Document:

EXHIBIT 10.5.2

                        BIO-REFERENCE LABORATORIES, INC.
                    2003 EMPLOYEE INCENTIVE STOCK OPTION PLAN

1. PURPOSE

         The  purpose of the 2003  Employee  Incentive  Stock  Option  Plan (the
"Plan") is to advance the interests of BIO-REFERENCE  LABORATORIES,  INC., a New
Jersey  corporation (the "Company"),  by strengthening  the Company's ability to
attract  and retain in its  employ  people of  experience  and  ability,  and to
furnish additional incentives to Employees (as such term is hereinafter defined)
of the Company and its subsidiaries upon whose judgment,  initiative and efforts
the successful  conduct and  development  of its business  largely  depends,  by
encouraging  them to become  owners of the  common  stock,  $.01 par value  (the
"Common Stock") of the Company.

         Accordingly,  the  Company  may,  from  time  to  time,  grant  to such
Employees  as may be selected  in the manner  hereinafter  provided,  options to
purchase the shares of the Company's Common Stock, upon the terms and conditions
hereinafter  established.  The options to be granted shall be options which will
qualify for incentive stock option  treatment under the Internal Revenue Code of
1986, as amended ("ISO's").

2. AMOUNT AND SOURCE OF STOCK

         The  aggregate  number and class of shares  which may be the subject of
options granted pursuant to the Plan is 800,000 shares of Common Stock, $.01 par
value,  of the Company  (the  "Shares"),  subject to  adjustment  as provided in
Paragraph 10. Such Shares may be reserved or made  available  from the Company's
authorized  and  unissued  Shares  or from  Shares  reacquired  and  held in the
Company's  treasury.  In the  event  that any  option  granted  hereunder  shall
terminate  prior to its  exercise in full,  for any reason,  including,  without
limitation,  an option  exchange  pursuant  to  Paragraph  12  hereof,  then any
remaining  Shares not  purchased  pursuant to such option  shall be added to the
Shares  otherwise  available  for  issuance  pursuant to the exercise of options
under the Plan.

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3. ADMINISTRATION OF THE PLAN

         The Plan shall be administered by the Board of Directors of the Company
(the "Board"),  or if so designated,  by resolution of the Board, by a committee
selected by the Board (the "Committee"), and to be composed of not less than two
(2) members to be  appointed  from time to time by such  Board,  and who, at any
time they  exercise  discretion  in  administering  the Plan and within one year
prior  thereto,  shall have not been  eligible for selection as a person to whom
stock could have been  allocated or to whom stock options or stock  appreciation
rights  could have been  granted  pursuant  to the Plan or any other plan of the
Company or any of its affiliates  entitling the participants  therein to acquire
stock, stock options or stock  appreciation  rights of the Company or any of its
affiliates.

         The  Board  or,  if so  designated,  the  Committee,  shall  have  full
authority to interpret the Plan,  to establish  and amend rules and  regulations
relating to it, to determine  the Employees to whom options may be granted under
the Plan, to determine the terms and provisions of the option  agreements and to
make all other  determinations  necessary or advisable for the administration of
the Plan.  The  Board  or, if so  designated.  the  Committee,  shall  have full
authority to amend the Plan;  provided,  however,  that any  amendment  that (i)
increases the number of Shares that may be the subject of stock options  granted
under the Plan, (ii) increases the period during which options may be granted or
the  permissible  term of options under the Plan, or (iii) decreases the minimum
exercise  price of such  options,  shall  only be adopted by the Board or, if so
designated, the Committee,  subject to shareholder approval. No amendment to the
Plan shall, without the consent of the holder of an existing option,  materially
and  adversely  affect his rights under any option.  Unless a different  date is
designated by the Board (or the Committee) the date on which the Board or, if so
designated,  the Committee adopts resolutions  granting an option to a specified
individual  shall  constitute  the date of grant of such  option  (the  "Date of
Grant");  provided,  however,  that if the grant of an option is made subject to
the occurrence of a subsequent event (such as, for example,  the commencement of
employment), the date on which such subsequent event occurs shall be the Date of
Grant. The adoption of any such resolution by the majority of the members of the
Board  or,  if so  designated,  the  Committee,  shall  complete  the  necessary
corporate  action  constituting  the grant of said option and an offer of Shares
for sale to said individual under the Plan.

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4. ELIGIBILITY

(a) Employees of the Company or  subsidiaries  of the Company,  as determined by
the Board or, if so  designated,  the  Committee,  shall be  eligible to receive
options hereunder; provided, however , that no option shall be granted hereunder
to any person who,  together with his spouse,  children and trusts and custodial
accounts for their benefit,  immediately at the time of the grant of such option
and assuming its immediate exercise,  would beneficially own, within the meaning
of Section 424(d) of the Internal Revenue Code of 1986, as amended (the "Code"),
Shares possessing more than ten percent (10%) of the total combined voting power
of all of the  outstanding  stock of the Company (a "Ten Percent  Shareholder"),
unless  such an option  granted to the Ten  Percent  Shareholder  satisfies  the
additional conditions for options,  designated as an ISO, granted to Ten Percent
Shareholders  set forth in  subparagraph  (c)(5) of Section 422 of the Code. For
purposes of the Plan, an "Employee"  shall include full and part time  employees
of the Company or any subsidiary of the Company who may also be officers  and/or
directors of the Company and/or any  subsidiary;  provided,  however,  that such
options  shall only be issued to  employees  eligible to receive such options as
ISOs under the Code.  Furthermore,  for purposes of the Plan, a subsidiary shall
mean  any  corporation  of which  the  Company  owns or  controls,  directly  or
indirectly,  fifty  percent (50%) or more of the  outstanding  shares of capital
stock  normally  entitled  to  vote  for  the  election  of  directors  and  any
partnership of which the Company or a corporate subsidiary is a general partner.
From time to time the Board or, if so designated,  the Committee  shall,  in its
sole discretion, within the applicable limits of the Plan, select from among the
eligible  individuals  those  persons to whom options shall be granted under the
Plan, the number of Shares subject to each option, and the exercise price, terms
and conditions of any options to be granted hereunder .

(b)  Notwithstanding  anything  to the  contrary  herein,  the  Board,  or if so
designated,  the Committee,  shall only grant an option  designated as an ISO to
such  persons who are  eligible to receive an ISO pursuant to Section 422 of the
Code.

5. OPTION PRICE; MAXIMUM GRANT

(a) The exercise price for the Shares purchasable under options granted pursuant
to the Plan shall not be less than 100%, or, in the case of an option granted to
a Ten Percent Shareholder,

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110% of the fair market  value per share of the Shares  subject to option  under
the Plan at the Date of Grant,  as determined by the Board or, if so designated,
the Committee,  in good faith.  In  determining  the exercise price of an option
granted  pursuant to the Plan, the Board,  or if so  designated,  the Committee,
shall  consider the closing  price of the Common Stock on the date the option is
granted (if listed on a national securities exchange), or the last sale price as
reported  by NASDAQ,  or such  other  reasonable  method as it selects  based on
market  quotations.  The exercise price for options granted pursuant to the Plan
shall be subject to adjustment as provided in Paragraph 10.

(b) With respect to those options  granted  pursuant to the Plan,  the aggregate
fair market value,  determined as of the Date of Grant, of the Shares subject to
such  options  which may be granted  to an  individual  and which are  initially
exercisable in any one calendar year, under this Plan and all other stock option
plans of the Company and of any parent or subsidiary of the Company  pursuant to
which incentive  stock options may be granted,  shall not exceed  $100,000.  The
Board,  or  Committee,  may  adopt a vesting  schedule  as it may  determine  in
connection  with any option  granted under the Plan;  provided,  however,  in no
event shall an option  granted  pursuant to the Plan vest more than  $100,000 in
any one year, determined at the time of grant.

6. TERM OF OPTION

(a) Subject to the provisions of the Plan, the Board,  or if so designated,  the
Committee,  shall have  absolute  discretion  in  determining  the period during
which,  the rate at which,  and the terms and  conditions  upon which any option
granted  hereunder  may be  exercised,  and  whether any option  exercisable  in
installments  is to be  exercisable  on a cumulative  or  non-cumulative  basis;
provided,  however,  that no option granted hereunder shall be exercisable for a
period  exceeding  ten (10) years or, in the case of an option  granted to a Ten
Percent  Shareholder,  five  (5)  years  from  the  Date of  Grant.  Unless  the
resolution granting an option provides otherwise,  each option granted hereunder
shall,  subject to the provisions of Paragraph 9 hereof,  be  exercisable  for a
period of ten (10) years or, in the case of an option  granted to a Ten  Percent
Shareholder, five (5) years from the Date of Grant.

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(b) The grant of options by the Board or, if so designated, the Committee, shall
be  effective  as of the date on which  the  Board  or,  if so  designated,  the
Committee, shall authorize the option; provided, however, that no option granted
hereunder  shall be exercisable  unless and until the holder shall enter into an
individual option agreement with the Company which shall set forth the terms and
conditions of such option.  Each such agreement shall  expressly  incorporate by
reference  the  provisions of this Plan and shall state that in the event of any
inconsistency   between  the  provisions  hereof  and  the  provisions  of  such
agreement, the provisions of this Plan shall govern.

7. EXERCISE OF OPTIONS

An option shall be exercised when written notice of such exercise, signed by the
person  entitled to exercise the option,  has been  delivered or  transmitted by
registered or certified  mail to the Chief  Financial  Officer of the Company at
its then  principal  office.  Said notice shall specify the number of Shares for
which  the  option  is being  exercised  and  shall be  accompanied  by (i) such
documentation,  if  any,  as may be  required  by the  Company  as  provided  in
subparagraph 11(b), and (ii) payment in full of the aggregate option price. Such
payment shall be in the form of (i) cash or (ii) a bank draft or certified check
(unless such certification is waived by the Company) payable to the order of the
Company in the amount of the  aggregate  option  price.  Delivery of said notice
shall  constitute an  irrevocable  election to purchase the Shares  specified in
said notice, and the date on which the Company receives the last of said notice,
documentation  and the  aggregate  option  exercise  price for all of the Shares
covered  by the  notice  shall be the date as of which the  Shares so  purchased
shall be deemed to have been issued.  The person entitled to exercise the option
shall  not have the right or  status  as a holder  of the  Shares to which  such
exercise  relates  prior to receipt by the  Company of the  payment,  notice and
documentation expressly referred to in this Paragraph 7.

8. EXERCISE AND CANCELLATION OF OPTIONS UPON TERMINATION OF EMPLOYMENT OR DEATH.

Except  as set forth  below,  if a holder  shall  voluntarily  or  involuntarily
terminate  his service as an Employee  of the Company or any  subsidiary  of the
Company,  or if his  employment is terminated by the Company or a subsidiary for
what the Company  deems  justifiable  "cause,"  the option of such holder  shall
terminate  upon the date of such  termination  of  employment  regardless of the

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expiration  date specified in such option.  If the  termination of employment is
due to retirement (as defined by the Board or, if so designated,  the Committee,
in its sole  discretion),  the holder shall have the privilege of exercising any
option which the holder could have  exercised on the day upon which he ceased to
be an  employee  of the  Company or any  subsidiary  of the  Company;  provided,
however,  that such exercise must be accomplished within the term of such option
and within three (3) months of the holder's  retirement.  If the  termination of
employment  is due to  disability  (to an  extent  and in a  manner  as shall be
determined  by the  Board  or,  if so  designated,  the  Committee,  in its sole
discretion),  he (or his duly appointed  guardian or conservator) shall have the
privilege of exercising  any option that be could have exercised on the day upon
which he  ceased to be an  employee  of the  Company  or any  subsidiary  of the
Company;  provided,  however, that such exercise must be accomplished within the
term of such option and within one (1) year of the termination of his employment
with the Company or any subsidiary of the Company.  If termination of employment
is due to the death of the holder,  the duly appointed executor or administrator
of his estate shall have the privilege at any time of exercising any option that
the holder  could have  exercised on the date of his death;  provided,  however,
that such  exercise  must be  accomplished  within  the term of such  option and
within one (1) year of the  holder's  death.  For all  purposes of the Plan,  an
approved  leave of absence as defined under the Code or  Regulations  thereunder
for an ISO shall not constitute interruption or termination of employment.

Nothing contained herein or in any option agreement shall be construed to confer
on any option  holder any right to be  continued in the employ of the Company or
any  subsidiary  of the Company or derogate from any right of the Company or any
subsidiary  of the Company to retire,  request the  resignation  of or discharge
such  option  holder,  or to layoff or require a leave of absence of such option
holder (with or without pay), at any time, with or without cause.

9. NON-TRANSFERABILITY OF OPTIONS

No option granted under the Plan shall be sold, pledged, assigned or transferred
in any manner  except to the extent that options may be exercised by an executor
or administrator as provided in Paragraph 8 hereof.  An option may be exercised,
during the  lifetime  of the  holder  thereof,  only by such  holder or his duly
appointed guardian or conservator in the event of his disability.

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10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION

(a)  If  the  outstanding  Shares  are  subdivided,   consolidated,   increased,
decreased,  changed into, or exchanged for a different  number or kind of shares
or  other   securities   of  the   Company   through   reorganization,   merger,
recapitalization,  reclassification,  capital adjustment or otherwise, or if the
Company  shall  issue  additional  Shares as a dividend  or  pursuant to a stock
split, then the number and kind of Shares available for issuance pursuant to the
exercise of options to be granted under this Plan and all Shares  subject to the
unexercised  portion of any option  theretofore  granted and the option price of
such  options  shall be  adjusted  to prevent  the  inequitable  enlargement  or
dilution of any rights hereunder; provided, however, that any such adjustment in
outstanding options under the Plan shall be made without change in the aggregate
exercise price  applicable to the  unexercised  portion of any such  outstanding
option. Distributions to the Company's shareholders consisting of property other
than shares of Common Stock of the Company or its successors  and  distributions
to  shareholders of rights to subscribe for Common Stock shall not result in the
adjustment of the Shares  purchasable under outstanding  options or the exercise
price of outstanding options.  Adjustments under this paragraph shall be made by
the Board or, if so designated,  by the Committee,  whose determination  thereof
shall be conclusive and binding. Any fractional Share resulting from adjustments
pursuant to this paragraph shall be eliminated from any then outstanding option.
Nothing contained herein or in any option agreement shall be construed to affect
in any way the  right or power of the  Company  to make or become a party to any
adjustments,  reclassifications,  reorganizations  or changes in its  capital or
business structure or to merge,  consolidate,  dissolve,  liquidate or otherwise
transfer all or any part of its business or assets.

(b) If,  in the  event of a merger  or  consolidation,  the  Company  is not the
surviving  corporation,  and in the event  that the  agreements  governing  such
merger or  consolidation  do not provide for the  substitution of new options or
other  rights  in lieu  of the  options  granted  hereunder  or for the  express
assumption of such outstanding options by the surviving  corporation,  or in the
event of the dissolution or liquidation of the Company, the holder of any option
theretofore  granted under this Plan shall have the right not less than five (5)
days prior to the record date for the determination of shareholders  entitled to
participate  in such  merger,  consolidation,  dissolution  or  liquidation,  to
exercise  his option,  in whole or in part,  without  regard to any

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installment  provisions that may have been made part of the terms and conditions
of such option;  provided,  that any  conditions  precedent to such exercise set
forth in any option agreement granted under this Plan, other than the passage of
time, have been satisfied.  In any such event, the Company will mail or cause to
be mailed to each  holder of an option  hereunder a notice  specifying  the date
that is to be fixed as of which all  holders  of record of the  Shares  shall be
entitled  to  exchange  their  Shares  for  securities,  cash or other  property
issuable or deliverable pursuant to such merger , consolidation,  dissolution or
liquidation.  Such  notice  shall be mailed at least ten (10) days  prior to the
date  therein  specified.  In the  event  any  then  outstanding  option  is not
exercised  in its  entirety  on or  prior  to the date  specified  therein,  all
remaining   outstanding  options  granted  hereunder  and  any  and  all  rights
thereunder shall terminate as of said date.

11. GENERAL RESTRICTIONS

(a) No option granted  hereunder  shall be exercisable if the Company shall,  at
any time and in its sole  discretion,  determine  that (i) the listing  upon any
securities  exchange,  registration or qualification  under any state or federal
law of any Shares otherwise  deliverable upon such exercise,  or (ii) consent or
approval of any regulatory body or the  satisfaction of withholding tax or other
withholding  liabilities,  is necessary or appropriate  in connection  with such
exercise prior thereto.  In any such events, the exerciseability of such options
shall be suspended  and shall not be  effective  unless and until the grantee of
such  option  has  paid  such   withholding   tax  or   listing,   registration,
qualification  or approval  shall have been  effected  or  obtained  free of any
conditions not acceptable to the Company in its sole discretion, notwithstanding
any  termination  of any option or any  portion of any option  during the period
when exerciseability has been suspended.

(b) The Board or, if so designated,  the Committee,  may require, as a condition
to the right to exercise an option,  that the  Company  receive  from the option
holder,  at the  time of any  such  exercise,  representations,  warranties  and
agreements to the effect that the Shares are being  purchased by the holder only
for investment and without any present intention to sell or otherwise distribute
such  Shares  and that the option  holder  will not  dispose  of such  Shares in
transactions which, in the opinion of counsel to the Company,  would violate the
registration  provisions of the Securities Act of 1933, as then amended, and the
rules and  regulations

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thereunder.   The  certificates  issued  to  evidence  such  Shares  shall  bear
appropriate legends summarizing such restrictions on the disposition thereof.

12. EXCHANGE OF OPTIONS

The Board,  or if so designated,  the  Committee,  shall have the right to grant
options  hereunder  that are granted  subject to the condition  that the grantee
shall agree with the Company to terminate all or a portion of another  option or
options  previously  granted  under the Plan.  The Shares that had been issuable
pursuant to the  exercise of the option  terminated  in the  exchange of options
shall,  upon such  termination,  again become available for issuance pursuant to
the exercise of options under the Plan.

13. LOANS TO EMPLOYEES

The Board, or if so designated, the Committee,  acting on behalf of the Company,
shall have the  authority  and may,  in its sole  discretion,  lend money to, or
guaranty  any  obligation  of, an  Employee  for the  purpose of  enabling  such
Employee  to exercise an option  granted  hereunder;  the amount of such loan or
obligation, however, shall be limited to an amount no greater than fifty percent
(50%) of the exercise price of such option.  Any loan made hereunder  shall bear
interest  at the rate of not less  than the Base Rate of Chase  Manhattan  Bank,
N.A. at the time of such loan plus one percent (1%) per annum;  may be unsecured
or  secured in such  manner as the Board,  or the  Committee,  shall  determine,
including,  without  limitation,  a pledge of the subject  shares;  and shall be
subject to such other terms and conditions as the Board,  or the Committee,  may
determine.

14. TERMINATION

Unless the Plan shall theretofore have been terminated as hereinafter  provided,
the Plan shall terminate on June 2, 2013,  which date is ten (10) years from the
date of the original adoption hereof by the Board, and no options under the Plan
shall thereafter be granted,  provided,  however,  the Board at any time may, in
its  sole  discretion,  terminate  the  Plan  prior to the  foregoing  date.  No
termination of the Plan shall,  without the consent of the holder of an existing
option, materially and adversely affect his rights under such option.

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The Plan shall be submitted to the  shareholders  of the Company for approval in
accordance with the applicable provisions of the New Jersey Business Corporation
Act as promptly as  practicable  and in any event within one year after the date
of the original  adoption  hereof by the Board.  Any options  granted  hereunder
prior to such  shareholder  approval shall not be  exercisable  unless and until
such approval is obtained. If such approval is not obtained on or before June 2,
2004, which date is one ( 1) year from the date of the original  adoption hereof
by the Board, the Plan and any options granted hereunder shall be terminated.

                                       9<PAGE>

                                  EXHIBIT 10.2

                                     Form of
                               Advisory Agreement

<PAGE>

                           FORM OF ADVISORY AGREEMENT

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

                               W I T N E S S E T H

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

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

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

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

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

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

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

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

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

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

<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                        3
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

                                        4
<PAGE>

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

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

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

         Good Reason. With respect to the termination of this Agreement, (i) any
failure to obtain a satisfactory agreement from any successor to the Company to
assume and agree to perform the Company's obligations under this Agreement; or
(ii) any material breach of this Agreement of any nature whatsoever by the
Company.

         Gross Proceeds. The aggregate purchase price of all Shares sold for the
account of the Company through the 2004 Offering, without deduction for selling
commissions, volume discounts, the marketing support fee, due diligence expense
reimbursements or Offering Expenses. For the purpose of computing Gross
Proceeds, the purchase price of any Share for which reduced selling commissions
are paid to the Managing Dealer or a Soliciting Dealer (where net proceeds to
the Company are not reduced) shall be deemed to be the full offering price of
the Shares.

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

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

         Independent Expert. A Person or entity with no material current or
prior business or personal relationship with the Advisor or the Directors and
who is engaged to a substantial extent

                                        5
<PAGE>

in the business of rendering opinions regarding the value of assets of the type
held by the Company.

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

         Invested Capital. The amount calculated by multiplying the total number
of Shares purchased by stockholders by the issue price, reduced by the portion
of any Distribution that is attributable to Net Sales Proceeds and by any
amounts paid by the Company to repurchase Shares pursuant to the Company's plan
for redemption of Shares.

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

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

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

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

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

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

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

                                        6
<PAGE>

amount of all commissions and closing costs paid by the Company. In the case of
a transaction described in clause (ii) of the definition of Sale, Net Sales
Proceeds means the proceeds of such transaction or series of transactions less
all amounts generated thereby and reinvested in one or more Properties within
180 days thereafter and less the amount of any real estate commissions, closing
costs, and legal and other selling expenses incurred by or allocated to the
Company in connection with such transaction or series of transactions. Net Sales
Proceeds shall also include, in the case of any lease of a Property consisting
of a building only, any Mortgage Loan or any Secured Equipment Lease, any
amounts from tenants, borrowers or lessees that the Company determines, in its
discretion, to be economically equivalent to proceeds of a Sale. Net Sales
Proceeds shall not include, as determined by the Company in its sole discretion,
any amounts reinvested in one or more Properties, Mortgage Loans, or Secured
Equipment Leases, to repay outstanding indebtedness, or to establish reserves.

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

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

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

         Permanent Financing. The financing (i) to acquire Assets, (ii) to pay
the Secured Equipment Lease Servicing Fee, (iii) to pay a fee of 3.9% of any
Permanent Financing, excluding amounts to fund Secured Equipment Leases, as
Acquisition Fees, and (iv) to refinance

                                        7
<PAGE>

outstanding amounts on the Line of Credit. Permanent Financing may be in
addition to any borrowing under the Line of Credit.

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

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

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

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

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

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

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

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

                                        8
<PAGE>

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

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

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

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

         Shares. The common shares of the Company.

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

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

         Sponsor.Any Person directly or indirectly instrumental in organizing,
wholly or in part, the Company or any Person who will control, manage or
participate in the management of the Company, and any Affiliate of such Person.
Not included is any Person whose only relationship with the Company is that of
an independent property manager of Company assets, and whose only compensation
is as such. Sponsor does not include independent third parties such as

                                        9
<PAGE>

attorneys, accountants, and underwriters whose only compensation is for
professional services. A Person may also be deemed a Sponsor of the Company by:

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

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

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

         d.       possessing significant rights to control the Company
                  Properties;

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

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

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

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

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

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

         Termination Date. The date of termination of this Agreement.

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

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

         2%/25% Guidelines. The requirement pursuant to the guidelines of the
North American Securities Administrators Association, Inc. that, in any 12 month
period, total Operating

                                       10
<PAGE>

Expenses may not exceed the greater of 2% of the Company's Average Invested
Assets during such 12 month period or 25% of the Company's Net Income over the
same 12 month period.

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

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

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

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

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

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

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

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

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

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

                                       11
<PAGE>

                           Persons acting in any other capacity deemed by the
                           Advisor necessary or desirable for the performance of
                           any of the services herein, including but not limited
                           to entering into contracts in the name of the Company
                           with any of the foregoing;

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

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

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

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

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

                                       12
<PAGE>

                           underwriter; and provided, further, that any fees and
                           costs payable to third parties incurred by the
                           Advisor in connection with the foregoing shall be the
                           responsibility of the Company;

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

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

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

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

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

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

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

         (4)      AUTHORITY OF ADVISOR.

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

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

                                       13
<PAGE>

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

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

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

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

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

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

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

                                       14
<PAGE>

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

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

         (9)      FEES.

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

         (b)      Acquisition Fees. The Company shall pay the Advisor a fee in
the amount of 3.9% of Total Proceeds as Acquisition Fees. Acquisition Fees shall
be reduced to the extent that, and, if necessary to limit, the total
compensation paid to all persons involved in the acquisition of any Property to
the amount customarily charged in arm's-length transactions by other persons or
entities rendering similar services as an ongoing public activity in the same
geographical location and for comparable types of Properties and to the extent
that other acquisition fees, finder's fees, real estate commissions, or other
similar fees or commissions are paid by any person in connection with the
transaction. In addition, Acquisition Fees shall be reduced to 1.0% of Gross
Proceeds in connection with sales in excess of 500,000 shares to a "purchaser"
(as such term is defined in the section of the Prospectus titled "The Offering
-- Plan of Distribution"), provided all such shares are purchased through the
same registered investment adviser, Soliciting Dealer or the Managing Dealer.
The total of all Acquisition Fees and any Acquisition Expenses shall be limited
in accordance with the Articles of Incorporation.

                                       15
<PAGE>

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

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

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

                                       16
<PAGE>

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

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

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

         (10)     EXPENSES.

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

                      (i)      the Company's Offering Expenses;

                      (ii)     Acquisition Expenses incurred in connection with
the selection and acquisition of Properties or the making of Mortgage Loans, for
goods and services provided by the Advisor at the lesser of the actual cost or
90% of the competitive rate charged by unaffiliated persons providing similar
goods and services in the same geographic location;

                                       17
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

                      (xv)     administrative service expenses (including
personnel costs; provided, however, that no reimbursement shall be made for
costs of personnel to the extent that such personnel perform services in
transactions for which the Advisor receives a separate fee at the lesser of
actual cost or 90% of the competitive rate charged by unaffiliated persons
providing similar goods and services in the same geographic location); and

                                       18
<PAGE>

                      (xvi)    audit, accounting and legal fees.

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

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

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

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

                                       19
<PAGE>

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

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

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

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

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

         (17)     ASSIGNMENT TO AN AFFILIATE. This Agreement may be assigned by
the Advisor to an Affiliate with the approval of a majority of the Directors
(including a majority of the Independent Directors). The Advisor may assign any
rights to receive fees or other payments under this Agreement without obtaining
the approval of the Directors. This Agreement shall not be assigned by the
Company without the consent of the Advisor, except in the case of an assignment
by the Company to a corporation or other organization which is a successor to
all of the assets, rights and obligations of the Company, in which case such
successor organization

                                       20
<PAGE>

shall be bound hereunder and by the terms of said assignment in the same manner
as the Company is bound by this Agreement.

         (18)     PAYMENTS TO AND DUTIES OF ADVISOR UPON TERMINATION. Payments
to the Advisor pursuant to this Paragraph (18) shall be subject to the 2%/25%
Guidelines to the extent applicable.

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

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

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

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

                  (e)      The Advisor shall promptly upon termination:

                                       21
<PAGE>

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

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

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

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

         (19)     INDEMNIFICATION BY THE COMPANY. The Company shall indemnify
and hold harmless the Advisor and its Affiliates, including their respective
officers, directors, partners and employees, from all liability, claims, damages
or losses arising in the performance of their duties hereunder, and related
expenses, including reasonable attorneys' fees, to the extent such liability,
claims, damages or losses and related expenses are not fully reimbursed by
insurance, subject to any limitations imposed by the laws of the State of
Maryland or the Articles of Incorporation of the Company. Notwithstanding the
foregoing, the Advisor shall not be entitled to indemnification or be held
harmless pursuant to this Paragraph 19 for any activity for which the Advisor
shall be required to indemnify or hold harmless the Company pursuant to
Paragraph 20. Any indemnification of the Advisor may be made only out of the net
assets of the Company and not from Stockholders.

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

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

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

                                       22
<PAGE>

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

Either party may at any time give notice in writing to the other party of a
change in its address for the purposes of this Paragraph 21.

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

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

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

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

         (26)     INDULGENCES, NOT WAIVERS. Neither the failure nor any delay on
the part of a party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver shall be effective unless it is
in writing and is signed by the party asserted to have granted such waiver.

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

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

                                       23
<PAGE>

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

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

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

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

                                   CNL RETIREMENT PROPERTIES, INC.

                                   By: ________________________
                                   Name:  James M. Seneff, Jr.
                                   Title: Chairman of the Board

                                   CNL RETIREMENT CORP.

                                   By: ___________________________
                                   Name:  Thomas J. Hutchison III
                                   Title: Chief Executive Officer

                                       24

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