EXHIBIT 10.15

LEASE AGREEMENT

THIS LEASE AGREEMENT made and entered into this 1st day of June, 1997, by and between G&L Gardens, LLC., an Arizona Limited Liability Company the "Lessor", and Capital Senior Management 1, Inc., a Texas Corporation, the "Lessee".

W I T N E S E T H

WHEREAS, Lessor owns a 98 bed Intermediate Care Nursing and Alzheimers facility located in Phoenix, Arizona known as Maryland Gardens Care Center, which together with any other improvements now hereafter located on the tract and all easements, tenements, hereditament, buildings, appurtenances and any and all furnishings, fixtures and equipment and supplies used in conjunction therewith are hereinafter referred to as the "Leased Premises";

WHEREAS, the Lessor owns furnishings, furniture, equipment, fixtures and supplies to be used in or about the Leased Premises which are enumerated on Exhibit "A" (hereinafter collectively referred to as the "Personal Property");

WHEREAS, Lessee has agreed to lease the Leased Premises and Personal Property from Lessor pursuant to the terms and conditions of this lease (the "Lease");

NOW, THEREFORE, in consideration of the rents hereinafter specified and the covenants, terms and conditions hereinafter contained, the parties do hereby agree as follows:

1. Leased Premises and Personal Property. Lessor, for and in consideration of the rent, and covenants and agreements hereinafter reserved, mentioned and contained on the part of the Lessee, its successors and assigns, to be paid, kept and performed, does hereby Lease unto Lessee the Leased Premises together with the Personal Property to be used in and upon the Leased Premises for the term hereinafter specified, for use and operation therein and thereon of a nursing home and Alzheimers facility.

2. Term of Lease. The term of this Lease shall be for a period of fourteen (14) months commencing on June 1, 1997, (the "Commencement Date"), and shall expire at midnight on July 31, 1998, unless sooner terminated as hereinafter provided.

3. Rent. Lessee shall pay to Lessor after payment of all expenses, (including the monthly management fee) the monthly rental for the Leased Premises (the "Rent") in the amount of $30,000 in June, July and September, 1997, and $35,000 per month thereafter. Notwithstanding the above, it is agreed that no

rental payments will be due in August of 1997 and May of 1998. All rent payments shall be paid by the fifth day of each month.

4. License and Certifications. Lessee will use its best efforts to take all affirmative action required by all federal, state, county and local governmental authorities having jurisdiction over Lessee, the services it provides and the facilities it operates, to obtain, maintain, and retain all necessary, and appropriate certificates, licenses, and other approvals for operation of the Leased Premises.

5. Payment of Taxes and Assessments.

a. Generally. Lessee will pay or cause to be paid, all taxes and assessments, which during the term of this Lease may have been, or may be assessed, levied, confirmed, imposed upon and become due and payable out of or in respect of, or become a lien on the Leased Premises or any part thereof (hereinafter collectively referred to as "Taxes and Assessments"). Notwithstanding the foregoing, Lessee will be under no obligation, however, to pay interest or principal on any debt of Lessor secured by the Property, any franchise or income tax payable by Lessor (including income or similar tax on net income of Lessor derived from this Lease), any gift, inheritance, transfer estate or succession tax by reason of any present or future law which may be enacted during the term of this Lease.

b. Contest. Lessee shall have the right to contest the amount or validity, in whole or in part, of any Taxes and Assessments by appropriate proceedings diligently conducted in good faith.

6. Occupancy and Use of Premises.

a. Use of Premises. During the term of this Lease, the Leased Premises shall be used and occupied by Lessee for an Intermediate Care Nursing and Alzheimers Facility.

b. Status at Termination. Upon termination of this Lease for any reason, Lessee will return to Lessor the Leased Premises and transfer all applicable licenses and permits to Lessor.

7. Utilities. Lessee will contract in its own name and pay all charges for water, gas, sewer, electricity, light, heat air conditioning, power telephone, waste removal or other services used by, rendered or supplied to Lessee in connection with the Leased Premises. However, Lessee may contest any such utility charges.

8. Insurance.

a. General Coverage Requirements. Lessee, at its sole cost and expense, will insure and keep insured with responsible insurance companies authorized to do business in the State in which the Leased Premises is located, the Leased Premises and all alterations, extension and improvements thereto and replacements thereof, as well as all personal property of Lessee located on the Leased Premises, against loss or damage by fire and the risks contemplated within the extended coverage endorsement (as such endorsement in the broadest form may customarily be written in such jurisdiction from time to time) and against such other risks as may be reasonably required by Lessor or by any lender holding a mortgage superior to this Lease, but in no event in an amount more than the full insurable value of the Leased Premises, or an amount which, if the Leased Premises were substantially or totally destroyed, would provide sufficient proceeds to completely repair or replace the Leased Premises, as such amounts may change from time to time. Lessee will pay the premium for such insurance as it becomes due and will deliver to Lessor copies of all such policies of insurance as it becomes due and will deliver to Lessor copies of all such policies of insurance with due proof of payment of premiums at least ten
(10) days prior to expiration of the policies; provided, however, at the commencement of the Initial Term of this Lease, Lessee shall have the option to keep in force the fire and other policies of Lessor, if any, then in force until their respective expiration dates, and if kept in force, the premiums for such policies will be prorated and adjusted between Lessor and Lessee as of the date of the commencement of the Initial Term of this Lease, and similar adjustment and proration will be made in respect to any such policies taken out by Lessee and in existence at the end of the term of this Lease. All policies of fire and other insurance will be for the benefit of, and with loss payable to Lessor, Lessee and any lender holding a mortgage superior to this Lease, as their interests may appear. The interest of any such lender will be covered by the customary mortgagee endorsement used in the jurisdiction in which the Leased Premises is located.

b. Specific Coverage Requirements. Lessee shall also, at Lessee's sole cost and expense, cause to be issued and shall maintain during the entire term of this Lease the following:

i. Lessee will carry and maintain at all times during the term of this Lease insurance against claims for personal injury or property damage under a policy of general liability insurance or a combination of General Liability and Commercial Umbrella Liability policies in an amount of at least Three Million

and No/100 dollars ($3,000,000.00) per occurrence and One Hundred Thousand and No/100 Dollars ($100,000.00) (but in no event less than the requirements of Lessor's lenders) or the reasonable recommendations of any qualified insurance consultant retained by Lessor. Lessee will also carry adequate workmen's compensation insurance and business interruption insurance equal to one years rental payments.

ii. Lessee will carry and maintain at all times during the term of this Lease professional liability or "malpractice" insurance to the extent of not less than Three Million Dollars ($3,000,000.00) per occurrence, Three Million Dollars ($3,000,000.00) per year.

iii. Lessee, at its sole cost and expense, will maintain such other usual and customary polices of insurance in such amounts as may be reasonably required by Lessor's lenders, including but not limited to, any automobile liability insurance, boiler insurance or flood insurance required by said lenders; provided that such insurance is available at commercially reasonable rates.

c. Policy Requirements. All policies of insurance shall provide that they shall not be canceled, terminated, reduced or materially modified without at least thirty (30) days prior written notice to Lessor and Lessee.

d. Delivery of Policies. The originals or binder of all insurance policies required by this Article shall be delivered to Lessor upon request.

9. Repairs and Maintenance.

a. Lessee's Duties to Repair. Throughout the term of this Lease, Lessee, at its sole cost and expense, will keep and maintain, or cause to be kept and maintained, the Leased Premises (including the grounds) and the Personal Property in good order and condition without waste and in a suitable state of repair at least comparable to that which existed immediately prior to the Commencement Date (ordinary wear and tear excepted). However, Lessee shall not be responsible for any maintenance and repairs which are not of a routine nature. Instead, Lessor shall be responsible for all structural repairs and replacements and material capital expenditures, such as repairs and replacements to the building, roof, and major mechanical systems, changes to the parking, grading and other matters concerning the land on which the improvements are located, and other non-routine repairs and replacements. Additionally, Lessor shall fund the renovations listed under Exhibit "B" under the time limits set forth in said Exhibit.

b. Replacement of Personal Property. Lessee shall have the right, at any time and from time to time, to remove and dispose of any Personal Property which may have become obsolete or unfit for use, or which is no longer useful in the operation of the Leased Premises.

10. Alterations and Demolition. Lessee will not remove or demolish any improvement or building which is part of the Leased Premises or any portion thereof or allow it to be removed or demolished, without the prior written consent of the Lessor, which consent shall not be unreasonably withheld. Subject to the terms of any mortgage secured by the Leased Premises, Lessee agrees that it will not make, authorize or permit to be made, any changes or alterations in or to the Leased Premise in excess of $20,000.00 without first obtaining the Lessor's written consent thereto.

11. Discharge of Liens.

a. General. Lessee will not create or permit to be created or to remain, and Lessee will discharge, any lien, encumbrance or charge levied on account of any mechanic's, laborer's or materialman's lien of any conditional sale, security agreement or chattel mortgage, or otherwise, which might be or become a lien, encumbrance or charge upon the Leased Premises or any part thereof, or the income therefrom or the Personal Property, for work or materials or Personal Property furnished or supplied to, or claimed to have been supplied to or at the request of Lessee.

b. Cure by Lessee. If any mechanic's laborer's, materialman's or other lien caused or charged to Lessee shall at any time be filed against the Leased Premises or Personal Property, Lessee shall have the right to contest such lien or charge, provided, Lessee within thirty (30) days after notice of the filing thereof, will cause the same to be discharged or record or in lieu thereof to secure Lessor against said lien by deposit with Lessor of such security as may be reasonably demanded by Lessor to protect against such lien.

12. Inspection of Premises by Lessor. At any time after twenty-four (24) hours notice to Lessee, during reasonable business hours, Lessor and/or its authorized representative shall have the right to enter and inspect the Leased Premises. Lessor agrees that the person or persons upon entering and inspecting the Leased Premises will cause as little inconvenience to the Lessee as may reasonably be possible under the circumstances.

13. Condemnation.

a. Generally. Lessor and Lessee shall immediately notify the other party as soon as either becomes aware of any attempt to acquire by condemnation, as hereinafter defined, the entire premises, or any portion thereof. As used in this section, the word "Condemnation" and grammatical variations thereof made to fit the grammatical usage, means any taking of any interest in the premises or the improvements to the premises by right to eminent domain or any purchase of any such interest in lieu of such taking.

b. Termination on Entire Taking. In the event the entire premises at any one facility is taken by Condemnation, the Lease shall terminate with regard to that facility and expire as of the date possession is taken. A partial taking of a portion of any facility which is so extensive as to render the remainder of the facility economically unsuitable for its primary intended use under this Lease, in Lessee's reasonable business judgment, shall be deemed an entire taking, and this Lease shall terminate.

c. Restoration. If there is partial taking of the Leased Premises and this Lease is not terminated pursuant to Paragraph 12 (b), above, this Lease shall remain in full force and effect and the Lessor, at its cost, shall accomplish all necessary restoration to the extent reasonably practicable, up to but not exceeding the amount of the award payable to Lessor as a result of such taking.

14. Covenants, Warranties and Representations of Lessor.

a. Lessor covenants, warrants and represents that is has fee simple title to the Leased Premises and the Personal Property, free and clear of any and all liens, mortgages, claims, rights of parties in possession and any other claims or rights except as specifically set forth on Exhibit "C" attached hereto.

b. Lessor represents and warrants that there presently is no claim or litigation pending or, to the best knowledge of Lessor, threatened against Lessor or which would have the effect of preventing or terminating this Lease or the quiet enjoyment of the Leased Premises or the Personal Property by the Lessee.

c. Lessor represents and warrants that it has the full power and authority to enter into this Lease.

d. To the best of its actual knowledge, Lessor represents and warrants that there presently exits in good standing such licenses and permits as are

necessary to operate this facility according to all applicable federal and state statues and ordinances, including specifically the Reimbursement Plan and all Medicare/Medicaid regulations.

15. Covenants, Warranties, and Representations of Lessee.

a. Lessee represents and warrants that it has the full power and authority to enter into this Lease.

b. Lessee covenants that it will promptly apply for such licenses and permits as are necessary in order for it to operate the Leased Premises in accordance with the Reimbursement Plan and applicable Medicare/Medicaid regulations.

16. Events of Default. The following acts or events shall be deemed to be an event of default (an "Event of Default"):

a. The failure by Lessee to pay when due any rental payment or part thereof, under the provisions of the Lease, when such failure shall continue for a period of thirty (30) days after the due date thereof, and for a period of ten (10) business days after written notice from Lessor;

b. The failure of Lessee to perform, or the violation by Lessee of any material covenants, terms conditions or provisions of this Lease, other than those relating to the payment of money if such failure or violation shall not be cured within thirty
(30) days after notice thereof by Lessor to Lessee, unless such failure by its nature cannot be cured within such thirty
(30) days in which case Lessee shall not be deemed in defaults so long as Lessee commenced the cure of such failure within such thirty (30) days and diligently prosecutes such cure to completion;

c. The filing of Lessee of a voluntary petition in bankruptcy, any adjudication that the Lessee is bankrupt, or the appointment of a trustee or receiver of the properties of the Lessee;

d. The abandonment of the Leased Premises by Lessee.

e. The failure of Lessor to perform, or the violation by Lessor of any material covenants, terms conditions or provisions of this Lease, if such failure or violation shall not be cured within thirty (30) days after notice thereof by Lessee to Lessor, unless such failure by its nature cannot be cured within such thirty (30) days in which case Lessor shall not be deemed in default so long as Lessor commenced the cure of such

failure within such thirty (30) days and diligently prosecutes such cure to completion;

17. Lessor's Remedies Upon Default.

a. Termination of Lease or Right of Possession. If an Event of Default occurs on the part of the Lessee, Lessor may, if it so elects, and as its sole and exclusive remedy, upon ten (10) days prior written notice to Lessee of such election, and with or without any demand whatsoever upon Lessee, forthwith terminate this Lease and Lessee's right to possession of the Leased Premises. Upon any such termination of this Lease, Lessee shall vacate the Leased Premises immediately, and shall quietly and peaceably deliver possession thereof to Lessor, and Lessee hereby grants to Leased Premises in such event with or without process of law and to repossess the Leased Premises and Personal Property as the Lessor's former estate. In the event of any such termination of this Lease or the Lessee's right to occupy the Leased Premises, the Lessor shall again have possession and enjoyment of the Leased Premises and Personal Property to the extent as if this Lease had not been made, and thereupon this Lease and everything herein contained on the part of Lessee to be done and performed shall cease and terminate.

b. Assignment of Licenses and Permits. In the event of any Event of Default and if Lessor elects to terminate this Lease or to terminate Lessee's right to possession of the Leased Premises, then all licenses, certifications, permits and authorizations issued by any governmental agency, body or authority in connection with or relating to the Leased Premises and the nursing home operated thereon shall be deemed as being assigned to Lessor to the extent permitted by applicable state and federal law. Lessee shall deliver all such subsequent reimbursement checks for periods following the date of termination to Lessor immediately upon receipt thereof by Lessee. Lessor shall also have the right to continue to utilize the telephone number and name used by Lessee in connection with the operation of the nursing home located on the Leased Premises. To the extent permitted by applicable state and federal law, this Lease shall be deemed and construed as an assignment for purposes of vesting in Lessor all right, title and interest in and to (i) all licenses, certifications, permits and authorizations obtained in concoction with the operation of the nursing home located on the Leased Premises and (ii) the name and telephone number used in connection with the operation of the nursing home located on the Leased Premises. Upon demand by Lessor, Lessee hereby agrees to take such other action and execute such other

documents as may be necessary in order to vest in Lessor all right, title and interest to the items specified herein.

18. Lessor's Remedies Upon Default: If an Event of Default occurs on the part of the Lessor, Lessee may, if it so elects, upon ten (10) days prior written notice to Lessor of such election, and with or without any demand whatsoever upon Lessor, forthwith terminate this Lease. Lessor shall remain responsible for any management fees or other expenses due and owing to Lessee as of the date of termination of the Lease, including reasonable attorney fees if needed to collect such fees.

19. Right of Termination.

Lessee shall have the right to terminate this Lease for any reason upon thirty (30) day notice to Lessor.

20. Assignment.

a. Lessee. Except to an affiliate of Lessee, Lessee shall not assign all or any part of Lessee's rights under this Lease (including the option rights) or sublet the whole or any part of the premises without the written consent of Lessor. Any consent which may be given to Lessee shall not release Lessee from its obligations under this Lease. If consent is once given by Lessor assignment of this Lease, or any interest therein, Lessor shall not be barred to refuse to consent to any further assignment.

b. Lessor. Lessor shall have at all times the right to assign its rights under this Lease, provided, however, that in the event of such assignment Lessor shall also assign all sums held on behalf of tenant, and all assignee shall assume Lessor's obligations under the Lease.

21. Holdover. If Lessee shall occupy the Leased Premises with the consent of Lessor after the expiration or other termination of this Lease and rent is accepted, such occupancy and payment shall be construed as an extension of this Lease for the terms of one (1) month only from the date of expiration, and occupation and payment thereafter shall operate to extend the terms of this Lease for but one (1) month at a time unless other terms of such extensions are executed in writing signed by the parties. In such event, if either Lessor or Lessee desires to terminate said occupancy at the end of any month after the expiration of this Lease, the party desiring to terminate the same shall give the other party at least thirty (30) days written notice to that effect.

22. Miscellaneous.

a. Quiet Enjoyment. Lessee shall lawfully and quietly hold, occupy and enjoy the Leased Premises during the term of this Lease, without hindrance by Lessor or by any other person or persons claiming under Lessor.

b. Attorney's Fees. In case litigation is instituted, arising directly or indirectly out of this Agreement, the losing party shall pay to the prevailing party its reasonable attorney's fees, together with all expenses which may reasonably incur in taking such action including, but not limited to, costs incurred in searching records, the costs of title reports and expert witness fees, and anticipated post judgment collection services. If an appeal is taken from any judgment or decree of the trial cost, the losing party shall pay the prevailing party in the appeal its reasonable attorney's fees in such appeal.

c. Estoppel Letter. Each party agrees that any time, and from time to time, upon not less that ten (10) days prior written request from the other party, to execute, acknowledge and deliver to the other party a statement in writing, certifying that this Lease is unmodified and in full force and effect (or if there have been modifications, that the same is in full force and effect a modified, and stating the modifications), the dates to which the rent, taxes, and assessments, if any, have been paid, the amount of any additional rent held by Lessor, and whether the Lease is then in default or whether any events have occurred which, with the giving of notice or the passage of time, or both, could constitute a default hereunder, it being intended that any such statement delivered pursuant to this paragraph may be relied upon by any prospective assignee, mortgage or purchase of the fee interest in the Leased Premises or of this Lease.

d. Headings. The headings and titles in this Lease are inserted only as a matter of convenience and for reference and in no ways define, limit or describe the scope or intent of this Lease, nor in any way affect this Lease.

e. Integration and Modifications. This Lease contains the entire agreement between the parties and any executory agreement hereafter made shall be ineffective to change, modify or discharge it in whole or in part unless such executory agreement is in writing and signed by the party against whom enforcement of the change, modification or discharge is sought. This Lease cannot be changed orally or terminated orally.

f. Binding Effect. Except as otherwise herein expressly provided, the covenants, conditions and agreements in this Lease shall bind and insure to the benefit of the Lessor and Lessee and their respective successors and assigns.

g. Grammatical Changes. All nouns and 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, firm or firms, corporation or corporations, entity or entities or any other thing or things may require.

h. Severability. If any term or provision of this Lease shall to any extent be held invalid or unenforceable, the remaining terms and provisions of this Lease shall not be affected thereby, but each term and provision shall be valid and be enforced to the fullest extent permitted by law.

i. Jurisdiction and Venue. The laws of Arizona shall govern this validity, performance and enforcement of the Lease.

j. Financial Statements. Within thirty (30) days after the end of each month, Lessee shall furnish to Lessor copies of monthly financial statements for Leased Premises.

k. Indemnification. Lessee will indemnify, defend and hold Lessor harmless from any liability, damages, costs and expenses, including but not limited to reasonable attorney's fees, from any gross negligence or willful misconduct by Lessee. Lessor will indemnify, defend and hold Lessee harmless from any liability, damages, costs and expenses, including but not limited to reasonable attorneys' fees, for anything relating to the Leased Premises which arises from the gross negligence or willful misconduct of Lessor, its agents, or employees.

23. Notices. All notices, demands or requests which may or are required to be given by either party to the other shall be in writing and shall be sent by United States certified mail, return receipt requested, addressed to the other party hereto at the address set forth below:

If to Lessor:                    Mark Hamermesh
                                 Senior Vice President
                                 G&L Realty Corporation
                                 439 N. Bedford Drive
                                 Beverly Hills, CA  90210


If to Lessee:                    David R. Brickman
                                 Vice President
                                 Capital Senior Management I, Inc.
                                 14160 Dallas Parkway, Suite 300
                                 Dallas, TX  75240

Any party may from time to time change such addresses by notifying all other parties in writing by certified or registered mail, postage prepaid, of the change. Notices mailed as set forth above shall be deemed given and received forty eight (48) hours after such deposit in the mail.

24. Prorates of Operations. Revenues and expenses of the Leased Premises at the commencement and termination of the Lease shall accrue to the benefit of the Leased Premises.

25. Right of First Refusal. Lessee shall have a right of first refusal to match any bona fide offer of purchase received by, and acceptable to Lessor. Lessor shall give to Lessee full details in writing of any such offer which is acceptable to Lessor at least thirty (30) days prior to the anticipated sale. Lessee shall have fourteen (14) days from receipt of such notice in which to notify Lessor of its desire to purchase the Leased Premises on the same terms and conditions as set forth in the written notification. If Lessee does not exercise its right to purchase the Leased Premises, Lessor shall have sixty (60) days in which to complete such sale on the same terms as set forth in the written notification. If Lessor shall sell the Leased Premises to a third party as herein provided during the term of this Lease, Lessor shall pay Lessee severance compensation in amount equal to the then current monthly management fee times the number of months remaining in the term of the Lease, but no greater than four months. For purposes of this paragraph, the monthly management fee shall be 5% of gross revenues.

26. Nonrecourse. This Agreement shall be nonrecourse to Lessee. The preceding sentence shall not apply to any liability or obligation of Lessee which results from or arises out of the gross negligence, willful misconduct, misappropriation of funds or fraud of or by Lessee. Additionally, no officer or director of Lessee shall have any personal liability hereunder.

IN WITNESS WHEREOF, the parties hereto have caused this Lease to be signed by persons authorized to do so on behalf of each of them respectively the day and year first above written.

BY:  /s/ MARK H. HAMERMESH
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      G & L Gardens, LLC

BY: /s/ DAVID R. BRICKMAN, V.P.
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EXHIBIT 10.16

PRE-OPENING CONSULTING AGREEMENT

THIS PRE-OPENING CONSULTING AGREEMENT (the "Agreement") is made as of the 16th day of June, 1997, by and between The Emmaus Calling, Inc. ("Owner") and Capital Senior Management 1, Inc. ("Consultant").

WHEREAS, Owner is engaged in the development, marketing, pre-leasing and other pre-opening duties for a 104 unit assisted living facility located in Mesquite, Texas (the "Facility") and

WHEREAS, Owner desires to employ Consultant to assist in the marketing and pre-leasing of the Facility as well as assist in pre-opening and other operational duties for the Facility during the term herein provided and Consultant desires to accept such employment.

NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:

1. RENDITION OF SERVICES

The Consultant agrees to provide professional services to Owner in accordance with the terms and conditions of this Agreement.

2. SCOPE OF SERVICES

During the term of this Agreement, Consultant shall provide consulting services to Owner relating to the marketing, lease-up, pre-opening and other operational activities for the Facility. These services shall include the following:

A. Operational Services

1. Budget. Consultant shall provide the initial operating budget within five (5) weeks of execution of this Agreement.

2. Policy/Procedure Manuals. Consultant shall provide assistance to Owner in development of policy/procedure manuals and appropriate forms/systems developed by Owner that may be required for each department.

3. Inventories. Consultant shall assist Owner in determining initial equipment, smallwares, and supply and food inventories for each department of the Facility.

4. Open House. Consultant will provide input/direction to Owner in effective planning and implementation of the "open house" festivities that will be performed by Owner.

5. Hiring. Consultant shall provide assistance to Owner in interviewing final candidates being considered for key staff positions, such as Executive Director, (if applicable), and Department Managers.

6. Financial Accounting Systems. Consultant shall review and provide input regarding the financial accounting systems to be purchased or utilized by Owner.

7. Resident Handbook. Consultant shall provide input and direction to Owner in order for Owner to develop an effective resident handbook.

8. Staffing Schedules. Consultant shall assist Owner in determining staffing and hire dates during the pre-opening process for specific personnel (i.e., Department Managers, Housekeepers, etc.).

9. Training. Consultant shall provide assistance to Owner in determining staff training/orientation programs provided by Owner.

10. Move-In Schedules. Consultant shall provide assistance to Owner regarding move-in coordination performed by Owner.

B. Marketing Services.

1. Marketing Plan. Consultant shall review, evaluate and make recommendations with regard to the existing marketing plan and budget. Such review will include evaluation and analysis of the product, competition and the Facility's position within the market.

2. Lead Generation. Consultant shall evaluate the existing components of the Facility's lead generation and make recommendations to create or improve these sources. The sources include general advertising, signage (on and off site), community outreach and public relations, resident referral programs, special events, special promotions and direct mail.

3. Brochures. Consultant shall assist the existing staff in the development of brochures and collaterals for marketing and lease-up of the Facility.

4. Model Apartments. Consultant shall assist in the establishment of "model apartments" for the Facility.

5. Hiring and Training. Consultant shall provide input to Owner in the selection and hiring of marketing staff and shall also provide input with regard to staff training and orientation. These responsibilities shall include assistance in the identification of the Marketing Director's key responsibilities, the Resident Liaison's key responsibilities and the Executive Director's marketing support role.

6. Sales Policies and Procedures. Consultant will review, evaluate and make recommendations regarding the Facility's sales office functions, procedures and policies.

7. Sales Strategy. Consultant will assist and make recommendations to Owner with regard to the following sales strategies: lead management, identifying sales goals, telephone procedures and guidelines, sales closing techniques, overcoming prospect's objections, and procedures for touring the prospect's family and advisors.

3. SCHEDULE AND TIME OF COMPLETION

This Agreement shall commence six (6) months before the issuance of the Certificate of Occupancy for the Facility (estimated July 1, 1998), and terminate on the later of August 31, 1998, or the receipt by Owner of a Certificate of occupancy for the Facility from the appropriate governmental officials (the "Term"). Due to the necessary time and personnel commitment by Consultant, Owner agrees that it will not enter into any discussions, negotiations or oral or written agreements with any other consultant regarding the marketing and management of the Facility on or before the expiration of the Term.

4. OWNERSHIP OF WORK

All reports, schedules and other materials prepared, or in the process of being prepared, for the services to be performed by Consultant shall be and are the property of Owner, and Owner shall be entitled to access thereto, and copies thereof, during the progress of the work. Any such remaining in the hands of the Consultant or in the hands of any subcontractor upon completion or termination of the work shall be forthwith delivered to Owner. If any materials are lost, damaged or destroyed before final delivery to Owner, the Consultant shall replace them at its own expense and the Consultant hereby assumes all risks of loss, damage or destruction of or to such materials. The Consultant may retain a copy of all material produced under this Agreement for its use in its general business activities.

5. USE OF SUBCONTRACTORS

Consultant shall not subcontract any services to be performed by it under this Agreement.

6. CHANGES

Owner may, at any time, by written order, make changes within the scope of work and services described in this Agreement. If such changes cause an increase in the budgeted cost of or the time required for performance of the agreed upon work, an equitable adjustment as mutually agreed shall be made regarding the compensation as set forth in Section 8. In the event that Consultant encounters any unanticipated conditions or contingencies that may affect the scope of work or services and result in an adjustment in the amount of compensation specified herein, Consultant shall so advise Owner immediately upon notice of such condition or contingency. The written notice shall explain the circumstances giving rise to the

unforeseen condition or contingency and shall set forth the proposed adjustment in compensation resulting therefrom. Such notice shall be given to Owner prior to the time that Consultant performs work or services related to the proposed adjustment in compensation. Any and all pertinent changes shall be expressed in a written supplement to this Agreement prior to implementation of such changes.

7. RESPONSIBILITY; INDEMNIFICATION

Consultant and Owner shall indemnify, keep and save harmless the other party to this Agreement, and its directors, officers, agents and employees against any and all suits, claims or actions arising out of any injury to persons or property that may occur, or that may be alleged to have occurred, in the course of the performance of this Agreement by the Consultant or Owner as applicable, caused by an act or omission of the Consultant or Owner as applicable, or its employees, subcontractors or agents. Consultant and Owner further agree to defend the other party to this Agreement in any and all such actions, suits or claims and pay all charges of attorneys and all other costs and expenses arising therefrom or incurred in connection therewith; and if any judgment be rendered against one party, or any of the other individuals enumerated above in such action, then the other party shall, at its expense, satisfy and discharge the same.

8. COMPENSATION

The Consultant agrees to perform the operational services included in
Section 2 for a sum of Four Thousand and No/100 Dollars ($4,000.00) per month and the marketing services included in Section 2 for a sum of Four Thousand and No/100 Dollars ($4,000.00) per month (collectively the "Compensation"), payable on or before the tenth of each month. A nonrefundable prepayment of two (2) months' fees shall be paid and deemed earned by Consultant upon execution of this Agreement.

9. CONSULTANT'S STATUS

Neither the Consultant nor any party contracting with the Consultant shall be deemed to be an agent or employee of Owner. The Consultant is and shall be an independent contractor, and the legal relationship of any person performing services for the Consultant shall be one solely between said parties.

10. RECORDS

During the term of this Agreement, Consultant shall permit representatives of Owner to have access to, examine and make copies, at Owner's expense, of its books, records and documents relating to this Agreement at all reasonable times.

11. CONSULTANT WARRANTIES

Owner makes no warranties, representations, or agreements, either express or implied, beyond such as are explicitly stated herein.

12. OWNER REPRESENTATIVE

Except when approval or other action is required to be given or taken by the Board of Directors of Owner, the Owner shall designate which officer or officers shall represent and act for Owner.

13. TERMINATION OF THIS AGREEMENT

A. Severance Compensation.

If Owner terminates the Agreement without cause prior to the expiration of the Term or if Consultant terminates this Agreement during the Term for cause as provided in Section 13 B2. below, severance compensation in an amount equal to the monthly Compensation times the number of months remaining in the Term shall be paid to Consultant upon the effective date of termination. Any such termination shall be effective upon the expiration of the ninety (90) day period following the giving of the notice or on such later date as may be specified in the notice.

B. Termination For Cause.

1. This Agreement may be terminated by Owner for cause for the following reasons:

(a) In the event of material breach by Consultant of a material term hereof, which breach is not cured within thirty (30) days after notice by Owner and such failure is the result of Consultant's willful misconduct, gross negligence or unlawful act.

(b) In the event that a petition in bankruptcy is filed by Consultant or its permitted assignee, or in the event Consultant or its permitted assignee makes an assignment for the benefit of creditors or takes advantage of an insolvency act, by notice to Consultant or assignee, or if manager becomes insolvent.

(c) In the event that (i) Consultant's or any permitted assignee's corporate existence is dissolved and the duties under this Agreement are not assumed by Consultant or an affiliate of Consultant, (ii) Consultant or any permitted assignee ceases to do business for any reason, by notice to Consultant or such assignee and the duties under this Agreement are not assumed by Consultant or Consultant's Affiliate.

(d) In the event Owner reasonably determines the intended project is not economically or commercially viable and Owner abandons construction activities for a two year time period.

2. This Agreement may be terminated by Consultant in the event that Consultant fails to receive reimbursement of reimbursable expenses or any compensation due Consultant pursuant to the terms of this Agreement or any other compensation due

Consultant, and such failure continues for a period of sixty
(60) days after Consultant's written notice thereof to Owner, however, that this Agreement shall not be so terminated if Owner pays Consultant all such expenses and compensation then due and payable on or before the expiration of said sixty (60) day period.

3. No termination of this Agreement shall affect any obligation owning by either party hereto to the other which accrued prior to the effective date of such termination.

C. Covenants Surviving Termination.

The termination of this Agreement shall not terminate the right of Owner and Consultant to indemnification relating to events occurring during the term of this Agreement under Section 7.

If to OWNER:                 The Emmaus Calling, Inc.
                             7778 Willow Winds Court, Suite 135
                             Dallas, Texas  75230
Attention:                   Ms. Robbie Wittner


If to CONSULTANT:            Capital Senior Management 1, Inc.
                             14160 Dallas Parkway, Suite 300
                             Dallas, Texas  75240
Attention:                   Keith N. Johannessen, President

The address to which mailings may be made may be changed from time to time by notice mailed as described above. Any notice given by mail shall be deemed given on the day after that on which it is deposited in the United States Mail as provided above.

15. ARBITRATION

In the event of any dispute, claim or controversy of any kind between the parties, concerning this Agreement or the termination of this Agreement, the matter shall be submitted to arbitration in accordance with rules of the American Arbitration Association, except that the selection of the Arbitrator shall be done Selected Arbitrator. The parties jointly shall agree on an arbitrator. If the parties are unable to agree, in good faith within a reasonable time, on the selection of an arbitrator, either party may request appoint of an arbitrator chosen by

the American Arbitration Association who shall be the Selected Arbitrator. Such arbitrator shall be limited in his decision to a choice between the final position as requested by each party. Said arbitration shall be held in Dallas/Fort Worth, Texas or such other place as is mutually agreeable. The arbitration decision shall be final and binding on both parties unless the arbitration is fraudulent or so grossly erroneous as to necessarily imply bad faith. Costs of arbitration are to be shared by both parties equally, provided that the arbitrator may choose to award the costs of arbitration against the losing party if the arbitrator determined that the final position urged by the losing party was not reasonable.

16. APPLICABLE LAW

This Agreement, its interpretation and all work performed thereunder, shall be governed by the laws of the State of Texas.

17. BINDING ON SUCCESSORS

All of the terms, provisions and conditions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns and legal representatives.

18. CONFIDENTIALITY

The Parties recognize and acknowledge that during entry upon the Facility or performance of services contemplated hereby Contractor/Owner, as the case may be, may come into possession of information which Owner/Contractor deems is secret, peculiar and proprietary in nature and that the courtesy provided to Contractor as to any entry upon the Facility, employment, ability to perform work, or the ability to perform services for Owner and acceptance by Contractor of such employment is subject to a mutual agreement between the Parties to keep certain items and information confidential and not to divulge such to others. Therefore, the Parties agree any and all information provided by Owner to Contractor, and any information Contractor may come into possession of as a result of their observations, work, discussions, or provision of goods or services upon the Facility or to or for the benefit of Owner of whatever nature ("Owner Information") is intended to be protected hereby. Similarly, any and all information provided by Contractor to Owner concerning Contractor's internal operations, management of Contractor's facilities, or management by Contractor of third party facilities of whatever nature ("Contractor Information") is intended to be protected hereby. (Both Owner Information and Contractor Information may hereafter be referred to collectively as the "Information"). The Information shall include but not be limited to facilities, equipment, sources of information, ideas, plans, proposals, inventions, formulae, client lists, cost and pricing data, supplier lists, purchaser lists, business/marketing/financial plans and summaries, and any and all other information which may be protected hereby, and the Parties agree such Information is the sole and absolute property of Owner/Contractor as the case may be. For the purposes of this Agreement, the Information shall be considered proprietary in nature, Trade Secrets, and/or have a competitive value such that it may be protected. Accordingly, Contractor shall not use, disclose, distribute, copy or release the Owner Information, in whole or in part, to any

person, company, firm, or other entity without the prior written consent of Owner. Similarly, Owner shall not use, disclose, distribute, copy or release the Contractor Information, in whole or in part, to any person, company, firm, or other entity without the prior written consent of Contractor. This section shall not apply to information which: (a) is or becomes public knowledge through a source other than a party hereto or a third party similarly placed under an obligation to keep such confidential, and such party hereto is a recipient of such knowledge through no fault of their own; (b) is or becomes lawfully available, through no fault, request, or otherwise involving in any way a party hereto, from a source other than a disclosing party hereto or a person or entity similarly placed under an obligation of confidentiality; (c) is disclosed by a party hereto with the other party's prior written approval;
(d) was in the party's possession or was known to such party, without an obligation to keep it confidential, before such information was disclosed to such party by the other party hereto; (e) is independently developed in total by or for a party hereto without in any way reference to and separate and apart from any information transmitted between the parties;
(f) is lawfully required to be given to a court of competent jurisdiction or governmental agency, however this exception shall apply only to the extent limited information must by law be disclosed with no other alterative being available.

The Parties agree that any breach or threatened breach of this Agreement, particularly with regard to this Article involving confidentiality and non-competition by a party hereto may cause the other party(ies) irreparable harm for which monetary damages may be inadequate. Each party agrees, therefore, that any other party shall be entitled to an injunction to restrain the breaching party from the breach or threatened breach of this Agreement or any part thereof. Nothing herein shall be construed as preventing a party hereto from pursuing any remedy at law or in equity for any breach or threatened breach of this Agreement or any portion thereof. This section shall survive the termination of this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their duly authorized officers as of the day and year first above written.

OWNER:                                     CONSULTANT

THE EMMAUS CALLING, INC.                   CAPITAL SENIOR MANAGEMENT 1, INC.



BY: /s/ ROBBIE WITTNER                     BY: /s/ DAVID R. BRICKMAN
   -----------------------------              ---------------------------------
ITS:  President                            ITS: Vice President
    ----------------------------               --------------------------------

EXHIBIT 10.17

M A N A G E M E N T A G R E E M E N T

THIS AGREEMENT, made in Dallas, Texas, as of the 1st day of February, 1995, by and between:

Capital Senior Living Communities, L.P., a partnership organized and existing under the laws of the State of Delaware, hereinafter referred to as "Owner" and Capital Senior Living, Inc., a corporation organized and existing under the laws of the State of Texas, hereinafter referred to as "Manager,"

WITNESSETH

WHEREAS, the Owner now owns a business commonly known as Canton Regency Retirement Community, in the City of Canton, State of Ohio, hereinafter called the "Home."

WHEREAS, the Owner desires to employ the Manager to act as general manager of the Home, and the Manager is willing to accept such employment subject to the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the foregoing and of the terms and conditions herein set forth, the parties hereto agree as follows:

EMPLOYMENT OF MANAGER

The Owner hereby appoints the Manager, and the Manager hereby accepts the appointment as exclusive Manager of the Home.

TERM

The services of Manager shall commence on February 1, 1995, and shall terminate nine (9) years from the date thereof, unless sooner terminated as herein provided.

MANAGER'S DUTIES

During the term of this Agreement, which period is hereinafter referred to as the "Operating Period," the Manager shall use its best efforts in the management and operation of the business, services and sales of the Home so that the Home and its services will be operated and maintained with the maximum of benefit and in a first quality manner so that the Home shall remain a first quality convalescent center. In pursuance of the foregoing, the Manager shall perform the following services:

1. Use its reasonable efforts and due diligence in the renting of all of the rooms and facilities to desirable tenants.

2. Employ, at the expense of the facility, such resident administrator, assistant administrator, employees, agents, clerks at the Home as may be required to continue the standard and quality of management and operation at a level not lower than that heretofore maintained. The Manager shall not be liable to the Owner or others for any act or omission on the part of such employees unless the Manager has failed to use reasonable diligence in their hiring, discharge or supervision so as to maintain a staff of qualified, competent, and trustworthy employees. The Manager will negotiate on the Owner's behalf with any labor union lawfully entitled to represent such employees, but no collective bargaining agreement or labor contract resulting from such negotiations shall be valid unless executed or approved by the Owner. The Manager will not at any time enter into any agreement with any employee for a period in excess of one (1) year or for compensation in excess of $50,000.00 per year without the consent in writing of the Owner. The Manager shall procure and maintain adequate workman's compensation insurance in the name of and at the expense of the facility covering all the facility employees.

3. Keep the facility and all furniture, furnishings and other equipment therein and appurtenant thereto, in good repair.

4. Arrange for necessary alterations, decorations, replacements, improvements, or changes in the Home and in the furniture, furnishings, and other equipment therein and develop policies with respect to the installation of new features to the extent that the financial obligations and resources of the facility permit. All capital expenditures, other than minor repair and maintenance, must be submitted to Owner for approval prior to expenditure.

5. Develop policies with respect to publicity for the purpose of creating the greatest possible net income for the Home and place and supervise all advertising and promotional material.

6. Arrange at the facility's expense for compliance with all statutes, ordinances, laws, rules, regulations, orders and determinations affecting or issued in connection with the Home by any governmental authority having jurisdiction thereof.

7. Cause the Home to comply with all the terms, conditions and obligations contained in any mortgage, lease, or other agreement executed by the Owner which relates to the facility. The Owner shall promptly notify the Manager of any such mortgage, lease or other agreement.

8. Deposit in a banking institution or institutions selected by the Manager, and in accounts in the facility's name as agent for the Owner, all monies furnished by the Owner

as working funds and all monies received by the Manager for or on behalf of the Owner. The Manager shall pay on behalf of the Owner all accounts incurred after the date hereof as required for the operations of the Home, all assessments and charges of every kind imposed by any governmental authority having jurisdiction and interest and penalties thereon, license fees, permit fees and insurance appraisal fees; fines, penalties, and court disbursements incurred in connection with the operation of the Home; premiums on policies of insurance; all disbursements authorized by this Agreement; and any other charge, item of expense, or other item which the Owner, in writing, authorizes as an expense.

9. Receive, consider and handle the complaints of all tenants, guests or users of any of the services or facilities of the Home and provide copies upon written request to the Owner.

10. Institute in its own name or in the name of the Owner, at the expense of the facility and with the approval of the Owner, any necessary legal actions or proceedings.

11. Place at the reasonable disposal of the Owner its engineering, maintenance, decorating, general purchasing, accounting, cost control, taxation, insurance, publicity, advertising, labor relations, safety and supervisory knowledge and abilities.

EXPENDITURES BY MANAGER

The Manager shall have power and authority to make all contracts and disbursements necessary to carry out the duties conferred and imposed upon it by this Agreement, including, but not limited to, the authority to pay for all expenses of leasing, collection of rents, management, operations, maintenance and insurance in accordance with a budget approved by the Owner.

ACCOUNTING SERVICES

The Manager shall establish and supervise all bookkeeping, accounting and clerical services, including the maintenance of payroll records, incident to the efficient operation and maintenance of the Home.

The Manager shall maintain, for the Owner, proper and suitable records and books of account in which there shall be properly recorded all receipts and disbursements connected with the management and operation of the Home. The Manager shall prepare and file (or cause to be prepared and filed) all necessary reports with respect to withholding taxes, social security taxes, unemployment insurance, disability insurance, the Fair Labor Standards Act, and all other statements and reports pertaining to the labor employed on the facility payroll in or about the Home. All books of account shall at all times be open to the inspection and audit of any officer of the Owner or any duly accredited and authorized representative of the Owner. All books, records, bills, receipts, bank books, check books, check vouchers, correspondence, lists, files, index cards, and books of account relating to

leases, tenants and prospective tenants and employees of the Home for the term of this Agreement and any renewal terms hereof and any and all records existing as of the commencement of this Agreement and other data and records pertaining to or in any manner relating to the management and operation of the Home shall at all times be safely kept and preserved and shall be the property of the Owner, and upon the termination of this Agreement shall be retained by the Owner.

Financial statements (including balance sheet, operating statement and statement of cash flow) shall be provided to Owner within twenty-one (21) days of month end.

All costs, penalties or expenses incurred by Owner by reason of Manager's failure to comply with the terms of this section shall be borne completely by Manager, and Manager shall hold Owner harmless for all such costs, penalties and other expenses. Such costs, penalties or expenses shall not include legal and lawful assessments owed to any governmental entity or regulatory agency including overpayment by Medicaid or Medicare or assessments to any governmental agency which were not paid by reason of a misinterpretation or contested interpretation of any law or regulation. The Manager shall be held responsible for any penalty assessed by reason of late payment unless the Owner has concurred with the interpretation and actions of the Manager in connection with the said payment. Said costs, penalties or expenses shall not include any such expenses incurred by reason of Owner's negligence or delay of payment occasioned by Owner.

ACCESS TO MANAGEMENT RECORDS

The Manager shall make available to all applicable governmental authorities having jurisdiction or regulatory authority over or with respect to the Home, including the Comptroller General, Secretary of Health and Human Services or their designees, such contracts, books, documents and records necessary to verify the costs of service contracts of $10,000.00 or more in a twelve (12) month period as reported on Medicare cost reports.

The Manager shall preserve and maintain such contracts, books, documents, and records during the term of this Agreement and any renewal term, until the expiration of four (4) years after the services are furnished.

DEPOSIT OF COLLECTIONS

All monies collected by the Manager out of and from the operation of the facility shall be deposited in appropriately designated and adequately identified accounts in the name of the facility of Owner in one or more banks. Out of such accounts, the Manager shall pay for all obligations and expenditures necessary and properly incurred for and on account of the Owner in the management and operation of the facility, including but not limited to compensation of the Manager, insurance premiums, betterments, and improvements. The Manager may keep on hand for the account of the Owner such a fund

as may be necessary, in the joint opinion of the Manager and Owner, to provide for working cash for the operation of the facility. The Manager shall render to the Owner or persons designated by the Owner any statements reasonably required by the Owner.

DISBURSEMENT OF CASH FLOW

Cash flow, as calculated, shall be distributed to the Owner within twenty-one (21) days following each month end. Cash flow to be distributed shall be calculated at the close of each monthly accounting period, as follows:

Cash on hand and in bank - end of month Current accounts receivable to be collected (within 30 days) Less - current payables (to be paid within 30 days)

Less - reserve for working capital (if any) Cash for distribution to Owner

MANAGER'S COMPENSATION

As compensation for the services to be rendered by the Manager during the Operating Period, the Owner will pay the sum of five percent (5%) of gross rental revenue.

As compensation for all accounting and consulting services provided by the Manager, a charge of one dollar ($1.00) per resident day in the nursing center and per occupied apartment day for the independent living facility shall be paid. This amount shall be charged and paid in the following month.

The Owner will reimburse the Manager on a monthly basis for the actual out-of-pocket costs of direct telephone and travel expenses incurred on Partnership business, direct out-of-pocket fees, expenses and charges paid by it to third parties for rendering legal, auditing, accounting, bookkeeping, computer, printing and public relations services, expenses of preparing and distributing reports to Limited Partners and BUC Holders, an allocable portion of the salaries and fringe benefits of employees of the Manager who are not partners of RLC, insurance premiums including premiums for liability insurance which will cover the Owner, the cost of compliance with all state and federal regulatory requirements and stock exchange or NASDAQ listing fees and charges, and other payments to third parties for services rendered to the Partnership. Any reimbursements pursuant to this provision shall not be in excess of the lower of actual costs or the amount the Partnership would be required to pay independent third parties for comparable services in the same geographic location.

INSURANCE

The Manager shall advise the Owner in obtaining of insurance on the Home and all furniture, furnishings, and equipment therein against all risks usually covered in the care of similar properties, including, but without limitation, fire, plate glass, repairs and omissions, liability and fidelity insurance, Federal Civil Rights Liability insurance and all other usual insurance (which shall also cover any liability of the Manager). It shall be the joint responsibility of the Manger and the Owner to determine the limits and extent of insurance coverage and to mutually agree upon an agency or company and to provide copies of said insurance policies to individuals sent. It shall be the Manager's duty to inform the Owner no less than thirty (30) days prior to the expiration of any such insurance policy that such about to expire and to advise the Owner in obtaining a renewal of said policy or seeking coverage from a different insurance carrier. All policies of insurance shall name the Owner, the Manager, and such other parties as may be required by the provisions of any mortgage as the insured thereunder. All insurance shall be obtained at the expense of the facility.

TERMINATION AND DAMAGES

This Agreement may be terminated at any time by mutual consent of the parties if evidenced in writing. In addition, the Owner may terminate this Agreement without penalty on sixty (60) days notice by the vote of the Majority in Interest of the Limited Partners and the Buc Holders as defined in the Amended and Restated Agreement Of Limited Partnership Of Owner. In the event of Owner's termination of Manager pursuant to this paragraph, Owner shall be liable to pay the Manager the accrued amounts due Manager pursuant to this Agreement up to the day of termination, less the damages, if any, caused by any such breach or violation of this Agreement by Manager. Therefore, the parties agree that the liability of Manager for any breach or violation of this Agreement or duties hereunder shall be limited to the actual management fee received by Manager under this Agreement. Each party shall have all rights and remedies available to them under applicable laws.

ATTORNEY FEES

In the event that it is necessary for either the Owner or the Manager to maintain any lawsuit, action or proceeding upon this Agreement, or if any appeal is taken therefrom, in connection with any controversy arising out of this Agreement, the prevailing party shall be entitled to recover, in addition to such other sums of money or performance due hereunder, such sums as the Court may adjudge reasonable as attorney's fees in said suit, action, proceeding or appeal.

CONTROLLING LAW

This Agreement shall be enforced and interpreted according to the laws of the State of Indiana. If any provision of this Agreement is invalid, illegal, or incapable of being enforced, other conditions of this Agreement shall nevertheless remain in full force and effect with no provisions being deemed dependent on any other provision unless so stated herein.

EXCLUSIVE APPLICATION

Nothing in this Agreement is intended or shall be construed to confer upon or to give any person, firm, or corporation other than the parties hereto, any right, remedy or claim under or by reason of this Agreement. All terms and conditions in this Agreement shall be for the sole and exclusive benefit of the parties hereto.

NONASSIGNABILITY

This Agreement is not assignable by the Manager without the prior written consent of the Owner.

NOTICE

All Notices required or permitted hereunder shall be addressed to the respective parties at the address stated herein, unless either party notifies the other party in writing of a different address. Notice shall be made by certified mail, return receipt requested, and shall be deemed to have been received by the addressee or an agent of the addressee as evidenced by the return receipt. The addresses for notification may be changed upon written notice.

BINDING EFFECT

This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, except as herein before limited.

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

OWNER:

CAPITAL SENIOR LIVING COMMUNITIES, L.P.

BY: RETIREMENT LIVING COMMUNITIES, L.P.,
Its General Partner

BY: CAPITAL REALTY GROUP SENIOR HOUSING, INC.,
Its General Partner

         BY: /s/ JEFFREY L. BECK
            ------------------------------------------------------
MANAGER:

CAPITAL SENIOR LIVING, INC.

BY: /s/ JAMES STROUD, COO
   ------------------------------------

EXHIBIT 10.18

MANAGEMENT AGREEMENT

THIS AGREEMENT, made in Dallas, Texas, as of the 1st day of February, 1995, by and between:

Capital Senior Living Communities, L.P., a partnership organized and existing under the laws of the State of Delaware, hereinafter referred to as 'Owner' and Capital Senior Living, Inc., a corporation organized and existing under the laws of the State of Texas, hereinafter referred to as "Manager,"

WITNESSETH

WHEREAS, the Owner now owns a business commonly known as Cottonwood Village, in the City of Cottonwood, State of Arizona, hereinafter called the "Home."

WHEREAS, the Owner desires to employ the Manager to act as general manager of the Home, and the Manager is willing to accept such employment subject to the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the foregoing and of the terms and conditions herein set forth, the parties hereto agree as follows:

EMPLOYMENT OF MANAGER

The Owner hereby appoints the Manager, and the Manager hereby accepts the appointment as exclusive Manager of the Home.

TERM

The services of Manager shall commence on February 1, 1995 and shall terminate nine (9) years from the date thereto, unless sooner terminated as herein provided.

MANAGER'S DUTIES

During the term of this Agreement which period is hereinafter referred to as the "Operating Period," the Manager shall use its best efforts in the management and operation of the business, services and sales of the Home so that the Home and its services will be operated and maintained with the maximum of benefit and in a first quality manner so that the Home shall remain a first quality convalescent center. In pursuance of the foregoing, the Manager shall perform the following services:

1. Use its reasonable efforts and due diligence in the renting of all of the rooms and facilities to desirable tenants.

2. Employ, at the expense of the facility, such resident administrator, assistant administrator, employees, agents, clerks at the Home as may be required to continue the standard and quality of management and operation at a level not lower than that heretofore maintained. The Manager shall not be liable to the Owner or others for any act or omission on the part of such employees unless the Manager has failed to use reasonable diligence in their hiring, discharge or supervision so as to maintain a staff of qualified, competent, and trustworthy employees. The Manager will negotiate on the Owner's behalf with any labor union lawfully entitled to represent such employees, but no collection bargaining agreement or labor contract resulting from such negotiations shall be valid unless executed or approved by the Owner. The Manager will not at any time enter into any agreement with any employee for a period in excess of one (1) year or for compensation in excess of $50,000.00 per year without the consent in writing of the Owner. The Manager shall procure and maintain adequate workman's compensation insurance in the name of and at the expense of the facility covering all the facility employees.

3. Keep the facility and all furniture, furnishings and other equipment therein, and appurtenant thereto, in good repair.

4. Arrange for necessary alterations, decorations, replacements, improvements, or changes in the Home and in the furniture, furnishings, and other equipment therein and develop policies with respect to the installation of new features to the extent that the financial obligations and resources of the facility permit. All capital expenditures, other than minor repair and maintenance, must be submitted to Owner for approval prior to expenditure.

5. Develop policies with respect to publicity for the purpose of creating the greatest possible net income for the Home and place and supervise all advertising and promotional material.

6. Arrange at the facility's expense for compliance with all statutes, or ordinances, laws, rules, regulations, orders and determinations affecting or issued in connection with the Home by any governmental authority having jurisdiction thereof.

7. Cause the Home to comply with all the terms, conditions and obligations contained in any mortgage, lease, or other agreement executed by the Owner which relates to the facility. The Owner shall promptly notify the Manager of any such mortgage, lease or other agreement.

8. Deposit in a banking institution or institutions selected by the Manager, and in accounts in the facilities name as agent for the Owner, all monies furnished by the Owner as working funds and all monies received by the Manager for or on behalf of the Owner. The Manager shall pay on behalf of the Owner all accounts incurred after the date hereof as required for the operations of the Home, all assessments and charges of every kind imposed by any

governmental authority having jurisdiction and interest and penalties thereon, license fees, permit fees and insurance appraisal fees; fines, penalties, and court disbursements incurred in connection with the operation of the Home; premium on policies of insurance; all disbursements authorized by this Agreement; and any other charge, item of expense, or other item which the Owner, in writing, authorizes as an expense.

9. Receive, consider and handle the complaints of all tenants, guests or users of any of the services or facilities of the Home and provide copies upon written request to the Owner.

10. Institute in its own name or in the name of the Owner,,at the expense of the facility and with the approval of the Owner, any necessary legal actions or proceedings.

11. Place at the reasonable disposal of the Owner its engineering, maintenance, decorating, general purchasing, accounting, cost control taxation, insurance, publicity, advertising, labor relations, safety and supervisory knowledge and abilities.

EXPENDITURES BY MANAGER

The Manager shall have power and authority to make all contracts and disbursements necessary to carry out the duties conferred and imposed upon it by this Agreement, including, but not limited to, the authority to pay for all expenses of leasing, collection of rents, management, operations, maintenance and insurance in accordance with a budget approved by the Owner.

ACCOUNTING SERVICES

The Manager shall establish and supervise all bookkeeping, accounting and clerical services, including the maintenance of payroll records, incident to the efficient operation and maintenance of the Home.

The Manager shall maintain, for the Owner, proper and suitable records and books of account in which there shall be properly recorded all receipts and disbursements connected with the management and operation of the Home. The Manager shall prepare and file (or cause to be prepared and filed) all necessary reports with respect to withholding taxes, social security taxes, unemployment insurance, disability insurance, the Fair Labor Standards Act, and all other statements and reports pertaining to the labor employed on the facility payroll in or about the Home. All books of account shall at all times be open to the inspection and audit of any officer of the Owner or any duly accredited and authorized representative of the Owner. All books, records, bills, receipts, bank books, check books, check vouchers, correspondence, lists, files, index cards, and books of account relating to leases, tenants and prospective tenants and employees of the Home for the term of this Agreement and any renewal terms hereof and any and all records pertaining to or in any manner relating to the management and operation of the Home shall at all times be safely kept and preserved and shall be the property of the Owner, and upon the termination of this Agreement shall be retained by the Owner.

Financial statements (including balance sheet, operating statement and statement of cash flow) shall be provided to Owner within twenty-one (21) days of month end.

All costs, penalties or expenses incurred by Owner by reason of Manager's failure to comply with the terms of this section shall be borne completely by Manager, and Manager shall hold Owner harmless for all such costs, penalties and other expenses. Such costs, penalties or expenses shall not include legal and lawful assessments owed to any governmental entity or regulatory agency including overpayment by Medicaid or Medicare or assessments to any governmental agency which were not paid by reason of a misinterpretation or contested interpretation of any law or regulation. The Manager shall be held responsible for any penalty assessed by reason of late payment unless the Owner has concurred with the interpretation and actions of the Manager in connection with the said payment. Said costs, penalties or expenses shall not include any such expenses incurred by reason of Owner's negligence or delay of payment occasioned by Owner.

ACCESS TO MANAGEMENT RECORDS

The Manager shall make available to all applicable governmental authorities having jurisdiction or regulatory authority over or with respect to the Home, including the Comptroller General, Secretary of Health and Human Services or their designees, such contracts, books, documents and records necessary to verify the costs of service contracts of S10,000.00 or more in a twelve (12) month period as reported on Medicare cost reports.

The Manager shall preserve and maintain such contracts, books, documents, and records during the term of this Agreement and any renewal term, until the expiration of four (4) years after the services are furnished.

DEPOSIT OF COLLECTIONS

All monies collected by the Manager out of and from the operation of the facility shall be deposited in appropriately designated and adequately identified accounts in the name of the facility of Owner in one or more banks. Out of such accounts, the Manager shall pay for all obligations and expenditures necessary and properly incurred for and on account of the Owner in the management and operation of the facility, including but not limited to compensation of the Manager, insurance premiums, betterments, and improvements. The Manager may keep on hand for the account of the Owner such a fund as may be necessary, in the joint opinion of the Manager and Owner, to provide for working cash for the operation of the facility. The Manager shall render to the Owner or persons designated by the Owner any statements reasonably required by the Owner.

DISBURSEMENT OF CASH FLOW

Cash flow, as calculated, shall be distributed to the Owner within twenty-one (21) days following each month end. Cash flow to be distributed shall be calculated at the close of each monthly accounting period, as follows:

Cash on hand and in bank - end of month Current accounts receivable to be collected (within 30 days) Less - current payables (to be paid within 30 days)

Less - reserve for working capital (if any) Cash for distribution to Owner

MANAGER'S COMPENSATION

As compensation for the services to be rendered by the Manager during the Operating Period, the Owner will pay the sum of five percent (5%) of gross rental revenue.

As compensation for all accounting and consulting services provided by the Manager, charge of one dollar ($1.00) per resident day in the nursing center and per occupied apartment day for the independent living facility shall be paid. This amount shall be charged and paid in the following month.

The Owner will reimburse the Manager on a monthly basis for the actual out-of-pocket costs of direct telephone and travel expenses incurred on Partnership business, direct out-of-pocket fees, expenses and charges paid by it to third parties for rendering legal auditing, accounting, bookkeeping, computer, printing and public relations services, expenses of preparing and distributing reports to Limited Partners and BUC Holders, an allocable portion of the salaries and fringe benefits of employees of the Manager who are not partners of RLC, insurance premium, including premiums for liability insurance which will cover the Owner, the cost of compliance with all state and federal regulatory requirements and stock exchange or NASDAQ listing fees and charges, and other payments to third parties for services rendered to the Partnership. Any reimbursements pursuant to this provision shall not be in excess of the lower of actual costs or the amount the Partnership would be required to pay independent third parties for comparable services in the same geographic location.

INSURANCE

The Manager shall advise the Owner in obtaining of insurance on the Home and all furniture, furnishings, and equipment therein against all risks usually covered in the care of similar properties, including, but without limitation, fire, plate glass, repairs and omissions, liability and fidelity insurance, Federal Civil Rights Liability insurance and all other usual insurance (which shall also cover any liability of the Manager). It shall be the joint responsibility of the Manager and the Owner to determine the limits and extent of insurance coverage and to mutually agree upon an agency or company and to provide copies of said insurance policies to individuals sent. It shall be the Manager's duty to inform the Owner no less than thirty (30) days prior to the expiration of any such insurance policy that such about to expire and to advise the Owner in obtaining a renewal of said policy or seeking coverage from a different insurance carrier. All policies of insurance shall name the Owner, the Manager, and such other parties as may be required by the provisions of any mortgage as the insured thereunder. All insurance shall be obtained at the expense of the facility.

TERMINATION AND DAMAGES

This Agreement may be terminated at any time by mutual consent of the parties if evidenced in writing. In addition, the Owner may terminate this Agreement without penalty on sixty (60) days notice by the vote of the Majority in Interest of the Limited Partners, and the BUC Holders as defined in the Amended and Restated Agreement Of Limited Partnership Of Owner. In the event of Owner's termination of Manager pursuant to this paragraph, Owner shall be liable to pay the Manager the accrued amounts due Manager pursuant to this Agreement up to the day of termination, less the damages, if any, caused by any such breach or violation of this Agreement by Manager. Therefore, the parties agree that the liability of Manager for any breach or violation of this Agreement or duties hereunder shall be limited to the actual management fee received by Manager under this Agreement. Each party shall have all rights and remedies available to them under applicable law.

ATTORNEY FEES

In the event that it is necessary for either the Owner or the Manager to maintain any lawsuit, action or proceeding upon this Agreement or if any appeal is taken therefrom, in connection with any controversy arising out of this Agreement, the prevailing party shall be entitled to recover, in addition to such other sums of money or performance due hereunder, such sums as the Court may adjudge reasonable as attorney's fees in said suit, action, proceeding or appeal.

CONTROLLING LAW

This Agreement shall be enforced and interpreted according to the laws of the State of Indiana. If any provision of this Agreement is invalid, illegal or incapable of being enforced, other conditions of this Agreement shall nevertheless remain in full force and effect with no provisions being deemed dependent on any other provision unless so stated herein.

EXCLUSIVE APPLICATION

Nothing in this Agreement is intended or shall be construed to confer upon or to give any person, firm, or corporation other than the parties hereto, any right, remedy or claim under or by reason of this Agreement. All terms and conditions in this Agreement shall be for the sole and exclusive benefit of the parties hereto.

NONASSIGNABILITY

This Agreement is not assignable by the Manager without the prior written consent of the Owner.

NOTICE

All Notices required or permitted hereunder shall be addressed to the respective parties at the address stated herein, unless either party notifies the other party in writing of a different address. Notice shall be made by certified mail, return receipt requested, and shall be deemed to have been received by the addressee or an agent of the addressee as evidenced by the return receipt. The addresses for notification may be changed upon written notice.

BINDING EFFECT

This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, except as herein before limited.

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

OWNER:

CAPITAL SENIOR LIVING COMMUNITIES, L.P.

BY: RETIREMENT LIVING COMMUNITIES, L.P.,
Its General Partner

BY: CAPITAL REALTY GROUP SENIOR HOUSING, INC.,
Its General Partner

BY: /s/ Jeffrey L. Beck
   -------------------------------------

MANAGER:

CAPITAL SENIOR LIVING, INC.

BY: /s/ James Stroud
   ------------------------------------------------------

EXHIBIT 10.19

MANAGEMENT AGREEMENT

THIS AGREEMENT, made in Dallas, Texas, as of the 1st day of February, 1995, by and between:

Capital Senior Living Communities, L.P., a partnership organized and existing under the laws of the State of Delaware, hereinafter referred to as 'Owner' and Capital Senior Living, Inc., a corporation organized and existing under the laws of the State of Texas, hereinafter referred to as "Manager,"

WITNESSETH

WHEREAS, the Owner now owns a business commonly known as The Harrison At Eagle Valley, in the City of Indianapolis, State of Indiana, hereinafter called the "Home."

WHEREAS, the Owner desires to employ the Manager to act as general manager of the Home, and the Manager is willing to accept such employment subject to the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the foregoing and of the terms and conditions herein set forth, the parties hereto agree as follows:

EMPLOYMENT OF MANAGER

The Owner hereby appoints the Manager, and the Manager hereby accepts the appointment as exclusive Manager of the Home.

TERM

The services of Manager shall commence on February 1, 1995 and shall terminate nine (9) years from the date thereto, unless sooner terminated as herein provided.

MANAGER'S DUTIES

During the term of this Agreement which period is hereinafter referred to as the "Operating Period," the Manager shall use its best efforts in the management and operation of the business, services and sales of the Home so that the Home and its services will be operated and maintained with the maximum of benefit and in a first quality manner so that the Home shall remain a first quality convalescent center. In pursuance of the foregoing, the Manager shall perform the following services:

1. Use its reasonable efforts and due diligence in the renting of all of the rooms and facilities to desirable tenants.

2. Employ, at the expense of the facility, such resident administrator, assistant administrator, employees, agents, clerks at the Home as may be required to continue the standard and quality of management and operation at a level not lower than that heretofore maintained. The Manager shall not be liable to the Owner or others for any act or omission on the part of such employees unless the Manager has failed to use reasonable diligence in their hiring, discharge or supervision so as to maintain a staff of qualified, competent, and trustworthy employees. The Manager will negotiate on the Owner's behalf with any labor union lawfully entitled to represent such employees, but no collection bargaining agreement or labor contract resulting from such negotiations shall be valid unless executed or approved by the Owner. The Manager will not at any time enter into any agreement with any employee for a period in excess of one (1) year or for compensation in excess of $50,000.00 per year without the consent in writing of the Owner. The Manager shall procure and maintain adequate workman's compensation insurance in the name of and at the expense of the facility covering all the facility employees.

3. Keep the facility and all furniture, furnishings and other equipment therein, and appurtenant thereto, in good repair.

4. Arrange for necessary alterations, decorations, replacements, improvements, or changes in the Home and in the furniture, furnishings, and other equipment therein and develop policies with respect to the installation of new features to the extent that the financial obligations and resources of the facility permit. All capital expenditures, other than minor repair and maintenance, must be submitted to Owner for approval prior to expenditure.

5. Develop policies with respect to publicity for the purpose of creating the greatest possible net income for the Home and place and supervise all advertising and promotional material.

6. Arrange at the facility's expense for compliance with all statutes, or ordinances, laws, rules, regulations, orders and determinations affecting or issued in connection with the Home by any governmental authority having jurisdiction thereof.

7. Cause the Home to comply with all the terms, conditions and obligations contained in any mortgage, lease, or other agreement executed by the Owner which relates to the facility. The Owner shall promptly notify the Manager of any such mortgage, lease or other agreement.

8. Deposit in a banking institution or institutions selected by the Manager, and in accounts in the facilities name as agent for the Owner, all monies furnished by the Owner as working funds and all monies received by the Manager for or on behalf of the Owner. The Manager shall pay on behalf of the Owner all accounts incurred after the date hereof as required for the operations of the Home, all assessments and charges of every kind imposed by any

governmental authority having jurisdiction and interest and penalties thereon, license fees, permit fees and insurance appraisal fees; fines, penalties, and court disbursements incurred in connection with the operation of the Home; premium on policies of insurance; all disbursements authorized by this Agreement; and any other charge, item of expense, or other item which the Owner, in writing, authorizes as an expense.

9. Receive, consider and handle the complaints of all tenants, guests or users of any of the services or facilities of the Home and provide copies upon written request to the Owner.

10. Institute in its own name or in the name of the Owner,,at the expense of the facility and with the approval of the Owner, any necessary legal actions or proceedings.

11. Place at the reasonable disposal of the Owner its engineering, maintenance, decorating, general purchasing, accounting, cost control taxation, insurance, publicity, advertising, labor relations, safety and supervisory knowledge and abilities.

EXPENDITURES BY MANAGER

The Manager shall have power and authority to make all contracts and disbursements necessary to carry out the duties conferred and imposed upon it by this Agreement, including, but not limited to, the authority to pay for all expenses of leasing, collection of rents, management, operations, maintenance and insurance in accordance with a budget approved by the Owner.

ACCOUNTING SERVICES

The Manager shall establish and supervise all bookkeeping, accounting and clerical services, including the maintenance of payroll records, incident to the efficient operation and maintenance of the Home.

The Manager shall maintain, for the Owner, proper and suitable records and books of account in which there shall be properly recorded all receipts and disbursements connected with the management and operation of the Home. The Manager shall prepare and file (or cause to be prepared and filed) all necessary reports with respect to withholding taxes, social security taxes, unemployment insurance, disability insurance, the Fair Labor Standards Act, and all other statements and reports pertaining to the labor employed on the facility payroll in or about the Home. All books of account shall at all times be open to the inspection and audit of any officer of the Owner or any duly accredited and authorized representative of the Owner. All books, records, bills, receipts, bank books, check books, check vouchers, correspondence, lists, files, index cards, and books of account relating to leases, tenants and prospective tenants and employees of the Home for the term of this Agreement and any renewal terms hereof and any and all records pertaining to or in any manner relating to the management and operation of the Home shall at all times be safely kept and preserved and shall be the property of the Owner, and upon the termination of this Agreement shall be retained by the Owner.

Financial statements (including balance sheet, operating statement and statement of cash flow) shall be provided to Owner within twenty-one (21) days of month end.

All costs, penalties or expenses incurred by Owner by reason of Manager's failure to comply with the terms of this section shall be borne completely by Manager, and Manager shall hold Owner harmless for all such costs, penalties and other expenses. Such costs, penalties or expenses shall not include legal and lawful assessments owed to any governmental entity or regulatory agency including overpayment by Medicaid or Medicare or assessments to any governmental agency which were not paid by reason of a misinterpretation or contested interpretation of any law or regulation. The Manager shall be held responsible for any penalty assessed by reason of late payment unless the Owner has concurred with the interpretation and actions of the Manager in connection with the said payment. Said costs, penalties or expenses shall not include any such expenses incurred by reason of Owner's negligence or delay of payment occasioned by Owner.

ACCESS TO MANAGEMENT RECORDS

The Manager shall make available to all applicable governmental authorities having jurisdiction or regulatory authority over or with respect to the Home, including the Comptroller General, Secretary of Health and Human Services or their designees, such contracts, books, documents and records necessary to verify the costs of service contracts of S10,000.00 or more in a twelve (12) month period as reported on Medicare cost reports.

The Manager shall preserve and maintain such contracts, books, documents, and records during the term of this Agreement and any renewal term, until the expiration of four (4) years after the services are furnished.

DEPOSIT OF COLLECTIONS

All monies collected by the Manager out of and from the operation of the facility shall be deposited in appropriately designated and adequately identified accounts in the name of the facility of Owner in one or more banks. Out of such accounts, the Manager shall pay for all obligations and expenditures necessary and properly incurred for and on account of the Owner in the management and operation of the facility, including but not limited to compensation of the Manager, insurance premiums, betterments, and improvements. The Manager may keep on hand for the account of the Owner such a fund as may be necessary, in the joint opinion of the Manager and Owner, to provide for working cash for the operation of the facility. The Manager shall render to the Owner or persons designated by the Owner any statements reasonably required by the Owner.

DISBURSEMENT OF CASH FLOW

Cash flow, as calculated, shall be distributed to the Owner within twenty-one (21) days following each month end. Cash flow to be distributed shall be calculated at the close of each monthly accounting period, as follows:

Cash on hand and in bank - end of month Current accounts receivable to be collected (within 30 days) Less - current payables (to be paid within 30 days)

Less - reserve for working capital (if any) Cash for distribution to Owner

MANAGER'S COMPENSATION

As compensation for the services to be rendered by the Manager during the Operating Period, the Owner will pay the sum of five percent (5%) of gross rental revenue.

As compensation for all accounting and consulting services provided by the Manager, charge of one dollar ($1.00) per resident day in the nursing center and per occupied apartment day for the independent living facility shall be paid. This amount shall be charged and paid in the following month.

The Owner will reimburse the Manager on a monthly basis for the actual out-of-pocket costs of direct telephone and travel expenses incurred on Partnership business, direct out-of-pocket fees, expenses and charges paid by it to third parties for rendering legal auditing, accounting, bookkeeping, computer, printing and public relations services, expenses of preparing and distributing reports to Limited Partners and BUC Holders, an allocable portion of the salaries and fringe benefits of employees of the Manager who are not partners of RLC, insurance premium, including premiums for liability insurance which will cover the Owner, the cost of compliance with all state and federal regulatory requirements and stock exchange or NASDAQ listing fees and charges, and other payments to third parties for services rendered to the Partnership. Any reimbursements pursuant to this provision shall not be in excess of the lower of actual costs or the amount the Partnership would be required to pay independent third parties for comparable services in the same geographic location.

INSURANCE

The Manager shall advise the Owner in obtaining of insurance on the Home and all furniture, furnishings, and equipment therein against all risks usually covered in the care of similar properties, including, but without limitation, fire, plate glass, repairs and omissions, liability and fidelity insurance, Federal Civil Rights Liability insurance and all other usual insurance (which shall also cover any liability of the Manager). It shall be the joint responsibility of the Manager and the Owner to determine the limits and extent of insurance coverage and to mutually agree upon an agency or company and to provide copies of said insurance policies to individuals sent. It shall be the Manager's duty to inform the Owner no less than thirty (30) days prior to the expiration of any such insurance policy that such about to expire and to advise the Owner in obtaining a renewal of said policy or seeking coverage from a different insurance carrier. All policies of insurance shall name the Owner, the Manager, and such other parties as may be required by the provisions of any mortgage as the insured thereunder. All insurance shall be obtained at the expense of the facility.

TERMINATION AND DAMAGES

This Agreement may be terminated at any time by mutual consent of the parties if evidenced in writing. In addition, the Owner may terminate this Agreement without penalty on sixty (60) days notice by the vote of the Majority in Interest of the Limited Partners, and the BUC Holders as defined in the Amended and Restated Agreement Of Limited Partnership Of Owner. In the event of Owner's termination of Manager pursuant to this paragraph, Owner shall be liable to pay the Manager the accrued amounts due Manager pursuant to this Agreement up to the day of termination, less the damages, if any, caused by any such breach or violation of this Agreement by Manager. Therefore, the parties agree that the liability of Manager for any breach or violation of this Agreement or duties hereunder shall be limited to the actual management fee received by Manager under this Agreement. Each party shall have all rights and remedies available to them under applicable laws.

ATTORNEY FEES

In the event that it is necessary for either the Owner or the Manager to maintain any lawsuit, action or proceeding upon this Agreement or if any appeal is taken therefrom, in connection with any controversy arising out of this Agreement, the prevailing party shall be entitled to recover, in addition to such other sums of money or performance due hereunder, such sums as the Court may adjudge reasonable as attorney's fees in said suit, action, proceeding or appeal.

CONTROLLING LAW

This Agreement shall be enforced and interpreted according to the laws of the State of Indiana. If any provision of this Agreement is invalid, illegal or incapable of being enforced, other conditions of this Agreement shall nevertheless remain in full force and effect with no provisions being deemed dependent on any other provision unless so stated herein.

EXCLUSIVE APPLICATION

Nothing in this Agreement is intended or shall be construed to confer upon or to give any person, firm, or corporation other than the parties hereto, any right, remedy or claim under or by reason of this Agreement. All terms and conditions in this Agreement shall be for the sole and exclusive benefit of the parties hereto.

NONASSIGNABILITY

This Agreement is not assignable by the Manager without the prior written consent of the Owner.

NOTICE

All Notices required or permitted hereunder shall be addressed to the respective parties at the address stated herein, unless either party notifies the other party in writing of a different address. Notice shall be made by certified mail, return receipt requested, and shall be deemed to have been received by the addressee or an agent of the addressee as evidenced by the return receipt. The addresses for notification may be changed upon written notice.

BINDING EFFECT

This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, except as herein before limited.

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

OWNER:

CAPITAL SENIOR LIVING COMMUNITIES, L.P.

BY: RETIREMENT LIVING COMMUNITIES, L.P.,
Its General Partner

BY: CAPITAL REALTY GROUP SENIOR HOUSING, INC.,
Its General Partner

BY: /s/ Jeffrey L. Beck
   -------------------------------

MANAGER:

CAPITAL SENIOR LIVING, INC.

BY: /s/ James Stroud, COO
   ----------------------------

EXHIBIT 10.20

MANAGEMENT AGREEMENT

THIS AGREEMENT, made in Dallas, Texas, as of the 1st day of February, 1995, by and between:

Capital Senior Living Communities, L.P., a partnership organized and existing under the laws of the State of Delaware, hereinafter referred to as 'Owner' and Capital Senior Living, Inc., a corporation organized and existing under the laws of the State of Texas, hereinafter referred to as "Manager,"

WITNESSETH

WHEREAS, the Owner now owns a business commonly known as Towne Centre, in the City of Merrillville, State of Indiana, hereinafter called the "Home."

WHEREAS, the Owner desires to employ the Manager to act as general manager of the Home, and the Manager is willing to accept such employment subject to the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the foregoing and of the terms and conditions herein set forth, the parties hereto agree as follows:

EMPLOYMENT OF MANAGER

The Owner hereby appoints the Manager, and the Manager hereby accepts the appointment as exclusive Manager of the Home.

TERM

The services of Manager shall commence on February 1, 1995 and shall terminate nine (9) years from the date thereto, unless sooner terminated as herein provided.

MANAGER'S DUTIES

During the term of this Agreement which period is hereinafter referred to as the "Operating Period," the Manager shall use its best efforts in the management and operation of the business, services and sales of the Home so that the Home and its services will be operated and maintained with the maximum of benefit and in a first quality manner so that the Home shall remain a first quality convalescent center. In pursuance of the foregoing, the Manager shall perform the following services:

1. Use its reasonable efforts and due diligence in the renting of all of the rooms and facilities to desirable tenants.

2. Employ, at the expense of the facility, such resident administrator, assistant administrator, employees, agents, clerks at the Home as may be required to continue the standard and quality of management and operation at a level not lower than that heretofore maintained. The Manager shall not be liable to the Owner or others for any act or omission on the part of such employees unless the Manager has failed to use reasonable diligence in their hiring, discharge or supervision so as to maintain a staff of qualified, competent, and trustworthy employees. The Manager will negotiate on the Owner's behalf with any labor union lawfully entitled to represent such employees, but no collection bargaining agreement or labor contract resulting from such negotiations shall be valid unless executed or approved by the Owner. The Manager will not at any time enter into any agreement with any employee for a period in excess of one (1) year or for compensation in excess of $50,000.00 per year without the consent in writing of the Owner. The Manager shall procure and maintain adequate workman's compensation insurance in the name of and at the expense of the facility covering all the facility employees.

3. Keep the facility and all furniture, furnishings and other equipment therein, and appurtenant thereto, in good repair.

4. Arrange for necessary alterations, decorations, replacements, improvements, or changes in the Home and in the furniture, furnishings, and other equipment therein and develop policies with respect to the installation of new features to the extent that the financial obligations and resources of the facility permit. All capital expenditures, other than minor repair and maintenance, must be submitted to Owner for approval prior to expenditure.

5. Develop policies with respect to publicity for the purpose of creating the greatest possible net income for the Home and place and supervise all advertising and promotional material.

6. Arrange at the facility's expense for compliance with all statutes, or ordinances, laws, rules, regulations, orders and determinations affecting or issued in connection with the Home by any governmental authority having jurisdiction thereof.

7. Cause the Home to comply with all the terms, conditions and obligations contained in any mortgage, lease, or other agreement executed by the Owner which relates to the facility. The Owner shall promptly notify the Manager of any such mortgage, lease or other agreement.

8. Deposit in a banking institution or institutions selected by the Manager, and in accounts in the facilities name as agent for the Owner, all monies furnished by the Owner as working funds and all monies received by the Manager for or on behalf of the Owner. The Manager shall pay on behalf of the Owner all accounts incurred after the date hereof as required for the operations of the Home, all assessments and charges of every kind imposed by any

governmental authority having jurisdiction and interest and penalties thereon, license fees, permit fees and insurance appraisal fees; fines, penalties, and court disbursements incurred in connection with the operation of the Home; premium on policies of insurance; all disbursements authorized by this Agreement; and any other charge, item of expense, or other item which the Owner, in writing, authorizes as an expense.

9. Receive, consider and handle the complaints of all tenants, guests or users of any of the services or facilities of the Home and provide copies upon written request to the Owner.

10. Institute in its own name or in the name of the Owner,,at the expense of the facility and with the approval of the Owner, any necessary legal actions or proceedings.

11. Place at the reasonable disposal of the Owner its engineering, maintenance, decorating, general purchasing, accounting, cost control taxation, insurance, publicity, advertising, labor relations, safety and supervisory knowledge and abilities.

EXPENDITURES BY MANAGER

The Manager shall have power and authority to make all contracts and disbursements necessary to carry out the duties conferred and imposed upon it by this Agreement, including, but not limited to, the authority to pay for all expenses of leasing, collection of rents, management, operations, maintenance and insurance in accordance with a budget approved by the Owner.

ACCOUNTING SERVICES

The Manager shall establish and supervise all bookkeeping, accounting and clerical services, including the maintenance of payroll records, incident to the efficient operation and maintenance of the Home.

The Manager shall maintain, for the Owner, proper and suitable records and books of account in which there shall be properly recorded all receipts and disbursements connected with the management and operation of the Home. The Manager shall prepare and file (or cause to be prepared and filed) all necessary reports with respect to withholding taxes, social security taxes, unemployment insurance, disability insurance, the Fair Labor Standards Act, and all other statements and reports pertaining to the labor employed on the facility payroll in or about the Home. All books of account shall at all times be open to the inspection and audit of any officer of the Owner or any duly accredited and authorized representative of the Owner. All books, records, bills, receipts, bank books, check books, check vouchers, correspondence, lists, files, index cards, and books of account relating to leases, tenants and prospective tenants and employees of the Home for the term of this Agreement and any renewal terms hereof and any and all records pertaining to or in any manner relating to the management and operation of the Home shall at all times be safely kept and preserved and shall be the property of the Owner, and upon the termination of this Agreement shall be retained by the Owner.

Financial statements (including balance sheet, operating statement and statement of cash flow) shall be provided to Owner within twenty-one (21) days of month end.

All costs, penalties or expenses incurred by Owner by reason of Manager's failure to comply with the terms of this section shall be borne completely by Manager, and Manager shall hold Owner harmless for all such costs, penalties and other expenses. Such costs, penalties or expenses shall not include legal and lawful assessments owed to any governmental entity or regulatory agency including overpayment by Medicaid or Medicare or assessments to any governmental agency which were not paid by reason of a misinterpretation or contested interpretation of any law or regulation. The Manager shall be held responsible for any penalty assessed by reason of late payment unless the Owner has concurred with the interpretation and actions of the Manager in connection with the said payment. Said costs, penalties or expenses shall not include any such expenses incurred by reason of Owner's negligence or delay of payment occasioned by Owner.

ACCESS TO MANAGEMENT RECORDS

The Manager shall make available to all applicable governmental authorities having jurisdiction or regulatory authority over or with respect to the Home, including the Comptroller General, Secretary of Health and Human Services or their designees, such contracts, books, documents and records necessary to verify the costs of service contracts of S10,000.00 or more in a twelve (12) month period as reported on Medicare cost reports.

The Manager shall preserve and maintain such contracts, books, documents, and records during the term of this Agreement and any renewal term, until the expiration of four (4) years after the services are furnished.

DEPOSIT OF COLLECTIONS

All monies collected by the Manager out of and from the operation of the facility shall be deposited in appropriately designated and adequately identified accounts in the name of the facility of Owner in one or more banks. Out of such accounts, the Manager shall pay for all obligations and expenditures necessary and properly incurred for and on account of the Owner in the management and operation of the facility, including but not limited to compensation of the Manager, insurance premiums, betterments, and improvements. The Manager may keep on hand for the account of the Owner such a fund as may be necessary, in the joint opinion of the Manager and Owner, to provide for working cash for the operation of the facility. The Manager shall render to the Owner or persons designated by the Owner any statements reasonably required by the Owner.

DISBURSEMENT OF CASH FLOW

Cash flow, as calculated, shall be distributed to the Owner within twenty-one (21) days following each month end. Cash flow to be distributed shall be calculated at the close of each monthly accounting period, as follows:

Cash on hand and in bank - end of month Current accounts receivable to be collected (within 30 days) Less - current payables (to be paid within 30 days)

Less - reserve for working capital (if any) Cash for distribution to Owner

MANAGER'S COMPENSATION

As compensation for the services to be rendered by the Manager during the Operating Period, the Owner will pay the sum of five percent (5%) of gross rental revenue.

As compensation for all accounting and consulting services provided by the Manager, charge of one dollar ($1.00) per resident day in the nursing center and per occupied apartment day for the independent living facility shall be paid. This amount shall be charged and paid in the following month.

The Owner will reimburse the Manager on a monthly basis for the actual out-of-pocket costs of direct telephone and travel expenses incurred on Partnership business, direct out-of-pocket fees, expenses and charges paid by it to third parties for rendering legal auditing, accounting, bookkeeping, computer, printing and public relations services, expenses of preparing and distributing reports to Limited Partners and BUC Holders, an allocable portion of the salaries and fringe benefits of employees of the Manager who are not partners of RLC, insurance premium, including premiums for liability insurance which will cover the Owner, the cost of compliance with all state and federal regulatory requirements and stock exchange or NASDAQ listing fees and charges, and other payments to third parties for services rendered to the Partnership. Any reimbursements pursuant to this provision shall not be in excess of the lower of actual costs or the amount the Partnership would be required to pay independent third parties for comparable services in the same geographic location.

INSURANCE

The Manager shall advise the Owner in obtaining of insurance on the Home and all furniture, furnishings, and equipment therein against all risks usually covered in the care of similar properties, including, but without limitation, fire, plate glass, repairs and omissions, liability and fidelity insurance, Federal Civil Rights Liability insurance and all other usual insurance (which shall also cover any liability of the Manager). It shall be the joint responsibility of the Manager and the Owner to determine the limits and extent of insurance coverage and to mutually agree upon an agency or company and to provide copies of said insurance policies to individuals sent. It shall be the Manager's duty to inform the Owner no less than thirty (30) days prior to the expiration of any such insurance policy that such about to expire and to advise the Owner in obtaining a renewal of said policy or seeking coverage from a different insurance carrier. All policies of insurance shall name the Owner, the Manager, and such other parties as may be required by the provisions of any mortgage as the insured thereunder. All insurance shall be obtained at the expense of the facility.

TERMINATION AND DAMAGES

This Agreement may be terminated at any time by mutual consent of the parties if evidenced in writing. In addition, the Owner may terminate this Agreement without penalty on sixty (60) days notice by the vote of the Majority in Interest of the Limited Partners, and the BUC Holders as defined in the Amended and Restated Agreement Of Limited Partnership Of Owner. In the event of Owner's termination of Manager pursuant to this paragraph, Owner shall be liable to pay the Manager the accrued amounts due Manager pursuant to this Agreement up to the day of termination, less the damages, if any, caused by any such breach or violation of this Agreement by Manager. Therefore, the parties agree that the liability of Manager for any breach or violation of this Agreement or duties hereunder shall be limited to the actual management fee received by Manager under this Agreement. Each party shall have all rights and remedies available to them under applicable laws.

ATTORNEY FEES

In the event that it is necessary for either the Owner or the Manager to maintain any lawsuit, action or proceeding upon this Agreement or if any appeal is taken therefrom, in connection with any controversy arising out of this Agreement, the prevailing party shall be entitled to recover, in addition to such other sums of money or performance due hereunder, such sums as the Court may adjudge reasonable as attorney's fees in said suit, action, proceeding or appeal.

CONTROLLING LAW

This Agreement shall be enforced and interpreted according to the laws of the State of Indiana. If any provision of this Agreement is invalid, illegal or incapable of being enforced, other conditions of this Agreement shall nevertheless remain in full force and effect with no provisions being deemed dependent on any other provision unless so stated herein.

EXCLUSIVE APPLICATION

Nothing in this Agreement is intended or shall be construed to confer upon or to give any person, firm, or corporation other than the parties hereto, any right, remedy or claim under or by reason of this Agreement. All terms and conditions in this Agreement shall be for the sole and exclusive benefit of the parties hereto.

NONASSIGNABILITY

This Agreement is not assignable by the Manager without the prior written consent of the Owner.

NOTICE

All Notices required or permitted hereunder shall be addressed to the respective parties at the address stated herein, unless either party notifies the other party in writing of a different address. Notice shall be made by certified mail, return receipt requested, and shall be deemed to have been received by the addressee or an agent of the addressee as evidenced by the return receipt. The addresses for notification may be changed upon written notice.

BINDING EFFECT

This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, except as herein before limited.

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

OWNER:

CAPITAL SENIOR LIVING COMMUNITIES, L.P.

BY: RETIREMENT LIVING COMMUNITIES, L.P.,
Its General Partner

BY: CAPITAL REALTY GROUP SENIOR HOUSING, INC.,
Its General Partner

                 BY: /s/ Jeffrey L. Beck
                    -------------------------------

MANAGER:

CAPITAL SENIOR LIVING, INC.

BY:      /s/ James Stroud, COO
   ----------------------------------

EXHIBIT 10.21

NURSING HOME MANAGEMENT AGREEMENT
[CAMBRIDGE NURSING HOME, CAMBRIDGE]

This Management Agreement (the "Agreement") effective August 1, 1996, between Capital Senior Living, Inc., a Texas Corporation ("Manager"), and Cambridge Nursing Home Limited Liability Company, a Massachusetts limited liability company ("Lessee").

WITNESSETH:

WHEREAS, Lessee leases that certain 119 bed facility (the "Facility") located at 1 Russell Street, Cambridge, Massachusetts and commonly known as Cambridge Nursing Home.

WHEREAS, Manager is an experienced and qualified manager in the field of long-term care management; and

WHEREAS, Lessee desires to engage Manager, and Manager is willing, to manage the Facility, pursuant to the terms and conditions set forth herein.

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

1. Retention of Manager. Lessee hereby retains Manager to provide management services in connection with the facility under the terms and conditions set forth herein.

2. Responsibilities of Manager. During the Term, as defined below, Manager shall provide the following management consulting and advisory services to Lessee in connection with the operation of the Facility.

A. Facility Administrator. Manager shall select and direct the performance of the Facility Administrator, who shall be responsible for the operation of the Facility and execution on a daily basis of policies established by Manager and Lessee in accordance with the Agreement.

B. Other Personnel. Manager shall recruit, select, train, promote, and terminate the employment of all Facility personnel, which personnel shall all be deemed to be employees of Manager; establish the salary levels, personnel policies and employee benefits with respect thereto; and establish employee performance standards as needed during the Term to ensure the efficient operation of all departments within and services offered by the Facility. All Facility personnel shall be the employees of Manager. Manager will also be responsible for the payment of employee payroll, benefits and related employee expenses (including payroll taxes) as part of Facility operating expenses (payable

out of Facility funds) and the distribution of employee income tax withholding forms at year end.

C. Fiscal Year: Budgets. The fiscal year for the Facility shall be January 1 through December 31. Within approximately 60 days following the date of this Agreement, Manager shall review and modify the facility's current operating budget and submit this revised budget to Lessee for approval. In addition, at least forty-five
(45) days prior to the start of each fiscal year, Manager shall prepare and submit to Lessee for its review and approval, which approval shall not be unreasonably withheld, and annual operating budget and an annual capital expenditure budget for the following year (collectively, the "Budgets"). Thereafter, Manager shall be entitled to make or commit Lessee to make expenditures which are reflected in the Budgets, as well as expenditures which individually do not exceed 10% of the amounts set forth therein for the applicable expense item (the "Budget Threshold"). Except for emergency repairs referred to in Section 2 (I), any unbudgeted expenditures and/or expenditures in excess of the Budget Threshold shall be subject to Lessee's approval, which shall not be unreasonably withheld.

D. Bank Accounts: Payment of Facility Expenses: Distribution of Facility Net Cash Flow. Manager shall utilize existing accounts and maintain a checking account (s) in the name of Lessee and/or the Facility, as appropriate, for the benefit and account of Lessee in a bank of Manager's selection and shall deposit therein all money received in the course of the operation of the Facility. Manager shall pay for the benefit of Lessee all expenses incurred in the operation of the Facility, including, but not limited to payment of Manager's fees and expenses hereunder, payroll, benefits and related employee expenses, repayment of working capital loans and the interest thereon and Facility debt service payments, all of which shall be paid by check drawn on such accounts. Manager shall apply revenue derived from the operation of the Facility in the following order:

i. Payment of Facility operating expenses (which shall include any and all costs, expenses or fees associated with the operation of the Facility), including Manager's fees and other expenses set forth in Section 4, but excluding debt service.

ii. Payment of Facility debt service expenses, including working capital loans, if any.

iii. Deposit into bank account(s) to satisfy the requirements of Section 8.

iv. The balance of the cash to Lessee.

E. Operational Policies. Manager shall maintain all operational policies necessary to establish and maintain the operational standards appropriate for the nature of the Facility.

F. Rent and Charges. Manager shall establish the schedules of recommended rents and charges, including any and all special charges for services rendered to the residents of the Facility.

G. Information. Manager may develop any necessary informational material, mass media releases and other related publicity materials in connection with the Facility.

H. Regulatory Compliance. Manager shall use its best efforts to obtain and maintain in the name of Lessee or Manager, as appropriate under applicable state law, and at the expense of Lessee, all licenses, permits, qualifications and approvals from any applicable governmental or regulatory authority necessary for the lawful operation of the Facility as a long-term care facility.

I. Capital Equipment and Improvement. Manager shall advise Lessee as to capital equipment and Facility improvements which are needed to maintain or upgrade the quality of the Facility and said equipment, or to replace obsolete or rundown equipment. Lessee shall review and act upon Manager's recommendations as expeditiously as possible. Manager shall not be liable for any cost or liability which Lessee may incur in the event Lessee disregards Manager's recommendations. Manager shall make all necessary and approved repairs, replacements and maintenance within the budgetary limits set forth in the annual capital expenditure budget prepared by Manager pursuant to Section 2 (C). Notwithstanding any contrary provisions in this Agreement, Manager shall be entitled, without Lessee's consent, to make or commit Lessee to make unbudgeted expenditures and/or expenditures in excess of the Budget Threshold for the purposes of emergency repairs involving manifest danger to persons or property or required to avoid suspension of any necessary service at the Facility. However, in no instance shall these unbudgeted expenditures exceed $5,000 without the prior authorization of the owner.

J. Supplies and Non-Capital Equipment. Manager shall purchase supplies and non-capital equipment needed to operate the Facility within the budgetary limits set forth in the annual operating budget prepared by Manager pursuant to Section 2 (C).

K. Ancillary Services. Manager shall negotiate for the provision of necessary ancillary services through qualified contractors and on an ongoing basis shall review and analyze the performance of said ancillary services contractors and, if necessary, shall negotiate additional or alternative contractual arrangements therefor. If any contracts for such services are with related parties to the Manager they will not exceed the cost of similar services that could be provided by an unrelated third party.

L. Legal Matters. Manager and Lessee shall jointly agree on appropriate legal counsel for matters pertaining to the Facility. Lessee shall be responsible for all legal fees, including allocated charges for internal counsel.

M. Bookkeeping and Accounting. Manager shall provide bookkeeping and accounting procedures necessary for the operation of the Facility and the preparation of proper financial records. Bookkeeping and accounting procedures and systems shall be in accordance with the operation capital and cash programs developed by Manager, which programs shall conform to generally accepted accounting principles.

N. Collection of Accounts. Manager shall issue bills and collect accounts and monies owed for services and materials furnished by the Facility, and shall be entitled to enforce the rights of Lessee of the Facility as creditor under any contract of in connection with the rendering of any service; provided, however, that any expenses incurred by Manager in so doing shall be treated as Facility operating expenses, which shall be payable out of Facility funds.

O. Reports. Manager shall prepare and provide to Lessee the following reports, which shall be due at Lessee's office no later than the 15th of each month except where otherwise stated. These reports shall reflect operations at the Facility:

i. Daily cash receipts journal to be faxed to Lessee on Friday of each week;

ii. Daily census reports to be faxed to Lessee on Friday of each week;

iii. Management fee calculations to be faxed to Lessee monthly on or before the 10th of the month;

iv. Balance sheet;

v. Operating statement;

vi. Aging of accounts payable and aging of accounts receivable that ties to the balance sheet;

vii. check register for the month;

viii. Any additional reasonable operational information which may from time to time be specifically requested by Lessee.

P. Insurance. Manager, on behalf and at the expense of Lessee, shall obtain and maintain all such insurance coverage, which shall include property damage insurance covering the Facility and the furniture, fixtures and equipment situated therein, and comprehensive general liability and professional liability insurance, for the protection of Lessee, Manager, Facility employees and volunteers of the Facility. Notwithstanding the foregoing, Lessee shall provide all employee health and worker's compensation insurance for its employees. Any changes in insurance carrier or coverage deemed necessary by Manager shall be implemented only following review and approval by Lessee.

3. Term. This Agreement shall become effective on the day the Lessee files an application for licensure as a long term care facility with the Division of Health Care Quality of the Massachusetts Department of Public Health and thereby has the effect of license and shall continue in full force and effect until August 1, 2005, hereinafter referred to as the "Term", unless sooner terminated as provided in paragraph 9 below.

4. Management Fees. For services performed hereunder, Lessee shall pay to Manager the following:

A. Management Fee. Commencing with the signing of this Agreement, Lessee shall pay to Manager seven percent (7%) of the Gross Revenues generated during the immediately preceding month and shall be payable on the 15th day of the month following that month in which revenues were actually collected. "Gross Revenues" shall mean all collected cash receipts generated by the Facility. If the services of Manager commence or terminate other than on the first day of a month, the compensation set forth in the Section 4 (B) shall be prorated for the number of days for which services are actually rendered.

B. Expense Reimbursement. Lessee shall reimburse Manager for the following items:

i. Reasonable food, lodging and travel expenses for service to the facility.

ii. general overhead and salaries [and other expenses permitted by the Second Amended and Restated Limited Partnership Agreement of HealthCare Properties, L.P., a Delaware limited partnership, dated as of May 31, 1995]

iii. Any other items set forth in this Agreement as reimbursable items.

C. Late Charges. Lessee shall pay to Manager, to the extent permitted by applicable law, interest on any amount owing to Manager under this Agreement which is not paid when due, for any period for which any of the same is overdue (without regard to any grace period), at a rate equal to the lesser of (i) four percent in excess of the rate announced from time to time by Chase Manhattan Bank, N.A. as its prime or reference rate, as such rate may change from time to time, and (ii) the maximum rate of interest permitted by applicable law.

D. Method of Payment. Lessee shall pay the amounts set forth in Sections 4 (B) and (C) monthly, in advance, no later than the fifteenth (15th) day of the month during which such amounts are earned or paid. Manager shall be entitled to disburse all such amounts to itself out of the accounts provided for in Section 2 (D).

5. Proprietary Interest. The systems, methods, procedures and controls employed by Manager and any written materials or brochures developed by Manager to document the same shall not, at any time, be utilized, distributed, copies or otherwise employed or acquired for use outside of this Facility, except with Manager's prior written consent, which Manager may withhold in its sole discretion. Neither Lessee nor Lessee's designee shall be entitled to utilize any written material or brochure outside of this Facility which Manager may have developed to document said systems, methods, procedures or controls.

6. No Guaranty of Profitability. Lessee acknowledges that Manager does not guaranty that the Facility will be profitable.

7. Lessee Inspection. During the term, Lessee shall have the right, upon request and at reasonable times, to inspect the Facility and to inspect and/or audit all books and records pertaining to the operation thereof.

8. Responsibility for Funding. Lessee shall make funds available sufficient to fund payroll and all accounts payable on reasonable terms in the account (s) referred to in Section 2 (D). These funds shall be greater than or equal to the greater of

(A) the sum of all current and unpaid invoices (both those received and those pending), note or installment payments, payrolls, rents, expenses, management fees and other charges incident to the operation of the Facility which will become due and payable within the next succeeding 45 days, and (B) such amount as Manager, in its reasonable judgment, deems necessary for the proper operation of, or improvements or repairs to, the Facility.

9. Termination.

A. This Agreement may be terminated by the Lessee:

1. In the event of material breach by Manager of a material term hereof, which breach is not cured within 60 days after notice by the Lessee (unless Manager is using commercially reasonable efforts to cure such failure, in which case such period shall be extended for one year) and such failure is the result of Manager's willful misconduct, gross negligence, or unlawful act as finally determined by a court having such jurisdiction regarding such matter.

2. In the event that a petition in bankruptcy is filed by Manager or its permitted assignee, or in the event Manager or its permitted assignee makes an assignment for the benefit of creditors or takes advantage of an insolvency act, by notice to the manager or assignee.

3. In the event that (i) Manager's or any permitted assignee's corporate existence is dissolved and the duties under this Agreement are not assumed by Manager or Manager's Affiliate (ii) Manager or any permitted assignee ceases to do business for any reason, by notice to the Manager or such assignee, and the duties under this Agreement are not assumed by Manager or Manager's Affiliate.

B. This Agreement may be terminated by Manager in the event that Manager fails to receive reimbursement of reimbursable expenses or any compensation due Manager pursuant to the terms of this Agreement, or any other compensation due Manager, and such failure continues for a period of 60 days after Managers written notice thereof to Lessee. Manager may terminate this Agreement effective immediately upon expiration of 60-day period without further notice to Lessee; provided, however, that this Agreement shall not be so terminated if the Lessee pay Manager all such expenses and compensation then due and payable on or before the expiration of said 60-day period.

C. No termination of this Agreement shall affect any obligation owing by either party hereto to the other which accrued prior to the effective date of such termination.

D. Notwithstanding any earlier provisions, and as per Section N, Number 8 of the Second Amended and Restated Limited Partnership Agreement of HealthCare Properties, L.P. (the "Partnership Agreement"), the Parties' agree that should the Manager become an affiliated party (as defined in
Section B of the Partnership Agreement) with the General Partners of HealthCare Properties, L.P., either Manager or Lessee may terminate this Agreement on sixty (60) days written notice; Provided however, that such cancellation provision shall be deemed waived if Manager disassociates itself from the General Partners during any such sixty
(60) day notice period. Alternatively, Manager may successfully avoid the sixty (60) day cancellation clause by assigning its management obligations to an unaffiliated entity reasonably judged to be capable of fulfilling the Partnership needs for such services.

10. Miscellaneous.

A. Disclaimer of Employment of Facility Employees. No person employed by the Lessee will be an employee of Manager, and Manager shall have no liability for payment of their wages, payroll taxes and other expenses of employment. All such persons will be employees of the Lessee, or, pursuant to Section (K) hereof, independent contractors or the employees or independent contractors.

B. Relationship of the Parties: Disclaimer of Liability:
Indemnification. The relationship of Manager to Lessee shall be that of an independent contractor and all acts performed by Manager Pursuant to this Agreement during the Term shall be deemed to be performed in its capacity as an independent contractor. Manager shall not be liable for any loss, expense or liability incurred by or asserted against Lessee, unless such loss, expense cost or liability results from the gross negligence or willful misconduct of Manager. Lessee shall indemnify and hold Manager harmless from and against any and all loss, expense, cost or liability incurred by or asserted against Manager arising from or related to the Facility; provided, however, that Lessee shall not be obligated to indemnify Manager for any loss, expense, cost or liability which results from Manager's gross negligence or willful misconduct.

C. Employee Non-Solicitation. Recognizing the unique services provided by employee of Manager, during the Term and for a period of two (2) years after termination of this Agreement, Lessee shall not directly or

indirectly solicit or employ any employees of Manager to become employees of Lessee without Manager's prior written consent, which Manager may withhold in its sole discretion. Likewise, Manager shall not directly or indirectly solicit or employ any employees of Lessee to become employees of Manager without Lessee's prior written consent, which Lessee may withhold in its sole discretion.

D. Assignment: Binding Effect. This Agreement shall not be assigned by either party without the prior written consent of the other party, which consent shall not be unreasonably withheld, Notwithstanding the foregoing, Manager may assign its rights and obligations hereunder to an entity controlling, controlled by or under common control with Manager. This Agreement shall be binding upon and insure to the benefit of the permitted successors and assigns of the parties.

E. Notices. All notices required or permitted hereunder shall be given in writing and shall be personally delivered or be sent by registered or certified mail, postage prepaid, to the following addresses or at such other places as either party shall designate in writing:

If to Manager:        Capital Realty Group Senior
                      Housing, Inc.
                      14160 Dallas Parkway
                      Suite 300
                      Dallas, Texas  75240
                      Attention:  David R. Brickman


If to Lessee:         Cambridge Nursing Home Limited
                      Liability Company
                      14160 Dallas Parkway
                      Suite 300
                      Dallas, Texas  75240
                      Attention: David R. Brickman

                      Mr. James A. Stroud
                      14160 Dallas Parkway
                      Suite 300
                      Dallas, Texas  75240

And in either instance a copy shall be sent to:

Alan S. Goldberg, Esq.

Goulston & Storrs
400 Atlantic Avenue
Boston, MA 02110-3333

Notices shall be deemed effective upon receipt.

F. Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the subject matter hereof and shall supersede all prior understandings, agreements or arrangements, oral or written, between the parties.

G. Amendment. This Agreement shall not be modified or amended except by written instrument signed by both of the parties.

H. Captions. The captions and headings used herein are for convenience of reference only and shall not be construed in any manner to limit or modify any of the terms hereof.

I. Attorney's Fees. In the event either party brings an action to enforce this Agreement, the prevailing party in such action shall be entitled to recover from the other all costs incurred in connections therewith, including reasonable attorney's fees. Reasonably attorney's fees shall include reasonable charges allocated for internal counsel.

J. Severability. In the event one or more of the provisions of this Agreement is deemed to be invalid, illegal or unenforceable in any respect under applicable laws, the validity, legality and enforceability of the remaining provisions hereof shall not, in any way, be impaired thereby.

K. Representations. Each of the parties represents and warrants to the other as follows:

i. The execution, delivery and performance of this Agreement (a) are within the corporate and partnership powers of the respective parties, (b) have been duly authorized by all necessary corporate or partnership action, and (c) do not and will not (1) require any consent or approval by stockholders or partners, or (2) violate any provision of any law, rule, regulation, order, writ, judgment, decree or award presently in effect having applicability to the parties or the articles of incorporation, bylaws, partnership or joint venture agreements of the parties.

ii. This Agreement constitutes the valid and binding obligations of Lessee and Manager, respectively, enforceable in accordance with its terms.

L. Counterparts. This Agreement may be executed in counterparts, each of which shall be an original, but all of which together shall constitute but one and the same instrument.

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

N. Access to Records, Cost Reports and Financial Statements. Each of the parties hereby grant the other, and the appropriate governmental agency access to all contracts, books, documents and records necessary to verify the costs of any contract between any subcontractor and any Medicaid/Medicare provider in accordance with state/federal statutory and/or regulatory requirements.

IN WITNESS WHEREOF, the parties have each caused the Agreement to be duly executed by its duly authorized officer, as of the date first written above.

Lessee:                            CAMBRIDGE NURSING HOME LIMITED
                                   LIABILITY COMPANY a Massachusetts
                                   limited liability company

                                           By: Cambridge Nursing Home, Inc., its
                                           Managing Member


                                               By: /s/ David R. Brickman
                                                  ------------------------------
                                                  Its Vice President
                                                     ---------------------------
                                                  Hereunto duly authorized

Manager:                           CAPITAL SENIOR LIVING, INC.


                                            By: /s/ Keith Johnanessan
                                               ---------------------------------
                                               Its  President
                                                  ------------------------------
                                               Hereunto duly authorized

Exhibit 10.22

MANAGEMENT AGREEMENT

THIS AGREEMENT entered into this 1st day of April, 1996, by and between BUCKNER RETIREMENT SERVICES, INC., ("Buckner") a not-for-profit corporation organized under the laws of the state of Texas, and CAPITAL SENIOR MANAGEMENT 1, INC. ("Capital"), a for-profit corporation organized under the laws of the state of Texas.

PREAMBLE

Buckner by this Agreement is engaging Capital to provide management services relating to the operation of Buckner Westminster Place (the "Facility"), a retirement community located in Longview, Texas. Capital has management expertise and resources designed to assist in the development and maintenance of quality service to residents of retirement communities on a financially sound basis. Capital and Buckner share a commitment to make the retirement years of residents as meaningful and comfortable as possible. Both share the philosophy that the retirement environment should allow for and encourage contained personal growth and independent living for the elderly, and when independent living is no longer possible, then the same retirement environment should have the flexibility to provide quality health care in the midst of a high degree of understanding, compassion and companionship enhanced by and based upon the prior years of residence in the same community.

This Agreement is founded on the following assumptions:

Buckner retains primary responsibility to:

a) Establish the policies of the Facility, and to plan for its short-range and long-range goals.

b) Review and evaluate the performance of Capital in carrying out the established policies and in attaining the goals established by Buckner.

c) Annually review and approve the budget.

d) Annually review the policies and goals which have been established.

e) Provide Christian social service ministry from the Facility that is resident and community-based.

Capital assumes primary responsibility to:

a) Implement the policies established by Buckner.

b) Supervise the day-to-day management of the Facility, including all resident activities.

c) Provide to Buckner full, timely and accurate information as to past operations.

d) Provide to Buckner projections and recommendations relating to the future operations of the Facility.

The parties therefore agree as follows:

I. RESPONSIBILITIES OF CAPITAL

A. Recommend Policies. Capital shall recommend policies and goals to be established by Buckner, and shall evaluate such policies and goals on an ongoing basis.

B. Management Duties. Capital shall supervise the operation of the Facility, provide management services, install operating procedures and oversee day-to-day operations, all subject to and in accordance with the budgets and policies, established by Buckner.

C. Marketing Duties. Capital shall manage and supervise the marketing program. Capital shall periodically review the residence agreement and recommend changes thereof as and if required.

D. Employees. All Facility-based Employees, including the administrative employees, shall be employees of Capital with the exception of Buckner ministry-based employees. Capital shall have sole authority over Facility-based Employees and Non-Facility-based Employees who are directly responsible for the Facility and all matters pertaining thereto and shall be responsible for all actions and omissions of such employees occurring pursuant to Capital's employee policy manual. All costs of hiring, equipping and providing the services of Facility-based Employees, including, but not limited to, compensation, health insurance, employer liability insurance, payroll taxes, bonding, workers' compensation insurance, benefits and vacations shall be treated as an expense of Capital to be reimbursed from the Facility operations if sufficient to reimburse such expenses; if it is not sufficient, such expenses shall be reimbursed by Buckner.

E. Operating Procedures. Capital shall develop, install and maintain operating procedures, systems, and controls.

F. Facility Expansion. Capital shall make recommendations regarding construction, remodeling or expansion of the Facility.

G. Budgets. Capital shall prepare annual operating budgets for revenue, expense and cash flow of the Facility, and a capital expenditures budget. Budgets shall be prepared in advance of each fiscal year. Cash flow projections shall accompany each operating budget. It is to be understood that budgets are only estimates and guidelines of future results and that budget overruns may occur from time to time.

H. Financial Controls. Capital shall establish and maintain a system of financial controls for the Facility.

I. Monthly Financial Statements. Capital shall provide to Buckner, on a monthly basis, financial statements and related financial reports.

J. Marketing Reports. Capital shall, on a weekly and monthly basis, provide sales and occupancy reports to Buckner, as well as the results of the annual resident satisfaction survey.

K. Legal Counsel. Capital, at Facility expense, shall coordinate with Buckner the utilization of legal counsel relating to Facility operations.

L. Rental Collections and Disbursements. Capital shall collect the revenues from the residents and, on behalf of Buckner, deposit all such funds in a residential depository account at a FDIC insured bank approved by Buckner. The style of the account shall be in the name of the facility with designated representatives from Buckner and Capital being the only parties authorized to draw from said account.

On an as needed basis, Capital shall transfer the funds from the above stated account into an Operating Expense Account in the name of the facility. The account shall be in a FDIC insured bank approved by Buckner. The style of the account shall be in the name of the facility with designated representatives from Buckner and Capital being the only parties authorized to draw from said account. Capital shall pay out of such Operating Expense Account all operating expenses (including Capital's Management Fee and any other sums due to Capital from Buckner), and all other sums properly payable pursuant to any of the provisions of this Agreement. Capital shall hold, remit or expend the balance of such funds, if any, as Buckner may direct. These funds shall not be co-mingled with funds from any other projects and/or facilities managed and/or operated by Capital.

M. Accounting Systems and Software. Capital shall provide to Buckner, during the term of this Agreement, appropriate on-site accounting systems and software, which shall include complete accounting, bookkeeping and record keeping services for the Facility, specifically including, but not limited to, resident billings, accounts payable, accounts receivable, general ledger and inventory records, and maintain demographic information on the residents. Acquisition of software, software maintenance and update charges will be budgeted expenses of the Facility. Payroll processing may be delegated to a third party, the cost of which be the responsibility of the Facility.

II. BUCKNER'S RESPONSIBILITIES

A. Policies. Buckner shall establish the policies for the Facility.

B. Goals. Buckner shall establish the short range and long range goals of the Facility.

C. Budgets. Buckner shall review and approve budgets for the operation of the Facility.

D. Capital's Performance. Buckner shall review and evaluate the performance of Capital in carrying out the policies for the Facility.

E. Legal Counsel. Buckner shall obtain legal counsel to perform all necessary legal services relating to Buckner's ownership of the Facility.

F. Audits. Buckner, at its discretion, may engage certified public accountants to perform annual audits of the Facility as well as prepare any other reports required for federal or state regulatory agencies which require licensure and/or certification. Every quarter, upon receipt of reasonable notice to Capital, all financial records pertaining to the facility will be open for inspection and review by Buckner's

representatives. All labor and expense associated with such review shall be borne by Buckner.

G. Directives. In order to assure proper coordination, Buckner shall issue any directions concerning the operations of the Facility only through the President or Vice President of Capital.

H. Operating Reports. During the term of this Agreement, Buckner shall, within fourteen (14) days of issuance, furnish to Capital copies of any and all Facility-related reports, including the annual audit (if any) as well as copies of the minutes of all local advisory Board meetings, other than items relating to the performance of Capital.

I. Advisory Board Meetings. During the term of this Agreement, a representative of Capital shall be a member of the local advisory board and attend any regular or special meeting of the local advisory Board other than any part thereof involving evaluation of the performance of Capital under this Agreement. Buckner shall give Capital the same notice of local advisory Board meetings as is required to be given to Board members.

J. Change of Residency Agreement. Buckner shall not change the Residency Agreement without consulting with and seeking approval of Capital, unless required to do so to comply with any applicable law or regulation.

K. Decisions. Buckner shall examine documents submitted by Capital and render decisions pertaining thereto promptly to avoid unreasonable delay.

L. Uniform Accounts. Facility shall use the uniform chart of accounts recommended by Capital.

M. Furnishing Information. Buckner agrees at its expense to install and maintain a computer terminal compatible with the mainframe computer currently in use by Capital and to transmit data to the Capital mainframe computer via telephone lines.

N. Right of First Refusal.

1. Buckner hereby grants to Capital a right of first refusal in the event that Buckner decides to sell the Facility during the initial term of this Agreement. Buckner shall furnish Capital with a written copy of the terms and conditions of the proposed sale, which terms and conditions shall be certified by Buckner as bona fide, and Capital shall have thirty (30) days from the date of receipt of such written copy within which to notify Buckner whether Capital desires to exercise its rights of first refusal to purchase the Facility on the same terms and conditions. If Capital fails to notify Buckner of its desire to exercise its right of first refusal within such thirty (30) day period, Capital shall be deemed to have not exercised its right of first refusal hereunder.

2. If Capital exercises its right of first refusal, Capital shall have an additional sixty (60) days following expiration of the thirty (30) day notice period within which to obtain financing to purchase the Facility. Capital shall notify Buckner whether it has obtained financing to purchase the Facility within such sixty (60) day period. If Capital fails to notify Buckner of its having obtained financing within such sixty (60) day period, Capital shall be deemed not to have obtained the requisite financing.

3. If Capital gives timely notice of the exercise of its right of first refusal and having obtained the requisite financing to purchase the Facility, the closing on the sale to Capital shall take place within thirty (30) days after the expiration of the sixty (60) day period on materially the same terms and conditions as set forth in the bona fide offer; provided, however, that Capital shall furnish Buckner with a non-refundable deposit equal to five percent (5%) of the purchase price, to be credited with interest earned thereon against the purchase price at the closing in order to extend the closing for such thirty (30) day period.

4. If Capital fails to give timely notice of the exercise of its right of first refusal or having obtained the requisite financing to purchase the Facility, Buckner shall be free to close on the sale to the proposed purchaser, with the closing to take place within one hundred eighty (180) days after the failure of Capital to give timely notice, but only on materially the same terms and conditions as set forth in the bona fide offer. If such closing to the proposed purchaser does not occur within such one hundred eighty (180) day period or if the terms and conditions of the proposed sale are not materially the same as set forth in the bona fide offer, the Facility may not be sold without Capital once again being offered the right to exercise its right of first refusal hereunder.

5. Any sale, Sub-lease, or assignment with respect to the Facility, other than to Capital, shall be expressly subject to the terms and provisions of this Agreement and shall not relieve Buckner of its liability or obligations

hereunder, and Buckner shall cause any purchaser, assignee, or sub-lessee to deliver to Capital written acknowledgment of its agreement to perform hereunder including the payment of the management fee described herein. Buckner may at any time, without the consent of Capital, subject its interest in the Facility or any part thereof to the lien of one or more deeds of trust, mortgages, or other security instruments, so long as the mortgage and/or successor in interest confirms its consent to be bound by the terms of this Agreement within ten (10) days following Capital's demand therefor; provided, however, that so long as Buckner has no right to terminate this Agreement because of the default of Capital hereunder; in the event of any foreclosure or other proceeding under any such deed or trust, mortgage, or other security instruments to enforce the lien or security interest thereby created, this Agreement shall continue in full force and effect notwithstanding such foreclosure or other proceedings.

III. INSURANCE.

A. Capital shall maintain, in full force and effect, at the Facility's expense, the following insurance protecting Buckner and Capital and their officers and employees:

1. Employee's fidelity insurance

2. Worker's compensation and employers liability insurance

3. Professional liability insurance

4. Comprehensive general public liability insurance and overlying umbrella liability coverage against loss or liability for damages for personal injury or death occurring on, in or about the Facility.

Such policy or policies shall be written by a responsible insurance company or companies satisfactory to Buckner and in kind and amounts satisfactory to Buckner. Certificates of insurance showing compliance with the foregoing requirements shall be furnished by Capital to Buckner. Certificates shall state that the policy or policies will not be canceled or altered without at least 30 days prior written notice to Buckner.

B. Buckner shall procure and maintain, in full force and effect, at Buckner's expense the following insurance protecting Buckner and Capital and their officers and employees:

1. Property Insurance for loss or damage by fire and other perils insurable under the broad form of extended coverage insurance available in the area where the Facility is located, and improvements, and contents thereof, constituting all or any portion of the Facility.

2. Insurance for automobiles owned or hired by Buckner or Capital and used in connection with the Facility.

Such policy or policies shall be written by a responsible insurance company or companies satisfactory to Capital in kind and amounts satisfactory to Capital. Certificates of insurance showing compliance with the foregoing requirements shall be furnished by Buckner to Capital. Certificates shall state that the policy or

policies will not be canceled or altered without at least 30 days prior written notice to Capital.

IV. TERM AND TERMINATION OF THIS AGREEMENT

A. Term and Termination Without Cause. This Agreement shall commence on the date set forth on the first page hereof and continue for a period of five (5) years, except that either party may terminate this Agreement after the Fixed Term (as hereinafter defined) by giving ninety (90) days written notice to the other party. The Fixed Term shall be thirty-six (36) months, except that if tax exempt financing is not utilized or if the U.S. Treasury Department liberalizes its current published advance ruling guidelines (Rev. Proc. 82-14, 1982-1 C.B. 459) to extend the period in which a management contract may be non-terminable without adversely affecting the tax-exempt status of bonds issued to finance the Facility to which the management contract relates, and if, in the opinion of bond counsel, such Treasury action applies to the bonds issued to finance the Facility, then the Fixed Term shall be the maximum period allowed for advance ruling purposes, but not more than five (5) years. If Buckner terminates the Agreement prior to the expiration of the Fixed Term or if Capital terminates this Agreement during the Fixed Term for cause as provided in Paragraph IV.B. below, severance compensation in an amount equal to the then-current monthly management fee times the number of months remaining in the Fixed Term shall be paid to Capital upon the effective date of termination. Any such termination shall be effective upon the expiration of the ninety (90) day period following the giving of the notice or on such later date as may be specified in the notice.

B. Termination for Cause.

1. This Agreement may be terminated by Buckner for cause for the following reasons:

a) In the event of material breach by Capital of a material term hereof, which breach is not cured within sixty (60) days after notice by Buckner and such failure is the result of Capital's willful misconduct, gross negligence, or unlawful act.

b) In the event that a petition in bankruptcy is filed by Capital or its permitted assignee, or in the event Capital or its permitted assignee makes an assignment for the benefit of creditors or takes advantage of an insolvency act, by notice to Capital or assignee.

c) In the event that (i) Capital's or any permitted assignee's corporate existence is dissolved and the duties under this Agreement are not assumed by Capital or an affiliate of Capital (ii) Capital or any permitted assignee ceases to do business for any reason, by notice to Capital or such assignee, and the duties under this Agreement are not assumed by Capital or Capital's Affiliate.

d) In the event of a change of controlling ownership interest in Capital or Capital Senior Living, Inc. Controlling Ownership shall be defined as a change of greater than 50% from the present 100% ownership of James
A. Stroud and Jeffrey L. Beck and affiliates of which they control.

2. This Agreement may be terminated by Capital in the event that Capital fails to receive reimbursement of reimbursable expenses or any compensation due Capital pursuant to the terms of this Agreement, or any other compensation due Capital, and such failure continues for a period of sixty (60) days after Capital's written notice thereof to Buckner; provided, however, that this Agreement shall not be so terminated if Buckner pays Capital all such expenses and compensation then due and payable on or before the expiration of said sixty-day period.

3. No termination of this Agreement shall affect any obligation owing by either party hereto to the other which accrued prior to the effective date of such termination.

C. Covenants Surviving Termination. The termination of this Agreement shall not terminate the right of Capital to indemnification relating to events occurring during the term of this Agreement under Article VI.L., and to protection of its property rights under Article VI.B.

V. COMPENSATION

A. Operations Management and Marketing Lease-up Fees. Buckner shall pay to Capital a fee in the amount set forth below, payable on the fifteenth day of each month commencing with the second month this Agreement is executed and ending on the last day of the month after which this Agreement is terminated:

1. The amount to be paid monthly shall be the greater of $5,000.00 per month or 5% of Gross Revenues generated during the immediately proceeding month. "Gross Revenues" shall be defined as gross monthly revenues from

the operation of the Facility. Gross Revenues shall not include (i) security deposits received from residents and, if applicable, interest accrued thereon for the benefit of the residents until such deposits or interest are accrued thereon for the benefit of the residents until such deposits or interest are applied for rental payments; (ii) proceeds from the sale of depositions of all or any part of such Facility; (iii) insurance proceeds received by Buckner as a result of any insured loss
(except proceeds for rent loss insurance); (iv)
capital contributions made by any partner of Buckner;
(v) loans by Buckner; and (vi) proceeds from capital, financing and any other transactions not in the ordinary course of operation of such Facility. The Monthly Management Fee for the facility shall be payable monthly in arrears following calculations thereof upon submission of a monthly statement for such Facility from Capital. It is agreed between Buckner and Capital that if the Gross Revenues of the Facility are insufficient to pay all disbursements, including the Monthly Management Fee, or any portion thereof, then Buckner shall remain responsible for such disbursements. It is further agreed between Buckner and Capital that in no event will any disbursement be made to Buckner from any Facility Account until all accrued and unpaid fees to Capital and repayments, if any, to Capital for Capital's advancement of funds to cover any insufficiencies in such Facility's Rental or Payroll Account have been paid in full.

2. A marketing lease-up fee of $500.00 shall be paid for each apartment unit and patio home at the time the unit is initially occupied. This fee will be

applicable for only those units not leased as of the date of the execution of this Agreement.

3. Buckner and Capital shall prepare a net income projection for the start up period beginning April 1, 1996 and ending June 30, 1997 ("First Projection Term"), in form similar to Exhibit A. Said projection shall be approved by both parties in writing. This projection shall not include any debt service obligations or capital expenditure obligations of the Facility. If, at the end of the First Projection Term, Capital either exceeds projected net positive income for the First Projection Term or falls below the projected net loss, Capital shall be entitled to receive 25% of either the savings below the projected net loss or the profits above the projected net positive income, but not to exceed the amount paid under item 1 of section V.A. for the First Projection Term. After the First Projection Term ending June 30, 1997, Buckner and Capital shall prepare a net income projection for the next six (6) month period ending December 31, 1997 ("Second Projection Term"). If, at the end of the Second Projection Term Capital exceeds the projected income, or falls below the projected net loss for the said period, Capital shall be entitled to retain 25% of either the savings below the net loss or the amount of profit above the projected net gain, but not to exceed the amount paid under item 1 of section V.A. for the Second Projection Term. Each year, subsequent to the Second Projection Term, Buckner and Capital shall prepare, on an annual basis, a net income projection beginning January 1 of each year and ending December 31 of that same year. If at the end of

each year, Capital exceeds the projected annual income number as of that year, or falls below the projected loss for the year, Capital shall be entitled to retain 25% of either the savings below the net loss or the amount of profit above the projected net gain, but not to exceed the amount paid under item 1 of section V.A. for each subsequent projection term.

B. Certain Expenses. In accordance with the Annual Budgets, the Facility will reimburse Capital for the cost of reasonable transportation, lodging and meal expenses for non-Facility-based employees of Capital or its outside consultants when traveling in connection with the performance of the services being performed pursuant to this Agreement, together with any reasonable long distance telephone expenses, copying, mailing or express shipments, and other miscellaneous out of pocket expenses that relate to the marketing and management of the Facility. Relocation, education, professional memberships and licensing expenses of the Facility-based administrative employees, shall also be an expense of the Facility.

VI. MISCELLANEOUS

A. Insurance-Subrogation. No indemnity shall be paid to the other party under this Agreement where the claim, damage, liability, loss or expense incurred was or was not required to be insured against. Any insurance policies obtained by the parties pursuant to this Agreement shall contain provisions or have the effect of waiving any right of subrogation by the insurer of one party against the other party or its insurer.

B. Property of Capital. Trade names, including the name "Buckner Westminster Place," ideas and documents, forms, occupancy development material, specifically

for and related to Buckner Westminster Place shall be the property of Buckner. Trade names, ideas and documents, forms and occupancy development material, not directly related to the Facility and supplied by Capital are to be considered proprietary and will remain the property of Capital. Buckner may use such materials which are the property of Capital and information in the operation and management of the Facility, as may be recommended by Capital, but may not use such materials or information after termination of this Agreement for the development or expansion of the Facility or for new projects for itself or others without the written consent of Capital.

C. Status of Parties. It is expressly understood and agreed that Capital shall act as an independent contractor in the performance of this Agreement. No provision hereof shall be deemed or construed to create a partnership or a joint venture between Buckner and Capital with respect to the Facility or otherwise.

D. Additional Action. In order to carry out the intent and spirit of this Agreement, Buckner and Capital will do all acts and things necessary including the execution of other agreements.

E. Entire Agreement. This Agreement sets forth the entire Agreement between Capital and Buckner. Any change or modification of this Agreement must be in writing and signed by all parties hereto.

F. Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto, their successors and assigns.

G. Assignment, etc. Capital shall not, without Buckner's prior written approval (which approval shall not be unreasonably withheld), assign any of its rights or obligations under this Agreement.

H. Governing Law. This Agreement, its interpretation, validity and performance shall be governed by the laws of the State of Texas.

I. No Personal Liability. This Agreement has been executed on behalf of Buckner and Capital by their respective officers solely in their representative capacities, and no officer, director, agent, employee or attorney of Buckner or Capital shall have any personal liability hereunder to any person.

J. Hiring Capital Employees. Without the prior written consent of Capital, for a period of three years following termination of this Agreement, Buckner will not employ or engage any person who was a Capital employee assigned to the administrative staff of the Facility at any time during the last twelve (12) months of the term of this Agreement.

K. Conditions Beyond Control of Parties. Neither party shall be held liable for failure to comply with any of the terms of this Agreement when such failure has been caused solely by fire, labor dispute, strike, war, insurrection, government restrictions, force majeure, or act of God beyond the control and without fault on the part of the party involved, provided such party uses due diligence to remedy such default. Circumstances are likely to arise from time to time which may require that budgets be exceeded, and Capital shall not be liable for budget overruns.

L. Indemnification. Buckner will indemnify and hold harmless Capital from any and all liability arising incident to Buckner's performance of its duties under this Agreement. Capital will indemnify and hold harmless Buckner from any and all liabilities arising incident to Capital's performance of its duties under this Agreement.

Buckner shall also indemnify and hold Capital harmless against any and all losses, costs or expenses incurred by Capital by reason of, arising out of or in any way related to noncompliance by the Facility with all applicable state, federal and local laws, ordinances, rules and regulations relating to the physical condition of the property of the Facility, provided Capital shall promptly notify Buckner of Capital's knowledge of any such noncompliance.

M. Arbitration. In the event of any dispute, claim or controversy of any kind between the parties, concerning this Agreement or the termination of this Agreement, the matter shall be submitted to arbitration in accordance with rules of the American Arbitration Association, except that the selection of the Arbitrator shall be done Selected Arbitrator. The parties jointly shall agree on an arbitrator. If the parties are unable to agree, in good faith within a reasonable time, on the selection of an arbitrator, either party may request appointment of an arbitrator chosen by the American Arbitration Association who shall be the Selected Arbitrator. Such arbitrator shall be limited in his decision to a choice between the final position as requested by each party. Said arbitration shall be held in Dallas/Fort Worth, Texas, or such other place as is mutually agreeable. The arbitration decision shall

be final and binding on both parties unless the arbitration is fraudulent or so grossly erroneous as to necessarily imply bad faith. Costs of arbitration are to be shared by both parties equally, provided that the arbitrator may choose to award the costs of arbitration against the losing party if the arbitrator determined that the final position urged by the losing party was not reasonable.

BUCKNER RETIREMENT SERVICES, INC.          CAPITAL SENIOR MANAGEMENT 1, INC.



By: /s/ Kennith S. Hall                    By: /s/ Keith Johannessen
   ------------------------------             ----------------------------------
(title)  President/CEO                     (title)  President
       --------------------------                 ------------------------------

AMENDMENT TO MANAGEMENT AGREEMENT

THIS AMENDMENT is incorporated into and made a part of the Management Agreement dated April 1, 1996 ("the Agreement") between BUCKNER RETIREMENT SERVICES, INC. ("Buckner"), a not-for-profit corporation organized under the laws of the State of Texas, and CAPITAL SENIOR MANAGEMENT 1, INC. ("Capital"), a for-profit corporation organized under the laws of the State of TEXAS.

Article IV, Section B, Item 1(d) of the Agreement is hereby amended by adding the following to the end of the sentence:

. . . Notwithstanding the above, in the event that a public offering of the stock of Capital Senior or Capital Senior Living, Inc., the controlling ownership shall be defined as a change of greater than an aggregate 30% ownership of James A. Stroud and Jeffrey L. Beck and affiliates of which they control as well as ownership of current management of Capital Senior or Capital Senior Living, Inc.

Except as modified herein, all other terms and conditions of the Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Amendment effective on this 16th day of April, 1996.

BUCKNER RETIREMENT SERVICES, INC.              CAPITAL SENIOR MANAGEMENT 1, INC.


By: /s/                                        By: /s/ David R. Brickman
   ------------------------------                 ------------------------------
   Name                                           Name

       Senior Vice President                         Vice President
   ------------------------------                 ------------------------------
   Title                                          Title

EXHIBIT 10.23

MANAGEMENT AGREEMENT

THIS MANAGEMENT AGREEMENT (the Agreement) entered into this 23rd day of May, 1997 by and between The Emmaus Calling, Inc. ("Owner"), a not-for-profit corporation organized under the laws of the state of Texas, and Capital Senior Management 1, Inc., (Manager), a for-profit corporation organized under the laws of the state of Texas.

PREAMBLE

Owner by this Agreement is engaging Manager to provide management services relating to the operation of a 104 unit assisted living facility located in Mesquite, Texas (the Facility), and

Manager and Owner share a commitment to make the retirement years of residents as meaningful and comfortable as possible. Both share the philosophy that the retirement environment should allow for and encourage contained personal growth and independent living for the elderly, and when independent living is no longer possible, then the same retirement environment should have the flexibility to provide quality health care in the midst of a high degree of understanding, compassion and companionship enhanced by and based upon the prior years of residence in the same community.

This Agreement is founded on the following assumptions:

Owner retains primary responsibility to:

a. Establish the policies of the Facility and to plan for its short-range and long-range goals.

b. Review and evaluate the performance of Manager in carrying out the established policies and in attaining the goals established by Owner.

c. Annually review and approve the budget.

d. Annually review the policies and goals which have been established.

Manager assumes primary responsibility to:

a. Implement the policies established by Owner.

b. Supervise the day-to-day management of the Facility, including all resident activities.

c. Provide to Owner full, timely and accurate information as to past operations.

d. Provide to Owner budgets and recommendations relating to the future operations of the Facility.

The parties therefore agree as follows:

I. RESPONSIBILITIES OF MANAGER

A. RECOMMENDED POLICIES. Manager shall recommend policies and goals to be established by Owner and shall evaluate such policies and goals on an ongoing basis.

B. MANAGEMENT DUTIES. Manager shall supervise the operation of the Facility, provide management services, install operating procedures and oversee day-to-day operations, all subject to and in accordance with the budgets and policies established by Owner.

C. MARKETING DUTIES. Manager shall manage and supervise the marketing program. Manager shall periodically review the residency agreement and recommend changes thereof as and if required.

D. EMPLOYEES. All Facility-based Employees, including the administrative employees, shall be employees of Manager. Manager shall have sole authority over Facility-based Employees and Non-Facility-based Employees who are directly responsible for the Facility and all matters pertaining thereto and shall be responsible for all actions and omissions of such employees occurring pursuant to Manager's employee policy manual. All costs of hiring, equipping and providing the services of Facility-based Employees, including, but not limited to, compensation, health insurance, employer liability insurance, payroll taxes, bonding, workers' compensation insurance, benefits and vacations shall be an expense of Manager. To the extent the above-stated expenses are incurred in accordance with the Facility budget or approved by Owner, they shall be reimbursed from the Facility operations or Owner as the case may be.

E. OPERATING PROCEDURES. Manager shall develop, install and maintain operating procedures, systems and controls.

F. FACILITY EXPANSION. Manager shall make recommendations regarding construction, remodeling or expansion of the Facility.

G. BUDGETS. Manager shall prepare for review and approval by Owner based on reasonable standards annual operating budgets for revenue, expense and cash flow of the Facility and a capital expenditures budget. Budgets shall be prepared in advance of each fiscal year. Cash flow projections shall accompany each operating budget. It is to be understood that budgets are only estimates and guidelines of future results and that budget overruns may occur from time to time.

H. FINANCIAL CONTROLS. Manager shall establish and maintain a system of financial controls for the Facility.

I. MONTHLY FINANCIAL STATEMENTS. Manager shall provide to Owner, on a monthly basis, financial statements and related financial reports. Such statements and reports shall be provided by the 20th day after the end of the month. These reports shall be in the form attached as Exhibit "A."

J. MARKETING REPORTS. Manager shall, on a monthly basis, provide sales and occupancy reports to Owner, as well as the results of the annual resident satisfaction survey.

K. LEGAL COUNSEL. Manager, at Facility expense, shall coordinate with Owner the utilization of legal counsel relating to Facility operations.

L. RENTAL COLLECTIONS AND DISBURSEMENTS. Manager shall collect the revenues from the residents and, on behalf of Owner, deposit all such funds in a residential depository account at a FDIC insured bank approved by Owner. The style of the account shall be in the name of the Facility with designated representatives from Owner and Manager being the only parties authorized to draw from said account.

On an as needed basis, Manager shall transfer the funds from the above stated account into an Operating Expense Account in the name of the Facility. The account shall be in a FDIC insured bank approved by Owner. The style of the account shall be in the name of the Facility with designated representatives from Owner and Manager being the only parties authorized to draw from said account. Manager shall pay out of such Operating Expense Account all operating expenses for which payment has been approved in accordance with the budget or approved by Owner (including Manager's Management Fee and any other sums due to Manager from Owner), and all other sums properly payable pursuant to any of the provisions of this Agreement. Manager shall hold, remit or expend the balance of such funds, if any, as Owner may direct.

These funds shall not be co-mingled with funds from any other projects and/or facilities managed and/or operated by Manager.

M. ACCOUNTING SYSTEMS AND SOFTWARE. Manager shall provide to Owner, during the term of this Agreement, appropriate on-site accounting systems and software, which shall include complete accounting, bookkeeping and record keeping services for the Facility, specifically including, but not limited to, resident billings, accounts payable, accounts receivable, general ledger and inventory records and maintain demographic information on the residents. Acquisition of software for Facility based operations, software maintenance and update charges will be budgeted expenses of the Facility. Payroll processing may be delegated to a third party, the cost of which will be the responsibility of the Facility.

II. OWNER'S RESPONSIBILITIES

A. POLICIES. Owner shall establish the policies for the Facility.

B. GOALS. Owner shall establish the short range and long range goals of the Facility.

C. BUDGETS. Owner shall review and approve budgets for the operation of the Facility.

D. MANAGER'S PERFORMANCE. Owner shall review and evaluate the performance of Manager in carrying out the policies for the Facility.

E. LEGAL COUNSEL. Owner shall obtain legal counsel to perform all necessary legal services relating to Owner's ownership of the Facility.

F. AUDITS. Owner, at its discretion, may engage certified public accountants to perform annual audits of the Facility as well as prepare any other reports required for federal or state regulatory agencies which require licensure and/or certification. Every quarter, upon receipt of reasonable notice to Manager, all financial records pertaining to the Facility will be open for inspection and review by Owner's representatives. All labor and expense associated with such review shall be borne by Owner.

G. DIRECTIVES. In order to assure proper coordination, Owner shall issue any directions concerning the operations of the Facility only through the President or Vice President of Manager.

H. OPERATING REPORTS. During the term of this Agreement, Owner shall, within fourteen (14) days of issuance, furnish to Manager copies of any and all Facility-related reports, including the annual audit (if any) as well

as copies of the minutes of all local advisory Board meetings, other than items relating to the performance of Manager.

I. ADVISORY BOARD MEETINGS. If applicable, during the term of this Agreement, a representative of Manager shall be a member of the local advisory board and attend any regular or special meeting of the local advisory Board other than any part thereof involving evaluation of the performance of Manager under this Agreement. Owner shall give Manager the same notice of local advisory Board meetings as is required to be given to Board members.

J. CHANGE OF RESIDENCY AGREEMENT. Owner shall not change the Residency Agreement without consulting with and seeking approval of Manager unless required to do so to comply with any applicable law or regulation.

K. DECISIONS. Owner shall examine documents submitted by Manager and render decisions pertaining thereto promptly to avoid unreasonable delay.

L. UNIFORM ACCOUNTS. Facility shall use the uniform chart of accounts recommended by Manager.

M. FURNISHING INFORMATION. Owner agrees at its expense to install and maintain a computer terminal compatible with the mainframe computer currently in use by Manager and to transmit data to the Manager mainframe computer vial telephone lines.

N. RIGHT OF FIRST REFUSAL.

1. After the opening of the Facility, Owner hereby grants to Manager a right of first refusal in the event that Owner decides to sell the Facility during the initial term of this Agreement. This right of first refusal shall be effective only if this Agreement is then in full operation and effect. Owner shall furnish Manager with a written copy of the terms and conditions of the proposed sale, which terms and conditions shall be certified by Owner as bona fide and Manager shall have thirty (30) days from the date of receipt of such written copy within which to notify Owner whether Manager desires to exercise its rights of first refusal to purchase the Facility on the same terms and conditions. If Manager fails to notify Owner of its desire to exercise its right of first refusal within such thirty (30) day period, Manager shall be deemed to have not exercised its right of first refusal hereunder.

2. If Manager exercises its right of first refusal, Manager shall have an additional sixty (60) days following expiration of the thirty (30) day notice period within which to obtain financing to purchase the Facility. Manager shall notify Owner whether it has obtained financing to purchase the Facility within such sixty (60) day period. If Manager fails to notify Owner of its having obtained financing within such sixty (60) day period, Manager shall be deemed not to have obtained the requisite financing.

3. If Manager gives timely notice of the exercise of its right of first refusal and having obtained the requisite financing to purchase the Facility, the closing on the sale to Manager shall take place within thirty (30) days after the expiration of the sixty (60) day period on materially the same terms and conditions as set forth in the bona fide offer; provided, however, that Manager shall furnish Owner with a non-refundable deposit equal to five percent (5%) of the purchase price, to be credited with interest earned thereon against the purchase price at the closing in order to extend the closing for such thirty (30) day period.

4. If Manager fails to give timely notice of the exercise of its rights of first refusal or having obtained the requisite financing to purchase the Facility, Owner shall be free to close on the sale to the proposed purchaser, with the closing to take place within one hundred eighty (180) days after the failure of Manager to give timely notice, but only on materially the same terms and conditions as set forth in the bona fide offer. If such closing to the proposed purchaser does not occur within such one hundred eighty (180) day period or if the terms and conditions of the proposed sale are not materially the same as set forth in the bona fide offer, the Facility may not be sold without Manager once again being offered the right to exercise its right of first refusal hereunder.

Owner may at any time, without the consent of Manager, subject its interest in the Facility or any part thereof to the lien of one or more deeds of trust, mortgages or other security instruments, so long as the mortgage and/or successor in interest confirms its consent to be bound by the terms of this Agreement within ten (10) days following Manager's demand therefor; provided, however, that so long as Owner has no right to terminate this Agreement because of the default of Manager hereunder; in the event of any foreclosure or other proceeding under any such deed or trust, mortgage or other security instruments to enforce the lien or security interest thereby created, this Agreement shall continue in full force and effect notwithstanding such foreclosure or other proceedings.

6. If Manager does not exercise its right of first refusal, and if Owner sells, assigns or subleases the Facility to a third party, Owner shall, upon the effective date of termination, pay to Manager severance compensation in an amount equal to the present value of thirty percent (30%) of the then- current monthly management fee times the number of months remaining in the Fixed Term calculated at a discount rate at eight percent (8%).

III. INSURANCE.

A. Manager shall maintain, in full force and effect, at the Facility's expense, the following insurance protecting Owner and Manager and their officers and employees:

1. Employee's fidelity insurance

2. Worker's compensation and employers liability insurance

3. Professional liability insurance

4. Comprehensive general public liability insurance and overlying umbrella liability coverage against loss or liability for damages for personal injury or death occurring on, in or about the Facility.

Such policy or policies shall be written by a responsible insurance company or companies satisfactory to Owner and in kind and amounts satisfactory to Owner. Certificates of insurance showing compliance with the foregoing requirements shall be furnished by Manager to Owner. Certificates shall state that the policy or policies will not be canceled or altered without at least 30 days prior written notice to Owner.

B. Owner shall procure and maintain, in full force and effect, at Owner's expense the following insurance protecting Owner and Manager and their officers and employees:

1. Property Insurance for loss or damage by fire and other perils insurable under the broad form of extended coverage insurance available in the area where the Facility is located, and improvements, and contents thereof, constituting all or any portion of the Facility.

2. Insurance for automobiles owned or hired by Owner and used in connection with the Facility.

Such policy or policies shall be written by a responsible insurance company or companies satisfactory to Manager in kind and amounts satisfactory to Manager. Certificates of insurance showing compliance with the foregoing requirements shall be furnished by Owner to Manager. Certificates shall state that the policy or policies will not be canceled or altered without at lease thirty (30) days prior written notice to Manager.

IV. TERM AND TERMINATION OF THIS AGREEMENT.

A. TERM AND TERMINATION WITHOUT CAUSE. This Agreement shall commence on the date set forth on the first page hereof and continue for a period of the lesser of eighty percent (80%) of the reasonably expected useful life of the Facility or fifteen
(15) years (the "Fixed Term"). If the U.S. Treasury Department liberalizes its current published advance ruling guidelines (Rev. Proc. 97-13) to extend the period in which a management contract may be non-terminable without adversely affecting the tax-exempt status of bonds issued to finance the Facility to which the management contract relates, and if, in the opinion of bond counsel, such Treasury action applies to the bonds issued to finance the Facility, then the Fixed Term shall be the maximum period allowed for advance ruling purposes. Except as stated under Article II, Section N, Number 6, if Owner terminates the Agreement prior to the expiration of the Fixed Term without cause or if Manager terminates this Agreement during the Fixed Term for cause as provided in Paragraph IV. B. below, severance compensation in an amount equal to the then-current monthly management fee times the number of months remaining in the Fixed Term shall be paid to Manager upon the effective date of termination. Any such termination shall be effective upon the expiration of the ninety (90) day period following the giving of the notice or on such later date as may be specified in the notice.

B. TERMINATION FOR CAUSE.

1. This Agreement may be terminated by Owner for cause for the following reasons:

a) In the event of material breach by Manager of a material term hereof, which breach is not cured within thirty (30) days after notice by Owner and such failure is the result of Manager's willful misconduct, gross negligence or unlawful act.

b) In the event that a petition in bankruptcy is filed by Manager or its permitted assignee, or in the event Manager or its permitted assignee makes an assignment for the benefit of

creditors or takes advantage of an insolvency act, by notice to Manager or assignee or if Manager becomes insolvent.

c) In the event that (i) Manager's or any permitted assignee's corporate existence is dissolved and the duties under this Agreement are not assumed by Manager or an affiliate of Manager (ii), Manager or any permitted assignee ceases to do business for any reason, by notice to Manager or such assignee and the duties under this Agreement are not assumed by Manager or Manager's Affiliate.

d) At any time after 15 years of its execution, with or without cause.

2. This Agreement may be terminated by Manager in the event that Manager fails to receive reimbursement of reimbursable expenses or any compensation due Manager pursuant to the terms of this Agreement or any other compensation due Manager, and such failure continues for a period of sixty (60) days after Manager's written notice thereof to Owner, however, that this Agreement shall not be so terminated if Owner pays Manager all such expenses and compensation then due and payable on or before the expiration of said sixty
(60) day period.

3. No termination of this Agreement shall affect any obligation owing by either party hereto to the other which accrued prior to the effective date of such termination.

C. COVENANTS SURVIVING TERMINATION. The termination of this Agreement shall not terminate the right of Manager to indemnification relating to events occurring during the term of this Agreement under Article VI. L. and to protection of its property rights under Article VI. B.

V. COMPENSATION

A. OPERATIONS MANAGEMENT FEES. Owner shall pay to Manager a fee in the amount set forth below, payable on the fifteenth day of each month commencing with the date of the first resident move-in and ending on the last day of the month after which this Agreement is terminated:

1. The amount to be paid monthly shall be Eight Thousand And No/100 Dollars ($8,000.00) per month (the Monthly Management Fee). The Monthly Management Fee shall be increased yearly by the difference between the Consumer Price Index for that year less

the Consumer Price Index for the year of completion. The Monthly Management Fee for the Facility shall be payable monthly in arrears following calculations thereof upon submission of a monthly statement for such Facility from Manager. It is agreed between Owner and Manager that if the Gross Revenues of the Facility are insufficient to pay all disbursements, including the Monthly Management Fee or any portion thereof, then Owner shall remain responsible for such disbursements. It is further agreed between Owner and Manager that in no event will any disbursement be made to Owner from any Facility Account until all accrued and unpaid fees to Manager and repayments, if any, to Manager for Manager's advancement of funds to cover any insufficiencies in such Facility's Rental or Payroll Account have been paid in full.

2. A Productivity Award equal to $_______________ when the gross monthly revenues from the Facility exceed $_______________ for three (3) consecutive months. In the event the Productivity Award is greater than five percent (5%) of the total Monthly Management Fee for that annual period, (I) it shall be reduced to five percent (5%) of the total Monthly Management Fee for that annual period and (ii) Manager shall be eligible to receive a Productivity Award in the next year (subject to the same five percent (5%) limitation) if the gross monthly revenues from the Facility exceed $________________ for three (3) consecutive months in that next year.

B. CERTAIN EXPENSES. In accordance with the Annual Budgets, the Facility will reimburse Manager for the cost of reasonable transportation, lodging and meal expenses for non-Facility-based employees of Manager or its outside consultants when traveling in connection with the performance of the services being performed pursuant to this Agreement, together with any reasonable long distance telephone expenses, copying, mailing or express shipments and other miscellaneous out of pocket expenses that relate to the marketing and management of the Facility. Relocation, education, professional memberships and licensing expenses of the Facility-based administrative employees shall also be an expense of the Facility subject to Owner's approval.

VI. MISCELLANEOUS

A. INSURANCE-SUBROGATION. No indemnity shall be paid to the other party under this Agreement where the claim, damage, liability, loss or expense incurred was required to be insured against by such other party. Any insurance policies obtained by the parties pursuant to this Agreement shall contain

provisions or have the effect of waiving any right of subrogation by the insurer of one party against the other party or its insurer.

B. PROPERTY OF MANAGER. Trade names, including the name ______________________, ideas and documents, forms, occupancy development material, specifically for and related to the Facility shall be the property of Owner. Trade names, ideas and documents, forms and occupancy development material, not directly related to the Facility and supplied by Manager are to be considered proprietary and will remain the property of Manager. Owner may use such materials which are the property of Manager and information in the operation and management of the Facility, as may be recommended by Manager, but may not use such materials or information after termination of this Agreement for the development or expansion of the Facility or for new projects for itself or others without the written consent of Manager.

C. STATUS OF PARTIES. It is expressly understood and agreed that Manager shall act as an independent contractor in the performance of this Agreement. No provision hereof shall be deemed or construed to create a partnership or a joint venture between Owner with respect to the Facility or otherwise.

D. ADDITIONAL ACTION. In order to carry out the intent and spirit of this Agreement, Owner and Manager will do all acts and things necessary including the execution of other agreements.

E. ENTIRE AGREEMENT. This Agreement sets forth the entire Agreement between Manager and Owner. Any change or modification of this Agreement must be in writing and signed by all parties hereto.

F. BINDING EFFECT. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto, their successors and assigns.

G. ASSIGNMENT, ETC. Manager shall not, without Owner's prior written approval (which approval shall not be unreasonably withheld), assign any of its rights or obligations under this Agreement.

H. GOVERNING LAW. This Agreement, its interpretation, validity and performance shall be governed by the laws of the State of Texas.

I. NO PERSONAL LIABILITY. This Agreement has been executed on behalf of Owner and Manager by their respective officers solely in their representative capacities and no officer, director, agent, employee or attorney of Owner or Manager shall have any personal liability hereunder to any person.

J. NON-COMPETE. Without the prior written consent of Manager, for a period of three years following termination of this Agreement, Owner will not employ or engage any person who was a Manager employee assigned to the administrative staff of the Facility at any time during the last twelve (12) months of the term of this Agreement. Additionally, neither Manager nor Owner will operate, manage or develop any facilities within a 3 mile radius of the "Facility". This section shall not apply to Owner upon sale of the Facility to a third party, termination of the Agreement for cause by Owner.

K. CONDITIONS BEYOND CONTROL OF PARTIES. Neither party shall be held liable for failure to comply with any of the terms of this Agreement when such failure has been caused solely by fire, labor dispute, strike, war, insurrection, government restrictions, force majeure, or act of God beyond the control and without fault on the part of the party involved, provided such party uses due diligence to remedy such default. Circumstances are likely to arise from time to time which may require that budgets be exceeded, and Manager shall not be liable for budget overruns.

L. INDEMNIFICATION. Owner will indemnify and hold harmless Manager from any and all liability arising incident to Owner's performance of its duties under this Agreement. Manager will indemnify and hold harmless Owner from any and all liabilities arising incident to Manager's performance of its duties under this Agreement.

Owner shall also indemnify and hold Manager harmless against any and all losses, costs or expenses incurred by Manager by reason of, arising out of or in any way related to noncompliance by the Facility with all applicable state, federal and local laws, ordinances, rules and regulations relating to the physical condition of the property of the Facility, provided Manager shall promptly notify Owner of Manager's knowledge of any such noncompliance.

M. ARBITRATION. In the event of any dispute, claim or controversy of any kind between the parties, concerning this Agreement or the termination of this Agreement, the matter shall be submitted to arbitration in accordance with rules of the American Arbitration Association, except that the selection of the Arbitrator shall be done Selected Arbitrator. The parties jointly shall agree on an arbitrator. If the parties are unable to agree, in good faith within a reasonable time, on the selection of an arbitrator, either party may request appointment of an arbitrator chosen by the American Arbitration Association who shall be the Selected Arbitrator. Such arbitrator shall be limited in his decision to a choice between the final position as requested by each party. Said arbitration shall be held in Dallas/Ft. Worth, Texas or such other place as is mutually agreeable. The arbitration decision shall be final and binding on both parties unless

the arbitration is fraudulent or so grossly erroneous as to necessarily imply bad faith. Costs of arbitration are to be shared by both parties equally, provided that the arbitrator may choose to award the costs of arbitration against the losing party if the arbitrator determined that the final position urged by the losing party was not reasonable.

THE EMMAUS CALLING, INC. CAPITAL SENIOR MANAGEMENT 1, INC.

Owner                                      Manager



By:  /s/ ROBBIE L. WITTNER                 By:  /s/ DAVID R. BRICKMAN
     -----------------------------              ----------------------------
Title:  President                          Title:  VP
        -----------------------------              ----------------------------

Exhibit 10.24

PROPERTY MANAGEMENT AGREEMENT

This Agreement (herein so called) is made and entered into effective as of February 1, 1995, between NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP, a Delaware limited ("Owner"), and CAPITAL SENIOR LIVING, INC., a Texas corporation ("Agent").

1. Appointment and Acceptance. The Owner, on behalf of itself appoints the Agent as exclusive agent to manage, operate, maintain, lease, rent, and otherwise operate the properties more particularly described in Schedule I of this Agreement (collectively, the "Projects" and individually, a "Project"). Agent accepts the appointment, subject to the terms and conditions set forth in this Agreement; and agrees to exert its reasonable efforts in managing the property.

2. Definitions. The following terms and phrases are employed in this Agreement. Subject to the terms and conditions of this Agreement, said terms and phrases shall be deemed to have the respective meanings set forth below wherever they appear in this Agreement.

(a) "Affiliate" means (i) any other person directly or indirectly controlling or controlled by or under common control with another person, (ii) a person owning, or controlling 10% or more of the outstanding voting securities of such person or (iii) any officer, director or partner of such person.

(b) "Management Plan" means a description of the general policies and procedures to be followed in the management of a Project including, but not limited to, the Operating Budget for such Project, a form of lease, a list of Project employees, a list of services to be provided and service standards and any amendment or amendments thereto.

(c) "Marketing Plan" means a description of the general policies and procedures, including any amendment or amendments thereto, to be followed in the marketing of a Project, and including an advertising budget.

(d) "Non-Project-based Employees" means employees of the Agent other than Project-based Employees.

(e) "Operating Year" means each fiscal year, which shall be on a calendar year basis, of the Projects.

(f) "Partnership Notes" means those 13% Nonrecourse Pension Notes Due December 31, 2001, issued pursuant to the Trust Indenture, not exceeding $42,672,000 in aggregate principal amount.

(g) "Payroll Account" means one or more bank accounts established by Agent with a bank or financial institution whose deposits are insured by an agency of the United States Government, carried in Agent's name under Agent's Federal Employer (Tax)

Identification Number, with the Agent having signatory authority, and designated on record as "[Project Name] - Payroll Account." A Payroll Account may be an interest or non-interest bearing account including, without limitation, checking accounts, savings accounts, money market accounts and certificates of deposit, as Agent deems advisable.

(h) "Principal Parties" means the Owner and the Agent.

(i) "Project Administrator" means the person designated and selected by Agent to perform full-time supervisory management services at the Project site.

(j) "Operating Budget" means the annual operating budget for a Project prepared by Agent.

(k) "Project-based Employees" means all on-site employees of a Project including, without Incitation, the Project Administrator.

(l) "Rental Agency Account" means one or more bank accounts separated from all other accounts and funds established by Agent with a bank or financial institution whose deposits are insured by an agency of the United States Government, carried in Agent's name under Agent's Federal Employer (Tax) Identification Number, with the Agent and Owner having signature authority, and designated on record as "[Project Name] Rental Agency Account." A Rental Agency Account may be an interest or non-interest bearing account including, without limitation, checking accounts, savings accounts, money market accounts and certificates of deposit, as Agent deems advisable.

(m) "Trust Account" means one or more bank, accounts separated from all other accounts and funds established by Agent with a bank or financial institution selected by Agent in its sole discretion whose deposits are insured by an agency of the United States Government, carried in Agent's name under Agent's Federal Employer (Tax) Identification Number, with Agent and Owner having signature authority, and designated on record as "[Project Name] Trust Account". A Trust Account must be an interest-bearing account including, without limitation, checking accounts, savings accounts, money market accounts and certificates of deposit, as Agent deems advisable.

3. Management Plan. Except as otherwise provided in this Agreement, Owner and Agent shall meet and confer from time to time, as reasonably requested by Owner or Agent but no less than once a year, for the sole purpose of reviewing the Management Plan for each Project and the policies and procedures set forth therein. Agent shall deliver not later than sixty
(60) days prior to the end of the preceding Operating Year the entire Management Plan for each subsequent Operating Year to Owner for Owner's review and approval, which approval shall not be unreasonably withheld. Owner and Agent may agree to amend the Management Plan from time to time, but any such amendment shall be in writing signed by both Owner and Agent. The initial Management Plans and any subsequent Management Plan and all amendments thereto shall be deemed to be additional terms and conditions binding the Principal Parties of this Agreement and shall be incorporated herein by reference as though set forth herein in full, except that, should any

provisions of the initial Management Plan or any subsequent Management Plan and all amendments thereto conflict with any terms, conditions, or provisions of this Agreement, then this Agreement shall govern.

4. Marketing. Agent will use his discretion in marketing the Projects subject to any limitations contained in the applicable Management Plan and Marketing Plan. Ongoing advertising expenses within such limitations shall be Project expenses payable out of the Rental Agency Accounts.

5. Rentals. The Agent will offer for rent and will use its reasonable efforts to rent dwelling units and any other rental facilities in the Projects. Incident thereto, the following provisions will apply:

(a) Agent will use its reasonable efforts to show the premises to prospective tenants.

(b) Agent will use its reasonable efforts to take and process applications for rentals. If an application is rejected by Agent, the applicant will be told the reason for rejection, and the rejected application, with reason for rejection noted thereon, will be kept on file by Agent for one (1) year. A current list of prospective tenants will be maintained.

(c) Subject to any limitations imposed by applicable law, Agent will use its reasonable efforts to cause rental agreements to be in a general form included in the applicable Management Plan, and

(i) all individual rental agreements relating to dwelling units to be entered into by tenants shall be prepared by Agent and executed by Agent in Agent's name identified thereon as Agent for Owner.

(ii) all commercial and concession agreements, if any, shall be negotiated by Agent, executed by Agent in Agent's name identified thereon as agent for Owner.

(d) No resident may occupy space in any of the Projects without an executed lease. No lease or lease renewal shall be entered into for a term in excess of one year, subject to renewal.

(e) Agent shall prepare and provide to Owner, for Owner's review and approval, which approval shall not be unreasonably withheld, monthly rent and service package schedules showing minimum rents and fees to be charged for dwelling units and other facilities and services.

(f) Subject to any limitations imposed by law, Agent will use its reasonable efforts to collect, deposit and disburse security deposits, if required, in accordance with the terms of each tenant's rental agreement. Security deposits will be deposited by Agent

in the respective Project's Trust Account. All such deposits, together with accrued interest, if any, shall be disbursed as follows:

(i) first, in accordance with any applicable law;

(ii) second, in accordance with terms of any written or oral agreement under which it was received; and

(iii) third, if any amount is remaining, to Owner by disbursement to the respective Project's Rental Agency Account at such times as Agent, in Agent's discretion, deems appropriate.

Agent shall use its reasonable efforts to keep complete and accurate records on the Trust Accounts identifying, among other things: (1) what amount, or remaining portion thereof, of any principal deposit is attributable to a particular tenant, tenancy or agreement; (2) if required by law or any written agreement, what amount of interest or remaining portion thereof, is attributable to said principal; and (3) all disbursements.

6. Collection of Rents and other Receipts. Agent will use its reasonable efforts to collect when due all rents, charges and other amounts receivable for Owner's account in connection with the management and operation of the Projects. Except for those amounts required to be deposited in the Trust Accounts, such receipts shall be deposited in the Rental Agency Accounts.

7. Enforcement of Leases. Agent shall use its reasonable efforts to secure compliance by each tenant with the terms of such tenant's lease. Subject to the pertinent procedures prescribed in the applicable Management Plan, Agent will lawfully terminate any tenancy when in the Agent's judgment sufficient cause, including but not limited to nonpayment of rent, for such termination occurs under the terms of the tenant's lease. For this purpose, Agent is authorized to employ legal counsel to bring actions for eviction and to execute notices to vacate and judicial pleadings incident to such actions; provided, however, that Agent will use its reasonable efforts to keep Owner informed as to the progress and status of such actions. Reasonable attorneys' fees and other necessary costs incurred in connection with such action will be paid out of the respective Rental Agency Account as Project expenses. Agent shall have the authority to select one or more attorneys that may be engaged for such purposes.

8. Maintenance and Repair. Subject to any limitation contained in this Agreement or the Management Plans (including the operating Budgets for the Projects), and any written limitations reasonably imposed by Owner, Agent shall have full authority to maintain and repair the Projects and will use its reasonable efforts to cause the Projects to be maintained and repaired in accordance with the standards for a comparable apartment development in counties and localities in which the respective Projects are located, including, but not limited to, cleaning, painting, decorating, plumbing, carpentry, masonry, electrical and elevator maintenance and repair work, grounds care and such other maintenance and repair work as may be necessary. Owner shall deliver to Agent, to the extent available and without representation or warranty as to

their accuracy or any other matter related thereto, copies of all as-built surveys of the Projects; as-built plans and specifications of the Projects (marked to show changes); engineering, mechanical, electrical and plumbing drawings and specifications of the Projects; and warranties, guarantees and owners or operations manuals with respect to systems and equipment located in the Projects.

In connection therewith, the following provisions will apply:

(a) Special attention will be given to preventive maintenance, to the extent reasonably and financially feasible.

(b) Agent will use regular Project-based Employees wherever, in Agent's reasonable judgment, possible. Agent, on behalf of Owner, will contract with qualified independent contractors for maintenance and repair work as in Agent's reasonable judgment, appropriate.

(c) Agent will use its reasonable efforts to systematically and promptly receive and investigate all service requests from tenants, take such action thereon as may be justified and will use its reasonable efforts to keep records of the same. Emergency requests will be received and reasonably serviced on a twenty- four hours-a-day, seven days-a-week basis.

(d) Subject to the terms and provisions of this Agreement and the Management Plans (including the Operating Budgets for the Projects), Agent is authorized to purchase for the account of each Project all materials, equipment, tools, appliances, supplies and service necessary, in Agent's reasonable judgment, for the proper maintenance and repair of such Project.

(e) Agent will require that all maintenance and repairs will be done in material compliance with known applicable building codes and laws.

(f) Notwithstanding any of the foregoing provisions, the prior approval of Owner, which shall not be unreasonably withheld, will be required for any expenditure for maintenance and/or repair which exceeds Five Thousand Dollars ($5,000.00) in any one instance for labor, materials or otherwise, in connection with the maintenance and repair of a Project, except for (i) recurring expenses within the limits of the applicable Operating Budget, (ii) other expenses provided for in such Operating Budget and (iii) emergency repairs involving manifest danger to persons or property, or required to avoid suspension of any necessary service to a Project. In the event of such emergency repairs, Agent will inform Owner of the facts as promptly as possible. In no event shall Agent use any funds set aside in a replacement or similar reserve not designated for use in the Operating Budget without first notifying Owner in writing of the nature of such use and obtaining the prior written approval of Owner to such use, which approval shall not be unreasonably withheld.

Except as otherwise provided by this Agreement, all expenditures for maintenance and repair shall be Project expenses.

9. Utilities and Services. In accordance with the Management Plans and the Operating Budgets, Agent will use its reasonable efforts to arrange for all necessary utilities and services, including, but not limited to, water, electricity, gas, sewage, trash disposal, vermin extermination, cable television and telephone service. Agent will contract with the providers of such services on behalf of Owner and will execute the contracts in Agent's name, identified therein as Agent for Owner, as may be necessary to secure such utilities and services. All the Costs for said services, including, without limitation, deposits, hook-up and installation fees and service charges, shall be Project expenses.

10. Employees.

(a) All Project-based Employees shall be employees of Agent. Agent shall have sole authority over Project-based Employees and Non-Project-based Employees who are directly responsible for the Projects and all matters pertaining thereto and shall be responsible for all actions and omissions of such employees occurring pursuant to Agent's employee policy manuals. All costs of hiring, equipping and providing the services of Project-based Employees and Non-Project-based Employees who are directly responsible for the Projects, including, but not limited to, compensation, health and liability insurance, payroll taxes, bonding, workers' compensation insurance, benefits and vacations shall be treated as an expense of Agent to be reimbursed by Owner.

(b) Reasonable travel expenses incurred by Non-Project-based Employees traveling between the Project and Agent's offices, office supplies, overnight courier charges, long-distance telephone charges and fidelity bond costs shall also be considered an operating expense of the Project. Additionally, all allowable expenses as stated under Section 10 of the Third Amended and Restated Agreement of Limited Partnership for NHP Retirement Housing Partners I, Limited Partnership shall be considered operating expenses of the Project.

11. Disbursements from Accounts.

(a) Rental Agency Accounts:

(i) Agent will use its reasonable efforts to make the following disbursements promptly when payable from the funds collected and deposited by Agent in the applicable Rental Agency Account and interest, if any, accrued thereon:

(A) Agent shall disburse to the Payroll Account sufficient sums to reimburse all of Agent's obligations associated with compensation of Project-based Employees and Non-Project- based Employees who are directly responsible for the Projects, including, without limitation,

compensation, withholding taxes and assessments, employer's contribution to taxes and assessments, workers' compensation and disbursements for health and other insurance and benefits, if any.

(B) All sums otherwise due and payable by Owner as expenses of the Project incurred by Agent under the terms of this Agreement, the applicable Management Plan (including the Operating Budget for such Project) and the applicable Marketing Plan, including, without limitation, compensation and reimbursements payable to Agent for Agent's services hereunder, real estate and other property taxes and all other fees, taxes, assessments and charges relating to ownership, maintenance and operation of such Project.

(C) To the extent financially feasible, as determined by Agent, interest, principal and other sums due and payable by Owner in connection with any indebtedness secured by the Project or otherwise related to the Project as set forth in the Operating Budget.

(D) After payment of the aforementioned items, the remaining balance, if any, shall be kept in reserve for anticipated expenses, to the extent deemed necessary or desirable by Agent and otherwise shall be paid by Agent to Owner on the twentieth
(20th) day of each calendar month.

(ii) In the event that the balance in the Rental Agency Account of any Project is at any time insufficient to pay disbursements due and payable under this Subparagraph
11(a), Agent will inform Owner in writing of such fact. If Owner advises Agent that the funds in the Partnership reserves are not sufficient to cover such insufficiency, then Agent may advance funds to cover such insufficiency from Agent's own funds, or may elect immediately to terminate this Agreement. If advanced by Agent, such funds shall be deemed to be an interest bearing loan at prime plus four percent (4%) to such Project to the extent of such insufficiency, and, shall be repaid to Agent prior to any disbursement to Owner from the Rental Agency Account or any other Project account.

(b) Payroll Accounts:

(i) From funds deposited in the Payroll Accounts and interest, if any, accrued thereon, Agent will make the following disbursements promptly when payable:

(A) Compensation due Project-based Employees and Non-Project-based Employees who are directly responsible for the Projects.

(B) Workers' compensation and employer's payments with respect to withholding taxes and assessments, including, but not limited to,

employer's contributions with respect to Project-based Employees, and Non-Project-based Employees who are directly responsible for the Projects and disbursements for health and other insurance and benefits, if any.

(ii) In the event that the balance in the Payroll Account of any Project is at any time insufficient to pay any disbursements due and payable under this Subparagraph
11(b), Agent will draw sufficient funds out of such Rental Agency Account to cover said expenses and, if there are insufficient funds in such account from which to draw, Agent will inform Owner in writing of such fact. If Owner advises Agent that the funds in the Partnership's reserves are not sufficient to cover such insufficiency, then Agent may advance funds to cover such insufficiency from Agent's own funds, or may elect immediately to terminate this Agreement. If advanced by Agent, such funds shall be deemed to be an interest bearing loan at prime plus four percent (4%) to such Project to the extent of such insufficiency, and shall be repaid to Agent prior to any disbursement to Owner from the Rental Agency Account or any other Project account.

12. Budgets. Annual Operating Budgets for each Project will be included in the Management Plan and will be subject to approval by Owner, which approval shall not be unreasonably withheld. Except as permitted under Subparagraph 8(f) above, annual disbursements for each type of operating expenses itemized in the operating Budget will not exceed the amount authorized by the approved Operating Budget. Agent will prepare a recommended Operating Budget for each Operating Year during the term of this Agreement, in such form as may be reasonably prescribed by Owner, and shall submit each such Operating Budget with the Management Plan in accordance with the provisions of Paragraph 3 hereof. Owner will promptly inform Agent of changes, if any, in the approved Operating Budget, and Agent will keep Owner informed of any anticipated material deviation from the receipts or disbursements stated in the approved Operating Budget; such changes and anticipated deviations shall be subject to further approval by Owner, which approval shall not be unreasonably withheld.

13. Records and Reports. In addition to any other requirements specified in the Management Plans or other provisions of this Agreement, Agent will have the following responsibilities with respect to records and reports:

(a) Agent will establish and maintain a system of records, including, but not limited to, rent records, insurance policies (other than policies maintained by Owner), leases and subleases, current certificates of insurance for contractors, subcontractors and independent contractors, correspondence, receipted vouchers, a resident profile and an employee profile (including the names, addresses, home phone numbers, social security numbers and other appropriate information for all Project-based Employees), pertaining to the Projects or the operation thereof. All such records, books and accounts will be subject to examination at reasonable hours at Agent's home office by any authorized representative of Owner, subject, however, to any laws or regulations protecting the privacy or confidentiality of such information. Such records will include resident income

verifications required by governmental agencies, if any are so required by such agencies. All such records, books and accounts shall be and remain the sole property of Owner.

(b) Agent will furnish such information (including occupancy reports) as may be reasonably requested by Owner from time to time with respect to the financial, physical or operational condition of the Projects.

(c) By the twentieth day of each calendar month, Agent will furnish Owner with statement of receipts and disbursements for each Project during the previous month from each account detailing receipts and disbursements for the month and the year-to-date and comparing same to the budget for such Project established pursuant to Paragraph 12 hereof. In the event Agent is unable to furnish Owner with such statement as provided herein, Agent shall have an additional 15 days to furnish such statement to Owner.

(d) By the twentieth day of the calendar month following each calendar quarter (i.e., April 20, July 20, October 20 and January 20), Agent will furnish Owner with an adjusted trial balance of each of the Projects, on an accrual basis, as of the end of the preceding calendar quarter, in form and detail reasonably agreed to by Agent and Owner. In the event Agent is unable to furnish Owner with such balance as provided herein, Agent shall have an additional 15 days to furnish such balance to Owner.

(e) Except as otherwise provided in Paragraphs 10 and 24 of this Agreement, the overhead expenses of Agent's home office, including but not limited to, equipment and transportation for Agent's home office managerial personnel and compensation, benefits and other related costs for Agent's non-Project-based Employees (except those who are directly responsible for the Projects), will be borne by Agent out of its own funds and will not be treated as Project expenses.

(f) Owner shall select a certified public accountant to prepare an annual financial report of the Projects for each calendar year based upon the preparer's examination of the books and records of the Owner and the Agent, and a partnership United States Partnership Return of Income (Form 1065) and related state returns for the Project; Agent shall cooperate fully and promptly with such certified public accountant. Such annual financial report shall be certified by the preparer and the Agent and shall be delivered to the Owner within ninety (90) days after the end of the Projects' fiscal year. All fees and costs of the selected certified public accountant shall be a Project expense. Except as otherwise provided herein, all corporate, partnership and individual income tax returns for Owner are the sole responsibility of Owner, except that the records and reports furnished Owner by Agent shall be reasonably sufficient for these purposes.

14. Bids, Discounts, Rebates, Etc. Agent will use its reasonable efforts to obtain contracts, materials, supplies, utilities and services on terms deemed by Agent, in its reasonable judgment, to be fair and appropriate. Agent is authorized to solicit bids, either formal or informal, for those items which can be obtained from more than one source. Agent will use its reasonable efforts to secure and credit to Owner all discounts, rebates and other concessions or

incentives earned in connection with the Project and all other transactions on Owner's behalf. Agent will not enter into any contract or agreement which provides, directly or indirectly, for any overhead, profit or mark-up payable or otherwise allocable to Agent, without the prior approval of Owner except Agent is authorized to provide therapy, home health care, assisted living, rehabilitation services and other similar services at market rates in the vicinities in which the Projects are located.

15. On-site Management Facilities. On-Site office facilities for intermittent use by Agent's non-Project- based Employees and for the Project Administration reasonably satisfactory to Agent shall be provided by Owner as Project expenses.

16. Insurance. Owner will arrange for policies of insurance against physical damage (such as fire with extended coverage endorsement, boiler and machinery) and against liability for loss, damage or injury to property or persons which might arise out of the occupancy, management, operation or maintenance of the Projects, and such other policies of insurance, including without limitation automobile insurance, as may reasonably be necessary in connection with the Projects, and shall include Agent as an additional insured on any such policies. Payment of any deductible amounts with respect to any claims will be made from the applicable Project's Rental Agency Account and will be treated as an operating expense of such Project. Agent shall be entitled to 30 days' written notice prior to any cancellation of any of such insurance policies. Agent will pay premiums for all such insurance out of the applicable Project's Rental Agency Account, and such premiums will be treated as operating expenses of such Project. Agent will pay any deductible amounts with respect to any claims out of the applicable Project's Rental Agency Account, and such payments will be treated as operating expenses of such Project. Deductible amounts on insurance policies shall be determined by Owner. Agent will use reasonable efforts to assist Owner in obtaining the most favorable insurance rates possible, including, but not limited to, requesting quotations, reviewing bids and comparing coverage variations. Agent will be responsible for obtaining workers' compensation insurance for Project-based Employees.

17. Claims Against Insurance. Agent shall use its reasonable efforts to investigate and submit a written report to the insurance carrier or its agent and Owner as to all accidents, claims for damage relating to the ownership, operation and maintenance of the Projects, any damage to or destruction of the Projects and the estimated costs of repair thereof, and shall use its reasonable efforts to prepare and file with the insurance company or its representative and Owner in a timely manner and otherwise as the insurance company and/or Owner reasonably requires reports in connection therewith. Agent shall use its reasonable efforts to take no action (such as admission of liability) which might preclude Owner from obtaining any protections provided by any policy held by Owner or which might prejudice the defense in any legal proceeding involving Owner or any of the Projects, or otherwise prevent Owner from protecting itself against any such claims, demands or legal proceedings. Agent shall reasonably cooperate with Owner in the defense or settling of any such claim, demand or legal proceeding arising out of any policies, including the execution of proofs of loss, the adjustment of losses, signing and collection of receipts and collection of money.

18. Additional Insurance. As long as this Agreement is in effect, Agent shall maintain workers' compensation coverage for Agent's Project-based and Non-Project-based Employees in statutory amounts and employer's liability coverage for Agent ($100,000.00 each accident, $100,000.00 disease limit per employee, $500,000.00 disease policy limit). Such policies of insurance shall provide for written notice to Owner of cancellation or nonrenewal of, or material changes in, such insurance within 30 days thereof. Expenses Incurred by Agent in connection with such insurance shall be treated as an expense of the Project with respect to Project-based Employees, and with respect to Non-Project-based Employees to the extent such Non-project-based Employees render services to the Projects. Any additional insurance obtained by Agent for their own account shall be at their own expense.

19. Fidelity Bond. Agent shall furnish for each Project, as a Project expense, a fidelity bond against misapplication of Project funds, loss, theft, embezzlement or other fraudulent acts on the part of agent or its employees. The surety thereon shall be in an amount not less than the sum of
(i) monthly "Gross Receipts" (hereinafter defined) from the operation of such Project based on the estimated year-end occupancy as set forth in the applicable Management Plan and (ii) the maximum possible level of funds held as security deposits based on the estimated year-end occupancy as set forth in such Management Plan.

20. Agent's Professional Liability Coverage. Agent shall maintain, as a Project expense, Professional Liability Coverage for Real Estate Management Errors and omissions, providing coverage for Agent and its employees in the amount of $2,000,000.00 per Project. Owner must be furnished evidence of such coverage for the entire term of this Agreement and any renewal or extension hereof.

21. Contractor's, Subcontractor's Insurance. Agent shall use its reasonable efforts to require all contractors, subcontractors and independent contractors entering upon any of the Projects to perform services, to have insurance coverage, at the contractor's, subcontractor's or independent contractor's expense, in the following minimum amounts:

(a) Workers' Compensations and Employer's Liability statutory amount (Limit for employer's liability for $100,000.00 each accident, $100,000.00 disease limit per employee, $500,000.00 disease policy limit).

(b) Comprehensive General Liability in the amount of:

(i) $1,000,000.00 combined single limit for bodily injury and property damage including Broad Form Coverage Endorsement Extension, affording products and completed operations and contractual liability coverage (deleting XCU exclusions, if applicable); or

(ii) if the value of a contractor's, subcontractor's or independent contractor's contract is in excess of $1,000,000.00, Agent shall determine the appropriate amount of insurance required in connection therewith prior to the execution of such contract and shall advise Owner of such insurance requirements.

(c) Comprehensive Auto Liability insurance covering the use of all owned, nonowned and hired automobiles with bodily injury and property damage limits of $1,000,000.00 combined single limit.

(d) Umbrella Liability following form coverage above Workers' compensation and Employer's Liability, Comprehensive General Liability and Comprehensive Automobile Liability as required above for a minimum of $1,000,000.00 combined single limit for bodily injury and property damage.

Agent shall use its reasonable efforts to keep on file current certificates of insurance showing that each contractor and subcontractor is so insured, providing for 30 days written notice of cancellation, nonrenewal or reduction in policy limits below $1,000,000.00 and naming Owner and Agent as additional insureds. Agent shall use its reasonable efforts to not permit any contractor, subcontractor or independent contractor to enter upon any of the Projects to perform services who has not provided Agent with such a certificate or certificates of insurance, unless Agent has delivered a letter to Owner requesting a waiver of any of the above requirements for such contractor, subcontractor or independent contractor and has received Owner's written approval of such waiver.

22. Compliance With Governmental Orders. Agent shall use its reasonable efforts to comply promptly with any and all statues, regulations, orders, building codes, zoning and licensing requirements, and other requirements affecting the Projects, whether imposed by federal, state, county or municipal authority, or other political subdivision, including but not limited to, those statutes, regulations, orders, codes and requirements respecting tenant security deposits. Nevertheless, Agent shall take no such action so long as Owner is contesting, or has affirmed its intention to contest, any such order or requirement. Agent will use its reasonable efforts to notify Owner in writing of all notices of such orders or other requirements within 48 hours from the time of their receipt. Upon the prior written consent of Owner, Agent may appeal any requirement Agent deems unwarranted and Agent may compromise or settle any dispute regarding such requirements.

23. Non-Discrimination. In the performance of its obligations under this Agreement, the Agent will use its reasonable efforts to comply with the provisions of any federal, state or local law prohibiting discrimination in housing on the grounds of race, color, creed or national origin, including Title VI of the Civil Rights Act of 1964 (Public Law 88-3452, 78 Stat. 241), regulations issued pursuant to Executive Order 11063, and Title VII of the 1968 Civil Rights Act.

24. Agent's Compensation. Agent will be compensated for their services under this Agreement by fees to be paid out of the Rental Agency Accounts and such fees will be treated as Project expenses. Such fees will be payable during the term of this Agreement and any extensions or renewals thereof, prior to payments out of the Rental Agency Accounts of any other Project expenses, in the amounts and on the dates set forth below.

(a) A monthly management fee (the "Monthly Management Fee") for each Project equal to the amount calculated pursuant to Exhibit X hereto (specific percentages in Exhibit X shall refer to percentages of Gross Receipts unless otherwise indicated), subject to increase or decrease as provided below. For purposes hereof, the term "Gross Receipts" shall mean gross monthly receipts of whatever kind or nature collected by Agent from the operation of the Project, excluding
(i) security deposits received from residents and, if applicable, interest accrued thereon for the benefit of the residents until such deposits or interest are applied for rental payments; (ii) reimbursements by residents for work done for particular residents;
(iii) proceeds from the sale or other disposition of all or any part of such Project; (iv) insurance proceeds received by Owner as a result of any insured loss (except proceeds for rent loss insurance); (v) condemnation proceeds (except proceeds for lost rent); (vi) capital contributions made by any partner of the Partnership; (vii) loans by Owner or Agent; and (viii) proceeds from Capital, financing and any other transactions not in the ordinary course of operation of such Project. The Monthly Management Fee for each Project shall be payable monthly in arrears in installments following calculation thereof upon submission of a monthly statement for such Project from the Rental Agency Account. Subject to the provisions of Paragraph 26 hereof, it is agreed between Owner and Agent that if the Gross Receipts of any Project are insufficient to pay all disbursements, including the Monthly Management Fee, or any portion thereof, then Owner shall use the Partnership reserves to make such disbursements. It is further agreed between Owner and Agent that in no event will any disbursement be made to Owner from any Project Account, until all accrued and unpaid fees to Agent and repayments, if any, to Agent for Agent's advancement of funds to cover any insufficiencies in the such Project's Rental or Payroll Account have been paid in fall. Upon termination of this Agreement pursuant to Paragraph 26, the parties will prorate the Monthly Management Fee for each Project on a per diem basis to the effective date of such cancellation or termination.

(b) A monthly fee for providing food services for each Project, including the planning and provision of tenant meals (the "Dietary Services Fee"), exclusive of reimbursed expenses, equal to the amount calculated pursuant to Exhibit X hereto. In connection with providing food services, Agent shall maintain and make available to Owner upon reasonable notice sufficient records pertaining to food service costs, including but not limited to invoices, delivery receipts and payroll records.

25. Term. This Agreement shall become effective the day and year first written above and shall continue in full force and effect until December 31, 2001, hereinafter referred to as the "Term," unless sooner terminated as provided in Paragraph 26 below.

26. Termination. This Agreement shall continue in full force and effect until expiration of the Term unless sooner terminated as follows:

(a) This Agreement may be terminated by the mutual written consent of the Principal Parties.

(b) In the event Agent fails to receive reimbursement of reimbursable expenses or any compensation due Agent pursuant to the terms of this Agreement and such failure continues for a period of 60 days after Agent's written notice thereof to Owner, Agent may terminate this Agreement effective immediately upon expiration of such 60-day period without further notice to Owner; provided, however, that this Agreement shall not be so terminated if Owner pays Agent all such expenses and compensation then due and payable on or before the expiration of said 60-day period; provided, further, however, that Agent may terminate this Agreement immediately in the event that Owner fails to advance funds to cover an insufficiency in any Payroll Account within three business days after Owner's receipt of written notice that such insufficiency exists, as provided in Paragraph 11(b) above.

(c) In the event that a petition in bankruptcy is filed by Agent or its assignee or in the event Agent or its assignee makes an assignment for the benefit of creditors or takes advantage of any insolvency act, Owner may terminate this Agreement with notice to the Agent.

(d) With regard to a Project, in the event that such Project is sold by Owner, unless Owner sells such Project to an affiliate of the Partnership.

(e) Agent shall fail to keep, observe or perform any material covenant, agreement or provision of this Agreement to be kept, observed or performed by Agent, and such default shall continue for sixty (60) days after written notice thereof from Owner (unless Agent is in good faith using commercially reasonable efforts to cure such failure, in which case such period shall be extended for two years).

(f) Misappropriation of funds held by Agent in trust for Owner or any other fraudulent act committed by Agent and related to the performance of Agent's obligations hereunder, but only if (i) Jeffrey Beck or James Stroud are active participants in such misappropriation or fraudulent act, or (ii) with respect to misappropriation of funds, such funds are not reimbursed to Owner within 45 days after notice from Owner to Agent, or (iii) with respect to fraudulent acts, Owner is not reimbursed for any damages caused by such acts within 45 days after notice from Owner to Agent.

(g) In the event that Agent fails in a material way to operate, lease and maintain the Projects as required under the terms of this Agreement, the Management Plans and/or the Marketing Plans, such failure continues for 60 days after Owner's written notice thereof to Agent and Agent does not cure such failure during such 60-day period (unless Agent is in good faith using commercially reasonable efforts to cure such failure, in which case such period shall be extended for two years) and such failure is the result of Agent's willful misconduct, gross negligence or unlawful act as finally determined by a court having jurisdiction regarding such matter.

(h) In the event that (i) Agent's or its assignee is dissolved (ii) Agent's real estate brokerage license, if such license is legally required as a condition to manage or

lease the Project, is terminated or (iii) Agent or its assignee cease to continue to do business for any reason Owner may terminate this Agreement by notice to Agent.

(i) Owner may terminate this Agreement by written notice to Agent in the event that none of James Stroud, Jeffrey Beck or Keith Johannessen is an executive officer of Agent and Owner has not approved the individual replacing any of such persons as an executive officer, which approval shall not be unreasonably withheld.

(j) In the event that this Agreement is assigned by Agent in breach of Paragraph 27(h).

Upon termination, Agent will submit to Owner any financial statements required, and after the Principal Parties have accounted to each other with respect to all matters outstanding as of the date of termination, Owner will furnish Agent security, in the form and principal amount satisfactory to Agent, against any obligations or liabilities which the Agent may properly have incurred on behalf of Owner hereunder.

All notices required under this Paragraph 26 shall be in accordance with Subparagraph 27(b) below.

27. Interpretative Provisions.

(a) This Agreement may be executed in several counterparts, each of which shall constitute a complete original Agreement, which may be introduced in evidence or used for any other purpose without production of any of the, other counterparts.

(b) Except as otherwise provided in this Agreement, all notices under this Agreement shall be in writing and shall be delivered by personal service, by overnight courier from whom a receipt can be obtained or by certified or registered mail, return receipt requested, from one party to the other at the following addresses or such other address as one party may advise the other by written notice:

If to Agent:     Capital Senior Living, Inc.
                 14160 Dallas Parkway, Suite 300
                 Dallas, TX 75240
                 Attn.:  Mr. Keith Johannessen, President


If to Owner:     NHP Retirement Housing Partners I Limited Partnership
                 c/o Capital Realty Group Senior Housing, Inc.
                 14160 Dallas Parkway, Suite 300
                 Dallas, TX 75240
                 Attn.: Mr. James A. Stroud, Chief Operating Officer
                        Mr. Jeffrey L. Beck, Chief Executive Officer

The date of receipt of notice shall be the date delivered if personally delivered or five days after the date of mailing if mailed.

(c) The rights and remedies of either of the parties hereunder shall not be mutually exclusive, i.e., the exercise of one or more of the provisions hereof shall not preclude the exercise of any other provisions hereof. Each of the parties confirms that damages at law will be an inadequate remedy for a breach or threatened breach of this Agreement and agrees that, in the event of a breach or threatened breach of any provision hereof, the respective rights and obligations hereunder shall be enforceable by specific performance, injunction, or other equitable remedy, but nothing herein contained is intended to, nor shall it, limit or affect any rights at law or by statute or otherwise of any party aggrieved as against the other for a breach or threatened breach of any provision hereof, it being the intention of this Subparagraph 27(c) to make clear the agreement of the parties that the respective rights and obligations of the parties hereunder shall be enforceable in equity as well as at law or otherwise.

(d) All personal pronouns used in this Agreement, whether used in the masculine, feminine or neuter gender, shall include all other genders; and the singular shall include the plural and vice versa. Titles of Articles, Subparagraphs and Paragraphs are for convenience only, and neither limit nor amplify the provisions of this Agreement itself. The use herein of the word "including," when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar terms or matters, whether or not non-limiting language (such as without limitation, or, but not limited to, or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that could reasonably fall within the broadest possible scope of such general statement term or matter.

(e) Each party hereto agrees, without any additional consideration, to do all acts and things and to make, execute and deliver such written instruments, as shall from time to time be reasonably required to carry out the terms and provisions of this Agreement.

(f) Should any litigation be commenced between the parties hereto or their representatives or should any party institute any proceeding in bankruptcy or similar court which has jurisdiction over any party hereto or any or all of his or its property or assets concerning any provision of this Agreement or the rights and duties of any person or entity in relation thereof, the party or parties prevailing in such litigation shall be entitled in addition to such other relief as may be granted, to a reasonable sum as and for his or its or their attorneys' fees and court costs in such litigation which shall be determined by the court in such litigation or in a separate action brought for that purpose.

(g) In the event that any provision of this Agreement shall be held to be invalid or unenforceable, the same shall not affect in any respect whatsoever the validity or enforceability of the remainder of this Agreement.

(h) Except as provided herein to the contrary, this Agreement shall be binding upon and inure to the benefit of the parties signatory hereto, their respective heirs, executors, legal representatives and permitted successors and assigns. Neither this Agreement nor any portion thereof including, but not limited to, any money due or to become due under this Agreement, may be assigned by either party except upon written consent of all the Principal Parties hereto. This Agreement is a personal service contract; except as specifically provided herein, Agent's duties may not be delegated to another party, except for delegation of nominal duties in the ordinary course of business or as otherwise permitted hereunder, without in each instance the prior written consent of Owner, which may or may not be given in Owner's sole discretion. Notwithstanding the foregoing, Owner consents to the sale, assignment, contribution or similar transfer of all or a portion of this Agreement to an Affiliate of Agent.

(i) This Agreement and the rights and obligations of the parties hereunder shall be governed by and construed in accordance with the laws of Texas.

(j) No consent or waiver, express or implied, by a party to or of any breach or default by the other party in the performance by such other party of its obligations hereunder shall be deemed or construed to be a consent or waiver to or of any other breach or default in the performance by such other party of the same or any other obligations of such other party hereunder. Failure on the part of a party to complain of any other party in default, irrespective of how long such failure continues, shall not constitute a waiver by such party of its rights hereunder. The giving of consent by a party in any one instance shall not limit or waive the necessity to obtain such party consent in any future instance.

28. Indemnifications.

(a) Agent's Indemnity: Owner shall indemnity and hold Agent harmless from all claims, actions, liabilities, expenses and attorney's fees not covered by insurance in connection with, arising from, or incurred as a result of Agent performing its duties under this Agreement, including, without limitation, damage to property and injury or death of any employee, tenant, guest, invitee, trespasser or other person whatsoever, alleged or actual defective construction of a Project or any equipment thereon, and the failure of Agent to pay any expenses and costs of a Project as required by this Agreement if necessary funds are not made available to Agent by Owner; provided, however, that Owner shall not indemnify Agent from and against any of the foregoing claims, actions, liabilities, expenses or attorney's fees, arising from or incurred as a result of Agent's gross negligence, willful misconduct or unlawful act.

(b) Owner's Indemnity: Agent shall indemnify and hold Owner harmless from all claims, actions, liabilities, expenses and attorney's fees not covered by insurance arising from or incurred as a result of any gross negligence, willful misconduct or unlawful act performed by Agent in regard to the management of a Project, including the acts of Agent's employees, servants and agents, and violation of any statute, ordinance,

law or regulation of any governmental body, public authority or official thereof having jurisdiction.

29. No Partner Liability. Notwithstanding anything to the contrary contained in this Agreement, the Owner shall not have any personal liability for the payment of any fee, compensation or reimbursement under this Agreement, including any interest thereon. Agent (a) shall look solely to the assets of the Partnership for the payment of such fee, compensation or reimbursement, and (b) shall not seek a deficiency or other personal judgment against the Owner for such payment.

IN WITNESS WHEREOF, the Principal Parties, by their duly authorized officers, have executed this Agreement as of the date first above written.

OWNER:

NHP RETIREMENT HOUSING PARTNERS I
LIMITED PARTNERSHIP, a Delaware
limited partnership

By: Capital Realty Group Senior
Housing, Inc., General Partner

By:  /s/ Jeffrey L. Beck
   -----------------------------
         Jeffrey L. Beck
         Chief Executive Officer

AGENT:

CAPITAL SENIOR LIVING, INC.,
a Texas corporation

By:  /s/ James A. Stroud
   ---------------------------------
         James A. Stroud, Chief
         Operating Officer

SCHEDULE I

Properties: The Atrium of Carmichael, Carmichael, California

Crosswood Oaks Apartments, Citrus Heights, California

The Heatherwood, Southfield, Michigan

The Veranda Club, Boca Raton, Florida

The Amberleigh at Woodstream Farms, Amherst, New York

Amberleigh
----------

      Monthly Management Fee              Greater of 5 % or $10,900 per month

      Food Services Fee                   Greater of 20% of actual cost or $8,500 per month

Atrium of Carmichael
--------------------

      Monthly Management Fee              5%

      Food Services Fee                   20 % of actual cost

Crosswood Oaks
--------------

      Monthly Management Fee              5%

      Food Services Fee                   20 % of actual cost

Heatherwood
-----------

      Monthly Management Fee              Greater of 5% or $9,000 per month

      Food Services Fee                   Greater of 20% of actual cost or $7,500 per month

Veranda Club
------------

      Monthly Management Fee              Greater of 5% or $9,650 per month

      Food Services Fee                   Greater of 20 % of actual cost or $8,000 per month

EXHIBIT 10.25

MANAGEMENT AGREEMENT

THIS MANAGEMENT AGREEMENT (the "Agreement") effective the 1st day of April, 1997 by and between BUCKNER RETIREMENT SERVICES, INC., ("Buckner"), a non-profit corporation organized under the laws of the state of Texas, and CAPITAL SENIOR MANAGEMENT 1, INC., (Capital), a for-profit corporation organized under the laws of the state of Texas.

PREAMBLE

BUCKNER by this Agreement is engaging Capital to provide management services relating to the operation of Buckner Baptist Haven, a senior living community located in Houston, Texas ("the Facility").

Capital and Buckner share a commitment to make the retirement years of residents as meaningful and comfortable as possible. Both share the philosophy that the retirement environment should allow for and encourage contained personal growth and independent living for the elderly, and when independent living is no longer possible, then the same retirement environment should have the flexibility to provide quality health care in the midst of a high degree of understanding, compassion and companionship enhanced by and based upon the prior years of residence in the same community.

This Agreement is founded on the following assumptions:

Buckner retains primary responsibility to:

a. Establish the policies of the Facility and to plan for its short-range and long-range goals.

b. Review and evaluate the performance of Capital in carrying out the established policies and in attaining the goals established by Buckner.

c. Annually review and approve the budget.

d. Annually review the policies and goals which have been established.

e. Provide Christian social service ministry from the Facility that is resident and community- based.

Capital assumes primary responsibility to:

a. Implement the policies established by Buckner.

b. Supervise the day-to-day management of the Facility, including all resident activities.

c. Provide to Buckner full, timely and accurate information as to past operations.

d. Provide to Buckner projections and recommendations relating to the future operations of the Facility.

The parties therefore agree as follows:

I. RESPONSIBILITIES OF CAPITAL

A. RECOMMENDED POLICIES. Capital shall recommend policies and goals to be established by Buckner and shall evaluate such policies and goals on an ongoing basis.

B. MANAGEMENT DUTIES. Capital shall supervise the operation of the Facility, provide management services, install operating procedures and oversee day-to-day operations, all subject to and in accordance with the budgets and policies established by Buckner.

C. MARKETING DUTIES. Capital shall manage and supervise the marketing program. Capital shall periodically review the residency agreement and recommend changes thereto as and if required.

D. EMPLOYEES. All Facility-based Employees, including the administrative employees, shall be employees of Capital with the exception of Buckner ministry-based employees. Capital shall have sole authority over Facility-based Employees and Non-Facility-based Employees who are directly responsible for the Facility and all matters pertaining thereto and shall be responsible for all actions and omissions of such employees occurring pursuant to Capital's employee policy manual. All costs of hiring, equipping and providing the services of Facility-based Employees, including, but not limited to, compensation, health insurance, employer liability insurance, payroll taxes, bonding, workers' compensation insurance, benefits and vacations shall be treated as an expense of Capital to be reimbursed from the cash flow provided by the Facility operations if sufficient to reimburse such expenses; if said cash flow is not sufficient, such expenses shall be reimbursed by Buckner.

E. OPERATING PROCEDURES. Capital shall develop, install and maintain operating procedures, systems and controls.

F. FACILITY EXPANSION. Capital shall make recommendations regarding construction, remodeling or expansion of the Facility.

G. BUDGETS. Capital shall prepare annual operating budgets for revenue, expense and cash flow of the Facility and a capital expenditures budget. Budgets shall be prepared in advance of each fiscal year. Cash flow projections shall accompany each operating budget. It is to be understood that budgets are only estimates and guidelines of future results and that budget overruns may occur from time to time.

H. FINANCIAL CONTROLS. Capital shall establish and maintain a system of financial controls for the Facility.

I. MONTHLY FINANCIAL STATEMENTS. Capital shall provide to Buckner, on a monthly basis, financial statements and related financial reports.

J. MARKETING REPORTS. Capital shall, on a weekly and monthly basis, provide sales and occupancy reports to Buckner, as well as the results of the annual resident satisfaction survey.

K. LEGAL COUNSEL. Capital, at Facility expense, shall coordinate with Buckner the utilization of legal counsel relating to Facility operations.

L. RENTAL COLLECTIONS AND DISBURSEMENTS. Capital shall collect the revenues from the residents and, on behalf of Buckner, deposit all such funds in a residential depository account at a FDIC insured bank approved by Buckner. The style of the account shall be in the name of the Facility with designated representatives from Buckner and Capital being the only parties authorized to draw from said account.

On an as needed basis, Capital shall transfer the funds from the above stated account into an Operating Expense Account in the name of the Facility. The account shall be in a FDIC insured bank approved by Buckner. The style of the account shall be in the name of the Facility with designated representatives from Buckner and Capital being the only parties authorized to draw from said account. Capital shall pay out of such Operating Expense Account all operating expenses (including Capital's Management Fee and any other sums due to Capital from Buckner), and all other sums properly payable pursuant to any of the provisions of this Agreement. Capital shall hold, remit or expend the balance of such funds, if any, as Buckner may direct. These funds shall

not be co-mingled with funds from any other projects and/or facilities managed and/or operated by Capital.

M. ACCOUNTING SYSTEMS AND SOFTWARE. Capital shall provide to Buckner, during the term of this Agreement, appropriate on-site accounting systems and software, which shall include complete accounting, bookkeeping and record keeping services for the Facility, specifically including, but not limited to, resident billings, accounts payable, accounts receivable, general ledger and inventory records, and maintain demographic information on the residents. Acquisition of software, software maintenance and update charges will be budgeted expenses of the Facility. Payroll processing may be delegated to a third party, the cost of which will be the responsibility of the Facility.

II. BUCKNER'S RESPONSIBILITIES

A. POLICIES. Buckner shall establish the policies for the Facility.

B. GOALS. Buckner shall establish the short range and long range goals of the Facility.

C. BUDGETS. Buckner shall review and approve budgets for the operation of the Facility.

D. CAPITAL'S PERFORMANCE. Buckner shall review and evaluate the performance of Capital in carrying out the policies for the Facility.

E. LEGAL COUNSEL. Buckner shall obtain legal counsel to perform all necessary legal services relating to Buckner's ownership of the Facility.

F. AUDITS. Buckner, at its discretion, may engage certified public accountants to perform annual audits of the Facility as well as prepare any other reports required for federal or state regulatory agencies which require licensure and/or certification. Every quarter, upon receipt of reasonable notice to Capital, all financial records pertaining to the Facility will be open for inspection and review by Buckner's representatives. All labor and expense associated with such review shall be borne by Buckner.

G. DIRECTIVES. In order to assure proper coordination, Buckner shall issue any directions concerning the operations of the Facility only through the President or Vice President of Capital.

H. OPERATING REPORTS. During the term of this Agreement, Buckner shall, within fourteen (14) days of issuance, furnish to Capital copies of

any and all Facility-related reports, including the annual audit (if any) as well as copies of the minutes of all local advisory Board meetings, other than items relating to the performance of Capital.

I. ADVISORY BOARD MEETINGS. If applicable, during the term of this Agreement, a representative of Capital shall be a member of the local advisory board and attend any regular or special meeting of the local advisory Board other than any part thereof involving evaluation of the performance of Capital under this Agreement. Buckner shall give Capital the same notice of local advisory Board meetings as is required to be given to Board members.

J. CHANGE OF RESIDENCY AGREEMENT. Buckner shall not change the Residency Agreement without consulting with and seeking approval of Capital unless required to do so to comply with any applicable law or regulation.

K. DECISIONS. Buckner shall examine documents submitted by Capital and render decisions pertaining thereto promptly to avoid unreasonable delay.

L. UNIFORM ACCOUNTS. Facility shall use the uniform chart of accounts recommended by Capital.

M. FURNISHING INFORMATION. Buckner agrees at its expense to install and maintain a computer terminal compatible with the mainframe computer currently in use by Capital and to transmit data to the Capital mainframe computer via telephone lines.

III. INSURANCE.

A. Capital shall maintain, in full force and effect, at the Facility's expense, the following insurance protecting Buckner and Capital and their officers and employees:

1. Employee's fidelity insurance

2. Worker's compensation and employers liability insurance

3. Professional liability insurance

4. Comprehensive general public liability insurance and overlying umbrella liability coverage against loss or liability for damages for personal injury or death occurring on, in or about the Facility.

Such policy or policies shall be written by a responsible insurance company or companies satisfactory to Buckner and in kind and amounts satisfactory to Buckner. Certificates of insurance showing compliance with the foregoing requirements shall be furnished by Capital to Buckner. Certificates shall state that the policy or policies will not be canceled or altered without at least 30 days prior written notice to Buckner.

B. Buckner shall procure and maintain, in full force and effect, at Buckner's expense the following insurance protecting Buckner and Capital and their officers and employees:

1. Property Insurance for loss or damage by fire and other perils insurable under the broad form of extended coverage insurance available in the area where the Facility is located, and improvements, and contents thereof, constituting all or any portion of the Facility.

2. Insurance for automobiles owned or hired by Buckner or Capital and used in connection with the Facility.

Such policy or policies shall be written by a responsible insurance company or companies satisfactory to Capital in kind and amounts satisfactory to Capital. Certificates of insurance showing compliance with the foregoing requirements shall be furnished by Buckner to Capital. Certificates shall state that the policy or policies will not be canceled or altered without at least thirty (30) days prior written notice to Capital.

IV. TERM AND TERMINATION OF THIS AGREEMENT.

A. TERM AND TERMINATION WITHOUT CAUSE. This Agreement shall commence on the date set forth on the first page hereof and continue for a period of five (5) years, except that either party may terminate this Agreement on thirty days notice after the earlier of the move-out of the final resident from the Facility, or after the Fixed Term (as hereinafter defined) by giving ninety (90) days written notice to the other party. The Fixed Term shall be thirty-six (36) months, except that if tax exempt financing is not utilized or if the U.S. Treasury Department liberalizes its current published advance ruling guidelines (Rev. Proc. 82-14, 1982-1 C.B. 459) to extend the period in which a management contract may be non-terminable without adversely affecting the tax-exempt status of bonds issued to finance the Facility to which the management contract relates, and if, in the opinion of bond counsel, such Treasury action applies to the bonds issued to finance the Facility, then the Fixed Term shall be the maximum period allowed for advance ruling purposes, but not more than five
(5) years. If Buckner terminates the Agreement prior to the expiration of the Fixed Term for any reason other than the move out of the final

resident as listed above, or if Capital terminates this Agreement during the Fixed Term for cause as provided in Paragraph IV. B. below, severance compensation in an amount equal to the then-current monthly management fee times the number of months remaining in the Fixed Term shall be paid to Capital upon the effective date of termination. Any such termination shall be effective upon the expiration of the ninety (90) day period following the giving of the notice or on such later date as may be specified in the notice.

B. TERMINATION FOR CAUSE.

1. This Agreement may be terminated by Buckner for cause for the following reasons:

a. In the event of material breach by Capital of a material term hereof, which breach is not cured within sixty (60) days after notice by Buckner and such failure is the result of Capital's willful misconduct, gross negligence or unlawful act.

b. In the event that a petition in bankruptcy is filed by Capital or its permitted assignee, or in the event Capital or its permitted assignee makes an assignment for the benefit of creditors or takes advantage of an insolvency act, by notice to Capital or assignee.

c. In the event that (i) Capital's or any permitted assignee's corporate existence is dissolved and the duties under this Agreement are not assumed by Capital or an affiliate of Capital or (ii), Capital or any permitted assignee ceases to do business for any reason, by notice to Capital or such assignee and the duties under this Agreement are not assumed by Capital or Capital's affiliate.

d. In the event of a change of controlling ownership interest in Capital or Capital Senior Living, Inc. Controlling ownership shall be defined as a change of greater than 50% from the present 100% ownership of James
A. Stroud and Jeffrey L. Beck and affiliates of which they control. Notwithstanding the above, in the event that a public offering of the stock of Capital or Capital Senior Living, Inc, the controlling ownership shall be defined as a change of greater than an aggregate 30% ownership of James A. Stroud and Jeffrey L. Beck and affiliates of which they control, as well as ownership of current management of Capital or Capital Senior Living, Inc.

2. This Agreement may be terminated by Capital in the event that Capital fails to receive reimbursement of reimbursable expenses or any compensation due Capital pursuant to the terms of this Agreement or any other compensation due Capital, and such failure continues for a period of sixty (60) days after Capital's written notice thereof to Buckner; however, this Agreement shall not be so terminated if Buckner pays Capital all such expenses and compensation then due and payable on or before the expiration of said sixty
(60) day period.

3. No termination of this Agreement shall affect any obligation owing by either party hereto to the other which accrued prior to the effective date of such termination.

C. COVENANTS SURVIVING TERMINATION. The termination of this Agreement shall not terminate the right of Capital to indemnification relating to events occurring during the term of this Agreement under Article VI. L. and to protection of its property rights under Article VI.B.

V. COMPENSATION

A. OPERATIONS MANAGEMENT FEES. Buckner shall pay to Capital a fee in the amount set forth below, payable on the fifteenth day of each month commencing with the second month this Agreement is executed and ending on the last day of the month after which this Agreement is terminated:

1. The amount to be paid monthly shall be the greater of $5,000.00 per month or 5% of Gross Revenues generated during the immediately preceding month. "Gross Revenues" shall be defined as gross monthly revenues from the operation of the Facility. Gross Revenues shall not include (i) security deposits received from residents and, if applicable, interest accrued thereon for the benefit of the residents until such deposits or interest are applied for rental payments;
(ii) proceeds from the sale or depositions of all or any part of such Facility; (iii) insurance proceeds received by Buckner as a result of any insured loss
(except proceeds for rent loss insurance); (iv) capital contributions made by any partner of Buckner;
(v) loans by Buckner; and (vi) proceeds from capital, financing and any other transactions not in the ordinary course of operation of such Facility. The Monthly Management Fee for the Facility shall be payable monthly in arrears following calculations thereof upon submission of a monthly statement for such Facility from Capital. It is agreed between Buckner and Capital that if the

Gross Revenues of the Facility are insufficient to pay all disbursements, including the Monthly Management Fee or any portion thereof, then Buckner shall remain responsible for such disbursements. It is further agreed between Buckner and Capital that in no event will any disbursement be made to Buckner from any Facility Account until all accrued and unpaid fees to Capital and repayments, if any, to Capital for Capital's advancement of funds to cover any insufficiencies in such Facility's Rental or Payroll Account have been paid in full.

B. CERTAIN EXPENSES. In accordance with the Annual Budgets, the Facility will reimburse Capital for the cost of reasonable transportation, lodging and meal expenses for non-Facility-based employees of Capital or its outside consultants when traveling in connection with the performance of the services being performed pursuant to this Agreement, together with any reasonable long distance telephone expenses, copying, mailing or express shipments and other miscellaneous out of pocket expenses that relate to the marketing and management of the Facility. Relocation, education, professional memberships and licensing expenses of the Facility-based administrative employees shall also be an expense of the Facility.

VI. MISCELLANEOUS

A. INSURANCE-SUBROGATION. No indemnity shall be paid to the other party under this Agreement where the claim, damage, liability, loss or expense incurred was or was not required to be insured against. Any insurance policies obtained by the parties pursuant to this Agreement shall contain provisions or have the effect of waiving any right of subrogation by the insurer of one party against the other party or its insurer.

B. PROPERTY OF CAPITAL. Trade names, including the name "Buckner Baptist Haven," ideas and documents, forms, occupancy development material, specifically for and related to Buckner Baptist Haven shall be the property of Buckner. Trade names, ideas and documents, forms and occupancy development material, not directly related to the Facility and supplied by Capital are to be considered proprietary and will remain the property of Capital. Buckner may use such materials which are the property of Capital and information in the operation and management of the Facility, as may be recommended by Capital, but may not use such materials or information after termination of this Agreement for the development or expansion of the Facility or for new projects for itself or others without the written consent of Capital.

C. STATUS OF PARTIES. It is expressly understood and agreed that Capital shall act as an independent contractor in the performance of this Agreement. No provision hereof shall be deemed or construed to create a partnership or a joint venture between Buckner with respect to the Facility or otherwise.

D. ADDITIONAL ACTION. In order to carry out the intent and spirit of this Agreement, Buckner and Capital will do all acts and things necessary including the execution of other agreements.

E. ENTIRE AGREEMENT. This Agreement sets forth the entire Agreement between Capital and Buckner. Any change or modification of this Agreement must be in writing and signed by all parties hereto.

F. BINDING EFFECT. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto, their successors and assigns.

G. ASSIGNMENT, ETC. Capital shall not, without Buckner's prior written approval (which approval shall not be unreasonably withheld), assign any of its rights or obligations under this Agreement.

H. GOVERNING LAW. This Agreement, its interpretation, validity and performance shall be governed by the laws of the State of Texas.

I. NO PERSONAL LIABILITY. This Agreement has been executed on behalf of Buckner and Capital by their respective officers solely in their representative capacities and no officer, director, agent, employee or attorney of Buckner or Capital shall have any personal liability hereunder to any person.

J. NON-COMPETE. Without the prior written consent of Capital, for a period of three years following termination of this Agreement, Buckner will not employ or engage any person who was a Capital employee hired by Capital on or after the effective date of this Agreement and who was not previously an employee of Buckner. Additionally, Capital will not operate, manage or develop any facilities within a 5 mile radius of the Facility except for any facility owned by Buckner.

K. CONDITIONS BEYOND CONTROL OF PARTIES. Neither party shall be held liable for failure to comply with any of the terms of this Agreement when such failure has been caused solely by fire, labor dispute, strike, war, insurrection, government restrictions, force majeure, or act of God beyond the control and without fault on the part of the party involved, provided such party uses due diligence to remedy such default. Circumstances are likely to arise from time to time which may require that budgets be exceeded, and Capital shall not be liable for budget overruns.

L. INDEMNIFICATION. Buckner will indemnify and hold harmless Capital from any and all liability arising incident to Buckner's performance of its duties under this Agreement. Capital will indemnify and hold harmless Buckner from any and all liabilities arising incident to Capital's performance of its duties under this Agreement.

M. Buckner shall also indemnify and hold Capital harmless against any and all losses, costs or expenses incurred by Capital by reason of, arising out of or in any way related to noncompliance by the Facility with all applicable state, federal and local laws, ordinances, rules and regulations relating to the physical condition of the property of the Facility, provided Capital shall promptly notify Buckner of Capital's knowledge of any such noncompliance.

N. ARBITRATION. In the event of any dispute, claim or controversy of any kind between the parties, concerning this Agreement or the termination of this Agreement, the matter shall be submitted to arbitration in accordance with rules of the American Arbitration Association, except that the selection of the Arbitrator shall be done pursuant to this Paragraph and the proceeding shall be governed solely by the Selected Arbitrator. The parties jointly shall agree on an arbitrator. If the parties are unable to agree, in good faith within a reasonable time, on the selection of an arbitrator, either party may request appointment of an arbitrator chosen by the American Arbitration Association who shall be the Selected Arbitrator. Such arbitrator shall be limited in his decision to a choice between the final selection as requested by each party. Said arbitration shall be held in Dallas/Ft. Worth, Texas or such other place as is mutually agreeable. The arbitration decision shall be final and binding on both parties unless the arbitration is fraudulent or so grossly erroneous as to necessarily imply bad faith. Costs of arbitration are to be shared by both parties equally, provided that the arbitrator may choose to award the costs of arbitration against the losing party if the arbitrator determined that the final position urged by the losing party was not reasonable.

BUCKNER RETIREMENT SERVICES, INC.          CAPITAL SENIOR MANAGEMENT 1, INC.



By:  /s/ KENNETH T. HALL                    By:  /s/ DAVID R. BRICKMAN
    --------------------------------            --------------------------------

Title:  President/CEO                       Title:  V.P.
       -----------------------------               -----------------------------

Exhibit 10.26
MANAGEMENT AGREEMENT

This Management Agreement (the "Agreement") dated as of November 30, 1992, between Capital Realty Group Senior Housing, Inc. d/b/a Capital Senior Living, Inc., a Texas corporation ("Manager"), and Jacques-Miller Healthcare Properties, L.P., a Delaware limited partnership ("Owner").

W I T N E S S E T H:

WHEREAS, owner beneficially owns Cedarbrook, Cane Creek, Crenshaw Creek, and Sandybrook, that certain 144 bed facilities (collectively the "Facility"), located at Gallatin and Goodlettsville, Tennessee, Martin, Tennessee, Waxhaw Township, South Carolina, and Mt. Dora, Florida respectively; and

WHEREAS, Manager has certain asset management and property management duties under the First Amendment To Restated Lease Agreement dated November 30, 1992 regarding the Facility (the "Lease"); and

WHEREAS, Owner is indebted to Third National Bank and First American National Bank in the approximate amount of $4,000,000.00 which is secured by the Lease; and

WHEREAS, Owner desires to engage Manager and Manager is willing, to provide leasing, releasing, leasing related services, and asset management related services regarding the Facility, pursuant to the terms and conditions set forth herein.

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

1. Retention of Manager. Owner hereby retains Manager to provide leasing, releasing, leasing related services, and asset management related services in connection with the Facility under the terms and conditions set forth herein.

2. Responsibilities of Manager. During the Term, as defined below, Manager shall provide the following leasing, releasing, leasing related services, and asset management related services to Owner in connection with the operation of the Facility.

A. Leasing Services. Manager shall select and direct the performance of the Facility lessee, and Manager shall be responsible for the operation of the Facility and execution on a daily basis of policies established by Manager and Owner in accordance with this Agreement.

B. Releasing Services. Manager shall select, negotiate, and cause to be documented any releasing or modification of the lease to the Facility in accordance with terms and provisions that are acceptable to owner and recommended by Manager in accordance with this Agreement.

C. Fiscal Year: Budget. The fiscal year for the Facility shall be January 1 - December 31st. Within approximately 60 days following the date of this agreement, Manager shall review and modify the Facility's current repair and improvement budget and submit this revised budget to Owner for approval. In addition, at least forty-five (45) days prior to the start of each fiscal year, Manager shall prepare and submit to Owner for its review and approval, which approval shall not be unreasonably withheld, an annual repair and improvement budget for the following year (the "Budget"). Thereafter, Manager shall be entitled to make or commit Owner to make expenditures which are reflected in the Budget, as well as expenditures which individually do not exceed 10% of the amounts set forth therein for the applicable capital item (the "Budget Threshold"). Except for emergency repairs referred to in section
2(H), any unbudgeted expenditures and/or expenditures in excess of the Budget Threshold shall be subject to Owner's approval, which shall not be unreasonably withheld.

D. Operational Policies. Manager shall maintain all operational policies necessary to establish and maintain the operational standards appropriate for the nature of the Facility.

E. On-Site Inspection. Manager shall visit and perform an on-site review of the Facility on at least a quarterly basis, which on-site review shall include lessee's general ledger, financial statements, cost reports, reimbursement information, survey reports, and any notices of deficiency from Medicare, Medicaid, any other payor, or any state or federal regulatory agency.

F. Information. Manager may develop any necessary informational material, mass media releases and other related publicity materials in connection with the Facility.

G. Regulatory Compliance. Manager shall use its best efforts to obtain and/or maintain all licenses, permits, qualifications and approvals from any applicable governmental or regulatory authority necessary for the lawful operation of the Facility.

H. Capital Equipment and Improvement. Manager shall advise Owner as to capital equipment and Facility improvements which are needed to maintain or upgrade the quality of the Facility and said equipment, or to replace obsolete or rundown equipment. Owner shall review and act upon Manager's recommendations as expeditiously as possible. Manager shall

not be liable for any cost or liability which owner may incur in the event Owner disregards Manager's recommendations. Manager shall make all necessary and approved repairs, replacements and maintenance within the budgetary limits set forth in the annual capital expenditure budget prepared by Manager pursuant to Section 2(C). Notwithstanding any contrary provisions in this Agreement, Manager shall be entitled, without Owner's consent, to make or commit Owner to make unbudgeted expenditures and/or expenditures in excess of the Budget Threshold for the purposes of emergency repairs involving manifest danger to persons or property or required to avoid suspension of any necessary service at the Facility. However, in no instance shall these unbudgeted expenditures exceed $5,000 without the prior authorization of the owner.

I. Ancillary Services. Manager shall negotiate for the provision of necessary ancillary services through qualified contractors and on an ongoing basis shall review and analyze the performance of said ancillary services contractors and, if necessary, shall negotiate additional or alternative contractual arrangements therefor. If any contracts for such services are with related parties to the Manager they will not exceed the cost of similar services that could be provided by an unrelated third party.

J. Legal Matters. Manager and Owner shall jointly agree on appropriate legal counsel for matters pertaining to the Facility. Owner shall be responsible for all legal fees, including allocated charges for internal counsel.

K. Bookkeeping and Accounting. Manager shall provide bookkeeping and accounting procedures regarding the Facility and the preparation of proper financial records. Bookkeeping and accounting procedures and systems shall be in accordance with the operation capital and cash programs developed by Manager, which programs shall conform to generally accepted accounting principles.

L. Reports. Manager shall prepare and provide to Owner the following reports, which shall reflect operations at the Facility:

i. A monthly balance sheet and income statement prepared in accordance with generally accepted accounting principles consistently applied;

ii. Monthly operating trend report;

iii. Monthly facility comparison report comparing month to date and year to date;

iv. Monthly cash summary and census summary;

v. Monthly accounts receivable aging and accounts payable aging schedules;

vi. On a quarterly basis, a cost report analysis and marketing analysis;

vii. On an annual basis, a repair and improvement budget analysis and insurance coverage analysis;

viii. On an annual basis, each Facility's state survey, cost report and fire inspection report;

ix. Any additional reasonable operational information which may from time to time be specifically requested by Owner.

M. Insurance. Manager shall cause to be obtained and maintained all such insurance coverage, which shall include property damage insurance covering the Facility and the furniture, fixtures and equipment situated therein, and comprehensive general liability and professional liability insurance, for the protection of Owner, Manager, lessee, Facility employees and volunteers of the Facility. Any changes in insurance carrier or coverage deemed necessary by Manager shall be implemented only following review and approval by Owner.

3. Term. This agreement shall become effective the day and year first written above and shall continue in full force and effect until October 31, 2002, hereinafter referred to as the "Term", unless sooner terminated as provided in paragraph 9 below.

4. Management Fees. For services performed hereunder, owner shall pay to Manager the following:

A. Management Fee. Commencing with January 1, 1993, Owner shall pay to Manager six percent (6%) of the Gross Revenues generated during the immediately preceding month and shall be payable on the 15th day of the month following that month in which revenues were actually collected. "Gross Revenues" shall mean all collected cash receipts generated by the Facility. If the services of Manager commence or terminate other than on the first day of a month, the compensation set forth in the Section 4(B) shall be prorated for the number of days for which services are actually rendered.

B. Expense Reimbursement. Owner shall reimburse Manager for the following items:

i. Reasonable food, lodging and travel expenses for service to the Facility.

ii. Any other items set forth in this Agreement as reimbursable items.

C. Late Charges. Owner shall pay to Manager, to the extent permitted by applicable law, interest on any amount owing to Manager under this Agreement which is not paid when due, for any period for which any of the same is overdue (without regard to any grace period), at a rate equal to the lesser of (i) four percent in excess of the rate announced from time to time by Chase Manhattan Bank, N.A. as its prime or reference rate, as such rate may change from time to time, and (ii) the maximum rate of interest permitted by applicable law.

D. Method of Payment. Owner shall pay the amounts set f orth in Sections 4(B) and (C) monthly, in advance, no later than the fifteenth (15th) day of the month during which such amounts are earned or paid. Manager shall be entitled to disburse all such amounts to itself out of the accounts provided for in
Section 2(D).

5. Proprietary Interest. The systems, methods, procedures and controls employed by Manager and any written materials or brochures developed by Manager to document the same shall not, at any time, be utilized, distributed copies or otherwise employed or acquired for use outside of this Facility, except with Manager's prior written consent, which Manager may withhold in its sole discretion. Neither owner nor owner's designee shall be entitled to utilize any written material or brochure outside of this Facility which Manager may have developed to document said systems, methods, procedures or controls.

6. No Guaranty of Profitability. Owner acknowledges that Manager does not guaranty that the Facility will be profitable.

7. Owner Inspection. During the term, Owner shall have the right, upon request and at reasonable times, to inspect the Facility and to inspect and/or audit all books and records pertaining to the operation thereof.

8. Responsibility for Funding. Owner shall make funds available sufficient to fund the repair and improvement budget referred to in Section 2(C).

9. Termination.

A. This agreement may be terminated by the Owner:

1. In the event of material breach by Manager of a material term hereof, which breach is not cured within 60 days after notice by the Owner (unless

Manager is using commercially reasonable efforts to cure such failure, in which case such period shall be extended for one year) and such failure is the result of Manager's willful misconduct, gross negligence, or unlawful act as finally determined, by a court having such jurisdiction regarding such matter.

2. In the event that a petition in bankruptcy is filed by Manager or its permitted assignee, or in the event Manager or its permitted assignee makes an assignment for the benefit of creditors or takes advantage of an insolvency act, by notice to the manager or assignee.

3. In the event that (i) Manager's or any permitted assignee's corporate existence is dissolved and the duties under this Agreement are not assumed by Manager or Manager's Affiliate (ii) Manager or any permitted assignee ceases to do business for any reason, by notice to the Manager or such assignee, and the duties under this Agreement are not assumed by Manager or Manager's Affiliate.

B. This agreement may be terminated by Manager in the event that Manager fails to receive reimbursement of reimbursable expenses or any compensation due Manager pursuant to the terms of this Agreement, or any other compensation due Manager, and such failure continues for a period of 60 days after Managers written notice thereof to Owner. Manager may terminate this Agreement effective immediately upon expiration of 60-day period without further notice to Owner; provided, however, that this Agreement shall not be so terminated if the Owners pay Manager all such expenses and compensation then due and payable on or before the expiration of said 60-day period.

C. No termination of this Agreement shall affect any obligation owing by either party hereto to the other which accrued prior to the effective date of such termination.

D. Notwithstanding any earlier provisions, and as per
Section N, Number 8 of the Restated Limited Partnership Agreement of Jacques-Miller Healthcare Properties, L.P., the Parties' agree that should the Manager become an affiliated party (as defined in
Section B of the Restated Limited Partnership Agreement of Jacques-Miller Healthcare Properties, L.P.) with the General Partners of Jacques-Miller Healthcare Properties, L.P., either Manager or Owner may terminate this Agreement on sixty (60) days written notice; Provided however, that such cancellation provision shall be deemed waived if Manager disassociates itself from the General Partners during any such sixty (60) day notice period. Alternatively, Manager may successfully avoid the sixty (60) day cancellation clause by assigning its management obligations to an unaffiliated entity reasonably judged to be capable of fulfilling the Partnership needs for such services.

10. Miscellaneous.

A. Disclaimer of Employment of Facility Employees. No person employed by the owner will be an employee of Manager, and Manager shall have no liability for payment of their wages, payroll taxes and other expenses of employment. All such persons will be employees of the Owner, or, pursuant to Section (K) hereof, independent contractors or the employees or independent contractors.

B. Relationship of the Parties: Disclaimer of Liability:
Indemnification. The relationship of Manager to Owner shall be that of an independent contractor and all acts performed by Manager pursuant to this Agreement during the Term shall be deemed to be performed in its capacity as an independent contractor. Manager shall not be liable for any loss, expense or liability incurred by or asserted against Owner, unless such loss, expense cost or liability results from the gross negligence or willful misconduct of Manager. Owner shall indemnify and hold Manager harmless from and against any and all loss, expense, cost or liability incurred by or asserted against Manager arising from or related to the Facility; provided, however, that Owner shall not be obligated to indemnify Manager for any loss, expense, cost or liability which results from Manager's gross negligence or willful misconduct.

C. Employee Non-solicitation. Recognizing the unique services provided by employee of Manager, during the Tern and for a period of two (2) years after termination of this Agreement, Owner shall not directly or indirectly solicit or employ any employees of Manager to become employees of Owner without Manager's prior written consent, which Manager nay withhold in its sole discretion. Likewise, Manager shall not directly or indirectly solicit or employ any employees of Owner to become employees of Manager without owner's prior written consent, which Owner may withhold in its sole discretion.

D. Assignment: Binding Effect. This Agreement shall not be assigned by either party without the prior written consent of the other party, which consent shall not be unreasonably withheld, Notwithstanding the foregoing, Manager may assign its rights and obligations hereunder to an entity controlling, controlled by or under common control with Manager. This Agreement shall be binding upon and insure to the benefit of the permitted successors and assigns of the parties.

E. Notices. All notices required or permitted hereunder shall be given in writing and shall be personally delivered or be sent by registered or certified mail, postage prepaid, to the following addresses or at such other places as either party shall designate in writing:

If to Manager:   Mr. Larry C. Dingmann
                 14160 Dallas Parkway
                 Suite 300
                 Dallas, TX 75240


If to owner:     Jacques-Miller Healthcare
                 Properties, L.P.
                 c/o Jacques-Miller, Inc., Managing
                 General Partners
                 102 Woodmont Blvd, Suite 400
                 Nashville, TN 37205
                 Attn: David Griffin, President

Notices shall be deemed effective upon receipt.

F. Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the subject matter hereof and shall supersede all prior understandings, agreements or arrangements, oral or written, between the parties.

G. Amendment. This Agreement shall not be modified or amended except by written instrument signed by both of the parties.

H. Captions. The captions and headings used herein are for convenience of reference only and shall not be construed in any manner to limit or modify any, of the terms hereof.

I. Attorney's Fees. In the event either party brings an action to enforce this Agreement, the prevailing party in such action shall be entitled to recover from the other all costs incurred in connections therewith, including reasonable attorney's fees. Reasonably attorney's fees shall include reasonable charges allocated for internal counsel.

J. Severability. In the event one or more of the provisions of this Agreement is deemed to be invalid, illegal or unenforceable in any respect under applicable laws, the validity, legality and enforceability of the remaining provisions hereof shall not, in any way, be impaired thereby.

K. Representations. Each of the parties represents and warrants to the other as follows:

i. The execution, delivery and performance of this Agreement (a) are within the corporate and partnership powers of the respective parties,

(b) have been duly authorized by all necessary corporate or partnership action, and (c) do not and will not (1) require any consent or approval by stockholders or partners, or (2) violate any provision of any law, rule, regulation, order, writ, judgment, decree or award presently in effect having applicability to the parties or the articles of incorporation, bylaws, partnership or joint venture agreements of the parties.

ii. This Agreement constitutes the valid and binding obligations of Owner and Manager, respectively, enforceable in accordance with its terms.

L. Counterparts. This Agreement may be executed in counterparts, each of which shall be an original, but all of which together shall constitute but one and the same instrument.

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

N. Access to Records, Cost Reports and Financial Statements. Each of the parties hereby grant the other, and the appropriate governmental agency access to all contracts, books, documents and records necessary to verify the costs of any contract between any subcontractor and Medicaid/Medicare provider in accordance with state/federal statutory and/or regulatory requirements.

IN WITNESS WHEREOF, the parties have each caused the Agreement to be duly executed by its duly authorized officer, as of the date first written above.

Owner:   Jacques-Miller Healthcare Properties, L.P.

             c/o Jacques-Miller, Inc., Managing General Partner

             By: Capital Realty Group Properties, Inc., Its Agent


                 By:  /s/ James A. Stroud, President
                    -----------------------------------
                     James A. Stroud, President

Manager:     Capital Realty Group Senior Housing, Inc.

             d/b/a Capital Senior Living, Inc.


                 By:  /s/ Larry C. Dingmann
                    -----------------------------------
                     Larry C. Dingmann
                     Senior Vice President

EXHIBIT 10.27

MANAGEMENT AGREEMENT

DATED AS OF JULY 29, 1996

BETWEEN

ILM I LEASE CORPORATION,

AS OWNER

AND

CAPITAL SENIOR MANAGEMENT 2, INC.,

AS MANAGER

AND

CAPITAL SENIOR LIVING, INC.

AS GUARANTOR

TABLE OF CONTENTS

                                                                     PAGE
                                                                     ----
                             ARTICLE I

                        GENERAL PROVISIONS
                        ------------------

Section 1.01.  Employment as Exclusive Leasing Agent and
               Manager   . . . . . . . . . . . . . . . . . . . . . .    1
Section 1.02.  Manager's Duties Generally  . . . . . . . . . . . . .    2
Section 1.03.  Term of Agreement   . . . . . . . . . . . . . . . . .    3
Section 1.04.  Compensation  . . . . . . . . . . . . . . . . . . . .    3
Section 1.05.  Termination   . . . . . . . . . . . . . . . . . . . .    3
Section 1.06.  Insurance   . . . . . . . . . . . . . . . . . . . . .    7
Section 1.07.  Plans and Specifications  . . . . . . . . . . . . . .   12
Section 1.08.  Ethical Standards   . . . . . . . . . . . . . . . . .   12
Section 1.09.  Cooperation and Consultation with Third Parties   . .   12
Section 1.10.  Indemnities   . . . . . . . . . . . . . . . . . . . .   12
Section 1.11.  Guaranty  . . . . . . . . . . . . . . . . . . . . . .   12
Section 1.12.  Real Estate Tax Assessments   . . . . . . . . . . . .   13
Section 1.13.  Policies and Procedures Manual  . . . . . . . . . . .   13

                            ARTICLE II

                              LEASING
                              -------

Section 2.01.  Manager's Duties Generally As Leasing Agent   . . . .   13
Section 2.02.  Negotiation and Execution of Leases   . . . . . . . .   13
Section 2.03.  Liaison with Tenants  . . . . . . . . . . . . . . . .   14
Section 2.04.  Marketing of Rental Space   . . . . . . . . . . . . .   14
Section 2.05.  Advertising   . . . . . . . . . . . . . . . . . . . .   14

                            ARTICLE III

                      ADMINISTRATIVE SUPPORT
                      ----------------------

Section 3.01.  Personnel   . . . . . . . . . . . . . . . . . . . . .   14
Section 3.02.  Contracts   . . . . . . . . . . . . . . . . . . . . .   16
Section 3.03.  Status Reports  . . . . . . . . . . . . . . . . . . .   16
Section 3.04.  Records   . . . . . . . . . . . . . . . . . . . . . .   17
Section 3.05.  Obligations Under Tenant Leases   . . . . . . . . . .   17
Section 3.06.  Tenant Compliance   . . . . . . . . . . . . . . . . .   17
Section 3.07.  Licensing   . . . . . . . . . . . . . . . . . . . . .   17

                            ARTICLE IV

                    MAINTENANCE AND OPERATIONS
                    --------------------------

Section 4.01.  Engineering Management Services   . . . . . . . . . .   18
Section 4.02.  Preventative Maintenance  . . . . . . . . . . . . . .   18
Section 4.03.  Capital Improvements; Expansion   . . . . . . . . . .   18
Section 4.04.  Personnel Training  . . . . . . . . . . . . . . . . .   20
Section 4.05.  Maintenance   . . . . . . . . . . . . . . . . . . . .   20
Section 4.06.  Supervision of Contracts  . . . . . . . . . . . . . .   20
Section 4.07.  Service Requests  . . . . . . . . . . . . . . . . . .   20
Section 4.08.  Emergencies   . . . . . . . . . . . . . . . . . . . .   21
Section 4.09.  Regulatory Requirements   . . . . . . . . . . . . . .   21
Section 4.10.  Inventory   . . . . . . . . . . . . . . . . . . . . .   21
Section 4.11.  Security  . . . . . . . . . . . . . . . . . . . . . .   22

                             ARTICLE V

                       FINANCIAL MANAGEMENT
                       --------------------

Section 5.01.  Bank Account  . . . . . . . . . . . . . . . . . . . .   22
Section 5.02.  Collections and Deposits  . . . . . . . . . . . . . .   22
Section 5.03.  Disbursements   . . . . . . . . . . . . . . . . . . .   22
Section 5.04.  Examinations and Audits of Accounts   . . . . . . . .   23
Section 5.05.  Books and Records   . . . . . . . . . . . . . . . . .   23
Section 5.06.  Budget  . . . . . . . . . . . . . . . . . . . . . . .   24
Section 5.07.  Obligations for Expenses  . . . . . . . . . . . . . .   24

                            ARTICLE VI

                           MISCELLANEOUS
                           -------------

Section 6.01.  No Partnership or Joint Venture   . . . . . . . . . .   25
Section 6.02.  Notices   . . . . . . . . . . . . . . . . . . . . . .   25
Section 6.03.  Applicable Law  . . . . . . . . . . . . . . . . . . .   26
Section 6.04.  Successors and Assigns  . . . . . . . . . . . . . . .   26
Section 6.05.  Confidentiality   . . . . . . . . . . . . . . . . . .   27
Section 6.06.  Manager's Insignia  . . . . . . . . . . . . . . . . .   28
Section 6.07.  Entire Agreement  . . . . . . . . . . . . . . . . . .   28
Section 6.08.  Captions, Gender, Number  . . . . . . . . . . . . . .   28
Section 6.09.  Severability  . . . . . . . . . . . . . . . . . . . .   28
Section 6.10.  Days  . . . . . . . . . . . . . . . . . . . . . . . .   28

EXHIBIT A
TO MANAGEMENT AGREEMENT

List of Properties

EXHIBIT B
TO MANAGEMENT AGREEMENT

Fees and Compensation of Manager

EXHIBIT C
TO MANAGEMENT AGREEMENT

Budget

EXHIBIT D
TO MANAGEMENT AGREEMENT

D-1 Form of Monthly Status Report
D-2 Form of Quarterly Status Report

D-3 Form of Annual Fiscal Year Status Report D-4 Form of Annual Calendar Year Status Report

EXHIBIT E
TO MANAGEMENT AGREEMENT

Form of Rent Roll

EXHIBIT F
TO MANAGEMENT AGREEMENT

List of Non-Property Staff

EXHIBIT G
TO MANAGEMENT AGREEMENT

Properties on Which Feasibility Study
Will Be Conducted Within Three Months

MANAGEMENT AGREEMENT

THIS AGREEMENT, dated as of July 29, 1996, by and between ILM I LEASE CORPORATION, a Virginia corporation (the "Owner"), and CAPITAL SENIOR MANAGEMENT 2, INC., a Texas corporation (the "Manager") and CAPITAL SENIOR LIVING, INC., a Texas corporation (the "Guarantor"), recites and provides:

RECITALS

WHEREAS, the Owner leases the real estate and related personal property described on Exhibit A hereto (collectively, the "Properties" and each individually, a "Property").

WHEREAS, each of the Properties is operated as an assisted living or congregate care facility;

WHEREAS, the Manager has experience and expertise in the management of assisted living and congregate care facilities;

WHEREAS, the Owner wishes the Manager to manage the Properties, and the Manager desires to do so, pursuant to the terms and conditions set forth in this Agreement.

AGREEMENT

NOW, THEREFORE, for and in consideration of the mutual covenants set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Owner and Manager agree as follows.

ARTICLE I

GENERAL PROVISIONS

Section 1.01. Employment as Exclusive Leasing Agent and Manager. The Owner hereby employs Manager as its exclusive agent for leasing, operating and managing the Properties. Manager accepts such employment and agency and, subject to the terms and conditions hereof and such express restrictions or limitations on its authority and, to the extent not inconsistent with the terms and conditions hereof, such written instructions as may from time to time be given by the Owner, agrees to perform the duties and obligations described herein. In its performance of its duties under this Agreement, Manager shall be an independent contractor rather than an employee of the Owner.

Section 1.02. Manager's Duties Generally.

(a) Manager shall assist the Owner in the leasing, management, operation, supervision, control and administration of the Properties and, by its execution hereof, Manager accepts the relationship of trust and confidence established between itself and the Owner. In accepting its employment hereunder, Manager shall (i) perform its responsibilities hereunder with the same or a greater degree of diligence, competence and care exercised by leading real estate brokers, agents and managers of facilities of the same or similar type as the Properties in the general areas in which the Properties are located and (ii) act with due care in its management of the Owner's funds and property and avoid conflicts of interest or self dealing that would be detrimental to the interests of the Owner. In addition to the obligations expressly provided for in this Agreement, Manager shall do such other things on behalf of the Owner that are consistent with this Agreement, necessary or appropriate, in the judgment of the Owner, and communicated to the Manager, for the proper and profitable operation of the Properties.

(b) Without limiting the restrictions placed upon the Manager pursuant to Subsection (a), the Manager hereby agrees that:

(i) during the Term of this Agreement neither the Manager nor any person controlling, controlled by or under common control with the Manager (an "Affiliate") shall develop, finance, operate, manage or acquire any direct or indirect interest in any assisted living or congregate care facility (as the case may be) located within ten miles of any of the Properties (a "Competing Facility") without the prior written consent of the Owner, provided, however, that in the event that the Manager enters into a Portfolio Transaction, the Manager may own, operate or manage, as applicable, one Competing Facility connected with a Portfolio Transaction and located within such radius if (A) with respect to a Portfolio Transaction in which the Manager acquires the ownership of a Competing Facility, the Manager provides the Owner, or the Owner's designee, with an option to purchase and lease back such Competing Facility at a fair market value, as determined by an appraisal from an independent appraiser acceptable to the Owner and the Manager; (B) the Manager does not relocate any Property Staff involved in the marketing of any of the Properties to such Competing Facility or otherwise employ any marketing materials or trade secrets specifically developed for use in the Properties; and (C) the Manager does not reposition the Competing Facility to compete directly with the Property located closest to such Competing Facility. For purposes of this Subsection, "Portfolio Transaction" shall mean a single transaction in which the Manager acquires the ownership of, leasehold interest in, or is contracted to manage, at least five operating assisted living or congregate care facilities.

(ii) during the Term of this Agreement and for a period of two years thereafter, neither the Manager nor any Affiliate will, in connection with any assisted living or congregate care facility (as the case may be) in which it directly or indirectly owns an interest or which it manages, solicit any of the tenants of the Properties or interfere, either directly or

indirectly, in any manner, with any relationship between the tenants of the Properties and their landlord(s).

(iii) for a period of two years after the expiration of this Agreement, neither the Manager nor any Affiliate will solicit any of the Property Staff (as defined in Section 3.01) or interfere, either directly or indirectly, in any manner, with their employment by the Owner, another lessee or owner of the Properties, or the successor to the Manager, as applicable.

(iv) neither the Manager nor any of its Affiliates, directors, officers or Non-Property Staff (as defined in Section 3.01) shall trade in any securities issued by the Owner or PaineWebber Independent Living Mortgage Fund, Inc., a Virginia corporation.

(c) If any provision of this Section is deemed invalid by a court of competent jurisdiction, the covenants contained herein shall be applicable and enforceable for such lesser period of time and for such lesser activity included within such limitations, as such court may then or thereafter determine to be reasonable and proper under the circumstances.

(d) In the event that any provision hereof is deemed to be unenforceable, the remainder of this Section shall not be affected thereby and each provision hereof shall be valid and enforced to the fullest extent permitted by law.

(e) The Manager hereby acknowledges that the damages the Owner would sustain in the event of any violation of the provisions of this Section are difficult or impossible to ascertain. Accordingly, the Manager hereby agrees that the Owner shall be entitled, in addition to any other remedy or damages available to it in the event of any such violation, to injunctive relief to restrain such violation by the Manager and any person or entity acting for or with the Manager.

Section 1.03. Term of Agreement. The initial term of this Agreement (the "Initial Term") shall commence on July 29, 1996 and shall continue through either (i) December 31, 1999 or (ii) in the event that certain Facilities Lease Agreement dated as of September 1, 1995 between ILM Holding, Inc. and the Owner (the "Facilities Lease") is extended for any period following December 31, 1999, the earlier of (A) five years from the date of this Agreement or (B) the period during which the Facilities Lease is extended. Unless the Owner gives the Manager notice of termination of this Agreement at least thirty days prior to the expiration of the Initial Period, upon the expiration of the Initial Term, this Agreement shall extend automatically for additional one month periods (the "Renewal Terms") until terminated as provided herein (the Initial Term as extended through any Renewal Terms, herein referred to as the "Term"). If the Owner gives the Manager notice of termination of this Agreement thirty days prior to the expiration of the Initial Period, this Agreement shall terminate and no additional fees shall be payable hereunder.

Section 1.04. Compensation. As compensation for Manager's performance of its obligations hereunder, the Owner agrees to pay to Manager the fees for each Property as set forth on Exhibit B attached hereto.

Section 1.05. Termination.

(a) Termination for Cause. The Owner may elect to terminate this Agreement with respect to all the Properties immediately upon the occurrence of a Default by notifying the Manager in writing that this Agreement has been terminated (a "Notice of Default"). For purposes of this Agreement, "Default" shall mean:

(i) Manager's gross negligence or wilful misconduct in the performance of its duties under this Agreement;

(ii) The revocation of any license or permit necessary for the performance by Manager of its duties hereunder or for the operation of any of the Properties as congregate care or assisted living facilities, as the case may be, or Manager's failure to keep any such license or permit in force for any reason whatsoever which license or permit is not reinstated before a material adverse impact or effect on the operation of the affected Property or Properties or, if later, the expiration of sixty days after Manager is initially notified of such revocation or failure by applicable authorities or the Owner;

(iii) The violation by Manager of any material provision of this Agreement, provided, however, that no default shall be deemed to have occurred if the Manager cures such violation within thirty days after the Owner's written notice to Manager of such violation;

(iv) The violation by Manager of any material provision of that certain Management Agreement, of even date herewith, between Manager and ILM II Lease Corporation (the "ILM II Agreement") relating to properties leased by ILM II Lease Corporation ("ILM II"), which violation entitles ILM II under the ILM II Agreement to terminate such ILM II Agreement;

(v) The entry by a court of competent jurisdiction of a decree or order for relief in respect of Manager, the Guarantor or either of Jeffrey Beck or James Stroud (the "Shareholders") in an involuntary case or proceeding under any bankruptcy, insolvency or similar law, or appointing a receiver, liquidator, trustee or similar official of Manager, the Guarantor or the Shareholders or of all or any substantial part of the property of any of them, or ordering the reorganization of Manager or the Guarantor or the winding up of either of their affairs or liquidation of either of their property, and such decree or order shall continue unstayed and in effect for a period of 30 days; or

(vi) The consent or acquiescence by Manager, the Guarantor or either of the Shareholders to the entry of any decree or order described in Subsection 1.05(a)(v) hereof, the commencement by Manager or the Guarantor of a voluntary case or proceeding under any bankruptcy, insolvency or similar law, the making by Manager or the Guarantor of any

general assignment for the benefit of creditors, or Manager's or the Guarantor's failure or admission in writing of its inability to pay its debts as they become due.

Manager shall notify the Owner in writing of the occurrence of any of the events specified in Sections 1.05(a)(i)-(vi) above promptly after it first learns of such event.

(b) Termination Without Cause. Subject to compliance with
Section 2 (Right of Offer) of that certain Agreement of even date herewith between PaineWebber Independent Living Mortgage Fund, Inc., ILM Holding, Inc., Owner and Manager, the Owner may terminate this Agreement with respect to any or all of the Properties by delivering a Notice of Termination to the Manager thirty days prior to (i) the sale to an unaffiliated third party of such Property by the owner thereof, or (ii) the transfer to an unaffiliated third party of 50 percent or more of the ownership interest in ILM Holding, Inc., or PaineWebber Independent Living Mortgage Fund, Inc.

(c) Action on Termination.

For purposes of this Section, "Effective Date" shall mean (i) with respect to a Notice of Termination delivered pursuant to Section 1.05(a), the date of such Notice of Termination and (ii) with respect to a Notice of Termination delivered pursuant to Section 1.05(b), the date thirty days following the date of delivery of such Notice of Termination.

(i) Within ten business days following the date of any Notice of Termination, Manager shall provide the Owner with the following items to facilitate the transfer of leasing and management responsibilities to the Owner or its designee in a comprehensive and professional manner:

(A) A schedule of termination activities including notices to vendors, contractors and banks and meetings with the successor entity responsible for the leasing and management of the Properties;

(B) An itemized statement of the amounts due hereunder from the Owner to the Manager;

(C) An itemized statement of the amounts due suppliers of services and goods which have been ordered by Manager in the name of the Owner;

(D) An itemized statement of all accounts receivable due the Owner from any source; and

(E) A list of all records, reports, financial statements, files and similar materials in Manager's possession related to the Properties.

(ii) On the Effective Date of the Notice of Termination, Manager shall:

(A) Deliver to the Owner all funds collected and held for the account of the Owner including, without limitation, passbook accounts, negotiable and investment instruments, demand deposits and petty cash, whether any of the foregoing is received before or after the termination hereof;

(B) Deliver to the Owner all property and documents and all records, reports, files and similar materials relating to the Properties;

(C) Assign to the Owner, or its designee, all contracts not otherwise in the name of the Owner relating to the operation or leasing of any of the Properties and assign, to the extent transferable, to the Owner, or its designee, all applicable licenses and permits necessary to operate the Properties as congregate care or assisted living (as the case may be) facilities;

(D) Deliver to the Owner a complete list of all contracts, agreements and obligations entered into or incurred by Manager on behalf of the Owner during the Term hereof; and

(E) Furnish such other information and take such other actions as the Owner shall reasonably require to transfer Manager's leasing and management responsibilities to the Owner or its designee.

(iii) Within 25 days after the Effective Date of the Notice of Termination, Manager shall deliver to the Owner a full accounting, including a statement showing all payments collected by it and all moneys held by it, for the period following the last date covered by the last accounting furnished to the Owner.

(iv) Manager's obligation to deliver to the Owner or its designee the items described in this Section 1.05(c) shall be a continuing obligation with respect to any of those items that may be in or come into Manager's possession or control on or after the effective date of termination of this Agreement.

(v) Manager shall cooperate fully with the Owner or its designee in the transfer of, or in obtaining, all applicable licenses and permits necessary to operate the Properties as congregate care or assisted living (as the case may be) facilities and of management, leasing and licensing operational responsibilities to the Owner or such designee.

(d) Casualty or Condemnation. Notwithstanding the foregoing or anything to the contrary contained in this Agreement, either the Manager or the Owner may elect to terminate this Agreement immediately with respect to a Property subject to a Casualty or Condemnation Event (as defined herein) by giving written notice of termination to the other party; provided, however, that as to any Property for which this Agreement is so terminated and at which the Owner thereafter commences operations as an assisted living or congregate care facility, as the case may be, prior to the termination of this Agreement with respect to all

of the Properties, Manager shall have the option to re-commence providing services at such Property pursuant to the terms hereof. For purposes hereof, a "Casualty or Condemnation Event" shall mean damage to a Property by fire, smoke, lightning, wind storm, explosion, riot, vandalism, malicious mischief, theft and such other casualty hazards and risks to the extent that the Property cannot, in the Manager's or Owner's (as the case may be) reasonable judgment, be economically operated as the type of facility it was prior to such casualty and (i) such casualty occurred within 24 months of the end of the Term, or (ii) such casualty is an event for which insurance coverage is not required under
Section 1.06, and a condemnation or taking by eminent domain which is either
(i) 50% or more of the Property (measured by any of gross area, rentable square footage or number of rental units) or (ii) such portion or portions of the Property so that the portion remaining cannot, in the Manager's or Owner's (as the case may be) reasonable judgement, be economically operated as the type of facility it was prior to the taking.

(e) Partial Termination. In the event that this Agreement is terminated with respect to one or more, but less than all, of the Properties, the term "Properties" shall thereafter refer only to such remaining Properties.

(f) Termination by Manager. Manager may terminate this Agreement by written termination notice to Owner in the event that Manager fails to receive reimbursement of reimbursable expenses or any compensation due Manager pursuant to the terms of this Agreement, and such failure continues for a period of sixty (60) days after Manager's written notice of such failure to Owner.

(g) Effect of Termination. No termination of this Agreement shall affect any obligation owing by either party hereto to the other which accrued prior to the Effective Date of the Notice of Termination.

Section 1.06. Insurance.

(a) Owner's Insurance Coverage. The Manager will obtain at Owner's sole cost and expense the following coverage for the Owner with respect to the Properties. Owner retains the right to procure all such insurance for itself should it see fit rather than having the Manager procure such insurance on behalf of Owner.

(i) Building Insurance. The Manager shall obtain a building and contents insurance policy with comprehensive all risk coverage with respect to the buildings and personal property components of the Properties (including, without limitation, any such personal property components owned by Manager) and which shall not exclude the following: fire, lighting, extended coverage, theft, flood, earthquake (where available), vandalism, sprinkler leakage, water damage, collapse and debris removal.

The amount of such insurance shall not be less than the full replacement cost except where sublimits are appropriate (and a replacement cost endorsement shall be provided for

these purposes permitting payment of the loss without a requirement to rebuild) as determined by an insurance appraisal or such other valuation with provisions for the use of indexes at interim dates to increase the value for inflation.

The policy shall contain an endorsement called an "Agreed Amount Endorsement" which shall waive any and all coinsurance provisions under the policy as it applies to the coverage.

(ii) Business Interruption and Loss of Rent Insurance. The Manager shall obtain a business interruption and loss of rent insurance policy with coverage against all of the risks referred to in Subsection (a)(i) above. The insurance shall be in an amount equal to not less than 100% of the annual rent roll schedules of the Properties covering all tenants and shall be endorsed to cover unoccupied and unleased space at pro forma rents and shall include gross budgeted revenues for all other activities. The policy shall contain an Agreed Amount Endorsement waiving all coinsurance provisions.

(iii) Comprehensive General Liability Insurance. This policy shall include coverage for claims arising from bodily injury, personal injury, and property damage occurring upon, in, or about each of the Properties. The coverage shall be on an occurrence basis, and the minimum limits shall be not less than $1,000,000. Coverage for liquor law liability shall also be included if required by law.

The policy should cover the following hazards: premises and operation; incidental malpractice; comprehensive owned and non-owned auto liability insurance; and coverage for hired vehicles on an "if any" basis.

(iv) Umbrella Liability Coverage. A policy shall be obtained, providing coverage in an amount equal to at least $10,000,000 in excess of the coverage to be maintained pursuant to Subsection (iii) of this
Section 1.06(a).

(v) Additional Insurance. Owner shall have the right to require Manager to obtain and maintain, if requested in writing and at Owner's sole cost and expense, such other insurance as Owner may from time to time deem reasonably necessary, and which insurance is normal and customary for other operations of improved property similar to the Properties.

(vi) Priority of Coverage. Owner's insurance will be primary as to any insurance carried by Manager, and any such coverage of Manager will be excess insurance to the extent that Manager is acting within the scope of its duties under this Agreement.

(b) Manager's Operational Insurance Coverage. Throughout the Term of this Agreement, the Manager shall procure and maintain, at Owner's sole cost and expense, the following insurance coverage. Owner retains the right to procure all such insurance for itself or the Manager, as appropriate, should it see fit rather than having the Manager procure

such insurance; provided, however, that to the extent that the Manager identifies such insurance coverage which otherwise conforms with the requirements of this Section 1.06 but the Owner procures such insurance pursuant hereto which is other than that so identified by Manager, "Net Cash Flow," as calculated pursuant to Exhibit B, will be calculated assuming insurance costs equal to the premiums and costs applicable to the coverage so identified by the Manager to the extent such premiums and costs are less than those applicable to the coverage so procured by the Owner.

(i) Worker's Compensation and Unemployment Compensation. Workers' compensation and unemployment compensation with respect to the Property Staff in full compliance with all applicable state and federal laws and regulations;

(ii) Employer's Liability Insurance. Employer's liability insurance in an amount not less than $100,000 for each accident, $500,000 for each disease policy limit and $100,000 for diseases for each employee covering all Property Staff;

(iii) Comprehensive Automobile Liability Insurance. Comprehensive automobile liability insurance coverage with respect to those motor vehicles owned by the Owner which are used by the Property Staff in connection with the Properties which has limits for bodily injury of not less than $250,000 per person and $500,000 per accident and property damage of $100,000 per accident. The comprehensive automobile liability policy shall include blanket non-owned coverage;

(iv) Employee Dishonesty Insurance. Employee dishonesty insurance with respect to the Property Staff and any agents against employee dishonesty in an amount not less than the greater of (A) One Million Five Hundred Thousand Dollars ($1,500,000.00) or (B) an amount equal to the average monthly receipts from all of the Properties;

(v) Professional Liability Insurance. Professional liability insurance in an amount equal to at least $1,000,000 with respect to bodily injury, property damage or personal injury arising out of professional acts, errors or omissions;

(vi) Fiduciary Liability Insurance. In the event that the Manager makes any employee benefit plan available to the Property Staff, fiduciary liability insurance in an amount equal to at least $1,000,000 with respect to claims alleging breach of fiduciary obligations under the Employment Retirement Income Security Act of 1974 and any acts, errors or omissions committed in connection with the administration of any employee benefit plans for the Property Staff;

(vii) Employment Practices Insurance. Employment practices insurance in an amount equal to at least $1,000,000 with respect to lawsuits brought by employees alleging wrongful discharge, discrimination, harassment or other employment related exposure with respect to the Property Staff; and

(viii) Umbrella Liability Coverage. A policy shall be obtained, providing coverage in an amount equal to at least $10,000,000 in excess of the coverage to be maintained pursuant to Subsections (i) through
(vii) of this Section 1.06(b).

(ix) Other Insurance. Such other insurance as may be carried at similar properties as Owner may from time to time reasonably deem necessary in connection with or for the performance of Manager's duties hereunder.

(c) Manager's Insurance Coverage. Throughout the Term of this Agreement, the Manager shall procure and maintain, at Manager's sole cost and expense, the following insurance coverage:

(i) Comprehensive General Liability Insurance. Comprehensive general liability insurance which includes coverage for all Non- Property Staff (as defined in Section 3.01(b)) and if Manager is found to be acting outside the scope of his duties under this Agreement, with minimum limits of at least $1,000,000 per occurrence for bodily injury, personal injury and property damage;

(ii) Worker's Compensation and Unemployment Compensation. Workers' compensation and unemployment compensation with respect to the Non-Property Staff in full compliance with all applicable state and federal laws and regulations;

(iii) Employer's Liability Insurance. Employer's liability insurance in an amount not less than $100,000 for each accident, $500,000 for each disease policy and $100,000 for diseases for each employee covering all Non-Property Staff performing any work relating to the Properties;

(iv) Comprehensive Automobile Liability Insurance. Comprehensive automobile liability insurance coverage with respect to those motor vehicles owned by the Manager which are used by Non-Property Staff in connection with the Properties which has limits for bodily injury of not less than $250,000 per person and $500,000 per accident and property damage of $100,000 per accident. The comprehensive automobile liability policy shall include blanket non-owned coverage;

(v) Umbrella Liability Insurance. An "umbrella" liability coverage providing coverage in an amount equal to at least $10,000,000 in excess of the coverage to be maintained pursuant to Subsections
(i), (iii) and (iv) above;

(vi) Employee Dishonesty Insurance. Employee dishonesty insurance with respect to the Non-Property Staff and any agents, officers and employees of the Manager against dishonesty by any of such persons in an amount not less than the greater of (A) One Million Five Hundred Thousand Dollars ($1,500,000.00) or (B) an amount equal to the average monthly receipts from all of the Properties;

(vii) Fiduciary Liability Insurance. Fiduciary liability insurance in an amount equal to at least $1,000,000 with respect to claims alleging breach of fiduciary obligations under the Employment Retirement Income Security Act of 1974 and any acts, errors or omissions committed in connection with the administration of any employee benefit plans made available to the Non-Property Staff;

(viii) Employment Practices Insurance. Employment practices insurance in an amount equal to at least $1,000,000 with respect to lawsuits brought by employees alleging wrongful discharge, discrimination, harassment or other employment related exposure with respect to Non-Property Staff; and

(ix) Other Insurance. Such other insurance as may be carried at similar properties as Owner may from time to time reasonably deem necessary in connection with or for the performance of Manager's duties hereunder.

(d) Payment of Insurance. The insurance required by Subsection (a) and (b) of this Section, whether obtained by Manager on behalf of Owner or by Owner directly, shall be an operating expense of the applicable Property and paid from such Property's revenues or reserves or by the Owner, as directed by the Owner. The insurance coverage required pursuant to Subsection
(c) shall be paid for by the Manager from its own funds.

(e) Policy Requirements. The policies described in Subsections (a) through (c) above shall be in form and substance satisfactory to the Owner and with insurance companies that are acceptable to Owner, reputable and properly licensed in each State in which they propose to effect coverage. Manager shall furnish Owner with certificates of insurance or certified copies of each of the insurance polices required to be obtained and maintained by Manager pursuant to the terms of this Agreement. The insurance policies required pursuant to Subsection (a) shall be in the name of the Owner with the Manager named as an additional insured party. The insurance policies required pursuant to Subsections (b) and (c) shall be in the name of the Manager with the Owner named as an additional insured party. Each insurance policy required by this Section shall provide that such policies shall not be canceled or otherwise modified without 45 days' prior written notice to Owner. At least fifteen days prior to the extension of any such policy Manager shall furnish Owner with evidence that the insurance policies required hereunder have been renewed. Manager shall in all cases obtain the Owner's prior written approval before obtaining, renewing, cancelling or modifying the coverages under any insurance policies required hereunder. Manager shall make periodic reports and recommendations to the Owner regarding the adequacy of the then current insurance policies and provide the Owner with adequate warning of any potential lapses in coverage of which Manager becomes aware.

(f) Waiver of Subrogation. Owner and Manager hereby waive and release any and all claims either may have or acquire against the other by way of subrogation or otherwise, for any loss or damage occasioned by the negligence of either of them or their respective agents, employees, contractors, licensees or invitees, which results in any loss or

damage to person or property and which is fully insured against by either Owner or Manager in accordance with the terms of this Agreement. Each party agrees to obtain from its respective insurance carriers waiver of subrogation endorsements to all such insurance policies maintained hereunder (excluding workmen's compensation or employer's liability insurance) providing that each insurance carrier waives its right of subrogation against the other party in the event of any loss or damage which is fully insured against pursuant to the provisions of this Agreement. In the event that such endorsements cannot be obtained and the mutual waiver contained herein would invalidate any such insurance policy, then the provisions of this Subsection (f) shall be inapplicable to such insurance policy.

(g) Compliance With Insurance Requirements. Manager shall use its best efforts to assure that each Property is not used for any purpose which may void or impair, or increase the premium payable under, any policy of insurance held by Owner pursuant to the terms of this Section 1.06, or which may render any loss under any such policy uncollectible.

(h) Insurance Claims. Manager shall promptly report to Owner, and the insurance agent, broker or adjustor designated by Owner, all damages, accidents or claims relating to the ownership, maintenance or operation of any Property and shall cooperate with such agent, broker or adjustor in connection with its investigation thereof and its reporting to the appropriate insurance carrier. Manager shall not compromise or settle any claims against insurance carriers without the prior written approval of Owner.

Section 1.07. Plans and Specifications. To the extent that they are within the Owner's possession, the Owner shall furnish Manager with a set of plans and specifications for each Property and, with the aid of these documents and its own inspections, Manager shall become and remain knowledgeable with respect to the organization, location, character, plan and operation of the lighting, plumbing, heating, air conditioning and all other mechanical systems and equipment of each Property.

Section 1.08. Ethical Standards. In any transaction with vendors, contractors or others who provide services or goods for the Owner or the Properties, Manager shall act at all times in the best interests of the Owner and shall credit to the Owner all discounts, commissions, rebates, finders fees and similar amounts obtainable as a result of such transactions. Manager shall not enter into any agreement to provide goods or services for any Property with any party, partnership, corporation or other entity related to or affiliated with Manager without the prior written approval of the Owner.

Section 1.09. Cooperation and Consultation with Third Parties. The Owner may appoint and employ auditors, attorneys, appraisers and other persons for the purpose of rendering advice about or for conducting research and inquiry with respect to the leasing, management, operation and valuation of any Property and, in any such case, Manager shall cooperate fully with such persons and, within the authority invested in such persons, communicate all information requested and advise and consult with them in good faith.

Section 1.10. Indemnities. Subject to the provisions of Section 1.06 hereof, the Owner shall indemnify and hold Manager harmless from and against all loss, cost, expense, claims and liability arising out of or in connection with the management, operation and leasing of the Property, except for acts of Manager which constitute a breach of the provisions of this Agreement or are otherwise outside the scope of its employment and Manager's own negligence or misconduct (such acts together referred to as "Unauthorized Acts"). Subject to the provisions of Section 1.06 hereof, Manager shall indemnify and hold the Owner harmless from and against all loss, cost, expense, claims and liability arising out of or in connection with Manager's Unauthorized Acts.

Section 1.11. Guaranty. The Manager's obligations pursuant to this Agreement, including, without limitation, the indemnification obligations set forth in Section 1.10, shall be guaranteed by Capital Senior Living, Inc. (the "Guarantor"). The Guarantor guarantees the full and prompt payment of all amounts payable by the Manager hereunder and all amounts which may become due and arising as a result of the Default by the Manager. Upon the Default by the Manager in the performance of any of its obligations hereunder, and without further notice, or the resort to any property of the Manager which may be in the possession of or otherwise available to the Owner and without exhausting all remedies available to the Owner against the Manager, the Guarantor shall perform the obligations described above. The Guarantor shall have all rights of the Manager hereunder regarding any event which, with the giving of requisite notice hereunder and the passage of time would result in a Default hereunder, including but not limited to defenses, notices, cure periods and any counterclaims.

Section 1.12. Real Estate Tax Assessments. Manager shall review for accuracy and reasonableness all real estate tax assessments and shall advise the Owner of the results of such review. If during the Term, the Owner shall elect to protest any real or personal property tax assessment in connection with Property, Manager shall cooperate with the Owner and its tax advisors in connection therewith. The Manager will have no responsibility for the institution of any legal proceedings in connection with tax assessments.

Section 1.13. Policies and Procedures Manual. In connection with the performance of its obligations under this Agreement, and after review of the Owner's existing policies and procedures manual, Manager shall develop a policies and procedures manual and provide same to Owner for review and approval within six months from the effective date of this Agreement. Following the approval of the policies and procedures manual submitted by Manager (the "Manual"), Manager shall utilize the Manual in connection with the leasing, management or operation of the Properties and shall submit any proposed modifications to the Manual to the Owner in writing. Following the Owner's review and approval of such modifications, the Manager shall utilize the modified Manual.

ARTICLE II

LEASING

Section 2.01. Manager's Duties Generally As Leasing Agent. Manager shall use its best efforts to lease and keep leased all leasable space in the Properties to such tenants as it may deem compatible with the character and locations of the Properties. Manager shall use its best efforts to develop and maintain the character and reputation of each of the Properties while maintaining the highest possible net income. Manager shall be familiar with all tenant leases for the Properties, particularly with regard to the services, charges and procedures applicable to the various tenants.

Section 2.02. Negotiation and Execution of Leases. Manager shall respond to all inquiries concerning tenant leases and shall conduct all negotiations in connection with their execution, renewal, extension, modification, amendment or termination. All leases entered into after the date hereof shall be in such form as may be approved by the Owner, and Manager shall furnish the Owner executed originals of such leases upon request.

Section 2.03. Liaison with Tenants. Manager shall schedule and coordinate tenant moves, maintain personal contact with tenants and serve as liaison with the Owner in order to minimize misunderstandings and receive and resolve tenant complaints in a timely and courteous manner.

Section 2.04. Marketing of Rental Space. Manager shall develop a comprehensive, professional program for marketing each Property (a "Marketing Plan") and, following the approval of each Marketing Plan by the Owner, implement and monitor the effectiveness of such Marketing Plan.

Section 2.05. Advertising. Manager, at the Owner's expense and in accordance with the Budget (as that term is defined in Section 5.06 below) and the Marketing Plan, shall advertise, to such extent and in such media as Manager deems advisable, the availability of units in each of the Properties; provided, however that Manager shall pay all costs associated with advertisements that do not relate specifically and exclusively to the availability of rental space in, or the operational needs of, the Properties, unless otherwise approved in writing by the Owner.

ARTICLE III

ADMINISTRATIVE SUPPORT

Section 3.01. Personnel.

(a) Property Staff. Based upon the Budget, job standards, wage rates and the applicable Plan of Operation (as defined in Subsection (c), below), Manager shall recruit, hire, train, supervise and discharge all on-site management, administrative, maintenance, cleaning and other personnel, including, without limitation, the Property director or administrator (collectively, the "Property Staff") necessary to properly manage, administer,

repair, maintain and otherwise operate each Property. The Property Staff may be full-time, part-time, temporary or contract personnel. The Property Staff shall be employees of Manager and not the Owner, provided, however, that the costs of such Property Staff shall be paid from the Owner's funds. Manager shall pay wages and required payroll taxes and all costs and expenses of such Property Staff from the Owner's funds and shall make provision at the Owner's expenses for employee group benefits as agreed upon by the Owner. Manager will abide by all local, state and federal laws, regulations and guidelines in administering the payroll. Manager will cause to be prepared and filed all forms, reports and returns as required by law in connection with unemployment insurance, workers' compensation insurance, withholding tax, social security and other similar taxes now in effect. In addition Manager shall take such actions as may be necessary to comply with the provisions of wage, hour, health, safety, income tax, social security, unemployment compensation, workman's compensation and similar laws, regulations and requirements relating to the Property Staff. Manager shall, at the request of Owner, provide Owner with the then-current list of Property Staff.

(b) Manager's Personnel. The Manager shall maintain sufficient personnel to fulfill its obligations hereunder. Prior to the commencement of its duties hereunder, Manager shall provide the Owner with a listing of the personnel which it intends to employ in connection with the obligations to be performed by Manager hereunder (the "Non-Property Staff"), together with a job description for each member of the Non-Property Staff. The Owner and the Manager shall mutually agree upon the personnel required by the Manager to fulfill its obligations hereunder. The Manager shall, upon the request of Owner, provide Owner with a list of the then-current Non-Property Staff. The Owner shall have no authority to provide directions to the Managers employees or to terminate such employees employment by the Manager. Nothing in this section is intended or shall be construed to make any person employed by the Manager an employee of the Owner, to influence the hiring decisions of the Manager or to alter the relationship between the Owner and Manager of independent contractor. The Manager acknowledges that in entering into this Agreement the Owner is relying upon the experience and capabilities of the employees of the Manager and the Shareholders. Accordingly, the Manager agrees to maintain each of positions listed on Exhibit F to this Agreement (the "Positions") and shall not eliminate or change any of the Positions without the prior written consent of the Owner. The initial occupants of each of the Positions are listed on Exhibit F and the Manager agrees to keep each of the Positions permanently occupied during the Term by personnel with experience and capabilities similar or superior to the individuals listed on Exhibit F (the "Personnel"), with any vacancies in any such Positions occurring during such Term to be filled on a timely basis. The Manager shall notify the Owner of any change in the Personnel and shall supply the Owner with information which is reasonably sufficient to demonstrate the calibre and experience of any replacement Personnel.

(c) Plan of Operation. The Owner shall provide to Manager and the Manager shall review the current plan of operation (if any) for each Property. The revised plan of operation for each Property or, in the event that there is no existing plan of operation, a plan of operation developed by the Manager (the "Plan of Operation") shall be (i) describe

each of the services to be supplied to tenants at such Property, (ii) list all Property Staff that will be required at such Property in order to provide such services to the tenants, to provide management and administrative services for such Property (other than such administrative services as are to be provided by the Manager hereunder) or to maintain the Property. The Plan of Operation for each Property shall be submitted to the Owner thirty days after the commencement of the Manager's duties hereunder and must be approved by the Owner in writing within thirty days following receipt thereof. The Owner and the Manager shall review the Plan of Operation for each Property not less than annually and shall amend the Plan of Operation from time to time as appropriate.

(d) Job Descriptions. To the extent that they are within the Owner's possession, Owner shall provide to Manager and Manager shall review or develop job descriptions for all Property Staff positions based upon the Plan of Operation. Manager shall furnish the job descriptions, along with job performance standards, to the Owner to delineate clearly between Manager's exclusive responsibilities which are to be performed by the Non-Property Staff, and those responsibilities that are delegated by Manager to the Property Staff.

Section 3.02. Contracts.

(a) Renewal and Execution. Manager shall be familiar with the provisions of, and provide to the Owner copies of, all material contracts affecting the leasing, management or operation of each Property. At least sixty (60) days prior to the scheduled termination of any of these contracts, Manager shall recommend to the Owner whether such contracts should be renewed, modified or canceled, and renew, modify or cancel such contracts as the Owner may direct. Where new contracts are necessary, Manager shall recommend to the Owner for its approval contracts from responsive and responsible contractors for work to be performed according to written specifications developed by Manager in consultation with the Owner. Manager shall assure that all contractors are properly insured (and bonded, if appropriate) for the duration of their contracts. Except for emergencies and those cases where the Owner authorizes otherwise due to the size or nature of the contract, all contracts and procurements shall be let by competitive bidding procedures. Manager, its employees and the Property Staff shall disclose to the Owner the extent of any financial interest that it or they may have in any firm or person providing goods or services to the Owner pursuant to any such contracts. Manager shall exploit fully all commonality of contracting and purchasing so as to accrue to the Owner all possible benefits deriving from a unified procurement policy.

(b) Supervision and Enforcement. Manager shall supervise and oversee the activities of all contractors, review the quality of their workmanship, enforce contractors' warranties and approve all work and materials prior to payment therefor.

Section 3.03. Status Reports.

(a) Monthly Status Reports. Manager shall prepare and deliver to the Owner within the prescribed time period set forth on Exhibit D-1 a written Monthly Status Report in the form attached hereto as Exhibit D-1.

(b) Quarterly Status Reports. The Manager shall submit to the Owner within 15 days following the end of each fiscal quarter, a report in the form of Exhibit D-2 attached hereto.

(c) Annual Fiscal Year Status Reports. The Manager shall submit to the Owner within 30 days following the end of each fiscal year, a report in the form of Exhibit D-3 attached hereto.

(d) Annual Calendar Year Status Reports. The Manager shall submit to the Owner within 15 days following the end of each calendar year, a report in the form of Exhibit D-4 attached hereto.

(e) Other. Manager shall prepare and deliver to the Owner such other reports and/or statements in such form as may reasonably be requested by the Owner from time to time, which reports shall be delivered within 30 days after request thereof (or as soon thereafter as is practicable).

Section 3.04. Records. Manager shall maintain and keep complete, accurate and up-to-date all books and records of the Owner relating to each Property including, without limitation, all accounting and financial records, rent rolls, memoranda, correspondence, notices and all other such records as may be appropriate or customary in connection with the leasing and operation of the Property and the transaction of business with third parties including, without limitation, suppliers, employees, labor unions and governmental or municipal authorities. All of these records shall be kept and maintained available for inspection at any and all reasonable times during normal business hours by any person authorized in writing by the Owner, but not by others.

Section 3.05. Obligations Under Tenant Leases. Manager shall comply with all requirements respecting the operation or maintenance of each Property imposed upon the Owner as "landlord" under any lease for the Properties. Manager's duties hereunder shall include, without limitation, the selection and supervision of all contractors or others providing required tenant services or performing tenant repair or capital improvement work at the Properties.

Section 3.06. Tenant Compliance. Manager shall monitor the performance of all tenants and use its best efforts to secure the full compliance by tenants with the terms and provisions of their leases. Manager shall inform all tenants of such rules, regulations and notices as may be promulgated by the Owner or Manager. Manager, at the expense of and using attorneys approved by the Owner, may institute legal proceeding in its own name or in the name of the Owner to collect rent, security deposits and other tenant charges, to oust or

dispossess tenants or others occupying the Property and otherwise to enforce the rights of the Owner with respect thereto. Manager shall secure the prior written approval of the Owner before instituting legal proceedings or compromising or settling any such claim or proceeding. Manager shall give the Owner prompt written notice of all matters involving actual or threatened litigation.

Section 3.07. Licensing. The Manager shall be responsible for obtaining all licenses, permits or other authorizations (the "Permits") necessary to operate each of the Properties as an assisted living or congregate care facility (as the case may be) in the name of the Owner or such other name as the Owner may designate. All amounts payable to state or local governmental authorities with respect to the Permits for a Property, and all legal fees incurred in connection with obtaining such Permits with the prior written permission of the Owner, shall be paid by the Owner. Upon request, the Manager shall provide such assistance as may be necessary in order to obtain Permits for such other affiliate of the Owner with respect to any of the Properties, whether such Permits are required by applicable law or are being requested at the option of the Owner or the applicable affiliate.

ARTICLE IV

MAINTENANCE AND OPERATIONS

Section 4.01. Engineering Management Services.

(a) Benchmark Study. Upon the commencement of the Initial Term, Manager shall perform a walk-through of each Property and shall note corrective and deferred maintenance work or capital improvements required to be performed. Promptly after the completion of such walk-through, Manager shall prepare and deliver to the Owner a report containing the results of that study.

(b) Quarterly Inspections. Manager shall conduct physical inspections of each Property at least quarterly unless the Owner reasonably determines that a more frequent inspection is necessary. Specific problems shall be investigated on an "as-needed" basis. Manager shall submit to the Owner a written report containing findings, conclusions and recommendations of actions to be taken to correct deficiencies noted during the inspections. This quarterly inspection and report shall address deficiencies found in, among other areas, the building foundations, exterior, roof, flashings, concrete work, sidewalks, retaining walls, parking areas, gutter and downspout systems, mechanical equipment and utility distribution systems.

(c) Engineering On-Site Inspections. At the request of the Owner, and at the Owner's expense, Manager shall employ or retain a licensed, experienced mechanical engineer or engineering firm to conduct engineering on- site inspections of any Property. During each of these inspections, the engineering firm shall: (i) inspect all mechanical

equipment for corrective maintenance and other action that should be completed by the Property Staff or outside contractors; (ii) review preventive maintenance records, logs and other related records to evaluate work completed;
(iii) review energy practices; (iv) consult with the Property Staff on the findings with regard to the foregoing items; and (v) submit to the Owner a written, itemized report with respect to the foregoing immediately following each inspection.

Section 4.02. Preventative Maintenance. To the extent that they are within the Owner's possession, Owner shall provide to the Manager the current preventative maintenance program for each Property. Manager shall review or develop, as applicable, a program designed to keep each Property and all installed mechanical and electrical systems in proper condition. Following the Owner's review and approval of such program for each Property, Manager shall maintain such program on a regular basis and such program shall reflect the useful lives of the various components and items of equipment comprising the Property. Manager shall establish and monitor a seasonal maintenance program for the heating and cooling systems in the Property to assure that they are in good working order and conserve utility consumption.

Section 4.03. Capital Improvements; Expansion.

(a) Predevelopment. Manager agrees within 3 months of the date of this Agreement to undertake a feasibility study with respect to the expansion of the Properties listed on Exhibit G and within 6 months of the date of this Agreement to undertake a feasibility study with respect to each of the other Properties. If, based upon the results of the study with respect to any Property, Manager believes that such Property should be expanded or improved, Manager shall recommend such action to the Owner. If the Owner decides to proceed with the expansion of such Property, the Owner shall so notify the Manager. Within 30 days from the date of receipt by the Manager of such notice, the Manager shall prepare and deliver to the Owner a proposed budget and schedule with respect to the Predevelopment Costs (as defined below) which would be incurred in connection with the expansion of such Property. The budget shall list each fee or other cost which will be incurred prior to the commencement of the construction or renovation of the Property including, without limitation, land use study, preconstruction plan, legal, licensure and zoning, working drawings, environmental report, a market analysis and financing plan (the "Predevelopment Costs"). Following approval of the budget and schedule, by the Owner, the Manager shall, as Owner's agent, contract for each of the services listed in the budget and the schedule and approved in writing by the Owner (the "Predevelopment Services"). The Owner shall be responsible for the payment of each of the Predevelopment Costs in accordance with the budget. Following performance of the Predevelopment Services and based upon the results thereof, the Manager shall develop a development plan (the "Development Plan") which shall be submitted to the Owner.

(b) Development. Following the receipt by Owner of the Development Plan for a Property, the Owner shall determine whether to proceed with the construction at such Property. If the Owner approves the commencement of such construction, the Owner shall

notify the Manager and the Manager shall, within thirty days of the date of receipt of such notice contract as Owner's agent for each of the services required pursuant to the Development Plan and Manager shall otherwise commence the execution of the Development Plan. The Owner agrees to be responsible for obtaining the financing, and shall be solely responsible for all liability associated with such financing. Manager agrees to fund for the first year only up to $170,000.00 with respect to all operating losses with respect to any Property subject to development or expansion where operating costs (not including financing costs) exceed revenue for such Property or portion of a Property (the "Start Up Losses"). The Manager shall provide Owner with a detailed accounting relating to the developed Property or expanded portion of a Property. All Start Up Losses shall be funded from Manager's own funds and shall not be paid from the Checking Account described in Section 5.03.

(c) Fee Compensation. Manager shall be paid a seven percent (7%) development fee on the total project cost, which shall include the Predevelopment Costs, all third party hard and soft costs set forth in the Development Plan but excluding any third party financing costs (the "Total Project Cost"). Following the completion of the construction of any expanded or additional portions of a Property, such Property shall for all purposes hereunder be deemed to be one of the Properties and the Manager shall receive the same compensation with respect to such expanded Property or developed Property as set forth on Exhibit B. Manager shall be entitled to receive repayment of any Start Up Losses incurred with respect to any Property upon the earlier of the sale or refinancing of such Property or the termination of this Agreement.

(d) No Subcontracting. The management and coordination of the expansion of any Property shall not be subcontracted by the Manager to any other person; provided, however, that such management and coordination may be subcontracted to Manager's affiliate, Capital Senior Development, Inc. provided that Manager shall bear all costs of such subcontract arrangement.

Section 4.04. Personnel Training. Manager shall outline in writing the training needs of the Property Staff and establish a training program that will teach, maintain and improve the technical proficiency of each member in his or her assigned job.

Section 4.05. Maintenance. Manager shall be responsible, at Owner's expense, for maintaining the Properties according to standards at least comparable to similar properties in the general areas in which they are located. Manager's maintenance responsibilities shall include, without limitation, interior cleaning, exterior window cleaning, painting, decorating, grounds care and landscaping, plumbing, electrical repair, carpentry, plastering and such other normal maintenance and repair work as may be necessary. The areas and items to be maintained shall include, without limitation, roofing, mechanical and other equipment, building exterior surfaces (including windows), parking areas, sidewalks, gutters, walkways, hallways, stairwells, storage rooms, the management office and all other related areas including fencing, signs and lighting. The Property Staff shall, at least weekly, conduct walk through inspections of these areas to assure that they are receiving adequate and appropriate

care. Manager shall supervise the work of the Property Staff to assure that it is performed in accordance with the Owner's standards.

Section 4.06. Supervision of Contracts. Manager shall arrange for, coordinate, supervise and enforce the conditions of all contracts necessary or advisable for the proper operation of the Properties including, without limitation, contracts for the maintenance and repair work described in Section 4.05 above and for water, sewer, electricity, telephone, vermin extermination, trash removal, landscaping, heating fuels, air conditioner contractual maintenance, and snow and ice removal. All such contracts shall be at the Owner's expense. Such contracts entered into during the Term shall provide for cancellation by the Owner without penalty upon 30 days written notice and shall not terminate upon the termination of this Agreement, unless the Owner has agreed otherwise in writing. Any such contracts in manager's possession at the commencement of the Term which do not allow for such 30-day cancellation will be identified by Manager and reported to the Owner within 30 days of the commencement of operations. Further, Manager shall place orders for such equipment, tools, appliances, materials, and supplies as are required to adequately maintain and operate the Properties. Such equipment, tools, appliances, supplies and materials shall be used only for operating, maintaining and repairing the Properties, unless the cost thereof is prorated on a basis satisfactory to the Owner.

Section 4.07. Service Requests. Manager shall maintain business-like relations with tenants of the Properties and receive, record and take appropriate action with respect to any service requests that may be made. Complaints of a serious nature shall, after investigation, be reported to the Owner in a timely manner, together with appropriate recommendations. Manager shall make reasonable efforts to obtain full compliance by tenants for all items of maintenance for which they are individually responsible. Scheduled outages of water, electricity or other services shall be reported to the Owner and to all tenants, individually, as promptly, fully and courteously as possible and in a manner and at a time which are customary under the circumstances or as may otherwise be required by applicable law. Unscheduled material outages shall be reported to the Owner and the tenants as soon after occurring as is reasonably possible.

Section 4.08. Emergencies.

(a) Services. To the extent that they are within Owner's possession, Owner shall provide to the Manager details of the current 24-hour, seven day-a-week maintenance emergency system and any system designed to be responsive to emergencies (the "Emergency System"). Manager shall review or develop, as applicable, the Emergency System for each Property and shall submit such Emergency System to the Owner for the Owner's review and approval. An emergency is defined as any condition of, in or acting on a Property which if not responded to could injure or damage or impose a threat of injury or damage to property or persons. The definition of an emergency includes, without limitation, fire, flood, insufficient heat during winter weather, lack of hot water and utility shut offs. Following the review of the Emergency System for each Property submitted by the Manager, the Manager shall insure that

all appropriate Property Staff and Non-Property Staff are familiar with the applicable Emergency System and shall undertake periodic reviews to insure that such Emergency System is being complied with.

(b) Readiness. In addition to such programs as may be required by applicable state or local law, rules or regulations, Manager shall establish, with the approval of the Owner, a comprehensive program ensuring that emergencies are dealt with by the Property Staff and outside agencies in a manner in the best interests of the Owner and the Properties and in compliance with applicable law. This responsibility shall include notification and testing procedures as may be necessary.

Section 4.09. Regulatory Requirements. Manager shall take such action as may be necessary to (a) obtain and maintain all licenses, permits and approvals necessary for the operation and maintenance of the Properties and (b) comply with all laws, ordinances, orders and requirements affecting each Property (or the Owner or Manager in connection therewith) imposed by any governmental or quasi-governmental authority having jurisdiction, including but not limited to building codes, anti-discrimination laws, zoning and licensing requirements affecting the Property. Manager shall give the Owner prompt written notice of any violation or claimed violation of any such requirement.

Section 4.10. Inventory. Manager shall comply with and shall deliver such reports and other information as may be required pursuant to the inventory control system for all supplies and equipment used at each Property. The Manager and the Owner shall from time to time, at Owner's request, monitor the compliance by the Manager with the inventory control system and make such amendments or modification to such system as the Owner may deem reasonably necessary.

Section 4.11. Security. Manager shall consult with the Owner to plan, arrange and supervise a comprehensive security program for each Property. This program shall include, without limitation, that adequate communications equipment is operable and available to the Property Staff and all Property Staff are fully aware of their security responsibilities. Detailed security, fire and safety procedures shall be developed and distributed to the Owner, all tenants and the Property Staff. Manager shall maintain effective liaison with local fire and police organizations and keep detailed logs covering all security incidents. Manager shall promptly inform the Owner of all security incidents and other material matters prejudicial to the security and safety of any Property.

ARTICLE V

FINANCIAL MANAGEMENT

Section 5.01. Bank Account. Manager shall open and maintain, for each Property, in a local bank selected by the Owner, a checking account (the "Checking Account") for moneys

to be paid or received by Manager in connection with its duties hereunder. The Checking Account shall be in the name determined by the Owner and the Owner shall pay all costs (if any) charged by the bank for maintaining the account including monthly service fees and the cost of blank checks; provided, however, that Manager shall pay all costs charged by the bank on account of Manager's errors or negligence in maintaining the Checking Account including, without limitation, the maintenance of any necessary cash reserve therein. Manager shall not deposit any of its funds to the Checking Account or otherwise commingle its funds with the Owner's funds. Manager shall have authority to endorse checks payable to the Owner and deposit funds paid or payable to the Owner into the Checking Account.

Section 5.02. Collections and Deposits. Manager shall collect and deposit in each Checking Account all rents, security deposits, late charges, insurance and condemnation proceeds, fees, refunds and other monies due from any source which are payable to the Owner in connection with the leasing and operation of the related Property; provided, however, that Manager shall deposit security deposits in bank accounts selected by and owned by Owner and shall otherwise handle security deposits in accordance with applicable law. All amounts deposited to the Checking Account shall be swept by the Manager from the Checking Account on a regular basis into an Operating Expense Account (herein so called) for such Property. Each Operating Expense Account shall be in an FDIC insured bank approved by Owner and shall be owned by Owner. The style of the Operating Expense Account shall be in the name of the Property with designated representatives from Owner and Manager being the only parties authorized to draw from said accounts.

Section 5.03. Disbursements. On the 15th day of each calendar month or, if such day is not a business day, the immediately succeeding business day, the Manager shall deliver to the Owner a check representing all amounts in the Operating Expense Account (after allowing for outstanding checks written and deposits made pursuant to this Agreement which had not yet cleared such Operating Expense Account) in excess of the sum of (i) the amounts to be expended or disbursed by the Manager with respect to the Properties during such calendar month as set forth in the Budget; (ii) amounts expended in any prior month in excess of the amount specified in the Budget with respect to which the Manager has not yet been reimbursed and which have been approved in writing by the Owner; and (iii) a cushion equal to 5% of the aggregate amount to be expended in accordance with the Budget in the immediately succeeding month or such other amount as may be designated by the Owner. Manager shall pay out of the Operating Expense Account for each Property all operating expenses of such Property in accordance with the Budget for such Property, as permitted by this Agreement or as otherwise approved in writing by the Owner. Manager shall hold, remit or expend the funds in the Checking Accounts and Operating Expense Accounts according to the Budget or the directions of the Owner. The funds in the Checking Accounts and Operating Expense Accounts shall not be co-mingled with funds from any other projects or facilities managed or operated by Manager and Manager shall compile detailed records concerning all transactions relating to the Checking Accounts and Operating Expense Accounts and shall promptly deliver to Owner copies of all statements or other correspondence received by Manager with respect to such Checking Accounts and Operating Expense Accounts. Except in emergencies, Manager shall

not incur any obligation in excess of $2,000 which is not specifically included in the Budget, and neither shall Manager incur any substantial overrun of any budgeted item without the Owner's prior written approval. Where an emergency relating to a Property precludes Manager's obtaining the prior written consent of the Owner, Manager shall make reasonable expenditures as necessary to abate the emergency and shall use its best efforts to contact the Owner by telephone or otherwise as soon as possible. Manager shall also notify the Owner in writing of any such emergency expenditures within 24 hours thereafter. Except as specifically authorized by the Owner, Manager will not incur any obligation (whether or not in the Budget) which will exceed $10,000 or mature more than one year after its creation. At least two but no more than three persons (including Property Staff) shall be responsible for handling cash in order to maintain adequate financial control procedures.

Section 5.04. Examinations and Audits of Accounts. The Checking Accounts, the Operating Expense Accounts and any other accounts maintained by Manager in the name of or for the benefit of the Owner may be examined by the Owner or its designated representatives during normal business hours. The Owner shall have the right to cause an audit of such accounts at any time at its expense and Manager shall make its facilities available for, and cooperate in, any such audit. In addition, Manager shall promptly supply to the Owner's accountants, without charge therefor, all records or documents respecting any Property that such accountant may request in connection with audits of the Owner's accounts and preparation of necessary tax returns.

Section 5.05. Books and Records. Manager shall maintain, in a manner consistent with generally accepted accounting principles, a system of books and records that fully and accurately detail all financial transactions with respect to the leasing and operation of each Property. Such books and records shall be (a) the property of the Owner, (b) maintained at Manager's office at the Property or at the Manager's corporate office, (c) available to the Owner upon reasonable request and (d) delivered to the Owner upon the termination of this Agreement.

Section 5.06. Budget.

(a) Annual Operating and Capital Budget. The Budget shall serve as the major control under which Manager shall operate each Property and there shall be no substantial deviations therefrom, excluding deviations for such expenses as utilities, fuel, insurance and other expenses not within the control of Manager, except as may be approved in writing by the Owner. No expenses may be incurred and no commitments may be made by Manager in the name of the Owner in connection with the maintenance and operation of any Property in excess of the amounts allocated to the various classifications of expense in the Budget for that Property, except as otherwise provided herein.

(b) Budget Preparation. Manager shall prepare for the Owner's written approval operating and capital budgets for each Property addressing each of the items listed on Exhibit C attached hereto (with the Owner-approved budget in effect from time to time being

herein called the "Budget"). Other than with respect to the budget for fiscal year 1997, Manager shall submit to the Owner, at least 45 days prior to the end of the Owner's fiscal year, a proposed budget for the next ensuing fiscal year. Manager shall within ninety days of the date of this Agreement submit a budget to the Owner for the period beginning on the date of this Agreement and ending immediately prior to the end of the Owner's fiscal year 1997. The proposed budget submitted by Manager shall include an analysis of repair and maintenance needs, operating expenses and any capital improvements anticipated for that period. Reserve fund requirements, adjusted for inflationary factors, shall also be included on an updated cost basis in the proposed budget. Reasonable supporting schedules shall be submitted with the proposed budget. The proposed budget will reflect a "three (3) year cycle" and will be based on actual income and expenses for the past completed year and projected income and expenses for the current year and for the future year for which the Budget is being prepared. Increases or decreases in actual or estimated amounts for income and expense items shall also be shown as percentage increases or decreases. The proposed budget also shall contain a forecast of cash flow for each month of the budget period, an assessment of personnel needs for operating the Property, a forecast of rental rates, an analysis of leases then in effect, and such other supplemental information as may be reasonably required by the Owner. Following the review and approval of a budget by the Owner, the Manager shall implement such budget and perform in accordance therewith.

Section 5.07. Obligations for Expenses. All obligations and expenses incurred by Manager in accordance with this Agreement shall be deemed to be obligations and expenses of the Owner, the parties acknowledging that Manager may engage, at the Owner's expense, independent contractors and service providers as permitted under this Agreement, as may be usual and customary in the circumstances in connection with the performance of Manager's duties hereunder. The salaries and benefits of the Non-Property Staff of Manager shall be paid by the Manager from its own funds. Manager shall be reimbursed for any costs and expenses (other than those described in the immediately preceding sentence) related to a Property, including, without limitation, those for office supplies, postage, copying charges, telephone tolls, computer time, travel and entertainment. Such reimbursement shall be paid monthly from the Operating Expense Account and shall be limited to an amount equal to $90,000 during any consecutive twelve month period (or a pro rata amount for any period less than twelve months) (the "Maximum Reimbursement Amount"). The Maximum Reimbursement Amount shall be increased on August 31, 1997 and on each August 31 thereafter during the Term of this Agreement (a "Review Date") by the lesser of (i) the percentage change in the CPI during the twelve months immediately preceding such Review Date or (ii) 3%. For purposes of this Section, CPI means the Consumer Price Index for Urban Wage Earners and Clerical Workers, U.S. City Average (1967 = 100) Unadjusted, all items indexed published by the Bureau of Labor Statistics, United States Department of Labor (the "Department of Labor"). If the CPI shall cease to be compiled and published at any time before an adjustment is to be calculated on a Review Date, but a comparable successor index is compiled and published by the Department of Labor, the adjustments under this Section shall be computed according to such successor index, with such mutually agreed upon adjustments in the index to reflect any difference in the method of computation used in the CPI. If on any Review Date,

neither the CPI nor a comparable successor index is available from the Department of Labor, the parties hereto shall mutually agree upon an index for "all items" compiled and published by another branch of the federal government or by an institution or organization generally recognized as an authority by financial and insurance institutions to be used as a basis for such calculations.

ARTICLE VI

MISCELLANEOUS

Section 6.01. No Partnership or Joint Venture. This Agreement is a management agreement only and does not grant to Manager any ownership right or interest in any of the Properties or any other property of the Owner pertaining thereto. This Agreement is not intended to and does not constitute a partnership or joint venture of any kind between the Owner and Manager with respect to the operation of the Properties or any other matter.

Section 6.02. Notices. Any notice that is provided for in this Agreement shall be in writing, shall be given either manually or by mail, telegram, radiogram or cable, and shall be deemed sufficiently given if and when received by the party to be notified at its address set forth below or if and when mailed by registered or certified mail, postage prepaid, addressed to such party at such address (any single notice given pursuant to this Section 6.02 to the address designated below for Manager shall be deemed as notice so given to both the Manager and Guarantor). Any party and any representative designated below may, by notice to the others, change its address for receiving such notices. Refusal to accept such notice or inability to deliver such notice on account of a change in address not given the other addressees shall be deemed receipt of notice.

If to the Owner or any affiliate:

ILM I Lease Corporation,
c/o PaineWebber Properties Incorporated 265 Franklin Street, 16th Floor Boston, Massachusetts 02110 Attn: John B. Watts, III

with a copy to:

Hunton & Williams
951 E. Byrd Street
Richmond, Virginia 23219
Attn: Kenneth J. Alcott, Esq.

If to Manager or Guarantor:

Capital Senior Living, Inc., and

Capital Senior Management 2, Inc. 14160 Dallas Parkway
Suite 300
Dallas, Texas 75240
Attn: Keith Johannessen and David Brickman

Section 6.03. Applicable Law. This Agreement shall be executed, construed and performed in accordance with the laws of the Commonwealth of Virginia.

Section 6.04. Successors and Assigns. This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns; provided, however, that Manager shall not assign its rights or delegate its duties hereunder to any party by operation of law, or otherwise, and no shares of stock in the Manager shall be transferred without the prior written consent of the Owner, which consent may be withheld in the Owner's sole discretion. Notwithstanding the foregoing, Manager may, without Owner's consent, enter into a merger transaction with Capital Senior Living, Inc. or an affiliate or Capital Senior Living, Inc. or assign its rights and delegate its duties hereunder to Capital Senior Living, Inc. or an affiliate of Capital Senior Living, Inc., provided, however, that no such merger or assignment shall relieve the Manager or the Guarantor from any of its obligations under this Agreement. Any attempted assignment or delegation by Manager other than as permitted hereby shall be void and of no force or effect. The Owner shall be entitled, at any time during the Term and in its sole discretion, to assign its rights and benefits under this Agreement to any entity which is an affiliate of the Owner or of any shareholder thereof so long as such assignee assumes the Owner's obligations hereunder and agrees to be bound by the terms and conditions hereof.

Section 6.05. Confidentiality

(a) Confidential Information; Representatives. For purposes of this Section:

(i) The term "Confidential Information" shall be deemed to include all information concerning the Properties (including those Properties with respect to which this Agreement has been terminated) and the Owner (whether prepared by the Owner, its Representatives or otherwise and irrespective of the form of communication) which is furnished to the Manager or Representative of the Manager (collectively, the "Management Group") now or in the future by the Owner or by its Representatives or is developed by the Manager during the course of the performance of its duties hereunder, together with all notes, analyses, compilations, studies, interpretations or other documents prepared by any member of the Management Group which contain, reflect or are based upon, in whole or in part, the information furnished to any member of the Management Group pursuant hereto. The term "Confidential Information" does not include information which (1) is or becomes generally available to the public other than as a result of a disclosure in violation of this Agreement by any member of the Management Group, or (2) as shown by written records, was lawfully within the Management Group member's possession prior to its being furnished to the Management Group member by or on behalf of the Owner or developed by the Manager during the course of the performance of Manager's duties hereunder, provided that the source of such information was not known by such Management Group member to be bound by a confidentiality agreement with or other contractual, legal or fiduciary obligation of confidentiality to the Owner or any other party with respect to such information.

(ii) The term "Representatives" shall mean, collectively, and as applicable, a person's directors, officers, employees, affiliates (as such term is defined under the Securities Exchange Act of 1934, as amended), agents or advisors (including, without limitation, attorneys, accountants, consultants, bankers and financial advisors).

(b) Use of Confidential Information. The Manager hereby agrees that each member of the Management Group shall use the Confidential Information solely for the purpose of managing the Properties or otherwise performing or assisting the Manager in the performance of its obligations under this Agreement, that the Confidential Information will be kept confidential and that no member of the Management Group will use the Confidential Information for any other purpose or disclose any of the Confidential Information in any manner whatsoever; provided, however, that the Manager may make any disclosure of the Confidential Information to the extent that the Owner gives its prior written consent. It is understood and agreed that the Manager shall inform each member of the Management Group of the confidential nature of the Confidential Information prior to delivery thereof to such person, and of the obligation to not contact or communicate with the persons described above, and that by receiving such materials, such member of the Management Group will be deemed to have agreed to be bound by this Agreement. In any event, the Manager shall be responsible for any breach of this Agreement by the Manager or by any member of the Management Group, unless such Management Group member has signed a separate Confidentiality

Agreement with the Owner, and the Manager agrees, at the Manager's sole expense, to take all reasonable measures (including but not limited to court proceedings) to restrain any member of the Management Group from prohibited or unauthorized contacts or disclosure or use of the Confidential Information. Notwithstanding any other provision of this Agreement, the foregoing restriction shall continue in full force and effect throughout the Term and following the termination of this Agreement.

(c) Remedies of Owner. The Manager agrees that the Owner shall be entitled to equitable relief, including injunction and specific performance, in the event of any breach of the provisions of this Section and that the Manager shall not oppose the granting of such relief. The Manager also agrees that the Manager will not seek and agrees to waive (and will use the Manager's reasonable efforts to cause each Management Group member not to seek and to waive) any requirement for the securing or posting of a bond in connection with the Owner's seeking or obtaining such relief.

Section 6.06. Manager's Insignia. Except to the extent required by applicable state or local laws, rules and regulations or as may be approved in writing by the Owner, (i) the Manager shall not display signs, nameplates or other insignia at any Property disclosing the Manager's name, its corporate logo or any tradename or trademark (collectively, "Insignia") or identifying the Manager as the operator of a Property or otherwise and (ii) all advertising information, circulars, stationary or other printed materials used in the operations of or distributed by each of the Properties shall be in the name of and bear the corporate logo or other trademark of the Owner.

Section 6.07. Entire Agreement. This Agreement contains the entire agreement between the parties hereto with respect to the subject matter hereof and supersede all prior and contemporaneous negotiations, understandings and agreements, written or oral, between the parties. This Agreement shall not be amended or modified, and no waiver of any provision hereof shall be effective, unless set forth in a written instrument authorized and executed with the same formality as this Agreement.

Section 6.08. Captions, Gender, Number. The captions hereof are for convenience of reference only and shall neither limit nor enlarge the provisions hereof. All personal pronouns used herein, whether used in the masculine, feminine or neuter gender, shall include all other genders. The singular shall include the plural and vice versa unless the context requires otherwise.

Section 6.09. Severability. If any provision hereof, or the application thereof to any person or circumstance, shall to any extent be invalid or unenforceable, the remainder of the provisions hereof, or the application of such provision to other persons or circumstances, shall not be affected thereby, and each provision hereof shall be valid and enforceable to the fullest extent permitted by law.

Section 6.10. Days. If any action is required to be performed, or if any notice, consent or other communication is to be given, on a day that is a Saturday or Sunday or a legal holiday in the jurisdiction in which the action is required to be performed or in which is located the intended recipient of such notice, consent or other communication, such performance shall be deemed to be required, and such notice, consent or other communication shall be deemed to be given, on the first business day following such Saturday, Sunday or legal holiday. Unless otherwise specified herein, all references herein to a "day" or "days" shall refer to calendar days and not business days.

WITNESS the following signatures.

OWNER:

ILM I LEASE CORPORATION

By: /s/ JOHN B. WATTS
    --------------------------------------
    Title: President
           -------------------------------

MANAGER:

CAPITAL SENIOR MANAGEMENT 2, INC.
a Texas corporation.

By: /s/ DAVID R. BRICKMAN
    --------------------------------------
    Title: Vice President
           -------------------------------

GUARANTOR:

CAPITAL SENIOR LIVING, INC.
a Texas corporation.

By: /s/ DAVID R. BRICKMAN
    --------------------------------------
    Title: Vice President
           -------------------------------

EXHIBIT A

TO MANAGEMENT AGREEMENT

List of Properties

Independence Village
East Lansing, Michigan

Independence Village
Winston Salem, North Carolina

Independence Village
Peoria, Illinois

Independence Village
Raleigh, North Carolina

Sedgwick Plaza
Wichita, Kansas

Crown Pointe
Omaha, Nebraska

West Shores
Hot Springs, Arkansas

Villa Santa Barbara
Santa Barbara California

EXHIBIT B

FEES AND COMPENSATION OF MANAGER

1. Base Management Fee. Owner shall pay Manager a fee in the amount of 4% of the monthly Gross Operating Revenue recognized during each month of the Term with respect to the Properties ("Base Management Fee"). The Base Management Fee shall be payable monthly in arrears on the fifteenth day of each month or, if such day is not a business day, the immediately succeeding business day (a "Payment Date"). For purposes hereof, "Gross Operating Revenue" shall mean, with respect to a Property, all revenue from whatever source derived except (i) proceeds from the sale, refinancing, assignment or other disposition of all or any portion of the Property, (ii) security deposits, advance rents or amounts paid by reason of the breach of any lease, license, concession or similar agreement (unless and until such deposits or payments shall have been applied by the Owner to the payment of current or past due fixed rent), (iii) proceeds from any casualty insurance policies or condemnation awards except payments under policies for business or rental interruption, all as calculated pursuant to generally accepted accounting principles.

2. Incentive Management Fee. As additional compensation for Manager's performance of its obligations hereunder, Owner agrees to pay to Manager an Incentive Management Fee (as hereinafter defined). The Incentive Management Fee shall be payable monthly in arrears on each Payment Date. The aggregate amount of the Incentive Management Fee payable during each fiscal year during the Term of this Agreement shall be calculated following the preparation of the audited financial statements of the Owner for such fiscal year. Any amount due to or owing by the Manager as a result of such calculation may be deducted from or added to any amounts payable to the Manager on any succeeding Payment Date or, if there is no succeeding Payment Date, by certified check. The Incentive Management Fee shall be an amount equal to twenty-five percent (25%) of the amount, if any, by which the average monthly Net Cash Flow for each property for the twelve (12) month period ending on the last day of each calendar month (a "Calculation Date") exceeds the Base Amount. The Base Amount for each property for the period commencing on the date of this Agreement and ending August 31, 1997 shall be the amount set forth below:

                                     Annual       Monthly
                                      Base         Base         Percent
ILM I                                Amount       Amount        of Fund
                                     ------       ------        -------
Crown Pointe                        1,079,190      89,933       14.6%
East Lansing                        1,283,230     106,936       17.4%
Peoria                              1,026,683      85,557       13.9%
Raleigh                             1,246,988     103,916       16.9%
Sedgwick Plaza                        951,523      79,294       12.9%
Villa Santa Barbara (25%)             239,178      19,931        3.2%
West Shores                           734,261      61,188        9.9%
Winston Salem                         826,555      68,880       11.2%
                                                                -----

Each August 31 (the "Anniversary Date") the Base Amount shall be increased by
(i) the percentage increase in the CPI at the end of such twelve (12) month period ending on such Anniversary Date, provided, however, that the percentage increase in any twelve (12) month period shall not exceed three percent (3%) and (ii) 15% of the sum of (A) the Total Project Cost and (B) the development fees paid to Manager, incurred in connection with the development of any of the Properties during such twelve month period and actually paid or expended during such period.

For purposes hereof, "Net Cash Flow" shall mean, with respect to any period, the profit or loss generated by the Property for such period, determined in accordance with generally accepted accounting principles consistently applied, but subject to Section 1.06(b) and the following adjustments. The Net Cash Flow shall be:

(i) increased by the sum of:

(A) to the extent included in the computation of such profit or loss;

(1) depreciation, amortization and other non-cash charges included in the computation of such profit or loss; and

(2) expenses incurred during such period but not paid during such period; and

(B) to the extent not otherwise included in the computation of such profit or loss:

(1) payments with respect to the Property from the proceeds of business and rental interruption insurance; and

(2) revenues received during such period;

(ii) reduced by the sum of:

(A) to the extent not otherwise included in the computation of such profit or loss:

(1) expenses paid during such period except for any such payments made out of the proceeds from any sale, refinancing, condemnation, casualty, assignment or other disposition of all or any part of the Properties;

(2) a management fee of 4.5%; and

(3) actual cash expenditures for ordinary and routine capital improvements at the Property; and

(B) to the extent included in the computation of such profit or loss, revenues recognized during such period but for which payment was not received during such period.

(iii) all gains and losses from, and proceeds from, the sale, refinancing, condemnation, casualty, assignment or other disposition of all or any part of the Property (other than the proceeds of any business or rental interruption insurance or eminent domain awards or payments to compensate for lost rentals in respect of any period) shall be excluded from the computation of Net Cash Flow.

EXHIBIT C

TO MANAGEMENT AGREEMENT

Budget Items

EXHIBIT D

TO MANAGEMENT AGREEMENT

D-1 FORM OF MONTHLY STATUS REPORT

The monthly status report will be provided within 15 days after the end of each month and will include the following reports:

Reports for each Property:

(a) Accrual basis operating statement (Income and Expense Statement) showing figures for the current month, year-to-date and comparison with budget
(b) Balance sheet
(c) General ledger

Summary reports for all Properties in the Fund:

1. Occupancy percentage history report including occupancy for each Property and the weighted average occupancy percentage for all Properties in the Fund. Report will compare current period to previous period, to the same period one year ago and to the occupancy levels at transfer of management.
2. Accrual basis operating statement totaling operation of all Properties in the Fund (Income and Expense Statement) showing figures for the current month, year-to-date and comparison with budget
3. Balance sheet totaling all Properties in the Fund
4. Capital expenditure status report by Property with Fund totals, including a breakdown of capital improvements in process and those completed during the month by Property, type of asset and amount
5. Narrative report recommending corrective actions and other capital items to be approved for the following month as well as any upcoming significant expenditures

An additional monthly status report will be provided within 20 days after the end of the month and will include the following reports for each Property:

1. Narrative explanations of significant variations from budget
2. Rent roll
3. Detailed occupancy/leasing report with summary information about move- ins and move-outs
4. Report of accidents and other mishaps
5. Summary of staff turnover
6. General information regarding Property operations (legislation, governmental decisions, tax rulings, insurance, financial and other practices) which come to Manager's attention in the normal course of business
7. Accounts payable

8. Cash receipts and cash disbursements journals
9. Copy of journal entries (as may be requested by the Owner from time to time)
10. Copy of bank statement(s)
11. Bank reconciliation(s)
12. Detailed Management Fee invoices and corporate expense distribution report
13. Rent proof report (includes outstanding balance at beginning of month, current charges, cash received and month-end balance per tenant)

D-2 FORM OF QUARTERLY STATUS REPORT

Manager will submit the following reports within 15 days after the end of each fiscal quarter (fiscal quarters ending November 30, February 28, May 31, August 31):

1. Economic occupancy summary for the quarter for each Property and the weighted average for all Properties in the Fund with comparisons to the previous quarter and to the same quarter one year ago
2. One-paragraph narrative description of each Property's operations for the quarter including:

o Changes in occupancy levels
o Planned changes in property operations
o Changes in local market conditions (new competition, etc.)
o Changes in, or results of, ongoing marketing strategies
o Other events of interest

D-3 FORM OF ANNUAL FISCAL YEAR STATUS REPORT

Manager will submit reports as required to assist independent auditing firm with annual audit including preparation of audited work paper packages

D-4 FORM OF ANNUAL CALENDAR YEAR STATUS REPORT

Within 15 days after the end of the calendar year, Manager will submit operating statements for each Property and a summary totaling the operations of all of the Properties in the Fund for the calendar year for preparation of Forms 1099 and calendar-year tax returns

EXHIBIT E

TO MANAGEMENT AGREEMENT

Keith Johannessen -          President
Fred Tanner -                Executive Vice President
James Bloomquist -           Vice President, Capital Senior
                             Development, Inc.
Rob Goodpaster -             National Marketing Director
David Brickman -             Vice President
Robert Hollister -           Controller
Marilyn Teel -               Regional Manager
Lesley Tejada -              Regional Executive Director
Gary Vasquez -               Regional Executive Director
Laurie Okeon -               Regional Executive Director

EXHIBIT G

TO MANAGEMENT AGREEMENT

EXHIBIT 10.28

MANAGEMENT AGREEMENT

DATED AS OF JULY 29, 1996

BETWEEN

ILM II LEASE CORPORATION,

AS OWNER

AND

CAPITAL SENIOR MANAGEMENT 2, INC.,

AS MANAGER

AND

CAPITAL SENIOR LIVING, INC.

AS GUARANTOR

TABLE OF CONTENTS

                                                                                                            PAGE
                                                                                                            ----
                                               ARTICLE I

                                           GENERAL PROVISIONS

Section 1.01.  Employment as Exclusive Leasing Agent and Manager . . . . . . . . . . . . . . . . . . . . . .   1
Section 1.02.  Manager's Duties Generally  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2
Section 1.03.  Term of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   3
Section 1.04.  Compensation  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   3
Section 1.05.  Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   4
Section 1.06.  Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   7
Section 1.07.  Plans and Specifications  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  12
Section 1.08.  Ethical Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  12
Section 1.09.  Cooperation and Consultation with Third Parties . . . . . . . . . . . . . . . . . . . . . . .  12
Section 1.10.  Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  12
Section 1.11.  Guaranty  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13
Section 1.12.  Real Estate Tax Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13
Section 1.13.  Policies and Procedures Manual  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13

                                               ARTICLE II

                                                LEASING

Section 2.01.  Manager's Duties Generally As Leasing Agent . . . . . . . . . . . . . . . . . . . . . . . . .  13
Section 2.02.  Negotiation and Execution of Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14
Section 2.03.  Liaison with Tenants  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14
Section 2.04.  Marketing of Rental Space . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14
Section 2.05.  Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14

                                              ARTICLE III

                                         ADMINISTRATIVE SUPPORT

Section 3.01.  Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14
Section 3.02.  Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  16
Section 3.03.  Status Reports  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  16
Section 3.04.  Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17
Section 3.05.  Obligations Under Tenant Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17
Section 3.06.  Tenant Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17
Section 3.07.  Licensing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17

                                               ARTICLE IV

                                       MAINTENANCE AND OPERATIONS

Section 4.01.  Engineering Management Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18
Section 4.02.  Preventative Maintenance  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18
Section 4.03.  Capital Improvements; Expansion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19
Section 4.04.  Personnel Training  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20
Section 4.05.  Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20
Section 4.06.  Supervision of Contracts  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20
Section 4.07.  Service Requests  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
Section 4.08.  Emergencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
Section 4.09.  Regulatory Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
Section 4.10.  Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
Section 4.11.  Security  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22

                                               ARTICLE V

                                          FINANCIAL MANAGEMENT

Section 5.01.  Bank Account  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22
Section 5.02.  Collections and Deposits  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22
Section 5.03.  Disbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  23
Section 5.04.  Examinations and Audits of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  23
Section 5.05.  Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  23
Section 5.06.  Budget  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24
Section 5.07.  Obligations for Expenses  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24

                                               ARTICLE VI

                                             MISCELLANEOUS

Section 6.01.  No Partnership or Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  25
Section 6.02.  Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  25
Section 6.03.  Applicable Law  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26
Section 6.04.  Successors and Assigns  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26
Section 6.05.  Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  27
Section 6.06.  Manager's Insignia  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  28
Section 6.07.  Entire Agreement  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  28
Section 6.08.  Captions, Gender, Number  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  28
Section 6.09.  Severability  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  28
Section 6.10.  Days  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  28

EXHIBIT A
TO MANAGEMENT AGREEMENT

List of Properties

EXHIBIT B
TO MANAGEMENT AGREEMENT

Fees and Compensation of Manager

EXHIBIT C
TO MANAGEMENT AGREEMENT

Budget

EXHIBIT D
TO MANAGEMENT AGREEMENT

D-1 Form of Monthly Status Report
D-2 Form of Quarterly Status Report

D-3 Form of Annual Fiscal Year Status Report D-4 Form of Annual Calendar Year Status Report

EXHIBIT E
TO MANAGEMENT AGREEMENT

Form of Rent Roll

EXHIBIT F
TO MANAGEMENT AGREEMENT

List of Non-Property Staff

EXHIBIT G
TO MANAGEMENT AGREEMENT

Properties on Which Feasibility Study
Will Be Conducted Within Three Months

MANAGEMENT AGREEMENT

THIS AGREEMENT, dated as of July 29, 1996, by and between ILM II LEASE CORPORATION, a Virginia corporation (the "Owner"), and CAPITAL SENIOR MANAGEMENT 2, INC., a Texas corporation (the "Manager") and CAPITAL SENIOR LIVING, INC., a Texas corporation (the "Guarantor"), recites and provides:

RECITALS

WHEREAS, the Owner leases the real estate and related personal property described on Exhibit A hereto (collectively, the "Properties" and each individually, a "Property").

WHEREAS, each of the Properties is operated as an assisted living or congregate care facility;

WHEREAS, the Manager has experience and expertise in the management of assisted living and congregate care facilities;

WHEREAS, the Owner wishes the Manager to manage the Properties, and the Manager desires to do so, pursuant to the terms and conditions set forth in this Agreement.

AGREEMENT

NOW, THEREFORE, for and in consideration of the mutual covenants set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Owner and Manager agree as follows.

ARTICLE I

GENERAL PROVISIONS

Section 1.01. Employment as Exclusive Leasing Agent and Manager. The Owner hereby employs Manager as its exclusive agent for leasing, operating and managing the Properties. Manager accepts such employment and agency and, subject to the terms and conditions hereof and such express restrictions or limitations on its authority and, to the extent not inconsistent with the terms and conditions hereof, such written instructions as may from time to time be given by the Owner, agrees to perform the duties and obligations described herein. In its performance of its duties under this Agreement, Manager shall be an independent contractor rather than an employee of the Owner.

Section 1.02. Manager's Duties Generally.

(a) Manager shall assist the Owner in the leasing, management, operation, supervision, control and administration of the Properties and, by its execution hereof, Manager accepts the relationship of trust and confidence established between itself and the Owner. In accepting its employment hereunder, Manager shall (i) perform its responsibilities hereunder with the same or a greater degree of diligence, competence and care exercised by leading real estate brokers, agents and managers of facilities of the same or similar type as the Properties in the general areas in which the Properties are located and (ii) act with due care in its management of the Owner's funds and property and avoid conflicts of interest or self dealing that would be detrimental to the interests of the Owner. In addition to the obligations expressly provided for in this Agreement, Manager shall do such other things on behalf of the Owner that are consistent with this Agreement, necessary or appropriate, in the judgment of the Owner, and communicated to the Manager, for the proper and profitable operation of the Properties.

(b) Without limiting the restrictions placed upon the Manager pursuant to Subsection (a), the Manager hereby agrees that:

(i) during the Term of this Agreement neither the Manager nor any person controlling, controlled by or under common control with the Manager (an "Affiliate") shall develop, finance, operate, manage or acquire any direct or indirect interest in any assisted living or congregate care facility (as the case may be) located within ten miles of any of the Properties (a "Competing Facility") without the prior written consent of the Owner, provided, however, that in the event that the Manager enters into a Portfolio Transaction, the Manager may own, operate or manage, as applicable, one Competing Facility connected with a Portfolio Transaction and located within such radius if (A) with respect to a Portfolio Transaction in which the Manager acquires the ownership of a Competing Facility, the Manager provides the Owner, or the Owner's designee, with an option to purchase and lease back such Competing Facility at a fair market value, as determined by an appraisal from an independent appraiser acceptable to the Owner and the Manager; (B) the Manager does not relocate any Property Staff involved in the marketing of any of the Properties to such Competing Facility or otherwise employ any marketing materials or trade secrets specifically developed for use in the Properties; and (C) the Manager does not reposition the Competing Facility to compete directly with the Property located closest to such Competing Facility. For purposes of this Subsection, "Portfolio Transaction" shall mean a single transaction in which the Manager acquires the ownership of, leasehold interest in, or is contracted to manage, at least five operating assisted living or congregate care facilities.

(ii) during the Term of this Agreement and for a period of two years thereafter, neither the Manager nor any Affiliate will, in connection with any assisted living or congregate care facility (as the case may be) in which it directly or indirectly owns an interest or which it manages, solicit any of the tenants of the Properties or interfere, either directly or

indirectly, in any manner, with any relationship between the tenants of the Properties and their landlord(s).

(iii) for a period of two years after the expiration of this Agreement, neither the Manager nor any Affiliate will solicit any of the Property Staff (as defined in Section 3.01) or interfere, either directly or indirectly, in any manner, with their employment by the Owner, another lessee or owner of the Properties, or the successor to the Manager, as applicable.

(iv) neither the Manager nor any of its Affiliates, directors, officers or Non-Property Staff (as defined in Section 3.01) shall trade in any securities issued by the Owner or PaineWebber Independent Living Mortgage Inc. II, a Virginia corporation.

(c) If any provision of this Section is deemed invalid by a court of competent jurisdiction, the covenants contained herein shall be applicable and enforceable for such lesser period of time and for such lesser activity included within such limitations, as such court may then or thereafter determine to be reasonable and proper under the circumstances.

(d) In the event that any provision hereof is deemed to be unenforceable, the remainder of this Section shall not be affected thereby and each provision hereof shall be valid and enforced to the fullest extent permitted by law.

(e) The Manager hereby acknowledges that the damages the Owner would sustain in the event of any violation of the provisions of this
Section are difficult or impossible to ascertain. Accordingly, the Manager hereby agrees that the Owner shall be entitled, in addition to any other remedy or damages available to it in the event of any such violation, to injunctive relief to restrain such violation by the Manager and any person or entity acting for or with the Manager.

Section 1.03. Term of Agreement. The initial term of this Agreement (the "Initial Term") shall commence on July 29, 1996 and shall continue through either (i) December 31, 2000 (except for the Property known as Villa Santa Barbara, located in Santa Barbara, California, for which the "Initial Term" shall continue through December 31, 1999) or (ii) in the event that that certain Facilities Lease Agreement dated as of September 1, 1995 between ILM II Holding, Inc. and the Owner (the "Facilities Lease") is extended for any period following December 31, 2000, the earlier of (A) five years from the date of this Agreement or (B) the period during which the Facilities Lease is extended. Unless the Owner gives the Manager notice of termination of this Agreement at least thirty days prior to the expiration of the Initial Period, upon the expiration of the Initial Term, this Agreement shall extend automatically for additional one month periods (the "Renewal Terms") until terminated as provided herein (the Initial Term as extended through any Renewal Terms, herein referred to as the "Term"). If the Owner gives the Manager notice of termination of this Agreement thirty days prior to the expiration of the Initial Period, this Agreement shall terminate and no additional fees shall be payable hereunder.

Section 1.04. Compensation. As compensation for Manager's performance of its obligations hereunder, the Owner agrees to pay to Manager the fees for each Property as set forth on Exhibit B attached hereto.

Section 1.05. Termination.

(a) Termination for Cause. The Owner may elect to terminate this Agreement with respect to all the Properties immediately upon the occurrence of a Default by notifying the Manager in writing that this Agreement has been terminated (a "Notice of Default"). For purposes of this Agreement, "Default" shall mean:

(i) Manager's gross negligence or wilful misconduct in the performance of its duties under this Agreement;

(ii) The revocation of any license or permit necessary for the performance by Manager of its duties hereunder or for the operation of any of the Properties as congregate care or assisted living facilities, as the case may be, or Manager's failure to keep any such license or permit in force for any reason whatsoever which license or permit is not reinstated before a material adverse impact or effect on the operation of the affected Property or Properties or, if later, the expiration of sixty days after Manager is initially notified of such revocation or failure by applicable authorities or the Owner;

(iii) The violation by Manager of any material provision of this Agreement, provided, however, that no default shall be deemed to have occurred if the Manager cures such violation within thirty days after the Owner's written notice to Manager of such violation;

(iv) The violation by Manager of any material provision of that certain Management Agreement, of even date herewith, between Manager and ILM I Lease Corporation (the "ILM I Agreement") relating to properties leased by ILM I Lease Corporation ("ILM I"), which violation entitles ILM I under the ILM I Agreement to terminate such ILM I Agreement;

(v) The entry by a court of competent jurisdiction of a decree or order for relief in respect of Manager, the Guarantor or either of Jeffrey Beck or James Stroud (the "Shareholders") in an involuntary case or proceeding under any bankruptcy, insolvency or similar law, or appointing a receiver, liquidator, trustee or similar official of Manager, the Guarantor or the Shareholders or of all or any substantial part of the property of any of them, or ordering the reorganization of Manager or the Guarantor or the winding up of either of their affairs or liquidation of either of their property, and such decree or order shall continue unstayed and in effect for a period of 30 days; or

(vi) The consent or acquiescence by Manager, the Guarantor or either of the Shareholders to the entry of any decree or order described in Subsection 1.05(a)(v) hereof,

the commencement by Manager or the Guarantor of a voluntary case or proceeding under any bankruptcy, insolvency or similar law, the making by Manager or the Guarantor of any general assignment for the benefit of creditors, or Manager's or the Guarantor's failure or admission in writing of its inability to pay its debts as they become due.

Manager shall notify the Owner in writing of the occurrence of any of the events specified in Sections 1.05(a)(i)-(vi) above promptly after it first learns of such event.

(b) Termination Without Cause. Subject to compliance with Section 2 (Right of Offer) of that certain Agreement of even date herewith between PaineWebber Independent Living Mortgage Inc. II, ILM II Holding, Inc., Owner and Manager, the Owner may terminate this Agreement with respect to any or all of the Properties by delivering a Notice of Termination to the Manager thirty days prior to (i) the sale to an unaffiliated third party of such Property by the owner thereof, or (ii) the transfer to an unaffiliated third party of 50 percent or more of the ownership interest in ILM II Holding, Inc., or PaineWebber Independent Living Mortgage Inc. II.

(c) Action on Termination.

For purposes of this Section, "Effective Date" shall mean (i) with respect to a Notice of Termination delivered pursuant to Section 1.05(a), the date of such Notice of Termination and (ii) with respect to a Notice of Termination delivered pursuant to Section 1.05(b), the date thirty days following the date of delivery of such Notice of Termination.

(i) Within ten business days following the date of any Notice of Termination, Manager shall provide the Owner with the following items to facilitate the transfer of leasing and management responsibilities to the Owner or its designee in a comprehensive and professional manner:

(A) A schedule of termination activities including notices to vendors, contractors and banks and meetings with the successor entity responsible for the leasing and management of the Properties;

(B) An itemized statement of the amounts due hereunder from the Owner to the Manager;

(C) An itemized statement of the amounts due suppliers of services and goods which have been ordered by Manager in the name of the Owner;

(D) An itemized statement of all accounts receivable due the Owner from any source; and

(E) A list of all records, reports, financial statements, files and similar materials in Manager's possession related to the Properties.

(ii) On the Effective Date of the Notice of Termination, Manager shall:

(A) Deliver to the Owner all funds collected and held for the account of the Owner including, without limitation, passbook accounts, negotiable and investment instruments, demand deposits and petty cash, whether any of the foregoing is received before or after the termination hereof;

(B) Deliver to the Owner all property and documents and all records, reports, files and similar materials relating to the Properties;

(C) Assign to the Owner, or its designee, all contracts not otherwise in the name of the Owner relating to the operation or leasing of any of the Properties and assign, to the extent transferable, to the Owner, or its designee, all applicable licenses and permits necessary to operate the Properties as congregate care or assisted living (as the case may be) facilities;

(D) Deliver to the Owner a complete list of all contracts, agreements and obligations entered into or incurred by Manager on behalf of the Owner during the Term hereof; and

(E) Furnish such other information and take such other actions as the Owner shall reasonably require to transfer Manager's leasing and management responsibilities to the Owner or its designee.

(iii) Within 25 days after the Effective Date of the Notice of Termination, Manager shall deliver to the Owner a full accounting, including a statement showing all payments collected by it and all moneys held by it, for the period following the last date covered by the last accounting furnished to the Owner.

(iv) Manager's obligation to deliver to the Owner or its designee the items described in this Section 1.05(c) shall be a continuing obligation with respect to any of those items that may be in or come into Manager's possession or control on or after the effective date of termination of this Agreement.

(v) Manager shall cooperate fully with the Owner or its designee in the transfer of, or in obtaining, all applicable licenses and permits necessary to operate the Properties as congregate care or assisted living (as the case may be) facilities and of management, leasing and licensing operational responsibilities to the Owner or such designee.

(d) Casualty or Condemnation. Notwithstanding the foregoing or anything to the contrary contained in this Agreement, either the Manager or the Owner may elect to terminate this Agreement immediately with respect to a Property subject to a Casualty or Condemnation Event (as defined herein) by giving written notice of termination to the other party; provided, however, that as to any Property for which this Agreement is so terminated

and at which the Owner thereafter commences operations as an assisted living or congregate care facility, as the case may be, prior to the termination of this Agreement with respect to all of the Properties, Manager shall have the option to re-commence providing services at such Property pursuant to the terms hereof. For purposes hereof, a "Casualty or Condemnation Event" shall mean damage to a Property by fire, smoke, lightning, wind storm, explosion, riot, vandalism, malicious mischief, theft and such other casualty hazards and risks to the extent that the Property cannot, in the Manager's or Owner's (as the case may be) reasonable judgment, be economically operated as the type of facility it was prior to such casualty and (i) such casualty occurred within 24 months of the end of the Term, or (ii) such casualty is an event for which insurance coverage is not required under Section 1.06 and a condemnation or taking by eminent domain which is either (i) 50% or more of the Property (measured by any of gross area, rentable square footage or number of rental units) or (ii) such portion or portions of the Property so that the portion remaining cannot, in the Manager's or Owner's (as the case may be) reasonable judgement, be economically operated as the type of facility it was prior to the taking.

(e) Partial Termination. In the event that this Agreement is terminated with respect to one or more, but less than all, of the Properties, the term "Properties" shall thereafter refer only to such remaining Properties.

(f) Termination by Manager. Manager may terminate this Agreement by written termination notice to Owner in the event that Manager fails to receive reimbursement of reimbursable expenses or any compensation due Manager pursuant to the terms of this Agreement, and such failure continues for a period of sixty (60) days after Manager's written notice of such failure to Owner.

(g) Effect of Termination. No termination of this Agreement shall affect any obligation owing by either party hereto to the other which accrued prior to the Effective Date of the Notice of Termination.

Section 1.06. Insurance.

(a) Owner's Insurance Coverage. The Manager will obtain at Owner's sole cost and expense the following coverage for the Owner with respect to the Properties. Owner retains the right to procure all such insurance for itself should it see fit rather than having the Manager procure such insurance on behalf of Owner.

(i) Building Insurance. The Manager shall obtain a building and contents insurance policy with comprehensive all risk coverage with respect to the buildings and personal property components of the Properties (including, without limitation, any such personal property components owned by Manager) and which shall not exclude the following: fire, lighting, extended coverage, theft, flood, earthquake (where available), vandalism, sprinkler leakage, water damage, collapse and debris removal.

The amount of such insurance shall not be less than the full replacement cost except where sublimits are appropriate (and a replacement cost endorsement shall be provided for these purposes permitting payment of the loss without a requirement to rebuild) as determined by an insurance appraisal or such other valuation with provisions for the use of indexes at interim dates to increase the value for inflation.

The policy shall contain an endorsement called an "Agreed Amount Endorsement" which shall waive any and allcoinsurance provisions under the policy as it applies to the coverage.

(ii) Business Interruption and Loss of Rent Insurance. The Manager shall obtain a business interruption and loss of rent insurance policy with coverage against all of the risks referred to in Subsection (a)(i) above. The insurance shall be in an amount equal to not less than 100% of the annual rent roll schedules of the Properties covering all tenants and shall be endorsed to cover unoccupied and unleased space at pro forma rents and shall include gross budgeted revenues for all other activities. The policy shall contain an Agreed Amount Endorsement waiving all coinsurance provisions.

(iii) Comprehensive General Liability Insurance. This policy shall include coverage for claims arising from bodily injury, personal injury, and property damage occurring upon, in, or about each of the Properties. The coverage shall be on an occurrence basis, and the minimum limits shall be not less than $1,000,000. Coverage for liquor law liability shall also be included if required by law.

The policy should cover the following hazards: premises and operation; incidental malpractice; comprehensive owned and non-owned auto liability insurance; and coverage for hired vehicles on an "if any" basis.

(iv) Umbrella Liability Coverage. A policy shall be obtained, providing coverage in an amount equal to at least $10,000,000 in excess of the coverage to be maintained pursuant to Subsection (iii) of this
Section 1.06(a).

(v) Additional Insurance. Owner shall have the right to require Manager to obtain and maintain, if requested in writing and at Owner's sole cost and expense, such other insurance as Owner may from time to time deem reasonably necessary, and which insurance is normal and customary for other operations of improved property similar to the Properties.

(vi) Priority of Coverage. Owner's insurance will be primary as to any insurance carried by Manager, and any such coverage of Manager will be excess insurance to the extent that Manager is acting within the scope of its duties under this Agreement.

(b) Manager's Operational Insurance Coverage. Throughout the Term of this Agreement, the Manager shall procure and maintain, at Owner's sole cost and expense,

the following insurance coverage. Owner retains the right to procure all such insurance for itself or the Manager, as appropriate, should it see fit rather than having the Manager procure such insurance; provided, however, that to the extent that the Manager identifies such insurance coverage which otherwise conforms with the requirements of this Section 1.06 but the Owner procures such insurance pursuant hereto which is other than that so identified by Manager, "Net Cash Flow," as calculated pursuant to Exhibit B, will be calculated assuming insurance costs equal to the premiums and costs applicable to the coverage so identified by the Manager to the extent such premiums and costs are less than those applicable to the coverage so procured by the Owner.

(i) Worker's Compensation and Unemployment Compensation. Workers' compensation and unemployment compensation with respect to the Property Staff in full compliance with all applicable state and federal laws and regulations;

(ii) Employer's Liability Insurance. Employer's liability insurance in an amount not less than $100,000 for each accident, $500,000 for each disease policy limit and $100,000 for diseases for each employee covering all Property Staff;

(iii) Comprehensive Automobile Liability Insurance. Comprehensive automobile liability insurance coverage with respect to those motor vehicles owned by the Owner which are used by the Property Staff in connection with the Properties which has limits for bodily injury of not less than $250,000 per person and $500,000 per accident and property damage of $100,000 per accident. The comprehensive automobile liability policy shall include blanket non-owned coverage;

(iv) Employee Dishonesty Insurance. Employee dishonesty insurance with respect to the Property Staff and any agents against employee dishonesty in an amount not less than the greater of (A) One Million Five Hundred Thousand Dollars ($1,500,000.00) or (B) an amount equal to the average monthly receipts from all of the Properties;

(v) Professional Liability Insurance. Professional liability insurance in an amount equal to at least $1,000,000 with respect to bodily injury, property damage or personal injury arising out of professional acts, errors or omissions;

(vi) Fiduciary Liability Insurance. In the event that the Manager makes any employee benefit plan available to the Property Staff, fiduciary liability insurance in an amount equal to at least $1,000,000 with respect to claims alleging breach of fiduciary obligations under the Employment Retirement Income Security Act of 1974 and any acts, errors or omissions committed in connection with the administration of any employee benefit plans for the Property Staff;

(vii) Employment Practices Insurance. Employment practices insurance in an amount equal to at least $1,000,000 with respect to lawsuits brought by

employees alleging wrongful discharge, discrimination, harassment or other employment related exposure with respect to the Property Staff; and

(viii) Umbrella Liability Coverage. A policy shall be obtained, providing coverage in an amount equal to at least $10,000,000 in excess of the coverage to be maintained pursuant to Subsections (i) through
(vii) of this Section 1.06(b).

(ix) Other Insurance. Such other insurance as may be carried at similar properties as Owner may from time to time reasonably deem necessary in connection with or for the performance of Manager's duties hereunder.

(c) Manager's Insurance Coverage. Throughout the Term of this Agreement, the Manager shall procure and maintain, at Manager's sole cost and expense, the following insurance coverage:

(i) Comprehensive General Liability Insurance. Comprehensive general liability insurance which includes coverage for all Non-Property Staff (as defined in Section 3.01(b)) and if Manager is found to be acting outside the scope of his duties under this Agreement, with minimum limits of at least $1,000,000 per occurrence for bodily injury, personal injury and property damage;

(ii) Worker's Compensation and Unemployment Compensation. Workers' compensation and unemployment compensation with respect to the Non-Property Staff in full compliance with all applicable state and federal laws and regulations;

(iii) Employer's Liability Insurance. Employer's liability insurance in an amount not less than $100,000 for each accident, $500,000 for each disease policy and $100,000 for diseases for each employee covering all Non-Property Staff performing any work relating to the Properties;

(iv) Comprehensive Automobile Liability Insurance. Comprehensive automobile liability insurance coverage with respect to those motor vehicles owned by the Manager which are used by Non-Property Staff in connection with the Properties which has limits for bodily injury of not less than $250,000 per person and $500,000 per accident and property damage of $100,000 per accident. The comprehensive automobile liability policy shall include blanket non-owned coverage;

(v) Umbrella Liability Insurance. An "umbrella" liability coverage providing coverage in an amount equal to at least $10,000,000 in excess of the coverage to be maintained pursuant to Subsections
(i), (iii) and (iv) above;

(vi) Employee Dishonesty Insurance. Employee dishonesty insurance with respect to the Non- Property Staff and any agents, officers and employees of the Manager against dishonesty by any of such persons in an amount not less than the greater of (A) One

Million Five Hundred Thousand Dollars ($1,500,000.00) or (B) an amount equal to the average monthly receipts from all of the Properties;

(vii) Fiduciary Liability Insurance. Fiduciary liability insurance in an amount equal to at least $1,000,000 with respect to claims alleging breach of fiduciary obligations under the Employment Retirement Income Security Act of 1974 and any acts, errors or omissions committed in connection with the administration of any employee benefit plans made available to the Non-Property Staff;

(viii) Employment Practices Insurance. Employment practices insurance in an amount equal to at least $1,000,000 with respect to lawsuits brought by employees alleging wrongful discharge, discrimination, harassment or other employment related exposure with respect to Non-Property Staff; and

(ix) Other Insurance. Such other insurance as may be carried at similar properties as Owner may from time to time reasonably deem necessary in connection with or for the performance of Manager's duties hereunder.

(d) Payment of Insurance. The insurance required by Subsection (a) and (b) of this Section, whether obtained by Manager on behalf of Owner or by Owner directly, shall be an operating expense of the applicable Property and paid from such Property's revenues or reserves or by the Owner, as directed by the Owner. The insurance coverage required pursuant to Subsection
(c) shall be paid for by the Manager from its own funds.

(e) Policy Requirements. The policies described in Subsections (a) through (c) above shall be in form and substance satisfactory to the Owner and with insurance companies that are acceptable to Owner, reputable and properly licensed in each State in which they propose to effect coverage. Manager shall furnish Owner with certificates of insurance or certified copies of each of the insurance polices required to be obtained and maintained by Manager pursuant to the terms of this Agreement. The insurance policies required pursuant to Subsection (a) shall be in the name of the Owner with the Manager named as an additional insured party. The insurance policies required pursuant to Subsections (b) and (c) shall be in the name of the Manager with the Owner named as an additional insured party. Each insurance policy required by this Section shall provide that such policies shall not be canceled or otherwise modified without 45 days' prior written notice to Owner. At least fifteen days prior to the extension of any such policy Manager shall furnish Owner with evidence that the insurance policies required hereunder have been renewed. Manager shall in all cases obtain the Owner's prior written approval before obtaining, renewing, canceling or modifying the coverages under any insurance policies required hereunder. Manager shall make periodic reports and recommendations to the Owner regarding the adequacy of the then current insurance policies and provide the Owner with adequate warning of any potential lapses in coverage of which Manager becomes aware.

(f) Waiver of Subrogation. Owner and Manager hereby waive and release any and all claims either may have or acquire against the other by way of subrogation or otherwise, for any loss or damage occasioned by the negligence of either of them or their respective agents, employees, contractors, licensees or invitees, which results in any loss or damage to person or property and which is fully insured against by either Owner or Manager in accordance with the terms of this Agreement. Each party agrees to obtain from its respective insurance carriers waiver of subrogation endorsements to all such insurance policies maintained hereunder (excluding workmen's compensation or employer's liability insurance) providing that each insurance carrier waives its right of subrogation against the other party in the event of any loss or damage which is fully insured against pursuant to the provisions of this Agreement. In the event that such endorsements cannot be obtained and the mutual waiver contained herein would invalidate any such insurance policy, then the provisions of this Subsection (f) shall be inapplicable to such insurance policy.

(h) Compliance With Insurance Requirements. Manager shall use its best efforts to assure that each Property is not used for any purpose which may void or impair, or increase the premium payable under, any policy of insurance held by Owner pursuant to the terms of this Section 1.06, or which may render any loss under any such policy uncollectible.

(i) Insurance Claims. Manager shall promptly report to Owner, and the insurance agent, broker or adjustor designated by Owner, all damages, accidents or claims relating to the ownership, maintenance or operation of any Property and shall cooperate with such agent, broker or adjustor in connection with its investigation thereof and its reporting to the appropriate insurance carrier. Manager shall not compromise or settle any claims against insurance carriers without the prior written approval of Owner.

Section 1.07. Plans and Specifications. To the extent that they are within the Owner's possession, the Owner shall furnish Manager with a set of plans and specifications for each Property and, with the aid of these documents and its own inspections, Manager shall become and remain knowledgeable with respect to the organization, location, character, plan and operation of the lighting, plumbing, heating, air conditioning and all other mechanical systems and equipment of each Property.

Section 1.08. Ethical Standards. In any transaction with vendors, contractors or others who provide services or goods for the Owner or the Properties, Manager shall act at all times in the best interests of the Owner and shall credit to the Owner all discounts, commissions, rebates, finders fees and similar amounts obtainable as a result of such transactions. Manager shall not enter into any agreement to provide goods or services for any Property with any party, partnership, corporation or other entity related to or affiliated with Manager without the prior written approval of the Owner.

Section 1.09. Cooperation and Consultation with Third Parties. The Owner may appoint and employ auditors, attorneys, appraisers and other persons for the purpose of rendering advice about or for conducting research and inquiry with respect to the leasing,

management, operation and valuation of any Property and, in any such case, Manager shall cooperate fully with such persons and, within the authority invested in such persons, communicate all information requested and advise and consult with them in good faith.

Section 1.10. Indemnities. Subject to the provisions of Section 1.06 hereof, the Owner shall indemnify and hold Manager harmless from and against all loss, cost, expense, claims and liability arising out of or in connection with the management, operation and leasing of the Property, except for acts of Manager which constitute a breach of the provisions of this Agreement or are otherwise outside the scope of its employment and Manager's own negligence or misconduct (such acts together referred to as "Unauthorized Acts"). Subject to the provisions of Section 1.06 hereof, Manager shall indemnify and hold the Owner harmless from and against all loss, cost, expense, claims and liability arising out of or in connection with Manager's Unauthorized Acts.

Section 1.11. Guaranty. The Manager's obligations pursuant to this Agreement, including, without limitation, the indemnification obligations set forth in Section 1.10, shall be guaranteed by Capital Senior Living, Inc. (the "Guarantor"). The Guarantor guarantees the full and prompt payment of all amounts payable by the Manager hereunder and all amounts which may become due and arising as a result of the Default by the Manager. Upon the Default by the Manager in the performance of any of its obligations hereunder, and without further notice, or the resort to any property of the Manager which may be in the possession of or otherwise available to the Owner and without exhausting all remedies available to the Owner against the Manager, the Guarantor shall perform the obligations described above. The Guarantor shall have all rights of the Manager hereunder regarding any event which, with the giving of requisite notice hereunder and the passage of time would result in a Default hereunder, including but not limited to defenses, notices, cure periods and any counterclaims.

Section 1.12. Real Estate Tax Assessments. Manager shall review for accuracy and reasonableness all real estate tax assessments and shall advise the Owner of the results of such review. If during the Term, the Owner shall elect to protest any real or personal property tax assessment in connection with Property, Manager shall cooperate with the Owner and its tax advisors in connection therewith. The Manager will have no responsibility for the institution of any legal proceedings in connection with tax assessments.

Section 1.13. Policies and Procedures Manual. In connection with the performance of its obligations under this Agreement, and after review of the Owner's existing policies and procedures manual, Manager shall develop a policies and procedures manual and provide same to Owner for review and approval within six months from the effective date of this Agreement. Following the approval of the policies and procedures manual submitted by Manager (the "Manual"), Manager shall utilize the Manual in connection with the leasing, management or operation of the Properties and shall submit any proposed modifications to the Manual to the Owner in writing. Following the Owner's review and approval of such modifications, the Manager shall utilize the modified Manual.

ARTICLE II

LEASING

Section 2.01. Manager's Duties Generally As Leasing Agent. Manager shall use its best efforts to lease and keep leased all leasable space in the Properties to such tenants as it may deem compatible with the character and locations of the Properties. Manager shall use its best efforts to develop and maintain the character and reputation of each of the Properties while maintaining the highest possible net income. Manager shall be familiar with all tenant leases for the Properties, particularly with regard to the services, charges and procedures applicable to the various tenants.

Section 2.02. Negotiation and Execution of Leases. Manager shall respond to all inquiries concerning tenant leases and shall conduct all negotiations in connection with their execution, renewal, extension, modification, amendment or termination. All leases entered into after the date hereof shall be in such form as may be approved by the Owner, and Manager shall furnish the Owner executed originals of such leases upon request.

Section 2.03. Liaison with Tenants. Manager shall schedule and coordinate tenant moves, maintain personal contact with tenants and serve as liaison with the Owner in order to minimize misunderstandings and receive and resolve tenant complaints in a timely and courteous manner.

Section 2.04. Marketing of Rental Space. Manager shall develop a comprehensive, professional program for marketing each Property (a "Marketing Plan") and, following the approval of each Marketing Plan by the Owner, implement and monitor the effectiveness of such Marketing Plan.

Section 2.05. Advertising. Manager, at the Owner's expense and in accordance with the Budget (as that term is defined in Section 5.06 below) and the Marketing Plan, shall advertise, to such extent and in such media as Manager deems advisable, the availability of units in each of the Properties; provided, however that Manager shall pay all costs associated with advertisements that do not relate specifically and exclusively to the availability of rental space in, or the operational needs of, the Properties, unless otherwise approved in writing by the Owner.

ARTICLE III

ADMINISTRATIVE SUPPORT

Section 3.01. Personnel.

(a) Property Staff. Based upon the Budget, job standards, wage rates and the applicable Plan of Operation (as defined in Subsection (c), below), Manager shall recruit,

hire, train, supervise and discharge all on-site management, administrative, maintenance, cleaning and other personnel, including, without limitation, the Property director or administrator (collectively, the "Property Staff") necessary to properly manage, administer, repair, maintain and otherwise operate each Property. The Property Staff may be full-time, part-time, temporary or contract personnel. The Property Staff shall be employees of Manager and not the Owner, provided, however, that the costs of such Property Staff shall be paid from the Owner's funds. Manager shall pay wages and required payroll taxes and all costs and expenses of such Property Staff from the Owner's funds and shall make provision at the Owner's expenses for employee group benefits as agreed upon by the Owner. Manager will abide by all local, state and federal laws, regulations and guidelines in administering the payroll. Manager will cause to be prepared and filed all forms, reports and returns as required by law in connection with unemployment insurance, workers' compensation insurance, withholding tax, social security and other similar taxes now in effect. In addition Manager shall take such actions as may be necessary to comply with the provisions of wage, hour, health, safety, income tax, social security, unemployment compensation, workman's compensation and similar laws, regulations and requirements relating to the Property Staff. Manager shall, at the request of Owner, provide Owner with the then-current list of Property Staff.

(b) Manager's Personnel. The Manager shall maintain sufficient personnel to fulfill its obligations hereunder. Prior to the commencement of its duties hereunder, Manager shall provide the Owner with a listing of the personnel which it intends to employ in connection with the obligations to be performed by Manager hereunder (the "Non- Property Staff"), together with a job description for each member of the Non-Property Staff. The Owner and the Manager shall mutually agree upon the personnel required by the Manager to fulfill its obligations hereunder. The Manager shall, upon the request of Owner, provide Owner with a list of the then-current Non-Property Staff. The Owner shall have no authority to provide directions to the Managers employees or to terminate such employees employment by the Manager. Nothing in this section is intended or shall be construed to make any person employed by the Manager an employee of the Owner, to influence the hiring decisions of the Manager or to alter the relationship between the Owner and Manager of independent contractor. The Manager acknowledges that in entering into this Agreement the Owner is relying upon the experience and capabilities of the employees of the Manager and the Shareholders. Accordingly, the Manager agrees to maintain each of positions listed on Exhibit F to this Agreement (the "Positions") and shall not eliminate or change any of the Positions without the prior written consent of the Owner. The initial occupants of each of the Positions are listed on Exhibit F and the Manager agrees to keep each of the Positions permanently occupied during the Term by personnel with experience and capabilities similar or superior to the individuals listed on Exhibit F (the "Personnel"), with any vacancies in any such Positions occurring during such Term to be filled on a timely basis. The Manager shall notify the Owner of any change in the Personnel and shall supply the Owner with information which is reasonably sufficient to demonstrate the calibre and experience of any replacement Personnel.

(c) Plan of Operation. The Owner shall provide to Manager and the Manager shall review the current plan of operation (if any) for each Property. The revised plan of operation for each Property or, in the event that there is no existing plan of operation, a plan of operation developed by the Manager (the "Plan of Operation") shall be (i) describe each of the services to be supplied to tenants at such Property, (ii) list all Property Staff that will be required at such Property in order to provide such services to the tenants, to provide management and administrative services for such Property (other than such administrative services as are to be provided by the Manager hereunder) or to maintain the Property. The Plan of Operation for each Property shall be submitted to the Owner thirty days after the commencement of the Manager's duties hereunder and must be approved by the Owner in writing within thirty days following receipt thereof. The Owner and the Manager shall review the Plan of Operation for each Property not less than annually and shall amend the Plan of Operation from time to time as appropriate.

(d) Job Descriptions. To the extent that they are within the Owner's possession, Owner shall provide to Manager and Manager shall review or develop job descriptions for all Property Staff positions based upon the Plan of Operation. Manager shall furnish the job descriptions, along with job performance standards, to the Owner to delineate clearly between Manager's exclusive responsibilities which are to be performed by the Non-Property Staff, and those responsibilities that are delegated by Manager to the Property Staff.

Section 3.02. Contracts.

(a) Renewal and Execution. Manager shall be familiar with the provisions of, and provide to the Owner copies of, all material contracts affecting the leasing, management or operation of each Property. At least sixty (60) days prior to the scheduled termination of any of these contracts, Manager shall recommend to the Owner whether such contracts should be renewed, modified or canceled, and renew, modify or cancel such contracts as the Owner may direct. Where new contracts are necessary, Manager shall recommend to the Owner for its approval contracts from responsive and responsible contractors for work to be performed according to written specifications developed by Manager in consultation with the Owner. Manager shall assure that all contractors are properly insured (and bonded, if appropriate) for the duration of their contracts. Except for emergencies and those cases where the Owner authorizes otherwise due to the size or nature of the contract, all contracts and procurements shall be let by competitive bidding procedures. Manager, its employees and the Property Staff shall disclose to the Owner the extent of any financial interest that it or they may have in any firm or person providing goods or services to the Owner pursuant to any such contracts. Manager shall exploit fully all commonality of contracting and purchasing so as to accrue to the Owner all possible benefits deriving from a unified procurement policy.

(b) Supervision and Enforcement. Manager shall supervise and oversee the activities of all contractors, review the quality of their workmanship, enforce contractors' warranties and approve all work and materials prior to payment therefor.

Section 3.03. Status Reports.

(a) Monthly Status Reports. Manager shall prepare and deliver to the Owner within the prescribed time period set forth on Exhibit D-1 a written Monthly Status Report in the form attached hereto as Exhibit D-1.

(b) Quarterly Status Reports. The Manager shall submit to the Owner within 15 days following the end of each fiscal quarter, a report in the form of Exhibit D-2 attached hereto.

(c) Annual Fiscal Year Status Reports. The Manager shall submit to the Owner within 30 days following the end of each fiscal year, a report in the form of Exhibit D-3 attached hereto.

(d) Annual Calendar Year Status Reports. The Manager shall submit to the Owner within 15 days following the end of each calendar year, a report in the form of Exhibit D-4 attached hereto.

(e) Other. Manager shall prepare and deliver to the Owner such other reports and/or statements in such form as may reasonably be requested by the Owner from time to time, which reports shall be delivered within 30 days after request thereof (or as soon thereafter as is practicable).

Section 3.04. Records. Manager shall maintain and keep complete, accurate and up-to-date all books and records of the Owner relating to each Property including, without limitation, all accounting and financial records, rent rolls, memoranda, correspondence, notices and all other such records as may be appropriate or customary in connection with the leasing and operation of the Property and the transaction of business with third parties including, without limitation, suppliers, employees, labor unions and governmental or municipal authorities. All of these records shall be kept and maintained available for inspection at any and all reasonable times during normal business hours by any person authorized in writing by the Owner, but not by others.

Section 3.05. Obligations Under Tenant Leases. Manager shall comply with all requirements respecting the operation or maintenance of each Property imposed upon the Owner as "landlord" under any lease for the Properties. Manager's duties hereunder shall include, without limitation, the selection and supervision of all contractors or others providing required tenant services or performing tenant repair or capital improvement work at the Properties.

Section 3.06. Tenant Compliance. Manager shall monitor the performance of all tenants and use its best efforts to secure the full compliance by tenants with the terms and provisions of their leases. Manager shall inform all tenants of such rules, regulations and notices as may be promulgated by the Owner or Manager. Manager, at the expense of and

using attorneys approved by the Owner, may institute legal proceeding in its own name or in the name of the Owner to collect rent, security deposits and other tenant charges, to oust or dispossess tenants or others occupying the Property and otherwise to enforce the rights of the Owner with respect thereto. Manager shall secure the prior written approval of the Owner before instituting legal proceedings or compromising or settling any such claim or proceeding. Manager shall give the Owner prompt written notice of all matters involving actual or threatened litigation.

Section 3.07. Licensing. The Manager shall be responsible for obtaining all licenses, permits or other authorizations (the "Permits") necessary to operate each of the Properties as an assisted living or congregate care facility (as the case may be) in the name of the Owner or such other name as the Owner may designate. All amounts payable to state or local governmental authorities with respect to the Permits for a Property, and all legal fees incurred in connection with obtaining such Permits with the prior written permission of the Owner, shall be paid by the Owner. Upon request, the Manager shall provide such assistance as may be necessary in order to obtain Permits for such other affiliate of the Owner with respect to any of the Properties, whether such Permits are required by applicable law or are being requested at the option of the Owner or the applicable affiliate.

ARTICLE IV

MAINTENANCE AND OPERATIONS

Section 4.01. Engineering Management Services.

(a) Benchmark Study. Upon the commencement of the Initial Term, Manager shall perform a walk- through of each Property and shall note corrective and deferred maintenance work or capital improvements required to be performed. Promptly after the completion of such walk-through, Manager shall prepare and deliver to the Owner a report containing the results of that study.

(b) Quarterly Inspections. Manager shall conduct physical inspections of each Property at least quarterly unless the Owner reasonably determines that a more frequent inspection is necessary. Specific problems shall be investigated on an "as-needed" basis. Manager shall submit to the Owner a written report containing findings, conclusions and recommendations of actions to be taken to correct deficiencies noted during the inspections. This quarterly inspection and report shall address deficiencies found in, among other areas, the building foundations, exterior, roof, flashings, concrete work, sidewalks, retaining walls, parking areas, gutter and downspout systems, mechanical equipment and utility distribution systems.

(c) Engineering On-Site Inspections. At the request of the Owner, and at the Owner's expense, Manager shall employ or retain a licensed, experienced mechanical

engineer or engineering firm to conduct engineering on-site inspections of any Property. During each of these inspections, the engineering firm shall: (i) inspect all mechanical equipment for corrective maintenance and other action that should be completed by the Property Staff or outside contractors; (ii) review preventive maintenance records, logs and other related records to evaluate work completed; (iii) review energy practices; (iv) consult with the Property Staff on the findings with regard to the foregoing items; and (v) submit to the Owner a written, itemized report with respect to the foregoing immediately following each inspection.

Section 4.02. Preventative Maintenance. To the extent that they are within the Owner's possession, Owner shall provide to the Manager the current preventative maintenance program for each Property. Manager shall review or develop, as applicable, a program designed to keep each Property and all installed mechanical and electrical systems in proper condition. Following the Owner's review and approval of such program for each Property, Manager shall maintain such program on a regular basis and such program shall reflect the useful lives of the various components and items of equipment comprising the Property. Manager shall establish and monitor a seasonal maintenance program for the heating and cooling systems in the Property to assure that they are in good working order and conserve utility consumption.

Section 4.03. Capital Improvements; Expansion.

(a) Predevelopment. Manager agrees within 3 months of the date of this Agreement to undertake a feasibility study with respect to the expansion of the Properties listed on Exhibit G and within 6 months of the date of this Agreement to undertake a feasibility study with respect to each of the other Properties. If, based upon the results of the study with respect to any Property, Manager believes that such Property should be expanded or improved, Manager shall recommend such action to the Owner. If the Owner decides to proceed with the expansion of such Property, the Owner shall so notify the Manager. Within 30 days from the date of receipt by the Manager of such notice, the Manager shall prepare and deliver to the Owner a proposed budget and schedule with respect to the Predevelopment Costs (as defined below) which would be incurred in connection with the expansion of such Property. The budget shall list each fee or other cost which will be incurred prior to the commencement of the construction or renovation of the Property including, without limitation, land use study, preconstruction plan, legal, licensure and zoning, working drawings, environmental report, a market analysis and financing plan (the "Predevelopment Costs"). Following approval of the budget and schedule, by the Owner, the Manager shall, as Owner's agent, contract for each of the services listed in the budget and the schedule and approved in writing by the Owner (the "Predevelopment Services"). The Owner shall be responsible for the payment of each of the Predevelopment Costs in accordance with the budget. Following performance of the Predevelopment Services and based upon the results thereof, the Manager shall develop a development plan (the "Development Plan") which shall be submitted to the Owner.

(b) Development. Following the receipt by Owner of the Development Plan for a Property, the Owner shall determine whether to proceed with the construction at such Property. If the Owner approves the commencement of such construction, the Owner shall notify the Manager and the Manager shall, within thirty days of the date of receipt of such notice contract as Owner's agent for each of the services required pursuant to the Development Plan and Manager shall otherwise commence the execution of the Development Plan. The Owner agrees to be responsible for obtaining the financing, and shall be solely responsible for all liability associated with such financing. Manager agrees to fund for the first year only up to $170,000.00 with respect to all operating losses with respect to any Property subject to development or expansion where operating costs (not including financing costs) exceed revenue for such Property or portion of a Property (the "Start Up Losses"). The Manager shall provide Owner with a detailed accounting relating to the developed Property or expanded portion of a Property. All Start Up Losses shall be funded from Manager's own funds and shall not be paid from the Checking Account described in Section 5.03.

(c) Fee Compensation. Manager shall be paid a seven percent (7%) development fee on the total project cost, which shall include the Predevelopment Costs, all third party hard and soft costs set forth in the Development Plan but excluding any third party financing costs (the "Total Project Cost"). Following the completion of the construction of any expanded or additional portions of a Property, such Property shall for all purposes hereunder be deemed to

be one of the Properties and the Manager shall receive the same compensation with respect to such expanded Property or developed Property as set forth on Exhibit B. Manager shall be entitled to receive repayment of any Start Up Losses incurred with respect to any Property upon the earlier of the sale or refinancing of such Property or the termination of this Agreement.

(d) No Subcontracting. The management and coordination of the expansion of any Property shall not be subcontracted by the Manager to any other person; provided, however, that such management and coordination may be subcontracted to Manager's affiliate, Capital Senior Development, Inc. provided that Manager shall bear all costs of such subcontract arrangement.

Section 4.04. Personnel Training. Manager shall outline in writing the training needs of the Property Staff and establish a training program that will teach, maintain and improve the technical proficiency of each member in his or her assigned job.

Section 4.05. Maintenance. Manager shall be responsible, at Owner's expense, for maintaining the Properties according to standards at least comparable to similar properties in the general areas in which they are located. Manager's maintenance responsibilities shall include, without limitation, interior cleaning, exterior window cleaning, painting, decorating, grounds care and landscaping, plumbing, electrical repair, carpentry, plastering and such other normal maintenance and repair work as may be necessary. The areas and items to be maintained shall include, without limitation, roofing, mechanical and other equipment, building exterior surfaces (including windows), parking areas, sidewalks, gutters, walkways, hallways, stairwells, storage rooms, the management office and all other related areas including fencing, signs and lighting. The Property Staff shall, at least weekly, conduct walk through inspections of these areas to assure that they are receiving adequate and appropriate care. Manager shall supervise the work of the Property Staff to assure that it is performed in accordance with the Owner's standards.

Section 4.06. Supervision of Contracts. Manager shall arrange for, coordinate, supervise and enforce the conditions of all contracts necessary or advisable for the proper operation of the Properties including, without limitation, contracts for the maintenance and repair work described in Section 4.05 above and for water, sewer, electricity, telephone, vermin extermination, trash removal, landscaping, heating fuels, air conditioner contractual maintenance, and snow and ice removal. All such contracts shall be at the Owner's expense. Such contracts entered into during the Term shall provide for cancellation by the Owner without penalty upon 30 days written notice and shall not terminate upon the termination of this Agreement, unless the Owner has agreed otherwise in writing. Any such contracts in manager's possession at the commencement of the Term which do not allow for such 30-day cancellation will be identified by Manager and reported to the Owner within 30 days of the commencement of operations. Further, Manager shall place orders for such equipment, tools, appliances, materials, and supplies as are required to adequately maintain and operate the Properties. Such equipment, tools, appliances, supplies and materials shall be used only for

operating, maintaining and repairing the Properties, unless the cost thereof is prorated on a basis satisfactory to the Owner.

Section 4.07. Service Requests. Manager shall maintain business-like relations with tenants of the Properties and receive, record and take appropriate action with respect to any service requests that may be made. Complaints of a serious nature shall, after investigation, be reported to the Owner in a timely manner, together with appropriate recommendations. Manager shall make reasonable efforts to obtain full compliance by tenants for all items of maintenance for which they are individually responsible. Scheduled outages of water, electricity or other services shall be reported to the Owner and to all tenants, individually, as promptly, fully and courteously as possible and in a manner and at a time which are customary under the circumstances or as may otherwise be required by applicable law. Unscheduled material outages shall be reported to the Owner and the tenants as soon after occurring as is reasonably possible.

Section 4.08. Emergencies.

(a) Services. To the extent that they are within Owner's possession, Owner shall provide to the Manager details of the current 24-hour, seven day-a-week maintenance emergency system and any system designed to be responsive to emergencies (the "Emergency System"). Manager shall review or develop, as applicable, the Emergency System for each Property and shall submit such Emergency System to the Owner for the Owner's review and approval. An emergency is defined as any condition of, in or acting on a Property which if not responded to could injure or damage or impose a threat of injury or damage to property or persons. The definition of an emergency includes, without limitation, fire, flood, insufficient heat during winter weather, lack of hot water and utility shut offs. Following the review of the Emergency System for each Property submitted by the Manager, the Manager shall insure that all appropriate Property Staff and Non-Property Staff are familiar with the applicable Emergency System and shall undertake periodic reviews to insure that such Emergency System is being complied with.

(b) Readiness. In addition to such programs as may be required by applicable state or local law, rules or regulations, Manager shall establish, with the approval of the Owner, a comprehensive program ensuring that emergencies are dealt with by the Property Staff and outside agencies in a manner in the best interests of the Owner and the Properties and in compliance with applicable law. This responsibility shall include notification and testing procedures as may be necessary.

Section 4.09. Regulatory Requirements. Manager shall take such action as may be necessary to (a) obtain and maintain all licenses, permits and approvals necessary for the operation and maintenance of the Properties and (b) comply with all laws, ordinances, orders and requirements affecting each Property (or the Owner or Manager in connection therewith) imposed by any governmental or quasi-governmental authority having jurisdiction, including but not limited to building codes, anti-discrimination laws, zoning and licensing requirements

affecting the Property. Manager shall give the Owner prompt written notice of any violation or claimed violation of any such requirement.

Section 4.10. Inventory. Manager shall comply with and shall deliver such reports and other information as may be required pursuant to the inventory control system for all supplies and equipment used at each Property. The Manager and the Owner shall from time to time, at Owner's request, monitor the compliance by the Manager with the inventory control system and make such amendments or modification to such system as the Owner may deem reasonably necessary.

Section 4.11. Security. Manager shall consult with the Owner to plan, arrange and supervise a comprehensive security program for each Property. This program shall include, without limitation, that adequate communications equipment is operable and available to the Property Staff and all Property Staff are fully aware of their security responsibilities. Detailed security, fire and safety procedures shall be developed and distributed to the Owner, all tenants and the Property Staff. Manager shall maintain effective liaison with local fire and police organizations and keep detailed logs covering all security incidents. Manager shall promptly inform the Owner of all security incidents and other material matters prejudicial to the security and safety of any Property.

ARTICLE V

FINANCIAL MANAGEMENT

Section 5.01. Bank Account. Manager shall open and maintain, for each Property, in a local bank selected by the Owner, a checking account (the "Checking Account") for moneys to be paid or received by Manager in connection with its duties hereunder. The Checking Account shall be in the name determined by the Owner and the Owner shall pay all costs (if any) charged by the bank for maintaining the account including monthly service fees and the cost of blank checks; provided, however, that Manager shall pay all costs charged by the bank on account of Manager's errors or negligence in maintaining the Checking Account including, without limitation, the maintenance of any necessary cash reserve therein. Manager shall not deposit any of its funds to the Checking Account or otherwise commingle its funds with the Owner's funds. Manager shall have authority to endorse checks payable to the Owner and deposit funds paid or payable to the Owner into the Checking Account.

Section 5.02. Collections and Deposits. Manager shall collect and deposit in each Checking Account all rents, security deposits, late charges, insurance and condemnation proceeds, fees, refunds and other monies due from any source which are payable to the Owner in connection with the leasing and operation of the related Property; provided, however, that Manager shall deposit security deposits in bank accounts selected by and owned by Owner and shall otherwise handle security deposits in accordance with applicable law. All amounts deposited to the Checking Account shall be swept by the Manager from the Checking Account

on a regular basis into an Operating Expense Account (herein so called) for such Property. Each Operating Expense Account shall be in an FDIC insured bank approved by Owner and shall be owned by Owner. The style of the Operating Expense Account shall be in the name of the Property with designated representatives from Owner and Manager being the only parties authorized to draw from said accounts.

Section 5.03. Disbursements. On the 15th day of each calendar month or, if such day is not a business day, the immediately succeeding business day, the Manager shall deliver to the Owner a check representing all amounts in the Operating Expense Account (after allowing for outstanding checks written and deposits made pursuant to this Agreement which had not yet cleared such Operating Expense Account) in excess of the sum of (i) the amounts to be expended or disbursed by the Manager with respect to the Properties during such calendar month as set forth in the Budget; (ii) amounts expended in any prior month in excess of the amount specified in the Budget with respect to which the Manager has not yet been reimbursed and which have been approved in writing by the Owner; and (iii) a cushion equal to 5% of the aggregate amount to be expended in accordance with the Budget in the immediately succeeding month or such other amount as may be designated by the Owner. Manager shall pay out of the Operating Expense Account for each Property all operating expenses of such Property in accordance with the Budget for such Property, as permitted by this Agreement or as otherwise approved in writing by the Owner. Manager shall hold, remit or expend the funds in the Checking Accounts and Operating Expense Accounts according to the Budget or the directions of the Owner. The funds in the Checking Accounts and Operating Expense Accounts shall not be co-mingled with funds from any other projects or facilities managed or operated by Manager and Manager shall compile detailed records concerning all transactions relating to the Checking Accounts and Operating Expense Accounts and shall promptly deliver to Owner copies of all statements or other correspondence received by Manager with respect to such Checking Accounts and Operating Expense Accounts. Except in emergencies, Manager shall not incur any obligation in excess of $2,000 which is not specifically included in the Budget, and neither shall Manager incur any substantial overrun of any budgeted item without the Owner's prior written approval. Where an emergency relating to a Property precludes Manager's obtaining the prior written consent of the Owner, Manager shall make reasonable expenditures as necessary to abate the emergency and shall use its best efforts to contact the Owner by telephone or otherwise as soon as possible. Manager shall also notify the Owner in writing of any such emergency expenditures within 24 hours thereafter. Except as specifically authorized by the Owner, Manager will not incur any obligation (whether or not in the Budget) which will exceed $10,000 or mature more than one year after its creation. At least two but no more than three persons (including Property Staff) shall be responsible for handling cash in order to maintain adequate financial control procedures.

Section 5.04. Examinations and Audits of Accounts. The Checking Accounts, the Operating Expense Accounts and any other accounts maintained by Manager in the name of or for the benefit of the Owner may be examined by the Owner or its designated representatives during normal business hours. The Owner shall have the right to cause an audit of such accounts at any time at its expense and Manager shall make its facilities available for, and

cooperate in, any such audit. In addition, Manager shall promptly supply to the Owner's accountants, without charge therefor, all records or documents respecting any Property that such accountant may request in connection with audits of the Owner's accounts and preparation of necessary tax returns.

Section 5.05. Books and Records. Manager shall maintain, in a manner consistent with generally accepted accounting principles, a system of books and records that fully and accurately detail all financial transactions with respect to the leasing and operation of each Property. Such books and records shall be (a) the property of the Owner, (b) maintained at Manager's office at the Property or at the Manager's corporate office, (c) available to the Owner upon reasonable request and (d) delivered to the Owner upon the termination of this Agreement.

Section 5.06. Budget.

(a) Annual Operating and Capital Budget. The Budget shall serve as the major control under which Manager shall operate each Property and there shall be no substantial deviations therefrom, excluding deviations for such expenses as utilities, fuel, insurance and other expenses not within the control of Manager, except as may be approved in writing by the Owner. No expenses may be incurred and no commitments may be made by Manager in the name of the Owner in connection with the maintenance and operation of any Property in excess of the amounts allocated to the various classifications of expense in the Budget for that Property, except as otherwise provided herein.

(b) Budget Preparation. Manager shall prepare for the Owner's written approval operating and capital budgets for each Property addressing each of the items listed on Exhibit C attached hereto (with the Owner-approved budget in effect from time to time being herein called the "Budget"). Other than with respect to the budget for fiscal year 1997, Manager shall submit to the Owner, at least 45 days prior to the end of the Owner's fiscal year, a proposed budget for the next ensuing fiscal year. Manager shall within ninety days of the date of this Agreement submit a budget to the Owner for the period beginning on the date of this Agreement and ending immediately prior to the end of the Owner's fiscal year 1997. The proposed budget submitted by Manager shall include an analysis of repair and maintenance needs, operating expenses and any capital improvements anticipated for that period. Reserve fund requirements, adjusted for inflationary factors, shall also be included on an updated cost basis in the proposed budget. Reasonable supporting schedules shall be submitted with the proposed budget. The proposed budget will reflect a "three (3) year cycle" and will be based on actual income and expenses for the past completed year and projected income and expenses for the current year and for the future year for which the Budget is being prepared. Increases or decreases in actual or estimated amounts for income and expense items shall also be shown as percentage increases or decreases. The proposed budget also shall contain a forecast of cash flow for each month of the budget period, an assessment of personnel needs for operating the Property, a forecast of rental rates, an analysis of leases then in effect, and such other supplemental information as may be reasonably required by the

Owner. Following the review and approval of a budget by the Owner, the Manager shall implement such budget and perform in accordance therewith.

Section 5.07. Obligations for Expenses. All obligations and expenses incurred by Manager in accordance with this Agreement shall be deemed to be obligations and expenses of the Owner, the parties acknowledging that Manager may engage, at the Owner's expense, independent contractors and service providers as permitted under this Agreement, as may be usual and customary in the circumstances in connection with the performance of Manager's duties hereunder. The salaries and benefits of the Non-Property Staff of Manager shall be paid by the Manager from its own funds. Manager shall be reimbursed for any costs and expenses (other than those described in the immediately preceding sentence) related to a Property, including, without limitation, those for office supplies, postage, copying charges, telephone tolls, computer time, travel and entertainment. Such reimbursement shall be paid monthly from the Operating Expense Account and shall be limited to an amount equal to $60,000 during any consecutive twelve month period (or a pro rata amount for any period less than twelve months) (the "Maximum Reimbursement Amount"). The Maximum Reimbursement Amount shall be increased on August 31, 1997 and on each August 31 thereafter during the Term of this Agreement (a "Review Date") by the lesser of (i) the percentage change in the CPI during the twelve months immediately preceding such Review Date or (ii) 3%. For purposes of this Section, CPI means the Consumer Price Index for Urban Wage Earners and Clerical Workers, U.S. City Average (1967 = 100) Unadjusted, all items indexed published by the Bureau of Labor Statistics, United States Department of Labor (the "Department of Labor"). If the CPI shall cease to be compiled and published at any time before an adjustment is to be calculated on a Review Date, but a comparable successor index is compiled and published by the Department of Labor, the adjustments under this Section shall be computed according to such successor index, with such mutually agreed upon adjustments in the index to reflect any difference in the method of computation used in the CPI. If on any Review Date, neither the CPI nor a comparable successor index is available from the Department of Labor, the parties hereto shall mutually agree upon an index for "all items" compiled and published by another branch of the federal government or by an institution or organization generally recognized as an authority by financial and insurance institutions to be used as a basis for such calculations.

ARTICLE VI

MISCELLANEOUS

Section 6.01. No Partnership or Joint Venture. This Agreement is a management agreement only and does not grant to Manager any ownership right or interest in any of the Properties or any other property of the Owner pertaining thereto. This Agreement is not intended to and does not constitute a partnership or joint venture of any kind between the Owner and Manager with respect to the operation of the Properties or any other matter.

Section 6.02. Notices. Any notice that is provided for in this Agreement shall be in writing, shall be given either manually or by mail, telegram, radiogram or cable, and shall be deemed sufficiently given if and when received by the party to be notified at its address set forth below or if and when mailed by registered or certified mail, postage prepaid, addressed to such party at such address (any single notice given pursuant to this Section 6.02 to the address designated below for Manager shall be deemed as notice so given to both the Manager and Guarantor). Any party and any representative designated below may, by notice to the others, change its address for receiving such notices. Refusal to accept such notice or inability to deliver such notice on account of a change in address not given the other addressees shall be deemed receipt of notice.

If to the Owner or any affiliate:

ILM II Lease Corporation, c/o PaineWebber Properties Incorporated 265 Franklin Street, 16th Floor Boston, Massachusetts 02110 Attn: John B. Watts, III

with a copy to:

Hunton & Williams
951 E. Byrd Street
Richmond, Virginia 23219 Attn: Kenneth J. Alcott, Esq.

If to Manager or Guarantor:

Capital Senior Living Inc., and

Capital Senior Management 2, Inc. 14160 Dallas Parkway
Suite 300
Dallas, Texas 75240
Attn: Keith Johannessen and David Brickman

Section 6.03. Applicable Law. This Agreement shall be executed, construed and performed in accordance with the laws of the Commonwealth of Virginia.

Section 6.04. Successors and Assigns. This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns; provided, however, that Manager shall not assign its rights or delegate its duties hereunder to any party by operation of law, or otherwise, and no shares of stock in the Manager shall be transferred without the prior written consent of the Owner, which consent may be withheld in the Owner's

sole discretion. Notwithstanding the foregoing, Manager may, without Owner's consent, enter into a merger transaction with Capital Senior Living, Inc. or an affiliate or Capital Senior Living, Inc. or assign its rights and delegate its duties hereunder to Capital Senior Living, Inc. or an affiliate of Capital Senior Living, Inc., provided, however, that no such merger or assignment shall relieve the Manager or the Guarantor from any of its obligations under this Agreement. Any attempted assignment or delegation by Manager other than as permitted hereby shall be void and of no force or effect. The Owner shall be entitled, at any time during the Term and in its sole discretion, to assign its rights and benefits under this Agreement to any entity which is an affiliate of the Owner or of any shareholder thereof so long as such assignee assumes the Owner's obligations hereunder and agrees to be bound by the terms and conditions hereof.

Section 6.05. Confidentiality

(a) Confidential Information; Representatives. For purposes of this Section:

(i) The term "Confidential Information" shall be deemed to include all information concerning the Properties (including those Properties with respect to which this Agreement has been terminated) and the Owner (whether prepared by the Owner, its Representatives or otherwise and irrespective of the form of communication) which is furnished to the Manager or Representative of the Manager (collectively, the "Management Group") now or in the future by the Owner or by its Representatives or is developed by the Manager during the course of the performance of its duties hereunder, together with all notes, analyses, compilations, studies, interpretations or other documents prepared by any member of the Management Group which contain, reflect or are based upon, in whole or in part, the information furnished to any member of the Management Group pursuant hereto. The term "Confidential Information" does not include information which (1) is or becomes generally available to the public other than as a result of a disclosure in violation of this Agreement by any member of the Management Group, or (2) as shown by written records, was lawfully within the Management Group member's possession prior to its being furnished to the Management Group member by or on behalf of the Owner or developed by the Manager during the course of the performance of Manager's duties hereunder, provided that the source of such information was not known by such Management Group member to be bound by a confidentiality agreement with or other contractual, legal or fiduciary obligation of confidentiality to the Owner or any other party with respect to such information.

(ii) The term "Representatives" shall mean, collectively, and as applicable, a person's directors, officers, employees, affiliates (as such term is defined under the Securities Exchange Act of 1934, as amended), agents or advisors (including, without limitation, attorneys, accountants, consultants, bankers and financial advisors).

(b) Use of Confidential Information. The Manager hereby agrees that each member of the Management Group shall use the Confidential Information solely for the purpose of managing the Properties or otherwise performing or assisting the Manager in the performance of its obligations under this Agreement, that the Confidential Information will be kept confidential and that no member of the Management Group will use the Confidential Information for any other purpose or disclose any of the Confidential Information in any manner whatsoever; provided, however, that the Manager may make any disclosure of the Confidential Information to the extent that the Owner gives its prior written consent. It is understood and agreed that the Manager shall inform each member of the Management Group of the confidential nature of the Confidential Information prior to delivery thereof to such person, and of the obligation to not contact or communicate with the persons described above, and that by receiving such materials, such member of the Management Group will be deemed to have agreed to be bound by this Agreement. In any event, the Manager shall be responsible for any breach of this Agreement by the Manager or by any member of the Management Group, unless such Management Group member has signed a separate Confidentiality

Agreement with the Owner, and the Manager agrees, at the Manager's sole expense, to take all reasonable measures (including but not limited to court proceedings) to restrain any member of the Management Group from prohibited or unauthorized contacts or disclosure or use of the Confidential Information. Notwithstanding any other provision of this Agreement, the foregoing restriction shall continue in full force and effect throughout the Term and following the termination of this Agreement.

(c) Remedies of Owner. The Manager agrees that the Owner shall be entitled to equitable relief, including injunction and specific performance, in the event of any breach of the provisions of this Section and that the Manager shall not oppose the granting of such relief. The Manager also agrees that the Manager will not seek and agrees to waive (and will use the Manager's reasonable efforts to cause each Management Group member not to seek and to waive) any requirement for the securing or posting of a bond in connection with the Owner's seeking or obtaining such relief.

Section 6.06. Manager's Insignia. Except to the extent required by applicable state or local laws, rules and regulations or as may be approved in writing by the Owner, (i) the Manager shall not display signs, nameplates or other insignia at any Property disclosing the Manager's name, its corporate logo or any tradename or trademark (collectively, "Insignia") or identifying the Manager as the operator of a Property or otherwise and (ii) all advertising information, circulars, stationary or other printed materials used in the operations of or distributed by each of the Properties shall be in the name of and bear the corporate logo or other trademark of the Owner.

Section 6.07. Entire Agreement. This Agreement contains the entire agreement between the parties hereto with respect to the subject matter hereof and supersede all prior and contemporaneous negotiations, understandings and agreements, written or oral, between the parties. This Agreement shall not be amended or modified, and no waiver of any provision hereof shall be effective, unless set forth in a written instrument authorized and executed with the same formality as this Agreement.

Section 6.08. Captions, Gender, Number. The captions hereof are for convenience of reference only and shall neither limit nor enlarge the provisions hereof. All personal pronouns used herein, whether used in the masculine, feminine or neuter gender, shall include all other genders. The singular shall include the plural and vice versa unless the context requires otherwise.

Section 6.09. Severability. If any provision hereof, or the application thereof to any person or circumstance, shall to any extent be invalid or unenforceable, the remainder of the provisions hereof, or the application of such provision to other persons or circumstances, shall not be affected thereby, and each provision hereof shall be valid and enforceable to the fullest extent permitted by law.

Section 6.10. Days. If any action is required to be performed, or if any notice, consent or other communication is to be given, on a day that is a Saturday or Sunday or a legal holiday in the jurisdiction in which the action is required to be performed or in which is located the intended recipient of such notice, consent or other communication, such performance shall be deemed to be required, and such notice, consent or other communication shall be deemed to be given, on the first business day following such Saturday, Sunday or legal holiday. Unless otherwise specified herein, all references herein to a "day" or "days" shall refer to calendar days and not business days.

WITNESS the following signatures.

OWNER:

ILM I LEASE CORPORATION

By: /s/ JOHN B. WATTS
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    Title: President
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MANAGER:

CAPITAL SENIOR MANAGEMENT 2, INC.
a Texas corporation.

By: /s/ DAVID R. BRICKMAN
    --------------------------------------
    Title: Vice President
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GUARANTOR:

CAPITAL SENIOR LIVING, INC.
a Texas corporation.

By: /s/ DAVID R. BRICKMAN
    --------------------------------------
    Title: Vice President
           -------------------------------