<PAGE>
Exhibit 10.15

                                    GUARANTY

      Reference is made to (a) that certain Option, Settlement and Release
Agreement, dated as of February 6, 2002 (the "Option Agreement"), by and among
Meditrust Acquisition Company II LLC (the "Lessor"), La Quinta TRS II, Inc. ("La
Quinta-TRS"), IPC Advisors S.A.R.L.(the "Buyer"), Balanced Care Corporation (the
"Guarantor"), Balanced Care at Stafford, Inc. ("BCC-Stafford"), BCC Development
and Management Co. (the "Developer"), Balanced Care at Blytheville, Inc.
("BCC-Blytheville"), Balanced Care at Lewisburg, Inc. ("BCC-Lewisburg"), BCC at
Lima, Inc. ("BCC-Lima"), Balanced Care at Dillsburg, Inc. ("BCC-Dillsburg"),
Balanced Care at Xenia, Inc. ("BCC-Xenia"), BCC at Chippewa, Inc.
("BCC-Chippewa"), Balanced Care at Kingsport, Inc. ("BCC-Kingsport"), Balanced
Care at Chesterfield, Inc. ("BCC-Chesterfield"), Balanced Care at
Hendersonville, Inc. ("BCC-Hendersonville"), Balanced Care at Knoxville, Inc.
("BCC-Knoxville"), Balanced Care at Pocahontas, Inc. ("BCC-Pocahontas") and
Balanced Care Tenant (MT), Inc. (the "Lessee") and (b) that certain Master Lease
Agreement of even date herewith by and between the Lessor and the Lessee (the
"Lease"). All capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to such terms in the Lease.

      The Lessor is the owner of twelve (12) parcels of lands located in
Arkansas, Pennsylvania, Ohio, Virginia and Tennessee and more particularly
described in the Lease (collectively, the "Land"). The Lessor acquired title to
the Land from its Affiliate, New Meditrust Company LLC, a Delaware limited
liability company that is now known as THCI Company, LLC ("New Meditrust-LLC").
BCC-Stafford, the Developer, BCC-Blytheville, BCC-Lewisburg, BCC-Lima,
BCC-Dillsburg, BCC-Xenia, BCC-Chippewa, BCC-Kingsport, BCC-Chesterfield,
BCC-Hendersonville, BCC-Knoxville and BCC-Pocahontas (collectively, the "BCC
Subsidiaries") are all directly owned and controlled by the Guarantor. The Buyer
is the majority shareholder of the Guarantor. The Guarantor and the BCC
Subsidiaries (collectively, the "BCC Parties") regularly transact business with
each other, with the BCC Parties providing working capital, financial and
management services and benefits and other services and benefits to and for each
other.

      Previously, certain wholly-owned Subsidiaries of Meditrust Corporation,
which is now known as La Quinta Properties, Inc.
<PAGE>
(such Subsidiaries are collectively referred to as the "Meditrust Subsidiaries")
entered into various loan, lease and other transactions involving the Guarantor
and various wholly-owned Subsidiaries of the Guarantor, including, without
limitation, the transactions evidenced by the Existing Lease Documents (as
defined under the Option Agreement) and transactions involving the Tranche 1
Properties (as defined under the Option Agreement). Pursuant to the Existing
Leases, the Lessor leased the Leased Property to the Existing Lessees (as
defined under the Option Agreement). Until the consummation of the Stock
Transfers (as defined under the Option Agreement), all of the Existing Lessees
other than BCC-Stafford (collectively, the "Third Party Lessees") were owned by
parties that are unrelated to the Guarantor.

      In accordance with the Existing Lease Documents, the Developer, on behalf
of each Third Party Lessee, constructed an assisted living or other senior
housing facility on the portion of the Land demised to such Third Party Lessee,
with funds advanced under the Existing Lease Documents. Each Third Party Lessee
also engaged one of the BCC Subsidiaries (other than the Developer and
BCC-Stafford) to manage the Facility demised to it under the applicable Existing
Lease.

      In addition to advancing funds under the Existing Lease Documents for the
construction of the Facilities, the applicable Meditrust Subsidiary (i) advanced
funds pursuant to the Notes (as defined under the Option Agreement) to the
Holding Companies (as defined under the Option Agreement), the sole shareholders
of the Third Party Lessees, to enable the Holding Companies to make equity
contributions to the Third Party Lessees so that, upon receipt of the equity
contributions made by the Holding Companies to the Third Party Lessees, such
Third Party Lessees could fulfill their respective working capital obligations,
including, without limitation, their Existing Lease Obligations (as defined
under the Option Agreement) and (ii) accepted the Demand Notes (as defined under
the Option Agreement), as additional security for the Existing Lease
Obligations.

      In order to induce the applicable Meditrust Subsidiaries (i) to enter into
and accept the Existing Leases and the other Existing Lease Documents and (ii)
to lend to the Holding Companies the sums advanced under the Notes in accordance
with the terms thereof; which, in turn, induced the Third Party Lessees to
engage the Developer to develop the Facilities demised to the Third Party
Lessees and to engage the other applicable BCC Subsidiaries to manage such
Facilities, the


                                       -2-
<PAGE>
Guarantor agreed, pursuant to the Working Capital Assurance Agreements (as
defined under the Option Agreement), to advance to the Third Party Lessees all
funds necessary for the Third Party Lessees to fulfill their working capital
obligations (including, without limitation, all of their rent and other
obligations under the Existing Leases). In consideration of the Guarantor's
agreement to provide such working capital to the Third Party Lessees, the
Holding Companies granted the Guarantor options to acquire all of the issued and
outstanding capital stock of the Third Party Lessees (collectively, the "Stock
Options"); thus, the Guarantor and the other BCC Parties each received direct
and indirect benefits from the consummation of the transactions contemplated
under the Existing Lease Documents because they were able to enter into
contractual arrangements that would allow them to develop, manage and ultimately
acquire ownership of the operation of the Facilities.

      In 1999, the Buyer and the Guarantor were granted an option to acquire the
Tranche 1 Properties by New Meditrust-LLC. As part of the consideration paid by
the Buyer and the Guarantor for the Tranche 1 Properties, the Buyer and
Guarantor executed and delivered to New Meditrust-LLC a Promissory Note, dated
as of December 30, 1999, in the original principal amount of SEVEN MILLION EIGHT
HUNDRED ELEVEN THOUSAND FIFTY-FOUR DOLLARS ($7,811,054) made by the Buyer and
the Guarantor to the order of New Meditrust-LLC (the "Promissory Note"). As a
condition of the consummation of the transaction involving the Tranche 1
Properties, the Buyer and the Guarantor agreed to acquire from New Meditrust-LLC
an option to acquire a fee simple interest in the Leased Property and New
Meditrust-LLC agreed to grant the Buyer an option to acquire a fee simple
interest in the Leased Property, all in accordance with the terms and conditions
set forth in that certain Option Agreement, dated as of December 30, 1999, as
amended, by and among New Meditrust-LLC, the Buyer and the Guarantor (the "1999
Option Agreement"). The 1999 Option Agreement provided, among other things, that
for each Facility (and the applicable portion of the Leased Property relating
thereto) acquired in accordance with the terms of the 1999 Option Agreement, a
portion of the purchase price paid with respect thereto would be applied to
reduce the Promissory Note.

      The 1999 Option Agreement expired by its terms without any exercise
thereunder; however, prior to the expiration of the term of the 1999 Option
Agreement, there were numerous conversations and letters between the parties
regarding proposed extensions of the 1999 Option Agreement and a dispute arose
between New Meditrust-LLC, the Guarantor and the Buyer as to


                                       -3-
<PAGE>
whether and on what terms an extension had been granted and as to the
outstanding obligations owed to New Meditrust-LLC under the Promissory Note. The
Guarantor and the Buyer asserted, among other things, that New Meditrust-LLC (i)
violated its obligations under the 1999 Option Agreement, in part, to avoid a
reduction of the outstanding indebtedness under the Promissory Note and (ii)
failed to provide a waiver of financial covenants under certain of the Existing
Lease Documents so that defaults under the Existing Lease Documents would exist
(which would, in turn, prevent the exercise of the option under the 1999 Option
Agreement as the absence of any such defaults was a pre-condition to the
exercise and consummation of the transactions contemplated under the 1999 Option
Agreement).

      New Meditrust-LLC denied those allegations and asserted, among other
things, that the request for the waiver was not made until after the 1999 Option
Agreement had already expired and that the Buyer and the Guarantor had not
exercised the option granted under the 1999 Option Agreement prior to the
expiration thereof. In March of 2001, New Meditrust-LLC assigned all of its
right, title and interest under the Promissory Note to La Quinta-TRS. La
Quinta-TRS filed the Pending Litigation (as defined in the Option Agreement)
against the Buyer and the Guarantor, seeking payment of all amounts due under
the Promissory Note.

      During the recent past, the Guarantor and its Subsidiaries experienced
cash flow shortfalls at certain of their respective facilities and businesses
(including, without limitation, at the Facilities) and, as a result of such cash
flow shortfalls, publicly announced, on several previous occasions, that they
would be unable to meet their various financial obligations, including, without
limitation, (i) the Guarantor's obligations to the Lessor to advance funds under
the Working Capital Assurance Agreements and make payments under the Potomac
Point Guaranty (as defined under the Option Agreement) and (ii) BCC-Stafford's
obligation to pay rent under the Potomac Point Lease (as defined under the
Option Agreement). Such announcements by the Guarantor that it was unable to
meet its debts constituted defaults under the Existing Leases. In addition, (a)
commencing with the quarter that ended September 30, 2000 and for each quarter
thereafter, the Existing Lessees failed to maintain the applicable Rent Coverage
Ratio (as defined under the Option Agreement) required under the Existing Leases
and such failures to maintain the required Rent Coverage Ratios constituted
defaults under the Existing Leases and (b) commencing with the quarter that
ended September 30, 2000 and for each quarter


                                       -4-
<PAGE>
thereafter, the Guarantor did not maintain the Tangible Net Worth (as defined
under the Option Agreement) required under the Existing Leases and such failures
to maintain the required Tangible Net Worth constituted defaults under the
Existing Leases.

      Commencing with the month ending on November 30, 2000 and for each month
thereafter, the Holding Companies failed to make the payments due under the
Notes and such failures to make the monthly payments due under the Notes
constituted defaults under the Existing Leases. Commencing with the month ending
on December 31, 2000 and for each month thereafter, the Third Party Lessees and
BCC-Stafford did not pay the Existing Base Rent (as defined in the Option
Agreement) due under the Existing Leases and such failures to make the Existing
Base Rent payments constituted defaults under the Existing Leases. In addition,
the Third Party Lessees and BCC-Stafford did not pay all of the Existing
Additional Rent (as defined under the Option Agreement) due under the Existing
Leases and such failures to make the Existing Additional Rent payments
constituted defaults under the Existing Leases.

      Demand was made upon the Guarantor under the Working Capital Assurance
Agreements and the Potomac Point Guaranty to advance sufficient funds to cure
the monetary defaults described above, but the Guarantor failed to effect such
cures and such failures constituted defaults under the Existing Leases. The
Guarantors and its Subsidiaries, as well as the Third Party Lessees, continued
to experience cash flow shortfalls and, as a result, the Guarantor, the other
BCC Parties and the Third Party Lessees anticipated a continued future inability
to comply with their respective obligations under the Existing Lease Documents.

      The Buyer, the Guarantor and the BCC Subsidiaries wished to avoid the
damage to their respective businesses and reputations which may have resulted
from (i) the continued inability by the Guarantor and the BCC Subsidiaries to
comply with their respective obligations under the Existing Lease Documents and
any subsequent exercise by the Lessor of its rights and remedies in connection
therewith and (ii) the continued prosecution of the Pending Litigation by La
Quinta-TRS. The Lessor and La Quinta-TRS (collectively, the "Meditrust Parties")
wished to avoid (a) the damage to the reputation and other goodwill of the
Facilities that may have resulted from any future inability of the Guarantor and
the BCC Subsidiaries to comply with their obligations under the Existing Lease
Documents as a consequence of their deteriorating financial condition and (b)
the delay and


                                       -5-
<PAGE>
expense attendant to any exercise of their respective rights and remedies under
the Existing Lease Documents and the Promissory Note. In addition, the Buyer
wished to be granted an option to acquire the Leased Property so that in
connection with any purchase of the Leased Property by the Buyer, the BCC
Parties' business operations with respect to the Facilities could restructured
on a basis favorable to them, which will, in turn, allow (x) the Guarantor and
the BCC Subsidiaries to improve their deteriorating financial condition and (y)
the Buyer to protect its investment in the Guarantor. In addition, (1) as a
consequence of the deteriorating financial condition of the Balanced Care
Entities (as defined in the Option Agreement), the Buyer and the Guarantor asked
for certain financial accommodations from the Meditrust Parties, including,
without limitation, a release from their respective liabilities under the
Promissory Note and arising as a consequence of the Existing Defaults (as
defined under the Option Agreement) and (2) in order to move forward toward
completing the Divesture (as defined under the Option Agreement), (A) the Seller
wished to resolve the Existing Defaults and desires to sell the Leased Property
and (B) La Quinta-TRS wished to resolve the Pending Litigation.

      Consequently, the Buyer, the BCC Parties and the Meditrust Parties entered
into the Option Agreement to and address and settle the foregoing matters.
Pursuant to the Option Agreement, among other things, (i) the Lessor granted an
option to the Buyer to acquire the Leased Property at a discounted price, (ii)
La Quinta-TRS agreed to settle the Pending Litigation, (iii) the Seller granted
the BCC Release (as defined under the Option Agreement) and (iv) the Meditrust
Parties granted the IPC/BCC Release (as defined under the Option Agreement); all
subject to the terms and conditions more particularly set forth under the Option
Agreement, including, without limitation, the consummation of the Stock
Transfers and Mergers, the assignment of the tenant's interest under the Potomac
Point Lease Documents to the Lessee, the consolidation, amendment and
restatement of the Existing Leases into the Lease and the execution and delivery
of the other Lease Documents (including, without limitation, this Guaranty).

      Accordingly, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, which consideration includes (a)
the Lessor's agreement to enter into the Option Agreement and grant the Option
Right (as defined under the Option Agreement) to the Buyer, (b) the Lessor's
agreement to the IPC/BCC Release and the BCC Release and (c) the


                                       -6-
<PAGE>
Lessor's agreement to consent to the Stock Transfers (notwithstanding the
Existing Defaults), the undersigned, BALANCED CARE CORPORATION, a Delaware
corporation, having its principal place of business at 1215 Manor Drive,
Mechanicsburg, Pennsylvania 17055, hereby unconditionally guarantees to the
Lessor the full payment and performance of the Lease Obligations.

      This Guaranty is an absolute, unconditional and continuing guaranty of the
full and punctual payment and performance of the Lease Obligations and not
merely of their collectibility and is in no way conditioned upon any requirement
that the Lessor first collect or attempt to collect the Lease Obligations or any
portion thereof from the Lessee or from any endorser, surety or other guarantor
of any of the same or resort to any security or other means of obtaining the
payment and/or performance of any of the Lease Obligations that the Lessor now
has or may acquire after the date hereof, or upon any other contingency
whatsoever. Upon any Lease Default, the Lease Obligations and all liabilities
and obligations of the Guarantor to the Lessor, hereunder or otherwise, shall,
at the option of the Lessor, become immediately due and payable to the Lessor
without further demand or notice of any nature, all of which are expressly
waived by the Guarantor. Payments by the Guarantor hereunder may be required by
the Lessor on any number of occasions. This Guaranty shall continue in full
force and effect until the complete payment and performance of all of the Lease
Obligations.

      All payments hereunder received by the Lessor shall be applied by the
Lessor, without any marshalling of assets, towards the payment and/or
performance of the Lease Obligations and any other indebtedness of the Guarantor
hereunder in such order as the Lessor, in its sole and absolute discretion, may
determine.

      2.    The Guarantor's Further Agreements to Pay. The Guarantor further
agrees, as the principal obligor and not as a guarantor, to pay to the Lessor
forthwith upon demand, in funds immediately available to the Lessor, all costs
and expenses, including without limitation, court costs and attorneys' fees and
expenses and court costs, reasonably incurred or expended by the Lessor in
connection with the collection or enforcement of the Lease Obligations and the
enforcement of all of the other obligations hereunder. Any amounts owed to the
Lessor under this Section 2 shall be a demand obligation and, if not paid within
ten (10) days after demand, shall thereafter, to the


                                       -7-
<PAGE>
extent then permitted by applicable law, bear interest at the Overdue Rate until
the date of payment. The provisions of this Section 2 shall survive the
expiration or earlier termination of the Lease.

      3.    Liability of the Guarantor. This Guaranty is unlimited and the
Guarantor shall be jointly and severally liable with every endorser, surety or
other guarantor of any or all of the Lease Obligations and the continuation of
this Guaranty shall not be affected by the termination, discontinuance, release
or modification of any agreement from (a) any such endorser, surety or guarantor
and/or (b) any other endorser, surety or guarantor of any of the other
Obligations. Nothing contained herein or otherwise shall require the Lessor to
make demand upon or join the Lessee or any such endorser, surety or guarantor or
other party in any suit brought upon this Guaranty; and the Guarantor hereby
waives any right to require marshalling or exhaustion of any remedy against any
collateral, other property, or any other Person primarily or secondarily liable
for the Obligations.

      4.    The Lessor's Freedom to Deal with the Lessee and Other Parties. The
Lessor shall be at liberty, without giving notice to or obtaining the assent of
the Guarantor and without relieving the Guarantor of any liability hereunder, to
deal with the Lessee and with each other Person who now is or after the date
hereof becomes liable in any manner for any of the Obligations in such manner as
the Lessor, in its sole and absolute discretion, deems fit. The Lessor and the
other Meditrust Entities have full authority (in their sole and absolute
discretion) to do any or all of the following things, none of which shall
discharge or affect the Guarantor's liability hereunder:

      (a)   extend credit, make loans and afford other financial accommodations
to the Lessee and/or any of the Related Parties at such times, in such amounts
and on such terms as the Lessor may approve;

      (b)   modify, amend, vary the terms and grant extensions or renewals of
any present or future indebtedness or of any of the Obligations or any
instrument relating to or securing the same, and, without limitation, this
Guaranty shall survive the expiration or earlier termination of the Lease;

      (c)   grant time, waivers and other indulgences in respect of any of the
Obligations;


                                       -8-
<PAGE>
      (d)   vary, exchange, release or discharge, wholly or partially, or delay
or abstain from perfecting and enforcing any security or guaranty or other means
of obtaining payment of any of the Obligations which the Lessor or any of the
other Meditrust Entities now has or acquires after the date hereof;

      (e)   take or omit to take any of the actions referred to in any
instrument evidencing, securing or relating to any of the Obligations or any
actions under this Guaranty;

      (f)   fail, omit or delay to enforce, assert or exercise any right, power
or remedy conferred on the Lessor or any of the other Meditrust Entities in this
Guaranty or in any other instrument evidencing, securing or relating to any of
the Obligations or take or refrain from taking any other action;

      (g)   accept partial payments from the Lessee, any other member of the
Leasing Group, any of the Related Parties or any other Person;

      (h)   release or discharge, wholly or partially, the Lessee, any other
member of the Leasing Group, any of the Related Parties and/or any other Person
now or hereafter primarily or secondarily liable for the Obligations (or any
portion thereof) or accept additional collateral for the payment of any
Obligations;

      (i)   compromise or make any settlement or other arrangement with the
Lessee, any other member of the Leasing Group, any of the Related Parties or any
other Person referred to in clause (h) above; and

      (j)   consent to and participate in the proceeds of any assignment, trust
or mortgage for the benefit of creditors.

      5.    Unenforceability of Obligations; Invalidity of Security or Other
Guaranties. The obligations of the Guarantor hereunder shall not be affected by
any change in the beneficial ownership of the Lessee, any other member of the
Leasing Group or any of the Related Parties, by reason of any disability of the
Lessee, any other member of the Leasing Group, any Related Party or by any other
circumstance (other than the complete payment and performance of the Lease
Obligations) which might constitute a defense available to, or a discharge of,
the Lessee, any other member of the Leasing Group or any of the Related Parties
in respect of any of the Obligations. If for


                                       -9-
<PAGE>
any reason now or hereafter the Lessee, any other member of the Leasing Group or
any of the Related Parties has no legal existence or is under no legal
obligation to discharge any of the Obligations undertaken or purported to be
undertaken by it or on its behalf, or if any of the moneys included in the
Obligations have become irrecoverable from the Lessee, any other member of the
Leasing Group or any Related Party by operation of law or for any other reason,
this Guaranty shall nevertheless be binding on the Guarantor and the Guarantor
shall remain unconditionally liable for the complete payment and performance of
the Lease Obligations. This Guaranty shall be in addition to any other guaranty
or other security for the Obligations, and it shall not be prejudiced or
rendered unenforceable by the invalidity of any such other guaranty or security.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if, at any time, any payment of the Obligations is rescinded or must
otherwise be returned by the Lessor or any of the other Meditrust Entities, upon
the insolvency, bankruptcy or reorganization of the Lessee, any other member of
the Leasing Group or any of the Related Parties or otherwise, all as though such
payment had not been made. The Guarantor covenants to cause the Lessee to
maintain and preserve the enforceability of any instruments now or hereafter
executed in favor of the Lessor, and to take no action of any kind which might
be the basis for a claim that the Guarantor has any defense hereunder other than
the complete payment and performance of the Lease Obligations.

      It shall not be necessary for the Lessor to inquire into the power of the
Lessee or anyone acting or purporting to act on its behalf, and any Lease
Obligation made or created in reliance upon the professed exercise of such
powers shall be guaranteed hereunder. The Guarantor represents that the Lessee
is the bona fide tenant of the Leased Property and that the Lessee has not been
formed or availed of to evade or circumvent the applicable usury laws of any
state or states concerned therewith, and the Guarantor hereby indemnifies the
Lessor and agrees to save it harmless against any damages or expenses suffered
by the Lessor should this representation or any other representation contained
herein prove untrue in any material respect. The aforesaid indemnification
agreement shall include, without limitation, attorneys' fees and expenses and
court costs reasonably incurred by the Lessor in connection with the enforcement
of said indemnification.


                                      -10-
<PAGE>
      The indemnity provisions of this Section 5 shall survive the complete
payment and performance of the Obligations and the expiration or earlier
termination of the Lease.

      6.    Representations and Warranties of the Guarantor. In order to induce
the Lessor to enter into or accept the Lease and the other Lease Documents, the
Guarantor hereby warrants and represents to, and covenants and agrees with, the
Lessor that:

      6.1.  Formation and Authority of the Guarantor.

      (a)   The Guarantor is a corporation duly organized, validly existing and
in good standing under the laws of Delaware. The Guarantor has all requisite
corporate power to own and operate its properties and to carry on its business
as now conducted and as proposed to be conducted and is duly qualified to do
business and is in good standing in each jurisdiction where such qualification
is necessary or desirable in order to carry out its business as now conducted
and as proposed to be conducted;

      (b)   The Guarantor is duly authorized to make and enter into this
Guaranty and all of the other Lease Documents to which the Guarantor is a party
and to carry out the transactions contemplated therein. This Guaranty and all of
the other Lease Documents to which the Guarantor is a party have each been duly
executed and delivered by the Guarantor, and each is a legal, valid and binding
obligation of the Guarantor, enforceable in accordance with its terms;

      6.2.  The Lessee as Subsidiary.

      The Lessee is a wholly-owned Subsidiary of the Guarantor.

      6.3.  No Violations.

      The execution, delivery and performance of this Guaranty and the other
Lease Documents and the consummation of the transactions thereby contemplated
shall not result in any breach of, or constitute a default under, or result in
the acceleration of, or constitute an event which, with notice or passage of
time could result in default or acceleration of any obligation of the Guarantor
or any other contract, mortgage, lien, lease, agreement, instrument, franchise,
arbitration award, judgment, decree, bank loan or credit agreement, trust
indenture or other instrument to which the Guarantor is a party or by which the


                                      -11-
<PAGE>
Guarantor may be bound or affected and do not violate or contravene any Legal
Requirement;

      6.4.  No Consent or Approval.

      Except as already obtained or filed, as the case may be, no consent or
approval or other authorization of, or exemption by, or declaration or filing
with, any Person and no waiver of any right by any Person is required to
authorize or permit, or is otherwise required as a condition to the Guarantor's
execution and delivery of this Guaranty or any of the other Lease Documents to
which it is a party and the performance of its obligations thereunder, or as a
condition to the validity (assuming the due authorization, execution and
delivery by the Lessor of the Lease and the other Lease Documents to which it is
a party) or enforceability of any of the same and/or the first priority of any
Liens granted thereunder;

      6.5.  Pending Litigation.

      To the best of the Guarantor's knowledge and belief, there are no actions,
suits, investigations or proceedings pending or threatened:

            i.    against or affecting any portion of the Leased Property or the
      ownership, construction, development, maintenance, management, repair,
      use, occupancy, possession or operation thereof in excess of Twenty-Five
      Thousand Dollars ($25,000) and not covered by insurance; or

            ii.   which may involve or affect the validity, priority or
      enforceability of this Guaranty, the Lease or any of the other Lease
      Documents, at law or in equity, or before or by any arbitrator or
      Governmental Authority;

      6.6.  Commercial Acts.

      The Guarantor's performance of and compliance with the obligations and
conditions set forth herein and the other Lease Documents to which it is a party
will constitute commercial acts done and performed for commercial purposes; and

      6.7.  Filing of Tax Returns.

      The Guarantor has filed all federal, state and local tax returns which are
required to be filed as to which extensions are not currently in effect and has
paid all taxes, assessments,


                                      -12-
<PAGE>
impositions, fees and other governmental charges (including interest and
penalties) which have become due pursuant to such returns or pursuant to any
assessment or notice of tax claim or deficiency received by the Guarantor. No
tax liability has been asserted by the Internal Revenue Service against the
Guarantor or any other federal, state or local taxing authority for taxes,
assessments, impositions, fees or other governmental charges (including interest
or penalties thereon) in excess of those already paid.

      7.    Continuing Representations and Warranties: All representations and
warranties contained in this Guaranty shall constitute continuing
representations and warranties which shall remain true, correct and complete as
long as this Guaranty is in force and effect. Notwithstanding the provisions of
the foregoing sentence but without derogation from any other terms and
provisions of this Guaranty, including, without limitation, those terms and
provisions containing covenants to be performed or conditions to be satisfied on
the part of the Guarantor, the representations and warranties contained in
Section 6.5 and in the second sentence of Section 6.7 hereof shall not
constitute continuing representations and warranties hereunder.

      8.    No Contest with the Lessor. No set-off, counterclaim, reduction or
diminution of any obligation, or any claim or defense of any kind or nature
which the Guarantor has or may have against the Lessee, any other member of the
Leasing Group, any of the Related Parties or the Lessor shall be available
hereunder to the Guarantor. The Guarantor shall not assert and hereby waives any
right whatsoever that the Guarantor may have at law or in equity, including,
without limitation, any right of subrogation or to seek contribution,
indemnification or any other form of reimbursement from the Lessee, any other
endorser, surety or guarantor of any of the Obligations or any other Person now
or hereafter primarily or secondarily liable for any of the Obligations. The
Guarantor shall not, in any proceedings under the Bankruptcy Code or insolvency
proceedings of any nature, prove in competition with the Lessor in respect of
any payment hereunder or be entitled to have the benefit of any counterclaim or
proof of claim or dividend or payment by or on behalf of the Lessee, any other
member of the Leasing Group or any of the Related Parties or the benefit of any
other security for any obligation which, now or hereafter, the Guarantor may
hold in competition with the Lessor.

      9.    Set-off. In addition to any rights now or hereafter granted under
any agreement or applicable law and not by way of


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<PAGE>
limitation of any such rights, upon the occurrence of any Lease Default,
including, without limitation, any default by the Guarantor hereunder, the
Lessor and the other Meditrust Entities are hereby authorized at any time or
from time to time, without presentment, demand, protest or other notice of any
kind to the Guarantor or to any other Person, all of which are hereby expressly
waived, to set off and to appropriate and apply any and all deposits and any
other indebtedness at any time held by or owing to the Lessor (or any of the
other Meditrust Entities) to or for the credit or the account of the Guarantor
against and on account of the obligations and liabilities of the Guarantor to
the Lessor or any of the other Meditrust Entities under this Guaranty or
otherwise, irrespective of whether or not the Lessor or any of the other
Meditrust Entities shall have made any demand hereunder or under any Related
Party Agreement and although said obligations, liabilities or claims, or any of
them, may then be contingent or unmatured and without regard to the availability
or adequacy of other collateral. The Guarantor also grants to the Lessor (and
the other Meditrust Entities) a security interest in all of the Guarantor's
deposits, securities and other property at any time and from time to time, in
the possession of the Lessor (or any of the other Meditrust Entities) and, upon
the occurrence of any Lease Default, the Lessor and the other Meditrust Entities
may exercise all rights and remedies of a secured party under the Massachusetts
Uniform Commercial Code. The Lessor and the other Meditrust Entities shall have
no duty to take steps to preserve rights against prior parties as to such
securities or other property.

      The Guarantor hereby agrees that all collateral now or hereafter granted
as security for any indebtedness of the Guarantor to the Lessor and/or the other
Meditrust Entities shall be deemed to be additional collateral securing the
Obligations.

      10.   Waivers. The Guarantor waives presentment for payment, demand,
protest, notice of nonpayment, notice of dishonor, protest of any dishonor,
suretyship defenses, notice of protest and protest of the Lease Documents and,
and all other notices in connection with (a) the delivery or the acceptance of
the Lease Documents and any reliance thereon and/or (b) the performance, default
(except notice of default as specifically elsewhere required under any of the
Lease Documents) or enforcement of any obligation under the Lease Documents, and
agrees that its liability shall be unconditional without regard to the liability
of any other party and shall not be in any manner affected by any indulgence,
extension of time, renewal,


                                      -14-
<PAGE>
waiver or modification granted or consented to by the Lessor; and the Guarantor
consents to any and all extensions of time, renewals, waivers or modifications
that may be granted or consented to by the Lessor with respect to the payment or
performance of any obligations under the Lease Documents and to the release of
the Collateral (or any part thereof), with or without substitution, and agrees
that additional makers, endorsers, guarantors or sureties may become parties to
the Lease Documents without notice to the Guarantor or affecting the liability
of the Guarantor hereunder or under any of the other Lease Documents to which
the Guarantor is a party.

      11.   Indemnification. Except with respect to the gross negligence or
willful misconduct of the Lessor or any of the other Indemnified Parties, as to
which no indemnity is provided, the Guarantor hereby agrees to defend with
counsel acceptable to the Lessor, indemnify and hold harmless the Lessor and
each of the other Indemnified Parties from and against all damages, losses,
claims, liabilities, obligations, penalties, causes of action, costs and
expenses (including, without limitation, attorneys' fees, court costs and other
expenses of litigation) suffered by, or claimed or asserted against, the Lessor
or any of the other Indemnified Parties, directly or indirectly, based on,
arising out of or resulting from (a) the use and occupancy of the Leased
Property or any business conducted therein, (b) any act, fault, omission to act
or misconduct by (i) any member of the Leasing Group, (ii) any Affiliate of the
Lessee or (iii) any employee, agent, licensee, business invitee, guest,
customer, contractor or sublessee of any of the foregoing parties, relating to,
directly or indirectly, the Leased Property, (c) any accident, injury or damage
whatsoever caused to any Person, including, without limitation, any claim of
malpractice, or to the property of any Person in or about the Leased Property or
outside of the Leased Property where such accident, injury or damage results or
is claimed to have resulted from any act, fault, omission to act or misconduct
by any member of the Leasing Group or any Affiliate of the Lessee or any
employee, agent, licensee, contractor or sublessee of any of the foregoing
parties, (d) any Lease Default (including, without limitation, the failure of
the Lessee to pay the Reimbursement Amount to the Lessor), (e) any claim brought
or threatened against any of the Indemnified Parties by any member of the
Leasing Group or by any other Person on account of (i) the Lessor's relationship
with any member of the Leasing Group pertaining in any way to the Leased
Property and/or the transaction evidenced by the Lease Documents and/or (ii) the
Lessor's negotiation of, entering into and/or performing any of


                                      -15-
<PAGE>
its obligations and/or exercising any of its right and remedies under any of the
Lease Documents, (f) any attempt by any member of the Leasing Group or any
Affiliate of the Lessee to transfer or relocate any of the Permits to any
location other than the Leased Property and/or (g) the enforcement of this
indemnity. Any amounts which become payable by the Guarantor under this Section
11 shall be a demand obligation of the Guarantor to the Lessor. The indemnity
provided for in this Section 11 shall survive any termination of this Guaranty.

      12.   Notices. Any notice, request, demand, statement or consent made
hereunder shall be in writing and shall be deemed duly given if personally
delivered, sent by certified mail, return receipt requested, or sent by a
nationally recognized commercial overnight delivery service with provisions for
a receipt, postage or delivery charges prepaid, and shall be deemed given when
postmarked or placed in the possession of such mail or delivery service and
addressed as follows:

If to the Guarantor:          Balanced Care Corporation
                        1215 Manor Drive
                        Mechanicsburg, Pennsylvania  17055
                        Attn:  President

With copies to:               Balanced Care Corporation
                        1215 Manor Drive
                        Mechanicsburg, Pennsylvania  17055
                        Attn:  General Counsel

                        Kirkpatrick & Lockhart
                        Henry W. Oliver Building
                        535 Smithfield Street
                        Pittsburgh, Pennsylvania  15222-2312
                        Attn:  Steven Adelkoff, Esq.

If to the Lessor:             Meditrust Acquisition Company II LLC
                        197 First Avenue
                        Needham Heights, Massachusetts  02494
                        Attn:  President

With copies to:               Meditrust Acquisition Company II LLC
                        197 First Avenue
                        Needham Heights, Massachusetts  02494
                        Attn:  General Counsel

                        Nutter, McClennen & Fish, LLP
                        One International Place


                                      -16-
<PAGE>
                        Boston, Massachusetts  02110-2699
                        Attn:  Marianne Ajemian, Esq.

or at such other place as any of the parties hereto may from time to time
hereafter designate to the others in writing. Any notice given to the Guarantor
by the Lessor at any time shall not imply that such notice or any further or
similar notice was or is required.

      13.   Governing Law. This Guaranty shall be construed, and the rights and
obligations of the Lessor and the Guarantor shall be determined, in accordance
with the laws of the Commonwealth of Massachusetts.

      The Guarantor hereby consents to personal jurisdiction in the courts of
the Commonwealth of Massachusetts and the United States District Court for the
District of Massachusetts as well as to the jurisdiction of all courts from
which an appeal may be taken from the aforesaid courts, for the purpose of any
suit, action or other proceeding arising out of or with respect to any of the
Lease Documents, the negotiation and/or consummation of the transactions
evidenced by the Lease Documents, the Lessor's relationship of any member of the
Leasing Group in connection with the transactions evidenced by the Lease
Documents and/or the performance of any obligation or the exercise of any remedy
under any of the Lease Documents and expressly waives any and all objections the
Guarantor may have as to venue in any of such courts.

      14.   General Provisions; Rules of Construction. The provisions set forth
in Article 23 and Sections 2.2, 11.5.4, 16.8 through 16.10, 17.2, 24.2 through
24.10 and 24.12 of the Lease are hereby incorporated herein by reference,
mutatis, mutandis and shall be applicable to this Guaranty as if set forth in
full herein.

                [REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]


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<PAGE>
      IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as an
instrument under seal as of the 14th day of March, 2002.

WITNESS:                      GUARANTOR:

                              BALANCED CARE CORPORATION, a Delaware
                              corporation


/s/Jaynelle D. Covert         By:/s/Robin L. Barber (SEAL)
Name: Jaynelle D. Covert           Name: Robin L. Barber
                                   Title: Senior Vice President,
                                   Legal Counsel and Assistant
                                   Secretary


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