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                                                                    Exhibit 10.7


                                 PROMISSORY NOTE
                                    (SECOND)


PRINCIPAL AMOUNT:  $2,000,000                            DATE: JANUARY 12, 2000


            Christian Health Care of Missouri, Inc., a Missouri nonprofit
corporation, Christian Health Care Terraces, Inc., a Missouri nonprofit
corporation, Regional Care of Nevada, LLC, a Missouri limited liability company,
Regional Care of Republic, LLC, a Missouri limited liability company, and
Cornerstone Health Care, Inc., a Missouri corporation (hereinafter collectively
referred to as "Maker"), do hereby jointly and severally promise to pay to the
order of Balanced Care Corporation, a Delaware corporation ("Payee"), with its
principal place of business at 1215 Manor Drive, Mechanicsburg, PA 17055, or at
such other place as Payee may from time to time designate in writing, in lawful
money of the United States of America, in immediately available funds the
principal sum of $2,000,000 plus interest from and after the date hereof on the
unpaid balance hereof at the Applicable Interest Rate, as defined below. Maker
shall make six (6) equal monthly installments of interest only on the
outstanding principal sum on the first day of each calendar month commencing
February 1, 2000, and continuing on the 1st day of each calendar month
thereafter up to and including July 1, 2000. Maker shall thereafter pay
twenty-four (24) equal monthly installments of principal and interest based on a
twenty-four (24) month amortization period commencing August 1, 2000, and
continuing on the 1st day of each calendar month thereafter up to and including
July 1, 2002. The balance of any principal sum remaining, together with all
accrued but unpaid interest, shall be immediately due and payable in full on
July 1, 2002, or upon earlier maturity hereof whether by acceleration or
otherwise (the "Maturity Date"). Notwithstanding the foregoing Maturity Date and
payment terms, in the event Maker pays off the existing lease and loan
obligations in favor of Meditrust with respect to the Meditrust Leased
Facilities, the balance of any principal sum remaining, together with all
accrued but unpaid interest, shall be immediately due and payable in full.

            Any capitalized term used but not defined herein shall have the
meaning ascribed to such term in that certain Asset Purchase Agreement (as
amended) dated as of October 15, 1999 by and between Maker and Payee.

            The term "Applicable Interest Rate" means from the date of this Note
through and including the Maturity Date, a fixed rate of eight and
three/quarters percent (8.75%) per annum. All interest payable hereunder shall
be calculated on the basis of a 365-day year.

            Maker may prepay this Note in whole or in part at any time, and from
time to time, without premium or penalty. All payments made hereunder shall be
applied first to amounts due other than interest and principal, then to accrued
but unpaid interest and then to principal.
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            The following events shall be Events of Default under this Note:

                        (i)   failure to make any payment on this Note within
      twenty (20) days after the date on which the same shall become due;

                        (ii) any breach by Maker under the Guaranty (as defined
      below) or Lease Guaranty Fee Agreement; or

                        (iii) adjudication of Maker as a bankrupt or insolvent,
      or entry of an order, remaining unstayed by appeal or otherwise for ninety
      (90) days, appointing a receiver or trustee for Maker, or for all or any
      of its property, or approving a petition seeking reorganization or relief
      under the bankruptcy or other similar laws of the United States or of any
      state or of any other competent jurisdiction, or the filing by Maker of a
      petition seeking any of the foregoing or consenting thereto, or the filing
      of a petition to take advantage of any debtors' law, or making a general
      assignment for the benefit of creditors, or admitting in writing its
      inability to pay its debts as they mature.

            Upon and during the continuance of any Event of Default, Payee may
at any time by notice to Maker declare the unpaid principal of this Note and all
interest then accrued thereon to be due, and such principal and interest shall
thereupon be immediately due and payable without presentment, protest, demand or
other notice (except as provided herein), provided, however, that upon an Event
of Default described in clause (iii), above, the entire balance of this Note
shall thereupon be immediately due and payable in full without any action or
demand by Payee. Thereafter, interest shall continue to accrue on the amount due
hereunder at the Applicable Interest Rate and shall be payable upon demand.

            Maker further agrees, to the extent not prohibited by applicable
law, to pay to Payee all reasonable costs and expenses incurred by Payee in the
collection of this Note, including reasonable attorneys' fees, costs and
expenses.

            This Note is secured by, and the Payee is entitled to the benefits
of, an Agreement of Guaranty and Suretyship (the "Guaranty") made by Allen D.
Kilgore, individually, in favor of Payee; and, additionally, a separate Deed of
Trust for each of the Owned Facilities, made by Regional Care of Nevada, LLC, in
the one instance, and Regional Care of Republic, LLC, in the other instance,
each in favor of the Payee. Any holder of this Note is entitled to the benefits
of the Guaranty and each Deed of Trust to which reference is hereby made and may
exercise the remedies provided for thereby or otherwise available in respect
thereof.

            Maker waives presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Note (except as provided herein), and agrees that
the liability of Maker shall not be in any manner affected by any indulgence,
extension of time, renewal, waiver or notification granted or consented to by
Payee. No delay or omission on the part of the Payee in exercising any right
hereunder shall operate as a waiver of such right or of any other right under
this Note. A waiver on any one occasion shall not be construed as a bar to or
waiver of any such future right and/or remedy on any future occasion.

            In the event any payment required by this Note is deemed to be
usurious, the amount so required to be paid shall be the maximum legal amount
and any amount in excess of said legal amount shall be deemed for all purposes
whatsoever as applied toward reduction of the principal indebtedness hereunder.


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            If any provision of this Note shall be illegal, invalid or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not be affected and shall remain in full force and effect as
though such illegal, invalid or unenforceable provision was not included in this
Note.

              In any action on this Note, Payee or its assignee need not produce
or file the original of this Note, but need only produce or file a photocopy of
this Note certified by Payee or such assignee to be a true and correct copy of
this Note.

            This Note shall be binding on and inure to the benefit of each of
Payee and Maker, and their respective successors and assigns, except Maker shall
have no right to assign any rights or interests under this Note without the
prior written consent of Payee, which consent, based on Payee's own internal
credit evaluation policy and procedures, shall not be unreasonably withheld,
delayed, or otherwise conditioned.

            THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF MISSOURI,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OR CHOICE OF LAWS.

            THE PARTIES HEREBY AGREE THAT THE UNITED STATES DISTRICT COURT FOR
THE WESTERN DISTRICT OF MISSOURI OR, TO THE EXTENT REQUIRED BY APPLICABLE LAW,
ANY MISSOURI STATE COURT, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES PERTAINING DIRECTLY OR INDIRECTLY TO THIS
GUARANTY AGREEMENT.


            THE PROVISIONS OF THIS NOTE MAY BE AMENDED OR REVISED ONLY BY AN
INSTRUMENT IN WRITING SIGNED BY THE MAKER AND PAYEE. THIS NOTE EMBODIES THE
FINAL, ENTIRE AGREEMENT OF MAKER AND PAYEE AND SUPERSEDES ANY AND ALL PRIOR
COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR
ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE
CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF MAKER AND PAYEE. THERE ARE NO ORAL AGREEMENTS
BETWEEN MAKER AND PAYEE.

               [THIS REMAINING SPACE INTENTIONALLY LEFT BLANK]
               [THE NEXT PAGE FOLLOWING IS THE SIGNATURE PAGE]


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            IN WITNESS WHEREOF, and intending to be jointly and severally
legally bound, Maker has executed and sealed this Note as of the date set forth
above.


WITNESS/ATTEST:                           MAKER:
                                          CHRISTIAN HEALTH CARE OF MISSOURI,
                                          INC.

By: /s/ Ray Green                         By: /s/ Allen D. Kilgore
-----------------                             ---------------------
Name: Rayburn W. Green                         Allen D. Kilgore
Title: Attorney                                      President

WITNESS/ATTEST:                           MAKER:
                                          CHRISTIAN HEALTH CARE
                                          TERRACES, INC.

By: /s/ Ray Green                         By: /s/ Allen D. Kilgore
-----------------                             ---------------------
Name: Rayburn W. Green                         Allen D. Kilgore
Title: Attorney                                      President

WITNESS/ATTEST:                           MAKER:
                                          REGIONAL CARE OF NEVADA, LLC

By: /s/ Ray Green                         By: /s/ Allen D. Kilgore
-----------------                             ---------------------
Name: Rayburn W. Green                         Allen D. Kilgore
Title: Attorney                                      President

WITNESS/ATTEST:                           MAKER:
                                          REGIONAL CARE OF REPUBLIC, LLC

By: /s/ Ray Green                         By: /s/ Allen D. Kilgore
-----------------                             ---------------------
Name: Rayburn W. Green                         Allen D. Kilgore
Title: Attorney                                     President

WITNESS/ATTEST:                           MAKER:
                                          CORNERSTONE HEALTH CARE, INC.

By: /s/ Ray Green                         By: /s/ Allen D. Kilgore
-----------------                             ---------------------
Name: Rayburn W. Green                         Allen D. Kilgore
Title: Attorney                                      President


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                                 ACKNOWLEDGMENT

STATE OF ARKANSAS
COUNTY OF WASHINGTON

      BE IT REMEMBERED, that on this day came before the undersigned, a Notary
Public duly commissioned and acting, Allen D. Kilgore, to me well known or
satisfactorily proven, as the President, of Christian Health Care of Missouri,
Inc., a Missouri nonprofit corporation, who stated that he was authorized to
execute and deliver this Promissory Note (First) on behalf of such corporation,
and further stated that he had executed and delivered this Promissory Note
(First), on behalf of such corporation, for the consideration and purposes set
forth herein.

      WITNESS my signature and seal as a Notary Public on January 4th, 2000.

My Commission Expires:
                                    Rebecca C. Bercher
                                    -------------------------
9-1-2009                            Notary Public


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                                 ACKNOWLEDGMENT

STATE OF ARKANSAS
COUNTY OF WASHINGTON

      BE IT REMEMBERED, that on this day came before the undersigned, a Notary
Public duly commissioned and acting, Allen D. Kilgore, to me well known or
satisfactorily proven, as the President, of Christian Health Care Terraces,
Inc., a Missouri nonprofit corporation, who stated that he was authorized to
execute and deliver this Promissory Note (First) on behalf of such corporation,
and further stated that he had executed and delivered this Promissory Note
(First), on behalf of such corporation, for the consideration and purposes set
forth herein.

      WITNESS my signature and seal as a Notary Public on January 4th, 2000.

My Commission Expires:
                                    Rebecca C. Bercher
                                    -------------------------
9-1-2009                            Notary Public


                                       6
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                                 ACKNOWLEDGMENT

STATE OF ARKANSAS
COUNTY OF WASHINGTON

      BE IT REMEMBERED, that on this day came before the undersigned, a Notary
Public duly commissioned and acting, Allen D. Kilgore, to me well known or
satisfactorily proven, as the President, of Regional Care of Nevada, LLC, a
Missouri limited liability company, who stated that he was authorized to execute
and deliver this Promissory Note (First) on behalf of such corporation, and
further stated that he had executed and delivered this Promissory Note (First),
on behalf of such corporation, for the consideration and purposes set forth
herein.

      WITNESS my signature and seal as a Notary Public on January 4th, 2000.

My Commission Expires:
                                    Rebecca C. Bercher
                                    -------------------------
9-1-2009                            Notary Public


                                       7
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                                 ACKNOWLEDGMENT

STATE OF ARKANSAS
COUNTY OF WASHINGTON

      BE IT REMEMBERED, that on this day came before the undersigned, a Notary
Public duly commissioned and acting, Allen D. Kilgore, to me well known or
satisfactorily proven, as the President, Regional Care of Republic, LLC, a
Missouri limited liability company, who stated that he was authorized to execute
and deliver this Promissory Note (First) on behalf of such corporation, and
further stated that he had executed and delivered this Promissory Note (First),
on behalf of such corporation, for the consideration and purposes set forth
herein.

      WITNESS my signature and seal as a Notary Public on January 4th, 2000.

My Commission Expires:
                                    Rebecca C. Bercher
                                    -------------------------
9-1-2009                            Notary Public


                                       8
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                                 ACKNOWLEDGMENT

STATE OF ARKANSAS
COUNTY OF WASHINGTON

      BE IT REMEMBERED, that on this day came before the undersigned, a Notary
Public duly commissioned and acting, Allen D. Kilgore, to me well known or
satisfactorily proven, as the President, of Cornerstone Health Care, Inc., a
Missouri corporation, who stated that he was authorized to execute and deliver
this Promissory Note (First) on behalf of such corporation, and further stated
that he had executed and delivered this Promissory Note (First), on behalf of
such corporation, for the consideration and purposes set forth herein.

      WITNESS my signature and seal as a Notary Public on January 4th, 2000.

My Commission Expires:
                                    Rebecca C. Bercher
                                    -------------------
9-1-2009                            Notary Public


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