<PAGE>
 
                                                                Exhibit 10.58


================================================================================

                                     LEASE

                         Dated as of November 21, 1997


                                    between


               BROOKDALE LIVING COMMUNITIES OF CONNECTICUT, INC.
                                 as the Lessee

                                      and

                           THE GABLES BUSINESS TRUST
                                 as the Lessor

================================================================================



  Acquisition of Managed Residential Care Facility in Farmington, Connecticut




================================================================================

This Lease has been executed in several counterparts.  To the extent, if any,
that this Lease constitutes chattel paper (as such term is defined in the
Uniform Commercial Code as in effect in any applicable jurisdiction), no lien on
this Lease may be created through the transfer or possession of any counterpart
other than the original counterpart containing the receipt therefor executed by
Nomura Asset Capital Corporation and its successors and assigns, as Lender.


<PAGE>
 
                                     LEASE


     THIS LEASE (together with the Lease Supplement (as defined in Appendix 1
                                                                   ----------
hereto), this "Lease"), dated as of November 21, 1997, between THE GABLES
               -----                                                     
BUSINESS TRUST, a Delaware business trust, having its principal office at
Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001, and BROOKDALE LIVING COMMUNITIES OF
CONNECTICUT, INC., a Delaware corporation, having its principal office at c/o
Brookdale Living Communities, Inc., 77 West Wacker Drive, Chicago, Illinois
60601.


                              W I T N E S S E T H:
                              ------------------- 

     WHEREAS, the Lessor desires to lease to the Lessee, and the Lessee desires
to lease from the Lessor, the Property; and

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


                                   ARTICLE I
                          DEFINITIONS; INTERPRETATION

      1.1  Definitions; Interpretation.  Capitalized terms used but not
           ---------------------------                                 
otherwise defined in this Lease have the respective meanings specified in
Appendix 1 to this Lease; and the rules of interpretation set forth in Appendix
----------                                                             --------
1 to this Lease shall apply to this Lease; provided, however, that capitalized
-                                          --------  -------                  
terms used but not otherwise defined in this Lease and Appendix 1 to this Lease
                                                       ----------              
shall have the respective meanings specified in the Nomura Loan Agreement.


                                  ARTICLE II
                               PURCHASE AND LEASE

      I.1  Acceptance and Lease of Property.  Subject to the terms and
           --------------------------------                           
conditions of this Lease, on the Acquisition Date (i) the Seller shall convey to
the Lessor, and the Lessor shall accept delivery of, the Property pursuant to
the terms hereof (and subject to the conditions set forth herein) and (ii) the
Lessor shall demise and lease to the Lessee hereunder for the Term the Lessor's
interest in the Property, subject to the Loan Documents and the Lessee hereby
agrees, expressly for the direct benefit of the Lessor, to lease from the Lessor
for the Term, the Lessor's interest in the Property.

      II.2 Acceptance Procedure.  The Lessee hereby agrees that the execution
           --------------------                                              
and delivery by the Lessee on the Acquisition Date of an appropriately completed
Lease Supplement in the form of Exhibit B hereto covering the Property thereon
                                ---------                                     
shall, without further act, constitute the irrevocable acceptance by the Lessee
of the Property for all purposes of this Lease and the other Operative Documents
on the terms set 
<PAGE>
 
forth therein and herein, and that the Property, shall be deemed to be included
in the leasehold estate of this Lease and shall be subject to the terms and
conditions of this Lease as of the Acquisition Date.

      II.3 Lease Term.  The term of this Lease (the "Term") shall consist of an
           ----------                                ----                      
Interim Lease Term (the "Interim Lease Term") and a Base Lease Term (a "Base
                         ------------------                             ----
Lease Term").  The Interim Lease Term of this Lease shall commence on (and
----------                                                                
include) the Acquisition Date and end on February 11, 1999.  Upon no less than
sixty (60) days' prior written notice to the Lessor and the payment of an
extension fee in the amount of one percent (1%) of the Principal Indebtedness,
if the payment of same by Lessor is required under the Nomura Loan Agreement,
the Lessee may extend the Interim Lease Term for a period not to exceed twelve
(12) months, but in all events to the eleventh day of a calendar month.  The
Base Lease Term shall commence on (and include) the last day of the Interim
Lease Term (and any extensions thereto) and end on (but exclude) the Expiration
Date, as such Expiration Date may be extended from time to time in accordance
with Article XXIII.
     ------------- 

      II.4 Title.  The Property is leased to the Lessee without any
           -----                                                   
representation or warranty, express or implied, by the Lessor and subject to the
rights of parties in possession, the existing state of title (including, without
limitation, Permitted Liens other than Lessor Liens) and all applicable
Requirements of Law.  The Lessee shall in no event have any recourse against the
Lessor for any defect in or exception to title to the Property other than to the
extent resulting from Lessor Liens.


                                  ARTICLE III
                             FUNDING OF THE ADVANCE

      III.1 Lessor Commitment.  Subject to the conditions and terms hereof, the
            -----------------                                                  
Lessor shall, upon the written request of the Lessee, make the Advance on the
Acquisition Date up to the amount of the Commitment for the purpose of financing
the acquisition of the Property.

      III.2 Procedures for Advance.
            ---------------------- 

             (a)  The Lessee shall give the Lessor prior written notice not
     later than 9:00 a.m., New York City time, five (5) Business Days prior to
     the Acquisition Date, pursuant to a Funding Request substantially in the
     form of Exhibit A (the "Funding Request"), specifying the proposed
             ---------       ---------------
     Acquisition Date and the amount of Advance requested. Except as the parties
     may otherwise agree in writing, the Advance shall be made solely to provide
     the Lessee with funds with which to pay or reimburse itself for amounts
     paid or payable to third parties as Property Cost and Transaction Expenses
     paid or payable by the Lessee in connection with the preparation, execution
     and delivery of the Operative Documents, and all fees paid or payable by
     the Lessee to the Lessor in connection with the Operative Documents and any
     amounts paid or payable by Lessee pursuant to Section 31.2 hereof.
                                                   ------------        

            (b)  The Advance shall be made on the Acquisition Date in
     immediately available federal funds by wire transfer to the account
     designated by the Lessee, except that a portion of the Advance shall be
     made (in accordance with instructions to be included in the Funding
     Request) by wire transfer directly to an account designated by Lessee to
     pay the Seller and/or to reimburse the Lessee for Transaction Expenses.
<PAGE>
 
                                  ARTICLE IV
                              CONDITIONS PRECEDENT

      IV.1 Documentation Date.  The Documentation Date (the "Documentation
           ------------------                                -------------
Date") shall occur on the earliest date on which the following conditions
precedent shall have been satisfied:

            (a)  Lease.  This Lease shall have been duly authorized, executed 
                 -----
      and delivered by the parties thereto.

            (b)  FBTC Loan Agreement.  The FBTC Loan Agreement shall have been 
                 -------------------
      duly authorized, executed and delivered by the parties thereto.

            (c)  Lessee's Resolutions and Incumbency Certificate.  The Lessee
                 -----------------------------------------------             
      shall have delivered to the Lessor a certificate of its Secretary or an
      Assistant Secretary attaching and certifying as to the incumbency and
      signature of persons authorized to execute and deliver on its behalf the
      Operative Documents to which it is a party.

            (d)  Opinion of Counsel to the Lessee.  On or prior to the
                 --------------------------------                     
      Documentation Date, the Lessor shall have received an opinion of internal
      counsel for the Lessee in form and substance satisfactory to the Lessor.

            (e)  Certain Transaction Expenses.  Counsel for the Lessor shall 
                 ----------------------------
      have received, to the extent then invoiced, payment in full in cash of all
      Transaction Expenses payable to such counsel pursuant to Section 31.1(a).
                                                              --------------- 

            (f)  FBTC Indemnity.  The FBTC Indemnity shall have been duly
                 --------------                                          
      authorized, executed and delivered by the Parent.

            (g)  Opinion of Counsel to Lessor.  On or prior to the Documentation
                 ----------------------------                                   
      Date, the Lessee shall have received an opinion of counsel to the Lessor
      in form and substance reasonably satisfactory to the Lessee.

      IV.2 Acquisition Date.  The closing date with respect to the acquisition
           ----------------                                                   
of Land (and the Improvements, if any, existing thereon) (the "Acquisition
                                                               -----------
Date") shall occur on the earliest date after the Documentation Date, on which
all the conditions precedent thereto set forth in Section 4.3 with respect to
                                                  -----------                
such acquisition of the Property shall have been satisfied or waived by the
applicable parties as set forth therein.  The Acquisition Date for the Property
shall be the date the Advance is made.

      IV.3 Conditions Precedent to the Acquisition Date and the Advance.  The
           ------------------------------------------------------------      
occurrence of the Acquisition Date and the obligation of the Lessor to make the
Advance are subject to the satisfaction or waiver of the following conditions
precedent:

            (a)  Operative Documents; No Default.  Each of the Operative 
                 -------------------------------
      Documents shall have been duly authorized, executed and delivered by the
      parties thereto, in form and substance satisfactory to the parties hereto,
      and shall be in full force and effect. No Default or Event of Default
      shall 

                                      -3-
<PAGE>
 
      exist under any of the Operative Documents (either before or after
      giving effect to the transactions contemplated by the Operative
      Documents), and the Lessor shall have received a fully executed copy of
      each of such Operative Documents (other than this Lease, of which the
      Lessor shall receive the original). The Operative Documents (or memoranda
      thereof), any supplements thereto and any financing statements in
      connection therewith required under the Uniform Commercial Code shall have
      been recorded, registered and filed, if necessary, in such manner as to
      enable counsel to render the opinions referred to in clause (c) below and
                                                           ----------
      to enable the title company to issue the title insurance policies referred
      to in clause (j) below.
            ----------

            (b)  Taxes.  All taxes, fees and other charges in connection with 
                 -----
      the execution, delivery, recording, filing and registration of the
      Operative Documents shall have been paid or provisions for such payment
      shall have been made to the satisfaction of the Lessor.

            (c)  Opinions of Counsel.  Counsel to the Lessee (i) in the
                 -------------------                                   
      jurisdiction in which the Property is located shall have issued to the
      Lessor their opinions, all in form and substance satisfactory to the
      Lessor and (ii) shall have issued to the Lessor their opinions to the
      effect that upon delivery to the Custodian of the Pledged Securities
      pursuant to the Securities Pledge Agreement, a valid first priority
      security interest in the Pledged Securities shall have been created and
      granted to the Custodian in the Pledged Securities.

            (d)  Governmental Approvals.  All necessary (or, in the reasonable
                 ----------------------                                       
      opinion of the Lessor, advisable) Governmental Actions, in each case
      required by any Requirement of Law, shall have been obtained or made and
      be in full force and effect.

            (e)  Litigation.  No action or proceeding shall have been insti-
                 ----------
      tuted, nor shall any action or proceeding be threatened, before any
      Governmental Authority, nor shall any order, judgment or decree have been
      issued or proposed to be issued by any Governmental Authority (i) to set
      aside, restrain, enjoin or prevent the full performance of this Lease, any
      other Operative Document or any transaction contemplated hereby or thereby
      or (ii) which is reasonably likely to materially and adversely affect the
      Lessee.

            (f)  Requirements of Law.  The transactions contemplated by the
                 -------------------                                       
      Operative Documents do not and will not violate any Material Requirement
      of Law and do not and will not subject the Lessor to any Material adverse
      regulatory prohibitions or constraints.

            (g)  Responsible Employee's Certificates.  The Lessor shall have
                 -----------------------------------                        
      received a Responsible Employee's Certificate of the Lessee, in
      substantially the form of Exhibit C, dated as of the Acquisition Date,
                                ---------                                   
      stating that for the Lessee (i) each and every representation and warranty
      of the Lessee contained in each Operative Document to which it is a party
      is true and correct in all material respects on and as of the Acquisition
      Date; (ii) no Default or Event of Default has occurred and is continuing
      under any Operative Document with respect to the Lessee; (iii) each
      Operative Document to which the Lessee is a party is in full force and
      effect with respect to it; and (iv) the Lessee has duly performed and
      complied in all material respects with all covenants, agreements and
      conditions contained herein or in any Operative Document required to be
      performed or complied with by it on or prior to the Acquisition Date.

                                      -4-
<PAGE>
 
            (h)  Environmental Audit.  The Lessor shall have received an
                 -------------------                                    
      Environmental Audit for the Property in form and substance acceptable to
      the Lessor, provided, Lessor shall not deem an Environmental Audit
      unacceptable solely because a Phase Two environmental site assessment is
      called for.

            (i)  Appraisal.  The Lessor shall have received an Appraisal of the
                 ---------                                                     
      Property.

            (j)  Survey and Title Insurance.  The Lessee shall have delivered to
                 --------------------------                                     
      the Lessor an ALTA/1992 (Urban) Survey of the Property (other than the
      Equipment located therein) prepared by a licensed surveyor and meeting the
      Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys as
      adopted by the American Land Title Association/American Society and
      American Congress on Surveying and Mapping in 1992 certified to the Lessor
      and the title company and otherwise in form reasonably acceptable to the
      Lessor and an ALTA owner's insurance policy covering the Property (other
      than any Equipment) in favor of the Lessor, and, at the option of Lessee,
      a leasehold policy in favor of the Lessee evidencing the Lessee's
      equitable ownership in the Property, each such policy to be dated as of
      the Acquisition Date and in an amount not less than the Property Cost and
      to be reasonably satisfactory to the Lessor with comprehensive, zoning and
      mechanics liens' endorsements and such other endorsements reasonably
      requested by the Lessor.

            (k)  Recordation.  The Lessor shall have received evidence 
                 -----------
      reasonably satisfactory to it that each of the Deed and the Lease
      Supplement shall have been delivered to the title company in escrow for
      recordation with the appropriate Governmental Authorities (and the
      issuance of the title insurance policies in clause (j) above shall be
                                                  ----------
      satisfactory evidence of the foregoing).

            (l)  Evidence of Property Insurance.  The Lessor shall have received
                 ------------------------------                                 
      evidence of insurance with respect to the Property required to be
      maintained pursuant to this Lease, setting forth the respective coverages,
      limits of liability, carrier, policy number and period of coverage, and
      otherwise satisfying the requirements set forth in Article XVII.
                                                         ------------ 

            (m)  Lease Supplement.  On or prior to the Acquisition Date, the
                 ----------------                                           
      Lessee shall have delivered to the Lessor the Lease Supplement executed by
      the Lessee.

            (n)  Nomura Loan Agreement Conditions Precedent.  The conditions
                 ------------------------------------------                 
      precedent set forth in Section 3.1 of the Nomura Loan Agreement shall have
                             -----------                                        
      been satisfied or waived; provided, however, that the conditions precedent
                                --------  -------                               
      set forth in Sections 3.1(a)(A), (ix), (xi), (D)-(J) (but with respect to
                   ------------------  ----  ---- -----------------------------
      Section 3.1(a)(J) only to the extent same is made by the Lessee), (K), 
      ---------------------------------------------------------------------  
      (M)-(T) and (V)-(W) of the Nomura Loan Agreement shall have been satisfied
      --- ---     ------- 
      by the Lessee or waived.

            (o)  Funding Request.  The Lessor shall have received no later than
                 ---------------                                               
      five (5) Business Days prior to the Acquisition Date a fully executed
      counterpart of the applicable Funding Request, executed by the Lessee.

            (p)  Delivery of Pledged Securities and Certificate A.  The Lessee
                 ------------------------------------------------             
      shall have delivered the Pledged Securities and the Certificate A to the
      Custodian and the Lessor, respectively, in accordance with the Securities
      Pledge Agreement and Certificate Pledge Agreement, respectively.

                                      -5-
<PAGE>
 
All documents and instruments required to be delivered on the Acquisition Date
shall be delivered at the offices of Mayer, Brown & Platt, 1675 Broadway, New
York, New York 10019, or at such other location as may be determined by the
Lessor and the Lessee.


                                   ARTICLE V
                            [INTENTIONALLY OMITTED]


                                  ARTICLE VI
                                REPRESENTATIONS

      VI.1  Representations of the Lessor.  The Lessor represents and warrants 
            -----------------------------
to the Lessee that:

            (a)  ERISA.  The Lessor is not and will not be funding the Advance
                 -----                                                        
      hereunder, and is not performing its obligations under the Operative
      Documents, with the assets of an "employee benefit plan" (as defined in
      Section 3(3) of ERISA) which is subject to Title I of ERISA, or "plan" (as
      ------------                                                              
      defined in Section 4975(e)(1) of the Code).
                 ------------------              

            (b)  Status.  The Lessor is a duly organized and validly existing
                 ------                                                      
      Delaware business trust and has all requisite power and authority to own
      its property and to conduct the business in which it is currently engaged.

            (c)  Corporate Power and Authority.  The Lessor has the requisite
                 -----------------------------                               
      power and authority to execute, deliver and carry out the terms and
      provisions of the Operative Documents to which it is or will be a party
      and has taken all necessary action to authorize the execution, delivery
      and performance of the Operative Documents to which it is a party and has
      duly executed and delivered each Operative Document required to be
      executed and delivered by it and, assuming the due authorization,
      execution and delivery thereof on the part of each other party thereto,
      each such Operative Document constitutes a legal, valid and binding
      obligation enforceable against it in accordance with its terms, except as
      the same may be limited by insolvency, bankruptcy, reorganization or other
      laws relating to or affecting the enforcement of creditors' rights
      generally and by equitable principles whether enforcement is sought by
      proceedings in equity or at law and except as the same may be limited by
      certain circumstances under law or court decisions in respect of
      provisions providing for indemnification of a party with respect to
      liability where such indemnification is contrary to public policy.

            (d)  No Legal Bar.  Neither the execution, delivery and performance
                 ------------
      by the Lessor of the Operative Documents to which it is or will be a party
      nor compliance with the terms and provisions thereof, nor the consummation
      by the Lessor of the transactions contemplated therein (i) will result in
      a violation by the Lessor of any provision of any Applicable Law that
      would Materially adversely affect (x) the validity or enforceability of
      the Operative Documents to which the Lessor is a party, or the title to,
      or value or condition of, the Property, or (y) the financial position,
      business or results of operations of the Lessor or the ability of the
      Lessor to perform its obligations under the Operative Documents (ii) will
      conflict with or result in any breach which would constitute a default
      under, or (other than pursuant to the Operative Documents) result in the
      creation or imposition of (or the obligation to create or impose) any Lien
      upon any of the property 

                                      -6-
<PAGE>
 
      or assets of the Lessor pursuant to the terms of any indenture, loan
      agreement or other agreement for borrowed money to which the Lessor is a
      party or by which it or any of its property or assets is bound or to which
      it may be subject (other than Permitted Liens), or (iii) will violate any
      provision of the Trust Agreement.

            (e)  Litigation.  There are no actions, suits or proceedings pending
                 ----------                                                     
      or, to the knowledge of the Lessor, threatened (i) against the Property,
      (ii) that are reasonably likely to have a Materially adverse effect on the
      ability of the Lessor to perform its obligations under the Operative
      Documents or (iii) that question the validity of the Operative Documents
      or the rights or remedies of the Lessor with respect to the Lessor or the
      Property under the Operative Documents.

            (f)  Governmental Approvals.  No Governmental Action by any
                 ----------------------                                
      Governmental Authority having jurisdiction over the Lessor which has not
      been taken on or prior to the Acquisition Date is required to authorize or
      is required in connection with (i) the execution, delivery and performance
      by the Lessor of any Operative Document to which it is a party, or (ii)
      the legality, validity, binding effect or enforceability against the
      Lessor of any Operative Document to which it is a party.

            (g)  Investment Company Act.  The Lessor is not an "investment
                 ----------------------                                   
      company" or a company "controlled" by an "investment company," within the
      meaning of the Investment Company Act.

            (h)  Public Utility Holding Company Act.  The Lessor is not a 
                 ----------------------------------
      "holding company" or a "subsidiary company," or an "affiliate" of a
      "holding company" or of a "subsidiary company" of a "holding company,"
      within the meaning of the Public Utility Company Act of 1935, as amended.

      VI.2  Representations of Lessee.  The Lessee represents and warrants to 
            -------------------------
the Lessor that:

            (a)  Corporate Status.  The Lessee (i) is a duly organized and 
                 ---------------- 
      validly existing corporation in good standing under the laws of the State
      of Delaware and (ii) has the corporate power and authority to own its
      properties and to conduct the business in which it is currently engaged.

            (b)  Corporate Power and Authority.  The Lessee has the corporate
                 -----------------------------                               
      power and authority to execute, deliver and carry out the terms and
      provisions of the Operative Documents to which it is or will be a party
      and has taken all necessary corporate action to authorize the execution,
      delivery and performance of the Operative Documents to which it is a party
      and has duly executed and delivered each Operative Document required to be
      executed and delivered by it and, assuming the due authorization,
      execution and delivery thereof on the part of each other party thereto,
      each such Operative Document constitutes a legal, valid and binding
      obligation enforceable against it in accordance with its terms, except as
      the same may be limited by insolvency, bankruptcy, reorganization or other
      laws relating to or affecting the enforcement of creditors' rights
      generally and by equitable principles whether enforcement is sought by
      proceedings in equity or at law and except as the same may be limited by
      certain circumstances under law or court decisions in respect of
      provisions providing for indemnification of a party with respect to
      liability where such indemnification is contrary to public policy.

            (c)  No Legal Bar.  Neither the execution, delivery and performance
                 ------------
      by the Lessee of the Operative Documents to which it is or will be a party
      nor compliance with the terms and

                                      -7-
<PAGE>
 
     provisions thereof, nor the consummation by the Lessee of the transactions
     contemplated therein (i) will result in a violation by the Lessee of any
     provision of any Applicable Law that would Materially adversely affect (x)
     the validity or enforceability of the Operative Documents to which the
     Lessee is a party, or the title to, or value or condition of, the Property,
     or (y) the consolidated financial position, business or consolidated
     results of operations of the Lessee or the ability of the Lessee to perform
     its obligations under the Operative Documents, (ii) will conflict with or
     result in any breach which would constitute a default under, or (other than
     pursuant to the Operative Documents) result in the creation or imposition
     of (or the obligation to create or impose) any Lien upon any of the
     property or assets of the Lessee pursuant to the terms of any indenture,
     loan agreement or other agreement for borrowed money to which the Lessee is
     a party or by which it or any of its property or assets is bound or to
     which it may be subject (other than Permitted Liens), or (iii) will violate
     any provision of the certificate of incorporation or by-laws of the Lessee.

          (d)  Litigation.  There are no actions, suits or proceedings pending
               ----------                                                     
     or, to the knowledge of the Lessee, threatened (i) against the Property,
     (ii) that are reasonably likely to have a Materially adverse effect on the
     ability of the Lessee to perform its obligations under the Operative
     Documents or (iii) that question the validity of the Operative Documents or
     the rights or remedies of the Lessor with respect to the Lessee or the
     Property under the Operative Documents.

          (e)  Governmental Approvals.  No Governmental Action by any
               ----------------------                                
     Governmental Authority having jurisdiction over the Lessee or the Property
     which has not been taken on or prior to the Acquisition Date is required to
     authorize or is required in connection with (i) the execution, delivery and
     performance by the Lessee of any Operative Document to which it is a party,
     or (ii) the legality, validity, binding effect or enforceability against
     the Lessee of any Operative Document to which it is a party.

          (f)  Investment Company Act.  The Lessee is not an "investment
               ----------------------                                   
     company" or a company "controlled" by an "investment company," within the
     meaning of the Investment Company Act.

          (g)  Public Utility Holding Company Act.  The Lessee is not a "holding
               ----------------------------------                               
     company" or a "subsidiary company", or an "affiliate" of a "holding
     company" or of a "subsidiary company" of a "holding company", within the
     meaning of the Public Utility Company Act of 1935, as amended.

          (h)  Offer of Securities, etc.  Neither the Lessee nor any Person
               ------------------------                                    
     authorized to act on the Lessee's behalf has, directly or indirectly,
     offered any interest in the Property or any other interest similar thereto
     (the sale or offer of which would be integrated with the sale or offer of
     such interest in the Property), for sale to, or solicited any offer to
     acquire any of the same from, any Person other than the Lessor and other
     "accredited investors" (as defined in Regulation D of the Securities and
     Exchange Commission).

          (i)  Solvency.  The Lessee's representations and warranties set forth
               --------                                                        
     in Section 4.1 (c)(I) are true and correct.
                ---                             

          (j)  Use of Property. The Property and the contemplated use thereof by
               ---------------
     the Lessee and its agents, assignees, employees, lessees, licensees and
     tenants will comply with all Material Requirements of Law (including,
     without limitation, all zoning and land use laws and Environmental Laws)
     and Material Insurance Requirements, except for such Requirements of Law

                                      -8-
<PAGE>
 
     as the Lessee shall be contesting in good faith by appropriate proceedings.
     There is no action, suit or proceeding (including any proceeding in
     condemnation or eminent domain or under any Environmental Law) pending or,
     to the best of the Lessee's knowledge, threatened with respect to the
     Lessee, its Affiliates or the Property which adversely Materially affects
     the title to, or the use, operation or value of, the Property.

          (k) Condition of Property.  The Property has all utilities required to
              ---------------------                                             
     adequately service it for its intended use pursuant to adequate permits
     (including any that may be required under applicable Environmental Laws).
     No fire or other casualty with respect to the Property has occurred which
     fire or other casualty has had a Material adverse effect on the Property.
     The Property has available all Material services of public facilities and
     other utilities necessary for use and operation of the Property as a
     managed residential community with assisted living services, including
     required public utilities and means of access between the Property and
     public highways for pedestrians and motor vehicles.  All utilities proposed
     to serve the Property are located in, and vehicular access to the Property
     is provided by, either public rights-of-way abutting the Property or
     Appurtenant Rights.

          (l) Title.  The Deed will be in form and substance sufficient to
              -----                                                       
     convey good and marketable title to the Property in fee simple, subject
     only to Permitted Liens.  The Lessor will at all times during the Term have
     good title to all Equipment located on the Property and in any
     Improvements, subject only to Permitted Liens and Lessor Liens, if any.

          (m) Insurance.  The Lessee has obtained insurance coverage covering
              ---------                                                      
     the Property or self insures in a manner which satisfies the terms of this
     Lease, and any such coverage is in full force and effect.  The Lessee
     carries insurance with reputable insurers in respect of its Material
     Assets, in such manner, in such amounts and against such risks as is
     customarily maintained by other Persons of similar size engaged in similar
     business.

          (n) Flood Hazard Areas.  Except as otherwise identified on the survey
              ------------------                                               
     delivered pursuant to Section 4.3(j), no portion of the Property is located
                           --------------                                       
     in an area identified as a special flood hazard area by the Federal
     Emergency Management Agency or other applicable agency.  With respect to
     any portion of the Property located in an area identified as a special
     flood hazard area by the Federal Emergency Management Agency or other
     applicable agency, the Lessee is self-insured with respect to all risks
     related thereto to the same extent as the Lessee self-insures its other
     assets similarly situated, and otherwise in accordance with Section 17.2
                                                                 ------------
     and in accordance with the National Flood Insurance Act of 1968, as
     amended, or has provided adequate flood hazard insurance as required under
     the Nomura Loan Agreement.

          (o) Defaults.  No Event of Default or similar event which with the
              --------                                                      
     lapse of time or notice or both would constitute an "Event of Default" or
     similar event has occurred and is continuing hereunder or under any
     Material bond, debenture, note or other evidence of indebtedness or
     Material mortgage, deed of trust, indenture or loan agreement or other
     instrument to which the Lessee is a party or is subject to or bound.

          (p) Use of Advance.  No part of the Advance will be used directly or
              --------------                                                  
     indirectly for the purpose of purchasing or carrying, or for payment in
     full or in part of Debt that was incurred for the purposes of purchasing or
     carrying, any margin security as such term is defined in Section 
                                                              -------  

                                      -9-
<PAGE>
 
     207.2 of Regulation G of the Board of Governors of the Federal Reserve
     -----
     System (12 C.F.R., Chapter II, Part 207).

           VI.3  Representations of the Lessee with Respect to the Advance.  The
                 ---------------------------------------------------------      
     Lessee represents and warrants to the Lessor as of the Acquisition Date as
     follows:

           (a) Representations.  The representations and warranties of the
               ---------------                                            
     Lessee set forth in the Operative Documents (including the representations
     and warranties set forth in Section 6.2) are true and correct in all
                                 -----------                             
     material respects on and as of the Acquisition Date, except to the extent
     such representations or warranties relate solely to an earlier date, in
     which case such representations and warranties shall have been true and
     correct in all material respects on and as of such earlier date.  The
     Lessee is in compliance in all material respects with its respective
     obligations under the Operative Documents and there exists no Default or
     Event of Default under this Lease or any other Operative Document to which
     the Lessee is a party.  No Default or Event of Default under this Lease or
     any other Operative Document to which the Lessee is a party will occur as a
     result of, or by giving effect to, the Advance requested by the Funding
     Request on such date.

           (b) Liens.  The Lessee has not permitted Liens to be placed against
               -----                                                          
     the Property other than Permitted Liens.

           (c) Advance.  The Advance requested represents amounts owed by, or
               -------                                                       
     previously paid by, the Lessee to third parties in respect of Property
     Cost.  The conditions precedent to the Advance set forth in Article IV have
                                                                 ----------     
     been satisfied.


                                  ARTICLE VII
                                PAYMENT OF RENT

     VII.1  Rent.
            ---- 

           (a) The Lessee shall pay FBTC Basic Rent and Lessor Basic Rent on
     the Acquisition Date. Thereafter the Lessee shall pay Basic Rent (to the
     extent such Basic Rent (or any component thereof) is then due and owing) on
     (x) each Payment Date during the Term, (y) the date required under Section
                                                                        -------
     24.1(i) in connection with the Lessee's exercise of the Remarketing Option,
     -------
     and (z) any date on which this Lease shall terminate. The Lessee and Lessor
     hereby agree that amounts which would otherwise be payable by Lessee to
     Lessor hereunder as Lessor Basic Rent are payable as interest on the
     Pledged Securities pursuant to the terms of the Securities Pledge Agreement
     and such amounts shall not constitute Rent hereunder.

           (b) Rent shall be due and payable in lawful money of the United
     States and, after the occurrence and during the continuance of a Cash
     Management Event, shall be paid by wire transfer of immediately available
     funds on the due date therefor from the relevant Sub-Accounts of the Cash
     Collateral Account, to the extent funds exist therein.  With the exception
     of the first payment on the Acquisition Date of FBTC Basic Rent and Lessor
     Basic Rent, for which at least two (2) Business Days prior written notice
     from the Lessor shall be provided, the Lessor shall provide written notice
     of the amount of Basic Rent due at least five (5) Business Days prior to
     each due date therefor; provided, however, that the failure of the Lessor
                             --------  -------                                
     to provide such notice 

                                      -10-
<PAGE>
 
     shall not affect Lessee's obligations hereunder or impose liability on
     Lessor. Lessee shall deposit all security deposits received by it with
     respect to the Property into the Security Deposit Account and shall cause
     all relevant checks to be made payable to the name of the Security Deposit
     Account.

            (c) So long as a Cash Management Event is not continuing, Rent shall
     be payable by wire transfer of immediately available funds on the due date
     therefor as follows: (i) Lessor Basic Rent and FBTC Basic Rent and
     Supplemental Rent to which the Lessor is entitled shall be payable to the
     Lessor at the place of payment designated in writing by the Lessor and (ii)
     the remainder of Basic Rent and Supplemental Rent to which the Lender is
     entitled shall be payable to the Lender or Lender's designee or to an
     account identified by Lender or Lender's designee as set forth in Section
                                                                       -------
     2.12 (b) of the Nomura Loan Agreement.
     --------                              

            (d) Neither the Lessee's inability or failure to take possession of
     all or any portion of the Property when delivered by the Lessor, whether or
     not attributable to any act or omission of the Lessee, or for any other
     reason whatsoever, shall delay or otherwise affect the Lessee's obligation
     to pay Rent for the Property in accordance with the terms of this Lease.

     VII.2  Payment of Rent. Rent shall be paid absolutely net to the Lessor,
            ---------------
so that this Lease shall yield to the Lessor the full amount thereof, without
setoff, deduction or reduction.

     VII.3  Supplemental Rent.  The Lessee shall pay promptly as Supplemental
            -----------------                                                
Rent shall become due and payable (a) after the occurrence and during the
continuance of a Cash Management Event, to the Collection Account and (b) so
long as that a Cash Management Event is not continuing, any and all Supplemental
Rent payable pursuant to the Nomura Loan Agreement, to the Lender, Lender's
designee or to such parties as set forth in the Nomura Loan Agreement, and all
other Supplemental Rent to the Lessor. If the Lessee fails to pay any
Supplemental Rent, the Lessor shall have all rights, powers and remedies
provided for herein or by law or equity or otherwise in the case of nonpayment
of Basic Rent.  The Lessee shall pay as Supplemental Rent, among other things,
with ten (10) days following demand (or such shorter period that such payment is
required to be made under the Loan Documents) to the extent permitted by
applicable Requirements of Law, interest at the applicable Overdue Rate on any
installment of Basic Rent not paid when due for the period for which the same
shall be overdue and on any payment of Supplemental Rent not paid when due or
demanded by the Lessor for the period from the due date or the date of any such
demand, as the case may be, until the same shall be paid.  The expiration or
other termination of the Lessee's obligations to pay Basic Rent hereunder shall
not limit or modify the obligations of the Lessee with respect to Supplemental
Rent.  Unless expressly provided otherwise in this Lease, in the event of any
failure on the part of the Lessee to pay and discharge any Supplemental Rent as
and when due, the Lessee shall also promptly pay and discharge any fine,
penalty, interest or cost which may be assessed or added under any agreement
with a third party for nonpayment or late payment of such Supplemental Rent, all
of which shall also constitute Supplemental Rent.

     VII.4  Method of Payment.  Except as otherwise set forth in the Nomura Loan
            -----------------                                                   
Agreement, each payment of Rent or any other amount due hereunder shall be made
by the Lessee to the applicable party prior to 12:00 noon., New York City time
at the place of payment designated in writing by the Lessor or such applicable
party in funds consisting of lawful currency of the United States of America
which shall be in federal or other immediately available funds to an account
specified by Lender (with respect to payments to Lender) and, with respect to
all other payees, to such accounts as specified by such payees. If 

                                      -11-
<PAGE>
 
any payment is due on a date which is not a Business Day, such payment shall be
made on the next succeeding Business Day. Payments received after 12:00 noon,
New York City time on the date due shall for all purposes hereof be deemed to
have been paid on the next succeeding Business Day.


                                  ARTICLE VII
                       QUIET ENJOYMENT; RIGHT TO INSPECT

     VII.1   Quiet Enjoyment. Subject to Sections 2.4 and 8.2, and subject to
             ---------------             ------------     --- 
the rights of the Lessor contained herein and the other terms of the Operative
Documents to which the Lessee is a party, the Lessee shall peaceably and quietly
have, hold and enjoy the Property for the Term, free of any claim or other
action by the Lessor or anyone claiming by, through or under the Lessor (other
than the Lessee) with respect to any matters arising from and after the
Acquisition Date. Such right of quiet enjoyment is independent of, and shall not
affect the Lessor's rights otherwise to initiate legal action to enforce, the
obligations of the Lessee under this Lease.

     VIII.2  Right to Inspect. During the Term, the Lessee shall, upon
             ----------------
reasonable prior written notice from the Lessor (except that no notice shall be
required if an Event of Default under this Lease has occurred and is
continuing), and subject to the rights of permitted sublessees permit the Lessor
and its authorized representatives to inspect the Property during normal
business hours, provided that such inspections shall not unreasonably interfere
with the Lessee's business operations at the Property.


                                  ARTICLE IX
                                NET LEASE, ETC.

     IX.1    Net Lease. This Lease shall constitute a net lease. Any present or
             --------- 
future law to the contrary notwithstanding, this Lease shall not terminate, nor
shall the Lessee be entitled to any abatement, suspension, deferment, reduction,
setoff, counterclaim, or defense with respect to the Rent, nor shall the
obligations of the Lessee hereunder be affected (except as expressly herein
permitted and by performance of the obligations in connection therewith) by
reason of: (i) any defect in the condition, merchantability, design,
construction, quality or fitness for use of the Property or any part thereof, or
the failure of the Property to comply with all Requirements of Law, including
any inability to occupy or use the Property by reason of such non-compliance;
(ii) any damage to, removal, abandonment, salvage, loss, contamination of or
Release from, scrapping or destruction of or any requisition or taking of the
Property or any part thereof; (iii) any restriction, prevention or curtailment
of or interference with any use of the Property or any part thereof including
eviction; (iv) any defect in title to or rights to the Property or any Lien on
such title or rights or on the Property (other than Lessor Liens); (v) any
change, waiver, extension, indulgence or other action or omission or breach in
respect of any obligation or liability of or by the Lessor; (vi) any bankruptcy,
insolvency, reorganization, composition, adjustment, dissolution, liquidation or
other like proceedings relating to the Lessee or any other Person, or any action
taken with respect to this Lease by any trustee or receiver of the Lessee or any
other Person, or by any court, in any such proceeding; (vii) any claim that the
Lessee has or might have against any Person, including without limitation the
Lessor and any vendor, manufacturer, contractor of or for any portion of the
Property; (viii) any failure on the part of the Lessor to perform or comply with
any of the terms of this Lease (other than performance by Lessor of its
obligations set forth in Section 2.1 hereof), of any other Operative Document or
                         -----------
of any other agreement; (ix) any invalidity or unenforceability or illegality or
disaffirmance of this Lease against or by the Lessee or any provision hereof or
any of the other Operative Documents or any provision of any 

                                      -12-
<PAGE>
 
thereof; (x) the impossibility or illegality of performance by the Lessee, the
Lessor or both; (xi) any action by any court, administrative agency or other
Governmental Authority; (xii) any restriction, prevention or curtailment of or
interference with the construction on or any use of the Property or any part
thereof; or (xiii) any other cause or circumstances, whether or not the Lessee
shall have notice or knowledge of any of the foregoing. The parties intend that
the obligations of the Lessee hereunder shall be covenants and agreements that
are separate and independent from any obligations of the Lessor hereunder or
under any other Operative Documents and the obligations of the Lessee shall
continue unaffected unless such obligations shall have been modified or
terminated in accordance with an express provision of this Lease. Nothing
contained herein is intended to obviate or otherwise diminish any right the
Lessee may have to bring an action, either at law or in equity, to remedy any
breach by the Lessor of the Lessor's obligations hereunder.

     XI.2.   No Termination or Abatement. The Lessee shall remain obligated
             ---------------------------
under this Lease in accordance with its terms and shall not take any action to
terminate, rescind or avoid this Lease, notwithstanding any action for
bankruptcy, insolvency, reorganization, liquidation, dissolution, or other
proceeding affecting the Lessor, or any action with respect to this Lease which
may be taken by any trustee, receiver or liquidator of the Lessor or by any
court with respect to the Lessor. The Lessee hereby waives all right (i) to
terminate or surrender this Lease (except as provided herein) or (ii) to avail
itself of any abatement, suspension, deferment, reduction, setoff, counterclaim
or defense with respect to any Rent. The Lessee shall remain obligated under
this Lease in accordance with its terms and the Lessee hereby waives any and all
rights now or hereafter conferred by statute or otherwise to modify or to avoid
strict compliance with its obligations under this Lease. Notwithstanding any
such statute or otherwise, the Lessee shall be bound by all of the terms and
conditions contained in this Lease. Notwithstanding anything contained in this
Article IX, this Lease may be terminated by Lessor pursuant to, inter alia,
----------                                                      ----------
Sections 19.1 and 20.2 hereof.
-------------     ----

                                   ARTICLE X
                                   SUBLEASES

     X.1.    Subletting.  The Lessee may, without the consent of the Lessor,
             ----------                                                     
sublease the Property or any portion thereof to any Person.  No sublease or
other relinquishment of possession of the Property shall in any way discharge or
diminish any of the Lessee's obligations to the Lessor hereunder, and the Lessee
shall remain directly and primarily liable under this Lease, even if assigned,
and as to the Property or portion thereof so sublet.  Any sublease of the
Property shall have a term of not longer than one year or if such sublease has a
term of more than one year, such term shall not extend beyond the Base Lease
Term or any Renewal Period.  The Lessor hereby expressly agrees that any
obligations or covenants under this Lease may be performed by any permitted
sublessee directly, and the Lessor agrees that any such performance will be
accepted in satisfaction of the obligations or covenants in this Lease.


                                  ARTICLE XI
                             LESSEE ACKNOWLEDGMENTS

     XI.1.   Condition of the Property.  THE LESSEE ACKNOWLEDGES AND AGREES THAT
             -------------------------                                          
IT IS LEASING THE PROPERTY "AS IS" WITHOUT REPRESENTATION, WARRANTY OR COVENANT
(EXPRESS OR IMPLIED) BY THE LESSOR AND SUBJECT TO (A) THE EXISTING 

                                      -13-
<PAGE>
 
STATE OF TITLE, (B) THE RIGHTS OF ANY PARTIES IN POSSESSION THEREOF, (C) ANY
STATE OF FACTS WHICH AN ACCURATE SURVEY OR PHYSICAL INSPECTION MIGHT SHOW, AND
(D) VIOLATIONS OF REQUIREMENTS OF LAW WHICH MAY EXIST ON THE DATE HEREOF OR ON
THE ACQUISITION DATE. THE LESSOR HAS NOT MADE AND SHALL NOT BE DEEMED TO HAVE
MADE ANY REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) AND SHALL NOT
BE DEEMED TO HAVE ANY LIABILITY WHATSOEVER AS TO THE TITLE (OTHER THAN FOR
LESSOR LIENS), VALUE, HABITABILITY, USE, CONDITION, DESIGN, OPERATION, OR
FITNESS FOR USE OF THE PROPERTY (OR ANY PART THEREOF), OR ANY OTHER
REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO THE PROPERTY (OR ANY PART THEREOF) AND THE LESSOR SHALL NOT BE LIABLE
FOR ANY LATENT, HIDDEN, OR PATENT DEFECT THEREIN (OTHER THAN FOR LESSOR LIENS)
OR THE FAILURE OF THE PROPERTY, OR ANY PART THEREOF, TO COMPLY WITH ANY
REQUIREMENT OF LAW.

     XI.2.   Risk of Loss. During the Term the risk of loss of or decrease in
             ------------
the enjoyment and beneficial use of the Property as a result of the damage or
destruction thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise is assumed by the Lessee, and the Lessor shall in no event be
answerable or accountable therefor.


                                  ARTICLE XII
                   POSSESSION AND USE OF THE PROPERTY, ETC.

     XII.1   Utility Charges.  The Lessee shall pay or cause to be paid all
             ---------------                                               
charges for electricity, power, gas, oil, water, telephone, sanitary sewer
service and all other rents and utilities used in or on the Property during the
Term.  The Lessee shall be entitled to receive any credit or refund with respect
to any utility charge paid by the Lessee and the amount of any credit or refund
received by the Lessor on account of any utility charges paid by the Lessee, net
of the costs and expenses reasonably incurred by the Lessor in obtaining such
credit or refund, shall be promptly paid over to the Lessee.

     XII.2.  Possession and Use of the Property. The Property shall be used as a
             ----------------------------------
managed residential community with assisted living services in a manner
consistent with the standards applicable to properties of a similar nature in
the geographic area in which the Property is located and in any event not less
than the standards applied by Affiliates of the Lessee for other comparable
properties of the Lessee or such Affiliates in such geographic area. The Lessee
shall pay, or cause to be paid, all charges and costs required in connection
with the use of the Property as contemplated by this Lease. The Lessee shall not
intentionally commit or permit any waste of the Property or any part thereof.

     XII.3.  Compliance with Requirements of Law and Insurance Requirements.
             --------------------------------------------------------------  
Subject to the terms hereof relating to permitted contests, the Lessee, at its
sole cost and expense, shall (a) comply in all Material respects with all
Requirements of Law (including all Environmental Laws) and Insurance
Requirements relating to the Property, including the use, construction,
operation, maintenance, repair and restoration thereof and the remarketing
thereof pursuant to Article XXIV, whether or not compliance therewith shall
                    ------------                                           
require structural or extraordinary changes in the applicable Improvements or
interfere with the use and enjoyment of the Property, and (b) procure, maintain
and comply with all Material licenses, permits, orders, approvals, consents and
other authorizations required for the construction, use, 

                                      -14-
<PAGE>
 
maintenance and operation of the Property and for the use, operation,
maintenance, repair and restoration of the applicable Improvements.

     XII.4.  Assignment by Lessee.  Subject to the terms of the Nomura Loan
             --------------------                                          
Agreement, the Lessee may, with the consent of the Lessor, assign its rights
hereunder, including the Purchase Option, to any other Person so long as the
Lessee remains fully liable for all of the obligations of the "Lessee" hereunder
and under the other Operative Documents.


                                  ARTICLE XII
                        MAINTENANCE AND REPAIR; RETURN

     XIII.1. Maintenance and Repair; Return.
             ------------------------------ 

             (a) The Lessee, at its sole cost and expense, shall maintain the
     Property in good condition (ordinary wear and tear excepted) and make all
     necessary repairs thereto, of every kind and nature whatsoever, whether
     interior or exterior, ordinary or extraordinary, structural or
     nonstructural or foreseen or unforeseen, in each case as required by all
     Requirements of Law and Insurance Requirements and on a basis consistent
     with the operation and maintenance by the Lessee or its Affiliates of
     properties of a similar nature owned or leased by the Lessee or any of its
     Affiliates in the geographic area where the Property is located.

             (b) The Lessor shall under no circumstances be required to build
     any improvements on the Property, make any repairs, replacements,
     alterations or renewals of any nature or description to the Property, make
     any expenditure whatsoever in connection with this Lease or maintain the
     Property in any way. The Lessor shall not be required to maintain, repair
     or rebuild all or any part of the Property, and the Lessee waives any right
     to (i) require the Lessor to maintain, repair, or rebuild all or any part
     of the Property, or (ii) make repairs at the expense of the Lessor pursuant
     to any Requirement of Law, Insurance Requirement, contract, agreement, or
     covenant, condition or restriction in effect at any time during the Term.

             (c) The Lessee shall, upon the expiration or earlier termination of
     this Lease, vacate and surrender the Property to the Lessor in its then-
     current, "AS IS" condition, subject to the Lessee's obligations under
     Sections 12.3, 13.1(a), 14.1, 15.1, 18.1(e), 18.2 and 24.1, unless the
     -------------  -------  ----  ----  -------  ----     ----            
     Lessee has purchased the Property from the Lessor as provided herein.


                                  ARTICLE XIV
                              MODIFICATIONS, ETC.

     XIV.1.  Modifications, Substitutions and Replacements.  The Lessee, at its
             ---------------------------------------------                     
sole cost and expense, may at any time and from time to time make alterations,
renovations, improvements and additions to the Property or any part thereof and
substitutions and replacements therefor (collectively, "Modifications");
                                                        -------------   
provided, however, that:  (i) except for any Modification required to be made
--------  -------                                                            
pursuant to a Requirement of Law (a "Required Modification"), no Modification
                                     ---------------------                   
shall impair the value, utility or useful life of the Property or any part
thereof from that which existed immediately prior to such Modification; (ii) the
Modification shall be done expeditiously and in a good and workmanlike manner;
(iii) the Lessee shall 

                                      -15-
<PAGE>
 
comply with all Requirements of Law (including all Environmental Laws) and
Insurance Requirements applicable to the Modification, including the obtaining
of all permits and certificates of occupancy, and the structural integrity of
the Property shall not be materially adversely affected; (iv) subject to the
terms of Article XVI relating to permitted contests, the Lessee shall pay all
costs and expenses and shall discharge (or cause to be insured or bonded over)
within sixty (60) days after the same shall be filed (or otherwise become
effective) any Liens arising with respect to the Modification; and (v) such
Modifications shall comply with Sections 12.3 and 13.1(a). All Modifications
shall remain part of the realty and shall be subject to this Lease and title
thereto shall immediately vest in the Lessor; provided, however, that
Modifications that meet each of the following conditions shall not be subject to
this Lease: (x) such Modifications are not Required Modifications, (y) such
Modifications were not financed by the Lessor and (z) such Modifications are
readily removable without impairing the value, utility or remaining useful life
of the Property. The Lessee may place upon the Property any trade fixtures,
machinery, equipment or other property belonging to the Lessee or third parties
and may remove the same at any time during the Term, subject, however, to the
terms of Section 13.1(a), and Lessor hereby waives any liens, to which it may be
entitled pursuant to any statutory or common law, in such trade fixtures,
machinery, equipment or other property; provided that such trade fixtures,
machinery, equipment or other property do not Materially impair the value,
utility or remaining useful life of the Property; provided, further, that the
Lessee shall keep and maintain at the Property and shall not, without the
Lessor's prior consent, remove from the Property any Equipment financed or
otherwise paid for (directly or indirectly) by the Lessor pursuant to this
Lease.  Notwithstanding the forgoing, the Lessee shall comply with all
provisions of the Loan Documents with respect to Modifications as if the Lessee
were the Borrower thereunder, and to the extent the provisions hereof are
inconsistent with same, the provisions of the Loan Documents shall control.


                                  ARTICLE XV
                          WARRANT OF TITLE; EASEMENTS

      XV.1.  Warrant of Title.
             ---------------- 

             (a)  The Lessee agrees that except as otherwise provided herein and
     subject to the terms of Article XVI relating to permitted contests, the
     Lessee shall not directly or indirectly create or allow to remain, and
     shall promptly discharge at its sole cost and expense, any Lien, defect,
     attachment, levy, title retention agreement or claim upon the Property or
     any Modifications or any Lien, attachment, levy or claim with respect to
     the Rent, other than Permitted Liens and Liens on machinery, equipment,
     general intangibles and other personal property not financed by the
     Advance.

             (b)  Nothing contained in this Lease shall be construed as
     constituting the consent or request of the Lessor, expressed or implied, to
     or for the performance by any contractor, mechanic, laborer, materialman,
     supplier or vendor of any labor or services or for the furnishing of any
     materials for any construction, alteration, addition, repair or demolition
     of or to the Property or any part thereof. NOTICE IS HEREBY GIVEN THAT THE
     LESSOR IS NOT AND SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS
     FURNISHED OR TO BE FURNISHED TO THE LESSEE, OR TO ANYONE HOLDING THE
     PROPERTY OR ANY PART THEREOF THROUGH OR UNDER THE LESSEE, AND THAT NO
     MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS 

                                      -16-
<PAGE>
 
     SHALL ATTACH TO OR AFFECT THE INTEREST OF THE LESSOR, IN AND TO THE
     PROPERTY.

     XV.2.   Grants and Releases of Easements; Lessor's Waivers.  (x) Provided
             --------------------------------------------------               
that no Event of Default shall have occurred and be continuing, (y) subject to
the rights of the Lessee under the provisions of Articles XII, XIII and XIV and
(z) provided that the following is consistent with the terms of the Loan
Documents, the Lessor hereby consents in each instance to the following actions
by the Lessee, in the name and stead of the Lessor, but at the Lessee's sole
cost and expense:  (a) the granting of easements, licenses, rights-of-way and
other rights and privileges in the nature of easements reasonably necessary or
desirable for the use, repair, or maintenance of the Property as herein
provided; (b) the release of existing easements or other rights in the nature of
easements which are for the benefit of the Property; (c) if required by
applicable Governmental Authority for any purpose, including, but not limited
to, the dedication or transfer of unimproved portions of the Property for road,
highway or other public purposes; and (d) the execution of amendments to any
covenants and restrictions affecting the Property; provided, however, that in
each case (i) such grant, release, dedication, transfer or amendment does not
Materially impair the value, utility or remaining useful life of the Property,
(ii) such grant, release, dedication, transfer, annexation or amendment is
reasonably necessary in connection with the use, maintenance, alteration or
improvement of the Property, (iii) such grant, release, dedication, transfer,
annexation or amendment will not cause the Property or any portion thereof to
fail to comply in any Material respect with the provisions of this Lease or any
other Operative Documents and all Requirements of Law (including, without
limitation, all applicable zoning, planning, building and subdivision
ordinances, all applicable restrictive covenants and all applicable
architectural approval requirements); (iv) all governmental consents or
approvals required prior to such grant, release, dedication, transfer,
annexation or amendment have been obtained, and all filings required prior to
such action have been made; (v) such grant, release, dedication, transfer,
annexation or amendment will not result in any down-zoning of the Property or
any portion thereof or a material reduction in the maximum density or
development rights available to the Property under all Requirements of Law; (vi)
the Lessee shall remain obligated under this Lease and under any instrument
executed by the Lessee consenting to the assignment of the Lessor's interest in
this Lease as security for indebtedness, in each such case in accordance with
their terms, as though such grant, release, dedication, transfer, annexation or
amendment had not been effected and (vii) the Lessee shall pay and perform any
obligations of the Lessor under such grant, release, dedication, transfer,
annexation or amendment.  The Lessor acknowledges the Lessee's right to finance
and to secure under the Uniform Commercial Code, inventory, furnishings,
furniture, equipment, machinery, leasehold improvements and other personal
property located at the Property other than Equipment which has been purchased
with funds provided by the Lessor, and Lessor hereby disclaims and waives any
interest therein and right thereto and the Lessor shall, upon the request of the
Lessee, and at the Lessee's sole cost and expense, execute and deliver any
instruments necessary or appropriate to confirm any such grant, release,
dedication, transfer, annexation, amendment, disclaimer or waiver to any Person
permitted under this Section 15.2 including landlord waivers with respect to any
of the foregoing.


                                  ARTICLE XVI
                              PERMITTED CONTESTS

     XVI.1.  Permitted Contests in Respect of Applicable Law.  Subject to the
             -----------------------------------------------                 
terms of the Loan Documents, if, to the extent and for so long as (a) a test,
challenge, appeal or proceeding for review of any Applicable Law relating to the
Property shall be prosecuted diligently and in good faith in appropriate

                                      -17-
<PAGE>
 
proceedings by the Lessee or (b) compliance with such Applicable Law shall have
been excused or exempted by a valid nonconforming use, variance permit, waiver,
extension or forbearance, the Lessee shall not be required to comply with such
Applicable Law but only if and so long as any such test, challenge, appeal,
proceeding, waiver, extension, forbearance or noncompliance shall not, in the
reasonable opinion of the Lessor, involve (A) any risk of criminal liability
being imposed on the Lessor or the Property, or (B) any risk of (1) foreclosure,
forfeiture or loss of the Property, or any Material part thereof, or (2) the
nonpayment of Rent or (C) any substantial danger of (1) the sale of, or the
creation of any Lien (other than a Permitted Lien) on, any part of the Property,
(2) civil liability being imposed on the Lessor, or the Property, or (3)
enjoinment of, or interference with, the use, possession or disposition of the
Property in any Material respect.

     The Lessor will not be required to join in any proceedings pursuant to this
Section 16.1 unless a provision of any Applicable Law requires that such
proceedings be brought by or in the name of the Lessor; and in that event the
Lessor will join in the proceedings or permit them or any part thereof to be
brought in its name if and so long as (i) no Default has occurred and is
continuing and (ii) the Lessee pays all related expenses and indemnifies the
Lessor to its reasonable satisfaction.


                                  ARTICLE XVI
                                   INSURANCE

     XVII.2. Public Liability and Workers' Compensation Insurance.
             ---------------------------------------------------- 

             (a)  During the Term the Lessee shall procure and carry, at the
     Lessee's sole cost and expense, commercial general liability insurance for
     claims for bodily injury or death sustained by persons or damage to
     property while on the Property and such other public liability coverages as
     are ordinarily procured by the Lessee or its Affiliates who own or operate
     similar properties. Such insurance shall be on terms and in amounts that
     are in accordance with normal industry practice. The policy shall be
     endorsed to name the Lessor, the Trust Company and the Lender as additional
     insured. The policy shall also specifically provide that the policy shall
     be considered primary insurance which shall apply to any loss or claim
     before any contribution by any insurance which the Lessor may have in
     force.

             (b)  The Lessee shall, in the construction of any Improvements
     (including in connection with any Modifications thereof) and the operation
     of the Property, comply with, or cause the applicable contractor to comply
     with, all applicable workers' compensation laws.

     XVII.2  Hazard and Other Insurance.  During the Term the Lessee shall keep,
             --------------------------                                         
or cause to be kept, the Property insured against loss or damage by fire, flood
and other risks on terms and in amounts that are no less favorable than
insurance covering other similar properties owned by the Lessee or its
Affiliates and that are in accordance with normal industry practice and as
required in the Loan Documents.  During the construction of any Improvements the
Lessee shall also maintain or cause to be maintained builders' risk insurance.

     XVII.3. Insurance Coverage.
             ------------------ 

                                      -18-
<PAGE>
 
             (a)  The Lessee shall furnish the Lessor with certificates showing
     the insurance required under Sections 17.1 and 17.2 to be in effect and
     naming the Lessor as additional insured with respect to liability coverage
     (excluding worker's compensation insurance), and naming the Lessor as loss
     payee with respect to property coverage and showing the mortgagee
     endorsement required by Section 17.3(c) with respect to such coverage. All
     such insurance shall be at the cost and expense of the Lessee. Such
     certificates shall include a provision for no less than thirty (30) days'
     advance written notice by the insurer to the Lessor in the event of
     cancellation or reduction of such insurance.

             (b)  The Lessee agrees that the insurance policy or policies
     required by Section 17.2 shall include an appropriate clause pursuant to
     which such policy shall provide that it will not be invalidated should the
     Lessee waive, in writing, prior to a loss, any or all rights of recovery
     against any party for losses covered by such policy, and that the insurance
     in favor of the Lessor and its rights under and interests in said policies
     shall not be invalidated or reduced by any act or omission or negligence of
     the Lessee or any other Person having any interest in the Property. The
     Lessee hereby waives any and all such rights against the Lessor to the
     extent of payments made under such policies.

             (c)  All such insurance shall be written by reputable insurance
     companies that are financially sound and solvent and otherwise reasonably
     appropriate considering the amount and type of insurance being provided by
     such companies.  Any insurance company selected by the Lessee which is
     rated in Best's Insurance Guide or any successor thereto (or if there be
     none, an organization having a similar national reputation) shall have a
     general policyholder rating of "A" and a financial rating of at least "12"
     or be otherwise acceptable to the Lessor.  All insurance policies required
     by Section 17.2 shall include a standard form mortgagee endorsement in
     favor of the Lender.

             (d)  The Lessor may carry separate liability insurance so long as
     (i) the Lessee's insurance is designated as primary and in no event excess
     or contributory to any insurance the Lessor may have in force which would
     apply to a loss covered under the Lessee's policy and (ii) each such
     insurance policy will not cause the Lessee's insurance required under this
     Article XVII to be subject to a coinsurance exception of any kind.

             (e)  The Lessee shall pay as they become due all premiums for the
     insurance required by Section 17.1 and Section 17.2, and shall renew or
     replace each policy prior to the expiration date thereof.  Throughout the
     Term, at the time each of the Lessee's insurance policies is renewed (but
     in no event less frequently than once each year), the Lessee shall deliver
     to the Lessor certificates of insurance evidencing that all insurance
     required by this Article XVII is being maintained by the Lessee and is in
     effect.

     XVII.4. Insurance Proceeds.  All insurance proceeds in respect of any 
             ------------------                   
loss or occurrence shall, to the extent permitted under the Loan Documents, be
paid to the Lender and, upon compliance with the terms of the Loan Documents,
the Lender shall pay same to the Lessee for application toward the
reconstruction, repair or refurbishment of the Property to the extent permitted
under the Loan Documents.

     XVII.5. Insurance Requirements in Loan Documents.  Notwithstanding the
             ----------------------------------------                      
provisions of Section 17.1, 17.2, 17.3 and 17.4, the Lessee shall comply with
all Insurance Requirements (as defined in the 

                                      -19-
<PAGE>
 
Nomura Loan Agreement) and to the extent the provisions hereof are inconsistent
with same, the provisions of the Loan Documents shall control. The Lessor
acknowledges that the Insurance Requirements are acceptable to it; provided,
however, that notwithstanding the foregoing, the Lessee must at all times during
the Term have liability insurance complying with Section 17.1.

                                  ARTICLE XVI
                          CASUALTY AND CONDEMNATION;
                             ENVIRONMENTAL MATTERS

     XVIII.1.  Casualty and Condemnation.
               ------------------------- 

               (a)  Subject to the provisions of this Article XVIII, if all or a
     portion of the Property is damaged or destroyed in whole or in part by a
     Casualty or if the use, access, occupancy, easement rights or title to the
     Property or any part thereof, is the subject of a Condemnation, then the
     Lessee shall (i) reconstruct, refurbish and repair the Property upon
     submission to the Lessor of an architect's certificate as to the cost of
     such restoration and to the effect that the Property can be fully restored
     to the condition required under the Operative Documents and as to the cost
     of such restoration or (ii) pay the Lease Balance.

               (b)  The Lessee may appear in any proceeding or action to
     negotiate, prosecute, adjust or appeal any claim for any award,
     compensation or insurance payment on account of any such Casualty or
     Condemnation and shall pay all expenses thereof. At the Lessee's reasonable
     request, and at the Lessee's sole cost and expense, the Lessor shall
     participate in any such proceeding, action, negotiation, prosecution or
     adjustment. The Lessor and the Lessee agree that this Lease shall control
     the rights of the Lessor and the Lessee in and to any such award,
     compensation or insurance payment.

               (c)  If the Lessor or the Lessee shall receive notice of a
     Casualty or of an actual, pending or threatened Condemnation of the
     Property or any interest therein, the Lessor or the Lessee, as the case may
     be, shall give notice thereof to the other and the Lender promptly after
     the receipt of such notice.

               (d)  If pursuant to this Section 18.1 and Section 19.1 this Lease
     shall continue in full force and effect following a Casualty or
     Condemnation with respect to the Property, the Lessee shall, at its sole
     cost and expense (and, without limitation, if any award, compensation or
     insurance payment is not sufficient to restore the Property in accordance
     with this paragraph, the Lessee shall pay the shortfall), promptly and
     diligently repair any damage to the Property caused by such Casualty or
     Condemnation in conformity with the requirements of Sections 13.1 and 14.1
     using the as-built plans and specifications for the Property (as modified
     to give effect to any subsequent Modifications, any Condemnation affecting
     the Property and all applicable Requirements of Law) so as to restore the
     Property as near as possible to the condition, operation, function and
     value as existed immediately prior to such Casualty or Condemnation with
     such Modification as the Lessee may elect in accordance with Section 14.1.
     In such event, title to the Property shall remain with the Lessor.  Upon
     completion of such restoration, the Lessee shall furnish the Lessor an
     architect's certificate of substantial completion and a Responsible
     Employee's Certificate confirming that such restoration has been completed
     pursuant to this Lease.

                                      -20-
<PAGE>
 
          (e)  In no event shall a Casualty or Condemnation affect the Lessee's
     obligations to pay Rent pursuant to Section 7.1 or to perform its
     obligations and pay any amounts due on the Expiration Date or pursuant to
     Articles XXII and XXV.

          (f)  Any Excess Proceeds received by the Lessor in respect of a
     Casualty or Condemnation shall be turned over to the Lessee.

          (g)  Notwithstanding the provisions of this Section 18.1, the Lessee
     shall comply with and be entitled to the benefit of all provisions in the
     Loan Documents regarding Casualty and Condemnation and to the extent the
     provisions hereof are inconsistent with same, the provisions of the Loan
     Documents shall control.

     XVIII.2.  Environmental Matters.  Promptly upon the Lessee's knowledge of 
               ---------------------   
the existence of an Environmental Violation, the Lessee shall notify the Lessor
in writing of such Environmental Violation. If the Lessor elects not to
terminate this Lease pursuant to Section 19.1, at the Lessee's sole cost and
expense, the Lessee shall promptly and diligently commence any response, clean
up, remedial or other action necessary to remove, clean up or remediate the
Environmental Violation in accordance with the terms of Section 12.3. If the
Lessor does not deliver a Termination Notice pursuant to Section 19.1, the
Lessee shall, upon completion of remedial action by the Lessee, cause to be
prepared by an environmental consultant reasonably acceptable to the Lessor a
report describing the Environmental Violation and the actions taken by the
Lessee (or its agents) in response to such Environmental Violation, and a
statement by the consultant that the Environmental Violation has been remedied
in compliance in all material respects with applicable Environmental Law. Each
such Environmental Violation shall be remedied prior to the Expiration Date.
Nothing in this Article XVII I shall reduce or limit the Lessee's obligations
under the indemnity provisions hereof.

     XVIII.3.  Notice of Environmental Matters.  Promptly, but in any event 
               -------------------------------   
within sixty (60) Business Days from the date the Lessee has actual knowledge
thereof, the Lessee shall provide to the Lessor written notice of any pending or
threatened claim, action or proceeding involving any Environmental Violation on
or in connection with the Property. All such notices shall describe in
reasonable detail the nature of the claim, action or proceeding and the Lessee's
proposed response thereto. In addition, the Lessee shall provide to the Lessor,
within sixty (60) Business Days of receipt, copies of all written communications
with any Governmental Authority relating to any Environmental Law or any Release
in connection with the Property. The Lessee shall also promptly provide such
detailed reports of any such environmental claims as may reasonably be requested
by the Lessor. In the event that the Lessor receives written notice of any
pending or threatened claim, action or proceeding involving any Environmental
Violation on or in connection with the Property, the Lessor shall promptly give
notice thereof to the Lessee.

     XVIII.4.  Environmental Obligations of the Lessor Pursuant to the Nomura 
               --------------------------------------------------------------
Loan Agreement.  The representations, warranties and covenants set forth in 
-------------- 
Section 4.1(d)(U) and Section 5.1(b)(D) through Section 5.1(b)(I) of the Nomura
Loan Agreement imposed upon Lessee pursuant thereto shall survive in perpetuity.

                                  ARTICLE XIX
                             TERMINATION OF LEASE

                                      -21-
<PAGE>
 
     XIX.1.   Termination upon Certain Events.  With respect to the Property, if
              -------------------------------                                   
either:

              (i)   a Significant Condemnation occurs; or

              (ii)  an Environmental Violation occurs which (x) either causes
     the Lender to accelerate the Principal Indebtedness or (y) is not being
     addressed by the Lessee or the Parent as required hereby or by the FBTC
     Environmental Guaranty;

and the Lessor or the Lessee shall have given written notice to the other party
that this Lease is to be terminated as a consequence of the occurrence of such
an event (a "Termination Notice"), then, the Lessee shall be obligated to
purchase all or a portion of the Lessor's interest in the Property on a Payment
Date prior to the date occurring one hundred eighty (180) days after the date of
the notice of termination (or if such Payment Date arises prior to the second
anniversary of the Start-Up Date, on the first Payment Date after such
anniversary) by paying the Lessor on such Payment Date an amount equal to (a)
the Equity Balance, in which case this Lease shall not terminate but the Lease
Balance shall be reduced by the amount of such payment of Equity Balance or (b)
the Lease Balance.

     XIX.2.   Termination Procedures.  On the date of the payment by the Lessee 
              ----------------------      
of the Lease Balance in accordance with the Termination Notice or in accordance
with Section 19.1 (such date, the "Termination Date"), this Lease shall
terminate and, concurrent with the Lessor's receipt of such payment,

              (a)  the Lessor shall execute and deliver to the Lessee (or to the
     Lessee's designee) at the Lessee's cost and expense a quitclaim deed with
     respect to the Property, a quitclaim bill of sale with respect to the
     applicable Equipment and an assignment of the Lessor's entire interest in
     the Property (which shall include an assignment of all of the Lessor's
     right, title and interest in and to any Net Proceeds not previously
     received by the Lessor and existing subleases and security deposits
     thereunder), in each case in recordable form and otherwise in conformity
     with local custom and free and clear of any Lessor Liens attributable to
     the Lessor;

              (b)  the Property shall be conveyed to such Person "AS IS" and in
     its then present physical condition;

              (c)  in the case of a termination pursuant to clause (i) or (ii)
     of Section 19.1, the Lessor shall convey to the Lessee any Net Proceeds
     with respect to the Casualty or Condemnation giving rise to the partial
     termination of this Lease theretofore received by the Lessor or at the
     request of the Lessee, such amounts shall be applied against sums due
     hereunder; and

              (d)  the Lessor shall execute and deliver to Lessee and the
     Lessee's title insurance company an affidavit as to the absence of any
     Lessor Liens and shall execute and deliver to the Lessee a statement of
     termination of this Lease to the extent relating to the Property.

                                  ARTICLE XX
                               EVENTS OF DEFAULT

                                      -22-
<PAGE>
 
     XX.1.  Events of Default.  The occurrence of any one or more of the
            -----------------                                           
following events (whether such event shall be voluntary or involuntary or come
about or be effected by operation of law or pursuant to or in compliance with
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body) shall constitute an "Event of Default":

            (a)  the Lessee shall fail to make payment of any Basic Rent,
     including amounts due pursuant to Section 19.1 or 22.1 or Article XXIV,
     Equity Balance or Lease Balance when due; provided, however, that if a Cash
     Management Event has not occurred, the failure to pay those portions of
     Basic Rent consisting of FBTC Basic Rent, Lessor Basic Rent, the Required
     Debt Service Payment due on such date, the Basic Carrying Costs Monthly
     Installment due on such date or the Capital Reserve Monthly Installment due
     on the due date therefor shall not constitute an Event of Default if Lessee
     shall cure such failure within five (5) days after the due date therefor;

            (b)  the Lessee shall fail to make payment of any Supplemental Rent
     (i) required to be made pursuant to the Nomura Loan Agreement on the due
     date therefor and such failure is not remedied within any applicable grace
     period set forth in the Loan Documents, and (ii) any other component of
     Supplement Rent due and payable within five (5) Business Days after receipt
     of notice thereof;

            (c)  the Lessee shall fail to maintain insurance as required by
     Article XVII of this Lease;

            (d)  the Lessee shall fail in any Material respect to observe or
     perform any term, covenant or condition of the Lessee under this Lease or
     the Operative Documents to which it is party other than those described in
     Section 20.1(a), (b), or (c) hereof, and such failure shall have continued
     for thirty (30) days after the earlier of (i) delivery to the Lessee of
     written notice thereof from the Lessor or (ii) a Responsible Employee of
     the Lessee shall have knowledge of such failure; provided, however, that if
     such failure is capable of cure but cannot be cured by payment of money or
     cannot be cured by diligent efforts within such thirty (30) day period but
     such diligent efforts shall be properly commenced within the cure period
     and the Lessee is diligently pursuing, and shall continue to pursue
     diligently, remedy of such failure, the cure period shall be extended for
     an additional period of time as may be necessary to cure, not to exceed an
     additional one hundred twenty (120) days or to extend beyond the Expiration
     Date; provided further, that failure by the Lessee to fully comply with the
     requirements of Section 24.1 hereof shall not be subject to any cure
     period;

            (e)  to the extent the same causes an Event of Default under the
     Nomura Loan Agreement, any representation or warranty made by the Lessee in
     any of the Operative Documents to which it is a party shall prove to have
     been inaccurate in any Material respect at the time made, and if such
     inaccuracy can be cured, it shall not have been cured within forty-five
     (45) days after the earlier of (i) delivery to the Lessee of written notice
     thereof from the Lessor or (ii) a Responsible Employee of the Lessee shall
     have knowledge of such inaccuracy;

            (f)  an "Event of Default" under the Nomura Loan Agreement shall
     have occurred and be continuing;

                                      -23-
<PAGE>
 
           (g) the Lessee or the Parent shall (i) admit in writing its inability
     to pay its debts generally as they become due, (ii) file a petition under
     the United States bankruptcy laws or any other applicable insolvency law or
     statute of the United States of America or any State or Commonwealth
     thereof, (iii) make a general assignment for the benefit of its creditors,
     (iv) consent to the appointment of a receiver of itself or the whole or any
     substantial part of its property, (v) fail to cause the discharge of any
     custodian, trustee or receiver appointed for the Lessee or the Parent, as
     applicable, or the whole or a substantial part of the Lessee's or the
     Parent's property within ninety (90) days after such appointment, (vi) file
     a petition or answer seeking or consenting to reorganization under the
     United States bankruptcy laws or any other applicable insolvency law or
     statute of the United States of America or any State or Commonwealth
     thereof; or (vii) be adjudicated as bankrupt or insolvent;

           (h) dissolution, liquidation or insolvency proceedings or a petition
     under the United States bankruptcy laws or any other applicable insolvency
     law or statute of the United States of America or any State or Commonwealth
     thereof shall be filed against, consented to or acquiesced by the Lessee or
     the Parent and not dismissed within ninety (90) days from the date of its
     filing, or a court of competent jurisdiction shall enter an order or decree
     appointing, without the consent of the Lessee or the Parent, as applicable,
     a receiver, liquidator or trustee of the Lessee or the Parent or the whole
     or a substantial part of any of the Lessee's or the Parent's property and
     such order or decree shall not be vacated or set aside within ninety (90)
     days from the date of the entry thereof;

           (i) an event of default, as defined in any agreement, mortgage,
     indenture or instrument under which there may be issued, or by which there
     may be secured or evidenced, any indebtedness of the Lessee in a principal
     amount in excess of $5,000,000, whether such indebtedness now exists or
     shall hereafter be created, shall happen, if the effect of such default is
     to accelerate the maturity of such indebtedness, unless the Lessee is
     diligently and in good faith contesting such default in appropriate
     proceedings;

           (j) any Lien granted by the Lessee under any Operative Document
     shall, in whole or in part, terminate, cease to be effective against, or
     cease to be the legal, valid, binding and enforceable obligation of, the
     Lessee;

           (k) the Lessee shall directly or indirectly contest the validity of
     any Operative Document in any manner in any court of competent jurisdiction
     or any lien granted by the Lessee under any Operative Document;

           (l) the Lessee shall fail to satisfy any of its obligations under the
     Securities Pledge Agreement or Certificate Pledge Agreement, including,
     without limitation, satisfying the Collateral Requirement (as defined in
     the Securities Pledge Agreement) within the applicable grace period
     provided therefor, for which the exclusive remedy for such Event of Default
     is provided in Section 20.2(k); or
                    ---------------    

           (m) the Lessor shall not have received all FBTC Basic Rent and Lessor
     Basic Rent within five (5) days after any FBTC Payment Date.

     XX.2. Remedies.  Upon the occurrence of any Event of Default and at any
           --------                                                         
time thereafter, the Lessor may, so long as such Event of Default is continuing,
do one or more of the following as the Lessor 

                                      -24-
<PAGE>
 
in its sole discretion shall determine, without limiting any other right or
remedy the Lessor may have on account of such Event of Default:

          (a)  The Lessor may, by notice to the Lessee, rescind or terminate
     this Lease as of the date specified in such notice; however, (i) no
     reletting, reentry or taking of possession of the Property (or any portion
     thereof) by the Lessor will be construed as an election on the Lessor's
     part to terminate this Lease unless a written notice of such intention is
     given to the Lessee, (ii) notwithstanding any reletting, reentry or taking
     of possession, the Lessor may at any time thereafter elect to terminate
     this Lease for a continuing Event of Default and (iii) no act or thing done
     by the Lessor or any of its agents, representatives or employees and no
     agreement accepting a surrender of the Property shall be valid unless the
     same be made in writing and executed by the Lessor.

          (b)  The Lessor may (i) demand that the Lessee, and the Lessee shall
     upon the written demand of the Lessor, return the Property promptly to the
     Lessor in the manner and condition required by, and otherwise in accordance
     with all of the provisions of, Articles XI and XIII  and Section 12.3
                                    -----------     ----      ------------
     hereof as if the Property were being returned at the end of the Term, and
     the Lessor shall not be liable for the reimbursement of the Lessee for any
     costs and expenses incurred by the Lessee in connection therewith and (ii)
     without prejudice to any other remedy which the Lessor may have for
     possession of the Property, and to the extent and in the manner permitted
     by Applicable Law, enter upon the Property and take immediate possession of
     (to the exclusion of the Lessee) the Property or any part thereof and expel
     or remove the Lessee and any other Person who may be occupying the
     Property, by summary proceedings or otherwise, all without liability to the
     Lessee for or by reason of such entry or taking of possession, whether for
     the restoration of damage to property caused by such taking or otherwise
     and, in addition to the Lessor's other damages, the Lessee shall be
     responsible for all costs and expenses incurred by the Lessor in connection
     with any reletting, including, without limitation, reasonable brokers' fees
     and all costs of any alterations or repairs made by the Lessor.

          (c)  The Lessor may (i) sell all or any part of the Property at public
     sale free and clear of any rights of the Lessee and without any duty to
     account to the Lessee with respect to such action or inaction or any
     proceeds (except that Excess Proceeds are payable to and shall be paid to
     the Lessee) with respect thereto (except to the extent required by clause
                                                                        ------
     (ii) below if the Lessor shall elect to exercise its rights thereunder) in
     ----                                                                      
     which event the Lessee's obligation to pay Basic Rent hereunder for periods
     commencing after the date of such sale shall be terminated or
     proportionately reduced, as the case may be; and (ii) if the Lessor shall
     so elect, demand that the Lessee pay to the Lessor, and the Lessee shall
     pay to the Lessor, on the date of such sale, as liquidated damages for loss
     of a bargain and not as a penalty (the parties agreeing that the Lessor's
     actual damages would be difficult to predict, but the aforementioned
     liquidated damages represent a reasonable approximation of such amount) (in
     lieu of Basic Rent due for periods commencing on or after the Payment Date
     coinciding with such date of sale (or, if the sale date is not a Payment
     Date, the Payment Date next preceding the date of such sale)), an amount
     equal to (A) the excess, if any, of (1) the Lease Balance calculated as of
     such Payment Date (including all Rent due and unpaid to and including such
     Payment Date and), over (2) the net proceeds of such sale (that is, after
     deducting all costs and expenses incurred by the Lessor incident to such
     conveyance, including, without limitation, repossession costs, brokerage
     commissions, prorations, transfer taxes, fees and expenses for counsel,
     title insurance fees, survey costs, recording fees, and any 

                                      -25-
<PAGE>
 
     repair costs); plus (B) interest at the Overdue Rate on the foregoing
     amount from such Payment Date until the date of payment.

          (d)  The Lessor may, at its option, elect not to terminate this Lease
     and continue to collect all Basic Rent, Supplemental Rent, and all other
     amounts due the Lessor (together with all costs of collection) and enforce
     the Lessee's obligations under this Lease as and when the same become due,
     or are to be performed, and at the option of the Lessor, upon any
     abandonment of the Property by the Lessee or re-entry of same by the
     Lessor, the Lessor may, in its sole and absolute discretion, elect not to
     terminate this Lease and may make the necessary repairs in order to relet
     the Property, and relet the Property or any part thereof for such term or
     terms (which may be for a long term extending beyond the Term of this
     Lease) and at such rental or rentals and upon such other terms and
     conditions as the Lessor in its reasonable discretion may deem advisable;
     and upon each such reletting all rentals actually received by the Lessor
     from such reletting shall be applied to the Lessee's obligations hereunder
     and the other Operative Documents in such order, proportion and priority as
     the Lessor may elect in the Lessor's sole and absolute discretion.  If such
     rentals received from such reletting during any period are less than the
     Rent with respect to the Property to be paid during that period by the
     Lessee hereunder, the Lessee shall pay any deficiency, as calculated by the
     Lessor, to the Lessor on the next Payment Date.

          (e)  Unless the Property has been sold in its entirety, the Lessor
     may, whether or not the Lessor shall have exercised or shall thereafter at
     any time exercise any of its rights under paragraph (b), (c) or (d) of this
                                               -------------  ---    ---        
     Section 20.2 with respect to the Property or portion thereof, demand, by
     ------------                                                            
     written notice to the Lessee specifying a date (a "Termination Date") not
                                                        ----------------      
     earlier than 10 days after the date of such notice, that the Lessee
     purchase, on such Termination Date, the Property (or the remaining portion
     thereof) in accordance with the provisions of Article XXII; provided,
                                                   ------------  -------- 
     however, that no such written notice shall be required upon the occurrence
     -------                                                                   
     of any Event of Default in clause (g) or (h) of Section 20.1.
                                ----------    ---    ------------ 

          (f)  The Lessor may exercise any other right or remedy that may be
     available to it under Applicable Law, or proceed by appropriate court
     action (legal or equitable) to enforce the terms hereof or to recover
     damages for the breach hereof.  Separate suits may be brought to collect
     any such damages for any period(s), and such suits shall not in any manner
     prejudice the Lessor's right to collect any such damages for any subsequent
     period(s), or the Lessor may defer any such suit until after the expiration
     of the Term, in which event such suit shall be deemed not to have accrued
     until the expiration of the Term.

          (g)  The Lessor may retain and apply against the Lessor's damages all
     sums which the Lessor would, absent such Event of Default, be required to
     pay to, or turn over to, the Lessee pursuant to the terms of this Lease.

          (h)  If an Event of Default shall have occurred and so long as same is
     continuing, the Lessor, as a matter of right and without notice to the
     Lessee, and without regard to the value of the Property or the solvency of
     the Lessee, shall have the right to apply to any court having jurisdiction
     to appoint a receiver or receivers of the Property, and the Lessee hereby
     irrevocably consents to any such appointment.  Any such receiver(s) shall
     have all of the usual powers and duties of receivers in like or similar
     cases and all of the powers and duties of the Lessor in case of 

                                      -26-
<PAGE>
 
     entry, and shall continue as such and exercise such powers until the date
     of confirmation of the sale of the Property unless such receivership is
     sooner terminated.

          (i)  To the maximum extent permitted by law, the Lessee hereby waives
     the benefit of any appraisement, valuation, stay, extension, reinstatement
     and redemption laws now or hereafter in force and all rights of marshaling
     in the event of any sale of any or all of the Property or any interest
     therein.

          (j)  The Lessor shall be entitled to enforce payment of the
     indebtedness and performance of the obligations secured hereby and to
     exercise all rights and powers under this instrument or under any of the
     other Operative Documents or other agreement or any laws now or hereafter
     in force, notwithstanding some or all of the obligations secured hereby may
     now or hereafter be otherwise secured, whether by mortgage, security
     agreement, pledge, lien, assignment or otherwise.  Neither the acceptance
     of this instrument nor its enforcement, shall prejudice or in any manner
     affect the Lessor's right to realize upon or enforce any other security now
     or hereafter held by the Lessor, it being agreed that the Lessor shall be
     entitled to enforce this instrument and any other security now or hereafter
     held by the Lessor in such order and manner as the Lessor may determine in
     its absolute discretion.  No remedy herein conferred upon or reserved to
     the Lessor is intended to be exclusive of any other remedy herein or by law
     provided or permitted, but each shall be cumulative and shall be in
     addition to every other remedy given hereunder or now or hereafter existing
     at law or in equity or by statute.  Every power or remedy given by any of
     the Operative Documents to the Lessor or to which it may otherwise be
     entitled, may be exercised, concurrently or independently, from time to
     time and as often as may be deemed expedient by the Lessor.

          (k)  The Lessor may exercise any and all rights under (a) the
     Certificate Pledge Agreement against Certificate A and/or (b) the
     Securities Pledge Agreement against the Pledged Securities, and the
     collateral represented thereby.

In no event shall the Lessor, in the exercise of the remedies provided in this
instrument (including, without limitation, in connection with the assignment of
rents to Lessor, or the appointment of a receiver and the entry of such receiver
on to all or any part of the Property), be deemed a "mortgagee in possession,"
and the Lessor shall not in any way be made liable for any act, either of
commission or omission, in connection with the exercise of such remedies.

     If, pursuant to the exercise by the Lessor of its remedies pursuant to this
Section 20.2, the Lease Balance, all other amounts due and owing from the Lessee
------------                                                                    
under this Lease and the other Operative Documents have been paid in full, then
the Lessor shall remit to the Lessee any excess amounts received by the Lessor.

     XX.3. Waiver of Certain Rights.  If this Lease shall be terminated pursuant
           ------------------------                                             
to Section 20.2, the Lessee waives, to the fullest extent permitted by law, (a)
   ------------                                                                
any notice of re-entry or the institution of legal proceedings to obtain re-
entry or possession; (b) any right of redemption, re-entry or repossession; (c)
the benefit of any laws now or hereafter in force exempting property from
liability for rent or for debt or limiting the Lessor with respect to the
election of remedies; and (d) any other rights which might otherwise limit or
modify any of the Lessor's rights or remedies under this Article XX.
                                                         ---------- 

                                      -27-
<PAGE>
 
                                  ARTICLE XXI
                               LESSOR ASSIGNMENT

     XXI.1.  Assignment. The Lessee hereby consents to the Lessor's assignment 
             ----------  
of this Lease to the Lender and the Lender and the Lessee acknowledge that the
Lender is a third party beneficiary of this Lease.


                                  ARTICLE XXI
                              PURCHASE PROVISIONS

     XXII.1. Purchase Option.  Provided that the Lessee shall not have given
             ---------------                                                
notice of its intention to exercise the Remarketing Option, the Lessee shall
have the option on any Payment Date after the second anniversary of the Start-Up
Date (exercisable by giving the Lessor irrevocable written notice (the "Purchase
                                                                        --------
Notice") of the Lessee's election to exercise such option) to (a) purchase all,
------                                                                         
and not less than all, of the Property on the date specified in such Purchase
Notice at a price equal to the Lease Balance theretofore accruing or (b) pay the
Lessor the Equity Balance and reduce the amount of the Lease Balance by the
amount paid.  The Lessee shall deliver the Purchase Notice to the Lessor not
less than thirty (30) days prior to such purchase or payment of the Equity
Balance.  If the Lessee exercises its option to purchase the Property pursuant
to Section 22.1(a) (the "Purchase Option"), the Lessor shall transfer to the
   ---------------       ---------------                                    
Lessee or its designee all of the Lessor's right, title and interest in and to
the Property as of the date specified in the Purchase Notice upon receipt of the
Lease Balance in accordance with Section 25.1. Subject to Section 12.4 and with
                                 ------------             ------------         
the consent of the Lessor the Lessee may assign the Purchase Option to any
Person.  The Lessee may designate, in a notice given to the Lessor not less than
five (5) Business Days prior to the closing of such purchase (time being of the
essence), the transferee or transferees to whom the conveyance shall be made (if
other than to the Lessee), in which case such conveyance shall (subject to the
terms and conditions set forth herein) be made to such designee; provided,
                                                                 -------- 
however, that such designation of a transferee or transferees shall not cause
-------                                                                      
the Lessee to be released, fully or partially, from any of its obligations under
this Lease, including, without limitation, the obligation to pay the Lessor the
Lease Balance on the Expiration Date.


                                  ARTICLE XXI
                              RENEWAL PROCEDURES

     XXIII.1.  Renewal.  Subject to the conditions set forth herein, the 
               -------   
Lessee and the Lessor may agree to renew the Base Lease Term for the Property
for up to eleven one-year terms (each, a "Renewal Term"), with each such Renewal
                                          ------------    
Term to commence on the first day following the Expiration Date then in effect.
The effective extension of the Base Lease Term for the Property shall be subject
to the satisfaction of each of the following conditions:

               (a) each renewal shall be automatic unless on or before one
     hundred eighty (180) days prior to the Expiration Date the Lessee shall
     have delivered written notice to the Lessor of the Lessee's determination
     not to extend the Base Lease Term for the Property;

                                      -28-
<PAGE>
 
          (b) on the Expiration Date then in effect prior to any renewal, no
     Event of Default shall have occurred and be continuing; and

          (c) the Lessee shall not have given notice of its intention to
     exercise the Remarketing Option.


                                  ARTICLE XXI
                              REMARKETING OPTION

     XXIV.1.  Option to Remarket.  Subject to the fulfillment of each of the
              ------------------                                            
conditions set forth in this Section 24.1, the Lessee shall have the option
                             ------------                                  
beginning on the second anniversary of the Start-Up Date (the "Remarketing
                                                               -----------
Option") to market and complete the sale of the Property for the Lessor.
------                                                                  

     The Lessee's effective exercise and consummation of the Remarketing Option
shall be subject to the due and timely fulfillment of each of the following
provisions as to the Property as of the dates set forth below.

          (a)  Not later than one hundred eighty (180) days prior to the
     Expiration Date, the Lessee shall give to the Lessor written notice of the
     Lessee's exercise of the Remarketing Option, which exercise shall be
     irrevocable.  If Lessee does not deliver a notice of its intention not to
     renew this Lease as provided in Section 23.1 and fails to timely provide
     the Remarketing Notice, then this Lease shall be renewed for a Renewal Term
     as provided in Section 23.1.  If Lessee delivers the notice of its
     intention not to renew this Lease as provided in Section 23.1 and fails to
     timely provide the Remarketing Notice, then Lessee shall be deemed to have
     elected to exercise its Purchase Option under Section 22.1(i).
                                                   --------------- 

          (b)  Not later than one hundred twenty (120) days prior to the
     Expiration Date, the Lessee shall deliver to the Lessor an Environmental
     Audit for the Property. Such Environmental Audit shall be prepared by an
     environmental consultant selected by the Lessor in the Lessor's reasonable
     discretion and shall contain conclusions reasonably satisfactory to the
     Lessor as to the environmental status of the Property. If any such
     Environmental Audit indicates any exceptions with respect to which a Phase
     Two environment assessment is recommended, the Lessee shall also deliver
     (i) a Phase Two environmental assessment by such environmental consultant
     within thirty (30) days prior to the Expiration Date and (ii) a certificate
     of such environmental consultant prior to the Expiration Date showing the
     completion of all remedial action in compliance with Applicable Law.

          (c)  On the date of the Lessee's notice to the Lessor of the Lessee's
     exercise of the Remarketing Option, and on the Expiration Date, no Event of
     Default shall exist.

          (d)  The Lessee shall have completed in all Material respects all
     Modifications, restoration and rebuilding of the Property pursuant to
     Sections 14.1 and 18.1 (as the case may be) and shall have fulfilled in all
     -------------     ----                                                     
     Material respects all of the conditions and requirements in connection
     therewith pursuant to said Sections, in each case by the date on which the
     Lessor receives the Lessee's notice of the Lessee's exercise of the
     Remarketing Option (time being of the essence), regardless of whether the
     same shall be within the Lessee's control.  The Lessee shall have also 

                                      -29-
<PAGE>
 
     paid the cost of all Modifications commenced prior to the Expiration Date.
     The Lessee shall not have been excused pursuant to Section 16.1 from
                                                        ------------
     complying with any Applicable Law that involved the extension of the
     ultimate imposition of such Applicable Law beyond the last day of the Term.
     Any Permitted Liens (other than Lessor Liens) on the Property that were
     contested by the Lessee shall have been removed.

          (e)  During the Marketing Period, the Lessee shall, as nonexclusive
     agent for the Lessor, use best efforts to sell the Lessor's interest in the
     Property and will attempt to obtain the highest purchase price therefor and
     for not less than the Fair Market Sales Value of the Property. The Lessee
     will be responsible for hiring brokers and making the Property available
     for inspection by prospective purchasers. The Lessee shall promptly upon
     request permit inspection of the Property and any maintenance records
     relating to the Property by the Lessor and any potential purchasers, and
     shall otherwise do all things reasonably necessary to sell and deliver
     possession of the Property to any purchaser. All such marketing of the
     Property shall be at the Lessee's sole expense. The Lessee shall allow the
     Lessor and any potential qualified purchaser reasonable access to the
     Property for the purpose of inspecting the same.

          (f)  The Lessee shall submit all bids to the Lessor, and the Lessor
     will have the right to submit any one or more bids. The Lessee shall
     deliver to the Lessor, not less than thirty (30) days prior to the
     Expiration Date, binding written unconditional (except as set forth below),
     irrevocable offer or offers by such purchaser or purchasers offering the
     highest bid to purchase the Property. No such purchaser shall be the Lessee
     or an Affiliate of the Lessee. The written offer must specify the
     Expiration Date as the closing date unless the Lessor shall otherwise agree
     in its reasonable discretion. Any sale by the Lessee shall be for the
     highest cash bid submitted to the Lessor. The determination of the highest
     bid shall be made by the Lessor prior to the end of the Marketing Period,
     but in any event, the Lessor shall have no obligation to approve any bid
     unless the aggregate amount of the highest bids for the Property equals or
     exceeds an amount equal to the Lease Balance minus the Contingent Rental
                                                  -----                      
     Adjustment determined as of the Expiration Date. All bids shall be on an
     all-cash basis unless the Lessor shall otherwise agree in its sole
     discretion.

          (g)  In connection with any such sale of the Property, the Lessee will
     provide to each Purchaser all customary "seller's" indemnities,
     representations and warranties regarding absence of Liens (other than
     Lessor Liens and the condition of the Property. The Lessee shall have
     obtained, at its cost and expense, all required governmental and regulatory
     consents and approvals and shall have made all filings as required by
     Applicable Law in order to carry out and complete the transfer of the
     Property. As to the Lessor, any such sale shall be made on an "as is, with
     all faults" basis without representation or warranty by the Lessor other
     than the absence of Lessor Liens. Any agreement as to such sale shall be
     made subject to the Lessor's rights hereunder.

          (h)  The Lessee shall pay directly, and not from the sale proceeds,
     all prorations, credits, costs and expenses of the sale of the Property,
     whether incurred by the Lessor or the Lessee, including without limitation,
     the cost of all title insurance, surveys, environmental reports,
     appraisals, transfer taxes, the Lessor's reasonable attorneys' fees, the
     Lessee's attorneys' fees, commissions, escrow fees, recording fees, and all
     applicable documentary and other transfer taxes.

          (i)  The Lessee shall pay to the Lessor on or prior to the Expiration
     Date (or to such other Person as the Lessor shall notify the Lessee in
     writing) an amount equal to the Contingent Rental 

                                      -30-
<PAGE>
 
     Adjustment for the Property plus all Basic Rent and all other amounts
                                 ----
     hereunder which have accrued or will accrue prior to or as of the
     Expiration Date or such other closing date approved by the parties, in the
     type of funds specified in Section 7.4 hereof.
                                -----------

          (j)  The Lessee shall pay to the Lessor on or prior to the Expiration
     Date the amounts, if any, required to be paid pursuant to Section 26.2
                                                               ------------
     hereof.

          (k)  If the Lessor approves any bid for the Property, the purchase of
     the Property shall be consummated on or before the Expiration Date and the
     gross proceeds (the "Gross Proceeds") of the sale of the Property, less the
                          --------------                                        
     documented expenses incurred by the Lessee under clause (h) shall be paid
                                                      ----------              
     directly to the Lessor; provided, however, that if the sum of (x) the
                             --------  -------                            
     remaining Gross Proceeds from such sale or sales plus (y) the Contingent
                                                      ----                   
     Rental Adjustment received by the Lessor pursuant to clause (i) plus (z)
                                                          ---------- ----    
     amounts received by the Lessor pursuant to Section 26.2 hereof exceeds the
                                                ------------                   
     Lease Balance as of such date, then the excess shall be paid to the Lessee
     on the Expiration Date or such other closing date approved by the parties.

          (l)  All reconstruction, refurbishment and repair to the Property
resulting from a Casualty or Condemnation shall have been completed prior to the
end of the Marketing Period.

     If one or more of the foregoing provisions shall not be fulfilled as of the
date set forth above with respect to the Property, then the Lessor shall declare
by written notice to the Lessee the Remarketing Option to be null and void
(whether or not it has been theretofore exercised by the Lessee), in which event
all of the Lessee's rights under this Section 24.1 shall immediately terminate
                                      ------------                            
and the Lessee shall be obligated to purchase the Property pursuant to Section
                                                                       -------
22.1 on the Expiration Date.
----                        

     If the Lessee effectively elects the Remarketing Option and no sale of the
Property is consummated prior to the end of the Marketing Period, the Lessee
shall, in addition to making the payment required pursuant to Section 24.1(i)
                                                              ---------------
above, return the Property to the Lessor (or to any other Person specified by
the Lessor).  In connection with any such return of the Property, the Lessee
shall, at its own cost and expense, do each of the following:

          (i)  the Lessee shall, on or prior to the Expiration Date, execute and
     deliver to the Lessor (or to the Lessor's designee) (A) a deed with respect
     to the Property containing representations and warranties of grantor to the
     Lessor (or such other Person) regarding the absence of Liens (other than
     Permitted Liens of the type described in clause (i), (iii), (vii), (viii),
                                              ----------  -----  -----  ------ 
     (ix) or (x) of the definition of "Permitted Liens"), (B) a bill of sale
     ----    ---                                                            
     with respect to any Equipment then located on the Property and (C) an
     assignment of the Lessee's entire interest in the Property (which shall
     include an assignment of all of the Lessee's right, title and interest in
     and to any Net Proceeds with respect to the Property not previously
     received by the Lessee and an assignment of leases of the Property), in
     each case in recordable form and otherwise in conformity with local custom
     and free and clear of any Liens attributable to the Lessee;

          (ii) the Lessee shall execute and deliver to Lessor and the Lessor's
     title insurance company an affidavit as to the absence of any Liens (other
     than Permitted Liens of the type described in clause (i), (iii), (vii),
                                                   ----------  -----  ----- 
     (viii), (ix) or (x)), and shall execute and deliver to the Lessor a
     ------  ----    ---                                                
     statement of termination of this Lease to the extent relating to the
     Property;

                                      -31-
<PAGE>
 
          (iii)  the Lessee shall, on the Expiration Date, transfer possession
     of the Property to the Lessor or any Person designated by the Lessor, by
     surrendering the same into the possession of the Lessor or such Person, as
     the case may be, in the condition required by this Section 24.1 and in
                                                        ------------       
     compliance with Applicable Law;

          (iv)   the Lessee shall, for a period of up to one year after the
     Expiration Date, cooperate reasonably with the Lessor and/or any Person
     designated by the Lessor to receive the Property, which cooperation shall
     include reasonable efforts with respect to the following, all of which the
     Lessee shall do on or before the Expiration Date or as soon thereafter as
     is reasonably practicable: providing copies of all books and records
     regarding the maintenance and ownership of the Property and all know-how,
     data and technical information relating thereto, granting or assigning all
     licenses necessary for the operation and maintenance of the Property and
     cooperating reasonably in seeking and obtaining all necessary Governmental
     Action.  The obligations of the Lessee under this paragraph shall survive
     the expiration or termination of this Lease; and

          (v)    no subleases with respect to the Property or any portion
     thereof shall be in effect on the Expiration Date.

     Except as expressly set forth herein, the Lessee shall have no right, power
or authority to bind the Lessor in connection with any proposed sale or sales of
the Property.

      XXV.2.  Certain Obligations Continue.  During the Marketing Period, the
              ----------------------------                                   
obligation of the Lessee to pay Rent shall continue undiminished until payment
in full to the Lessor of the Contingent Rental Adjustment and all other amounts
due to the Lessor by Lessee under the Operative Documents to which the Lessee is
a party.  The Lessor shall have the right, but shall be under no duty, to
solicit bids, to inquire into the efforts of the Lessee to obtain bids or
otherwise to take action in connection with any such sale, other than as
expressly provided in this Article XXIV.
                           ------------ 


                                  ARTICLE XXV
                PROCEDURES RELATING TO PURCHASE OR REMARKETING

      XXV.1.  Provisions Relating to the Exercise of Purchase Option and 
              ----------------------------------------------------------
Conveyance Upon Remarketing and Conveyance Upon Certain Other Events.  In 
--------------------------------------------------------------------    
connection with the Lessee's exercise of its Purchase Option, upon the
Expiration Date or the purchase of the Property under Article XIX or Section
                                                      -----------    -------
20.2(e) hereof and upon tender by the Lessee of the amounts set forth in Article
-------                                                                  -------
XIX, Section 20.2(e) or 22.1(a) hereof, as applicable:
---  ---------------    -------

          (i)  the Lessor shall execute and deliver to the Lessee (or to the
      Lessee's designee) at the Lessee's cost and expense a limited warranty
      deed (with covenants against grantor acts) with respect to the Property, a
      limited warranty bill of sale (with covenants against grantor acts) with
      respect to any Equipment and an assignment of the Lessor's entire interest
      in the Property (which shall include an assignment of all of the Lessor's
      right, title and interest in and to any Net Proceeds not previously
      received by the Lessor, and an assignment of leases of the Property and
      any security deposits collected by the Lessor), in each case in recordable
      form and otherwise in conformity with local custom and free and clear of
      any Lessor Liens attributable to the Lessor;

                                      -32-
<PAGE>
 
          (ii)   the Property shall be conveyed to the Lessee "AS IS" and in its
     then present physical condition;

          (iii)  the Lessor shall execute and deliver to Lessee and the Lessee's
     title insurance company an affidavit as to the Lessor's title and the
     absence of Lessor Liens; and

          (iv)   the Lessor shall execute such other documents reasonably
     requested by the Lessee, or otherwise required under local law, to effect a
     transfer of the Property and title thereto.


                                 ARTICLE XXVI
                                INDEMNIFICATION

      XXVI.1.  General Indemnification.  The Lessee agrees, whether or not any 
               -----------------------   
of the transactions contemplated hereby shall be consummated, to assume
liability for, and to indemnify, protect, defend, save and keep harmless each
Indemnitee, on an After Tax Basis, from and against, any and all Claims that may
be imposed on, incurred by or asserted against such Indemnitee (whether because
of action or omission by such Indemnitee or otherwise), whether or not such
Indemnitee shall also be indemnified as to any such Claim by any other Person
and whether or not such Claim arises or accrues prior to the Documentation Date
or after the Expiration Date, in any way relating to or arising out of:

          (a)    any of the Operative Documents or any of the transactions
     contemplated thereby, and any amendment, modification or waiver in respect
     thereof;

          (b)    the Property or any part thereof or interest therein;

          (c)    the purchase, design, construction, preparation, installation,
     inspection, delivery, non-delivery, acceptance, rejection, ownership,
     management, possession, operation, rental, lease, sublease, repossession,
     maintenance, repair, alteration, modification, addition or substitution,
     storage, transfer of title, redelivery, use, financing, refinancing,
     disposition, operation, condition, sale (including, without limitation, any
     sale pursuant to any provision hereof), return or other disposition of all
     or any part or any interest in the Property or the imposition of any Lien
     other than a Lessor Lien (or incurring of any liability to refund or pay
     over any amount as a result of any Lien other than a Lessor Lien) thereon,
     including, without limitation:  (1) Claims or penalties arising from any
     violation of law or in tort (strict liability or otherwise), (2) latent or
     other defects, whether or not discoverable, (3) any Claim based upon a
     violation or alleged violation of the terms of any restriction, easement,
     condition or covenant or other matter affecting title to the Property, (4)
     the making of any Modifications in violation of any standards imposed by
     any insurance policies required to be maintained by the Lessee pursuant to
     this Lease which are in effect at any time with respect to the Property or
     any part thereof, (5) any Claim for patent, trademark or copyright
     infringement, and (6) Claims arising from any public improvements with
     respect to the Property resulting in any change or special assessments
     being levied against the Property or any plans to widen, modify or realign
     any street or highway adjacent to the Property, or any Claim for utility
     "tap-in" fees;

          (d)    the breach by the Lessee of any covenant, representation or
     warranty made by it or deemed made by it in any Operative Document or any
     certificate required to be delivered by any Operative Document;

                                      -33-
<PAGE>
 
          (e)  the retaining or employment of any broker, finder or financial
     advisor by the Lessee to act on its behalf in connection with the
     transactions contemplated hereby;

          (f)  the existence of any Lien on or with respect to the Property, any
     Improvements, or Basic Rent or Supplemental Rent, title thereto, or any
     interest therein including any Liens which arise out of the possession,
     use, occupancy, construction, repair or rebuilding of the Property or by
     reason of labor or materials furnished or claimed to have been furnished to
     the Lessee, or any of its contractors or agents or by reason of the
     financing of any personalty or equipment purchased or leased by the Lessee
     or Modifications constructed by the Lessee, except with respect to any of
     the foregoing Lessor Liens and Liens in favor of the Lessor; or

          (g)  subject to the accuracy of Lessor's representation set forth in
     Section 6.1(a), the transactions contemplated by this Lease or by any other
     --------------                                                             
     Operative Document, in respect of the application of Parts 4 and 5 of
     Subtitle B of Title I of ERISA and any prohibited transaction described in
     Section 4975(c) of the Code;
     ---------------             

provided, however, the Lessee shall not be required to indemnify any Indemnitee
--------  -------                                                              
under this Section 26.1 for any of the following:  (1) any Claim to the extent
           ------------                                                       
resulting from the willful misconduct or gross negligence of such Indemnitee (it
                                                                              --
being understood that the Lessee shall be required to indemnify an Indemnitee
----------------                                                             
even if the ordinary (but not gross) negligence of such Indemnitee caused or
contributed to such Claim) or the breach of any representation, warranty or
covenant of such Indemnitee set forth in any Operative Document, (2) any Claim
resulting from Lessor Liens which the Lessor is responsible for discharging
under the Operative Documents, (3) any Claim to the extent attributable to acts
or events occurring after the expiration of the Term or the return or
remarketing of the Property so long as the Lessor is not exercising remedies
against the Lessee in respect of the Operative Documents, and (4) any Claim
arising from a breach or alleged breach by the Lessor of any agreement entered
into in connection with the assignment or participation of Rent.  It is
expressly understood and agreed that the indemnity provided for herein shall
survive the expiration or termination of and shall be separate and independent
from any remedy under this Lease or any other Operative Document.  Without
limiting the express rights of any Indemnitee under this Section 26.1, this
                                                         ------------      
Section 26.1 shall be construed as an indemnity only and not a guaranty of
------------                                                              
residual value of the Property.

      XXVI.2.  End of Term Indemnity.
               --------------------- 

               (a)  If the Lessee elects the Remarketing Option and there would,
     after giving effect, to the proposed remarketing transactions, be a
     Shortfall Amount, then prior to the Expiration Date and as a condition to
     the Lessee's right to complete the remarketing of the Property pursuant to
     Section 24.1, the Lessee shall cause to be delivered to the Lessor at least
     ------------                                                               
     thirty (30) days prior to the Expiration Date, at the Lessee's sole cost
     and expense, a report from an appraiser selected by the Lessor and
     reasonably satisfactory to the Lessee in form and substance satisfactory to
     the Lessor (the "End of the Term Report") which shall state the appraiser's
                      ----------------------                                    
     conclusions as to the reason for any decline in the Fair Market Sales Value
     of the Property from that anticipated for such date in the Appraisal
     delivered on the Acquisition Date.

               (b)  If the Lessee elects the Remarketing Option, then on or
     prior to the Expiration Date, the Lessee shall pay to the Lessor an amount
     (not to exceed the Shortfall Amount) equal to the 

                                      -34-
<PAGE>
 
     portion of the Shortfall Amount that the End of the Term Report
     demonstrates was the result of a decline in the Fair Market Sales Value of
     the Property due to

               (i)   extraordinary use, failure to maintain, to repair, to
          restore, to rebuild or to replace, failure to comply with all
          applicable laws, failure to use, workmanship, method of installation
          or removal or maintenance, repair, rebuilding or replacement,
          (excepting in each case ordinary wear and tear), or

               (ii)  with respect to the Property, any Modification made to, or
          any rebuilding of, the Property or any part thereof by the Lessee, or

               (iii) the existence of any Environmental Violations, or

               (iv)  any restoration or rebuilding carried out by the Lessee, or

               (v)   any use of the Property or any part thereof by the Lessee
          other than as permitted under this Lease, or

               (vi)  any grant, release, dedication, transfer, annexation or
          amendment made pursuant to Section 15.2, or
                                     ------------    

               (vii) the failure of the Lessor to have title to the Property
          free and clear of all Liens (excluding Permitted Liens).

      XXVI.3.  Environmental Indemnity.  Without limitation of the other 
               -----------------------    
provisions of this Article XXVI, the Lessee hereby agrees to indemnify, hold 
                   ------------  
harmless and defend each Indemnitee from and against any and all claims
(including without limitation third party claims for personal injury or real or
personal property damage), losses (including but not limited to, to the extent
the Lease Balance has not been fully paid, any loss of value of the Property),
damages, liabilities, fines, penalties, charges, administrative and judicial
proceedings (including informal proceedings) and orders, judgments, remedial
action, requirements, enforcement actions of any kind, and all reasonable and
documented costs and expenses incurred in connection therewith (including but
not limited to reasonable and documented attorneys' and/or paralegals' fees and
expenses), including, but not limited to, all costs incurred in connection with
any investigation or monitoring of site conditions or any clean-up, remedial,
removal or restoration work by any federal, state or local government agency,
arising in whole or in part, out of

          (a)  the presence on or under the Property of any Hazardous Substance
     in violation of Environmental Law, or any releases or discharges of any
     Hazardous Substance on, under, from or onto the Property in violation of
     Environmental Law,

          (b)  any activity, including, without limitation, construction,
     carried on or undertaken on or off the Property, and whether by the Lessee
     or any predecessor in title or any employees, agents, contractors or
     subcontractors of the Lessee or any predecessor in title, or any other
     Persons (including such Indemnitee), in connection with the handling,
     treatment, removal, storage, decontamination, clean-up, transport or
     disposal of any Hazardous Substances in violation of Environmental Law that
     at any time are located or present on or under or that at any time migrate,
     flow, percolate, diffuse or in any way move onto or under the Property,

                                      -35-
<PAGE>
 
          (c)  loss of or damage to any property or the environment (including,
     without limitation, clean-up costs, response costs, remediation and removal
     costs, cost of corrective action, costs of financial assurance, fines and
     penalties and natural resource damages), or death or injury to any Person,
     and all expenses associated with the protection of wildlife, aquatic
     species, vegetation, flora and fauna, and any mitigative action required by
     or under Environmental Laws,

          (d)  any claim concerning lack of compliance with Environmental Laws,
     or any act or omission causing an environmental condition that requires
     remediation or would allow any Governmental Authority to record a Lien on
     the land records, or

          (e)  any residual contamination on or under the Land, or affecting any
     natural resources, and to any contamination of any property or natural
     resources arising in connection with the generation, use, handling,
     storage, transport or disposal of any such Hazardous Substances, and
     irrespective of whether any of such activities were or will be undertaken
     in accordance with applicable laws, regulations, codes and ordinances;

provided, however, the Lessee shall not be required to indemnify any Indemnitee
--------  -------                                                              
under this Section 26.3 for (1) any Claim to the extent resulting from the
           ------------                                                   
willful misconduct or gross negligence of such Indemnitee (it being understood
                                                           -- ----- ----------
that, unless the applicable Indemnitee was in possession of the Property and
caused the Claim, the Lessee shall be required to indemnify an Indemnitee even
if the ordinary (but not gross) negligence of such Indemnitee caused or
contributed to such Claim) or (2) any Claim to the extent attributable to acts
or events occurring after the expiration of the Term or the return or
remarketing of the Property so long as the Lessor is not exercising remedies
against the Lessee in respect of the Operative Documents.  It is expressly
understood and agreed that the indemnity provided for herein shall survive the
expiration or termination of and shall be separate and independent from any
remedy under this Lease or any other Operative Document.

      XXVI.4.  Proceedings in Respect of Claims.  With respect to any amount 
               --------------------------------    
that the Lessee is requested by an Indemnitee to pay by reason of Section 26.1
                                                                  ------------
 or 26.3, such Indemnitee shall, if so requested by the Lessee and prior to any
    ----                                                                       
payment, submit such additional information to the Lessee as the Lessee may
reasonably request and which is in the possession of such Indemnitee to
substantiate properly the requested payment.

     In case any action, suit or proceeding shall be brought against any
Indemnitee, such Indemnitee shall promptly notify the Lessee of the commencement
thereof, and the Lessee shall be entitled, at its expense, to participate in,
and, to the extent that the Lessee desires to, assume and control the defense
thereof; provided, however, that the Lessee shall not have any increased
         --------  -------                                              
liability as a direct result of an Indemnitee's failure to provide such notice
promptly; provided, further, that the Lessee shall have acknowledged in writing
          --------  -------                                                    
its obligation to fully indemnify such Indemnitee in respect of such action,
suit or proceeding, and, the Lessee shall keep such Indemnitee fully apprised of
the status of such action suit or proceeding and shall provide such Indemnitee
with all information with respect to such action suit or proceeding as such
Indemnitee shall reasonably request, and provided, further, that the Lessee
                                         --------  -------                 
shall not be entitled to assume and control the defense of any such action, suit
or proceeding if and to the extent that, (A) in the reasonable opinion of such
Indemnitee, (x) such action, suit or proceeding involves any risk of imposition
of criminal liability or any risk of imposition of material civil liability on
such Indemnitee or will involve a material risk of the sale, forfeiture or loss
of, or the creation of any Lien (other than a Permitted Lien or Lessor Lien) on
the Property or any part thereof unless, in the case of civil liability, the

                                      -36-
<PAGE>
 
Lessee shall have posted a bond or other security satisfactory to the relevant
Indemnitees in respect to such risk or (y) the control of such action, suit or
proceeding would involve an actual or potential conflict of interest, (B) such
proceeding involves Claims not fully indemnified by the Lessee which the Lessee
and the Indemnitee have been unable to sever from the indemnified claim(s), or
(C) an Event of Default has occurred and is continuing.  The Indemnitee may
participate in a reasonable manner at its own expense and with its own counsel
in any proceeding conducted by the Lessee in accordance with the foregoing.  The
Lessee shall not enter into any settlement or other compromise with respect to
any Claim which is entitled to be indemnified under Section 26.1 or 26.3 without
                                                    ------------    ----        
the prior written consent of the Indemnitee which consent shall not be
unreasonably withheld in the case of a money settlement not involving an
admission of liability of such Indemnitee; provided, however, that in the event
                                           --------  -------                   
that such Indemnitee withholds consent to any settlement or other compromise,
the Lessee shall not be required to indemnify such Indemnitee under Section 26.1
                                                                    ------------
or 26.3 to the extent that the applicable Claim (x) is for legal fees and
   ----                                                                  
expenses incurred after the date of the proposed settlement or (y) results in a
judgment in excess of such offered money settlement.

     Each Indemnitee shall at the expense of the Lessee supply the Lessee with
such information and documents reasonably requested by the Lessee as are
necessary or advisable for the Lessee to participate in any action, suit or
proceeding to the extent permitted by Section 26.1 or 26.3.  Unless an Event of
                                      ------------    ----                     
Default shall have occurred and be continuing, no Indemnitee shall enter into
any settlement or other compromise with respect to any Claim which is entitled
to be indemnified under Section 26.1 or 26.3 without the prior written consent
                        ------------    ----                                  
of the Lessee, which consent shall not be unreasonably withheld, unless such
Indemnitee waives its right to be indemnified under Section 26.1 or 26.3 with
                                                    ------------    ----     
respect to such Claim.

     Upon payment in full of any Claim by the Lessee pursuant to Section 26.1 or
                                                                 ------------   
26.3 to or on behalf of an Indemnitee, the Lessee, without any further action,
----                                                                          
shall be subrogated to any and all claims that such Indemnitee may have relating
thereto (other than claims in respect of insurance policies maintained by such
Indemnitee at its own expense), and such Indemnitee shall execute such
instruments of assignment and conveyance, evidence of claims and payment and
such other documents, instruments and agreements as may be necessary to preserve
any such claims and otherwise cooperate with the Lessee and give such further
assurances as are necessary or advisable to enable the Lessee vigorously to
pursue such claims.

     Any amount payable to an Indemnitee pursuant to Section 26.1 or 26.3 shall
                                                     ------------    ----      
be paid to such Indemnitee within ten (10) Business Days after receipt of a
written demand therefor from such Indemnitee, accompanied by a written statement
describing in reasonable detail the basis for such indemnity and the computation
of the amount so payable and, if requested by the Lessee, such determination
shall be verified by a nationally recognized independent accounting firm
mutually acceptable to the Lessee and the Indemnitee at the expense of the
Lessee; provided, however, that if the Lessee has assumed the defense of the
        --------  -------                                                   
related Claim or is paying the costs of the Indemnitee's defense of the related
claim on an ongoing basis, the Lessee shall not be required to pay such amount
to the applicable Indemnitee until such time as a judgment is entered with
respect to such Claim, the enforcement of which is not stayed or which judgment
is not bonded over, or the Claim is otherwise settled or lost.  To the extent
the Lessee suffers any losses or damages as a result of an Indemnitee's failure
to provide the Lessee with prompt notice of the commencement of any action, suit
or proceeding against any Indemnitee in accordance with the first sentence of
the second paragraph of this Section 26.4, the amounts of such losses or damages
                             ------------                                       
may be offset against the Lessee's indemnification obligation to such
Indemnitee.

      XXVI.5.  General Tax Indemnity.
               --------------------- 

                                      -37-
<PAGE>
 
          (a)  Indemnification.  The Lessee shall pay and assume liability for,
               ---------------                                                 
     and does hereby agree to indemnify, protect and defend the Property and all
     Tax Indemnitees, and hold them harmless against, all Impositions on an
     After Tax Basis.

          (b)  Contests.  If any claim shall be made against any Tax Indemnitee
               --------                                                        
     or if any proceeding shall be commenced against any Tax Indemnitee
     (including a written notice of such proceeding) for any Imposition as to
     which the Lessee may have an indemnity obligation pursuant to this Section
                                                                        -------
     26.5, or if any Tax Indemnitee shall determine that any Imposition to which
     ----                                                                       
     the Lessee may have an indemnity obligation pursuant to this Section 26.5
                                                                  ------------
     may be payable, such Tax Indemnitee shall promptly (and in any event,
     within 30 days) notify the Lessee in writing (provided that failure to so
                                                   --------                   
     notify the Lessee within 30 days shall not alter such Tax Indemnitee's
     rights under this Section 26.5 except to the extent such failure precludes
                       ------------                                            
     or materially adversely affects the ability to conduct a contest of any
     indemnified Taxes) and shall not take any action with respect to such
     claim, proceeding or Imposition without the written consent of the Lessee
     (such consent not to be unreasonably withheld or unreasonably delayed) for
     30 days after the receipt of such notice by the Lessee; provided, however,
                                                             --------  ------- 
     that in the case of any such claim or proceeding, if such Tax Indemnitee
     shall be required by law or regulation to take action prior to the end of
     such 30-day period, such Tax Indemnitee shall in such notice to the Lessee,
     so inform the Lessee, and such Tax Indemnitee shall not take any action
     with respect to such claim, proceeding or Imposition without the consent of
     the Lessee (such consent not to be unreasonably withheld or unreasonably
     delayed) for 10 days after the receipt of such notice by the Lessee unless
     the Tax Indemnitee shall be required by law or regulation to take action
     prior to the end of such 10-day period.

          The Lessee shall be entitled for a period of 30 days from receipt of
     such notice from the Tax Indemnitee (or such shorter period as the Tax
     Indemnitee has notified the Lessee is required by law or regulation for the
     Tax Indemnitee to commence such contest), to request in writing that such
     Tax Indemnitee contest the imposition of such Tax, at the Lessee's expense.
     If (x) such contest can be pursued in the name of the Lessee and
     independently from any other proceeding involving a Tax liability of such
     Tax Indemnitee for which the Lessee has not agreed to indemnify such Tax
     Indemnitee, (y) such contest must be pursued in the name of the Tax
     Indemnitee, but can be pursued independently from any other proceeding
     involving a Tax liability of such Tax Indemnitee for which the Lessee has
     not agreed to indemnify such Tax Indemnitee or (z) the Tax Indemnitee so
     requests, then the Lessee shall be permitted to control the contest of such
     claim, provided that in the case of a contest described in clause (y), if
            --------                                            ----------    
     the Tax Indemnitee determines in good faith that such contest by the Lessee
     could have a material adverse impact on the business or operations of the
     Tax Indemnitee and provides a written explanation to the Lessee of such
     determination, the Tax Indemnitee may elect to control or reassert control
     of the contest, and provided, that by taking control of the contest, Lessee
                         --------                                               
     acknowledges that it is responsible for the Imposition ultimately
     determined to be due by reason of such claim, and provided, further, that
                                                       --------  -------      
     in determining the application of clauses (x) and (y) of the preceding
                                       -----------     ---                 
     sentence, each Tax Indemnitee shall take any and all reasonable steps to
     segregate claims for any Taxes for which the Lessee indemnifies hereunder
     from Taxes for which the Lessee is not obligated to indemnify hereunder, so
     that the Lessee can control the contest of the former.  In all other claims
     requested to be contested by the Lessee, the Tax Indemnitee shall control
     the contest of such claim, acting through counsel reasonably acceptable to
     the Lessee.  In no event shall the Lessee be permitted to contest 

                                      -38-
<PAGE>
 
     (or the Tax Indemnitee required to contest) any claim, (A) if such Tax
     Indemnitee provides the Lessee with a legal opinion of counsel reasonably
     acceptable to the Lessee that such action, suit or proceeding involves a
     risk of imposition of criminal liability or will involve a material risk of
     the sale, forfeiture or loss of, or the creation of any Lien (other than a
     Permitted Lien or Lessor Lien) on the Property or any part of any thereof
     unless the Lessee shall have posted and maintained a bond or other security
     reasonably satisfactory to the relevant Tax Indemnitee in respect to such
     risk, (B) if an Event of Default has occurred and is continuing unless the
     Lessee shall have posted and maintained a bond or other security reasonably
     satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject
     to such claim and any and all expenses for which the Lessee is responsible
     hereunder reasonably foreseeable in connection with the contest of such
     claim, (C) unless the Lessee shall have agreed to pay and shall pay, to
     such Tax Indemnitee within ten (10) Business Days after demand all
     reasonable out-of-pocket costs, losses and expenses that such Tax
     Indemnitee may incur in connection with contesting such Imposition
     including all reasonable legal, accounting and investigatory fees and
     disbursements, or (D) if such contest shall involve the payment of the Tax
     prior to the contest, unless the Lessee shall provide to the Tax Indemnitee
     an interest-free advance in an amount equal to the Imposition that the
     Indemnitee is required to pay (with no additional net after-tax costs to
     such Tax Indemnitee). In addition for Tax Indemnitee controlled contests
     and claims contested in the name of the Tax Indemnitee in a public forum,
     no contest shall be required: (A) unless the amount of the potential
     indemnity (taking into account all similar or logically related claims that
     have been or could be raised in any audit involving such Tax Indemnitee for
     which the Lessee may be liable to pay an indemnity under this Section
                                                                   -------
     26.5(b)) exceeds $500,000 and (B) unless, if requested by the Tax
     -------                                                          
     Indemnitee, the Lessee shall have provided to the Tax Indemnitee an opinion
     of counsel selected by the Lessee (which may be in-house counsel) (except,
     in the case of income taxes indemnified hereunder which shall be an opinion
     of independent tax counsel selected by the Tax Indemnitee and reasonably
     acceptable to the Lessee) that a reasonable basis exists to contest such
     claim.  In no event shall a Tax Indemnitee be required to appeal an adverse
     judicial determination to the United States Supreme Court.

          The party conducting the contest shall consult in good faith with the
     other party and its counsel with respect to the contest of such claim for
     Taxes (or claim for refund) but the decisions regarding what actions to be
     taken shall be made by the controlling party in its sole judgement,
     provided, however, that if the Tax Indemnitee is the controlling party and
     --------  -------                                                         
     the Lessee recommends the acceptance of a settlement offer made by the
     relevant Governmental Authority and such Tax Indemnitee rejects such
     settlement offer then the amount for which the Lessee will be required to
     indemnify such Tax Indemnitee with respect to the Taxes subject to such
     offer shall not exceed the amount which it would have owed if such
     settlement offer had been accepted.  In addition, the controlling party
     shall keep the noncontrolling party reasonably informed as to the progress
     of the contest, and shall provide the noncontrolling party with a copy of
     (or appropriate excerpts from) any reports or claims issued by the relevant
     auditing agents or taxing authority to the controlling party thereof, in
     connection with such claim or the contest thereof.

          Each Tax Indemnitee shall at the Lessee's expense supply the Lessee
     with such information and documents reasonably requested by the Lessee as
     are necessary or advisable for the Lessee to participate in any action,
     suit or proceeding to the extent permitted by this Section 26.5(b).  No Tax
                                                        ---------------         
     Indemnitee shall enter into any settlement or other compromise or fail to
     appeal an adverse ruling with respect to any claim which is entitled to be
     indemnified under this Section 26.5 (and with respect to which contest is
                            ------------                                      
     required under this Section 26.5(b)) without the prior 
                         ---------------                                      

                                      -39-
<PAGE>
 
     written consent of the Lessee, unless such Tax Indemnitee waives its right
     to be indemnified under this Section 26.5 with respect to such claim.
                                  ------------                            

          Notwithstanding anything contained herein to the contrary, a Tax
     Indemnitee will not be required to contest (and the Lessee shall not be
     permitted to contest) a claim with respect to the imposition of any Tax if
     such Tax Indemnitee shall waive its right to indemnification under this
     Section 26.5 with respect to such claim (and any claim with respect to such
     ------------                                                               
     year or any other taxable year the contest of which is materially adversely
     affected as a result of such waiver).

          (c)  Reimbursement for Tax Savings.  If (x) a Tax Indemnitee or any
               -----------------------------                                 
     Affiliate thereof realizes a deduction, offset, credit or refund of any
     Taxes or any other savings or benefit as a result of any indemnity paid by
     the Lessee pursuant to this Section 26.5 or (y) by reason of the incurrence
                                 ------------                                   
     or imposition of any Tax (or the circumstances or event giving rise
     thereto) for which a Tax Indemnitee is indemnified hereunder or any payment
     made to or for the account of such Tax Indemnitee by the Lessee pursuant to
     this Section 26.5 or any payment made by a Tax Indemnitee to the Lessee by
          ------------                                                         
     reason of this Section 26.5(c), such Tax Indemnitee at any time actually
                    ---------------                                          
     realizes a reduction in any Taxes for which the Lessee is not required to
     indemnify such Tax Indemnitee pursuant to this Section 26.5 which reduction
                                                    ------------                
     in Taxes was not taken into account in computing such payment by the Lessee
     to or for the account of such Tax Indemnitee or by the Tax Indemnitee to
     the Lessee, then such Tax Indemnitee shall promptly pay to the Lessee (xx)
     the amount of such deduction, offset, credit, refund, or other savings or
     benefit together with the amount of any interest received by such Tax
     Indemnitee on account of such deduction, offset, credit, refund or other
     savings or benefit or (yy) an amount equal to such reduction in Taxes, as
     the case may be, in either case together with an amount equal to any
     reduced Taxes payable by such Tax Indemnitee as a result of such payment;
     provided that no such payment shall be made so long as a Default or Event
     --------                                                                 
     of Default shall have occurred and be continuing but shall be paid promptly
     after cure of such Default or Event of Default.  Each Tax Indemnitee agrees
     to take such actions as the Lessee may reasonably request (provided in the
     good faith judgment of the Tax Indemnitee, such actions would not result in
     a material adverse effect on the Tax Indemnitee for which the Tax
     Indemnitee is not entitled to indemnification from the Lessee) and to
     otherwise act in good faith to claim such refunds and other available Tax
     benefits, and take such other actions as may be reasonable to minimize any
     payment due from the Lessee pursuant to this Section 26.5 and to maximize
                                                  ------------                
     the amount of any Tax savings available to it.  The disallowance or
     reduction of any credit, refund or other tax savings with respect to which
     a Tax Indemnitee has made a payment to the Lessee under this Section
                                                                  -------
     26.5(e) shall be treated as a Tax for which the Lessee is obligated to
     -------                                                               
     indemnify such Tax Indemnitee hereunder without regard to the exclusions
     set forth in the definition of Impositions except the exclusions set forth
     in (iv), (v), (vi), (vii), (ix), (x), (xi), (xiv) and (xvi).

          (d)  Payments.  Any Imposition indemnifiable under this Section 26.5
               --------                                           ------------
     shall be paid directly when due to the applicable taxing authority if
     direct payment is practicable and permitted.  If direct payment to the
     applicable taxing authority is not permitted or is otherwise not made, any
     amount payable to a Tax Indemnitee pursuant to Section 26.5 shall be paid
                                                    ------------              
     within thirty (30) days after receipt of a written demand therefor from
     such Tax Indemnitee accompanied by a written statement describing in
     reasonable detail the amount so payable, but not before two Business Days
     prior to the date that the relevant Taxes are due.  Any payments made
     pursuant to this Section 26.5 shall be made directly to the Tax Indemnitee
                      ------------                                             
     entitled thereto or the Lessee, as the case may be, in 

                                      -40-
<PAGE>
 
     immediately available funds at such bank or to such account as specified by
     the payee in written directions to the payor, or, if no such direction
     shall have been given, by check of the payor payable to the order of the
     payee by certified mail, postage prepaid at its address as set forth in
     Schedule I hereto. Upon the request of any Tax Indemnitee with respect to a
     ----------
     Tax that the Lessee is required to pay, the Lessee shall furnish to such
     Tax Indemnitee the original or a certified copy of a receipt for the
     Lessee's payment of such Tax or such other evidence of payment as is
     reasonably acceptable to such Tax Indemnitee.

          (e)  Reports.  In the case of any report, return or statement required
               -------                                                          
     to be filed with respect to any Taxes that are subject to indemnification
     under this Section 26.5 and of which the Lessee has knowledge, the Lessee
                ------------                                                  
     shall promptly notify the Tax Indemnitee of such requirement and, at the
     Lessee's expense (i) if the Lessee is permitted (unless otherwise requested
     by the Tax Indemnitee) by Applicable Law, timely file such report, return
     or statement in its own name or (ii) if such report, return or statement is
     required to be in the name of or filed by such Tax Indemnitee or the Tax
     Indemnitee otherwise requests that such report, return or statement for
     filing by such Tax Indemnitee in such manner as shall be satisfactory to
     such Tax Indemnitee and send the same to the Tax Indemnitee for filing no
     later than 15 days prior to the due date therefor. In any case in which the
     Tax Indemnitee will file any such report, return or statement, the Lessee
     shall, upon written request of such Tax Indemnitee, provide such Tax
     Indemnitee with such information as is reasonably necessary to allow the
     Tax Indemnitee to file such report, return or statement.

          (f)  Verification.  At the Lessee's request, the amount of any
               ------------                                             
     indemnity payment by the Lessee or any payment by a Tax Indemnitee to the
     Lessee pursuant to this Section 26.5 shall be verified and certified by an
                             ------------                                      
     independent public accounting firm mutually acceptable to the Lessee and
     the Tax Indemnitee.  The costs of such verification shall be borne by the
     Lessee unless such verification shall result in an adjustment in the
     Lessee's favor of the lesser of (i) $10,000, and (ii) five (5%) percent of
     the payment as computed by the Tax Indemnitee, in which case such fee shall
     be paid by the Tax Indemnitee.  In no event shall the Lessee have the right
     to review the Tax Indemnitee's tax returns or receive any other
     confidential information from the Tax Indemnitee in connection with such
     verification.  Any information provided to such accountants by any Person
     shall be and remain the exclusive property of such Person and shall be
     deemed by the parties to be (and the accountants will confirm in writing
     that they will treat such information as) the private, proprietary and
     confidential property of such Person, and no Person other than such Person
     and the accountants shall be entitled thereto and all such materials shall
     be returned to such Person.  Such accounting firm shall be requested to
     make its determination within 30 days of the Lessee's request for
     verifications and the computations of the accounting firm shall be final,
     binding and conclusive upon the Lessee and the Tax Indemnitee.  The parties
     agree that the sole responsibility of the independent public accounting
     firm shall be to verify the amount of a payment pursuant to this Lease and
     that matters of interpretation of this Lease are not within the scope of
     the independent accounting firm's responsibilities.

          (g)  Tax Ownership.  The Lessor represents and warrants that it will
               -------------                                                  
     not, prior to the termination of this Lease, claim ownership of (or any tax
     benefits, including depreciation, with respect to) the Property for any
     income tax purposes, it being understood that the Lessee is and will remain
     the owner of the Property for such income tax purposes until the
     termination of this Lease.  If, notwithstanding the income tax intentions
     of the parties as set forth herein, the Lessor actually receives any income
     tax deductions, reductions in income tax or other income tax benefit 

                                      -41-
<PAGE>
 
     as a result of any claim for, or recharacterization requiring such party to
     take, any tax benefits attributable to ownership of the Property for income
     tax purposes, the Lessor shall pay to the Lessee, together with an amount
     equal to any reduced Taxes payable by such Tax Indemnitee as a result of
     such payment, the amount of such income tax savings actually realized by
     the Lessor (less the amount of any anticipated increase in income tax which
     the Lessor determines is currently payable as a result of such claim or
     recharacterization), provided that the Lessee shall agree to reimburse the
                          --------                                             
     Lessor for any subsequent increase in the Lessor's income taxes resulting
     from such claim or recharacterization not taken into account in the payment
     made to the Lessee, up to the amount paid to the Lessee by the Lessor.  The
     parties agree that this Section 26.5(g) is intended to require a payment to
                             ---------------                                    
     the Lessee if and only if the Lessor shall have actually received an
     unanticipated tax savings with respect to the Property that would not have
     been received if the Lessor had advanced funds to the Lessee in the form of
     a loan secured by the Property in an amount equal to the Lease Balance.
     Nothing in this Section 26.5(g) shall be construed to require the Lessor to
                     ---------------                                            
     take any affirmative action to realize any tax savings if in its good faith
     judgment such action may have a material adverse affect on the Lessor.

     XXVI.6.  Funding Losses.  If any payment of Rent or the Lease Balance,
              --------------                                               
including pursuant to the Lessee's exercise of the Purchase Option under Section
                                                                         -------
22.1, is made on any day other than the last day of an Interest Period
----                                                                  
applicable thereto, the Lessee shall reimburse the Lessor within fifteen (15)
days after demand for any actual resulting loss or expense incurred by it,
including any loss incurred in obtaining, liquidating or employing deposits from
third parties, swaps, hedges or similar transactions entered into in connection
with or in contemplation of transactions relating to the Property, but excluding
loss of margin for the period after any such payment or conversion or failure to
borrow or prepay, provided that the Lessor shall have delivered to the Lessee a
                  --------                                                     
certificate signed by an officer of the Lessor as to the amount of such loss or
expense, which certificate shall be conclusive in the absence of manifest error,
and provided, further, that such loss shall in no event exceed the then
    --------  -------                                                  
effective Lease Rate which would have been payable for the balance of such
Interest Period.  The Lessor will, at the request of the Lessee, furnish such
additional information concerning the determination of such loss as the Lessee
may reasonably request.

     XXVI.7.  Regulation D Compensation.  During the Term, for so long as the
              -------------------------                                      
Lessor (or FBTC) is required to maintain reserves against "Eurocurrency
Liabilities" (or any other category of liabilities which include deposits by
reference to which the Lease Rate is determined or any category of extensions of
credit or other assets which includes loans by a non-United States office of the
Lessor to United States residents), and, as a result, the cost to the Lessor (or
its Funding Office) of making or maintaining its Advances is increased, then the
Lessor may require the Lessee to pay, contemporaneously with each payment of
Rent, an additional amount at a rate per annum up to but not exceeding the
excess of (i) (A) the applicable Eurodollar Rate divided by (B) one minus the
                                                                    -----    
Eurocurrency Reserve Requirements and (ii) the applicable Eurodollar Rate.  In
the event that the Lessor wishes to require payment of such additional amount,
the Lessor (x) shall so notify the Lessee, in which case such additional Rent
shall be payable to the Lessor at the place indicated in such notice with
respect to each Interest Period commencing at least three Business Days after
the giving of such notice and (y) shall furnish to the Lessee at least five
Business Days prior to each date on which Rent is payable a certificate setting
forth the amount to which it is then entitled under this Section (which shall be
consistent with its good faith estimate of the level at which the related
reserves are maintained by it).  Each such certificate shall be accompanied by
such information as the Lessee may reasonably request as to the computation set
forth therein.

                                      -42-
<PAGE>
 
     XXVI.8.  Deposits Unavailable.  If on or prior to the first day of any
              --------------------                                         
Interest Period:

          (a)  deposits in dollars (in the applicable amounts) are not being
     offered to the Lessor (or its Affiliates) in the relevant market for such
     Interest Period, or

          (b)  the Lessor advises the Lessee that the Eurodollar Rate as
     determined by the Lessor will not adequately and fairly reflect the cost to
     the Lessor of funding Advances for such Interest Period,

the Lessor shall forthwith give notice thereof to the Lessee, whereupon until
the Lessor notifies the Lessee that the circumstances giving rise to such
suspension no longer exist, the Advance shall begin to bear interest at the
Alternate Base Rate on the last day of the then current Interest Period
applicable thereto.  The Lessor shall provide to the Lessee a statement in
writing of the Alternate Base Rate as calculated hereunder.

     XXVI.9.  Illegality.  If, on or after the date hereof, the adoption of any
              ----------                                                       
applicable law, rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by the Lessor (or its Funding Office) with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency shall make it unlawful or impossible for the
Lessor (or its Funding Office) to make, maintain or fund the Advance, and the
Lessor shall so notify the Lessee, whereupon until the Lessor notifies the
Lessee that the circumstances giving rise to such suspension no longer exist,
the obligation to make the Advance shall be suspended.  The Lessor, with the
consent of the Lessee (which consent shall not unreasonably be withheld), will
designate a different Funding Office if such designation will avoid the need for
giving such notice and will not, in the judgment of the Lessor, be otherwise
disadvantageous to the Lessor.  If such notice is given (i) the Lessee shall be
entitled upon its request to a reasonable explanation of the factors underlying
such notice and (ii) the Advance shall begin to bear interest at the Alternate
Base Rate either (a) on the last day of the then current Interest Period
applicable thereto, if the Lessor may lawfully continue to maintain and fund the
Advance to such day or (b) immediately, if the Lessor shall determine that it
may not lawfully continue to maintain and fund the Advance to such day.  The
Lessor shall provide to the Lessee a statement in writing of the Alternate Base
Rate as calculated hereunder.

     XXVI.10.  Increased Cost and Reduced Return.
               --------------------------------- 

          (a)  In the event that the adoption of any applicable law, rule or
     regulation, or any change therein or in the interpretation or application
     thereof by any governmental authority, central bank or comparable agency
     charged with the interpretation or administration thereof or compliance by
     the Lessor with any request or directive after the date hereof (whether or
     not having the force of law) of any such authority, central bank or
     comparable agency:

               (i)   does or shall subject the Lessor to any additional tax of
          any kind whatsoever with respect to the Operative Documents or the
          Advance made by it, or change the basis or the applicable rate of
          taxation of payments to the Lessor of principal, interest or any other
          amount payable hereunder (except for the imposition of or change in
          any tax on or measured by the overall net income of the Lessor (other
          than any such tax imposed by means of withholding));

                                      -43-
<PAGE>
 
               (ii)  does or shall impose, modify or hold applicable any
          reserve, special deposit, insurance assessment, compulsory loan or
          similar requirement against assets held by, or deposits or other
          liabilities in or for the account of, advances or loans by, or other
          credit extended by, or any other acquisition of funds by, any office
          of the Lessor which are not otherwise included in determination of the
          rate of interest on the Advance; or

               (iii) does or shall impose on the Lessor any other condition; and
          the result of any of the foregoing is to increase the cost to the
          Lessor of making or maintaining the Advance or to reduce any amount
          receivable hereunder, then in any such case, the Lessee shall promptly
          pay to the Lessor, upon demand, any additional amounts necessary to
          compensate the Lessor for such increased cost or reduced amount
          receivable which the Lessor deems to be material as determined by the
          Lessor with respect to the Advance.

          (b) If the Lessor shall have determined that, after the date hereof,
     the adoption of any applicable law, rule or regulation regarding capital
     adequacy, or any change therein, or any change in the interpretation or
     administration thereof by any governmental authority, central bank or
     comparable agency charged with the interpretation or administration
     thereof, or any request or directive regarding capital adequacy (whether or
     not having the force of law) of any such authority, central bank or
     comparable agency, has or would have the effect of reducing the rate of
     return on capital of the Lessor (or any entity directly or indirectly
     controlling the Lessor) as a consequence of the Lessor's obligations under
     the Operative Documents to a level below that which the Lessor (or any
     entity directly or indirectly controlling the Lessor) could have achieved
     but for such adoption, change, request or directive (taking into
     consideration its policies with respect to capital adequacy) by an amount
     deemed by the Lessor to be material, then from time to time, within fifteen
     (15) days after demand by the Lessor, the Lessee shall pay to the Lessor
     such additional amount or amounts as will compensate the Lessor for such
     reduction.

          (c) The Lessor will promptly notify the Lessee of any event of which
     it has knowledge, occurring after the date hereof, which will entitle the
     Lessor to compensation pursuant to this Section and will, if practicable,
     with the consent of the Lessee (which consent shall not unreasonably be
     withheld), designate a different Funding Office or take any other
     reasonable action if such designation or action will avoid the need for, or
     reduce the amount of, such compensation and will not, in the judgment of
     the Lessor, be otherwise disadvantageous to the Lessor.  A certificate
     signed by an officer of the Lessor claiming compensation under this Section
     and setting forth in reasonable detail its computation of the additional
     amount or amounts to be paid to it hereunder shall be conclusive in the
     absence of manifest error.  In determining such amount, the Lessor may use
     any reasonable averaging and attribution methods.

          (d) Notwithstanding the foregoing clauses (a) and (b) of this Section
                                            -----------     ---         -------
     26.10, the Lessee shall only be obligated to compensate the Lessor for any
     -----                                                                     
     amount arising or accruing both:

               (i)  during (A) any time or period commencing (x) in the case of
                                                                               
          subsection (a), not earlier than the first day of any Interest Period
          --------------                                                       
          in effect on the date which, and (y) in the case of subsection (b),
                                                              -------------- 
          not earlier than the date on which the Lessor notifies the Lessee that
          it proposes to demand such compensation and identifies to the Lessee
          the statute, regulation or other basis upon which the claimed
          compensation is or will be based and (B) any time or period during
          which, because of the retroactive application of such statute,

                                      -44-
<PAGE>
 
          regulation or other basis, the Lessor did not know that such amount
          would arise or accrue; and

               (ii)  within six months prior to any demand therefor, accompanied
          by a certificate of the Lessor claiming compensation and setting forth
          in reasonable detail its computation of the additional amount or
          amounts to be paid to it hereunder.


                                  ARTICLE XXVII
                             ESTOPPEL CERTIFICATES

     XXVII.1.  Estoppel Certificates.  At any time and from time to time upon
               ---------------------
not less than fifteen (15) days' prior request by the Lessor or the Lessee (the
"Requesting Party"), the other party (whichever party shall have received such
 ----------------                                                             
request, the "Certifying Party") shall furnish to the Requesting Party (but in
              ----------------                                                
the case of the Lessor, as Certifying Party, not more than four times per year
unless required to satisfy the requirements of any subleases and only to the
extent that the required information has been provided to the Lessor by the
Lessee) a certificate signed by an individual having the office of vice
president or higher in the Certifying Party certifying that this Lease is in
full force and effect (or that this Lease is in full force and effect as
modified and setting forth the modifications); the dates to which the Basic Rent
and Supplemental Rent have been paid; to the best knowledge of the signer of
such certificate, whether or not the Requesting Party is in default under any of
its obligations hereunder (and, if so, the nature of such alleged default); and
such other matters under this Lease as the Requesting Party may reasonably
request. Any such certificate furnished pursuant to this Article XXVII may be
                                                         -------------       
relied upon by the Requesting Party, and any existing or prospective mortgagee,
purchaser or lender, and any accountant or auditor, of, from or to the
Requesting Party (or any Affiliate thereof).


                                ARTICLE XXVIII
                            ACCEPTANCE OF SURRENDER

     XXVIII.1.  Acceptance of Surrender.  No surrender to the Lessor of this
                -----------------------
Lease or of all or any portion of the Property or of any interest therein shall
be valid or effective unless agreed to and accepted in writing by the Lessor,
and no act by the Lessor or any representative or agent of the Lessor, other
than a written acceptance, shall constitute an acceptance of any such surrender.


                                 ARTICLE XXIX
                              NO MERGER OF TITLE

     XXIX.1.  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
may acquire, own or hold, directly or indirectly, in whole or in part, (a) this
Lease or the leasehold estate created hereby or any interest in this Lease or
such leasehold estate, (b) the fee or groundleasehold estate in the Property,
except as may expressly be stated in a written instrument duly executed and
delivered by the appropriate Person or (c) a beneficial interest in the Lessor.

                                      -45-
<PAGE>
 
                                  ARTICLE XXX
                             INTENT OF THE PARTIES

     XXX.1.  Ownership of the Property.
             ------------------------- 

          (a)  It is the intent of the parties hereto that for financial
     accounting purposes the Lease constitutes an "operating lease" pursuant to
     Statement of Financial Accounting Standards No. 13, as amended, and for
     purposes of commercial, real estate, bankruptcy and federal, state and
     local income tax law, the transaction contemplated hereby is a financing
     arrangement.  The parties further intend that Lessee shall be treated as
     owner of the Property for income tax purposes and shall be entitled to all
     deductions for depreciation thereof.  Lessor shall take no action
     inconsistent with such treatment.

          (b)  It is the intent of the parties hereto that the obligations of
     the Lessee under this Lease to pay Basic Rent and Supplemental Rent or
     Lease Balance in connection with any purchase of the Property pursuant to
     this Lease shall be treated as payments of interest on and principal of,
     respectively, loans from the Lessor to the Lessee.

          (c)  Specifically, without limiting the generality of subsection (b)
                                                                --------------
     of this Section 30.1, the Lessor and the Lessee intend and agree that with
             ------------                                                      
     respect to the nature of the transactions evidenced by this Lease in the
     context of the exercise of remedies under the Operative Documents,
     including, without limitation, in the case of any insolvency or
     receivership proceedings or a petition under the United States bankruptcy
     laws or any other applicable insolvency laws or statute of the United
     States of America or any State or Commonwealth thereof affecting the Lessee
     and the Lessor, or any enforcement or collection actions, the transactions
     evidenced by this Lease are loans made by the Lessor as unrelated third
     party lender to the Lessee.

                                 ARTICLE XXXI
                          PAYMENT OF CERTAIN EXPENSES

     XXXI.1.  Transaction Expenses.
              -------------------- 

          (a)  The Lessee shall pay, or cause to be paid, from time to time all
     Transaction Expenses in respect of the transactions taking place on the
     Documentation Date and on Acquisition Date on such respected date;
     provided, however, that, if the Lessee has not received written invoices
     --------  -------                                                       
     therefor prior to such date, such Transaction Expenses shall be paid within
     ten (10) Business Days after the Lessee has received written invoices
     therefor.

          (b)  The Lessee shall pay or cause to be paid (i) all Transaction
     Expenses incurred by the Lessor in entering into any future amendments or
     supplements with respect to any of the Operative Documents, whether or not
     such amendments or supplements are ultimately entered into, or giving or
     withholding of waivers of consents hereto or thereto, in each case which
     have been requested by or approved by the Lessee, (ii) all Transaction
     Expenses incurred by the Lessor in connection with any purchase of the
     Property by the Lessee or other Person pursuant to this Lease and (iii) all
     Transaction Expenses incurred by the Lessor in respect of enforcement of
     any of its rights or remedies against the Lessee in respect of the
     Operative Documents.

                                      -46-
<PAGE>
 
      XXXI.2.  Brokers' Fees and Stamp Taxes.  The Lessee shall pay or cause to
               -----------------------------
be paid any brokers' fees and any and all stamp, transfer and other similar
taxes, fees and excises, if any, including any interest and penalties, which are
payable in connection with the transactions contemplated by this Lease and the
other Operative Documents.


                                 ARTICLE XXXII
                   OTHER COVENANTS AND AGREEMENTS OF LESSEE

     XXXII.1.  Covenants.  The Lessee hereby agrees that so long as this Lease
               ---------
is in effect:

          (a)  Information.  The Lessee will deliver to the Lessor:
               -----------                                         

               (i)   promptly upon the request of the Lessor, the publicly
          available consolidated and consolidating statements of financial
          position of the Lessee and its consolidated subsidiaries as of the end
          of each of the Lessee's fiscal years and the related consolidated and
          consolidating statements of income and cash flows for such fiscal
          year, setting forth in each case in comparative form the figures for
          the previous fiscal year, with such consolidated financial statements
          reported on by Ernst & Young or other independent public accountants
          of nationally recognized standing reasonably acceptable to the Lessor;
          and with respect to each of the first three quarters of each fiscal
          year of the Lessee, the publicly available unaudited consolidated
          statement of financial position of the Lessee as of the end of such
          quarter and the related unaudited consolidated statements of income
          and cash flows for such quarter and for the portion of the Lessee's
          fiscal year ended at the end of such quarter;

               (ii)  as soon as possible and in any event within ten (10) days
          after a Responsible Employee of the Lessee obtains knowledge of the
          occurrence of each Event of Default or each event that, with the
          giving of notice or time elapse, or both, would constitute an Event of
          Default continuing on the date of such statement, a statement of the
          authorized officer setting forth details of such Event of Default or
          event and the action that the Lessee proposes to take with respect
          thereto; provided that the Lessee shall not be obligated to give
          notice of any Event of Default which is remedied within ten (10) days
          after such Responsible Employee first obtains knowledge;

               (iii) promptly upon becoming aware thereof, written notice of the
          commencement or existence of any proceeding against the Lessee or any
          Affiliate of the Lessee by or before any court or governmental agency
          that might, in the reasonable judgment of the Lessee, result in a
          Material adverse effect on the business, operations or financial
          conditions of the Lessee or the ability of the Lessee to perform its
          obligations under the Operative Documents;

               (iv)  as soon as possible and in any event within ten (10) days
          after a Responsible Employee of the Lessee obtains knowledge of the
          occurrence of any violation or alleged violation of an Environmental
          Law by Lessee, a statement of an authorized officer setting forth the
          details of such violation and the action which the Lessee proposes to
          take with respect thereto; and

                                      -47-
<PAGE>
 
               (v)  from time to time such additional information regarding the
          business, properties, condition or operations, financial or otherwise,
          of the Lessee, or regarding the Property or the status of any
          construction thereon, if any, as the Lessor may reasonably request in
          connection with the Property.

          (b)  Obligations under Loan Documents.  Absent prior written notice
               --------------------------------                              
     from the Lessor to the contrary, the Lessee shall comply with (i) all
     requirements in the Nomura Loan Agreement that the Lessor, as Borrower,
     furnish the Lender with notices, documents, reports, budgets, data and all
     other information relating to the Property, including, without limitation,
     the requirements in connection with a defeasance of the Loan pursuant to
     Section 2.11 of the Nomura Loan Agreement and (ii) all requirements and
     ------------                                                           
     obligations of Operator set forth in the Mortgage.

          (c)  Compliance with Laws.  The Lessee will comply in all Material
               --------------------                                         
     respects with all applicable laws, ordinances, rules, regulations, and
     requirements of governmental authorities (including, without limitation,
     Environmental Laws and ERISA and the rules and regulations thereunder) with
     respect to its Material Assets, including the Property, except where the
     necessity of compliance therewith is contested in good faith by appropriate
     proceedings.

          (d)  Further Assurances.  The Lessee shall take or cause to be taken
               ------------------                                             
     from time to time all action necessary to assure that the intent of the
     parties pursuant to the Operative Documents is given effect as contemplated
     by this Lease.  The Lessee shall execute and deliver, or cause to be
     executed and delivered, to the Lessor from time to time, promptly upon
     request therefor, any and all other and further instruments that may be
     reasonably requested by the Lessor to cure any deficiency in the execution
     and delivery of this Lease or any Operative Document to which it is a
     party.

          (e)  Preservation of Existence, Etc.  The Lessee will preserve and
               ------------------------------                               
     maintain its existence and all rights, privileges and franchises necessary
     and desirable in the normal conduct of its business and the performance of
     its obligations hereunder and under the Operative Documents; provided that
     the Lessee may consolidate with or merge with or into any other corporation
     or convey or transfer its properties and assets substantially as an
     entirety to any Person, if either the Lessee shall be the continuing
     corporation, or the corporation (if other than the Lessee) formed by such
     consolidation or into which the Lessee is merged or the Person which
     acquires by conveyance or transfer the properties and assets of the Lessee
     substantially as an entirety shall expressly assume, by an assumption
     agreement executed and delivered to the Lessor, the performance of the
     Lessee's obligations under each of the Operative Documents.

          (f)  Nonpetition Covenants.  Lessee shall not during the Term of the
               ---------------------                                          
     Lease acquiesce, petition or otherwise invoke or cause the Lessor to invoke
     the process of any court or government authority for the purpose of
     commencing or sustaining a case against the Lessor under any federal or
     state bankruptcy, insolvency or similar law or appointing a receiver,
     liquidator, assignee, trustee, custodian, sequestrator or other similar
     official of the Lessor or any substantial part of its property, or ordering
     the winding up or liquidation of the affairs of the Lessor.  Lessor shall
     not during the Term of the Lease acquiesce, petition or otherwise invoke or
     cause the Lessee to invoke the process of any court or government authority
     for the purpose of commencing or sustaining a case against the Lessee under
     any federal or state bankruptcy, insolvency or similar law or 

                                     -48-
<PAGE>
 
     appointing a receiver, liquidator, assignee, trustee, custodian,
     sequestrator or other similar official of the Lessee or any substantial
     part of its property, or ordering the winding up or liquidation of the
     affairs of the Lessee.


                                  ARTICLE XXX
                                 MISCELLANEOUS

     XXXIII.1.  Survival; Severability; Etc. Anything contained in this Lease
                ---------------------------    
to the contrary notwithstanding, all claims against and liabilities of the
Lessee or the Lessor arising from events commencing prior to the expiration or
earlier termination of this Lease shall survive such expiration or earlier
termination for a period of one year except as to indemnification which shall
continue to survive. If any term or provision of this Lease or any application
thereof shall be declared invalid or unenforceable, the remainder of this Lease
and any other application of such term or provision shall not be affected
thereby. If any right or option of the Lessee provided in this Lease would, in
the absence of the limitation imposed by this sentence, be invalid or
unenforceable as being in violation of the rule against perpetuities or any
other rule of law relating to the vesting of an interest in or the suspension of
the power of alienation of property, then such right or option shall be
exercisable only during the period which shall end twenty-one (21) years after
the date of death of the last survivor of the descendants of Franklin D.
Roosevelt, the former President of the United States, Henry Ford, the deceased
automobile manufacturer, and John D. Rockefeller, the founder of the Standard
Oil Company, known to be alive on the date of the execution, acknowledgment and
delivery of this Lease.

     XXXIII.2.  Amendments and Modifications. Neither this Lease nor any
                ----------------------------              
provision hereof may be amended, waived, discharged or terminated except by an
instrument in writing in recordable form signed by the Lessor and the Lessee.

     XXXIII.3.  No Waiver. No failure by the Lessor or the Lessee to insist upon
                ---------    
the strict performance of any term hereof or to exercise any right, power or
remedy upon a default hereunder, and no acceptance of full or partial payment of
Rent during the continuance of any such default, shall constitute a waiver of
any such default or of any such term. To the fullest extent permitted by law, no
waiver of any default shall affect or alter this Lease, and this Lease shall
continue in full force and effect with respect to any other then existing or
subsequent default.

     XXXIII.4.  Notices. All notices, demands, requests, consents, approvals and
                ------- 
other communications hereunder shall be in writing (including by facsimile), and
directed to the address of the appropriate party as set forth in Schedule I
                                                                 ----------
hereto.

     XXXIII.5.  Successors and Assigns. All the terms and provisions of this
                ----------------------                               
Lease shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.

     XXXIII.6.  Headings and Table of Contents. The headings and table of
                ------------------------------ 
contents in this Lease are for convenience of reference only and shall not limit
or otherwise affect the meaning hereof.

     XXXIII.7.  Counterparts. This Lease may be executed in any number of
                ------------                                              
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same instrument.

                                     -49-
<PAGE>
 
     XXXIII.8.  GOVERNING LAW. THIS LEASE SHALL BE GOVERNED BY, AND CONSTRUED
                -------------                                      
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CONNECTICUT.
WITHOUT LIMITING THE FOREGOING, IN THE EVENT THAT THIS LEASE IS DEEMED TO
CONSTITUTE A FINANCING, WHICH IS THE INTENTION OF THE PARTIES, THE LAWS OF THE
STATE OF CONNECTICUT, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, SHALL
GOVERN THE CREATION, TERMS AND PROVISIONS OF THE INDEBTEDNESS EVIDENCED HEREBY.

     XXXIII.9.  Original Lease. The single executed original of this Lease
                --------------                             
marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART" on the signature
page thereof and containing the receipt of the Lessor therefor on or following
the signature page thereof shall be the Original Executed Counterpart of this
Lease (the "Original Executed Counterpart"). To the extent that this Lease
            -----------------------------                                 
constitutes chattel paper, as such term is defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction, no security interest in this
Lease may be created through the transfer or possession of any counterpart other
than the Original Executed Counterpart.

     XXXIII.10.  Waiver of Jury Trial.  THE PARTIES HERETO HEREBY KNOWINGLY,
                 --------------------                                       
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS LEASE AND/OR ANY OF THE OTHER OPERATIVE DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED THEREBY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF SUCH PARTIES.  THE PARTIES
HERETO ACKNOWLEDGE AND AGREE THAT THEY HAVE RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PARTIES ENTERING INTO THE LEASE AND EACH SUCH OTHER OPERATIVE
DOCUMENT.

     XXXIII.11. Compliance with Loan Documents. Lessor covenants and agrees
                ------------------------------                           
with Lessee that Lessor shall (a) not without the express written consent of the
Lessee, which consent shall not be unreasonably withheld, enter into any
amendments or modifications of the FBTC Loan Agreement, the Lessor Pledge
Agreement or any of the Loan Documents to which it is a party and (b) comply
with the terms of the FBTC Loan Agreement, the Lessor Pledge Agreement and the
Loan Documents to which it is a party.

     XXXIII.12. Payment of Equity Balance; Transfer of Beneficial Interest in
                -------------------------------------------------------------
Lessor. In the event the Lessee exercises its right to pay the Equity Balance to
------
he Lessor as set forth in this Lease, the Lessee shall not pay such Equity
Balance without complying with the provisions of the Nomura Loan Agreement. The
parties further agree that as soon as possible (time being of the essence) after
the payment by the Lessee to the Lessor of the Equity Balance or upon the
Lessor's exercise of all its rights under the Securities Pledge Agreement and
the Certificate Pledge Agreement, including, without limitation, its rights to
possess the Pledged Securities and the Certificate A, the Lessee shall accept a
transfer requested of it by the beneficial owner of the Lessor of its equity
interest in the Lessor. The Lessee and Lessor agree to execute all documents
reasonably necessary to effectuate such transfer. The acquisition by the Lessee
of the equity interest in the Lessor shall comply with the provisions of the
Nomura Loan Agreement.

                                     -50-
<PAGE>
 
     XXXIII.13. Concerning the Lessor. This Lease has been executed by
                ---------------------                      
Wilmington Trust Company solely in its capacity as Trustee under the Trust
Agreement and not in its individual capacity and in no case shall the Trust
Company (or any entity acting as successor or additional Trustee under the Trust
Agreement) be personally liable for or on account of any of the statements,
representations, warranties, covenants or obligations of the Trust, the Trustee
or the Lessor hereunder, any such liabilities being hereby waived by the other
parties hereto provided, that Wilmington Trust Company accepts the benefits of
               --------        
running to it hereunder and agrees that it shall be liable in its individual
capacity for its own gross negligence or willful misconduct. If a successor
Trustee is appointed in accordance with the terms of the Trust Agreement, such
successor Trustee shall, without any further act, succeed to all the rights,
duties, immunities and obligations of the Lessor hereunder and the predecessor
Trustee shall be released from all further duties and obligations hereunder
arising after such successor Trustee will have been appointed.

                                     -51-
<PAGE>
 
     IN WITNESS WHEREOF, the parties have caused this Lease be duly executed and
delivered as of the date first above written.


                                BROOKDALE LIVING COMMUNITIES OF 
                                   CONNECTICUT, INC.,



                                By
                                  ----------------------------------------------
                                  Name:
                                  Title:


                                      S-1
<PAGE>
 
Commitment:                     THE GABLES BUSINESS TRUST
----------                                         
                                By Wilmington Trust Company, not in its
                                individual capacity but as Trustee

$23,125,000


                                By
                                  ----------------------------------------------
                                  Patricia A. Evans
                                  Financial Services Officer


                                      S-2
<PAGE>
 
THIS COUNTERPART IS NOT THE ORIGINAL EXECUTED COUNTERPART.

Receipt of this original counterpart of the foregoing Lease is hereby
acknowledged as of the date hereof.


                                NOMURA ASSET CAPITAL CORPORATION



                                By /s/ Raymond M. Anthony
                                   ---------------------------------
                                   Raymond M. Anthony
                                   Managing Director


                                      S-3
<PAGE>
 
                                  SCHEDULE I

                              NOTICE INFORMATION

Lessee
------

Brookdale Living Communities of Connecticut, Inc.
c/o Brookdale Living Communities, Inc.
77 West Wacker Drive
Chicago, Illinois 60601
Attention: Mark J. Schulte
Telephone No.:(312) 977-3690
Facsimile No.: (312) 977-3699

with copies delivered concurrently to:

Brookdale Living Communities of Connecticut, Inc.
c/o Brookdale Living Communities, Inc.
77 West Wacker Drive
Chicago, Illinois 60601
Attention: Darryl W. Copeland, Jr.
Telephone No.:(312) 977-3692
Facsimile No.: (312) 977-3699

Brookdale Living Communities of Connecticut, Inc.
c/o Brookdale Living Communities, Inc.
77 West Wacker Drive
Chicago, Illinois 60601
Attention: Robert J. Rudnik, Esquire
Telephone No.:(312) 977-3360
Facsimile No.: (312) 977-3701

Frank J. Saccomandi, III, Esquire
Murtha, Cullina, Richter and Pinney
185 Asylum Street - CityPlace I
Hartford, Connecticut  06103
Telephone Number: 860-240-6043
Facsimile Number: 860-240-6150
<PAGE>
 
Lessor
------

The Gables Business Trust
c/o Wilmington Trust Company
1100 North Market Street
Wilmington, Delaware 19890-0001

------------------------------

------------------------------
Attention: Corporate Trust Administration
Telephone No.: 302-651-8882
Facsimile No.: 302-651-1000
<PAGE>
 
                                                                       EXHIBIT A
                                                                       ---------


                            FORM OF FUNDING REQUEST



TO:  The Gables Business Trust

     -----------------------

     -----------------------


     Reference is hereby made to the Lease dated as of November __, 1997, as it
may be amended from time to time (the "Lease"), between Brookdale Living
                                       -----                            
Communities of Connecticut, Inc. (the "Company") and The Gables Business Trust.
                                       -------                                  
Capitalized terms not otherwise defined herein are used herein as defined in
Appendix 1 to the Lease.
----------              

     The Company hereby requests the making of an Advance in the amount of
$____________ on _____________, 199_ (the "Requested Funding Date").
                                           ----------------------   

     In connection with such requested Advance, the Company hereby represents
and warrants to you as follows:

          (a) The Advance will be allocated as follows:

              (i)   ___________ of the Advance shall be used solely to provide
          the Company with funds with which to pay or reimburse itself for
          Property Cost.

              (ii)  $___________ of the Advance shall be used to pay or
          reimburse the Company for Transaction Expenses paid or payable by the
          Company in connection with the Operative Documents and fees paid or
          payable by the Company to the Lessor in connection with the Operative
          Documents and any amounts paid or payable by the Company pursuant to
          Section 31.1 of the Lease, and
          ------------                  

          (b) On and as of the Requested Funding Date the representations and
     warranties of the Company contained in the Lease and in each of the other
     Operative Documents are true and correct in all material respects as though
     made on and as of such date, except to the extent such representations or
     warranties relate solely to an earlier date, in which case such
     representations and warranties were true and correct in all material
     aspects on and as of such earlier date;

          (c) On and as of the Requested Funding Date there are no actions,
     suits or proceedings pending or, to the knowledge of the Company,
     threatened (i) that are reasonably likely to have a Material adverse effect
     on the Property or (ii) that question the validity of the Operative
     Documents or the rights or remedies of the Lessor with respect to the
     Company or the Property under the Operative Documents;
<PAGE>
 
          (d) To the knowledge of the Company, there have been no Liens against
     the Property since the recordation of the Deed other than Permitted Liens;

          (e) On and as of the Requested Funding Date no Default or Event or
     Default under the Lease has occurred and is continuing, and no Default or
     Event of Default under the Lease will have occurred after giving effect to
     the making of the Advance requested hereby; and

          (f) All of the applicable conditions precedent to this Advance under
     Article IV of the Lease have been satisfied.

     Please wire transfer the proceeds of the Advance requested hereby (other
than proceeds described in paragraph (a)(iv) of this Funding Request) to
                           -----------------                            
____________.

     The Company has caused this Funding Request to be executed and delivered by
its duly authorized Responsible Employee this */_______ day of __________,
199_.




                              BROOKDALE LIVING COMMUNITIES OF CONNECTICUT, INC.,

                              By
                                --------------------------
                                Name:
                                Title:


-------------------------
*/  Funding Request must be delivered not later than 9:00 A.M., New York City
time, five (5) Business Days prior to the Requested Funding Date.

<PAGE>
 
                                                                       EXHIBIT C
                                                                       ---------

               BROOKDALE LIVING COMMUNITIES OF CONNECTICUT, INC.,

                       Responsible Employee's Certificate
                    Pursuant to Section 4.3(g) of the Lease

                            -----------------------
          

     The undersigned certifies that he is the duly appointed and acting
[____________] of BROOKDALE LIVING COMMUNITIES OF CONNECTICUT, INC., (the
"Company"), and is familiar with the terms and provisions of the Lease, dated as
--------                                                                        
of November __, 1997 (the "Lease"), among the Company, as the Lessee, The Gables
Business Trust, as the Lessor, and the transactions and documents contemplated
thereby.  Capitalized terms used herein but not defined shall have the meanings
ascribed to them in Appendix 1 to the Lease.
                    ----------              

     Pursuant to Section 4.3(g) of the Lease, the undersigned, as [____________]
                 --------------                                                 
of the Company, further certifies that:  (i) each and every representation and
warranty of the Company contained in each Operative Document to which is a party
is true and correct in all material respects on and as of the Acquisition Date;
(ii) to the best of the undersigned's knowledge, no Default or Event of Default
has occurred and is continuing under any Operative Document to which the Company
is a party with respect to the Company; (iii) each Operative Document to which
the Company is a party is in full force and effect with respect to the Company;
and (iv) the Company has duly performed and complied in all material respects
with all covenants, agreements and conditions contained in the Lease or in any
other Operative Document required to be performed or complied with by it on or
prior to such Acquisition Closing Date.

     IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
this ____ day of __________, 199__.

                              BROOKDALE LIVING COMMUNITIES OF CONNECTICUT, INC.,


                              -----------------------------
                              Name:
                              Title:
<PAGE>
 
                               TABLE OF CONTENTS

Section                                                               Page
-------                                                               ----

                     ARTICLE I DEFINITIONS; INTERPRETATION
1.1.  Definitions; Interpretation...................................... 1

                          ARTICLE II PURCHASE AND LEASE
2.1.  Acceptance and Lease of Property................................. 1
2.2.  Acceptance Procedure............................................. 1
2.3.  Lease Term....................................................... 2
2.4.  Title............................................................ 2

                      ARTICLE III FUNDING OF THE ADVANCE
3.1.  Lessor Commitment................................................ 2
3.2.  Procedures for Advance........................................... 2

                        ARTICLE IV CONDITIONS PRECEDENT
4.1.  Documentation Date............................................... 3
4.2.  Acquisition Date................................................. 3
4.3.  Conditions Precedent to the Acquisition Date and the Advance..... 3

                       ARTICLE V [INTENTIONALLY OMITTED]

                          ARTICLE VI REPRESENTATIONS
6.1.  Representations of the Lessor.................................... 6
6.2.  Representations of Lessee........................................ 7
6.3.  Representations of the Lessee with Respect to the Advance........10

                          ARTICLE VII PAYMENT OF RENT
7.1.  Rent.............................................................10
7.2.  Payment of Rent..................................................11
7.3.  Supplemental Rent................................................11
7.4.  Method of Payment................................................11

                ARTICLE VIII QUIET ENJOYMENT; RIGHT TO INSPECT
8.1.  Quiet Enjoyment..................................................12
8.2.  Right to Inspect.................................................12

                          ARTICLE IX NET LEASE, ETC.
9.1.  Net Lease........................................................12
9.2.  No Termination or Abatement......................................13

                              ARTICLE X SUBLEASES
10.1.  Subletting......................................................13

<PAGE>
 
                       ARTICLE XI LESSEE ACKNOWLEDGMENTS
11.1.  Condition of the Property.......................................13
11.2.  Risk of Loss....................................................14

              ARTICLE XII POSSESSION AND USE OF THE PROPERTY, ETC.
12.1.  Utility Charges.................................................14
12.2.  Possession and Use of the Property..............................14
12.3.  Compliance with Requirements of Law and Insurance Requirements..14
12.4.  Assignment by Lessee............................................14

                  ARTICLE XIII MAINTENANCE AND REPAIR; RETURN
13.1.  Maintenance and Repair; Return..................................15

                        ARTICLE XIV MODIFICATIONS, ETC.
14.1.  Modifications, Substitutions and Replacements...................15

                     ARTICLE XV WARRANT OF TITLE; EASEMENTS
15.1.  Warrant of Title................................................16
15.2.  Grants and Releases of Easements; Lessor's Waivers..............16

                         ARTICLE XVI PERMITTED CONTESTS
16.1.  Permitted Contests in Respect of Applicable Law.................17

                             ARTICLE XVII INSURANCE
17.1.  Public Liability and Workers' Compensation Insurance............18
17.2.  Hazard and Other Insurance......................................18
17.3.  Insurance Coverage..............................................18
17.4.  Insurance Proceeds..............................................19
17.5.  Insurance Requirements in Loan Documents........................19

         ARTICLE XVIII CASUALTY AND CONDEMNATION;ENVIRONMENTAL MATTERS
18.1.  Casualty and Condemnation.......................................20
18.2.  Environmental Matters...........................................21
18.3.  Notice of Environmental Matters.................................21
18.4.  Environmental Obligations of the Lessor Pursuant to the
        Nomura Loan Agreement..........................................21

                       ARTICLE XIX TERMINATION OF LEASE
19.1.  Termination upon Certain Events.................................21
19.2.  Termination Procedures..........................................22

                         ARTICLE XX EVENTS OF DEFAULT
20.1.  Events of Default...............................................22
20.2.  Remedies........................................................24
20.3.  Waiver of Certain Rights........................................27


                         ARTICLE XXI LESSOR ASSIGNMENT
<PAGE>
 
21.1.  Assignment......................................................27

                        ARTICLE XXII PURCHASE PROVISIONS
22.1.  Purchase Option.................................................28

                        ARTICLE XXIII RENEWAL PROCEDURES
23.1.  Renewal.........................................................28

                         ARTICLE XXIV REMARKETING OPTION
24.1.  Option to Remarket..............................................29
24.2.  Certain Obligations Continue....................................32

           ARTICLE XXV PROCEDURES RELATING TO PURCHASE OR REMARKETING
25.1.  Provisions Relating to the Exercise of Purchase Option and
     Conveyance Upon Remarketing and Conveyance Upon
     Certain Other Events..............................................32

                          ARTICLE XXVI INDEMNIFICATION
26.1.  General Indemnification.........................................33
26.2.  End of Term Indemnity...........................................34
26.3.  Environmental Indemnity.........................................35
26.4.  Proceedings in Respect of Claims................................36
26.5.  General Tax Indemnity...........................................37
26.6.  Funding Losses..................................................42
26.7.  Regulation D Compensation.......................................42
26.8.  Deposits Unavailable............................................42
26.9.  Illegality......................................................43
26.10.  Increased Cost and Reduced Return..............................43

                      ARTICLE XXVII ESTOPPEL CERTIFICATES
27.1.  Estoppel Certificates...........................................44

                    ARTICLE XXVIII ACCEPTANCE OF SURRENDER
28.1.  Acceptance of Surrender.........................................45

                        ARTICLE XXIX NO MERGER OF TITLE
29.1.  No Merger of Title..............................................45

                       ARTICLE XXX INTENT OF THE PARTIES
30.1.  Ownership of the Property.......................................45

                   ARTICLE XXXI PAYMENT OF CERTAIN EXPENSES
31.1.  Transaction Expenses............................................46
31.2.  Brokers' Fees and Stamp Taxes...................................46

            ARTICLE XXXII OTHER COVENANTS AND AGREEMENTS OF LESSEE
32.1.  Covenants.......................................................47
<PAGE>
 
 
                         ARTICLE XXXIII MISCELLANEOUS
33.1.  Survival; Severability; Etc.....................................49
33.2.  Amendments and Modifications....................................49
33.3.  No Waiver.......................................................49
33.4.  Notices.........................................................49
33.5.  Successors and Assigns..........................................49
33.6.  Headings and Table of Contents..................................49
33.7.  Counterparts....................................................49
33.8.  GOVERNING LAW...................................................49
33.9.  Original Lease..................................................50
33.10. Waiver of Jury Trial............................................50
33.11. Compliance with Loan Documents..................................50
33.12. Payment of Equity Balance; Transfer of Beneficial
       Interest in Lessor..............................................50
33.13. Concerning the Lessor...........................................50
 

<PAGE>
 
Schedules

SCHEDULE I    Notice Information
SCHEDULE II   FBTC Basic Rent

Exhibits

EXHIBIT A     Funding Request
EXHIBIT B     Lease Supplement
EXHIBIT C     Responsible Employee's Certificate
<PAGE>
 
                                  APPENDIX 1
                                      to
                                     Lease
                                     -----

                        DEFINITIONS AND INTERPRETATION


     A.   Interpretation.  In each Operative Document, unless a clear contrary
          --------------                                                      
intention appears:

          (i)   the singular number includes the plural number and vice versa;
                                                                   ---- ----- 

          (ii)  reference to any Person includes such Person's successors and
     assigns but, if applicable, only if such successors and assigns are
     permitted by the Operative Documents, and reference to a Person in a
     particular capacity excludes such Person in any other capacity or
     individually;

          (iii) reference to any gender includes each other gender;

          (iv)  reference to any agreement (including any Operative Document),
     document or instrument means such agreement, document or instrument as
     amended or modified and in effect from time to time in accordance with the
     terms thereof and, if applicable, the terms of the other Operative
     Documents and reference to any promissory note includes any promissory note
     which is an extension or renewal thereof or a substitute or replacement
     therefor;

          (v)   reference to any Applicable Law means such Applicable Law as
     amended, modified, codified, replaced or reenacted, in whole or in part,
     and in effect from time to time, including rules and regulations
     promulgated thereunder and reference to any section or other provision of
     any Applicable Law means that provision of such Applicable Law from time to
     time in effect and constituting the substantive amendment, modification,
     codification, replacement or reenactment of such section or other
     provision;

          (vi)  reference in any Operative Document to any Article, Section,
     Appendix, Schedule or Exhibit means such Article or Section thereof or
     Appendix, Schedule or Exhibit thereto;
<PAGE>
 
          (vii)   "hereunder", "hereof", "hereto" and words of similar import
     shall be deemed references to an Operative Document as a whole and not to
     any particular Article, Section or other provision thereof;

          (viii)  "including" (and with correlative meaning "include") means
     including without limiting the generality of any description preceding such
     term;

          (ix)    relative to the determination of any period of time, "from"
     means "from and including" and "to" means "to but excluding";

          (x)     terms used herein or in the Lease but not otherwise defined
therein shall have the meanings specified therefor in the Nomura Loan Agreement.
 
     B.   Accounting Terms.  In each Operative Document, unless expressly
          ----------------                                               
otherwise provided, accounting terms shall be construed and interpreted, and
accounting determinations and computations shall be made, in accordance with
GAAP.

     C.   Conflict in Operative Documents.  If there is any conflict between any
          -------------------------------                                       
Operative Documents, such Operative Document shall be interpreted and construed,
if possible, so as to avoid or minimize such conflict but, to the extent (and
only to the extent) of such conflict, the Nomura Loan Agreement shall prevail
and control.

     D.   Legal Representation of the Parties.  The Operative Documents were
          -----------------------------------                               
negotiated by the parties with the benefit of legal representation and any rule
of construction or interpretation otherwise requiring the Operative Document to
be construed or interpreted against any party shall not apply to any
construction or interpretation hereof or thereof.

     E.   Defined Terms.  Unless a clear contrary intention appears, terms
          -------------                                                   
defined herein have the respective indicated meanings when used in each
Operative Document.  Terms used herein and in the Lease but not defined herein
or in the Lease shall have the meanings ascribed to them in the Nomura Loan
Agreement.

     "Acquisition Date" is defined in Section 4.2 of the Lease.
      ----------------                -----------              

     "Advance" means the advance of funds by the Lessor pursuant to Article III
      -------                                                       -----------
of the Lease.

     "After Tax Basis" means, with respect to any payment to be received, the
      ---------------                                                        
amount of such payment increased so that, after deduction of the amount of all
taxes required to be paid by the recipient (less any tax savings realized and
the present value of any tax savings projected to be realized by the recipient
as a result of the payment of the indemnified amount) with respect to the
receipt by the recipient of such amounts, such increased payment (as so reduced)
is equal to the payment otherwise required to be made.
<PAGE>
 
     "Alternate Base Rate" means, for any period, an interest rate per annum
      -------------------                                                   
equal to the sum of (i) the Federal Funds Effective Rate most recently
determined by the Lessor plus .50% and (ii) the Applicable Margin.  If the
                         ----                                             
aforesaid rate changes from time to time after the date of the Lease, the
Alternate Base Rate shall be automatically increased or decreased, if
appropriate and as the case may be, without notice to the Lessee as of the
effective time of each change.

     "Applicable Law" means all existing and future applicable laws, rules,
      --------------                                                       
regulations (including Environmental Laws) statutes, treaties, codes,
ordinances, permits, certificates, orders and licenses of and interpretations
by, any Governmental Authority, and applicable judgments, decrees, injunctions,
writs, orders or like action of any court, arbitrator or other administrative,
judicial or quasi-judicial tribunal or agency of competent jurisdiction
(including those pertaining to health, safety or the environment (including,
without limitation, wetlands) and those pertaining to the construction, use or
occupancy of the Property) and any restrictive covenant or deed restriction or
easement of record affecting the Property or any other Material Assets.

     "Applicable Margin" means at any time 0.50% per annum.
      -----------------                                    

     "Appraisal" means an appraisal of the Property, which Appraisal complies in
      ---------                                                                 
all material respects (as determined by the reasonable judgment of counsel for
the Lessor) with the requirements of the Financial Institutions Reform, Recovery
and Enforcement Act of 1989, as amended, the rules and regulations adopted
pursuant thereto, and all other applicable Requirements of law, and will
appraise the Fair Market Sales Value of such Property, in form and substance
reasonably satisfactory to the Lessor, prepared by American Appraisal Associates
or another reputable appraiser selected by the Lessor.

     "Appurtenant Rights" means (i) all agreements, easements, rights of way or
      ------------------                                                       
use, rights of ingress or egress, privileges, appurtenances, tenements,
hereditaments and other rights and benefits at any time belonging or pertaining
to the Land or the Improvements, including, without limitation, the use of any
streets, ways, alleys, vaults or strips of land adjoining, abutting, adjacent or
contiguous to the Land and (ii) all permits, licenses and rights, whether or not
of record, appurtenant to the Land.

     "Architect" means, with respect to the Property, the architect acting in
      ---------                                                              
such capacity. Any requirement in any Operative Document that a certificate of
the Architect be delivered shall be satisfied by delivery of certificate(s) from
one or more of the foregoing so long as such certificates collectively satisfy
the requirements set forth in such Operative Documents.

     "Base Lease Term" is defined in Section 2.3 of the Lease.
      ---------------                -----------              

     "Basic Rent" means Debt Service, Basic Carrying Costs Monthly Installments,
      ----------                                                                
Operating Expense Monthly Installments and Capital Reserve Monthly Installments,
each to the extent required to be paid under the Nomura Loan Agreement and FBTC
Basic Rent and Lessor Basic Rent.

                                      -3-
<PAGE>
 
     "Break Costs" means an amount equal to the amount, if any, required to
      -----------                                                          
compensate the Lessor for any additional losses (including, any loss, cost or
expense incurred by reason of the liquidation or reemployment of deposits or
funds acquired by the Lessor to fund its obligations hereunder, swaps, hedges or
similar transactions entered into in connection with or in contemplation of
transactions relating to the Property) it may reasonably incur as a result of
(x) the Lessee's payment of Rent or Lease Balance other than on a Payment Date,
(y) the Advance not being made on the date specified therefore in the Funding
Request (other than as a result of a breach by the Lessor if its obligation
under Section 3.1 of the Lease to make the Advance), or (z) as a result of any
conversion of the Eurodollar Rate in accordance with Section 26.8 or 26.9 of the
Lease.  A statement as to the amount of such loss, cost of expense, prepared in
good faith and in reasonable detail and submitted by the Lessor to the Lessee,
shall be conclusive and binding for all purposes absent manifest error.

     "Board" means the Board of Governors of the Federal Reserve System of the
      -----                                                                   
United States (or any successor).

     "CERCLA" means the Comprehensive Environmental Response, Compensation, and
      ------                                                                   
Liability Act of 1980, 42 U.S.C. (S)(S) 9601 et seq., as amended by the
                                             -- ---                    
Superfund Amendments and Reauthorization Act of 1986.

     "Casualty" means any damage or destruction of all or any portion of the
      --------                                                              
Property as a result of a fire or other casualty.

     "Certificate A" means the accreting investment certificate, in the
      -------------                                                    
principal amount of $3,931,250.00 issued by The Fuji Bank and Trust Company and
pledged to the Lessee pursuant to the Certificate Pledge Agreement.

     "Certificate Pledge Agreement" means the Certificate Pledge Agreement,
      ----------------------------                                         
dated as of November 21, 1997, between the Lessee and the Lessor pursuant to
which the Lessee pledged Certificate A to the Lessor.

     "Certifying Party" is defined in Section 27.1 of the Lease.
      ----------------                ------------              

     "Claims" means any and all obligations, liabilities, losses, actions,
      ------                                                              
suits, judgments, penalties, fines, claims, demands, settlements, costs and
expenses (including, without limitation, reasonable legal fees and expenses) of
any nature whatsoever.

     "Commitment" means the obligation of the Lessor to make the Advance to the
      ----------                                                               
Lessee in an aggregate principal amount not to exceed the amount set forth
opposite the Lessor's name on its signature page to the Lease.

                                      -4-
<PAGE>
 
     "Condemnation" means any condemnation, requisition, confiscation, seizure
      ------------                                                            
or other taking or sale of the use, access, occupancy, easement rights or title
to the Property or any part thereof, wholly or partially (temporarily or
permanently), by or on account of any actual or threatened eminent domain
proceeding or other taking of action by any Person having the power of eminent
domain, including an action by a Governmental Authority to change the grade of,
or widen the streets adjacent to, the Property or alter the pedestrian or
vehicular traffic flow to the Property so as to result in change in access to
the Property, or by or on account of an eviction by paramount title or any
transfer made in lieu of any such proceeding or action.  A "Condemnation" shall
                                                            ------------       
be deemed to have occurred on the earliest of the dates that use, occupancy or
title vests in the condemning authority.

     "Contingent Rental Adjustment" means the sum of (a) the maximum amount
      ----------------------------                                         
(calculated as a percentage of the Fair Market Sales Value of the Property as
set forth in the Appraisal) that when present valued with the minimum Basic Rent
payments to be made during the Term permits the Lease to be characterized as an
"operating lease" in accordance with the Statement of Financial Accounting
Standards No. 13 as in effect on the Acquisition Date and permits recourse to
the Lessee , which in no event shall be less than all amounts due and owing
under the Nomura Loan Agreement and (b) any additional amount required to prepay
the Loan or defease the Loan in whole or in part pursuant to the Nomura Loan
Agreement, including, but not limited to, the Defeasance Deposit or the Yield
Maintenance Premium, as applicable , and all costs and fees payable in
connection therewith.

     "Control" means (including the correlative meanings of the terms
      -------                                                        
"controlled by" and "under common control with"), as used with respect to any
Person, the possession directly or indirectly, of the power to direct or cause
the direction of the management policies of such Person, whether through the
ownership of voting securities or other beneficial interests or by contract or
otherwise.

     "Custodian" means Wilmington Trust company, as custodian under the
      ---------                                                        
Securities Pledge Agreement.

     "Debt" means, for any Person, (i) all indebtedness of such Person for
      ----                                                                
borrowed money or for the deferred purchase price of property or services, (ii)
all obligations of such Person under any conditional sale or other title
retention agreement relating to property purchased by such Person, (iii) all
indebtedness for borrowed money or for the deferred purchase price of property
or services secured by (or for which the holder of such indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien on any
property owned by such Person, whether or not such indebtedness has been
assumed, and (iv) all obligations of such Person as lessee under leases that
have been or should be, in accordance with generally accepted accounting
principles, recorded as capital leases.

     "Deed" means a limited warranty deed with respect to the real property
      ----                                                                 
comprising the Property, in conformity with Applicable Law and appropriate for
recording with the applicable 


                                      -5-

<PAGE>
 
Governmental Authorities, conveying fee simple title to such real property to
the Lessor, subject only to Permitted Liens.

     "Default" means any event or condition which, with the lapse of time or the
      -------                                                                   
giving of notice, or both, would constitute an Event of Default.

     "Documentation Date" is defined in Section 4.1 of the Lease.
      ------------------                -----------              

     "Dollars" and "$" mean dollars in lawful currency of the United States of
      -------       -                                                         
America.

     "End of the Term Report" is defined in Section 26.2(a) of the Lease.
      ----------------------                ---------------              

     "Environmental Audit" means a Phase One environmental site assessment (the
      -------------------                                                      
scope and performance of which meets or exceeds ASTM Standard Practice E1527-93
Standard Practice for Environmental Site Assessments:  Phase One Environmental
Site Assessment Process) of the Property, and, if called for by the Phase One
assessment, a Phase Two environmental site assessment.

     "Environmental Law" means, whenever enacted or promulgated, any applicable
      -----------------                                                        
Federal, state, county or local law, statute, ordinance, rule, regulation,
license, permit, authorization, approval, covenant, criteria, administrative or
court order, judgment, decree, injunction, code or requirement or any agreement
with a Governmental Authority:

          (x) relating to pollution (or the cleanup, removal, remediation or
     encapsulation thereof, or any other response thereto), or the regulation or
     protection of human health, safety or the environment, including air,
     water, vapor, surface water, groundwater, drinking water, land (including
     surface or subsurface), plant, aquatic and animal life, or

          (y) concerning exposure to, or the use, containment, storage,
     recycling, treatment, generation, discharge, emission, Release or
     threatened Release, transportation, processing, handling, labeling,
     containment, production, disposal or remediation of any Hazardous
     Substance.

in each case as amended and as now or hereafter in effect.  Applicable laws
include, but are not limited to, CERCLA; the Resource Conservation and Recovery
Act of 1976, 42 U.S.C. (S) 6901 et seq.; the Federal Water Pollution Control
                                -- ---                                      
Act, 33 U.S.C. (S) 1251 et seq.; the Clean Air Act, 42 U.S.C. (S)(S) 7401 et
                        -- ---                                            --
seq.; the National Environmental Policy Act, 42 U.S.C. (S) 4321; the Refuse Act,
---                                                                             
33 U.S.C. (S)(S) 401 et seq.; the Hazardous Materials Transportation Act of
                     -- ---                                                
1975, 49 U.S.C. (S)(S) 1801-1812; the Toxic Substances Control Act, 15 U.S.C.
(S)(S) 2601 et seq.; the Federal Insecticide, Fungicide, and Rodenticide Act, 7
            -- ---                                                             
U.S.C. (S)(S) 136 et seq.; the Safe Drinking Water Act, 42 U.S.C. (S)(S) 300f et
                  -- ---                                                      --
seq., each as amended and as now or hereafter in effect, and their state and
---                                                                         
local counterparts or equivalents, including any regulations promulgated
thereunder.

                                      -6-
<PAGE>
 
     "Environmental Violation" means any activity, occurrence or condition that
      -----------------------                                                  
violates or results in non-compliance with any Environmental Law in any Material
respect.

     "Equipment" means all of Lessee's "equipment," as such term is defined in
      ---------                                                               
the UCC, and, to the extent not included in such definition, all fixtures,
appliances, machinery, furniture, furnishings, decorations, tools and supplies,
now owned or hereafter acquired by Lessee using the proceeds of the Advance or
other funds from the Lessor, including but not limited to, all beds, linens,
radios, televisions, carpeting, telephones, cash registers, computers, lamps,
glassware, restaurant and kitchen equipment, all medical, dental,
rehabilitation, therapeutic and paramedic equipment and supplies, any building
equipment, including but not limited to, all heating, lighting, incinerating,
waste removal and power equipment, engines, pipes, tanks, motors, conduits,
switchboards, security and alarm systems, plumbing, lifting, cleaning, fire
prevention, fire extinguishing, refrigeration, washing machines, dryers, stoves,
refrigerators, ventilating, and communications apparatus, air cooling and air
conditioning apparatus, escalators, elevators, ducts, and compressors, materials
and supplies, and all other machinery, apparatus, equipment, fixtures and
fittings now owned or hereafter acquired by Lessee using proceeds of the Advance
or other funds from the Lessor, wherever located, any portion thereof or any
appurtenances thereto, together with all additions, replacements, parts,
fittings, accessions, attachments, accessories, modifications and alterations of
any of the foregoing.

     "Equity Balance" means an amount equal to the sum of (a) the aggregate
      --------------                                                       
amount of the Certificate A, inclusive of principal and accrued interest thereon
in accordance with Schedule II to the Lease, (b) $693,750.00, (c) all due and
unpaid FBTC Basic Rent, Lessor Basic Rent and Supplemental Rent to which the
Lessor is entitled and (d) all accrued interest on the Pledged Securities that
has not been paid to the Lessor pursuant to the Securities Pledge Agreement.

     "ERISA" means the Employee Retirement Income Security Act of 1974, as
      -----                                                               
amended from time to time or any successor Federal statute.

     "Eurocurrency Reserve Requirements" means, for any day as applied to a
      ---------------------------------                                    
payment of Rent, the aggregate (without duplication) of the rates (expressed as
a decimal fraction) of reserve requirements in effect on such day (including,
without limitation, basic, supplemental, marginal and emergency reserves under
any regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board) maintained by a member bank of the Federal Reserve
System.

     "Eurodollar Lease Rate" means, during any Interest Period, the rate per
      ---------------------                                                 
annum equal to the sum of the Eurodollar Rate for such Interest Period plus the
Applicable Margin.

     "Eurodollar Rate" means the rate per annum at which deposits in Dollars
      ---------------                                                       
appear with respect to such Interest Period on the Telerate Page 3750 (or any
successor page), in each case as of 11:00 a.m. (London time) two Business Days
prior to the beginning of such Interest 

                                      -7-
<PAGE>
 
Period, or if such rate is not available, then the average (rounded upward, if
necessary, to the nearest multiple of one-sixteenth of one percent) of the
offered rates per annum at which Dollars appear with respect to such Interest
Period on the Reuters Screen LIBO Page (or any successor).

     "Event of Default" is defined in Section 20.1.
      ----------------                ------------ 
 
     "Excess Proceeds" means the excess, if any, of the aggregate of all awards,
      ---------------                                                           
compensation or insurance proceeds payable in connection with a Casualty or
Condemnation over the sum of the Lease Balance paid by the Lessee pursuant to
Articles XVII and XIX of the Lease with respect to such Casualty or Condemnation
-------------     ---                                                           
and all proceeds received by the Lessor in connection with any sale of the
Property pursuant to the Lessor's exercise of remedies under Section 20.2 of the
                                                             ------------       
Lease or the Lessee's exercise of the Remarketing Option under Article XXIV of
                                                               ------------   
the Lease.

     "Expiration Date" means, unless the Lease shall have been earlier
      ---------------                                                 
terminated in accordance with the provisions of the Lease or the other Operative
Documents, November 11, 2002, or if the Base Lease Term has been extended in
accordance with Article XXIII of the Lease, the last day of the most recent
                -------------                                              
Renewal Term, provided, however, the Expiration Date for the final potential
              --------  -------                                             
Renewal Term under the Lease shall be November 11, 2013.

     "Fair Market Sales Value" means the amounts, which in any event shall not
      -----------------------                                                 
be less than zero, that would be paid in cash in an arm's-length transaction
between an informed and willing purchaser and an informed and willing seller,
neither of whom is under any compulsion to purchase or sell, respectively, for
the ownership of all of the Property.  The Fair Market Sales Value of the
Property shall be determined based on the assumption that, except for purposes
of Article XX of the Lease and Section 26.2 of the Lease, the Property is in the
   ----------                  ------------                                     
condition and state of repair required under Section 13.1 of the Lease and the
                                             ------------                     
Lessee is in compliance with the other requirements of the Operative Documents.

     "FBTC" means FBTC Leasing Corp., a New York corporation and its successors
      ----                                                                     
and assigns.

     "FBTC Basic Rent" means an amount payable quarterly in advance beginning on
      ---------------                                                           
the Acquisition Date in the amounts set forth next to the Acquisition Date and
the applicable Payment Date on Schedule II to the Lease.

     "FBTC Indemnity" means the Indemnity Agreement dated as of November 21,
      --------------                                                        
1997 from the Parent to the Borrower's Trustee and FBTC.

     "FBTC Loan Agreement" means the Loan Agreement, dated as of November 21,
      -------------------                                                    
1997, between The Gables Business Trust, as Borrower, and FBTC, as Lender.

                                      -8-
<PAGE>
 
     "Federal Funds Effective Rate" means, for any day, an interest rate per
      -----------------------------                                         
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a Business Day,
the average of quotations for such day on such transaction received by the
Lessor from three Federal funds brokers of recognized standing selected by it.

     "Fixtures" means all fixtures relating to the Improvements, including all
      --------                                                                
components thereof, located in or on the Improvements, together with all
replacements, modifications, alterations and additions thereto.

     "Funding Office" means the office of the Lessor identified on its signature
      --------------                                                            
page to the Lease as its Funding Office.

     "Funding Request" is defined in Section 3.2(a) of the Lease.
      ---------------                --------------              

     "GAAP" means United States generally accepted accounting principles in
      ----                                                                 
effect from time to time.

     "Governmental Action" means all permits, authorizations, registrations,
      -------------------                                                   
consents, approvals, waivers, exceptions, variances, orders, judgments, written
interpretations, decrees, licenses, exemptions, publications, filings, notices
to and declarations of or with, or required by, any Governmental Authority, or
required by any Applicable Law, and shall include, without limitation, all
environmental and operating permits and licenses that are required for the full
use, occupancy, zoning and operation of the Property.

     "Governmental Authority" means any nation or government, any state or other
      ----------------------                                                    
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.

     "Gross Proceeds" is defined in Section 24.1(k) of the Lease.
      --------------                ---------------              

     "Impositions" means any and all liabilities, losses, expenses and costs of
      -----------                                                              
any kind whatsoever for fees, taxes, levies, imposts, duties, charges,
assessments or withholdings of any nature whatsoever ("Taxes") (including,
                                                       -----              
without limitation, (i) real and personal property taxes, including personal
property taxes on the Property covered by the Lease that is classified by
Governmental Authorities as personal property, and real estate or ad valorem
taxes in the nature of property taxes; (ii) sales taxes, use taxes and other
similar taxes (including rent taxes and intangibles taxes); (iii) any excise
taxes; (iv) real estate transfer taxes, conveyance taxes, mortgage taxes,
intangible taxes, stamp taxes and documentary recording taxes and fees; (v)
taxes that are or are in the nature of franchise, income, value added, gross
receipts, privilege and doing business taxes, license and registration fees; and
(vi) assessments on the Property, including all assessments for public
improvements or benefits, whether or not such 


                                      -9-
<PAGE>
 
improvements are commenced or completed within the Term, and in each case all
interest, additions to tax and penalties thereon, which at any time may be
levied, assessed or imposed by any Federal, state or local authority upon or
with respect to (a) any Tax Indemnitee, the Property or any part thereof or
interest therein, or the Lessee or any sublessee or user of the Property; (b)
the financing, refinancing, demolition, construction, substitution, subleasing,
assignment, control, condition, occupancy, servicing, maintenance, repair,
ownership, possession, purchase, rental, lease, activity conducted on, delivery,
insuring, use, operation, improvement, transfer, return or other disposition of
the Property or any part thereof or interest therein; (c) the rentals, receipts
or earnings arising from the Property or any part thereof or interest therein;
(d) the Operative Documents or any payment made or accrued pursuant thereto; (e)
the income or other proceeds received with respect to the Property or any part
thereof or interest therein upon the sale or disposition thereof; (f) any
contract relating to the construction, acquisition or delivery of the
Improvements or any part thereof or interest therein; or (g) otherwise in
connection with the transactions contemplated by the Operative Documents.

     Notwithstanding anything in the first paragraph of this definition (except
as provided in the final paragraph of this definition) the term "Imposition"
                                                                 ---------- 
shall not mean or include:

          (i)   Taxes and impositions (other than Taxes that are, or are in the
     nature of, sales, use, rental, transfer or property taxes) that are imposed
     by any Governmental Authority and that are based upon or measured by the
     gross or net income or gross or net receipts (including any minimum taxes,
     withholding taxes or taxes on, measured by or in the nature of capital, net
     worth, excess profits, items of tax preference, capital stock, franchise,
     business privilege or doing business taxes); provided that this clause (i)
                                                  --------           ----------
     shall not be interpreted to prevent a payment from being made on an After
     Tax Basis if such payment is otherwise required to be so made;

          (ii)  any Tax or imposition to the extent, but only to such extent, it
     relates to any act, event or omission that occurs, or relates to a period,
     after the termination of the Lease (but not any Tax or imposition that
     relates to any period prior to the termination of the Lease);

          (iii) any Tax or imposition for so long as, but only for so long as,
     it is being contested in accordance with the provisions of Section 26.5(b)
                                                                ---------------
     of the Lease, provided that the foregoing shall not limit the Lessee's
                   --------                                                
     obligation under Section 26.5(b) of the Lease to advance to such Tax
                      ---------------                                    
     Indemnitee amounts with respect to Taxes that are being contested in
     accordance with Section 26.5(b) of the Lease or any expenses incurred by
                     ---------------                                         
     such Tax Indemnitee in connection with such contest;

          (iv)  any interest or penalties imposed on a Tax Indemnitee as a
     result of a breach by such Tax Indemnitee of its obligations under Section
                                                                        -------
     26.5(e) of the Lease or otherwise as a result of a Tax Indemnitee's failure
     to file any return or other documents timely and as prescribed by
     applicable law; provided that this clause (iv) shall not apply (x) if such
                     --------           -----------



                                     -10-
<PAGE>
 
     interest or penalties arise as a result of a position taken (or requested
     to be taken) by the Lessee in a contest controlled by the Lessee under
     Section 26.5(b) of the Lease or (y) if such failure is attributable to a
     ---------------
     failure by the Lessee to fulfill its obligations under the Lease with
     respect to any such return;

          (v)    any Taxes or impositions imposed upon a Tax Indemnitee with
     respect to any voluntary transfer, sale, financing or other voluntary
     disposition of any interest in the Property or any part thereof, or any
     interest therein or any interest or obligation under the Operative
     Documents, or from any sale, assignment, transfer or other disposition of
     any interest in a Tax Indemnitee or any Affiliate thereof, (other than any
     transfer in connection with (1) the exercise by the Lessee of its Purchase
     Option or any termination option or other purchase of the Property by the
     Lessee, (2) the occurrence of an Event of Default, (3) a Casualty or
     Condemnation affecting the Property, or (4) any sublease, modification or
     addition to the Property by the Lessee);

          (vi)   any Taxes or impositions imposed on a Tax Indemnitee, to the
     extent such Tax Indemnitee actually receives a credit (or otherwise has a
     reduction in a liability for Taxes) in respect thereof against Taxes that
     are not indemnified under the Lease (but only to the extent such credit is
     not taken into account in calculating the indemnity payment on an After Tax
     Basis);

          (vii)  Taxes imposed on or with respect to or payable by any Tax
     Indemnitee based on, measured by or imposed with respect to any fees
     received by such Tax Indemnitee;

          (viii) any Taxes imposed against or payable by a Tax Indemnitee
     resulting from, or that would not have been imposed but for, the gross
     negligence or willful misconduct of such Tax Indemnitee;

          (ix)   Taxes imposed on or payable by a Tax Indemnitee to the extent
     such Taxes would not have been imposed but for a breach by the Tax
     Indemnitee or any Affiliate thereof of any representations, warranties or
     covenants set forth in the Operative Documents (unless such breach is
     caused by the Lessee's breach of its representations, warranties or
     covenants set forth in the Operative Documents);

          (x)    Taxes to the extent resulting from such Tax Indemnitee's
     failure to comply with the provisions of Section 26.5(b) of the Lease,
                                              ---------------
     which failure precludes or materially adversely affects the ability to
     conduct a contest pursuant to Section 26.5(b) of the Lease (unless such
                                   ---------------
     failure is caused by the Lessee's breach of its obligations);

          (xi)   Taxes which are included in Property Cost if and to the extent
     actually paid;



                                     -11-

<PAGE>
 
          (xii)   Taxes that would have been imposed in the absence of the
     transactions contemplated by the Operative Documents and Taxes imposed on
     or with respect to or payable as a result of activities of a Tax Indemnitee
     or Affiliate thereof unrelated to the transactions contemplated by the
     Operative Documents;

          (xiii)  Taxes imposed on or with respect to or payable by a Tax
     Indemnitee resulting from, or that would not have been imposed but for the
     existence of, any Lessor Lien created by or through such Tax Indemnitee or
     an Affiliate thereof and not caused by acts or omissions of the Lessee,
     unless required to be removed by the Lessee;

          (xiv)   Any Tax imposed against or payable by a Tax Indemnitee to the
     extent that the amount of such Tax exceeds the amount of such Tax that
     would have been imposed against or payable by such Tax Indemnitee (or, if
     less, that would have been subject to indemnification under Section 26.5 of
                                                                 ------------   
     the Lease) if such Tax Indemnitee were not a direct or indirect successor,
     transferee or assign of one of the original Tax Indemnitees; provided,
                                                                  -------- 
     however, that this exclusion (xiv) shall not apply if such direct or
     -------            ---------------                                  
     indirect successor, transferee or assign acquired its interest as a result
     of a transfer while an Event of Default shall have occurred and is
     continuing;

          (xv)    Taxes imposed on or with respect to or payable by a Tax
     Indemnitee that would not have been imposed but for an amendment,
     supplement, modification, consent or waiver to any Operative Document not
     initiated, requested or consented to by the Lessee unless such amendment,
     supplement, modification, consent or waiver (A) arises due to, or in
     connection with there having occurred, an Event of Default or (B) is
     required by the terms of the Operative Documents or is executed in
     connection with any amendment to the Operative Documents required by law;

          (xvi)   Taxes in the nature of intangibles, stamp, documentary or
     similar Taxes;

          (xvii)  Taxes imposed on or with respect to or payable by a Tax
     Indemnitee or any Affiliate because such Tax Indemnitee or any Affiliate
     thereof is not a United States person within the meaning of Section
     7701(a)(30) of the Code;

          (xviii) Any tax imposed by its express terms in lieu of or in
     substitution for a Tax not subject to indemnity pursuant to the provisions
     of Section 26.5 of the Lease.
        ------------              

Notwithstanding the foregoing, the exclusions from the definition of Impositions
set forth in clauses (i), (ii), (v), (vii), (xii), (xvi) and (xviii) (to the
             -----------  ----  ---  -----  -----  -----     -------        
extent that any such tax is imposed by its express terms in lieu of or in
substitution for a Tax set forth in clauses (i), (ii), (v), (vii), (xii) and
                                    -----------  ----  ---  -----  -----    
(xvi)) above shall not apply (but the other exclusions shall apply) to any Taxes
-----                                                                           
or any increase in Taxes imposed on a Tax Indemnitee net of any decrease in
taxes realized by such Tax Indemnitee, to the extent that such tax increase or
decrease would not have occurred if on the Funding Date the Lessor had advanced
funds to the Lessee in the form of a loan secured by the 



                                     -12-
<PAGE>
 
Property in an amount equal to the Property Cost funded on the Funding Date,
with debt service for such loan equal to the Basic Rent payable on each Payment
Date and a principal balance at the maturity of such loan in an amount equal to
the then outstanding amount of the Advance at the end of the term of the Lease.

     "Improvements" means, with respect to the Property, all buildings,
      ------------                                                     
structures, Fixtures, Equipment, and other improvements of every kind existing
at any time and from time to time (including those purchased with amounts
advanced by the Lessor pursuant to the Lease) on or under the Land, together
with any and all appurtenances to such buildings, structures or improvements,
including sidewalks, utility pipes, conduits and lines, parking areas and
roadways, and including all Modifications and other additions to or changes in
the Improvements at any time and including all gas and electric fixtures,
radiators, heaters, washing machines, dryers, refrigerators, ovens, engines and
machinery, boilers, ranges, elevators and motors, plumbing and heating fixtures,
antennas, carpeting and other floor coverings, water heaters, awnings and storm
sashes, and cleaning apparatus which are or shall be attached to the Land or
said buildings, structures or improvements.

     "Indemnitee" means the Lessor , the Trust Company and FBTC, and their
      ----------                                                          
successors, permitted assigns, directors, shareholders, partners, officers,
employees and agents.

     "Institutional Lender" means an insurance company, bank, savings and loan
      --------------------                                                    
association, trust company, commercial credit corporation, pension plan, pension
fund or pension fund advisory firm, mutual fund or other investment company, or
an institution substantially similar to any of the foregoing, in each case
having at least $250 million in capital/statutory surplus or shareholders'
equity and at least $1 billion in total assets, or any entity wholly owned by
any of the institutions meeting the foregoing criteria.

     "Insurance Requirements" means all terms and conditions of any insurance
      ----------------------                                                 
policy either required by the Lease to be maintained by the Lessee, or required
by the Lender to be maintained pursuant to the Nomura Loan Agreement, and all
reasonable and appropriate requirements of the issuer of any such policy.

     "Interest Period" shall have the meaning set forth in the Nomura Loan
      ---------------                                                     
Agreement for "Interest Accrual Period".

     "Interim Lease Term" is defined in Section 2.3 of the Lease.
      ------------------                -----------              

     "Investment Company Act" means the Investment Company Act of 1940, as
      ----------------------                                              
amended, together with the rules and regulations promulgated thereunder.

     "Land" means the parcel of real property described on Annex 1 to the Lease
      ----                                                 -------             
Supplement and all Appurtenant Rights attached thereto.



                                     -13-
<PAGE>
 
     "Lease" means the Lease , dated as of the Documentation Date, between the
      -----                                                                   
Lessor and the Lessee.

     "Lease Balance" means, as of any date of determination, the sum of (a) the
      -------------                                                            
Equity Balance (if same has not been paid as of such date) (b) all other amounts
owing by the Lessor and Lessee under the Operative Documents (including all due
and unpaid Basic Rent and Supplemental Rent) and (c)  all amounts (but not
duplicative of those described in clause (b) above) due and owing or otherwise
payable pursuant to the terms of the Nomura Loan Agreement, including, without
limitation, any additional amount required to prepay the Loan or defease the
Loan in whole or in part in accordance with the terms thereof, including,
without limitation, the Defeasance Deposit or Yield Maintenance Premium, as
applicable, and  all costs and fees payable in connection therewith.

     "Lease Supplement" means the Memorandum of Lease substantially in the form
      ----------------                                                         
of Exhibit B to the Lease, executed and delivered by the Lessee and dated as of
   ---------                                                                   
the Acquisition Date for the Property.

     "Lender" means Nomura Asset Capital Corporation, together with its
      ------                                                           
successor and assigns.

     "Lessee" means Brookdale Living Communities of Connecticut, Inc., as
      ------                                                             
lessee, and its successors and assigns expressly permitted under the Operative
Documents.

     "Lessor" means The Gables Business Trust, a Delaware business trust.
      ------                                                             

     "Lessor Basic Rent" means an amount payable quarterly in advance beginning
      -----------------                                                        
on the Acquisition Date in the amount of $9,800.42 and on each third Payment
Date and the Expiration Date in an amount equal to the amount that (a) the
product of the Eurodollar Lease Rate and $693,750.00, calculated for the number
days then elapsed since the previous payment of Lessor Basic Rent over a year of
360 days, exceeds (b) interest earned on the Pledged Securities since the
previous payment of Lessor Basic Rent.

     "Lessor Lien" means any Lien, true lease or sublease or disposition of
      -----------                                                          
title arising as a result of (a) any claim against the Lessor not resulting from
the transactions contemplated by the Operative Documents (all Liens created or
existing under the Loan Documents are expressly made part of the transactions
contemplated by the Operative Documents), (b) any act or omission of the Lessor
which is not required by the Operative Documents or is in violation of any of
the terms of the Operative Documents, (c) any claim against the Lessor with
respect to Taxes or Transaction Expenses against which Lessee is not required to
indemnify Lessor pursuant to the Lease or (d) any claim against the Lessor
arising out of any transfer by the Lessor of all or any portion of the interest
of the Lessor in the Property or the Operative Documents other than the transfer
of title to or possession of the Property by the Lessor pursuant to and in
accordance with the Lease or pursuant to the exercise of the remedies set forth
in Article XX of the Lease.
   ----------              



                                     -14-
<PAGE>
 
     "Lessor Pledge Agreement" means the Pledge Agreement, dated as of the
      -----------------------                                             
Documentation Date, between the Lessor and FBTC, pursuant to which the Lessor
pledged to FBTC the Certificate A.

     "Lien" means any mortgage, deed of trust, pledge, security interest,
      ----                                                               
encumbrance, lien, easement, servitude or charge of any kind, including, without
limitation, any irrevocable license, conditional sale or other title retention
agreement, any lease in the nature thereof, or any other right of or arrangement
with any creditor to have its claim satisfied out of any specified property or
asset with the proceeds therefrom prior to the satisfaction of the claims of the
general creditors of the owner thereof, whether or not filed or recorded, or the
filing of, or agreement to execute as "debtor", any financing or continuation
statement under the Uniform Commercial Code of any jurisdiction or any federal,
state or local lien imposed pursuant to any Environmental Law.

     "Loan Documents" has the meaning specified therefor in the Nomura Loan
      --------------                                                       
Agreement.
 
     "Marketing Period" means the period commencing upon the Lessee's election
      ----------------                                                        
to exercise the Remarketing Option pursuant to Section 24.1(a) of the Lease and
                                               ---------------                 
ending on the Expiration Date.

     "Material" and "Materially" mean material to (i) as to any Person, the
      --------       ----------                                            
consolidated financial position, business or consolidated results of operations
of such Person, (ii) as to any Person, the ability of such Person to perform in
any material respect its respective obligations under the Operative Documents to
which it is a party, or (iii) the value or condition of the Property.

     "Material Assets" means with respect to any Person all material interests
      ---------------                                                         
in any kind of property or asset, whether real, personal or mixed, or tangible
or intangible.

     "Modifications" is defined in Section 14.1(a) of the Lease.
      -------------                ---------------              

     "Net Proceeds" means all amounts paid in connection with any Casualty or
      ------------                                                           
Condemnation or any sale of the Property pursuant to Lessor's exercise of
remedies under Section 20.2 of the Lease or the Lessee's exercise of the
               ------------                                             
Remarketing Option under Article XXIV of the Lease, and all interest earned
                         ------------                                      
thereon, less the expense of claiming and collecting such amounts, including all
costs and expenses in connection therewith for which the Lessor is entitled to
be reimbursed pursuant to the Lease.

     "Nomura Loan Agreement" means the Loan Agreement, dated on or about
      ---------------------                                             
November 24, 1997, by and among the Lessor, as Borrower, Nomura Asset Capital
Corporation, as Lender, and the Lessee, as Guarantor and Operator, together with
all amendments, modifications and supplements thereto.

     "Operative Documents" means the following:
      -------------------                      



                                     -15-
<PAGE>
 
          (a)  the Lease;
          (b)  the Deed;
          (c)  the Lease Supplement;
          (d)  the FBTC Loan Agreement and the note related thereto;
          (e)  the Loan Documents;
          (f)  the Certificate Pledge Agreement;
          (g)  the Securities Pledge Agreement;
          (h)  the Lessor Pledge Agreement;
          (i)  the FBTC Indemnity; and
          (j)  the Trust Agreement.

     "Overdue Rate" shall have the meaning set forth in the Nomura Loan
      ------------                                                     
Agreement for "Default Rate."

     "Parent" means Brookdale Living Communities, Inc.
      ------                                          

     "Permitted Liens" shall have the meaning set forth in the Nomura Loan
      ---------------                                                     
Agreement for "Permitted Encumbrances", and including Lessor Liens.

     "Pledge Agreements" means the Securities Pledge Agreement, the Certificate
      -----------------                                                        
Pledge Agreement and the Lessor Pledge Agreement.

     "Pledged Securities" means the securities pledged to the Lessor by the
      ------------------                                                   
Lessee pursuant to the Securities Pledge Agreement and the proceeds thereof.

     "Property" means (a) a fee interest in the Land and (b) all of the
      --------                                                         
Improvements at any time located on or under the Land.

     "Property Cost" means the amount of the Advance funded to the Lessee for
      -------------                                                          
the purpose of acquiring the Property and paying Transaction Expenses relating
to such funding and acquisition, as such amount is set forth in the Funding
Request relating to the acquisition of the Property.

     "Purchase Notice" is defined in Section 22.1 of the Lease.
      ---------------                ------------              

     "Purchase Option" is defined in Section 22.1 of the Lease.
      ---------------                ------------              

     "Release" means any release, pumping, pouring, emptying, injecting,
      -------                                                           
escaping, leaching, dumping, seepage, spill, leak, flow, discharge, disposal or
emission of a Hazardous Substance in violation of Environmental Law.

     "Remarketing Option" is defined in Section 24.1 of the Lease.
      ------------------                ------------              



                                     -16-
<PAGE>
 
     "Renewal Term" is defined in Section 23.1 of the Lease.
      ------------                ------------              

     "Rent" means, collectively, Basic Rent and Supplemental Rent, in each case
      ----                                                                     
payable under the Lease.

     "Requesting Party" is defined in Section 27.1 of the Lease.
      ----------------                ------------              

     "Required Modification" is defined in Section 14.1(a) of the Lease.
      ---------------------                ---------------              

     "Requirement of Law" means all Federal, state, county, municipal and other
      ------------------                                                       
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting the Property, the Improvements or the
demolition, construction, use or alteration thereof, whether now or hereafter
enacted and in force, including any that require repairs, modifications or
alterations in or to the Property or in any way limit the use and enjoyment
thereof (including all building, zoning and fire codes and the Americans with
Disabilities Act of 1990, 42 U.S.C. (S)(S) 1201 et seq. and any other similar
                                                -- ---                       
Federal, state or local laws or ordinances and the regulations promulgated
thereunder) and any that may relate to environmental requirements (including all
Environmental Laws), and all permits, certificates of occupancy, licenses,
authorizations and regulations relating thereto, and all covenants, agreements,
restrictions and encumbrances contained in any instruments which are either of
record or known to the Lessee affecting the Property, the Appurtenant Rights and
any easements, licenses or other agreements entered into pursuant to Section
                                                                     -------
15.2 of the Lease.
----              

     "Responsible Employee" means, with respect to the Lessee, its Chairman,
      --------------------                                                  
President, any of its corporate Vice Presidents, its corporate Controller, its
corporate Treasurer, its corporate Assistant Treasurers or others duly
authorized by such Person to execute documents pursuant to Section 4.3(g) of the
                                                           --------------       
Lease.

     "Responsible Employee's Certificate" means a certificate signed by any
      ----------------------------------                                   
Responsible Employee, which certificate shall certify as true and correct the
subject matter being certified to in such certificate.

     "Securities Pledge Agreement" means the Securities Pledge Agreement, dated
      ---------------------------                                              
as of November 21, 1997, between the Lessee and the Lessor pursuant to which the
Lessee pledged the Pledged Securities to the Lessor.

     "Seller" means the Person selling the Land to the Lessor.
      ------                                                  

     "Shortfall Amount" means, as of the Expiration Date, an amount equal to (i)
      ----------------                                                          
the Lease Balance, minus (ii) the Contingent Rental Adjustment received by the
                   -----                                                      
Lessor from the Lessee pursuant to Section 24.1(i) of the Lease, minus (iii) the
                                   ---------------               -----          
amount of the highest binding, written, unconditional, irrevocable offer to
purchase the Property obtained by the Lessee pursuant to Section 24.1(f) of the
                                                         ---------------       
Lease; provided, however, that if the sale of the Property to the Person
       --------  -------                                                



                                     -17-
<PAGE>
 
submitting such offer is not consummated on or prior to the Expiration Date,
then the term "Shortfall Amount" shall mean an amount equal to (i) the Lease
Balance, minus (ii) the Contingent Rental Adjustment received by the Lessor from
         -----                                                                  
the Lessee pursuant to Section 24.1(i) of the Lease.
                       ---------------              

     "Significant Condemnation" means a Condemnation which causes the Lender to
      ------------------------                                                 
accelerate the Principal Indebtedness under the Nomura Loan Agreement.

     "Subsidiary" of any Person means a corporation or other entity of which
      ----------                                                            
securities or other ownership interests having ordinary voting power (other than
securities or other ownership interests having such power by reason of the
happening of a contingency) to elect the majority of the board of directors or
other persons performing similar functions are at the time directly or
indirectly owned by such Person, by such Person and one or more of its
Subsidiaries or by one or more of such Person's Subsidiaries.

     "Supplemental Rent" means all amounts, liabilities and obligations (other
      -----------------                                                       
than Basic Rent) which Lessee assumes or agrees to pay to Lessor or any other
Person under the Lease or under any of the other Operative Documents, and all
amounts, liabilities and obligations (other than as described in the definition
of Basic Rent) payable by Lessor, as Borrower, under the Nomura Loan Agreement
or under any other Loan Document, including, without limitation, Break Costs,
payments of Excess Cash Flow, Initial Basic Carrying Costs Amount, Defeasance
Deposit, Impositions, the Initial Capital Reserve Amount and the Initial
Securitization Expense Amount, fees thereunder and any prepayment make whole
amounts.

     "Tax Indemnitee" means the Lessor and FBTC Leasing Corp. and their
      --------------                                                   
successors, permitted assigns, directors, shareholders, partners, officers,
employees and agents.

     "Taxes" is defined in the definition of Impositions.
      -----                                              

     "Term" means the period commencing on the Acquisition Date and ending on
      ----                                                                   
the Expiration Date.

     "Termination Date" is defined in Section 19.2 and 20.2(e) of the Lease.
      ----------------                ------------     -------              

     "Termination Notice" is defined in Section 19.1 of the Lease.
      ------------------                ------------              

     "Transaction Expenses" means all costs and expenses incurred in connection
      --------------------                                                     
with the preparation, execution and delivery of the Operative Documents and the
transactions contemplated by the Operative Documents including without
limitation:

          (a) the reasonable fees, out-of-pocket expenses and disbursements of
     counsel for each of the Lessor and the Lessee in negotiating the terms of
     the Operative Documents and the other transaction documents, preparing for
     the closing under, and 



                                     -18-
<PAGE>
 
     rendering opinions in connection with, such transactions and in rendering
     other services customary for counsel representing parties to transactions
     of the types involved in the transactions contemplated by the Operative
     Documents;

          (b) the reasonable fees, out-of-pocket expenses and disbursements of
     any law firm or other external counsel of the Lessor in connection with (1)
     any amendment, supplement, waiver or consent with respect to any Operative
     Documents requested or approved by the Lessee and (2) any enforcement of
     any rights or remedies against the Lessee in respect of the Operative
     Documents;

          (c) any other reasonable fees, out-of-pocket expenses, disbursements
     or cost of the Lessor to the Operative Documents or any of the other
     transaction documents;

          (d) any and all Taxes and fees incurred in recording, registering or
     filing any Operative Document or any other transaction document, any deed,
     declaration, mortgage, security agreement, notice or financing statement
     with any public office, registry or governmental agency in connection with
     the transactions contemplated by the Operative Documents;

          (e) any title fees, premiums and escrow costs and other expenses
     relating to title insurance and the closings contemplated by the Operative
     Documents;

          (f) all expenses relating to all Environmental Audits and other due
     diligence and other costs and expenses incurred in connection with the
     negotiation of the purchase of the Property and in connection with the
     investigation and purchase of the Property;

          (g) all Transaction Costs described in Section 8.24 of the Nomura Loan
                                                 ------------                   
     Agreement; and

          (h) all fees, out-of-pocket expenses, disbursements or costs
     (including counsel fees and expenses) of the Trustee and the Custodian
     incurred in connection with the Operative Document.

     "Trust Agreement" means the Trust Agreement, dated November 19, 1997,
      ---------------                                                     
between the Lessor and FBTC.

     "Trust Company" means Wilmington Trust Company in its individual capacity.
      -------------                                                            

     "Uniform Commercial Code" and "UCC" mean the Uniform Commercial Code as in
      -----------------------       ---                                        



                                     -19-