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Exhibit 10.5


                      FORM OF INTERIM MANAGEMENT AGREEMENT
                                    [      ]


                  THIS INTERIM MANAGEMENT AGREEMENT ("Agreement") is made as of
January 12, 2001 between ELDER CARE OPERATORS OF [ ], LLC, a Delaware limited
liability company ("Tenant"), BALANCED CARE AT [ ], INC., a Delaware
corporation, and (collectively, with Tenant, the "Management Firm") and
NATIONWIDE HEALTH PROPERTIES, INC., a Maryland corporation (the "Owner").

                               W I T N E S S E T H

                  WHEREAS, Tenant, as Tenant, and Owner, as Landlord, entered
into that certain Master Lease and Security Agreement [ ] dated as of July 1,
2000 (the "Lease");

                  WHEREAS, pursuant to the terms of the Lease, Tenant leased
from Owner the real property, improvements thereon and appurtenances thereto
commonly known as Outlook Pointe at [ ], located at [ ] (the "Facility");

                  WHEREAS, Tenant leased the Facility for operation, and caused
the Manager to operate the Facility, as a personal care/assisted living facility
(as so utilized, an "ALF") in the manner described in the Lease;

                  WHEREAS, Tenant defaulted, and an Event of Default arose,
under the Lease;

                  WHEREAS, Owner and Tenant, among others, have entered into
that certain Master Termination and Release Agreement of even date herewith (the
"Termination Agreement") pursuant to which, among other things, the Lease was
terminated and the Facility leased thereunder by Tenant from Owner were
surrendered to Owner;

                  WHEREAS, Management Firm and Owner, among others, have entered
into that certain Master Transfer Operations Agreement (the "Transfer
Agreement");

                  WHEREAS, Management Firm is an Affiliate (as defined below) of
Balanced Care Corporation, a Delaware corporation ("BCC");


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                  WHEREAS, Management Firm holds the healthcare licenses
necessary for the lawful operation of the Facility as an ALF; and

                  WHEREAS, in order for Owner to make alternative arrangements
for the operation and management of the Facility and to effect the transfer of
the healthcare license required in connection therewith, Owner and Management
Firm desire that Management Firm shall manage the Facility for Owner on an
interim basis on the terms and conditions more particularly described in this
Agreement.

                  NOW, THEREFORE, in consideration of the foregoing Recitals
(which by this reference are incorporated herein), and for other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:

1.       Scope of Work.

                  Owner hereby appoints Management Firm as the operator and
manager of the Facility during the term of this Agreement. Subject to the
obligations of Owner as provided in Section 10, the other terms and provisions
of this Agreement, and the express limitations on such responsibility and
authority set forth herein, the Management Firm shall have full responsibility
and authority in the name and on behalf of Owner to operate and manage the
Facility and hereby covenants and agrees to take all actions necessary or
desirable to operate and manage the Facility and to fulfill its duties
hereunder, including without limitation to: (i) operate and maintain the
Facility as an ALF in accordance with prudent and customary practice and
industry standards and licensed for the number of beds or units existing on the
date hereof; (ii) collect all room and board revenue (provided that all resident
rates and changes thereto shall be subject to Owner's prior approval), as well
as other revenue, and pay prior to the imposition of any fine or penalty all
debts and other obligations relating to the Facility, including fixed expenses
and taxes; (iii) ensure the Facility and Management Firm comply with applicable
Federal, state and local laws and regulations including all healthcare licensing
laws applicable to the operation of an ALF; (iv) provide all necessary services
to ensure that the Facility provides quality care to its residents; (v) recruit,
hire and train personnel as needed for the operation of all departments and
services of the Facility, provided that no management level personnel shall be
hired without Owner's prior approval; (vi) open and maintain such bank accounts
as may be necessary or desirable for the operation of


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the Facility (the "Operating Accounts"), which, together with all funds on
deposit therein from time to time, at all times shall be and remain the sole
property of Owner, and open and maintain an account solely in Management Firm's
own name from which all payments with respect to Pass-Through Employee
Liabilities (as defined below) shall be made (the "Payroll Account"); (vii)
establish salary levels (provided that changing the salary payable to any
employee (excluding cost of living and other ordinary course increases) shall be
subject to Owner's prior approval), performance standards, personnel policies
and employee benefits (subject to Owner's prior approval) for the Management
Firm's employees; and (viii) to take all other actions necessary or desirable to
operate and manage the Facility in accordance with prudent practice and industry
standards. Owner hereby grants to Management Firm a license during the term of
this Agreement for the right to occupy the Facility for purposes of performing
its obligations hereunder.

                  Management Firm acknowledges that the operation and management
of the Facility, and each decision made or action taken by Management Firm in
connection therewith, may be reviewed and countermanded by Owner. Management
Firm shall take all such action in connection with the operation and management
of the Facility as Owner may request, provided that such action is lawful and
within the scope of the services to be provided by Management Firm under this
Agreement.

                  Prior to the date of this Agreement, Owner has reviewed and
approved an operating budget for the Facility (in the form attached hereto as
Exhibit A, the "Budget"). Management Firm shall perform its duties hereunder,
and make expenditures in connection with the management of the Facility, only to
the extent consistent with the cumulative Budget unless, prior to any
inconsistent action or expenditure, it has obtained the prior approval of Owner.

                  Management Firm, at the direction of Owner, shall distribute
to Owner from the Operating Accounts any Federal, state or local income or sales
tax due by Owner in connection with revenue derived exclusively from the
Facility. Subject to Owner's prior approval, Management Firm shall make such
distributions as necessary to itself from the Operating Accounts to pay any
Federal, state or local income or sales taxes due by Management Firm as a result
of earnings of Owner in connection with the Facility, provided that Management
Firm shall be responsible for, and shall not be entitled to any such
distributions in connection with, the payment of any Federal,


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state or local income or sales taxes due by Management Firm as a result of its
earnings under this Agreement.

                  In performing its duties, the Management Firm (through its
in-house corporate staff or independent contractors) shall perform the following
with respect to the Facility, as well as any other matters reasonably related
thereto commencing upon the date of this Agreement:

                  (a)      Management Information Systems (MIS)

                  Support centralized Facility information system which provides
                  systems management for the following areas:

                           --  Accounts Payable
                           --  Payroll
                           --  Financial Reporting
                           --  Marketing administered at the Facility
                           --  General Ledger

                  The Management Firm shall be responsible for billing and
                  collection of accounts receivable generated in connection with
                  the Facility.

                  (b)      Legal Counsel

                  (i) Subject to Owner's prior approval, prepare or coordinate
                  with outside legal counsel for preparation of documents for
                  operation of the Facility, including resident agreements,
                  supplier/vendor contracts, service contracts, equipment leases
                  and other ancillary contracts; (ii) prepare or coordinate
                  licensure and other regulatory applications; (iii) subject to
                  Owner's prior approval, coordinate all litigation involving
                  the Facility with local counsel or the insurance companies;
                  (iv) subject to Owner's prior approval, coordinate with local
                  counsel on local law issues affecting the Facility; and (v)
                  provide legal counsel or coordinate with local counsel to
                  provide counsel to the Facility's Human Resources Department.

                  Without limiting the generality of Section 2 and Section 10
                  below, the parties acknowledge that all outside counsel
                  expenses under the foregoing paragraph shall be an expense
                  allocable to the Facility.


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                  (c)      Accounting/Tax

                  (i) Provide an accountant to supervise all accounting
                  activities; (ii) implement accounting policies and guidelines;
                  (iii) provide a cash management system; (iv) deposit in
                  Operating Accounts established in the Facility's name all
                  funds received from the operations of the Facility, satisfy
                  obligations of the Facility from such Operating Accounts
                  (provided that all Pass-Through Employee Liabilities shall be
                  satisfied solely from the Payroll Account), not commingle
                  funds in the Operating Accounts with any other funds and,
                  within ten (10) days of the date of this Agreement, cause
                  Owner to have signing authority for all matters on such
                  Operating Accounts; (v) supervise the Facility's internal
                  control structure; (vi) provide payroll, income and real
                  estate tax support as follows: prepare or supervise
                  preparation of all payroll tax returns (subject to Owner's
                  prior approval), assist the Facility in the event of a tax
                  audit, assist the Facility with technical issues relating to
                  payroll, excise and other taxes, and monitor pending and final
                  Federal, state and local tax law changes; (viii) provide
                  operations expertise through site visits and strategies to
                  maximize fiscal performance; and (ix) subject to Owner's prior
                  approval, propose, develop and implement revisions to the
                  Budget for appropriate operations, capital outlay and cash
                  requirements. All checks or other documents for withdrawal of
                  funds shall be signed by the appropriate officer of the
                  Management Firm or Owner; provided that checks and other
                  withdrawal documents for withdrawal of funds from the Payroll
                  Account shall be signed solely by Management Firm. Deposits
                  may be made by the appropriate officer of the Management Firm
                  or Owner.

                  (d)      Human Resources

                  (i) Implement all personnel policies and guidelines; (ii)
                  recruit management personnel of the Facility, including the
                  community


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                  director of the Facility, which recruitment and the salaries
                  related thereto shall be an expense of the Owner, provided
                  that hiring any management level personnel shall be subject to
                  Owner's prior approval; (iii) provide on-going training for
                  the Facility's Human Resources Director; (iv) negotiate
                  (subject to Owner's prior approval) and administer, to the
                  extent applicable, all employee benefit plans including health
                  insurance, dental insurance, life insurance, long-term
                  disability insurance (for the community director only), and
                  retirement/401K; (v) negotiate (subject to Owner's prior
                  approval) and administer general and professional liability,
                  workers' compensation, property, and vehicular insurance
                  plans; (vi) monitor the Facility's compliance with Federal,
                  state and local employment laws; (vii) respond to all
                  government compliance agencies and legal proceedings as
                  necessary; (viii) implement and monitor safety/loss control
                  programs; (ix) recruit, employ and train personnel as needed
                  for the operation of all departments and services of the
                  Facility; and (x) establish salary levels, performance
                  standards, personnel policies and employee benefits for all
                  employees within applicable budgetary and regulatory limits,
                  provided that changing the salary payable or employee benefits
                  owed to any employee (excluding cost of living and other
                  ordinary course increases) shall be subject to Owner's prior
                  approval. All employees at the Facility, including without
                  limitation the community director and the community marketing
                  coordinator, shall at all times during the term of this
                  Agreement remain the employees of the Management Firm.
                  Notwithstanding the foregoing, all Pass-Through Employee
                  Liabilities (as defined in the Transfer Agreement) shall be an
                  operating expense of the Facility to be paid from the Payroll
                  Account, which shall be funded from the Operating Accounts in
                  accordance with the terms hereof, including without limitation
                  Section 10.


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                  (e)      Program Development

                  (i) Provide ongoing program development and management
                  consultation; (ii) supply select program manuals for local
                  modification and implementation; and (iii) provide program
                  development/management training. A community director shall be
                  engaged by the Management Firm for the Facility.

                  (f)      Quality Management

                  (i) Provide model quality management systems and implement
                  such including risk management, resident/family satisfaction,
                  licensing and accreditation, and program evaluation; and (ii)
                  provide ongoing monitoring of the Facility resident outcomes.

                  (g)      Marketing/Communication

                  (i) Hire, direct and supervise marketing department staff;
                  (ii) train staff (program managers, rehabilitation liaisons,
                  marketing representatives, etc.) in marketing skills; (iii)
                  maintain strong sales efforts within the target area; (iv)
                  establish an intake/admission system and continuously review
                  the admission process; (v) maintain image building advertising
                  strategies for the Facility; and (vi) maintain and produce
                  Facility selected promotional literature.

                  (h)      Contracting

                  Negotiate and enter into contracts and agreements related to
                  the Facility with third parties and parties affiliated with
                  the Management Firm; provided that all contracts and
                  agreements (i) with third parties shall be on market terms and
                  no less favorable to Owner than similar contracts or
                  agreements entered into by Affiliates of Management Firm in
                  connection with the operation of other similar healthcare
                  facilities, and (ii) with parties affiliated with the
                  Management Firm shall be on terms no less favorable to Owner
                  than terms for comparable contracts and agreements with
                  unaffiliated parties. Notwithstanding the foregoing, without
                  the prior approval of Owner, Management Firm


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                  shall not enter into any new contract or agreement, or amend,
                  modify, or extend any contract or agreement existing on the
                  date hereof, that affects the Facility, whether in the name of
                  Manager or Owner, which contract or agreement is (x) not
                  terminable on thirty (30) or fewer days notice without penalty
                  or premium, (y) requires the payment of more than $5,000 in
                  any twelve (12) month period, and (z) when aggregated with
                  amounts due under all other contracts entered into by
                  Management Firm during the term of this Agreement for which
                  Owner consent was not required, requires the payment of more
                  that $15,000 in any twelve (12) month period. As used in this
                  Agreement, "Affiliate" shall mean with respect to any person
                  or entity, any other person or entity which controls, is
                  controlled by or is under common control with the first person
                  or entity.

                  (i)      Insurance

                  Cause to be obtained and maintained in full force and effect
                  for itself and the Facility the types, coverages and amounts
                  of insurance set forth on Exhibit B, such other types,
                  coverages and amounts of insurance as Owner may reasonably
                  require and, subject to the prior approval of Owner, such
                  other insurance as Management Firm may believe to be prudent
                  and customary.

                  (j)      Miscellaneous

                  (1) Provide prompt notice to Owner of an occurrence at the
                  Facility that could materially adversely affect, financially
                  or otherwise, Owner or the Facility, including without
                  limitation, the occurrence of any material damage or casualty
                  to the Facility, any filed or threatened litigation concerning
                  the Facility or activities conducted thereat and any incidents
                  affecting the health or safety of the residents or any single
                  resident of the Facility.

                  (2) Provide to Owner promptly after receipt thereof by
                  Management Firm a copy of any inspection or other report or
                  survey prepared or issued by any regulatory agency.


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                  (3) Obtain and maintain in accordance with all applicable laws
                  and regulations all licenses, approvals and certifications
                  required for operation of the Facility and use reasonable
                  efforts to procure eligibility for participation in other
                  applicable referral or payor programs. Comply with all
                  notification and reporting requirements imposed under laws and
                  regulations in connection with the operation of the Facility.

                  (4) Subject to the provisions of Section 1(h), at the Owner's
                  cost and expense, purchase supplies, using procurement
                  practices in accordance with industry standards, and purchase
                  or lease equipment under national and regional agreements or
                  purchase contracts of the Management Firm or its affiliated
                  companies and provide to the Owner all benefits resulting
                  therefrom to the extent permitted by their terms and by law.
                  All such supplies so purchased shall become property of the
                  Owner. Once leases are completed, equipment shall become
                  property of the Owner.

                  (5) Subject to the provisions of Section 1(h), review and
                  analyze the performance of ancillary services under contract
                  and negotiate contractual arrangements therefor.

                  (6) Maintain books and records for the Facility at the
                  Management Firm's address herein (except for the financial
                  books and records that are maintained at BCC's corporate
                  headquarters) for the purpose of providing services under this
                  Agreement. The Management Firm shall make available to the
                  Owner and any entity designated by the Owner, and their
                  respective agents, accountants, and attorneys during normal
                  business hours all books and records pertaining to the
                  Facility, and the Management Firm shall promptly respond to
                  any questions of the Owner or any such designee with respect
                  to such books and records and shall confer with the Owner and
                  any such designee at all reasonable times, upon request,
                  concerning the operation of the Facility.


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                  (7) Order, supervise and conduct a program of regular
                  maintenance and repair of the Facility at the Owner's cost and
                  expense, such that the Facility is maintained in a condition
                  that complies with the terms of this Agreement.

                  (8) Supervise and provide for the operation of food service
                  facilities for the Facility.

                  (9) Make periodic evaluations of the performance of all
                  departments of the Facility and investigate and report, upon
                  request, any inconsistency between expenditures and budget.

                  (10) Implement all policies and procedures reasonably
                  necessary for the operation of the Facility consistent with
                  applicable regulations.

                  (11) Foster a working relationship between Management Firm and
                  any authorized volunteer or auxiliary groups interested in
                  providing support to the Facility and residents of the
                  Facility.

                  (12) Afford Owner, its agents and designees, access to the
                  Facility and all records related thereto, at all times without
                  prior notice.

                  (13) Subject to the prior approval of Owner, establish dates
                  and procedures by which all accounting matters related to the
                  operation of the Facility (including income, expenses and
                  accounts receivable) shall be properly attributed to the
                  periods of operation before, during, and after the term of
                  this Agreement.

2. Additional Services. It is the intention of the parties that the Management
Firm be responsible for providing all service necessary or desirable for the
efficient and orderly management and operations of the Facility; provided, the
cost and expense of operating the Facility is to be the responsibility of Owner
and paid by Management Firm as an operating expense of the Facility. The
Management Firm shall actively utilize staff specialists in its employ or that
of its Affiliates in such areas as accounting, budgeting, marketing,
reimbursement, dietary, housekeeping, clinical, pharmaceutical, purchasing and
third party payments in the management of the


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Facility when considered desirable by the Management Firm. The expense of such
personnel employed by Management Firm at the Facility (but not the expense of
personnel employed by any Affiliate of Management Firm or not employed at the
Facility) shall be the responsibility of Owner, and paid by Management Firm as
an operating expense of the Facility. Notwithstanding anything contained in this
Section 2 or any other provision of this Agreement to the contrary, in no event
shall Management Firm be required to expend its own funds with respect to the
Facility, and instead all funds required for the operation and maintenance of
the Facility shall be the responsibility of Owner as set forth in Section 10.

3. Financial Statements and Reports. The Management Firm shall, at its own cost
and expense, prepare and provide to Owner: (a) within twenty (20) days after the
end of each calendar month, monthly Facility operating reports, including
without limitation census reports, profit and loss statements, accounts payable
aging information, balance sheet, income statement, total patient days and
occupancy; and (b) within such reasonable period as may be specified by Owner,
such additional and further information concerning the Facility as Owner may
reasonably request, which may include without limitation historical financial
information concerning the operation of the Facility prior to the termination of
the Lease. The fiscal year for the Facility shall be the calendar year. All
financial statements are to be prepared in accordance with GAAP.

4. Property Interests/Confidentiality.

                  (a) The Intangible Property (as defined in the Transfer
Agreement) employed by the Management Firm has been transferred to Owner
pursuant to the Transfer Agreement, shall remain the property of Owner following
the termination of this Agreement, and is not, at any time, to be utilized,
distributed, copied or otherwise employed or acquired by Management Firm except
as necessary for the performance of its obligations under this Agreement, as
approved in writing by Owner or as may be required by law. Management Firm also
acknowledges that, pursuant to that certain License Agreement described in the
Transfer Agreement, certain trade or service names, associated marks and other
intellectual property, including the name "Outlook Pointe," shall be licensed by
Management Firm or Affiliates of Management Firm, as applicable, to Owner for
use in the operation of the Facility in accordance with the provisions of such
License Agreement.

                  (b) Management Firm understands and acknowledges that


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the Intangible Property has been transferred to Owner pursuant to the Transfer
Agreement, and is proprietary to Owner and the confidential information of Owner
(collectively, the "Confidential Information"). Management Firm shall not
disclose to any party any Confidential Information, without the prior written
consent of Owner, except as may be required by law.

                  (c) Owner acknowledges that Affiliates of BCC own and employ
methods, policies, procedures and controls and information and materials
substantially similar to, respectively, the Intangible Property and Confidential
Information. Nothing contained in this Agreement shall prohibit the use,
distribution, transfer or sale by BCC and its Affiliates of such matters and
material to any other party.

                  (d) The provisions of this Section shall survive the
expiration or sooner termination of this Agreement.

5. Term of Agreement. The term of this Agreement shall commence upon the date
hereof, and, subject to the provisions of Section 6, shall continue until the
earliest to occur of (a) ninety (90) days after the Effective Date (as defined
in the Transfer Agreement), or (b) at Owner's option, ten (10) days after Owner
has given notice to Management Firm that all licenses necessary for the
operation of the Facility as an ALF have been transferred or issued to Owner or
its designee. Notwithstanding the foregoing, Owner may extend the term of this
Agreement for three (3) consecutive periods of thirty (30) days each by
providing notice thereof to Management Firm at least fifteen (15) business days
prior to the expiration of the then current term.

6. Termination.

                  (a) Notwithstanding the provisions of Section 5, Owner may
terminate this Agreement upon written notice if Management Firm defaults in the
performance of any material covenant, agreement, term or provision of this
Agreement to be performed by it and such default continues for a period of ten
(10) days after written notice to Management Firm from Owner stating the
specific default.

                  (b) Notwithstanding the provisions of Section 5, Management
Firm may terminate this Agreement upon written notice if Owner defaults in the
performance of any material covenant, agreement, term or provision of this
Agreement to be performed by it, including without limitation the failure of
Owner to comply with any of the provisions of Section 10, and such


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default continues for a period of ten (10) days after written notice to Owner
from Management Firm stating the specific default.

                  (c) Upon the termination of this Agreement, whether pursuant
to Section 5 or Section 6, (i) the Facility shall be surrendered to Owner in the
manner required under Section 1 of the Transfer Agreement, (ii) all inventory,
consumable items, and personal property of Management Firm at the Facility shall
be transferred to Owner or its designee without further consideration, (iii) all
contracts and agreements affecting the Facility shall, as directed by Owner, be
either terminated or assigned to Owner or its designee, (iv) all books and
records concerning the Facility and operation thereof (including any books and
records maintained at BCC's corporate headquarters) shall be delivered to Owner
or its designee at the Facility, (v) neither Management Firm nor any Affiliate
thereof shall have any further right, title or interest in or to the Facility,
the Premises, the operation thereof or the income derived therefrom, and (vi)
pursuant to the terms of the Transfer Agreement, Owner, in its sole and absolute
discretion, may, but shall be under no obligation to, hire some or all of the
employees of Management Firm at the Facility, and Management Firm hereby agrees
that it shall reasonably cooperate with such hiring efforts of Owner.

7.       Liability and Indemnification/Force Majuere.

                  (a) By the Management Firm. The Management Firm and BCC shall
indemnify, defend, save and hold harmless the Owner, its members, shareholders,
officers, directors, employees, or agents from and against all demands, claims,
actions, losses, damages, deficiencies, liabilities, costs and expenses
(including, without limitation, attorney's fees, interest, penalties and all
amounts paid in investigation, defense or settlement of any of the foregoing)
asserted against or incurred by the Owner, its members, shareholders, officers,
directors, employees, or agents, in connection with, or arising out of, or
resulting from (i) a breach by the Management Firm of any of its material
covenants, agreements, representations or warranties in this Agreement, or (ii)
the negligent or willful acts or omissions of Management Firm, its employees or
agents during the term of this Agreement. The provisions of this Section shall
survive the expiration or sooner termination of this Agreement.


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                  (b) By the Owner. The Owner shall indemnify, defend, save and
hold harmless the Management Firm, its shareholders, officers, directors,
employees, or agents from and against all demands, claims, actions, losses,
damages, deficiencies, liabilities, costs and expenses (including, without
limitation, attorney's fees, interest, penalties and all amounts paid in
investigation, defense or settlement of any of the foregoing) asserted against
or incurred by the Management Firm, its officers, directors, employees, or
agents, in connection with, or arising out of, or resulting from (i) a breach by
Owner of any of its material covenants, agreements, representations or
warranties in this Agreement, or (ii) the negligent or willful acts or omissions
of Owner, its employees or agents during the term of this Agreement. The
provisions of this Section shall survive the expiration or sooner termination of
this Agreement.

                  (c) Nothing contained herein shall preclude either party from
asserting any claims or suits against the other party that may arise out of the
terms and provisions of this Agreement.

                  (d) Neither Management Firm nor Owner shall be deemed to be in
violation of this Agreement, and its respective performance shall be excused, if
it is prevented from performing any of its respective obligations hereunder for
any reason beyond its control, including shortages in labor or supplies; war;
acts of God; with respect to Management Firm, the failure of the Owner to
advance funds required hereunder; or changes in any law of Federal, state or
local government, or any agency thereof.

8. Relationship Between Parties. The relationship of the Management Firm to the
Owner shall be that of independent contractor.

9. Management Fee. The Management Firm for the services rendered hereunder shall
be entitled to five percent (5%) of all gross revenues of the Facility as its
sole compensation for management of the Facility (the "Management Fee"). The
Management Fee shall be paid monthly, and shall be based on the financial
operations of the Facility as of the end of each calendar month. In the event
that this Agreement is terminated as of a date other than the end of calendar
month, the Management Fee for such partial month shall be prorated accordingly.
To the extent that final operating reports or financial statements for the
Facility produced pursuant to Section 3, or an independent audit of the
financial records of the Facility performed at the request and expense of Owner


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within one (1) year of the date of the termination of this Agreement, disclose
that the Management Fee actually received during the term of this Agreement were
greater or less than what should have been received, Owner (in case of
underpayment) shall pay upon demand the shortfall, and Management Firm (in the
case of overpayment) shall repay upon demand the overage.

10. Funding of Costs and Expenses by the Owner. Notwithstanding any provision
deemed to be to the contrary contained in this Agreement, Owner, and not
Management Firm or any Affiliate of Management Firm, shall be responsible for
all costs and expenses of any kind or nature (whether ordinary or extraordinary)
with respect to the Facility and its operations, except for any such costs or
expenses covered by the indemnity set forth in Section 7(a). Such costs and
expenses shall include, without limitation, all operating costs and expenses,
all costs and expenses for capital improvements desired by Owner and all costs
and expenses associated with assuring that the Facility complies with all laws,
regulations, permits and rules applicable to the Facility. The Owner shall at
all times provide on a timely basis sufficient capital for the operation and
maintenance of the Facility (including without limitation all sums to be
expended in accordance with the Budget) and shall deposit from time to time such
funds in the Operating Accounts of the Facility. Owner shall deposit any funds
required under this Section 10 into the Operating Accounts within five (5) days
of Management Firm's written request therefor, which request shall identify the
uses of such funds; in the event of an emergency requiring the deposit of such
additional funds, Management Firm shall give Owner as much advance notice as
practicable under the circumstances, and Owner shall deposit the required funds
as soon as practicable thereafter.

11. Other Facilities. Owner understands and acknowledges that BCC and Affiliates
thereof are in the business of operating facilities such as the Facility, and
that BCC and Affiliates thereof intend to continue to manage and operate such
other facilities, which facilities may or may not be in competition with the
Facility. Subject to Section 3.c of the Termination Agreement, nothing contained
herein shall be deemed to be construed as a restriction on the Management Firm's
right to so operate and manage such other existing facilities or facilities that
may be opened in the future, even if such facilities are in competition with the
Facility.


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12.      Notices; Authorized Representatives of Owner.

                  (a) All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered in person,
Federal Express or other recognized overnight courier or sent by registered or
certified U.S. mail, return receipt requested or sent by facsimile or telecopy
transmission and addressed:

                  (i) If to the Management Firm, at:

                  1215 Manor Drive
                  Mechanicsburg, PA 17055
                  Facsimile: 717-796-6294
                  Attention: Legal Department

                  With a copy to Management Firm's counsel, at:

                  Kirkpatrick & Lockhart LLP
                  Henry W. Oliver Building
                  535 Smithfield Street
                  Pittsburgh, PA  15222
                  Facsimile: 412-355-6501
                  Attention: Steven J. Adelkoff, Esq.

                  (ii) If to the Owner, at:

                  c/o Nationwide Health Properties, Inc.
                  610 Newport Center Drive, Suite 1150
                  Newport Beach, CA 92660-6429
                  Facsimile: 949-759-6887
                  Attention: General Counsel

                  With a copy to Owner's counsel, at:

                  O'Melveny & Myers LLP
                  610 Newport Center Drive, Suite 1700
                  Newport Beach, CA 92660-6429
                  Facsimile: 949-823-6994
                  Attention: Steven L. Edwards, Esq.

or to such other address or facsimile number as a party may designate by notice
to the other parties hereto.


                                      -16-
<PAGE>   17
                  (b) Each of the following persons, in addition to such other
persons as may be designated by Owner from time to time, shall be authorized on
behalf of Owner to grant any approval or consent of Owner required under this
Agreement:

                  R. Bruce Andrews                949-718-4405
                  Mark L. Desmond                 949-718-4412
                  Steven J. Insoft                617-928-3077
                  John J. Sheehan                 423-614-4191
                  Gary E. Stark                   949-718-4413
                  T. Andrew Stokes                949-718-4404

13. Compliance with Federal Records Requirements. To the extent required under
applicable law, the Management Firm shall, (and if Management Firm carries out
any of the duties under this Agreement through a subcontract with a related
organization and such subcontract has a value or cost of $10,000 or more during
any 12-month period, Management Firm shall cause such subcontract to contain a
clause to the effect that the subcontractor shall), until the expiration of four
(4) years after the furnishing of services hereunder, make available upon
written request by the Secretary of Health and Human Service or the Comptroller
General of the United States or any of their duly authorized representatives,
this Agreement and the books, documents and records of the Management Firm (or
such subcontractor) that are necessary to verify the nature and extent of the
costs furnished under this Agreement.

14. Successors and Assigns. This Agreement shall binding upon, and inure to the
benefit of the successors and assigns of Owner and Management Firm. Upon advance
notice to Management Firm, this Agreement is freely assignable and transferable
by Owner, provided that no such assignment or transfer shall limit or terminate
any obligation hereunder binding upon Owner. Management Firm acknowledges and
agrees that this Agreement is in the nature of a personal services contract.
Management Firm may not assign this Agreement (whether as collateral security or
otherwise) expressly, by operation of law (including any assignment in any
bankruptcy proceeding), or otherwise, without the prior written consent of the
Owner, which may granted, denied or conditioned in Owner's sole and absolute
discretion.

15. Non-Competition. The Management Firm acknowledges and agrees that it is
bound by the provisions of Section 3.c of the Termination Agreement.

16. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the state of


                                      -17-
<PAGE>   18
California without reference to the conflict or choice of law provisions
thereof.

17. Severability. If any provision of this Agreement is held to be unenforceable
for any reason, all other provisions of this Agreement shall be deemed valid and
enforceable to the fullest extent possible. To the fullest extent permitted by
law, the parties hereto hereby waive any provision of law that renders any term
or provision of this Agreement invalid or unenforceable in any respect.

18. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall constitute an original, but all of which when taken together
shall constitute a single instrument.

19. Amendments. This Agreement may be modified or amended only by a written
instrument executed by the parties hereto.

20. No Third Parties Benefitted. This Agreement is made and entered into for the
sole benefit of Owner and Management Firm. No other persons or entities are
beneficiaries of, or have any right of action under, the terms and provisions of
this Agreement.

21. Consents and Approvals. Except if expressly provided that Owner may grant,
deny or condition its consent or approval in its sole and absolute discretion,
no approval or consent sought by Management Firm of Owner pursuant to the terms
of this Agreement shall be unreasonably withheld, delayed or conditioned.


                                      -18-
<PAGE>   19
                  IN WITNESS WHEREOF, intending to be legally bound hereby, the
parties hereto have affixed their names by their proper officers or duly
authorized representatives the day and year first above written.

MANAGEMENT FIRM:                        ELDER CARE OPERATORS OF HILLIARD, LLC,
                                        a Delaware limited liability company


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

                                        BALANCED CARE AT HILLIARD, INC.,
                                        a Delaware corporation



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


OWNER:                                  NATIONWIDE HEALTH PROPERTIES, INC.,
                                        a Maryland corporation


                                        By:/s/Gary Stark
                                        Name:    Gary Stark
                                        Title:   Vice President


BCC:                                    FOR PURPOSES OF SECTION 7(a) ONLY:

                                        BALANCED CARE CORPORATION,
                                        a Delaware corporation


                                        By:/s/Robin L. Barber
                                        Name:    Robin L. Barber
                                        Title:   Senior Vice President, Legal
                                                 Counsel and Assistant
                                                 Secretary