Document:

EXHIBIT 10.3

                          INTERIM MANAGEMENT AGREEMENT

         THIS INTERIM MANAGEMENT AGREEMENT (this "Agreement") is made as of this
1st day of July,  2000,  among  Mariner  Post-Acute  Network,  Inc.,  a Delaware
corporation  (formerly known as Paragon Health Network,  Inc.) ("Mariner"),  AMS
Properties,  Inc., a Delaware  corporation ("AMS  Properties"),  GCI Health Care
Centers,   Inc.,  a  Delaware  corporation  ("GCIHCC"  and,  together  with  AMS
Properties,  collectively,  the "Mariner  Licensees"),  the  entities  listed on
Schedule  A  hereto,  each of  which is a  Delaware  limited  liability  company
(collectively,  the "Proposed SNH Licensees"), and Five Star Quality Care, Inc.,
a Delaware corporation (the "Manager").

                              W I T N E S S E T H:

         WHEREAS,  SPTMNR  Properties  Trust, a Maryland real estate  investment
trust ("SPTMNR"), is the owner of all of the real property, buildings, plant and
equipment  and certain of the  personal  property  used in  connection  with the
operation of the skilled nursing,  intermediate  care or residential  facilities
listed on Schedule B (each a "Facility" and collectively, the "Facilities"); and

         WHEREAS,   SPTMNR  currently  leases  the  Facilities  to  the  Mariner
Licensees; and

         WHEREAS,  the  Mariner  Licensees  hold the  licenses  to  operate  the
Facilities; and

         WHEREAS, pursuant to a Settlement Agreement, dated as of March 20, 2000
(the  "Settlement  Agreement"),  among Mariner,  the Mariner  Licensees,  Senior
Housing  Properties  Trust,  a Maryland real estate  investment  trust  ("SNH"),
SPTMNR,  the Proposed SNH Licensees and the Manager,  the Mariner Licensees have
requested SPTMNR, and SPTMNR has agreed, to accept a surrender (through SPTMNR's
designees,  the Proposed SNH Licensees),  of the Mariner Licensees' lease of the
Facilities,  subject to, and upon, the terms and conditions  contained  therein;
and

         WHEREAS, in connection therewith, the Proposed SNH Licensees and/or the
Manager  are  submitting  the  applications,  filings  and  other  documentation
necessary   to  receive   all   governmental   licenses,   permits,   approvals,
authorizations,  provider agreements and certificates and determinations of need
in order for the Proposed SNH  Licensees to operate the  Facilities as licensees
and to receive  Medicare and Medicaid  reimbursement  for the services  provided
therein (such licenses, permits, approvals, authorizations, provider agreements,
and  certificates  and   determinations  of  need  are  hereafter   referred  to
individually,  as a "Necessary  License"  and  collectively,  as the  "Necessary
Licenses"); and

         WHEREAS,   the  SNH   Licensees  and  the  Manager  would  assume  full
responsibility  for the  operation of the  Facilities on the date hereof but for
the fact that the Mariner  Licensees are the only entities which are licensed to
operate the Facilities as of the date hereof;

         WHEREAS,   in  light  of  the  foregoing,   the  Settlement   Agreement
contemplates  that the SNH  Licensees,  the Mariner  Licensees,  Mariner and the
Manager  shall  enter into an interim
<PAGE>

arrangement in order to accomplish  the orderly  transition of the operations of
the Facilities from the Mariner  Licensees to the Proposed SNH Licensees and the
Manager and that  during such  transition  period the  Mariner  Licensees  shall
retain ultimate authority and control over the Facilities as licensees;

         WHEREAS, in accordance with the foregoing,  the Proposed SNH Licensees,
Mariner,  the Mariner  Licensees  and the Manager  desire to enter into  certain
arrangements  regarding the management of the Facilities and, more specifically,
to provide (i) for the Mariner  Licensees  to continue to direct and control the
operation of the Facilities subject to the terms and conditions hereof, (ii) for
the  Mariner  Licensees  to  retain  Manager  to assume  day to day  operational
responsibility  (subject to the  ultimate  authority  and control of the Mariner
Licensees) for the Facilities  pending,  and in anticipation  of, the receipt by
the Proposed SNH Licensees or the Manager of the Necessary Licenses (the date on
which any  Proposed  SNH  Licensee or the Manager  shall have  received all such
Necessary  Licenses with respect to a Facility  being referred to herein as such
Facility's  "SNH  Licensing  Date"),  and  (iii) for  Mariner,  on behalf of the
Mariner Licensees and the SNH Licensees, to continue to provide certain services
to the Facilities on behalf of, and in consultation  and  cooperation  with, the
Manager, all as hereinafter set forth;

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

1. Mariner Licensee; Interim Occupancy Agreements.  Each Facility shall continue
to be operated  subject to the  direction  and control of the  relevant  Mariner
Licensee until such Facility's SNH Licensing Date and, in connection  therewith,
each  such  Mariner  Licensee  (i)  shall  retain  ultimate  authority  over the
business, policies, operations and assets of the Facility, (ii) shall remain the
responsible  licensee of such Facility and, as such, be fully liable and legally
accountable  at all  times to all  patients,  governmental  agencies  and  third
parties for all patient care and funds,  and all other  aspects of the operation
and  maintenance  of the  Facility,  and (iii) shall  perform  those general and
specific duties described in Sections 4 and 5 hereof.

         In  order  to  permit  the   foregoing,   each  Mariner   Licensee  is,
simultaneously   herewith,   entering  into  an  Interim   Occupancy   Agreement
(collectively,  the  "Occupancy  Agreements"),  in the form  attached  hereto as
Schedule  C, with the  relevant  Proposed  SNH  Licensee,  pursuant to which the
Proposed SNH Licensee  shall grant to such Mariner  Licensee the right to occupy
such  Facility  and use  certain  related  personal  property  for  purposes  of
exercising its rights, duties and obligations hereunder.

         Mariner,  the Mariner  Licensees,  the Proposed SNH  Licensees  and the
Manager  agree  that,  subject  in all  events  to the  provisions  of the first
paragraph of this Section 1, the SNH Proposed  Licensees or the Manager may from
time to time,  notify Mariner that the Manager is prepared to provide any one or
more of those  services  (the  "Designated  Services")  designated in Schedule D
attached hereto (the  "Designated  Services  Schedule") and any of those general
and specific duties related thereto  described in Sections 4 and 5 hereof,  with
respect  to any one or more of the  Facilities,  and  from  and  after  the date
specified in such notice,  the Mariner  Licensee  shall delegate to the Manager,
and the Manager shall assume and perform,  such Designated

                                      -2-
<PAGE>

Services and general and specific duties in accordance with the  requirements of
this Agreement.  Mariner, the Mariner Licensees,  the Proposed SNH Licensees and
the Manager shall reasonably  cooperate in the transition of the  responsibility
for  such  Designated  Service(s)  to the  Manager,  subject  to  the  continued
authority and responsibility of the Mariner Licensee referred to herein.

         The Mariner  Licensees,  the  Proposed  SNH  Licensees  and the Manager
acknowledge  and agree that (i) it would be the desire of all  parties  that the
Manager assume all of the  operations of the Facilities on the date hereof,  but
that the  interim  arrangement  contemplated  hereby  is  necessary  in order to
accomplish the orderly  transition of the operations of the Facilities  from the
Mariner  Licensees  to the  Proposed SNH  Licensees  and the  Manager,  (ii) the
parties  hereto have reviewed and agreed upon goals and  parameters of operation
for the term hereof which are in the best  interests of the  Facilities  and the
residents therein,  (iii) it is the intent of the parties hereto that day-to-day
operations  be conducted in a manner  consistent  with the agreed upon goals and
parameters,  and (iv) if, for any reason,  the day-to-day  operations  cannot be
conducted  consistent  with  those  goals  and  parameters,  or if the goals and
parameters  become  inconsistent  with the best  interests of the Facilities and
residents, the Mariner Licensees shall advise the Proposed SNH Licensees and the
Manager  and the parties  shall  endeavor  to agree upon  appropriate  revisions
thereto.

         Mariner,  the Proposed SNH  Licensees and the Manager  acknowledge  and
agree that  Mariner has agreed in this  Agreement  that  Mariner may continue to
provide certain services after the SNH Licensing Date. Mariner, the Proposed SNH
Licensees and the Manager acknowledge and agree,  however,  that, from and after
the SNH  Licensing  Date with respect to a Facility,  the relevant  Proposed SNH
Licensee  shall  direct and  control the  operations  of such  Facility  and, in
connection therewith, shall have ultimate authority over the business, policies,
operation  and assets of the  Facility and be the  responsible  licensee of such
Facility and, as such, be fully liable and legally  accountable  at all times to
all  patients and  governmental  agencies for all patient care and funds at such
Facility,  and all  other  aspects  of the  operation  and  maintenance  of such
Facility.

2. General Duties of the Manager.  Subject to the ultimate authority and control
of the Mariner Licensees,  the Manager shall manage and supervise the day-to-day
operation of the  Facilities  with the objective of providing  skilled  nursing,
intermediate  care and  residential  services to patients  and  residents of the
Facilities  and to carry out general  management  functions  with respect to the
Facilities,  including,  but  not  limited  to,  the  following:  supervise  the
performance  of  all  administrative  functions  as  may  be  necessary  in  the
management and operation of the Facilities; select, hire or contract for, train,
supervise,  monitor the  performance  of, and  terminate or fire,  all personnel
involved in the  administration  and  day-to-day  operations of the  Facilities,
including,  without limitation,  professional  personnel,  custodial,  cleaning,
maintenance,  and other operational  personnel,  and secretarial and bookkeeping
personnel;  maintain patients' medical records in accordance with all applicable
state and Federal requirements;  represent the Facilities in their dealings with
regulatory authorities,  patients,  personnel,  agents for collection,  insurers
and,  at the  request  of the  Proposed  SNH  Licensees,  creditors;  market the
services of the Facilities;  manage and supervise the admission and discharge of
residents  as required  by state and  Federal  laws;  and  generally  see to the
operations and management of the  Facilities,  the marketing of their  services,
planning for future  operations,  and the  establishment  and  implementation of
policies for the Facilities.

                                      -3-
<PAGE>

3. Specific Duties of the Manager. Subject to the ultimate authority and control
of the Mariner Licensees, the Manager shall have the following specific duties:

         3.1  Employees.  The  Manager  shall  recruit,   evaluate,  and  select
qualified  nursing  home   administrators  who  shall  be  responsible  for  the
functional  operation  of the  Facilities  and  supervision  of personnel at the
Facilities,  on a  day-to-day  basis,  as  well  as  all  on-site  professional,
custodial,  food  service,   cleaning,   maintenance,   clerical,   secretarial,
bookkeeping,  management,  collection,  and other  employees for the  day-to-day
operations of the Facilities.  Such  administrators and all such other personnel
shall be employees of the Manager and,  subject to the  provisions  of Section 7
hereof  (providing  for the Proposed SNH  Licensees to pay expenses set forth in
the Expense Statement (including,  without limitation,  those expenses specified
in Section  7.1(a)) the Manager  shall have full  responsibility  for payment of
their wages,  salaries,  and other compensation and benefits.  The Manager shall
establish such personnel policies, wage structures,  and staff schedules as they
deem  necessary  and advisable in accordance  with  applicable  law. The Manager
shall have  authority  to continue  to employ and to  discharge  employees.  For
purposes of those Facilities located in the State of California,  this Agreement
is intended to serve as an outside  resources  contract  pursuant to  California
Administrative  Code Title 22, Section 72511 and a copy of this Agreement  shall
remain at each such Facility and shall remain  readily  available for inspection
and review by the Department of Health Services in accordance with Section 72511
as aforesaid.

         3.2 Purchasing. In consultation with Mariner and the Mariner Licensees,
the Manager will purchase, in the name, and for the account, of the Proposed SNH
Licensees and/or the Manager,  all necessary  supplies,  foodstuffs,  materials,
appliances,  tools,  and  equipment  customarily  used in the  operation  of the
Facilities.  The  Manager  shall use  commercially  reasonable  efforts to limit
purchasing costs and to maintain such costs at a level reasonably  calculated to
allow the Facilities to operate profitably.  The Manager shall arrange contracts
for electricity,  gas, telephone,  and any other utility or service necessary to
the operation of the Facilities,  in each case in the name, and for the account,
of the Proposed SNH Licensees and/or the Manager.  The Manager shall, on its own
behalf  and/or on behalf of the owner of the  buildings and real property in and
on which the Facilities are located (the "Real Property Owner"), arrange for and
supervise the making of any necessary repairs,  alterations, and improvements to
the  Facilities,  provided  that  in the  case  of  any  repair,  alteration  or
improvement,  the cost of which  exceeds  $5,000,  the Manager  shall obtain the
prior approval of the Proposed SNH Licensee,  except that no such prior approval
shall be  required if the  expenditure  is made under  circumstances  reasonably
requiring  emergency action. The Manager shall prepare such certifications as to
expenses incurred in the operation of the Facilities as may be required in order
to comply with applicable law and regulations,  including,  without  limitation,
law and regulations applicable to preparation and submission of cost reports.

                                      -4-
<PAGE>

         3.3 Marketing. In consultation with the Mariner Licensees,  the Manager
shall  use  commercially  reasonable  efforts  to  market  the  services  of the
Facilities in order to maintain the patient or resident census at the Facilities
in such numbers and of such categories as, in Manager's  judgment,  will tend to
maintain the financial stability of the Facilities and to ensure compliance with
applicable laws, regulations, orders and judgments applicable to the Facilities.
The Manager may design and implement  programs with third party payors,  such as
insurance companies, federal agencies and state and local agencies, for services
to patients on a contract  basis,  for the purpose of  improving  the  financial
stability of the Facilities.

         3.4 Liaison  with  Agencies.  In  consultation  with the  Proposed  SNH
Licensees,  Mariner and the Mariner  Licensees,  the  Manager  shall  appear in,
prosecute  and defend all formal  and  informal  proceedings  before any and all
local,  state and federal  agencies which regulate the  Facilities.  Each of the
Mariner Licensees,  the Proposed SNH Licensees and Manager shall promptly inform
the others of the  commencement  of any such  proceedings  known to it which may
have a material  impact upon the  operation  of the  Facilities  or which affect
reimbursement  for  services  provided  in  or  by  the  Facilities,   including
challenging any findings of violations or the creation of a duty to correct.

         3.5  Insurance.  The  Manager  shall  obtain on behalf of  itself,  the
Proposed SNH  Licensees,  Mariner,  the Mariner  Licensees and the Real Property
Owners  for  each  Facility,  as  their  interests  may  appear,  all  customary
liability, fire and extended coverage, professional or malpractice liability and
worker's compensation  insurance covering the Facilities,  any equipment used in
connection with the Facilities,  and the Facilities' employees,  in such amounts
and with such deductibles and other provisions as may be reasonably  agreed upon
by the Manager,  the Proposed SNH Licensees,  Mariner, the Mariner Licensees and
the Real Property Owners.

         3.6 Technical  and  Professional  Services.  In  consultation  with the
Proposed SNH  Licensees,  Mariner and the Mariner  Licensees,  the Manager shall
secure such engineering, legal, and other specialized technical and professional
services as may be necessary to advise or to represent the Manager, the Proposed
SNH Licensees,  Mariner,  the Mariner Licensees and the Real Property Owners for
each  Facility,  in connection  with any matter  involving or arising out of the
operation of the Facilities or the conduct of the Facilities.

         3.7  Necessary  Licenses.  Upon  receipt by the  relevant  Proposed SNH
Licensee or the Manager of the  Necessary  Licenses  with respect to a Facility,
the Manager  shall give the relevant  Mariner  Licensee  prompt  written  notice
thereof.

4. General  Duties of Mariner and the Mariner  Licensees.  Mariner shall provide
accounting,  purchasing and bill payment functions for the Facilities;  maintain
systems of accounts and supervise the  maintenance  of ledgers and other primary
accounting  records  with respect to the  Facilities;  supervise  the  financial
affairs  of the  Facilities;  establish  and  supervise  the  implementation  of
operating  budgets,  and establish and  administer  financial  controls over the
operations and  management of the  Facilities;  develop and establish  financial
standards and norms by which the income, costs, and operations of the Facilities
may be evaluated;  operate,  maintain and administer the information  management
systems of the Facilities;  furnish reports and economic and statistical data in
connection  with or relative to the  management  of the  Facilities  in order to
comply with  applicable laws and  regulations;  prepare and file with

                                      -5-
<PAGE>

applicable state Medicaid programs and the Medicare program and all other public
and private  third party  reimbursement  programs  (collectively,  "third  party
payors") all required  cost reports;  maintain  listings of all residents of the
Facilities and the persons or third party payors  responsible for their charges;
on behalf of the SNH Entities,  disburse and collect the funds of the Facilities
in accordance with the provisions of this  Agreement,  pay the debts and fulfill
the obligations of the Facilities  incurred subsequent to the Effective Time (as
hereafter  defined);  maintain  payroll  records  and shall  prepare and process
employee  payrolls,  and returns of withholding taxes in accordance with current
payroll  schedules in place at each Facility;  oversee  billing (in  conjunction
with the Manager's  employees at each Facility);  and oversee the administration
of  trust  funds  for  the  benefit  of  residents  of the  Facilities  and  the
preparation and filing of all accounts for such funds required by applicable law
(in conjunction with the Manager's employees at each Facility).

5. Specific Duties of Mariner and the Mariner Licensees.  Mariner shall have the
following specific duties:

         5.1  Purchasing.  Mariner shall  cooperate with the Manager (and assist
the Manager in its efforts to) purchase,  in the name,  and for the account,  of
the  Proposed  SNH  Licensees  and/or  the  Manager,   all  necessary  supplies,
foodstuffs,  materials, appliances, tools, and equipment customarily used in the
operation  of the  Facilities  and  shall  make  available  to the  Manager  any
centralized  purchasing  system  established by Mariner or the Mariner Licensees
for other  facilities  under its or their  operation or  management  (including,
without limitation, any national accounts) in order to minimize costs.

         5.2  Bookkeeping.  Mariner  shall  establish  and maintain a record and
bookkeeping system for the operation and conduct of the Facilities in accordance
with  generally  accepted  accounting  principles.  Full books of  account  with
entries of all receipts and  expenditures  of the  Facilities  shall be open for
inspection  by  representatives  of Proposed  SNH  Licensees  and  Manager  upon
reasonable notice and at reasonable times.

         5.3  Financial  Reports.  Mariner  shall:  (a) as  soon  as  reasonably
possible  after the close of each  calendar  month,  furnish to the Proposed SNH
Licensees  and the Manager a statement  of income for the month and for the year
to date,  together with a detailed  statement of billings,  cash receipts,  cash
disbursements,  accounts  payable and accounts  receivable (in hard copy and, to
the extent possible,  in electronic  format);  (b) in the event the Proposed SNH
Licensee or the Mariner  Licensee is required by applicable law,  regulations or
the provisions of any material contract to which it is a party or by which it is
bound or at such other time as the  Proposed  SNH  Licensees  may elect in their
reasonable  discretion,  to  conduct  an  audit  of  the  Facilities'  financial
performance,  make available all books and records of the Facilities on a timely
basis and cooperate fully with any auditors or accountants  selected by Proposed
SNH  Licensee;  (c) as soon as  reasonably  possible  after  the  close  of each
applicable  reporting period for rate setting  purposes,  and not later than the
applicable  deadline,  prepare and submit a cost report for each  Facility  (and
including in any event,  any short-year  cost report required to be submitted by
the  Mariner  Licensee  or  Proposed  SNH  Licensee),   showing  the  costs  and
expenditures  relating  to  resident  care for  such  Facility  and  such  other
information as is required by the applicable governmental  authority,  each such
report being in all material respects  (including as to form) in compliance with
the requirements of such applicable  governmental

                                      -6-
<PAGE>

authority;  and (d) cooperate with and furnish  information to each Proposed SNH
Licensee and Manager in a timely manner in connection  with the  preparation  of
applications  by such  Proposed  SNH Licensee for any  Necessary  Licenses  with
respect to the Facilities.

         5.4  Consultative  Services.  Mariner and the Mariner  Licensees  shall
provide  oversight  and  consultative  services to Manager  with  respect to the
operations of the Facilities in areas  including,  without  limitation,  quality
assurance,  clinical  programs and support,  regulatory  affairs,  marketing and
other functions  currently supported by Mariner's regional operations staff (the
"Consultative  Services").  Neither  the  SNH  Licensees  nor  the  Manager  may
terminate the Consultative Services until the SNH Licensing Date.

         5.5 Collections, Accounts, Disbursements and Termination Accounting.

              (a) Billing.  Mariner  shall (in  conjunction  with the  Manager's
employees  at each  Facility)  prepare  and submit  bills for all moneys  owing,
whether from patients or third party payors,  for services provided by or at the
Facilities  at any  time,  whether  prior to 12:01  a.m.  on July 1,  2000  (the
"Effective Time") or after the Effective Time.

              (b)  Collection  of Accounts  Receivable.  Mariner and the Mariner
Licensees acknowledge that,  notwithstanding  anything to the contrary contained
in the Settlement Agreement, from and after the Effective Time, (i) the Proposed
SNH Licensees shall, to the extent permitted by applicable law, own all accounts
receivable  which  relate  to or arise  out of  services  provided  by or at the
Facilities  from or after the Effective Time (the  "Post-Effective  A/R"),  (ii)
Mariner shall, with the assistance of Facility-level  personnel, make and effect
collections of all  Post-Effective  A/R, (iii) Mariner shall  establish new bank
accounts  (the "New A/R  Accounts") in the name of the Proposed SNH Licensees on
or prior to the Effective  Time (or as soon as practicable  thereafter).  On the
fifth (5th) day  following  notice  thereof by the  Proposed  SNH  Licensees  to
Mariner  and the Mariner  Licensees  (but no sooner than the earlier to occur of
the SNH  Licensing  Date or the  forty-fifth  (45th) day following the Effective
Time),  Mariner and the Mariner  Licensees shall instruct all Third Party Payors
and other Persons (as such terms are defined in the Settlement  Agreement)  that
directly  deposit  monies into the existing  bank  accounts  (the  "Existing A/R
Accounts")  with respect to the  Retained  Facilities  to terminate  such direct
deposit and commence depositing such monies into the New A/R Accounts as soon as
is practicable  thereafter (and Mariner shall take such further action as may be
reasonably  necessary  to cause such  Third  Party  Payors and other  Persons to
comply with such instructions so that all  Post-Effective  A/R is deposited into
the New A/R Accounts as soon as is practicable  thereafter).  From and after the
Effective Time, monies, checks, drafts or other instruments or items received as
payment (collectively, "Remittances") for collected accounts receivable shall be
processed as follows:  (x) any  Remittances  solely  comprised of collections of
accounts  receivable which relate to or arise out of services  provided by or at
the Facilities  prior to the Effective Time (the  "Pre-Effective  A/R") shall be
deposited into the Existing A/R Accounts,  (y) any Remittances  solely comprised
of  collections of  Post-Effective  A/R shall be endorsed and deposited into the
New A/R Accounts,  and (z) any Remittances  comprised of both  Pre-Effective A/R
and  Post-Effective A/R (the "Commingled  Remittances")  shall be deposited into
the Existing A/R Accounts  during the first  forty-five  (45) days following the
Effective  Time and into the New A/R Accounts  after the 45th day  following the
Effective Time.

                                      -7-
<PAGE>

         Mariner   shall   prepare  a  weekly   reconciliation   of   Commingled
Remittances,  identifying the amount of Pre-Effective A/R and Post-Effective A/R
deposited  into the Existing  A/R  Accounts and the New A/R Accounts  during the
previous week ending on Friday.  The amount of Pre-Effective  A/R deposited into
the New A/R Accounts shall be netted against  Post-Effective  A/R deposited into
the Existing A/R Accounts. If the amount of Pre-Effective A/R deposited into the
New A/R Accounts is greater than the amount of Post-Effective A/R deposited into
the  Existing  A/R  Accounts,  then such net amount  shall be remitted  via wire
transfer by the SNH  Licensees to Mariner  within five (5) business  days of the
end of the previous week. If the amount of Post-Effective A/R deposited into the
Existing A/R Accounts is greater than the amount of Pre-Effective  A/R deposited
into the New A/R  Accounts,  then such net  amount  shall be  remitted  via wire
transfer by Mariner to the SNH  Licensees  within five (5) business  days of the
end of the previous week.

         The SNH Entities,  Mariner and the Mariner  Licensees  acknowledge  and
agree that the Mariner Licensees shall continue to own the Pre-Effective A/R. To
the extent  either party  receives any accounts  receivable  of the other party,
both parties  acknowledge that the party receiving any payment  belonging to the
party  shall hold such  payment in trust on behalf of the other party until such
payment is  remitted to the other  party and that  neither  party shall have any
right of offset with respect to accounts receivable.

              (c) Books and Records. During the term of this Agreement,  Mariner
shall keep accurate and complete  books and records of all receipts with respect
to all billing, accounts receivable, all deposits and other transactions whether
to the  Existing  A/R  Accounts,  the New A/R  Accounts,  or to  other  checking
accounts,  which books and records shall be made  available to the SNH Licensees
and the Manager upon request, and after termination of this Agreement shall make
such books and records  available to the Proposed SNH  Licensees and the Manager
to the extent  necessary  to enable the Proposed SNH Licensee and the Manager to
comply with all applicable laws and regulations, including regulations governing
preparation  and  submission of cost reports.  Mariner shall timely  prepare and
file any cost reports which  applicable laws and  regulations  require that they
file after the termination of this Agreement.

         5.6 Patient Trust Accounts. At such time as a Proposed SNH Licensee has
received all  Necessary  Licenses with respect to a Facility and the Manager has
given the  Mariner  Licensee  notice as  provided  in Section  3.7,  the Mariner
Licensee  will  transfer  the  patient  trust  accounts  held for the benefit of
residents  of such  Facility to the Proposed  SNH  Licensee  (and in  connection
therewith shall restore any deficiencies therein), together with all records and
an accounting regarding such accounts.

6. Fees.  Manager and Mariner shall be compensated for services  rendered herein
as follows:

         6.1 Manager's  Fee.  Each Proposed SNH Licensee of each Facility  shall
pay the Manager in  consideration  of the performance of its duties  hereunder a
fee (the  "Manager's  Fee") on a  Facility-by-Facility  basis on or prior to the
fifth (5th) day following the end of each calendar month during the term hereof,
as follows:  (i) for the first three (3) months of the term hereof, in an amount
equal to all costs and expenses incurred by, or allocable to, the performance by
the Manager in connection  with the performance of its duties  hereunder  during
such calendar  month,

                                      -8-
<PAGE>

and (ii)  thereafter,  in an amount  equal to five  percent  (5%) of net patient
revenues for such Facility for such calendar month.

         6.2 Mariner's  Fee.  Each Proposed SNH Licensee of each Facility  shall
pay to Mariner in consideration of the performance of its duties hereunder a fee
("Mariner's Fee") on a Facility-by-Facility basis for each calendar month during
the term of this  Agreement  in an amount equal to the product of (A) the sum of
the Designated  Services  Percentages,  as specified in the Designated  Services
Schedule,  attributable  to  the  Designated  Services  being  performed  by the
applicable  Mariner  Licensee at such Facility for such month and (B) the amount
of net patient revenues of such Facility for such month.

         Until  the  Agreed  Deficiency  shall  have been  reduced  to zero (0),
payment of  Mariner's  Fee shall be made by  dollar-for-dollar  reduction of the
Reduced  Deficiency  (as such  term is  defined  in the  Settlement  Agreement).
Notwithstanding  anything to the contrary contained in this Section 6.2, in each
of the first  three (3) months of the term  hereof,  Mariner's  Fee shall be not
less than Four  Hundred  Thousand  ($400,000)  (regardless  of the amount of net
patient  revenues at the  Facilities for such month or whether the Manager shall
have elected to discontinue Mariner's provision of any services specified herein
during such period) and the aggregate  amount of Mariner's Fees shall in no case
be less than the Agreed Deficiency.

         As used in this Agreement,  "net patient  revenues" shall mean, for any
period,  the aggregate  amount of all revenues  (determined  in accordance  with
generally accepted accounting principals, consistently applied), received by, or
by reason of the operation of, such Facility  during such period,  but excluding
(a) revenues from  professional  fees or charges by physicians and  unaffiliated
providers of ancillary  services to the extent such charges are paid over to, or
separately   billed  by,  such  physicians  and  unaffiliated   providers,   (b)
non-operating  revenues, (c) revenues attributable to services provided off-site
to  non-patients,  and (d) all  revenues,  if any,  attributable  to child  care
services provided  primarily to employees of such Facilities,  but in all events
excluding any revenues  generated for services  provided to patients referred by
any Mariner Entity.

7. Expenses.

         7.1  During  the  period  from and after  the  Effective  Time to,  but
excluding, the date of termination of this Agreement, for each Facility, Mariner
shall provide the Proposed SNH Licensees and the Manager with a weekly statement
of expenses of the type listed below to the extent incurred in the operation and
management  of such  Facility (the  "Expense  Statements")  accompanied  by such
documentation  as the Proposed SNH Licensee and/or the Manager shall  reasonably
request:

              (a) salary and expenses  (including,  without limitation,  payroll
taxes, workers'  compensation,  costs of employee benefit plans (or such portion
thereof as is properly  allocable  to such  Facility),  travel,  insurance,  and
fidelity bonds) of employees at such Facility,  including,  without  limitation,
administrative, professional, custodial, food service, cleaning and maintenance,
operational, secretarial and bookkeeping personnel;

                                      -9-
<PAGE>

              (b)  all  supplies  and  equipment  necessary  and  desirable  for
operation  of the such  Facility  as a skilled  nursing,  intermediate  care and
residential  facility;  food; fuel; kitchen and food service equipment;  linens;
beds; furniture; clothing and all other supplies and equipment used in supplying
services to patients;

              (c) expenses  connected  directly or  indirectly  with the design,
acquisition,  disposition,  lease, occupancy, ownership or operation of real and
personal  property  devoted,  used or consumed in the business of such Facility,
including,  without  limitation,  maintenance,  repair,  and  improvement of the
Facilities; and

              (d) all other costs,  expenses and liabilities  arising out of the
operation,  maintenance  and management of the  Facilities,  including,  without
limitation, fees of professionals engaged to fulfill Manager's obligations under
Section 3.6, but excluding those costs,  expenses and liabilities arising out of
the Manager's gross negligence or willful misconduct.

         7.2 The following  expenses of Mariner shall be for the sole account of
Mariner and shall not be subject to  reimbursement  hereunder:  (a) overhead and
ordinary administrative expenses, salary (including, without limitation, payroll
taxes, workers' compensation, costs of employee benefit plans, travel, insurance
and fidelity  bonds) of financial,  accounting and other  personnel  employed by
Mariner to provide regional quality assurance  consulting,  centralized billing,
collection,  bill paying,  accounting,  record keeping,  information management,
purchasing,  personnel and policy planning services to any Facility; and (b) any
losses, cost and expenses under Section 13.

         7.3 The Proposed SNH  Licensees  shall cause the Manager to establish a
bank  account  under its name and control and to deposit and  maintain a minimum
balance  therein of  $100,000.  The Mariner  Licensees  and  Mariner  shall have
signing authority with respect to such account and weekly,  upon approval of the
Expense Statement, the Manager shall fund such account with an amount sufficient
(over and above the  minimum  balance) to fund and for the purpose of paying the
expenses set forth in the Expense Statement.  If Mariner or any Mariner Licensee
advances its own funds for any approved Expense Statement  expense,  the Manager
and the Proposed SNH Licensees shall promptly  reimburse Mariner or such Mariner
Licensee therefor.

8. Access to Records. For the time and to the extent required by applicable law,
including, without limitation, Section 1861(v)(1)(I) of the Social Security Act,
Mariner and the Mariner Licensees shall retain, and shall permit the Comptroller
General of the United States, the U.S.  Department of Health and Human Services,
and their respective duly authorized representatives,  and duly authorized state
representatives,  access to  examine  or copy  this  Agreement  and such  books,
documents,  and  records as are  reasonably  necessary  to verify the nature and
extent of goods and  services  supplied  and the costs of the goods and services
supplied, and the payments claimed under this Agreement. In the event Mariner or
any Mariner Licensee provides any of its services under this Agreement  pursuant
to a subcontract  and if (i) the services  provided  pursuant to the subcontract
have a value or cost of $10,000 or more over a twelve (12) month period and (ii)
the  subcontract is with a related  organization,  then Mariner and such Mariner
Licensee  agree  that the  subcontract  shall  contain  a clause  requiring  the
subcontractor  to retain and allow  access to its  records on the same terms and
conditions as required by such Mariner Licensee.

                                      -10-
<PAGE>

9. Duty of Mariner;  Prohibited Transactions.  Mariner and the Mariner Licensees
shall  render  the  services  called for  hereunder  in good  faith.  Other than
Mariner's Fee, neither Mariner nor any Mariner Licensee,  or any person, firm or
corporation  which,  directly  or  indirectly  owns or  controls,  is  owned  or
controlled by, or is under direct or indirect  common  ownership or control with
Mariner  or any  Mariner  Licensee  or any person  related by blood or  marriage
within the third  degree to  persons in such  control  (an  "Affiliate"),  shall
receive any remuneration (other than reimbursements and other payments expressly
provided for herein),  whether direct or indirect, for any purchases of goods or
services  made on behalf of Mariner,  any Mariner  Licensee,  the  Proposed  SNH
Licensees or the Manager,  and neither Mariner nor any Mariner Licensee,  or any
of its Affiliates  shall markup,  increase the price,  or obtain any premium for
goods or services  purchased by any Mariner or any Mariner Licensee on behalf of
or for the  benefit  of  Mariner  or any  Mariner  Licensee,  the  Proposed  SNH
Licensees or the Manager.

10.  Relationship  of Parties.  No party to this Agreement is a partner or joint
venturer  with any other party,  and nothing  herein shall be construed so as to
make  them  such  partners  or  joint  venturers  or  impose  on any of them any
liability as partners or joint venturers.

11. Term and Termination.

         11.1 The term of this  Agreement  shall  commence at the Effective Time
and  shall  continue  in full  force  for  twelve  (12)  months  unless  earlier
terminated as provided  below,  and thereafter,  from month to month  thereafter
unless terminated upon not less than thirty (30) days' prior written notice from
the Proposed SNH Licensees or the Mariner Licensees to the other.

         Subject to the  provisions of the first  paragraph in Section 1 of this
Agreement,  the Proposed SNH Licensees shall have the further right from time to
time  to  require  Mariner  to  discontinue  provision  of any  or all  services
hereunder  to any one or more of the  Facilities  upon not less than thirty (30)
days' prior written notice to the relevant Mariner Licensee.

         The Proposed SNH Licensees and the Manager shall further have the right
to terminate the Manager's  provision of any or all,  services  hereunder to any
one or more of the  Facilities  upon not less than sixty (60) days prior written
notice to the other.

         If there is a final adverse determination with respect to any Necessary
Licenses,  provided  that the  Proposed SNH Licensee  shall have  exhausted  all
appeals with respect thereto, this Agreement shall terminate with respect to the
Facility(ies) which would be affected.

         11.2 From and after the effective date of termination of this Agreement
in accordance  with Section 11.1 with respect to any party hereto (a "Terminated
Party"),  the Terminated Party shall not be entitled to compensation for further
services  hereunder  (and, in the case of the  discontinuation  of services at a
Facility in accordance  with Section 11.1,  from and after the effective date of
such discontinuance,  the Terminated Party shall not be entitled to compensation
for  further  services  with  respect to such  Facility).  Upon  termination  or
discontinuance, the Terminated Party shall forthwith:

              (a) pay over to the relevant Proposed SNH Licensee all collections
of  Post-Effective  A/R  received  by the  Terminated  Party  pursuant  to  this
Agreement;

                                      -11-
<PAGE>

              (b)  deliver  to the  relevant  Proposed  SNH  Licensees  and,  if
applicable,  the Manager a full  accounting,  including a statement  showing all
payments  collected by it and a statement of all money held by it,  covering the
period following the date of the last accounting furnished to them; and

              (c)  deliver  to the  relevant  Proposed  SNH  Licensees  and,  if
applicable,  the Manager,  as the case may be, all property and documents of any
of them (including,  without limitation,  health care and other patient records)
then in the custody of the Terminated Party.

12. Notices. All notices and other  communications  provided for hereunder shall
be in writing  (including  telecopy  communication)  and mailed,  telecopied  or
delivered addressed as follows:

              (a) if to the Manager:

                           Five Star Quality Care, Inc.
                           400 Centre Street
                           Newton, MA  02458
                           Attention:  Treasurer
                           Telecopy No.:  617-796-8349

              (b) with copy to:

                           Sullivan & Worcester LLP
                           One Post Office Square
                           Boston, MA 02109
                           Attention:  Nancy S. Grodberg, Esq.
                           Telecopy No.:  617-338-2880

              (c) if to the Mariner:

                           Mariner Post-Acute Network, Inc.
                           One Ravinia Drive, Suite 1500
                           Atlanta, Georgia 30346
                           Attention:  Associate General Counsel
                           Telecopy No. 770-698-8199

              (d) if to Mariner Licensees:

                           AMS Properties, Inc.
                           One Ravinia Drive, Suite 1500
                           Atlanta, Georgia 30346
                           Attention:  Associate General Counsel
                           Telecopy No. 770-698-8199

                                      -12-
<PAGE>

                           and to:

                           GCI Health Care Centers, Inc.
                           One Ravinia Drive, Suite 1500
                           Atlanta, Georgia  30346
                           Attention:  Associate General Counsel
                           Telecopy No. 770-698-8199

              (e) If to the Proposed SNH Licensees:

                           SHOPCO-AZ, LLC
                           400 Centre Street
                           Newton, MA  02458
                           Attention:  Treasurer
                           Telecopy No.:  617-796-8349

                           SHOPCO-CA, LLC
                           400 Centre Street
                           Newton, MA  02458
                           Attention:  Treasurer
                           Telecopy No.:  617-796-8349

                           SHOPCO-COLORADO, LLC
                           400 Centre Street
                           Newton, MA  02458
                           Attention:  Treasurer
                           Telecopy No.:  617-796-8349

                           SHOPCO-WI, LLC
                           400 Centre Street
                           Newton, MA  02458
                           Attention:  Treasurer
                           Telecopy No.:  617-796-8349

or to such other  address as may  hereafter be  designated by any party for such
other  purpose,  and shall be  effective  upon receipt if hand  delivered,  when
telecopied,  if  transmitted  by telecopier or upon the  expiration of the fifth
Business Day after being deposited in the mails, if mailed.

13. Indemnification.

              (a) Mariner  Licensees'  Indemnification.  Mariner and the Mariner
Licensees,  jointly and severally,  shall  protect,  indemnify and hold harmless
each of the Proposed SNH  Licensees,  the Manager and their  respective  agents,
employees,   officers,   directors,   partners,  members,  trustees,  attorneys,
successors or assigns  (hereafter  the "SNH  Indemnitees,"  and when referred to
singly,  an  "SNH  Indemnitee")  for,  from  and  against  any  and  all  debts,
obligations,  damages, penalties,  liabilities, liens, claims, causes of action,
administrative   orders  or  notices,   costs,  fines,   penalties  or  expenses
(including, without limitation, reasonable attorney's fees and expenses actually
incurred) to the maximum  extent  permitted by law imposed upon,  incurred by

                                      -13-
<PAGE>

or asserted  against any  Indemnitee  and  arising in  connection  with any act,
omission or obligation of any Mariner Licensee or Mariner  hereunder,  under its
Interim  Occupancy  Agreement,  or  otherwise  in  connection  with the  Mariner
Licensees' or Mariner's  activities in operating or overseeing  the operation of
any of the  Facilities.  Mariner and the Mariner  Licensees,  at their  expense,
shall contest,  resist and defend any such claim,  action or proceeding asserted
or instituted  against any SNH Indemnitee or may compromise or otherwise dispose
of the same,  with the relevant SNH  Indemnitee's  prior written  consent (which
consent may not be unreasonably withheld or delayed).

              (b) Proposed SNH  Licensees'  and Manager's  Indemnification.  The
Proposed  SNH  Licensees  and the Manager  (collectively  referred to as the SNH
Indemnitors),  jointly and severally, shall protect, indemnify and hold harmless
each of the Mariner Licensees and their respective agents, employees,  officers,
directors,  partners,  members,  trustees,  attorneys,  successors  and  assigns
(hereafter  the  "Mariner  Indemnitees"  and when  referred to singly,  "Mariner
Indemnitee")  for,  from and  against any and all debts,  obligations,  damages,
penalties,  liabilities,  liens, claims, causes of action, administrative orders
or notices, costs, fines, penalties, or expenses (including, without limitation,
reasonable attorney's fees and expenses actually incurred) to the maximum extent
permitted  by law imposed  upon,  incurred  by or  asserted  against any Mariner
Indemnitee and arising in connection with any act, omission or obligation of any
SNH Indemnitor hereunder,  under the Interim Occupancy Agreements,  or otherwise
in connection  with the SNH Parties'  activities in operating or overseeing  the
operation of any of the Facilities.  The SNH Parties',  at their expense,  shall
contest,  resist and defend any such  claim,  action or  proceeding  asserted or
instituted against any Mariner Indemnitee or may compromise or otherwise dispose
of the same, with the relevant  Mariner  Licensee's prior written consent (which
consent may not be unreasonably withheld or delayed).

         The provisions of this Section 13 shall survive the termination of this
Agreement.

14. Miscellaneous.

         14.1  Amendments.  This  Agreement  shall  not  be  changed,  modified,
terminated, or discharged in whole or in part except by an instrument in writing
signed by each of the parties hereto or their respective successors or assigns.

         14.2  Non-Assignability.  This  Agreement  shall not be assigned by any
party without the consent of the other party and this Agreement shall be binding
upon and shall inure to the benefit of consented to successors and assigns.

         14.3 Governing Law. This Agreement  shall be governed by,  interpreted,
construed,  applied and enforced in accordance with the laws of the Commonwealth
of Massachusetts  applicable to contracts  between residents of the Commonwealth
of Massachusetts  which are to be performed  entirely within the Commonwealth of
Massachusetts,  regardless of (i) where this Agreement is executed or delivered;
or (ii) where any payment or other  performance  required by this  Agreement  is
made or required to be made;  or (iii) where any breach of any provision of this
Agreement  occurs, or any cause of action otherwise  accrues;  or (iv) where any
action or other  proceeding is instituted  or pending;  or (v) the  nationality,
citizenship,   domicile,   principal   place  of  business  or  jurisdiction  of
organization  or  domestication  of any party;  or (vi)  whether the laws of

                                      -14-
<PAGE>

the forum jurisdiction  otherwise would apply the laws of the jurisdiction other
than  the  Commonwealth  of  Massachusetts;  or  (vii)  any  combination  of the
foregoing.

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

         14.4  Entire  Agreement.  This  Agreement,   together  with  the  other
agreements  contemplated  by,  referred  to in, or  contemplated  by  agreements
referred to herein,  together  constitute  the entire  agreement  of the parties
hereto with respect to the subject  matter  hereof and  supersede and cancel any
preexisting agreements with respect to such subject matter.

         14.5  Attorney's  Fees and  Costs.  If any  action is  brought  for the
enforcement  of this  Agreement,  or because of a  dispute,  breach,  default or
misrepresentation  in connection  with any of the provisions of this  Agreement,
the prevailing party shall be entitled to recover reasonable attorneys' fees and
other costs  incurred in that action in addition to any other relief to which it
may be entitled.

         14.6 Confidentiality. The parties agree not to disclose or permit their
respective representatives, attorneys, auditors or agents to disclose, except as
may be required by law or performance  hereunder,  any  confidential  non-public
information  of the others which is obtained by any of them in  connection  with
the transactions contemplated by this Agreement.

         14.7 Cooperation;  Commercially  Reasonable Efforts.  The parties shall
cooperate in good faith in connection with all actions to be taken to consummate
the  transactions  contemplated  by,  and to enforce  the rights  created by and
perform the  responsibilities  imposed by, this Agreement and in order to assure
compliance  with  Federal,  state and local  laws,  rules and  regulations.  The
parties agree to execute such  amendments,  modifications or supplements to this
Agreement or any other  agreements  between or among any of the parties  hereto,
necessary or appropriate to assure such compliance.

         14.8  Responsibility  for Compliance  with Law. During the term of this
Agreement,  each  Mariner  Licensee  will  keep in full  force  and  effect  all
licenses,   permits,   approvals,   authorizations,   provider  agreements,  and
certificates or  determinations  of need necessary for such Mariner  Licensee to
occupy  and  operate  its  Facilities  and  to  receive  Medicare  and  Medicaid
reimbursement  for  services  provided  therein and the Mariner  Licensees  will
cooperate  with  Proposed  SNH  Licensees  in  connection  with the Proposed SNH
Licensees  obtaining  provider  agreements  to ensure there is no period  during
which  neither a Mariner  Licensee  nor a Proposed  SNH  Licensee is entitled to
reimbursement for services provided at the Facilities.

         14.9 Bankruptcy Court Authorization.  Mariner and the Mariner Licensees
shall  seek  authorization  from the  United  States  Bankruptcy  Court  for the
District of Delaware in order to proceed with those matters provided herein,  in
conjunction  with the  authorization  sought for

                                      -15-
<PAGE>

proceeding  with  the  Settlement   Agreement.   The  form  of  order  providing
authorization  shall  be in a  form  acceptable  to  SPTMNR,  the  Proposed  SNH
Licensees and the Manager.

                  [Remainder of page intentionally left blank.]

                                      -16-
<PAGE>

         IN WITNESS  WHEREOF,  the  parties  have caused  this  Agreement  to be
executed under seal by their duly  authorized  officers as of the date first set
forth above.

                                 MARINER POST-ACUTE NETWORK, INC.

                                 By: /s/ Todd Andrews
                                     Its (Vice) President

                                 AMS PROPERTIES, INC.

                                 By: /s/ Todd Andrews
                                     Its (Vice) President

                                 GCI HEALTH CARE CENTERS, INC.

                                 By: /s/ Todd Andrews
                                     Its (Vice) President

                                 SHOPCO-AZ, LLC

                                 By: /s/ Ajay Saini
                                     Its Treasurer

                                 SHOPCO-CA, LLC

                                 By: /s/ Ajay Saini
                                     Its Treasurer

                                 SHOPCO-COLORADO, LLC

                                 By: /s/ Ajay Saini
                                     Its Treasurer

                                      -17-
<PAGE>

                                 SHOPCO-WI, LLC

                                  By: /s/ Ajay Saini
                                      Its Treasurer

                                  FIVE STAR QUALITY CARE, INC.

                                  By: /s/ Evrett Benton
                                      Its President

                                      -18-
<PAGE>

                                   SCHEDULE A

                             PROPOSED SNH LICENSEES

1.       SHOPCO-AZ LLC, a Delaware limited liability company.

2.       SHOPCO-CA LLC, a Delaware limited liability company.

3.       SHOPCO-COLORADO LLC, a Delaware limited liability company.

4.       SHOPCO-WI LLC, a Delaware limited liability company.

<PAGE>

<TABLE>
<CAPTION>
                                                   SCHEDULE B

                                                   FACILITIES

            Property Name                                Property Address                      Tenant
--------------------------------------------------------------------------------------------------------------
<S>                                                <C>                                     <C>

Cedars Health Care Center                           1599 Ingalls Street                     AMS Properties
                                                    Lakewood, CO

Cherrelyn Manor Nursing Home                        5555 South Elati                        AMS Properties
                                                    Littleton, CO

Christopher East Health Care Center                 1132 East Knapp Street                  AMS Properties
                                                    Milwaukee, WI 53202

Greentree Health Care Center                        70 Greentree Road                       AMS Properties
                                                    Clintonville, WI 54929

La Mesa Health Care Center                          2470 S. Arizona Avenue                  GCIHCC
                                                    Yuma, AZ 85364

La Salette Health Care & Rehabilitation Center      537 E. Fulton                           GCIHCC
                                                    Stockton, CA 95204

Lancaster Health Care Center                        1642 West Avenue "J"                    AMS Properties
                                                    Lancaster, CA

Northwest Health Care Center                        7800 West Fond du Lac Avenue            AMS Properties
                                                    Milwaukee, WI 53218

Pine Manor Health Care Center                       East Side of County Y Highway           AMS Properties
                                                    Embarrass (Clintonville), WI

River Hills West Health Care Center                 321 Riverside Drive                     AMS Properties
                                                    Pewaukee, WI 53072

Sunny Hill Health Care Center                       4325 Nakoma Road                        AMS Properties
                                                    Madison, WI

Sunquest Village of Yuma                            265 East 24th Street                    GCIHCC
                                                    Yuma, AZ 85364

Thousand Oaks Health Care Center                    93 West Avenida de los Arobules         AMS Properties
                                                    Thousand Oaks, CA 91360

Van Nuys Health Care Center                         6835 Hazeltine Avenue                   AMS Properties
                                                    Van Nuys, CA 91405

Village Green Nursing Home                          2932 North 14th Street                  GCIHCC
                                                    Phoenix, AZ 85094

Virginia Health Care Center                         1471 Waukesha Avenue                    AMS Properties
                                                    Waukesha, WI

Woodland Health Care Center                         18740 W. Bluemound Road                 AMS Properties
                                                    Brookfield, WI

</TABLE>

<PAGE>

                                   SCHEDULE C

                           FORM OF OCCUPANCY AGREEMENT

                               See attached copy.

<PAGE>
                           INTERIM OCCUPANCY AGREEMENT

         This Interim Occupancy  Agreement (this "Interim Occupancy  Agreement")
is made this ___ day of 2000,  between [insert name of applicable New Operator],
a Delaware  corporation  ("Sublessor"),  and [insert name of applicable  Mariner
Licensee], a Delaware corporation ("Sublessee").

                                   WITNESSETH

         WHEREAS,  SPTMNR  Properties  Trust, a Maryland real estate  investment
trust  ("SPTMNR"),  and Sublessor are parties to an Amended and Restated  Master
Lease  Agreement,  dated as of  ____________  ___,  ______ (the  "Lease"),  with
respect to the skilled  nursing  facility  known as "[insert  name of facility]"
(the "Facility"); and

         WHEREAS,  SPTMNR,  Sublessor,  Sublessee and various other parties have
entered into a Settlement  Agreement (the "Settlement  Agreement"),  pursuant to
which  Sublessee has agreed to manage the operation of the Facility on the terms
contained therein and in an Interim Management  Agreement,  dated as of the date
hereof (the "Interim  Management  Agreement"),  between Sublessor and Sublessee;
and

         WHEREAS, in order to accomplish the foregoing,  Sublessor has agreed to
sublease the Facility to Sublessee on the terms contained herein;

         NOW THEREFORE, in consideration of the premises, and for other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged by the parties hereto,  the parties hereto,  intending to be bound,
hereby agree as follows:

         1. Sublease.  Upon and subject to the terms and conditions  hereinafter
set forth,  Sublessor  subleases to  Sublessee,  and  Sublessee  subleases  from
Sublessor,  all of  Sublessor's  right,  title and  interest  in,  to,  under or
relating  to the  real  property,  improvements,  fixtures  and  related  rights
constituting  the  Facility  (the  "Demised   Premises"),   including,   without
limitation,  any leasehold rights of Sublessor  relating to the use or occupancy
thereto,  and  Sublessor  agrees that  Sublessee  has and will  continue to have
throughout the term of this Interim  Occupancy  Agreement,  the right to use and
occupy the Demised Premises as the licensed operator of the Facility.

         2. Term. The term of this Interim Occupancy Agreement shall commence on
the  date  hereof,  and  shall  end on the  earlier  of (i) the  date  on  which
Sublessee's  obligation to provide services in connection with the management of
the operation of the Facility under the Interim Management  Agreement shall have
expired  or been  terminated  pursuant  to the  terms  thereof  and (ii) the SNH
Licensing Date (as defined in the Interim Management  Agreement).  Sublessor and
Sublessee acknowledge that under the Interim Management Agreement, Sublessor may
terminate Sublessee's provision of one or more services thereunder,  and that if
Sublessor shall elect to do so, this Interim Occupancy Agreement shall remain in
effect  notwithstanding  such termination  until Sublessor shall have elected to
terminate  Sublessee's  provision of all services  under the Interim  Management
Agreement with respect to the Facility.
<PAGE>

         3.  Rent.  Sublessee  shall pay to  Sublessor  as the rent  under  this
Interim Occupancy Agreement (the "Rent"),  all net patient revenues derived from
the  operation  of the  Facility  during  the  term  of this  Interim  Occupancy
Agreement  to the extent such net patient  revenues  are  actually  collected by
Sublessee.  Except as expressly set forth in the preceding  sentence,  Sublessee
shall  have no  obligation  to pay any  amounts or perform  any  obligations  in
respect of this Interim Occupancy Agreement;  it being the purpose and intent of
Sublessor and Sublessee that this Interim  Occupancy  Agreement is a gross lease
and  that  except  for  the  payment  of  the  Rent,  all  costs,  fees,  taxes,
impositions,  utility  charges,  repairs,  alterations,  restorations,  charges,
expenses,  reimbursements  and  obligations of every kind and manner  whatsoever
relating to the Demised  Premises  which may arise or become due during or after
the term of this Interim  Occupancy  Agreement,  shall be paid and discharged by
Sublessor.

         4.  Surrender  of  Possession.  At the end of the term of this  Interim
Occupancy Agreement, Sublessee shall surrender the Facility to Sublessor and, if
Sublessee shall fail to do so, Sublessee shall be a tenant-at-sufferance subject
to all of the terms of this Interim  Occupancy  Agreement except that Rent shall
be twice the Rent in effect  immediately  prior to the expiration or termination
hereof.  Sublessee  shall be liable for all damages  incurred by  Sublessor as a
result of such holding over.

         5. No Subletting or  Assignment.  Sublessee  shall not sublet or assign
any or all of the Facility  without the prior  consent of  Sublessor;  provided,
however,  that the  foregoing  shall not be deemed to  prohibit  Sublessee  from
permitting  patients or residents to occupy the Facility in the ordinary  course
of Sublessee's business.

         6. Notices.  All notices  required or permitted  hereunder  shall be in
writing and shall be deemed to be properly  given when  personally  delivered to
the party  entitled to receive the notice or on the date of actual  receipt,  if
sent by  certified  or  registered  mail,  postage  prepaid  and return  receipt
requested,  or one  business  day  after  being  sent by  nationally  recognized
overnight courier service,  properly  addressed and postage prepaid to the party
entitled to receive such notice at the address stated below:

If to the Sublessor:                     ____________________
                                         400 Centre Street
                                         Newton, MA 02458
                                         Attention: Treasurer

with a copy to:                          Sullivan & Worcester LLP
                                         One Post Office Square
                                         Boston, MA 02109
                                         Attention:  Nancy S. Grodberg, Esq.

If to the Sublessee:                     ____________________
                                         One Ravinia Drive, Suite 1500
                                         Atlanta, GA 30346
                                         Attention:  Associate General Counsel

                                      -2-
<PAGE>

with a copy to:                          Powell, Goldstein, Frazier & Murphy
                                         191 Peachtree Street
                                         Atlanta, GA 30308
                                         Attention:  Douglas S. Gosden, Esq.

         7. Miscellaneous.

              (a)  All  the  terms  and  provision  of  this  Interim  Occupancy
Agreement  shall be binding upon and inure to the benefit of the parties  hereto
and their respective  successors and permitted  assigns.  Neither party shall be
entitled to assign its rights or  obligations  under this  Sublease  without the
prior consent of the other party hereto.

              (b) The  headings  in this  Interim  Occupancy  Agreement  are for
convenience of reference only and shall not limit or otherwise  affect the terms
hereof.

              (c) This  Interim  Occupancy  Agreement  shall be  governed by and
construed  in  accordance  with the  internal  laws of the  State  in which  the
Facility  is  located,  without  giving  effect  to  contrary  conflicts  of law
principles.

              (d) This Interim  Occupancy  Agreement may be executed in separate
counterparts,  each of which shall be considered an original,  and all of which,
when taken together, shall constitute one and the same instrument.

              (e) This Interim Occupancy Agreement  (including the Schedules and
Exhibits hereto), and the other documents and instruments  specifically provided
for herein and  therein,  contain the entire  understanding  between the parties
concerning  the  subject  matter  hereof and  thereof,  and except as  expressly
provided  for  herein  or  therein,   supersede  all  prior  understandings  and
agreements  whether  oral or written,  between  them with respect to the subject
matter hereof and thereof.

              (f) Neither this Interim  Occupancy  Agreement  nor any  provision
hereof may be changed, waived,  discharged or terminated except by an instrument
in writing signed by Sublessor and Sublease.

              (g) Any rights or  remedies  that any party  hereto may have under
this Interim Occupancy  Agreement with respect to any matter shall not be deemed
to be such  party's  exclusive  rights or remedies  with  respect to such matter
arising out of the  Settlement  Agreement (or any of the  Transaction  Documents
referred to therein),  and any party may exercise its rights and remedies  under
this Interim  Occupancy  Agreement or the  Settlement  Agreement  (or any of the
Transaction  Documents  referred  to therein)  concurrently  with any such other
rights or remedies,  or in any order that it determines in its sole and absolute
discretion.

                            [SIGNATURES ON NEXT PAGE]

                                      -3-
<PAGE>

         IN WITNESS  WHEREOF,  the parties  have caused this  Interim  Occupancy
Agreement to be executed and  delivered by their  respective  officers  hereunto
duly authorized.

SUBLESSOR:                                  SUBLESSEE:

[insert name of applicable New Operator]    [insert name of Mariner Licensee]

By:___________________________              By:___________________________
Its: ___________________________            Its: ___________________________

                                      -4-
<PAGE>

                                   SCHEDULE D

                               Designated Services

    Information Technology Support                                   1.0%

           Reimbursement                                             0.5%

Accounts Payable and Payroll Processing                              1.5%

         Consultative Services                                       2.0%EXHIBIT 10.4

                      IN THE UNITED STATES BANKRUPTCY COURT
                          FOR THE DISTRICT OF DELAWARE

In re                                     )        Chapter 11
                                          )
INTEGRATED HEALTH SERVICES,               )        Case No. 00-389 (MFW)
INC., et at.,                             )
                                          )
                             Debtors.     )        Jointly Administered

         ORDER UNDER 11 U.S.C.ss.ss.105, 363, 365 AND 1146 AND FED. R. BANKR.
         P. 6004, 6006 AND 9019: (i) APPROVING SETTLEMENT AGREEMENT
         WITH SENIOR HOUSING PROPERTIES TRUST AND CERTAIN RELATED
         ENTITIES; (ii) AUTHORIZING THE SALE TO SENIOR HOUSING
         PROPERTIES TRUST AND CERTAIN RELATED ENTITIES OF RIGHTS
         AND INTERESTS IN AND TO CERTAIN REAL AND PERSONAL
         PROPERTY FREE AND CLEAR OF ALL LIENS, CLAIMS,
         ENCUMBRANCES, AND INTERESTS; (iii) AUTHORIZING THE
         ASSUMPTION AND ASSIGNMENT OF CERTAIN EXECUTORY
         CONTRACTS AND UNEXPIRED LEASES; (iv) DETERMINING THAT
         SUCH TRANSFERS ARE EXEMPT FROM ANY STAMP, TRANSFER,
         RECORDING, OR SIMILAR TAX; AND (v) GRANTING RELATED RELIEF,
         INCLUDING. A PROHIBITION OF RECOURSE

         Upon the motion,  dated April 12, 2000 (the  "Settlement  Motion"),  of
Integrated Health Services, Inc. ("IHS"), and certain of its direct and indirect
subsidiaries   which  are  also   debtors  and   debtors-in-possession   in  the
above-captioned  cases (collectively,  the "IHS Debtors")1 for an order under 11
U.S.C.  ss.ss. 105, 363, 365 and 1146 and Bankruptcy Rules 6004, 6006, and 9019;
(i)  approving  a  Settlement  Agreement,2  together  with  all  appendices  and
exhibits, between the

----------------
         1 Other than IHS, the IHS Debtors are: ECA  Holdings,  Inc.,  Community
Care of  Nebraska,  Inc.,  W.S.T.  Care,  Inc.,  Quality  Care of  Lyons,  Inc.,
Marietta/SCC,  Inc.,  Glenwood/SCC,  Inc.,  Dublin/SCC,  Inc., College Park/SCC,
Inc.,  IHS  Acquisition  No, 108,  Inc.,  IHS  Acquisition  No. 112,  Inc.,  IHS
Acquisition  No. 113, Inc., IHS  Acquisition  No. 135, Inc., IHS Acquisition No.
148,  Inc.,  IHS  Acquisition  No. 152,  Inc.,  IHS  Acquisition  No.  153,  IHS
Acquisition  No. 154, Inc., IHS  Acquisition  No. 155, Inc., IHS Acquisition No.
175,  Inc.,  Integrated  Health  Services at Grandview  Care Center,  Inc.,  ECA
Properties, Inc., CCA of Midwest, Inc., and Quality Care of Columbus, Inc.

         2 All  capitalized  terms not otherwise  defined  herein shall have the
meaning assigned in the Settlement Agreement.
<PAGE>

IHS  Debtors  and Senior  Housing  Properties  Trust and  certain of its related
entities (collectively,  the "SNH Entities"), dated April 11, 2000 as amended by
that certain Amendment to Settlement Agreement,  dated as of June ___, 2000 (the
"Settlement  Agreement");  (ii)  authorizing the sale of certain assets free and
clear of all liens, claims,  encumbrances,  and interests; (iii) authorizing the
assumption and assignment of certain  executory  contracts and unexpired leases;
(iv) determining that such sale is exempt from any stamp,  transfer,  recording,
or similar tax; and (v) granting related relief, including a prohibition against
recourse and the IHS Debtors  having  entered into a certain  Stipulation  Among
Debtors,  SNH  Entities  and the United  States  Department  of Health and Human
Services  Regarding  Treatment of Medicare  Provider  Agreements  Pertaining  to
Certain "Transfer  Facilities" and Order Thereon (the "U.S.  Stipulation");  and
the Court having considered the Settlement Motion and the U.S. Stipulation;  and
upon the record in these cases; and after due deliberation thereon; and good and
sufficient cause appearing therefor; it is hereby

         FOUND THAT:3

         A. This Court has jurisdiction  over the Settlement Motion and the U.S.
         Stipulation  pursuant to 28 U.S.C.  ss.ss.157 and 1334. Venue is proper
         pursuant to 28  U.S.C.ss.ss.1408  and 1409.  This is a core  proceeding
         under  28  U.S.C.ss.157(b)(2)(A),   (M)  (N)  and  (O).  The  statutory
         predicates  for the relief  sought herein are 11  U.S.C.ss.ss.  105(a),
         363, 365 and 1146(c) and Fed. R, Bankr. P. 6004, 6006, and 9019.

         B. Due and proper notice of the Settlement  Motion,  the objection date
         and the hearing  thereon has been given to: (i) counsel to the Official
         Committee of Unsecured

-------------
         3  Findings  of fact  shall  be  construed  as  conclusions  of law and
conclusions  of law shall be  construed  as finds of act when  appropriate.  See
Bankruptcy Rule 7052.

                                      -2-
<PAGE>

         Creditors  appointed in these cases;  (ii) counsel for the IHS Debtors'
         prepetition  lender;  (iii)  counsel for the IHS Debtors'  postpetition
         lenders;  (iv)  counsel for certain  major  holders of the IHS Debtors'
         subordinated indebtedness; (v) the office of the United States Trustee;
         (vi) all persons who have filed a notice of appearance  and request for
         service of papers in these cases pursuant to Bankruptcy Rule 2002; (vi)
         all governmental units, including taxing, regulatory agencies and Third
         Party  Payors,  that have  dealings  with the IHS  Debtors'  facilities
         affected by this motion;  (viii) all persons on the mailing  matrix for
         these cases whose address is in one of the states in which IHS Debtors'
         facilities  affected by this motion are  located;  and (ix) all persons
         who have litigation  pending against the IHS Debtors or have threatened
         litigation  against the IHS Debtors  relating to any of the  facilities
         affected by this motion;  and notice has been posted at each of the IHS
         Debtors' facilities affected by the Settlement  Agreement and published
         in newspapers  as follows:  USA Today,  The News  Journal,  Omaha World
         Herald,  The  Des  Moines  Register,   The  Denver  Post,  The  Atlanta
         Journal-Constitution,  The Boston  Globe,  The Wichita  Eagle,  The St.
         Louis  Post  Dispatch,  KC  Star,  The  Wyoming  Tribune-Eagle  and The
         Hartford Courant.  The IHS Debtors have also served Notice of Filing of
         the U. S. Stipulation and of Debtors' Supplemental  Submission:  (A) in
         support of Motion for Order inter alia,  approving Settlement Agreement
         with Senior Housing  Properties Trust and Related Entities;  and (B) in
         Response  to  Objection  filed by Richard  Wolfe,  individually  and on
         behalf of Buchanan/SCC, Inc. on those persons in categories (i) through
         (vi) above.  No other or further notice is required.

         C. In response to the  Settlement  Motion and notice  thereof,  the IHS
         Debtors received

                                      -3-
<PAGE>

         certain objections to the relief sought in the Settlement Motion:  each
         of  which  has  either  been  overruled,  withdrawn  or  settled.

         D. A reasonable  opportunity to object or be heard regarding the relief
         requested in the Settlement  Motion has been afforded to all interested
         persons and governmental  units, the Court having conducted hearings on
         the Settlement Motion on May 2, 2000 and July 7, 2000.

         E. The IHS Debtors  have:  (i) full  corporate  power and  authority to
         execute the Settlement  Agreement and all other documents  contemplated
         thereby;  and (ii) all the corporate  power and authority  necessary to
         consummate the transactions  contemplated by the Settlement  Agreement;
         no consent or  approval,  other than this Order is required for the IHS
         Debtors to consummate such transactions.

         F. The IHS Debtors have exercised  sound business  judgment in deciding
         to proceed with those matters provided in the Settlement  Agreement and
         the U.S.  Stipulation,  including  without  limitation the IHS Debtors'
         transfer to the SNH Entities of all the IHS Debtors' rights,  title and
         interests  in the  Transfer  Facilities  and  the  Aurora  Parcel,  the
         assumptions  and  assignments  (the  "Contract   Assignments")  of  the
         Assigned Contracts provided therein,  the execution and delivery of the
         New Pennsylvania  Lease,  New Pennsylvania  Guaranty and the Management
         and Servicing Agreement, the payments to be made to the SNH Entities in
         lieu of rent or use and occupancy for periods after the petition  date,
         the  payment  of  rent  from  January  1,  2000  pursuant  to  the  New
         Pennsylvania  Lease,  the  sale of  personal  property  located  at the
         Transfer Facilities to the extent

                                      -4-
<PAGE>

         provided therein, and the exchange of mutual releases.

         G. The  transfers of assets and  properties  of the IHS  Debtors'  (the
         "Asset Transfers"),  including, the Transfer Facilities, Aurora Parcel,
         the Contract  Assignments and the sale of personal  property located at
         the  Transfer  Facilities  to the  extent  provided  in the  Settlement
         Agreement  (the  "Transferred   Assets"),  are  transfers  pursuant  to
         ss.1146(e) of the Code,  and,  accordingly,  may not be taxed under any
         law imposing a stamp tax or similar tax.

         H.  Approval  of  the  Settlement  Agreement  and  consummation  of the
         transactions provided therein at this time are in the best interests of
         the IHS Debtors, their creditors, and their estates.

         I. Pursuant to ss.363(b) of the  Bankruptcy  Code, the IHS Debtors have
         articulated good and sufficient  business  justification for proceeding
         with those  transactions  provided for in the Settlement  Agreement and
         the U.S. Stipulation.

         J. The IHS  Debtors  and the SNH  Entities  negotiated  the  Settlement
         Agreement in good faith,  without  collusion,  and at arm's length. The
         SNH  Entities  are  unrelated  to the IHS  Debtors  and are good  faith
         purchasers,  under  ss.363(m) of the Code and, as such, are entitled to
         the protections afforded thereby.

                                      -5-
<PAGE>

         K. All amounts,  if any, to be paid by the IHS Debtors  pursuant to the
         Settlement Agreement constitute administrative expenses under ss.ss.503
         (b) and 507 (a) (1) of the Code and are immediately payable if and when
         any IHS  Debtors'  obligations  arise  under the  Settlement  Agreement
         without  further order of the Court.

         L. The value received by the IHS Debtors for the Transferred  Assets is
         fair and reasonable.

         M. The IHS  Debtors may sell the  Transferred  Assets free and clear of
         all liens,  claims,  encumbrances,  rights of first  refusal  and other
         interests   because  each  person  with  a  security  interest  in  the
         Transferred Assets has consented to, or is deemed to have consented to,
         the sale of such  property,  such  interest  is a lien and the price at
         which such property is sold is greater than the aggregate  value of all
         liens on such property,  or each person or  governmental  unit could be
         compelled  in a  legal  or  equitable  proceeding  to  accept  a  money
         satisfaction of such interest,  including, the acceptance of substitute
         collateral.

                                      -6-
<PAGE>

         N. The Asset Transfers pursuant to the Settlement Agreement: (a) are or
         will be legal,  valid or  effective  transfers  of  property of the IHS
         Debtors'  estates to the SNH  Entities;  and (b)  except for  Permitted
         Encumbrances  and to the extent the SNH Entities have expressly  agreed
         in the Settlement Agreement to discharge obligations under the Assigned
         Contracts  arising  prior to or after the  Closing  Date (the  "Assumed
         Contract Obligations"),  the Asset Transfers shall be free and clear of
         any and all liens, claims,  interests, and encumbrances under ss.363(f)
         of the Code.

         O.  Consummation  of the Asset  Transfers does not and will not subject
         the SNH Entities to any debts, liabilities,  obligations,  commitments,
         responsibilities  or claims of any kind or nature  whatsoever,  whether
         known or  unknown,  contingent  or  otherwise,  existing as of the date
         hereof  or  hereafter  arising,  of or  against  the IHS  Debtors,  any
         affiliate of the IHS Debtors, or any person by reason of such transfers
         and  assignments  under  the  laws of the  United  States,  any  state,
         territory or possession thereof or the District of Columbia  applicable
         to such transactions,  except that the SNH Entities shall be liable for
         payment only of the Assumed Contract Obligations.

         P. The IHS  Debtors  have good  title to the  Transferred  Assets  and,
         accordingly,  the Asset  Transfers to the SNH  Entities  will be legal,
         valid and effective transfers.

         Q. The SNH  Entities do not  constitute  a successor to the IHS Debtors
         because:

                  1.  Other  than as  explicitly  set  forth  in the  Settlement
                  Agreement with respect to Permitted  Encumbrances  and Assumed
                  Contract  Obligations,  the SNH Entities are not  expressly or
                  impliedly agreeing to assume any of the IHS Debtors' debts;

                  2. The transaction does not amount to a consolidation,  merger
                  or de facto

                                      -7-
<PAGE>

                  merger of the IHS Debtors and the SNH Entities;

                  3. The SNH Entities are not merely a  continuation  of the IHS
                  Debtors; and

                  4. The  transaction is not being entered into  fraudulently or
                  in order to escape liability from the IHS Debtors' debts.

         R. The relief  requested  in the  Settlement  Motion is  necessary  and
         appropriate to assist the reorganization of the IHS Debtors' businesses
         and to prevent the deterioration of the IHS Debtors' assets,  and is in
         the  best  interests  of the  IHS  Debtors,  their  estates  and  their
         creditors.

         S. All of the  provisions of this Order are  nonseverable  and mutually
         dependent.

         T. The SNH Entities  have cured,  or have provided  adequate  assurance
         that they will promptly cure, any default of any Assigned  Contracts in
         accordance  with the procedures  hereunder,  within the meaning of Code
         ss.365(b)(1)(A).

         U. The SNH Entities have provided compensation or adequate assurance of
         compensation  to any party  other than the IHS  Debtors  for any actual
         pecuniary loss to such party resulting from a default prior to the date
         hereof   under  any   Assigned   Contract,   within   the   meaning  of
         ss.365(b)(1)(B) of the Code.

         V.  The  SNH  Entities  have  provided  adequate  assurance  of  future
         performance   of  the  Assigned   Contracts,   within  the  meaning  of
         ss.365(b)(1)(C) of the Code.

         W. The  sale,  conveyance  and  assignment  of the  Transferred  Assets
         pursuant to the Settlement  Agreement free and clear of liens,  claims,
         encumbrances  and  interests,  except for  Permitted  Encumbrances,  as
         provided in the Settlement Agreement and in this Order

                                      -8-
<PAGE>

         is appropriate under the circumstances because: (a) such liens, claims,
         encumbrances and interests are subject to a bona fide dispute;  (b) the
         holders of such liens, claims, encumbrances and interests, if any, have
         consented to such relief; or (c) such liens,  claims,  encumbrances and
         interests,  if any, shall attach to the proceeds,  if any, from the IHS
         Debtors'  transfer  of the  particular  asset or property to which such
         lien,  claim,  encumbrance or interest is now attached,  subject to the
         same  defenses or claims  which the IHS  Debtors may have with  respect
         thereto, with the same priority,  validity,  force and effect that they
         now have against the Transferred Assets.

         X.  The  transactions  contemplated  by the  Settlement  Agreement  are
         prerequisites  to the IHS Debtors'  ability to confirm and consummate a
         plan or plans of reorganization or liquidation. The Asset Transfers are
         sales  in  contemplation  of a plan  and,  accordingly,  are  transfers
         pursuant to ss.1146 (c) of the Code, which shall not be taxed under any
         law imposing a stamp tax or similar tax.

                  IT IS THEREFORE ORDERED, ADJUDGED AND DECREED THAT:

         1. The  Settlement  Motion and the relief sought  therein is granted in
all respects and the terms and conditions of the Settlement  Agreement,  annexed
to the Settlement Motion as Exhibit A and as amended to date, are approved.

         2. All  objections  to the  Settlement  Motion or the relief  requested
therein that have not been withdrawn, waived or settled, and all reservations of
rights included therein, are overruled on the merits.

                                      -9-
<PAGE>

         3. The  terms  and  conditions  and  transactions  contemplated  by the
Settlement  Agreement  are  hereby  approved  in all  respects,  and  the  Asset
Transfers are hereby  approved in all respects and authorized and directed under
ss.363 (b) of the Code.

         4. The IHS Debtors are  authorized and directed to execute and deliver,
and  empowered  to perform  under,  consummate  and  implement,  the  Settlement
Agreement,  together with all additional  instruments  and documents that may be
reasonably necessary or desirable to implement the Settlement Agreement,  and to
take all further  actions as may reasonably be requested by the SNH Entities for
the purpose of assigning,  transferring,  granting,  conveying and conferring to
the SNH Entities, or reducing to possession all of the Transferred Assets, or as
may be  necessary  or  appropriate  to the  performance  of the  obligations  as
contemplated by the Settlement Agreement.

         5. Pursuant to  ss.ss.105(a)  and 363(f) of the Code,  upon the closing
under the Settlement Agreement,  the SNH Entities shall acquire all right, title
and  interest  in and to the  Transferred  Assets,  free and clear  of:  (a) all
mortgages,  security  interests,  conditional  sale  or  other  title  retention
agreements,  pledges, liens,  judgments,  demands,  encumbrances,  restrictions,
constructive  or resulting  trusts,  rights of first refusal,  or charges of any
kind or nature,  if any,  including,  but not limited to, any restriction on the
use, voting, transfer,  receipt of income or other exercise of any attributes of
ownership (collectively,  "Interests");  and (b) all debts, claims (as that term
is defined in the Code), Pre-Effective Time Obligations,  obligations,  demands,
guaranties,  options, rights, contractual commitments,  restrictions,  interests
and matters of any kind and nature, arising prior to the Closing, whether before
or after the

                                      -10-
<PAGE>

commencement of these cases,  and whether  imposed by agreement,  understanding,
law,  equity or otherwise,  arising in any way in  connection  with any acts, or
failures  to  act,  of the  IHS  Debtors  or the IHS  Debtors'  predecessors  or
affiliates (collectively, the "Claims"), except for such Interests and Claims as
are Permitted Encumbrances as defined in the Settlement Agreement, with all such
Interests and Claims  released,  terminated and discharged as to the Transferred
Assets,  which  Interests and Claims shall attach to the net  proceeds,  if any,
received by the IHS Debtors for the particular  Transferred  Asset to which such
Interests  or Claims now attach,  with the same  priority,  validity,  force and
effect  which  such  Interests  or Claims now have as  against  the  Transferred
Assets.

         6.  Except  with  respect to  Permitted  Encumbrances,  all persons and
governmental  units holding  Interests or Claims against the IHS Debtors arising
before the Closing,  or out of events occurring before the Closing,  of any kind
and nature with respect to the  Transferred  Assets  conveyed  hereby are barred
from  asserting such Interests and Claims of any kind and nature against the SNH
Entities, their successors or assigns, or the Transferred Assets.

         7.  Payments  which are  received by the IHS  Debtors  from Third Party
Payors for  services  rendered  by the  Transfer  Facilities  from and after the
Closing,  shall, in accordance with the Management and Servicing  Agreement,  be
received  by the  IHS  Debtors  and  delivered  by the  IHS  Debtors  to the SNH
Entities,  and shall  not be  subject  to  claims  against,  or  obligations  or
liabilities of ally of the IHS Debtors, but shall be subject to rights of setoff
in

                                      -11-
<PAGE>

favor of the IHS Debtors to the extent expressly  provided in the Management and
Servicing Agreement.

         8. To the  greatest  extent  allowed  by  applicable  law,  except  for
Permitted  Encumbrances and Assumed Contract  Obligations:  (a) the SNH Entities
are not assuming nor shall they in any way whatsoever be liable or  responsible,
under  any  theory  of law  or  equity,  as  successor  or  otherwise,  for  any
liabilities,  debts or obligations of the IHS Debtors or any liabilities,  debts
or  obligations  in any way  whatsoever  relating  to or  arising  from  the IHS
Debtors'  operations or use of the  Transferred  Assets or from the  Transferred
Assets  prior  to the  consummation  of  the  transactions  contemplated  by the
Settlement Agreement; and (b) except as expressly provided in the Management and
Servicing  Agreement,  the consummation of the Asset Transfers shall not subject
the SNH Entities to any Claims  against,  or liabilities or obligations  of, the
IHS Debtors  arising as of the date of this Order or hereafter by reason of such
Asset Transfers,  under the laws of the United States,  any state,  territory or
possession  thereof  or the  District  of  Columbia,  applicable  to such  Asset
Transfers.

         9. Except for Permitted  Encumbrances and Assumed Contract Obligations,
no person or governmental  unit,  including,  without  limitation,  any federal,
state or local governmental agency, department or instrumentality,  shall assert
by suit or otherwise  against the SNH Entities or their  successors  in interest
any Claim  that they  had,  have or may have  against  the IHS  Debtors,  or any
liability,  debt or obligation relating to the IHS Debtors' operations or use of
the Transferred Assets or from the Transferred Assets prior to the Closing,

                                      -12-
<PAGE>

and all persons and entities are hereby enjoined from asserting  against the SNH
Entities in any way any such Claims, liabilities, debts or obligations.

         10. The transfers of the Transferred  Assets pursuant to the Settlement
Agreement are transfers  pursuant to ss.1146(c) of the Code,  and,  accordingly,
may not be taxed under any law imposing a stamp tax or similar tax.

         11. As of the Closing in accordance with the Settlement Agreement,  all
of the IHS Debtors'  interests in the Transferred  Assets will be transferred to
and  vested in the SNH  Entities.  Subject to the  fulfillment  of the terms and
conditions of the Settlement  Agreement,  as of the Closing,  this Order will be
considered and constitute for all purposes a full and complete general quitclaim
assignment, conveyance and transfer of the Transferred Assets and/or a quitclaim
deed transferring the IHS Debtors' title and interest in the Transferred  Assets
to the SNH Entities.  All governmental  recording offices and all other parties,
persons or governmental units are hereby authorized anal directed to accept this
Order as such a quitclaim  assignment  and/or quitclaim deed, and, if necessary,
this  Order  will be  accepted  for  recordation  on or after  the  Closing,  as
conclusive  evidence of the transfer of title to the Transferred Assets conveyed
to SNH Entities at the Closing. All Interests or Claims of record as of or prior
to the Closing, except for the Permitted Encumbrances, will be forthwith removed
and stricken as against the Transferred Assets.

         12.  No  bulk  sales  law or any  similar  law of any  state  or  other
jurisdiction  will apply in any way to the IHS Debtors' sale of the  Transferred
Assets to the SNH Entities.

                                      -13-
<PAGE>

         13. From and after the Closing,  each of the IHS Debtors'  creditors is
directed  to  execute  such  documents  and take  all  other  actions  as may be
necessary to release its Interests on or Claims against the Transferred  Assets,
as such  Interests or Claims,  if any, may have been  recorded or may  otherwise
exist.

         14. This Order: (a) is and shall be effective as a determination  that,
as of the Closing, all Interests or Claims existing as to the Transferred Assets
before the Closing have been unconditionally released, discharged and eliminated
(with such interests to attach to the net proceeds  received by the IHS Debtors,
if any,  from the transfer of the  particular  Transferred  Assets to which such
Interest is presently  attached),  and that the  conveyance  of the  Transferred
Assets hereof has been effected; and (b) is and shall be binding upon and govern
the acts of all persons and governmental  units including without limitation all
filing agents,  filing officers,  title agents,  title  companies,  recorders of
mortgages,  recorders  of deeds,  registrars  of deeds,  registrars  of patents,
trademarks or other intellectual property, administrative agencies, governmental
departments,  secretaries of federal,  state and local officials , and all other
persons and  entities  who may be required by  operation  of law,  the duties of
their office, or contract, to accept, file, register otherwise record or release
any  documents  or  instruments,  or who maybe  required to report or insure any
title or state of title in or to any of the Transferred Assets.

         15. All individuals or entities who are presently, or as of the Closing
may be,  in  possession  of some or all of the  Transferred  Assets  are  hereby
directed to surrender  possession of said Transferred Assets to the SNH Entities
at or prior to the Closing.

                                      -14-
<PAGE>

         16.  If any  person  that  has  filed  financing  statements  or  other
documents or agreements  evidencing  Interests on or in the  Transferred  Assets
shall not have delivered to the IHS Debtors  before the Closing,  in form proper
for filing and  executed by the  appropriate  parties,  termination  statements,
instruments of  satisfaction,  releases of all Interests or other interests that
the  person  or entity  has with  respect  to the  Transferred  Assets,  the SNH
Entities are hereby authorized to execute and tile such statements, instruments,
releases  and other  documents  on  behalf of the  person  with  respect  to the
Transferred Assets.

         17.  Nothing  contained in any chapter 11 plan confirmed in these cases
or the order of  confirmation  confirming  any such chapter 11 plan or any other
order entered in these cases shall conflict with or derogate from the provisions
of the Settlement Agreement or the terms of this Order.

         18. The Settlement Agreement and the transactions  contemplated thereby
shall be binding  upon,  and not subject to rejection  or avoidance  by, the IHS
Debtors or any  chapter 7 or chapter  11  trustee of the IHS  Debtors  and their
respective estates.

         19. The Settlement  Agreement and any related agreements,  documents or
other  instruments  may be  modified,  amended or  supplemented  by the  parties
thereto in accordance with the terms thereof without further order of the Court,
provided that any such modification, amendment or supplement is not material.

         20.  The  SNH  Entities  are  good-faith  purchasers,  entitled  to the
protections  ofss.363(m)  of the Code in the event that this Order is revised or
modified on appeal; provided,

                                      -15-
<PAGE>

however, that nothing herein shall be construed to release,  waive, or otherwise
modify  claims the IHS Debtors or the SNH  Entities  may have against each other
relating to transactions  or occurrences to be consummated  under the Settlement
Agreement, which are fully preserved.

         21. The consideration  provided by the SNH Entities for the Transferred
Assets  pursuant  to the  Settlement  Agreement  shall be deemed  to  constitute
reasonably  equivalent value and fair consideration  under the Code or under the
laws of the United States, any state,  territory,  possession or the District of
Columbia.

         22: The Asset  Transfers are fair and reasonable and may not be avoided
under ss.363(n) of the Bankruptcy Code.

         23.  Nothing  in  this  Order  or the  Settlement  Agreement  shall  be
construed as releasing or relieving any entity from any environmental  liability
to a  government  entity as the owner or operator  of property  that that entity
owns or operates after the date of entry of this Order.

         24. The failure specifically to include any particular provision of the
Settlement   Agreement   in  this  Order  shall  not   diminish  or  impair  the
effectiveness  of such  provision,  it being the  intent  of the Court  that the
Settlement Agreement be authorized and approved in its entirety.

         25. The U. S.  Stipulation  is hereby  approved and the IHS Debtors are
authorized to perform under,  consummate  and implement the U.S.  Stipulation in
accordance with its terms.

                                      -16-
<PAGE>

         26. As provided by Bankruptcy  Rule 7062, this Order shall be effective
and enforceable  immediately upon entry.  This Order shall not be subject to the
10 day stay  arising  under  Bankruptcy  Rules  6004 (g) and 6006  (d),  and the
parties to the  Settlement  Agreement may  accordingly  proceed  immediately  to
Closing.

         27.  This Court  shall  retain  jurisdiction  to decide and resolve any
disputes  arising between the SNH Entities,  the IHS Debtors or any other person
or entity with  respect to the  Settlement  Agreement  or any of the  Settlement
Documents or this Order.

         28. The Settlement  Agreement and this Order shall be without prejudice
to any  claims of the  creditors  of the IHS  Debtors  or any  claims of the IHS
Debtors for an allocation of benefits  conferred or burdens incurred as a result
of the transactions to be effected under the Settlement Agreement.

Dated:   Wilmington, Delaware

         July 7, 2000

                               /s/ Mary F. Walrath
                               UNITED STATES BANKRUPTCY JUDGE

                                      -17-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00013-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00013-of-00352.parquet"}]]