<PAGE>
                                                                    EXHIBIT 10.1

                                LEASE AGREEMENT

                       EFFECTIVE AS OF DECEMBER 1, 1998

                           THE BOARD OF SUPERVISORS

                                      OF

                       CHOCTAW COUNTY, MISSISSIPPI, AND

                       THE BOARD OF TRUSTEES OF CHOCTAW

                  COUNTY MEDICAL CENTER, COLLECTIVELY LESSOR

                                      AND

             CENTENNIAL HEALTHCARE INVESTMENT CORPORATION, LESSEE
<PAGE>
 
                                ii


                           INDEX TO LEASE AGREEMENT

1.    Lease of Real and Chattel Property, Term...............................2
2.    Title to Demised Premises..............................................3
3.    Rent...................................................................3
4.    Taxes..................................................................3
5.    Repair and Replacement.................................................4
6.    Compliance with Laws...................................................6
7.    Alterations............................................................7
8.    Use of Demised Premises................................................7
9.    Protection Against Claims by Public....................................7
10.   Independence of Demised Premises.......................................8
11.   Mechanics' Liens.......................................................8
12.   Liability Insurance....................................................8
13.   Indemnity..............................................................10
14.   Hazard Insurance.......................................................10
15.   Fire and Other Casualty................................................12
16.   Condemnation...........................................................12
17.   Restoration after Fire or Condemnation.................................14
18.   Environmental Matters..................................................15
19.   Assignment and Subletting..............................................17
20.   Bankruptcy.............................................................18
21.   Access to Project; Books, Records, Accounts and Annual
      Reports................................................................19
22.   Default; Termination...................................................20
23.   Waiver of Rights of Redemption.........................................22
24.   Lessor's Right to Cure Lessee's Defaults...............................22
25.   Lessor Default.........................................................22
26.   Injunction.............................................................22
27.   No Merger..............................................................23
28.   Definition of "Lessor" and "Lessee"....................................23
29.   Quiet Enjoyment........................................................23
30.   Lessor's Right of Entry................................................23
31.   Estoppel Certificates..................................................23
32.   Rights Cumulative......................................................24
33.   Payments of Money, Interest............................................24
34.   Surrender, Obligations Upon Expiration or Termination..................24
35.   No Waiver..............................................................25
36.   Severability...........................................................26
37.   Benefit................................................................26
38.   Construction...........................................................26
39.   Entire Agreement; Written Modifications................................26
40.   Governing Law..........................................................26
41.   Captions...............................................................26
42.   Notices................................................................26
43.   Counterparts...........................................................27
44.   Costs of Enforcement...................................................27
45.   Agreement Regarding Lease..............................................27
46.   Cooperation............................................................28
47.   Additional Stipulations................................................28


<PAGE>
 
                                LEASE AGREEMENT

      THIS LEASE, effective as of the 1st day of December, 1998, by and between
THE BOARD OF COUNTY SUPERVISORS OF CHOCTAW COUNTY, MISSISSIPPI, a political
subdivision of the State of Mississippi authorized to acquire, own, lease and
dispose of properties for hospital and other healthcare purposes, having its
principal office and place of business, and its mailing address at Choctaw
County Courthouse, Ackerman, Mississippi 39735 (the "County") and THE BOARD OF
TRUSTEES OF CHOCTAW COUNTY MEDICAL CENTER, a political subdivision of the State
of Mississippi authorized on behalf of the County to administer its properties
for hospital and healthcare purposes, and to acquire, own, lease, and dispose of
same on behalf of the County (hereinafter referred to as the "Hospital



<PAGE>
 
Trustees") (the County and the Hospital Trustees are hereinafter referred to
collectively as the "Lessor," which term shall refer jointly and severally to
each of them), and CENTENNIAL HEALTHCARE INVESTMENT CORPORATION, a corporation
organized and existing under the laws of the State of Georgia, having its
principal office and place of business and its mailing address at 400 Perimeter
Center Terrace, Suite 650, Atlanta, Georgia 30346 (hereinafter referred to as
the "Lessee").

                             W I T N E S S E T H:

      WHEREAS, Lessor owns that certain rural hospital having a licensed bed
capacity of twenty-two (22) beds for acute-care patients, inclusive of a nine
(9) bed allotment for geriatric psychiatric inpatients (collectively "Licensed
Hospital Bed Capacity") (herein the "Hospital Facility") identified in Item I of
Exhibit A attached hereto and made a part hereof; and

      WHEREAS, Lessor also owns that certain skilled nursing facility which is
adjacent to the Hospital Facility and which has a licensed bed capacity of 68
beds for subacute and other nursing care patients (the "Licensed Nursing Home
Bed Capacity;" the Licensed Hospital Bed Capacity and the Licensed Nursing Home
Bed Capacity are herein collectively referred to as the "Licensed Bed Capacity")
(the "Nursing Home") identified in Item II of Exhibit A attached hereto and made
a part hereof (the Hospital Facility and the Nursing Home are herein referred to
collectively as the "Facility"); and

      WHEREAS, Lessor also owns or operates three (3) rural health clinics, one
of which is located on-site at the Hospital Facility in Ackerman, Mississippi,
one of which is located in Ware, Mississippi, and one of which is located off-
site in Ackerman, Mississippi (collectively, the "Clinics"), all as identified
in Item III of Exhibit A;

      WHEREAS, Lessor desires to lease to Lessee, and Lessee desires to lease
from Lessor, the real and chattel property of the Facility and the Clinics;

      WHEREAS, Lessor also desires that Lessee assume certain obligations and
arrangements made by Lessor to provide Choctaw County Residents with emergency
ambulance services (the "Ambulance Services Contract") as identified more
particularly in Item IV of Exhibit A attached hereto and made a part hereof;

      NOW, THEREFORE, in consideration of the premises and of their mutual
undertakings, the parties hereto agree as follows:

1. Lease of Real and Chattel Property, Term. Lessor, in consideration of the
rents hereinafter reserved, and the terms, covenants, conditions and agreements
set forth herein to be kept and performed by Lessee, does hereby agree to demise
and let unto Lessee and Lessee, subject to and in reliance on the conditions,
terms, covenants, warranties and representations of Lessor contained herein,
does hereby agree to hire and take from Lessor, the following described assets,
rights, interests and other properties owned by Lessor and relating to the
Facility (herein the "Demised Premises"):

(a)   Land: The parcel or parcels of land more particularly described in Item 2
      of Exhibit B attached hereto and made a part hereof (herein the "Owned
      Parcels") together with such tracts or parcels of improved or unimproved
      land or portions


<PAGE>
 
      thereof leased or rented by Lessor in connection with the ownership
      operation, or use of the Facility or the Clinics (the "Leased Parcels"
      pursuant to leases described in Exhibit C attached hereto and made a part
      hereof (the Owned Parcels and Leased Parcels are collectively referred to
      as the "Parcels");

(b)   Improvements: All buildings, structures, fixtures and improvements erected
      or located on the Parcels, or affixed thereto (herein the "Improvements");

(c)   Appurtenances: All tenements, hereditaments, rights, privileges,
      interests, easements and appurtenances belonging or in any wise pertaining
      to the Parcels and/or the Improvements (the Parcels, the Improvements and
      the aforesaid appurtenances thereto being herein referred to collectively
      as the "Real Property"); and

(d)   Tangible Personal Property: All machinery and equipment, building
      materials, appliances, apparatus, motor vehicles, furniture, furnishings,
      fixtures, tools, instruments, parts, and other tangible personal property
      of every kind or nature whatsoever, owned, being purchased on contract or
      being leased by Lessor as of the date hereof, and located at or relating
      to the Facility, including inventories (collectively herein the "Personal
      Property"); such tangible personal property on the effective date hereof
      shall include, but not be limited to, any and all items identified in the
      attached Exhibit D which is made a part hereof and incorporated herein by
      reference.

      TO HAVE AND TO HOLD the Demised Premises unto Lessee, its successors and
permitted assigns, upon and subject to all of the terms, covenants, conditions,
conditional limitations and agreements herein contained, for a term commencing
as of December 1, 1998 (herein the "Commencement Date") and expiring on the last
day of the sixtieth (60th) full calendar month following the Commencement Date,
to wit: November 30, 2003 (herein the "Term"), or until said term is sooner
terminated pursuant to any of the conditional limitations or other provisions
hereof; provided, however, that Lessee shall have the right to extend the Term
of this Lease for three (3) successive extension terms of five (5) years each
(the "Extension Terms") by giving Lessor written notice thereof not less than
ninety (90) days prior to the expiration of the Term (or any prior Extension
Term). Such Extension Terms shall be upon the same rental and other terms and
conditions as are set forth in this Lease as applicable to the Initial Term of
this Lease.

      Notwithstanding the designation of December 1, 1998 as the Commencement
Date, the term shall not take effect as of such date unless and until all
conditions to Lessee's obligations as set forth herein and in that certain
"General Agreement" more particularly described in Paragraph 45 of this Lease
between Lessor and Lessee dated, providing contractually for the terms and
conditions upon which Lessor and Lessee have agreed to proceed in connection
with this Lease, have been satisfied or waived by Lessee.

      For purposes of this Lease, the term "Lease Year" means a period of one
(1) year commencing on the Commencement Date or the annual anniversary date
<PAGE>
 
thereof.

2. Title to Demised Premises. The Demised Premises shall be demised and let by
Lessor unto Lessee free and clear of any and all liens, leases, mortgages,
pledges, security interests, conditional sale agreements, charges, claims,
options, and other encumbrances of any kind or nature whatsoever (collectively
"Encumbrances"), except the following (collectively the "Permitted
Encumbrances"):

(a)   Zoning Laws: The provisions of all applicable zoning laws;

(b)   Taxes:  The liens of current real estate and personal  property  taxes not
      delinquent.

      Lessor warrants and will forever defend the right and title to the Demised
Premises unto Lessee against the claims of all persons whomsoever, except for
claims arising under and by virtue of the Permitted Encumbrances.

3. Rent. Lessee shall pay to Lessor rent for the Demised Premises (herein
"Rent") an annual amount of TWO HUNDRED FOUR THOUSAND FIVE HUNDRED FORTY AND
NO/100 DOLLARS ($204,540.00), in equal monthly installments of SEVENTEEN
THOUSAND FORTY-FIVE AND NO/100 DOLLARS ($17,045.00) in advance on the first
(1st) day of each calendar month during the term hereof; provided, however, that
if the term hereof commences on a day other than the first day of a calendar
month or is terminated on a day other than the last day of a calendar month,
then the Rent for such partial month shall be prorated on the basis of the
number of days included in the Term of this Lease.

4. Taxes. Lessee shall, at its cost and expense, bear, pay and discharge, on or
before the last day upon which the same may be paid without interest or penalty
for late payment thereof, all taxes, assessments, sewer rents, water rents and
charges, duties, impositions, license and permit fees, charges for public
utilities of any kind, payments and other charges of every kind or nature
whatsoever, ordinary or extraordinary, foreseen or unforeseen, general or
special (collectively herein "Impositions"), which shall, pursuant to present or
future law or otherwise, prior to or during the term hereof, have been or be
levied, charged, assessed or imposed upon, or grow or become due and payable out
of or for, or become or have become a lien on, the Demised Premises or any part
thereof, or the rents and income received by Lessor hereunder or received by
Lessee from any permitted subtenants of the Demised Premises or of any part
thereof, or any use or occupation of the Demised Premises. Lessee shall also
bear, pay and discharge any and all income taxes assessed against Lessee, any
franchise, estate, succession, inheritance or transfer taxes of Lessor, or any
tax or charge in replacement or substitution of the foregoing or of a similar
character.

      Lessor shall cause the Demised Premises to be assessed and taxed separate
and apart from all other premises.

      Lessee shall pay all interest and penalties  imposed upon the late payment
of any Imposition which Lessee is obligated to pay hereunder.

      Lessee may take the  benefit of the  provisions  of any law or  regulation
permitting any Imposition to be paid in installments.

      If Lessee shall fail, for ten (10) days after notice and demand given to
Lessee, to pay any Imposition on or before the last day upon which the same may
<PAGE>
 
be paid without the imposition of interest or penalties for the late payment
thereof, then Lessor may pay the same with all interest and penalties lawfully
imposed upon the late payment thereof, and the amounts so paid by Lessor shall
thereupon be and become immediately due and payable by Lessee to Lessor
hereunder as additional Rent payable under this Lease.

      So long as Lessee is not in default hereunder, Lessee, at its own cost and
expense may, if it shall in good faith so desire, contest the validity or amount
of any Imposition, in which event Lessee may, if permitted by applicable law,
defer the payment thereof for such period as such contest shall be prosecuted
actively and shall be pending undetermined; provided, however, that no provision
hereof shall be construed so as to require Lessee to allow any such item so
contested or intended to be contested to remain unpaid for such length of time
as shall permit the Demised Premises, or the lien thereon created by such item
to be contested, to be sold by federal, state, county or municipal authority for
the nonpayment thereof.

      An official certificate or statement issued or given by any sovereign or
municipal authority, or any agency thereof, or any public utility, showing the
existence of any Imposition, or interest or penalties thereon, the payment of
which is the obligation of Lessee as herein provided, shall be prima facie
evidence for all purposes hereof of the existence, amount and validity of such
Imposition.

5. Repair and Replacement. Lessee acknowledges that Lessor has made no
representation whatsoever regarding the physical condition of the Demised
Premises except those contained in this Agreement, and that Lessee freely
accepts the Demised Premises in their present "as is" condition, subject,
however, to any "punchlist" repairs or replacement items identified by Lessee's
inspection of the Demised Premises, any latent or concealed conditions and any
respects in which the Demised Premises fails to comply with all laws, rules,
orders, ordinances, regulations, and requirements, including, without
limitation, applicable health, building, fire and life safety codes and
ordinances, now or hereafter enacted or promulgated by any government or
municipality having jurisdiction over the Demised Premises, or Lessee's
operations of the Facilities as licensed health care facilities (the
"Governmental Requirements"). Lessor shall provide Lessee with reasonable access
to the Demised Premises at all times prior to the Commencement Date to
facilitate Lessee's inspection and shall cooperate with and assist Lessee in the
testing and evaluation of the operating condition of building systems, equipment
and similar items. Lessor shall keep landscaped areas in good condition. Subject
to the terms of this Paragraph 5, Lessee shall at all times during the Term
(including any renewals or extensions thereof), at its own cost and expense,
make such ordinary, non-structural repairs to be Demised Premises as may be
required to keep the Demised Premises (other than the Personal Property) in good
and reasonable operating condition and repair. Notwithstanding the foregoing,
however, Lessee's liability and total aggregate expenditures for "Major Repairs"
to the Demised Premises (inclusion of repairs and replacements of Personal
Property) over the initial Term of the Lease shall not exceed the sum of Two
Hundred Thousand and No/100 Dollars ($200,000.00); provided further that Lessor
shall provide the next $200,000.00 needed for Major Repairs during the initial
Term and thereafter Lessor and Lessee shall share equally in the cost and
expenses of Major Repairs during the initial Term. As used herein the term
"Major Repairs" shall mean and refer to a repair or replacement which is not
covered by insurance and for which the total cost is greater than or equal to
$25,000.00. In the event Lessor fails to provide its share of costs for Major
Repairs during the initial Term, Lessee shall have the right (in addition to any


<PAGE>
 
other rights and remedies at law or in equity) to fund such Major Repairs and
offset such expenditures against rental amounts becoming due under this Lease,
until Lessee shall have been fully reimbursed for amounts advanced on Lessor's
behalf. Following the initial Term, each Renewal Term shall be subject to the
same threshold limitations and cost-sharing arrangements as are applicable
during the initial Term. Lessor shall make, at its sole cost and expense, all
other or additional repairs or replacements to the Demised Premises as may be
required to place, keep and maintain the Demised Premises (i) in good and
reasonable operating condition and repair and (ii) in compliance with applicable
Government Requirements.

      Lessee acknowledges that the items of Personal Property listed on Exhibit
D attached hereto are the property of Lessor and that Lessee has only the right
to the exclusive possession and use thereof as provided herein. Notwithstanding
any contrary provision set forth herein, Lessee shall keep all of the aforesaid
items of Personal Property in as good working order and condition as existed on
the Commencement Date, and at the expiration of the Term of this Lease shall
return and deliver all of such Personal Property to Lessor in as good order and
condition as when received hereunder, reasonable wear and tear and damage by
Acts of God or insurable peril excepted; provided, that Lessee agrees, if
necessary for the proper operation of the Demised Premises, or to comply with or
maintain all pertinent licensure, certification, insurance policy or other legal
requirements and otherwise in accordance with customary practice in the
industry, that Lessee shall replace all items of Personal Property which may be
damaged or destroyed through no fault or neglect of Lessor or which may become
worn out or obsolete during the Term of this Lease with new items of Personal
Property (i.e., the "New Personal Property"), and such New Personal Property and
replacements thereof shall be the property of and owned by Lessor, subject to
the terms and provisions of this Lease. Upon expiration or termination of this
Lease, all Personal Property and New Personal Property shall become the property
of Lessor, if not already owned by Lessor, and Lessee shall execute all
documents and take any actions reasonably necessary to evidence such ownership.

      All maintenance and repair work undertaken by Lessee shall be done in a
workmanlike manner, leaving the Demised Premises free of liens for labor and
materials. It is the intent of the parties hereto that the Demised Premises be
maintained at all times and returned upon the termination or expiration of this
Agreement in a condition equal to that at the time of execution of this
Agreement, reasonable wear and tear excepted. Lessee hereby grants to Lessor the
right to inspect and access to the Demised Premises at all reasonable times;
provided, however, that Lessor shall have no duty to conduct any inspections
unless requested to do so by Lessee.

6. Compliance with Laws. Lessor and Lessee mutually covenant and agree, Lessee
as to its manner of use of the Demised Premises and its repair obligations as
set forth in this Lease, and Lessor as to the condition of the Demised Premises,
its repair obligations and all other matters not related to the Lessee's
operation of the Facility, to substantially perform and comply with Governmental
Requirements now or hereafter enacted or promulgated, of every government or
municipality having jurisdiction over the Demised Premises, Lessee's operation
of the Facility as a licensed health care facility, and the franchises and
privileges connected therewith, whether or not such Governmental Requirements so
involved shall necessitate structural changes, improvements, interference with
use and enjoyment of the Demised Premises, replacements or repairs,
extraordinary or ordinary, and Lessor or Lessee, as the particular circumstances
may warrant, shall so perform and comply whether or not such Governmental
Requirements shall now exist or shall hereafter be enacted or promulgated, and

<PAGE>
 
whether or not such Governmental Requirements are within the present
contemplation of the parties hereto.

      Each party shall have the right, provided it does so with due diligence
and dispatch, to contest by appropriate legal proceedings, without cost or
expense to the other party, the validity of any Governmental Requirements of the
nature referred to above. The party contesting such Governmental Requirement may
postpone compliance with such law, rule, order, ordinance, regulation or
requirement until the final determination of such proceedings so long as such
postponement of compliance will not subject the Demised Premises to an
encumbrance or the other party to any criminal prosecution. No provision hereof
shall be construed so as to permit a party to postpone compliance with any
Governmental Requirements if any sovereign, municipal or other governmental
authority shall threaten to carry out or comply with the same or to foreclose or
sell any lien affecting all or any part of the Demised Premises that shall have
arisen by reason of such postponement or failure of compliance. If requested by
the other party, the party contesting such Governmental Requirement shall post a
bond or other adequate security for the costs of compliance and any monetary
fines, penalties, damages or other liabilities which might be imposed, in
Lessor's sole judgment, in connection with such contest.

      Notwithstanding any other provision of this Agreement to the contrary,
each party shall inform the other party immediately by telephone, telecopy or
telegraph of any action taken, commenced or instituted by any state or federal
authority having jurisdiction over the Demised Premises as a health care
facility to terminate or revoke any license certification of such party. Such
notice shall be given to Lessor at the address or telephone number set forth in
Paragraph 42 herein.

7. Alterations. Except as may be required of Lessee by Paragraphs 5 and 6 above,
Lessee shall not make any alterations or additions to the Demised Premises
without Lessor's written prior approval, which approval may not be unreasonably
withheld. Lessor shall not withhold written consent to minor alterations or
additions or alterations or additions necessary in the reasonable opinion of
Lessee to comply with applicable Governmental Requirements (including, without
limitation, any conditions to a certification of need or exemption therefrom
applicable to the Facility), to maintain or expand existing services to
patients, to maintain licensure, or to maintain certification under the Medicaid
or Medicare or any other public or private program now or hereafter applicable
to the Demised Premises. Nothing herein shall be deemed to obligate Lessee to
make alterations or additions constituting repairs or replacements required to
be made by Lessor pursuant to Paragraphs 5 and 6, provided, however, that if
Lessor fails to perform its repairs and replacement obligation, Lessee shall
have the right to do so at Lessor's expense and to offset the reasonable cost
thereof against Rental or other sums due under this Lease.

8. Use of Demised Premises. Lessee may use the Demised Premises for healthcare
and related purposes. Lessee shall not commit, or allow to be committed, any
waste upon the Demised Premises, or any public or private nuisance. Lessee shall
not use or keep or allow the Demised Premises or any portion thereof to be used
or occupied for any unlawful purpose and shall not suffer any act to be done or
any condition to exist within the Demised Premises or any portion thereof, or
knowingly permit any article to be brought therein, which may be dangerous,
unless safeguarded as required by law, or which may make void or voidable any
insurance in force with respect thereto.

9. Protection Against Claims by Public. During such period or periods of the


<PAGE>
 
term hereof as any portion of the Parcels shall be unenclosed by any walled
structure, fence or gate, such portion shall be subject to such reasonable
directions as Lessor may from time to time make or give to Lessee with respect
to the maintenance and use thereof, for the purpose of Lessor's protection
against possible claims of the public, as such. Lessee hereby acknowledges that
Lessor does not hereby consent, expressly or by implication, to the unrestricted
use or possession of the whole or any portion of the Demised Premises by the
public, as such, and Lessee covenants and agrees that all such reasonable
directions so given shall be deemed to be and become incorporated herein by
reference and shall be fully and promptly performed and enforced by Lessee at
its cost and expense. Lessor hereby warrants and represents to Lessee that the
Demised Premises complies with all zoning and land use requirements, including,
without limitation, parking, drainage, and utility requirements.

10. Independence of Demised Premises. Lessee shall not by act or omission permit
any building or other improvement on premises not demised hereunder to rely on
the Real Property or any part thereof or any interest therein to fulfill any
municipal or governmental requirement, including without limitation,
requirements for offsite parking, drainage and utilities, and Lessee shall not
take any action which shall cause an Improvement to rely on any premises not
demised hereunder or any interest therein to fulfill any governmental or
municipal requirement. Lessee shall not by act or omission impair the integrity
of the Demised Premises as units separate and apart from all other premises. Any
act or omission by Lessee which would result in a violation of any of the
provisions of this Paragraph shall be void.

11. Mechanics' Liens. Notice is hereby given that Lessor shall not be liable for
any work performed or to be performed on the Demised Premises for Lessee or any
subtenant, or for any materials furnished or to be furnished at the Demised
Premises for Lessee or any subtenant, and that no mechanic's or other lien for
such work or materials shall attach to the reversionary or other interest of
Lessor. If, in connection with any work being performed by Lessee or any
subtenant, or in connection with any materials being furnished to Lessee or any
subtenant, any mechanics or other lien or charge shall be filed or made against
the Demised Premises or any part thereof, or if any such lien or charge shall be
filed or made against Lessor as owner, then Lessee, at its cost and expense,
within thirty (30) days after such lien or charge shall have been filed or made,
shall cause the same to be canceled and discharged of record by payment thereof
or filing a bond or otherwise, and shall also defend any action, suit or
proceeding which may be brought for the enforcement of such lien or charge, and
shall pay any damages, costs and expenses, including reasonable attorneys' fees,
suffered or incurred thereby by Lessor, and shall satisfy and discharge any
judgment entered therein within thirty (30) days from the entering of such
judgment by payment thereof, or by filing of a bond, or by furnishing to Lessor
an unconditional letter of credit issued by a bank and in an amount reasonably
acceptable to Lessor, or otherwise. In the event of the failure of Lessee to
discharge within such thirty (30) day period any lien, charge or judgment herein
required to be paid or discharged by Lessee, Lessor may pay such item or
discharge such liability by payment or bond or both, and Lessee shall repay to
Lessor, upon demand, any and all amounts paid by Lessor therefor, or by reason
of any liability on any such bond, and also any and all incidental expenses,
including reasonable attorneys' fees, incurred by Lessor in connection
therewith.

12. Liability Insurance. At all times during the term hereof, Lessee shall, at
its own cost and expense, provide and keep in force policies as follows:


<PAGE>
 
(a)   Comprehensive general public liability insurance including, without
      limitation upon the generality of the provisions of this Paragraph,
      elevator and boiler risks, protecting Lessor and Lessee against accident
      or disaster in or about the Demised Premises with limits not less than
      Three Million Dollars ($3,000,000.00) combined single limit for bodily
      injury (including death) and One Million Dollars ($1,000,000.00) for
      property damage;

(b)   Comprehensive automobile liability insurance, with limits not less than
      One Million Dollars ($1,000,000.00);

(c)   Professional liability insurance, with limits not less than Three Million
      Dollars ($3,000,000.00); and

(d)   Workers' compensation insurance, with limits not less than those required
      by law.

Certificates evidencing all such policies of insurance shall be delivered to
Lessor. Such policies of insurance, as well as any policies of insurance to be
obtained by Lessee pursuant to Paragraphs 13 and 14 hereof, shall be issued by
companies having a Best's rating of "A-1" or better. Such insurance coverage, as
well as any insurance to be obtained by Lessee pursuant to Paragraphs 13 and 14
hereof, may be effected pursuant to a combination of primary and excess coverage
insurance policies. Such insurance coverages may also be effected pursuant to
blanket coverage insurance policies which cover losses in addition to those
required to be insured against hereunder.

      If at any time Lessee shall neglect or fail, for fifteen (15) days after
notice and demand given to Lessee, so to provide and keep in force insurance
policies as aforesaid, or indemnity insurance policies pursuant to Paragraph 13
hereof or fire or other casualty insurance policies pursuant to Paragraph 14
hereof, or so to deliver to Lessor certificates evidencing any of such policies
of insurance, as required by the provisions hereof, Lessor may effect such
insurance as the agent of Lessee, by taking out a policy or policies in a
company or companies satisfactory to Lessor, running for a period not exceeding
one (1) year under any one (1) policy; and the amount of premium paid for such
insurance by Lessor shall be paid by Lessee to Lessor upon demand; and Lessor
shall not be limited in the proof of any damages which Lessor may claim against
Lessee arising out of or by reason of Lessee's failure to provide and keep in
force general liability insurance policies as aforesaid to the amount of the
insurance premium not paid or incurred by Lessee which would have been payable
upon such insurance, but shall also be entitled to recover as damages for such
breach the uninsured amount of any loss, liability, damage, claim, costs and
expenses of suit, judgment and interest suffered or incurred by Lessor.

      Lessee agrees that any insurance coverage required of it pursuant to this
Lease shall also be subject to the following terms and conditions:

      (a)  Insurance coverage shall be occurrence based. The Lessor, at its sole
           discretion, may approve liability policies issued on a "claims made"
           basis provided that, in Lessor's sole opinion, there is sufficient
           "tail" coverage;

      (b)  The Lessee shall furnish to Lessor copies of all policies of
           insurance required by this Lease which shall be delivered to the
           Lessor no later than each such policy's renewal date;

<PAGE>
 
      (c)  The Lessor,  or its  successors  and assigns,  as their  interest may
           appear shall be listed as an additional  insured on the liability and
           indemnity policies required by Paragraph 12 and 13 of this Lease.

13. Indemnity. Lessor and Lessee mutually agree to the following indemnification
provisions. Lessor or Lessee, as the case may be (herein the "Indemnitor"),
hereby agrees to indemnify and save harmless the other party (herein the
"Indemnitee") from and against any and all liability, claims, loss, damages,
expenses, costs of action, suits, interest, fines, penalties, claims and
judgments (to the extent that the same are not paid out of the proceeds of any
policy of insurance furnished by the Indemnitor to the Indemnitee pursuant to
this Lease) arising out of Indemnitor's failure to perform, fully and promptly,
or Indemnitor's postponement of compliance with, each and every term, covenant,
condition and agreement herein provided to be performed by Indemnitor, or
arising out of Indemnitor's negligence or willful misconduct, excepting
liability of Indemnitee for Indemnitee's negligence and willful misconduct.
Except as hereinbefore provided, Indemnitor, at its own cost and expense, will
defend by counsel reasonably acceptable to Indemnitee, any and all suits that
may be brought, and claims which may be made, against Indemnitee, or in which
Indemnitee may be impleaded with others, whether Indemnitee shall be liable or
not, in respect of any such injury or claim of injury during the Term hereof
growing out of the occupation, possession, use, management, alteration, repair,
maintenance or control of the Demised Premises, and Indemnitor shall satisfy,
pay and discharge any and all judgments that may be recovered against Indemnitee
in any such action in which Indemnitee may be a party defendant, or that may be
filed against the Demised Premises or any interest therein, and in the event of
the failure of Indemnitor, for ten (10) days after notice and demand given to
Indemnitor, to pay any such sum for which Indemnitor shall become liable as
aforesaid, then Indemnitee may pay such sum, with all interest and charges which
may have accrued thereon, and the amount so paid by Indemnitee shall be payable
by Indemnitor to Indemnitee upon demand.

      At all times during the term hereof, Indemnitor shall, at its own cost and
expense, provide and keep in force a policy or policies of insurance (which may
be effected by blanket coverage insurance as provided in Paragraph 12 hereof)
insuring Indemnitor against all liability of Indemnitor under this Paragraph 13.
Certificates evidencing all such policies of insurance shall be delivered to
Indemnitee. If at any time or times Indemnitor shall neglect or fail, for five
(5) days after notice and demand given to Indemnitor, so to provide and keep in
force insurance policies as aforesaid, or so to deliver to Indemnitee
certificates evidencing any of such policies of insurance, as required by the
provisions hereof, Indemnitee shall have all rights set forth in Paragraph 12
hereof.

14. Hazard Insurance. At all times during the term hereof, Lessee shall, at its
own cost and expense, keep:

(a)   The Demised Premises (including, without limitation, the Personal
      Property) insured against loss or damage by fire, lightning, windstorm,
      hail, explosion, riot, damage from aircraft, smoke damage, sprinkler
      leakage damage, war damage (when available) and such other insurance
      risks, casualties and hazards as are insured against by owners of
      comparable premises in an amount equal to one hundred percent (100%) of
      the replacement cost thereof or $2,500,000.00, whichever is less, said
      replacement cost to be determined, on Lessee's


<PAGE>
 
      request not more frequently than at annual intervals, by one or more of
      the insurers, or by an architect, contractor, appraiser or appraisal
      company selected by Lessee. Any of the Demised Premises located in special
      flood hazard areas shall be insured against loss or damage by flood, in an
      amount equal to the maximum amount of insurance obtainable under the
      federal flood insurance program; and

(b)   The net rental value of the Demised Premises insured against loss or
      damage by fire, lightning, windstorm, hail, explosion, riot, damage from
      aircraft, smoke damage, war damage (when available) and such other
      insurance risks, casualties and hazards as are insured against by owners
      of comparable premises, in an amount equal to the sum of the following
      amounts: (i) all Rent payable by Lessee under Paragraph 3 hereof for the
      ensuing six (6) month period, plus (ii) all Impositions payable by Lessee
      under Paragraph 4 hereof for the ensuing six (6) month period (if the
      amount of any such Imposition shall not have been fixed, then the same may
      be estimated based upon the tax rate for the preceding period and/or upon
      such other factors as are relevant, plus (iii) the cost of obtaining, for
      a one (1) year period, all insurance then required to be maintained by
      Lessor hereunder.

      All insurance to be furnished by Lessee under this Paragraph 14 shall be
by policies which shall name as insureds Lessee, Lessor and any fee or leasehold
mortgagee, as their interests may appear, shall provide a minimum cancellation
provision of sixty (60) days after notice to all parties, shall not contain a
deductible in excess of $________, and shall provide that the loss, if any,
shall be payable to Lessor and Lessee, as their interests may appear, subject to
the rights of any Fee Mortgage. Such policies may be blanket coverage insurance
policies as provided in Paragraph 12 hereof. Certificates evidencing all such
policies of insurance shall be delivered to Lessee.

      If at any time Lessee shall, for fifteen (15) days after notice and demand
given by Lessor, neglect to insure the Demised Premises and rental value as
aforesaid, or to deliver such certificates of insurance as aforesaid, Lessor
shall have all of the rights conferred upon Lessor set forth in Paragraph 12
hereof, relating to Lessor's right to obtain liability insurance upon a failure
by Lessee to maintain such coverage.

      Lessee shall comply with the terms of each insurance policy required by
the terms hereof to be furnished by Lessee.

      Lessor and Lessee expressly waive any and all rights and claims as against
each other for losses and damages to the extent that such losses and damages are
covered by insurance, provided that such waiver is not prohibited by the terms
of the applicable insurance policies.

15. Fire and Other Casualty. If any Improvement or any Personal Property shall
be damaged or destroyed by fire or other casualty, then, irrespective of the
cause and whether or not such damage or destruction shall have been insured,
Lessee shall give prompt written notice thereof to Lessor, and Lessor shall
proceed with reasonable diligence to carry out any necessary demolition and to
restore, repair, replace and rebuild such Improvements or Personal Property at
Lessor's own cost and expense; provided, however, that insurance proceeds shall


<PAGE>
 
be made available for such restoration and rebuilding. If, as a result of the
actions of any Fee Mortgagee or otherwise, insurance proceeds are not made
available to the Lessor, and if the Lessor is unable after reasonable diligent
efforts to secure and provide replacement funds, the Lessee shall have the right
to terminate this Lease without further liability on the part of Lessee or
Lessor unless the unavailability of such insurance proceeds is the result of
Lessor's acts or omissions. If at any time Lessor shall fail or neglect to
supply sufficient workmen or sufficient materials of proper quality, or fail in
any other respect to prosecute such work of demolition, restoration, repair,
replacement or rebuilding with diligence and promptness, then Lessee may give
Lessor notice of such failure or neglect, and, if such failure or neglect
continues for twenty (20) days after such notice, then Lessee, in addition to
all other rights which Lessee may have, including, without limitation, the right
to cancel and terminate this Lease, may enter upon the Demised Premises, provide
labor and/or materials, cause the performance of any contract, and/or do such
other acts and things as Lessee may deem advisable to prosecute such work. All
costs and expenses incurred by Lessee in carrying out such work shall be borne
by Lessor and shall be payable by Lessor to Lessee upon demand, which demand may
be made by Lessee from time to time as such costs and expenses are incurred, in
addition to any and all damages to which Lessee shall be entitled hereunder.

      Rent shall abate hereunder as of the date of damage or destruction in
proportion to the percentage of the Demised Premises thereby rendered unusable
(in Lessee's sole opinion). Lessor shall in such event look solely to proceeds
of its insurance (including its loss of rents coverage). Any proceeds of loss of
rents insurance received by Lessor by reason of such damage or destruction shall
be applied by Lessor to the payment of Rent which would otherwise be due from
Lessee under Paragraph 3 hereof, Impositions payable by Lessee under Paragraph 4
hereof and premiums for any insurance required to be maintained by Lessee
hereunder. In the event rent insurance proceeds received by Lessor are
insufficient to pay the same or for any reason such rent insurance proceeds are
not actually applied by Lessor to the payment of such amounts, Lessor shall
nevertheless have no claim against Lessee for Rental abated hereunder.

16.   Condemnation.

(a)   Entire Condemnation. If at any time during the Term (including renewals or
      extensions of this Lease) all or substantially all of the Demised Premises
      shall be taken in the exercise of the power of eminent domain by any
      sovereign, municipality or other public or private authority, then this
      Lease shall terminate on the date of taking of possession by such
      authority. Substantially all of the Demised Premises shall be deemed to
      have been taken if the remaining Improvements cannot feasibly be repaired
      and restored so that they shall constitute a complete structural unit or
      units which can be operated as a health care facility on an economically
      feasible basis under the provisions hereof. The award or awards for any
      such taking of all or substantially all of the Parcel and the Improvements
      shall be paid to the Lessor and Lessee, as their interests may appear.

(b)   Partial Condemnation. If less than all or substantially all of the Demised
      Premises shall be taken in the exercise of

<PAGE>
 
      the power of eminent domain by any sovereign, municipality or other public
      or private authority, then this Lease shall continue in force and effect
      and Lessor shall proceed with reasonable diligence to carry out any
      necessary repair and restoration so that the remaining Improvements shall
      constitute a complete structural unit or units which can be operated as a
      health care facility on an economically feasible basis under the
      provisions hereof. If Lessor shall fail or neglect to supply sufficient
      workmen or sufficient materials of proper quality, or shall fail in any
      other respect to prosecute such work of repair or restoration with
      diligence and promptness, then Lessee may give Lessor written notice of
      such failure or neglect, and, if such failure or neglect continues for
      twenty (20) days after such notice, then Lessee, in addition to all rights
      which Lessee may have, including, without limitation, the right to cancel
      and terminate this Lease, may enter upon the Demised Premises, provide
      labor and/or materials, cause the performance of any contract, and/or do
      such other acts and things as Lessee may deem advisable to prosecute such
      work. All costs and expenses incurred by Lessee in carrying out such work
      shall be borne by Lessor and shall be payable by Lessor to Lessee upon
      demand, which demand may be made by Lessee from time to time as such costs
      and expenses are incurred, in addition to any and all damages to which
      Lessee may be entitled hereunder.

           The award(s) for any such partial taking shall be paid to Lessor or
      Lessee, as their interests may appear; provided, however, that Lessor
      shall be excused from obligation to repair and restore the Improvements if
      Lessee shall fail to make any such award available to Lessor to pay the
      cost of the repair and restoration work required of Lessor hereunder.

           The Rent shall, as of the date of taking of possession by such
      authority, be decreased by an amount equal to that proportion of such Rent
      which the value of that portion so taken has to the value of the Demised
      Premises immediately prior to such taking.

           In the event that, by reason of subordination of this Lease to any
      Fee Mortgage, any such award for any such taking is not paid or made
      available for restoration of the Improvements as hereinbefore provided,
      then Lessee, at Lessee's option, may elect to terminate this Lease by
      giving ten (10) days notice in writing to Lessor, electing to terminate
      this Lease, and the Term hereof shall expire by limitation at the
      expiration of said ten (10) days notice as fully and completely as if said
      date were the date herein originally fixed for the expiration of the term
      hereof.

(c)   Temporary Taking. If the temporary use of the whole or any part of the
      Demised Premises shall be taken at any time during the Term hereof in the
      exercise of the power of eminent domain by any sovereign, municipality or
      other authority, the Term hereof shall not be reduced or affected in any
      way and Lessee shall continue to pay in full the Rent and other sums of
      money and charges herein reserved and provided to be paid by Lessee, and
      the award for such taking



<PAGE>
 
      shall be divided and paid out in the following order of priority: First,
      there shall be paid to Lessee that portion of said award paid for use and
      occupancy of the Demised Premises during the Term hereof, and second, the
      remainder, if any, of said award shall be paid to Lessor.

(d)   Interest. Interest upon any award paid for a taking of the type referred
      to in Sections (a), (b) or (c) of this Paragraph 16 shall be divided and
      paid out to those persons entitled to the award upon which such interest
      shall have been paid, in proportion to the respective amounts received by
      such persons.

(e)   Personal Property and Moving Expenses. Any award or part of an award paid
      as compensation for the taking of personal property owned by Lessee or a
      subtenant or for moving expenses of Lessee or a subtenant, shall be
      payable to Lessee or such subtenant, as the case may be.

17. Restoration after Fire or Condemnation. Whenever Lessee shall be required or
shall elect to carry out any work of demolition, restoration, repair,
replacement or rebuilding pursuant to Paragraph 15 hereof or Section (b) of
Paragraph 16 hereof, Lessee, prior to the commencement of such work (unless such
work is of a minor nature, as that term is hereinafter defined) shall:

(a)   Furnish Lessor complete plans and specifications for such work bearing the
      signed approval thereof by a licensed architect.

(b)   Furnish Lessor certified or photostatic copies of all permits and
      approvals required by law in connection with the commencement and conduct
      of such work.

      Lessee shall not commence any of said demolition, restoration, repair,
replacement or rebuilding work until Lessee shall have complied with the above
requirements, and thereafter Lessee shall carry out such work diligently and in
good faith in accordance with the plans and specifications referred to above.

      If the above-mentioned work shall be of a minor nature, as that term is
hereinafter defined, then the requirements set forth above in this Paragraph 17
shall not be applicable, except that Lessee shall obtain and furnish to Lessor
all permits and approvals required by law in connection with the commencement
and carrying out of such work. Such work shall be deemed to be of a minor nature
only if in one continuous project the aggregate cost of such work is less than
Fifty Thousand Dollars ($50,000.00).

18.   Environmental Matters.

(a)   Lessor hereby warrants and represents to Lessee that: the Demised Premises
      are in compliance with all Federal, state and local laws and ordinances
      relating to clean air, water, waste disposal, toxic substances and other
      environmental regulations. The Demised Premises are in compliance with all
      laws and ordinances relating to occupational health and safety. During the
      period of Lessor's ownership of the Demised Premises, Lessor has not
      caused or permitted the Demised Premises to be used, to generate,
      manufacture, refine, transport, treat, store, handle, dispose, transfer,
      produce or process "Hazardous Material" (as hereinafter defined), or other
      dangerous or toxic substances, or solid

<PAGE>
 
      waste, except in compliance with all applicable federal, state, and local
      laws or regulations. During the period of Lessors' ownership of the
      Demised Premises, there has been no release of "Hazardous Material" (as
      hereafter defined) on or off-site of the Demised Premises, nor have any
      "Hazardous Materials Claims" (as hereinafter defined) been made against
      Lessor to Lessor's knowledge in respect of the Demised Premises. There has
      not been incorporated into the Demised Premises and the Demised Premises
      do not contain, any asbestos products, urea-formaldehyde, and other known
      building products which may be harmful or injurious to human health or
      constitute Hazardous Materials. No underground storage tank ("UST's")
      exist on the Demised Premises and if any UST's formerly existed on the
      Demised Premises, such UST's have been removed and any contamination of
      soils or ground water has been fully remediated in accordance with
      applicable Governmental Requirements. All closure requirements for such
      UST's have been fulfilled.

           "Hazardous Material(s)" shall be defined as flammable, explosives,
      radioactive materials, or hazardous, toxic or dangerous waste, substances
      of related material including, but not limited to, substances defined as
      such in (or for purposes of) the Comprehensive Environmental Response,
      Compensation, and Liability Act, as amended 42 U.S.C Sections 9601, et
      seq.; the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801,
      et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. Section
      6901, et seq.; those substances defined as hazardous or toxic under any
      other federal, state or local statute, relating to, or imposing liability
      or standards of conduct concerning, any hazardous, toxic and dangerous
      waste, substance or material, as now or at any time hereafter in effect.

(b)   Lessee hereby indemnifies and agrees to defend, protect and hold the
      Lessor, any successor or successors to Lessor's interest in and to the
      Demised Premises, and any mortgagee on the Lessor's interest in and to the
      Demised Premises harmless from and against any and all losses,
      liabilities, fines, charges, damages, injuries, penalties, response cost,
      expenses and claims of any and every kind whatsoever paid, incurred or
      suffered by, or asserted against, the Lessor including, without
      limitation, (i) all consequential damages; (ii) the costs of any required
      or necessary repair, cleanup or detoxification of the Demised Premises,
      and the preparation and implementation of any closure, remedial or other
      required plans; and (iii) all reasonable costs and expenses incurred by
      Lessor in connection with clauses (i) and (ii), including, but not limited
      to, reasonable attorneys' fees for, with respect to, or as a direct or
      indirect result of the presence on or under, or the escape, seepage,
      leakage, spillage, discharge, emission, or actual threatened release of
      any Hazardous Material (as herein defined) from the Demised Premises by
      the Lessee (including, without limitation, any losses, liabilities,
      damages, injuries, costs, expenses or claims asserted or arising under any
      federal or state or local statute, law, ordinance, code, rule, regulation,
      order or decree regulating, relating to, or imposing liability or standard
      of conduct concerning any Hazardous Material), to the extent caused by, or
      within

<PAGE>
 
      the control of, Lessee, or any employees, agents, contractors or
      subcontractors of Lessee, or any third persons, occupying or present on
      the Demised Premises, during the period of ownership, operation or control
      of the Demised Premises by Lessee, unless such activities were or will be
      undertaken in accordance with applicable laws, regulations, codes or
      means. The warranties, representations and indemnities made by Lessee in
      this section are expressly agreed by Lessor and Lessee to survive the
      termination of this Lease Agreement.

           Notwithstanding anything to the contrary herein, Lessee shall have no
      liability or responsibility to remediate, except as may be expressly
      provided herein, with respect to any Hazardous Material which Lessor fails
      to prove has its origin on the Demised Premises after the Commencement
      Date of this Lease and during Lessee's possession and control of the
      Demised Premises (whether directly or through a subtenant's occupancy
      thereof).

(c)   Lessee shall keep and maintain the Demised Premises in compliance with,
      and shall not cause or permit the Demised Premises to be in violation of,
      any federal, state or local laws, ordinances, statutes or regulations
      relating to industrial hygiene or to the environmental conditions on,
      under or about the Demised Premises including, but not limited to, soil
      and groundwater conditions. Lessee shall not use, generate, manufacture,
      store or dispose of on, under or about the Demised Premises or transport
      to or from the Demised Premises any Hazardous Material, except in
      compliance with applicable "Hazardous Materials Laws" (as defined below).
      Lessee hereby agrees at all times to comply fully and in a timely manner
      with, and to cause all of its employees, agents, suppliers, contractors
      and subcontractors and any other persons occupying or present on the
      Demised Premises to so comply with, all applicable federal, state and
      local laws, regulations, guidelines, codes, statutes, and ordinances
      applicable to the use, generation, handling, storage, treatments,
      transport and disposal of any Hazardous Material now or hereafter located
      or present on or under the Demised Premises.

(d)   Lessee shall immediately advise Lessor in writing of (i) any and all
      enforcement, cleanup, removal or other governmental or regulatory actions
      instituted, completed or threatened pursuant to any applicable federal
      state or local laws, ordinances, or regulations relating to any Hazardous
      Material affecting the Demised Premises ("Hazardous Material Laws"); (ii)
      all claims made or threatened by any third party against Lessee relating
      to damage, contribution, cost recovery compensation, loss or injury
      resulting from any Hazardous Material affecting the Demised Premises (the
      matters set forth in clauses (i) and (ii) above are hereinafter referred
      to as "Hazardous Materials Claims"); and (iii) Lessee's discovery of any
      occurrence or condition on the Demised Premises or any real property
      adjoining or in the vicinity of the Demised Premises or to be otherwise
      subject to any restrictions on the ownership, occupancy,


<PAGE>
 
      transferability or use of the property under any Hazardous Materials Laws.
      Lessor shall have the right, but not the obligation, to join and
      participate in, as a party if it so elects, any legal proceedings or
      actions initiated in connection with any Hazardous Materials Claims.

(e)   Without Lessor's prior written consent, Lessee shall not take any remedial
      action in response to the presence of any Hazardous Materials on, under,
      or about the Demised Premises, nor enter into any settlement agreement,
      consent decree, or other compromise in respect to any Hazardous Materials
      Claims, which remedial action, settlement, consent or compromise might, in
      Lessor's reasonable judgment, impair the value of Lessor's security
      hereunder or of Lessor's interest in the reversion; provided, however,
      that Lessor's prior consent shall not be necessary in the event that the
      presence of any Hazardous Material on, under, or about the Demised
      Premises either poses an immediate threat to the health, safety or welfare
      of any individual or is of such a nature that an immediate remedial
      response is necessary and it is not reasonably possible to obtain Lessor's
      consent before taking such action, provided that in such event Lessee
      shall notify Lessor as soon as practicable thereafter of any action so
      taken. Lessor agrees not to withhold its consent, where such consent is
      required hereunder, if either (i) a particular remedial action is ordered
      by a court of competent jurisdiction, or (ii) Lessee establishes to the
      reasonable satisfaction of Lessor that there is no reasonable alternative
      to such remedial action which would result in less impairment of Lessor's
      security hereunder or of Lessor's interest in the reversion.

19. Assignment and Subletting. Lessee may not assign this Lease or any interest
herein, or make any sublease of all or any part of the Demised Premises, without
Lessor's prior written consent, which consent may not be unreasonably withheld,
and any such attempted assignment or subletting without such prior written
consent shall be void; provided, however, that such prior written consent shall
not be required for (i) any assignment or sublease by Lessee to an affiliate of
Lessee, (ii) any residency agreement or admission agreement with respect to the
Facility made by Lessee in the ordinary course of its business, and/or (iii) any
sublease of space in the Facility for any accessory use made by Lessee in the
ordinary course of business. No consent by Lessor to any assignment or
subletting shall be deemed or construed to relieve Lessee from obtaining the
express written consent of Lessor to any further assignment or subletting.

      For purposes hereof, the term "affiliate of Lessee" means a person
controlling, controlled by or under common control with Lessee, and shall be
deemed and construed to include, but not be limited to, a corporation, limited
liability company, or general, limited or limited liability partnership, of
which Lessee or an affiliate of Lessee is, respectively, a majority or
controlling shareholder, a managing or majority member, or a general or managing
partner, regardless of the percentage of Lessee or its affiliate's beneficial
interest in such person. In addition, an assignment or sublease pursuant to a
merger or consolidation of Lessee or pursuant to a sale of all or a substantial
portion of Lessee's assets shall be deemed an assignment (or, if applicable,
subletting) to an affiliate of Lessee and shall not require Lessor's prior
written consent.

<PAGE>
 
      No acceptance by Lessor of any performance or rent herein provided to be
done or paid by Lessee from any person other than Lessee shall discharge Lessee
or any other person liable for performance of Lessee's obligations hereunder
(except to the extent of the performance and payments so accepted by Lessor)
from liability to pay all of the rent herein provided to be paid by Lessee or
from liability to perform any of the terms, covenants, conditions and agreements
set forth herein.

      All references herein to a sublease shall be deemed to include all
arrangements for occupancy or other use by any person of all or any part of the
Demised Premises, and all references herein to a subtenant shall include any
occupant or other user of all or any part of the Demised Premises.

      In the event of a termination hereof, each subtenant of space within the
Demised Premises shall attorn to the Lessor unless the Lessor shall, at the
Lessor's option, elect to dispossess such subtenant or otherwise terminate the
sublease held by such subtenant. Each subtenant who hereafter subleases space
within the Demised Premises shall be deemed to have agreed to the provisions of
this Paragraph.

      Lessee hereby assigns to Lessor the right, following any default by Lessee
hereunder which is not cured by Lessee within any applicable cure period, to
collect from any and all subtenants all rents and other sums payable by them,
and to apply the same to the payment of Rent and all other amounts payable by
Lessee hereunder, and any balance shall be paid over to Lessee; but no exercise
by Lessor of rights under this Paragraph shall be deemed a waiver by Lessor of
any other rights hereunder or be deemed an acceptance by Lessor of such
subtenant or an acquiescence by Lessor to the occupancy of any part of the
Demised Premises by such subtenant or a release of Lessee from the performance
of any of the obligations of Lessee hereunder.

20. Bankruptcy. If at any time during the term hereof there shall be filed by or
against Lessee in any court or other tribunal pursuant to any statute or other
rule of law, either of the United States or of any state or of any other
authority now or hereafter exercising jurisdiction, a petition in bankruptcy or
insolvency proceedings or for reorganization or for the appointment of a
receiver or trustee of all or substantially all of Lessee's property or if
Lessee makes a general assignment for the benefit of creditors then, subject to
the provisions of this Paragraph 20, this Lease may, at the option of Lessor to
be exercised by thirty (30) days written notice to Lessee, be canceled and
terminated, and in that event neither Lessee nor any person claiming through or
under Lessee by virtue of any statute or other rule or of an order of any court
or other tribunal shall be entitled to possession or to remain in possession of
the Demised Premises or any part thereof but shall forthwith quit and surrender
the Demised Premises; provided however, that if any such petition shall be filed
against Lessee and if in good faith Lessee shall promptly thereafter commence
and diligently prosecute any and all proceedings appropriate to secure the
dismissal of such petition, Lessor's right to cancel and terminate this Lease by
reason of the filing of such petition shall be suspended during such period as
said proceedings for the dismissal of such petition shall continue. Any
provision of this Paragraph 20 providing for the suspension of Lessor's right to
cancel and terminate this Lease is intended only to suspend Lessor's right to
cancel and terminate pursuant to this Paragraph 20, and shall not be deemed to
suspend or otherwise restrict Lessor's right to cancel and terminate this Lease,
in the event of a default by Lessee under any other paragraph hereof pursuant to
Paragraph 22 hereof or otherwise.

<PAGE>
 
      In the event of the termination hereof pursuant to Paragraph 22, Lessor
shall forthwith at Lessor's option, notwithstanding any other provision hereof
to the contrary, be entitled to recover from Lessee, in addition to any other
proper claims for rent and other sums of money payable hereunder, as and for
liquidated damages, a sum equal to the amount by which the Rent reserved under
Paragraphs 3 and 4 hereof for the unexpired portion of the term hereof exceeds
the net rental value of the Demised Premises at the time of such termination for
the said unexpired portion of the term hereof, both discounted at the rate of
eight percent (8%) per annum to their present worth. Nothing herein contained
shall limit or prejudice the right of Lessor to prove or obtain as liquidated
damages by reason of a termination hereof pursuant to Paragraph 22 an amount
equal to the maximum allowed by any statute or other rule of law in effect at
the time when, and governing the proceedings in which, such damages are to be
proved, whether or not such amount be greater than, equal to or less than the
amount of the damages referred to above.

21. Access to Project; Books, Records, Accounts and Annual Reports. Lessee shall
keep and maintain or shall cause to be kept and maintained, at Lessee's cost and
expense and in accordance with sound accounting practice, proper and accurate
books, records and accounts reflecting all items of income and expense in
connection with the operation of the Facility or in connection with any
services, equipment or furnishings provided in connection with the operation
thereof. Lessor shall have the right, from time to time, to examine by Lessor's
agents, accountants and attorneys employed at Lessor's expense, such books,
records and accounts at the office either of Lessee or such other person or
entity maintaining said books, records and accounts and to make copies or
extracts thereof as Lessor shall desire and to discuss Lessee's affairs,
finances and accounts with Lessee and with the officers and principals of Lessee
at such reasonable times as may be requested by Lessor. Lessee will furnish to
Lessor on or before April 30th of each year, for the preceding calendar year, a
balance sheet, profit and loss statement, and all supporting schedules covering
operation of the Facility and the Lessee, all in reasonable detail, prepared in
accordance with sound accounting practices and certified by the principal
financial or accounting officer of Lessee; and Lessee will furnish to Lessor, at
any time within thirty (30) days after demand by Lessor, statements certified by
Lessee's principal financial or accounting officer covering such additional
financial matters respecting the Facility and the Lessee as Lessor may
reasonably request including, without limitation, quarterly operating statements
with respect to the Facilities and the Lessee.

22. Default; Termination. If at any time during the term hereof (i) Lessee shall
default in the payment of any Rent or of any other sum of money whatsoever which
Lessee shall be obligated to pay under the provisions hereof for ten (10) days
after written notice and demand, or (ii) Lessee shall default in the performance
or observance of any of the other terms, covenants, conditions or agreements
hereof for thirty (30) days after written notice and demand for cure, or if such
default shall be of such a nature that the same cannot practicably be cured
within said thirty (30) day period, Lessee shall not within said thirty (30) day
period commence with due diligence and dispatch to cure and perform such
defaulted term, covenant, condition or agreement, or Lessee shall within said
thirty (30) day period commence with due diligence and dispatch to cure and
perform such defaulted term, covenant, condition or agreement but shall
thereafter fail or neglect to prosecute and complete with due diligence and
dispatch the curing and performance of such defaulted term, covenant, condition
or agreement, or (iii) the taking, commencement or institution of any action or
proceeding, including fast track proceedings, by any state or federal authority

<PAGE>
 
having jurisdiction over the Demised Premises as a health care facility to
terminate or revoke any license certification of Lessee of which Lessor is not
immediately notified or which is not resolved within fifteen (15) days for fast
track proceedings or thirty (30) days for any other action or proceeding, or
(iv) the receipt by Lessee of a Level A or higher deficiency on any licensure
inspection or survey of the Demised Premises which (unless contested in good
faith) is not resolved by corrective action plan or otherwise within a period of
twenty (20) days (or such longer period as may be permitted by the applicable
regulatory agency); THEN AND IN ANY SUCH CASE, if such default shall be
continuing, Lessor, at Lessor's option, may elect to terminate this Lease at any
time by giving ten (10) days notice in writing to Lessee, electing to terminate
this Lease, and the term hereof shall expire by limitation at the expiration of
said ten (10) days notice as fully and completely as if said date were the date
herein originally fixed for the expiration of the term hereof, and Lessee shall
thereupon quit and peacefully surrender the Demised Premises to Lessor, without
any payment therefor by Lessor, and Lessor, upon the expiration of said ten (10)
days notice, or at any time thereafter may re-enter and remove all persons and
property therefrom, either by summary proceedings or by any suitable action or
proceeding at law, or by force or otherwise, without being liable to indictment,
prosecution or damages therefor, and may have, hold and enjoy the Demised
Premises.

      If Lessor shall obtain possession of the Demised Premises by reason of or
following any default of Lessee, then Lessee shall pay to Lessor on demand all
reasonable expenses incurred by Lessor in obtaining possession and in altering,
repairing and putting the Demised Premises in good order and condition, and in
reletting the same, including reasonable fees of architects, attorneys and
agents, and any other reasonable expenses and commissions and Lessee further
agrees to pay to Lessor upon the rent days specified herein in each month
following any termination hereof by reason of a default of Lessee hereunder,
until the end of the period which would have constituted the Term hereof
(whether or not Lessor shall have terminated this Lease), the Rent and all other
sums of money whatsoever which would have been payable by Lessee during such
period, deducting only the net amount of rent, if any, which Lessor shall
actually receive (after deducting therefrom all reasonable expenses and costs of
operation and maintenance of the Demised Premises) from and by any reletting of
the Demised Premises, and Lessee hereby agrees to be and remain liable for all
sums aforesaid as well as for any deficiency therein. Lessor shall have the
right from time to time to bring and maintain successive actions or other legal
proceedings against Lessee for the recovery of such amounts, which liability it
is expressly covenanted shall survive the issuance of any warrant of dispossess
or other court process. Nothing herein contained shall be deemed to require
Lessor to wait to bring any such action or other legal proceedings until the
date when this Lease would have expired had there been no such default by
Lessee. In reletting the Demised Premises as aforesaid, Lessor may make leases
and lettings of the whole or less than the whole of the same, for a term or
terms greater or less than the term hereof, and for a rental or rentals and upon
such terms, covenants, conditions, agreements and provisions as Lessor may elect
in its sole discretion.

      In addition to the right of Lessor to cancel the Agreement as provided in
this Section, and without waiver of such right, Lessor may sue Lessee for
damages for noncompliance with any covenant, agreement or warranty contained in
this Agreement or for nonpayment of any sum required to be paid by Lessee to
Lessor or for specific performance of any covenant of this Agreement. The waiver
of any one Event of Default shall not be construed as the waiver of any other
Event of Default.
<PAGE>
 
      Upon the occurrence of a default by Lessee under this Agreement, Lessor
shall have the absolute right, at any time without notice to have a receiver
appointed to take possession of the Demised Premises, collect the rents, issues,
profits, patient contract accounts, Medicare and Medicaid payments, accounts
receivable and all other payments or obligations owing to Lessee with respect to
the Demised Premises, and apply the same against Lessee's obligations hereunder.
Neither the filing of a petition for the appointment of a receiver nor the
appointment itself shall constitute an election by Lessor to terminate this
Agreement.

      No receipt of moneys by Lessor from Lessee after a termination hereof by
Lessor shall reinstate, continue or extend the Term hereof or affect any notice
theretofore given to Lessee, or operate as a waiver of the right of Lessor to
enforce the payment of rent when due or thereafter falling due, it being agreed
that after the commencement of suit for possession of the Demised Premises, or
after final order or judgment for possession of the Demised Premises, Lessor may
demand, receive and collect any moneys due or thereafter falling due without in
any manner affecting such suit, order or judgment; all such monies collected
being deemed payments on account of the use and occupation of the Demised
Premises or, at the election of Lessor, on account of Lessee's liability
hereunder. Lessor shall have, receive and enjoy, as Lessor's sole and absolute
property, any and all sums collected by Lessor as rent or otherwise upon
reletting the Demised Premises after Lessor shall resume possession thereof as
hereinbefore provided, including, without limitation upon the generality of the
foregoing, any amounts by which the sum or sums collected exceed the continuing
liability of Lessee hereunder.

23. Waiver of Rights of Redemption. If at any time hereafter Lessor shall obtain
possession of the Demised Premises under legal proceedings or pursuant to the
terms and conditions hereof or pursuant to present or future law, because of
default by Lessee in observing or performing any term, covenant, condition or
agreement hereof, all rights of redemption provided by any law, statute or
ordinance now in force or hereafter enacted shall be and are hereby waived by
Lessee to the extent permitted by law.

24. Lessor's Right to Cure Lessee's Defaults. Whenever and as often as Lessee
shall fail or neglect to comply with and perform any term, covenant, condition
or agreement to be complied with or performed by Lessee hereunder, then, upon
thirty (30) days prior written notice to Lessee (except where a shorter notice
period is provided herein, in which event such shorter period shall apply), if
such default shall be continuing, Lessor, at Lessor's option, in addition to all
other remedies available to Lessor, may perform, or cause to be performed, such
work, labor, services, acts or things, and take such other steps, including
entry onto the Demised Premises as Lessor may reasonably deem advisable, to
comply with and perform any such term, covenant, condition or agreement which is
in default, in which event Lessee shall reimburse Lessor upon demand, and from
time to time, for all reasonable costs and expenses suffered or incurred by
Lessor in so complying with or performing such term, covenants, condition or
agreement. The commencement of any work or the taking of any other steps or
performance of any other act by Lessor pursuant to this paragraph shall not be
deemed to obligate Lessor to complete the curing of any term, covenant,
condition or agreement which is in default. Lessee hereby waives any claim and
releases Lessor and Lessor's agents, contractors and employees from all
liability for damage occasioned by any action taken by Lessor pursuant to this
paragraph, excepting liability of Lessor for negligence and willful misconduct
of Lessor and Lessor's agents, contractors and employees.
<PAGE>
 
25. Lessor Default. In the event Lessor shall default in the performance of any
of the terms and provisions of this Lease and shall fail to cure such default
within thirty (30) days after written notice and demand from Lessee, Lessee
shall have the right, at its option, to exercise one or more of the following
remedies: (a) to terminate this Lease and recover against Lessor for all
damages, general, special and consequential, incurred as a proximate result of
Lessor's breach and termination; (b) to do and perform the act or action
required of Lessor under this Lease and to offset against Rental and other sums
payable by Lessee any and all costs of Lessee's performance; (c) to proceed with
an action, proceeding or suit at law or in equity, seeking damages or equitable
relief (including, in an appropriate case, an injunction, a decree of specific
performance, or a declaratory judgment). Such remedies are cumulative of any and
all other rights and remedies available to Lessee under this Lease or otherwise.

26. Injunction. Each party, at its option, in addition to any other rights
reserved to it, and notwithstanding the concurrent pendency of other proceeds
between Lessor and Lessee, shall have the right at all times during the Term
hereof to restrain by injunction any violation or attempted violation by the
other party of any of the terms, covenants, conditions or agreements hereof, and
to enforce by injunction any of the terms, covenants, conditions and agreements
thereof.

27. No Merger. In no event shall the leasehold in the Demised Premises created
hereby, or the rights of Lessee hereunder, merge with any interest, estate or
rights of Lessor in or to the Demised Premises, except by Lessor's written
declaration of such merger, it being understood that such leasehold and the
rights of Lessee hereunder shall be deemed to be separate and distinct from
Lessor's interest, estate and rights in and to the Demised Premises,
notwithstanding that any such interests, estates or rights shall at any time or
times be held by or vested in the same person.

28. Definition of "Lessor" and "Lessee". The terms "Lessor" and "Lessee" as used
herein shall at any given time mean the persons who are the owners of the
reversionary interest estate of Lessor in and to the Demised Premises, and the
leasehold of Lessee in and to the Demised Premises created herein, respectively.
Subject to and conditioned upon Lessee's obtaining Lessor's prior written
consent to any transfer or assignment of Lessee's leasehold interest under this
Lease, in the event of any conveyance or other divestiture of either Lessor or
Lessee's interest in and to the Demised Premises, the grantor or the person who
is divested of such interest (the "Grantor") shall be entirely freed and
relieved of all covenants and obligations thereafter accruing hereunder, and the
grantee or the person who otherwise succeeds to such interest shall be deemed
automatically and by operation of this Lease to have assumed the covenants and
obligations of the Grantor thereafter accruing hereunder, and until the next
conveyance or divestiture of such interest the other party shall look solely to
said grantee or successor for the observance and performance of the covenants
and obligations of the Grantor hereunder so assumed by said grantee or
successor. Lessee shall attorn to any such grantee or successor of Lessor. Any
provision hereof to the contrary notwithstanding, no assignment by Lessee of
this Lease or any interest herein shall relieve or release Lessee of or from any
of its liabilities or obligations hereunder.

29. Quiet Enjoyment. Lessor covenants that at all times during the term hereof,
so long as Lessee is not in default hereunder, Lessee's quiet enjoyment of the
Demised Premises or any part thereof shall not be disturbed by the act of any
person whomsoever.
<PAGE>
 
30. Lessor's Right of Entry. Lessor and its authorized agents and employees
shall have the right from time to time, at Lessor's option, and upon reasonable
prior notice to Lessee (except in an emergency), to enter and pass through the
Demised Premises to examine the same and to show them to prospective purchasers,
fee mortgagees and others.

31. Estoppel Certificates. Each party shall at any time and from time to time
during the term hereof, within ten (10) days after request by the other party,
execute, acknowledge and deliver to the other party or to any prospective
purchaser, assignee or mortgagee designated by the other party, a certificate
stating (i) that this Lease is unmodified and in force and effect (or, if there
have been any modifications that this Lease is in force and effect as modified
and identifying the modification agreements); (ii) the date to which Rent has
been paid; (iii) whether or not there is any existing default by Lessee in the
payment of Rent or any other sum of money hereunder, and whether or not there is
any other existing default by either party with respect to which a notice of
default has been served, and, if there is any such default, specifying the
nature and extent thereof; and (iv) whether or not there are any set offs,
defenses or counterclaims against enforcement of the obligations to be performed
hereunder existing in favor of the party executing such certificate.

32. Rights Cumulative. All the rights and remedies of each party hereunder or
pursuant to present or future law shall be deemed to be separate, distinct and
cumulative, and no one or more of them, whether exercised or not, nor any
mention of or reference to any one or more of them herein, shall be deemed to be
an exclusion or a waiver of any of the others, or of any of the rights or
remedies which such party may have, whether by present or future law or pursuant
hereto, and each party shall have, to the fullest extent permitted by law, the
right to enforce any rights or remedies separately and to take any lawful action
or proceedings to exercise or enforce any right or remedy without thereby
waiving or being barred or estopped from exercising and enforcing any other
rights and remedies by appropriate action or proceedings.

33. Payments of Money, Interest. All amounts whatsoever which Lessee shall be
obligated to pay pursuant hereto shall be deemed rent, and in the event of the
nonpayment by Lessee of any such of money whatsoever which Lessee from time to
time shall be obligated to pay to Lessor under any provision hereof, Lessor
shall have the same rights and remedies by reason of such nonpayment as if
Lessee had failed to pay an installment of Rent under Paragraph 3 hereof. Except
as herein specifically stated otherwise, in each instance when Lessee shall be
obligated to make any payment of any sum of money whatsoever hereunder, interest
shall accrue thereon and be payable hereunder at the rate of twelve percent
(12%) per annum computed from the date such payment first became due hereunder.

34.   Surrender, Obligations Upon Expiration or Termination.

(a)   Lessee shall, on the last day of the term hereof or upon any termination
      hereof well and truly surrender and deliver up the Demised Premises into
      the possession and use of Lessor, without fraud or delay and in good
      order, condition and repair, ordinary wear and tear excepted, free and
      clear of all lettings and occupancies and free and clear of all
      encumbrances other than those existing on the date hereof and those, if
      any, created by Lessor.

(b)   Lessee  represents  and  warrants to Lessor that  (except
      for changes  in the  ordinary  course  of  business,  and for all
<PAGE>
 
      other changes unforeseen and/or uncontrollable by Lessee, occurring after
      the date hereof), to the extent feasible and consistent with ordinary
      business practices, Lessee will expend reasonable efforts to assure or
      cause upon the expiration or termination of the Term hereof, the following
      statements to be true statements of law and fact:

(1)        All of the Inventories shall be at levels which are consistent with
           operations in the ordinary course of business and, to the best of
           Lessee's knowledge after diligent investigation, at levels consistent
           with all applicable regulatory requirements and usable in the
           ordinary course of business.

(2)        There is no outstanding written notice of default, cancellation or
           termination in connection with any instrument or document material to
           the operation of the Demised Premises which could be construed,
           directly or indirectly, to bind or in any way affect Lessor or
           Lessor's assigns after the termination hereof.

(3)        Lessee is not a party to any written employment or consulting
           agreement, or written pension, profit-sharing, bonus, deferred
           compensation, retirement, stock option, medical health, disability,
           insurance, welfare or other employee benefit plan, arrangement,
           contract agreement, program or policy relating to the Facilities
           (collectively, the "Benefit Plans") which would be binding upon or
           affect Lessor or any successor lessee after the date of expiration or
           termination hereof.

(4)        Lessee has paid all accounts payable and other liabilities on a
           current basis.

(5)        There is no disciplinary proceeding pending or, to the best of
           Lessee's knowledge after diligent investigation, threatened against
           any then current member of the medical staff.

(6)        All costs, reimbursement and similar reports relating to the Facility
           have been filed when due as required for Medicaid and any third-party
           payor reimbursement.

(7)        The Licensed Bed Capacity shall be equal to the Licensed Bed Capacity
           as of the effective date of this Lease.

(c)   Lessee shall use  reasonable  efforts to encourage  such  personnel of the
      Facilities  as  Lessor  may  designate  to become  employees  of Lessor or
      Lessor's assigns after the expiration or termination of the term hereof.

(d)   Following the expiration or termination of the term hereof, Lessee shall
      pay all personnel of the Facility all benefits [specifically including,
      but not limited to, compensation for accrued and vested (in accordance
      with Lessee's personnel policies), but unpaid, vacation pay] normally
      payable upon termination of employment. If Lessee fails to make any such
      payment, Lessor shall have the right to cure such default and demand
      immediate reimbursement from Lessee.

(e)   Lessee  shall have the duty to  cooperate  with  Lessor in  procuring  the
<PAGE>
 
      transfer of licenses and certifications as necessary to keep the Demised
      Premises in operation following termination of this Lease.

35. No Waiver. No failure on the part of either party at any time to require the
performance by the other party of any term hereof shall be taken or held to be a
waiver of such term or in any way affect such party's right to enforce such
term, and no waiver on the part of either party of any term hereof shall be
taken or held to be a waiver of any other term hereof or the breach thereof

36. Severability. The invalidity or unenforceability of any particular provision
hereof shall not affect the other provisions, and this Lease shall be construed
in all respects as if such invalid or unenforceable provision had not been
contained herein.

37. Benefit. This Lease shall inure to the benefit of and be binding upon the
parties and their respective legal representatives, successors and assigns. The
provisions hereof are solely for the benefit of the parties and their respective
legal representatives, successors and assigns, and shall not be deemed or
construed to create any rights for the benefit of any other person.

38. Construction. Whenever a singular word is used herein, it shall also include
the plural wherever required by the context, and vice versa. The terms and
conditions hereof represent the results of bargaining and negotiations between
the parties, each of which has been represented by counsel of its selection, and
neither of which has acted under duress or compulsion, whether legal, economic
or otherwise, and represent the results of a combined draftsmanship effort.
Consequently, the terms and conditions hereof shall be interpreted and construed
in accordance with their usual and customary meanings, and the parties hereby
expressly waive and disclaim, in connection with the interpretation and
construction hereof, any rule of law or procedure requiring otherwise,
specifically including but not limited to, any rule of law to the effect that
ambiguous or conflicting terms or conditions contained herein shall be
interpreted or construed against the party whose counsel prepared this Lease or
any earlier draft hereof.

39. Entire Agreement; Written Modifications. This Lease contains the entire
understanding between the parties with respect to the subject matter hereof; all
representations, promises, and prior or contemporaneous understanding, between
the parties with respect to the subject matter hereof are merged into and
expressed in this Lease; and any other understandings between the parties with
respect to the subject matter hereof are hereby canceled. This Lease shall not
be amended, modified or supplemented without the written agreement of the
parties at the time of such amendment, modification or supplement.

40.  Governing  Law.  This Lease shall be governed by and subject to the laws of
the State of Florida.

41. Captions. The captions herein are for convenience and identification
purposes only, are not an integral part hereof, and are not to be considered in
the interpretation of any part hereof.

42. Notices. All notices and other communications hereunder shall be in writing
and shall be deemed to have been duly given if sent by certified or registered
mail, return receipt request, postage prepaid, addressed as follows:

To Lessor: .....     Board of County Supervisors of Choctaw
           .....       County, Mississippi
<PAGE>
 
           .....     Choctaw County Courthouse
           .....     Ackerman, Mississippi  39735
           .....     Attention:  Chairman

With copy to:...
           .....
           .....
To Lessee: .....     Centennial HealthCare Investment Corporation
           .....     400 Perimeter Center Terrace
           .....     Suite 650
           .....     Atlanta, Georgia  30346
           .....     Attn:  Michael C. Lake, Vice President

With copies to:.     Daryl R. Griswold, Esq.
           .....     Centennial HealthCare Investment Corporation
                     400 Perimeter Center Terrace
           .....     Suite 650
           .....     Atlanta, Georgia  30346

                     Jeffrey N. Plowman, Esq.
           .....     NELSON MULLINS RILEY & SCARBOROUGH, L.L.P.
           .....     First Union Plaza, Suite 1400
           .....     999 Peachtree Street, N.E.
           .....     Atlanta, Georgia  30309

or to such other address as shall be furnished in writing by either party to the
other party.

43. Counterparts. This Lease may be executed in separate counterparts, each of
which when so executed shall be an original, but all of such counterparts shall
together constitute but one and the same instrument.

44. Costs of Enforcement. If any action is instituted in connection with any
controversy arising out of this Lease, the prevailing party shall be entitled to
recover, in addition to costs, such sum as the court may adjudge reasonable as
attorneys fees in such action and on any appeal from any judgment or decree
entered therein.

45. Agreement Regarding Lease. This Lease Agreement is executed and delivered
pursuant to that certain Agreement Regarding Lease (the "General Agreement")
containing terms, covenants, conditions, warranties and representations on which
Lessee has and is hereby relying in entering into this Lease and the related
transactions described in the General Agreement. The General Agreement is hereby
incorporated into and made a part of this Lease as if fully set forth herein.

46. Cooperation. Lessor shall cooperate with Lessee in connection with any and
all efforts by Lessee to secure the lawful benefits of grants, governmental aid
or assistance payments or supplements or designation of the Facility as
preferred status or preferred provider or other beneficial designation for
purposes of enhanced reimbursement or otherwise.

47. Additional  Stipulations.  The following  additional  stipulations of Lessee
shall be deemed part of this Lease:

(a)   Lessee and Lessor acknowledge that the primary use of the Hospital
      Facility shall be for the operation of an acute
<PAGE>
 
      care hospital facility, to include, unless otherwise agreed, laboratory,
      x-ray, emergency room (on a 24-hour a day basis), and outpatient treatment
      services. In addition, limited surgical services shall be furnished at or
      from the Facility. Lessee shall also have the right to provide these and
      other services from the Clinics and other locations operated by Lessee.

(b)   Lessee shall have the right, subject to Governmental Requirements to
      convert a portion of its Licensed Hospital Bed Capacity into Licensed
      Nursing Home Bed Capacity and vice versa; provided, however, that Lessee
      shall at all times furnish a minimum Licensed Hospital Bed Capacity of at
      least ten (10) beds. Lessee shall also have the right, subject to
      applicable Governmental Requirements, to expand, contract or discontinue
      the services furnished at the Clinics.

(c)   Lessee shall provide or arrange for the management of ambulance services
      sufficient to establish Lessor's compliance with applicable Mississippi
      statutes, if any, requiring counties to provide or arrange for such
      services. Lessee shall enter into a supplemental agreement to this Lease
      with the current provider of such ambulance services, and providing for
      monthly payments by Lessee of approximately Five Thousand and No/100
      Dollars ($5,000.00) per month, to continue for so long as the Ambulance
      Service Contract and this Lease shall both remain in full force and
      effect; provided, however, that Lessor shall pay all costs of such
      ambulance service to the extent in excess of $7,500.00 per month, or, at
      Lessee's option, Lessee shall have the right to cancel or terminate the
      Ambulance Service Contract and either contract with another provider or
      assume such duties and obligations to provide the required ambulance
      services.

(d)   Lessor and Lessee acknowledge that the effective date of this Lease has
      been stipulated to be December 1, 1998, notwithstanding that the Lease has
      been executed on the dates set forth beneath each party's signatures
      below; and subject furthermore to the caveat that Lessee's obligations
      under this Lease are subject to, and conditioned upon the satisfaction and
      performance of the terms and conditions set forth in the General
      Agreement.

(e)   Notwithstanding any contrary provision herein, Lessee does not assume and
      shall not be required to pay principal, interest or debt service relating
      to any indebtedness, whether secured or unsecured, arising from the
      issuance of bonds and the loan of the proceeds of such bond issue for the
      acquisition, construction, or financing of the Facility (herein referred
      to as the "Facility Debt"). Lessor shall pay the Facility Debt and all
      principal, interest or other debt service payments thereon, as and when
      such payments become due and payable.

(f)   Pursuant to Section 18 of the General Agreement, the Lessee has acquired
<PAGE>
 
      certain "Receivables" and has assumed certain "Payables" (as said terms
      are defined therein). Nothing in this Lease shall affect the rights and
      liabilities of Lessee and Lessor under Section 18 of the General
      Agreement, which are hereby ratified and confirmed.

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



                               LESSOR: BOARD OF COUNTY SUPERVISORS OF
                                       CHOCTAW COUNTY, MISSISSIPPI


                               BY:/s/ Mike King
                               Its: Chairman


                              ATTEST:
                              By:/s/ Don Threadgil
                              Secretary
                              (County Seal)


Date of Execution: 11/02/98



                              BOARD OF TRUSTEES OF CHOCTAW
                              COUNTY MEDICAL CENTER


                               BY: /s/ Samuel Kennedy
                               Its: Chairman


                               ATTEST:
                               By: /s/ Jerry Ruff
                               Its: Secretary
                               (Seal)


Date of Execution: 11/03/98


                               LESSEE: CENTENNIAL HEALTHCARE INVESTMENT
                                       CORPORATION



                               By:/s/ Alan Dahl
                               Its: Executive Vice President


                               ATTEST:
                               By: /s/ Daryl R. Griswold
                               Its: Assistant Secretary
                               (Corporate Seal)



Date of Execution: 11/10/98
<PAGE>
 
                             EXHIBIT A


I.     Hospital Facility

      [Description of Hospital Facility]

II.    Nursing Home

      [Description of Nursing Home]

III.   Clinics

      [Description of Clinics]

IV.    Ambulance Services Contract

      [Description of Ambulance Services Contract]
<PAGE>
 
                             EXHIBIT B


           [Legal Descriptions of Lessor-Owned Parcels]
<PAGE>
 
                             EXHIBIT C


          [Description of Leases, Lessor-Leased Parcels]
<PAGE>
 
                             EXHIBIT D





                    [List of Personal Property]