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Exhibit 10.42

                      OPEN-END MORTGAGE, SECURITY AGREEMENT
                       AND ASSIGNMENT OF LEASES AND RENTS
                                  (Medina, OH)


         THIS OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF LEASES AND
RENTS (herein "Instrument") is made as of the 31st day of March, 2002 by the
grantor, Balanced Care Realty (OFC), Inc., a Delaware corporation (the
"Borrower") in favor of the following grantees: Centerville ALF, Inc., a Florida
corporation, Medina ALF, Inc., a Florida corporation, and Shippensburg ALF,
Inc., a Florida corporation (collectively referred to hereinafter as the "Ocwen
Affiliates"), and Ocwen Financial Corporation, a Florida corporation ("Ocwen").

         WHEREAS, the Ocwen Affiliates, Balanced Care Corporation, a Delaware
corporation ("Balanced Care"), Ocwen, Senior Care Operators of Shippensburg,
LLC, a Delaware limited liability company ("Licensee"), Senior Care Operators of
Ohio, LLC, a Delaware limited liability company, and Senior Care Operators of
Centerville LLC, a Delaware limited liability company, have entered into the
Settlement Agreement and Release, effective March 31, 2002 ("Settlement
Agreement") pursuant to which Balanced Care has agreed to provide the Balanced
Care Corporation Promissory Note, also dated as of March 31, 2002, in the
principal amount of $936,445.00, to the Ocwen Affiliates ("BCC Note") to settle
and resolve the Litigation (as defined in the Settlement Agreement).

         WHEREAS, Ocwen, Borrower, Balanced Care, Balanced Care at Medina, Inc.,
a Delaware corporation ("BCM"), Balanced Care at Centerville, Inc., a Delaware
corporation ("BCC"), Balanced Care at Shippensburg, Inc. ("BCS") a Delaware
corporation, (BCM, BCC, and BCS are collectively referred to hereinafter as
"Management Companies"), and Licensee, have entered 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
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Fifty-Three Thousand Three Hundred Fifty-Six Dollars ($9,153,356.00) plus
interest thereon ("Loan").

         WHEREAS, Borrower has used the proceeds of the Loan to pay a portion of
the purchase price for certain real property (and three (3) assisted living
facilities located thereon) Borrower has purchased from the Ocwen Affiliates,
pursuant to the terms and conditions of the Agreement of Purchase and Sale, of
even date herewith, by and among the Ocwen Affiliates, Ocwen, Borrower, Balanced
Care and the following parties joining only as to specific provisions:
Management Companies and Licensee ("Purchase Agreement").

         WHEREAS, in connection with the Loan, Borrower has executed the Term
Note, of even date herewith ("Term Note"), evidencing Borrower's obligation to
repay all principal and interest due under the Loan as well as certain
additional payments that may be required pursuant to the terms of the Term Loan
Agreement and Term Note.

         WHEREAS, Borrower is a wholly owned subsidiary of Balanced Care.

         WHEREAS, in addition to the Loan, a portion of the purchase price for
the real property being transferred and conveyed by the Ocwen Affiliates to
Borrower shall be deferred and is payable in accordance with the terms and
conditions of the Deferred Purchase Price Note given by Borrower to the Ocwen
Affiliates in the original principal amount of $3,449,401.47 ("Deferred Purchase
Price Note").

         WHEREAS, Ocwen and the Ocwen Affiliates, as a condition to providing
the Loan to Borrower, entering into the Settlement Agreement with Balanced Care,
and entering into the Purchase Agreement with Borrower, Balanced Care and the
other parties thereto, requires that Borrower grant to Ocwen and the Ocwen
Affiliates a mortgage on the property legally described on Exhibit A hereto,
pursuant to the terms of this Instrument, and the Borrower is willing to grant
Ocwen and the Ocwen Affiliates a mortgage in and to the property described on
Exhibit A hereto and to otherwise perform the obligations set forth in this
Instrument.

         WHEREAS, Ocwen and the Ocwen Affiliates understand that the lien
created by this Instrument shall be second in priority to the lien of the
Mortgages (as defined in the Term Loan Agreement).


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         WHEREAS, the Term Loan Agreement, the Term Note, all Security Documents
(as defined in the Term Loan Agreement), all Ancillary Documents (as defined in
the Term Loan Agreement), the Settlement Agreement, the BCC Note, the Purchase
Agreement, and the Deferred Purchase Price Note shall hereinafter be
collectively referred to as the "Transaction Documents."

         Borrower, intending to be legally bound, in consideration of the Loan
from Ocwen, Ocwen's and Ocwen Affiliates' entering into the Settlement Agreement
with Balanced Care, and Ocwen's and Ocwen Affiliates' execution of the Purchase
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, hereby agrees that the foregoing
recitals are incorporated herein by reference and as follows:

         TO SECURE TO THE OCWEN AFFILIATES AND OCWEN (a) the repayment of any
amounts due to Ocwen and/or the Ocwen Affiliates under the Transaction
Documents, specifically including but not limited to the BCC Note and Deferred
Purchase Price Note, and the repayment of other indebtedness of Borrower or
Balanced Care to Ocwen or the Ocwen Affiliates secured by this Instrument, with
interest on the foregoing, and all renewals, extensions and modifications of the
foregoing; (b) the payment of all other sums with interest thereon advanced in
accordance herewith to protect the security of this Instrument; and (c) the
performance of the covenants and agreements of Borrower and Balanced Care herein
contained and contained in the Transaction Documents, and in any other documents
given by Borrower or Balanced Care to Ocwen and/or the Ocwen Affiliates to
evidence, or otherwise in connection with, additional indebtedness of Borrower
or Balanced Care to Ocwen and/or the Ocwen Affiliates secured by this
Instrument, Borrower does hereby mortgage, grant, convey and assign to the Ocwen
Affiliates and Ocwen all of the Borrower's right, title, interest, and
privileges in and to the following: the real property described in Exhibit A
attached hereto and made a part hereof, together with all buildings,
improvements, and tenements now or hereafter erected on the real property and
owned by Borrower, and all heretofore or hereafter vacated alleys and streets
abutting the property, and all easements, rights, appurtenances, rents,
royalties, mineral, oil and gas rights and profits, water, water rights, and
water stock appurtenant to the property, and all fixtures, machinery, equipment,
engines, boilers, incinerators, building materials and appliances whatsoever now
or hereafter located in, or on, or used, or intended to be used in connection
with the property, including, but not limited to, those for the purposes of
supplying or distributing heating, cooling, electricity, gas, water, air and
light; and all elevators, and


                                      -3-
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related machinery and equipment, fire prevention and extinguishing apparatus,
security and access control apparatus, plumbing, bath tubs, water heaters, water
closets, sinks, ranges, stoves, refrigerators, dishwashers, disposals, washers,
dryers, awnings, storm windows, storm doors, screens, blinds, shades, curtains
and curtain rods, mirrors, cabinets, paneling, rugs, attached floor coverings,
furniture, fixtures and equipment now owned or hereafter acquired and used in,
on or about the subject real estate (excluding, however, leased equipment) all
of which, to the extent owned by Borrower, including replacements and additions
thereto, shall be deemed to be and remain a part of the real property covered by
this Instrument; and, to the extent permissible by law, all licenses, permits
and certifications and all other general intangibles owned or used in connection
with the operation of the real property covered by this Instrument; and all of
the proceeds of the foregoing; and all of the above including said real property
are herein referred to as the "Property".

         Borrower covenants and agrees that Borrower is lawfully seized of the
estate hereby conveyed and has the right to mortgage, grant, convey and assign
the Property, that the Property is unencumbered, except for Permitted
Encumbrances, and that Borrower will warrant and defend generally the title to
the Property against all claims and demands, whatsoever. As used herein,
"Permitted Encumbrances" means (i) all matters listed on Schedule B to that
certain "marked up" Title Insurance Commitment issued by First American Title
Insurance Company, dated April 5, 2002 and noted as Commitment Number 14-28032;
(ii) all resident or occupancy contracts for the leasing of units located on the
Property; and (iii) real property taxes and assessments imposed or assessed on
the Property but not yet due and payable as of March 31, 2002.

         Borrower, Balanced Care, Ocwen and the Ocwen Affiliates covenant and
agree as follows:

         1. PAYMENT OF AMOUNTS DUE UNDER THE TRANSACTION DOCUMENTS; OPEN-END
MORTGAGE. Borrower and Balanced Care are obligated to promptly pay when due all
amounts which shall become due to Ocwen or the Ocwen Affiliates under the
Transaction Documents, and all other sums secured by this Instrument. This
Instrument is intended to be and shall be construed as an open-end mortgage and
shall secure the maximum principal amount of $4,385,846.47 together with
interest thereon and such other amounts as shall become due and owing to Ocwen
or the Ocwen Affiliates from Borrower or Balanced Care pursuant to this
Instrument, the Transaction Documents, or other notes, documents or agreements


                                      -4-
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evidencing, or otherwise executed in connection with, additional indebtedness
secured by this Instrument.

         2. FUNDS FOR TAXES, INSURANCE AND OTHER CHARGES. Upon default in
payment of any of the following described items, which default continues for a
period of thirty (30) days after Ocwen or the Ocwen Affiliates have provided
notice of same to Borrower (and Borrower shall notify Ocwen of its default in
the payment of the following promptly after Borrower becomes aware of same), or,
upon the occurrence of an Event of Default under any of the Transaction
Documents, specifically including but not limited to the BCC Note and Deferred
Purchase Price Note, or other notes or agreements given in connection with
additional indebtedness of Borrower or Balanced Care to Ocwen or an Ocwen
Affiliate secured by this Instrument, Ocwen shall have the right, at its option,
to require Borrower to pay to Ocwen on the first day of each month, for so long
as the BCC Note and/or Deferred Purchase Price Note or any of the Transaction
Documents remains outstanding, a sum (herein "Funds") equal to one-twelfth of
(a) the yearly water and sewer rates which may be levied on the Property; and
(b) the yearly expenses, costs or fees associated with any licenses, permits,
certifications or other governmental approvals required, necessary, or desirable
for the operation of the facility located on the Property, all as reasonably
estimated initially and from time to time adjusted by the basis of assessments
and bills and reasonable estimates thereof. Any waiver by Ocwen of a requirement
that Borrower pay such Funds following Borrower's default in payment of any of
such items or the occurrence of an Event of Default under any of the Transaction
Documents, specifically including but not limited to the BCC Note and Deferred
Purchase Price Note, may be revoked by Ocwen, in Ocwen's sole discretion, at any
time upon notice in writing to Borrower. Borrower shall be required to escrow
funds sufficient to pay real property taxes and assessments, and upon Borrower's
failure to pay premiums for the following when due, insurance premiums for fire
and other casualty/hazard insurance, in accordance with the terms and conditions
of Section 4.7 of the Term Loan Agreement, and such escrowed funds shall not be
governed by this Section 2, but rather by Section 4.7 of the Term Loan
Agreement.

         The Funds shall be held by Ocwen and shall be applied to pay said
rates, rents, and/or license, permit, or other fees ("Other Impositions") so
long as no Event of Default has occurred under any of the Transaction Documents,
specifically including but not limited to the BCC Note and/or Deferred Purchase
Price Note. Ocwen shall make no charge for so holding and applying the Funds,
analyzing said account or for verifying and compiling said


                                      -5-
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assessments and bills, unless Ocwen pays Borrower interest, earnings or profits
on the Funds and applicable law permits Ocwen to make such a charge. Unless
applicable law requires interest, earnings or profits on the Funds to be paid,
Ocwen shall not be required to pay Borrower any interest, earnings or profits on
the Funds. Ocwen shall give to Borrower, without charge, an annual accounting of
the Funds showing credits and debits to the Funds and the purpose for which each
debit to such Funds was made.

         If at any time the amount of the Funds held by Ocwen shall be less than
the amount deemed necessary by Ocwen to pay water and sewer rates, rents, and/or
license, permit or other fees, and Other Impositions, as they fall due, Borrower
shall, thirty (30) days after demand, pay such deficiency.

         Upon Borrower's breach of any covenant or agreement of Borrower in this
Instrument or upon the occurrence of an Event of Default under any of the
Transaction Documents, specifically including but not limited to the BCC Note
and/or Deferred Purchase Price Note, Ocwen may apply, in any amount and in any
order as Ocwen shall determine in Ocwen's sole discretion, any Funds held by
Ocwen at the time of application (a) to pay rates, rents, and/or license,
permit, or other fees, and Other Impositions which are now or will hereafter
become due; or (b) as a credit against sums secured by this Instrument. Upon
release of this Instrument, Ocwen shall promptly refund to Borrower any Funds
held by Ocwen.

         3. APPLICATION OF PAYMENTS. All payments received by Ocwen or an Ocwen
Affiliate from Borrower under the Transaction Documents or this Instrument shall
be applied by Ocwen in the following order of priority: (a) amounts payable to
Ocwen by Borrower under paragraph 2 hereof; (b) interest payable on amounts due
under the Transaction Documents; (c) principal due under the Transaction
Documents; (d) interest payable on advances made pursuant to paragraph 8 hereof;
(e) principal of advances made pursuant to paragraph 8 hereof; and (f) any other
sums secured by this Instrument in such order as Ocwen, at Ocwen's option, may
determine; provided, however, that Ocwen may, at Ocwen's option, apply any sums
to interest and principal payable by Borrower pursuant to paragraph 8 hereof
prior to amounts due pursuant to the Transaction Documents and further provided
that, in the event of a sale as provided in paragraph 25 hereof, the proceeds of
the sale shall be applied first to the costs of sale and thereafter as otherwise
set forth herein.

         4. CHARGES; LIENS. Borrower shall pay all water and sewer rates, rents,
taxes (not being diligently contested by Borrower in


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a timely manner and not otherwise paid by Ocwen from the escrow fund therefore
established and maintained pursuant to Section 4.7 of the Term Loan Agreement),
premiums, and license, permit, or other fees, and Other Impositions attributable
to the Property. Borrower shall promptly discharge any lien which has, or may
have, priority over or equality with, the lien of this Instrument (except for
the Mortgages); provided, however, that Borrower shall be entitled to contest
any such lien in good faith (provided Borrower contests such lien in a diligent
and timely manner). With respect to liens filed for failure to pay real property
taxes and/or assessments, Borrower shall be entitled to contest the lien only if
Borrower pays the taxing or assessing authority sufficient funds to discharge
the lien prior to commencement of the contest. Upon written request from Ocwen,
if the lien is in a face amount in excess of $100,000, Borrower shall provide a
bond, letter of credit, or sufficient funds in an escrow account, to pay off the
amount required to discharge the lien during the period of contest by Borrower
(except for real property tax and/or assessment liens, which are governed by the
foregoing sentence). If a mechanic's lien is filed against the Property,
Borrower shall promptly notify Ocwen and, at Ocwen's request, shall, at
Borrower's option, but subject to the right to contest hereinafter set forth,
either (i) escrow with Ocwen or with the consent of Ocwen deposit in a court of
competent jurisdiction a sum of money equal to the amount of the lien, or (ii)
provide a bond against the lien in such amount and in such manner as to
discharge the lien as an encumbrance against the Property. Without Ocwen's prior
written permission, except as otherwise permitted herein or in any other
Transaction Document, Borrower shall not allow any lien, encumbrance, or other
interest in the Property inferior to the lien of this Instrument to be perfected
against the Property.

         5. HAZARD, LIABILITY, AND OTHER INSURANCE. Borrower shall keep the real
property and improvements now existing or hereafter erected on the Property
insured by carriers at all times satisfactory to Ocwen and in a form acceptable
to Ocwen against loss by fire, hazards included within the term "extended
coverage," and such other hazards and casualties as Ocwen shall reasonably
require and in an amount not less than the full replacement cost of the
buildings and improvements located on the Property (i.e., such insurance shall
insure the Property on a replacement value basis). The Borrower shall also
maintain such other insurance, specifically including but not limited to rent
loss (if applicable), general liability, workers' compensation, etc., upon the
Property, of such character as is usually maintained by Balanced Care or its
Affiliates on like properties, and in an amount that is acceptable to Ocwen, in
the exercise of


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its reasonable discretion. Such policies must be written on an occurrence basis
so as to provide blanket contractual liability, broad form property damage
coverage, and coverage for products and completed operations.

         Borrower shall determine if the Property is located in a federally
identified flood hazard zone and if the property is so located the Borrower will
provide flood insurance coverage in a reasonable amount as determined by Ocwen.

         All policies of insurance required by the terms of this Instrument
shall provide or contain an endorsement by the insurer thereof that any loss
shall be payable in accordance with the terms of such policy notwithstanding any
act or negligence of Borrower which might otherwise result in forfeiture of said
insurance and the further agreement of the insurer waiving all rights of
set-off, counterclaim or deductions against Borrower. In addition, such policies
shall contain an agreement by the insurers thereof that such policies shall not
be canceled or changed except upon not less than 30 days prior written notice
delivered to Ocwen.

         All insurance policies and renewals thereof shall be issued by
companies with a Best's Insurance Reports policy holder's rating of A- or better
and a financial size category of Class XI or better, shall be in a form
acceptable to Ocwen and shall include a standard mortgagee clause in favor of
and in form acceptable to Ocwen. Ocwen shall be listed as a mortgagee, loss
payee and additional insured of all such policies. Ocwen shall have the right to
hold the policies, and Borrower shall promptly furnish to Ocwen all renewal
notices and all receipts of paid premiums. At least ten (10) days prior to the
expiration date of a policy, Borrower shall deliver to Ocwen a renewal policy in
form satisfactory to Ocwen. Notwithstanding anything to the contrary set forth
above, Ocwen will agree to consent, in its reasonable discretion, to
modifications to insurance requirements to accommodate company-wide insurance
programs that may in the future be implemented by Balanced Care and its
Affiliates (as defined in the Term Loan Agreement), which insurance programs may
include (without limitation) self-insurance elements or blanket policy insurance
programs with other Affiliates of Balanced Care or LMR Holdings Limited, an
exempted company incorporated in the Cayman Islands ("LMR").

         If Ocwen or an Ocwen Affiliate is made a party defendant to any
litigation concerning this Instrument or the Property or any part thereof or
interest therein, or the occupancy thereof by


                                      -8-
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Borrower, and such litigation is not caused by any act of Ocwen or an Ocwen
Affiliate which constitutes gross negligence or intentional misconduct on the
part of Ocwen or an Ocwen Affiliate, then Borrower shall indemnify, defend and
hold Ocwen and the Ocwen Affiliates harmless from all liability by reason of
said litigation, including reasonable attorneys' fees and expenses incurred by
Ocwen or an Ocwen Affiliate in any such litigation, whether or not any such
litigation is prosecuted to judgment. Borrower waives any and all right to claim
or recover against Ocwen and the Ocwen Affiliates, their officers, employees,
agents and representatives, for loss of or damage to Borrower, the Property,
Borrower's property, or the property of others under Borrower's control from any
cause insured against or required to be insured against by the provisions of
this Instrument, except when such claim or recovery arises out of an act of
Ocwen or the Ocwen Affiliates.

         In the event of loss, Borrower shall give reasonably prompt written
notice to the insurance carrier and to Ocwen. If an Event of Default has
occurred under any of the Transaction Documents, specifically including but not
limited to the Term Loan Agreement, the BCC Note and the Deferred Purchase Price
Note, Borrower hereby authorizes Ocwen to act as attorney-in-fact for Borrower
to make proof of loss, to adjust and compromise any claim under the insurance
policies, to appear in and prosecute any action arising from such insurance
policies, to collect and receive insurance proceeds, and to deduct therefrom
Ocwen's expenses incurred in the collection of such proceeds; provided, however,
that nothing contained in this paragraph 5 shall require Ocwen to incur any
expense or take any action hereunder. In the event of loss, the proceeds of said
insurance shall be paid, held and disbursed as hereinafter provided.

         If the Property is sold pursuant to paragraph 25 hereof, or if the
Ocwen Affiliates acquire title to the Property, Ocwen shall have all of the
right, title and interest of Borrower in and to any insurance policies and
unearned premiums thereon and in and to the proceeds resulting from any damage
to the Property prior to such sale or acquisition.

         Provided that Borrower is not in default hereunder and an Event of
Default has not occurred and is not continuing under any of the Transaction
Documents, specifically including but not limited to the BCC Note and the
Deferred Purchase Price Note, insurance proceeds shall be held by Ocwen to
reimburse Borrower for the cost of restoration and repair of the Property, and
the Property shall be restored to the equivalent of its original


                                      -9-
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condition or such other condition as Ocwen may approve in writing. Ocwen may, at
Ocwen's option, condition disbursement of said proceeds on Ocwen's approval of
plans and specifications of an architect satisfactory to Ocwen, contractor's
cost estimates, architect's certificates, waivers of lien, sworn statements of
mechanics and materialmen and such other evidence of costs, percentage
completion of construction, application of payments, and satisfaction of liens
as Ocwen may reasonably require. If the amount needed to complete such repairs
or restoration is greater than the amount of insurance proceeds available, the
Borrower shall, at the election of Ocwen and within sixty (60) days from the
date of loss, (i) deposit with Ocwen the difference between the estimated amount
needed to complete such repairs and the available insurance proceeds, or (ii)
pay from Borrower's funds all costs attributable to such repair or restoration
until such time as the estimated remaining cost of the repairs or restoration is
less than or equal to the available insurance proceeds. If the above conditions
are not met, Ocwen may apply such proceeds toward payment of any amounts due
under the Transaction Documents, or toward payment of any other indebtedness of
Borrower or Balanced Care to Ocwen or an Ocwen Affiliate secured by this
Instrument.

         6. PRESERVATION AND MAINTENANCE OF PROPERTY. Borrower (a) shall not
commit waste or permit impairment or deterioration of the Property; (b) shall
not abandon the Property; (c) shall restore or repair promptly and in a good and
workmanlike manner all or any part of the Property to the equivalent of its
original condition (except for obsolete equipment and ordinary wear and tear),
or such lesser condition as Ocwen may approve in writing, in the event of any
damage, injury or loss thereto, whether or not insurance proceeds are available
to cover in whole or in part the costs of such restoration or repair unless the
improvements portion of the Property are totally destroyed, insurance has been
maintained thereon as required by this Instrument and Ocwen applies the proceeds
of said insurance to the full payment of the sums secured by this Instrument;
(d) shall keep the Property, including improvements, fixtures, equipment,
machinery and appliances thereon in good repair (except for obsolete items and
ordinary wear and tear) and shall replace improvements, fixtures, equipment,
machinery and appliances in the ordinary course of Borrower's business; (e)
shall comply in all material respects with all laws, ordinances, regulations and
requirements of any governmental body applicable to the Property unless Borrower
is contesting the same in good faith and such contest does not unreasonably
jeopardize the continued operation of the Property; (f) shall keep in full force
and effect, without restriction or limitation, and not allow the expiration or
lapse of, and shall


                                      -10-
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fully comply with all conditions and requirements associated with all licenses,
permits, certifications and governmental approvals (including but not limited to
Medicare and Medicaid provider numbers and participation agreements and
requirements of the State of Ohio Certificate of Need Law, in the event same
become applicable) required, necessary, or desirable for the operation of the
long-term care facility constituting part of the Property hereunder, and (g)
shall give notice in writing to Ocwen of, appear in and defend any action or
proceeding purporting to affect the Property, the security of this Instrument or
the rights or powers of Ocwen hereunder. Neither the Borrower nor any tenant or
other person shall remove, demolish or alter any improvement now existing or
hereafter erected on the Property or any fixture (other than trade fixtures),
equipment, machinery or appliance in or on the Property except when incident to
the replacement of improvements, fixtures, equipment, machinery and appliances
with items of like kind or additions, and except replacements or removals in the
ordinary course of the Borrower's business.

         7. USE OF PROPERTY. Unless required by applicable law or unless Ocwen
has otherwise agreed in writing, Borrower shall not allow changes in the use for
which all or any part of the Property was intended at the time this Instrument
was executed. Borrower shall not initiate or acquiesce in a change in the zoning
classification of the Property without Ocwen's prior written consent.

         8. PROTECTION OF OCWEN'S SECURITY. If Borrower fails to perform the
covenants and agreements contained in this Instrument, or if any action or
proceeding is commenced which affects the Property or title thereto or the
interest of Ocwen therein, including, but not limited to, eminent domain,
insolvency, code enforcement, or arrangements or proceedings involving a
bankrupt or decedent, then Ocwen, at Ocwen's option and after thirty (30) days
prior notice to Borrower, may make such appearances, disburse such sums and take
such action as Ocwen deems necessary, in its sole discretion, to protect Ocwen's
and the Ocwen Affiliates' interests, including, but not limited to, (a)
disbursement of attorney's fees; (b) entry upon the Property to make repairs;
(c) procurement of satisfactory insurance as provided in paragraph 5 hereof; and
(d) taking all action required in order to obtain or reinstate any required,
necessary or desirable licenses, permits, approvals, or authorizations of
governmental entities (including but not limited to Medicare and Medicaid
provider numbers and participation agreements and State of Ohio or Pennsylvania
Certificate of Need approvals and/or authorization, in the event the foregoing
become applicable).


                                      -11-
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         Any amounts disbursed by Ocwen pursuant to this paragraph 8, with
interest thereon, shall become additional indebtedness of Borrower secured by
this Instrument. Unless Borrower and Ocwen agree to other terms of payment, such
amounts shall be immediately due and payable and shall bear interest from the
date of disbursement at the Default Rate of interest stated in the Term Loan
Agreement unless collection from Borrower of interest at such rate would be
contrary to applicable law, in which event such amounts shall bear interest at
the highest rate which may be collected from Borrower under applicable law.
Borrower hereby covenants and agrees that Ocwen shall be subrogated to the lien
of any mortgage or other lien discharged, in whole or in part, by the
indebtedness secured hereby. Nothing contained in this paragraph 8 shall require
Ocwen to incur any expense or take any action hereunder.

         9. INSPECTION. Ocwen may make or cause to be made entries upon and
inspections of the Property in accordance with the terms and provisions of the
Term Loan Agreement governing such inspections.

         10. BOOKS AND RECORDS. Borrower shall keep and maintain at all times
complete and accurate books of account and records adequate to reflect correctly
the operation of the Property and copies of all written contracts, leases and
other instruments which affect the Property, including but not limited to
licenses, permits, certifications and authorizations and approvals of
governmental agencies. Such books, records, contracts, leases and other
instruments (including licenses, permits, certifications, and authorizations and
approvals of governmental agencies) shall be subject to examination and
inspection at any reasonable time by Ocwen.

         11. CONDEMNATION. Borrower shall promptly notify Ocwen of any action or
proceeding relating to any condemnation or other taking, whether direct or
indirect, of the Property, or part thereof, and Borrower shall appear in and
prosecute any such action or proceeding unless otherwise directed by Ocwen in
writing. If any Event of Default under the Transaction Documents has occurred
and is continuing, Ocwen, at Ocwen's option, may act as attorney-in-fact for
Borrower to commence, appear in and prosecute, in Ocwen's name, the names of the
Ocwen Affiliates, or Borrower's name, any action or proceeding relating to any
condemnation or other taking of the Property, whether direct or indirect, and to
settle or compromise any claim in connection with such condemnation or other
taking. The proceeds of any award,


                                      -12-
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payment or claim for damages, direct or consequential, in connection with any
condemnation or other taking, whether direct or indirect, of the Property, or
part thereof, or for conveyances in lieu of condemnation, are hereby assigned to
and shall be paid to Ocwen.

         With the consent of Ocwen, which consent shall not be unreasonably
withheld, Borrower may apply such awards, payments, proceeds or damages, after
the deduction of Ocwen's expenses incurred in the collection of such amounts, to
restoration or repair of the Property. Otherwise, such sums so received shall be
applied to payment of any amounts due under the Transaction Documents, under
other notes, agreements, or documents evidencing other indebtedness of Borrower
or Balanced Care to Ocwen or the Ocwen Affiliates secured by this Instrument, or
other sums secured by this Instrument, or, if no such amounts are then due, held
by Ocwen or the Ocwen Affiliates as security for Borrower's obligations under
the Transaction Documents or such other notes, agreements or documents
evidencing indebtedness secured hereby. Borrower agrees to execute such further
evidence of assignment of any awards, proceeds, damages or claims arising in
connection with such condemnation or taking as Ocwen or the Ocwen Affiliates may
require.

         12. BORROWER AND LIEN NOT RELEASED. From time to time, Ocwen may, at
Ocwen's option, without giving notice to or obtaining the consent of Borrower or
Borrower's successors or assigns or of any junior lienholder or guarantor,
without liability on Ocwen's or any Ocwen Affiliate's part and notwithstanding
Borrower's breach of any covenant or agreement of Borrower in this Instrument,
extend the time for payment of any amounts due under the Transaction Documents
or any other indebtedness secured by this Instrument or any part thereof, reduce
the payments thereon, release anyone liable for payment of such amounts, release
from the lien of this Instrument any part of the Property, take or release other
or additional security, reconvey any part of the Property, consent to any map or
plat of the Property, consent to the granting of any easement, join in any
extension or subordination agreement, agree in writing with Borrower to modify
any term or condition of the Transaction Documents, or other notes, documents or
agreements evidencing indebtedness of Borrower to Ocwen or the Ocwen Affiliates
secured hereby, including any term or condition relating to the payment of
money. Any actions taken by Ocwen pursuant to the terms of this paragraph 12
shall not affect the obligation of Borrower or Borrower's successors or assigns
to pay the sums secured by this Instrument and to observe the covenants of
Borrower contained


                                      -13-
<PAGE>
herein, shall not affect the guaranty of any person, corporation, partnership or
other entity for payment of the indebtedness secured hereby, and shall not
affect the lien or priority of lien hereof on the Property. Borrower shall pay
Ocwen a reasonable service charge, together with such title insurance premiums
and attorney's fees as may be incurred at Ocwen's option for any such action if
taken at Borrower's request.

         13. FORBEARANCE BY OCWEN NOT A WAIVER. Any forbearance by Ocwen or the
Ocwen Affiliates in exercising any right or remedy hereunder, or otherwise
afforded by applicable law, shall not be a waiver of or preclude the exercise of
any right or remedy. The acceptance by Ocwen or the Ocwen Affiliates of payment
of any sum secured by this Instrument after the due date of such payment shall
not be a waiver of Ocwen's or the Ocwen Affiliates' right to either require
prompt payment when due of all other sums so secured or to declare a default for
failure to make prompt payment. The procurement of insurance or the payment of
taxes or other liens or charges by Ocwen shall not be a waiver of Ocwen's or the
Ocwen Affiliates' right to accelerate the maturity of the indebtedness secured
by this Instrument. Ocwen's or the Ocwen Affiliates' receipt of any awards,
proceeds or damages under paragraphs 5 and 11 hereof shall not operate to cure
or waive Borrower's default in payment of sums secured by this Instrument.

         14. ESTOPPEL CERTIFICATE. Borrower shall, within 30 days of a written
request from Ocwen, furnish Ocwen or the Ocwen Affiliates with a written
statement, duly acknowledged, setting forth, to Borrower's knowledge, the sums
secured by this Instrument and any right of set-off, counterclaim or other
defense which exists against such sums and the obligations of this Instrument.
Within 30 days of Borrower's written request therefor, Ocwen and the Ocwen
Affiliates shall furnish Borrower with a statement as to (i) the amount then
secured by this Instrument, and (ii) whether, to Ocwen's knowledge, an Event of
Default under the Transaction Documents has occurred or is continuing.

         15. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. In addition to being a
Mortgage and Assignment of Rents, this Instrument is intended to be a security
agreement pursuant to the Uniform Commercial Code for any of the items specified
above as part of the Property which under applicable law may be subject to a
security interest pursuant to the Uniform Commercial Code, and Borrower hereby
grants Ocwen and the Ocwen Affiliates a first security interest in said items.
Borrower agrees that Ocwen or the Ocwen Affiliates may file this Instrument, or
a reproduction


                                      -14-
<PAGE>
hereof, in the real estate records or other appropriate index, as a financing
statement for any of the items specified above as part of the Property. Any
reproduction of this Instrument or of any other security agreement or financing
statement shall be sufficient as a financing statement. In addition, Borrower
agrees to execute and deliver to Ocwen, upon Ocwen's request, any financing
statements, as well as extensions, renewals and amendments thereof, and
reproductions of this Instrument in such form as Ocwen or the Ocwen Affiliates
may reasonably require to perfect a security interest with respect to said
items. Borrower shall pay all costs of filing such financing statements and any
extensions, renewals, amendments and releases thereof, and shall pay all
reasonable costs and expenses of any record searches for financing statements
Ocwen or the Ocwen Affiliates may reasonably require. Without the prior written
consent of Ocwen, except as otherwise permitted by the Transaction Documents,
Borrower shall not create or suffer to be created pursuant to the Uniform
Commercial Code any other security interest in said items, including
replacements and additions thereto. If any Event of Default occurs under any of
the Transaction Documents, specifically including but not limited to the BCC
Note and the Deferred Purchase Price Note, or if a default occurs under any
other note, document or agreement given by Borrower or Balanced Care to Ocwen or
the Ocwen Affiliates in connection with indebtedness of Borrower or Balanced
Care to Ocwen or the Ocwen Affiliates secured by this Instrument, or if Ocwen or
the Ocwen Affiliates declare all sums secured hereby immediately due and payable
in accordance with the first sentence of paragraph 25, Ocwen and the Ocwen
Affiliates shall have the remedies of a secured party under the Uniform
Commercial Code and, at Ocwen's or the Ocwen Affiliates' option, may also invoke
the remedies provided in paragraph 25 of this Instrument as to such items. In
exercising any of said remedies, Ocwen and the Ocwen Affiliates may proceed
against the items of real property and any items of personal property specified
above as part of the Property separately or together and in any order
whatsoever, without in any way affecting the availability of Ocwen's or the
Ocwen Affiliates' remedies under the Uniform Commercial Code or of the remedies
provided in paragraph 25 of this Instrument.

         16. LEASES OF THE PROPERTY. Borrower shall comply with and observe
Borrower's obligations as landlords under any leases of the Property or any part
thereof. Borrower shall furnish Ocwen with executed copies of all
non-residential leases hereafter made of all or any part of the Property, and
all non-residential leases hereafter entered into will be subject to Ocwen's
prior written approval, which approval shall not be unreasonably withheld.


                                      -15-
<PAGE>
Borrower shall provide copies of all residential leases to Ocwen within thirty
(30) Business Days after Ocwen's request therefore. Unless otherwise directed by
Ocwen and except for non-residential leases, all leases of the Property made
after the date hereof shall specifically provide that such leases are
subordinate to this Instrument; that the tenant attorns to Ocwen or the Ocwen
Affiliates, such attornment to be effective upon Ocwen's or the Ocwen
Affiliates' acquisition of title to the Property; that the tenant agrees to
execute such further evidences of attornment as Ocwen or the Ocwen Affiliates
may from time to time request; and that the attornment of the tenant shall not
be terminated by foreclosure. In addition, all lessees (other than lessees under
residential leases) of all or any part of the Property shall execute a
Subordination, Attornment and Non-Disturbance and Estoppel Certificate in
substantially the same form attached hereto as Exhibit B or as agreed to by
Ocwen or the Ocwen Affiliates. Except for residential leases amended, modified,
executed, surrendered, or terminated in the ordinary course of Borrower's
business, Borrower shall not, without Ocwen's written consent, which consent
shall not be unreasonably withheld, execute, modify, surrender or terminate,
either orally or in writing, any lease hereafter made of all or any part of the
Property, permit an assignment or sublease of such a lease, or request or
consent to the subordination of any lease of all or any part of the Property to
any lien subordinate to this Instrument. If Borrower becomes aware that any
tenant (other than a residential tenant) proposes to do, or is doing, any act or
thing which may give rise to any right to set-off against rent, Borrower shall
(a) take such steps as shall be reasonably calculated to prevent the accrual of
any right to a set-off against rent, (b) notify Ocwen thereof and of the amount
of said set-offs, and (c) within ten days after such accrual, reimburse the
tenant who shall have acquired such right to set-off or take such other steps as
shall effectively discharge such set-off and as shall assure that rents
thereafter due shall continue to be payable without set-off or deduction.

         17. REMEDIES CUMULATIVE. Each remedy provided in this Instrument is
distinct and cumulative to all other rights or remedies under this Instrument or
afforded by law or equity, and may be exercised concurrently, independently, or
successively, in any order whatsoever.

         18. TRANSFERS OF THE PROPERTY; CHANGES IN CONTROL OR OWNERSHIP OF
MORTGAGOR. Upon the voluntary or involuntary sale, lease (in violation of this
Instrument or in violation of the Term Loan Agreement), exchange, assignment,
conveyance (other than a


                                      -16-
<PAGE>
condemnation governed by Section 11 of this Instrument), transfer or other
disposition (herein collectively called "Disposition") of all or any portion of
the Property (or any interest therein), or a transfer of the Borrower of any
interest therein prohibited by any of the Transaction Documents, in the event
Borrower conveys to any other party a security interest in the Property or any
part thereof, or voluntarily or involuntarily permits or suffers the Property to
be further encumbered, in violation of this Instrument (herein collectively
called "Encumbrance"), then such Disposition or Encumbrance shall be a default
hereunder, and Ocwen and the Ocwen Affiliates may, at their option, enforce any
and all of their rights, remedies and recourses as set forth herein and/or in
the Transaction Documents; provided, however, neither Ocwen nor any Ocwen
Affiliate shall enforce such rights, remedies, and recourses if it consents in
writing to the Disposition or Encumbrance in question. It is expressly agreed
that in connection with determining whether to grant or withhold such consent
the determination made by Ocwen or an Ocwen Affiliate shall be conclusive and
Ocwen may require as conditions to granting such consent (a) payment of Ocwen's
or the Ocwen Affiliates' reasonable attorneys' fees in connection with such
Disposition or Encumbrance, and (b) the express assumption of the payment of the
indebtedness and performance of the obligations of the Borrower or Balanced Care
by the party to whom such Disposition will be made (with or without the release
of Borrower or Balanced Care from liability for such indebtedness and
obligations).

         19. NOTICE. Whenever notice is required to be given pursuant to the
provisions hereof, such notice shall be given at the addresses and in the manner
specified in the Term Loan Agreement.

         20. SUCCESSORS AND ASSIGNS BOUND; AGENTS; CAPTIONS. The covenants and
agreements herein contained shall bind, and the rights hereunder shall inure to,
the respective successors and assigns of Ocwen, the Ocwen Affiliates, and
Borrower. In exercising any rights hereunder or taking any actions provided for
herein, Ocwen and the Ocwen Affiliates may act through their employees, agents
or independent contractors as authorized by Ocwen or the Ocwen Affiliates. The
captions and headings of the paragraphs of this Instrument are for convenience
only and are not to be used to interpret or define the provisions hereof.

         21. GOVERNING LAW AND FORUM SELECTION; SEVERABILITY. This Instrument
shall be governed by the laws of the State of Ohio, without regard to its
conflict of law provisions. In the event of


                                      -17-
<PAGE>
any dispute, claim or controversy arising out of the terms or conditions of this
Instrument or any of the Transaction Documents, Borrower hereby agrees that such
dispute, claim, or controversy shall be brought and heard only in the United
States District Court for the Southern district of Ohio, Western Division, in
such other federal court as Ocwen shall select, in state court in the State of
Ohio, County of Montgomery, or in such other state court in such other county
and state as Ocwen may select, and all applicable appellate courts thereof, and
Borrower hereby waives any objection to jurisdiction, venue or forum non
convenes that Borrower may have otherwise had if this provision were not
included herein. At the request of Ocwen, made at any time, Borrower shall
designate a statutory agent in any State requested by Ocwen such that the forum
selection clause of this Section 21 may be effectuated.

         In the event that any provision of this Instrument conflicts with
applicable law, such conflict shall not affect other provisions of this
Instrument which can be given effect without the conflicting provisions, and to
this end the provisions of this Instrument are declared to be severable.

         22. WAIVER OF STATUTE OF LIMITATIONS. TO the extent permitted by law,
Borrower hereby waives the right to assert any statute of limitations as a bar
to the enforcement of the lien of this Instrument or to any action brought to
enforce any of the Transaction Documents or any other obligation secured by this
Instrument.

         23. WAIVER OF MARSHALLING. Notwithstanding the existence of any other
security interests in the Property held by Ocwen or by any other party, Ocwen
shall have the right to determine the order in which any or all of the Property
shall be subjected to the remedies provided herein. Ocwen shall have the right
to determine the order in which any or all portions of the indebtedness secured
hereby are satisfied from the proceeds realized upon the exercise of the
remedies provided herein. Borrower, any party who consents to this Instrument,
and any party who now or hereafter acquires a security interest in the Property
and who has actual or constructive notice hereof, hereby waives any and all
right to require the marshalling of assets in connection with the exercise of
any of the remedies permitted by applicable law or provided herein.

         24. ASSIGNMENT OF LEASES AND RENTS, CONTRACT RIGHTS, AND LICENSES AND
PERMITS; APPOINTMENT OF RECEIVER; OCWEN IN POSSESSION. Borrower hereby
absolutely and unconditionally


                                      -18-
<PAGE>
assigns and transfers to Ocwen all the leases, rents and revenues of the
Property, including those now due, past due, or to become due by virtue of any
lease or other agreement for the occupancy or use of all or any part of the
Property, regardless of to whom the rents and revenues of the Property are
payable. Borrower hereby absolutely and unconditionally assigns and transfers to
Ocwen all of the contract rights of Borrower in and under resident agreements or
occupancy agreements (quasi real property leases), service agreements and other
vendor agreements necessary, required, or desirable for the operation of the
facility that constitutes the Property secured hereby, the foregoing assignment
to be effective at any time upon Ocwen providing written notice to Borrower. To
the extent permitted by applicable law, Borrower also hereby absolutely and
unconditionally assigns and transfers to Ocwen all of the rights of Borrower in,
under and to all licenses, permits, certifications and governmental approvals
necessary, required or desirable in connection with the operation of the
facility that constitutes the Property secured hereby (including but not limited
to Medicare and Medicaid provider numbers and participation agreements and Ohio
Certificate of Need approvals and authorizations, in the event the foregoing are
applicable), the foregoing assignment to be effective at any time upon Ocwen
providing written notice to Borrower. Although this Instrument is a present
assignment, Ocwen shall not exercise any of the rights or powers herein
conferred upon it until (i) an Event of Default shall have occurred under any of
the Transaction Documents, specifically including but not limited to the BCC
Note and the Deferred Purchase Price Note and specifically including but not
limited to a default in the payment of Indebtedness (as defined in the Term Loan
Agreement) owed to Ocwen, or a default in performance by Borrower or Balanced
Care under any other documents, agreements or notes provided by Borrower or
Balanced Care to Ocwen or an Ocwen Affiliate in connection therewith, or (ii) a
default occurs under this Instrument or any other instrument securing the
Borrower's or Balanced Care's obligations under the Transaction Documents, and
with respect to the latter two events, Ocwen provides written notice of same to
Borrower. Borrower hereby authorizes Ocwen or Ocwen's agents or its designee to
(i) collect the aforesaid rents and revenues and hereby directs each tenant of
the Property to pay such rents to Ocwen or Ocwen's agents; and (ii) take any
action necessary to obtain the assignment of contracts, licenses, permits,
certifications or approvals necessary, required or desirable in connection with
the operation of the facility that constitutes the Property secured hereby and
hereby directs third parties, to the extent they require Borrower's consent or
approval to permit or allow such transfers and assignment, to grant and
effectuate such


                                      -19-
<PAGE>
assignments. Upon an event of default as hereinabove described, and without the
necessity of Ocwen entering upon and taking and maintaining full control of the
Property in person, by agent or by a court-appointed receiver, Ocwen shall
immediately be entitled to possession of all rents and revenues of the Property,
and upon prior written notice to Borrower, all contracts, licenses, permits,
certifications and approvals, as specified in this paragraph; with respect to
rents, revenues, and payments due under income-producing or income-generating
contracts for Borrower, as the same become due and payable (including but not
limited to rents then due and unpaid) and all such rents and other payments
received by Borrower shall immediately upon delivery of such notice be held by
Borrower as trustees for the benefit of Ocwen only. This paragraph may be
supplemented by a separate assignment of leases and rents instrument, and/or a
separate assignment of contracts instrument, and/or separate assignments of
licenses, permits, certifications, and approvals entered into by and between
Ocwen and Borrower, which instrument(s) shall set forth more fully Ocwen's
rights with respect to the leases, rents, revenue, contract rights, licenses,
permits, certifications and approvals relating to the Property.

         25. ACCELERATION; REMEDIES. If (a) Borrower or Balanced Care is in
default beyond any applicable grace period under any of the Transaction
Documents, specifically including but not limited to the BCC Note and the
Deferred Purchase Price Note, (b) Borrower defaults in the performance or
observance of any of the covenants or agreements of Borrower contained in this
Instrument and such default continues for a period of 30 days after written
notice thereof from Ocwen to Borrower, and, 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 reasonable diligence by Borrower, Borrower shall be
entitled to an additional 30 days to cure such default (not including monetary
defaults) provided Borrower has commenced and continues to diligently prosecute
such cure at all times, (c) an Event of Default under the Term Loan Agreement
has occurred and is continuing beyond any applicable grace period, or (d)
Borrower or Balanced Care is in default or in breach of any provision, including
but not limited to any payment provision, beyond any applicable grace period,
contained in any note, document or agreement given by Borrower or Balanced Care
to Ocwen or an Ocwen Affiliate in connection with indebtedness of Borrower and
Balanced Care to Ocwen and the Ocwen Affiliates secured by this Instrument;
then, in any such event, at any time, without further demand or notice, any and
all sums secured by this Instrument shall be immediately due and payable and, in
addition to any other right or remedy which Ocwen or the


                                      -20-
<PAGE>
Ocwen Affiliates may now or hereafter have at law or in equity, Ocwen and the
Ocwen Affiliates shall have the right and power: (a) to foreclose upon this
Instrument and the lien hereof; (b) to sell the Property according to law at one
or more sales as an entity or in parcels and at such time and place upon such
terms and conditions and after such notices thereof as may be required by law;
(c) to enter upon and take possession of the Property and/or have a receiver
appointed therefor as set forth in paragraph 24 hereof; and (d) to effectuate
the assignments of contract rights, licenses, permits, certifications, and
approvals, as described herein. If all sums secured by this Instrument become
immediately due and payable in accordance with this paragraph, Ocwen or the
Ocwen Affiliates, at Ocwen's option, may foreclose this Instrument by judicial
proceeding and may invoke any other remedies permitted by applicable law or as
provided herein. Ocwen and the Ocwen Affiliates shall be entitled to collect all
costs and expenses incurred in pursuing such remedies, including, but not
limited to costs of documentary evidence, abstracts, title reports, attorneys
fees, and any and all fees and costs associated with the (i) transfer of
contracts, or obtaining new contracts, and (ii) transfer of licenses, permits,
certifications, and approvals, both of the foregoing which are necessary,
required, or desirable in connection with the operation of the facility that
constitutes the Property secured hereby.

         26. INDEMNIFICATION. Borrower shall protect, indemnify, defend and save
harmless Ocwen and the Ocwen Affiliates from and against all actions, claims,
causes of action, liabilities, costs and expenses (including, without
limitation, reasonable attorneys fees and expenses, including those incurred in
connection with appellate, bankruptcy and post-judgment proceedings) imposed
upon or incurred by or asserted against Ocwen or an Ocwen Affiliate by reason
of: (a) the terms and conditions set forth in this Instrument; (b) ownership of
the Property or any interest therein, or receipt of any rents; (c) any accident,
injury to or death of persons or loss of or damage to property occurring in, on
or about the Property or any part thereof or on the adjoining sidewalks, curbs,
adjacent property or adjacent parking areas or streets; (d) any use, non-use or
condition in, on or about the Property or any part thereof or on the adjoining
sidewalks, curbs, adjacent property, parking areas or streets; (e) any failure
on the part of Borrower or Balanced Care to perform or comply with any of the
terms of this Instrument; or (f) the performance of any labor or services or the
furnishing of any materials or other property in respect of the Property or any
part thereof. The obligations of Borrower under this paragraph 26 shall survive
any termination or satisfaction of this Instrument until the expiration of the


                                      -21-
<PAGE>
statute of limitations of any action, claim, cause of action, liability, cost or
expense for which indemnification is to be provided by Borrower, as set forth
above.

         27. HAZARDOUS WASTE REPRESENTATION AND INDEMNIFICATION. The Borrower,
Ocwen, the Ocwen Affiliates, Balanced Care, Balanced Care at Medina, Inc., a
Delaware corporation, Balanced Care at Centerville, Inc., a Delaware
corporation, Balanced Care at Shippensburg, Inc., a Delaware corporation, and
Senior Care Operators of Shippensburg, LLC, a Delaware limited liability company
have entered into the ENVIRONMENTAL CONDITION AND INDEMNITY AGREEMENT, of even
date herewith, governing the relationship between Borrower and Ocwen (and other
parties) as to environmental matters affecting the Property.

         28. RELEASE. Upon payment of all sums secured by this Instrument that
are due and payable at the time of payoff of the Term Note, and upon the payment
in full of the Term Note (not including any Additional Payments that may become
due in accordance with the terms of Section 1.6 of the Term Loan Agreement) and
all other amounts due and owing to Ocwen under the Term Loan Agreement at the
time of payoff of the Term Note (except for the Additional Payments), Ocwen and
the Ocwen Affiliates shall discharge this Instrument. Borrower shall pay Ocwen's
and the Ocwen Affiliates' reasonable costs incurred in discharging this
Instrument.

         Notwithstanding the foregoing paragraph to the contrary, in the event
that, at the time of the payoff of the Term Note, payment is due Ocwen or any of
its Affiliates (specifically including Medina ALF, Inc., Shippensburg ALF, Inc.,
and Centerville ALF, Inc.) under the Deferred Purchase Price Note and BCC Note,
Ocwen shall not discharge or be required to discharge this Instrument until
payment in full has been made under the Term Note (not including any Additional
Payments that may become due in accordance with the terms of Section 1.6 of the
Term Loan Agreement), the Deferred Purchase Price Note and the BCC Note, and all
other amounts due and owing to Ocwen and/or such Affiliates under the Term Note,
Deferred Purchase Price Note, and BCC Note have been paid in full.

         Ocwen acknowledges that Borrower may choose to pay off the Loan by
refinancing, and Borrower agrees to provide Ocwen with thirty (30) days advance
written notice of such refinancing. Ocwen shall have such 30 days to provide
Borrower with a payoff letter and to provide to a title company or other escrow
agent a satisfaction and release of this Instrument to be held by such


                                      -22-
<PAGE>
escrow agent in escrow until Ocwen shall have received payment in full of the
Term Note, and if applicable, the Deferred Purchase Price Note and BCC Note. In
the event that Ocwen fails to provide a letter of payoff or provide the release
of lien of this Instrument within the time period described above, and solely as
a result of Ocwen's failure to timely respond (and not as a result of any action
or inaction by Borrower), Borrower fails to make a payment when due under the
Term Note, Ocwen may not accelerate payments due under the Term Note, or deem
payment due under the Deferred Purchase Price Note and/or BCC Note. Provided,
however, that nothing set forth above shall release Borrower and/or Balanced
Care from any obligation of Borrower or Balanced Care under the Term Note or any
Loan Documents, or under the BCC Note or Deferred Purchase Price Note, in the
event that payments are otherwise due under any of the foregoing; the intent of
the parties with respect to this paragraph being that Ocwen may not benefit from
its failure to timely respond by accelerating the Term Note based solely on such
failure, thereby causing payments to be due that would not otherwise be due
under the Deferred Purchase Price Note and BCC Note, but otherwise, the
obligations of the Borrower and/or Balanced Care under the Transaction
Documents, Deferred Purchase Price Note and BCC Note shall be unaffected hereby.

         29. WAIVER OF JURY TRIAL. OCWEN, THE OCWEN AFFILIATES, BALANCED CARE,
AND BORROWER HEREBY VOLUNTARILY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT
TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE, AMONG OCWEN, THE OCWEN AFFILIATES, BALANCED CARE,
AND BORROWER ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED AMONG BORROWER, THE OCWEN AFFILIATES, BALANCED
CARE, AND OCWEN IN CONNECTION WITH THIS INSTRUMENT OR ANY OTHER AGREEMENT OR
DOCUMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTION RELATED
HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO OCWEN AND THE OCWEN
AFFILIATES TO ENTER INTO THE FINANCING TRANSACTION AND THE TRANSACTION
DOCUMENTS. IT SHALL NOT IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR MODIFY OCWEN'S
OR THE OCWEN AFFILIATES' ABILITY TO PURSUE THEIR REMEDIES CONTAINED IN THIS
INSTRUMENT OR ANY OTHER DOCUMENT RELATED HERETO.


                                      -23-
<PAGE>
         IN WITNESS WHEREOF, Borrower has executed this Instrument as of the day
and year first set forth above.

Signed and acknowledged                         BORROWER:
in the presence of:
                                                BALANCED CARE REALTY (OFC),
                                                INC.

/s/ Theresa M. Haddad

Printed Name: Theresa M. Haddad                 By: /s/Robin L. Barber
                                                Its:  Vice President and
                                                      Secretary

/s/ Barbara E. Davis
Printed Name: Barbara E. Davis

COMMONWEALTH OF PENNSYLVANIA        )
                                    )  SS
COUNTY OF CUMBERLAND                )


         On this 4th day of April, 2002, before me, a Notary Public in and for
said County and State, personally appeared Robin L. Barber, the Vice President
and Secretary of Balanced Care Realty (OFC), Inc., a Delaware corporation, who
executed the foregoing instrument as his/her free act and deed on behalf of said
corporation.

         IN WITNESS WHEREOF, I have hereunto set my hand and official seal.

                                         /s/ Jaynelle D. Covert
                                         Notary Public

                                         My Commission Expires: June 21, 2004



This instrument was prepared by:
Jill E. Aebker, Esq.
Squire, Sanders & Dempsey L.L.P.
1300 Huntington Center
41 South High Street
Columbus, OH  43215


                                      -24-