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                                                                    Exhibit 10.2



                              EMPLOYMENT AGREEMENT

          THIS AGREEMENT (the "Agreement"), made as of the 11th day of February,
1999 by and between Balanced Care Corporation, a Delaware corporation with a
principal office at 5021 Louise Drive, Suite 200, Mechanicsburg, PA, 17055 (the
"Company") and Clint T. Fegan, an individual business executive residing at 2
East Green Street, Shiremanstown, PA 17011 (the "Executive").


                                  WITNESSETH:

          WHEREAS, the Company desires to retain the services and employment of
Executive as Chief Financial Officer for the benefit of itself and each of its
subsidiaries throughout the term of this Agreement, and Executive is willing to
be employed by the Company in the foregoing capacity for such period, upon the
terms and conditions hereinafter set forth.

          NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and intending to be legally bound, the parties hereto agree as
follows:

1.   Employment. The Company hereby employs Executive and Executive hereby
     accepts employment by the Company subject to all of the terms and
     conditions hereafter set forth.

2.   Capacity. Executive shall serve as Chief Financial Officer of the Company
     ("CFO") and, in such capacity, shall report directly to the Chief Executive
     Officer (the "CEO") of the Company.

3.   Duties. During the term of this Agreement and any extension thereof,
     Executive shall and agrees to devote his business attention and best
     efforts to the performance of the customary duties of the office of CFO of
     the Company, including supervisory responsibility for the financial
     function of the Company, including financial reporting and controls,
     accounting policy and procedures, financial forecasting and budgeting,
     treasury 

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     operation, tax reporting and external financial reporting. Executive agrees
     to perform such other or additional duties not inconsistent with the
     customary position of CFO, all as may be assigned from time to time by the
     Board of Directors of the Company (the "Board") and the CEO of the Company.

4.   Term of Employment and Renewal. The duties of Executive under this
     Agreement shall commence on the date hereof. Unless earlier terminated as
     hereafter provided, this Agreement shall expire three (3) years from the
     date hereof (the "Term"); provided, however, that upon expiration of such
     Term, this Agreement shall be extended for an additional one year term and
     thereafter shall extend on each one year anniversary of the date of this
     Agreement for an additional one year term (each, an "Extension Term")
     without further action on the part of the parties hereto, unless either
     party gives written notice of termination to the other party at least
     ninety (90) days prior to the expiration of the then current Term or any
     Extension Term that such party does not desire to renew the Agreement. The
     date upon which the Term hereof, as extended from time to time pursuant to
     an Extension Term, shall expire is hereinafter referred to as the
     "Expiration Date".

5.   Compensation.

     (a)  Cash Compensation. During the Term of this Agreement, as compensation
          for services to the Company, Company shall pay to Executive a base
          salary in the amount of $160,000 per year (the "Base Salary"), payable
          in equal installments in accordance with the Company's payroll
          practices then applicable to Executive officers. Additionally, the
          Board of Directors of the Company may, in its sole discretion from
          time to time, increase the Base Salary to be paid to Executive under
          this paragraph, or provide additional compensation to Executive,
          including but not limited to, the annual bonus provided in Section
          5(b) below, whether permanently or for a limited period of time, based
          upon the performance of Executive, the financial performance of the
          Company, compensation paid to comparable officers by other companies
          in the


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           industry and such other factors as the Board may deem relevant.

     (b)  Annual Bonus. The Executive shall be eligible to receive an annual
          bonus (the "Annual Bonus") of up to 50% of his then current Base
          Salary based upon (1) Executive's performance as determined pursuant
          to written annual performance objectives mutually agreed upon by
          Executive and the CEO, as the case may be, and approved by the Board,
          which approval will not be unreasonably withheld and (2) the Company's
          achievement of its annual pre-tax earnings level (determined in
          accordance with generally accepted accounting principles and after
          giving effect, to the extent appropriate, to minority interests)
          approved by the Board in the annual operating budget for a particular
          year.

     (c)  Stock Options. The Executive will be eligible to participate in the
          Company's 1996 Stock Incentive Plan, as such plan may be amended from
          time to time (the "Plan"). Executive shall be granted an option to
          purchase 125,000 shares of the Company's common stock at a price equal
          to the fair market value (based on the lowest price of the day) on the
          date of grant, which for purposes of this Agreement is the date of
          Board approval of the grant (the "Grant Date"). Such stock options
          shall vest over four (4) years at the rate of 25% per year.

     (d)  Vacation. The Executive shall be entitled to a vacation of four (4)
          weeks annually in accordance with the policies of the Company
          applicable to comparable executives of the Company. Any time spent by
          the Executive at professional meetings and other similar meetings so
          as to better enable the Executive to perform his professional services
          on behalf of the Company shall not be considered vacation time.

     (e)  Fringe Benefits. The Executive shall enjoy and benefit under all
          fringe benefit plans, programs or arrangements sponsored by the
          Company for employees generally or for executive officers in
          accordance with the respective terms and conditions thereof, as the
          same may be amended from time to time.



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     (f)  Signing Bonus. The Executive shall be entitled to receive a signing
          bonus in the amount of $10,000 (the "Signing Bonus") upon the
          execution of this Agreement by the parties hereto. The Signing Bonus
          shall be due and payable by the Company to the Executive within 15
          calendar days of the date of this Agreement.

          Notwithstanding the foregoing, the Company may, without breaching the
          terms of this Agreement, amend any employee benefit plan and/or fringe
          benefit plan in which the Executive participates or any policy
          applicable to vacations or other terms and conditions of employment
          generally applicable to executive officers of the Company provided
          that such amendment is applicable to and proportionately affects all
          executive employees of the Company in positions comparable to the
          Executive's.

6.   Confidentiality.

     Commencing immediately upon the signing of this Agreement and during
     Executive's employment with the Company and for any subsequent period with
     respect to which he is entitled to receive Severance Rights under this
     Agreement, the Executive shall keep secret and confidential all matters of
     the Company or relating to the Company, its operations and businesses which
     are not, as of the time immediately preceding disclosure, in the public
     domain and generally known by the public (the "Confidential Information").
     Executive shall not intentionally or through gross negligence disclose
     Confidential Information to any third party without the express written
     consent of the Company and may only utilize such information during the
     normal course of performing his duties for the Company and solely for the
     Company's benefit.

     Executive acknowledges and agrees that any breach of this Section 6 will
     cause the Company irreparable injury to which the Company shall have no
     adequate remedy at law. Therefore, Executive agrees that the Company shall
     be entitled, in addition to any remedies it may have under this Agreement
     or at law, to injunctive and other equitable relief to prevent or curtail
     any breach of the provisions of this Section 6 by Executive.



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7.   Termination of Employment.

     Except as otherwise specifically set forth in this Section 7, this
     Agreement, the Term hereof, as extended by any Extension Term, and the
     Executive's employment and right to receive salary and other benefits set
     forth in Section 5 hereof, shall terminate on the earlier of the events
     described below:

     (a)  Death. The employment, salary and benefits of the Executive hereunder
          shall immediately terminate upon the Executive's date of death and the
          Executive shall not be entitled to receive any pro-rata portion of any
          Annual Bonus payment which may be accrued for the year in which the
          Executive's death occurred. Any stock options granted to the Executive
          on or before the date of death will be governed by the provisions of
          the Plan. Nothing contained herein shall be deemed to prevent the
          receipt by the Executive or his spouse or estate, as the case may be,
          of any benefit payable to or with respect to such death under any
          plan, program or arrangement then sponsored by the Company, if
          applicable.

     (b)  Disability. The Company may terminate the Executive's employment if,
          in the reasonable opinion of the Board acting in the best interest of
          the Company, the Executive is unable for any reason to perform the
          duties to be performed by the Executive hereunder for a period of 120
          consecutive calendar days (the ""Disability Period"). The Board may
          terminate the Executive's employment upon expiration of the Disability
          Period upon written notice by the Company to the Executive.
          Termination of employment under this Section 7(b) shall be effective
          on and as of the date that the Company provides written notice to the
          Executive. In the event of termination under this Section 7(b), the
          Executive shall be entitled to receive salary and other benefits
          (excluding the right to receive any pro-rata portion of any Annual
          Bonus payment which may be accrued for the year in which such
          termination occurred), for the 8-month period following the
          termination date in accordance with the terms and conditions of the
          Company's applicable plans, to the 



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          extent permitted thereunder. Any stock options granted to the
          Executive on or before the termination date will be governed by the
          provisions of the Plan.

     (c)  Voluntary Resignation by the Executive. The employment, salary and
          benefits of the Executive hereunder shall immediately terminate on the
          effective date of the Executive's voluntary resignation and the
          Executive shall not be entitled to receive any pro-rata portion of any
          Annual Bonus payment which may be accrued for the year in which such
          resignation occurred

          or any Severance Rights unless such voluntary resignation is made
          after and as a consequence of a Change in Control of the Company (as
          defined in subsection (g) (II) below. Any stock options granted to the
          Executive on or before the resignation date will be governed by the
          provisions of the Plan.

     (d)  Cause. The Company may terminate the Executive's employment, salary
          and benefits for Cause (as defined in subsection (g) (I) below). In
          the event of termination under this Section 7(d), the employment,
          salary and benefits of the Executive hereunder shall immediately
          terminate on the effective date of termination (determined in
          accordance with the provisions of Section g(I)) and the Executive
          shall not be entitled to receive any pro-rata portion of any Annual
          Bonus payment which may be accrued for the year in which such
          termination occurred or any Severance Rights. Any stock options
          granted to the Executive on or before the effective termination date
          will be governed by the provisions of the Plan.

     (e)  Termination by the Company without Cause. The Company may terminate
          the Executive's employment without Cause upon 90 days prior written
          notice to the Executive. Termination under this Section 7(e) shall be
          effective 90 days after the date of the Company's written notice to
          the Executive. If the Company terminates the Executive's employment
          without Cause, the Executive shall be entitled to receive an amount
          equal to the sum of (A) the Executive's annual Base Salary for the
          year in which the termination occurred and (B) the pro-rata portion of
          any Annual Bonus payment which may be accrued for the year in which
          the 


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          termination occurred (the sum of (A) and (B) may hereinafter be
          referred to as the "Termination Payment"). At the Company's option,
          the Termination Payment may be payable in (A) a lump sum due within 45
          days of the date of termination or (B) 12 equal monthly installments
          due on the 1st day of each month for the 12 consecutive months
          immediately following the date of termination. Any stock options
          granted to the Executive on or before the termination date will be
          governed by the provisions of the Plan. The Executive will also be
          entitled to participate in the Company's other benefit programs for
          the 12-month period following the termination date subject to the
          terms and conditions of such plans and to the extent permitted
          thereunder.

     (f)  Termination Following a Change of Control. The Executive shall be
          entitled to receive a Severance Payment (as defined in Section
          (g)(III) below) if, within two (2) years following a Change in
          Control, there occurs any of the following events:

               (I)     any termination of the Executive except for Cause;

               (II)    any material reduction in the Executive's
                       responsibilities (including reporting responsibilities)
                       or authority, including as such responsibilities or
                       authority may be increased from time to time;

               (III)   the assignment to the Executive of duties inconsistent
                       with the Executive's office on the date of a Change in
                       Control or as the same may be increased from time to time
                       after a Change in Control:

               (IV)    any reassignment of the Executive to a location greater
                       than sixty (60) miles from the principal executive
                       offices of the Company before the Change in Control;



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               (V)     any material reduction (including, after a Change in
                       Control, proportional reductions affecting all employees
                       or executive employees) in the Executive's annual Base
                       Salary in effect on the date of a Change in Control or as
                       same may be increased from time to time after a Change in
                       Control;

               (VI)    any failure (including, after a Change in Control,
                       proportional failures affecting all executive employees)
                       to continue the Executive's participation on
                       substantially similar terms in the Plan or any bonus plan
                       in which the

                       Executive participated at the time of the Change in
                       Control or any change or amendment to any substantive
                       provisions of any such plan which would materially
                       decrease the potential benefits to the Executive under
                       any of such plans;


               (VII)   any failure (including, after a Change in Control, a
                       proportional failure affecting all executive employees)
                       to provide the Executive with benefits at least as
                       favorable as those enjoyed by the Executive under any of
                       the Company's pension, life insurance, medical, health
                       and accident or other employee plans in which the
                       Executive participated at the time of the Change in
                       Control, unless such reduction relates to a reduction in
                       benefits applicable to all employees generally; AND

               (VIII)  in the event of any of the events described in (II)
                       through (VII) above, the Executive voluntarily terminates
                       his employment under this Agreement as a result of such
                       event(s).

     (g)  Definitions. As used in this Section 7, the following terms shall have
          the meanings set forth below:


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               (I)    "Cause" shall mean willful misconduct, intentional and
                       material failure to perform duties under this Agreement
                       by the Executive or the Executive's conviction of a
                       felony. No termination for cause shall be effective
                       unless and until the Executive is given written notice
                       that the act or omission constitutes "Cause" under this
                       Agreement and the Executive is given an opportunity to
                       correct or cure the particular act or omission within
                       thirty (30) days after receipt by the Executive of such
                       written notice from the Company.

               (II)    A "Change in Control" shall be deemed to have taken place
                       if: (A) any person, including a group but not excluding
                       the Company or any current stockholder of the Company who
                       beneficially owns five percent (5%) or more of the
                       Company's outstanding shares, becomes the beneficial
                       owner of shares of the Company having twenty percent
                       (20%) or more of the total number of votes that may be
                       cast for the election of directors or (B) there occurs
                       any cash tender or exchange offer for shares of the
                       Company, merger or other business combination, sale of
                       assets or contested election, or any combination of the
                       foregoing transactions, and as a result of or in
                       connection with any such event persons who were directors
                       of the Company before the event shall cease to constitute
                       a majority of the Board of the Company or any successor
                       to the Company. As used herein, the terms "person" and
                       "beneficial owner" have the same meaning as under Section
                       13(d) of the Securities Exchange Act of 1934 and the
                       rules and regulations thereunder.


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               (III)   A "Severance Payment" shall include the following: (1)
                       all outstanding stock options granted to the Executive,
                       if any, under the Plan, shall immediately become vested
                       and shall be exercisable in accordance with the
                       provisions of the Plan and (2) a lump sum cash payment
                       shall be payable within thirty (30) days of termination
                       of employment, equal to the sum of (A) the amount
                       determined by multiplying by three (3) the Executive's
                       annual Base Salary then in effect on the date of
                       termination and (B) the amount of the Executive's Annual
                       Bonus percentage payable under Section 5(b) for the year
                       in which the termination took place if (i) the annual
                       operating budget was achieved and (ii) the Executive was
                       employed for the full year. For example, if at the time
                       of such termination the Executive's Base Salary was
                       $160,000, and provided the conditions in clauses (i) and
                       (ii) above were satisfied so that the Executive was
                       entitled to receive his maximum potential Annual Bonus
                       percentage of 50%, the lump sum payment would be
                       $560,000, i.e.$160,000 x 3 plus $80,000.

     (h)  Notice of Termination. Any notice of termination of Executive shall be
          given by the Company in writing and delivered by hand delivery or by
          registered or certified mail, return receipt requested, postage
          prepaid, at the address first above written for Executive or at such
          other address as Executive shall have furnished to the Company in
          writing.

8.   Non-Competition and Non-Solicitation.

     (a)  Restrictions on Competition. While employed by the Company under this
          Agreement and for a period of one (1) year following termination of
          Executive's employment hereunder, Executive agrees that he will not
          directly or indirectly own an interest in, manage or control, or
          provide consulting services or services as 


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          an employee or partner, to a business engaged in managing, leasing,
          owning or operating assisted living facilities, nursing homes or
          sub-acute operations (the "Business Activities") within a sixty (60)
          mile radius of any Company facility existing or under active
          development at the time of such termination.

     (b)  Restriction on Solicitation. While employed by the Company under this
          Agreement and for a period of one (1) year following termination of
          Executive's employment hereunder, Executive agrees that he will not:
          (A) directly or indirectly solicit or encourage Company's customers to
          deal with Executive or any other third party other than the Company or
          (B) directly or indirectly solicit for Executive's benefit or for the
          benefit of any third party the employment or services of any then
          current employee of the Company.

     (c)  Listed Stock Ownership Exception. Nothing in this Section 8 shall
          prohibit Executive from owning stock in a publicly traded company as a
          passive investor provided that Executive shall not own more than 5% of
          the equity of a publicly traded competing enterprise of Company's.

9.   Successors.

     (a)  This Agreement is personal to Executive and shall not be assignable by
          the Executive otherwise than by his will or the laws of descent and
          distribution. This Agreement shall inure to the benefit of and be
          enforceable by the Executive's legal heirs representatives.

     (b)  This Agreement shall inure to the benefit of and be binding upon the
          Company and its successors and assigns.

     (c)  The Company will require any successor (whether direct or indirect, by
          purchase, merger, consolidation or otherwise) to all or substantially
          all of the business and/or assets of the Company to assume expressly
          and agree to perform this Agreement in the same manner and to the same
          extent that the Company would be required to perform it if no such
          succession 


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          had taken place. As used in this Agreement, the Company shall mean the
          Company as hereinbefore defined and any successor to its business
          and/or assets as aforesaid which assumes and agrees to perform this
          Agreement by operation of law or otherwise.

10.  Entire Agreement. This writing represents the entire agreement and
     understanding between the parties with respect to the subject matter
     contained herein and may not be altered or amended except in a writing
     signed by both parties.

11.  Unenforceability. If any provision of this Agreement shall be adjudged by
     any court of competent jurisdiction to be invalid or unenforceable for any
     reason, such judgment shall not affect, impair or invalidate the remainder
     of this Agreement.

12.  Waiver. The failure of the parties to insist upon strict compliance with
     any provision hereof or the failure to assert any right the parties may
     have hereunder shall not be deemed to be a waiver of such provision or
     right or any other provision or right thereof by the parties.

13.  Counterparts. This Agreement may be executed by the parties in two or more
     counterparts, each of which shall be deemed to be an original, but all such
     counterparts shall constitute one and the same instrument.

14.  Headings. The headings of the sections and subsections of this Agreement
     are for convenience only and shall not control or affect the meaning or
     construction or limit the scope or intent of any of the provisions of this
     Agreement.

15.  Governing law. This Agreement has been negotiated and executed within the
     Commonwealth of Pennsylvania 


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     and shall be governed by and construed in accordance with the laws of the
     Commonwealth of Pennsylvania.

          IN WITNESS WHEREOF, intending to be legally bound hereby, the parties
hereto have executed this Agreement as of the date first above written.


ATTEST:                                      BALANCED CARE CORPORATION

/s/ ROBIN L. BARBER                          By: /s/ BRAD E. HOLLINGER
Asst. Secretary                              -----------------------------------
                                                 Brad E. Hollinger
                                                 Chief Executive
                                                 Officer


WITNESS:                                     EXECUTIVE

/s/ ROBIN L. BARBER                          /s/ CLINT T. FEGAN
                                             -----------------------------------
                                             Clint T. Fegan



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