Document:

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Exhibit 10.3

                      UNCONDITIONAL AND CONTINUING GUARANTY

         THIS GUARANTY is made effective as of January 1, 2002 (the "Effective
Date") by BALANCED CARE CORPORATION ("Company"), and BALANCED CARE AT LEBANON,
INC., FINANCIAL CARE INVESTORS OF LEBANON, LLC, BALANCED CARE AT LOYALSOCK,
INC., FINANCIAL CARE INVESTORS OF LOYALSOCK, LLC, BALANCED CARE AT SAGAMORE
HILLS, INC., FINANCIAL CARE INVESTORS OF SAGAMORE HILLS, LLC, BALANCED CARE AT
SAXONBURG, INC., and BALANCED CARE AT BLOOMSBURG II, INC.(collectively called
"Manager"), in favor of PENNSYLVANIA BCC PROPERTIES, INC., a corporation
organized under the laws of Commonwealth of Pennsylvania ("HCRI-PA/BCC"), and
HCN BCC HOLDINGS, INC., a corporation organized under the laws of the State of
Delaware ("HCRI-HCN/BCC"). Company and Manager may be collectively called
"Guarantor". HCRI, HCRI-PA/BCC, and HCRI-HCN/BCC may be collectively called
"Landlord".

                                 R E C I T A L S

         A. Landlord is granting to Balanced Care Tenant (HCN), Inc., a
corporation organized under the laws of the State of Delaware ("Tenant"), a
lease of certain real property ("Property") pursuant to a Master Lease Agreement
between Landlord and Tenant of even date ("Lease"). Tenant is entering into
management agreements with each Manager to operate the facilities located on the
Property.

         B. In order to extend the Lease, Landlord requires that this guaranty
be provided by Guarantor. Guarantor has determined that Guarantor will benefit
from the Lease and has agreed to provide this guaranty to Landlord.

         C. As used herein, "Lease Documents" means the Lease and all other
documents and agreements made in connection with the Lease, as amended,
modified, renewed or extended from time to time. "Credit" means all rent, late
charges, taxes, utility charges, insurance premiums and all other charges,
expenses and amounts payable by Tenant to Landlord pursuant to the Lease
Documents. "Security" includes all guaranties of any Credit, all interests in
real or personal property securing the payment of any Credit or any guaranties
of any Credit, and all other agreements, rights, or interests insuring or
guaranteeing payment of any Credit. "Lease Obligations" means all of the
covenants, obligations and liabilities of Tenant under the Lease Documents,
including the payment of the Credit when due.

         NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Landlord and Guarantor intending to be legally bound hereby, agree
as follows:

         1. Guaranty. Guarantor unconditionally guarantees the prompt payment
when due of the Credit and the performance of the
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Lease Obligations and shall indemnify Landlord and hold Landlord harmless from
any costs and expenses in any way arising out of Tenant's failure to repay the
Credit or perform the Lease Obligations according to their terms.

         2. Warranties.

                  (a) Capacity. Balanced Care at Lebanon, Inc., Balanced Care at
Loyalsock, Inc., Balanced Care at Sagamore Hills, Inc., Balanced Care at
Saxonburg, Inc., and Balanced Care at Bloomsburg II, Inc. are corporations duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Financial Care Investors of Lebanon, LLC, Financial Care Investors of
Loyalsock, LLC, and Financial Care Investors of Sagamore Hills, LLC are limited
liability companies duly organized, validly existing, and in good standing under
the laws of the State of Delaware. Guarantor warrants that Guarantor has taken
all necessary corporate or limited liability company action to incur the
obligations of this guaranty and to execute, deliver and perform this guaranty.

                  (b) Contracts. Guarantor warrants that there is no provision
of the Articles of Incorporation or Bylaws or Articles of Organization or
Operating Agreement of Guarantor, or any existing indenture, contract, or
agreement to which Guarantor is a party or of any law, administrative
regulation, court order, or consent decree that would be contravened by the
execution, delivery, or performance of this guaranty.

                  (c) Inducement to Landlord; Waivers. Guarantor [1]
acknowledges that Landlord would not have extended the Credit to Tenant and will
not continue to extend Credit to Tenant but for this guaranty; [2] warrants that
Guarantor has given this guaranty to induce Landlord to extend and to continue
to extend Credit to Tenant; [3] agrees that Landlord may rely on this guaranty
in extending future Credit to Tenant without notice to Guarantor, but only in
connection with the Leased Property; [4] warrants that Guarantor has received
good and valuable consideration for this guaranty; [5] waives acceptance of this
guaranty; [6] warrants that Guarantor has not given this guaranty in reliance
upon the existence of any Security; [7] acknowledges receipt of notice of all
Credit extended before this date; [8] waives notice of any Credit extended after
this date except as specifically provided in the Lease; [9] waives protest and
any other notice of failure to pay the Credit or to perform any agreement
relating to any Credit or Security except as specifically provided in the Lease;
[10] acknowledges that Guarantor has read this guaranty, the Lease, and all
other Lease Documents; and [11] acknowledges that Guarantor understands and
agrees to Guarantor's obligations under this guaranty.

                  (d) No Reliance on Information from Landlord. Guarantor [1]
warrants that Guarantor has not relied on any information about the Tenant, the
Security, or any guarantor of

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the Credit provided directly or indirectly by Landlord; [2] warrants that
Guarantor is familiar with Tenant, Tenant's affairs, and the Security; [3]
warrants that Guarantor has had ample opportunity to investigate Tenant,
Tenant's affairs, the Security, and the effect that the Credit will have; [4]
warrants that Guarantor has been provided all information concerning Tenant,
Tenant's affairs, and the Security that Guarantor has requested; [5] warrants
that Guarantor has had adequate opportunity to seek and evaluate professional
advice concerning Tenant, the Security, and this guaranty from advisors of
Guarantor's choosing, including financial and legal advice; and [6] agrees that
Guarantor shall not rely on any information provided by Landlord about Tenant or
the Security, including any other guarantor. Guarantor shall continue to
investigate and evaluate Tenant and the Security independently throughout the
term of this guaranty, and Landlord has no obligation to provide Guarantor any
information about the Tenant or the Security.

         3. Waivers. Subject to the provisions of the Lease Documents, without
notice to or consent of Guarantor, Landlord may do or refrain from doing
anything affecting any Credit or any Security including the following: [a]
granting or not granting any indulgences to anyone liable for payment of the
Credit or any Security; [b] failing to get or to perfect any Security; [c]
failing to get an enforceable agreement to repay the Credit; [d] releasing any
Security or anyone or any property from liability for payment of the Credit; [e]
exercising any right or remedy including, without limitation, eviction of Tenant
or termination of the Lease; [f] applying any funds received from Tenant,
Guarantor or any other party and any funds realized from any Security to the
Credit in such manner and in such order or priority as Landlord elects in its
sole discretion; and [g] delaying in enforcing or failing to enforce any rights
to payment of the Credit or rights against any Security. In the event that
Landlord forecloses or otherwise realizes on any Security for repayment of the
Credit, Guarantor agrees that the purchase price at any judicial or other sale
of the Security paid by Landlord or any other party shall be conclusive evidence
of the value of the Security and Landlord shall have an absolute right, subject
to applicable law, to obtain a deficiency judgment of all amounts due in excess
of such purchase price, to the extent permitted by applicable law. To the
fullest extent permitted by law, Guarantor waives the right to contest the value
of the Security through appraisals or otherwise, and waives any defense to a
deficiency judgment that Guarantor may have pursuant to any statute or other
applicable law.

         4. Defects in Security, Etc. Guarantor's liability under this guaranty
shall not be affected by [a] any default in any document concerning any Credit
or Security when accepted by Landlord or arising any time thereafter; [b] the
unenforceability of or defect in any Security or document relating to any
Credit; [c] any decline in the value of any Security; [d] Landlord's failure to
obtain any Security or to perfect Landlord's security

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interest therein; [e] the death, incompetence, insolvency, dissolution,
liquidation, or winding up of affairs of Tenant, Guarantor, or anyone liable for
any Security or the start of insolvency proceedings by or against any such
person or entity; [f] any termination of the leasehold estate created by the
Lease to the extent Tenant remained liable under the Lease; [g] the release or
discharge of Tenant in any creditor's, receivership, bankruptcy, other
insolvency proceedings, or other proceedings; [h] impairment, limitation or
modification of the liability of Tenant or the estate of Tenant in bankruptcy or
of any remedy for the enforcement of Tenant's liability under the Lease,
resulting from the operation of any present or future provisions of the federal
Bankruptcy Code or other statutes or from the decision of any court; [i] the
rejection or disaffirmance of the Lease in any such proceedings; [j] the
assignment or transfer of the Lease by the Tenant; [k] any disability or other
defense of Tenant; [l] the cessation from any cause whatsoever of the liability
of Tenant under the Lease; or [m] any reorganization, merger, consolidation,
combination, or sale of substantially all the assets of Tenant.

         5. Waiver of Surety's Defenses. GUARANTOR WAIVES ALL SURETYSHIP AND
OTHER SIMILAR DEFENSES.

         6. Unconditional Obligation. If Tenant fails to pay all or any part of
any Credit when due after expiration of any applicable grace, notice or cure
period, Guarantor shall immediately pay to Landlord all amounts then due and
payable in connection with any Credit, regardless of whether or not Landlord
first pursues Tenant or exhausts any of its rights or remedies against Tenant,
any other Guarantor, others, or other Security. Guarantor shall not have any
right of subrogation to the rights of Landlord against any of the assets of
Tenant or any other guarantor of the Lease until after indefeasible payment in
full of the Credit.

         7. Continuing Obligation. This guaranty shall extend and be applicable
to all renewals, amendments, extensions, consolidations, modifications,
increases and reductions of the Lease Documents and the Credit. Guarantor's
liability under this guaranty shall not be reduced or cancelled by any such
action and shall be deemed modified in accordance with the terms of such action,
whether or not Guarantor has notice of such action.

         8. Subordination. Except as otherwise specified in the Lease, the
provisions of this paragraph shall be effective only [i] after the occurrence of
an Event of Default (as defined in the Lease) and until such Event of Default is
cured, or [ii] after the commencement of any bankruptcy or insolvency proceeding
by or against Tenant and until such proceeding is dismissed. Guarantor
subordinates to and postpones in favor of the Credit and Security [a] any
present and future debts and obligations of Tenant to Guarantor (the
"Indebtedness") including but not limited to [i] salary, bonuses, and other
payments pursuant to any employment arrangement; [ii] fees, reimbursement

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of expenses and other payments pursuant to any independent contractor
arrangement; [iii] principal and interest pursuant to any Indebtedness; [iv]
distributions payable to any shareholders or general or limited partners of
Tenant; and [v] lease payments pursuant to any leasing arrangement; and [b] any
liens or security interests securing payment of the Indebtedness. Guarantor
shall not ask for, sue for, demand, take or receive any payment, by setoff or in
any other manner, including the receipt of a negotiable instrument, for all or
any part of the Indebtedness owed by Tenant, or any successor or assign of
Tenant, including without limitation a receiver, trustee or debtor in possession
(the term "Tenant" shall include any such successor or assign of Tenant) until
the Credit has been paid in full; however, if Guarantor receives such a payment,
Guarantor shall immediately deliver the payment to Landlord for credit against
the then outstanding balance of the Credit, whether matured or unmatured.
Notwithstanding any right of Guarantor to ask, demand, sue for, take or receive
any payment with respect to the Indebtedness, all rights, liens and security
interests of the Guarantor, whether now or hereafter arising, in any assets of
the Tenant or in any Security shall be and hereby are subordinated to the rights
of Landlord in such assets and Guarantor shall have no right to possession of
any such assets or to foreclose upon any such asset, whether by judicial action
or otherwise, unless and until the Credit has been paid in full. Guarantor
agrees that Landlord shall be subrogated to the Guarantor with respect to the
Guarantor's claims against Tenant and the Guarantor's rights, liens and security
interest, if any, in any of the Tenant's assets and proceeds thereof until all
of the Credit has been paid in full.

         Guarantor warrants and represents that Guarantor has not previously
assigned any interest in the Indebtedness to any party other than Landlord, that
no other party owns an interest in the Indebtedness other than Guarantor,
(whether as joint holders of the Indebtedness, participants or otherwise) and
that, except as provided below, the entire Indebtedness is and shall continue to
be owing only to the Guarantor. Guarantor shall not assign or transfer to others
any claim Guarantor has or may have against the Tenant, unless such assignment
or transfer is made expressly subject to this guaranty.

         Any claim which Guarantor may make against Tenant or Tenant's estate in
any bankruptcy or insolvency proceedings shall be expressly subject to the terms
of this Section 8.

         In the event of any distribution of the assets or readjustment of the
obligations and indebtedness of the Tenant, whether by reason of liquidation,
bankruptcy, arrangement, receivership, assignment for the benefit of creditors
or any other action or proceeding involving the readjustment of all or any of
the Indebtedness hereby subordinated, or the application of the assets of the
Tenant to the payment or liquidation thereof, Landlord shall be entitled to
receive payment in full of any and

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all of the Credit, due or not due, prior to the payment of all or any part of
the Indebtedness hereby subordinated, and in order to enable Landlord to enforce
its rights hereunder in any such action or proceeding, Landlord is hereby
authorized and empowered in its discretion to make and present for and on behalf
of Guarantor such proofs of claims against the Tenant, if the Guarantor shall
have failed to file any such proof of claim within thirty (30) days after
Landlord has requested Guarantor to file such proofs of claim on account of the
Indebtedness hereby subordinated, as Landlord may deem expedient or proper and
to vote such proofs of claims in any such proceeding and to receive and collect
any and all dividends or other payments or disbursements made thereon in
whatever form the same may be paid or issued and to apply the same on account of
any of the Credit.

         In the event of any distribution, division or application, partial or
complete, voluntary or involuntary, by operation of law or otherwise, of all or
any part of the assets of the Tenant or the proceeds thereof, to the creditors
of the Tenant's business, or upon the sale of all or substantially all of the
Tenant's assets, then, and in any such event, any payment or distribution of any
kind or character, either in cash, securities or other property, which shall be
payable or deliverable upon or with respect to any or all of the Indebtedness
shall be paid or delivered directly to Landlord for application on any of the
Credit, due or not due, until such Credit shall have first been fully paid and
satisfied. After the occurrence and during the continuance of any Event of
Default, in the event that Guarantor shall fail or refuse to take any action
that Landlord requests in writing that the Guarantor take with respect to the
Indebtedness within thirty (30) days of the Guarantor's receipt of such request,
Guarantor authorizes and empowers Landlord to demand, sue for, collect and
receive every such payment or distribution and give acquittance therefor and to
file claims and take such other proceedings, in Landlord's own name or in the
name of Guarantor or otherwise, as Landlord may deem necessary or advisable for
the enforcement of this guaranty; and Guarantor will execute and deliver to
Landlord such powers of attorney, assignments or other instruments or documents,
as may be requested by Landlord in order to enable Landlord to enforce any and
all claims upon or with respect to any or all of the Indebtedness and to collect
and receive any and all payments of distributions which may be payable or
deliverable at any time upon or with respect to the Indebtedness, all for
Landlord's own benefit.

         Should any payment, distribution, security, instrument or proceeds
which are subject to the subordination contained in the first paragraph of this
Section 8 be received by Guarantor upon, or with respect to, the Indebtedness
while such subordination provision is effective and prior to the satisfaction of
all of the Credit and termination of all financing arrangements between the
Tenant and Landlord, Guarantor shall receive and hold the same in trust as
trustee, for the benefit of Landlord and shall forthwith deliver the same to
Landlord in precisely the form received

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(except for the endorsement or assignment of the Guarantor where necessary), for
application on any of the Credit, due or not due, and until so delivered, the
same shall be held in trust by the Guarantor as the property of Landlord. In the
event of the failure of Guarantor to make any such endorsement or assignment to
Landlord, Landlord, or any of its officers or employees, is hereby irrevocably
authorized to make the same.

         Any instrument evidencing any of the Indebtedness, or any portion
thereof, will, on the date hereof or promptly hereafter, be inscribed with a
legend conspicuously indicating that payment thereof is subordinated to the
claims of Landlord, pursuant to the terms of this guaranty, and will be
delivered to Landlord upon request therefor after the declaration of an Event of
Default, if such original is necessary in order to enable Landlord to take any
action permitted hereunder, including, without limitation, the filing of proofs
of claim on behalf of Guarantor.

         This subordination shall continue and shall be irrevocable until all
the terms, covenants and conditions of the Credit have been fully and completely
performed by Tenant or otherwise discharged and released by Landlord, and the
Guarantor shall not be released from any duty, obligation or liability hereunder
so long as there is any claim of Landlord against Tenant arising out of the
Credit which has not been performed, settled or discharged in full.

         9. Financial Statements.

                  (a) Financial Statements. Not later than 90 days after the end
of each fiscal year, Company shall deliver to Landlord audited consolidated
financial statements of Company for the preceding year and each Manager shall
deliver to Landlord unaudited financial statements of each Manager for the
preceding year. In addition, not later than 45 days after the end of each
quarter, Company shall deliver to Landlord unaudited consolidated financial
statements of Company for the preceding quarter. If Company is or becomes
subject to any reporting requirements of the Securities and Exchange Commission
("SEC"), Company shall, in lieu of providing the financial statements described
above concurrently deliver to Landlord such financial statements as are
delivered to the SEC pursuant to applicable securities laws.

                  (b) Certificate. With each delivery of financial statements,
Company shall also provide to Landlord a Certificate in the form of Exhibit A.

                  (c) Tax Returns. Company shall deliver to Landlord the federal
tax return of Company for each year within 15 days after the filing of the
return. If the filing date for any tax return has been extended, Company shall
also deliver to Landlord a copy of the extension application within 15 days
after the date of filing.

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                  (d) Other Information. Guarantor shall promptly furnish to
Landlord such other information and statements concerning the business affairs
and financial condition of the Guarantor as Landlord may reasonably request.
Guarantor shall give Landlord access to all books, records, and financial data
of Guarantor by or through any of Landlord's officers, agents, attorneys or
accountants, at all reasonable times and from time to time. Landlord may
examine, inspect, and make extracts from Guarantor's books and other records at
all reasonable times and from time to time, subject, however, to any agreements
made by Landlord regarding confidentiality of such information.

                  (e) Covenants. Guarantor covenants that all financial
statements of Guarantor furnished Landlord will present fairly in all material
respects the financial condition of Guarantor as of the dates of the statements
and will be prepared in accordance with generally accepted accounting principles
applied on a basis consistently maintained throughout the period involved.

         10. [Intentionally Deleted].

         11. No Conveyance. Except as permitted in the Lease, Guarantor shall
not sell, convey, pledge, encumber or otherwise transfer any ownership interest
in Tenant now owned or hereafter acquired, if any, without the prior written
consent of Landlord, which consent shall not be unreasonably withheld. Except as
permitted in the Lease, Guarantor shall not sell, give, convey or otherwise
transfer, directly or indirectly, all or substantially all of the assets of
Guarantor to any person ("Transferee"). Any transfer of assets that is
prohibited by this section shall constitute an Event of Default under the Lease
and shall be deemed to be a fraudulent conveyance against Landlord. In the event
of any such prohibited transfer, Landlord shall be entitled to enforce this
guaranty against the Transferee and to seize all such transferred assets and
apply the proceeds from such assets to payment of the Credit, whether matured or
unmatured.

         12. Lease Covenants. Throughout the term of the Lease, Guarantor shall
comply with all requirements and covenants of the Lease expressly applicable to
Guarantor, including, without limitation,Sections 14.5 and 14.9.

         13. Subsequent Guaranties. No subsequent guaranty to Landlord by
Guarantor shall supersede or terminate this guaranty, but shall be an additional
guaranty unless otherwise stated therein and, if Guarantor has given a previous
guaranty to Landlord, this guaranty shall be in addition to the previous
guaranty.

         14. Successors, Etc. This guaranty shall be binding upon not only
Guarantor but also Guarantor's successors and assigns and shall inure to the
benefit of Landlord and its successors and assigns.

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         15. Termination; Revocation. Subject to reinstatement pursuant
to Section 16, this guaranty shall automatically terminate on the date on which
all of the Credit is paid in full. No revocation of this guaranty or any
substitute guaranty by Guarantor shall be effective until all of the Credit has
been paid in full.

         16. Survival. The obligations of the Guarantor under this guaranty will
continue to be effective or shall be reinstated, as the case might be, if at any
time any payment from the Tenant of any sum due to the Landlord is rescinded or
must otherwise be restored or returned by the Landlord on the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Tenant or as a
result of the appointment of a custodian, conservator, receiver, trustee or
other officer with similar powers with respect to the Tenant or any part of the
Tenant's property or otherwise.

         17. Governing Law. This guaranty shall be governed by and construed in
accordance with the internal laws of the State of Ohio without giving effect to
the conflict of laws rules thereof.

         18. Number; Gender. Where appropriate, the number of any word in this
guaranty shall include both singular and plural, the gender of any word shall be
masculine, feminine, or neuter.

         19. Enforceability. If any provision of this guaranty or the
application thereof to anyone or any circumstance shall be adjudged invalid or
unenforceable to any extent, the application of the remainder of the provision
to the party or circumstance, the application of the provision to other parties
or circumstances, and the application of the remainder of this guaranty shall
not be affected thereby. Each provision of this guaranty shall be valid and
enforceable to the fullest extent permitted by law.

         20. No Waivers by Landlord. No forbearance by Landlord in exercising
any right under this guaranty, any Credit, or any Security shall operate as a
waiver thereof; no forbearance in exercising any right under this guaranty, any
Credit, or any Security on any one or more occasions shall operate as a waiver
of such right on any other occasion; and no single or partial exercise of any
right under this guaranty, any Credit, or any Security shall preclude any other
or further exercise thereof or the exercise of any other right, power, or
privilege. Landlord's rights under this guaranty are cumulative and not
exclusive of any rights or remedies that Landlord may otherwise have.

         21. Fees and Expenses. Guarantor shall pay to Landlord all costs and
expenses incurred by Landlord in administering the Lease and the Security,
enforcing or protecting Landlord's rights in connection with any Credit,
Security or this guaranty and in collecting payment on any Credit or this
guaranty, whether or not an Event of Default (as defined in the Lease) has
actually

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occurred or has been declared and thereafter cured, including, but not limited
to, [a] attorney's fees and paralegal fees; [b] the fees and expenses of any
litigation, administrative, bankruptcy, insolvency, receivership or any other
similar proceeding; [c] court costs; [d] the expenses of Landlord, its
employees, agents, and witnesses in preparing for litigation and for lodging,
travel, and attendance at pretrial hearings, depositions, and trials; and [e]
consulting fees and expenses incurred by Landlord in connection with any
litigation.

         22. Notices. Any notices required or desired to be given under this
guaranty shall be in writing and shall be delivered in the manner set forth in
the Lease, and if to Landlord, delivered to Landlord at One SeaGate, Suite 1500,
P.O. Box 1475, Toledo, Ohio 43603, and if to a Guarantor, to the address set
forth opposite such Guarantor's signature, or to such other address as Landlord
or any Guarantor may hereafter give written notice thereof. All notices shall be
effective upon the earlier of actual receipt or three days after deposit in the
U.S. mail or one business day after deposit with the overnight courier.

         23. Amendment. This guaranty may not be amended except in a writing
signed by Guarantor and Landlord. All references to this guaranty, whether in
this guaranty or any other document or instrument, shall be deemed to
incorporate all amendments, modifications, renewals and extensions of this
guaranty and all substitutions therefor made after the date hereof.

         24. [Intentionally Deleted].

         25. Counterparts. This guaranty may be executed in multiple
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same instrument.

         26. JURISDICTION AND VENUE. GUARANTOR IRREVOCABLY SUBMITS AND CONSENTS
TO THE NONEXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURT HAVING
JURISDICTION OVER LUCAS COUNTY, OHIO OR ANY COUNTY IN WHICH A FACILITY IS
LOCATED FOR ADJUDICATION OF ALL MATTERS IN CONTROVERSY UNDER THIS GUARANTY, AND
WAIVES ANY OBJECTIONS TO SUCH JURISDICTION AND VENUE AND CONSENTS TO FULL FAITH
AND CREDIT BEING GIVEN TO ANY DECISION OF SUCH COURTS BY ANY OTHER STATE OR
FEDERAL COURT OF THE UNITED STATES OF AMERICA. GUARANTOR SHALL NOT ATTEMPT TO
LITIGATE ANY MATTERS IN CONTROVERSY UNDER THIS GUARANTY BEFORE ANY COURT OR
TRIBUNAL OTHER THAN BEFORE A STATE OR FEDERAL COURT HAVING JURISDICTION OVER
LUCAS COUNTY, OHIO. GUARANTOR WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS
UPON GUARANTOR AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS UPON THE GUARANTOR
BE MADE BY REGISTERED OR CERTIFIED MAIL DIRECTED TO GUARANTOR AT THE ADDRESS SET
FORTH BELOW AND SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER POSTED.

         27. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY LAW,
GUARANTOR HEREBY WAIVES KNOWINGLY AND

                                      -10-
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VOLUNTARILY THE RIGHT TO A JURY TRIAL IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS GUARANTY.

            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

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                  IN WITNESS WHEREOF, Guarantor executes and delivers to
Landlord this Unconditional and Continuing Guaranty effective as of the
Effective Date.

Address:                              BALANCED CARE CORPORATION
1215 Manor Drive
Mechanicsburg, Pennsylvania  17055

                                      By:/s/Robin L. Barber

                                          Title: Sr. Vice President and

                                          Assistant Secretary

                                           Tax ID No.:

                                      BALANCED CARE AT LEBANON, INC.

                                      By:/s/Robin L. Barber

                                          Title:Vice President and

                                          Secretary

                                           Tax ID No.:

                                      FINANCIAL CARE INVESTORS OF LEBANON, LLC

                                      By:/s/Robin L. Barber

                                          Title:Vice President and

                                          Secretary

                                           Tax ID No.:

                                      BALANCED CARE AT LOYALSOCK, INC.

                                      By:/s/Robin L. Barber

                                          Title:Vice President and

                                          Secretary

                                           Tax ID No.:

                                      FINANCIAL CARE INVESTORS OF LOYALSOCK, LLC

                                      By:/s/Robin L. Barber

                                          Title:Vice President and

                                          Secretary

                                           Tax ID No.:
<PAGE>
                                      BALANCED CARE AT SAGAMORE HILLS, INC.

                                      By:/s/Robin L. Barber

                                          Title:Vice President and

                                          Secretary

                                           Tax ID No.:

                                      FINANCIAL CARE INVESTORS OF
                                         SAGAMORE HILLS, LLC

                                      By:/s/Robin L. Barber

                                          Title:Vice President and

                                          Secretary

                                           Tax ID No.:

                                      BALANCED CARE AT SAXONBURG, INC.

                                      By:/s/Robin L. Barber

                                          Title:Vice President and

                                          Secretary

                                           Tax ID No.:

                                      BALANCED CARE AT BLOOMSBURG II, INC.

                                      By:/s/Robin L. Barber

                                          Title:Vice President and

                                          Secretary

                                           Tax ID No.:<PAGE>

Exhibit 10.4
                              SETTLEMENT AGREEMENT

                  THIS SETTLEMENT AGREEMENT ("Agreement") is made effective as
of January 31, 2002 ("Effective Date") by and among the following:

[i]      HEALTH CARE REIT, INC., a corporation organized under the laws of the
         State of Delaware ("HCRI"), having its principal office located at One
         SeaGate, Suite 1500, P. O. Box 1475, Toledo, Ohio 43603-1475;

[ii]     PENNSYLVANIA BCC PROPERTIES, INC., a corporation organized under the
         laws of the Commonwealth of Pennsylvania ("HCRI-PA/BCC" and a
         "Landlord"), having its principal office located at One SeaGate, Suite
         1500, P. O. Box 1475, Toledo, Ohio 43603-1475;

[iii]    HCN BCC HOLDINGS, INC., a corporation organized under the laws of the
         State of Delaware ("HCRI-HCN/BCC" and a "Landlord"), having its
         principal office located at One SeaGate, Suite 1500, P. O. Box 1475,
         Toledo, Ohio 43603-1475;

[iv]     HCRI INDIANA PROPERTIES, LLC, a limited liability company organized
         under the laws of the State of Indiana ("HCRI-IN" and a "Landlord"),
         having its principal office located at One SeaGate, Suite 1500, P. O.
         Box 1475, Toledo, Ohio 43603-1475;

[v]      FINANCIAL CARE INVESTORS OF LEBANON, LLC, a limited liability company
         organized under the laws of the State of Delaware ("FCI-Lebanon" and a
         "Tenant"), having its principal office located at 1215 Manor Drive,
         Mechanicsburg, Pennsylvania 17055;

[vi]     FINANCIAL CARE INVESTORS OF LOYALSOCK, LLC, a limited liability company
         organized under the laws of the State of Delaware ("FCI-Loyalsock" and
         a "Tenant"), having its principal office located at 1215 Manor Drive,
         Mechanicsburg, Pennsylvania 17055;

[vii]    FINANCIAL CARE INVESTORS OF MORRISTOWN, LLC, a limited liability
         company organized under the laws of the State of Delaware
         ("FCI-Morristown" and a "Tenant"), having its principal office located
         at 1215 Manor Drive, Mechanicsburg, Pennsylvania 17055;
<PAGE>
[viii]   FINANCIAL CARE INVESTORS OF OAK RIDGE, LLC, a limited liability company
         organized under the laws of the State of Delaware ("FCI-Oak Ridge" and
         a "Tenant"), having its principal office located at 1215 Manor Drive,
         Mechanicsburg, Pennsylvania 17055;

[ix]     FINANCIAL CARE INVESTORS OF SAGAMORE HILLS, LLC, a limited liability
         company organized under the laws of the State of Delaware
         ("FCI-Sagamore Hills" and a "Tenant"), having its principal office
         located at 1215 Manor Drive, Mechanicsburg, Pennsylvania 17055;

[x]      FINANCIAL CARE INVESTORS OF WESTERVILLE, LLC, a limited liability
         company organized under the laws of the State of Delaware
         ("FCI-Westerville" and a "Tenant"), having its principal office located
         at 1215 Manor Drive, Mechanicsburg, Pennsylvania 17055;

[xi]     BALANCED CARE AT SAXONBURG, INC., a corporation organized under the
         laws of the State of Delaware ("Saxonburg" and a "Tenant"), having its
         principal office located at 1215 Manor Drive, Mechanicsburg,
         Pennsylvania 17055;

[xii]    BALANCED CARE AT BLOOMSBURG II, INC., a corporation organized under the
         laws of the State of Delaware ("Bloomsburg" and a "Tenant"), having its
         principal office located at 1215 Manor Drive, Mechanicsburg,
         Pennsylvania 17055;

[xiii]   BALANCED CARE AT MERRILLVILLE, INC., a corporation organized under the
         laws of the State of Delaware ("Merrillville" and a "Tenant"), having
         its principal office located at 1215 Manor Drive, Mechanicsburg,
         Pennsylvania 17055;

[xiv]    BALANCED CARE AT LEBANON, INC., a corporation organized under the laws
         of the State of Delaware ("BCC-Lebanon" and a "Manager"), having its
         principal office located at 1215 Manor Drive, Mechanicsburg,
         Pennsylvania 17055;

[xv]     BALANCED CARE AT LOYALSOCK, INC., a corporation organized under the
         laws of the State of Delaware ("BCC-Loyalsock" and a "Manager"), having
         its principal office located at 1215 Manor Drive, Mechanicsburg,
         Pennsylvania 17055;

[xvi]    BALANCED CARE AT MORRISTOWN, INC., a corporation organized under the
         laws of the State of Delaware ("BCC-Morristown"

                                      -2-
<PAGE>
         and a "Manager"), having its principal office located at 1215 Manor
         Drive, Mechanicsburg, Pennsylvania 17055;

[xvii]   BALANCED CARE AT OAK RIDGE, INC., a corporation organized under the
         laws of the State of Delaware ("BCC-Oak Ridge" and a "Manager"), having
         its principal office located at 1215 Manor Drive, Mechanicsburg,
         Pennsylvania 17055;

[xviii]  BALANCED CARE AT SAGAMORE HILLS, INC., a corporation organized under
         the laws of the State of Delaware ("BCC-Sagamore Hills" and a
         "Manager"), having its principal office located at 1215 Manor Drive,
         Mechanicsburg, Pennsylvania 17055;

[xix]    BALANCED CARE AT WESTERVILLE, INC., a corporation organized under the
         laws of the State of Delaware ("BCC-Westerville" and a "Manager"),
         having its principal office located at 1215 Manor Drive, Mechanicsburg,
         Pennsylvania 17055;

[xx]     BCC DEVELOPMENT AND MANAGEMENT CO., a corporation organized under the
         laws of the State of Delaware ("BCC Development" and a "Manager"),
         having its principal office located at 1215 Manor Drive, Mechanicsburg,
         Pennsylvania 17055;

[xxi]    BALANCED CARE CORPORATION, a corporation organized under the laws of
         the State of Delaware ("Company"), having its principal office located
         at 1215 Manor Drive, Mechanicsburg, Pennsylvania 17055; and

[xxii]   IPC ADVISORS S.A.R.L., a corporation organized under the laws of
         Luxembourg ("IPC"), having its principal office located at 28 rue Jean
         Baptise Frescz, L-1542, Luxembourg.

             Hereinafter, HCRI and Landlords may be collectively called "HCN",
and Company, Tenants, Managers, and IPC may be collectively called the "BCC
Group".

                                 R E C I T A L S

                  A. Each Tenant was or is the tenant of certain leased property
located in Lebanon, Montoursville, Saxonburg, and Bloomsburg, Pennsylvania;
Sagamore Hills and Westerville, Ohio; Oak Ridge and Morristown, Tennessee; and
Merrillville, Indiana (collectively called "Property") under separate Lease
Agreements described on Exhibit A attached hereto and incorporated herein
("Leases"). All documents evidencing obligations between HCN, Tenants, Managers
or Company in connection with the Leases may be called collectively "Lease
Documents". HCRI-PA/BCC terminated the

                                      -3-
<PAGE>
Lebanon, Loyalsock, Saxonburg and Bloomsburg Leases as of February 26, 2001, and
HCRI-HCN/BCC terminated the Morristown, Oak Ridge, Sagamore Hills, and
Westerville Leases as of February 26, 2001. HCRI conveyed the Merrillville
Leased Property and assigned the Merrillville Lease to HCRI-IN as of June 16,
2001.

                  B. HCRI-PA/BCC and HCRI-HCN/BCC also extended to FCI-Lebanon,
FCI-Loyalsock, FCI-Morristown, FCI-Oak Ridge, FCI-Sagamore Hills, and
FCI-Westerville ("FCI Borrowers") loans in the amounts specified on Exhibit A
("FCI Loans") subject to the terms of the Loan Agreements described on Exhibit A
("FCI Loan Agreements"). The FCI Loans are each evidenced by Notes described on
Exhibit A ("FCI Notes"). The FCI Loans are secured by leasehold mortgages ("FCI
Leasehold Mortgages") against the Lebanon, Loyalsock, Morristown, Oak Ridge,
Sagamore Hills, and Westerville Leases ("FCI Leases") and security interests in
substantially all the personal property of the FCI Borrowers. All documents
executed by the FCI Borrowers as evidence of or security for the FCI Loans may
be called collectively the "FCI Loan Documents".

                  C. HCRI extended to Merrillville a loan in the amount
specified on Exhibit A ("Merrillville Loan") subject to the terms of the Loan
Agreement described on Exhibit A ("Merrillville Loan Agreement"). The
Merrillville Loan is evidenced by the Note described on Exhibit A ("Merrillville
Note"). The Merrillville Loan is secured by a leasehold mortgage against the
Merrillville Lease and a security interest in substantially all the personal
property of Merrillville. All documents executed by Merrillville as evidence of
or security for the Merrillville Loan may be called collectively the
"Merrillville Loan Documents".

                  D. HCRI extended to Company a loan in the amount specified on
Exhibit A ("Company Loan"). The Company Loan is evidenced by the Note described
on Exhibit A ("Company Note"). The Company Loan is secured by the FCI Leasehold
Mortgages. All documents executed by Company as evidence of or security for the
Company Loan may be called collectively the "Company Loan Documents".

                  E. Company guaranteed [i] Tenants' obligations under the
Leases pursuant to the Unconditional and Continuing Lease Guaranties described
on Exhibit A; [ii] the repayment of the FCI Loans pursuant to Unconditional
Continuing Guaranties described on Exhibit A; and [iii] the repayment of the
Merrillville Loan pursuant to the Unconditional Continuing Guaranty described on
Exhibit A (collectively called "Guaranties").

                                      -4-
<PAGE>
                  F. Tenants currently operate the facilities identified on
Exhibit A ("Facilities") and located on the Property. The Facilities are managed
by Managers under separate management agreements between Managers and Tenants as
described on Exhibit A ("Management Agreements").

                  G. Tenants failed to pay rent and interest in full and failed
to satisfy financial covenants under the Lease Documents, the FCI Loan
Documents, and the Company Loan Documents (collectively called "Defaults"). As a
result, HCRI-PA/BCC and HCRI-HCN/BCC terminated the FCI Leases, the Saxonburg
Lease, and the Bloomsburg Lease. In addition, HCRI-PA/BCC and HCRI-HCN/BCC
accelerated payment of the FCI Loans, and HCRI accelerated payment of the
Company Loan.

                  H. HCRI and Company attempted to resolve the Defaults by
entering into a Master Lease Offer dated March 12, 2001, as supplemented by
letters dated April 25, 2001 and June 13, 2001 (collectively called "Initial
Master Lease Offer"). In connection with the Initial Master Lease Offer, Company
executed and delivered to HCRI a note in the original principal amount of
$216,867.00 to fund, in part, the acquisition of personal property for the
Westerville Facility ("Westerville Note"). The Initial Master Lease Offer and
the Westerville Note may be collectively called the "Initial Settlement
Documents". Company was unable to perform its obligations under the Initial
Settlement Documents.

                  I. As a result of the failure of Company to perform its
obligations under the Initial Settlement Documents, HCRI, HCRI-PA/BCC, and
HCRI-HCN/BCC commenced actions against Tenants (excluding Merrillville) and
Company seeking, among other remedies, judgments for possession of the Property
(excluding the Merrillville Property) and collection of amounts due under the
FCI Loans, the Company Loan, and the Initial Settlement Documents (collectively
called "HCN Litigation").

                  J. Company and HCRI have now agreed to resolve the Defaults
and the HCN Litigation pursuant to the terms of a second Master Lease Offer
dated December 21, 2001 ("Second Master Lease Offer"). The Second Master Lease
Offer provides for [i] payment of funds to HCRI; [ii] assignment of the FCI
Loans, the Company Loan, and the Merrillville Loan from HCN to IPC; [iii]
termination of the Merrillville Lease and transfer of operations of the
Merrillville, Westerville, Oak Ridge, and Morristown Facilities ("Transfer
Facilities") to new operators designated by HCRI; [iv] execution of a Master
Lease between HCRI-PA/BCC and HCRI-HCN/BCC and Balanced Care Tenant (HCN), Inc.
for the Lebanon, Montoursville, Bloomsburg, Saxonburg, and Sagamore Hills

                                      -5-
<PAGE>
Properties ("Master Lease Properties"); and [v] a mutual release of liability in
connection with the Defaults under Lease Documents. Company and HCRI shall
perform their obligations under the Second Master Lease Offer subject to the
terms of this Agreement.

                  NOW THEREFORE, in consideration of the foregoing premises and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree to the following.

                  1. Recitals. The Recitals set forth above are true and correct
and incorporated into this Agreement. Nothing contained in the Recitals or
elsewhere in this Agreement shall be deemed an admission of any liability by any
party hereto.

                  2. Consideration. The parties hereto each acknowledge that it
is receiving fair and reasonably equivalent value in exchange for any
consideration it is providing to the other party under this Agreement. The
parties intend that any transfers of value to be made by one party to the other
under or in connection with this Agreement shall constitute a contemporaneous
exchange for new value being provided under the terms of this Agreement by such
party to the other.

                  3. Sub-Debt Purchase. Under the Second Master Lease Offer, IPC
purchased the FCI Loans, the Merrillville Loan, and the Company Loan
(collectively called "Sub-Debt Loans") for a purchase price of $5,000,000.00
("Sub-Debt Purchase Price"). IPC delivered the Sub-Debt Purchase Price to HCRI
on December 21, 2001. HCN assigned the FCI Notes, FCI Loan Agreement,
Merrillville Loan, Merrillville Loan Agreement, and Company Note (collectively
called "Loan Documents") to IPC pursuant to an Assignment of Notes and Loan
Documents dated December 26, 2001.

                  4. Settlement Payment. As a material part of the consideration
for the agreements, accommodations and commitments being made by HCN pursuant to
this Agreement, [i] Company made a payment by wire transfer to HCRI in the
amount of $250,000.00 on January 8, 2002; and [ii] commencing on February 10,
2002 and continuing thereafter on the 10th calendar day of each month thereafter
up through and including January 10, 2003, Company shall pay $20,833.33 to HCRI
by wire transfer.

                  5. Settlement Note. Under the Second Master Lease Offer,
Company executed and delivered a promissory note in favor of HCRI in the
original principal amount of $1,500,000.00 ("Settlement Note"). The Settlement
Note will be secured by a

                                      -6-
<PAGE>
leasehold mortgage against Balanced Care Tenant (HCN), Inc.'s leasehold interest
in the Master Lease Properties. The Settlement Note was executed and delivered
by Company to HCRI on December 21, 2001. The Settlement Note and the Settlement
Payments from Company to HCN are in consideration for, among other things, the
releases contemplated herein, the dismissal of the HCN Litigation, and the
transfer of operations of the Transfer Facilities to the New Operators (defined
below).

                  6. Sub-Debt Waivers. On December 21, 2001, HCN agreed pursuant
to the Second Master Lease Offer that [i] all defaults under the Loan Documents
or other writings evidencing obligations between HCN, Tenants, Managers, and
Company with respect to the Sub-Debt Loans (collectively called "Sub-Debt
Documents") shall be deemed cured, including without limitation any defaults
under the Lease Documents resulting from any defaults under the Sub-Debt
Documents (collectively called "Indebtedness Cross Defaults"); [ii] all rights
and remedies with respect to the Defaults under the Sub-Debt Loans or arising
under the Sub-Debt Documents shall be irrevocably waived, including without
limitation, the Indebtedness Cross Defaults; [iii] all contingencies, payments,
liabilities or obligations in connection with the Defaults under the Sub-Debt
Loans or arising under the Sub-Debt Documents shall be deemed satisfied in full,
including without limitation, the Indebtedness Cross Defaults; [iv] the HCN
Litigation filed in connection with the Defaults under the Sub-Debt Loans or
arising under the Sub-Debt Documents, including without limitation, the
Indebtedness Cross Defaults, shall be dismissed without prejudice pursuant to a
notice of dismissal acceptable to the parties hereto to be filed on the day
following the day on which this Agreement and all documents related to this
Agreement are executed and delivered to HCN ("Closing"), except HCN agrees that
it will never again pursue any claims under the Sub-Debt Loans or the Sub-Debt
Documents unless the purchase and sale of the Sub-Debt Loans are subsequently
rendered void; and [v] all contingencies, payments, liabilities or obligations
under the Sub-Debt Loans and the Sub-Debt Documents, including without
limitation, all principal and accrued but unpaid interest, shall be deemed
satisfied in full as between the BCC Group and HCN (but not IPC). The foregoing
restriction on pursuing claims shall not be binding upon IPC as the assignee of
the Sub-Debt.

                  7. Release Agreement. In consideration of this Agreement, the
purchase of the Sub-Debt Loans, the Settlement Payment, and the Settlement Note,
the BCC Group and HCN shall execute and deliver to each other a Release
Agreement in the form of Exhibit B attached hereto ("Release").

                                      -7-
<PAGE>
                  8. Transfer of Operations of Transfer Facilities.

                           (a) Effective as of January 9, 2002 (the "RMI
Transfer Date"), the operation of the Westerville Facility and the Merrillville
Facility (collectively called "OH/IN Facilities") were transferred to Retirement
Management, Inc. pursuant to the following documents: Operations Transfer
Agreement, Interim Management Agreement, Assignment and Assumption Agreement,
and Bill of Sale (collectively called "RMI Transfer Documents").

                           (b) On or before January 31, 2002, but subject to
such extensions as are mandated by State licensing requirements, the operation
of the Oak Ridge Facility and the Morristown Facility (collectively called the
"TN Facilities") will be transferred to Home Quality Management, Inc. effective
as of the transfer date for the TN Facilities (the "HQM Transfer Date"). In
connection with the transfer of operations of the TN Facilities, Company and the
Tenants and Managers of the TN Facilities shall enter into transfer documents
with HQM in form and substance substantially similar to the RMI Transfer
Documents, subject to the good faith negotiations of the parties and State
licensing requirements. Retirement Management, Inc. and Home Quality Management,
Inc. may be collectively called the "New Operators".

                  9. Mechanic's Liens. The BCC Group shall obtain the release of
any mechanic's liens or litigation related to the construction of a Transfer
Facility that was filed of record prior to the Transfer Date for such Transfer
Facility.

                  10. Master Lease. On or before January 31, 2002, HCRI-PA/BCC,
HCRI-HCN/BCC, and Balanced Care Tenant (HCN), Inc., a wholly owned subsidiary of
Company, shall enter into a Master Lease Agreement for the Master Lease
Properties, subject to the terms and conditions contained in the Second Master
Lease Offer.

                  11. Westerville Settlement. Company shall use commercially
reasonable efforts to diligently pursue settlement with respect to St. Paul Fire
and Marine Company in connection with the Westerville Facility ("Westerville
Settlement") pursuant to that certain Settlement Agreement and Mutual Release
dated January 11, 2002 among BCC Development and Management Co., the St. Paul
Companies, and the other parties named therein. Company shall use any funds it
receives in connection with the Westerville Settlement as follows: first to pay
reasonable legal costs incurred by a member of the BCC Group in connection with
the Westerville Settlement, second to pay Company's remaining construction costs
in connection with the completion of the

                                      -8-
<PAGE>
Westerville Facility, and third, to HCRI up to a maximum of $416,867.00.

                  12. Lease Waivers. Effective upon Closing, HCN agrees that [i]
all defaults under the Lease Documents shall be deemed cured; [ii] all rights
and remedies with respect to the Defaults under the Lease Documents shall be
irrevocably waived; [iii] all contingencies, payments, liabilities or
obligations in connection with the Defaults under the Lease Documents shall be
deemed satisfied in full; and [iv] the HCN Litigation filed in connection with
the Defaults under the Lease Documents shall be dismissed with prejudice
pursuant to notices of dismissal acceptable to the parties hereto to be filed on
the day after Closing.

                  13. BCC Representations and Warranties. In order to induce HCN
to enter into this Agreement, the BCC Group represents and warrants to HCN as
follows as of the Effective Date:

                  13.1 Authorization. The execution and delivery of this
Agreement and all related agreements and documents executed by the BCC Group and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary parties.

                  13.2 No Consent. To the BCC Group's knowledge, no consent or
approval of any person or entity or Federal, state or local governmental body or
agency is required for the BCC Group to execute and deliver this Agreement or to
perform its obligations hereunder except for those consents that have already
been obtained and for the licenses to be granted to New Operators.

                  13.3 No Violation. The execution and delivery of this
Agreement by the BCC Group and the consummation of the transactions contemplated
hereby do not violate or breach any organizational document of any member of the
BCC Group or any contract, agreement, order, judgment, consent decree or law by
which the BCC Group or any of its assets are bound.

                  13.4 Legal Proceedings. Except for the HCN Litigation and
except as provided on Exhibit C, there is no action, injunction, suit, or other
legal proceeding presently pending or, to the knowledge of the BCC Group,
threatened against any member of the BCC Group in excess of $25,000.00 which is
not covered by insurance that would materially adversely affect the validity or
enforceability of this Agreement against any member of the BCC Group or the
business, financial condition or assets of any member of the BCC Group.

                                      -9-
<PAGE>
                  13.5 Bankruptcy. No voluntary or involuntary proceeding under
11 U.S.C. or any federal or state law relating to bankruptcy, insolvency or the
relief of debtors has been filed by or against any member of the BCC Group and
no proceeding has been commenced in which the appointment of a receiver, trustee
or custodian with respect to any of the Facilities has been requested.

                  13.6 No Transfer of Claims. The BCC Group has not assigned,
transferred, or conveyed, in whole or part, any of the claims, demands, debts,
actions, causes of action, suits, contracts, agreements, obligations, accounts,
defenses or offsets that are being released in the Release Agreement.

                  14. HCN Representations and Warranties. In order to induce the
BCC Group to enter into this agreement, HCN represents and warrants to the BCC
Group as follows as of the Effective Date:

                  14.1 Authorization. The execution and delivery of this
Agreement and all related agreements and documents executed by HCN and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary parties.

                  14.2 No Assignment of Claims. Except for the assignment of the
Sub-Debt Loans and Sub-Debt Documents, HCN has not assigned, transferred, or
conveyed, in whole or in part, any of the claims, demands, debts, actions,
causes of action, suits, contracts, agreements, obligations, accounts, defenses
or offsets that are being released in the Release Agreement.

                  15. Further Assurances. Each of the parties hereto agrees to
execute and deliver any and all further agreements, documents, assignments,
bills of sale and instruments necessary to effectuate this Agreement and the
transactions referred to herein or contemplated hereby or reasonably requested
by the other party to perfect or evidence their rights hereunder. Tenants shall
deliver to HCN (or to an escrow agent specified by HCN) an original executed
termination of any Memorandum or Notice of Lease for each Lease in recordable
form and in form acceptable to HCN. At Closing (for the Master Lease Facilities)
and on the applicable dates that the New Operators occupy the Transfer
Facilities (or such other date that may be required for regulatory purposes for
the Transfer Facilities) Tenant and Managers shall deliver to HCN evidence of
the termination of the Management Agreements.

                  16. Confidentiality; Public Disclosure. The parties agree to
maintain the terms of this Agreement and all negotiations relating to the
subject matter of this Agreement as confidential

                                      -10-
<PAGE>
among the BCC Group and HCN, except [i] for disclosure to their respective
professional advisors and consultants who agree to be bound by the provisions
hereof; [ii] disclosures required under the Securities Exchange Act of 1934 and
the Securities Act of 1933 and the regulations promulgated thereunder, including
without limitation, the filings of exhibits (collectively called "SEC
Disclosures"); and [iii] if, on the advice of counsel, the disclosing party is
required to do so for compliance with law, but the disclosing party shall
provide the nondisclosing party with prompt prior notice so the nondisclosing
party may seek a protective order or other appropriate remedy. The disclosing
party agrees to disclose only such portion of the information that is legally
required to be disclosed and take all reasonable steps to preserve the
confidentiality of the remaining information. Except for any SEC Disclosures or
as otherwise required by law, no member of the BCC Group or HCN will issue or
cause to be issued any announcement, press release or other statement concerning
this Agreement or the subject matter of this Agreement to the persons employed
at the Facilities, residents of the Facilities, the press or the general public
without the prior written approval [i] of HCN for any such communication by any
member of the BCC Group, and [ii] of Company for any such communication by HCN.
Except for SEC Disclosures, Company and HCN shall agree on disclosures for
public dissemination. All approvals shall not be unreasonably withheld,
conditioned or delayed.

                  17. BCC Group Event of Default. The failure of the BCC Group
to perform any covenant or to conform to any warranty or representation under
this Agreement will constitute an Event of Default (without any notice, grace or
cure period) under this Agreement ("BCC Group Event of Default").

                  18. HCN Rights and Remedies. Upon the occurrence of any BCC
Group Event of Default and at any time thereafter until HCN waives the default
in writing or the default is cured, at HCN's option, without declaration, notice
of dishonor, protest, noting for protest, or any other notice, or demand of any
kind (all of which the BCC Group hereby waive), HCN may proceed against the BCC
Group, jointly and severally, at law or in equity, to collect all damages
(including consequential damages), losses, liabilities and expenses (including,
without limitation, reasonable attorneys' and other professionals' fees and
court costs) incurred in connection with or arising from an BCC Group Event of
Default and, in addition, may obtain the remedy of specific performance. This
Section 18 shall not limit the provisions of the Release and to the extent that
there is a conflict between any

                                      -11-
<PAGE>
provision in this Agreement and the Release, the Release shall control.

                  19. HCN Event of Default. The failure of HCN to perform any
covenant or to conform to any warranty or representation under this Agreement
will constitute an Event of Default (without any notice, grace or cure period)
under this Agreement ("HCN Event of Default").

                  20. BCC Group Rights and Remedies. Upon the occurrence of any
HCN Event of Default and at any time thereafter until the BCC Group waives the
default in writing or the default is cured, at the BCC Group's option, without
declaration, notice of dishonor, protest, noting for protest, or any other
notice, or demand of any kind (all of which HCN hereby waives), the BCC Group
may proceed against HCN, jointly and severally, at law or in equity, to collect
all damages (including consequential damages), losses, liabilities and expenses
(including, without limitation, reasonable attorneys' and other professionals'
fees and court costs) incurred in connection with or arising from an HCN Event
of Default and, in addition, may obtain the remedy of specific performance. This
Section 20 shall not limit the provisions of the Release and to the extent that
there is a conflict between any provision in this Agreement and the Release, the
Release shall control.

                  21. Voluntary Agreement. The BCC Group represents and warrants
that [i] each is represented by legal counsel (or has knowingly declined legal
counsel) in regard to the transaction provided for by this Agreement and that
such counsel has explained to each of them the significance of the terms, and
the meaning and effect of this Agreement and all other related documents; [ii]
each is fully aware and clearly understands all of the terms and provisions
contained in this Agreement and in all other related documents; [iii] each has
voluntarily, with full knowledge and without coercion or duress of any kind
entered into this Agreement and the documents executed in connection with this
Agreement; [iv] each is not relying on any representations either written or
oral, express or implied, made to any of them by HCN other than as set forth in
this Agreement; [v] this Agreement reflects a proposal that the BCC Group made
to HCN on their own initiative; and [vi] the consideration received by the BCC
Group to enter into this Agreement and the arrangement contemplated by this
Agreement has been actual and sufficient.

                                      -12-
<PAGE>
                  22. Miscellaneous.

                  22.1 Transaction Costs. Each party shall be responsible for
its own costs and expenses in connection with this Agreement and the
transactions contemplated hereby, including, without limitation, HCN legal fees
provided, however, the BCC Group shall pay all recording and title costs and any
HCN legal fees in excess of $10,000.00 but subject to a maximum liability of
$15,000.00.

                  22.2 Governing Law. The laws of the State of Ohio shall govern
the construction of this Agreement and the rights and duties of the parties
hereunder. If any provision of this Agreement or the application thereof to
anyone or any circumstances shall be adjudged invalid or unenforceable to any
extent, the application of the remainder of the provisions of this Agreement
shall not be affected thereby. Each provision of this Agreement shall be valid
and enforceable to the fullest extent permitted by law.

                  22.3 Time is of the Essence. Time is of the essence in the
performance of this Agreement.

                  22.4 Entire Agreement; Amendment; Waiver. This Agreement, the
Second Master Lease Offer, the Master Lease and any other documents contemplated
hereunder constitute the entire understanding between the parties with respect
to the subject matter hereof, superseding all negotiations, prior discussions
and preliminary agreements. In the event of a conflict between any provision of
the Second Master Lease Offer and any provision of this Agreement, this
Agreement shall control. This Agreement may not be modified or amended except in
writing signed by the parties hereto. No waiver of any term, provision or
condition of this Agreement in any one or more instances, shall be construed as
a further or continuing waiver of any such term, provision or condition of this
Agreement. No failure to act shall be construed as a waiver of any term,
provision, condition or rights granted hereunder.

                  22.5 Joint Venture; Third Party Beneficiaries. Nothing
contained herein shall be construed as forming a joint venture or partnership
between the parties hereto with respect to the subject matter hereof. The
parties hereto do not intend that any third party, other than the New Operators,
shall have any rights under this Agreement.

                  22.6 Captions. The section headings contained herein are for
convenience only and shall not be considered or referred to in resolving
questions of interpretation.

                                      -13-
<PAGE>
                  22.7 Counterparts. This Agreement may be executed and
delivered via facsimile and in one or more counterparts and all such
counterparts taken together shall constitute a single original Agreement.

                  23. Notices. All notices hereunder shall be in writing, and
delivered personally, or by nationally recognized overnight courier service, or
by United States mail, postage prepaid, to the addresses set forth below or to
such other address as may hereafter be provided in writing to the other party:

                  HCN:         Health Care REIT, Inc.
                               One Sea Gate, Suite 1500
                               P. O. Box 1475
                               Toledo, Ohio  43603-1475
                               Attention: Erin C. Ibele, Vice President and
                                          Corporate Secretary

                  BCC Group:   Balanced Care Corporation
                               1215 Manor Drive
                               Mechanicsburg, Pennsylvania  17055
                               Attention:   Richard D. Richardson, Interim CEO

                               with a copy to:
                               Balanced Care Corporation
                               1215 Manor Drive
                               Mechanicsburg, Pennsylvania  17055
                               Attention: Robin L. Barber, Esq.
                                          Senior Vice President and Legal
                                          Counsel

All notices shall be deemed to be given upon the earlier of actual receipt or
three days after deposit in the United States mail or one day after deposit with
a nationally recognized overnight courier.

                  24. CONSENT TO JURISDICTION. EACH MEMBER OF THE BCC GROUP
HEREBY IRREVOCABLY SUBMITS AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION AND
VENUE OF ANY STATE OR FEDERAL COURT HAVING JURISDICTION OVER LUCAS COUNTY, OHIO
FOR ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY MATTER ARISING FROM OR
RELATED TO [I] THIS AGREEMENT; [II] THE RELEASE; [III] ANY OTHER DOCUMENTS
CONTEMPLATED HEREUNDER; OR [IV] ANY OTHER AGREEMENT, DOCUMENT OR INSTRUMENT
RELATING TO OR SECURING ANY OF THE FOREGOING. EACH MEMBER OF THE BCC GROUP
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR
PROCEEDING. EACH MEMBER OF THE BCC GROUP AGREES THAT A FINAL JUDGMENT IN ANY
SUCH

                                      -14-
<PAGE>
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER
JURISDICTION BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.

                  25. WAIVER OF JURY TRIAL. HCN AND EACH MEMBER OF THE BCC GROUP
WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY OF
THEM AGAINST THE OTHER ON ALL MATTERS ARISING OUT OF THIS AGREEMENT, THE RELEASE
OR ANY OTHER DOCUMENTS RELATING TO OR SECURING ANY OF THE FOREGOING.

              [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                      -15-
<PAGE>
                  IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the Effective Date.

HCN:                            HEALTH CARE REIT, INC.

                                By:/s/Erin C. Ibele

                                         Title: Vice President
                                         and Corporate Secretary
LANDLORDS:                      PENNSYLVANIA BCC PROPERTIES, INC.

                                By:/s/Erin C. Ibele

                                         Title: Vice President
                                         and Corporate Secretary
                                HCN BCC HOLDINGS, INC.

                                By:/s/Erin C. Ibele

                                         Title: Vice President
                                         and Corporate Secretary
                                HCRI INDIANA PROPERTIES, LLC

                                By:/s/Erin C. Ibele

                                         Title: Vice President
                                         and Corporate Secretary
TENANTS:                        FINANCIAL CARE INVESTORS OF LEBANON, LLC

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

                                FINANCIAL CARE INVESTORS OF LOYALSOCK, LLC

                                By:/s/Robin L. Barber
                                         Robin L. Barber
                                         Vice President and
                                         Secretary
<PAGE>
                                FINANCIAL CARE INVESTORS OF MORRISTOWN, LLC

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

                                FINANCIAL CARE INVESTORS OF OAK RIDGE, LLC

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

                                FINANCIAL CARE INVESTORS OF SAGAMORE HILLS, LLC

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

                                FINANCIAL CARE INVESTORS OF WESTERVILLE, LLC

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

                                BALANCED CARE AT SAXONBURG, INC.

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

                                BALANCED CARE AT BLOOMSBURG II, INC.

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

                                      -2-
<PAGE>
                                BALANCED CARE AT MERRILLVILLE, INC.

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

MANAGERS:                       BALANCED CARE AT LEBANON, INC.

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

                                BALANCED CARE AT LOYALSOCK, INC.

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

                                BALANCED CARE AT MORRISTOWN, INC.

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

                                BALANCED CARE AT OAK RIDGE, INC.

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

                                BALANCED CARE AT SAGAMORE HILLS, INC.

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

                                      -3-
<PAGE>
                                BALANCED CARE AT WESTERVILLE, INC.

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

                                BCC DEVELOPMENT AND MANAGEMENT CO.

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

COMPANY:                        BALANCED CARE CORPORATION

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

IPC:                            IPC ADVISORS S.A.R.L.

                                By:/s/J.B. Unsworth
                                Title: Manager

                                      -4-
<PAGE>
                                                                       EXHIBIT A

Leases

<TABLE>
<CAPTION>
                Tenants                                            Facility Types                    Facilities
               Landlords                   Agreements (Date)       (Units, Beds)                     Locations
<S>                                       <C>                  <C>                     <C>
Financial Care Investors of Lebanon, LLC  Lease Agreement      Personal care facility  Outlook Pointe at Lebanon
                                          (9/22/98);           (56 units, 60 beds)     860 Norman Drive
Pennsylvania BCC Properties, Inc.         First Amendment                              Lebanon, Pennsylvania  17042
                                          (9/30/99)                                    County:  Lebanon
                                                                                       ("Lebanon Facility")

Financial Care Investors of Loyalsock,    Lease Agreement      Personal care facility  Outlook Pointe at Loyalsock
LLC                                       (9/22/98);           (56 units, 60 beds)     2985 Four Mile Drive
                                          First Amendment                              Montoursville, Pennsylvania  17754
Pennsylvania BCC Properties, Inc.         (9/30/99)                                    County:  Lycoming
                                                                                       ("Loyalsock Facility")

Financial Care Investors of Morristown,   Lease Agreement      Assisted care living    Outlook Pointe at Morristown
LLC                                       (9/22/98);           facility                2131 Walters Drive
                                          First Amendment      (60 units, 66 beds)     Morristown, Tennessee  27814
HCN BCC Holdings, Inc.                    (9/30/99)                                    County:  Hamblen
                                                                                       ("Morristown  Facility")

Financial Care Investors of Oak Ridge,    Lease Agreement      Assisted care living    Outlook Pointe at Oak Ridge
LLC                                       (9/22/98);           facility                734 Emory Valley Road
                                          First Amendment      (58 units, 62 beds)     Oak Ridge, Tennessee  37830
HCN BCC Holdings, Inc.                    (9/30/99)                                    County:  Anderson
                                                                                       ("Oak Ridge Facility")
</TABLE>

                                      -5-
<PAGE>
Leases

<TABLE>
<CAPTION>
                Tenants                                            Facility Types                    Facilities
               Landlords                   Agreements (Date)       (Units, Beds)                     Locations
<S>                                       <C>                  <C>                     <C>
Financial Care Investors of Sagamore      Lease Agreement      Residential care        Outlook Pointe at Sagamore Hills
Hills, LLC                                (9/22/98);           facility                997 West Aurora Road
                                          First Amendment      (103 units, 214 beds)   Sagamore Hills, Ohio  44067
HCN BCC Holdings, Inc.                    (9/30/99)                                    County:  Summit
                                                                                       ("Sagamore Hills Facility")

Financial Care Investors of               Lease Agreement      Residential care        Outlook Pointe at Westerville
Westerville, LLC                          (9/22/98);           facility                690 Cooper Road
                                          First Amendment      (106 units, 106 beds)   Westerville, Ohio  43081
HCN BCC Holdings, Inc.                    (9/30/99)                                    County:  Franklin
                                                                                       ("Westerville Facility")
</TABLE>

                                      -6-
<PAGE>
Leases

<TABLE>
<CAPTION>
               Tenants                                          Facility Types                  Facilities
              Landlords                  Agreements (Date)      (Units, Beds)                   Locations
<S>                                    <C>                    <C>                      <C>
Balanced Care at Bloomsburg II, Inc.   Lease Agreement        Skilled nursing          Balanced Care, Bloomsburg
                                       (3/15/99);             facility                 3298 Ridge Road
Pennsylvania BCC Properties, Inc.      First Amendment        (36 units, 66 beds)      Bloomsburg, Pennsylvania  17815
                                       (9/30/99)                                       County:  Columbia
                                                                                       ("Bloomsburg Facility")

Balanced Care at Saxonburg, Inc.       Lease Agreement        Assisted living          Outlook Pointe at Saxonburg
                                       (3/15/99);             (personal care           100 Bella Court
Pennsylvania BCC Properties, Inc.      First Amendment        boarding home)           Saxonburg, Pennsylvania  16056
                                       (9/30/99)              (77 units, 103 beds)     County:  Butler
                                                                                       ("Saxonburg Facility")

Balanced Care at Merrillville, Inc.    Master Lease           Residential care         Outlook Pointe at Merrillville
                                       Agreement              facility                 101 West 87th Avenue
HCRI Indiana Properties, LLC           (10/1/00);             (63 units, 86 beds)      Merrillville, Indiana  46410
                                       Amendment to Master                             County:  Lake
                                       Lease Agreement                                 ("Merrillville Facility")
                                       (10/1/00)
</TABLE>

                                      -7-
<PAGE>
Loans

<TABLE>
<CAPTION>
                   Borrowers                           Agreements                  Notes
                    Lenders                              (Date)                   (Date)              Amount
<S>                                              <C>                      <C>                      <C>
Financial Care Investors of Lebanon, LLC         Loan Agreement           Amended and Restated     $686,800.00
                                                 (9/22/98);               Note (10/31/00)
Pennsylvania BCC Properties, Inc.                First Amendment
                                                 (9/30/99);
                                                 Second Amended and
                                                 Restated Loan Agreement
                                                 (10/31/00)

Financial Care Investors of Loyalsock, LLC       Loan Agreement;          Amended and Restated     $674,050.00
                                                 First Amendment          Note (10/31/00)
Pennsylvania BCC Properties, Inc.                (9/30/99);
                                                 Second Amended and
                                                 Restated Loan Agreement
                                                 (10/31/00)

Financial Care Investors of Morristown, LLC      Loan Agreement;          Amended and Restated     $692,000.00
                                                 First Amendment          Note (10/31/00)
HCN BCC Holdings, Inc.                           (9/30/99);
                                                 Second Amended and
                                                 Restated Loan Agreement
                                                 (10/31/00)
</TABLE>

                                      -8-
<PAGE>
Loans

<TABLE>
<CAPTION>
                   Borrowers                           Agreements                  Notes
                    Lenders                              (Date)                   (Date)              Amount
<S>                                              <C>                      <C>                      <C>
Financial Care Investors of Oak Ridge, LLC       Loan Agreement;          Amended and Restated     $697,948.00
                                                 First Amendment          Note (10/31/00)
HCN BCC Holdings, Inc.                           (9/30/99);
                                                 Second Amended and
                                                 Restated Loan Agreement
                                                 (10/31/00)

Financial Care Investors of Sagamore Hills, LLC  Loan Agreement;          Amended and Restated     $1,243,550.00
                                                 First Amendment          Note (10/31/00)
HCN BCC Holdings, Inc.                           (9/30/99);
                                                 Second Amended and
                                                 Restated Loan Agreement
                                                 (10/31/00)

Financial Care Investors of Westerville, LLC     Loan Agreement;          Amended and Restated     $1,313,675.00
                                                 First Amendment          Note (10/31/00)
HCN BCC Holdings, Inc.                           (9/30/99);
                                                 Second Amended and
                                                 Restated Loan Agreement
                                                 (10/31/00)

Balanced Care at Merrillville, Inc.              Loan Agreement           Note                     $1,000,000.00
                                                 (10/1/00)                (10/1/00)
Health Care REIT, Inc.
</TABLE>

                                      -9-
<PAGE>
Loans

<TABLE>
<CAPTION>
                   Borrowers                           Agreements                  Notes
                    Lenders                              (Date)                   (Date)              Amount
<S>                                              <C>                      <C>                      <C>

Balanced Care Corporation                        N/A                      Note                     $900,000.00
                                                                          (10/31/00)
Health Care REIT, Inc.
</TABLE>

                                      -10-
<PAGE>
Guaranties

<TABLE>
<CAPTION>
                                                   Agreements
                Guarantor                            (Date)                            Guaranteed Obligations
<S>                                        <C>                          <C>
Balanced Care Corporation                  Unconditional and            Payment and performance of Bloomsburg's obligations
                                           Continuing Lease Guaranty    under the Bloomsburg Lease
                                           (3/15/99)

Balanced Care Corporation                  Unconditional and            Payment and performance of Saxonburg's obligations
                                           Continuing Lease Guaranty    under the Saxonburg Lease
                                           (3/15/99)

Balanced Care Corporation                  Unconditional and            Payment and performance of Merrillville's
                                           Continuing Guaranty          obligations under the Merrillville Lease and the
                                           (10/1/00)                    Merrillville Loan

Balanced Care Corporation                  Unconditional and            Payment and performance of FCI-Lebanon's obligations
                                           Continuing Lease Guaranty    under the Lebanon Lease
                                           (10/31/00)

Balanced Care Corporation                  Unconditional and            Payment and performance of FCI-Loyalsock's
                                           Continuing Lease Guaranty    obligations under the Loyalsock Lease
                                           (10/31/00)

Balanced Care Corporation                  Unconditional and            Payment and performance of FCI-Morristown's
                                           Continuing Lease Guaranty    obligations under the Morristown Lease
                                           (10/31/00)

Balanced Care Corporation                  Unconditional and            Payment and performance of FCI-Oak Ridge's
                                           Continuing Lease Guaranty    obligations under the Oak Ridge Lease
                                           10/31/00)

Balanced Care Corporation                  Unconditional and            Payment and performance of FCI-Sagamore Hills'
                                           Continuing Lease Guaranty    obligations under the Sagamore Hills Lease
                                           (10/31/00)
</TABLE>

                                      -11-
<PAGE>
<TABLE>
<S>                                        <C>                          <C>
Balanced Care Corporation                  Unconditional and            Payment and performance of FCI-Westerville's
                                           Continuing Lease Guaranty    obligations under the Westerville Lease
                                           (10/31/00)

Balanced Care Corporation                  Unconditional and            Payment and performance of FCI-Lebanon's obligations
                                           Continuing Guaranty          under the FCI Loan extended to FCI-Lebanon
                                           (10/31/00)

Balanced Care Corporation                  Unconditional and            Payment and performance of FCI-Loyalsock's
                                           Continuing Guaranty          obligations under the FCI Loan extended to
                                           (10/31/00)                   FCI-Loyalsock
</TABLE>

                                      -12-
<PAGE>
Guaranties

<TABLE>
<CAPTION>
                                                   Agreements
                Guarantor                            (Date)                            Guaranteed Obligations
<S>                                        <C>                          <C>
Balanced Care Corporation                  Unconditional and            Payment and performance of FCI-Morristown's
                                           Continuing Guaranty          obligations under the FCI Loan extended to
                                           (10/31/00)                   FCI-Morristown

Balanced Care Corporation                  Unconditional and            Payment and performance of FCI-Oak Ridge's
                                           Continuing Guaranty          obligations under the FCI Loan extended to FCI-Oak
                                           (10/31/00)                   Ridge

Balanced Care Corporation                  Unconditional and            Payment and performance of FCI-Sagamore Hills'
                                           Continuing Guaranty          obligations under the FCI Loan extended to
                                           (10/31/00)                   FCI-Sagamore Hills

Balanced Care Corporation                  Unconditional and            Payment and performance of FCI-Westerville's
                                           Continuing Guaranty          obligations under the FCI Loan extended to
                                           (10/31/00)                   FCI-Westerville
</TABLE>

                                      -13-
<PAGE>
Management Agreements

<TABLE>
<CAPTION>
                                                   Agreements               Facility Types                Facilities
                Managers                             (Date)                  (Units, Beds)                Locations
<S>                                        <C>                          <C>                      <C>
Balanced Care at Lebanon, Inc.             Management Agreement         Personal care facility   Outlook Pointe at Lebanon
                                           (9/30/98)                    (56 units, 60 beds)      860 Norman Drive
                                                                                                 Lebanon, Pennsylvania  17042
                                                                                                 County:  Lebanon
                                                                                                 ("Lebanon Facility")

Balanced Care at Loyalsock, Inc.           Management Agreement         Personal care facility   Outlook Pointe at Loyalsock
                                           (9/30/98)                    (56 units, 60 beds)      2985 Four Mile Drive

                                                                                                 Montoursville,
                                                                                                 Pennsylvania  17754
                                                                                                 County:  Lycoming
                                                                                                 ("Loyalsock Facility")

Balanced Care at Morristown, Inc.          Management Agreement         Assisted care living     Outlook Pointe at Morristown
                                           (9/30/98)                    facility                 2131 Walters Drive
                                                                        (60 units, 66 beds)      Morristown, Tennessee  27814
                                                                                                 County:  Hamblen
                                                                                                 ("Morristown  Facility")
</TABLE>

                                      -14-
<PAGE>
<TABLE>
<S>                                        <C>                          <C>                      <C>
Balanced Care at Oak Ridge, Inc.           Management Agreement         Assisted care living     Outlook Pointe at Oak Ridge
                                           (9/30/98)                    facility                 734 Emory Valley Road
                                                                        (58 units, 62 beds)      Oak Ridge, Tennessee  37830
                                                                                                 County:  Anderson
                                                                                                 ("Oak Ridge Facility")

Balanced Care at Sagamore Hills, Inc.      Management Agreement         Residential care         Outlook Pointe at Sagamore
                                           (9/30/98)                    facility                 Hills
                                                                        (103 units, 214 beds)    997 West Aurora Road
                                                                                                 Sagamore Hills, Ohio  44067
                                                                                                 County:  Summit
                                                                                                 ("Sagamore Hills Facility")

Balanced Care at Westerville, Inc.         Management Agreement         Residential care         Outlook Pointe at
                                           (9/30/98)                    facility                 Westerville
                                                                        (106 units, 106 beds)    690 Cooper Road
                                                                                                 Westerville, Ohio  43081
                                                                                                 County:  Franklin
                                                                                                 ("Westerville Facility")
</TABLE>

                                      -15-
<PAGE>
Management Agreements

<TABLE>
<CAPTION>
                                                   Agreements               Facility Types                Facilities
                Managers                             (Date)                  (Units, Beds)                Locations
<S>                                        <C>                          <C>                      <C>
BCC Development and Management Co.        Agreement to Provide            Skilled nursing          Balanced Care, Bloomsburg
                                          Management Services Between     facility                 3298 Ridge Road
                                          Balanced Care at Bloomsburg     (36 units, 66 beds)      Bloomsburg, Pennsylvania
                                          II, Inc. and BCC Development                             17815
                                          and Management Co.                                       County:  Columbia
                                          (1/2/98)                                                 ("Bloomsburg Facility")

BCC Development and Management Co.        Agreement to Provide            Assisted living          Outlook Pointe at Saxonburg
                                          Management Services Between     (personal care           100 Bella Court
                                          Balanced Care at Saxonburg,     boarding home)           Saxonburg, Pennsylvania
                                          Inc. and BCC Development and    (77 units, 103 beds)     16056
                                          Management Co.                                           County:  Butler
                                          (10/31/97)                                               ("Saxonburg Facility")

BCC Development and Management Co.        Agreement to Provide            Residential care         Outlook Pointe at
                                          Management Services Between     facility                 Merrillville
                                          Balanced Care at                (63 units, 86 beds)      101 West 87th Avenue
                                          Merrillville, Inc. and BCC                               Merrillville, Indiana  46410
                                          Development and Management Co.                           County:  Lake
                                          (10/24/00)                                               ("Merrillville Facility")
</TABLE>

                                      -16-

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