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                                                                   Exhibit 10.14

                      FORM OF LEASE AND SECURITY AGREEMENT

                                 BY AND BETWEEN


                       NATIONWIDE HEALTH PROPERTIES, INC.,
                             A MARYLAND CORPORATION

                                  AS "LANDLORD"


                                       AND


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

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

                                   AS "TENANT"




                           DATED _______________, 1998









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

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

                       ------------------------------------
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                               TABLE OF CONTENTS


                                                                          Page

1.       Term..............................................................
         1.1      Term.....................................................
         1.2      Renewal Terms............................................

2.       Rent..............................................................
         2.1      Initial Term Minimum Rent................................
         2.2      Initial Term Additional Rent.............................
         2.3      Renewal Term Minimum Rent................................
         2.4      Renewal Term Additional Rent.............................
         2.5      Rent Cap and Floor.......................................
         2.6      Proration for Partial Periods............................
         2.7      Forms for Additional Rent and Annual Rent Limits.........
         2.8      Absolute Net Lease.......................................

3.       Taxes, Assessments and Other Charges..............................
         3.1      Tenant's Obligations.....................................
         3.2      Proration................................................
         3.3      Right to Protest.........................................
         3.4      Tax Indemnity...........................................
         3.5      Tax Bills...............................................
         3.6      Other Charges...........................................

4.       Insurance........................................................
         4.1      General Insurance Requirements..........................
         4.2      Fire and Extended Coverage..............................
         4.3      Public Liability........................................
         4.4      Professional Liability Insurance........................
         4.5      Workers Compensation....................................
         4.6      Boiler Insurance........................................
         4.7      Business Interruption Insurance.........................
         4.8      Deductible Amounts......................................

5.       Use, Maintenance and Alteration of the Premises..................
         5.1      Tenant's Maintenance Obligations........................
         5.2      Regulatory Compliance...................................
         5.3      Permitted Use...........................................
         5.4      Tenant Repurchase Obligation............................
         5.5      No Liens; Permitted Contests............................
         5.6      Alterations by Tenant...................................
         5.7      Capital Improvements Funded by Landlord.................
         5.8      Compliance With IRS Guidelines..........................

6.       Condition of, and Title to, Premises.............................

7.       Landlord and Tenant Personal Property............................
         7.1      Tenant Personal Property................................
         7.2      Landlord's Security Interest............................
         7.3      Financing Statements....................................
         7.4      Intangible Property.....................................

8.       Representations and Warranties...................................
         8.1      Due Authorization and Execution.........................
         8.2      Due Organization........................................
         8.3      No Breach of Other Agreements...........................

9.       Financial, Management and Regulatory Reports.....................
         9.1      Monthly Facility Reports................................
         9.2      Quarterly Financial Statements..........................
         9.3      Annual Financial Statement..............................
         9.4      Accounting Principles...................................
         9.5      Regulatory Reports......................................

10.      Events of Default and Landlord's Remedies........................
         10.1     Events of Default.......................................
         10.2     Remedies................................................
         10.3     Receivership............................................
         10.4     Late Charges............................................
         10.5     Remedies Cumulative; No Waiver..........................
         10.6     Performance of Tenant's Obligations by Landlord.........

11.      Security Deposit.................................................

12.      Damage by Fire or Other Casualty.................................
         12.1     Reconstruction Using Insurance..........................
         12.2     Surplus Proceeds........................................
         12.3     No Rent Abatement.......................................

13.      Condemnation.....................................................
         13.1     Complete Taking.........................................
         13.2     Partial Taking..........................................
         13.3     Lease Remains in Effect.................................

14.      Provisions on Termination of Term................................
         14.1     Surrender of Possession.................................
         14.2     Removal of Personal Property............................
         14.3     Title to Personal Property Not Removed..................
         14.4     Management of Premises..................................
         14.5     Correction of Deficiencies..............................

15.      Notices and Demands..............................................

16.      Right of Entry; Examination of Records...........................

17.      Landlord May Grant Liens.........................................

18.      Subordination and Non-Disturbance. ..............................

19.      Quiet Enjoyment..................................................

20.      Easements, Etc...................................................

21.      Applicable Law...................................................

22.      Preservation of Gross Revenues...................................

23.      Hazardous Materials..............................................
         23.1     Hazardous Material Covenants............................
         23.2     Tenant Notices to Landlord..............................
         23.3     Extension of Term.......................................
         23.4     Participation in Hazardous Materials Claims.............
         23.5     Environmental Activities................................
         23.6     Hazardous Materials.....................................
         23.7     Hazardous Materials Claims..............................
         23.8     Hazardous Materials Laws................................

24.      Assignment and Subletting........................................

25.      Indemnification..................................................

26.      Holding Over.....................................................

27.      Estoppel Certificates............................................

28.      Conveyance by Landlord...........................................

29.      Access to Records................................................

30.      Attorneys' Fees..................................................

31.      Severability.....................................................

32.      Counterparts.....................................................

33.      Binding Effect...................................................

34.      Waiver and Subrogation...........................................

35.      Memorandum of Lease..............................................

36.      Incorporation of Recitals and Attachments........................

37.      Titles and Headings..............................................

38.      Usury Savings Clause.............................................

39.      Joint and Several................................................

40.      Survival of Representations, Warranties and Covenants............

41.      Interpretation...................................................

42.      Substitution of Property for the Premises........................

43.      WAIVER OF JURY TRIAL.............................................


EXHIBITS:

EXHIBIT A         LEGAL DESCRIPTION
EXHIBIT B         APPRAISAL PROCESS
EXHIBIT C         CALCULATION OF ADDITIONAL RENT
EXHIBIT D         PERMITTED EXCEPTIONS
EXHIBIT E         CALCULATION OF RENT CAP AND FLOOR
EXHIBIT F         SCHEDULE 1 TO FINANCING STATEMENT






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                          LEASE AND SECURITY AGREEMENT


        THIS LEASE AND SECURITY AGREEMENT ("LEASE") is made and entered into as
of the _____ day of ___________, 1998, by and between _____________________
__________________________________ ("LANDLORD"), and ___________________
_________________________________________________________ ("TENANT").

                              W I T N E S S E T H:

        WHEREAS, Landlord has acquired that certain real property, all
improvements thereon and all appurtenances thereto, located at ____________
____________________________________________________________________________
and more specifically described in EXHIBIT "A" attached hereto and incorporated
herein for all purposes (the "REAL PROPERTY"), pursuant to the terms and
provisions of that certain Option Agreement (the "PURCHASE AGREEMENT") dated
December 22, 1997 by and between BALANCED CARE CORPORATION, a Delaware
corporation ("BCC"), as buyer, and ____________________________________________
__________________________ ("SELLER"), formed and existing under the laws of or
residing in the __________________, as seller, and pursuant to the terms and
provisions of that certain Assignment of Purchase Agreement of even date
herewith, by and between BCC and Landlord, pursuant to which Landlord acquired
all of BCC's rights under the Purchase Agreement. The Real Property, together
with all subsequent improvements and appurtenances thereto, and all Landlord
Personal Property (defined below) shall be collectively referred to in this
Lease as the "PREMISES"; and

        WHEREAS, BCC has agreed to provide working capital advances to Tenant in
the event Tenant would otherwise be unable to meet Tenant's obligations under
this Lease or otherwise, pursuant to the terms and provisions of (i) that
certain Shortfall Funding Agreement ("SHORTFALL FUNDING AGREEMENT") of even date
herewith, by and between Tenant, BCC and all equity owners of Tenant, (ii) that
certain _______________________________________________________________________
("LEASEHOLD MORTGAGE") of even date herewith, by and between Tenant and BCC,
(iii) that certain Deposit Pledge Agreement ("DEPOSIT PLEDGE AGREEMENT") of even
date herewith, by and between Tenant, Landlord, BCC and all equity owners of
Tenant, (iv) that certain Option Agreement ("OPTION Agreement") of even date
herewith, by and between the equity owners of Tenant and BCC, (v) that certain
Equity Pledge Agreement of even date herewith, by and between Tenant, BCC and
all equity owners of Tenant, and (vi) that certain Working Capital Assurance
Agreement ("WORKING CAPITAL ASSURANCE AGREEMENT") of even date herewith, by and
between BCC and Landlord; and

        WHEREAS, Landlord has agreed to provide funds for the construction of
____________________________ (such type of facility being hereinafter
individually referred to as a "FACILITY" and severally referred to as
"FACILITIES"), pursuant to the terms and provisions of that certain Development
Agreement of even date herewith entered into by and between Landlord and BCC
DEVELOPMENT AND MANAGEMENT CO. ("DEVELOPER"), a Delaware corporation, all of the
issued and outstanding capital stock of Developer being owned by BCC. The
Facility to be built on the Premises pursuant to the development 


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agreement shall be deemed part of the Premises for all purposes of this Lease,
together with any furniture, machinery, equipment, appliances, fixtures,
supplies and other personal property used in connection therewith and funded by
Landlord (the "LANDLORD PERSONAL PROPERTY"); and

        WHEREAS, Tenant and ________________________________., a Delaware
corporation (the "MANAGER") have entered into a Management Agreement dated on or
about the date of this Lease (the "MANAGEMENT AGREEMENT") for the operation and
management of the applicable Facility; and

        WHEREAS, Landlord, BCC and Developer have agreed to enter into other
transactions involving the acquisition, lease, and/or development of other
tracts or parcels of real property (the "OTHER PROPERTIES") pursuant to the
terms and provisions of that certain Second Series Master Investment Agreement
("MASTER AGREEMENT") of even date herewith, and Tenant has agreed to be bound by
the Master Agreement pursuant to the terms and provisions of that certain Tenant
Estoppel Certificate of even date herewith. Any leases of such Other Properties
entered into by and between Landlord, BCC or their respective Affiliates
(defined below) shall be hereinafter collectively referred to as the "OTHER
LEASES"; and

        WHEREAS, Landlord desires to lease the Premises to Tenant, and Tenant
desires to lease the Premises from Landlord.

        NOW THEREFORE, in consideration of the mutual covenants, conditions and
agreements set forth herein, and intending to be legally bound hereby, Landlord
hereby leases and lets unto Tenant the Premises for the term and upon the
conditions and provisions hereinafter set forth.

        1. TERM.

               1.1 TERM. The term of this Lease shall commence on the date first
written above and shall end on June 30, 2009 (the "INITIAL TERM") unless
extended pursuant to Section 1.2 or earlier terminated in accordance with the
provisions hereof. The Initial Term and all Renewal Terms (as hereinafter
defined) are referred to collectively as the "TERM".

               1.2 RENEWAL TERMS. The Term may be extended for three (3)
separate renewal terms (each, a "RENEWAL TERM") of six (6) years each, upon the
satisfaction of all of the following terms and conditions:

                       1.2.1 Not more than thirty (30) days before or after the
               date which is twelve (12) months prior to the end of the then
               current Term, Tenant shall give Landlord written notice that
               Tenant desires to exercise its right to extend the then current
               Term for one (1) Renewal Term.

                       1.2.2 There shall be no Event of Default under this Lease
               or any of the Other Leases, either on the date of Tenant's notice
               to Landlord pursuant to Section 1.2.1 above, or on the last day
               of the then current Term of this Lease.


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                       1.2.3 The tenants of all the Other Leases concurrently
               exercise their respective rights to extend the then current term
               of such Other Leases, and the terms and conditions of renewal of
               such Other Leases are fully satisfied, all as provided in the
               Master Agreement and such Other Leases.

                       1.2.4 All other provisions of this Lease shall remain in
               full force and effect and shall continuously apply throughout the
               Renewal Term(s).

        2. RENT. During the Initial Term and all Renewal Terms Tenant shall pay
to Landlord minimum rent ("MINIMUM RENT") and additional rent ("ADDITIONAL
RENT") as follows:

               2.1 INITIAL TERM MINIMUM RENT. During the Initial Term, the
Minimum Rent shall accrue or be paid to Landlord by Tenant monthly in advance
and shall be calculated as follows:

                       2.1.1 CONSTRUCTION PERIOD MINIMUM RENT. During the
               Initial Term, but prior to the earliest to occur of (A)
               Substantial Completion, or (B) the Completion Date (both as
               defined in the Development Agreement) (such earliest date being
               hereinafter in this Lease referred to as the "RESET DATE"),
               Minimum Rent shall be calculated as follows:

                              (i) Landlord shall determine in good faith based
               on recognized industry sources the London Interbank Offering Rate
               for 30 day advances (the "LIBOR RATE") in effect on the first
               business day of each calendar month before the Reset Date occurs;

                              (ii) During each calendar month in the Initial
               Term until the Reset Date occurs, Minimum Rent (referred to
               herein as the "CONSTRUCTION PERIOD MINIMUM RENT") shall accrue
               but shall not be paid:

                              (A) on the total outstanding from time to time of
                       (x) _________________________________________________
                       ________________ (hereinafter referred to as the "LAND
                       COST") plus (y) all advances made under the Development
                       Agreement with respect to Work (as defined in the
                       Development Agreement) plus (z) all previously accrued
                       but unpaid Construction Period Minimum Rent;

                              (B) at a rate equal to one twelfth (1/12) of the
                       sum of (x) the LIBOR Rate in affect for the applicable
                       month, plus (y) one hundred fifty (150) basis points;

                              (iii) The accrual of Construction Period Minimum
               Rent calculated under this Section 2.1.1 with respect to advances
               made other than on the first day of a calendar month shall be
               prorated in the month in which advances are made on the basis of
               a thirty (30) day month and actual days elapsed;



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                       2.1.2 POST-CONSTRUCTION MINIMUM RENT. On the Reset Date,
               the monthly Minimum Rent with respect to the total of (A) the
               Land Cost plus (B) all advances under the Development Agreement
               for Work plus (C) all accrued but unpaid Construction Period
               Minimum Rent shall be reset at an amount equal to one-twelfth
               (1/12) of the product of (I) the total of the Land Cost plus such
               advances made for Work plus accrued but unpaid Construction
               Period Minimum Rent, times (II) three hundred thirty (330) basis
               points over the twenty (20) day average 10 year United States
               Treasury rate in effect on the Reset Date (the "INITIAL TERM
               POST-CONSTRUCTION MINIMUM RENT").

                       2.1.3 DEFERRAL PERIOD.

                              (i) The Initial Term Post-Construction Minimum
               Rent shall accrue but not be paid until one hundred twenty (120)
               days after the Reset Date. The total amount which accrues during
               such one hundred twenty (120) day period is referred to herein as
               the "BASE DEFERRED RENT" and such one hundred twenty (120) day
               period is referred to as the "DEFERRAL PERIOD". With respect to
               the Deferral Period, Tenant hereby agrees to pay additional
               deferred rent in an amount equal to six percent (6%) of the Base
               Deferred Rent (hereinafter referred to as the "ADDITIONAL
               DEFERRED RENT"). The sum of the Base Deferred Rent plus the
               Additional Deferred Rent is referred to herein as the "DEFERRED
               RENT AMOUNT";

                              (ii) Commencing with the Payment Commencement
               Date (as such term is defined in the next sentence) and on the
               first business day of each calendar month thereafter during the
               Initial Term, the Minimum Rent payable during the Initial Term
               shall include the Initial Term Post-Construction Minimum Rent and
               the Amortizing Payment (as defined below). As used herein, the
               "PAYMENT COMMENCEMENT DATE" shall mean the first business day of
               the calendar month immediately following the expiration of the
               Deferral Period. If the Reset Date falls on other than the first
               business day of a calendar month, on the Payment Commencement
               Date, Tenant shall also pay a prorated amount of Initial Term
               Post-Construction Minimum Rent for the period from the end of the
               Deferral Period to the Payment Commencement Date, based on a
               thirty (30) day month and actual days elapsed;

                              (iii) Commencing on the Payment Commencement Date
               and monthly thereafter during the Initial Term, the Minimum Rent
               payable by Tenant shall include an amount (the "AMORTIZING
               PAYMENT") equal to (A) the Deferred Rent Amount, divided by (B)
               the number of calendar months remaining after the end of the
               Deferral Period through the end of the Initial Term;

                              (iv) Therefore, during the Initial Term but
               before the end of the Deferral Period, although the Deferred Rent
               Amount shall accrue and be payable over the balance of the
               Initial Term, there shall be no monthly Minimum Rent payable by
               Tenant; and


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                              (v) After the end of the Deferral Period and
               continuing for the remainder of the Initial Term, monthly Minimum
               Rent payable by Tenant consists of (A) the Initial Term
               Post-Construction Minimum Rent plus (B) the Amortizing Payment.

               2.2 INITIAL TERM ADDITIONAL RENT.

                       2.2.1 During the second Lease Year of the Initial Term,
               Tenant agrees to pay Additional Rent to Landlord on a monthly
               basis in advance on the first business day of each calendar
               month. Such Additional Rent (which shall be expressed as an
               annual amount but shall be payable in equal monthly installments)
               shall be equal to the total Minimum Rent payable by Tenant with
               respect to the first Lease Year times the percentage increase
               (the "CPI INCREASE") in the United States Department of Labor,
               Bureau of Labor Statistics Consumer Price Index for All Urban
               Wage Earners and Clerical Workers, United States Average,
               Subgroup "All Items" (1982-1984=100) (the "CPI"). In no event
               shall a CPI Increase calculated under this Lease be a negative
               number. For purposes of this Section 2.2.1, the CPI Increase
               shall be calculated by comparing the CPI in effect on January 1,
               1998 to the CPI in effect on January 1, 1999.

                       2.2.2 Commencing with the third Lease Year and continuing
               thereafter during the Initial Term, Tenant agrees to pay
               Additional Rent to Landlord on a monthly basis in arrears on the
               fifteenth (15th) day of each calendar month; provided, however,
               if such payment date falls on a weekend or federal holiday,
               Tenant shall make such payment on the first business day
               immediately preceding such payment date. Such Additional Rent
               shall be equal to the sum of (a) eleven percent (11%) of the
               amount by which the Gross Revenues for the applicable Lease Year
               through the applicable month exceed the Gross Revenues for the
               applicable portion of the Base Year, minus (b) all Additional
               Rent previously paid by Tenant with respect to such Lease Year.
               The obligation to make a payment of Additional Rent which accrues
               during the Term shall survive the termination of this Lease and
               be payable as if the Lease was still in effect.

                       2.2.3 "GROSS REVENUES" shall be calculated according to
               generally accepted accounting principles consistently applied
               ("GAAP") and shall be defined as all revenues generated by the
               operation, sublease and/or use of the Premises in any way,
               excluding (a) contractual allowances during the Term for billings
               not paid by or received from the appropriate governmental
               agencies or third party providers; (b) federal, state or local
               sales or excise taxes and any tax based upon or measured by said
               revenues which is added to or made a part of the amount billed to
               the patient or resident or other recipient of such services or
               goods, whether included in the billing or stated separately; (c)
               allowances according to GAAP or uncollectible accounts; (d) all
               proper patient or resident billing credits; and (e) deposits
               refundable to patients or residents of the applicable 


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               Facility. To the extent any portion of the Premises is subleased
               or occupied by an Affiliate of Tenant, Gross Revenues calculated
               for all purposes of this Lease (including, without limitation,
               the determination of the Additional Rent payable under this
               Lease) shall include the Gross Revenues of such sublessee with
               respect to the premises demised under the applicable sublease
               (i.e., the Gross Revenues generated from the operations conducted
               on such subleased portion of the Premises) and the rent received
               or receivable from such sublessee pursuant to such subleases
               shall be excluded from Gross Revenues for all such purposes. As
               to any sublease between Tenant and a non-Affiliate of Tenant,
               only the rental actually received by Tenant from such
               non-Affiliate shall be included in Gross Revenues.

                       2.2.4 "LEASE YEAR" shall be defined as the twelve (12)
               month periods commencing on July 1 of each year of the Term.

                       2.2.5 The "BASE YEAR" during the Initial Term shall mean
               the second Lease Year.

                       2.2.6 (a) the term "AFFILIATE" is defined to mean with
               respect to any person or entity, any other person or entity which
               controls, is controlled by or is under common control with the
               first person or entity, and the term "AFFILIATES" is defined to
               mean any group of such persons or entities; (b) the term
               "CONTROL" is expressly deemed to include any actual discretion or
               power to direct the affairs of the controlled person or entity,
               either directly or through a chain of ownership or control
               (regardless of actual ownership); (c) a general partner, manager,
               or managing member of a partnership or limited liability company,
               and any owner of thirty percent (30%) or more of such general
               partner or managing member, is expressly deemed to control such
               partnership or limited liability company; (d) a person or entity
               owning thirty percent (30%) or more of the common stock of a
               corporation or thirty percent (30%) or more of the voting
               interest in any other type of entity, is expressly deemed to
               control such corporation or other entity; (e) a trustee of a
               trust is expressly deemed to control such trust; (f) Tenant and
               any entity which is an Affiliate of Tenant, are all expressly
               deemed to be Affiliates of each other, and (g) BCC, Developer,
               Manager and any entity which is an Affiliate of any of the
               aforementioned entities, are all expressly deemed to be
               Affiliates of each other. Notwithstanding the foregoing, the term
               "Affiliate" shall not include any person or entity that is an
               equity owner or parent entity of Tenant; provided, however, this
               exclusion provision shall not exclude BCC, Developer, Manager, or
               Tenant as an Affiliate.

               2.3 RENEWAL TERM MINIMUM RENT. The Minimum Rent for each Renewal
Term shall be expressed as an annual amount but shall be payable in advance in
equal monthly installments on the first business day of each calendar month.
Such annual Minimum Rent shall be equal to the product of:

                       2.3.1 the greater of (a) the fair market value of the
               Premises on the date of Tenant's notice of exercise pursuant to
               Section 1.2.1 or (b) Landlord's Adjusted Investment (defined
               below) in the Premises, both as applicable; and


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                       2.3.2 a percentage equal to three hundred twenty (320)
               basis points over the average 10 year United States Treasury rate
               for the 20 day period ending on the date of Tenant's notice of
               exercise pursuant to Section 1.2.1 above.

                       2.3.3 As used in this Lease, the term "LANDLORD'S
               ADJUSTED INVESTMENT" means the product of Landlord's Investment
               (defined below) times the percentage equal to the sum of (i) One
               Hundred Percent (100%) plus (ii) the CPI Increase. For purposes
               of this Section 2.3.3, the CPI Increase shall be determined by
               comparing the CPI in effect as of January 1, 1998 to the CPI in
               effect on January 1 of the calendar year during which the
               applicable Renewal Term begins.

                       2.3.4 As used in this Lease, the term "LANDLORD'S
               INVESTMENT" means the sum of (i) the Land Cost, plus (ii) all
               amounts advanced by Landlord pursuant to Section 5.7 below, plus
               (iii) all amounts advanced by Landlord under the Development
               Agreement for Work, plus (iv) the total accrued Construction
               Period Minimum Rent, plus (v) the total accrued Deferred Rent
               Amount (but only to the extent such Deferred Rent Amount remains
               unamortized or unpaid as of this calculation), minus (vi) any net
               award paid to Landlord pursuant to Section 13.1 or Section 13.2
               below.

If within ten (10) days of the date of Tenant's notice of exercise pursuant to
Section 1.2.1 above, Landlord and Tenant are unable to agree on the fair market
value of the Premises for purposes of this calculation, such fair market value
shall be established by the appraisal process described on EXHIBIT "B" attached
hereto and incorporated herein for all purposes. The fair market value for
purposes of determining the Minimum Rent for the applicable Renewal Term must be
finally determined by such appraisal process on or before a date ninety (90)
days after Tenant's notice of exercise pursuant to Section 1.2.1 above or Tenant
shall lose its right to extend the Term. Landlord and Tenant acknowledge and
agree that this Section is designed to establish a fair market Minimum Rent for
the Premises during the applicable Renewal Terms.

               2.4 RENEWAL TERM ADDITIONAL RENT. Except during the first Lease
Year of any Renewal Term, Tenant shall pay to Landlord Additional Rent in each
Renewal Term on a monthly basis in arrears on the fifteenth (15th) day of each
calendar month; provided, however, if such payment date falls on a weekend or
federal holiday, Tenant shall make such payment on the first business day
immediately preceding such payment date. The Additional Rent for each Renewal
Term shall be calculated as provided in Section 2.2 hereof except that (i)
Section 2.2.1 hereof shall not apply, and (ii) the Base Year for the purpose of
determining such Additional Rent shall be the first Lease Year of the applicable
Renewal Term.

               2.5 RENT CAP AND FLOOR.

                       2.5.1 Notwithstanding any of the other terms of this
               Section 2 


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<PAGE>   10


               but subject to Sections 2.5.2 and 2.5.3 below, the total of the
               Minimum Rent and Additional Rent (the "TOTAL RENT") due during
               each Lease Year shall not increase from one Lease Year to the
               next by an amount in excess of the product of (i) three percent
               (3%), times (ii) the Total Rent due during the immediately
               preceding Lease Year.

                       2.5.2 The terms of Section 2.5.1 above shall have no
               applicability in determining the calculation of the Total Rent
               due with respect to the first Lease Year of any Renewal Term.
               Notwithstanding any of the other terms of this Section 2, the
               Total Rent due with respect to the first Lease Year of any
               Renewal Term shall not exceed one hundred twenty-five percent
               (125%) of the Total Rent due during the immediately preceding
               Lease Year.

                       2.5.3 Notwithstanding any of the other terms of this
               Section 2, the Total Rent due during any Lease Year shall not
               under any circumstances be less than the Total Rent due during
               the immediately preceding Lease Year.

                       2.5.4 To the extent that Section 2.5.1 above operates to
               limit the Total Rent due for any Lease Year, the amount of rent
               which would have otherwise been paid or payable by Tenant will be
               carried forward on a cumulative basis and will be paid by Tenant
               to Landlord in any subsequent Lease Year (other than the first
               Lease Year of a Renewal Term) to the extent that the Total Rent
               due for such subsequent Lease Year is less than one hundred three
               percent (103%) of the Total Rent due during the Lease Year
               immediately preceding such subsequent Lease Year.

                       2.5.5 Within sixty (60) days of the end of each Lease
               Year, Tenant shall deliver to Landlord a report in a form
               mutually agreed upon by Landlord and Tenant, certified by an
               officer or general partner of Tenant, as applicable, setting
               forth the calculations required by the application of this
               Section 2.5. If said report provides that Tenant owes Landlord
               any sum of money, Tenant shall accompany such report delivered to
               Landlord with such funds. If said report provides that Landlord
               owes Tenant any sum of money, such sum shall be applied as a
               credit against future installments of Minimum Rent and Additional
               Rent due from Tenant to Landlord; provided, however, if such sum
               is owed by Landlord to Tenant with respect to the last Lease Year
               of the Term, Landlord shall pay such sum to Tenant within thirty
               (30) days of Landlord's receipt of the report in question.

                       2.5.6 For the purpose of comparing the Total Rent due
               from Lease Year to Lease Year pursuant to this Section 2.5, the
               increase in Minimum Rent by reason of any disbursement by
               Landlord pursuant to Section 5.7 of this Lease or pursuant to the
               Development Agreement shall be treated as follows: (i) for the
               purpose of comparing the Total Rent in the Lease Year in which
               such disbursement is made against the Total Rent in the preceding
               Lease Year, such increase in Minimum Rent shall be ignored, and
               (ii) for the purpose of comparing the Total Rent in the Lease
               Year in which such disbursement is made to the Total 


                                                                             -8-


<PAGE>   11

               Rent in the following Lease Year, such increase in Minimum Rent
               shall be deemed effective on the first day of the Lease Year in
               which the disbursement is made.

                       2.5.7 For the purpose of comparing the Total Rent due
               from Lease Year to Lease Year pursuant to this Section 2.5, the
               Total Rent due during the second Lease Year shall be calculated
               as if the Reset Date occurred during the first Lease Year.

               2.6 PRORATION FOR PARTIAL PERIODS. The rent for any month during
the Term which begins or ends on other than the first or last calendar day of a
calendar month shall be prorated based on actual days elapsed.

               2.7 FORMS FOR ADDITIONAL RENT AND ANNUAL RENT LIMITS. Tenant
shall accompany each payment of Additional Rent with a completed calculation in
the form of EXHIBIT "C" attached hereto and incorporated herein for all
purposes. Tenant shall accompany each payment of the first month's Minimum Rent
for each Lease Year with a completed calculation in the form of EXHIBIT "D"
attached hereto and incorporated herein for all purposes.

               2.8 ABSOLUTE NET LEASE. All rent payments shall be absolutely net
to the Landlord free of Taxes (as hereinafter defined), assessments, utility
charges, operating expenses, refurnishings, insurance premiums or any other
charge or expense in connection with the Premises. All expenses and charges,
whether for upkeep, maintenance, repair, refurnishing, refurbishing,
restoration, replacement, insurance premiums, taxes, utilities, and other
operating or other charges of a like nature or otherwise, shall be paid by
Tenant. This provision is not in derogation of the specific provisions of this
Lease, but in expansion thereof and as an indication of the general intentions
of the parties hereto. Tenant shall continue to perform its obligations under
this Lease even if Tenant claims that Tenant has been damaged by any act or
omission of Landlord. Therefore, except for any credit due from Landlord in
favor of Tenant as provided in Section 2.5.5 of this Lease, Tenant shall at all
times remain obligated under this Lease without any right of set-off,
counterclaim, abatement, deduction, reduction or defense of any kind. Tenant's
sole right to recover damages against Landlord by reason of a breach or alleged
breach of Landlord's obligations under this Lease shall be to prove such damages
in a separate action against Landlord.

        3. TAXES, ASSESSMENTS AND OTHER CHARGES:

               3.1 TENANT'S OBLIGATIONS. Tenant agrees to pay and discharge
(including the filing of all required returns) any and all taxes (including, but
not limited to, recordation taxes, real estate and personal property taxes,
business and occupational license taxes, ad valorem sales, use, intangible
property, single business, gross receipts, transaction privilege, franchise
taxes, business privilege, rent or other excise taxes) and other assessments
levied or assessed against Tenant, the Premises or any interest therein or
Landlord (with respect to this Lease and/or the Premises, but excluding (i) any
state or federal income tax based upon the net income of Landlord, and (ii) any
transfer tax or stamps assessed in connection with the transfer 


                                                                             -9-
<PAGE>   12

by Landlord of its interest in the Premises to any person or entity other than
BCC or a BCC Affiliate) (all such taxes and assessments payable by Tenant being
collectively referred to herein as "TAXES") prior to delinquency or imposition
of any fine, penalty, interest or other cost. If any of the foregoing may, at
the option of the taxpayer, be paid in installments, Tenant may exercise such
option to pay the same in installments (whether or not interest shall accrue on
the unpaid balance) as the same respectively become due and before any
delinquency, fine, penalty, or further interest or costs may be added thereto.

               3.2 PRORATION. At the commencement and at the end of the Term,
all Taxes shall be prorated.

               3.3 RIGHT TO PROTEST. Landlord and/or Tenant shall have the
right, but not the obligation, to protest the amount or payment of any real or
personal property taxes, assessments, or other impositions levied against the
Premises; provided that in the event of any protest by Tenant, Landlord shall
not incur any expense because of any such protest and shall cooperate in such
protest, Tenant shall diligently and continuously prosecute any such protest and
notwithstanding such protest Tenant shall pay any tax, assessment or other
charge before the imposition of any penalty or interest.

               3.4 TAX INDEMNITY. In the event any Taxes, or fine, penalty,
and/or interest thereon are at any time assessed against the Landlord by the
state in which the Premises is located or any local governmental entity or
authority as a result of or arising out of the sale of the Premises to the
Landlord by the Seller or the lease of the Premises by the Tenant from the
Landlord, or Landlord becomes liable for any reason for any liability of Tenant
for Taxes or for any fine, penalty, or interest thereon, whether such assessment
arises from the sole liability of Landlord or from the joint liability of
Landlord and Tenant, and Landlord pays such assessment or liability, Tenant
hereby agrees to pay to the Landlord an amount equal to the amount of such
assessment of Tax, fine, penalty and interest. Such payment shall be due and
payable to Landlord on or before the thirtieth (30th) day following Tenant's
receipt of a written notice from Landlord (pursuant to the notice provisions
under this Lease) of any such assessment and payment. Tenant shall have the
right, but not the obligation, to protest the amount or payment of such
assessment (in whole or in part) against the Landlord, and Landlord will
cooperate fully with Tenant in regard to such protest; provided that in the
event of any protest by Tenant, Landlord shall not incur any expense because of
such protest. Tenant shall diligently and continuously prosecute any such
protest. To the fullest extent permitted by law, Tenant agrees to protect,
indemnify, defend and save harmless Landlord, its directors, officers,
shareholders, agents, and employees from and against any and all foreseeable or
unforeseeable liability, expense, loss, costs, deficiency, fine, penalty,
interest, or other damages (including, without limitation, punitive or
consequential damages, reasonable attorneys' fees, and expenses) arising out of
or due to any tax protest by Tenant pursuant to Sections 3.3 and 3.4 hereof
whether such items arise from the sole liability of Landlord or from the joint
liability of Landlord and Tenant. Upon receiving notice of or information
concerning any suit, claim or demand, including any proposed tax audit of
Landlord or any proposed tax assessment, asserted by a third party that Landlord
believes is covered by the indemnity set forth in this Lease, Landlord shall
give Tenant notice of same. Tenant shall defend Landlord against such matter at
Tenant's sole cost and expense with legal counsel reasonably satisfactory to
Landlord.


                                                                            -10-
<PAGE>   13


               3.5 TAX BILLS. Landlord shall promptly forward to Tenant copies 
of all tax bills and payment receipts relating to the Premises received by 
Landlord.

               3.6 OTHER CHARGES. Tenant agrees to pay and discharge, punctually
as and when the same shall become due and payable without penalty, all
electricity, gas, garbage collection, cable television, telephone, water, sewer,
and other utilities costs and all other charges, obligations or deposits
assessed against the Premises during the Term.

        4.    INSURANCE.

              4.1 GENERAL INSURANCE REQUIREMENTS. All insurance provided for in
this Lease shall be maintained under valid and enforceable policies issued by
insurers of recognized responsibility, licensed and approved to do business in
the state in which the Premises is located having a general policyholders rating
of not less than "A-11" and a financial rating of not less than "XII" in the
then most current Best's Insurance Report. Any and all policies of insurance
required under this Lease shall name the Landlord as an additional insured and
shall be on an "occurrence" basis. In addition, Landlord shall be shown as the
loss payable beneficiary under the casualty insurance policy maintained by
Tenant pursuant to Section 4.2 hereof. All policies of insurance required herein
may be in the form of "blanket" or "umbrella" type policies which shall name the
Landlord and Tenant as their interests may appear and allocate to the Premises
the full amount of insurance required hereunder. Original policies or
satisfactory certificates from the insurers evidencing the existence of all
policies of insurance required by this Lease and showing the interest of the
Landlord shall be filed with the Landlord prior to the commencement of the Term
and shall provide that the subject policy may not be canceled except upon not
less than thirty (30) days prior written notice to Landlord. If Landlord is
provided with a certificate, upon Landlord's request Tenant shall provide
Landlord with a complete copy of the insurance policy evidenced by such
certificate within thirty (30) days of the commencement of the Term. Originals
of the renewal policies or certificates therefor from the insurers evidencing
the existence thereof shall be deposited with Landlord not less than ten (10)
days prior to the expiration dates of the policies. If Landlord is provided with
a certificate for a renewal policy, upon Landlord's request Tenant shall deliver
a copy of the complete renewal policy to Landlord within thirty (30) days of the
expiration of the replaced policy. Any claims under any policies of insurance
described in this Lease shall be adjudicated by and at the expense of the Tenant
or of its insurance carrier, but shall be subject to joint control of Tenant and
Landlord.

               4.2 FIRE AND EXTENDED COVERAGE. Tenant shall keep the Premises
insured against loss or damage from all causes under standard "all risk"
property insurance coverage, without exclusion for fire, lightning, windstorm,
explosion, smoke damage, vehicle damage, sprinkler leakage, flood, vandalism,
earthquake (if in an earthquake zone), malicious mischief or any other risks as
are normally covered under an extended coverage endorsement, in the amounts that
are not less than the full insurable value of the Premises including all
equipment and personal property (whether or not Landlord Personal Property) used
in the operation of the Premises. The term "FULL INSURABLE VALUE" as used in
this Lease shall mean the actual replacement value of the Premises (including
all improvements, but excluding the value of the


                                                                            -11-
<PAGE>   14
Land) and every portion thereof, including the cost of compliance with changes
in zoning and building codes and other laws and regulations, demolition and
debris removal and increased cost of construction. In addition, the casualty
insurance required under this Section 4.2 will include an agreed amount
endorsement such that the insurance carrier has accepted the amount of coverage
and deductible and has agreed that there will be no co-insurance penalty.

               4.3 PUBLIC LIABILITY. Tenant shall maintain comprehensive general
public liability insurance coverage (including products liability coverage)
against claims for bodily injury, death or property damage occurring on, in or
about the Premises and the adjoining sidewalks and passageways, such insurance
shall include a broad form endorsement and to afford protection to Landlord and
Tenant of not less than One Million Dollars ($1,000,000.00) with respect to
bodily injury or death to any one person, not less than Three Million Dollars
($3,000,000.00) with respect to any one accident, and not less than One Million
Dollars ($1,000,000.00) with respect to property damage; provided, that Landlord
shall have the right at any time hereafter to require such higher limits as may
be reasonable and customary for transactions and properties similar to the
Premises; provided, further, that Tenant shall have the right to satisfy the
requirements of this Section 4.3 with excess coverage of not less than Three
Million Dollars ($3,000,000.00).

               4.4 PROFESSIONAL LIABILITY INSURANCE. Tenant shall maintain
insurance against liability imposed by law upon such persons for damages on
account of professional services rendered or which should have been rendered by
or on behalf of Tenant, or by any person for whose or which acts Tenant is
legally liable (including without limitation Manager or any future manager), on
account of injury, sickness or disease, including death at any time resulting
therefrom, and including damages allowed for loss of service, in a minimum
amount of One Million Dollars ($1,000,000.00) for each claim and Three Million
Dollars ($3,000,000.00) in the aggregate.

               4.5 WORKERS COMPENSATION. Tenant, Manager and any future manager
shall comply with all legal requirements regarding worker's compensation,
including any requirement to maintain worker's compensation insurance against
claims for injuries sustained by their respective employees in the course of
their employment.

               4.6 BOILER INSURANCE. Tenant shall maintain boiler and pressure
vessel insurance, including an endorsement for boiler business interruption
insurance, on any fixtures or equipment which are capable of bursting or
exploding, in an amount not less Five Million Dollars ($5,000,000.00) for damage
to property, bodily injury or death resulting from such perils.

               4.7 BUSINESS INTERRUPTION INSURANCE. Tenant shall maintain, at
its expense, business interruption and extra expense insurance insuring against
loss of rental value for a period not less than one (1) year.

               4.8 DEDUCTIBLE AMOUNTS. The policies of insurance which Tenant is
required to provide under this Lease shall not have deductibles or self-insured
retentions in excess of Fifty Thousand Dollars ($50,000).


                                                                            -12-

<PAGE>   15
        5.  USE, MAINTENANCE AND ALTERATION OF THE PREMISES.

               5.1     TENANT'S MAINTENANCE OBLIGATIONS.

                       5.1.1 Tenant will keep and maintain the Premises in good
               appearance, repair and condition and maintain proper
               housekeeping. Tenant shall promptly make or cause to be made all
               repairs, interior and exterior, structural and nonstructural,
               ordinary and extraordinary, foreseen and unforeseen, necessary to
               keep the Premises in good and lawful order and condition and in
               substantial compliance with all requirements for the operation of
               a Facility in the state in which the Premises is located and, if
               applicable, certification for participation in Medicare and
               Medicaid (or any successor programs) as otherwise required under
               all applicable local, state and federal laws.

                       5.1.2 As part of Tenant's obligations under this Section
               5.1, Tenant shall be responsible to maintain, repair and replace
               all Landlord Personal Property and all Tenant Personal Property
               (as defined in Section 7.1 below) in good condition, ordinary
               wear and tear excepted, consistent with prudent industry practice
               for a Facility.

                       5.1.3 Without limiting Tenant's obligations to maintain
               the Premises under this Lease, within thirty (30) days of the end
               of each Lease Year starting with the end of the fourth (4th)
               Lease Year, Tenant shall provide Landlord with evidence
               satisfactory to Landlord in the reasonable exercise of Landlord's
               discretion that Tenant has in such Lease Year spent on Upgrade
               Expenditures (as hereinafter defined) an annual average amount of
               at least Two Hundred and No/100 Dollars ($200.00) per living unit
               as such amount is adjusted annually at the end of each Lease Year
               for CPI Increases. For purposes of this Section 5.1.3, the CPI
               Increase shall be determined by comparing the CPI in effect as of
               January 1, 1998 to the CPI in effect on January 1 of the calendar
               year during which the Upgrade Expenditures are to be made. The
               term "UPGRADE EXPENDITURES" is defined to mean upgrades or
               improvements to the Premises which have the effect of maintaining
               or improving the competitive position of the Premises in its
               marketplace. Non-exclusive examples of Upgrade Expenditures are
               new or replacement wallpaper, tiles, window coverings, lighting
               fixtures, painting, upgraded landscaping, carpeting,
               architectural adornments, common area amenities and the like. It
               is expressly understood that capital improvements or repairs
               (such as but not limited to repairs or replacements to the
               structural elements of the walls, parking area, or the roof or to
               the electrical, plumbing, HVAC or other mechanical or structural
               systems in the Premises) shall not be considered to be Upgrade
               Expenditures. If Tenant fails to make at least the above amount
               of Upgrade Expenditures, Tenant shall promptly on demand from
               Landlord (but in no event more than five days) pay to Landlord
               the applicable shortfall in Upgrade Expenditures. Such funds
               shall be the sole property of Landlord and Landlord may in its
               sole discretion provide such funds to Tenant to 


                                                                            -13-
<PAGE>   16



               correct the shortfall in Upgrade Expenditures or may simply
               retain such funds as supplemental rent hereunder.

               5.2     REGULATORY COMPLIANCE.

                       5.2.1 Tenant and the Premises shall comply with all
               federal, state and local licensing and other laws and regulations
               applicable to the operation of a Facility as well as with the
               certification requirements of Medicare and Medicaid (or any
               successor program), if applicable. Further, Tenant shall ensure
               that the Premises continue to be operated as at least a 60-unit
               Facility, all without any suspension, revocation, decertification
               or limitation. Further, Tenant shall not commit any act or
               omission that would in any way violate any certificate of
               occupancy affecting the Premises.

                       5.2.2 The Facility license and all other licenses and
               certifications on or affecting the Property must be in the name
               of Tenant, or another operator (the "OPERATOR") approved in
               writing by Landlord, whose consent may not be unreasonably
               withheld, except for transfers between Tenant and BCC or a BCC
               Affiliate (provided Landlord receives at least 30 days prior
               written notice of such transfer). Neither Tenant, BCC, a BCC
               Affiliate, nor any such Operator may sell, transfer, assign,
               encumber, sublet, permit to lapse, expire, become suspended, or
               terminate any such licenses or certifications, operating rights
               associated with the Premises and certification without the prior
               written consent of Landlord which may not be unreasonably
               withheld, except for transfers between Tenant and BCC or a BCC
               Affiliate (provided Landlord receives at least 30 days prior
               written notice of such transfer). Tenant understands and agrees,
               and agrees to so direct Manager, any future manager, and/or such
               other Operator (as applicable), that all such licenses are an
               integral part of the Property and must remain at the Property
               unless approved in writing by Landlord, which approval may be
               unreasonably withheld. Tenant or such other Operator must provide
               photocopies of all such certifications and licenses, and any and
               all notices and reports requested by Landlord, within five (5)
               days of receipt of such request.

                       5.2.3 All inspection fees, costs and charges associated
               with a change of such licensure or certification shall be borne
               solely by Tenant. Tenant shall at its sole cost make any
               additions or alterations to the Premises necessitated by, or
               imposed in connection with, a change of ownership inspection
               survey for the transfer of operation of the Premises from Tenant
               or Tenant's assignee or subtenant to Landlord or Landlord's
               designee at the expiration or termination of the Term.

               5.3 PERMITTED USE. Tenant shall continuously use and occupy the
Premises during the Term, as a personal care/assisted living facility with at
least 60 units or such additional units as may hereafter be permitted under this
Lease, and for such ancillary health care uses as are permitted by law and
acceptable to Landlord in the exercise of Landlord's reasonable discretion,
including, without limitation, outpatient rehab and Alzheimer services.

                                                                            -14-

<PAGE>   17

               5.4 TENANT REPURCHASE OBLIGATION. If Tenant fails to comply with
Section 5.3 of this Lease, if any certification of the Premises under Medicare
or Medicaid (or any successor program) is ever granted and then later revoked,
suspended or materially limited, or if any material license relating to the
operation of the Premises is revoked, suspended or materially limited, then in
addition to Landlord's other rights and remedies under this Lease, Landlord
shall have the right, thirty (30) days after providing to Tenant written notice
an opportunity to cure, to put the Premises to Tenant. If Landlord exercises
such right, Tenant shall purchase the Premises from Landlord for a cash price
equal to the greater of (a) Landlord's Adjusted Investment, or (b) the fair
market value of the Premises on the date of Landlord's notice of exercise. Such
fair market value shall be as agreed between Landlord and Tenant. However,
failing such agreement within ten (10) days of Landlord's notice of exercise
under this Section, such fair market value shall be determined by the appraisal
process set forth in Exhibit "B" attached hereto. Within ninety (90) days of
Landlord's exercise of its put under this Section 5.4, such purchase shall be
consummated utilizing an escrow at a national title company selected by
Landlord. Such escrow shall be documented on such title company's standard sale
escrow instructions without representations or warranties and without any due
diligence or other contingencies in favor of the buyer. Tenant shall pay all
costs of such sale transaction. At the close of such sale, Landlord shall
deliver to Tenant title to the Premises free and clear of any liens created by
Landlord (other than liens, leases, subleases, and related instruments entered
into, caused or created in whole or in part by BCC, Developer, Manager, or their
respective Affiliates) subject only to those title exceptions shown on EXHIBIT
"E" attached hereto and incorporated herein for all purposes and any additional
title exceptions required or approved by Landlord in its sole discretion.

               5.5 NO LIENS; PERMITTED CONTESTS. Tenant shall not cause or
permit any liens, levies or attachments to be placed or assessed against the
Premises or the operation thereof for any reason, other than the Permitted
Encumbrances. For purposes of this Section 5.5, the term "PERMITTED
ENCUMBRANCES" shall mean and include the Leasehold Mortgage and any recorded
financing statements related thereto. Tenant acknowledges and agrees the
interest of the Landlord in the Premises shall not be subject to liens for
improvements made by Tenant to the Premises. However, Tenant shall be permitted
in good faith and at its expense to contest the existence, amount or validity of
any lien upon the Premises by appropriate proceedings sufficient to prevent the
collection or other realization of the lien or claim so contested, as well as
the sale, forfeiture or loss of any of the Premises or any rent to satisfy the
same. Tenant shall provide Landlord with security satisfactory to Landlord in
Landlord's reasonable judgment to assure the foregoing. Each contest permitted
by this Section 5.5 shall be promptly and diligently prosecuted to a final
conclusion by Tenant.

               5.6 ALTERATIONS BY TENANT. Tenant shall have the right of
altering, improving, replacing, modifying or expanding the facilities, equipment
or appliances in the Premises from time to time as it may determine is desirable
for the continuing and proper use and maintenance of the Premises under this
Lease; provided, however, that any alterations, improvements, replacements,
expansions or modifications in excess of One Hundred Fifty Thousand and No/100
Dollars ($150,000.00) in any rolling twelve (12) month period shall require the
prior written consent of the Landlord. The cost of all such alterations,
improvements, replacements, modifications, expansions or other purchases,
whether 

                                                                            -15-
<PAGE>   18


undertaken as an on-going licensing, Medicare or Medicaid (or any successor
program) (if applicable), other regulatory requirement, or otherwise, shall be
borne solely and exclusively by Tenant (unless funded by Landlord under Section
5.7 below) and shall immediately become a part of the Premises and the property
of the Landlord subject to the terms and conditions of this Lease. All work done
in connection therewith shall be done in a good and workmanlike manner and in
compliance with all existing codes and regulations pertaining to the Premises
and shall comply with the requirements of insurance policies required under this
Lease. In the event any items of the Premises have become inadequate, obsolete
or worn out or require replacement (by direction of any regulatory body or
otherwise), Tenant shall remove such items and exchange or replace the same at
Tenant's sole cost and the same shall become part of the Premises and property
of the Landlord.

               5.7 CAPITAL IMPROVEMENTS FUNDED BY LANDLORD. In the event Tenant
desires to make a capital improvement or a related series of capital
improvements to the Premises and if Tenant desires that Landlord fund the same,
Landlord shall, in its discretion and without obligation, within thirty (30)
days of Tenants' written request therefor, consider Tenant's request to fund
such capital improvements. Each and every capital improvement funded by Landlord
under this Section shall immediately become a part of the Premises and shall
belong to Landlord subject to the terms and conditions of this Lease. If
Landlord funds any capital improvements, Landlord's Investment shall be
increased for all purposes under this Lease by the amount of the funds provided
by Landlord for capital improvements.

               5.8 COMPLIANCE WITH IRS GUIDELINES. Any improvement or
modification to the Premises shall satisfy the requirements set forth in
Sections 4(4).02 and .03 of Revenue Procedure 75-21, 1975-1 C.B. 715, as
modified by Revenue Procedure 79-48, 1979-2 C.B. 529. Landlord reserves the
right to refuse to consent to any improvement or modification to the Premises
if, in its judgment, such improvement or modification does not meet the
foregoing requirements.

        6. CONDITION OF, AND TITLE TO, PREMISES. Tenant acknowledges that it is
presently engaged in the operation of Facilities in the state in which the
Premises is located and has expertise in the Facility industry. Tenant has
thoroughly investigated the Premises, has selected the Premises to its own
specifications, and has concluded that no other improvements or modifications to
the Premises are required in order to operate the Premises for its intended use,
except for the improvements to be constructed pursuant to the Development
Agreement. Tenant accepts the Premises for use as a Facility under this Lease on
an "AS IS, WHERE IS, WITH ALL FAULTS" basis and will assume all responsibility
and cost for the correction of any observed or unobserved deficiencies or
violations. In making its decision to enter into this Lease, Tenant has not
relied on any representations or warranties, express or implied, of any kind
from Landlord. Tenant has examined the condition of title to the Premises prior
to the execution and delivery of this Lease and has found the same to be
satisfactory. Notwithstanding any other provisions of this Lease to the
contrary, Tenant accepts the Premises in their present condition, AS IS, WHERE
IS, WITH ALL FAULTS, and without any representations or warranties whatsoever,
express or implied, including, without limitation, any express or implied
representations or warranties as to the fitness, use, suitability, or condition
of the Premises. Tenant hereby represents and warrants to Landlord 


                                                                            -16-
<PAGE>   19

that Tenant is thoroughly familiar with the Premises and the condition thereof,
that Tenant is relying on Tenant's own personal knowledge of the condition of
the Premises, that neither Landlord nor any person or entity acting or allegedly
acting for or on behalf of Landlord or any other person or entity having or
claiming any interest in the Premises has made any representations, warranties,
agreements, statements, or expressions of opinions in any way or manner
whatsoever related to, connected with, or concerning the Premises, the condition
of the Premises, or any other fact or circumstance whatsoever on which Tenant is
relying, and, to the maximum extent not prohibited by applicable law, Tenant
hereby releases and discharges Landlord and all other persons and entities
having or claiming any interest in the Premises from all liability, damages,
costs, and expenses of every kind and nature whatsoever in any way or manner
arising out of, connected with, related to, or emanating from the condition of
the Premises at any time during the Term of this Lease. Tenant has examined the
condition of title to the Premises prior to the execution and delivery of this
Lease and has found the same to be satisfactory.

        7. LANDLORD AND TENANT PERSONAL PROPERTY.

               7.1 TENANT PERSONAL PROPERTY. Tenant shall install, affix or
assemble or place on the Premises all items of furniture, fixtures, equipment
and supplies not included as Landlord Personal Property as Tenant reasonably
considers to be appropriate for Tenant's use of the Premises as contemplated by
this Lease (the "TENANT PERSONAL PROPERTY"). Tenant shall provide and maintain
during the entire Term all Tenant Personal Property as shall be necessary in
order to operate the Premises in compliance with all requirements set forth in
this Lease. All Tenant Personal Property shall be and shall remain the property
of Tenant and may be removed by Tenant upon the expiration of the Term. However,
if there is any Event of Default, Tenant will not remove the Tenant Personal
Property from the Premises and will on demand from Landlord, convey the Tenant
Personal Property to Landlord by executing a bill of sale in a form reasonably
required by Landlord conveying all right, title, and interest Tenant has in
Tenant Personal Property, including, without limitation, all rights under third
party agreements regarding lease or purchase of Tenant Personal Property and all
related cure rights and rights to receive notice of default thereunder. In any
event, Tenant will repair all damage to the Premises caused by any removal of
the Tenant Personal Property.

               7.2     LANDLORD'S SECURITY INTEREST.

                       7.2.1 The parties intend that if Tenant defaults under
               this Lease, Landlord will control the Tenant Personal Property
               and the Intangible Property (as defined in Section 7.4 below) so
               that Landlord or its designee can operate or re-let the Premises
               intact for use as a Facility.

                       7.2.2 Therefore, to implement the intention of the
               parties, and for the purpose of securing the payment and
               performance of Tenant's obligations under this Lease, Tenant, as
               debtor, hereby grants to Landlord, as secured party, a security
               interest in and an express contractual lien upon, all of Tenant's
               right, title and interest in and to the Tenant Personal Property
               and in and to the Intangible Property and in and to all of the
               property set forth on EXHIBIT "F" attached hereto 


                                                                            -17-
<PAGE>   20



               and incorporated herein for all purposes and in or to any and all
               products and proceeds thereof in which Tenant now owns or
               hereafter acquires an interest or right, including any leased
               Tenant Personal Property. The schedule attached hereto as Exhibit
               "F" may be attached to any financing statement filed pursuant to
               Section 7.3 hereof. This Lease constitutes a security agreement
               covering all such Tenant Personal Property and the Intangible
               Property. The security interest granted to Landlord in this
               Section 7.2.2 is intended by Landlord and Tenant to be
               subordinate to any security interest granted in connection with
               the financing or leasing of all or any portion of the Tenant
               Personal Property so long as the lessor or financier of such
               Tenant Personal Property agrees to (a) give Landlord written
               notice of any default by Tenant under the terms of such lease or
               financing arrangement, (b) give Landlord the lesser of (i) five
               days after receipt of such notice to cure any such default or
               (ii) the same time period as given to Tenant to cure any such
               default, and (c) consent to Landlord's written assumption of such
               lease or financing arrangement upon Landlord's curing of any
               defaults thereunder. This security agreement and the security
               interest created herein shall survive the termination of this
               Lease if such termination results from the occurrence of an Event
               of Default.

               7.3 FINANCING STATEMENTS. If required by Landlord at any time
during the Term, Tenant will execute and deliver to Landlord, in form reasonably
satisfactory to Landlord, additional security agreements, financing statements,
fixture filings and such other documents as Landlord may reasonably require to
perfect or continue the perfection of Landlord's security interest in the Tenant
Personal Property and the Intangible Property and any and all products and
proceeds thereof now owned or hereafter acquired by Tenant. Tenant shall pay all
fees and costs that Landlord may incur in filing such documents in public
offices and in obtaining such record searches as Landlord may reasonably
require. In the event Tenant fails to execute any financing statements or other
documents for the perfection or continuation of Landlord's security interest,
Tenant hereby appoints Landlord as its true and lawful attorney-in-fact to
execute any such documents on its behalf, which power of attorney shall be
irrevocable and is deemed to be coupled with an interest.

               7.4 INTANGIBLE PROPERTY. The term "INTANGIBLE PROPERTY" means all
accounts, proceeds of accounts, rents, profits, income or revenue derived from
the use of rooms or other space within the Premises or the providing of services
in or from the Premises; documents, chattel paper, instruments, contract rights,
deposit accounts, general intangibles, chooses in action, now owned or hereafter
acquired by Tenant (including any right to any refund of any taxes or other
charges heretofore or hereafter paid to any governmental authority) arising from
or in connection with Tenant's operation or use of the Premises; all licenses
and permits now owned or hereinafter acquired by Tenant, necessary or desirable
for Tenant's use of the Premises under this Lease, including, without
limitation, if applicable, any certificate of need or other similar certificate;
and the right to use any trade or other name now or hereafter associated with
the operation of the Premises by Tenant, including, without limitation, the name
"Outlook Pointe At Pensacola". The word "accounts" above shall include, without
limitation and to the extent assignable, accounts to be paid by Medicaid or
Medicare (or successor programs), if any. With respect to the above referenced
trade name, Landlord and 


                                                                            -18-
<PAGE>   21

BCC each agree to cooperate to enter into a licensing agreement for the use of
the trade name, in form and substance reasonably acceptable to both Landlord and
BCC, which agreement shall include, without limitation, that the license shall
be (i) perpetual (except in the event BCC or an Affiliate acquires the Premises
in which case the license shall automatically terminate); (ii) at no cost to
Landlord; (iii) assignable by Landlord to a successor operator of the Premises
upon or after the occurrence of an Event of Default under the Lease, and (iv)
solely applicable to the Premises.

        8. REPRESENTATIONS AND WARRANTIES. Landlord and Tenant do hereby each
for itself represent and warrant to each other as follows:

               8.1 DUE AUTHORIZATION AND EXECUTION. This Lease and all
agreements, instruments and documents executed or to be executed in connection
herewith by either Landlord or Tenant were duly authorized and shall be binding
upon the party that executed and delivered the same.

               8.2 DUE ORGANIZATION. Landlord and Tenant are duly organized,
validly existing and in good standing under the laws of the State of their
respective formations and are duly authorized and qualified to do all things
required of the applicable party under this Lease within the state in which the
Premises is located.

               8.3 NO BREACH OF OTHER AGREEMENTS. Neither this Lease nor any
agreement, document or instrument executed or to be executed in connection
herewith, violates the terms of any other agreement to which either Landlord or
Tenant is a party.

        9. FINANCIAL, MANAGEMENT AND REGULATORY REPORTS.

               9.1 MONTHLY FACILITY REPORTS. Within thirty (30) days after the
end of each calendar month during the Term, Tenant shall prepare and deliver
monthly financial reports to Landlord consisting of a balance sheet, income
statement, total patient days, occupancy and payor mix concerning the business
conducted at the Premises. Without limitation, such reports shall clearly state
Gross Revenues for the applicable period. These reports will be accompanied by a
statement signed by the President, Chief Financial Officer, Principal Accounting
Officer, Controller, Executive Vice President, Development, or other officer of
Tenant or the current manager of the Facility as approved by Landlord in
writing, certifying that said reports are true, correct, and complete in all
material respects after due inquiry.

               9.2 QUARTERLY FINANCIAL STATEMENTS. Within forty-five (45) days
of the end of each of the first three quarters of the fiscal year of Tenant's
parent company, if any, Tenant shall deliver the quarterly consolidated or
combined, as applicable, financial statements of Tenant's parent company to
Landlord.

               9.3 ANNUAL FINANCIAL STATEMENT. Within one hundred (100) days of
the fiscal year end of Tenant, or if Tenant has a parent company, then of
Tenant's parent company, Tenant shall deliver to Landlord the annual
consolidated or combined, as applicable, financial statement of Tenant or
Tenant's parent company, as applicable, audited by a reputable certified 

                                                                            -19-
<PAGE>   22


public accounting firm. Notwithstanding any of the other terms of this Section
9.3, if Tenant or Tenant's parent company becomes subject to any reporting
requirements of the Securities and Exchange Commission (the "SEC") during the
Term, Tenant shall concurrently deliver to Landlord such reports as are
delivered to the SEC pursuant to applicable securities laws.



               9.4 ACCOUNTING PRINCIPLES. All of the reports and statements
required hereby shall be prepared in accordance with GAAP and Tenant's
accounting principles consistently applied.

               9.5 REGULATORY REPORTS. In addition, Tenant shall within thirty
(30) business days of receipt thereof deliver to Landlord all federal, state and
local licensing and reimbursement certification surveys, inspection and other
reports received by Tenant as to the Premises and the operation of business
thereon, including, without limitation, state department of health licensing
surveys, Medicare and Medicaid (and successor programs) certification surveys
(if applicable), and life safety code reports. Within five (5) business days of
receipt thereof, Tenant shall give Landlord written notice of any violation of
any federal, state or local licensing or reimbursement certification statute or
regulation, including, without limitation, Medicare or Medicaid (or successor
programs) (if applicable), any suspension, termination or restriction placed
upon Tenant or the Premises, the operation of business thereon or the ability to
admit residents or patients, or any violation of any other permit, approval or
certification in connection with the Premises or its business, by any federal,
state or local authority, including, without limitation, Medicare or Medicaid
(or successor programs) (if applicable).

        10. EVENTS OF DEFAULT AND LANDLORD'S REMEDIES.

               10.1    EVENTS OF DEFAULT.  The occurrence of any of the 
following shall constitute an event of default on the part of Tenant hereunder
("EVENT OF DEFAULT"):

                       10.1.1 The failure to pay within five (5) calendar days
        of the date when due any Minimum Rent, Additional Rent, Taxes (except
        for Taxes and other charges being contested in accordance with Sections
        3.3 and 3.4 hereof), utilities, premiums for insurance or other charges
        or payments required of Tenant under this Lease;

                       10.1.2 A material breach by Tenant of any representation 
        or warranty in this Lease;

                       10.1.3 A material default by Tenant, BCC, Developer, any
        future guarantor of this Lease, or their respective Affiliates under any
        obligation with respect to any of the Other Leases or any document
        concerning the Other Properties owed by such persons to Landlord or its
        Affiliates (including, without limitation, any development agreements
        regarding Other Properties, any financing agreements, and any of the
        Other Leases), which default is not cured within any applicable cure
        period provided in the documentation for such obligation;

                       10.1.4 A material default by Tenant, or any future
        guarantor of this Lease with respect to any obligation under any other
        lease or financing agreement with any 


                                                                            -20-
<PAGE>   23

        other party, which default is not cured within any applicable cure
        period provided in the documentation for such obligation. For purposes
        of this Section 10.1.4, a default shall be deemed to be material if it
        does or could result in damages equal to or greater than One Million
        and No/100 Dollars ($1,000,000.00);

                       10.1.5 Any material misstatement or omission of fact in
        any written report, notice or communication from Tenant, BCC, Manager,
        or any future manager or guarantor of this lease to Landlord with
        respect to any of such persons or the Premises;

                       10.1.6 Any Change in Control (as defined below) of Tenant
        or BCC as of the date hereof. As used in this Section 10.1.6, the term
        "CHANGE IN CONTROL" shall mean the acquisition by any person, entity or
        group of persons or entities acting in concert (other than the current
        management of Tenant or BCC, respectively) of the beneficial interest in
        sufficient Voting Stock (defined below) of Tenant or BCC to permit the
        person, persons, entity, or entities acquiring such beneficial interests
        to vote for a majority of the board of directors of Tenant or BCC,
        respectively. For purposes of this Section 10.1.6, the term "VOTING
        STOCK" shall collectively mean (i) any and all classes of capital stock
        of a corporation to which any voting rights are ascribed to the holders
        thereof, at law or by contract, together with (ii) any contracts for the
        purchase of such stock already issued by that corporation, (iii)
        subscriptions for the purchase of such stock to be issued by that
        corporation, (iv) options to purchase such stock, (v) warrants for such
        stock, (vi) securities convertible into such stock, (vii) voting trusts,
        proxies, or other agreements or understandings with respect to the
        voting of such stock, or (viii) purchase rights, exchange rights, or
        other contracts or commitments that could require that corporation to
        sell, transfer, or otherwise dispose of any such stock or that could
        require that corporation to issue, sell, or otherwise cause to become
        outstanding any of such stock;

                       10.1.7 An assignment by Tenant, BCC, or any future
        guarantor of this Lease of all or substantially all of its property for
        the benefit of creditors;

                       10.1.8 The appointment of a receiver, trustee, or
        liquidator for Tenant, BCC Developer, Manager, or any future guarantor
        of this Lease (any such person being hereinafter individually referred
        to in this Section 10.1.8 as the "AFFECTED PERSON"), or any of the
        property of the Affected Person, if within ten (10) business days of
        such appointment the Affected Person does not inform Landlord in writing
        that the Affected Person intends to cause such appointment to be
        discharged or the Affected Person does not thereafter diligently
        prosecute such discharge to completion within sixty (60) days after the
        date of such appointment;

                       10.1.9 The failure to deliver evidence of insurance to
        Landlord as required by Section 4.1;

                       10.1.10 The filing by Tenant, BCC, Developer, Manager, or
        any future manager or guarantor of this Lease of a voluntary petition
        under any federal bankruptcy law or under the law of any state to be
        adjudicated as bankrupt or for any arrangement 


                                                                            -21-

<PAGE>   24

        or other debtor's relief, or in the alternative, if any such petition is
        involuntarily filed against Tenant, BCC, Developer, Manager, or any
        future manager or guarantor of this Lease (any such person being
        hereinafter individually referred to in this Section 10.1.10 as the
        "BANKRUPT PERSON") by any other party and the Bankrupt Person, BCC, or
        Tenant does not within three (3) business days of any such filing inform
        Landlord in writing of the intent by the Bankrupt Person to cause such
        petition to be dismissed, or if the Bankrupt Person does not thereafter
        diligently prosecute such dismissal, or if such filing is not dismissed
        within ninety (90) days after filing thereof;

                       10.1.11 The failure to perform or comply with any other
        term or provision of this Lease not requiring the payment of money
        (except as provided in Section 10.1.9), including, without limitation,
        the failure to comply with the provisions hereof pertaining to the use,
        operation and maintenance of the Premises; provided, however, the
        default described in this Section 10.1.11 is curable and shall be deemed
        cured, if: (a) within ten (10) business days of Tenant's receipt of a
        notice of default from Landlord, Tenant gives Landlord notice of its
        intent to cure such default; and (b) Tenant cures such default within
        thirty (30) days after such notice from Landlord, unless such default
        cannot with due diligence be cured within a period of thirty (30) days
        because of the nature of the default or delays beyond the control of
        Tenant, and cure after such thirty (30) day period will not have a
        material and adverse effect upon the Premises, in which case such
        default shall not constitute an Event of Default if Tenant uses its best
        efforts to cure such default by promptly commencing and diligently
        pursuing such cure to the completion thereof, provided, however, no such
        default shall continue for more than one hundred twenty (120) days from
        Tenant's receipt of a notice of default from Landlord;

                       10.1.12 There shall be no cure period in the event of the
        breach by Tenant of (a) the obligation to provide replacement policies
        of insurance as required in Section 4.1 above, (b) the provisions of
        Section 20 below, or (c) the provisions of Section 22 below with respect
        to assignments and other related matters; and

                       10.1.13 All notice and cure periods provided herein shall
        run concurrently with any notice or cure periods provided by applicable 
        law.

               10.2 REMEDIES. Upon the occurrence of an Event of Default,
Landlord may exercise all rights and remedies under this Lease and the laws of
the state in which the Premises is located available to a lessor of real and
personal property in the event of a default by its lessee, and as to the Tenant
Personal Property and the Intangible Property all remedies granted under the
laws of such State to a secured party under its Uniform Commercial Code.
Without limiting the foregoing, Landlord shall have the right to do any of the
following:

                       10.2.1 Sue for the specific performance of any covenant
        of Tenant under this Lease as to which Tenant is in breach;

                       10.2.2 Enter upon the Premises, terminate this Lease,
        dispossess Tenant from the Premises and/or collect money damages by
        reason of Tenant's breach, including, without limitation, the
        acceleration of all rent which would have accrued after 


                                                                            -22-
<PAGE>   25


        such termination and all obligations and liabilities of Tenant under
        this Lease which survive the termination of the Term;

                       10.2.3 Elect to leave this Lease in place and sue for 
        rent and/or other money damages as the same come due;

                       10.2.4 Before or after repossession of the Premises
        pursuant to Section 10.2.2, and whether or not this Lease has been
        terminated, Landlord shall have the right (but shall be under no
        obligation) to relet any portion of the Premises to such tenant or
        tenants, for such term or terms (which may be greater or less than the
        remaining balance of the Term), for such rent, or such conditions (which
        may include concessions) and for such uses, as Landlord, in its absolute
        discretion, may determine, and Landlord may collect and receive any
        rents payable by reason of such reletting. Tenant agrees to pay
        Landlord, immediately upon demand, all reasonable expenses incurred by
        Landlord in obtaining possession and in reletting any of the Premises,
        including fees, commissions and costs of attorneys, architects, agents
        and brokers. Although Landlord shall have no duty to mitigate damages
        unless required by applicable law and shall not be responsible or liable
        for any failure to relet any of the Premises or for any failure to
        collect any rent due upon any such reletting, Landlord agrees that any
        rents actually received by Landlord from reletting the Premises shall be
        credited towards the amounts due hereunder.

                       10.2.5 Sell the Tenant Personal Property and/or the 
        Intangible Property in a non-judicial foreclosure sale.

                       10.2.6 For the purpose of calculating rent loss damages
        payable to Landlord, Additional Rent for all periods after an Event of
        Default shall be calculated based on the higher of actual Gross Revenues
        or extrapolated Gross Revenues based on Gross Revenues performance prior
        to the Event of Default.

               10.3 RECEIVERSHIP. Tenant acknowledges that one of the rights and
remedies available to Landlord under applicable law is to apply to a court of
competent jurisdiction for the appointment of a receiver to take possession of
the Premises, to collect the rents, issues, profits and income of the Premises
and to manage the operation of the Premises. Tenant further acknowledges that
the revocation, suspension or material and adverse limitation of (i)
certification of the Premises for provider status (in the event such
certification is ever obtained) under Medicare or Medicaid (or successor
programs) and/or (ii) a license relating to the operation of the Premises for
its intended use as a Facility under the laws of the state in which the Premises
is located will materially and irreparably impair the value of Landlord's
investment in the Premises. Therefore, in any of such events, and in addition to
any other right or remedy of Landlord under this Lease, Landlord may petition
any appropriate court for, and Tenant hereby consents to, the appointment of a
receiver to take possession of the Premises, to manage the operation of the
Premises, to collect and disburse all rents, issues, profits and income
generated thereby and to preserve or replace to the extent possible any such
license for the Premises or to otherwise substitute the licensee or provider
thereof. The receiver shall be entitled to a reasonable fee for its services as
a receiver. All such fees and 


                                                                            -23-
<PAGE>   26


other expenses of the receivership estate shall be added to the monthly rent due
to Landlord under this Lease (but shall not be considered for the purpose of
calculating any amounts pursuant to Section 2.5 of this Lease). Tenant hereby
irrevocably stipulates to the appointment of a receiver under such circumstances
and for such purposes and agrees not to contest such appointment.

               10.4 LATE CHARGES. Tenant acknowledges that the late payment of
any Minimum Rent or Additional Rent will cause Landlord to lose the use of such
money and incur costs and expenses not contemplated under this Lease, including,
without limitation, administrative and collection costs and processing and
accounting expenses, the exact amount of which is extremely difficult to
ascertain. Therefore, if any installment of Minimum Rent or Additional Rent is
not paid within five (5) calendar days after the due date for such rent payment,
then Tenant shall pay to Landlord on demand a late charge equal to ten percent
(10%) of the amount of all installments of Minimum Rent or Additional Rent not
paid on the due date. Landlord and Tenant agree that this late charge represents
a reasonable estimate of such costs and expenses and is fair compensation to
Landlord for the loss suffered from such nonpayment by Tenant.

               10.5 REMEDIES CUMULATIVE; NO WAIVER. No right or remedy herein
conferred upon or reserved to Landlord is intended to be exclusive of any other
right or remedy, and each and every right and remedy shall be cumulative and in
addition to any other right or remedy given hereunder or now or hereafter
existing at law or in equity. No failure of Landlord to insist at any time upon
the strict performance of any provision of this Lease or to exercise any option,
right, power or remedy contained in this Lease shall be construed as a waiver,
modification or relinquishment thereof as to any similar or different breach
(future or otherwise) by Tenant. A receipt by Landlord of any rent or other sum
due hereunder (including any late charge) with knowledge of the breach of any
provision contained in this Lease shall not be deemed a waiver of such breach,
and no waiver by Landlord of any provision of this Lease shall be deemed to have
been made unless expressed in a writing signed by Landlord.

               10.6 PERFORMANCE OF TENANT'S OBLIGATIONS BY LANDLORD. If Tenant
at any time shall fail to make any payment or perform any act on its part
required to be made or performed under this Lease, then Landlord may, without
waiving or releasing Tenant from any obligations or default of Tenant hereunder,
make any such payment or perform any such act for the account and at the expense
of Tenant, and may enter upon the Premises for the purpose of taking all such
action thereon as may be reasonably necessary therefor. No such entry shall be
deemed an eviction of Tenant. All sums so paid by Landlord and all necessary and
incidental costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses) incurred in connection with the performance of any
such act by Landlord, together with interest at the maximum interest rate
allowable under the applicable statutes or law of the state in which the Real
Property is located from the date of the making of such payment or the incurring
of such costs and expenses by Landlord, shall be payable by Tenant to Landlord
on demand.



                                                                            -24-
<PAGE>   27

        11. SECURITY DEPOSIT. On the date hereof, Tenant shall deposit with
Landlord a sum equal to Sixty-Seven Thousand Five Hundred Eighty-Eight Dollars
and Four Cents ($67,588.04) in cash representing a security deposit against the
faithful performance of the terms and conditions contained in this Lease; and
monthly after the Reset Date for four (4) months, Tenant shall deposit with
Landlord a sum equal to Thirty-Three Thousand Seven Hundred Ninety-Four Dollars
and Two Cents ($33,794.02) in cash representing additional security deposit
against the faithful performance of the terms and conditions contained in this
Lease. Landlord shall not be deemed a trustee as to such deposit and shall have
the right to commingle any such security deposit with its own or other funds.
Interest on any such cash deposit shall be paid by Landlord to Tenant on a
quarterly basis in arrears at the average rate earned in such period on
Landlord's cash and cash equivalent investments. In the event Tenant has fully
complied with the terms of this Lease and no Event of Default exists, the
remaining balance of the security deposit shall be returned to Tenant, without
interest, within thirty (30) days after the expiration of the Term provided,
however, Landlord shall have the right to retain and expend such remaining
balance for cleaning and repairing the Premises if Tenant shall fail to deliver
the Premises at the termination or expiration of this Lease in a neat and clean
condition and in as good a condition as existed at the date of possession and
occupancy of same, ordinary wear and tear only excepted.

        12. DAMAGE BY FIRE OR OTHER CASUALTY.

               12.1 RECONSTRUCTION USING INSURANCE. In the event of the damage
or destruction of the Premises, Tenant shall forthwith notify Landlord and
diligently repair or reconstruct the same to a like or better condition than
existed prior to such damage or destruction. Any net insurance proceeds payable
with respect to the casualty shall be used for the repair or reconstruction of
the Premises pursuant to reasonable disbursement controls in favor of Landlord.
If such proceeds are insufficient for such purposes, Tenant shall provide the
required additional funds.

               12.2 SURPLUS PROCEEDS. If there remains any surplus of insurance
proceeds after the completion of the repair or reconstruction of the Premises,
such surplus shall belong to and be paid to Tenant.

               12.3 NO RENT ABATEMENT. The rent payable under this Lease shall
not abate by reason of any damage or destruction of the Premises by reason of an
insured or uninsured casualty. Tenant hereby waives all rights under applicable
law to abate, reduce or offset rent by reason of such damage or destruction.

        13. CONDEMNATION.       

               13.1 COMPLETE TAKING. If during the Term all or substantially
all of the Premises is taken or condemned by any competent public or
quasi-public authority, then Tenant may, at Tenant's election, made within
thirty (30) days of such taking by condemnation, terminate this Lease, and the
current Minimum Rent and Additional Rent shall be prorated as of the date of
such termination. The award payable upon such taking shall be allocated between
Landlord and Tenant as so allocated by the taking authority. In the absence of
such allocation by the taking authority, the award shall be allocated as agreed
by Landlord and Tenant. Failing such agreement within thirty (30) days after
the effective date of such




                                                                            -25-
<PAGE>   28


        13. CONDEMNATION.

               13.1 COMPLETE TAKING. If during the Term all or substantially all
of the Premises is taken or condemned by any competent public or quasi-public
authority, then Tenant may, at Tenant's election, made within thirty (30) days
of such taking by condemnation, terminate this Lease, and the current Minimum
Rent and Additional Rent shall be prorated as of the date of such termination.
The award payable upon such taking shall be allocated between Landlord and
Tenant as so allocated by the taking authority. In the absence of such
allocation by the taking authority, the award shall be allocated as agreed by
Landlord and Tenant. Failing such agreement within thirty (30) days after the
effective date of such 


                                                                            -25-
<PAGE>   29


taking, the award shall be allocated between Landlord and Tenant pursuant to the
appraisal procedure described on Exhibit "B" attached hereto.

               13.2 PARTIAL TAKING. In the event such condemnation proceeding or
right of eminent domain results in a taking of less than all or substantially
all of the Premises, the Minimum Rent and Additional Rental thereto shall be
abated to the same extent as the diminution in the fair market value of the
Premises by reason of the condemnation. Such diminution in the fair market value
shall be as agreed between Landlord and Tenant, but failing such agreement
within thirty (30) days of the effective date of the condemnation such fair
market value will be determined by appraisal pursuant to Exhibit "B" attached
hereto. Landlord shall be entitled to receive and retain any and all awards for
the partial taking and damage and Tenant shall not be entitled to receive or
retain any such award for any reason. Landlord's Investment will be reduced for
all purposes under this Lease by reason of any award paid to Landlord under this
Section 13.2.

               13.3 LEASE REMAINS IN EFFECT. Except as provided above, this
Lease shall not terminate and shall remain in full force and effect in the event
of a taking or condemnation of the Premises, or any portion thereof, and Tenant
hereby waives all rights under applicable law to abate, reduce or offset rent by
reason of such taking.

        14. PROVISIONS ON TERMINATION OF TERM.

               14.1 SURRENDER OF POSSESSION. To the extent permitted by
applicable law, Tenant shall, on or before the last day of the Term, or upon
earlier termination of this Lease, surrender to Landlord the Premises (including
all patient charts and resident records along with appropriate patient and
resident consents if necessary) in good condition and repair, ordinary wear and
tear excepted.

               14.2 REMOVAL OF PERSONAL PROPERTY. If Tenant is not then in
default hereunder Tenant shall have the right in connection with the surrender
of the Premises to remove from the Premises all Tenant Personal Property but not
the Landlord Personal Property (including the Landlord Personal Property
replaced by Tenant or required by the state in which the Premises is located or
any other governmental entity to operate the Premises for the purpose set forth
in Section 5.3 above). Any such removal shall be done in a workmanlike manner
leaving the Premises in good and presentable condition and appearance, including
repair of any damage caused by such removal. At the end of the Term or upon the
earlier termination of this Lease, Tenant shall return the Premises to Landlord
with the Landlord Personal Property (or replacements thereof) in the same
condition and utility as was delivered to Tenant at the commencement of the
Term, normal wear and tear excepted.

               14.3 TITLE TO PERSONAL PROPERTY NOT REMOVED. Title to any of
Tenant Personal Property which is not removed by Tenant upon the expiration of
the Term shall, at Landlord's election, vest in Landlord; provided, however,
that Landlord may remove and dispose at Tenant's expense of any or all of such
Tenant Personal Property which is not so removed by Tenant without obligation or
accounting to the Tenant.


                                                                            -26-


<PAGE>   30

               14.4 MANAGEMENT OF PREMISES. Upon the expiration or earlier
termination of the Term, Landlord or its designee may elect, upon written notice
to Tenant and to the extent permitted by applicable law, to assume the
responsibilities and obligations for the management and operation of the
Premises, and Tenant agrees to cooperate fully with Landlord or its designee to
accomplish the transfer of such management and operation without interrupting
the operation of the Premises. Tenant shall not commit any act or be remiss in
the undertaking of any act that would jeopardize any licensure or certification
of the facility, and Tenant shall, at the time of any such surrender and to the
extent permitted by applicable law, comply with all requests for an orderly
transfer of (a) the Applicable Facility license, (b) any Medicare and Medicaid
(or any successor program) certifications and (if applicable), and (c)
possession of the Premises. Upon the expiration or earlier termination of the
Term, Tenant shall promptly deliver copies of all of Tenant's books and records
relating to the Premises and its operations to Landlord.

               14.5 CORRECTION OF DEFICIENCIES. Upon termination or cancellation
of this Lease, Tenant shall indemnify Landlord for any loss, damage, cost or
expense incurred by Landlord to correct all deficiencies of a physical nature
identified by the governmental agency responsible for licensing Facilities in
the state in which the Premises is located and/or the governmental agency
responsible for administering Medicare or Medicaid payments or any other
government agency or Medicare or Medicaid (or any successor programs) providers
in the course of the change of ownership inspection and audit.

        15. NOTICES AND DEMANDS. All notices and demands, certificates,
requests, consents, approvals, and other similar instruments under this Lease
shall be in writing and shall be sent by personal delivery or by either (a)
United States certified or registered mail, return receipt requested, postage
prepaid, or (b) Federal Express or similar generally recognized overnight
carrier regularly providing proof of delivery, addressed as follows:


                                                                            -27-


<PAGE>   31

To Tenant:                                  To Landlord:

___________________________________         Nationwide Health Properties, Inc.
610 Newport Center Drive, Suite 1200        Attention:  Gary E. Stark
Newport Beach, California  92660            610 Newport Center Drive, Suite 1150
Attn: Kevin L. Sherry                       Newport Beach, California  92660
Facsimile: (949) 719-1212                   Facsimile:     (714) 759-6876

With Copy To:                               With Copy To:

Balanced Care Corporation                   Cordray & Goodrich
5021 Louise Drive, Suite 200                Attn:  Howard F. Cordray, Jr.
Mechanicsburg, PA  17055                    3306 Sul Ross
Attn: Legal Department                      Houston, TX  77098
Facsimile: (717) 796-6150                   Facsimile:  (713) 630-0017

With Copy To:

Kirkpatrick & Lockhart, LLP
1500 Oliver Building
Pittsburgh, PA  15222
Attn:  Steven Adelkoff
Facsimile:  (412) 355-6501

Any notice so given by mail shall be deemed to have been given as of the date of
delivery (whether accepted or refused) established by U.S. Post Office return
receipt or the overnight carrier's proof of delivery, as the case may be,
whether accepted or refused. Any such notice not so given shall deemed given
upon receipt of the same by the party to whom the same is to be given. Any party
hereto may designate a different address for itself by notice to the other party
in accordance with this Section 15. If Tenant is not an individual, notice may
be made to any officer, general partner or principal thereof.
Notice to any one co-Tenant shall be deemed notice to all co-Tenants.

         16. RIGHT OF ENTRY; EXAMINATION OF RECORDS. Landlord and its
representative may enter the Premises at any reasonable time after reasonable
notice to Tenant for the purpose of inspecting the Premises for any reason,
including, without limitation, Tenant's default under this Lease, or to exhibit
the Premises for sale, lease or mortgage financing, or posting notices of
default, or non-responsibility under any mechanic's or materialman's lien law or
to otherwise inspect the Premises for compliance with the terms of this Lease.
Any such entry shall not unreasonably interfere with residents, patients,
patient care, or any other of Tenant's operations. During normal business hours
and to the extent permitted by applicable law, Tenant will permit Landlord and
Landlord's representatives, inspectors and consultants to examine all contracts,
books and records relating to Tenant's operations at the Premises, whether kept
at the Premises or at some other location, including, without limitation,
Tenant's financial records.


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<PAGE>   32

         17. LANDLORD MAY GRANT LIENS. Without the consent of Tenant, Landlord
may, subject to the terms and conditions set forth below in this Section 17,
from time to time, directly or indirectly, create or otherwise cause to exist
any lien, encumbrance or title retention agreement ("ENCUMBRANCE") upon the
Premises, or any portion thereof or interest therein (including this Lease),
whether to secure any borrowing or other means of financing or refinancing or
otherwise. Any such Encumbrance shall provide that it is subject to the rights
of Tenant under this Lease, and shall further provide that so long as no Event
of Default shall have occurred under this Lease, Tenant's occupancy hereunder,
including, but without limitation, Tenant's right of quiet enjoyment provided in
Section 18, shall not be disturbed in the event any such lienholder or any other
person takes possession of the Premises through foreclosure proceeding or
otherwise. Upon the request of Landlord, Tenant shall subordinate this Lease to
the lien of a new Encumbrance on the Premises; provided, however, if Tenant is
not then in default hereunder, then Tenant shall not be required to so
subordinate this Lease unless the holder or beneficiary of such Encumbrance
executes a nondisturbance agreement in conformity with the provisions of Section
18 hereof.

         18. SUBORDINATION AND NON-DISTURBANCE. (a) Concurrently with the
execution and delivery of any fee mortgage entered into after the date hereof,
provided that the Tenant executes and delivers an agreement of the type
described in the following paragraph, Landlord shall obtain and deliver to
Tenant an agreement by the holder of such fee mortgage, pursuant to which, the
applicable fee mortgagee (i) consents to this Lease, and (ii) agrees that,
notwithstanding the terms of the applicable fee mortgage held by such fee
mortgagee, or any default, expiration, termination, foreclosure, sale, entry or
other act or omission under or pursuant to such fee mortgage, or any transfer in
lieu of foreclosure, (A) Tenant's rights under this Lease shall not be disturbed
so long as Tenant is not in default hereunder, nor shall this Lease be
terminated or cancelled at any time, except in the event that Landlord shall
have the right to terminate this Lease under the terms and provisions expressly
set forth herein, (B) BCC's option to purchase the Premises shall remain in
force and effect pursuant to the terms of the Master Agreement, and (C) in the
event that BCC or its Affiliate elects its option to purchase the Premises and
performs all of its obligations hereunder in connection with any such election,
the holder of the fee mortgage shall release its fee mortgage upon payment by
BCC or its Affiliate of the purchase price required under the Master Agreement.

         (b) At the request from time to time of any fee mortgagee, Tenant shall
(i) subordinate this Lease and all of Tenant's rights and estate hereunder to
the fee mortgage held by such fee mortgagee, and (ii) agree that Tenant will
attorn to and recognize such fee mortgagee or the purchaser at any foreclosure
sale or any sale under a power of sale contained in any such fee mortgage as
Landlord under this Lease for the balance of the Term then remaining. To effect
the intent and purpose of the immediately preceding sentence, Tenant agrees to
execute and deliver such instruments in recordable form as are reasonably
requested by Landlord or the applicable fee mortgagee; provided, however, that
such fee mortgagee simultaneously executes, delivers and records a written
agreement of the type described in Section 18(a) above.

         19. QUIET ENJOYMENT. So long as there is no Event of Default by Tenant,
Landlord covenants and agrees that Tenant shall peaceably and quietly have, hold
and enjoy the 


                                                                            -29-

<PAGE>   33

Premises for the Term, free of any claim or other action not caused or created
by Tenant (excepting, however, intrusion of Tenant's quiet enjoyment occasioned
by condemnation or destruction of the property as referred to in Sections 12 and
13 hereof).

         20. EASEMENTS, ETC.. Landlord will, from time to time, at the request
of Tenant and at Tenant's cost and expense, but subject to the approval of
Landlord (a) grant easements and other rights in the nature of easements, (b)
release existing easements or other rights in the nature of easements which are
for the benefit of the Premises, (c) dedicate or transfer unimproved portions of
the Premises for road, highway or other public purposes, (d) execute petitions
to have the Premises annexed to any municipal corporation or utility district,
(e) execute amendments to any covenants and restrictions affecting the Premises,
and (f) execute and deliver to any person such instruments as may be necessary
or appropriate to confirm or effect such grants, releases, dedications and
transfers (to the extent of its interest in the Premises). Along with any such
request, Tenant shall deliver to Landlord an Officer's Certificate stating (and
such other confirming information as Landlord may reasonably require) that such
grant, release, dedication, transfer, petition or amendment has no adverse
effect on the intended use of the Premises and does not reduce the value
thereof.

         21. APPLICABLE LAW. This Lease shall be governed by and construed in
accordance with the internal laws of the state in which the Premises is located
without regard to the conflict of laws rules of such State.

         22. PRESERVATION OF GROSS REVENUES.

             22.1 Tenant acknowledges that a fair return to Landlord on its
investment in the Premises is dependent, in part, on the concentration on the
Premises during the Term of the Facility business of Tenant and its Affiliates
in the geographical area of the Premises. Tenant further acknowledges that the
diversion of residents and/or patient care activities from the Premises to other
facilities owned or operated by Tenant or its Affiliates at or near the end of
the Term will have a material adverse impact on the value and utility of the
Premises.

                  22.1.1 Therefore, Tenant agrees that during the Term, and for
         a period of one (1) year thereafter, neither Tenant nor any of its
         Affiliates shall, without the prior written consent of Landlord,
         operate, own, participate in or otherwise receive revenues from any
         other facility or institution providing services or similar goods to
         those provided on or in connection with the Premises and the permitted
         use thereof as contemplated under this Lease, within a five (5) mile
         radius of the Premises; provided, however, that the provisions of this
         Section 22.1.1 shall not apply to the operation or ownership of any
         licensed skilled nursing facility or licensed acute care hospital
         facility.

                  22.1.2 In addition, Tenant hereby covenants and agrees that
         for a period of one (1) year following the expiration or earlier
         termination of this Lease, neither Tenant nor any of its Affiliates
         shall, without prior written consent of Landlord, solicit for hire,
         engage or otherwise employ any management or supervisory personnel
         working on or in connection with the Premises and not


                                                                            -30-
<PAGE>   34



         also working at any other facility owned or operated by BCC or any
         Affiliate of BCC.



             22.2 Except as required for medically appropriate reasons, prior to
and for a period of one (1) year after Lease termination, neither Tenant nor any
of its Affiliates will recommend or solicit the removal or transfer of any
resident or patient from the Premises to any other assisted living, senior
housing, or retirement housing facility; provided, however, the provisions of
this Section 22.2 shall not apply to the removal or transfer of a resident or
patient to a licensed skilled nursing facility or licensed acute care hospital
facility.

             22.3 Tenant hereby specifically acknowledges and agrees that the
temporal, geographical and other restrictions contained in this Section 22 are
reasonable and necessary to protect the business and prospects of Landlord, and
that the enforcement of the provisions of this Section 22 will not work an undue
hardship on Tenant. Tenant further agrees that in the event either the length of
time, geographical or any other restrictions, or portion thereof, set forth in
this Section 22 is overly restrictive and unenforceable in any court proceeding,
the court may reduce or modify such restrictions, but only to the extent
necessary, to those which it deems reasonable and enforceable under the
circumstances, and the parties agree that the restrictions of this Section 22
will remain in full force and effect as reduced or modified. Tenant further
agrees and acknowledges that Landlord does not have an adequate remedy at law
for the breach or threatened breach by Tenant of the covenants contained in this
Section 22, and Tenant therefore specifically agrees that Landlord may, in
addition to other remedies which may be available to Landlord hereunder, file a
suit in equity to enjoin Tenant from such breach or threatened breach, without
the necessity of posting any bond. Tenant further agrees, in the event that any
provision of this Section 22 is held to be invalid or against public policy, the
remaining provisions of this Section 22 and the remainder of this Lease shall
not be affected thereby.

         23. HAZARDOUS MATERIALS.

             23.1 HAZARDOUS MATERIAL COVENANTS. Tenant's use of the Premises
shall comply with all Hazardous Materials Laws. In the event any Environmental
Activities occur or are suspected to have occurred in violation of any Hazardous
Materials Laws or if Tenant has received any Hazardous Materials Claim against
the Premises, Tenant shall promptly obtain all permits and approvals necessary
to remedy any such actual or suspected problem through the removal of Hazardous
Materials or otherwise, and upon Landlord's approval of the remediation plan
(which approval shall not be unreasonably withheld or delayed), remedy any such
problem to the satisfaction of Landlord and all applicable governmental
authorities, in accordance with all Hazardous Materials Laws and good business
practices.

             23.2 TENANT NOTICES TO LANDLORD. Tenant shall immediately advise
Landlord in writing of:

                  23.2.1 any Environmental Activities in violation of any
         Hazardous Materials Laws;

                  23.2.2 any Hazardous Materials Claims against Tenant or the
         Premises;


                                                                            -31-
<PAGE>   35

                  23.2.3 any remedial action taken by Tenant in response to any
         Hazardous Materials Claims or any Hazardous Materials on, under or
         about the Premises in violation of any Hazardous Materials Laws;

                  23.2.4 Tenant's discovery of any occurrence or condition on or
         in a one (1) mile radius of the Premises that materially increase the
         risk that the Premises will be exposed to Hazardous Materials; and

                  23.2.5 all communications to or from Tenant, any governmental
         authority or any other person relating to Hazardous Materials Laws or
         Hazardous Materials Claims with respect to the Premises, including
         copies thereof.

             23.3 EXTENSION OF TERM. Notwithstanding any other provision of this
Lease, in the event any Hazardous Materials are discovered on, under or about
the Premises in violation of any Hazardous Materials Law, the Term shall be
automatically extended and this Lease shall remain in full force and effect
until the earlier to occur of the completion of all remedial action or
monitoring, as approved by Landlord, in accordance with all Hazardous Materials
Laws, or the date specified in a written notice from Landlord to Tenant
terminating this Lease (which date may be subsequent to the date upon which the
Term was to have expired).

             23.4 PARTICIPATION IN HAZARDOUS MATERIALS CLAIMS. Landlord shall
have the right, at Tenant's sole cost and expense (including, without
limitation, Landlord's reasonable attorneys' fees and costs) and with counsel
chosen by Landlord, to join and participate in, as a party if it so elects, any
legal proceedings or actions initiated in connection with any Hazardous
Materials Claims.

             23.5 ENVIRONMENTAL ACTIVITIES shall mean the use, generation,
transportation, handling, discharge, production, treatment, storage, release or
disposal of any Hazardous Materials at any time to or from the Premises or
located on or present on or under the Premises. Nothing contained in the
foregoing or elsewhere in this Section 21 is intended to, nor shall it, limit
the liability of Tenant, if any, to Landlord with respect to any representation
or warranty given to Landlord with respect to Hazardous Materials or
environmental matters generally as set forth in the Purchase Agreement.

             23.6 HAZARDOUS MATERIALS shall mean (a) any petroleum products
and/or by-products (including any fraction thereof), flammable substances,
explosives, radioactive materials, hazardous or toxic wastes, substances or
materials, known carcinogens or any other materials, contaminants or pollutants
which pose a hazard to the Premises or to persons on or about the Premises or
cause the Premises to be in violation of any Hazardous Materials Laws; (b)
asbestos in any form which is friable; (c) urea formaldehyde in foam insulation
or any other form; (d) transformers or other equipment which contain dielectric
fluid containing levels of polychlorinated biphenyls in excess of fifty (50)
parts per million or any other more restrictive standard then prevailing; (e)
medical wastes and biohazards; (f) radon gas in excess 


                                                                            -32-
<PAGE>   36

of permissible state or federal guidelines; (g) underground storage tanks which
pose a hazard to the property or to persons on or about the Property or cause
the Property to be in violation of any Hazardous Materials Laws; and (h) any
other chemical, material or substance, exposure to which is prohibited, limited
or regulated by any governmental authority or may or could pose a hazard to the
health and safety of the occupants of the Premises or the owners and/or
occupants of property adjacent to or surrounding the Premises, including,
without limitation, any materials or substances that are listed in the United
States Department of Transportation Hazardous Materials Table (49 CFR 172.101)
as amended from time to time.

                  23.7 HAZARDOUS MATERIALS CLAIMS shall mean any and all
enforcement, clean-up, removal or other governmental or regulatory actions or
orders threatened, instituted or completed pursuant to any Hazardous Material
Laws, together with all claims made or threatened by any third party against the
Premises, Landlord or Tenant relating to damage, contribution, cost recovery
compensation, loss or injury resulting from any Hazardous Materials.

                  23.8 HAZARDOUS MATERIALS LAWS shall mean any laws, ordinances,
regulations, rules, orders, guidelines or policies relating to the environment,
health and safety, underground storage tanks, Environmental Activities,
Hazardous Materials, air and water quality, waste disposal and other
environmental matters.

         24. ASSIGNMENT AND SUBLETTING. (a) Tenant shall not, without the prior
written consent of Landlord, which may be withheld at Landlord's sole
discretion, voluntarily or involuntarily assign, mortgage, encumber or
hypothecate this Lease or any interest herein or sublet the Premises or any part
thereof. For the purposes of this Lease, the following, without limitation,
shall be considered an assignment of this Lease by Tenant: (i) a management or
similar agreement (other than any such agreement between Tenant and BCC or an
Affiliate of BCC), and (ii) any Change in Control (as such term is defined in
Section 10.1.6 hereof) of Tenant. Any of the foregoing acts without such consent
shall be void but shall, at the option of Landlord in its sole discretion,
constitute an Event of Default giving rise to Landlord's right, among other
things, to terminate this Lease. Without limiting the foregoing, this Lease
shall not, nor shall any interest of Tenant herein, be assigned or encumbered by
operation of law without the prior written consent of Landlord which may be
withheld at Landlord's sole discretion. Notwithstanding the foregoing, Tenant
may without Landlord's consent assign this Lease or sublet all (but not less
than all) of the Premises thereof to an Affiliate of Tenant, provided that such
Affiliate fully assumes the obligations of Tenant under this Lease, BCC has
approved such assignment in writing, Tenant remains fully liable under this
Lease, the use of the Premises remains unchanged, and no such assignment or
sublease shall be valid and no such Affiliate shall take possession of the
Premises until an executed counterpart of such assignment or sublease has been
delivered to Landlord. Anything contained in this Lease to the contrary
notwithstanding, Tenant shall not sublet the Premises or any part thereof on any
basis such that the rental to be paid by the sublessee thereunder would be
based, in whole or in part, on either the income or profits derived by the
business activities of the sublessee, or any other formula, such that any
portion of the sublease rental received by Landlord would fail to qualify as
"rents from real property" within the meaning of Section 856(d) of the U.S.
Internal Revenue Code, or any similar or successor provision thereto.


                                                                            -33-
<PAGE>   37


         (b) If no Event of Default exists under this Lease and no event of
default exists under the Master Agreement, the Development Agreement, the
Deposit Pledge Agreement, or the Working Capital Assurance Agreement, then
notwithstanding the provisions of Section 10.1.6 above or Section 24(a) above to
the contrary, Tenant shall have the right, and Landlord hereby consents, to the
transfer, assignment or sale to either BCC or an Affiliate of BCC of all the
outstanding equity interests of Tenant pursuant to the Option Agreement or all
of the assets of Tenant pursuant to the Asset Purchase Option (as defined in the
Shortfall Funding Agreement); provided, however, should such purchase be made by
an Affiliate of BCC, BCC shall provide to Landlord a guaranty in form and
substance satisfactory to Landlord of all obligations of the successor Tenant
under this Lease; and provided, further, that BCC must give Landlord thirty (30)
days prior written notice of any such transfer, assignment or sale (without any
obligation for BCC to obtain Landlord's approval of any such transfer). In such
event, the initial Tenant and any guarantor of such Tenant's obligations to
Landlord (exclusive of BCC or a BCC Affiliate) shall be relieved of all
liability and obligations hereunder and to Landlord, and Landlord shall look
solely to BCC (and, if applicable, the BCC Affiliate acting as Tenant hereunder)
for the satisfaction of all such obligations owed to Landlord.

         25. INDEMNIFICATION. To the fullest extent permitted by law, Tenant
agrees to protect, indemnify, defend and save harmless Landlord, its directors,
officers, shareholders, agents and employees from and against any and all
foreseeable or unforeseeable liability, expense loss, costs, deficiency, fine,
penalty, or damage (including, without limitation, punitive or consequential
damages) of any kind or nature, including reasonable attorneys' fees, from any
suits, claims or demands, on account of any matter or thing, action or failure
to act arising out of or in connection with this Lease (including, without
limitation, the breach by Tenant of any of its obligations hereunder), the
Premises, or the operations of Tenant on the Premises, including, without
limitation, all Environmental Activities on the Premises, all Hazardous
Materials Claims (including, without limitation, any Claims arising out of any
Environmental Activities described in the "PHASE I REPORT", as defined in the
Purchase Agreement) or any violation by Tenant of a Hazardous Materials Law with
respect to the Premises. Upon receiving knowledge of any suit, claim or demand
asserted by a third party that Landlord believes is covered by this indemnity,
Landlord shall give Tenant notice of the matter. Tenant shall defend Landlord
against such matter at Tenant's sole cost and expense (including, without
limitation, Landlord's reasonable attorneys' fees and costs) with legal counsel
reasonably satisfactory to Landlord. Landlord may elect to defend the matter
with its own counsel at Tenant's expense.

         26. HOLDING OVER. If Tenant shall for any reason remain in possession
of the Premises after the expiration or earlier termination of this Lease, such
possession shall be a month-to-month tenancy during which time Tenant shall pay
as rental each month, one hundred fifty percent (150%) of the aggregate of the
monthly Minimum Rent payable with respect to the last Lease Year plus Additional
Rent allocable to the month, all additional charges accruing during the month
and all other sums, if any, payable by Tenant pursuant to the provisions of this
Lease with respect to the Premises. Nothing contained herein shall constitute
the consent, express or implied, of Landlord to the holding over of Tenant after
the expiration or earlier termination of this Lease, nor shall anything
contained herein be deemed 


                                                                            -34-
<PAGE>   38


to limit Landlord's remedies pursuant to this Lease or otherwise available to
Landlord at law or in equity.

         27. ESTOPPEL CERTIFICATES. Tenant or Landlord, as applicable, shall, at
any time upon not less than five (5) days prior written request by the
requesting party, execute, acknowledge and deliver to the requesting party or
its designee a statement in writing, executed by an officer or general partner
of Tenant or Landlord (as applicable), certifying (a) that this Lease is
unmodified and in full force and effect (or, if there have been any
modifications, that this Lease is in full force and effect as modified, and
setting forth such modifications), (b) the dates to which Minimum Rent,
Additional Rent and additional charges hereunder have been paid, (c) that no
default by either Landlord or Tenant exists hereunder or specifying each such
default, and (d) as to such other matters as the requesting party may reasonably
request.

         28. CONVEYANCE BY LANDLORD. If Landlord or any successor owner of the
Premises shall convey the Premises in accordance with the terms hereof, Landlord
or such successor owner shall thereupon be released from all future liabilities
and obligations of Landlord under this Lease arising or accruing from and after
the date of such conveyance or other transfer as to the Premises and all such
future liabilities and obligations shall thereupon be binding upon the new
owner.

         29. ACCESS TO RECORDS. To the extent required by applicable law and
until the expiration of four (4) years after the furnishing of services pursuant
to this Lease, the Landlord shall make available (and, if Landlord carries out
any of the duties under this Lease on behalf of Landlord or Tenant through a
subcontract with a related organization, and such subcontract has a value or
cost of Ten Thousand Dollars ($10,000.00) or more during any twelve (12) month
period, then such subcontract shall contain a clause to the effect that the
applicable subcontractor shall make available) the books, documents and records
of the Landlord (or such subcontractor) that are necessary to verify the nature
and extent of such costs in connection with said services, upon request by the
Secretary of Health and Human Services, the U.S. Comptroller General, or their
respective duly authorized representatives.

         30. ATTORNEYS' FEES. If Landlord or Tenant brings any action to
interpret or enforce this Lease, or for damages for any alleged breach hereof,
the prevailing party in any such action shall be entitled to reasonable
attorneys' fees and costs as awarded by the court in addition to all other
recovery, damages and costs.

         31. SEVERABILITY. In the event any part or provision of the Lease shall
be determined to be invalid or unenforceable, the remaining portion of this
Lease shall nevertheless continue in full force and effect.

         32. COUNTERPARTS. This Lease may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same agreement.


                                                                            -35-
<PAGE>   39


         33. BINDING EFFECT. Subject to the provisions of Section 24 above, this
Lease shall be binding upon and inure to the benefit of Landlord and Tenant and
their respective successors in interest and assigns.

         34. WAIVER AND SUBROGATION. Landlord and Tenant hereby waive to each
other all rights of subrogation which any insurance carrier, or either of them,
may have as to the Landlord or Tenant by reason of any provision in any policy
of insurance issued to Landlord or Tenant, provided such waiver does not thereby
invalidate the policy of insurance.

         35. MEMORANDUM OF LEASE. If requested by Landlord or Tenant, then
Landlord and Tenant shall execute a memorandum or notice of lease in which
reference to this Lease shall be made, in form suitable for recording under the
laws of the state in which the Premises is located. Tenant shall pay all costs
and expenses of preparing and recording such memorandum or notice of this Lease.

         36. INCORPORATION OF RECITALS AND ATTACHMENTS. The recitals and
exhibits, schedules, addenda and other attachments to this Lease are hereby
incorporated into this Lease and made a part hereof.

         37. TITLES AND HEADINGS. The titles and headings of sections of this
Lease are intended for convenience only and shall not in any way affect the
meaning or construction of any provision of this Lease.

         38. USURY SAVINGS CLAUSE. The parties intend that their relationship be
that of lessor and lessee only. Nothing contained in this Lease shall be deemed
or construed to constitute an extension of credit by Landlord to Tenant, nor
shall this Lease be deemed to be a partnership or venture agreement between
Landlord and Tenant. Notwithstanding the foregoing, in the event any payment
made to Landlord hereunder is deemed to violate any applicable laws regarding
usury, the portion of any payment deemed to be usurious shall be held by
Landlord to pay the future obligations of Tenant as such obligations arise and,
in the event Tenant discharges and performs all obligations hereunder, such
funds will be reimbursed to Tenant upon the expiration of the Term. No interest
shall be paid on any such funds held by Landlord.

         39. JOINT AND SEVERAL. If more than one person or entity is the Tenant
hereunder, the liability and obligations of such persons or entities under this
Lease shall be joint and several.

         40. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All of the
obligations, representations, warranties and covenants of Tenant under this
Lease shall survive the expiration or earlier termination of the Term,
including, without limitation, Tenant's obligations to pay rent and other sums
under this Lease following the occurrence of an Event of Default and the
termination of this Lease pursuant to Section 10.2.2 above.

         41. INTERPRETATION. Both Landlord and Tenant have been represented by
counsel and this Lease has been freely and fairly negotiated. Consequently, all
provisions of this Lease shall be interpreted according to their fair meaning
and shall not be strictly construed against any party.


                                                                            -36-
<PAGE>   40

         42. SUBSTITUTION OF PROPERTY FOR THE PREMISES. In the event Landlord
accepts an offer by Tenant to substitute other property for the Premises, and
provided that no Event of Default shall have occurred and be continuing, Tenant
shall have the right (subject to such conditions as Landlord may reasonably
require, and upon notice to Landlord) to substitute one or more properties
(collectively referred to as "SUBSTITUTE PROPERTIES" or individually as a
"SUBSTITUTE PROPERTY") for the Premises on a monthly payment date specified in
such notice (the "SUBSTITUTION DATE") occurring not less than ninety (90) days
after receipt by Landlord of such notice. The notice shall be in the form of an
Officer's Certificate and shall specify the reason(s) for the proposed
substitution and the proposed Substitution Date. Notwithstanding anything
contained herein to the contrary, any substitution for the Premises shall
require the prior written consent of Landlord which shall be within the sole
discretion of Landlord.

                       [FOLLOWING PAGE IS SIGNATURE PAGE]


                                                                            -37-
<PAGE>   41



         Executed as of the date indicated above.






                                        TENANT:

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


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



                                        LANDLORD:


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


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


                                                                            -38-