<PAGE>
Exhibit 10.1

                                  AGREEMENT FOR
                        TERMINATION OF LEASE, GUARANTIES
                             AND ANCILLARY DOCUMENTS

                  THIS AGREEMENT FOR TERMINATION OF LEASE, GUARANTIES AND
ANCILLARY DOCUMENTS (this "Agreement") is made and entered into as of October
31, 2001, by and among HEALTH CARE PROPERTY INVESTORS, INC., a Maryland
corporation ("Landlord"), ASSISTED CARE OPERATORS OF JACKSON, LLC, a Delaware
limited liability company ("Tenant"), ASSISTED CARE OPERATORS, L.L.C., a
Delaware limited liability company ("ACO"), OAKHAVEN SENIOR LIVING, INC., a
California corporation ("Oakhaven Senior"), OAKHAVEN ASSISTED LIVING, INC., a
California corporation ("Oakhaven Assisted"), BALANCED CARE CORPORATION, a
Delaware corporation ("BCC"), BCC DEVELOPMENT AND MANAGEMENT CO., a Delaware
corporation (a/k/a "BCC Management and Development Co." and referred to herein
as "BCC Development"), and BALANCED CARE AT JACKSON, INC., a Delaware
corporation ("BCC Jackson"), with respect to the following:

                                    RECITALS

                  A. Landlord, as successor in interest to AHP of Tennessee,
Inc., a Tennessee corporation ("AHP"), and Tenant are parties to that certain
Lease and Security Agreement dated as of January 30, 1998, as amended by a First
Amendment to Lease and Security Agreement dated as of July 8, 1999 (as the same
may have been further amended or modified from time to time in accordance with
the terms thereof, collectively, the "Lease"), covering certain real and
personal property (collectively, the "Leased Property") located in the City of
Jackson, State of Tennessee, as more particularly described in the Lease. Tenant
presently operates a residential care facility (the "Facility") on the Leased
Property.

                  B. Landlord, as successor in interest to AHP, and Tenant are
also parties to that certain Assignment of Leases, Rents and Receivables dated
as of January 30, 1998 (as the same may have been amended or modified in
accordance with the terms thereof, the "Assignment of Rents"), entered into in
connection with the Lease and recorded in the Office of the Recorder in which
the Leased Property is located.

                  C. Landlord, as successor in interest to AHP, and Tenant are
also parties to that certain Security Agreement dated as of January 30, 1998 (as
the same may have been amended or
<PAGE>
modified in accordance with the terms thereof, the "Security Agreement"),
entered into in connection with the Lease.

                  D. ACO, Oakhaven Senior, and Oakhaven Assisted are
collectively the "Guarantor" pursuant to (i) that certain Guaranty of Payment
and Performance dated as of January 30, 1998 (as the same may have been amended
or reaffirmed from time to time in accordance with the terms thereof, the "Lease
Guaranty"), made in favor of Landlord, as successor in interest to AHP, in
connection with the Lease, and (ii) that certain Assignment Agreement dated as
of March 16, 1998 (the "Oakhaven Assignment"), by and between Oakhaven Senior,
as assignor, and Oakhaven Assisted, as assignee. Oakhaven Senior was not
released of its obligations under the Lease Guaranty in connection with the
Oakhaven Assignment. Pursuant to that certain Agreement for Assumption of
Guaranty Obligations dated as of October 31, 2001, BCC is assuming and shall be
jointly and severally liable with ACO, Oakhaven Senior, and Oakhaven Assisted
under the Lease Guaranty.

                  E. Tenant and BCC Jackson are parties to that certain
Management Agreement dated as of January 30, 1998 (as the same may have been
amended or modified from time to time in accordance with the terms thereof, the
"Management Agreement"), entered into in connection with the Lease. The
Management Agreement will be terminated concurrently herewith pursuant to that
certain Management and Subordination and Standstill Termination Agreement dated
as of October 31, 2001.

                  F. BCC is also the "Guarantor" pursuant to that certain
Management Agreement Guaranty dated as of January 30, 1998 (as the same may have
been amended or reaffirmed from time to time in accordance with the terms
thereof, the "Management Agreement Guaranty"), made in favor of Landlord, as
successor in interest to AHP, in connection with the Lease.

                  G. Landlord, as successor in interest to AHP, and BCC are also
parties to that certain Right of First Refusal Offer Agreement dated as of
January 30, 1998 (as the same may have been amended or modified from time to
time in accordance with the terms thereof, the "Right of First Offer"), entered
into in connection with the Lease.

                  H. Landlord, as successor in interest to AHP, Tenant, BCC
Development, and BCC are also parties to that certain Assignment of Rights dated
as of January 30, 1998 (as the same may have been amended or modified from time
to time in


                                       2
<PAGE>
accordance with the terms thereof, the "Assignment of Rights"), entered into in
connection with the Lease.

                  I. Landlord, as successor in interest to AHP, Tenant, BCC
Development, BCC Jackson, Oakhaven Assisted, as successor in interest to
Oakhaven Senior pursuant to the Oakhaven Assignment, ACO, and BCC are also
parties to that certain Non-Competition Agreement dated as of January 30, 1988
[sic] (as the same may have been amended or modified from time to time in
accordance with the terms thereof, the "Non-Competition Agreement"), entered
into in connection with the Lease. As described in the Oakhaven Assignment,
Oakhaven Senior continues to be bound by the terms of the Non-Competition
Agreement.

                  J. Tenant and Cheyenne Trace, LLC, a Delaware limited
liability company ("New Operator"), have entered or will enter into an
operations transfer agreement (the "Operations Transfer Agreement"), pursuant to
which Tenant and New Operator have provided for the orderly transfer of the
Facility from Tenant to New Operator as of the termination of the Lease, and
have clarified each party's responsibilities and obligations with regard to the
transfer of the operation of and ownership interests in the Facility.

                  K. The Lease, the Assignment of Rents and the Security
Agreement are collectively referred to herein as the "Lease Documents". The
Management Agreement Guaranty and the Right of First Offer are collectively
referred to herein as the "BCC Documents." The Assignment of Rights and the
Non-Competition Agreement are collectively referred to herein as the "Ancillary
Documents".

                  L. Landlord and BCC have also entered into that certain Option
to Purchase Agreement dated March 13, 2001, as amended by letter agreements
dated March 30, 2001, April 16, 2001, July 3, 2001, and October 29, 2001
(collectively, the "Put/Call Agreement") pursuant to which Landlord and BCC have
agreed to enter into a series of transactions involving the Facility and certain
other facilities owned by Landlord and leased to Affiliates of BCC. The
"Acceptance Period" under the Put/Call Agreement will expire on January 31,
2002, and unless BCC shall deliver a written termination notice to Landlord on
or before the expiration of the "Acceptance Period," the parties shall
thereafter be obligated to consummate the transactions described therein,
including BCC's purchase of those facilities located in Allison Park,
Pennsylvania, and Evansville, Indiana (collectively, the "Purchased
Facilities"). Notwithstanding


                                       3
<PAGE>
that the Acceptance Period had not expired, Landlord (in order to mitigate its
damages), BCC and certain other parties previously executed definitive documents
relating to a termination of the lease for the facility in Anderson, Indiana, as
contemplated by the Put/Call Agreement. Pursuant and subject to the terms and
conditions of the Put/Call Agreement, pending the expiration of the Acceptance
Period Landlord has also agreed, among other things, to a standstill with
respect to its rights and remedies under the Lease, Lease Guaranty and Ancillary
Documents as a result of the "Tenant's" failure to timely perform its
obligations under the Lease.

                  M. Notwithstanding that the Acceptance Period under the
Put/Call Agreement has not expired as of the date hereof, in order to permit
Landlord to mitigate its damages under the Lease and to transition operations of
the Facility to New Operator, Lease Guaranty and Ancillary Documents, Landlord,
Tenant, ACO, Oakhaven Senior, Oakhaven Assisted, BCC, BCC Development, and BCC
Jackson desire to mutually cancel and terminate the Lease Documents, the Lease
Guaranty, the Management Agreement Guaranty and the Ancillary Documents to which
each is a party on the terms and conditions contained herein.

                                    AGREEMENT

                  IN CONSIDERATION OF the foregoing recitals, the mutual
promises contained herein, and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto hereby
agree as follows:

         1. Termination of Lease Documents. Subject to all of the terms and
conditions of this Agreement, including, without limitation, Paragraph 2 below,
each of the Lease Documents and the respective obligations of Landlord and
Tenant thereunder, including, but not limited to, (i) Tenant's obligations with
respect to present or future Base Rent, Additional Rent and those items of
Additional Charges that directly relate to the payment of Base Rent and/or
Additional Rent (e.g., late payments charges and interest) (collectively, the
"Terminated Rent Obligations"), and (ii) any right of Tenant to purchase all or
any portion of the Leased Property pursuant to Article 15, 16 or 25 of the Lease
or otherwise shall be terminated at 11:59 p.m. (Eastern time) on the date (the
"Termination Date") that is the later of (a) the date upon which Tenant actually
vacates the Leased Property and surrenders possession thereof to Landlord or New
Operator in accordance with Section 3 below and the Operations Transfer
Agreement or (b) the "Effective Date" of the Operations Transfer Agreement.
Unless Landlord delivers written


                                       4
<PAGE>
notice to Tenant specifying a reason that Tenant's surrender of the Leased
Property is not in compliance with Section 3 below, the Termination Date shall
be deemed to be the "Effective Date" of the Operations Transfer Agreement.
Except as set forth in this Agreement, neither Landlord nor Tenant shall have
any further obligations to the other pursuant to the Lease Documents subsequent
to the Termination Date.

         2. Termination Payment; Cessation of Obligations Under Lease Documents;
and Reservations. Notwithstanding the occurrence of the Termination Date, the
following obligations of Tenant shall be reserved and continue subsequent to the
Termination Date:

                  (a) In consideration for Landlord's execution and delivery of
this Agreement, concurrently with Tenant's execution and delivery hereof, Tenant
shall pay or cause BCC to pay to Landlord the sum of $30,000.00, as a one-time
termination payment (the "Termination Fee"), which amount shall be applied by
Landlord towards certain operating costs of the Facility following the
Termination Date. If the provisions of Section 2(f) below apply, such
Termination Fee shall be applied against any other damages and remedies to which
Landlord is entitled to receive pursuant to such Section 2(f).

                  (b) Tenant agrees to defend, indemnify and hold harmless
Landlord from and against any and all liens, claims, costs, losses, expenses,
damages, actions and causes of action for which Tenant is responsible under the
Lease Documents and which accrue or accrued on or before the Termination Date
(other than in connection with the Terminated Rent Obligations).

                  (c) Tenant shall remain liable for (i) the cost of any and all
Impositions, insurance premiums, utilities charges and other expenses incurred
in connection with the operation, maintenance and use of the Leased Property
through and including the Termination Date until full payment thereof (other
than in connection with the Terminated Rent Obligations). Tenant shall obtain,
or cause to be obtained, directly from the companies providing any such services
closing statements for all services rendered through the Termination Date and
shall promptly pay the same.

                  (d) Tenant shall remain responsible for and shall pay any
personal property taxes assessed against the Leased Property or any personal
property abandoned by Tenant therein with a lien date prior to the Termination
Date, irrespective of the date of the billing therefor, and shall indemnify,
defend and hold


                                       5
<PAGE>
Landlord harmless with respect to any claims for such taxes or resulting from
non-payment thereof.

                  (e) Without limiting the generality of Section 2(b) above,
Tenant shall remain responsible for and shall pay all 2000 assessments for real
estate and personal property taxes due and payable in 2001, and for all prior
years (the "2000 Assessments"). Tenant shall also be responsible for and shall
pay its proportionate share of all real estate and personal property taxes which
are assessed in 2001, and which are due and payable in 2002, based upon the
number of days between January 1, 2001, and the Termination Date.

                  (f) Notwithstanding anything to the contrary in this
Agreement, Tenant acknowledges that Landlord would not enter into this Agreement
and effect the transactions contemplated hereby (including, but not limited to,
a termination of the Lease and Lease Guaranty effective as of the Termination
Date) but for BCC's agreement to purchase the Purchased Facilities in accordance
with the terms of the Put/Call Agreement. Nevertheless, as of the Termination
Date, BCC will continue to hold the right to terminate the Put/Call Agreement by
written notice to Landlord on or before the expiration of the Acceptance Period
in accordance with the terms thereof. Accordingly, the parties hereto agree as
follows:

                           (i) As of the date hereof, an Event of Default under
the Lease (and under the related documents including the Lease Guaranty and
Ancillary Documents) has occurred and is continuing, without the requirement for
delivery of any further notice of any kind.

                           (ii) If, at any time after the Termination Date,
either (i) BCC shall terminate the Put/Call Agreement in accordance with the
terms thereof or (ii) within thirty (30) days following the expiration of the
Acceptance Period, BCC and Landlord (through no fault of Landlord) shall fail to
execute and deliver definitive legal documentation with respect to the purchase
and sale of the Purchased Facilities in accordance with the terms of the
Put/Call Agreement, then, notwithstanding the occurrence of the Termination Date
or anything in this Agreement to the contrary, Landlord shall be entitled to
seek and recover from Tenant (and BCC, ACO, Oakhaven and Oakhaven Assisted as
"Guarantors" under the Lease Guaranty and any other responsible parties) all
damages to which Landlord is entitled under the Lease and Lease Guaranty by
reason of an Event of Default, including, without limitation, the right to seek
and recover the


                                       6
<PAGE>
damages set forth in clauses (i) through (iv) of Section 17.3 of the Lease.

                           (iii) Each party hereto (other than Landlord) hereby
irrevocably waives and relinquishes any defenses or counterclaims which it may
have to prevent the enforcement of or the right of Landlord to seek and recover
any such damages under the Lease by reason of such Event of Default, including
those damages set forth in clauses (i) through (iv) of Section 17.3 of the
Lease.

The provisions of this Section 2(f) shall automatically terminate and be of no
further force or effect upon execution and delivery of definitive legal
documentation with respect to the purchase and sale of the Purchased Facilities
in accordance with the terms of the Put/Call Agreement.

         3. Delivery of the Leased Property. On or before the Termination Date,
Tenant shall deliver to Landlord or, at Landlord's direction to New Operator,
possession of the Leased Property, including the Land, Improvements, Equipment
and Fixtures. Delivery shall be accomplished by surrender of physical possession
of the Leased Property to Landlord. Upon surrender to Landlord, the Leased
Property shall be broom-clean (i.e., free of debris and rubbish), in a safe
condition and free from any Hazardous Substances.

         4. Transfer of Tenant's Personal Property. As additional consideration
for Landlord's execution of this Agreement, including the termination of
Tenant's Terminated Rent Obligations as described in this Agreement, on or
before the Termination Date, Tenant shall convey and deliver to Landlord all of
Tenant's Personal Property other than the property described on Schedule 4A
attached hereto free and clear of any liens, claims or encumbrances, except for
(i) any Permitted Encumbrances (as defined in the Lease), and (ii) the purchase
money security interests set forth on Schedule 4B attached hereto (the "PMSIs").
Tenant shall execute in favor of Landlord a bill of sale in form and substance
acceptable to Landlord evidencing such conveyance.

         5. Termination of Lease Guaranty. Subject to all of the terms and
conditions of this Agreement, the Lease Guaranty and the respective obligations
of BCC, ACO, Oakhaven Senior and Oakhaven Assisted thereunder, including, but
not limited to, any obligations relating to the Terminated Rent Obligations,
shall be terminated at 11:59 p.m. (Eastern time) on the Termination Date;
provided, however, that nothing contained herein shall be


                                       7
<PAGE>
deemed to relieve BCC, ACO, Oakhaven Senior and Oakhaven Assisted of any of its
respective obligations or liabilities under the Lease Guaranty which accrue or
have accrued on or prior to the Termination Date or any obligations or
liabilities of Tenant under this Agreement, which obligations and liabilities
shall continue to be guaranteed obligations under the Lease Guaranty to and
until full and complete performance of the same, including, without limitation,
those obligations of Tenant set forth in Sections 2, 3 and 4 above.

         6. Termination of BCC Documents. Subject to all of the terms and
conditions of this Agreement, the BCC Documents and the respective obligations
of Landlord and BCC thereunder, including, but not limited to, any obligations
relating to the Terminated Rent Obligations, shall be terminated at 11:59 p.m.
(Eastern time) on the Termination Date; provided, however, that nothing
contained herein shall be deemed to relieve BCC of any of its obligations or
liabilities under the BCC Documents which accrue or have accrued on or prior to
the Termination Date, including, without limitation, any obligations of BCC to
indemnify, defend and hold harmless Landlord from and against any and all
claims, liabilities, losses, costs, actions, damages, expenses or fees,
including but not limited to attorneys' fees and costs of defense, for which BCC
is responsible under the BCC Documents and which accrue or have accrued on or
before the Termination Date.

         7. Termination of Ancillary Documents. Subject to all of the terms and
conditions of this Agreement, each of the Ancillary Documents and the respective
obligations of Landlord, Tenant, BCC, BCC Development, BCC Jackson, ACO,
Oakhaven Senior and Oakhaven Assisted thereunder, including, but not limited to,
any obligations relating to the Terminated Rent Obligations thereunder, shall be
terminated at 11:59 p.m. (Eastern time) on the Termination Date; provided,
however, that nothing contained herein shall be deemed to relieve Tenant, BCC,
BCC Development, BCC Jackson, ACO, Oakhaven Senior and Oakhaven Assisted of any
of their respective obligations or liabilities under the Ancillary Documents to
which such entity is a party which accrue or have accrued on or prior to the
Termination Date, including, without limitation, any obligations of Tenant, BCC,
BCC Development, BCC Jackson, ACO, Oakhaven Senior and Oakhaven Assisted to
indemnify, defend and hold harmless Landlord from and against any and all
claims, liabilities, losses, costs, actions, damages, expenses or fees,
including but not limited to attorneys' fees and costs of defense, for which
Tenant, BCC, BCC Development, BCC Jackson, ACO, Oakhaven Senior and Oakhaven

                                       8
<PAGE>
Assisted are responsible under the Ancillary Document to which Landlord, BCC,
BCC Development, BCC Jackson, ACO, Oakhaven Senior and Oakhaven Assisted is a
party and which accrue or have accrued on or before the Termination Date.

         8. Representations and Covenants. Tenant represents, warrants and
covenants as follows:

                  (a) Except for the Terminated Rent Obligations, Tenant will
pay or make provision for the payment of all trade accounts, wage claims and
other obligations of the business conducted in the Leased Property and shall
neither take any action nor fail to take any action the result of which will be
the imposition of any liens upon the Leased Property or the Improvements,
Fixtures or Equipment thereon or therein or the creation of any claims against
Landlord. It is hereby mutually agreed that this provision is not intended to
bestow any benefit upon any person who is not a party to this Agreement.

                  (b) The Leased Property, all Improvements, Fixtures and
Equipment therein, and Tenant's Personal Property are free and clear of any
liens, claims or encumbrances created or suffered by, through or under Tenant,
or its Affiliates, sublessees or other third parties for whom Tenant or its
Affiliates are responsible, and that none of the foregoing is subject to a
conditional sales agreement, lease or other title retention device.

                  (c) That there are no subtenants, franchisees, concessionaires
or other persons claiming an interest in the Leased Property or Tenant's
Personal Property or a right to occupy the Leased Property or any portion
thereof under or through Tenant other than the residents of the Facility.

         9. Indemnity for Breach of Representations and Warranties. As
additional consideration for Landlord entering into this Agreement, Tenant and
BCC each agree to indemnify, defend and hold harmless Landlord from and against
any and all claims, liabilities, losses, costs, actions, damages, expenses or
fees, including but not limited to attorneys' fees and costs of defense relating
to the breach of any representation or warranty set forth in Section 8 above.
The obligations of Tenant and BCC under this Section 9 shall be joint and
several.

         10. Mutual Termination of Lease. Within ten (10) days after the
Termination Date, Landlord and Tenant shall execute in recordable form a Mutual
Termination of Lease relating to the Lease in substantially the form of Exhibit
A attached hereto,


                                       9
<PAGE>
and shall cause same to be recorded in the office of the county recorder in the
appropriate county where the Facility is located (the "County"). Landlord and
Tenant each hereby agree promptly to execute and deliver such other documents as
the other party may reasonably request in order to confirm the termination of
the Lease in accordance with the terms of this Agreement.

         11. Further Assurances. The parties hereto agree to execute and deliver
to the other parties hereto any agreement, document or instrument deemed
reasonably necessary or desirable to give effect to the transactions described
in this Agreement. Without limiting the generality of the foregoing, within ten
(10) days after the Termination Date, (i) Tenant and BCC agree to execute in
recordable form and cause to be recorded in the office of the county recorder in
the County, any and all instruments deemed reasonably necessary by Landlord to
remove the effect on title to the Leased Property of that certain Revolving
Credit/Future Advances Leasehold Mortgage dated as of January 30, 1998, by and
between Tenant, as mortgagor, and BCC, as mortgagee, and (ii) Landlord agrees to
execute and cause to be recorded or filed, as applicable, in the office of the
county recorder in the county in which the Leased Property is located and/or in
the office of the Secretary of State, termination statements relating to any
Financing Statements or Fixture Filings relating to the Leased Property in favor
of Landlord.

         12. Miscellaneous.

                  (a) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.

                  (b) This Agreement shall be governed by and construed in
accordance with the local law of the state in which the Leased Property is
located.

                  (c) There are no agreements, understandings, commitments,
representations or warranties with respect to the subject matter hereof except
as expressly set forth in this Agreement. This Agreement supersedes all prior
oral or written negotiations, understandings and agreements with respect to the
subject matter hereof; provided, however, that except with respect to the
specific matters addressed herein relating to the Lease, the Lease guaranty and
the Ancillary Documents, nothing contained herein shall be deemed to modify in
any way the Put/Call Agreement, which Put/Call Agreement shall remain in full
force and effect in accordance with the terms thereof.

                                       10
<PAGE>
                  (d) Neither anything contained herein nor the transaction
provided for herein shall be deemed or construed to constitute a "bulk sale" or
an assumption by Landlord of any obligations of Tenant. The transaction provided
for herein is and shall be construed solely as the termination of the Lease, the
Lease Guaranty, the Management Guaranty and the Ancillary Documents.

                  (e) Each of the parties hereto acknowledges that it has
negotiated for the specific considerations to be received by it hereunder and
that damages would be an inadequate remedy for the breach of this Agreement by
another party hereto. Each of the parties hereto shall be entitled to enforce
the terms of this Agreement by an action either for specific performance or for
injunctive relief, or both, to prevent the breach or continued breach of this
Agreement. The prevailing party in any proceeding pursuant to or based upon this
Agreement or in which this Agreement is asserted as a defense shall be entitled
to recover attorneys' fees and costs incurred in such proceeding in such amount
as the court shall determine to be reasonable.

                  (f) All capitalized terms not defined in this Agreement but
defined in the Lease shall have the meaning given to such terms under the Lease.

                  (g) All indemnification covenants are intended to apply to
losses, damages, injuries, claims, etc. incurred directly by the indemnified
parties and their property, as well as by the indemnifying party or third party,
and their property.

                  (h) Landlord hereby acknowledges that following the
Termination Date, BCC or an Affiliate of BCC intends to acquire all of the
issued and outstanding securities of Tenant, ACO, Oakhaven Senior and Oakhaven
Assisted.

                            [SIGNATURE PAGE FOLLOWS]




                                       11
<PAGE>
                  IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.

"Landlord"                              HEALTH CARE PROPERTY INVESTORS,
                                        a Maryland corporation

                                        By:/s/Edward J. Henning
                                           -------------------------------------
                                              Edward J. Henning
                                              Senior Vice President, General
                                              Counsel and Corporate Secretary

"Tenant"                                ASSISTED CARE OPERATORS OF JACKSON, LLC,
                                        a Delaware limited liability company

                                        By:      Assisted Care Operators,
                                                 L.L.C., a Delaware limited
                                                 liability company,
                                                 its manager and authorized
                                                 representative

                                                 By:   Retirement Operators
                                                       Funding, L.L.C., a
                                                       Delaware limited
                                                       liability company, its
                                                       manager and authorized
                                                       representative

                                                       By:   Retirement
                                                             Operators
                                                             Management,
                                                             Inc., a California
                                                             corporation, its
                                                             manager and
                                                             authorized
                                                             representative

                                                       By:/s/F. David Carr
                                                          ----------------------
                                                             F. David Carr,
                                                             President




                                       12
<PAGE>
"ACO"                                   ASSISTED CARE OPERATORS, L.L.C.,
                                        a Delaware limited liability company

                                        By:     Retirement Operators Funding,
                                                L.L.C., a Delaware limited
                                                liability company, its manager
                                                and authorized representative

                                                By:    Retirement Operators
                                                       Management, Inc., a
                                                       California corporation,
                                                       its manager and
                                                       authorized representative

                                                        By:/s/F. David Carr
                                                          ----------------------
                                                              F. David Carr,
                                                              President

"Oakhaven Senior"                       OAKHAVEN SENIOR LIVING, INC.,
                                        a California corporation

                                        By:
                                        Name:
                                        Title:

"Oakhaven Assisted"                     OAKHAVEN ASSISTED LIVING, INC.,
                                        a California corporation

                                        By:
                                        Name:
                                        Title:




                                       13
<PAGE>
"BCC"                                   BALANCED CARE CORPORATION,
                                        a Delaware corporation

                                        By:/s/Robin L. Barber
                                           -------------------------------------
                                              Robin L. Barber
                                              Senior Vice President,
                                              Legal Counsel
                                              & Assistant Secretary

"BCC Development"                       BCC DEVELOPMENT AND MANAGEMENT CO.,
                                        a California corporation

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

"BCC Jackson"                           BALANCED CARE AT JACKSON, INC., a
                                        Delaware corporation


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




                                       14
<PAGE>
                                    EXHIBIT A

                       Form of Mutual Termination of Lease


RECORDING REQUESTED BY

AND WHEN RECORDED MAIL TO:

Latham & Watkins
650 Town Center Drive
Twentieth Floor
Costa Mesa, California 92626
Attn:  David C. Meckler, Esq.

                                     (Space Above Line For Recorder's Use Only)


                           MUTUAL TERMINATION OF LEASE

                  THIS MUTUAL TERMINATION OF LEASE is made and entered into as
of October 31, 2001, by and between HEALTH CARE PROPERTY INVESTORS, a Maryland
corporation ("Landlord"), and ASSISTED CARE OPERATORS OF TENNESSEE, LLC, a
Delaware limited liability company (the "Tenant"), with respect to the
following:

A.       Landlord, as successor in interest to AHP of Tennessee, Inc., a
         Tennessee corporation, is the landlord and Tenant is the tenant
         pursuant to that certain Lease and Security Agreement dated as of
         January 30, 1998 (as the same may have been modified or amended, the
         "Lease"). The Lease describes and covers certain real property located
         in _____________ County, Tennessee, and more particularly described on
         Exhibit A attached hereto and incorporated herein by this reference
         (the "Property"). The Lease is evidenced of record by that certain
         Memorandum of Lease dated as of January 30, 1998, recorded in the
         Office of the Recorder of _______ County, Tennessee on ___________,
         1998, as Instrument No. ___________.

B.       Landlord and Tenant mutually desire to cancel and terminate the Lease
         effective as of ______________, 2001 (the "Termination Date"),
         irrespective of the date of the execution and recordation of this
         instrument.


                                      A-1
<PAGE>
C.       All terms used in this instrument with initial capital letters and not
         defined herein shall have the meanings given to such terms by the
         Lease.

                  NOW, THEREFORE, for and in consideration of the foregoing
recitals and for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Landlord and Tenant do hereby mutually cancel and
terminate the Lease, and the leasehold estate created thereby, effective on the
Termination Date; provided, however, that nothing contained herein shall be
deemed to relieve Tenant of any of its obligations or liabilities under the
Lease which accrue or have accrued on or prior to the Termination Date,
including, without limitation, all obligations of Tenant, to indemnify, defend
and hold harmless Landlord from and against any and all claims, liabilities,
losses, costs, actions, damages, expenses or fees, including but not limited to
attorneys' fees and costs of defense, for which Tenant is responsible under the
Lease and which accrue or have accrued on or before the Termination Date.
Furthermore, this Mutual Termination of Lease shall in no way affect the
obligations of any party under that certain Agreement for Termination of Lease,
Guaranty and Ancillary Documents dated as of October 31, 2001 by and among
Landlord, Tenant, Assisted Care Operators of Tennessee, L.L.C., Assisted Care
Operators, L.L.C., Oakhaven Senior Living, Inc., Oakhaven Assisted Living, Inc.,
Balanced Care Corporation, BCC Development and Management Co., and Balanced Care
at Jackson, Inc.

                  This instrument may be signed in multiple counterparts which,
when duly delivered and taken together, shall constitute a binding agreement
between all parties.

                  IN WITNESS WHEREOF, the parties hereto have executed and
entered into this Mutual Termination of Lease as of the day and year first above
written.

                            [SIGNATURES PAGE FOLLOWS]




                                      A-2
<PAGE>
                  IN WITNESS WHEREOF, the undersigned have caused this Mutual
Termination of Lease to be executed as of the date first above written.
<TABLE>
<CAPTION>
                       "Tenant"                                               "Owner"
<S>                                                     <C>
ASSISTED CARE OPERATORS OF TENNESSEE, LLC, a Delaware   HEALTH CARE PROPERTY INVESTORS, INC., a Maryland
limited liability company                               corporation

By:      Balanced Care at Jackson, Inc.,
         a Delaware corporation                         By:
                                                                Edward J. Henning
                                                                Senior Vice President, General Counsel and
         By:                                                    Corporate Secretary
                  Robin L. Barber
                  Vice President    and
                  Secretary
</TABLE>



                                      A-3
<PAGE>
STATE OF ___________________________
COUNTY OF _________________________

                 On _______________________, 2001 before me, _________________,
Notary Public, personally appeared, __________________ personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.

                  IN WITNESS WHEREOF, I have hereunto set my hand and seal on
this ______ day of _________________, 2001.

                                            ____________________________________
                                            Notary Public

MY COMMISSION EXPIRES:
_________________________


STATE OF ___________________________
COUNTY OF _________________________

                  On _______________________, 2001 before me, _________________,
Notary Public, personally appeared __________________, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.

                                            ____________________________________
                                            Notary Public

MY COMMISSION EXPIRES:
_________________________




                                      A-4
<PAGE>
                                    EXHIBIT A
                                       TO
                           MUTUAL TERMINATION OF LEASE

                        Legal Description of the Property






                    Exhibit A to Mutual Termination of Lease
<PAGE>
                                   SCHEDULE 4A

                           Excluded Personal Property






                                   Schedule 4A
<PAGE>
                                   SCHEDULE 4B

                        Purchase Money Security Interests






                                   Schedule 4B