THIS AGREEMENT IS SUBJECT TO ARBITRATION PURSUANT TO

            SECTION 15-48-10, CODE OF LAWS OF SOUTH CAROLINA (1976).






                                 LEASE AGREEMENT

                          CAPSTONE CAPITAL CORPORATION
                             a Maryland corporation
                                   ("LESSOR")

                                       AND

              INTEGRATED LIVING COMMUNITIES OF WEST COLUMBIA, INC.,
                             a Delaware corporation
                                   ("LESSEE")

                                February 21, 1997



                                       For


                         Integrated Communities Assisted
                        Living Facility of West Columbia
                         (Jenni-Lynn Retirement Center)
                                 915 Hook Avenue
                          West Columbia, South Carolina


<PAGE>
<TABLE>
<CAPTION>

                                TABLE OF CONTENTS

<S>                  <C>                                                                                       <C>
ARTICLE I              LEASED PROPERTY; TERM....................................................................  1
                       ---------------------

ARTICLE II             RENT.....................................................................................  2
                       ----
         2.1           Minimum Rent and Adjustments to Minimum Rent.............................................  2
         2.2           Calculation of Increases to Minimum Rent.................................................  3
         2.3           Additional Charges.......................................................................  4
         2.4           Net Lease................................................................................  4

ARTICLE III            IMPOSITIONS..............................................................................  4
                       -----------
         3.1           Payment of Impositions...................................................................  4
         3.2           Proration of Impositions.................................................................  5
         3.3           Utility Charges..........................................................................  5
         3.4           Insurance Premiums.......................................................................  5

ARTICLE IV             NO TERMINATION...........................................................................  5
                       --------------

ARTICLE V              OWNERSHIP OF LEASED PROPERTY ............................................................  6
                       -----------------------------
         5.1           Ownership of the Property................................................................  6
         5.2           Personal Property........................................................................  6

ARTICLE VI             CONDITION AND USE OF LEASED PROPERTY.....................................................  6
                       ------------------------------------
         6.1           Condition of the Leased Property.........................................................  6
         6.2           Use of the Leased Property...............................................................  7
         6.3           Management of Facility...................................................................  8
         6.4           Lessor to Grant Easements................................................................  8

ARTICLE VII            LEGAL, INSURANCE AND FINANCIAL REQUIREMENTS..............................................  8
                       -------------------------------------------
         7.1           Compliance with Legal and Insurance Requirements.........................................  8
         7.2           Legal Requirement Covenants..............................................................  9
         7.3           Rent and Debt Service Coverage ..........................................................  9
         7.4           Rent and Debt Service Coverage .......................................................... 10

ARTICLE VIII           REPAIRS; RESTRICTIONS AND ANNUAL INSPECTIONS............................................. 10
                       --------------------------------------------
         8.1           Maintenance and Repair................................................................... 10
         8.2           Encroachments; Restrictions.............................................................. 11
         8.3           Inspections.............................................................................. 12

ARTICLE IX             CAPITAL ADDITIONS........................................................................ 12
                       -----------------
         9.1           Construction of Capital Additions to the Leased Property................................. 12
         9.2           Capital Additions Financed by Lessee..................................................... 13
         9.3           Capital Additions Financed by Lessor..................................................... 13
         9.4           Remodeling and Non-Capital Additions..................................................... 15
         9.5           Salvage.................................................................................. 15

ARTICLE X              LIENS.................................................................................... 16
                       -----

ARTICLE XI             PERMITTED CONTESTS....................................................................... 16
                       ------------------

ARTICLE XII            INSURANCE................................................................................ 17
                       ---------
         12.1          General Insurance Requirements........................................................... 17
         12.2          Replacement Cost......................................................................... 18

                                       i
<PAGE>
         12.3          Additional Insurance..................................................................... 18
         12.4          Waiver of Subrogation.................................................................... 19
         12.5          Form of Insurance........................................................................ 19
         12.6          Change in Limits......................................................................... 19
         12.7          Blanket Policy........................................................................... 19
         12.8          No Separate Insurance.................................................................... 20
         12.9          Insurance for Contractors................................................................ 20

ARTICLE XIII           FIRE AND CASUALTY........................................................................ 20
                       -----------------
         13.1          Insurance Proceeds....................................................................... 20
         13.2          Reconstruction in the Event of Damage or Destruction Covered by Insurance................ 20
         13.3          Reconstruction in the Event of Damage or Destruction Not Covered by Insurance............ 22
         13.4          Lessee's Property........................................................................ 23
         13.5          Restoration of Lessee's Property......................................................... 23
         13.6          No Abatement of the Rent................................................................. 23
         13.7          Damage Near End of Term.................................................................. 23
         13.8          Purchase or Substitution................................................................. 23
         13.9          Waiver................................................................................... 23

ARTICLE XIV            CONDEMNATION............................................................................. 24
                       ------------
         14.1          Parties' Rights and Obligations.......................................................... 24
         14.2          Total Taking............................................................................. 24
         14.3          Partial Taking........................................................................... 24
         14.4          Restoration.............................................................................. 24
         14.5          Award Distribution....................................................................... 25
         14.6          Temporary Taking......................................................................... 25
         14.7          Purchase or Substitution................................................................. 25

ARTICLE XV             DEFAULT.................................................................................. 25
                       -------
         15.1          Events of Default........................................................................ 25
         15.2          Remedies................................................................................. 26
         15.3          Additional Expenses...................................................................... 28
         15.4          Application of Funds..................................................................... 28

ARTICLE XVI            LESSOR'S RIGHT TO CURE................................................................... 28
                       ----------------------

ARTICLE XVII           PURCHASE OF THE LEASED PROPERTY.......................................................... 29
                       -------------------------------

ARTICLE XVIII          HOLDING OVER............................................................................. 30
                       ------------

ARTICLE XIX            ABANDONMENT.............................................................................. 30
                       -----------
         19.1          Discontinuance of Operations on the Leased Property...................................... 30
         19.2          Obsolescence of the Leased Property; Offer to Purchase................................... 30
         19.3          Conveyance of Leased Property............................................................ 30
         19.4          Option to Purchase....................................................................... 31

ARTICLE XX             SUBSTITUTION OF PROPERTY................................................................. 31
                       ------------------------
         20.1          Substitution of Property for the Leased Property......................................... 31
         20.2          Conditions to Substitution............................................................... 33
         20.3          Conveyance to Lessee..................................................................... 34
         20.4          Expenses................................................................................. 34

                                       ii
<PAGE>

ARTICLE XXI            RISK OF LOSS............................................................................. 34
                       ------------

ARTICLE XXII           INDEMNIFICATION.......................................................................... 35
                       ---------------

ARTICLE XXIII          SUBLETTING AND ASSIGNMENT................................................................ 35
                       -------------------------
         23.1          Subletting and Assignment................................................................ 35
         23.2          Non-Disturbance, Subordination and Attornment............................................ 36

ARTICLE XXIV           OFFICER'S CERTIFICATES AND FINANCIAL STATEMENTS.......................................... 36
                       -----------------------------------------------
         24.1          Estoppel Certificate..................................................................... 36
         24.2          Financial Statements and Certificates.................................................... 37

ARTICLE XXV            INSPECTION............................................................................... 38
                       ----------

ARTICLE XXVI           QUIET ENJOYMENT.......................................................................... 38
                       ---------------

ARTICLE XXVII          NOTICES.................................................................................. 38
                       -------

ARTICLE XXVIII         APPRAISAL................................................................................ 40
                       ---------

ARTICLE XXIX           PURCHASE................................................................................. 41
                       --------

ARTICLE XXX            DEFAULT BY LESSOR........................................................................ 41
                       -----------------
         30.1          Default by Lessor........................................................................ 41
         30.2          Lessee's Right to Cure................................................................... 42

ARTICLE XXXI           ARBITRATION.............................................................................. 42
                       -----------
         31.1          Controversies............................................................................ 42
         31.2          Appointment of Arbitrators............................................................... 42
         31.3          Third Arbitrator......................................................................... 43
         31.4          Arbitration Procedure.................................................................... 43
         31.5          Expenses................................................................................. 43

ARTICLE XXXII          FINANCING OF THE LEASED PROPERTY......................................................... 43
                       --------------------------------

ARTICLE XXXIII         SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE............................................ 44
                       ---------------------------------------------

ARTICLE XXXIV          EXTENDED TERMS........................................................................... 44
                       --------------

ARTICLE XXXV           GUARANTY................................................................................. 45
                       --------
         35.1          Guarantee................................................................................ 45
         35.2          Obligations of Guarantor Upon Default.................................................... 45
         35.3          Guarantee of Payment..................................................................... 45

ARTICLE XXXVI          MISCELLANEOUS............................................................................ 45
                       -------------
         36.1          No Waiver................................................................................ 45
         36.2          Remedies Cumulative...................................................................... 46
         36.3          Surrender................................................................................ 46
         36.4          No Merger of Title....................................................................... 46
         36.5          Transfers by Lessor...................................................................... 46
         36.6          General...........................................................................,...... 46
         36.7          Memorandum of Lease...............................................................,...... 47

                                      iii

<PAGE>
         36.8          Transfer of Licenses..................................................................... 47

ARTICLE XXXVII             GLOSSARY OF TERMS.................................................................... 47
                           -----------------
</TABLE>


                                       iv
<PAGE>

                                      LEASE

         THIS LEASE  ("Lease") dated as of February 21, 1997, is entered into by
and between CAPSTONE CAPITAL  CORPORATION,  a Maryland  corporation,  having its
principal  office at 1000 Urban Center  Drive,  Suite 630,  Birmingham,  Alabama
35242  ("Lessor") and INTEGRATED  LIVING  COMMUNITIES OF WEST COLUMBIA,  INC., a
Delaware  corporation  ("Lessee"),  and INTEGRATED LIVING  COMMUNITIES,  INC., a
Delaware  corporation  ("Guarantor"),  each having its principal office at 24850
Old 41 Road, Suite 10, Bonita Springs, Florida 34135-7022.

                                    ARTICLE I
                              LEASED PROPERTY; TERM
                              -------'--------------

         Upon and  subject to the terms and  conditions  hereinafter  set forth,
Lessor leases to Lessee and Lessee rents from Lessor all of Lessor's  rights and
interest  in and to the  following  real  property  (collectively,  the  "Leased
Property"):

         (a) the real property more particularly described on Exhibit A attached
hereto together with all covenants,  licenses,  privileges and benefits  thereto
belonging,  and any  easements,  rights-of-way,  rights of ingress and egress or
other  interests  of  Lessor  in, on or to any land,  highway,  street,  road or
avenue,  open or proposed,  in, on, across,  in front of,  abutting or adjoining
such real property,  including all strips and gores adjacent to or lying between
such real property and any adjacent real property (the "Land");

         (b) all buildings,  structures,  Fixtures (as hereinafter  defined) and
other  improvements  of every  kind  (including  all  alleyways  and  connecting
tunnels,  crosswalks,  sidewalks,  landscaping,  parking lots and structures and
roadways  appurtenant to such  buildings and  structures  presently or hereafter
situated  upon  the  Land,  and  Capital  Additions   financed  by  Lessor  (but
specifically  excluding Capital Additions financed by Lessee),  drainage and all
above-ground  and underground  utility  structures)  (collectively,  the "Leased
Improvements");

         (c) all permanently  affixed equipment,  machinery,  fixtures and other
items of real and/or personal property,  including all components  thereof,  now
and hereafter located in, on or used in connection with, and permanently affixed
to or  incorporated  into  the  Leased  Improvements,  including  all  furnaces,
boilers,   heaters,   electrical   equipment,   heating,   plumbing,   lighting,
ventilating, refrigerating, incineration, air and water pollution control, waste
disposal,  air-cooling  and air  conditioning  systems and apparatus,  sprinkler
systems and fire and theft protection equipment,  carpet, moveable or immoveable
walls or partitions  and built-in  oxygen and vacuum  systems,  all of which are
hereby deemed by the parties hereto to constitute real estate, together with all
replacements, modifications, alterations and additions thereto, but specifically
excluding  all  items  included   within  the  category  of  Personal   Property
(collectively the "Fixtures");

         (d)      the Personal Property;

         (e) to the extent  permitted by law, all permits,  approvals  and other
intangible  property or any interest  therein now or hereafter  owned or held by
Lessor in connection  with the Leased Property or any business or businesses now
or  hereafter  conducted  by  Lessee  or any  Tenant  or with  the use  thereof,
including all leases, contract rights, agreements, trade names, water rights and
reservations,  zoning rights,  business licenses and warranties (including those
relating to construction  or fabrication)  related to the Leased Property or any
part  thereof,  but  specifically  excluding the general  corporate  trademarks,
service marks, logos, insignia or books and records of Lessee; and

         (f) all site plans, surveys, soil and substrata studies,  architectural
drawings, plans and specifications,  engineering plans and studies, floor plans,
landscape  plans,  and other  plans and  studies  that relate to the Land or the
Leased Improvements and are in Lessor's possession or control.

SUBJECT,  HOWEVER,  to the matters  set forth on Exhibit B attached  hereto (the
"Permitted  Exceptions"),  to have and to hold for a fixed term of fifteen years
(the "Initial Term") commencing on the date hereof (the "Commencement Date") and
ending at midnight on the last day of the ________ month 

<PAGE>

after the  Commencement  Date,  unless sooner  terminated  pursuant to the terms
hereof.

                                   ARTICLE II
                                      RENT
                                      ----

     II.1  Minimum Rent and  Adjustments  to Minimum  Rent.  Lessee shall pay to
Lessor,  without notice, demand, set off (except as set forth in Section 30.2 or
Article XXXII hereof) or counterclaim,  in advance in lawful money of the United
States of America,  at Lessor's  address set forth herein or at such other place
or to such other person,  firms or  corporations as Lessor from time to time may
designate in writing,  Minimum  Rent, as adjusted  annually  pursuant to Section
2.1(b) during the Term, as follows:

         (a) Minimum  Rent.  Lessee will pay to Lessor as rent (as adjusted from
time to time in accordance with Sections 2.1(b) and 2.1(e),  the "Minimum Rent")
for the Leased  Property the annual sum equal to the product of (i) the Purchase
Amount times (ii) the greater of (X) ten percent and (Y) the  Treasury  Yield in
effect  ten  days  prior  to  the   Commencement   Date  with  maturity  periods
substantially  equivalent to the Initial Term plus 3.5%.  The Minimum Rent shall
be,  payable in advance in 12 equal,  consecutive  monthly  installments  on the
first day of each  calendar  month during the Term.  The parties will execute an
acknowledgement of the initial Minimum Rent calculated  pursuant to this Section
2.1(a) as soon as  reasonably  practicable  after  the  Commencement  Date.  The
Minimum  Rent  shall be  prorated  for any  partial  month,  and is  subject  to
adjustment as provided in Sections 2.1(b),  2.1(e) and 9.3(b)(iv) below. As used
herein, the term "Purchase Amount" means the total amount funded or to be funded
for the  acquisition of the Leased  Property by Lessor  pursuant to the Purchase
Agreement,  including  legal  fees and  expenses,  recording  taxes and fees and
expenses  related to or arising out of the title  policy,  structural  and other
inspections, survey, environmental report and appraisal.

         (b) Increases to Minimum Rent. On each  anniversary of the Commencement
Date (each such annual date individually  referred to as the "Adjustment  Date")
throughout the Initial Term and any Extended  Terms,  the  then-current  Minimum
Rent shall be increased  annually  effective as of such  Adjustment  Date by the
increase in the  Consumer  Price Index from the  Commencement  Date to the first
Adjustment Date and,  thereafter,  from one Adjustment Date to the  then-current
Adjustment Date; however,  with the exception of the first year of each Extended
Term,  in no event will the annual  change in the Minimum  Rent be less than two
percent nor more than five percent of the Minimum Rent for the prior year.

         (c) Capital Replacement Account.  Lessee will pay to Lessor for deposit
in a money market  account in a federally  insured bank in  Birmingham,  Alabama
acceptable to Lessor and Lessee the sums set forth on Exhibit C attached hereto,
which funds (the  "Capital  Replacement  Account")  shall be made  available  to
Lessee to make repairs and  replacements  for the Leased Property as approved by
Lessor  (which  approval  shall not be  unreasonably  withheld,  conditioned  or
delayed),  the  costs  of  which  according  to  generally  accepted  accounting
principles  must be depreciated  over periods greater than one year. The Capital
Replacement  Account shall be in the name of Lessor, and interest earned on such
account shall be retained in the Capital Replacement Account.  Lessee shall make
detailed  requests  for such  funds in  writing  to Lessor in the same form as a
Request  pursuant  Section 9.3 hereof.  Within 30 days of such  Request,  Lessor
shall  reasonably  approve  the  amount of  requested  funds  and make  mutually
agreeable arrangements for the disbursement of the funds, or provide Lessee with
written  notice in  reasonable  detail  specifying  Lessor's  objections to such
Request.

         (d) Payment of Minimum Rent. All payments of Minimum Rent shall be made
in  lawful  money of the  United  States by wire  transfer  of same day funds to
Lessor's account #0000040999 at First Commercial Bank, Birmingham,  Alabama, ABA
Routing  #062003605,  Attention:  Todd Beard, with advice to Daryl D. McCombs at
(205) 967-2092 (or such other account or location  specified by Lessor from time
to time in writing) on or before 2:00 p.m.,  Birmingham  time,  on any  Business
Day.

                                       2
<PAGE>
         (e)  Recalculation of Minimum Rent. The parties agree that the Purchase
Amount may be  estimated  as of the  Commencement  Date.  As soon as  reasonably
practicable  after the  determination of the final Purchase Amount,  Lessor will
recalculate  the Minimum Rent pursuant to Section  2.1(a)  whereupon the parties
will execute an acknowledgement of the recalculated Minimum Rent.

     II.2  Calculation of Increases to Minimum Rent. On or about each Adjustment
Date,  Lessor will  calculate  the increase in the Minimum Rent  pursuant to the
provisions  of Section  2.1(b) and will provide  Lessee with  written  notice of
same.

     II.3 Additional Charges. Lessee will also pay and discharge as and when due
(a) all other amounts,  liabilities,  obligations and Impositions,  which Lessee
assumes or agrees to pay under this Lease including,  to the extent  applicable,
any condominium  association dues,  assessments or other charges, and (b) in the
event of any failure on the part of Lessee to pay any of those items referred to
in clause (a) above,  Lessee will also  promptly pay and  discharge  every fine,
penalty, interest and cost which may be added for non-payment or late payment of
such items (the items referred to in clauses (a) and (b) above being referred to
herein  collectively  as the  "Additional  Charges"),  and Lessor shall have all
legal,  equitable and contractual  rights,  powers and remedies provided in this
Lease,  by statute or otherwise,  in the case of  non-payment  of the Additional
Charges,  as well as the Minimum  Rent.  If any  installment  of Minimum Rent or
Additional  Charges (but only as to those  Additional  Charges which are payable
directly  to Lessor)  shall not be paid within ten days after the date when due,
Lessee will pay Lessor on demand, as Additional Charges, interest (to the extent
permitted  by  law)  computed  at  the  Overdue  Rate  on  the  amount  of  such
installment,  from the date when due to the date of payment in full thereof.  In
the event Lessor  provides  Lessee with written  notice of failure to timely pay
any  installment of Minimum Rent or any Additional  Charges  pursuant to Section
15.1(b) more than three times within any twelve-month  period,  Lessee shall pay
an  administrative  fee to Lessor in the amount of $500.00  for each  additional
written notice Lessor gives  pursuant to Section  15.1(b) during the next twelve
months.  To the extent that Lessee pays any Additional  Charges to Lessor or the
Facility  Mortgagee  pursuant to any requirement of this Lease,  Lessee shall be
relieved of its obligation to pay such Additional Charges to the entity to which
such  Additional  Charges would  otherwise be due.  Additional  Charges shall be
deemed Rent hereunder.

     II.4 Net Lease.  The Rent shall be paid  absolutely net to Lessor,  so that
this Lease shall yield to Lessor the full amount of the  installments of Minimum
Rent and the payments of Additional  Charges  throughout the Term but subject to
any provisions of this Lease which  expressly  provide for payments by Lessor or
the adjustment of the Rent or other charges.

                                   ARTICLE III
                                   IMPOSITIONS
                                   -----------

     III.1 Payment of  Impositions.  Subject to Article XI relating to permitted
contests, Lessee will pay, or cause to be paid, all Impositions before any fine,
penalty, interest or cost may be added for non-payment, such payments to be made
directly to the taxing  authorities  where  feasible,  and Lessee will promptly,
upon  request,   furnish  to  Lessor  copies  of  official   receipts  or  other
satisfactory proof evidencing such payments. If any such Imposition may lawfully
be paid in  installments  (whether or not  interest  shall  accrue on the unpaid
balance of such Imposition), Lessee may exercise the option to pay the same (and
any accrued  interest on the unpaid balance of such  Imposition) in installments
and, in such event,  shall pay such  installments  during the Term hereof as the
same become due and before any fine, penalty,  premium, further interest or cost
may be added thereto.  Lessor, at its expense, shall, to the extent permitted by
applicable law,  prepare and file all tax returns and reports as may be required
by governmental  authorities in respect of Lessor's net income,  gross receipts,
franchise taxes and taxes on its capital stock.  Lessee, at its expense,  shall,
to the extent permitted by applicable laws and regulations, prepare and file all
other tax returns and reports in respect of any Imposition as may be required by
governmental  authorities.  If any refund shall be due from any taxing authority
in respect of any

                                       3
<PAGE>
Imposition paid by Lessee,  the same shall be paid over to or retained by Lessee
if no Event of Default shall have occurred hereunder and be continuing. Any such
funds retained by Lessor due to an Event of Default shall be applied as provided
in Article XV. Lessor and Lessee shall, upon request of the other,  provide such
data as is  maintained  by the party to whom the request is made with respect to
the Leased  Property as may be  necessary  to prepare any  required  returns and
reports. In the event governmental  authorities classify any property covered by
this Lease as personal  property,  Lessee shall file all  personal  property tax
returns in such jurisdictions  where filing is required.  Lessor and Lessee will
provide  the other  party,  upon  request,  with cost and  depreciation  records
necessary  for  filing  returns  for any  property  so  classified  as  personal
property.  Where  Lessor is  legally  required  to file  personal  property  tax
returns, and Lessee is obligated for the same hereunder, Lessee will be provided
with  copies of  assessment  notices  in  sufficient  time for  Lessee to file a
protest.  Lessee may,  upon giving 30 days' prior written  notice to Lessor,  at
Lessee's  option and at Lessee's  sole cost and  expense,  protest,  appeal,  or
institute  such other  proceedings  as Lessee may deem  appropriate  to effect a
reduction  of real  estate or  personal  property  assessments  and  Lessor,  if
requested by Lessee and at Lessee's expense as aforesaid,  shall fully cooperate
with Lessee in such protest, appeal, or other action. Billings for reimbursement
by Lessee to Lessor of personal property taxes shall be accompanied by copies of
an invoice  therefor and payments  thereof which identify the personal  property
with respect to which such payments are made.  Lessor will cooperate with Lessee
in order that  Lessee may  fulfill  its  obligations  hereunder,  including  the
execution of any instruments or documents reasonably requested by Lessee.

     III.2  Proration  of  Impositions.  Impositions  imposed  in respect of the
tax-fiscal  period during which the Term  terminates  shall be prorated  between
Lessor and Lessee,  whether or not such  Imposition  is imposed  before or after
such termination,  and Lessee's and Lessor's  obligation to pay their respective
prorated shares thereof shall survive such termination.

     III.3 Utility Charges. Lessee will, or will cause Tenants to, contract for,
in its own name, and will pay or cause to be paid all charges for,  electricity,
power,  gas, oil, water and other  utilities used in the Leased  Property during
the Term.

     III.4  Insurance  Premiums.  Lessee will contract for, in its own name, and
will pay or cause to be paid all premiums for, the insurance  coverage  required
to be maintained by Lessee pursuant to Article XII during the Term.

                                       4
<PAGE>
                                   ARTICLE IV
                                 NO TERMINATION
                                 --------------

         Except as provided in this Lease,  Lessee  shall  remain  bound by this
Lease in accordance with its terms and shall neither take any action without the
consent of Lessor to modify,  surrender or terminate  the same,  nor seek nor be
entitled to any abatement, deduction, deferment or reduction of Rent, or set-off
against the Rent, nor shall the  respective  obligations of Lessor and Lessee be
otherwise affected by reason of (a) any damage to, or destruction of, the Leased
Property or any portion  thereof from whatever cause or any Taking of the Leased
Property or any portion thereof,  except as otherwise  provided in Articles XIII
or XIV, (b) the lawful or unlawful prohibition of, or restriction upon, Lessee's
use of the Leased  Property,  or any portion thereof,  or the interference  with
such use by any person,  corporation,  partnership or other entity, or by reason
of eviction by  paramount  title,  (c) any claim which  Lessee has or might have
against  Lessor or by reason of any default or breach of any  warranty by Lessor
under this Lease or any other  agreement  between  Lessor and Lessee or to which
Lessor and Lessee are parties, (d) any bankruptcy,  insolvency,  reorganization,
composition,  readjustment,   liquidation,  dissolution,  winding  up  or  other
proceedings affecting Lessor or any assignee or transferee of Lessor, or (e) for
any  other  cause  whatsoever  whether  similar  or  dissimilar  to  any  of the
foregoing.  Lessee  hereby  specifically  waives  all  rights  arising  from any
occurrence  whatsoever which may now or hereafter be conferred upon it by law to
(i) modify,  surrender or terminate  this Lease or quit or surrender  the Leased
Property  or any  portion  thereof,  or (ii)  entitle  Lessee to any  abatement,
reduction,  suspension  or deferment of the Rent or other sums payable by Lessee
hereunder,  except  as  otherwise  specifically  provided  in  this  Lease.  The
obligations  of Lessor and Lessee  hereunder  shall be separate and  independent
covenants  and  agreements  and the Rent and all other  sums  payable  by Lessee
hereunder  shall continue to be payable in all events unless the  obligations to
pay the same shall be  terminated  pursuant  to the express  provisions  of this
Lease.  Notwithstanding  the foregoing,  Lessee shall have the right by separate
and  independent  action to pursue  any  claim or seek any  damages  it may have
against  Lessor as a result of a breach by Lessor of the terms of this  Lease or
Lessor's willful misconduct.

                                    ARTICLE V
                          OWNERSHIP OF LEASED PROPERTY
                          ----------------------------

     V.1 Ownership of the Property. Lessee acknowledges that the Leased Property
is the  property of Lessor and that Lessee has only the right to the  possession
and use of the Leased Property upon the terms and conditions of this Lease.

     V.2 Personal Property.  Lessee may (and shall as provided hereinbelow),  at
its expense,  install,  affix or assemble or place on any parcels of the Land or
in any of the Leased  Improvements any items of the Personal  Property,  and may
remove,  replace or  substitute  for the same from time to time in the  Ordinary
Course of Business  with like property of equal or greater  value.  Lessee shall
provide and maintain during the entire Term all such Personal  Property as shall
be necessary in order to operate the Facility in  compliance  with all licensure
and  certification  requirements,   in  compliance  with  all  applicable  Legal
Requirements  and  Insurance  Requirements  and  otherwise  in  accordance  with
customary  practice in the  industry  for the Primary  Intended Use in the state
where the Land is located.

                                   ARTICLE VI
                      CONDITION AND USE OF LEASED PROPERTY
                      ------------------------------------

     VI.1  Condition of the Leased  Property.  Lessee  acknowledges  receipt and
delivery of possession  of the Leased  Property and that Lessee has examined and
otherwise  acquired  knowledge of the condition of the Leased  Property prior to
the  execution  and  delivery of this Lease and has found the same to be in good
order and repair and satisfactory for its purpose  hereunder . Lessee is leasing
the Leased  Property "as is" in its condition at the time of  occupancy.  Lessee
waives any claim or action against

                                       5

<PAGE>
Lessor in  respect of the  condition  of the Leased  Property.  LESSOR  MAKES NO
WARRANTY  OR  REPRESENTATION,  EXPRESS  OR  IMPLIED,  IN  RESPECT  OF THE LEASED
PROPERTY OR ANY PART  THEREOF,  EITHER AS TO ITS  FITNESS FOR USE,  SUITABILITY,
DESIGN OR CONDITION FOR ANY  PARTICULAR  USE OR PURPOSE OR  OTHERWISE,  OR AS TO
QUALITY OF THE  MATERIAL  OR  WORKMANSHIP  THEREIN,  LATENT OR PATENT,  IT BEING
AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY LESSEE.  LESSEE  ACKNOWLEDGES THAT
THE LEASED  PROPERTY HAS BEEN INSPECTED BY LESSEE AND IS  SATISFACTORY  TO IT IN
ALL RESPECTS.

     VI.2 Use of the Leased Property.

         (a) After the  Commencement  Date and during the  entire  Term,  Lessee
shall use or cause to be used the Leased Property and the  improvements  thereon
as a senior  residential  facility which may include  congregate  care services,
assisted living services, Alzheimer's care services or skilled nursing services,
or some  combination  of the foregoing  services (at any time, the actual use or
combination of uses specified  herein that is or are then being conducted at the
Leased Property,  are referred to as the "Primary  Intended Use").  Lessee shall
not use the Leased Property or any portion thereof for any other use without the
prior  written  consent  of  Lessor,  which  consent  shall not be  unreasonably
withheld or delayed.

         (b) Lessee  covenants  that it will obtain and maintain,  with Lessor's
cooperation but at Lessee's sole cost and expense, all material approvals needed
to use and operate the Leased Property and the Facility for the Primary Intended
Use in compliance with all applicable Legal Requirements.

         (c) Lessee  covenants  and agrees  that during the Term it will use its
reasonable  best  efforts  to  operate   continuously  the  Leased  Property  in
accordance with its Primary Intended Use and to maintain its  certifications for
reimbursement,  if any,  and  licensure  and its  accreditation,  with  Lessor's
cooperation  but  at  Lessee's  sole  cost  and  expense,   if  compliance  with
accreditation  standards is required to maintain the  operations of the Facility
and if a failure to comply would adversely affect operations of the Facility.

         (d) Lessee shall not commit or suffer to be committed  any waste on the
Leased Property, or in the Facility or cause or permit any nuisance thereon.

         (e) Lessee shall neither  suffer nor permit the Leased  Property or any
portion  thereof,  including  any Capital  Addition  whether or not  financed by
Lessor,  to be used in such a manner as (i) reasonably likely to impair Lessor's
estate therein or in any portion thereof, or (ii) is reasonably likely to result
in a claim or claims of adverse usage or adverse  possession  by the public,  as
such, or of implied dedication of the Leased Property or any portion thereof.

         (f) Lessee  will not  utilize  any  Hazardous  Materials  on the Leased
Property except in accordance with applicable  Legal  Requirements  and will not
permit any  contamination  which may require  remediation  under any  applicable
Hazardous Materials Law. Lessee agrees not to dispose of any Hazardous Materials
or substances  within the sewerage  system of the Leased  Property,  and that it
will  handle  all "red  bag"  wastes in  accordance  with  applicable  Hazardous
Materials Laws.

     VI.3  Management  of  Facility.  Unless  otherwise  agreed to in writing by
Lessor (i) Lessee  shall cause the  Facility to be managed and leased to Tenants
at all times by Lessee or an  Affiliate  of Lessee,  (ii) Lessee shall not enter
into any agreement (oral or written) with respect to such management and leasing
activities  unless the terms  thereof and the proposed  manager or leasing agent
have been  approved in writing by Lessor,  (iii) all such  management or leasing
agreements  must be in writing,  and (iv) all  management or leasing  agreements
with an Affiliate of Lessee must contain  provisions  to the effect that (A) the
obligation of Lessee to pay management  fees is subordinate to its obligation to
pay the  Rent,  and (B) the  manager  shall not have the  right to  collect  any
management fees during the continuance of an

                                       6

<PAGE>
Event of Default.

     VI.4 Lessor to Grant  Easements.  Lessor  will,  from time to time,  at the
request of Lessee and at Lessee's cost and expense,  but subject to the approval
of Lessor (a) grant  easements and other rights in the nature of easements,  (b)
release existing  easements or other rights in the nature of easements which are
for the benefit of the Leased  Property,  (c)  dedicate  or transfer  unimproved
portions of the Leased Property for road, highway or other public purposes,  (d)
execute  petitions  to  have  the  Leased  Property  annexed  to  any  municipal
corporation  or utility  district,  (e) execute  amendments to any covenants and
restrictions  affecting the Leased Property,  and (f) execute and deliver to any
person such  instruments as may be necessary or appropriate to confirm or effect
such grants, releases,  dedications and transfers (to the extent of its interest
in the  Leased  Property),  but only upon  delivery  to  Lessor of an  Officer's
Certificate stating (and such other information as Lessor may reasonably require
confirming)  that  such  grant,  release,  dedication,   transfer,  petition  or
amendment  is  required  or  beneficial  for and not  detrimental  to the proper
conduct of the business of Lessee on the Leased Property and does not reduce the
value thereof.

                                   ARTICLE VII
                   LEGAL, INSURANCE AND FINANCIAL REQUIREMENTS
                   -------------------------------------------

     VII.1 Compliance with Legal and Insurance Requirements.  Subject to Article
XI relating to permitted  contests,  Lessee,  at its expense,  will promptly (a)
comply with all  material  Legal  Requirements  and  Insurance  Requirements  in
respect of the use, operation, maintenance, repair and restoration of the Leased
Property, whether or not compliance therewith shall require structural change in
any of the Leased  Improvements  or interfere  with the use and enjoyment of the
Leased Property,  and (b) directly or indirectly with the cooperation of Lessor,
but at Lessee's  sole cost and  expense,  procure,  maintain and comply with all
material  licenses,  certificates  of need,  if any,  and  other  authorizations
required for (i) any use of the Leased  Property  then being made,  and for (ii)
the proper  erection,  installation,  operation  and  maintenance  of the Leased
Improvements or any part thereof, including any Capital Additions.

     VII.2 Legal  Requirement  Covenants.  Lessee  covenants and agrees that the
Leased  Property  shall  not be used for any  unlawful  purpose.  Lessee  shall,
directly or indirectly with the cooperation of Lessor, but at Lessee's sole cost
and expense, acquire and maintain all material licenses,  certificates,  permits
and other  authorizations and approvals needed to operate the Leased Property in
its customary manner for the Primary Intended Use and any other use conducted on
the Leased  Property as may be  permitted  from time to time  hereunder.  Lessee
further  covenants  and agrees  that  Lessee's  use of the Leased  Property  and
Lessee's  maintenance,  alteration,  and  operation  of the same,  and all parts
thereof,  shall at all times conform to all applicable Legal  Requirements where
the  failure to conform  would have a material  adverse  effect on Lessee or the
Leased Property.

     VII.3 Rent and Debt Service  Coverage - Consolidated.  As used herein,  the
term  "Consolidated  Coverage Ratio" means EBITDAR (as defined below) for Lessee
and Guarantor on a consolidated  basis for the applicable  period divided by the
principal  (excluding any  prepayments  or principal at maturity),  interest and
lease (capital and operating)  payment  obligations of Lessee and Guarantor on a
consolidated  basis for the same  period.  As used  herein,  the term  "EBITDAR"
means,  for  any  period,  the sum of (i)  the  income  (or  deficit)  from  all
operations  before  provision  of  income  taxes  for such  period  and  without
deduction for actual  management  fees paid or incurred,  plus (ii) the interest
charges paid or accrued during such period (including  imputed interest on lease
(capital  or  operating)  obligations  (including  this  Lease),  but  excluding
amortization of debt discount and expense), plus (iii) all amounts in respect of
depreciation and amortization for such period,  plus (iv) the rent due under all
leases  (capital or  operating,  including  this Lease) for such period.  Lessee
agrees and covenants with Lessor that so long as this Lease is in effect, Lessee
will achieve and within 45 days after the end of each calendar quarter (or year)
specified  below provide  evidence to Lessor of the achievement of the following
Consolidated Coverage Ratio requirements:

                                       7
<PAGE>
<TABLE>
<CAPTION>

                                            Required                            Months Included
         Period                             Consolidated Coverage Ratio         in Calculation
         ------                             ---------------------------         --------------

<S>     <C>                                <C>                                <C>    
(i)      Prior to date in (ii)              No requirement                      No requirement

(ii)     For calendar quarter               1.0 to 1.0                          Three months ending
         ending 12/31/97                                                        with such date

(iii)    For calendar quarter               1.0 to 1.0                          Three months ending
         ending 3/31/98                                                         with such date

(iv)     For calendar quarter               1.1 to 1.0                          Three months ending
         ending 6/30/98                                                         with such date

(v)      For calendar quarter               1.2 to 1.0                          Three months ending
         ending 9/30/98                                                         with such date

(vi)     For calendar year                  1.2 to 1.0                          Twelve months ending
         ending on 12/31/98                                                     with such date

(vii)    For calendar quarter               1.25 to 1.0                         Three months ending
         ending 12/31/98                                                        with such date

(viii)   For calendar quarter               1.3 to 1.0                          Three months ending
         ending 3/31/99 and                                                     with such date
         all subsequent calendar
         quarters

(ix)     For calendar year                  1.3 to 1.0                          Twelve months ending
         ending 12/31/99 and                                                    with such date
         all subsequent calendar
         years
</TABLE>

     VII.4 Rent and Debt Service Coverage - Facility.  As used herein,  the term
"Facility Coverage Ratio" means EBITDAR for the Facility only for the applicable
period  minus  assumed  management  fees of five  percent  of the total  patient
revenues  (regardless  of the amount of the  management  fees  actually  paid or
incurred)  earned from the  Facility  divided by the  principal  (excluding  any
prepayments or principal at maturity), interest and lease payment obligations of
Lessee  (including  the Minimum  Rent) for the same  period.  Lessee  agrees and
covenants  with  Lessor  that so long as this  Lease is in effect,  Lessee  will
achieve  and  within 45 days after the end of each  March,  June,  September  or
December during the Term,  beginning with the calendar  quarter ending no sooner
than three  months and no later than six  months  after the  Commencement  Date,
provide  evidence to Lessor of the  achievement  of the Facility  Coverage Ratio
equal to or greater than 1.25 to 1.0.

                                  ARTICLE VIII
                  REPAIRS; RESTRICTIONS AND ANNUAL INSPECTIONS
                  --------------------------------------------

     VIII.1 Maintenance and Repair.d Repair

         (a)  Lessee,  at its  expense,  will keep the Leased  Property  and all
private  roadways,  sidewalks and curbs  appurtenant  thereto in reasonably good
order and repair (whether or not the need for such repairs occurs as a result of
Lessee's use, any prior use, the elements, the age of the Leased Property or


                                       8
<PAGE>
any portion thereof), and except as otherwise provided in Articles XIII and XIV,
with  reasonable  promptness  will make all  necessary and  appropriate  repairs
thereto of every kind and nature  (including  remodeling to the extent necessary
to maintain the Leased Property in a condition  substantially the same as exists
on the date hereof), whether interior or exterior, structural or non-structural,
ordinary  or  extraordinary,  foreseen or  unforeseen  or arising by reason of a
condition  existing prior to or after the commencement of the Term of this Lease
(concealed  or  otherwise).  All repairs  and  remodeling  shall,  to the extent
reasonably  achievable,  be at least  equivalent in quality to the original work
and shall be accomplished  by Lessee or a party selected by Lessee.  Lessee will
not take or omit to take any  action  the  taking  or  omission  of which  might
materially  impair the value or  usefulness  of the Leased  Property or any part
thereof for the  Primary  Intended  Use.  If Lessee  fails to perform any of its
obligations  hereunder,  or if  Lessor  reasonably  determines  that  action  is
necessary and is not being taken,  Lessor may, on giving 30 days' written notice
to Lessee (other than in a case reasonably  deemed by Lessor to be an emergency,
in which  case no such  notice  shall be  required),  without  demand on Lessee,
perform  any such  obligations  in such  manner and to such extent and take such
other  action  as  Lessor  may deem  appropriate  in the  event  Lessee  has not
commenced  to perform  such  obligation  or take such action  during such 30-day
period,  and all costs,  expenses  and  charges of Lessor  relating  to any such
action  shall  constitute  Additional  Charges and shall be payable by Lessee to
Lessor in accordance with Section 2.3.

         (b)  Except  for  the use of any  insurance  proceeds  (to  the  extent
required  by  Sections  13.1 and 13.2) and any Award (to the extent  required by
Section 14.3) Lessor shall not under any  circumstances  be required to build or
rebuild  any  improvements  on the  Leased  Property,  or to make  any  repairs,
replacements,   alterations,   restorations,   or  renewals  of  any  nature  or
description  to  the  Leased  Property,   whether  ordinary  or   extraordinary,
structural or nonstructural,  foreseen or unforeseen, or to make any expenditure
whatsoever  with respect  thereto in connection  with this Lease, or to maintain
the Leased Property in any way.

         (c) Nothing contained in this Lease and no action or inaction by Lessor
shall be construed as constituting  the consent or request of Lessor,  expressed
or implied, to any contractor,  subcontractor, laborer, materialman or vendor to
or for the performance of any particular  labor or services or the furnishing of
any  particular  materials or other property for the  construction,  alteration,
addition, repair or demolition of or to the Leased Property or any part thereof.

         (d) Unless  Lessor  shall  convey any of the Leased  Property to Lessee
pursuant to the  provisions of this Lease,  Lessee will,  upon the expiration or
prior  termination  of this Lease,  vacate and surrender the Leased  Property to
Lessor in the  condition in which the Leased  Property was  originally  received
from Lessor,  except for ordinary  wear and tear  (subject to the  obligation of
Lessee to  maintain  the  Property  in good order and  repair  during the entire
Term),  damage  caused by the gross  negligence  or willful acts of Lessor,  and
damage or  destruction  described  in Article  XIII or  resulting  from a Taking
described in Article XIV which Lessee is not required by the terms of this Lease
to repair or restore,  and except as  repaired,  rebuilt,  restored,  altered or
added to as permitted or required by the provisions of this Lease.

     VIII.2  Encroachments;  Restrictions.  If any of the Improvements shall, at
any time,  encroach upon any property,  street or  right-of-way  adjacent to the
Leased Property,  or shall violate the agreements or conditions contained in any
applicable Legal  Requirement,  lawful  restrictive  covenant or other agreement
affecting the Leased Property,  or any part thereof,  or shall impair the rights
of others under any  easement or  right-of-way  to which the Leased  Property is
subject,  then promptly upon the request of Lessor, Lessee shall at its expense,
subject  to its  right  to  contest  the  existence  of any  such  encroachment,
violation or impairment,  (a) obtain valid and effective  waivers or settlements
of all claims,  liabilities and damages  resulting from each such  encroachment,
violation or impairment,  whether the same shall affect Lessor or Lessee, or (b)
make such changes in the Improvements, and take such other actions, as Lessor in
the good faith exercise of its judgment deems reasonably practicable,  to remove
such  encroachment,  or to end  such  violation  or  impairment,  including,  if
necessary, the alteration of any of the Leased


                                       9

<PAGE>
Improvements,  and in any event  take all such  actions as may be  necessary  in
order to be able to  continue  the  operation  of the  Facility  for the Primary
Intended  Use  substantially  in the manner and to the extent the  Facility  was
operated  prior to the  assertion of such  violation or  encroachment.  Any such
alteration  shall be made in  conformity  with the  applicable  requirements  of
Article IX. Lessee's  obligations under this Section 8.2 shall be in addition to
and shall in no way  discharge or diminish any  obligation  of any insurer under
any policy of title or other  insurance and Lessee shall be entitled to a credit
for any  sums  recovered  by  Lessor  under  any such  policy  of title or other
insurance.

     VIII.3  Inspections.  From time to time  during  the Term,  Lessor  and its
agents  shall  have the  right,  subject  to any  rights of  confidentiality  of
Tenants, to inspect the Leased Property and all systems contained therein at any
reasonable time and upon two days advance notice to Lessee to determine Lessee's
compliance with its obligations  under this Lease,  including those  obligations
set forth in Article VII and this Article VIII.  Lessee shall be responsible for
the costs of such inspections, which costs shall not exceed the sum of $2,000.00
per year for each year of the Term for an independent, third party inspection of
the Facility.

                                   ARTICLE IX
                                CAPITAL ADDITIONS
                                -----------------

     IX.1 Construction of Capital Additions to the Leased Property.

         (a) If no Event of  Default  shall  have  occurred  and be  continuing,
Lessee shall have the right,  upon and subject to the terms and  conditions  set
forth below,  to construct or install  Capital  Additions on the Leased Property
with the prior written consent of Lessor which consent shall not be unreasonably
withheld;  provided that Lessee shall not be permitted to create any Encumbrance
on the Leased  Property in connection with such Capital  Addition  without first
complying with Section 9.1(b) hereof.  Prior to commencing  construction  of any
Capital  Addition,  Lessee shall submit to Lessor in writing a proposal  setting
forth in reasonable  detail any proposed  Capital  Addition and shall provide to
Lessor such plans and  specifications,  permits,  licenses,  contracts and other
information  concerning the proposed  Capital  Addition as Lessor may reasonably
request.  Without limiting the generality of the foregoing,  such proposal shall
indicate the approximate  projected cost of constructing  such Capital  Addition
and the use or uses to which it will be put.

         (b) Prior to commencing  construction of any Capital  Addition,  Lessee
shall first request Lessor to provide funds to pay for such Capital  Addition in
accordance  with the provisions of Section 9.3. If Lessor  declines or is unable
to provide  such  financing  on terms  acceptable  to Lessee and Lessee  rejects
Lessor's  offer of  financing,  Lessee may arrange or provide  other  financing,
subject to the provisions of Section 9.2. Lessor will reasonably  cooperate with
Lessee regarding the grant of any consents or easements or the like necessary or
appropriate in connection  with any Capital  Addition;  provided that no Capital
Addition shall be made which would tie in or connect any Leased  Improvements on
the Leased  Property  with any other  improvements  on property  adjacent to the
Leased  Property  (and not part of the Land  covered  by this  Lease)  including
tie-ins of buildings or other structures or utilities,  unless Lessee shall have
obtained  the prior  written  approval of Lessor,  which  approval  shall not be
unreasonably  withheld.  All proposed Capital Additions shall be architecturally
integrated into and consistent with the Leased Property.

     IX.2 Capital  Additions  Financed by Lessee. If Lessee finances or arranges
to finance any Capital Addition with a party other than Lessor or if Lessee pays
cash for any  Capital  Addition,  this  Lease  shall be and hereby is amended to
provide as follows:

         (a) There shall be no  adjustment  in the Minimum Rent by reason of any
such Capital Addition.


                                       10
<PAGE>
         (b) Upon the expiration or earlier  termination  of this Lease,  Lessor
shall compensate Lessee for all Capital Additions paid for or financed by Lessee
in any of the following ways:

                  (i) By  purchasing  all Capital  Additions  paid for by Lessee
         from  Lessee for cash in the amount of the Fair  Market  Added Value at
         the time of purchase by Lessor of all such Capital  Additions  paid for
         or financed by Lessee; or

                  (ii) Such other  arrangement  regarding such  compensation  as
         shall be mutually acceptable to Lessor and Lessee.

Any amount  owed by Lessee to Lessor  under this  Lease at such  termination  or
expiration may be deducted from any compensation for Capital  Additions  payable
by Lessor to Lessee under this Section 9.2.

     IX.3 Capital Additions Financed by Lessor.

         (a) Lessee shall request that Lessor provide or arrange financing for a
Capital  Addition  by  providing  to Lessor such  information  about the Capital
Addition  as  Lessor  may  reasonably  request  (a  "Request"),   including  all
information  referred to in Section 9.1 above. Lessor may, but shall be under no
obligation to provide or obtain the funds necessary to meet the Request.  Within
30 days of receipt of a Request,  Lessor  shall  notify  Lessee as to whether it
will finance the proposed  Capital Addition and, if so, the terms and conditions
upon which it would do so,  including  the terms of any amendment to this Lease.
In no event  (i)  shall the  portion  of the  projected  Capital  Addition  Cost
comprised of land (if any),  materials,  labor charges and fixtures be less than
100% of the  total  amount  of such  cost,  or (ii)  shall  Lessee or any of its
Affiliates  be  entitled  to any  commission  or  development  fee,  directly or
indirectly,  as a portion of the Capital Addition Cost. Any Capital Addition not
financed by Lessor  must still be approved in writing by Lessor  pursuant to the
terms of Section 9.1 hereof,  which consent will not be  unreasonably  withheld.
Lessee may  withdraw its Request by notice to Lessor at any time before or after
receipt of Lessor's terms and conditions.

         (b) If Lessor agrees to finance the proposed Capital Addition, Lessor's
obligation  to  advance  any funds  shall be  subject  to  receipt of all of the
following, in form and substance reasonably satisfactory to Lessor:

                  (i)   such loan documentation as may be required by Lessor;

                  (ii)  any  information,  certificates,  licenses,  permits  or
         documents  requested  by Lessor,  or by any lender with whom Lessor has
         agreed or may  agree to  provide  financing,  which  are  necessary  or
         appropriate  to confirm  that  Lessee  will be able to use the  Capital
         Addition  upon  completion  thereof  in  accordance  with  the  Primary
         Intended Use, including all required federal, state or local government
         licenses and approvals;

                  (iii)  an  Officer's   Certificate   and,  if   requested,   a
         certificate from Lessee's architect, setting forth in detail reasonably
         satisfactory to Lessor the projected (or actual,  if available) cost of
         the proposed Capital Addition;

                  (iv)  an   amendment   to  this  Lease,   duly   executed  and
         acknowledged,  in form and substance  satisfactory to Lessor and Lessee
         (the "Lease Amendment"), containing such provisions as may be necessary
         or appropriate due to the Capital  Addition,  including any appropriate
         changes  in the legal  description  of the Land and the Rent,  all such
         changes to be mutually agreed upon by Lessor and Lessee;

                  (v)    if appropriate, a deed conveying title to Lessor to any
         land and


                                       11
<PAGE>
         improvements  or other rights  acquired for the purpose of constructing
         the  Capital  Addition,  free and  clear of any  liens or  encumbrances
         except  those  approved  in  writing by Lessor  and,  both prior to and
         following  completion  of the  Capital  Addition,  an  as-built  survey
         thereof reasonably satisfactory to Lessor;

                  (vi) if appropriate, endorsements to any outstanding policy of
         title insurance  covering the Leased Property or a supplemental  policy
         of title insurance covering the Leased Property reasonably satisfactory
         in form and  substance  to Lessor (A)  updating  the same  without  any
         additional  exceptions,  except as may be permitted by Lessor;  and (B)
         increasing  the coverage  thereof by an amount equal to the Fair Market
         Value of the  Capital  Addition  (except to the  extent  covered by the
         owner's policy of title  insurance  referred to in  subparagraph  (vii)
         below);

                  (vii) if  required by Lessor,  (A) an owner's  policy of title
         insurance  insuring  fee simple  title to any land  conveyed  to Lessor
         pursuant  to  subparagraph  (v),  free  and  clear  of  all  liens  and
         encumbrances  except those approved by Lessor and (B) a lender's policy
         of title insurance satisfactory in form and substance to Lessor and the
         Lending Institution advancing any portion of the Capital Addition Cost;

                  (viii)   if required by Lessor upon completion of the  Capital
         Addition,  an M.A.I appraisal of the Leased Property; and

                  (ix)   such   other   certificates   (including   endorsements
         increasing  the  insurance  coverage,  if any, at the time  required by
         Section  12.1),  documents,  customary  opinions of  Lessee's  counsel,
         appraisals,  surveys,  certified copies of duly adopted  resolutions of
         the Board of Directors of Lessee authorizing the execution and delivery
         of the Lease Amendment and any other instruments or documents as may be
         reasonably required by Lessor.

         (c) Upon making a Request to finance a Capital Addition, whether or not
such financing is actually  consummated,  Lessee shall pay the reasonable  costs
and  expenses  of Lessor and any  Lending  Institution  which has  committed  to
finance such Capital  Addition paid or incurred in connection with the financing
of the Capital Addition, including (i) the fees and expenses of their respective
counsel,  (ii) the amount of any  recording  or transfer  taxes and fees,  (iii)
documentary  stamp taxes,  if any, (iv) title insurance  charges,  (v) appraisal
fees, if any, and (vi) commitment fees, if any.

     IX.4 Remodeling and Non-Capital Additions.  Lessee shall have the right and
the obligation to make  additions,  modifications  or improvements to the Leased
Property which are not Capital Additions,  including tenant improvements made in
connection  with the  Tenant  Leases,  from  time to time as may  reasonably  be
necessary  for its uses and purposes  and to permit  Lessee to comply fully with
its  obligations  set forth in this  Lease;  provided  that such  action will be
undertaken  expeditiously,  in a workmanlike  manner and will not  significantly
alter the character or purpose or detract from the value or operating efficiency
of the Leased Property and will not  significantly  impair the revenue producing
capability of the Leased  Property or adversely  affect the ability of Lessee to
comply with the provisions of this Lease.  Title to all  non-Capital  Additions,
modifications and improvements shall,  without payment by Lessor at any time, be
included  under  the  terms  of this  Lease  and,  upon  expiration  or  earlier
termination of this Lease, shall pass to and become the property of Lessor.

     IX.5  Salvage.  All  materials  which are scrapped or removed in connection
with the making of either Capital Additions  permitted by Section 9.1 or repairs
required by Article  VIII shall be or become the  property  of Lessor;  provided
that Lessor may require  Lessee to dispose of such  materials  and remit the net
proceeds thereof to Lessor within 15 days of such disposal.


                                       12
<PAGE>
                                    ARTICLE X
                                      LIENS
                                      -----

         Subject to the provisions of Article XI relating to permitted contests,
Lessee  will not  directly  or  indirectly  create  or  suffer to exist and will
promptly  discharge  at its expense  any lien,  encumbrance,  attachment,  title
retention  agreement or claim upon the Leased Property or any attachment,  levy,
claim or encumbrance in respect of the Rent,  not including,  however,  (a) this
Lease,  (b) the  matters,  if any, set forth in Exhibit B attached  hereto,  (c)
restrictions,  liens and other encumbrances which are consented to in writing by
Lessor,  or any easements  granted  pursuant to the provisions of Section 6.4 of
this Lease,  (d) liens for those taxes of Lessor which Lessee is not required to
pay  hereunder,  (e)  subleases  permitted  by  Article  XXIII,  (f)  liens  for
Impositions or for sums resulting from  noncompliance with Legal Requirements so
long as (1) the same are not yet payable or are payable  without the addition of
any fine or penalty or (2) such liens are in the process of being  contested  in
accordance with the provisions of Article XI, (g) liens of mechanics,  laborers,
materialmen,  suppliers  or vendors  for sums  either  disputed  or not yet due,
provided  that (1) the payment of such sums shall not be postponed for more than
60 days after the  completion  of the  action  (including  any  appeal  from any
judgment  rendered  therein)  giving rise to such lien and such reserve or other
appropriate  provisions  as  shall  be  required  by law or  generally  accepted
accounting principles shall have been made therefor or (2) any such liens are in
the process of being  contested in accordance with the provisions of Article XI,
and (h) any Encumbrance placed on the Leased Property by Lessor.

                                   ARTICLE XI
                               PERMITTED CONTESTS
                               ------------------

         Lessee,  after ten days' prior written notice to Lessor,  on its own or
on Lessor's behalf (or in Lessor's name), but at Lessee's expense,  may contest,
by appropriate legal proceedings conducted in good faith and with due diligence,
the amount,  validity or  application,  in whole or in part, of any  Imposition,
Legal Requirement,  Insurance Requirement,  lien, attachment, levy, encumbrance,
charge or claim  (collectively  "Charge") not otherwise  permitted by Article X,
which is required  to be paid or  discharged  by Lessee or any Tenant;  provided
that (a) in the case of an unpaid Charge,  the  commencement and continuation of
such  proceedings,  or the posting of a bond or certificate of deposit as may be
permitted by applicable  law, shall suspend the  collection  thereof from Lessor
and from the Leased  Property;  (b)  neither  the Leased  Property  nor any Rent
therefrom  nor any part thereof or interest  therein  would be in any  immediate
danger of being sold,  forfeited,  attached or lost;  (c) Lessor would not be in
any  immediate  danger of civil or  criminal  liability  for  failure  to comply
therewith  pending  the outcome of such  proceedings;  (d) in the event that any
such  contest  shall  involve  a sum of money or  potential  loss in  excess  of
$50,000.00,  then Lessee  shall  deliver to Lessor and its counsel an  Officer's
Certificate  as to the  matters set forth in clauses  (a),  (b) and (c) and such
opinions of legal counsel as Lessor may reasonably  request;  (e) in the case of
an  Insurance  Requirement,  the  coverage  required  by  Article  XII  shall be
maintained;  and (f) if such  contest  be  finally  resolved  against  Lessor or
Lessee,  Lessee shall,  as Additional  Charges due  hereunder,  promptly pay the
amount  required to be paid,  together with all interest and  penalties  accrued
thereon,  or otherwise comply with the applicable Charge;  provided further that
nothing  contained  herein shall be  construed  to permit  Lessee to contest the
payment of the Rent,  or any other sums  payable by Lessee to Lessor  hereunder.
Lessor,  at  Lessee's  expense,   shall  execute  and  deliver  to  Lessee  such
authorizations  and other  documents as may  reasonably  be required in any such
contest and, if reasonably  requested by Lessee or if Lessor so desires and then
at its own expense,  Lessor shall join as a party  therein.  Lessor shall do all
things  reasonably  requested by Lessee in connection  with such action.  Lessee
shall indemnify and save Lessor harmless against any liability,  cost or expense
of any kind that may be imposed upon Lessor in connection  with any such contest
and any loss resulting therefrom.

                                  ARTICLE XII

                                       13
<PAGE>
                                    INSURANCE
                                    ---------

     XII.1 General Insurance Requirements. During the Term of this Lease, Lessee
shall at all times keep the Leased  Property,  and all property located in or on
the Leased  Property  insured with the kinds and amounts of insurance  described
below and written by companies reasonably  acceptable to Lessor authorized to do
insurance  business in the state in which the Leased  Property  is located.  The
policies must name Lessor as an  additional  insured and losses shall be payable
to Lessor and/or  Lessee as provided in Article XIII. In addition,  the policies
shall name as an additional  insured the holder  ("Facility  Mortgagee")  of any
mortgage,  deed of trust or other security  agreement  securing any  Encumbrance
placed  on the  Leased  Property  or any part  thereof  in  accordance  with the
provisions of Article XXXII ("Facility Mortgage"),  if any, by way of a standard
form of mortgagee's loss payable  endorsement.  Any loss adjustment in excess of
$100,000.00  shall  require  the  written  consent of Lessor  and each  affected
Facility Mortgagee. Evidence of insurance shall be deposited with Lessor and, if
requested,  with any  Facility  Mortgagee(s).  If any  provision of any Facility
Mortgage which constitutes a first lien on the Leased Property requires deposits
of insurance to be made with such Facility Mortgagee, Lessee shall pay to Lessor
monthly the amounts  required  and Lessor  shall  transfer  such amounts to such
Facility  Mortgagee.  The policies on the Leased Property,  including the Leased
Improvements,  the Fixtures and the Personal Property,  shall insure against the
following risks:

         (a) Loss or damage by fire, vandalism and malicious mischief,  extended
coverage  perils  commonly  known as "All Risk" and all  physical  loss  perils,
including  sprinkler  leakage and business  interruption,  in an amount not less
than the then Full  Replacement  Cost thereof (as defined below in Section 12.2)
after  deductible  with a  replacement  cost  endorsement  sufficient to prevent
Lessee from becoming a co-insurer together with an agreed value endorsement;

         (b) Loss or damage by explosion of steam boilers,  pressure  vessels or
similar  apparatus now or hereafter  installed in the  Facility,  in such limits
with respect to any one accident as may be  reasonably  requested by Lessor from
time to time;

         (c) Loss  or  damage  by  hurricane and earthquake in the amount of the
Full  Replacement  Cost,  after deductible;

         (d) Loss of  rental  under a  business  interruption  insurance  policy
covering risk of loss during the first 12 months of reconstruction  necessitated
by the occurrence of any of the hazards described in Sections  12.1(a),  12.1(b)
or 12.1  (c),  in an  amount  sufficient  to  prevent  Lessee  from  becoming  a
co-insurer;  provided  that in the event  that  Lessee  shall not be in  default
hereunder  and Lessor  shall  receive any  proceeds  from such rental  insurance
which, when added to rental amounts received with respect to the applicable time
period,  exceed  the amount of rental  owed by Lessee  hereunder,  Lessor  shall
immediately pay such excess to Lessee;

         (e) Claims for  personal  injury or property  damage  under a policy of
comprehensive  general public liability  insurance  including  insurance against
assumed or contractual  liability  including  indemnities under this Lease, with
amounts not less than  $1,000,000.00  per occurrence in respect of bodily injury
and death, $5,000,000.00 in the aggregate and $1,000,000.00 for property damage;
provided that if it becomes customary for tenants occupying similar buildings in
the same City where the Leased  Property  is located to be  required  to provide
liability  coverage  with higher  limits than the  foregoing,  then Lessee shall
provide Lessor with an insurance  policy with coverage  limits that are not less
than such customary limits; and

         (f) Flood  (when the  Leased  Property  is  located in whole or in part
within a designated flood plain area) and such other hazards and in such amounts
as may be customary for comparable  properties in the area and if available from
insurance  companies  authorized to do business in the state in which the Leased
Property is located.


                                       14
<PAGE>

     XII.2  Replacement  Cost. The term "Full  Replacement  Cost" as used herein
shall  mean the  actual  replacement  cost of the  Facility  from  time to time,
including increased cost of construction  endorsement,  less exclusions provided
in the normal fire insurance policy. In the event Lessor or Lessee believes that
the Full  Replacement  Cost has  increased  or  decreased at any time during the
Term,  it shall have the right at its own expense to have such Full  Replacement
Cost  redetermined by an impartial  insurance company  reasonably  acceptable to
both parties,  hereinafter  referred to as the "impartial  appraiser";  provided
that such  redetermination  shall not occur more  often  than once  every  three
years.  The party  desiring to have the Full  Replacement  Cost so  redetermined
shall forthwith,  on receipt of such  determination by the impartial  appraiser,
give written notice thereof to the other party hereto. The determination of such
impartial appraiser shall be final and binding on the parties hereto, and Lessee
shall forthwith increase,  or may decrease,  the amount of the insurance carried
pursuant to this Article to the amount so determined by the impartial appraiser.

     XII.3 Additional  Insurance.  In addition to the insurance described above,
Lessee shall maintain such  additional  insurance as may be reasonably  required
from time to time by any Facility  Mortgagee  which is consistent with insurance
coverage for similar  properties in the city,  county and state where the Leased
Property is located,  or required pursuant to any applicable Legal  Requirement,
and shall at all times  maintain  or cause to be  maintained  adequate  worker's
compensation insurance coverage for all persons employed by Lessee on the Leased
Property, in accordance with all applicable Legal Requirements.

     XII.4 Waiver of Subrogation.  All insurance  policies (other than liability
and worker's compensation insurance) carried by either party covering the Leased
Property,  the Fixtures,  the Facility and/or the Personal  Property,  including
contents,  fire and  casualty  insurance,  shall  expressly  waive  any right of
subrogation  on the part of the  insurer  against the other  party.  The parties
hereto  agree  that  their  policies  will  include  such  a  waiver  clause  or
endorsement  so long as the same is obtainable  without  extra cost,  and in the
event of such an extra charge the other party, at its election,  may request and
pay the same,  but shall not be  obligated to do so. Each party waives any claim
it has against the other party to the extent such claim is covered by insurance.

     XII.5 Form of  Insurance.  All of the policies of insurance  referred to in
this  Section  shall be written  in form  reasonably  satisfactory  to Lessor by
insurance  companies  reasonably  satisfactory  to  Lessor;  provided  that  the
deductibles for insurance required by Sections 12.1(a) through 12.1 (d) shall be
no greater than  $50,000.00 and the deductible for coverage  required by Section
12.1(e)  shall be no greater  than  $100,000.00.  Lessee  shall pay all premiums
therefor,  and deliver such policies or certificates  thereof to Lessor prior to
their effective date (and, with respect to any renewal policy,  at least 30 days
prior to the expiration of the existing policy).  In the event of the failure of
Lessee to effect such  insurance  in the names  herein  called for or to pay the
premiums therefor, or to deliver such policies or certificates thereof to Lessor
at the times required,  Lessor shall be entitled,  but shall have no obligation,
to enact such insurance and pay the premiums  therefor,  which premiums shall be
repayable by Lessee to Lessor upon written demand therefor, and failure to repay
the same  shall  constitute  an Event of Default  within the  meaning of Section
15.1(c).  Each insurer  mentioned in this Section shall agree, by endorsement on
the policy or policies issued by it, or by independent  instrument  furnished to
Lessor,  that it will give to Lessor prior  written  notice before the policy or
policies in question shall be altered, allowed to expire or canceled.

     XII.6  Change  in  Limits.  In the  event  that  Lessor  shall  at any time
reasonably and in good faith believe the limits of the personal injury, property
damage or general public  liability  insurance then carried to be  insufficient,
the parties shall endeavor to agree on the proper and reasonable limits for such
insurance to be carried and such insurance shall  thereafter be carried with the
limits thus agreed on until further  change  pursuant to the  provisions of this
Section.  If the  parties  shall be  unable to agree  thereon,  the  proper  and
reasonable  limits for such insurance  shall be determined by an impartial third
party


                                       15
<PAGE>
selected by the parties the costs of which shall be divided  equally between the
parties. Such  redeterminations,  whether made by the parties or by arbitration,
shall be made no more  frequently  than every year.  Nothing herein shall permit
the amount of  insurance  to be reduced  below the amount or amounts  reasonably
required by any Facility Mortgagee.

     XII.7 Blanket Policy. Notwithstanding anything to the contrary contained in
this Section,  Lessee's  obligations to carry the insurance  provided for herein
may be brought within the coverage of a so-called  blanket policy or policies of
insurance carried and maintained by Lessee;  provided that the coverage afforded
Lessor will not be reduced or  diminished  or otherwise  be different  from that
which would exist under separate policies meeting all other requirements of this
Lease;  provided further that the requirements of this Article XII are otherwise
satisfied.

     XII.8 No Separate  Insurance.  Without the prior written consent of Lessor,
Lessee  shall not,  on  Lessee's  own  initiative  or pursuant to the request or
requirement of any third party, take out separate  insurance  concurrent in form
or  contributing  in the event of loss with that required in this Article XII to
be furnished by, or which may reasonably be required by a Facility  Mortgagee to
be furnished by, Lessee, or increase the amounts of any then-existing  insurance
required  under this Article XII by securing an additional  policy or additional
policies,  unless all parties having an insurable interest in the subject matter
of the insurance, including in all cases Lessor and all Facility Mortgagees, are
included  therein as  additional  insureds  and the loss is  payable  under said
insurance  in the same manner as losses are  required  to be payable  under this
Lease.  Lessee  shall  immediately  notify  Lessor of the taking out of any such
separate  insurance  or  of  the  increasing  of  any  of  the  amounts  of  the
then-existing   insurance  required  under  this  Article  XII  by  securing  an
additional policy or additional policies.

     XII.9  Insurance  for  Contractors.  If Lessee  shall engage or cause to be
engaged any  contractor  to perform  work on the Leased  Property,  Lessee shall
require such contractor to carry and maintain insurance  coverage  comparable to
the  foregoing  requirements,  at no expense to Lessor;  provided  that in cases
where such coverage is excessive in relation to the work being done,  Lessee may
allow  any  such  contractor  to  carry  or  maintain  alternative  coverage  in
reasonable  amounts upon  Lessor's  prior  written  consent,  which shall not be
unreasonably withheld.

                                  ARTICLE XIII
                                FIRE AND CASUALTY
                                -----------------

     XIII.1  Insurance  Proceeds.  All proceeds payable by reason of any loss or
damage to the Leased  Property or any  portion  thereof,  and insured  under any
policy of  insurance  required  by Article  XII of this  Lease  shall be paid to
Lessor and held by Lessor in trust  (subject to the  provisions of Section 13.7)
and shall be made available for reconstruction or repair, as the case may be, of
any damage to or destruction of the Leased Property, or any portion thereof, and
shall be paid out by Lessor  from time to time for the  reasonable  cost of such
reconstruction  or repair in accordance  with this Article XIII after Lessee has
expended an amount equal to or exceeding  the  deductible  under any  applicable
insurance  policy.  Any  excess  proceeds  of  insurance   remaining  after  the
completion of the restoration or  reconstruction of the Leased Property shall be
retained  by Lessee  free and  clear  upon  completion  of any such  repair  and
restoration  except as  otherwise  specifically  provided  below in this Article
XIII; provided that in the event neither Lessor nor Lessee is required or elects
to repair or restore the Leased Property, then all such insurance proceeds shall
be retained by Lessor.  All salvage resulting from any risk covered by insurance
shall belong to Lessee, including any salvage relating to Capital Additions paid
for by Lessee.

     XIII.2  Reconstruction  in the Event of Damage or  Destruction  Covered  by
Insurance.

         (a)      Facility  Rendered  Unsuitable for Its Primary  Intended  Use.
Except as provided in Section 13.7, if during the Term,  the Facility is totally
or partially destroyed from a risk covered by the


                                       16
<PAGE>
insurance  described  in  Article  XII  and the  Facility  thereby  is  rendered
Unsuitable for its Primary  Intended Use, such damage or  destruction  shall not
terminate this Lease and all of Lessee's  obligations with respect to payment of
the Rent shall  continue  in full  force and  effect  and shall not be  affected
thereby and Lessee shall either:

                  (i) apply all proceeds payable with respect thereto to restore
         the Facility to substantially the same condition as existed immediately
         prior to such damage or destruction, or

                  (ii)  offer  either (A) to acquire  the Leased  Property  from
         Lessor for a purchase price equal to the Minimum Purchase Amount of the
         Leased Property  immediately prior to such damage or destruction or (B)
         to  substitute a new  property or  properties  for the Leased  Property
         pursuant to and in accordance  with the provisions of Article XX (which
         offers Lessor may in its sole discretion refuse).

Lessee shall give written notice to Lessor within 60 days after the date of such
damage or  destruction  whether Lessee chooses option (i) or option (ii), and if
option (ii) is chosen, such notice shall be accompanied by the offer referred to
therein. In the event Lessee fails to give such notice or does not make an offer
under option  (ii),  Lessee  shall  promptly  proceed to restore the Facility to
substantially  the same condition as existed  immediately prior to the damage or
destruction.  If Lessor  does not accept  Lessee's  offer to  substitute  for or
purchase  the  Leased  Property  within 30 days  after  the date of such  offer,
Lessee's  offer  shall be deemed  withdrawn  on such 30th day and  Lessee  shall
promptly proceed to restore the Facility to substantially  the same condition as
existed immediately prior to such damage for destruction.

         (b) Facility  Not Rendered  Unsuitable  for Its Primary  Intended  Use.
Except as  provided  in  Section  13.7,  if during  the Term,  the  Facility  is
partially  destroyed  from a risk covered by the insurance  described in Article
XII,  but the  Facility  is not  thereby  rendered  Unsuitable  for its  Primary
Intended  Use,  Lessee  shall  restore the  Facility to  substantially  the same
condition as existed  immediately  prior to the damage or  destruction  and such
damage  or  destruction  shall not  terminate  this  Lease  and all of  Lessee's
obligations  hereunder,  including  Lessee's  obligations  with  respect  to the
payment of the Rent,  shall  continue  in full force and effect and shall not be
affected thereby; provided that if Lessee cannot within a reasonable time obtain
all necessary  governmental  approvals,  including  building permits,  licenses,
conditional use permits and any  certificates of need, after diligent efforts to
do so, in order to be able to perform all required repair and  restoration  work
and to operate the Facility for its Primary  Intended Use in  substantially  the
same  manner as  immediately  prior to such damage or  destruction,  then Lessee
shall either:

                  (i) offer  either (A) to acquire  that  Leased  Property  from
         Lessor  for a  purchase  price  equal to the  Minimum  Purchase  Amount
         immediately prior to such damage or destruction, or (B) to substitute a
         new property or properties for the Leased  Property  pursuant to and in
         accordance  with the  provisions  of Article XX (which offers Lessor in
         its sole discretion may refuse), or

                  (ii) after the fourth  anniversary of the  Commencement  Date,
         offer to purchase the Leased  Property from Lessor for a purchase price
         equal to the Minimum Purchase Amount of the Leased Property immediately
         prior to such damage or destruction.

Lessee shall give written notice to Lessor within 60 days after the date of such
damage or destruction whether Lessee chooses option (i)(A) or option (i)(B), and
if option (i)(B) or option (ii) is chosen,  such notice shall be  accompanied by
the offer referred to therein.  In the event Lessee fails to give such notice or
does not make an offer under  option (i) or option (ii),  Lessee shall  promptly
proceed to restore the


                                       17
<PAGE>
Facility to substantially the same condition as existed immediately prior to the
damage or  destruction.  If Lessor does not accept  Lessee's offer to substitute
for or purchase the Leased Property within 30 days after the date of such offer,
Lessee's  offer  shall be deemed  withdrawn  on such 30th day and  Lessee  shall
promptly proceed to restore the Facility to substantially  the same condition as
existed immediately prior to such damage for destruction.

     XIII.3  Reconstruction in the Event of Damage or Destruction Not Covered by
Insurance.  Except as provided in Section  13.7, if during the Term the Facility
is  totally or  materially  destroyed  from a risk  (including  earthquake)  not
covered by the insurance described in Article XII, whether or not such damage or
destruction renders the Facility Unsuitable for Its Primary Intended Use, Lessee
shall:

                  (i) restore the Facility to  substantially  the same condition
         it was in  immediately  prior to such  damage or  destruction  and such
         damage  or  destruction  shall not  terminate  this  Lease,  and all of
         Lessee's  obligations  hereunder,  including Lessee's  obligations with
         respect to the  payment of the Rent,  shall  continue in full force and
         effect and not be affected thereby, or

                  (ii)  offer  either (A) to acquire  the Leased  Property  from
         Lessor  for a  purchase  price  equal to the  Minimum  Purchase  Amount
         immediately prior to such damage or destruction, or (B) to substitute a
         new property or properties for the Leased  Property  pursuant to and in
         accordance  with the  provisions  of Article XX (which offers Lessor in
         its sole  discretion  may  refuse);  provided  that if such  damage  or
         destruction is not material in the reasonable opinion of Lessor, Lessee
         shall  restore the  Facility to  substantially  the same  condition  as
         existed immediately prior to any such damage or destruction.

Lessee shall give written notice to Lessor within 60 days after the date of such
damage or  destruction  whether Lessee chooses option (i) or option (ii), and if
option (ii) is chosen such notice shall be  accompanied by the offer referred to
therein.  If Lessor does not accept Lessee's offer to substitute for or purchase
the Leased Property within 30 days after the date of such offer,  Lessee's offer
shall be deemed to be withdrawn on such 30th day. If such offer is so withdrawn,
or if Lessee  fails to purchase  the Leased  Property or to provide a Substitute
Property in accordance with Article XX, then such damage and  destruction  shall
be deemed to be a total Taking of such  Facility  under  Section  14.2,  and the
provisions of said Section 14.2 shall apply to the rights of the parties and all
insurance  proceeds payable in connection with such damage or destruction  shall
be treated as if such proceeds constituted an "Award" under said Section 14.2.

     XIII.4 Lessee's  Property.  Lessee shall use any insurance proceeds payable
by reason of any loss of or damage to any of the  Personal  Property  to restore
such  Personal  Property  to the Leased  Property  with  items of  substantially
equivalent value to the items being replaced.

     XIII.5 Restoration of Lessee's Property. If Lessee is required or elects to
restore the  Facility as provided in Sections  13.2 or 13.3,  Lessee  shall also
restore the Personal  Property  related  thereto as required by Section 13.4 and
all Capital Additions paid for or financed by Lessor. Insurance proceeds payable
by reason of damage to Capital Additions paid for or financed by Lessor shall be
paid to Lessor and Lessor shall hold such insurance proceeds in trust to pay the
cost of repairing or replacing  such Capital  Additions in the event Lessee does
not purchase or substitute other property or properties for the Leased Property.
All  other  insurance  proceeds  shall  be paid  to  Lessee  to pay the  cost of
replacing or restoring any Capital Additions paid for or financed by Lessee.

     XIII.6 No Abatement of the Rent.  This Lease shall remain in full force and
effect and  Lessee's  obligation  to make rental  payments  and to pay all other
charges  required by this Lease shall remain unabated during any period required
for repair and restoration.


                                       18
<PAGE>
     XIII.7 Damage Near End of Term.  Notwithstanding any provisions of Sections
13.2 or 13.3 to the contrary, if damage to or destruction of the Facility occurs
during the last 12 months of the Term, and if such damage or destruction  cannot
be fully  repaired and restored  within the lesser of (i) six months or (ii) the
period remaining in the Term immediately following the date of loss, then either
party  shall  have the  right  to  terminate  this  Lease by  giving  notice  of
termination  to the  other  within  30 days  after  the date of such  damage  or
destruction,  in which event  Lessor  shall be entitled to retain the  insurance
proceeds and Lessee  shall pay to Lessor on demand the amount of any  deductible
or uninsured loss arising in connection therewith; provided that any such notice
given by Lessor shall be void and of no force and effect if Lessee  exercises an
available  option to extend the Term for one Extended  Term,  or one  additional
Extended  Term,  as the case may be,  within 30 days  following  receipt of such
termination notice.

     XIII.8 Purchase or  Substitution.  In the event Lessor accepts any offer by
Lessee to purchase the Leased Property or to substitute a property or properties
for the Leased Property, this Lease shall terminate upon payment of the purchase
price and execution and delivery of all documentation in accordance with Article
XVII, or execution and delivery of all documents  required in connection  with a
Substitute  Property  under Article XX. Lessor shall remit to Lessee,  or in the
case of a purchase  allow Lessee a credit toward the purchase  price,  an amount
equal to all insurance proceeds being held in trust by Lessor.

     XIII.9 Waiver.  Lessee hereby  knowingly and expressly waives any statutory
or common law rights of  termination  which may arise by reason of any damage or
destruction of the Facility.

                                   ARTICLE XIV
                                  CONDEMNATION
                                  ------------

     XIV.1  Parties'  Rights  and  Obligations.  If during the Term there is any
Taking of all or any part of the Leased  Property or any  interest in this Lease
by  Condemnation,  the rights and obligations of the parties shall be determined
by this Article XIV.

     XIV.2 Total Taking.  If there is a Taking of all of the Leased  Property by
Condemnation,  this Lease shall terminate on the Date of Taking, and the Minimum
Rent and all Additional  Charges paid or payable  hereunder shall be apportioned
and paid to the Date of Taking.

     XIV.3  Partial  Taking.  If there is a Taking  of a portion  of the  Leased
Property  by  Condemnation  such  that  the  Facility  is not  thereby  rendered
Unsuitable for Its Primary  Intended Use, this Lease shall not terminate and all
of Lessee's obligations  hereunder,  including Lessee's obligations with respect
to the  payment of the Rent,  shall  continue in full force and effect and shall
not  be  affected  thereby.  If,  however,  the  Facility  is  thereby  rendered
Unsuitable for Its Primary Intended Use, Lessee shall either:

                  (i) at Lessee's expense,  restore the Facility,  to the extent
         possible,  to substantially  the same condition as existed  immediately
         prior to the partial  Taking,  in which case the  proceeds of any Award
         shall  be  applied  to such  restoration  to the  extent  necessary  or
         appropriate, or

                  (ii)  offer  either (A) to acquire  the Leased  Property  from
         Lessor for a purchase price equal to the Minimum Purchase Amount of the
         Leased Property  immediately  prior to such partial  Taking,  or (B) to
         substitute  a new  property  or  properties  for  the  Leased  Property
         pursuant to and in accordance  with the provisions of Article XX (which
         offers Lessor may in its sole discretion refuse), or


                                       19
<PAGE>
                  (iii)  terminate this Lease  effective upon the effective date
of such Taking.

Lessee will give written  notice to Lessor within 60 days after Lessee  receives
notice of the Taking whether Lessee chooses option (i), option (ii)(A) or option
(ii)(B) or option (iii),  and if option (ii)(B) is chosen,  such notice shall be
accompanied  by the offer  referred  to  therein.  In the event  Lessor does not
accept  Lessee's offer to so purchase the Leased  Property  within 30 days after
receipt of the notice described in the preceding sentence, Lessee may either (a)
withdraw  its offer to purchase  the Leased  Property and proceed to restore the
Facility, to the extent possible, to substantially the same condition as existed
immediately  prior to the partial  Taking,  or (b)  terminate the offer and this
Lease by written notice to Lessor.

     XIV.4 Restoration.  If there is a partial Taking of the Leased Property and
this Lease  remains in full force and effect  pursuant to any  provision of this
Article XIV, Lessee shall accomplish all necessary restoration in order that the
Leased Property may continue to be used for its Primary Intended Use.

     XIV.5 Award Distribution. In the event Lessee purchases the Leased Property
pursuant to Section  14.3 or Lessor  accepts any offer by Lessee to purchase the
Leased Property or to provide a Substitute  Property  therefor  pursuant to this
Article XIV,  then the entire Award shall belong to Lessee and Lessor  agrees to
assign to Lessee  all of its  rights  thereto.  Except  as  otherwise  expressly
provided in this  Article  XIV, in any other event the entire Award shall belong
to and be  paid  to  Lessor;  provided  that  if this  Lease  is  terminated  in
accordance  with  Section  14.2(b) or 14.3(a),  and subject to the rights of any
Facility Mortgagees,  Lessee shall be entitled to receive from the Award any sum
attributable  to any Capital  Additions  for which  Lessee  would be entitled to
reimbursement  at the end of the Term  pursuant  to the  provisions  of  Section
9.2(b),  but only if and to the extent such Award expressly  includes such items
and  allocates a value  thereto.  If Lessee is required or elects to restore the
Facility,  Lessor agrees that, subject to the rights of the Facility Mortgagees,
its  portion of the Award shall be used for such  restoration  and it shall hold
such  portion  of the  Award  in  trust,  for  application  to the  costs of the
restoration.

     XIV.6  Temporary  Taking.  The Taking of the Leased  Property,  or any part
thereof,  by military or other  public  authority  shall  constitute a Taking by
Condemnation  only  when  the use and  occupancy  by the  Taking  authority  has
continued for longer than six months.  During any such six-month  period all the
provisions  of this  Lease  shall  remain in full  force and effect and the Rent
shall not be abated or reduced  during such period of Taking;  provided  that to
the extent any  compensation is paid by the Taking authority as a result of such
temporary Taking, Lessee will retain such compensation.

     XIV.7  Purchase or  Substitution.  In the event Lessor accepts any offer by
Lessee to purchase the Leased Property or to substitute a property or properties
for the Leased Property, this Lease shall terminate upon payment of the purchase
price and execution and delivery of all appropriate  documentation in accordance
with Article  XVII,  or  execution  and  delivery of all  documents  required in
connection with a Substitute Property under Article XX.

                                   ARTICLE XV
                                     DEFAULT
                                     -------

     XV.1 Events of Default.  The occurrence of any one or more of the following
events shall constitute events of default  (individually,  an "Event of Default"
and, collectively, "Events of Default") hereunder:

         (a) An event of default shall occur under any other lease (the "Related
Leases")  between  Lessor  or any of its  Affiliates  and  Lessee  or any of its
Affiliates,  which  event of default is not cured  within the  applicable  grace
period set forth therein;


                                       20
<PAGE>
         (b) Lessee  shall fail to make a payment of the Rent  payable by Lessee
under  this  Lease  when the  same  becomes  due and  payable  and such  failure
continues for a period of ten calendar days after written  notice from Lessor to
Lessee;

         (c) Lessee shall fail to observe or perform any other term, covenant or
condition of this Lease or any document executed in connection herewith and such
failure  is not cured by  Lessee  within a period of 30 days  after  receipt  by
Lessee of notice  thereof  from  Lessor,  unless  such  failure  cannot with due
diligence be cured within a period of 30 days,  in which case such failure shall
not be deemed to continue if Lessee proceeds  promptly and with due diligence to
cure the  failure  and  diligently  completes  the  curing  thereof  (as soon as
reasonably possible);

         (d)      Lessee shall:

                  (i) admit in writing its inability to pay its debts  generally
         as they become due,

                  (ii) file a  petition  in  bankruptcy  or a  petition  to take
         advantage of any insolvency law,

                  (iii) make an assignment for the benefit of its creditors,

                  (iv) consent to the  appointment of a receiver of itself or of
         the whole or any substantial part of its property,

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

         (e) Lessee shall default beyond any applicable  grace period  contained
in one or more major  credit  facilities  which by their terms  would  permit an
outstanding balance equal to or greater than $10,000,000.00 in the aggregate and
the same shall be accelerated by the lenders or other applicable parties; or

         (f) Lessee's corporate parent company,  Guarantor,  fails to maintain a
Consolidated Tangible Net Worth of at least $50,000,000.00.

     XV.2 Remedies.  If an Event of Default shall have occurred,  Lessor may, at
its  election,  then or at any time  thereafter,  pursue  any one or more of the
following remedies, in addition to any remedies which may be permitted by law or
by other provisions of this Lease,  without further notice or demand,  except as
hereinafter provided:

         (a) Without any notice or demand whatsoever, Lessor may take any one or
more  actions  permissible  at law to ensure  performance  by Lessee of Lessee's
covenants and obligations under this Lease. In this regard, it is agreed that if
Lessee abandons or vacates the Leased  Property,  Lessor may enter upon and take
possession of such Leased Property in order to protect it from deterioration and
continue to demand from Lessee the monthly rentals and other charges provided in
this  Lease.  Lessor  shall  use  reasonable  efforts  to relet on  commercially
reasonable terms but shall have no absolute obligation to relet. If Lessor does,
at its sole  discretion,  elect to relet the  Leased  Property,  such  action by
Lessor shall not be deemed as an acceptance of Lessee's  surrender of the Leased
Property unless Lessor expressly  notifies Lessee of such acceptance in writing,
Lessee hereby acknowledging that Lessor shall otherwise be reletting as Lessee's
agent.  It is further  agreed in this  regard  that in the event of any Event of
Default  described in this Article XV, Lessor shall have the right to enter upon
the Leased Property and do whatever Lessee is obligated to do under the terms of
this Lease. Lessee agrees to reimburse Lessor


                                       21
<PAGE>
on demand for any  reasonable  expenses which Lessor may incur in thus effecting
compliance with Lessee's  obligations  under this Lease, and further agrees that
Lessor shall not be liable for any damages resulting to Lessee from such action,
except as may result from Lessor's gross negligence or willful misconduct.

         (b) Lessor may  terminate  this Lease by written  notice to Lessee,  in
which event Lessee shall  immediately  surrender the Leased  Property to Lessor,
and if Lessee fails to do so, Lessor may, without  prejudice to any other remedy
which  Lessor  may have for  possession  or  arrearage  in rent  (including  any
interest  which  may have  accrued  pursuant  to  Section  2.3 of this  Lease or
otherwise),  to the  extent  permitted  by  applicable  law enter  upon and take
possession  of the  Leased  Property  and expel or remove  Lessee  and any other
person who may be occupying said premises or any part thereof other than Tenants
pursuant to Tenant Leases. In addition, Lessee agrees to pay to Lessor on demand
the  amount of all loss and  damage  which  Lessor  may  suffer by reason of any
termination effected pursuant to this subsection (b), said loss and damage to be
determined,  at Lessor's option, by either of the following alternative measures
of damages:

                  (i) Although  Lessor shall be under no absolute  obligation to
         attempt and shall be obligated only to use reasonable efforts, to relet
         the Leased  Property,  until the Leased  Property is relet Lessee shall
         pay to  Lessor on or before  the first day of each  calendar  month the
         monthly  rentals and other  charges  provided in this Lease.  After the
         Leased Property has been relet by Lessor, Lessee shall pay to Lessor on
         the 10th day of each calendar month the difference  between the monthly
         rentals  and other  charges  provided  in this Lease for the  preceding
         calendar month and that actually collected by Lessor for such month. If
         it is  necessary  for  Lessor  to bring  suit in order to  collect  any
         deficiency,  Lessor  shall have a right to allow such  deficiencies  to
         accumulate  and to bring an action  on  several  or all of the  accrued
         deficiencies  at one time. Any such suit shall not prejudice in any way
         the  right of  Lessor  to bring a  similar  action  for any  subsequent
         deficiency  or  deficiencies.  Any  amount  collected  by  Lessor  from
         subsequent  tenants  for any  calendar  month in excess of the  monthly
         rentals and other  charges  provided in this Lease shall be credited to
         Lessee in reduction of Lessee's  liability  for any calendar  month for
         which the  amount  collected  by Lessor  will be less than the  monthly
         rentals and other charges provided in this Lease, but Lessee shall have
         no right to such excess other than the above described credit; or

                  (ii) When Lessor desires, Lessor may demand a final settlement
         not to exceed  the  Minimum  Purchase  Amount at the time of such final
         settlement.  Upon demand for a final  settlement,  Lessor  shall have a
         right to, and Lessee hereby agrees to pay, the  difference  between the
         total of all monthly  rentals and other charges  provided in this Lease
         for the  remainder of the Term and the  reasonable  rental value of the
         Leased  Property for such period  (including a reasonable time to relet
         the Leased  Property),  as  determined  pursuant to the  provisions  of
         Article  XXVIII  hereof,  such  difference  to be discounted to present
         value  at a rate  equal  to the  Treasury  Yield  then in  effect  with
         maturity periods substantially equivalent to the balance of the Initial
         Term or any Extended Term exercised by Lessee  pursuant to the terms of
         Article XXXIV.

         The rights and remedies of Lessor hereunder are cumulative, and pursuit
of any of the above  remedies  shall not preclude  pursuit of any other remedies
prescribed in other  sections of this Lease and any other  remedies  provided by
law or  equity.  Forbearance  by Lessor to enforce  one or more of the  remedies
herein  provided  upon an Event of Default  shall not be deemed or  construed to
constitute  a waiver of such Event of Default.  Exercise by Lessor of any one or
more  remedies  shall not  constitute  an  acceptance of surrender of the Leased
Property by Lessee, it being understood that such surrender can be effected only
by the prior written agreement of Lessor and Lessee.


                                       22
<PAGE>
     XV.3  Additional  Expenses.  In addition to payments  required  pursuant to
subsections (a) and (b) of Section 15.2 above,  Lessee shall  compensate  Lessor
for all  reasonable  expenses  incurred  by Lessor in  repossessing  the  Leased
Property  (including any increase in insurance premiums caused by the vacancy of
the Leased  Property),  all reasonable  expenses incurred by Lessor in reletting
(including  repairs,  remodeling,  replacements,  advertisements  and  brokerage
fees),  all  reasonable  concessions  granted  to a new  tenant  upon  reletting
(including renewal options previously granted by Lessee),  all fees and expenses
incurred by Lessor as a direct or indirect result of any appropriate action by a
Facility  Mortgagee,  any expenses of Lessor  incurred for the  installation  of
separate  lines or  meters  for any  public  utilities  not  previously  metered
separately from adjacent property of Lessee.

     XV.4 Application of Funds. All payments  otherwise  payable to Lessee which
are  received by Lessor  under any of the  provisions  of this Lease  during the
existence or  continuance  of any Event of Default  shall be applied to Lessee's
obligations  in the order which  Lessor may  reasonably  determine  or as may be
prescribed by the laws of the state in which the Facility is located.

                                   ARTICLE XVI
                             LESSOR'S RIGHT TO CURE
                             ----------------------

         If Lessee,  without the prior written consent of Lessor,  shall fail to
make any payment,  or to perform any act required to be made or performed  under
this Lease and to cure the same within the  relevant  time  periods  provided in
Section 15.1,  Lessor,  without  waiving or releasing any obligation or Event of
Default,  may (but shall be under no obligation to) make such payment or perform
such act for the account  and at the  expense of Lessee,  and may, to the extent
permitted by law,  enter upon the Leased  Property for such purpose and take all
such action  thereon as, in Lessor's  opinion,  may be necessary or  appropriate
therefor.  No such entry shall be deemed an eviction of Lessee. All sums so paid
by Lessor,  together with a late charge thereon (to the extent permitted by law)
at the  Overdue  Rate from the date on which such sums or  expenses  are paid or
incurred by Lessor, and all costs and expenses (including  reasonable attorneys'
fees and  expenses,  in each case,  to the extent  permitted by law) so incurred
shall be paid by Lessee  to Lessor on  demand.  The  obligations  of Lessee  and
rights of Lessor  contained  in this Article  shall  survive the  expiration  or
earlier termination of this Lease.


                                       23
<PAGE>
                                  ARTICLE XVII
                         PURCHASE OF THE LEASED PROPERTY
                         -------------------------------

         In the event Lessee  purchases the Leased Property from Lessor pursuant
to any of the terms of this Lease, Lessor shall, upon receipt from Lessee of the
applicable  purchase  price  (after  credit  for  the  balance  of  the  Capital
Replacement  Account),  together  with full  payment of any unpaid  Rent due and
payable with respect to any period  ending on or before the date of the purchase
and  any  other  amounts  owing  to  Lessor  hereunder,  deliver  to  Lessee  an
appropriate special warranty deed (in substantially the same form used to convey
the Leased Property to Lessor) and any other documents  reasonably  requested by
Lessee to convey the interest of Lessor in and to the Leased Property to Lessee,
and such other standard documents usually and customarily prepared in connection
with such  transfers,  free and clear of all  encumbrances  other than (a) those
that Lessee has agreed hereunder to pay or discharge,  (b) those mortgage liens,
if any,  which Lessee has agreed in writing to accept and to take title  subject
to, (c) any other  Encumbrances  permitted to be imposed on the Leased  Property
under the  provisions of Article XXXII which are assumable at no cost to Lessee,
and (d) any matters  affecting the Leased Property on or as of the  Commencement
Date. The difference between the applicable  purchase price and the total of the
encumbrances assigned or taken subject to shall be paid in cash to Lessor, or as
Lessor may direct,  in federal or other  immediately  available  funds except as
otherwise  mutually  agreed by Lessor and  Lessee.  The closing of any such sale
shall  be  contingent  upon  and  subject  to  Lessee   obtaining  all  required
governmental  consents and approvals for such transfer.  If such sale shall fail
to be  consummated  by reason  of the  inability  of  Lessee to obtain  all such
approvals and  consents,  any options to extend the Term which  otherwise  would
have  expired  during the  period  from the date when  Lessee  elected or became
obligated to purchase the Leased Property until Lessee's inability to obtain the
approvals  and consents is confirmed  shall be deemed to remain in effect for 30
days after the end of such  period.  The closing  with  respect to any such sale
shall be  appropriately  timed to accommodate the  determination  of the Minimum
Purchase  Amount  in  accordance  with  Article  XXVIII.  All  expenses  of such
conveyance,  including the cost of title  examination or standard coverage title
insurance, reasonable attorneys' fees incurred by Lessor in connection with such
conveyance,  transfer  taxes  and  recording  fees  shall  be  paid  by  Lessee.
Additionally,  any sale to Lessee  shall be subject to delivery of an opinion of
Lessor's  counsel  confirming  that (i) the sale  will not  result  in  ordinary
recapture  income to Lessor  pursuant to Code  Section 1245 or 1250 or any other
Code provision, (ii) the sale will result in income, if any, to Lessor of a type
described in Code Section  856(c)(2) or 856(c)(3)  and will not result in income
of the types  described in Code  Section  856(c)(4) or result in the tax imposed
under  Code  Section  857(b)(6),  and (iii) the  sale,  together  with all other
substitutions and sales made or requested by Lessee pursuant to any other leases
with Lessor of properties  hereto or any other  transfers of the Leased Property
or the properties leased under other such operating leases,  during the relevant
time period,  will not jeopardize the  qualification  of Lessor as a real estate
investment trust under Code Sections 856-860.

                                  ARTICLE XVIII
                                  HOLDING OVER
                                  ------------

         If Lessee  shall for any  reason  remain in  possession  of the  Leased
Property after the expiration of the Term or any earlier termination of the Term
hereof,  such possession  shall be as a tenancy at will during which time Lessee
shall pay as  rental  each  month an amount  equal to the sum of (a) 150% of the
aggregate of 1/12 of the aggregate Minimum Rent payable with respect to the last
complete  year  prior to the  expiration  of the Term,  plus (b) all  Additional
Charges  accruing  during such month,  plus (c) all other sums, if any,  payable
pursuant to the  provisions  of this Lease with respect to the Leased  Property.
During such period of tenancy,  Lessee and Lessor  shall be obligated to perform
and  observe all of the terms,  covenants  and  conditions  of this Lease and to
continue its occupancy and use of the Leased Property.  Nothing contained herein
shall constitute the consent,  express or implied, of Lessor to the holding over
of Lessee after the expiration or earlier termination of this Lease.


                                       24
<PAGE>
                                   ARTICLE XIX
                                   ABANDONMENT
                                   -----------

     XIX.1  Discontinuance  of  Operations  on the  Leased  Property;  Offer  of
Substitution.  If Lessee has  discontinued  use of the Leased  Property  for its
Primary  Intended Use for 90  consecutive  days without  Lessor's  prior written
consent  for  alterations  or  remodeling  pursuant  to Article  IX,  repairs or
restoration pursuant to Article XIII or Article XIV or otherwise,  then provided
Lessor has not terminated this Lease pursuant to Section 15.2,  Lessee may offer
to substitute a new property or properties for the Leased  Property  pursuant to
and in accordance  with the provisions of Article XX (which offers Lessor may in
its sole discretion refuse).

     XIX.2 Obsolescence of the Leased Property; Offer to Purchase. If the Leased
Property becomes Unsuitable for its Primary Intended Use, all as set forth in an
Officer's  Certificate delivered to Lessor. Lessee may on or after the fifteenth
anniversary of the  Commencement  Date (provided this Lease is still in effect),
purchase  the  Leased  Property  for the  Minimum  Purchase  Amount on the first
Payment Date  occurring not less than 120 days after the date of such  Officer's
Certificate.

     XIX.3 Conveyance of Leased Property. In the event Lessee elects to purchase
the Leased  Property  pursuant to Section  19.2,  then on the first Payment Date
occurring  not less than 120 days  after the date of the  Officer's  Certificate
referred to in Section  19.2,  Lessor  shall,  upon  receipt  from Lessee of the
Minimum  Purchase  Amount  as of the date of such  purchase  and all Rent and or
other sums then due and payable under this Lease  (excluding any  installment of
Minimum Rent due on such Payment Date),  convey the Leased Property to Lessee on
such date in accordance with the provisions of Article XVII and this Lease shall
thereupon terminate as to the Leased Property.

     XIX.4 Option to Purchase.  In return for the payment by Lessee to Lessor of
the amount of  $500.00 as  valuable  consideration  and other good and  valuable
consideration,  the  adequacy,  sufficiency,  payment  and  receipt of which are
hereby  acknowledged,  within 180 days prior to the end of the Initial  Term and
each Extended Term  exercised by Lessee  pursuant to the terms of Article XXXIV,
Lessee shall have the option to purchase the Leased Property upon written notice
to Lessor for a purchase  price equal to the  Minimum  Purchase  Amount.  If not
sooner exercised, the option to purchase granted hereby will expire and be of no
further force and effect upon the expiration the Term or the termination of this
Lease pursuant to the terms of Article XV.

                                   ARTICLE XX
                            SUBSTITUTION OF PROPERTY
                            ------------------------

     XX.1 Substitution of Property for the Leased Property.

         (a) In the event Lessor accepts an offer by Lessee to substitute  other
property for the Leased Property under Article XIII, Article XIV or Article XIX,
and provided  that no Event of Default  shall have  occurred and be  continuing,
Lessee shall have the right  (subject to the  conditions set forth below in this
Article  XX, and upon  notice to Lessor) to  substitute  one or more  properties
(collectively  referred  to as  "Substitute  Properties"  or  individually  as a
"Substitute  Property")  for the  Leased  Property  on a  monthly  Payment  Date
specified in such notice (the  "Substitution  Date")  occurring not less than 90
days after receipt by Lessor of such notice.  The notice shall be in the form of
an  Officer's  Certificate  and shall  specify the  reason(s)  for the  proposed
substitution  and  the  proposed  Substitution  Date.  Notwithstanding  anything
contained herein to the contrary, any other substitution for the Leased Property
shall require the prior written consent of Lessor which shall be within the sole
discretion of Lessor.

         (b) If Lessee gives the notice  referred to in Section  20.1(a)  above,
Lessee shall present to Lessor one or more  properties (or groups of properties)
each of which property (or groups of properties)


                                       25
<PAGE>
shall provide Lessor with a yield (i.e.,  an annual return on its equity in such
property)  equal to or greater than the Current Yield (and the yield  reasonably
expected to be received  thereafter  throughout  the remainder of the term) from
the Leased Property at the time of such proposed substitution (or in the case of
a proposed substitution as a result of damage, destruction or Condemnation,  the
Current Yield immediately prior to such damage, destruction or Condemnation) and
as reasonably  projected  over the remaining Term of this Lease and shall have a
Fair Market  Value  substantially  equivalent  to the Fair  Market  Value of the
Leased  Property.  Lessor  shall have a period of 90 days within which to review
such  information  and either to accept or to reject the Substitute  Property or
Substitute  Properties  so  presented;  provided that if Lessee is required by a
court  order or  administrative  action to divest or  otherwise  dispose  of the
Leased  Property  within a shorter  time  period,  in which case the time period
shall be shortened  appropriately to meet the reasonable needs of Lessee, but in
no event shall said period be less than 15 Business Days after Lessor's  receipt
of said  notice  (subject to further  extension  for any period of time in which
Lessor is not timely provided with the information  provided for in Section 20.2
and  Section  20.3  below);  provided  that if  Lessor  shall  contend  that the
Substitute Properties fail to meet all the conditions for substitution set forth
in this Article XX,  including the provisions of Sections  20.1(c),  (d) and (e)
below,  the matter shall be submitted to arbitration in accordance  with Article
XXXI and the time  periods for Lessor's  approval or  rejection  shall be tolled
during the period of such arbitration.

         (c) It  shall  be a  condition  to  consummation  of  any  substitution
hereunder that all of the conditions set forth in Section 20.2 below, shall have
been  satisfied  with  respect to such  substitution,  and to the delivery of an
opinion  of counsel  for  Lessor  confirming  that (i) the  substitution  of the
Substitute  Property for the Leased  Property will qualify as an exchange solely
of property of a like-kind under Section 1031 of the Code, in which,  generally,
except for "boot" such as cash needed to equalize  exchange  values or discharge
indebtedness,  no gain or loss is recognized to Lessor, (ii) the substitution or
sale will not result in  ordinary  recapture  income to Lessor  pursuant to Code
Section 1245 or 1250 or any other Code provision, (iii) the substitution or sale
will result in income,  if any, to Lessor of a type  described  in Code  Section
856(c)(2) or 856(c)(3)  and will not result in income of the types  described in
Code  Section  856(c)(4)  or  result  in the  tax  imposed  under  Code  Section
857(b)(6),   and  (iv)  the  substitution  or  sale,  together  with  all  other
substitutions and sales made or requested by Lessee pursuant to any other leases
with Lessor of properties  hereto or any other  transfers of the Leased Property
or the properties leased under other such operating leases,  during the relevant
time period,  will not jeopardize the  qualification  of Lessor as a real estate
investment trust under Code Sections 856-860.

         (d) In the event that the equity  value of the  Substitute  Property or
group of Substitute  Properties  (i.e.,  the Fair Market Value of the Substitute
Property or group of Substitute  Properties  minus the  encumbrances  subject to
which  Lessor  will  take  the  Substitute   Property  or  group  of  Substitute
Properties) as of the Substitution  Date is greater than the equity value of the
Leased  Property  (i.e.,  the Fair Market Value of the Leased Property minus the
encumbrances  subject to which  Lessee will take the Leased  Property) as of the
Substitution  Date (or in the case of damage  destruction or  Condemnation,  the
Fair  Market   Value   immediately   prior  to  such  damage,   destruction   or
Condemnation),  Lessor  shall pay to Lessee an amount  equal to the  difference,
subject to the limitation  set forth below.  In the event that said equity value
of the Substitute  Property or group of Substitute  Properties is less than said
equity value of the Leased Property,  Lessee shall pay to Lessor an amount equal
to the  difference,  subject to the limitation set forth below.  Notwithstanding
the  foregoing,  neither  Lessor nor Lessee shall be obligated to consummate any
substitution  if such party  would be required to make a payment to the other in
excess of an amount equal to ten percent of said Fair Market Value of the Leased
Property  (the amount of cash paid by one party to the other  being  hereinafter
referred to as the "Cash Adjustment").

         (e) The Rent for such Substitute Property in all respects shall provide
Lessor with a yield at the time of such substitution (i.e., annual return on its
investment in such Substitute Property) not less than the Current Yield (and the
yield reasonably expected to be received thereafter  throughout the remainder of
the  Term)  from  the  Leased  Property  prior  to any  damage,  destruction  or
Condemnation, taking into account the Cash Adjustment paid or received by Lessor
and any other relevant factors.


                                       26
<PAGE>
         (f)  The  Minimum  Purchase  Amount  of  any  Substitute   Property  or
Substitute Properties shall be an amount equal to the Minimum Purchase Amount of
the  Leased  Property  on the  Substitution  Date  (i)  increased  by  any  Cash
Adjustment  paid by Lessor  pursuant to Section 20.1(d) above, or (ii) decreased
by any Cash Adjustment paid by Lessee pursuant to Section 20.1(d) above.

     XX.2 Conditions to Substitution.  On the Substitution  Date, the Substitute
Property will become the Leased  Property  hereunder  upon delivery by Lessee to
Lessor of the following items in form and substance  reasonably  satisfactory to
Lessor:

         (a) an Officer's  Certificate  representing,  warranting and certifying
that (i) the Substitute Property has been accepted by Lessee for all purposes of
this Lease and there has been no material damage to the improvements  located on
the Substitute  Property nor is any  condemnation  or eminent domain  proceeding
pending  with respect  thereto;  (ii) all  permits,  licenses  and  certificates
(including  a permanent,  unconditional  certificate  of  occupancy  and, to the
extent  permitted  by law,  all  certificates  of need and  licenses)  which are
necessary to permit the use of the  Substitute  Property in accordance  with the
provisions  of this Lease have been  obtained  and are in full force and effect;
(iii) under applicable  zoning and use laws,  ordinances,  rules and regulations
the Substitute Property may be used for the purposes  contemplated by Lessee and
all  necessary  subdivision  approvals  have been  obtained;  (iv)  there are no
mechanic's or materialmen's  liens outstanding or threatened to the knowledge of
Lessee against the Substitute  Property arising out of or in connection with the
construction of the  improvements  thereon,  other than those being contested by
Lessee pursuant to Article XI; (v) any mechanic's or  materialmen's  liens being
contested by Lessee will be promptly  paid by Lessee if such contest is resolved
in favor of the mechanic or  materialman;  (vi) to the best knowledge of Lessee,
there  exists no Event of Default  under this Lease,  and no defense,  offset or
claim exists with respect to any sums to be paid by Lessee hereunder;  and (vii)
any exceptions to Lessor's  title to the  Substitute  Property do not materially
interfere with the intended use of the Substitute Property by Lessee;

         (b) a special  warranty deed with  warranties  against  claims  arising
under Lessee conveying to Lessor title to the Substitute Property free and clear
of any liens and  encumbrances  except  those  approved in writing or assumed by
Lessor;

         (c) a lease  duly  executed,  acknowledged  and  delivered  by  Lessee,
containing  the same terms and conditions as are contained  herein,  except that
(i) the legal  description of the Land shall refer to the  Substitute  Property,
(ii) the  Minimum  Purchase  Amount,  Rent and any  Additional  Charges  for the
Substitute  Property shall be consistent  with the  requirements of Section 20.1
and (iii) such other changes  therein as may be necessary or  appropriate  under
the circumstances shall be made;

         (d) a standard  owner's or  lessee's  (as  applicable)  policy of title
insurance covering the Substitute Property (or a valid,  binding,  unconditional
commitment therefor), dated the Substitution Date, in current form and including
mechanics'  and  materialmen's  lien  coverage,  issued  to  Lessor  by a  title
insurance  company  reasonably  satisfactory  to Lessor.  Such policy  shall (i)
insure (A) Lessor's fee title to the Substitute Property, subject to no liens or
encumbrances  except  those  approved  or assumed  by  Lessor,  and (B) that any
restrictions affecting the Substitute Property have not been violated and that a
further violation thereof will not result in a forfeiture or reversion of title,
(ii) be in an amount at least equal to the Fair Market  Value of the  Substitute
Property,  and (iii) contain such endorsements as may be reasonably requested by
Lessor;

         (e)  certificates   of   insurance   with   respect  to the  Substitute
Property fulfilling the requirements of Article XII;

         (f)  current  appraisals or other evidence  satisfactory  to Lessor, in
its sole  discretion,  as to the current Fair Market  Values of such  Substitute
Property;


                                       27
<PAGE>
         (g) all available revenue data relating to the Substitute  Property for
the period from the date of opening for business of the  Substitute  Property to
the date of Lessee's most recent  Fiscal-Year  end, or for the most recent three
years, whichever is less; and

         (h) such other certificates,  documents, opinions of counsel (which may
be in-house  counsel),  and other  instruments as may be reasonably  required by
Lessor.

     XX.3 Conveyance to Lessee.  On the Substitution Date Lessor will convey the
Leased  Property to Lessee in  accordance  with the  provisions  of Article XVII
(except as to payment of any  expenses in  connection  therewith  which shall be
governed by Section 20.4 below) upon either (a) payment in cash  therefor or (b)
conveyance to Lessor of the Substitute Property, as appropriate.

     XX.4  Expenses.  Lessee  shall  pay or  cause to be paid,  on  demand,  all
reasonable  costs and expenses paid or incurred by Lessor in connection with the
substitution and conveyance of the Leased Property and the Substitute  Property,
including  (a) fees and  expenses  of  Lessor's  counsel,  (b) the amount of any
recording  taxes and filing fees,  (c) the cost of preparing and  recording,  if
appropriate, a release of the Leased Property from the lien of any mortgage, (d)
broker's fees and  commissions  for Lessee,  if any, (e)  documentary  stamp and
transfer  taxes, if any, (f) title  insurance  charges,  and (g) escrow fees, if
any.

                                   ARTICLE XXI
                                  RISK OF LOSS
                                  ------------

         Except as  otherwise  provided in this  Lease,  during the Term of this
Lease,  the risk of loss or of decrease in the enjoyment and  beneficial  use of
the Leased Property in consequence of the damage or destruction thereof by fire,
the elements, casualties, thefts, riots, wars or otherwise, or in consequence of
foreclosures,  attachments, levies or executions (other than by Lessor and those
claiming from,  through or under Lessor) is assumed by Lessee and,  Lessor shall
in no event be  answerable or  accountable  therefor nor shall any of the events
mentioned in this Section  entitle Lessee to any abatement of the Rent except as
specifically provided in this Lease.


                                       28
<PAGE>
                                  ARTICLE XXII
                                 INDEMNIFICATION
                                 ---------------

         Notwithstanding  the  existence  of any  insurance  or  self  insurance
provided for in Article XII, and without regard to the policy limits of any such
insurance or self insurance,  Lessee will protect,  indemnify, save harmless and
defend Lessor from and against all liabilities,  obligations,  claims,  damages,
penalties, causes of action, costs and expenses (including reasonable attorneys'
fees and expenses),  to the extent permitted by law, imposed upon or incurred by
or asserted against Lessor by reason of: (a) any accident, injury to or death of
persons or loss to property occurring on or about the Leased Property, including
any claims of malpractice,  (b) any use, misuse, no use, condition,  maintenance
or repair by Lessee of the Leased Property,  (c) any Impositions  (which are the
obligations  of Lessee to pay  pursuant  to the  applicable  provisions  of this
Lease),  (d) any  failure on the part of Lessee to perform or comply with any of
the  terms  of this  Lease,  (e) the  non-performance  of any of the  terms  and
provisions of any and all existing and future  subleases of the Leased  Property
to be performed by Lessee as landlord  thereunder  and (f) the  violation of any
Hazardous  Materials  Law. Any amounts which become payable by Lessee under this
Section  shall be paid within ten days after  liability  therefor on the part of
Lessor  is  finally  determined  by  litigation  or  otherwise   (including  the
expiration of any time for appeals) and, if not timely paid, shall bear interest
(to the  extent  permitted  by law) at the  Overdue  Rate  from the date of such
determination  to the date of payment.  Lessee,  at its expense,  shall contest,
resist and defend any such claim,  action or  proceeding  asserted or instituted
against Lessor or may compromise or otherwise dispose of the same as Lessee sees
fit. Lessor shall cooperate with Lessee in a reasonable  manner to permit Lessee
to satisfy  Lessee's  obligations  hereunder,  including  the  execution  of any
instruments or documents reasonably requested by Lessee. Nothing herein shall be
construed as  indemnifying  Lessor or its agents for their own negligent acts or
omissions  or  willful  misconduct.  Lessee's  liability  for a  breach  of  the
provisions of this Article shall survive any termination of this Lease.

                                  ARTICLE XXIII
                            SUBLETTING AND ASSIGNMENT
                            -------------------------

     XXIII.1  Subletting and Assignment.  Subject to the rights of Tenants under
existing  Tenant Leases and subject to the  provisions of Section 23.3 below and
any other  express  conditions  or  limitations  set forth  herein,  Lessee may,
without  the  consent of Lessor,  sublet all or any part of the Leased  Property
consistently  with the  Primary  Intended  Use.  Lessor  shall not  unreasonably
withhold its consent to any other or further subletting or assignment;  provided
that  (a) in the case of a  subletting,  the  sublessee  shall  comply  with the
provisions of Section 23.2, (b) in the case of an assignment, the assignee shall
assume in writing  and agree to keep and  perform all of the terms of this Lease
on the part of Lessee to be kept and performed  and shall be and become  jointly
and severally  liable with Lessee for the performance  thereof,  (c) an original
counterpart of each such sublease and assignment and  assumption,  duly executed
by  Lessee  and such  sublessee  or  assignee,  as the case may be,  in form and
substance  reasonably  satisfactory  to Lessor,  shall be delivered  promptly to
Lessor,  and (d) in case of either an  assignment  or  subletting,  Lessee shall
remain  primarily  liable,  as principal  rather than as surety,  for the prompt
payment  of the  Rent  and  for the  performance  and  observance  of all of the
covenants  and  conditions to be performed by Lessee  hereunder.  In addition to
Lessee's  rights to sublet and assign as provided in this section above,  Lessee
shall also have the right (upon Lessor's prior consent,  which consent shall not
unreasonably  be withheld) to enter into Tenant  Leases which extend  beyond the
Term of this Lease.  To the extent that any such Tenant Leases extend beyond the
Term of this Lease,  Lessor shall receive the rents from, and be responsible for
any  obligations on the part of the landlord or lessor under such Tenant Leases.
Any and all such Tenant Leases shall,  to the extent  applicable,  be subject to
the provisions of this Section and Section 23.2.

     XXIII.2   Non-Disturbance, Subordination and Attornment.Except for existing
Tenant  Leases,  Lessee shall insert in each written  sublease  permitted  under
Section 23.1 provisions to the effect that (a)


                                       29
<PAGE>

such sublease is subject and  subordinate  to all of the terms and provisions of
this  Lease and to the rights of Lessor  hereunder,  (b) in the event this Lease
shall terminate before the expiration of such sublease, the sublessee thereunder
will, at Lessor's option, attorn to Lessor and waive any right the sublessee may
have to terminate the sublease or to surrender possession thereunder as a result
of the  termination of this Lease and (c) in the event the sublessee  receives a
written notice from Lessor or Lessor's assignees, if any, stating that Lessee is
in default under this Lease, the sublessee, shall thereafter be obligated to pay
all rentals  accruing  under said  sublease  directly  to the party  giving such
notice, or as such party may direct.  All rentals received from the sublessee by
Lessor or Lessor's assignees, if any, shall be credited against amounts owing by
Lessee  under this  Lease.  Lessor  agrees  that  notwithstanding  any  default,
termination, expiration, sale, entry or other act or omission of Lessee pursuant
to the terms of this Lease, or at law or in equity,  Tenant's  possession  shall
not be disturbed unless such possession may otherwise be terminated  pursuant to
the terms of the applicable  Tenant Lease.  Lessor hereby agrees,  upon Lessee's
request,  to  execute a  nondisturbance  agreement  in favor of any Tenant or in
favor of any sublessee  under any sublease  permitted  under Section 23.1 above;
provided  that the  Tenant or any such  sublessee  has  acknowledged  all of the
foregoing provisions and executed all documents required by this Section 23.2.

                                  ARTICLE XXIV
                 OFFICER'S CERTIFICATES AND FINANCIAL STATEMENTS
                 -----------------------------------------------

     XXIV.1  Estoppel  Certificate.  At any time and from time to time within 20
days  following  written  request by Lessor,  Lessee  will  furnish to Lessor an
Officer's Certificate certifying that this Lease is unmodified and in full force
and  effect (or that this  Lease is in full  force and  effect as  modified  and
setting forth the  modifications) and the dates to which the Rent has been paid.
Any such Officer's  Certificate furnished pursuant to this Article may be relied
upon by Lessor,  any prospective  purchaser of the Leased Property and any third
parties  who have an interest in the Leased  Property,  including  any Lender or
professional advisor or Lessor.

     XXIV.2  Financial  Statements  and  Certificates.  Lessee will  furnish the
following  statements to Lessor;  provided  that Lessor shall keep  confidential
items furnished by Lessee which are not generally available to the public:

                  (i) within 120 days  after the end of each  Fiscal  Year (A) a
         copy of the Consolidated Financial Statements for such Fiscal Year; (B)
         an Officer's Certificate stating (x) that no Event of Default, or event
         which, with the giving of notice or the passage of time, or both, would
         constitute an Event of Default,  has occurred and is continuing and has
         not been waived,  or, if there shall have  occurred  and be  continuing
         such an Event of Default,  specifying  the nature thereof and the steps
         being  taken  to  remedy  the  same,  and (y)  that to the  best of the
         signer's  knowledge  and  belief,  Lessee  is  not  in  default  in the
         performance  or  observance  of any of the terms of any loans or credit
         facilities,  which by their terms would permit an  outstanding  balance
         equal to or greater than $10,000,000.00 in the aggregate, which default
         would permit the holder thereof to accelerate its stated maturity;  (C)
         a current  rent or lease roll for the  Leased  Property  setting  forth
         rental  information in reasonable  detail  regarding all of the Tenants
         and Tenant  Leases,  including  any space  utilized  by  Lessee;  (D) a
         statement  of  revenues  and  expenses of the Leased  Property  for the
         twelve-month  period then ended in detail  reasonably  satisfactory  to
         Lessor;  (E) a  certificate  in form  acceptable  to  Lessor  that  the
         required  Consolidated  Coverage Ratio and Facility  Coverage Ratio for
         the applicable period has been achieved;

                  (ii) within 15 days after  request by Lessor,  (A) a statement
         of the number of beds  available  and the actual  patient-days  for the
         most recent month,  quarter and year,  (B) census  information  for the
         Facility in sufficient  detail to show  patient-mix  on a daily average
         basis  for the  prior  quarter  and  year,  and  (C) an  aged  accounts
         receivable report in sufficient detail to show


                                       30
<PAGE>
         amounts due from each class of patient-mix (such as private,  Medicare,
         Medicaid and V.A.) by the account age  classifications  of 30 days,  60
         days, 90 days, 120 days, and over 120 days;

                  (iii) within 15 days after filing or receipt,  as the case may
         be, (A) all cost reports filed with any regulatory or licensing  agency
         and any amendments thereto, together with all responses,  audit reports
         or  inquiries  with  respect  to such cost  reports,  (B) copies of all
         licensure  and   certification   survey   reports  and   statements  of
         deficiencies  with  respect  to the  Facility  (with  correction  plans
         attached  thereto),   (C)  copies  of  the  Medicaid  rate  calculation
         worksheet (or  equivalent  thereof),  if any,  issued by the applicable
         Medicaid  Agency,  (D) copies of all notices  (regardless of form) from
         any and all licensing  and/or  certifying  agencies that the license or
         applicable  reimbursement  certification  for  the  Facility  is  being
         downgraded  to a  substandard  category,  revoked or  suspended or that
         action is pending or being  considered  to downgrade  to a  substandard
         category,  revoke or suspend the Facility's  license or  certification,
         and (E) evidence of the payment of any bed taxes or similar taxes;

                  (iv) within 30 days after filing,  copies of the 10-Q and 10-K
         Reports  of  Guarantor  filed  with the United  States  Securities  and
         Exchange Commission;

                  (v)  within  45  days  after  the  end  of  each  quarter,   a
         certificate in form acceptable to Lessor that the required Consolidated
         Coverage  Ratio and Facility  Coverage Ratio for the quarter then ended
         has been achieved; and

                  (vi)  with  reasonable  promptness,   such  other  information
         respecting the financial condition, affairs and properties of Lessee as
         Lessor may reasonably request from time to time.

                                   ARTICLE XXV
                                   INSPECTION
                                   ----------

         Lessee  shall  permit  Lessor  and its  authorized  representatives  to
inspect the Leased Property during usual business hours subject to any security,
health,  safety or  confidentiality  requirements  of Lessee,  the rights of the
Tenants,  any Insurance  Requirements  relating to the Leased  Property,  or any
other restrictions imposed by law or applicable regulations.

                                  ARTICLE XXVI
                                 QUIET ENJOYMENT
                                 ---------------

         So long as Lessee  shall pay all Rent as the same becomes due and shall
fully  comply with all of the terms of this Lease and  perform  its  obligations
hereunder,  Lessee shall  peaceably and quietly have,  hold and enjoy the Leased
Property  for the Term  hereof,  free of any claim or other  action by Lessor or
anyone  claiming  by,  through  or under  Lessor,  but  subject to all liens and
encumbrances  of  record  as of the date  hereof or  hereafter  consented  to by
Lessee.  No failure by Lessor to comply with the foregoing  covenant  shall give
Lessee any right to cancel or terminate this Lease,  or to fail to pay any other
sum payable  under this Lease,  or to fail to perform  any other  obligation  of
Lessee hereunder.  Notwithstanding the foregoing, Lessee shall have the right by
separate and  independent  action to pursue any claim or seek any damages it may
have  against  Lessor as a result of a breach by Lessor of the covenant of quiet
enjoyment contained in this Article.


                                       31
<PAGE>
                                  ARTICLE XXVII
                                     NOTICES
                                     -------

         Any notices,  demands,  approvals and other communications provided for
herein  shall be in writing  and shall be  delivered  by  telephonic  facsimile,
overnight air courier,  personal  delivery or registered or certified  U.S. Mail
with return receipt  requested,  postage paid, to the  appropriate  party at its
address as follows:

         If to Lessor:

         CAPSTONE CAPITAL CORPORATION
         1000 Urban Center Drive
         Suite 630
         Birmingham, Alabama  35242
         Attention:  Mr. Daryl D. McCombs
         Telephone: (205) 967-2092
         Telecopy:  (205) 967-9066

         With a copy to:

         Mr. Thomas A. Ansley
         Sirote & Permutt, P.C.
         2222 Arlington Avenue South
         Birmingham, Alabama  35205
         Telephone: (205) 930-5300
         Telecopy:  (205) 930-5301

         If to Lessee or Guarantor:

         INTEGRATED LIVING COMMUNITIES, INC.
         Brentwood Centre
         24850 Old 41 Road
         Suite 10
         Bonita Springs, Florida  34135-7022
         Attention: Mr. John B. Poole
         Telephone: (941) 947-7200
         Telecopy:  (941) 947-7201

         With a copy to:

         INTEGRATED LIVING COMMUNITIES, INC.
         Brentwood Centre
         24850 Old 41 Road
         Suite 10
         Bonita Springs, Florida  34135-7022
         Attention: Ms. Geralyn Kidera
         Telephone: (941) 947-7222
         Telecopy:  (941) 947-7201

         Addresses for notice may be changed from time to time by written notice
to all other parties. Any communication given by mail will be effective (i) upon
the  earlier of (a) five  business  days  following  deposit in a post office or
other official depository under the care and custody of the United States Postal


                                       32
<PAGE>
Service or (b) actual receipt, as indicated by the return receipt; (ii) if given
by telephone facsimile, when sent; and (iii) if given by personal delivery or by
overnight air courier, when delivered to the appropriate address set forth.

                                 ARTICLE XXVIII
                                    APPRAISAL
                                    ---------

         In the event that it becomes  necessary  to  determine  the Fair Market
Value,  Fair Market Value  Purchase  Amount,  the Fair Market  Added Value,  the
Minimum  Purchase  Amount or the Fair Market Rental Value of the Leased Property
or a Substitute  Property for any purpose of this Lease,  the party  required or
permitted to give notice of such  required  determination  shall  include in the
notice  the name of a person  selected  to act as an  appraiser  on its  behalf.
Within ten days after receipt of any such notice, Lessor (or Lessee, as the case
may be)  shall by notice to Lessee  (or  Lessor,  as the case may be)  appoint a
second person as an appraiser on its behalf. The appraisers thus appointed (each
of whom must be a member of the American  Institute of Real Estate Appraisers or
any successor  organization thereto) shall, within 45 days after the date of the
notice  appointing the first appraiser,  proceed to appraise the Leased Property
or the  Substitute  Property,  as the  case  may  be,  to  determine  any of the
foregoing  values as of the relevant date (giving effect to the impact,  if any,
of inflation  from the date of their  decision to the relevant  date);  provided
that if only one appraiser  shall have been so appointed,  or if two  appraisers
shall have been so appointed  but only one such  appraiser  shall have made such
determination  within 50 days after the making of Lessee's or Lessor's  request,
then the  determination  of such  appraiser  shall be final and binding upon the
parties.  If two appraisers  shall have been appointed and shall have made their
determinations  within the respective  requisite  periods set forth above and if
the difference between the amounts so determined shall not exceed ten percent of
the lesser of such  amounts,  then the Fair Market  Value or Fair  Market  Added
Value or the Fair Market Rental Value shall be an amount equal to 50% of the sum
of the  amounts  so  determined.  If  the  difference  between  the  amounts  so
determined  shall  exceed  10% of the  lesser  of such  amounts,  then  such two
appraisers  shall  have 20  days  to  appoint  a  third  appraiser,  but if such
appraisers fail to do so, then either party may request the American Arbitration
Association or any successor organization thereto to appoint an appraiser within
20 days of such request,  and both parties shall be bound by any  appointment so
made within such 20-day period.  If no such appraiser  shall have been appointed
within  such  20  days  or  within  90  days  of  the  original  request  for  a
determination of Fair Market Value or Fair Market Added Value or the Fair Market
Rental  Value,  whichever is earlier,  either  Lessor or Lessee may apply to any
court having  jurisdiction to have appointment made by such court. Any appraiser
appointed,  by the American  Arbitration  Association or by such court, shall be
instructed  to determine the Fair Market Value or Fair Market Added Value or the
Fair Market Rental Value within 30 days after appointment of such appraiser. The
determination of the appraiser which differs most in terms of dollar amount from
the determinations of the other two appraisers shall be excluded, and 50% of the
sum of the remaining two  determinations  shall be final and binding upon Lessor
and  Lessee as the Fair  Market  Value or Fair  Market  Added  Value or the Fair
Market Rental Value for such interest.  However, in the event that following the
appraisal  performed by said third  appraiser,  the dollar amount of two of such
appraisals  are higher and lower,  respectively,  than the dollar  amount of the
remaining appraisal in equal degrees, the determinations of both the highest and
lowest appraisal,  respectively,  shall be rejected and the determination of the
remaining  appraisal  shall be final and  binding  upon Lessor and Lessee as the
Fair Market Value or Fair Market Added Value or the Fair Market Rental Value for
such  interest.   This  provision  for   determination  by  appraisal  shall  be
specifically enforceable to the extent such remedy is available under applicable
law, and any determination hereunder shall be final and binding upon the parties
except as otherwise provided by applicable law. Lessor and Lessee shall each pay
the fees and  expenses  of the  appraiser  appointed  by it and each  shall  pay
one-half of the fees and  expenses of the third  appraiser  and  one-half of all
other costs and expenses incurred in connection with each appraisal.


                                       33
<PAGE>
                                  ARTICLE XXIX
                                 PURCHASE RIGHTS
                                 ---------------

         During the Term hereof  (provided that no Event of Default has occurred
and is  continuing),  Lessee shall have a first  refusal  option to purchase the
Leased Property upon the same terms and conditions as Lessor,  or its successors
and  assigns,  shall have  received an offer from a third party to purchase  the
Leased  Property,  which Lessor  intends to accept (or has  accepted  subject to
Lessee's right of first refusal  granted  herein).  If, during the Term,  Lessor
receives  such an offer or reaches such  agreement  with a third  party,  Lessor
shall promptly  notify Lessee of the purchase price for the Leased  Property and
all other  material  terms and  conditions  of such  agreement or proposed  sale
together with a copy of such offer,  and Lessee shall have 30 days after receipt
of such notice  from Lessor  within  which time to exercise  Lessee's  option to
purchase.   If  Lessee  exercises  its  option,  then  such  purchase  shall  be
consummated within the time set forth in the third-party offer and in accordance
with the  provisions  of Article  XVII  hereof to the  extent  not  inconsistent
herewith.  If Lessee shall not exercise  Lessee's option to purchase within said
30-day period after receipt of said notice from Lessor, Lessor shall be free for
a period  of 90 days  after the  expiration  of said  30-day  period to sell the
Leased  Property  to the  third  party at the  price and terms set forth in such
offer.  Whether or not such sale is  consummated,  Lessee  shall be  entitled to
exercise  its right of first  refusal as  provided  in this  Article,  as to any
subsequent sale of the Leased Property during the Term of this Lease.

                                   ARTICLE XXX
                                DEFAULT BY LESSOR
                                -----------------

     XXX.1  Default by  Lessor.  Lessor  shall be in default of its  obligations
under this Lease if Lessor  shall fail to observe or perform any term,  covenant
or condition of this Lease on its part to be  performed  and such failure  shall
continue  for a period of 30 days after  written  notice  thereof is received by
Lessor,  unless such failure  cannot with due diligence be cured within a period
of 30 days,  in which  case such  failure  shall not be  deemed to  continue  if
Lessor,  within said 30-day period,  proceeds promptly and with due diligence to
cure the failure and diligently  completes the curing  thereof.  The time within
which Lessor  shall be obligated to cure any such failure  shall also be subject
to extension of time due to the  occurrence  of any  Unavoidable  Delay.  In the
event  Lessor  fails  to cure any  such  default,  Lessee,  without  waiving  or
releasing  any  obligations  hereunder,  and in addition  to all other  remedies
available to Lessee  hereunder  or at law or in equity,  may purchase the Leased
Property  from  Lessor for a  purchase  price  equal to the  greater of the Fair
Market  Value  Purchase  Amount or the  Minimum  Purchase  Amount of the  Leased
Property  minus an amount  equal to any damage  suffered  by Lessee by reason of
such  default.  In the event Lessee elects to purchase the Leased  Property,  it
shall deliver a notice thereof to Lessor  specifying a Payment Date occurring no
less  than 90 days  subsequent  to the  date of such  notice  on  which it shall
purchase  the Leased  Property,  and the same  shall be  thereupon  conveyed  in
accordance  with the  provisions of Article XVII. Any sums owed Lessee by Lessor
hereunder  shall bear interest at the Overdue Rate from the date due and payable
until the date paid.

     XXX.2 Lessee's Right to Cure. Subject to the provisions of Section 30.1, if
Lessor shall breach any covenant to be performed by it under this Lease, Lessee,
after giving notice to and demand upon Lessor in  accordance  with Section 30.1,
without waiving or releasing any obligation of Lessor hereunder, and in addition
to all other  remedies  available to Lessee  hereunder  and at law or in equity,
Lessee may (but shall be under no  obligation  at any time  thereafter  to) make
such  payment or perform  such act for the account and at the expense of Lessor.
All sums so paid by  Lessee  and all costs and  expenses  (including  reasonable
attorneys' fees) so incurred, together with interest thereon at the Overdue Rate
from the date on which such sums or  expenses  are paid or  incurred  by Lessee,
shall be paid by Lessor to Lessee  on demand or set off  against  the Rent.  The
rights  of  Lessee  hereunder  to cure and to  secure  payment  from  Lessor  in
accordance with this Section 30.2 shall survive the termination of this Lease.


                                       34
<PAGE>
                                  ARTICLE XXXI
                                   ARBITRATION
                                   -----------

     XXXI.1  Controversies.  Except with  respect to the payment of Minimum Rent
hereunder,  in case any controversy shall arise between the parties hereto as to
any  of  the  requirements  of  this  Lease  or the  performance  thereof  which
controversy  the parties  shall be unable to settle by agreement or as otherwise
provided  herein,  such  controversy  shall be determined by  arbitration  to be
initiated and conducted as provided in this Article XXXI.

     XXXI.2  Appointment  of  Arbitrators.   The  party  or  parties  requesting
arbitration shall serve upon the other a written demand therefor  specifying the
matter to be submitted to  arbitration,  and  nominating an arbitrator  who is a
member in good standing of the American Arbitration  Association ("AAA"). Within
20 days after receipt of such written demand and  notification,  the other party
shall,  in writing,  nominate a person who is a member in good standing with AAA
and the two arbitrators so designated shall, within ten days thereafter,  select
a third arbitrator who is a person who is a member in good standing with AAA and
give immediate  written notice of such selection to the parties and shall fix in
said  notice a time and place for the first  meeting of the  arbitrators,  which
meeting shall be held as soon as  conveniently  possible  after the selection of
all  arbitrators,  at which time and place the  parties to the  controversy  may
appear and be heard.

     XXXI.3 Third  Arbitrator.  In case the notified party or parties shall fail
to make a  selection  upon  notice,  as  aforesaid,  or in case  the  first  two
arbitrators selected shall fail to agree upon a third arbitrator within ten days
after their selection, then such arbitrator or arbitrators may, upon application
made by either of the parties to the controversy,  after 20 days' written notice
thereof to the other party or parties,  have a third arbitrator appointed by any
judge of any United States court of record having  jurisdiction  in the state in
which the Leased Property is located or, if such office shall not then exist, by
a judge holding an office most nearly corresponding thereto.

     XXXI.4  Arbitration  Procedure.  Said  arbitrators  shall  give each of the
parties  not less  than ten days'  written  notice of the time and place of each
meeting  at which the  parties  or any of them may appear and be heard and after
hearing  the  parties in regard to the matter in dispute  and taking  such other
testimony and making such other examinations and investigations as justice shall
require  and as the  arbitrators  may deem  necessary,  they  shall  decide  the
questions submitted to them in accordance with the rules of AAA. The decision of
said  arbitrators  in writing  signed by a  majority  of them shall be final and
binding upon the parties to such  controversy.  In rendering  such decisions and
award,  the arbitrators  shall not add to, subtract from or otherwise modify the
provisions of this Lease.

     XXXI.5 Expenses.  The expenses of such arbitration shall be divided between
Lessor and Lessee unless otherwise specified in the decision of the arbitrators.
Each party in interest shall pay the fees and expenses of its own counsel.


                                       35
<PAGE>
                                  ARTICLE XXXII
                        FINANCING OF THE LEASED PROPERTY
                        --------------------------------

         Lessor  agrees that it will not grant or create any  mortgage,  deed of
trust,  lien,  encumbrance  or other title  retention  agreement upon the Leased
Property to secure any  indebtedness of Lessor (an  "Encumbrance"),  unless each
holder of such an Encumbrance agrees (a) to give Lessee the same notice, if any,
given to Lessor of any default or acceleration of any obligation  underlying any
such Encumbrance or any sale in foreclosure of such  Encumbrance,  (b) to permit
Lessee to appear with its  representatives  and to bid at any public foreclosure
sale with  respect to any such  Encumbrance,  (c)  agrees to release  the Leased
Property from the Encumbrance upon the exercise by Lessee of a right to purchase
contained  in this Lease and the  payment by Lessee of the  applicable  purchase
price,  and (d) enters into an agreement  with Lessee  containing the provisions
described in Article XXXIII of this Lease.  Lessee agrees to execute and deliver
to Lessor or the holder of an Encumbrance any written agreement required by this
Article within ten days of written request thereof by Lessor or the holder of an
Encumbrance. Lessee hereby consents to the assignment of and grant of a security
interest  and  lien  in  this  Lease  together  with  the  other  documents  and
instruments  delivered to Lessor by Lessee and Guarantor  pursuant hereto and in
connection  herewith  (collectively,  the "Assigned  Documents"),  including all
rights of  Lessor  in, to and under  each  Assigned  Document,  by Lessor to any
Facility  Mortgagee  requesting same.  Lessee hereby further agrees to execute a
Consent to Assignment in substantially the form attached hereto as Exhibit G.

                                 ARTICLE XXXIII
                  SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE
                  ---------------------------------------------

         At  the  request  from  time  to  time  by one or  more  holders  of an
Encumbrance  that may  hereafter be placed upon the Leased  Property or any part
thereof, and any and all renewals, replacements, modifications,  consolidations,
spreaders and extensions thereof,  Lessee will subordinate this Lease and all of
Lessee's rights and estate hereunder to each such Encumbrance and will attorn to
and recognize such holder (or the purchaser at any foreclosure  sale or any sale
under a power of sale contained in any such Encumbrance or a holder by a deed in
lieu of  foreclosure,  as the case may be) as Lessor  under  this  Lease for the
balance of the Term then  remaining,  subject to all of the terms and provisions
of this Lease;  provided that each such institutional holder simultaneously with
or prior to  recording  any such  Encumbrance  executes  and  delivers a written
agreement in recordable  form (a)  consenting  to this Lease and agreeing  that,
notwithstanding any such other lease,  mortgage,  deed of trust, right, title or
interest, or any default, expiration,  termination,  foreclosure, sale, entry or
other act or omission  under,  pursuant to or  affecting  any of the  foregoing,
Lessee shall not be disturbed in peaceful  enjoyment of the Leased  Property nor
shall this Lease be  terminated  or  canceled  at any time,  except in the event
Lessor  shall  have the  right to  terminate  this  Lease  under  the  terms and
provisions expressly set forth herein; (b) agreeing that it will be bound by all
the terms of this Lease,  perform and  observe all of Lessor's  obligations  set
forth  herein;  and (c) agreeing  that all  proceeds of the  casualty  insurance
described in Article XIII of this Lease and all Awards  described in Article XIV
will be made available to Lessor for  restoration of the Leased  Property as and
to the extent  required by this Lease,  subject  only to  reasonable  regulation
regarding the manner of disbursement and application  thereof.  Lessee agrees to
execute  and  deliver  to Lessor or the  holder of an  Encumbrance  any  written
agreement required by this Article within ten days of written request thereof by
Lessor or such holder of an  Encumbrance.  Lessee agrees to execute from time to
time,  at the  request of Lessor,  an  institutional  investor  of Lessor's or a
Facility Mortgagee, a certificate setting forth any defaults of Lessor hereunder
and the dates  through which Rent has been paid and such other matters as may be
reasonably requested.


                                       36
<PAGE>
                                  ARTICLE XXXIV
                                 EXTENDED TERMS
                                 --------------

         If no Event of Default shall have occurred and be continuing, Lessee is
hereby granted the right to extend the Term of this Lease for three  additional,
consecutive  five-year periods  ("Extended Term") for a maximum possible Term of
approximately  30  years,  by  giving  written  notice  to  Lessor  of each such
extension at least 180 days, prior to the expiration of the  then-current  Term;
subject,  however,  to the  provisions  of Section 13.7  hereof.  Lessee may not
exercise its option for more than one  Extended  Term at a time and may exercise
the  option to  extend  only if all of the  Related  Leases  are  simultaneously
extended by Lessee or its  Affiliates.  During each  Extended  Term,  all of the
terms and  conditions  of this Lease  shall  continue  in full force and effect,
except that the Minimum Rent for and during each of the Extended  Terms shall be
the  greater  of (i) the  Fair  Market  Rental  Value on the  first  day of such
Extended Term or (ii) the Minimum Rent in effect  immediately prior to the first
day of such Extended  Term. In any event,  the Minimum Rent shall continue to be
increased  throughout  the Extended  Terms in accordance  with the provisions of
Section 2.1(b) hereof.

                                  ARTICLE XXXV
                                    GUARANTY
                                    --------

XXXV.1  Guarantee.  In consideration of Lessor's  agreement to fund the Purchase
Amount  for  the  purchase  of the  Leased  Property  pursuant  to the  Purchase
Agreement and in  consideration  of the  execution of this Lease by Lessor,  and
upon the terms and provisions hereof,  Guarantor hereby irrevocably,  absolutely
and  unconditionally  warrants and  guarantees  (the  "Guaranty")  to Lessor the
prompt and full payment and  performance  of all of Lessee's  obligations  under
this Lease (the "Guaranteed Obligations").

XXXV.2  Obligations of Guarantor Upon Default.  Upon the occurrence of any Event
of  Default  under this  Lease,  Guarantor  shall,  upon  demand of Lessor:  (i)
immediately  cure such failure to pay and/or perform the applicable  part of the
Guaranteed  Obligations;  and (ii) pay  Lessor  all other  costs and  damages it
incurs  as a result  of such  failure  by any party to pay  and/or  perform  the
Guaranteed Obligations,  including without limitation, all reasonable attorneys'
fees and all other costs it incurs in enforcing the  performance  or the payment
of the Guaranteed Obligations with interest thereon at the Overdue Rate.

XXXV.3  Guarantee  of Payment.  The  Guaranty of Guarantor is not a guarantee of
collection,   but  rather  the   Guaranty  is  an   irrevocable,   absolute  and
unconditional guarantee of payment and performance. Guarantor hereby irrevocably
and  unconditionally  covenants  and  agrees  that  Guarantor  is liable for the
Guaranteed  Obligations as a primary obligor.  Any Guaranteed  Obligation may be
enforced  by  Lessor  separately  without  enforcing  compliance  with any other
Guaranteed  Obligation and without waiving the right to subsequently enforce any
other  Guaranteed  Obligation  hereunder.  Without  notice to  Guarantor  or the
consent of Guarantor,  and without affecting or limiting Guarantor's obligations
hereunder,  Lessor may: (i) grant Lessee  extensions  of time for payment of the
Guaranteed  Obligations  or any part  hereof;  (ii) renew any of the  Guaranteed
Obligations; (iii) grant Lessee extensions of time for performance of agreements
or other  indulgences;  and (iv) with Lessee's written consent,  modify or amend
any obligation, covenant or agreement of Lessee set forth in this Lease.


                                       39
<PAGE>
                                  ARTICLE XXXVI
                                  MISCELLANEOUS
                                  -------------

     XXXVI.1 No Waiver. No failure by Lessor or Lessee to insist upon the strict
performance  of any term  hereof  or to  exercise  any  right,  power or  remedy
consequent upon a breach  thereof,  and no acceptance of full or partial payment
of the Rent during the continuance of any such breach, shall constitute a waiver
of any such breach or any such term.  To the extent  permitted by law, no waiver
of any breach  shall  affect or alter this Lease,  which shall  continue in full
force and effect with respect to any other then existing or subsequent breach.

     XXXVI.2  Remedies  Cumulative.  To the extent permitted by law, each legal,
equitable  or  contractual  right,  power and  remedy of Lessor or Lessee now or
hereafter  provided  either in this Lease or by statute  or  otherwise  shall be
cumulative and  concurrent and shall be in addition to every other right,  power
and remedy and the  exercise or beginning of the exercise by Lessor or Lessee of
any one or more of such  rights,  powers and  remedies  shall not  preclude  the
simultaneous  or  subsequent  exercise by Lessor or Lessee of any or all of such
other rights, powers and remedies.

     XXXVI.3  Surrender.  No  surrender to Lessor of this Lease or of the Leased
Property or any part  thereof,  or of any  interest  therein,  shall be valid or
effective  unless  agreed to and  accepted  in  writing  by Lessor and no act by
Lessor  or any  representative  or agent of  Lessor,  other  than such a written
acceptance by Lessor, shall constitute an acceptance of any such surrender.

     XXXVI.4  No Merger of Title.  There  shall be no merger of this Lease or of
the leasehold  estate created hereby by reason of the fact that the same person,
firm,  corporation  or  other  entity  may  acquire,  own or hold,  directly  or
indirectly,  (a) this  Lease  or the  leasehold  estate  created  hereby  or any
interest  in this Lease or (b) such  leasehold  estate and the fee estate in the
Leased Property.

     XXXVI.5 Transfers by Lessor. If Lessor or any successor owner of the Leased
Property shall convey the Leased  Property in accordance  with the terms hereof,
other than as  security  for a debt,  the  grantee or  transferee  of the Leased
Property shall expressly assume all obligations of Lessor  hereunder  arising or
accruing from and after the date of such  conveyance  or transfer,  and shall be
reasonably  capable of performing the obligations of Lessor hereunder and Lessor
or such successor  owner,  as the case may be, shall  thereupon be released from
all future  liabilities  and  obligations  of Lessor under this Lease arising or
accruing from and after the date of such  conveyance  or other  transfer and all
such future  liabilities and obligations shall thereupon be binding upon the new
owner.

     XXXVI.6  General.   Anything  contained  in  this  Lease  to  the  contrary
notwithstanding,  all claims  against,  and  liabilities  of,  Lessee and Lessor
against the other  arising out of or relating to this Lease and arising prior to
any date of  termination  of this Lease shall survive such  termination.  If any
term or provision of this Lease or any  application  thereof shall be invalid or
unenforceable,  the  remainder of this Lease and any other  application  of such
term or provision shall not be affected  thereby.  If any late charges  provided
for in any  provision  of this  Lease  are  based  upon a rate in  excess of the
maximum rate  permitted by  applicable  law, the parties agree that such charges
shall be fixed at the  maximum  permissible  rate.  Neither  this  Lease nor any
provision hereof may be changed,  waived,  discharged or terminated except by an
instrument  in writing and in recordable  form signed by Lessor and Lessee.  All
the terms and  provisions  of this Lease shall be binding  upon and inure to the
benefit of the parties hereto and their respective  successors and assigns.  The
headings in this Lease are for convenience of reference only and shall not limit
or  otherwise  affect the  meaning  hereof.  This Lease shall be governed by and
construed  in  accordance  with the laws of the state where the Land is located,
but not including its conflict of laws rules.  This Lease may be executed in one
or more  counterparts,  each of  which  shall be an  original  but,  when  taken
together, shall constitute but one document.


                                       38
<PAGE>
     XXXVI.7  Memorandum of Lease.  Lessor and Lessee  shall,  promptly upon the
request of either,  enter  into a short  form  memorandum  of this Lease in form
suitable for recording  under the laws of the state in which the Leased Property
is located in which reference to this Lease, and all options  contained  herein,
shall be made.

     XXXVI.8    Transfer of Licenses. Upon the expiration or earlier termination
of the Term, Lessee shall take all action necessary or appropriate to effect (or
useful in effecting)  the transfer,  to the extent  permitted by any  applicable
Legal  Requirement,  to Lessor or Lessor's  nominee of all  licenses,  operating
permits and other  governmental  authorizations  and all service contracts which
may be  necessary  or useful in the  operation  of the Facility and which relate
exclusively  to the  Facility  which have not  previously  been  transferred  or
assigned to Lessor.

                                 ARTICLE XXXVII
                                GLOSSARY OF TERMS
                                -----------------

         XXXVII.1  For  purposes of this Lease,  except as  otherwise  expressly
provided or unless the context otherwise requires, (a) the terms defined in this
Article  XXXVII have the meanings  assigned to them in this  Article  XXXVII and
include  the  plural  as well as the  singular,  (b) all  accounting  terms  not
otherwise  defined herein have the meanings  assigned to them in accordance with
generally  accepted  accounting  principles as at the time  applicable,  (c) all
references  in  this  Lease  to  designated  "Articles",  "Sections"  and  other
subdivisions are to the designated Articles,  Sections and other subdivisions of
this Lease, and (d) the words "herein", "hereof" and "hereunder" and other words
of  similar  import  refer to this  Lease as a whole  and not to any  particular
Article,  Section  or other  subdivision,  (e) the word  "including"  shall mean
"including  without  limitation,"  and  (f)  all  consents  required  of  Lessor
hereunder shall be in Lessor's sole and absolute  discretion,  unless  otherwise
specifically  set forth herein.  For purposes of this Lease, the following terms
shall have the meanings indicated:

         "AAA" means the American Arbitration Association.

         "Additional  Charges"  has the  meaning set forth in Section 2.3 hereof
together with all other items specifically  included as "Additional  Charges" in
this Agreement.

         "Adjustment Date" has the meaning set forth in Section 2.1(b) hereof.

         "Affiliate,"  when used  with  respect  to  Lessee,  means  any  Person
directly or  indirectly  controlling,  controlled by or under direct or indirect
common  control with Lessee,  except for  Integrated  Health  Services,  Inc., a
Delaware corporation.  For the purposes of this definition,  "control",  as used
with respect to any Person,  shall mean the possession,  directly or indirectly,
of the power to direct or cause the direction of the  management and policies of
such  Person,  through the  ownership  of 50% or more of the voting  securities,
partnership interests or other equity interests.

         "Agent" has the meaning set forth in Article XXXII hereof.

         "Assigned Documents" has the meaning set forth in Article XXXII hereof.

         "Award" means all compensation, sums or anything of value awarded, paid
or received on a total or partial Condemnation.

         "Business  Day" means each  Monday,  Tuesday,  Wednesday,  Thursday and
Friday  which is not a day on which  national  banks in the City of  Birmingham,
Alabama are closed.

         "Capital  Additions"  means  one or more new  buildings  or one or more
additional  structures annexed to any portion of any of the Leased Improvements,
which are constructed on any parcel or


                                       39
<PAGE>
portion of the Land during the Term, including the construction of a new wing or
new story, or the rebuilding of the existing Leased  Improvements or any portion
thereof  not normal,  ordinary or  recurring  to maintain  the Leased  Property,
excluding, however, any construction governed by the provisions of Article XIII.

         "Capital  Addition  Cost"  means  the  cost  of any  Capital  Additions
proposed to be made by Lessee  whether  paid for by Lessee or Lessor.  Such cost
shall  include  and be limited to (a) the cost of  construction  of the  Capital
Additions,  including  site  preparation  and  improvement,   materials,  labor,
supervision and certain related design,  engineering and architectural  services
and the cost of any fixtures,  construction  financing and  miscellaneous  items
approved in writing by Lessor, (b) if agreed to by Lessor in writing in advance,
the cost of any land contiguous to the Leased Property purchased for the purpose
of placing thereon the Capital Additions or any portion thereof or for providing
means of access thereto, or parking facilities  therefor,  including the cost of
surveying  the same,  (c) the cost of insurance,  real estate  taxes,  water and
sewage  charges and other  carrying  charges for such Capital  Additions  during
construction,  (d) the cost of title insurance, (e) reasonable fees and expenses
of legal counsel and accountants,  (f) filing,  registration and recording taxes
and fees, (g) documentary stamp taxes, if any, (h) environmental assessments and
boundary  surveys and (i) all  reasonable  costs and  expenses of Lessor and any
Lending  Institution  which has  committed  to finance  the  Capital  Additions,
including,  (A) the  reasonable  fees and  expenses  of their  respective  legal
counsel, (B) all printing expenses,  (C) the amount of any filing,  registration
and recording  taxes and fees, (D)  documentary  stamp taxes,  if any, (E) title
insurance  charges,  appraisal fees, if any, (F) rating agency fees, if any, and
(G) commitment  fees, if any,  charged by any Lending  Institution  advancing or
offering to advance any portion of the financing for such Capital Additions.

         "Capital  Replacement  Account"  has the  meaning  set forth in Section
2.1(c).

         "Cash Adjustment" has the meaning set forth in Section 20.1(d).

         "Charge" has the meaning set forth in Article XI hereof.

         "Code" means the Internal Revenue Code of 1986, as amended.

         "Commencement Date" has the meaning set forth in Article I.

         "Condemnation"  means  the  transfer  of all or any part of the  Leased
Property as a result of (i) the exercise of any governmental  power,  whether by
legal  proceedings  or  otherwise,  by a Condemnor  or (ii) a voluntary  sale or
transfer by Lessor to any  Condemnor,  either  under threat of  condemnation  or
while legal proceedings for condemnation are pending.

         "Condemnor"  means any  public or  quasi-public  authority,  or private
corporation or individual, having the power of condemnation or eminent domain.

         "Consolidated Coverage Ratio" has the meaning set forth in Section 7.3.

         "Consolidated  Financial Statements" means for any fiscal year or other
accounting  period  for  Lessee,  Guarantor  and their  respective  consolidated
Affiliates,  audited statements of earnings and retained earnings and of changes
in financial  position for such period and for the period from the  beginning of
the  respective  fiscal year of Lessee to the end of such period and the related
balance sheet as at the end of such period, together with the notes thereto, all
in reasonable  detail and setting forth in  comparative  form the  corresponding
figures for the corresponding period in the preceding fiscal year of Lessee, and
prepared  in  accordance   with   generally   accepted   accounting   principles
consistently applied, except as noted.


                                       40
<PAGE>
         "Consolidated  Tangible  Net Worth"  means at any time,  the sum of the
following  which would appear on a balance sheet of Lessee and  Guarantor,  on a
consolidated  basis prepared in accordance  with generally  accepted  accounting
principles:

                  (a) the amount of capital or stated capital  (after  deducting
         the cost of any treasury shares or like interests), plus

                  (b) the amount of capital  surplus and retained  earnings (or,
         in the case of a capital surplus or retained  earnings  deficit,  minus
         the amount of such deficit), minus

                  (c)  the  sum  of  the  following   (without   duplication  of
         deductions in respect of items already  deducted in arriving at capital
         surplus  and  retained  earnings):  (i) any  write-up  in book value of
         assets  resulting  from a  revaluation  thereof  subsequent to the most
         recent financial  statement of Developer or Guarantor prior to the date
         thereof, except any net write-up in value of foreign currency; (ii) any
         write-up  resulting  from a  reversal  of a  reserve  for bad  debts or
         depreciation; and (iii) any write-up resulting from a change in methods
         of accounting for inventory, minus

                  (d) the  aggregate  book value of  Intangible  Assets shown on
         such balance sheet.

         "Consumer  Price Index" or "CPI" means the Consumer Price Index for All
Urban  Consumers  for the U.S.  City  Average for all Items  (1982-1984=100)  as
published by the United States Department of Labor,  Bureau of Labor Statistics.
If the manner in which the Consumer  Price Index is  determined by the Bureau of
Labor Statistics shall be substantially  revised (including a change in the base
index year),  an adjustment  shall be made by Lessor in such revised index which
would produce results  equivalent,  as nearly as possible,  to those which would
have been obtained if the Consumer  Price Index had not been so revised.  If the
Consumer Price Index shall become unavailable to the public because  publication
is discontinued or otherwise,  or if equivalent data is not readily available to
enable  Lessor to make the  adjustment  referred to in the  preceding  sentence,
Lessor will  substitute  therefor a  comparable  index based upon changes in the
cost of living or purchasing power of the consumer dollar published by any other
governmental  agency, or if no such index shall be available,  then a comparable
index  published  by a  major  bank  or  other  financial  institution  or  by a
university or a recognized financial publication.

         "Credit  Enhancements"  means all cash collateral,  security  deposits,
security  interests,  letters of credit,  pledges,  prepaid  rent or other sums,
deposits or interests held by Lessee, if any, to secure obligations with respect
to the Leased Property, the Tenant Leases or the Tenants.

         "Current  Yield"  means as of any  date the  annual  Minimum  Rent,  as
adjusted from time-to-time  pursuant to the terms of this Lease,  divided by the
sum of (i) the Purchase Amount plus (ii) all Capital Additions Costs paid for or
financed by Lessor which have not been repaid by Lessee.

         "Date  of  Taking"  means  the  date  the  Condemnor  has the  right to
possession of the property being condemned.

         "EBITDAR" has the meaning set forth in Section 7.3.

         "Encumbrance" has the meaning set forth in Article XXXII.

         "Event of Default" has the meaning set forth in Section 15.1.

         "Extended Term" has the meaning set forth in Section XXXIV.

         "Facility"  means the  21,426  square  foot  assisted  living  facility
located on the Leased Property,


                                       41
<PAGE>
containing 55 licensed beds and the related amenities.

         "Facility Coverage Ratio" has the meaning set forth in Section 7.4.

         "Facility Mortgage" has the meaning set forth in Section 12.1.

         "Facility Mortgagee" has the meaning set forth in Section 12.1.

         "Fair Market  Added Value" means the Fair Market Value (as  hereinafter
defined) of the Leased Property  (including all Capital Additions) less the Fair
Market Value of the Leased Property  determined as if no Capital  Additions paid
for by Lessee without financing by Lessor had been constructed.

         "Fair Market  Rental  Value" means the fair market  rental value of the
Leased  Property  or  any  Substitute   Property,   (a)  assuming  the  same  is
unencumbered  by this Lease,  (b)  determined in  accordance  with the appraisal
procedures  set  forth in  Article  XXVIII or in such  other  manner as shall be
mutually  acceptable  to Lessor and Lessee,  and (c) not taking into account any
reduction in value  resulting from an  indebtedness to which the Leased Property
or Substitute Property may be subject.

         "Fair Market Value" means the fair market value of the Leased  Property
or any Substitute  Property,  including all Capital Additions,  (a) assuming the
same is  unencumbered  by this Lease,  (b)  determined  in  accordance  with the
appraisal  procedures  set forth in Article  XXVIII or in such  other  manner as
shall be  mutually  acceptable  to Lessor and  Lessee,  and (c) not taking  into
account any  reduction in value  resulting  from any  indebtedness  to which the
Leased  Property or such  Substitute  Property  is subject or which  encumbrance
Lessee or Lessor is otherwise  required to remove  pursuant to any  provision of
this Lease or agrees to remove at or prior to the closing of the  transaction as
to which such Fair Market  Value  determination  is being made.  The positive or
negative  effect on the value of the  Leased  Property  or  Substitute  Property
attributable  to  the  interest  rate,  amortization  schedule,  maturity  date,
prepayment  penalty and other terms and  conditions  of any  Encumbrance  on the
Leased Property or any Substitute Property,  as the case may be, which is not so
required or agreed to be removed shall be taken into account in determining such
Fair Market Value.

         "Fair Market Value  Purchase  Amount"  means the Fair Market Value less
the Fair Market Added Value.

         "Fiscal Year" means the 12-month period from January 1 to December 31.

         "Fixtures" has the meaning set forth in Article I.

         "Full Replacement Cost" has the meaning set forth in Section 12.2.

         "Guaranteed Obligations" has the meaning set forth in Section 35.1.

         "Guarantor"  means  INTEGRATED  LIVING  COMMUNITIES,  INC.,  a Delaware
corporation.

         "Guaranty" has the meaning set forth in Section 35.1.

         "Hazardous  Materials" means any substance,  including  asbestos or any
substance  containing  asbestos,   the  group  of  organic  compounds  known  as
polychlorinated biphenyls, flammable explosives,  radioactive materials, medical
waste, chemicals, pollutants,  effluents,  contaminants,  emissions or any other
related  materials  and items  included in the  definition of hazardous or toxic
wastes, materials or substances under any Hazardous Materials Law.

         "Hazardous  Materials  Law"  means  any law,  regulation  or  ordinance
relating to environmental


                                       42
<PAGE>
conditions,  medical  waste  and  industrial  hygiene,  including  the  Resource
Conservation and Recovery Act of 1976 ("RCRA"), the Comprehensive  Environmental
Response,  Compensation and Liability Act of 1980 ("CERCLA"),  as amended by the
Superfund  Amendments and  Reauthorization  Act of 1986 ("SARA"),  the Hazardous
Materials Transportation Act, the Federal Water Pollution Control Act, the Clean
Air Act,  the Clean  Water  Act,  the Toxic  Substances  Control  Act,  the Safe
Drinking  Water Act, the Atomic  Energy Act and all similar  federal,  state and
local  environmental  statutes and ordinances,  whether  heretofore or hereafter
enacted or effective  and all  regulations,  orders,  or decrees  heretofore  or
hereafter promulgated thereunder.

         "Impositions"  means,  collectively,  all taxes  relating to the Leased
Property,  including  all ad valorem,  sales and use,  gross  receipts,  action,
privilege,   rent  (with  respect  to  the  Tenant  Leases)  or  similar  taxes,
assessments  (including all  assessments  for public  improvements  or benefits,
whether or not  commenced or  completed  prior to the date hereof and whether or
not to be completed within the Term),  water,  sewer or other rents and charges,
excises, tax levies, fees (including license, permit, inspection,  authorization
and similar  fees),  and all other  governmental  charges,  in each case whether
general or special,  ordinary or  extraordinary,  or foreseen or unforeseen,  of
every character in respect of the Leased Property and/or the Rent (including all
interest and penalties  thereon due to any failure in payment by Lessee),  which
at any time prior to, during or in respect of the Term hereof may be assessed or
imposed on or in respect of or be a lien upon (a) Lessor or Lessor's interest in
the Leased  Property,  (b) the Rent, the Leased  Property or any part thereof or
any rent therefrom or any estate,  right, title or interest therein,  or (c) any
occupancy,  operation,  use or possession of, sales from, or activity  conducted
on, or in connection  with,  the Leased  Property or the Tenant Leases or use of
the Leased Property or any part thereof; provided that nothing contained in this
Lease  shall be  construed  to  require  Lessee  to pay (1) any tax based on net
income  (whether  denominated  as a  franchise  or  capital  stock or other tax)
imposed on Lessor,  (2) any  transfer or net revenue tax of Lessor,  (3) any tax
imposed with respect to the sale, exchange or other disposition by Lessor of any
portion  of the  Leased  Property  or the  proceeds  thereof,  or (4)  except as
expressly  provided  elsewhere in this Lease,  any  principal or interest on any
Encumbrance  on  the  Leased  Property,  except  to the  extent  that  any  tax,
assessment, tax levy or charge which Lessee is obligated to pay pursuant to this
definition  and which is in effect at any time during the Term hereof is totally
or partially repealed,  and a tax,  assessment,  tax levy or charge set forth in
clause (1), (2) or (3) is levied, assessed or imposed expressly in lieu thereof.

         "Intangible  Assets" means those assets which are (i) deferred  assets,
other than  prepaid  insurance  and prepaid  taxes,  (ii)  patents,  copyrights,
trademarks,  trade names, franchises, good will, experimental expenses and other
similar assets which would be classified as intangible assets on a balance sheet
prepared in accordance  with generally  accepted  accounting  principles,  (iii)
unamortized  debt discount and expense,  and (iv) assets located,  and notes and
receivables due from obligors domiciled outside of the United States.

         "Initial Term" has the meaning set forth in Article I.

         "Insurance  Requirements"  means  all  terms  of any  insurance  policy
required by this Lease and all requirements of the issuer of any such policy.

         "Land" has the meaning set forth in Article I.

         "Lease" means this Lease.

         "Lease Amendment" has the meaning set forth in Section 9.3(b)(iv).

         "Lease  Assignment" means that certain  Assignment of Rents and Leases,
substantially  in the form attached hereto as Exhibit D, to be dated on or about
the date  hereof  executed  by Lessee to Lessor,  pursuant to the terms of which
Lessee assigns to Lessor each of the Tenant Leases and Credit


                                       43
<PAGE>
Enhancements,  if any,  as security  for the  obligations  of Lessee  under this
Lease,  and any other  obligations  of  Lessee,  or any  Affiliate  of Lessee to
Lessor.

         "Leased Improvements" and "Leased Property" have the meanings set forth
in Article I.

         "Legal Requirements" means all federal,  state,  county,  municipal and
other  governmental  statutes,  laws, rules,  orders,  regulations,  ordinances,
judgments,  decrees  and  injunctions  affecting  the  Leased  Property  or  the
construction, use or alteration thereof, whether now or hereafter enacted and in
force, including any which may (a) require repairs, modifications or alterations
of or to the Leased  Property,  or (b) in any way  adversely  affect the use and
enjoyment  thereof,  and all permits,  licenses,  authorizations and regulations
relating  thereto,  and all  covenants,  agreements,  actions  and  encumbrances
contained in any  instruments,  either of record or known to Lessee  (other than
encumbrances  created by Lessor  without the consent of Lessee),  at any time in
force affecting the Leased Property.

         "Lending  Institution" means any insurance  company,  federally insured
commercial  or savings  bank,  national  banking  association,  savings and loan
association, employees' welfare, pension or retirement fund or system, corporate
profit-sharing or pension plan, college or university, or real estate investment
company  including  any  corporation  qualified  to be treated  for  federal tax
purposes  as a real  estate  investment  trust  having  a net  worth of at least
$50,000,000.

         "Lessee" means INTEGRATED LIVING COMMUNITIES OF WEST COLUMBIA,  INC., a
Delaware corporation, its successors and assigns.

         "Lessor" means CAPSTONE CAPITAL  CORPORATION,  a Maryland  corporation,
and its successors and assigns.

         "Minimum Rent" has the meaning set forth in Section 2.1(a).

         "Minimum  Purchase  Amount"  means the  greater of (i) the Fair  Market
Value of the Leased Property at the time of purchase hereunder by Lessee or (ii)
the Purchase  Amount (and in the case of a substitution  pursuant to Article XX,
as adjusted pursuant to Section 20.1(f)) as such amount is increased at the rate
of three percent  compounded  annually for each year (to be prorated for partial
years) between the Commencement Date and the date of repurchase by Lessee,  plus
the sum of all Capital  Addition Costs relating to the Leased  Property paid for
or financed by Lessor which as of the date of repurchase of the Leased  Property
have not been  repaid by Lessee,  less the net amount  (after  deduction  of all
reasonable  legal fees and other costs and expenses,  including  expert  witness
fees,  incurred  by  Lessor  in  connection  with  obtaining  any such  award or
proceeds)  of all Awards  received  by Lessor  from  Condemnation  of the Leased
Property.

         "Officer's  Certificate"  means a  certificate  of Lessee signed by the
Chairman of the Board of Directors, the President, any Vice President or another
officer authorized to so sign by the Board of Directors or By-Laws of Lessee, or
any  other  person  whose  power and  authority  to act has been  authorized  by
delegation in writing by any of the persons holding the foregoing offices.

         "Optional Renewal Term" has the meaning set forth in Article I.

         "Ordinary Course of Business" means the ordinary course of business for
Lessee  consistent  with  past  custom  and  practice  (including  quantity  and
frequency).

         "Overdue  Rate"  means as of any date,  a rate per  annum  equal to the
Prime Rate as of such date,  plus two percent,  but in no event greater than the
maximum rate then permitted under applicable law.

         "Payment  Date" means any due date for the payment of the  installments
of Minimum Rent under


                                       44
<PAGE>
this Lease.

         "Permitted Exceptions" has the meaning set forth in Article I hereof.

         "Permitted  Liens"  means (i) liens  described  on  Exhibit E  attached
hereto and the  Permitted  Exceptions,  (ii) pledges or deposits  made to secure
payments of worker's  compensation  insurance (or to  participate in any fund in
connection  with  worker's  compensation  insurance),   unemployment  insurance,
pensions  or  social  security  programs,   (iii)  liens  imposed  by  mandatory
provisions of law such as for  materialmen,  mechanics,  warehousemen  and other
like liens  arising in the Ordinary  Course of Business,  securing  indebtedness
whose payment is not yet due and payable, (iv) liens for taxes,  assessments and
governmental charges or levies if the same are not yet due and payable or if the
same are being  contested in good faith and as to which  adequate  cash reserves
have been  provided,  (v) liens  arising from good faith  deposits in connection
with  tenders,  leases,  real estate  bids or  contracts  (other than  contracts
involving  the  borrowing  of money),  pledges or deposits  to secure  public or
statutory  obligations  and  deposits  to secure (or in lieu of)  surety,  stay,
appeal  or  customs   bonds  and  deposits  to  secure  the  payment  of  taxes,
assessments,  duties or other  similar  charges,  (vi) liens to secure  purchase
money  indebtedness,  so long as the  indebtedness  incurred to purchase the new
asset is secured only by such asset, or (vii) encumbrances  consisting of zoning
restrictions,  easements  or  other  restrictions  on the use of real  property;
provided that such items do not impair the use of such property for the purposes
intended,  none of which is violated by existing or proposed  structures or land
use.

         "Person"  means a  natural  person,  corporation,  partnership,  trust,
association, limited liability company or other entity.

         "Personal   Property"  means  all  machinery,   equipment,   furniture,
furnishings,  computers,  signage, trade fixtures or other personal property and
consumable  inventory and supplies used in the operation of the Leased  Property
for its Primary Intended Use,  together with all replacements and  substitutions
therefor,   except  for  any  portion  of  the  Leased  Property,  all  as  more
specifically  set forth on Exhibit F attached  hereto or to be attached once the
complete list is available.

         "Primary Intended Use" has the meaning set forth in Section 6.2(a).

         "Prime Rate" means the annual rate reported by The Wall Street Journal,
Eastern  Edition (or, if The Wall Street Journal shall no longer be published or
shall  cease to report  such  rates,  then a  publication  or journal  generally
acceptable in the  financial  industry as  authoritative  evidence of prevailing
commercial  lending rates) from time to time as being the prevailing  prime rate
(or, if more than one such rate shall be  published  in any given  edition,  the
arithmetic mean of such rates). The prime rate is an index rate used by The Wall
Street Journal to report prevailing lending rates and may not necessarily be the
most favorable  lending rate  available.  Any change in the Prime Rate hereunder
shall  take  effect on the  effective  date of such  change in the prime rate as
reported  by The Wall  Street  Journal,  without  notice  to Lessee or any other
action  by  Lessor.  Interest  shall be  computed  on the  basis  that each year
contains 360 days, by multiplying the principal amount by the per annum rate set
forth  above,  dividing  the  product so obtained by 360,  and  multiplying  the
quotient thereof by the actual number of days elapsed.

         "Purchase  Agreement"  means the Asset Purchase  Agreement  dated on or
about  ____________________,  1997, between Sundance, Inc., as "Seller," J. Fred
Barton,  III and Hazel H.  Barton,  as  "Shareholders  of Seller"  and Lessee as
"Purchaser" relating to the acquisition by Lessor of the Leased Property,  which
Asset  Purchase  Agreement  was  assigned  by Lessee to Lessor  pursuant to that
certain  Assignment,  Assumption  and  Amendment  Agreement  for Asset  Purchase
Agreement dated February ___, 1997,  among the foregoing  Seller,  Shareholders,
Lessee and Lessor.

         "Purchase Amount" has the meaning set forth in Section 2.1(a).


                                       45
<PAGE>
         "Related Leases" has the meaning set forth in Section 15.1(a).

         "Rent"  means,  collectively,  the  Minimum  Rent  and  the  Additional
Charges.

         "Request" has the meaning set forth in Section 9.3(a).

         "Security Agreement" means that certain Security Agreement of even date
herewith executed by Lessee to Lessor, pursuant to the terms of which Lessee has
granted  to  Lessor a first  lien  and  security  interest  in and to all of the
Personal  Property,  including but not limited to, fixed and movable  equipment,
including  replacements  and  substitutions,  as security for the obligations of
Lessee under this Lease, and any and all other obligations of Lessee.

         "Substitution Date" has the meaning set forth in Section 20.1.

         "Substitute Properties" has the meaning set forth in Section 20.1.

         "Taking" means a taking or voluntary  conveyance during the Term hereof
of all or part of the Leased Property, or any interest therein or right accruing
thereto or use thereof,  as the result of, or in settlement of any  Condemnation
or other eminent domain proceeding  affecting the Leased Property whether or not
the same shall have actually been commenced.

         "Tenant" means the lessees or tenants under the Tenant Leases, if any.

         "Tenant  Leases"  means all leases,  subleases,  assignments  and other
rental agreements  (written or verbal, now or hereafter in effect), if any, that
grant a  possessory  interest in and to any space in the  Improvements,  or that
otherwise  grant  possessory  or  occupancy  rights  with  regard to the  Leased
Property, and all Credit Enhancements, if any, held in connection therewith.

         "Term" means the Initial Term and any Extended  Term as to which Lessee
has  exercised  its options to extend  contained in Article  XXXIV hereof unless
earlier terminated pursuant to the provisions hereof.

         "Treasury  Yield"  means  as of any date the  weekly  average  yield on
United States Treasury  Securities Constant Maturity Series issued by the United
States  Government,  as most recently  published by the Federal Reserve Board in
Federal Reserve Statistical Release H.15(519).  If, with respect to the Treasury
Yield,  Lessor  determines  that the sale of Treasury  Securities  by the United
States  Government  has been  suspended,  or Treasury  Securities  are not being
offered  for sale,  or the  weekly  average  yield is no longer  printed  by the
Federal Reserve Board in Federal Reserve  Statistical  Release  H.15(519) or for
any  other  reason  Lessor is not able to obtain a  quotation  from the  Federal
Reserve for the sale of such Treasury Securities, then Lessor will promptly give
notice to Lessee and advise Lessee of a new index for  determining  the interest
rate to be used in  connection  with this Lease,  which rate,  in the good faith
judgment of Lessor, will be substantially equivalent to the Treasury Yield.

         "Unavoidable Delays" means delays due to strikes,  lockouts,  inability
to procure  materials after the exercise of reasonable  efforts,  power failure,
acts of God,  governmental  restrictions,  enemy action, civil commotion,  fire,
unavoidable casualty or other causes beyond the control of the party responsible
for performing an obligation hereunder, provided that lack of funds shall not be
deemed a cause  beyond the control of either  party  hereto  unless such lack of
funds is caused  by the  failure  of the  other  party  hereto  to  perform  any
obligations of such other party under this Lease.

         "Unsuitable  for Its  Primary  Intended  Use" as used  anywhere in this
Lease, shall mean that, by reason of damage or destruction, or a partial Taking,
in the good faith judgment of Lessee,  reasonably exercised, the Facility cannot
be profitably operated for its Primary Intended Use in the manner used


                                       46
<PAGE>
prior to such damage or destruction or Taking, taking into account,  among other
relevant  factors,  the number of usable  suites and  number  and  diversity  of
Tenants affected by such damage or destruction or partial Taking.

                                 End of Page 47


                                       47
<PAGE>
         IN WITNESS  WHEREOF,  the parties have caused this Lease to be executed
and their  respective  corporate  seals to be hereunto  affixed and  attested by
their respective officers thereunto duly authorized as of the date first written
above.

                                     LESSOR:

                                     CAPSTONE CAPITAL CORPORATION
                                     a Maryland corporation



                                     By
                                        ----------------------------------------
                                                  Daryl D. McCombs
                                                  Assistant Vice President


                                     LESSEE:

                                     INTEGRATED LIVING COMMUNITIES
                                     OF WEST COLUMBIA, INC.
                                     a Delaware corporation



                                     By
                                        ----------------------------------------
                                                  John B. Poole
                                                  Vice President


                                   GUARANTOR:

                                    INTEGRATED LIVING COMMUNITIES, INC.
                                    a Delaware corporation


                                    By
                                        ----------------------------------------
                                                  John B. Poole
                                                  Vice President and
                                                  Chief Financial Officer


                                       48
<PAGE>
                                    EXHIBIT A

                              PROPERTY DESCRIPTION


<PAGE>



                                    EXHIBIT B

                          LIST OF PERMITTED EXCEPTIONS

         1.       Taxes and assessments which are not yet due and payable.

         2.


<PAGE>



                                    EXHIBIT C

                       SCHEDULE OF CONTRIBUTIONS BY LESSEE
                         TO CAPITAL REPLACEMENT ACCOUNT


         Lessee  shall fund the  Capital  Replacement  Account  annually  in the
following amounts:

                  (1)     $25 per room per month for years 1-6 of the Lease; and

                  (2)     $40 per room per month thereafter,

commencing with the first payment on the first  anniversary of the  Commencement
Date and continuing on each anniversary of the Commencement Date thereafter.


<PAGE>



                                    EXHIBIT D

                         ASSIGNMENT OF RENTS AND LEASES

STATE OF __________        )
                                         KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF __________       )

         THIS ASSIGNMENT OF RENTS AND LEASES (this "Assignment") is entered into
as of February ___, 1997, by and between  INTEGRATED LIVING  COMMUNITIES OF WEST
COLUMBIA,  INC., a Delaware  corporation  ("Assignor" or "Lessee") whose address
for notice  hereunder is 24850 Old 41 Road,  Suite 10, Bonita  Springs,  Florida
34135-7022 and CAPSTONE CAPITAL CORPORATION,  a Maryland corporation ("Assignee"
or  "Lessor"),  whose  address for notice  hereunder is 1000 Urban Center Drive,
Suite 630, Birmingham, Alabama 35242.

                                   WITNESSETH

                                   ARTICLE 1.
                                   DEFINITIONS
                                   -----------

         As used herein, the following  capitalized terms used herein shall have
the following meanings:

         "Credit Enhancements" means all security deposits,  security interests,
letters of credit,  pledges,  prepaid rent or other sums, deposits or interests,
if any,  held by Lessee with respect to the  Property,  the Tenant Leases or the
tenants under the Tenant Leases.

         "Engineering  Documents"  means  all  site  plans,  surveys,  soil  and
substrata studies, architectural drawings, plans and specifications, engineering
plans and studies,  floor plans,  landscape  plans,  and other plans and studies
that relate to the Land,  the  Improvements  or the Fixtures and are in Lessee's
possession or control.

         "Fixtures"  means  all  permanently   affixed   equipment,   machinery,
fixtures,  and other  items of real  and/or  personal  property,  including  all
components thereof, now and hereafter located in, on or used in connection with,
and permanently  affixed to or incorporated  into the  Improvements,  including,
without  limitation,  all  furnaces,  boilers,  heaters,  electrical  equipment,
heating, plumbing, lighting, ventilating,  refrigerating,  incineration, air and
water  pollution  control,  waste  disposal,  air-cooling  and  air-conditioning
systems  and  apparatus,   sprinkler  systems  and  fire  and  theft  protection
equipment, and built-in vacuum, cable transmission,  oxygen and similar systems,
all of which, to the greatest extent  permitted by law, are hereby deemed by the
parties  hereto to  constitute  real  estate,  together  with all  replacements,
modifications, alterations and additions thereto, but specifically excluding any
of Tenant's  trade  fixtures or other  fixtures  that a Tenant is  permitted  to
remove pursuant to the applicable Tenant Lease.

         "Improvements"  means  all  buildings,  improvements,   structures  and
Fixtures  now or on the Closing  Date  located on the Land,  including,  without
limitation,  landscaping,  parking lots and structures,  roads, drainage and all
above ground and underground  utility  structures,  equipment  systems and other
so-called "infrastructure" improvements.

         "Land" means the real property more particularly described on Exhibit A
attached hereto and made a part hereof,  together with all covenants,  licenses,
privileges and benefits  thereto  belonging,  and any easements,  rights-of-way,
rights of ingress or egress or other interests of Lessee in, on, or to any land,
highway,  street, road or avenue, open or proposed, in, on, across, in front of,
abutting or adjoining  such real property  including,  without  limitation,  any
strips  and  gores  adjacent  to or lying  between  such real  property  and any
adjacent real property.


<PAGE>
         "Lease"  means  that  certain  lease  agreement  of even date  herewith
between Lessor and Lessee.

         "License" has the meaning set forth in Section 3.1 hereof.

         "Obligations" means any and all of the indebtedness,  liabilities,  and
other  obligations made or undertaken by Lessee to Lessor or others as set forth
in the  Security  Documents  (hereinafter  defined),  the Lease  and any  lease,
sublease or other form of  conveyance or any other  agreement  pursuant to which
Lessee is granted a possessory interest in the Property.

         "Obligation  Documents"  means any and all agreements,  assignments and
instruments  (including any renewals,  extensions,  modifications  or amendments
thereof) evidencing, securing or pertaining to the Lease.

         "Property"   means,   collectively,   the   Improvements,   the  Credit
Enhancements, the Engineering Documents and the Warranties.

         "Rents" means the immediate,  absolute and continuing  right to collect
and receive all of the rents, income, receipts, revenues, proceeds, security and
other types of  deposits,  issues and profits now due or which may become due or
to  which  Lessee  may now or  shall  hereafter  (whether  upon  any  applicable
redemption period or otherwise) become entitled or may demand or claim,  arising
or issuing from or out of the Tenant  Leases,  or from or out of the Property or
any part thereof  (subject only to the limited  license granted herein by Lessor
to Lessee to so collect and receive the Rents), including,  without limiting the
generality  of  the  foregoing,   minimum  rents,   additional  rents,   parking
maintenance charges or fees, tax and insurance  contributions,  proceeds of sale
of electricity,  gas, chilled and heated water and other utilities and services,
deficiency rents and liquidated damages following  default,  premiums payable by
any Tenant  upon the  exercise of a  cancellation  privilege  provided  for in a
Tenant Lease and all  proceeds  payable  under any policy of insurance  covering
loss of rents resulting from untenantability  caused by destruction or damage to
the Property.

         "Security  Documents"  means  this  Assignment,  and any and all  other
documents now or hereafter  executed by Lessee, or any other person or party, to
evidence or secure the payment or performance and discharge of the  Obligations,
including, without limitation, the Lease.

         "Tenant Leases" means all leases, subleases and other rental agreements
and  guaranties  thereof  (written or verbal,  now or  hereafter in effect) that
grant a possessory interest in and to occupy and enjoy all or any portion of the
Property  (save and except any and all  leases,  subleases  or other  agreements
pursuant  to which  Lessor or Lessee is  granted a  possessory  interest  in the
Land),  together with all the rights,  power and authority of Lessee to execute,
deliver,  perform, enforce, alter, modify or supplement the terms of such leases
and  agreements or to surrender,  cancel or terminate such leases and agreements
without  the prior  written  consent of Lessor,  and  together  with any and all
guarantees of any of the tenant's  obligations under any of such leases.  Any of
the Tenant Leases are  hereinafter  referred to individually as a "Tenant Lease"
and collectively as the "Tenant Leases".

         "Warranties" means all transferrable  warranties,  representations  and
guaranties  with  respect to the  Property,  whether  express or implied,  which
Lessee now holds or under which Lessee is the  beneficiary,  including,  without
limitation,  all of the representations,  warranties and guaranties given and/or
assigned to Lessee under the Tenant Leases.

                                   ARTICLE 2.
                                   ASSIGNMENT
                                   ----------

         Lessee,  in  consideration  of the sum of  $10.00,  and other  good and
valuable consideration, the


<PAGE>
receipt and  sufficiency  of which is hereby  acknowledged,  does hereby  grant,
sell, convey,  assign,  transfer, set over and deliver the Tenant Leases and the
Rents unto this Lessor, to have and to hold the Tenant Leases and the Rents unto
Lessor,  and Lessee does  hereby  bind  itself,  its  successors  and assigns to
warrant  and  defend the title to the  Tenant  Leases and the Rents unto  Lessor
against every person  whomsoever  lawfully  claiming or to claim the name or any
part thereof, by, through or under Lessee but not otherwise.

                                   ARTICLE 3.
                          LIMITED LICENSE, CONTINUATION
                          AND TERMINATION OF ASSIGNMENT
                          -----------------------------

         3.1  Limited  License.  Lessee  shall  have the  right  under a limited
license (the "License")  which may be revoked by Lessor pursuant to the terms of
Section  7.1, to collect  upon,  but not prior to accrual,  all of the Rents and
Lessee  shall  receive  the Rents  and hold the  same,  as well as the right and
license to receive the Rents,  as a trust fund to be applied,  and Lessee hereby
covenants to apply the Rents, to the payment,  satisfaction and discharge of the
Obligations then due, including  specifically,  but without  limitation,  to the
payment of taxes and assessments  upon the Property before payment of penalty or
interest are due thereon,  to the cost of such insurance  then due,  maintenance
and  repairs as may be required by the terms of the  Security  Documents  and in
satisfaction of all  obligations  under the Tenant Leases then due; all prior to
the application by Lessee of the Rents for any other purposes. The License shall
also include the right of Lessee to execute,  deliver,  perform, enforce, alter,
modify,  change or  supplement  the terms of the Tenant Leases and to surrender,
cancel or terminate  such Tenant  Leases  without the prior  written  consent of
Lessor except for any of the Tenant Leases  executed,  modified or  supplemented
after the date hereof whose term (including any possible  extensions on the part
of the applicable Tenant) extends beyond the Term of the Lease.  Thereafter,  so
long as there exists no Event of Default  hereunder or under any of the Security
Documents,  Lessee  may use the Rents in any manner  not  inconsistent  with the
Security Documents.  Upon the sale and conveyance by Lessor or its successors or
assigns of the title to the  Property,  all  right,  title,  interest  and power
granted  under the  License  granted  herein  shall be  automatically  continued
subject to the terms and  conditions of the Lease and any of the other  Security
Documents.

         3.2  Continuation  and  Termination of Assignment.  Upon final payment,
performance  and discharge in full of the  Obligations,  this  Assignment  shall
become and be void and of no force or effect. Written demand by Lessor delivered
to any Tenant for payment of the Rents by reason of the  occurrence of any Event
of  Default  claimed  by  Lessor,  and the  then  existence  thereof,  shall  be
sufficient  evidence of each such Tenant's  obligation and authority to make all
future payments of the Rents to Lessor without the necessity for further consent
by Lessee.

         3.3 Permitted Contests. Lessee, after ten days' prior written notice to
Lessor,  on its own or on Lessor's behalf (or in Lessor's name), but at Lessee's
expense,  may contest, by appropriate legal proceedings  conducted in good faith
and with due  diligence,  the amount,  validity or  application,  in whole or in
part,  of any of the  Obligations  which is required to be paid or discharged by
Lessee pursuant to the terms of Section 3.1 pursuant to the terms and conditions
of Article XI of the Lease;  provided  that  nothing  contained  herein shall be
construed to permit  Lessee to contest the payment of the rent or any other sums
payable by Lessee to Lessor under the Lease.

                                   ARTICLE 4.
                         WARRANTIES AND REPRESENTATIONS
                         ------------------------------

         Lessee  hereby  unconditionally  warrants and  represents  to Lessor as
follows:

         4.1 Ownership of Tenant  Leases and the Rents.  Subject to the terms of
the Lease, Lessee has good title to the Tenant Leases not previously transferred
or assigned to Lessor and the Rents and has all


<PAGE>
requisite right,  power and authority to assign such Tenant Leases and the Rents
to Lessor,  and no other person,  firm or  corporation  has any right,  title or
interest therein.

         4.2 No  Default.  Lessee  has duly and  punctually  performed,  all and
singular, the terms,  covenants,  conditions and warranties of the Tenant Leases
on  Lessee's  part to be  kept,  observed  and  performed;  and,  to the best of
Lessee's knowledge, the Tenants thereunder are not in material default of any of
the terms or provisions of the respective Tenant Leases.

         4.3  No   Modification   of  the  Tenant  Leases  or   Anticipation  or
Hypothecation of the Rents.  The Tenant Leases are valid and unmodified,  except
as  indicated  herein,  and  remain in full  force and  effect;  Lessee  has not
previously  sold,  assigned,  transferred,  or pledged the Tenant  Leases or the
Rents,  or any part thereof,  whether now due or hereafter to become due, except
for the sales,  assignments,  transfers,  mortgages and pledges for which Lessee
has heretofore obtained a full release; the Rents now due, or to become due, for
any  periods  subsequent  to the date hereof  have not been  collected  and that
payment thereof has not been anticipated,  waived or released,  discounted,  set
off or  otherwise  discharged  or  compromised;  and Lessee has not received any
funds or deposits  from any Tenant for which credit has not already been made on
account of the accrued Rents.

                                   ARTICLE 5.
                              AFFIRMATIVE COVENANTS
                              ---------------------

         Lessee  hereby  unconditionally  covenants  and agrees  with  Lessor as
follows:

         5.1 Performance.  Lessee shall observe, perform and discharge, duly and
punctually, all and singular, the obligations,  terms, covenants, conditions and
warranties  of the Tenant  Leases to be  observed,  performed or  discharged  by
landlord  thereunder;  and Lessee shall  promptly  deliver to Lessor any notices
received with respect to the Tenant  Leases  alleging any failure on the part of
the Lessee to observe, perform and discharge the same.

         5.2  Notification to Tenants.  Upon written  request by Lessor,  Lessee
shall notify and direct,  in writing,  such and every  present or future  Tenant
that any Credit Enhancement delivered to Lessee by such Tenant shall be retained
by Lessee but assigned to Lessor.

         5.3  Enforcement.  Lessee shall enforce or secure in the name of Lessee
the  performance of each and every  obligation,  term,  covenant,  condition and
agreement in the Tenant Leases by any Tenant to be  performed,  and Lessee shall
appear in and defend any action or proceeding arising under, occurring out of or
in any manner  connected  with the Tenant Leases or the  obligations,  duties or
liabilities  of Lessee and any Tenant  thereunder,  and upon  request by Lessor,
Lessee  will do so in the name and on behalf of  Lessor,  but at the  expense of
Lessee,  and  Lessee  shall pay all  costs and  expenses  of  Lessor,  including
reasonable  attorneys'  fees and  disbursements,  in any action or proceeding in
which Lessor may appear.

         5.4 Anticipation or Hypothecation of the Rents. Lessee hereby covenants
and agrees (a) upon and after an Event of Default  hereunder or under any of the
Security  Documents  and  while  the  same  shall  continue,  to give to  Lessor
duplicate  notice  of each  default  by each  Tenant  and  copies of any and all
notices and  communications  received from any Tenant  promptly upon delivery or
receipt  thereof;  (b) to comply  with the terms and  provisions  of each Tenant
Lease; (c) not to assign,  transfer,  pledge, mortgage or otherwise encumber any
Tenant  Lease;  (d) not to  assign,  transfer,  pledge,  mortgage  or  otherwise
encumber any Rents;  (e) not to collect,  accept from any Tenant,  or permit any
Tenant to pay any Rents for more than one month in advance  (whether  in cash or
by evidence of indebtedness);  (f) except in the ordinary course of business and
in accordance  with past  practice and custom,  not to waive,  excuse,  condone,
discount,  set-off,  compromise or in any manner release or discharge any Tenant
of and from any  obligations,  covenants,  conditions  or agreements to be kept,
observed or performed by such Tenant,  under and in accordance with the terms of
the respective Tenant Lease; and (g) not to enter


<PAGE>
into any Tenant Lease or amend,  modify,  extend or renew any Tenant Lease for a
time  period  extending  beyond the term of the  Lease,  without  prior  written
approval of Lessor, which approval shall not be unreasonably withheld.

         5.5 Delivery of the Tenant Leases;  Further Acts and  Assurance.  Until
the Obligations secured hereby have been paid in full, performed and discharged,
Lessee  shall  enter into only  leases of the  Property  in a form  approved  in
writing by Lessor and shall upon the written request of Lessor deliver  executed
copies of all existing and all other and future Tenant Leases when executed upon
all or any part of the  Property  and will  transfer  and assign  such other and
future Tenant Leases upon the same terms and conditions as herein contained, and
Lessee hereby covenants and agrees to make, execute and deliver to Lessor,  upon
demand and at any time or times, any and all assignments and other documents and
instruments  which  Lessor may deem  advisable to carry out the true purpose and
intent of this Assignment.

                                   ARTICLE 6.
                                EVENTS OF DEFAULT
                                -----------------

         The term "Event of Default",  as used herein, shall mean the occurrence
or  happening,  at any  time and  from  time to time,  of any one or more of the
following:

         6.1 Performance of Obligations. If Lessee shall fail, refuse or neglect
to perform and discharge fully and timely any of its  obligations  hereunder and
such failure is not cured by Lessee  within a period of 30 days after receipt by
Lessee of written  notice  thereof from Lessor,  unless such failure cannot with
due  diligence be cured  within a period of 30 days,  in which case such failure
shall  not be deemed  to  continue  if  Lessee  proceeds  promptly  and with due
diligence to cure the failure and  diligently  completes the curing  thereof (as
soon as reasonably possible).

         6.2 Security  Documents.  The  occurrence of any Event of Default under
and as defined in the Lease or any other of the Security Documents.

                                   ARTICLE 7.
                                    REMEDIES
                                    --------

         7.1  Remedies.  Upon or any time after the  occurrence,  and during the
continuance  thereof,  of an Event of Default hereunder,  Lessor, at its option,
shall have the complete right, power and authority hereunder, then or thereafter
until the Event of Default is cured,  to exercise  and enforce any or all of the
following rights and remedies set out in this Article 7:

         (a) To terminate the License and then and  thereafter,  without  taking
possession  of the  Property,  to the extent  permitted  by law, in Lessee's own
name, to demand,  collect,  receive, sue for, attach and levy the Rents and give
proper  receipts,  releases and acquittances  therefor,  and after deducting all
necessary  and  proper  costs and  expenses  of  operation  and  collection,  as
determined by Lessor,  including  reasonable  attorneys' fees, and apply the net
proceeds  thereof,  together with any funds of Lessee deposited with Lessor,  in
reduction or repayment  of the  Obligations  in such order of priority as Lessor
may, in its sole discretion, determine in accordance with applicable law;

         (b) To declare the Lease in default and, at its option, exercise all of
the  rights and  remedies  contained  in the Lease or any other of the  Security
Documents;

         (c) Without regard to the adequacy of the security, with or without any
action or proceeding through any person or by any agent, or by the trustee under
any deed of trust included among the Security Documents,  or by a receiver to be
appointed by a court of competent  jurisdiction,  and  irrespective  of Lessee's
possession,  then or thereafter to enter upon,  take  possession  of, manage and
operate the  Property or any part  thereof;  make,  modify,  enforce,  cancel or
accept surrender of a Tenant Lease now in effect or


<PAGE>
hereafter  in effect on the Property or any part  thereof;  remove and evict any
Tenant  (subject  to  the  provisions  of  any  non-disturbance  and  attornment
agreement  entered  into by and  between  Lessor and any  Tenant);  increase  or
decrease  the  Rents  under a Tenant  Lease;  decorate,  clean and  repair,  and
otherwise  do any act or  incur  any  cost or  expense  which  Lessor  may  deem
reasonably  necessary  to protect the status and value of the  Property as fully
and to the same extent as Lessee could do if in possession thereof;  and in such
event,  to apply the Rents so collected to the operation  and  management of the
Property,  but in such  order or  priority  as Lessor  shall  deem  proper,  and
including the payment of reasonable  management,  brokerage and attorneys'  fees
and  disbursements,  and payment of the Obligations and to the establishment and
maintenance, without interest, of a reserve for replacements; and

         (d)      Any other remedy available to Lessor at law or in equity.

         7.2 Exculpation of Lessor. The acceptance by Lessor of this Assignment,
with all of the rights,  powers,  privileges and authority created hereby, shall
not,  prior to entry upon and taking  possession  of the Property by Lessor,  be
deemed or  construed  to  constitute  Lessor a "mortgagee  in  possession",  nor
thereafter  or at any time or in any event  obligate  Lessor to take any  action
hereunder  or to expend any money or incur any  expenses or perform or discharge
any  obligation,  duty or  liability  under a  Tenant  Lease  or to  assume  any
obligation  or  responsibility  for any  security  deposits  or  other  deposits
delivered to Lessee by a Tenant and not assigned  and  delivered to Lessor,  nor
shall  Lessor  be liable in any way for any  injury  or  damage  to  persons  or
property  sustained by any person,  firm or corporation in or about the Property
not attributable to the negligence or fault of Lessor, its agents or affiliates.

         7.3      No Waiver or Election of Remedies.

         (a) Waiver.  Neither the  collection  of the Rents and  application  as
provided for in this Assignment nor the entry upon and taking  possession of the
Property  by Lessor  shall be deemed  to cure or waive any Event of  Default  or
waive,  modify or affect any notice of default  under any  Security  Document or
invalidate any act done pursuant to any such notice.  If Lessor shall thereafter
elect to discontinue  the exercise of any such right or remedy  hereunder,  such
right or remedy may be  reasserted  at any time and from time to time  following
any subsequent Event of Default.

         (b)  Election of  Remedies.  The failure of Lessor to assert any of the
terms,  covenants or conditions of this  Assignment for any period of time or at
any time or times  shall not be  construed  or deemed to be a waiver of any such
right,  and nothing herein  contained nor anything done or omitted to be done by
Lessor pursuant to this Assignment shall be deemed to be an election of remedies
or a waiver by Lessor of any of its rights and remedies under any other Security
Document  or under the law.  The right of the Lessor to collect  and enforce the
payment and performance of the Obligations and to enforce any security  therefor
may be  exercised  by the  Lessor  either  prior  to or  simultaneously  with or
subsequent to any action taken hereunder.


<PAGE>
         7.4 Appointment of Attorney-in-Fact.  Upon and following the occurrence
of an Event of Default remaining uncured, Lessee hereby constitutes and appoints
Lessor the true and lawful attorney-in-fact, coupled with an interest, of Lessee
and in the name,  place and stead of Lessee to demand,  sue for,  attach,  levy,
recover and receive any premium or penalty payable upon the exercise by a Tenant
under a Tenant Lease of a privilege of cancellation  originally provided in such
Tenant Lease and to give proper  receipts,  releases and  acquittances  therefor
and,  after  deducting  expenses of  collection,  to apply the net proceeds as a
credit upon any portion of the Obligations  selected by Lessor,  notwithstanding
the fact that such portion of the Obligations may not then be due and payable or
that such portion of the Obligations is otherwise adequately secured; and Lessee
does  hereby  authorize  and direct any such Tenant to deliver  such  payment to
Lessor in  accordance  with this  Assignment,  and Lessee  hereby  ratifies  and
confirms  that  Lessor,  as  attorney-in-fact,  shall  do or cause to be done by
virtue of the powers granted hereby. Under the circumstances referred to in this
Section 7.4, the foregoing  appointment is irrevocable and continuing,  and such
rights,  powers and privileges shall be exclusive in Lessor,  its successors and
assigns, so long as any part of the Obligations secured hereby remain unpaid and
undischarged.

                                   ARTICLE 8.
                                  MISCELLANEOUS
                                  -------------

         8.1 Performance at Lessee's Expense. The cost and expense of performing
or  complying  with any and all of the  Obligations  shall be  borne  solely  by
Lessee,  and no portion of such cost and expense shall be, in any way and to any
extent credited against any installment on or portion of the Obligations.

         8.2  Survival of  Obligations.  Each and all of the  Obligations  shall
survive  that  execution  and  delivery  of  the  Security   Documents  and  the
consummation of the transaction  called for therein,  and shall continue in full
force and effect  until the  Obligations  shall have been paid and  performed in
full.

         8.3  Further  Assurances.  Lessee,  upon the  request of  Lessor,  will
execute,  acknowledge,  deliver and record and/or file such further  instruments
and do such further acts as may be  necessary,  desirable or proper to carry out
more  effectively  the purpose of the Security  Documents  and to subject to the
liens and security  interests thereof any property intended by the terms thereof
to be covered  thereby,  including  specifically,  but without  limitation,  any
renewals, substitutions, replacements, modifications or amendments to the Tenant
Leases.

         8.4 Recording and Filing.  Lessee will cause the Security Documents and
all  amendments  and  supplements  thereto  and  substitutions  therefor  to  be
recorded,  filed,  re-recorded  and refiled in such manner and in such places as
Lessor  shall  reasonably  request,  and will pay all  such  recording,  filing,
re-recording and refiling taxes, fees and other charges.

         8.5 Notices. Any notices,  demands,  approvals and other communications
provided  for in this  Assignment  shall be in writing and shall be delivered by
telephonic facsimile,  overnight air courier, personal delivery or registered or
certified  U.S.  Mail  with  return  receipt  requested,  postage  paid,  to the
appropriate party at its address as follows:


<PAGE>





         If to Lessor:

         CAPSTONE CAPITAL CORPORATION
         1000 Urban Center Drive
         Suite 630
         Birmingham, Alabama  35242
         Attention:  Mr. Daryl D. McCombs
         Telephone: (205) 967-2092
         Telecopy:  (205) 967-9066

         With a copy to:

         Mr. Thomas A. Ansley
         Sirote & Permutt, P.C.
         2222 Arlington Avenue South
         Birmingham, Alabama  35205
         Telephone: (205) 930-5300
         Telecopy:  (205) 930-5301

         If to Lessee or Guarantor:

         INTEGRATED LIVING COMMUNITIES, INC.
         Brentwood Centre
         24850 Old 41 Road
         Suite 10
         Bonita Springs, Florida  34135-7022
         Attention: Mr. John B. Poole
         Telephone: (941) 947-7200
         Telecopy:  (941) 947-7201

         With a copy to:

         INTEGRATED LIVING COMMUNITIES, INC.
         Brentwood Centre
         24850 Old 41 Road
         Suite 10
         Bonita Springs, Florida  34135-7022
         Attention: Ms. Geralyn Kidera
         Telephone: (941) 947-7222
         Telecopy:  (941) 947-7201

         Addresses for notice may be changed from time to time by written notice
to all other parties. Any communication given by mail will be effective (i) upon
the earlier of (a) three  business  days  following  deposit in a post office or
other official depository under the care and custody of the United States Postal
Service or (b) actual receipt, as indicated by the return receipt; (ii) if given
by telephone facsimile, when sent; and (iii) if given by personal delivery or by
overnight air courier, when delivered to the appropriate address set forth.

         8.6 Successors and Assigns.  All of the terms of the Security Documents
shall apply to, be binding upon and inure to the benefit of the parties  hereto,
their  successors,  assigns,  heirs  and  legal  representatives,  and all other
persons claiming by, through or under them.


<PAGE>
         8.7 No Waiver;  Severability.  Any failure by Lessor to insist,  or any
election by Lessor not to insist,  upon strict  performance  by Lessee of any of
the terms,  provisions  or  conditions  of the Security  Documents  shall not be
deemed to be a waiver  of same or any  other  terms,  provisions  or  conditions
thereof,  and  Lessor  shall have the right at any time or times  thereafter  to
insist upon strict  performance by Lessee of any and all such terms,  provisions
and  conditions.  The  Security  Documents  are  intended  to  be  performed  in
accordance  with,  and only to the extent  permitted  by, all  applicable  legal
requirements.  If  any  provision  of  any  of  the  Security  Documents  or the
application  thereof to any person or circumstance  shall, for any reason and to
any extent,  be invalid or  unenforceable,  then  neither the  remainder  of the
instrument  in which such  provision to other persons or  circumstances  nor the
other  instruments  referred to herein  shall be affected  thereby,  but rather,
shall be enforced to the greatest extent permitted by law.

         8.8 Entire  Agreement and  Modification.  This Assignment  contains the
entire  agreement  between the parties relating to the subject matter hereof and
thereof,  and all prior  agreements  relative  thereto  which are not  contained
herein or therein are terminated.  This Assignment may not be amended,  revised,
waived,  discharged,  released  or  terminated  orally,  but  only by a  written
instrument or instruments executed by the party against which enforcement of the
amendment,  revision, waiver, discharge, release or termination is asserted. Any
alleged amendment,  revision, waiver, discharge, release or termination which is
not so documented shall not be effective as to any party.

         8.9  Counterparts.  This  Assignment  may be  executed in any number of
counterparts,  each of which  shall be an  original,  but all of which  together
shall constitute but one instrument.

         8.10  Applicable  Law. The Security  Documents shall be governed by and
construed  according  to the laws of the State of  Alabama  from time to time in
effect  except to the extent  preempted  by United  States  federal  law.  It is
expressly  stipulated  and  agreed to be the  intent of Lessee and Lessor at all
times to comply with  applicable  law now or  hereafter  governing  any interest
payable under the Lease,  including any notes  evidencing the Obligations or any
part thereof.  If the  applicable  law is ever  revised,  repealed or judicially
interpreted  so as to render  usurious  any  amount  called for under any of the
Security  Documents,  or if Lessor's  exercise of the option to  accelerate  the
maturity of the  Obligations  or if any  prepayment by Lessee  results in Lessee
having paid any interest in excess of that permitted by law, then it is Lessee's
and Lessor's  express  intent that all excess amounts  theretofore  collected by
Lessor be  credited  on the  principal  balance of the  Obligations  (or, if the
Obligations have been paid in full,  refunded to Lessee),  and the provisions of
the Security Documents immediately be deemed reformed and the amounts thereafter
collectible  hereunder  and  thereunder  reduced,  so as to comply with the then
applicable law, but so as to permit the recovery of the fullest amount otherwise
called for hereunder or thereunder. All sums paid or agreed to be paid to Lessor
for the use,  forbearance or detention of the  Obligations  shall, to the extent
permitted  by  applicable  law, be  amortized,  prorated,  allocated  and spread
throughout  the full term of the  Obligations  until payment in full so that the
rate or amount of  interest on account of such  Obligations  does not exceed the
usury ceiling from time to time in effect and  applicable to the  Obligations so
long as debt is outstanding thereunder.

         8.11 Headings.  The Article,  Paragraph and  Subparagraph  entitlements
hereof are inserted for convenience of reference only and shall in no way alter,
modify  or  define,  or be  used in  construing,  the  text  of  such  Articles,
Paragraphs or Subparagraphs.

         EXECUTED as of the date first above written,  to be effective as of the
date first above written.

                                     LESSOR:

                                     CAPSTONE CAPITAL CORPORATION
                                     a Maryland corporation


<PAGE>




                                     By
                                        ----------------------------------------
                                                       Daryl D. McCombs
                                                       Assistant Vice President


                                     LESSEE:

                                     INTEGRATED LIVING COMMUNITIES
                                     OF WEST COLUMBIA, INC.
                                     a Delaware corporation


                                     By
                                        ----------------------------------------
                                                       John B. Poole
                                                       Vice President

STATE OF ALABAMA         )
                         :
JEFFERSON COUNTY         )

         I, the undersigned authority, a Notary Public in and for said county in
said state,  hereby certify that Daryl D. McCombs,  whose name as Assistant Vice
President of CAPSTONE CAPITAL CORPORATION, a Maryland corporation,  is signed to
the foregoing  instrument and who is known to me, acknowledged before me on this
day that,  being  informed of the contents of the said  instrument,  he, as such
partner and with full  authority,  executed the same  voluntarily for and as the
act of said partnership.

         GIVEN under my hand and seal,  this _____ day of  ____________________,
1997.


[ NOTARIAL SEAL ]
                                       -----------------------------------------
                                                         Notary Public

                                       My Commission Expires
                                                            --------------------


STATE OF __________        )
                           :
__________ COUNTY          )

         I, the undersigned authority, a Notary Public in and for said county in
said state,  hereby certify that John B. Poole,  whose name as Vice President of
Integrated Living Communities of West Columbia, Inc., a Delaware corporation, is
signed to the foregoing  instrument and who is known to me,  acknowledged before
me on this day that, being informed of the contents of the said instrument,  he,
as such officer and with full authority,  executed the same  voluntarily for and
as the act of said corporation.

         GIVEN under my hand and seal,  this _____ day of  ____________________,
1997.


[ NOTARIAL SEAL ]


                                       -----------------------------------------
                                                         Notary Public
                                                                                

                                       My Commission Expires
                                                            --------------------


<PAGE>



                                    EXHIBIT A

                              PROPERTY DESCRIPTION


<PAGE>



                                    EXHIBIT E

                                 PERMITTED LIENS

                                      NONE


<PAGE>



                                    EXHIBIT F

                                PERSONAL PROPERTY



<PAGE>



                                    EXHIBIT G

                              CONSENT TO ASSIGNMENT

         TO:

         The undersigned  corporation  (the  "Consenting  Party")  delivers this
Consent as of the _____ day of ________________________ ___, 1997, in connection
with the  transactions  contemplated  by the  Construction  Loan Agreement dated
__________________________________________ (the   "Loan   Agreement")    between
______________________________________________________________  ("Borrower") and
________________________________ ("Lender").

         The Consenting Party hereby acknowledges and consents to:

         (a) the Deed of Trust, Mortgage, Open-End Mortgage, Security Agreement,
         Fixture  Financing  Statement,  Assignment  of Leases  and  Rents,  and
         Financing  Statement (the "Deed of Trust") executed by the Borrower for
         the benefit of the Lender in connection with the Loan Agreement; and

         (b) the Assignment of Lease and Management Agreement (the "Assignment")
         executed by the  Borrower  for the benefit of the Lender in  connection
         with the Loan Agreement.

         The Consenting  Party hereby  acknowledges  and consents to the Deed of
Trust and the  Assignment,  pursuant  to which the  Borrower  has  assigned  and
granted to the Agent (for itself and the  Lenders) a security  interest and lien
in certain lease  agreements,  management  agreements,  guaranty  agreements and
other property of the Borrower,  including without  limitation the rights of the
Borrower  in, to and under each of the  agreements  listed on Exhibit A attached
hereto.

         IN WITNESS  WHEREOF,  the Consenting Party has executed this Consent as
of the date first above written.

                                         INTEGRATED LIVING COMMUNITIES
                                         OF WEST COLUMBIA, INC.
                                         a Delaware corporation



                                         By
                                             -----------------------------------
                                                          John B. Poole
                                                          Vice President


<PAGE>



                                    EXHIBIT A

                               ASSIGNED AGREEMENTS

1.            Lease dated as of February ___, 1997, between the Borrower and the
              Consenting Party.