<PAGE>
Exhibit 10.45
                          SECURITY AND PLEDGE AGREEMENT

         This SECURITY AND PLEDGE AGREEMENT (the "Security Agreement") is made
effective as of March 31, 2002, by and among Balanced Care Realty (OFC), Inc., a
Delaware corporation (the "Borrower"), Balanced Care at Medina, Inc., a Delaware
corporation ("BCM"), Balanced Care at Centerville, Inc., a Delaware corporation
("BCC"), Balanced Care at Shippensburg, Inc., a Delaware corporation ("BCS"),
Senior Care Operators of Shippensburg, LLC, a Delaware limited liability company
("SCS") and Ocwen Financial Corporation, a Florida corporation ("Ocwen").
Borrower, BCM, BCC, BCS, and SCS are hereinafter referred to collectively as the
"Obligated Group."

                                   WITNESSETH:

         WHEREAS, Ocwen, Borrower, Balanced Care Corporation, a Delaware
corporation ("Balanced Care"), BCM, BCC, BCS, and SCS have or will enter into
the Term Loan Agreement, as of the date hereof ("Term Loan Agreement"), pursuant
to which Ocwen has agreed to loan Borrower, and Borrower has accepted from
Ocwen, the principal sum of Nine Million One Hundred Fifty-Three Thousand Three
Hundred Fifty-Six Dollars ($9,153,356.00) plus interest thereon ("Loan"). The
Borrower's obligations under the Term Loan Agreement are evidenced by a
promissory note of even date herewith ("Term Note").

         WHEREAS, Ocwen is willing to enter into the Term Loan Agreement upon
the condition that the Obligated Group grants to and creates in favor of Ocwen
security interests in certain property of the Obligated Group as security for
(i) the payment of all amounts owing to Ocwen pursuant to the Term Loan
Agreement, the Term Note, this Security Agreement, the other Security Documents
(as defined in the Term Loan Agreement), and all other Loan Documents (as
defined in the Term Loan Agreement); and (ii) the Obligated Group's performance
of, and compliance with, all of the terms, covenants, conditions, stipulations
and agreements contained in the Term Loan Agreement, this Security Agreement,
the other Security Documents, and the other Loan Documents (all of the foregoing
are collectively referred to hereinafter as the "Secured Obligations"). Terms
used herein which are defined in the Term Loan Agreement shall have the meanings
set forth in the Term Loan Agreement, unless the context hereof otherwise
clearly requires.
<PAGE>

         NOW, THEREFORE, Ocwen and the Obligated Group, intending to be legally
bound, in exchange for the mutual promises, covenants, and agreements set forth
herein, the Loan, and the promise to repay such Loan, and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, hereby agree that the foregoing recitals are incorporated herein
by reference and as follows:

                                   AGREEMENT:

         SECTION 1. Creation of Security Interests. As security for the Secured
Obligations, each member of the Obligated Group hereby (a) grants and creates in
favor of Ocwen, and (b) agrees that there now are or will be duly executed and
filed and recorded in all appropriate state and local offices all documents
necessary to grant and create in favor of Ocwen, the following:

                  (a) Security Interests. A first priority security interest
         under the Uniform Commercial Code, as adopted by the State of Ohio and
         the Commonwealth of Pennsylvania, as amended from time to time, in all
         personal property of the members of the Obligated Group, wherever
         located, and now owned or hereafter acquired, including:

                      (i)     Accounts, including but not limited to all
                              accounts receivable and health care insurance
                              receivables;

                      (ii)    Chattel paper (electronic and tangible);

                      (iii)   Goods, including goods that are or are to become
                              fixtures, timber to be cut, manufactured homes,
                              inventory, consumer goods, farm products,
                              equipment, software embedded in goods, and goods
                              covered by documents; and, any other tangible
                              property of the members of the Obligated Group;
                              (iv) Oil, gas, and other minerals after
                              extraction;

                      (v)     Instruments, including promissory notes;

                      (vi)    Documents;

                      (vii)   Letter of credit rights;

                      (viii)  Investment property, except for the stock of
                              Senior Care Operators of Shippensburg, LLC, which
                              is currently owned by BCS;

                      (ix)    Deposit accounts of any nature or type, created
                              for any purpose whatsoever,

                                      -2-
<PAGE>

                              including but not limited to deposit accounts for
                              escrow funds pursuant to the Term Loan Agreement;

                     (x)      The commercial tort claims described on Schedule 6
                              attached hereto;

                     (xi)     General intangibles, including but not limited to
                              (1) all payment intangibles and all other forms of
                              obligations owing to any member of the Obligated
                              Group, and (2) all licenses, permits,
                              certifications, provider
                              agreements and certifications under the Medicare
                              and Medicaid Programs or other governmental
                              programs, rights under Ohio's or Pennsylvania's
                              certificate of need law or federal law presently
                              held by any member of the Obligated Group or
                              required by any member of the Obligated Group to
                              operate its facilities as nursing homes, assisted
                              living facilities or other types of long-term care
                              facilities, and all other licenses, permits and
                              certifications under Ohio, Pennsylvania, and/or
                              federal law associated with or required in
                              connection with the operation of a nursing home,
                              assisted living facility, or other type of
                              long-term care facility;

                     (xii)    All intellectual property of the members of the
                              Obligated Group, including but not limited to
                              patents, patent applications, copyrights,
                              servicemarks, trademarks, logos, or tradenames,
                              pending applications for any of the foregoing, and
                              all licenses thereof; and, any other intangible
                              property of the members of the Obligated Group;


                     (xiii)   Security interests, including but not limited to
                              guarantees, held by or in favor of the members of
                              the Obligated Group;

                     (xiv)    Supporting obligations;

                     (xv)     Accessions;

                     (xvi)    After-acquired property;

                     (xvii)   Contracts and contract rights, including but not
                              limited to the


                                      -3-
<PAGE>

                              Obligated Group's interest as lessor or sublessor
                              under real property leases, resident agreements
                              (occupancy agreements) or other income-producing
                              or income-generating contracts to which any member
                              of the Obligated Group is a party, Medicare and
                              Medicaid provider agreements and other agreements
                              with governmental agencies, and service agreements
                              or other vendor contracts to which any member of
                              the Obligated Group is a party which are
                              necessary, required, or desirable for any member
                              of the Obligated Group to operate its business;

                     (xviii)  All cash and non-cash proceeds resulting or
                              arising from the rendering of services (of any
                              nature or type) by any member of the Obligated
                              Group;

                        (xix) Proceeds or rights to payment arising or resulting
                              from insurance coverage (of any nature or type) or
                              settlements relating to same; and

                         (xx) To the extent not listed above as original
                              collateral, proceeds and products of the
                              foregoing.

                  (b) Pledges. A pledge hereunder of all of the securities,
         promissory notes, deposit accounts (general or special), evidences of
         indebtedness, and certificates of deposit described on Schedule 1
         attached hereto and incorporated herein by this reference, except for
         the stock of Senior Care Operators of Shippensburg, LLC, which is
         currently owned by BCS (collectively the "Pledged Security"), or
         hereafter acquired by any member of the Obligated Group, together with
         assignments endorsed in blank, control agreements or contracts, or
         other documents required to transfer any member of the Obligated
         Group's interest in such Pledged Security to Ocwen and/or required in
         order for Ocwen to perfect Ocwen's security interest in same, which
         Pledged Security, assignments, control agreements, etc. in favor of
         Ocwen have been made and delivered simultaneously (except for those
         relating to after-acquired property) with the execution of this
         Security Agreement.

                                      -4-
<PAGE>

                  (c) Intellectual Property. An assignment of all patents,
         patent applications, copyrights, service marks, trademarks, logos and
         trade names, and all licenses thereof, of the members of the Obligated
         Group (collectively, "Intellectual Property").

                  (d) Assignment of Leases. An assignment of all real and
         personal property leases related to the operation of the members of the
         Obligated Group's business, except for vehicles leased from third
         parties by any member of the Obligated Group for use at the Project
         Properties (as defined in the Term Loan Agreement) and except for
         equipment leased from third parties by any member of the Obligated
         Group for use at the Project Properties.

                  (e) Subsequent Grants. A security interest under the Uniform
         Commercial Code, a mortgage or deed of trust, an assignment of leases,
         a pledge or an assignment, whichever is appropriate, in, on or of any
         property determined to be available to or requested by Ocwen pursuant
         to the provisions of this Security Agreement, the Loan Documents, or
         any other documents, notes, or agreements evidencing, securing, or
         otherwise with respect to indebtedness of the members of the Obligated
         Group to Ocwen, whether now existing or hereafter arising.

                  (f) Financing Statement. The members of the Obligated Group
         authorize Ocwen to file financing statements, continuations, or
         amendments describing the Collateral (as hereinafter defined), any
         agricultural liens, or other statutory liens held by Ocwen.

                  (g) Assignment of Contract Rights. Upon written notice, at any
         time, from Ocwen to any member of the Obligated Group, an assignment of
         all contracts to which such member of the Obligated Group is a party
         and which are required, necessary or desirable in order for such member
         to operate its facilities as assisted living facilities, or other types
         of long-term care facilities, including but not limited to resident or
         occupancy agreements or contracts (quasi real property leases), other
         income-producing or income-generating contracts for such member or its
         business(es), Medicare and Medicaid provider agreements and other
         agreements with governmental agencies, service agreements of every
         nature or type, and various other vendor contracts.

                                      -5-
<PAGE>

         The terms used in Section 1(a) shall have the same meanings as in the
Uniform Commercial Code as adopted in the State of Ohio as amended from time to
time. The property described in this Section 1 is collectively referred to
herein as the "Collateral."

         SECTION 2. Conditions of Issuance. In addition to the conditions on
Ocwen's obligation to make the Loan set forth in the Term Loan Agreement, the
following conditions must be satisfied before Ocwen shall be required to provide
the Loan to the Borrower:

                  (a) Possession. The members of the Obligated Group shall have
         possession of the Collateral, except for that Collateral which Ocwen
         chooses to perfect by possession, including, but not limited to, the
         Collateral listed in Schedule 3 to this Security Agreement.

                  (b) Control. Ocwen shall have control of the Collateral listed
         in Schedule 4 as of the Closing Date. The members of the Obligated
         Group will cooperate with Ocwen such that Ocwen shall gain control of
         such Collateral on or prior to the Closing Date.

                  (c) Collateral Locations. The members of the Obligated Group
         will provide, no less than five (5) days prior to or at Closing, a
         schedule containing the counties and states where the Collateral is
         located (the "Collateral States"), such schedule being attached to this
         Security Agreement as Schedule 2.

                  (d) Notice of Security Interests in Inventory or Livestock.
         The members of the Obligated Group will provide a list, attached as
         Schedule 5 hereto, of any security interests in its inventory or
         livestock held by other secured parties. The members of the Obligated
         Group will cooperate with Ocwen to send out appropriate notices to such
         other secured parties prior to the members of the Obligated Group
         gaining possession of the inventory or livestock.

                  (e) Interest in Real Property. The members of the Obligated
         Group will provide a true and correct description of the real property
         where the fixtures, crops, or other real property interests are
         located, which description is attached hereto as Exhibit A.

                                      -6-
<PAGE>

         SECTION 3. Provisions Applicable to the Collateral. The parties agree
that the following provisions shall be applicable to the Collateral during the
term of this Security Agreement:

                  (a)      Books and Records.

                           (i) The members of the Obligated Group will keep
                    accurate and complete books and records concerning the
                    Collateral. The members of the Obligated Group will maintain
                    accounting practices that will enable Ocwen to identify and
                    trace the proceeds of any Collateral.

                           (ii) The members of the Obligated Group shall not
                    invoice an account debtor or maintain its records in any
                    name other than its own proper corporate name.

                  (b) Inspection. Ocwen and its authorized agents shall have the
         right to review the books and records of the members of the Obligated
         Group concerning the Collateral and to copy the same and make excerpts
         therefrom, and to inspect the Collateral, at all times during regular
         business hours.

                  (c) Members of the Obligated Group's Right to Collect
         Accounts. Notwithstanding the security interest in the Accounts granted
         hereunder, the members of the Obligated Group shall have the right to
         collect the Accounts at its own cost and expense until such time as
         Ocwen shall have notified the members of the Obligated Group pursuant
         to paragraph (e) below that it has revoked such right.

                  (d) Cash Collateral Accounts. If an Event of Default shall
         have occurred and be continuing beyond any applicable cure period,
         Ocwen shall have the right after notice to the members of the Obligated
         Group to cause to be opened and maintained with Ocwen one or more
         non-interest bearing bank accounts in the name of the respective member
         of the Obligated Group as cash collateral accounts (herein called
         "Collateral Accounts"). Upon receipt of notice by the respective member
         of the Obligated Group from Ocwen that one or more Collateral Accounts
         have been opened for the respective member of the Obligated Group
         pursuant to this paragraph, the respective member of the Obligated
         Group shall cause all cash Proceeds collected by it to be delivered to
         Ocwen forthwith upon receipt, in the original form in which received,
         bearing such endorsements or assignments by the respective member of
         the Obligated Group as may be necessary to permit collection thereof by
         Ocwen, and for such purpose


                                      -7-
<PAGE>

         the respective member of the Obligated Group hereby irrevocably
         authorizes and empowers the officers and employees of Ocwen to endorse
         and sign the name of the respective member of the Obligated Group on
         all checks, drafts, money orders or other media of payment so delivered
         to it and such endorsements or assignments shall, for all purposes, be
         deemed to have been made by the respective member of the Obligated
         Group prior to any endorsement or assignment thereof by Ocwen. Ocwen
         may use any convenient or customary means for the purpose of collecting
         such checks, drafts, money orders or other media of payment. Ocwen
         shall terminate the requirement that cash proceeds be delivered to
         Ocwen pursuant to this Section 3 at such time as Ocwen shall determine,
         in its sole and absolute discretion.

                  (e) Collection of Accounts by Ocwen. If an Event of Default
         shall have occurred and be continuing beyond any applicable cure
         period, Ocwen shall have the right at any time (i) to revoke the right
         of the members of the Obligated Group to collect their Accounts
         pursuant to paragraph (c) above by written notice to the members of the
         Obligated Group to such effect, (ii) to take over and direct collection
         of the Accounts of the members of the Obligated Group, (iii) to give
         notice of Ocwen's security interest in the Accounts to any or all of
         the account debtors or makers obligated to the members of the Obligated
         Group thereon, (iv) to direct such account debtors to make payment of
         the Accounts directly to Ocwen (and at the request of Ocwen, the
         members of the Obligated Group shall indicate on all billings to
         account debtors that payments thereon are to be made to Ocwen), and (v)
         to take control of the Accounts of the members of the Obligated Group
         and the proceeds thereof and to take possession of copies of all of the
         members of the Obligated Group's books and records relating thereto,
         with full power and authority in the name of Ocwen or of the members of
         the Obligated Group to enforce, collect, sue for, receive, compromise,
         settle and receipt for any and all of the Accounts. If any Account
         becomes evidenced by a promissory note or other instrument for the
         payment of money, and there is, prior to payment thereof, an Event of
         Default or Default, the members of the Obligated Group will at Ocwen's
         request deliver any such instrument to Ocwen duly endorsed to the order
         of Ocwen as additional Collateral under this Security Agreement. It is
         understood and agreed by the members of the Obligated Group that Ocwen
         shall have no liability whatsoever to the members of the Obligated
         Group under this paragraph (e) except for its own gross negligence or
         willful


                                      -8-
<PAGE>
         misconduct. Provided, however, that in the event that Ocwen's actions
         under this paragraph (e) shall adversely affect or compromise the
         licensure of any of the Project Properties (as defined in the Tem Loan
         Agreement), such actions shall be deemed to constitute "gross
         negligence" on the part of Ocwen.

                  (f) Funds in Collateral Accounts; Control. All cash proceeds
         received by Ocwen from the members of the Obligated Group pursuant to
         paragraph (d) above or by Ocwen directly from account debtors pursuant
         to paragraph (e) above shall be deposited in Ocwen's Collateral Account
         as further security for the Secured Obligations. Ocwen shall have sole
         dominion and control over all funds deposited in each Collateral
         Account and such funds may be withdrawn therefrom only by or at the
         direction of Ocwen.

                  (g) Account Verification. Ocwen may at any time, following an
         Event of Default that continues beyond any applicable cure period, with
         prior notice to the members of the Obligated Group, verify with any
         account debtor of the members of the Obligated Group the status of any
         accounts payable by such account debtor. Prior to the occurrence of an
         Event of Default hereunder, no request for verification shall be made
         in the name of Ocwen or shall disclose the purpose of such request. The
         members of the Obligated Group from time to time will execute and
         deliver such instruments and take all such action as Ocwen may
         reasonably request in order to effectuate the purpose of this paragraph
         (g).

                  (h) Notice of Adverse Change. The members of the Obligated
         Group will promptly notify Ocwen of any material adverse effect on the
         members of the Obligated Group resulting from the ultimate
         collectibility of any one Account in excess of $100,000.00.

                      Ocwen, Ocwen Federal Bank FSB, Borrower, Balanced Care,
         BCM, BCC, BCS, and SCS have entered into the Lockbox and Blocked
         Account Agreement, of even date herewith ("Lockbox Agreement"). The
         provisions of this Section3(c) through 3(h) shall apply in addition to,
         and not in lieu of any of the terms and/or provisions of the Lockbox
         Agreement. Nothing in this Security Agreement shall limit any of
         Ocwen's rights or remedies set forth in the Lockbox Agreement, and
         nothing in the Lockbox Agreement shall limit any of Ocwen's rights or
         remedies under this Security Agreement.

                                      -9-
<PAGE>

                  (i) Certificates of Title. The members of the Obligated Group
         will not consent to or aid in the issuance of a certificate of title
         for any of the Collateral unless such certificate shows that the
         Collateral covered is subject to Ocwen's interest or contains a
         statement that the collateral may be subject to security interests not
         shown on the certificate.

                  (j) No Disposition of Collateral. Except as otherwise
         permitted by the terms of the other Loan Documents (as defined in the
         Term Loan Agreement), Ocwen does not authorize, and the members of the
         Obligated Group agree not to make any sales or leases of any of the
         Collateral, license any of the Collateral, or grant any other security
         interest in any of the Collateral, including any interest under Uniform
         Commercial Code Articles 4-210 or 5-118.

                  (k) Conditions for the Disposition of Collateral. Except as
         otherwise provided by the terms of the Loan Documents, in the event of
         any disposition of the Collateral through sale, lease, license,
         security interest, or otherwise, the members of the Obligated Group
         will notify in writing and receive a written acknowledgement of Ocwen's
         interest in the Collateral from the recipient of the Collateral unless
         Ocwen specifically disclaims its interest. The members of the Obligated
         Group will in no case make a non-exclusive license unless specifically
         authorized to do so by Ocwen. Where feasible, the members of the
         Obligated Group will mark the Collateral to indicate Ocwen's interest.
         This Section should not be construed to authorize any disposition of
         the Collateral; all dispositions of the Collateral must be authorized
         by Ocwen in writing in advance, except for dispositions permitted in
         accordance with the terms of the other Loan Documents.

                  (l) Marking of Chattel Paper. The members of the Obligated
         Group will not create any chattel paper without placing a legend on the
         chattel paper acceptable to Ocwen indicating that Ocwen has a security
         interest in the chattel paper.

                  (m) Notice of Future Commercial Tort Claims. The members of
         the Obligated Group will notify Ocwen of any future commercial tort
         claims the members of the Obligated Group may have and agree to amend
         this Security Agreement to include any such commercial tort claims. The
         members of



                                      -10-
<PAGE>
         the Obligated Group grant Ocwen permission to add such commercial tort
         claims to any financing statements filed pursuant to this Security
         Agreement.

         SECTION 4. Preservation and Protection of Security Interests. The
members of the Obligated Group will faithfully preserve and protect Ocwen's
security interest in its respective Collateral and will, at their own cost and
expense, cause such security interest to be perfected and continued perfected so
long as the Secured Obligations or any portion thereof are outstanding and
unpaid, and for such purpose the members of the Obligated Group will from time
to time at the request of Ocwen file or record, or cause to be filed or
recorded, such instruments, documents and notices, including without limitation,
financing statements and continuation statements, as Ocwen may deem necessary or
advisable from time to time in order to perfect and continue perfected said
security interests. The members of the Obligated Group will do all such other
acts and things and will execute and deliver all such other instruments and
documents, including without limitation further security agreements, pledges,
endorsements, assignments, agreements, notices, or otherwise as Ocwen may deem
necessary or advisable from time to time in order to perfect and preserve the
priority of said security interest as a perfected first lien security interest
in the Collateral prior to the rights of any other secured party or lien
creditor except as otherwise permitted herein. Ocwen, and its officers,
employees and authorized agents, or any of them, are hereby irrevocably
appointed the attorneys-in-fact of the members of the Obligated Group to do all
acts and things which Ocwen may deem necessary or advisable to preserve, perfect
and continue perfected Ocwen's security interest in the Collateral, including
without limitation the signing of financing, continuation or other similar
statements and notices on behalf of the members of the Obligated Group.

         SECTION 5. Application of Moneys. Except as otherwise provided herein,
if an Event of Default shall have occurred and be continuing beyond any
applicable cure period, all moneys which Ocwen shall receive upon realization of
the security or otherwise may be applied by or at the direction of Ocwen in the
following manner:

                  (a) First, to the payment or reimbursement of all reasonable
         advances, expenses and disbursements of Ocwen (including, without
         limitation, the reasonable fees and disbursements of its counsel and
         agents) incurred in connection with the administration and enforcement
         of, or the preservation of any rights under, this Security Agreement or

                                      -11-
<PAGE>
         in the collection of the obligations of the members of the Obligated
         Group under the Loan Documents, specifically including but not limited
         to the Term Loan Agreement and under any and all other notes,
         documents, or agreements evidencing or securing additional indebtedness
         of the members of the Obligated Group to Ocwen, whether now existing or
         hereafter arising; and


                  (b) Second, to be applied in any reasonable manner desired by
         Ocwen to the satisfaction of the Secured Obligations.

         SECTION 6. Certain Representations, Warranties, and Covenants. The
members of the Obligated Group agree, from and after the date of this Security
Agreement and until payment in full of the Secured Obligations, as follows:

                  (a) Title and Liens. Each respective member has and will have
         good and marketable title to the Collateral from time to time owned or
         acquired by it, free and clear of all liens, encumbrances, pledges and
         security interests, except as permitted by the Term Loan Agreement;
         and, the security interests of Ocwen in the Collateral are perfected
         lien security interests, prior to the rights of any other secured party
         or lien creditor. Each member of the Obligated Group will defend its
         title to the Collateral against the claims and demands of all persons
         whomsoever.

                  (b) Negative Pledge. Except as otherwise provided in the other
         Loan Documents, no member of the Obligated Group will, without the
         prior written consent of Ocwen, (i) grant or create or permit to exist
         any lien, encumbrance, pledge or security interest on, or in, any of
         the Collateral, except for liens permitted by the Term Loan Agreement,
         (ii) permit any levy or attachment to be made against any of the
         Collateral, except under circumstances where the members of the
         Obligated Group have taken prompt action to stay or set aside such levy
         or attachment and such action is pending or has been finally resolved
         in favor of the members of the Obligated Group, and the members of the
         Obligated Group have remained in control and possession of such
         Collateral, or (iii) file any financing statement or mortgage or deed
         of trust with respect to any of the Collateral, except financing
         statements and mortgages and deeds of trust in favor of Ocwen.

                                      -12-
<PAGE>

                  (c) Risk of Loss; Insurance. Risk of loss of, damage to, or
         destruction of, the Collateral is on the members of the Obligated Group
         to the extent that the members now or hereafter own or acquire such
         Collateral. Ocwen has no duty to collect any income accruing on the
         Collateral or to preserve any rights relating to the Collateral. If the
         members fail to effect and keep in full force and effect insurance
         covering the Collateral as may be required by the Term Loan Agreement
         or the Security Documents, or fail to pay the premiums thereon when
         due, Ocwen may do so for the account of the members of the Obligated
         Group and add the cost thereof to the Secured Obligations. The members
         of the Obligated Group hereby assign and sets over unto Ocwen all
         moneys which may become payable on account of such insurance, including
         without limitation any return or unearned premiums which may be due
         upon cancellation of any such insurance, and directs the insurers to
         pay Ocwen any amount so due. Ocwen, its officers, employees and
         authorized agents are hereby irrevocably appointed the
         attorneys-in-fact of the members of the Obligated Group to endorse any
         draft or check which may be payable to the members of the Obligated
         Group in order to collect the proceeds of such insurance or any return
         or unearned premiums. Any balance of insurance proceeds remaining in
         the possession of Ocwen after payment in full of the Secured
         Obligations shall be paid to the respective member of the Obligated
         Group or its order.

                  (d) Maintenance of Machinery and Equipment. The members of the
         Obligated Group agree that they will maintain the machinery and
         equipment which comprises part of the Collateral in good and marketable
         condition, reasonable wear and tear alone excepted, and will pay and
         discharge all taxes, levies and other impositions levied thereon
         (except such thereof as are being contested in good faith by
         appropriate proceedings diligently conducted) as well as the cost of
         repairs to or maintenance of the same. If the members of the Obligated
         Group fail to do so, Ocwen may pay such taxes, levies or impositions
         and the cost of such repairs or maintenance for the account of the
         members of the Obligated Group and add the amount thereof to the
         Secured Obligations.

                  (e) Care of Collateral by Ocwen. Ocwen shall be deemed to have
         exercised reasonable care in the custody and preservation of such of
         the Collateral as may be in Ocwen's possession if Ocwen takes such
         action for that purpose as the respective member of the Obligated Group
         owning such


                                      -13-
<PAGE>
         Collateral shall request in writing, provided that such requested
         action shall not, in the judgment of Ocwen, impair Ocwen's security
         interest in such Collateral or its rights in, or the value of, such
         Collateral, and provided further that such written request is received
         by Ocwen in sufficient time to permit Ocwen to take the requested
         action.

                  (f) Chief Executive Office. Each of the members of the
         Obligated Group represent and warrant that its respective chief
         executive office is located at the address set forth below. The members
         of the Obligated Group shall not change their chief executive offices
         without providing prior written notice of same to Ocwen.

                  (g) State of Incorporation and Legal Name. The members of the
         Obligated Group represent and warrant that they are incorporated or
         organized in the State of Delaware. The members of the Obligated Group
         further represent and warrant that their exact legal name is as is set
         forth in the certified copy of the respective member's Certificate of
         Formation or Organization and the first paragraph of this Security
         Agreement. The members of the Obligated Group shall neither change
         their state of incorporation from that listed above or change their
         name from that set forth in the first paragraph hereof without
         providing prior written notice of same to Ocwen and receiving Ocwen's
         prior written consent, which consent shall not be unreasonably
         withheld.

                  (h) Interest in Real Property. The members of the Obligated
         Group represent and warrant that they have an interest of record in or
         possession of the real property described in Exhibit A and that this
         real property is the property where the fixtures, crops, or other real
         property interests that comprise part of the Collateral are located.

                  (i) Preservation of Corporate Form and Existence. Except as
         otherwise provided in the Term Loan Agreement with respect to Balanced
         Care only, the members of the Obligated Group will preserve their
         corporate existence and not, in one transaction or a series of related
         transactions, merge into or consolidate with any other entity, or sell
         all or substantially all of their assets without the prior written
         consent of Ocwen, except that stock of Senior Care Operators of
         Shippensburg, LLC, which is currently owned by BCS, may be redeemed by
         BCS effecting


                                      -14-
<PAGE>
         a merger of Senior Care Operators of Shippensburg, LLC into BCS, with
         BCS being the surviving entity.

                  (j) Location of Collateral. The members of the Obligated Group
         represent and warrant that, with respect to the items of Collateral
         described in Section 1(a) of this Security Agreement, the location is
         accurately and completely set forth in Schedule 2 hereto. Except as
         otherwise permitted pursuant to the terms of the Term Loan Agreement,
         the members of the Obligated Group shall not remove any such Collateral
         from such location without the prior written consent of Ocwen, which
         consent shall not be unreasonably withheld.

         SECTION 7.      Default.

                  (a) Events of Default. An "Event of Default" exists if any one
         or more of the following events shall occur and be continuing or shall
         exist:

                      (i) Any representation or warranty herein made by the
                  members of the Obligated Group shall prove to have been false
                  or misleading in any material respect as of the time made or
                  furnished; or

                           (ii) The members of the Obligated Group shall default
                  in the due observation or performance of any of the covenants
                  or agreements of the members of the Obligated Group contained
                  in this Security Agreement, and such default shall not be
                  remedied within a period of 30 days after written notice
                  thereof to the members of the Obligated Group from Ocwen;
                  provided, however, that in the event that any such default
                  (other than a monetary default) cannot be cured in such
                  initial 30 day period despite the exercise of all due
                  diligence by the members of the Obligated Group, the members
                  of the Obligated Group shall be entitled to an additional 30
                  days to cure such default (not including monetary defaults)
                  provided that the members of the Obligated Group have
                  commenced and continue to diligently prosecute such cure at
                  all times; or

                      (iii) an Event of Default (as that term is defined in the
                  Term Loan Agreement) shall occur and be continuing beyond any
                  applicable cure period or shall exist; or

                                      -15-
<PAGE>

                           (iv) The members of the Obligated Group shall be in
                  default beyond any applicable cure period in the due
                  observation or performance of any of the covenants, agreements
                  or obligations of such member contained in the Term Note,
                  other Security Documents (as defined in the Term Loan
                  Agreement), or other Loan Documents.

                  (b) Rights upon Default. In any such Event of Default, Ocwen
         shall have such rights and remedies in respect of the Collateral or any
         part thereof as are provided by the Uniform Commercial Code and such
         other rights and remedies in respect thereof which it may have at law
         or in equity or under this Security Agreement, including without
         limitation the right to enter any premises where any Collateral is
         located and take possession of the same without demand or notice and
         without prior judicial hearing or legal proceedings, which the members
         of the Obligated Group hereby expressly waive, and to sell all or any
         portion of the Collateral at public or private sale without prior
         notice to the members of the Obligated Group except as otherwise
         required by law (and if notice is required by law, after ten days'
         prior written notice) at such place or places and at such time or times
         and in such manner and upon such terms, whether for cash or on credit,
         as Ocwen in its sole discretion may determine. Upon any such sale of
         any of the Collateral, Ocwen may purchase, by crediting some or all of
         the members of the Obligated Group's Secured Obligations or otherwise,
         all or any of the Collateral being sold free from any equity or right
         of redemption. Ocwen shall apply the proceeds of any such sale to the
         obligations of the members of the Obligated Group as provided in
         Section5 hereof. If such proceeds are insufficient to pay the amount of
         funds the members of the Obligated Group owe to Ocwen for the Secured
         Obligations, the members of the Obligated Group shall be liable for any
         deficiency in the amount so realized from the Collateral.

                  (c) Assembly of Collateral. In any such Event of Default, each
         of the members of the Obligated Group shall promptly upon demand by
         Ocwen assemble its Collateral and make it available to Ocwen at a place
         to be designated by Ocwen which shall be reasonably convenient to
         Ocwen. The right of Ocwen under this Section to have the Collateral
         assembled and made available to it is of the essence of this Security
         Agreement and Ocwen may, at its election, enforce such right by an
         action in equity for specific performance.

                  (d) Reserved.

                                      -16-
<PAGE>

                  (e) Warranties. Ocwen may sell the Collateral without giving
         any warranties as to the Collateral. Ocwen may specifically disclaim
         any warranties of title or the like. This procedure will not be
         considered to adversely affect the commercial reasonableness of the
         sale of any Collateral.

                  (f) Compliance with Other Laws. Ocwen may comply with any
         applicable state or federal law requirements in connection with a
         disposition of the Collateral and compliance will not be considered to
         adversely affect the commercial reasonableness of any sale of the
         Collateral.

                  (g) Condition of Collateral. Ocwen has no obligation to clean
         up or otherwise prepare the Collateral for sale.

                  (h) No Waiver of Remedies. No delay or omission by Ocwen to
         exercise any right or remedy accruing upon any Event of Default shall
         impair any right or remedy, waive any Event of Default or operate as an
         acquiescence to the Event of Default, or affect any subsequent Event of
         Default of the same or different nature.

                  (i) No Marshalling. Each of the members of the Obligated
         Group, to the extent that it has any right, title or interest in any of
         the Collateral, waives and releases any right to require Ocwen to
         collect any of the Secured Obligations from any other of the Collateral
         under any theory of marshalling of assets, or otherwise, and
         specifically authorizes Ocwen to apply any of the Collateral against
         any of the Secured Obligations in any manner that Ocwen may determine.

         SECTION 8. Amendments, Waivers. The provisions of this Security
Agreement may from time to time be waived, modified or amended only as provided
in Section 8.4 of the Term Loan Agreement.

         SECTION 9. Defeasance. Upon payment in full of the Term Note, and any
other sums or monies owed to Ocwen under and pursuant to the Term Loan Agreement
(other than payments due Ocwen pursuant to Section 1.6 of the Term Loan
Agreement), this Security Agreement shall terminate and be of no further force
and effect; and in such event, Ocwen will, at the expense of the members of the
Obligated Group, redeliver and reassign the Collateral to the members of the
Obligated Group and take all action necessary to terminate the security
interests of Ocwen in the Collateral. Until such time,


                                      -17-
<PAGE>
however, this Security Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns.

         SECTION 10. Miscellaneous.

                  (a) Conformity with Term Loan Agreement. The provisions set
         forth in Sections 8.1, 8.2, 8.3, 8.4, 8.5, 8.8, 8.9, 8.10, 8.11, 8.12,
         8.13, 8.15, 8.16, 8.19, 8.20, and 8.23 of the Term Loan Agreement shall
         be applicable to this Security Agreement as though set forth herein in
         full.

                  (b) Conformity with UCC Definitions. Any term used in the
         Uniform Commercial Code and not defined in this Security Agreement or
         in the Term Loan Agreement, but used herein, shall have the same
         meaning as in the Uniform Commercial Code, as adopted by the State of
         Ohio, as amended from time to time, unless the context otherwise
         requires.

                  (c) Assignment. This Security Agreement shall bind and shall
         inure to the benefit of the successors and assigns of Ocwen. Ocwen does
         not consent to any assignment of this Security Agreement by the members
         of the Obligated Group. Subject to Section 8.16 of the Term Loan
         Agreement, Ocwen may assign its rights and interests under this
         Security Agreement freely. If an assignment is made, the members of the
         Obligated Group shall render performance under this Security Agreement
         to and with the assignee. The members of the Obligated Group waive and
         will not assert against any assignee any claims, defenses, or set-offs
         that the members of the Obligated Group could assert against Ocwen
         except defenses which cannot be waived.

                  (d) OCWEN AND THE MEMBERS OF THE OBLIGATED GROUP HEREBY
         VOLUNTARILY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A
         JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
         CONTRACT, TORT, OR OTHERWISE, BETWEEN OCWEN AND THE MEMBERS OF THE
         OBLIGATED GROUP ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR
         INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION
         WITH THIS AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT EXECUTED OR
         DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO.
         THIS PROVISION IS A MATERIAL INDUCEMENT TO OCWEN TO ENTER INTO THE TERM
         LOAN AGREEMENT. IT SHALL NOT IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR
         MODIFY OCWEN'S ABILITY TO


                                      -18-
<PAGE>

PURSUE ANY REMEDY, EITHER IN LAW OR IN EQUITY, AVAILABLE TO IT.

                                      -19-
<PAGE>


         IN WITNESS WHEREOF, the members of the Obligated Group and Ocwen
hereto, by their officers thereunto duly authorized, have executed and delivered
this Security Agreement as of the day and year first above written.

<TABLE>
<CAPTION>
OCWEN:                                    BORROWER:
<S>                                       <C>
OCWEN FINANCIAL CORPORATION               BALANCED CARE REALTY (OFC), INC.


By:/s/William B. Shepro                   By:/s/Robin L. Barber
Print Name: William B. Shepro             Print Name: Robin L. Barber
Its: Sr. Vice President                   Its: Vice President and
                                               Secretary

                                          Address of Chief Executive Office:
                                          1215 Manor Drive
                                          Mechanicsburg, PA  17055

BCM:                                      BCC:
BALANCED CARE AT MEDINA, INC.             BALANCED CARE AT CENTERVILLE, INC.


By:/s/Robin L. Barber                     By:/s/Robin L. Barber
Print Name: Robin L. Barber               Print Name: Robin L. Barber
Its: Vice President and                   Its: Vice President and
     Secretary                                 Secretary

Address of Chief Executive Office:        Address of Chief Executive Office:
1215 Manor Drive                          1215 Manor Drive
Mechanicsburg, PA  17055                  Mechanicsburg, PA  17055
</TABLE>
                              -20-
<PAGE>
BCS:                                      SCS:
BALANCED CARE AT                          SENIOR CARE OPERATORS OF
SHIPPENSBURG, INC.                        SHIPPENSBURG, LLC

                                          By: BALANCED CARE AT
                                              SHIPPENSBURG, INC., its Manager
By:/s/Robin L. Barber
Print Name: Robin L. Barber

Its: Vice President and                   By:/s/Robin L. Barber
     Secretary                            Print Name: Robin L. Barber
                                          Its: Vice President and
                                                  Secretary

Address of Chief Executive Office:
1215 Manor Drive
Mechanicsburg, PA  17055                  Address of Chief Executive Office:
                                          1215 Manor Drive
                                          Mechanicsburg, PA  17055