Document:

Exhibit 4.1

                               SERIES SUPPLEMENT

                      CORPORATE BACKED TRUST CERTIFICATES

       W.R. BERKLEY CAPITAL TRUST SECURITIES-BACKED SERIES 2002-1 TRUST

                                    between

                            LEHMAN ABS CORPORATION,

                                 as Depositor

                                      and

                     U.S. BANK TRUST NATIONAL ASSOCIATION,

                                  as Trustee

                      CORPORATE BACKED TRUST CERTIFICATES

                         Dated as of January 23, 2002

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                               Table of Contents
                                                                        Page
                                                                        ----

Section 1.   Incorporation of Standard Terms...............................1

Section 2.   Definitions...................................................1

Section 3.   Designation of Trust and Certificates.........................7

Section 4.   Trust Certificates............................................8

Section 5.   Distributions.................................................8

Section 6.   Trustee's Fees................................................11

Section 7.   Optional Exchange.............................................11

Section 8.   Notices of Events of Default..................................13

Section 9.   Miscellaneous.................................................13

Section 10.  Governing Law.................................................16

Section 11.  Counterparts..................................................16

Section 12.  Termination of the Trust......................................16

Section 13.  Sale of Underlying Securities;................................16

Section 14.  Amendments....................................................16

Section 15.  Voting of Underlying Securities, Modification of Indenture....17

Section 16.  Additional Depositor Representation...........................18

SCHEDULE I        SERIES 2002-1 UNDERLYING SECURITIES SCHEDULE
EXHIBIT A-1       FORM OF TRUST CERTIFICATE CLASS A-1
EXHIBIT A-2       FORM OF TRUST CERTIFICATE CLASS A-2

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                               SERIES SUPPLEMENT

                      CORPORATE BACKED TRUST CERTIFICATES

       W.R. BERKLEY CAPITAL TRUST SECURITIES-BACKED SERIES 2002-1 TRUST

SERIES SUPPLEMENT, W.R. Berkley Capital Trust Securities-Backed Series 2002-1,
dated as of January 23, 2002 (the "Series Supplement"), by and between LEHMAN
ABS CORPORATION, as Depositor (the "Depositor"), and U.S. BANK TRUST NATIONAL
ASSOCIATION, as Trustee (the "Trustee").

                             W I T N E S S E T H:

WHEREAS, the Depositor desires to create the Trust designated herein (the
"Trust") by executing and delivering this Series Supplement, which shall
incorporate the terms of the Standard Terms for Trust Agreements, dated as of
January 16, 2001 (the "Standard Terms"; together with this Series Supplement,
the "Trust Agreement"), by and between the Depositor and the Trustee, as
modified by this Series Supplement;

WHEREAS, the Depositor desires to deposit into the Trust the Underlying
Securities set forth on Schedule I attached hereto (the "Underlying Securities
Schedule") the general terms of which are described in the Prospectus
Supplement under the heading "Description of the Deposited Assets - Underlying
Securities;"

WHEREAS, in connection with the creation of the Trust and the deposit therein
of the Underlying Securities, it is desired to provide for the issuance of
trust certificates (the "Certificates") evidencing undivided interests in the
Trust; and

WHEREAS, the Trustee has joined in the execution of the Standard Terms and
this Series Supplement to evidence the acceptance by the Trustee of the Trust;

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants expressed herein, it is hereby agreed by and between the Depositor
and the Trustee as follows:

Section 1.  Incorporation of Standard Terms. Except as otherwise provided
            herein, all of the provisions of the Standard Terms are hereby
            incorporated herein by reference in their entirety, and this Series
            Supplement and the Standard Terms shall form a single agreement
            between the parties. In the event of any inconsistency between the
            provisions of this Series Supplement and the provisions of the
            Standard Terms, the provisions of this Series Supplement will
            control with respect to the W.R. Berkley Capital Trust
            Securities-Backed Series 2002-1 Certificates and the transactions
            described herein.

Section 2.  Definitions.

            (a)   Except as otherwise specified herein or as the context may
                  otherwise require, the following terms shall have the
                  respective meanings set forth below for all purposes under
                  this Series Supplement. (Section 2(b) below sets forth terms
                  listed in the Standard Terms which are not applicable to
                  this Series.) Capitalized

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                  terms used but not defined herein shall have the meanings
                  assigned to them in the Standard Terms.

"Available Funds" shall have the meaning specified in the Standard Terms,
except that proceeds of any redemption of the Underlying Securities shall be
included in Available Funds.

"Business Day" shall mean any day other than (i) Saturday and Sunday or (ii) a
day on which banking institutions in New York City, New York are authorized or
obligated by law or executive order to be closed for business or (iii) a day
that is not a business day for the purposes of the Underlying Securities Trust
Agreement.

"Certificate Account" shall have the meaning specified in the Standard Terms.

"Certificates" shall have the meaning specified in Section 3 hereof.

"Class A-1 Allocation" means the sum of the present values (discounted at the
rate of 8.125% per annum) of (i) any unpaid interest due or to become due on
the Class A-1 Certificates and (ii) the outstanding principal amount of the
Certificates (in each case assuming that the Class A-1 Certificates were paid
when due and were not redeemed prior to their stated maturity).

"Class A-1 Certificates" shall mean the Certificates, in the form attached
hereto as Exhibit A-1, to be issued by the Trust representing a proportionate
undivided beneficial ownership interest in certain distributions to be made by
the Trust and having the characteristics described herein and in the
Certificates.

"Class A-2 Allocation" means the present value (discounted at the rate of
8.125% per annum) of any unpaid amounts due or to become due on the Class A-2
Certificates (assuming that the Class A-2 Certificates were paid when due and
were not redeemed prior to their stated maturity).

"Class A-2 Certificates" shall mean the Certificates, in the form attached
hereto as Exhibit A-2, to be issued by the Trust representing a proportionate
undivided beneficial ownership interest in certain distributions to be made by
the Trust and having the characteristics described herein and in the
Certificates.

"Closing Date" shall mean January 23, 2002.

"Collection Period" shall mean, (i) with respect to each December Distribution
Date, the period beginning on the day after the June Distribution Date of such
year and ending on such December Distribution Date, inclusive and, (ii) with
respect to each June Distribution Date, the period beginning on the day after
the December Distribution Date of the prior year and ending on such June
Distribution Date, inclusive; provided, however, that clauses (i) and (ii)
shall be subject to Section 9(f) hereof.

"Corporate Trust Office" shall mean the office of U.S. Bank Trust National
Association located at 100 Wall Street, New York, New York 10005.

"Currency" shall mean United States Dollars.

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"Depository" shall mean The Depository Trust Company.

"Distribution Date" shall mean June 15th and December 15th of each year (or if
such date is not a Business Day, the next succeeding Business Day), commencing
on June 15, 2002, and ending on the earlier of the Final Scheduled
Distribution Date and any date on which Underlying Securities are redeemed
pursuant to the Underlying Securities Trust Agreement.

"Eligible Account" shall have the meaning specified in the Standard Terms.

"Event of Default" shall mean (i) a default in the payment of any interest on
any Underlying Security after the same becomes due and payable (subject to any
permitted deferral during the pendency of an Extension Period and applicable
grace period), (ii) a default in the payment of the principal of or any
installment of principal of any Underlying Security when the same becomes due
and payable, and (iii) any other event specified as an "Event of Default" in
the Underlying Securities Trust Agreement.

"Exchange Act" shall mean the Securities and Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.

"Extension Period" shall have the meaning set forth in Section 5(b) hereof.

"Extraordinary Trust Expenses" shall have the meaning specified in the
Standard Terms.

"Final Scheduled Distribution Date" shall mean December 15, 2045; provided,
that such date shall be advanced in the event the maturity date of the
Underlying Securities is advanced, pursuant to the Underlying Securities Trust
Agreement.

"Interest Accrual Period" shall mean for any Distribution Date, the period
from and including the preceding Distribution Date (or in the case of the
first Interest Accrual Period, from and including January 23, 2002) to but
excluding the current Distribution Date.

"Liquidation Price" shall mean the price at which the Trustee sells the
Underlying Securities.

"Liquidation Proceeds" shall have the meaning specified in the Standard Terms.

"Maturity Date" shall have the meaning specified in Schedule I hereto.

"Moody's" shall mean Moody's Investors Service, Inc.

"Optional Exchange" shall mean the exchange of the Certificates by the Trust
for the Underlying Securities pursuant to Section 7(a) hereof.

"Optional Exchange Date" shall mean any Distribution Date on which Underlying
Securities subject to Optional Exchange are distributed to a
Certificateholder.

"Ordinary Expenses" shall mean the Trustee's ordinary expenses and overhead in
connection with its services as Trustee, including the items referred to in
the definition of Ordinary Expenses in the Standard Terms.

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"Prepaid Ordinary Expenses" shall be zero for this Series.

"Prospectus Supplement" shall mean the Prospectus Supplement, dated January
11, 2002, relating to the Certificates.

"Rating Agency" shall mean Moody's and S&P.

"Rating Agency Condition" shall have the meaning specified in the Standard
Terms.

"Record Date" shall mean, with respect to each Distribution Date, the day
immediately preceding the related Distribution Date.

"Required Interest" shall have the meaning specified in the Standard Terms.

"Required Percentage-Amendment" shall be 66-2/3% of the aggregate Voting
Rights, unless the subject amendment requires the vote of holders of only one
class of Certificates pursuant to the Standard Terms, in which case 66-2/3% of
the Certificate Principal Amount of such Class.

"Required Percentage-Direction of Trustee" shall be 66-2/3% of the aggregate
Voting Rights.

"Required Percentage-Remedies" shall be 66-2/3% of the aggregate Voting
Rights.

"Required Percentage-Removal" shall be 66-2/3% of the aggregate Voting Rights.

"Required Rating" shall mean, in the case of Moody's, the rating assigned to
the Underlying Securities by Moody's as of the Closing Date, and, in the case
of S&P, the rating assigned to the Underlying Securities by S&P as of the
Closing Date.

"S&P" shall mean Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.

"Series" shall mean W.R. Berkley Capital Trust Securities-Backed Series 2002-1.

"Special Event" shall have the meaning specified in the Prospectus Supplement.

"Trustee Fee" shall mean the amount paid to the Trustee by the Depositor on
the Closing Date.

"Trust Property" shall mean the Underlying Securities described on Schedule I
hereto and the Certificate Account.

"Underlying Securities" shall mean $22,000,000 aggregate principal amount of
8.197% Capital Securities due December 15, 2045, issued by the Underlying
Securities Issuer, as set forth in Schedule I attached hereto (subject to
Section 3(d) hereof).

"Underlying Securities Issuer" shall mean W.R. Berkley Capital Trust.

"Underlying Securities Administrative Trustees" shall mean a Trustee who is an
employee or officer of, or is affiliated with the W.R. Berkley Corporation.

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"Underlying Securities Debenture Trustee" shall mean The Bank of New York.

"Underlying Securities Delaware Trustee" shall mean The Bank of New York.

"Underlying Securities Guarantor" shall mean W.R. Berkley Corporation.

"Underlying Securities Property Trustee" shall mean The Bank of New York.

"Underlying Securities Trust Agreement" shall mean the amended and restated
declaration of trust dated as of December 20, 1996 among the Underlying
Securities Guarantor, the Underlying Securities Property Trustee, the
Underlying Securities Delaware Trustee and certain administrative trustees.

"Underwriters" shall mean Lehman Brothers Inc., an affiliate of the Depositor,
First Union Securities, Inc., J.J.B. Hilliard, W.L. Lyons, Inc. and U.S.
Bancorp Piper Jaffray Inc.

"Voting Rights" shall, in the entirety, be allocated among all Class A-1
Certificateholders in proportion to the then unpaid principal amounts of their
respective Certificates. The Class A-2 Certificateholders will have no Voting
Rights.

         (b)     The terms listed below are not applicable to this Series.

                           "Accounting Date"

                           "Administrative Fees"

                           "Advance"

                           "Allowable Expense Amounts"
                           "Basic Documents"

                           "Calculation Agent"

                           "Call Premium Percentage"

                           "Credit Support"

                           "Credit Support Instrument"

                           "Credit Support Provider"

                           "Cut-off Date"

                           "Eligible Expense"

                           "Eligible Investment"

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                           "Exchange Rate Agent"

                           "Fixed Pass-Through Rate"

                           "Floating Pass-Through Rate"

                           "Guaranteed Investment Contract"

                           "Letter of Credit"

                           "Limited Guarantor"

                           "Limited Guaranty"

                           "Minimum Wire Denomination"

                           "Notional Amount"

                           "Pass-Through Rate"

                           "Place of Distribution"

                           "Purchase Price"

                           "Required Premium"

                           "Required Principal"

                           "Requisite Reserve Amount"

                           "Retained Interest"

                           "Sale Procedures"

                           "Sub-Administration Account"

                           "Sub-Administration Agreement"

                           "Sub-Administration Agent"

                           "Surety Bond"

                           "Swap Agreement"

                           "Swap Counterparty"

                           "Swap Distribution Amount"

                           "Swap Guarantee"

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                           "Swap Guarantor"

                           "Swap Receipt Amount"

                           "Swap Termination Payment"

Section 3.  Designation of Trust and Certificates.  The Trust created hereby
            shall be known as the "Corporate Backed Trust Certificates, W.R.
            Berkley Capital Trust Securities-Backed Series 2002-1 Trust." The
            Certificates evidencing certain undivided ownership interests
            therein shall be known as "Corporate Backed Trust Certificates,
            W.R. Berkley Capital Trust Securities-Backed Series 2002-1." The
            Certificates shall consist of the Class A-1 Certificates and the
            Class A-2 Certificates (together, the "Certificates").

           (a)    The Certificates shall be held through the Depository in
                  book-entry form and shall be substantially in the forms
                  attached hereto as Exhibits A-1 and A-2. The Class A-1
                  Certificates shall be issued in denominations of $10. The
                  Class A-2 Certificates shall be issued in minimum notional
                  denominations of $1,000 and integral multiples of $1 in
                  excess thereof. Except as provided in the Standard Terms and
                  in paragraph (d) in this Section, the Trust shall not issue
                  additional Certificates or incur any indebtedness.

           (b)    The Class A-1 Certificates have an initial aggregate
                  certificate principal amount (the "Certificate Principal
                  Amount") of $22,000,000. The Class A-2 Certificates are
                  interest-only Certificates, and have a notional amount equal
                  to the Certificate Principal Amount of the Class A-1
                  Certificates.

           (c)    The holders of the Class A-1 Certificates will be entitled
                  to receive on each Distribution Date the interest, if any,
                  received on the Underlying Securities, to the extent
                  necessary to pay interest at a rate of 8.125% per annum on
                  the outstanding Certificate Principal Amount of the Class
                  A-1 Certificates. The holders of the Class A-2 Certificates
                  will be entitled to receive on each Distribution Date the
                  interest, if any, received on the Underlying Securities, to
                  the extent necessary to pay interest at a rate of 0.072% per
                  annum on the outstanding notional amount of the Class A-2
                  Certificates.

           (d)    The Depositor may sell to the Trustee additional Underlying
                  Securities on any date hereafter upon at least 3 Business
                  Days notice to the Trustee and upon (i) satisfaction of the
                  Rating Agency Condition and (ii) delivery of an Opinion of
                  Counsel to the effect that the sale of such additional
                  Underlying Securities will not materially increase the
                  likelihood that the Trust would fail to qualify as a grantor
                  trust under the Code. Upon such sale to the Trustee, the
                  Trustee shall deposit such additional Underlying Securities
                  in the Certificate Account, and shall authenticate and
                  deliver to the Depositor, on its order, Class A-1
                  Certificates in a Certificate Principal Amount, and Class
                  A-2 Certificates in a notional amount, equal to the
                  principal amount of such additional Underlying Securities.
                  Any such additional Class A-1 Certificates and Class A-2
                  Certificates authenticated and delivered shall have the same
                  terms and rank pari passu with the corresponding

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                  classes of Certificates previously issued in accordance with
                  this Series Supplement.

Section 4.  Trust Certificates.  The Trustee hereby acknowledges receipt, on or
            prior to the Closing Date, of:

           (a)    the Underlying Securities set forth on the Underlying
                  Securities Schedule; and

           (b)    all documents required to be delivered to the Trustee
                  pursuant to Section 2.01 of the Standard Terms.

Section 5.  Distributions.

           (a)    Except as otherwise provided in Section 3(c), on each
                  applicable Distribution Date, the Trustee shall apply
                  Available Funds in the Certificate Account as follows:

                  (i)      The Trustee will pay the interest portion of
                           Available Funds (subject to Section 5(c) and
                           Section 5(d) below):

                      (1)  first, to the Trustee, as reimbursement for any
                           Extraordinary Trust Expenses incurred by the
                           Trustee in accordance with Section 6(b) below and
                           approved by 100% of the Certificateholders; and

                      (2)  second, to the holders of the Class A-1
                           Certificates and to the holders of the Class A-2
                           Certificates, interest accrued and unpaid on each
                           such Class pro rata in proportion to their
                           entitlements thereto.

                  (ii)     the Trustee will pay the principal portion of
                           Available Funds:

                      (1)  first, to the Trustee, as reimbursement for any
                           remaining Extraordinary Trust Expenses incurred by
                           the Trustee in accordance with Section 6(b) below
                           and approved by 100% of the Certificateholders; and

                      (2)  second, to the holders of the Class A-1
                           Certificates, the Certificate Principal Amount.

Any portion of the Available Funds (i) that does not constitute principal of,
or interest on, the Underlying Securities, (ii) that is is not received in
connection with a redemption, prepayment or liquidation of the Underlying
Securities or (iii) for which allocation by the Trustee is not otherwise
contemplated by this Series Supplement, shall be remitted by the Trustee to
the Depositor.

           (b)    Distributions of interest on the Class A-1 Certificates and
                  the Class A-2 Certificates may be deferred as a result of the
                  deferral of payment on the Underlying Securities during the
                  pendency of an Extension Period.  Distributions on the
                  Underlying Securities may be deferred pursuant to the
                  Underlying Securities Trust Agreement for up to ten
                  consecutive semi-annual interest periods

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                  (each, an "Extension Period") provided that no Extension
                  Period may extend beyond the Final Scheduled Distribution
                  Date.  During any Extension Period, interest on the
                  Underlying Securities will continue to accrue at the
                  applicable rate per annum compounded semi-annually.  Interest
                  on deferred and compounded interest on the Class A-1
                  Certificates and the Class A-2 Certificates will be owing
                  only to the extent that such interest is actually received by
                  the Trustee on the Underlying Securities.

           (c)    Notwithstanding the foregoing, if the Underlying Securities
                  are redeemed, prepaid or liquidated in whole or in part for
                  any reason other than due to the occurrence of an Underlying
                  Securities Event of Default, the cessation of W.R. Berkley
                  Corporation to file periodic reports as required by the
                  Exchange Act or at their maturity, the Trustee shall apply
                  Available Funds in the manner described in Section 5(h) in
                  the following order of priority:

                  (i)      first, to the Trustee, as reimbursement for any
                           Extraordinary Trust Expenses incurred by the Trustee
                           in accordance with Section 6(b) below and approved
                           by 100% of the Certificateholders;

                  (ii)     second, to the holders of the Class A-1 Certificates,
                           an amount equal to the outstanding principal amount
                           thereof plus accrued and unpaid interest thereon;

                  (iii)    third, to the holders of the Class A-2
                           Certificates, the present value of all amounts that
                           would otherwise have been payable on the Class A-2
                           Certificates for the period from the date of such
                           redemption or prepayment to the Final Scheduled
                           Distribution Date using a discount rate of 8.125%
                           per annum, assuming no delinquencies, deferrals,
                           redemptions or prepayments on the Underlying
                           Securities; and

                  (iv)     fourth, any remainder to the holders of the Class
                           A-1 Certificates and the Class A-2 Certificates pro
                           rata in proportion to the ratio of the Class A-1
                           Allocation to the Class A-2 Allocation.

           (d)    Notwithstanding the foregoing, if the Underlying Securities
                  are redeemed, prepaid or liquidated in whole or in part due
                  to the occurrence of an Underlying Securities Event of
                  Default, the Trustee shall apply Available Funds to the
                  holders of the Class A-1 Certificates and the holders of the
                  Class A-2 Certificates in accordance with the ratio of the
                  Class A-1 Allocation to the Class A-2 Allocation.

           (e)    Unless otherwise instructed by holders of Certificates
                  representing a majority of the Voting Rights, thirty (30)
                  days after giving notice pursuant to Section 8 hereof, the
                  Trustee shall sell the Underlying Securities pursuant to
                  Section 13 hereof and deposit the Liquidation Proceeds, if
                  any, into the Certificate Account for distribution not later
                  than two (2) Business Days after the receipt of immediately
                  available funds in accordance with Section 5(d) hereof.

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           (f)    If the Trustee receives non-cash property in respect of the
                  Underlying Securities as a result of a payment default on
                  the Underlying Securities (including from the sale thereof),
                  the Trustee will promptly give notice to the Depository, or
                  for any Certificates which are not then held by DTC or any
                  other depository, directly to the registered holders of the
                  Certificates then outstanding and unpaid. Such notice shall
                  state that the Trustee shall and the Trustee shall, not
                  later than 30 days after the receipt of such property,
                  allocate and distribute such property to the holders of
                  Class A-1 Certificates and Class A-2 Certificates then
                  outstanding and unpaid (after deducting the costs incurred
                  in connection therewith) in accordance with Section 5(d)
                  hereof. Property other than cash will be liquidated by the
                  Trustee, and the proceeds thereof distributed in cash, only
                  to the extent necessary to avoid distribution of fractional
                  securities to Certificateholders. In-kind distribution of
                  such property to Certificateholders will be deemed to reduce
                  the principal amount of Certificates on a dollar-for-dollar
                  basis.

           (g)    Subject to Section 9(f) hereof, to the extent Available
                  Funds are insufficient to make any required distributions
                  due to any class of Certificates on any Distribution Date,
                  any shortfall will be carried over and will be distributed
                  on the next Distribution Date (or date referred to in
                  Section 5(h) hereof) on which sufficient funds are available
                  to pay such shortfall.

           (h)    If a payment with respect to the Underlying Securities is
                  made to the Trustee (i) after the payment date of the
                  Underlying Securities on which such payment was due or (ii)
                  after the Underlying Securities are redeemed, prepaid or
                  liquidated in whole or in part for any reason (including a
                  Special Event) other than due to the occurrence of an
                  Underlying Securities Event of Default or at their maturity,
                  then the Trustee will distribute any such amounts received
                  on the next occurring Business Day (a "Special Distribution
                  Date") as if the funds had constituted Available Funds on
                  the Distribution Date immediately preceding such Special
                  Distribution Date; provided, however, that the Record Date
                  for such Special Distribution Date shall be the Business Day
                  prior to the day on which the related payment was received
                  from the Underlying Securities Property Trustee.

           (i)    Notwithstanding Section 3.12 of the Standard Terms, if W.R.
                  Berkley Corporation ceases to file periodic reports as
                  required under the Exchange Act, the Depositor shall within
                  a reasonable time instruct the Trustee to sell the
                  Underlying Securities and distribute the proceeds of such
                  sale to the certificateholders in accordance with the
                  following order of priority: first, to the Trustee, as
                  reimbursement for any Extraordinary Trust Expenses incurred
                  by the Trustee in accordance with Section 6(b) below and
                  approved by 100% of the Certificateholders; and second, any
                  remainder to the holders of the Class A-1 Certificates and
                  the Class A-2 Certificates pro rata in proportion to the
                  ratio of the Class A-1 Allocation to the Class A-2
                  Allocation; provided, however, the Depositor shall not
                  instruct the Trustee to distribute or sell the Underlying
                  Securities pursuant to this clause unless W.R. Berkley
                  Corporation has either (x) stated in writing that it intends
                  permanently to cease filing reports required under

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                  the Exchange Act or (y) failed to file any required reports
                  for one full calendar year.

Section 6.   Trustee's Fees.

           (a)    As compensation for its services hereunder, the Trustee
                  shall be entitled to the Trustee Fee. The Trustee Fee shall
                  be paid by the Depositor and not from Trust Property. The
                  Trustee shall bear all Ordinary Expenses. Failure by the
                  Depositor to pay such amount shall not entitle the Trustee
                  to any payment or reimbursement from the Trust, nor shall
                  such failure release the Trustee from the duties it is
                  required to perform under the Trust Agreement.

           (b)    Extraordinary Expenses shall not be paid out of the Trust
                  Property unless all the holders of the Class A-1
                  Certificates and Class A-2 Certificates then outstanding
                  have directed the Trustee to incur such Extraordinary
                  Expenses. The Trustee may incur other Extraordinary Expenses
                  if any lesser percentage of the Certificateholders
                  requesting such action pursuant hereto reimburse the Trustee
                  for the cost thereof from their own funds in advance. If
                  Extraordinary Expenses are not approved unanimously as set
                  forth in the first sentence of this Section 6(b), such
                  Extraordinary Expenses shall not be an obligation of the
                  Trust, and the Trustee shall not file any claim against the
                  Trust therefor notwithstanding failure of Certificateholders
                  to reimburse the Trustee.

Section 7.  Optional Exchange.

           (a)    On any Distribution Date, any holder of Class A-1
                  Certificates and Class A-2 Certificates may exchange such
                  Certificates for a distribution of Underlying Securities
                  representing the same percentage of the Underlying
                  Securities as such Certificates represent of all outstanding
                  Certificates.

           (b)    The following conditions shall apply to any Optional Exchange.

                  (i)      A notice specifying the number of Certificates
                           being surrendered and the Optional Exchange Date
                           shall be delivered to the Trustee no less than 5
                           days (or such shorter period acceptable to the
                           Trustee) but not more than 30 days before the
                           Optional Exchange Date.

                  (ii)     Certificates shall be surrendered to the Trustee no
                           later than 10:00 a.m. (New York City time) on the
                           Optional Exchange Date.

                  (iii)    Class A-1 Certificates and Class A-2 Certificates
                           representing a like percentage of all Class A-1
                           Certificates and Class A-2 Certificates shall be
                           surrendered.

                  (iv)     The Trustee shall have received an opinion of
                           counsel stating that the Optional Exchange would
                           not affect the characterization of the Trust as a
                           "grantor trust" for federal income tax purposes.

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                  (v)      If the Certificateholder is the Depositor or any
                           Affiliate of the Depositor, (1) the Trustee shall
                           have received a certification from the
                           Certificateholder that any Certificates being
                           surrendered have been held for at least six months,
                           and (2) the Certificates being surrendered may
                           represent no more than 5% (or 25% in the case of
                           Certificates acquired by the Underwriters but never
                           distributed to investors) of the then outstanding
                           Certificates.

                  (vi)     The Trustee shall not be obligated to determine
                           whether an Optional Exchange complies with the
                           applicable provisions for exemption under Rule 3a-7
                           of the Investment Company Act of 1940, as amended,
                           or the rules or regulations promulgated thereunder.

                  (vii)    The provisions of Section 4.07 of the Standard
                           Terms shall not apply to an Optional Exchange
                           pursuant to this Section 7(b). This Section 7(b)
                           shall not provide any person with a lien against,
                           an interest in or a right to specific performance
                           with respect to the Underlying Securities.

Section 8.   Notices of Events of Default.

As promptly as practicable after, and in any event within 30 days after, the
occurrence of any Event of Default actually known to the Trustee, the Trustee
shall give notice of such Event of Default to the Depository, or, if any
Certificates are not then held by DTC or any other depository, directly to the
registered holders of such Certificates. However, except in the case of an
Event of Default relating to the payment of principal of or interest on any of
the Underlying Securities, the Trustee will be protected in withholding such
notice if in good faith it determines that the withholding of such notice is
in the interest of the Certificateholders.

Section 9.  Miscellaneous.

           (a)    The provisions of Section 4.04, Advances, of the Standard
                  Terms shall not apply to the W.R. Berkley Capital Trust
                  Securities-Backed Series 2002-1 Certificates.

           (b)    The provisions of Section 4.07, Optional Exchange, of the
                  Standard Terms shall not apply to the W.R. Berkley Capital
                  Trust Securities-Backed Series 2002-1 Certificates.

           (c)    The Trustee shall simultaneously forward reports to
                  Certificateholders pursuant to Section 4.03 of the Standard
                  Terms and to the New York Stock Exchange.

           (d)    Except as expressly provided herein, the Certificateholders
                  shall not be entitled to terminate the Trust or cause
                  the sale or other disposition of the Underlying Securities.

           (e)    The provisions of Section 3.07(d) of the Standard Terms shall
                  not apply to the W.R. Berkley Capital Trust Securities-Backed
                  Series 2002-1 Certificates.

                                      12
<PAGE>

           (f)    If the Trustee has not received payment with respect to a
                  Collection Period on the Underlying Securities on or prior
                  to the related Distribution Date, such distribution will be
                  made promptly upon receipt of such payment. No additional
                  amounts shall accrue on the Certificates or be owed to
                  Certificateholders as a result of such delay; provided,
                  however, that any additional interest owed and paid by the
                  Underlying Securities Issuer as a result of such delay shall
                  be paid to the Class A-1 Certificateholders pro rata in
                  proportion to their respective entitlements to interest.

           (g)    The outstanding principal balance of the Certificates shall
                  not be reduced by the amount of any Realized Losses (as
                  defined in the Standard Terms).

           (h)    The Trust may not engage in any business or activities other
                  than in connection with, or relating to, the holding,
                  protecting and preserving of the Trust Property and the
                  issuance of the Certificates, and other than those required
                  or authorized by the Trust Agreement or incidental and
                  necessary to accomplish such activities. The Trust may not
                  issue or sell any certificates or other obligations other
                  than the Certificates or otherwise incur, assume or
                  guarantee any indebtedness for money borrowed.
                  Notwithstanding Section 3.05 of the Standard Terms, funds on
                  deposit in the Certificate Account shall not be invested.

           (i)    Notwithstanding anything in the Trust Agreement to the
                  contrary, the Trustee may be removed upon 60 days prior
                  written notice delivered by the holders of Class A-1
                  Certificates and Class A-2 Certificates representing the
                  Required Percentage-Removal.

           (j)    In the event that the Internal Revenue Service challenges
                  the characterization of the Trust as a grantor trust, the
                  Trustee shall then file such forms as the Depositor may
                  specify to establish the Trust's election pursuant to
                  Section 761 of the Code to exclude the Trust from the
                  application of Subchapter K of the Code and is hereby
                  empowered to execute such forms on behalf of the
                  Certificateholders.

           (k)    Notwithstanding anything in the Standard Terms to the
                  contrary, the Trustee, upon written direction by the
                  Depositor, will execute the Certificates.

           (l)    In relation to Section 7.01(f) of the Standard Terms, any
                  periodic reports filed by the Trustee pursuant to the
                  Exchange Act in accordance with the customary practices of
                  the Depositor, need not contain any independent reports.

           (m)    Notwithstanding anything in the Trust Agreement to the
                  contrary, the Trustee will have no recourse to the Underlying
                  Securities.

           (n)    [Reserved].

           (o)    The Trust will not merge or consolidate with any other
                  entity without confirmation from each Rating Agency that
                  such merger or consolidation will not result in the
                  qualification, reduction or withdrawal of its then-current
                  rating on the Certificates.

                                      13
<PAGE>

           (p)    All directions, demands and notices hereunder or under the
                  Standard Terms shall be in writing and shall be delivered as
                  set forth below (unless written notice is otherwise provided
                  to the Trustee).

If to the Depositor, to:

                           Lehman ABS Corporation
                           101 Hudson Street
                           Jersey City, New Jersey 07302
                           Attention:  Structured Credit Trading
                           Telephone:  (201) 524-2000
                           Facsimile:  (201) 524-5451

If to the Trustee, to:

                           U.S. Bank Trust National Association
                           100 Wall Street
                           New York, New York  10005
                           Attention:  Corporate Trust
                           Telephone:  (212) 361-2500
                           Facsimile:  (212) 809-5459

If to the Rating Agencies, to:

                           Moody's Investors Service, Inc.
                           99 Church Street 21W
                           New York, New York  10007
                           Attention:  CBO/CLO Monitoring Department
                           Telephone:  (212) 553-1494
                           Facsimile:  (212) 553-0355

         and to:

                           Standard & Poor's Ratings Services
                           55 Water Street
                           New York, New York  10041
                           Attention:  Structured Finance Surveillance Group
                           Telephone:  (212) 438-2482
                           Facsimile:  (212) 438-2664

If to the New York Stock Exchange, to:

                           New York Stock Exchange, Inc.
                           20 Broad Street
                           New York, New York  10005
                           Attention:  Vincent Patten
                           Telephone:  (212) 656-5276
                           Facsimile:  (212) 656-5780

                                      14
<PAGE>

Section 10. Governing Law. THIS SERIES SUPPLEMENT AND THE TRANSACTIONS
            DESCRIBED HEREIN SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
            WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
            MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT GIVING
            EFFECT TO THE CHOICE OF LAWS PROVISIONS THEREOF.

Section 11. Counterparts.  This Series Supplement may be executed in any
            number of counterparts, each of which shall be deemed to be an
            original, and all such counterparts shall constitute but one and
            the same instrument.

Section 12. Termination of the Trust. The Trust shall terminate upon the
            earliest to occur of (i) the payment in full at maturity or sale
            by the Trust after a payment default or an acceleration or other
            early payment of the Underlying Securities and the distribution in
            full of all amounts due to the Class A-1 Certificateholders and
            Class A-2 Certificateholders; (ii) the Final Scheduled
            Distribution Date and (iii) the expiration of 21 years from the
            death of the last survivor of the descendants of Joseph P.
            Kennedy, the late Ambassador of the United States to the Court of
            St. James, living on the date hereof.

Section 13. Sale of Underlying Securities. In the event of a sale of the
            Underlying Securities pursuant to Section 5(e) hereof, the Trustee
            shall solicit bids for the sale of the Underlying Securities with
            settlement thereof on or before the third (3rd) Business Day after
            such sale from three leading dealers in the relevant market. Any
            of the following dealers (or their successors) shall be deemed to
            qualify as leading dealers: (1) Credit Suisse First Boston
            Corporation, (2) Goldman, Sachs & Co., (3) Merrill Lynch, Pierce,
            Fenner & Smith Incorporated, (4) UBS Warburg LLC, (5) Salomon
            Smith Barney Inc., and (6) Lehman Brothers Inc. The Trustee shall
            not be responsible for the failure to obtain a bid so long as it
            has made reasonable efforts to obtain bids. If a bid for the sale
            of the Underlying Securities has been accepted by the Trustee but
            the sale has failed to settle on the proposed settlement date, the
            Trustee shall request new bids from such leading dealers to the
            Class A-1 and Class A-2 Certificateholders.

Section 14. Amendments. Notwithstanding anything in the Trust Agreement to the
            contrary, in addition to the other restrictions on modification
            and amendment contained therein, the Trustee shall not enter into
            any amendment or modification of the Trust Agreement which would
            adversely affect in any material respect the interests of the
            holders of any class of Certificates without the consent of the
            holders of 100% of such class of Certificates; provided, however,
            that no such amendment or modification will be permitted which
            would alter the status of the Trust as a grantor trust for federal
            income tax purposes. Further, no amendment shall be permitted
            which would adversely affect in any material respect the interests
            of any class of Certificateholders without confirmation by each
            Rating Agency that such amendment will not result in a downgrading
            or withdrawal of its rating of such Class of Certificates.

Section 15. Voting of Underlying Securities, Modification of Indenture.

                                      15
<PAGE>

            (a)   The Trustee, as holder of the Underlying Securities, has the
                  right to vote and give consents and waivers in respect of
                  the Underlying Securities as permitted by the Depository and
                  except as otherwise limited by the Trust Agreement. In the
                  event that the Trustee receives a request from the
                  Depository, the Underlying Securities Delaware Trustee, the
                  Underlying Securities Property Trustee, the Underlying
                  Securities Administrative Trustee, the Underlying Securities
                  Issuer or any other authorized Person for its consent to any
                  amendment, modification or waiver of the Underlying
                  Securities, the Underlying Securities Trust Agreement or any
                  other document thereunder or relating thereto, or receives
                  any other solicitation for any action with respect to the
                  Underlying Securities, the Trustee shall mail a notice of
                  such proposed amendment, modification, waiver or
                  solicitation to each Certificateholder of record as of such
                  date. The Trustee shall request instructions from the
                  Certificateholders as to whether or not to consent to or
                  vote to accept such amendment, modification, waiver or
                  solicitation. The Trustee shall consent or vote, or refrain
                  from consenting or voting, in the same proportion (based on
                  the relative outstanding principal balances of the Class A-1
                  Certificates) as the Certificates of the Trust were actually
                  voted or not voted by the Certificateholders thereof as of a
                  date determined by the Trustee prior to the date on which
                  such consent or vote is required; provided, however, that,
                  notwithstanding anything in the Trust Agreement to the
                  contrary, the Trustee shall at no time vote on or consent to
                  any matter (i) unless such vote or consent would not (based
                  on an opinion of counsel) alter the status of the Trust as a
                  grantor trust for federal income tax purposes or result in
                  the imposition of tax upon the Certificateholders, (ii)
                  which would alter the timing or amount of any payment on the
                  Underlying Securities, including, without limitation, any
                  demand to accelerate the Underlying Securities, except in
                  the event of a default under the Underlying Securities or an
                  event which with the passage of time would become an event
                  of default under the Underlying Securities and with the
                  unanimous consent of all outstanding Class A-1
                  Certificateholders and the Class A-2 Certificateholders, or
                  (iii) which would result in the exchange or substitution of
                  any of the outstanding Underlying Securities pursuant to a
                  plan for the refunding or refinancing of such Underlying
                  Securities except in the event of a default under the
                  Underlying Securities Trust Agreement and only with the
                  consent of Certificateholders representing 100% of the Class
                  A-1 Certificates and 100% of the Class A-2 Certificates. The
                  Trustee shall have no liability for any failure to act
                  resulting from Certificateholders' late return of, or
                  failure to return, directions requested by the Trustee from
                  the Certificateholders.

            (b)   In the event that an offer is made by the Underlying
                  Securities Issuer to issue new obligations in exchange and
                  substitution for any of the Underlying Securities, pursuant
                  to a plan for the refunding or refinancing of the
                  outstanding Underlying Securities or any other offer is made
                  for the Underlying Securities, the Trustee shall notify the
                  Class A-1 Certificateholders and Class A-2
                  Certificateholders of such offer promptly. The Trustee must
                  reject any such offer unless the Trustee is directed by the
                  affirmative vote of the holders of 100% of the Class A-1
                  Certificates and Class A-2 Certificates to accept such offer
                  and the Trustee has received the tax opinion described
                  above. If pursuant to the preceding sentence,

                                      16
<PAGE>

                  the Trustee accepts any such offer the Trustee shall promptly
                  notify the Rating Agencies.

            (c)   If an event of default under the Underlying Securities Trust
                  Agreement occurs and is continuing, and if directed by a
                  majority of the outstanding Class A-1 Certificateholders and
                  Class A-2 Certificateholders, the Trustee shall vote the
                  Underlying Securities in favor of directing, or take such
                  other action as may be appropriate to direct, the Underlying
                  Securities Trustee to declare the unpaid principal amount of
                  the Underlying Securities and any accrued and unpaid
                  interest thereon to be due and payable.

Section 16. Additional Depositor Representation. It is the express intent of
            the parties hereto that the conveyance of the Underlying
            Securities by the Depositor to the Trustee be, and be construed
            as, a sale of the Underlying Securities by the Depositor and not a
            pledge of any Underlying Securities by the Depositor to secure a
            debt or other obligation of the Depositor. In the event that,
            notwithstanding the aforementioned intent of the parties, any
            Underlying Securities are held to be property of the Depositor,
            then, it is the express intent of the parties that such conveyance
            be deemed a pledge of such Underlying Securities by the Depositor
            to the Trustee to secure a debt or other obligation of the
            Depositor, pursuant to Section 10.07 of the Standard Terms. In
            connection with any such grant of a security interest in the
            Underlying Securities, Depositor hereby represents and warrants to
            Trustee as follows:

(i)         In the event the Underlying Securities are held to be property of
            the Depositor, then the Trust Agreement creates a valid and
            continuing security interest (as defined in the applicable Uniform
            Commercial Code) in the Underlying Securities in favor of the
            Trustee which security interest is prior to all other liens, and
            is enforceable as such as against creditors of, and purchasers
            from, the Depositor.

(ii)        The Underlying Securities have been credited to a trust account
            (the "Securities Account") of the Trustee, or its authorized
            agent, in accordance with Section 2.01 of the Standard Terms. The
            Trustee, as securities intermediary for the Securities Account,
            has agreed to treat the Underlying Securities as "financial
            assets" within the meaning of the Uniform Commercial Code.

(iii)       Immediately prior to the transfer of the Underlying Securities to
            the Trust, Depositor owned and had good and marketable title to
            the Underlying Securities free and clear of any lien, claim or
            encumbrance of any Person.

(iv)        Depositor has received all consents and approvals required by the
            terms of the Underlying Securities to the transfer to the Trustee
            of its interest and rights in the Underlying Securities as
            contemplated by the Trust Agreement.

(v)         Depositor has taken all steps necessary to cause the Trustee, as
            securities intermediary for the Securities Account, to identify on
            its records that the Trustee, as the trustee of the Trust, is the
            Person having a security entitlement against the securities
            intermediary in the Securities Account.

                                      17
<PAGE>

(vi)        Depositor has not assigned, pledged, sold, granted a security
            interest in or otherwise conveyed any interest in the Underlying
            Securities (or, if any such interest has been assigned, pledged or
            otherwise encumbered, it has been released). Depositor has not
            authorized the filing of and is not aware of any financing
            statements against Depositor that includes a description of the
            Underlying Securities. Depositor is not aware of any judgment or
            tax lien filings against Depositor

(vii)       The Securities Account is not in the name of any Person other than
            the Trust. Depositor has not consented to the compliance by the
            Trustee, as securities intermediary, with entitlement orders of
            any Person other than the Trustee, as trustee of the Trust.

                                      18
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Series Supplement to
be duly executed by their respective authorized officers as of the date first
written above.

                                 LEHMAN ABS CORPORATION,
                                 as Depositor

                                 By: /s/ Rene Canezin
                                    -----------------------
                                 Name: Rene Canezin
                                 Title:  Senior Vice President

                                 U.S. BANK TRUST NATIONAL
                                 ASSOCIATION,
                                 not in its individual capacity
                                 but solely as Trustee on behalf
                                 of the Corporate Backed Trust Certificates
                                 W.R. Berkley Capital Trust Securities-Backed
                                 Series 2002-1 Trust

                                  By: /s/ David J. Kolibachuk
                                      --------------------------
                                  Name:   David J. Kolibachuk
                                  Title:  Vice President

                                      19
<PAGE>
                                                               SCHEDULE I
<TABLE>
<CAPTION>

          W.R. BERKLEY CAPITAL TRUST SECURITIES-BACKED SERIES 2002-1

                        UNDERLYING SECURITIES SCHEDULE

<S>                                                          <C>
Underlying Securities:                                       8.197% Capital Securities due December 15, 2045.

Issuer:                                                      W.R. Berkley Capital Trust

CUSIP Number:                                                084498AB0.

Principal Amount Deposited:                                  $22,000,000.

Final Exchange Date:                                         Pursuant to an exchange offer that expired on June 4,
                                                             1997, the Underlying Securities Issuer exchanged the
                                                             Underlying Securities, which are registered under the
                                                             Securities Act of 1933, as amended, for a like
                                                             aggregate liquidation amount of its then outstanding
                                                             8.197% Capital Securities.  Any of such 8.197% Capital
                                                             Securities that remain outstanding after consummation
                                                             of the exchange offer and the Underlying Securities
                                                             will vote together as a single class.
Principal Amount of
Underlying Securities
Originally Issued:                                           $210,000,000.

Maturity                                                     Date: December 15, 2045; provided that the
                                                             Underlying Securities Issuer shall have the
                                                             right to advance the maturity of the Underlying
                                                             Securities upon the occurrence of a Tax Event.

Interest Rate:                                               8.197% per annum.

Interest Payment Dates:                                      June 15th and December 15th

Record Dates:                                                June 1st and December 1st

</TABLE>

                                     I-1
<PAGE>
                                  EXHIBIT A-1
                      FORM OF TRUST CERTIFICATE CLASS A-1

                             CLASS A-1 CERTIFICATE

NUMBER 1                                        2,200,000 $10 PAR CERTIFICATES
                                                         CUSIP NO. 21988G 53 6

                      SEE REVERSE FOR CERTAIN DEFINITIONS

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS CERTIFICATE REPRESENTS A PROPORTIONATE UNDIVIDED BENEFICIAL OWNERSHIP
INTEREST IN THE TRUST AND DOES NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST
IN, AND IS NOT GUARANTEED BY THE DEPOSITOR OR THE TRUSTEE OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE OR THE TRUST ASSETS ARE
INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR ANY OTHER PERSON.

                                    A-1-1
<PAGE>

                            LEHMAN ABS CORPORATION

                               2,200,000 $10 PAR

                     CORPORATE BACKED TRUST CERTIFICATES,

          W.R. BERKLEY CAPITAL TRUST SECURITIES-BACKED SERIES 2002-1

8.125% INTEREST RATE

         evidencing a proportionate undivided beneficial ownership interest in
the Trust, as defined below, the property of which consists principally of
$22,000,000 aggregate principal amount of 8.197% Capital Securities due
December 15, 2045, issued by W.R. Berkley Capital Trust (the "Underlying
Securities Issuer") and all payments received thereon (the "Trust Property"),
deposited in trust by Lehman ABS Corporation (the "Depositor").

         THIS CERTIFIES THAT CEDE & CO. is the registered owner of $22,000,000
DOLLARS nonassessable, fully-paid, proportionate undivided beneficial
ownership interest in the Corporate Backed Trust Certificates, W.R. Berkley
Capital Trust Securities-Backed Series 2002-1 Trust, formed by the Depositor.

                                     A-1-2
<PAGE>

         The Trust was created pursuant to a Standard Terms for Trust
Agreements, dated as of January 16, 2001 (the "Standard Terms"), between the
Depositor and U.S. Bank Trust National Association, a national banking
association, not in its individual capacity but solely as Trustee (the
"Trustee"), as supplemented by the Series Supplement, W.R. Berkley Capital
Trust Securities-Backed Series 2002-1, dated as of January 23, 2002 (the
"Series Supplement" and, together with the Standard Terms, the "Trust
Agreement"), between the Depositor and the Trustee. This Certificate does not
purport to summarize the Trust Agreement and reference is hereby made to the
Trust Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and obligations of the Trustee with respect hereto. A copy of the Trust
Agreement may be obtained from the Trustee by written request sent to the
Corporate Trust Office. Capitalized terms used but not defined herein have the
meanings assigned to them in the Trust Agreement.

         This Certificate is one of the duly authorized Certificates
designated as the "Corporate Backed Trust Certificates, W.R. Berkley Capital
Trust Securities-Backed Series 2002-1, Class A-1" (herein called the
"Certificates"). This Certificate is issued under and is subject to the terms,
provisions and conditions of the Trust Agreement, to which Trust Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound. The Trust Property consists of: (i) Underlying
Securities described in the Trust Agreement, and (ii) all payments on or
collections in respect of the Underlying Securities accrued on or after
January 23, 2002 together with any proceeds thereof; and (iv) all funds from
time to time deposited with the Trustee relating to the Certificates, together
with any and all income, proceeds and payments with respect thereto; provided,
however, that any income from the investment of Trust funds in certain
permitted investments ("Eligible Investments") does not constitute Trust
Property.

         Subject to the terms and conditions of the Trust Agreement (including
the availability of funds for distributions) and until the obligation created
by the Trust Agreement shall have terminated in accordance therewith,
distributions will be made on each Distribution Date, to the Person in whose
name this Certificate is registered on the applicable Record Date, in an
amount equal to such Certificateholder's proportionate undivided beneficial
ownership interest in the amount required to be distributed to the Holders of
the Certificates on such Distribution Date. The Record Date applicable to any
Distribution Date is the close of business on the day immediately preceding
such Distribution Date (whether or not a Business Day). If a payment with
respect to the Underlying Securities is made to the Trustee after the date on
which such payment was due, then the Trustee will distribute any such amounts
received on the next occurring Business Day (a "Special Distribution Date").

         Each Certificateholder, by its acceptance of a Certificate, covenants
and agrees that such Certificateholder will not at any time institute against
the Trust, or join in any institution against the Trust of, any bankruptcy
proceedings under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Certificates or the Trust
Agreement.

         Distributions made on this Certificate will be made as provided in
the Trust Agreement by the Trustee by wire transfer in immediately available
funds, or check mailed to the Certificateholder of record in the Certificate
Register without the presentation or surrender of

                                     A-1-3
<PAGE>

this Certificate or the making of any notation hereon, except that with
respect to Certificates registered on the Record Date in the name of the
nominee of the Clearing Agency (initially, such nominee shall be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Except as otherwise provided in the Trust
Agreement and notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Trustee of the pendency of
such distribution and only upon presentation and surrender of this Certificate
at the Corporate Trust Office or such other location as may be specified in
such notice.

         Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall
for all purposes have the same effect as if set forth at this place.

         Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, by manual signature, this Certificate shall not
entitle the Holder hereof to any benefit under the Trust Agreement or be valid
for any purpose.

         THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE HOLDER HEREOF SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.

                                     A-1-4
<PAGE>

         IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed as of the date set forth below.

                                          CORPORATE BACKED TRUST
                                          CERTIFICATES, W.R. BERKLEY CAPITAL
                                          TRUST SECURITIES-BACKED SERIES 2002-1
                                          TRUST

                                          By: U.S. BANK TRUST NATIONAL
                                          ASSOCIATION
                                          not in its individual capacity but
                                          solely as Trustee,

                                          By: _______________________________
                                              Authorized Signatory

Dated: January 23, 2002

                    TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This is one of the Corporate Backed Trust Certificates, W.R. Berkley Capital
Trust Securities-Backed Series 2002-1, described in the Trust Agreement
referred to herein.

U.S. BANK TRUST NATIONAL ASSOCIATION
not in its individual capacity but solely as
Trustee,

By:__________________________
     Authorized Signatory

                                     A-1-5
<PAGE>

                           (REVERSE OF CERTIFICATE)

         The Certificates are limited in right of distribution to certain
payments and collections respecting the Underlying Securities, all as more
specifically set forth herein and in the Trust Agreement. The registered
Holder hereof, by its acceptance hereof, agrees that it will look solely to
the Trust Property (to the extent of its rights therein) for distributions
hereunder.

         The Trust Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor and the Trustee and the rights of the
Certificateholders under the Trust Agreement at any time by the Depositor and
the Trustee with the consent of the Holders of Class A-1 Certificates in the
manner set forth in the Series Supplement and the Standard Terms. Any such
consent by the Holder of this Certificate (or any predecessor Certificate)
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent in
made upon this Certificate. The Trust Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders
of any of the Certificates.

         The Certificates are issuable in fully registered form only in
denominations of $10.

         As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies of the Certificate Registrar maintained by
the Trustee in the Borough of Manhattan, the City of New York, duly endorsed
by or accompanied by an assignment in the form below and by such other
documents as required by the Trust Agreement, and thereupon one or more new
Certificates of the same class in authorized denominations evidencing the same
principal amount will be issued to the designated transferee or transferees.
The initial Certificate Registrar appointed under the Trust Agreement is U.S.
Bank Trust National Association.

         No service charge will be made for any registration of transfer or
exchange, but the Trustee may require exchange of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with
any transfer or exchange of Certificates.

         The Depositor and the Trustee and any agent of the Depositor or the
Trustee may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and neither the Depositor, the Trustee, nor
any such agent shall be affected by any notice to the contrary.

         It is the intention of the parties to the Trust Agreement that the
Trust created thereunder shall constitute a fixed investment trust for federal
income tax purposes under Treasury Regulation Section 301.7701-4, and the
Certificateholder agrees to treat the Trust, any distributions therefrom and
its beneficial interest in the Certificates consistently with such
characterization.

         The Trust and the obligations of the Depositor and the Trustee
created by the Trust Agreement with respect to the Certificates shall
terminate upon the earliest to occur of (i) the payment in full at maturity or
sale by the Trust after a payment default or an acceleration or other

                                     A-1-6
<PAGE>

early payment of the Underlying Securities and the distribution in full of all
amounts due to the Class A-1 Certificateholders and Class A-2
Certificateholders; (ii) the Final Scheduled Distribution Date and (iii) the
expiration of 21 years from the death of the last survivor of the descendants
of Joseph P. Kennedy, the late Ambassador of the United States to the Court of
St. James, living on the date hereof.

         An employee benefit plan subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), a plan described in Section
4975(e) of the Code, an entity whose underlying assets include plan assets by
reason of any such plan's investment in the entity, including an individual
retirement account or Keogh plan (any such, a "Plan") may purchase and hold
Certificates if the Plan can represent and warrant that its purchase and
holding of the Certificates would not be prohibited under ERISA or the Code.

                                     A-1-7
<PAGE>
                                  ASSIGNMENT

FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE

(Please print or type name and address, including postal zip code, of

assignee) the within Certificate, and all rights thereunder, hereby

irrevocably constituting and appointing ______________________ Attorney to

transfer said Certificate on the books of the Certificate Register, with full

power of substitution in the premises.

Dated:

                                                                   *

                                                         Signature Guaranteed:

                                                                   *

*NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Signatures must be guaranteed
by an "eligible guarantor institution" meeting the requirements of the
Certificate Registrar, which requirements include membership or participation
in the Security Transfer Agent Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the Certificate
Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Securities Exchange Act of 1934, as amended.

                                     A-1-8
<PAGE>
                                  EXHIBIT A-2
                      FORM OF TRUST CERTIFICATE CLASS A-2
                             CLASS A-2 CERTIFICATE

NUMBER 1                                               CUSIP NO. 21988G BL 9

                      SEE REVERSE FOR CERTAIN DEFINITIONS

THIS CLASS A-2 CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF
EXCEPT WHILE A REGISTRATION UNDER SUCH ACT IS IN EFFECT OR PURSUANT TO AN
EXEMPTION THEREFROM UNDER SUCH ACT. THE CLASS A-2 CERTIFICATE REPRESENTED
HEREBY MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF THE SERIES
SUPPLEMENT.

THE NOTIONAL PRINCIPAL AMOUNT OF THIS CLASS A-2 CERTIFICATE IS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING NOTIONAL PRINCIPAL AMOUNT OF THIS CLASS
A-2 CERTIFICATE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE
HEREOF.

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS CERTIFICATE REPRESENTS A PROPORTIONATE UNDIVIDED BENEFICIAL OWNERSHIP
INTEREST IN THE TRUST AND DOES NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST
IN, AND IS NOT GUARANTEED BY THE DEPOSITOR OR THE TRUSTEE OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE OR THE TRUST ASSETS ARE
INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR ANY OTHER PERSON.

                                    A-2-1
<PAGE>

                            LEHMAN ABS CORPORATION

                     CORPORATE BACKED TRUST CERTIFICATES,

          W.R. BERKLEY CAPITAL TRUST SECURITIES-BACKED SERIES 2002-1

                     $22,000,000 NOTIONAL PRINCIPAL AMOUNT

0.15% INTEREST RATE

         evidencing a proportionate undivided beneficial ownership interest in
the Trust, as defined below, the property of which consists principally of
$22,000,000 aggregate notional principal amount of 8.197% Debentures due
December 15, 2045, issued by W.R. Berkley Capital Trust and all payments
received thereon (the "Trust Property"), deposited in trust by Lehman ABS
Corporation (the "Depositor").

THIS CERTIFIES THAT CEDE & CO. is the registered owner of an aggregate
principal amount of $22,000,000 notional principal amount nonassessable,
fully-paid, proportionate undivided beneficial ownership interest in the
Corporate Backed Trust Certificates, W.R. Berkley Capital Trust
Securities-Backed Series 2002-1 Trust, formed by the Depositor.

The Trust was created pursuant to a Standard Terms for Trust Agreements, dated
as of January 16, 2001 (the "Standard Terms"), between the Depositor and U.S.
Bank Trust National Association , a national banking association, not in its
individual capacity but solely as Trustee (the "Trustee"), as supplemented by
the Series Supplement, W.R. Berkley Capital Trust Securities-Backed Series
2002-1, dated as of January 23, 2002 (the "Series Supplement" and, together
with the Standard Terms, the "Trust Agreement"), between the Depositor and the
Trustee. This Certificate does not purport to summarize the Trust Agreement
and reference is hereby made to the Trust Agreement for information with
respect to the interests, rights, benefits, obligations, proceeds and duties
evidenced hereby and the rights, duties and obligations of the Trustee with
respect hereto. A copy of the Trust Agreement may be obtained from the Trustee
by written request sent to the Corporate Trust Office. Capitalized terms used
but not defined herein have the meanings assigned to them in the Trust
Agreement.

This Certificate is one of the duly authorized Certificates designated as the
"Corporate Backed Trust Certificates, W.R. Berkley Capital Trust
Securities-Backed Series 2002-1, Class A-2" (herein called the
"Certificates"). This Certificate is issued under and is subject to the terms,
provisions and conditions of the Trust Agreement, to which Trust Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound. The Trust Property consists of: (i) Underlying
Securities described in the Trust Agreement, and (ii) all payments on or
collections in respect of the Underlying Securities accrued on or after
January 23, 2002 together with any proceeds thereof; and (iv) all funds from
time to time deposited with the Trustee relating to the Certificates, together
with any and all income, proceeds and payments with respect thereto; provided,
however, that any income from the investment of Trust funds in certain
permitted investments ("Eligible Investments") does not constitute Trust
Property.

                                    A-2-2
<PAGE>

Subject to the terms and conditions of the Trust Agreement (including the
availability of funds for distributions) and until the obligation created by
the Trust Agreement shall have terminated in accordance therewith,
distributions of interest will be made on this Certificate on each
Distribution Date.

Subject to the terms and conditions of the Trust Agreement (including the
availability of funds for distributions) and until the obligation created by
the Trust Agreement shall have terminated in accordance therewith,
distributions will be made on each Distribution Date, to the Person in whose
name this Certificate is registered on the applicable Record Date, in an
amount equal to such Certificateholder's proportionate undivided beneficial
ownership interest in the amount required to be distributed to the Holders of
the Certificates on such Distribution Date. The Record Date applicable to any
Distribution Date is the close of business on the day immediately preceding
such Distribution Date (whether or not a Business Day). If a payment with
respect to the Underlying Securities is made to the Trustee after the date on
which such payment was due, then the Trustee will distribute any such amounts
received on the next occurring Business Day (a "Special Distribution Date").

Each Certificateholder, by its acceptance of a Certificate, covenants and
agrees that such Certificateholder will not at any time institute against the
Trust, or join in any institution against the Trust of, any bankruptcy
proceedings under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Certificates or the Trust
Agreement.

Distributions made on this Certificate will be made as provided in the Trust
Agreement by the Trustee by wire transfer in immediately available funds, or
check mailed to the Certificateholder of record in the Certificate Register
without the presentation or surrender of this Certificate or the making of any
notation hereon, except that with respect to Certificates registered on the
Record Date in the name of the nominee of the Clearing Agency (initially, such
nominee shall be Cede & Co.), payments will be made by wire transfer in
immediately available funds to the account designated by such nominee. Except
as otherwise provided in the Trust Agreement and notwithstanding the above,
the final distribution on this Certificate will be made after due notice by
the Trustee of the pendency of such distribution and only upon presentation
and surrender of this Certificate at the Corporate Trust Office or such other
location as may be specified in such notice.

Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee, by manual signature, this Certificate shall not entitle
the Holder hereof to any benefit under the Trust Agreement or be valid for any
purpose.

THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE HOLDER HEREOF SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.

                                    A-2-3
<PAGE>

IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed as of the date set forth below.

                                       CORPORATE BACKED TRUST
                                       CERTIFICATES,
                                       W.R. BERKLEY CAPITAL TRUST
                                       SECURITIES-BACKED SERIES 2002-1 TRUST

                                       By: U.S. BANK TRUST NATIONAL ASSOCIATION
                                       not in its individual capacity but
                                       solely as Trustee,

                                       By:___________________________________
                                          Authorized Signatory

Dated: January 23, 2002

                    TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This is one of the Corporate Backed Trust Certificates, W.R. Berkley Capital
Trust Securities-Backed Series 2002-1, described in the Trust Agreement
referred to herein.

U.S. BANK TRUST NATIONAL ASSOCIATION
not in its individual capacity but solely as
Trustee,

By:_____________________________
    Authorized Signatory

                                    A-2-4
<PAGE>
                           (REVERSE OF CERTIFICATE)

The Certificates are limited in right of distribution to certain payments and
collections respecting the Underlying Securities, all as more specifically set
forth herein and in the Trust Agreement. The registered Holder hereof, by its
acceptance hereof, agrees that it will look solely to the Trust Property (to
the extent of its rights therein) for distributions hereunder.

The Trust Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the Trustee and the rights of the Certificateholders under the
Trust Agreement at any time by the Depositor and the Trustee with the consent
of the holders of Class A-2 Certificates in the manner set forth in the Series
Supplement and the Standard Terms. Any such consent by the Holder of this
Certificate (or any predecessor Certificate) shall be conclusive and binding
on such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange hereof or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Trust Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.

The Certificates are issuable in fully registered form only in denominations
of $1,000 and in integral multiples of $1 in excess thereof.

As provided in the Trust Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register upon surrender of this Certificate for registration of transfer at
the offices or agencies of the Certificate Registrar maintained by the Trustee
in the Borough of Manhattan, the City of New York, duly endorsed by or
accompanied by an assignment in the form below and by such other documents as
required by the Trust Agreement, and thereupon one or more new Certificates of
the same class in authorized denominations evidencing the same notional
principal amount will be issued to the designated transferee or transferees.
The initial Certificate Registrar appointed under the Trust Agreement is U.S.
Bank Trust National Association.

No service charge will be made for any registration of transfer or exchange,
but the Trustee may require exchange of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any transfer
or exchange of Certificates.

The Depositor and the Trustee and any agent of the Depositor or the Trustee
may treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Depositor, the Trustee, nor any such
agent shall be affected by any notice to the contrary.

It is the intention of the parties to the Trust Agreement that the Trust
created thereunder shall constitute a fixed investment trust for federal
income tax purposes under Treasury Regulation Section 301.7701-4, and the
Certificateholder agrees to treat the Trust, any distributions therefrom and
its beneficial interest in the Certificates consistently with such
characterization.

         The Trust and the obligations of the Depositor and the Trustee
created by the Trust Agreement with respect to the Certificates shall
terminate upon the earliest to occur of (i) the payment in full at maturity or
sale by the Trust after a payment default on or an acceleration or other early
payment of the Underlying Securities and the distribution in full of all
amounts due to

                                    A-2-5
<PAGE>
the Class A-1 and Class A-2 Certificateholders; (ii) the Final Scheduled
Distribution Date and (iii) the expiration of 21 years from the death of
the last survivor of the descendants of Joseph P. Kennedy, the late Ambassador
of the United States to the Court of St. James, living on the date hereof.

An employee benefit plan subject to the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), a plan described in Section 4975(e) of the
Code, an entity whose underlying assets include plan assets by reason of any
such plan's investment in the entity, including an individual retirement
account or Keogh plan (any such, a "Plan") may purchase and hold Certificates
if the Plan can represent and warrant that its purchase and holding of the
Certificates would not be prohibited under ERISA or the Code.

                                    A-2-6
<PAGE>

                                  ASSIGNMENT

FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE

(Please print or type name and address, including postal zip code, of
assignee) the within Certificate, and all rights thereunder, hereby
irrevocably constituting and appointing ________________ Attorney to transfer
said Certificate on the books of the Certificate Register, with full power of
substitution in the premises.

Dated:

                                                                      *

                                                         Signature Guaranteed:

                                                                      *

*NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Signatures must be guaranteed
by an "eligible guarantor institution" meeting the requirements of the
Certificate Registrar, which requirements include membership or participation
in the Security Transfer Agent Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the Certificate
Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Securities Exchange Act of 1934, as amended.

                                    A-2-7Exhibit 10.1

                             MASTER LEASE AGREEMENT,

                         dated as of December 31, 2001,

                                  by and among

             CERTAIN AFFILIATES OF SENIOR HOUSING PROPERTIES TRUST,

                                  AS LANDLORD,

                                       AND

                          FIVE STAR QUALITY CARE TRUST,

                                    AS TENANT

<PAGE>

                                TABLE OF CONTENTS

                                                                        Page

EXHIBITS
A-1 through A-56               Land
B                              Required Repairs

<PAGE>
                                TABLE OF CONTENTS

                                                                        Page

ARTICLE 1   DEFINITIONS...................................................1
            1.1  "Accounting Period"......................................1
            1.2  "Additional Charges".....................................1
            1.3  "Additional Rent"........................................1
            1.4  "Affiliated Person"......................................2
            1.5  "Agreement"..............................................2
            1.6  "Applicable Laws"........................................2
            1.7  "Award"..................................................2
            1.8  "Base Net Patient Revenues"..............................2
            1.9  "Base Year"..............................................3
            1.10  "Business Day"..........................................3
            1.11  "Capital Addition"......................................3
            1.12  "Capital Expenditure"...................................3
            1.13  "Change in Control".....................................3
            1.14  "Claim".................................................4
            1.15  "Code"..................................................4
            1.16  "Commencement Date".....................................4
            1.17  "Condemnation"..........................................4
            1.18  "Condemnor".............................................4
            1.19  "Consolidated Financials"...............................4
            1.20  "Date of Taking"........................................4
            1.21  "Default"...............................................5
            1.22  "Disbursement Rate".....................................5
            1.23  "Distribution"..........................................5
            1.24  "Easement Agreement"....................................5
            1.25  "Encumbrance"...........................................5
            1.26  "Entity"................................................5
            1.27  "Environment"...........................................5
            1.28  "Environmental Obligation"..............................5
            1.29  "Environmental Notice"..................................5
            1.30  "Event of Default"......................................5
            1.31  "Excess Net Patient Revenues"...........................5
            1.32  "Extended Term".........................................6
            1.33  "Facility"..............................................6
            1.34  "Facility Mortgage".....................................6
            1.35  "Facility Mortgagee"....................................6
            1.36  "Financial Officer's Certificate".......................6
            1.37  "Fiscal Year"...........................................6
            1.38  "Five Star".............................................6
            1.39  "Fixed Term"............................................6
            1.40  "Fixtures"..............................................6
            1.41  "GAAP"..................................................6
            1.42  "Government Agencies"...................................6
            1.43  "Guarantor".............................................7

                                      -i-
<PAGE>

                                TABLE OF CONTENTS
                                   (continued)
                                                                        Page

            1.44  "Guaranty"..............................................7
            1.45  "Hazardous Substances"..................................7
            1.46  "Immediate Family"......................................8
            1.47  "Impositions"...........................................8
            1.48  "Incidental Documents"..................................9
            1.49  "Indebtedness"..........................................9
            1.50  "Insurance Requirements"................................9
            1.51  "Interest Rate".........................................9
            1.52  "Land"..................................................9
            1.53  "Landlord"..............................................9
            1.54  "Landlord Default"......................................9
            1.55  "Landlord Liens"........................................9
            1.56  "Lease Year"...........................................10
            1.57  "Leased Improvements"..................................10
            1.58  "Leased Intangible Property"...........................10
            1.59  "Leased Personal Property".............................10
            1.60  "Leased Property"......................................10
            1.61  "Legal Requirements"...................................10
            1.62  "Lien".................................................10
            1.63  "Manager"..............................................10
            1.64  "Management Agreement".................................11
            1.65  "Minimum Rent".........................................11
            1.66  "Net Patient Revenues".................................11
            1.67  "Notice"...............................................12
            1.68  "Officer's Certificate"................................12
            1.69  "Other Lease"..........................................12
            1.70  "Overdue Rate".........................................12
            1.71  "Parent"...............................................12
            1.72  "Permitted Encumbrances"...............................12
            1.73  "Permitted Liens"......................................12
            1.74  "Permitted Use"........................................12
            1.75  "Person"...............................................12
            1.76  "Property".............................................13
            1.77  "Provider Agreements"..................................13
            1.78  "Records"..............................................13
            1.79  "Regulated Medical Wastes".............................13
            1.80  "Rent".................................................13
            1.81  "Required Repairs".....................................13
            1.82  "SEC"..................................................13
            1.83  "Security Agreement"...................................13
            1.84  "State"................................................13
            1.85  "Stock Pledge Agreement"...............................13
            1.86  "Stock Purchase Closing Date"..........................13
            1.87  "Subordinated Creditor"................................13
            1.88  "Subordination Agreement"..............................13
            1.89  "Subsidiary"...........................................14

                                      -ii-
<PAGE>

                                TABLE OF CONTENTS
                                   (continued)
                                                                        Page

            1.90  "Successor Landlord"...................................14
            1.91  "Tenant"...............................................14
            1.92  "Tenant's Personal Property"...........................14
            1.93  "Term".................................................14
            1.94  "Third Party Payor Programs"...........................14
            1.95  "Third Party Payors"...................................14
            1.96  "Unsuitable for Its Permitted Use".....................14
            1.97  "Work".................................................15
ARTICLE 2   LEASED PROPERTY AND TERM.....................................15
            2.1  Leased Property.........................................15
            2.2  Condition of Leased Property............................16
            2.3  Fixed Term..............................................17
            2.4  Extended Terms..........................................17
ARTICLE 3   RENT.........................................................17
            3.1  Rent....................................................17
            3.2  Late Payment of Rent, Etc...............................22
            3.3  Net Lease...............................................23
            3.4  No Termination, Abatement, Etc..........................23
ARTICLE 4   USE OF THE LEASED PROPERTY...................................24
            4.1  Permitted Use...........................................24
            4.2  Compliance with Legal/Insurance Requirements, Etc.......25
            4.3  Compliance with Medicaid and Medicare Requirements......25
            4.4  Environmental Matters...................................26
ARTICLE 5   MAINTENANCE AND REPAIRS......................................28
            5.1  Maintenance and Repair..................................28
            5.2  Tenant's Personal Property..............................29
            5.3  Yield Up................................................30
            5.4  Management Agreement....................................30
ARTICLE 6   IMPROVEMENTS, ETC............................................31
            6.1  Improvements to the Leased Property.....................31
            6.2  Salvage.................................................31
ARTICLE 7   LIENS........................................................32
            7.1  Liens...................................................32
            7.2  Landlord's Lien.........................................32
ARTICLE 8   PERMITTED CONTESTS...........................................33
ARTICLE 9   INSURANCE AND INDEMNIFICATION................................33
            9.1  General Insurance Requirements..........................33
            9.2  Waiver of Subrogation...................................34
            9.3  Form Satisfactory, Etc..................................34
            9.4  No Separate Insurance; Self-Insurance...................35
            9.5  Indemnification of Landlord.............................35
ARTICLE 10  CASUALTY.....................................................36
            10.1  Insurance Proceeds.....................................36

                                     -iii-
<PAGE>

                                TABLE OF CONTENTS
                                   (continued)
                                                                        Page

            10.2  Damage or Destruction..................................36
            10.3  Damage Near End of Term................................38
            10.4  Tenant's Property......................................38
            10.5  Restoration of Tenant's Property.......................38
            10.6  No Abatement of Rent...................................38
            10.7  Waiver.................................................39
ARTICLE 11  CONDEMNATION.................................................39
            11.1  Total Condemnation, Etc................................39
            11.2  Partial Condemnation...................................39
            11.3  Abatement of Rent......................................40
            11.4  Temporary Condemnation.................................40
            11.5  Allocation of Award....................................41
ARTICLE 12  DEFAULTS AND REMEDIES........................................41
            12.1  Events of Default......................................41
            12.2  Remedies...............................................43
            12.3  Tenant's Waiver........................................45
            12.4  Application of Funds...................................45
            12.5  Landlord's Right to Cure Tenant's Default..............45
ARTICLE 13  HOLDING OVER.................................................45
ARTICLE 14  LANDLORD DEFAULT.............................................46
ARTICLE 15  PURCHASE RIGHTS..............................................46
ARTICLE 16  SUBLETTING AND ASSIGNMENT....................................47
            16.1  Subletting and Assignment..............................47
            16.2  Required Sublease Provisions...........................48
            16.3  Permitted Sublease.....................................49
            16.4  Sublease Limitation....................................49
ARTICLE 17  ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS...............50
            17.1  Estoppel Certificates..................................50
            17.2  Financial Statements...................................50
            17.3  General Operations.....................................51
ARTICLE 18  LANDLORD'S RIGHT TO INSPECT..................................52
ARTICLE 19  EASEMENTS....................................................52
            19.1  Grant of Easements.....................................52
            19.2  Exercise of Rights by Tenant...........................52
            19.3  Permitted Encumbrances.................................53
ARTICLE 20  FACILITY MORTGAGES...........................................53
            20.1  Landlord May Grant Liens...............................53
            20.2  Subordination of Lease.................................53
            20.3  Notice to Mortgagee and Superior Landlord..............54
ARTICLE 21  ADDITIONAL COVENANTS OF TENANT...............................55
            21.1  Prompt Payment of Indebtedness.........................55
            21.2  Conduct of Business....................................55
            21.3  Maintenance of Accounts and Records....................55

                                      -iv-
<PAGE>

                                TABLE OF CONTENTS
                                   (continued)
                                                                        Page

            21.4  Notice of Litigation, Etc..............................56
            21.5  Indebtedness of Tenant.................................56
            21.6  Distributions, Payments to Affiliated Persons, Etc.....57
            21.7  Prohibited Transactions................................57
            21.8  Liens and Encumbrances.................................57
            21.9  Merger; Sale of Assets; Etc............................58
ARTICLE 22  ARBITRATION..................................................58
ARTICLE 23  MISCELLANEOUS................................................59
            23.1  Limitation on Payment of Rent..........................59
            23.2  No Waiver..............................................59
            23.3  Remedies Cumulative....................................59
            23.4  Severability...........................................60
            23.5  Acceptance of Surrender................................60
            23.6  No Merger of Title.....................................60
            23.7  Conveyance by Landlord.................................60
            23.8  Quiet Enjoyment........................................60
            23.9  No Recordation.........................................61
            23.10  Notices...............................................61
            23.11  Construction..........................................62
            23.12  Counterparts; Headings................................62
            23.13  Applicable Law, Etc...................................62
            23.14  Right to Make Agreement...............................63
            23.15  Attorneys' Fees.......................................63
            23.16  Nonliability of Trustees..............................63
            23.17  Bankruptcy Remote Entities............................64

                                      -v-

<PAGE>
                             MASTER LEASE AGREEMENT

         THIS MASTER LEASE AGREEMENT is entered into as of December 31, 2001, by
and among (i) each of the parties  identified on the signature  page hereof,  as
landlord  (collectively,  "Landlord"),  and (ii) FIVE STAR QUALITY CARE TRUST, a
Maryland business trust, as tenant ("Tenant").

                              W I T N E S S E T H :

         WHEREAS,   Landlord  owns  fee  simple  title  to  the  fifty-six  (56)
Properties  (this and other  capitalized  terms used and not  otherwise  defined
herein  having the  meanings  ascribed to such terms in Article 1)  described on
Exhibits A-1 - A-56; and

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

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

                                   ARTICLE 1

                                  DEFINITIONS

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

         1.1 "Accounting Period" shall mean, with respect to any Property,  each
calendar  month or such other  accounting  period  designated  by  Landlord  and
Tenant.

         1.2  "Additional  Charges"  shall have the  meaning  given such term in
Section 3.1.3.

         1.3 "Additional Rent" shall have the meaning given such term in Section
3.1.2(a).
<PAGE>

         1.4 "Affiliated  Person" shall mean, with respect to any Person, (a) in
the  case of any  such  Person  which  is a  partnership,  any  partner  in such
partnership,  (b) in the case of any such  Person  which is a limited  liability
company,  any member of such company,  (c) any other Person which is a Parent, a
Subsidiary, or a Subsidiary of a Parent with respect to such Person or to one or
more of the Persons  referred to in the  preceding  clauses (a) and (b), (d) any
other Person who is an officer,  director, trustee or employee of, or partner in
or member of, such Person or any Person  referred  to in the  preceding  clauses
(a),  (b) and (c),  and (e) any other  Person  who is a member of the  Immediate
Family of such Person or of any Person referred to in the preceding  clauses (a)
through (d).

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

         1.6  "Applicable  Laws"  shall  mean  all  applicable  laws,  statutes,
regulations,  rules, ordinances,  codes, licenses, permits and orders, from time
to time in existence,  of all courts of competent  jurisdiction  and  Government
Agencies, and all applicable judicial and administrative and regulatory decrees,
judgments and orders, including common law rulings and determinations,  relating
to injury to, or the protection of, real or personal property or human health or
the  Environment,   including,   without   limitation,   all  valid  and  lawful
requirements of courts and other  Government  Agencies  pertaining to reporting,
licensing,  permitting,  investigation,  remediation  and removal of underground
improvements  (including,  without  limitation,  treatment or storage tanks,  or
water,  gas or oil wells),  or  emissions,  discharges,  releases or  threatened
releases of Hazardous Substances, chemical substances,  pesticides, petroleum or
petroleum products,  pollutants,  contaminants or hazardous or toxic substances,
materials  or wastes  whether  solid,  liquid or  gaseous  in  nature,  into the
Environment,  or relating to the  manufacture,  processing,  distribution,  use,
treatment,  storage, disposal,  transport or handling of Hazardous Substances or
Regulated  Medical  Wastes,   underground   improvements   (including,   without
limitation,  treatment  or  storage  tanks,  or  water,  gas or oil  wells),  or
pollutants,  contaminants or hazardous or toxic substances, materials or wastes,
whether solid, liquid or gaseous in nature.

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

         1.8 "Base  Net  Patient  Revenues"  shall  mean,  with  respect  to any
Property,  Net Patient  Revenues at such  Property for the Base Year,  provided,
however,  that in the event that,  with  respect to any Lease  Year,  or portion
thereof,  for  any  reason  (including,   without

                                      -2-
<PAGE>
limitation, a casualty or Condemnation) there shall be a reduction in the number
of units  available at the Facility  located at such Property or in the services
provided at such Facility from the number of such units or the services provided
during the Base Year,  in  determining  Additional  Rent payable with respect to
such Property for such Lease Year, Base Net Patient Revenues with respect to the
affected  Property  shall  be  reduced  as  follows:  (a)  in the  event  of the
termination of this  Agreement with respect to any Property  pursuant to Article
10, 11 or 12, all Net Patient  Revenues for such  Property for the period during
the Base Year  equivalent to the period after the  termination of this Agreement
with  respect  to such  Property  shall be  subtracted  from  Base  Net  Patient
Revenues;  (b) in the event of a partial closing of such Facility  affecting the
number of  units,  or the  services  provided,  at such  Facility,  Net  Patient
Revenues  attributable  to units or services at such  Facility  shall be ratably
allocated  among all units in service at such Facility  during the Base Year and
all such Net Patient  Revenues  attributable to units no longer in service shall
be  subtracted  from Base Net  Patient  Revenues  throughout  the period of such
closing; and (c) in the event of any other change in circumstances affecting any
Facility,  Base Net Patient Revenues shall be equitably  adjusted in such manner
as Landlord and Tenant shall reasonably  agree. It is understood and agreed that
Base Net Patient  Revenues shall be calculated  separately for each Property and
shall not be determined on an aggregate basis for the Leased Property.

         1.9 "Base Year" shall mean the 2003 Fiscal Year.

         1.10 "Business Day" shall mean any day other than Saturday,  Sunday, or
any other day on which banking institutions in The Commonwealth of Massachusetts
are authorized by law or executive action to close.

         1.11 "Capital  Addition" shall mean, with respect to any Property,  any
renovation,  repair or improvement to the Leased Property (or portion  thereof),
the cost of which constitutes a Capital Expenditure.

         1.12  "Capital  Expenditure"  shall  mean any  expenditure  treated  as
capital in nature in accordance with GAAP.

         1.13 "Change in Control" shall mean (a) the  acquisition by any Person,
or two or more Persons acting in concert,  of beneficial  ownership  (within the
meaning  of Rule  13d-3 of the  SEC) of 9.8% or  more,  or  rights,  options  or
warrants to acquire 9.8% or more, of the  outstanding  shares of voting stock of
Tenant  or any  Guarantor,  as the  case may be,  or the  power  to  direct  the
management and policies of Tenant or any Guarantor,  directly or indirectly, (b)
the merger or  consolidation  of Tenant or any Guarantor  with or into any other
Person (other than the merger or  consolidation of any Person into Tenant or any
Guarantor  that  does not  result  in a Change  in  Control  of  Tenant  or such
Guarantor under clauses (a), (c) or (d) of this definition), (c) any one or more
sales or conveyances to any Person of all or any

                                      -3-
<PAGE>
material portion of its assets  (including  capital stock) or business of Tenant
or any Guarantor,  as the case may be, or (d) the cessation,  for any reason, of
the individuals who at the beginning of any twenty-four (24)  consecutive  month
period  (commencing  on the date hereof)  constituted  the board of directors of
Tenant or any Guarantor  (together with any new directors whose election by such
Board or whose  nomination  for election by the  shareholders  of Tenant or such
Guarantor,  as the case may be,  was  approved  by a vote of a  majority  of the
directors then still in office who were either directors at the beginning of any
such period or whose  election or  nomination  for  election was  previously  so
approved)  to  constitute  a majority of the board of directors of Tenant or any
Guarantor then in office.

         1.14 "Claim" shall have the meaning given such term in Article 8.

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

         1.16 "Commencement Date" shall mean the date of this Agreement.

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

         1.18 "Condemnor" shall mean any public or quasi-public  Person,  having
the power of Condemnation.

         1.19 "Consolidated Financials" shall mean, for any Fiscal Year or other
accounting period of Five Star, annual audited and quarterly unaudited financial
statements of Five Star prepared on a consolidated basis,  including Five Star's
consolidated  balance sheet and the related statements of income and cash flows,
all  in  reasonable   detail,   and  setting  forth  in  comparative   form  the
corresponding figures for the corresponding period in the preceding Fiscal Year,
and prepared in accordance with GAAP throughout the periods reflected.

         1.20 "Date of Taking"  shall mean,  with respect to any  Property,  the
date the Condemnor has the right to possession of such Property,  or any portion
thereof, in connection with a Condemnation.

                                      -4-
<PAGE>
         1.21 "Default"  shall mean any event or condition which with the giving
of notice and/or lapse of time would ripen into an Event of Default.

         1.22 "Disbursement  Rate" shall mean an annual rate of interest,  as of
the date of  determination,  equal to the greater of (i) the  Interest  Rate and
(ii) the per annum rate for ten (10) year U.S. Treasury Obligations as published
in The Wall Street  Journal  plus four  hundred  (400) basis  points;  provided,
however, that in no event shall the Disbursement Rate exceed eleven and one-half
percent (11.5%).

         1.23  "Distribution"  shall mean (a) any  declaration or payment of any
dividend (except  ordinary cash dividends  payable in common stock of Tenant) on
or in respect of any  shares of any class of  capital  stock of Tenant,  (b) any
purchase, redemption, retirement or other acquisition of any shares of any class
of capital stock of a corporation,  (c) any other  distribution on or in respect
of any shares of any class of capital stock of a  corporation  or (d) any return
of capital to shareholders.

         1.24  "Easement  Agreement"  shall mean any  conditions,  covenants and
restrictions,  easements, declarations,  licenses and other agreements which are
Permitted Encumbrances and such other agreements as may be granted in accordance
with Section 19.1.

         1.25  "Encumbrance"  shall have the meaning  given such term in Section
20.1.

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

         1.27  "Environment"  shall mean soil,  surface  waters,  ground waters,
land, stream, sediments, surface or subsurface strata and ambient air.

         1.28 "Environmental  Obligation" shall have the meaning given such term
in Section 4.4.1.

         1.29  "Environmental  Notice" shall have the meaning given such term in
Section 4.4.1.

         1.30  "Event of  Default"  shall  have the  meaning  given such term in
Section 12.1.

         1.31  "Excess Net Patient  Revenues"  shall mean,  with  respect to any
Property,  with respect to any Lease Year, or portion thereof, the amount of Net
Patient Revenues for such Property for such Lease Year,

                                      -5-
<PAGE>
or portion thereof, in excess of Base Net Patient Revenues for such Property for
the equivalent period during the Base Year.

         1.32 "Extended  Term" shall have the meaning given such term in Section
2.4.

         1.33 "Facility"  shall mean, with respect to any Property,  the skilled
nursing/intermediate   care/independent   living/assisted   living/special  care
facility being operated or proposed to be operated on such Property.

         1.34 "Facility  Mortgage"  shall mean any  Encumbrance  placed upon the
Leased Property, or any portion thereof, in accordance with Article 20.

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

         1.36 "Financial Officer's  Certificate" shall mean, as to any Person, a
certificate of the chief executive  officer,  chief  financial  officer or chief
accounting officer (or such officers'  authorized designee) of such Person, duly
authorized,  accompanying the financial  statements  required to be delivered by
such Person  pursuant to Section  17.2,  in which such officer shall certify (a)
that such statements have been properly prepared in accordance with GAAP and are
true,  correct and  complete in all  material  respects  and fairly  present the
consolidated  financial  condition of such Person at and as of the dates thereof
and the results of its and their operations for the periods covered thereby, and
(b),  in the event  that the  certifying  party is an  officer of Tenant and the
certificate  is being given in such  capacity,  certify that no Event of Default
has occurred and is continuing hereunder.

         1.37 "Fiscal  Year" shall mean the  calendar  year or such other annual
period designated by Tenant and approved by Landlord.

         1.38 "Five Star" shall mean Five Star  Quality  Care,  Inc., a Maryland
corporation, and its permitted successors and assigns.

         1.39 "Fixed  Term"  shall have the  meaning  given such term in Section
2.3.

         1.40  "Fixtures"  shall  have the  meaning  given  such term in Section
2.1(d).

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

         1.42  "Government  Agencies" shall mean any court,  agency,  authority,
board (including,  without limitation,  environmental  protection,  planning and
zoning), bureau, commission, department, office or instrumentality of any nature
whatsoever of any governmental

                                      -6-
<PAGE>
or  quasi-governmental  unit of the United  States or any State or any county or
any political  subdivision of any of the foregoing,  whether now or hereafter in
existence, having jurisdiction over Tenant or the Leased Property or any portion
thereof or any Facility operated thereon.

         1.43  "Guarantor"  shall  mean  Five  Star  and each  and  every  other
guarantor  of  Tenant's   obligations  under  this  Agreement,   and  each  such
guarantor's successors and assigns.

         1.44  "Guaranty"  shall  mean  any  guaranty  agreement  executed  by a
Guarantor in favor of Landlord  pursuant to which the payment or  performance of
Tenant's  obligations  under this  Agreement are  guaranteed,  together with all
modifications, amendments and supplements thereto.

         1.45 "Hazardous Substances" shall mean any substance:

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

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

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

                  (d) the  presence  of which  on the  Leased  Property,  or any
         portion  thereof,  causes or materially  threatens to cause an unlawful
         nuisance  upon the  Leased  Property,  or any  portion  thereof,  or to
         adjacent  properties or poses or materially  threatens to pose a hazard
         to the Leased  Property,  or any portion  thereof,  or to the health or
         safety of  persons  on or about the  Leased  Property,  or any  portion
         thereof; or

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

                                      -7-
<PAGE>
                  (f)  without   limitation,   which  contains   polychlorinated
         biphenyls (PCBs) or asbestos or urea formaldehyde foam insulation; or

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

                  (h) without limitation, constitutes Regulated Medical Wastes.

         1.46  "Immediate  Family" shall mean,  with respect to any  individual,
such  individual's  spouse,  parents,  brothers,  sisters,  children (natural or
adopted),    stepchildren,    grandchildren,    grandparents,    parents-in-law,
brothers-in-law, sisters-in-law, nephews and nieces.

         1.47  "Impositions"  shall mean,  collectively,  all taxes  (including,
without limitation,  all taxes imposed under the laws of any State, as such laws
may be amended from time to time, and all ad valorem,  sales and use, or similar
taxes as the same relate to or are imposed upon Landlord, Tenant or the business
conducted upon the Leased Property), assessments (including, without limitation,
all assessments for public improvements or benefit,  whether or not commenced or
completed  prior to the date hereof),  ground rents  (including any minimum rent
under any ground lease, and any additional rent or charges  thereunder),  water,
sewer or other rents and charges, excises, tax levies, fees (including,  without
limitation,  license, permit,  inspection,  authorization and similar fees), and
all  other  governmental  charges,  in each case  whether  general  or  special,
ordinary or extraordinary, foreseen or unforeseen, of every character in respect
of the Leased Property or the business  conducted  thereon by Tenant  (including
all  interest  and  penalties  thereon due to any failure in payment by Tenant),
which at any time  prior to,  during or in  respect  of the Term  hereof  may be
assessed  or  imposed  on or in  respect  of or be a lien  upon  (a)  Landlord's
interest in the Leased Property,  (b) the Leased Property or any part thereof or
any rent therefrom or any estate,  right, title or interest therein,  or (c) any
occupancy, operation, use or possession of, or sales from, or activity conducted
on, or in  connection  with the  Leased  Property  or the  leasing or use of the
Leased Property or any part thereof by Tenant;  provided,  however, that nothing
contained  herein  shall be  construed  to  require  Tenant  to pay and the term
"Impositions"  shall not  include  (i) any tax based on net  income  imposed  on
Landlord,  (ii) any net revenue tax of  Landlord,  (iii) any  transfer  fee (but
excluding  any  mortgage or similar tax  payable in  connection  with a Facility
Mortgage)  or other tax  imposed  with  respect to the sale,  exchange  or other
disposition by Landlord of the Leased Property or the proceeds thereof, (iv) any
single  business,  gross receipts tax,  transaction  privilege,  rent or similar
taxes as the same relate to or are imposed  upon  Landlord,  (v) any interest or
penalties imposed on Landlord as a result of the failure of Landlord to file any
return or report  timely and in the form  prescribed by law or to pay any tax or
imposition,  except to the

                                      -8-
<PAGE>
extent  such  failure  is a result  of a breach  by  Tenant  of its  obligations
pursuant to Section 3.1.3,  (vi) any impositions  imposed on Landlord that are a
result of Landlord not being  considered a "United  States person" as defined in
Section  7701(a)(30)  of the Code,  (vii) any  impositions  that are  enacted or
adopted by their express  terms as a substitute  for any tax that would not have
been  payable by Tenant  pursuant to the terms of this  Agreement  or (viii) any
impositions  imposed as a result of a breach of  covenant or  representation  by
Landlord in any  agreement  governing  Landlord's  conduct or  operation or as a
result of the negligence or willful misconduct of Landlord.

         1.48  "Incidental  Documents"  shall mean the  Guaranty,  the  Security
Agreement and the Stock Pledge Agreement.

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

         1.50  "Insurance  Requirements"  shall mean all terms of any  insurance
policy required by this Agreement and all requirements of the issuer of any such
policy and all orders,  rules and regulations and any other  requirements of the
National  Board of Fire  Underwriters  (or any  other  body  exercising  similar
functions) binding upon Landlord, Tenant, any Manager or the Leased Property.

         1.51 "Interest Rate" shall mean ten percent (10%) per annum.

         1.52 "Land" shall have the meaning given such term in Section 2.1(a).

         1.53 "Landlord" shall have the meaning given such term in the preambles
to this Agreement and shall also include their respective  permitted  successors
and assigns.

         1.54  "Landlord  Default"  shall  have the  meaning  given such term in
Article 14.

         1.55  "Landlord  Liens"  shall  mean  liens on or  against  the  Leased
Property or any  payment of Rent (a) which  result from any act of, or any claim
against,  Landlord or any owner of a direct or  indirect  interest in the Leased
Property  (other than the lessor under any ground lease affecting any portion of
the Leased  Property),  or which  result from any  violation  by Landlord of any
terms of this  Agreement,  or (b) which result from liens in favor of any taxing
authority  by reason of any tax owed by Landlord or any fee owner of a direct or
indirect interest in the Leased Property (other than the lessor under any Ground
Lease affecting any portion of the Leased  Property);  provided,  however,  that
"Landlord  Lien"  shall not include  any lien  resulting  from any tax for which
Tenant is  obligated  to pay or indemnify  Landlord  against  until such time as
Tenant  shall  have  already  paid to or on  behalf of  Landlord  the tax or the
required indemnity with respect to the same.

                                      -9-
<PAGE>

         1.56 "Lease Year" shall mean any Fiscal Year or portion  thereof during
the Term.

         1.57 "Leased  Improvements"  shall have the meaning  given such term in
Section 2.1(b).

         1.58 "Leased  Intangible  Property" shall mean all agreements,  service
contracts,  equipment  leases,  booking  agreements  and other  arrangements  or
agreements affecting the ownership, repair, maintenance,  management, leasing or
operation of the Leased Property, or any portion thereof, to which Landlord is a
party;  all books,  records  and files  relating  to the  leasing,  maintenance,
management  or  operation  of  the  Leased  Property,  or any  portion  thereof,
belonging to Landlord;  all transferable or assignable permits,  certificates of
occupancy,  operating permits,  sign permits,  development rights and approvals,
certificates,  licenses,  warranties and guarantees,  rights to deposits,  trade
names,  service marks,  telephone  exchange  numbers  identified with the Leased
Property, and all other transferable intangible property,  miscellaneous rights,
benefits  and  privileges  of any kind or character  belonging to Landlord  with
respect to the Leased Property.

         1.59 "Leased Personal  Property" shall have the meaning given such term
in Section 2.1(e).

         1.60  "Leased  Property"  shall  have the  meaning  given  such term in
Section 2.1.

         1.61  "Legal  Requirements"  shall  mean all  federal,  state,  county,
municipal and other governmental  statutes,  laws, rules,  orders,  regulations,
ordinances,  judgments, decrees and injunctions affecting the Leased Property or
the maintenance,  construction,  alteration or operation thereof, whether now or
hereafter  enacted  or in  existence,  including,  without  limitation,  (a) all
permits,  licenses,  authorizations,  certificates of need,  authorizations  and
regulations necessary to operate any Property for its Permitted Use, and (b) all
covenants,   agreements,   restrictions  and   encumbrances   contained  in  any
instruments at any time in force  affecting any Property,  including those which
may (i) require  material  repairs,  modifications  or  alterations in or to any
Property  or  (ii)  in any  way  materially  and  adversely  affect  the use and
enjoyment  thereof,  but  excluding  any  requirements  arising  as a result  of
Landlord's status as a real estate investment trust.

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

         1.63 "Manager" shall mean,  with respect to any Property,  the operator
or  manager  under any  Management  Agreement  from time to time

                                      -10-
<PAGE>
in effect  with  respect to such  Property,  and its  permitted  successors  and
assigns.

         1.64  "Management  Agreement" shall mean, with respect to any Property,
any operating or management  agreement  from time to time entered into by Tenant
with respect to such Property in accordance  with the  applicable  provisions of
this  Agreement,  together with all  amendments,  modifications  and supplements
thereto.

         1.65 "Minimum Rent" shall mean Seven Million Dollars  ($7,000,000)  per
annum.

         1.66 "Net Patient  Revenues"  shall mean, with respect to any Property,
for each Fiscal Year during the Term,  all revenues and receipts  (determined on
an accrual basis and in all material  respects in accordance with GAAP) of every
kind  derived  from  renting,  using and/or  operating  such  Property and parts
thereof,  including,  but not limited to: all patient,  client or resident rents
and revenues  received or  receivable  for the use of otherwise by reason of all
units, beds and other facilities  provided,  meals served,  services  performed,
space or  facilities  subleased or goods sold on such  Property,  or any portion
thereof,  including,  without  limitation,  any other  arrangements  with  third
parties  relating to the possession or use of any portion of such Property;  and
proceeds,  if any, from business interruption or other loss of income insurance;
provided,  however,  that Net Patient  Revenues shall not include the following:
revenue  from  professional  fees or  charges  by  physicians  and  unaffiliated
providers of services, when and to the extent such charges are paid over to such
physicians and unaffiliated  providers of services, or are separately billed and
not included in  comprehensive  fees;  contractual  allowances  (relating to any
period  during  the  Term)  for  billings  not  paid  by or  received  from  the
appropriate governmental agencies or third party providers; allowances according
to GAAP for uncollectible  accounts,  including credit card accounts and charity
care or other administrative  discounts;  all proper patient billing credits and
adjustments  according  to GAAP  relating  to health care  accounting;  provider
discounts  for hospital or other  medical  facility  utilization  contracts  and
credit card discounts;  any amounts  actually paid by Tenant for the cost of any
federal,  state or local  governmental  programs imposed specially to provide or
finance indigent patient care; federal,  state or municipal excise,  sales, use,
occupancy  or  similar  taxes  collected  directly  from  patients,  clients  or
residents  or  included  as part of the sales  price of any  goods or  services;
insurance proceeds (other than proceeds from business interruption or other loss
of income insurance);  Award proceeds (other than for a temporary Condemnation);
revenues  attributable to services  actually provided off-site or otherwise away
from such Property,  such as home health care, to persons that are not patients,
clients or  residents  at such  Property;  revenues  attributable  to child care
services provided primarily to employees of such Property; any proceeds from any
sale of such  Property  or from the  refinancing  of any debt  encumbering  such
Property; proceeds from the disposition of

                                      -11-
<PAGE>
furnishings,  fixture and equipment no longer necessary for the operation of the
Facility  located  thereon;  any security  deposits and other advance  deposits,
until and unless the same are forfeited to Tenant or applied for the purpose for
which  they  were  collected;  and  interest  income  from any bank  account  or
investment  of Tenant.  It is  understood  and agreed that Net Patient  Revenues
shall be calculated  separately for each Property and shall not be determined on
an aggregate basis for the Leased Property.

         1.67  "Notice"  shall mean a notice  given in  accordance  with Section
23.10.

         1.68  "Officer's  Certificate"  shall mean a  certificate  signed by an
officer  or other duly  authorized  individual  of the  certifying  Entity  duly
authorized by the board of directors or other  governing  body of the certifying
Entity.

         1.69 "Other Lease" shall mean the Master Lease  Agreement,  dated as of
the Stock  Purchase  Closing Date, by and among  certain  Affiliated  Persons of
Senior Housing Properties Trust, as landlord,  and certain Affiliated Persons of
Five  Star,  as  tenant,   together  with  all  modifications,   amendments  and
supplements thereto.

         1.70  "Overdue  Rate"  shall  mean,  on any date,  a per annum  rate of
interest equal to the lesser of fifteen  percent (15%) and the maximum rate then
permitted under applicable law.

         1.71 "Parent" shall mean, with respect to any Person,  any Person which
owns  directly,  or indirectly  through one or more  Subsidiaries  or Affiliated
Persons,  twenty percent (20%) or more of the voting or beneficial  interest in,
or otherwise has the right or power (whether by contract,  through  ownership of
securities or otherwise) to control, such Person.

         1.72 "Permitted Encumbrances" shall mean, with respect to any Property,
all rights, restrictions, and easements of record set forth on Schedule B to the
applicable  owner's or leasehold title insurance  policy issued to Landlord with
respect to such Property,  plus any other  encumbrances as may have been granted
or caused by Landlord or otherwise consented to in writing by Landlord from time
to time.

         1.73 "Permitted  Liens" shall mean any Liens granted in accordance with
Section 21.8(a).

         1.74 "Permitted Use" shall mean, with respect to any Property,  any use
of such Property permitted pursuant to Section 4.1.1.

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

                                      -12-
<PAGE>
         1.76 "Property" shall have the meaning given such term in Section 2.1.

         1.77 "Provider  Agreements" shall mean all participation,  provider and
reimbursement  agreements  or  arrangements  now or  hereafter in effect for the
benefit  of  Tenant or any  Manager  in  connection  with the  operation  of any
Facility  relating to any right of payment or other  claim  arising out of or in
connection with Tenant's participation in any Third Party Payor Program.

         1.78 "Records" shall have the meaning given such term in Section 7.2.

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

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

         1.81 "Required Repairs" shall mean the repairs set forth in Exhibit B.

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

         1.83 "Security  Agreement" shall mean the Security Agreement,  dated as
of the date  hereof,  made by Tenant for the benefit of  Landlord,  as it may be
amended, restated, supplemented or otherwise modified from time to time.

         1.84  "State"  shall mean,  with  respect to any  Property,  the state,
commonwealth or district in which the such Property is located.

         1.85 "Stock Pledge  Agreement"  shall mean the Stock Pledge  Agreement,
dated as of the date hereof,  made by Five Star Quality  Care,  Inc., a Maryland
corporation, in favor of Landlord with respect to the stock of Tenant, as it may
be amended, restated, supplemented or otherwise modified from time to time.

         1.86 "Stock  Purchase  Closing  Date" shall mean the date of closing of
the stock purchase  contemplated  under that certain Stock  Purchase  Agreement,
dated as of August 9, 2001 by and among Senior Housing Properties Trust, SNH/CSL
Properties  Trust,  Crestline  Capital  Corporation,  and CSL  Group,  Inc.,  as
amended.

         1.87 "Subordinated Creditor" shall mean any creditor of Tenant which is
a party to a Subordination Agreement in favor of Landlord.

         1.88  "Subordination  Agreement"  shall  mean  any  agreement  (and any
amendments  thereto)  executed by a Subordinated  Creditor pursuant

                                      -13-
<PAGE>
to  which  the  payment  and   performance  of  Tenant's   obligations  to  such
Subordinated  Creditor  are  subordinated  to the  payment  and  performance  of
Tenant's obligations to Landlord under this Agreement.

         1.89  "Subsidiary"  shall mean, with respect to any Person,  any Entity
(a) in which such  Person  owns  directly,  or  indirectly  through  one or more
Subsidiaries,  twenty percent (20%) or more of the voting or beneficial interest
or (b) which such Person otherwise has the right or power to control (whether by
contract, through ownership of securities or otherwise).

         1.90  "Successor  Landlord"  shall have the meaning  given such term in
Section 20.2.

         1.91  "Tenant"  shall have the meaning given such term in the preambles
to this Agreement and shall also include its permitted successors and assigns.

         1.92  "Tenant's  Personal  Property"  shall mean all motor vehicles and
consumable inventory and supplies,  furniture,  furnishings,  equipment, movable
walls and  partitions,  equipment and machinery and all other tangible  personal
property of Tenant,  if any, acquired by Tenant on and after the date hereof and
located  at the  Leased  Property  or used in  Tenant's  business  at the Leased
Property and all modifications,  replacements, alterations and additions to such
personal  property  installed  at the  expense of  Tenant,  other than any items
included within the definition of Fixtures or Leased Personal Property.

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

         1.94  "Third  Party  Payor  Programs"  shall mean all third party payor
programs in which Tenant presently or in the future may participate,  including,
without limitation,  Medicare, Medicaid, CHAMPUS, Blue Cross and/or Blue Shield,
Managed Care Plans,  other private  insurance  programs and employee  assistance
programs.

         1.95 "Third Party Payors" shall mean Medicare,  Medicaid, CHAMPUS, Blue
Cross and/or Blue Shield,  private insurers and any other Person which presently
or in the future maintains Third Party Payor Programs.

         1.96 "Unsuitable for Its Permitted Use" shall mean, with respect to any
Facility,  a state or condition of such  Facility  such that (a)  following  any
damage or destruction involving a Facility, (i) such Facility cannot be operated
on a  commercially  practicable  basis  for  its  Permitted  Use  and it  cannot
reasonably  be expected to be restored to  substantially  the same  condition as
existed immediately before such damage or destruction, and as otherwise required
by

                                      -14-
<PAGE>
Section  10.2.4,   within  twelve  (12)  months  following  such  damage  or
destruction  or such  longer  period of time as to which  business  interruption
insurance is available to cover Rent and other costs  related to the  applicable
Property  following such damage or destruction,  (ii) the damage or destruction,
if uninsured,  exceeds $1,000,000 or (iii) the cost of such restoration  exceeds
ten percent (10%) of the fair market value of such Property immediately prior to
such  damage  or  destruction,  or (b) as the  result  of a  partial  taking  by
Condemnation,  such Facility  cannot be operated,  in the good faith judgment of
Tenant, on a commercially practicable basis for its Permitted Use.

         1.97 "Work" shall have the meaning given such term in Section 10.2.4.

                                   ARTICLE 2

                            LEASED PROPERTY AND TERM

         2.1  Leased  Property.  Upon and  subject  to the terms and  conditions
hereinafter set forth, Landlord leases to Tenant and Tenant leases from Landlord
all of Landlord's right, title and interest in and to all of the following (each
of items (a) through (g) below which, as of the  Commencement  Date,  relates to
any single Facility, a "Property" and, collectively, the "Leased Property"):

                  (a) those certain tracts,  pieces and parcels of land, as more
         particularly  described in Exhibits A-1 through A-56,  attached  hereto
         and made a part hereof (the "Land");

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

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

                  (d) all  equipment,  machinery,  fixtures,  and other items of
         property,  now or hereafter permanently affixed to or incorporated into
         the Leased Improvements,  including,  without limitation, all furnaces,
         boilers, heaters,  electrical equipment,  heating, plumbing,  lighting,
         ventilating,  refrigerating,  incineration,  air  and  water  pollution
         control, waste disposal,  air-cooling and air-conditioning  systems and
         apparatus,  sprinkler systems and fire and theft protection  equipment,
         all of which, to the maximum extent permitted by law, are hereby deemed
         by the parties  hereto to  constitute  real estate,  together  with all
         replacements,  modifications,  alterations and additions  thereto,  but

                                      -15-
<PAGE>
         specifically  excluding  all items  included  within  the  category  of
         Tenant's Personal Property (collectively, the "Fixtures");

                  (e) all machinery, equipment, furniture, furnishings, moveable
         walls or  partitions,  computers  or trade  fixtures or other  personal
         property of any kind or description used or useful in Tenant's business
         on or in the  Leased  Improvements,  and  located  on or in the  Leased
         Improvements,  and all  modifications,  replacements,  alterations  and
         additions to such personal  property,  except items,  if any,  included
         within the category of Fixtures,  but specifically  excluding all items
         included   within  the   category   of   Tenant's   Personal   Property
         (collectively, the "Leased Personal Property");

                  (f) all of the Leased Intangible Property; and

                  (g) any and all leases of space in the Leased Improvements.

         2.2  Condition  of Leased  Property.  Tenant  acknowledges  receipt and
delivery of  possession  of the Leased  Property  and Tenant  accepts the Leased
Property  in its  "as  is"  condition,  subject  to the  rights  of  parties  in
possession,  the existing state of title,  including all covenants,  conditions,
restrictions,  reservations,  mineral  leases,  easements  and other  matters of
record or that are visible or apparent on the Leased  Property,  all  applicable
Legal Requirements,  the lien of any financing instruments,  mortgages and deeds
of trust  existing prior to the  Commencement  Date or permitted by the terms of
this Agreement, and such other matters which would be disclosed by an inspection
of the Leased  Property  and the record title  thereto or by an accurate  survey
thereof.  TENANT REPRESENTS THAT IT HAS INSPECTED THE LEASED PROPERTY AND ALL OF
THE  FOREGOING  AND HAS  FOUND THE  CONDITION  THEREOF  SATISFACTORY  AND IS NOT
RELYING ON ANY  REPRESENTATION  OR WARRANTY OF LANDLORD OR LANDLORD'S  AGENTS OR
EMPLOYEES  WITH RESPECT  THERETO AND TENANT  WAIVES ANY CLAIM OR ACTION  AGAINST
LANDLORD IN RESPECT OF THE CONDITION OF THE LEASED  PROPERTY.  LANDLORD MAKES NO
WARRANTY  OR  REPRESENTATION,  EXPRESS  OR  IMPLIED,  IN  RESPECT  OF THE LEASED
PROPERTY  OR ANY PART  THEREOF,  EITHER  AS TO ITS  FITNESS  FOR USE,  DESIGN OR
CONDITION FOR ANY PARTICULAR  USE OR PURPOSE OR OTHERWISE,  AS TO THE QUALITY OF
THE MATERIAL OR WORKMANSHIP THEREIN,  LATENT OR PATENT, IT BEING AGREED THAT ALL
SUCH RISKS ARE TO BE BORNE BY TENANT.  To the maximum  extent  permitted by law,
however,  Landlord hereby assigns to Tenant all of Landlord's  rights to proceed
against any  predecessor  in interest or insurer for breaches of  warranties  or
representations  or for latent  defects in the Leased  Property.  Landlord shall
fully cooperate with Tenant in the prosecution of any such claims, in Landlord's
or Tenant's name, all at Tenant's sole cost and expense. Tenant shall indemnify,
defend,  and hold harmless  Landlord from and against any loss, cost,  damage or
liability  (including  reasonable  attorneys'  fees)  incurred  by  Landlord  in
connection with such cooperation.

                                      -16-
<PAGE>
         2.3 Fixed Term.  The initial term of this  Agreement (the "Fixed Term")
shall commence on the Commencement Date and shall expire on December 31, 2018.

         2.4 Extended  Terms.  Provided  that (i) no Event of Default shall have
occurred and be continuing, and (ii) the term of the Other Lease shall have been
simultaneously extended,  Tenant shall have the right to extend the Term for one
renewal term of fifteen (15) years (the "Extended Term").

         The Extended Term shall  commence on the day  succeeding the expiration
of the Fixed Term. All of the terms,  covenants and provisions of this Agreement
shall apply to the  Extended  Term,  except  that Tenant  shall have no right to
extend the Term beyond the  expiration  of the  Extended  Term.  If Tenant shall
elect to exercise the aforesaid option, it shall do so by giving Landlord Notice
thereof not later than  December 31, 2015, it being  understood  and agreed that
time shall be of the  essence  with  respect to the  giving of such  Notice.  If
Tenant  shall  fail to give such  Notice,  this  Agreement  shall  automatically
terminate at the end of the Fixed Term and Tenant  shall have no further  option
to extend  the Term of this  Agreement.  If Tenant  shall  give such  Notice and
notice  pursuant to the Other Lease,  the extension of this  Agreement  shall be
automatically  effected  without the execution of any additional  documents;  it
being  understood  and agreed,  however,  that Tenant and Landlord shall execute
such  documents  and  agreements  as either  party shall  reasonably  require to
evidence the same. Notwithstanding the provisions of the foregoing sentence, if,
subsequent  to the giving of such Notice,  an Event of Default  shall occur,  at
Landlord's  option,  the extension of this Agreement  shall cease to take effect
and this Agreement shall  automatically  terminate at the end of the Fixed Term,
and Tenant shall have no further option to extend the Term of this Agreement.

                                   ARTICLE 3

                                      RENT

         3.1 Rent.  Tenant  shall pay, in lawful  money of the United  States of
America which shall be legal tender for the payment of public and private debts,
without  offset,  abatement,  demand or deduction  (unless  otherwise  expressly
provided in this  Agreement),  Minimum Rent and Additional  Rent to Landlord and
Additional  Charges to the party to whom such  Additional  Charges are  payable,
during the Term.  All  payments  to Landlord  shall be made by wire  transfer of
immediately  available federal funds or by other means acceptable to Landlord in
its sole discretion. Rent for any partial Accounting Period shall be prorated on
a per diem basis.

         3.1.1 Minimum Rent.

                  (a)  Payments.  Minimum  Rent  shall be paid in arrears on the
         last Business Day of each Accounting Period.

                                      -17-
<PAGE>
                  (b) Allocation of Minimum Rent.  Minimum Rent may be allocated
         and reallocated among the Properties  comprising the Leased Property by
         agreement among Landlord and Tenant; provided, however that in no event
         shall the  Minimum  Rent  allocated  to any  Property  be less than the
         monthly amount payable by Landlord on account of any Facility  Mortgage
         and/or  ground or master lease with respect to such  Property nor shall
         the aggregate  amount of Minimum Rent  allocated  among the  Properties
         exceed the total amount payable for the Leased Property.

                  (c) Adjustments of Minimum Rent Following  Disbursements Under
         Sections  5.1.2(b),  10.2.3  and  11.2.  Effective  on the date of each
         disbursement  to  pay  for  the  cost  of  any  repairs,   maintenance,
         renovations or replacements  pursuant to Sections  5.1.2(b),  10.2.3 or
         11.2,  the annual Minimum Rent shall be increased by a per annum amount
         equal to the  Disbursement  Rate times the amount so disbursed.  If any
         such  disbursement  is made  during  any month on a day other  than the
         first  Business  Day  of an  Accounting  Period,  Tenant  shall  pay to
         Landlord  on  the  first  Business  Day of  the  immediately  following
         Accounting  Period (in  addition to the amount of Minimum  Rent payable
         with respect to such Accounting  Period,  as adjusted  pursuant to this
         paragraph  (c)) the  amount  by which  Minimum  Rent for the  preceding
         Accounting  Period,  as adjusted  for such  disbursement  on a per diem
         basis,  exceeded  the  amount of  Minimum  Rent paid by Tenant for such
         preceding Accounting Period.

                  (d)  Adjustments  of  Minimum  Rent  Following  Partial  Lease
         Termination.  Subject  to Section  4.1.1(b),  if this  Agreement  shall
         terminate  with respect to any Property but less than all of the Leased
         Property,  Minimum  Rent shall be reduced  by the  affected  Property's
         allocable  share of Minimum  Rent  determined  in  accordance  with the
         applicable provisions of this Agreement.

         3.1.2 Additional Rent.

                  (a) Amount.  Tenant  shall pay  additional  rent  ("Additional
         Rent") with  respect to each Lease Year during the Term  subsequent  to
         the Base Year,  with respect to each Property,  in an amount,  not less
         than zero,  equal to three percent (3%) of Excess Net Patient  Revenues
         with respect to such Property.  Quarterly  payments of Additional  Rent
         for such Property shall be calculated based on Net Patient Revenues for
         such quarter during the preceding year and shall be due and payable and
         delivered  to  Landlord  on the  first  Business  Day of each  calendar
         quarter,  or portion  thereof,  thereafter  occurring  during the Term,
         together with an Officer's Certificate setting forth the calculation of
         Additional Rent due and payable for such quarter.

                  (b) Quarterly  Installments.  Installments  of Additional Rent
         for each Lease  Year  during the Term,  or  portion  thereof,  shall be
         calculated  and paid  quarterly in arrears,  together with

                                      -18-
<PAGE>
         an Officer's  Certificate  setting forth the  calculation of Additional
         Rent due and payable for such quarter.

                  (c)  Reconciliation  of Additional  Rent. In addition,  within
         seventy-five  (75) days  after the end of the Base Year and each  Lease
         Year  thereafter (or any portion  thereof  occurring  during the Term),
         Tenant  shall  deliver,  or cause to be  delivered,  to Landlord  (i) a
         financial  report  setting  forth  the Net  Patient  Revenues  for each
         Property for such preceding  Lease Year, or portion  thereof,  together
         with  an  Officer's   Certificate  from  Tenant's  chief  financial  or
         accounting  officer  certifying  that such report is true and  correct,
         (ii) an audit of Net Patient Revenues prepared by a firm of independent
         certified  public  accountants  proposed  by  Tenant  and  approved  by
         Landlord (which approval shall not be unreasonably withheld, delayed or
         conditioned),  and (iii) a statement  showing  Tenant's  calculation of
         Additional  Rent due for such  preceding  Lease  Year  based on the Net
         Patient Revenues set forth in such financial  report,  together with an
         Officer's  Certificate  from  Tenant's  chief  financial or  accounting
         officer certifying that such statement is true and correct.

                  If the annual Additional Rent for such preceding Lease Year as
         set forth in Tenant's  statement  thereof exceeds the amount previously
         paid with  respect  thereto by Tenant,  Tenant shall pay such excess to
         Landlord at such time as the  statement  is  delivered,  together  with
         interest at the Interest  Rate,  which  interest  shall accrue from the
         close of such  preceding  Lease Year until the date that such statement
         is required to be delivered and, thereafter, such interest shall accrue
         at the Overdue Rate,  until the amount of such difference shall be paid
         or  otherwise  discharged.  If the  annual  Additional  Rent  for  such
         preceding Lease Year as shown in such statement is less than the amount
         previously paid with respect thereto by Tenant,  provided that no Event
         of Default shall have occurred and be continuing,  Landlord shall grant
         Tenant a credit  against  the  Additional  Rent next  coming due in the
         amount of such difference, together with interest at the Interest Rate,
         which  interest  shall  accrue from the date of payment by Tenant until
         the date such  credit is applied  or paid,  as the case may be. If such
         credit cannot be made because the Term has expired prior to application
         in full  thereof,  provided  no Event of Default  has  occurred  and is
         continuing,  Landlord shall pay the unapplied balance of such credit to
         Tenant,  together with interest at the Interest  Rate,  which  interest
         shall  accrue  from the date of  payment  by  Tenant  until the date of
         payment by Landlord.

                  (d) Confirmation of Additional Rent. Tenant shall utilize,  or
         cause to be utilized,  an accounting  system for the Leased Property in
         accordance  with its usual and customary  practices and in all material
         respects in accordance with GAAP, which will accurately  record all Net
         Patient Revenues and Tenant

                                      -19-
<PAGE>
         shall retain, for at least three (3) years after the expiration of each
         Lease Year,  reasonably  adequate records conforming to such accounting
         system showing all Net Patient Revenues for such Lease Year.  Landlord,
         at its own  expense,  except as  provided  hereinbelow,  shall have the
         right,   exercisable  by  Notice  to  Tenant,  by  its  accountants  or
         representatives,  to audit the  information  set forth in the Officer's
         Certificate  referred to in  subparagraph  (c) above and, in connection
         with such audits,  to examine  Tenant's  books and records with respect
         thereto  (including  supporting data and sales and excise tax returns).
         Landlord  shall  begin  such  audit  as  soon  as  reasonably  possible
         following its receipt of the applicable Officer's Certificate and shall
         complete such audit as soon as reasonably possible  thereafter.  If any
         such audit  discloses a deficiency  in the payment of  Additional  Rent
         and,  either  Tenant agrees with the result of such audit or the matter
         is otherwise  compromised with Landlord,  Tenant shall forthwith pay to
         Landlord the amount of the deficiency, as finally agreed or determined,
         together with interest at the Interest Rate, from the date such payment
         should have been made to the date of payment thereof. If any such audit
         discloses that Tenant paid more Additional Rent for any Lease Year than
         was due hereunder,  and either  Landlord agrees with the result of such
         audit or the  matter  is  otherwise  determined,  provided  no Event of
         Default has occurred and is continuing,  Landlord  shall, at Landlord's
         option,  either  grant Tenant a credit or pay to Tenant an amount equal
         to the amount of such overpayment  against  Additional Rent next coming
         due in the amount of such difference,  as finally agreed or determined,
         together  with  interest at the Interest  Rate,  which  interest  shall
         accrue from the time of payment by Tenant until the date such credit is
         applied or paid, as the case may be; provided,  however, that, upon the
         expiration  or sooner  termination  of the Term,  provided  no Event of
         Default  has  occurred  and  is  continuing,  Landlord  shall  pay  the
         unapplied  balance of such credit to Tenant,  together with interest at
         the Interest Rate, which interest shall accrue from the date of payment
         by  Tenant  until  the  date of  payment  from  Landlord.  Any  dispute
         concerning the  correctness of an audit shall be settled by arbitration
         pursuant to the provisions of Article 22.

         Any proprietary information obtained by Landlord with respect to Tenant
pursuant to the provisions of this Agreement  shall be treated as  confidential,
except that such information may be used, subject to appropriate confidentiality
safeguards,  in any  litigation  between  the parties  and except  further  that
Landlord may disclose such information to its prospective lenders, provided that
Landlord shall direct such lenders to maintain such information as confidential.
The  obligations  of Tenant and Landlord  contained in this Section  3.1.2 shall
survive the expiration or earlier termination of this Agreement.

         3.1.3  Additional   Charges.  In  addition  to  the  Minimum  Rent  and
Additional Rent payable hereunder, Tenant shall pay (or cause to

                                      -20-
<PAGE>
be paid) to the appropriate parties and discharge (or cause to be discharged) as
and when due and payable the following (collectively, "Additional Charges"):

                  (a)  Impositions.  Subject to Article 8 relating to  permitted
         contests, Tenant shall pay, or cause to be paid, all Impositions before
         any fine, penalty, interest or cost (other than any opportunity cost as
         a result of a  failure  to take  advantage  of any  discount  for early
         payment)  may be  added  for  non-payment,  such  payments  to be  made
         directly to the taxing authorities where feasible,  and shall promptly,
         upon request,  furnish to Landlord copies of official receipts or other
         reasonably  satisfactory  proof  evidencing such payments.  If any such
         Imposition  may,  at the option of the  taxpayer,  lawfully  be paid in
         installments  (whether  or not  interest  shall  accrue  on the  unpaid
         balance of such Imposition),  Tenant may exercise the option to pay the
         same  (and  any  accrued   interest  on  the  unpaid  balance  of  such
         Imposition) in installments and, in such event,  shall pay, or cause to
         pay,  such  installments  during  the Term as the same  become  due and
         before any fine,  penalty,  premium,  further  interest  or cost may be
         added thereto.  Landlord, at its expense, shall, to the extent required
         or  permitted  by  Applicable  Law,  prepare  and file,  or cause to be
         prepared and filed, all tax returns and pay all taxes due in respect of
         Landlord's net income, gross receipts,  sales and use, single business,
         transaction privilege,  rent, ad valorem,  franchise taxes and taxes on
         its capital stock,  and Tenant,  at its expense,  shall,  to the extent
         required or permitted by Applicable Laws and  regulations,  prepare and
         file all other tax returns and reports in respect of any  Imposition as
         may be required by  Government  Agencies.  Provided no Event of Default
         shall have occurred and be continuing,  if any refund shall be due from
         any taxing  authority in respect of any Imposition paid by or on behalf
         of  Tenant,  the same  shall be paid  over to or  retained  by  Tenant.
         Landlord and Tenant shall, upon request of the other, provide such data
         as is  maintained by the party to whom the request is made with respect
         to the Leased  Property as may be  necessary  to prepare  any  required
         returns and  reports.  In the event  Government  Agencies  classify any
         property covered by this Agreement as personal  property,  Tenant shall
         file, or cause to be filed,  all personal  property tax returns in such
         jurisdictions  where it may legally so file.  Each party shall,  to the
         extent it possesses the same,  provide the other,  upon  request,  with
         cost and  depreciation  records  necessary  for filing  returns for any
         property so classified as personal property.  Where Landlord is legally
         required to file personal  property tax returns for property covered by
         this Agreement, Landlord shall provide Tenant with copies of assessment
         notices  in  sufficient  time  for  Tenant  to  file  a  protest.   All
         Impositions   assessed   against  such  personal   property   shall  be
         (irrespective  of whether  Landlord or Tenant  shall file the  relevant
         return)  paid by Tenant  not later

                                      -21-
<PAGE>

         than the last date on which the same may be made  without  interest  or
         penalty, subject to the provisions of Article 8.

         Landlord shall give prompt Notice to Tenant of all Impositions  payable
by Tenant  hereunder  of which  Landlord  at any time has  knowledge;  provided,
however,  that  Landlord's  failure  to give  any  such  notice  shall in no way
diminish Tenant's obligation hereunder to pay such Impositions.

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

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

                  (d) Other  Charges.  Tenant  shall pay or cause to be paid all
         other  amounts,   liabilities  and  obligations,   including,   without
         limitation,  ground  rents,  if any, and all amounts  payable under any
         equipment  leases  and  all  agreements  to  indemnify  Landlord  under
         Sections 4.4.2 and 9.5.

                  (e)  Reimbursement for Additional  Charges.  If Tenant pays or
         causes to be paid property taxes or similar or other Additional Charges
         attributable  to  periods  after  the  end of the  Term,  whether  upon
         expiration  or  sooner   termination  of  this  Agreement  (other  than
         termination  by reason of an Event of  Default),  Tenant may,  within a
         reasonable  time after the end of the Term,  provide Notice to Landlord
         of its estimate of such  amounts.  Landlord  shall  promptly  reimburse
         Tenant  for all  payments  of such taxes and other  similar  Additional
         Charges  that are  attributable  to any  period  after the Term of this
         Agreement.

         3.2 Late  Payment of Rent,  Etc. If any  installment  of Minimum  Rent,
Additional Rent or Additional  Charges (but only as to those Additional  Charges
which are payable  directly to Landlord)  shall not be paid within ten (10) days
after its due date, Tenant shall pay Landlord, on demand, as Additional Charges,
a late charge (to the extent  permitted by law)  computed at the Overdue Rate on
the amount of such  installment,  from the due date of such  installment  to the
date of payment thereof.  To the extent that Tenant pays any Additional  Charges
directly to Landlord or any Facility  Mortgagee  pursuant to any  requirement of
this  Agreement,  Tenant  shall  be  relieved  of its  obligation  to  pay  such
Additional  Charges to the Entity to which they would  otherwise  be due. If any
payments  due from  Landlord  to Tenant  shall not be paid  within ten (10) days
after its due date,  Landlord shall pay to Tenant,  on demand, a late charge (to
the extent  permitted by law) computed at the Overdue Rate on the amount of such
installment  from  the due  date  of such  installment  to the  date of  payment
thereof.

                                      -22-
<PAGE>
         In the event of any  failure  by Tenant to pay any  Additional  Charges
when due, Tenant shall promptly pay and discharge,  as Additional Charges, every
fine, penalty,  interest and cost which is added for non-payment or late payment
of such items. Landlord shall have all legal,  equitable and contractual rights,
powers and remedies provided either in this Agreement or by statute or otherwise
in the  case  of  non-payment  of the  Additional  Charges  as in  the  case  of
non-payment of the Minimum Rent and Additional Rent.

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

         3.4 No Termination,  Abatement,  Etc. Except as otherwise  specifically
provided in this Agreement,  each of Landlord and Tenant,  to the maximum extent
permitted by law,  shall remain bound by this  Agreement in accordance  with its
terms and shall not take any action  without the consent of the other to modify,
surrender  or  terminate  this  Agreement.  In  addition,  except  as  otherwise
expressly provided in this Agreement,  Tenant shall not seek, or be entitled to,
any abatement, deduction, deferment or reduction of the Rent, or set-off against
the  Rent,  nor shall the  respective  obligations  of  Landlord  and  Tenant be
otherwise  affected by reason of (a) any damage to or  destruction of the Leased
Property or any portion thereof from whatever cause or any Condemnation, (b) the
lawful or unlawful  prohibition  of, or  restriction  upon,  Tenant's use of the
Leased Property,  or any portion thereof,  or the interference  with such use by
any Person or by reason of  eviction  by  paramount  title;  (c) any claim which
Tenant may have against Landlord by reason of any default (other than a monetary
default) or breach of any warranty by Landlord under this Agreement or any other
agreement  between  Landlord  and Tenant,  or to which  Landlord  and Tenant are
parties;   (d)  any   bankruptcy,   insolvency,   reorganization,   composition,
readjustment,   liquidation,   dissolution,  winding  up  or  other  proceedings
affecting  Landlord or any assignee or  transferee  of Landlord;  or (e) for any
other cause whether similar or dissimilar to any of the foregoing  (other than a
monetary default by Landlord). Except as otherwise specifically provided in this
Agreement,   Tenant  hereby  waives  all  rights  arising  from  any  occurrence
whatsoever,  which  may  now or  hereafter  be  conferred  upon it by law (a) to
modify,  surrender or terminate  this  Agreement or quit or surrender the Leased
Property  or any  portion  thereof,  or (b) which  would  entitle  Tenant to any
abatement,  reduction, suspension or deferment of the Rent or other sums payable
or other  obligations to be performed by Tenant  hereunder.  The  obligations of
Tenant hereunder shall be separate and independent covenants and agreements, and
the Rent and all other sums  payable by Tenant  hereunder  shall  continue to be
payable in all events unless the obligations to pay the same shall be terminated
pursuant to the express provisions of this Agreement.

                                      -23-
<PAGE>
                                   ARTICLE 4

                           USE OF THE LEASED PROPERTY

         4.1 Permitted Use.

                  4.1.1 Permitted Use.

                  (a) Tenant  shall,  at all times  during the Term,  and at any
         other time that Tenant shall be in possession  of the Leased  Property,
         continuously  use and operate,  or cause to be used and operated,  each
         Property   as   a   skilled    nursing/intermediate    care/independent
         living/assisted living/special care facility as currently operated, and
         any uses incidental thereto. Tenant shall not use (and shall not permit
         any Person to use) any  Property or any  portion  thereof for any other
         use without the prior written consent of Landlord, which approval shall
         not be unreasonably withheld,  delayed or conditioned.  No use shall be
         made or  permitted to be made of any Property and no acts shall be done
         thereon  which  will cause the  cancellation  of any  insurance  policy
         covering such  Property or any part thereof  (unless  another  adequate
         policy is  available)  or which would  constitute  a default  under any
         ground lease  affecting  any of the Leased  Property,  nor shall Tenant
         sell or otherwise provide to residents or patients  therein,  or permit
         to be kept, used or sold in or about any Property any article which may
         be  prohibited  by  law or by  the  standard  form  of  fire  insurance
         policies,  or any  other  insurance  policies  required  to be  carried
         hereunder, or fire underwriter's regulations. Tenant shall, at its sole
         cost  (except as  expressly  provided in Section  5.1.2(b)),  comply or
         cause to be complied with all Insurance Requirements.  Tenant shall not
         take or omit to take, or permit to be taken or omitted to be taken, any
         action, the taking or omission of which materially impairs the value or
         the  usefulness  of any of the Leased  Property or any part thereof for
         its Permitted Use.

                  (b) In the event  that,  in the  reasonable  determination  of
         Tenant,  it shall no longer be  economically  practical  to operate any
         Property as  currently  operated,  Tenant  shall give  Landlord  Notice
         thereof,  which Notice shall set forth in reasonable detail the reasons
         therefor.  Thereafter,  (i) Landlord and Tenant shall negotiate in good
         faith to agree on an  alternative  use for such  Property,  appropriate
         adjustments to the Additional Rent and other related matters; provided,
         however,  in no event shall the Minimum  Rent be reduced or abated as a
         result thereof,  and (ii) Tenant may market such Property for sale to a
         third  party.  If Tenant  receives  a bona fide offer (an  "Offer")  to
         purchase such  Property from a Person having the financial  capacity to
         implement the terms of such Offer,  Tenant shall give  Landlord  Notice
         thereof,  which  Notice shall  include a copy of the Offer  executed by
         such third party.  In the event that  Landlord  shall fail to accept or
         reject such Offer within thirty (30) days after receipt

                                      -24-
<PAGE>
         of such Notice,  such Offer shall be deemed to be rejected by Landlord.
         If Landlord shall either sell the Property  pursuant to such Offer,  or
         reject such Offer,  effective  as of the date or proposed  date of such
         sale, as the case may be, this Agreement  shall  terminate with respect
         to such  Property,  and the Minimum  Rent shall be reduced by an amount
         equal to ten  percent  (10%) of the net  proceeds  of sale  received by
         Landlord  or, in the case of  rejection,  the  projected  net  proceeds
         determined by reference to such Offer.

                  4.1.2 Necessary  Approvals.  Tenant shall proceed with all due
diligence and exercise reasonable efforts to obtain and maintain, or cause to be
obtained and  maintained,  all approvals  necessary to use and operate,  for its
Permitted Use, each Property and the Facility  located thereon under  applicable
law and, without limiting the foregoing,  shall exercise  reasonable  efforts to
maintain   (or  cause  to  be   maintained)   appropriate   certifications   for
reimbursement and licensure.

                  4.1.3 Lawful Use, Etc.  Tenant shall not, and shall not permit
any Person to use or suffer or permit the use of the Leased Property or Tenant's
Personal Property, if any, for any unlawful purpose. Tenant shall not, and shall
not  permit any Person  to,  commit or suffer to be  committed  any waste on any
Property,  or in any  Facility,  nor shall  Tenant  cause or permit any unlawful
nuisance  thereon or therein.  Tenant shall not, and shall not permit any Person
to, suffer nor permit the Leased Property, or any portion thereof, to be used in
such a manner  as (i) may  materially  and  adversely  impair  Landlord's  title
thereto  or to any  portion  thereof,  or (ii) may  reasonably  allow a claim or
claims for adverse  usage or adverse  possession  by the public,  as such, or of
implied dedication of the Leased Property or any portion thereof.

         4.2 Compliance with Legal/Insurance  Requirements,  Etc. Subject to the
provisions of Article 8 and Section 5.1.2(b), Tenant, at its sole expense, shall
(i) comply (or cause to be complied with) with all material  Legal  Requirements
and  Insurance  Requirements  in  respect  of the use,  operation,  maintenance,
repair, alteration and restoration of the Leased Property and with the terms and
conditions of any ground lease affecting any Property, (ii) perform (or cause to
be performed) all of Landlord's obligations under any ground lease affecting any
Property and (iii)  procure,  maintain and comply with (or cause to be procured,
maintained  and complied  with) all  material  licenses,  certificates  of need,
permits,  provider  agreements and other  authorizations and agreements required
for any use of the Leased Property and Tenant's Personal Property,  if any, then
being made, and for the proper erection, installation, operation and maintenance
of the Leased Property or any part thereof.

         4.3 Compliance with Medicaid and Medicare Requirements.  Tenant, at its
sole  cost and  expense,  shall  make (or  shall  cause  to be  made),  whatever
improvements  (capital  or  ordinary)  as are  required  to

                                      -25-
<PAGE>
conform the Leased  Property to such  standards  as may,  from time to time,  be
required  by Federal  Medicare  (Title 18) or  Medicaid  (Title 19) for  skilled
and/or intermediate care nursing programs, to the extent Tenant is a participant
in such programs,  or any other applicable  programs or legislation,  or capital
improvements  required by any other governmental agency having jurisdiction over
the Leased  Property as a condition of the continued  operation of each Property
for its Primary Intended Use.

         4.4 Environmental Matters.

                  4.4.1  Restriction on Use, Etc.  During the Term and any other
time that Tenant shall be in  possession  of the Leased  Property,  Tenant shall
not,  and shall not  permit  any Person to,  store,  spill  upon,  dispose of or
transfer  to or from the Leased  Property  any  Hazardous  Substance,  except in
compliance  with all  Applicable  Laws.  During the Term and any other time that
Tenant shall be in possession of the Leased Property, Tenant shall maintain (and
shall  cause to be  maintained)  the  Leased  Property  at all times free of any
Hazardous  Substance  (except in compliance  with all Applicable  Laws).  Tenant
shall  promptly:  (a) upon  receipt  of notice  or  knowledge,  promptly  notify
Landlord in writing of any material  change in the nature or extent of Hazardous
Substances at the Leased Property, (b) transmit to Landlord a copy of any report
which is  required  to be filed by Tenant or any  Manager  with  respect  to the
Leased  Property  pursuant to SARA Title III or any other  Applicable  Law,  (c)
transmit  to  Landlord  copies  of  any  citations,  orders,  notices  or  other
governmental   communications  received  by  Tenant  or  any  Manager  or  their
respective  agents  or  representatives  with  respect  thereto   (collectively,
"Environmental  Notice"), which Environmental Notice requires a written response
or any action to be taken  and/or if such  Environmental  Notice gives notice of
and/or presents a material risk of any material  violation of any Applicable Law
and/or  presents a material risk of any material cost,  expense,  loss or damage
(an  "Environmental  Obligation"),  (d)  observe  and  comply  (and  cause to be
observed and complied) with all Applicable Laws relating to the use, maintenance
and  disposal of  Hazardous  Substances  and all orders or  directives  from any
official,  court or  agency of  competent  jurisdiction  relating  to the use or
maintenance   or  requiring  the  removal,   treatment,   containment  or  other
disposition  thereof,  and (e) pay or otherwise  dispose (or cause to be paid or
otherwise  disposed) of any fine, charge or Imposition  related thereto,  unless
Tenant or any Manager  shall  contest the same in good faith and by  appropriate
proceedings  and the right to use and the value of any of the Leased Property is
not materially and adversely affected thereby.

         If, at any time prior to the termination of this  Agreement,  Hazardous
Substances  (other than those maintained in accordance with Applicable Laws) are
discovered on the Leased Property, subject to Tenant's right to contest the same
in  accordance  with  Article 8, Tenant shall take (and shall cause to be taken)
all actions and incur any and all  expenses,  as are required by any  Government
Agency and by

                                      -26-
<PAGE>
Applicable  Law,  (i) to clean up and remove from and about the Leased  Property
all  Hazardous  Substances  thereon,  (ii) to contain  and  prevent  any further
release  or threat of  release of  Hazardous  Substances  on or about the Leased
Property and (iii) to use good faith efforts to eliminate any further release or
threat of release of Hazardous Substances on or about the Leased Property.

                  4.4.2  Indemnification  of  Landlord.  Tenant  shall  protect,
indemnify  and  hold  harmless  Landlord  and  each  Facility  Mortgagee,  their
trustees,  officers,  agents,  employees  and  beneficiaries,  and any of  their
respective  successors or assigns with respect to this Agreement  (collectively,
the "Indemnitees" and, individually,  an "Indemnitee") for, from and against any
and all  debts,  liens,  claims,  causes  of  action,  administrative  orders or
notices,  costs, fines,  penalties or expenses  (including,  without limitation,
reasonable  attorney's fees and expenses) imposed upon,  incurred by or asserted
against any  Indemnitee  resulting  from,  either  directly or  indirectly,  the
presence  in, upon or under the soil or ground  water of the Leased  Property or
any properties  surrounding the Leased  Property of any Hazardous  Substances in
violation of any  Applicable  Law,  except to the extent the same arise from the
acts or omissions of Landlord or any other  Indemnitee or during any period that
Landlord or a Person designated by Landlord (other than Tenant) is in possession
of the Leased  Property  from and after the date  hereof.  Tenant's  duty herein
includes,  but is not limited  to,  costs  associated  with  personal  injury or
property  damage claims as a result of the presence  prior to the  expiration or
sooner  termination  of the Term and the  surrender  of the Leased  Property  to
Landlord in accordance with the terms of this Agreement of Hazardous  Substances
in, upon or under the soil or ground  water of the Leased  Property in violation
of  any  Applicable  Law.  Upon  Notice  from  Landlord  and  any  other  of the
Indemnitees,  Tenant  shall  undertake  the defense,  at Tenant's  sole cost and
expense, of any indemnification  duties set forth herein, in which event, Tenant
shall not be liable for payment of any  duplicative  attorneys' fees incurred by
any Indemnitee.

         Tenant shall, upon demand, pay (or cause to be paid) to Landlord, as an
Additional  Charge,  any  cost,  expense,  loss or  damage  (including,  without
limitation,  reasonable  attorneys'  fees)  reasonably  incurred by Landlord and
arising from a failure of Tenant to observe and perform (or cause to be observed
and  performed) the  requirements  of this Section 4.4, which amounts shall bear
interest from the date ten (10) Business Days after written  demand  therefor is
given to Tenant until paid by Tenant to Landlord at the Overdue Rate.

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

                                      -27-
<PAGE>
                                   ARTICLE 5

                            MAINTENANCE AND REPAIRS

         5.1 Maintenance and Repair.

                  5.1.1 Tenant's General Obligations.

                  (a) Tenant shall keep (or cause to be kept),  at Tenant's sole
         cost  and  expense,  the  Leased  Property  and all  private  roadways,
         sidewalks  and  curbs   appurtenant   thereto  (and  Tenant's  Personal
         Property) in good order and repair,  reasonable  wear and tear excepted
         (whether  or not the need  for  such  repairs  occurs  as a  result  of
         Tenant's or any  Manager's  use, any prior use, the elements or the age
         of the Leased  Property  or Tenant's  Personal  Property or any portion
         thereof), and shall promptly make or cause to be made all necessary and
         appropriate repairs and replacements  thereto of every kind and nature,
         whether interior or exterior, structural or nonstructural,  ordinary or
         extraordinary,  foreseen  or  unforeseen  or  arising  by  reason  of a
         condition  existing prior to the commencement of the Term (concealed or
         otherwise).  All repairs shall be made in a good,  workmanlike  manner,
         consistent  with industry  standards for comparable  Facilities in like
         locales,  in accordance  with all applicable  federal,  state and local
         statutes, ordinances, codes, rules and regulations relating to any such
         work.  Tenant  shall not take or omit to take (or  permit any Person to
         take or omit to take) any action, the taking or omission of which would
         materially  and  adversely  impair the value or the  usefulness  of the
         Leased  Property or any material  part thereof for its  Permitted  Use.
         Tenant's  obligations  under this Section 5.1.1 shall be limited in the
         event of any  casualty or  Condemnation  as set forth in Article 10 and
         Article  11  and  Tenant's   obligations   with  respect  to  Hazardous
         Substances are as set forth in Section 4.4.

                  (b) Tenant  shall,  at its sole cost and  expense,  within one
         hundred  eighty (180) days after the  Commencement  Date,  complete the
         Required Repairs.

                  5.1.2 Landlord's Obligations.

                  (a) Except as otherwise  expressly provided in this Agreement,
         Landlord  shall not, under any  circumstances,  be required to build or
         rebuild any improvement on the Leased Property, or to make any repairs,
         replacements,  alterations,  restorations  or renewals of any nature or
         description to the Leased Property,  whether ordinary or extraordinary,
         structural or  nonstructural,  foreseen or  unforeseen,  or to make any
         expenditure  whatsoever with respect thereto, or to maintain the Leased
         Property in any way.  Except as  otherwise  expressly  provided in this
         Agreement,  Tenant hereby waives,  to the maximum  extent

                                      -28-
<PAGE>
         permitted  by law, the right to make repairs at the expense of Landlord
         pursuant to any law in effect on the date hereof or hereafter  enacted.
         Landlord shall have the right to give, record and post, as appropriate,
         notices  of  nonresponsibility  under any  mechanic's  lien laws now or
         hereafter existing.

                  (b) If,  pursuant  to the terms of this  Agreement,  Tenant is
         required  to make any  expenditures  in  connection  with  any  repair,
         maintenance or renovation  with respect to any Property other than with
         respect to the Required Repairs,  Tenant may, at its election,  advance
         such funds or give  Landlord  Notice  thereof,  which  Notice shall set
         forth,  in  reasonable  detail,  the  nature  of the  required  repair,
         renovation or  replacement,  the estimated  cost thereof and such other
         information  with respect  thereto as Landlord may reasonably  require.
         Provided that no Event of Default shall have occurred and be continuing
         and Tenant shall  otherwise  comply with the  applicable  provisions of
         Article 6,  Landlord  shall,  within ten (10)  Business Days after such
         Notice,  subject to and in accordance with the applicable provisions of
         Article 6, disburse such required  funds to Tenant (or, if Tenant shall
         so elect,  directly to the Manager or any other Person  performing  the
         required work) and, upon such  disbursement,  the Minimum Rent shall be
         adjusted as provided in Section 3.1.1(c).

                  5.1.3  Nonresponsibility  of Landlord,  Etc. All  materialmen,
contractors, artisans, mechanics and laborers and other persons contracting with
Tenant with  respect to the Leased  Property,  or any part  thereof,  are hereby
charged with notice that liens on the Leased Property or on Landlord's  interest
therein  are  expressly  prohibited  and that they must look solely to Tenant to
secure payment for any work done or material  furnished to Tenant or any Manager
or for any other purpose during the term of this Agreement.

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

         5.2 Tenant's Personal  Property.  Tenant shall provide and maintain (or
cause to be  provided  and  maintained)  throughout  the Term all such  Tenant's
Personal  Property as shall be necessary in order to operate in compliance  with
applicable material Legal Requirements and Insurance  Requirements and otherwise
in accordance with customary

                                      -29-
<PAGE>
practice  in the  industry  for the  Permitted  Use,  and  all of such  Tenant's
Personal  Property  shall,  upon the  expiration or earlier  termination of this
Agreement,  become the property of Landlord. If, from and after the Commencement
Date,  Tenant  acquires an interest  in any item of tangible  personal  property
(other than motor vehicles) on, or in connection with, the Leased Property which
belongs  to anyone  other than  Tenant,  Tenant  shall  require  the  agreements
permitting such use to provide that Landlord or its designee may assume Tenant's
rights  and  obligations  under  such  agreement  upon the  termination  of this
Agreement  and the  assumption  of  management  or  operation of the Facility by
Landlord or its designee.

         5.3  Yield  Up.  Upon the  expiration  or  sooner  termination  of this
Agreement,  Tenant shall vacate and surrender the Leased Property to Landlord in
substantially  the same  condition  in which the Leased  Property  was in on the
Commencement Date, except as repaired, rebuilt, restored, altered or added to as
permitted or required by the provisions of this  Agreement,  reasonable wear and
tear  excepted  (and casualty  damage and  Condemnation,  in the event that this
Agreement is terminated  following a casualty or Condemnation in accordance with
Article 10 or Article 11 excepted).

         In  addition,  upon  the  expiration  or  earlier  termination  of this
Agreement, Tenant shall, at Landlord's sole cost and expense, use its good faith
efforts to transfer (or cause to be  transferred) to and cooperate with Landlord
or Landlord's  nominee in connection with the processing of all applications for
licenses,  operating  permits  and  other  governmental  authorizations  and all
contracts,  including contracts with governmental or quasi-governmental Entities
which  may be  necessary  for the  use and  operation  of the  Facility  as then
operated. If requested by Landlord,  Tenant shall continue to manage one or more
of the Facilities  after the expiration of the Term for up to one hundred eighty
(180) days,  on such  reasonable  terms  (which  shall  include an  agreement to
reimburse  Tenant  for its  reasonable  out-of-pocket  costs and  expenses,  and
reasonable administrative costs), as Landlord shall reasonably request.

         5.4 Management  Agreement.  Tenant shall not, without  Landlord's prior
written  consent (which consent shall not be unreasonably  withheld,  delayed or
conditioned),  enter  into,  amend or modify the  provisions  of any  Management
Agreement with respect to any Property.  Any Management  Agreement  entered into
pursuant to the  provisions  of this  Section 5.4 shall be  subordinate  to this
Agreement  and shall  provide,  inter alia,  that all amounts due from Tenant to
Manager  thereunder  shall be  subordinate  to all  amounts  due from  Tenant to
Landlord  (provided  that,  as long as no Event of Default has  occurred  and is
continuing,  Tenant may pay all  amounts due to Manager  thereunder  pursuant to
such Management  Agreement) and for termination  thereof,  at Landlord's option,
upon the termination of this Agreement.  Tenant shall not take any action, grant
any consent or permit any action under any such Management Agreement which might
have a material adverse effect on Landlord, without the prior written consent of

                                      -30-
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Landlord,  which  consent  shall  not  be  unreasonably  withheld,   delayed  or
conditioned.

                                   ARTICLE 6

                               IMPROVEMENTS, ETC.

         6.1  Improvements  to the  Leased  Property.  Tenant  shall  not  make,
construct  or  install  (or permit to be made,  constructed  or  installed)  any
Capital Additions without, in each instance,  obtaining Landlord's prior written
consent,  which  consent  shall  not  be  unreasonably   withheld,   delayed  or
conditioned provided that (a) construction or installation of the same would not
adversely  affect  or  violate  any  material  Legal  Requirement  or  Insurance
Requirement  applicable  to the  Leased  Property  and (b)  Landlord  shall have
received an  Officer's  Certificate  certifying  as to the  satisfaction  of the
conditions set out in clause (a) above; provided,  however, that no such consent
shall be required in the event immediate  action is required to prevent imminent
harm to person or  property.  Prior to  commencing  construction  of any Capital
Addition, Tenant shall submit to Landlord, in writing, a proposal setting forth,
in  reasonable  detail,  any such  proposed  improvement  and shall  provide  to
Landlord such plans and specifications,  and such permits,  licenses,  contracts
and such  other  information  concerning  the same as  Landlord  may  reasonably
request.  Landlord shall have thirty (30) days to review all materials submitted
to Landlord in connection with any such proposal. Failure of Landlord to respond
to Tenant's  proposal  within thirty (30) days after receipt of all  information
and materials requested by Landlord in connection with the proposed  improvement
shall be  deemed  to  constitute  approval  of the same.  Without  limiting  the
generality  of the  foregoing,  such  proposal  shall  indicate the  approximate
projected cost of constructing such proposed  improvement and the use or uses to
which it will be put.  No Capital  Addition  shall be made which would tie in or
connect any Leased Improvements with any other improvements on property adjacent
to the Leased Property (and not part of the Land) including, without limitation,
tie-ins of  buildings  or other  structures  or  utilities.  Except as permitted
herein,  Tenant  shall  not  finance  the  cost  of  any  construction  of  such
improvement  by the  granting  of a lien on or  security  interest in the Leased
Property or such improvement,  or Tenant's  interest therein,  without the prior
written  consent of  Landlord,  which  consent  may be  withheld  by Landlord in
Landlord's sole discretion.  Any such improvements shall, upon the expiration or
sooner termination of this Agreement,  remain or pass to and become the property
of  Landlord,   free  and  clear  of  all  encumbrances   other  than  Permitted
Encumbrances.

         6.2 Salvage.  All materials which are scrapped or removed in connection
with the making of either Capital Additions or non-Capital  Additions or repairs
required by Article 5 shall be or become the property of the party that paid for
such work.

                                      -31-
<PAGE>
                                   ARTICLE 7

                                     LIENS

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

         7.2 Landlord's  Lien. In addition to any statutory  landlord's lien and
in order to secure  payment of the Rent and all other sums payable  hereunder by
Tenant,  and to secure  payment of any loss,  cost or damage which  Landlord may
suffer by reason of Tenant's breach of this Agreement, Tenant hereby grants unto
Landlord, to the maximum extent permitted by Applicable Law, a security interest
in and an express contractual lien upon Tenant's Personal Property (except motor
vehicles), and Tenant's interest in all ledger sheets, files, records, documents
and instruments  (including,  without limitation,  computer programs,  tapes and
related electronic data processing)  relating to the operation of the Facilities
(the   "Records")  and  all  proceeds   therefrom,   subject  to  any  Permitted
Encumbrances;  and such Tenant's Personal Property shall not be removed from the
Leased  Property  at any time  when an  Event of  Default  has  occurred  and is
continuing.

         Upon Landlord's  request,  Tenant shall execute and deliver to Landlord
financing  statements  in form  sufficient  to perfect the security  interest of
Landlord in Tenant's  Personal  Property and the proceeds  thereof in accordance
with the provisions of the applicable laws of the State.  During the continuance
of an Event of Default,  Tenant hereby grants  Landlord an  irrevocable  limited
power of  attorney,  coupled  with an  interest,  to execute all such  financing
statements  in Tenant's  name,  place and stead.  The security  interest  herein
granted is in addition to any statutory lien for the Rent.

                                      -32-
<PAGE>
                                   ARTICLE 8

                               PERMITTED CONTESTS

         Tenant  shall have the right to contest  the amount or  validity of any
Imposition, Legal Requirement, Insurance Requirement,  Environmental Obligation,
lien, attachment, levy, encumbrance, charge or claim (collectively, "Claims") as
to the Leased  Property,  by appropriate  legal  proceedings,  conducted in good
faith and with due diligence, provided that (a) the foregoing shall in no way be
construed as relieving,  modifying or extending  Tenant's  obligation to pay (or
cause to be paid) any Claims as finally  determined,  (b) such contest shall not
cause  Landlord or Tenant to be in default  under any  mortgage or deed of trust
encumbering  the Leased  Property  (Landlord  agreeing that any such mortgage or
deed of trust shall  permit  Tenant to exercise the rights  granted  pursuant to
this Article 8) or any interest  therein or result in or  reasonably be expected
to result in a lien attaching to the Leased Property,  (c) no part of the Leased
Property  nor any Rent  therefrom  shall  be in any  immediate  danger  of sale,
forfeiture, attachment or loss, and (d) Tenant shall indemnify and hold harmless
Landlord  from and  against  any cost,  claim,  damage,  penalty  or  reasonable
expense,   including  reasonable   attorneys'  fees,  incurred  by  Landlord  in
connection therewith or as a result thereof. Landlord agrees to join in any such
proceedings  if  required  legally to  prosecute  such  contest,  provided  that
Landlord  shall not thereby be subjected to any liability  therefor  (including,
without  limitation,  for the  payment of any costs or  expenses  in  connection
therewith)  unless Tenant  agrees by agreement in form and substance  reasonably
satisfactory to Landlord,  to assume and indemnify  Landlord with respect to the
same.  Tenant shall be entitled to any refund of any Claims and such charges and
penalties or interest thereon which have been paid by Tenant or paid by Landlord
to the extent that Landlord has been fully reimbursed by Tenant. If Tenant shall
fail (x) to pay or cause to be paid any Claims when finally  determined,  (y) to
provide  reasonable  security  therefor  or  (z) to  prosecute  or  cause  to be
prosecuted  any such contest  diligently  and in good faith,  Landlord may, upon
reasonable  notice to Tenant  (which  notice  shall not be  required if Landlord
shall reasonably determine that the same is not practicable),  pay such charges,
together with interest and penalties due with respect thereto,  and Tenant shall
reimburse Landlord therefor, upon demand, as Additional Charges.

                                   ARTICLE 9

                         INSURANCE AND INDEMNIFICATION

         9.1 General Insurance  Requirements.  Tenant shall, at all times during
the Term and at any other  time  Tenant  shall be in  possession  of the  Leased
Property,  keep (or cause to be kept) each  Property  and all  property  located
therein or thereon,  insured against the risks and in such amounts as is against
such risks and in such amounts as Landlord shall  reasonably  require and may be
commercially  reasonable.  Tenant

                                      -33-
<PAGE>

shall  prepare a proposal  setting  forth the  insurance  Tenant  proposes to be
maintained  with respect to such Property  during the ensuing  Fiscal Year,  and
shall submit such proposal to Landlord on or before  December 1 of the preceding
Lease Year,  for  Landlord's  review and approval,  which  approval shall not be
unreasonably withheld, delayed or conditioned.  In the event that Landlord shall
fail to respond  within  thirty (30) days after receipt of such  proposal,  such
proposal shall be deemed approved.

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

         9.3 Form  Satisfactory,  Etc. All insurance  policies and  endorsements
required pursuant to this Article 9 shall be fully paid for,  nonassessable,  be
issued by insurance  carriers  authorized to do business in the State, and shall
be  issued  by  reputable  insurance  companies,  and,  otherwise,  be issued by
insurance  carriers having a general policy holder's rating of no less than A in
Best's latest rating guide. All property,  business interruption,  liability and
flood  insurance  policies  with  respect  to such  Property  shall  include  no
deductible in excess of Two Hundred Fifty Thousand  Dollars  ($250,000).  At all
times,  all  property,  business  interruption,  liability  and flood  insurance
policies, with the exception of worker's compensation insurance coverage,  shall
name  Landlord  and any  Facility  Mortgagee as  additional  insureds,  as their
interests  may  appear.  All loss  adjustments  shall be payable as  provided in
Article  10,  except that  losses  under  liability  and  worker's  compensation
insurance  policies  shall be payable  directly to the party  entitled  thereto.
Tenant shall cause all insurance premiums to be paid and shall deliver (or cause
to be delivered)  policies or  certificates  thereof to Landlord  prior to their
effective date (and, with respect to any renewal policy, prior to the expiration
of the existing  policy).  All such  policies  shall  provide  Landlord (and any
Facility  Mortgagee  if  required by the same)  thirty  (30) days prior  written
notice of any  material  change or  cancellation  of such  policy.  In the event
Tenant shall fail to effect (or cause to be effected)  such  insurance as herein
required,  to pay (or cause to be paid) the premiums  therefor or to deliver (or
cause to be delivered) such policies or certificates to Landlord or any Facility
Mortgagee at the times required,  Landlord

                                      -34-
<PAGE>
shall have the right, upon Notice to Tenant, but not the obligation,  to acquire
such insurance and pay the premiums therefor,  which amounts shall be payable to
Landlord,  upon demand,  as Additional  Charges,  together with interest accrued
thereon  at the  Overdue  Rate from the date such  payment  is made  until  (but
excluding) the date repaid.

         9.4 No Separate  Insurance;  Self-Insurance.  Tenant shall not take (or
permit  any  Person  to take)  out  separate  insurance,  concurrent  in form or
contributing  in the event of loss  with that  required  by this  Article  9, or
increase the amount of any existing  insurance by securing an additional  policy
or additional  policies,  unless all parties having an insurable interest in the
subject  matter  of  such  insurance,   including   Landlord  and  all  Facility
Mortgagees,  are included therein as additional insureds and the loss is payable
under  such  insurance  in the same  manner as losses  are  payable  under  this
Agreement.  In the event  Tenant shall take out any such  separate  insurance or
increase any of the amounts of the then  existing  insurance,  Tenant shall give
Landlord  prompt Notice  thereof.  Tenant shall not  self-insure  (or permit any
Person to self-insure).

         9.5  Indemnification of Landlord.  Notwithstanding the existence of any
insurance  provided  for herein and without  regard to the policy  limits of any
such insurance,  Tenant shall protect, indemnify and hold harmless Landlord for,
from and against  all  liabilities,  obligations,  claims,  damages,  penalties,
causes of action, costs and reasonable expenses (including,  without limitation,
reasonable  attorneys'  fees), to the maximum extent  permitted by law,  imposed
upon or  incurred by or asserted  against  Landlord by reason of the  following,
except  to  the  extent  caused  by  Landlord's   gross  negligence  or  willful
misconduct: (a) any accident, injury to or death of persons or loss of or damage
to property occurring on or about the Leased Property or adjoining  sidewalks or
rights of way, (b) any past, present or future use, misuse, non-use,  condition,
management,  maintenance  or repair by Tenant,  any  Manager or anyone  claiming
under any of them or Tenant's Personal Property or any litigation, proceeding or
claim by governmental  entities or other third parties to which Landlord is made
a party or  participant  relating to the Leased  Property  or Tenant's  Personal
Property or such use, misuse, non-use,  condition,  management,  maintenance, or
repair  thereof   including,   failure  to  perform   obligations   (other  than
Condemnation proceedings) to which Landlord is made a party, (c) any Impositions
that are the obligations of Tenant to pay pursuant to the applicable  provisions
of this Agreement,  and (d) any failure on the part of Tenant or anyone claiming
under  Tenant  to  perform  or comply  with any of the terms of this  Agreement.
Tenant, at its expense, shall contest,  resist and defend any such claim, action
or  proceeding  asserted  or  instituted  against  Landlord  (and  shall  not be
responsible  for any  duplicative  attorneys'  fees incurred by Landlord) or may
compromise  or otherwise  dispose of the same,  with  Landlord's  prior  written
consent  (which   consent  may  not  be   unreasonably   withheld,   delayed  or
conditioned).  The  obligations of Tenant under this Section 9.5 are in addition
to the obligations set

                                      -35-
<PAGE>
forth in Section 4.4 and shall survive the termination of this Agreement.

                                   ARTICLE 10

                                    CASUALTY

         10.1 Insurance Proceeds.  Except as provided in the last clause of this
sentence,  all proceeds payable by reason of any loss or damage to any Property,
or any portion  thereof,  and insured under any policy of insurance  required by
Article 9 (other than the proceeds of any business interruption insurance) shall
be paid directly to Landlord (subject to the provisions of Section 10.2) and all
loss  adjustments  with respect to losses  payable to Landlord shall require the
prior  written  consent of Landlord,  which  consent  shall not be  unreasonably
withheld, delayed or conditioned;  provided,  however, that, so long as no Event
of Default shall have occurred and be continuing, all such proceeds less than or
equal to Two Hundred Fifty Thousand Dollars ($250,000) shall be paid directly to
Tenant and such losses may be adjusted without Landlord's  consent. If Tenant is
required to reconstruct or repair any Property as provided herein, such proceeds
shall be paid out by  Landlord  from  time to time for the  reasonable  costs of
reconstruction  or  repair  of such  Property  necessitated  by such  damage  or
destruction, subject to and in accordance with the provisions of Section 10.2.4.
Provided  no Default or Event of Default has  occurred  and is  continuing,  any
excess  proceeds of insurance  remaining after the completion of the restoration
shall be paid to Tenant.  In the event that the provisions of Section 10.2.1 are
applicable,  the  insurance  proceeds  shall be retained  by the party  entitled
thereto pursuant to Section 10.2.1.

         10.2 Damage or Destruction.

                  10.2.1 Damage or  Destruction of Leased  Property.  If, during
the Term, any Property shall be totally or partially  destroyed and the Facility
located  thereon is thereby  rendered  Unsuitable for Its Permitted Use,  either
Landlord or Tenant may, by the giving of Notice thereof to the other,  terminate
this Agreement with respect to such affected Property, whereupon, this Agreement
shall  terminate  with respect to such affected  Property and Landlord  shall be
entitled to retain the insurance  proceeds payable on account of such damage. In
such event,  Tenant shall pay to Landlord the amount of any deductible under the
insurance policies covering such Facility,  the amount of any uninsured loss and
any difference  between the  replacement  cost of the affected  Property and the
casualty insurance proceeds therefor.

                  10.2.2 Partial Damage or Destruction. If, during the Term, any
Property  shall be  totally  or  partially  destroyed  but the  Facility  is not
rendered  Unsuitable  for Its Permitted  Use,  Tenant shall,  subject to Section
10.2.3, promptly restore such Facility as provided in Section 10.2.4.

                                      -36-
<PAGE>
                  10.2.3  Insufficient  Insurance  Proceeds.  If the cost of the
repair or restoration of the applicable Property exceeds the amount of insurance
proceeds  received by Landlord and Tenant  pursuant to Section 9.1, Tenant shall
give Landlord  Notice thereof which notice shall set forth in reasonable  detail
the nature of such deficiency and whether Tenant shall pay and assume the amount
of such deficiency (Tenant having no obligation to do so, except that, if Tenant
shall elect to make such funds  available,  the same shall become an irrevocable
obligation  of Tenant  pursuant to this  Agreement).  In the event  Tenant shall
elect not to pay and assume the amount of such  deficiency,  Landlord shall have
the right (but not the  obligation),  exercisable at Landlord's sole election by
Notice to Tenant,  given  within  sixty (60) days after  Tenant's  notice of the
deficiency,  to elect to make available for application to the cost of repair or
restoration the amount of such  deficiency;  provided,  however,  in such event,
upon any disbursement by Landlord thereof, the Minimum Rent shall be adjusted as
provided in Section  3.1.1(c).  In the event that  neither  Landlord  nor Tenant
shall elect to make such deficiency  available for restoration,  either Landlord
or Tenant may terminate this Agreement with respect to the affected  Property by
Notice to the other, whereupon,  this Agreement shall so terminate and insurance
proceeds  shall be distributed  as provided in Section  10.2.1.  It is expressly
understood and agreed, however, that, notwithstanding anything in this Agreement
to the contrary,  Tenant shall be strictly liable and solely responsible for the
amount of any deductible and shall, upon any insurable loss, pay over the amount
of such deductible to Landlord at the time and in the manner herein provided for
payment of the applicable proceeds to Landlord.

                  10.2.4  Disbursement  of  Proceeds.  In the  event  Tenant  is
required to restore any Property  pursuant to Section 10.2 and this Agreement is
not  terminated  as to such  Property  pursuant to this Article 10, Tenant shall
commence (or cause to be commenced)  promptly and continue diligently to perform
(or  cause  to be  performed)  the  repair  and  restoration  of  such  Property
(hereinafter called the "Work"), so as to restore (or cause to be restored) such
Property in material  compliance  with all Legal  Requirements  and so that such
Property shall be, to the extent practicable,  substantially equivalent in value
and general utility to its general utility and value  immediately  prior to such
damage or destruction.  Subject to the terms hereof,  Landlord shall advance the
insurance  proceeds and any additional  amounts payable by Landlord  pursuant to
Section 10.2.3 or otherwise  deposited with Landlord to Tenant  regularly during
the repair and  restoration  period so as to permit  payment for the cost of any
such  restoration  and  repair.  Any such  advances  shall be made not more than
monthly within ten (10) Business Days after Tenant submits to Landlord a written
requisition and  substantiation  therefor on AIA Forms G702 and G703 (or on such
other form or forms as may be reasonably acceptable to Landlord).  Landlord may,
at its  option,  condition  advancement  of such  insurance  proceeds  and other
amounts on (i) the absence of any Event of Default,  (ii) its  approval of plans
and  specifications  of an architect  satisfactory  to Landlord  (which

                                      -37-
<PAGE>
approval shall not be  unreasonably  withheld,  delayed or  conditioned),  (iii)
general contractors' estimates, (iv) architect's  certificates,  (v) conditional
lien waivers of general contractors,  if available, (vi) evidence of approval by
all  governmental  authorities  and other  regulatory  bodies whose  approval is
required,  (vii), if Tenant has elected to advance  deficiency funds pursuant to
Section  10.2.3,  Tenant  depositing the amount thereof with Landlord and (viii)
such other certificates as Landlord may, from time to time, reasonably require.

         Landlord's obligation to disburse insurance proceeds under this Article
10 shall be subject to the release of such proceeds by any Facility Mortgagee to
Landlord.

         Tenant's obligation to restore the applicable Property pursuant to this
Article 10 shall be subject to the release of  available  insurance  proceeds by
the applicable  Facility Mortgagee to Landlord or directly to Tenant and, in the
event such proceeds are insufficient,  Landlord electing to make such deficiency
available therefor (and disbursement of such deficiency).

         10.3 Damage Near End of Term. Notwithstanding any provisions of Section
10.1 or 10.2 to the contrary, if damage to or destruction of any Property occurs
during the last twelve (12) months of the Term and if such damage or destruction
cannot  reasonably  be expected to be fully  repaired and restored  prior to the
date that is six (6)  months  prior to the end of the Term,  the  provisions  of
Section  10.2.1  shall apply as if such  Property  had been totally or partially
destroyed and the Facility thereon rendered Unsuitable for its Permitted Use.

         10.4 Tenant's Property. All insurance proceeds payable by reason of any
loss of or damage to any of Tenant's  Personal  Property shall be paid to Tenant
and, to the extent necessary to repair or replace Tenant's  Personal Property in
accordance  with Section  10.5,  Tenant shall hold such proceeds in trust to pay
the cost of repairing or replacing damaged Tenant's Personal Property.

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

         10.6 No Abatement of Rent.  This  Agreement  shall remain in full force
and effect and Tenant's  obligation  to make all payments of Rent and to pay all
other charges as and when required  under this Agreement  shall remain  unabated
during  the Term  notwithstanding  any  damage  involving  the  Leased  Property
(provided  that Landlord  shall credit against such payments any amounts paid to
Landlord  as a  consequence  of such  damage  under  any  business  interruption
insurance obtained by Tenant hereunder). The provisions of this Article 10 shall
be considered an express agreement  governing any cause of damage or

                                      -38-
<PAGE>
destruction to the Leased Property and, to the maximum extent  permitted by law,
no local or State statute, laws, rules, regulation or ordinance in effect during
the Term which provide for such a contingency shall have any application in such
case.

         10.7 Waiver.  Tenant hereby waives any statutory  rights of termination
which may arise by reason of any damage or destruction  of the Leased  Property,
or any portion thereof.

                                   ARTICLE 11

                                  CONDEMNATION

         11.1 Total  Condemnation,  Etc. If either (i) the whole of any Property
shall be taken by  Condemnation or (ii) a Condemnation of less than the whole of
any  Property  renders any  Property  Unsuitable  for Its  Permitted  Use,  this
Agreement  shall  terminate with respect to such  Property,  Tenant and Landlord
shall seek the Award for their interests in the applicable  Property as provided
in Section 11.5.

         11.2 Partial Condemnation.  In the event of a Condemnation of less than
the whole of any  Property  such that such  Property is still  suitable  for its
Permitted  Use,  Tenant  shall,  to the  extent of the Award and any  additional
amounts disbursed by Landlord as hereinafter provided,  commence (or cause to be
commenced) promptly and continue diligently to restore (or cause to be restored)
the untaken  portion of the applicable  Leased  Improvements so that such Leased
Improvements shall constitute a complete  architectural unit of the same general
character and condition (as nearly as may be possible  under the  circumstances)
as such Leased Improvements existing immediately prior to such Condemnation,  in
material  compliance with all Legal  Requirements,  subject to the provisions of
this  Section  11.2.  If the cost of the repair or  restoration  of the affected
Property  exceeds the amount of the Award,  Tenant  shall give  Landlord  Notice
thereof  which  notice shall set forth in  reasonable  detail the nature of such
deficiency and whether Tenant shall pay and assume the amount of such deficiency
(Tenant having no obligation to do so, except that if Tenant shall elect to make
such funds available,  the same shall become an irrevocable obligation of Tenant
pursuant  to this  Agreement).  In the event  Tenant  shall elect not to pay and
assume the amount of such deficiency, Landlord shall have the right (but not the
obligation),  exercisable at Landlord's  sole election by Notice to Tenant given
within sixty (60) days after Tenant's Notice of the deficiency, to elect to make
available for  application  to the cost of repair or  restoration  the amount of
such  deficiency;  provided,  however,  in such event,  upon any disbursement by
Landlord  thereof,  the  Minimum  Rent shall be  adjusted as provided in Section
3.1.1(c). In the event that neither Landlord nor Tenant shall elect to make such
deficiency  available for  restoration,  either Landlord or Tenant may terminate
this Agreement with respect to the affected  Property and the entire Award shall
be allocated as set forth in Section 11.5.

                                      -39-
<PAGE>
         Subject to the terms hereof,  Landlord shall  contribute to the cost of
restoration  that  part of the  Award  necessary  to  complete  such  repair  or
restoration,  together with  severance  and other damages  awarded for the taken
Leased  Improvements  and any  deficiency  Landlord has agreed to  disburse,  to
Tenant regularly  during the restoration  period so as to permit payment for the
cost of such repair or  restoration.  Landlord  may,  at its  option,  condition
advancement  of such Award and other  amounts on (i) the absence of any Event of
Default,  (ii)  its  approval  of  plans  and  specifications  of  an  architect
satisfactory to Landlord  (which  approval shall not be  unreasonably  withheld,
delayed or conditioned),  (iii) general contractors' estimates, (iv) architect's
certificates, (v) conditional lien waivers of general contractors, if available,
(vi) evidence of approval by all  governmental  authorities and other regulatory
bodies  whose  approval  is  required,  (vii),  if Tenant has elected to advance
deficiency  funds  pursuant to the preceding  paragraph,  Tenant  depositing the
amount thereof with Landlord and (viii) such other certificates as Landlord may,
from time to time, reasonably require.  Landlord's obligation under this Section
11.2 to disburse  the Award and such other  amounts  shall be subject to (x) the
collection  thereof  by  Landlord  and (y) the  satisfaction  of any  applicable
requirements  of any  Facility  Mortgage,  and the  release of such Award by the
applicable  Facility  Mortgagee.  Tenant's  obligation  to  restore  the  Leased
Property shall be subject to the release of the Award by the applicable Facility
Mortgagee to Landlord.

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

         11.4 Temporary Condemnation. In the event of any temporary Condemnation
of any Property or Tenant's interest  therein,  this Agreement shall continue in
full force and effect and Tenant shall continue to pay (or cause to be paid), in
the  manner  and on the terms  herein  specified,  the full  amount of the Rent.
Tenant  shall  continue to perform and  observe  (or cause to be  performed  and
observed) all of the other terms and conditions of this Agreement on the part of
the Tenant to be  performed  and  observed.  Provided  no Event of  Default  has
occurred  and is  continuing,  the  entire  amount  of any  Award  made for such
temporary  Condemnation  allocable to the Term,  whether paid by way of damages,
rent or  otherwise,  shall be paid to Tenant.  Tenant  shall,  promptly upon the
termination of any such period of temporary  Condemnation,  at its sole cost and
expense,  restore the Leased Property to the condition that existed  immediately
prior to such

                                      -40-
<PAGE>
Condemnation,  in material  compliance with all applicable  Legal  Requirements,
unless such period of temporary  Condemnation shall extend beyond the expiration
of the  Term,  in  which  event  Tenant  shall  not be  required  to  make  such
restoration.

         11.5  Allocation  of Award.  Except as provided in Section 11.5 and the
second  sentence  of this  Section  11.6,  the total  Award  shall be solely the
property  of and  payable  to  Landlord.  Any  portion of the Award made for the
taking of Tenant's leasehold  interest in the Leased Property,  loss of business
during the remainder of the Term, the taking of Tenant's Personal Property,  the
taking  of  Capital  Additions  paid for by  Tenant  and  Tenant's  removal  and
relocation expenses shall be the sole property of and payable to Tenant (subject
to the provisions of Section 11.2). In any  Condemnation  proceedings,  Landlord
and Tenant  shall  each seek its own Award in  conformity  herewith,  at its own
expense.

                                   ARTICLE 12

                             DEFAULTS AND REMEDIES

         12.1  Events  of  Default.  The  occurrence  of any  one or more of the
following events shall constitute an "Event of Default" hereunder:

                  (a) should  Tenant fail to make any payment of the Rent or any
         other sum payable hereunder when due; or

                  (b) should  Tenant fail to maintain  the  insurance  coverages
         required under Article 9; or

                  (c) should Tenant default in the due observance or performance
         of any of the terms,  covenants or  agreements  contained  herein to be
         performed or observed by it (other than as specified in clauses (a) and
         (b) above) and such default shall  continue for a period of thirty (30)
         days after Notice thereof from Landlord to Tenant;  provided,  however,
         that if such  default is  susceptible  of cure but such cure  cannot be
         accomplished  with due diligence  within such period of time and if, in
         addition,  Tenant  commences  to cure or cause to be cured such default
         within  thirty  (30)  days  after  Notice  thereof  from  Landlord  and
         thereafter   prosecutes  the  curing  of  such  default  with  all  due
         diligence, such period of time shall be extended to such period of time
         (not to exceed an additional  ninety (90) days in the aggregate) as may
         be necessary to cure such default with all due diligence; or

                  (d)  should  any  obligation  of  Tenant  in  respect  of  any
         Indebtedness  for  money  borrowed  or for  any  material  property  or
         services, or any guaranty relating thereto, be declared to be or become
         due and payable prior to the stated maturity  thereof,  or should there
         occur and be continuing with respect to any such Indebtedness any event
         of default under any instrument or

                                      -41-
<PAGE>
         agreement  evidencing  or securing the same,  the effect of which is to
         permit  the  holder or holders of such  instrument  or  agreement  or a
         trustee,  agent or other  representative  on behalf  of such  holder or
         holders,  to cause such any such obligations to become due prior to its
         stated maturity; or

                  (e) should an event of default by Tenant, any Guarantor or any
         Affiliated Person as to Tenant or any Guarantor occur and be continuing
         beyond the  expiration of any  applicable  cure period under any of the
         Incidental Documents; or

                  (f) should any event of  default by any  Affiliated  Person of
         Five  Star  occur  and  be  continuing  beyond  the  expiration  of any
         applicable cure period under the Other Lease; or

                  (g) should Tenant or any Guarantor generally not be paying its
         debts as they  become  due or  should  Tenant or any  Guarantor  make a
         general assignment for the benefit of creditors; or

                  (h) should any  petition be filed by or against  Tenant or any
         Guarantor  under the  Federal  bankruptcy  laws,  or  should  any other
         proceeding be instituted by or against Tenant or any Guarantor  seeking
         to  adjudicate  Tenant or any  Guarantor  a bankrupt or  insolvent,  or
         seeking  liquidation,   reorganization,   arrangement,   adjustment  or
         composition  of Tenant's  debts under any law  relating to  bankruptcy,
         insolvency or reorganization or relief of debtors, or seeking the entry
         of an order  for  relief or the  appointment  of a  receiver,  trustee,
         custodian or other similar  official for Tenant or any Guarantor or for
         any  substantial  part of the property of Tenant or any  Guarantor  and
         such  proceeding is not dismissed  within one hundred eighty (180) days
         after institution thereof; or

                  (i) should  Tenant or any  Guarantor  cause or  institute  any
         proceeding for its dissolution or termination; or

                  (j)  should  the  estate or  interest  of Tenant in the Leased
         Property  or any  part  thereof  be  levied  upon  or  attached  in any
         proceeding  and the same shall not be vacated or discharged  within the
         later of (x) ninety (90) days after  commencement  thereof,  unless the
         amount in dispute is less than  $250,000,  in which case  Tenant  shall
         give  notice to  Landlord  of the  dispute but Tenant may defend in any
         suitable  way, and (y) two hundred  seventy (270) days after receipt by
         Tenant  of  Notice  thereof  from  Landlord  (unless  Tenant  shall  be
         contesting  such lien or attachment  in good faith in  accordance  with
         Article 8); or

                  (k)  should  there  occur  any  direct or  indirect  Change in
         Control of Tenant or any  Guarantor,  except as otherwise  permitted by
         Article 16; or

                                      -42-
<PAGE>
                  (l) should a final  unappealable  determination be made by the
         applicable  Government  Agency that Tenant  shall have failed to comply
         with applicable  Medicare and/or Medicaid  regulations in the operation
         of any  Facility,  as a result  of which  failure  Tenant  is  declared
         ineligible to receive reimbursements under the Medicare and/or Medicaid
         programs for such Facility;

then,  and in any such  event,  Landlord,  in  addition  to all  other  remedies
available to it, may terminate  this Agreement with respect to any or all of the
Leased  Property by giving Notice  thereof to Tenant and upon the  expiration of
the time, if any,  fixed in such Notice,  this  Agreement  shall  terminate with
respect to all or the designated  portion of the Leased  Property and all rights
of Tenant under this Agreement with respect thereto shall cease.  Landlord shall
have and may exercise all rights and remedies  available at law and in equity to
Landlord as a result of Tenant's breach of this Agreement.

         Upon the  occurrence of an Event of Default,  Landlord may, in addition
to any other remedies  provided  herein,  enter upon the Leased  Property or any
portion  thereof  and  take  possession  of any  and  all of  Tenant's  Personal
Property, if any, and the Records,  without liability for trespass or conversion
(Tenant  hereby  waiving any right to notice or hearing  prior to such taking of
possession  by  Landlord)  and sell the same at public or  private  sale,  after
giving Tenant  reasonable  Notice of the time and place of any public or private
sale,  at which sale  Landlord or its assigns may purchase all or any portion of
Tenant's Personal Property,  if any, unless otherwise  prohibited by law. Unless
otherwise  provided by law and without  intending to exclude any other manner of
giving Tenant reasonable  notice,  the requirement of reasonable Notice shall be
met if such Notice is given at least ten (10) days before the date of sale.  The
proceeds  from any such  disposition,  less all expenses  incurred in connection
with the taking of possession,  holding and selling of such property (including,
reasonable   attorneys'   fees)  shall  be  applied  as  a  credit  against  the
indebtedness  which is secured by the security  interest granted in Section 7.2.
Any surplus  shall be paid to Tenant or as otherwise  required by law and Tenant
shall pay any deficiency to Landlord, as Additional Charges, upon demand.

         12.2 Remedies.  None of (a) the termination of this Agreement  pursuant
to Section  12.1,  (b) the  repossession  of the Leased  Property or any portion
thereof,  (c) the  failure of  Landlord  to re-let the  Leased  Property  or any
portion  thereof,  nor (d) the  reletting of all or any of portion of the Leased
Property,  shall relieve Tenant of its liability and obligations hereunder,  all
of which shall survive any such termination,  repossession or re-letting. In the
event of any such  termination,  Tenant shall forthwith pay to Landlord all Rent
due and payable  with  respect to the Leased  Property,  or  terminated  portion
thereof, through and including the date of such termination. Thereafter, Tenant,
until the end of what would have been the Term of this  Agreement in the absence
of such  termination,  and  whether or not the Leased  Property  or any  portion
thereof  shall have been re-let,

                                      -43-
<PAGE>
shall be liable to Landlord for, and shall pay to Landlord,  as current damages,
the Rent  (Additional  Rent to be  reasonably  calculated  by Landlord  based on
historical  Net  Patient  Revenues)  and other  charges  which  would be payable
hereunder for the remainder of the Term had such termination not occurred,  less
the net  proceeds,  if any, of any  re-letting  of the Leased  Property,  or any
portion thereof, after deducting all reasonable expenses in connection with such
reletting,  including,  without limitation,  all repossession  costs,  brokerage
commissions,   legal  expenses,   attorneys'  fees,  advertising,   expenses  of
employees,  alteration  costs and expenses of  preparation  for such  reletting.
Tenant shall pay such current  damages to Landlord  monthly on the days on which
the Minimum Rent would have been payable  hereunder  if this  Agreement  had not
been so terminated with respect to such of the Leased Property.

         At any time after such termination,  whether or not Landlord shall have
collected any such current damages,  as liquidated final damages beyond the date
of such  termination,  at Landlord's  election,  Tenant shall pay to Landlord an
amount equal to the present value (as reasonably  determined by Landlord) of the
excess,  if any, of the Rent and other charges which would be payable  hereunder
from the date of such  termination  (assuming  that,  for the  purposes  of this
paragraph,  annual  payments by Tenant on account of Impositions  and Additional
Rent would be the same as payments required for the immediately preceding twelve
calendar  months,  or if less than twelve calendar months have expired since the
Commencement  Date, the payments required for such lesser period projected to an
annual  amount) for what would be the then  unexpired  term of this Agreement if
the same  remained in effect,  over the fair market  rental for the same period.
Nothing contained in this Agreement shall, however, limit or prejudice the right
of Landlord to prove and obtain in  proceedings  for bankruptcy or insolvency an
amount  equal to the maximum  allowed by any statute or rule of law in effect at
the time when,  and governing the  proceedings  in which,  the damages are to be
proved,  whether or not the amount be greater  than,  equal to, or less than the
amount of the loss or damages referred to above.

         In case of any Event of Default, re-entry, expiration and dispossession
by summary proceedings or otherwise, Landlord may, (a) relet the Leased Property
or any part or parts thereof, either in the name of Landlord or otherwise, for a
term or terms which may at Landlord's  option,  be equal to, less than or exceed
the period which would  otherwise have  constituted  the balance of the Term and
may  grant  concessions  or free  rent to the  extent  that  Landlord  considers
advisable  and  necessary  to relet the same,  and (b) may make such  reasonable
alterations,  repairs  and  decorations  in the Leased  Property  or any portion
thereof as Landlord,  in its sole and absolute  discretion,  considers advisable
and necessary for the purpose of reletting the Leased  Property;  and the making
of such  alterations,  repairs and decorations shall not operate or be construed
to release  Tenant from liability  hereunder as aforesaid.  Landlord shall in no
event be  liable  in any way  whatsoever  for any  failure  to relet  all or

                                      -44-
<PAGE>
any portion of the Leased Property, or, in the event that the Leased Property is
relet,  for  failure to collect  the rent under such  reletting.  To the maximum
extent  permitted by law, Tenant hereby  expressly  waives any and all rights of
redemption granted under any present or future laws in the event of Tenant being
evicted or dispossessed, or in the event of Landlord obtaining possession of the
Leased  Property,  by reason of the occurrence and  continuation  of an Event of
Default hereunder.

         12.3  Tenant's  Waiver.  IF THIS  AGREEMENT IS  TERMINATED  PURSUANT TO
SECTION 12.1 OR 12.2,  TENANT WAIVES,  TO THE EXTENT PERMITTED BY LAW, ANY RIGHT
TO A TRIAL BY JURY IN THE EVENT OF SUMMARY  PROCEEDINGS  TO ENFORCE THE REMEDIES
SET FORTH IN THIS  ARTICLE 12, AND THE BENEFIT OF ANY LAWS NOW OR  HEREAFTER  IN
FORCE EXEMPTING PROPERTY FROM LIABILITY FOR RENT OR FOR DEBT.

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

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

                                   ARTICLE 13

                                  HOLDING OVER

         Any holding over by Tenant after the  expiration or sooner  termination
of this  Agreement  shall be treated as a daily  tenancy at sufferance at a rate
equal to two (2)  times  the  Minimum  Rent and other  charges  herein  provided
(prorated  on a daily  basis).  Tenant  shall

                                      -45-
<PAGE>
also pay to Landlord all damages (direct or indirect) sustained by reason of any
such  holding  over.  Otherwise,  such  holding  over  shall be on the terms and
conditions  set  forth in this  Agreement,  to the  extent  applicable.  Nothing
contained herein shall constitute the consent,  express or implied,  of Landlord
to the holding over of Tenant after the  expiration  or earlier  termination  of
this Agreement.

                                   ARTICLE 14

                                LANDLORD DEFAULT

         If Landlord  shall default in the  performance  or observance of any of
its covenants or  obligations  set forth in this  Agreement or any obligation of
Landlord,  if any,  under any  agreement  affecting  the  Leased  Property,  the
performance of which is not Tenant's obligation pursuant to this Agreement,  and
any such  default  shall  continue for a period of thirty (30) days after Notice
thereof from Tenant to Landlord and any applicable Facility  Mortgagee,  or such
additional period as may be reasonably  required to correct the same, Tenant may
declare the  occurrence  of a "Landlord  Default" by a second Notice to Landlord
and to such Facility Mortgagee.  Thereafter,  Tenant may forthwith cure the same
and, subject to the provisions of the following paragraph,  invoice Landlord for
costs and  expenses  (including  reasonable  attorneys'  fees and  court  costs)
incurred by Tenant in curing the same,  together with  interest  thereon (to the
extent permitted by law) from the date Landlord  receives Tenant's invoice until
paid,  at the  Overdue  Rate.  Tenant  shall  have no  right to  terminate  this
Agreement  for any  default by  Landlord  hereunder  and no right,  for any such
default,  to  offset  or  counterclaim  against  any Rent or other  charges  due
hereunder.

         If Landlord  shall in good faith dispute the occurrence of any Landlord
Default and Landlord, before the expiration of the applicable cure period, shall
give Notice thereof to Tenant,  setting forth, in reasonable  detail,  the basis
therefor,  no Landlord  Default  shall be deemed to have  occurred  and Landlord
shall have no obligation with respect thereto until final adverse  determination
thereof.  If Tenant and Landlord shall fail, in good faith,  to resolve any such
dispute  within ten (10) days after  Landlord's  Notice of  dispute,  either may
submit the matter for resolution in accordance with Article 22.

                                   ARTICLE 15

                                PURCHASE RIGHTS

         Landlord shall have the option to purchase Tenant's Personal  Property,
at the expiration or termination of this  Agreement,  for an amount equal to the
then fair market  value  thereof  (current  replacement  cost as  determined  by
agreement  of the  parties  or, in the  absence of such  agreement,  appraisal),
subject to, and with appropriate  price  adjustments for, all equipment  leases,
conditional sale contracts, UCC-1 financing statements and other encumbrances to

                                      -46-
<PAGE>
which  such  Personal  Property  is  subject.  Upon  the  expiration  or  sooner
termination  of this  Agreement,  Tenant  shall use its  reasonable  efforts  to
transfer and assign, or cause to be transferred and assigned, to Landlord or its
designee,  or assist  Landlord or its  designee  in  obtaining,  any  contracts,
licenses,  and  certificates  required  for the  then  operation  of the  Leased
Property.

                                   ARTICLE 16

                           SUBLETTING AND ASSIGNMENT

         16.1  Subletting  and  Assignment.  Except as provided in Section 16.3,
Tenant shall not, without Landlord's prior written consent (which consent may be
given or withheld in Landlord's sole and absolute discretion), assign, mortgage,
pledge,  hypothecate,  encumber or otherwise transfer this Agreement or sublease
or permit the  sublease  (which term shall be deemed to include the  granting of
concessions,  licenses and the like),  of all or any part of the Leased Property
or suffer or permit this Agreement or the leasehold estate created hereby or any
other  rights  arising  under  this  Agreement  to  be  assigned,   transferred,
mortgaged,  pledged,  hypothecated or encumbered,  in whole or in part,  whether
voluntarily,  involuntarily  or by  operation  of  law,  or  permit  the  use or
operation  of the Leased  Property  by anyone  other than  Tenant,  any  Manager
approved by Landlord pursuant to the applicable  provisions of this Agreement or
residents  and  patients  of  Tenant,  or the Leased  Property  to be offered or
advertised for assignment or subletting.

         For purposes of this Section  16.1,  an  assignment  of this  Agreement
shall be deemed to include, without limitation, any direct or indirect Change in
Control of Tenant.

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

         Any  assignment or transfer of Tenant's  interest  under this Agreement
shall be subject to such assignee's or transferee's  delivery to Landlord of (i)
a pledge of the stock,  partnership,  membership or other ownership interests of
such assignee or other  transferee  to secure  Tenant's  obligations  under this
Agreement  and the  Incidental  Documents,  which  pledge  shall  be in form and
substance  satisfactory  to Landlord in its sole  discretion and (ii) a security
agreement  granting  Landlord a security  interest in of all such  assignee's or
transferee's

                                      -47-
<PAGE>
right,  title and  interest in and to any  personal  property,  intangibles  and
fixtures  (other than accounts  receivable)  with respect to any Leased Property
which  is  subject  to any  such  assignment  or  transfer  to  secure  Tenant's
obligations  under this Agreement and the Incidental  Documents,  which security
agreement  shall be in form and substance  satisfactory  to Landlord in its sole
discretion.

         No  subletting  or  assignment  shall in any way impair the  continuing
primary  liability of Tenant  hereunder  (unless  Landlord and Tenant  expressly
otherwise agree that Tenant shall be released from all  obligations  hereunder),
and no consent to any subletting or assignment in a particular instance shall be
deemed to be a waiver of the  prohibition  set forth in this  Section  16.1.  No
assignment,  subletting  or  occupancy  shall  affect  any  Permitted  Use.  Any
subletting,  assignment  or other  transfer  of  Tenant's  interest  under  this
Agreement in  contravention of this Section 16.1 shall be voidable at Landlord's
option.

         16.2 Required Sublease  Provisions.  Any sublease of all or any portion
of the Leased  Property  entered into on or after the date hereof shall  provide
(a) that it is subject and  subordinate  to this Agreement and to the matters to
which this  Agreement  is or shall be subject  or  subordinate;  (b) that in the
event of termination of this Agreement or reentry or  dispossession of Tenant by
Landlord  under this  Agreement,  Landlord  may, at its option,  terminate  such
sublease  or take  over all of the  right,  title and  interest  of  Tenant,  as
sublessor under such sublease,  and such subtenant shall, at Landlord's  option,
attorn to Landlord  pursuant to the then executory  provisions of such sublease,
except that neither Landlord nor any Facility Mortgagee, as holder of a mortgage
or as  Landlord  under  this  Agreement,  if  such  mortgagee  succeeds  to that
position,  shall (i) be liable  for any act or  omission  of Tenant  under  such
sublease, (ii) be subject to any credit,  counterclaim,  offset or defense which
theretofore  accrued to such  subtenant  against  Tenant,  (iii) be bound by any
previous  modification  of such sublease not consented to in writing by Landlord
or by any previous  prepayment of more than one (1) month's rent,  (iv) be bound
by any  covenant of Tenant to  undertake  or complete  any  construction  of the
Leased  Property  or any  portion  thereof,  (v) be  required to account for any
security  deposit of the  subtenant  other than any  security  deposit  actually
delivered  to Landlord by Tenant,  (vi) be bound by any  obligation  to make any
payment to such  subtenant or grant any credits,  except for services,  repairs,
maintenance and  restoration  provided for under the sublease that are performed
after the date of such attornment,  (vii) be responsible for any monies owing by
Tenant to the credit of such subtenant unless actually  delivered to Landlord by
Tenant,  or (viii) be required to remove any Person occupying any portion of the
Leased  Property;  and (c), in the event that such subtenant  receives a written
Notice from Landlord or any Facility  Mortgagee stating that an Event of Default
has occurred and is continuing,  such subtenant shall thereafter be obligated to
pay all rentals  accruing under such sublease  directly to the party giving such
Notice or as such party may direct.  All rentals received from such

                                      -48-
<PAGE>
subtenant  by Landlord or the Facility  Mortgagee,  as the case may be, shall be
credited  against  the amounts  owing by Tenant  under this  Agreement  and such
sublease shall provide that the subtenant  thereunder  shall,  at the request of
Landlord,  execute a suitable  instrument in  confirmation  of such agreement to
attorn.  An  original  counterpart  of each such  sublease  and  assignment  and
assumption,  duly executed by Tenant and such subtenant or assignee, as the case
may be, in form and  substance  reasonably  satisfactory  to Landlord,  shall be
delivered  promptly  to  Landlord  and  (a) in the  case of an  assignment,  the
assignee  shall assume in writing and agree to keep and perform all of the terms
of this  Agreement on the part of Tenant to be kept and  performed and shall be,
and become, jointly and severally liable with Tenant for the performance thereof
and (b) in case of either an  assignment  or  subletting,  Tenant  shall  remain
primarily liable, as principal rather than as surety,  for the prompt payment of
the Rent and for the  performance  and  observance  of all of the  covenants and
conditions to be performed by Tenant hereunder.

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

         16.3  Permitted  Sublease  Notwithstanding  the  foregoing,  including,
without limitation,  Section 16.2, but subject to the provisions of Section 16.4
and any other express conditions or limitations set forth herein, Tenant may, in
each  instance  after Notice to Landlord,  (a) enter into third party  residency
agreements  with respect to the units  located at the  Facilities,  (b) sublease
space at any Property for laundry,  commissary  or child care  purposes or other
concessions  in furtherance of the Permitted Use, so long as such subleases will
not reduce the number of units at any  Facility,  will not violate or affect any
Legal  Requirement  or  Insurance  Requirement,  and Tenant  shall  provide such
additional  insurance  coverage  applicable to the activities to be conducted in
such  subleased  space as Landlord and any  Facility  Mortgagee  may  reasonably
require,  and (c) enter into one or more  subleases with  Affiliated  Persons of
Tenant with  respect to the Leased  Property or any  portion  thereof,  provided
Tenant gives Landlord Notice of the material terms and conditions thereof.

         16.4 Sublease  Limitation.  Anything contained in this Agreement to the
contrary  notwithstanding,  Tenant  shall not sublet the Leased  Property on any
basis  such that the  rental  to be paid by any  sublessee  thereunder  would be
based, in whole or in part, on the net income or profits derived by the business
activities  of such  sublessee,  any other formula such that any portion of such
sublease  rental would fail to qualify as "rents from real property"  within the
meaning of Section  856(d) of the Code,  or any similar or  successor  provision
thereto or would  otherwise  disqualify  Landlord for treatment as a real estate
investment trust.

                                      -49-
<PAGE>
                                   ARTICLE 17

                 ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS

         17.1 Estoppel Certificates.  At any time and from time to time, but not
more than a  reasonable  number  of times per year,  upon not less than ten (10)
Business  Days prior Notice by either  party,  the party  receiving  such Notice
shall  furnish  to the  other an  Officer's  Certificate  certifying  that  this
Agreement is unmodified  and in full force and effect (or that this Agreement is
in full force and effect as modified and setting forth the  modifications),  the
date to which the Rent has been paid, that no Default or an Event of Default has
occurred and is continuing  or, if a Default or an Event of Default shall exist,
specifying in reasonable detail the nature thereof, and the steps being taken to
remedy the same, and such  additional  information  as the requesting  party may
reasonably request. Any such certificate furnished pursuant to this Section 17.1
may be relied upon by the  requesting  party,  its  lenders and any  prospective
purchaser or mortgagee of the Leased  Property or the leasehold  estate  created
hereby.

         17.2 Financial  Statements.  Tenant shall furnish or cause Five Star to
furnish, as applicable, the following statements to Landlord:

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

                  (b) within ninety (90) days after the end of each Fiscal Year,
         the most recent  Consolidated  Financials  and financials of Tenant for
         such year,  certified by an  independent  certified  public  accountant
         reasonably  satisfactory  to Landlord  and  accompanied  by a Financial
         Officer's Certificate;

                  (c) within  forty-five  (45) days after the end of each month,
         an unaudited operating statement and statement of capital  expenditures
         prepared  on a  Facility  by  Facility  basis  and  a  combined  basis,
         including  occupancy  percentages  and average rate,  accompanied  by a
         Financial Officer's Certificate;

                  (d) at any  time  and from  time to time  upon  not less  than
         twenty (20) days Notice from Landlord or such additional  period as may
         be reasonable under the  circumstances,  any  Consolidated  Financials,
         Tenant financials or any other audited or unaudited financial reporting
         information  required to be filed by Landlord with any  securities  and
         exchange  commission,  the SEC or any  successor  agency,  or any other
         governmental authority, or required pursuant to any order issued by any
         court,  governmental authority or arbitrator in any litigation to which
         Landlord is a party,  for purposes of compliance  therewith;  provided,
         however,  that,  except as to  calculations  pertaining  to Net Patient

                                      -50-
<PAGE>
         Revenues,  Tenant shall not be required to provide  audited  financials
         with respect to any individual  Facility unless Landlord shall agree to
         pay for the cost thereof;

                  (e) promptly,  after receipt or sending thereof, copies of all
         notices given or received by Tenant under any Management Agreement; and

                  (f)   promptly,   upon  Notice  from   Landlord,   such  other
         information concerning the business, financial condition and affairs of
         Tenant and any Guarantor as Landlord  reasonably  may request from time
         to time.

         Landlord may at any time,  and from time to time,  provide any Facility
Mortgagee  with copies of any of the foregoing  statements,  subject to Landlord
obtaining the agreement of such Facility  Mortgagee to maintain such  statements
and the information therein as confidential.

         17.3  General  Operations.  Tenant  covenants  and agrees to furnish to
Landlord,  within thirty (30) days after receipt or modification thereof, copies
of:

                  (a) all licenses  authorizing Tenant or any Manager to operate
         any Facility for its Primary Intended Use;

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

                  (c) if  required  under  Applicable  Law with  respect  to any
         Facility,  a license for each individual employed as administrator with
         respect to such Facility;

                  (d) all reports of surveys, statements of deficiencies,  plans
         of  correction,  and  all  material  correspondence  relating  thereto,
         including,  without limitation, all reports and material correspondence
         concerning    compliance    with   or    enforcement    of   licensure,
         Medicare/Medicaid,  and accreditation requirements,  including physical
         environment  and Life Safety Code survey reports  (excluding,  however,
         correspondence  which may be subject to any attorney client privilege);
         and

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

                                      -51-
<PAGE>
                                   ARTICLE 18

                          LANDLORD'S RIGHT TO INSPECT

         Tenant shall  permit  Landlord and its  authorized  representatives  to
inspect  the Leased  Property  during  usual  business  hours upon not less than
forty-eight (48) hours' notice and to make such repairs as Landlord is permitted
or required to make pursuant to the terms of this  Agreement,  provided that any
inspection or repair by Landlord or its  representatives  will not  unreasonably
interfere  with  Tenant's use and  operation of the Leased  Property and further
provided  that in the event of an  emergency,  as  determined by Landlord in its
reasonable discretion, prior Notice shall not be necessary.

                                   ARTICLE 19

                                   EASEMENTS

         19.1 Grant of Easements.  Provided no Event of Default has occurred and
is  continuing,  Landlord will join in granting and, if necessary,  modifying or
abandoning  such  rights-of-way,   easements  and  other  interests  as  may  be
reasonably requested by Tenant for ingress and egress, and electric,  telephone,
gas, water, sewer and other utilities so long as:

                  (a) the instrument creating,  modifying or abandoning any such
         easement,  right-of-way  or  other  interest  is  satisfactory  to  and
         approved  by  Landlord   (which  approval  shall  not  be  unreasonably
         withheld, delayed or conditioned);

                  (b)  Landlord  receives an Officer's  Certificate  from Tenant
         stating  (i)  that  such  grant,  modification  or  abandonment  is not
         detrimental to the proper  conduct of business on such  Property,  (ii)
         the consideration,  if any, being paid for such grant,  modification or
         abandonment (which  consideration shall be paid by Tenant),  (iii) that
         such  grant,  modification  or  abandonment  does not impair the use or
         value of such  Property for the  Permitted  Use, and (iv) that,  for as
         long as this  Agreement  shall be in effect,  Tenant  will  perform all
         obligations, if any, of Landlord under any such instrument; and

                  (c) Landlord receives  evidence  satisfactory to Landlord that
         the Manager has  granted  its  consent to such grant,  modification  or
         abandonment  in  accordance  with the  requirements  of such  Manager's
         Management Agreement or that such consent is not required.

         19.2  Exercise of Rights by Tenant.  So long as no Event of Default has
occurred and is  continuing,  Tenant shall have the right to exercise all rights
of Landlord under the Easement Agreements and, in connection therewith, Landlord
shall  execute and  promptly  return to Tenant such  documents  as Tenant  shall
reasonably  request.  Tenant

                                      -52-
<PAGE>
shall perform all obligations of Landlord under the Easement Agreements.

         19.3 Permitted Encumbrances.  Any agreements entered into in accordance
with this Article 19 shall be deemed a Permitted Encumbrance.

                                   ARTICLE 20

                               FACILITY MORTGAGES

         20.1 Landlord May Grant Liens. Without the consent of Tenant,  Landlord
may, from time to time,  directly or  indirectly,  create or otherwise  cause to
exist any lien,  encumbrance or title retention agreement  ("Encumbrance")  upon
the Leased  Property,  or any portion  thereof or interest  therein,  whether to
secure any borrowing or other means of financing or refinancing.

         20.2  Subordination of Lease.  This Agreement and any and all rights of
Tenant  hereunder  are and shall be  subject  and  subordinate  to any ground or
master  lease,  and all renewals,  extensions,  modifications  and  replacements
thereof,  and to all  mortgages  and deeds of trust,  which may now or hereafter
affect  the  Leased  Property  or any  improvements  thereon  and/or any of such
leases,  whether or not such  mortgages or deeds of trust shall also cover other
lands  and/or  buildings  and/or  leases,  to each  and  every  advance  made or
hereafter  to be made  under  such  mortgages  and  deeds of  trust,  and to all
renewals,  modifications,  replacements  and  extensions of such leases and such
mortgages and deeds of trust and all  consolidations of such mortgages and deeds
of trust.  This section  shall be  self-operative  and no further  instrument of
subordination shall be required.  In confirmation of such subordination,  Tenant
shall promptly  execute,  acknowledge  and deliver any instrument that Landlord,
the  lessor  under  any such  lease or the  holder of any such  mortgage  or the
trustee  or  beneficiary  of any  deed  of  trust  or any  of  their  respective
successors in interest may  reasonably  request to evidence such  subordination.
Any lease to which this  Agreement  is, at the time  referred  to,  subject  and
subordinate is herein called "Superior Lease" and the lessor of a Superior Lease
or its successor in interest at the time referred to is herein called  "Superior
Landlord"  and any mortgage or deed of trust to which this  Agreement is, at the
time referred to, subject and subordinate is herein called  "Superior  Mortgage"
and the holder,  trustee or beneficiary of a Superior  Mortgage is herein called
"Superior Mortgagee".  Tenant shall have no obligations under any Superior Lease
or Superior Mortgage other than those expressly set forth in this Section 20.2.

         If any  Superior  Landlord  or  Superior  Mortgagee  or the  nominee or
designee of any Superior  Landlord or Superior  Mortgagee  shall  succeed to the
rights of Landlord under this Agreement (any such person, "Successor Landlord"),
whether through  possession or foreclosure  action or delivery of a new lease or
deed, or otherwise, at such

                                      -53-
<PAGE>
Successor Landlord's request, Tenant shall attorn to and recognize the Successor
Landlord as Tenant's  landlord  under this  Agreement and Tenant shall  promptly
execute and deliver any instrument  that such Successor  Landlord may reasonably
request to evidence such  attornment  (provided  that such  instrument  does not
alter the terms of this Agreement),  whereupon, this Agreement shall continue in
full force and effect as a direct  lease  between  the  Successor  Landlord  and
Tenant upon all of the terms,  conditions and covenants as are set forth in this
Agreement,  except that the  Successor  Landlord  (unless  formerly the landlord
under this Agreement or its nominee or designee)  shall not be (a) liable in any
way to Tenant  for any act or  omission,  neglect  or default on the part of any
prior Landlord under this Agreement,  (b) responsible for any monies owing by or
on deposit with any prior Landlord to the credit of Tenant (except to the extent
actually  paid or  delivered  to the  Successor  Landlord),  (c)  subject to any
counterclaim  or setoff which  theretofore  accrued to Tenant  against any prior
Landlord,  (d) bound by any  modification  of this Agreement  subsequent to such
Superior Lease or Mortgage,  or by any previous prepayment of Rent for more than
one (1) month in advance of the date due  hereunder,  which was not  approved in
writing by the Superior Landlord or the Superior Mortgagee  thereto,  (e) liable
to Tenant beyond the Successor  Landlord's  interest in the Leased  Property and
the rents,  income,  receipts,  revenues,  issues and profits  issuing  from the
Leased  Property,  (f) responsible for the performance of any work to be done by
the  Landlord  under this  Agreement  to render the  Leased  Property  ready for
occupancy by Tenant (subject to Landlord's obligations under Section 5.1.2(b) or
with respect to any  insurance  or  Condemnation  proceeds),  or (g) required to
remove any Person  occupying the Leased Property or any part thereof,  except if
such person claims by, through or under the Successor Landlord. Tenant agrees at
any time and from time to time to execute a suitable  instrument in confirmation
of Tenant's  agreement to attorn,  as aforesaid  and Landlord  agrees to provide
Tenant  with an  instrument  of  nondisturbance  and  attornment  from each such
Superior  Mortgagee and Superior  Landlord  (other than the lessors under ground
leases with respect to the Leased Property,  or any portion thereof) in form and
substance reasonably satisfactory to Tenant.  Notwithstanding the foregoing, any
Successor  Landlord  shall be liable (a) to pay to Tenant any amounts owed under
Section 5.1.2(b), and (b) to pay to Tenant any portions of insurance proceeds or
Awards  received by Landlord or the  Successor  Landlord  required to be paid to
Tenant  pursuant to the terms of this  Agreement,  and,  as a  condition  to any
mortgage,  lien or lease in  respect  of the  Leased  Property,  or any  portion
thereof,  and  the  subordination  of this  Agreement  thereto,  the  mortgagee,
lienholder or lessor,  as applicable,  shall expressly agree, for the benefit of
Tenant,  to  make  such  payments,  which  agreement  shall  be  embodied  in an
instrument in form reasonably satisfactory to Tenant.

         20.3 Notice to  Mortgagee  and  Superior  Landlord.  Subsequent  to the
receipt by Tenant of Notice  from  Landlord as to the  identity of any  Facility
Mortgagee or Superior  Landlord under a lease with  Landlord,  as ground lessee,
which  includes  the Leased  Property as part

                                      -54-
<PAGE>
of the demised premises and which complies with Section 20.1 (which Notice shall
be accompanied by a copy of the  applicable  mortgage or lease),  no Notice from
Tenant to  Landlord as to a default by Landlord  under this  Agreement  shall be
effective with respect to a Facility  Mortgagee or Superior  Landlord unless and
until a copy of the  same  is  given  to such  Facility  Mortgagee  or  Superior
Landlord at the address set forth in the above described Notice,  and the curing
of any of Landlord's  defaults within the applicable notice and cure periods set
forth in Article 14 by such  Facility  Mortgagee or Superior  Landlord  shall be
treated as performance by Landlord.

                                   ARTICLE 21

                         ADDITIONAL COVENANTS OF TENANT

         21.1 Prompt Payment of  Indebtedness.  Tenant shall (a) pay or cause to
be paid when due all  payments  of  principal  of and  premium  and  interest on
Tenant's Indebtedness for money borrowed and shall not permit or suffer any such
Indebtedness to become or remain in default beyond any applicable  grace or cure
period,  (b) pay or cause to be paid when due all  lawful  claims  for labor and
rents with respect to the Leased Property,  (c) pay or cause to be paid when due
all  trade  payables  and (d) pay or  cause  to be paid  when  due all  other of
Tenant's  Indebtedness  upon which it is or becomes  obligated,  except, in each
case,  other than that referred to in clause (a), to the extent payment is being
contested in good faith by appropriate  proceedings in accordance with Article 8
and if Tenant shall have set aside on its books  adequate  reserves with respect
thereto  in  accordance  with  GAAP,  if   appropriate,   or  unless  and  until
foreclosure,  distraint  sale or  other  similar  proceedings  shall  have  been
commenced.

         21.2 Conduct of Business. Tenant shall not engage in any business other
than the leasing and operation of the Leased Property  (including any incidental
or  ancillary  business  relating  thereto) and shall do or cause to be done all
things  necessary  to  preserve,  renew and keep in full force and effect and in
good standing its corporate  existence and its rights and licenses  necessary to
conduct such business.

         21.3  Maintenance  of  Accounts  and  Records.  Tenant  shall keep true
records and books of account of Tenant in which full,  true and correct  entries
will be made of  dealings  and  transactions  in relation  to the  business  and
affairs  of Tenant in  accordance  with  GAAP.  Tenant  shall  apply  accounting
principles in the  preparation of the financial  statements of Tenant which,  in
the judgment of and the opinion of its independent  public  accountants,  are in
accordance  with GAAP,  where  applicable,  except for changes  approved by such
independent  public  accountants.  Tenant shall provide to Landlord  either in a
footnote to the financial  statements  delivered under Section 17.2 which relate
to the period in which such  change  occurs,  or in separate  schedules  to such
financial  statements,  information  sufficient  to show the  effect of any such
changes on such financial statements.

                                      -55-
<PAGE>
         21.4 Notice of  Litigation,  Etc.  Tenant  shall give prompt  Notice to
Landlord of any  litigation  or any  administrative  proceeding  to which it may
hereafter  become a party of which Tenant has notice or actual  knowledge  which
involves a  potential  liability  equal to or  greater  than Two  Hundred  Fifty
Thousand  Dollars  ($250,000)  or which may  otherwise  result  in any  material
adverse  change in the business,  operations,  property,  prospects,  results of
operation or condition,  financial or other,  of Tenant.  Forthwith  upon Tenant
obtaining knowledge of any Default,  Event of Default or any default or event of
default under any agreement  relating to  Indebtedness  for money borrowed in an
aggregate amount exceeding,  at any one time, Two Hundred Fifty Thousand Dollars
($250,000),  or any event or condition that would be required to be disclosed in
a current report filed by Tenant on Form 8-K or in Part II of a quarterly report
on Form 10-Q if Tenant were required to file such reports  under the  Securities
Exchange  Act of 1934,  as  amended,  Tenant  shall  furnish  Notice  thereof to
Landlord  specifying the nature and period of existence  thereof and what action
Tenant has taken or is taking or proposes to take with respect thereto.

         21.5 Indebtedness of Tenant.  Tenant shall not create, incur, assume or
guarantee, or permit to exist, or become or remain liable directly or indirectly
upon, any Indebtedness except the following:

                  (a) Indebtedness of Tenant to Landlord;

                  (b) Indebtedness of Tenant for Impositions, to the extent that
         payment  thereof  shall  not at the  time  be  required  to be  made in
         accordance with the provisions of Article 8;

                  (c)  Indebtedness  of Tenant in respect of judgments or awards
         (i) which have been in force for less than the applicable appeal period
         and in  respect  of which  execution  thereof  shall  have been  stayed
         pending  such  appeal or  review,  or (ii)  which are fully  covered by
         insurance  payable to Tenant,  or (iii)  which are for an amount not in
         excess of $250,000 in the aggregate at any one time outstanding and (x)
         which  have been in force for not  longer  than the  applicable  appeal
         period, so long as execution is not levied thereunder or (y) in respect
         of which an  appeal  or  proceedings  for  review  shall at the time be
         prosecuted in good faith in accordance  with the  provisions of Article
         8, and in respect of which  execution  thereof  shall have been  stayed
         pending such appeal or review;

                  (d) unsecured borrowings of Tenant from its Affiliated Persons
         which  are  by  their  terms  expressly   subordinate   pursuant  to  a
         Subordination  Agreement  to the  payment and  performance  of Tenant's
         obligations under this Agreement; or

                  (e)  Indebtedness  for purchase money  financing in accordance
         with Section 21.8 (a) and other operating  liabilities  incurred in the
         ordinary course of Tenant's business; or

                                      -56-
<PAGE>
                  (f) Indebtedness of Tenant as guarantor or borrower secured by
         Liens permitted under Section 21.8(c).

         21.6 Distributions,  Payments to Affiliated Persons,  Etc. Tenant shall
not declare,  order, pay or make,  directly or indirectly,  any Distributions or
any  payment  to any  Affiliated  Person of Tenant  (including  payments  in the
ordinary course of business) or set apart any sum or property therefor, or agree
to do so, if, at the time of such proposed action,  or immediately  after giving
effect  thereto,  any Event of Default  shall have  occurred and be  continuing.
Otherwise, as long as no Event of Default shall have occurred and be continuing,
Tenant  may make  Distributions  and  payments  to  Affiliated  Persons  without
restriction.

         21.7 Prohibited Transactions. Tenant shall not permit to exist or enter
into any agreement or  arrangement  whereby it engages in a  transaction  of any
kind with any Affiliated  Person as to Tenant or any Guarantor,  except on terms
and conditions which are commercially reasonable.

         21.8 Liens and  Encumbrances.  Except as  permitted  by Section 7.1 and
Section  21.5,  Tenant  shall not  create or incur or  suffer to be  created  or
incurred  or to exist  any Lien on this  Agreement  or any of  Tenant's  assets,
properties, rights or income, or any of its interest therein, now or at any time
hereafter owned, other than:

                  (a)  Security   interests   securing  the  purchase  price  of
         equipment or personal  property  whether  acquired  before or after the
         Commencement Date; provided,  however,  that (i) such Lien shall at all
         times  be  confined  solely  to the  asset  in  question  and  (ii) the
         aggregate  principal  amount of  Indebtedness  secured by any such Lien
         shall  not  exceed  the  cost of  acquisition  or  construction  of the
         property subject thereto;

                  (b) Permitted Encumbrances;

                  (c)  Security  interests  in  Accounts  or Chattel  Paper,  in
         Support  Obligations,  General Intangibles or Deposit Accounts relating
         to such Accounts or Chattel  Paper,  in any  Instruments  or Investment
         Property  evidencing or arising from such Accounts or Chattel Paper, in
         any documents, books, records or other information (including,  without
         limitation,   computer  programs,   tapes,  discs,  punch  cards,  data
         processing  software and related  property and rights)  maintained with
         respect to any property  described  in this  Section  21.8(c) or in any
         Proceeds  of any of the  foregoing  (capitalized  terms  used  in  this
         Section  21.8(c)  without  definition  being  used as defined in or for
         purposes  of Article 9 of the Uniform  Commercial  Code as in effect in
         the Commonwealth of Massachusetts); and

                                      -57-
<PAGE>
                  (d) As permitted pursuant to Section 21.5.

         21.9 Merger;  Sale of Assets;  Etc.  Without  Landlord's  prior written
consent (which consent may be given or withheld in Landlord's sole  discretion),
Tenant shall not (i) sell, lease (as lessor or sublessor), transfer or otherwise
dispose of, or abandon,  all or any  material  portion of its assets  (including
capital stock) or business to any Person, (ii) merge into or with or consolidate
with any other Entity,  or (iii) sell, lease (as lessor or sublessor),  transfer
or otherwise  dispose of, or abandon,  any personal  property or fixtures or any
real property; provided, however, that, notwithstanding the provisions of clause
(iii)  preceding,  Tenant may dispose of equipment or fixtures which have become
inadequate, obsolete, worn-out, unsuitable, undesirable or unnecessary, provided
substitute  equipment or fixtures having equal or greater value and utility (but
not necessarily having the same function) have been provided.

                                   ARTICLE 22

                                  ARBITRATION

         Landlord or Tenant may elect to submit any dispute  hereunder  that has
an amount in  controversy in excess of $250,000 to  arbitration  hereunder.  Any
such dispute shall be resolved in  accordance  with the  Commercial  Arbitration
Rules of the  American  Association  then  pertaining  and the  decision  of the
arbitrators with respect to such dispute shall be binding,  final and conclusive
on the parties.

         In the event  Landlord or Tenant shall elect to submit any such dispute
to  arbitration  hereunder,  Landlord  and Tenant shall each appoint and pay all
fees of a fit and impartial  person as arbitrator  with at least ten (10) years'
recent  professional  experience in the general  subject  matter of the dispute.
Notice of such appointment  shall be sent in writing by each party to the other,
and the arbitrators so appointed,  in the event of their failure to agree within
thirty (30) days after the appointment of the second  arbitrator upon the matter
so submitted,  shall appoint a third  arbitrator.  If either  Landlord or Tenant
shall fail to appoint an arbitrator,  as aforesaid,  for a period of twenty (20)
days after written  notice from the other party to make such  appointment,  then
the arbitrator appointed by the party having made such appointment shall appoint
a second  arbitrator and the two (2) so appointed  shall,  in the event of their
failure to agree upon any decision within thirty (30) days thereafter, appoint a
third  arbitrator.  If such  arbitrators  fail to agree upon a third  arbitrator
within forty five (45) days after the appointment of the second arbitrator, then
such third arbitrator shall be appointed by the American Arbitration Association
from its qualified panel of  arbitrators,  and shall be a person having at least
ten (10) years'  recent  professional  experience  as to the  subject  matter in
question.  The fees of the third  arbitrator  and the  expenses  incident to the
proceedings  shall be borne  equally  between  Landlord  and Tenant,  unless the
arbitrators  decide  otherwise.  The fees of

                                      -58-
<PAGE>
respective counsel engaged by the parties,  and the fees of expert witnesses and
other witnesses  called for the parties,  shall be paid by the respective  party
engaging such counsel or calling or engaging such witnesses.

         The decision of the  arbitrators  shall be rendered  within thirty (30)
days  after  appointment  of the third  arbitrator.  Such  decision  shall be in
writing and in duplicate,  one  counterpart  thereof to be delivered to Landlord
and one to  Tenant.  A  judgment  of a court of  competent  jurisdiction  may be
entered  upon the  award of the  arbitrators  in  accordance  with the rules and
statutes applicable thereto then obtaining.

         Landlord and Tenant  acknowledge and agree that, to the extent any such
dispute shall involve any Manager and be subject to arbitration pursuant to such
Manager's  Management   Agreement,   Landlord  and  Tenant  shall  cooperate  to
consolidate any such arbitration  hereunder and under such Management  Agreement
into a single proceeding.

                                   ARTICLE 23

                                 MISCELLANEOUS

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

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

         23.3 Remedies Cumulative.  To the maximum extent permitted by law, each
legal,  equitable or contractual  right, power and remedy of

                                      -59-
<PAGE>
Landlord or Tenant,  now or hereafter  provided  either in this  Agreement or by
statute  or  otherwise,  shall be  cumulative  and  concurrent  and  shall be in
addition to every other right, power and remedy and the exercise or beginning of
the  exercise by Landlord or Tenant (as  applicable)  of any one or more of such
rights,  powers and remedies shall not preclude the  simultaneous  or subsequent
exercise by Landlord of any or all of such other rights, powers and remedies.

         23.4  Severability.   Any  clause,  sentence,   paragraph,  section  or
provision  of this  Agreement  held by a court of competent  jurisdiction  to be
invalid,  illegal or  ineffective  shall not impair,  invalidate  or nullify the
remainder of this Agreement,  but rather the effect thereof shall be confined to
the clause,  sentence,  paragraph,  section or  provision so held to be invalid,
illegal  or  ineffective,  and  this  Agreement  shall be  construed  as if such
invalid, illegal or ineffective provisions had never been contained therein.

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

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

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

         23.8 Quiet Enjoyment. Tenant shall peaceably and quietly have, hold and
enjoy the Leased  Property for the Term,  free of hindrance  or  molestation  by
Landlord or anyone  claiming by, through or under  Landlord,  but subject to (a)
any Encumbrance  permitted under Article 20 or otherwise permitted to be created
by  Landlord  hereunder,  (b)  all  Permitted  Encumbrances,  (c)  liens  as  to
obligations of Landlord that

                                      -60-
<PAGE>
are either not yet due or which are being  contested in good faith and by proper
proceedings, provided the same do not materially interfere with Tenant's ability
to operate any Facility and (d) liens that have been  consented to in writing by
Tenant.  Except as otherwise provided in this Agreement,  no failure by Landlord
to comply with the foregoing  covenant  shall give Tenant any right to cancel or
terminate  this  Agreement or abate,  reduce or make a deduction  from or offset
against the Rent or any other sum payable  under this  Agreement,  or to fail to
perform any other obligation of Tenant hereunder.

         23.9 No  Recordation.  Neither  Landlord  nor Tenant  shall record this
Agreement.

         23.10 Notices.

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

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

                  (c) All such notices shall be addressed,

         if to Landlord:

                    c/o Senior Housing Properties Trust
                    400 Centre Street
                    Newton, Massachusetts  02458
                    Attn:  Mr. David J. Hegarty
                    [Telecopier No. (617) 796-8349]

                                      -61-
<PAGE>
         if to Tenant to:

                    c/o Five Star Quality Care, Inc.
                    400 Centre Street
                    Newton, Massachusetts  02458
                    Attn:  Evrett W. Benton
                    [Telecopier No. (617) 796-8385]

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

         23.11  Construction.  Anything  contained  in  this  Agreement  to  the
contrary  notwithstanding,  all claims  against,  and  liabilities of, Tenant or
Landlord  arising  prior  to any  date  of  termination  or  expiration  of this
Agreement with respect to the Leased Property shall survive such  termination or
expiration.  In no event shall Landlord be liable for any consequential  damages
suffered  by Tenant as the  result of a breach of this  Agreement  by  Landlord.
Neither  this  Agreement  nor  any  provision  hereof  may be  changed,  waived,
discharged or terminated  except by an instrument in writing signed by the party
to be charged.  All the terms and provisions of this Agreement  shall be binding
upon and  inure to the  benefit  of the  parties  hereto  and  their  respective
successors and assigns. Each term or provision of this Agreement to be performed
by Tenant shall be construed as an independent  covenant and condition.  Time is
of the essence  with  respect to the  provisions  of this  Agreement.  Except as
otherwise set forth in this  Agreement,  any  obligations  of Tenant  (including
without limitation,  any monetary,  repair and indemnification  obligations) and
Landlord shall survive the expiration or sooner  termination of this  Agreement.
Whenever it is provided in this  Agreement  that Tenant shall direct any Manager
to take any action, Tenant shall not be deemed to have satisfied such obligation
unless Tenant shall have exhausted all applicable  rights and remedies of Tenant
as "Owner" under such Manager's Management Agreement.

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

         23.13  Applicable  Law,  Etc.  This  Agreement  shall  be  interpreted,
construed,  applied and enforced in accordance with the laws of The Commonwealth
of  Massachusetts  applicable to contracts  between

                                      -62-
<PAGE>
residents  of   Massachusetts   which  are  to  be  performed   entirely  within
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 the
forum  jurisdiction  otherwise would apply the laws of a jurisdiction other than
Massachusetts;  or (vii) any combination of the foregoing.  Notwithstanding  the
foregoing,  the laws of the State shall apply to the  perfection and priority of
liens upon and the disposition of any Property.

         23.14 Right to Make  Agreement.  Each party  warrants,  with respect to
itself,  that neither the execution of this Agreement,  nor the  consummation of
any transaction  contemplated hereby, shall violate any provision of any law, or
any judgment,  writ,  injunction,  order or decree of any court or  governmental
authority having  jurisdiction  over it; nor result in or constitute a breach or
default under any indenture,  contract, other commitment or restriction to which
it is a party or by which it is bound; nor require any consent, vote or approval
which has not been given or taken,  or at the time of the  transaction  involved
shall not have been given or taken.  Each party  covenants  that it has and will
continue  to have  throughout  the  term of this  Agreement  and any  extensions
thereof, the full right to enter into this Agreement and perform its obligations
hereunder.

         23.15  Attorneys'  Fees. If any lawsuit or  arbitration  or other legal
proceeding  arises in connection with the  interpretation or enforcement of this
Agreement,  the  prevailing  party therein shall be entitled to receive from the
other party the  prevailing  party's  costs and expenses,  including  reasonable
attorneys' fees incurred in connection therewith, in preparation therefor and on
appeal therefrom, which amounts shall be included in any judgment therein.

         23.16 Nonliability of Trustees.  THE DECLARATIONS OF TRUST ESTABLISHING
LANDLORD,  COPIES OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO  (COLLECTIVELY,
THE  "DECLARATIONS"),  ARE DULY FILED WITH THE  DEPARTMENT  OF  ASSESSMENTS  AND
TAXATION OF THE STATE OF MARYLAND,  PROVIDES  THAT THE NAMES  "HRES2  PROPERTIES
TRUST," "SPTIHS PROPERTIES TRUST,"  "SPT-MICHIGAN  TRUST" AND "SPTMNR PROPERTIES
TRUST" REFER TO THE TRUSTEES UNDER THE  DECLARATIONS  COLLECTIVELY  AS TRUSTEES,
BUT NOT INDIVIDUALLY OR PERSONALLY,  AND THAT NO TRUSTEE, OFFICER,  SHAREHOLDER,
EMPLOYEE OR AGENT OF LANDLORD SHALL BE HELD TO ANY PERSONAL  LIABILITY,  JOINTLY
OR SEVERALLY,  FOR ANY OBLIGATION OF, OR CLAIM  AGAINST,  LANDLORD.  ALL PERSONS
DEALING WITH LANDLORD, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF LANDLORD FOR
THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

                                      -63-
<PAGE>

         23.17 Bankruptcy Remote Entities.  At Landlord's request,  Tenant shall
make such amendments,  modifications  or other changes to its charter  documents
and  governing  bodies  (including,   without  limitation,   Tenant's  board  of
directors), and take such other action, as may from time to time be necessary to
qualify  Tenant as a "bankruptcy  remote  entity,"  provided that Landlord shall
reimburse  Tenant for all costs and  expenses  reasonably  incurred by Tenant in
connection with the making of such amendments or modifications.

                                      -64-
<PAGE>

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

                                     LANDLORD:

                                     HRES2 PROPERTIES TRUST

                                     By: /s/ David J. Hegarty
                                           Its: President

                                     SPTIHS PROPERTIES TRUST

                                     By: /s/ David J. Hegarty
                                           Its: President

                                     SPT-MICHIGAN TRUST

                                     By: /s/ David J. Hegarty
                                           Its: President

                                     SPTMNR PROPERTIES TRUST

                                     By: /s/ David J. Hegarty
                                           Its: President

                                     TENANT:

                                     FIVE STAR QUALITY CARE TRUST

                                     By: /s/ Bruce J. Mackey Jr.
                                           Its: Treasurer and Chief
                                                 Financial Officer

                                      -65-
<PAGE>

                                OMITTED EXHIBITS

The following exhibits to the Master Lease have been omitted:

Exhibit Letter                                       Exhibit Title

A-1 through A-56                                     Land

B                                                    Required Repairs

The Registrant agrees to furnish  supplementally a copy of the foregoing omitted
exhibits to the Securities and Exchange Commission upon request.

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