8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 5, 2002

VENTAS, INC.

(Exact name of registrant as specified in its charter)

Delaware	1-10989	61-1055020
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

4360 Brownsboro Road, Suite 115, Louisville, Kentucky 40207-1642

(Address of principal executive offices) (Zip Code)

(502) 357-9000

(Registrant’s telephone number, including area code)

Item 2.    Acquisition or Disposition of Assets.

As previously announced, on November 5, 2002, Ventas, Inc. (the “Company”), through its wholly owned subsidiary Ventas Realty, Limited Partnership (“Ventas Realty”), completed a $120 million transaction (the “Transaction”) with Trans Healthcare, Inc., a privately owned long-term care and hospital company (“THI”).

The Transaction is structured as a $53 million sale leaseback transaction (the “Sale Leaseback”) and $67 million loan (the “Loan”), which is comprised of a first mortgage loan and a mezzanine loan.

Under the Sale Leaseback, Ventas Realty purchased 5 properties and is leasing them back to THI under a master lease (the “Master Lease”). The properties subject to the Sale Leaseback are four skilled nursing facilities and one continuing care retirement community that is comprised of one skilled nursing facility, one rehabilitation hospital, and one assisted living facility. Three of the properties are located in Maryland and two are located in Ohio. These properties contain a total of 770 beds. The Master Lease provides for annual base rent of $5.9 million, escalating each year by three percent.

The Loan is divided into two components:

(a) a $45 million first mortgage loan (the “First Mortgage Loan”) secured by 17 skilled nursing facilities and one related assisted living facility. Fourteen of these properties are located in Ohio and four are located in Maryland. These properties contain a total of 1,402 beds. The First Mortgage Loan is structured as a collateralized mortgage backed security that Ventas has originated for investment purposes, but may later sell. The First Mortgage Loan bears interest at LIBOR plus 367 basis points, inclusive of upfront fees (with a LIBOR floor of three percent). The First Mortgage Loan matures in three years, and THI holds options to exercise two one-year extensions upon satisfaction of certain conditions; and

(b) a $22 million mezzanine loan (the “Mezzanine Loan”), which bears interest, inclusive of upfront fees, of 18 percent per annum and is secured by subordinate interests in the 18 facilities that also collateralize the First Mortgage Loan, liens on four additional healthcare/senior housing properties and interests in three additional properties operated by THI.

The Transaction covers a total of 32 facilities: 18 skilled nursing facilities, four assisted living facilities, and one rehabilitation hospital containing 1,546 beds in Ohio; and nine skilled nursing facilities containing 1,206 beds in Maryland.

The Company funded the transaction on a short-term basis by drawing on its revolving credit facility established pursuant to the Second Amended and Restated Credit, Security and Guaranty Agreement, dated April 17, 2002, among Ventas Realty, as borrower, the Company and certain subsidiaries of the Company identified therein, as guarantors, the lenders identified therein, including Bank of America, N.A., as Issuing Bank for the Letters of Credit

-2-

thereunder, Bank of America, N.A., as Administrative Agent, and UBS Warburg LLC, as Syndication Agent.

The value of the Transaction was determined through arms length negotiations. In connection therewith, the Company also obtained independent appraisals of certain of the properties involved in the Transaction.

FORWARD-LOOKING STATEMENTS

This Current Report on Form 8-K includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements regarding the Company’s and its subsidiaries’ expected future financial position, results of operations, cash flows, funds from operations, dividends and dividend plans, financing plans, business strategy, budgets, projected costs, capital expenditures, competitive positions, growth opportunities, expected lease income, continued qualification as a real estate investment trust (“REIT”), plans and objectives of management for future operations and statements that include words such as “anticipate,” “if,” “believe,” “plan,” “estimate,” “expect,” “intend,” “may,” “could,” “should,” “will” and other similar expressions are forward-looking statements. Such forward-looking statements are inherently uncertain, and stockholders must recognize that actual results may differ from the Company’s expectations. The Company does not undertake a duty to update such forward-looking statements.

Actual future results and trends for the Company may differ materially depending on a variety of factors discussed in the Company’s filings with the Securities and Exchange Commission. Factors that may affect the plans or results of the Company include, without limitation, (a) the ability and willingness of Kindred Healthcare, Inc. (“Kindred”) and certain of its affiliates to continue to meet and/or perform their obligations under their contractual arrangements with the Company and the Company’s subsidiaries, including without limitation the lease agreements and various agreements (the “Spin Agreements”) entered into by the Company and Kindred at the time of the Company’s spin-off of Kindred on May 1, 1998 (the “1998 Spin Off”), as such agreements may have been amended and restated in connection with Kindred’s emergence from bankruptcy on April 20, 2001, (b) the ability and willingness of Kindred to continue to meet and/or perform its obligation to indemnify and defend the Company for all litigation and other claims relating to the healthcare operations and other assets and liabilities transferred to Kindred in the 1998 Spin Off, (c) the ability of Kindred and the Company’s other operators to maintain the financial strength and liquidity necessary to satisfy their respective obligations and duties under the leases and other agreements with the Company, and their existing credit agreements, (d) the Company’s success in implementing its business strategy, (e) the nature and extent of future competition, (f) the extent of future healthcare reform and regulation, including cost containment measures and changes in reimbursement policies and procedures, (g) increases in the cost of borrowing for the Company, (h) the ability of the Company’s operators to deliver high quality care and to attract patients, (i) the results of litigation affecting the Company, (j) changes in general economic conditions and/or economic conditions in the markets in which the Company may, from time to time, compete, (k) the ability of the Company to pay down, refinance, restructure, and/or extend its indebtedness as it becomes

-3-

due, (l) the movement of interest rates and the resulting impact on the value of the Company’s interest rate swap agreements and the ability of the Company to satisfy its obligation to post cash collateral if required to do so under one of these interest rate swap agreements, (m) the ability and willingness of Atria, Inc. (“Atria”) to continue to meet and honor its contractual arrangements with the Company and Ventas Realty, Limited Partnership entered into in connection with the Company’s spin-off of its assisted living operations and related assets and liabilities to Atria in August 1996, (n) the ability and willingness of the Company to maintain its qualification as a REIT due to economic, market, legal, tax or other considerations, including without limitation, the risk that the Company may fail to qualify as a REIT due to its ownership of common stock in Kindred, (o) the outcome of the audit being conducted by the Internal Revenue Service for the Company’s tax years ending December 31, 1997 and 1998, (p) final determination of the Company’s taxable net income for the year ending December 31, 2002, (q) the ability and willingness of the Company’s tenants to renew their leases with the Company upon expiration of the leases and the Company’s ability to relet its properties on the same or better terms in the event such leases expire and are not renewed by the existing tenants, (r) the impact on the liquidity, financial condition and results of operations of Kindred and the Company’s other operators resulting from increased operating costs and uninsured liabilities for professional liability claims, particularly in the state of Florida and (s) the value of the Company’s common stock in Kindred and the limitations on the ability of the Company to sell, transfer or otherwise dispose of its common stock in Kindred arising out of the securities laws and the registration rights agreement the Company entered into with Kindred and certain of the holders of the common stock in Kindred. Many of such factors are beyond the control of the Company and its management.

Item 7.    Financial Statements and Exhibits.

(a)  Financial statements of businesses acquired.

Not applicable.

(b)  Pro forma financial information.

Not applicable.

(c)  Exhibits:

10.1.1 Purchase and Sale Agreement, dated as of November 1, 2002, by and between Ventas Realty, Limited Partnership, as Buyer, and Trans Healthcare of Ohio, Inc., as Seller.

10.1.2 Master Lease Agreement, dated as of November 1, 2002, between Ventas Realty, Limited Partnership, as Landlord, and the Tenants named therein.

10.2.1 Loan Agreement, dated as of November 1, 2002, among Ventas Realty, Limited Partnership, as Lender, and the Borrowers named therein.

-4-

10.2.2 Promissory Note, dated as of November 1, 2002, from certain Borrowers named therein, to Ventas Realty, Limited Partnership, as Lender.

10.2.3 Guaranty of Recourse Obligations, dated as of November 1, 2002, by the Guarantors named therein, for the benefit of Ventas Realty, Limited Partnership, as Lender.

10.2.4 Assignment of Leases, Rents, and Contracts, dated as of November 1, 2002, by the Borrowers named therein, to Ventas Realty, Limited Partnership, as Lender.

10.2.5 Open-End Fee and Leasehold Mortgage and Security Agreement, dated as of November 1, 2002, by the Borrowers named therein, for the benefit of Ventas Realty, Limited Partnership, as Lender.

10.2.6 Deed of Trust and Security Agreement, dated as of November 1, 2002, by the Borrowers named therein, to Brian Lobuts, as Trustee for the benefit of Ventas Realty, Limited Partnership, as Lender.

10.2.7 Schedule of Agreements Substantially Identical in All Material Respects to Agreements Filed as Exhibits 10.2.4, 10.2.5 and 10.2.6 pursuant to Instruction 2 to Item 601 of Regulation S-K.

10.3.1 Mezzanine Loan Agreement, dated as of November 1, 2002, among Ventas Realty, Limited Partnership, as Lender, and the Borrowers named therein.

10.3.2 Promissory Note, dated as of November 1, 2002, from the Mezzanine Borrowers named therein to Ventas Realty, Limited Partnership as Mezzanine Lender.

10.3.3 Guaranty, dated as of November 1, 2002, by Trans Healthcare, Inc, and subsidiaries named therein, as Guarantors, in favor of Ventas Realty, Limited Partnership, as Lender.

10.3.4 Guarantor Pledge and Security Agreement, dated as of November 1, 2002, by Trans Healthcare, Inc, and subsidiaries named therein, as Guarantors, in favor of Ventas Realty, Limited Partnership, as Lender.

10.3.5 Mezzanine Pledge and Security Agreement, dated as of November 1, 2002, by THI of Ohio SNFS, LLC, THI of Maryland SNFS I, LLC, and THI of Maryland SNFS II, LLC, as Pledgors, in favor of Ventas Realty, Limited Partnership, as Secured Party.

-5-

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

VENTAS, INC.

(Registrant)

Date:    November 18, 2002

By:	/s/    T. Richard Riney
	Name:    T. Richard Riney Title:      Executive Vice President and General Counsel

-6-

EXHIBIT INDEX

Exhibit	Description
10.1.1	Purchase and Sale Agreement, dated as of November 1, 2002, by and between Ventas Realty, Limited Partnership, as Buyer, and Trans Healthcare of Ohio, Inc., as Seller.
10.1.2	Master Lease Agreement, dated as of November 1, 2002, between Ventas Realty, Limited Partnership, as Landlord, and the Tenants named therein.
10.2.1	Loan Agreement, dated as of November 1, 2002, among Ventas Realty, Limited Partnership, as Lender, and the Borrowers named therein.
10.2.2	Promissory Note, dated as of November 1, 2002, from certain Borrowers named therein, to Ventas Realty, Limited Partnership, as Lender.
10.2.3	Guaranty of Recourse Obligations, dated as of November 1, 2002, by the Guarantors named therein, for the benefit of Ventas Realty, Limited Partnership, as Lender.
10.2.4	Assignment of Leases, Rents, and Contracts, dated as of November 1, 2002, by the Borrowers named therein, to Ventas Realty, Limited Partnership, as Lender.
10.2.5	Open-End Fee and Leasehold Mortgage and Security Agreement, dated as of November 1, 2002, by the Borrowers named therein, for the benefit of Ventas Realty, Limited Partnership, as Lender.
10.2.6	Deed of Trust and Security Agreement, dated as of November 1, 2002, by the Borrowers named therein, to Brian Lobuts, as Trustee for the benefit of Ventas Realty, Limited Partnership, as Lender.
10.2.7	Schedule of Agreements Substantially Identical in All Material Respects to Agreements Filed as Exhibits 10.2.4, 10.2.5 and 10.2.6 pursuant to Instruction 2 to Item 601 of Regulation S-K.
10.3.1	Mezzanine Loan Agreement, dated as of November 1, 2002, among Ventas Realty, Limited Partnership, as Lender, and the Borrowers named therein.

-7-

10.3.2	Promissory Note, dated as of November 1, 2002, from the Mezzanine Borrowers named therein to Ventas Realty, Limited Partnership as Mezzanine Lender.
10.3.3	Guaranty, dated as of November 1, 2002, by Trans Healthcare, Inc, and subsidiaries named therein, as Guarantors, in favor of Ventas Realty, Limited Partnership, as Lender.
10.3.4	Guarantor Pledge and Security Agreement, dated as of November 1, 2002, by Trans Healthcare, Inc, and subsidiaries named therein, as Guarantors, in favor of Ventas Realty, Limited Partnership, as Lender.
10.3.5	Mezzanine Pledge and Security Agreement, dated as of November 1, 2002, by THI of Ohio SNFS, LLC, THI of Maryland SNFS I, LLC, and THI of Maryland SNFS II, LLC, as Pledgors, in favor of Ventas Realty, Limited Partnership, as Secured Party.

-8-

EX-10.1.1

                                                                  Exhibit 10.1.1
























                           PURCHASE AND SALE AGREEMENT



     THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made and entered
into this 1st day of November, 2002, by and between TRANS HEALTHCARE OF OHIO,
INC., a Delaware corporation ("Seller"), and VENTAS REALTY, LIMITED PARTNERSHIP,
a Delaware limited partnership ("Buyer").

                                    RECITALS

     WHEREAS, Seller beneficially owns the four (4) healthcare facilities
identified on Schedule 1 attached hereto and made a part hereof as the "Owned
Facilities"; and

     WHEREAS, Trans Healthcare, Inc., an affiliate of Seller ("THC"), is party
to that certain Asset Purchase Agreement dated March 19, 2002, as amended by
that certain First Addendum to Asset Purchase Agreement dated August 30, 2002
(as amended, the "Millennium Agreement"), with Millennium Health Services, LLC,
et. al. (collectively, the "Current Owner"), Robert G. Owens and Stanley H.
Snow, pursuant to which Seller has the right to purchase and acquire from the
Current Owner the three (3) healthcare facilities identified as the "Contract
Facilities" on Schedule 1 attached hereto and made a part hereof; and

     WHEREAS, at Closing, Current Owner shall convey each Contract Facility to
Buyer pursuant to a special warranty deed (or comparable deed or instrument) in
form and substance acceptable to Buyer; and

     WHEREAS, at Closing, THC, Seller, Current Owner, the Seller Parties (as
defined in the Millennium Agreement) and Buyer shall execute and enter into that
certain Contract Right Assignment (as hereinafter defined); and

     WHEREAS, the Contract Facilities are operated by those certain affiliates
of Current Owner identified as the "Current Operators" on Schedule 2 attached
hereto and made a part hereof; and

     WHEREAS, the Owned Facilities and the Contract Facilities are collectively
referred to herein as "Facilities," and, each, individually, as a "Facility;"
and

     WHEREAS, from and after Closing (as hereinafter defined), the Facilities
will be leased by Buyer to, and operated by, those certain affiliates of Seller
identified on Schedule 2 attached hereto and made a part hereof (collectively,
the "Operators", and each, individually, an "Operator"); and

     WHEREAS, Ventas, Inc., an affiliate of Buyer ("Ventas"), and THC have
previously executed and entered into that certain Term Sheet (the "Term Sheet"),
dated September 24, 2002, describing the general terms and conditions upon which
THC and Seller would be willing to sell, transfer and convey the Facilities to
Buyer, and Buyer would be willing to acquire the Facilities from Seller; and

     WHEREAS, Buyer and THC have previously executed and entered into that
certain Commitment Letter (the "Commitment Letter") further describing the
general terms and conditions upon which Seller would be willing to sell,
transfer and convey the Facilities to Buyer, and Buyer would be willing to
assume and accept the Facilities from Seller; and



     WHEREAS, Seller desires to sell, transfer, convey and assign to Buyer, and
Buyer desires to acquire, assume and accept from Seller, the Facilities on and
subject to the terms and conditions contained in this Agreement; and

     WHEREAS, Ventas and THC have previously executed and entered into that
certain Term Sheet (the "Loan Term Sheet"), dated September 24, 2002, describing
the general terms and conditions upon which Buyer would be willing to provide
first mortgage and so-called "mezzanine" financing to THC or its affiliates in
connection with their ownership and operation of certain healthcare facilities
owned, or to be acquired pursuant to, the Millennium Agreement, by THC or its
affiliates (such financing, the "Loan Transaction"); and

     WHEREAS, Buyer and THC have previously executed and entered into that
certain Commitment Letter (the "Loan Commitment Letter") further describing the
general terms and conditions upon which Buyer and THC would be willing to engage
in the Loan Transaction.

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged hereby, the parties hereto agree to
incorporate the foregoing recitals as if the same were more particularly set
forth in the body of this Agreement and further agree as follows:

     1. SALE. Seller agrees to sell and convey to Buyer (or cause to be sold and
conveyed to Buyer), and Buyer agrees to purchase from Seller, for the purchase
price set forth below, and on the terms and conditions set forth in this
Agreement, the Property (as hereinafter defined), including the Facilities. For
purposes of this Agreement, the term "Property" shall be deemed to mean on a
collective basis:

          1.1. The Land. The parcels of land legally described on Exhibit A
attached hereto and made a part hereof, together with all rights, easements and
interests appurtenant thereto including, but not limited to, any streets or
other public ways adjacent to the Land and any water or mineral rights owned by,
or leased to, Seller or Current Owner, as applicable (collectively, the "Land").

          1.2. The Improvements. All improvements located on the Land,
including, but not limited to, the Facilities, and all other structures,
systems, fixtures and utilities associated with, and utilized in, the ownership
and operation of the Facilities (all such improvements being collectively
referred to as the "Improvements").

          1.3. Intangible Property. All other interest, if any, of Seller or
Current Owner, as applicable, in and to the Land and the Improvements or
pertaining thereto and any and all intangible property of every kind and
character owned or utilized by Seller or Current Owner, as applicable, in
connection with the ownership and operation of the Facilities (collectively, the
"Intangibles"), including, without limitation, any and all of the following: (i)
the interest, if any, of Seller or Current Owner, as applicable, in the identity
or business of the Facilities as a going concern, including without limitation,
any names or trade names by which the Facilities or any part thereof may be
known, and all registrations for such names, if any; excluding, however, the
name Trans Healthcare, THI, Millennium and derivations thereof; (ii) to the
extent assignable or transferable, the interest, if any, of Seller or Current
Owner, as applicable, in and to each and

                                       2



every bond, guaranty and warranty concerning the Improvements, including,
without limitation, any roofing, air conditioning, heating, elevator or other
bond, guaranty and warranty relating to the construction, maintenance or
replacement of the Improvements or any portion thereof; (iii) the interest of
Seller (or Current Owner, as applicable) in all guaranties and warranties given
to Seller (or Current Owner, as applicable) that have not expired (either on a
"claims made" or "occurrences" basis) in connection with the operation,
construction, improvement, alteration or repair of the Land or the Improvements;
and (iv) to the extent permitted by applicable law, the interest, if any, of
Seller or Current Owner, as applicable, in and to those certain Permits (as
hereinafter defined) that are specifically described on Schedule 3 attached
hereto as "Assumed Permits" (hereinafter collectively referred to as the
"Assumed Permits"). For purposes of this Agreement, the term "Permits" shall
mean any and all licenses, permits, accreditations, approvals and certificates
used in or relating to the ownership, occupancy or operation of all or any part
of the Facilities that are held, issued to or controlled by Seller, Current
Owner or Current Operator, including, without limitation, any permit, license,
accreditation, Certificate of Need (as hereinafter defined) or other approval
necessary under applicable federal, state or local law in order to permit the
operation of the Facilities as healthcare facilities. For purposes of this
Agreement, the term "Certificate of Need" shall mean a certificate of need or
similar permit or approval (not including conventional building permits) from a
governmental authority related to the construction and/or operation of any
Facility for the use of a specified number of beds in a nursing facility,
assisted living facility and/or rehabilitation hospital, or alteration of any
such Facility or modification of services provided at such Facility.
Notwithstanding anything contained herein the contrary, all Certificates of Need
shall constitute Assumed Permits that will be assigned to Buyer at Closing by
Seller, Current Owner or Current Operator, as applicable, if and to the extent
permitted to be held by an owner of a healthcare facility that is not an
operator thereof under applicable law (it being the intention of Buyer and
Seller that any and all Certificates of Need be issued to, held in the name of
and owned by Buyer from and after Closing if and to the extent permitted under
applicable law).

Each Facility, together with the Land, Improvements, Intangibles and Assumed
Permits associated therewith being individually referred to as a "Project."

          1.4. Current Owner Projects. Buyer, THC, Seller, Current Owner and all
of the Seller Parties hereby acknowledge and agree that: (i) Seller has agreed
to cause Current Owner to, and Current Owner has agreed to, sell, transfer,
convey and assign the Current Owner Projects (as hereinafter defined), and only
the Current Owner Projects as herein described, to Buyer on and subject to the
terms and conditions contained herein; (ii) Seller has agreed, subject to the
terms and conditions contained in the Millennium Agreement and in the Contract
Right Assignment, to assume and accept from Current Owner (or to cause the
Operators to assume and accept from Current Owner), certain liabilities and
obligations related to the Current Owner Projects that Buyer has not agreed to
assume and accept hereunder, which liabilities and obligations shall not be
conveyed to Buyer hereunder or pursuant to any conveyance documentation
delivered in connection with this Agreement, including, but not limited to, the
Assumed Liabilities (as defined in the Millennium Agreement), any indebtedness
described on Schedule 2.3(d) to the Millennium Agreement, any liabilities
relative to patient deposits, any and all liabilities associated with the
conduct of the Business (as defined in the Millennium Agreement) and liability
for the reimbursement, recapture or refund of over payments under Medicare (as
hereinafter defined) and Medicaid (as hereinafter defined) (collectively, such

                                       3



liabilities and obligations, the "Operator Liabilities"); (iii) Current Owner
has agreed to sell, transfer, convey and assign to the Operators, and the
Operators have agreed to assume and accept, the Operator Liabilities pursuant
to, and in accordance with, the Millennium Agreement; (iv) Seller, Current Owner
or the applicable Current Operator (as necessary) has agreed to (x) sell,
transfer, convey and assign to the applicable Operators those of the Operator
Licenses (as hereinafter defined) or Provider Agreements (as hereinafter
defined) identified on Schedule 3 attached hereto as the "Transferred Operator
Permits" as of Closing (except for those Assigned Interest Operators (as
hereinafter defined) with respect to which the Operator Licenses or Provider
Agreements shall remain with the Assigned Interest Operators); and (y) from and
after Closing, allow the applicable Operators to rely upon, employ and otherwise
use those of the Operator Licenses and Provider Agreements identified on
Schedule 3 attached hereto as the "Transition Permits," until such time as the
applicable Operators have obtained all of the Operator Approvals (as hereinafter
defined) necessary for the operation of the Facilities in the ordinary course
from and after Closing; and (v) Current Owner has agreed to assign and transfer
to Seller or an affiliate of Seller all of the membership interests in and to
the Current Operators identified as Millennium Health and Rehabilitation Center
of Forestville, LLC and Millennium Healthcare and Rehabilitation Center of
Ellicott City, LLC (the "Assigned Interest Operators") such that the Assigned
Interest Operators may continue operations at the applicable Facilities pursuant
to the existing Operators Licenses, which shall be deemed Transferred Operator
Permits or Transaction Permits as necessary and appropriate. Current Owner and
the Seller Parties hereby agree that, notwithstanding anything contained herein
or in the Millennium Agreement to the contrary, Buyer shall not assume, accept
or undertake, or otherwise be liable for, and Current Owner hereby forever and
irrevocably releases and discharges Buyer and the Buyer Indemnified Parties from
liability with respect to, the Operator Liabilities, regardless of the period to
which such Operator Liabilities relate. From and after Closing, Current Owner
and the Seller Parties understand, consent and agree that Buyer (and its
successors and assigns) shall have the right to rely upon, enforce and benefit
from any and all rights, title and interest of THC or Seller in, to and under
the Millennium Agreement with respect to the Current Owner Projects, including,
but not limited to, any representations, warranties, covenants, and indemnities
made by Current Owner or any Seller Parties to and with respect to the Current
Owner Projects (the "Assigned Rights"); provided, however, that the foregoing
shall be without limitation upon the right of THC or Seller to rely upon,
enforce and benefit from the Assigned Rights. The Assigned Rights shall include,
but not be limited to, the right to rely upon and enforce the indemnity provided
by the Sellers (as defined in the Millennium Agreement) to and for the benefit
of THC pursuant to Section 11.2 of the Millennium Agreement and the
non-competition covenants and undertakings made by the Seller Parties pursuant
to Section 6.5 of the Millennium Agreement; provided, however, that Buyer and
the Buyer Indemnified Parties shall not have the right to draw upon and benefit
from the escrowed funds deposited by Current Owner and the Seller Parties unless
Buyer or its successor-in-interest has required the Operational Transfer (as
defined in the Lease) contemplated by the Lease. At Closing, THC shall sell,
transfer, convey and assign to Buyer (and its successors and assigns), in form
acceptable to Buyer, any and all Assigned Rights (the "Contract Right
Assignment"). The Contract Right Assignment shall be executed by Current Owner
and the Seller Parties for purposes of consenting to, and acknowledging, Buyer's
(and its successors' and assigns') right to rely thereon and the terms of this
Section 1.4. The Contract Right Assignment shall contain an (i) indemnity (in
form and substance acceptable to Buyer) from THC to and for the benefit of Buyer
from and against any and all Losses resulting from the

                                       4



Operator Liabilities; and (ii) affidavit from Current Owner confirming that the
sale of the Current Owner Projects is not subject to, and does not subject Buyer
to, liability for any bulk sales obligations under applicable law and an
indemnity for Losses suffered by Buyer in connection with the foregoing. Current
Owner and the Seller Parties have executed this Agreement for the limited
purpose of acknowledging their agreement to the terms of this Section 1.4.
Buyer, Current Owner and the Seller Parties shall execute such instruments,
agreements, conveyance documents and assignments as are reasonably requested by
the others to effectuate the interest of this Section 1.4. The terms of this
Section 1.4 shall survive Closing and the delivery of any conveyance
documentation.

          1.5. Excluded Liabilities. Notwithstanding anything to the contrary
set forth in this Agreement, Buyer does not hereby agree to assume, pay,
perform, satisfy or discharge any liability or obligation of Seller, Current
Owner or any Current Operator existing on the Closing Date or arising out of any
transactions entered into, or any state of facts existing, prior to the Closing
Date (the "Excluded Liabilities"), and Seller agrees to pay and satisfy when due
all of the Excluded Liabilities. The term "Excluded Liabilities" shall include,
without limitation, the following:

               (i) any liabilities or obligations of Seller, Current Owner or
     any Current Operator relating to employee benefits or compensation
     arrangements of any nature;

               (ii) any liability or obligation of Seller, Current Owner or any
     Current Operator for breach of contract, personal injury or property damage
     (whether based on negligence, breach of warranty, strict liability or any
     other theory) caused by, arising out of or resulting from, directly or
     indirectly, any alleged or actual acts or omissions;

               (iii) any liability or obligation of the Seller, Current Owner or
     any Current Operator for money borrowed;

               (iv) any amounts due, claimed or becoming due to Medicare,
     Medicaid or any other health care reimbursement or payment intermediary,
     including, but not limited to, any recapture, adjustment, overpayment,
     penalty assessment or any other financial obligation or charge, including
     but limited to those arising from any adjustments or reductions in Medicare
     or Medicaid reimbursement;

               (v) any Environmental Liability (as hereinafter defined); and

               (vi) any and all other liabilities and obligations of every kind
     of Seller, Current Owner and any Current Operator incurred in connection
     with, or arising by reason of, their ownership or operation of the Property
     prior to the Closing.

     2. PURCHASE PRICE.

          2.1. Purchase Price Formula. The total purchase price (the "Purchase
Price") to be paid to Seller by Buyer shall be equal to Fifty-Three Million and
No/100 Dollars

                                       5



($53,000,000.00). In calculating the Purchase Price, no portion of the Purchase
Price is allocated to the Intangibles.

          2.2. Transaction Closing Costs. For purposes of this Agreement,
"Transaction Closing Costs" shall mean any and all reasonable costs and expenses
paid or incurred by Buyer in connection with the consummation of the
transactions contemplated hereby, including, but not limited to: (i) any and all
actual costs associated with Buyer's due diligence inspection of the Property;
(ii) any actual Expenses (as defined in the Commitment Letter) for which Seller
is required to reimburse Buyer pursuant to the Commitment Letter that have not
previously been paid or reimbursed by Seller; (iii) any costs and expenses paid
or incurred by Buyer to negotiate, execute and deliver this Agreement, the Term
Sheet or the Commitment Letter; and (iv) any costs and expenses paid or incurred
by Buyer that are similar to any of the foregoing. The Transaction Closing Costs
shall be paid out of the net proceeds of the Purchase Price payable by Buyer to
Seller at Closing to the applicable third party service provider (i.e. the Title
Company (as hereinafter defined), Buyer's attorneys, the surveyor, etc.) if and
to the extent such amounts have not been previously paid or reimbursed by
Seller. The obligation of Seller to pay (or reimburse Buyer for) any and all
Transaction Closing Costs shall survive the termination of this Agreement and
Closing and the delivery of any conveyance documentation, and, to the extent
that Buyer identifies any Transaction Closing Costs that were not paid by Seller
at or prior to Closing or the termination of this Agreement, Seller shall
reimburse Buyer for any such unpaid Transaction Closing Costs promptly, and in
any event within ten (10) business days, after the presentation of invoices
therefore by Buyer to Seller. Delinquent amounts owing from Seller to Buyer
hereunder shall bear interest at the per annum rate then announced by Citigroup,
N.A. as its "prime" or "reference" rate plus four percent (4%) (the "Delinquency
Rate"). Except as otherwise provided in Section 12.2, if this Agreement is
terminated, other than as a result of a breach by Buyer, Seller shall remain
obligated to, and shall reimburse Buyer for any and all Transaction Closing
Costs incurred by Buyer.

          2.3. Capital Expenditure Holdback.

               2.3.1. Capital Repair Notice. As part of Buyer's due diligence
inspection of the Property, Buyer has conducted certain engineering and
environmental studies and inspections of the Improvements and certain regulatory
compliance reviews of the Facilities. Attached hereto as Exhibit B is a
description of the engineering reports, a list of repair items (the "Capital
Repair Notice") describing any and all of the following repairs, replacements or
cures that are necessary at the Improvements to place them in compliance with
laws and in a first class condition and working order (collectively, the
"Capital Repair Items"): (i) repairs or replacements of physical defects or
deficiencies in the Improvements or the systems serving the Improvements
(capital or otherwise), including, but not limited to, deferred maintenance
items, roof defects and parking lot repairs; (ii) any and all repairs,
maintenance, replacements or installations necessary to cause the Improvements
to comply with any and all governmental or quasi-governmental laws, ordinances,
rules or regulations, including, but not limited to, zoning laws; and (iii) any
and all repairs, maintenance or replacements necessary to cause the Improvements
to comply with or satisfy the requirements of any Health Departments (as
hereinafter defined), Permits, Operator Licenses and Provider Agreements. For
purposes of this Agreement, "Health Departments" shall mean departments of
health and/or any governmental, quasi-governmental or regulatory authorities of
each of the states where the Facilities are located

                                       6



which have jurisdiction over the licensing, ownership and/or operations of the
Facilities as healthcare facilities. Buyer and Seller have agreed that the
amount necessary to perform all of the Capital Repair Items from and after
Closing is $70,545 ("Capital Expenditure Amount"). The "Capital Expenditure
Holdback" is $88,181, consisting of the amount equal to the sum of the Capital
Expenditure Amount and an amount equal to twenty-five percent (25%) of the
Capital Expenditure Amount. The Capital Expenditure Holdback has been
specifically allocated among the Capital Repair Items (each such allocation, an
"Allowance Amount") as set forth on Exhibit B attached hereto and made a part
hereof.

               2.3.2. Capital Expenditure Holdback. At Closing, Buyer shall
deduct and retain from Seller's net proceeds of the Purchase Price the Capital
Expenditure Holdback. From and after Closing, Seller shall cause the Operators,
as tenants pursuant to the Lease (as hereinafter defined), to act diligently and
in good faith to cure, repair, maintain or replace, as applicable, the Capital
Repair Items. Buyer shall reimburse Seller for the cost incurred by the
applicable Operator to cure, repair or replace any Capital Repair Item from the
Capital Expenditure Holdback up to an amount not to exceed the applicable
Allowance Amount for any Capital Repair Item or the amount of the Capital
Expenditure Holdback for all Capital Repair Items. Buyer shall provide such
reimbursement to Seller only at such time as the Capital Repair Item has been
completed to Buyer's reasonable satisfaction and Seller has presented evidence
(in the form of final lien waivers from all contractors and subcontractors) that
any portion of the cost of such Capital Repair Item required to be paid by
Seller hereunder has been paid in full. Any cure, repair or replacement of a
Capital Repair Item at any Facility shall be performed by the applicable
Operator subject to, and in accordance with, the terms of the Lease applicable
to such activities (i.e. the sections of the Lease describing repairs and
maintenance and alterations). If the cost incurred by any Operator to complete a
Capital Repair Item exceeds the applicable Allowance Amount, such excess cost
shall be paid by Seller without contribution from Buyer or the applicable
Operator. Any Capital Repair Item shall be repaired, cured, maintained or
replaced in a good, workmanlike and lien free fashion. If any part of the
Capital Expenditure Holdback has not been applied by Buyer towards the cost of
Capital Repair Items after the completion of all Capital Repair Items in
accordance with the requirements of this Section 2.3, Buyer shall promptly pay
such amounts to Seller after Seller's written request therefor. If Seller has
not caused the Operators to repair, maintain, cure or replace the Capital Repair
Items within twelve (12) months after Closing, Buyer shall have the right to
repair, maintain, replace or cure such Capital Repair Items on behalf of such
Operators and at Seller's sole cost. Any costs so incurred by Buyer shall first
be deducted from the Capital Expenditure Holdback. If the cost incurred by Buyer
to perform any such Capital Repair Items exceed the amounts remaining in the
Capital Expenditure Holdback, Seller shall promptly, and in any event within ten
(10) business days, reimburse Buyer for such excess costs. Delinquent amounts
owing from Seller to Buyer pursuant to this Section 2.3 shall bear interest at
the Delinquency Rate.

               2.3.3. THC Responsibility/Survival. THC shall be liable, on a
joint and several basis, for all of the obligations of Seller set forth in this
Section 2.3. The terms of this Section 2.3 shall survive Closing and the
delivery of any conveyance documentation.

          2.4. General. Provided that all conditions precedent to Buyer's
obligations to close that are set forth in this Agreement ("Conditions
Precedent") have been satisfied and

                                       7



fulfilled, or waived in writing by Buyer, the Purchase Price shall be paid to
Seller at Closing, plus or minus prorations and other adjustments hereunder and
less the Transaction Closing Costs and the Capital Expenditure Holdback, by
federal wire transfer of immediately available funds. The portion of the
Purchase Price allocated to each Project is set forth on Exhibit C attached
hereto and made a part hereof (each an "Allocated Purchase Price").

     3. CLOSING. The purchase and sale contemplated herein shall be consummated
at a closing ("Closing") to take place at the New York offices of Dechert, 30
Rockefeller Center, New York, New York 10112, or a location as otherwise agreed
by the parties, on the basis of a "New York-style" closing with a representative
of the Title Company in attendance. The Closing shall occur prior to the close
of business on November 1, 2002, or at such other time as the parties may agree
upon in writing (the "Closing Date"). The Closing shall be effective as of 12:01
A.M. on the Closing Date. Notwithstanding the foregoing, the risk of loss of all
or any portion of the Property shall be borne by Seller up to and including the
actual time of the Closing and wire transfer of the Purchase Price to Seller,
and thereafter by Buyer, subject, however, to the terms and conditions of
Section 11 below.

     4. TITLE AND SURVEY MATTERS.

          4.1. Title. At Closing, Seller agrees to deliver (or cause to be
delivered) to Buyer for each Project a Special Warranty Deed (or its equivalent
in the State in which the Project is located) (collectively, the "Deeds"), in
recordable form, conveying each Project to Buyer or Buyer's assignee or
designee, free and clear of all liens, claims and encumbrances except for the
Permitted Exceptions (as hereinafter defined). Buyer has ordered and obtained,
at Seller's sole cost, a commitment (the "Title Commitment"), issued by First
American Title Insurance Company (the "Title Company"), and ordered from the
National Title Services office of the Title Company in Chicago, Illinois: 30
North LaSalle Street, Suite 310, Chicago, Illinois 60602, Attn: Greg Chaparro
(phone (312) 917-7222, facsimile (312) 553-0480, email gchaparro@firstam.com)
for an owner's title insurance policy (the "Title Policy"), ALTA Policy Form
B-1992, or other form of policy reasonably acceptable to Buyer, in the full
amount of the Purchase Price insuring Buyer as the fee simple owner of the Land
and the Improvements. As a Condition Precedent to Buyer's obligation to proceed
to Closing, the Title Company shall issue the Title Policy (which may be in the
form of a mark-up reasonably acceptable to Buyer, or a so-called "pro-forma" of
the Title Policy executed by the Title Company) to Buyer at Closing insuring
Buyer as the fee simple owner of the Land and the Improvements in the full
amount of the Purchase Price, with all standard and general printed exceptions
deleted so as to afford full "extended form coverage," together with all of the
endorsements, to the extent available in the jurisdiction in which the Project
is located, set forth on Exhibit E attached hereto and made a part hereof
(collectively, the "Endorsements"). For purposes of this Agreement, "Permitted
Exceptions" shall mean with respect to each Project: (A) real estate taxes,
assessments and other governmental levies, fees or charges imposed with respect
to such Project which are not due and payable as of the Closing Date; (B)
zoning, building codes and other land use laws regulating the use or occupancy
of such Project or the activities conducted thereon which are imposed by any
governmental authority having jurisdiction over such Project which are not
violated by the current use or occupancy of such Project or the operation of the
Business, or any violation which would not have a material adverse effect on
Seller's business; (C) easements, covenants, conditions, restrictions and
matters affecting title to such Project that were set forth in the Title

                                       8



Commitment that have not been deleted and removed from the Title Policy; and (D)
those matters disclosed by the Surveys (as hereinafter defined).

          4.2. Survey. Seller has ordered, at Seller's sole cost and expense,
as-built surveys of all of the Land and the Improvements (collectively, the
"Surveys"), prepared by surveyors duly registered in the State in which the
various Projects are located. The Surveys have been certified as of a date
within thirty (30) days of the Closing by said surveyors as having been prepared
in accordance with the most currently available minimum detail and
classification requirements of the land survey standards of the American Land
Title Association.

     5. SELLER'S REPRESENTATIONS AND WARRANTIES. Each of Seller and THC
represents and warrants to Buyer that the following matters are true as of the
Closing Date:

          5.1. Ownership. Seller is the owner in fee simple of the Projects
identified as numbers 1 through 4 on Schedule 1 attached hereto and made a part
hereof. Current Owner is the fee simple owner of the Projects identified as
numbers 5 through 7 on Schedule 1 attached hereto and made a part hereof (the
"Current Owner Projects").

          5.2. No Assignment. During the period commencing as of the execution
of the Term Sheet by Seller through and including the Closing Date (the
"Executory Period"), Seller has not (nor has Current Owner) assigned, alienated,
liened, encumbered or otherwise transferred all or any part of the Property or
any interest, easement or right of way therein. Without limitation or of the
foregoing, during the Executory Period, Seller has not (nor has Seller permitted
Current Owner to) enter into any agreement, arrangement, letter of intent or
understanding, formal or informal, for the sale, transfer or conveyance of all
or any portion of the Property, conditional or otherwise.

          5.3. Change in Conditions. During the Executory Period, Seller has, to
the extent Seller has obtained knowledge thereof, promptly notified Buyer of any
material change in any condition with respect to the Property, or of the
occurrence of any event or circumstance, that makes any representation or
warranty of (i) Seller to Buyer under this Agreement had the same been made at
any time during the Executory Period or (ii) Current Owner to Seller or THC
under the Millennium Agreement, materially untrue or misleading, or any covenant
of Seller under this Agreement had the same been applicable at any time during
the Executory Period (or Current Owner under the Millennium Agreement),
incapable or less likely to be performed. During the Executory Period, and
continuing through the Closing Date, Seller has promptly, after its receipt,
delivery, filing or preparation, as the case may be, delivered to Buyer true and
complete copies of: (i) any Operator Reports (as hereinafter defined) received
or prepared by Seller (Current Owner or any Current Operator); (ii) any reports,
filings, applications, or petitions made by Seller (or Current Owner or any
Current Operator) to any governmental or quasi-governmental authority (including
any Health Departments) with respect to any Facility; (iii) any material written
correspondence or notices to or from Seller, Current Owner, any Current Operator
or governmental or quasi-governmental authority (including any Health
Departments) with respect to any Facility; and (iv) any other document,
information, material, notice or comparable report or item that constitutes a
Document but either did not exist, was not discovered or was not in Seller's
possession or reasonable control as of the date of the Term Sheet.

                                       9



          5.4. No Conveyance. During the Executory Period, neither Seller, THC,
nor any of their respective affiliates, agents, representatives, brokers or
employees (collectively, the "Seller Representatives"), have: (i) sold,
transferred, conveyed, assigned, liened, financed, encumbered or otherwise
disposed of, directly or indirectly, all or any portion of the Property, THC or
Seller (or any assets of THC or Seller other than in the ordinary course) other
than in connection with the Loan Transaction; or (ii) solicited, negotiated,
entertained proposal for, or executed and entered into any agreement,
arrangement or understanding for (formal or informal, conditional or otherwise):
(x) the sale, transfer or conveyance of the Property, THC or Seller (or any
assets of THC or Seller other in the ordinary course) to any person or entity,
or (y) the financing of the Property, THC or Seller other than in connection
with the Loan Transaction. Without limitation of the foregoing, during the
Executory Period, neither Seller nor THC has consented to any of the foregoing
activities on the part of Current Owner or with respect to the Current Owner
Projects.

          5.5. Provider Agreements. During the Executory Period, Seller has not
(nor has Seller permitted Current Owner or any Current Operator to), other than
in accordance with normal and commercially reasonable business practices,
changed the terms of any Provider Agreements or altered the terms of its (or
their) participation in Medicare (as hereinafter defined), Medicaid (as
hereinafter defined) or any Third Party Payor Programs (as hereinafter defined).
During the Executory Period, Seller has (and Current Owner and the Current
Operators have) timely filed any and all Operator Reports and otherwise complied
with the terms of the Operator Licenses and Provider Agreements.

          5.6. Documents. Prior to the date hereof, Seller has delivered to
Buyer true and complete copies of all of the material documents, Permits,
Provider Agreements, Operator Licenses, Certificates of Need, reports, studies,
materials and other information described on Exhibit D attached hereto and made
a part hereof (collectively, the "Documents") in its possession or reasonable
control. To the best of Seller's knowledge, none of the Documents contain any
untrue statement of a fact or omit to state a fact necessary to make the
statement of fact contained therein misleading in any material respect. To the
best of Seller's knowledge, the Documents represent all of the materials,
reports, agreements, studies, books, records, documents, Certificates of Need,
Permits, Provider Agreements, instruments and comparable information necessary
for Buyer to make an informed decision concerning its acquisition of the
Property.

          5.7. Defaults. Neither Seller, any Current Operator, nor Current Owner
have received any written notice alleging that Seller, Current Owner or any
Current Operators are in default under any of the Permits, Provider Agreements,
or Certificates of Need, nor does there exist a material default under any of
the Permits, Provider Agreements, or Certificates of Need. For purposes of this
Agreement, the term "Provider Agreements" shall mean any provider agreements
held by or issued to Seller, Current Owner or the Current Operators under which
the Facilities are eligible to receive payment under Title XVIII ("Medicare"),
Title XIX ("Medicaid") or any other governmental or quasi-governmental third
party payor programs or any private or quasi-private healthcare reimbursement or
private payor programs (including so-called "HMO" and "PPO" programs) ("Third
Party Payor Programs") as well as any other agreement, arrangement, program or
understanding with any federal, state or local governmental agency or
organization or private organization pursuant to which the Facilities qualify
for

                                       10



payment or reimbursement for medical or therapeutic care or other goods or
services rendered or supplied to any resident.

          5.8. Physical Condition. Except for the Capital Repair Items, (i) the
Improvements contain no material structural defects, (ii) the Land and the
Improvements are free of insect and rodent infestation, (iii) the roofs of the
Improvements are free of leaks or other defects, (iv) all mechanical and utility
systems servicing the Improvements (including, but not limited to, the heating,
ventilation and air conditioning systems and all components thereof) are in good
condition and proper working order, free of material defects and are in
compliance with all applicable laws and codes; and (v) the Improvements are free
of mold.

          5.9. Utilities. To the best of Seller's knowledge, all water, sewer,
gas, electric, telephone, drainage and other utility equipment, facilities and
services required by law or necessary for the operation of the Facilities are
installed and connected pursuant to valid permits; are adequate to service the
Facilities; and are in good operating condition, reasonable wear and tear
excepted. Neither Seller nor Current Owner has received any written notice
advising or alleging of the existence of any fact or condition that would or
could result in the termination or impairment of the furnishing of service to
the Facilities of water, sewer, gas, electric, telephone, drainage or other such
utility services.

          5.10. Employees. Seller and Current Owner have no employees at the
Facilities.

          5.11. Compliance with Laws and Codes. The Facilities, and the use and
operation thereof, are in substantial compliance with all applicable municipal
and other governmental laws, ordinances, rules, regulations, codes, licenses,
permits and authorizations (including the Permits and the Provider Agreements).

          5.12. Litigation. Except as disclosed on Exhibit F attached hereto and
made a part hereof, there are no pending or threatened, judicial, municipal or
administrative proceedings affecting the Property, or in which Seller, the
Current Owner or the Current Operators are or will be a party by reason of
Seller's and Current Owner's ownership or Seller's or the Current Operators'
operation of the Property or any portion thereof, including, without limitation,
proceedings for or involving collections, condemnation, eminent domain, alleged
building code or environmental or zoning violations, or personal injuries or
property damage alleged to have occurred on the Land or the Improvements or by
reason of the condition, use of, or operations on, the Land or the Improvements.
No attachments, execution proceedings, assignments for the benefit of creditors,
insolvency, bankruptcy, reorganization or other proceedings are pending or
threatened against Seller or against Current Owner or any Current Operators nor
are any of such proceedings contemplated by Seller or by Current Owner or any
Current Operators.

          5.13. Insurance. Seller, or the Current Owner, as applicable, now has
in full force and effect the insurance coverages relating to each Project
described on Exhibit G attached hereto and made a part hereof (the "Insurance
Policies"). Neither Seller, nor Current Owner nor any Current Operator have
received any written notice from any insurance carrier alleging any defects or
inadequacies with respect to any Project that, if not corrected, would result in
termination of insurance coverage or increase in the normal and customary cost
of any or all of

                                       11



the Insurance Policies. For each Facility, Seller, Current Owner or any Current
Operator, as applicable, have made reserves for expenses relating to malpractice
or professional liability claims that are adequate and sufficient in the
exercise of commercially reasonable judgment and normal commercial practice,
which reserves have been approved by their respective independent auditors and
insurance actuaries and are accurately and completely reflected in their most
recent Financial Statements and Operating Statements. None of Seller, Current
Owner or any Current Operator have been advised, orally or in writing, formally
or informally, by their respective insurance carriers, any reinsurance
providers, their independent accountants, any governmental or quasi-governmental
authority or any third party payor program providers of any pending, threatened
or contemplated increase in any such reserves for expenses relating to
malpractice or professional liability claims, nor are any proceedings,
investigations, analysis or reviews of such reserves for malpractice or
professional liability pending, threatened or contemplated. The Documents
include accurate and complete copies of any and all: (i) actuarial reports,
studies, reviews and analysis prepared by or on behalf of Seller, Current Owner,
any Current Operator or their respective insurance carries, quarterly and
otherwise, concerning Seller's, Current Owner's or any Current Operator's
reserves for expenses relating to malpractice or professional liability claims
and malpractice or professional liability insurance; and (ii) material
information, analysis, correspondence to and from Seller, Current Owner, any
Current Operator and their respective insurance carriers, reinsurance providers,
accountants, any governmental or quasi-governmental authorities and any third
party payor program providers concerning Seller's, Current Owner's or Current
Operator's reserves for expenses relating to malpractice or professional
liability claims and malpractice and professional liability insurance.

          5.14. Financial Information, Absence of Any Undisclosed Liabilities.

               5.14.1. Financial Information. The Operating Statements and the
Financial Statements (each as defined in Exhibit D attached hereto and made a
part hereof) delivered by Seller to Buyer are accurate and complete copies
thereof and represent all of the Operating Statements and Financial Statements
prepared and relied upon by Seller, Current Operator or the Current Owner in the
conduct of their respective businesses with respect to the periods covered
therein. The Operating Statements and the Financial Statements accurately set
forth the results of the operations of the Facilities for the periods covered.
The Operating Statements have been prepared in accordance with sound property
management practices consistently applied during the periods described therein
and the Financial Statements have been prepared in accordance with GAAP
consistently applied during the periods described therein, and fairly present
the assets and liabilities and the results from operations of the Facilities.
There has been no material adverse change in the financial conditions or
operation of the Facilities since the periods covered by the Operating
Statements and the Financial Statements. Neither Seller, Current Owner nor any
Current Operator has any liabilities or obligations, and there is no basis for
any assertion against Seller, Current Owner or any Current Operator of any
liability or obligations, except those liabilities or obligations which are (a)
fully reflected or adequately reserved against in the Financial Statements, (b)
disclosed in this Agreement or in the schedules hereto, or (c) incurred in the
ordinary course of business consistent with past practice from and after the
date of the last Operating Statement, which in the aggregate are not material to
Seller, Current Owner or any Current Operator, as applicable.

                                       12



               5.14.2. Absence of Certain Changes. Since December 31, 2001,
Seller, Current Owner and the Current Operators, have operated the Facilities in
the ordinary course, consistent with past practice, and none of such parties
have: (i) suffered any adverse change or any event, occurrence, development or
state of circumstances or facts which has had or could reasonably be expected to
result in or have an adverse effect on the ownership and operation of any
Facility; (ii) incurred, assumed or guaranteed any indebtedness for money
borrowed, or incurred any liabilities or obligations other than in the ordinary
course of business; (iii) paid, discharged or satisfied any claim, lien or
liability, other than those: (a) which were reflected or reserved against in the
Financial Statements, and which will be paid, discharged or satisfied in the
ordinary course of business consistent with past practice or (b) which were
incurred and paid, discharged or satisfied since the date of the last applicable
Financial Statement in the ordinary course of business consistent with past
practice; (iv) written down the value of any inventory, or written off as
uncollectible any notes, accounts or other receivables or any portion thereof,
except in the ordinary course of business consistent with past practice; (v)
leased or acquired any capital asset other than in the ordinary course of
business; (vi) entered into any transaction with any of their respective
affiliates, other than in the ordinary course of, and pursuant to the reasonable
requirements of, the business at the Facilities and upon terms that are no less
favorable than could be obtained in a comparable transaction with a person who
was not such an affiliate; or (vii) agreed to, or made any commitment to, do any
of the foregoing.

          5.15. Re-Zoning. Except as set forth in the Documents, the use of each
Facility, together with the ancillary uses thereto, are permitted under the
applicable municipal zoning ordinances, or special exceptions, variances or
conditional uses thereto, and the Facilities comply with all conditions,
restrictions and requirements of such zoning ordinances and amendments thereto.
Neither Seller nor Current Owner are a party to nor is there any threatened
proceeding for the rezoning of the Land or the Improvements or any portion
thereof, or the taking of any other action by governmental authorities that
would have an adverse or material impact on the value of the Property or use
thereof.

          5.16. Authority. Schedule 4 attached hereto and made a part hereof
sets forth a list of all of the individuals and entities that (i) are affiliated
with, controlled by, or under common control with (either directly or
indirectly) Seller, THC, Current Owner or any Current Operator; (ii) have an
interest (either directly or indirectly) in the Property; (iii) have interest
(either directly or indirectly) in the Property that will be pledged as
collateral in connection with the Loan Transaction; and (iv) are guarantors,
affiliated management companies, or general partners (or managing members, as
applicable) of Seller, THC, Current Owner or any Current Operator (collectively,
"Seller Related Parties"), and holders of controlling interests in the Seller
Related Parties. The execution and delivery of this Agreement by Seller, and the
performance of this Agreement by Seller, have been duly authorized by Seller,
and this Agreement is binding on Seller and enforceable against Seller in
accordance with its terms. No consent of any creditor, investor, judicial or
administrative body, governmental authority, Health Department or other
governmental body or agency, or other party to such execution, delivery and
performance by Seller is required. Neither the execution of this Agreement nor
the consummation of the transactions contemplated hereby will (i) result in a
breach of, default under, or acceleration of, any agreement to which Seller is a
party or by which Seller or the Property are bound; or (ii) violate any
restriction, court order, permit, agreement or other legal obligation to which
Seller and/or any Project is subject.

                                       13



          5.17. Real Estate Taxes. Neither Seller nor Current Owner has received
any written notice of any proposed increase in the assessed valuation of the
Land or the Improvements other than increases in the assessed valuation of the
Land or the Improvements occurring in the ordinary course to all properties in
the jurisdictions which an applicable Project is located. There is not now
pending, and Seller agrees that it will not, without the prior written consent
of Buyer (which consent will not be unreasonably withheld or delayed), institute
(or consent to the institution by Current Owner) prior to the Closing Date, any
proceeding or application for a reduction in the real estate tax assessment of
the Land or the Improvements or any other relief for any tax year. There are no
outstanding written agreements with attorneys or consultants with respect to
real estate taxes that will be binding on Buyer or any Project after the
Closing. Other than the amounts disclosed by the tax bills, no special
assessments of any kind (special, bond or otherwise) are or have been levied
against any Project, or any portion thereof, that are outstanding or unpaid,
and, none will be levied prior to Closing.

          5.18. Operator Matters.

               5.18.1. Operator Licenses and Provider Agreements. Seller,
Current Owner or the Current Operators, as applicable, have been issued and are
in good standing with respect to any and all permits, licenses, regulatory
approvals, approvals, Certificates of Need, accreditations and comparable
authorizations (collectively, "Operator Licenses") from all applicable
governmental and quasi-governmental authorities (including, but not limited to,
any Health Department) necessary or advisable for the use, operation and
maintenance of the applicable Facility and the conduct of Seller's or the
Current Operator's business therein. Seller and each Current Operator has
obtained and is in good standing with respect to any and all Provider Agreements
under which the Seller, the applicable Current Operator and/or Facility is
entitled to receive payment or reimbursement under Medicare, Medicaid or any
Third Party Payor Programs. None of Seller, Current Owner or the Current
Operators are in violation of any law, ordinance, rule or regulation, any
Operator Licenses or any Provider Agreements. None of Seller, Current Owner or
the Current Operators are the subject of any investigation, proceeding or
examination by any Health Department or other governmental or quasi-governmental
authority commission, board or agency concerning an actual or alleged violation
of any laws, ordinances, rules or regulations, any Operator Licenses or any
Provider Agreements. The Operator Licenses and the Provider Agreements (i) may
not be, and have not been and will not be, transferred to any location other
than the Facilities; (ii) are not and will not be pledged as collateral security
for any loan or indebtedness that will not be released at Closing; and (iii) are
held and will remain free from restrictions or known conflicts which would
materially impair the use or operation of the Facilities and shall not be
provisional, probationary or restricted in any way. At Closing, the foregoing
representation and warranty shall be true and current with respect to the
Facilities, Seller, Current Owner, all Current Operators and all of the
Operators which will be tenants under the Lease.

               5.18.2. Litigation. Neither Seller, Current Owner nor any Current
Operator is involved in any litigation, proceeding, or investigation (by or with
any person, resident, Health Department or governmental or quasi-governmental
authority) which if determined or resolved adversely would have a material
adverse impact on the conduct by the Seller, Current Owner or the applicable
Current Operator of its business. Other than regularly scheduled audits and
reviews, no validation review, peer review or program integrity review

                                       14



related to any Facility or Seller, Current Owner or any Current Operator has
been conducted by any entity, commission, board or agency in connection with the
Medicare program, and no such reviews are schedule, pending or threatened
against or affecting any Facility, Seller, Current Owner or any Current
Operator. At Closing, the foregoing representation and warranty shall be true
and current with respect to the Facilities, Seller, Current Owner, all Current
Operators and all of the Operators which will be tenants under the Lease.

               5.18.3. Licensing Matters. With respect to each Facility, the
Operator Licenses and the Provider Agreements represent all of the licenses,
permits, approvals, and provider agreements necessary in order to operate the
Facilities as healthcare facilities, and receive regular reimbursement for
services rendered under Medicare and Medicaid, and, no other material franchise,
license, permit, order or approval of any governmental or quasi-governmental
authority is material to or necessary for Seller, Current Owner or any Current
Operator to receive regular reimbursement for services rendered under Medicare
and Medicaid. Neither Seller, Current Owner, any Current Operators nor any of
their respective representatives, officers, directors, agents or employees have
been disqualified from participating in either the Medicare or Medicaid
programs. Without limitation of the foregoing, none of Seller, Current, Owner,
any Current Operators or their respective officers, directors or managing
employees or other employees or agents has engaged in any activities which are
prohibited under criminal law, or are cause for civil penalties or mandatory or
permissive exclusion from Medicare, or any other state health care program.
There is no, and there shall continue to be no, threatened, existing or pending
revocation, suspension, termination, probation, restriction, limitation or
nonrenewal affecting Seller, Current Owners, the Current Operators or the
Facilities of any participation or Provider Agreements with Medicare, Medicaid
or any Third Party Payor Programs to which Seller, Current Owners or the Current
Operators presently or at any time hereafter are subject. All Medicaid, Medicare
and private insurance cost reports and financial reports submitted by Seller
Current Owner or any Current Operators are and will be materially accurate and
complete and have not been and will not be misleading in any material respects.
At Closing, the foregoing representation and warranty shall be true and current
with respect to the Facilities, Seller, Current Owner, any Current Operators and
all of the Operators which will be tenants under the Lease.

               5.18.4. Operator Reporting. Seller has delivered to Buyer
accurate and complete copies of all of the census information concerning the
number of licensed beds occupied by bona fide residents, monthly financial
statements and other reports, materials and information concerning Seller,
Current Owner and each Current Operator's business operations and compliance
with laws, ordinances, rules, regulations, Operator Licenses and Provider
Agreements that are submitted by Seller, Current Owner or any Current Operator,
for all of the Facilities, including, but not limited to, Medicare and Medicaid
cost reports relating to the Facility (the "Operator Reports") for the periods
described in Exhibit D attached hereto and made a part hereof. Except as may
otherwise be disclosed in the Documents, the Operator Reports are accurate in
all material respects. All materials reports, documents and notices, including,
without limitation, all Medicare cost reports, required to be filed, maintained
or furnished by Seller, Current Owner and each Current Operator to any
governmental agency with respect to any Facility have been so filed, maintained
or furnished. There are no defects or deficiencies to or with respect to the
Facilities or any Provider Agreement cited in any survey or cost report
provided, submitted or made by or to any governmental or quasi-governmental
authority under Medicare, Medicaid, any Third Party Payor Program or any law,
ordinance, rule

                                       15



or regulation that remain uncured. At Closing, the representation and warranty
set forth in this Section 5.18.4 shall be true and current with respect to the
Facilities, Seller, any Current Operators and all of the Operators which will be
tenants under the Lease.

               5.18.5. No Violations. None of Seller, Current Owner, any Current
Operator nor the Facilities is or will be the subject of any proceeding by any
governmental agency, and no notice of any violation has been or will be issued
by a governmental agency that would, directly or indirectly, or with the passage
of time:

               (i) Impact Seller's or any Current Operator's ability to accept
     and/or retain patients at a Facility; or

               (ii) Have an adverse effect on Seller's or any Current Operator's
     ability to accept and/or retain patients or operate the Facilities or
     result in the imposition of a fine or sanction or a lower rate
     certification or a lower reimbursement rate for services rendered to
     eligible patients; or

               (iii) Modify, limit or annul or result in the transfer,
     suspension, or revocation or imposition of probationary use of any of the
     Operator Licenses; or

               (iv) Affect Seller's or any Current Operator's continued
     participation in Medicare, Medicaid or any Third Party Payor Programs, or
     any successor programs thereto, at then current rate certifications. At
     Closing, the foregoing representation and warranty shall be true and
     current with respect to the Facilities, Seller, any Current Operators and
     all of the Operators which will be tenants under the Lease.

               5.18.6. No Facility Violations. No Facility has received a "Level
A" (or equivalent) violation under Medicare or Medicaid, as applicable, and no
statement of charges or deficiencies has been made or penalty enforcement action
has been undertaken against the Facilities, any Current Operator, Current Owner
or Seller, or against any officer or director, of any Current Operator, Current
Owner or Seller by any governmental agency during the last three calendar years,
and there have been no violations during the period of time in which Seller or
Current Owner has owned the particular Facility which would threaten the
Facilities', any Current Operator's or Seller's certification for participation
in Medicare or Medicaid or any other Third Party Payors' Programs. At Closing,
the foregoing representation and warranty shall be true and current with respect
to the Facilities, Seller, any Current Operators and all of the Operators which
will be tenants under the Lease.

               5.18.7. No Reimbursement Audits or Appeals. There are no current,
pending or outstanding Medicaid, Medicare or Third Party Payor Programs'
reimbursement audits or appeals pending at the Facilities which (x) are not
normal and customary on an annual basis in the ordinary course of business for
facilities similar to the Facilities and (y) would have a material and adverse
effect on the Facilities. At Closing, the foregoing representation and warranty
shall be true and current with respect to the Facilities, Seller, any Current
Operators and all of the Operators which will be tenants under the Lease.

               5.18.8. No Recoupments Efforts. There are no current or pending
Medicaid, Medicare or Third Party Payor Programs' recoupment efforts at the
Facilities which

                                       16



are (x) not normal and customary on an annual basis in the ordinary course for
facilities similar to the Facilities and (y) would have a material and adverse
effect on the Facilities. Neither Seller nor any Current Operator are a
participant in any federal program whereby any governmental agency may have the
right to recover funds by reason of the advance of federal funds. At Closing,
the foregoing representation and warranty shall be true and current with respect
to the Facilities, Seller, any Current Operators and all of the Operators which
will be tenants under the Lease.

               5.18.9. Admissions Hold. There is no suspension, ban or
limitation upon the admission of patients or residents to any Facility (i) by
any governmental or quasi-governmental agency having jurisdiction over the
licensure or Medicare or Medicaid certification of such Facility or (ii)
pursuant to any applicable law, regulation or ordinance.

               5.18.10. TAGS. No state or federal regulatory agency with
jurisdiction over any Facility has: (i) made a substandard quality of care
determination regarding such Facility; (ii) made a determination that such
Facility is not in substantial compliance with any applicable regulatory
requirements; (iii) designated any portion of such Facility or the entirety of
such Facility as part of a "poor performing chain"; (iv) cited deficiencies at
the scope and severity of a "G", "H" or higher with respect to such Facility; or
(v) taken adverse regulatory action with respect to such Facility including,
without limitation, the imposing of civil money penalties.

          5.19. United States Person. Seller and Current Owner are each a
"United States Person" within the meaning of Section 1445(f)(3) of the Internal
Revenue Code of 1986, as amended, and shall execute and deliver an "Entity
Transferor" certification at Closing.

          5.20. Other Taxes. The sale of the Property to Buyer hereunder is not
subject to, and does not subject Buyer to, any liability for income tax, retail
sales tax or bulk sales obligation under the law of the state in which any
portion of the Property is located.

          5.21. Permits. The Permits represent all of the permits, licenses,
approvals, Certificates of Need, provider agreements, covenants and other
comparable authorizations from governmental or quasi-governmental authorities
(including, but not limited to, any Health Department) required, necessary or
advisable to be issued or granted to Seller, the Current Owner or the Current
Operators in connection with the operation and ownership of the Facilities under
applicable laws, ordinances, rules and regulations. Neither Current Owner, any
Current Operator nor Seller is not in material violation of any Permits, nor has
Seller, Current Owner or any Current Operator received any written notice
alleging any material violation of any Permits. Schedule 3 contains an accurate
and complete list of (i) all Permits (including any Provider Agreements and
Certificates of Need), (ii) the parties to whom the same have been issued and
(iii) the parties who issue such Permits. Schedule 3 attached hereto also
identifies those Permits which are (i) only transferable upon receipt of consent
or approval from the parties identified as having issued such Permits or (ii)
not transferable. Schedule 3 attached hereto also identifies the Assumed
Permits, the Transition Permits (including each party that will rely on a
Transition Permit), the Transferred Operator Permits (including each party that
will assume each Transferred Operator Permit) and all of the Operator Approvals
(including each Operator that will receive each Operator Approval).

                                       17



          5.22. Condemnation. Neither Current Owner nor Seller has received any
written notice advising it of any pending or threatened condemnation or other
governmental taking proceedings affecting all or any part of the Land or the
Improvements.

          5.23. Agreement of Sale. Neither Seller nor any Seller Representative
(as hereinafter defined) is party to any agreement, arrangement or understanding
(formal or informal, conditional or otherwise) for: (i) the sale, transfer, or
conveyance of all or any portion of the Property or Seller (or any assets of
Seller other than in the ordinary course); or (ii) the financing of the Property
or Seller, except for the Millennium Agreement, the Term Sheet, the Commitment
Letter, the Loan Term Sheet and the Loan Commitment Letter.

          5.24. Millennium Agreement. Seller has delivered to Buyer a true,
accurate and complete copy of the Millennium Agreement and any and all
documents, materials, reports, agreements and comparable information provided by
Current Owner or to the Seller Parties to THC or Seller with respect to the
Property. THC, Current Owner and the Seller Parties have (i) complied with all
terms and conditions of the Millennium Agreement; (ii) performed all of their
respective obligations under the Millennium Agreement; and (iii) are not in
default under the Millennium Agreement. The Millennium Agreement provides THC
with the unconditional right to acquire the Current Owner Projects and Seller is
not aware of any fact or condition that has occurred or failed to occur that
would prevent Seller, THC or their successors and assigns from acquiring the
Current Owner Projects pursuant to the Millennium Agreement. THC has the
unconditional right pursuant to the Millennium Agreement to cause the Current
Owner Projects to be conveyed to Buyer and leased by Seller to the Operators at
Closing in accordance with this Agreement.

          5.25. Environmental Matters. Except as discussed on Schedule 5.25
attached hereto.

               5.25.1. No Violations. The Land and the Improvements have been
and continue to be owned and operated in material compliance with all
Environmental Laws (as hereinafter defined). To the best of Seller's knowledge,
except for matters which have been cured and remedied in accordance with all
Environmental Laws, there have been no past claims, complaints, notices, or
requests for information received by Seller, Current Owner, any Current
Operator, any Seller Parties or any Additional Seller Parties (as hereinafter
defined) with respect to any material violation or alleged violation of any
Environmental Law, any material releases of Hazardous Substances (as hereinafter
defined) or material liability for any corrective or remedial action for or
cleanup in each case with respect to the Land or the Improvements or any portion
thereof. For purposes of this Agreement, "Additional Seller Parties" shall mean
the members, partners or shareholders of Seller and Current Owner, and the
offices, directors, employees, agents or duly authorized managing agents of any
or all of Seller, Current Owner and their respective members, partners or
shareholders.

               5.25.2. Hazardous Substances Neither Seller, nor to the best of
Seller's knowledge, Current Owner, any Current Operator, any Seller Parties or
any Additional Seller Parties has transported, disposed of or treated, or
arranged for the transportation, disposal or treatment of, any Hazardous
Substances to or from the Land or the Improvements. No written notification of a
material release or discharge of a Hazardous Substance has been filed by or on

                                       18



behalf of, or received by, Seller, or, to the best of Seller's knowledge,
Current Owner or any Current Operator with respect to any of the Land or the
Improvements and, to the best of Seller's knowledge, none of the Land or the
Improvements are listed on the National Priorities List promulgated pursuant to
CERCLA or on any similar state list of sites requiring investigation or
clean-up.

               5.25.3. Underground Storage Tanks There are no underground
storage tanks at, in, under or about the Land that do not comply in all material
respects with all Environmental Laws. Neither Seller nor, to the best of
Seller's knowledge, Current Owner or any Current Operator has removed any
underground storage tanks from the ground.

               5.25.4. Asbestos and Polychlorinated Biphenyls. To the best of
Seller's knowledge, no asbestos, polychlorinated biphenyls or urea formaldehyde
is or has been present at the Land or the Improvements in a manner that does not
comply in all material respects with all Environmental Laws.

               5.25.5. Liens There are no environmental liens on any of the Land
or Improvements, and, to the best of Seller's knowledge, no governmental actions
have been taken or are in process that could subject any of the Land or
Improvements to such liens.

               5.25.6. Notices No notice, notification, demand, request for
information, citation, summons or order has been issued, no complaint has been
filed, no penalty has been assessed and no investigation or review is pending or
threatened by any governmental authority or other person with respect to any
actual or alleged violation by Seller, Current Owner, any Current Operator, any
Seller Parties or any Additional Seller Party of any Environmental Law in
connection with the Land or the Improvements or the conduct of business thereon.

               5.25.7. Definitions. For purposes of this Agreement,
"Environmental Laws" shall mean: all federal, state and local statutes,
regulations, directives, ordinances, rules, policies and guidelines having the
force and effect of law, court orders and decrees of any governmental authority
and any legally enforceable arbitration awards and the common law, which pertain
to environmental matters, contamination of any type whatsoever or health and
safety matters, as such have been amended, modified or supplemented from time to
time. For purposes of this Agreement, "Hazardous Substances" shall mean: any
chemical, pollutant, mold, contaminant, pesticide, petroleum or petroleum
product or by product, radioactive substance, solid waste (hazardous or
extremely hazardous), special, dangerous or toxic waste, substance, chemical or
material regulated, as hazardous or toxic under any Environmental Law. For
purposes of this Agreement, "Environmental Liabilities" shall mean: any and all
Losses and other liabilities arising in connection with or in any way relating
to the Property, or the use, operation or ownership of the Property by Seller,
Current Owner, the Seller Parties, any Current Operator, any Additional Seller
Parties or any of their affiliates, whether vested or unvested, contingent or
fixed, actual or potential, to the extent such losses or other liabilities (i)
arise under or relate to Environmental Laws, Hazardous Substances, or arise in
connection with or relate to any matter disclosed or required to be disclosed in
Schedule 5.25 attached hereto and (ii) arise from or relate in any way to
actions occurring or conditions existing prior to the Closing Date.

                                       19



Schedule 5.25 sets forth an accurate and complete list of all Environmental
Liabilities known to Seller as of the date of this Agreement.

          5.26. Buyer Permits; Assumed Permits. Prior to Closing, Seller and
Current Owner have reasonably assisted Buyer in its efforts to obtain any
permits, licenses, Certificates of Need, approvals, provider agreements or
comparable consents from any governmental or quasi-governmental authority
(including, but not limited to, any Health Departments) that are either a
condition of the sale of the Facilities to Buyer or necessary or advisable for
Buyer to obtain (rather than receive an assignment thereof from Seller (or
Current Owner or any Current Operator) or rely on comparable permits, licenses,
approvals or provider agreements issued to any Operator) in connection with
ownership, use and operation of the Facilities from and after Closing under any
and all applicable laws, ordinances, rules or regulations (collectively, "Buyer
Permits"). At Closing, Seller has sold, transferred, conveyed and assigned (or
has caused Current Owner to assign) all of the Assumed Permits to Buyer and
obtained any and all Transfer Approvals (as hereinafter defined) from
governmental or quasi-governmental authorities or the providers under any Third
Party Payor Programs necessary or advisable as a condition to (a) the assignment
to Buyer, and the assumption by Buyer, of the Assumed Permits and (b) the
Operational Transfer (as hereinafter defined).

          5.27. Operator Approvals; Transferred Operator Permits. On or prior to
Closing, Seller has used its best efforts to cause to be issued to, or received
by, the applicable Operator of each Facility any and all permits, licenses,
approvals, consents, Certificates of Need, provider agreements or other
comparable items from any governmental or quasi-governmental authority
(including, but not limited to, any Health Departments) that are either a
condition of the transfer of operations at the Facilities or necessary or
advisable in connection with the Operational Transfer and/or the use and
operation of the Facilities after Closing in the ordinary course, and the
receipt of regular reimbursement under Medicare, Medicaid or other Third Party
Payor Programs after Closing (such permits, licenses, approvals, provider
agreements and comparable items, the "Operator Approvals"). On or prior to
Closing, Seller, Current Owner or the Current Operators have sold, transferred,
conveyed and assigned to applicable Operators of each Facility all of the
Transferred Operator Permits (or in the case of the Assigned Interest Operations
allowed such Transferred Operator Permits to remain with the Assigned Interest
Operators) and obtained any and all Transfer Approvals necessary or advisable as
a condition of such transfer (or allowing the Transferred Operator Permits to
remain with the Assignment Interest Operators, as applicable). Without
limitation of the foregoing, the Transferred Operator Permits represent all of
the Operator Licenses that (a) should be sold, transferred, conveyed and
assigned (or allowed to remain with the Assigned Interest Operators) to the
Operators as part of the Operational Transfer or (b) are necessary or advisable
in connection with the Operational Transfer and/or the use and operation of the
Facilities after Closing in the ordinary course, and the receipt of regular
reimbursement under Medicare, Medicaid or other Third Party Payor Programs after
Closing in the ordinary course.

          5.28. Transition Permits. On or prior to Closing, Seller, Current
Owner or the Current Operators have taken such actions; filed such applications,
notices, petitions and transfers; and obtained such consents, approvals,
licenses, permits or permission from governmental or quasi-governmental
authorities and the providers under any Third Party Payor Programs as are
required, necessary or advisable to allow the Operators to rely upon, use and

                                       20



employ the Transition Permits for the use and operation of the Facilities for
their primary intended purpose from and after Closing in the ordinary course and
the receipt of regular reimbursement under Medicare, Medicaid or any Third Party
Payor Programs from and after Closing in the ordinary course, until the
Operators receive the Operator Approvals necessary to replace such Transition
Permits.

          5.29. Operational Transfer. On or prior to Closing, Seller, Current
Owner or the Current Operators, as applicable and at Seller's sole cost, have
taken any and all necessary actions; obtained and filed such applications,
petitions and transfers (including, but not limited to, the Transfer Notices (as
hereinafter defined) and the Transfer Approvals); made such assignments,
conveyances and transfers to and for the benefit of the Operators (including,
but not limited to, the assignment of the Transferred Operator Permits); caused
such permits, licenses, approvals and provider agreements (including, but not
limited to, certain of the Operator Approvals) to be issued to and for the
benefit of the Operators; and obtained all such approvals, consents, licenses
and permits as are necessary to allow: (a) the Operators to rely upon, use and
employ the Transition Permits and (b) to allow the Assigned Interest Operators
to continue to rely upon and employ the Transferred Operation Permits after
Closing as are necessary, desirable, advisable or required such that the
day-to-day operations of the Facilities, as healthcare facilities, are
transferred and transitioned, practically and legally, to the Operators
simultaneously with Closing without interruption of the business activities
therein, regulatory or otherwise (such transfer of operations, the "Operational
Transfer"). Prior to Closing, Seller has, at Seller's cost, (i) used its best
efforts to obtain such consents, approvals and permits from governmental and
quasi-governmental authorities ("Transfer Approvals"); and (ii) filed and
submitted such petitions, notices and applications ("Transfer Notices") as are
necessary or advisable (a) in connection with (1) the transfer and conveyance of
the Facilities by Seller to Buyer and (2) the Operational Transfer and (b) to
allow the Operators (including the Assigned Interest Operators) to rely on the
Transition Permits and to use and employ the Transferred Operator Permits from
and after Closing.

All representations and warranties made by Seller in this Agreement shall
survive the Closing for a period of two (2) years and shall not merge into any
conveyancing documentation delivered at Closing. Except as otherwise expressly
set forth herein, the representations and warranties of each Seller and THC in
this Section 5 are the sole and exclusive representations and warranties of each
Seller and THC with respect to environmental, health and safety matters,
including without limitation, all matters arising under Environmental Laws or
relating to Hazardous Substances.

          5.30. 8-K Requirements. Upon Buyer's request, for a period of two (2)
years after Closing, Seller or Current Owner (with respect to the Current Owner
Projects) shall make the Operating Statements, the Financial Statements and any
underlying financial data associated therewith available to Buyer for
inspection, copying and audit by Buyer's designated accountants, and at Buyer's
expense. Seller or Current Owner (with respect to the Current Owner Projects)
shall provide Buyer, but without third-party expense to Seller or Current Owner,
with copies of, or access to, such factual information as may be reasonably
requested by Buyer, and in the possession or control of Seller or Current Owner,
to enable Ventas, Inc. to file Form 8-K and the required financial statements of
Buyer, if, as and when such filing may be required by the Securities and
Exchange Commission. Without limitation of the foregoing, Buyer or its

                                       21



designated independent or other accountants may audit the required Operating
Statements and the Financial Statements, and Seller or Current Owner (with
respect to the Current Owner Projects) shall supply such documentation in its
possession or control and respond to inquiries as Buyer or its accountants may
reasonably request in order to complete such audit, and Seller or Current Owner
(with respect to the Current Owner Projects) shall execute an audit
representation letter in the form required by the Buyer's accountants
substantially in the form of audit representation letter contained in Exhibit I
attached hereto or made a part hereof.

All covenants made in this Agreement by Seller shall survive the Closing for a
period of two (2) years and shall not be merged into any instrument of
conveyance delivered at Closing.

     6. CONDITIONS PRECEDENT TO CLOSING.

          6.1. Buyer's obligations to proceed to Closing shall be conditioned
upon:

               6.1.1. Pending Actions. At Closing, there shall be no
administrative agency, litigation or governmental proceeding of any kind
whatsoever, pending or threatened, that, after Closing, would, in Buyer's
reasonable discretion, materially and adversely affect the value of any
Facility, or the ability of Buyer or any Operator to operate any Facility in the
manner it is being operated on the date of this Agreement. Without limitation of
the foregoing, at Closing, all of the Permits, Operator Licenses, Operator
Approvals and Provider Agreements shall be in good standing in all material
respects and neither Seller, Current Owner nor any Current Operator shall have
received any written notice alleging or advising of any violation of any
Permits, Operator Licenses or Provider Agreements.

               6.1.2. Representations and Warranties. As of the Closing Date,
the representations and warranties made by Seller to Buyer shall be true,
accurate and correct in all material respects.

               6.1.3. Title Policy. At Closing, the Title Company shall issue
the Title Policy to Buyer in the form required by Section 4.1 above inclusive of
the Endorsements.

               6.1.4. Buyer Permits. Buyer shall have obtained and/or been
issued any and all Buyer Permits from governmental or quasi-governmental
authorities that are either a condition of the sale of the Facilities to Buyer
or necessary or advisable for Buyer to obtain (rather than receive an assignment
thereof from Seller (or Current Owner) or rely on comparable permits, licenses,
approvals or provider agreements issued to a Operator) in connection with the
use, operation and ownership of the Facilities from and after Closing in the
ordinary course of business.

               6.1.5. Operator Approvals. The Operators shall either (i) have
obtained and/or been issued any and all Operator Approvals from governmental or
quasi-governmental authorities or Transferred Operator Permits or (ii) obtained
the right to rely upon, employ and use any and all Transition Permits that are
either a condition of the transfer of operations at the Facilities to the
Operators or necessary or advisable in connection with the Operational Transfer
and/or the use and operation of the Facilities (and the receipt by the
Facilities and the Operators of regular reimbursement under Medicare, Medicaid
and other Third Party Payor Programs) after Closing in the manner in which they
are currently being operated.

                                       22



               6.1.6. Transfer Approvals. Seller and the Operators, as the case
may be, shall have (i) filed any and all Transfer Notices with the necessary
governmental and quasi-governmental authorities and caused such authorities to
accept such Transfer Notices; and (ii) obtained any and all Transfer Approvals
from governmental and quasi-governmental authorities necessary or advisable for
the sale, transfer and conveyance of the Facilities to Buyer, their use,
operation and ownership from and after Closing and the Operational Transfer.

               6.1.7. Lease. At Closing, Buyer (or any affiliate of Buyer) and
each Operator shall execute and enter into that certain Master Lease Agreement
substantially in the form which is attached hereto as Exhibit J (the "Lease"),
pursuant to which Buyer master leases the Facilities pursuant to the terms and
conditions set forth therein. Each Operator shall lease the Facility identified
with respect to such Operator on Schedule 2 attached hereto and made a part
hereof pursuant to the Lease. The Operators shall be duly formed and validly
incorporated under the laws of the State of Delaware and shall be organized as
so-called "bankruptcy remote" entities on terms acceptable to Buyer. At Closing,
the execution and delivery of the Lease by each Operator, and its performance
under the Lease, shall, have been duly authorized by such Operator, and the
Lease shall be binding on each Operator and enforceable against each Operator in
accordance with its terms. At Closing, no consent of any creditor, investor,
judicial or administrative body, governmental authority, Health Department or
other governmental body or agency, or other party to such execution, delivery
and performance of the Lease by any Operator shall be required. Neither the
execution of the Lease nor the consummation of the transactions contemplated
thereby will (i) result in a breach of, default under, or acceleration of, any
agreement to which any Operator (or its sole member) is a party or by which any
Operator (or its sole member) is bound; or (ii) violate any restriction, court
order, permit, agreement or other legal obligation to which any Operator (or its
sole member) is subject. At Closing, THC shall unconditionally guaranty all of
the obligations of the Operators pursuant to the Lease pursuant to the form of
Lease Guaranty attached to the Lease (the "Lease Guaranty"). The obligations of
THC pursuant to the Lease Guaranty shall be secured by the equity pledge.

               6.1.8. Loan Transaction. Buyer shall have provided to Seller, and
THC shall have executed and accepted the Loan Commitment Letter and all of the
loan documents, mortgages and security instruments necessary to consummate the
Loan Transaction (the "Loan Documents"). At Closing, Buyer (or its affiliates)
and Seller, THC or their respective affiliates shall simultaneously proceed to
the closing of the Loan Transaction or the terms contemplated by the Loan
Documents and the Loan Commitment Letter.

               6.1.9. Certain Regulatory Issues. The licensing and operation of
each Project shall be reasonably satisfactory to Buyer. Without limitation of
the foregoing, Buyer shall have no obligation to proceed to Closing if any of
the following are true with respect to any Project: (a) the Project has a G
"TAG"; (b) the Project has 10 or more "TAGS" in the aggregate; or (c) the
Project is subject to an admissions hold, in each case unless a plan of
correction has been submitted and has been accepted by the appropriate
regulatory authorities and such corrective plan is acceptable to Buyer.

          6.2. Seller's obligation to proceed to closing shall be conditioned
upon:

                                       23



               6.2.1. Representations and Warranties. As of the Closing Date,
the representations and warranties made by Buyer to Seller pursuant to this
Agreement shall be true, accurate and correct in all material respects;

               6.2.2. Lease. At Closing, Buyer (or any affiliate of Buyer) shall
have executed and entered into the Lease;

               6.2.3. Loan Transaction. Seller (or any affiliate of Seller)
shall have executed all of the Loan Documents. At Closing, Buyer (or its
affiliates) and Seller (or its affiliates) shall simultaneously proceed to the
closing of the Loan Transaction on the terms contemplated by the Loan Documents;
and

               6.2.4. Millennium Agreement. The closing under the Millennium
Agreement shall have occurred.

     7. OPERATIONAL TRANSFER.

          7.1. Transfer of Operations. From and after Closing, Seller, at
Seller's sole cost, shall continue to take all necessary actions; file such
applications, petitions and transfers (including, but not limited to, Transfer
Notices and the Transfer Approvals); make such assignments, conveyances and
transfers to and for the benefit of the Operators; cause such permits, licenses,
approvals and provider agreements (including, but not limited to, the Operator
Approvals) to be issued to and for the benefit of the Operators; and obtain and
maintain the right for the benefit of the Operators to use, rely upon and employ
the Transition Permits as are necessary, desirable, advisable or required to
complete the Operational Transfer, practically and legally, without interruption
of the business activities therein, regulatory or otherwise. From and after
Closing, Seller shall, at Seller's cost, obtain those Transfer Approvals it was
unable to obtain prior to Closing that are necessary or advisable (a) in
connection with the transfer and conveyance of the Facilities by Seller to Buyer
and the Operational Transfer and (b) to allow the Operators to rely on the
Transition Permits from and after Closing. From and after Closing, the
Operators, as tenants pursuant to the Lease, shall manage and operate the
Facilities as healthcare facilities in substantially the same manner and fashion
in which they are presently being operated by Seller or Current Owner. Without
limitation of any of the foregoing, as part of the Operational Transfer, from
and after Closing, Seller shall (or Seller shall cause the Current Owner or the
Current Operators, as applicable to), at Seller's cost, (i) cause the issuance
to, the Operators of the Operator Approvals; and (ii) cause the ongoing business
activities at the Facilities to proceed without interruption from and after
Closing subject to the supervision and control of the Operators such that the
Operators are fully licensed and approved by any and all necessary governmental
and quasi-governmental authorities to conduct business in the Facilities in the
ordinary course and receive regular reimbursement under Medicare, Medicaid and
other necessary Third Party Payor Programs. It is acknowledged by the parties
that from and after Closing until the Operators obtain any and all Operator
Approvals, the Operators shall be entitled to use, rely upon and employ the
Transition Permits for purposes of conducting business at the Facilities from
and after Closing. From and after Closing, Seller shall (and Seller shall cause
Current Owner or Current Operator, as applicable to) take such actions; file
such applications, petitions and transfers; and obtain and maintain such
consents, licenses, permits and approvals from any and all governmental or
quasi-governmental authorities and the providers under any

                                       24



Third Party Payor Programs as are necessary, desirable, advisable or required to
facilitate the Operational Transfer by allowing (i) the Operators to rely upon,
employ or use any and all Transition Permits until such time as the Operators
obtain the Operator Approvals necessary to replace such Transition Permits; and
(ii) the Assigned Interest Operators to continue to use and rely upon the
Transferred Operators Permits applicable to such Facilities. Seller shall
deliver such information relative to, and evidence of, the Operational Transfer
as Buyer shall reasonably require from time to time. Following the Closing, the
parties shall cooperate fully with each other and shall make available to the
other all information, records or documents required to complete any and all
federal and state applications/forms required to effectuate the change of
ownership of the Facilities. Seller further agrees that an authorized
representative shall sign said applications/forms where required by law or
applicable regulations to effectuate the change of ownership of the Facilities.
The terms of this Section 7 shall survive Closing and the delivery of any
conveyance documentation.

          7.2. Transfer of Permits. At Closing, Seller shall, at Seller's cost,
transfer to Buyer (or cause Current Owner to transfer to Buyer) the Assumed
Permits. From and after Closing, Seller shall continue (and shall cause Current
Owner to continue to) reasonably assist Buyer in its efforts to obtain any and
all Buyer Permits as soon as reasonably practicable after Closing.

     8. SELLER'S CLOSING DELIVERIES. At Closing (or such other times as may be
specified below), Seller shall deliver or cause to be delivered to Buyer the
following, in form and substance reasonably acceptable to Buyer:

          8.1. Deed. The Deeds, executed by Seller (or Current Owner, as
applicable), in recordable form, conveying each Project to Buyer free and clear
of all liens, claims and encumbrances except for the Permitted Exceptions.

          8.2. General Assignment. An assignment, executed by Seller (or Current
Owner, as applicable), to Buyer of all right, title and interest of Seller (or
Current Owner, as applicable) and its agents in and to the Intangibles
including, but not limited to, the Assumed Permits together with such additional
requirements, notices and petitions as Buyer may reasonably require to transfer
the Assumed Permits.

          8.3. Operator Licenses. An assignment and assumption, executed by
Seller (or Current Owner or Current Operator, as applicable) and the applicable
Operators, of any and all Transferred Operator Permits, together with evidence
satisfactory to Buyer that any and all governmental and quasi-governmental
authorities as well as the providers under any Third Party Payor Programs have
approved (a) the transfer of such Transferred Operator Permits and (b) the use
of, reliance upon or employment by the Operators of the Transition Permits from
and after Closing for the operation of the Facilities in the ordinary course of
business.

          8.4. ALTA Statement. If required by the Title Company, ALTA (or
comparable) Statements, each executed by Seller (or Current Owner, as
applicable) and in form and substance acceptable to the Title Company.

                                       25



          8.5. Transfer Notices. Copies of the Transfer Notices together with
evidence of their delivery to, and acceptance by, the applicable governmental
and quasi-governmental authorities and any and all Transfer Approvals.

          8.6. Original Documents. To the extent not previously delivered to
Buyer, originals of the Assigned Contracts and the Assumed Permits.

          8.7. Closing Statement. A closing statement conforming to the
proration and other relevant provisions of this Agreement.

          8.8. Plans and Specifications. All plans and specifications related to
the Improvements in Seller's possession or reasonable control or otherwise
available to Seller which have not been previously delivered to Buyer.

          8.9. Entity Transfer Certificate. Entity Transfer Certification
confirming that Seller and Current Owner (as applicable) are each a "United
States Person" within the meaning of Section 1445 of the Internal Revenue Code
of 1986, as amended.

          8.10. Tax Affidavit. Seller's affidavit confirming that the sale of
the Property to Buyer hereunder is not subject to, and does not subject Buyer
to, liability for income tax, retail sales tax or bulk sales obligations under
the applicable laws of any state in which a Project is located.

          8.11. Certificate of Occupancy. A currently valid certificate of
occupancy (or comparable permit or license) with respect to the Facilities.

          8.12. Closing Certificate. A certificate, signed by Seller and THC,
certifying to the Buyer that the representations and warranties of Seller
contained in this Agreement are true and correct as of the Closing Date, and
that all covenants required to be performed by Seller prior to the Closing Date
have been performed, in all material respects.

          8.13. Lease. The Lease duly executed by each of the Operators together
with (i) any security deposit required to be posted thereunder by such
Operators; (ii) evidence reasonably satisfactory to Buyer that the Operational
Transfer has been completed and that the Operators are fully licensed and
approved to conduct business in the Facilities in the ordinary course and
receive regular reimbursement under Medicare, Medicaid and other necessary Third
Party Payor Programs; and (iii) any and all Certificates of Insurance required
to be delivered by the Operators, as tenants, to Buyer, as landlord. The Lease
Guaranty duly executed by THC.

          8.14. Assignment of Contract Rights. The Contract Right Assignment
duly executed by THC, Current Owner and the Seller Parties.

          8.15. Opinion of Counsel. An opinion of Seller's (or Current Owner's,
as to the Current Owner Projects) counsel to and for the benefit of Buyer, in
form acceptable to Buyer, indicating that such Assumed Permits have been sold,
transferred, conveyed and assigned to Buyer, such Transferred Operator Permits
have been assigned to, or received by, the Operators, such approvals have been
obtained for the reliance upon the Transition Permits by the Operators and such
Transfer Notices have been posted or filed as are necessary or advisable in
connection

                                       26



with the Operational Transfer and the Operational Transfer has otherwise
occurred pursuant to, and in accordance with, any and all laws, ordinances,
rules and regulations.

          8.16. Other. Such other documents and instruments as may reasonably be
required by Buyer or the Title Company and that may reasonably be necessary or
appropriate to consummate this transaction and to otherwise effect the
agreements of the parties pursuant to this Agreement.

     9. BUYER'S CLOSING DELIVERIES. At Closing Buyer shall cause the following
to be delivered to Seller in form reasonably acceptable to Seller:

          9.1. Purchase Price. The Purchase Price, plus or minus prorations,
shall be delivered to the Title Company in escrow for disbursement to Seller.

          9.2. Contract Assignment. The Contract Assignment duly executed by
Buyer.

          9.3. Lease. The Lease duly executed by Buyer (or an affiliate of Buyer
selected by Buyer).

          9.4. Contract Right Assignment. The Contract Right Assignment duly
executed by Buyer.

          9.5. Other. Such other documents and instruments as may reasonably be
required by Seller or the Title Company and that may reasonably be necessary or
appropriate to consummate this transaction and to otherwise effect the
agreements of the parties pursuant to this Agreement.

     10. PRORATIONS AND ADJUSTMENTS. The following shall be prorated and
adjusted between Seller and Buyer as of the Closing Date, except as otherwise
specified:

          10.1. Taxes. All accrued general real estate, personal property and ad
valorem taxes for the current year applicable to the Property shall be prorated
on an accrual basis utilizing actual final tax bills if available prior to
Closing. If such tax bills are not available, then such taxes shall be prorated
on the basis of the most currently available tax bills for the Property and
promptly re-prorated upon the issuance of final bills therefor, and any amounts
due from any party to the other shall be paid in cash at that time. Prior to or
at Closing, Seller shall pay or have paid all tax bills that are due and payable
prior to or on the Closing Date and shall furnish evidence of such payment to
Buyer and the Title Company. Buyer shall apply any credit received at Closing in
connection with this Section 10.1 towards the funding of the tax escrow
contemplated by Section 3.3 of the Lease.

          10.2. Assessments. All assessments, general or special, shall be
prorated as of the Closing Date, with Seller being responsible for any
installments of assessments which are due prior to the Closing Date and Buyer
being responsible for any installments of assessments which are due on or after
the Closing Date; provided, however, that Buyer shall apply any credit received
at Closing in connection with this Section 10.2 to fund the tax escrow
contemplated by Section 3.3 of the Lease.

                                       27



     For purposes of calculating prorations, Buyer shall be deemed to be in
title to the Property, and therefore entitled to the income therefrom and
responsible for the expenses thereof, for the entire day upon which the Closing
occurs. All such prorations shall be made on the basis of the actual number of
days of the year and month that shall have elapsed as of the Closing Date. The
amount of such prorations shall be adjusted in cash after Closing, as and when
complete and accurate information becomes available. Seller and Buyer agree to
cooperate and use their good faith and diligent efforts to make such adjustments
no later than thirty (30) days after the Closing, or as soon as is reasonably
practicable if and to the extent that the required final proration information
is not available within such thirty (30) day period. The obligations of the
parties pursuant to this Section 10 shall survive the Closing and shall not
merge into any documents of conveyance delivered at Closing.

     11. CLOSING EXPENSES. Seller will pay at Closing, all reasonable and
necessary closing costs and expenses, including without limitation, the entire
cost of the Title Policy (including the cost of any chain of title searches and
the Endorsements), the cost of the Surveys, any fees or premiums incurred in
connection with the prepayment of debt encumbering any portion of the Land or
the Improvements, the actual fees of Seller's attorneys, the fees of Buyer's
attorneys (including local counsel), all documentary and state, county and
municipal transfer taxes relating to the instruments of conveyance contemplated
herein, and any escrows hereunder. Seller's obligation to reimburse Buyer for
such costs (including attorney's fees) shall survive any termination of this
Agreement.

     12. DEFAULT.

          12.1. Default by Seller. In the event Seller fails or refuses to close
pursuant to the terms of this Agreement or fails to consummate the Loan
Transaction for any reason other than Buyer's failure to perform on terms
consistent with this Agreement, Seller or THC shall pay to Buyer, as fixed and
liquidated damages (and not as a penalty), the entire Application Fee (as
defined in the Loan Term Sheet) plus $500,000 [the "Seller Default Amount"] as
Buyer's sole remedy (hereunder, under the Loan Commitment Letter, the Term
Sheet, the Commitment Letter, the Loan Term Sheet and otherwise), on account of
either or both of Seller's failure to proceed to Closing or proceed with the
Loan Transaction. Upon payment of the Seller Default Amount, this Agreement
shall be terminated and neither party shall have any further liability
hereunder, except for those liabilities that expressly survive a termination of
this Agreement. Without limitation of the foregoing, in no event shall Seller or
THC be obligated to pay the Seller Default Amount to Buyer on account of both
its failure to proceed to Closing hereunder and to the closing of the Loan
Transaction such that the Seller Default Amount would be payable twice (such
payment being a one time, aggregate payment on account of Seller's failure to
proceed with either or both of the transactions contemplated by this Agreement
and the Loan Transaction). Additionally, Seller and THC shall remain obligated
to reimburse Buyer for its Expenses (as defined in the Commitment Letter)
actually incurred, the Transaction Closing Costs and any expenses actually
incurred and owing to Buyer pursuant to the Loan Commitment Letter
(collectively, "Reimbursement Obligations"); provided, however, that neither
Seller nor THC shall be obligated to pay any such Reimbursement Obligations more
than once. BUYER, THC AND SELLER ACKNOWLEDGE AND AGREE THAT: (1) THE SELLER
DEFAULT AMOUNT IS A REASONABLE ESTIMATE OF AND BEARS A REASONABLE RELATIONSHIP
TO THE DAMAGES THAT WOULD BE SUFFERED AND COSTS

                                       28



INCURRED BY BUYER AS A RESULT OF THE FAILURE OF CLOSING TO HAVE OCCURRED DUE TO
A DEFAULT OF SELLER UNDER THIS AGREEMENT OR OTHERWISE OR A FAILURE OF SELLER TO
PROCEED TO CLOSING; (2) THE ACTUAL DAMAGES SUFFERED AND COSTS INCURRED BY BUYER
AS A RESULT OF SUCH FAILURE TO CLOSE DUE TO A DEFAULT OF SELLER UNDER THIS
AGREEMENT OR OTHERWISE WOULD BE EXTREMELY DIFFICULT AND IMPRACTICAL TO
DETERMINE; (3) SELLER SEEKS TO LIMIT ITS LIABILITY UNDER THIS AGREEMENT TO THE
SELLER DEFAULT AMOUNT IN THE EVENT THIS AGREEMENT IS TERMINATED AND THE
TRANSACTION CONTEMPLATED BY THIS AGREEMENT DOES NOT CLOSE DUE TO A DEFAULT OF
SELLER UNDER THIS AGREEMENT OR OTHERWISE; AND (4) THE SELLER DEFAULT AMOUNT
SHALL BE AND CONSTITUTE VALID LIQUIDATED DAMAGES. In the event of any breach,
default or failure of performance by or on the part of Seller with respect to
any covenant, agreement, representation and warranty or other undertaking that
survives Closing, whether such breach, default or failure occurs after Closing
or occurs prior to Closing but is first disclosed or discovered after Closing,
Buyer shall have all of its remedies at law and in equity on account of such
breach, default or failure of performance (except the foregoing sentence shall
not apply and Buyer shall be precluded from recovering any such additional
amounts from Seller after the termination of this Agreement to the extent Buyer
is paid the Seller Default Amount). Notwithstanding anything contained herein to
the contrary, the right of Buyer to receive, and the receipt by Buyer of, the
Seller Default Amount shall be without limitation upon its right to retain the
Good Faith Deposit (as hereinafter defined) pursuant to the Term Sheet, the
Commitment Fee (as hereinafter defined) pursuant to the Commitment Letter and
any comparable amounts paid by Seller or THC pursuant to the Loan Term Sheet or
the Loan Commitment Letter.

          12.2. Default by Buyer. In the event (i) Buyer fails or refuses to
close pursuant to the terms of this Agreement or to fund the Loan Transaction;
and (ii) all of the Conditions Precedent set forth herein and/or all of the
conditions to funding the Loan Transaction contained in the Loan Commitment
Letter and the Loan Documents, respectively, have been satisfied to the standard
set forth herein or therein (collectively, the "Funding Conditions"), Buyer
shall pay to Seller, as fixed and liquidated damages (and not as a penalty),
Five Hundred Thousand and No/100 Dollars ($500,000) [the "Buyer Default Amount"]
as Seller's sole remedy (hereunder, under the Loan Commitment Letter, the Term
Sheet, the Commitment Letter, the Loan Term Sheet and otherwise), on account of
either or both of Buyer's default hereunder and failure to proceed to Closing or
proceed with the Loan Transaction. Upon payment of the Buyer Default Amount,
this Agreement shall automatically terminate and neither party shall have any
further liability hereunder, except for those liabilities that expressly survive
the termination of this Agreement. Without limitation of the foregoing, in no
event shall Buyer be obligated to pay the Buyer Default Amount to Seller on
account of both its failure to proceed with the transactions described in this
Agreement and the Loan Transaction after the Funding Conditions have been
satisfied such that the Buyer Default Amount would be payable twice (such
payment being a one time, aggregate payment on account of Buyer's failure to
proceed with either or both of the transactions contemplated by this Agreement
and the Loan Transaction after the Funding Conditions have been satisfied).
Additionally, should Buyer be obligated to pay the Buyer Default Amount pursuant
to the terms hereof, Buyer shall refund any Expenses paid by Seller, any
Transaction Closing Costs paid by Seller hereunder (and any expenses paid by
Seller on behalf of Buyer pursuant to the Loan Commitment Letter). Seller shall
have no other remedy for

                                       29



any default by Buyer, including any right to damages. BUYER AND SELLER
ACKNOWLEDGE AND AGREE THAT: (1) THE BUYER DEFAULT AMOUNT IS A REASONABLE
ESTIMATE OF AND BEARS A REASONABLE RELATIONSHIP TO THE DAMAGES THAT WOULD BE
SUFFERED AND COSTS INCURRED BY SELLER AS A RESULT OF HAVING WITHDRAWN THE
PROPERTY FROM SALE AND THE FAILURE OF CLOSING TO HAVE OCCURRED DUE TO A DEFAULT
OF BUYER UNDER THIS AGREEMENT AFTER SATISFACTION OF THE FUNDING CONDITIONS; (2)
THE ACTUAL DAMAGES SUFFERED AND COSTS INCURRED BY SELLER AS A RESULT OF SUCH
WITHDRAWAL AND FAILURE TO CLOSE DUE TO A DEFAULT OF BUYER UNDER THIS AGREEMENT
AFTER SATISFACTION OF THE FUNDING CONDITIONS WOULD BE EXTREMELY DIFFICULT AND
IMPRACTICAL TO DETERMINE; (3) BUYER SEEKS TO LIMIT ITS LIABILITY UNDER THIS
AGREEMENT TO THE BUYER DEFAULT AMOUNT IN THE EVENT THIS AGREEMENT IS TERMINATED
AND THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT DOES NOT CLOSE DUE TO A
DEFAULT OF BUYER UNDER THIS AGREEMENT AFTER SATISFACTION OF THE FUNDING
CONDITIONS; AND (4) THE BUYER DEFAULT AMOUNT SHALL BE AND CONSTITUTE VALID
LIQUIDATED DAMAGES. The foregoing shall not apply to, and Seller shall have no
right to the Buyer Default Amount in connection with, a breach, default or
failure of performance by Buyer pursuant to Section 14; provided, however, that
Seller shall be entitled to pursue an action for actual damages with respect to
such breach, default or failure of performance by Buyer pursuant to those
Sections. In the event of any breach, default or failure of performance by Buyer
of any covenant, agreement, indemnity, representation or warranty of Buyer that
survives the Closing or the termination of this Agreement, Seller shall have all
of its rights at law or in equity on account of such breach, default or failure
of performance (except the foregoing sentence shall not apply and Seller shall
be precluded from recovering any such additional amounts from Buyer after the
termination of this Agreement to the extent Seller is paid the Buyer Default
Amount).

     13. TAX-DEFERRED EXCHANGE/ REVERSE EXCHANGE. Buyer may assign all or any of
its right, title and interest under this Agreement to any third party
intermediary (an "Intermediary") in connection with a tax-deferred exchange or
reverse exchange pursuant to Section 1031 of the Internal Revenue Code (an
"Exchange"). In the event Buyer elects to assign this Agreement to an
Intermediary, Seller shall reasonably cooperate with Buyer (without incurring
any additional liability or any additional third party expenses) in connection
with such election and the consummation of the Exchange, including without
limitation, by executing an acknowledgment of Buyer's assignment of this
Agreement to the Intermediary.

     14. INDEMNIFICATION. Seller and THC each hereby agrees and does indemnify
and hold Buyer, Buyer's affiliates, and their respective partners, officers,
employees, agents, successors and assigns (the "Buyer Indemnified Parties")
harmless (on a joint and several basis) from and against any and all actual
losses, damages, claims, causes of action, judgments, costs and expenses
(including, reasonable fees of attorneys) (collectively, "Losses") that may be
suffered or incurred by or asserted or awarded against Buyer or any Buyer
Indemnified Party, in each case arising out of, or in connection with, or by
reason of: (i) any matters contemplated by this Agreement; (ii) any Operator
Liabilities, regardless of the period to which such Operator Liabilities relate;
(iii) any material inaccuracy, breach or default by Seller or THC in any

                                       30



representations and warranties of Seller or THC hereunder; (iv) any material
failure by Seller or THC to perform any material covenant, agreement or
undertaking hereunder; (v) any and all actions, suits, litigation, arbitrations,
procedures, investigations, or claims arising out of any of the foregoing or out
such other conditions that have occurred prior to the Closing Date even though
such actions, suits, litigation, arbitrations, procedures, investigations or
claims have not be filed or have not come to light until after Closing; (vi) any
Environmental Liabilities; (vii) any material breach, default or failure of
performance by Current Owner, the Seller Parties or THC pursuant to the
Millennium Agreement; and (viii) the inability by Seller to cause the
Operational Transfer in accordance with this Agreement, including, but not
limited to, Seller's inability to obtain any Transfer Approvals or the inability
of the Operators to rely upon the Transition Permits from and after Closing.
With respect to items (i), (ii) and (v) set forth above, Seller and THC shall
not be required to indemnify Buyer or any Buyer Indemnified Parties from and
against any such Losses to the extent such Losses are solely and directly
attributable to the gross negligence or willful misconduct of Buyer or any of
the Buyer Indemnified Parties. The foregoing indemnity shall survive Closing and
the delivery of any conveyance documentation.

     15. LITIGATION. In the event of litigation between the parties with respect
to the Property, this Agreement, the performance of their respective obligations
hereunder or the effect of a termination under this Agreement, the losing party
shall pay all costs and expenses incurred by the prevailing party in connection
with such litigation, including, but not limited to, reasonable attorneys' fees
of counsel selected by the prevailing party. Notwithstanding any provision of
this Agreement to the contrary, the obligations of the parties under this
Section 14 shall survive termination of this Agreement or Closing and the
delivery of any conveyance documentation.

     16. NOTICES. Any notice, demand or request which may be permitted, required
or desired to be given in connection therewith shall be given in writing and
directed to Seller and Buyer as follows:

     Seller:           Trans Healthcare of Ohio, Inc.
                       c/o Trans Healthcare, Inc.
                       4660 Trindle Road
                       Suite 103
                       Camp Hill, Pennsylvania  17011
                       Attn: Anthony Misitano
                       Fax: (717) 730-8722

     With a copy to
     its attorneys:    Latsha Davis & Yohe, P.C.
                       4720 Old Gettysburg Road
                       Suite 101
                       Harrisburg, Pennsylvania  17108-0825
                       Attn: Douglas Yohe
                       Fax: (717) 761-2286

                                       31



     and to:           Kirkland & Ellis
                       200 East Randolph Drive
                       Chicago, Illinois  60601
                       Attn: Francesco Penati
                       Fax:  (312) 660-0495

     Buyer:            Ventas Realty, Limited Partnership
                       333 W. Wacker Drive
                       Suite 2850
                       Chicago, Illinois 60606
                       Attn: Donna Cote
                       Fax:  (312) 984-3150

     With a copy to:   Ventas Realty, Limited Partnership
                       4360 Brownsboro, Suite 115
                       Louisville, Kentucky 40207
                       Attn: T. Richard Riney
                       Fax:  (502) 357-9029

     With a copy to
     its attorneys:    Barack Ferrazzano Kirschbaum Perlman &
                       Nagelberg LLC
                       333 W. Wacker Drive
                       27th Floor
                       Chicago, Illinois 60606
                       Attn: Mark J. Beaubien
                       Fax:  (312) 984-3150

Notices shall be deemed properly delivered and received (i) the same day when
personally delivered; or (ii) one day after deposit with Federal Express or
other commercial overnight courier; or (iii) the same day when sent by confirmed
facsimile.

     17. BENEFIT. This Agreement is for the benefit only of the parties hereto
and their nominees, successors, beneficiaries and assignees as permitted in
Section 13 and no other person or entity shall be entitled to rely hereon,
receive any benefit herefrom or enforce against any party hereto any provision
hereof.

     18. LIMITATION OF LIABILITY. Upon the Closing, Buyer shall neither assume
nor undertake to pay, satisfy or discharge any liabilities, obligations or
commitments of Seller other than those specifically agreed to between the
parties and set forth in this Agreement.

     19. REASONABLE EFFORTS. Seller and Buyer shall use their reasonable,
diligent and good faith efforts, and shall cooperate with and assist each other
in their efforts, to obtain such consents and approvals of third parties
(including, but not limited to, governmental authorities), to the transaction
contemplated hereby, and to otherwise perform as may be necessary to effectuate
transfer the Property to Buyer in accordance with this Agreement.

                                       32



     20. FEES. Buyer and Seller acknowledge and agree that Seller has delivered
to Buyer (i) a good faith deposit in the amount of $200,000 pursuant to the Term
Sheet ("Good Faith Deposit") and (ii) a commitment fee in the amount of $500,000
(the "Commitment Fee") pursuant to the Commitment Letter. Seller acknowledges
and agrees that the Commitment Fee and the Good Faith Deposit have been earned
by Buyer and are non-refundable to Seller or THC in all circumstances.

     21. MISCELLANEOUS.

          21.1. Entire Agreement. Except for the Term Sheet and the Commitment
Letter, this Agreement constitutes the entire understanding between the parties
with respect to the transaction contemplated herein, and all prior or
contemporaneous oral agreements, understandings, representations and statements,
and all prior written agreements, understandings, letters of intent and
proposals, in each case with respect to the transaction contemplated herein, are
hereby superseded and rendered null and void and of no further force and effect
and are merged into this Agreement. Neither this Agreement nor any provisions
hereof may be waived, modified, amended, discharged or terminated except by an
instrument in writing signed by the party against which the enforcement of such
waiver, modification, amendment, discharge or termination is sought, and then
only to the extent set forth in such instrument.

          21.2. Legal Holidays. If any date herein set forth for the performance
of any obligations by Seller or Buyer or for the delivery of any instrument or
notice as herein provided should be on a Saturday, Sunday or legal holiday, the
compliance with such obligations or delivery shall be deemed acceptable on the
next business day following such Saturday, Sunday or legal holiday. As used
herein, the term "legal holiday" means any state or federal holiday for which
financial institutions or post offices are generally closed for observance
thereof in the State of Illinois.

          21.3. Conditions Precedent. The obligations of (i) Buyer to pay the
Purchase Price and to close the transaction contemplated herein and (ii) Seller
to proceed to Closing are subject to the express Conditions Precedent set forth
in this Agreement (and the other conditions precedent of Buyer therein
contained), each of which is for the sole benefit of Buyer and Seller, as the
case may be, and may be waived at any time by written notice thereof from Buyer
or Seller, as the case may be. The waiver of any particular Condition Precedent
shall not constitute the waiver of any other. In the event of the failure of a
Condition Precedent for any reason whatsoever, Buyer or Seller, as the case may
be, may elect, in its sole discretion and by delivery of written notice to the
other party on or prior to Closing, to (A) terminate this Agreement, in which
event the provisions of Section 21.7 of this Agreement governing a permitted
termination shall apply; or (B) waive the failure of the applicable Condition(s)
Precedent and proceed to Closing.

          21.4. Construction. This Agreement shall not be construed more
strictly against one party than against the other merely by virtue of the fact
that it may have been prepared by counsel for one of the parties, it being
recognized that both Seller and Buyer have contributed substantially and
materially to the preparation of this Agreement. The headings of various
sections in this Agreement are for convenience only, and are not to be utilized
in construing the content or meaning of the substantive provisions hereof.

                                       33



          21.5. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois.

          21.6. Partial Invalidity. The provisions hereof shall be deemed
independent and severable, and the invalidity or partial invalidity or
enforceability of any one provision shall not affect the validity of
enforceability of any other provision hereof.

          21.7. Permitted Termination. In the event that Buyer exercises any
right it may have hereunder to terminate this Agreement, the Buyer Default
Amount shall not be owing from Buyer to Seller hereunder or otherwise and
neither party shall have any further liability or obligation under this
Agreement except for those liabilities and obligations that expressly survive a
termination of this Agreement.

          21.8. Conflict. In the event of any conflict between the terms and
provisions of this Agreement, the Term Sheet and the Commitment Letter, the
terms of this Agreement shall control, in all events.

                           [Signature Page to Follow]

                                       34



     IN WITNESS WHEREOF, the parties hereto have executed this Purchase and Sale
Agreement on the date first above written.

                                     SELLER:

                                     TRANS HEALTHCARE OF OHIO, INC., a
                                     Delaware corporation


                                     By:  /s/ ANTHONY MISITANO
                                         ---------------------------------------
                                     Its: President
                                         ---------------------------------------

                                       S-1



                                     BUYER:

                                     VENTAS REALTY, LIMITED
                                     PARTNERSHIP, a Delaware corporation


                                     By: Ventas, Inc., a Delaware corporation
                                     Its:General Partner


                                         By: /s/ T. RICHARD RINEY
                                             -----------------------------------
                                         Its: Executive Vice President
                                             -----------------------------------

                                       S-2



                                     THC:

                                     ACKNOWLEDGED AND AGREED by Trans
                                     HealthCare, Inc. for purposes of
                                     acknowledging its undertakings hereunder:

                                     TRANS HEALTHCARE, INC., a Delaware
                                     corporation


                                     By:  /s/ ANTHONY MISITANO
                                         ---------------------------------------
                                     Its:  President
                                          --------------------------------------

                                      S-3



                                     ACKNOWLEDGED AND AGREED by each
                                     Current Owner and the Seller Parties for
                                     the limited purpose of acknowledging their
                                     agreement and undertakings pursuant to
                                     Sections 1.4 and 5.30 hereof:

                                     MILLENNIUM HOLDINGS IV, LLC

                                     MILLENNIUM HOLDINGS VI, LLC

                                     MILLENNIUM HOLDINGS VII, LLC

                                     MILLENNIUM HEALTH AND
                                     REHABILITATION CENTER AT SOUTH
                                     RIVER, LLC

                                     MILLENNIUM HEALTH AND
                                     REHABILITATION CENTER OF ELLICOTT
                                     CITY, LLC

                                     MILLENNIUM HEALTH AND
                                     REHABILITATION CENTER OF
                                     FORESTVILLE, LLC


                                     By:  /s/ ROBERT G. OWENS
                                         ---------------------------------------
                                     Name  Robert G. Owens
                                          --------------------------------------
                                     Title: President
                                           -------------------------------------


                                     ROBERT G. OWENS (Individually)

                                      /s/ ROBERT G. OWENS
                                     -------------------------------------------


                                     STANLEY H. SNOW (Individually)

                                      /s/ STANLEY H. SNOW
                                     -------------------------------------------

                                      S-4

EX-10.1.2

                                                                  Exhibit 10.1.2

                             MASTER LEASE AGREEMENT

                                       BY

                       VENTAS REALTY, LIMITED PARTNERSHIP,

                                   AS LANDLORD

                                       AND

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

                                    AS TENANT

                          DATED AS OF NOVEMBER 1, 2002



                                TABLE OF CONTENTS

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

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

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

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

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

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

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

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

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

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

                                        i



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

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

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

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

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

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

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

                                       ii



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

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

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

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

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

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

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

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

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

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

                                       iii



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

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

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

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

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

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

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

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

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

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

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

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

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

                                       iv



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

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

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

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

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

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

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

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

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

LIST OF SCHEDULES AND EXHIBITS

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

                                        v



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

                                       vi



                             MASTER LEASE AGREEMENT

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

                                    RECITALS:

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

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

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

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

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

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

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

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

                                       1



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

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

     1. Leased Property; Term.

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

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

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

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

                                       2



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

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

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

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

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

                                       3



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

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

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

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

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

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

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

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

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

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

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

                                       4



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

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

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

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

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

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

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

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

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

                                       5



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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       6



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

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

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

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

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

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

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

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

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

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

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

                                       7



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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       8



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

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

                                       9



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

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

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

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

     "Fixtures" shall mean all permanently affixed equipment, machinery,
elevators, conveyors, fixtures, commercial kitchen equipment, laundry equipment
and other items of real and/or personal property, including, without limitation,
all components thereof, now and hereafter located in, on or used in connection
with, and permanently affixed to or incorporated into the Leased Improvements,
including, without limitation, all furnaces, boilers, heaters, electrical
equipment, heating, plumbing, lighting, ventilating, refrigeration,
incineration, air and water pollution control, waste disposal, air-cooling and
air-conditioning systems and apparatus, sprinkler systems and fire and theft
protection equipment, and built-in oxygen and vacuum systems, all of which, to
the greatest extent permitted by law, are hereby deemed by the parties hereto to
constitute real property, together with all replacements, modifications,
alterations and additions thereto.

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

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

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

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

                                       10



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

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

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

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

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

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

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

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

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

                                       11



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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       12



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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       13



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

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

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

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

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

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

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

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

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

                                       14



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

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

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

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

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

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

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

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

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

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

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

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

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

                                       15



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

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

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

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

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

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

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

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

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

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

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

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

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

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

     "REIT" shall mean a real estate investment trust.

                                       16



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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       17



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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       18



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

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

     3. Rent.

          3.1 Fixed Rent.

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

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

                                       19



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

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

                                       20



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

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

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

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

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

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

                                       21



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

          3.3 Escrow Deposits.

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

                                       22



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

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

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

                                       23



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

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

          3.4 Security Deposit.

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

                                       24



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

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

                                       25



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

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

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

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

                                       26



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

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

     4. Impositions.

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

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

                                       27



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

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

     6. Premises; Tenant's Personal Property.

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

                                       28



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

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

     7. Condition and Use of Each Leased Property.

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

          7.2 Use of Each Leased Property.

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

                                       29



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

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

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

                                       30



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

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

     8. Negative and Affirmative Covenants of Tenant.

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

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

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

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

                                       31



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

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

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

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

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

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

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

                                       32



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

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

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

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

               8.1.14 ERISA.

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

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

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

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

                                       33



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

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

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

               8.1.17 Use-Specific Negative Covenants. No Tenant shall:

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

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

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

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

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

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

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

                                       34



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

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

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

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

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

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

               8.2.3 Documents and Information.

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

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

                                       35



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

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

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

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

                                       36



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

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

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

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

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

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

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

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

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

                                       37



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

     9. Maintenance of Facilities.

          9.1 Maintenance and Repair.

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

                                       38



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

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

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

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

                                       39



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

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

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

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

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

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

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

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

                                       40



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

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

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

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

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

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

                                       41



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

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

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

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

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

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

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

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

                                       42



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

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

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

     11. Alterations.

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

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

                                       43



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

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

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

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

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

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

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

                                       44



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

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

          11.3 Capital Expenditures Accounts.

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

                                       45



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

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

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

                                       46



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

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

     14. Insurance.

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

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

                                       47



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

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

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

                                       48



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

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

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

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

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

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

                                       49



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

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

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

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

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

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

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

                                       50



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

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

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

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

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

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

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

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

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

                                       51



     15. Damage and Destruction.

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

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

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

                                       52



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

          15.4 Restoration.

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

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

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

                                       53



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

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

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

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

                                       54



     16. Condemnation.

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

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

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

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

          16.5 Award-Distribution.

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

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

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

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

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

                                       55



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

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

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

     17. Default.

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

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

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

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

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

                                       56



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

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

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

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

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

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

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

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

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

                                       57



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

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

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

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

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

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

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

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

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

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

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

                                       58



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

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

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

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

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

                                       59



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

               17.1.21 Reserve Event. The occurrence of any Reserve Event.

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

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

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

                                       60



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

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

          (A) the sum of:

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

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

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

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

                                       61



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

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

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

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

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

                                       62



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

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

                                       63



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

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

     20. Subordination.

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

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

                                       64



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

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

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

     21. Property Collateral.

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

                                       65



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

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

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

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

                                       66



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

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

                                       67



     24. Assignment; Sublease.

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

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

                                       68



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

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

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

                                       69



     25. Financial Statements and Reporting.

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

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

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

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

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

                                       70



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

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

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

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

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

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

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

                                       71



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

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

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

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

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

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

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

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

                                       72



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

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

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

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

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

                                       73



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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       74



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

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

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

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

                                       75



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

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

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

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

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

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

                                       76



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

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

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

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

                                       77



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

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

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

          (a)  if to any Tenant:

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

                                       78



          with a copy to:

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

          (b)  if to Landlord:

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

          with a copy to:

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

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

     34. Appraisals.

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

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

                                       79



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

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

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

                                       80



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

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

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

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

                                       81



     37. Compliance With Environmental Laws.

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

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

                                       82



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

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

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

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

                                       83



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

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

     39. Operational Transfer.

          39.1 Exercise; Transfer of Authorizations.

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

                                       84



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

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

                                       85



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

          39.3 Facility Termination; Limited Extension.

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

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

                                       86



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

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

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

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

                                       87



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

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

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

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

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

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

                                       88



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

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

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

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

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

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

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

                                       89



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

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

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

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

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

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

                                       90



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

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

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

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

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

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

                                       91



     45. Miscellaneous.

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

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

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

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

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

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

          45.7 Waivers. No waiver of any condition or covenant herein contained,
or of any breach of any such condition or covenant, shall be held or taken to be
a waiver of any subsequent breach of such covenant or condition, or to permit or
excuse its continuance or any future breach thereof, or of Landlord's right to
terminate this Lease or exercise any other remedy granted herein on account of
such existing default.

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

                                       92



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

          45.10 Forbearance. No delay or omission by either party hereto to
exercise any right or power accruing upon any noncompliance or default by the
other party with respect to any of the terms hereof shall impair any such right
or power or be construed to be a waiver thereof.

            [The remainder of this page is intentionally left blank]

                                       93



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

                                       LANDLORD:

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

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

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

                                       TENANT:

Witness:                               THI OF OHIO AT CHARDON, LLC

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

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

                                       MILLENNIUM HEALTH AND REHABILITATION
                                       CENTER OF FORESTVILLE, LLC

                                       MILLENNIUM HEALTH AND REHABILITATION
                                       CENTER OF ELLICOTT CITY, LLC


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

                                       S-1



State of New York

County of New York


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


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

(Seal)

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

State of New York                             [Notary Seal]

County of New York


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

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

(Seal)

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

                                              [Notary Seal]

                                       S-2

EX-10.2.1

                                                                  Exhibit 10.2.1

                                 LOAN AGREEMENT

                          Dated as of November 1, 2002

                                      Among

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

                                       and

                       VENTAS REALTY, LIMITED PARTNERSHIP,
                                    as Lender



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

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

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

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

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

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

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

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

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

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

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

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

                                       i



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

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

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

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

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

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

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

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

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

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

                                       ii



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

                                      iii



SCHEDULES

Schedule I      - Operating Leases

Schedule II     - Intentionally Deleted

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

Schedule IV     - Organizational Chart

Schedule V      - Allocated Loan Amount

Schedule VI     - Amortization

Schedule VII    - Intentionally deleted

Schedule VIII   - Guarantors

Schedule IX     - Insurance Claims

Schedule X      - Waivers of Physical Plant Standards

Schedule XI     - Pending Audits

Schedule XII    - Waivers in Connection with Licensed Beds

Schedule XIII   - Proceedings and Notices

Schedule XIV    - Enforcement Actions

EXHIBITS

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

Exhibit B       - Interest Rate Cap Requirements

Exhibit C       - Form of Nonconsolidation Opinion

Exhibit D       - Material Agreements

                                       iv



                                 LOAN AGREEMENT

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

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

                              W I T N E S S E T H :

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

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

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

               ARTICLE I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION

          Section 1.1. Definitions.

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

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

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

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



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

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

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

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

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

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

                                       2



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

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

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

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

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

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

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

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

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

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

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

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

                                       3



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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       4



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

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

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

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

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

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

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

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

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

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

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

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

                                       5



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

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

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

          "Deferred Maintenance Amount" means $179,456.25.

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

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

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

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

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

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

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

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

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

                                       6



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

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

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

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

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

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

          "Fitch" means Fitch, Inc.

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

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

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

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

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

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

                                       7



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

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

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

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

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

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

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

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

                                       8



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

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

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

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

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

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

                                       9



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

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

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

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

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

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

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

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

                                       10



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

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

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

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

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

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

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

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

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

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

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

                                       11



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

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

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

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

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

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

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

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

                                       12



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

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

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

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

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

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

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

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

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

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

                                       13



          "Mezzanine Loan Agreement" means that certain Mezzanine Loan Agreement
of even date herewith among Mezzanine Borrowers, as borrowers and Mezzanine
Lender, as lender, as the same may be amended, restated, replaced, supplemented
or otherwise modified from time to time.

          "Mezzanine Payment Date" means the "Payment Date" as defined in the
Mezzanine Loan Agreement.

          "Monthly Capital Expenditure Reserve Amount" means $35,050.

          "Moody's" means Moody's Investors Service, Inc.

          "Mortgage" means, (a) with respect to each Property located in the
State of Ohio, a first priority Open-Ended Fee and Leasehold Mortgage and
Security Agreement or (b) with respect to each Property located in the State of
Maryland, a first priority Deed of Trust and Security Agreement, or similar
security instrument, dated the date hereof, executed and delivered by a Borrower
as security for the Loan and encumbering such Property, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time, and "Mortgages" means all such instruments collectively.

          "Net Operating Income" means, for any period, the amount by which
Operating Income exceed Operating Expenses.

          "Net Proceeds" means: (i) the net amount of all insurance proceeds
payable as a result of a Casualty to a Property, after deduction of reasonable
costs and expenses (including, but not limited to, reasonable attorneys' fees),
if any, in collecting such insurance proceeds and taxes, if any, payable by a
Borrower with respect to such proceeds, or (ii) the net amount of the Award,
after deduction of reasonable costs and expenses (including, but not limited to,
reasonable attorneys' fees), if any, in collecting such Award and taxes, if any,
payable by a Borrower with respect to such proceeds.

          "Net Proceeds Account" has the meaning set forth in Section 6.8(a).

          "Net Proceeds Deficiency" has the meaning set forth in Section
5.3.2(f).

          "Note" has the meaning set forth in Section 2.1.3.

          "Notice" has the meaning set forth in Section 11.6.

          "Nursing Facility" means a facility (including any Alzheimer's or
dementia care unit of sub acute unit), which offers nonacute inpatient care to
patients who suffer from a disease, chronic illness, or disability requiring
nursing care without continuous hospital services, and who require medical
services and nursing services rendered by or under the supervision of a licensed
medical professional, together with convalescent or restorative services now or
hereafter located on a Property.

          "Officer's Certificate" means a certificate delivered to Lender by a
Borrower which is signed by an authorized senior officer of such Borrower.

                                       14



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

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

          "Ohio Staff Provider" means THI Services Corp., a Delaware
corporation.

          "Operating Expense Reserve Account" shall have the meaning set forth
in Section 6.5(a).

          "Operating Expenses" means, with respect to a Property (or the
Properties) and without duplication, all costs and expenses incurred by a
Borrower determined on an accrual basis, relating to the operation, maintenance,
repair, use and management of such Property (or the Properties), including,
without limitation, utilities, repairs and maintenance, insurance, property
taxes and assessments, advertising expenses, payroll and related taxes,
equipment lease payments, actual management fees but excluding (i) rent payments
made by any Operator under an Operating Lease and principal, interest and other
payments made by a Borrower under the Loan Documents, (ii) depreciation,
amortization and other non-cash expenses of the Properties; provided, however,
such costs and expenses shall be subject to reasonable adjustment by Lender to
normalize such costs and expenses and (iii) capital expenditures.

          "Operating Income" means, without duplication, all revenue derived
from the ownership and/or operation of a Property (or Properties) by any
Borrower (other than Rents received from any Operator under any Operating Lease)
from whatever source determined on an accrual basis, including, but not limited
to, (i) Rents, including, but not limited to, Patient Revenues received by any
Operator or by any subtenant or licensee which is an Affiliate of any Operator
(but excluding any revenues received by any subtenant or licensee which is not
an Affiliate of any Operator) and (ii) Rents received by any Operator from any
subtenant or licensee which is not an Affiliate of any Operator (but excluding
any rents received from any subtenant or licensee which is an Affiliate of any
Operator); but excluding (a) sales, use and occupancy or other taxes on receipts
required to be accounted for by any Borrower to any governmental authority, (b)
non-recurring revenues as reasonably determined by Lender (e.g. proceeds from a
sale of assets or refinancing), (c) security deposits (except to the extent
determined by Lender to be properly utilized to offset a loss of rent received
by any Operator), (d) proceeds of casualty insurance and condemnation awards
(other than business interruption or other loss of income insurance related to
business interruption or loss of income for the period in question) and (e) any
proceeds from the sale or refinancing of any Property or recapitalization of any
Borrower. In addition, if required by Lender, income accrued but not paid in
cash during an accounting period shall be adjusted for an allowance for doubtful
accounts in a manner consistent with historical net realizable value.

          "Operating Lease" means, with respect to each Property, the Operating
Lease Agreement, dated as of the date hereof, between the applicable Fee Owner,
as lessor, and the

                                       15



applicable Operator, as lessee, as the same may be modified or amended from time
to time in accordance with the terms and conditions of this Agreement.

          "Operator" means, with respect to a Property, the applicable Borrower
identified as "operator" on Schedule III attached hereto (if any), in its
capacity as: (i) the licensee entitled to deliver health care services at such
Property, (ii) as the provider under all Third Party Payor Programs, including,
but not limited to, Medicare and Medicaid and (iii) as the lessee under the
applicable Operating Lease, or its successors or permitted assigns thereunder.

          "Other Charges" means all ground rents, maintenance charges,
impositions other than Taxes, and any other charges, including, without
limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining the Properties, now or hereafter levied or assessed or
imposed against the Properties or any part thereof.

          "Other Taxes" has the meaning set forth in Section 2.3.6.

          "Parent" means Trans Healthcare, Inc., a Delaware corporation

          "Patient Revenues" means revenues generated from the sale of goods or
services at or through the Properties, whether by an Operator or any subtenant
or licensee of such Operator, or any other party, which revenues are primarily
derived from services provided to patients (including, without limitation,
revenues received or receivable for the use of or otherwise by reason of all
rooms, beds and other facilities provided, meals served, services performed or
goods sold at the Properties), including but not limited to, Self-Pay
Receivables and all other income, consideration, issues, accounts, profits or
benefits of any nature arising from the ownership, possession, use or operation
of such Property, including, without limitation, all rights to payment from the
Medicare and Medicaid programs or similar state or federal programs, boards,
bureaus or agencies (to the extent legally assignable under applicable law) and
rights to payment from patients or private insurers, arising from the operation
of such Property and all revenues, receipts, income, receivables and accounts
relating to or arising from rentals, rent equivalent income, income and profits
from guest rooms, meeting rooms, food and beverage facilities, vending machines,
telephone and television systems, guest laundry, and the provision or sale of
other goods and services.

          "Payment Date" means the fifteenth (15th) day of every calendar month
occurring during the term of the Loan; provided, however, in connection with a
Securitization of the Loan, Lender may change the Payment Date, the LIBOR
Determination Date and the Interest Accrual Period. Each Borrower shall promptly
execute an amendment to this Agreement to evidence any such change and any
necessary amendment to the Acceptable Interest Rate Cap Agreement as approved by
the Lender and the Rating Agencies.

          "Payor Notice" has the meaning set forth in Section 6.1(b).

          "Permitted Debt" means as to a Property or Borrower (x) (i) unsecured
trade payables incurred in the ordinary course of business relating to the
ownership and operation of such Property which are paid within ninety (90) days
of the date incurred and (ii) financing of Equipment or vehicles used in the
ordinary course of operating and owning a Property (including capitalized leases
of such Equipment and vehicles) and (y) which unsecured trade payables and

                                       16



financing do not exceed at any one time an aggregate amount as to all Borrowers
and their Properties on an aggregate basis of $3,500,000.

          "Permitted Encumbrances" means, with respect to each Property,
collectively, (i) the Liens and security interests created by the Loan
Documents, (ii) all Liens, encumbrances and other matters disclosed in the Title
Insurance Policies relating to such Property or any part thereof, (iii) Liens,
if any, for Taxes imposed by any Governmental Authority not yet due or
delinquent, (iv) such other title and survey exceptions as Lender has approved
or may approve in writing in Lender's sole discretion, none of which adversely
affect the use, value or operation of such Property, (v) Liens on the Equipment
or vehicles used in the ordinary course of business of operating and owning such
Property which are the subject of a financing of such Equipment or vehicles
(including capitalized leases of such Equipment or vehicles) which financing
complies with the terms of the definition of the term "Permitted Debt" and (vi)
the Operating Lease and the Leases consisting of Borrowers' standard form
patient admission and resident care agreements.

          "Permitted Investments" has the meaning set forth in the Cash
Management Agreement.

          "Person" means any individual, corporation, partnership, limited
liability company, joint venture, estate, trust, unincorporated association, any
other entity, any federal, state, county or municipal government or any bureau,
department or agency thereof and any fiduciary acting in such capacity on behalf
of any of the foregoing.

          "Physical Plant Standards" has the meaning set forth in Section
3.1.40(g).

          "Policies" has the meaning specified in Section 5.1.1(b).

          "Prepayment Fee" has the meaning set forth in Section 2.4.1.

          "Prepayment Notice" has the meaning set forth in Section 2.4.1.

          "Pro Forma Net Operating Income" means with respect to a Property, Net
Operating Income for any period for such Property adjusted as follows: (i) if
the actual occupancy percentage of such Property is greater than ninety-five
percent (95%), Operating Income for such Property shall be reduced by the
product of (1) the difference between the actual occupancy percentage of such
Property and ninety-five percent (95%) times (2) the Operating Income for such
Property, (ii) Operating Income for such Property shall be reduced by (x) a bad
debt expense for such Property equal to the greater of (A) the actual bad debt
expense and (B) six-tenths of one percent (0.6%) of Operating Income for such
Property for such period (after deducting the vacancy factor as calculated
above, if any); (y) a management fee for such Property equal to the greater of
(A) the actual management fee and (B) five percent (5%) of Operating Income for
such Property for such period (after deducting any vacancy factor and for bad
debt expenses as calculated above, as applicable); (z) a reserve for Capital
Expenditures equal to $300 per annum per licensed bed at each Property
consisting of a Nursing Facility or Assisted Living Facility and for each
Property which does not constitute a Nursing Facility or Assisted Living
Facility such per bed per annum amount as reasonably determined by the Lender;
provided, however, that Lender may further adjust Pro Forma Net Operating Income
as

                                       17



Lender deems reasonably necessary based upon the occurrence of tangible events
that Lender reasonably determines may have a material effect on any Borrower or
Property.

          "Property" means each parcel of real property, the Improvements
thereon and all personal property owned by any Borrower and encumbered by a
Mortgage, together with all rights pertaining to such property and Improvements,
all as more particularly described in the Granting Clauses of such Mortgage, and
"Properties" means all such parcels and other properties collectively.

          "Qualified Equity Transferee" means an entity (i) with a minimum of
five (5) years experience operating Nursing Facilities, Assisted Living
Facilities and/or Specialty Hospitals similar to the Properties in the
jurisdictions in which the Properties are located with a minimum of 1,000 beds
in such facilities, (ii) which entity makes representations and warranties as
reasonably requested by Lender as to such entity's operations but shall at a
minimum make such representations and warranties substantially similar to those
set forth in Article III hereof and (iii) as to which a Rating Agency
Confirmation is delivered.

          "Rating Agencies" means, prior to the final Securitization of the
Loan, each of S&P, Moody's and Fitch or any other nationally-recognized
statistical rating agency which has been designated by Lender and, after the
final Securitization of the Loan, shall mean any of the foregoing that have
rated any of the Securities.

          "Rating Agency Confirmation" means a written affirmation from each of
the Rating Agencies that the credit rating of the Securities rated by such
Rating Agency immediately prior to the occurrence of the event with respect to
which such Rating Agency Confirmation is sought will not be qualified,
downgraded or withdrawn as a result of the occurrence of such event, which
affirmation may be granted or withheld in such Rating Agency's sole and absolute
discretion.

          "Re-sizing" has the meaning set forth in the Cooperation Agreement.

          "Re-sizing Date" means the earlier of (i) the Payment Date upon which
the Re-sizing shall occur or (ii) February 15, 2003.

          "Re-sizing Maturity Date" means the date that is the third anniversary
of the Re-sizing Date.

          "Reference Bank Rate" has the meaning set forth in the definition of
LIBOR.

          "Reference Banks" has the meaning set forth in the definition of LIBOR

          "Registration Statement" has the meaning set forth in Section 9.2(b).

          "Regulatory Permits" has the meaning set forth in Section 3.1.40(b).

          "Reimbursement Contracts" means all third party reimbursement
contracts for the Properties which are now or hereafter in effect with respect
to residents or patients qualifying for coverage under the same, including,
without limitation, Medicare, Medicaid and private

                                       18



insurance agreements, and any successor program or other similar reimbursement
program and/or private insurance agreements.

          "Rents" means, with respect to each Property, (x) all receipts, rents
(whether denoted as advance rent, minimum rent, percentage rent, additional rent
or otherwise), issues, income, royalties, profits, revenues (including, without
limitation, Patient Revenues and Self-Pay Receivables), proceeds, bonuses,
deposits (whether denoted as security deposits, utility deposits or otherwise),
lease termination fees or payments, rejection damages, buy-out fees and any
other fees made or to be made in lieu of rent, any award made hereafter to any
Borrower in any court proceeding involving any tenant, lessee, licensee or
concessionaire under any of the Leases in any bankruptcy, insolvency or
reorganization proceedings in any state or federal court, and all other
payments, rights and benefits of whatever nature from time to time due under any
of the Leases, including, without limitation, rights to payment earned under the
Leases for space in the Improvements for the operation of ongoing businesses,
such as restaurants, news stands, barber shops, beauty shops and pharmacies;
provided, however, "Rents" shall not include "patient trust accounts" or
"patient needs funds."

          "Restoration" has the meaning set forth in Section 5.2.1.

          "Restoration Threshold" means (a) with respect to any Property, the
greater of (i) five percent (5%) of the Allocated Loan Amount for such Property
or (ii) $200,000 and (b) with respect to the Properties, two percent (2%) of the
Loan Amount.

          "S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.

          "Sale/Leaseback Lessor" means Ventas Realty, Limited Partnership, a
Delaware limited partnership, in its capacity as lessor under the Lease
Documents (as defined in the Master Guaranty).

          "SAP Completion Date" has the meaning set forth in the Cooperation
Agreement.

          "Secondary Market Transaction" has the meaning set forth in Section
9.1(a).

          "Securities" has the meaning set forth in Section 9.1(a).

          "Securities Act" has the meaning set forth in Section 9.2(a).

          "Securitization" has the meaning set forth in Section 9.1(a).

          "Self-Pay Receivables" means those receivables whereby an individual
or resident of a Property is the payor of such receivables.

          "Servicer" has the meaning set forth in Section 11.24.

          "Servicing Agreement" has the meaning set forth in Section 11.24.

          "Severed Loan Documents" has the meaning set forth in Section 10.2(c).

                                       19



          "Single Member LLC" means a limited liability company that (i) is
either (a) a single member limited liability company or (b) a multiple member
limited liability company that does not have a Single-Purpose Entity that owns
at least 1% of the equity interests in such limited liability company as its
managing member, and (ii) is organized under the laws of the State of Delaware.

          "Single-Purpose Entity" means a corporation, limited partnership, or
limited liability company which, at all times since its formation and thereafter
(i) was and will be organized solely for the purpose of (x) owning or operating
the applicable Property or (y) acting as the managing member of the limited
liability company which owns or operates a Property or (z) acting as the general
partner of a limited partnership which owns or operates a Property, (ii) has not
and will not engage in any business unrelated to (x) the ownership or operation
of the applicable Property or (y) acting as a member of a limited liability
company which owns or operates such Property or (z) acting as a general partner
of a limited partnership which owns or operates such Property, (iii) has not and
will not have any assets other than (x) those related to the applicable Property
or (y) its memberbership interest in the limited liability company which owns or
operates such Property or (z) its general partnership interest in the limited
partnership which owns or operates such Property, as applicable, (iv) has not
and will not engage in, seek or consent to any dissolution, winding up,
liquidation, consolidation or merger, and, except as otherwise expressly
permitted by this Agreement, has not and will not engage in, seek or consent to
any asset sale, transfer of partnership or membership or shareholder interests,
or amendment of its limited partnership agreement, articles of incorporation,
articles of organization, certificate of formation or operating agreement (as
applicable), (v) if such entity is a limited partnership, has and will have as
its only general partners, general partners which are and will be Single-Purpose
Entities which are corporations, (vi) if such entity is a corporation, at all
relevant times, has and will have at least two Independent Directors, (vii) the
board of directors of such entity has not taken and will not take any action
requiring the unanimous affirmative vote of one hundred percent (100%) of the
members of the board of directors unless all of the directors, including without
limitation all Independent Directors, shall have participated in such vote,
(viii) has not and will not fail to correct any known misunderstanding regarding
the separate identity of such entity, (ix) if such entity is a limited liability
company, is either a Single Member LLC or has and will have at least one member
that is and will be a Single-Purpose Entity which is and will be a corporation,
and such corporation is and will be the managing member of such limited
liability company, (x) without the unanimous consent of all of the partners,
directors or managers (including without limitation all Independent Directors)
or members, as applicable, has not and will not with respect to itself or to any
other entity in which it has a direct or indirect legal or beneficial ownership
interest (w) file a bankruptcy, insolvency or reorganization petition or
otherwise institute insolvency proceedings or otherwise seek any relief under
any laws relating to the relief from debts or the protection of debtors
generally; (x) seek or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator, custodian or any similar official for such
entity or all or any portion of such entity's properties; (y) make any
assignment for the benefit of such entity's creditors; or (z) take any action
that might cause such entity to become insolvent, (xi) has maintained and will
maintain its accounts, books and records separate from any other person or
entity (except that, for accounting and reporting purposes, each Borrower may be
included in the consolidated financial statements of any equity owner of such
Borrower in accordance with GAAP provided that such financials will contain
detailed notes stating that such entity is a separate legal entity that owns its
own assets and has creditors that

                                       20



have a security interest in such assets and that, as to each Fee Owner, the
applicable Property has been sold to such Fee Owner), (xii) has maintained and
will maintain its books, records, resolutions and agreements as official
records, (xiii) has not commingled and will not commingle its funds or assets
with those of any other entity, (xiv) has held and will hold its assets in its
own name, (xv) has conducted and will conduct its business in its name, (xvi)
has maintained and will maintain its financial statements, accounting records
and other entity documents separate from any other person or entity (except
that, for accounting and reporting purposes, each Borrower may be included in
the consolidated financial statements of any equity owner of such Borrower in
accordance with GAAP), (xvii) has paid and will pay its own liabilities out of
its own funds and assets, (xviii) has observed and will observe all partnership,
corporate or limited liability company formalities as applicable, (xix) has
maintained and will maintain an arms-length relationship with its affiliates,
(xx) if (x) such entity owns or operates a Property, has and will have no
Indebtedness other than (A) the Debt and (B) Permitted Debt, or (y) such entity
acts as the general partner of a limited partnership which owns or operates such
Property, has and will have no indebtedness other than unsecured trade payables
in the ordinary course of business relating to acting as general partner of the
limited partnership which owns or operates such Property which (1) do not
exceed, at any time, Ten Thousand Dollars ($10,000.00) and (2) are paid within
ninety (90) days of the date incurred, or (z) such entity acts as a managing
member of a limited liability company which owns or operates such Property, has
and will have no indebtedness other than unsecured trade payables in the
ordinary course of business relating to acting as a member of the limited
liability company which owns or operates such Property which (1) do not exceed,
at any time, Ten Thousand Dollars ( $10,000.00) and (2) are paid within ninety
(90) days of the date incurred, (xxi) has not and will not assume or guarantee
or become obligated for the debts of any other entity or hold out its credit as
being available to satisfy the obligations of any other entity except for the
Debt, (xxii) has not acquired and will not acquire obligations or securities of
its partners, members or shareholders, (xxiii) has allocated and will allocate
fairly and reasonably shared expenses, including, without limitation, shared
office space and use separate stationery, invoices and checks and has and will
maintain office space separate from any other entity (which may be a separately
identified area in office space shared with one or more entity) and maintain a
separate sign in the office directory, (xxiv) except for the Liens granted
pursuant to the Loan Documents, has not and will not pledge its assets for the
benefit of any other person or entity, (xxv) has held and identified itself and
will hold itself out and identify itself as a separate and distinct legal entity
under its own name and not as a division or part of any other person or entity
so as not to mislead others with whom it is dealing (except that, for accounting
and reporting purposes, each Borrower may be included in the consolidated
financial statements of any equity owner of such Borrower in accordance with
GAAP provided that such financials will contain detailed notes stating that such
entity is a separate legal entity that owns its own assets and has creditors
that have a security interest in such assets and that, as to each Fee Owner, the
applicable Property has been sold to such Fee Owner), (xxvi) has not made and
will not make loans to any person or entity, (xxvii) has not and will not
identify its partners, members or shareholders, or any affiliates of any of them
as a division or part of it, (xxviii) if such entity is a limited liability
company (other than a Single Member LLC), such entity shall dissolve only upon
the bankruptcy of the managing member, and such entity's articles of
organization, certificate of formation and/or operating agreement, as
applicable, shall contain such provision, (xxiv) has not entered and will not
enter into or be a party to, any transaction with its partners, members,
shareholders or its affiliates except in the ordinary course of its business and
on terms

                                       21



which are intrinsically fair and are no less favorable to it than would
be obtained in a comparable arms-length transaction and on a commercially
reasonably basis with an unrelated third party, (xxx) has paid and will pay the
salaries of its own employees from its own funds and has and will maintain a
sufficient number of employees in light of its contemplated business operations,
(xxxi) has maintained and will maintain adequate capital in light of its
contemplated business operations (xxxii) if such entity is a limited liability
company (other than a Single Member LLC) or limited partnership, and such entity
has one or more managing members or general partners, as applicable, then such
entity shall continue (and not dissolve) for so long as a solvent managing
member or general partner, as applicable, exists and such entity's
organizational documents shall contain such provision; (xxxiii) if such entity
is a Single Member LLC, its organizational documents shall provide that, as long
as any portion of the Debt remains outstanding, upon the occurrence of any event
that causes the sole member of such Single Member LLC to cease to be a member of
such Single Member LLC (other than (y) upon an assignment by such member of all
of its limited liability company interest in such Single Member LLC and the
admission of the transferee, if permitted pursuant to the organizational
documents of such Single Member LLC and the Loan Documents, or (z) the
resignation of such member and the admission of an additional member of such
Single Member LLC, if permitted pursuant to the organizational documents of such
Single Member LLC and the Loan Documents) at least one individual acting as an
Independent Director of such Single Member LLC shall, without any action of any
Person and simultaneously with the sole member of the Single Member LLC ceasing
to be a member of the Single Member LLC, automatically be admitted as the sole
member of the Single Member LLC (the "Special Member") and shall preserve and
continue the existence of the Single Member LLC without dissolution; (xxxiv) if
such entity is a Single Member LLC, its organizational documents shall provide
that for so long as any Obligation is outstanding, no Special Member may resign
or transfer its rights as Special Member unless (y) a successor Special Member
has been admitted to such Single Member LLC as a Special Member, and (z) such
successor Special Member has also accepted its appointment as an Independent
Director; and (xxxv) has and shall maintain its assets in a manner that will not
be costly or difficult to segregate, ascertain or identify its individual assets
for those of any other entity.

          "Special Member" has the meaning set forth in the definition of
Single-Purpose Entity.

          "Specialty Hospital" means a facility that is operated as a special
hospital for providing specialized services, including but not limited to
rehabilitation services, on an inpatient basis. For purposes of this Agreement,
the term "Specialty Hospital" shall include "rehabilitation hospital" and
"long-term acute care hospital" as those terms are defined under applicable
Medicare Regulations.

          "Spread" means three hundred (300) basis points; provided, the Spread
shall be (i) four hundred (400) basis points commencing on December 1, 2002 if
the SAP Completion Date shall not have occurred on or prior to November 30,
2002, (ii) five hundred (500) basis points commencing on January 1, 2003 if the
SAP Completion Date shall not have occurred on or prior to December 31, 2002 and
(iii) six hundred (600) basis points commencing on February 1, 2003 if the SAP
Completion Date shall not have occurred on or prior to January 31, 2003.
Notwithstanding the foregoing, upon completion of the Securitization Accounting
Procedures,

                                       22



commencing on the Payment Date first occurring after such completion, the Spread
shall be three hundred (300) basis points.

          "Spread Maintenance Premium" means, if all or any portion of the Note
is prepaid (other than a permitted prepayment hereunder) or accelerated, an
amount equal to the present value, discounted at LIBOR on the most recent LIBOR
Determination Date, of all future installments of interest which would have been
due hereunder through and including the Lockout Date on the portion of the
outstanding principal balance of the Loan being prepaid as if interest accrued
on such portion of the principal balance being prepaid at an interest rate per
annum equal to the Spread; provided, however, under no circumstances shall the
Spread Maintenance Premium be less than four percent (4%) of the principal
amount of the Loan being repaid. The calculation of the Spread Maintenance
Premium shall be made by Lender and shall, absent manifest error, be final,
conclusive and binding upon all parties.

          "Staff Leasing Agreement" means the Ohio Staff Leasing Agreement or
the Maryland Staff Leasing Agreement, as the case may be.

          "Staff Provider" means the Ohio Staff Provider or the Maryland Staff
Provider, as the case may be.

          "State" means, with respect to a Property, the State or Commonwealth
in which such Property or any part thereof is located.

          "Tax and Insurance Escrow Account" has the meaning set forth in
Section 6.3(a).

          "Taxes" means all real estate and personal property taxes,
assessments, water rates or sewer rents, now or hereafter levied or assessed or
imposed against any of the Properties or part thereof, together with all
interest and penalties thereon.

          "Third Party Payor" means any state, federal or municipal boards,
bureaus, corporations or agencies and any private commercial insurers remitting
payments to any Borrower pursuant to Medicare, Medicaid, Blue Cross and/or Blue
Shield or other insurance, health plan, managed care or employee assistance
programs.

          "Third Party Payor Programs" has the meaning set forth in Section
3.1.40(e).

          "Title Insurance Policy" means, with respect to each Property, an ALTA
mortgagee title insurance policy in the form reasonably acceptable to Lender
issued with respect to such Property and insuring the lien of the Mortgage
encumbering such Property.

          "Transfer" means any voluntary or involuntary sale, conveyance,
mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer of: (a)
all or any part of a Property or the Properties or any estate or interest
therein including, but not be limited to, (i) an installment sales agreement
wherein any Borrower agrees to sell a Property or the Properties or any part
thereof for a price to be paid in installments, (ii) an agreement by any
Borrower leasing all or a substantial part of a Property or the Properties, for
other than actual occupancy by a tenant (other than the Operator pursuant to the
Operating Lease) thereunder and its affiliates or (iii) a sale, assignment or
other transfer of, or the grant of a security interest in, any Borrower's right,
title

                                       23



and interest in and to any Leases or any Rents; or (b) any ownership interest in
(i) any Borrower or any Guarantor or (ii) any corporation, partnership, limited
liability company, trust or other Person owning, directly or indirectly, any
interest in any Borrower or any Guarantor.

          "Trustee" means any trustee holding the Loan in a Securitization.

          "UCC" or "Uniform Commercial Code" means the Uniform Commercial Code
as in effect in the State.

          "Underwriter Group" has the meaning set forth in Section 9.2(b).

          "Updated Information" has the meaning set forth in Section 9.1(b)(i).

          "U.S. Obligations" means direct full faith and credit obligations of
the United States of America that are not subject to prepayment, call or early
redemption.

          "U.S. Person" means a United States person within the meaning of
Section 7701(a)(30) of the Code.

          "U.S. Tax" means any present or future tax, assessment or other charge
or levy imposed by or on behalf of the United States of America or any taxing
authority thereof.

          "Ventas Group" has the meaning set forth in Section 9.2(b).

          Section 1.2. Principles of Construction.

          All references to sections and schedules are to sections and schedules
in or to this Agreement unless otherwise specified. Unless otherwise specified,
the words "hereof," "herein" and "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. Unless otherwise specified, all meanings
attributed to defined terms herein shall be equally applicable to both the
singular and plural forms of the terms so defined. Whenever the context may
require, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural and vice versa.

                              ARTICLE II. THE LOAN

          Section 2.1. The Loan.

          2.1.1. Agreement to Lend and Borrow. Subject to and upon the terms and
conditions set forth herein, Lender shall make the Loan to Borrowers and
Borrowers shall accept the Loan from Lender on the Closing Date.

          2.1.2. Single Disbursement to Borrowers. Borrowers shall receive only
one borrowing hereunder in respect of the Loan and any amount borrowed and
repaid hereunder in respect of the Loan may not be reborrowed. Notwithstanding
the foregoing, the parties acknowledge that the Loan Amount may be increased or
decreased as a result of the Re-sizing.

                                       24



          2.1.3. The Note. The Loan shall be evidenced by that certain
Promissory Note of even date herewith, in the maximum principal amount of Fifty
Five Million and No/100 Dollars ($55,000,000) executed by Borrowers and payable
to the order of Lender in evidence of the Loan (as the same may hereafter be
amended, supplemented, restated, componitized, split, increased, extended or
consolidated, the "Note") and shall be repaid in accordance with the terms of
this Agreement and the Note.

          2.1.4. Use of Proceeds. Borrowers shall use proceeds of the Loan to
(i) pay and discharge any existing loans relating to certain of the Properties
and to acquire certain of the Properties, (ii) pay all past-due Basic Carrying
Costs, if any, in respect of the Properties, (iii) deposit the initial required
amounts into the Collateral Accounts, (iv) pay costs and expenses incurred in
connection with the closing of the Loan, including, but not limited to, Lender's
costs and expenses, all as approved by Lender, (v) fund any working capital
requirements of the Properties, as approved by Lender and (vi) pay any
recoupment of deposits or expenses in connection with the acquisition of any of
the Properties or in any failed financing in the past nine (9) months.

          Section 2.2. Interest Rate.

          2.2.1. Interest Rate. Interest on the outstanding principal balance of
the Loan shall accrue from the Closing Date up to but excluding the Maturity
Date at the Interest Rate.

          2.2.2. Default Rate. In the event that, and for so long as, any Event
of Default shall have occurred and be continuing, the outstanding principal
balance of the Loan and, to the extent permitted by law, overdue interest in
respect of the Loan, shall accrue interest at the Default Rate, calculated from
the date on which the default which gave rise to the Event of Default occurred
without regard to any grace or cure periods contained herein.

          2.2.3. Interest Calculation. Interest on the outstanding principal
balance of the Loan shall be calculated by multiplying (a) the actual number of
days elapsed in the applicable Interest Accrual Period by (b) a daily rate based
on a three hundred sixty (360) day year (that is, the Interest Rate or the
Default Rate, as the case may be, divided by three hundred sixty (360)) by (c)
the outstanding principal balance.

          2.2.4. Usury Savings. This Agreement and the other Loan Documents are
subject to the express condition that at no time shall Borrowers be required to
pay interest on the principal balance of the Loan at a rate which could subject
Lender to either civil or criminal liability as a result of being in excess of
the Maximum Legal Rate. If by the terms of this Agreement or the other Loan
Documents, any Borrower is at any time required or obligated to pay interest on
the principal balance due hereunder at a rate in excess of the Maximum Legal
Rate, the Interest Rate or the Default Rate, as the case may be, shall be deemed
to be immediately reduced to the Maximum Legal Rate and all previous payments in
excess of the Maximum Legal Rate shall be deemed to have been payments in
reduction of principal and not on account of the interest due hereunder. All
sums paid or agreed to be paid to Lender for the use, forbearance, or detention
of the sums due under the Loan, shall, to the extent permitted by applicable
law, be amortized, prorated, allocated, and spread throughout the full stated
term of the Loan until payment in full so that the rate or amount of interest on
account of the Loan does

                                       25



not exceed the Maximum Legal Rate from time to time in effect and applicable to
the Loan for so long as the Loan is outstanding.

          Section 2.3. Loan Payments.

          2.3.1. Payment Before Maturity Date. Borrowers shall make a payment to
Lender of interest only on the Closing Date for the period from the Closing Date
through the last day of the Interest Accrual Period in which the Closing Date
occurs (unless the Closing Date is the fifteenth (15th) day of a calendar month,
in which case no such separate payment of interest shall be due) (the "Stub
Interest Payment"). Notwithstanding the foregoing, Lender will waive the
requirement of payment of the Stub Interest Payment on the Closing Date and the
Borrowers hereby agree and covenant to pay the Stub Interest Payment on November
15, 2002. Borrowers shall make a payment to Lender of monthly interest on the
Loan on the Payment Date occurring in December, 2002 and on each Payment Date
thereafter to and including the Maturity Date. Together with each monthly
payment of interest, Borrowers shall make a payment of principal to Lender in
the amount set forth on the amortization schedule attached hereto as Schedule
VI. Notwithstanding the foregoing, if any Re-sizing or adjustment in the Loan
Amount shall have occurred pursuant to the Cooperation Agreement, Borrowers
shall make a payment of principal to Lender in the amount set forth on any
replacement amortization schedule hereafter delivered in connection with such
Re-sizing or adjustment. All payments to Lender by Borrowers under this Loan
Agreement shall be made by wire transfer of funds to an account designated by
Lender.

          2.3.2. Payment on Maturity Date. Borrowers shall pay to Lender on the
Maturity Date the outstanding principal balance of the Loan, all accrued and
unpaid interest and all other amounts due hereunder and under the Note, the
Mortgages and the other Loan Documents.

          2.3.3. Late Payment Charge. If any principal, interest or any other
sum due under the Loan Documents (excluding the principal payment due on the
Maturity Date) is not paid by any Borrower on the date on which it is due,
Borrowers shall pay to Lender upon demand an amount equal to the lesser of five
percent (5%) of such unpaid sum or the maximum amount permitted by applicable
law in order to defray the expense incurred by Lender in handling and processing
such delinquent payment and to compensate Lender for the loss of the use of such
delinquent payment. Any such amount shall be secured by the Mortgages and the
other Loan Documents.

          2.3.4. Method and Place of Payment.

               (a) Except as otherwise specifically provided herein, all
payments and prepayments under this Agreement and the Note shall be made to
Lender or Lender's designee not later than 11:00 A.M., New York City time, on
the date when due and shall be made in lawful money of the United States of
America in immediately available funds at Lender's office or such other place as
Lender shall direct, and any funds received by Lender after such time shall, for
all purposes hereof, be deemed to have been paid on the next succeeding Business
Day.

                                       26



               (b) Whenever any payment to be made hereunder or under any other
Loan Document shall be stated to be due on a day which is not a Business Day,
the due date thereof shall be the preceding Business Day.

               (c) All payments required to be made by Borrowers hereunder or
under the Note or the other Loan Documents shall be made irrespective of, and
without deduction for, any setoff, claim or counterclaim and shall be made
irrespective of any defense thereto.

          2.3.5. Acceptable Interest Rate Cap Agreement. Borrowers shall obtain
and maintain an Acceptable Interest Rate Cap Agreement throughout the term of
the Loan, including any extension thereof contemplated herein, and shall cause
such Acceptable Interest Rate Cap Agreement to be collaterally assigned to
Lender pursuant to the terms set forth in the Collateral Assignment of Interest
Rate Cap. Each Borrower shall comply with all of its obligations under the terms
and provisions of each Acceptable Interest Rate Cap Agreement. All amounts paid
by the cap provider under an Acceptable Interest Rate Cap Agreement shall be
deposited directly by the cap provider into the Cash Management Account. Each
Borrower shall take all actions reasonably requested by Lender to enforce
Lender's rights under the Acceptable Interest Rate Cap Agreement in the event of
a default by the cap provider thereunder and shall not waive, amend or otherwise
modify any of its rights or any provisions thereunder without Lender's consent
and Rating Agency Confirmation.

          2.3.6. Other Taxes. (a) All payments made by any Borrower hereunder
shall be made free and clear of, and without reduction for or on account of,
income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions, reserves or withholdings imposed, levied, collected, withheld or
assessed by any Governmental Authority, which are imposed, enacted or become
effective after the date hereof excluding income and franchise taxes of the
United States of America or any political subdivision or taxing authority
thereof or therein (such non-excluded taxes being referred to collectively as
"Other Taxes"). If any Other Taxes are required to be withheld from any amounts
payable to Lender hereunder, the amounts so payable to Lender shall be increased
to the extent necessary to yield to Lender (after payment of all Other Taxes)
interest or any such other amounts payable hereunder at the rate or in the
amounts specified hereunder. Whenever any Other Taxes are payable pursuant to
applicable law by any Borrower, as promptly as possible thereafter, such
Borrower shall send to Lender an original official receipt, if available, or
certified copy thereof showing payment of such Other Taxes. Each Borrower hereby
indemnifies Lender for any incremental taxes, interest or penalties that may
become payable by Lender which may result from any failure by such Borrower to
pay any such Other Taxes when due to the appropriate taxing authority or any
failure by any Borrower to remit to Lender the required receipts or other
required documentary evidence.

          (b) If any Borrower is required by law to withhold or deduct any
amount from any payment hereunder in respect of any U.S. Tax, such Borrower
shall withhold or deduct the appropriate amount, remit such amount to the
appropriate Governmental Authority and pay to each Person to whom there has been
an assignment or participation of the Loan and who is not a U.S. Person such
additional amounts as are necessary in order that the net payment of any amount
due to such non-U.S. Person hereunder after deduction for or withholding in
respect of any U.S. Tax imposed with respect to such payment (or in lieu
thereof, payment of such U.S.

                                       27



Tax by such non-U.S. Person), will not be less than the amount stated herein to
be then due and payable; provided that the foregoing obligation to pay such
additional amounts shall not apply (i) to any assignee that has not complied
with the obligations contained in Section 9.1(d), (ii) to any U.S. Taxes imposed
solely by reason of the failure by such Person (or, if such Person is not the
beneficial owner of the Loan, such beneficial owner) to comply with applicable
certification, information, documentation or other reporting requirements
concerning the nationality, residence, identity or connections with the United
States of America of such Person (or beneficial owner, as the case may be) if
such compliance is required by statute or regulation of the United States of
America as a precondition to relief or exemption from such U.S. Taxes; or (iii)
with respect to any Person who is a fiduciary or partnership or other than the
sole beneficial owner of such payment, to any U.S. Tax imposed with respect to
payments made under the Note to a fiduciary or partnership to the extent that
the beneficial owner or member of the partnership would not have been entitled
to the additional amounts if such beneficial owner or member of the partnership
had been the holder of the Note.

          2.3.7. Regulatory Change. In the event that any change in any
requirement of law or in the interpretation or application thereof, or
compliance by Lender with any request or directive (whether or not having the
force of law) hereafter issued from any central bank or other Governmental
Authority, including, without limitation, any imposition of or increase in any
reserve requirement with respect to a LIBOR-based loan: (i) shall hereafter have
the effect of reducing the rate of return on Lender's capital as a consequence
of its obligations hereunder to a level below that which Lender could have
achieved but for such adoption, change or compliance (taking into consideration
Lender's policies with respect to capital adequacy) by any amount deemed by
Lender to be material; or (ii) shall hereafter impose on Lender any other
condition and the result of any of the foregoing is to increase the cost to
Lender of making, renewing or maintaining loans or extensions of credit or to
reduce any amount receivable hereunder; then, in any such case, Borrowers shall
promptly pay Lender, upon demand, any additional amounts necessary to compensate
Lender for such additional cost or reduced amount receivable which Lender deems
to be material as determined by Lender. Lender shall take reasonable steps to
minimize or eliminate such additional costs. If Lender becomes entitled to claim
any additional amounts pursuant to this Section, Lender shall provide Borrowers
with not less than thirty (30) days written notice specifying in reasonable
detail the event by reason of which it has become so entitled and the additional
amount required to fully compensate Lender for such additional cost or reduced
amount. A certificate as to any additional costs or amounts payable pursuant to
the foregoing sentence, executed by an authorized signatory of Lender and
submitted by Lender to any Borrower shall be conclusive in the absence of
manifest error. If Lender shall fail to notify Borrowers of any such event
within 180 days following the end of the month during which such event occurred,
each Borrower's liability for any amounts described in this Section incurred by
such Lender as a result of such event shall be limited to those attributable to
the period occurring subsequent to the 180th day prior to the date upon which
such Lender actually notified Borrowers of the occurrence of such event. This
Section shall survive payment of the Note and the satisfaction of all other
obligations of any Borrower under this Agreement and the Loan Documents.

          2.3.8. Breakage Costs. Each Borrower agrees to indemnify Lender and to
hold Lender harmless from any loss or expense which Lender sustains or incurs as
a consequence of (i) any default by any Borrower in payment of the Loan,
including, without limitation, any loss

                                       28



or expense arising from interest or fees payable by Lender to lenders of funds
obtained by it in order to maintain a LIBOR-based loan hereunder, and (ii) any
prepayment (whether voluntary or mandatory) of the Loan on a day that is not a
Payment Date, including, without limitation, such loss or expense arising from
interest or fees payable by Lender to lenders of funds obtained by it in order
to maintain the Loan, unless such prepayment includes interest on the amount
being prepaid through the next Payment Date (the amounts referred to in clauses
(i) and (ii) are herein referred to collectively as the "Breakage Costs").
Whenever in this Section the term "interest or fees payable by Lender to lenders
of funds obtained by it" is used and no such funds were actually obtained from
such lenders, it shall include interest or fees which would have been payable by
Lender if it had obtained funds from lenders in order to maintain a LIBOR-based
loan hereunder. Lender will provide to Borrowers a statement detailing such
Breakage Costs and the calculation thereof.

          2.3.9. Survival. The provisions of Sections 2.3.6 through 2.3.8 shall
survive payment of the Note in full and the satisfaction of all other
obligations of any Borrower under this Agreement and the other Loan Documents.

          Section 2.4. Prepayments.

          2.4.1. Voluntary Prepayments. Except as otherwise provided herein, no
Borrower shall have the right to prepay the Loan in whole or in part prior to
the Lockout Date. Beginning on the Lockout Date or on any Business Day
thereafter, any Borrower may, at its option, prepay the Debt in whole, but not
in part. Any prepayment made on or after the Lockout Date shall be accompanied
by a prepayment fee (a "Prepayment Fee") equal to (i) four percent (4%) of the
outstanding principal balance if the prepayment occurs on or after the Lockout
Date but prior to the second anniversary of the Re-sizing Date or (ii) two
percent (2%) of the outstanding principal balance if the prepayment occurs on or
after the second anniversary of the Re-sizing Date. In addition, if any Borrower
prepays the Loan on any date other than a Payment Date, Borrowers shall pay to
Lender on the date of such prepayment an amount equal to the interest that would
have accrued on the Loan through the next Payment Date. As a condition to any
voluntary prepayment, each Borrower shall give Lender written notice (a
"Prepayment Notice") of its intent to prepay, which notice must be given not
later than thirty (30) days prior to the date on which such prepayment is to be
made and must specify the Business Day on which such prepayment is to be made.

          2.4.2. Mandatory Prepayments. (a) On each date on which Lender
actually receives a distribution of Net Proceeds, and if Lender does not make
such Net Proceeds available to any Borrower for a Restoration of the applicable
Property, Borrowers shall, at Lender's option, prepay the outstanding principal
balance of the Note in an amount equal to one hundred percent (100%) of such Net
Proceeds together with interest that would have accrued on such amounts through
the next Payment Date. The Allocated Loan Amount with respect to such Property
will be reduced in an amount equal to such prepayment. No Prepayment Fee or
Spread Maintenance Premium shall be due in connection with any prepayment made
pursuant to this Section 2.4.2. Any prepayment received by Lender pursuant to
this Section 2.4.2 on a date other than a Payment Date shall be held by Lender
as collateral security for the Loan in the Net Proceeds Account, and shall be
applied by Lender on the next Payment Date.

                                       29



               (b) In the event, prior to a Securitization, the equity holders
of the Parent propose a Change of Control (as defined in the Master Guaranty) to
the Parent, as a condition to such Change of Control, in connection with the
mandatory prepayment of the Mezzanine Loan as set forth in Section 2.4.2(d) of
the Mezzanine Loan, Borrowers shall prepay the entire outstanding principal
balance of the Loan together with interest that would have accrued on the
principal balance of the Mortgage Loan through the next Payment Date (in the
event the prepayment occurs on a date other than a Payment Date) plus the
Prepayment Fee.

          2.4.3. Prepayments After Default. If after an Event of Default,
payment of all or any part of the principal of the Loan is tendered by any
Borrower, a purchaser at foreclosure or any other Person, such tender shall be
deemed an attempt to circumvent the prohibition against prepayment set forth in
Section 2.4.1 and Borrowers, such purchaser at foreclosure or other Person shall
pay the Spread Maintenance Premium, in addition to the outstanding principal
balance, all accrued and unpaid interest and other amounts payable under the
Loan Documents.

          Section 2.5. Extension of Loan. Borrowers shall have the option to
extend the original Maturity Date of the Loan on the same terms and conditions
in effect during the initial term, for two additional one (1) year periods
subject to satisfaction as of the Maturity Date (or, with respect to the second
one (1) year extension option, the Maturity Date as previously extended) of each
of the terms and conditions set forth in this Section. Borrowers shall give
Lender written notice of its exercise of the option to extend, not less than
sixty (60) days prior to the Maturity Date (or, with respect to the second one
(1) year extension option, the Maturity Date as previously extended). Each of
the following conditions must be satisfied prior to any extension:

               (a) No Default or Event of Default shall have occurred and be
continuing under the Loan Documents;

               (b) The Debt Service Coverage Ratio as of the Maturity Date (or,
with respect to the second one (1) year extension option, the Maturity Date as
previously extended) shall be no less than one hundred and three percent (103%)
of the Debt Service Coverage Ratio as of the Closing Date.

               (c) Borrowers shall obtain and maintain throughout the extended
term an Acceptable Interest Rate Cap Agreement with a term equal to the extended
term and collaterally assign the same pursuant to a Collateral Assignment of
Interest Rate Cap;

               (d) Each Borrower shall pay all reasonable costs and expenses,
including reasonable legal fees, actually incurred by Lender or otherwise
involved in extending the Maturity Date;

               (e) Each Borrower shall execute and/or deliver to Lender any
other documentation reasonably requested by Lender, including, without
limitation, security agreements, financing statements, opinions of counsel and
title endorsements, all of which shall be reasonably satisfactory in form and
substance to Lender;

               (f) All Regulatory Permits with respect to the Properties shall
be in full force and effect; and

                                       30



               (g) Borrowers shall pay the Extension Fee.

          Section 2.6 Supplemental Mortgage Affidavits. The Liens created by
each Mortgage are intended to encumber the Property described therein to the
full extent of Borrowers' obligations under the Loan Documents. As of the
Closing Date, Borrowers shall have paid all state, county and municipal
recording and all other taxes imposed upon the execution and recordation of the
Mortgages. Notwithstanding anything contained herein to the contrary, if at any
time Lender determines, based on Lender's estimation of market value and
applicable law, that Lender is not being afforded the maximum amount of security
available from any Property as a direct, or indirect, result of applicable taxes
not having been paid with respect to the related Mortgage, Lender may request,
and each Borrower agrees that it (i) will execute, acknowledge and deliver to
Lender, within a reasonable period of time after Lender's request, supplemental
affidavits increasing the amount of Indebtedness for which all applicable taxes
have been or are required to be paid under the related Mortgage to an amount
determined by Lender, in its reasonable discretion, to be appropriate and (ii)
will pay any and all applicable recording, intangible or similar taxes.

                   ARTICLE III. REPRESENTATIONS AND WARRANTIES

          Section 3.1. Borrower Representations.

          Each Borrower represents and warrants that:

          3.1.1. Organization. Each Borrower is duly organized, validly existing
and in good standing with full power and authority to own its assets and conduct
its business, and is duly qualified in all jurisdictions in which the ownership
or lease of its property or the conduct of its business requires such
qualification. Each Borrower has taken all necessary action to authorize the
execution, delivery and performance of this Agreement and the other Loan
Documents by it, and has the full power and authority to execute, deliver and
perform under this Agreement, the other Loan Documents and all the transactions
contemplated hereby. Each Borrower's exact and correct legal name as it appears
on file with the Secretary of State of Delaware is as set forth in Schedule III
attached hereto. Each Borrower is a limited liability company organized under
the laws of the State of Delaware. Each Borrower's organization identification
number assigned by the state of its organization is as set forth opposite such
Borrower's name on Schedule III. Borrower's federal tax identification number is
as set forth opposite such Borrower's name on Schedule III.

          3.1.2. Proceedings. This Agreement and the other Loan Documents have
been duly authorized, executed and delivered by each Borrower and, as
applicable, each Guarantor and constitute a legal, valid and binding obligation
of each Borrower and, as applicable, each Guarantor, enforceable against each
Borrower and, as applicable, each Guarantor in accordance with their respective
terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally, and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

                                       31



          3.1.3. No Conflicts. The execution and delivery of this Agreement and
the other Loan Documents by each Borrower and, as applicable, each Guarantor,
and the performance of its obligations hereunder and thereunder will not
conflict with or violate any provision of any law, or regulation to which or
each Guarantor is subject, or conflict with, result in a breach of, or
constitute a default, including due notice or lapse of time or both, under, any
of the terms, conditions or provisions of any of any Borrower's or any
Guarantor's organizational documents or any agreement or instrument to which any
Borrower or any Guarantor is a party or by which it is bound, or any order or
decree applicable to any Borrower or any Guarantor, or result in the creation or
imposition of any lien on any of any Borrower's or any Guarantor's assets or
property (other than pursuant to the Loan Documents) or otherwise materially and
adversely affect performance of its respective duties.

          3.1.4. Litigation. There is no action, suit, proceeding arbitration or
investigation pending or, to such Borrower's knowledge, threatened against any
Borrower, any Borrower Party, any Guarantor, Manager or any of the Properties in
any court or by or before any other Governmental Authority which could
reasonably be expected to have a Material Adverse Effect.

          3.1.5. Agreements. No Borrower Party is in default with respect to any
order or decree of any court or any order, regulation or demand of any
Governmental Authority, which default might have consequences that would
materially and adversely affect the condition (financial or other) or operations
of any Borrower or any of the Properties or might have consequences that would
adversely affect its performance hereunder.

          3.1.6. Consents. No consent, approval, authorization, order or filings
of or with any court or Governmental Authority is required for the execution,
delivery and performance by any Borrower of, or compliance by any Borrower with,
this Agreement or the consummation of the transactions contemplated hereby
except those the absence of which would not have a Material Adverse Effect,
other than those which have been obtained by such Borrower; provided, however,
Borrowers will obtain within sixty (60) days (or, in the case of Medicare
provider agreements only, one hundred and eighty (180) days) of the Closing Date
the state licenses for the operation of each Property as a Nursing Facility or
Assisted Living Facility, as applicable, and the Medicare and Medicaid provider
agreements in the names of each applicable Borrower which have not been obtained
as of the Closing Date.

          3.1.7. Title. Each Fee Owner has good, marketable and insurable fee
title to the real property comprising the applicable Property and each Operator
has a valid leasehold interest to the real property comprising the applicable
Property and good title to the balance of such Property, in each case, free and
clear of all Liens whatsoever except the Permitted Encumbrances. Each Mortgage,
when properly recorded in the appropriate records, together with any Uniform
Commercial Code financing statements required to be filed in connection
therewith, will create (i) a valid, and enforceable first priority, perfected
Lien on the applicable Property, subject only to Permitted Encumbrances and (ii)
valid and enforceable perfected security interests in and to, and perfected
collateral assignments of, all personalty (including the Leases), all in
accordance with the terms thereof, in each case subject only to any Permitted
Encumbrances. There are no mechanics', materialman's or other similar Liens or
claims which have been filed for work, labor or materials affecting any Property
which are or may be Liens prior to, or equal or coordinate with, the Lien of the
related Mortgage or for which Borrower has

                                       32



not provided title insurance over such Lien. None of the Permitted Encumbrances,
individually or in the aggregate, materially interfere with the benefits of the
security intended to be provided by the Mortgages and this Agreement, materially
and adversely affect the value of the Properties, impair the intended use or
operations of the Properties or impair any Borrower's ability to pay its
obligations in a timely manner.

          3.1.8. No Plan Assets. As of the date hereof and throughout the term
of the Loan (a) no Borrower is and will be an "employee benefit plan," as
defined in Section 3(3) of ERISA, subject to Title I of ERISA, or a "plan," as
defined in Section 4975(e)(1) of the Code, subject to Code Section 4975, (b) no
Borrower is and will be a "governmental plan" within the meaning of Section
3(32) of ERISA, (c) none of the assets of any Borrower constitutes or will
constitute "plan assets" of one or more of any such plans within the meaning of
29 C.F.R. Section 2510.3-101, and (d) transactions by or with any Borrower are
not and will not be subject to state statutes regulating investment of, and
fiduciary obligations with respect to, governmental plans.

          3.1.9. Compliance. Each Borrower Party and each of the Properties and
the use thereof is in substantial compliance with all applicable Legal
Requirements, including, without limitation, building and zoning ordinances and
codes. No Borrower Party is in default or violation of any order, writ,
injunction, decree or demand of any Governmental Authority, the violation of
which might materially adversely affect the condition (financial or otherwise)
or business of any Borrower. No Borrower Party has committed any act which may
give any Governmental Authority the right to cause any Borrower to forfeit any
of the Properties or any part thereof or any monies paid in performance of any
Borrower's obligations under any of the Loan Documents.

          3.1.10. Financial Information. All financial data, including, without
limitation, the statements of cash flow and income and operating expense, that
have been delivered to Lender in respect of the Properties and each Borrower
Party (i) are true, complete and correct in all material respects, (ii)
accurately represent the financial condition of the Properties as of the date of
such reports, and (iii) have been prepared in accordance with GAAP throughout
the periods covered, except as disclosed therein. No Borrower Party has any
contingent liabilities, liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable commitments
that are known to any Borrower and reasonably likely to have a materially
adverse effect on the Properties or the operation thereof, except as referred to
or reflected in said financial statements. Since the date of the financial
statements, there has been no material adverse change in the financial
condition, operations or business of a Borrower Party or the Properties from
that set forth in said financial statements.

          3.1.11. Condemnation. No Condemnation or other proceeding is pending
or, to such Borrower's knowledge, is threatened with respect to all or any
portion of any of the Properties or for the relocation of roadways providing
access to any of the Properties.

          3.1.12. Utilities and Public Access. Except as denoted on the
application Survey or Title Policy, each Property has adequate rights of access
to public ways and is served by utilities, including, without limitation,
adequate water, sewer, electricity, gas, telephone, sanitary sewer and storm
drain facilities. All public utilities necessary to the continued use and
enjoyment of each Property as presently used and enjoyed are located in the
public right-of-way

                                       33



abutting such Property, and all such utilities are connected
so as to serve such Property without passing over other property. All roads
necessary for the full utilization of each Property for its current purpose have
been completed and dedicated to public use and accepted by all governmental
authorities or are the subject of access easements for the benefit of such
Property.

          3.1.13. Separate Lots. Except as denoted by the applicable Title
Policy, each Property is comprised of one (1) or more parcels which constitute
separate tax lots and do not constitute a portion of any other tax lot not a
part of the applicable Property.

          3.1.14. Assessments. There are no pending or, to Borrower's knowledge,
proposed special or other assessments for public improvements or otherwise
affecting any of the Properties, nor are there any contemplated improvements to
any of the Properties that may result in such special or other assessments.

          3.1.15. Enforceability. The Loan Documents are not subject to any
right of rescission, set-off, counterclaim or defense by any Borrower or, as
applicable, any Guarantor, including the defense of usury, nor would the
operation of any of the terms of the Loan Documents, or the exercise of any
right thereunder, render the Loan Documents unenforceable, and neither any
Borrower nor any Guarantor has not asserted any right of rescission, set-off,
counterclaim or defense with respect thereto.

          3.1.16. Assignment of Leases. Each Assignment of Leases creates a
valid assignment of, or a valid security interest in, certain rights under the
related Leases, subject only to a license granted to the applicable Borrower to
exercise certain rights and to perform certain obligations of the lessor under
such Leases, including the right to operate the related Property. No Person
other than Lender has any interest in or assignment of the Leases or any portion
of the Rents due and payable or to become due and payable thereunder.

          3.1.17. Insurance. Each Borrower has obtained and has delivered to
Lender original or certified copies of all of the Policies for each Property,
with all premiums prepaid thereunder, reflecting the insurance coverages,
amounts and other requirements set forth in this Agreement. Except as set forth
in Schedule IX, no claims have been made by any Borrower under any of the
Policies which remain unresolved, and no Person, including each Borrower, has
done, by act or omission, anything which would impair the coverage of any of the
Policies.

          3.1.18. Licenses. All permits, authorizations, licenses and approvals
(including, without limitation, CONs, Accreditations, Medicaid Provider
Agreements and Certifications, Medicare Participation Agreements and
Certifications and certificates of occupancy) required by any Governmental
Authority for the use, occupancy and operation of each Property in the manner in
which such Property is currently being used, occupied and operated have been
obtained, except those the absence of which would not mean a Material Adverse
Effect and are valid and in full force and effect; provided, however, Borrowers
will obtain within sixty (60) days (or in the case of Medicare provider
agreements only, one hundred eighty (180) days) of the Closing Date the state
licenses for operation of each Property as a Nursing Facility or Assisted Living
Facility, as applicable, and the Medicare and Medicaid provider agreements in
the names of the applicable Borrowers which have not been obtained as of the
Closing Date.

                                       34



          3.1.19. Flood Zone. None of the Improvements on any of the Properties
are located in an area identified by the Federal Emergency Management Agency as
a special flood hazard area.

          3.1.20. Physical Condition. Except as set forth on the applicable
Property Condition Report, each Property, including, without limitation, all
buildings, improvements, parking facilities, sidewalks, storm drainage systems,
roofs, plumbing systems, HVAC systems, fire protection systems, electrical
systems, equipment, elevators, exterior sidings and doors, landscaping,
irrigation systems and all structural components, are in good condition, order
and repair in all material respects; there exists no structural or other
material defects or damages in any of the Properties, whether latent or
otherwise, and no Borrower has received notice from any insurance company or
bonding company of any defects or inadequacies in any of the Properties, or any
part thereof, which would materially and adversely affect the insurability of
the same or cause the imposition of extraordinary premiums or charges thereon or
of any termination or threatened termination of any policy of insurance or bond.

          3.1.21. Boundaries. Except as denoted on the applicable Survey, all of
the improvements which were included in determining the appraised value of each
Property lie wholly within the boundaries and building restriction lines of such
Property, and no improvements on adjoining properties encroach upon such
Property, and no easements or other encumbrances affecting the applicable
Property encroach upon any of the improvements, so as to affect the value or
marketability of the applicable Property except those which are insured against
by title insurance.

          3.1.22. Leases. Each Borrower represents and warrants to Lender with
respect to the Leases that: (a) the list of Operating Leases described on
Schedule I attached hereto is true, complete and correct and none of the
Properties are subject to any Leases other than (i) such Operating Leases and
(ii) the resident care agreements entered into by the Operators and the
residents of the Properties, (b) the Operating Leases are in full force and
effect and there are no defaults thereunder by either party, (c) the copies of
the Operating Leases delivered to Lender are true and complete, and there are no
oral agreements with respect thereto, (d) no Rent (including security deposits)
has been paid more than one (1) month in advance of its due date, (e) all work
to be performed by any Borrower under each Lease has been performed as required
and has been accepted by the applicable tenant, and (f) any payments, free rent,
partial rent, rebate of rent or other payments, credits, allowances or
abatements required to be given by any Borrower to any tenant has already been
received by such tenant.

          3.1.23. Filing and Recording Taxes. All transfer taxes, deed stamps,
intangible taxes or other amounts in the nature of transfer taxes required to be
paid under applicable Legal Requirements in connection with the transfer of the
Properties to any Borrower have been paid or will be paid at closing. All
mortgage, mortgage recording, stamp, intangible or other similar tax required to
be paid under applicable Legal Requirements in connection with the execution,
delivery, recordation, filing, registration, perfection or enforcement of any of
the Loan Documents, including, without limitation, the Mortgages, have been paid
or are being paid simultaneously herewith. All taxes and governmental
assessments due and owing in respect of the Properties have been paid, or an
escrow of funds in an amount sufficient to cover such

                                       35



payments has been established hereunder or are insured against by the title
insurance policy to be issued in connection with the Mortgages.

          3.1.24. Single Purpose. Each Borrower hereby represents and warrants
to, and covenants with, Lender that each Borrower has been at all times since
its formation, and will continue to be a Single-Purpose Entity.

          3.1.25. Tax Filings; Payroll Taxes. Each Borrower and each Guarantor
has filed (or have obtained effective extensions for filing) all federal, state
and local tax returns required to be filed and have paid or made adequate
provision for the payment of all federal, state and local taxes, charges and
assessments payable by any Borrower and any Guarantor. Each Borrower believes
that its tax returns and those of each Guarantor properly reflect the income and
taxes of each Borrower and each Guarantor for the periods covered thereby,
subject only to reasonable adjustments required by the Internal Revenue Service
or other applicable tax authority upon audit. Each of each Borrower and each
Guarantor have paid all payroll taxes required to be paid by any such party by
any Governmental Authorities.

          3.1.26. Solvency. Each Borrower (a) has not entered into the
transaction or any Loan Document with the actual intent to hinder, delay, or
defraud any creditor and (b) received reasonably equivalent value in exchange
for its obligations under the Loan Documents. Giving effect to the Loan, the
fair saleable value of each Borrower's assets exceeds and will, immediately
following the making of the Loan, exceed such Borrower's total liabilities,
including, without limitation, subordinated, unliquidated, disputed and
contingent liabilities. The fair saleable value of each Borrower's assets is and
will, immediately following the making of the Loan, be greater than such
Borrower's probable liabilities, including the maximum amount of its contingent
liabilities on its debts as such debts become absolute and matured. Each
Borrower's assets do not and, immediately following the making of the Loan will
not, constitute unreasonably small capital to carry out its business as
conducted or as proposed to be conducted. Each Borrower does not intend to, and
does not believe that it will, incur Indebtedness and liabilities (including
contingent liabilities and other commitments) beyond its ability to pay such
Indebtedness and liabilities as they mature (taking into account the timing and
amounts of cash to be received by such Borrower and the amounts to be payable on
or in respect of obligations of such Borrower).

          3.1.27. Federal Reserve Regulations. No part of the proceeds of the
Loan will be used for the purpose of purchasing or acquiring any "margin stock"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System or for any other purpose which would be inconsistent with such
Regulation U or any other Regulations of such Board of Governors, or for any
purposes prohibited by Legal Requirements or by the terms and conditions of this
Agreement or the other Loan Documents.

          3.1.28. Organizational Chart. The organizational chart attached as
Schedule IV hereto, relating to Borrowers and certain Affiliates and other
parties, is true, complete and correct on and as of the date hereof.

          3.1.29. Bank Holding Company. Each Borrower is not a "bank holding
company" or a direct or indirect subsidiary of a "bank holding company" as
defined in the Bank

                                       36



Holding Company Act of 1956, as amended, and Regulation Y thereunder of the
Board of Governors of the Federal Reserve System.

          3.1.30. No Other Debt. Each Borrower has not borrowed or received debt
financing (other than permitted pursuant to this Agreement) that has not been
heretofore repaid in full.

          3.1.31. Investment Company Act. Each Borrower is not (1) an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended; (2) a
"holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of either a "holding company" or a "subsidiary company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended; or (3)
subject to any other federal or state law or regulation which purports to
restrict or regulate its ability to borrower money.

          3.1.32. No Bankruptcy Filing. Each Borrower is not contemplating
either the filing of a petition by it under any state or federal bankruptcy or
insolvency laws or the liquidation of its assets or property, and each Borrower
does not have any knowledge of any Person contemplating the filing of any such
petition against it or any Guarantor and the Properties are not the subject of,
and each Borrower and each Guarantor are not a debtor in, any state or federal
bankruptcy, insolvency or similar proceeding.

          3.1.33. Full and Accurate Disclosure. No information contained in this
Agreement, the other Loan Documents, or any written statement furnished by or on
behalf of any Borrower pursuant to the terms of this Agreement contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained herein or therein not misleading in light of
the circumstances under which they were made. There is no fact or circumstance
presently known to any Borrower which has not been disclosed to Lender and which
materially adversely affects, or is reasonably likely to materially adversely
affect, any of the Properties, any Borrower or its business, operations or
condition (financial or otherwise).

          3.1.34. Foreign Person. Each Borrower is not a "foreign person" within
the meaning of Section 1445(f)(3) of the Code.

          3.1.35. No Change in Facts or Circumstances; Disclosure. There has
been no material adverse change in any condition, fact, circumstance or event
that would make the financial statements, rent rolls, reports, certificates or
other documents submitted in connection with the Loan inaccurate, incomplete or
otherwise misleading in any material respect or that otherwise materially and
adversely affects the business operations or the financial condition of any
Borrower or any of the Properties.

          3.1.36. Security Deposits. Each Borrower Party is and each Borrower
will continue to be in substantial compliance in all material respects with all
Legal Requirements relating to security deposits and resident trust funds. Each
Borrower is and will continue to hold all related security deposits and resident
trust funds collected in connection with each of the Properties in segregated
Eligible Accounts.

                                       37



          3.1.37. Embargoed Person. (a) None of the funds or other assets of any
Borrower or any Guarantor constitute property of, or are beneficially owned,
directly or indirectly, by any person, entity or government subject to trade
restrictions under U.S. law, including but not limited to, the International
Emergency Economic Powers Act, 50 U.S.C.(S)(S) 1701 et seq., The Trading with
the Enemy Act, 50 U.S.C. App. 1 et seq. , and any Executive Orders or
regulations promulgated thereunder with the result that the investment in any
Borrower or any Guarantor, as applicable (whether directly or indirectly), is
prohibited by law or the Loan made by the Lender is in violation of law
("Embargoed Person"); (b) no Embargoed Person has any interest of any nature
whatsoever in any Borrower or any Guarantor, as applicable (whether directly or
indirectly), is prohibited by law or the Loan is in violation of law; and (c)
none of the funds of any Borrower or any Guarantor, as applicable, have been
derived from any unlawful activity with the result that the investment in any
Borrower or any Guarantor, as applicable (whether directly or indirectly), is
prohibited by law or the Loan is in violation of law.

          3.1.38. Intentionally deleted.

          3.1.39. Management Agreement/Staff Leasing Agreement. Each Management
Agreement and Staff Leasing Agreement is in full force and effect and there is
no default, breach or violation existing thereunder by any party thereto and no
event has occurred that, with the passage of time or the giving of notice, or
both, would constitute a default, breach or violation by any party thereunder.

          3.1.40. Use-Specific Representations.

               (a) Compliance with Laws. Each Borrower Party and each Property
are in substantial compliance with all applicable federal, state and local laws,
regulations and guidelines (including any government payment program
requirements and disclosure of ownership and related information requirements),
quality and safety standards, accepted professional standards and principles
that apply to professionals providing services to Nursing Facilities and/or
Assisted Living Facilities, in each case, as applicable, accreditation
standards, and requirements of the applicable state licensing agency, CMS and
all other Governmental Authorities including, without limitation, those
requirements relating to the physical structure and environment of each
Property, licensing, quality and adequacy of medical care, distribution of
pharmaceuticals, rate setting, equipment, personnel, operating policies,
additions to facilities and services and fee splitting except for any
non-compliance with any of the foregoing that could have a Material Adverse
Effect. No Borrower Party has committed any act which may give any Governmental
Authority the right to cause any Borrower to lose any applicable Regulatory
Permits the loss of which could have a Material Adverse Effect.

               (b) Regulatory Permits. All governmental licenses, permits,
regulatory agreements or other approvals or agreements necessary or desirable
for the use or operation of each Property as intended are held by the applicable
Borrower and are in full force and effect, including, without limitation,
approved provider participation status in any provider payment program
(including, but not limited to, Medicare and Medicaid), and a valid CON or
similar certificate, license, or approval issued by the applicable state and/or
federal agency for the requisite number and type of beds (collectively, the
"Regulatory Permits") except for any Regulatory Permits the failure to hold or
maintain in full force or effect could have a Material

                                       38



Adverse Effect; provided, however, Borrower will obtain within sixty (60) days
or, in the case of Medicare provider agreements only, one hundred and eighty
(180) days of the Closing Date the state licenses for the operation of each
Property as a Nursing Facility or Assisted Living Facility, as applicable, and
the Medicare and Medicaid provider agreements in the names of the applicable
Borrowers which have not been obtained as of the Closing Date.

               (c) Ownership of Regulatory Permits. The Regulatory Permits,
including without limitation, each CON:

                         (i) are not and have not been, transferred to any
     location other than the Property to which such Regulatory Permits relate;

                         (ii) are not and have not been, pledged as collateral
     security for any loan or indebtedness other than the Loan; and

                         (iii) are held free from restrictions or known
     conflicts which would materially impair the use or operation of each
     Property as intended, and are not provisional, probationary or restricted
     in any way.

               (d) Medicare and Medicaid Compliance. To the extent applicable,
each Borrower Party and each Property is in substantial compliance with all
requirements for participation in Medicare and Medicaid, including without
limitation, the Medicare and Medicaid Patient and Program Protection Act of
1987. To the extent applicable, each Borrower Party and each Property is in
conformance in all material respects with all conditions of participation,
reimbursement and cost reporting requirements, and each applicable Borrower has
a current provider agreement which is in full force and effect under Medicare
and Medicaid for the number and type of beds.

               (e) Third Party Payor Programs. There is no threatened or pending
revocation, suspension, termination, probation, restriction, limitation, fine,
civil monetary penalty, recoupment or non-renewal affecting any Borrower Party
or any Property in respect of any participation or provider agreement with any
third-party payor, including, without limitation, Medicare, Medicaid, Blue Cross
and/or Blue Shield, and any other private commercial insurance managed care and
employee assistance program (collectively, the "Third Party Payor Programs") to
which any Borrower presently is subject. All Medicaid, Medicare, and private
insurance cost reports and financial reports submitted by any Borrower Party are
and will be materially accurate and complete and have not been and will not be
misleading in any material respects. No cost reports or financial reports for
any Property remain "open" or unsettled except for those reports that remain
open for the current period.

               (f) Governmental Proceedings and Notices. Except as described on
the attached Schedule XIII, no Borrower Party and no Property is currently the
subject of any proceeding by any Governmental Authority, and no notice of any
violation or subpoena or inquiry of any nature has been received from a
Governmental Authority that would, directly or indirectly, or with the passage
of time:

                         (i) have a material adverse impact on any Borrower's
     ability to accept and/or retain patients or result in the imposition of a
     fine, a sanction, an

                                       39



     administrative or criminal action, a lower rate certification or a lower
     reimbursement rate for services rendered to eligible patients;

                         (ii) modify, limit or annul or result in the transfer,
     suspension, revocation or imposition of probationary use on any Regulatory
     Permit the absence of which would have a Material Adverse Effect;

                         (iii) affect any Borrower's continued participation in
     Medicare, Medicaid or other Third Party Payor Programs, as applicable, or
     any successor programs thereto, at current rate certifications.

               (g) Physical Plant Standards. Each Property and the use thereof
complies in all material respects with all applicable local, state and federal
building codes, fire codes, life safety codes, health care, nursing facility and
other similar regulatory requirements, including, without limitation,
participation requirements in Medicare and Medicaid (collectively, the "Physical
Plant Standards") and, except as described on the attached Schedule X, no
waivers of the Physical Plant Standards exist at such Property.

               (h) Past Violations. Except as set forth on the attached Schedule
XIV, here have been no penalty enforcement actions undertaken by any
Governmental Authority during the last three (3) calendar years or during the
last survey cycle against any Property, against any Borrower Party, or against
any partner, member, officer, director, stockholder or Affiliate of any Borrower
Party which enforcement action could have a Material Adverse Effect. There have
been no violations over the past three (3) years that have threatened any
Property's or any Borrower's certification for participation in any Medicare,
Medicaid or other Third Party Payor Programs. No Borrower Party has been the
subject of a "double G" determination for the last three (3) calendar years or
since January 14, 2000, whichever date is later.

               (i) Audits. Except as set forth on the attached Schedule XI,
there are no current, pending or outstanding reimbursement audits regarding
Medicaid, Medicare or other Third Party Payor Programs nor any appeals pending
at any Property that (x) are not applicable in the ordinary course to Nursing
Facilities or Assisted Living Facilities, as applicable, comparable to the
Properties and (y) could have a Material Adverse Effect.

               (j) Recoupment. There are no current or pending recoupment
efforts regarding Medicaid, Medicare or other Third Party Payor Programs at (or
with respect to) any Property that (x) are not applicable in the ordinary course
to Nursing Facilities or Assisted Living Facilities, as applicable, comparable
to any Property and (y) could have a Material Adverse Effect. No Borrower is a
participant in any federal program whereby any Governmental Authority may have
the right to recover funds by reason of the advance of federal funds.

               (k) Pledges of Receivables. No Borrower Party has pledged its
receivables or any Rents as collateral security for any outstanding loan or
indebtedness other than the Loan.

               (l) Patient Care Agreements. There are no patient or resident
care agreements with patients or residents or with any other persons that
deviate in any material adverse respect from the standard form customarily used
at each Property.

                                       40



               (m) Patient Records. All patient and resident records at each
Property, and all patient and resident trust fund accounts, are maintained in
substantial compliance with all regulatory requirements and are true and correct
in all respects.

               (n) Reimbursement Contracts. All Reimbursement Contracts
applicable to any Borrower Party or any Property are in good standing with all
applicable Governmental Authorities, Regulatory Permits, Medicare Certifications
and/or Medicaid Certifications. Each Borrower Party is current in the payment of
all so-called provider specific taxes, bed taxes or other assessments with
respect to any Reimbursement Contracts.

               (o) Licensed Beds. The number and category of licensed beds at
each Property is as set forth on Schedule III attached hereto. Except as set
forth in Schedule XII, no waivers of any laws, rules, regulations or
requirements (including, without limitation minimum square foot requirements per
bed) are required for each Property to operate at the licensed bed capacities
listed on Schedule III and to operate in substantial compliance with applicable
Legal Requirements. No Borrower Party has been granted nor has any Borrower
Party requested the right, to reduce the number of licensed beds at any
Property. No Borrower Party has applied for approval to move any and all of the
licensed beds at any Property to any other location.

               (p) Intentionally deleted.

          3.1.41. Material Agreements. There are no Material Agreements except
as described in Exhibit D. Each Borrower has made available to Lender true and
complete copies of all Material Agreements. Each Material Agreement has been
entered into at arm's length in the ordinary course of business by or on behalf
of a Borrower.

          Section 3.2 Survival of Representations.

          The representations and warranties set forth in Section 3.1 shall
survive for so long as any amount remains payable to Lender under this Agreement
or any of the other Loan Documents.

                         ARTICLE IV. BORROWER COVENANTS

          Section 4.1 Borrower Affirmative Covenants.

          Until all amounts are paid in full under the Loan Documents (excluding
contingent indemnity obligations that survive repayment), each Borrower hereby
covenants and agrees with Lender that:

          4.1.1. Existence; Compliance with Legal Requirements. Each Borrower
shall do or cause to be done all things necessary to preserve, renew and keep in
full force and effect its existence, rights, licenses, permits and franchises
except to the extent such preservation, renewal and effectiveness could not have
a Material Adverse Effect, and substantially comply with all Legal Requirements
applicable to it and the Properties.

          4.1.2. Taxes and Other Charges. Each Borrower shall pay all Taxes and
Other Charges and payroll taxes now or hereafter levied or assessed or imposed
against the Properties

                                       41



or any part thereof or any Borrower as the same become due and payable;
provided, however, each Borrower's obligation to directly pay Taxes shall be
suspended for so long as such Borrower complies with the terms and provisions of
Section 6.3 hereof and there are adequate funds in the Tax and Insurance Escrow
Account. Each Borrower shall furnish to Lender receipts for the payment of the
Taxes and the Other Charges prior to the date the same shall become delinquent;
provided, however, that each Borrower is not required to furnish such receipts
for payment of Taxes in the event that such Taxes have been paid by Lender
pursuant to Section 6.3 hereof. Each Borrower shall not permit or suffer and
shall promptly discharge any liens or charges against the Properties, except
Permitted Encumbrances. After prior notice to Lender, each Borrower, at its own
expense, may contest by appropriate legal proceeding, conducted in good faith
and with due diligence, the amount or validity of any Taxes or Other Charges,
provided that (i) no Default or Event of Default has occurred and remains
uncured; (ii) such proceeding shall be permitted under and be conducted in
accordance with all applicable statutes, laws and ordinances; (iii) none of the
Properties nor any part thereof or interest therein will be in danger of being
sold, forfeited, terminated, canceled or lost; (iv) each Borrower shall promptly
upon final determination thereof pay the amount of any such Taxes or Other
Charges, together with all costs, interest and penalties which may be payable in
connection therewith; (v) such proceeding shall suspend the collection of Taxes
or Other Charges from the applicable Property; and (vi) upon request of Lender,
each Borrower shall deposit with Lender cash, or other security as may be
approved by Lender, in an amount equal to one hundred twenty-five percent (125%)
of the contested amount, to insure the payment of any such Taxes or Other
Charges, together with all interest and penalties thereon. Lender may pay over
any such cash or other security held by Lender to the claimant entitled thereto
at any time when, in the judgment of Lender, the entitlement of such claimant is
established.

          4.1.3. Litigation. Each Borrower shall give prompt notice to Lender of
any litigation or governmental proceedings pending or threatened against any
Borrower which might materially adversely affect any of the Properties or any
Borrower's ability to perform its obligations hereunder or under the other Loan
Documents.

          4.1.4. Access to Properties. Each Borrower shall permit agents,
representatives and employees of Lender to inspect each Property or any part
thereof at reasonable hours upon reasonable advance written notice. Lender shall
not unreasonably interfere with any Borrowers' business operations during such
inspection.

          4.1.5. Further Assurances. Each Borrower shall, at such Borrower's
sole cost and expense, from time to time as reasonably requested by Lender,
execute, acknowledge, record, register, file and/or deliver to Lender such other
instruments, agreements, certificates and documents (including UCC financing
statements and amended or replacement mortgages) as Lender may reasonably
request to evidence, confirm, perfect and maintain the liens securing or
intended to secure the obligations of any Borrower under the Loan Documents or
to facilitate a replacement of the Cash Management Bank or Collection Account
Bank if requested by Lender, and do and execute all such further lawful and
reasonable acts, conveyances and assurances for the better and more effective
carrying out of the intents and purposes of this Agreement and the other Loan
Documents as Lender shall reasonably require from time to time. Each Borrower
hereby authorizes and appoints Lender as its attorney-in-fact to execute,
acknowledge, record, register and/or file such instruments, agreements,
certificates and documents, and to do and

                                       42



execute such acts, conveyances and assurances, should any Borrower fail to do so
itself in violation of this Agreement following written request from Lender, in
each case without the signature of any Borrower. The foregoing grant of
authority is a power of attorney coupled with an interest and such appointment
shall be irrevocable for the term of this Agreement. Each Borrower hereby
ratifies all actions that such attorney shall lawfully take or cause to be taken
in accordance with this Section.

          4.1.6. Financial Reporting.

               (a) Each Borrower shall keep and maintain or will cause to be
kept and maintained proper and accurate books and records, in accordance with
GAAP in all material respects, reflecting the financial affairs of each
Borrower. Lender shall have the right from time to time during normal business
hours upon reasonable notice to the applicable Borrower to examine such books
and records at the office of such Borrower or other Person maintaining such
books and records and to make such copies or extracts thereof as Lender shall
desire.

               (b) As soon as available, and in any event within one hundred
twenty (120) days after the close of each Fiscal Year, each Borrower shall
furnish to Lender, in hard copy and electronic format and presented on a
consolidated as well as a property-by-property basis, financial statements
prepared for such year with respect to Borrowers, including a balance sheet and
operating statement as of the end of such year, together with related statements
of income and members' or partners' capital for such Fiscal Year, audited by a
"Big Four" accounting firm or a nationally recognized, independent certified
public accounting firm reasonably satisfactory to Lender whose opinion shall be
to the effect that such financial statements have been prepared in accordance
with GAAP applied on a consistent basis and shall not be qualified as to the
scope of the audit or as to the status of each Borrower as a going concern.
Together with each Borrower's annual financial statements, such Borrower shall
furnish to Lender an Officer's Certificate certifying as of the date thereof
whether to the best of such Borrower's knowledge there exists an event or
circumstance which constitutes a Default or Event of Default by any Borrower
under the Loan Documents and if such Default or Event of Default exists, the
nature thereof, the period of time it has existed and the action then being
taken to remedy the same. Together with each Borrower's annual financial
statements, such Borrower shall furnish to Lender, in hard copy and electronic
format:

                    (i) a statement of cash flows for each Property; and

                    (ii) such other information as Lender shall reasonably
     request.

               (c) As soon as available, and in any event within forty-five (45)
days after the end of each fiscal quarter (based on Borrrower's Fiscal Year),
each Borrower shall furnish to Lender, in hard copy and electronic format and
presented on a consolidated as well as a property-by-property basis, quarterly
and year-to-date unaudited financial statements prepared for such fiscal quarter
with respect to Borrowers, including a balance sheet and operating statement as
of the end of such fiscal quarter, together with related statements of income,
members' or partners' capital and cash flows for such fiscal quarter and for the
portion of the Fiscal Year ending with such fiscal quarter,which statements
shall be accompanied by (i) an

                                       43



Officer's Certificate certifying that the same are true and correct and were
prepared in accordance with GAAP applied on a consistent basis, subject to
changes resulting from audit and normal year-end audit adjustments and (ii) an
Officer's Certificate certifying as of the date thereof whether to the best of
such Borrower's knowledge there exists an event or circumstance which
constitutes a Default or Event of Default by any Borrower under the Loan
Documents and if such Default or Event of Default exists, the nature thereof,
the period of time it has existed and the action then being taken to remedy the
same. Each such quarterly statement shall show the separate operations of each
Property, including, without limitation, (1) a breakdown of Patient Revenues and
other revenues itemized by payor type and a reasonably detailed breakdown of
operating expenses and (2) patient census by payor type. Each such quarterly
report shall be accompanied by the following, in hard copy and electronic
format:

                    (i) a statement in reasonable detail which calculates Net
     Operating Income for each Property for the trailing four fiscal quarters,
     in each case, ending at the end of such fiscal quarter;

                    (ii) then current occupancy report for each Property; and

                    (iii) such other information as Lender shall reasonably
     request.

               (d) As soon as available, and in any event within thirty (30)
days after the end of each calendar month, each Borrower shall furnish (x) a
report describing in reasonable detail the occurrence during such calendar month
of any of the following: the termination, cancellation or entry into, or default
by any party under, any Operating Lease at any of the Properties or any event
which is reasonably likely to result in a material adverse effect on the the
ability of any Borrower to perform any material provision of any Loan
Document,or the value, use or enjoyment of any of the Properties or the
operation thereof and (y) such Borrower's calculation of Debt Service Coverage
Ratio and adequate back-up to support such calculation.

               (e) Until the occurrence of a Securitization or series of
Securitizations, which, in the aggregate, shall have securitized the entire
Loan, each Borrower shall, simultaneously with delivering the report described
in the foregoing clause (d), furnish, in hard copy and electronic format and
presented on a consolidated as well as a property-by-property basis, monthly and
year-to-date unaudited financial statements prepared for the applicable month
with respect to Borrowers, including a balance sheet and operating statement as
of the end of such month, together with related statements of income, members'
or partners' capital and cash flows for such month and for the portion of the
Fiscal Year ending with such month, which statements shall be accompanied by (i)
an Officer's Certificate certifying that the same are true and correct and were
prepared in accordance with GAAP applied on a consistent basis, subject to
changes resulting from audit and normal year-end audit adjustments and (ii) an
Officer's Certificate certifying as to any material variances from the approved
Annual Budget on a line-item basis. Each monthly report shall show the separate
operations of each Property, including, without limitation, (1) a breakdown of
Patient Revenues and other revenues itemized by payor type and a reasonably
detailed breakdown of operating expenses and (2) patient census by payor

                                       44



type. Each such monthly report shall be accompanied by the following in hard
copy and electronic format:

                    (i) a statement in reasonable detail which calculates Net
  Operating Income for each Property for the trailing twelve (12) months, in
  each case, ending at the end of that month;

                    (ii) then current occupancy report for each Property; and

                    (iii) such other information as Lender shall reasonably
  request.

               (f) As soon as available, and in any event within ninety (90)
days after the end of each calendar year, each Borrower shall furnish to Lender
true and complete copies of a report regarding the compliance of the Properties
with all Regulatory Permits.

               (g) Upon Lender's written request, as soon as available, and in
any event within five (5) days after preparation thereof, each Borrower shall
furnish to Lender the weekly and monthly consolidated cash flow reports of each
Operator and consolidated patient census reports for each Operator.

               (h) As soon as available, and in any event no later than thirty
(30) days after the end of each fiscal quarter, each Borrower shall furnish to
Lender (i) the quarterly consolidated survey deficiency summary report,
indicating for each Property whether any survey, citation or report alleging any
deficiency with respect to such Property has been issued during the prior month
and, if so, setting forth, the identity of the Governmental Authority that
issued such survey, citation or report, a description of the alleged deficiency
and the timetable or deadline for same and the applicable Borrower's plan for
curing such deficiency and (ii) to the extent existing, all actuarial reports
relating to all professional liability claims. Each Borrower shall also deliver
to Lender promptly after request therefor by Lender any other Property specific
survey reports reasonably requested by Lender.

               (i) As soon as available, and in any event within forty-five (45)
days after the end of each calendar quarter, each Borrower shall deliver to
Lender copies of the Officer's Certificates, setting forth whether any event(s)
of default has occurred and is continuing with respect to the reduction of the
number of licensed beds at any Property or the revocation of certification for
reimbursement under Medicare or Medicaid with respect to any Property.

               (j) As soon as available, and in any event within ten (10) days
of receipt, each Borrower shall deliver to Lender any and all notices
(regardless of form) from any licensing and/or certifying agency (i) that any
Regulatory Permit for any Property or the Medicare Certification or Medicaid
Certification of any Property is the subject of any enforcement action,
revocation or suspension, or is subject to assessment for civil monetary
penalties or is the subject of any overpayment claim or recoupment claim or (ii)
that action is pending or being considered to revoke or suspend any Regulatory
Permit or to institute enforcement actions of any kind.

                                       45



               (k) Upon the request of Lender, within five (5) days of the
earlier of (i) the date of the required filing of cost reports for any Property
with the Medicaid agency or (ii) the date of actual filing of such cost report
for any Property with such agency, each Borrower shall furnish to Lender a
complete and accurate copy of the annual Medicaid cost report for each Property,
which will be prepared by an independent certified public accountant or by an
experienced cost report preparer acceptable to Lender in its sole discretion,
and promptly furnish to Lender any amendments filed with respect to such reports
and all responses, audit reports or inquiries with respect to such reports.

               (l) As soon as available, and in any event within five (5) days
of receipt, each Borrower shall deliver to Lender a copy of any Medicare,
Medicaid or other licensing agency survey or report and any statement of
deficiencies, and within the time period required by the particular agency for
furnishing a plan of correction, shall also furnish or cause to be furnished to
Lender, a copy of the plan of correction generated from such survey or report
for a Property,and correct or cause to be corrected any deficiency, the curing
of which is a condition of continued licensure or for full participation in
Medicare or Medicaid for existing patients or for new patients to be admitted
with Medicare or Medicaid coverage, by the date required for cure by such agency
(plus any extensions of time granted by such agency).

               (m) Borrowers have previously delivered to Lender the Annual
Budget for each Property for the 2002 Fiscal Year. At least thirty (30) days
prior to the commencement of each subsequent Fiscal Year during the term of the
Loan, Borrowers shall deliver to Lender for approval an Annual Budget presented
on a consolidated as well as a property-by-property basis for the ensuing Fiscal
Year and, promptly after preparation thereof, any subsequent revisions to the
Annual Budget.

               (n) As soon as available, and in any event within one hundred
twenty(120) days after the close of each Fiscal Year, each Borrower shall cause
each Guarantor to furnish to Lender, in hard copy and electronic format and
presented on a consolidated as well as a property-by-property basis, financial
statements prepared for such year with respect to Guarantors, including a
balance sheet and operating statement as of the end of such year, together with
related statements of income and members' or partners' capital for such Fiscal
Year, audited by a "Big Four" accounting firm or a nationally recognized,
independent certified public accounting firm reasonably satisfactory to Lender
whose opinion shall be to the effect that such financial statements have been
prepared in accordance with GAAP applied on a consistent basis and shall not be
qualified as to the scope of the audit or as to the status of each Guarantor as
a going concern. Together with each Guarantor's annual financial statements,
each Borrower shall cause each Guarantor to furnish to Lender an Officer's
Certificate certifying as of the date thereof whether to the best of such
Guarantor's knowledge there exists an event or circumstance which constitutes a
Default or Event of Default by any Guarantor under any guaranty and if such
Default or Event of Default exists, the nature thereof, the period of time it
has existed and the action then being taken to remedy the same.

               (o) Notwithstanding the foregoing, in the event the Parent makes
a public offering of its stock and becomes subject to public record disclosure,
Mortgage Borrowers shall provide Lender with copies of all financial statements
filed by Parent with the Securities and Exchange Commission within two (2) days
of such filing.

                                       46



          4.1.7. Title to the Properties. Each Borrower will warrant and defend
the validity and priority of the Liens of the Mortgages and the Assignments of
Leases on the Properties against the claims of all Persons whomsoever, subject
only to Permitted Encumbrances.

          4.1.8. Estoppel Statement.

               (a) After request by Lender, each Borrower shall within ten (10)
Business Days furnish Lender with a statement, duly acknowledged and certified,
stating (i) the unpaid principal amount of the Note, (ii) the Interest Rate of
the Note, (iii) the date installments of interest and/or principal were last
paid, (iv) any offsets or defenses to the payment of the Debt, if any, and (v)
that this Agreement and the other Loan Documents have not been modified or if
modified, giving particulars of such modification.

               (b) Each Borrower shall deliver to Lender, upon request, an
estoppel certificate from each tenant under any Lease (other than tenants under
patient admission and resident care agreements) at any of the Properties;
provided that such certificate may be in the form required under such Lease;
provided further that each Borrower shall not be required to deliver such
certificates more frequently than two (2) times in any calendar year.

          4.1.9. Operating Leases. Without the prior written consent of Lender
and without delivery of a Rating Agency Confirmation, each Borrower shall not
(i) cancel or terminate any Operating Lease in whole or in part, (ii) approve
any assignment of any Operating Lease, (iii) amend or modify any economic terms
or otherwise amend or modify or waive any provisions of any Operating Lease,
(iv) cancel or modify any guaranty, or release any security deposit, letter of
credit or other item constituting security pertaining to such Operating Lease.
Each Borrower agrees to take all necessary action requested by Lender to
facilitate the transfer of all Regulatory Permits to Lender, its designee or
assignee, or any subsequent purchaser, provided that (i) the number of beds and
the scope of services provided are not changed and (ii) Lender, its designee or
assignee, or subsequent purchaser submits prior notification of such change to
the applicable regulatory agency.

          4.1.10. Alterations. Lender's prior approval shall be required in
connection with any alterations to any Improvements on any Property (a) that may
have a material adverse effect on any Borrower's financial condition, the value
of the related Property or the Net Operating Income or (b) the cost of which
(including any related alteration, improvement or replacement) is reasonably
anticipated to exceed the Alteration Threshold. If the total unpaid amounts
incurred and to be incurred with respect to such alterations to the Improvements
shall at any time exceed the Alteration Threshold, Borrowers shall promptly
deliver to Lender as security for the payment of such amounts and as additional
security for each Borrowers' obligations under the Loan Documents any of the
following: (i) cash, (ii) U.S. Obligations, (iii) other securities acceptable to
Lender, provided that Lender shall have received a Rating Agency Confirmation as
to the form and issuer of same, or (iv) a completion bond, provided that Lender
shall have received a Rating Agency Confirmation as to the form and issuer of
same. Such security shall be in an amount equal to the excess of the total
unpaid amounts incurred and to be incurred with respect to such alterations to
the Improvements on the applicable Property (other

                                       47



than such amounts to be paid or reimbursed by Tenants under the Leases) over the
Alteration Threshold.

          4.1.11. Use-Specific Covenants.

               (a) Each Borrower shall:

                    (i) operate each Property or cause each Property to be
     operated in substantial compliance with the laws and requirements referred
     to in Section 3.1.40 hereof;

                    (ii) operate each Property or cause each Property to be
     operated in a manner such that the Regulatory Permits shall remain in full
     force and effect;

                    (iii) maintain or cause to be maintained the number and type
     of licensed beds at each Property at the licensure/certification levels set
     forth in Schedule III; provided, however, a Borrower may remove from
     service a number of licensed beds at its Property by not more than the
     greater of ten (10) beds and ten percent (10%) of the number of licensed
     beds at such Property immediately prior to the proposed reduction provided
     such removal from service is on a temporary basis and Borrower delivers to
     Lender from each applicable Governmental Authority written evidence that
     such removal from service is on a temporary, and not permanent, basis and
     that such beds may be placed back into service without approval from any
     Governmental Authority; and provided further that the Borrower shall not
     adjust the number of licensed beds at the facility; and

                    (iv) to the extent applicable, substantially comply with all
     requirements for participation in Medicare, Medicaid and any other Third
     Party Payor Programs, and shall keep in full force and effect a current
     provider agreement under Medicare, Medicaid and any other Third Party Payor
     Programs as are financially prudent.

               (b) Each Borrower shall cause the operation of each Property to
be conducted at all times in a manner consistent with the following:

                    (i) to maintain or cause to be maintained the standard of
     operations at each Property at all times at a level necessary to insure a
     level of quality for each Property consistent with similar facilities in
     the same competitive market;

                    (ii) to maintain or cause to be maintained a standard of
     care in the storage, use, transportation and disposal of all medical
     equipment, medical supplies, medical products and medical waste, of any
     kind and in any form, that is in accordance at least, with that of the
     highest prudent industry standard and in substantial conformity with all
     applicable Legal Requirements;

                    (iii) to operate or cause each Property to be operated in a
     prudent manner in substantial compliance in all respects with applicable
     Legal Requirements and requirements of the Policies relating thereto and,
     except where the

                                       48



     failure to maintain their effectiveness could not have a Material Adverse
     Effect, cause all licenses, Regulatory Permits, and any other agreements
     necessary for the continued use and operation of such Property or for
     participation in the Medicare, Medicaid or other Third Party Payor Programs
     to remain in full force and effect;

                    (iv) to maintain or cause to be maintained sufficient
     Inventory and Equipment of types and quantities at each Property to enable
     the applicable Borrower to operate such Property.

          4.1.12. Material Agreements. No Borrower shall amend, modify,
surrender or waive any material rights or remedies under, or enter into or
terminate, any Material Agreement unless any such amendment, modification,
surrender, waiver, entry or termination would not have a Material Adverse
Effect.

          Section 4.2. Borrower Negative Covenants.

          Until all amounts are paid in full under the Loan Documents (excluding
contingent indemnity obligations that survive repayment), each Borrower
covenants and agrees with Lender that:

          4.2.1. Due on Sale and Encumbrance; Transfers of Interests. Without
the prior written consent of Lender, neither any Borrower nor any Person having
a direct or indirect interest ownership or beneficial interest in any Borrower
or any Guarantor shall sell, convey, mortgage, grant, bargain, encumber, pledge,
assign or otherwise Transfer any interest, direct or indirect in any Borrower,
any Guarantor, any of the Properties or any part thereof, whether voluntarily or
involuntarily, in violation of the covenants and conditions set forth in the
Mortgages, this Agreement or the Master Guaranty; provided, that this Section
shall not prohibit transfers of equity interest in the Parent permitted under
Section 8.2.

          4.2.2. Liens. Each Borrower shall not create, incur, assume or suffer
to exist any Lien on any portion of any of the Properties except for Permitted
Encumbrances.

          4.2.3. Issuance of Equity Interests. Each Borrower shall not issue or
allow to be created any stocks or shares or shareholder, partnership or
membership interests in any Borrower, or other ownership interests other than
the stocks, shares, shareholder, partnership or membership interests and other
ownership interests which are outstanding or exist on the Closing Date or any
security or other instrument which by its terms is convertible into or
exercisable or exchangeable for stock, shares, shareholder, partnership or
membership interests or other ownership interests in any Borrower.

          4.2.4. Change in Business. Each Borrower shall not cease to be a
Single-Purpose Entity or make any material change in the scope or nature of its
business objectives, purposes or operations, or undertake or participate in
activities other than the continuance of its present business provided, however,
with the prior written consent of the Lender, not to be unreasonably withheld,
and, after a Securitization of the Loan, a Rating Agency Confirmation, a
Borrower may amend its business operations at a Property to include a Specialty
Hospital (in which event Schedule III hereto shall be amended to reflect such
amendment).

                                       49



          4.2.5. Debt Cancellation. Each Borrower shall not cancel or otherwise
forgive or release any claim or debt (other than termination of Leases in
accordance herewith) owed to any Borrower by any Person, except for adequate
consideration and in the ordinary course of any Borrower's business.

          4.2.6. Affiliate Transactions. Each Borrower shall not enter into, or
be a party to, any transaction with an Affiliate of any Borrower or any of the
partners of any Borrower except in the ordinary course of business and on terms
that are no less favorable to any Borrower or such Affiliate than would be
obtained in a comparable arm's-length transaction with an unrelated third party.

          4.2.7. Zoning. Each Borrower shall not initiate or consent to any
zoning reclassification of any portion of any of the Properties or seek any
variance under any existing zoning ordinance or use or permit the use of any
portion of any of the Properties in any manner that could result in such use
becoming a non-conforming use under any zoning ordinance or any other applicable
land use law, rule or regulation, without the prior consent of Lender.

          4.2.8. Assets. Each Borrower shall not purchase or own any properties
other than the Properties and any other property necessary or incidental for the
operation of the Properties.

          4.2.9. No Joint Assessment. Each Borrower shall not suffer, permit or
initiate the joint assessment of any Property (i) with any other real property
constituting a tax lot separate from such Property, and (ii) with any portion of
such Property which may be deemed to constitute personal property, or any other
procedure whereby the lien of any taxes which may be levied against such
personal property shall be assessed or levied or charged to such Property.

          4.2.10. Principal Place of Business. Each Borrower shall not change
its jurisdiction of organization or its name without first obtaining the written
consent of Lender.

          4.2.11. ERISA.

               (a) Each Borrower shall not engage in any transaction which would
cause any obligation, or action taken or to be taken, hereunder (or the exercise
by Lender of any of its rights under the Note, this Agreement or the other Loan
Documents) to be a non-exempt (under a statutory or administrative class
exemption) prohibited transaction under the Employee Retirement Income Security
Act of 1974, as amended ("ERISA").

               (b) Each Borrower shall deliver to Lender such certifications or
other evidence from time to time throughout the term of the Loan, as requested
by Lender in its sole discretion, that (A) such Borrower is not and does not
maintain an "employee benefit plan" as defined in Section 3(3) of ERISA, which
is subject to Title I of ERISA, or a "governmental plan" within the meaning of
Section 3(3) of ERISA; (B) such Borrower is not subject to state statutes
regulating investments and fiduciary obligations with respect to governmental
plans; and (C) one or more of the following circumstances is true:

                    (i) Equity interests in such Borrower are publicly offered
     securities, within the meaning of 29 C.F.R.(S)2510.3-101(b)(2);

                                       50



                    (ii) Less than twenty-five percent (25%) of each outstanding
     class of equity interests in such Borrower are held by "benefit plan
     investors" within the meaning of 29 C.F.R.(S)2510.3-101(f)(2); or

                    (iii) Such Borrower qualifies as an "operating company" or a
     "real estate operating company" within the meaning of 29
     C.F.R.(S)2510.3-101(c) or (e).

          4.2.12. Other Indebtedness. Each Borrower shall not incur, create,
assume or become liable in any manner with respect to any Indebtedness, except
the Debt and the Permitted Debt.

          4.2.13. Use-Specific Negative Covenants: Each Borrower shall not and
shall not allow the Manager, if any, to:

               (a) transfer any Regulatory Permits to any location other than
the related Property nor pledge any Regulatory Permits as collateral security
for any loan or indebtedness other than the Loan;

               (b) rescind, withdraw, revoke, amend, modify, supplement, or
otherwise alter the nature, tenor or scope of (i) any Regulatory Permit for any
Property or (ii) any applicable provider payment program participation for any
Property;

               (c) except as permitted by the proviso to Section 4.1.11(a)(iii),
amend or otherwise change any Property's authorized bed capacity and/or the
number or type of beds, and/or licensing category or type and/or the number of
beds participating in governmental payment programs approved by the applicable
state licensing agency, CMS or other Governmental Authority without Lender's
prior written consent which may be given or denied in Lender's sole discretion;

               (d) replace or transfer all or any part of any Property's
licensed beds to another site or location, change the type of licensed beds at
any Property or reduce the number of licensed beds at any Property;

               (e) apply for approval to (i) move any licensed beds to another
site or location, (ii) change the type of licensed beds at any Property or (iii)
reduce the number of licensed beds at any Property;

               (f) jeopardize in any manner any Borrower's participation in any
Third Party Payor Programs to which any Borrower is subject as of the Closing
Date; provided, to the extent financially prudent and consistent with the terms
of the Loan Agreements, each Borrower may terminate participation in any Third
Party Payor Program with any private commercial insurance to the extent such
termination could not have a Material Adverse Effect;

               (g) pledge any receivables as collateral security for any loan or
indebtedness other than the Loan;

                                       51



               (h) enter into any patient or resident care agreements with
patients or residents or with any other persons which deviate in any material
respect from the standard form customarily used by any Borrower at any Property;

               (i) change the terms of any of the Third Party Payors' Programs
or its normal billing payment or reimbursement policies and procedures with
respect thereto (including without limitation the amount and timing of finance
charges, fees and write-offs); provided a Borrower may enter into changes which
do not have a Material Adverse Effect; or

               (j) assign or transfer any of its interest in any Regulatory
Permit or Reimbursement Contract (including any right to payment thereunder) or
assign, transfer or remove or permit any other person to assign, transfer or
remove any records pertaining to any Property including, without limitation,
patient records, medical and clinical records (except for removal of such
patient records as directed by the patients owning such records).

                 ARTICLE V. INSURANCE, CASUALTY AND CONDEMNATION

          Section 5.1. Insurance.

          5.1.1. Insurance Policies.

               (a) Each Borrower shall obtain and maintain, or cause to be
maintained, insurance for such Borrower and each Property providing at least the
following coverages:

                    (i) coverage for loss or damage by fire, lightning, wind and
     such other perils as are included in a standard "all risk" or "special
     causes of loss" endorsement and against loss or damage by other risks and
     hazards covered by a standard property insurance policy including, without
     limitation, riot, civil commotion, vandalism, malicious mischief, burglary
     and theft on the Improvements and the personal property at the Property,
     including contingent liability from Operation of Building Laws, Demolition
     Costs and Increased Cost of Construction Endorsements, in each case (A) in
     an amount equal to one hundred percent (100%) of the "Full Replacement
     Cost," which for purposes of this Agreement shall mean actual replacement
     value (exclusive of costs of excavations, foundations, underground
     utilities and footings) with a waiver of depreciation, but the amount shall
     in no event be less than the Allocated Loan Amount of the Property; (B)
     containing an agreed amount endorsement with respect to the Improvements
     and personal property at the Property waiving all co-insurance provisions;
     (C) providing for no deductible in excess of Ten Thousand and No/100
     Dollars ($10,000) for all such insurance coverage; and (D) containing (a)
     an "Ordinance or Law Coverage" or "Enforcement" endorsement and (b)
     "demolition" insurance (in an amount equal to ten percent (10%) of the
     value of the Improvements) and "increased cost of construction" insurance
     (equal to twenty-five percent (25%) of the value of the Improvements, or
     such other amount approved by Lender, if any of the Improvements or the use
     of the applicable Property shall at any time constitute legal
     non-conforming structures or uses. In addition, each Borrower shall obtain:
     (y) if any portion of the Improvements is currently or at any time in the
     future located in a federally designated "special flood

                                       52



     hazard area", flood hazard insurance in an amount equal to the lesser of
     (1) the "Full Replacement Cost" (defined above) but no less than the
     Allocated Loan Amount of the applicable Property or (2) the maximum amount
     of such insurance available under the National Flood Insurance Act of 1968,
     the Flood Disaster Protection Act of 1973 or the National Flood Insurance
     Reform Act of 1994, as each may be amended; and (z) earthquake insurance in
     amounts and in form and substance satisfactory to Lender in the event the
     applicable Property is located in an area with a high degree of seismic
     activity, provided that the insurance pursuant to clauses (y) and (z)
     hereof shall be on terms consistent with the comprehensive all risk
     insurance policy required under this subsection (i).

                    (ii) commercial general liability insurance against claims
     for personal injury, bodily injury, death or property damage occurring
     upon, in or about the Property, such insurance (A) to be on the so-called
     "occurrence" (or claims made form if the "occurrence" form is not available
     at commercially reasonable prices) form with a combined limit, excluding
     umbrella coverage, of not less than One Million and No/100 Dollars
     ($1,000,000) per occurrence with a minimum Three Million and No/100 Dollars
     ($3,000,000) general aggregate; (B) to continue at not less than the
     aforesaid limit until required to be changed by Lender by reason of changed
     economic conditions making such protection inadequate; and (C) to cover at
     least the following hazards: (1) premises and operations; (2) products and
     completed operations on an "if any" basis; (3) independent contractors; (4)
     blanket contractual liability for all legal contracts; (5) contractual
     liability covering the indemnities contained in Article 9 of the related
     Mortgage to the extent the same is available; (6) broad form property
     damage; (7) personal injury (including death resulting therefrom); (8)
     healthcare professional liability and (9) a liquor liability endorsement if
     alcoholic beverages are sold at the Property and (B) with a deductible of
     no more than $10,000.

                    (iii) business interruption insurance (A) with loss payable
     to Lender; (B) covering all risks required to be covered by the insurance
     provided for in subsection (i) above and (xi) below; (C) in an amount
     sufficient to avoid any co-insurance penalty and to provide proceeds which
     will cover a period of not less than eighteen (18) months from the date of
     casualty or loss; (D) containing an extended period of indemnity
     endorsement which provides that after the physical loss to the Property has
     been repaired, the continued loss of income will be insured until such
     income returns to the same level it was prior to the loss, or the
     expiration twenty-four (24) months from the date of the loss, whichever
     first occurs, and notwithstanding that the policy may expire prior to the
     end of such period. The amount of coverage shall be no less than
     $12,000,000;

                    (iv) at all times during which structural construction,
     repairs or alterations are being made with respect to the Improvements, and
     only if the applicable Property's coverage form does not otherwise apply,
     (A) owner's contingent or protective liability insurance covering claims
     not covered by or under the terms or provisions of the above mentioned
     commercial general liability insurance policy; and (B) the insurance
     provided for in subsection (i) above written in a so-called builder's risk
     completed value form (1) on a non-reporting basis, (2) against all risks
     insured against

                                       53



     pursuant to subsection (i) above, (3) including permission to occupy the
     applicable Property, and (4) with an agreed amount endorsement waiving
     co-insurance provisions;

                    (v) workers' compensation, subject to the statutory limits
     of the state in which the applicable Property is located, and employer's
     liability insurance with a limit of at least One Hundred Thousand and
     No/100 Dollars ($100,000) per accident and per disease per employee, and
     Five Hundred Thousand and No/100 Dollars ($500,000) aggregate in respect of
     any work or operations on or about the Property, or in connection with the
     applicable Property or its operation (if applicable);

                    (vi) broad form boiler and machinery insurance (without
     exclusion for explosion) covering all boilers or other pressure vessels,
     machinery, and equipment located in, on or about any Property (including
     "system breakdown coverage") in an amount equal to or greater than the
     repair and full replacement cost of such equipment and insurance against
     loss of occupancy or use arising from any breakdown of such equipment in
     such amounts as are generally required by institutional lenders for
     properties comparable to the Properties;

                    (vii) umbrella liability insurance in addition to primary
     coverage in an aggregate amount not less than Nine Million and No/100
     Dollars ($9,000,000) on terms consistent with the commercial general
     liability insurance policy required under subsection (ii) above that cover
     all claims typically covered by an umbrella liability policy including all
     legal liability imposed upon any Borrower and all court costs and
     attorneys' fees connection with the ownership, operation and maintenance of
     the Properties;

                    (viii) motor vehicle liability coverage for all owned and
     non-owned vehicles, including rented and leased vehicles containing minimum
     limits per occurrence, including umbrella coverage, of One Million and
     No/100 Dollars ($1,000,000);

                    (ix) if alcoholic beverages are sold at the applicable
     Property, so-called "dramshop" insurance or other liability insurance
     required in connection with the sale of alcoholic beverages;

                    (x) insurance against employee dishonesty in an amount not
     less than $100,000 and with a deductible not greater than Ten Thousand and
     No/100 Dollars ($10,000);

                    (xi) If the insurance required under clause (i) above
     excludes coverage for acts of terrorism, each Borrower shall provide
     terrorism insurance coverage in an amount equal to the lesser of (1) the
     "Full Replacement Cost" (defined above) but no less than the Loan Amount or
     (2) the maximum amount of such insurance which is commercially reasonably
     available, unless at the time of determination: (i) it is not available at
     commercially reasonable rates; (ii) no Affiliates of Borrower are
     maintaining terrorism insurance with respect to another property; (iii)
     terrorism insurance is not commonly maintained by owners of other similar
     properties and (iv) terrorism

                                       54



     insurance is not required for securitized loans similar to the Loan and
     secured by property similar to the Properties and with similar ratings as
     the Loan in the commercial mortgage-backed securities market; and

                    (xii) such other reasonable insurance and in such reasonable
     amounts as Lender from time to time may reasonably request against such
     other insurable hazards or casualties which at the time are commonly
     insured against for property similar to the Properties located in or around
     the region in which the Properties are located including, without
     limitation, sinkhole, mine subsidence and environmental insurance, due
     regard being given to the height and type of property, construction,
     location, use and occupancy.

               (b) All insurance provided for in Section 5.1.1(a) shall be
obtained under valid and enforceable policies (collectively, the "Policies" or
in the singular, the "Policy") and, to the extent not specified above, shall be
subject to the approval of Lender as to deductibles, loss payees and insureds.
Not less than ten (10) days prior to the expiration dates of the Policies
theretofore furnished to Lender, certificates of insurance evidencing the
Policies accompanied by evidence satisfactory to Lender of payment of the
premiums then due thereunder (the "Insurance Premiums"), shall be delivered by
Borrowers to Lender. Borrowers shall deliver certified copies of the Policies to
Lender within thirty (30) days of the Closing Date and thereafter upon request.
All Policies must have a term of not less than one (1) year.

               (c) Intentionally deleted.

               (d) All Policies of insurance provided for or contemplated by
Section 5.1.1(a), except for the Policy referenced in Section 5.1.1(a)(v), shall
name each applicable Borrower as the insured and Lender and its successors
and/or assigns as the additional insured, as its interests may appear, and in
the case of property damage, terrorism insurance, boiler and machinery, flood
and earthquake insurance, shall contain a so-called New York standard
non-contributing mortgagee clause in favor of Lender providing that the loss
thereunder shall be payable to Lender.

               (e) All Policies of insurance provided for in Section 5.1.1(a)
shall contain clauses or endorsements to the effect that:

                    (i) no act or negligence of any Borrower, or anyone acting
     for any Borrower, or of any tenant or other occupant, or failure to comply
     with the provisions of any Policy, which might otherwise result in a
     forfeiture of the insurance or any part thereof, shall in any way affect
     the validity or enforceability of the insurance insofar as Lender is
     concerned;

                    (ii) the Policy shall not be materially changed (other than
     to increase the coverage provided thereby) or canceled without at least
     thirty (30) days' written notice to Lender and any other party named
     therein as an additional insured;

                    (iii) Lender shall not be liable for any Insurance Premiums
     thereon or subject to any assessments thereunder; and

                                       55



                    (iv) to the extent available at commercially reasonable
     rates, a waiver of subrogation rights as to Lender.

               (f) If at any time Lender is not in receipt of written evidence
that all insurance required hereunder is in full force and effect, Lender shall
have the right, without notice to any Borrower, to take such action as Lender
deems necessary to protect its interest in the Properties, including, without
limitation, the obtaining of such insurance coverage as Lender in its sole
discretion deems appropriate and all premiums incurred by Lender in connection
with such action or in obtaining such insurance and keeping it in effect shall
be paid by Borrowers to Lender upon demand and until paid shall be secured by
the Mortgages and shall bear interest at the Default Rate.

               (g) In the event of foreclosure of any Mortgage or other transfer
of title to any Property in extinguishment in whole or in part of the Debt, all
right, title and interest the applicable Borrower in and to the Policies that
are not blanket Policies then in force concerning the Properties and all
proceeds payable thereunder shall thereupon vest in the purchaser at such
foreclosure or Lender or other transferee in the event of such other transfer of
title.

          5.1.2. Insurance Company. The Policies shall be issued by one or more
domestic primary insurance companies, duly qualified in the jurisdiction where
the Properties are located and rated A: VII or better by A.M. Best and having a
claims-paying ability of at least "AA" or its equivalent by each of the Rating
Agencies, or by a syndicate of insurers through which at least seventy-five
percent (75%) of the coverage (if there are four (4) or fewer members of the
syndicate) or at least sixty percent (60%) of the coverage (if there are five
(5) or more members of the syndicate) is with carriers having such claims-paying
ability ratings (provided that all such carriers shall have claims-paying
ability ratings of not less than "A" or the equivalent by each of the Rating
Agencies).

          Section 5.2 Casualty and Condemnation.

          5.2.1. Casualty. If a Property shall sustain a Casualty, each Borrower
shall give prompt notice of such Casualty to Lender (provided that notice shall
not need to be required for a Casualty which causes less than $50,000 worth of
damage to a Property) and, provided Lender permits the applicable Borrower to
utilize the Net Proceeds, if any, for any such Restoration, shall promptly
commence and diligently prosecute to completion the repair and restoration of
any Property as nearly as possible to the condition such Property was in
immediately prior to such Casualty (a "Restoration") and otherwise in accordance
with Section 5.3. Borrowers shall pay all costs of such Restoration whether or
not such costs are covered by insurance. Lender may, but shall not be obligated
to, make proof of loss if not made promptly by any Borrower. In the event of a
Casualty where the loss does not exceed the Restoration Threshold, a Borrower
may settle and adjust such claim; provided that (a) no Event of Default has
occurred and is continuing and (b) such adjustment is carried out in a
commercially reasonable and timely manner. In the event of a Casualty where the
loss exceeds the Restoration Threshold or if an Event of Default then exists, a
Borrower may settle and adjust such claim only with the consent of Lender (which
consent shall not be unreasonably withheld or delayed) and Lender shall have the
opportunity to participate, at Borrowers' cost, in any such adjustments.
Notwithstanding any

                                       56



Casualty, each Borrower shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note and in this Agreement.

          5.2.2. Condemnation. Each Borrower shall give Lender prompt notice of
any actual or threatened Condemnation by any Governmental Authority of all or
any part of any Property (provided that notice shall not be required for a
Condemnation which could result in less than $50,000 in Condemnation Proceeds)
and shall deliver to Lender a copy of any and all papers served in connection
with such proceedings. Provided no Event of Default has occurred and is
continuing, in the event of a Condemnation where the amount of the taking does
not exceed the Restoration Threshold, a Borrower may settle and compromise such
Condemnation; provided that the same is effected in a commercially reasonable
and timely manner. In the event a Condemnation where the amount of the taking
exceeds the Restoration Threshold or if an Event of Default then exists, a
Borrower may settle and compromise the Condemnation only with the consent of
Lender (which consent shall not be unreasonably withheld or delayed) and Lender
shall have the opportunity to participate, at Borrowers' cost, in any litigation
and settlement discussions in respect thereof and each Borrower shall from time
to time deliver to Lender all instruments requested by Lender to permit such
participation. Each Borrower shall, at its expense, diligently prosecute any
such proceedings, and shall consult with Lender, its attorneys and experts, and
cooperate with them in the carrying on or defense of any such proceedings.
Notwithstanding any Condemnation, each Borrower shall continue to pay the Debt
at the time and in the manner provided for its payment in the Note and in this
Agreement. Lender shall not be limited to the interest paid on the Award by any
Governmental Authority but shall be entitled to receive out of the Award
interest at the rate or rates provided herein or in the Note. If any Property or
any portion thereof is taken by any Governmental Authority and provided Lender
permits the applicable Borrowers to utilize the Net Proceeds, if any, for the
Restoration of the applicable Property, each Borrower shall promptly commence
and diligently prosecute the Restoration of such Property and otherwise comply
with the provisions of Section 5.3. If such Property is sold, through
foreclosure or otherwise, prior to the receipt by Lender of the Award, Lender
shall have the right, whether or not a deficiency judgment on the Note shall
have been sought, recovered or denied, to receive the Award, or a portion
thereof sufficient to pay the Debt.

          Section 5.3 Delivery of Net Proceeds.

          5.3.1. Minor Casualty or Condemnation. If a Casualty or Condemnation
has occurred to a Property and the Net Proceeds shall be less than the
Restoration Threshold and the costs of completing the Restoration shall be less
than the Restoration Threshold, and provided no Event of Default shall have
occurred and remain uncured, the Net Proceeds will be disbursed by Lender to the
applicable Borrower. Promptly after receipt of the Net Proceeds, such Borrower
shall commence and satisfactorily complete with due diligence the Restoration in
accordance with the terms of this Agreement. If any Net Proceeds are received by
any Borrower and may be retained by such Borrower pursuant to the terms hereof,
such Net Proceeds shall, until completion of the Restoration, be held in trust
for Lender and shall be segregated from other funds of such Borrower to be used
to pay for the cost of Restoration in accordance with the terms hereof.

                                       57



          5.3.2. Major Casualty or Condemnation.

               (a) If a Casualty or Condemnation has occurred to a Property and
the Net Proceeds are equal to or greater than the Restoration Threshold or the
costs of completing the Restoration is equal to or greater than the Restoration
Threshold, Lender shall make the Net Proceeds available for the Restoration,
provided that each of the following conditions are met:

                    (i) no Event of Default shall have occurred and be
     continuing;

                    (ii) (A) in the event the Net Proceeds are insurance
     proceeds, less than twenty-five percent (25%) of the total floor area of
     the Improvements at the applicable Property has been damaged, destroyed or
     rendered unusable as a result of such Casualty or (B) in the event the Net
     Proceeds are an Award, less than ten percent (10%) of the land constituting
     applicable Property is taken, and such land is located along the perimeter
     or periphery of the Property, and no portion of the Improvements is the
     subject of the Condemnation;

                    (iii) (A) in the event of a Casualty, the Casualty resulted
     in an actual or constructive loss of less than twenty-five percent (25%) of
     the fair market value of the applicable Property or (B) in the event of a
     Condemnation, the Condemnation resulted in an actual or constructive loss
     of less than ten percent (10%) of the fair market value of the applicable
     Property.

                    (iv) Intentionally Omitted.

                    (v) The applicable Borrower shall commence the Restoration
     as soon as reasonably practicable (but in no event later than sixty (60)
     days after such Casualty or Condemnation or such longer period, not to
     exceed 120 days, as is reasonably necessary to adjust the claim or receive
     the award; provided, however, with respect to each Property the use of
     which is a legal non-conforming use under applicable Legal Requirements,
     the Restoration shall be commenced within such period as required by such
     Legal Requirements to maintain such status) and shall diligently pursue the
     same to satisfactory completion and in any event, as to each Property the
     use of which is a legal non-conforming use under applicable Legal
     Requirements, within such period as required by such Legal Requirements to
     maintain such status;

                    (vi) Lender shall be satisfied that any operating deficits
     and all payments of principal and interest under the Note will be paid
     during the period required for Restoration from (A) the Net Proceeds, or
     (B) other funds of the applicable Borrower;

                    (vii) Lender shall be satisfied that the Restoration will be
     completed on or before the earliest to occur of (A) the date six (6) months
     prior to the Maturity Date, (B) such time as may be required under
     applicable Legal Requirements in order to repair and restore the applicable
     Property to the condition it was in immediately prior to such Casualty or
     to as nearly as possible the condition it was in immediately prior

                                       58



     to such Condemnation, as applicable or (C) the expiration of the insurance
     coverage referred to in Section 5.1.1(a)(iii);

                    (viii) Lender shall be satisfied that after the Restoration,
     the fair market value of the applicable Property will be at least equal to
     the fair market value of such Property prior to the Casualty or
     Condemnation;

                    (ix) the applicable Property and the use thereof after the
     Restoration will be in substantial compliance with and permitted under all
     applicable Legal Requirements;

                    (x) the Restoration shall be done and completed by the
     applicable Borrower in an expeditious and diligent fashion and in
     substantial compliance with all applicable Legal Requirements; and

                    (xi) such Casualty or Condemnation, as applicable, does not
     result in the loss of access to the applicable Property or the related
     Improvements.

               (b) The Net Proceeds shall be paid directly to Lender and held by
Lender in the Net Proceeds Account, and until disbursed in accordance with the
provisions of this Section 5.3.2, shall constitute additional security for the
Debt. The Net Proceeds shall be disbursed by Lender to, or as directed by, the
applicable Borrower from time to time during the course of the Restoration, upon
receipt of evidence satisfactory to Lender that (A) all requirements set forth
in Section 5.3.2(a) have been satisfied, (B) all materials installed and work
and labor performed (except to the extent that they are to be paid for out of
the requested disbursement) in connection with the Restoration have been paid
for in full, and (C) there exist no notices of pendency, stop orders, mechanic's
or materialman's liens or notices of intention to file same, or any other liens
or encumbrances of any nature whatsoever on the applicable Property arising out
of the Restoration which have not either been fully bonded to the satisfaction
of Lender and discharged of record or in the alternative fully insured to the
reasonable satisfaction of Lender by the title company issuing the Title
Insurance Policy.

               (c) All plans and specifications required in connection with the
Restoration shall be subject to prior approval of Lender and an independent
architect selected by Lender (the "Casualty Consultant"). The plans and
specifications shall require that the Restoration be completed in a first-class
workmanlike manner at least equivalent to the quality and character of the
original work in the Improvements (provided, however, that in the case of a
partial Condemnation, the Restoration shall be done to the extent reasonably
practical after taking into account the consequences of such partial
Condemnation), so that upon completion thereof, the applicable Property is
restored to be of at least equal value and of substantially the same character
as prior to the Casualty. The applicable Borrower shall restore all Improvements
such that when they are fully restored and/or repaired, such Improvements and
their contemplated use substantially comply with all applicable material Legal
Requirements. The identity of the contractors, subcontractors and materialmen
engaged in the Restoration, as well as the contracts under which they have been
engaged, shall be subject to reasonable approval of Lender and the Casualty
Consultant. All costs and expenses incurred by Lender in connection with
recovering, holding and advancing the Net Proceeds for the Restoration
including, without

                                       59



limitation, reasonable attorneys' fees and disbursements and the Casualty
Consultant's fees and disbursements, shall be paid by Borrowers.

               (d) In no event shall Lender be obligated to make disbursements
of the Net Proceeds in excess of an amount equal to the costs actually incurred
from time to time for work in place as part of the Restoration, as certified by
the Casualty Consultant, less the Casualty Retainage. The term "Casualty
Retainage" shall mean, as to each contractor, subcontractor or materialman
engaged in the Restoration, an amount equal to ten percent (10%) of the costs
actually incurred for work in place as part of the Restoration, as certified by
the Casualty Consultant, until the Restoration has been completed. The Casualty
Retainage shall in no event, and notwithstanding anything to the contrary set
forth above in this Section 5.3.2(d), be less than the amount actually held back
by the applicable Borrower from contractors, subcontractors and materialmen
engaged in the Restoration. The Casualty Retainage shall not be released until
the Casualty Consultant certifies to Lender that the Restoration has been
completed in accordance with the provisions of this Section 5.3.2(d) and that
all approvals necessary for the re-occupancy and use of the applicable Property
have been obtained from all appropriate Governmental Authorities, and Lender
receives evidence satisfactory to Lender that the costs of the Restoration have
been paid in full or will be paid in full out of the Casualty Retainage;
provided, however, that Lender will release the portion of the Casualty
Retainage being held with respect to any contractor, subcontractor or
materialman engaged in the Restoration as of the date upon which the Casualty
Consultant certifies to Lender that the contractor, subcontractor or materialman
has satisfactorily completed all work and has supplied all materials in
accordance with the provisions of the contractor's, subcontractor's or
materialman's contract, the contractor, subcontractor or materialman delivers
the lien waivers and evidence of payment in full of all sums due to the
contractor, subcontractor or materialman as may be reasonably requested by
Lender or by the title company issuing the Title Insurance Policy, and Lender
receives an endorsement to the Title Insurance Policy insuring the continued
priority of the lien of the related Mortgage and evidence of payment of any
premium payable for such endorsement. If required by Lender, the release of any
such portion of the Casualty Retainage shall be approved by the surety company,
if any, which has issued a payment or performance bond with respect to the
contractor, subcontractor or materialman.

               (e) Lender shall not be obligated to make disbursements of the
Net Proceeds more frequently than once every calendar month.

               (f) If at any time the Net Proceeds or the undisbursed balance
thereof shall not, in the opinion of Lender in consultation with the Casualty
Consultant, be sufficient to pay in full the balance of the costs which are
reasonably estimated by the Casualty Consultant to be incurred in connection
with the completion of the Restoration, Borrowers shall deposit the deficiency
(the "Net Proceeds Deficiency") with Lender before any further disbursement of
the Net Proceeds shall be made. The Net Proceeds Deficiency deposited with
Lender shall be held by Lender in the Net Proceeds Account and shall be
disbursed for costs actually incurred in connection with the Restoration on the
same conditions applicable to the disbursement of the Net Proceeds, and until so
disbursed pursuant to this Section 5.3.2 shall constitute additional security
for the Debt.

                                       60



               (g) The excess, if any, of the Net Proceeds and the remaining
balance, if any, of the Net Proceeds Deficiency deposited with Lender after the
Casualty Consultant certifies to Lender that the Restoration has been completed
in accordance with the provisions of this Section 5.3.2, and the receipt by
Lender of evidence satisfactory to Lender that all costs incurred in connection
with the Restoration have been paid in full, shall be remitted by Lender to the
applicable Borrower, provided no Event of Default shall have occurred and shall
be continuing under any of the Loan Documents.

               (h) All Net Proceeds not required (i) to be made available for
the Restoration or (ii) to be returned to a Borrower as excess Net Proceeds
pursuant to Section 5.3.2(g) may be retained and applied by Lender toward the
payment of the Debt, whether or not then due and payable, in such order,
priority and proportions as Lender in its sole discretion shall deem proper
without any Prepayment Fee or Spread Maintenance Premium, or, at the discretion
of Lender, the same may be paid, either in whole or in part, to a Borrower for
such purposes as Lender shall designate.

                              ARTICLE VI. ACCOUNTS

          Section 6.1. Cash Management Account/Collection Account.

               (a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Cash Management Bank an account for the
collection of all income from each Property (the "Cash Management Account"). As
a condition precedent to the closing of the Loan, Borrowers shall cause the Cash
Management Bank to execute and deliver the Cash Management Agreement, which
provides, inter alia, that no party other than Lender and Servicer shall have
the right to withdraw funds from the Cash Management Account. The fees and
expenses of the Cash Management Bank shall be paid by Borrower. On or prior to
the Closing Date, the Borrowers shall establish and thereafter maintain with the
Collection Account Bank a lockbox account (the "Collection Account"). As a
conditon precedent to the closing of the Loan, Borrowers shall cause the
Collection Account Bank to execute and deliver the Collection Account Agreement,
which provides, inter alia, that no party other than Lender and Servicer shall
have the right to withdraw funds from the Collection Account. The fees and
expenses of the Collection Account Bank shall be paid by the Borrowers.

               (b) On the Closing Date, each Borrower shall deliver a written
notice (a "Payor Notice") in the form of Exhibit A to each Third Party Payor
that is under Medicare and Medicaid, which notice shall provide that (A) all
payments from such Third Party Payor shall thereafter be transmitted directly by
it to, and deposited directly into, the Collection Account and (B) such
instruction may not be rescinded unless and until such Third Party Payor
receives from a Borrower or Lender a copy of Lender's written consent to such
rescission. Each Borrower shall send a copy of each such written notice to
Lender and shall re-deliver such notices to each Third Party Payor until such
time as such Third Party Payor complies therewith. Each Borrower covenants to
cause all Rents relating to the Properties and all other money received by each
Borrower or Manager with respect to the Properties, including, but not limited
to, payments from all other Third Party Payors excluding Medicare and Medicaid
("Private Third Party Payors") and Self-Pay Receivables to be deposited in the
Collection Account by the end of the first (1st) Business Day following any
Borrower's or Manager's receipt thereof; and each Borrower shall

                                       61



be permitted to deposit in the Collection Account such additional amounts as any
Borrower may elect. Notwithstanding the foregoing, the parties acknowledge and
agree that with respect to each Property, the payments from the Private Third
Party Payors and the Self-Pay Receivables constituting checks will be remitted
by each Borrower once such Borrower has accumulated $1,000.00 worth of such
checks by overnight delivery to Manager. Manager shall hold such checks in trust
and will deposit such checks within one (1) Business Day of receipt thereof into
the Collection Account.

               (c) Lender shall have the right to replace the Cash Management
Bank or request the Borrower to replace the Collection Account Bank with any
other Eligible Institution in which Eligible Accounts may be maintained which
will promptly execute and deliver to Lender a Cash Management Agreement or
Collection Account Agreement, (and each Borrower shall cooperate with Lender in
connection with such transfer) in the event that (i) at any time the Cash
Management Bank or the Collection Account Bank ceases to be an Eligible
Institution or (ii) the Cash Management Bank or the Collection Account Bank
resigns or otherwise fails to comply with the Cash Management Agreement, as
applicable or (iii) there is a default by the Cash Management Bank or the
Collection Account Bank, as applicable under its Cash Management Agreement or
Collection Account Agreement. Notwithstanding the foregoing, Lender shall have
the right to hold the Collateral Accounts at any other Eligible Institution.

          Section 6.2. Distributions From Cash Management Account.

               (a) At the end of each Business Day, the Collection Account Bank
shall remit all available funds in the Collection Account to the Cash Management
Account.

               (b) On each Business Day, provided no Event of Default has
occurred and no Cash Management Period or Mezzanine Cash Management Period
exists, the Cash Management Bank shall withdraw all available funds in the Cash
Management Account and shall disburse such funds in the following order of
priority until such time as the maximum amount required to be deposited in each
Collateral Account has been so deposited:

                    (i) intentionally deleted;

                    (ii) to the Tax and Insurance Escrow Account, the amount
     required to be deposited therein pursuant to Section 6.3;

                    (iii) to the Debt Service Account, the amount required to be
     deposited therein pursuant to Section 6.4;

                    (iv) to the Capital Expenditure Reserve Account, the amount
     required to be deposited therein pursuant to Section 6.6; and

                    (v) any remaining amounts to the Mezzanine Cash Management
     Account; provided, however, if the Mezzanine Loan shall have been paid in
     full, any remaining amounts shall be disbursed to such account as the
     applicable Borrower may direct.

                                       62



               (c) If a Cash Management Period or Mezzanine Cash Management
Period exists but no Event of Default has occurred and is continuing, the Cash
Management Bank shall withdraw on each Business Day all available funds in the
Cash Management Account and shall disburse such funds in the following order of
priority until such time as the maximum amount required to be deposited in each
Collateral Account has been so deposited:

                    (i) intentionally deleted;

                    (ii) to the Tax and Insurance Escrow Account, the amount
     required to be deposited therein pursuant to Section 6.3;

                    (iii) to the Debt Service Account, the amount required to be
     deposited therein pursuant to Section 6.4;

                    (iv) to the Operating Expense Reserve Account, the amount
     required to be deposited therein pursuant to Section 6.5;

                    (v) to the Capital Expenditure Reserve Account, the amount
     required to be deposited therein pursuant to Section 6.6; and

                    (vi) any remaining amounts to be disbursed as follows:

                    (1) if no Cash Management Period exists and the Mezzanine
                    Loan is outstanding, to the Mezzanine Cash Management
                    Account;

                    (2) if a Cash Management Period exists and the Mezzanine
                    Loan is outstanding, to the Mezzanine Cash Management
                    Account in an amount equal to the Mezzanine Debt Service due
                    on the next Mezzanine Payment Date, with any amounts in
                    excess thereof, to the Excess Cash Reserve Account; or

                    (3) if a Cash Management Period exists and the Mezzanine
                    Loan is not outstanding, all remaining amounts to the Excess
                    Cash Reserve Account.

               (d) If an Event of Default has occurred and is continuing, Lender
shall promptly notify Cash Management Bank of such Event of Default and Lender
may, in addition to all other rights and remedies provided for under the Loan
Documents, disburse and apply the amounts in the Cash Management Account toward
the payment of the Debt and/or toward the payment of Basic Carrying Costs,
Operating Expenses or Capital Expenditures, in such sequence as Lender shall
elect in its sole discretion.

               (e) If on any Payment Date, any Collateral Account has not been
fully funded in the applicable amount described in Section 6.2(b) or Section
6.2(c), as applicable, Borrowers shall deposit into the Cash Management Account
on such Payment Date the amount of such deficiency. If Borrowers shall fail to
make such deposit, the same shall constitute an

                                       63



Event of Default and, in addition to all other rights and remedies provided for
under the Loan Documents, Lender may disburse and apply the amounts in the Cash
Management Account toward the payment of the Debt and/or toward the payment of
Basic Carrying Costs, Operating Expenses or Capital Expenditures, in such
sequence as Lender shall elect in its sole discretion.

          Section 6.3. Tax and Insurance Escrow Account.

               (a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Cash Management Bank an account for the purpose
of reserving amounts payable by any Borrower in respect of Taxes and Insurance
Premiums for each Property (the "Tax and Insurance Escrow Account").

               (b) On or prior to the Closing Date, the Tax and Insurance Escrow
Account shall be funded in an amount equal to the sum of (i) an amount
sufficient to pay all Taxes for the Properties by the thirtieth (30th) day prior
to the date they come due, assuming subsequent monthly fundings on Payment Dates
of one-twelfth (1/12th) of projected annual Taxes, plus (ii) an amount
sufficient to pay all Insurance Premiums for the Properties by the thirtieth
(30th) day prior to the date they come due, assuming subsequent monthly fundings
on Payment Dates of one-twelfth (1/12th) of projected Insurance Premiums.

               (c) On each subsequent Business Day during an Interest Accrual
Period, the Cash Management Bank shall withdraw all available funds in the Cash
Management Account and shall disburse such funds into the Tax and Insurance
Escrow Account in accordance with the provisions set forth in Section 6.2 until
an amount equal to the sum of:

                    (A) one-twelfth (1/12th) of the Taxes for the Properties
     that Lender reasonably estimates, based on information provided by
     Borrowers, will be payable during the next ensuing twelve (12) months, plus

                    (B) one-twelfth (1/12th) of the Insurance Premiums for the
     Properties that Lender reasonably estimates, based on information provided
     by Borrowers, will be payable during the next ensuing twelve (12) months;

has been deposited into the Tax and Insurance Escrow Account provided, however,
that if at any time Lender reasonably determines that the amount in the Tax and
Insurance Escrow Account will not be sufficient to accumulate (upon payment of
subsequent monthly amounts in accordance with the provisions of this Agreement)
the full amount of all installments of Taxes and Insurance Premiums for the
Properties by the date on which such amounts come due, then Lender shall notify
Borrowers of such determination and Borrowers shall increase the monthly
payments to the Tax and Insurance Escrow Account by the amount that Lender
reasonably estimates is sufficient to achieve such accumulation.

               (d) Each Borrower shall provide Lender with copies of all tax and
insurance bills relating to each Property promptly after the applicable
Borrower's receipt thereof. Lender will apply amounts in the Tax and Insurance
Escrow Account toward the purposes for which such amounts are deposited therein.
In connection with the making of any payment from the Tax and Insurance Escrow
Account, Lender may cause such payment to be made according to any bill,
statement or estimate procured from the appropriate public office or insurance
carrier,

                                       64



without inquiry into the accuracy of such bill, statement or estimate or into
the validity of any tax, assessment, sale, forfeiture, tax lien or title or
claim thereof unless given written advance notice by a Borrower of such
inaccuracy, invalidity or other contest.

          Section 6.4. Debt Service Account.

               (a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Cash Management Bank an account for the purpose
of reserving amounts payable by Borrowers in respect of Debt Service (the "Debt
Service Account").

               (b) On each Business Day during an Interest Accrual Period, the
Cash Management Bank shall withdraw all available funds in the Cash Management
Account and shall disburse such funds into the Debt Service Account in
accordance with the provisions set forth in Section 6.2 until an amount equal to
the amount of all scheduled or delinquent interest on the Loan and other amounts
due and payable under the Loan Documents on the next Payment Date has been
deposited into the Debt Service Account. To the extent Lender receives any
prepayments of the Debt in an Interest Accrual Period on a date other than a
Payment Date, the total amount of such prepayment shall be deposited into the
Debt Service Account, together with all other sums payable with respect to such
prepayment including, but not limited to, any Prepayment Fee and all interest
that would have accrued from the date of such prepayment through the applicable
Payment Date. Any Net Proceeds actually received by Lender shall be deposited
directly into the Net Proceeds Account pursuant to Section 6.8 hereof.

          Section 6.5. Operating Expense Reserve Account.

               (a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Cash Management Bank an account for the purpose
of reserving amounts in respect of Operating Expenses (the "Operating Expense
Reserve Account").

               (b) On each Business Day during a Cash Management Period or a
Mezzanine Cash Management Period, the Cash Management Bank shall withdraw all
available funds in the Cash Management Account and shall disburse such funds
into the Operating Expense Reserve Account in accordance with the provisions set
forth in Section 6.2 until an amount equal to the funds necessary to pay all
Operating Expenses which are (A) to be incurred during the applicable Interest
Accrual Period in accordance with the Annual Budget, or (B) certified by
Borrowers from time to time and approved by Lender in its sole discretion, has
been deposited into the Operating Expense Reserve Account.

               (c) Upon the request of a Borrower at any time, provided that no
Event of Default has occurred, Lender shall remit to such Borrower from the
Operating Expense Reserve Account amounts to permit such Borrower to pay (or to
reimburse such Borrower) for Operating Expenses incurred by such Borrower in
connection with any of the Properties, provided that:

                    (i) Such Borrower shall deliver to Lender invoices
     evidencing that the costs for which such disbursements are requested are
     due and payable;

                                       65



                    (ii) Such Borrower shall deliver to Lender an Officer's
     Certificate confirming that all such costs are within the limits of the
     Annual Budget and all such costs have been previously paid by such Borrower
     or will be paid from the proceeds of the requested disbursement; and

                    (iii) Lender may condition the making of a requested
     disbursement on reasonable evidence establishing that each Borrower has
     applied any amounts previously received by it in accordance with this
     Section for the expenses to which specific draws made hereunder relate.

          Section 6.6. Capital Expenditure Reserve Account.

               (a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Cash Management Bank an account for the purpose
of reserving amounts in respect of Capital Expenditures (the "Capital
Expenditure Reserve Account").

               (b) On each Business Day, the Cash Management Bank shall withdraw
all available funds in the Cash Management Account and shall disburse such funds
into the Capital Expenditure Reserve Account in accordance with the provisions
set forth in Section 6.2 until an amount equal to the Monthly Capital
Expenditure Reserve Amount has been deposited therein.

               (c) Upon the request of any Borrower at any time (but not more
often than once per calendar month), provided no Event of Default has occurred
and is continuing, Lender shall remit to such Borrower from the Capital
Expenditure Reserve Account amounts to permit such Borrower to pay (or to
reimburse such Borrower) for Capital Expenditures made in accordance herewith;
provided that:

                    (i) Such Borrower shall deliver to Lender invoices
     evidencing that the costs for which such disbursements are requested are
     due and payable;

                    (ii) Such Borrower shall deliver to Lender an Officer's
     Certificate confirming that all such costs have been previously paid by
     such Borrower or will be paid from the proceeds of the requested
     disbursement; and

                    (iii) Lender may condition the making of a requested
     disbursement on (1) reasonable evidence establishing that each Borrower has
     applied any amounts previously received by it in accordance with this
     Section for the expenses to which specific draws made hereunder relate, (2)
     a reasonably satisfactory site inspection, and (3) receipt of lien releases
     and waivers from any contractors, subcontractors and others in connection
     with such amounts.

          Section 6.7. Deferred Maintenance and Environmental Escrow Account.

               (a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Cash Management Bank an account for the purpose
of reserving

                                       66



amounts anticipated to be required to correct Deferred Maintenance Conditions
(the "Deferred Maintenance and Environmental Escrow Account").

               (b) On the Closing Date, Borrowers shall deposit into the
Deferred Maintenance and Environmental Escrow Account, from the proceeds of the
Loan, an amount equal to the Deferred Maintenance Amount.

               (c) Borrowers shall correct the Deferred Maintenance Conditions
in a diligent, workmanlike manner and shall complete the same within twelve (12)
months of the Closing Date. Upon the request of a Borrower at any time (but not
more often than once per calendar month), provided no Event of Default has
occurred and is continuing, Lender shall disburse to such Borrower from the
Deferred Maintenance and Environmental Escrow Account amounts to permit such
Borrower to pay (or to reimburse such Borrower) for reasonable costs and
expenses incurred in order to correct Deferred Maintenance Conditions; provided
that:

                    (i) Such Borrower shall deliver to Lender invoices
     evidencing that the costs for which such disbursements are requested are
     due and payable;

                    (ii) Such Borrower shall deliver to Lender an Officer's
     Certificate confirming that all such costs have been previously paid by
     Borrower or will be paid from the proceeds of the requested disbursement;

                    (iii) Lender may condition the making of a requested
     disbursement on (1) reasonable evidence establishing that each Borrower has
     applied any amounts previously received by it in accordance with this
     Section for the expenses to which specific draws made hereunder relate, (2)
     a reasonably satisfactory site inspection, and (3) receipt of lien releases
     and waivers from any contractors, subcontractors and others with respect to
     such amounts; and

                    (iv) as to any Deferred Maintenance Condition, the
     applicable Borrower shall only be entitled to a disbursement of the amount
     which equals the cost for such Deferred Maintenance Condition.

          Section 6.8. Net Proceeds Account.

               (a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Cash Management Bank an account for the purpose
of depositing any Net Proceeds (the "Net Proceeds Account") from the Properties.

               (b) Provided no Event of Default has occurred, funds in the Net
Proceeds Account shall be applied in accordance with Section 5.3.

          Section 6.9. Excess Cash Reserve Account.

               (a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Cash Management Bank an account for the purpose
of depositing

                                       67



any amounts remaining in the Cash Management Account after the deposits required
by Section 6.2(c)(i) through (v) have been made (the "Excess Cash Reserve
Account").

               (b) Provided no Event of Default exists, if there are
insufficient funds in the Cash Management Account for the deposits required
pursuant to Section 6.2(c)(i) through (v), the Cash Management Bank, at the
direction of Lender or Servicer, shall withdraw funds from the Excess Cash
Reserve Account in the amount of such insufficiency for payment of same in the
order and priority required by Section 6.2(c)(i) through (v). Provided no Event
of Default exists, any funds remaining in the Excess Cash Reserve Account shall
be released upon the expiration of the Cash Management Period as follows : (i)
if no Mezzanine Cash Management Period exists, to the Borrowers or (ii) if a
Mezzanine Cash Management Period exists, to the Mezzanine Cash Management
Account.

          Section 6.10. Intentionally deleted.

          Section 6.11. Account Collateral.

               (a) Each Borrower hereby grants a perfected first-priority
security interest in favor of Lender in and to the Account Collateral (other
than the Collection Account) as security for the Debt, together with all rights
of a secured party with respect thereto. Each Collateral Account shall be an
Eligible Account under the sole dominion and control of Lender and shall be in
the name of Borrowers, as pledgors, and Lender, as pledgee. Each Borrower shall
have no right to make withdrawals from any of the Collateral Accounts. Funds in
the Collateral Accounts shall not be commingled with any other monies at any
time. Each Borrower shall execute any additional documents that Lender in its
reasonable discretion may require and shall provide all other evidence
reasonably requested by Lender to evidence or perfect its first-priority
security interest in the Account Collateral (other than the Collection Account).

               (b) The insufficiency of amounts contained in the Collateral
Accounts shall not relieve any Borrower from its obligation to fulfill all
covenants contained in the Loan Documents.

               (c) During the continuance of an Event of Default, Lender may, in
its sole discretion, apply funds in the Collateral Accounts, and funds resulting
from the liquidation of Permitted Investments contained in the Collateral
Accounts, toward the payment of the Debt and/or toward the payment of Basic
Carrying Costs, Operating Expenses or Capital Expenditures in such sequence as
Lender shall elect in its sole discretion.

          Section 6.12. Permitted Investments.

               (a) So long as no Event of Default shall be continuing, Borrowers
shall be permitted to direct the investment of the funds from time to time held
in the Collateral Accounts (other than the Collection Account) in Permitted
Investments and to sell or liquidate such Permitted Investments and reinvest
proceeds from such sale or liquidation in other Permitted Investments (but
Lender shall have no liability whatsoever in respect of any failure by the Cash
Management Bank to do so), with all such proceeds and reinvestments to be held
in the applicable Collateral Account; provided, however, that the maturity of an
adequate portion of the Permitted Investments on deposit in the Collateral
Accounts shall be no later than the Business

                                       68



Day immediately preceding the date on which such funds are required to be
withdrawn therefrom pursuant to this Agreement, and provided further that
Borrowers shall remit into the applicable Collateral Account an amount equal to
any losses realized on Permitted Investments contained therein within five (5)
Business Days of the date of such loss. Funds in the Collection Account shall
not be invested. No Permitted Investment shall be liquidated at a loss at the
direction of any Borrower except to the extent necessary to make a required
payment to Lender on a Payment Date.

               (b) All income and gains from the investment of funds in the
Collateral Accounts shall be retained in the Collateral Accounts from which they
were derived. As between Borrowers and Lender, Borrowers shall treat all income,
gains and losses from the investment of amounts in the Collateral Accounts as
its income or loss for federal, state and local income tax purposes.

               (c) After the Debt has been paid in full, the Collateral Accounts
shall be closed and the balances therein, if any, shall be paid to Borrowers.

          Section 6.13. Bankruptcy.

          Each Borrower and Lender acknowledge and agree that upon the filing of
a bankruptcy petition by or against any Borrower under the Bankruptcy Code, the
Account Collateral and the Operating Income (whether then already in the
Collateral Accounts, or then due or becoming due thereafter) shall be deemed not
to be property of such Borrower's bankruptcy estate within the meaning of
Section 541 of the Bankruptcy Code. However, if a court of competent
jurisdiction determines that, notwithstanding the foregoing characterization of
the Account Collateral and the Operating Income by any Borrower and Lender, the
Account Collateral and/or the Operating Income do constitute property of such
Borrower's bankruptcy estate, then Borrowers and Lender further acknowledge and
agree that all such Operating Income, whether due and payable before or after
the filing of the petition, are and shall be cash collateral of Lender. Each
Borrower acknowledges that Lender does not consent to any Borrower's use of such
cash collateral and that, in the event Lender elects (in its sole discretion) to
give such consent, such consent shall only be effective if given in writing
signed by Lender. Except as provided in the immediately preceding sentence, each
Borrower shall not have the right to use or apply or require the use or
application of such cash collateral (i) unless the applicable Borrower shall
have received a court order authorizing the use of the same, and (ii) the
applicable Borrower shall have provided such adequate protection to Lender as
shall be required by the bankruptcy court in accordance with the Bankruptcy
Code.

          SECTION 6.14. Letters of Credit.

               (a) In lieu of making the payments to any of the Collateral
Accounts (other than the Debt Service, Operating Expense Reserve Account or
Excess Cash Reserve Account), Borrowers may deliver to Lender a Letter of Credit
in accordance with the provisions of this Section. Additionally, Borrowers may
deliver to Lender a Letter of Credit in accordance with the provisions of this
Section in lieu of deposits previously made to the Collateral Accounts (other
than the Debt Service, Operating Expense Reserve Account or Excess Cash Reserve
Account). The aggregate amount of any Letter of Credit and cash on deposit with
respect to any

                                       69



of such Collateral Accounts shall at all times be at least equal to the
aggregate amount which each Borrower is required to have on deposit in such
Collateral Account pursuant to this Agreement through the end of the calendar
year in which the Letter of Credit is delivered, as reasonably estimated by
Lender (and in the case of Taxes and Insurance Premiums in no event less than an
amount equal to one year of Insurance Premiums and estimated Taxes for the
Properties). In determining the aggregate amount of any Letter of Credit and
cash required to be delivered to Lender in respect of the Capital Expenditure
Reserve Account, such aggregate amounts shall equal all amounts required to be
deposited hereunder through the end of the calendar year in which the Letter of
Credit is delivered, less amounts expended by any Borrower for Capital
Expenditures for which any Borrower has satisfied the conditions to withdrawal
from the Capital Expenditure Reserve Account. In the event that a Letter of
Credit is delivered in lieu of any deposits to the Tax and Insurance Reserve
Account, Borrowers shall be responsible for the payment of Taxes or Insurance
Premiums for the Properties, as applicable, and Lender shall not be responsible
therefor.

               (b) Borrowers shall give Lender no less than thirty (30) days
notice of a Borrower's election to deliver a Letter of Credit and Borrowers
shall pay to Lender all of Lender's reasonable out-of-pocket costs and expenses
in connection therewith. Each Borrower shall not be entitled to draw from any
such Letter of Credit. Upon thirty (30) days notice to Lender, a Borrower may
replace a Letter of Credit with a cash deposit to the applicable Collateral
Account if a Letter of Credit has been outstanding for more than six (6) months.
Prior to the return of a Letter of Credit, Borrowers shall deposit an amount
equal to the amount that would have accumulated in the applicable Collateral
Account and not been disbursed in accordance with this Agreement if such Letter
of Credit had not been delivered.

               (c) Each Borrower shall provide Lender with notice of any
increases in the annual payments for Taxes, Insurance Premiums or Capital
Expenditures for any of the Properties thirty (30) days prior to the effective
date of any such increase and any applicable Letter of Credit shall be increased
by such increased amount at least ten (10) days prior to the effective date of
such increase.

          Section 6.15. Provisions Regarding Letters of Credit.

          6.15.1. Security for Debt. Each Letter of Credit delivered under this
Agreement shall be additional security for the payment of the Debt. Upon the
occurrence of a Default or an Event of Default, Lender shall have the right, at
its option, to draw on any Letter of Credit and to apply all or any part thereof
to the payment of the items for which such Letter of Credit was established or
to apply each such Letter of Credit to payment of the Debt in such order,
proportion or priority as Lender may determine. Any such application to the Debt
shall be subject to the Spread Maintenance Premium.

          6.15.2. Additional Rights of Lender. In addition to any other right
Lender may have to draw upon a Letter of Credit pursuant to the terms and
conditions of this Agreement, Lender shall have the additional rights to draw in
full any Letter of Credit: (a) if Lender has received a notice from the issuing
bank that the Letter of Credit will not be renewed and a substitute Letter of
Credit is not provided at least thirty (30) days prior to the date on which the
outstanding Letter of Credit is scheduled to expire; (b) upon receipt of notice
from the issuing

                                       70



bank that the Letter of Credit will be terminated (except if the termination of
such Letter of Credit is permitted pursuant to the terms and conditions of this
Agreement or a substitute Letter of Credit is provided); or (c) if the bank
issuing the Letter of Credit shall cease to be an Eligible Institution and any
Borrower fails to deliver a replacement Letter of Credit within ten (10) days of
the date that the issuing bank is no longer an Eligible Institution.
Notwithstanding anything to the contrary contained in the above, Lender is not
obligated to draw any Letter of Credit upon the happening of an event specified
in (a), (b) or (c) above and shall not be liable for any losses sustained by any
Borrower due to the insolvency of the bank issuing the Letter of Credit if
Lender has not drawn the Letter of Credit.

                        ARTICLE VII. PROPERTY MANAGEMENT

          Section 7.1. The Management Agreement.

          Each Borrower shall cause Manager to manage the Properties in
accordance in all material respects with the Management Agreements. Each
Borrower shall (i) diligently perform and observe in all material respects all
of the terms, covenants and conditions of the Management Agreements on the part
of any Borrower to be performed and observed (ii) promptly notify Lender of any
default by Manager under the provisions of the Management Agreements and (iii)
promptly notify Lender of any notice to any Borrower of any default by any
Borrower in the performance or observance of any of the terms, covenants or
conditions of the Management Agreements on the part of any Borrower to be
performed and observed. If any Borrower shall default in the performance or
observance of any material term, covenant or condition of any Management
Agreement on the part of any Borrower to be performed or observed, then, without
limiting Lender's other rights or remedies under this Agreement or the other
Loan Documents, and without waiving or releasing any Borrower from any of its
obligations hereunder or under such Management Agreement, Lender shall have the
right, but shall be under no obligation, to pay any sums and to perform any act
as may be appropriate to cause all the material terms, covenants and conditions
of such Management Agreement on the part of any Borrower to be performed or
observed.

          Section 7.2. Prohibition Against Termination or Modification.

          Each Borrower shall not surrender, terminate, cancel, amend, modify,
renew or extend any Management Agreement, or enter into any other agreement
relating to the management or operation of any Property with any Manager or any
other Person, or consent to the assignment by any Manager of its interest under
the relevant Management Agreement, in each case without the express consent of
Lender, which consent may be granted or denied in Lender's sole discretion;
provided, however, with respect to a new manager such consent may be conditioned
upon Borrowers delivering a Rating Agency Confirmation as to such new manager
and management agreement. If at any time Lender consents to the appointment of a
new manager, such new manager and Borrowers shall, as a condition of Lender's
consent, execute a subordination of management agreement in the form then used
by Lender. The management fees and other fees reserved under the Management
Agreements shall not exceed in the aggregate the prevailing rate for properties
of comparable size, quality and tenant mix in the market in which the Properties
are located. In no event shall such fees exceed seven percent (7%) of the
Operating Income.

                                       71



          Section 7.3. Replacement of Manager.

          Lender shall have the right to require any Borrower to terminate any
Management Agreement and to replace any Manager with a Person chosen by a
Borrower and approved by Lender, upon the occurrence of any one or more of the
following events: (i) at any time following the occurrence of an Event of
Default, (ii) if a Manager shall be in default under the relevant Management
Agreement or the relevant Assignment of Management Agreement beyond any
applicable notice and cure period, (iii) if at any time a Manager has engaged in
gross negligence, malfeasance, fraud or willful misconduct and (iv) if the Debt
Service Coverage Ratio is less than 1.25:1.00.

                             ARTICLE VIII. TRANSFERS

          Section 8.1. Transfer of the Properties.

          Each Borrower may not transfer all of the Properties to another party
(i) unless Lender shall have consented in writing to such transfer which consent
may be granted or denied in Lender's sole discretion, (ii) after a
Securitization has occurred, Rating Agency Confirmation is obtained, (iii)
acceptable opinions relating to such transfer shall have been delivered by
Borrowers to Lender and to the Rating Agencies (including without limitation tax
and non-consolidation opinions), (iv) the transferee assumes in writing all
obligations of the transferor under the Loan Documents and executes and delivers
such other documentation as may be required by Lender or the Rating Agencies,
(v) Borrowers pay an assumption fee equal to one half of one percent (.5%) of
the Loan Amount and (vi) Borrowers pay all reasonable expenses incurred by
Lender in connection with such transfer.

          Section 8.2. Transfer of Equity Interests.

               (a) ny transfer of any direct or indirect equity interests in any
Borrower shall be prohibited unless (i) Lender shall have consented in writing
to such transfer or transfers which may be granted or denied in Lender's sole
discretion, (ii) Rating Agency Confirmation is obtained, (iii) acceptable
opinions relating to such transfer or transfers shall have been delivered by
Borrowers to Lender and the Rating Agencies (including, without limitation, tax
and non-consolidation opinions), and (iv) Borrowers pay all reasonable expenses
incurred by Lender in connection with such transfer or transfers.

               (b) Notwithstanding the foregoing clause (a): (i) if the equity
owners of the Parent desire to cause a Change of Control (as defined in the
Master Guaranty) in the Parent after a Securitization has occurred, subject to
the terms of the Master Guaranty, transfers of equity interests in the Parent to
a Qualified Equity Transferee shall be permitted and (ii) transfers of equity
interests in the Parent which do not constitute a Change of Control (as defined
in the Master Guaranty), to the extent permitted under the Master Guaranty,
shall be permitted..

          Section 8.3. Lender's Consent Rights.

          Lender shall not be required to demonstrate any actual impairment of
its security or any increased risk of default hereunder in order to declare the
Debt immediately due and payable upon a Transfer without Lender's consent. This
provision shall apply to every Transfer,

                                       72



other than any Transfer permitted pursuant to Sections 8.1 and 8.2, regardless
of whether voluntary or not, or whether or not Lender has consented to any
previous Transfer.

                 ARTICLE IX. Sale and Securitization of Mortgage

          Section 9.1. Sale of Mortgages and Securitization.

               (a) Lender shall have the right (i) to sell or otherwise transfer
the Loan or any portion thereof as a whole loan, (ii) to sell participation
interests in the Loan or (iii) to securitize the Loan or any portion thereof in
a single asset securitization or a pooled loan securitization. (The transaction
referred to in clauses (i), (ii) and (iii) shall hereinafter be referred to
collectively as "Secondary Market Transactions" and the transactions referred to
in clause (iii) shall hereinafter be referred to as a "Securitization." Any
certificates, notes or other securities issued in connection with a
Securitization are hereinafter referred to as "Securities").

               (b) If requested by Lender, each Borrower shall assist Lender in
satisfying the market standards to which Lender customarily adheres or which may
be reasonably required in the marketplace or by the Rating Agencies in
connection with any Secondary Market Transactions, including, without
limitation, to:

                    (i) (A) provide updated financial and other information with
     respect to the Properties, the business operated at the Properties, each
     Borrower and the Managers, (B) provide updated budgets relating to the
     Properties and (C) provide updated appraisals, market studies,
     environmental assessments (Phase I's and, if appropriate, Phase II's),
     property condition reports and other due diligence investigations of the
     Properties (the "Updated Information"), together, if customary, with
     appropriate verification of the Updated Information through letters of
     auditors or opinions of counsel acceptable to Lender and the Rating
     Agencies;

                    (ii) provide opinions of counsel, which may be relied upon
     by Lender, the Rating Agencies and their respective counsel, agents and
     representatives, as to non-consolidation or any other opinion customary in
     Secondary Market Transactions or required by the Rating Agencies with
     respect to the Properties and Borrowers and Affiliates, which counsel and
     opinions shall be satisfactory to Lender and the Rating Agencies;

                    (iii) provide updated, as of the closing date of the
     Secondary Market Transaction, representations and warranties made in the
     Loan Documents and such additional representations and warranties as the
     Rating Agencies may require; and

                    (iv) execute amendments to the Loan Documents and any
     Borrower's organizational documents reasonably requested by Lender;
     provided, however, that such Borrower shall not be required to modify or
     amend any Loan Document if such modification or amendment would (A) change
     the interest rate, the stated maturity or the amortization of principal as
     set forth herein or in the Note, or (B) modify or amend any other material
     economic term of the Loan.

                                       73



               (c) Each Borrower acknowledges that the Loan may be further
divided into two or more separate notes (or components) that correspond to one
or more tranches of certificates created in a Securitization and each Borrower
agrees to cooperate with Lender in connection therewith. Such notes or note
components may be assigned different interest rates, so long as the weighted
average of such interest rates equals the applicable Interest Rate; provided,
that each Borrower recognizes that, in the case of partial prepayments
associated with principal reduction funded from Net Proceeds, the application of
amounts to principal following an Event of Default under the Loan, or any other
prepayment of a portion of the Loan by any Borrower, the weighted average
interest rate of the Loan may increase because principal may be applied
sequentially, starting with the most senior tranche of certificates. In
addition, each Borrower acknowledges and agrees that Lender shall have the right
to split the Note into an "A" note and a "B" note and each Borrower agrees to
cooperate with Lender in connection therewith in connection with the foregoing
so long as the weighted average interest rate of the "A" note and the "B" note
equals the applicable Interest Rate; provided, that each Borrower recognizes
that, in the case of partial prepayments associated with principal reduction
funded from Net Proceeds, the application of amounts to principal following an
Event of Default under the Loan, or any other prepayment of a portion of the
Loan by any Borrower, the weighted average interest rate of the Loan may
increase because in certain circumstances principal may be applied sequentially
to the "A" and the "B" note.

               (d) If, pursuant to this Section, any interest in this Agreement
or the Note is transferred to any transferee that is not a U.S. Person, the
Lender shall cause such transferee, concurrently with the effectiveness of such
transfer, to furnish to the Lender and Borrowers either Form W-8BEN or Form
W-8ECI or any other form in order to establish an exemption from, or reduction
in the rate of, U.S. withholding tax on all interest payments hereunder, and to
agree (for the benefit of Lender and Borrowers) to provide the Lender a new Form
W-8BEN or Form W-8ECI or any forms reasonably requested in order to establish an
exemption, or reduction in the rate of, U.S. withholding tax upon the expiration
or obsolescence of any previously delivered form and comparable statements in
accordance with applicable U.S. laws and regulations and amendments duly
executed and completed by such transferee, and to comply from time to time with
all applicable U.S. laws and regulations with regard to such withholding tax
exemption.

          Section 9.2. Securitization Indemnification.

               (a) Each Borrower understands that information provided to Lender
by any Borrower and its agents, counsel and representatives may be included in
disclosure documents in connection with the Securitization, including, without
limitation, an offering circular, a prospectus, prospectus supplement, private
placement memorandum or other offering document (each, an "Disclosure Document")
and may also be included in filings with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the "Securities Act"), or
the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and
may be made available to investors or prospective investors in the Securities,
the Rating Agencies, and service providers relating to the Securitization.

               (b) Upon request, each Borrower shall provide in connection with
each of (i) a preliminary and a final private placement memorandum or (ii) a
preliminary and final

                                       74



prospectus or prospectus supplement, as applicable, an agreement (A) certifying
that each Borrower has examined such Disclosure Documents specified by Lender
and that each such Disclosure Document, as it relates to each Borrower, Borrower
Affiliates, the Properties, Manager and all other aspects of the Loan (the
"Relevant Material"), does not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements made,
in the light of the circumstances under which they were made, not misleading,
(B) indemnifying Lender (and for purposes of this Section 9.2, Lender hereunder
shall include its officers and directors and each Person that controls Lender
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, collectively, the "Ventas Group"), the party that has filed the
registration statement relating to the Securitization (the "Registration
Statement"), each of its directors, each of its officers who have signed the
Registration Statement and each Person that controls such party within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
(collectively, the "Underwriter Group") for any losses, claims, damages or
liabilities (collectively, the "Liabilities") to which Lender, Ventas Group or
the Underwriter Group may become subject insofar as the Liabilities arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Relevant Material or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated in the Relevant Material or necessary in order to make the
statements in the Relevant Material, in light of the circumstances under which
they were made, not misleading and (C) agreeing to reimburse Lender, the Ventas
Group and/or the Underwriter Group for any legal or other expenses reasonably
incurred by Lender, the Ventas Group and the Underwriter Group in connection
with investigating or defending the Liabilities; provided, however, that each
Borrower will be liable in any such case under clauses (B) or (C) above only to
the extent that any such loss claim, damage or liability arises out of or is
based upon any such untrue statement or omission made therein in reliance upon
and in conformity with information furnished to Lender by or on behalf of any
Borrower in connection with the preparation of the Disclosure Document or in
connection with the underwriting or closing of the Loan, including, without
limitation, financial statements of any Borrower, operating statements, rent
rolls, appraisals, market studies, environmental site assessment reports and
property condition reports with respect to the Properties. This indemnity will
be in addition to any liability which any Borrower may otherwise have.

               (c) In connection with Exchange Act Filings, each Borrower shall
(i) indemnify Lender, the Ventas Group and the Underwriter Group for Liabilities
to which Lender, the Ventas Group or the Underwriter Group may become subject
insofar as the Liabilities arise out of or are based upon the omission or
alleged omission to state in the Disclosure Document a material fact required to
be stated in the Disclosure Document in order to make the statements in the
Disclosure Document, in light of the circumstances under which they were made,
not misleading and (ii) reimburse Lender, the Ventas Group or the Underwriter
Group for any legal or other expenses reasonably incurred by Lender, the Ventas
Group or the Underwriter Group in connection with defending or investigating the
Liabilities.

               (d) Promptly after receipt by an indemnified party under this
Section 9.2 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 9.2, notify the indemnifying party in writing of the
commencement thereof, but the omission to so notify the indemnifying party will
not relieve the indemnifying party from any liability which the

                                       75



indemnifying party may have to any indemnified party hereunder except to the
extent that failure to notify causes prejudice to the indemnifying party. In the
event that any action is brought against any indemnified party, and it notifies
the indemnifying party of the commencement thereof, the indemnifying party will
be entitled, jointly with any other indemnifying party, to participate therein
and, to the extent that it (or they) may elect by written notice delivered to
the indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. After notice from the indemnifying party
to such indemnified party under this Section 9.2, such indemnified party shall
pay for any legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable costs of
investigation; provided, however, if the defendants in any such action include
both the indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there are any legal defenses available to
it and/or other indemnified parties that are different from or additional to
those available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to assert such legal defenses
and to otherwise participate in the defense of such action on behalf of such
indemnified party at the cost of the indemnifying party. The indemnifying party
shall not be liable for the expenses of more than one separate counsel unless an
indemnified party shall have reasonably concluded that there may be legal
defenses available to it that are different from or additional to those
available to another indemnified party.

               (e) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 9.2(b) or
(c) is for any reason held to be unenforceable as to an indemnified party in
respect of any losses, claims, damages or liabilities (or action in respect
thereof) referred to therein which would otherwise be indemnifiable under
Section 9.2(b) or (c), the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such losses, claims,
damages or liabilities (or action in respect thereof); provided, however, that
no Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation. In determining the
amount of contribution to which the respective parties are entitled, the
following factors shall be considered: (i) the applicable indemnified party's
and each Borrower's relative knowledge and access to information concerning the
matter with respect to which the claim was asserted; (ii) the opportunity to
correct and prevent any statement or omission; and (iii) any other equitable
considerations appropriate in the circumstances. Lender and each Borrower hereby
agree that it would not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation.

               (f) The liabilities and obligations of both Borrowers and Lender
under this Section 9.2 shall survive the termination of this Agreement and the
satisfaction and discharge of the Debt.

                                       76



                               ARTICLE X. DEFAULTS

          Section 10.1. Event of Default.

               (a) Each of the following events shall constitute an event of
default hereunder (an "Event of Default"):

                    (i) if any portion of the Debt is not paid when due or if
     any Borrower fails to pay any other amount payable pursuant to this
     Agreement (including, without limitation, any deposits or payments to the
     Collateral Accounts) or any other Loan Document when due and payable in
     accordance with the provisions hereof or thereof, as the case may be;

                    (ii) subject to Borrowers' right to contest Taxes and Other
     Charges pursuant to Section 4.1.2 and provided Borrower is complying with
     the terms of such Section, if any of the Taxes or Other Charges are not
     paid when due;

                    (iii) if the Policies are not kept in full force and effect;

                    (iv) if any Borrower breaches or permits or suffers a breach
     of Article 6 of any Mortgage;

                    (v) if any representation or warranty made by any Borrower
     herein or in any other Loan Document, or in any report, certificate,
     financial statement or other instrument, agreement or document furnished to
     Lender shall have been false or misleading in any material respect as of
     the date the representation or warranty was made;

                    (vi) if any Borrower shall make an assignment for the
     benefit of creditors;

                    (vii) if a receiver, liquidator or trustee shall be
     appointed for any Borrower or if any Borrower shall be adjudicated a
     bankrupt or insolvent, or if any petition for bankruptcy, reorganization or
     arrangement pursuant to federal bankruptcy law, or any similar federal or
     state law, shall be filed by or against, consented to, or acquiesced in by,
     any Borrower, or if any proceeding for the dissolution or liquidation of
     any Borrower shall be instituted; provided, however, if such appointment,
     adjudication, petition or proceeding was involuntary and not consented to
     by any Borrower, upon the same not being discharged, stayed or dismissed
     within thirty (30) days;

                    (viii) if any Borrower attempts to assign its rights under
     this Agreement or any of the other Loan Documents or any interest herein or
     therein in contravention of the Loan Documents;

                    (ix) if any of the assumptions contained in the Insolvency
     Opinion, or in any other non-consolidation opinion delivered to Lender in

                                       77



     connection with the Loan, or in any other non-consolidation delivered
     subsequent to the closing of the Loan, is or shall become untrue in any
     material respect;

                    (x) if any Borrower breaches any representation, warranty or
     covenant contained in Section 3.1.24 hereof or if any Borrower is not a
     Single-Purpose Entity or if any provision of any organizational document of
     any Borrower is amended or modified in any respect without the prior
     written consent of Lender;

                    (xi) if any Borrower shall continue to be in Default under
     any of the other terms, covenants or conditions of this Agreement not
     specified in subsections (i) to (x) above, for ten (10) days after notice
     to any Borrower from Lender, in the case of any Default which can be cured
     by the payment of a sum of money, or for thirty (30) days after notice from
     Lender in the case of any other Default; provided, however, that if such
     non-monetary Default is susceptible of cure but cannot reasonably be cured
     within such 30-day period and provided further that a Borrower shall have
     commenced to cure such Default within such 30-day period and thereafter
     diligently and expeditiously proceeds to cure the same, such 30-day period
     shall be extended for such time as is reasonably necessary for such
     Borrower in the exercise of due diligence to cure such Default, such
     additional period not to exceed sixty (60) days; (xii) if there shall be
     default under any of the other Loan Documents beyond any applicable cure
     periods contained in such Loan Documents, whether as to any Borrower or any
     of the Properties, or if any other such event shall occur or condition
     shall exist, if the effect of such event or condition is to accelerate the
     maturity of any portion of the Debt or to permit Lender to accelerate the
     maturity of all or any portion of the Debt;

                    (xiii) if any Guarantor breaches any covenant, warranty or
     representation contained in any Loan Document to which it is a party,
     including, but not limited to, the Master Guaranty and Master Guaranty
     Pledge which is not remedied within any grace period; or

                    (xiv) if Borrowers shall fail to maintain an Acceptable
     Interest Rate Cap Agreement collaterally assigned to Lender pursuant to the
     Collateral Assignment of Interest Rate Cap or is in default of its
     obligations under any interest rate cap agreement delivered in connection
     with the Loan beyond any applicable notice and cure period, or if any such
     interest rate cap agreement shall be void or unenforceable; or

                    (xv) if a final unappealable determination shall have been
     made by any applicable Governmental Authority of any Borrower's
     non-compliance with material Legal Requirements applicable to any Property,
     or of the revocation of any material license, permit or approval required
     for the lawful operation of any Property, or any other circumstances under
     which any Borrower is required by a final unappealable determination of any
     such Governmental Authority to cease operations of such Property as a
     Nursing Facility, Assisted Living Facility or Specialty Hospital, in each
     case as

                                       78



     described on the attached Schedule III (as such Schedule may be amended to
     show any change of use of any Property);

                    (xvi) if an "Event of Default" occurs under any Operating
     Lease;

                    (xvii) if there is a reduction in the number of licensed
     beds or a change in the type of licensed beds for any Property in violation
     of the requirements of this Agreement; or

                    (xviii) if any Borrower shall fail to correct, within the
     time deadlines set by any Medicare, Medicaid, health, reimbursement,
     licensing or similar agency, any deficiency that justifies either of the
     following actions by such agency with respect to any Property and such
     agency commences either of the following actions:

                    (1) a termination of any Medicare contract, Medicaid
                    contract or Regulatory Permit;

                    (2) a ban on new admissions generally or on admission of
                    patients otherwise qualifying for Medicaid or Medicare
                    coverage which ban is not lifted within sixty (60) days or
                    as to which a Borrower fails to file a plan of correction
                    within ten (10) days of such ban;

                    (xix) if any Property is assessed material fines or
     penalties by any state or any Medicare, Medicaid, health, reimbursement,
     licensing or similar agency having jurisdiction over any Borrower or any
     Property;

                    (xx) except as may be permitted pursuant to this Agreement,
     as to each Property, if any Borrower ceases to operate, or changes the use
     of, such Property as or from a Nursing Facility, Assisted Living Facility
     or Rehabilitation Hospital in each case as described on the attached
     Schedule III (as such Schedule may be amended to show any change of use of
     any Property) or terminates such business for any reason whatsoever (other
     than a temporary cessation in connection with any renovations); or

                    (xxi) if, with respect to any Property, any Governmental
     Authority (a) makes a substandard quality of care determination regarding
     such Property which determination is not corrected in sixty (60) days (or
     if incapable of being cured within such sixty (60) days period, within one
     hundred twenty (120) days provided Borrowers are taking all appropriate
     actions to correct such determination); (b) makes a determination that such
     Property is not in substantial compliance with any applicable regulatory
     requirements which determination is not corrected in sixty (60) days (or if
     incapable of being cured within such sixty (60) days period, within one
     hundred twenty (120) days, provided Borrowers are taking all appropriate
     actions to correct such determination); (c) designates any portion of such
     Property or the entirety of such Property as part of a "poor performing
     chain"; (d) cites deficiencies at the scope or

                                       79



     severity of "G", "H" or higher with respect to such Property and for which
     no plan of correction is in place within ten (10) days of receipt of such
     deficiency statement; (e) cites deficiencies at the scope and severity of
     "G", "H" or higher with respect to such Property for which a plan of
     correction has been filed but not approved by such Governmental Authority,
     with such designation, determination or action continuing unremedied for a
     period of sixty (60) days (or if incapable of being cured within such sixty
     (60) days period, within one hundred twenty (120) days, provided Borrowers
     are taking all appropriate actions to correct such determination) (or ten
     (10) days for immediate jeopardy deficiencies) following any Borrower's
     first receipt of notice of such designation, determination or action; or
     (f) takes adverse regulatory action with respect to such Property,
     including, without limitation, the imposing of civil money penalties, with
     such designation, determination or action continuing unremedied for a
     period of sixty (60) days (or if incapable of being cured within such sixty
     (60) days period, within one hundred twenty (120) days, provided Borrowers
     are taking all appropriate actions to correct such determination) (ten (10)
     days for immediate jeopardy deficiencies) following any Borrower's receipt
     of notice of such designation, determination or action.

               (b) Upon the occurrence of an Event of Default (other than an
Event of Default described in clauses (vi), (vii) or (viii) above) and at any
time thereafter Lender may, in addition to any other rights or remedies
available to it pursuant to this Agreement and the other Loan Documents or at
law or in equity, take such action, without notice or demand, that Lender deems
advisable to protect and enforce its rights against any Borrower and in and to
any or all of the Properties, including, without limitation, declaring the Debt
to be immediately due and payable, and Lender may enforce or avail itself of any
or all rights or remedies provided in the Loan Documents against any Borrower
and any or all of the Properties, including, without limitation, all rights or
remedies available at law or in equity; and upon any Event of Default described
in clauses (vi), (vii) or (viii) above, the Debt and all other obligations of
each Borrower hereunder and under the other Loan Documents shall immediately and
automatically become due and payable, without notice or demand, and each
Borrower hereby expressly waives any such notice or demand, anything contained
herein or in any other Loan Document to the contrary notwithstanding.

          Section 10.2. Remedies.

               (a) Upon the occurrence and during the continuance of an Event of
Default, all or any one or more of the rights, powers, privileges and other
remedies available to Lender against any Borrower under this Agreement or any of
the other Loan Documents executed and delivered by, or applicable to, any
Borrower or at law or in equity may be exercised by Lender at any time and from
time to time, whether or not all or any of the Debt shall be declared due and
payable, and whether or not Lender shall have commenced any foreclosure
proceeding or other action for the enforcement of its rights and remedies under
any of the Loan Documents with respect to any or all of the Properties. Any such
actions taken by Lender shall be cumulative and concurrent and may be pursued
independently, singly, successively, together or otherwise, at such time and in
such order as Lender may determine in its sole discretion, to the fullest extent
permitted by law, without impairing or otherwise affecting the other rights and
remedies of Lender permitted by law, equity or contract or as set forth herein
or in the other Loan Documents. Without limiting the generality of the
foregoing, if an Event of

                                       80



Default is continuing (i) Lender is not subject to any "one action" or "election
of remedies" law or rule to the face extent allowed by applicable law, and (ii)
all liens and other rights, remedies or privileges provided to Lender shall
remain in full force and effect until Lender has exhausted all of its remedies
against the Properties and each Mortgage has been foreclosed, sold and/or
otherwise realized upon in satisfaction of the Debt or the Debt has been paid in
full.

               (b) Upon the occurrence and during the continuance of an
Event of Default, Lender shall have the right from time to time to partially
foreclose the Mortgages in any manner and for any amounts secured by the
Mortgages then due and payable as determined by Lender in its sole discretion
including, without limitation, the following circumstances: (i) in the event any
Borrower defaults beyond any applicable grace period in the payment of one or
more scheduled payments of principal and interest, Lender may foreclose one or
more of the Mortgages to recover such delinquent payments, or (ii) in the event
Lender elects to accelerate less than the entire outstanding principal balance
of the Loan, Lender may foreclose one or more the Mortgages to recover so much
of the principal balance of the Loan as Lender may accelerate and such other
sums secured by one or more of the Mortgages as Lender may elect.
Notwithstanding one or more partial foreclosures, the Properties shall remain
subject to the Mortgages to secure payment of sums secured by the Mortgages and
not previously recovered.

               (c) Upon the occurrence and during the continuance of an Event of
Default, Lender shall have the right from time to time to sever the Note and the
other Loan Documents into one or more separate notes, mortgages and other
security documents (the "Severed Loan Documents") in such denominations as
Lender shall determine in its sole discretion for purposes of evidencing and
enforcing its rights and remedies provided hereunder. Each Borrower shall
execute and deliver to Lender from time to time, promptly after the request of
Lender, a severance agreement and such other documents as Lender shall request
in order to effect the severance described in the preceding sentence, all in
form and substance reasonably satisfactory to Lender. Each Borrower hereby
absolutely and irrevocably appoints Lender as its true and lawful attorney,
coupled with an interest, in its name and stead to make and execute all
documents necessary or desirable to effect the aforesaid severance, each
Borrower ratifying all that its said attorney shall do by virtue thereof;
provided, however, Lender shall not make or execute any such documents under
such power until three (3) days after notice has been given to any Borrower by
Lender of Lender's intent to exercise its rights under such power. Except as may
be required in connection with a Securitization pursuant to Section 9.1 hereof,
(i) each Borrower shall not be obligated to pay any costs or expenses incurred
in connection with the preparation, execution, recording or filing of the
Severed Loan Documents, and (ii) the Severed Loan Documents shall not contain
any representations, warranties or covenants not contained in the Loan Documents
and any such representations and warranties contained in the Severed Loan
Documents will be given by each Borrower only as of the Closing Date.

               (d) Any amounts recovered from the Properties or any other
collateral for the Loan after an Event of Default may be applied by Lender
toward the payment of any interest and/or principal of the Loan and/or any other
amounts due under the Loan Documents in such order, priority and proportions as
Lender in its sole discretion shall determine.

                                       81



          Section 10.3. Remedies Cumulative.

          The rights, powers and remedies of Lender under this Agreement shall
be cumulative and not exclusive of any other right, power or remedy which Lender
may have against any Borrower pursuant to this Agreement or the other Loan
Documents, or existing at law or in equity or otherwise. Lender's rights, powers
and remedies may be pursued singly, concurrently or otherwise, at such time and
in such order as Lender may determine in Lender's sole discretion. No delay or
omission to exercise any remedy, right or power accruing upon an Event of
Default shall impair any such remedy, right or power or shall be construed as a
waiver thereof, but any such remedy, right or power may be exercised from time
to time and as often as may be deemed expedient. A waiver of one Default or
Event of Default with respect to any Borrower shall not be construed to be a
waiver of any subsequent Default or Event of Default by any Borrower or to
impair any remedy, right or power consequent thereon.

                            ARTICLE XI. MISCELLANEOUS

          Section 11.1. Successors and Assigns.

          All covenants, promises and agreements in this Agreement, by or on
behalf of any Borrower, shall inure to the benefit of the legal representatives,
successors and assigns of Lender.

          Section 11.2. Lender's Discretion.

          Whenever pursuant to this Agreement Lender exercises any right given
to it to approve or disapprove, or any arrangement or term is to be satisfactory
to Lender, the decision of Lender to approve or disapprove or to decide whether
arrangements or terms are satisfactory or not satisfactory shall (except as is
otherwise specifically herein provided) be in the sole discretion of Lender and
shall be final and conclusive. Prior to a Securitization, whenever pursuant to
this Agreement the Rating Agencies are given any right to approve or disapprove,
or any arrangement or term is to be satisfactory to the Rating Agencies, the
decision of Lender to approve or disapprove or to decide whether arrangements or
terms are satisfactory or not satisfactory, based upon Lender's determination of
Rating Agency criteria, shall be substituted therefore.

          Section 11.3. Governing Law.

               (a) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, AND
MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND THE
PROCEEDS OF THE NOTE DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF
NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE
PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS,
INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH
STATE (WITHOUT

                                       82



REGARD TO PRINCIPLES OF CONFLICT LAWS) AND ANY APPLICABLE LAW OF THE UNITED
STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION,
PERFECTION, AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS CREATED PURSUANT
HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND
CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE APPLICABLE PROPERTY IS
LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF
SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION,
VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS
ARISING HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY LAW,
BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT
THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THE NOTE, AND THIS
AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW.

               (b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR
BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY AT LENDER'S OPTION BE
INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW
YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND
BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE
AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT,
ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT:

          CT CORPORATION SYSTEM
          111 EIGHTH AVENUE
          NEW YORK, NEW YORK  10011

AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE
MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN
EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER, IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT
NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II)
MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT
WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE
DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL
PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED

                                       83



AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT
LEAVING A SUCCESSOR.

          Section 11.4. Modification, Waiver in Writing.

          No modification, amendment, extension, discharge, termination or
waiver of any provision of this Agreement or of any other Loan Document, nor
consent to any departure by any Borrower therefrom, shall in any event be
effective unless the same shall be in a writing signed by the party against whom
enforcement is sought, and then such waiver or consent shall be effective only
in the specific instance, and for the purpose, for which given. Except as
otherwise expressly provided herein, no notice to, or demand on any Borrower,
shall entitle any Borrower to any other or future notice or demand in the same,
similar or other circumstances.

          Section 11.5. Delay Not a Waiver.

          Neither any failure nor any delay on the part of Lender in insisting
upon strict performance of any term, condition, covenant or agreement, or
exercising any right, power, remedy or privilege hereunder, or under any other
Loan Document, shall operate as or constitute a waiver thereof, nor shall a
single or partial exercise thereof preclude any other future exercise, or the
exercise of any other right, power, remedy or privilege. In particular, and not
by way of limitation, by accepting payment after the due date of any amount
payable under this Agreement or any other Loan Document, Lender shall not be
deemed to have waived any right either to require prompt payment when due of all
other amounts due under this Agreement or the other Loan Documents, or to
declare a default for failure to effect prompt payment of any such other amount.

          Section 11.6. Notices.

          All notices, demands, requests, consents, approvals or other
communications (any of the foregoing, a "Notice") required, permitted, or
desired to be given hereunder shall be in writing sent by telefax (with answer
back acknowledged) or by registered or certified mail, postage prepaid, return
receipt requested, or delivered by hand or reputable overnight courier addressed
to the party to be so notified at its address hereinafter set forth, or to such
other address as such party may hereafter specify in accordance with the
provisions of this Section 11.6. Notice to any Borrower shall be deemed notice
as to all Borrowers and the Lender shall not be required to deliver any Notice
to all Borrowers as long as such Notice is delivered to any one Borrower. Any
Notice shall be deemed to have been received: (a) three (3) days after the date
such Notice is mailed, (b) on the date of sending by telefax if sent during
business hours on a Business Day (otherwise on the next Business Day), (c) on
the date of delivery by hand if delivered during business hours on a Business
Day (otherwise on the next Business Day), and (d) on the next Business Day if
sent by an overnight commercial courier, in each case addressed to the parties
as follows:

                                       84



          If to Lender:       Ventas Realty, Limited Partnership
                              c/o Ventas, Inc.
                              4360 Brownsboro Road, Suite 115
                              Louisville, Kentucky 40207
                              Attention:  Chief Financial Officer
                              Facsimile No. (502)-357-9001

          with a copy to:     Ventas Realty, Limited Partnership
                              c/o Ventas, Inc.
                              4360 Brownsboro Road, Suite 115
                              Louisville, Kentucky 40207
                              Attention:  General Counsel
                              Facsimile No. (502)-357-9001

          with a copy to:     Dechert
                              4000 Bell Atlantic Tower
                              1717 Arch Street
                              Philadelphia, Pennsylvania  19103
                              Attention: David W. Forti
                              Facsimile No. (215) 994-2222

          If to a Borrower:   c/o Trans Healthcare, Inc.
                              4660 Trindle Road, Suite 103
                              Camp Hill, Pennsylvania 17011
                              Attention: Anthony Misitano
                              Facsimile No. (717) 730-8722

          with a copy to:     Latsha Davis & Yohe, P.C.
                              4720 Old Gettysburg Road, Suite 101
                              Harrisburg, Pennsylvania 17108
                              Attention: Douglas C. Yohe
                              Facsimile No. (717) 761-2286

          Section 11.7. Waiver of Right to Trial by Jury.

          BORROWER AND LENDER EACH HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF
ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY
TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO
THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN
CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY
AND VOLUNTARILY BY BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE. BORROWER AND LENDER ARE EACH HEREBY AUTHORIZED TO
FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS
WAIVER.

                                       85



          Section 11.8. Headings.

          The Article and/or Section headings and the Table of Contents in this
Agreement are included herein for convenience of reference only and are not to
be construed as defining or limiting the scope or intent of the provisions
hereof.

          Section 11.9. Severability.

          Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.

          Section 11.10. Preferences.

          Lender shall have the continuing and exclusive right to apply or
reverse and reapply any and all payments by any Borrower to any portion of the
obligations of any Borrower hereunder. To the extent any Borrower makes a
payment or payments to Lender, which payment or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds received, the obligations hereunder or
part thereof intended to be satisfied shall be revived and continue in full
force and effect, as if such payment or proceeds had not been received by
Lender.

          Section 11.11. Waiver of Notice.

          To the extent permitted by applicable law, each Borrower shall not be
entitled to any notices of any nature whatsoever from Lender except with respect
to matters for which this Agreement or the other Loan Documents specifically and
expressly provide for the giving of notice by Lender to a Borrower and except
with respect to matters for which any Borrower is not, pursuant to applicable
Legal Requirements, permitted to waive the giving of notice to the full extent
permitted by applicable law. Each Borrower hereby expressly waives the right to
receive any notice from Lender with respect to any matter for which this
Agreement or the other Loan Documents do not specifically and expressly provide
for the giving of notice by Lender to a Borrower.

          Section 11.12. Remedies of Borrower.

          In the event that a claim or adjudication is made that Lender or its
agents have acted unreasonably or unreasonably delayed acting in any case where,
by law or under this Agreement or the other Loan Documents, Lender or such
agent, as the case may be, has an obligation to act reasonably or promptly,
neither Lender nor its agents shall be liable for any monetary damages, and a
Borrower's sole remedy shall be limited to commencing an action seeking
injunctive relief or declaratory judgment. Any action or proceeding to determine
whether Lender has acted reasonably shall be determined by an action seeking
declaratory

                                       86



judgment. Any expedited procedure legally available with such a declaratory
judgment action or action for injunctive relief may be utilized to the extent
possible.

          Section 11.13. Expenses; Indemnity.

               (a) Each Borrower shall pay or, if any Borrower fails to pay,
reimburse Lender upon receipt of notice from Lender, for all reasonable costs
and expenses (including reasonable attorneys' fees and disbursements) incurred
by Lender in connection with (i) any Borrower's ongoing performance of and
compliance with any Borrower's agreements and covenants contained in this
Agreement, the Cooperation Agreement and the other Loan Documents on its part to
be performed or complied with after the Closing Date, including, without
limitation, confirming compliance with environmental and insurance requirements;
(ii) Lender's ongoing performance of and compliance with all agreements and
covenants contained in this Agreement and the other Loan Documents on its part
to be performed or complied with after the Closing Date; (iii) the negotiation,
preparation, execution, delivery and administration of any consents, amendments,
waivers or other modifications to this Agreement and the other Loan Documents
and any other documents or matters requested by any Borrower; (iv) the filing
and recording fees and expenses, title insurance and reasonable fees and
expenses of counsel for providing to Lender all required legal opinions, and
other similar expenses incurred, in creating and perfecting the Liens in favor
of Lender pursuant to this Agreement and the other Loan Documents; (v) enforcing
or preserving any rights, in response to third party claims or the prosecuting
or defending of any action or proceeding or other litigation, in each case
against, under or affecting any Borrower, this Agreement, the other Loan
Documents, the Properties, or any other security given for the Loan; (vi) the
Re-sizing and (vii) enforcing any obligations of or collecting any payments due
from any Borrower under this Agreement, the other Loan Documents or with respect
to the Properties or in connection with any refinancing or restructuring of the
credit arrangements provided under this Agreement in the nature of a "work-out"
or of any insolvency or bankruptcy proceedings; provided, however, that each
Borrower shall not be liable for the payment of any such costs and expenses to
the extent the same arise by reason of the gross negligence, illegal acts, fraud
or willful misconduct of Lender. Any costs due and payable to Lender may be paid
to Lender pursuant to the Cash Management Agreement.

               (b) Each Borrower shall indemnify, defend and hold harmless
Lender and its officers, directors, agents and employees (and the successors and
assigns of the foregoing (the "Lender Indemnitees")) from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, the reasonable fees and disbursements
of counsel for Lender Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
Lender Indemnitees shall be designated a party thereto), that may be imposed on,
incurred by, or asserted against Lender Indemnitees in any manner relating to or
arising out of (i) any breach by any Borrower of its obligations under, or any
material misrepresentation by any Borrower contained in, this Agreement or the
other Loan Documents, or (ii) the use or intended use of the proceeds of the
Loan (collectively, the "Indemnified Liabilities"); provided, however, that each
Borrower shall not have any obligation to Lender Indemnitees hereunder to the
extent that such Indemnified Liabilities arise from the gross negligence,
illegal acts, fraud or willful misconduct of Lender Indemnitees. To the extent
that the undertaking to indemnify, defend and hold harmless set forth in the
preceding sentence

                                       87



may be unenforceable because it violates any law or public policy, Borrowers
shall pay the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by Lender Indemnitees.

          Section 11.14. Schedules Incorporated.

          The Schedules annexed hereto are hereby incorporated herein as a part
of this Agreement with the same effect as if set forth in the body hereof.

          Section 11.15. Offsets, Counterclaims and Defenses.

          Any assignee of Lender's interest in and to this Agreement and the
other Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses which are unrelated to such documents which any
Borrower may otherwise have against any assignor of such documents, and no such
unrelated counterclaim or defense shall be interposed or asserted by any
Borrower in any action or proceeding brought by any such assignee upon such
documents and any such right to interpose or assert any such unrelated offset,
counterclaim or defense in any such action or proceeding is hereby expressly
waived by each Borrower.

          Section 11.16. No Joint Venture or Partnership; No Third Party
Beneficiaries.

               (a) Each Borrower and Lender intend that the relationships
created hereunder and under the other Loan Documents be solely that of borrower
and lender. Nothing herein or therein is intended to create a joint venture,
partnership, tenancy-in-common, or joint tenancy relationship between any
Borrower and Lender nor to grant Lender any interest in the Properties other
than that of mortgagee, beneficiary or lender.

               (b) This Agreement and the other Loan Documents are solely for
the benefit of Lender and nothing contained in this Agreement or the other Loan
Documents shall be deemed to confer upon anyone other than Lender any right to
insist upon or to enforce the performance or observance of any of the
obligations contained herein or therein. All conditions to the obligations of
Lender to make the Loan hereunder are imposed solely and exclusively for the
benefit of Lender and no other Person shall have standing to require
satisfaction of such conditions in accordance with their terms or be entitled to
assume that Lender will refuse to make the Loan in the absence of strict
compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender's sole
discretion, Lender deems it advisable or desirable to do so.

          Section 11.17. Publicity.

          All news releases, publicity or advertising by any Borrower or its
Affiliates through any media intended to reach the general public which refers
to the Loan Documents or the financing evidenced by the Loan Documents, to
Lender or any of its Affiliates shall be subject to the prior approval of
Lender.

                                       88



          Section 11.18. Waiver of Marshalling of Assets.

          To the fullest extent permitted by law, each Borrower, for itself and
its successors and assigns, waives all rights to a marshalling of the assets of
any Borrower, any Borrower's partners and others with interests in any Borrower,
and of the Properties, and shall not assert any right under any laws pertaining
to the marshalling of assets, the sale in inverse order of alienation, homestead
exemption, the administration of estates of decedents, or any other matters
whatsoever to defeat, reduce or affect the right of Lender under the Loan
Documents to a sale of the Properties for the collection of the Debt without any
prior or different resort for collection or of the right of Lender to the
payment of the Debt out of the net proceeds of the Properties in preference to
every other claimant whatsoever.

          Section 11.19. Waiver of Offsets/Defenses/Counterclaims.

          To the extent permitted by applicable law, each Borrower hereby waives
the right to assert a counterclaim, other than a mandatory or compulsory
counterclaim, in any action or proceeding brought against it by Lender or its
agents or otherwise to offset any obligations to make the payments required by
the Loan Documents. No failure by Lender to perform any of its obligations
hereunder shall be a valid defense to, or result in any offset against, any
payments which any Borrower is obligated to make under any of the Loan
Documents.

          Section 11.20. Conflict; Construction of Documents; Reliance.

          In the event of any conflict or inconsistency between the provisions
of this Agreement and any of the other Loan Documents, the provisions of this
Agreement shall control. The parties hereto acknowledge that they were
represented by competent counsel in connection with the negotiation, drafting
and execution of the Loan Documents and that such Loan Documents shall not be
subject to the principle of construing their meaning against the party which
drafted same. Each Borrower acknowledges that, with respect to the Loan, each
Borrower shall rely solely on its own judgment and advisors in entering into the
Loan without relying in any manner on any statements, representations or
recommendations of Lender or any parent, subsidiary or Affiliate of Lender.
Lender shall not be subject to any limitation whatsoever in the exercise of any
rights or remedies available to it under any of the Loan Documents or any other
agreements or instruments which govern the Loan by virtue of the ownership by it
or any parent, subsidiary or Affiliate of Lender of any equity interest any of
them may acquire in any Borrower, and each Borrower hereby irrevocably waives
the right to raise any defense or take any action on the basis of the foregoing
with respect to Lender's exercise of any such rights or remedies. Each Borrower
acknowledges that Lender engages in the business of real estate financings and
other real estate transactions and investments which may be viewed as adverse to
or competitive with the business of any Borrower or its Affiliates.

          Section 11.21. Brokers and Financial Advisors.

          Each Borrower hereby represents that it has dealt with no financial
advisors, brokers, underwriters, placement agents, agents or finders in
connection with the transactions contemplated by this Agreement. Each Borrower
shall indemnify, defend and hold Lender Indemnitees harmless from and against
any and all claims, liabilities, costs and expenses of any

                                       89



kind (including attorneys' fees and expenses) in any way relating to or arising
from a claim by any Person that such Person acted on behalf of any Borrower or
Lender Indemnitees in connection with the transactions contemplated herein. The
provisions of this Section 11.21 shall survive the expiration and termination of
this Agreement and the payment of the Debt.

          Section 11.22. Exculpation.

          Subject to the qualifications below, Lender shall not enforce the
liability and obligation of any Borrower to perform and observe the obligations
contained in the Note, this Agreement, the Mortgages or the other Loan Documents
by any action or proceeding wherein a money judgment shall be sought against any
Borrower, except that Lender may bring a foreclosure action, an action for
specific performance or any other appropriate action or proceeding to enable
Lender to enforce and realize upon its interest under the Note, this Agreement,
the Mortgages and the other Loan Documents, or in the Properties, the Rents, or
any other collateral given to Lender pursuant to the Loan Documents; provided,
however, that, except as specifically provided herein, any judgment in any such
action or proceeding shall be enforceable against Borrowers only to the extent
of Borrowers' interest in the Properties, in the Rents and in any other
collateral given to Lender, and Lender, by accepting the Note, this Agreement,
the Mortgages and the other Loan Documents, shall not sue for, seek or demand
any deficiency judgment against any Borrower in any such action or proceeding
under or by reason of or under or in connection with the Note, this Agreement,
the Mortgages or the other Loan Documents. The provisions of this Section shall
not, however, (a) constitute a waiver, release or impairment of any obligation
evidenced or secured by any of the Loan Documents; (b) impair the right of
Lender to name any Borrower as a party defendant in any action or suit for
foreclosure and sale under any of the Mortgages; (c) affect the validity or
enforceability of any guaranty made in connection with the Loan, the Mezzanine
Loan, the Sale/Leaseback Transaction or any of the rights and remedies of Lender
thereunder; (d) impair the right of Lender to obtain the appointment of a
receiver; (e) impair the enforcement of any of the Assignments of Leases; (f)
constitute a prohibition against Lender to seek a deficiency judgment against
any Borrower in order to fully realize the security granted by each of the
Mortgages or to commence any other appropriate action or proceeding in order for
Lender to exercise its remedies against all of the Properties; or (g) constitute
a waiver of the right of Lender to enforce the liability and obligation of any
Borrower, by money judgment or otherwise, to the extent of any loss, damage,
cost, expense, liability, claim or other obligation incurred by Lender
(including attorneys' fees and costs reasonably incurred) arising out of or in
connection with the following:

                    (i) fraud or intentional misrepresentation by any Borrower
     or any guarantor in connection with the Loan;

                    (ii) the gross negligence or willful misconduct of any
     Borrower;

                    (iii) the breach of any representation, warranty, covenant
     or indemnification provision in the Environmental Indemnity concerning
     environmental laws, hazardous substances and asbestos and any
     indemnification of Lender with respect thereto contained in the
     Environmental Indemnity;

                                       90



                    (iv) the removal or disposal of any portion of the
     Properties after an Event of Default;

                    (v) the misapplication or conversion by any Borrower of (A)
     any insurance proceeds paid by reason of any loss, damage or destruction to
     the Properties, (B) any Awards or other amounts received in connection with
     the Condemnation of all or a portion of the Properties, or (C) any Rents
     following an Event of Default;

                    (vi) failure to pay charges for labor or materials or other
     charges that can create Liens on any portion of the Properties;

                    (vii) any security deposits, advance deposits or any other
     deposits collected with respect to the Properties which are not delivered
     to Lender upon a foreclosure of the Properties or action in lieu thereof,
     except to the extent any such security deposits were applied in accordance
     with the terms and conditions of any of the Leases prior to the occurrence
     of the Event of Default that gave rise to such foreclosure or action in
     lieu thereof;

                    (viii) each Borrower's indemnification of Lender set forth
     in Section 9.2 hereof; and

                    (ix) the failure to deposit all Rents into the Cash
     Management Account in accordance with the provisions hereof.

          Notwithstanding anything to the contrary in this Agreement, the Note
or any of the Loan Documents, (A) Lender shall not be deemed to have waived any
right which Lender may have under Section 506(a), 506(b), 1111(b) or any other
provisions of the Bankruptcy Code to file a claim for the full amount of the
Debt or to require that all collateral shall continue to secure all of the Debt
owing to Lender in accordance with the Loan Documents, and (B) the Debt shall be
fully recourse to each Borrower (1) prior to a Securitization and (2) in the
event that: (i) any Borrower fails to permit on-site inspections of the
Properties, fails to provide financial information, fails to maintain its status
as a Single-Purpose Entity or fails to appoint a new property manager upon the
request of Lender after an Event of Default or other event that would give rise
to the right of Lender to request any Borrower to appoint a new property
manager, each as required by, and in accordance with the terms and provisions
of, this Agreement and the other Loan Documents; (iii) any Borrower fails to
obtain Lender's prior consent to any subordinate financing, mezzanine financing
or other voluntary Lien encumbering the Properties; (iv) any Borrower fails to
obtain Lender's prior consent to any Transfer to the extent such consent is
required herein or in the Mortgages; (v) any Borrower files a voluntary petition
under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency
law; (vi) an Affiliate, officer, director, or representative which controls,
directly or indirectly, any Borrower files, or joins in the filing of, an
involuntary petition against any Borrower under the Bankruptcy Code or any other

                                       91



Federal or state bankruptcy or insolvency law, or solicits or causes to be
solicited petitioning creditors for any involuntary petition against any
Borrower from any Person; (vii) any Borrower files an answer consenting to or
otherwise acquiescing in or joining in any involuntary petition filed against
it, by any other Person under the Bankruptcy Code or any other Federal or state
bankruptcy or insolvency law, or solicits or causes to be solicited petitioning
creditors for any involuntary petition from any Person; (viii) any Affiliate,
officer, director, or representative which controls any Borrower consents to or
acquiesces in or joins in an application for the appointment of a custodian,
receiver, trustee, or examiner for any Borrower or any portion of the
Properties; or (ix) any Borrower makes an assignment for the benefit of
creditors, or admits, in writing or in any legal proceeding, its insolvency or
inability to pay its debts as they become due.

          Section 11.23. Prior Agreements.

          This Agreement and the other Loan Documents contain the entire
agreement of the parties hereto and thereto in respect of the transactions
contemplated hereby and thereby, and all prior agreements among or between such
parties, whether oral or written, including, without limitation, the loan
commitment dated October 2, 2002, and all attachments thereto including, but not
limited to, the term sheet between Borrowers and Lender, are superseded by the
terms of this Agreement and the other Loan Documents.

          Section 11.24. Servicer.

          At the option of Lender, the Loan may be serviced by a servicer
including, but not limited to any sub-servicers or master servicer (the
"Servicer") selected by Lender and Lender may delegate all or any portion of its
responsibilities under this Agreement and the other Loan Documents to the
Servicer pursuant to a servicing agreement (the "Servicing Agreement") between
Lender and Servicer. Borrowers shall be responsible for any reasonable set-up
fees or any other initial costs relating to or arising under the Servicing
Agreement; provided, however, that Borrowers shall not be responsible for
payment of the monthly servicing fee due to the Servicer under the Servicing
Agreement.

          Section 11.25. Duplicate Originals; Counterparts.

          This Agreement may be executed in any number of duplicate originals
and each such duplicate original shall be deemed to be an original. This
Agreement may be executed in several counterparts, each of which counterparts
shall be deemed an original instrument and all of which together shall
constitute a single Agreement. The failure of any party hereto to execute this
Agreement, or any counterpart hereof, shall not relieve the other signatories
from their obligations hereunder.

          Section 11.26. Cross Collateralization.

          Without limitation to any other right or remedy provided to Lender in
this Agreement or any of the other Loan Documents, each Borrower acknowledges
and agrees that to the full extent permitted under applicable law, upon the
occurrence of an Event of Default (i) Lender shall have the right to pursue all
of its rights and remedies in one proceeding, or separately and independently in
separate proceedings which it, as Lender, in its sole and absolute discretion,
shall determine from time to time, (ii) Lender is not required to either
marshall assets, sell any of the collateral for the Loan in any inverse order of
alienation, or be subjected to any "one action" or "election of remedies" law or
rule, (iii) the exercise by Lender of any remedies against any of the collateral
for the Loan will not impede Lender from subsequently or

                                       92



simultaneously exercising remedies against other collateral for the Loan, (iv)
all Liens and other rights, remedies and privileges provided to Lender in this
Agreement and in the other Loan Documents or otherwise shall remain in full
force and effect until Lender has exhausted all of its remedies against the
collateral for the Loan and all of the collateral for the Loan has been
foreclosed, sold and/or otherwise realized upon and (v) all of the Properties
shall be security for the performance of all of each Borrower's obligations
hereunder.

          Section 11.27. Joint and Several Liability.

          If more than one Person has executed this Agreement as "Borrower," the
representations, covenants, warranties and obligations of all such Persons
hereunder shall be joint and several.

                         [NO FURTHER TEXT ON THIS PAGE]

                                       93



          IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be duly executed by their duly authorized representatives, all as of the day
and year first above written.

                          LENDER:

                          VENTAS REALTY, LIMITED PARTNERSHIP,
                          a Delaware limited partnership


                          By: Ventas, Inc.
                              a Delaware corporation,
                              its sole general partner


                              By:   /s/ T. RICHARD RINEY
                                 -----------------------------------------------
                                 Name:  T. Richard Riney
                                 Title: Executive Vice President/General Counsel

                     [Signatures continue on following page]



                          BORROWER:

                          THI OF OHIO REAL ESTATE HOLDING COMPANY, LLC,
                          a Delaware limited liability company


                          By:    /s/ JOHN E. BAUER
                              --------------------------------------------------
                              Name:  John E. Bauer
                              Title: Vice-President


                          THI OF OHIO AT COLUMBUS, LLC,
                          a Delaware limited liability company


                          By:    /s/ JOHN E. BAUER
                              --------------------------------------------------
                              Name:  John E. Bauer
                              Title: Vice-President


                          THI OF OHIO AT VALLEY VIEW, LLC,
                          a Delaware limited liability company


                          By:    /s/ JOHN E. BAUER
                              --------------------------------------------------
                              Name:  John E. Bauer
                              Title: Vice-President


                          THI OF OHIO AT NORTHWESTERN, LLC,
                          a Delaware limited liability company


                          By:    /s/ JOHN E. BAUER
                              --------------------------------------------------
                              Name:  John E. Bauer
                              Title: Vice-President


                          THI OF OHIO AT OAK GROVE, LLC,
                          a Delaware limited liability company


                          By:    /s/ JOHN E. BAUER
                              --------------------------------------------------
                              Name:  John E. Bauer
                              Title: Vice-President



                          THI OF OHIO AT PARADISE OAKS, LLC,
                          a Delaware limited liability company


                          By:    /s/ JOHN E. BAUER
                              --------------------------------------------------
                              Name:  John E. Bauer
                              Title: Vice-President


                          THI OF OHIO AT SOMERSET, LLC,
                          a Delaware limited liability company


                          By:    /s/ JOHN E. BAUER
                              --------------------------------------------------
                              Name:  John E. Bauer
                              Title: Vice-President


                          THI OF OHIO AT WILLARD, LLC,
                          a Delaware limited liability company


                          By:    /s/ JOHN E. BAUER
                              --------------------------------------------------
                              Name:  John E. Bauer
                              Title: Vice-President


                          THI OF OHIO AT HILLCREST, LLC,
                          a Delaware limited liability company


                          By:    /s/ JOHN E. BAUER
                              --------------------------------------------------
                              Name:  John E. Bauer
                              Title: Vice-President


                          THI OF OHIO AT MAPLE VIEW, LLC,
                          a Delaware limited liability company


                          By:    /s/ JOHN E. BAUER
                              --------------------------------------------------
                              Name:  John E. Bauer
                              Title: Vice-President



                          THI OF OHIO AT WINTERSONG VILLAGE, LLC,
                          a Delaware limited liability company


                          By:    /s/ JOHN E. BAUER
                              --------------------------------------------------
                              Name:  John E. Bauer
                              Title: Vice-President


                          THI OF OHIO AT WOODLAND, LLC,
                          a Delaware limited liability company


                          By:    /s/ JOHN E. BAUER
                              --------------------------------------------------
                              Name:  John E. Bauer
                              Title: Vice-President


                          THI OF OHIO AT GREENBRIAR SOUTH, LLC,
                          a Delaware limited liability company


                          By:    /s/ JOHN E. BAUER
                              --------------------------------------------------
                              Name:  John E. Bauer
                              Title: Vice-President


                          THI OF OHIO AT GOLDEN YEARS, LLC,
                          a Delaware limited liability company


                          By:    /s/ JOHN E. BAUER
                              --------------------------------------------------
                              Name:  John E. Bauer
                              Title: Vice-President


                          THI OF MARYLAND REAL ESTATE HOLDING CO., LLC,
                          a Delaware limited liability company


                          By:    /s/ JEFFREY A. BARNHILL
                              --------------------------------------------------
                              Name:  Jeffrey A. Barnhill
                              Title: Vice-President



                          THI OF MARYLAND AT BEL PRE, LLC,
                          a Delaware limited liability company


                          By:    /s/ JEFFREY A. BARNHILL
                              --------------------------------------------------
                              Name:  Jeffrey A. Barnhill
                              Title: Vice-President


                          THI OF MARYLAND AT LIBERTY HEIGHTS, LLC,
                          a Delaware limited liability company


                          By:    /s/ JEFFREY A. BARNHILL
                              --------------------------------------------------
                              Name:  Jeffrey A. Barnhill
                              Title: Vice-President


                          THI OF MARYLAND AT MARLEY NECK, LLC,
                          a Delaware limited liability company


                          By:    /s/ JEFFREY A. BARNHILL
                              --------------------------------------------------
                              Name:  Jeffrey A. Barnhill
                              Title: Vice-President


                          THI OF MARYLAND AT NORTHWEST, LLC,
                          a Delaware limited liability company


                          By:    /s/ JEFFREY A. BARNHILL
                              --------------------------------------------------
                              Name:  Jeffrey A. Barnhill
                              Title: Vice-President

EX-10.2.2

                                                                  Exhibit 10.2.2

                                 PROMISSORY NOTE

$55,000,000                                                   New York, New York
                                                                November 1, 2002

          FOR VALUE RECEIVED THOSE ENTITIES LISTED ON SCHEDULE I attached
hereto, each a Delaware limited liability company and each having its principal
place of business at 4660 Trindle Road, Suite 103, Camp Hill, Pennsylvania 17011
(each, a "Borrower" and collectively, the "Borrowers"), hereby jointly and
severally promise to pay to the order of VENTAS REALTY, LIMITED PARTNERSHIP, a
Delaware limited partnership, having an address at 4360 Brownsboro Road, Suite
115, Louisville, Kentucky 40207 (together with any subsequent holder of this
Note, and their respective successors and assigns, "Lender"), or at such other
place as the holder hereof may from time to time designate in writing, the
maximum principal sum of FIFTY FIVE MILLION AND NO/100 DOLLARS ($55,000,000), or
so much thereof as is advanced, in lawful money of the United States of America,
with interest thereon to be computed from the date of this Note at the Interest
Rate, and to be paid in accordance with the terms of this Note and that certain
Loan Agreement dated the date hereof between the Borrowers and Lender (as the
same may be amended, restated, supplemented or otherwise modified from time to
time, the "Loan Agreement"). All capitalized terms not defined herein shall have
the respective meanings set forth in the Loan Agreement.

                            ARTICLE 1 - PAYMENT TERMS

          Each Borrower agrees to pay the principal sum of this Note and
interest on the unpaid principal sum of this Note from time to time outstanding
at the rates and at the times specified in Article II of the Loan Agreement and
the outstanding balance of the principal sum of this Note and all accrued and
unpaid interest thereon shall be due and payable on the Maturity Date.

                      ARTICLE 2 - DEFAULT AND ACCELERATION

          The Debt shall without notice become immediately due and payable at
the option of Lender if any payment required under this Note is not paid on or
prior to the date when due or if not paid on the Maturity Date or on the
happening of any other Event of Default.

                           ARTICLE 3 - LOAN DOCUMENTS

          This Note is secured by the Mortgages and the other Loan Documents.
All of the terms, covenants and conditions contained in the Loan Agreement, the
Mortgages and the other Loan Documents are hereby made part of this Note to the
same extent and with the same force as if they were fully set forth herein. In
the event of a conflict or inconsistency between the terms of this Note and the
Loan Agreement, the terms and provisions of the Loan Agreement shall govern.



                           ARTICLE 4 - SAVINGS CLAUSE

          Notwithstanding anything to the contrary, (a) all agreements and
communications between any Borrower and Lender are hereby and shall
automatically be limited so that, after taking into account all amounts deemed
interest, the interest contracted for, charged or received by Lender shall never
exceed the maximum lawful rate or amount, (b) in calculating whether any
interest exceeds the lawful maximum, all such interest shall be amortized,
prorated, allocated and spread over the full amount and term of all principal
indebtedness of the Borrowers to Lender, and (c) if through any contingency or
event, Lender receives or is deemed to receive interest in excess of the lawful
maximum, any such excess shall be deemed to have been applied toward payment of
the principal of any and all then outstanding indebtedness of the Borrowers to
Lender, or if there is no such indebtedness, shall immediately be returned to
the Borrowers.

                           ARTICLE 5 - NO ORAL CHANGE

          No modification, amendment, extension, discharge, termination or
waiver of any provision of this Note, nor consent to any departure by any
Borrower therefrom, shall in any event be effective unless the same shall be in
a writing signed by the party against whom enforcement is sought, and then such
waiver or consent shall be effective only in the specific instance, and for the
purpose, for which given. Except as otherwise expressly provided herein, no
notice to, or demand on any Borrower shall entitle such Borrower to any other or
future notice of demand in the same, similar or other circumstances.

                               ARTICLE 6 - WAIVERS

          Each Borrower and all others who may become liable for the payment of
all or any part of the Debt do hereby severally waive presentment and demand for
payment, notice of dishonor, notice of intention to accelerate, notice of
acceleration, protest and notice of protest and non-payment and all other
notices of any kind. No release of any security for the Debt or extension of
time for payment of this Note or any installment hereof, and no alteration,
amendment or waiver of any provision of this Note, the Loan Agreement or the
other Loan Documents made by agreement between Lender or any other Person shall
release, modify, amend, waive, extend, change, discharge, terminate or affect
the liability of any Borrower or any other Person who may become liable for the
payment of all or any part of the Debt under this Note, the Loan Agreement or
the other Loan Documents. No notice to or demand on any Borrower shall be deemed
to be a waiver of the obligation of such Borrower or of the right of Lender to
take further action without further notice or demand as provided for in this
Note, the Loan Agreement or the other Loan Documents. If any Borrower is a
partnership or limited liability company, the agreements herein contained shall
remain in force and be applicable, notwithstanding any changes in the
individuals comprising the partnership or limited liability company, and the
term "Borrower," as used herein, shall include any alternate or successor
partnership or limited liability company, but any predecessor partnership or
limited liability company and their partners or members shall not thereby be
released from any liability. If any Borrower is a corporation, the agreements
contained herein shall remain in full force and be applicable notwithstanding
any changes in the shareholders comprising, or the officers and directors
relating to, the corporation, and the term "Borrower," as used herein, shall
include any alternative or successor corporation, but any predecessor
corporation shall not be relieved of

                                      -2-



liability hereunder. Nothing in the foregoing sentence shall be construed as a
consent to, or a waiver of, any prohibition or restriction on transfers of
interests in such partnership, limited liability company or corporation, which
may be set forth in the Loan Agreement, the Mortgages or any other Loan
Document.

                              ARTICLE 7 - TRANSFER

          Upon the transfer of this Note in accordance with the provisions of
the Loan Agreement, each Borrower hereby waiving notice of any such transfer,
Lender may deliver all the collateral mortgaged, granted, pledged or assigned
pursuant to the Loan Documents, or any part thereof, to the transferee who shall
thereupon become vested with all the rights herein or under applicable law given
to Lender with respect thereto, and Lender shall thereafter forever be relieved
and fully discharged from any liability or responsibility in the matter; but
Lender shall retain all rights hereby given to it with respect to any
liabilities and the collateral not so transferred.

                             ARTICLE 8 - EXCULPATION

          The provisions of Section 11.22 of the Loan Agreement are hereby
incorporated by reference into this Note to the same extent and with the same
force as if fully set forth herein.

                            ARTICLE 9 - GOVERNING LAW

          (A) THIS NOTE WAS NEGOTIATED IN THE STATE OF NEW YORK, AND MADE BY
EACH BORROWER AND ACCEPTED BY LENDER IN THE STATE OF NEW YORK, AND THE PROCEEDS
OF THIS NOTE WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES
AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING
TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING
THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS NOTE AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO
PRINCIPLES OF CONFLICT LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF
AMERICA. TO THE FULLEST EXTENT PERMITTED BY LAW, EACH BORROWER HEREBY
UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY
OTHER JURISDICTION GOVERNS THIS NOTE AND THIS NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

          (B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR ANY
BORROWER ARISING OUT OF OR RELATING TO THIS NOTE MAY AT LENDER'S OPTION BE
INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW
YORK, PURSUANT TO SECTION 5-1402

                                      -3-



OF THE NEW YORK GENERAL OBLIGATIONS LAW, AND EACH BORROWER WAIVES ANY OBJECTIONS
WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENCE
OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND EACH BORROWER HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.
EACH BORROWER DOES HEREBY DESIGNATE AND APPOINT:

          CT CORPORATION SYSTEM
          111 EIGHTH AVENUE
          NEW YORK, NEW YORK  10011

AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE
MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN
EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW YORK. EACH BORROWER (I) SHALL GIVE
PROMPT NOTICE TO LENDER OF ANY CHANGE IN ADDRESS OF ITS AUTHORIZED AGENT
HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE
AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT
AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF
PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED
AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT
LEAVING A SUCCESSOR.

                              ARTICLE 10 - NOTICES

          All notices or other written communications hereunder shall be
delivered in accordance with Section 11.6 of the Loan Agreement.

                         [NO FURTHER TEXT ON THIS PAGE]

                                      -4-



          IN WITNESS WHEREOF, each Borrower has duly executed this Note as of
the day and year first above written.

                                   BORROWER:

                                   THI OF OHIO REAL ESTATE HOLDING COMPANY, LLC,
                                   a Delaware limited liability company


                                   By:   /s/ JOHN E. BAUER
                                      ------------------------------------------
                                      Name:  John E. Bauer
                                      Title: Vice-President


                                   THI OF OHIO AT COLUMBUS, LLC,
                                   a Delaware limited liability company


                                   By:   /s/ JOHN E. BAUER
                                      ------------------------------------------
                                      Name:  John E. Bauer
                                      Title: Vice-President


                                   THI OF OHIO AT VALLEY VIEW, LLC,
                                   a Delaware limited liability company


                                   By:   /s/ JOHN E. BAUER
                                      ------------------------------------------
                                      Name:  John E. Bauer
                                      Title: Vice-President


                                   THI OF OHIO AT NORTHWESTERN, LLC,
                                   a Delaware limited liability company


                                   By:   /s/ JOHN E. BAUER
                                      ------------------------------------------
                                      Name:  John E. Bauer
                                      Title: Vice-President


                                   THI OF OHIO AT OAK GROVE, LLC,
                                   a Delaware limited liability company


                                   By:   /s/ JOHN E. BAUER
                                      ------------------------------------------
                                      Name:  John E. Bauer
                                      Title: Vice-President



                                   THI OF OHIO AT PARADISE OAKS, LLC,
                                   a Delaware limited liability company


                                   By:   /s/ JOHN E. BAUER
                                      ------------------------------------------
                                      Name:  John E. Bauer
                                      Title: Vice-President


                                   THI OF OHIO AT SOMERSET, LLC,
                                   a Delaware limited liability company


                                   By:   /s/ JOHN E. BAUER
                                      ------------------------------------------
                                      Name:  John E. Bauer
                                      Title: Vice-President


                                   THI OF OHIO AT WILLARD, LLC,
                                   a Delaware limited liability company


                                   By:   /s/ JOHN E. BAUER
                                      ------------------------------------------
                                      Name:  John E. Bauer
                                      Title: Vice-President


                                   THI OF OHIO AT HILLCREST, LLC,
                                   a Delaware limited liability company


                                   By:   /s/ JOHN E. BAUER
                                      ------------------------------------------
                                      Name:  John E. Bauer
                                      Title: Vice-President


                                   THI OF OHIO AT MAPLE VIEW, LLC,
                                   a Delaware limited liability company


                                   By:   /s/ JOHN E. BAUER
                                      ------------------------------------------
                                      Name:  John E. Bauer
                                      Title: Vice-President



                                   THI OF OHIO AT WINTERSONG VILLAGE, LLC,
                                   a Delaware limited liability company


                                   By:   /s/ JOHN E. BAUER
                                      ------------------------------------------
                                      Name:  John E. Bauer
                                      Title: Vice-President


                                   THI OF OHIO AT WOODLAND, LLC,
                                   a Delaware limited liability company


                                   By:   /s/ JOHN E. BAUER
                                      ------------------------------------------
                                      Name:  John E. Bauer
                                      Title: Vice-President


                                   THI OF OHIO AT GREENBRIAR SOUTH, LLC,
                                   a Delaware limited liability company


                                   By:   /s/ JOHN E. BAUER
                                      ------------------------------------------
                                      Name:  John E. Bauer
                                      Title: Vice-President


                                   THI OF OHIO AT GOLDEN YEARS, LLC,
                                   a Delaware limited liability company


                                   By:   /s/ JOHN E. BAUER
                                      ------------------------------------------
                                      Name:  John E. Bauer
                                      Title: Vice-President


                                   THI OF MARYLAND REAL ESTATE HOLDING CO., LLC,
                                   a Delaware limited liability company


                                   By:   /s/ JEFFREY A. BARNHILL
                                      ------------------------------------------
                                      Name:  Jeffrey A. Barnhill
                                      Title: Vice-President



                                   THI OF MARYLAND AT BEL PRE, LLC,
                                   a Delaware limited liability company


                                   By:   /s/ JEFFREY A. BARNHILL
                                      ------------------------------------------
                                      Name:  Jeffrey A. Barnhill
                                      Title: Vice-President


                                   THI OF MARYLAND AT LIBERTY HEIGHTS, LLC,
                                   a Delaware limited liability company


                                   By:   /s/ JEFFREY A. BARNHILL
                                      ------------------------------------------
                                      Name:  Jeffrey A. Barnhill
                                      Title: Vice-President


                                   THI OF MARYLAND AT MARLEY NECK, LLC,
                                   a Delaware limited liability company


                                   By:   /s/ JEFFREY A. BARNHILL
                                      ------------------------------------------
                                      Name:  Jeffrey A. Barnhill
                                      Title: Vice-President


                                   THI OF MARYLAND AT NORTHWEST, LLC,
                                   a Delaware limited liability company


                                   By:   /s/ JEFFREY A. BARNHILL
                                      ------------------------------------------
                                      Name:  Jeffrey A. Barnhill
                                      Title: Vice-President



                                   SCHEDULE I

                                   (BORROWERS)

1. THI of Ohio Real Estate Holding Company, LLC

2. THI of Ohio at Columbus, LLC

3. THI of Ohio at Valley View, LLC

4. THI of Ohio at Northwestern, LLC

5. THI of Ohio at Oak Grove, LLC

6. THI of Ohio at Paradise Oaks, LLC

7. THI of Ohio at Somerset, LLC

8. THI of Ohio at Willard, LLC

9. THI of Ohio at Hillcrest, LLC

10. THI of Ohio at Maple View, LLC

11. THI of Ohio at Wintersong Village, LLC

12. THI of Ohio at Woodland, LLC

13. THI of Ohio at Greenbriar South, LLC

14. THI of Ohio at Golden Years, LLC

15. THI of Maryland Real Estate Holding Co., LLC

16. THI of Maryland at Bel Pre, LLC

17. THI of Maryland at Liberty Heights, LLC

18. THI of Maryland at Marley Neck, LLC

19. THI of Maryland at Northwest, LLC

EX-10.2.3

                                                                  EXHIBIT 10.2.3

                        GUARANTY OF RECOURSE OBLIGATIONS

          THIS GUARANTY (as amended, restated, replaced, supplemented or
otherwise modified from time to time, this "Guaranty") is executed as of
November 1, 2002 by THOSE ENTITIES LISTED ON SCHEDULE II attached hereto (each,
a "Guarantor" and collectively the, "Guarantors"), for the benefit of VENTAS
REALTY, LIMITED PARTNERSHIP, a Delaware limited partnership (together with its
successors and assigns, "Lender").

                               W I T N E S S E T H

          WHEREAS, pursuant to that certain Promissory Note, dated of even date
herewith, executed by the entities listed on Schedule I attached hereto, each a
Delaware limited liability company (each, a "Borrower" and collectively, the
"Borrowers") and payable to the order of Lender in the maximum principal amount
of Fifty Five Million and No/100 Dollars ($55,000,000) (together with all
renewals, modifications, increases and extensions thereof, the "Note"), the
Borrowers have become indebted, and may from time to time be further indebted,
to Lender with respect to a loan (the "Loan") which is made pursuant to that
certain Loan Agreement, dated of even date herewith, between the Borrowers and
Lender (as amended, restated, replaced, supplemented or otherwise modified from
time to time, the "Loan Agreement");

          WHEREAS, Lender is not willing to make the Loan, or otherwise extend
credit, to the Borrowers unless each Guarantor unconditionally guarantees
payment and performance to Lender of the Guaranteed Obligations (as herein
defined); and

          WHEREAS, the Guarantors are the owners of a direct or indirect
interest in the Borrowers, and will directly benefit from Lender's making the
Loan to the Borrowers.

          NOW, THEREFORE, as an inducement to Lender to make the Loan to the
Borrowers and to extend such additional credit as Lender may from time to time
agree to extend under the Loan Documents, and for other good and valuable
consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the parties do hereby agree as follows:

                    ARTICLE I - NATURE AND SCOPE OF GUARANTY

          Section 1.1 Guaranty of Obligations. Each Guarantor hereby irrevocably
and unconditionally guarantees to Lender and its successors and assigns the
payment and performance of the Guaranteed Obligations as and when the same shall
be due and payable, whether by lapse of time, by acceleration of maturity or
otherwise. Each Guarantor hereby irrevocably and unconditionally covenants and
agrees that it is liable for the Guaranteed Obligations as a primary obligor.

          Section 1.2 Definition of Guaranteed Obligations. As used herein, the
term "Guaranteed Obligations" means the obligations or liabilities of any
Borrower to Lender for



any loss, damage, cost, expense, liability, claim or other obligation incurred
by Lender (including attorneys' fees and costs reasonably incurred) arising out
of or in connection with the following:

               (a) fraud or intentional misrepresentation by any Borrower or any
     Guarantor in connection with the Loan;

               (b) the gross negligence or willful misconduct by any Borrower;

               (c) the breach of any representation, warranty, covenant or
     indemnification provision in the Environmental Indemnity concerning
     environmental laws, hazardous substances and asbestos and any
     indemnification of Lender with respect thereto contained in the
     Environmental Indemnity;

               (d) the removal or disposal of any portion of the Properties
     after an Event of Default;

               (e) the misapplication or conversion by any Borrower of (i) any
     insurance proceeds paid by reason of any loss, damage or destruction to the
     Properties, (ii) any Awards or other amounts received in connection with
     the Condemnation of all or a portion of the Properties or (iii) any Rents;

               (f) failure to pay charges for labor or materials or other
     charges that can create Liens on any portion of the Properties;

               (g) any security deposits, advance deposits or other deposits
     collected with respect to the Properties which are not delivered to Lender
     upon a foreclosure of the Properties or action in lieu thereof, except to
     the extent any such security deposits were applied in accordance with the
     terms and conditions of any of the Leases prior to the occurrence of the
     Event of Default that gave rise to such foreclosure or action in lieu
     thereof;

               (h) the breach by any Borrower of its indemnification obligations
     set forth in Section 9.2 of the Loan Agreement; and

               (i) the failure to deposit all Rents into the Cash Management
     Account as required by the Loan Agreement.

          Notwithstanding anything to the contrary in any of the Loan Documents,
(i) Lender shall not be deemed to have waived any right which Lender may have
under Section 506(a), 506(b), 1111(b) or any other provisions of the Bankruptcy
Code to file a claim for the full amount of the Debt or to require that all
collateral shall continue to secure all of the Debt owing to Lender in
accordance with the Loan Documents and (ii) each Guarantor shall be liable for
the full amount of the Debt (1) prior to a Securitization and (2) in the event
that: (A) any Borrower fails to permit on-site inspections of any Property,
fails to provide financial information, fails to maintain its status as a
Single-Purpose Entity or fails to appoint a new property manager or new Operator
upon the request of Lender after an Event of Default or other event that would
give rise to the right of Lender to request such Borrower to appoint a new
property manager or new Operator, each as required by, and in accordance with
the terms and

                                      -2-



provisions of, the Loan Documents; (B) any Borrower fails to obtain Lender's
prior written consent to any subordinate financing, mezzanine financing or other
voluntary lien encumbering any Property; (C) any Borrower fails to obtain
Lender's prior written consent to any Transfer to the extent such consent is
required in the Loan Agreement or any Mortgage; (D) any Borrower files a
voluntary petition under the Bankruptcy Code or any other Federal or state
bankruptcy or insolvency law; (E) any Affiliate, officer, director, or
representative which controls, directly or indirectly, any Borrower files, or
joins in the filing of, an involuntary petition against such Borrower under the
Bankruptcy Code or any other Federal or state bankruptcy or insolvency law, or
solicits or causes to be solicited petitioning creditors for any involuntary
petition against such Borrower from any Person; (F) any Borrower files an answer
consenting to or otherwise acquiescing in or joining in any involuntary petition
filed against it, by any other Person under the Bankruptcy Code or any other
Federal or state bankruptcy or insolvency law, or solicits or causes to be
solicited petitioning creditors for any involuntary petition from any Person;
(G) any Affiliate, officer, director, or representative which controls any
Borrower consents to or acquiesces in or joins in an application for the
appointment of a custodian, receiver, trustee, or examiner for such Borrower or
any portion of the Properties; or (H) any Borrower makes an assignment for the
benefit of creditors, or admits, in writing or in any legal proceeding, its
insolvency or inability to pay its debts as they become due.

          Section 1.3 Nature of Guaranty. This Guaranty is an irrevocable,
absolute, continuing guaranty of payment and performance and not a guaranty of
collection. This Guaranty may not be revoked by any Guarantor and shall continue
to be effective with respect to any Guaranteed Obligations arising or created
after any attempted revocation by any Guarantor and after (if a Guarantor is a
natural person) such Guarantor's death (in which event this Guaranty shall be
binding upon such Guarantor's estate and such Guarantor's legal representatives
and heirs). The fact that at any time or from time to time the Guaranteed
Obligations may be increased or reduced shall not release or discharge the
obligation of any Guarantor to Lender with respect to the Guaranteed
Obligations. This Guaranty may be enforced by Lender and any subsequent holder
of the Note and shall not be discharged by the assignment or negotiation of all
or part of the Note.

          Section 1.4 Guaranteed Obligations Not Reduced by Offset. The
Guaranteed Obligations and the liabilities and obligations of each Guarantor to
Lender hereunder shall not be reduced, discharged or released because or by
reason of any existing or future offset, claim or defense of any Borrower or any
other party against Lender or against payment of the Guaranteed Obligations,
whether such offset, claim or defense arises in connection with the Guaranteed
Obligations (or the transactions creating the Guaranteed Obligations) or
otherwise.

          Section 1.5 Payment by Guarantor. If all or any part of the Guaranteed
Obligations shall not be punctually paid when due, whether at demand, maturity,
acceleration or otherwise, each Guarantor shall, immediately upon demand by
Lender and without presentment, protest, notice of protest, notice of
non-payment, notice of intention to accelerate the maturity, notice of
acceleration of the maturity or any other notice whatsoever, pay in lawful money
of the United States of America, the amount due on the Guaranteed Obligations to
Lender at Lender's address as set forth herein. Such demand(s) may be made at
any time coincident with or after the time for payment of all or part of the
Guaranteed Obligations and may be made from time to time

                                      -3-



with respect to the same or different items of Guaranteed Obligations. Such
demand shall be deemed made, given and received in accordance with the notice
provisions hereof.

          Section 1.6 No Duty to Pursue Others. It shall not be necessary for
Lender (and each Guarantor hereby waives any rights which it may have to require
Lender), in order to enforce the obligations of each Guarantor hereunder, first
to (i) institute suit or exhaust its remedies against any Borrower or others
liable on the Loan or the Guaranteed Obligations or any other person, (ii)
enforce Lender's rights against any collateral which shall ever have been given
to secure the Loan, (iii) enforce Lender's rights against any other guarantors
of the Guaranteed Obligations, (iv) join any Borrower or any others liable on
the Guaranteed Obligations in any action seeking to enforce this Guaranty, (v)
exhaust any remedies available to Lender against any collateral which shall ever
have been given to secure the Loan, or (vi) resort to any other means of
obtaining payment of the Guaranteed Obligations. Lender shall not be required to
mitigate damages or take any other action to reduce, collect or enforce the
Guaranteed Obligations.

          Section 1.7 Waivers. Each Guarantor agrees to the provisions of the
Loan Documents and hereby waives notice of (i) any loans or advances made by
Lender to any Borrower, (ii) acceptance of this Guaranty, (iii) any amendment,
modification, replacement or extension of the Note, the Mortgages, the Loan
Agreement or of any other Loan Documents, (iv) the execution and delivery by any
Borrower and Lender of any other loan or credit agreement or of any Borrower's
execution and delivery of any promissory notes or other documents arising under
the Loan Documents or in connection with any of the Properties, (v) the
occurrence of any breach by any Borrower or an Event of Default, (vi) Lender's
transfer or disposition of the Guaranteed Obligations, or any part thereof,
(vii) sale or foreclosure (or posting or advertising for sale or foreclosure) of
any collateral for the Guaranteed Obligations, (viii) protest, proof of
non-payment or default by any Borrower, or (ix) any other action at any time
taken or omitted by Lender and, generally, all demands and notices of every kind
in connection with this Guaranty, the Loan Documents, any documents or
agreements evidencing, securing or relating to any of the Guaranteed Obligations
and the obligations hereby guaranteed.

          Section 1.8 Payment of Expenses. In the event that any Guarantor
should breach or fail to timely perform any provisions of this Guaranty, each
Guarantor shall, immediately upon demand by Lender, pay Lender all costs and
expenses (including court costs and attorneys' fees) incurred by Lender in the
enforcement hereof or the preservation of Lender's rights hereunder. The
covenant contained in this Section shall survive the payment and performance of
the Guaranteed Obligations.

          Section 1.9 Effect of Bankruptcy. In the event that pursuant to any
insolvency, bankruptcy, reorganization, receivership or other debtor relief law
or any judgment, order or decision thereunder, Lender must rescind or restore
any payment or any part thereof received by Lender in satisfaction of the
Guaranteed Obligations, as set forth herein, any prior release or discharge from
the terms of this Guaranty given to any Guarantor by Lender shall be without
effect and this Guaranty shall remain in full force and effect. It is the
intention of each Borrower and each Guarantor that each Guarantor's obligations
hereunder shall not be discharged except by performance of such obligations and
then only to the extent of such performance.

                                      -4-



          Section 1.10 Waiver of Subrogation, Reimbursement and Contribution.
Notwithstanding anything to the contrary contained in this Guaranty, unless and
until the indefeasible payment and satisfaction in full of all of the Guaranteed
Obligations, each Guarantor hereby unconditionally and irrevocably waives,
releases and abrogates any and all rights it may now or hereafter have under any
agreement, at law or in equity (including, without limitation, any law
subrogating such Guarantor to the rights of Lender), to assert any claim against
or seek contribution, indemnification or any other form of reimbursement from
any Borrower or any other party liable for payment of any or all of the
Guaranteed Obligations for any payment made by such Guarantor under or in
connection with this Guaranty or otherwise.

          Section 1.11 Borrower. The term "Borrower" as used herein shall
include any new or successor corporation, association, partnership (general or
limited), limited liability company joint venture, trust or other individual or
organization formed as a result of any merger, reorganization, sale, transfer,
devise, gift or bequest of any Borrower or any interest in any Borrower.

                    ARTICLE II - EVENTS AND CIRCUMSTANCES NOT
                 REDUCING OR DISCHARGING GUARANTOR'S OBLIGATIONS

          Section 2.1 Events and Circumstances Not Reducing or Discharging
Guarantor's Obligations. Each Guarantor hereby consents and agrees to each of
the following and agrees that its obligations under this Guaranty shall not be
released, diminished, impaired, reduced or adversely affected by any of the
following and waives any common law, equitable, statutory or other rights
(including without limitation rights to notice) which it might otherwise have as
a result of or in connection with any of the following:

               (a) Modifications. Any renewal, extension, increase,
     modification, alteration or rearrangement of all or any part of the
     Guaranteed Obligations, the Note, the Mortgages, the Loan Agreement, the
     other Loan Documents or any other document, instrument, contract or
     understanding between any Borrower and Lender or any other parties
     pertaining to the Guaranteed Obligations or any failure of Lender to notify
     any Guarantor of any such action.

               (b) Adjustment. Any adjustment, indulgence, forbearance or
     compromise that might be granted or given by Lender to any Borrower or any
     Guarantor.

               (c) Condition of Borrower or Guarantor. The insolvency,
     bankruptcy, arrangement, adjustment, composition, liquidation, disability,
     dissolution or lack of power of any Borrower, any Guarantor or any other
     party at any time liable for the payment of all or part of the Guaranteed
     Obligations; or any dissolution of any Borrower or any Guarantor or any
     sale, lease or transfer of any or all of the assets of any Borrower or any
     Guarantor or any changes in the shareholders, partners or members of any
     Borrower or any Guarantor; or any reorganization of any Borrower or any
     Guarantor.

               (d) Invalidity of Guaranteed Obligations. The invalidity,
     illegality or unenforceability of all or any part of the Guaranteed
     Obligations or any document or agreement executed in connection with the
     Guaranteed Obligations for any reason

                                      -5-



     whatsoever, including without limitation the fact that (i) the Guaranteed
     Obligations or any part thereof exceeds the amount permitted by law, (ii)
     the act of creating the Guaranteed Obligations or any part thereof is ultra
     vires, (iii) the officers or representatives executing the Note, the
     Mortgages, the Loan Agreement or the other Loan Documents or otherwise
     creating the Guaranteed Obligations acted in excess of their authority,
     (iv) the Guaranteed Obligations violate applicable usury laws, (v) any
     Borrower has valid defenses, claims or offsets (whether at law, in equity
     or by agreement) which render the Guaranteed Obligations wholly or
     partially uncollectible from such Borrower, (vi) the creation, performance
     or repayment of the Guaranteed Obligations (or the execution, delivery and
     performance of any document or instrument representing part of the
     Guaranteed Obligations or executed in connection with the Guaranteed
     Obligations or given to secure the repayment of the Guaranteed Obligations)
     is illegal, uncollectible or unenforceable, or (vii) the Note, the
     Mortgages, the Loan Agreement or any of the other Loan Documents have been
     forged or otherwise are irregular or not genuine or authentic, it being
     agreed that each Guarantor shall remain liable hereon regardless of whether
     any Borrower or any other person be found not liable on the Guaranteed
     Obligations or any part thereof for any reason.

               (e) Release of Obligors. Any full or partial release of the
     liability of any Borrower on the Guaranteed Obligations or any part
     thereof, or of any co-guarantors, or any other Person now or hereafter
     liable, whether directly or indirectly, jointly, severally, or jointly and
     severally, to pay, perform, guarantee or assure the payment of the
     Guaranteed Obligations, or any part thereof, it being recognized,
     acknowledged and agreed by each Guarantor that it may be required to pay
     the Guaranteed Obligations in full without assistance or support of any
     other party, and each Guarantor has not been induced to enter into this
     Guaranty on the basis of a contemplation, belief, understanding or
     agreement that other parties will be liable to pay or perform the
     Guaranteed Obligations, or that Lender will look to other parties to pay or
     perform the Guaranteed Obligations.

               (f) Other Collateral. The taking or accepting of any other
     security, collateral or guaranty, or other assurance of payment, for all or
     any part of the Guaranteed Obligations.

               (g) Release of Collateral. Any release, surrender, exchange,
     subordination, deterioration, waste, loss or impairment (including without
     limitation negligent, willful, unreasonable or unjustifiable impairment) of
     any collateral, property or security at any time existing in connection
     with, or assuring or securing payment of, all or any part of the Guaranteed
     Obligations.

               (h) Care and Diligence. The failure of Lender or any other party
     to exercise diligence or reasonable care in the preservation, protection,
     enforcement, sale or other handling or treatment of all or any part of any
     collateral, property or security, including but not limited to any neglect,
     delay, omission, failure or refusal of Lender (i) to take or prosecute any
     action for the collection of any of the Guaranteed Obligations or (ii) to
     foreclose, or initiate any action to foreclose, or, once commenced,
     prosecute to completion any action to foreclose upon any security therefor,
     or (iii) to take or prosecute

                                      -6-



     any action in connection with any instrument or agreement evidencing or
     securing all or any part of the Guaranteed Obligations.

               (i) Unenforceability. The fact that any collateral, security,
     security interest or lien contemplated or intended to be given, created or
     granted as security for the repayment of the Guaranteed Obligations, or any
     part thereof, shall not be properly perfected or created, or shall prove to
     be unenforceable or subordinate to any other security interest or lien, it
     being recognized and agreed by each Guarantor that it is not entering into
     this Guaranty in reliance on, or in contemplation of the benefits of, the
     validity, enforceability, collectibility or value of any of the collateral
     for the Guaranteed Obligations.

               (j) Offset. The Note, the Guaranteed Obligations and the
     liabilities and obligations of each Guarantor to Lender hereunder shall not
     be reduced, discharged or released because of or by reason of any existing
     or future right of offset, claim or defense of any Borrower against Lender,
     or any other party, or against payment of the Guaranteed Obligations,
     whether such right of offset, claim or defense arises in connection with
     the Guaranteed Obligations (or the transactions creating the Guaranteed
     Obligations) or otherwise.

               (k) Merger. The reorganization, merger or consolidation of any
     Borrower into or with any other Person.

               (l) Preference. Any payment by any Borrower to Lender is held to
     constitute a preference under bankruptcy laws or for any reason Lender is
     required to refund such payment or pay such amount to any Borrower or
     someone else.

               (m) Other Actions Taken or Omitted. Any other action taken or
     omitted to be taken with respect to the Loan Documents, the Guaranteed
     Obligations, or the security and collateral therefor, whether or not such
     action or omission prejudices any Guarantor or increases the likelihood
     that any Guarantor will be required to pay the Guaranteed Obligations
     pursuant to the terms hereof, it is the unambiguous and unequivocal
     intention of each Guarantor that it shall be obligated to pay the
     Guaranteed Obligations when due, notwithstanding any occurrence,
     circumstance, event, action, or omission whatsoever, whether contemplated
     or uncontemplated, and whether or not otherwise or particularly described
     herein, which obligation shall be deemed satisfied only upon the full and
     final payment and satisfaction of the Guaranteed Obligations.

                  ARTICLE III - REPRESENTATIONS AND WARRANTIES

          Section 3.1 Representations and Warranties. To induce Lender to enter
into the Loan Documents and extend credit to the Borrowers, each Guarantor
represents and warrants to Lender as follows:

               (a) Benefit. Guarantor is an Affiliate of the Borrowers, is the
     owner of a direct or indirect interest in the Borrowers, and has received,
     or will receive, direct or

                                      -7-



     indirect benefit from the making of this Guaranty with respect to the
     Guaranteed Obligations.

               (b) Familiarity and Reliance. Guarantor is familiar with, and has
     independently reviewed books and records regarding, the financial condition
     of each Borrower and is familiar with the value of any and all collateral
     intended to be created as security for the payment of the Note or
     Guaranteed Obligations; however, Guarantor is not relying on such financial
     condition or the collateral as an inducement to enter into this Guaranty.

               (c) No Representation by Lender. Neither Lender nor any other
     party has made any representation, warranty or statement to Guarantor in
     order to induce Guarantor to execute this Guaranty.

               (d) Guarantor's Financial Condition. As of the date hereof, and
     after giving effect to this Guaranty and the contingent obligation
     evidenced hereby, Guarantor is and will be solvent and has and will have
     assets which, fairly valued, exceed its obligations, liabilities (including
     contingent liabilities) and debts, and has and will have property and
     assets sufficient to satisfy and repay its obligations and liabilities.

               (e) Legality. The execution, delivery and performance by
     Guarantor of this Guaranty and the consummation of the transactions
     contemplated hereunder do not and will not contravene or conflict with any
     law, statute or regulation whatsoever to which Guarantor is subject or
     constitute a default (or an event which with notice or lapse of time or
     both would constitute a default) under, or result in the breach of, any
     indenture, mortgage, charge, lien, or any contract, agreement or other
     instrument to which Guarantor is a party or which may be applicable to
     Guarantor. This Guaranty is a legal and binding obligation of Guarantor and
     is enforceable in accordance with its terms, except as limited by
     bankruptcy, insolvency or other laws of general application relating to the
     enforcement of creditors' rights.

               (f) Survival. All representations and warranties made by
     Guarantor herein shall survive the execution hereof.

               ARTICLE IV - SUBORDINATION OF CERTAIN INDEBTEDNESS

          Section 4.1 Subordination of All Guarantor Claims. As used herein, the
term "Guarantor Claims" shall mean all debts and liabilities of any Borrower to
any Guarantor, whether such debts and liabilities now exist or are hereafter
incurred or arise, or whether the obligations of any Borrower thereon be direct,
contingent, primary, secondary, several, joint and several, or otherwise, and
irrespective of whether such debts or liabilities be evidenced by note,
contract, open account, or otherwise, and irrespective of the person or persons
in whose favor such debts or liabilities may, at their inception, have been, or
may hereafter be created, or the manner in which they have been or may hereafter
be acquired by any Guarantor. The Guarantor Claims shall include without
limitation all rights and claims of any Guarantor against any Borrower (arising
as a result of subrogation or otherwise) as a result of such Guarantor's payment
of all or a portion of the Guaranteed Obligations. After the occurrence of an
Event of

                                      -8-



Default or the occurrence of an event which would, with the giving of notice or
the passage of time, or both, constitute an Event of Default, no Guarantor shall
receive or collect, directly nor indirectly, from any Borrower or any other
party any amount upon the Guarantor Claims.

          Section 4.2 Claims in Bankruptcy. In the event of receivership,
bankruptcy, reorganization, arrangement, debtor's relief, or other insolvency
proceedings involving any Guarantor as debtor, Lender shall have the right to
prove its claim in any such proceeding so as to establish its rights hereunder
and receive directly from the receiver, trustee or other court custodian
dividends and payments which would otherwise be payable upon Guarantor Claims.
Each Guarantor hereby assigns such dividends and payments to Lender. Should
Lender receive, for application against the Guaranteed Obligations, any dividend
or payment which is otherwise payable to any Guarantor and which, as between any
Borrower and such Guarantor, shall constitute a credit against the Guarantor
Claims, then, upon payment to Lender in full of the Guaranteed Obligations, such
Guarantor shall become subrogated to the rights of Lender to the extent that
such payments to Lender on the Guarantor Claims have contributed toward the
liquidation of the Guaranteed Obligations, and such subrogation shall be with
respect to that proportion of the Guaranteed Obligations which would have been
unpaid if Lender had not received dividends or payments upon the Guarantor
Claims.

          Section 4.3 Payments Held in Trust. In the event that, notwithstanding
anything to the contrary in this Guaranty, any Guarantor should receive any
funds, payment, claim or distribution which is prohibited by this Guaranty, it
agrees to hold in trust for Lender an amount equal to the amount of all funds,
payments, claims or distributions so received, and agrees that it shall have
absolutely no dominion over the amount of such funds, payments, claims or
distributions so received except to pay them promptly to Lender, and it
covenants promptly to pay the same to Lender.

          Section 4.4 Liens Subordinate. Each Guarantor agrees that any liens,
security interests, judgment liens, charges or other encumbrances upon any
Borrower's assets securing payment of the Guarantor Claims shall be and remain
inferior and subordinate to any liens, security interests, judgment liens,
charges or other encumbrances upon any Borrower's assets securing payment of the
Guaranteed Obligations, regardless of whether such encumbrances in favor of any
Guarantor or Lender presently exist or are hereafter created or attach. Without
the prior written consent of Lender, no Guarantor shall (i) exercise or enforce
any creditor's right it may have against any Borrower, or (ii) foreclose,
repossess, sequester or otherwise take steps or institute any action or
proceedings (judicial or otherwise, including without limitation the
commencement of, or joinder in, any liquidation, bankruptcy, rearrangement,
debtor's relief or insolvency proceeding) to enforce any liens, mortgage, deeds
of trust, security interests, collateral rights, judgments or other encumbrances
on assets of any Borrower held by it.

                            ARTICLE V - MISCELLANEOUS

          Section 5.1 Waiver. No failure to exercise, and no delay in
exercising, on the part of Lender, any right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right. The rights of
Lender hereunder shall be in addition to all other rights provided by law. No

                                      -9-



modification or waiver of any provision of this Guaranty, nor consent to
departure therefrom, shall be effective unless in writing and no such consent or
waiver shall extend beyond the particular case and purpose involved. No notice
or demand given in any case shall constitute a waiver of the right to take other
action in the same, similar or other instances without such notice or demand.

          Section 5.2 Notices. All notices, demands, requests, consents,
approvals or other communications (any of the foregoing, a "Notice") required,
permitted, or desired to be given hereunder shall be in writing sent by telefax
(with answer back acknowledged) or by registered or certified mail, postage
prepaid, return receipt requested, or delivered by hand or reputable overnight
courier addressed to the party to be so notified at its address hereinafter set
forth, or to such other address as such party may hereafter specify in
accordance with the provisions of this Section 5.2. Any Notice to any Guarantor
shall be deemed effective as to all Guarantors to the extent delivered to one
Guarantor; it being understood that Notice to all Guarantors shall not be
required if Notice is given to one Guarantor. Any Notice shall be deemed to have
been received: (a) three (3) days after the date such Notice is mailed, (b) on
the date of sending by telefax if sent during business hours on a Business Day
(otherwise on the next Business Day), (c) on the date of delivery by hand if
delivered during business hours on a Business Day (otherwise on the next
Business Day), and (d) on the next Business Day if sent by an overnight
commercial courier, in each case addressed to the parties as follows:

          If to Lender:      Ventas Realty, Limited Partnership
                             c/o Ventas, Inc.
                             4360 Brownsboro Road, Suite 115
                             Louisville, Kentucky 40207
                             Attention: Chief Financial Officer
                             Facsimile No. (502) 357-9001

          with a copy to:    Ventas Realty, Limited Partnership
                             c/o Ventas, Inc.
                             4360 Brownsboro Road, Suite 115
                             Louisville, Kentucky 40207
                             Attention: General Counsel
                             Facsimile No. (502) 357-9001

          with a copy to:    Dechert
                             4000 Bell Atlantic Tower
                             1717 Arch Street
                             Philadelphia, Pennsylvania 19103
                             Attention:  David W. Forti, Esquire
                             Facsimile No: (215) 994-2222

          If to Guarantor:   c/o Trans Healthcare, Inc.
                             4660 Trindle Road, Suite 103
                             Camp Hill, Pennsylvania 17011
                             Attention: Anthony Misitano
                             Facsimile No. (717) 730-8722

                                      -10-



          with a copy to:    Latsha Davis & Yohe, P.C.
                             4720 Old Gettysburg Road, Suite 101
                             Harrisburg, Pennsylvania 17108
                             Attention:  Douglas C. Yohe, Esquire
                             Facsimile No. (717)761-2286

          Section 5.3 Governing Law; Submission to Jurisdiction.

               (a) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK AND
     MADE BY EACH GUARANTOR AND ACCEPTED BY LENDER IN THE STATE OF NEW YORK, AND
     THE PROCEEDS OF THE LOAN WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH
     STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND
     TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS,
     INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF
     CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS GUARANTY AND THE OBLIGATIONS
     ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
     THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
     PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT LAWS) AND
     ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA. TO THE FULLEST EXTENT
     PERMITTED BY LAW, EACH GUARANTOR HEREBY UNCONDITIONALLY AND IRREVOCABLY
     WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS
     THIS GUARANTY AND THE NOTE, AND THIS GUARANTY AND THE NOTE SHALL BE
     GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
     YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

               (b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR ANY
     GUARANTOR ARISING OUT OF OR RELATING TO THIS GUARANTY MAY AT LENDER'S
     OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK,
     COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL
     OBLIGATIONS LAW, AND EACH GUARANTOR WAIVES ANY OBJECTIONS WHICH IT MAY NOW
     OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH
     SUIT, ACTION OR PROCEEDING, AND EACH GUARANTOR HEREBY IRREVOCABLY SUBMITS
     TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.
     EACH GUARANTOR DOES HEREBY DESIGNATE AND APPOINT:

               CT CORPORATION SYSTEM
               111 EIGHTH AVENUE
               NEW YORK, NEW YORK  10011

                                      -11-



     AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF
ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING
IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE
MAILED OR DELIVERED TO GUARANTOR IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED
IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON GUARANTOR IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW YORK. EACH GUARANTOR (I) SHALL GIVE
PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT
HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE
AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT
AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS)
AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT
CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A
SUCCESSOR.

          Section 5.4 Invalid Provisions. If any provision of this Guaranty is
held to be illegal, invalid, or unenforceable under present or future laws
effective during the term of this Guaranty, such provision shall be fully
severable and this Guaranty shall be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part of this Guaranty,
and the remaining provisions of this Guaranty shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance from this Guaranty, unless such continued
effectiveness of this Guaranty, as modified, would be contrary to the basic
understandings and intentions of the parties as expressed herein.

          Section 5.5 Amendments. This Guaranty may be amended only by an
instrument in writing executed by the party or an authorized representative of
the party against whom such amendment is sought to be enforced.

          Section 5.6 Number and Gender/Successors and Assigns. All pronouns and
any variations thereof shall be deemed to refer to the masculine, feminine,
neuter, singular or plural as the identity of the person or persons referred to
may require. Without limiting the effect of specific references in any provision
of this Guaranty, the term "Guarantor" shall be deemed to refer to each and
every person comprising a Guarantor from time to time, as the sense of a
particular provision may require, and to include the heirs, executors,
administrators, legal representatives, successors and assigns of such Guarantor,
all of whom shall be bound by the provisions of this Guaranty, provided that no
obligation of any Guarantor may be assigned except with the written consent of
Lender. Without limiting the effect of specific references in any provision of
this Guaranty, the term "Borrower" shall be deemed to refer to each and every
person comprising a Borrower from time to time, as the sense of a particular
provision may require, and to include the heirs, executors, administrators,
legal representatives, successors and assigns of such Borrower. Each reference
herein to Lender shall be deemed to include its successors and assigns. This
Guaranty shall inure to the benefit of Lender and its respective successors and
assigns forever.

                                      -12-



          Section 5.7 Headings, Etc. The headings and captions of various
paragraphs of this Guaranty are for the convenience of reference only and are
not to be construed as defining or limiting, in any way, the scope or intent of
the provisions hereof.

          Section 5.8 Recitals. The recital and introductory paragraphs hereof
are a part hereof, form a basis for this Guaranty and shall be considered prima
facie evidence of the facts and documents referred to therein.

          Section 5.9 Counterparts. To facilitate execution, this Guaranty may
be executed in as many counterparts as may be convenient or required. It shall
not be necessary that the signature of, or on behalf of, each party, or that the
signature of all persons required to bind any party, appear on each counterpart.
All counterparts shall collectively constitute a single instrument. It shall not
be necessary in making proof of this Guaranty to produce or account for more
than a single counterpart containing the respective signatures of, or on behalf
of, each of the parties hereto. Any signature page to any counterpart may be
detached from such counterpart without impairing the legal effect of the
signatures thereon and thereafter attached to another counterpart identical
thereto except having attached to it additional signature pages.

          Section 5.10 Rights and Remedies. If any Guarantor becomes liable for
any indebtedness owing by any Borrower to Lender, by endorsement or otherwise,
other than under this Guaranty, such liability shall not be in any manner
impaired or affected hereby and the rights of Lender hereunder shall be
cumulative of any and all other rights that Lender may ever have against such
Guarantor. The exercise by Lender of any right or remedy hereunder or under any
other instrument, or at law or in equity, shall not preclude the concurrent or
subsequent exercise of any other right or remedy.

          Section 5.11 Other Defined Terms. Any capitalized term utilized herein
shall have the meaning as specified in the Loan Agreement, unless such term is
otherwise specifically defined herein.

          Section 5.12 Entirety. THIS GUARANTY EMBODIES THE FINAL, ENTIRE
AGREEMENT OF EACH GUARANTOR AND LENDER WITH RESPECT TO EACH GUARANTOR'S GUARANTY
OF THE GUARANTEED OBLIGATIONS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF. THIS GUARANTY IS INTENDED BY EACH
GUARANTOR AND LENDER AS A FINAL AND COMPLETE EXPRESSION OF THE TERMS OF THE
GUARANTY, AND NO COURSE OF DEALING BETWEEN ANY GUARANTOR AND LENDER, NO COURSE
OF PERFORMANCE, NO TRADE PRACTICES, AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY
NATURE SHALL BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS
GUARANTY AGREEMENT. THERE ARE NO ORAL AGREEMENTS BETWEEN ANY GUARANTOR AND
LENDER.

          Section 5.13 Waiver of Right to Trial by Jury. EACH GUARANTOR HEREBY
AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF

                                      -13-



RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT
ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS GUARANTY, THE
NOTE, THE MORTGAGES, THE LOAN AGREEMENT, OR THE OTHER LOAN DOCUMENTS, OR ANY
CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER
OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY EACH GUARANTOR,
AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO
WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY
AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE
EVIDENCE OF THIS WAIVER BY EACH GUARANTOR.

          Section 5.14 Cooperation. Each Guarantor acknowledges that Lender and
its successors and assigns may (i) sell this Guaranty, the Note and other Loan
Documents to one or more investors as a whole loan, (ii) participate the Loan
secured by this Guaranty to one or more investors, (iii) deposit this Guaranty,
the Note and other Loan Documents with a trust, which trust may sell
certificates to investors evidencing an ownership interest in the trust assets,
or (iv) otherwise sell the Loan or interest therein to investors (the
transactions referred to in clauses (i) through (iv) are hereinafter each
referred to as "Secondary Market Transaction"). Each Guarantor shall cooperate
with Lender in effecting any such Secondary Market Transaction and shall
cooperate to implement all requirements imposed by any Rating involved in any
Secondary Market Transaction. Each Guarantor shall provide such information and
documents relating to any Guarantor, any Borrower, the Properties and any
tenants of the Improvements as Lender may reasonably request in connection with
such Secondary Market Transaction. In addition, each Guarantor shall make
available to Lender all information concerning its business and operations that
Lender may reasonably request. Lender shall be permitted to share all such
information with the investment banking firms, Rating Agencies, accounting
firms, law firms and other third-party advisory firms involved with the Loan and
the Loan Documents or the applicable Secondary Market Transaction. It is
understood that the information provided by any Guarantor to Lender may
ultimately be incorporated into the offering documents for the Secondary Market
Transaction and thus various investors may also see some or all of the
information. Lender and all of the aforesaid third-party advisors and
professional firms shall be entitled to rely on the information supplied by, or
on behalf of, any Guarantor in the form as provided by such Guarantor. Lender
may publicize the existence of the Loan in connection with its marketing for a
Secondary Market Transaction or otherwise as part of its business development.

          Section 5.15 Reinstatement in Certain Circumstances. If at any time
any payment of the principal of or interest under the Note or any other amount
payable by any Borrower under the Loan Documents is rescinded or must be
otherwise restored or returned upon the insolvency, bankruptcy or reorganization
of any Borrower or otherwise, each Guarantor's obligations hereunder with
respect to such payment shall be reinstated as though such payment has been due
but not made at such time.

          Section 5.16 Joint and Several Liability. If more than one Person has
executed this Agreement as "Guarantor," the representations, covenants,
warranties and obligations of all such Persons hereunder shall be joint and
several.

                                      -14-



          IN WITNESS WHEREOF, the undersigned has executed this Guaranty all as
of the day and year first above written.

                                        GUARANTOR:

                                        TRANS HEALTHCARE, INC.,
                                        a Delaware corporation


                                        By:   /s/ ANTHONY F. MISITANO
                                           -------------------------------------
                                           Name:  Anthony F. Misitano
                                           Title: President


                                        TRANS HEALTHCARE OF OHIO, INC.,
                                        a Delaware corporation


                                        By:   /s/ ANTHONY F. MISITANO
                                           -------------------------------------
                                           Name:  Anthony F. Misitano
                                           Title: President


                                        THI OF OHIO ALFS, INC.,
                                        a Delaware corporation


                                        By:   /s/ ANTHONY F. MISITANO
                                           -------------------------------------
                                           Name:  Anthony F. Misitano
                                           Title: President


                                        THI PROPERTIES, INC.,
                                        a Delaware corporation


                                        By:   /s/ ANTHONY F. MISITANO
                                           -------------------------------------
                                           Name:  Anthony F. Misitano
                                           Title: President



                                        THI SERVICES CORP.,
                                        a Delaware corporation


                                        By:   /s/ ANTHONY F. MISITANO
                                           -------------------------------------
                                           Name:  Anthony F. Misitano
                                           Title: President


                                        THI SPECIALTY HOSPITALS OF OHIO, INC.,
                                        a Delaware corporation


                                        By:   /s/ ANTHONY F. MISITANO
                                           -------------------------------------
                                           Name:  Anthony F. Misitano
                                           Title: President


                                        TRANS HEALTH MANAGEMENT, INC.,
                                        a Delaware corporation


                                        By:   /s/ ANTHONY F. MISITANO
                                           -------------------------------------
                                           Name:  Anthony F. Misitano
                                           Title: President


                                        THI OF MARYLAND, INC.,
                                        a Delaware corporation


                                        By:   /s/ ANTHONY F. MISITANO
                                           -------------------------------------
                                           Name:  Anthony F. Misitano
                                           Title: President


                                        PHYSICAL THERAPY PLUS, INC.,
                                        a Pennsylvania corporation


                                        By:   /s/ ANTHONY F. MISITANO
                                           -------------------------------------
                                           Name:  Anthony F. Misitano
                                           Title: President



                                        DALE J. CORDIAL, PT, INC.,
                                        a Pennsylvania corporation


                                        By:   /s/ ANTHONY F. MISITANO
                                           -------------------------------------
                                           Name:  Anthony F. Misitano
                                           Title: President


                                        DALE J. CORDIAL, PT, INC., NUMBER 4,
                                        a Pennsylvania corporation


                                        By:   /s/ ANTHONY F. MISITANO
                                           -------------------------------------
                                           Name:  Anthony F. Misitano
                                           Title: President


                                        THE PT GROUP OF PENN HILLS,
                                        a Pennsylvania general partnership


                                        By: Trans Healthcare, Inc.,
                                            a Delaware corporation,
                                            its Partner


                                            By:   /s/ ANTHONY F. MISITANO
                                               ---------------------------------
                                               Name:  Anthony F. Misitano
                                               Title: President


                                        THE PT GROUP PHYSICAL THERAPY FOR WOMEN,
                                        a Pennsylvania general partnership


                                        By: Dale J. Cordial, PT, Inc.,
                                            a Pennsylvania corporation,
                                            its Partner


                                            By:   /s/ ANTHONY F. MISITANO
                                               ---------------------------------
                                               Name:  Anthony F. Misitano
                                               Title: President



                                        THE PT GROUP OF MOON TOWNSHIP,
                                        a Pennsylvania general partnership


                                        By: Dale J. Cordial, PT, Inc., Number 4,
                                            a Pennsylvania corporation,
                                            its Partner


                                            By:   /s/ ANTHONY F. MISITANO
                                               ---------------------------------
                                               Name:  Anthony F. Misitano
                                               Title: President


                                        THI Therapy Concepts, LLC,
                                        a Delaware limited liability company


                                        By:   /s/ JEFFREY A. BARNHILL
                                           -------------------------------------
                                           Name:  Jeffrey A. Barnhill
                                           Title: Vice-President


                                        THI SERVICES OF MARYLAND, LLC,
                                        a Delaware limited liability company


                                        By:   /s/ JEFFREY A. BARNHILL
                                           -------------------------------------
                                           Name:  Jeffrey A. Barnhill
                                           Title: Vice-President



                                   SCHEDULE I

                                   (BORROWERS)

1.   THI of Ohio Real Estate Holding Company, LLC

2.   THI of Ohio at Columbus, LLC

3.   THI of Ohio at Valley View, LLC

4.   THI of Ohio at Northwestern, LLC

5.   THI of Ohio at Oak Grove, LLC

6.   THI of Ohio at Paradise Oaks, LLC

7.   THI of Ohio at Somerset, LLC

8.   THI of Ohio at Willard, LLC

9.   THI of Ohio at Hillcrest, LLC

10.  THI of Ohio at Maple View, LLC

11.  THI of Ohio at Wintersong Village, LLC

12.  THI of Ohio at Woodland, LLC

13.  THI of Ohio at Greenbriar South, LLC

14.  THI of Ohio at Golden Years, LLC

15.  THI of Maryland Real Estate Holding Co., LLC

16.  THI of Maryland at Bel Pre, LLC

17.  THI of Maryland at Liberty Heights, LLC

18.  THI of Maryland at Marley Neck, LLC

19.  THI of Maryland at Northwest, LLC



                                   SCHEDULE II

                                  (GUARANTORS)



- ----------------------------------------------------------------------------------
GUARANTOR                                     TYPE OF ENTITY

- ----------------------------------------------------------------------------------
                                           
1.  Trans Healthcare, Inc.                    a Delaware corporation

- ----------------------------------------------------------------------------------
2.  Trans Healthcare of Ohio, Inc.            a Delaware corporation

- ----------------------------------------------------------------------------------
3.  THI of Ohio ALFs, Inc.                    a Delaware corporation

- ----------------------------------------------------------------------------------
4.  THI Properties, Inc.                      a Delaware corporation

- ----------------------------------------------------------------------------------
5.  THI Services Corp.                        a Delaware corporation

- ----------------------------------------------------------------------------------
6.  THI Specialty Hospitals of Ohio, Inc.     a Delaware corporation

- ----------------------------------------------------------------------------------
7.  Trans Health Management, Inc.             a Delaware corporation

- ----------------------------------------------------------------------------------
8.  THI of Maryland, Inc.                     a Delaware corporation

- ----------------------------------------------------------------------------------
9.  THI Therapy Concepts, LLC                 a Maryland limited liability company

- ----------------------------------------------------------------------------------
10. THI Services of Maryland, LLC             a Maryland limited liability company

- ----------------------------------------------------------------------------------
11. Physical Therapy Plus, Inc.               a Pennsylvania corporation

- ----------------------------------------------------------------------------------
12. Dale J. Cordial, PT, Inc.                 a Pennsylvania corporation

- ----------------------------------------------------------------------------------
13. Dale J. Cordial, PT, Inc., Number Four    a Pennsylvania corporation

- ----------------------------------------------------------------------------------
14. The pt Group of Penn Hills                a Pennsylvania general partnership

- ----------------------------------------------------------------------------------
15. The pt Group Physical Therapy for Women   a Pennsylvania general partnership

- ----------------------------------------------------------------------------------
16. The pt Group of Moon Township             a Pennsylvania general partnership

- ----------------------------------------------------------------------------------

EX-10.2.4

                                                                  EXHIBIT 10.2.4

THIS INSTRUMENT PREPARED BY,
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:

David W. Forti, Esquire
Dechert
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA  19103

- --------------------------------------------------------------------------------
                    Space Above This Line For Recorder's Use

                   ASSIGNMENT OF LEASES, RENTS, AND CONTRACTS



                                      from




                  THI OF OHIO REAL ESTATE HOLDING COMPANY, LLC
                                       and
                          THI OF OHIO AT COLUMBUS, LLC,
                   each a Delaware limited liability company,
                          and each having an address at
                          4660 Trindle Road, Suite 103
                          Camp Hill, Pennsylvania 17011

                          (collectively, as Borrowers)


                                       to


                       Ventas Realty, Limited Partnership,
                         a Delaware limited partnership,
                              having an address at
                         4360 Brownsboro Road, Suite 115
                           Louisville, Kentucky 40207
                                    (Lender)

Property:   Columbus Quality Care
            4301 Clime Road
            Columbus, OH




     THIS ASSIGNMENT OF LEASES, RENTS AND CONTRACTS (as amended, restated,
replaced, supplemented or otherwise modified from time to time, this
"Assignment") made as of November 1, 2002, by THI OF OHIO REAL ESTATE HOLDING
COMPANY, LLC, and THI OF OHIO AT COLUMBUS, LLC each a Delaware limited liability
company, and each having its principal place of business at 4660 Trindle Road,
Suite 103, Camp Hill, Pennsylvania 17011, collectively as assignor (each, a
"Borrower" and collectively, the "Borrowers") to VENTAS REALTY, LIMITED
PARTNERSHIP, a Delaware limited partnership, having an address at 4360
Brownsboro Road, Suite 115, Louisville, Kentucky 40207, as assignee (together
with its successors and assigns, "Lender").

                              W I T N E S S E T H

     WHEREAS, this Assignment is given in connection with a loan in the maximum
principal sum of FIFTY FIVE MILLION AND NO/100 DOLLARS ($55,000,000) (the
"Loan") made by Lender to the Borrowers and certain Affiliates of the Borrowers
named therein (the "Other Borrowers") pursuant to that certain Loan Agreement
dated as of the date hereof (as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time, the "Loan Agreement") and
evidenced by that certain Promissory Note dated the date hereof made by the
Borrowers and the Other Borrowers to Lender (as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time, the
"Note");

     WHEREAS, the Note is secured by that certain Open-Ended Fee and Leasehold
Mortgage and Security Agreement dated the date hereof (as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time, the "Security Instrument") made by the Borrowers for the benefit of
Lender; and

     WHEREAS, each Borrower desires to further secure the payment of the Debt
(as defined in the Loan Agreement) and the performance of all of its obligations
under the Note, the Loan Agreement and the other Loan Documents.

     NOW THEREFORE, in consideration of the making of the Loan by Lender and the
covenants, agreements, representations and warranties set forth in this
Assignment:

                        ARTICLE 1 - ASSIGNMENT

         Section 1.1 Property Assigned. Each Borrower hereby absolutely and
unconditionally assigns and grants to Lender the following property, rights,
interests and estates, now owned, or hereafter acquired by such Borrower:

              (a) Leases. All existing and future "leases" and "lease
         provisions" (as described in Exhibit B annexedhereto and made a part
         hereof), including, without limitation, the Operating Lease (as
         defined in the Security Instrument), patient admission and resident
         care agreements, lettings, subleases, licenses, concessions, tenancies
         or other occupancy agreements covering or encumbering all or any
         portion of the Property,

                                        1



affecting the use, enjoyment, or occupancy of all or any part of that certain
lot or piece of land, more particularly described in Exhibit A annexed hereto
and made a part hereof, or all or any part of the buildings, structures,
fixtures, additions, enlargements, extensions, modifications, repairs,
replacements and improvements now or hereafter located thereon (collectively,
the "Property") and the right, title and interest of such Borrower, its
successors and assigns, therein and thereunder.

     (b) Other Leases and Agreements. All other leases and other agreements,
whether or not in writing affecting the use, enjoyment or occupancy of the
Property or any portion thereof now or hereafter made, whether made before or
after the filing by or against such Borrower of any petition for relief under 11
U.S.C. (S)101 et seq., as the same may be amended from time to time (the
"Bankruptcy Code") together with any extension, renewal or replacement of the
same, this Assignment of other present and future leases and present and future
agreements being effective without further or supplemental assignment. The
"leases" and the "lease provisions" described in Subsection 1.1(a) and the
leases and other agreements described in this Subsection 1.1(b) are collectively
referred to as the "Leases".

     (c) Rents. All "rents" (as described in Exhibit B annexed hereto and made a
part hereof) including, without limitation, (i) rights to payment earned under
the Leases for space in the Improvements for the operation of ongoing
businesses, such as restaurants, news stands, barber shops, beauty shops and
pharmacies and (ii) all other income, consideration, profits and benefits of any
nature arising from the ownership, possession, use or operation of the Property,
including, without limitation, all Patient Revenues and Self-Pay Receivables,
whether paid or accruing before or after the filing by or against such Borrower
of any petition for relief under the Bankruptcy Code (collectively, the
"Rents"); provided, however, "Rents" shall not include "patient trust accounts"
or "patient needs funds".

     (d) Contracts. All contracts and agreements (in each case to the extent
assignable without the consent of another person or where any such consents have
been or will be obtained) to which such Borrower is a party executed in
connection with the development, construction, repair, use, operation,
maintenance, enjoyment, acquisition, ownership and management of the Property
(including, without limitation, construction contracts, architects' agreements,
engineers' contracts, licensing agreements, utility contracts, letters of
credit, escrow agreements, maintenance agreements, management agreements,
parking agreements, equipment leases, service and supply contracts, agreements
for the sale, lease or exchange of goods or other property, and agreements for
the performance of services), and, to the extent assignable, all licenses,
permits, variances, entitlements and certificates used in connection with the
development, construction, repair, use, occupancy, operation, maintenance,
enjoyment, acquisition, ownership and management of the Property (including,
without limitation, Regulatory Permits, business licenses, licenses to conduct
business and all such other permits, licenses and rights, obtained from any
Governmental Authority or private Person concerning ownership, operation, use or
occupancy of the Property) and any and all modifications, renewals, extensions
and substitutions of the foregoing (each a "Contract"; collectively, the
"Contracts"; the parties with whom or to whom such contracts have been

                                       2



or may hereafter be given are collectively, the "Contractors"). Without limiting
the foregoing, the term "Contracts" shall include:


     (i) all rights of such Borrower to receive monies due and to become due
under or pursuant to the Contracts;

     (ii) all claims of such Borrower for damages arising out of or for breach
of or default under the Contracts;

     (iii) all rights of such Borrower to terminate, amend, supplement, modify
or waive performance under the Contracts, to compel performance and otherwise to
exercise all remedies thereunder; and

     (iv) to the extent not included in the foregoing, all cash and non-cash
proceeds, products, rents, revenues, issues, profits, royalties, income,
benefits, additions, substitutions, replacements and accessions of and to any
and all of the foregoing.

     (e) Warranties. All of such Borrower's right, title and interest in and to
all warranties, guarantees, and other rights of each Borrower or any manager
under any management agreement, direct and indirect, against manufacturers,
dealers, suppliers, Contractors, and others in connection with the work done or
to be done and the materials supplied or to be supplied to or for the Property
(collectively, the "Warranties").

     (f) Bankruptcy Claims. All of such Borrower's claims and rights (the
"Bankruptcy Claims") to the payment of damages arising from any rejection by a
lessee of any Lease or Contract under the Bankruptcy Code.

     (g) Lease Guaranties. All of such Borrower's right, title and interest in
and claims under any and all lease guaranties, letters of credit and any other
credit support (individually, a "Lease Guaranty", collectively, the "Lease
Guaranties") given by any guarantor in connection with any of the Leases or
leasing commissions (individually, a "Lease Guarantor", collectively, the "Lease
Guarantors") to such Borrower.

     (h) Proceeds. All proceeds from the sale or other disposition of the
Leases, the Rents, the Contracts, the Warranties, the Lease Guaranties and the
Bankruptcy Claims.

     (i) Other. All rights, powers, privileges, options and other benefits of
such Borrower under the Leases, the Contracts and the Lease Guaranties,
including without limitation the immediate and continuing right to make claim
for, receive, collect and receipt for all Rents payable or receivable under the
Leases and all sums payable under the Contracts, the Warranties, the Lease
Guaranties or pursuant thereto (and to apply the same to the payment of the Debt
or the Other Obligations), and to do all other things which such Borrower or any
lessor is or may become entitled to do under the Leases, the Contracts, the
Warranties, or the Lease Guaranties.

                                        3



     (j) Entry. The right, at Lender's option, upon revocation of the license
granted herein, to enter upon the Property in person, by agent or by
court-appointed receiver, to collect the Rents.

     (k) Power of Attorney. Such Borrower's irrevocable power of attorney,
coupled with an interest, to take any and all of the actions set forth in
Section 3.1 of this Assignment and any or all other actions designated by Lender
for the proper management and preservation of the Property.

     (l) Other Rights and Agreements. Any and all other rights of such Borrower
in and to the items set forth in subsections (a) through (k) above, and all
amendments, modifications, replacements, renewals and substitutions thereof.

                         ARTICLE 2 - TERMS OF ASSIGNMENT

     Section 2.1 Present Assignment and License Back. It is intended by each
Borrower that this Assignment constitute a present, absolute assignment of the
Leases, Rents, Contracts, Warranties, Lease Guaranties and Bankruptcy Claims,
and not an assignment for additional security only. Nevertheless, subject to the
terms of this Section 2.1, Section 7.1(h) of the Security Instrument, the Loan
Agreement, the Collection Account Agreement and the Cash Management Agreement,
Lender grants to the Borrowers a revocable license to collect, receive, use and
enjoy the Rents, as well as other sums due under the Contracts, Warranties and
Lease Guaranties. The Borrowers shall hold the Rents, as well as all sums
received pursuant to any Contract, Warranty and Lease Guaranty, or a portion
thereof sufficient to discharge all current sums due on the Debt, in trust for
the benefit of Lender for use in the payment of such sums.

     Section 2.2 Notice to Lessees. To the extent not already being deposited
into the Collection Account pursuant to the Collection Account Agreement, each
Borrower hereby authorizes and directs the lessees named in the Leases or any
other future lessees or occupants of the Property and all Contractors and Lease
Guarantors to pay over to Lender or to such other party as Lender directs all
Rents and all sums due under any Contracts, Warranties and Lease Guaranties upon
receipt from Lender of written notice to the effect that Lender is then the
holder of this Assignment and that an Event of Default (as defined in the Loan
Agreement) exists, and to continue so to do until otherwise notified by Lender.

     Section 2.3 Incorporation by Reference. All representations, warranties,
covenants, conditions and agreements contained in the Loan Agreement and the
other Loan Documents as same may be modified, renewed, substituted or extended
are hereby made a part of this Assignment to the same extent and with the same
force as if fully set forth herein.

                              ARTICLE 3 - REMEDIES

     Section 3.1 Remedies of Lender. Upon the occurrence of an Event of Default
and during the continuation thereof, the license granted to the Borrowers in
Section 2.1 of this Assignment shall automatically be revoked, and Lender shall
immediately be entitled to possession of all Rents and sums due under any
Contracts, Warranties and Lease Guaranties, whether or not Lender enters upon or
takes control of the Property. In addition, Lender may, at

                                       4



its option, without waiving such Event of Default and during the continuation
thereof, without regard to the adequacy of the security for the Debt, either in
person or by agent, nominee or attorney, with or without bringing any action or
proceeding, or by a receiver appointed by a court, dispossess each Borrower and
its agents and servants from the Property, without liability for trespass,
damages or otherwise and exclude each Borrower and its agents or servants wholly
therefrom, and take possession of the Property and all books, records and
accounts relating thereto and have, hold, manage, lease and operate the Property
on such terms and for such period of time as Lender may deem proper and either
with or without taking possession of the Property in its own name, demand, sue
for or otherwise collect and receive all Rents and sums due under all Contracts,
Warranties and Lease Guaranties, including those past due and unpaid with full
power to make from time to time all alterations, renovations, repairs or
replacements thereto or thereof as Lender may deem proper and may apply the
Rents and sums received pursuant to any Contracts, Warranties and Lease
Guaranties to the payment of the following in such order and proportion as
Lender in its sole discretion may determine, any law, custom or use to the
contrary notwithstanding: (a) all expenses of managing and securing the
Property, including, without being limited thereto, the salaries, fees and wages
of a managing agent and such other employees or agents as Lender may deem
necessary, and all expenses of operating and maintaining the Property,
including, without being limited thereto, all taxes, charges, claims,
assessments, water charges, sewer rents and any other liens, and premiums for
all insurance which Lender may deem necessary, and the cost of all alterations,
renovations, repairs or replacements, and all expenses incident to taking and
retaining possession of the Property; and (b) the Debt, together with all costs
and reasonable attorneys' fees. In addition, upon the occurrence of an Event of
Default and during the continuation thereof, Lender, at its option, may (1)
complete any construction on the Property in such manner and form as Lender
deems advisable, (2) exercise all rights and powers of any Borrower under any
Leases, Contracts, Warranties or Lease Guaranties, without any interference or
objection from such Borrower, including, without limitation, the right to
negotiate, execute, cancel, enforce or modify Leases, obtain and evict tenants,
and demand, sue for, collect and receive all Rents from the Property and all
sums due under any Contracts, Warranties and Lease Guaranties, (3) require each
Borrower to pay monthly in advance to Lender, or any receiver appointed to
collect the Rents, the fair and reasonable rental value for the use and
occupancy of such part of the Property as may be in possession of such Borrower
or (4) require each Borrower to vacate and surrender possession of the Property
to Lender or to such receiver and, in default thereof, such Borrower may be
evicted by summary proceedings or otherwise. Additionally, upon the occurrence
of an Event of Default and during the continuation thereof, if and to the extent
permitted by law and the terms of the Contracts and Warranties, Lender may, with
or without entry upon the Property, at its sole option, take over and enjoy the
benefits of the Contracts and Warranties, exercise any Borrower's rights under
the Contracts and Warranties, and perform all acts in the same manner and to the
same extent as such Borrower might do. Lender may also effect new Regulatory
Permits, Contracts and Warranties, cancel or surrender existing Regulatory
Permits, Contracts and Warranties, alter or amend the terms of and renew
Contracts, Warranties and Regulatory Permits, and make concessions to the
Governmental Authorities, the Contractors, warrantors and others. To the extent
permitted by law, Lender hereby releases any and all claims which any Borrower
has or might have against Lender arising out of any such actions by Lender
unless arising from Lender's fraud or willful misconduct.

                                       5



     Section 3.2 Other Remedies. Nothing contained in this Assignment and no act
done or omitted by Lender pursuant to the power and rights granted to Lender
hereunder shall be deemed to be a waiver by Lender of its rights and remedies
under the Loan Agreement, the Note, or the other Loan Documents and this
Assignment is made and accepted without prejudice to any of the rights and
remedies possessed by Lender under the terms thereof. The right of Lender to
collect the Debt and to enforce any other security therefor held by it may be
exercised by Lender either prior to, simultaneously with, or subsequent to any
action taken by it hereunder. Each Borrower hereby absolutely, unconditionally
and irrevocably waives any and all rights to assert any setoff, counterclaim or
crossclaim of any nature whatsoever with respect to its obligations under this
Assignment, the Loan Agreement, the Note, the other Loan Documents or otherwise
with respect to the Loan in any action or proceeding brought by Lender to
collect same, or any portion thereof, or to enforce and realize upon the lien
and security interest created by this Assignment, the Loan Agreement, the Note,
or any of the other Loan Documents (provided, however, that the foregoing shall
not be deemed a waiver of any Borrower's right to assert any compulsory
counterclaim if such counterclaim is compelled under local law or rule of
procedure, nor shall the foregoing be deemed a waiver of any Borrower's right to
assert any claim which would constitute a defense, setoff, counterclaim or
crossclaim of any nature whatsoever against Lender in any separate action or
proceeding).

     Section 3.3 Other Security. Lender may take or release other security for
the payment of the Debt, may release any party primarily or secondarily liable
therefor and may apply any other security held by it to the reduction or
satisfaction of the Debt without prejudice to any of its rights under this
Assignment.

     Section 3.4 Non-waiver. The exercise by Lender of the option granted it in
Section 3.1 of this Assignment and the collection of the Rents and sums due
under the Contracts, Warranties and Lease Guaranties and the application thereof
as herein provided shall not be considered a waiver of any default by any
Borrower under the Note, the Loan Agreement, the Leases, this Assignment or the
other Loan Documents. The failure of Lender to insist upon strict performance of
any term hereof shall not be deemed to be a waiver of any term of this
Assignment. Neither Borrower shall be relieved of its obligations hereunder by
reason of (a) the failure of Lender to comply with any request of any Borrower
or any other party to take any action to enforce any of the provisions hereof or
of the Loan Agreement, the Note or the other Loan Documents, (b) the release
regardless of consideration, of the whole or any part of the Property, or (c)
any agreement or stipulation by Lender extending the time of payment or
otherwise modifying or supplementing the terms of this Assignment, the Loan
Agreement, the Note, or the other Loan Documents. Lender may resort for the
payment of the Debt to any other security held by Lender in such order and
manner as Lender, in its discretion, may elect. Lender may take any action to
recover the Debt, or any portion thereof, or to enforce any covenant hereof
without prejudice to the right of Lender thereafter to enforce its rights under
this Assignment. The rights of Lender under this Assignment shall be separate,
distinct and cumulative and none shall be given effect to the exclusion of the
others. No act of Lender shall be construed as an election to proceed under any
one provision herein to the exclusion of any other provision.

                                       6



Section 3.5 Bankruptcy.

     (a) Upon or at any time after the occurrence of an Event of Default, Lender
shall have the right to proceed in its own name or in the name of any Borrower
in respect of any claim, suit, action or proceeding relating to the rejection of
any Lease, including, without limitation, the right to file and prosecute, to
the exclusion of such Borrower, any proofs of claim, complaints, motions,
applications, notices and other documents, in any case in respect of the lessee
under such Lease under the Bankruptcy Code.

     (b) If there shall be filed by or against any Borrower a petition under the
Bankruptcy Code, and such Borrower, as lessor under any Lease, shall determine
to reject such Lease pursuant to Section 365(a) of the Bankruptcy Code, then
such Borrower shall give Lender not less than ten (10) days' prior notice of the
date on which such Borrower shall apply to the bankruptcy court for authority to
reject the Lease. Lender shall have the right, but not the obligation, to serve
upon such Borrower within such ten-day period a notice stating that (i) Lender
demands that such Borrower assume and assign the Lease to Lender pursuant to
Section 365 of the Bankruptcy Code and (ii) Lender covenants to cure or provide
adequate assurance of future performance under the Lease. If Lender serves upon
such Borrower the notice described in the preceding sentence, such Borrower
shall not seek to reject the Lease and shall comply with the demand provided for
in clause (i) of the preceding sentence within thirty (30) days after the notice
shall have been given, subject to the performance by Lender of the covenant
provided for in clause (ii) of the preceding sentence.

                   ARTICLE 4 - NO LIABILITY,FURTHER ASSURANCES

     Section 4.1 No Liability of Lender. This Assignment shall not be construed
to bind Lender to the performance of any of the covenants, conditions or
provisions contained in any Lease Contract, Warranty or Lease Guaranty or
otherwise impose any obligation upon Lender. Lender shall not be liable to the
Governmental Authorities, the Contractors or others by reason of any default by
any party under the Regulatory Permits, the Contracts or the Warranties. Lender
shall not be liable for any loss sustained by any Borrower resulting from
Lender's failure to let the Property after an Event of Default or from any other
act or omission of Lender in managing the Property after an Event of Default
unless such loss is caused by the willful misconduct or bad faith of Lender.
Lender shall not be obligated to perform or discharge any obligation, duty or
liability under the Leases, the Contracts, the Warranties or any Lease
Guaranties or under or by reason of this Assignment and each Borrower shall
indemnify Lender for, and hold Lender harmless from, any and all liability, loss
or damage which may or might be incurred under the Leases, any Lease Guaranties
or under or by reason of this Assignment and from any and all claims and demands
whatsoever, including the defense of any such claims or demands which may be
asserted against Lender by reason of any alleged obligations and undertakings on
its part to perform or discharge any of the terms, covenants or agreements
contained in the Leases or any Lease Guaranties. Should Lender incur any such
liability, the amount thereof, including costs, expenses and reasonable
attorneys' fees, shall be secured by this Assignment and by the Security
Instrument and the other Loan Documents and each Borrower shall reimburse Lender
therefor immediately upon demand and upon the failure of such Borrower to do so
Lender may, at its option, declare all sums secured by this Assignment and by
the Security Instrument and the other

                                       7



Loan Documents immediately due and payable. This Assignment shall not operate to
place any obligation or liability for the control, care, management or repair of
the Property upon Lender, nor for the carrying out of any of the terms and
conditions of the Leases or any Lease Guaranties; nor shall it operate to make
Lender responsible or liable for any waste committed on the Property by the
tenants or any other parties, or for any dangerous or defective condition of the
Property including, without limitation, the presence of any Hazardous Substances
(as defined in the Security Instrument), or for any negligence in the
management, upkeep, repair or control of the Property resulting in loss or
injury or death to any tenant, licensee, employee or stranger.

     Section 4.2 No Mortgagee in Possession. Nothing herein contained shall be
construed as constituting Lender a "mortgagee in possession" in the absence of
the taking of actual possession of the Property by Lender. In the exercise of
the powers herein granted Lender, no liability shall be asserted or enforced
against Lender, all such liability being expressly waived and released by each
Borrower.

     Section 4.3 Further Assurances. Each Borrower will, at its cost, and
without expense to Lender, do, execute, acknowledge and deliver all and every
such further acts, conveyances, assignments, notices of assignments, transfers
and assurances as Lender shall, from time to time, reasonably require for the
better assuring, conveying, assigning, transferring and confirming unto Lender
the property and rights hereby assigned or intended now or hereafter so to be,
or which such Borrower may be or may hereafter become bound to convey or assign
to Lender, or for carrying out the intention or facilitating the performance of
the terms of this Assignment or for filing, registering or recording this
Assignment and, on demand, will execute and deliver and hereby authorizes Lender
to execute in the name of such Borrower to the extent Lender may lawfully do so,
one or more financing statements, chattel mortgages or comparable security
instruments, to evidence more effectively the lien and security interest hereof
in and upon the Leases.

     Section 4.4 Copies Furnished. Each Borrower shall, upon the reasonable
request of Lender, furnish Lender with a complete list of all Contracts and
Warranties. Further, if requested, each Borrower shall deliver to Lender
executed or certified copies of any management agreement, and all Regulatory
Permits, Contracts and Warranties and other written agreements, correspondence
and memoranda between such Borrower (and its predecessors in title) and any
manager, the Contractors, the Governmental Authorities and others, setting forth
the contractual or other arrangements between them. Such requests may be made at
any reasonable time. Monthly requests, or more frequent requests if made after
the occurrence of an Event of Default, shall be deemed reasonable.

                    ARTICLE 5 - MISCELLANEOUS PROVISIONS

     Section 5.1 Definitions. Capitalized terms used and not defined herein
shall have the respective meaning ascribed thereto in the Loan Agreement.

     Section 5.2 Conflict of Terms. In case of any conflict between the terms of
this Assignment and the terms of the Loan Agreement, the terms of the Loan
Agreement shall prevail.

                                        8



     Section 5.3 No Oral Change. This Assignment and any provisions hereof may
not be modified, amended, waived, extended, changed, discharged or terminated
orally, or by any act or failure to act on the part of any Borrower or
Lender, but only by an agreement in writing signed by the party against whom the
enforcement of any modification, amendment, waiver, extension, change, discharge
or termination is sought.

     Section 5.4 General Definitions. All capitalized terms not defined herein
shall have the respective meanings set forth in the Loan Agreement. Unless
the context clearly indicates a contrary intent or unless otherwise specifically
provided herein, words used in this Assignment may be used interchangeably in
singular or plural form and the word "Borrower" shall mean "each Borrower and
any subsequent owner or owners of the Property or any part thereof or interest
therein," the word "Lender" shall mean "Lender and any subsequent holder of the
Note, the word "Note" shall mean "the Note and any other evidence of
indebtedness secured by the Loan Agreement," the word "Property" shall include
any portion of the Property and any interest therein, the phrases "attorneys'
fees," "legal fees" and "counsel fees" shall include any and all attorney's,
paralegal and law clerk fees and disbursements, including, but not limited to,
fees and disbursements at the pre-trial, trial and appellate levels incurred or
paid by Lender in protecting its interest in the Property, the Leases and the
Rents and enforcing its rights hereunder; whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice versa.

     Section 5.5 Inapplicable Provisions. If any term, covenant or condition of
this Assignment is held to be invalid, illegal or unenforceable in any
respect,this Assignment shall be construed without such provision.

     Section 5.6 Governing Law. This Assignment shall be governed by and
construed in accordance with the laws of the state in which the Property is
located.

     Section 5.7 Termination of Assignment. Upon payment in full of the Debt,
this Assignment shall become and be void and of no effect.

     Section 5.8 Notices. All notices or other written communications hereunder
shall be delivered in accordance with Section 11.6 of the Loan Agreement.

     Section 5.9 Waiver of Trial by Jury. EACH BORROWER HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING
DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THE NOTE, THE APPLICATION FOR
THE LOAN EVIDENCED BY THE NOTE, THIS ASSIGNMENT, THE NOTE, OR THE OTHER LOAN
DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS
OR AGENTS IN CONNECTION THEREWITH. THIS WAVIER OF RIGHT TO TRIAL BY JURY IS
GIVEN KNOWINGLY AND VOLUNTARILY BY EACH BORROWER, AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE. LENDER IS EACH

                                       9



HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS
CONCLUSIVE EVIDENCE OF THIS WAIVER.

     Section 5.10 Exculpation. The provisions of Section 11.22 of the Loan
Agreement are hereby incorporated by reference into this Assignment to the same
extent and with the same force as if fully set forth herein.

     Section 5.11 Successors and Assigns. This Assignment shall be binding upon
and inure to the benefit of each Borrower and Lender and their respective
successors and assigns forever.

     Section 5.12 Headings, Etc. The headings and captions of various paragraphs
of this Assignment are for convenience of reference only and are not to be
construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.

     Section 5.13 Waiver of Notice. To the extent permitted by applicable law,
neither Borrower shall be entitled to any notices of any nature whatsoever from
Lender except with respect to matters for which this Assignment specifically and
expressly provides for the giving of notice by Lender to such Borrower and
except with respect to matters for which Lender is required by applicable law to
give notice, and each Borrower hereby expressly waives the right to receive any
notice from Lender with respect to any matter for which this Assignment does not
specifically and expressly provide for the giving of notice by Lender to such
Borrower.

     Section 5.14 Entire Agreement. The Note, the Loan Agreement, the Security
Instrument, this Assignment and the other Loan Documents constitute the entire
understanding and agreement between the Borrowers and Lender with respect to the
transactions arising in connection with the Debt and supersede all prior written
or oral understandings and agreements between the Borrowers and Lender with
respect thereto. Each Borrower hereby acknowledges that, except as incorporated
in writing in the Note, the Loan Agreement, the Security Instrument, this
Assignment and the other Loan Documents, there are not, and were not, and no
persons are or were authorized by Lender to make, any representations,
understandings, stipulations, agreements or promises, oral or written, with
respect to the transaction which is the subject of the Note, the Loan Agreement,
this Security Instrument, this Assignment and the other Loan Documents.

     Section 5.15 Secondary Market. Lender may sell, transfer and deliver the
Note and assign the Security Instrument, this Assignment and the other Loan
Documents to one or more investors in the secondary mortgage market
("Investors"). In connection with such sale, Lender may retain or assign
responsibility for servicing the Loan, including the Note, the Security
Instrument, this Assignment and the other Loan Documents, or may delegate some
or all of such responsibility and/or obligations to a servicer including, but
not limited to, any subservicer or master servicer, on behalf of the Investors.
All references to Lender herein shall refer to and include any such servicer to
the extent applicable.

     Section 5.16 Cross-Collateralization. Without limitation to any other right
or remedy provided to Lender in this Assignment or any of the other Loan
Documents, each Borrower acknowledges and agrees that (i) upon the occurrence of
an Event of Default, to the

                                       10



fullest extent permitted by law, Lender shall have the right to pursue all of
its rights and remedies in one proceeding, or separately and independently in
separate proceedings which Lender, in its sole and absolute discretion, shall
determine from time to time, (ii) Lender is not required to marshall assets,
sell any collateral for the Loan in any inverse order of alienation, or be
subjected to any "one action" or "election of remedies" law or rule, (iii) the
exercise by Lender of any remedies against any collateral for the Loan will not
impede Lender from subsequently or simultaneously exercising remedies against
other collateral for the Loan; (iv) all Liens and other rights, remedies and
privileges provided to Lender in the Loan Documents or otherwise shall remain in
full force and effect until Lender has exhausted all of its remedies against the
collateral for the Loan and all of the collateral for the Loan has been
foreclosed, sold and/or otherwise realized upon in satisfaction of the Loan; and
(v) all of the Properties shall remain security for the performance of all of
the obligations of each Borrower hereunder, under the Note and under any of the
other Loan Documents.

     Section 5.17 Joint and Several Liability. If more than one Person has
executed this Assignment as "Borrower," the representations, covenants,
warranties and obligations of all such Persons hereunder shall be joint and
several. Each Borrower further acknowledges and agrees that it shall be jointly
and severally liable for the obligations of all Other Borrowers under the Loan
Documents.

                         [NO FURTHER TEXT ON THIS PAGE]

                                       11



                  IN WITNESS WHEREOF, each Borrower has executed under seal this
Assignment the day and year first above written.


                                   THI OF OHIO REAL ESTATE HOLDING
                                   COMPANY, LLC, a Delware limited liability
                                   company




                                   By: /s/ JOHN E. BAUER           (SEAL)
                                      -----------------------------
                                      Name: John E. Bauer
                                      Title: Vice-President




                                   THI OF OHIO AT COLUMBUS, LLC,a
                                   Delaware limited liability company




                                   By: /s/ JOHN E. BAUER           (SEAL)
                                      -----------------------------
                                      Name: John E. Bauer
                                      Title: Vice-President



                                 ACKNOWLEDGMENT

   STATE OF NEW YORK                    )
                                        ) ss:
   COUNTY OF NEW YORK                   )


     On October 30, 2002, before me, a Notary Public in and for said state,
personally appeared John E. Bauer, personally known to me or proved to me on the
basis of satisfactory evidence to be the person whose name is subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in
his/her/their capacity, and that by his/her/their signature on the instrument,
the person, or the entity upon behalf of which the person acted, executed the
instrument.


                                              /s/ KATINA NASH
                                              ----------------------------
                                              Notary Public:

                                              My commission expires: 6-30-03


                                 ACKNOWLEDGMENT    [Notary Seal]

   STATE OF NEW YORK                    )
                                        ) ss:
   COUNTY OF NEW YORK                   )


     On October 30, 2002, before me, a Notary Public in and for said state,
personally appeared John E. Bauer, personally known to me or proved to me on the
basis of satisfactory evidence to be the person whose name is subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in
his/her/their capacity, and that by his/her/their signature on the instrument,
the person, or the entity upon behalf of which the person acted, executed the
instrument.

                                              /s/ KATINA NASH
                                              ----------------------------
                                              Notary Public:

                                              My commission expires: 6-30-03

   THIS INSTRUMENT PREPARED BY,
   RECORDING REQUESTED BY AND                 [Notary Seal]
   WHEN RECORDED RETURN TO:

   David W. Forti, Esquire
   Dechert
   4000 Bell Atlantic Tower
   1717 Arch Street
   Philadelphia, PA  19103

EX-10.2.5

                                                                  EXHIBIT 10.2.5

THIS INSTRUMENT PREPARED BY,
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:

David W. Forti, Esquire
Dechert
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103

- --------------------------------------------------------------------------------
                    Space Above This Line For Recorder's Use



           OPEN-END FEE AND LEASEHOLD MORTGAGE AND SECURITY AGREEMENT

                                       by

                  THI OF OHIO REAL ESTATE HOLDING COMPANY, LLC

                                       and

                          THI OF OHIO AT COLUMBUS, LLC,
                   each a Delaware limited liability company,
                          and each having an address at
                          4660 Trindle Road, Suite 103
                          Camp Hill, Pennsylvania 17011
                          (collectively, as mortgagor)

                                       to

                       VENTAS REALTY, LIMITED PARTNERSHIP,
                         a Delaware limited partnership,
                              having an address at
                         4360 Brownsboro Road, Suite 115
                           Louisville, Kentucky 40207
                                 (as mortgagee)



            (THE MAXIMUM PRINCIPAL AMOUNT NOT TO EXCEED $60,000,000)


Property:    Columbus Quality Care
             4301 Clime Road
             Columbus, OH



           OPEN-END FEE AND LEASEHOLD MORTGAGE AND SECURITY AGREEMENT

         THIS OPEN-END FEE AND LEASEHOLD MORTGAGE AND SECURITY AGREEMENT (as
amended, restated, replaced, supplemented or otherwise modified from time to
time, this "Security Instrument") is made as of November 1, 2002, by THI OF OHIO
REAL ESTATE HOLDING COMPANY, LLC (the "Fee Owner") and THI OF OHIO AT COLUMBUS,
LLC (the "Operator"), each a Delaware limited liability company, and each having
its principal place of business at 4660 Trindle Road, Suite 103, Camp Hill,
Pennsylvania 17011, collectively as mortgagor (Fee Owner and Operator are
referred to herein individually as, a "Borrower" and collectively as, the
"Borrowers") for the benefit of VENTAS REALTY, LIMITED PARTNERSHIP, a Delaware
limited partnership, having an address at 4360 Brownsboro Road, Suite 115,
Louisville, Kentucky 40207, as mortgagee (together with its successors and
assigns, "Lender").

                               W I T N E S S E T H

         WHEREAS, this Security Instrument is given to secure a loan (the
"Loan") in the maximum principal sum of FIFTY FIVE MILLION AND NO/100 DOLLARS
($55,000,000.00) or so much thereof as may be advanced pursuant to that certain
Loan Agreement dated as of the date hereof among the Borrowers, certain
Affiliates of the Borrowers named therein (collectively, the "Other Borrowers")
and Lender (as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time, the "Loan Agreement") and evidenced by
that certain Promissory Note dated the date hereof made by the Borrowers and the
Other Borrowers to Lender (such Note, together with all extensions, renewals,
replacements, components, restatements or modifications thereof being
hereinafter referred to as the "Note");

         WHEREAS, each Borrower desires to secure the payment of the Debt (as
defined in the Loan Agreement) and the performance of all of its obligations
under the Note, the Loan Agreement and the other Loan Documents (as defined
below); and

         WHEREAS, this Security Instrument is given pursuant to the Loan
Agreement, and payment, fulfillment, and performance by each Borrower of its
obligations thereunder and under the other Loan Documents are secured hereby,
and each and every term and provision of the Loan Agreement and the Note,
including the rights, remedies, obligations, covenants, conditions, agreements,
indemnities, representations and warranties of the parties therein, are hereby
incorporated by reference herein as though set forth in full and shall be
considered a part of this Security Instrument (the Loan Agreement, the Note,
this Security Instrument, that certain Assignment of Leases, Rents and Contracts
of even date herewith made by the Borrowers in favor of Lender (the "Assignment
of Leases") and all other documents evidencing or securing the Debt or delivered
in connection with the making of the Loan are hereinafter referred to
collectively as the "Loan Documents").

         NOW THEREFORE, in consideration of the making of the Loan by Lender and
the covenants, agreements, representations and warranties set forth in this
Security Instrument:



                         ARTICLE 1 - GRANTS OF SECURITY

     Section 1.1   Property Mortgaged. Each Borrower does hereby irrevocably
mortgage, grant, bargain, sell, pledge, assign, warrant, transfer and convey to
Lender and its successors and assigns, with Power of Sale, all of its right,
title and interest in the following property, rights, interests and estates now
owned, or hereafter acquired by such Borrower (collectively, the "Property").

          (a)      Land. (i) The real property described in Exhibit A attached
     hereto and made a part hereof (the "Land") including, without limitation,
     all As Extracted Collateral (as defined in Article 9 of the Uniform
     Commercial Code in the jurisdiction where the Land is located (as the same
     may be amended, modified or revised from time to time, the "Uniform
     Commercial Code")), all minerals, oil, gas and other hydrocarbon substances
     on, in or under the Land and (ii) Operator's leasehold interest created by
     that certain Lease of even date herewith by and between Fee Owner and
     Operator (as amended, restated, replaced, supplemented or otherwise
     modified from time to time, the "Operating Lease"), together with all
     right, title and interest in and to any right pursuant to Section 365(h) of
     the Bankruptcy Code (as defined below) or any successor to such Section (x)
     to possession of any statutory term of years derived from or incident to
     the Operating Lease or (y) to treat the Operating Lease as terminated;


          (b)      Additional Land. All additional lands, estates and
     development rights hereafter acquired by such Borrower for use in
     connection with the Land and the development of the Land and all additional
     lands and estates therein which may, from time to time, by supplemental
     mortgage or otherwise be expressly made subject to the lien of this
     Security Instrument;

          (c)      Improvements.  The buildings, structures, fixtures,
     additions, enlargements, extensions, modifications, repairs, replacements
     and improvements now or hereafter erected or located on the Land
     (collectively, the "Improvements");

          (d)      Easements.  All easements, rights-of-way or use, rights,
     strips and gores of land, streets, ways, alleys, passages, sewer rights,
     water, water courses, water rights and powers, air rights and development
     rights, and all estates, rights, titles, interests, privileges, liberties,
     servitudes, tenements, hereditaments and appurtenances of any nature
     whatsoever, in any way now or hereafter belonging, relating or pertaining
     to the Land and the Improvements and the reversion and reversions,
     remainder and remainders, and all land lying in the bed of any street, road
     or avenue, opened or proposed, in front of or adjoining the Land, to the
     center line thereof and all the estates, rights, titles, interests, dower
     and rights of dower, curtesy and rights of curtesy, property, possession,
     claim and demand whatsoever, both at law and in equity, of such Borrower
     of, in and to the Land and the Improvements and every part and parcel
     thereof, with the appurtenances thereto;

          (e)      Equipment. All "equipment," as such term is defined in the
     Uniform Commercial Code, now owned or hereafter acquired by such Borrower,
     which is used at or in connection with the Improvements or the Land or is
     located thereon or therein (including, but not limited to, all Software (as
     defined in the Uniform Commercial Code),

                                       2



     appliances, machinery, equipment, furniture, furnishings, and electronic
     data-processing and other office equipment now owned or hereafter acquired
     by such Borrower (including, without limitation, all beds, linens, radios,
     televisions, carpeting, telephones, cash registers, computers, lamps,
     glassware, restaurant and kitchen equipment, all medical, dental,
     rehabilitation, therapeutic and paramedic equipment and supplies), and any
     and all additions, substitutions and replacements of any of the foregoing),
     together with all attachments, components, parts, equipment, accessions and
     accessories installed thereon or affixed thereto (collectively, the
     "Equipment"). Notwithstanding the foregoing, Equipment shall not include
     any property belonging to tenants under leases except to the extent that
     any Borrower shall have any right or interest therein;

          (f)      Fixtures.  All Equipment and Goods (as defined in the Uniform
     Commercial Code) now owned, or the ownership of which is hereafter
     acquired, by such Borrower which is so related to the Land and Improvements
     forming part of the Property that it is deemed fixtures or real property
     under the law of the particular state in which the Land is located,
     including, without limitation, all building or construction materials
     intended for construction, reconstruction, alteration or repair of or
     installation on the Land and Improvements, construction equipment,
     appliances, machinery, plant equipment, fittings, apparatuses, fixtures and
     other items now or hereafter attached to, installed in or used in
     connection with (temporarily or permanently) any of the Improvements or the
     Land, including, but not limited to, engines, devices for the operation of
     pumps, pipes, plumbing, cleaning, call and sprinkler systems, fire
     extinguishing apparatuses and equipment, heating, ventilating, plumbing,
     laundry, incinerating, electrical, air conditioning and air cooling
     equipment and systems, gas and electric machinery, appurtenances and
     equipment, pollution control equipment, security systems, disposals,
     dishwashers, refrigerators and ranges, recreational equipment and
     facilities of all kinds, and water, gas, electrical, storm and sanitary
     sewer facilities, utility lines and equipment (whether owned individually
     or jointly with others, and, if owned jointly, to the extent of such
     Borrower's interest therein) and all other utilities whether or not
     situated in easements, all water tanks, water supply, water power sites,
     fuel stations, fuel tanks, fuel supply, and all other structures, together
     with all accessions, appurtenances, additions, replacements, betterments
     and substitutions for any of the foregoing and the proceeds thereof
     (collectively, the "Fixtures"). Notwithstanding the foregoing, "Fixtures"
     shall not include any property which tenants are entitled to remove
     pursuant to leases except to the extent that any Borrower shall have any
     right or interest therein;

          (g)      Personal Property. All "accounts" (as defined in the Uniform
     Commercial Code), Chattel Paper (including Electronic Chattel Paper and
     Tangible Chattel Paper), Commercial Tort Claims, Commingled Goods, Deposit
     Accounts, Documents, General Intangibles, Goods, Instruments, Inventory,
     Investment Property, Letter of Credit Rights, Payment Intangibles,
     Supporting Obligations (as such terms are defined in the Uniform Commercial
     Code) , furniture, furnishings, objects of art, machinery, goods, tools,
     supplies, appliances, contract rights, accounts receivable, franchises,
     licenses, certificates and permits (including any Regulatory Permits), and
     all other personal property of any kind or character whatsoever other than
     Fixtures, which are now or hereafter owned by such Borrower and which are
     located within or about or otherwise relate or pertain to the

                                       3








     Land and the Improvements, together with all accessories, accessions,
     replacements and substitutions thereto or therefor and the proceeds thereof
     (collectively, together with the Equipment and the Proceeds, the "Personal
     Property"), and the right, title and interest of such Borrower in and to
     any of the Personal Property which may be subject to any security interests
     superior in lien to the lien of this Security Instrument and all proceeds
     and products of the above;

          (h)      Leases and Rents.  All leases and other agreements affecting
     the use, enjoyment or occupancy of the Land and the Improvements heretofore
     or hereafter entered into (including, without limitation, the Operating
     Lease, all patient admissions and resident care agreements, all lettings,
     subleases, licenses, concessions, tenancies and other occupancy agreements
     covering or encumbering all or any portion of the Property), whether before
     or after the filing by or against such Borrower of any petition for relief
     under 11 U.S.C. (S)101 et seq., as the same may be amended from time to
     time (the "Bankruptcy Code") (collectively, the "Leases") and all right,
     title and interest of such Borrower, its successors and assigns therein and
     thereunder, including, without limitation, cash or securities deposited
     thereunder to secure the performance by the lessees of their obligations
     thereunder and all rents, additional rents, revenues (including, without
     limitation, (i) rights to payment earned under the Leases for space in the
     Improvements for the operation of ongoing businesses, such as restaurants,
     news stands, barber shops, beauty shops and pharmacies and (ii) all other
     income, consideration, profits and benefits of any nature arising from the
     ownership, possession, use or operation of the Property, including, without
     limitation Patient Revenues and Self-Pay Receivables), issues and profits
     (including all oil and gas or other mineral royalties and bonuses) from the
     Land and the Improvements whether paid or accruing before or after the
     filing by or against such Borrower of any petition for relief under the
     Bankruptcy Code (collectively, the "Rents") and all proceeds from the sale
     or other disposition of the Leases and the right to receive and apply the
     Rents to the payment of the Debt;

          (i)      Condemnation Awards. All awards or payments, including
     interest thereon, which may heretofore and hereafter be made with respect
     to the Property, whether from the exercise of the right of eminent domain
     (including but not limited to any transfer made in lieu of or in
     anticipation of the exercise of the right), or for a change of grade, or
     for any other injury to or decrease in the value of the Property;

          (j)      Insurance Proceeds.  All proceeds in respect of the Property
     under any insurance policies covering the Property, including, without
     limitation, the right to receive and apply the proceeds of any insurance,
     judgments, or settlements made in lieu thereof, for damage to the Property;

          (k)      Tax Certiorari.  All refunds, rebates or credits in
     connection with reduction in real estate taxes and assessments charged
     against the Property as a result of tax certiorari or any applications or
     proceedings for reduction;

          (l)      Rights. The right, in the name and on behalf of such
     Borrower, to appear in and defend any action or proceeding brought with
     respect to the Property and to commence any action or proceeding to protect
     the interest of Lender in the Property;

                                       4



          (m)      Agreements. All agreements, contracts, certificates,
     instruments, franchises, permits, licenses, plans, specifications and other
     documents, now or hereafter entered into, and all rights therein and
     thereto, respecting or pertaining to the use, occupation, construction,
     management or operation of the Land and any part thereof and any
     Improvements or respecting any business or activity conducted on the Land
     and any part thereof and all right, title and interest of either Borrower
     therein and thereunder, including, without limitation, the right, upon the
     happening of any default hereunder, to receive and collect any sums payable
     to either Borrower thereunder;

          (n)      Trademarks.  All tradenames, trademarks, servicemarks, logos,
     copyrights, goodwill, books and records and all other general intangibles
     relating to or used in connection with the operation of the Property;

          (o)      Proceeds. All proceeds (including, without limitation, all
     "proceeds" as defined in the Uniform Commercial Code) of any of the
     foregoing, including, without limitation, proceeds of insurance and
     condemnation awards, whether cash, liquidation or other claims or otherwise
     (collectively, the "Proceeds"); and

          (p)      Other Rights.  Any and all other rights of such Borrower in
     and to the items set forth in Subsections (a) through (o) above.

     AND without limiting any of the other provisions of this Security
Instrument, to the extent permitted by applicable law, each Borrower expressly
grants to Lender, as secured party, a security interest in the portion of the
Property which is or may be subject to the provisions of the Uniform Commercial
Code which are applicable to secured transactions; it being understood and
agreed that the Improvements and Fixtures are part and parcel of the Land (the
Land, the Improvements and the Fixtures collectively referred to as the "Real
Property") appropriated to the use thereof and, whether affixed or annexed to
the Real Property or not, shall for the purposes of this Security Instrument be
deemed conclusively to be real estate and mortgaged hereby.

     Section 1.2  Assignment of Rents. Each Borrower hereby absolutely and
unconditionally assigns to Lender all of its right, title and interest in and to
all current and future Leases and Rents; it being intended by each Borrower that
this assignment constitutes a present, absolute assignment and not an assignment
for additional security only. Nevertheless, subject to the terms of the Loan
Agreement, Collection Account Agreement, Cash Management Agreement, the
Assignment of Leases and Section 7.1(h) of this Security Instrument, Lender
grants to the Borrowers a revocable license to collect, receive, use and enjoy
the Rents. The Borrowers shall hold the Rents, or a portion thereof sufficient
to discharge all current sums due on the Debt, for use in the payment of such
sums.

     Section 1.3  Security Agreement. This Security Instrument is both a real
property mortgage and a "security agreement" within the meaning of the Uniform
Commercial Code. The Property includes both real and personal property and all
other rights and interests, whether tangible or intangible in nature, of each
Borrower in the Property. By executing and delivering this Security Instrument,
each Borrower hereby grants to Lender, as security for the Obligations
(hereinafter defined), a security interest in the Fixtures, the Equipment, the
Personal Property and

                                       5



other property constituting the Property to the fullest extent that security
interests in such property may be granted under and subject to the Uniform
Commercial Code (said portion of the Property so subject to the Uniform
Commercial Code being called the "UCC Collateral"). If an Event of Default shall
occur and be continuing, Lender, in addition to any other rights and remedies
which it may have, shall have and may exercise immediately and without demand,
any and all rights and remedies granted to a secured party upon default under
the Uniform Commercial Code, including, without limiting the generality of the
foregoing, the right to take possession of the UCC Collateral or any part
thereof, and to take such other measures as Lender may deem necessary for the
care, protection and preservation of the UCC Collateral. Upon request or demand
of Lender after the occurrence and during the continuance of an Event of
Default, each Borrower shall, at its expense, assemble the UCC Collateral and
make it available to Lender at a convenient place (at the Land if tangible
property) reasonably acceptable to Lender. Each Borrower shall pay to Lender on
demand any and all expenses, including reasonable legal expenses and attorneys'
fees, incurred or paid by Lender in protecting its interest in the UCC
Collateral and in enforcing its rights hereunder with respect to the UCC
Collateral after the occurrence and during the continuance of an Event of
Default. Any notice of sale, disposition or other intended action by Lender with
respect to the UCC Collateral sent to either Borrower in accordance with the
provisions hereof at least ten (10) business days prior to such action, shall,
except as otherwise provided by applicable law, constitute reasonable notice to
such Borrower. The proceeds of any disposition of the UCC Collateral, or any
part thereof, may, except as otherwise required by applicable law, be applied by
Lender to the payment of the Debt in such priority and proportions as Lender in
its discretion shall deem proper. The principal place of business of each
Borrower (Debtor) is as set forth on page one hereof and the address of Lender
(Secured Party) is as set forth on page one hereof. Each Borrower's location,
for purposes of Section 9-307 of the Uniform Commercial Code, such Borrower's
state of formation/incorporation/organization as set forth on page one hereof
("Borrower's Jurisdiction").

     Section 1.4  Fixture Filing. Certain of the Property is or will become
"fixtures" (as that term is defined in the Uniform Commercial Code) on the Land,
described or referred to in this Security Instrument, and this Security
Instrument, upon being filed for record in the real estate records of the county
wherein such Land is situated, shall operate also as a financing statement filed
as a fixture filing in accordance with the applicable provisions of said Uniform
Commercial Code upon such of the Property that is or may become fixtures.
Alternatively, and/or in addition to the foregoing, Lender may file a separate
financing statement as a fixture filing to evidence the lien granted hereby. The
name of the record owner of the real property described in Exhibit A is THI OF
OHIO REAL ESTATE HOLDING COMPANY, LLC.

     Section 1.5  Pledges of Monies Held. Each Borrower hereby pledges to Lender
any and all monies now or hereafter held by Lender or on behalf of Lender in
connection with the Loan, including, without limitation, any sums deposited in
the Accounts (as defined in the Cash Management Agreement) and Net Proceeds, as
additional security for the Obligations until expended or applied as provided in
this Security Instrument.

                                       6



                               CONDITIONS TO GRANT

         TO HAVE AND TO HOLD the above granted and described Property,
including, but not limited to, Operator's leasehold interest in the Property
unto and to the use and benefit of Lender and its successors and assigns,
forever;

         WITH POWER OF SALE, to secure payment to Lender of the Obligations at
the time and in the manner provided for its payment in the Note and in this
Security Instrument;

         PROVIDED, HOWEVER, these presents are upon the express condition that,
if the Borrowers and the Other Borrowers shall well and truly pay to Lender the
Debt at the time and in the manner provided in the Note, the Loan Agreement and
this Security Instrument, shall well and truly perform the Other Obligations as
set forth in this Security Instrument and shall well and truly abide by and
comply with each and every covenant and condition set forth herein and in the
Note, the Loan Agreement and the other Loan Documents, these presents and the
estate hereby granted shall cease, terminate and be void; provided, however,
that each Borrower's obligation to indemnify and hold harmless Lender pursuant
to the provisions hereof shall survive any such payment or release.

                    ARTICLE 2 - DEBT AND OBLIGATIONS SECURED

     Section 2.1  Debt. This Security Instrument and the grants, assignments and
transfers made in Article 1 are given for the purpose of securing the Debt which
by its definition (as set forth in the Loan Agreement) includes, but is not
limited to, the obligations of Borrower and the Other Borrowers to pay to Lender
the principal and interest owing pursuant to the terms and conditions of the
Note.

     Section 2.2  Other Obligations. This Security Instrument and the grants,
assignments and transfers made in Article 1 are also given for the purpose of
securing the following (the "Other Obligations"):

          (a) the performance of all other obligations of each Borrower
     contained herein;

          (b) the performance of each obligation of each Borrower and the Other
     Borrowers contained in the Loan Agreement and any other Loan Document; and

          (c) the performance of each obligation of each Borrower and the Other
     Borrowers contained in any renewal, extension, amendment, modification,
     consolidation, change of, or substitution or replacement for, all or any
     part of the Note, the Loan Agreement or any other Loan Document.

     Section 2.3  Debt and Other Obligations. Each Borrower's obligations for
the payment of the Debt and the performance of the Other Obligations shall be
referred to collectively herein as the "Obligations."

                                       7



                         ARTICLE 3 - BORROWER COVENANTS

     Each Borrower covenants and agrees that:

     Section 3.1  Payment of Debt. Borrower will pay the Debt at the time and in
the manner provided in the Loan Agreement, the Note and the Loan Documents.

     Section 3.2  Incorporation by Reference. All the covenants, conditions and
agreements contained in (a) the Loan Agreement, (b) the Note and (c) all and
any of the other Loan Documents, are hereby made a part of this Security
Instrument to the same extent and with the same force as if fully set forth
herein.

     Section 3.3  Insurance. Borrower shall obtain and maintain, or cause to be
maintained, in full force and effect at all times insurance with respect to
Borrower and the Property as required pursuant to the Loan Agreement.

     Section 3.4  Maintenance of Property. Borrower shall cause the Property to
be maintained in a good and safe condition and repair. The Improvements, the
Fixtures, the Equipment and the Personal Property shall not be removed,
demolished or materially altered (except for normal replacement of the Fixtures,
the Equipment or the Personal Property, tenant finish and refurbishment of the
Improvements) without the reasonable consent of Lender, which consent shall not
be unreasonably withheld. Borrower shall promptly repair, replace or rebuild any
part of the Property which may be destroyed by any Casualty or become damaged,
worn or dilapidated or which may be affected by any Condemnation, and shall
complete and pay for any structure at any time in the process of construction or
repair on the Land.

     Section 3.5  Waste. Borrower shall not commit or suffer any material waste
of the Property or make any change in the use of the Property which will in any
way materially increase the risk of fire or other hazard arising out of the
operation of the Property, or take any action that might invalidate or allow the
cancellation of any Policy, or do or permit to be done thereon anything that may
in any way materially impair the value of the Property or the security of this
Security Instrument. Borrower will not, without the prior written consent of
Lender, permit any drilling or exploration for or extraction, removal, or
production of any minerals from the surface or the subsurface of the Land,
regardless of the depth thereof or the method of mining or extraction thereof.

                                       8



     Section 3.6  Payment for Labor and Materials.

          (a)  Borrower will promptly pay when due all bills and costs for
     labor, materials, and specifically fabricated materials ("Labor and
     Material Costs") incurred in connection with the Property and never permit
     to exist beyond the due date thereof in respect of the Property or any part
     thereof any lien or security interest, even though inferior to the liens
     and the security interests hereof, and in any event never permit to be
     created or exist in respect of the Property or any part thereof any other
     or additional lien or security interest other than the liens or security
     interests hereof except for the Permitted Encumbrances.

          (b)  After prior written notice to Lender, Borrower, at its own
     expense, may contest by appropriate legal proceeding, promptly initiated
     and conducted in good faith and with due diligence, the amount or validity
     or application in whole or in part of any of the Labor and Material Costs,
     provided that (i) no Event of Default has occurred and is continuing under
     the Loan Agreement, the Note, this Security Instrument or any of the other
     Loan Documents, (ii) Borrower is permitted to do so under the provisions of
     any other mortgage, deed of trust or deed to secure debt affecting the
     Property, (iii) such proceeding shall suspend the collection of the Labor
     and Material Costs from Borrower and from the Property or Borrower shall
     have paid all of the Labor and Material Costs under protest, (iv) such
     proceeding shall be permitted under and be conducted in accordance with the
     provisions of any other instrument to which Borrower is subject and shall
     not constitute a default thereunder, (v) neither the Property nor any part
     thereof or interest therein will be in danger of being sold, forfeited,
     terminated, canceled or lost, and (vi) Borrower shall have furnished the
     security as may be required in the proceeding, or as may be reasonably
     requested by Lender to insure the payment of any contested Labor and
     Material Costs, together with all interest and penalties thereon.

     Section 3.7  Performance of Other Agreements. Borrower shall observe and
perform each and every term, covenant and provision to be observed or performed
by Borrower pursuant to the Loan Agreement, any other Loan Document and any
other agreement or recorded instrument affecting or pertaining to the Property
and any amendments, modifications or changes thereto.

     Section 3.8  Change of Name, Identity, Structure or Address. Borrower shall
not change Borrower's name, identity (including its trade name or names),
principal place of business, organization (from that on page one hereof),
Borrower's Jurisdiction, or, if not an individual, Borrower's corporate,
partnership or other structure without notifying Lender of such change in
writing at least thirty (30) days prior to the effective date of such change
and, in the case of a change in Borrower's structure or Borrower's Jurisdiction,
without first obtaining the prior written consent of Lender. Borrower shall
execute and deliver to Lender, prior to or contemporaneously with the effective
date of any such change, any financing statement or financing statement change
required by Lender to establish or maintain the validity, perfection and
priority of the security interest granted herein. At the request of Lender,
Borrower shall execute a certificate in form satisfactory to Lender listing the
trade names under which Borrower intends to operate the Property, and
representing and warranting that Borrower does business under no other trade
name with respect to the Property.

                                       9



                     ARTICLE 4 - OBLIGATIONS AND RELIANCES

     Section 4.1  Relationship of Borrower and Lender. The relationship between
any Borrower and Lender is solely that of debtor and creditor, and Lender has no
fiduciary or other special relationship with any Borrower, and no term or
condition of any of the Loan Agreement, the Note, this Security Instrument and
the other Loan Documents shall be construed so as to deem the relationship
between any Borrower and Lender to be other than that of debtor and creditor.

     Section 4.2  No Reliance On Lender. The general partners, members,
principals and (if any Borrower is a trust) beneficial owners of each Borrower
are experienced in the ownership and operation of properties similar to the
Property, and each Borrower and Lender are relying solely upon such expertise
and business plan in connection with the ownership and operation of the
Property. No Borrower is relying on Lender's expertise, business acumen or
advice in connection with the Property.

     Section 4.3  No Lender Obligations.

           (a) Notwithstanding the provisions of Subsections 1.1(h) and (m) or
     Section 1.2 hereof, Lender is not undertaking the performance of (i) any
     obligations under the Leases; or (ii) any obligations with respect to such
     agreements, contracts, certificates, instruments, franchises, permits,
     trademarks, licenses and other documents.

           (b) By accepting or approving anything required to be observed,
     performed or fulfilled or to be given to Lender pursuant to this Security
     Instrument, the Loan Agreement, the Note or the other Loan Documents,
     including, without limitation, any officer's certificate, balance sheet,
     statement of profit and loss or other financial statement, survey,
     appraisal, or insurance policy, Lender shall not be deemed to have
     warranted, consented to, or affirmed the sufficiency, the legality or
     effectiveness of same, and such acceptance or approval thereof shall not
     constitute any warranty or affirmation with respect thereto by Lender.

     Section 4.4  Reliance. Each Borrower recognizes and acknowledges that in
accepting the Loan Agreement, the Note, this Security Instrument and the other
Loan Documents, Lender is expressly and primarily relying on the truth and
accuracy of the warranties and representations set forth in Article III of the
Loan Agreement without any obligation to investigate the Property and
notwithstanding any investigation of the Property by Lender; that such reliance
existed on the part of Lender prior to the date hereof, that the warranties and
representations are a material inducement to Lender in making the Loan; and that
Lender would not be willing to make the Loan and accept this Security Instrument
in the absence of the warranties and representations as set forth in Article III
of the Loan Agreement.

                         ARTICLE 5 - FURTHER ASSURANCES

     Section 5.1  Recording of Security Instrument, Etc. Each Borrower forthwith
upon the execution and delivery of this Security Instrument and thereafter, from
time to time, will cause this Security Instrument and any of the other Loan
Documents creating a lien or

                                       10




security interest or evidencing the lien hereof upon the Property and each
instrument of further assurance to be filed, registered or recorded in such
manner and in such places as may be required by Lender for any present or future
law in order to publish notice of and fully to protect and perfect the lien or
security interest hereof upon, and the interest of Lender in, the Property. Each
Borrower will pay all taxes, filing, registration or recording fees, and all
expenses incident to the preparation, execution, acknowledgment and/or recording
of the Note, this Security Instrument, the other Loan Documents, any financing
statements evidencing Lender's lien in the Property, any note, deed of trust or
mortgage supplemental hereto, any security instrument with respect to the
Property and any instrument of further assurance, and any modification,
continuation, or amendment of the foregoing documents, and all federal, state,
county and municipal taxes, duties, imposts, assessments and charges arising out
of or in connection with the execution and delivery of this Security Instrument,
any deed of trust or mortgage supplemental hereto, any security instrument with
respect to the Property or any instrument of further assurance, and any
modification or amendment of the foregoing documents, except where prohibited by
law so to do.

     Section 5.2  Further Acts, Etc. Each Borrower will, at its cost,
and without expense to Lender, do, execute, acknowledge and deliver all and
every such further acts, deeds, conveyances, deeds of trust, mortgages,
assignments, notices of assignments, transfers and assurances as Lender shall,
from time to time, reasonably require, for the better assuring, conveying,
assigning, transferring, and confirming unto Lender the property and rights
hereby mortgaged, deeded, granted, bargained, sold, conveyed, confirmed,
pledged, assigned, warranted and transferred or intended now or hereafter so to
be, or which any Borrower may be or may hereafter become bound to convey or
assign to Lender, or for carrying out the intention or facilitating the
performance of the terms of this Security Instrument or for filing, registering
or recording this Security Instrument (or evidencing the lien created hereby),
or for complying with all Legal Requirements. Pursuant to its signature
hereunder, and in connection with Lender's filing initial financing statements
(and/or fixture filings), amendments, continuations and terminations in all such
jurisdictions and with all such governmental authorities as Lender deems
desirable (to evidence the lien granted Lender hereunder), each Borrower hereby
confirms that the Lender is a person entitled to file a record, and each
Borrower has authorized all such filings, within the meaning of Section 9-509 of
the Uniform Commercial Code. Each Borrower grants to Lender an irrevocable power
of attorney coupled with an interest for the purpose of exercising and
perfecting any and all rights and remedies available to Lender at law and in
equity, including without limitation such rights and remedies available to
Lender pursuant to this Section 5.2.

     Section 5.3  Changes in Tax, Debt, Credit and Documentary Stamp Laws.

             (a)  If any law is enacted or adopted or amended after the date of
     this Security Instrument which deducts the Debt from the value of the
     Property for the purpose of taxation or which imposes a tax, either
     directly or indirectly, on the Debt or Lender's interest in the Property,
     each Borrower will pay the tax, with interest and penalties thereon, if
     any. If Lender is advised by counsel chosen by it that the payment of tax
     by such Borrower would be unlawful or taxable to Lender or unenforceable or
     provide the basis for a defense of usury then Lender shall have the option
     by written notice of not less than one hundred twenty (120) days to declare
     the Debt immediately due and payable.

                                       11



             (b)  Neither Borrower will claim or demand or be entitled to any
     credit or credits on account of the Debt for any part of the Taxes or Other
     Charges assessed against the Property, or any part thereof, and no
     deduction shall otherwise be made or claimed from the assessed value of the
     Property, or any part thereof, for real estate tax purposes by reason of
     this Security Instrument or the Debt. If such claim, credit or deduction
     shall be required by law, Lender shall have the option, by written notice
     of not less than one hundred twenty (120) days, to declare the Debt
     immediately due and payable.

             (c)  If at any time the United States of America, any State thereof
     or any subdivision of any such State shall require revenue or other stamps
     to be affixed to the Note, this Security Instrument, or any of the other
     Loan Documents or impose any other tax or charge on the same, each Borrower
     will pay for the same, with interest and penalties thereon, if any.

     Section 5.4  Splitting of Mortgage. This Security Instrument and the Note
shall, at any time until the same shall be fully paid and satisfied, at the sole
election of Lender, be split or divided into two or more notes and two or more
security instruments, each of which shall cover all or a portion of the Property
to be more particularly described therein. To that end, each Borrower, upon
written request of Lender, shall execute, acknowledge and deliver, or cause to
be executed, acknowledged and delivered by the then owner of the Property, to
Lender and/or its designee or designees substitute notes and security
instruments in such principal amounts, aggregating not more than the then unpaid
principal amount of the Note, and containing terms, provisions and clauses
similar to those contained herein and in the Note, and such other documents and
instruments as may be reasonably required by Lender.

     Section 5.5  Replacement Documents. Upon receipt of an affidavit of an
officer of Lender as to the loss, theft, destruction or mutilation of the Note
or any other Loan Document which is not of public record, and, in the case of
any such mutilation, upon surrender and cancellation of such Note or other Loan
Document, each Borrower will issue, in lieu thereof, a replacement Note or other
Loan Document, dated the date of such lost, stolen, destroyed or mutilated Note
or other Loan Document in the same principal amount thereof and otherwise of
like tenor.

                      ARTICLE 6 - DUE ON SALE/ENCUMBRANCE

     Section 6.1  Lender Reliance. Each Borrower acknowledges that Lender has
examined and relied on the experience of each Borrower and its general partners,
members, principals and (if such Borrower is a trust) beneficial owners in
owning and operating properties such as the Property in agreeing to make the
Loan, and will continue to rely on Borrower's ownership of the Property as a
means of maintaining the value of the Property as security for repayment of the
Debt and the performance of the Other Obligations. Each Borrower acknowledges
that Lender has a valid interest in maintaining the value of the Property so as
to ensure that, should Borrower default in the repayment of the Debt or the
performance of the Other Obligations, Lender can recover the Debt by a sale of
the Property.

                                       12



     Section 6.2   No Transfer. Neither Borrower shall not permit or suffer any
Transfer to occur, unless permitted by the Loan Agreement or unless Lender shall
consent thereto in writing.

     Section 6.3   Transfer Defined. As used in this Article 6 "Transfer" shall
mean any voluntary or involuntary sale, conveyance, mortgage, grant, bargain,
encumbrance, pledge, assignment, or transfer of: (a) all or any part of the
Property or any estate or interest therein including, but not be limited to, (i)
an installment sales agreement wherein any Borrower agrees to sell the Property
or any part thereof for a price to be paid in installments, (ii) an agreement by
any Borrower leasing all or a substantial part of the Property for other than
actual occupancy by a space tenant thereunder and its affiliates or (iii) a
sale, assignment or other transfer of, or the grant of a security interest in,
any Borrower's right, title and interest in and to any Leases or any Rents; or
(b) any ownership interest in (i) any Borrower, (ii) SPE Equity Owner or (iii)
any indemnitor or guarantor of any Obligations or (iv) any corporation,
partnership, limited liability company, trust or other entity owning, directly
or indirectly, any interest in any Borrower or any indemnitor or guarantor of
any Obligations.

     Section 6.4   Lender's Rights. Without obligating Lender to grant any
consent under Section 6.2 hereof which Lender may grant or withhold in its sole
discretion, Lender reserves the right to condition the consent required
hereunder upon (a) a modification of the terms hereof and of the Loan Agreement,
the Note or the other Loan Documents; (b) an assumption of the Loan Agreement,
the Note, this Security Instrument and the other Loan Documents; (c) payment of
all of Lender's expenses incurred in connection with such transfer; (d) receipt
of Rating Agency Confirmation; (e) the delivery of a nonconsolidation opinion
reflecting the proposed transfer satisfactory in form and substance to Lender;
(f) the proposed transferee's continued compliance with the representations and
covenants set forth in the Loan Agreement; (g) the delivery of evidence
satisfactory to Lender that the single purpose nature and bankruptcy remoteness
of each Borrower, its shareholders, partners or members, as the case may be,
following such transfers are in accordance with the standards of the Rating
Agencies; (h) the proposed transferee's ability to satisfy Lender's then-current
underwriting standards; or (i) such other conditions as Lender shall determine
in its reasonable discretion to be in the interest of Lender, including, without
limitation, the creditworthiness, reputation and qualifications of the
transferee with respect to the Loan and the Property. Lender shall not be
required to demonstrate any actual impairment of its security or any increased
risk of default hereunder in order to declare the Debt immediately due and
payable upon a Transfer without Lender's consent. This provision shall apply to
every Transfer, other than any Transfer permitted pursuant to the Loan
Agreement, regardless of whether voluntary or not, or whether or not Lender has
consented to any previous Transfer.

                  ARTICLE 7 - RIGHTS AND REMEDIES UPON DEFAULT

     Section 7.1   Remedies. Upon the occurrence and during the continuance of
any Event of Default, each Borrower agrees that Lender may take such action,
without notice or demand, as it deems advisable to protect and enforce its
rights against such Borrower and in and to the Property, including, but not
limited to, the following actions, each of which may be pursued concurrently or
otherwise, at such time and in such order as Lender may determine, in its sole
discretion, without impairing or otherwise affecting the other rights and
remedies of Lender:

                                       13



          (a)  declare the entire unpaid Debt to be immediately due and payable;

          (b)  institute proceedings, judicial or otherwise, for the complete
     foreclosure of this Security Instrument under any applicable provision of
     law, in which case the Property or any interest therein may be sold for
     cash or upon credit in one or more parcels or in several interests or
     portions and in any order or manner;

          (c)  with or without entry, to the extent permitted and pursuant to
     the procedures provided by applicable law, institute proceedings for the
     partial foreclosure of this Security Instrument for the portion of the Debt
     then due and payable, subject to the continuing lien and security interest
     of this Security Instrument for the balance of the Debt not then due,
     unimpaired and without loss of priority;

          (d)  sell for cash or upon credit the Property or any part thereof
     and all estate, claim, demand, right, title and interest of any Borrower
     therein and rights of redemption thereof, pursuant to power of sale or
     otherwise, at one or more sales, as an entirety or in parcels, at such time
     and place, upon such terms and after such notice thereof as may be required
     or permitted by law, and, without limiting the foregoing:

             (i)     In connection with any sale or sales hereunder, Lender
     shall be entitled to elect to treat any of the Property which consists of a
     right in action or which is property that can be severed from the Real
     Property covered hereby or any improvements without causing structural
     damage thereto as if the same were personal property, and dispose of the
     same in accordance with applicable law, separate and apart from the sale of
     Real Property. Where the Property consists of Real Property, Personal
     Property, Equipment or Fixtures, whether or not such Personal Property or
     Equipment is located on or within the Real Property, Lender shall be
     entitled to elect to exercise its rights and remedies against any or all of
     the Real Property, Personal Property, Equipment and Fixtures and the fee
     and/or leasehold interest therein in such order and manner as is now or
     hereafter permitted by applicable law;

             (ii)    Lender shall be entitled to elect to proceed against any
     or all of the Real Property, Personal Property, Equipment and Fixtures and
     the fee and/or leasehold interest therein in any manner permitted under
     applicable law; and if Lender so elects pursuant to applicable law, the
     power of sale herein granted shall be exercisable with respect to all or
     any of the Real Property, Personal Property, Equipment and Fixtures and the
     fee and/or leasehold interest therein covered hereby, as designated by
     Lender and Lender is hereby authorized and empowered to conduct any such
     sale of any Real Property, Personal Property, Equipment and Fixtures and
     the fee and/or leasehold interest therein in accordance with the procedures
     applicable to Real Property;

             (iii)   Should Lender elect to sell any portion of the Property
     which is Real Property or which is Personal Property, Equipment or Fixtures
     that the Lender has elected under applicable law to sell together with Real
     Property in accordance with the laws governing a sale of Real Property,
     Lender shall give such notice of Event of Default, if any, and election to
     sell as may then be required by law. Thereafter, upon the expiration of
     such time and the giving of such notice of sale as may then be required by

                                       14



     law, and without the necessity of any demand on any Borrower, Lender at the
     time and place specified in the notice of sale, shall sell such Real
     Property or part thereof at public auction to the highest bidder for cash
     in lawful money of the United States. Lender may from time to time postpone
     any sale hereunder by public announcement thereof at the time and place
     noticed therefor;

                    (iv) If the Property consists of several lots, parcels or
     items of property, Lender shall, subject to applicable law, (A) designate
     the order in which such lots, parcels or items shall be offered for sale or
     sold, or (B) elect to sell such lots, parcels or items through a single
     sale, or through two or more successive sales, or in any other manner
     Lender designates. Any Person, including any Borrower or Lender, may
     purchase at any sale hereunder. Should Lender desire that more than one
     sale or other disposition of the Property be conducted, Lender shall,
     subject to applicable law, cause such sales or dispositions to be conducted
     simultaneously, or successively, on the same day, or at such different days
     or times and in such order as Lender may designate, and no such sale shall
     terminate or otherwise affect the lien of this Security Instrument on any
     part of the Property not sold until all the Debt has been paid in full. In
     the event Lender elects to dispose of the Property through more than one
     sale, except as otherwise provided by applicable law, each Borrower agrees
     to pay the costs and expenses of each such sale and of any judicial
     proceedings wherein such sale may be made;

               (e)  institute an action, suit or proceeding in equity for the
     specific performance of any covenant, condition or agreement contained
     herein, in the Note, the Loan Agreement or in the other Loan Documents;

               (f)  recover judgment on the Note either before, during or after
     any proceedings for the enforcement of this Security Instrument or the
     other Loan Documents;

               (g)  apply for the appointment of a receiver, trustee, liquidator
     or conservator of the Property, without notice and without regard for the
     adequacy of the security for the Debt and without regard for the solvency
     of any Borrower, any guarantor, indemnitor with respect to the Loan or of
     any Person liable for the payment of the Debt;

               (h)  the license granted to the Borrowers under Section 1.2
     hereof shall automatically be revoked and Lender may enter into or upon the
     Property, either personally or by its agents, nominees or attorneys and
     dispossess each Borrower and its agents and servants therefrom, without
     liability for trespass, damages or otherwise and exclude each Borrower and
     its agents or servants wholly therefrom, and take possession of all books,
     records and accounts relating thereto and each Borrower agrees to surrender
     possession of the Property and of such books, records and accounts to
     Lender upon demand, and thereupon Lender may (i) use, operate, manage,
     control, insure, maintain, repair, restore and otherwise deal with all and
     every part of the Property and conduct the business thereat; (ii) complete
     any construction on the Property in such manner and form as Lender deems
     advisable; (iii) make alterations, additions, renewals, replacements and
     improvements to or on the Property; (iv) exercise all rights and powers of
     any Borrower with respect to the Property, whether in the name of such
     Borrower or otherwise,

                                       15






         including, without limitation, the right to make, cancel, enforce or
         modify Leases, obtain and evict tenants, and demand, sue for, collect
         and receive all Rents of the Property and every part thereof; (v)
         require each Borrower to pay monthly in advance to Lender, or any
         receiver appointed to collect the Rents, the fair and reasonable rental
         value for the use and occupation of such part of the Property as may be
         occupied by such Borrower; (vi) require each Borrower to vacate and
         surrender possession of the Property to Lender or to such receiver and,
         in default thereof, such Borrower may be evicted by summary proceedings
         or otherwise; and (vii) apply the receipts from the Property to the
         payment of the Debt, in such order, priority and proportions as Lender
         shall deem appropriate in its sole discretion after deducting therefrom
         all expenses (including reasonable attorneys' fees) incurred in
         connection with the aforesaid operations and all amounts necessary to
         pay the Taxes, Other Charges, insurance and other expenses in
         connection with the Property, as well as just and reasonable
         compensation for the services of Lender, its counsel, agents and
         employees;

                    (i)  exercise any and all rights and remedies granted to a
          secured party upon default under the Uniform Commercial Code,
          including, without limiting the generality of the foregoing: (i) the
          right to take possession of the Fixtures, the Equipment and the
          Personal Property, or any part thereof, and to take such other
          measures as Lender may deem necessary for the care, protection and
          preservation of the Fixtures, the Equipment and the Personal Property,
          and (ii) request each Borrower at its expense to assemble the
          Fixtures, the Equipment and the Personal Property and make it
          available to Lender at a convenient place acceptable to Lender. Any
          notice of sale, disposition or other intended action by Lender with
          respect to the Fixtures, the Equipment and/or the Personal Property
          sent to any Borrower in accordance with the provisions hereof at least
          five (5) days prior to such action, shall constitute commercially
          reasonable notice to such Borrower;

                    (j)  apply any sums then deposited or held in escrow or
          otherwise by or on behalf of Lender in accordance with the terms of
          the Loan Agreement, this Security Instrument or any other Loan
          Document to the payment of the following items in any order in its
          uncontrolled discretion:

                       (i)   Taxes and Other Charges;

                       (ii)  Insurance Premiums;

                       (iii) Interest on the unpaid principal balance of the
          Note;

                       (iv)  Amortization of the unpaid principal balance of the
          Note;

                       (v)   All other sums payable pursuant to the Note, the
          Loan Agreement, this Security Instrument and the other Loan Documents,
          including without limitation advances made by Lender pursuant to the
          terms of this Security Instrument;

                    (k)  pursue such other remedies as Lender may have under
          applicable law;

                                       16








               (l)  apply the undisbursed balance of any Net Proceeds Deficiency
     deposit, together with interest thereon, to the payment of the Debt in such
     order, priority and proportions as Lender shall deem to be appropriate in
     its discretion; or

               (m)  institute proceedings, judicial or otherwise, for the
     complete foreclosure of this Security Instrument as it relates to Fee
     Owner's fee interest in the Property without foreclosing on that portion of
     the Property which constitutes Operator's leasehold interest therein.
     Notwithstanding the foregoing, Operator agrees that Lender may, in its sole
     discretion, terminate any and all operating leases to which either Fee
     Owner or Operator is now or hereafter may be a party.

In the event of a sale, by foreclosure, power of sale or otherwise, of less than
all of Property, this Security Instrument shall continue as a lien and security
interest on the remaining portion of the Property unimpaired and without loss of
priority.

     Section 7.2  Application of Proceeds. The purchase money, proceeds and
avails of any disposition of the Property, and or any part thereof, or any other
sums collected by Lender pursuant to the Note, this Security Instrument or the
other Loan Documents, may be applied by Lender to the payment of the Debt in
such priority and proportions as Lender in its discretion shall deem proper, to
the extent consistent with law.

     Section 7.3  Right to Cure Defaults. Upon the occurrence and during the
continuance of any Event of Default or if any Borrower fails to make any payment
or to do any act as herein provided, Lender may, but without any obligation to
do so and without notice to or demand on any Borrower and without releasing any
Borrower from any obligation hereunder, make or do the same in such manner and
to such extent as Lender may deem necessary to protect the security hereof.
Lender is authorized to enter upon the Property for such purposes, or appear in,
defend, or bring any action or proceeding to protect its interest in the
Property or to foreclose this Security Instrument or collect the Debt, and the
cost and expense thereof (including reasonable attorneys' fees to the extent
permitted by law), with interest as provided in this Section 7.3, shall
constitute a portion of the Debt and shall be due and payable to Lender upon
demand. All such costs and expenses incurred by Lender in remedying such Event
of Default or such failed payment or act or in appearing in, defending, or
bringing any such action or proceeding shall bear interest at the Default Rate,
for the period after notice from Lender that such cost or expense was incurred
to the date of payment to Lender. All such costs and expenses incurred by Lender
together with interest thereon calculated at the Default Rate shall be deemed to
constitute a portion of the Debt and be secured by this Security Instrument and
the other Loan Documents and shall be immediately due and payable upon demand by
Lender therefor.

     Section 7.4  Actions and Proceedings. Lender has the right to appear in and
defend any action or proceeding brought with respect to the Property and to
bring any action or proceeding, in the name and on behalf of any Borrower, which
Lender, in its discretion, decides should be brought to protect its interest in
the Property.

     Section 7.5 Recovery of Sums Required to be Paid. Lender shall have the
right from time to time to take action to recover any sum or sums which
constitute a part of the Debt as the same become due, without regard to whether
or not the balance of the Debt shall be due,

                                       17



and without prejudice to the right of Lender thereafter to bring an action of
foreclosure, or any other action, for a default or defaults by any Borrower
existing at the time such earlier action was commenced.

     Section 7.6  Examination of Books and Records. At reasonable times and upon
reasonable notice, Lender, its agents, accountants and attorneys shall have the
right to examine the records, books, management and other papers of any Borrower
which reflect upon its financial condition, at the Property or at any office
regularly maintained by such Borrower where the books and records are located.
Lender and its agents shall have the right to make copies and extracts from the
foregoing records and other papers. In addition, at reasonable times and upon
reasonable notice, Lender, its agents, accountants and attorneys shall have the
right to examine and audit the books and records of any Borrower pertaining to
the income, expenses and operation of the Property during reasonable business
hours at any office of such Borrower where the books and records are located.
This Section 7.6 shall apply throughout the term of the Note and without regard
to whether an Event of Default has occurred and is continuing.

     Section 7.7  Other Rights, Etc.

          (a)  The failure of Lender to insist upon strict performance of
     any term hereof shall not be deemed to be a waiver of any term of this
     Security Instrument. Neither Borrower shall be relieved of its obligations
     hereunder by reason of (i) the failure of Lender to comply with any request
     of any Borrower or any guarantor or indemnitor with respect to the Loan to
     take any action to foreclose this Security Instrument or otherwise enforce
     any of the provisions hereof or of the Note or the other Loan Documents,
     (ii) the release, regardless of consideration, of the whole or any part of
     the Property, or of any person liable for the Debt or any portion thereof,
     or (iii) any agreement or stipulation by Lender extending the time of
     payment or otherwise modifying or supplementing the terms of the Note, this
     Security Instrument or the other Loan Documents.


          (b)  It is agreed that the risk of loss or damage to the Property
     is on each Borrower, and Lender shall have no liability whatsoever for
     decline in value of the Property, for failure to maintain the Policies, or
     for failure to determine whether insurance in force is adequate as to the
     amount of risks insured. Possession by Lender shall not be deemed an
     election of judicial relief, if any such possession is requested or
     obtained, with respect to any Property or collateral not in Lender's
     possession.

          (c)  Lender may resort for the payment of the Debt to any other
     security held by Lender in such order and manner as Lender, in its
     discretion, may elect. Lender may take action to recover the Debt, or any
     portion thereof, or to enforce any covenant hereof without prejudice to the
     right of Lender thereafter to foreclose this Security Instrument. The
     rights of Lender under this Security Instrument shall be separate, distinct
     and cumulative and none shall be given effect to the exclusion of the
     others. No act of Lender shall be construed as an election to proceed under
     any one provision herein to the exclusion of any other provision. Lender
     shall not be limited exclusively to the rights and remedies herein stated
     but shall be entitled to every right and remedy now or hereafter afforded
     at law or in equity.

                                       18








     Section 7.8  Right to Release Any Portion of the Property. Lender may
release any portion of the Property for such consideration as Lender may require
without, as to the remainder of the Property, in any way impairing or affecting
the lien or priority of this Security Instrument, or improving the position of
any subordinate lienholder with respect thereto, except to the extent that the
obligations hereunder shall have been reduced by the actual monetary
consideration, if any, received by Lender for such release, and may accept by
assignment, pledge or otherwise any other property in place thereof as Lender
may require without being accountable for so doing to any other lienholder. This
Security Instrument shall continue as a lien and security interest in the
remaining portion of the Property. Notwithstanding the forgoing, upon full
payment of all Debt, at the time and manner provided in the Loan Documents, this
conveyance or lien shall be null and void and upon demand therefor following
such payment, a release of this Security Instrument shall be promptly provided
by Lender to the Borrowers, at the sole cost and expense of the Borrowers.

     Section 7.9  Violation of Laws. If the Property is not in material
compliance with Legal Requirements, Lender may impose additional requirements
upon each Borrower in connection herewith including, without limitation,
monetary reserves or financial equivalents.

     Section 7.10 Recourse and Choice of Remedies. Notwithstanding any other
provision of this Security Instrument or the Loan Agreement, including, without
limitation, Section 11.22 of the Loan Agreement, Lender and other Indemnified
Parties (as hereinafter defined) are entitled to enforce the obligations of any
Borrower and any guarantor and indemnitor contained in Sections 9.2 and 9.3
herein and Section 9.2 of the Loan Agreement without first resorting to or
exhausting any security or collateral and without first having recourse to the
Note or any of the Property, through foreclosure, exercise of a power of sale or
acceptance of a deed in lieu of foreclosure or otherwise, and in the event
Lender commences a foreclosure action against the Property, or otherwise
exercises the power of sale pursuant to this Security Instrument, Lender is
entitled to pursue a deficiency judgment with respect to such obligations
against any Borrower and any guarantor or indemnitor with respect to the Loan.
The provisions of Sections 9.2 and 9.3 herein and Section 9.2 of the Loan
Agreement are exceptions to any non-recourse or exculpation provisions in the
Loan Agreement, the Note, this Security Instrument or the other Loan Documents,
and any Borrower and any guarantor or indemnitor with respect to the Loan are
fully and personally liable for the obligations pursuant to Sections 9.2 and 9.3
herein and Section 9.2 of the Loan Agreement. The liability of any Borrower and
any guarantor or indemnitor with respect to the Loan pursuant to Sections 9.2
and 9.3 herein and Section 9.2 of the Loan Agreement is not limited to the
original principal amount of the Note. Notwithstanding the foregoing, nothing
herein shall inhibit or prevent Lender from foreclosing or exercising a power of
sale pursuant to this Security Instrument or exercising any other rights and
remedies pursuant to the Loan Agreement, the Note, this Security Instrument and
the other Loan Documents, whether simultaneously with foreclosure proceedings or
in any other sequence. A separate action or actions may be brought and
prosecuted against any Borrower pursuant to Sections 9.2 and 9.3 herein and
Section 9.2 of the Loan Agreement, whether or not action is brought against any
other Person or whether or not any other Person is joined in the action or
actions. In addition, Lender shall have the right but not the obligation to join
and participate in, as a party if it so elects, any administrative or judicial
proceedings or actions initiated in connection with any matter addressed in the
Environmental Indemnity.

                                       19



     Section 7.11  Right of Entry. Upon reasonable notice to the Borrowers,
Lender and its agents shall have the right to enter and inspect the Property at
all reasonable times.

                        ARTICLE 8 - LEASEHOLD PROVISIONS

     Section 8.1   Operator shall pay or cause to be paid all rents, additional
rents and other sums required to be paid by Operator as tenant under and
pursuant to the provisions of the Operating Lease on or before the date on which
such rent or other charge is payable. Fee Owner and Operator shall (i)
diligently perform and observe all of the terms, covenants and conditions of the
Operating Lease, as landlord and tenant, respectively, thereunder, to be
performed and observed prior to the expiration of any applicable grace period
therein provided, (ii) promptly notify the Lender of the giving of any notice to
the Fee Owner or Operator, as applicable, of any default by such party as
landlord or tenant thereunder, and promptly deliver to the Lender a true copy of
each such notice except, in the case of clauses (i) through (ii) above, for any
such defaults or breaches as would not be reasonably expected to have a material
adverse effect.

     Section 8.2   Neither Borrower shall (i) surrender the leasehold estate
created by the Operating Lease or terminate or cancel the Operating Lease, (ii)
modify, change, supplement, alter or amend the Operating Lease, in any respect,
either orally or in writing, in any manner that materially impairs the
collateral value of the leasehold created by the Operating Lease or in any
manner that would be materially adverse to the Lender. Each Borrower hereby
assigns to the Lender, as further security for the payment and performance of
the Obligations and observance of the terms, covenants and conditions of this
Security Instrument, all of the rights, privileges and prerogatives of such
Borrower, as landlord and tenant under the Operating Lease following the
occurrence and during the continuance of an Event of Default, to surrender the
leasehold estate created by the Operating Lease or to terminate, cancel, modify,
change, supplement, alter or amend the Operating Lease, and any such surrender
of the leasehold estate created by the Operating Lease or termination,
cancellation, modification, change, supplement, alteration or amendment of the
Operating Lease not permitted pursuant to the foregoing terms of this Section
6.21(b) shall be void and of no force or effect.

     Section 8.3   If at any time after the occurrence and during the
continuance of an Event of Default, any Borrower shall default in the
performance or observance of any term, covenant or condition of the Operating
Lease to be performed or observed by it, then, without limiting the generality
of the other provisions of this Security Instrument, and without waiving or
releasing such Borrower from any of its Obligations, the Lender shall have the
right, but shall be under no obligation, to pay any sums and to perform any act
or take any action as may be appropriate to cause all of the terms, covenants
and conditions of the Operating Lease on the part of such Borrower to be
performed or observed or to be promptly performed or observed on behalf of such
Borrower, to the end that the rights of such Borrower in, to and under the
Operating Lease shall be kept unimpaired and free from default. If the Lender
shall make any payment or perform any act or take action in accordance with the
preceding sentence, the Lender will notify the Borrowers thereof. In any such
event, upon the occurrence and during the continuance of an Event of Default and
subject to the rights of tenants, subtenants and other occupants under the
Leases, the Lender and any person designated by the Lender shall have, and are
hereby granted, the right to enter upon the Land at any time and from time to
time for the purpose of taking any such action. If Fee Owner shall deliver to
the Lender a copy of any notice of default sent to

                                       20



Operator, such notice shall constitute full protection to the Lender for any
action taken or omitted to be taken by the Lender, in good faith, in reliance
thereon.

     Section 8.4 In the event of the bankruptcy, reorganization or
insolvency of any Borrower, any attempt by such Borrower to surrender its
estate, or any portion thereof, under the Operating Lease, or any attempt under
such circumstances by such Borrower to terminate, cancel or acquiesce in the
rejection of the Operating Lease without the consent of the Lender shall be null
and void. Each Borrower hereby expressly releases, assigns, relinquishes and
surrenders unto the Lender all of its right, power and authority to terminate,
cancel, acquiesce in the rejection of, modify, change, supplement, alter or
amend the Operating Lease in any respect, either orally or in writing, in the
event of the bankruptcy, reorganization or insolvency of such Borrower, and any
attempt on the part of such Borrower to exercise any such right without the
consent of the Lender shall be null and void. Each Borrower hereby irrevocably
appoints the Lender as its true and lawful attorney-in-fact which power of
attorney shall be coupled with an interest, for the purpose of exercising its
rights pursuant to Section 365(h) of the Bankruptcy Code or any successor to
such Section (i) to obtain for the benefit of such Borrower or the Lender a
right to possession or statutory term of years derived from or incident to the
Operating Lease, or (ii) to treat the Operating Lease as terminated.

     Section 8.5 Notwithstanding the rejection of the Operating Lease by the Fee
Owner, as debtor in possession, or by a trustee for the Fee Owner, pursuant to
Section 365 of the Bankruptcy Code, neither the lien of this Security Instrument
nor the Lender's rights with respect to the Operating Lease shall be affected or
impaired by reason thereof. In the event that Operator shall remain in
possession of the Property following a rejection of the Operating Lease by the
Fee Owner, as debtor in possession, or by a trustee for the Fee Owner, Operator
agrees that it shall not exercise any right of offset against the rent payable
under the Operating Lease, pursuant to Section 365(h)(2) of the Bankruptcy Code,
or otherwise, without the prior consent of the Lender thereto.

                          ARTICLE 9 - INDEMNIFICATION

     Section 9.1 General Indemnification. Each Borrower shall, at its sole cost
and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all claims, suits, liabilities
(including, without limitation, strict liabilities), actions, proceedings,
obligations, debts, damages, losses, costs, expenses, diminutions in value,
fines, penalties, charges, fees, expenses, judgments, awards, amounts paid in
settlement, punitive damages, foreseeable and unforeseeable consequential
damages, of whatever kind or nature (including but not limited to reasonable
attorneys' fees and other costs of defense) (collectively, the "Losses") imposed
upon or incurred by or asserted against any Indemnified Parties and directly or
indirectly arising out of or in any way relating to any one or more of the
following: (a) ownership of this Security Instrument, the Property or any
interest therein or receipt of any Rents; (b) any amendment to, or restructuring
of, the Debt, and the Note, the Loan Agreement, this Security Instrument, or any
other Loan Documents; (c) any and all lawful action that may be taken by Lender
in connection with the enforcement of the provisions of this Security Instrument
or the Loan Agreement or the Note or any of the other Loan Documents, whether or
not suit is filed in connection with same, or in connection with any Borrower,
any guarantor or indemnitor and/or any partner, joint venturer or shareholder
thereof becoming a party to a voluntary or

                                       21



involuntary federal or state bankruptcy, insolvency or similar proceeding; (d)
any accident, injury to or death of persons or loss of or damage to property
occurring in, on or about the Property or any part thereof or on the adjoining
sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways;
(e) any use, nonuse or condition in, on or about the Property or any part
thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent
parking areas, streets or ways; (f) any failure on the part of any Borrower to
perform or be in compliance with any of the terms of this Security Instrument;
(g) performance of any labor or services or the furnishing of any materials or
other property in respect of the Property or any part thereof; (h) the failure
of any person to file timely with the Internal Revenue Service an accurate Form
1099-B, Statement for Recipients of Proceeds from Real Estate, Broker and Barter
Exchange Transactions, which may be required in connection with this Security
Instrument, or to supply a copy thereof in a timely fashion to the recipient of
the proceeds of the transaction in connection with which this Security
Instrument is made; (i) any failure of the Property to be in compliance with any
Legal Requirements; (j) the enforcement by any Indemnified Party of the
provisions of this Article 9; (k) any and all claims and demands whatsoever
which may be asserted against Lender by reason of any alleged obligations or
undertakings on its part to perform or discharge any of the terms, covenants, or
agreements contained in any Lease; (1) the payment of any commission, charge or
brokerage fee to anyone claiming through any Borrower which may be payable in
connection with the funding of the Loan; or (m) any misrepresentation made by
any Borrower in this Security Instrument or any other Loan Document. Any amounts
payable to Lender by reason of the application of this Section 9.1 shall become
immediately due and payable and shall bear interest at the Default Rate from the
date loss or damage is sustained by Lender until paid. For purposes of this
Article 9, the term "Indemnified Parties" means Lender and any Person who is or
will have been involved in the origination of the Loan, any Person who is or
will have been involved in the servicing of the Loan secured hereby, any Person
in whose name the encumbrance created by this Security Instrument is or will
have been recorded, persons and entities who may hold or acquire or will have
held a full or partial interest in the Loan secured hereby (including, but not
limited to, investors or prospective investors in the Securities, as well as
custodians, trustees and other fiduciaries who hold or have held a full or
partial interest in the Loan secured hereby for the benefit of third parties) as
well as the respective directors, officers, shareholders, partners, employees,
agents, servants, representatives, contractors, subcontractors, affiliates,
subsidiaries, participants, successors and assigns of any and all of the
foregoing (including but not limited to any other Person who holds or acquires
or will have held a participation or other full or partial interest in the Loan,
whether during the term of the Loan or as a part of or following a foreclosure
of the Loan and including, but not limited to, any successors by merger,
consolidation or acquisition of all or a substantial portion of Lender's assets
and business).

     Section 9.2  Mortgage And/or Intangible Tax. Each Borrower shall, at its
sole cost and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all Losses imposed upon or incurred
by or asserted against any Indemnified Parties and directly or indirectly
arising out of or in any way relating to any tax on the making and/or recording
of this Security Instrument, the Note or any of the other Loan Documents, but
excluding any income, franchise or other similar taxes.

     Section 9.3  Erisa Indemnification. Each Borrower shall, at its sole cost
and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and

                                       22



against any and all Losses (including, without limitation, reasonable attorneys'
fees and costs incurred in the investigation, defense, and settlement of Losses
incurred in correcting any prohibited transaction or in the sale of a prohibited
loan, and in obtaining any individual prohibited transaction exemption under
ERISA that may be required, in Lender's sole discretion) that Lender may incur,
directly or indirectly, as a result of a default under Sections 3.1.8 or 4.2.11
of the Loan Agreement.

     Section 9.4  Intentionally Omitted.

     Section 9.5  Duty to Defend; Attorneys' Fees and Other Fees and Expenses.
Upon written request by any Indemnified Party, each Borrower shall defend such
Indemnified Party (if requested by any Indemnified Party, in the name of the
Indemnified Party) by attorneys and other professionals approved by the
Indemnified Parties. Notwithstanding the foregoing, if the defendants in any
such claim or proceeding include any Borrower and any Indemnified Party and such
Borrower and such Indemnified Party shall have reasonably concluded that there
are any legal defenses available to it and/or other Indemnified Parties that are
different from or additional to those available to such Borrower, such
Indemnified Party shall have the right to select separate counsel to assert such
legal defenses and to otherwise participate in the defense of such action on
behalf of such Indemnified Party, provided that no compromise or settlement
shall be entered without such Borrower's consent, which consent shall not be
unreasonably withheld. Upon demand, such Borrower shall pay or, in the sole and
absolute discretion of the Indemnified Parties, reimburse, the Indemnified
Parties for the payment of reasonable fees and disbursements of attorneys,
engineers, environmental consultants, laboratories and other professionals in
connection therewith.

                              ARTICLE 10 - WAIVERS

     Section 10.1 Waiver of Counterclaim. To the extent permitted by applicable
law, each Borrower hereby waives the right to assert a counterclaim, other than
a mandatory or compulsory counterclaim, in any action or proceeding brought
against it by Lender arising out of or in any way connected with this Security
Instrument, the Loan Agreement, the Note, any of the other Loan Documents, or
the Obligations.

     Section 10.2 Marshalling and Other Matters. To the fullest extent permitted
by applicable law, each Borrower, for itself and its successors and assigns,
hereby waives the benefit of all appraisement, valuation, stay, extension,
reinstatement and redemption laws now or hereafter in force and all rights of
marshalling in the event of any sale hereunder of the Property or any part
thereof or any interest therein. Further, each Borrower hereby expressly waives
any and all rights of redemption from sale under any order or decree of
foreclosure of this Security Instrument on behalf of such Borrower, and on
behalf of each and every person acquiring any interest in or title to the
Property subsequent to the date of this Security Instrument and on behalf of all
persons to the extent permitted by applicable law.

     Section 10.3 Waiver of Notice. To the extent permitted by applicable law,
neither Borrower shall be entitled to any notices of any nature whatsoever from
Lender except with respect to matters for which this Security Instrument
specifically and expressly provides for the giving of notice by Lender to such
Borrower and except with respect to matters for which Lender

                                       23



is required by applicable law to give notice, and each Borrower hereby expressly
waives the right to receive any notice from Lender with respect to any matter
for which this Security Instrument does not specifically and expressly provide
for the giving of notice by Lender to such Borrower.

     Section 10.4 Waiver of Statute of Limitations. To the extent permitted by
applicable law, each Borrower hereby expressly waives and releases to the
fullest extent permitted by law, the pleading of any statute of limitations as a
defense to payment of the Debt or performance of its Other Obligations.

     Section 10.5 Survival. The indemnifications made pursuant to Sections 9.1,
9.2 and 9.3 herein and the representations and warranties, covenants, and other
obligations arising under the Environmental Indemnity, shall continue
indefinitely in full force and effect and shall survive and shall in no way be
impaired by: any satisfaction, release or other termination of this Security
Instrument, any assignment or other transfer of all or any portion of this
Security Instrument or Lender's interest in the Property (but, in such case,
shall benefit both Indemnified Parties and any assignee or transferee), any
exercise of Lender's rights and remedies pursuant hereto including but not
limited to foreclosure or acceptance of a deed in lieu of foreclosure, any
exercise of any rights and remedies pursuant to the Loan Agreement, the Note or
any of the other Loan Documents, any transfer of all or any portion of the
Property (whether by any Borrower or by Lender following foreclosure or
acceptance of a deed in lieu of foreclosure or at any other time), any amendment
to this Security Instrument, the Loan Agreement, the Note or the other Loan
Documents, and any act or omission that might otherwise be construed as a
release or discharge of any Borrower from the obligations pursuant hereto.

                            ARTICLE 11 - EXCULPATION

     The provisions of Section 11.22 of the Loan Agreement are hereby
incorporated by reference into this Security Instrument to the same extent and
with the same force as if fully set forth herein.

                              ARTICLE 12 - NOTICES

     All notices or other written communications hereunder shall be delivered in
accordance with Section 11.6 of the Loan Agreement.

                          ARTICLE 13 - APPLICABLE LAW

     Section 13.1 Governing Law. This Security Instrument shall be governed and
construed in accordance with the laws of the State in which the Land is located.

     Section 13.2 Usury Laws. Notwithstanding anything to the contrary, (a) all
agreements and communications between any Borrower and Lender are hereby and
shall automatically be limited so that, after taking into account all amounts
deemed interest, the interest contracted for, charged or received by Lender
shall never exceed the maximum lawful rate or amount, (b) in calculating whether
any interest exceeds the lawful maximum, all such

                                       24



interest shall be amortized, prorated, allocated and spread over the full amount
and term of all principal indebtedness of the Borrowers to Lender, and (c) if
through any contingency or event, Lender receives or is deemed to receive
interest in excess of the lawful maximum, any such excess shall be deemed to
have been applied toward payment of the principal of any and all then
outstanding indebtedness of the Borrowers to Lender, or if there is no such
indebtedness, shall immediately be returned to the Borrowers.

     Section 13.3 Provisions Subject to Applicable Law. All rights, powers and
remedies provided in this Security Instrument may be exercised only to the
extent that the exercise thereof does not violate any applicable provisions of
law and are intended to be limited to the extent necessary so that they will not
render this Security Instrument invalid, unenforceable or not entitled to be
recorded, registered or filed under the provisions of any applicable law.

                            ARTICLE 14 - DEFINITIONS

     All capitalized terms not defined herein shall have the respective meanings
set forth in the Loan Agreement. Unless the context clearly indicates a contrary
intent or unless otherwise specifically provided herein, words used in this
Security Instrument may be used interchangeably in singular or plural form and
the word "Borrower" shall mean "each Borrower and any subsequent owner or owners
of the Property or any part thereof or any interest therein," the word "Lender"
shall mean "Lender and any subsequent holder of the Note," the word "Note" shall
mean "the Note and any other evidence of indebtedness secured by this Security
Instrument," the word "Property" shall include any portion of the Property and
any interest therein, and the phrases "attorneys' fees", "legal fees" and
"counsel fees" shall include any and all attorneys', paralegal and law clerk
fees and disbursements, including, but not limited to, fees and disbursements at
the pre-trial, trial and appellate levels incurred or paid by Lender in
protecting its interest in the Property, the Leases and the Rents and enforcing
its rights hereunder.

                     ARTICLE 15 - MISCELLANEOUS PROVISIONS

     Section 15.1 No Oral Change. This Security Instrument, and any provisions
hereof, may not be modified, amended, waived, extended, changed, discharged or
terminated orally or by any act or failure to act on the part of any Borrower or
Lender, but only by an agreement in writing signed by the party against whom
enforcement of any modification, amendment, waiver, extension, change, discharge
or termination is sought.

     Section 15.2 Successors and Assigns. This Security Instrument shall be
binding upon and inure to the benefit of each Borrower and Lender and their
respective successors and assigns forever.

     Section 15.3 Inapplicable Provisions. If any term, covenant or condition of
the Loan Agreement, the Note or this Security Instrument is held to be invalid,
illegal or unenforceable in any respect, the Loan Agreement, the Note and this
Security Instrument shall be construed without such provision.

                                       25



     Section 15.4 Headings, Etc. The headings and captions of various Sections
of this Security Instrument are for convenience of reference only and are not to
be construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.

     Section 15.5 Intentionally Omitted.

     Section 15.6 Subrogation. If any or all of the proceeds of the Note have
been used to extinguish, extend or renew any indebtedness heretofore existing
against the Property, then, to the extent of the funds so used, Lender shall be
subrogated to all of the rights, claims, liens, titles, and interests existing
against the Property heretofore held by, or in favor of, the holder of such
indebtedness and such former rights, claims, liens, titles, and interests, if
any, are not waived but rather are continued in full force and effect in favor
of Lender and are merged with the lien and security interest created herein as
cumulative security for the repayment of the Debt, the performance and discharge
of any Borrower's obligations hereunder, under the Loan Agreement, the Note and
the other Loan Documents and the performance and discharge of the Other
Obligations.

     Section 15.7 Entire Agreement. The Note, the Loan Agreement, this Security
Instrument and the other Loan Documents constitute the entire understanding and
agreement between the Borrowers and Lender with respect to the transactions
arising in connection with the Debt and supersede all prior written or oral
understandings and agreements between the Borrowers and Lender with respect
thereto. Each Borrower hereby acknowledges that, except as incorporated in
writing in the Note, the Loan Agreement, this Security Instrument and the other
Loan Documents, there are not, and were not, and no persons are or were
authorized by Lender to make, any representations, understandings, stipulations,
agreements or promises, oral or written, with respect to the transaction which
is the subject of the Note, the Loan Agreement, this Security Instrument and the
other Loan Documents.

     Section 15.8 Limitation On Lender's Responsibility. No provision of this
Security Instrument shall operate to place any obligation or liability for the
control, care, management or repair of the Property upon Lender, nor shall it
operate to make Lender responsible or liable for any waste committed on the
Property by the tenants or any other Person, or for any dangerous or defective
condition of the Property, or for any negligence in the management, upkeep,
repair or control of the Property resulting in loss or injury or death to any
tenant, licensee, employee or stranger. Nothing herein contained shall be
construed as constituting Lender a "mortgagee in possession."

     Section 15.9 Waiver of Right to Trial by Jury.

     EACH BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE
TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE
EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS
SECURITY INSTRUMENT OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR
OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY
JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY EACH BORROWER, AND IS INTENDED TO
ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS

                                       26



TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS EACH
HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS
CONCLUSIVE EVIDENCE OF THIS WAIVER.

     Section 15.10 Secondary Market. Lender may sell, transfer and deliver the
Note and assign this Security Instrument and the other Loan Documents to one or
more investors in the secondary mortgage market ("Investors"). In connection
with such sale, Lender may retain or assign responsibility for servicing the
Loan, including the Note, this Security Instrument or the other Loan Documents,
or may delegate some or all of such responsibility and/or obligations to a
servicer including, but not limited to, any subservicer or master servicer, on
behalf of the Investors. All references to Lender herein shall refer to and
include any such servicer to the extent applicable.

     Section 15.11 Cross-collateralization. Without limitation to any other
right or remedy provided to Lender in this Security Instrument or any of the
other Loan Documents, each Borrower acknowledges and agrees that (i) upon the
occurrence of an Event of Default, to the fullest extent permitted by law,
Lender shall have the right to pursue all of its rights and remedies in one
proceeding, or separately and independently in separate proceedings which
Lender, in its sole and absolute discretion, shall determine from time to time,
(ii) Lender is not required to either marshall assets, sell any collateral for
the Loan in any inverse order of alienation, or be subjected to any "one action"
or "election of remedies" law or rule, (iii) the exercise by Lender of any
remedies against any of the collateral for the Loan will not impede Lender from
subsequently or simultaneously exercising remedies against other collateral for
the Loan; (iv) all Liens and other rights, remedies and privileges provided to
Lender in the Loan Documents or otherwise shall remain in full force and effect
until Lender has exhausted all of its remedies against the collateral for the
Loan and all of the collateral for the Loan has been foreclosed, sold and/or
otherwise realized upon in satisfaction of the Loan; and (v) all of the
Properties shall remain security for the performance of all of the obligations
of each Borrower hereunder, under the Note and under any of the other Loan
Documents.

     Section 15.12 Joint and Several Liability. If more than one Person has
executed this Security Instrument as "Borrower," the representations, covenants,
warranties and obligations of all such Persons hereunder shall be joint and
several. Each Borrower further acknowledges and agrees that it shall be jointly
and severally liable for the obligations of all the Other Borrowers under the
Loan Documents.

                     ARTICLE 16 - STATE-SPECIFIC PROVISIONS

     Section 16.1  Principles of Construction. In the event of any
inconsistencies between the terms and conditions of this Article 16 and the
other terms and conditions of this Security Instrument, the terms and conditions
of this Article 16 shall control and be binding.

     Section 16.2  Mortgagee-in-possession. No action taken by Lender pursuant
to this Security Instrument shall be construed so as to constitute Lender a
"mortgagee in possession" in the absence of the taking of actual possession of
the Property by Lender. In the exercise of the powers herein granted to Lender,
no liability shall be asserted or enforced against Lender, all such liability
being expressly waived and released by each Borrower.

                                       27



     Section 16.3 Property Not a "Reporting Facility." Each Borrower represents
and warrants to Lender that neither the Property nor any part thereof has ever
been or is now classified as a "reporting facility" within the meaning of Ohio
Revised Code Section 3752.01. Neither Borrower shall cause or permit the
Property or any part thereof to become so classified.

     Section 16.4 Mechanics' Lien Law. Lender shall be and is hereby authorized
and empowered to do as mortgagee all things provided in the mechanic's lien laws
of Ohio, including, without limitation, Section 1311.14 of the Ohio Revised
Code, and all amendments and supplements thereto.

     Section 16.5 Appointment of Receiver. Lender shall be entitled to the
appointment of a receiver of Lender's choice for the Property as a matter of
right and without notice, which is hereby expressly waived, with power to
collect the rents due and to become due, without regard to the value of the
Property and regardless of whether Lender may have an adequate remedy at law or
in equity. Each Borrower, for itself and its successors and assigns, hereby
waives any and all defenses to the application for a receiver as set forth
above, and hereby specifically consents to such appointment of a receiver of
Lender's choice in any event in ex parte proceedings and without notice. Nothing
herein contained is to be construed to deprive Lender of any other right, remedy
or privilege it may now have, or may hereafter obtain, to have a receiver
appointed. From such rents collected by the receiver or by Lender prior to a
foreclosure sale, there shall be deducted the cost of collection thereof,
including, without limitation, real estate commissions, if any, for new or
extended or renewed leases, if any, receiver's fees, attorneys' fees and
expenses to the fullest extent not prohibited by applicable law, and any court
costs and other expenses; the remainder shall be disbursed by the receiver or
otherwise applied at Lender's discretion against the Debt.

     Section 16.6 Advances Secured. Each Borrower and Lender intend that this
Security Instrument shall secure the unpaid balance of loan advances made by the
holder hereof after this Security Instrument is delivered to the County Recorder
in the county listed on the cover page of this Security Instrument for record to
the fullest extent and with the highest priority contemplated by Section
5301.232 of the Ohio Revised Code. The maximum amount of all loan advances, in
the aggregate and exclusive of interest accrued thereon and protective advances
made as contemplated by this Section 16.6 and by any other provision of this
Security Instrument, which may be outstanding at any time, is $1.00. If and to
the extent applicable, each Borrower hereby waives any right it may have under
Section 5301.232(c) of the Ohio Revised Code. In addition to the loan advances
referred to hereinabove in this Section 16.6, Lender shall have the right, but
not the obligation, to make protective advances with respect to the Property for
the payment of taxes, assessments, insurance premiums, repairs, maintenance
costs, costs and expenses, if any, incurred by reason of all or any part of the
Property being classified as a "reporting facility" within the meaning of Ohio
Revised Code Section 3752.01, and other costs incurred in the protection of the
Property as contemplated by Section 5301.233 of the Ohio Revised Code, and such
protective advances, together with interest thereon at the Default Rate (as
defined in the Loan Agreement) from the date of each such advance until it is
repaid in full, shall be secured by this Security Instrument to the fullest
extent and with the highest priority contemplated by said Section 5301.233.

                                       28



     Section 16.7 Tax Payor I.D. Lender's federal taxpayer identification number
is 61-1324573.

     Section 16.8 Attorney Fees. As provided in Ohio Revised Code 1301.21, this
is a Contract of Indebtedness and each Borrower has committed to pay attorneys'
fees.

                         [NO FURTHER TEXT ON THIS PAGE]

                                       29



         IN WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been executed by each
Borrower as of the day and year first above written.

                                     THI OF OHIO REAL ESTATE HOLDING
                                     COMPANY, LLC, a Delaware limited liability
                                     company


                                         By: /s/ JOHN E. BAUER
                                             -------------------------------
                                             Name: John E. Bauer
                                             Title: Vice-President


                                     THI OF OHIO AT COLUMBUS, LLC, a
                                     Delaware limited liability company


                                         By: /s/ JOHN E. BAUER
                                             -------------------------------
                                             Name: John E. Bauer
                                             Title: Vice-President



                                 ACKNOWLEDGMENT

STATE OF NEW YORK               )
                                ) ss:
COUNTY OF NEW YORK              )

     On October 30, 2002, before me, a Notary Public in and for said state,
personally appeared John E. Bauer, personally known to me or proved to me on the
basis of satisfactory evidence to be the person whose name is subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in
his/her/their capacity, and that by his/her/their signature on the instrument,
the person, or the entity upon behalf of which the person acted, executed the
instrument.

                                                  /s/ KATINA NASH
                                                  ----------------------------
                                                  Notary Public:

                                                  My commission expires: 6-30-03

                                                  [Notary Seal]
                                 ACKNOWLEDGMENT

STATE OF NEW YORK               )
                                ) ss:
COUNTY OF NEW YORK              )

     On October 30, 2002, before me, a Notary Public in and for said state,
personally appeared John E. Bauer, personally known to me or proved to me on the
basis of satisfactory evidence to be the person whose name is subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in
his/her/their capacity, and that by his/her/their signature on the instrument,
the person, or the entity upon behalf of which the person acted, executed the
instrument.

                                                  /s/ KATINA NASH
                                                  ----------------------------
                                                  Notary Public:

                                                  My commission expires: 6-30-03
THIS INSTRUMENT PREPARED BY,
RECORDING REQUESTED BY AND                        [Notary Seal]
WHEN RECORDED RETURN TO:
David W. Forti, Esquire
Dechert
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103

EX-10.2.6

                                                                  EXHIBIT 10.2.6

RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:

David W. Forti, Esquire
Dechert
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia PA  19103
- --------------------------------------------------------------------------------
                    Space Above This Line For Recorder's Use

                                DEED OF TRUST AND
                               SECURITY AGREEMENT

                                       by

                  THI OF MARYLAND REAL ESTATE HOLDING CO., LLC
                                       and
                         THI OF MARYLAND AT BEL PRE, LLC
                   each a Delaware limited liability company,
                          and each having an address at
                          4660 Trindle Road, Suite 103
                          Camp Hill, Pennsylvania 17011
                           (collectively, as grantor)

                                       to

                                  BRIAN LOBUTS,
                                 an Individual,
                              having an address at
                    1025 Connecticut Avenue, N.W., Suite 709
                             Washington, D.C. 20036
                                  (as trustee)

                               for the benefit of

                       VENTAS REALTY, LIMITED PARTNERSHIP,
                         a Delaware limited partnership,
                              having an address at
                         4360 Brownsboro Road, Suite 115
                           Louisville, Kentucky 40207
                                (as beneficiary)

Property:   Bel Pre
            2601 Bel Pre Road, Silver Spring, MD
NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, THE MAXIMUM PRINCIPAL
AMOUNT SECURED BY THIS SECURITY AGREEMENT IS $5,425,500.00, WHICH REPRESENTS ONE
HUNDRED FIFTY PERCENT (150%) OF THE ALLOCATED LOAN AMOUNT FOR THE PROPERTY.



                      DEED OF TRUST AND SECURITY AGREEMENT

       THIS DEED OF TRUST AND SECURITY AGREEMENT (as amended, restated,
replaced, supplemented or otherwise modified from time to time, this "Security
Instrument") is made as of November 1, 2002, by THI OF MARYLAND REAL ESTATE
HOLDING CO., LLC (the "Fee Owner") and THI OF MARYLAND AT BEL PRE, LLC (the
"Operator"), each a Delaware limited liability company, and each having its
principal place of business at 4660 Trindle Road, Suite 103, Camp Hill,
Pennsylvania 17011, collectively as grantor (Fee Owner and Operator are referred
to herein individually as, a "Borrower" and collectively as, the "Borrowers")to
BRIAN LOBUTS, an individual, having an address at c/o First American Title
Insurance Company, 1025 Connecticut Avenue, N.W., Suite 709, Washington, DC
20036 as trustee ("Trustee"), for the benefit of VENTAS REALTY, LIMITED
PARTNERSHIP, a Delaware limited partnership, having an address at 4360
Brownsboro Road, Suite 115, Louisville, Kentucky 40207, as beneficiary (together
with its successors and assigns, "Lender").

                               W I T N E S S E T H

       WHEREAS, this Security Instrument is given to secure a loan (the "Loan")
in the maximum principal sum of FIFTY FIVE MILLION AND NO/100 DOLLARS
($55,000,000.00) or so much thereof as may be advanced pursuant to that certain
Loan Agreement dated as of the date hereof among the Borrowers, certain
Affiliates of the Borrowers named therein (collectively, the "Other Borrowers")
and Lender (as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time, the "Loan Agreement") and evidenced by
that certain Promissory Note dated the date hereof made by the Borrowers and the
Other Borrowers to Lender (such Note, together with all extensions, renewals,
replacements, components, restatements or modifications thereof being
hereinafter referred to as the "Note");

       WHEREAS, each Borrower desires to secure the payment of the Debt (as
defined in the Loan Agreement) and the performance of all of its obligations
under the Note, the Loan Agreement and the other Loan Documents (as defined
below); and

       WHEREAS, this Security Instrument is given pursuant to the Loan
Agreement, and payment, fulfillment, and performance by each Borrower of its
obligations thereunder and under the other Loan Documents are secured hereby,
and each and every term and provision of the Loan Agreement and the Note,
including the rights, remedies, obligations, covenants, conditions, agreements,
indemnities, representations and warranties of the parties therein, are hereby
incorporated by reference herein as though set forth in full and shall be
considered a part of this Security Instrument (the Loan Agreement, the Note,
this Security Instrument, that certain Assignment of Leases, Rents and Contracts
of even date herewith made by the Borrowers in favor of Lender (the "Assignment
of Leases") and all other documents evidencing or securing the Debt or delivered
in connection with the making of the Loan are hereinafter referred to
collectively as the "Loan Documents").

       NOW THEREFORE, in consideration of the making of the Loan by Lender and
the covenants, agreements, representations and warranties set forth in this
Security Instrument:

                                       1



                         ARTICLE 1 - GRANTS OF SECURITY

       Section 1.1. Property Conveyed. Each Borrower does hereby irrevocably
grant, bargain, sell, pledge, assign, warrant, transfer and convey to Trustee
and its successors and assigns, in trust, with Power of Sale and Right of Entry
and Possession, for the benefit of Lender as beneficiary in trust, all of its
right, title and interest in the following property, rights, interests and
estates now owned, or hereafter acquired by such Borrower (collectively, the
"Property").

              (a) Land. (i) The real property described in Exhibit A attached
       hereto and made a part hereof (the "Land") including, without limitation,
       all As Extracted Collateral (as defined in Article 9 of the Uniform
       Commercial Code in the jurisdiction where the Land is located (as the
       same may be amended, modified or revised from time to time, the "Uniform
       Commercial Code")), all minerals, oil, gas and other hydrocarbon
       substances on, in or under the Land and (ii) Operator's leasehold
       interest created by any and all operating leases to which either Fee
       Owner or Operator is now or hereafter a party (collectively, the
       "Operating Lease"), together with all right, title and interest in and to
       any right pursuant to Section 365(h) of the Bankruptcy Code (as defined
       below) or any successor to such Section (x) to possession of any
       statutory term of years derived from or incident to the Operating Lease
       or (y) to treat the Operating Lease as terminated;

              (b) Additional Land. All additional lands, estates and development
       rights hereafter acquired by such Borrower for use in connection with the
       Land and the development of the Land and all additional lands and estates
       therein which may, from time to time, by supplemental mortgage or
       otherwise be expressly made subject to the lien of this Security
       Instrument;

              (c) Improvements. The buildings, structures, fixtures, additions,
       enlargements, extensions, modifications, repairs, replacements and
       improvements now or hereafter erected or located on the Land
       (collectively, the "Improvements");

              (d) Easements. All easements, rights-of-way or use, rights, strips
       and gores of land, streets, ways, alleys, passages, sewer rights, water,
       water courses, water rights and powers, air rights and development
       rights, and all estates, rights, titles, interests, privileges,
       liberties, servitudes, tenements, hereditaments and appurtenances of any
       nature whatsoever, in any way now or hereafter belonging, relating or
       pertaining to the Land and the Improvements and the reversion and
       reversions, remainder and remainders, and all land lying in the bed of
       any street, road or avenue, opened or proposed, in front of or adjoining
       the Land, to the center line thereof and all the estates, rights, titles,
       interests, dower and rights of dower, curtesy and rights of curtesy,
       property, possession, claim and demand whatsoever, both at law and in
       equity, of such Borrower of, in and to the Land and the Improvements and
       every part and parcel thereof, with the appurtenances thereto;

                                       2







              (e) Equipment. All "equipment," as such term is defined in the
       Uniform Commercial Code, now owned or hereafter acquired by such
       Borrower, which is used at or in connection with the Improvements or the
       Land or is located thereon or therein (including, but not limited to, all
       Software (as defined in the Uniform Commercial Code), appliances,
       machinery, equipment, furniture, furnishings, and electronic
       data-processing and other office equipment now owned or hereafter
       acquired by such Borrower (including, without limitation, all beds,
       linens, radios, televisions, carpeting, telephones, cash registers,
       computers, lamps, glassware, restaurant and kitchen equipment, all
       medical, dental, rehabilitation, therapeutic and paramedic equipment and
       supplies), and any and all additions, substitutions and replacements of
       any of the foregoing), together with all attachments, components, parts,
       equipment, accessions and accessories installed thereon or affixed
       thereto (collectively, the "Equipment"). Notwithstanding the foregoing,
       Equipment shall not include any property belonging to tenants under
       leases except to the extent that any Borrower shall have any right or
       interest therein;

              (f) Fixtures. All Equipment and Goods (as defined in the Uniform
       Commercial Code) now owned, or the ownership of which is hereafter
       acquired, by such Borrower which is so related to the Land and
       Improvements forming part of the Property that it is deemed fixtures or
       real property under the law of the particular state in which the Land is
       located, including, without limitation, all building or construction
       materials intended for construction, reconstruction, alteration or repair
       of or installation on the Land and Improvements, construction equipment,
       appliances, machinery, plant equipment, fittings, apparatuses, fixtures
       and other items now or hereafter attached to, installed in or used in
       connection with (temporarily or permanently) any of the Improvements or
       the Land, including, but not limited to, engines, devices for the
       operation of pumps, pipes, plumbing, cleaning, call and sprinkler
       systems, fire extinguishing apparatuses and equipment, heating,
       ventilating, plumbing, laundry, incinerating, electrical, air
       conditioning and air cooling equipment and systems, gas and electric
       machinery, appurtenances and equipment, pollution control equipment,
       security systems, disposals, dishwashers, refrigerators and ranges,
       recreational equipment and facilities of all kinds, and water, gas,
       electrical, storm and sanitary sewer facilities, utility lines and
       equipment (whether owned individually or jointly with others, and, if
       owned jointly, to the extent of such Borrower's interest therein) and all
       other utilities whether or not situated in easements, all water tanks,
       water supply, water power sites, fuel stations, fuel tanks, fuel supply,
       and all other structures, together with all accessions, appurtenances,
       additions, replacements, betterments and substitutions for any of the
       foregoing and the proceeds thereof (collectively, the "Fixtures").
       Notwithstanding the foregoing, "Fixtures" shall not include any property
       which tenants are entitled to remove pursuant to leases except to the
       extent that any Borrower shall have any right or interest therein;

              (g) Personal Property. All "accounts" (as defined in the Uniform
       Commercial Code), Chattel Paper (including Electronic Chattel Paper and
       Tangible Chattel Paper), Commercial Tort Claims, Commingled Goods,
       Deposit

                                       3







       Accounts, Documents, General Intangibles, Goods, Instruments, Inventory,
       Investment Property, Letter of Credit Rights, Payment Intangibles,
       Supporting Obligations (as such terms are defined in the Uniform
       Commercial Code), furniture, furnishings, objects of art, machinery,
       goods, tools, supplies, appliances, contract rights, accounts receivable,
       franchises, licenses, certificates and permits (including any Regulatory
       Permits), and all other personal property of any kind or character
       whatsoever other than Fixtures, which are now or hereafter owned by such
       Borrower and which are located within or about or otherwise relate or
       pertain to the Land and the Improvements, together with all accessories,
       accessions, replacements and substitutions thereto or therefor and the
       proceeds thereof (collectively, together with the Equipment and the
       Proceeds, the "Personal Property"), and the right, title and interest of
       such Borrower in and to any of the Personal Property which may be subject
       to any security interests superior in lien to the lien of this Security
       Instrument and all proceeds and products of the above;

              (h) Leases and Rents. All leases and other agreements affecting
       the use, enjoyment or occupancy of the Land and the Improvements
       heretofore or hereafter entered into (including, without limitation, the
       Operating Lease, all patient admissions and resident care agreements, all
       lettings, subleases, licenses, concessions, tenancies and other occupancy
       agreements covering or encumbering all or any portion of the Property),
       whether before or after the filing by or against such Borrower of any
       petition for relief under 11 U.S.C.ss.101 et seq., as the same may be
       amended from time to time (the "Bankruptcy Code") (collectively, the
       "Leases") and all right, title and interest of such Borrower, its
       successors and assigns therein and thereunder, including, without
       limitation, cash or securities deposited thereunder to secure the
       performance by the lessees of their obligations thereunder and all rents,
       additional rents, revenues (including, without limitation, (i) rights to
       payment earned under the Leases for space in the Improvements for the
       operation of ongoing businesses, such as restaurants, news stands, barber
       shops, beauty shops and pharmacies and (ii) all other income,
       consideration, profits and benefits of any nature arising from the
       ownership, possession, use or operation of the Property, including,
       without limitation Patient Revenues and Self-Pay Receivables), issues and
       profits (including all oil and gas or other mineral royalties and
       bonuses) from the Land and the Improvements whether paid or accruing
       before or after the filing by or against such Borrower of any petition
       for relief under the Bankruptcy Code (collectively, the "Rents") and all
       proceeds from the sale or other disposition of the Leases and the right
       to receive and apply the Rents to the payment of the Debt;

              (i) Condemnation Awards. All awards or payments, including
       interest thereon, which may heretofore and hereafter be made with respect
       to the Property, whether from the exercise of the right of eminent domain
       (including but not limited to any transfer made in lieu of or in
       anticipation of the exercise of the right), or for a change of grade, or
       for any other injury to or decrease in the value of the Property;

                                       4



              (j) Insurance Proceeds. All proceeds in respect of the Property
       under any insurance policies covering the Property, including, without
       limitation, the right to receive and apply the proceeds of any insurance,
       judgments, or settlements made in lieu thereof, for damage to the
       Property;

              (k) Tax Certiorari. All refunds, rebates or credits in connection
       with reduction in real estate taxes and assessments charged against the
       Property as a result of tax certiorari or any applications or proceedings
       for reduction;

              (l) Rights. The right, in the name and on behalf of either
       Borrower, to appear in and defend any action or proceeding brought with
       respect to the Property and to commence any action or proceeding to
       protect the interest of Lender in the Property;

              (m) Agreements. All agreements, contracts, certificates,
       instruments, franchises, permits, licenses, plans, specifications and
       other documents, now or hereafter entered into, and all rights therein
       and thereto, respecting or pertaining to the use, occupation,
       construction, management or operation of the Land and any part thereof
       and any Improvements or respecting any business or activity conducted on
       the Land and any part thereof and all right, title and interest of such
       Borrower therein and thereunder, including, without limitation, the
       right, upon the happening of any default hereunder, to receive and
       collect any sums payable to such Borrower thereunder;

              (n) Trademarks. All tradenames, trademarks, servicemarks, logos,
       copyrights, goodwill, books and records and all other general intangibles
       relating to or used in connection with the operation of the Property;

              (o) Proceeds. All proceeds (including, without limitation, all
       "proceeds" as defined in the Uniform Commercial Code) of any of the
       foregoing, including, without limitation, proceeds of insurance and
       condemnation awards, whether cash, liquidation or other claims or
       otherwise (collectively, the "Proceeds"); and

              (p) Other Rights. Any and all other rights of such Borrower in and
       to the items set forth in Subsections (a) through (o) above.


       AND without limiting any of the other provisions of this Security
Instrument, to the extent permitted by applicable law, each Borrower expressly
grants to Trustee, as secured party, a security interest in the portion of the
Property which is or may be subject to the provisions of the Uniform Commercial
Code which are applicable to secured transactions; it being understood and
agreed that the Improvements and Fixtures are part and parcel of the Land (the
Land, the Improvements and the Fixtures collectively referred to as the "Real
Property") appropriated to the use thereof and, whether affixed or annexed to
the Real Property or not, shall for the purposes of this Security Instrument be
deemed conclusively to be real estate and conveyed hereby.

                                       5



       Section 1.2. Assignment of Rents. Each Borrower hereby absolutely and
unconditionally assigns to Lender and Trustee all of its right, title and
interest in and to all current and future Leases and Rents; it being intended by
each Borrower that this assignment constitutes a present, absolute assignment
and not an assignment for additional security only. Nevertheless, subject to the
terms of the Loan Agreement, Collection Account Agreement, Cash Management
Agreement, the Assignment of Leases and Section 7.1(h) of this Security
Instrument, Lender grants to the Borrowers a revocable license to collect,
receive, use and enjoy the Rents. The Borrowers shall hold the Rents, or a
portion thereof sufficient to discharge all current sums due on the Debt, for
use in the payment of such sums.

       Section 1.3. Security Agreement. This Security Instrument is both a real
property deed of trust and a "security agreement" within the meaning of the
Uniform Commercial Code. The Property includes both real and personal property
and all other rights and interests, whether tangible or intangible in nature, of
each Borrower in the Property. By executing and delivering this Security
Instrument, each Borrower hereby grants to Lender, as security for the
Obligations (hereinafter defined), a security interest in the Fixtures, the
Equipment, the Personal Property and other property constituting the Property to
the fullest extent that security interests in such property may be granted under
and subject to the Uniform Commercial Code (said portion of the Property so
subject to the Uniform Commercial Code being called the "UCC Collateral"). If an
Event of Default shall occur and be continuing, Lender, in addition to any other
rights and remedies which it may have, shall have and may exercise immediately
and without demand, any and all rights and remedies granted to a secured party
upon default under the Uniform Commercial Code, including, without limiting the
generality of the foregoing, the right to take possession of the UCC Collateral
or any part thereof, and to take such other measures as Lender may deem
necessary for the care, protection and preservation of the UCC Collateral. Upon
request or demand of Lender after the occurrence and during the continuance of
an Event of Default, each Borrower shall, at its expense, assemble the UCC
Collateral and make it available to Lender at a convenient place (at the Land if
tangible property) reasonably acceptable to Lender. Each Borrower shall pay to
Lender on demand any and all expenses, including reasonable legal expenses and
attorneys' fees, incurred or paid by Lender in protecting its interest in the
UCC Collateral and in enforcing its rights hereunder with respect to the UCC
Collateral after the occurrence and during the continuance of an Event of
Default. Any notice of sale, disposition or other intended action by Lender with
respect to the UCC Collateral sent to either Borrower in accordance with the
provisions hereof at least ten (10) business days prior to such action, shall,
except as otherwise provided by applicable law, constitute reasonable notice to
such Borrower. The proceeds of any disposition of the UCC Collateral, or any
part thereof, may, except as otherwise required by applicable law, be applied by
Lender to the payment of the Debt in such priority and proportions as Lender in
its discretion shall deem proper. The principal place of business of each
Borrower (Debtor) is as set forth on page one hereof and the address of Lender
(Secured Party) is as set forth on page one hereof. Each Borrower's location,
for purposes of Section 9-307 of the Uniform Commercial Code, is such Borrower's
state of formation/incorporation/organization as set forth on page one hereof
("Borrower's Jurisdiction").

       Section 1.4. Fixture Filing. Certain of the Property is or will become
"fixtures" (as that term is defined in the Uniform Commercial Code) on the Land,
described or referred to in this Security Instrument, and this Security
Instrument, upon being filed for record in the real estate records of the city
or county wherein such Land is situated, shall operate also as a

                                       6



financing statement filed as a fixture filing in accordance with the applicable
provisions of said Uniform Commercial Code upon such of the Property that is or
may become fixtures. Alternatively, and/or in addition to the foregoing, Lender
may file a separate financing statement as a fixture filing to evidence the lien
granted hereby.

       Section 1.5. Pledges of Monies Held. Each Borrower hereby pledges to
Lender any and all monies now or hereafter held by Lender or on behalf of Lender
in connection with the Loan, including, without limitation, any sums deposited
in the Accounts (as defined in the Cash Management Agreement) and Net Proceeds,
as additional security for the Obligations until expended or applied as provided
in this Security Instrument.

                               CONDITIONS TO GRANT

       TO HAVE AND TO HOLD the above granted and described Property, including
but not limited to, Operator's leasehold interest in the Property unto and to
the use and benefit of Trustee and its successors and assigns, forever;

       IN TRUST, WITH POWER OF SALE AND RIGHT OF ENTRY AND POSSESSION, to secure
payment to Lender of the Obligations at the time and in the manner provided for
its payment in the Note and in this Security Instrument;

       PROVIDED, HOWEVER, these presents are upon the express condition that, if
the Borrowers and the Other Borrowers shall well and truly pay to Lender the
Debt at the time and in the manner provided in the Note, the Loan Agreement and
this Security Instrument, shall well and truly perform the Other Obligations as
set forth in this Security Instrument and shall well and truly abide by and
comply with each and every covenant and condition set forth herein and in the
Note, the Loan Agreement and the other Loan Documents, these presents and the
estate hereby granted shall cease, terminate and be void; provided, however,
that each Borrower's obligation to indemnify and hold harmless Lender pursuant
to the provisions hereof shall survive any such payment or release.

                    ARTICLE 2 - DEBT AND OBLIGATIONS SECURED

       Section 2.1. Debt. This Security Instrument and the grants, assignments
and transfers made in Article 1 are given for the purpose of securing the Debt
which by its definition (as set forth in the Loan Agreement) includes, but is
not limited to, the obligations of each Borrower and the Other Borrowers to pay
to Lender the principal and interest owing pursuant to the terms and conditions
of the Note.

       Section 2.2. Other Obligations. This Security Instrument and the grants,
assignments and transfers made in Article 1 are also given for the purpose of
securing the following (the "Other Obligations"):

               (a) the performance of all other obligations of each Borrower
   contained herein;

               (b) the performance of each obligation of each Borrower and the
   Other Borrowers contained in the Loan Agreement and any other Loan Document;
   and

                                       7







              (c)   the performance of each obligation of each Borrower and the
       Other Borrowers contained in any renewal, extension, amendment,
       modification, consolidation, change of, or substitution or replacement
       for, all or any part of the Note, the Loan Agreement or any other Loan
       Document.

       Section 2.3. Debt and Other Obligations. Each Borrower's obligations for
the payment of the Debt and the performance of the Other Obligations shall be
referred to collectively herein as the "Obligations."

                         ARTICLE 3 - BORROWER COVENANTS

       Each Borrower covenants and agrees that:

       Section 3.1. Payment of Debt. Borrower will pay the Debt at the time and
in the manner provided in the Loan Agreement, the Note and the Loan Documents.

       Section 3.2. Incorporation by Reference. All the covenants, conditions
and agreements contained in (a) the Loan Agreement, (b) the Note and (c) all and
any of the other Loan Documents, are hereby made a part of this Security
Instrument to the same extent and with the same force as if fully set forth
herein.

       Section 3.3. Insurance. Borrower shall obtain and maintain, or cause to
be maintained, in full force and effect at all times insurance with respect to
Borrower and the Property as required pursuant to the Loan Agreement.

       Section 3.4. Maintenance of Property. Borrower shall cause the Property
to be maintained in a good and safe condition and repair. The Improvements, the
Fixtures, the Equipment and the Personal Property shall not be removed,
demolished or materially altered (except for normal replacement of the Fixtures,
the Equipment or the Personal Property, tenant finish and refurbishment of the
Improvements) without the reasonable consent of Lender, which consent shall not
be unreasonably withheld. Borrower shall promptly repair, replace or rebuild any
part of the Property which may be destroyed by any Casualty, or become damaged,
worn or dilapidated or which may be affected by any Condemnation, and shall
complete and pay for any structure at any time in the process of construction or
repair on the Land.

       Section 3.5. Waste. Borrower shall not commit or suffer any material
waste of the Property or make any change in the use of the Property which will
in any way materially increase the risk of fire or other hazard arising out of
the operation of the Property, or take any action that might invalidate or allow
the cancellation of any Policy, or do or permit to be done thereon anything that
may in any way materially impair the value of the Property or the security of
this Security Instrument. Borrower will not, without the prior written consent
of Lender, permit any drilling or exploration for or extraction, removal, or
production of any minerals from the surface or the subsurface of the Land,
regardless of the depth thereof or the method of mining or extraction thereof.

       Section 3.6. Payment for Labor and Materials.

                                       8



               (a)  Borrower will promptly pay when due all bills and costs for
labor, materials, and specifically fabricated materials ("Labor and Material
Costs") incurred in connection with the Property and never permit to exist
beyond the due date thereof in respect of the Property or any part thereof any
lien or security interest, even though inferior to the liens and the security
interests hereof, and in any event never permit to be created or exist in
respect of the Property or any part thereof any other or additional lien or
security interest other than the liens or security interests hereof except for
the Permitted Encumbrances.

               (b)  After prior written notice to Lender, Borrower, at its own
expense, may contest by appropriate legal proceeding, promptly initiated and
conducted in good faith and with due diligence, the amount or validity or
application in whole or in part of any of the Labor and Material Costs, provided
that (i) no Event of Default has occurred and is continuing under the Loan
Agreement, the Note, this Security Instrument or any of the other Loan
Documents, (ii) Borrower is permitted to do so under the provisions of any other
mortgage, deed of trust or deed to secure debt affecting the Property, (iii)
such proceeding shall suspend the collection of the Labor and Material Costs
from Borrower and from the Property or Borrower shall have paid all of the Labor
and Material Costs under protest, (iv) such proceeding shall be permitted under
and be conducted in accordance with the provisions of any other instrument to
which Borrower is subject and shall not constitute a default thereunder, (v)
neither the Property nor any part thereof or interest therein will be in danger
of being sold, forfeited, terminated, canceled or lost, and (vi) Borrower shall
have furnished the security as may be required in the proceeding, or as may be
reasonably requested by Lender to insure the payment of any contested Labor and
Material Costs, together with all interest and penalties thereon.

       Section 3.7. Performance of Other Agreements. Borrower shall observe and
perform each and every term, covenant and provision to be observed or performed
by Borrower pursuant to the Loan Agreement, any other Loan Document and any
other agreement or recorded instrument affecting or pertaining to the Property
and any amendments, modifications or changes thereto.

       Section 3.8. Change of Name, Identity, Structure or Address. Borrower
shall not change Borrower's name, identity (including its trade name or names),
principal place of business, organization (from that on page one hereof),
Borrower's Jurisdiction, or, if not an individual, Borrower's corporate,
partnership or other structure without notifying Lender of such change in
writing at least thirty (30) days prior to the effective date of such change
and, in the case of a change in Borrower's structure or Borrower's Jurisdiction,
without first obtaining the prior written consent of Lender. Borrower shall
execute and deliver to Lender, prior to or contemporaneously with the effective
date of any such change, any financing statement or financing statement change
required by Lender to establish or maintain the validity, perfection and
priority of the security interest granted herein. At the request of Lender,
Borrower shall execute a certificate in form satisfactory to Lender listing the
trade names under which Borrower intends to operate the Property, and
representing and warranting that Borrower does business under no other trade
name with respect to the Property.

                                       9



                    ARTICLE 4 - OBLIGATIONS AND RELIANCES

       Section 4.1. Relationship of Borrower and Lender. The relationship
between any Borrower and Lender is solely that of debtor and creditor, and
Lender has no fiduciary or other special relationship with any Borrower, and no
term or condition of any of the Loan Agreement, the Note, this Security
Instrument and the other Loan Documents shall be construed so as to deem the
relationship between any Borrower and Lender to be other than that of debtor and
creditor.

       Section 4.2. No Reliance on Lender. The general partners, members,
principals and (if any Borrower is a trust) beneficial owners of each Borrower
are experienced in the ownership and operation of properties similar to the
Property, and each Borrower and Lender are relying solely upon such expertise
and business plan in connection with the ownership and operation of the
Property. No Borrower is relying on Lender's expertise, business acumen or
advice in connection with the Property.

       Section 4.3. No Lender Obligations.

               (a)  Notwithstanding the provisions of Subsections 1.1(h) and (m)
or Section 1.2 hereof, Lender is not undertaking the performance of (i) any
obligations under the Leases; or (ii) any obligations with respect to such
agreements, contracts, certificates, instruments, franchises, permits,
trademarks, licenses and other documents.

               (b)  By accepting or approving anything required to be observed,
performed or fulfilled or to be given to Lender pursuant to this Security
Instrument, the Loan Agreement, the Note or the other Loan Documents, including,
without limitation, any officer's certificate, balance sheet, statement of
profit and loss or other financial statement, survey, appraisal, or insurance
policy, Lender shall not be deemed to have warranted, consented to, or affirmed
the sufficiency, the legality or effectiveness of same, and such acceptance or
approval thereof shall not constitute any warranty or affirmation with respect
thereto by Lender.

       Section 4.4. Reliance. Each Borrower recognizes and acknowledges that in
accepting the Loan Agreement, the Note, this Security Instrument and the other
Loan Documents, Lender is expressly and primarily relying on the truth and
accuracy of the warranties and representations set forth in Article III of the
Loan Agreement without any obligation to investigate the Property and
notwithstanding any investigation of the Property by Lender; that such reliance
existed on the part of Lender prior to the date hereof, that the warranties and
representations are a material inducement to Lender in making the Loan; and that
Lender would not be willing to make the Loan and accept this Security Instrument
in the absence of the warranties and representations as set forth in Article III
of the Loan Agreement.

                         ARTICLE 5 - FURTHER ASSURANCES

       Section 5.1. Recording of Security Instrument, etc. Each Borrower
forthwith upon the execution and delivery of this Security Instrument and
thereafter, from time to time, will cause this Security Instrument and any of
the other Loan Documents creating a lien or security interest or evidencing the
lien hereof upon the Property and each instrument of further assurance to be
filed, registered or recorded in such manner and in such places as may be

                                       10



required by Lender for any present or future law in order to publish notice of
and fully to protect and perfect the lien or security interest hereof upon, and
the interest of Lender in, the Property. Each Borrower will pay all taxes,
filing, registration or recording fees, and all expenses incident to the
preparation, execution, acknowledgment and/or recording of the Note, this
Security Instrument, the other Loan Documents, any financing statements
evidencing Lender's lien in the Property, any note, deed of trust or mortgage
supplemental hereto, any security instrument with respect to the Property and
any instrument of further assurance, and any modification, continuation, or
amendment of the foregoing documents, and all federal, state, county and
municipal taxes, duties, imposts, assessments and charges arising out of or in
connection with the execution and delivery of this Security Instrument, any deed
of trust or mortgage supplemental hereto, any security instrument with respect
to the Property or any instrument of further assurance, and any modification or
amendment of the foregoing documents, except where prohibited by law so to do.

       Section 5.2. Further Acts, etc. Each Borrower will, at its own cost, and
without expense to Lender, do, execute, acknowledge and deliver all and every
such further acts, deeds, conveyances, deeds of trust, assignments, notices of
assignments, transfers and assurances as Lender shall, from time to time,
reasonably require, for the better assuring, conveying, assigning, transferring,
and confirming unto Lender and Trustee the property and rights hereby deeded,
granted, bargained, sold, conveyed, confirmed, pledged, assigned, warranted and
transferred or intended now or hereafter so to be, or which any Borrower may be
or may hereafter become bound to convey or assign to Trustee or Lender, or for
carrying out the intention or facilitating the performance of the terms of this
Security Instrument or for filing, registering or recording this Security
Instrument (or evidencing the lien created hereby), or for complying with all
Legal Requirements. Pursuant to its signature hereunder, and in connection with
Lender's filing initial financing statements (and/or fixture filings),
amendments, continuations, and terminations in all such jurisdictions and with
all such governmental authorities as Lender deems desirable (to evidence the
lien granted Lender hereunder), each Borrower hereby confirms that the Lender is
a person entitled to file a record, and each Borrower has authorized all such
filings, within the meaning of Section 9-509 of the Uniform Commercial Code.
Each Borrower grants to Lender an irrevocable power of attorney coupled with an
interest for the purpose of exercising and perfecting any and all rights and
remedies available to Lender at law and in equity, including without limitation
such rights and remedies available to Lender pursuant to this Section 5.2.

       Section 5.3. Changes in Tax, Debt, Credit and Documentary Stamp Laws.

               (a)  If any law is enacted or adopted or amended after the date
of this Security Instrument which deducts the Debt from the value of the
Property for the purpose of taxation or which imposes a tax, either directly or
indirectly, on the Debt or Lender's interest in the Property, each Borrower will
pay the tax, with interest and penalties thereon, if any. If Lender is advised
by counsel chosen by it that the payment of tax by such Borrower would be
unlawful or taxable to Lender or unenforceable or provide the basis for a
defense of usury then Lender shall have the option by written notice of not less
than one hundred twenty (120) days to declare the Debt immediately due and
payable.

               (b)  Neither Borrower will claim or demand or be entitled to any
credit or credits on account of the Debt for any part of the Taxes or Other
Charges assessed against the

                                       11



Property, or any part thereof, and no deduction shall otherwise be made or
claimed from the assessed value of the Property, or any part thereof, for real
estate tax purposes by reason of this Security Instrument or the Debt. If such
claim, credit or deduction shall be required by law, Lender shall have the
option, by written notice of not less than one hundred twenty (120) days, to
declare the Debt immediately due and payable.

               (c)  If at any time the United States of America, any State
thereof or any subdivision of any such State shall require revenue or other
stamps to be affixed to the Note, this Security Instrument, or any of the other
Loan Documents or impose any other tax or charge on the same, each Borrower will
pay for the same, with interest and penalties thereon, if any.

       Section 5.4. Splitting of Deed of Trust. This Security Instrument and the
Note shall, at any time until the same shall be fully paid and satisfied, at the
sole election of Lender, be split or divided into two or more notes and two or
more security instruments, each of which shall cover all or a portion of the
Property to be more particularly described therein. To that end, each Borrower,
upon written request of Lender, shall execute, acknowledge and deliver, or cause
to be executed, acknowledged and delivered by the then owner of the Property, to
Lender and/or its designee or designees substitute notes and security
instruments in such principal amounts, aggregating not more than the then unpaid
principal amount of the Note, and containing terms, provisions and clauses
similar to those contained herein and in the Note, and such other documents and
instruments as may be reasonably required by Lender.

       Section 5.5. Replacement Documents. Upon receipt of an affidavit of an
officer of Lender as to the loss, theft, destruction or mutilation of the Note
or any other Loan Document which is not of public record, and, in the case of
any such mutilation, upon surrender and cancellation of such Note or other Loan
Document, each Borrower will issue, in lieu thereof, a replacement Note or other
Loan Document, dated the date of such lost, stolen, destroyed or mutilated Note
or other Loan Document in the same principal amount thereof and otherwise of
like tenor.

                       ARTICLE 6 - DUE ON SALE/ENCUMBRANCE

       Section 6.1. Lender Reliance. Each Borrower acknowledges that Lender has
examined and relied on the experience of each Borrower and its general partners,
members, principals and (if such Borrower is a trust) beneficial owners in
owning and operating properties such as the Property in agreeing to make the
Loan, and will continue to rely on Borrower's ownership of the Property as a
means of maintaining the value of the Property as security for repayment of the
Debt and the performance of the Other Obligations. Each Borrower acknowledges
that Lender has a valid interest in maintaining the value of the Property so as
to ensure that, should Borrower default in the repayment of the Debt or the
performance of the Other Obligations, Lender can recover the Debt by a sale of
the Property.

       Section 6.2. No Transfer. Neither Borrower shall permit or suffer any
Transfer to occur, unless permitted by the Loan Agreement or unless Lender shall
consent thereto in writing.

       Section 6.3. Transfer Defined. As used in this Article 6 "Transfer" shall
mean any voluntary or involuntary sale, conveyance, mortgage, grant, bargain,
encumbrance, pledge,

                                       12



assignment, or transfer of: (a) all or any part of the Property or any estate or
interest therein including, but not be limited to, (i) an installment sales
agreement wherein any Borrower agrees to sell the Property or any part thereof
for a price to be paid in installments, (ii) an agreement by any Borrower
leasing all or a substantial part of the Property for other than actual
occupancy by a space tenant thereunder and its affiliates or (iii) a sale,
assignment or other transfer of, or the grant of a security interest in, any
Borrower's right, title and interest in and to any Leases or any Rents; or (b)
any ownership interest in (i) any Borrower, (ii) SPE Equity Owner or (iii) any
indemnitor or guarantor of any Obligations or (iv) any corporation, partnership,
limited liability company, trust or other entity owning, directly or indirectly,
any interest in any Borrower or any indemnitor or guarantor of any Obligations.

       Section 6.4. Lender's Rights. Without obligating Lender to grant any
consent under Section 6.2 hereof which Lender may grant or withhold in its sole
discretion, Lender reserves the right to condition the consent required
hereunder upon (a) a modification of the terms hereof and of the Loan Agreement,
the Note or the other Loan Documents; (b) an assumption of the Loan Agreement,
the Note, this Security Instrument and the other Loan Documents; (c) payment of
all of Lender's expenses incurred in connection with such transfer; (d) receipt
of Rating Agency Confirmation; (e) the delivery of a nonconsolidation opinion
reflecting the proposed transfer satisfactory in form and substance to Lender;
(f) the proposed transferee's continued compliance with the representations and
covenants set forth in the Loan Agreement; (g) the delivery of evidence
satisfactory to Lender that the single purpose nature and bankruptcy remoteness
of each Borrower, its shareholders, partners or members, as the case may be,
following such transfers are in accordance with the standards of the Rating
Agencies; (h) the proposed transferee's ability to satisfy Lender's then-current
underwriting standards; or (i) such other conditions as Lender shall determine
in its reasonable discretion to be in the interest of Lender, including, without
limitation, the creditworthiness, reputation and qualifications of the
transferee with respect to the Loan and the Property. Lender shall not be
required to demonstrate any actual impairment of its security or any increased
risk of default hereunder in order to declare the Debt immediately due and
payable upon a Transfer without Lender's consent. This provision shall apply to
every Transfer, other than any Transfer permitted pursuant to the Loan
Agreement, regardless of whether voluntary or not, or whether or not Lender has
consented to any previous Transfer.

                  ARTICLE 7 - RIGHTS AND REMEDIES UPON DEFAULT

       Section 7.1. Remedies. Upon the occurrence and during the continuance of
any Event of Default, each Borrower agrees that Lender or Trustee, or both, may
take such action, without notice or demand, as it deems advisable to protect and
enforce its rights against such Borrower and in and to the Property, including,
but not limited to, the following actions, each of which may be pursued
concurrently or otherwise, at such time and in such order as Lender or Trustee
may determine, in their sole discretion, without impairing or otherwise
affecting the other rights and remedies of Lender or Trustee:

     (a) declare the entire unpaid Debt to be immediately due and payable;

     (b) institute proceedings, judicial or otherwise, for the complete
foreclosure of this Security Instrument under any applicable provision of law,
in which case the

                                       13



Property or any interest therein may be sold for cash or upon credit in one or
more parcels or in several interests or portions and in any order or manner;

       (c)     with or without entry, to the extent permitted and pursuant to
the procedures provided by applicable law, institute proceedings for the partial
foreclosure of this Security Instrument for the portion of the Debt then due and
payable, subject to the continuing lien and security interest of this Security
Instrument for the balance of the Debt not then due, unimpaired and without loss
of priority;

       (d)     sell for cash or upon credit the Property or any part thereof and
all estate, claim, demand, right, title and interest of any Borrower therein and
rights of redemption thereof, pursuant to power of sale or otherwise, at one or
more sales, as an entirety or in parcels, at such time and place, upon such
terms and after such notice thereof, all as may be required or permitted by law;
and, without limiting the foregoing:

               (i)   In connection with any sale or sales hereunder, Lender or
       the Trustee shall be entitled to elect to treat any of the Property which
       consists of a right in action or which is property that can be severed
       from the Real Property covered hereby or any improvements without causing
       structural damage thereto as if the same were personal property, and
       dispose of the same in accordance with applicable law, separate and apart
       from the sale of Real Property. Where the Property consists of Real
       Property, Personal Property, Equipment or Fixtures, whether or not such
       Personal Property or Equipment is located on or within the Real Property,
       Lender and/or the Trustee shall be entitled to elect to exercise its
       rights and remedies against any or all of the Real Property, Personal
       Property, Equipment and Fixtures and the fee and/or leasehold interest
       therein in such order and manner as is now or hereafter permitted by
       applicable law;

               (ii)  Lender and/or the Trustee shall be entitled to elect to
       proceed against any or all of the Real Property, Personal Property,
       Equipment and Fixtures and the fee and/or leasehold interest therein in
       any manner permitted under applicable law; and if Lender and/or the
       Trustee so elects pursuant to applicable law, the power of sale herein
       granted shall be exercisable with respect to all or any of the Real
       Property, Personal Property, Equipment and Fixtures and the fee and/or
       leasehold interest therein covered hereby, as designated by Lender and/or
       the Trustee and Trustee is hereby authorized and empowered to conduct any
       such sale of any Real Property, Personal Property, Equipment and Fixtures
       and the fee and/or leasehold interest therein in accordance with the
       procedures applicable to Real Property;

               (iii) Should Lender and/or the Trustee elect to sell any portion
       of the Property which is Real Property or which is Personal Property,
       Equipment or Fixtures that the Lender and/or the Trustee has elected
       under applicable law to sell together with Real Property in accordance
       with the laws governing a sale of Real Property, Lender and/or the
       Trustee shall give such notice of Event of Default, if any, and election
       to sell as may then be required by law. Thereafter, upon the expiration
       of such time and the giving of such notice of sale as may then

                                       14



     be required by law, and without the necessity of any demand on any
     Borrower, Lender and/or the Trustee at the time and place specified in the
     notice of sale, shall sell such Real Property or part thereof at public
     auction to the highest bidder for cash in lawful money of the United
     States. Lender or the Trustee may from time to time postpone any sale
     hereunder by public announcement thereof at the time and place noticed
     therefor;

           (iv)   If the Property consists of several lots, parcels or items of
     property, Lender or the Trustee shall, subject to applicable law, (A)
     designate the order in which such lots, parcels or items shall be offered
     for sale or sold, or (B) elect to sell such lots, parcels or items through
     a single sale, or through two or more successive sales, or in any other
     manner Lender or the Trustee designates. Any Person, other than the
     Trustee, including any Borrower or Lender, may purchase at any sale
     hereunder. Should Lender or the Trustee desire that more than one sale or
     other disposition of the Property be conducted, Lender or the Trustee
     shall, subject to applicable law, cause such sales or dispositions to be
     conducted simultaneously, or successively, on the same day, or at such
     different days or times and in such order as Lender or the Trustee may
     designate, and no such sale shall terminate or otherwise affect the lien of
     this Security Instrument on any part of the Property not sold until all the
     Debt has been paid in full. In the event Lender or the Trustee elects to
     dispose of the Property through more than one sale, except as otherwise
     provided by applicable law, each Borrower agrees to pay the costs and
     expenses of each such sale and of any judicial proceedings wherein such
     sale may be made;

     (e)   institute an action, suit or proceeding in equity for the specific
performance of any covenant, condition or agreement contained herein, in the
Note, the Loan Agreement or in the other Loan Documents;

     (f)   recover judgment on the Note either before, during or after any
proceedings for the enforcement of this Security Instrument or the other Loan
Documents;

     (g)   apply for the appointment of a receiver, trustee, liquidator or
conservator of the Property, without notice and without regard for the adequacy
of the security for the Debt and without regard for the solvency of any
Borrower, any guarantor, indemnitor with respect to the Loan or of any Person,
liable for the payment of the Debt;

     (h)   the license granted to the Borrowers under Section 1.2 hereof shall
automatically be revoked and Lender may enter into or upon the Property, either
personally or by its agents, nominees or attorneys and dispossess each Borrower
and its agents and servants therefrom, without liability for trespass, damages
or otherwise and exclude each Borrower and its agents or servants wholly
therefrom, and take possession of all books, records and accounts relating
thereto and each Borrower agrees to surrender possession of the Property and of
such books, records and accounts to Lender upon demand, and thereupon Lender may
(i) use, operate, manage, control, insure, maintain, repair, restore and
otherwise deal with all and every part of the Property and conduct the

                                       15



business thereat; (ii) complete any construction on the Property in such manner
and form as Lender deems advisable; (iii) make alterations, additions, renewals,
replacements and improvements to or on the Property; (iv) exercise all rights
and powers of any Borrower with respect to the Property, whether in the name of
such Borrower or otherwise, including, without limitation, the right to make,
cancel, enforce or modify Leases, obtain and evict tenants, and demand, sue for,
collect and receive all Rents of the Property and every part thereof; (v)
require each Borrower to pay monthly in advance to Lender, or any receiver
appointed to collect the Rents, the fair and reasonable rental value for the use
and occupation of such part of the Property as may be occupied by such Borrower;
(vi) require each Borrower to vacate and surrender possession of the Property to
Lender or to such receiver and, in default thereof, such Borrower may be evicted
by summary proceedings or otherwise; and (vii) apply the receipts from the
Property to the payment of the Debt, in such order, priority and proportions as
Lender shall deem appropriate in its sole discretion after deducting therefrom
all expenses (including reasonable attorneys' fees) incurred in connection with
the aforesaid operations and all amounts necessary to pay the Taxes, Other
Charges, insurance and other expenses in connection with the Property, as well
as just and reasonable compensation for the services of Lender, its counsel,
agents and employees;

     (i)   exercise any and all rights and remedies granted to a secured party
upon default under the Uniform Commercial Code, including, without limiting the
generality of the foregoing: (i) the right to take possession of the Fixtures,
the Equipment and the Personal Property, or any part thereof, and to take such
other measures as Lender may deem necessary for the care, protection and
preservation of the Fixtures, the Equipment and the Personal Property, and (ii)
request each Borrower at its expense to assemble the Fixtures, the Equipment and
the Personal Property and make it available to Lender at a convenient place
acceptable to Lender. Any notice of sale, disposition or other intended action
by Lender with respect to the Fixtures, the Equipment and/or the Personal
Property sent to any Borrower in accordance with the provisions hereof at least
five (5) days prior to such action, shall constitute commercially reasonable
notice to such Borrower;

     (j)   apply any sums then deposited or held in escrow or otherwise by or on
behalf of Lender in accordance with the terms of the Loan Agreement, this
Security Instrument or any other Loan Document to the payment of the following
items in any order in its uncontrolled discretion:

           (i)   Taxes and Other Charges;

           (ii)  Insurance Premiums;

           (iii) Interest on the unpaid principal balance of the Note;

           (iv)  Amortization of the unpaid principal balance of the Note;

           (v)   All other sums payable pursuant to the Note, the Loan
     Agreement, this Security Instrument and the other Loan Documents, including
     without

                                       16



limitation advances made by Lender pursuant to the terms of this Security
Instrument;

     (k) pursue such other remedies as Lender may have under applicable law;

     (l) apply the undisbursed balance of any Net Proceeds Deficiency deposit,
together with interest thereon, to the payment of the Debt in such order,
priority and proportions as Lender shall deem to be appropriate in its
discretion; or

     (m) institute proceedings, judicial or otherwise, for the complete
foreclosure of this Security Instrument as it relates to Fee Owner's fee
interest in the Property without foreclosing on that portion of the Property
which constitutes Operator's leasehold interest therein. Notwithstanding the
foregoing, Operator agrees that Lender may, in its sole discretion, terminate
any and all operating leases to which either Fee Owner or Operator is now or
hereafter may be a party.

In the event of a sale, by foreclosure, power of sale or otherwise, of less than
all of Property, this Security Instrument shall continue as a lien and security
interest on the remaining portion of the Property unimpaired and without loss of
priority.

     Section 7.2.   Application of Proceeds. The purchase money, proceeds and
avails of any disposition of the Property, and or any part thereof, or any other
sums collected by Lender pursuant to the Note, this Security Instrument or the
other Loan Documents, may be applied by Lender to the payment of the Debt in
such priority and proportions as Lender in its discretion shall deem proper, to
the extent consistent with law.

     Section 7.3.   Right to Cure Defaults. Upon the occurrence and during the
continuance of any Event of Default or if any Borrower fails to make any payment
or to do any act as herein provided, Lender may, but without any obligation to
do so and without notice to or demand on any Borrower and without releasing any
Borrower from any obligation hereunder, make or do the same in such manner and
to such extent as Lender may deem necessary to protect the security hereof.
Lender is authorized to enter upon the Property for such purposes, or appear in,
defend, or bring any action or proceeding to protect its interest in the
Property or to foreclose this Security Instrument or collect the Debt, and the
cost and expense thereof (including reasonable attorneys' fees to the extent
permitted by law), with interest as provided in this Section 7.3, shall
constitute a portion of the Debt and shall be due and payable to Lender upon
demand. All such costs and expenses incurred by Lender in remedying such Event
of Default or such failed payment or act or in appearing in, defending, or
bringing any such action or proceeding shall bear interest at the Default Rate,
for the period after notice from Lender that such cost or expense was incurred
to the date of payment to Lender. All such costs and expenses incurred by Lender
together with interest thereon calculated at the Default Rate shall be deemed to
constitute a portion of the Debt and be secured by this Security Instrument and
the other Loan Documents and shall be immediately due and payable upon demand by
Lender therefor.

     Section 7.4.   Actions and Proceedings. Lender or Trustee has the right to
appear in and defend any action or proceeding brought with respect to the
Property and to bring any action

                                       17



or proceeding, in the name and on behalf of any Borrower, which Lender, in its
discretion, decides should be brought to protect its interest in the Property.

     Section 7.5.   Recovery of Sums Required To be Paid. Lender shall have the
right from time to time to take action to recover any sum or sums which
constitute a part of the Debt as the same become due, without regard to whether
or not the balance of the Debt shall be due, and without prejudice to the right
of Lender or Trustee thereafter to bring an action of foreclosure, or any other
action, for a default or defaults by any Borrower existing at the time such
earlier action was commenced.

     Section 7.6.   Examination of Books and Records. At reasonable times and
upon reasonable notice, Lender, its agents, accountants and attorneys shall have
the right to examine the records, books, management and other papers of any
Borrower which reflect upon its financial condition, at the Property or at any
office regularly maintained by such Borrower where the books and records are
located. Lender and its agents shall have the right to make copies and extracts
from the foregoing records and other papers. In addition, at reasonable times
and upon reasonable notice, Lender, its agents, accountants and attorneys shall
have the right to examine and audit the books and records of any Borrower
pertaining to the income, expenses and operation of the Property during
reasonable business hours at any office of such Borrower where the books and
records are located. This Section 7.6 shall apply throughout the term of the
Note and without regard to whether an Event of Default has occurred and is
continuing.

     Section 7.7.   Other Rights, Etc.

              (a)   The failure of Lender or Trustee to insist upon strict
performance of any term hereof shall not be deemed to be a waiver of any term of
this Security Instrument. Neither Borrower shall be relieved of its obligations
hereunder by reason of (i) the failure of Lender or Trustee to comply with any
request of any Borrower or any guarantor or indemnitor with respect to the Loan
to take any action to foreclose this Security Instrument or otherwise enforce
any of the provisions hereof or of the Note or the other Loan Documents, (ii)
the release, regardless of consideration, of the whole or any part of the
Property, or of any person liable for the Debt or any portion thereof, or (iii)
any agreement or stipulation by Lender extending the time of payment or
otherwise modifying or supplementing the terms of the Note, this Security
Instrument or the other Loan Documents.

              (b)   It is agreed that the risk of loss or damage to the Property
is on each Borrower, and Lender shall have no liability whatsoever for decline
in value of the Property, for failure to maintain the Policies, or for failure
to determine whether insurance in force is adequate as to the amount of risks
insured. Possession by Lender shall not be deemed an election of judicial
relief, if any such possession is requested or obtained, with respect to any
Property or collateral not in Lender's possession.

              (c)   Lender may resort for the payment of the Debt to any other
security held by Lender in such order and manner as Lender, in its discretion,
may elect. Lender or Trustee may take action to recover the Debt, or any portion
thereof, or to enforce any covenant hereof without prejudice to the right of
Lender or Trustee thereafter to foreclose this Security Instrument. The rights
of Lender or Trustee under this Security Instrument shall be separate,

                                       18



distinct and cumulative and none shall be given effect to the exclusion of the
others. No act of Lender or Trustee shall be construed as an election to proceed
under any one provision herein to the exclusion of any other provision. Neither
Lender nor Trustee shall be limited exclusively to the rights and remedies
herein stated but shall be entitled to every right and remedy now or hereafter
afforded at law or in equity.

     Section 7.8.   Right to Release Any Portion of the Property. Lender may
release any portion of the Property for such consideration as Lender may require
without, as to the remainder of the Property, in any way impairing or affecting
the lien or priority of this Security Instrument, or improving the position of
any subordinate lienholder with respect thereto, except to the extent that the
obligations hereunder shall have been reduced by the actual monetary
consideration, if any, received by Lender for such release, and may accept by
assignment, pledge or otherwise any other property in place thereof as Lender
may require without being accountable for so doing to any other lienholder. This
Security Instrument shall continue as a lien and security interest in the
remaining portion of the Property. Notwithstanding the forgoing, upon full
payment of all Debt, at the time and manner provided in the Loan Documents, this
conveyance or lien shall be null and void and upon demand therefor following
such payment, a release of this Security Instrument shall be promptly provided
by Lender to the Borrowers, at the sole cost and expense of the Borrowers.

     Section 7.9.   Violation of Laws. If the Property is not in material
compliance with Legal Requirements, Lender may impose additional requirements
upon each Borrower in connection herewith including, without limitation,
monetary reserves or financial equivalents.

     Section 7.10.  Recourse and Choice of Remedies. Notwithstanding any other
provision of this Security Instrument or the Loan Agreement, including, without
limitation, Section 11.22 of the Loan Agreement, Lender and other Indemnified
Parties (as hereinafter defined) are entitled to enforce the obligations of any
Borrower and any guarantor and indemnitor contained in Sections 9.2 and 9.3
herein and Section 9.2 of the Loan Agreement without first resorting to or
exhausting any security or collateral and without first having recourse to the
Note or any of the Property, through foreclosure, exercise of a power of sale or
acceptance of a deed in lieu of foreclosure or otherwise, and in the event
Lender commences a foreclosure action against the Property, or otherwise causes
Trustee to exercise the power of sale pursuant to this Security Instrument,
Lender is entitled to pursue a deficiency judgment with respect to such
obligations against any Borrower and any guarantor or indemnitor with respect to
the Loan. The provisions of Sections 9.2 and 9.3 herein and Section 9.2 of the
Loan Agreement are exceptions to any non-recourse or exculpation provisions in
the Loan Agreement, the Note, this Security Instrument or the other Loan
Documents, and any Borrower and any guarantor or indemnitor with respect to the
Loan are fully and personally liable for the obligations pursuant to Sections
9.2 and 9.3 herein and Section 9.2 of the Loan Agreement. The liability of any
Borrower and any guarantor or indemnitor with respect to the Loan pursuant to
Sections 9.2 and 9.3 herein and Section 9.2 of the Loan Agreement is not limited
to the original principal amount of the Note. Notwithstanding the foregoing,
nothing herein shall inhibit or prevent Lender or Trustee from foreclosing or
exercising a power of sale pursuant to this Security Instrument or exercising
any other rights and remedies pursuant to the Loan Agreement, the Note, this
Security Instrument and the other Loan Documents, whether simultaneously with
foreclosure proceedings or in any other sequence. A separate action or actions
may be brought and prosecuted against

                                       19



any Borrower pursuant to Sections 9.2 and 9.3 herein and Section 9.2 of the Loan
Agreement, whether or not action is brought against any other Person or whether
or not any other Person is joined in the action or actions. In addition, Lender
shall have the right but not the obligation to join and participate in, as a
party if it so elects, any administrative or judicial proceedings or actions
initiated in connection with any matter addressed in the Environmental
Indemnity.

     Section 7.11.  Right of Entry. Upon reasonable notice to the Borrowers,
Lender and its agents shall have the right to enter and inspect the Property at
all reasonable times.

                         ARTICLE 8 INTENTIONALLY OMITTED

                           ARTICLE 9 - INDEMNIFICATION

     Section 9.1.   General Indemnification. Each Borrower shall, at its sole
cost and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all claims, suits, liabilities
(including, without limitation, strict liabilities), actions, proceedings,
obligations, debts, damages, losses, costs, expenses, diminutions in value,
fines, penalties, charges, fees, expenses, judgments, awards, amounts paid in
settlement, punitive damages, foreseeable and unforeseeable consequential
damages, of whatever kind or nature (including but not limited to reasonable
attorneys' fees and other costs of defense) (collectively, the "Losses") imposed
upon or incurred by or asserted against any Indemnified Parties and directly or
indirectly arising out of or in any way relating to any one or more of the
following: (a) ownership of this Security Instrument, the Property or any
interest therein or receipt of any Rents; (b) any amendment to, or restructuring
of, the Debt, and the Note, the Loan Agreement, this Security Instrument, or any
other Loan Documents; (c) any and all lawful action that may be taken by Lender
in connection with the enforcement of the provisions of this Security Instrument
or the Loan Agreement or the Note or any of the other Loan Documents, whether or
not suit is filed in connection with same, or in connection with any Borrower,
any guarantor or indemnitor and/or any partner, joint venturer or shareholder
thereof becoming a party to a voluntary or involuntary federal or state
bankruptcy, insolvency or similar proceeding; (d) any accident, injury to or
death of persons or loss of or damage to property occurring in, on or about the
Property or any part thereof or on the adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways; (e) any use, nonuse or
condition in, on or about the Property or any part thereof or on the adjoining
sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways;
(f) any failure on the part of any Borrower to perform or be in compliance with
any of the terms of this Security Instrument; (g) performance of any labor or
services or the furnishing of any materials or other property in respect of the
Property or any part thereof; (h) the failure of any person to file timely with
the Internal Revenue Service an accurate Form 1099-B, Statement for Recipients
of Proceeds from Real Estate, Broker and Barter Exchange Transactions, which may
be required in connection with this Security Instrument, or to supply a copy
thereof in a timely fashion to the recipient of the proceeds of the transaction
in connection with which this Security Instrument is made; (i) any failure of
the Property to be in compliance with any Legal Requirements; (j) the
enforcement by any Indemnified Party of the provisions of this Article 9; (k)
any and all claims and demands whatsoever which may be asserted against Lender
by reason of any alleged obligations or undertakings on its part to perform or
discharge any of the terms, covenants, or agreements contained in any Lease; (1)
the payment of any commission, charge or brokerage fee to anyone claiming
through any Borrower which may be

                                       20



payable in connection with the funding of the Loan; or (m) any misrepresentation
made by any Borrower in this Security Instrument or any other Loan Document. Any
amounts payable to Lender by reason of the application of this Section 9.1 shall
become immediately due and payable and shall bear interest at the Default Rate
from the date loss or damage is sustained by Lender until paid. For purposes of
this Article 9, the term "Indemnified Parties" means Lender and any Person who
is or will have been involved in the origination of the Loan, any Person who is
or will have been involved in the servicing of the Loan secured hereby, any
Person in whose name the encumbrance created by this Security Instrument is or
will have been recorded, persons and entities who may hold or acquire or will
have held a full or partial interest in the Loan secured hereby (including, but
not limited to, investors or prospective investors in the Securities, as well as
custodians, trustees and other fiduciaries who hold or have held a full or
partial interest in the Loan secured hereby for the benefit of third parties) as
well as the respective directors, officers, shareholders, partners, employees,
agents, servants, representatives, contractors, subcontractors, affiliates,
subsidiaries, participants, successors and assigns of any and all of the
foregoing (including but not limited to any other Person who holds or acquires
or will have held a participation or other full or partial interest in the Loan,
whether during the term of the Loan or as a part of or following a foreclosure
of the Loan and including, but not limited to, any successors by merger,
consolidation or acquisition of all or a substantial portion of Lender's assets
and business).

     Section 9.2.   Mortgage and/or Intangible Tax. Each Borrower shall, at its
sole cost and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all Losses imposed upon or incurred
by or asserted against any Indemnified Parties and directly or indirectly
arising out of or in any way relating to any tax on the making and/or recording
of this Security Instrument, the Note or any of the other Loan Documents, but
excluding any income, franchise or other similar taxes.

     Section 9.3.   ERISA Indemnification. Each Borrower shall, at its sole cost
and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all Losses (including, without
limitation, reasonable attorneys' fees and costs incurred in the investigation,
defense, and settlement of Losses incurred in correcting any prohibited
transaction or in the sale of a prohibited loan, and in obtaining any individual
prohibited transaction exemption under ERISA that may be required, in Lender's
sole discretion) that Lender may incur, directly or indirectly, as a result of a
default under Sections 3.1.8 or 4.2.11 of the Loan Agreement.

     Section 9.4.   Intentionally Omitted.

     Section 9.5.   Duty to Defend; Attorneys' Fees and Other Fees and Expenses.
Upon written request by any Indemnified Party, each Borrower shall defend such
Indemnified Party (if requested by any Indemnified Party, in the name of the
Indemnified Party) by attorneys and other professionals approved by the
Indemnified Parties. Notwithstanding the foregoing, if the defendants in any
such claim or proceeding include any Borrower and any Indemnified Party and such
Borrower and Indemnified Party shall have reasonably concluded that there are
any legal defenses available to it and/or other Indemnified Parties that are
different from or additional to those available to such Borrower, such
Indemnified Party shall have the right to select separate counsel to assert such
legal defenses and to otherwise participate in the defense of such action on

                                       21



behalf of such Indemnified Party, provided that no compromise or settlement
shall be entered without such Borrower's consent, which consent shall not be
unreasonably withheld. Upon demand, such Borrower shall pay or, in the sole and
absolute discretion of the Indemnified Parties, reimburse, the Indemnified
Parties for the payment of reasonable fees and disbursements of attorneys,
engineers, environmental consultants, laboratories and other professionals in
connection therewith.

                              ARTICLE 10 - WAIVERS

     Section 10.1.  Waiver of Counterclaim. To the extent permitted by
applicable law, each Borrower hereby waives the right to assert a counterclaim,
other than a mandatory or compulsory counterclaim, in any action or proceeding
brought against it by Lender arising out of or in any way connected with this
Security Instrument, the Loan Agreement, the Note, any of the other Loan
Documents, or the Obligations.

     Section 10.2.  Marshalling and Other Matters. To the fullest extent
permitted by applicable law, each Borrower, for itself and its successors and
assigns, hereby waives the benefit of all appraisement, valuation, stay,
extension, reinstatement and redemption laws now or hereafter in force and all
rights of marshalling in the event of any sale hereunder of the Property or any
part thereof or any interest therein. Further, each Borrower hereby expressly
waives any and all rights of redemption from sale under any order or decree of
foreclosure of this Security Instrument on behalf of such Borrower, and on
behalf of each and every person acquiring any interest in or title to the
Property subsequent to the date of this Security Instrument and on behalf of all
persons to the extent permitted by applicable law.

     Section 10.3.  Waiver of Notice. To the extent permitted by applicable law,
neither Borrower shall be entitled to any notices of any nature whatsoever from
Lender or Trustee except with respect to matters for which this Security
Instrument specifically and expressly provides for the giving of notice by
Lender or Trustee to such Borrower and except with respect to matters for which
Lender or Trustee is required by applicable law to give notice, and each
Borrower hereby expressly waives the right to receive any notice from Lender or
Trustee with respect to any matter for which this Security Instrument does not
specifically and expressly provide for the giving of notice by Lender or Trustee
to such Borrower.

     Section 10.4.  Waiver of Statute of Limitations. To the extent permitted by
applicable law, each Borrower hereby expressly waives and releases to the
fullest extent permitted by law, the pleading of any statute of limitations as a
defense to payment of the Debt or performance of its Other Obligations.

     Section 10.5.  Survival. The indemnifications made pursuant to Sections
9.1, 9.2 and 9.3 herein and the representations and warranties, covenants, and
other obligations arising under the Environmental Indemnity, shall continue
indefinitely in full force and effect and shall survive and shall in no way be
impaired by: any satisfaction, release or other termination of this Security
Instrument, any assignment or other transfer of all or any portion of this
Security Instrument or Lender's interest in the Property (but, in such case,
shall benefit both Indemnified Parties and any assignee or transferee), any
exercise of Lender's rights and remedies pursuant hereto including but not
limited to foreclosure or acceptance of a deed in lieu of foreclosure, any

                                       22



exercise of any rights and remedies pursuant to the Loan Agreement, the Note or
any of the other Loan Documents, any transfer of all or any portion of the
Property (whether by any Borrower or by Lender following foreclosure or
acceptance of a deed in lieu of foreclosure or at any other time), any amendment
to this Security Instrument, the Loan Agreement, the Note or the other Loan
Documents, and any act or omission that might otherwise be construed as a
release or discharge of any Borrower from the obligations pursuant hereto.

                            ARTICLE 11 - EXCULPATION

     The provisions of Section 11.22 of the Loan Agreement are hereby
incorporated by reference into this Security Instrument to the same extent and
with the same force as if fully set forth herein.

                              ARTICLE 12 - NOTICES

     All notices or other written communications hereunder shall be delivered in
accordance with Section 11.6 of the Loan Agreement.

                          ARTICLE 13 - APPLICABLE LAW

     Section 13.1. Governing Law. This Security Instrument shall be governed and
construed in accordance with the laws of the State in which the Land is located.

     Section 13.2. Usury Laws. Notwithstanding anything to the contrary, (a) all
agreements and communications between any Borrower and Lender are hereby and
shall automatically be limited so that, after taking into account all amounts
deemed interest, the interest contracted for, charged or received by Lender
shall never exceed the maximum lawful rate or amount, (b) in calculating whether
any interest exceeds the lawful maximum, all such interest shall be amortized,
prorated, allocated and spread over the full amount and term of all principal
indebtedness of the Borrowers to Lender, and (c) if through any contingency or
event, Lender receives or is deemed to receive interest in excess of the lawful
maximum, any such excess shall be deemed to have been applied toward payment of
the principal of any and all then outstanding indebtedness of the Borrowers to
Lender, or if there is no such indebtedness, shall immediately be returned to
the Borrowers.

     Section 13.3. Provisions Subject to Applicable Law. All rights, powers and
remedies provided in this Security Instrument may be exercised only to the
extent that the exercise thereof does not violate any applicable provisions of
law and are intended to be limited to the extent necessary so that they will not
render this Security Instrument invalid, unenforceable or not entitled to be
recorded, registered or filed under the provisions of any applicable law.

                            ARTICLE 14 - DEFINITIONS

     All capitalized terms not defined herein shall have the respective meanings
set forth in the Loan Agreement. Unless the context clearly indicates a contrary
intent or unless otherwise

                                       23



specifically provided herein, words used in this Security Instrument may be used
interchangeably in singular or plural form and the word "Borrower" shall mean
"each Borrower and any subsequent owner or owners of the Property or any part
thereof or any interest therein," the word "Lender" shall mean "Lender and any
subsequent holder of the Note," the word "Note" shall mean "the Note and any
other evidence of indebtedness secured by this Security Instrument," the word
"Property" shall include any portion of the Property and any interest therein,
and the phrases "attorneys' fees", "legal fees" and "counsel fees" shall include
any and all attorneys', paralegal and law clerk fees and disbursements,
including, but not limited to, fees and disbursements at the pre-trial, trial
and appellate levels incurred or paid by Lender in protecting its interest in
the Property, the Leases and the Rents and enforcing its rights hereunder.

                      ARTICLE 15 - MISCELLANEOUS PROVISIONS

     Section 15.1. No Oral Change. This Security Instrument, and any provisions
hereof, may not be modified, amended, waived, extended, changed, discharged or
terminated orally or by any act or failure to act on the part of any Borrower or
Lender, but only by an agreement in writing signed by the party against whom
enforcement of any modification, amendment, waiver, extension, change, discharge
or termination is sought.

     Section 15.2. Successors and Assigns. This Security Instrument shall be
binding upon and inure to the benefit of each Borrower and Lender and their
respective successors and assigns forever.

     Section 15.3. Inapplicable Provisions. If any term, covenant or condition
of the Loan Agreement, the Note or this Security Instrument is held to be
invalid, illegal or unenforceable in any respect, the Loan Agreement, the Note
and this Security Instrument shall be construed without such provision.

     Section 15.4. Headings, etc. The headings and captions of various Sections
of this Security Instrument are for convenience of reference only and are not to
be construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.

     Section 15.5. Intentionally Omitted.

     Section 15.6. Subrogation. If any or all of the proceeds of the Note have
been used to extinguish, extend or renew any indebtedness heretofore existing
against the Property, then, to the extent of the funds so used, Lender shall be
subrogated to all of the rights, claims, liens, titles, and interests existing
against the Property heretofore held by, or in favor of, the holder of such
indebtedness and such former rights, claims, liens, titles, and interests, if
any, are not waived but rather are continued in full force and effect in favor
of Lender and are merged with the lien and security interest created herein as
cumulative security for the repayment of the Debt, the performance and discharge
of any Borrower's obligations hereunder, under the Loan Agreement, the Note and
the other Loan Documents and the performance and discharge of the Other
Obligations.

     Section 15.7. Entire Agreement. The Note, the Loan Agreement, this Security
Instrument and the other Loan Documents constitute the entire understanding and
agreement between the Borrowers and Lender with respect to the transactions
arising in connection with the

                                       24



Debt and supersede all prior written or oral understandings and agreements
between the Borrowers and Lender with respect thereto. Each Borrower hereby
acknowledges that, except as incorporated in writing in the Note, the Loan
Agreement, this Security Instrument and the other Loan Documents, there are not,
and were not, and no persons are or were authorized by Lender to make, any
representations, understandings, stipulations, agreements or promises, oral or
written, with respect to the transaction which is the subject of the Note, the
Loan Agreement, this Security Instrument and the other Loan Documents.

     Section 15.8.  Limitation on Lender's Responsibility. No provision of this
Security Instrument shall operate to place any obligation or liability for the
control, care, management or repair of the Property upon Lender, nor shall it
operate to make Lender responsible or liable for any waste committed on the
Property by the tenants or any other Person, or for any dangerous or defective
condition of the Property, or for any negligence in the management, upkeep,
repair or control of the Property resulting in loss or injury or death to any
tenant, licensee, employee or stranger. Nothing herein contained shall be
construed as constituting Lender a "mortgagee in possession."

     Section 15.9.  Waiver of Right to Trial by Jury.

     EACH BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE
TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE
EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS
SECURITY INSTRUMENT OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR
OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY
JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY EACH BORROWER, AND IS INTENDED TO
ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A
TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS EACH HEREBY AUTHORIZED TO FILE A
COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER.

     Section 15.10. Secondary Market. Lender may sell, transfer and deliver the
Note and assign this Security Instrument and the other Loan Documents to one or
more investors in the secondary mortgage market ("Investors"). In connection
with such sale, Lender may retain or assign responsibility for servicing the
Loan, including the Note, this Security Instrument or the other Loan Documents,
or may delegate some or all of such responsibility and/or obligations to a
servicer including, but not limited to, any subservicer or master servicer, on
behalf of the Investors. All references to Lender herein shall refer to and
include any such servicer to the extent applicable.

     Section 15.11. Cross-Collateralization. Without limitation to any other
right or remedy provided to Lender or Trustee in this Security Instrument or any
of the other Loan Documents, each Borrower acknowledges and agrees that (i) upon
the occurrence of an Event of Default, to the fullest extent permitted by law,
Lender or Trustee shall have the right to pursue all of its rights and remedies
in one proceeding, or separately and independently in separate proceedings which
Lender or Trustee, in its sole and absolute discretion, shall determine from
time to time, (ii) neither Lender nor Trustee is required to marshall assets,
sell any collateral for

                                       25



the Loan in any inverse order of alienation, or be subjected to any "one action"
or "election of remedies" law or rule, (iii) the exercise by Lender or Trustee
of any remedies against any collateral for the Loan will not impede Lender or
Trustee from subsequently or simultaneously exercising remedies against other
collateral for the Loan; (iv) all Liens and other rights, remedies and
privileges provided to Lender or Trustee in the Loan Documents or otherwise
shall remain in full force and effect until Lender or Trustee has exhausted all
of its remedies against the collateral for the Loan and all of the collateral
for the Loan has been foreclosed, sold and/or otherwise realized upon in
satisfaction of the Loan; and (v) all of the Properties shall remain security
for the performance of all of the obligations of each Borrower hereunder, under
the Note and under any of the other Loan Documents.

     Section 15.12. Joint and Several Liability. If more than one Person has
executed this Security Instrument as "Borrower," the representations, covenants,
warranties and obligations of all such Persons hereunder shall be joint and
several. Each Borrower further acknowledges and agrees that it shall be jointly
and severally liable for the obligations of all the Other Borrowers under the
Loan Documents.

                     ARTICLE 16 - DEED OF TRUST PROVISIONS

     Section 16.1. Concerning the Trustee. Trustee shall be under no duty to
take any action hereunder except as expressly required hereunder or by law, or
to perform any act which would involve Trustee in any expense or liability or to
institute or defend any suit in respect hereof, unless properly indemnified to
Trustee's reasonable satisfaction. Trustee, by acceptance of this Security
Instrument, covenants to perform and fulfill the trusts herein created, being
liable, however, only for willful negligence or misconduct, and hereby waives
any statutory fee and agrees to accept reasonable compensation, in lieu thereof,
for any services rendered by Trustee in accordance with the terms hereof.
Trustee may resign at any time upon giving thirty (30) days' notice to the
Borrowers and to Lender. Lender may remove Trustee at any time or from time to
time and select a successor trustee. In the event of the death, removal,
resignation, refusal to act, or inability to act of Trustee, or in its sole
discretion for any reason whatsoever Lender may, without notice and without
specifying any reason therefor and without applying to any court, select and
appoint a successor trustee, by an instrument recorded wherever this Security
Instrument is recorded and all powers, rights, duties and authority of Trustee,
as aforesaid, shall thereupon become vested in such successor. Such substitute
trustee shall not be required to give bond for the faithful performance of the
duties of Trustee hereunder unless required by Lender. The procedure provided
for in this paragraph for substitution of Trustee shall be in addition to and
not in exclusion of any other provisions for substitution, by law or otherwise.

     Section 16.2. Trustee's Fees. Each Borrower shall pay all reasonable costs,
fees and expenses incurred by Trustee and Trustee's agents and counsel in
connection with the performance by Trustee of Trustee's duties hereunder and all
such costs, fees and expenses shall be secured by this Security Instrument.

     Section 16.3. Certain Rights. With the approval of Lender, Trustee shall
have the right to take any and all of the following actions: (i) to select,
employ, and advise with counsel (who may be, but need not be, counsel for
Lender) upon any matters arising hereunder, including

                                       26



the preparation, execution, and interpretation of the Loan Agreement, the Note,
this Security Instrument or the other Loan Documents, and shall be fully
protected in relying as to legal matters on the advice of counsel, (ii) to
execute any of the trusts and powers hereof and to perform any duty hereunder
either directly or through his agents or attorneys, (iii) to select and employ,
in and about the execution of his duties hereunder, suitable accountants,
engineers and other experts, agents and attorneys-in-fact, either corporate or
individual, not regularly in the employ of Trustee, and Trustee shall not be
answerable for any act, default, negligence, or misconduct of any such
accountant, engineer or other expert, agent or attorney-in-fact, if selected
with reasonable care, or for any error of judgment or act done by Trustee in
good faith, or be otherwise responsible or accountable under any circumstances
whatsoever, except for Trustee's gross negligence or bad faith, and (iv) any and
all other lawful action as Lender may instruct Trustee to take to protect or
enforce Lender's rights hereunder. Trustee shall not be personally liable in
case of entry by Trustee, or anyone entering by virtue of the powers herein
granted to Trustee, upon the Property for debts contracted for or liability or
damages incurred in the management or operation of the Property. Trustee shall
have the right to rely on any instrument, document, or signature authorizing or
supporting an action taken or proposed to be taken by Trustee hereunder,
believed by Trustee in good faith to be genuine. Trustee shall be entitled to
reimbursement for actual expenses incurred by Trustee in the performance of
Trustee's duties hereunder and to reasonable compensation for such of Trustee's
services hereunder as shall be rendered.

     Section 16.4. Retention of Money. All moneys received by Trustee shall,
until used or applied as herein provided, be held in trust for the purposes for
which they were received, but need not be segregated in any manner from any
other moneys (except to the extent required by applicable law) and Trustee shall
be under no liability for interest on any moneys received by Trustee hereunder.

     Section 16.5. Perfection of Appointment. Should any deed, conveyance, or
instrument of any nature be required from any Borrower by any Trustee or
substitute trustee to more fully and certainly vest in and confirm to the
Trustee or substitute trustee such estates rights, powers, and duties, then,
upon request by the Trustee or substitute trustee, any and all such deeds,
conveyances and instruments shall be made, executed, acknowledged, and delivered
and shall be caused to be recorded and/or filed by such Borrower.

     Section 16.6. Succession Instruments. Any substitute trustee appointed
pursuant to any of the provisions hereof shall, without any further act, deed,
or conveyance, become vested with all the estates, properties, rights, powers,
and trusts of its or his predecessor in the rights hereunder with like effect as
if originally named as Trustee herein; but nevertheless, upon the written
request of Lender or of the substitute trustee, the Trustee ceasing to act shall
execute and deliver any instrument transferring to such substitute trustee, upon
the trusts herein expressed, all the estates, properties, rights, powers, and
trusts of the Trustee so ceasing to act, and shall duly assign, transfer and
deliver any of the property and moneys held by such Trustee to the substitute
trustee so appointed in the Trustee's place.

                                       27



                     ARTICLE 17 - STATE-SPECIFIC PROVISIONS

     Section 17.1. Principles of Construction. In the event of any
inconsistencies between the terms and conditions of this Article 17 and the
other terms and conditions of this Security Instrument, the terms and conditions
of this Article 17 shall control and be binding.

     Section 17.2. Financing Statement. This Security Instrument shall also be
effective as a financing statement covering minerals or the like (including oil
and gas) and accounts subject to Subsection (3) of Section 9-103 of the Maryland
Uniform Commercial Code, as amended, and similar provisions (if any) of the
Uniform Commercial Code as enacted in any other state where the Property is
situated which will be financed at the wellhead or minehead of the wells or
mines located on the Property and is to be filed for record in the real estate
records of each county where any part of the Property is situated. This Security
Instrument shall also be effective as a financing statement covering any other
property and may be filed in any other appropriate filing or recording office.

     Section 17.3. Release. If and when the Borrowers have paid all of the Debt,
as the same becomes due and payable, and all of the covenants, warranties,
undertakings and agreements in this Security Instrument are kept and performed,
and all obligations, if any, of Lender for future advances have been terminated,
then, and in that event only, all rights under this Security Instrument shall
terminate (except to the extent expressly provided herein with respect to
indemnifications, representations and warranties and other rights which are to
continue following the release hereof), and the Trustee, upon request by Lender,
will provide a release of this Security Instrument to the Borrowers. The
Borrowers shall be responsible for the recordation of such release and payment
of any recording costs associated therewith.

     Section 17.4. Additional Remedies. In addition to any other rights they may
have at law or in equity, following an Event of Default hereunder, (i) Trustee
may take possession of and sell the Property, or any part thereof requested by
Lender to be sold, and in connection therewith each Borrower hereby (A) assents
to the passage of a decree for the sale of the Property by the equity court
having jurisdiction, and (B) authorizes and empowers Trustee to take possession
of and sell (or in case of the default of any purchaser to resell) the Property,
or any part thereof, all in accordance with the laws or rules of court of the
State of Maryland relating to deeds of trust, including any amendments thereof,
or additions thereto, which do not materially change or impair the remedy. In
connection with any foreclosure, Lender and/or Trustee may (y) procure such
title reports, surveys, tax histories and appraisals as they deem necessary, and
(z) make such repairs and additions to the Property as they deem advisable,
subject to the terms and provisions contained in the Leases (if any), all of
which shall constitute Expenses (hereinafter defined). In the case of any sale
under this Security Instrument, by virtue of judicial proceedings or otherwise,
the Property may be sold as an entirety or in parcels, by one sale or by several
sales, and any fixtures or collateral encumbered by this Security Instrument may
be sold at the same sale as the Property or in one or more sales, as may be
deemed by Trustee to be appropriate and without regard to any right of any
Borrower or any other person to the marshalling of assets, for cash, on credit
or for other property, for immediate or future delivery, and for such price or
prices and on such terms having first given such notice prior to the sale of
such time, place and terms by publication in at least one newspaper published or
having general circulation in the county or counties in which the Property is
located or at such time or times as may be required

                                       28



by the laws of the State of Maryland or rule of court of the State of Maryland,
and such other times and by such other methods, if any, as Trustee, in its sole
discretion, shall deem advantageous and proper. "Expenses" means all costs and
expenses of any nature whatsoever incurred at any time and from time to time
(whether before or after an Event of Default) by Lender or Trustee in exercising
or enforcing any rights, powers and remedies provided in this Security
Instrument or any of the other Loan Documents, including, without limitation,
attorneys' fees, court costs, receivers' fees, management fees and costs
incurred in the repair, maintenance and operation of, or taking possession of
the Property, subject to the terms and provisions contained in the Leases (if
any) as to the costs for maintenance and repair, or selling, the Property.

     Section 17.5. Foreclosure. Any sale of Property hereunder may be made at
public auction, at such time or times, at such place or places, upon such terms
and conditions and after such previous public notice as Trustee shall deem
appropriate and advantageous and as required by the laws of the State of
Maryland. Upon the terms of such sale being complied with, Trustee shall convey
to, and at the cost of, the purchaser or purchasers the interest of such
Borrower in the Property so sold, free and discharged of and from all estate,
title or interest of such Borrower, at law or in equity, such purchaser or
purchasers being hereby discharged from all liability to see to the application
of the purchase money. Lender and any affiliate thereof may be a purchaser of
the Property or of any part thereof or of any interest therein at any public
sale thereof, whether pursuant to foreclosure or power of sale or otherwise
hereunder, without forfeiting its right to collect any deficiency from any
Borrower; and Lender may apply upon the purchase price the Debt secured hereby
owing to Lender. Lender, upon any such purchase, shall acquire good title to the
properties so purchased, free of the lien of this Security Instrument and free
of all rights of redemption in any Borrower and free of all liens and
encumbrances subordinate to this Security Instrument. The proceeds of such sale
or sales under this Security Instrument, whether under the assent to a decree,
the power of sale, or by equitable foreclosure, shall be held by Trustee and
applied as follows: (i) first (A) all Expenses incurred in connection with such
sale or in preparing the Property for such sale and of obtaining possession
including, among other things, counsel fees reasonably incurred shall be allowed
and paid out of the proceeds of such sale or sales as the court having
jurisdiction may deem proper, (B) the Trustee's Commission (hereinafter defined)
and expenses and (C) all taxes, levies, assessments or other charges relating to
the Property which have or in the opinion of Trustee may have, priority over the
lien of this Security Instrument, including the pro rata portion thereof
applicable to the taxable period during which any payment is made pursuant to
this subsection; (ii) second, to pay all of the Debt and all interest then due
and accrued thereon, which shall include interest through the date of
ratification of the auditor's account; (iii) third, to pay the amount of any
liens of record inferior to this Security Instrument, together with lawful
interest, and lawful claims of third parties against the proceeds of any sale;
and (iv) lastly, to pay the surplus, if any, to any Borrower or any person or
entity entitled thereto unless otherwise required by law or directed by a court
of competent jurisdiction. In the event that the proceeds of any such sale or
sales, together with all other monies at the time held by Trustee under this
Security Instrument, are insufficient to pay the foregoing costs and expenses,
Lender may, at its sole option, advance such sums as Lender in its sole and
absolute discretion shall determine for the purpose of paying all or any part of
such costs and expenses, and all such sums so advanced shall be (A) a lien
against the Property, (B) added to the amount due under the Note and secured by
this Security Instrument, and (C) payable on demand with interest at the rate of
interest applicable to the principal balance of the

                                       29



Note, from and including the date each such advance is made. In any event, each
Borrower shall be liable to Lender for any deficiency if the proceeds of any
such sale or sales are insufficient to pay, in full, all amounts to be
distributed pursuant to the clause (i) above. The Borrowers shall pay to Trustee
a commission in the amount of two and one half percent (2.5%) of the
then-outstanding debt secured hereby if the Property is advertised for sale
under the provisions of this Security Instrument and is not sold, and the
Borrowers shall also pay or reimburse Trustee for all of Trustee's expenses and
disbursements hereunder regardless of whether the Property is sold (the
"Trustee's Commission").

                         [NO FURTHER TEXT ON THIS PAGE]

                                     30



     IN WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been executed under seal
by each Borrower as of the day and year first above written.


                                  THI OF MARYLAND REAL ESTATE,
                                  HOLDING CO.,LLC, a Delaware limited liability
                                  company


                                  By:  /s/ JEFFREY A. BARNHILL (SEAL)
                                      -------------------------
                                    Name:  Jeffrey A. Barnhill
                                    Title:  Vice-President



                                  THI OF MARYLAND AT BEL PRE, LLC, a
                                  Delaware limited liability company

                                  By:  /s/ JEFFREY A. BARNHILL (SEAL)
                                      -------------------------
                                    Name:  Jeffrey A. Barnhill
                                    Title:  Vice-President



                                 ACKNOWLEDGMENT

STATE OF NEW YORK                     )
                                      ) ss:
COUNTY OF NEW YORK                    )

     On October 30, 2002, before me, a Notary Public in and for said state,
personally appeared Jeffrey A. Barnhill, personally known to me or proved to me
on the basis of satisfactory evidence to be the person whose name is subscribed
to the within instrument and acknowledged to me that he/she/they executed the
same in his/her/their capacity, and that by his/her/their signature on the
instrument, the person, or the entity upon behalf of which the person acted,
executed the instrument.

                                                  /s/ KATINA NASH
                                                  ----------------------------
                                                  Notary Public:
                                                  My commission expires: 6-30-03

                                                  [Notary Seal]



                                 ACKNOWLEDGMENT

STATE OF NEW YORK                     )
                                      ) ss:
COUNTY OF         NEW YORK            )

     On October 30, 2002, before me, a Notary Public in and for said state,
personally appeared Jeffrey A. Barnhill, personally known to me or proved to me
on the basis of satisfactory evidence to be the person(s) whose name(s) is (are)
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument, the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.

                                                  /s/ KATINA NASH
                                                  ----------------------------
                                                  Notary Public:

                                                  My commission expires: 6-30-03

                                                  [Notary Seal]



                             ATTORNEY'S CERTIFICATE

     I HEREBY CERTIFY that the within instrument was prepared by or under the
supervision of the undersigned, an attorney duly admitted to practice before the
Court of Appeals of Maryland.
                                           /s/ JEFFREY H. SEIBERT
                                          -----------------------------------

                                          Name: Jeffrey H. Seibert
                                               ------------------------------

                                        1

EX-10.2.7

                                                                  EXHIBIT 10.2.7
                                                                   -------------

                             SCHEDULE OF AGREEMENTS
                SUBSTANTIALLY IDENTICAL IN ALL MATERIAL RESPECTS
            TO AGREEMENTS FILED AS EXHIBITS 10.2.4, 10.2.5 AND 10.2.6
             PURSUANT TO INSTRUCTION 2 TO ITEM 601 OF REGULATION S-K

     In addition to the agreement filed as Exhibit 10.2.4 to this filing, Ventas
Realty, Limited Partnership has executed and delivered an ASSIGNMENT OF LEASES,
RENTS, AND CONTRACTS dated as of November 1, 2002 from the Borrowers identified
therein to Ventas Realty, Limited Partnership, as Lender, with respect to each
of the properties listed in the schedule below. Such agreements are
substantially identical in all material respects with the agreement filed as
Exhibit 10.2.4 to this filing, except for immaterial differences relating to
recording, mortgage and other similar taxes, notary acknowledgements,
attestation requirements, corporate seal requirements, and other similar items
and relating to site or state-specific legal requirements, remedies and other
matters.

FACILITY
  NO.        FACILITY NAME AND ADDRESS
- --------     -------------------------------------------------------------------

  2202       Valley View Healthcare Center, 825 June Street, Fremont, Ohio 43420
             (Sandusky County)
  2203       Northwestern Care Center, 570 North Rocky River Road, Berea, Ohio
             44017 (Cuyahoga County)
  2204       Oak Grove Quality Care Nursing and Rehab Center, 620 East Water
             Street, Deshler, Ohio 43516 (Henry County)
  2205       Paradise Oaks Quality Care Nursing and Rehab Center, 152 Main
             Street, Cloverdale, Ohio 45827 (Putnam County)
  2206       Somerset Quality Care, 441 South Columbus Street, Somerset, Ohio
             43783 (Perry County)
  2207       Willard Quality Care Center, 725 Wessor Avenue, Willard, Ohio 44890
             (Huron County)
  2208       Hillcrest Manor Care Center, 6674 Stafford Road, Washington Court
             House, Ohio 43160 (Fayette County)
  2209       Maple View Manor, 430 South Maple Street, Bainbridge, Ohio  45612
             (Ross County)
  2210       Wintersong Village of Washington Court House, 719 Rawlings Street,
             Washington Court House, Ohio 43160 (Fayette County)
  2211       Woodland Care Center, 6431 State Route 104, McDermott, Ohio 45652
             (Scioto County)
  2212       Heritage House Adult Care Home, 6529 State Route 104, McDermott,
             Ohio 45652 (Scioto County)
  2213       Greenbriar of Portsmouth, 1242 Crescent Drive, Wheelersburg, OH
             45694 (Scioto County)
  2214       Golden Years Healthcare Center, 2125 Royce Street, Portsmouth,
             Ohio 45662 (Scioto County)
  2215       Millennium Health and Rehabilitation of Bel Pre, 2601 Bel Pre Road,
             Silver Spring, Maryland 20747 (Montgomery County)
  2216       Millennium Health & Rehab at Liberty Heights, 4017 Liberty Heights
             Avenue,  Baltimore, Maryland 21207 (Baltimore County)
  2217       Millennium Health and rehabilitation Center at Marley Neck, 7575
             East Howard Road, Glen Burnie, Maryland 21060 (Anne Arundel County)
  2218       Millennium Health and Rehabilitation at Northwest, 4601 Pall Mall
             Road, Baltimore, Maryland 21215 (Baltimore County)
  2219       Wintersong Adult Care Home, 432 Delaware  Street, Washington Court
             House, Ohio 43160 (Fayette County)
  2220       Rosemont Court, 780 Gregg Street, Washington Court House, Ohio
             43160 (Fayette County)


         In addition to the agreement filed as Exhibit 10.2.5 to this filing,
Ventas Realty, Limited Partnership has executed and delivered an OPEN-END FEE
AND LEASEHOLD MORTGAGE AND SECURITY AGREEMENT or similarly titled document
dated as of November 1, 2002 by the Borrowers identified therein to Ventas
Realty, Limited Partnership, as Lender, with respect to each of the properties
listed in the schedule below. Such agreements are substantially identical in all
material respects with the agreement filed as Exhibit 10.2.5 to this filing.

FACILITY
  NO.        FACILITY NAME AND ADDRESS
- --------     -------------------------------------------------------------------
  2202       Valley View Healthcare Center, 825 June Street, Fremont, Ohio 43420
             (Sandusky County)
  2203       Northwestern Care Center, 570 North Rocky River Road, Berea, Ohio
             44017 (Cuyahoga County)
  2204       Oak Grove Quality Care Nursing and Rehab Center, 620 East Water
             Street, Deshler, Ohio 43516 (Henry County)
  2205       Paradise Oaks Quality Care Nursing and Rehab Center, 152 Main
             Street, Cloverdale, Ohio 45827 (Putnam County)
  2206       Somerset Quality Care, 441 South Columbus Street, Somerset, Ohio
             43783 (Perry County)
  2207       Willard Quality Care Center, 725 Wessor Avenue, Willard, Ohio 44890
             (Huron County)
  2208       Hillcrest Manor Care Center, 6674 Stafford Road, Washington Court
             House, Ohio 43160 (Fayette County)
  2209       Maple View Manor, 430 South Maple Street, Bainbridge, Ohio  45612
             (Ross County)
  2210       Wintersong Village of Washington Court House, 719 Rawlings Street,
             Washington Court House, Ohio 43160 (Fayette County)
  2211       Woodland Care Center, 6431 State Route 104, McDermott, Ohio 45652
             (Scioto County)
  2212       Heritage House Adult Care Home, 6529 State Route 104, McDermott,
             Ohio 45652 (Scioto County)
  2213       Greenbriar of Portsmouth, 1242 Crescent Drive, Wheelersburg, OH
             45694 (Scioto County)
  2214       Golden Years Healthcare Center, 2125 Royce Street, Portsmouth, Ohio
             45662 (Scioto County)
  2219       Wintersong Adult Care Home, 432 Delaware Street, Washington Court
             House, Ohio 43160 (Fayette County)
  2220       Rosemont Court, 780 Gregg Street, Washington Court House, Ohio
             43160 (Fayette County)

                                        2


     In addition to the agreement filed as Exhibit 10.2.6 to this filing, a DEED
OF TRUST AND SECURITY AGREEMENT dated as of November 1, 2002 by the Borrowers
identified therein to Brian Lobuts, an individual, as Trustee, for the benefit
of Ventas Realty, Limited Partnership, as Lender, with respect to each of the
properties listed in the schedule below. Such agreements are substantially
identical in all material respects with the agreement filed as Exhibit 10.2.6 to
this filing.

FACILITY
  NO.        FACILITY NAME AND ADDRESS
- --------     -------------------------------------------------------------------
  2216       Millennium Health & Rehabilitation at Liberty Heights,  4017
             Liberty Heights Avenue, Baltimore, Maryland 21207 (Baltimore
             County)
  2217       Millennium Health and Rehabilitation Center at Marley Neck, 7575
             East Howard Road, Glen Burnie, Maryland 21060 (Anne Arundel County)
  2218       Millennium Health and Rehabilitation at Northwest, 4601 Pall Mall
             Road, Baltimore, Maryland 21215 (Baltimore County)

                                        3

EX-10.3.1

                                                                  Exhibit 10.3.1

                            MEZZANINE LOAN AGREEMENT

                          Dated as of November 1, 2002

                                      Among

             THOSE ENTITIES LISTED AS A "BORROWER" ON SCHEDULE III,
                           collectively, as Borrowers

                                       and

                       VENTAS REALTY, LIMITED PARTNERSHIP,
                                    as Lender



ARTICLE I.       DEFINITIONS; PRINCIPLES OF CONSTRUCTION.......................2

SECTION 1.1.        DEFINITIONS................................................2
SECTION 1.2.        PRINCIPLES OF CONSTRUCTION................................28

ARTICLE II.      THE LOAN.....................................................28

SECTION 2.1.        THE LOAN..................................................28
SECTION 2.2.        INTEREST RATE.............................................29
SECTION 2.3.        LOAN PAYMENTS.............................................29
SECTION 2.4.        PREPAYMENTS...............................................30
SECTION 2.5.        SUPPLEMENTAL MORTGAGE AFFIDAVITS..........................32

ARTICLE III.     REPRESENTATIONS AND WARRANTIES...............................32

SECTION 3.1.        BORROWER REPRESENTATIONS..................................32
SECTION 3.2.        SURVIVAL OF REPRESENTATIONS...............................45

ARTICLE IV.      BORROWER COVENANTS...........................................46

SECTION 4.1.        BORROWER AFFIRMATIVE COVENANTS............................46
SECTION 4.2.        BORROWER NEGATIVE COVENANTS...............................55

ARTICLE V.       INSURANCE, CASUALTY AND CONDEMNATION.........................60

SECTION 5.1.        INSURANCE.................................................60
SECTION 5.2.        CASUALTY AND CONDEMNATION.................................65
SECTION 5.3.        DELIVERY OF NET PROCEEDS..................................66

ARTICLE VI.      ACCOUNTS.....................................................70

SECTION 6.1.        MEZZANINE CASH MANAGEMENT ACCOUNT/
                       MEZZANINE COLLECTION ACCOUNT...........................70
SECTION 6.2.        DISTRIBUTIONS FROM MEZZANINE CASH MANAGEMENT ACCOUNT......71
SECTION 6.3.        TAX AND INSURANCE ESCROW ACCOUNT..........................72
SECTION 6.4.        DEBT SERVICE ACCOUNT......................................74
SECTION 6.5.        OPERATING EXPENSE RESERVE ACCOUNT.........................74
SECTION 6.6.        CAPITAL EXPENDITURE RESERVE ACCOUNT.......................75
SECTION 6.7.        DEFERRED MAINTENANCE AND ENVIRONMENTAL ESCROW ACCOUNT.....76
SECTION 6.8.        NET PROCEEDS ACCOUNT......................................76
SECTION 6.9.        INTENTIONALLY DELETED.....................................77
SECTION 6.10.       GROUND RENT ESCROW ACCOUNT................................77
SECTION 6.11.       ACCOUNT COLLATERAL........................................77
SECTION 6.12.       PERMITTED INVESTMENTS.....................................78
SECTION 6.13.       BANKRUPTCY................................................78
SECTION 6.14.       LETTERS OF CREDIT.........................................79
SECTION 6.15.       PROVISIONS REGARDING LETTERS OF CREDIT....................80

                                          i



ARTICLE VII.     PROPERTY MANAGEMENT..........................................80

SECTION 7.1.        THE MANAGEMENT AGREEMENT..................................81
SECTION 7.2.        PROHIBITION AGAINST TERMINATION OR MODIFICATION...........81
SECTION 7.3.        REPLACEMENT OF MANAGER....................................81

ARTICLE VIII.    TRANSFERS....................................................82

SECTION 8.1.        TRANSFER OF THE PROPERTIES AND COLLATERAL.................82
SECTION 8.2.        TRANSFER OF EQUITY INTERESTS..............................82
SECTION 8.3.        LENDER'S CONSENT RIGHTS...................................82

ARTICLE IX.      SALE AND SECURITIZATION OF MORTGAGE..........................83

SECTION 9.1.        SALE OF MORTGAGES AND SECURITIZATION......................83
SECTION 9.2.        SECURITIZATION INDEMNIFICATION............................84

ARTICLE X.       DEFAULTS.....................................................86

SECTION 10.1.       EVENT OF DEFAULT..........................................86
SECTION 10.2.       REMEDIES..................................................90
SECTION 10.3.       REMEDIES CUMULATIVE.......................................92

ARTICLE XI.      MISCELLANEOUS................................................92

SECTION 11.1.       SUCCESSORS AND ASSIGNS....................................92
SECTION 11.2.       LENDER'S DISCRETION.......................................92
SECTION 11.3.       GOVERNING LAW.............................................93
SECTION 11.4.       MODIFICATION, WAIVER IN WRITING...........................94
SECTION 11.5.       DELAY NOT A WAIVER........................................94
SECTION 11.6.       NOTICES...................................................95
SECTION 11.7.       WAIVER OF RIGHT TO TRIAL BY JURY..........................96
SECTION 11.8.       HEADINGS..................................................96
SECTION 11.9.       SEVERABILITY..............................................96
SECTION 11.10.      PREFERENCES...............................................96
SECTION 11.11.      WAIVER OF NOTICE..........................................97
SECTION 11.12.      REMEDIES OF BORROWER......................................97
SECTION 11.13.      EXPENSES; INDEMNITY.......................................97
SECTION 11.14.      SCHEDULES INCORPORATED....................................98
SECTION 11.15.      OFFSETS, COUNTERCLAIMS AND DEFENSES.......................98
SECTION 11.16.      NO JOINT VENTURE OR PARTNERSHIP;
                       NO THIRD PARTY BENEFICIARIES...........................99
SECTION 11.17.      PUBLICITY.................................................99
SECTION 11.18.      WAIVER OF MARSHALLING OF ASSETS...........................99
SECTION 11.19.      WAIVER OF OFFSETS/DEFENSES/COUNTERCLAIMS.................100
SECTION 11.20.      CONFLICT; CONSTRUCTION OF DOCUMENTS; RELIANCE............100
SECTION 11.21.      BROKERS AND FINANCIAL ADVISORS...........................100

                                       ii



SECTION 11.22.      INTENTIONALLY DELETED....................................101
SECTION 11.23.      PRIOR AGREEMENTS.........................................101
SECTION 11.24.      SERVICER.................................................101
SECTION 11.25.      DUPLICATE ORIGINALS; COUNTERPARTS........................101
SECTION 11.26.      CROSS COLLATERALIZATION..................................101
SECTION 11.27.      JOINT AND SEVERAL LIABILITY..............................102

                                      iii



SCHEDULES

Schedule I      - Mortgage Borrowers

Schedule II     - Intentionally Deleted

Schedule III    - Borrowers, Licensed Beds

Schedule IV     - Organizational Chart

Schedule V      - Allocated Loan Amount

Schedule VI     - Amortization

Schedule VII    - Intentionally Deleted

Schedule VIII   - Guarantors

Schedule IX     - Insurance Claims

Schedule X      - Waivers of Physical Plant Standards

Schedule XI     - Pending Audits

Schedule XII    - Waivers in Connection with Licensed Beds

Schedule XIII   - Proceedings and Notices

Exhibits

Exhibit A       - Intentionally Deleted

Exhibit B       - Intentionally Deleted

Exhibit C       - Intentionally Deleted

Exhibit D       - Material Agreements

                                      iv



                            MEZZANINE LOAN AGREEMENT

          THIS MEZZANINE LOAN AGREEMENT, dated as of November 1, 2002 (as
amended, restated, replaced, supplemented or otherwise modified from time to
time, this "Agreement"), among VENTAS REALTY, LIMITED PARTNERSHIP, a Delaware
limited partnership, having an address at 4360 Brownsboro Road, Suite 115,
Louisville, Kentucky 40207 (together with its successors and assigns "Lender")
and THOSE ENTITIES LISTED AS A "BORROWER" ON SCHEDULE III attached hereto, each
a Delaware limited liability company and each having an address at 4660 Trindle
Road, Suite 103, Camp Hill, Pennsylvania 17011 (each, a "Borrower" and
collectively, the "Borrowers").

          All capitalized  terms used herein shall have the respective  meanings
set forth in Article I hereof.

                              W I T N E S S E T H :

          WHEREAS, Ventas Realty, Limited Partnership, a Delaware limited
partnership, as mortgage lender (together with its successors and assigns, the
"Mortgage Lender"), has made a loan in the maximum principal amount of
$55,000,0000 (the "Mortgage Loan") to those entities listed as a "Mortgage
Borrower" on Schedule I attached hereto, each a Delaware limited liability
company (each, a "Mortgage Borrower" and collectively, the "Mortgage Borrowers")
pursuant to a Loan Agreement of even date herewith (as amended, restated,
replaced, supplemented or otherwise modified from time to time, the "Mortgage
Loan Agreement"), which Mortgage Loan is evidenced by a Promissory Note of even
date herewith (as amended, restated, replaced, supplemented or otherwise
modified from time to time, the "Mortgage Note") made by the Mortgage Borrowers
to Mortgage Lender and secured by, among other things, those certain Mortgages
(as defined in the Mortgage Loan Agreement) made by each of the Mortgage
Borrowers in favor of Mortgage Lender pursuant to which the Mortgage Borrowers
have granted to the Mortgage Lender first priority mortgages and deeds of trust
on the real property and other collateral as more fully described in the
Mortgages (each, a "Mortgage Property" and collectively, the "Mortgage
Properties");

          WHEREAS, THI of Ohio ALFs I, LLC (the "Fee Property Borrower") is the
owner of a fee interest in each of the Mezzanine Properties (as defined below)
listed opposite its name on Schedule III attached hereto;

          WHEREAS, each of (i) THI of Ohio at Kent, LLC, (ii) THI of Ohio at
Cortland, LLC, (iii) THI of Ohio at Berea, LLC, (iv) THI of Maryland at Franklin
Square, LLC and (v) THI of Maryland at Fort Washington, LLC (each, a "Leasehold
Property Borrower" and collectively, the "Leasehold Property Borrowers") is the
owner of a leasehold interest in the Mezzanine Property (as defined below)
listed opposite its name on Schedule III attached hereto;

          WHEREAS, THI of Maryland at Franklin Square, LLC is the owner of a fee
interest in the Mezzanine Property that is a parking lot;



          WHEREAS, THI of Ohio SNFs, LLC (the "Ohio Equity Borrower") is the
legal and beneficial owner of all of the membership interests in each Mortgage
Borrower listed under its name on Schedule I attached hereto (such membership
interests, the "Ohio Pledged Company Interests");

          WHEREAS, THI of Maryland SNFs I, LLC (the "Maryland I Equity
Borrower") is the legal and beneficial owner of all of the membership interests
in each Mortgage Borrower listed under its name on Schedule I attached hereto
(such membership interests, the "Maryland I Pledged Company Interests");

          WHEREAS, THI of Maryland SNFs II, LLC (the "Maryland II Equity
Borrower") is the legal and beneficial owner of all of the membership interests
in each of (i) THI of Maryland at Franklin Square, LLC and (ii) THI of Maryland
at Fort Washington, LLC (such membership interests, the "Maryland II Pledged
Company Interests");

          WHEREAS, (i) the Fee Property Borrower and the Leasehold Property
Borrowers are individually referred to herein as, a "Property Borrower" and
collectively as, the "Property Borrowers", (ii) the Ohio Equity Borrower, the
Maryland I Equity Borrower and the Maryland II Equity Borrower are individually
referred to herein, as an "Equity Borrower" and collectively as, the "Equity
Borrowers" and (iii) the Ohio Pledged Company Interests, the Maryland I Pledged
Company Interests and the Maryland II Pledged Company Interests are referred to
herein collectively as, the "Pledged Company Interests";

          WHEREAS, the Borrowers have requested that Lender make a loan to the
Borrowers in the initial principal amount of $22,000,000 (the "Loan"); and

          WHEREAS, as a condition precedent to the obligation of Lender to make
the Loan to the Borrowers, (i) each Equity Borrower has entered into that
certain Mezzanine Pledge and Security Agreement of even date herewith in favor
of Lender (as amended, restated, replaced, supplemented or otherwise modified
from time to time, the "Pledge Agreement"), pursuant to which such Equity
Borrower has granted to Lender a first priority security interest in the
Collateral (as defined in the Pledge Agreement) as collateral security for the
Debt (as defined below) and (ii) each Property Borrower has entered into a
Mortgage (as defined below) in favor of Lender, pursuant to which such Property
Borrower has granted to Lender a first priority security interest in each
Mezzanine Property (as defined below);

          NOW, THEREFORE, in consideration of the covenants set forth in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree,
represent and warrant as follows:

                                       2



                 ARTICLE DEFINITIONS; PRINCIPLES OF CONSTRUCTION

          Section 1.1. Definitions.

          For all purposes of this Agreement, except as otherwise expressly
provided:

          "Account Collateral" means, collectively, the Collateral Accounts and
all sums at any time held, deposited or invested therein, together with any
interest or other earnings thereon, and all proceeds thereof (including proceeds
of sales and other dispositions), whether accounts, general intangibles, chattel
paper, deposit accounts, instruments, documents or securities.

          "Accreditation" means certification by a generally recognized
independent agency or other organization that a facility fully complies with the
standards set by such agency or organization for operation of such a facility.

          "Affiliate" of any specified Person means any other Person
controlling, controlled by or under common control with such specified Person.
For the purposes of this Agreement, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities or other beneficial interests, by contract or otherwise; and the
terms "controls," "controlling" and "controlled" have the meanings correlative
to the foregoing.

          "Agreement" means this Loan Agreement, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.

          "Allocated Loan Amount" means the portion of the Loan Amount allocated
to each Mezzanine Property as set forth on Schedule V, as such amounts shall be
adjusted from time to time as hereinafter set forth. Upon each adjustment in the
amount of Debt due to (A) a regular payment of monthly Debt Service pursuant to
Section 2.3.1, each Allocated Loan Amount shall be decreased by an amount equal
to the product of (i) the amount of such payment and (ii) a fraction, the
numerator of which is the applicable Allocated Loan Amount (prior to the
adjustment in question) and the denominator of which is the total of all
Allocated Loan Amounts (prior to the adjustment in question) or (B) an
adjustment of the Loan Amount as a result of a reallocation of the aggregate
principal balance of the Loan and the Mortgage Loan pursuant to Section 2 of the
Cooperation Agreement, each Allocated Loan Amount shall be decreased or
increased by an amount equal to the product of (i) the amount by which the Loan
Amount is to be decreased or increased in connection with a reallocation
pursuant to Section 2 of the Cooperation Agreement and (ii) a fraction, the
numerator of which is the applicable Allocated Loan Amount (prior to the
adjustment in question) and the denominator of which is the total of all
Allocated Loan Amounts (prior to the adjustment in question). Notwithstanding
the foregoing sentence to the contrary, when the Debt is reduced as the result
of Lender's receipt of proceeds with respect to a Condemnation or Casualty
affecting one hundred percent (100%) of a Mezzanine Property, the Allocated Loan
Amount for such Mezzanine Property with respect to which the insurance proceeds
or Award were received shall, at Lender's sole discretion, be reduced to zero
(such Allocated Loan Amount prior to reduction being referred to as the

                                       3



"Withdrawn Allocated Amount"), and each other Allocated Loan Amount shall, if
the Withdrawn Allocated Amount exceeds the proceeds (such excess being referred
to as the "Proceeds Deficiency"), be increased by an amount equal to the product
of (1) the Proceeds Deficiency and (2) a fraction, the numerator of which is the
applicable Allocated Loan Amount (prior to the adjustment in question) and the
denominator of which is the aggregate of all of the Allocated Loan Amounts
(prior to the adjustment in question) other than the Withdrawn Allocated Amount.

          "ALTA" means American Land Title Association, or any successor
thereto.

          "Alteration Threshold" means (a) with respect to any Mezzanine
Property, the greater of (i) five percent (5%) of the Allocated Loan Amount for
such Mezzanine Property or (ii) $200,000 and (b) with respect to the Mezzanine
Properties, two percent (2%) of the Loan Amount.

          "Annual Budget" means the operating and capital budget for the
Mezzanine Properties on a combined basis and for each Mezzanine Property setting
forth, in reasonable detail, (i) Borrowers' good faith estimate of the
anticipated results of operations, including Operating Income, Operating
Expenses, and Capital Expenditures for the applicable Fiscal Year and (ii) a
breakdown of projected Patient Revenues and other revenues of each Borrower and
its Affiliates itemized by payor type.

          "Assignment of Leases" means, with respect to each Mezzanine Property,
that certain first priority Assignment of Leases and Rents and Contracts, dated
as of the date hereof, from the applicable Property Borrower, as assignor, to
Lender, as assignee, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time, and "Assignments of Leases
and Rents" means all such instruments collectively.

          "Assisted Living Facility" means a residential or facility-based
program that provides housing and supportive services, supervision, personalized
assistance, health-related services or a combination thereof which meets the
needs of individuals who are unable to perform or who need assistance in
performing the activities of daily living, whether licensed as an assisted
living facility, a residential care facility or adult care facility.

          "Assignment of Management Agreement" means that certain Assignment of
Management Agreement and Staff Leasing Agreement dated the date hereof among the
Property Borrowers, Manager, each Staff Provider and Lender, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time, and "Assignments of Management Agreements" means all such instruments
collectively.

          "Award" means any compensation paid by any Governmental Authority in
connection with a Condemnation in respect of all or any part of a Mezzanine
Property.

          "Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as amended from time to time, and any successor statute or
statutes and all rules

                                       4



and regulations from time to time promulgated thereunder, and any comparable
foreign laws relating to bankruptcy, insolvency or creditors' rights.

          "Basic Carrying Costs" means, with respect to each Mezzanine Property,
the sum of the following costs associated with such Mezzanine Property: (i)
Taxes, (ii) Insurance Premiums and (iii) ground rents, if any.

          "Berea Ground Lease" means that certain Lease Agreement dated January
1, 1991 by and between Laurence W. Gertsma, Trustee and Howard Wyles, Trustee
(collectively, the "Berea Ground Lessor") and Northwestern Service Corporation,
a Delaware corporation ("Berea Original Lessee"), as assigned pursuant to the
Assignment and Landlord's Consent and Estoppel Certificate dated May 31, 2000
among the Berea Ground Lessor, Providence Health Care, Inc., a Delaware
corporation (successor to the Berea Original Lessee), and Trans Healthcare of
Ohio, Inc., a Delaware corporation, as further assigned to the applicable
Borrower, as amended, modified and in effect from time to time.

          "Borrower" and "Borrowers" each has the meaning set forth in the first
paragraph of this Agreement.

          "Borrower Party" means each Borrower, each Mortgage Borrower and each
entity which held any Regulatory Permit (as defined herein and in the Mortgage
Loan Agreement) relating to any Property prior to transferring same to such
Borrower or Mortgage Borrower, as applicable.

          "Business Day" means any day other than a Saturday, a Sunday or a
legal holiday on which national banks are not open for general business in the
State of New York or the State where the Cash Management Bank is located.

          "Capital Expenditure Reserve Account" shall have the meaning set forth
in Section 6.6(a).

          "Capital Expenditures" means, with respect to each Mezzanine Property,
hard and soft costs incurred by any Property Borrower with respect to
replacements and capital repairs made to the Mezzanine Property (including
repairs to, and replacements of, structural components, roofs, building systems,
parking garages and parking lots), in each case to the extent capitalized in
accordance with GAAP and to the extent not paid by Net Proceeds.

          "Casualty" means the occurrence of any casualty, damage or injury, by
fire or otherwise, to a Property or any part thereof.

          "Casualty Consultant" has the meaning set forth in Section 5.3.2(c).

          "Casualty Retainage" has the meaning set forth in Section 5.3.2(d).

          "Closing Date" means the date of funding the Loan.

                                       5



          "CMS" means the Centers for Medicare and Medicaid Services (formerly
known as the Health Care Financing Administration ("HCFA")).

          "Code" means the Internal Revenue Code of 1986, as amended, and as it
may be further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.

          "Collateral" has the meaning set forth in the recitals of this
Agreement.

          "Collateral Accounts" means, collectively, the Mezzanine Cash
Management Account, the Mezzanine Collection Account, the Tax and Insurance
Escrow Account, the Ground Rent Escrow Account, the Debt Service Account, the
Net Proceeds Account, the Capital Expenditure Reserve Account, the Operating
Expense Reserve Account and the Deferred Maintenance and Environmental Escrow
Account.

          "CON" means a certificate of need or similar permit or approval (not
including conventional building permits) from a Governmental Authority related
to the construction and/or operation of Improvements at any Property for use for
a specified number of beds in a Nursing Facility, Assisted Living Facility
and/or Specialty Hospital, or alteration of any such Improvements or
modifications of services provided at a Property used as a Nursing Facility,
Assisted Living Facility and/or Specialty Hospital.

          "Condemnation" means a temporary or permanent taking by any
Governmental Authority as the result or in lieu or in anticipation of the
exercise of the right of condemnation or eminent domain, of all or any part of a
Property, or any interest therein or right accruing thereto, including any right
of access thereto or any change of grade affecting the applicable Property or
any part thereof.

          "Cooperation Agreement" means that certain Cooperation Agreement of
even date herewith among Lender, Mortgage Borrowers, Borrowers and Guarantors,
as the same may from time to time be modified, amended or replaced.

          "Cortland Ground Lease" means that certain Lease Agreement dated
October 22, 1974 by and between Carr-Lee Inc., an Ohio corporation ("Cortland
Ground Lessor") and Northwestern Service Corporation, a Delaware corporation
("Cortland Original Lessee"), as assigned pursuant to the Assignment and
Landlord's Consent and Estoppel Certificate dated May 31, 2000 among Kamalt
Corporation, an Ohio corporation (as successor to the Cortland Ground Lessor),
Providence Health Care, Inc., a Delaware corporation (successor to Cortland
Original Lessee), and Trans Healthcare of Ohio, Inc., a Delaware corporation, as
further assigned to the applicable Borrower, as amended, modified and in effect
from time to time.

          "Debt" means the outstanding principal amount of the Loan together
with all interest accrued and unpaid thereon and all other sums (including,
without limitation, any Prepayment Premium payable hereunder and any of Lender's
costs and expenses for which any Borrower is responsible under the terms of any
of the Loan Documents) due to Lender in respect

                                       6



of the Loan under the Note, this Agreement, the Pledge Agreement, the Master
Guaranty Pledge, the Mortgages, the Environmental Indemnity or any other Loan
Document.

          "Debt Constant" means eleven and thirty-three one hundredths percent
(11.33%).

          "Debt Service" means, with respect to any particular period of time,
scheduled principal and interest payments under the Note.

          "Debt Service Account" has the meaning set forth in Section 6.4.

          "Debt Service Coverage Ratio" shall mean, for any twelve (12) calendar
month period, the ratio of (i) the Pro Forma Net Operating Income for all
Properties for such period immediately preceding the date of calculation to (ii)
Debt Service plus the Mortgage Debt Service for the twelve (12) calendar month
period following the date of calculation assuming, as to the Debt Service, an
interest rate equal to the greater of the Debt Constant and the Interest Rate in
effect on the date of such calculation.

          "Default" means the occurrence of any event hereunder or under any
other Loan Document which, but for the giving of notice or passage of time, or
both, would be an Event of Default.

          "Default Rate" means, with respect to the Loan, a rate per annum equal
to the lesser of (i) the Maximum Legal Rate, or (ii) four percent (4%) above the
Interest Rate.

          "Deferred Maintenance Amount" means $179,456.25.

          "Deferred Maintenance and Environmental Escrow Account" has the
meaning set forth in Section 6.7(a).

          "Deferred Maintenance Conditions" means those items described in the
property condition reports delivered to Lender in connection with the Loan.

          "Disclosure Document" has the meaning set forth in Section 9.2(a).

          "Eligible Account" means a separate and identifiable account from all
other funds held by the holding institution that is either (i) an account or
accounts maintained with a federal or state-chartered depository institution or
trust company which complies with the definition of Eligible Institution or (ii)
a segregated trust account or accounts maintained with a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity which, in the case of a state chartered depository institution or trust
company is subject to regulations substantially similar to 12 C.F.R.
(s).9.10(b), having in either case a combined capital and surplus of at least
fifty million dollars ($50,000,000) and subject to supervision or examination by
federal and state authority. An Eligible Account will not be evidenced by a
certificate of deposit, passbook or other instrument.

                                       7



          "Eligible Institution" means a depository institution or trust company
insured by the Federal Deposit Insurance Corporation the short term unsecured
debt obligations or commercial paper of which are rated at least A-1 by S&P, P-1
by Moody's, and F-1+ by Fitch in the case of accounts in which funds are held
for thirty (30) days or less or, in the case of Letters of Credit or accounts in
which funds are held for more than thirty (30) days, the long term unsecured
debt obligations of which are rated at least "AA-" by Fitch and S&P and "Aa2" by
Moody's.

          "Embargoed Person" has the meaning set forth in Section 3.1.37.

          "Environmental Indemnity" means that certain Environmental Indemnity
Agreement dated as of the date hereof executed by Borrowers and Guarantors in
connection with the Loan for the benefit of Lender.

          "Equipment" has the meaning set forth in the Granting Clause of the
Mortgages.

          "Equity Borrowers" and "Equity Borrower" each has the meaning set
forth in the recitals of this Agreement.

          "ERISA" has the meaning set forth in Section 4.2.11.

          "Event of Default" has the meaning set forth in Section 10.1.

          "Exchange Act" has the meaning set forth in Section 9.2(a).

          "Fee Property Borrower" has the meaning set forth in the recitals of
this Agreement.

          "Fiscal Year" means each twelve (12) month period commencing on
January 1 and ending on December 31 during each year of the term of the Loan.

          "Fitch" means Fitch, Inc.

          "Franklin Square Ground Lease" means that certain Lease Agreement
dated May 1, 1993 by and between Ellsea Realty Limited Partnership, as
beneficial owner and Robert M. Hankin and Mary C. Eubert, as personal
representatives to the Estate of Asa H. Wessels, as record owner (collectively
the "Franklin Square Ground Lessor") and Camden Yards Nursing and Rehabilitation
Center, LLC, a Maryland limited liability company ("Franklin Square Original
Lessee"), as assigned by Franklin Square Original Lessee to Mariner Health of
Maryland, Inc. ("Mariner") pursuant to the Assignment and Assumption Agreement
with Guaranty dated October 1, 1996; as further assigned by Mariner to
Millennium Health and Rehabilitation Center of Franklin Square, LLC, a Maryland
limited liability company, pursuant to the Assignment and Assumption Agreement
dated June 1, 1999, as further assigned to the applicable Borrower, as amended,
modified and in effect from time to time.

                                       8



          "Fort Washington Ground Lease" means that certain Lease dated December
1, 2000, between Fort Washington Care Center Limited Partnership, a Maryland
limited partnership ("Fort Washington Ground Lessor") and Millennium Health and
Rehabilitation Center of Fort Washington, LLC ("Original Fort Washington Ground
Lessee"), as assigned to the applicable Borrower, as amended, modified and in
effect from time to time.

          "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the accounting profession), or in such
other statements by such entity as may be in general use by significant segments
of the U.S. accounting profession.

          "Governmental Authority" means any court, board, agency, commission,
office or authority of any nature whatsoever or any governmental unit (federal,
state, county, district, municipal, city or otherwise) whether now or hereafter
in existence, including, without limitation, CMS, the United States Department
of Health and Human Services, any state licensing agency and/or any state
Medicaid agency.

          "Ground Leases" mean, collectively, the Berea Ground Lease, the
Cortland Ground Lease, the Franklin Square Ground Lease, the Fort Washington
Ground Lease and the Kent Ground Lease, and "Ground Lease" means any of such
ground leases individually.

          "Ground Lessor Agreement" means, with respect to each Ground Lease,
the Lessor Recognition and Estoppel Agreement by and among the applicable
Borrower, ground lessor thereunder and fee mortgagee thereunder, if any, as
amended, modified and in effect from time to time.

          "Ground Rent" means any rent, additional rent or other charge payable
by the tenant under a Ground Lease.

          "Ground Rent Funds" has the meaning set forth in Section 6.10(b).

          "Ground Rent Escrow Account" has the meaning set forth in Section
6.10(a).

          "Guarantors" means, collectively, Trans Healthcare, Inc., a Delaware
corporation, and each of its subsidiaries shown in the attached Schedule VIII
and "Guarantor" shall mean each such entity.

          "Guaranty (Recourse Obligations)" means that certain Guaranty of
Recourse Obligations of even date herewith from Guarantors for the benefit of
Lender.

          "Improvements" has the meaning set forth in the Granting Clause of the
Mortgages.

                                       9



          "Indebtedness" means, for any Person, without duplication: (i) all
indebtedness of such Person for borrowed money, for amounts drawn under a letter
of credit, or for the deferred purchase price of property for which such Person
or its assets is liable, (ii) all unfunded amounts under a loan agreement,
letter of credit, or other credit facility for which such Person would be liable
if such amounts were advanced thereunder, (iii) all amounts required to be paid
by such Person as a guaranteed payment to partners or a preferred or special
dividend, including any mandatory redemption of shares or interests, (iv) all
Indebtedness of others guaranteed by such Person, directly or indirectly, (v)
all obligations under leases that constitute capital leases for which such
Person is liable, and (vi) all obligations of such Person under interest rate
swaps, caps, floors, collars and other interest hedge agreements, in each case
whether such Person is liable contingently or otherwise, as obligor, guarantor
or otherwise, or in respect of which obligations such Person otherwise assures a
creditor against loss.

          "Indemnified Liabilities" has the meaning set forth in Section
11.13(b).

          "Independent Director" means a duly appointed member of the board of
directors (or with respect to a Single Member LLC, its board of managers) of the
relevant entity who shall not have been, at the time of such appointment or at
any time while serving as a director of the relevant entity and may not have
been at any time in the preceding five (5) years, (a) a direct or indirect legal
or beneficial owner in such entity or any of its affiliates, (b) a creditor,
supplier, employee, officer, director, family member, manager, or contractor of
such entity or any of its affiliates, or (c) a person who controls (whether
directly, indirectly, or otherwise) such entity or its affiliates or any
creditor, supplier, employee, officer, director, manager, or contractor of such
entity or its affiliates.

          "Insurance Premiums" has the meaning set forth in Section 5.1.1(b).

          "Interest Accrual Period" means, subject to the proviso in the
definition of the defined term "Payment Date," each period of time running from
and including the fifteenth (15th) day of a calendar month to and including the
fourteenth (14th) day of the following calendar month during the term of the
Loan. If the Closing Date shall occur prior to the fifteenth (15th) day of a
calendar month, the first Interest Accrual Period shall commence on and include
the Closing Date and end on and include the fourteenth (14th) day of the
calendar month in which the Closing Date occurs. If the Closing Date shall occur
after the fourteenth (14th) day of a calendar month, the first Interest Accrual
Period shall commence on the Closing Date and end on and include the fourteenth
(14th) day of the calendar month following the month in which the Closing Date
occurs. If the Closing Date shall occur on the fourteenth (14th) day of a
calendar month, the first Interest Accrual Period shall consist of a one (1) day
period consisting of the Closing Date.

          "Interest Rate" means a rate per annum equal to seventeen percent
(17%).

          "Inventory" means all "inventory," as such term is defined in the UCC
and, to the extent not included in such definition, any goods now owned or
hereafter acquired by any Borrower intended for sale or lease, or to be used in
connection with services furnished by any Borrower in connection with any
Mezzanine Property, including without limitation, all

                                       10



inventories held by each Borrower for sale or use at or from any Mezzanine
Property, and all other such goods, wares, merchandise, and materials and
supplies of every nature owned by any Borrower and all such other goods returned
to or repossessed by any Borrower.

          "Kent Ground Lease" means that certain Amended and Restated Lease
Agreement dated June 21, 1989 by and between Health Care Reit, Inc., a Delaware
corporation ("Kent Ground Lessor") and Northwestern Service Corporation, a
Delaware corporation ("Kent Original Lessee"), as assigned pursuant to the
Assignment and Landlord's Consent and Estoppel Certificate dated May 31, 2000
among Kent Ground Lessor, Providence Health Care, Inc., a Delaware corporation
(successor to Kent Original Lessee) and Trans Healthcare of Ohio, Inc., a
Delaware corporation, as further assigned to the applicable Borrower, as
amended, modified and in effect from time to time.

          "Lease" means any lease, sublease, sub-sublease or other agreement or
arrangement affecting the use or occupancy of all or any portion of any Property
(other than any Ground Lease) now in effect or hereafter entered into
(including, without limitation, any patient admission and resident care
agreement, letting, sublease, license, concession, tenancy or other occupancy
agreement covering or encumbering all or any portion of such Property), together
with any guarantee, supplement, amendment, modification, extension or renewal of
the same, and any additional remainder, reversion, or other right and estate
appurtenant thereto.

          "Leasehold Property Borrowers" and "Leasehold Property Borrower" each
has the meaning set forth in the recitals of this Agreement.

          "Legal Requirements" means, with respect to each Borrower, each
Mortgage Borrower and each Property, all federal, state, county, municipal and
other governmental statutes, laws, rules, orders, regulations, guidelines,
ordinances, judgments, decrees and injunctions of Governmental Authorities
affecting such Borrower, such Mortgage Borrower or such Property or any part
thereof or the construction, use, alteration or operation thereof, or any part
thereof, whether now or hereafter enacted and in force, including, without
limitation, (i) the Americans with Disabilities Act of 1990, (ii) all zoning,
subdivision and land use laws, regulations and ordinances, health, fire,
building codes and parking laws, (iii) skilled nursing facility, residential
care, personal care, adult care, boarding home and/or assisted living facility
laws, rules, regulations and guidelines, including, without limitation, Medicare
Regulations and Medicaid Regulations and (iv) any licensure requirements or
certification requirements under applicable federal and/or state cost
reimbursement programs, including, without limitation, Medicare and Medicaid,
and all permits, licenses and authorizations and regulations relating thereto,
and all covenants, agreements, restrictions and encumbrances contained in any
instruments, either of record or known to any Borrower or any Mortgage Borrower,
at any time in force affecting such Property or any part thereof, including,
without limitation, any which may (i) require repairs, modifications or
alterations in or to such Property or any part thereof, or (ii) in any way limit
the use and enjoyment thereof.

          "Lender" means Ventas Realty, Limited Partnership, a Delaware limited
partnership, together with its successors and assigns.

                                       11



          "Lender Indemnities" has the meaning set forth in Section 11.13(b).

          "Letter of Credit" means a clean, irrevocable, unconditional,
transferable evergreen letter of credit with respect to which no Borrower has
any reimbursement obligation, payable on sight draft only, in favor of Lender
and entitling Lender to draw thereon in New York, New York, issued by an
Eligible Institution. A Letter of Credit must expressly provide that (i) partial
draws are permitted thereunder, (ii) it is freely transferable to any successor
or assign of Lender without cost, and (iii) Lender is entitled to draw on it
immediately and without further notice (a) upon the occurrence and during the
continuance of a Default or Event of Default, (b) if any Borrower fails to
deliver to Lender, no less than thirty (30) days prior to the termination of a
Letter of Credit (including any renewal or extension thereof), a renewal or
extension of such Letter of Credit or a replacement Letter of Credit, or (c) if
the issuing bank is no longer an Eligible Institution and Borrowers fail to
deliver to Lender a replacement Letter of Credit within ten (10) days of the
date that the issuing bank is no longer an Eligible Institution.

          "Liabilities" has the meaning set forth in Section 9.2(b).

          "Lien" means, with respect to each Property, any mortgage, deed of
trust, lien, pledge, hypothecation, assignment, security interest, or any other
encumbrance, charge or transfer of, on or affecting such Property or any portion
thereof or any Borrower or Mortgage Borrower or any interest therein, including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, the filing of any financing statement, and mechanic's, materialmen's
and other similar liens and encumbrances.

          "Liquidation Event" has the meaning set forth in Section 2.4.2(b).

          "Loan" means the loan made by Lender to Borrowers pursuant to this
Agreement.

          "Loan Amount" shall mean the outstanding principal balance of the
Loan, as the same may be increased or decreased as a result of the Re-sizing,
prepayment or otherwise from time to time.

          "Loan Documents" means, collectively, this Agreement, the Note, the
Pledge Agreement, the Master Guaranty Pledge, the Mortgages, the Assignments of
Leases, the Mezzanine Cash Management Agreement, the Mezzanine Collection
Account Agreement, the Master Guaranty, the Environmental Indemnity, the
Assignment of Management Agreement and any other document pertaining to the
Mezzanine Properties as well as all other documents now or hereafter executed
and/or delivered in connection with the Loan as such documents may be amended,
restated, replaced, supplemented or otherwise modified from time to time.

          "Lockout Date" means the date that is eighteen (18) months after the
Re-sizing Date.

                                       12



          "Management Agreement" means the Management Services Agreement, dated
as of the date hereof, between the Property Borrowers, each as owner, and the
Manager, as manager, pursuant to which such manager is to provide management and
other services with respect to all of the Properties.

          "Manager" means Trans Health Management, Inc., a Delaware corporation
, in its capacity as manager under the Management Agreement, or its successors
or permitted assigns thereunder.

          "Maryland Property Borrowers" means each of the Borrowers that owns a
Property in the State of Maryland.

          "Maryland I Equity Borrower" has the meaning set forth in the recitals
of this Agreement.

          "Maryland I Pledged Company Interests" has the meaning set forth in
the recitals of this Agreement.

          "Maryland II Equity Borrower" has the meaning set forth in the
recitals of this Agreement.

          "Maryland II Pledged Company Interests" has the meaning set forth in
the recitals of this Agreement.

          "Maryland Staff Leasing Agreement" means the Staff Leasing Agreement,
dated as of the date hereof, between the Maryland Property Borrowers, each as
owner, and the Maryland Staff Provider, as the staff provider, pursuant to which
the Maryland Staff Provider is to provide personnel for all of the Mezzanine
Properties located in the State of Maryland.

          "Maryland Staff Provider" means THI Services of Maryland, Inc., a
Delaware corporation.

          "Master Guaranty" means that certain Master Guaranty, dated as of the
date hereof, from the Guarantors to Lender, Mortgage Lender and Sale/Leaseback
Lessor, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.

          "Master Guaranty Pledge" means that certain Guarantor Pledge and
Security Agreement, dated as of the date hereof, from the Guarantors to Lender,
Mortgage Lender and Sale/Leaseback Lessor, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.

          "Material Adverse Effect" means a material adverse effect upon (i) the
ability of any Borrower or any Mortgage Borrower to perform, or of Lender or
Mortgage Lender to enforce, any material provision of any Loan Document or
Mortgage Loan Document, (ii) the enforceability of any material provision of any
Loan Document or Mortgage Loan Document, or

                                       13



(iii) the value, Net Operating Income (as defined herein and in the Mortgage
Loan Agreement), use or enjoyment of any Property or the operation thereof. In
determining whether any individual event would result in a Material Adverse
Effect, notwithstanding that such event does not of itself have such effect, a
Material Adverse Effect shall be deemed to have occurred if the cumulative
effect of such event and all other then occurring events and existing conditions
would result in a Material Adverse Effect.

          "Material Agreement" means each contract or agreement relating to the
ownership, management, development, use, operation, leasing maintenance, repair
or improvement of a Mezzanine Property, or otherwise imposing obligations on a
Borrower, under which a Borrower would have the obligation to pay more than
$50,000 per annum or which cannot be terminated by a Borrower without cause upon
ninety (90) days notice or less without the payment of a termination fee.

          "Maturity Date" means November 15, 2005 or such other date on which
the final payment of principal of the Note becomes due and payable as therein or
herein provided, whether at such stated maturity date, by declaration of
acceleration, or otherwise. At Lender's option, the Maturity Date may be changed
from November 15, 2005 to the Re-sizing Maturity Date in accordance with the
Cooperation Agreement.

          "Maximum Legal Rate" means the maximum nonusurious interest rate, if
any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the indebtedness evidenced by the Note and as
provided for herein or the other Loan Documents, under the laws of such state or
states whose laws are held by any court of competent jurisdiction to govern the
interest rate provisions of the Loan.

          "Medicaid" means that certain program of medical assistance, funded
jointly by the federal government and the states for impoverished individuals
who are aged, blind and/or disabled, and for members of families with dependent
children, which program is more fully described in Title XIX of the Social
Security Act (42 U.S.C. 1396 et seq.) and the regulations promulgated
thereunder.

          "Medicaid Certification" means, with respect to any Person, health
care facility, or Nursing Facility, certification by CMS or a state agency or
entity under contract with CMS that such Person, facility or Nursing Facility,
as applicable, complies with the conditions of participation set forth in
Medicaid Regulations or any similar certification issued by CMS or a state
agency.

          "Medicaid Regulations" means, collectively, (i) all federal statutes
(whether set forth in Title XIX of the Social Security Act (42 U.S.C. (s)(s)
1396 et seq.) or elsewhere) affecting the medical assistance program established
by Title XIX of the Social Security Act; (ii) all applicable provisions of all
federal rules, regulations, manuals, orders and administrative, reimbursement
and other guidelines of all Governmental Authorities (whether or not having the
force of law) promulgated pursuant to or in connection with the statutes
described in clause (i) above; (iii) all state statutes enacted and all state
plans for medical assistance, and state plan

                                       14



amendments filed by the state with CMS in connection with the statutes and
provisions described in clauses (i) and (ii) above; and (iv) all applicable
provisions of all rules, regulations, manuals, orders and administrative,
reimbursement, and other guidelines of all Governmental Authorities (whether or
not having the force of law) promulgated pursuant to or in connection with any
of the foregoing, in each case as may be amended, supplemented or otherwise
modified from time to time.

          "Medicare" means that certain federal program providing health
insurance for eligible elderly and other individuals, under which physicians,
hospitals, Nursing Facilities, home health care and other providers are
reimbursed for certain covered services they provide to the beneficiaries of
such program, which program is more fully described in Title XVIII of the Social
Security Act (42 U.S.C. (s)(s) 1395 et seq.) and the regulations promulgated
thereunder.

          "Medicare Certification" means, with respect to any Person, health
care facility, or Nursing Facility, certification by CMS or a state agency or
entity under contract with CMS that such Person, facility or Nursing Facility,
as applicable, complies with the conditions of participation set forth in
Medicare Regulations or any similar certification issued by CMS or a state
agency.

          "Medicare Regulations" means, collectively, all federal statutes
(whether set forth in Title XVIII of the Social Security Act (42 U.S.C. (s)(s)
1395 et seq.) or elsewhere) affecting the health insurance program for the aged
and disabled established by Title XVIII of the Social Security Act, together
with all applicable provisions of all rules, regulations, manuals, orders and
administrative, reimbursement and other guidelines of all Governmental
Authorities promulgated pursuant to or in connection with any of the foregoing
(whether or not having the force of law), as each may be amended, supplemented
or otherwise modified from time to time.

          "Mezzanine Cash Management Account" has the meaning set forth in
Section 6.1(a).

          "Mezzanine Cash Management Agreement" means that certain Mezzanine
Cash Management Agreement of even date herewith among Lender, Mortgage Lender,
Borrowers, Mortgage Borrowers and Mezzanine Cash Management Bank, as the same
may from time to time be modified, amended or replaced.

          "Mezzanine Cash Management Bank" means The Bank of New York, a New
York State banking institution, and any other Eligible Institution from time to
time selected in accordance with Section 6.1(c).

          "Mezzanine Cash Management Event" means at any time the Debt Service
Coverage Ratio falls below 1.20:1.00.

          "Mezzanine Cash Management Period" means the period of time commencing
on the occurrence of a Cash Management Event and ending on the Payment Date
following the date that the Debt Service Coverage Ratio is at or above 1.20:1.00
for two (2) consecutive quarters.

                                       15



          "Mezzannine Collection Account" has the meaning set forth in Section
6.1.

          "Mezzanine Collection Account Agreement" means that certain Mezzanine
Collection Account Agreement of even date herewith among Lender, Borrowers and
Mezzanine Collection Account Bank, as the same may from time to time be
modified, amended or replaced.

          "Mezzanine Collection Account Bank" means First Union National Bank,
or any other Eligible Institution from time to time selected in accordance with
Section 6.1(c).

          "Mezzanine Property" means each parcel of real property, the
Improvements thereon and all personal property owned by any Property Borrower
and encumbered by a Mortgage, together with all rights pertaining to such
property and Improvements, all as more particularly described in the Granting
Clauses of such Mortgage, and "Mezzanine Properties" means all such parcels and
other properties collectively.

          "Monthly Capital Expenditure Reserve Amount" means $14,500.

          "Moody's" means Moody's Investors Service, Inc.

          "Mortgage" means, with respect to each Mezzanine Property, a first
priority Open-Ended Fee Mortgage and Security Agreement or a first priority
Open-Ended Leasehold Mortgage and Security Agreement, or similar security
instrument, dated the date hereof, executed and delivered by a Property Borrower
as security for the Loan and encumbering such Mezzanine Property, as the same
may be amended, restated, replaced, supplemented or otherwise modified from time
to time, and "Mortgages" means all such instruments collectively.

          "Mortgage Borrowers" and "Mortgage Borrower" each has the meaning set
forth in the recitals of this Agreement.

          "Mortgage Borrower Company Agreement" means, with respect to each
Mortgage Borrower, the operating agreement of such Mortgage Borrower, dated as
of the date hereof, by the related Borrower.

          "Mortgage Cash Management Account" means that certain cash management
account established pursuant to the terms of the Mortgage Loan Agreement.

          "Mortgage Cash Management Period" means the "Cash Management Period"
as defined in the Mortgage Loan Agreement.

          "Mortgage Debt Service" means, with respect to any particular period
of time, scheduled principal and interest payments under the Mortgage Loan.

          "Mortgage Lender " has the meaning set forth in the recitals of this
Agreement.

          "Mortgage Loan" has the meaning set forth in the recitals of this
Agreement.

                                       16



          "Mortgage Loan Agreement" has the meaning set forth in the recitals of
this Agreement.

          "Mortgage Loan Documents" has the meaning set forth in the Mortgage
Loan Agreement under the term, "Loan Documents".

          "Mortgage Payment Date" means the "Payment Date" as defined in the
Mortgage Loan Agreement.

          "Mortgage Properties" and "Mortgage Property" each has the meaning set
forth in the recitals of this Agreement.

          "Net Liquidation Proceeds After Debt Service" means, with respect to
any Liquidation Event, all amounts paid to or received by or on behalf of any
Mortgage Borrower in connection with such Liquidation Event, including, without
limitation, proceeds of any sale, refinancing or other disposition or
liquidation, less (i) Lender's reasonable costs incurred in connection there
recovery thereof, (ii) the costs incurred by any Mortgage Borrower in connection
with a restoration of the Property made in accordance with the Mortgage Loan
Documents, (iii) amounts required or permitted to be deducted therefrom and
amounts paid pursuant to the Mortgage Loan Documents to Mortgage Lender, (iv) in
the case of a foreclosure sale, disposition or transfer of the Property in
connection with realization thereon following an Event of Default under the
Mortgage Loan, such reasonable and customary costs and expenses of sale or other
disposition (including attorneys' fees and brokerage commissions), (v) in the
case of a foreclosure sale, such costs and expenses incurred by Mortgage Lender
under the Mortgage Loan Documents as Mortgage Lender shall be entitled to
receive reimbursement for under the terms of the Mortgage Loan Documents and
(vi) in the case of a refinancing of the Mortgage Loan, such costs and expenses
(including attorneys' fees) of such refinancing as shall be reasonably approved
by Lender.

          "Net Operating Income" means, for any period, the amount by which
Operating Income exceed Operating Expenses.

          "Net Proceeds" means: (i) the net amount of all insurance proceeds
payable as a result of a Casualty to a Property, after deduction of reasonable
costs and expenses (including, but not limited to, reasonable attorneys' fees),
if any, in collecting such insurance proceeds and taxes, if any, payable by a
Borrower with respect to such proceeds, or (ii) the net amount of the Award,
after deduction of reasonable costs and expenses (including, but not limited to,
reasonable attorneys' fees), if any, in collecting such Award and taxes, if any,
payable by a Borrower with respect to such proceeds.

          "Net Proceeds Account" has the meaning set forth in Section 6.8(a).

          "Net Proceeds Deficiency" has the meaning set forth in Section
5.3.2(f).

          "Note" has the meaning set forth in Section 2.1.3.

                                       17



          "Notice" has the meaning set forth in Section 11.6.

          "Nursing Facility" means a facility (including any Alzheimer's or
dementia care unit of sub acute unit), which offers nonacute inpatient care to
patients who suffer from a disease, chronic illness, or disability requiring
nursing care without continuous hospital services, and who require medical
services and nursing services rendered by or under the supervision of a licensed
medical professional, together with convalescent or restorative services now or
hereafter located on a Property.

          "Officer's Certificate" means a certificate delivered to Lender by a
Borrower which is signed by an authorized senior officer of such Borrower.

          "Ohio Equity Borrower" has the meaning set forth in the recitals of
this Agreement.

          "Ohio Property Borrowers" means, collectively, THI of Ohio ALFs I,
LLC, THI of Ohio at Berea, LLC, THI of Ohio at Cortland, LLC and THI of Ohio at
Kent, LLC.

          "Ohio Pledged Company Interests" has the meaning set forth in the
recitals of this Agreement.

          "Ohio Staff Leasing Agreement" means the Staff Leasing Agreement,
dated as of the date hereof, between the Ohio Property Borrowers, each as owner,
and the Ohio Staff Provider, as the staff provider, pursuant to which the Ohio
Staff Provider is to provide personnel for all of the Mezzanine Properties
located in the State of Maryland.

          "Ohio Staff Provider" means THI Services Corp., a Delaware
corporation.

          "Operating Expense Reserve Account" shall have the meaning set forth
in Section 6.5(a).

          "Operating Expenses" means, with respect to a Property (or the
Properties) and without duplication, all costs and expenses incurred by a
Borrower or Mortgage Borrower determined on an accrual basis, relating to the
operation, maintenance, repair, use and management of such Property (or the
Properties), including, without limitation, utilities, repairs and maintenance,
insurance, property taxes and assessments, advertising expenses, payroll and
related taxes, equipment lease payments, actual management fees but excluding
(i) rent payments made by any Borrower under a Ground Lease and principal,
interest and other payments made by a Borrower or Mortgage Borrower under the
Loan Documents or the Mortgage Loan Documents, (ii) depreciation, amortization
and other non-cash expenses of the Properties; provided, however, such costs and
expenses shall be subject to reasonable adjustment by Lender to normalize such
costs and expenses and (iii) capital expenditures.

          "Operating Income" means, without duplication, all revenue derived
from the ownership and/or operation of a Property (or Properties) by any
Borrower or Mortgage Borrower

                                       18



from whatever source determined on an accrual basis, including, but not limited
to, (i) Rents, including, but not limited to, Patient Revenues (as defined
herein and in the Mortgage Loan Agreement) received by any Borrower or Mortgage
Borrower or by any subtenant or licensee which is an Affiliate of any Borrower
or Mortgage Borrower (but excluding any revenues received by any subtenant or
licensee which is not an Affiliate of any Borrower or Mortgage Borrower) and
(ii) Rents received by any Borrower or Mortgage Borrower from any subtenant or
licensee which is not an Affiliate of any Borrower or Mortgage Borrower (but
excluding any rents received from any subtenant or licensee which is an
Affiliate of any Borrower or Mortgage Borrower); but excluding (a) sales, use
and occupancy or other taxes on receipts required to be accounted for by any
Borrower or Mortgage Borrower to any governmental authority, (b) non-recurring
revenues as reasonably determined by Lender (e.g. proceeds from a sale of assets
or refinancing), (c) security deposits (except to the extent determined by
Lender to be properly utilized to offset a loss of rent received by any Borrower
or Mortgage Borrower), (d) proceeds of casualty insurance and condemnation
awards (other than business interruption or other loss of income insurance
related to business interruption or loss of income for the period in question)
and (e) any proceeds from the sale or refinancing of any Property or
recapitalization of any Borrower or Mortgage Borrower. In addition, if required
by Lender, income accrued but not paid in cash during an accounting period shall
be adjusted for an allowance for doubtful accounts in a manner consistent with
historical net realizable value.

          "Organizational Documents" means, as to any Person, the certificate of
incorporation and by-laws with respect to a corporation; the certificate of
organization and operating agreement with respect to a limited liability
company; the certificate of limited partnership and partnership agreement with
respect to a limited partnership, or any other organizational or governing
documents of such Person.

          "Other Charges" means all ground rents, maintenance charges,
impositions other than Taxes, and any other charges, including, without
limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining the Mezzanine Properties, now or hereafter levied or
assessed or imposed against the Mezzanine Properties or any part thereof.

          "Parent" means Trans Healthcare, Inc., a Delaware corporation.

          "Patient Revenues" means revenues generated from the sale of goods or
services at or through the Properties, whether by a Borrower or any subtenant or
licensee of such Borrower, or any other party, which revenues are primarily
derived from services provided to patients (including, without limitation,
revenues received or receivable for the use of or otherwise by reason of all
rooms, beds and other facilities provided, meals served, services performed or
goods sold at the Mezzanine Properties), including but not limited to, Self-Pay
Receivables and all other income, consideration, issues, accounts, profits or
benefits of any nature arising from the ownership, possession, use or operation
of such Mezzanine Property, including, without limitation, all rights to payment
from the Medicare and Medicaid programs or similar state or federal programs,
boards, bureaus or agencies (to the extent legally assignable under applicable
law) and rights to payment from patients or private insurers, arising from the

                                       19



operation of such Mezzanine Property and all revenues, receipts, income,
receivables and accounts relating to or arising from rentals, rent equivalent
income, income and profits from guest rooms, meeting rooms, food and beverage
facilities, vending machines, telephone and television systems, guest laundry,
and the provision or sale of other goods and services.

          "Payment Date" means the fifteenth (15th) day of every calendar month
occurring during the term of the Loan; provided, however, in connection with a
Securitization of the Loan, Lender may change the Payment Date. Each Borrower
shall promptly execute an amendment to this Agreement to evidence any such
change.

          "Payor Notice" has the meaning set forth in Section 6.1(b).

          "Permitted Debt" means as to a Mezzanine Property (x) (i) unsecured
trade payables incurred in the ordinary course of business relating to the
ownership and operation of such Mezzanine Property which are paid within ninety
(90) days of the date incurred and (ii) financing of Equipment or vehicles used
in the ordinary course of operating and owning a Mezzanine Property (including
capitalized leases of such Equipment and vehicles) and (y) which unsecured trade
payables and financing do not exceed at any one time an aggregate amount as to
all Borrowers and their Properties on an aggregate basis of any AR Financing, if
any, entered into in accordance with Section 4.2.12 hereof.

          "Permitted Encumbrances" means, with respect to each Mezzanine
Property, collectively, (i) the Liens and security interests created by the Loan
Documents, (ii) all Liens, encumbrances and other matters disclosed in the Title
Insurance Policies relating to such Mezzanine Property or any part thereof,
(iii) Liens, if any, for Taxes with respect to such Mezzanine Property imposed
by any Governmental Authority not yet due or delinquent, (iv) such other title
and survey exceptions as Lender has approved or may approve in writing in
Lender's sole discretion, none of which adversely affect the use, value or
operation of such Mezzanine Property, (v) Liens on the Equipment or vehicles
used in the ordinary course of business of operating and owning such Mezzanine
Property which are the subject of a financing of such Equipment or vehicles
(including capitalized leases of such Equipment or vehicles) which financing
complies with the terms of the definition of the term "Permitted Debt," and (vi)
the Leases consisting of Borrower's standard form patient admission and resident
care agreements.

          "Permitted Investments" has the meaning set forth in the Cash
Management Agreement.

          "Person" means any individual, corporation, partnership, limited
liability company, joint venture, estate, trust, unincorporated association, any
other entity, any federal, state, county or municipal government or any bureau,
department or agency thereof and any fiduciary acting in such capacity on behalf
of any of the foregoing.

          "Physical Plant Standards" has the meaning set forth in Section
3.1.40(g).

                                       20



          "Pledge Agreement" has the meaning set forth in the recitals of this
Agreement.

          "Pledged Company Interests" has the meaning set forth in the recitals
of this Agreement.

          "Policies" has the meaning specified in Section 5.1.1(b).

          "Prepayment Notice" has the meaning set forth in Section 2.4.1.

          "Prepayment Premium" means an amount equal to the sum of (a) the
present value of the interest payments which would have accrued on the principal
balance of the Loan (outstanding as of the date of such prepayment) at the
Interest Rate from the date of such prepayment up to and including the day on
which any prepayment of the loan is, discounted at a rate equal to the Treasury
Rate plus (b) fifty (50) basis points.

          "Pro Forma Net Operating Income" means with respect to a Property, Net
Operating Income for any period for such Property adjusted as follows: (i) if
the actual occupancy percentage of such Property is greater than ninety-five
percent (95%), Operating Income for such Property shall be reduced by the
product of (1) the difference between the actual occupancy percentage of such
Property and ninety-five percent (95%) times (2) the Operating Income for such
Property, (ii) Operating Income for such Property shall be reduced by (x) a bad
debt expense for such Property equal to the greater of (A) the actual bad debt
expense and (B) six-tenths of one percent (0.6%) of Operating Income for such
Property for such period (after deducting the vacancy factor as calculated
above, if any); (y) a management fee for such Property equal to the greater of
(A) the actual management fee and (B) five percent (5%) of Operating Income for
such Property for such period (after deducting any vacancy factor and for bad
debt expenses as calculated above, as applicable); (z) a reserve for Capital
Expenditures (as defined herein and in the Mortgage Loan Agreement) equal to
$300 per annum per licensed bed at each Property consisting of a Nursing
Facility or Assisted Living Facility and for each Property which does not
constitute a Nursing Facility or Assisted Living Facility such per bed per annum
amount as reasonably determined by the Lender; provided, however, that Lender
may further adjust Pro Forma Net Operating Income as Lender deems reasonably
necessary based upon the occurrence of tangible events that Lender reasonably
determines may have a material effect on any Borrower or Property.

          "Property" means, any Mortgage Property or any Mezzanine Property and
"Properties" means, collectively, the Mortgage Properties and the Mezzanine
Properties.

          "Property Borrowers" and "Property Borrower" each has the meaning set
forth in the recitals of this Agreement.

          "Rating Agencies" means, prior to the final Securitization of the
Loan, each of S&P, Moody's and Fitch or any other nationally-recognized
statistical rating agency which has been designated by Lender and, after the
final Securitization of the Loan, shall mean any of the foregoing that have
rated any of the Securities.

                                       21



          "Rating Agency Confirmation" means a written affirmation from each of
the Rating Agencies that the credit rating of the Securities rated by such
Rating Agency immediately prior to the occurrence of the event with respect to
which such Rating Agency Confirmation is sought will not be qualified,
downgraded or withdrawn as a result of the occurrence of such event, which
affirmation may be granted or withheld in such Rating Agency's sole and absolute
discretion.

          "Re-sizing" has the meaning set forth in the Cooperation Agreement.

          "Re-sizing Date" means the earlier of (i) the Payment Date upon which
the Re-sizing shall occur or (ii) February 15, 2003.

          "Re-sizing Maturity Date" means the date that is the third anniversary
of the Re-sizing Date.

          "Registration Statement" has the meaning set forth in Section 9.2(b).

          "Regulatory Permits" has the meaning set forth in Section 3.1.40(b).

          "Reimbursement Contracts" means all third party reimbursement
contracts for the Properties which are now or hereafter in effect with respect
to residents or patients qualifying for coverage under the same, including,
without limitation, Medicare, Medicaid and private insurance agreements, and any
successor program or other similar reimbursement program and/or private
insurance agreements.

          "Rents" means, with respect to each Property, (x) all receipts, rents
(whether denoted as advance rent, minimum rent, percentage rent, additional rent
or otherwise), issues, income, royalties, profits, revenues (including, without
limitation, Patient Revenues (as defined herein and in the Mortgage Loan
Agreement) and Self-Pay Receivables (as defined herein and in the Mortgage Loan
Agreement)), proceeds, bonuses, deposits (whether denoted as security deposits,
utility deposits or otherwise), lease termination fees or payments, rejection
damages, buy-out fees and any other fees made or to be made in lieu of rent, any
award made hereafter to any Borrower or any Mortgage Borrower in any court
proceeding involving any tenant, lessee, licensee or concessionaire under any of
the Leases in any bankruptcy, insolvency or reorganization proceedings in any
state or federal court, and all other payments, rights and benefits of whatever
nature from time to time due under any of the Leases, including, without
limitation, rights to payment earned under the Leases for space in the
Improvements for the operation of ongoing businesses, such as restaurants, news
stands, barber shops, beauty shops and pharmacies; provided, however, "Rents"
shall not include "patient trust accounts" or "patient needs funds."

          "Restoration" has the meaning set forth in Section 5.2.1.

          "Restoration Threshold" means (a) with respect to any Mezzanine
Property, the greater of (i) five percent (5%) of the Allocated Loan Amount for
such Mezzanine Property or

                                       22



(ii) $200,000 and (b) with respect to the Mezzanine Properties, two percent (2%)
of the Loan Amount.

          "S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.

          "Sale/Leaseback Lessor" means Ventas Realty, Limited Partnership, a
Delaware limited partnership, in its capacity as lessor under the Lease
Documents (as defined in the Master Guaranty).

          "SAP Completion Date" has the meaning set forth in the Cooperation
Agreement.

          "Secondary Market Transaction" has the meaning set forth in Section
9.1(a).

          "Securities" has the meaning set forth in Section 9.1(a).

          "Securities Act" has the meaning set forth in Section 9.2(a).

          "Securitization" has the meaning set forth in Section 9.1(a).

          "Self-Pay Receivables" means those receivables whereby an individual
or resident of a Mezzanine Property is the payor of such receivables.

          "Servicer" has the meaning set forth in Section 11.24.

          "Servicing Agreement" has the meaning set forth in Section 11.24.

          "Severed Loan Documents" has the meaning set forth in Section 10.2(c).

          "Single Member LLC" means a limited liability company that (i) is
either (a) a single member limited liability company or (b) a multiple member
limited liability company that does not have a Single-Purpose Entity that owns
at least 1% of the equity interests in such limited liability company as its
managing member, and (ii) is organized under the laws of the State of Delaware.

          "Single-Purpose Entity" means a corporation, limited partnership, or
limited liability company which, at all times since its formation and thereafter
(i) was and will be organized solely for the purpose of (x) owning or operating
the applicable Property or Pledged Company Interests or (y) acting as the
managing member of the limited liability company which owns or operates a
Property or (z) acting as the general partner of a limited partnership which
owns or operates a Property, (ii) has not and will not engage in any business
unrelated to (x) the ownership or operation of the applicable Property or
Pledged Company Interests or (y) acting as a member of a limited liability
company which owns or operates such Property or (z) acting as a general partner
of a limited partnership which owns or operates such Property, (iii) has not and
will not have any assets other than (x) those related to the applicable Property
or Pledged Company Interests or (y) its membership interest in the limited
liability company which owns or

                                       23



operates such Property or (z) its general partnership interest in the limited
partnership which owns or operates such Property, as applicable, (iv) has not
and will not engage in, seek or consent to any dissolution, winding up,
liquidation, consolidation or merger, and, except as otherwise expressly
permitted by this Agreement, has not and will not engage in, seek or consent to
any asset sale, transfer of partnership or membership or shareholder interests,
or amendment of its limited partnership agreement, articles of incorporation,
articles of organization, certificate of formation or operating agreement (as
applicable), (v) if such entity is a limited partnership, has and will have as
its only general partners, general partners which are and will be Single-Purpose
Entities which are corporations, (vi) if such entity is a corporation, at all
relevant times, has and will have at least one Independent Director, (vii) the
board of directors of such entity has not taken and will not take any action
requiring the unanimous affirmative vote of one hundred percent (100%) of the
members of the board of directors unless all of the directors, including without
limitation the Independent Director, shall have participated in such vote,
(viii) has not and will not fail to correct any known misunderstanding regarding
the separate identity of such entity, (ix) if such entity is a limited liability
company, is either a Single Member LLC or has and will have at least one member
that is and will be a Single-Purpose Entity which is and will be a corporation,
and such corporation is and will be the managing member of such limited
liability company, (x) without the unanimous consent of all of the partners,
directors or managers (including without limitation the Independent Director) or
members, as applicable, has not and will not with respect to itself or to any
other entity in which it has a direct or indirect legal or beneficial ownership
interest (w) file a bankruptcy, insolvency or reorganization petition or
otherwise institute insolvency proceedings or otherwise seek any relief under
any laws relating to the relief from debts or the protection of debtors
generally; (x) seek or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator, custodian or any similar official for such
entity or all or any portion of such entity's properties; (y) make any
assignment for the benefit of such entity's creditors; or (z) take any action
that might cause such entity to become insolvent, (xi) has maintained and will
maintain its accounts, books and records separate from any other person or
entity (except that, for accounting and reporting purposes, each Borrower may be
included in the consolidated financial statements of any equity owner of such
Borrower in accordance with GAAP provided that such financials will contain
detailed notes stating that such entity is a separate legal entity that owns its
own assets and has creditors that have a security interest in such assets and
that the applicable Property has been sold to such Borrower), (xii) has
maintained and will maintain its books, records, resolutions and agreements as
official records, (xiii) has not commingled and will not commingle its funds or
assets with those of any other entity, (xiv) has held and will hold its assets
in its own name, (xv) has conducted and will conduct its business in its name,
(xvi) has maintained and will maintain its financial statements, accounting
records and other entity documents separate from any other person or entity
(except that, for accounting and reporting purposes, each Borrower may be
included in the consolidated financial statements of any equity owner of such
Borrower in accordance with GAAP), (xvii) has paid and will pay its own
liabilities out of its own funds and assets, (xviii) has observed and will
observe all partnership, corporate or limited liability company formalities as
applicable, (xix) has maintained and will maintain an arms-length relationship
with its affiliates, (xx) if (x) such entity owns or operates a Property, has
and will have no Indebtedness other than (A) the Debt and (B) Permitted Debt, or
(y) such entity acts as

                                       24



the general partner of a limited partnership which owns or operates such
Property, has and will have no indebtedness other than unsecured trade payables
in the ordinary course of business relating to acting as general partner of the
limited partnership which owns or operates such Property which (1) do not
exceed, at any time, Ten Thousand Dollars ($10,000.00) and (2) are paid within
ninety (90) days of the date incurred, or (z) such entity acts as a managing
member of a limited liability company which owns or operates such Property, has
and will have no indebtedness other than unsecured trade payables in the
ordinary course of business relating to acting as a member of the limited
liability company which owns or operates such Property which (1) do not exceed,
at any time, Ten Thousand Dollars ( $10,000.00) and (2) are paid within ninety
(90) days of the date incurred, (xxi) has not and will not assume or guarantee
or become obligated for the debts of any other entity or hold out its credit as
being available to satisfy the obligations of any other entity except for the
Debt, (xxii) has not acquired and will not acquire obligations or securities of
its partners, members or shareholders, (xxiii) has allocated and will allocate
fairly and reasonably shared expenses, including, without limitation, shared
office space and use separate stationery, invoices and checks and has and will
maintain office space separate from any other entity (which may be a separately
identified area in office space shared with one or more entity) and maintain a
separate sign in the office directory, (xxiv) except for the Liens granted
pursuant to the Loan Documents, has not and will not pledge its assets for the
benefit of any other person or entity, (xxv) has held and identified itself and
will hold itself out and identify itself as a separate and distinct legal entity
under its own name and not as a division or part of any other person or entity
so as not to mislead others with whom it is dealing (except that, for accounting
and reporting purposes, each Borrower may be included in the consolidated
financial statements of any equity owner of such Borrower in accordance with
GAAP provided that such financials will contain detailed notes stating that such
entity is a separate legal entity that owns its own assets and has creditors
that have a security interest in such assets and that the applicable Property
has been sold to such Borrower), (xxvi) has not made and will not make loans to
any person or entity, (xxvii) has not and will not identify its partners,
members or shareholders, or any affiliates of any of them as a division or part
of it, (xxviii) if such entity is a limited liability company (other than a
Single Member LLC), such entity shall dissolve only upon the bankruptcy of the
managing member, and such entity's articles of organization, certificate of
formation and/or operating agreement, as applicable, shall contain such
provision, (xxiv) has not entered and will not enter into or be a party to, any
transaction with its partners, members, shareholders or its affiliates except in
the ordinary course of its business and on terms which are intrinsically fair
and are no less favorable to it than would be obtained in a comparable
arms-length transaction and on a commercially reasonably basis with an unrelated
third party, (xxx) has paid and will pay the salaries of its own employees from
its own funds and has and will maintain a sufficient number of employees in
light of its contemplated business operations, (xxxi) has maintained and will
maintain adequate capital in light of its contemplated business operations
(xxxii) if such entity is a limited liability company (other than a Single
Member LLC) or limited partnership, and such entity has one or more managing
members or general partners, as applicable, then such entity shall continue (and
not dissolve) for so long as a solvent managing member or general partner, as
applicable, exists and such entity's organizational documents shall contain such
provision; (xxxiii) if such entity is a Single Member LLC, its organizational
documents shall provide that, as long as any portion of the Debt remains
outstanding, upon the

                                       25



occurrence of any event that causes the sole member of such Single Member LLC to
cease to be a member of such Single Member LLC (other than (y) upon an
assignment by such member of all of its limited liability company interest in
such Single Member LLC and the admission of the transferee, if permitted
pursuant to the organizational documents of such Single Member LLC and the Loan
Documents, or (z) the resignation of such member and the admission of an
additional member of such Single Member LLC, if permitted pursuant to the
organizational documents of such Single Member LLC and the Loan Documents) at
least one individual acting as an Independent Director of such Single Member LLC
shall, without any action of any Person and simultaneously with the sole member
of the Single Member LLC ceasing to be a member of the Single Member LLC,
automatically be admitted as the sole member of the Single Member LLC (the
"Special Member") and shall preserve and continue the existence of the Single
Member LLC without dissolution; (xxxiv) if such entity is a Single Member LLC,
its organizational documents shall provide that for so long as any Obligation is
outstanding, no Special Member may resign or transfer its rights as Special
Member unless (y) a successor Special Member has been admitted to such Single
Member LLC as a Special Member, and (z) such successor Special Member has also
accepted its appointment as an Independent Director and (xxxv) has and shall
maintain its assets in a manner that will not be costly or difficult to
segregate, ascertain or identify its individual assets for those of any other
entity.

          "Special Member" has the meaning set forth in the definition of
Single-Purpose Entity.

          "Specialty Hospital" means a facility that is operated as a special
hospital for providing specialized services, including but not limited to
rehabilitation services, on a in-patient basis. For purposes of this Agreement,
the term "Specialty Hospital" shall include "rehabilitation hospital" and
"long-term acute care hospital" as those terms are defined under applicable
Medicare Regulations.

          "Staff Leasing Agreement" means the Ohio Staff Leasing Agreement or
the Maryland Staff Leasing Agreement, as the case may be.

          "Staff Provider" means the Ohio Staff Provider or the Maryland Staff
Provider, as the case may be.

          "State" means, with respect to a Property, the State or Commonwealth
in which such Property or any part thereof is located.

          "Tax and Insurance Escrow Account" has the meaning set forth in
Section 6.3(a).

          "Taxes" means all real estate and personal property taxes,
assessments, water rates or sewer rents, now or hereafter levied or assessed or
imposed against any of the Mezzanine Properties or part thereof, together with
all interest and penalties thereon.

          "Third Party Payor" means any state, federal or municipal boards,
bureaus, corporations or agencies and any private commercial insurers remitting
payments to any

                                       26



Borrower pursuant to Medicare, Medicaid, Blue Cross and/or Blue Shield or other
insurance, health plan, managed care or employee assistance programs.

          "Third Party Payor Programs" has the meaning set forth in Section
3.1.40(e).

          "Title Insurance Policy" means, with respect to each Property, an ALTA
mortgagee title insurance policy in the form reasonably acceptable to Lender
issued with respect to such Property and insuring the lien of the Mortgage
encumbering such Property.

          "Transfer" means any voluntary or involuntary sale, conveyance,
mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer of: (a)
all or any part of a Property or the Properties or the Collateral or any estate
or interest therein including, but not be limited to, (i) an installment sales
agreement wherein any Borrower or Mortgage Borrower agrees to sell a Property or
the Properties or the Collateral or any part thereof for a price to be paid in
installments, (ii) an agreement by any Borrower or Mortgage Borrower leasing all
or a substantial part of a Property or the Properties, for other than actual
occupancy by a tenant thereunder and its affiliates or (iii) a sale, assignment
or other transfer of, or the grant of a security interest in, any Borrower's or
Mortgage Borrower's right, title and interest in and to any Leases or any Rents;
or (b) any ownership interest in (i) any Borrower, Mortgage Borrower or any
Guarantor or (ii) any corporation, partnership, limited liability company, trust
or other Person owning, directly or indirectly, any interest in any Borrower,
Mortgage Borrower or any Guarantor.

          "Treasury Rate" means the yield calculated by the linear interpolation
of yields, as reported in Federal Reserve Statistical Release H.15 - Selected
Interest Rates under the heading U.S. Government Securities/Treasury constant
maturities for the week ending prior to the date on which any prepayment of the
Loan occurs, of U.S. Treasury constant maturities with maturity dates (one
longer, one shorter) most nearly approximating the Maturity Date (and in the
event H.15 is no longer published, Lender shall in its reasonable discretion
select a comparable publication to determine the Treasury Rate).

          "Trustee" means any trustee holding the Loan in a Securitization.

          "UCC" or "Uniform Commercial Code" means the Uniform Commercial Code
as in effect in the State.

          "Underwriter Group" has the meaning set forth in Section 9.2(b).

          "Updated Information" has the meaning set forth in Section 9.1(b)(i).

          "U.S. Obligations" means direct full faith and credit obligations of
the United States of America that are not subject to prepayment, call or early
redemption.

          "Ventas Group" has the meaning set forth in Section 9.2(b).

                                       27



          Section 1.2. Principles of Construction.

          All references to sections and schedules are to sections and schedules
in or to this Agreement unless otherwise specified. Unless otherwise specified,
the words "hereof," "herein" and "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. Unless otherwise specified, all meanings
attributed to defined terms herein shall be equally applicable to both the
singular and plural forms of the terms so defined. Whenever the context may
require, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural and vice versa.

                              ARTICLE II. THE LOAN

          Section 2.1. The Loan.

               2.1.1. Agreement to Lend and Borrow. Subject to and upon the
terms and conditions set forth herein, Lender shall make the Loan to Borrowers
and Borrowers shall accept the Loan from Lender on the Closing Date.

               2.1.2. Single Disbursement to Borrowers. Borrowers shall receive
only one borrowing hereunder in respect of the Loan and any amount borrowed and
repaid hereunder in respect of the Loan may not be reborrowed. Notwithstanding
the foregoing, the parties acknowledge that the Loan Amount may be increased or
decreased as a result of the Re-sizing.

               2.1.3. The Note. The Loan shall be evidenced by that certain
Promissory Note of even date herewith, in the original principal amount of
Twenty-Two Million and No/100 Dollars ($22,000,000) executed by Borrowers and
payable to the order of Lender in evidence of the Loan (as the same may
hereafter be amended, supplemented, restated, componitized, split, increased,
extended or consolidated, the "Note") and shall be repaid in accordance with the
terms of this Agreement and the Note.

               2.1.4. Use of Proceeds. Borrowers shall use proceeds of the Loan
to (i) make equity contributions to the Mortgage Borrowers in order to cause the
Mortgage Borrowers to use such amounts for any use permitted pursuant to Section
2.1.4 of the Mortgage Loan Agreement, (ii) pay all past-due Basic Carrying
Costs, if any, in respect of the Mezzanine Properties, (iii) deposit the initial
required amounts into the Collateral Accounts, (iv) pay costs and expenses
incurred in connection with the closing of the Loan, including, but not limited
to, Lender's costs and expenses, all as approved by Lender, (v) fund any working
capital requirements of the Mezzanine Properties, as approved by Lender and (vi)
pay any recoupment of deposits or expenses in connection with the acquisition of
any of the Mezzanine Properties or in any failed financing in the past nine (9)
months.

                                       28



          Section 2.2. Interest Rate.

               2.2.1. Interest Rate. Interest on the outstanding principal
balance of the Loan shall accrue from the Closing Date up to but excluding the
Maturity Date at the Interest Rate.

               2.2.2. Default Rate. In the event that, and for so long as, any
Event of Default shall have occurred and be continuing, the outstanding
principal balance of the Loan and, to the extent permitted by law, overdue
interest in respect of the Loan, shall accrue interest at the Default Rate,
calculated from the date on which the default which gave rise to the Event of
Default occurred without regard to any grace or cure periods contained herein.

               2.2.3. Interest Calculation. Interest on the outstanding
principal balance of the Loan shall be calculated by multiplying (a) the actual
number of days elapsed in the applicable Interest Accrual Period by (b) a daily
rate based on a three hundred sixty (360) day year (that is, the Interest Rate
or the Default Rate, as the case may be, divided by three hundred sixty (360))
by (c) the outstanding principal balance.

               2.2.4. Usury Savings. This Agreement and the other Loan Documents
are subject to the express condition that at no time shall Borrowers be required
to pay interest on the principal balance of the Loan at a rate which could
subject Lender to either civil or criminal liability as a result of being in
excess of the Maximum Legal Rate. If by the terms of this Agreement or the other
Loan Documents, any Borrower is at any time required or obligated to pay
interest on the principal balance due hereunder at a rate in excess of the
Maximum Legal Rate, the Interest Rate or the Default Rate, as the case may be,
shall be deemed to be immediately reduced to the Maximum Legal Rate and all
previous payments in excess of the Maximum Legal Rate shall be deemed to have
been payments in reduction of principal and not on account of the interest due
hereunder. All sums paid or agreed to be paid to Lender for the use,
forbearance, or detention of the sums due under the Loan, shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the full stated term of the Loan until payment in full so that the
rate or amount of interest on account of the Loan does not exceed the Maximum
Legal Rate from time to time in effect and applicable to the Loan for so long as
the Loan is outstanding.

          Section 2.3. Loan Payments.

               2.3.1. Payment Before Maturity Date. Borrowers shall make a
payment to Lender of interest only on the Closing Date for the period from the
Closing Date through the last day of the Interest Accrual Period in which the
Closing Date occurs (unless the Closing Date is the fifteenth (15th) day of a
calendar month, in which case no such separate payment of interest shall be due)
(the "Stub Interest Payment"). Notwithstanding the foregoing, Lender will waive
the requirement of payment of the Stub Interest Payment on the Closing Date and
the Borrowers hereby agree and covenant to pay the Stub Interest Payment on
November 15, 2002. Borrowers shall make a payment to Lender of monthly Debt
Service on the Payment Date occurring in December, 2002 and on each Payment Date
thereafter to and including the Maturity

                                       29



Date. Each payment shall be applied first to accrued and unpaid interest and the
balance to principal. The monthly Debt Service required hereunder is based upon
a twenty-five (25) year amortization schedule attached hereto as Schedule VI.
Notwithstanding the foregoing, if any Re-sizing or adjustment in the Loan Amount
shall have occurred pursuant to the Cooperation Agreement, Borrowers shall make
a payment of principal to Lender in the amount set forth on any replacement
amortization schedule hereafter delivered in connection with such Re-sizing or
adjustment. All payments to Lender by Borrowers under this Loan Agreement shall
be made by wire transfer of funds to an account designated by Lender.

               2.3.2. Payment on Maturity Date. Borrowers shall pay to Lender on
the Maturity Date the outstanding principal balance of the Loan, all accrued and
unpaid interest and all other amounts due hereunder and under the Note, the
Mortgages and the other Loan Documents.

               2.3.3. Late Payment Charge. If any principal, interest or any
other sum due under the Loan Documents (excluding the principal payment due on
the Maturity Date) is not paid by any Borrower on the date on which it is due,
Borrowers shall pay to Lender upon demand an amount equal to the lesser of five
percent (5%) of such unpaid sum or the maximum amount permitted by applicable
law in order to defray the expense incurred by Lender in handling and processing
such delinquent payment and to compensate Lender for the loss of the use of such
delinquent payment. Any such amount shall be secured by the Mortgages and the
other Loan Documents.

               2.3.4. Method and Place of Payment.

               (a) Except as otherwise specifically provided herein, all
payments and prepayments under this Agreement and the Note shall be made to
Lender or Lender's designee not later than 11:00 A.M., New York City time, on
the date when due and shall be made in lawful money of the United States of
America in immediately available funds at Lender's office or such other place as
Lender shall direct, and any funds received by Lender after such time shall, for
all purposes hereof, be deemed to have been paid on the next succeeding Business
Day.

               (b) Whenever any payment to be made hereunder or under any other
Loan Document shall be stated to be due on a day which is not a Business Day,
the due date thereof shall be the preceding Business Day.

               (c) All payments required to be made by Borrowers hereunder or
under the Note or the other Loan Documents shall be made irrespective of, and
without deduction for, any setoff, claim or counterclaim and shall be made
irrespective of any defense thereto.

          Section 2.4. Prepayments.

               2.4.1. Voluntary Prepayments. Except as otherwise provided
herein, no Borrower shall have the right to prepay the Loan in whole or in part
prior to the Lockout Date.

                                       30



Beginning on the Lockout Date or on any Business Day thereafter, any Borrower
may, at its option, prepay the Debt in whole, but not in part. Any prepayment
made on or after the Lockout Date shall be accompanied by the Prepayment
Premium. In addition, if any Borrower prepays the Loan on any date other than a
Payment Date, Borrowers shall pay to Lender on the date of such prepayment an
amount equal to the interest that would have accrued on the Loan through the
next Payment Date. As a condition to any voluntary prepayment, (i) each Borrower
shall give Lender written notice (a "Prepayment Notice") of its intent to
prepay, which notice must be given not later than thirty (30) days prior to the
date on which such prepayment is to be made and must specify the Business Day on
which such prepayment is to be made and (ii) if Lender shall hold any interest
in the Mortgage Loan at the time of such voluntary prepayment, each Borrower
shall simultaneously prepay the Mortgage Loan, together with any Prepayment
Premium or other fees in connection therewith.

               2.4.2. Mandatory Prepayments/Liquidation Events.

               (a) On each date on which Lender actually receives a distribution
of Net Proceeds, and if Lender does not make such Net Proceeds available to any
Property Borrower for a Restoration of the applicable Mezzanine Property,
Borrowers shall, at Lender's option, prepay the outstanding principal balance of
the Note in an amount equal to one hundred percent (100%) of such Net Proceeds
together with interest that would have accrued on such amounts through the next
Payment Date. The Allocated Loan Amount with respect to such Mezzanine Property
will be reduced in an amount equal to such prepayment. No Prepayment Premium
shall be due in connection with any prepayment made pursuant to this Section
2.4.2(a). Any prepayment received by Lender pursuant to this Section 2.4.2(a) on
a date other than a Payment Date shall be held by Lender as collateral security
for the Loan in the Net Proceeds Account, and shall be applied by Lender on the
next Payment Date.

               (b) In the event, prior to a Securitization, the equity holders
of the Parent propose a Change of Control (as defined in the Master Guaranty) to
the Parent, as a condition to such Change of Control, in connection with the
mandatory prepayment of the Loan as set forth in Section 2.4.2(d) of the Loan,
Borrowers shall prepay the entire outstanding principal balance of the Loan
together with interest that would have accrued on the principal balance of the
Mortgage Loan through the next Payment Date (in the event the prepayment occurs
on a date other than a Payment Date plus the Prepayment Fee.

               (c) Borrowers shall notify Lender of any Liquidation Event not
later than one (1) Business Day following the first date on which any Borrower
has knowledge of such event. Borrowers shall be deemed to have knowledge of (i)
a sale (other than a foreclosure sale) of any Mortgage Property on the date on
which a contract of sale for such sale is entered into, and a foreclosure sale,
on the date notice of such foreclosure sale is given, and (ii) a refinancing of
any Mortgage Property, on the date on which a commitment for such refinancing
has been entered into. The provisions of this Section 2.4.2(c) shall not be
construed to contravene in any manner the restrictions and other provisions
regarding refinancing of the

                                       31



Mortgage Loan or transfer of any Property set forth in this Agreement and the
other Loan Documents.

               (d) In the event there is a proposed Change of Control (as
defined in the Master Guaranty) to the Parent which the equity owners of the
Parent desire to effect, as a condition to such Change of Control, (i) Borrowers
shall prepay the entire outstanding principal balance of the Loan as a condition
to such Change of Control together with interest that would have accrued on the
principal balance of the Loan through the next Payment Date (in the event the
prepayment occurs on a date other than a Payment Date) plus the Prepayment
Premium and (ii) (a) prior to a Securitization of the Mortgage Loan, the
Mortgage Borrowers shall prepay the entire outstanding principal balance of the
Mortgage Loan together with interest that would have accrued on the principal
balance of the Mortgage Loan through the next Payment Date (as defined in the
Mortgage Loan Agreement) (in the event the prepayment occurs on a date other
than a Payment Date (as defined in the Mortgage Loan Agreement)) plus the
Prepayment Fee (as defined in the Mortgage Loan Agreement) and (b) after a
Securitization, the terms of 8.2(b) of the Mortgage Loan shall be satisfied.

               2.4.3. Prepayments After Default. If after an Event of Default,
payment of all or any part of the principal of the Loan is tendered by any
Borrower, a purchaser at foreclosure or any other Person, such tender shall be
deemed an attempt to circumvent the prohibition against prepayment set forth in
Section 2.4.1 and Borrowers, such purchaser at foreclosure or other Person shall
pay the Prepayment Premium, in addition to the outstanding principal balance,
all accrued and unpaid interest and other amounts payable under the Loan
Documents.

          Section 2.5 Supplemental Mortgage Affidavits. The Liens created by
each Mortgage are intended to encumber the Mezzanine Property described therein
to the full extent of Borrowers' obligations under the Loan Documents. As of the
Closing Date, Borrowers shall have paid all state, county and municipal
recording and all other taxes imposed upon the execution and recordation of the
Mortgages. Notwithstanding anything contained herein to the contrary, if at any
time Lender determines, based on Lender's estimation of market value and
applicable law, that Lender is not being afforded the maximum amount of security
available from any Mezzanine Property as a direct, or indirect, result of
applicable taxes not having been paid with respect to the related Mortgage,
Lender may request, and each Borrower agrees that it (i) will execute,
acknowledge and deliver to Lender, within a reasonable period of time after
Lender's request, supplemental affidavits increasing the amount of Indebtedness
for which all applicable taxes have been or are required to be paid under the
related Mortgage to an amount determined by Lender, in its reasonable
discretion, to be appropriate and (ii) will pay any and all applicable
recording, intangible or similar taxes.

                                       32



                   ARTICLE III. REPRESENTATIONS AND WARRANTIES

          Section 3.1. Borrower Representations.

          Each Borrower represents and warrants that:

               3.1.1. Organization. Each Borrower is duly organized, validly
existing and in good standing with full power and authority to own its assets
and conduct its business, and is duly qualified in all jurisdictions in which
the ownership or lease of its property or the conduct of its business requires
such qualification. Each Borrower has taken all necessary action to authorize
the execution, delivery and performance of this Agreement and the other Loan
Documents by it, and has the full power and authority to execute, deliver and
perform under this Agreement, the other Loan Documents and all the transactions
contemplated hereby. Each Borrower's exact and correct legal name as it appears
on file with the Secretary of State of Delaware is as set forth in Schedule III
attached hereto. Each Borrower is a limited liability company organized under
the laws of the State of Delaware. Each Borrower's organization identification
number assigned by the state of its organization is as set forth opposite such
Borrower's name on Schedule III. Borrower's federal tax identification number is
as set forth opposite such Borrower's name on Schedule III.

               3.1.2. Proceedings. This Agreement and the other Loan Documents
have been duly authorized, executed and delivered by each Borrower and, as
applicable, each Guarantor and constitute a legal, valid and binding obligation
of each Borrower and, as applicable, each Guarantor, enforceable against each
Borrower and, as applicable, each Guarantor in accordance with their respective
terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally, and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

               3.1.3. No Conflicts. The execution and delivery of this Agreement
and the other Loan Documents by each Borrower and, as applicable, each
Guarantor, and the performance of its obligations hereunder and thereunder will
not conflict with or violate any provision of any law, or regulation to which
any Borrower or each Guarantor is subject, or conflict with, result in a breach
of, or constitute a default, including due notice or lapse of time or both,
under, any of the terms, conditions or provisions of any of any Borrower's or
any Guarantor's organizational documents or any agreement or instrument to which
any Borrower or any Guarantor is a party or by which it is bound, or any order
or decree applicable to any Borrower or any Guarantor, or result in the creation
or imposition of any lien on any of any Borrower's or any Guarantor's assets or
property (other than pursuant to the Loan Documents) or otherwise materially and
adversely affect performance of its respective duties.

               3.1.4. Litigation. There is no action, suit, proceeding
arbitration or investigation pending or, to such Borrower's knowledge,
threatened against any Borrower, any Mortgage Borrower, any Borrower Party, any
Guarantor, Manager or any of the Properties in

                                       33



any court or by or before any other Governmental Authority which could
reasonably be expected to have a Material Adverse Effect.

               3.1.5. Agreements. No Borrower Party is in default with respect
to any order or decree of any court or any order, regulation or demand of any
Governmental Authority, which default might have consequences that would
materially and adversely affect the condition (financial or other) or operations
of any Borrower or any Mortgage Borrower or any of the Mezzanine Properties or
any of the Mortgage Properties or might have consequences that would adversely
affect their respective performance hereunder or thereunder.

               3.1.6. Consents. No consent, approval, authorization, order or
filings of or with any court or Governmental Authority is required for the
execution, delivery and performance by any Borrower of, or compliance by any
Borrower with, this Agreement or the consummation of the transactions
contemplated hereby except those the absence of which would not have a Material
Adverse Effect, other than those which have been obtained by such Borrower;
provided, however, Borrowers will obtain within sixty (60) days (or, in the case
of Medicare provided agreements only, one hundred and eighty (180) days) of the
Closing Date the state licenses for the operation of each Mezzanine Property as
a Nursing Facility or Assisted Living Facility, as applicable, and the Medicare
and Medicaid provider agreements in the names of each applicable Borrower which
have not been obtained as of the Closing Date.

               3.1.7. Title.

               (a) (i) The Fee Property Borrower has good, marketable and
insurable fee title to the real property comprising the applicable Mezzanine
Property and good title to the balance of such Mezzanine Property and (ii) each
Leasehold Property Borrower has a valid leasehold interest in the real property
comprising the applicable Mezzanine Property and good title to the balance of
such Mezzanine Property, in each case, free and clear of all Liens whatsoever
except the Permitted Encumbrances. Each Mortgage, when properly recorded in the
appropriate records, together with any Uniform Commercial Code financing
statements required to be filed in connection therewith, will create (i) a
valid, and enforceable first priority, perfected Lien on the applicable
Mezzanine Property, subject only to Permitted Encumbrances and (ii) valid and
enforceable perfected security interests in and to, and perfected collateral
assignments of, all personalty (including the Leases), all in accordance with
the terms thereof, in each case subject only to any Permitted Encumbrances.
There are no mechanics', materialman's or other similar Liens or claims which
have been filed for work, labor or materials affecting any Mezzanine Property
which are or may be Liens prior to, or equal or coordinate with, the Lien of the
related Mortgage or for which Borrower has not provided title insurance over
such Lien. None of the Permitted Encumbrances, individually or in the aggregate,
materially interfere with the benefits of the security intended to be provided
by the Mortgages and this Agreement, materially and adversely affect the value
of the Mezzanine Properties, impair the intended use or operations of the
Mezzanine Properties or impair any Borrower's ability to pay its obligations in
a timely manner.

                                       34



               (b) The Equity Borrowers are the record and beneficial owners of,
and have good and marketable title to, the Collateral, free and clear of all
Liens whatsoever. The Pledge Agreement, together with any Certificates required
to be delivered in connection therewith and Uniform Commercial Code financing
statements required to be filed in connection therewith, will create valid,
perfected first priority security interests in and to the Collateral, all in
accordance with the terms thereof.

               3.1.8. No Plan Assets. As of the date hereof and throughout the
term of the Loan (a) no Borrower is and will be an "employee benefit plan," as
defined in Section 3(3) of ERISA, subject to Title I of ERISA, or a "plan," as
defined in Section 4975(e)(1) of the Code, subject to Code Section 4975, (b) no
Borrower is and will be a "governmental plan" within the meaning of Section
3(32) of ERISA, (c) none of the assets of any Borrower constitutes or will
constitute "plan assets" of one or more of any such plans within the meaning of
29 C.F.R. Section 2510.3-101, and (d) transactions by or with any Borrower are
not and will not be subject to state statutes regulating investment of, and
fiduciary obligations with respect to, governmental plans.

               3.1.9. Compliance. Each Borrower Party and each of the Properties
and the use thereof is in substantial compliance with all applicable Legal
Requirements, including, without limitation, building and zoning ordinances and
codes. No Borrower Party is in default or violation of any order, writ,
injunction, decree or demand of any Governmental Authority, the violation of
which might materially adversely affect the condition (financial or otherwise)
or business of any Borrower. No Borrower Party has committed any act which may
give any Governmental Authority the right to cause any Borrower or any Mortgage
Borrower to forfeit any of the Properties or any part thereof or any monies paid
in performance of any Borrower's obligations under any of the Loan Documents.

               3.1.10. Financial Information. All financial data, including,
without limitation, the statements of cash flow and income and operating
expense, that have been delivered to Lender in respect of the Properties and
each Borrower Party (i) are true, complete and correct in all material respects,
(ii) accurately represent the financial condition of the Properties as of the
date of such reports, and (iii) have been prepared in accordance with GAAP
throughout the periods covered, except as disclosed therein. No Borrower Party
has any contingent liabilities, liabilities for taxes, unusual forward or
long-term commitments or unrealized or anticipated losses from any unfavorable
commitments that are known to any Borrower and reasonably likely to have a
materially adverse effect on the Properties or the operation thereof, except as
referred to or reflected in said financial statements. Since the date of the
financial statements, there has been no material adverse change in the financial
condition, operations or business of a Borrower Party or the Properties from
that set forth in said financial statements.

               3.1.11. Condemnation. No Condemnation or other proceeding is
pending or, to such Borrower's knowledge, is threatened with respect to all or
any portion of any of the Properties or for the relocation of roadways providing
access to any of the Properties.

                                       35



               3.1.12. Utilities and Public Access. Except as denoted on the
application Survey or Title Policy, each Property has adequate rights of access
to public ways and is served by utilities, including, without limitation,
adequate water, sewer, electricity, gas, telephone, sanitary sewer and storm
drain facilities. All public utilities necessary to the continued use and
enjoyment of each Property as presently used and enjoyed are located in the
public right-of-way abutting such Property, and all such utilities are connected
so as to serve such Property without passing over other property. All roads
necessary for the full utilization of each Property for its current purpose have
been completed and dedicated to public use and accepted by all governmental
authorities or are the subject of access easements for the benefit of such
Property.

               3.1.13. Separate Lots. Except as denoted by the applicable Title
Policy, each Property is comprised of one (1) or more parcels which constitute
separate tax lots and do not constitute a portion of any other tax lot not a
part of the applicable Property.

               3.1.14. Assessments. There are no pending or, to Borrower's
knowledge, proposed special or other assessments for public improvements or
otherwise affecting any of the Properties, nor are there any contemplated
improvements to any of the Properties that may result in such special or other
assessments.

               3.1.15. Enforceability. The Loan Documents are not subject to any
right of rescission, set-off, counterclaim or defense by any Borrower or, as
applicable, any Guarantor, including the defense of usury, nor would the
operation of any of the terms of the Loan Documents, or the exercise of any
right thereunder, render the Loan Documents unenforceable, and neither any
Borrower nor any Guarantor has not asserted any right of rescission, set-off,
counterclaim or defense with respect thereto.

               3.1.16. Assignment of Leases. Each Assignment of Leases creates a
valid assignment of, or a valid security interest in, certain rights under the
related Leases, subject only to a license granted to the applicable Property
Borrower to exercise certain rights and to perform certain obligations of the
lessor under such Leases, including the right to operate the related Mezzanine
Property. No Person other than Lender has any interest in or assignment of the
Leases relating to the Mezzanine Properties or any portion of the Rents relating
to the Mezzanine Properties due and payable or to become due and payable
thereunder.

               3.1.17. Insurance. Each Borrower has obtained and has delivered
to Lender original or certified copies of all of the Policies (as defined herein
and in the Mortgage Loan Agreement) for each Property, with all premiums prepaid
thereunder, reflecting the insurance coverages, amounts and other requirements
set forth in this Agreement and the Mortgage Loan Agreement. Except as set forth
in Schedule IX attached hereto and to the Mortgage Loan Agreement, no claims
have been made by any Borrower under any of the Policies (as defined herein and
in the Mortgage Loan Agreement) which remain unresolved, and no Person,
including each Borrower and each Mortgage Borrower, has done, by act or
omission, anything which would impair the coverage of any of the Policies (as
defined herein and in the Mortgage Loan Agreement).

                                       36



               3.1.18. Licenses. All permits, authorizations, licenses and
approvals (including, without limitation, CONs, Accreditations, Medicaid
Provider Agreements and Certifications, Medicare Participation Agreements and
Certifications and certificates of occupancy) required by any Governmental
Authority for the use, occupancy and operation of each Property in the manner in
which such Property is currently being used, occupied and operated have been
obtained, except those the absence of which would not mean a Material Adverse
Effect and are valid and in full force and effect; provided, however, Borrowers
and Mortgage Borrowers will obtain within sixty (60) days (or in the case of
Medicare provider agreements only, one hundred eighty (180) days) of the Closing
Date the state licenses for operation of the related Property as a Nursing
Facility or Assisted Living Facility, as applicable, and the Medicare and
Medicaid provider agreements in the names of the applicable Borrowers and
Mortgage Borrowers which have not been obtained as of the Closing Date.

               3.1.19. Flood Zone. None of the Improvements on any of the
Properties are located in an area identified by the Federal Emergency Management
Agency as a special flood hazard area.

               3.1.20. Physical Condition. Except as set forth on the applicable
Property Condition Report, each Property, including, without limitation, all
buildings, improvements, parking facilities, sidewalks, storm drainage systems,
roofs, plumbing systems, HVAC systems, fire protection systems, electrical
systems, equipment, elevators, exterior sidings and doors, landscaping,
irrigation systems and all structural components, are in good condition, order
and repair in all material respects; there exists no structural or other
material defects or damages in any of the Properties, whether latent or
otherwise, and no Borrower has received notice from any insurance company or
bonding company of any defects or inadequacies in any of the Properties, or any
part thereof, which would materially and adversely affect the insurability of
the same or cause the imposition of extraordinary premiums or charges thereon or
of any termination or threatened termination of any policy of insurance or bond.

               3.1.21. Boundaries. Except as denoted on the applicable Survey,
all of the improvements which were included in determining the appraised value
of each Property lie wholly within the boundaries and building restriction lines
of such Property, and no improvements on adjoining properties encroach upon such
Property, and no easements or other encumbrances affecting the applicable
Property encroach upon any of the improvements, so as to affect the value or
marketability of the applicable Property except those which are insured against
by title insurance.

               3.1.22. Leases. Each Property Borrower represents and warrants to
Lender with respect to the Leases at the Mezzanine Properties that: (a) the
copies of the Ground Leases that have been delivered to Lender in connection
with the Loan are true, complete and correct and none of the Properties are
subject to any Leases other than (i) such Ground Leases and (ii) the resident
care agreements entered into by the Property Borrowers and the residents of the
Mezzanine Properties, (b) the Ground Leases are in full force and effect and
there are no defaults thereunder by any party thereto, (c) there are no oral
agreements with respect to the

                                       37



Ground Leases, (d) no Rent (including security deposits) has been paid more than
one (1) month in advance of its due date, (e) all work to be performed by any
Property Borrower under each Lease has been performed as required and has been
accepted by the applicable tenant, and (f) any payments, free rent, partial
rent, rebate of rent or other payments, credits, allowances or abatements
required to be given by any Borrower to any tenant has already been received by
such tenant.

               3.1.23. Filing and Recording Taxes. All transfer taxes, deed
stamps, intangible taxes or other amounts in the nature of transfer taxes
required to be paid under applicable Legal Requirements in connection with the
transfer of the Mezzanine Properties to any Property Borrower have been paid or
will be paid at closing. All mortgage, mortgage recording, stamp, intangible or
other similar tax required to be paid under applicable Legal Requirements in
connection with the execution, delivery, recordation, filing, registration,
perfection or enforcement of any of the Loan Documents, including, without
limitation, the Mortgages, have been paid or are being paid simultaneously
herewith. All taxes and governmental assessments due and owing in respect of the
Mezzanine Properties have been paid, or an escrow of funds in an amount
sufficient to cover such payments has been established hereunder or are insured
against by the title insurance policy to be issued in connection with the
Mortgages.

               3.1.24. Single Purpose. Each Borrower hereby represents and
warrants to, and covenants with, Lender that each Borrower and each Mortgage
Borrower has been at all times since its formation, and will continue to be a
Single-Purpose Entity (as defined herein and, as to each Mortgage Borrower, in
the Mortgage Loan Agreement).

               3.1.25. Tax Filings; Payroll Taxes. Each Borrower and each
Guarantor has filed (or have obtained effective extensions for filing) all
federal, state and local tax returns required to be filed and have paid or made
adequate provision for the payment of all federal, state and local taxes,
charges and assessments payable by any Borrower and any Guarantor. Each Borrower
believes that its tax returns and those of each Guarantor properly reflect the
income and taxes of each Borrower and each Guarantor for the periods covered
thereby, subject only to reasonable adjustments required by the Internal Revenue
Service or other applicable tax authority upon audit. Each of each Borrower and
each Guarantor have paid all payroll taxes required to be paid by any such party
by any Governmental Authorities.

               3.1.26. Solvency. Each Borrower (a) has not entered into the
transaction or any Loan Document with the actual intent to hinder, delay, or
defraud any creditor and (b) received reasonably equivalent value in exchange
for its obligations under the Loan Documents. Giving effect to the Loan, the
fair saleable value of each Borrower's assets exceeds and will, immediately
following the making of the Loan, exceed such Borrower's total liabilities,
including, without limitation, subordinated, unliquidated, disputed and
contingent liabilities. The fair saleable value of each Borrower's assets is and
will, immediately following the making of the Loan, be greater than such
Borrower's probable liabilities, including the maximum amount of its contingent
liabilities on its debts as such debts become absolute and matured. Each

                                       38



Borrower's assets do not and, immediately following the making of the Loan will
not, constitute unreasonably small capital to carry out its business as
conducted or as proposed to be conducted. Each Borrower does not intend to, and
does not believe that it will, incur Indebtedness and liabilities (including
contingent liabilities and other commitments) beyond its ability to pay such
Indebtedness and liabilities as they mature (taking into account the timing and
amounts of cash to be received by such Borrower and the amounts to be payable on
or in respect of obligations of such Borrower).

               3.1.27. Federal Reserve Regulations. No part of the proceeds of
the Loan will be used for the purpose of purchasing or acquiring any "margin
stock" within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System or for any other purpose which would be inconsistent with
such Regulation U or any other Regulations of such Board of Governors, or for
any purposes prohibited by Legal Requirements or by the terms and conditions of
this Agreement or the other Loan Documents.

               3.1.28. Organizational Chart. The organizational chart attached
as Schedule IV hereto, relating to Borrowers and certain Affiliates and other
parties, is true, complete and correct on and as of the date hereof.

               3.1.29. Bank Holding Company. No Borrower is a "bank holding
company" or a direct or indirect subsidiary of a "bank holding company" as
defined in the Bank Holding Company Act of 1956, as amended, and Regulation Y
thereunder of the Board of Governors of the Federal Reserve System.

               3.1.30. No Other Debt. No Borrower or Mortgage Borrower has
borrowed or received debt financing (other than permitted pursuant to this
Agreement and the Mortgage Loan Agreement) that has not been heretofore repaid
in full.

               3.1.31. Investment Company Act. No Borrower is (1) an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended; (2) a "holding
company" or a "subsidiary company" of a "holding company" or an "affiliate" of
either a "holding company" or a "subsidiary company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended; or (3) subject to any
other federal or state law or regulation which purports to restrict or regulate
its ability to borrower money.

               3.1.32. No Bankruptcy Filing. No Borrower or Mortgage Borrower is
contemplating either the filing of a petition by it under any state or federal
bankruptcy or insolvency laws or the liquidation of its assets or property, and
no Borrower has any knowledge of any Person contemplating the filing of any such
petition against it, any Mortgage Borrower or any Guarantor and no Property is
the subject of, and no Borrower, Mortgage Borrower or Guarantor is a debtor in,
any state or federal bankruptcy, insolvency or similar proceeding.

               3.1.33. Full and Accurate Disclosure. No information contained in
this Agreement, the other Loan Documents, or any written statement furnished by
or on behalf of any

                                       39



Borrower pursuant to the terms of this Agreement contains any untrue statement
of a material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading in light of the
circumstances under which they were made. There is no fact or circumstance
presently known to any Borrower which has not been disclosed to Lender and which
materially adversely affects, or is reasonably likely to materially adversely
affect, any of the Properties, any Borrower or its business, operations or
condition (financial or otherwise).

               3.1.34. Foreign Person. No Borrower is a "foreign person" within
the meaning of Section 1445(f)(3) of the Code.

               3.1.35. No Change in Facts or Circumstances; Disclosure. There
has been no material adverse change in any condition, fact, circumstance or
event that would make the financial statements, rent rolls, reports,
certificates or other documents submitted in connection with the Loan
inaccurate, incomplete or otherwise misleading in any material respect or that
otherwise materially and adversely affects the business operations or the
financial condition of any Borrower, Mortgage Borrower or any of the Properties.

               3.1.36. Security Deposits. Each Borrower Party is and each
Borrower will continue to be in substantial compliance in all material respects
with all Legal Requirements relating to security deposits and resident trust
funds. Each Borrower is and will continue to hold all related security deposits
and resident trust funds collected in connection with each of the Mezzanine
Properties in segregated Eligible Accounts.

               3.1.37. Embargoed Person. (a) None of the funds or other assets
of any Borrower or any Guarantor constitute property of, or are beneficially
owned, directly or indirectly, by any person, entity or government subject to
trade restrictions under U.S. law, including but not limited to, the
International Emergency Economic Powers Act, 50 U.S.C.(S)(S) 1701 et seq., The
Trading with the Enemy Act, 50 U.S.C. App. 1 et seq. , and any Executive Orders
or regulations promulgated thereunder with the result that the investment in any
Borrower or any Guarantor, as applicable (whether directly or indirectly), is
prohibited by law or the Loan made by the Lender is in violation of law
("Embargoed Person"); (b) no Embargoed Person has any interest of any nature
whatsoever in any Borrower or any Guarantor, as applicable (whether directly or
indirectly), is prohibited by law or the Loan is in violation of law; and (c)
none of the funds of any Borrower or any Guarantor, as applicable, have been
derived from any unlawful activity with the result that the investment in any
Borrower or any Guarantor, as applicable (whether directly or indirectly), is
prohibited by law or the Loan is in violation of law.

               3.1.38. Ground Lease Representations and Warranties.

               (a) Intentionally Deleted.

               (b) Recording. Each Ground Lease or a memorandum thereof has been
duly recorded, each such Ground Lease permits the interest of the lessee
thereunder to be encumbered by the related Mortgage, and there has not been a
material change in the terms of such Ground Lease since its recordation.

                                       40



               (c) No Senior Liens. Except for the Permitted Encumbrances, each
applicable Leasehold Property Borrower's interest in each Ground Lease is not
subject to any liens or encumbrances superior to, or of equal priority with, the
related Mortgage, other than the related ground lessor's related fee interest.

               (d) Ground Lease Assignable. Each applicable Leasehold Property
Borrower's interest in each Ground Lease is assignable to Lender upon notice to,
but without the consent of, the ground lessor thereunder or, in the event that
it is so assigned, it is further assignable to the trustee in a Securitization
upon notice to, but without a need to obtain the consent of, such ground lessor.

               (e) Default. Each Ground Lease is in full force and effect and no
default has occurred under such Ground Lease and there is no existing condition
which, but for the passage of time or the giving of notice, would result in a
default under the terms of such Ground Lease.

               (f) Notice. Each Ground Lease, as amended by the applicable
Ground Lessor Agreement, requires the ground lessor thereunder to give notice of
any default by any applicable Leasehold Property Borrower to any mortgagee and
provides that notice of termination given under such Ground Lease is not
effective against such mortgagee unless a copy of the notice has been delivered
to the mortgagee in the manner described in such Ground Lease.

               (g) Cure. Lender is permitted a reasonable opportunity
(including, where necessary, sufficient time to gain possession of the interest
of the applicable Leasehold Property Borrower under each Ground Lease) to cure
any default under each Ground Lease, which is curable after the receipt of
notice of the default before the ground lessor thereunder may terminate such
Ground Lease.

               (h) Intentionally Deleted.

               (i) New Lease. Each Ground Lease, as amended by the applicable
Ground Lessor Agreement, requires the ground lessor thereunder to enter into a
new lease upon termination of such Ground Lease for any reason, including
rejection of such Ground Lease in a bankruptcy proceeding, provided that Lender
cures any defaults which are susceptible of being cured.

               (j) Subleasing. No Ground Lease imposes commercially unreasonable
restrictions on subletting.

               (k) Amendments. Each applicable Leasehold Property Borrower shall
not (i) enter into any amendments, changes, cancellations, alterations,
surrender or modifications of any Ground Lease without the prior written consent
of Lender, (ii) consent to any matter requiring the consent of any applicable
Leasehold Property Borrower under any Ground Lease without the prior written
consent of Lender, (iii) cancel or terminate any Ground Lease.

                                       41



               3.1.39. Management Agreement/Staff Leasing Agreement. Each
Management Agreement and Staff Leasing Agreement is in full force and effect and
there is no default, breach or violation existing thereunder by any party
thereto and no event has occurred that, with the passage of time or the giving
of notice, or both, would constitute a default, breach or violation by any party
thereunder.

               3.1.40. Use-Specific Representations.

               (a) Compliance with Laws. Each Borrower Party and each Property
are in substantial compliance with all applicable federal, state and local laws,
regulations and guidelines (including any government payment program
requirements and disclosure of ownership and related information requirements),
quality and safety standards, accepted professional standards and principles
that apply to professionals providing services to Nursing Facilities and/or
Assisted Living Facilities, in each case, as applicable, accreditation
standards, and requirements of the applicable state licensing agency, CMS and
all other Governmental Authorities including, without limitation, those
requirements relating to the physical structure and environment of each
Property, licensing, quality and adequacy of medical care, distribution of
pharmaceuticals, rate setting, equipment, personnel, operating policies,
additions to facilities and services and fee splitting except for any
non-compliance with any of the foregoing that could have a Material Adverse
Effect. No Borrower Party has committed any act which may give any Governmental
Authority the right to cause any Borrower or Mortgage Borrower to lose any
applicable Regulatory Permits (as defined herein and in the Mortgage Loan
Agreement) the loss of which could have a Material Adverse Effect.

               (b) Regulatory Permits. All governmental licenses, permits,
regulatory agreements or other approvals or agreements necessary or desirable
for the use or operation of each Property as intended are held by the applicable
Borrower or Mortgage Borrower and are in full force and effect, including,
without limitation, approved provider participation status in any provider
payment program (including, but not limited to, Medicare and Medicaid), and a
valid CON or similar certificate, license, or approval issued by the applicable
state and/or federal agency for the requisite number and type of beds
(collectively, the "Regulatory Permits") except for any Regulatory Permits the
failure to hold or maintain in full force or effect could have a Material
Adverse Effect; provided, however, Borrowers and Mortgage Borrowers will obtain
within sixty (60) days or, in the case of Medicare provider agreements only, one
hundred and eighty (180) days of the Closing Date the state licenses for the
operation of each Property as a Nursing Facility or Assisted Living Facility, as
applicable, and the Medicare and Medicaid provider agreements in the names of
the applicable Borrowers and Mortgage Borrowers which have not been obtained as
of the Closing Date.

               (c) Ownership of Regulatory Permits. Except for certain
Regulatory Permits pledged to HUD for THI of Maryland at Fort Washington, LLC,
the Regulatory Permits, including without limitation, each CON:

                    (i) are not and have not been, transferred to any location
     other than the Property to which such Regulatory Permits relate;

                                       42



                    (ii) are not and have not been, pledged as collateral
     security for any loan or indebtedness other than the Loan; and

                    (iii) are held free from restrictions or known conflicts
     which would materially impair the use or operation of each Property as
     intended, and are not provisional, probationary or restricted in any way.

               (d) Medicare and Medicaid Compliance. To the extent applicable,
each Borrower Party and each Property is in substantial compliance with all
requirements for participation in Medicare and Medicaid, including without
limitation, the Medicare and Medicaid Patient and Program Protection Act of
1987. To the extent applicable, each Borrower Party and each Property is in
conformance in all material respects with all conditions of participation,
reimbursement and cost reporting requirements, and each applicable Borrower has
a current provider agreement which is in full force and effect under Medicare
and Medicaid for the number and type of beds.

               (e) Third Party Payor Programs. There is no threatened or pending
revocation, suspension, termination, probation, restriction, limitation, fine,
civil monetary penalty, recoupment or non-renewal affecting any Borrower Party
or any Property in respect of any participation or provider agreement with any
third-party payor, including, without limitation, Medicare, Medicaid, Blue Cross
and/or Blue Shield, and any other private commercial insurance managed care and
employee assistance program (collectively, the "Third Party Payor Programs") to
which any Borrower or Mortgage Borrower presently is subject. All Medicaid,
Medicare, and private insurance cost reports and financial reports submitted by
any Borrower Party are and will be materially accurate and complete and have not
been and will not be misleading in any material respects. No cost reports or
financial reports for any Property remain "open" or unsettled except for those
reports that remain open for the current period.

               (f) Governmental Proceedings and Notices. Except as described on
the Schedule XIII attached hereto or attached to the Mortgage Loan Agreement, no
Borrower Party and no Property is currently the subject of any proceeding by any
Governmental Authority, and no notice of any violation or subpoena or inquiry of
any nature has been received from a Governmental Authority that would, directly
or indirectly, or with the passage of time:

                    (i) have a material adverse impact on any Borrower's or
     Mortgage Borrower's ability to accept and/or retain patients or result in
     the imposition of a fine, a sanction, an administrative or criminal action,
     a lower rate certification or a lower reimbursement rate for services
     rendered to eligible patients;

                    (ii) modify, limit or annul or result in the transfer,
     suspension, revocation or imposition of probationary use on any Regulatory
     Permit the absence of which would have a Material Adverse Effect;

                                       43



                    (iii) affect any Borrower's or Mortgage Borrower's continued
     participation in Medicare, Medicaid or other Third Party Payor Programs, as
     applicable, or any successor programs thereto, at current rate
     certifications.

               (g) Physical Plant Standards. Each Property and the use thereof
complies in all material respects with all applicable local, state and federal
building codes, fire codes, life safety codes, health care, nursing facility and
other similar regulatory requirements, including, without limitation,
participation requirements in Medicare and Medicaid (collectively, the "Physical
Plant Standards") and, except as described on the Schedule X attached hereto and
attached to the Mortgage Loan Agreement, no waivers of the Physical Plant
Standards exist at such Property.

               (h) Past Violations. Except as set forth on the attached Schedule
XIV, there have been no penalty enforcement actions undertaken by any
Governmental Authority during the last three (3) calendar years or during the
last survey cycle against any Property, against any Borrower Party, or against
any partner, member, officer, director, stockholder or Affiliate of any Borrower
Party which enforcement action could have a Material Adverse Effect. There have
been no violations over the past three (3) years that have threatened any
Property's or any Borrower's or Mortgage Borrower's certification for
participation in any Medicare, Medicaid or other Third Party Payor Programs. No
Borrower Party has been the subject of a "double G" determination for the last
three (3) calendar years or since January 14, 2000, whichever date is later.

               (i) Audits. Except as set forth on the Schedule XI attached
hereto and attached to the Mortgage Loan Agreement, there are no current,
pending or outstanding reimbursement audits regarding Medicaid, Medicare or
other Third Party Payor Programs nor any appeals pending at any Property that
(x) are not applicable in the ordinary course to Nursing Facilities or Assisted
Living Facilities, as applicable, comparable to the Properties and (y) cold have
a Material Adverse Effect.

               (j) Recoupment. There are no current or pending recoupment
efforts regarding Medicaid, Medicare or other Third Party Payor Programs (or
with respect to) any Property that (x) are not applicable in the ordinary course
to Nursing Facilities or Assisted Living Facilities, as applicable, comparable
to any Property and (y) could have a Material Adverse Effect. No Borrower Party
or Property is a participant in any federal program whereby any Governmental
Authority may have the right to recover funds by reason of the advance of
federal funds, including, without limitation, those authorized under the Hill
Burton Act.

               (k) Pledges of Receivables. No Borrower Party has pledged its
receivables or any Rents as collateral security for any outstanding loan or
indebtedness other than the Loan, or the Mortgage Loan.

               (l) Patient Care Agreements. There are no patient or resident
care agreements with patients or residents or with any other persons that
deviate in any material adverse respect from the standard form customarily used
at each Property.

                                       44



               (m) Patient Records. All patient and resident records at each
Property, and all patient and resident trust fund accounts, are maintained in
substantial compliance with all regulatory requirements and are true and correct
in all respects.

               (n) Reimbursement Contracts. All Reimbursement Contracts
applicable to any Borrower Party or any Property are in good standing with all
applicable Governmental Authorities, Regulatory Permits, Medicare Certifications
and/or Medicaid Certifications. Each Borrower Party is current in the payment of
all so-called provider specific taxes, bed taxes or other assessments with
respect to any Reimbursement Contracts.

               (o)Licensed Beds. The number and category of licensed beds at
each Property is as set forth on Schedule III attached hereto and to the
Mortgage Loan Agreement. Except as set forth in Schedule XII attached hereto and
to the Mortgage Agreement, no waivers of any laws, rules, regulations or
requirements (including, without limitation minimum square foot requirements per
bed) are required for each Property to operate at the licensed bed capacities
listed on Schedule III attached hereto and to the Mortgage Loan Agreement and to
operate in substantial compliance with applicable Legal Requirements. No
Borrower Party has been granted nor has any Borrower Party requested the right,
to reduce the number of licensed beds at any Property. No Borrower Party has
applied for approval to move any and all of the licensed beds at any Property to
any other location.

               (p) Intentionally Deleted.

               3.1.41. Material Agreements. There are no Material Agreements (as
defined herein and in the Mortgage Loan Agreement) except as described in
Exhibit D attached hereto and to the Mortgage Loan Agreement. Each Borrower has
made available to Lender true and complete copies of all Material Agreements (as
defined herein and in the Mortgage Loan Agreement). Each Material Agreement (as
defined herein and in the Mortgage Loan Agreement) has been entered into at
arm's length in the ordinary course of business by or on behalf of a Borrower or
Mortgage Borrower, as applicable.

          Section 3.2 Survival of Representations.

          The representations and warranties set forth in Section 3.1 shall
survive for so long as any amount remains payable to Lender under this Agreement
or any of the other Loan Documents.

                                       45



                         ARTICLE IV. BORROWER COVENANTS

          Section 4.1. Borrower Affirmative Covenants.

          Until all amounts are paid in full under the Loan Documents (excluding
contingent indemnity obligations that survive repayments), each Borrower hereby
covenants and agrees with Lender that:

               4.1.1. Existence; Compliance with Legal Requirements. Each
Borrower shall do or cause to be done all things necessary to preserve, renew
and keep in full force and effect its existence, rights, licenses, permits and
franchises except to the extent such preservation, renewal and effectiveness
could not have a Material Adverse Effect, and substantially comply with all
Legal Requirements applicable to it, the Mortgage Borrowers and the Properties.

               4.1.2.Taxes and Other Charges. Each Property Borrower shall pay
all Taxes and Other Charges and payroll taxes now or hereafter levied or
assessed or imposed against the Mezzanine Properties or any part thereof or any
Borrower as the same become due and payable; provided, however, each Property
Borrower's obligation to directly pay Taxes shall be suspended for so long as
such Property Borrower complies with the terms and provisions of Section 6.3
hereof and there are adequate funds in the Tax and Insurance Escrow Account.
Each Property Borrower shall furnish to Lender receipts for the payment of the
Taxes and the Other Charges prior to the date the same shall become delinquent;
provided, however, that each Property Borrower is not required to furnish such
receipts for payment of Taxes in the event that such Taxes have been paid by
Lender pursuant to Section 6.3 hereof. Each Property Borrower shall not permit
or suffer, and shall promptly discharge any liens or charges against the
Mezzanine Properties, except Permitted Encumbrances. After prior notice to
Lender, each Property Borrower, at its own expense, may contest by appropriate
legal proceeding, conducted in good faith and with due diligence, the amount or
validity of any Taxes or Other Charges, provided that (i) no Default or Event of
Default has occurred and remains uncured; (ii) such proceeding shall be
permitted under and be conducted in accordance with all applicable statutes,
laws and ordinances; (iii) none of the Mezzanine Properties nor any part thereof
or interest therein will be in danger of being sold, forfeited, terminated,
canceled or lost; (iv) each Property Borrower shall promptly upon final
determination thereof pay the amount of any such Taxes or Other Charges,
together with all costs, interest and penalties which may be payable in
connection therewith; (v) such proceeding shall suspend the collection of Taxes
or Other Charges from the applicable Mezzanine Property; and (vi) upon request
of Lender, each Property Borrower shall deposit with Lender cash, or other
security as may be approved by Lender, in an amount equal to one hundred
twenty-five percent (125%) of the contested amount, to insure the payment of any
such Taxes or Other Charges, together with all interest and penalties thereon.
Lender may pay over any such cash or other security held by Lender to the
claimant entitled thereto at any time when, in the judgment of Lender, the
entitlement of such claimant is established.

               4.1.3. Litigation. Each Borrower shall give prompt notice to
Lender of any litigation or governmental proceedings pending or threatened
against any Borrower or Mortgage Borrower which might materially adversely
affect any of the Properties or any

                                       46



Borrower's or Mortgage Borrower's ability to perform its obligations hereunder
or under the other Loan Documents or the Mortgage Loan Documents.

               4.1.4. Access to Properties. Each Property Borrower shall, and
each Equity Borrower shall cause the related Mortgage Borrowers to, permit
agents, representatives and employees of Lender to inspect each Property or any
part thereof at reasonable hours upon reasonable advance written notice. Lender
shall not unreasonably interfere with any Borrowers' business operations during
such inspection.

               4.1.5. Further Assurances Each Borrower shall, at such Borrower's
sole cost and expense, from time to time as reasonably requested by Lender,
execute, acknowledge, record, register, file and/or deliver to Lender such other
instruments, agreements, certificates and documents (including UCC financing
statements and amended or replacement mortgages) as Lender may reasonably
request to evidence, confirm, perfect and maintain the liens securing or
intended to secure the obligations of any Borrower under the Loan Documents or
to facilitate a replacement of the Mezzanine Cash Management Bank or Mezzanine
Collection Account Bank if requested by Lender, and do and execute all such
further lawful and reasonable acts, conveyances and assurances for the better
and more effective carrying out of the intents and purposes of this Agreement
and the other Loan Documents as Lender shall reasonably require from time to
time. Each Borrower hereby authorizes and appoints Lender as its
attorney-in-fact to execute, acknowledge, record, register and/or file such
instruments, agreements, certificates and documents, and to do and execute such
acts, conveyances and assurances, should any Borrower fail to do so itself in
violation of this Agreement following written request from Lender, in each case
without the signature of any Borrower. The foregoing grant of authority is a
power of attorney coupled with an interest and such appointment shall be
irrevocable for the term of this Agreement. Each Borrower hereby ratifies all
actions that such attorney shall lawfully take or cause to be taken in
accordance with this Section.

               4.1.6. Financial Reporting.

               (a) Each Borrower shall keep and maintain or will cause to be
kept and maintained proper and accurate books and records, in accordance with
GAAP in all material respects, reflecting the financial affairs of each
Borrower. Lender shall have the right from time to time during normal business
hours upon reasonable notice to the applicable Borrower to examine such books
and records at the office of such Borrower or other Person maintaining such
books and records and to make such copies or extracts thereof as Lender shall
desire.

               (b) As soon as available, and in any event within one hundred
twenty (120) days after the close of each Fiscal Year, each Borrower shall
furnish to Lender, in hard copy and electronic format and presented on a
consolidated as well as a property-by-property basis, financial statements
prepared for such year with respect to Borrowers and the Mortgage Borrowers,
including a balance sheet and operating statement as of the end of such year,
together with related statements of income and members' or partners' capital for
such Fiscal Year, audited by a "Big Four" accounting firm or a nationally
recognized, independent certified public accounting firm reasonably satisfactory
to Lender whose opinion shall be to the effect that such

                                       47



financial statements have been prepared in accordance with GAAP applied on a
consistent basis and shall not be qualified as to the scope of the audit or as
to the status of each Borrower and Mortgage Borrower as a going concern.
Together with each Borrower's and Mortgage Borrower's annual financial
statements, such Borrower shall furnish to Lender an Officer's Certificate
certifying as of the date thereof whether to the best of such Borrower's
knowledge there exists an event or circumstance which constitutes a Default (as
defined herein and in the Mortgage Loan Agreement) or Event of Default (as
defined herein and in the Mortgage Loan Agreement) by any Borrower or Mortgage
Borrower under the Loan Documents or Mortgage Loan Documents, as applicable, and
if such Default or Event of Default exists, the nature thereof, the period of
time it has existed and the action then being taken to remedy the same. Together
with each Borrower's and Mortgage Borrower's annual financial statements, such
Borrower shall furnish to Lender, in hard copy and electronic format:

                    (i) a statement of cash flows for each Property; and

                    (ii) such other information as Lender shall reasonably
     request.

               (c) As soon as available, and in any event within forty-five (45)
days after the end of each fiscal quarter (based on Borrrower's Fiscal Year),
each Borrower shall furnish to Lender, in hard copy and electronic format and
presented on a consolidated as well as a property-by-property basis, quarterly
and year-to-date unaudited financial statements prepared for such fiscal quarter
with respect to Borrowers and Mortgage Borrowers, including a balance sheet and
operating statement as of the end of such fiscal quarter, together with related
statements of income, members' or partners' capital and cash flows for such
fiscal quarter and for the portion of the Fiscal Year ending with such fiscal
quarter,which statements shall be accompanied by (i) an Officer's Certificate
certifying that the same are true and correct and were prepared in accordance
with GAAP applied on a consistent basis, subject to changes resulting from audit
and normal year-end audit adjustments and (ii) an Officer's Certificate
certifying as of the date thereof whether to the best of such Borrower's
knowledge there exists an event or circumstance which constitutes a Default (as
defined herein and in the Mortgage Loan Agreement) or Event of Default (as
defined herein and in the Mortgage Loan Agreement) by any Borrower or Mortgage
Borrower under the Loan Documents or Mortgage Loan Documents, as applicable and
if such Default or Event of Default exists, the nature thereof, the period of
time it has existed and the action then being taken to remedy the same. Each
such quarterly statement shall show the separate operations of each Property,
including, without limitation, (1) a breakdown of Patient Revenues (as defined
herein and in the Mortgage Loan Agreement) and other revenues itemized by payor
type and a reasonably detailed breakdown of operating expenses and (2) patient
census by payor type. Each such quarterly report shall be accompanied by the
following, in hard copy and electronic format:

                    (i) a statement in reasonable detail which calculates Net
     Operating Income for each Property for the trailing four fiscal quarters,
     in each case, ending at the end of such fiscal quarter;

                    (ii) then current occupancy report for each Property; and

                                       48



                    (iii) such other information as Lender shall reasonably
     request.

               (d) As soon as available, and in any event within thirty (30)
days after the end of each calendar month, each Borrower shall furnish (x) a
report describing in reasonable detail the occurrence during such calendar month
of any of the following: the termination, cancellation or entry into, or default
by any party under, any Ground Lease at any of the Properties or any event which
is reasonably likely to result in a Material Adverse Effect on the the ability
of any Borrower to perform any material provision of any Loan Document,or the
value, use or enjoyment of any of the Properties or the operation thereof and
(y) such Borrower's calculation of Debt Service Coverage Ratio and adequate
back-up to support such calculation.

               (e) Until the occurrence of a Securitization or series of
Securitizations, which, in the aggregate, shall have securitized the entire
Loan, each Borrower shall, simultaneously with delivering the report described
in the foregoing clause (d), furnish, in hard copy and electronic format and
presented on a consolidated as well as a property-by-property basis, monthly and
year-to-date unaudited financial statements prepared for the applicable month
with respect to Borrowers and Mortgage Borrowers, including a balance sheet and
operating statement as of the end of such month, together with related
statements of income, members' or partners' capital and cash flows for such
month and for the portion of the Fiscal Year ending with such month, which
statements shall be accompanied by (i) an Officer's Certificate certifying that
the same are true and correct and were prepared in accordance with GAAP applied
on a consistent basis, subject to changes resulting from audit and normal
year-end audit adjustments and (ii) an Officer's Certificate certifying as to
any material variances from the approved Annual Budget (as defined herein and in
the Mortgage Loan Agreement) on a line-item basis. Each monthly report shall
show the separate operations of each Property, including, without limitation,
(1) a breakdown of Patient Revenues (as defined herein and in the Mortgage Loan
Agreement) and other revenues itemized by payor type and a reasonably detailed
breakdown of operating expenses and (2) patient census by payor type. Each such
monthly report shall be accompanied by the following in hard copy and electronic
format:

                    (i) a statement in reasonable detail which calculates Net
     Operating Income for each Property for the trailing twelve (12) months, in
     each case, ending at the end of that month;

                    (ii) then current occupancy report for each Property; and

                    (iii) such other information as Lender shall reasonably
     request.

               (f) As soon as available, and in any event within ninety (90)
days after the end of each calendar year, each Borrower shall furnish to Lender
true and complete copies of a report regarding the compliance of the Properties
with all Regulatory Permits (as defined herein and in the Mortgage Loan
Agreement).

               (g) Upon Lender's written request, as soon as available, and in
any event within five (5) days after preparation thereof, each Borrower shall
furnish to Lender the

                                       49



weekly and monthly consolidated cash flow reports of each Borrower and Mortgage
Borrower and consolidated patient census reports for each Borrower and Mortgage
Borrower.

               (h) As soon as available, and in any event no later than thirty
(30) days after the end of each fiscal quarter, each Borrower shall furnish to
Lender (i) the quarterly consolidated survey deficiency summary report,
indicating for each Property whether any survey, citation or report alleging any
deficiency with respect to such Property has been issued during the prior month
and, if so, setting forth, the identity of the Governmental Authority that
issued such survey, citation or report, a description of the alleged deficiency
and the timetable or deadline for same and the applicable Borrower's plan for
curing such deficiency and (ii) to the extent existing, all actuarial reports
relating to all professional liability claims. Each Borrower shall also deliver
to Lender promptly after request therefor by Lender any other Property specific
survey reports reasonably requested by Lender.

               (i) As soon as available, and in any event within forty-five (45)
days after the end of each calendar quarter, each Borrower shall deliver to
Lender copies of the Officer's Certificates, setting forth whether any event(s)
of default has occurred and is continuing with respect to the reduction of the
number of licensed beds at any Property or the revocation of certification for
reimbursement under Medicare or Medicaid with respect to any Property.

               (j) As soon as available, and in any event within ten (10) days
of receipt, each Borrower shall deliver to Lender any and all notices
(regardless of form) from any licensing and/or certifying agency (i) that any
Regulatory Permit (as defined herein and in the Mortgage Loan Agreement) for any
Property or the Medicare Certification or Medicaid Certification of any Property
is the subject of any enforcement action, revocation or suspension, or is
subject to assessment for civil monetary penalties or is the subject of any
overpayment claim or recoupment claim or (ii) that action is pending or being
considered to revoke or suspend any Regulatory Permit (as defined herein and in
the Mortgage Loan Agreement) or to institute enforcement actions of any kind.

               (k) Upon the request of Lender, within five (5) days of the
earlier of (i) the date of the required filing of cost reports for any Property
with the Medicaid agency or (ii) the date of actual filing of such cost report
for any Property with such agency, each Borrower shall furnish to Lender a
complete and accurate copy of the annual Medicaid cost report for each Property,
which will be prepared by an independent certified public accountant or by an
experienced cost report preparer acceptable to Lender in its sole discretion,
and promptly furnish to Lender any amendments filed with respect to such reports
and all responses, audit reports or inquiries with respect to such reports.

               (l) As soon as available, and in any event within five (5) days
of receipt by any Borrower or Mortgage Borrower, each Borrower shall deliver to
Lender a copy of any Medicare, Medicaid or other licensing agency survey or
report and any statement of deficiencies, and within the time period required by
the particular agency for furnishing a plan of correction, shall also furnish or
cause to be furnished to Lender, a copy of the plan of correction

                                       50



generated from such survey or report for a Property,and correct or cause to be
corrected any deficiency, the curing of which is a condition of continued
licensure or for full participation in Medicare or Medicaid for existing
patients or for new patients to be admitted with Medicare or Medicaid coverage,
by the date required for cure by such agency (plus any extensions of time
granted by such agency).

               (m) Borrowers have previously delivered to Lender the Annual
Budget (as defined herein and in the Mortgage Loan Agreement) for each Property
for the 2002 Fiscal Year. At least thirty (30) days prior to the commencement of
each subsequent Fiscal Year during the term of the Loan, Borrowers shall deliver
to Lender for approval an Annual Budget (as defined herein and in the Mortgage
Loan Agreement) presented on a consolidated as well as a property-by-property
basis for the ensuing Fiscal Year and, promptly after preparation thereof, any
subsequent revisions to the Annual Budget (as defined herein and in the Mortgage
Loan Agreement). Without the prior written consent of Lender, no Borrower shall
approve or consent to any Mortgage Borrower entering into any contracts or other
agreements nor expending any funds not provided for in the Annual Budget (as
defined in the Mortgage Loan Agreement), other than expenditures required to be
made by reason of the occurrence of any emergency. At the request of Lender,
each Equity Borrower agrees to cause the related Mortgage Borrowers to deliver
evidence in a form satisfactory to Lender that amounts allocated to budgeted
expenses have been paid in accordance with the approved Annual Budget (as
defined in the Mortgage Loan Agreement).

               (n) As soon as available, and in any event within one hundred
twenty (120) days after the close of each Fiscal Year, each Borrower shall cause
each Guarantor to furnish to Lender, in hard copy and electronic format and
presented on a consolidated as well as a property-by-property basis, financial
statements prepared for such year with respect to Guarantors, including a
balance sheet and operating statement as of the end of such year, together with
related statements of income and members' or partners' capital for such Fiscal
Year, audited by a "Big Four" accounting firm or a nationally recognized,
independent certified public accounting firm reasonably satisfactory to Lender
whose opinion shall be to the effect that such financial statements have been
prepared in accordance with GAAP applied on a consistent basis and shall not be
qualified as to the scope of the audit or as to the status of each Guarantor as
a going concern. Together with each Guarantor's annual financial statements,
each Borrower shall cause each Guarantor to furnish to Lender an Officer's
Certificate certifying as of the date thereof whether to the best of such
Guarantor's knowledge there exists an event or circumstance which constitutes a
Default (as defined herein and in the Mortgage Loan Agreement) or Event of
Default (as defined herein and in the Mortgage Loan Agreement) by any Guarantor
under any guaranty and if such Default or Event of Default exists, the nature
thereof, the period of time it has existed and the action then being taken to
remedy the same.

               (o) Notwithstanding the foregoing, in the event the Parent makes
a public offering of its stock and become subject to public record disclosure,
Mortgage Borrowers shall provide Lender with copies of all financial statements,
filed by Parent with the Securities and Exchange Commission within two (2) days
of such filing.

                                       51



               4.1.7. Title to the Properties and Collateral. Each Property
Borrower will warrant and defend the valtidity and priority of the Liens of the
Mortgages and the Assignments of Leases on the Mezzanine Properties against the
claims of all Persons whomsoever, subject only to Permitted Encumbrances. Each
Equity Borrower will warrant and defend the validity and priority of Lender's
security interest in the Collateral.

               4.1.8. Estoppel Statement.

               (a) After request by Lender, each Borrower shall within ten (10)
Business Days furnish Lender with a statement, duly acknowledged and certified,
stating (i) the unpaid principal amount of the Note, (ii) the Interest Rate of
the Note, (iii) the date installments of interest and/or principal were last
paid, (iv) any offsets or defenses to the payment of the Debt, if any, and (v)
that this Agreement and the other Loan Documents have not been modified or if
modified, giving particulars of such modification.

               (b) Each Borrower shall deliver to Lender, upon request, an
estoppel certificate from each tenant under any Lease (other than tenants under
patient admission and resident care agreements) at any of the Properties;
provided that such certificate may be in the form required under such Lease;
provided further that each Borrower shall not be required to deliver such
certificates more frequently than two (2) times in any calendar year.

               4.1.9. Intentionally Deleted.

               4.1.10. Alterations. Lender's prior approval shall be required in
connection with any alterations to any Improvements (as defined herein and in
the Mortgage Loan Agreement) on any Property (a) that may have a Material
Adverse Effect on any Borrower's or Mortgage Borrower's financial condition, the
value of the related Property or the Net Operating Income or (b) the cost of
which (including any related alteration, improvement or replacement) is
reasonably anticipated to exceed the Alteration Threshold (as defined herein and
in the Mortgage Loan Agreement). If the total unpaid amounts incurred and to be
incurred with respect to such alterations to the Improvements to any Mezzanine
Property shall at any time exceed the Alteration Threshold, Borrowers shall
promptly deliver to Lender as security for the payment of such amounts and as
additional security for each Borrowers' obligations under the Loan Documents any
of the following: (i) cash, (ii) U.S. Obligations, (iii) other securities
acceptable to Lender, provided that Lender shall have received a Rating Agency
Confirmation as to the form and issuer of same, or (iv) a completion bond,
provided that Lender shall have received a Rating Agency Confirmation as to the
form and issuer of same. Such security shall be in an amount equal to the excess
of the total unpaid amounts incurred and to be incurred with respect to such
alterations to the Improvements on the applicable Mezzanine Property (other than
such amounts to be paid or reimbursed by Tenants under the Leases) over the
Alteration Threshold.

                                       52




               4.1.11. Use-Specific Covenants.

               (a) Each Property Borrower shall:

                    (i) operate each Mezzanine Property or cause each Mezzanine
     Property to be operated in substantial compliance with the laws and
     requirements referred to in Section 3.1.40 hereof;

                    (ii) operate each Mezzanine Property or cause each Mezzanine
     Property to be operated in a manner such that the Regulatory Permits shall
     remain in full force and effect;

                    (iii) maintain or cause to be maintained the number and type
     of licensed beds at each Mezzanine Property at the licensure/certification
     levels set forth in Schedule III; provided, however, a Property Borrower
     may remove from service a number of licensed beds at its Property by not
     more than the greater of ten (10) beds and ten percent (10%) of the number
     of licensed beds at such Property immediately prior to the proposed
     reduction provided such removal from service is on a temporary basis and
     Borrower delivers to Lender from each applicable Governmental Authority
     written evidence that such removal from service is on a temporary, and not
     permanent, basis and that such beds may be placed back into service without
     approval from any Governmental Authority. Nothing shall permit the Property
     Borrower to adjust the number of Licensed Beds at the facility; and

                    (iv) to the extent applicable, substantially comply with all
     requirements for participation in Medicare, Medicaid and any other Third
     Party Payor Programs, and shall keep in full force and effect a current
     provider agreement under Medicare, Medicaid and any other Third Party Payor
     Programs as are financially prudent.

               (b) Each Property Borrower shall cause the operation of each
Mezzanine Property to be conducted at all times in a manner consistent with the
following:

                    (i) to maintain or cause to be maintained the standard of
     operations at each Mezzanine Property at all times at a level necessary to
     insure a level of quality for each Mezzanine Property consistent with
     similar facilities in the same competitive market;

                    (ii) to maintain or cause to be maintained a standard of
     care in the storage, use, transportation and disposal of all medical
     equipment, medical supplies, medical products and medical waste, of any
     kind and in any form, that is in accordance at least, with that of the
     highest prudent industry standard and in substantial conformity with all
     applicable Legal Requirements;

                    (iii) to operate or cause each Mezzanine Property to be
     operated in a prudent manner in substantial compliance in all respects with
     applicable Legal

                                       53



     Requirements and requirements of the Policies relating thereto and, except
     where the failure to maintain their effectiveness could not have a Material
     Adverse Effect, cause all licenses, Regulatory Permits, and any other
     agreements necessary for the continued use and operation of such Mezzanine
     Property or for participation in the Medicare, Medicaid or other Third
     Party Payor Programs to remain in full force and effect;

                    (iv) to maintain or cause to be maintained sufficient
     Inventory and Equipment of types and quantities at each Mezzanine Property
     to enable the applicable Property Borrower to operate such Mezzanine
     Property.

               4.1.12. Material Agreements. No Borrower shall amend, modify,
surrender or waive any material rights or remedies under, or enter into or
terminate, any Material Agreement unless any such amendment, modification,
surrender, waiver, entry or termination would not have a Material Adverse
Effect.

               4.1.13. Notices. Each Borrower shall give notice, or cause notice
to be given, to Lender promptly upon the occurrence of:

               (a) any Event of Default under the Mortgage Loan;

               (b) to the knowledge of Borrower, any default or event of default
under any contractual obligation of any Mortgage Borrower or any Guarantor that
could reasonably be expected to have a Material Adverse Effect on Borrower, the
ability of Borrower to perform under the Loan Documents or the rights and
remedies of Lender under the Loan Documents;

               (c) to the knowledge of Borrower, any litigation or proceeding
affecting any Mortgage Borrower or any Guarantor, in which the amount involved
in each case is $100,000 or more and not fully covered by insurance, or in which
injunctive or similar relief is sought;

               (d) to the knowledge of Borrower, any change in the business,
operations, property or financial or other condition or prospects of any
Mortgage Borrower or any Guarantor which could reasonably be expected to have a
Material Adverse Effect on Borrower, the ability of Borrower to perform under
the Loan Documents or the rights and remedies of Lender under the Loan
Documents.

               4.1.14. Special Distributions. On each date on which amounts are
required to be disbursed to the Debt Service Account pursuant to the terms of
the Mezzanine Cash Management Agreement or are required to be paid to Lender
under any of the Loan Documents, each Equity Borrower shall exercise its rights
under the related Mortgage Borrower Company Agreement to cause the related
Mortgage Borrowers to make to such Equity Borrower a distribution in an
aggregate amount such that Lender shall receive the amount required to be
disbursed to the Debt Service Account or otherwise paid to Lender on such date.

                                       54



               4.1.15. Curing. Lender shall have the right, but shall not have
the obligation, to exercise each Equity Borrower's rights under the related
Mortgage Borrower Company Agreement (a) to cure an Event of Default under the
Mortgage Loan and (b) to satisfy any Liens, claims or judgments against any
Mortgage Property (except for Liens permitted by the Mortgage Loan Documents),
in the case of either (a) or (b), unless such Equity Borrower or the related
Mortgage Borrower shall be diligently pursuing remedies to cure to Lender's sole
satisfaction. Each Equity Borrower shall reimburse Lender on demand for any and
all costs incurred by Lender in connection with curing any such Event of Default
under the Mortgage Loan or satisfying any Liens, claims or judgments against any
Mortgage Property.

               4.1.16. Mortgage Loan Documents. Each Equity Borrower agrees to
cause each related Mortgage Borrower to comply with the terms and provisions of
the Mortgage Loan Documents.

               4.1.17. Options to Extend. With respect to any Ground Lease with
an option to extend the term of such Ground Lease, Borrower shall exercise such
extension upon the request of the Lender.

          Section 4.2. Borrower Negative Covenants.

          Until all amounts are paid in full under the Loan Documents (excluding
contingent indemnity obligations that survive repayment), each Borrower
covenants and agrees with Lender that:

               4.2.1. Due on Sale and Encumbrance; Transfers of Interests.
Without the prior written consent of Lender, neither any Borrower, any Mortgage
Borrower nor any Person having a direct or indirect interest ownership or
beneficial interest in any Borrower, any Mortgage Borrower or any Guarantor
shall sell, convey, mortgage, grant, bargain, encumber, pledge, assign or
otherwise Transfer any interest, direct or indirect in any Borrower, any
Mortgage Borrower, any Guarantor, any of the Properties or Collateral or any
part thereof, whether voluntarily or involuntarily, in violation of the
covenants and conditions set forth in the Mortgages, this Agreement or the
Master Guaranty; provided, that this Section shall not prohibit transfers of
equity interest in the Parent permitted under Section 8.2.

               4.2.2. Liens. Each Borrower shall not create, incur, assume or
suffer to exist any Lien on any portion of any of the Collateral or any of the
Properties except for Permitted Encumbrances (as defined herein and, as to the
Mortgage Properties, as defined in the Mortgage Loan Agreement).

               4.2.3. Issuance of Equity Interests. Each Borrower shall not
issue or allow to be created any stocks or shares or shareholder, partnership or
membership interests in any Borrower or Mortgage Borrower, or other ownership
interests other than the stocks, shares, shareholder, partnership or membership
interests and other ownership interests which are outstanding or exist on the
Closing Date or any security or other instrument which by its terms is

                                       55



convertible into or exercisable or exchangeable for stock, shares, shareholder,
partnership or membership interests or other ownership interests in any Borrower
or Mortgage Borrower.

               4.2.4. Change in Business. Each Borrower shall not cease to be a
Single-Purpose Entity, each Equity Borrower shall cause each Mortgage Borrower
to not cease to be a Single-Purpose Entity (as defined in the Mortgage Loan
Agreement), or make any material change in the scope or nature of any such
entity's business objectives, purposes or operations, or undertake or
participate in activities other than the continuance of its present business
provided, however, with the prior written consent of the Lender, not to be
unreasonably withheld, and, after a Securitization of the Loan, a Rating Agency
Confirmation, a Borrower may amend its business operations at a Property to
include a Specialty Hospital (in which event Schedule III hereto shall be
amended to reflect such amendment).

               4.2.5. Debt Cancellation. Each Borrower shall not, and shall not
permit any Mortgage Borrower to, cancel or otherwise forgive or release any
claim or debt (other than termination of Leases in accordance herewith) owed to
any Borrower or any Mortgage Borrower by any Person, except for adequate
consideration and in the ordinary course of any Borrower's or Mortgage
Borrower's business.

               4.2.6. Affiliate Transactions. Each Borrower shall not, and shall
not permit any Mortgage Borrower to, enter into, or be a party to, any
transaction with an Affiliate of any Borrower or Mortgage Borrower or any of the
partners of any Borrower or Mortgage Borrower except in the ordinary course of
business and on terms which are fully disclosed to Lender in advance and are no
less favorable to such Borrower or Mortgage Borrower or such Affiliate than
would be obtained in a comparable arm's-length transaction with an unrelated
third party.

               4.2.7. Zoning. Each Borrower shall not, and shall not permit any
Mortgage Borrower to, initiate or consent to any zoning reclassification of any
portion of any of the Properties or seek any variance under any existing zoning
ordinance or use or permit the use of any portion of any of the Properties in
any manner that could result in such use becoming a non-conforming use under any
zoning ordinance or any other applicable land use law, rule or regulation,
without the prior consent of Lender.

               4.2.8. Assets. Each Borrower shall not, and shall not permit any
Mortgage Borrower to, purchase or own any properties other than the Properties
and any other property necessary or incidental for the operation of the
Properties. Each Borrower shall not purchase or own any property other than the
Collateral.

               4.2.9. No Joint Assessment. Each Borrower shall not, and shall
not permit any Mortgage Borrower to, suffer, permit or initiate the joint
assessment of any Property (i) with any other real property constituting a tax
lot separate from such Property, and (ii) with any portion of such Property
which may be deemed to constitute personal property, or any other procedure
whereby the lien of any taxes which may be levied against such personal property
shall be assessed or levied or charged to such Property.

                                       56



               4.2.10. Principal Place of Business. Each Borrower shall not, and
shall not permit any Mortgage Borrower to change its jurisdiction of
organization or its name without first obtaining the written consent of Lender.

               4.2.11. ERISA.

               (a) Each Borrower shall not engage in any transaction which would
cause any obligation, or action taken or to be taken, hereunder (or the exercise
by Lender of any of its rights under the Note, this Agreement or the other Loan
Documents) to be a non-exempt (under a statutory or administrative class
exemption) prohibited transaction under the Employee Retirement Income Security
Act of 1974, as amended ("ERISA").

               (b) Each Borrower shall deliver to Lender such certifications or
other evidence from time to time throughout the term of the Loan, as requested
by Lender in its sole discretion, that (A) such Borrower is not and does not
maintain an "employee benefit plan" as defined in Section 3(3) of ERISA, which
is subject to Title I of ERISA, or a "governmental plan" within the meaning of
Section 3(3) of ERISA; (B) such Borrower is not subject to state statutes
regulating investments and fiduciary obligations with respect to governmental
plans; and (C) one or more of the following circumstances is true:

                    (i) Equity interests in such Borrower are publicly offered
     securities, within the meaning of 29 C.F.R.(S)2510.3-101(b)(2);

                    (ii) Less than twenty-five percent (25%) of each outstanding
     class of equity interests in such Borrower are held by "benefit plan
     investors" within the meaning of 29 C.F.R.(S)2510.3-101(f)(2); or

                    (iii) Such Borrower qualifies as an "operating company" or a
     "real estate operating company" within the meaning of 29
     C.F.R.(S)2510.3-101(c) or (e).

               4.2.12. Other Indebtedness. Each Borrower shall not incur,
create, assume or become liable in any manner with respect to any Indebtedness,
except the Debt and the Permitted Debt and each Borrower shall not permit each
Mortgage Borrower to incur, create, assume or become liable in any manner with
respect to any Indebtedness, except the Debt (as defined in the Mortgage Loan
Agreement) and the Permitted Debt (as defined in the Mortgage Loan Agreement).
Each Borrower may obtain so-called "accounts receivable" financing with respect
to any Property (or its operations therein) ("AR Financing") provided (i) the
terms and conditions of this Section 4.2.12 have been satisfied; (ii) such
Borrower obtains Lender's consent to the terms thereof; and (ii) no Event of
Default exists hereunder. Lender shall not unreasonably withhold its consent to
any AR Financing provided that the amount of such AR Financing is reasonable
given the financial condition of Borrower and the applicable Property and Lender
is presented with an intercreditor agreement on terms acceptable to it in its
reasonable discretion.

                                       57



               4.2.13. Use-Specific Negative Covenants: Each Property Borrower
shall not and shall not allow the Manager, if any, to:

               (a) transfer any Regulatory Permits to any location other than
the related Mezzanine Property nor pledge any Regulatory Permits (except certain
Regulatory Permits pledged to HUD for THI of Maryland at Fort Washington, LLC)
as collateral security for any loan or indebtedness other than the Loan;

               (b) rescind, withdraw, revoke, amend, modify, supplement, or
otherwise alter the nature, tenor or scope of (i) any Regulatory Permit for any
Mezzanine Property or (ii) any applicable provider payment program participation
for any Mezzanine Property;

               (c) except as permitted by the proviso to Section 4.1.11(a)(iii),
amend or otherwise change any Mezzanine Property's authorized bed capacity
and/or the number or type of beds, and/or licensing category or type and/or the
number of beds participating in governmental payment programs approved by the
applicable state licensing agency, CMS or other Governmental Authority without
Lender's prior written consent which may be given or denied in Lender's sole
discretion;

               (d) replace or transfer all or any part of any Mezzanine
Property's licensed beds to another site or location, change the type of
licensed beds at any Mezzanine Property or reduce the number of licensed beds at
any Mezzanine Property;

               (e) apply for approval to (i) move any licensed beds to another
site or location, (ii) change the type of licensed beds at any Mezzanine
Property or (iii) reduce the number of licensed beds at any Mezzanine Property;

               (f) jeopardize in any manner any Borrower's participation in any
Third Party Payor Programs to which any Borrower is subject as of the Closing
Date; provided, to the extent financially prudent and consistent with the terms
of the Loan Agreement, each Property Borrower may terminate participation in any
Third Party Payor Program with any private commercial insurance to the extent
such termination could not have a Material Adverse Effect;

               (g) pledge any receivables as collateral security for any loan or
indebtedness other than the Loan;

               (h) enter into any patient or resident care agreements with
patients or residents or with any other persons which deviate in any material
respect from the standard form customarily used by any Property Borrower at any
Mezzanine Property;

               (i) change the terms of any of the Third Party Payors' Programs
or its normal billing payment or reimbursement policies and procedures with
respect thereto (including

                                       58



without limitation the amount and timing of finance charges, fees and
write-offs); provided a Property Borrower may enter into changes which do not
have a Material Adverse Effect; or

               (j) assign or transfer any of its interest in any Regulatory
Permit or Reimbursement Contract (including any right to payment thereunder) or
assign, transfer or remove or permit any other person to assign, transfer or
remove any records pertaining to any Mezzanine Property including, without
limitation, patient records, medical and clinical records (except for removal of
such patient records as directed by the patients owning such records).

               4.2.14. Limitations on Distributions. Subject to the terms of the
Master Guaranty, following the occurrence and during the continuance of an Event
of Default, no Borrower shall make any distributions to its members.

               4.2.15. Other Limitations. Prior to the payment in full of the
Debt, no Borrower shall, and no Borrower shall permit any Mortgage Borrower to,
without the prior written consent of Lender (which may be furnished or withheld
at its sole and absolute discretion), give its consent or approval to any of the
following actions or items:

               (a) except as permitted by Lender herein, (i) any refinance of
the Mortgage Loan, (ii) any prepayment in full of the Mortgage Loan, (iii) any
Transfer of any Mortgage Property or any portion thereof, or (iv) any action in
connection with or in furtherance of the foregoing;

               (b) creating, incurring, assuming or suffering to exist any
additional Liens on any portion of any Mortgage Property except for Permitted
Encumbrances (as defined in the Mortgage Loan Agreement).

               (c) any modification, amendment, consolidation, spread,
restatement, waiver or termination of any of the Mortgage Loan Documents;

               (d) approve the terms of any Annual Budget (as defined in the
Mortgage Loan Agreement);

               (e) the distribution to the partners, members or shareholders of
any Mortgage Borrower of property other than cash;

               (f) except as set forth in the Annual Budget (as defined in the
Mortgage Loan Agreement) or as permitted under the Mortgage Loan Documents, any
(i) improvement, renovation or refurbishment of all or any part of any Mortgage
Property to a materially higher standard or level than that of comparable
properties in the same market segment and in the same geographical area as such
Mortgage Property, (ii) removal, demolition or material alteration of the
improvements or equipment on any Mortgage Property or (iii) material increase in
the square footage or gross leasable area of the improvements on any Mortgage
Property if a material portion of any of the expenses in connection therewith
are paid or incurred by any Mortgage Borrower;

                                       59



               (g) any material change in the method of conduct of the business
of any Borrower or any Mortgage Borrower, such consent to be given in the sole
discretion of the Lender;

               (h) the settlement of any claim against any Borrower or any
Mortgage Borrower, other than a fully insured third party claim, in any amount
greater than $10,000 (in the case of any Borrower) or $10,000 (in the case of
any Mortgage Borrower), such consent to be given in the sole discretion of the
Lender; or

               (i) except as required by the Mortgage Loan Documents, any
determination to restore any Mortgage Property after a casualty or condemnation.

                 ARTICLE V. INSURANCE, CASUALTY AND CONDEMNATION

          Section 5.1. Insurance.

               5.1.1. Insurance Policies.

               (a) The Borrowers shall obtain and maintain, or cause to be
maintained, insurance for such Borrower and the Mezzanine Properties providing
at least the following coverages:

                    (i) coverage for loss or damage by fire, lightning, wind and
     such other perils as are included in a standard "all risk" or "special
     causes of loss" endorsement and against loss or damage by other risks and
     hazards covered by a standard property insurance policy including, without
     limitation, riot, civil commotion, vandalism, malicious mischief, burglary
     and theft on the Improvements and the personal property at each Mezzanine
     Property, including contingent liability from Operation of Building Laws,
     Demolition Costs and Increased Cost of Construction Endorsements, in each
     case (A) in an amount equal to one hundred percent (100%) of the "Full
     Replacement Cost," which for purposes of this Agreement shall mean actual
     replacement value (exclusive of costs of excavations, foundations,
     underground utilities and footings) with a waiver of depreciation, but the
     amount shall in no event be less than the Loan Amount; (B) containing an
     agreed amount endorsement with respect to the Improvements and personal
     property at the Mezzanine Properties waiving all co-insurance provisions;
     (C) providing for no deductible in excess of Ten Thousand and No/100
     Dollars ($10,000) for all such insurance coverage; and (D) containing (a)
     an "Ordinance or Law Coverage" or "Enforcement" endorsement and (b)
     "demolition" insurance (in an amount equal to ten percent (10%) of the
     value of the Improvements) and "increased cost of construction" insurance
     (equal to twenty-five percent (25%) of the value of the Improvements at any
     Mezzanine Property, if any of the Improvements or the use of such Mezzanine
     Property shall at any time constitute legal non-conforming structures or
     uses. In addition, each Property Borrower shall obtain: (y) if any portion
     of the Improvements at any Mezzanine Property is currently or at any time
     in the future located in a federally designated "special flood hazard
     area", flood hazard insurance in an amount equal to the lesser of (1) the

                                       60



     "Full Replacement Cost" (defined above) but no less than the Allocated Loan
     Amount of the applicable Mezzanine Property or (2) the maximum amount of
     such insurance available under the National Flood Insurance Act of 1968,
     the Flood Disaster Protection Act of 1973 or the National Flood Insurance
     Reform Act of 1994, as each may be amended; and (z) earthquake insurance in
     amounts and in form and substance satisfactory to Lender in the event any
     Mezzanine Property is located in an area with a high degree of seismic
     activity, provided that the insurance pursuant to clauses (y) and (z)
     hereof shall be on terms consistent with the comprehensive all risk
     insurance policy required under this subsection (i).

                    (ii) commercial general liability insurance against claims
     for personal injury, bodily injury, death or property damage occurring
     upon, in or about the Mezzanine Properties, such insurance (A) to be on the
     so-called "occurrence" form with a combined limit, excluding umbrella
     coverage, of not less than One Million and No/100 Dollars ($1,000,000) per
     occurrence with a minimum Two Million and No/100 Dollars ($3,000,000)
     general aggregate with limits applying on a "per location" basis; (B) to
     continue at not less than the aforesaid limit until required to be changed
     by Lender by reason of changed economic conditions making such protection
     inadequate; and (C) to cover at least the following hazards: (1) premises
     and operations; (2) products and completed operations on an "if any" basis;
     (3) independent contractors; (4) blanket contractual liability for all
     legal contracts; (5) contractual liability covering the indemnities
     contained in Article 9 of the related Mortgage to the extent the same is
     available; (6) broad form property damage; (7) personal injury (including
     death resulting therefrom); (8) healthcare professional liability and (9) a
     liquor liability endorsement if alcoholic beverages are sold at any
     Mezzanine Property and (D) providing for no deductible in excess of Ten
     Thousand and No Dollars ($10,000).

                    (iii) business interruption insurance (A) with loss payable
     to Lender; (B) covering all risks required to be covered by the insurance
     provided for in subsection (i) above and (xi) below; (C) in an amount
     sufficient to avoid any co-insurance penalty and to provide proceeds which
     will cover a period of not less than eighteen (18) months from the date of
     casualty or loss; (D) containing an extended period of indemnity
     endorsement which provides that after the physical loss to the applicable
     Mezzanine Property has been repaired, the continued loss of income will be
     insured until such income returns to the same level it was prior to the
     loss, or the expiration twenty-four (24) months from the date of the loss,
     whichever first occurs, and notwithstanding that the policy may expire
     prior to the end of such period. The amount of coverage shall be an annual
     aggregate amount equal to the projected gross revenue from the Mezzanine
     Properties, assuming the aggregate occupancy at such Mezzanine Properties
     equals ninety-five percent (95%). The amount of coverage shall be adjusted
     annually by Lender to reflect the projected gross revenue during the
     succeeding eighteen (18) month period;

                    (iv) at all times during which structural construction,
     repairs or alterations are being made with respect to any of the
     Improvements, and only if the

                                       61



     Mezzanine Property's coverage form does not otherwise apply, (A) owner's
     contingent or protective liability insurance covering claims not covered by
     or under the terms or provisions of the above mentioned commercial general
     liability insurance policy; and (B) the insurance provided for in
     subsection (i) above written in a so-called builder's risk completed value
     form (1) on a non-reporting basis, (2) against all risks insured against
     pursuant to subsection (i) above, (3) including permission to occupy the
     applicable Mezzanine Property, and (4) with an agreed amount endorsement
     waiving co-insurance provisions;

                    (v) workers' compensation, subject to the statutory limits
     of the state in which the applicable Mezzanine Property is located, and
     employer's liability insurance with a limit of at least One Hundred
     Thousand and No/100 Dollars ($100,000) per accident and per disease per
     employee, and Five Hundred Thousand and No/100 Dollars ($500,000) aggregate
     in respect of any work or operations on or about any Mezzanine Property, or
     in connection with any Mezzanine Property or its operation (if applicable);

                    (vi) broad form boiler and machinery insurance (without
     exclusion for explosion) covering all boilers or other pressure vessels,
     machinery, and equipment located in, on or about any Mezzanine Property
     (including "system breakdown coverage") in an amount equal to or greater
     than the repair and full replacement cost of such equipment and insurance
     against loss of occupancy or use arising from any breakdown of such
     equipment in such amounts as are generally required by institutional
     lenders for properties comparable to the Mezzanine Properties;

                    (vii) umbrella liability insurance in addition to primary
     coverage in an amount not less than Twenty-Five Million and No/100 Dollars
     ($25,000,000) per occurrence on terms consistent with the commercial
     general liability insurance policy required under subsection (ii) above
     that cover all claims typically covered by an umbrella liability policy
     including all legal liability imposed upon any Property Borrower and all
     court costs and attorneys' fees connection with the ownership, operation
     and maintenance of the Mezzanine Properties;

                    (viii) motor vehicle liability coverage for all owned and
     non-owned vehicles, including rented and leased vehicles containing minimum
     limits per occurrence, including umbrella coverage, of One Million and
     No/100 Dollars ($1,000,000);

                    (ix) if alcoholic beverages are sold at any Mezzanine
     Property, so-called "dramshop" insurance or other liability insurance
     required in connection with the sale of alcoholic beverages;

                    (x) insurance against employee dishonesty in an amount not
     less than six (6) months of gross revenue from any Mezzanine Properties and
     with a deductible not greater than Ten Thousand and No/100 Dollars
     ($10,000);

                                       62



                    (xi) If the insurance required under clause (i) above
     excludes coverage for acts of terrorism, the Borrowers shall provide
     terrorism insurance coverage in an amount equal to the lesser of (1) the
     "Full Replacement Cost" (defined above) but no less than the Allocated Loan
     Amount of the Mezzanine Properties or (2) the maximum amount of such
     insurance which is commercially reasonably available, unless at the time of
     determination: (i) it is not available at commercially reasonable rates;
     (ii) no Affiliates of any Property Borrower are maintaining terrorism
     insurance with respect to another property; (iii) terrorism insurance is
     not commonly maintained by owners of other similar properties and (iv)
     terrorism insurance is not required for loans similar to the Loan and
     secured by property similar to the Mezzanine Properties; and

                    (xii) such other reasonable insurance and in such reasonable
     amounts as Lender from time to time may reasonably request against such
     other insurable hazards or casualties which at the time are commonly
     insured against for property similar to the Mezzanine Properties located in
     or around the region in which the Mezzanine Properties are located
     including, without limitation, sinkhole, mine subsidence and environmental
     insurance, due regard being given to the height and type of property,
     construction, location, use and occupancy.

               (b) All insurance provided for in Section 5.1.1(a) shall be
obtained under valid and enforceable policies (collectively, the "Policies" or
in the singular, the "Policy") and, to the extent not specified above, shall be
subject to the approval of Lender as to deductibles, loss payees and insureds.
Not less than ten (10) days prior to the expiration dates of the Policies
theretofore furnished to Lender, certificates of insurance evidencing the
Policies accompanied by evidence satisfactory to Lender of payment of the
premiums then due thereunder (the "Insurance Premiums"), shall be delivered by
Property Borrowers to Lender. Property Borrowers shall deliver certified copies
of the Policies to Lender within thirty (30) days of the Closing Date and
thereafter upon request. All Policies must have a term of not less than one (1)
year. Equity Borrowers shall cause Mortgage Borrowers to deliver to Lender
copies of all deliveries made by Mortgage Borrowers to Mortgage Lender under
Section 5.1(b) of the Mortgage Loan Agreement.

               (c) Any blanket insurance Policy shall specifically allocate to
each Mezzanine Property the amount of coverage from time to time required
hereunder and shall otherwise provide the same protection as would a separate
Policy insuring only such Mezzanine Property in compliance with the provisions
of Section 5.1.1(a).

               (d) All Policies of insurance provided for or contemplated by
Section 5.1.1(a), except for the Policy referenced in Section 5.1.1(a)(v), shall
name each applicable Property Borrower as the insured and Lender and its
successors and/or assigns as the additional insured, as its interests may
appear, and in the case of property damage, terrorism insurance, boiler and
machinery, flood and earthquake insurance, shall contain a so-called New York
standard non-contributing mortgagee clause in favor of Lender providing that the
loss thereunder shall be payable to Lender.

                                       63



               (e) All Policies of insurance provided for in Section 5.1.1(a)
shall contain clauses or endorsements to the effect that:

                    (i) no act or negligence of any Property Borrower, or anyone
     acting for any Property Borrower, or of any tenant or other occupant, or
     failure to comply with the provisions of any Policy, which might otherwise
     result in a forfeiture of the insurance or any part thereof, shall in any
     way affect the validity or enforceability of the insurance insofar as
     Lender is concerned;

                    (ii) the Policy shall not be materially changed (other than
     to increase the coverage provided thereby) or canceled without at least
     thirty (30) days' written notice to Lender and any other party named
     therein as an additional insured;

                    (iii) Lender shall not be liable for any Insurance Premiums
     thereon or subject to any assessments thereunder; and

                    (iv) to the extent available at commercially reasonable
     rates, a waiver of subrogation rights as to Lender.

               (f) If at any time Lender is not in receipt of written evidence
that all insurance required hereunder is in full force and effect, Lender shall
have the right, without notice to any Property Borrower, to take such action as
Lender deems necessary to protect its interest in the Mezzanine Properties,
including, without limitation, the obtaining of such insurance coverage as
Lender in its sole discretion deems appropriate and all premiums incurred by
Lender in connection with such action or in obtaining such insurance and keeping
it in effect shall be paid by Borrowers to Lender upon demand and until paid
shall be secured by the Mortgages and shall bear interest at the Default Rate.

               (g) In the event of foreclosure of any Mortgage or other transfer
of title to any Mezzanine Property in extinguishment in whole or in part of the
Debt, all right, title and interest the applicable Borrower in and to the
Policies that are not blanket Policies then in force concerning the Mezzanine
Properties and all proceeds payable thereunder shall thereupon vest in the
purchaser at such foreclosure or Lender or other transferee in the event of such
other transfer of title.

               (h) Each Equity Borrower will cause the related Mortgage
Borrowers to comply with all of the provisions of Article V of the Mortgage Loan
Agreement.

               5.1.2. Insurance Company. The Policies shall be issued by one or
more domestic primary insurance companies, duly qualified in the jurisdiction
where the Mezzanine Properties are located and rated A: VII or better by A.M.
Best and having a claims-paying ability of at least "AA" or its equivalent by
each of the Rating Agencies, or by a syndicate of insurers through which at
least seventy-five percent (75%) of the coverage (if there are four (4) or fewer
members of the syndicate) or at least sixty percent (60%) of the coverage (if
there are five (5) or more members of the syndicate) is with carriers having
such claims-paying ability ratings

                                       64



(provided that all such carriers shall have claims-paying ability ratings of not
less than "A" or the equivalent by each of the Rating Agencies).

          Section 5.2. Casualty And Condemnation.

               5.2.1. Casualty. If a Mezzanine Property shall sustain a
Casualty, each Borrower shall give prompt notice of such Casualty to Lender
(provided that notice shall not need to be required for a Casualty which causes
less than $50,000 worth of damage to a Mezzanine Property) and, provided Lender
permits the applicable Borrower to utilize the Net Proceeds, if any, for any
such Restoration, shall promptly commence and diligently prosecute to completion
the repair and restoration of any Mezzanine Property as nearly as possible to
the condition such Mezzanine Property was in immediately prior to such Casualty
(a "Restoration") and otherwise in accordance with Section 5.3. At the same time
any Mortgage Borrower provides Mortgage Lender of notice of a Casualty to any
Mortgage Property, Borrowers shall cause such notice to be delivered to Lender.
Borrowers shall pay all costs of such Restoration whether or not such costs are
covered by insurance. Lender may, but shall not be obligated to, make proof of
loss if not made promptly by any Borrower. In the event of a Casualty where the
loss does not exceed the Restoration Threshold, a Borrower may settle and adjust
such claim; provided that (a) no Event of Default has occurred and is continuing
and (b) such adjustment is carried out in a commercially reasonable and timely
manner. In the event of a Casualty where the loss exceeds the Restoration
Threshold or if an Event of Default then exists, a Borrower may settle and
adjust such claim only with the consent of Lender (which consent shall not be
unreasonably withheld or delayed) and Lender shall have the opportunity to
participate, at Borrowers' cost, in any such adjustments. Notwithstanding any
Casualty, each Borrower shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note and in this Agreement.

               5.2.2. Condemnation. Each Borrower shall give Lender prompt
notice of any actual or threatened Condemnation by any Governmental Authority of
all or any part of any Mezzanine Property (provided that notice shall not be
required for a Condemnation which could result in less than $50,000 in
Condemnation Proceeds) and shall deliver to Lender a copy of any and all papers
served in connection with such proceedings. At the same time any Mortgage
Borrower provides Mortgage Lender with notice of any Condemnation to any
Mortgage Property, Borrowers shall cause such notice to be delivered to Lender.
Provided no Event of Default has occurred and is continuing, in the event of a
Condemnation where the amount of the taking does not exceed the Restoration
Threshold, a Borrower may settle and compromise such Condemnation; provided that
the same is effected in a commercially reasonable and timely manner. In the
event a Condemnation where the amount of the taking exceeds the Restoration
Threshold or if an Event of Default then exists, a Borrower may settle and
compromise the Condemnation only with the consent of Lender (which consent shall
not be unreasonably withheld or delayed) and Lender shall have the opportunity
to participate, at Borrowers' cost, in any litigation and settlement discussions
in respect thereof and each Borrower shall from time to time deliver to Lender
all instruments requested by Lender to permit such participation. Each Borrower
shall, at its expense, diligently prosecute any such proceedings, and shall
consult with

                                       65



Lender, its attorneys and experts, and cooperate with them in the carrying on or
defense of any such proceedings. Notwithstanding any Condemnation, each Borrower
shall continue to pay the Debt at the time and in the manner provided for its
payment in the Note and in this Agreement. Lender shall not be limited to the
interest paid on the Award by any Governmental Authority but shall be entitled
to receive out of the Award interest at the rate or rates provided herein or in
the Note. If any Mezzanine Property or any portion thereof is taken by any
Governmental Authority and provided Lender permits the applicable Borrower to
utilize the Net Proceeds, if any, for the Restoration of the applicable
Property, each Borrower shall promptly commence and diligently prosecute the
Restoration of such Mezzanine Property and otherwise comply with the provisions
of Section 5.3. If such Mezzanine Property is sold, through foreclosure or
otherwise, prior to the receipt by Lender of the Award, Lender shall have the
right, whether or not a deficiency judgment on the Note shall have been sought,
recovered or denied, to receive the Award, or a portion thereof sufficient to
pay the Debt.

          Section 5.3. Delivery of Net Proceeds.

               5.3.1. Minor Casualty or Condemnation. If a Casualty or
Condemnation has occurred to a Mezzanine Property and the Net Proceeds shall be
less than the Restoration Threshold and the costs of completing the Restoration
shall be less than the Restoration Threshold, and provided no Event of Default
shall have occurred and remain uncured, the Net Proceeds will be disbursed by
Lender to the applicable Borrower. Promptly after receipt of the Net Proceeds,
such Borrower shall commence and satisfactorily complete with due diligence the
Restoration in accordance with the terms of this Agreement. If any Net Proceeds
are received by any Borrower and may be retained by such Borrower pursuant to
the terms hereof, such Net Proceeds shall, until completion of the Restoration,
be held in trust for Lender and shall be segregated from other funds of such
Borrower to be used to pay for the cost of Restoration in accordance with the
terms hereof.

               5.3.2. Major Casualty or Condemnation.

               (a) If a Casualty or Condemnation has occurred to a Mezzanine
Property and the Net Proceeds are equal to or greater than the Restoration
Threshold or the costs of completing the Restoration is equal to or greater than
the Restoration Threshold, Lender shall make the Net Proceeds available for the
Restoration, provided that each of the following conditions are met:

                    (i) no Event of Default shall have occurred and be
     continuing;

                    (ii) (A) in the event the Net Proceeds are insurance
     proceeds, less than twenty-five percent (25%) of the total floor area of
     the Improvements at the applicable Mezzanine Property has been damaged,
     destroyed or rendered unusable as a result of such Casualty or (B) in the
     event the Net Proceeds are an Award, less than ten percent (10%) of the
     land constituting applicable Mezzanine Property is taken, and such land is
     located along the perimeter or periphery of the Mezzanine Property, and no
     portion of the Improvements is the subject of the Condemnation;

                                       66



                    (iii) (A) in the event of a Casualty, the Casualty resulted
     in an actual or constructive loss of less than twenty-five percent (25%) of
     the fair market value of the applicable Mezzanine Property or (B) in the
     event of a Condemnation, the Condemnation resulted in an actual or
     constructive loss of less than ten percent (10%) of the fair market value
     of the applicable Mezzanine Property.

                    (iv) Intentionally Deleted.

                    (v) The applicable Borrower shall commence the Restoration
     as soon as reasonably practicable (but in no event later than sixty (60)
     days after such Casualty or Condemnation, or such longer period, not to
     exceed 120 days, as is reasonably necessary to adjust the claim or receive
     the award; provided, however, with respect to each Mezzanine Property the
     use of which is a legal non-conforming use under applicable Legal
     Requirements, the Restoration shall be commenced within such period as
     required by such Legal Requirements to maintain such status) and shall
     diligently pursue the same to satisfactory completion and, in any event, as
     to each Mezzanine Property the use of which is a legal non-conforming use
     under applicable Legal Requirements, within such period as required by such
     Legal Requirements to maintain such status;

                    (vi) Lender shall be satisfied that any operating deficits
     and all payments of principal and interest under the Note will be paid
     during the period required for Restoration from (A) the Net Proceeds, or
     (B) other funds of the applicable Borrower;

                    (vii) Lender shall be satisfied that the Restoration will be
     completed on or before the earliest to occur of (A) the date six (6) months
     prior to the Maturity Date, (B) such time as may be required under
     applicable Legal Requirements in order to repair and restore the applicable
     Mezzanine Property to the condition it was in immediately prior to such
     Casualty or to as nearly as possible the condition it was in immediately
     prior to such Condemnation, as applicable or (C) the expiration of the
     insurance coverage referred to in Section 5.1.1(a)(iii);

                    (viii) Lender shall be satisfied that after the Restoration,
     the fair market value of the applicable Mezzanine Property will be at least
     equal to the fair market value of such Mezzanine Property prior to the
     Casualty or Condemnation;

                    (ix) the applicable Mezzanine Property and the use thereof
     after the Restoration will be in substantial compliance with and permitted
     under all applicable Legal Requirements;

                    (x) the Restoration shall be done and completed by the
     applicable Borrower in an expeditious and diligent fashion and in
     substantial compliance with all applicable Legal Requirements; and

                                       67



                    (xi) such Casualty or Condemnation, as applicable, does not
     result in the loss of access to the applicable Mezzanine Property or the
     related Improvements.

               (b) The Net Proceeds shall be paid directly to Lender and held by
Lender in the Net Proceeds Account, and until disbursed in accordance with the
provisions of this Section 5.3.2, shall constitute additional security for the
Debt. The Net Proceeds shall be disbursed by Lender to, or as directed by, the
applicable Borrower from time to time during the course of the Restoration, upon
receipt of evidence satisfactory to Lender that (A) all requirements set forth
in Section 5.3.2(a) have been satisfied, (B) all materials installed and work
and labor performed (except to the extent that they are to be paid for out of
the requested disbursement) in connection with the Restoration have been paid
for in full, and (C) there exist no notices of pendency, stop orders, mechanic's
or materialman's liens or notices of intention to file same, or any other liens
or encumbrances of any nature whatsoever on the applicable Mezzanine Property
arising out of the Restoration which have not either been fully bonded to the
satisfaction of Lender and discharged of record or in the alternative fully
insured to the reasonable satisfaction of Lender by the title company issuing
the Title Insurance Policy.

               (c) All plans and specifications required in connection with the
Restoration shall be subject to prior approval of Lender and an independent
architect selected by Lender (the "Casualty Consultant"). The plans and
specifications shall require that the Restoration be completed in a first-class
workmanlike manner at least equivalent to the quality and character of the
original work in the Improvements (provided, however, that in the case of a
partial Condemnation, the Restoration shall be done to the extent reasonably
practical after taking into account the consequences of such partial
Condemnation), so that upon completion thereof, the applicable Mezzanine
Property is restored to be of at least equal value and of substantially the same
character as prior to the Casualty. The applicable Borrower shall restore all
Improvements such that when they are fully restored and/or repaired, such
Improvements and their contemplated use substantially comply with all applicable
material Legal Requirements. The identity of the contractors, subcontractors and
materialmen engaged in the Restoration, as well as the contracts under which
they have been engaged, shall be subject to reasonable approval of Lender and
the Casualty Consultant. All costs and expenses incurred by Lender in connection
with recovering, holding and advancing the Net Proceeds for the Restoration
including, without limitation, reasonable attorneys' fees and disbursements and
the Casualty Consultant's fees and disbursements, shall be paid by Borrowers.

               (d) In no event shall Lender be obligated to make disbursements
of the Net Proceeds in excess of an amount equal to the costs actually incurred
from time to time for work in place as part of the Restoration, as certified by
the Casualty Consultant, less the Casualty Retainage. The term "Casualty
Retainage" shall mean, as to each contractor, subcontractor or materialman
engaged in the Restoration, an amount equal to ten percent (10%) of the costs
actually incurred for work in place as part of the Restoration, as certified by
the Casualty Consultant, until the Restoration has been completed. The Casualty
Retainage shall in no event, and notwithstanding anything to the contrary set
forth above in this Section 5.3.2(d), be less than

                                       68



the amount actually held back by the applicable Borrower from contractors,
subcontractors and materialmen engaged in the Restoration. The Casualty
Retainage shall not be released until the Casualty Consultant certifies to
Lender that the Restoration has been completed in accordance with the provisions
of this Section 5.3.2(d) and that all approvals necessary for the re-occupancy
and use of the applicable Mezzanine Property have been obtained from all
appropriate Governmental Authorities, and Lender receives evidence satisfactory
to Lender that the costs of the Restoration have been paid in full or will be
paid in full out of the Casualty Retainage; provided, however, that Lender will
release the portion of the Casualty Retainage being held with respect to any
contractor, subcontractor or materialman engaged in the Restoration as of the
date upon which the Casualty Consultant certifies to Lender that the contractor,
subcontractor or materialman has satisfactorily completed all work and has
supplied all materials in accordance with the provisions of the contractor's,
subcontractor's or materialman's contract, the contractor, subcontractor or
materialman delivers the lien waivers and evidence of payment in full of all
sums due to the contractor, subcontractor or materialman as may be reasonably
requested by Lender or by the title company issuing the Title Insurance Policy,
and Lender receives an endorsement to the Title Insurance Policy insuring the
continued priority of the lien of the related Mortgage and evidence of payment
of any premium payable for such endorsement. If required by Lender, the release
of any such portion of the Casualty Retainage shall be approved by the surety
company, if any, which has issued a payment or performance bond with respect to
the contractor, subcontractor or materialman.

               (e) Lender shall not be obligated to make disbursements of the
Net Proceeds more frequently than once every calendar month.

               (f) If at any time the Net Proceeds or the undisbursed balance
thereof shall not, in the opinion of Lender in consultation with the Casualty
Consultant, be sufficient to pay in full the balance of the costs which are
reasonably estimated by the Casualty Consultant to be incurred in connection
with the completion of the Restoration, Borrowers shall deposit the deficiency
(the "Net Proceeds Deficiency") with Lender before any further disbursement of
the Net Proceeds shall be made. The Net Proceeds Deficiency deposited with
Lender shall be held by Lender in the Net Proceeds Account and shall be
disbursed for costs actually incurred in connection with the Restoration on the
same conditions applicable to the disbursement of the Net Proceeds, and until so
disbursed pursuant to this Section 5.3.2 shall constitute additional security
for the Debt.

               (g) The excess, if any, of the Net Proceeds and the remaining
balance, if any, of the Net Proceeds Deficiency deposited with Lender after the
Casualty Consultant certifies to Lender that the Restoration has been completed
in accordance with the provisions of this Section 5.3.2, and the receipt by
Lender of evidence satisfactory to Lender that all costs incurred in connection
with the Restoration have been paid in full, shall be remitted by Lender to the
applicable Borrower, provided no Event of Default shall have occurred and shall
be continuing under any of the Loan Documents.

                                       69



               (h) All Net Proceeds not required (i) to be made available for
the Restoration or (ii) to be returned to a Borrower as excess Net Proceeds
pursuant to Section 5.3.2(g) may be retained and applied by Lender toward the
payment of the Debt, whether or not then due and payable, in such order,
priority and proportions as Lender in its sole discretion shall deem proper
without any Prepayment Premium, or, at the discretion of Lender, the same may be
paid, either in whole or in part, to a Borrower for such purposes as Lender
shall designate.

                              ARTICLE VI. ACCOUNTS

          Section 6.1. Mezzanine Cash Management Account/Mezzanine Collection
Account.

               (a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Mezzanine Cash Management Bank an account for
the collection of all income from each Mezzanine Property and any deposits from
the Mortgage Cash Management Account with respect to the Mortgage Properties
(the "Mezzanine Cash Management Account"). As a condition precedent to the
closing of the Loan, Borrowers shall cause the Mezzanine Cash Management Bank to
execute and deliver the Mezzanine Cash Management Agreement, which provides,
inter alia, that no party other than Lender and Servicer shall have the right to
withdraw funds from the Mezzanine Cash Management Account. The fees and expenses
of the Mezzanine Cash Management Bank shall be paid by Borrower. On or prior to
the Closing Date, the Borrowers shall establish and thereafter maintain with the
Mezzanine Collection Account Bank a lockbox account (the "Mezzanine Collection
Account"). As a conditon precedent to the closing of the Loan, Borrowers shall
cause the Mezzanine Collection Account Bank to execute and deliver the Mezzanine
Collection Account Agreement, which provides, inter alia, that no party other
than Lender and Servicer shall have the right to withdraw funds from the
Mezzanine Collection Account. The fees and expenses of the Mezzanine Collection
Account Bank shall be paid by the Borrowers.

               (b) On the Closing Date, with respect to each Mezzanine Property,
each Borrower shall deliver a written notice (a "Payor Notice") to each Third
Party Payor that is under Medicare and Medicaid, which notice shall provide that
(A) all payments from such Third Party Payor shall thereafter be transmitted
directly by it to, and deposited directly into, the Mezzanine Collection Account
and (B) such instruction may not be rescinded unless and until such Third Party
Payor receives from a Borrower or Lender a copy of Lender's written consent to
such rescission. Each Borrower shall send a copy of each such written notice to
Lender and shall re-deliver such notices to each Third Party Payor until such
time as such Third Party Payor complies therewith. Each Borrower covenants to
cause all Rents relating to the Mezzanine Properties and all other money
received by each Borrower or Manager with respect to the Mezzanine Properties,
including, but not limited to, payments from all other Third Party Payors
(excluding Medicare and Medicaid) ("Private Third Party Payors") and Self-Pay
Receivables to be deposited in the Mezzanine Collection Account by the end of
the first (1st) Business Day following any Borrower's or Manager's receipt
thereof; and each Borrower shall be permitted to deposit in the Mezzanine
Collection Account such additional amounts as any Borrower may

                                       70



elect. The parties acknowledge and agree that with respect to each Mezzanine
Property, the payments from the Private Third Party Payors and the Self-Pay
Receivables constituting checks will be remitted by each Borrower once such
Borrower has accumulated $1,000.00 worth of such checks, by overnight delivery
to Manager. Manager shall hold such checks in trust and will deposit such checks
within one (1) Business Day of receipt.

               (c) Lender shall have the right to replace the Mezzanine Cash
Management Bank or the Mezzanine Collection Account Bank with any other Eligible
Institution in which Eligible Accounts may be maintained which will promptly
execute and deliver to Lender a Mezzanine Cash Management Agreement or Mezzanine
Collection Account Agreement, (and each Borrower shall cooperate with Lender in
connection with such transfer) in the event that (i) at any time the Mezzanine
Cash Management Bank or the Mezzanine Collection Account Bank ceases to be an
Eligible Institution or (ii) the Mezzanine Cash Management Bank or the Mezzanine
Collection Account Bank resigns or otherwise fails to comply with the Mezzanine
Cash Management Agreement, as applicable or (iii) there is a default by the
Mezzanine Cash Management Bank or the Mezzanine Collection Account Bank, as
applicable under its Mezzanine Cash Management Agreement or Mezzanine Collection
Account Agreement. Notwithstanding the foregoing, Lender shall have the right to
hold the Collateral Accounts at any other Eligible Institution.

          Section 6.2. Distributions From Mezzanine Cash Management Account.

               (a) At the end of each Business Day, the Mezzanine Collection
Account Bank shall remit all available funds in the Mezzanine Collection Account
to the Mezzanine Cash Management Account.

               (b) On each Business Day, provided no Event of Default has
occurred and no Mezzanine Cash Management Period exists, the Mezzanine Cash
Management Bank shall withdraw all available funds in the Mezzanine Cash
Management Account and shall disburse such funds in the following order of
priority until such time as the maximum amount required to be deposited in each
Collateral Account has been so deposited:

                    (i) to the Ground Rent Escrow Account, the amount required
     to be deposited therein pursuant to Section 6.10

                    (ii) to the Tax and Insurance Escrow Account, the amount
     required to be deposited therein pursuant to Section 6.3;

                    (iii) to the Debt Service Account, the amount required to be
     deposited therein pursuant to Section 6.4;

                    (iv) to the Capital Expenditure Reserve Account, the amount
     required to be deposited therein pursuant to Section 6.6; and

                                       71



                    (v) any remaining amounts shall be disbursed to such account
     as the applicable Borrower may direct.

               (c) If a Mezzanine Cash Management Period exists but no Event of
Default has occurred and is continuing, the Mezzanine Cash Management Bank shall
withdraw on each Business Day all available funds in the Mezzanine Cash
Management Account and shall disburse such funds in the following order of
priority until such time as the maximum amount required to be deposited in each
Collateral Account has been so deposited:

                    (i) to the Ground Rent Escrow Account, the amount required
     to be deposited therein pursuant to Section 6.10

                    (ii) to the Tax and Insurance Escrow Account, the amount
     required to be deposited therein pursuant to Section 6.3;

                    (iii) to the Debt Service Account, the amount required to be
     deposited therein pursuant to Section 6.4;

                    (iv) to the Operating Expense Reserve Account, the amount
     required to be deposited therein pursuant to Section 6.5;

                    (v) to the Capital Expenditure Reserve Account, the amount
     required to be deposited therein pursuant to Section 6.6; and

                    (vi) any remaining amounts to be disbursed to the Debt
     Service Account to be applied to the prepayment of the Loan.

               (d) If an Event of Default has occurred and is continuing, Lender
shall promptly notify Mezzanine Cash Management Bank of such Event of Default
and Lender may, in addition to all other rights and remedies provided for under
the Loan Documents, disburse and apply the amounts in the Mezzanine Cash
Management Account toward the payment of the Debt and/or toward the payment of
Basic Carrying Costs, Operating Expenses for the Mezzanine Properties or Capital
Expenditures, in such sequence as Lender shall elect in its sole discretion.

               (e) If on any Payment Date, any Collateral Account has not been
fully funded in the applicable amount described in Section 6.2(b) or Section
6.2(c), as applicable, Borrowers shall deposit into the Mezzanine Cash
Management Account on such Payment Date the amount of such deficiency. If
Borrowers shall fail to make such deposit, the same shall constitute an Event of
Default and, in addition to all other rights and remedies provided for under the
Loan Documents, Lender may disburse and apply the amounts in the Mezzanine Cash
Management Account toward the payment of the Debt and/or toward the payment of
Basic Carrying Costs, Operating Expenses or for the Mezzanine Properties Capital
Expenditures, in such sequence as Lender shall elect in its sole discretion.

                                       72



          Section 6.3. Tax and Insurance Escrow Account.

               (a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Mezzanine Cash Management Bank an account for
the purpose of reserving amounts payable by any Borrower in respect of Taxes and
Insurance Premiums for each Mezzanine Property (the "Tax and Insurance Escrow
Account").

               (b) On or prior to the Closing Date, the Tax and Insurance Escrow
Account shall be funded in an amount equal to the sum of (i) an amount
sufficient to pay all Taxes for the Mezzanine Properties by the thirtieth (30th)
day prior to the date they come due, assuming subsequent monthly fundings on
Payment Dates of one-twelfth (1/12th) of projected annual Taxes, plus (ii) an
amount sufficient to pay all Insurance Premiums for the Mezzanine Properties by
the thirtieth (30th) day prior to the date they come due, assuming subsequent
monthly fundings on Payment Dates of one-twelfth (1/12th) of projected Insurance
Premiums.

               (c) On each subsequent Business Day during an Interest Accrual
Period, the Mezzanine Cash Management Bank shall withdraw all available funds in
the Mezzanine Cash Management Account and shall disburse such funds into the Tax
and Insurance Escrow Account in accordance with the provisions set forth in
Section 6.2 until an amount equal to the sum of:

                    (A) one-twelfth (1/12th) of the Taxes for the Mezzanine
     Properties that Lender reasonably estimates, based on information provided
     by Borrowers, will be payable during the next ensuing twelve (12) months,
     plus

                    (B) one-twelfth (1/12th) of the Insurance Premiums for the
     Mezzanine Properties that Lender reasonably estimates, based on information
     provided by Borrowers, will be payable during the next ensuing twelve (12)
     months;

has been deposited into the Tax and Insurance Escrow Account provided, however,
that if at any time Lender reasonably determines that the amount in the Tax and
Insurance Escrow Account will not be sufficient to accumulate (upon payment of
subsequent monthly amounts in accordance with the provisions of this Agreement)
the full amount of all installments of Taxes and Insurance Premiums for the
Mezzanine Properties by the date on which such amounts come due, then Lender
shall notify Borrowers of such determination and Borrowers shall increase the
monthly payments to the Tax and Insurance Escrow Account by the amount that
Lender reasonably estimates is sufficient to achieve such accumulation.

               (d) Each Borrower shall provide Lender with copies of all tax and
insurance bills relating to each Mezzanine Property promptly after the
applicable Borrower's receipt thereof. Lender will apply amounts in the Tax and
Insurance Escrow Account toward the purposes for which such amounts are
deposited therein. In connection with the making of any payment from the Tax and
Insurance Escrow Account, Lender may cause such payment to be made according to
any bill, statement or estimate procured from the appropriate public office or
insurance carrier, without inquiry into the accuracy of such bill, statement or
estimate or into the

                                       73



validity of any tax, assessment, sale, forfeiture, tax lien or title or claim
thereof unless given written advance notice by a Borrower of such inaccuracy,
invalidity or other contest.

          Section 6.4. Debt Service Account.

               (a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Mezzanine Cash Management Bank an account for
the purpose of reserving amounts payable by Borrowers in respect of Debt Service
(the "Debt Service Account").

               (b) On each Business Day during an Interest Accrual Period, the
Cash Management Bank shall withdraw all available funds in the Mezzanine Cash
Management Account and shall disburse such funds into the Debt Service Account
in accordance with the provisions set forth in Section 6.2 until an amount equal
to the amount of all scheduled or delinquent interest on the Loan and other
amounts due and payable under the Loan Documents on the next Payment Date has
been deposited into the Debt Service Account; provided, however, the amounts to
be applied in prepayment of the Loan due to the occurrence of a Mezzanine Cash
Management Event shall be deposited at such time as described in Section
6.2(c)(vi). To the extent Lender receives any prepayments of the Debt in an
Interest Accrual Period on a date other than a Payment Date, the total amount of
such prepayment shall be deposited into the Debt Service Account, together with
all other sums payable with respect to such prepayment including, but not
limited to, any Prepayment Premium and all interest that would have accrued from
the date of such prepayment through the applicable Payment Date. Any Net
Proceeds actually received by Lender shall be deposited directly into the Net
Proceeds Account pursuant to Section 6.8 hereof.

          Section 6.5. Operating Expense Reserve Account.

               (a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Mezzanine Cash Management Bank an account for
the purpose of reserving amounts in respect of Operating Expenses for the
Mezzanine Properties (the "Operating Expense Reserve Account").

               (b) On each Business Day during a Mezzanine Cash Management
Period, the Mezzanine Cash Management Bank shall withdraw all available funds in
the Mezzanine Cash Management Account and shall disburse such funds into the
Operating Expense Reserve Account in accordance with the provisions set forth in
Section 6.2 until an amount equal to the funds necessary to pay all Operating
Expenses for the Mezzanine Properties which are (A) to be incurred during the
applicable Interest Accrual Period in accordance with the Annual Budget, or (B)
certified by Borrowers from time to time and approved by Lender in its sole
discretion, has been deposited into the Operating Expense Reserve Account.

               (c) Upon the request of a Borrower at any time, provided that no
Event of Default has occurred, Lender shall remit to such Borrower from the
Operating Expense Reserve Account amounts to permit such Borrower to pay (or to
reimburse such Borrower) for

                                       74



Operating Expenses incurred by such Borrower in connection with any of the
Mezzanine Properties, provided that:

                    (i) Such Borrower shall deliver to Lender invoices
     evidencing that the costs for which such disbursements are requested are
     due and payable;

                    (ii) Such Borrower shall deliver to Lender an Officer's
     Certificate confirming that all such costs are within the limits of the
     Annual Budget and all such costs have been previously paid by such Borrower
     or will be paid from the proceeds of the requested disbursement; and

                    (iii) Lender may condition the making of a requested
     disbursement on reasonable evidence establishing that each Borrower has
     applied any amounts previously received by it in accordance with this
     Section for the expenses to which specific draws made hereunder relate.

          Section 6.6. Capital Expenditure Reserve Account.

               (a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Mezzanine Cash Management Bank an account for
the purpose of reserving amounts in respect of Capital Expenditures (the
"Capital Expenditure Reserve Account").

               (b) On each Business Day, the Mezzanine Cash Management Bank
shall withdraw all available funds in the Mezzanine Cash Management Account and
shall disburse such funds into the Capital Expenditure Reserve Account in
accordance with the provisions set forth in Section 6.2 until an amount equal to
the Monthly Capital Expenditure Reserve Amount has been deposited therein.

               (c) Upon the request of any Borrower at any time (but not more
often than once per calendar month), provided no Event of Default has occurred
and is continuing, Lender shall remit to such Borrower from the Capital
Expenditure Reserve Account amounts to permit such Borrower to pay (or to
reimburse such Borrower) for Capital Expenditures made in accordance herewith;
provided that:

                    (i) Such Borrower shall deliver to Lender invoices
     evidencing that the costs for which such disbursements are requested are
     due and payable;

                    (ii) Such Borrower shall deliver to Lender an Officer's
     Certificate confirming that all such costs have been previously paid by
     such Borrower or will be paid from the proceeds of the requested
     disbursement; and

                    (iii) Lender may condition the making of a requested
     disbursement on (1) reasonable evidence establishing that each Borrower has
     applied any amounts previously received by it in accordance with this
     Section for the expenses to

                                       75



     which specific draws made hereunder relate, (2) a reasonably satisfactory
     site inspection, and (3) receipt of lien releases and waivers from any
     contractors, subcontractors and others in connection with such amounts.

          Section 6.7. Deferred Maintenance and Environmental Escrow Account.

               (a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Mezzanine Cash Management Bank an account for
the purpose of reserving amounts anticipated to be required to correct Deferred
Maintenance Conditions (the "Deferred Maintenance and Environmental Escrow
Account").

               (b) On the Closing Date, Borrowers shall deposit into the
Deferred Maintenance and Environmental Escrow Account, from the proceeds of the
Loan, an amount equal to the Deferred Maintenance Amount.

               (c) Borrowers shall correct the Deferred Maintenance Conditions
in a diligent, workmanlike manner and shall complete the same within twelve (12)
months of the Closing Date. Upon the request of a Borrower at any time (but not
more often than once per calendar month), provided no Event of Default has
occurred and is continuing, Lender shall disburse to such Borrower from the
Deferred Maintenance and Environmental Escrow Account amounts to permit such
Borrower to pay (or to reimburse such Borrower) for reasonable costs and
expenses incurred in order to correct Deferred Maintenance Conditions; provided
that:

                    (i) Such Borrower shall deliver to Lender invoices
     evidencing that the costs for which such disbursements are requested are
     due and payable;

                    (ii) Such Borrower shall deliver to Lender an Officer's
     Certificate confirming that all such costs have been previously paid by
     Borrower or will be paid from the proceeds of the requested disbursement;

                    (iii) Lender may condition the making of a requested
     disbursement on (1) reasonable evidence establishing that each Borrower has
     applied any amounts previously received by it in accordance with this
     Section for the expenses to which specific draws made hereunder relate, (2)
     a reasonably satisfactory site inspection, and (3) receipt of lien releases
     and waivers from any contractors, subcontractors and others with respect to
     such amounts; and

                    (iv) as to any Deferred Maintenance Condition, the
     applicable Borrower shall only be entitled to a disbursement of the amount
     equal to the cost for such Deferred Maintenance Condition.

                                       76



          Section 6.8. Net Proceeds Account.

               (a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Mezzanine Cash Management Bank an account for
the purpose of depositing any Net Proceeds (the "Net Proceeds Account") from the
Properties.

               (b) Provided no Event of Default has occurred, funds in the Net
Proceeds Account shall be applied in accordance with Section 5.3.

          Section 6.9. Intentionally Deleted.

          Section 6.10. Ground Rent Escrow Account.

               (a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Mezzanine Cash Management Bank an account for
the purpose of reserving amounts payable by Borrower in respect of Ground Rent
(the "Ground Rent Escrow Account").

               (b) On or prior to the Closing Date, the Ground Rent Escrow
Account shall be funded in an amount sufficient to pay the Ground Rent by the
thirtieth (30th) day prior to the date such Ground Rent comes due, assuming
subsequent monthly fundings on Payment Dates of one-twelth (1/12) of annual
Ground Rent. On each subsequent Business Day, the Mezzanine Cash Management Bank
shall withdraw all available funds in the Mezzanine Cash Management Account and
shall disburse such funds into the Ground Rent Escrow Account until an amount
equal to one-twelth 1/12 of the Ground Rent that Lender reasonably estimates,
based on information provided by Borrowers, will be payable during the next
ensuing twelve (12) months, has been deposited into the Ground Rent Escrow
Account, provided, however, that if at any time Lender reasonably determines
that the amount in the Ground Rent Escrow Account will not be sufficient to
accumulate (upon payment of subsequent monthly amounts in accordance with the
provisions of this Agreement) the full amount of all installments of Ground Rent
by the date on which such amounts come due, then Lender shall notify Borrowers
of such determination and Borrowers shall increase the monthly payments to the
Ground Rent Escrow Account by the amount that Lender reasonably estimates is
sufficient to achieve such accumulation.

               (c) Each applicable Borrower shall provide Lender with copies of
all bills for Ground Rent promptly after such Borrower's receipt thereof. Lender
will apply amounts in the Ground Rent Escrow Account toward the purposes for
which such amounts are deposited therein. In connection with the making of any
payment from the Ground Rent Escrow Account, Lender may cause such payment to be
made according to any bill, statement or estimate submitted by the applicable
Borrower, without inquiry into the accuracy of such bill, statement or estimate.

                                       77



          Section 6.11. Account Collateral.

               (a) Each Borrower hereby grants a perfected first-priority
security interest in favor of Lender in and to the Account Collateral (other
than the Collection Account) as security for the Debt, together with all rights
of a secured party with respect thereto. Each Collateral Account shall be an
Eligible Account under the sole dominion and control of Lender and shall be in
the name of Borrowers, as pledgors, and Lender, as pledgee. Each Borrower shall
have no right to make withdrawals from any of the Collateral Accounts. Funds in
the Collateral Accounts shall not be commingled with any other monies at any
time. Each Borrower shall execute any additional documents that Lender in its
reasonable discretion may require and shall provide all other evidence
reasonably requested by Lender to evidence or perfect its first-priority
security interest in the Account Collateral (other than the Collection Account).

               (b) The insufficiency of amounts contained in the Collateral
Accounts shall not relieve any Borrower from its obligation to fulfill all
covenants contained in the Loan Documents.

               (c) During the continuance of an Event of Default, Lender may, in
its sole discretion, apply funds in the Collateral Accounts, and funds resulting
from the liquidation of Permitted Investments contained in the Collateral
Accounts, toward the payment of the Debt and/or toward the payment of Basic
Carrying Costs, Operating Expenses for the Mezzanine Properties or Capital
Expenditures in such sequence as Lender shall elect in its sole discretion.

          Section 6.12. Permitted Investments.

               (a) So long as no Event of Default shall be continuing, Borrowers
shall be permitted to direct the investment of the funds from time to time held
in the Collateral Accounts (other than the Collection Account) in Permitted
Investments and to sell or liquidate such Permitted Investments and reinvest
proceeds from such sale or liquidation in other Permitted Investments (but
Lender shall have no liability whatsoever in respect of any failure by the
Mezzanine Cash Management Bank to do so), with all such proceeds and
reinvestments to be held in the applicable Collateral Account; provided,
however, that the maturity of an adequate portion of the Permitted Investments
on deposit in the Collateral Accounts shall be no later than the Business Day
immediately preceding the date on which such funds are required to be withdrawn
therefrom pursuant to this Agreement, and provided further that Borrowers shall
remit into the applicable Collateral Account an amount equal to any losses
realized on Permitted Investments contained therein within five (5) Business
Days of the date of such loss. Funds in the Collection Account shall not be
invested. No Permitted Investment shall be liquidated at a loss at the direction
of any Borrower except to the extent necessary to make a required payment to
Lender on a Payment Date.

               (b) All income and gains from the investment of funds in the
Collateral Accounts shall be retained in the Collateral Accounts from which they
were derived. As between Borrowers and Lender, Borrowers shall treat all income,
gains and losses from the

                                       78



investment of amounts in the Collateral Accounts as its income or loss for
federal, state and local income tax purposes.

               (c) After the Debt has been paid in full, the Collateral Accounts
shall be closed and the balances therein, if any, shall be paid to Borrowers.

          Section 6.13. Bankruptcy.

          Each Borrower and Lender acknowledge and agree that upon the filing of
a bankruptcy petition by or against any Borrower under the Bankruptcy Code, the
Account Collateral and the Operating Income relating to the Borrowers or the
Mezzanine Properties (whether then already in the Collateral Accounts, or then
due or becoming due thereafter) shall be deemed not to be property of such
Borrower's bankruptcy estate within the meaning of Section 541 of the Bankruptcy
Code. However, if a court of competent jurisdiction determines that,
notwithstanding the foregoing characterization of the Account Collateral and the
Operating Income relating to the Borrowers or the Mezzanine Properties by any
Borrower and Lender, the Account Collateral and/or the Operating Income relating
to the Borrowers or the Mezzanine Properties do constitute property of such
Borrower's bankruptcy estate, then Borrowers and Lender further acknowledge and
agree that all such Operating Income relating to the Borrowers or the Mezzanine
Properties, whether due and payable before or after the filing of the petition,
are and shall be cash collateral of Lender. Each Borrower acknowledges that
Lender does not consent to any Borrower's use of such cash collateral and that,
in the event Lender elects (in its sole discretion) to give such consent, such
consent shall only be effective if given in writing signed by Lender. Except as
provided in the immediately preceding sentence, each Borrower shall not have the
right to use or apply or require the use or application of such cash collateral
(i) unless the applicable Borrower shall have received a court order authorizing
the use of the same, and (ii) the applicable Borrower shall have provided such
adequate protection to Lender as shall be required by the bankruptcy court in
accordance with the Bankruptcy Code.

          Section 6.14. Letters of Credit.

               (a) In lieu of making the payments to any of the Collateral
Accounts (other than the Debt Service or Operating Expense Reserve Account),
Borrowers may deliver to Lender a Letter of Credit in accordance with the
provisions of this Section. Additionally, Borrowers may deliver to Lender a
Letter of Credit in accordance with the provisions of this Section in lieu of
deposits previously made to the Collateral Accounts (other than the Debt Service
or Operating Expense Reserve Account). The aggregate amount of any Letter of
Credit and cash on deposit with respect to any of such Collateral Accounts shall
at all times be at least equal to the aggregate amount which each Borrower is
required to have on deposit in such Collateral Account pursuant to this
Agreement through the end of the calendar year in which the Letter of Credit is
delivered, as reasonably estimated by Lender (and in the case of Taxes and
Insurance Premiums in no event less than an amount equal to one year of
Insurance Premiums and estimated Taxes for the Mezzanine Properties). In
determining the aggregate amount of any Letter of Credit and cash required to be
delivered to Lender in respect of the Capital Expenditure Reserve Account, such
aggregate amounts shall equal all amounts required to be deposited

                                       79



hereunder through the end of the calendar year in which the Letter of Credit is
delivered, less amounts expended by any Borrower for Capital Expenditures for
which any Borrower has satisfied the conditions to withdrawal from the Capital
Expenditure Reserve Account. In the event that a Letter of Credit is delivered
in lieu of any deposits to the Tax and Insurance Reserve Account, Borrowers
shall be responsible for the payment of Taxes or Insurance Premiums for the
Mezzanine Properties, as applicable, and Lender shall not be responsible
therefor.

               (b) Borrowers shall give Lender no less than thirty (30) days
notice of a Borrower's election to deliver a Letter of Credit and Borrowers
shall pay to Lender all of Lender's reasonable out-of-pocket costs and expenses
in connection therewith. Each Borrower shall not be entitled to draw from any
such Letter of Credit. Upon thirty (30) days notice to Lender, a Borrower may
replace a Letter of Credit with a cash deposit to the applicable Collateral
Account if a Letter of Credit has been outstanding for more than six (6) months.
Prior to the return of a Letter of Credit, Borrowers shall deposit an amount
equal to the amount that would have accumulated in the applicable Collateral
Account and not been disbursed in accordance with this Agreement if such Letter
of Credit had not been delivered.

               (c) Each Borrower shall provide Lender with notice of any
increases in the annual payments for Taxes, Insurance Premiums, Capital
Expenditures or Ground Rent for any of the Mezzanine Properties thirty (30) days
prior to the effective date of any such increase and any applicable Letter of
Credit shall be increased by such increased amount at least ten (10) days prior
to the effective date of such increase.

          Section 6.15. Provisions Regarding Letters of Credit.

               6.15.1. Security for Debt. Each Letter of Credit delivered under
this Agreement shall be additional security for the payment of the Debt. Upon
the occurrence of a Default or an Event of Default, Lender shall have the right,
at its option, to draw on any Letter of Credit and to apply all or any part
thereof to the payment of the items for which such Letter of Credit was
established or to apply each such Letter of Credit to payment of the Debt in
such order, proportion or priority as Lender may determine. Any such application
to the Debt shall be subject to the Prepayment Premium.

               6.15.2. Additional Rights of Lender. In addition to any other
right Lender may have to draw upon a Letter of Credit pursuant to the terms and
conditions of this Agreement, Lender shall have the additional rights to draw in
full any Letter of Credit: (a) if Lender has received a notice from the issuing
bank that the Letter of Credit will not be renewed and a substitute Letter of
Credit is not provided at least thirty (30) days prior to the date on which the
outstanding Letter of Credit is scheduled to expire; (b) upon receipt of notice
from the issuing bank that the Letter of Credit will be terminated (except if
the termination of such Letter of Credit is permitted pursuant to the terms and
conditions of this Agreement or a substitute Letter of Credit is provided); or
(c) if the bank issuing the Letter of Credit shall cease to be an Eligible
Institution and any Borrower fails to deliver a replacement Letter of Credit
within ten (10) days of the date that the issuing bank is no longer an Eligible
Institution. Notwithstanding anything to the contrary contained in the above,
Lender is not obligated to draw any Letter of Credit upon the

                                       80



happening of an event specified in (a), (b) or (c) above and shall not be liable
for any losses sustained by any Borrower due to the insolvency of the bank
issuing the Letter of Credit if Lender has not drawn the Letter of Credit.

                        ARTICLE VII. PROPERTY MANAGEMENT

          Section 7.1. The Management Agreement.

          Each Property Borrower shall cause Manager to manage the Mezzanine
Properties in accordance in all material respects with the Management Agreement.
Each Property Borrower shall (i) diligently perform and observe in all material
respects all of the terms, covenants and conditions of the Management Agreement
on the part of such Property Borrower to be performed and observed (ii) promptly
notify Lender of any default by Manager under the provisions of the Management
Agreement and (iii) promptly notify Lender of any notice to any Property
Borrower of any default by such Property Borrower in the performance or
observance of any of the terms, covenants or conditions of the Management
Agreement on the part of such Property Borrower to be performed and observed. If
any Property Borrower shall default in the performance or observance of any
material term, covenant or condition of the Management Agreement on the part of
such Property Borrower to be performed or observed, then, without limiting
Lender's other rights or remedies under this Agreement or the other Loan
Documents, and without waiving or releasing any Property Borrower from any of
its obligations hereunder or under the Management Agreement, Lender shall have
the right, but shall be under no obligation, to pay any sums and to perform any
act as may be appropriate to cause all the material terms, covenants and
conditions of the Management Agreement on the part of any Property Borrower to
be performed or observed. Each Equity Borrower shall cause the related Mortgage
Borrowers to comply with terms and provisions of Article VII of the Mortgage
Loan Agreement.

          Section 7.2. Prohibition Against Termination or Modification.

          No Property Borrower shall surrender, terminate, cancel, amend,
modify, renew or extend the Management Agreement, or enter into any other
agreement relating to the management or operation of any Mezzanine Property with
Manager or any other Person, or consent to the assignment by Manager of its
interest under the Management Agreement, in each case without the express
consent of Lender, which consent may be granted or denied in Lender's sole
discretion; provided, however, with respect to a new manager such consent may be
conditioned upon delivering a Rating Agency Confirmation as to such new manager
and management agreement. If at any time Lender consents to the appointment of a
new manager, such new manager and Borrowers shall, as a condition of Lender's
consent, execute a subordination of management agreement in the form then used
by Lender. The management fees and other fees reserved under the Management
Agreement shall not exceed in the aggregate the prevailing rate for properties
of comparable size, quality and tenant mix in the market in which the Mezzanine
Properties are located. In no event shall such fees exceed seven percent (7%) of
the Operating Income for the applicable Mezzanine Property.

                                       81



          Section 7.3. Replacement of Manager.

          Lender shall have the right to require the Property Borrowers to
terminate the Management Agreement and to replace the Manager with a Person
chosen by the Property Borrowers and approved by Lender, upon the occurrence of
any one or more of the following events: (i) at any time following the
occurrence of an Event of Default, (ii) if Manager shall be in default under the
Management Agreement or the Assignment of Management Agreement beyond any
applicable notice and cure period, (iii) if at any time Manager has engaged in
gross negligence, malfeasance, fraud or willful misconduct and (iv) if the Debt
Service Coverage Ratio is less than 1.25:1.00.

                             ARTICLE VIII. TRANSFERS

          Section 8.1. Transfer of the Properties and Collateral.

          Each Borrower may not transfer, and each Equity Borrower may not
permit any Mortgage Borrower to transfer, any of the Properties to another party
(i) unless Lender shall have consented in writing to such transfer which consent
may be granted or denied in Lender's sole discretion, (ii) after a
Securitization has occurred, Rating Agency Confirmation is obtained, (iii)
acceptable opinions relating to such transfer shall have been delivered by
Borrowers to Lender and to the Rating Agencies (including without limitation tax
and non-consolidation opinions), (iv) the transferee assumes in writing all
obligations of the transferor under the Loan Documents and executes and delivers
such other documentation as may be required by Lender or the Rating Agencies,
(v) Borrowers pay an assumption fee equal to one half of one percent (.5%) of
the Loan Amount and (vi) Borrowers pay all reasonable expenses incurred by
Lender in connection with such transfer. Each Equity Borrower shall not Transfer
any of its interests in the Collateral without the prior written consent of the
Lender which may be granted or denied in its sole consent.

          Section 8.2. Transfer of Equity Interests.

          Any transfer of any direct or indirect equity interests in any
Borrower shall be prohibited unless (i) Lender shall have consented in writing
to such transfer or transfers which may be granted or denied in Lender's sole
discretion, (ii) Rating Agency Confirmation is obtained, (iii) acceptable
opinions relating to such transfer or transfers shall have been delivered by
Borrowers to Lender and the Rating Agencies (including, without limitation, tax
and non-consolidation opinions), and (iv) Borrowers pay all reasonable expenses
incurred by Lender in connection with such transfer or transfers.
Notwithstanding the foregoing, transfers of interests in the Parent which do not
constitute a Change of Control (as defined in the Master Guaranty) to the extent
permitted under the Master Guaranty shall be permitted hereunder.

          Section 8.3. Lender's Consent Rights.

          Lender shall not be required to demonstrate any actual impairment of
its security or any increased risk of default hereunder in order to declare the
Debt immediately due and

                                       82



payable upon a Transfer without Lender's consent. This provision shall apply to
every Transfer, other than any Transfer permitted pursuant to Sections 8.1 and
8.2, regardless of whether voluntary or not, or whether or not Lender has
consented to any previous Transfer.

                 ARTICLE IX. SALE AND SECURITIZATION OF MORTGAGE

          Section 9.1. Sale of Mortgages and Securitization.

               (a) Lender shall have the right (i) to sell or otherwise transfer
the Loan or any portion thereof as a whole loan, (ii) to sell participation
interests in the Loan or (iii) to securitize the Loan or any portion thereof in
a single asset securitization or a pooled loan securitization. (The transaction
referred to in clauses (i), (ii) and (iii) shall hereinafter be referred to
collectively as "Secondary Market Transactions" and the transactions referred to
in clause (iii) shall hereinafter be referred to as a "Securitization." Any
certificates, notes or other securities issued in connection with a
Securitization are hereinafter referred to as "Securities").

               (b) If requested by Lender, each Borrower shall assist Lender in
satisfying the market standards to which Lender customarily adheres or which may
be reasonably required in the marketplace or by the Rating Agencies in
connection with any Secondary Market Transactions, including, without
limitation, to:

                    (i) (A) provide updated financial and other information with
     respect to the Properties, the business operated at the Properties, each
     Borrower, each Mortgage Borrower and the Managers, (B) provide updated
     budgets relating to the Properties and (C) provide updated appraisals,
     market studies, environmental assessments (Phase I's and, if appropriate,
     Phase II's), property condition reports and other due diligence
     investigations of the Properties (the "Updated Information"), together, if
     customary, with appropriate verification of the Updated Information through
     letters of auditors or opinions of counsel acceptable to Lender and the
     Rating Agencies;

                    (ii) provide opinions of counsel, which may be relied upon
     by Lender, the Rating Agencies and their respective counsel, agents and
     representatives, as to non-consolidation or any other opinion customary in
     Secondary Market Transactions or required by the Rating Agencies with
     respect to the Properties and Borrowers and Affiliates, which counsel and
     opinions shall be satisfactory to Lender and the Rating Agencies;

                    (iii) provide updated, as of the closing date of the
     Secondary Market Transaction, representations and warranties made in the
     Loan Documents and such additional representations and warranties as the
     Rating Agencies may require; and

                    (iv) execute amendments to the Loan Documents and any
     Borrower's organizational documents reasonably requested by Lender;
     provided, however, that such Borrower shall not be required to modify or
     amend any Loan Document if such modification or amendment would (A) change
     the interest rate, the

                                       83



     stated maturity or the amortization of principal as set forth herein or in
     the Note, or (B) modify or amend any other material economic term of the
     Loan.

               (c) Each Borrower acknowledges that the Loan may be further
divided into two or more separate notes (or components) that correspond to one
or more tranches of certificates created in a Securitization and each Borrower
agrees to cooperate with Lender in connection therewith. Such notes or note
components may be assigned different interest rates, so long as the weighted
average of such interest rates equals the applicable Interest Rate; provided,
that each Borrower recognizes that, in the case of partial prepayments
associated with principal reduction funded from Net Proceeds, the application of
amounts to principal following an Event of Default under the Loan, or any other
prepayment of a portion of the Loan by any Borrower, the weighted average
interest rate of the Loan may increase because principal may be applied
sequentially, starting with the most senior tranche of certificates. In
addition, each Borrower acknowledges and agrees that Lender shall have the right
to split the Note into an "A" note and a "B" note and each Borrower agrees to
cooperate with Lender in connection therewith in connection with the foregoing
so long as the weighted average interest rate of the "A" note and the "B" note
equals the applicable Interest Rate; provided, that each Borrower recognizes
that, in the case of partial prepayments associated with principal reduction
funded from Net Proceeds, the application of amounts to principal following an
Event of Default under the Loan, or any other prepayment of a portion of the
Loan by any Borrower, the weighted average interest rate of the Loan may
increase because in certain circumstances principal may be applied sequentially
to the "A" and the "B" note.

          Section 9.2. Securitization Indemnification.

               (a) Each Borrower understands that information provided to Lender
by any Borrower and its agents, counsel and representatives may be included in
disclosure documents in connection with the Securitization, including, without
limitation, an offering circular, a prospectus, prospectus supplement, private
placement memorandum or other offering document (each, an "Disclosure Document")
and may also be included in filings with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the "Securities Act"), or
the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and
may be made available to investors or prospective investors in the Securities,
the Rating Agencies, and service providers relating to the Securitization.

               (b) Upon request, each Borrower shall provide in connection with
each of (i) a preliminary and a final private placement memorandum or (ii) a
preliminary and final prospectus or prospectus supplement, as applicable, an
agreement (A) certifying that each Borrower has examined such Disclosure
Documents specified by Lender and that each such Disclosure Document, as it
relates to each Borrower, Borrower Affiliates, the Properties, Manager and all
other aspects of the Loan (the "Relevant Material"), does not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made, in the light of the circumstances under which they
were made, not misleading, (B) indemnifying Lender (and for purposes of this
Section 9.2, Lender hereunder shall include its

                                       84



officers and directors and each Person that controls Lender within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act,
collectively, the "Ventas Group"), the party that has filed the registration
statement relating to the Securitization (the "Registration Statement"), each of
its directors, each of its officers who have signed the Registration Statement
and each Person that controls such party within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act (collectively, the "Underwriter
Group") for any losses, claims, damages or liabilities (collectively, the
"Liabilities") to which Lender, Ventas Group or the Underwriter Group may become
subject insofar as the Liabilities arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Relevant Material or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated in the Relevant
Material or necessary in order to make the statements in the Relevant Material,
in light of the circumstances under which they were made, not misleading and (C)
agreeing to reimburse Lender, the Ventas Group and/or the Underwriter Group for
any legal or other expenses reasonably incurred by Lender, the Ventas Group and
the Underwriter Group in connection with investigating or defending the
Liabilities; provided, however, that each Borrower will be liable in any such
case under clauses (B) or (C) above only to the extent that any such loss claim,
damage or liability arises out of or is based upon any such untrue statement or
omission made therein in reliance upon and in conformity with information
furnished to Lender by or on behalf of any Borrower in connection with the
preparation of the Disclosure Document or in connection with the underwriting or
closing of the Loan, including, without limitation, financial statements of any
Borrower, operating statements, rent rolls, appraisals, market studies,
environmental site assessment reports and property condition reports with
respect to the Properties. This indemnity will be in addition to any liability
which any Borrower may otherwise have.

               (c) In connection with Exchange Act Filings, each Borrower shall
(i) indemnify Lender, the Ventas Group and the Underwriter Group for Liabilities
to which Lender, the Ventas Group or the Underwriter Group may become subject
insofar as the Liabilities arise out of or are based upon the omission or
alleged omission to state in the Disclosure Document a material fact required to
be stated in the Disclosure Document in order to make the statements in the
Disclosure Document, in light of the circumstances under which they were made,
not misleading and (ii) reimburse Lender, the Ventas Group or the Underwriter
Group for any legal or other expenses reasonably incurred by Lender, the Ventas
Group or the Underwriter Group in connection with defending or investigating the
Liabilities.

               (d) Promptly after receipt by an indemnified party under this
Section 9.2 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 9.2, notify the indemnifying party in writing of the
commencement thereof, but the omission to so notify the indemnifying party will
not relieve the indemnifying party from any liability which the indemnifying
party may have to any indemnified party hereunder except to the extent that
failure to notify causes prejudice to the indemnifying party. In the event that
any action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled, jointly with any other indemnifying party, to

                                       85



participate therein and, to the extent that it (or they) may elect by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party. After notice from the
indemnifying party to such indemnified party under this Section 9.2, such
indemnified party shall pay for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation; provided, however, if the defendants in
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there are any
legal defenses available to it and/or other indemnified parties that are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assert such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party at the cost of the indemnifying
party. The indemnifying party shall not be liable for the expenses of more than
one separate counsel unless an indemnified party shall have reasonably concluded
that there may be legal defenses available to it that are different from or
additional to those available to another indemnified party.

               (e) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 9.2(b) or
(c) is for any reason held to be unenforceable as to an indemnified party in
respect of any losses, claims, damages or liabilities (or action in respect
thereof) referred to therein which would otherwise be indemnifiable under
Section 9.2(b) or (c), the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such losses, claims,
damages or liabilities (or action in respect thereof); provided, however, that
no Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation. In determining the
amount of contribution to which the respective parties are entitled, the
following factors shall be considered: (i) the applicable indemnified party's
and each Borrower's relative knowledge and access to information concerning the
matter with respect to which the claim was asserted; (ii) the opportunity to
correct and prevent any statement or omission; and (iii) any other equitable
considerations appropriate in the circumstances. Lender and each Borrower hereby
agree that it would not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation.

               (f) The liabilities and obligations of both Borrowers and Lender
under this Section 9.2 shall survive the termination of this Agreement and the
satisfaction and discharge of the Debt.

                               ARTICLE X. DEFAULTS

          Section 10.1. Event of Default.

               (a) Each of the following events shall constitute an event of
default hereunder (an "Event of Default"):

                                       86



                    (i) if any portion of the Debt is not paid when due or if
     any Borrower fails to pay any other amount payable pursuant to this
     Agreement (including, without limitation, any deposits or payments to the
     Collateral Accounts) or any other Loan Document when due and payable in
     accordance with the provisions hereof or thereof, as the case may be;

                    (ii) subject to Borrowers' right to contest Taxes and Other
     Charges pursuant to Section 4.1.2 and provided Borrower is complying with
     the terms of such Section, if any of the Taxes or Other Charges are not
     paid when due;

                    (iii) if the Policies are not kept in full force and effect;

                    (iv) if any Borrower breaches or permits or suffers a breach
     of Article 6 of any Mortgage;

                    (v) if any representation or warranty made by any Borrower
     herein or in any other Loan Document, or in any report, certificate,
     financial statement or other instrument, agreement or document furnished to
     Lender shall have been false or misleading in any material respect as of
     the date the representation or warranty was made;

                    (vi) if any Borrower shall make an assignment for the
     benefit of creditors;

                    (vii) if a receiver, liquidator or trustee shall be
     appointed for any Borrower or if any Borrower shall be adjudicated a
     bankrupt or insolvent, or if any petition for bankruptcy, reorganization or
     arrangement pursuant to federal bankruptcy law, or any similar federal or
     state law, shall be filed by or against, consented to, or acquiesced in by,
     any Borrower, or if any proceeding for the dissolution or liquidation of
     any Borrower shall be instituted; provided, however, if such appointment,
     adjudication, petition or proceeding was involuntary and not consented to
     by any Borrower, upon the same not being discharged, stayed or dismissed
     within thirty (30) days;

                    (viii) if any Borrower attempts to assign its rights under
     this Agreement or any of the other Loan Documents or any interest herein or
     therein in contravention of the Loan Documents;

                    (ix) if any Borrower breaches any representation, warranty
     or covenant contained in the Pledge Agreement;

                    (x) if any Borrower breaches any representation, warranty or
     covenant contained in Section 3.1.24 hereof or if any Borrower is not a
     Single-Purpose Entity or if any provision of any organizational document of
     any Borrower is amended or modified in any respect without the prior
     written consent of Lender;

                                       87



                    (xi) if any Borrower shall continue to be in Default under
     any of the other terms, covenants or conditions of this Agreement not
     specified in subsections (i) to (x) above, for ten (10) days after notice
     to any Borrower from Lender, in the case of any Default which can be cured
     by the payment of a sum of money, or for thirty (30) days after notice from
     Lender in the case of any other Default; provided, however, that if such
     non-monetary Default is susceptible of cure but cannot reasonably be cured
     within such 30-day period and provided further that a Borrower shall have
     commenced to cure such Default within such 30-day period and thereafter
     diligently and expeditiously proceeds to cure the same, such 30-day period
     shall be extended for such time as is reasonably necessary for such
     Borrower in the exercise of due diligence to cure such Default, such
     additional period not to exceed sixty (60) days;

                    (xii) if there shall be default under any of the other Loan
     Documents beyond any applicable cure periods contained in such Loan
     Documents, whether as to any Borrower or any of the Properties, or if any
     other such event shall occur or condition shall exist, if the effect of
     such event or condition is to accelerate the maturity of any portion of the
     Debt or to permit Lender to accelerate the maturity of all or any portion
     of the Debt;

                    (xiii) if any Guarantor breaches any covenant, warranty or
     representation contained in any Loan Document to which it is a party,
     including, but not limited to, the Master Guaranty and Master Guaranty
     Pledge which is not remedied within any grace period; or

                    (xiv) if any Borrower breaches any of the terms of: Section
     2.4.2(b) (Mandatory Prepayments/Liquidation Events), Section 4.1.14
     (Special Distributions), Section 4.2.1 (Due on Sale and Encumbrance),
     Section 4.2.2 (Liens), Section 4.2.3 (Issuance of Equity Interests) or
     Section 4.2.14 (Limitations on Distributions), Section 4.2.15 (Other
     Limitations);

                    (xv) if a final unappealable determination shall have been
     made by any applicable Governmental Authority of any Borrower's
     non-compliance with material Legal Requirements applicable to any Mezzanine
     Property, or of the revocation of any material license, permit or approval
     required for the lawful operation of any Mezzanine Property, or any other
     circumstances under which any Borrower is required by a final unappealable
     determination of any such Governmental Authority to cease operations of
     such Mezzanine Property as a Nursing Facility, Assisted Living Facility or
     Specialty Hospital, in each case as described on the attached Schedule III
     (as such Schedule may be amended to show any change of use of any
     Property);

                    (xvi) intentionally deleted;

                    (xvii) if there is a reduction in the number of licensed
     beds or a change in the type of licensed beds for any Mezzanine Property in
     violation of the requirements of this Agreement; or

                                       88



                    (xviii) if any Borrower shall fail to correct, within the
     time deadlines set by any Medicare, Medicaid, health, reimbursement,
     licensing or similar agency, any deficiency that justifies either of the
     following actions by such agency with respect to any Mezzanine Property and
     such agency commences either of the following actions:

                         (1)  a termination of any Medicare contract, Medicaid
                              contract or Regulatory Permit;

                         (2)  a ban on new admissions generally or on admission
                              of patients otherwise qualifying for Medicaid or
                              Medicare coverage which ban is not lifted within
                              sixty (60) days or as to which a Borrower fails to
                              file a plan of correction within ten (10) days of
                              such loan;

                    (xix) if any Mezzanine Property is assessed material fines
     or penalties by any state or any Medicare, Medicaid, health, reimbursement,
     licensing or similar agency having jurisdiction over any Borrower or any
     Mezzanine Property;

                    (xx) except as may be permitted pursuant to this Agreement,
     as to each Mezzanine Property, if any Borrower ceases to operate, or
     changes the use of, such Mezzanine Property as or from a Nursing Facility,
     Assisted Living Facility or Rehabilitation Hospital in each case as
     described on the attached Schedule III (as such Schedule may be amended to
     show any change of use of any Property) or terminates such business for any
     reason whatsoever (other than a temporary cessation in connection with any
     renovations);

                    (xxi) if, with respect to any Mezzanine Property, any
     Governmental Authority (a) makes a substandard quality of care
     determination regarding such Mezzanine Property which determination is not
     corrected in sixty (60) days (or if incapable of being cured within such
     sixty (60) days period, within one hundred twenty (120) days provided
     Borrowers are taking all appropriate actions to correct such
     determination); (b) makes a determination that such Mezzanine Property is
     not in substantial compliance with any applicable regulatory requirements
     which determination is not corrected in sixty (60) days (or if incapable of
     being cured within such sixty (60) days period, within one hundred twenty
     (120) days, provided Borrowers are taking all appropriate actions to
     correct such determination); (c) designates any portion of such Mezzanine
     Property or the entirety of such Mezzanine Property as part of a "poor
     performing chain"; (d) cites deficiencies at the scope or severity of "G",
     "H" or higher with respect to such Mezzanine Property and for which no plan
     of correction is in place within ten (10) days of receipt of such
     deficiency statement; (e) cites deficiencies at the scope and severity of
     "G", "H" or higher with respect to such Mezzanine Property for which a plan
     of correction has been filed but not approved by such Governmental
     Authority, with such designation, determination or action continuing
     unremedied for a

                                       89



     period of sixty (60) days (or if incapable of being cured within such sixty
     (60) days period, within one hundred twenty (120) days, provided Borrowers
     are taking all appropriate actions to correct such determination) or (ten
     (10) days for immediate jeopardy deficiencies) following any Borrower's
     first receipt of notice of such designation, determination or action; or
     (f) takes adverse regulatory action with respect to such Mezzanine
     Property, including, without limitation, the imposing of civil money
     penalties, with such designation, determination or action continuing
     unremedied for a period of sixty (60) days (or if incapable of being cured
     within such sixty (60) days period, within one hundred twenty (120) days,
     provided Borrowers are taking all appropriate actions to correct such
     determination) or (ten (10) days for immediate jeopardy deficiencies)
     following any Borrower's receipt of notice of such designation,
     determination or action;

                    (xxii) if any relevant Borrower shall default beyond any
     applicable grace period in the payment of any rent, additional rent or
     other charge payable under any Ground Lease; or any relevant Borrower shall
     default in the observance or performance of any other term, covenant or
     condition of such Ground Lease and such default is not cured prior to the
     expiration of any applicable grace period provided therein; or any event
     shall occur that would cause any Ground Lease to terminate or would entitle
     the ground lessor thereunder to terminate such Ground Lease and the term
     thereof by giving notice to any relevant Borrower; or the leasehold estate
     created by any Ground Lease shall be surrendered or such Ground Lease shall
     be terminated or cancelled for any reason or under any circumstance
     whatsoever; or any term of such Ground Lease shall be modified or
     supplemented without Lender's consent; or

                    (xxiii) any "Event of Default" under the Mortgage Loan
     Documents.

               (b) Upon the occurrence of an Event of Default (other than an
Event of Default described in clauses (vi), (vii) or (viii) above) and at any
time thereafter Lender may, in addition to any other rights or remedies
available to it pursuant to this Agreement and the other Loan Documents or at
law or in equity, take such action, without notice or demand, that Lender deems
advisable to protect and enforce its rights against any Borrower and in and to
any or all of the Properties, including, without limitation, declaring the Debt
to be immediately due and payable, and Lender may enforce or avail itself of any
or all rights or remedies provided in the Loan Documents and may exercise all
the rights and remedies of a secured party under the Uniform Commercial Code
where any of the Collateral is located, against any Borrower and any or all of
the Mezzanine Properties and Collateral, including, without limitation, all
rights or remedies available at law or in equity; and upon any Event of Default
described in clauses (vi), (vii) or (viii) above, the Debt and all other
obligations of each Borrower hereunder and under the other Loan Documents shall
immediately and automatically become due and payable, without notice or demand,
and each Borrower hereby expressly waives any such notice or demand, anything
contained herein or in any other Loan Document to the contrary notwithstanding.

                                       90



          Section 10.2. Remedies.

               (a) Upon the occurrence and during the continuance of an Event of
Default, all or any one or more of the rights, powers, privileges and other
remedies available to Lender against any Borrower under this Agreement or any of
the other Loan Documents executed and delivered by, or applicable to, any
Borrower or at law or in equity may be exercised by Lender at any time and from
time to time, whether or not all or any of the Debt shall be declared due and
payable, and whether or not Lender shall have commenced any foreclosure
proceeding or other action for the enforcement of its rights and remedies under
any of the Loan Documents with respect to any or all of the Mezzanine Properties
and Collateral. Any such actions taken by Lender shall be cumulative and
concurrent and may be pursued independently, singly, successively, together or
otherwise, at such time and in such order as Lender may determine in its sole
discretion, to the fullest extent permitted by law, without impairing or
otherwise affecting the other rights and remedies of Lender permitted by law,
equity or contract or as set forth herein or in the other Loan Documents.
Without limiting the generality of the foregoing, if an Event of Default is
continuing (i) Lender is not subject to any "one action" or "election of
remedies" law or rule to the face extent allowed by applicable law, and (ii) all
liens and other rights, remedies or privileges provided to Lender shall remain
in full force and effect until Lender has exhausted all of its remedies against
the Mezzanine Properties and Collateral and each Mortgage has been foreclosed,
sold and/or otherwise realized upon in satisfaction of the Debt or the Debt has
been paid in full.

               (b) Upon the occurrence and during the continuance of an Event of
Default, Lender shall have the right from time to time to partially foreclose
the Mortgages or the Pledge Agreement in any manner and for any amounts secured
by the Mortgages and Pledge Agreement then due and payable as determined by
Lender in its sole discretion including, without limitation, the following
circumstances: (i) in the event any Borrower defaults beyond any applicable
grace period in the payment of one or more scheduled payments of principal and
interest, Lender may foreclose one or more of the Mortgages and Pledge Agreement
to recover such delinquent payments, or (ii) in the event Lender elects to
accelerate less than the entire outstanding principal balance of the Loan,
Lender may foreclose one or more the Mortgages and Pledge Agreement to recover
so much of the principal balance of the Loan as Lender may accelerate and such
other sums secured by one or more of the Mortgages and Pledge Agreement as
Lender may elect. Notwithstanding one or more partial foreclosures, the
Mezzanine Properties and Collateral shall remain subject to the Mortgages and
Pledge Agreement, respectively, to secure payment of sums secured by the
Mortgages and not previously recovered.

               (c) Upon the occurrence and during the continuance of an Event of
Default, Lender shall have the right from time to time to sever the Note and the
other Loan Documents into one or more separate notes, mortgages and other
security documents (the "Severed Loan Documents") in such denominations as
Lender shall determine in its sole discretion for purposes of evidencing and
enforcing its rights and remedies provided hereunder. Each Borrower shall
execute and deliver to Lender from time to time, promptly after the request of
Lender, a severance agreement and such other documents as Lender shall request
in order to

                                       91



effect the severance described in the preceding sentence, all in form and
substance reasonably satisfactory to Lender. Each Borrower hereby absolutely and
irrevocably appoints Lender as its true and lawful attorney, coupled with an
interest, in its name and stead to make and execute all documents necessary or
desirable to effect the aforesaid severance, each Borrower ratifying all that
its said attorney shall do by virtue thereof; provided, however, Lender shall
not make or execute any such documents under such power until three (3) days
after notice has been given to any Borrower by Lender of Lender's intent to
exercise its rights under such power. Except as may be required in connection
with a Securitization pursuant to Section 9.1 hereof, (i) each Borrower shall
not be obligated to pay any costs or expenses incurred in connection with the
preparation, execution, recording or filing of the Severed Loan Documents, and
(ii) the Severed Loan Documents shall not contain any representations,
warranties or covenants not contained in the Loan Documents and any such
representations and warranties contained in the Severed Loan Documents will be
given by each Borrower only as of the Closing Date.

               (d) Any amounts recovered from the Mezzanine Properties, the
Collateral or any other collateral for the Loan after an Event of Default may be
applied by Lender toward the payment of any interest and/or principal of the
Loan and/or any other amounts due under the Loan Documents in such order,
priority and proportions as Lender in its sole discretion shall determine.

          Section 10.3. Remedies Cumulative.

          The rights, powers and remedies of Lender under this Agreement shall
be cumulative and not exclusive of any other right, power or remedy which Lender
may have against any Borrower pursuant to this Agreement or the other Loan
Documents, or existing at law or in equity or otherwise. Lender's rights, powers
and remedies may be pursued singly, concurrently or otherwise, at such time and
in such order as Lender may determine in Lender's sole discretion. No delay or
omission to exercise any remedy, right or power accruing upon an Event of
Default shall impair any such remedy, right or power or shall be construed as a
waiver thereof, but any such remedy, right or power may be exercised from time
to time and as often as may be deemed expedient. A waiver of one Default or
Event of Default with respect to any Borrower shall not be construed to be a
waiver of any subsequent Default or Event of Default by any Borrower or to
impair any remedy, right or power consequent thereon.

                            ARTICLE XI. MISCELLANEOUS

          Section 11.1. Successors and Assigns.

          All covenants, promises and agreements in this Agreement, by or on
behalf of any Borrower, shall inure to the benefit of the legal representatives,
successors and assigns of Lender.

                                       92



          Section 11.2. Lender's Discretion.

          Whenever pursuant to this Agreement Lender exercises any right given
to it to approve or disapprove, or any arrangement or term is to be satisfactory
to Lender, the decision of Lender to approve or disapprove or to decide whether
arrangements or terms are satisfactory or not satisfactory shall (except as is
otherwise specifically herein provided) be in the sole discretion of Lender and
shall be final and conclusive. Prior to a Securitization, whenever pursuant to
this Agreement the Rating Agencies are given any right to approve or disapprove,
or any arrangement or term is to be satisfactory to the Rating Agencies, the
decision of Lender to approve or disapprove or to decide whether arrangements or
terms are satisfactory or not satisfactory, based upon Lender's determination of
Rating Agency criteria, shall be substituted therefore.

          Section 11.3. Governing Law.

               (a) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, AND
MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND THE
PROCEEDS OF THE NOTE DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF
NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE
PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS,
INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH
STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT LAWS) AND ANY APPLICABLE LAW OF
THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE
CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS
CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS SHALL BE
GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE
APPLICABLE PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT
PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL
GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS AND
ALL OF THE OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT
PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY
CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT
AND THE NOTE, AND THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401
OF THE NEW YORK GENERAL OBLIGATIONS LAW.

                                       93



               (b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR
BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY AT LENDER'S OPTION BE
INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW
YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND
BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE
AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT,
ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT:

          CT CORPORATION SYSTEM
          111 EIGHTH AVENUE
          NEW YORK, NEW YORK  10011

AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE
MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN
EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER, IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT
NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II)
MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT
WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE
DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL
PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN
OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.

          Section 11.4. Modification, Waiver in Writing.

          No modification, amendment, extension, discharge, termination or
waiver of any provision of this Agreement or of any other Loan Document, nor
consent to any departure by any Borrower therefrom, shall in any event be
effective unless the same shall be in a writing signed by the party against whom
enforcement is sought, and then such waiver or consent shall be effective only
in the specific instance, and for the purpose, for which given. Except as
otherwise expressly provided herein, no notice to, or demand on any Borrower,
shall entitle any Borrower to any other or future notice or demand in the same,
similar or other circumstances.

                                       94



          Section 11.5. Delay Not a Waiver.

          Neither any failure nor any delay on the part of Lender in insisting
upon strict performance of any term, condition, covenant or agreement, or
exercising any right, power, remedy or privilege hereunder, or under any other
Loan Document, shall operate as or constitute a waiver thereof, nor shall a
single or partial exercise thereof preclude any other future exercise, or the
exercise of any other right, power, remedy or privilege. In particular, and not
by way of limitation, by accepting payment after the due date of any amount
payable under this Agreement or any other Loan Document, Lender shall not be
deemed to have waived any right either to require prompt payment when due of all
other amounts due under this Agreement or the other Loan Documents, or to
declare a default for failure to effect prompt payment of any such other amount.

          Section 11.6. Notices.

          All notices, demands, requests, consents, approvals or other
communications (any of the foregoing, a "Notice") required, permitted, or
desired to be given hereunder shall be in writing sent by telefax (with answer
back acknowledged) or by registered or certified mail, postage prepaid, return
receipt requested, or delivered by hand or reputable overnight courier addressed
to the party to be so notified at its address hereinafter set forth, or to such
other address as such party may hereafter specify in accordance with the
provisions of this Section 11.6. Notice to any Borrower shall be deemed notice
as to all Borrowers and the Lender shall not be required to deliver any Notice
to all Borrowers as long as such Notice is delivered to any one Borrower. Any
Notice shall be deemed to have been received: (a) three (3) days after the date
such Notice is mailed, (b) on the date of sending by telefax if sent during
business hours on a Business Day (otherwise on the next Business Day), (c) on
the date of delivery by hand if delivered during business hours on a Business
Day (otherwise on the next Business Day), and (d) on the next Business Day if
sent by an overnight commercial courier, in each case addressed to the parties
as follows:

          If to Lender:           Ventas Realty, Limited Partnership
                                  c/o Ventas, Inc.
                                  4360 Brownsboro Road, Suite 115
                                  Louisville, Kentucky 40207
                                  Attention:  Chief Financial Officer
                                  Facsimile No. (502)-357-9001

          with a copy to:         Ventas Realty, Limited Partnership
                                  c/o Ventas, Inc.
                                  4360 Brownsboro Road, Suite 115
                                  Louisville, Kentucky 40207
                                  Attention:  General Counsel
                                  Facsimile No. (502)-357-9001

                                  95



          with a copy to:         Dechert
                                  4000 Bell Atlantic Tower
                                  1717 Arch Street
                                  Philadelphia, Pennsylvania  19103
                                  Attention: David W. Forti
                                  Facsimile No. (215) 994-2222

          If to a Borrower:       c/o Trans Healthcare, Inc.
                                  4660 Trindle Road, Suite 103
                                  Camp Hill, Pennsylvania 17011
                                  Attention:  Anthony Misitano
                                  Facsimile No. (717) 730-8722

          with a copy to:         Latsha Davis & Yohe, P.C.
                                  4720 Old Gettysburg Road, Suite 101
                                  Harrisburg, Pennsylvania 17108
                                  Attention:  Douglas C. Yohe
                                  Facsimile No. (717) 761-2286

          Section 11.7. Waiver of Right to Trial by Jury.

          BORROWER AND LENDER EACH HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF
ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY
TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO
THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN
CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY
AND VOLUNTARILY BY BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE. BORROWER AND LENDER ARE EACH HEREBY AUTHORIZED TO
FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS
WAIVER.

          Section 11.8. Headings.

          The Article and/or Section headings and the Table of Contents in this
Agreement are included herein for convenience of reference only and are not to
be construed as defining or limiting the scope or intent of the provisions
hereof.

          Section 11.9. Severability.

          Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the

                                       96



extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.

          Section 11.10. Preferences.

          Lender shall have the continuing and exclusive right to apply or
reverse and reapply any and all payments by any Borrower to any portion of the
obligations of any Borrower hereunder. To the extent any Borrower makes a
payment or payments to Lender, which payment or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds received, the obligations hereunder or
part thereof intended to be satisfied shall be revived and continue in full
force and effect, as if such payment or proceeds had not been received by
Lender.

          Section 11.11. Waiver of Notice.

          To the extent permitted by applicable law, each Borrower shall not be
entitled to any notices of any nature whatsoever from Lender except with respect
to matters for which this Agreement or the other Loan Documents specifically and
expressly provide for the giving of notice by Lender to a Borrower and except
with respect to matters for which any Borrower is not, pursuant to applicable
Legal Requirements, permitted to waive the giving of notice to the full extent
permitted by applicable law. Each Borrower hereby expressly waives the right to
receive any notice from Lender with respect to any matter for which this
Agreement or the other Loan Documents do not specifically and expressly provide
for the giving of notice by Lender to a Borrower.

          Section 11.12. Remedies of Borrower.

          In the event that a claim or adjudication is made that Lender or its
agents have acted unreasonably or unreasonably delayed acting in any case where,
by law or under this Agreement or the other Loan Documents, Lender or such
agent, as the case may be, has an obligation to act reasonably or promptly,
neither Lender nor its agents shall be liable for any monetary damages, and a
Borrower's sole remedy shall be limited to commencing an action seeking
injunctive relief or declaratory judgment. Any action or proceeding to determine
whether Lender has acted reasonably shall be determined by an action seeking
declaratory judgment. Any expedited procedure legally available with such a
declaratory judgment action or action for injunctive relief may be utilized to
the extent possible.

          Section 11.13. Expenses; Indemnity.

               (a) Each Borrower shall pay or, if any Borrower fails to pay,
reimburse Lender upon receipt of notice from Lender, for all reasonable costs
and expenses (including reasonable attorneys' fees and disbursements) incurred
by Lender in connection with (i) any Borrower's ongoing performance of and
compliance with any Borrower's agreements and

                                       97



covenants contained in this Agreement, the Cooperation Agreement and the other
Loan Documents on its part to be performed or complied with after the Closing
Date, including, without limitation, confirming compliance with environmental
and insurance requirements; (ii) Lender's ongoing performance of and compliance
with all agreements and covenants contained in this Agreement and the other Loan
Documents on its part to be performed or complied with after the Closing Date;
(iii) the negotiation, preparation, execution, delivery and administration of
any consents, amendments, waivers or other modifications to this Agreement and
the other Loan Documents and any other documents or matters requested by any
Borrower; (iv) the filing and recording fees and expenses, title insurance and
reasonable fees and expenses of counsel for providing to Lender all required
legal opinions, and other similar expenses incurred, in creating and perfecting
the Liens in favor of Lender pursuant to this Agreement and the other Loan
Documents; (v) enforcing or preserving any rights, in response to third party
claims or the prosecuting or defending of any action or proceeding or other
litigation, in each case against, under or affecting any Borrower, this
Agreement, the other Loan Documents, the Mezzanine Properties, the Collateral or
any other security given for the Loan; (vi) the Re-sizing and (vii) enforcing
any obligations of or collecting any payments due from any Borrower under this
Agreement, the other Loan Documents or with respect to the Mezzanine Properties
or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a "work-out" or of
any insolvency or bankruptcy proceedings; provided, however, that each Borrower
shall not be liable for the payment of any such costs and expenses to the extent
the same arise by reason of the gross negligence, illegal acts, fraud or willful
misconduct of Lender. Any costs due and payable to Lender may be paid to Lender
pursuant to the Mezzanine Cash Management Agreement.

               (b) Each Borrower shall indemnify, defend and hold harmless
Lender and its officers, directors, agents and employees (and the successors and
assigns of the foregoing (the "Lender Indemnitees")) from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, the reasonable fees and disbursements
of counsel for Lender Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
Lender Indemnitees shall be designated a party thereto), that may be imposed on,
incurred by, or asserted against Lender Indemnitees in any manner relating to or
arising out of (i) any breach by any Borrower of its obligations under, or any
material misrepresentation by any Borrower contained in, this Agreement or the
other Loan Documents, or (ii) the use or intended use of the proceeds of the
Loan (collectively, the "Indemnified Liabilities"); provided, however, that each
Borrower shall not have any obligation to Lender Indemnitees hereunder to the
extent that such Indemnified Liabilities arise from the gross negligence,
illegal acts, fraud or willful misconduct of Lender Indemnitees. To the extent
that the undertaking to indemnify, defend and hold harmless set forth in the
preceding sentence may be unenforceable because it violates any law or public
policy, Borrowers shall pay the maximum portion that it is permitted to pay and
satisfy under applicable law to the payment and satisfaction of all Indemnified
Liabilities incurred by Lender Indemnitees.

                                       98



          Section 11.14. Schedules Incorporated.

          The Schedules annexed hereto are hereby incorporated herein as a part
of this Agreement with the same effect as if set forth in the body hereof.

          Section 11.15. Offsets, Counterclaims and Defenses.

          Any assignee of Lender's interest in and to this Agreement and the
other Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses which are unrelated to such documents which any
Borrower may otherwise have against any assignor of such documents, and no such
unrelated counterclaim or defense shall be interposed or asserted by any
Borrower in any action or proceeding brought by any such assignee upon such
documents and any such right to interpose or assert any such unrelated offset,
counterclaim or defense in any such action or proceeding is hereby expressly
waived by each Borrower.

          Section 11.16. No Joint Venture or Partnership; No Third Party
Beneficiaries.

               (a) Each Borrower and Lender intend that the relationships
created hereunder and under the other Loan Documents be solely that of borrower
and lender. Nothing herein or therein is intended to create a joint venture,
partnership, tenancy-in-common, or joint tenancy relationship between any
Borrower and Lender nor to grant Lender any interest in the Properties other
than that of mortgagee, beneficiary or lender.

               (b) This Agreement and the other Loan Documents are solely for
the benefit of Lender and nothing contained in this Agreement or the other Loan
Documents shall be deemed to confer upon anyone other than Lender any right to
insist upon or to enforce the performance or observance of any of the
obligations contained herein or therein. All conditions to the obligations of
Lender to make the Loan hereunder are imposed solely and exclusively for the
benefit of Lender and no other Person shall have standing to require
satisfaction of such conditions in accordance with their terms or be entitled to
assume that Lender will refuse to make the Loan in the absence of strict
compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender's sole
discretion, Lender deems it advisable or desirable to do so.

          Section 11.17. Publicity.

          All news releases, publicity or advertising by any Borrower or its
Affiliates through any media intended to reach the general public which refers
to the Loan Documents or the financing evidenced by the Loan Documents, to
Lender or any of its Affiliates shall be subject to the prior approval of
Lender.

                                       99



          Section 11.18. Waiver of Marshalling of Assets.

          To the fullest extent permitted by law, each Borrower, for itself and
its successors and assigns, waives all rights to a marshalling of the assets of
any Borrower, any Borrower's partners and others with interests in any Borrower,
and of the Mezzanine Properties and Collateral, and shall not assert any right
under any laws pertaining to the marshalling of assets, the sale in inverse
order of alienation, homestead exemption, the administration of estates of
decedents, or any other matters whatsoever to defeat, reduce or affect the right
of Lender under the Loan Documents to a sale of the Mezzanine Properties and
Collateral for the collection of the Debt without any prior or different resort
for collection or of the right of Lender to the payment of the Debt out of the
net proceeds of the Mezzanine Properties and Collateral in preference to every
other claimant whatsoever.

          Section 11.19. Waiver of Offsets/Defenses/Counterclaims.

          To the extent permitted by applicable law, each Borrower hereby waives
the right to assert a counterclaim, other than a mandatory or compulsory
counterclaim, in any action or proceeding brought against it by Lender or its
agents or otherwise to offset any obligations to make the payments required by
the Loan Documents. No failure by Lender to perform any of its obligations
hereunder shall be a valid defense to, or result in any offset against, any
payments which any Borrower is obligated to make under any of the Loan
Documents.

          Section 11.20. Conflict; Construction of Documents; Reliance.

          In the event of any conflict or inconsistency between the provisions
of this Agreement and any of the other Loan Documents, the provisions of this
Agreement shall control. The parties hereto acknowledge that they were
represented by competent counsel in connection with the negotiation, drafting
and execution of the Loan Documents and that such Loan Documents shall not be
subject to the principle of construing their meaning against the party which
drafted same. Each Borrower acknowledges that, with respect to the Loan, each
Borrower shall rely solely on its own judgment and advisors in entering into the
Loan without relying in any manner on any statements, representations or
recommendations of Lender or any parent, subsidiary or Affiliate of Lender.
Lender shall not be subject to any limitation whatsoever in the exercise of any
rights or remedies available to it under any of the Loan Documents or any other
agreements or instruments which govern the Loan by virtue of the ownership by it
or any parent, subsidiary or Affiliate of Lender of any equity interest any of
them may acquire in any Borrower, and each Borrower hereby irrevocably waives
the right to raise any defense or take any action on the basis of the foregoing
with respect to Lender's exercise of any such rights or remedies. Each Borrower
acknowledges that Lender engages in the business of real estate financings and
other real estate transactions and investments which may be viewed as adverse to
or competitive with the business of any Borrower or its Affiliates.

                                      100



          Section 11.21. Brokers and Financial Advisors.

          Each Borrower hereby represents that it has dealt with no financial
advisors, brokers, underwriters, placement agents, agents or finders in
connection with the transactions contemplated by this Agreement. Each Borrower
shall indemnify, defend and hold Lender Indemnitees harmless from and against
any and all claims, liabilities, costs and expenses of any kind (including
attorneys' fees and expenses) in any way relating to or arising from a claim by
any Person that such Person acted on behalf of any Borrower or Lender
Indemnitees in connection with the transactions contemplated herein. The
provisions of this Section 11.21 shall survive the expiration and termination of
this Agreement and the payment of the Debt.

          Section 11.22. Intentionally Deleted.

          Section 11.23. Prior Agreements.

          This Agreement and the other Loan Documents contain the entire
agreement of the parties hereto and thereto in respect of the transactions
contemplated hereby and thereby, and all prior agreements among or between such
parties, whether oral or written, including, without limitation, the loan
commitment dated October 2, 2002, and all attachments thereto including, but not
limited to, the term sheet between Borrowers and Lender, are superseded by the
terms of this Agreement and the other Loan Documents.

          Section 11.24. Servicer.

          At the option of Lender, the Loan may be serviced by a servicer
including, but not limited to any sub-servicers or master servicer (the
"Servicer") selected by Lender and Lender may delegate all or any portion of its
responsibilities under this Agreement and the other Loan Documents to the
Servicer pursuant to a servicing agreement (the "Servicing Agreement") between
Lender and Servicer. Borrowers shall be responsible for any reasonable set-up
fees or any other initial costs relating to or arising under the Servicing
Agreement; provided, however, that Borrowers shall not be responsible for
payment of the monthly servicing fee due to the Servicer under the Servicing
Agreement.

          Section 11.25. Duplicate Originals; Counterparts.

          This Agreement may be executed in any number of duplicate originals
and each such duplicate original shall be deemed to be an original. This
Agreement may be executed in several counterparts, each of which counterparts
shall be deemed an original instrument and all of which together shall
constitute a single Agreement. The failure of any party hereto to execute this
Agreement, or any counterpart hereof, shall not relieve the other signatories
from their obligations hereunder.

                                      101



          Section 11.26. Cross Collateralization.

          Without limitation to any other right or remedy provided to Lender in
this Agreement or any of the other Loan Documents, each Borrower acknowledges
and agrees that to the full extent permitted under applicable law, upon the
occurrence of an Event of Default (i) Lender shall have the right to pursue all
of its rights and remedies in one proceeding, or separately and independently in
separate proceedings which it, as Lender, in its sole and absolute discretion,
shall determine from time to time, (ii) Lender is not required to either
marshall assets, sell any of the collateral for the Loan in any inverse order of
alienation, or be subjected to any "one action" or "election of remedies" law or
rule, (iii) the exercise by Lender of any remedies against any of the collateral
for the Loan will not impede Lender from subsequently or simultaneously
exercising remedies against other collateral for the Loan, (iv) all Liens and
other rights, remedies and privileges provided to Lender in this Agreement and
in the other Loan Documents or otherwise shall remain in full force and effect
until Lender has exhausted all of its remedies against the collateral for the
Loan and all of the collateral for the Loan has been foreclosed, sold and/or
otherwise realized upon and (v) all of the Mezzanine Properties and Collateral
shall be security for the performance of all of each Borrower's obligations
hereunder.

          Section 11.27. Joint and Several Liability.

          If more than one Person has executed this Agreement as "Borrower," the
representations, covenants, warranties and obligations of all such Persons
hereunder shall be joint and several.

                         [NO FURTHER TEXT ON THIS PAGE]

                                      102



          IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be duly executed by their duly authorized representatives, all as of the day
and year first above written.

                       LENDER:

                       VENTAS REALTY, LIMITED PARTNERSHIP,
                       a Delaware limited partnership


                       By:  Ventas, Inc.
                            a Delaware corporation,
                            its sole general partner


                            By:     /s/ T. RICHARD RINEY
                                ------------------------------------------------
                                Name:   T. Richard Riney
                                Title:  Executive Vice President/General Counsel

                     [Signatures continue on following page]

                                      103



                       BORROWER:

                       THI OF OHIO SNFS, LLC,
                       a Delaware limited liability company


                       By:     /s/ JOHN E. BAUER
                            ----------------------------------------------------
                            Name:  John E. Bauer
                            Title: Vice-President


                       THI OF OHIO ALFS I, LLC,
                       a Delaware limited liability company


                       By:     /s/ JOHN E. BAUER
                            ----------------------------------------------------
                            Name:  John E. Bauer
                            Title: Vice-President


                       THI OF OHIO AT BEREA, LLC,
                       a Delaware limited liability company


                       By:     /s/ JOHN E. BAUER
                            ----------------------------------------------------
                            Name:  John E. Bauer
                            Title: Vice-President


                       THI OF OHIO AT CORTLAND, LLC,
                       a Delaware limited liability company


                       By:     /s/ JOHN E. BAUER
                            ----------------------------------------------------
                            Name:  John E. Bauer
                            Title: Vice-President


                       THI OF OHIO AT KENT, LLC,
                       a Delaware limited liability company


                       By:     /s/ JOHN E. BAUER
                            ----------------------------------------------------
                            Name:  John E. Bauer
                            Title: Vice-President

                                      104



                       THI OF MARYLAND SNFS I, LLC,
                       a Delaware limited liability company


                       By:     /s/ JEFFREY A. BARNHILL
                            ----------------------------------------------------
                            Name:  Jeffrey A. Barnhill
                            Title: Vice-President


                       THI OF MARYLAND SNFS II, LLC,
                       a Delaware limited liability company


                       By:     /s/ JEFFREY A. BARNHILL
                            ----------------------------------------------------
                            Name:  Jeffrey A. Barnhill
                            Title: Vice-President


                       THI OF MARYLAND AT FRANKLIN SQUARE, LLC,
                       a Delaware limited liability company


                       By:     /s/ JEFFREY A. BARNHILL
                            ----------------------------------------------------
                            Name:  Jeffrey A. Barnhill
                            Title: Vice-President


                       THI OF MARYLAND AT FORT WASHINGTON, LLC,
                       a Delaware limited liability company


                       By:     /s/ JEFFREY A. BARNHILL
                            ----------------------------------------------------
                            Name:  Jeffrey A. Barnhill
                            Title: Vice-President

                                      105

EX-10.3.2

                                                                  EXHIBIT 10.3.2

                                 PROMISSORY NOTE

$22,000,000                                                   New York, New York
                                                                November 1, 2002

          FOR VALUE RECEIVED THOSE ENTITIES LISTED ON SCHEDULE I attached
hereto, each a Delaware limited liability company and each having its principal
place of business at 4660 Trindle Road, Suite 103, Camp Hill, Pennsylvania 17011
(each, a "Mezzanine Borrower" and collectively, the "Mezzanine Borrowers"),
hereby jointly and severally promise to pay to the order of VENTAS REALTY,
LIMITED PARTNERSHIP, a Delaware limited partnership, having an address at 4360
Brownsboro Road, Suite 115, Louisville, Kentucky 40207 (together with any
subsequent holder of this Note, and their respective successors and assigns,
"Mezzanine Lender"), or at such other place as the holder hereof may from time
to time designate in writing, the principal sum of TWENTY TWO MILLION AND NO/100
DOLLARS ($22,000,000), or so much thereof as is advanced, in lawful money of the
United States of America, with interest thereon to be computed from the date of
this Note at the Interest Rate, and to be paid in accordance with the terms of
this Note and that certain Mezzanine Loan Agreement dated the date hereof
between the Mezzanine Borrowers and Mezzanine Lender (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the
"Mezzanine Loan Agreement"). All capitalized terms not defined herein shall have
the respective meanings set forth in the Mezzanine Loan Agreement.

                            ARTICLE 1 - PAYMENT TERMS

          Each Mezzanine Borrower agrees to pay the principal sum of this Note
and interest on the unpaid principal sum of this Note from time to time
outstanding at the rates and at the times specified in Article II of the
Mezzanine Loan Agreement and the outstanding balance of the principal sum of
this Note and all accrued and unpaid interest thereon shall be due and payable
on the Maturity Date.

                      ARTICLE 2 - DEFAULT AND ACCELERATION

          The Debt shall without notice become immediately due and payable at
the option of Mezzanine Lender if any payment required under this Note is not
paid on or prior to the date when due or if not paid on the Maturity Date or on
the happening of any other Event of Default.

                           ARTICLE 3 - LOAN DOCUMENTS

          This Note is secured by the Pledge Agreement, the Mortgages and the
other Loan Documents. All of the terms, covenants and conditions contained in
the Mezzanine Loan Agreement, the Pledge Agreement, the Mortgages and the other
Loan Documents are hereby made part of this Note to the same extent and with the
same force as if they were fully set forth herein. In the event of a conflict or
inconsistency between the terms of this Note and the Mezzanine Loan Agreement,
the terms and provisions of the Mezzanine Loan Agreement shall govern.



                           ARTICLE 4 - SAVINGS CLAUSE

          Notwithstanding anything to the contrary, (a) all agreements and
communications between any Mezzanine Borrower and Mezzanine Lender are hereby
and shall automatically be limited so that, after taking into account all
amounts deemed interest, the interest contracted for, charged or received by
Mezzanine Lender shall never exceed the maximum lawful rate or amount, (b) in
calculating whether any interest exceeds the lawful maximum, all such interest
shall be amortized, prorated, allocated and spread over the full amount and term
of all principal indebtedness of the Mezzanine Borrowers to Mezzanine Lender,
and (c) if through any contingency or event, Mezzanine Lender receives or is
deemed to receive interest in excess of the lawful maximum, any such excess
shall be deemed to have been applied toward payment of the principal of any and
all then outstanding indebtedness of the Mezzanine Borrowers to Mezzanine
Lender, or if there is no such indebtedness, shall immediately be returned to
the Mezzanine Borrowers.

                           ARTICLE 5 - NO ORAL CHANGE

          No modification, amendment, extension, discharge, termination or
waiver of any provision of this Note, nor consent to any departure by any
Mezzanine Borrower therefrom, shall in any event be effective unless the same
shall be in a writing signed by the party against whom enforcement is sought,
and then such waiver or consent shall be effective only in the specific
instance, and for the purpose, for which given. Except as otherwise expressly
provided herein, no notice to, or demand on any Mezzanine Borrower shall entitle
such Mezzanine Borrower to any other or future notice of demand in the same,
similar or other circumstances.

                               ARTICLE 6 - WAIVERS

          Each Mezzanine Borrower and all others who may become liable for the
payment of all or any part of the Debt do hereby severally waive presentment and
demand for payment, notice of dishonor, notice of intention to accelerate,
notice of acceleration, protest and notice of protest and non-payment and all
other notices of any kind. No release of any security for the Debt or extension
of time for payment of this Note or any installment hereof, and no alteration,
amendment or waiver of any provision of this Note, the Mezzanine Loan Agreement
or the other Loan Documents made by agreement between Mezzanine Lender or any
other Person shall release, modify, amend, waive, extend, change, discharge,
terminate or affect the liability of any Mezzanine Borrower or any other Person
who may become liable for the payment of all or any part of the Debt under this
Note, the Mezzanine Loan Agreement or the other Loan Documents. No notice to or
demand on any Mezzanine Borrower shall be deemed to be a waiver of the
obligation of such Mezzanine Borrower or of the right of Mezzanine Lender to
take further action without further notice or demand as provided for in this
Note, the Mezzanine Loan Agreement or the other Loan Documents. If any Mezzanine
Borrower is a partnership or limited liability company, the agreements herein
contained shall remain in force and be applicable, notwithstanding any changes
in the individuals comprising the partnership or limited liability company, and
the term "Mezzanine Borrower," as used herein, shall include any alternate or
successor partnership or limited liability company, but any predecessor
partnership or limited liability company and their partners or members shall not
thereby be released from any liability. If any Mezzanine Borrower is a
corporation, the agreements contained herein shall remain in full

                                       2



force and be applicable notwithstanding any changes in the shareholders
comprising, or the officers and directors relating to, the corporation, and the
term "Mezzanine Borrower," as used herein, shall include any alternative or
successor corporation, but any predecessor corporation shall not be relieved of
liability hereunder. Nothing in the foregoing sentence shall be construed as a
consent to, or a waiver of, any prohibition or restriction on transfers of
interests in such partnership, limited liability company or corporation, which
may be set forth in the Mezzanine Loan Agreement, the Mortgages, the Pledge
Agreement or any other Loan Document.

                              ARTICLE 7 - TRANSFER

          Upon the transfer of this Note in accordance with the provisions of
the Mezzanine Loan Agreement, each Mezzanine Borrower hereby waiving notice of
any such transfer, Mezzanine Lender may deliver all the collateral mortgaged,
granted, pledged or assigned pursuant to the Loan Documents, or any part
thereof, to the transferee who shall thereupon become vested with all the rights
herein or under applicable law given to Mezzanine Lender with respect thereto,
and Mezzanine Lender shall thereafter forever be relieved and fully discharged
from any liability or responsibility in the matter; but Mezzanine Lender shall
retain all rights hereby given to it with respect to any liabilities and the
collateral not so transferred.

                                    ARTICLE 8

          Intentionally deleted.

                            ARTICLE 9 - GOVERNING LAW

          (A) THIS NOTE WAS NEGOTIATED IN THE STATE OF NEW YORK, AND MADE BY
EACH MEZZANINE BORROWER AND ACCEPTED BY MEZZANINE LENDER IN THE STATE OF NEW
YORK, AND THE PROCEEDS OF THIS NOTE WERE DISBURSED FROM THE STATE OF NEW YORK,
WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND
TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING,
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS NOTE AND THE OBLIGATIONS ARISING HEREUNDER SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO
PRINCIPLES OF CONFLICT LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF
AMERICA. TO THE FULLEST EXTENT PERMITTED BY LAW, EACH MEZZANINE BORROWER HEREBY
UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY
OTHER JURISDICTION GOVERNS THIS NOTE AND THIS NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

                                       3



          (B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST MEZZANINE LENDER OR
ANY MEZZANINE BORROWER ARISING OUT OF OR RELATING TO THIS NOTE MAY AT MEZZANINE
LENDER'S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW
YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW, AND EACH MEZZANINE BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY
NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENCE OF ANY SUCH
SUIT, ACTION OR PROCEEDING, AND EACH MEZZANINE BORROWER HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.
EACH MEZZANINE BORROWER DOES HEREBY DESIGNATE AND APPOINT:

          CT CORPORATION SYSTEM
          111 EIGHTH AVENUE
          NEW YORK, NEW YORK 10011

AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE
MAILED OR DELIVERED TO MEZZANINE BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE
DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON MEZZANINE BORROWER IN
ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. EACH MEZZANINE
BORROWER (I) SHALL GIVE PROMPT NOTICE TO MEZZANINE LENDER OF ANY CHANGE IN
ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO
TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW
YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND
ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A
SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW
YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.

                              ARTICLE 10 - NOTICES

          All notices or other written communications hereunder shall be
delivered in accordance with Section 11.6 of the Mezzanine Loan Agreement.

                         [NO FURTHER TEXT ON THIS PAGE]

                                       4



          IN WITNESS WHEREOF, each Mezzanine Borrower has duly executed this
Note as of the day and year first above written.

                                        MEZZANINE BORROWER:

                                        THI OF OHIO SNFS, LLC,
                                        a Delaware limited liability company


                                        By:  /s/ JOHN E. BAUER
                                           -------------------------------------
                                           Name: John E. Bauer
                                           Title: Vice-President


                                        THI OF OHIO ALFS I, LLC,
                                        a Delaware limited liability company


                                        By:  /s/ JOHN E. BAUER
                                           -------------------------------------
                                           Name: John E. Bauer
                                           Title: Vice-President


                                        THI OF OHIO AT BEREA, LLC,
                                        a Delaware limited liability company


                                        By:  /s/ JOHN E. BAUER
                                           -------------------------------------
                                           Name: John E. Bauer
                                           Title: Vice-President


                                        THI OF OHIO AT CORTLAND, LLC,
                                        a Delaware limited liability company


                                        By:  /s/ JOHN E. BAUER
                                           -------------------------------------
                                           Name: John E. Bauer
                                           Title: Vice-President



                                        THI OF OHIO AT KENT, LLC,
                                        a Delaware limited liability company


                                        By:  /s/ JOHN E. BAUER
                                           -------------------------------------
                                           Name: John E. Bauer
                                           Title: Vice-President


                                        THI OF MARYLAND SNFS I, LLC,
                                        a Delaware limited liability company


                                        By:  /s/ JEFFREY A. BARNHILL
                                           -------------------------------------
                                           Name: Jeffrey A. Barnhill
                                           Title: Vice-President


                                        THI OF MARYLAND SNFS II, LLC,
                                        a Delaware limited liability company


                                        By:  /s/ JEFFREY A. BARNHILL
                                           -------------------------------------
                                           Name: Jeffrey A. Barnhill
                                           Title: Vice-President


                                        THI OF MARYLAND AT FRANKLIN SQUARE, LLC,
                                        a Delaware limited liability company


                                        By:  /s/ JEFFREY A. BARNHILL
                                           -------------------------------------
                                           Name: Jeffrey A. Barnhill
                                           Title: Vice-President


                                        THI OF MARYLAND AT FORT WASHINGTON, LLC,
                                        a Delaware limited liability company


                                        By:  /s/ JEFFREY A. BARNHILL
                                           -------------------------------------
                                           Name: Jeffrey A. Barnhill
                                           Title: Vice-President



                                   SCHEDULE I

                              (MEZZANINE BORROWERS)

"Mezzanine Borrowers"

1. THI of Ohio SNFs, LLC

2. THI of Ohio ALFs I, LLC

3. THI of Ohio at Kent, LLC

4. THI of Ohio at Cortland, LLC

5. THI of Ohio at Berea, LLC

6. THI of Maryland SNFs I, LLC

7. THI of Maryland SNFs II, LLC

8. THI of Maryland at Franklin Square, LLC

9. THI of Maryland at Fort Washington, LLC

EX-10.3.3

                                                                  EXHIBIT 10.3.3

                                    GUARANTY

          THIS GUARANTY (as amended, modified and in effect from time to time,
this "Guaranty") is executed as of November 1, 2002 by TRANS HEALTHCARE, INC., a
Delaware corporation ("Parent"), and the subsidiaries of Parent listed on
Schedule A hereto (along with Parent, each a "Guarantor" and collectively, the
"Guarantors"), for the benefit of ventas Realty, Limited Partnership, a Delaware
limited partnership (together with its successors and assigns, the "Lender").

                                   BACKGROUND

          WHEREAS, Lender has agreed to provide a loan consisting of a senior
first mortgage loan (the "Mortgage Loan") and a mezzanine loan (the "Mezzanine
Loan") to certain subsidiaries of Parent (the "Trans Entities") in respect of
certain healthcare facilities;

          WHEREAS, pursuant to that certain Promissory Note, dated of even date
herewith, executed by the entities listed on Schedule B attached hereto
(individually, a "Mortgage Borrower," and collectively the "Mortgage
Borrowers"), and payable to the order of Lender (together with all renewals,
modifications, increases and extensions thereof, the "Mortgage Note"), the
Mortgage Borrowers have become indebted to Lender with respect to the Mortgage
Loan which is made pursuant to that certain Loan Agreement, dated of even date
herewith, between the Mortgage Borrowers and Lender (as amended, modified and in
effect from time to time, the "Mortgage Loan Agreement");

          WHEREAS, pursuant to that the certain Promissory Note, dated of even
date herewith, executed by the entities listed on Schedule C hereto
(individually, a "Mezzanine Borrower," and collectively the "Mezzanine
Borrowers") and payable to the order of the Lender (together with all renewals,
modifications, increases and extensions thereof, the "Mezzanine Note"), the
Mezzanine Borrower has become indebted to Lender with respect to the Mezzanine
Loan which is made pursuant to that certain Loan Agreement, dated of even date
herewith, between the Mezzanine Borrower and Lender (as amended, modified and in
effect from time to time, the "Mezzanine Loan Agreement");

          WHEREAS, Lender has agreed to purchase certain healthcare facilities
from the entities listed on Schedule D attached hereto and subsequently lease
certain of such healthcare facilities to the entities listed on Schedule D-1
attached hereto and made a part hereof (collectively, the "Trans Lessees") (such
transaction, the "Sale/Leaseback Transaction");

          WHEREAS, each of the Mortgage Borrowers, the Mezzanine Borrowers and
the Trans Lessees are wholly-owned subsidiaries of Parent, each Guarantor is an
affiliate of Parent, the Mortgage Borrowers and the Mezzanine Borrowers and each
Guarantor will directly benefit from Lender's making the Mortgage Loan to the
Mortgage Borrowers, the Mezzanine Loan to the Mezzanine Borrower and from the
Sale/Leaseback Transaction;



          WHEREAS, Lender is not willing to make the Mortgage Loan or the
Mezzanine Loan, or otherwise extend credit, to the Mortgage Borrowers or the
Mezzanine Borrower or to enter into the Sale/Leaseback Transaction with the
Trans Lessees unless each Guarantor unconditionally guarantees payment and
performance to Lender of the Guaranteed Obligations (as herein defined);

          WHEREAS, certain of the Guarantors have executed and delivered a
Pledge and Security Agreement dated as of the date hereof, as pledgor, to Lender
(as amended, modified and in effect from time to time, the "Pledge Agreement"),
establishing a first priority lien on the Pledged Equity (as defined in the
Pledge Agreement) to secure the Guarantor's obligations hereunder; and

          WHEREAS, each Guarantor has reviewed the Mortgage Loan Documents, the
Mezzanine Loan Documents and the Lease Documents (each as defined herein), and
each Guarantor has determined that it is in its interest and to its financial
benefit that the respective parties to such documents enter into the
transactions contemplated hereby and thereby.

          NOW, THEREFORE, as an inducement to Lender to (i) make the Mortgage
Loan to the Mortgage Borrowers and to extend such additional credit as Lender
may from time to time agree to extend under the Mortgage Loan Documents, (ii)
make the Mezzanine Loan to Mezzanine Borrower and to extend such additional
credit as Lender may from time to time agree to extend under the Mezzanine Loan
Documents and (iii) enter into the Sale/Leaseback Transaction with the Trans
Entities, and for other good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged, the parties do hereby agree as
follows:

                            ARTICLE I - DEFINITIONS

     In addition to the terms defined in the Recitals, as used herein, the
following terms shall have the following meanings (all terms defined in this
Article 1 or in other provisions of this Guaranty in the singular have the same
meaning when used in the plural and vice versa):

          "Acquired Properties" shall have the meaning set forth in Section 4.1
of this Guaranty.

          "Acquisition" by any Person, shall mean the purchase or acquisition by
such Person of any Capital Stock in another Person or any asset of another
Person, whether or not involving a merger or consolidation with such other
Person.

          "Addition Event" shall have the meaning set forth in Section 2.14 of
this Guaranty.

          "Affiliate" of any specified Person means any other Person
controlling, controlled by or under common control with such specified Person.
For the purposes of this Agreement, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership

                                       2



of voting securities or other beneficial interests, by contract or otherwise;
and the terms "controls," "controlling" and "controlled" have the meanings
correlative to the foregoing.

          "Affiliated Group" shall mean a group of Persons, each of which is an
Affiliate of some other Person in the group.

          "Applicable Laws" shall mean all applicable provisions of
constitutions, statutes, laws, rules, treaties, regulations and orders of all
Governmental Authorities and all applicable orders, rules and decrees of courts
and arbitrators.

          "Asset Disposition" by any Person shall mean and include (i) the sale,
lease or other disposition of any property by such Person (including the Capital
Stock of a Subsidiary of such Person), but for purposes hereof shall not
include, in any event, (A) the sale of inventory in the ordinary course of
business, (B) the sale, lease or other disposition of machinery and equipment no
longer used or useful in the conduct of business and (C) a sale, lease, transfer
or disposition of property to another Loan Party, and (ii) receipt by such
Person of any cash insurance proceeds or condemnation award payable by reason of
theft, loss, physical destruction or damage, taking or similar event with
respect to any of its property.

          "Board of Directors" means the board of directors of Parent.

          "Capital Expenditures" shall mean, with respect to each Property,
actual disbursements incurred by any Mortgage Borrower, any Mezzanine Borrower,
any Trans Lessee or any Guarantor with respect to replacements and capital
repairs made to any Property (including repairs to, and replacements of,
structural components, roofs, building systems, parking garages and parking
lots), in each case to the extent capitalized in accordance with GAAP.

          "Capital Lease," as applied to any Person, shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
accordance with GAAP and in the reasonable judgment of such Person, is required
to be accounted for as a capital lease on the balance sheet of that Person.

          "Capital Stock" shall mean, with respect to any entity, any capital
stock (including preferred stock), shares, interests, participation or other
ownership interests (however designated) of such entity and any rights (other
than debt securities convertible into or exchangeable for capital stock),
warrants or options to purchase any thereof; provided, however, that leases of
real property that provide for contingent rent based on the financial
performance of the tenant shall not be deemed to be Capital Stock.

          "Cash Interest Expense" shall mean, for any period, for Parent and its
Consolidated Subsidiaries determined on a consolidated basis without duplication
in accordance with GAAP, all interest payable in cash in respect of Debt during
such period (whether or not actually paid during such period) and all payments
due under Interest Rate Protection Agreements by Parent and its Consolidated
Subsidiaries determined on a consolidated basis (net of payments to such parties
by any counter party thereunder).

                                       3



          "Change of Control" shall mean the occurrence of any of the following
events:

          (a) prior to the first public offering of common stock of Parent after
the date hereof, the Permitted Holders cease to be the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of a majority in the aggregate of the total voting power of the
Parent, whether as a result of issuance of securities of Parent, any merger,
consolidation, liquidation or dissolution of Parent, any direct or indirect
transfer of securities by the Permitted Holders or otherwise (for purposes of
this clause (a) and clause (b) below, the Permitted Holders shall be deemed to
beneficially own any voting stock of any Person (the "specified entity") held by
any other Person (the "parent entity") so long as the Permitted Holders
beneficially own (as so defined), directly or indirectly, in the aggregate a
majority of the voting power of the voting stock of the parent entity);

          (b) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than one or more Permitted Holders, is or becomes the
beneficial owner (as defined in clause (a) above, except that for purposes of
this clause (b) such person shall be deemed to have "beneficial ownership" of
all shares that any such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 35% of the total voting power of Parent; provided,
however, that the Permitted Holders beneficially own (as defined in clause (a)
above), directly or indirectly, in the aggregate a lesser percentage of the
total voting power of Parent than such other person and do not have the right or
ability by voting power, contract or otherwise to elect or designate for
election a majority of the Board of Directors (for the purposes of this clause
(b), such other person shall be deemed to beneficially own any voting stock of a
specified entity held by a parent entity, if such other person is the beneficial
owner (as defined in this clause (b)), directly or indirectly, of more than 35%
of the voting power of such parent entity and the Permitted Holders beneficially
own (as defined in clause (a) above), directly or indirectly, in the aggregate a
lesser percentage of the voting power of the voting stock of such parent entity
and do not have the right or ability by voting power, contract or otherwise to
elect or designate for election a majority of the board of directors of such
parent entity);

          (c) individuals who on the date hereof constituted the Board of
Directors (together with any new directors whose election by such Board of
Directors or whose nomination for election by the stockholders of Parent was
approved by a vote of a majority of the directors of Parent then still in office
who were either directors on the date hereof or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors then in office;

          (d) the adoption of a plan relating to the liquidation or dissolution
of Parent; or

          (e) Parent shall cease to be the sole direct or indirect owner of any
Loan Party other than as specifically permitted under Section 7.4 hereof.

          "Closing Date" shall mean the date on which the Mortgage Loan,
Mezzanine Loan and Sale/Lease Transaction are funded.

                                       4



          "CMS" has the meaning set forth in the definition of the term
"Governmental Authority."

          "Consolidated Adjusted Leverage Ratio" shall mean, at any date, for
Parent and its Consolidated Subsidiaries determined on a consolidated basis, the
ratio of the sum of (i) Debt (excluding reimbursement obligations in connection
with any undrawn letters of credit to the extent included in Debt) and (ii) rent
expense times eight (8) to Consolidated EBITDAR at such date for the Trailing
Four-Quarter Period ending on such date.

          "Consolidated EBITDAR" shall mean, for any period, for Parent and its
Consolidated Subsidiaries determined on a consolidated basis, Consolidated Net
Income for such period, plus without duplication, to the extent deducted in
determining Consolidated Net Income, the sum for such period of (i) amortization
and depreciation expense, (ii) provision for income taxes (including provision
for deferred taxes not payable currently), (iii) Consolidated Interest Expense,
(iv) rent expense, and (v) non-cash charges as are reasonably acceptable to the
Lender, but, excluding, for purposes hereof to the extent included in
determining Consolidated Net Income for such period (A) extraordinary gains and
losses and related tax effects thereon, (B) other non-cash gains and losses
thereon as are reasonably acceptable to the Lender, and (C) the amount of
interest income, all as determined for such period in conformity with GAAP.

          "Consolidated Interest Expense" shall mean, for any period, all
interest expense for Parent and its Consolidated Subsidiaries during such period
determined on a consolidated basis for such period taken as a single accounting
period in accordance with GAAP, including amortization of debt discount and
premium, the interest component under Capital Leases (and also including, to the
extent required under GAAP, the implied interest component under a
Securitization) and all payments due under Interest Rate Protection Agreements
by Parent and its Consolidated Subsidiaries determined on a consolidated basis
(net of payments to such parties by any counter party thereunder), but excluding
the amortization of any deferred financing fees. The applicable period of
determination shall be the Trailing Four Quarter Period.

          "Consolidated Net Income" shall mean, for any period, the net income
or loss of Parent and its Consolidated Subsidiaries during such period
determined on a consolidated basis for such period taken as a single accounting
period in accordance with GAAP; provided that there shall be excluded from such
determination of net income or loss (i) adjustments for straight-line rent
accounting, (ii) the income or loss of the Non-Guarantor Subsidiaries except to
the extent of the amount of dividends or other distributions actually received
by Parent or any Loan Party in cash on a non-contingent basis, without any
obligation to return such dividend or distribution by Parent or any Loan Party,
(iii) the income or loss of any Person (other than the Consolidated
Subsidiaries) in which Parent or any of its Consolidated Subsidiaries has an
equity investment or comparable interest, except to the extent of the amount of
dividends or other distributions actually received by Parent or any Loan Party
in cash on a non-contingent basis, without any obligation to return such
dividend or distribution by the Parent or any Loan Party (net of any payments by
Parent to a Non-Guarantor Subsidiary pursuant to Section 7.3 hereof), (iv)
income or loss of a Person accrued prior to the date it becomes a Consolidated
Subsidiary or is merged or consolidated with or such Person's assets are
acquired by Parent or any of its

                                       5



Consolidated Subsidiaries and (v) any after tax gains or losses attributable to
sales of non-current assets out of the ordinary course of business and
write-downs of non-current assets in anticipation of losses to the extent they
have decreased net income. The applicable period of determination shall be the
Trailing Four Quarter Period.

          "Consolidated Net Worth" shall mean, as of any date, for Parent and
its Consolidated Subsidiaries on a consolidated basis, consolidated
shareholders' equity or net worth (including preferred and common equity) as of
such date as determined in accordance with GAAP.

          "Consolidated Subsidiary" shall mean, as to any Person, at any date,
any Subsidiary or other entity the accounts of which would be consolidated with
those of such Person in its consolidated financial statements if such statements
were prepared as of such date.

          "Covenant Replacement Event" shall have the meaning set forth in
Section 2.13.

          "Debt," of Parent or any of its Consolidated Subsidiaries shall mean,
without duplication, any indebtedness of Parent or any of its Subsidiaries,
whether or not contingent, in respect of:

               (i) borrowed money or evidenced by bonds, notes, debentures or
          similar instruments;

               (ii) indebtedness for borrowed money secured by any encumbrance
          existing on property owned by Parent or its Consolidated Subsidiaries,
          to the extent of the lesser of (x) the amount of indebtedness so
          secured or (y) the fair market value of the property subject to such
          encumbrance;

               (iii) all reimbursement obligations in connection with any
          letters of credit or amounts representing the balance deferred and
          unpaid of the purchase price of any property or services, except any
          such balance that constitutes an accrued expense, trade payable,
          conditional sale obligation or obligation under any title retention
          agreement;

               (iv) all net obligations of such Person under any Interest Rate
          Protection Agreement valued in accordance with GAAP;

               (v) all obligations in respect of any preferred equity to the
          extent payments are being made thereon;

               (vi) indebtedness of any partnership or joint venture or other
          similar entity in which such Person is a general partner or joint
          venturer and, as such, has personal liability for such obligations,
          but only if and to the extent there is recourse to such Person for
          payment thereof,

                                       6



               (vii) any obligations of Parent and its Consolidated Subsidiaries
          with respect to redemption, repayment or other repurchase of any
          Equity Interest or the principal amount of any Subordinated Debt;

               (viii) any lease of property by Parent or any of its Consolidated
          Subsidiaries as lessee which is reflected as a capital lease
          obligation on the consolidated balance sheet of Parent or its
          Consolidated Subsidiaries;

          to the extent, in the case of items of indebtedness under clauses (i)
          through (viii) above, that any such items would appear as a liability
          on Parent's or its Consolidated Subsidiaries' consolidated balance
          sheet in accordance with GAAP; or

               (ix) the liquidation preference of any Equity Interest of Parent
          or any shares of preferred stock of any of its Consolidated
          Subsidiaries to the extent payments are being made thereon.

     Debt also includes, to the extent not otherwise included, any obligations
by Parent and its Consolidated Subsidiaries to be liable for, or to pay, as
obligor, guarantor or otherwise (other than for purposes of collection in the
ordinary course of business), Debt of another Person (other than Parent or any
other Guarantor) including Debt secured by a Lien on any assets of such Person,
whether or not such Person shall have assumed such indebtedness (provided, that
if such Person has not assumed such indebtedness of such other Person, then the
amount of indebtedness of such Person shall be equal to the lesser of the amount
of the indebtedness of such other Person or the fair market value of the assets
of such Person which secures such other indebtedness); it being understood that
Debt shall be deemed to be incurred by Parent or any of its Consolidated
Subsidiaries whenever Parent or such Consolidated Subsidiary shall create,
assume, guarantee or otherwise become liable in respect thereof; provided,
however that a Person shall not be deemed to have incurred Debt (or be liable
with respect to such Debt) by virtue of a Securitization.

     Debt shall not include (a) Debt arising from agreements of Parent or any of
its Consolidated Subsidiaries providing for indemnification, adjustment or
holdback of purchase price or similar obligations, in each case, incurred or
assumed in connection with the acquisition or disposition of any business,
assets or a Subsidiary, other than guarantees of Debt incurred by any Person
acquiring all or any portion of such business, assets or Subsidiary for the
purpose of financing the acquisition, (b) contingent obligations under
performance bonds, performance guarantees, surety bonds, appeal bonds or similar
obligations incurred in the ordinary course of business and consistent with past
practices or (c) endorsements of instruments for deposit or collection in the
ordinary course of business. In the case of Debt as of any date issued with
original issue discount, the amount of such Debt shall be the accreted value
thereof as of such date.

          "Default" shall mean any event the occurrence of which, upon the
passage of notice and/or grace periods, if any, would constitute an "Event of
Default" under the Mortgage Loan Documents, Mezzanine Loan Documents or the
Lease Documents.

                                       7



          "Deleted Properties" shall have the meaning set forth in Section 2.14
of this Guaranty.

          "Deletion Event" shall have the meaning set forth in Section 2.14 of
this Guaranty.

          "Dividend Payment" shall have the meaning set forth in Section 7.3 of
this Guaranty.

          "Environmental Law" means any present and future federal, state and
local laws, statutes, ordinances, rules, regulations and the like, as well as
common law, relating to protection of human health or the environment, relating
to Hazardous Substances, relating to liability for or costs of other actual or
threatened danger to human health or the environment. The term "Environmental
Law" includes, but is not limited to, the following statutes, as amended, any
successor thereto, and any regulations promulgated pursuant thereto, and any
state or local statutes, ordinances, rules, regulations and the like addressing
similar issues: the Comprehensive Environmental Response, Compensation and
Liability Act; the Emergency Planning and Community Right-to-Know Act; the
Hazardous Substances Transportation Act; the Resource Conservation and Recovery
Act (including but not limited to Subtitle I relating to underground storage
tanks); the Solid Waste Disposal Act; the Clean Water Act; the Clean Air Act;
the Toxic Substances Control Act; the Safe Drinking Water Act; the Occupational
Safety and Health Act; the Federal Water Pollution Control Act; the Federal
Insecticide, Fungicide and Rodenticide Act; the Endangered Species Act; the
National Environmental Policy Act; and the River and Harbors Appropriation Act.
The term "Environmental Law" also includes, but is not limited to, any present
and future federal, state and local laws, statutes ordinances, rules,
regulations and the like, as well as common law: conditioning transfer of
property upon a negative declaration or other approval of a governmental
authority of the environmental condition of any Property; requiring notification
or disclosure of Releases of Hazardous Substances or other environmental
condition of any Property to any Governmental Authority or other Person, whether
or not in connection with transfer of title to or interest in property; imposing
conditions or requirements in connection with permits or other authorization for
lawful activity; relating to nuisance, trespass or other causes of action
related to any Property; and relating to wrongful death, personal injury, or
property or other damage in connection with any physical condition or use of any
Property.

          "Equity Interest" shall mean Capital Stock and all warrants, options
or other rights to acquire Capital Stock (but excluding any debt security that
is convertible into, or exchangeable for, Capital Stock).

          "Event of Default" shall mean an "Event of Default" as defined in the
Mortgage Loan Documents, Mezzanine Loan Documents and in the Lease Documents.

          "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

          "Executive Officer" shall mean any Guarantor's president, principal
financial officer, principal accounting officer, any vice-president in charge of
a principal business unit,

                                       8



division or function, any other officer who performs a policy-making function or
any other Person who performs similar policy making functions for such
Guarantor.

          "Fiscal Quarter" shall mean a fiscal quarter of any Guarantor or any
of their Subsidiaries, as the context may require.

          "Fiscal Year" shall mean a fiscal year of any Guarantor or any of
their Subsidiaries, as the context may require.

          "Fixed Charge Coverage Ratio" shall mean, for Parent and its
Consolidated Subsidiaries on a consolidated basis, Consolidated EBITDAR for such
period divided by the sum of (i) scheduled principal payments on Debt of Parent
and its Consolidated Subsidiaries required to be made during such period and
amortization of discount or premium related to any such Debt for such period,
whether expensed or capitalized (including any payments made pursuant to the P&S
Agreement), (ii) Cash Interest Expense for such period, (iii) rent expense for
such period and (iv) dividends or distributions to the extent paid on or in
respect of any preferred equity of Parent for such period notwithstanding the
prohibition on payment of same. The applicable period of determination shall be
the Trailing Four Quarter Period.

          "GAAP" shall mean generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the accounting
profession), or in such other statements by such entity as may be in general use
by significant segments of the U.S. accounting profession.

          "Governmental Authority" shall mean any court, board, agency,
commission, office or authority of any nature whatsoever or any governmental
unit (federal, state, county, district, municipal, city or otherwise) whether
now or hereafter in existence, including, without limitation, the Centers for
Medicare and Medicaid Servicers (formerly known as the Health Care Financing
Administration) ("CMS"), the United States Department of Health and Human
Services, any state licensing agency and/or any state Medicaid agency.

          "GTCR" shall mean each of GTCR Golder Rauner, L.L.C. and GTCR Fund VI,
L.P., GTCR Associates VI, GTCR Fund VII, L.P., GTCR Associates VII, and GTCR
Capital Partners, L.P. which are investment funds managed by GTCR Golder Rauner,
L.L.C. so long as GTCR Golder Rauner L.L.C. has the power to vote and the power
to dispose of the Equity Interests in the Parent held by such investment fund.

          "Guaranteed Obligations" shall mean (i) the prompt and complete
payment of all indebtedness, debt, obligations and liabilities now or hereafter
owing to Lender under or on account of the Mortgage Loan Agreement, the
Mezzanine Loan Agreement, the Mortgage Note, the Mezzanine Note, the Lease
Documents or any other Loan Document or any other letters of credit, notes or
other instruments issued by or to the Lender pursuant thereto, (ii) the
performance of the covenants of the Mortgage Borrowers under the Mortgage Loan,
the performance of the covenants of the Mezzanine Borrowers under the Mezzanine
Loan, the

                                       9



performance of the covenants of the Trans Lessees under the Sale/Leaseback
Transaction and the Loan Documents and any monies expended by the Lender in
connection therewith (and required to be reimbursed by any Mortgage Borrower,
any Mezzanine Borrower or any Trans Lessee pursuant to any of the Mortgage Loan
Documents, Mezzanine Loan Documents or Lease Documents, as applicable), in all
cases (whether under the foregoing clause (i) or (ii)), of any kind or nature,
howsoever created or evidenced and whether now or hereafter existing, direct or
indirect (including without limitation any participation interest acquired by
Lender in any such indebtedness, debt, obligations or liabilities of any
Mortgage Borrower, any Mezzanine Borrower, any Trans Lessee or any of their
respective Subsidiaries to any other Person), absolute or contingent, joint
and/or several, secured or unsecured, arising by operation of law or otherwise,
and whether incurred by any Mortgage Borrower, any Mezzanine Borrower, any Trans
Lessee or any of their respective Subsidiaries as principal, surety, endorser,
guarantor, accommodation party or otherwise, including without limitation all
principal and all interest (including any interest accruing subsequent to any
petition filed by or against any Mortgage Borrower, any Mezzanine Borrower, any
Trans Lessee or any of their respective Subsidiaries under the U.S. Bankruptcy
Code), indemnity and reimbursement obligations, charges, expenses, fees,
attorneys' fees and disbursements and any other amounts owing thereunder and
(iii) the prompt payment, on demand, of any and all reasonable costs and
expenses incurred by Lender at any time in connection with enforcing the
obligations of any Guarantor hereunder, including, without limitation, the
reasonable fees and disbursements of counsel.

          "Guarantor Claims" shall have the meaning set forth in Section 8.1 of
this Guaranty.

          "Hazardous Substances" shall mean any and all substances (whether
solid, liquid or gas) defined, listed, or otherwise classified as pollutants,
toxic or hazardous wastes, toxic or hazardous substances, toxic or hazardous
materials, extremely hazardous wastes, or words of similar meaning or regulatory
effect under any present or future Environmental Laws or that may have a
negative impact on human health or the environment, including but not limited to
petroleum and petroleum products, asbestos and asbestos-containing materials,
mold, polychlorinated biphenyls, lead, radon, radioactive materials, flammables
and explosives, but excluding substances of kinds and in small amounts
ordinarily and customarily used or stored in similar properties for the purposes
of cleaning or other maintenance or operations and otherwise in compliance with
all Environmental Laws.

          "Healthcare Facility" shall mean (i) a residential or facility-based
program that provides housing and supportive services, supervision, personalized
assistance, health-related services or a combination thereof which meets the
needs of individuals who are unable to perform or who need assistance in
performing the activities of daily living; (ii) a facility (including any
Alzheimer's or dementia care unit of sub acute unit), which offers nonacute
inpatient care to patients who suffer from a disease, chronic illness, or
disability requiring nursing care without continuous hospital services, and who
require medical services and nursing services rendered by or under the
supervision of a licensed nurse, together with convalescent or restorative
services now or hereafter located on a Property (any such facility, a "Nursing
Facility"); or (iii) a facility that is operated as a special hospital for the
exclusive purpose of providing specialized rehabilitation services, on an
inpatient basis, to Persons with functional

                                       10



limitations or chronic disabling conditions who are in medically stable
condition and have the potential to achieve improvement in independent
functioning.

          "Improvements" shall mean the buildings, structures, fixtures,
additions, enlargements, extensions, modifications, repairs, replacements and
improvements now or hereafter erected on any Land (as defined in the Mortgages).

          "Indemnified Party" shall have the meaning set forth in Section 4.1 of
this Guaranty.

          "Interest Rate Protection Agreements" shall mean any interest rate
swap agreement, interest rate cap agreement, synthetic cap, collar or floor or
other financial agreement or arrangement designed to protect Parent or any Loan
Party against fluctuations in interest rates or to reduce the effect of any such
fluctuations.

          "Investment" shall mean, with respect to any Person, any stock,
evidence of indebtedness or other security of any Person, any loan, advance,
contribution of capital, extension of credit or commitment therefor (including,
without limitation, the guaranty of loans made to others, but excluding trade
and customer accounts receivable arising in the ordinary course of business and
payable in accordance with customary trading terms in the ordinary course of
business) any purchase of (i) any security of another Person or (ii) a line of
business, or all or substantially all of the assets, of any Person or any
commitment to make any such purchase. If Parent or any of its Consolidated
Subsidiaries sells or otherwise disposes of any Equity Interests of any direct
or indirect Subsidiary such that, after giving effect to any such sale or
disposition, such Person is no longer a Subsidiary, Parent or such Subsidiary
will be deemed to have made a Investment on the date of any such sale or
disposition equal to the fair market value of the Equity Interests of such
Subsidiary not sold or disposed. The acquisition by Parent or any of its
Consolidated Subsidiaries of a Person that holds an Investment in a third Person
will be deemed to be an Investment by Parent or such Subsidiary in such third
Person in an amount equal to the fair market value of Investments held by the
acquired Person in such third Person. "Investments" shall exclude extensions of
trade credit on commercially reasonable terms in accordance with normal trade
practices. In the event that a Person transfers assets to another Person in
exchange for a combination of items of value which includes items that would be
considered to be "Investments" under this definition, only those items that
would be considered to be "Investments" will be treated as Investments for
purposes of this Guaranty.

          "Lease Documents" shall mean the Master Lease, the Purchase and Sale
Agreement and all other documents now or hereafter executed and/or delivered in
connection with the Sale/Leaseback Transaction as such documents may be amended,
restated, replaced, supplemented or otherwise modified from time to time,
subject, however, to the terms of this Guaranty with respect the circumstances
in which the Loan Documents and the Trans Lessees may be altered or removed.

          "Legal Requirements" shall mean, with respect to each Obligor and each
Property, all federal, state, county, municipal and other governmental statutes,
laws, rules, orders, regulations, guidelines, ordinances, judgments, decrees and
injunctions of Governmental Authorities affecting such Obligor or such Property
or any part thereof or the construction, use,

                                       11



alteration or operation thereof, or any part thereof, whether now or hereafter
enacted and in force, including, without limitation, (i) the Americans with
Disabilities Act of 1990, (ii) all zoning, subdivision and land use laws,
regulations and ordinances, health, fire, building codes and parking laws, (ii)
skilled nursing facility, residential care, personal care, adult care, boarding
home and/or assisted living facility laws, rules, regulations and guidelines,
including, without limitation, Medicare Regulations and Medicaid Regulations,
(iii) any licensure requirements or certification requirements under applicable
federal and/or state cost reimbursement programs, including, without limitation,
Medicare and Medicaid, and all permits, licenses and authorizations and
regulations relating thereto, and all covenants, agreements, restrictions and
encumbrances contained in any instruments, either of record or known to
Borrower, at any time in force affecting such Property or any part thereof,
including, without limitation, any which may (i) require repairs, modifications
or alterations in or to such Property or any part thereof, or (ii) in any way
limit the use and enjoyment thereof.

          "Lien" shall mean, with respect to each Property, any mortgage, deed
of trust, lien, pledge, hypothecation, assignment, security interest, or any
other encumbrance, charge or transfer of, on or affecting such Property or any
portion thereof or any Loan Party or any interest therein, including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, the filing of any financing statement, and mechanic's, materialmen's
and other similar liens and encumbrances.

          "Loan Parties" shall mean the Consolidated Subsidiaries of Parent,
with the exception of the Non-Guarantor Subsidiaries.

          "Master Lease" shall mean the Master Lease of even date herewith by
and among the Trans Lessees and Lender, as amended, modified and in effect from
time to time.

          "Material Adverse Effect" shall mean a material adverse effect on (i)
the business, condition (financial or otherwise), results of operations,
performance, assets, liabilities or solvency of Parent and its Subsidiaries
taken as a whole, (ii) a material adverse effect on the ability of any Guarantor
to perform its obligations under any material provisions of this Guaranty or (c)
a material adverse effect on the legality, binding effect or enforceability of
any material provision of any Mortgage Loan Document, Mezzanine Loan Document or
any Lease Document or the rights and remedies of the Lender thereunder.

          "Medicaid" shall mean that certain program of medical assistance,
funded jointly by the federal government and the states for impoverished
individuals who are aged, blind and/or disabled, and for members of families
with dependent children, which program is more fully described in Title XIX of
the Social Security Act (42 U.S.C. 1396 et seq.) and the regulations promulgated
thereunder.

          "Medicaid Regulations" shall mean, collectively, (i) all federal
statutes (whether set forth in Title XIX of the Social Security Act (42 U.S.C.
(S)(S) 1396 et seq.) or elsewhere) affecting the medical assistance program
established by Title XIX of the Social Security Act; (ii) all applicable
provisions of all federal rules, regulations, manuals, orders and
administrative, reimbursement and other guidelines of all Governmental
Authorities (whether or not having the

                                       12



force of law) promulgated pursuant to or in connection with the statutes
described in clause (i) above; (iii) all state statutes enacted and all state
plans for medical assistance, and state plan amendments filed by the state with
CMS in connection with the statutes and provisions described in clauses (i) and
(ii) above; and (iv) all applicable provisions of all rules, regulations,
manuals, orders and administrative, reimbursement, and other guidelines of all
Governmental Authorities (whether or not having the force of law) promulgated
pursuant to or in connection with any of the foregoing, in each case as may be
amended, supplemented or otherwise modified from time to time.

          "Medicare" shall mean that certain federal program providing health
insurance for eligible elderly and other individuals, under which physicians,
hospitals, Nursing Facilities, home health care and other providers are
reimbursed for certain covered services they provide to the beneficiaries of
such program, which program is more fully described in Title XVIII of the Social
Security Act (42 U.S.C. (S)(S) 1395 et seq.) and the regulations promulgated
thereunder.

          "Medicare Regulations" shall mean, collectively, all federal statutes
(whether set forth in Title XVIII of the Social Security Act (42 U.S.C. (S)(S)
1395 et seq.) or elsewhere) affecting the health insurance program for the aged
and disabled established by Title XVIII of the Social Security Act, together
with all applicable provisions of all rules, regulations, manuals, orders and
administrative, reimbursement and other guidelines of all Governmental
Authorities promulgated pursuant to or in connection with any of the foregoing
(whether or not having the force of law), as each may be amended, supplemented
or otherwise modified from time to time.

          "Mezzanine Borrowers" as used herein shall include any new or
successor corporation, association, partnership (general or limited), limited
liability company joint venture, trust or other individual or organization
formed as a result of any merger, reorganization, sale, transfer, devise, gift
or bequest of Mezzanine Borrowers or any interest in Mezzanine Borrowers.

          "Mezzanine Loan Documents" shall mean the Mezzanine Loan Agreement,
the Mezzanine Note, this Guaranty, the Pledge Agreement and all other documents
now or hereafter executed and/or delivered in connection with the Mezzanine Loan
as such documents may be amended, restated, replaced, supplemented or otherwise
modified from time to time.

          "Mortgage" means, (a) with respect to each Property located in the
State of Ohio, a first priority Mortgage, Assignment of Leases and Rents and
Security Agreement or (b) with respect to each Property located in the State of
Maryland, a first priority Deed of Trust, Assignment of Leases and Rents and
Security Agreement, dated the date hereof, executed and delivered by Borrower as
security for the Loan and encumbering such Property, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time, and
"Mortgages" means all such instruments collectively.

          "Mortgage Borrowers" as used herein shall include any new or successor
corporation, association, partnership (general or limited), limited liability
company joint venture, trust or other individual or organization formed as a
result of any merger, reorganization, sale, transfer, devise, gift or bequest of
Mortgage Borrowers or any interest in Mortgage Borrowers.

                                       13



          "Mortgage Loan Documents" shall mean the Mortgage Loan Agreement, the
Mortgage Note, this Guaranty, the Pledge Agreement and all other documents now
or hereafter executed and/or delivered in connection with the Mortgage Loan as
such documents may be amended, restated, replaced, supplemented or otherwise
modified from time to time.

          "Non-Guarantor Restrictions" shall have the meaning set forth in
Section 4.1 of this Guaranty.

          "Non-Guarantor Subsidiaries" shall mean the subsidiaries of Parent
listed on Schedule E hereto.

          "Notice" shall have the meaning set forth in Section 10.5 of this
Guaranty.

          "Nursing Facility" has the meaning set forth in the definition of the
term "Healthcare Facility".

          "Obligor" shall mean, collectively, each Mortgage Borrower, each
Mezzanine Borrower, each Trans Lessee and each Guarantor.

          "Officer's Certificate" shall mean a certificate delivered to Lender
by Borrower which is signed by an authorized senior officer of Borrower.

          "Other Charges" means all ground rents, maintenance charges,
impositions other than Taxes, and any other charges, including, without
limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining the Properties, now or hereafter levied or assessed or
imposed against the Properties or any part thereof.

          "P&S Agreement" shall mean the Millennium Purchase and Sale Agreement,
dated March 19, 2002, as amended by that certain First Addendum to Asset
Purchase Agreement dated August 30, 2002 by and among Trans Healthcare, Inc.
("Parent"), an affiliate of the Borrowers, Millennium Heath Services, LLC (the
"Maryland Seller"), Robert G. Owens and Stanley H. Snow (as so amended, the
"Millennium Agreement") with respect to the Properties, including, but not
limited to, any representations, warranties, covenants, and indemnities made by
any Seller Parties (as defined in the Millennium Agreement) or the Maryland
Seller to and with respect to the Properties (the "Purchase Agreement Assigned
Rights"); provided, however, that the foregoing shall be without limitation upon
the right of Parent or Seller to rely upon, enforce and benefit from the
Purchase Agreement Assigned Rights.

          "Permitted Debt" shall mean (i) all Debt existing as of the date
hereof listed on Schedule 1.1(b), (ii) Debt incurred pursuant to this Guaranty
or any other Loan Document or Lease Document, including any renewals,
refinancings or extensions thereof, (iii) Debt incurred by Parent in favor of
GTCR provided that such Debt shall be Unsecured Debt in the form of preferred
equity on terms and conditions substantially similar to the preferred equity
outstanding on the date hereof or as are otherwise acceptable to the Lender in
its sole discretion or Unsecured Debt on terms and conditions acceptable to the
Lender in its sole discretion including, without limitation, that such Unsecured
Debt shall be subject and subordinate in right of payment to the right of the
Lender to receive the prior indefeasible payment and satisfaction in full of all
Guaranteed Obligations pursuant to the terms of an intercreditor agreement
between Lender and

                                       14



GTCR, in form and substance satisfactory to the Lender, and (iv) Debt incurred
by Parent in an amount of up to $5,000,000 provided that such Debt shall be
Unsecured Debt and shall be on terms and conditions approved in writing in
advance by Lender in its sole discretion including, without limitation, that the
holder of such financing shall subordinate all payments on such financing to any
payments of Parent's obligations under this Guaranty and such holder shall agree
to defer payment of such financing until all of Parent's obligations under this
Guaranty have terminated.

          "Permitted Encumbrances" shall mean Liens permitted under Section
7.2(a) hereof.

          "Permitted Holders" shall mean GTCR and each of the officers,
employees and directors of Parent, in each case as long as such Person shall
remain an officer, employee or director of Parent; provided, however, that in no
event shall any Persons (other than GTCR) be deemed "Permitted Holders" with
respect to more than 30% of the total voting power of the voting stock of
Parent.

          "Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, estate, trust, unincorporated association, any
other entity, any federal, state, county or municipal government or any bureau,
department or agency thereof and any fiduciary acting in such capacity on behalf
of any of the foregoing.

          "Pledge Agreement" has the meaning set forth in the recitals hereto.

          "Pro Forma Basis" shall mean, for purposes of determining compliance
with any financial covenant hereunder, that the subject transaction shall be
deemed to have occurred as of the first day of the applicable period ending on a
Quarterly Measurement Date for which annual or quarterly financial statements
shall have been delivered in accordance with the provisions of this Guaranty.
Further, for purposes of making calculations on a "Pro Forma Basis" hereunder,
(i) in the case of an Asset Disposition, (A) income statement items (whether
positive or negative) attributable to the property, entities or business units
that are the subject of such Asset Disposition shall be excluded to the extent
relating to any period prior to the actual date of the subject transaction, and
(B) Debt paid or retired in connection with the subject transaction shall be
deemed to have been paid and retired as of the first day of the applicable
period; and (ii) in the case of an Acquisition, (A) income statement items
(whether positive or negative) attributable to the property, entities or
business units that are the subject of such Acquisition shall be included to the
extent relating to any period prior to the actual date of the subject
transaction, and (B) Debt incurred in connection with the subject transaction
shall be deemed to have been incurred as of the first day of the applicable
period (and interest expense shall be imputed for the applicable period
utilizing the actual interest rates thereunder or, if actual rates are not
ascertainable, assuming prevailing interest rates hereunder).

          "Property" shall mean the "Property" as defined in the Mortgage Loan
Agreement, the "Property" as defined in the Mezzanine Loan Agreement, the
"Premises" as defined in the Master Lease and all parcels of land, buildings,
structures and other improvements thereon owned or leased by any of the
Guarantors.

                                       15



          "Purchase and Sale Agreement" shall mean the Purchase and Sale
Agreement of even date herewith by and between Trans Healthcare of Ohio, Inc.
and Lender.

          "Quarterly Measurement Date" shall mean the last Business Day of
March, June, September and December in each year, commencing on or after the
date hereof.

          "Rating Agencies" shall mean, as applicable, prior to the final
Securitization of the Mortgage Loan, Mezzanine Loan or the Master Lease, each of
Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies,
Inc., Moody's Investors Service, Inc. and Fitch, Inc. or any other
nationally-recognized statistical rating agency which has been designated by
Lender and, as applicable, after the final Securitization of the Mortgage Loan,
Mezzanine Loan or Master Lease, shall mean any of the foregoing that have rated
any of the securities issued in connection with such Securitization.

          "Real Estate Assets" shall mean, as of any date, the real estate
assets of Parent and its Consolidated Subsidiaries on such date, on a
consolidated basis, determined in accordance with GAAP.

          "Release" with respect to any Hazardous Substance includes but is not
limited to any release, deposit, discharge, emission, leaking, leaching,
spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping,
dumping, disposing or other movement of Hazardous Substances.

          "Remediation" (and its correlative terms) includes but is not limited
to any response, remedial, removal, or corrective action; any activity to clean
up, detoxify, decontaminate, contain or otherwise remediate any Hazardous
Substance; any actions to prevent, cure or mitigate any Release of any Hazardous
Substance; any action to comply with any Environmental Laws or with any permits
issued pursuant thereto; any inspection, investigation, study, monitoring,
assessment, audit, sampling and testing, laboratory or other analysis, or
evaluation relating to any Hazardous Substances or to anything referred to
herein, including the preparation of any plans, studies, reports or documents
with respect thereto.

          "Replacement Guaranty" shall have the meaning set forth in Section
2.14 of this Guaranty.

          "Replacement Guaranty Election" shall have the meaning set forth in
Section 2.14 of this Guaranty.

          "Requirements" shall mean all applicable present and future laws,
statutes, codes, ordinances, orders, judgments, decrees, injunctions, rules,
regulations and requirements of every Governmental Authority having jurisdiction
over Parent or any Loan Party or any Property and all restrictive covenants
applicable to any Property.

          "Secondary Market Transaction" shall have the meaning set forth in
Section 10.17 of this Guaranty.

                                       16



          "Secured Debt" shall mean all Debt of Parent and its Consolidated
Subsidiaries secured by a mortgage, lien, charge, pledge or security interest or
other encumbrance on the property of Parent or any of its Consolidated
Subsidiaries.

          "Securitization" shall have the meaning set forth in Section 10.17 of
this Guaranty.

          "Service Guarantors" shall mean the subsidiaries of Parent listed on
Schedule F hereto.

          "Subordinated Debt" shall mean Debt which by the terms of such Debt is
subordinated in right of payment to the principal of and interest and premium,
if any, on the loans and obligations owing hereunder and the guaranties thereof.

          "Subsidiary" shall mean, as to any Person, any corporation or other
entity of which at least the majority of the outstanding voting stock or other
ownership interests having ordinary voting power for the election of directors
(or the equivalent) is at the time directly or indirectly owned or controlled by
such Person or by one or more of any entities directly or indirectly controlled
by such Person.

          "Taxes" means all real estate and personal property taxes,
assessments, water rates or sewer rents, now or hereafter levied or assessed or
imposed against any of the Properties or part thereof, together with all
interest and penalties thereon.

          "Title Company" shall mean The First American Title Company or any
other title insurance company of recognized national standing which is
acceptable to the Lender in its sole discretion.

          "Total Consolidated Assets" shall mean, at any date, the total assets
of the Parent and its Consolidated Subsidiaries on a consolidated basis as of
such date determined in accordance with GAAP.

          "Trailing Four Quarter Period" shall mean the period of four
consecutive full fiscal quarters of the Parent and its Consolidated Subsidiaries
ended on such date (or, in the case of any such date which is earlier than
December 31, 2003, for the period from the Closing Date to and including such
date multiplied by a fraction the numerator of which is 365 and the denominator
of which is the number of days in such period).

          "Unsecured Debt" shall mean any Debt of Parent or its Consolidated
Subsidiaries that is not Secured Debt.

          "Updated Information" shall have the meaning set forth in Section
10.17 of this Guaranty.

                    ARTICLE II - NATURE AND SCOPE OF GUARANTY

          Section 2.1 Guaranty of Obligations. Each Guarantor hereby irrevocably
and unconditionally guarantees to Lender and its successors and assigns the
payment and performance of the Guaranteed Obligations as and when the same shall
be due and payable,

                                       17



whether by lapse of time, by acceleration of maturity or otherwise. Each
Guarantor hereby irrevocably and unconditionally covenants and agrees that it is
liable for the Guaranteed Obligations as a primary obligor.

          Section 2.2 Nature of Guaranty. This Guaranty is an irrevocable,
absolute, continuing guaranty of payment and performance and not a guaranty of
collection. This Guaranty may not be revoked by any Guarantor and shall continue
to be effective with respect to any Guaranteed Obligations arising or created
after any attempted revocation by any Guarantor. The fact that at any time or
from time to time the Guaranteed Obligations may be increased or reduced shall
not release or discharge the obligation of each Guarantor to Lender with respect
to the Guaranteed Obligations. This Guaranty may be enforced by Lender, any
subsequent holder of the Mortgage Note, the Mezzanine Note and any successor or
assignee of Lender to the Mortgage Loan Agreement, the Mezzanine Loan Agreement
and the Sale/Leaseback Transaction and shall not be discharged by the assignment
of any of the Mortgage Loan Documents, Mezzanine Loan Documents or the Lease
Documents or the assignment and negotiation of all or part of the Mortgage Note,
Mezzanine Note or the Lease Documents.

          Section 2.3 Guaranteed Obligations Not Reduced by Offset. The
Guaranteed Obligations and the liabilities and obligations of each Guarantor to
Lender hereunder shall not be reduced, discharged or released because or by
reason of any existing or future offset, claim or defense of any Mortgage
Borrower, any Mezzanine Borrower, any Trans Lessee or any other party against
Lender or against payment of the Guaranteed Obligations, whether such offset,
claim or defense arises in connection with the Guaranteed Obligations (or the
transactions creating the Guaranteed Obligations) or otherwise.

          Section 2.4 Payment by Guarantor. If all or any part of the Guaranteed
Obligations shall not be punctually paid when due, whether at demand, maturity,
acceleration or otherwise, each Guarantor shall, immediately upon demand by
Lender and without presentment, protest, notice of protest, notice of
non-payment, notice of intention to accelerate the maturity, notice of
acceleration of the maturity or any other notice whatsoever, pay in lawful money
of the United States of America, the amount due on the Guaranteed Obligations to
Lender at Lender's address as set forth herein. Such demand(s) may be made at
any time coincident with or after the time for payment of all or part of the
Guaranteed Obligations and may be made from time to time with respect to the
same or different items of Guaranteed Obligations. Such demand shall be deemed
made, given and received in accordance with the notice provisions hereof.

          Section 2.5 No Duty to Pursue Others. It shall not be necessary for
Lender (and each Guarantor hereby waives any rights which each Guarantor may
have to require Lender), in order to enforce the obligations of each Guarantor
hereunder, first to (i) institute suit or exhaust its remedies against any
Mortgage Borrower, any Mezzanine Borrower or any Trans Lessee or others liable
on the Guaranteed Obligations or any other Person, (ii) enforce Lender's rights
against any collateral which shall ever have been given to secure the Guaranteed
Obligations, (iii) enforce Lender's rights against any other guarantors of the
Guaranteed Obligations, (iv) join any Mortgage Borrower, any Mezzanine Borrower
or any Trans Lessee or any others liable on the Guaranteed Obligations in any
action seeking to enforce this Guaranty, (v) exhaust any remedies available to
Lender against any collateral which shall ever have been

                                       18



given to secure the Guaranteed Obligations, or (vi) resort to any other means of
obtaining payment of the Guaranteed Obligations. Lender shall not be required to
mitigate damages or take any other action to reduce, collect or enforce the
Guaranteed Obligations.

          Section 2.6 Waivers. Each Guarantor agrees to the provisions of the
Mortgage Loan Documents, Mezzanine Loan Documents and the Lease Documents and
hereby waives notice of (i) any loans or advances made by Lender to any Obligor,
(ii) acceptance of this Guaranty, (iii) any amendment, modification, replacement
or extension of the Mortgage Loan Agreement, the Mezzanine Loan Agreement, the
Mortgage Note, the Mezzanine Note, the Pledge Agreement, any other Mortgage Loan
Document, Mezzanine Loan Document or any Lease Document, (iv) the execution and
delivery by any Obligor and Lender of any other loan or credit agreement or of
any Obligor's, execution and delivery of any promissory notes or other documents
arising under the Mortgage Loan Documents, Mezzanine Loan Documents, in
connection with any Property, or under any Lease Document, (v) the occurrence of
any breach by any Obligor or a Default, (vi) Lender's transfer or disposition of
the Guaranteed Obligations, or any part thereof, (vii) sale or foreclosure (or
posting or advertising for sale or foreclosure) of any collateral for the
Guaranteed Obligations, (viii) protest, proof of non-payment or default by any
Obligor, (ix) any release in whole or in part, of any security for the
Guaranteed Obligations, (x) any forbearance, waiver, consent, indulgence or
other action or inaction which Lender may hereafter consent to, accord, grant or
take with respect to any Obligor in respect of the Mortgage Loan Agreement, the
Mezzanine Loan Agreement, the Mortgage Note, the Mezzanine Note, the Pledge
Agreement, any other Mortgage Loan Document, Mezzanine Loan Document or any
Lease Document or (xi) any other action at any time taken or omitted by Lender
and, generally, all demands and notices of every kind in connection with this
Guaranty, the Mortgage Loan Documents, Mezzanine Loan Documents, the Lease
Documents or any documents or agreements evidencing, securing or relating to any
of the Guaranteed Obligations and the obligations hereby guaranteed.

          Section 2.7 Payment of Expenses. In the event that any Guarantor
should breach or fail to timely perform any provisions of this Guaranty, each
Guarantor shall, immediately upon demand by Lender, pay Lender all costs and
expenses (including court costs and attorneys' fees) incurred by Lender in the
enforcement hereof or the preservation of Lender's rights hereunder. The
covenant contained in this Section shall survive the payment and performance of
the Guaranteed Obligations.

          Section 2.8 Joint and Several Obligations. The obligations of each
Guarantor hereunder shall be several and also joint each with all or with any
one or more of the other parties now or hereafter guaranteeing any of the
Guaranteed Obligations, and such obligations of each Guarantor may be enforced
against each Guarantor separately or against any two or more jointly, or against
some separately and some jointly.

          Section 2.9 Effect of Bankruptcy. In the event that pursuant to any
insolvency, bankruptcy, reorganization, receivership or other debtor relief law
or any judgment, order or decision thereunder, Lender must rescind or restore
any payment or any part thereof received by Lender in satisfaction of the
Guaranteed Obligations, as set forth herein, any prior release or discharge from
the terms of this Guaranty given to each Guarantor by Lender shall be without
effect and this Guaranty shall remain in full force and effect. It is the
intention of each

                                       19



Guarantor that each its respective obligations hereunder shall not be discharged
except by such Guarantor's performance of such obligations and then only to the
extent of such performance.

          Section 2.10 Waiver of Subrogation, Reimbursement and Contribution.
Notwithstanding anything to the contrary contained in this Guaranty, unless and
until the indefeasible payment and satisfaction in full of all of the Guaranteed
Obligations, each Guarantor hereby unconditionally and irrevocably waives,
releases and abrogates any and all rights it may now or hereafter have under any
agreement, at law or in equity (including, without limitation, any law
subrogating each Guarantor to the rights of Lender), to assert any claim against
or seek contribution, indemnification or any other form of reimbursement from
any Mortgage Borrower, any Mezzanine Borrower or any Trans Lessee or any other
party liable for payment of any or all of the Guaranteed Obligations for any
payment made by Guarantor under or in connection with this Guaranty or
otherwise.

          Section 2.11 Security for Guaranteed Obligations. Parent and certain
of the Guarantors shall pledge, transfer and assign pursuant to the Pledge
Agreement and grant to Lender as security for the payment and performance of the
Guaranteed Obligations a continuing perfected security interest in and to and
general first lien upon the Pledged Equity (as defined in the Pledge Agreement)
pursuant to the Pledge Agreement.

          Section 2.12 Termination of Guaranty as to Mortgage Loan. Upon
Lender's election, upon the inclusion of the Mortgage Loan in a Secondary Market
Transaction including, but not limited to a Securitization (as defined in the
Mortgage Loan Agreement), the Guaranty shall terminate as to that portion of the
Mortgage Loan as Lender shall elect. From and after such election, this Guaranty
shall be interpreted without reference to the terms relating to the
Mortgage Borrowers, Mortgage Loan, Mortgage Note, Mortgage Loan Agreement,
Mortgage Loan Documents and such other terms relating solely to the Mortgage
Loan. Obligors shall execute such amendments to the Mortgage Loan Documents,
including, but not limited to, this Guaranty and the Pledge Agreement as Lender
shall request to effectuate the foregoing.

          Section 2.13 Termination of Certain Covenants. Within thirty (30) days
after the date that the terms of Sections 2.4.2(b) or 8.2(b)(as applicable), and
24.2 of the Mortgage Loan Agreement, the Mezzanine Loan Agreement and the Master
Lease respectively are satisfied including, without limitation, the indefeasible
prepayment in full of the Mezzanine Loan, upon the payment by Parent to Lender
of security deposits under the Master Lease in an amount equal to two years rent
(after taking into account the amount of security deposits already held by
Parent), Parent may elect, in its sole discretion, to terminate the application
of the covenants provided in Articles VI and VII hereof (a "Covenant Replacement
Event") and thereafter this Guaranty shall be interpreted without reference to
such covenants.

          Section 2.14 New Leases; Revise Lease Documents. Each Guarantor
acknowledges and agrees that the Master Lease permits the Lender to elect, in
its sole discretion, to : (i) delete and eliminate one or more Lease Properties
(as defined in the Master Lease) from the Master Lease (a "Deletion Event");
(ii) upon the occurrence of a Deletion Event, require that those Trans Lessees
which lease the Leased Properties that are the subject of a Deletion Event (the
"Deleted Properties") execute and enter into a New Lease (as defined in the
Master Lease) with the Lender on substantially the same terms as are contained
in the Master Lease (as more

                                       20



particularly described and discussed in Section 42 in the Master Lease); and
(iii) to add one or more Additional Properties (as defined in the Master Lease)
to the Master Lease pursuant to Section 41 of the Master Lease (an "Addition
Event"). Upon the occurrence of a Deletion Event, the Lender may elect, in its
sole discretion, to (i) terminate this Guaranty as to the Deleted Properties for
all relevant purposes; (ii) require that the Guarantors execute and enter into a
new guaranty of any New Lease containing the same terms and conditions as this
Guaranty as to such New Lease and the applicable Leased Properties and a new
Pledge Agreement as to such New Lease and the applicable Leased Properties; or
(iii) allow any New Lease to constitute a Lease Document within the meaning of
this Guaranty. If the Lender elects alternative (i) or alternative (ii) of the
preceding sentence, (i) the Lease Documents shall no longer include any New
Lease, (ii) the Property shall no longer include the Deleted Properties; (iii)
the Trans Entities shall no longer include the "tenants" of the Deleted
Properties; and (iv) this Guaranty shall be interpreted without reference to the
Deleted Properties or such Trans Entities. Upon the occurrence of an Addition
Event, the Lender may elect, in its sole discretion, to require that the
Additional Properties again be subject to this Guaranty. The Lender may elect,
in its sole discretion, to delete and eliminate the Lease Documents, the Leased
Properties and the Trans Lessees from this Guaranty for all relevant purposes (a
"Replacement Guaranty Election") and require that the Guarantors provide an
independent, stand alone guaranty for the Lease Documents containing the same
terms, conditions, assurances and guarantees as this Guaranty, but relating
exclusively to the Sale/Leaseback Transaction. If the Lender makes a Replacement
Guaranty Election, (a) this Guaranty shall terminate as to the Sale/Leaseback
Transaction at such time as the Replacement Guaranty (as hereinafter defined)
has been executed by all of the Guarantors; (b) this Guaranty shall be
interpreted without reference to the terms relating to the Trans Lessees, the
Sale/Leaseback Transaction or the Lease Documents at such time as the
Replacement Guaranty has been executed by each Guarantor; and (c) the Guarantors
shall execute and enter into a guaranty to and for the benefit of the Lender as
to the Sale/Leaseback Transaction and the Lease Documents (the "Replacement
Guaranty") containing the same terms, conditions, protections, guarantees and
assurances as this Guaranty but relating solely to the Sale/Leaseback
Transaction and the Lease Documents. Obligors shall execute such amendments to
the Lease Documents, this Guaranty, the Mortgage Loan Documents and the Pledge
Agreement as Lender shall request to effectuate any of the foregoing.

                   ARTICLE III - EVENTS AND CIRCUMSTANCES NOT
                 REDUCING OR DISCHARGING GUARANTOR'S OBLIGATIONS

          Section 3.1 Events and Circumstances Not Reducing or Discharging
Guarantor's Obligations. Each Guarantor hereby consents and agrees to each of
the following and agrees that its respective obligations under this Guaranty
shall not be released, diminished, impaired, reduced or adversely affected by
any of the following and waives any common law, equitable, statutory or other
rights (including without limitation rights to notice) which each Guarantor
might otherwise have as a result of or in connection with any of the following:

               (a) Modifications. Any renewal, extension, increase,
     modification, alteration or rearrangement of all or any part of the
     Guaranteed Obligations, any Mortgage Loan Document, Mezzanine Loan
     Document, any Lease Document or any other document, instrument, contract or
     understanding between any Obligor and Lender

                                       21



     or any other parties pertaining to the Guaranteed Obligations or any
     failure of Lender to notify each Guarantor of any such action.

               (b) Adjustment. Any adjustment, indulgence, waiver, forbearance
     or compromise that might be granted or given by Lender to any Obligor or
     any Guarantor.

               (c) Condition of Borrower or Guarantors. The insolvency,
     bankruptcy, arrangement, adjustment, composition, liquidation, disability,
     dissolution or lack of power of any Mortgage Borrower, any Mezzanine
     Borrower, any Trans Lessee, any Guarantor or any other party at any time
     liable for the payment of all or part of the Guaranteed Obligations; or any
     dissolution of any Mortgage Borrower, any Mezzanine Borrower, any Trans
     Lessee or any Guarantor or any sale, lease or transfer of any or all of the
     assets of any Mortgage Borrower, any Mezzanine Borrower, any Trans Lessee
     or any Guarantor or any changes in the shareholders, partners or members of
     any Mortgage Borrower, any Mezzanine Borrower, any Trans Lessee or any
     Guarantor; or any reorganization of any Mortgage Borrower, any Mezzanine
     Borrower, any Trans Lessee or any Guarantor.

               (d) Invalidity of Guaranteed Obligations. The invalidity,
     illegality or unenforceability of all or any part of the Guaranteed
     Obligations or any document or agreement executed in connection with the
     Guaranteed Obligations for any reason whatsoever, including without
     limitation the fact that (i) the Guaranteed Obligations or any part thereof
     exceeds the amount permitted by law, (ii) the act of creating the
     Guaranteed Obligations or any part thereof is ultra vires, (iii) the
     officers or representatives executing the Mortgage Loan Agreement, the
     Mezzanine Loan Agreement, the Mortgage Note, the Mezzanine Note, the Pledge
     Agreement, any other Mortgage Loan Document, Mezzanine Loan Document or any
     Lease Document or otherwise creating the Guaranteed Obligations acted in
     excess of their authority, (iv) the Guaranteed Obligations violate
     applicable usury laws, (v) any Obligor has valid defenses, claims or
     offsets (whether at law, in equity or by agreement) which render the
     Guaranteed Obligations wholly or partially uncollectible from such Obligor,
     (vi) the creation, performance or repayment of the Guaranteed Obligations
     (or the execution, delivery and performance of any document or instrument
     representing part of the Guaranteed Obligations or executed in connection
     with the Guaranteed Obligations or given to secure the repayment of the
     Guaranteed Obligations) is illegal, uncollectible or unenforceable, or
     (vii) the Mortgage Loan Agreement, the Mezzanine Loan Agreement, the
     Mortgage Note, the Mezzanine Note, the Pledge Agreement, any other Mortgage
     Loan Document, Mezzanine Loan Document or any Lease Document have been
     forged or otherwise are irregular or not genuine or authentic, it being
     agreed that each Guarantor shall remain liable hereon regardless of whether
     any Obligor or any other Person be found not liable on the Guaranteed
     Obligations or any part thereof for any reason.

               (e) Release of Obligors. Any full or partial release of the
     liability of any Obligor on the Guaranteed Obligations or any part thereof,
     or of any co-guarantors, or any other Person now or hereafter liable,
     whether directly or indirectly, jointly, severally, or jointly and
     severally, to pay, perform, guarantee or assure the

                                       22



     payment of the Guaranteed Obligations, or any part thereof, it being
     recognized, acknowledged and agreed by Guarantor that Guarantor may be
     required to pay the Guaranteed Obligations in full without assistance or
     support of any other party, and each Guarantor has not been induced to
     enter into this Guaranty on the basis of a contemplation, belief,
     understanding or agreement that other parties will be liable to pay or
     perform the Guaranteed Obligations, or that Lender will look to other
     parties to pay or perform the Guaranteed Obligations.

               (f) Other Collateral. The taking or accepting of any other
     security, collateral or guaranty, or other assurance of payment, for all or
     any part of the Guaranteed Obligations.

               (g) Release of Collateral. Any release, surrender, exchange,
     subordination, deterioration, waste, loss or impairment (including without
     limitation negligent, willful, unreasonable or unjustifiable impairment) of
     any collateral, property or security at any time existing in connection
     with, or assuring or securing payment of, all or any part of the Guaranteed
     Obligations.

               (h) Care and Diligence. The failure of Lender or any other party
     to exercise diligence or reasonable care in the preservation, protection,
     enforcement, sale or other handling or treatment of all or any part of any
     collateral, property or security, including but not limited to any neglect,
     delay, omission, failure or refusal of Lender (i) to take or prosecute any
     action for the collection of any of the Guaranteed Obligations or (ii) to
     foreclose, or initiate any action to foreclose, or, once commenced,
     prosecute to completion any action to foreclose upon any security therefor,
     or (iii) to take or prosecute any action in connection with any instrument
     or agreement evidencing or securing all or any part of the Guaranteed
     Obligations.

               (i) Unenforceability. The fact that any collateral, security,
     security interest or lien contemplated or intended to be given, created or
     granted as security for the repayment of the Guaranteed Obligations, or any
     part thereof, shall not be properly perfected or created, or shall prove to
     be unenforceable or subordinate to any other security interest or lien, it
     being recognized and agreed by each Guarantor that it is not entering into
     this Guaranty in reliance on, or in contemplation of the benefits of, the
     validity, enforceability, collectibility or value of any of the collateral
     for the Guaranteed Obligations.

               (j) Offset. The Guaranteed Obligations and the liabilities and
     obligations of each Guarantor to Lender hereunder shall not be reduced,
     discharged or released because of or by reason of any existing or future
     right of offset, claim or defense of any Obligor against Lender, or any
     other party, or against payment of the Guaranteed Obligations, whether such
     right of offset, claim or defense arises in connection with the Guaranteed
     Obligations (or the transactions creating the Guaranteed Obligations) or
     otherwise.

               (k) Merger. The reorganization, merger or consolidation of any
     Obligor into or with any other Person.

                                       23



               (l) Preference. Any payment by any Obligor to Lender is held to
     constitute a preference under bankruptcy laws or for any reason Lender is
     required to refund such payment or pay such amount to any Obligor or
     someone else.

               (m) Other Actions Taken or Omitted. Any other action taken or
     omitted to be taken with respect to the Mortgage Loan Document, Mezzanine
     Loan Documents, the Lease Documents, the Guaranteed Obligations, or the
     security and collateral therefor, whether or not such action or omission
     prejudices any Guarantor or increases the likelihood that any Guarantor
     will be required to pay the Guaranteed Obligations pursuant to the terms
     hereof, it is the unambiguous and unequivocal intention of each Guarantor
     that it shall be obligated to pay the Guaranteed Obligations when due,
     notwithstanding any occurrence, circumstance, event, action, or omission
     whatsoever, whether contemplated or uncontemplated, and whether or not
     otherwise or particularly described herein, which obligation shall be
     deemed satisfied only upon the full and final payment and satisfaction of
     the Guaranteed Obligations.

             ARTICLE IV - REPRESENTATIONS, WARRANTIES AND AGREEMENTS

          Section 4.1 Representations and Warranties. To induce Lender to enter
into the Loan Documents and extend credit to each Mortgage Borrower and the
Mezzanine Borrower and enter into the Sale/Leaseback Transaction with the Trans
Lessees, each Guarantor represents and warrants to Lender as follows:

               (a) Benefit. (i) Parent is the owner of a direct or indirect
     interest in each Mortgage Borrower, each Trans Lessee and each Mezzanine
     Borrower, and has received, or will receive, direct or indirect benefit
     from the making of this Guaranty with respect to the Guaranteed
     Obligations.

                    (ii) Each Guarantor is an Affiliate of each Mortgage
     Borrower, each Mezzanine Borrower and each Trans Lessee, and has received,
     or will receive, direct or indirect benefit from the making of this
     Guaranty with respect to the Guaranteed Obligations.

                    (iii) Obligors make up a related organization of various
     entities constituting a single economic and business enterprise so that
     Obligors share an identity of interests such that any benefit received by
     any one of them benefits the others.

               (b) Familiarity and Reliance. Each Guarantor is familiar with,
     and has independently reviewed books and records regarding, the financial
     condition of each Mortgage Borrower, each Mezzanine Borrower and each Trans
     Lessee and is familiar with the value of any and all collateral intended to
     be created as security for the payment of the obligations evidenced by the
     Mortgage Loan Documents, Mezzanine Loan Documents, Lease Documents or
     Guaranteed Obligations; however, each Guarantor is not relying on such
     financial condition or the collateral as an inducement to enter into this
     Guaranty.

                                       24



               (c) No Representation by Lender. Neither Lender nor any other
     party has made any representation, warranty or statement to any Guarantor
     in order to induce such Guarantor to execute this Guaranty.

               (d) Guarantor's Financial Condition. As of the date hereof, and
     after giving effect to this Guaranty and the contingent obligation
     evidenced hereby, each Guarantor is and will be solvent and has and will
     have assets which, fairly valued, exceed its obligations, liabilities
     (including contingent liabilities) and debts, and has and will have
     property and assets sufficient to satisfy and repay its obligations and
     liabilities.

               (e) Legality. The execution, delivery and performance by each
     Guarantor of this Guaranty and the consummation of the transactions
     contemplated hereunder do not and will not contravene or conflict with any
     law, statute or regulation whatsoever to which each Guarantor is subject or
     constitute a default (or an event which with notice or lapse of time or
     both would constitute a default) under, or result in the breach of, any
     indenture, mortgage, charge, lien, or any contract, agreement or other
     instrument to which such Guarantor is a party or which may be applicable to
     such Guarantor. This Guaranty has been duly authorized and approved on the
     part of each Guarantor by all necessary corporate action, and this Guaranty
     is a legal and binding obligation of each Guarantor, is enforceable in
     accordance with its terms, except as limited by bankruptcy, insolvency or
     other laws of general application relating to the enforcement of creditors'
     rights.

               (f) True and Complete Disclosure. (i) All information, documents,
     financial reports and other projections, which have been made available to
     Lender by any Guarantor or its Subsidiaries, in connection with the
     negotiation, preparation or delivery of the Loan Documents and the Lease
     Documents, including this Guaranty, whether prior to or after the date of
     this Guaranty, when taken as a whole, are true, correct and complete in all
     material respects and do not or will not, contain any untrue statement of
     material fact or omit to state any material fact necessary to make the
     statements contained therein not misleading in any material respect, and
     all financial projections, results or reports concerning Parent or any
     Trans Entity that have been or are hereafter made available to Lender by
     any Guarantor or its Subsidiaries have been or will be prepared in good
     faith based upon the assumptions Parent believes to be reasonable;
     provided, however, the foregoing representation and warranty shall not
     constitute a guaranty by Parent or any Trans Entity regarding the future
     performance of the Properties as may be set forth in any projections.

                    (ii) Parent has delivered to Lender a true and complete copy
     of all financing, partnership and other documents which restrict Parent
     from pledging its Equity Interests in each of the Non-Guarantor
     Subsidiaries and prohibit each Non-Guarantor Subsidiary from executing and
     delivering this Guaranty (collectively, the "Non-Guarantor Restrictions").

                    (iii) Parent has delivered to Lender a true and complete
     copy of all documents with GTCR which create an Equity Interest in Parent
     or any of its

                                       25



     Consolidated Subsidiaries or any Debt as to Parent or any of its
     Consolidated Subsidiaries.

                    (iv) Parent has delivered to Lender a true and complete copy
     of the P&S Agreement.

               (g) Bankruptcy. Each Guarantor or its Subsidiaries is not party
     to, nor has it ever contemplated, any bankruptcy, insolvency or similar
     proceeding.

               (h) Default. Neither Parent nor the contract sellers are in
     default pursuant to the P&S Agreement, which P&S Agreement is in full force
     and effect and constitutes a valid and binding obligation of the parties
     thereto. The P&S Agreement provides Parent (and its successors and assigns)
     with the unconditional right to acquire the certain properties (the
     "Acquired Properties") on or prior to the Closing Date and Parent is not
     aware of any fact or condition that has occurred (or failed to occur) which
     would prevent Parent (or its successors or assigns) from acquiring the
     Acquired Properties pursuant to the P&S Agreement.

               (i) Indemnification. Parent agrees and does hereby indemnify and
     hold harmless the Lender, its affiliates and subsidiaries and their
     respective directors, officers, employees, advisors and agents (each, an
     "Indemnified Party") from and against (and will reimburse each Indemnified
     Party as the same are incurred) any and all losses, claims, damages,
     liabilities and expenses (including, without limitation, the reasonable
     fees and expenses of counsel) that may be incurred by or asserted or
     awarded against any Indemnified Party, in each case arising out of or in
     connection with or by reason of (including, without limitation, in
     connection with any investigation, litigation or proceeding or preparation
     of a defense in connection therewith) any matters contemplated by any Loan
     Document or Lease Document other than those losses, claims, damages,
     liabilities and expenses solely attributable to the Lender's gross
     negligence or willful misconduct.

               (j) Survival. All representations, warranties and agreements in
     this Article 4 made by each Guarantor herein shall survive the execution
     hereof.

                              ARTICLE V - COVENANTS

     Each Guarantor covenants and agrees with the Lender that, so long as (i)
the Mortgage Loan or the Mezzanine Loan or any additional credit is outstanding
and until payment in full of all amounts payable by any Mortgage Borrower
pursuant to the terms and conditions of the Mortgage Loan Agreement and all
amounts payable by any Mezzanine Borrower pursuant to the terms and conditions
of the Mezzanine Loan Agreement (other than the covenants that survive payment
in full) or (ii) the Sale/Leaseback Transaction is outstanding and until payment
in full of all amounts payable by any Trans Lessee pursuant to the terms and
conditions of the Sale/Leaseback Transaction (other than the covenants that
survive payment in full):

          Section 5.1 Financial Statements, Etc. Each Guarantor will deliver the
following information to the Lender:

                                       26



               (a) as soon as available, and in any event within one hundred
     twenty (120) days after the close of each Fiscal Year, in hard copy and
     electronic format and presented on a consolidated as well as a
     property-by-property basis, financial statements prepared for such year
     with respect to the Guarantors, including a balance sheet and operating
     statement as of the end of such year, together with related statements of
     income and capital for such Fiscal Year, audited by a "Big Four" accounting
     firm or a nationally recognized, independent certified public accounting
     firm reasonably satisfactory to Lender whose opinion shall be to the effect
     that such financial statements have been prepared in accordance with GAAP
     applied on a consistent basis and shall not be qualified as to the scope of
     the audit or as to the status of such Guarantor as a going concern or any
     other material qualification. Together with each Guarantor's annual
     financial statements, each Guarantor shall furnish to Lender an Officer's
     Certificate (i) certifying as of the date thereof whether to the best of
     such Guarantor's knowledge there exists an event or circumstance which
     constitutes a Default or Event of Default and if such Default or Event of
     Default exists, the nature thereof, the period of time it has existed and
     the action then being taken to remedy the same and (ii) demonstrating in
     reasonable detail compliance with the provisions of Sections 6.1, 6.2, 6.3,
     6.4 and 7.1 (including in detail all calculations necessary therein).

               (b) as soon as available and in any event within 45 days after
     the close of each Fiscal Year, unaudited financial statements prepared for
     such year with respect to Guarantors, including a balance sheet and
     operating statement as of the end of such year, together with related
     statements of income and capital for such Fiscal Year. Together with each
     Guarantor's interim financial statements, each Guarantor shall furnish to
     Lender an Officer's Certificate (i) certifying as of the date thereof
     whether to the best of such Guarantor's knowledge there exists an event or
     circumstance which constitutes a Default or Event of Default and if such
     Default or Event of Default exists, the nature thereof, the period of time
     it has existed and the action then being taken to remedy the same and (ii)
     demonstrating in reasonable detail compliance with the provisions of
     Sections 6.1, 6.2, 6.3, 6.4 and 7.1 (including in detail all calculations
     necessary therein).

               (c) as soon as available and in any event within 45 days after
     the end of each of the first three Fiscal Quarters of each Fiscal Year of
     Parent and its Consolidated Subsidiaries, (i) an unaudited consolidated
     balance sheet of Parent and its Consolidated Subsidiaries, together with
     the related consolidated and consolidating statements of operations for
     such Fiscal Quarter and for the portion of the Fiscal Year ended at such
     Fiscal Quarter and of cash flows for the portion of the Fiscal Year ended
     at the end of such Fiscal Quarter, setting forth in comparative form the
     unaudited consolidated and consolidating statements of operations and cash
     flows (to the extent available) for the corresponding Fiscal Quarter and
     the corresponding portion of the previous Fiscal Year, all prepared in
     accordance with GAAP. Together with each Guarantor's interim financial
     statements, each Guarantor shall furnish to Lender an Officer's Certificate
     (i) certifying as of the date thereof whether to the best of such
     Guarantor's knowledge there exists an event or circumstance which
     constitutes a Default or Event of Default and if such Default or Event of
     Default exists, the nature thereof, the period of time it has existed and
     the action then being taken to remedy the same and (ii)

                                       27



     demonstrating in reasonable detail compliance with the provisions of
     Sections 6.1, 6.2, 6.3, 6.4 and 7.1 (including in detail all calculations
     necessary therein).

               (d) as soon as available and in any event within 30 days after
     the end of each month of each Fiscal Year of Parent and its Consolidated
     Subsidiaries, (i) an unaudited consolidated balance sheet of Parent and its
     Consolidated Subsidiaries, together with the related consolidated and
     consolidating statements of operations for such month and for the portion
     of the Fiscal Year ended at such month and of cash flows for the portion of
     the Fiscal Year ended at the end of such month, setting forth in
     comparative form the unaudited consolidated and consolidating statements of
     operations and cash flows (to the extent available) for the corresponding
     month and the corresponding portion of the previous Fiscal Year.

               (e) notwithstanding anything to the contrary herein, within two
     days after the sending or filing thereof, furnish or cause to be furnished
     to Lender copies of all reports, financial statements and proxy statements
     which each Guarantor or its Subsidiaries sends to its stockholders
     generally and copies of all reports (including annual, quarterly or current
     reports), proxy statements and registration statements (other than the
     exhibits thereto and any registration statements on Form S-8 or its
     equivalent) which any such Person files with the Securities and Exchange
     Commission, any national or local securities exchange or the National
     Association of Securities Dealers, Inc.

               (f) within five Business Days after any executive officer or
     senior financial officer of any Guarantor obtains knowledge of (i) any
     Default, including any action or condition which is reasonably likely to
     have a Material Adverse Effect, including but not limited to the knowledge
     of any default, action, suit, proceeding, investigation or arbitration by
     any Governmental Authority or other Person against or affecting Parent or
     any Loan Party or any of its assets, and (ii) if such Default is then
     continuing, a certificate of a senior financial officer setting forth the
     details thereof and the action that each Guarantor is taking or proposes to
     take with respect thereto;

               (g) promptly, upon receipt or delivery by Parent or any Loan
     Party, any notice of default under any agreement relating to Property or
     any material agreement which is reasonably likely to have a Material
     Adverse Effect;

               (h) promptly after any member of the ERISA Group (i) gives or is
     required to give notice to the PBGC of any "reportable event" (as defined
     in Section 4043 of ERISA) with respect to any Plan which might constitute
     grounds for a termination of such Plan under Title IV of ERISA, or knows
     that the plan administrator of any Plan has given or is required to give
     notice of any such reportable event, a copy of the notice of such
     reportable event given or required to be given to the PBGC; (ii) receives
     notice of complete or partial withdrawal liability under Title 1V of ERISA
     or notice that any Multiemployer Plan is in reorganization, is insolvent or
     has been terminated, a copy of such notice; (iii) receives notice from the
     PBGC under Title IV of ERISA of an intent to terminate, impose liability
     (other than for premiums under Section 4007 of ERISA) in respect of, or
     appoint a trustee to administer any Plan, a copy of such notice; (iv)
     applies for a waiver of the minimum funding standard under Section 412 of

                                       28



     the Internal Revenue Code, a copy of such application; (v) gives notice of
     intent to terminate any Plan under Section 4041(c) of ERISA, a copy of such
     notice and other information filed with the PBGC, (vi) gives notice of
     withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such
     notice; or (vii) fails to make any payment or contribution to any Plan or
     Multiemployer Plan or makes any amendment to any Plan which has resulted or
     could result in the imposition of a Lien or the posting of a bond or other
     security, a certificate of a Financial Officer setting forth details as to
     such occurrence and the action, if any, which any Obligor or the applicable
     member of the ERISA Group is required or proposes to take;

               (i) as soon as reasonably practicable after any Executive Officer
     obtains knowledge of the commencement of an action, suit or proceeding
     against any Obligor, any Guarantor or any of their respective Subsidiaries
     before any court or arbitrator or any governmental body, agency or official
     in which there is a reasonable possibility of an adverse decision which
     could have a Material Adverse Effect or which in any manner questions the
     validity of any Loan Document, Officer's Certificate setting forth the
     nature of such action, suit or proceeding and such additional information
     as may be reasonably requested by the Lender;

               (j) promptly after an Executive Officer obtains knowledge of one
     or more judgments or orders of a court or arbitrator or regulatory
     authority for the payment of money aggregating in excess of $250,000
     rendered against any Obligor, any Guarantor or any of their respective
     Subsidiaries, Officer's Certificate setting forth the nature and amount of
     such judgment and whether any Obligor or Guarantor intends to seek a stay
     or appeal of such judgment made such additional information as may be
     reasonably requested by the Lender;

               (k) promptly upon each Guarantor's receipt from its independent
     public accountants of any management letter which indicates a material
     weakness in the reporting practices of any Mortgage Borrower, any Mezzanine
     Borrower, any Trans Lessee or any Guarantor, a description of such material
     weakness and any action being taken with respect thereto;

               (l) within 15 days after the commencement of each Fiscal Year,
     (i) cash flow, balance sheet and income statement forecasts in reasonable
     detail for Parent and its Consolidated Subsidiaries prepared on a monthly
     basis for the Fiscal Year and, promptly when available, any material
     revisions of such forecast and (ii) Parent's business and financial plans
     for such Fiscal Year, setting forth the assumptions used in preparing such
     plans and, promptly when available, any material revisions of such plans;

               (m) promptly upon their becoming available, copies of all press
     releases and other statements made available generally by any Obligor,
     including, but not limited to, each Guarantor to the public concerning
     material developments in its business;

               (n) from time to time such additional information as the Lender
     may reasonably request in writing relating to the business of each
     Guarantor or any of its

                                       29



     respective Subsidiaries including, without limitation, information
     regarding any of their financial position and results of operations,
     actuarial reports and insurance coverage.

          Section 5.2 Transactions with Non-Guarantor Subsidiaries. Each
Guarantor shall furnish to the Lender an Officer's Certificate at the end of
each Fiscal Quarter certifying (i) any Investment made by Parent or a Loan Party
in the Non-Guarantor Subsidiaries and (ii) evidence of any dividend or
distribution received by Parent or any Loan Party from the Non-Guarantor
Subsidiaries in cash on a non-contingent basis, without any obligation to return
such dividend or distribution by Parent or any Loan Party.

          Section 5.3 Maintenance of Property. Each Guarantor will keep, and
shall cause each of their respective Subsidiaries to keep, all property useful
and necessary in its business in good working order and condition, ordinary wear
and tear, casualty and condemnation excepted.

          Section 5.4 Insurance.

               (a) Insurance Policies. Subject to the terms of the Mortgage Loan
     Documents, the Mezzanine Loan Documents and the Loan Documents, (A) each
     Guarantor will maintain, and shall cause each of their respective
     Subsidiaries to maintain, insurance for each Guarantor and its respective
     Subsidiaries and each Property providing at least the following coverages:

                    (i) coverage for loss or damage by fire, lightning, wind and
     such other perils as are included in a standard "all risk" or "special
     causes of loss" endorsement and against loss or damage by other risks and
     hazards covered by a standard property insurance policy including, without
     limitation, riot, civil commotion, vandalism, malicious mischief, burglary
     and theft on the Improvements and the personal property at the Property,
     including contingent liability from Operation of Building Laws, Demolition
     Costs and Increased Cost of Construction Endorsements, in each case (A) in
     an amount equal to one hundred percent (100%) of the "Full Replacement
     Cost," which for purposes of this Guaranty shall mean actual replacement
     value (exclusive of costs of excavations, foundations, underground
     utilities and footings) with a waiver of depreciation, but as to the
     "Properties" as defined in the Mortgage Loan Agreement and the Mezzanine
     Loan Agreement, the amount shall in no event be less than the Allocated
     Loan Amount (as defined in the Mortgage Loan Agreement and the Mezzanine
     Loan Agreement) of such property; (B) containing an agreed amount
     endorsement with respect to the Improvements and personal property at the
     Property waiving all co-insurance provisions; (C) providing for no
     deductible in excess of Ten Thousand and No/100 Dollars ($10,000) for all
     such insurance coverage; and (D) containing (a) an "Ordinance or Law
     Coverage" or "Enforcement" endorsement and (b) "demolition" insurance (in
     an amount equal to ten percent (10%) of the value of the Improvements) and
     "increased cost of construction" insurance (equal to twenty-five percent
     (25%) of the value of the Improvements, or such other amount approved by
     Lender, if any of the Improvements or the use of the applicable Property
     shall at any time constitute legal non-conforming structures or uses. In
     addition, each Guarantor shall obtain, and shall cause each of their
     respective Subsidiaries to obtain: (y) if any portion of the Improvements
     is currently or at any time

                                       30



     in the future located in a federally designated "special flood hazard
     area", flood hazard insurance in an amount equal to the lesser of (1) the
     "Full Replacement Cost" (defined above) but as to the "Properties" as
     defined in the Mortgage Loan Agreement and the Mezzanine Loan Agreement, no
     less than the Allocated Loan Amount (as defined in the Mortgage Loan
     Agreement and the Mezzanine Loan Agreement) of the applicable property or
     (2) the maximum amount of such insurance available under the National Flood
     Insurance Act of 1968, the Flood Disaster Protection Act of 1973 or the
     National Flood Insurance Reform Act of 1994, as each may be amended; and
     (z) earthquake insurance in amounts and in form and substance satisfactory
     to Lender in the event the applicable Property is located in an area with a
     high degree of seismic activity, provided that the insurance pursuant to
     clauses (y) and (z) hereof shall be on terms consistent with the
     comprehensive all risk insurance policy required under this subsection (i).

                    (ii) commercial general liability insurance against claims
     for personal injury, bodily injury, death or property damage occurring
     upon, in or about the Property, such insurance (A) to be on the so-called
     "occurrence" (or claims made form if the "occurrence" form is not available
     at commercially reasonable prices) form with a combined limit, excluding
     umbrella coverage, of not less than One Million and No/100 Dollars
     ($1,000,000) per occurrence with a minimum Three Million and No/100 Dollars
     ($3,000,000) general aggregate; (B) to continue at not less than the
     aforesaid limit until required to be changed by Lender by reason of changed
     economic conditions making such protection inadequate; and (C) to cover at
     least the following hazards: (1) premises and operations; (2) products and
     completed operations on an "if any" basis; (3) independent contractors; (4)
     blanket contractual liability for all legal contracts; (5) contractual
     liability covering the indemnities contained in Article 9 of the related
     Mortgage to the extent the same is available; (6) broad form property
     damage; (7) personal injury (including death resulting therefrom); (8)
     healthcare professional liability and (9) a liquor liability endorsement if
     alcoholic beverages are sold at the Property and (B) with a deductible of
     no more than $10,000.

                    (iii) business interruption insurance (A) with loss payable
     to Lender in the case of the Properties securing the Mortgage Loan and
     Mezzanine Loan or subject to the Lease Documents; (B) covering all risks
     required to be covered by the insurance provided for in subsection (i)
     above and (xi) below; (C) in an amount sufficient to avoid any co-insurance
     penalty and to provide proceeds which will cover a period of not less than
     eighteen (18) months from the date of casualty or loss; (D) containing an
     extended period of indemnity endorsement which provides that after the
     physical loss to the Property has been repaired, the continued loss of
     income will be insured until such income returns to the same level it was
     prior to the loss, or the expiration twenty-four (24) months from the date
     of the loss, whichever first occurs, and notwithstanding that the policy
     may expire prior to the end of such period. The amount of coverage shall be
     no less than $12,000,000;

                    (iv) at all times during which structural construction,
     repairs or alterations are being made with respect to the Improvements, and
     only if the applicable Property's coverage form does not otherwise apply,
     (A) owner's contingent or protective liability insurance covering claims
     not covered by or under the terms or provisions of the

                                       31



     above mentioned commercial general liability insurance policy; and (B) the
     insurance provided for in subsection (i) above written in a so-called
     builder's risk completed value form (1) on a non-reporting basis, (2)
     against all risks insured against pursuant to subsection (i) above, (3)
     including permission to occupy the applicable Property, and (4) with an
     agreed amount endorsement waiving co-insurance provisions;

                    (v) workers' compensation, subject to the statutory limits
     of the state in which the applicable Property is located, and employer's
     liability insurance with a limit of at least One Hundred Thousand and
     No/100 Dollars ($100,000) per accident and per disease per employee, and
     Five Hundred Thousand and No/100 Dollars ($500,000) aggregate in respect of
     any work or operations on or about the Property, or in connection with the
     applicable Property or its operation (if applicable);

                    (vi) broad form boiler and machinery insurance (without
     exclusion for explosion) covering all boilers or other pressure vessels,
     machinery, and equipment located in, on or about any Property (including
     "system breakdown coverage") in an amount equal to or greater than the
     repair and full replacement cost of such equipment and insurance against
     loss of occupancy or use arising from any breakdown of such equipment in
     such amounts as are generally required by institutional lenders for
     properties comparable to the Properties;

                    (vii) umbrella liability insurance in addition to primary
     coverage in an aggregate amount not less than Nine Million and No/100
     Dollars ($9,000,000) on terms consistent with the commercial general
     liability insurance policy required under subsection (ii) above that cover
     all claims typically covered by an umbrella liability policy including all
     legal liability imposed upon any Guarantor or Subsidiary of a Guarantor and
     all court costs and attorneys' fees connection with the ownership,
     operation and maintenance of the Properties;

                    (viii) motor vehicle liability coverage for all owned and
     non-owned vehicles, including rented and leased vehicles containing minimum
     limits per occurrence, including umbrella coverage, of One Million and
     No/100 Dollars ($1,000,000);

                    (ix) if alcoholic beverages are sold at the applicable
     Property, so-called "dramshop" insurance or other liability insurance
     required in connection with the sale of alcoholic beverages;

                    (x) insurance against employee dishonesty in an amount not
     less than $100,000 and with a deductible not greater than Ten Thousand and
     No/100 Dollars ($10,000);

                    (xi) if the insurance required under clause (i) above
     excludes coverage for acts of terrorism, each Guarantor shall provide, and
     shall cause each of its Subsidiaries to provide, terrorism insurance
     coverage in an amount equal to the lesser of (1) the "Full Replacement
     Cost" (defined above) but, in the case of the Properties which are part of
     the Mortgage Loan or Mezzanine Loan transactions, no less than the Loan
     Amount (as defined in the Mortgage Loan Agreement and the Mezzanine Loan

                                       32



     Agreement) or (2) the maximum amount of such insurance which is
     commercially reasonably available, unless at the time of determination: (i)
     it is not available at commercially reasonable rates; (ii) no Affiliates of
     any Guarantor or Subsidiary of a Guarantor are maintaining terrorism
     insurance with respect to another property; (iii) terrorism insurance is
     not commonly maintained by owners of other similar properties and (iv)
     terrorism insurance is not required for securitized loans similar to the
     Mortgage Loan or Mezzanine Loan and secured by property similar to the
     Properties and with similar ratings as the Mortgage Loan or Mezzanine Loan
     in the commercial mortgage-backed securities market; and

                    (xii) such other reasonable insurance and in such reasonable
     amounts as Lender from time to time may reasonably request against such
     other insurable hazards or casualties which at the time are commonly
     insured against for property similar to the Properties located in or around
     the region in which the Properties are located including, without
     limitation, sinkhole, mine subsidence and environmental insurance, due
     regard being given to the height and type of property, construction,
     location, use and occupancy.

                    (B) All insurance provided for in Section 5.1(a)(A) shall be
obtained under valid and enforceable policies (collectively, the "Policies" or
in the singular, the "Policy") and, to the extent not specified above, shall be
subject to the approval of Lender as to deductibles, loss payees and insureds.
Not less than ten (10) days prior to the expiration dates of the Policies
theretofore furnished to Lender, certificates of insurance evidencing the
Policies accompanied by evidence satisfactory to Lender of payment of the
premiums then due thereunder (the "Insurance Premiums"), shall be delivered by
Borrowers to Lender. Borrowers shall deliver certified copies of the Policies to
Lender within thirty (30) days of the Closing Date and thereafter upon request.
All Policies must have a term of not less than one (1) year.

                    (C) Intentionally deleted.

                    (D) As to the Properties in the Mortgage Loan, Mezzanine
Loan and Sale/Leaseback Transaction, all Policies of insurance provided for or
contemplated by Section 5.1(a)(A), except for the Policy referenced in Section
5.1(a)(A)(v), shall name each applicable Guarantor or Subsidiary of a Guarantor
or, as to the Properties in the Sale/Leaseback Transaction, the Lender as the
insured and, for the Properties in the Mortgage Loan or Mezzanine Loan
transactions, Lender and its successors and/or assigns as the additional
insured, as its interests may appear, and in the case of property damage,
terrorism insurance, boiler and machinery, flood and earthquake insurance for
the Properties in the Mortgage Loan or Mezzanine Loan transactions, shall
contain a so-called New York standard non-contributing mortgagee clause in favor
of Lender providing that the loss thereunder shall be payable to Lender.

                    (E) All Policies of insurance provided for in Section
5.1(a)(A) shall contain clauses or endorsements to the effect that:

                    (i) no act or negligence of any Guarantor or Subsidiary of a
     Guarantor, or anyone acting for any Guarantor or Subsidiary of a Guarantor,
     or of any tenant or other occupant, or failure to comply with the
     provisions of any Policy, which

                                       33



     might otherwise result in a forfeiture of the insurance or any part
     thereof, shall in any way affect the validity or enforceability of the
     insurance insofar as Lender is concerned;

                    (ii) the Policy shall not be materially changed (other than
     to increase the coverage provided thereby) or canceled without at least
     thirty (30) days' written notice to Lender and any other party named
     therein as an additional insured;

                    (iii) Lender shall not be liable for any Insurance Premiums
     thereon or subject to any assessments thereunder; and

                    (iv) to the extent available at commercially reasonable
     rates, a waiver of subrogation rights as to Lender.

                    (F) If at any time Lender is not in receipt of written
evidence that all insurance required hereunder is in full force and effect,
Lender shall have the right, without notice to any Guarantor or Subsidiary of a
Guarantor, to take such action as Lender deems necessary to protect its interest
in the Properties, including, without limitation, the obtaining of such
insurance coverage as Lender in its sole discretion deems appropriate and all
premiums incurred by Lender in connection with such action or in obtaining such
insurance and keeping it in effect shall be paid by any Guarantor or Subsidiary
of a Guarantor to Lender upon demand and until paid shall be secured by the
Pledge Agreement and shall bear interest at the Default Rate (as defined in the
Mezzanine Loan Agreement).

                    (G) In the event of foreclosure of any Mortgage or other
transfer of title to any Property securing the Mortgage Loan or Mezzanine Loan
in extinguishment in whole or in part of the Debt (as defined in the Mortgage
Loan Agreement and the Mezzanine Loan Agreement), all right, title and interest
the applicable Guarantor or Subsidiary of a Guarantor in and to the Policies
that are not blanket Policies then in force concerning such Properties and all
proceeds payable thereunder shall thereupon vest in the purchaser at such
foreclosure or Lender or other transferee in the event of such other transfer of
title.

                    (b) Insurance Company. The Policies shall be issued by one
     or more domestic primary insurance companies, duly qualified in the
     jurisdiction where the Properties are located and rated A: VII or better by
     A.M. Best and having a claims-paying ability of at least "AA" or its
     equivalent by each of the Rating Agencies (as defined in the Mortgage Loan
     Agreement), or by a syndicate of insurers through which at least
     seventy-five percent (75%) of the coverage (if there are four (4) or fewer
     members of the syndicate) or at least sixty percent (60%) of the coverage
     (if there are five (5) or more members of the syndicate) is with carriers
     having such claims-paying ability ratings (provided that all such carriers
     shall have claims-paying ability ratings of not less than "A" or the
     equivalent by each of the Rating Agencies).

                    (c) Additional Agreement. Notwithstanding the foregoing, as
     to the Mortgage Borrowers, Mezzanine Borrowers and the Trans Lessees, the
     foregoing requirements shall be modified to the extent set forth in those
     certain side letters by and among the Mortgage Borrowers, Mezzanine
     Borrowers, the Trans Lessees, the Guarantors and the Lender dated as of the
     date hereof.

                                       34



          Section 5.5 Books and Records; Inspection. Each Guarantor shall, and
shall cause each of its respective Subsidiaries to, keep and maintain or will
cause to be kept and maintained proper and accurate books and records, in
accordance with GAAP in all material respects, reflecting the financial affairs
of each Guarantor and Subsidiary of each Guarantor. The Lender shall have the
right from time to time during normal business hours upon reasonable notice to
the applicable Guarantor or Subsidiary of such Guarantor to examine such books
and records at the office of such Guarantor or Subsidiary of such Guarantor or
other Person maintaining such books and records and to make such copies or
extracts thereof as the Lender shall desire.

          Section 5.6 Observance of Agreements. Each Guarantor shall, and shall
cause each of its respective Subsidiaries to:

               (a) duly observe and perform all material terms and conditions of
     (i) any agreement relating to any Property or (ii) any other agreement, in
     either case the absence of which agreement is reasonably likely to have a
     Material Adverse Effect (subject in each case, to the right of any
     Guarantor or any Subsidiary of any Guarantor to lawfully assert a defense
     to performance or to lawfully contest any claims for breach under any such
     agreement), and diligently protect and enforce the rights of any Guarantor
     or any Subsidiary of any Guarantor under all such agreements in a manner
     consistent with prudent business judgment and subject to the terms and
     conditions of such agreements.

               (b) promptly provide the Lender copies of any and all agreements
     amending, altering, modifying, waiving or supplementing in any material
     respect, any material agreement relating to any Property or any other
     agreement the absence of which is reasonably likely to have a Material
     Adverse Effect.

          Section 5.7 Taxes and Other Charges. Each Guarantor shall, and shall
cause each of its respective Subsidiaries to, pay all Taxes and Other Charges
and payroll taxes now or hereafter levied or assessed or imposed against the
Properties or any part thereof or any Guarantor or any Subsidiary of any
Guarantor as the same become due and payable. Each Guarantor shall, and shall
cause each of its respective Subsidiaries to, furnish to Lender receipts for the
payment of the Taxes and the Other Charges prior to the date the same shall
become delinquent. Each Guarantor shall not, and shall cause each of its
respective Subsidiaries to not, permit or suffer and shall promptly discharge
any liens or charges against the Properties, except Permitted Encumbrances.
After prior notice to Lender, each Guarantor or Subsidiary of any Guarantor, at
its own expense, may contest by appropriate legal proceeding, conducted in good
faith and with due diligence, the amount or validity of any Taxes or Other
Charges, provided that (i) no Default or Event of Default has occurred and
remains uncured; (ii) such proceeding shall be permitted under and be conducted
in accordance with all applicable statutes, laws and ordinances; (iii) none of
the Properties nor any part thereof or interest therein will be in danger of
being sold, forfeited, terminated, canceled or lost; (iv) such Guarantor or
Subsidiary of such Guarantor shall promptly upon final determination thereof pay
the amount of any such Taxes or Other Charges, together with all costs, interest
and penalties which may be payable in connection therewith; (v) such proceeding
shall suspend the collection of Taxes or Other Charges from the applicable
Property; and (vi) upon request of Lender, such Guarantor or Subsidiary or any

                                       35



Guarantor shall deposit with Lender cash, or other security as may be approved
by Lender, in an amount equal to one hundred twenty-five percent (125%) of the
contested amount, to insure the payment of any such Taxes or Other Charges,
together with all interest and penalties thereon. Lender may pay over any such
cash or other security held by Lender to the claimant entitled thereto at any
time when, in the judgment of Lender, the entitlement of such claimant is
established.

          Section 5.8 Compliance with Law, Etc. Each Guarantor will comply, and
shall cause each of its respective Subsidiaries to comply, in all material
respects with all Applicable Laws, except where (i) the necessity of compliance
therewith is contested in good faith by appropriate measures or proceedings, in
which case adequate and reasonable reserves will be established in accordance
with GAAP applied on a consistent basis and notice of each such contest (other
than contests in the ordinary course of business) shall be given to the Lender,
or (ii) failures to comply therewith could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.

          Section 5.9 Maintenance of Existence, Rights, Etc. Each Guarantor will
preserve, renew and keep, and shall cause each of its Subsidiaries to preserve,
renew and keep, in full force and effect its respective existence and its
rights, privileges, license and franchises necessary or desirable in the normal
conduct of business; provided that nothing in this Section shall prohibit (a)
any merger or consolidation permitted by Section 7.4, (b) the termination of the
existence of any Subsidiary (other than any Guarantor, Mortgage Borrower,
Mezzanine Borrower or Trans Lessee) if (i) such Guarantor determines that such
termination is in its best interest and (ii) such termination is not adverse in
any material respect to the Lender, or (c) the loss of any rights, privileges,
licenses and franchises if the loss thereof, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.

          Section 5.10 Guarantees by Future Subsidiaries. Each Guarantor will
not, nor will any of them permit any of their respective Subsidiaries to,
directly or indirectly, establish or create or acquire any interest in any
Subsidiary; provided, however, that a Guarantor may establish or create a
wholly-owned subsidiary provided that at least 30 days prior written notice
thereof is given to Lender. Within 10 business days after (a) any Person becomes
a Subsidiary of a Guarantor or any of its respective Subsidiaries or (b) the
Non-Guarantor Restrictions have terminated, Guarantor shall (i) cause such
Subsidiary or Non-Guarantor Subsidiary, as the case may be, to guarantee the
Guaranteed Obligations pursuant to a joinder to this Guaranty, (ii) cause the
Equity Interests in such Subsidiary or Non-Guarantor Subsidiary, as the case may
be, to be pledged to Lender pursuant to the Pledge Agreement and (iii) deliver
to the Lender such legal opinions or other documents as the Lender may
reasonably request relating to the existence of such Subsidiary or Non-Guarantor
Subsidiary, as the case may be, the corporate or other authority for and
validity of the joinder to this Guaranty, the pledge of such equity interest and
any other matters relevant thereto, all in form and substance reasonably
satisfactory to Lender. Upon execution and delivery of such joinder to this
Guaranty, such Subsidiary or Non-Guarantor Subsidiary, as the case may be, shall
thereafter be a "Guarantor" pursuant to this Guaranty.

          Section 5.11 Environmental Matters. From time to time after the
Closing Date, each Guarantor will review the effect of Environmental Laws on the
business, operations and properties of any Mortgage Borrower, any Mezzanine
Borrower, any Trans Lessee, each

                                       36



Guarantor and each of their respective Subsidiaries, in the course of which
reviews it will identify and evaluate associated liabilities and costs. If, on
the basis of such reviews, a Guarantor reasonably concludes that the foregoing
associated liabilities and costs are likely to have a Material Adverse Effect,
Guarantor shall promptly deliver a certificate to the Lender setting forth its
conclusion and the action that Guarantor proposes to take with respect thereto.

          Section 5.12 Distributions from Non-Guarantor Subsidiaries. Each
Guarantor shall cause each of the Non-Guarantor Subsidiaries to make not less
than weekly distributions of available cash to Parent, the amount of which shall
be determined using the same accounting and other methods, policies, practices
and procedures and the same judgments as such Guarantor or Non-Guarantor
Subsidiaries has used in making such distribution to Parent on an historical
basis and in no event shall such distribution be substantially less in amount
than the distributions made to Parent on an historical basis.

          Section 5.13 Ownership by Parent of Certain Equity Interests. Except
to the extent the terms of Section 7.4 hereof, Parent shall continue to own
directly or indirectly 100% of the outstanding Equity Interests of each Mortgage
Borrower, each Mezzanine Borrower, each Trans Lessee and each Guarantor.

          Section 5.14 Further Assurances. Each Guarantor will make, execute,
acknowledge and deliver all and every such further acts and assurances as the
Lender shall from time to time require for confirming or carrying out the
intentions or facilitating the performance of the terms of this Guaranty,
including but not limited to, the execution and delivery of a separate guaranty
of the Guaranteed Obligations as they relate to each of the Mortgage Loan,
Mezzanine Loan and Sale/Leaseback Transaction. Each Guarantor shall, at such
Guarantor's sole cost and expense, from time to time as reasonably requested by
Lender, execute, acknowledge, record, register, file and/or deliver to the
Lender such other instruments, agreements, certificates and documents (including
UCC financing statements and amended or replacement mortgages) as Lender may
reasonably request to evidence, confirm, perfect and maintain the liens securing
or intended to secure the obligations of any Guarantor under the Loan Documents
or Lease Documents if requested by Lender, and do and execute all such further
lawful and reasonable acts, conveyances and assurances for the better and more
effective carrying out of the intents and purposes of this Guaranty, the other
Loan Documents and the Lease Documents as the Lender shall reasonably require
from time to time. Each Guarantor hereby authorizes and appoints the Lender as
its attorney-in-fact to execute, acknowledge, record, register and/or file such
instruments, agreements, certificates and documents, and to do and execute such
acts, conveyances and assurances, should any Guarantor fail to do so itself in
violation of this Guaranty following written request from the Lender, in each
case without the signature of any Guarantor. The foregoing grant of authority is
a power of attorney coupled with an interest and such appointment shall be
irrevocable for the term of this Guaranty. Each Guarantor hereby ratifies all
actions that such attorney shall lawfully take or cause to be taken in
accordance with this Section.

                        ARTICLE VI - FINANCIAL COVENANTS

     Parent covenants and agrees with the Lender that, except in the case of a
Covenant Replacement Event, so long as (i) the Mortgage Loan or the Mezzanine
Loan or any additional

                                       37



credit is outstanding and until payment in full of all amounts payable by any
Mortgage Borrower pursuant to the terms and conditions of the Mortgage Loan
Agreement and all amounts payable by any Mezzanine Borrower pursuant to the
terms and conditions of the Mezzanine Loan Agreement (other than the covenants
that survive payment in full) or (ii) the Sale/Leaseback Transaction is
outstanding and until payment in full of all amounts payable by any Trans Lessee
pursuant to the terms and conditions of the Sale/Leaseback Transaction (other
than the covenants that survive payment in full):

          Section 6.1 Fixed Charge Coverage Ratio. (a) At each Quarterly
Measurement Date on or after the date hereof, the Fixed Charge Coverage Ratio
will not be less than the ratio set forth below opposite such Quarterly
Measurement Date (or any Quarterly Measurement Date which falls during the
periods set forth below):

- --------------------------------------------------
                  Period                     Ratio
- --------------------------------------------------
Closing Date through December 31, 2003       1.6:1
- --------------------------------------------------
January 1, 2004 through December 31, 2004   1.65:1
- --------------------------------------------------
January 1, 2005 and thereafter               1.7:1
- --------------------------------------------------

               (b) For purposes of calculating the foregoing ratio, Asset
Dispositions or Acquisitions which have occurred during such period shall be
included on a Pro Forma Basis.

          Section 6.2 Consolidated Adjusted Leverage Ratio. At each Quarterly
Measurement Date on or after the date hereof, the Consolidated Adjusted Leverage
Ratio will not exceed the ratio set forth below opposite such Quarterly
Measurement Date (or any Quarterly Measurement Date which falls during the
periods set forth below):

- --------------------------------------------------
                  Period                     Ratio
- --------------------------------------------------
Closing Date through December 31, 2003       5.0:1
- --------------------------------------------------
January 1, 2004 through December 31, 2004    4.9:1
- --------------------------------------------------
January 1, 2005 and thereafter               4.8:1
- --------------------------------------------------

               (b) For purposes of calculating the foregoing ratio, Asset
Dispositions or Acquisitions which have occurred during such period shall be
included on a Pro Forma Basis.

          Section 6.3 Minimum Consolidated Net Worth. The Consolidated Net Worth
of Parent and its Consolidated Subsidiaries will not be less than $40,000,000
for each Fiscal Quarter ending in Fiscal Years 2002 and 2003, $53,000,000 for
each Fiscal Quarter in Fiscal Year 2004 and $68,000,000 for each Fiscal Quarter
in Fiscal Year 2005 and thereafter, in each case plus (a) the amount of any gain
associated with the Sale/Leaseback Transaction plus (b) 90% of any proceeds
(without duplication) received by Parent or any of its Consolidated Subsidiaries
pursuant to the issuance of any equity securities of such entities.

          Section 6.4 Capital Expenditures. Capital Expenditures must be a
minimum amount of $300 per bed per annum for all Properties owned or operated by
the Trans Entities which are collateral for the Mortgage Loan, the Mezzanine
Loan or are the subject of the Sale/Leaseback Transaction. Notwithstanding the
foregoing, a minimum capital expenditure of $500 per bed per annum is required
for any such property that is a hospital.

                                       38



                        ARTICLE VII - NEGATIVE COVENANTS

     From the date hereof and, except in the case of a Covenant Replacement
Event, for so long as (i) the Mortgage Loan or the Mezzanine Loan or any
additional credit is outstanding and until payment in full of all amounts
payable by any Mortgage Borrower pursuant to the terms and conditions of the
Mortgage Loan Agreement and all amounts payable by any Mezzanine Borrower
pursuant to the terms and conditions of the Mezzanine Loan Agreement (other than
the covenants that survive payment in full) or (ii) the Sale/Leaseback
Transaction is outstanding and until payment in full of all amounts payable by
any Trans Lessee pursuant to the terms and conditions of the Sale/Leaseback
Transaction (other than the covenants that survive payment in full), each
Guarantor agrees that, unless the Lender shall otherwise consent in writing, it
will not and will not allow any of its Subsidiaries to:

          Section 7.1 Limitation on Debt. (a) Incur any Debt, other than
Permitted Debt, if immediately after giving effect to the incurrence of such
additional Debt and the application of the proceeds thereof, the aggregate
principal amount of all of Parent's and its Consolidated Subsidiaries'
outstanding Debt on a consolidated basis determined in accordance with GAAP
would be greater than 65% of Total Consolidated Assets of Parent and its
Consolidated Subsidiaries as of the end of the most recent Quarterly Measurement
Date prior to the incurrence of such additional Debt;

               (b) Incur any Debt which would be reasonably likely to result in
a breach of any covenant contained herein or in any Loan Document or Lease
Document at the next Quarterly Measurement Date.

Notwithstanding the foregoing, each Guarantor will not, and will not allow any
of its Subsidiaries to, guaranty the obligations of any Person who is not a
Guarantor, except with respect to the Mezzanine Loan, the Mortgage Loan or the
Sale/Leaseback Transaction; provided that Parent may provide a guaranty of up to
$5,000,000 of accounts receivable financing for THI Columbus, Inc. and a
guaranty of up to $3,000,000 of accounts receivable financing for THI of
Cleveland, Inc.

          Section 7.2 Limitations on Liens. Incur, create, assume or suffer to
exist:

               (a) any Lien on any Property, except:

                    (i) existing Liens listed on Schedule 7.2 hereto;

                    (ii) Liens for taxes, assessments or other governmental
     charges or levies due and payable, (A) the validity or amount of which is
     currently being contested in good faith by appropriate proceedings or (B)
     as to which Parent or any Loan Party is subject to certain enforcement
     restrictions contained in the applicable leases and subleases and is
     exercising its applicable lease and sublease rights in a commercially
     reasonable and diligent manner and, in each case, for which reserves have
     been set aside on the books of Parent or the applicable Loan Party and as
     to which foreclosure and other enforcement proceedings shall not have been
     commenced (unless fully bonded or

                                       39



     otherwise effectively stayed), in each case pursuant to and in accordance
     with the terms of Section 5.7 of this Guaranty;

                    (iii) Liens arising out of attachments, judgments or awards
     (A) as to which an appeal or other appropriate proceedings for contest or
     review are timely commenced (and as to which foreclosure and other
     enforcement proceedings shall not have been commenced (unless fully bonded
     or otherwise effectively stayed)) or (B) as to which Parent or any Loan
     Party is subject to certain enforcement restrictions contained in the
     applicable leases and subleases and is exercising its applicable lease and
     sublease rights in a commercially reasonable and diligent manner (and as to
     which foreclosure and other enforcement proceedings shall not have been
     commenced (unless fully bonded or otherwise effectively stayed)) and, in
     each case, as to which appropriate reserves have been established in
     accordance with GAAP to the extent any such reserves are required by GAAP;

                    (iv) deposits under worker's compensation, unemployment
     insurance and social security and similar laws or to secure statutory
     obligations or surety, appeal, performance, completion or other similar
     bonds, to secure performance as lessee under leases of real or personal
     property or to secure performance of tenders, bids, contracts (other than
     for the repayment of Indebtedness) and other obligations of a like nature,
     in each case incurred in the ordinary course of business;

                    (v) Liens customarily granted or incurred in the ordinary
     course of business with regard to services rendered by carriers,
     warehouses, suppliers of materials and equipment, mechanics and repairmen
     and other Liens imposed by Applicable Law which Liens are contemplated by
     Section 11.1 of the Master Leases, (or a successor provision) or any other
     comparable provision in any other lease with respect to a Property and do
     not secure obligations which are due and payable (unless such obligations
     are being contested in good faith and with respect to which appropriate
     reserves have been established in accordance with GAAP to the extent any
     such reserves are required by GAAP);

                    (vi) the Liens of the Lender under this Guaranty, the other
     Loan Documents and Lease Documents and any other document contemplated
     hereby or thereby;

                    (vii) easements (including, without limitation, reciprocal
     easement agreements and utility agreements), rights of way, Requirements,
     restrictions (including, without limitation, zoning restrictions),
     covenants, consents, reservations, encroachments, variations and other
     similar restrictions, charges, encumbrances (whether or not recorded) (but
     specifically excluding rights of first refusal, options and other
     contractual rights to sell, assign or otherwise dispose of any Property or
     any interest therein) on any Property which, in the aggregate, (A) do not
     materially detract from the value of the applicable Property subject
     thereto, (B) do not materially interfere with the ordinary conduct of the
     business of the Loan Parties or any lessee under a lease, or (iii) do not
     materially impair the use of the applicable Property by Parent or any Loan
     Party or any lessee under a lease;

                                       40



                    (viii) Liens arising by virtue of any statutory or common
     law provision relating to banker's liens, rights of set off or similar
     rights with respect to deposit accounts;

                    (ix) Rights of first refusal, options or other contractual
     rights to sell, assign or otherwise dispose of any Property or interest
     therein which right of first refusal, option or contractual right (A) is
     described on Schedule 7.2 hereto, (B) has been consented to in writing by
     the Lender in the exercise of its reasonable discretion, (C) is in
     connection with a sale of assets or Equity Interests permitted by Section
     7.4 hereof, or (D) has been granted after the Closing Date and which when
     taken with all other rights of first refusal, options and other contractual
     rights permitted by this clause (D), do not, in any fiscal year, affect
     Properties having an aggregate fair market value exceeding $10,000,000.00;
     and

                    (x) Liens set forth on the Title Policies and accepted by
     the Lender as of the Closing Date;

               (b) Liens on any of its other properties or assets to secure Debt
     other than (i) loans and obligations under this Guaranty or (ii) any
     additional Debt permitted by Section 7.1 of this Guaranty.

          Section 7.3 Restricted Payments.

               (a) Declare or pay any dividend or make any other payment or
     distribution on account of any Guarantor or any of its Subsidiaries' Equity
     Interests (including, without limitation, any payment in connection with
     any merger or consolidation involving any Guarantor or any of its
     Subsidiaries) or to the direct or indirect holders of any Guarantor or any
     of its Subsidiaries' Equity Interests in their capacity as such (a
     "Dividend Payment"); except that the Non-Guarantor Subsidiaries may make
     the distributions set forth in Section 5.12 hereof and except that, so long
     as no Event of Default has occurred,

                    (i) any Guarantor may declare or make a Dividend Payment to
     another Guarantor;

                    (ii) Parent may pay customary and ordinary operating
     expenses of the Non-Guarantor Subsidiaries so long as any such advances by
     Parent to the Non-Guarantor Subsidiaries made after the date hereof at any
     time outstanding do not exceed $2,000,000 in the aggregate after taking
     into account any distributions made by the Non-Guarantor Subsidiaries to
     Parent in accordance with Section 5.12, and the payment of any operating
     expenses in excess of such amount shall be subject to the Lender's prior
     written consent, which consent shall not be unreasonably withheld;

                    (iii) Parent may pay management fees or compensation to GTCR
     in an amount not to exceed $150,000 per year in the aggregate;

                                       41



                    (iv) the Guarantors may declare or make Dividend Payments in
     addition to those permitted hereunder in an amount not to exceed $500,000
     per year in the aggregate or the amount of $1,000,000 in the aggregate;

               (b) Purchase, redeem or otherwise acquire or retire for value
     (including, without limitation, in connection with any merger or
     consolidation involving any Guarantor or any of its Subsidiaries) any
     Equity Interests of such Guarantor or Subsidiary of such Guarantor or any
     direct or indirect parent of such Guarantor or Subsidiary of such
     Guarantor; or

               (c) Make any payment on or with respect to, purchase, redeem,
     defease or otherwise acquire or retire for value any Subordinated Debt,
     except if and to the extent such payment is permitted to be made pursuant
     to the applicable intercreditor agreement between Lender and GTCR on
     Subordinated Debt incurred by Parent in favor of GTCR which is Permitted
     Debt and the refinancing of Subordinated Debt incurred by Parent in favor
     of GTCR so long as no Event of Default has occurred and so long as such
     refinancing is on terms and conditions acceptable to the Lender in its sole
     discretion including, without limitation, that such refinanced Subordinated
     Debt shall remain subject and subordinate in right of payment to the right
     of the Lender to receive the prior indefeasible payment and satisfaction in
     full payment of all Guaranteed Obligations pursuant to the terms of an
     intercreditor agreement between Lender and GTCR, in form and substance
     satisfactory to the Lender.

          Section 7.4 Consolidations, Mergers and Asset Sales. Consolidate or
merge with or into, or sell, lease or otherwise dispose of all or substantially
all of its assets to any other Person, except that (i) a Guarantor or any of its
Subsidiaries (other than Parent, any Mortgage Borrower, any Mezzanine Borrower
or any Trans Lessee) may merge with any Person if such Guarantor or such
Consolidated Subsidiary or another Guarantor or Consolidated Subsidiary is the
surviving corporation and, immediately after such merger (and giving effect
thereto), no Default shall have occurred or be continuing and (ii) a Service
Guarantor may dispose of all or substantially all of its assets and Parent may
dispose of all or substantially all of its Equity Interests in any Service
Guarantor if (x) such entity receives consideration at the time of such sale at
least equal to the fair market value (evidenced by a resolution of its
respective Board of Directors set forth in an Officer's Certificate delivered to
the Lender) of the assets or Equity Interests sold or otherwise disposed of, (y)
100% of the consideration received therefor is in the form of cash and (z) all
proceeds of such disposition shall be immediately applied to repay the
Guaranteed Obligations. Notwithstanding the foregoing, no Service Guarantor
shall be released in its capacity as such from this Guaranty and Lender shall
not have any obligation to release such Service Guarantor from this Guaranty
until the Lender receives satisfactory evidence (including copies of executed
transaction documents) that (1) such sale or disposition was consummated in
accordance with transaction documents approved in writing in advance by Lender
and (2) the Lender received net proceeds from such sale or disposition in the
amount contemplated by such transaction documents.

          Section 7.5 Change in Control. Except to the extent the terms of
Sections 2.4.2(b) or 8.2(b)(as applicable), and 24.2 of the Mortgage Loan
Agreement, the Mezzanine Loan Agreement and the Master Lease respectively are
satisfied, permit a Change in

                                       42



Control or change in the identity of the person holding the title of President
and Chief Executive Officer of Parent; provided, however, that Parent may change
its President or Chief Executive Officer upon not less than ninety (90) days'
prior written notice to Lender of the designation of a successor that is
acceptable to the Lender in its sole discretion.

          Section 7.6 Limitations on Transactions with Affiliates. Other than as
set forth in Section 7.3, pay any funds to or for the account of, make any
Investment in, lease, sell, transfer or otherwise dispose of any assets tangible
or intangible, to, or participate in, or effect any transaction in connection
with any joint enterprise or other joint arrangement with, any Affiliate;
provided that the foregoing shall not prohibit:

               (a) Each Guarantor from performing its obligations under any
     agreements with Affiliates in existence as of the date hereof;

               (b) Each Guarantor or any of their respective Subsidiaries from
     making sales or leases to purchase or leases from any Affiliate and, in
     connection therewith, extending credit or making payments, or from making
     payments for services rendered by any Affiliate, if such sales, leases or
     purchases are made or such services are rendered in the ordinary course of
     business and on terms and conditions at least as favorable to such
     Guarantor or its respective Subsidiary as the terms and conditions which
     would apply in a similar transaction with a Person not an affiliate.

          Section 7.7 No Change in Fiscal Periods. Change the date on which any
of its Fiscal Years or Fiscal Quarters ends, unless the Lender shall have
consented to such change (which consent may be conditioned on the amendment of
any covenant herein that would be affected by such change to eliminate the
effect thereof).

          Section 7.8 Limitation on Business. Engage in any business, other than
the business of owning or managing Healthcare Facilities and any business
specifically incidental thereto and, specifically with respect to Parent, engage
in any activities other than owning the Equity Interests set forth in Section
5.13 and other Subsidiaries that own, operate or manage Healthcare Facilities,
and financing activities and other activities reasonably related to such
ownership.

          Section 7.9 Hazardous Substances. Subject to any restrictions
contained in the applicable lease documents to which Parent or a Loan Party is a
party, (a) cause or permit any of its properties or assets to be used to
generate, manufacture, refine, transport, treat, store, handle, dispose,
transfer, produce or process Hazardous Substances, except in compliance with all
applicable Environmental Laws; nor (b) release, discharge, dispose of or permit
or suffer any release or disposal as a result of any intentional act or omission
on its part of Hazardous Substances onto any such property or asset in violation
of any Environmental Law or in a manner that could result in liability under any
Environmental Law, except in the case of (a) and (b) as are not reasonably
likely to have a Material Adverse Effect.

                                       43



              ARTICLE VIII - SUBORDINATION OF CERTAIN INDEBTEDNESS

          Section 8.1 Subordination of All Guarantor Claims. As used herein, the
term "Guarantor Claims" shall mean all debts and liabilities of any Obligor to
any Guarantor, whether such debts and liabilities now exist or are hereafter
incurred or arise, or whether the obligations of such Obligor thereon be direct,
contingent, primary, secondary, several, joint and several, or otherwise, and
irrespective of whether such debts or liabilities be evidenced by note,
contract, open account, or otherwise, and irrespective of the Person or Persons
in whose favor such debts or liabilities may, at their inception, have been, or
may hereafter be created, or the manner in which they have been or may hereafter
be acquired by any Guarantor. The Guarantor Claims shall include without
limitation all rights and claims of any Guarantor against any Obligor (arising
as a result of subrogation or otherwise) as a result of any Guarantor's payment
of all or a portion of the Guaranteed Obligations. After the occurrence and
during the continuance of a Default or the occurrence and during the continuance
of an event which would, with the giving of notice or the passage of time, or
both, constitute a Default, each Guarantor shall not receive or collect,
directly or indirectly, from any Obligor or any other party any amount upon the
Guarantor Claims.

          Section 8.2 Claims in Bankruptcy. In the event of receivership,
bankruptcy, reorganization, arrangement, debtor's relief, or other insolvency
proceedings involving any Guarantor as debtor, Lender shall have the right to
prove its claim in any such proceeding so as to establish its rights hereunder
and receive directly from the receiver, trustee or other court custodian
dividends and payments which would otherwise be payable upon Guarantor Claims.
Each Guarantor hereby assigns such dividends and payments to Lender. Should
Lender receive, for application against the Guaranteed Obligations, any dividend
or payment which is otherwise payable to any Guarantor and which, as between any
Obligor and such Guarantor, shall constitute a credit against the Guarantor
Claims, then, upon payment to Lender in full of the Guaranteed Obligations, such
Guarantor shall become subrogated to the rights of Lender to the extent that
such payments to Lender on the Guarantor Claims have contributed toward the
liquidation of the Guaranteed Obligations, and such subrogation shall be with
respect to that proportion of the Guaranteed Obligations which would have been
unpaid if Lender had not received dividends or payments upon the Guarantor
Claims.

          Section 8.3 Payments Held in Trust. In the event that, notwithstanding
anything to the contrary in this Guaranty, any Guarantor should receive any
funds, payment, claim or distribution which is prohibited by this Guaranty, such
Guarantor agrees to hold in trust for Lender an amount equal to the amount of
all funds, payments, claims or distributions so received, and agrees that it
shall have absolutely no dominion over the amount of such funds, payments,
claims or distributions so received except to pay them promptly to Lender, and
such Guarantor covenants promptly to pay the same to Lender.

          Section 8.4 Liens Subordinate. Each Guarantor agrees that any liens,
security interests, judgment liens, charges or other encumbrances upon any
Obligor's assets securing payment of the Guarantor Claims shall be and remain
inferior and subordinate to any liens, security interests, judgment liens,
charges or other encumbrances upon such Obligor's assets securing payment of the
Guaranteed Obligations, regardless of whether such encumbrances in favor of such
Guarantor or Lender presently exist or are hereafter created or

                                       44



attach. Without the prior written consent of Lender, no Guarantor shall (i)
exercise or enforce any creditor's right it may have against any Obligor, or
(ii) foreclose, repossess, sequester or otherwise take steps or institute any
action or proceedings (judicial or otherwise, including without limitation the
commencement of, or joinder in, any liquidation, bankruptcy, rearrangement,
debtor's relief or insolvency proceeding) to enforce any liens, mortgage, deeds
of trust, security interests, collateral rights, judgments or other encumbrances
on assets of any Obligor held by such Guarantor.

                              ARTICLE IX - REMEDIES

          Section 9.1 Upon the occurrence and during the continuance of any
Default, the Lender may, in addition to the remedies provided in the Mortgage
Loan Documents, Mezzanine Loan Documents or Lease Documents, enforce its rights
either by suit or in equity, or by action at law, or by appropriate proceedings,
whether for specific performance (to the extent permitted by law) of any
covenant or agreement contained in this Guaranty or in aid of the exercise of
any power granted in this Guaranty and may enforce payment under this Guaranty
and any of its other rights available at law or in equity.

          Section 9.2 Upon the occurrence and during the continuance of any
Default, the Lender is hereby authorized at any time and from time to time,
without notice to any Guarantor (any requirement for such notice being expressly
waived by each Guarantor) to set off and apply against any and all of the
obligations of each Guarantor now or hereafter existing under this Guaranty any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by the Lender to or for
the credit or the account of each Guarantor and any property of each Guarantor
from time to time in possession of the Lenders, irrespective of whether or not
the Lender shall have made any demand hereunder and although such obligations
may be contingent and unmatured. The rights of the Lender under this Section 9.2
are in addition to other rights and remedies (including, without limitation,
other rights of setoff) which the Lender may have.

          Section 9.3 To the extent that it lawfully may, each Guarantor agrees
that it will not at any time insist upon or plead, or in any manner whatever
claim or take any benefit or advantage of any applicable present or future stay,
extension or moratorium law, which may affect observance or performance of the
provisions of this Guaranty, or any of the Loan Documents nor will it claim,
take or insist upon any benefit or advantage of any present or future law
providing for the evaluation or appraisal of any security for its obligations
hereunder or the obligations of any Obligor under the Loan Documents or the
Lease Documents prior to any sale or sales thereof which may be made under or by
virtue of any instrument governing the same.

                            ARTICLE X - MISCELLANEOUS

          Section 10.1 Successors and Assigns. All covenants, promises and
agreements in this Guaranty, by or on behalf of any Guarantor, shall inure to
the benefit of the legal representatives, successors and assigns of Lender.

                                       45



          Section 10.2 Governing Law; Submission to Jurisdiction.

               (a) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, AND
     MADE BY LENDER AND ACCEPTED BY EACH GUARANTOR IN THE STATE OF NEW YORK, AND
     THE PROCEEDS OF THE MORTGAGE LOAN, MEZZANINE LOAN AND THE SALE/LEASEBACK
     TRANSACTION WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE
     PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE
     UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING,
     WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION,
     VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING
     HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
     OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH
     STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT LAWS) AND ANY APPLICABLE
     LAW OF THE UNITED STATES OF AMERICA. TO THE FULLEST EXTENT PERMITTED BY
     LAW, EACH GUARANTOR HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM
     TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS GUARANTY AND
     THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
     LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK
     GENERAL OBLIGATIONS LAW.

               (b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR ANY
     GUARANTOR ARISING OUT OF OR RELATING TO THIS GUARANTY MAY AT LENDER'S
     OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK,
     COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL
     OBLIGATIONS LAW AND EACH GUARANTOR WAIVES ANY OBJECTIONS WHICH IT MAY NOW
     OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH
     SUIT, ACTION OR PROCEEDING, AND EACH GUARANTOR HEREBY IRREVOCABLY SUBMITS
     TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.
     EACH GUARANTOR DOES HEREBY DESIGNATE AND APPOINT:

          CT Corporation System
          111 Eighth Avenue
          New York, New York  10011

     AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF
     ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR
     PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES
     THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE
     OF SAID SERVICE MAILED OR DELIVERED TO ANY GUARANTOR IN THE MANNER PROVIDED
     HEREIN SHALL BE DEEMED IN EVERY RESPECT

                                       46



     EFFECTIVE SERVICE OF PROCESS UPON SUCH GUARANTOR, IN ANY SUCH SUIT, ACTION
     OR PROCEEDING IN THE STATE OF NEW YORK. EACH GUARANTOR (I) SHALL GIVE
     PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT
     HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A
     SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH
     SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS
     FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A
     SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK,
     NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.

          Section 10.3 Modification; Waiver in Writing. No modification,
amendment, extension, discharge, termination or waiver of any provision of this
Guaranty, nor consent to any departure by any Guarantor therefrom, shall in any
event be effective unless the same shall be in a writing signed by the party
against whom enforcement is sought, and then such waiver or consent shall be
effective only in the specific instance, and for the purpose, for which given.
Except as otherwise expressly provided herein, no notice to, or demand on any
Guarantor, shall entitle such Guarantor to any other or future notice or demand
in the same, similar or other circumstances.

          Section 10.4 Delay Not a Waiver. Neither any failure nor any delay on
the part of Lender in insisting upon strict performance of any term, condition,
covenant or agreement, or exercising any right, power, remedy or privilege
hereunder, or under any other Mortgage Loan Document, Mezzanine Loan Document or
Lease Document, shall operate as or constitute a waiver thereof, nor shall a
single or partial exercise thereof preclude any other future exercise, or the
exercise of any other right, power, remedy or privilege. In particular, and not
by way of limitation, by accepting payment after the due date of any amount
payable under this Guaranty, any other Mortgage Loan Document, Mezzanine Loan
Document or any Lease Document, Lender shall not be deemed to have waived any
right either to require prompt payment when due of all other amounts due under
this Guaranty, any Mortgage Loan Document, Mezzanine Loan Document or any Lease
Document, or to declare a default for failure to effect prompt payment of any
such other amount.

          Section 10.5 Notice. All notices, demands, requests, consents,
approvals or other communications (any of the foregoing, a "Notice") required,
permitted, or desired to be given hereunder shall be in writing sent by telefax
(with answer back acknowledged) or by registered or certified mail, postage
prepaid, return receipt requested, or delivered by hand or reputable overnight
courier addressed to the party to be so notified at its address hereinafter set
forth, or to such other address as such party may hereafter specify in
accordance with the provisions of this Section 10.6. Any Notice to any Guarantor
shall be deemed effective as to all Guarantors to the extent delivered to one
Guarantor and Notice to all Guarantors shall not be required if Notice is given
to one Guarantor. Any Notice shall be deemed to have been received: (a) three
(3) days after the date such Notice is mailed, (b) on the date of sending by
telefax if sent during business hours on a Business Day (otherwise on the next
Business Day), (c) on the date of delivery by hand if delivered during business
hours on a Business Day (otherwise on the next Business Day), and (d) on the
next Business Day if sent by an overnight commercial courier, in

                                       47



each case addressed to the parties as follows:

          If to Lender:       Ventas Realty, Limited Partnership
                              c/o Ventas, Inc.
                              4360 Brownsboro Road, Suite 115
                              Louisville, Kentucky 40207
                              Attention:  Chief Financial Officer
                              Facsimile No. (502)-357-9001

          with a copy to:     Ventas Realty, Limited Partnership
                              c/o Ventas, Inc.
                              4360 Brownsboro Road, Suite 115
                              Louisville, Kentucky 40207
                              Attention:  General Counsel
                              Facsimile No. (502)-357-9001

          with a copy to:     Dechert
                              4000 Bell Atlantic Tower
                              1717 Arch Street
                              Philadelphia, Pennsylvania  19103
                              Attention: David W. Forti
                              Facsimile No. (215) 994-2222

          If to Guarantors:   c/o Trans Healthcare, Inc.
                              4660 Trindle Road, Suite 103
                              Camp Hill, Pennsylvania 17011
                              Attention: Anthony F. Misitano
                              Facsimile No. (717) 730-8722

          with a copy to:     Latsha Davis & Yohe, P.C.
                              4720 Old Gettysburg Road, Suite 101
                              Harrisburg, Pennsylvania 17108
                              Attention: Douglas C. Yohe
                              Facsimile No. (717) 761-2286

          Section 10.6 Waiver of Right to Trial by Jury. EACH GUARANTOR AND
LENDER EACH HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF
RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY
SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS GUARANTY, ANY
MORTGAGE LOAN DOCUMENT, MEZZANINE LOAN DOCUMENT, ANY LEASE DOCUMENT, OR ANY
CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER
OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY EACH GUARANTOR
AND LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH
ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EACH
GUARANTOR AND LENDER ARE EACH

                                       48



HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS
CONCLUSIVE EVIDENCE OF THIS WAIVER.

          Section 10.7 Headings. The Article and/or Section headings in this
Guaranty are included herein for convenience of reference only and are not to be
construed as defining or limiting the scope or intent of the provisions hereof.

          Section 10.8 Severability. Wherever possible, each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.

          Section 10.9 Waiver of Notice. To the extent permitted by applicable
law, each Guarantor shall not be entitled to any notices of any nature
whatsoever from Lender except with respect to matters for which this Guaranty
specifically and expressly provide for the giving of notice by Lender to any
Guarantor and except with respect to matters for which any Guarantor is not,
pursuant to applicable Legal Requirements, permitted to waive the giving of
notice. Each Guarantor hereby expressly waives the right to receive any notice
from Lender with respect to any matter for which this Guaranty does not
specifically and expressly provide for the giving of notice by Lender to such
Guarantor.

          Section 10.10 Amendments. This Guaranty may be amended only by an
instrument in writing executed by the party or an authorized representative of
the party against whom such amendment is sought to be enforced.

          Section 10.11 Number and Gender. All pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine, neuter, singular or
plural as the identity of the person or persons referred to may require. Without
limiting the effect of specific references in any provision of this Guaranty,
the term "Guarantor" shall be deemed to refer to each and every person
comprising a Guarantor from time to time, as the sense of a particular provision
may require, and to include the heirs, executors, administrators, legal
representatives, successors and assigns of Guarantor, all of whom shall be bound
by the provisions of this Guaranty, provided that no obligation of Guarantor may
be assigned except with the written consent of Lender.

          Section 10.12 Recitals. The recital and introductory paragraphs hereof
are a part hereof, form a basis for this Guaranty and shall be considered prima
facie evidence of the facts and documents referred to therein.

          Section 10.13 Duplicates; Counterparts. This Agreement may be executed
in any number of duplicate originals and each such duplicate original shall be
deemed to be an original. This Agreement may be executed in several
counterparts, each of which counterparts shall be deemed an original instrument
and all of which together shall constitute a single Agreement. The failure of
any party hereto to execute this Guaranty, or any counterpart hereof, shall not
relieve the other signatories from their obligations hereunder..

          Section 10.14 Rights and Remedies. If any Guarantor becomes liable for
any indebtedness owing by any Obligor to Lender, by endorsement or otherwise,
other than under

                                       49



this Guaranty, such liability shall not be in any manner impaired or affected
hereby and the rights of Lender hereunder shall be cumulative of any and all
other rights that Lender may ever have against Guarantor. The exercise by Lender
of any right or remedy hereunder or under any other instrument, or at law or in
equity, shall not preclude the concurrent or subsequent exercise of any other
right or remedy.

          Section 10.15 Joint and Several Liability. If more than one Person has
executed this Guaranty as "Guarantor," the representations, covenants,
warranties and obligations of all such Persons hereunder shall be joint and
several.

          Section 10.16 Entirety. THIS GUARANTY EMBODIES THE FINAL, ENTIRE
AGREEMENT OF GUARANTOR AND LENDER WITH RESPECT TO GUARANTOR'S GUARANTY OF THE
GUARANTEED OBLIGATIONS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF. THIS GUARANTY IS INTENDED BY GUARANTOR AND LENDER AS A
FINAL AND COMPLETE EXPRESSION OF THE TERMS OF THE GUARANTY, AND NO COURSE OF
DEALING BETWEEN GUARANTOR AND LENDER, NO COURSE OF PERFORMANCE, NO TRADE
PRACTICES, AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE SHALL BE
USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS GUARANTY. THERE
ARE NO ORAL AGREEMENTS BETWEEN GUARANTOR AND LENDER.

          Section 10.17 Cooperation. (a) Each Guarantor acknowledges that Lender
and its successors and assigns may (i) sell or otherwise transfer this Guaranty,
the Mortgage Note, Mezzanine Note, the Mortgage Loan Documents, the Mezzanine
Loan Documents and/or Lease Documents to one or more investors as a whole loan
or whole lease, as applicable, (ii) sell participation interests in any of the
Mortgage Loan, Mezzanine Loan and/or the Sale/Leaseback Transaction, (iii)
securitize the Mortgage Loan, Mezzanine Loan and/or Master Lease in a single
asset securitization or a pooled loan securitization, or (iv) otherwise sell any
of the Mortgage Loan, Mezzanine Loan and/or the Sale/Leaseback Transaction
interest therein to investors (the transactions referred to in clauses (i)
through (iv) are hereinafter each referred to as "Secondary Market Transaction"
and the transactions referred to in clause (iii) are referred to herein as a
"Securitization").

               (a) If requested by Lender, each Guarantor shall assist Lender in
     satisfying the market standards to which Lender customarily adheres or
     which may be reasonably required in the marketplace or by the Rating
     Agencies in connection with any Secondary Market Transactions, including,
     without limitation, to:

                    (i) (A) provide updated financial and other information with
     respect to the Properties, the business operated at the Properties, the
     Mortgage Borrowers, Mezzanine Borrowers and the Trans Lessees, (B) provide
     updated budgets relating to the Properties and (C) provide updated
     appraisals, market studies, environmental reviews (Phase I's and, if
     appropriate, Phase II's), property condition reports and other due
     diligence investigations of the Properties (the "Updated

                                       50



     Information"), together, if customary, with appropriate verification of the
     Updated Information through letters of auditors or opinions of counsel
     acceptable to Lender and the Rating Agencies;

                    (ii) provide opinions of counsel, which may be relied upon
     by Lender, the Rating Agencies and their respective counsel, agents and
     representatives, as to non-consolidation or any other opinion customary in
     Secondary Market Transactions or required by the Rating Agencies with
     respect to the Properties and Mortgage Borrowers, Mezzanine Borrowers,
     Trans Lessees and Affiliates, which counsel and opinions shall be
     satisfactory to Lender and the Rating Agencies;

                    (iii) provide updated, as of the closing date of the
     Secondary Market Transaction, representations and warranties made in the
     Mortgage Loan Documents, Mezzanine Loan Documents and Lease Documents and
     such additional representations and warranties as the Rating Agencies may
     require; and

                    (iv) execute amendments to the Mortgage Loan Documents,
     Mezzanine Loan Documents or Lease Documents and the organizational
     documents of the Mortgage Borrowers, Mezzanine Borrowers or Trans Lessees
     reasonably requested by Lender; provided, however, that Mortgage Borrowers,
     Mezzanine Borrower and Trans Lessees shall not be required to modify or
     amend any Mortgage Loan Documents, Mezzanine Loan Document or Lease
     Document if such modification or amendment would (A) change the interest
     rate, the stated maturity or the amortization of principal as set forth
     herein or in the Mortgage Note or the Mezzanine Note or the termination
     date of or payments of rent under the Master Lease, or (B) modify or amend
     any other material economic term of the Mortgage Loan, Mezzanine Loan or
     Sale/Leaseback Transaction.

                         [NO FURTHER TEXT ON THIS PAGE]

                                       51



          IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly
executed all as of the day and year first above written.

                                       GUARANTOR:

                                       TRANS HEALTHCARE, INC.,
                                       a Delaware corporation


                                       By:   /s/ ANTHONY F. MISITANO
                                          --------------------------------------
                                          Name:  Anthony F. Misitano
                                          Title: President


                                       TRANS HEALTHCARE OF OHIO, INC.,
                                       a Delaware corporation


                                       By:   /s/ ANTHONY F. MISITANO
                                          --------------------------------------
                                          Name:  Anthony F. Misitano
                                          Title: President


                                       THI OF OHIO ALFS, INC.,
                                       a Delaware corporation


                                       By:   /s/ ANTHONY F. MISITANO
                                          --------------------------------------
                                          Name:  Anthony F. Misitano
                                          Title: President


                                       THI PROPERTIES, INC.,
                                       a Delaware corporation


                                       By:   /s/ ANTHONY F. MISITANO
                                          --------------------------------------
                                          Name:  Anthony F. Misitano
                                          Title: President


                                       THI SERVICES CORP.,
                                       a Delaware corporation


                                       By:   /s/ ANTHONY F. MISITANO
                                          --------------------------------------
                                          Name:  Anthony F. Misitano
                                          Title: President



                                       THI SPECIALTY HOSPITALS OF OHIO, INC.,
                                       a Delaware corporation


                                       By:   /s/ ANTHONY F. MISITANO
                                          --------------------------------------
                                          Name:  Anthony F. Misitano
                                          Title: President


                                       TRANS HEALTH MANAGEMENT, INC.,
                                       a Delaware corporation


                                       By:   /s/ ANTHONY F. MISITANO
                                          --------------------------------------
                                          Name:  Anthony F. Misitano
                                          Title: President


                                       THI OF MARYLAND, INC.,
                                       a Delaware corporation


                                       By:   /s/ ANTHONY F. MISITANO
                                          --------------------------------------
                                          Name:  Anthony F. Misitano
                                          Title: President


                                       PHYSICAL THERAPY PLUS, INC.,
                                       a Pennsylvania corporation


                                       By:   /s/ ANTHONY F. MISITANO
                                          --------------------------------------
                                          Name:  Anthony F. Misitano
                                          Title: President


                                       DALE J. CORDIAL, PT, INC.,
                                       a Pennsylvania corporation


                                       By:   /s/ ANTHONY F. MISITANO
                                          --------------------------------------
                                          Name:  Anthony F. Misitano
                                          Title: President



                                       DALE J. CORDIAL, PT, INC., NUMBER 4,
                                       a Pennsylvania corporation


                                       By:   /s/ ANTHONY F. MISITANO
                                          --------------------------------------
                                          Name:  Anthony F. Misitano
                                          Title: President


                                       THE PT GROUP OF PENN HILLS,
                                       a Pennsylvania general partnership


                                       By: Trans Healthcare, Inc.,
                                           a Delaware corporation,
                                           its Partner


                                           By:   /s/ ANTHONY F. MISITANO
                                              ----------------------------------
                                              Name:  Anthony F. Misitano
                                              Title: President


                                       THE PT GROUP PHYSICAL THERAPY FOR WOMEN,
                                       a Pennsylvania general partnership


                                       By: Dale J. Cordial, PT, Inc.,
                                           a Pennsylvania corporation,
                                           its Partner


                                           By:   /s/ ANTHONY F. MISITANO
                                              ----------------------------------
                                              Name:  Anthony F. Misitano
                                              Title: President


                                       THE PT GROUP OF MOON TOWNSHIP,
                                       a Pennsylvania general partnership


                                       By: Dale J. Cordial, PT, Inc., Number 4,
                                           a Pennsylvania corporation,
                                           its Partner


                                           By:   /s/ ANTHONY F. MISITANO
                                              ----------------------------------
                                              Name:  Anthony F. Misitano
                                              Title: President



                                       THI Therapy Concepts, LLC,
                                       a Delaware limited liability company


                                       By:   /s/ JEFFREY A. BARNHILL
                                          --------------------------------------
                                          Name:  Jeffrey A. Barnhill
                                          Title: Vice-President


                                       THI SERVICES OF MARYLAND, LLC,
                                       a Delaware limited liability company


                                       By:   /s/ JEFFREY A. BARNHILL
                                          --------------------------------------
                                          Name:  Jeffrey A. Barnhill
                                          Title: Vice-President

EX-10.3.4

                                                                  EXHIBIT 10.3.4

                     GUARANTOR PLEDGE AND SECURITY AGREEMENT

          THIS GUARANTOR PLEDGE AND SECURITY AGREEMENT, dated as of November 1,
2002 (as amended, restated, replaced, supplemented or otherwise modified from
time to time, the "Security Agreement"), is made by TRANS HEALTHCARE, INC.
("Parent") and THOSE SUBSIDIARIES OF PARENT LISTED AS A "PLEDGOR" ON SCHEDULE V
attached hereto, each having an address at 4660 Trindle Road, Suite 103, Camp
Hill, Pennsylvania 17011 (each a "Pledgor" and collectively, the "Pledgors"), in
favor of VENTAS REALTY, LIMITED PARTNERSHIP, a Delaware limited partnership
(together with its successors and assigns, "Secured Party").

                                    RECITALS

     A. WHEREAS, Ventas Realty, Limited Partnership, a Delaware limited
partnership, in its capacity as the mortgage lender, is making a first-priority
mortgage loan (the "Mortgage Loan") to those entities listed as a "Mortgage
Borrower" on Schedule I attached hereto, each a Delaware limited liability
company (each a "Mortgage Borrower" and collectively the "Mortgage Borrowers")
in the maximum principal amount of $55,000,000;

     B. WHEREAS, Ventas Realty, Limited Partnership, a Delaware limited
partnership, in its capacity as the mezzanine lender, is making a mezzanine loan
(the "Mezzanine Loan") to those entities listed as a "Mezzanine Borrower" on
Schedule II attached hereto, each a Delaware limited liability company (each a
"Mezzanine Borrower" and collectively the "Mezzanine Borrowers") in the maximum
principal amount of $22,000,000;

     C. WHEREAS, Ventas Realty, Limited Partnership, a Delaware limited
partnership, in its capacity as the purchaser under that certain Purchase and
Sale Agreement of even date herewith and as the lessor under that certain Master
Lease of even date herewith (the "Master Lease"), with those entities listed as
a "Lessee" on Schedule III attached hereto, each a Delaware limited liability
company (each a "Lessee" and collectively the "Lessees") is entering into an
acquisition and leaseback transaction with the Lessees (the "Sale/Leaseback
Transaction");

     D. WHEREAS, Parent owns one hundred percent (100%) of the equity interests
in each of the entities listed as a "Wholly-Owned Subsidiary" on Schedule IV
attached hereto (each, a "Wholly-Owned Subsidiary" and collectively, the
"Wholly-Owned Subsidiaries");

     E. WHEREAS, Parent and Dale J. Cordial, PT, Inc. collectively own one
hundred percent (100%) of the equity interests in The pt Group of Penn Hills
(the "Penn Hills Subsidiary");

     F. WHEREAS, Parent owns sixty-six and seven tenths percent (66.7%) of the
equity interests in each of (i) Dale J. Cordial, PT & Robert E. Brett, PT, d/b/a
The pt Group and (ii) Dale J. Cordial, PT & Steven J. Teitel, PT, d/b/a The pt
Group (each, a "Partially-Owned Subsidiary" and collectively, the
"Partially-Owned Subsidiaries");



     G. WHEREAS, Dale J. Cordial, PT, Inc. owns sixty-six and seven tenths
percent (66.7%) of the equity interests in Dale J. Cordial, PT, PC & Joseph R.
Chrillo, MS, PT, d/b/a The pt Group (the "DJC Subsidiary");

     H. WHEREAS, Dale J. Cordial, PT, Inc. and Dale J. Cordial, PT, Inc., Number
4 (collectively, the "PT Pledgors") collectively own one hundred percent (100%)
of the equity interests in each of (i) The pt Group Physical Therapy for Women
and (ii) The pt Group of Moon Township (each, a "PT Pledgor Subsidiary" and
collectively, the "PT Pledgor Subsidiaries");

     I. WHEREAS, Trans Healthcare of Ohio, Inc. (the "Ohio I Pledgor") owns one
hundred percent (100%) of the equity interests in (i) THI of Ohio SNFs, LLC (the
"Ohio I Mezzanine Borrower"), (ii) the Lessees listed under its name on Schedule
III attached hereto (each an "Ohio Lessee" and collectively the "Ohio Lessees")
and (iii) each of THI of Ohio at Kent, LLC, THI of Ohio at Cortland, LLC and THI
of Ohio at Berea, LLC (each an "Ohio I Pledgor Subsidiary" and collectively, the
"Ohio I Pledgor Subsidiaries");

     J. WHEREAS, the Ohio I Mezzanine Borrower owns one hundred percent (100%)
of the equity interests in each of the Mortgage Borrowers listed under its name
on Schedule I attached hereto (each, an "Ohio Mortgage Borrower" and
collectively, the "Ohio Mortgage Borrowers");

     K. WHEREAS, THI of Ohio ALFs, Inc. (the "Ohio II Pledgor") owns one hundred
percent (100%) of the equity interests in each of (i) THI of Ohio ALFs I, LLC
(the "Ohio II Mezzanine Borrower") and (ii) the Lessee listed under its name on
Schedule III attached hereto (the "Ohio ALF Lessee");

     L. WHEREAS, THI of Maryland, Inc. (the "Maryland Pledgor") owns one hundred
percent (100%) of the equity interests in (i) THI of Maryland SNFs I, LLC (the
"Maryland I Mezzanine Borrower"), (ii) THI of Maryland SNFs II, LLC (the
"Maryland II Mezzanine Borrower"; the Maryland II Mezzanine Borrower and the
Maryland I Mezzanine Borrower are individually, a "Maryland Mezzanine Borrower"
and collectively, the "Maryland Mezzanine Borrowers"), (iii) each of the Lessees
listed under its name on Schedule III attached hereto (each, a "Maryland Lessee"
and collectively, the "Maryland Lessees") and (iv) each of THI Therapy Concepts,
LLC and THI Services of Maryland, LLC (each a "Maryland Pledgor Subsidiary" and
collectively, the "Maryland Pledgor Subsidiaries");

     M. WHEREAS, the Maryland I Mezzanine Borrower owns one hundred percent
(100%) of the equity interests in each of the Mortgage Borrowers listed under
its name on Schedule I attached hereto (each, a "Maryland Mortgage Borrower" and
collectively, the "Maryland Mortgage Borrowers");

     N. WHEREAS, the Maryland II Mezzanine Borrower owns one hundred percent
(100%) of the membership interests in each of (i) THI of Maryland at Franklin
Square, LLC and (ii) THI of Maryland at Fort Washington, LLC (each, a "Maryland
Leasehold Entity" and collectively, the "Maryland Leasehold Entities");

                                       2



     O. WHEREAS, each of the Mezzanine Borrowers, the Lessees, the Wholly-Owned
Subsidiaries, the Penn Hills Subsidiary, the Partially-Owned Subsidiaries, the
DJC Subsidiary, the PT Pledgor Subsidiaries and the Maryland Pledgor
Subsidiaries, are referred to herein individually as, an "Existing Company" and
collectively as, the "Existing Companies" and each corporation, limited
liability company, limited partnership, general partnership or other entity
which may hereafter be formed by any Pledgor, together with each Existing
Company is referred to herein as, a "Company" and collectively as, the
"Companies";

     P. WHEREAS, all of the agreements, instruments and other documents which
govern, evidence and/or secure the Mortgage Loan, as the same may from time to
time hereafter be modified, supplemented or amended, are hereinafter referred to
as the "Mortgage Loan Documents"; and

     Q. WHEREAS, all of the agreements, instruments and other documents which
govern, evidence and/or secure the Mezzanine Loan, as the same may from time to
time hereafter be modified, supplemented or amended, are hereinafter referred to
as the "Mezzanine Loan Documents";

     R. WHEREAS, all of the agreements, instruments and other documents which
govern, evidence and/or secure the Sale/Leaseback Transaction, as the same may
from time to time hereafter be modified, supplemented or amended, are
hereinafter referred to as the "Lease Documents";

     S. WHEREAS, to secure the obligations of (i) each Mortgage Borrower under
the Mortgage Loan Documents, (ii) each Mezzanine Borrower under the Mezzanine
Loan Documents and (iii) each Lessee under the Master Lease and the other Lease
Documents, each Pledgor has executed and delivered to Secured Party a certain
Guaranty dated of even date herewith (as amended, restated, replaced,
supplemented or otherwise modified from time to time, the "Master Guaranty," and
capitalized terms used herein, unless otherwise defined herein, shall have the
meanings ascribed thereto in the Master Guaranty);

     T. WHEREAS, as a condition precedent to making the Mortgage Loan and the
Mezzanine Loan and to consummating the Sale/Leaseback Transaction, Secured Party
has required, among other things, that this Security Agreement be executed and
delivered by each of the Pledgors in order to secure the obligations of each
such Pledgor under the Master Guaranty;

          NOW THEREFORE, in consideration of the foregoing, and in order to
induce the Secured Party to make the Mortgage Loan to the Mortgage Borrowers and
the Mezzanine Loan to the Mezzanine Borrowers and to consummate the
Sale/Leaseback Transaction with the Lessees, and for other good and valuable
consideration, the receipt, adequacy and sufficiency of which are hereby
acknowledged, each of the Pledgors and Secured Party, intending to be legally
bound, do hereby agree as follows:

                                       3



          1. Definitions. As used in this Security Agreement, the following
terms have the meanings set forth in or incorporated by reference below:

               (a) "Code" means the Uniform Commercial Code from time to time in
effect in the State of New York.

               (b) "Corporate Company" means each Company that is a corporation,
whether now existing or hereafter formed.

               (c) "LLC Company" means each Company that is a limited liability
company, whether now existing or hereafter formed.

               (d) "Loans" means, collectively, the Mortgage Loan and the
Mezzanine Loan.

               (e) "Loan Documents" means, collectively, the Mortgage Loan
Documents and the Mezzanine Loan Documents.

               (f) "Partnership Company" means each Company that is a general
partnership, whether now existing or hereafter formed.

               (g) "Pledged Company Interests" means the regular membership
interests, limited partnership interests or general partnership interests of any
Pledgor in each LLC Company or Partnership Company, as applicable, together with
all membership or partnership interest certificates, options or rights of any
nature whatsoever which may be issued or granted by such LLC Company or
Partnership Company, as applicable, while this Security Agreement is in effect.

               (h) "Pledged Securities" means collectively, the Pledged Company
Interests and the Pledged Stock.

               (i) "Pledged Stock" means the shares of capital stock of Parent
in each Corporate Company, together with all stock certificates, options or
rights of any nature whatsoever which may be issued or granted by such Corporate
Company while this Security Agreement is in effect.

               (j) "Proceeds" means all "proceeds" as such term is defined in
Section 9-306(1) of the Code on the date hereof and, in any event, shall
include, without limitation, all dividends or other income from the Pledged
Securities, collections thereon or distributions with respect thereto.

                                       4



          2. Pledge, Security Interest And Assignment of Limited Liability
Company Distributions.

               (a) As security for the full and faithful payment, performance
and observance by each Pledgor of all obligations to be paid, performed or
observed by such Pledgor under the Master Guaranty (collectively, the "Secured
Obligations"), each Pledgor hereby grants and pledges to Secured Party, as
pledgee, a first priority and continuing lien on, and a first priority and
continuing security interest in, and, in furtherance of such grant and pledge,
hereby transfers and assigns to Secured Party as collateral security, all of its
right, title and interest in, to and under, and/or with respect to, and/or
arising from or out of, the following, whether now owned or hereafter acquired,
whether now existing or hereafter arising and wherever located (collectively,
the "Pledged Collateral"):

                    (i) all of Pledgor's right, title and interest in and to the
Pledged Securities;

                    (ii) all rights, privileges, authority and power arising
from Pledgor's interest in each Company (provided, however, that, so long as no
Event of Default exists, Pledgor may exercise such rights, privileges, authority
and power vested in Pledgor as a member, partner, shareholder or equity holder,
as the case may be, of such Company);

                    (iii) the capital of Pledgor in each Company and any and all
profits, losses, distributions and allocations attributable thereto as well as
the proceeds of any distribution thereof, whether arising under the terms of any
of the following documents, as applicable (each an "Organizational Document" and
collectively, the "Organizational Documents"): articles of incorporation,
certificate of formation, certificate of organization, by-laws, limited
partnership agreement, limited liability company agreement, stock certificates,
certificates of limited partnership interests or general partnership interests
(if any), certificates of limited liability company membership interests (if
any), and all amendments or modifications of any of the foregoing, and all other
agreements, instruments and/or other organizational or governing documents of or
relating to each Company;

                    (iv) all other payments, if any, due or to become due to
Pledgor in respect of the Pledged Collateral, under or arising out of any
Organizational Document of any Company, or otherwise, whether as contractual
obligations, damages, insurance proceeds, condemnation awards or otherwise
(including, without limitation, all amounts deposited and/or to be deposited in
the Cash Management Account (as defined in the Mortgage Loan Agreement and the
Cash Management Account (as defined in the Mezzanine Loan Agreement) and all
other cash collateral for the Loans);

                    (v) all of Pledgor's claims, rights, powers, privileges,
authority, options, security interests, Liens and remedies, if any, under or
arising out of the ownership of the Pledged Collateral;

                                       5



                    (vi) all present and future claims, if any, of Pledgor
against any Company for monies loaned or advanced, for services rendered or
otherwise;

                    (vii) all of Pledgor's rights pursuant to any Organizational
Document of any Company, or at law, to exercise and enforce every right, power,
remedy, authority, option and privilege of Pledgor relating to the Pledged
Securities, including the right to execute any instruments and to take any and
all other action on behalf of and in the name of Pledgor in respect of the
Pledged Securities and/or such Company, to make determinations, to exercise any
election (including, but not limited to, election of remedies) or option or to
give or receive any notice, consent, amendment, waiver or approval, together
with full power and authority to demand, receive, enforce or collect any of the
foregoing or any property of such Company, to enforce or execute any checks, or
other instruments or orders and to file any claims and to take any action in
connection with any of the foregoing;

                    (viii) all Investment Property (as such term is defined in
the Code) issued by, or relating to, any Company;

                    (ix) all equity interests or other property now owned or
hereafter acquired by Pledgor as a result of exchange offers, recapitalizations
of any type, contributions to capital, options or other rights relating to the
Pledged Collateral; and

                    (x) to the extent not otherwise included, all Proceeds of
any or all of the foregoing, as applicable.

               (b) Concurrently with the execution of this Security Agreement,
(i) each of the Pledgors shall execute and deliver to Secured Party, for filing,
all UCC-1 financing statements in proper form necessary to perfect the security
interests granted hereunder in all jurisdictions deemed relevant by Secured
Party (collectively, the "Financing Statements"), and each of the Pledgors
agrees to pay any and all fees or other charges relating to the filing of the
Financing Statements and hereby authorizes and instructs Secured Party to make
such payments by deducting from the proceeds of the Loans advanced to the
Pledgors the full amount of such fees or other charges.

               (c) (i) With respect to each Wholly-Owned Subsidiary, Parent
shall deliver to Secured Party the sole original executed certificated security
in registered form which represents all of the shares in such Wholly-Owned
Subsidiary, (ii) with respect to the Ohio I Mezzanine Borrower, the Ohio I
Pledgor shall deliver to Secured Party the sole original executed certificated
security in registered form which represents the sole limited liability company
membership interest in the Ohio I Mezzanine Borrower, (iii) with respect to each
Ohio Lessee, the Ohio I Pledgor shall deliver to Secured Party the sole original
executed certificated security in registered form which represents the sole
limited liability company membership interest in such Ohio Lessee, (iv) with
respect to each Ohio I Pledgor Subsidiary, the Ohio I Pledgor shall deliver to
Secured Party the sole original executed certificated security in registered
form which represents the sole limited liability company membership interest in
such Ohio I Pledgor Subsidiary, (v) with respect to the Ohio II Mezzanine
Borrower, the Ohio II Pledgor shall deliver

                                       6



to Secured Party the sole original executed certificated security in registered
form which represents the sole limited liability company membership interest in
the Ohio II Mezzanine Borrower, (vi) with respect to the Ohio ALF Lessee, the
Ohio II Pledgor shall deliver to Secured Party the sole original executed
certificated security in registered form which represents the sole limited
liability company membership interest in the Ohio ALF Lessee, (vii) with respect
to each Maryland Mezzanine Borrower, the Maryland Pledgor shall deliver to
Secured Party the sole original executed certificated security in registered
form which represents the sole limited liability company membership interest in
such Maryland Mezzanine Borrower, (viii) with respect to each Maryland Lessee,
the Maryland Pledgor shall deliver to Secured Party the sole original executed
certificated security in registered form which represents the sole limited
liability company membership interest in such Maryland Lessee and (ix) with
respect to each Maryland Pledgor Subsidiary, the Maryland Pledgor shall deliver
to Secured Party the sole original executed certificated security in registered
form which represents the sole limited liability company membership interest in
such Maryland Pledgor Subsidiary. Attached hereto as Exhibit A is a copy of the
certificates to be delivered to Secured Party pursuant to the immediately
preceding sentence (each, a "Certificate" and collectively, the "Certificates").
Each Certificate shall be duly "indorsed in blank" within the meaning of the
Code in a manner sufficient to provide Secured Party with "control" of such
certificated security within the meaning of Section 8-106 of the Code.
Concurrently with the delivery to Secured Party of each Certificate representing
one or more shares of the Pledged Securities, Parent shall deliver an undated
stock or certificate power covering each such Certificate, duly executed in
blank with signature guaranteed if Secured Party shall so request.

               (d) That portion of the Pledged Collateral which is comprised of
all distributions or other payments or receipts of cash or other property
(including, but not limited to, Investment Property or other property described
in Section 2(a)(viii) or Section 2(a)(ix) hereof) received by any Pledgor
directly or indirectly from any Company is referred to hereinafter sometimes as
the "Distributions". Notwithstanding anything to the contrary set forth in this
Security Agreement, with respect to the Distributions, subject to the provisions
of the Loan Documents and the Lease Documents, including, but not limited to the
Master Guaranty, this Security Agreement constitutes a present, and current
assignment of the Distributions effective upon the execution and delivery
hereof. Accordingly, if any Pledgor shall, at any time during a Cash Management
Period (as defined in the Mortgage Loan Agreement and the Mezzanine Loan
Agreement) or during a period in which it is in violation of any of the Loan
Documents or Lease Documents, including, but not limited to, the Master
Guaranty, receive, irrespective of whether or not such receipt occurs before or
after an Event of Default, one or more Distributions (including, but not limited
to, any distribution of the items of Pledged Collateral referred to in Section
2(a)(viii) or Section 2(a)(ix) above), such funds or property shall be held by
such Pledgor in trust for Secured Party and delivered within three (3) Business
Days to Secured Party (duly endorsed in blank in the case of certificated
securities in registered form (within the meaning of relevant Sections of the
Code)) for application by Secured Party in accordance with Section 11 hereof.

                                       7



          3. Representations and Warranties. Each Pledgor represents and
warrants as of the date hereof that:

               (a) no authorization, consent of or notice to any other Person
(including, without limitation, any member, partner, shareholder or creditor of
Pledgor, or of any Company) that has not been obtained, is required in
connection with the execution, delivery, performance, validity or enforceability
of this Security Agreement including, without limitation, the assignment and
transfer by Pledgor of any of the Pledged Collateral to Secured Party or the
subsequent transfer thereof by Secured Party pursuant to the terms hereof;

               (b) the Pledged Securities constitute all the issued and
outstanding equity, membership interests, limited partnership interests, general
partnership interests or capital stock, as the case may be, in the each Company
(other than the Partially-Owned Subsidiaries and the DJC Subsidiary);

               (c) Parent owns sixty-six and seven tenths percent (66.7%) in
each of the Partially-Owned Subsidiaries and such interests represent all of the
interest owned by Parent;

               (d) Dale J. Cordial, PT, Inc. owns sixty-six and seven tenths
percent (66.7%) in the DJC Subsidiary and such interests represent all of the
interest owned by Dale J. Cordial, PT, Inc.;

               (e) Pledgor is the record and beneficial owner of, and has good
and marketable title to, the Pledged Company Interests pledged by it, free of
any and all Liens or options in favor of, or claims of, any other Person, except
the Lien created by this Security Agreement;

               (f) upon the filing of the UCC-1 financing statements referred to
in Section 2(b) and delivery of the Certificates referred to in Section 2(c),
the Lien granted pursuant to this Security Agreement will constitute a valid,
perfected first priority Lien on the Pledged Company Interests and related
Proceeds, enforceable as a valid, perfected first priority Lien against all
creditors of Pledgor and any Persons purporting to purchase any Pledged Company
Interests and related Proceeds from Pledgor;

               (g) all of the Pledged Stock have been duly and validly issued
and are fully paid and nonassessable;

               (h) Pledgor is the record and beneficial owner of, and has good
and marketable title to, the Pledged Stock pledged by it, free of any and all
Liens or options in favor of, or claims of, any other Person, except the Lien
created by this Security Agreement;

               (i) upon delivery to Secured Party of the Certificates evidencing
the Pledged Stock pledged by Parent, the Lien granted pursuant to this Security
Agreement will constitute a valid, perfected first priority Lien on such Pledged
Stock and related Proceeds,

                                       8



enforceable as a valid, perfected first priority Lien against all creditors of
Parent and any Persons purporting to purchase any Pledged Stock and related
Proceeds from Parent;

               (j) the exact name of Pledgor is as set forth in the introductory
paragraph of this Security Agreement or as set forth on Schedule V hereof;

               (k) Pledgor is organized under the laws of the State set forth in
the introductory paragraph of this Security Agreement or as set forth on
Schedule V hereof;

               (l) the principal place of business and chief executive office of
Pledgor is located at 4660 Trindle Road, Suite 103, Camp Hill, Pennsylvania
17011;

               (m) there currently exist no certificates, instruments or
writings representing the Pledged Securities in any Partnership Company.
However, to the extent that in the future there exist any such certificates,
instruments or writings, Pledgor shall deliver all such certificates,
instruments or writings to Secured Party;

               (n) the Existing Companies and the Mortgage Borrowers represent
all the existing direct and indirect subsidiaries of Parent; provided, however,
Parent owns one hundred percent (100%) of a subsidiary know as THI of Columbus,
Inc, and a subsidiary known as THI of Cleveland, Inc.; and

               (o) there are no shareholder, partnership or member agreements or
other Organizational Documents which limit the rights of any Pledgor to pledge
the Pledged Collateral or limit the ability of Lender to exercise any of its
rights with respect to the Pledged Collateral.

          4. Covenants. Each Pledgor covenants and agrees with Secured Party
that, from and after the date of this Security Agreement until the Loans are
paid in full and the obligations of the Lessees under the Lease Documents have
been satisfied in full (exclusive of any indemnification or other obligations
which are expressly stated in any of the Loan Documents or Lease Documents to
survive satisfaction of the Loan Documents or Lease Documents, but subject to
the potential early termination of the Master Guaranty as set forth in Section
2.12 thereof as it relates to the Mortgage Loan):

               (a) if Pledgor shall, as a result of its ownership of the Pledged
Securities, become entitled to receive or shall receive any stock certificate,
limited partnership or general partnership certificate, or regular membership
certificate, as applicable (including, without limitation, any certificate
representing a dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate issued in
connection with any reorganization), option or rights, whether in addition to,
in substitution of, as a conversion of, or in exchange for any of the Pledged
Securities, or otherwise in respect thereof, Pledgor shall accept the same as
Secured Party's agent, hold the same in trust for Secured Party and deliver the
same forthwith to Secured Party in the exact form received, duly endorsed by
Pledgor to Secured Party, if required, together with an undated stock, regular
limited partnership or general

                                       9



partnership interest, or membership interest power covering such certificate
duly executed in blank and with signature guaranteed if Secured Party shall so
request, to be held by Secured Party hereunder as additional security for the
Loans and the obligations arising under the Sale/Leaseback Transaction. Any sums
paid upon or in respect of the Pledged Securities upon the liquidation or
dissolution of any Company shall be paid over to Secured Party to be held by it
hereunder as additional security for the Loans and the obligations arising under
the Sale/Leaseback Transaction, and in case any distribution of capital shall be
made on or in respect of the Pledged Securities or any property shall be
distributed upon or with respect to the Pledged Securities pursuant to the
recapitalization or reclassification of the capital of any Company, or pursuant
to the reorganization thereof, the property so distributed shall be delivered to
Secured Party to be held by it, subject to the terms hereof, as additional
security for the Loans and the obligations arising under the Sale/Leaseback
Transaction. If any sums of money or property so paid or distributed in respect
of the Pledged Company Interests shall be received by Pledgor, Pledgor shall,
until such money or property is paid or delivered to Secured Party, hold such
money or property in trust for Lender, segregated from other funds of Pledgor,
as additional security for the Loans and the obligations arising under the
Sale/Leaseback Transaction.

               (b) Without the prior written consent of Secured Party, Pledgor
shall not, directly or indirectly, (i) vote to enable, or take any other action
to permit, any Company to issue any limited or general partnership interests,
membership interests or shares, as applicable, or to issue any other securities
convertible into, or to grant the right to purchase or exchange for, any limited
or general partnership interests or membership interests, as applicable, in any
Company, or (ii) except as permitted by the Loan Documents or the Lease
Documents, sell, assign, transfer, exchange or otherwise dispose of, or grant
any option with respect to, the Pledged Collateral, or (iii) create, incur,
authorize or permit to exist any Lien or option in favor of, or any claim of any
Person with respect to, any of the Pledged Collateral, or any interest therein,
except for the Lien provided for by this Security Agreement. Pledgor shall
defend the right, title and interest of Secured Party in and to the Pledged
Collateral against the claims and demands of all Persons whomsoever.

               (c) If any amount payable under or in connection with any of the
Pledged Collateral shall be or become evidenced by any promissory note, other
instrument or chattel paper, such note, instrument or chattel paper shall be
promptly delivered to Secured Party, duly endorsed in a manner satisfactory to
Secured Party, to be held as Pledged Collateral pursuant to this Security
Agreement.

               (d) Pledgor (i) will not, and will not permit any Company to,
create, incur or permit to exist, (ii) will, and will cause each Company to,
defend the Pledged Securities against, and (iii) will, and will cause each
Company to, take all such other action as is necessary to remove, any Lien or
claim on or to the Pledged Securities, other than the Liens created hereby.
Pledgor will, and will cause each Company to, defend the right, title and
interest of Secured Party in, to and under the Pledged Securities against the
claims and demands of all Persons whomsoever.

                                       10



               (e) Pledgor will furnish and will cause each Company to furnish
to Secured Party from time to time statements and schedules further identifying
and describing the Pledged Securities and such other reports in connection with
the Pledged Securities as Secured Party may reasonably request, all in
reasonable detail.

               (f) Pledgor will not and will not permit any Company to (unless
(i) it shall have given thirty (30) days' prior written notice to such effect to
Secured Party and (ii) all action necessary or advisable, in Secured Party's
opinion, to protect and perfect the Liens and security interests intended to be
created hereunder with respect to the Pledged Securities shall have been taken):
(A) change the location of its chief executive office or principal place of
business from that specified in Section 3 above, or (B) change its name,
identity or structure, or (c) reorganize or reincorporate under the laws of
another jurisdiction.

               (g) Pledgor shall pay, and save Secured Party harmless from, any
and all liabilities with respect to, or resulting from any delay in paying, any
and all stamp, excise, sales or other taxes which may be payable or determined
to be payable with respect to any of the Pledged Collateral or in connection
with any of the transactions contemplated by this Security Agreement.

          5. Indemnification.

               (a) Each Pledgor shall indemnify and hold harmless Secured Party
and its directors, officers, employees, agents and contractors from and against
any and all liability, loss, expense, cost or damage which any of them may
suffer or incur and which arises out of or results from:

                    (i) this Security Agreement, the grant, pledge and
assignment of security hereunder, the receipt of Distributions, and/or the
exercise of any right, remedy or power hereunder, except to the extent that it
is finally judicially determined that any such liability, loss, expense, cost or
damage resulted from the gross negligence, fraud or willful misconduct of any
indemnified person; or

                    (ii) any claim or any alleged obligation, liability or duty
on the part of Secured Party to perform or discharge on behalf of Pledgor any
obligation, liability or duty of Pledgor which arises or accrues prior to the
date, if ever, on which Secured Party acquires title to the Pledged Collateral
by foreclosure, assignment in lieu of foreclosure or otherwise.

               (b) Each Pledgor shall reimburse each Person indemnified under
this Section 5 within ten (10) Business Days after demand by Secured Party or
such indemnified person for the full amount of any indemnity to which such
person may be entitled hereunder, which shall include all of such person's
reasonable costs and expenses with respect thereto (including, without
limitation, court costs and reasonable attorneys' fees and related expenses as
and when incurred), and the full amount of Pledgor's indemnity obligation shall
be considered to

                                       11



be a Secured Obligation and shall be secured hereby. The indemnity set forth in
this Section 5 shall survive the termination of this Security Agreement.

               (c) Notwithstanding anything contained herein or in any of the
Loan Documents to the contrary, no Pledgor will be liable for any losses
described in this Section 5, which first occur following the effective date of a
transfer of title to the Pledged Collateral to Secured Party or its Affiliates,
in foreclosure or otherwise.

          6. Remedies. If an Event of Default shall occur:

               (a) Secured Party, without obligation to resort to any other
security, right or remedy granted under any other agreement or instrument, shall
have the right, in addition to all rights, powers and remedies of a secured
party pursuant to the Code and/or any other applicable laws, to, at any time and
from time to time, (i) cause any part or all of the Pledged Collateral to be
registered in or transferred into the name of Secured Party or into the name of
a nominee or nominees, or designee or designees, of Secured Party, and/or (ii)
apply the cash, if any, then held by it as Pledged Collateral in reduction of
the Secured Obligations in accordance with the terms of the Loan Documents,
and/or (iii) sell, resell, assign and deliver, in its sole and absolute
discretion, any or all of the Pledged Collateral (whether in whole or in part
and at the same or different times) and all right, title and interest, claim and
demand therein and right of redemption thereof, at public or private sale, for
cash and/or with credit provided by Secured Party, and in connection therewith
Secured Party may grant options and may impose conditions such as requiring any
purchaser to represent that any "securities" (within the meaning of the Federal
securities laws) constituting any part of the Pledged Collateral are being
purchased for investment only, and in connection with any of the foregoing
described in clause (iii), each Pledgor hereby irrevocably waives and releases
any and all rights of redemption. If all or any part of the Pledged Collateral
is sold by Secured Party upon credit provided by Secured Party, Secured Party
shall not be liable for the failure of the purchaser to purchase or pay for the
same and, in the event of any such failure, Secured Party may freely resell such
Pledged Collateral. Secured Party may exercise its rights with respect to less
than all of the Pledged Collateral, leaving unexercised its rights with respect
to the remainder of the Pledged Collateral; such partial exercise shall in no
way restrict or jeopardize Secured Party's right to exercise its rights with
respect to all or any part of the remaining Pledged Collateral at a later time
or times. Secured Party may, instead of the power of sale herein conferred upon
it, proceed by a suit or suits at law or in equity to foreclose all or any part
of the security interests in the Pledged Collateral and sell the Pledged
Collateral, or any portion thereof, under a judgment or decree of a court or
courts of competent jurisdiction.

               (b) Secured Party may exercise, either by itself or by its
nominee or designee, in the name and place of any Pledgor, the rights, powers
and remedies granted to Secured Party under Section 2(a) hereof, including but
not limited to Section 2(a)(ii) hereof, in respect of the Pledged Collateral.
Such rights, powers and remedies shall include, without limitation, the right to
exercise all voting, consent, managerial and other rights relating to the
Pledged Collateral, whether in such Pledgor's name or otherwise, and the right
to exercise such

                                       12



Pledgor's rights, if any, of conversion, exchange, subscription or any other
rights, privileges or options pertaining to any of the Pledged Collateral,
including, without limitation, the right to exchange, at its discretion, any and
all of the Pledged Collateral upon the merger, consolidation, reorganization,
recapitalization or other readjustment of any Company, all without liability,
except to account for property actually received by Secured Party.

               (c) Each Pledgor hereby irrevocably authorizes and empowers
Secured Party, and assigns and transfers to Secured Party, and constitutes and
appoints Secured Party and any of its assigns, its true and lawful
attorney-in-fact, and as its agent, irrevocably, with full power of substitution
for it and in its name, in order to more fully vest in Secured Party the rights
and remedies provided for herein, and each Pledgor, further authorizes and
empowers Secured Party and any of its assigns, as its attorney-in-fact, and as
its agent, irrevocably, with full power of substitution for it and in its name,
to proceed from time to time in Pledgor's name in any statutory or non-statutory
legal or other proceeding, including but not limited to any bankruptcy
proceeding, affecting Pledgor or the Pledged Collateral, and Secured Party, any
of its assigns or their respective nominees or designees, may in connection
herewith (i) execute and file proofs of claims relating to the Pledged
Collateral and vote such claims for all or any portion of the Pledged Collateral
(x) for or against any proposal or resolution, (y) for a trustee or trustees or
for a receiver or receivers or for a committee of creditors and/or (z) for the
acceptance or rejection of any proposed arrangement, plan or reorganization,
composition or extension, and Secured Party or its nominee or designee may
receive any payment or distribution and give acquittance therefor and may
exchange or release any portion or all of the Pledged Collateral; and (ii)
endorse any draft or other instrument for the payment of money, execute releases
and negotiate settlements. Nothing contained in the foregoing provisions of this
Section 6(c) shall be deemed or construed to be a limitation on, or waiver by
Secured Party of, any of Secured Party's other rights or remedies hereunder or
under any of the Mortgage Loan Documents, the Mezzanine Loan Documents or the
Lease Documents. Secured Party shall have no duty to exercise any of the
aforesaid rights, privileges or options and shall not be responsible for any
failure to do so or delay in so doing. The foregoing powers of attorney are
irrevocable and coupled with an interest, and any similar or dissimilar powers
heretofore given by any Pledgor in respect of the Pledged Collateral to any
other person other than Secured Party are hereby revoked. The power of attorney
granted herein shall terminate automatically upon the termination of this
Security Agreement in accordance with Section 15 hereof.

               (d) Secured Party may at any time and from time to time, without
notice to, or assent by, any Pledgor or any other person, but without affecting
any of the Secured Obligations, in the name of such Pledgor or in the name of
Secured Party (i) notify any other party to make payment and performance with
respect to any item of Pledged Collateral directly to Secured Party, (ii) extend
the time of payment and performance of, compromise or settle for cash, credit or
otherwise, and upon any terms and conditions, any obligations owing to such
Pledgor, or claims of such Pledgor under any of the Organizational Documents of
any Company, (iii) file any claims, and/or commence, maintain or discontinue any
actions, suits or other proceedings deemed by Secured Party to be necessary or
advisable for the purpose of collecting upon or enforcing any of the
Organizational Documents of any Company, and (iv) execute any

                                       13



instrument and do all other things deemed necessary and proper by Secured Party
to protect and preserve and realize upon the Pledged Collateral or any portion
thereof and the other rights contemplated hereby.

               (e) Secured Party may without notice to, or the consent of, any
Pledgor require (i) that any and all Distributions, and/or other distributions
or payments of any type payable to such Pledgor with respect to all or any part
of the Pledged Collateral be paid to Secured Party and/or its nominees, and/or
(ii) that Secured Party or its nominee, designee, agent or assignee be
substituted for such Pledgor or any of its nominees or designees, as officers
and/or directors and/or other agents or representatives of any Company.

               (f) Pursuant to the powers of attorney provided for by Section
6(c) hereof, Secured Party may reasonably take any action and exercise and
execute any instrument which it may deem necessary or advisable to accomplish
the purposes of this Security Agreement. Without limiting the generality of the
foregoing, Secured Party shall have the right and power to receive, endorse and
collect all checks and other orders for the payment of money made payable to any
Pledgor representing any Distribution, interest, payment of principal or other
distribution or payment payable in respect of the Pledged Collateral or any part
thereof, and for and in the name, place and stead of such Pledgor, to execute
endorsements, assignments or other instruments of conveyance or transfer in
respect of the Pledged Collateral and any other property which is or may become
a part of the Pledged Collateral hereunder.

               (g) Without limiting any other provision of this Security
Agreement, and without waiving or releasing any Pledgor from any obligation or
default hereunder, Secured Party shall have the right, but not the obligation,
to perform any act or take any action, as it, in its judgment, may deem
necessary to cure any Event of Default, cause any term, covenant, condition or
obligation required under this Security Agreement to be performed or observed by
any Pledgor to be promptly performed or observed on behalf of such Pledgor, or
protect the security provided to Secured Party under this Security Agreement.
All amounts advanced by, or on behalf of, Secured Party in exercising its rights
under this Section 6(g) (including, but not limited to, reasonable legal
expenses and disbursements incurred in connection therewith as and when
incurred), together with interest thereon at a rate equal to ten percent (10%)
(the "Default Rate") from the date of each such advance, shall be payable by the
Pledgors to Secured Party within fifteen (15) days after written demand therefor
and shall be Secured Obligations under this Security Agreement.

          7. Sales of the Pledged Collateral; Strict Foreclosure.

               (a) No demand, advertisement or notice, all of which are hereby
expressly waived by each Pledgor, shall be required in connection with any sale
or other disposition of all or any part of the Pledged Collateral pursuant to
Section 6 hereof, except that Secured Party shall give such Pledgor at least ten
(10) days' prior written notice of the time and place of any public sale or of
the time and the place at which any private sale or other disposition is to be
made, which notice such Pledgor hereby agrees is reasonable, and all other
demands, advertisements and notices are hereby irrevocably waived by such
Pledgor. To the extent

                                       14



permitted by law, Secured Party shall not be obligated to make any sale of the
Pledged Collateral if it shall determine not to do so, regardless of the fact
that notice of sale may have been given, and Secured Party may without notice or
publication adjourn any public or private sale, and such sale may, without
further notice, be made at the time and place to which such sale is so
adjourned. Subject only to provisions of applicable law which cannot be waived,
upon each public or private sale of any portion of or all of the Pledged
Collateral, Secured Party (or its nominee or designee) may purchase any or all
of the Pledged Collateral being sold, free and clear of and discharged from any
trusts, claims, equity or right of redemption of any Pledgor, all of which are
hereby waived and released to the extent permitted by law, and may make payment
therefor by credit against any of the Secured Obligations in lieu of cash or any
other obligations. In the case of any sale, public or private, of any portion of
or all of the Pledged Collateral, each Pledgor shall be responsible for, and
shall pay within fifteen (15) days after demand therefore, all costs and
expenses of every kind relating to the sale and delivery of the Pledged
Collateral, including, without limitation, brokers' and reasonable attorneys'
fees and disbursements and any tax imposed thereon and such obligation to pay
such costs and expenses shall be a Secured Obligation.

               (b) To the extent permitted under applicable law, Secured Party
shall not be required to conduct any foreclosure sale of any part of the Pledged
Collateral. Secured Party may, in its sole and absolute discretion, retain and
acquire for itself and/or its designees or nominees, the Pledged Collateral by,
as contemplated by Section 6(a)(i) hereof, instructing each Pledgor to register
on its ledgers and books Secured Party's acquisition of the Pledged Collateral
and the Certificate which embodies the Pledged Collateral, subject to any rights
of such Pledgor to object in accordance with the Code, if such Pledgor has not
renounced or waived such rights in accordance with the Code. In connection
therewith, Secured Party shall have the right to complete any endorsements in
its favor on the Certificates or any other certificated securities or
instruments which at any time are part of the Pledged Collateral.

          8. Securities Laws.

          If an Event of Default shall have occurred, Secured Party may, in its
sole and absolute discretion, sell all of the Pledged Collateral or any part
thereof by private sale in such manner and under such circumstances as Secured
Party may deem necessary or advisable in order that such sale may legally be
effected without registration pursuant to the Securities Act of 1933 or any
other Federal, state or local law governing the offering or sale of securities,
provided that at least ten (10) days' prior written notice of the time and place
of any such sale shall be given to the applicable Pledgor. Without limiting the
generality of the foregoing, in any such event Secured Party, in its sole and
absolute discretion (i) may proceed to make such private sale notwithstanding
that a registration statement for the purpose of registering such Pledged
Collateral or part thereof shall not have been filed or shall not have become
effective such Securities Act, (ii) may approach and negotiate with a single
potential purchaser to effect such sale, and (iii) may restrict such sale to a
purchaser who will represent and agree that such purchaser is purchasing for its
own account, for investment, and not with a view to the distribution or sale of
such Pledged Collateral or part thereof. In the event of any such sale,

                                       15



Secured Party shall incur no responsibility or liability for selling all or any
part of the Pledged Collateral at a price which Secured Party may in good faith
deem reasonable under the circumstances, notwithstanding the possibility that a
substantially higher price might be realized if the sale were deferred until
after registration as aforesaid.

          9. Receipt of Sale Proceeds.

          Upon any sale of the Pledged Collateral, or any portion thereof, by
Secured Party hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of Secured Party or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Pledged Collateral so sold, and such purchaser or purchasers
shall not be obligated to see to the application of any part of the purchase
money paid over to Secured Party or such officer or be answerable in any way for
the misapplication or nonapplication thereof.

          10. Costs and Expenses.

               (a) Each Pledgor agrees that it shall pay to Secured Party:

                    (i) within fifteen (15) days after receipt of an invoice
therefor (accompanied by customary supporting material), the amount of any taxes
Secured Party may have been required to pay by reason of the security interests
created in the Pledged Collateral hereunder (excluding any income taxes,
franchise taxes or other taxes based upon Secured Party's income) or any amount
necessary to free any of the Pledged Collateral from any lien not created in
favor of Secured Party thereon, and

                    (ii) within fifteen (15) days after receipt of an invoice
therefor (accompanied by customary supporting material), the amount of any and
all reasonable expenses, including the reasonable fees and disbursements of
counsel as and when incurred and of any other agents or experts and any transfer
taxes or other taxes or governmental charges or fees (whether now existing or
hereinafter enacted), Secured Party may incur in connection with (a) the
enforcement of this Security Agreement, including such reasonable expenses as
are incurred to preserve the value of the Pledged Collateral or the validity,
effectiveness, enforceability, perfection, priority or value of any security
interest, (b) after the occurrence of an Event of Default, the collection, sale
or other disposition of any of the Pledged Collateral, (c) the exercise by
Secured Party of any of the rights and/or remedies conferred upon it hereunder,
or (d) any Event of Default.

               (b) Any amount required to be paid by any Pledgor under Section
10(a) above which is not paid when due shall bear interest for each day from the
date advanced by or on behalf of the Secured Party until repaid by such Pledgor
at the Default Rate. All obligations and liabilities of each Pledgor under
Section 10(a) above and this Section 10(b) shall be Secured Obligations under
this Security Agreement.

                                       16



          11. Application of Pledgor's Pledged Collateral.

          The Pledged Collateral and any proceeds thereof (including, without
limitation, any proceeds from the sale of all or any portion of the Pledged
Collateral and all Distributions) now or at any time hereafter received or
retained by Secured Party pursuant to the provisions of this Security Agreement
shall, after the occurrence of an Event of Default and acceleration of the
Loans, be applied by Secured Party in the following order of priority: first, to
the payment of all costs and expenses incurred in connection with the
administration and enforcement of, or the preservation of any rights under, this
Security Agreement (including, without limitation, reasonable attorneys' fees)
and, second, to the payment of the Secured Obligations in such order and manner
as Secured Party may determine in its sole and absolute discretion.

          12. Further Assurances.

          Each Pledgor agrees that at its sole expense and in such manner and
form as Secured Party reasonably may require at any time and from time to time,
it shall execute, deliver, file and/or record any financing statement, specific
assignment or other writing or instrument, and take any other action that
Secured Party may deem reasonably necessary or desirable, or that Secured Party
may reasonably request, in order to create, preserve or validate any security
interests created hereunder or the priority thereof or to enable Secured Party
to exercise and enforce its rights hereunder with respect to any of the Pledged
Collateral. Each Pledgor hereby authorizes Secured Party to execute and file at
any time or from time to time, in the name of such Pledgor, such UCC financing
statements and other similar instruments as Secured Party in its sole discretion
may deem necessary or desirable to perfect and continue the security interests
created hereunder.

          13. Attorney-In-Fact.

          Secured Party is hereby appointed the attorney-in-fact, with full
power of substitution, of each Pledgor for the purpose of carrying out the
provisions hereof from time to time, after an Event of Default, in Secured
Party's discretion, and taking any action and executing any instruments
(including, without limitation, financing or continuation statements,
conveyances, assignments and transfers) which Secured Party may deem necessary
or advisable to accomplish the purposes hereof, which appointment as
attorney-in-fact is coupled with an interest and is irrevocable. Each Pledgor
shall indemnify and hold harmless Secured Party from and against any liability,
loss, cost, expense and/or damage which it may incur in the exercise and
performance, in good faith, of any of Secured Party's powers and/or duties
specifically set forth herein.

          14. Waivers.

          No Pledgor shall be entitled to any notices of any nature whatsoever
from Secured Party except with respect to matters for which this Security
Agreement or the Loan Documents specifically and expressly provide for the
giving of notice by Secured Party to Pledgor and except with respect to matters
for which Pledgor is not, pursuant to applicable Legal

                                       17



Requirements, permitted to waive the giving of notice. Each Pledgor hereby
expressly waives the right to receive any notice from Secured Party with respect
to any matter for which this Security Agreement or the Loan Documents does not
specifically and expressly provide for the giving of notice by Secured Party to
Pledgor. No delay or omission on the part of Secured Party in exercising any
right hereunder shall operate as a waiver of that right or of any other right
hereunder. Any waiver of any right on any one occasion shall not be construed as
a bar to or waiver of that or any other right on any future occasion. No course
of dealing between any Pledgor and Secured Party nor any failure to exercise,
nor any delay in exercising, on the part of Secured Party, any right, power or
privilege hereunder or with respect to any of the Secured Obligations shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege hereunder or otherwise with respect to the Secured
Obligations preclude any other or further exercise thereof or the exercise of
any other right, power or privilege.

          15. Termination.

          This Security Agreement and the security interests in and lien on each
Pledgor's Pledged Collateral created hereby shall terminate upon the earlier of
(i) the indefeasible payment and satisfaction in full of all of the Secured
Obligations or (ii) the occurrence of a Covenant Replacement Event under Section
2.13 of the Master Guaranty.

          16. Integration Clause.

          This Security Agreement, together with all of the other Loan
Documents, represents the entire agreement between the parties with respect to
the subject matter hereof, and all prior or contemporaneous agreements,
understandings or other communications, oral or written, regarding the subject
matter which are not expressed herein or therein shall be of no force and
effect.

          17. Amendments and Waivers In Writing Only.

          This Security Agreement shall not be amended or otherwise modified
except by a further written agreement executed and delivered by all of the
parties hereto. No waiver, express or implied, of any of the provisions hereof
shall be effective unless embodied in a written document executed by the party
hereto who is charged with such waiver.

          18. Successors and Assigns.

          Except as may be expressly permitted in the Loan Documents and the
Lease Documents, neither this Security Agreement, nor any right title and/or
interest herein, shall be assigned or otherwise transferred by any Pledgor
without the prior written consent of Secured Party. Subject to the preceding
sentence, this Security Agreement shall inure to the benefit of the parties
hereto and their respective successors and assigns.

                                       18



          19. Notices.

          All notices, demands, requests, consents, approvals or other
communications (collectively, "Notices") required or permitted to be given
hereunder to Secured Party or any Pledgor or which are given to Secured Party or
any Pledgor with respect to this Security Agreement shall be in writing and
otherwise given in accordance with Section 10.5 of the Master Guaranty.

          20. No Duty to Preserve Pledgor's Pledged Collateral.

          Secured Party shall not have any duty as to the collection or
protection of the Pledged Collateral or any income thereon or payments with
respect thereto, or as to the preservation of any rights pertaining thereto,
beyond exercising reasonable care with respect to any cash or any Certificate
that is actually in Secured Party's possession pursuant hereto.

          21. No Release.

          The obligations of each Pledgor under this Security Agreement shall be
absolute and unconditional and shall remain in full force and effect without
regard to, and, subject to Section 15 hereof, shall not be released, suspended,
discharged, terminated or otherwise affected by, any circumstances or occurrence
whatsoever, including, without limitation: (a) any renewal, extension, amendment
or modification of, or addition or supplement to or deletion from, any of the
Loan Documents or Lease Documents or any other instrument or agreement referred
to therein, or any assignment or transfer of any thereof; (b) any waiver,
consent, extension, indulgence or other action or inaction under or in respect
of any of the Loan Documents or Lease Documents or any exercise or non-exercise
of any right, remedy, power or privilege under or in respect of any of the Loan
Documents or Lease Documents, respectively; (c) any furnishing of any additional
security to Secured Party or any acceptance thereof or any sale, exchange,
release, surrender or realization of or upon any security by Secured Party; or
(d) any invalidity, irregularity or unenforceability of all or part of the
Secured Obligations or of any security therefor.

          22. Waiver of Marshalling of Assets Defense.

          To the fullest extent that each Pledgor may legally do so, each
Pledgor hereby waives all rights to a marshalling of the assets of Pledgor,
and/or any others with interests in Pledgor, and/or of the Pledged Collateral,
or to a sale in inverse order of alienation in the event of foreclosure of the
interests hereby created, and agree not to assert any right under any laws
pertaining to the marshalling of assets, sales in inverse order of alienation or
any other matters whatsoever to defeat, reduce or affect the right of Secured
Party to a sale of the Pledged Collateral for the collection of the Secured
Obligations without any prior or different resort for collection.

                                       19



          23. General Provisions Relating To Secured Party's Remedies.

          Without limitation of any right or remedy of Secured Party in this
Security Agreement, each Pledgor acknowledges and agrees that upon the
occurrence and during the continuance of an Event of Default (i) the rights and
remedies of Secured Party herein provided or provided under any of the Loan
Documents or Lease Documents shall be cumulative, and shall be in addition to
and not exclusive of or in limitation of any rights and remedies provided by
applicable law, including, without limitation, the rights and remedies of a
secured party under the Code or any other applicable laws or in an equity
proceeding, (ii) Secured Party shall have the right to pursue all of its rights
and remedies in one proceeding, or separately and independently in separate
proceedings, in each case as Secured Party, in its sole and absolute discretion,
shall determine from time to time, (iii) Secured Party shall not be required to
either marshal assets or sell the Pledged Collateral in any inverse order of
alienation, and shall not be subjected to any "one action" or "election of
remedies" law or rule, (iv) the exercise by Secured Party of any remedies
against any of the Pledged Collateral shall not impede Secured Party from
subsequently or simultaneously exercising remedies against any other collateral
or security, and (v), subject to Section 15 hereof, all liens and other rights,
remedies and privileges provided to Secured Party in this Security Agreement and
the other Loan Documents or Lease Documents or otherwise shall remain in full
force and effect and shall in no event terminate prior to the exhaustion by
Secured Party of all of its remedies against the Pledged Collateral and Secured
Party's foreclosure, sale and/or other realization upon all of the Pledged
Collateral.

          24. Governing Law.

          This Security Agreement shall be governed and construed in accordance
with the internal laws of the State of New York, without regard to its conflicts
of law principles.

          25. Registration of Pledge.

          Concurrently with the execution of this Security Instrument, Parent
shall deliver to the Penn Hills Subsidiary and each Partially-Owned Subsidiary,
written instructions substantially in the form of Exhibit B attached hereto and
shall cause each such subsidiary to deliver to Secured Party an Initial
Transaction Statement in the form of Exhibit C attached hereto confirming that
such subsidiary has noted the pledge effected by this Security Agreement on its
books and records. Similarly, (i) Dale J. Cordial, PT, Inc. shall deliver to
each of (A) the Penn Hills Subsidiary and (B) the DJC Subsidiary, written
instructions substantially in the form of Exhibit B attached hereto and shall
cause each such subsidiary to deliver to Secured Party an Initial Transaction
Statement in the form of Exhibit C attached hereto confirming that such
subsidiary has noted the pledge effected by this Security Agreement on its books
and records, and (ii) each of the PT Pledgors shall deliver to each of the PT
Pledgor Subsidiaries, written instructions substantially in the form of Exhibit
B attached hereto and shall cause each such subsidiary to deliver to Secured
Party an Initial Transaction Statement in the form of Exhibit C attached hereto
confirming that such subsidiary has noted the pledge effected by this Security
Agreement on its books and records.

                                       20



          IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed and delivered as of the date first above written.

                                        PLEDGOR:

                                        TRANS HEALTHCARE, INC.,
                                        a Delaware corporation


                                        By:   /s/ ANTHONY F. MISITANO
                                           -------------------------------------
                                           Name:  Anthony F. Misitano
                                           Title: President


                                        TRANS HEALTHCARE OF OHIO, INC.,
                                        a Delaware corporation


                                        By:   /s/ ANTHONY F. MISITANO
                                           -------------------------------------
                                           Name:  Anthony F. Misitano
                                           Title: President


                                        THI OF OHIO ALFS, INC.,
                                        a Delaware corporation


                                        By:   /s/ ANTHONY F. MISITANO
                                           -------------------------------------
                                           Name:  Anthony F. Misitano
                                           Title: President


                                        THI PROPERTIES, INC.,
                                        a Delaware corporation


                                        By:   /s/ ANTHONY F. MISITANO
                                           -------------------------------------
                                           Name:  Anthony F. Misitano
                                           Title: President



                                        THI SERVICES CORP.,
                                        a Delaware corporation


                                        By:   /s/ ANTHONY F. MISITANO
                                           -------------------------------------
                                           Name:  Anthony F. Misitano
                                           Title: President


                                        THI SPECIALTY HOSPITALS OF OHIO, INC.,
                                        a Delaware corporation


                                        By:   /s/ ANTHONY F. MISITANO
                                           -------------------------------------
                                           Name:  Anthony F. Misitano
                                           Title: President


                                        TRANS HEALTH MANAGEMENT, INC.,
                                        a Delaware corporation


                                        By:   /s/ ANTHONY F. MISITANO
                                           -------------------------------------
                                           Name:  Anthony F. Misitano
                                           Title: President


                                        THI OF MARYLAND, INC.,
                                        a Delaware corporation


                                        By:   /s/ ANTHONY F. MISITANO
                                           -------------------------------------
                                           Name:  Anthony F. Misitano
                                           Title: President


                                        PHYSICAL THERAPY PLUS, INC.,
                                        a Pennsylvania corporation


                                        By:   /s/ ANTHONY F. MISITANO
                                           -------------------------------------
                                           Name:  Anthony F. Misitano
                                           Title: President



                                        DALE J. CORDIAL, PT, INC.,
                                        a Pennsylvania corporation


                                        By:   /s/ ANTHONY F. MISITANO
                                           -------------------------------------
                                           Name:  Anthony F. Misitano
                                           Title: President


                                        DALE J. CORDIAL, PT, INC., NUMBER 4,
                                        a Pennsylvania corporation


                                        By:   /s/ ANTHONY F. MISITANO
                                           -------------------------------------
                                           Name:  Anthony F. Misitano
                                           Title: President


                                        THE PT GROUP OF PENN HILLS,
                                        a Pennsylvania general partnership


                                        By: Trans Healthcare, Inc.,
                                            a Delaware corporation,
                                            its Partner


                                            By:   /s/ ANTHONY F. MISITANO
                                               ---------------------------------
                                               Name:  Anthony F. Misitano
                                               Title: President


                                        THE PT GROUP PHYSICAL THERAPY FOR WOMEN,
                                        a Pennsylvania general partnership


                                        By: Dale J. Cordial, PT, Inc.,
                                            a Pennsylvania corporation,
                                            its Partner


                                            By:   /s/ ANTHONY F. MISITANO
                                               ---------------------------------
                                               Name:  Anthony F. Misitano
                                               Title: President



                                        THE PT GROUP OF MOON TOWNSHIP,
                                        a Pennsylvania general partnership


                                        By: Dale J. Cordial, PT, Inc., Number 4,
                                            a Pennsylvania corporation,
                                            its Partner


                                            By:   /s/ ANTHONY F. MISITANO
                                               ---------------------------------
                                               Name:  Anthony F. Misitano
                                               Title: President


                                        THI THERAPY CONCEPTS, LLC,
                                        a Delaware limited liability company


                                        By:   /s/ JEFFREY A. BARNHILL
                                           -------------------------------------
                                           Name:  Jeffrey A. Barnhill
                                           Title: Vice-President


                                        THI SERVICES OF MARYLAND, LLC,
                                        a Delaware limited liability company


                                        By:   /s/ JEFFREY A. BARNHILL
                                           -------------------------------------
                                           Name:  Jeffrey A. Barnhill
                                           Title: Vice-President

                                        [Signatures continued on next page]



                                        SECURED PARTY:

                                        VENTAS REALTY, LIMITED PARTNERSHIP,
                                        a Delaware limited partnership


                                        By: Ventas, Inc.
                                            a Delaware corporation,
                                            its sole general partner


                                            By:   /s/ T. RICHARD RINEY
                                               ---------------------------------
                                               Name:  T. Richard Riney
                                               Title: Executive Vice
                                                      President/General Counsel

EX-10.3.5

                                                                  EXHIBIT 10.3.5

                     MEZZANINE PLEDGE AND SECURITY AGREEMENT

          THIS MEZZANINE PLEDGE AND SECURITY AGREEMENT, dated as of November 1,
2002 (as amended, restated, replaced, supplemented or otherwise modified from
time to time, the "Security Agreement"), is made by THI OF OHIO SNFS, LLC (the
"Ohio Pledgor"), THI OF MARYLAND SNFS I, LLC (the "Maryland I Pledgor") and THI
OF MARYLAND SNFS II, LLC (the "Maryland II Pledgor"), each a Delaware limited
liability company, and each having an address at 4660 Trindle Road, Suite 103,
Camp Hill, Pennsylvania 17011 (each a "Pledgor" and collectively, the
"Pledgors"), in favor of VENTAS REALTY, LIMITED PARTNERSHIP, a Delaware limited
partnership (together with its successors and assigns, "Secured Party").

                                    RECITALS

     A. WHEREAS, Ventas Realty, Limited Partnership, a Delaware limited
partnership, in its capacity as the mortgage lender, is making a first-priority
mortgage loan (the "Mortgage Loan") to those entities listed as a "Mortgage
Borrower" on Schedule I attached hereto, each a Delaware limited liability
company (each a "Mortgage Borrower" and collectively the "Mortgage Borrowers")
in the maximum principal amount of $55,000,000;

     B. WHEREAS, the Ohio Pledgor owns one hundred percent (100%) of the
membership interests in each of the Mortgage Borrowers listed under its name on
Schedule I attached hereto (each, an "Ohio Mortgage Borrower" and collectively
the "Ohio Mortgage Borrowers");

     C. WHEREAS, the Maryland I Pledgor owns one hundred percent (100%) of the
membership interests in each of the Mortgage Borrowers listed under its name on
Schedule I attached hereto (each, a "Maryland Mortgage Borrower" and
collectively the "Maryland Mortgage Borrowers");

     D. WHEREAS, the Maryland II Pledgor owns one hundred percent (100%) of the
membership interests in each of THI of Maryland at Franklin Square, LLC and THI
of Maryland at Fort Washington, LLC (each, a "Maryland Leasehold Entity" and
collectively, the "Maryland Leasehold Entities"; the Maryland Leasehold Entities
and the Mortgage Borrowers are referred to herein individually as, an "Existing
Company" and collectively as, the "Existing Companies" and each corporation,
limited liability company, limited partnership, general partnership or other
entity which may hereafter be formed by any Pledgor, together with each Existing
Company is referred to herein as, a "Company" and collectively as, the
"Companies");

     E. WHEREAS, concurrently with the mortgage loan referred to in Recital A
above, Secured Party is making a mezzanine loan (the "Mezzanine Loan") to the
Pledgors and the Other Mezzanine Borrowers (as hereinafter defined) in the
initial principal amount of $22,000,000;



     F. WHEREAS, all of the agreements, instruments and other documents which
govern, evidence and/or secure the Mezzanine Loan, as the same may from time to
time hereafter be modified, supplemented or amended, are hereinafter referred to
as the "Mezzanine Loan Documents", and capitalized terms used herein, unless
otherwise defined herein, shall have the meanings ascribed thereto in that
certain Mezzanine Loan Agreement by and among the Pledgors, the Other Mezzanine
Borrowers and Secured Party executed concurrently herewith (as the same may from
time to time hereafter be modified, supplemented or amended, the "Mezzanine Loan
Agreement"); and

     G. WHEREAS, as a condition precedent to making the Mezzanine Loan, Secured
Party has required, among other things, that this Security Agreement be executed
and delivered by each of the Pledgors;

          NOW THEREFORE, in consideration of the foregoing, and in order to
induce the Secured Party to make the Mezzanine Loan to the Pledgors and the
Other Mezzanine Borrowers, and for other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, each of the
Pledgors and Secured Party, intending to be legally bound, do hereby agree as
follows:

          1. Definitions. As used in this Security Agreement, the following
terms have the meanings set forth in or incorporated by reference below:

               (a) "Code" means the Uniform Commercial Code from time to time in
effect in the State of New York

               (b) "Other Mezzanine Borrowers" means, collectively, THI of Ohio
ALFs I, LLC; THI of Ohio at Kent, LLC; THI of Ohio at Cortland, LLC; THI of Ohio
at Berea, LLC; THI of Maryland at Franklin Square, LLC and THI of Maryland at
Fort Washington, LLC, each a Delaware limited liability company.

               (c) "Pledged Company Interests" means the regular membership
interests, limited partnership interests or general partnership interests of any
Pledgor in each Company, together with all membership or partnership interest
certificates, options or rights of any nature whatsoever which may be issued or
granted by such Company, while this Security Agreement is in effect.

               (d) "Proceeds" means all "proceeds" as such term is defined in
Section 9-306(1) of the Code on the date hereof and, in any event, shall
include, without limitation, all dividends or other income from the Pledged
Company Interests, collections thereon or distributions with respect thereto.

                                       2



          2. Pledge, Security Interest And Assignment of Limited Liability
Company Distributions.

               (a) As security for the full and punctual payment when due
(whether upon stated maturity, by acceleration or otherwise) of the Mezzanine
Loan and the full and faithful payment, performance and observance by each
Pledgor of all obligations to be paid, performed or observed by such Pledgor
under the Mezzanine Loan Documents (collectively, the "Secured Obligations"),
each Pledgor hereby grants and pledges to Secured Party, as pledgee, a first
priority and continuing lien on, and a first priority and continuing security
interest in, and, in furtherance of such grant and pledge, hereby transfers and
assigns to Secured Party as collateral security, all of its right, title and
interest in, to and under, and/or with respect to, and/or arising from or out
of, the following, whether now owned or hereafter acquired, whether now existing
or hereafter arising and wherever located (collectively, the "Pledged
Collateral"):

                    (i) all of Pledgor's right, title and interest in and to the
Pledged Company Interests;

                    (ii) all rights, privileges, authority and power arising
from Pledgor's interest in each Company (provided, however, that, so long as no
Event of Default exists, Pledgor may exercise such rights, privileges, authority
and power vested in Pledgor as a member of such Company);

                    (iii) the capital of Pledgor in each Company and any and all
profits, losses, distributions and allocations attributable thereto as well as
the proceeds of any distribution thereof, whether arising under the terms of any
of the following documents, as applicable (each an "Organizational Document" and
collectively, the "Organizational Documents"): articles of incorporation,
certificate of formation, certificate of organization, by-laws, limited
partnership agreement, limited liability company agreement, stock certificates,
certificates of limited partnership interests or general partnership interests
(if any), certificates of limited liability company membership interests (if
any), and all amendments or modifications of any of the foregoing, and all other
agreements, instruments and/or other organizational or governing documents of or
relating to each Company;

                    (iv) all other payments, if any, due or to become due to
Pledgor in respect of the Pledged Collateral, under or arising out of any
Organizational Document of any Company, or otherwise, whether as contractual
obligations, damages, insurance proceeds, condemnation awards or otherwise
(including, without limitation, all amounts deposited and/or to be deposited in
the Cash Management Account (as defined in the Mezzanine Loan Agreement) and all
other cash collateral for the Mezzanine Loan);

                    (v) all of Pledgor's claims, rights, powers, privileges,
authority, options, security interests, Liens and remedies, if any, under or
arising out of the ownership of the Pledged Collateral;

                                       3



                    (vi) all present and future claims, if any, of Pledgor
against any Company for monies loaned or advanced, for services rendered or
otherwise;

                    (vii) all of Pledgor's rights pursuant to any Organizational
Document of any Company or at law, to exercise and enforce every right, power,
remedy, authority, option and privilege of Pledgor relating to the Pledged
Company Interests, including the right to execute any instruments and to take
any and all other action on behalf of and in the name of Pledgor in respect of
the Pledged Company Interests and/or such Company to make determinations, to
exercise any election (including, but not limited to, election of remedies) or
option or to give or receive any notice, consent, amendment, waiver or approval,
together with full power and authority to demand, receive, enforce or collect
any of the foregoing or any property of such Company, to enforce or execute any
checks, or other instruments or orders and to file any claims and to take any
action in connection with any of the foregoing;

                    (viii) all Investment Property (as such term is defined in
the Code) issued by, or relating to, any Company, as applicable;

                    (ix) all equity interests or other property now owned or
hereafter acquired by Pledgor as a result of exchange offers, recapitalizations
of any type, contributions to capital, options or other rights relating to the
Pledged Collateral; and

                    (x) to the extent not otherwise included, all Proceeds of
any or all of the foregoing, as applicable.

               (b) Concurrently with the execution of this Security Agreement,
(i) each of the Pledgors shall deliver to Secured Party, for filing, all UCC-1
financing statements in proper form necessary to perfect the security interests
granted hereunder in all jurisdictions deemed relevant by Secured Party
(collectively, the "Financing Statements"), and each of the Pledgors agrees to
pay any and all fees or other charges relating to the filing of the Financing
Statements and hereby authorizes and instructs Secured Party to make such
payments by deducting from the proceeds of the Mezzanine Loan advanced to the
Pledgors the full amount of such fees or other charges.

               (c) (i) With respect to each Ohio Mortgage Borrower, the Ohio
Pledgor shall deliver to Secured Party a sole original executed certificated
security in registered form which represents the sole limited liability company
membership interest in such Ohio Mortgage Borrower, (ii) with respect to each
Maryland Mortgage Borrower, the Maryland I Pledgor shall deliver to Secured
Party a sole original executed certificated security in registered form which
represents the sole limited liability company membership interest in such
Maryland Mortgage Borrower, and (iii) with respect to each Maryland Leasehold
Entity, the Maryland II Pledgor shall deliver to Secured Party a sole original
executed certificated security in registered form which represents the sole
limited liability company membership interest in such Maryland Leasehold Entity.
Attached hereto as Exhibit A is a copy of each of the certificates to be
delivered to Secured Party pursuant to the immediately preceding sentence (each,
a "Certificate" and collectively, the "Certificates"). Each Certificate shall be
duly "indorsed in blank" within

                                       4



the meaning of the Code in a manner sufficient to provide Secured Party with
"control" of such certificated security within the meaning of Section 8-106 of
the Code.

               (d) That portion of the Pledged Collateral which is comprised of
all distributions or other payments or receipts of cash or other property
(including, but not limited to, Investment Property or other property described
in Section 2(a)(viii) or Section 2(a)(ix) hereof) received by any Pledgor
directly or indirectly from any Company is referred to hereinafter sometimes as
the "Distributions". Notwithstanding anything to the contrary set forth in this
Security Agreement, with respect to the Distributions, subject to the other
provisions of the Mezzanine Loan Documents, this Security Agreement constitutes
a present, and current assignment of the Distributions effective upon the
execution and delivery hereof. Accordingly, if any Pledgor shall at any time
during a Cash Management Period receive, irrespective of whether or not such
receipt occurs before or after an Event of Default, one or more Distributions
(including, but not limited to, any distribution of the items of Pledged
Collateral referred to in Section 2(a)(viii) or Section 2(a)(ix) above), such
funds or property shall be held by such Pledgor in trust for Secured Party and
delivered within three (3) Business Days to Secured Party (duly endorsed in
blank in the case of certificated securities in registered form (within the
meaning of relevant Sections of the Code)) for application by Secured Party in
accordance with Section 11 hereof.

          3. Representations and Warranties. Each Pledgor represents and
warrants as of the date hereof that:

               (a) no authorization, consent of or notice to any other Person
(including, without limitation, any member, partner, shareholder or creditor of
Pledgor, or of any Company) that has not been obtained, is required in
connection with the execution, delivery, performance, validity or enforceability
of this Security Agreement including, without limitation, the assignment and
transfer by Pledgor of any of the Pledged Collateral to Secured Party or the
subsequent transfer thereof by Secured Party pursuant to the terms hereof;

               (b) the Pledged Company Interests constitute all the issued and
outstanding equity, membership interests, limited partnership interests, general
partnership interests or capital stock, as the case may be, in each Company;

               (c) Pledgor is the record and beneficial owner of, and has good
and marketable title to, the Pledged Company Interests pledged by it, free of
any and all Liens or options in favor of, or claims of, any other Person, except
the Lien created by this Security Agreement;

               (d) upon the filing of the UCC-1 financing statements referred to
in Section 2(b) and delivery of the Certificates referred to in Section 2(c),
the Lien granted pursuant to this Security Agreement will constitute a valid,
perfected first priority Lien on the Pledged Company Interests and related
Proceeds, enforceable as a valid, perfected first priority Lien against all
creditors of Pledgor and any Persons purporting to purchase any Pledged Company
Interests and related Proceeds from Pledgor;

                                       5



               (e) the exact name of Pledgor is as set forth in the introductory
paragraph of this Security Agreement;

               (f) Pledgor is organized under the laws of the State of Delaware;

               (g) the principal place of business and chief executive office of
Pledgor is located at 4660 Trindle Road, Suite 103, Camp Hill, Pennsylvania
17011; and

               (h) the Ohio Mortgage Borrowers represent all the existing direct
and indirect subsidiaries of the Ohio Pledgor, the Maryland Mortgage Borrowers
represent all the existing direct and indirect subsidiaries of the Maryland I
Pledgor and the Maryland Leasehold Entities represent all the existing direct
and indirect subsidiaries of the Maryland II Pledgor ; and

               (i) there are no shareholder, partnership or member agreements or
other Organizational Documents, as applicable, which limit the rights of any
Pledgor to pledge the Pledged Collateral or limit the ability of Lender to
exercise any of its rights with respect to the Pledged Collateral.

          4. Covenants. Each Pledgor covenants and agrees with Secured Party
that, from and after the date of this Security Agreement until the Mezzanine
Loan (exclusive of any indemnification or other obligations which are expressly
stated in any of the Mezzanine Loan Documents to survive satisfaction of the
Mezzanine Loan Documents) is paid in full:

               (a) if Pledgor shall, as a result of its ownership of the Pledged
Company Interests, become entitled to receive or shall receive any stock
certificate, limited partnership or general partnership certificate, or regular
membership certificate, as applicable (including, without limitation, any
certificate representing a dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate issued in
connection with any reorganization), option or rights, whether in addition to,
in substitution of, as a conversion of, or in exchange for any of the Pledged
Company Interests, or otherwise in respect thereof, Pledgor shall accept the
same as Secured Party's agent, hold the same in trust for Secured Party and
deliver the same forthwith to Secured Party in the exact form received, duly
endorsed by Pledgor to Secured Party, if required, together with an undated
stock, regular limited partnership or general partnership interest, or
membership interest power covering such certificate duly executed in blank and
with signature guaranteed if Secured Party shall so request, to be held by
Secured Party hereunder as additional security for the Mezzanine Loan. Any sums
paid upon or in respect of the Pledged Company Interests upon the liquidation or
dissolution of any Company shall be paid over to Secured Party to be held by it
hereunder as additional security for the Mezzanine Loan, and in case any
distribution of capital shall be made on or in respect of the Pledged Company
Interests or any property shall be distributed upon or with respect to the
Pledged Company Interests pursuant to the recapitalization or reclassification
of the capital of any Company or pursuant to the reorganization thereof, the
property so distributed shall be delivered to Secured Party to be held by it,
subject to the terms hereof, as additional security for the Mezzanine Loan. If
any sums of money or property so paid or distributed in respect of the Pledged
Company Interests shall be received by Pledgor, Pledgor shall, until such money
or property is paid or delivered to Secured Party, hold such

                                       6



money or property in trust for Lender, segregated from other funds of Pledgor,
as additional security for the Mezzanine Loan.

               (b) Without the prior written consent of Secured Party, Pledgor
shall not, directly or indirectly, (i) vote to enable, or take any other action
to permit, any Company to issue any limited or general partnership interests,
membership interests or shares, as applicable, or to issue any other securities
convertible into, or to grant the right to purchase or exchange for, any limited
or general partnership interests or membership interests, as applicable, in any
Company, or (ii) except as permitted by the Mezzanine Loan Agreement, sell,
assign, transfer, exchange or otherwise dispose of, or grant any option with
respect to, the Pledged Collateral, or (iii) create, incur, authorize or permit
to exist any Lien or option in favor of, or any claim of any Person with respect
to, any of the Pledged Collateral, or any interest therein, except for the Lien
provided for by this Security Agreement. Pledgor shall defend the right, title
and interest of Secured Party in and to the Pledged Collateral against the
claims and demands of all Persons whomsoever.

               (c) If any amount payable under or in connection with any of the
Pledged Collateral shall be or become evidenced by any promissory note, other
instrument or chattel paper, such note, instrument or chattel paper shall be
promptly delivered to Secured Party, duly endorsed in a manner satisfactory to
Secured Party, to be held as Pledged Collateral pursuant to this Security
Agreement.

               (d) Pledgor (i) will not, and will not permit any Company to,
create, incur or permit to exist, (ii) will, and will cause each Company to,
defend the Pledged Company Interests against, and (iii) will, and will cause
each Company to, take all such other action as is necessary to remove, any Lien
or claim on or to the Pledged Company Interests, other than the Liens created
hereby. Pledgor will, and will cause each Company to, defend the right, title
and interest of Secured Party in, to and under the Pledged Company Interests
against the claims and demands of all Persons whomsoever.

               (e) Pledgor will furnish and will cause each Company to furnish
to Secured Party from time to time statements and schedules further identifying
and describing the Pledged Company Interests and such other reports in
connection with the Pledged Company Interests as Secured Party may reasonably
request, all in reasonable detail.

               (f) Pledgor will not, and will not permit any Company to (unless
(i) it shall have given thirty (30) days' prior written notice to such effect to
Secured Party and (ii) all action necessary or advisable, in Secured Party's
opinion, to protect and perfect the Liens and security interests intended to be
created hereunder with respect to the Pledged Company Interests shall have been
taken): (A) change the location of its chief executive office or principal place
of business from that specified in Section 3 above, or (B) change its name,
identity or structure, or (c) reorganize or reincorporate under the laws of
another jurisdiction.

               (g) Pledgor shall pay, and save Secured Party harmless from, any
and all liabilities with respect to, or resulting from any delay in paying, any
and all stamp, excise,

                                       7



sales or other taxes which may be payable or determined to be payable with
respect to any of the Pledged Collateral or in connection with any of the
transactions contemplated by this Security Agreement.

          5. Indemnification.

               (a) Each Pledgor shall indemnify and hold harmless Secured Party
and its directors, officers, employees, agents and contractors from and against
any and all liability, loss, expense, cost or damage which any of them may
suffer or incur and which arises out of or results from:

                    (i) this Security Agreement, the grant, pledge and
assignment of security hereunder, the receipt of Distributions, and/or the
exercise of any right, remedy or power hereunder, except to the extent that it
is finally judicially determined that any such liability, loss, expense, cost or
damage resulted from the gross negligence, fraud or willful misconduct of any
indemnified person; or

                    (ii) any claim or any alleged obligation, liability or duty
on the part of Secured Party to perform or discharge on behalf of Pledgor any
obligation, liability or duty of Pledgor which arises or accrues prior to the
date, if ever, on which Secured Party acquires title to the Pledged Collateral
by foreclosure, assignment in lieu of foreclosure or otherwise.

               (b) Each Pledgor shall reimburse each person indemnified under
this Section 5 within ten (10) Business Days after demand by Secured Party or
such indemnified person for the full amount of any indemnity to which such
person may be entitled hereunder, which shall include all of such person's
reasonable costs and expenses with respect thereto (including, without
limitation, court costs and reasonable attorneys' fees and related expenses as
and when incurred), and the full amount of Pledgor's indemnity obligation shall
be considered to be a Secured Obligation and shall be secured hereby. The
indemnity set forth in this Section 5 shall survive the termination of this
Security Agreement.

               (c) Notwithstanding anything contained herein or in any of the
other Mezzanine Loan Documents to the contrary, no Pledgor will be liable for
any losses described in this Section 5, which occur following the effective date
of a transfer of title to the Pledged Collateral to Secured Party or its
Affiliates, in foreclosure or otherwise.

               (d) The occurrence of an "Event of Default" under and as defined
in the Mezzanine Loan Agreement or in any of the other Mezzanine Loan Documents
shall constitute an event of default by each Pledgor hereunder (an "Event of
Default").

          6. Remedies. If an Event of Default shall occur and be continuing:

               (a) Secured Party, without obligation to resort to any other
security, right or remedy granted under any other agreement or instrument, shall
have the right, in addition

                                       8



to all rights, powers and remedies of a secured party pursuant to the Code
and/or any other applicable laws, to, at any time and from time to time, (i)
cause any part or all of the Pledged Collateral to be registered in or
transferred into the name of Secured Party or into the name of a nominee or
nominees, or designee or designees, of Secured Party, and/or (ii) apply the
cash, if any, then held by it as Pledged Collateral in reduction of the Secured
Obligations in accordance with the terms of the Mezzanine Loan Agreement, and/or
(iii) sell, resell, assign and deliver, in its sole and absolute discretion, any
or all of the Pledged Collateral (whether in whole or in part and at the same or
different times) and all right, title and interest, claim and demand therein and
right of redemption thereof, at public or private sale, for cash and/or with
credit provided by Secured Party, and in connection therewith Secured Party may
grant options and may impose conditions such as requiring any purchaser to
represent that any "securities" (within the meaning of the Federal securities
laws) constituting any part of the Pledged Collateral are being purchased for
investment only, and in connection with any of the foregoing described in clause
(iii), each Pledgor hereby irrevocably waives and releases any and all rights of
redemption. If all or any part of the Pledged Collateral is sold by Secured
Party upon credit provided by Secured Party, Secured Party shall not be liable
for the failure of the purchaser to purchase or pay for the same and, in the
event of any such failure, Secured Party may freely resell such Pledged
Collateral. Secured Party may exercise its rights with respect to less than all
of the Pledged Collateral, leaving unexercised its rights with respect to the
remainder of the Pledged Collateral; such partial exercise shall in no way
restrict or jeopardize Secured Party's right to exercise its rights with respect
to all or any part of the remaining Pledged Collateral at a later time or times.
Secured Party may, instead of the power of sale herein conferred upon it,
proceed by a suit or suits at law or in equity to foreclose all or any part of
the security interests in the Pledged Collateral and sell the Pledged
Collateral, or any portion thereof, under a judgment or decree of a court or
courts of competent jurisdiction.

               (b) Secured Party may exercise, either by itself or by its
nominee or designee, in the name and place of any Pledgor, the rights, powers
and remedies granted to Secured Party under Section 2(a) hereof, including but
not limited to Section 2(a)(ii) hereof, in respect of the Pledged Collateral.
Such rights, powers and remedies shall include, without limitation, the right to
exercise all voting, consent, managerial and other rights relating to the
Pledged Collateral, whether in such Pledgor's name or otherwise, and the right
to exercise such Pledgor's rights, if any, of conversion, exchange, subscription
or any other rights, privileges or options pertaining to any of the Pledged
Collateral, including, without limitation, the right to exchange, at its
discretion, any and all of the Pledged Collateral upon the merger,
consolidation, reorganization, recapitalization or other readjustment of any
Company, all without liability, except to account for property actually received
by Secured Party.

               (c) Each Pledgor hereby irrevocably authorizes and empowers
Secured Party, and assigns and transfers to Secured Party, and constitutes and
appoints Secured Party and any of its assigns, its true and lawful
attorney-in-fact, and as its agent, irrevocably, with full power of substitution
for it and in its name, in order to more fully vest in Secured Party the rights
and remedies provided for herein, and each Pledgor, further authorizes and
empowers Secured Party and any of its assigns, as its attorney-in-fact, and as
its agent, irrevocably, with full

                                       9



power of substitution for it and in its name, to proceed from time to time in
Pledgor's name in any statutory or non-statutory legal or other proceeding,
including but not limited to any bankruptcy proceeding, affecting Pledgor or the
Pledged Collateral, and Secured Party, any of its assigns or their respective
nominees or designees, may in connection herewith (i) execute and file proofs of
claims relating to the Pledged Collateral and vote such claims for all or any
portion of the Pledged Collateral (x) for or against any proposal or resolution,
(y) for a trustee or trustees or for a receiver or receivers or for a committee
of creditors and/or (z) for the acceptance or rejection of any proposed
arrangement, plan or reorganization, composition or extension, and Secured Party
or its nominee or designee may receive any payment or distribution and give
acquittance therefor and may exchange or release any portion or all of the
Pledged Collateral; and (ii) endorse any draft or other instrument for the
payment of money, execute releases and negotiate settlements. Nothing contained
in the foregoing provisions of this Section 6(c) shall be deemed or construed to
be a limitation on, or waiver by Secured Party of, any of Secured Party's other
rights or remedies hereunder or under any of the other Mezzanine Loan Documents,
including, without limitation, pursuant to the provisions of the Mezzanine Loan
Agreement. Secured Party shall have no duty to exercise any of the aforesaid
rights, privileges or options and shall not be responsible for any failure to do
so or delay in so doing. The foregoing powers of attorney are irrevocable and
coupled with an interest, and any similar or dissimilar powers heretofore given
by any Pledgor in respect of the Pledged Collateral to any other person other
than Secured Party are hereby revoked. The power of attorney granted herein
shall terminate automatically upon the termination of this Security Agreement in
accordance with Section 15 hereof.

               (d) Secured Party may at any time and from time to time, without
notice to, or assent by, any Pledgor or any other person, but without affecting
any of the Secured Obligations, in the name of such Pledgor or in the name of
Secured Party (i) notify any other party to make payment and performance with
respect to any item of Pledged Collateral directly to Secured Party, (ii) extend
the time of payment and performance of, compromise or settle for cash, credit or
otherwise, and upon any terms and conditions, any obligations owing to such
Pledgor, or claims of such Pledgor under any of the Organizational Documents of
any Company, (iii) file any claims, and/or commence, maintain or discontinue any
actions, suits or other proceedings deemed by Secured Party to be necessary or
advisable for the purpose of collecting upon or enforcing any of the
Organizational Documents of any Company, and (iv) execute any instrument and do
all other things deemed necessary and proper by Secured Party to protect and
preserve and realize upon the Pledged Collateral or any portion thereof and the
other rights contemplated hereby.

               (e) Secured Party may without notice to, or the consent of, any
Pledgor require (i) that any and all Distributions, and/or other distributions
or payments of any type payable to such Pledgor with respect to all or any part
of the Pledged Collateral be paid to Secured Party and/or its nominees, and/or
(ii) that Secured Party or its nominee, designee, agent or assignee be
substituted for such Pledgor or any of its nominees or designees, as officers
and/or directors and/or other agents or representatives of any Company.

                                       10



               (f) Pursuant to the powers of attorney provided for by Section
6(c) hereof, Secured Party may reasonably take any action and exercise and
execute any instrument which it may deem necessary or advisable to accomplish
the purposes of this Security Agreement. Without limiting the generality of the
foregoing, Secured Party shall have the right and power to receive, endorse and
collect all checks and other orders for the payment of money made payable to any
Pledgor representing any Distribution, interest, payment of principal or other
distribution or payment payable in respect of the Pledged Collateral or any part
thereof, and for and in the name, place and stead of such Pledgor, to execute
endorsements, assignments or other instruments of conveyance or transfer in
respect of the Pledged Collateral and any other property which is or may become
a part of the Pledged Collateral hereunder.

               (g) Without limiting any other provision of this Security
Agreement, and without waiving or releasing any Pledgor from any obligation or
default hereunder, Secured Party shall have the right, but not the obligation,
to perform any act or take any action, as it, in its judgment, may deem
necessary to cure any Event of Default, cause any term, covenant, condition or
obligation required under this Security Agreement to be performed or observed by
any Pledgor to be promptly performed or observed on behalf of such Pledgor, or
protect the security provided to Secured Party under this Security Agreement.
All amounts advanced by, or on behalf of, Secured Party in exercising its rights
under this Section 6(g) (including, but not limited to, reasonable legal
expenses and disbursements incurred in connection therewith as and when
incurred), together with interest thereon at the Default Rate (as defined in the
Mezzanine Loan Agreement) from the date of each such advance, shall be payable
by the Pledgors to Secured Party within fifteen (15) days after written demand
therefor and shall be Secured Obligations under this Security Agreement.

          7. Sales of the Pledged Collateral; Strict Foreclosure.

               (a) To the extent permitted by law, no demand, advertisement or
notice, all of which are hereby expressly waived by each Pledgor, shall be
required in connection with any sale or other disposition of all or any part of
the Pledged Collateral pursuant to Section 6 hereof, except that Secured Party
shall give such Pledgor at least ten (10) days' prior written notice of the time
and place of any public sale or of the time and the place at which any private
sale or other disposition is to be made, which notice such Pledgor hereby agrees
is reasonable, and all other demands, advertisements and notices are hereby
irrevocably waived by such Pledgor. To the extent permitted by law, Secured
Party shall not be obligated to make any sale of the Pledged Collateral if it
shall determine not to do so, regardless of the fact that notice of sale may
have been given, and Secured Party may without notice or publication adjourn any
public or private sale, and such sale may, without further notice, be made at
the time and place to which such sale is so adjourned. Subject only to
provisions of applicable law which cannot be waived, upon each public or private
sale of any portion of or all of the Pledged Collateral, Secured Party (or its
nominee or designee) may purchase any or all of the Pledged Collateral being
sold, free and clear of and discharged from any trusts, claims, equity or right
of redemption of any Pledgor, all of which are hereby waived and released to the
extent permitted by law, and may make payment therefor by credit against any of
the Secured Obligations in lieu of cash or

                                       11



any other obligations. In the case of any sale, public or private, of any
portion of or all of the Pledged Collateral, each Pledgor shall be responsible
for, and shall pay within fifteen (15) days after demand therefore, all costs
and expenses of every kind relating to the sale and delivery of the Pledged
Collateral, including, without limitation, brokers' and reasonable attorneys'
fees and disbursements and any tax imposed thereon and such obligation to pay
such costs and expenses shall be a Secured Obligation.

               (b) To the extent permitted under applicable law, Secured Party
shall not be required to conduct any foreclosure sale of any part of the Pledged
Collateral. Secured Party may, in its sole and absolute discretion, retain and
acquire for itself and/or its designees or nominees, the Pledged Collateral by,
as contemplated by Section 6(a)(i) hereof, instructing each Pledgor to register
on its ledgers and books Secured Party's acquisition of the Pledged Collateral
and the Certificate which embodies the Pledged Collateral, subject to any rights
of such Pledgor to object in accordance with the Code, if such Pledgor has not
renounced or waived such rights in accordance with the Code. In connection
therewith, Secured Party shall have the right to complete any endorsements in
its favor on the Certificates or any other certificated securities or
instruments which at any time are part of the Pledged Collateral.

          8. Securities Laws.

          If an Event of Default shall have occurred, Secured Party may, in its
sole and absolute discretion, sell all of the Pledged Collateral or any part
thereof by private sale in such manner and under such circumstances as Secured
Party may deem necessary or advisable in order that such sale may legally be
effected without registration pursuant to the Securities Act of 1933 or any
other Federal, state or local law governing the offering or sale of securities,
provided that at least ten (10) days' prior written notice of the time and place
of any such sale shall be given to the applicable Pledgor. Without limiting the
generality of the foregoing, in any such event Secured Party, in its sole and
absolute discretion (i) may proceed to make such private sale notwithstanding
that a registration statement for the purpose of registering such Pledged
Collateral or part thereof shall not have been filed or shall not have become
effective such Securities Act, (ii) may approach and negotiate with a single
potential purchaser to effect such sale, and (iii) may restrict such sale to a
purchaser who will represent and agree that such purchaser is purchasing for its
own account, for investment, and not with a view to the distribution or sale of
such Pledged Collateral or part thereof. In the event of any such sale, Secured
Party shall incur no responsibility or liability for selling all or any part of
the Pledged Collateral at a price which Secured Party may in good faith deem
reasonable under the circumstances, notwithstanding the possibility that a
substantially higher price might be realized if the sale were deferred until
after registration as aforesaid.

          9. Receipt of Sale Proceeds.

          Upon any sale of the Pledged Collateral, or any portion thereof, by
Secured Party hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of Secured Party or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Pledged Collateral so sold, and such purchaser or

                                       12



purchasers shall not be obligated to see to the application of any part of the
purchase money paid over to Secured Party or such officer or be answerable in
any way for the misapplication or nonapplication thereof.

          10. Costs and Expenses.

               (a) Each Pledgor agrees that it shall pay to Secured Party:

                    (i) within fifteen (15) days after receipt of an invoice
therefor (accompanied by customary supporting material), the amount of any taxes
Secured Party may have been required to pay by reason of the security interests
created in the Pledged Collateral hereunder (excluding any income taxes,
franchise taxes or other taxes based upon Secured Party's income) or any amount
necessary to free any of the Pledged Collateral from any lien not created in
favor of Secured Party thereon, and

                    (ii) within fifteen (15) days after receipt of an invoice
therefor (accompanied by customary supporting material), the amount of any and
all reasonable expenses, including the reasonable fees and disbursements of
counsel as and when incurred and of any other agents or experts and any transfer
taxes or other taxes or governmental charges or fees (whether now existing or
hereinafter enacted), Secured Party may incur in connection with (a) the
enforcement of this Security Agreement, including such reasonable expenses as
are incurred to preserve the value of the Pledged Collateral or the validity,
effectiveness, enforceability, perfection, priority or value of any security
interest, (b) after the occurrence of an Event of Default, the collection, sale
or other disposition of any of the Pledged Collateral, (c) the exercise by
Secured Party of any of the rights and/or remedies conferred upon it hereunder,
or (d) any Event of Default.

               (b) Any amount required to be paid by any Pledgor under Section
10(a) above which is not paid when due shall bear interest for each day from the
date advanced by or on behalf of the Secured Party until repaid by such Pledgor
at the Default Rate. All obligations and liabilities of each Pledgor under
Section 10(a) above and this Section 10(b) shall be Secured Obligations under
this Security Agreement.

          11. Application of Pledgor's Pledged Collateral.

          The Pledged Collateral and any proceeds thereof (including, without
limitation, any proceeds from the sale of all or any portion of the Pledged
Collateral and all Distributions) now or at any time hereafter received or
retained by Secured Party pursuant to the provisions of this Security Agreement
shall, after the occurrence of an Event of Default and acceleration of the
Mezzanine Loan, be applied by Secured Party in the following order of priority:
first, to the payment of all costs and expenses incurred in connection with the
administration and enforcement of, or the preservation of any rights under, this
Security Agreement (including, without limitation, reasonable attorneys' fees)
and, second, to the payment of the Secured

                                       13



Obligations  in such order and manner as Secured Party may determine in its sole
and absolute discretion.

          12. Further Assurances.

          Each Pledgor agrees that, at its sole expense and in such manner and
form as Secured Party reasonably may require at any time and from time to time,
it shall execute, deliver, file and/or record any financing statement, specific
assignment or other writing or instrument, and take any other action that
Secured Party may deem reasonably necessary or desirable, or that Secured Party
may reasonably request, in order to create, preserve or validate any security
interests created hereunder or the priority thereof or to enable Secured Party
to exercise and enforce its rights hereunder with respect to any of the Pledged
Collateral. Each Pledgor hereby authorizes Secured Party to execute and file at
any time or from time to time, in the name of such Pledgor, such UCC financing
statements and other similar instruments as Secured Party in its sole discretion
may deem necessary or desirable to perfect and continue the security interests
created hereunder.

          13. Attorney-In-Fact.

          Secured Party is hereby appointed the attorney-in-fact, with full
power of substitution, of each Pledgor for the purpose of carrying out the
provisions hereof from time to time, after an Event of Default, in Secured
Party's discretion, and taking any action and executing any instruments
(including, without limitation, financing or continuation statements,
conveyances, assignments and transfers) which Secured Party may deem necessary
or advisable to accomplish the purposes hereof, which appointment as
attorney-in-fact is coupled with an interest and is irrevocable. Each Pledgor
shall indemnify and hold harmless Secured Party from and against any liability,
loss, cost, expense and/or damage which it may incur in the exercise and
performance, in good faith, of any of Secured Party's powers and/or duties
specifically set forth herein.

          14. Waivers.

          No Pledgor shall be entitled to any notices of any nature whatsoever
from Secured Party except with respect to matters for which this Security
Agreement or the other Mezzanine Loan Documents specifically and expressly
provide for the giving of notice by Secured Party to Pledgor and except with
respect to matters for which Pledgor is not, pursuant to applicable Legal
Requirements, permitted to waive the giving of notice. To extent permitted by
law, Pledgor hereby expressly waives the right to receive any notice from
Secured Party with respect to any matter for which this Security Agreement or
the other Mezzanine Loan Documents does not specifically and expressly provide
for the giving of notice by Secured Party to Pledgor. No delay or omission on
the part of Secured Party in exercising any right hereunder shall operate as a
waiver of that right or of any other right hereunder. Any waiver of any right on
any one occasion shall not be construed as a bar to or waiver of that or any
other right on any future occasion. No course of dealing between any Pledgor and
Secured Party nor any failure to exercise, nor any delay in exercising, on the
part of Secured Party, any right, power or privilege hereunder or with

                                       14



respect to any of the Secured Obligations shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege hereunder
or otherwise with respect to the Secured Obligations preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.

          15. Termination.

          This Security Agreement and the security interests in and lien on each
Pledgor's Pledged Collateral created hereby shall terminate upon the
indefeasible payment and satisfaction in full of all of the Secured Obligations,
except contingent indemnity obligations not then due and payable.

          16. Integration Clause.

          This Security Agreement, together with all of the other Mezzanine Loan
Documents, represents the entire agreement between the parties with respect to
the subject matter hereof, and all prior or contemporaneous agreements,
understandings or other communications, oral or written, regarding the subject
matter which are not expressed herein or therein shall be of no force and
effect.

          17. Amendments and Waivers In Writing Only.

          This Security Agreement shall not be amended or otherwise modified
except by a further written agreement executed and delivered by all of the
parties hereto. No waiver, express or implied, of any of the provisions hereof
shall be effective unless embodied in a written document executed by the party
hereto who is charged with such waiver.

          18. Successors and Assigns.

          Except as may be expressly permitted in the Mezzanine Loan Agreement,
neither this Security Agreement, nor any right title and/or interest herein,
shall be assigned or otherwise transferred by any Pledgor without the prior
written consent of Secured Party. Subject to the preceding sentence, this
Security Agreement shall inure to the benefit of the parties hereto and their
respective successors and assigns.

          19. Notices.

          All notices, demands, requests, consents, approvals or other
communications (collectively, "Notices") required or permitted to be given
hereunder to Secured Party or any Pledgor or which are given to Secured Party or
any Pledgor with respect to this Security Agreement shall be in writing and
otherwise given in accordance with Section 11.6 of the Mezzanine Loan Agreement.

                                       15



          20. No Duty to Preserve Pledgor's Pledged Collateral.

          To the extent permitted by applicable law, Secured Party shall not
have any duty as to the collection or protection of the Pledged Collateral or
any income thereon or payments with respect thereto, or as to the preservation
of any rights pertaining thereto, beyond exercising reasonable care with respect
to any cash or any Certificate that is actually in Secured Party's possession
pursuant hereto.

          21. No Release.

          The obligations of each Pledgor under this Security Agreement shall be
absolute and unconditional and shall remain in full force and effect without
regard to, and, subject to Section 15 hereof, shall not be released, suspended,
discharged, terminated or otherwise affected by, any circumstances or occurrence
whatsoever, including, without limitation: (a) any renewal, extension, amendment
or modification of, or addition or supplement to or deletion from, any of the
Mezzanine Loan Documents or the Mortgage Loan Documents or any other instrument
or agreement referred to therein, or any assignment or transfer of any thereof;
(b) any waiver, consent, extension, indulgence or other action or inaction under
or in respect of any of the Mezzanine Loan Documents or the Mortgage Loan
Documents or any exercise or non-exercise of any right, remedy, power or
privilege under or in respect of any of the Mezzanine Loan Documents or the
Mortgage Loan Documents, respectively; (c) any furnishing of any additional
security to Secured Party or any acceptance thereof or any sale, exchange,
release, surrender or realization of or upon any security by Secured Party; or
(d) any invalidity, irregularity or unenforceability of all or part of the
Secured Obligations or of any security therefor.

          22. Waiver of Marshalling of Assets Defense.

          To the fullest extent that each Pledgor may legally do so, each
Pledgor hereby waives all rights to a marshalling of the assets of Pledgor,
and/or any others with interests in Pledgor, and/or of the Pledged Collateral,
or to a sale in inverse order of alienation in the event of foreclosure of the
interests hereby created, and agree not to assert any right under any laws
pertaining to the marshalling of assets, sales in inverse order of alienation or
any other matters whatsoever to defeat, reduce or affect the right of Secured
Party to a sale of the Pledged Collateral for the collection of the Secured
Obligations without any prior or different resort for collection.

          23. General Provisions Relating To Secured Party's Remedies.

          Without limitation of any right or remedy of Secured Party in this
Security Agreement, each Pledgor acknowledges and agrees that upon the
occurrence and during the continuance of an Event of Default (i) the rights and
remedies of Secured Party herein provided or provided under any of the other
Mezzanine Loan Documents shall be cumulative, and shall be in addition to and
not exclusive of or in limitation of any rights and remedies provided by
applicable law, including, without limitation, the rights and remedies of a
secured party under the Code or any other applicable laws or in an equity
proceeding, (ii) Secured Party shall have the

                                       16



right to pursue all of its rights and remedies in one proceeding, or separately
and independently in separate proceedings, in each case as Secured Party, in its
sole and absolute discretion, shall determine from time to time, (iii) Secured
Party shall not be required to either marshal assets or sell the Pledged
Collateral in any inverse order of alienation, and shall not be subjected to any
"one action" or "election of remedies" law or rule, (iv) the exercise by Secured
Party of any remedies against any of the Pledged Collateral shall not impede
Secured Party from subsequently or simultaneously exercising remedies against
any other collateral or security, and (v), subject to Section 15 hereof, all
liens and other rights, remedies and privileges provided to Secured Party in
this Security Agreement and the other Mezzanine Loan Documents or otherwise
shall remain in full force and effect and shall in no event terminate prior to
the exhaustion by Secured Party of all of its remedies against the Pledged
Collateral and Secured Party's foreclosure, sale and/or other realization upon
all of the Pledged Collateral.

          24. Limited Recourse.

          Notwithstanding anything herein to the contrary, each Pledgor's
recourse liability under or with respect to this Security Agreement shall be
limited to the identical extent provided in Section 11.22 of the Mezzanine Loan
Agreement.

          25. Governing Law.

          This Security Agreement shall be governed and construed in accordance
with the internal laws of the State of New York, without regard to its conflicts
of law principles.

                         [NO FURTHER TEXT ON THIS PAGE]

                                       17



          IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed and delivered as of the date first above written.

                                           PLEDGOR:

                                           THI OF OHIO SNFS, LLC,
                                           a Delaware limited liability company


                                           By:  /s/ JOHN E. BAUER
                                              ----------------------------------
                                              Name:  John E. Bauer
                                              Title: Vice-President


                                           THI OF MARYLAND SNFS I, LLC,
                                           a Delaware limited liability company


                                           By:  /s/ JEFFREY A. BARNHILL
                                              ----------------------------------
                                              Name:  Jeffrey A. Barnhill
                                              Title: Vice-President


                                           THI OF MARYLAND SNFS II, LLC,
                                           a Delaware limited liability company


                                           By:  /s/ JEFFREY A. BARNHILL
                                              ----------------------------------
                                              Name:  Jeffrey A. Barnhill
                                              Title: Vice-President

                       [Signatures continued on next page]



                                           SECURED PARTY:


                                           VENTAS REALTY, LIMITED PARTNERSHIP,
                                           a Delaware limited partnership


                                           By: Ventas, Inc.
                                               a Delaware corporation,
                                               its sole general partner


                                               By:  /s/ T. RICHARD RINEY
                                                  ------------------------------
                                                  Name:  T. Richard Riney
                                                  Title: Executive Vice
                                                         President/General
                                                         Counsel