Document:

<PAGE>   1
Exhibit 10.1

                                 AMENDMENT NO. 3

                                       TO

                           LOAN AND SECURITY AGREEMENT

                      originally dated as of April 22, 1999

                                  by and among

                           BALANCED CARE CORPORATION,
                    BCC AT HERMITAGE PARK CARE CENTER, INC.,
                        BCC AT LEBANON CARE CENTER, INC.,
                        BCC AT LEBANON PARK MANOR, INC.,
                    BCC AT MT. VERNON PARK CARE CENTER, INC.,
                 BCC AT MT. VERNON PARK CARE CENTER WEST, INC.,
                      BCC AT NEVADA PARK CARE CENTER, INC.,
                         BCC AT NIXA PARK CENTER, INC.,
                       BCC AT REPUBLIC PARK CENTER, INC.,
                      BCC AT SPRINGFIELD CARE CENTER, INC.,
                             DIXON MANAGEMENT INC.,
                            BCC AT DARLINGTON, INC.,
                       BALANCED CARE AT EYERS GROVE, INC.,
                         BALANCED CARE AT BUTLER, INC.,
                         BALANCED CARE AT SARVER, INC.,
                       BALANCED CARE AT NORTH RIDGE, INC.

                                       and

                        HELLER HEALTHCARE FINANCE, INC.,

                                Formerly known as

                               HCFP FUNDING, INC.

                         Amended as of December 31, 1999
<PAGE>   2
                 AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT

      THIS AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT (this "Amendment") is
made as of this 31st day of December, 1999, by and among BALANCED CARE
CORPORATION, a Delaware corporation (the "Parent"), BCC AT HERMITAGE PARK CARE
CENTER, INC., a Delaware corporation, BCC AT LEBANON CARE CENTER, INC., a
Delaware corporation, BCC AT LEBANON PARK MANOR, INC., a Delaware corporation,
BCC AT MT. VERNON PARK CARE CENTER, INC., a Delaware corporation, BCC AT MT.
VERNON PARK CARE CENTER WEST, INC., a Delaware corporation, BCC AT NEVADA PARK
CARE CENTER, INC., a Delaware corporation, BCC AT NIXA PARK CENTER, INC., a
Delaware corporation, BCC AT REPUBLIC PARK CENTER, INC., a Delaware corporation,
BCC AT SPRINGFIELD CARE CENTER, INC., a Delaware corporation, DIXON MANAGEMENT
INC., a Missouri corporation, BCC AT DARLINGTON, INC., a Delaware corporation,
BALANCED CARE AT EYERS GROVE, INC., a Delaware corporation, BALANCED CARE AT
BUTLER, INC., a Delaware corporation, BALANCED CARE AT SARVER, INC., a Delaware
corporation, BALANCED CARE AT NORTH RIDGE, INC., a Delaware corporation
(collectively and individually, the "Borrower"), and HELLER HEALTHCARE FINANCE,
INC., a Delaware corporation formerly known as HCFP FUNDING, INC., a Delaware
corporation (the "Lender").

                                    RECITALS

      A. The Lender agreed to make available to the Borrower a revolving credit
facility in the maximum principal amount of $20,000,000 (the "Loan") pursuant to
that certain Loan and Security Agreement dated April 22, 1999 by and among
Borrower and Lender, as amended pursuant to (i) that certain Amendment No. 1 to
Loan and Security Agreement dated July 1, 1999 made by and between the Borrower
and the Lender (the "First Amendment"), and (ii) that certain Amendment No. 2 to
Loan and Security Agreement dated July 29, 1999 made by and between the Lender
and the Borrower (the "Second Amendment", and as further amended from time to
time, collectively the "Loan Agreement") . Unless otherwise defined herein, all
capitalized terms used herein shall have the meanings assigned to such terms in
the Loan Agreement.

      B. The Parent has entered into that certain Asset Purchase Agreement dated
October 15th, 1999 (as amended, modified and restated from time to time, the
"Asset Purchase Agreement"), pursuant to which the Parent has agreed, on its
behalf and on behalf of the Skilled Nursing Facility Borrowers and the Accounts
<PAGE>   3
Receivable Borrowers to sell all of its ownership and leasehold rights in the
facilities and businesses owned, leased and/or operated by Nevada Park, Republic
Park and the other Accounts Receivable Borrowers. For purposes of this
Agreement, the Facilities and Accounts Receivable Borrowers listed on Exhibit A
attached hereto and made a part hereof shall be hereinafter collectively
referred to as the "Missouri Facilities" and the "Missouri Borrowers",
respectively).

      C. The Borrower has asked the Lender to release the Missouri Borrowers and
Missouri Facilities from the liens and security interests granted hereunder and
under the other Loan Documents, as contemplated by Sections 2.10(f) (as
described in the Second Amendment) and 2.12 of the Loan Agreement.

      D. The Lender has agreed to release the Missouri Borrowers and the
Missouri Facilities and to make certain changes to the terms of the Loan
Agreement, provided (among other things) that Borrower executes and delivers
this Amendment and otherwise complies with the agreements set forth herein.

      NOW, THEREFORE, in consideration of the foregoing, the terms and
conditions set forth in this Amendment, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Lender and Borrower hereby agree as follows:

      Section 1. Effectiveness of this Amendment. This Amendment shall not be
effective until the date all of the following shall have occurred (such date
being hereinafter referred to as the "Effective Date"):

            (a) Lender (or an escrow agent approved by Lender) shall have
received immediately available funds in an amount equal to (i) the Skilled
Nursing Obligations described in Section 2.10(f)(iii) of the Loan Agreement (as
described in the Second Amendment); (ii) the release fee described in Section
2.10(f)(iv) of the Loan Agreement (as described in the Second Amendment); (iii)
any additional amounts which may be required to reduce the outstanding principal
balance to no more than $12,000,000; (iv) fees of Lender's counsel; and (v) all
other amounts set forth in Lender's payoff letter attached hereto as Exhibit B
and made a part hereof (such amounts being hereinafter collectively referred to
as the "Payoff Amount").

            (b) Lender (or an escrow agent approved by Lender) shall have
received this Agreement executed by all Borrowers.

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<PAGE>   4
            (c) Lender (or an escrow agent approved by Lender) shall have
received updated versions of any Schedules to the Loan Agreement which no longer
contain accurate current information.

            (d) Lender and Borrower shall have executed and delivered this
Amendment to an escrow agent approved by Lender and Borrower (the "Escrow
Agent").

            (e) Lender shall have executed and delivered to the Escrow Agent
such releases and termination statements as may be required to release and
terminate the liens and security interests granted by the Missouri Borrowers
hereunder and under the other Loan Documents.

            (f) All Borrowers other than the Missouri Borrowers, as described in
Exhibit C attached hereto and made a part hereof (hereinafter, the "Remaining
Borrowers"), shall have executed and delivered to Lender the Amended and
Restated Revolving Credit Note described below.

            (g) Lender and Meditrust Mortgage Investment, Inc. shall have
executed and delivered to the Escrow Agent a Termination of Accounts Receivable
Intercreditor Agreement originally made as of April 22, 1999, as amended on July
29, 1999 by First Amendment to Accounts Receivable Agreement.

            (h) Lender shall have confirmed that (i) no Event of Default has
occurred and is continuing, and (ii) upon such release of the Missouri Borrowers
and the Missouri Facilities, the Borrower shall be in compliance with the
Borrowing Base.

      Section 2. Amendments to the Loan Agreement. Borrower and Lender hereby
agree to amend and modify the provisions of the Loan Agreement as follows:

      (a) Definitions. Commencing on the Effective Date, the following terms
shall be amended as follows:

            (i)   The term "Borrower" shall not include any of the Missouri
                  Borrowers, and shall be construed for all purposes in the Loan
                  Agreement and all other Loan Documents to include only the
                  Remaining Borrowers.

            (ii)  The term "Collateral" shall not include any Collateral of any
                  of the Missouri Borrowers, and shall be construed for all
                  purposes in the Loan

                                       3
<PAGE>   5
                  Agreement and all other Loan Documents to include only the
                  Remaining Borrowers.

            (iii) The term "Facility" shall not include the Missouri Facilities
                  and shall be construed for all purposes in the Loan Agreement
                  and all other Loan Documents to include only the Facilities
                  owned and operated by the Remaining Borrowers.

            (iv)  The term "Mortgage" shall not include the Mortgages covering
                  either Skilled Nursing Property (ie., the Property owned by
                  Nevada Park and the Property owned by Republic Park), and
                  shall be construed for all purposes in the Loan Agreement and
                  all other Loan Documents to include only the Mortgages
                  covering the Property owned by the Remaining Borrowers.

            (v)   The term "Note" shall include the Amended and Restated
                  Revolving Credit Note of even date herewith made by the
                  Remaining Borrowers payable to Lender in the principal amount
                  of $15,000,0000.

            (vi)  The term "Property" shall not include the Property owned by
                  Nevada Park or Republic Park, and shall be construed for all
                  purposes in the Loan Agreement and all other Loan Documents to
                  include only the Property owned by the Remaining Borrowers.

            (vii) The term "Real Estate Borrower" shall not include Nevada Park,
                  Republic Park or any of the other Missouri Borrowers, and
                  shall be construed for all purposes in the Loan Agreement and
                  all other Loan Documents to include only the Remaining
                  Borrowers.

            (viii)The term "Accounts Receivable Borrower"shall not include
                  Nevada Park, Republic Park or any of the other Missouri
                  Borrowers, and shall be construed for all purposes in the Loan
                  Agreement and all other Loan Documents to include only the
                  Remaining Borrowers.

            (ix)  The term "Accounts Receivable Facility" shall not include
                  Nevada Park, Republic Park or any of the other Missouri
                  Borrowers, and shall be construed

                                       4
<PAGE>   6
                  for all purposes in the Loan Agreement and all other Loan
                  Documents to include only the Remaining Borrowers.

            (viii)The term "Skilled Nursing Borrower" shall be
                  deleted.

            (ix) The term "Skilled Nursing Property" shall be deleted.

      (b) Application of Terms within Provisions of Loan Agreement. Commencing
on the Effective Date, all terms, conditions, agreements, promises, covenants
and references set forth in the Loan Agreement and other Loan Documents
containing the terms "Borrower", "Collateral", "Facility", "Mortgage",
"Property", "Real Estate Borrower", "Accounts Receivable Borrower" and "Accounts
Receivable Facility" in the Loan Agreement shall not apply, nor refer to, nor be
construed to include or refer to Nevada Park, Republic Park or any of the other
Missouri Borrowers or the other Missouri Facilities, and such terms, conditions,
agreements, promises, covenants and references shall only apply to the Remaining
Borrowers. In addition, the terms "Skilled Nursing Facility Borrower" and
Skilled Nursing Borrower" shall be deleted and all provisions with respect
thereto shall be disregarded and no longer have effect under the Loan Agreement.

      Section 3. Release of Liens and Security Interests. Commencing on the
Effective Date, (a) Lender hereby releases, relinquishes, terminates and
discharges all of the liens and security interests granted by the Missouri
Borrowers under the Loan Agreement and the other Loan Documents, and (b) Lender
hereby releases each Missouri Borrower from its Obligations under the Loan
Documents. Borrower and Lender hereby acknowledge and agree that such releases
by Lender are not intended, nor shall such releases be construed, as (i) a
release, termination, relinquishment or discharge of any of the liens on and
security interests in any Collateral or Property of the Remaining Borrowers;
(ii) a novation, discharge, extinquishment or impairment of the Obligations of
the Remaining Borrowers that remain outstanding under the Loan Agreement; (iii)
a waiver of any requirement, covenant, agreement set forth in the Loan Documents
and applicable to the Remaining Borrowers; (iv) a waiver of any default or Event
of Default, whether now existing or hereafter arising; or (v) any remedy of
Lender under the Loan Documents or applicable law.

                                       5
<PAGE>   7
      Section 4. Sublimit to the Maximum Loan Amount. Borrower and Lender hereby
agree that Section 2.4(a) is hereby deleted in its entirety and the following
new section is inserted in its place:

      "(a) Notwithstanding anything in the Loan Agreement to the contrary, the
Maximum Loan Amount will be subject to a cap in the principal amount of Twelve
Million Dollars ($12,000,000) (the "Cap"). Any advance of Loan proceeds above
the Cap shall be subject to approval of Lender's Credit Committee exercising its
sole credit judgment, and Lender shall be under no obligation whatsoever to
advance funds above $12,000,000 in aggregate outstanding Revolving Credit Loans,
irrespective of the Borrowing Base at any time. The Cap shall be applicable to
the calculation of the Termination Fee."

      Section 5. Monthly Usage Fee. Borrower and Lender hereby agree that
Section 2.4 (b) is hereby deleted in its entirety and the following new section
is inserted in lieu thereof:

            "(b) For so long as the Loan is available to Borrower, Borrower
unconditionally shall pay to Lender a monthly usage fee (the "Usage Fee") equal
to .021% of the average amount by which the Cap of $12,000,000 exceeds the
average amount of the outstanding principal balance of the Revolving Credit
Loans during the preceding month. The Usage Fee shall be payable monthly in
arrears on the first Business Day of each successive calendar month."

      Section 6. Cross Collateralization Provisions. Each Borrower hereby
acknowledges and agrees that (a) its grant of liens on and security interests in
the Pledgor Collateral set forth in Section 3.1A of the Loan Agreement shall
also collateralize the obligations of the Parent and certain of its Affiliates
more particularly described in Exhibit D attached hereto (collectively, the
"Outlooke Pointe Affiliates") in connection with a credit facility made or to be
made by Lender in the approximate principal amount of $32,000,000 (the "Outlook
Pointe Loan"), and (b) such agreement by Borrower is a condition precedent to
Lender's agreements set forth herein. Accordingly, Borrower and Lender hereby
agree that Section 3.1A shall be amended and restated as follows:

      "Section 3.1A Parent's and Real Estate Borrower's Pledge. As security for
the payment of the following obligations (which

                                       6
<PAGE>   8
obligations shall be collectively referred to herein as the "Obligations"): (a)
all liabilities of Borrower to Lender under the Note, this Agreement and all
other Loan Documents, including but not limited to any extensions,
modifications, substitutions, increases and renewals thereof, (b) the payment of
all amounts advanced by Lender to preserve, protect, defend, and enforce its
rights hereunder and in the Collateral (as hereinafter defined) in accordance
with the terms of this Agreement and all other Loan Documents, including
(without limitation) the Mortgage, (c) the payment of all reasonable expenses
incurred by Lender in connection therewith, (d) the payment of all obligations
of the Outlook Pointe Affiliates (the "Outlook Pointe Obligations") under any
and all notes, mortgages, security interests, guaranties, assignments and other
loan documents executed and delivered in connection with the Outlook Pointe Loan
(collectively, the "Outlook Pointe Documents"), each Real Estate Borrower and
the Parent (hereinafter called a "Pledgor" or a "Remaining Borrower") hereby
assigns and grants to Lender a continuing first priority lien on and security
interest in, upon, and to each and every portion of the following property (the
"Pledgor Collateral"):

            (i) All of the Pledgor's now-owned and hereafter acquired or arising
Accounts, accounts receivable and rights to payment of every kind and
description, and all of Borrower's contract rights, chattel paper, documents and
instruments with respect thereto, and all of the Pledgor's rights, remedies,
security and liens, in, to and in respect of the Accounts, including, without
limitation, rights of stoppage in transit, replevin, repossession and
reclamation and other rights and remedies of an unpaid vendor, lienor or secured
party, guaranties or other contracts of suretyship with respect to the Accounts,
deposits or other security for the obligation of any Account Debtor, and credit
and other insurance;

            (ii) All moneys, securities and other property and the proceeds
thereof, now or hereafter held or received by, in transit to, in possession of,
or under the control of Lender or a bailee or Affiliate of Lender, from or for
the Pledgor, whether for safekeeping, pledge, custody, transmission, collection
or otherwise, and all of the Pledgor's deposits (general or special), balances,
sums and credits with Lender at any time existing;

            (iii)All of the Pledgor's right, title and interest in, to and in
respect of all goods relating to, or which by sale have

                                       7
<PAGE>   9
resulted in, Accounts, including, without limitation, all goods described in
invoices or other documents or instruments with respect to, or otherwise
representing or evidencing, any Account, and all returned, reclaimed or
repossessed goods;

            (iv) All of the Pledgor's now or hereafter acquired deposit accounts
into which Accounts are deposited;

            (v) All of the Pledgor's now owned and hereafter acquired or arising
general intangibles and other property of every kind and description with
respect to, evidencing or relating to its Accounts, accounts receivable and
other rights to payment, including, but not limited to, all existing and future
customer lists, choses in action, claims, books, records, ledger cards,
contracts, licenses, formulae, tax and other types of refunds, returned and
unearned insurance premiums, rights and claims under insurance policies, and
computer programs, information, software, records, and data, as the same relates
to the Accounts; and

            (vi) The proceeds (including, without limitation, insurance
proceeds) of all of the foregoing."

      Section 7.   Cross Default Provisions.

      (a) Borrower and Lender hereby agree that a new Section 8.1(s) is hereby
added to the Loan Agreement, as follows:

            "(s) A Material Event of Default (as hereinafter defined) occurs
      under any other loan agreement, promissory note, mortgage, deed of trust,
      security agreement, guaranty agreement, letter agreement, or other
      instrument, document or agreement executed and delivered by the Parent,
      any Remaining Borrower or any Affiliate of the Parent or any Remaining
      Borrower, in connection with any other loan, line of credit or other
      financing provided by Lender to any such party, whether now existing or
      hereafter arising, including (without limitation) the loan evidenced and
      secured by the Outlook Pointe Documents. As used herein, "Material
      Default" shall mean and include any Event of Default (1) which occurs as a
      result of the failure of any Borrower or any Affiliate of any Borrower to
      pay monetary obligations to Lender beyond any applicable cure or grace
      period; (2) which occurs as a result of the occurrence of any of the
      events described in

                                       8
<PAGE>   10
      Section 8.1(f) or 8.1(g) hereof with respect to any Borrower or any
      Affiliate of any Borrower; (3) gives rise to Lender's acceleration of the
      indebtedness of any Borrower, or any Affiliate of Borrower, to Lender; or
      (4) gives rise to Lender's exercise of any other remedies against any
      Borrower or any Affiliate of Borrower, including (without limitation) the
      remedies of foreclosure, collection and the appointment of a receiver. As
      used herein, "Material Event of Default" shall not be applicable to, or
      include, any Event of Default under this Loan Agreement or any other Loan
      Document.

      (b) Borrower and Lender agree that Section 8.1(l) is hereby deleted in its
entirety.

      Section 8. Remedies. Borrower and Lender hereby agree to add a new
subsection (vi) to Section 8.3(a) of the Loan Agreement, as follows:

      "(vi) The right to exercise its rights and remedies under the Outlook
            Pointe Documents, including the right to foreclose its liens
            thereunder."

      Section 9. Representations and Warranties; No Event of Default. Each
Remaining Borrower hereby confirms that all of the representations and
warranties set forth in the Loan Agreement and all other Loan Documents are true
and correct, except as set forth in Exhibit E attached hereto and made a part
hereof by this reference. To the Borrower's best knowledge, no Event of Default
has occurred and is continuing. Each Remaining Borrower hereby reaffirms and
restates all of the Obligations and all of its promises, agreements and other
covenants set forth in the Loan Documents, and each Remaining Borrower ratifies
and confirms the Loan Documents to which it is a party. Each Remaining Borrower
reaffirms that the Collateral and Property of each Remaining Borrower continues
to secure the Obligations,

      Section 10. Enforceability. This Amendment constitutes the legal, valid
and binding obligation of each Borrower, and is enforceable against each
Borrower in accordance with its terms.

      Section 11. Reference to the Effect on the Loan Agreement. Upon the
effectiveness of this Amendment, each reference in the Loan Agreement to "this
Agreement," "hereunder," "hereof," "herein" or words of similar import shall
mean and

                                       9
<PAGE>   11
be a reference to the Loan Agreement as previously amended and as amended by
this Amendment.

      Section 12. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of Maryland.

      Section 13. Headings. Section headings in this Amendment are included for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.

      Section 14. Counterparts. This Amendment may be executed in counterparts,
and both counterparts taken together shall be deemed to constitute one and the
same instrument.

                          [SIGNATURES BEGIN ON PAGE 11]

                                       10
<PAGE>   12
            IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed as of the date first written above.

                                    LENDER:

ATTEST:                             HELLER HEALTHCARE FINANCE, INC.
                                    a Delaware corporation (formerly known as
                                    HCFP Funding, Inc.)

By:/s/Diana Pennington              By:/s/Kevin J. McMeen
Name:Diana Pennington                    Name:Kevin J. McMeen
Title:Senior Counsel                     Title:Sr. V.P.

                  [SIGNATURES OF BORROWERS ON FOLLOWING PAGES]

                                       11
<PAGE>   13
                              REMAINING BORROWERS:

ATTEST:                             BALANCED CARE CORPORATION
                                     a Delaware corporation

By:                                 By:/s/Clint T. Fegan  [SEAL]
     Name:                              Name:Clint T. Fegan
     Title:                             Title:VP. CFO

ATTEST:                             BCC AT DARLINGTON, INC.
                                    a Delaware corporation

By:                                 By:/s/Clint T. Fegan [SEAL]
     Name:                              Name:
     Title:                             Title:

ATTEST:                             BALANCED CARE AT EYERS GROVE, INC.
                                    a Delaware corporation

By:                                 By:/s/Clint T. Fegan [SEAL]
     Name:                              Name:
     Title:                             Title:

ATTEST:                             BALANCED CARE AT BUTLER, INC.
                                    a Delaware corporation

By:                                 By:/s/Clint T. Fegan [SEAL]
     Name:                              Name:
     Title:                             Title:

ATTEST:                             BALANCED CARE AT SARVER, INC.
                                    a Delaware corporation

By:                                 By:/s/Clint T. Fegan [SEAL]
     Name:                              Name:
     Title:                             Title:

                                       12
<PAGE>   14
ATTEST:                             BALANCED CARE AT NORTH RIDGE, INC.
                                    a Delaware corporation

By:                                 By:/s/Clint T. Fegan [SEAL]
     Name:                              Name:
     Title:                             Title:

                                   MISSOURI BORROWERS:

ATTEST:                             BCC AT HERMITAGE PARK CARE CENTER, INC.
                                    a Delaware corporation

By:                                 By:/s/Clint T. Fegan [SEAL]
     Name:                              Name:
     Title:                             Title:

ATTEST:                             BCC AT LEBANON CARE CENTER, INC.
                                    a Delaware corporation

By:                                 By:/s/Clint T. Fegan [SEAL]
     Name:                          Name:
     Title:                         Title:

ATTEST:                             BCC AT LEBANON PARK MANOR, INC.
                                    a Delaware  corporation

By:                                 By:/s/Clint T. Fegan [SEAL]
     Name:                              Name:
     Title:                             Title:

                                       13
<PAGE>   15
ATTEST:                             BCC AT MT. VERNON PARK CARE CENTER, INC.
                                    a Delaware corporation

By:                                 By:/s/Clint T. Fegan [SEAL]
     Name:                              Name:
     Title:                             Title:

ATTEST:                             BCC AT MT.  VERNON PARK CARE CENTER
                                    WEST, INC.
                                    a Delaware corporation

By:                                 By:/s/Clint T. Fegan [SEAL]
     Name:                              Name:
     Title:                             Title:

ATTEST:                             BCC AT NEVADA PARK CARE CENTER, INC.
                                    a Delaware corporation

By:                                 By:/s/Clint T. Fegan [SEAL]
     Name:                              Name:
     Title:                             Title:

ATTEST:                             BCC AT NIXA PARK CENTER, INC.
                                    a Delaware corporation

By:                                 By:/s/Clint T. Fegan [SEAL]
     Name:                              Name:
     Title:                             Title:

ATTEST:                             BCC AT REPUBLIC PARK CENTER, INC.
                                    a Delaware corporation

By:                                 By:/s/Clint T. Fegan [SEAL]
     Name:                              Name:
     Title:                             Title:

                                       14
<PAGE>   16
ATTEST:                             BCC AT SPRINGFIELD CARE CENTER, INC.
                                    a Delaware corporation

By:                                 By:/s/Clint T. Fegan [SEAL]
     Name:                              Name:
     Title:                             Title:

ATTEST:                             DIXON MANAGEMENT, INC.
                                    a Missouri corporation

By:                                 By:/s/Clint T. Fegan [SEAL]
     Name:                              Name:
     Title:                             Title:

                                       15
<PAGE>   17
                                    EXHIBIT A
                   MISSOURI BORROWERS and MISSOURI FACILITIES

BCC AT HERMITAGE PARK CARE CENTER, INC., doing business as
Balanced Care, Hermitage
      Highway 54 and 1st Street
      Hermitage, MO 65668

BCC AT LEBANON CARE CENTER, INC., doing business as
Balanced Care, Lebanon North
      596 Morton Road
      Lebanon, MO 65536

BCC AT LEBANON PARK MANOR, INC., doing business as
Balanced Care, Lebanon South
      514 W. Fremont Road
      Lebanon, MO 65536

BCC AT MT. VERNON PARK CARE CENTER, INC., doing business as
Balanced Care, Springfield West II
      3403 West Mt. Vernon
      Springfield, MO 65802

BCC AT MT. VERNON PARK CARE CENTER WEST, INC., doing business as
Balanced Care, Springfield West I
      3403 West Mt. Vernon
      Springfield, MO 65802

BCC AT NEVADA PARK CARE CENTER, INC., doing business as
Balanced Care, Nevada
      700 East Highland
      Nevada, MO 64772

BCC AT NIXA PARK CENTER, INC., doing business as
Balanced Care, Nixa
      1104 North Main
      Nixa, MO 65714

BCC AT REPUBLIC PARK CENTER, INC., doing business as
Balanced Care, Republic
      901 East Highway 174
      Republic, MO 65738

                                       16
<PAGE>   18
BCC AT SPRINGFIELD CARE CENTER, INC., doing business as
Balanced Care, Springfield East
      3535 East Cherokee
      Springfield MO 65809

DIXON MANAGEMENT INC., doing business as
Balanced Care, Dixon
      301 East 10th Street
      Dixon, MO 65459

                                       17<PAGE>   1
Exhibit 10.2

                                                                 Loan No. 99-407

                              SENIOR HOUSING RIDER

            THIS SENIOR HOUSING RIDER is attached to and made a part of that
certain Loan Agreement dated as of the 30th day of December, 1999, among
BALANCED CARE REALTY AT STATE COLLEGE, INC., a Delaware corporation, BALANCED
CARE REALTY AT ALTOONA, INC., a Delaware corporation, BALANCED CARE REALTY AT
LEWISTOWN, INC., a Delaware corporation, BALANCED CARE REALTY AT READING, INC.,
a Delaware corporation, BALANCED CARE REALTY AT BERWICK, INC., a Delaware
corporation, BALANCED CARE REALTY AT PECKVILLE, INC., a Delaware corporation,
BALANCED CARE REALTY AT SCRANTON, INC., a Delaware corporation, BALANCED CARE
REALTY AT MARTINSBURG, INC., a Delaware corporation, BALANCED CARE REALTY AT
MAUMELLE, INC., a Delaware corporation, BALANCED CARE REALTY AT SHERWOOD, INC.,
a Delaware corporation, BALANCED CARE REALTY AT MOUNTAIN HOME, INC., a Delaware
corporation, and BALANCED CARE REALTY AT MANSFIELD, INC., a Delaware corporation
(collectively, "Borrower"), the undersigned operators and HELLER HEALTHCARE
FINANCE, INC., a Delaware corporation (Heller Healthcare Finance, Inc. and its
successors and assigns are hereinafter referred to as "Lender"). To the extent
of any conflict between the terms and provisions of this Rider and the terms and
provisions of the Loan Agreement, the terms and provisions of this Rider shall
govern and control the rights and obligations of the parties.

            R-1. All terms not defined in this Rider shall have the meanings
ascribed to such terms as set forth in the Loan Agreement.

            R-2. The following representations, warranties and covenants are
hereby added to the representations, warranties and covenants contained in the
Loan Agreement.

            Each Borrower represents, covenants, and warrants, as of the date
hereof and through the term of Loan, as follows:

            (a) Each Borrower, together with the Balanced Care Corporation
      Affiliate which is the Manager of each of the Properties and the
      Improvements thereon, and if applicable, the Master Lessee of each
      Property in whose name the Licenses are issued (collectively, the
      "Operator"), are using and operating their respective the Properties and
      Improvements (collectively, the "Facilities") as assisted and/or
      independent senior housing and/or Alzheimer's facilities, together with
<PAGE>   2
      outpatient rehabilitation services, each Facility having the number of
      beds/units set forth on Exhibit A to the Loan Agreement (as modified from
      time to time with Lender's consent, which consent shall not be
      unreasonably withheld, the "Licensed Use"). Operator and each Borrower
      complies, and throughout the term of the Loan will comply in all material
      respects, with all federal, state and local laws, regulations, quality and
      safety standards, accreditation standards and requirements of the
      applicable state department of health or other applicable state regulatory
      agency (each a "DOH") and all other federal, state or local governmental
      authorities including those relating to the quality and adequacy of
      medical care, distribution of pharmaceuticals, rate setting, equipment,
      personnel, operating policies, additions to facilities and services and
      fee splitting. Each Facility which is owned, leased or operated by a
      Borrower or Operator shall be operated at all times in compliance in all
      material respects with such laws and requirements.

            (b) All governmental licenses, permits, regulatory agreements or
      other approvals or agreements necessary or desirable for the Licensed Use
      of each Facility are held by a Borrower or Operator in the name of the
      Borrower or Operator as required under applicable law and are in full
      force and effect, including, if required, a valid certificate of need
      ("CON") or similar certificate, license, or approval issued by the DOH for
      the requisite number of beds and units in each Facility, and a provider
      agreement or other required documentation of approved provider status for
      each provider payment or reimbursement program listed in Exhibit R-1
      hereto, if applicable; provided, however, rehabilitation services are
      provided at some or all of the Facilities by third parties, each of whom
      has the necessary licenses to perform such services at a Facility. All
      required permits, certificates, licenses and governmental approvals
      necessary for operation of each Facility for the Licensed Use are listed
      on Exhibit R-1 hereto (collectively, the "Licenses"). So long as the Loan
      remains outstanding, each Borrower (and Operator) shall operate its
      Facility or cause its Facility to be operated in a manner such that the
      Licenses shall remain in full force and effect. True and complete copies
      of the Licenses have been delivered to Lender.

            (c) The Licenses for each Facility, including without limitation, if
      applicable, the CON:
<PAGE>   3
                  (i) May not be, and have not been, and will not be transferred
            to any location other than that Facility; provided, however, the
            CON's for the Arkansas Facilities were acquired from other
            facilities;

                  (ii) Are not now and will not be pledged as collateral
            security for any other loan or indebtedness; and

                  (iii) Are held free and will remain free from restrictions or
            known conflicts which would materially impair the use or operation
            of the Facility for the Licensed Use, and shall not be provisional,
            probationary or restricted in any way.

            (d) Neither any Borrower nor Operator shall:

                  (i) Rescind, withdraw, revoke, amend, modify, supplement, or
            otherwise alter the nature, tenor or scope of the Licenses for any
            Facility;

                  (ii) Amend or otherwise change any Facility's authorized
            units/beds capacity and/or the number of units/beds approved by the
            DOH; except that, subject to Lender's consent, which consent shall
            not be unreasonably withheld or delayed, a Borrower may change the
            allocation of beds/units between assisted living and independent
            living;

                  (iii) Replace or transfer all or any part of a Facility's
            units or beds to another site or location; or

                  (iv) Voluntarily transfer or encourage the transfer of any
            resident of a Facility to any other facility not subject to a
            Mortgage, unless such transfer is at the request of the resident or
            is for reasons relating to the health, required level of medical
            care or safety of the resident to be transferred.

            (e) If and when a Borrower or Operator participates in any Medicare
      or Medicaid or other third party payor program with respect to a Facility,
      that Facility will remain in compliance in all material respects with all
      requirements for participation in Medicare and Medicaid, including the
      Medicare and Medicaid Patient Protection Act of 1987. Each Facility is and
      will remain in conformance in all material
<PAGE>   4
      respects with all insurance, reimbursement and cost reporting
      requirements, and, if applicable, has a current provider agreement which
      is in full force and effect under Medicare and Medicaid.

            (f) There is no, and during the term of the Loan there shall be no,
      threatened, existing or pending revocation, suspension, termination,
      probation, material restriction, material limitation, or nonrenewal
      affecting any Borrower, Operator or any Facility or any participation or
      provider agreement with any third-party payor, including Medicare,
      Medicaid, Blue Cross and/or Blue Shield, and any other private commercial
      insurance managed care and employee assistance program (such programs, the
      "Third-Party Payors' Programs") to which a Borrower or Operator may
      presently be subject with respect to a Facility, or at any time hereafter
      is subject. All Medicaid, Medicare, and private insurance cost reports and
      financial reports submitted by a Borrower or Operator, if any, are and
      will be materially accurate and complete and have not been and will not be
      misleading in any material respects. No cost reports for any Facility
      remain open or unsettled.

            (g) None of the Borrowers, Operator, or any Facility is or will be
      the subject of any proceeding by any governmental agency, and no notice of
      any violation has been or will be issued by a governmental agency that
      would, directly or indirectly, or with the passage of time:

                  (i) Have a material adverse impact on a Borrower's or
            Operator's ability to accept and/or retain patients or operate any
            Facility for its Licensed Use or result in the imposition of a
            material fine, a sanction having a material impact on a Borrower, a
            lower rate certification or a lower reimbursement rate for services
            rendered to eligible patients;

                  (ii) Modify, limit or annul or result in the transfer,
            suspension, revocation or imposition of probationary use of any of
            the Licenses; or

                  (iii) If applicable, affect a Borrower's or Operator's
            continued participation in the Medicaid or Medicare programs or any
            other of the Third-Party Payors' Programs, or any successor programs
            thereto, at current rate certifications.
<PAGE>   5
            (h) Each Facility and the use thereof complies and will continue to
      comply in all material respects with all applicable local, state and
      federal building codes, fire codes, health care, senior housing and other
      regulatory requirements (the "Physical Plant Standards") and no waivers of
      Physical Plant Standards exist at any Facility, except those that are
      described on Exhibit R-2 attached hereto.

            (i) No Facility has received a "Level A" (or equivalent) violation,
      and no statement of charges or deficiencies has been made or penalty
      enforcement action has been undertaken against any Facility, Operator or a
      Borrower, or against any officer, director, partner, member or stockholder
      of Operator or a Borrower by any governmental agency during the last three
      calendar years, and there have been no violations over the past three
      years which have threatened any Facility's, any Operator's or a Borrower's
      certification for participation in Medicare or Medicaid or the other
      Third-Party Payors' Programs.

            (j) There are no current, pending or outstanding Medicaid, Medicare
      or Third-Party Payors' Programs reimbursement audits or appeals pending at
      any Facility, and there are no years that are subject to audit.

            (k) There are no current or pending Medicaid or Medicare or
      Third-Party Payors' Programs recoupment efforts at any Facility. No
      Borrower is a participant in any federal program whereby any governmental
      agency may have the right to recover funds by reason of the advance of
      federal funds, including those authorized under the Hill-Burton Act (42
      U.S.C. 291, et seq.).

            (l) No Borrower will pledge its receivables as collateral security
      for any other loan or indebtedness.

            (m) There are no and there will remain no patient or resident care
      agreements with patients or residents which deviate in any material
      adverse respect from the form agreements which have been delivered to and
      approved by Lender pursuant to Section 3.7 of the Loan Agreement.

            (n) All patient or resident records at each Facility, including
      patient or resident trust fund accounts, are true and correct in all
      material respects, and will remain true and correct in all material
      respects.
<PAGE>   6
            (o) Any agreement relating to the general management, and operation
      of any Facility (each a "Management and Operating Agreement") and the
      manager or operator thereunder shall be subject to Lender's reasonable
      approval and no Management and Operating Agreement shall be modified,
      amended or terminated without Lender's prior consent, which consent shall
      not be unreasonably withheld. In the event any Management and Operating
      Agreement is terminated or in the event of foreclosure or other
      acquisition of a Facility by Lender or its designee or any purchaser at a
      foreclosure sale, Borrower, Lender, any subsequent operator or any
      subsequent purchaser need not obtain a CON prior to applying for and
      receiving Medicare or Medicaid payments.

            (p) No Borrower shall, nor shall any Facility or Operator, other
      than in the normal course of business, change the terms of any of the
      Third-Party Payors' Programs now or hereinafter in effect or their normal
      billing payment or reimbursement policies and procedures with respect
      thereto (including the amount and timing of finance charges, fees and
      write-offs).

            (q) From time to time, upon the request of Lender, regardless of
      whether or not an Event of Default has occurred hereunder or under the
      other Loan Documents, each Borrower shall, and shall cause Operator to
      complete, execute and deliver to Lender any applications, notices,
      documentation, and other information necessary or desirable, in Lender's
      judgment, to permit Lender or its designee (including a receiver) to
      obtain, maintain or renew any one or more of the Licenses for a Facility
      (or to become the owner of the existing Licenses for a Facility) and to
      the extent permitted by applicable law to obtain any other provider
      agreements, licenses or governmental authorizations then necessary or
      desirable for the operation of a Facility by Lender or its designee for
      its Licensed Use (including, without limitation, any applications for
      change of ownership of the existing Licenses or change of control of the
      owner of the existing Licenses). Upon an occurrence of an Event of
      Default, to the extent permitted by applicable law, (i) Lender is hereby
      authorized (without the consent of any Borrower or Operator) to submit any
      such applications, notices, documentation or other information which a
      Borrower caused to be delivered to Lender in accordance with the above
      provisions to the applicable governmental authorities, or to take such
      other steps
<PAGE>   7
      as Lender may deem advisable to obtain, maintain or renew any License or
      other license or governmental authorization in connection with the
      operation of any Facility for its Licensed Use, and each Borrower agrees
      to cooperate and to cause Operator to cooperate with Lender in connection
      with the same and (ii) each Borrower, upon demand by Lender, shall take
      any action and cause Operator to take any action necessary or desirable,
      in Lender's sole judgment, to permit Lender or its designee (including a
      receiver) to use, operate and maintain each Facility for its Licensed Use.
      If any Borrower fails to comply with the provisions of this subsection (q)
      for any reason whatsoever, such Borrower hereby irrevocably appoints
      Lender and its designee as such Borrower's attorney-in-fact, with full
      power of substitution, to take any action and execute any documents and
      instruments necessary or desirable in Lender's sole judgment to permit
      Lender or its designee to undertake Borrower's obligations under this
      subsection (q), including without limitation, obtaining any licenses or
      governmental authorizations then required for the operation of a Facility
      by Lender or its designee for its Licensed Use. The foregoing power of
      attorney is coupled with an interest and is irrevocable and Lender may
      exercise its rights thereunder in addition to any other remedies which
      Lender may have against any Borrower or Guarantor as a result of a
      Borrower's breach of the obligations contained in this subsection (q).

            (r) Each Borrower and Operator shall at all times comply in all
      material respects with all obligations under the contracts and leases with
      residents of each Facility, and no Borrower shall commit or permit any
      default by a Borrower or Operator thereunder. Each Borrower hereby
      indemnifies and holds harmless Lender and agrees to defend Lender (with
      counsel reasonably acceptable to Lender) from and against (collectively,
      the "Indemnified Claims") any (i) claims, proceedings or causes of action
      brought by any resident of a Facility, and (ii) loss, damage, cost or
      expense, including reasonable attorneys' fees, incurred or suffered by
      Lender as a result of any (x) breach by a Borrower or Operator of any
      contract or lease with a resident of a Facility or (y) violation of any
      license or any federal, state or local law governing a Facility or the
      use, operation or maintenance thereof for its Licensed Use.
<PAGE>   8
            (s) Notwithstanding the foregoing or any other provision of this
      Senior Housing Rider to the contrary, if through the exercise of Lender's
      rights under the Loan Documents or otherwise, Lender or an affiliate of
      Lender shall take permanent possession and control of any Facility,
      Borrower shall not be liable to Lender for any Indemnified Claims which
      first arose after the date ("Transfer Date") Lender or an affiliate of
      Lender took permanent possession and control of that Facility if (but only
      if) the following conditions are fully satisfied:

                  (i) None of any Borrower, Guarantor, any Affiliate of Borrower
            or Guarantor or any agent, employee or contractor of any of the
            foregoing contributed, by act or omission, to the cause, existence,
            or occurrence of such Indemnified Claims; and

                  (ii) The events or state of facts resulting (or with the
            passage of time eventually permanently resulting) in any such
            Indemnified Claims did not exist prior to the Transfer Date.

            (t) Notwithstanding any of the foregoing provisions of this Senior
      Housing Rider to the contrary, Lender, Borrower and Operator agree that
      with respect to each of the seven Facilities located in Pennsylvania (the
      "Pennsylvania Facilities"),

                  (i) at the Closing, the Licenses for such Facility will be in
            the name of the Master Lessee thereof, not in the name of the
            Manager thereof or the Borrower which owns such Facility (an
            "Owner");

                  (ii) promptly after Closing, each Owner and Master Lessee of
            such Facility will seek a determination from the DOH that the
            Licenses for each Facility do not need to be transferred to the
            Owner as a result of (A) the termination of the Master Lease of such
            Facility and the existing Management Agreement with respect to such
            Facility, concurrently with (B) the execution of a new Management
            Agreement in substantially the same form as has been approved by
            Lender and exists as of the date hereof at the Facilities which are
            not Pennsylvania Facilities (a "New Management Agreement"), whereby
            the Master Lessee will be the Manager of such Facility and will
            continue as the holder of the Licenses for such Facility;
<PAGE>   9
                  (iii) if the DOH indicates that it will not provide the
            requested determination (or fails to provide it in a timely manner),
            then such Owner will use diligent efforts to have the Licenses for
            such Facility reissued in the name of such Owner, at which time the
            Master Lease and existing Management Agreement with respect to such
            Facility shall be terminated, and a New Management Agreement entered
            into between the Owner and either the former Master Lessee or the
            prior Manager;

                  (iv) simultaneously with an Owner entering into a New
            Management Agreement, it (and the Manager thereunder) shall enter
            into an Agreement Regarding Management Agreement and Waiver of
            Property Management and Broker's Liens in favor of Lender in
            substantially the form entered into by the Borrowers and Managers
            which own or manage the Facilities which are not Pennsylvania
            Facilities on the date hereof (each, an "ARM Agreement");

                  (v) if by March 15, 2000,

                        (A) all seven of the Master Leases have not been
                  terminated, or

                        (B) there have not been seven New Management Agreements
                  and seven new ARM Agreements entered into as contemplated
                  above, or

                        (C) the DOH has not either issued a new License in the
                  Owner's name or issued the determination described in clause
                  (ii) above, for each of the seven Pennsylvania facilities,

            then, such circumstances shall constitute an Event of Default under
            the Loan Agreement.

                                 BORROWER:

                                 BALANCED CARE REALTY AT STATE COLLEGE, INC.,
                                 a Delaware corporation

                                 By/s/Clint T. Fegan
                                 Its VP-CFO
<PAGE>   10
                                 BALANCED CARE REALTY AT ALTOONA, INC., a
                                 Delaware corporation

                                 By/s/Clint T. Fegan
                                 Name Clint T. Fegan
                                 Its VP-CFO

                                 BALANCED CARE REALTY AT LEWISTOWN, INC., a
                                 Delaware corporation

                                 By/s/Clint T. Fegan
                                 Its

                                 BALANCED CARE REALTY AT READING, INC., a
                                 Delaware corporation

                                 By/s/Clint T. Fegan
                                 Its

                                 BALANCED CARE REALTY AT BERWICK, INC., a
                                 Delaware corporation

                                 By/s/Clint T. Fegan
                                 Its

                                 BALANCED CARE REALTY AT PECKVILLE, INC., a
                                 Delaware corporation

                                 By/s/Clint T. Fegan
                                 Its

                                 BALANCED CARE REALTY AT SCRANTON, INC., a
                                 Delaware corporation

                                 By/s/Clint T. Fegan
                                 Its
<PAGE>   11
                                 BALANCED CARE REALTY AT MARTINSBURG, INC., a
                                 Delaware corporation

                                 By/s/Clint T. Fegan
                                 Its

                                 BALANCED CARE REALTY AT MAUMELLE, INC., a
                                 Delaware corporation

                                 By/s/Clint T. Fegan
                                 Its

                                 BALANCED CARE REALTY AT SHERWOOD, INC., a
                                 Delaware corporation

                                 By/s/Clint T. Fegan
                                 Its

                                 BALANCED CARE REALTY AT MOUNTAIN HOME, INC.,
                                 a Delaware corporation

                                 By/s/Clint T. Fegan
                                 Its

                                 BALANCED CARE REALTY AT MANSFIELD, INC., a
                                 Delaware corporation

                                 By/s/Clint T. Fegan
                                 Its

                                 OPERATORS:

                                 BCC AT STATE COLLEGE, INC.,
                                 a Delaware corporation

                                 By/s/Clint T. Fegan
                                 Its
<PAGE>   12
                                 TC REALTY OF ALTOONA, INC.,
                                 a Delaware corporation

                                 By/s/Clint T. Fegan
                                 Its

                                 TC REALTY OF LEWISTOWN, INC.,
                                 a Delaware corporation

                                 By/s/Clint T. Fegan
                                 Its

                                 TC REALTY OF READING, INC.,
                                 a Delaware corporation

                                 By/s/Clint T. Fegan
                                 Its

                                 TC REALTY OF BERWICK, INC.,
                                 a Delaware corporation

                                 By/s/Clint T. Fegan
                                 Its

                                 BLACK BOX OF PECKVILLE, INC.,
                                 a Delaware corporation

                                 By/s/Clint T. Fegan
                                 Its

                                 TC REALTY CORPORATION III,
                                 a Delaware corporation

                                 By/s/Clint T. Fegan
                                 Its
<PAGE>   13
                                 BALANCED CARE AT MARTINSBURG, INC.,
                                 a Delaware corporation

                                 By/s/Clint T. Fegan
                                 Its

                                 BALANCED CARE AT MAUMELLE, INC.,
                                 a Delaware corporation

                                 By/s/Clint T. Fegan
                                 Its

                                 BALANCED CARE AT SHERWOOD, INC.,
                                 a Delaware corporation

                                 By/s/Clint T. Fegan
                                 Its

                                 BALANCED CARE AT MOUNTAIN HOME, INC.,
                                 a Delaware corporation

                                 By/s/Clint T. Fegan
                                 Its

                                 TC REALTY CORPORATION II,
                                 a Delaware corporation

                                 By/s/Clint T. Fegan
                                 Its

                                 BCC DEVELOPMENT AND MANAGEMENT CO., a
                                 Delaware corporation

                                 By/s/Clint T. Fegan
                                 Its
<PAGE>   14
                                 BCC AT ALTOONA, INC., a Delaware
                                 corporation

                                 By/s/Clint T. Fegan
                                 Its

                                 BALANCED CARE AT LEWISTOWN, INC., a Delaware
                                 corporation

                                 By/s/Clint T. Fegan
                                 Its

                                 BCC AT READING, INC., a Delaware
                                 corporation

                                 By/s/Clint T. Fegan
                                 Its

                                 BALANCED CARE AT BERWICK, INC., a Delaware
                                 corporation

                                 By/s/Clint T. Fegan
                                 Its

                                 BALANCED CARE AT PECKVILLE, INC., a Delaware
                                 corporation

                                 By/s/Clint T. Fegan
                                 Its

                                 BCC AT SCRANTON, INC., a Delaware
                                 corporation

                                 By/s/Clint T. Fegan
                                 Its

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