
                              Name:  John E. Bauer
                              Title: Vice-President

                          THI OF OHIO AT NORTHWESTERN, LLC,
                          a Delaware limited liability company

                          By:    /s/ JOHN E. BAUER
                              --------------------------------------------------
                              Name:  John E. Bauer
                              Title: Vice-President

                          THI OF OHIO AT OAK GROVE, LLC,
                          a Delaware limited liability company

                          By:    /s/ JOHN E. BAUER
                              --------------------------------------------------
                              Name:  John E. Bauer
                              Title: Vice-President

<PAGE>

                          THI OF OHIO AT PARADISE OAKS, LLC,
                          a Delaware limited liability company

                          By:    /s/ JOHN E. BAUER
                              --------------------------------------------------
                              Name:  John E. Bauer
                              Title: Vice-President

                          THI OF OHIO AT SOMERSET, LLC,
                          a Delaware limited liability company

                          By:    /s/ JOHN E. BAUER
                              --------------------------------------------------
                              Name:  John E. Bauer
                              Title: Vice-President

                          THI OF OHIO AT WILLARD, LLC,
                          a Delaware limited liability company

                          By:    /s/ JOHN E. BAUER
                              --------------------------------------------------
                              Name:  John E. Bauer
                              Title: Vice-President

                          THI OF OHIO AT HILLCREST, LLC,
                          a Delaware limited liability company

                          By:    /s/ JOHN E. BAUER
                              --------------------------------------------------
                              Name:  John E. Bauer
                              Title: Vice-President

                          THI OF OHIO AT MAPLE VIEW, LLC,
                          a Delaware limited liability company

                          By:    /s/ JOHN E. BAUER
                              --------------------------------------------------
                              Name:  John E. Bauer
                              Title: Vice-President

<PAGE>

                          THI OF OHIO AT WINTERSONG VILLAGE, LLC,
                          a Delaware limited liability company

                          By:    /s/ JOHN E. BAUER
                              --------------------------------------------------
                              Name:  John E. Bauer
                              Title: Vice-President

                          THI OF OHIO AT WOODLAND, LLC,
                          a Delaware limited liability company

                          By:    /s/ JOHN E. BAUER
                              --------------------------------------------------
                              Name:  John E. Bauer
                              Title: Vice-President

                          THI OF OHIO AT GREENBRIAR SOUTH, LLC,
                          a Delaware limited liability company

                          By:    /s/ JOHN E. BAUER
                              --------------------------------------------------
                              Name:  John E. Bauer
                              Title: Vice-President

                          THI OF OHIO AT GOLDEN YEARS, LLC,
                          a Delaware limited liability company

                          By:    /s/ JOHN E. BAUER
                              --------------------------------------------------
                              Name:  John E. Bauer
                              Title: Vice-President

                          THI OF MARYLAND REAL ESTATE HOLDING CO., LLC,
                          a Delaware limited liability company

                          By:    /s/ JEFFREY A. BARNHILL
                              --------------------------------------------------
                              Name:  Jeffrey A. Barnhill
                              Title: Vice-President

<PAGE>

                          THI OF MARYLAND AT BEL PRE, LLC,
                          a Delaware limited liability company

                          By:    /s/ JEFFREY A. BARNHILL
                              --------------------------------------------------
                              Name:  Jeffrey A. Barnhill
                              Title: Vice-President

                          THI OF MARYLAND AT LIBERTY HEIGHTS, LLC,
                          a Delaware limited liability company

                          By:    /s/ JEFFREY A. BARNHILL
                              --------------------------------------------------
                              Name:  Jeffrey A. Barnhill
                              Title: Vice-President

                          THI OF MARYLAND AT MARLEY NECK, LLC,
                          a Delaware limited liability company

                          By:    /s/ JEFFREY A. BARNHILL
                              --------------------------------------------------
                              Name:  Jeffrey A. Barnhill
                              Title: Vice-President

                          THI OF MARYLAND AT NORTHWEST, LLC,
                          a Delaware limited liability company

                          By:    /s/ JEFFREY A. BARNHILL
                              --------------------------------------------------
                              Name:  Jeffrey A. Barnhill
                              Title: Vice-President

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