REVOLVING CREDIT NOTE
                             ---------------------

$2,400,000.00                                           DATED:  OCTOBER 10, 1996

     FOR VALUE RECEIVED, the undersigned, INTEGRATED LIVING COMMUNITIES, INC., a
Delaware corporation (the "Maker") hereby unconditionally promises to pay to the
order  of  INTEGRATED  HEALTH  SERVICES,   INC.,  a  Delaware  corporation  (the
"Lender"), the sum of TWO MILLION FOUR HUNDRED THOUSAND ($2,400,000.00) DOLLARS,
and all accrued and unpaid interest  thereon,  shall be fully due and payable on
December 2, 1996.

     This Note shall bear interest from its date until maturity on the principal
amount  outstanding  from time to time  hereunder  (calculated on the basis of a
360-day  year of twelve  30-day  months) at a rate per annum  equal to  fourteen
(14%) percent.  Each installment when paid shall be applied first to the payment
of all accrued interest and the balance shall be applied to principal.

     Notwithstanding  any provision  contained  herein,  the total  liability of
Maker for  payment of  interest  pursuant  hereto  shall not exceed the  maximum
amount of such interest permitted by law to be charged,  collected,  or received
from Maker and if any  payments by Maker  includes  interest in excess of such a
maximum  amount,  Lender shall apply such excess to the  reduction of the unpaid
principal  amount due pursuant  hereto,  or if none is due, such excess shall be
refunded to Maker.

     The Lender will record the date and amount of each loan made to Maker,  the
date and amount of any principal and interest payment, and the principal balance
hereof of any schedule which may be attached hereto and made a part hereof,  and
any such recordation  shall, in the absence of manifest error,  constitute prima
facie evidence of the accuracy of the information so recorded; provided however,
that the Lender's  failure to so record shall not limit the  obligations  of the
Maker  hereunder to pay the  principal of and interest on the loans  advanced to
Maker.

     The Maker may prepay all or any part of the remaining  balance of this Note
at any time without penalty or premium.

         Maker waives  presentment for payment,  demand,  notice of non-payment,
notice of protest and protest of this Note,  and all other notices in connection
with the delivery, acceptance, performance, default, dishonor, or enforcement of
the  repayment of this Note.  Upon the  occurrence of a default under this Note,
the lender may proceed to protect and enforce its rights hereunder in any manner
or order it deems  expedient  without  regard  to any  equitable  principles  of
marshalling  or  otherwise.  All  rights  and  remedies  given by this  Note are
cumulative  and not  exclusive of any thereof or of any other rights or remedies
available to the Lender and no course of dealing between Maker and the Lender or
any delay or  omission  in  exercising  any right or remedy  shall  operate as a
waiver of

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any right or remedy,  and every right and remedy may be  exercised  from time to
time and as often as shall be deemed appropriate by Lender.

     This Note shall be governed,  interpreted,  and  enforceable  in accordance
with the laws of the State of Delaware.

     IN WITNESS  WHEREOF,  the  undersigned  has executed  this Note on the date
first above written.

                                             INTEGRATED LIVING COMMUNITIES, INC.

               
                                             BY: /s/John B. Poole
                                                --------------------------------
                                                John B. Poole

                                             TITLE:  CFO
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