Document:

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Exhibit 10.40

                      LOCKBOX AND BLOCKED ACCOUNT AGREEMENT

      THIS LOCKBOX AND BLOCKED ACCOUNT AGREEMENT ("Agreement") is made as of the
31st day of March, 2002 (this "Agreement"), by and among OCWEN FEDERAL BANK,
FSB, or any of its affiliates selected by Ocwen ("Bank"), OCWEN FINANCIAL
CORPORATION, a Florida corporation ("Ocwen"), BALANCED CARE REALTY (OFC), INC.,
a Delaware corporation ("Realty"), BALANCED CARE CORPORATION, a Delaware
corporation ("Balanced Care"), BALANCED CARE AT MEDINA, INC., a Delaware
corporation ("BCM"), BALANCED CARE AT CENTERVILLE, INC., a Delaware corporation
("BCC"), BALANCED CARE AT SHIPPENSBURG, INC., a Delaware corporation ("BCS"),
and SENIOR CARE OPERATORS OF SHIPPENSBURG, LLC, a Delaware limited liability
company ("SCS"). Hereinafter, Realty, Balanced Care, BCM, BCC, BCS, and SCS
shall be collectively referred to as the "Obligors," and individually, as an
"Obligor." Capitalized terms that are used in this Agreement, but that are not
defined herein, shall have the meanings ascribed to such terms in the Term Loan
Agreement (defined hereinafter), unless the context hereof clearly requires
otherwise.

                                   WITNESSETH:

      WHEREAS, Ocwen and the Obligors have entered into the Term Loan Agreement,
as of the date hereof ("Term Loan Agreement"), pursuant to which Ocwen has
agreed to loan Realty, and Realty has accepted from Ocwen, the principal sum of
Nine Million One Hundred Fifty-Three Thousand Three Hundred Fifty-Six Dollars
($9,153,356.00) plus interest thereon ("Loan"). Realty's obligations under the
Term Loan Agreement are evidenced by a promissory note of even date herewith
("Term Note").

      WHEREAS, as set forth and described in the Term Loan Agreement, Ocwen has
required that following an Event of Default under the Term Loan Agreement that
continues beyond any applicable cure periods, the Obligors will consent to and
participate in this Agreement with Ocwen and Bank with respect to all revenues
related to the Premises, including but not limited to the operation and conduct
of business on the three (3) Project Properties (as assisted-living facilities).
As used herein, "Premises" shall mean the real property and all improvements
located thereon described on Exhibit A, attached hereto and incorporated herein
by reference.

      NOW, THEREFORE, in consideration of the premises, mutual promises,
covenants, and agreements set forth herein, in order to induce Ocwen to enter
into the Term Loan Agreement, and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the Obligors, Bank, and
Ocwen, intending to be
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legally bound, hereby agree that the foregoing recitals are incorporated herein
by reference and as follows:

                                   AGREEMENT:

      1.    Lockbox and Blocked Account. The Obligors hereby confirm to Ocwen
that, upon an Event of Default under the Term Loan Agreement that continues
beyond any applicable cure periods, a post office box (the "Lockbox") will be
established by the Obligors and that only Bank will have access (and it shall be
unrestricted access) to the items deposited in the Lockbox. All of which items
deposited into the Lockbox that are remittances shall be deposited in a special
account or accounts at Bank to which only Bank will have access (the "Blocked
Account"), on which Blocked Account only payments to Ocwen's order may be drawn.
The Lockbox and Blocked Account are and shall each be in the names of one or
more of the Obligors for the benefit of Ocwen. Ocwen and the Obligors
understand, acknowledge and agree that there will be one Blocked Account
established for each of the three (3) Projects (as defined in the Term Loan
Agreement). All three Blocked Accounts are collectively referred to hereinafter
as "Blocked Account." All items of payment received through the Lockbox and all
funds deposited in the Blocked Account shall be and remain the sole and
exclusive property of Ocwen, and none of the Obligors or Bank shall have any
interest therein or (except as specifically authorized herein) control thereof.
All fees, costs and expenses charged by Bank for the Lockbox and Blocked Account
shall be in accordance with its customary practices, payable by Obligors,
jointly and severally. Except as expressly provided for hereinafter, Ocwen shall
bear no responsibility for said amounts. The Obligors shall direct all
residents, tenants, and others owing funds to the Obligors in connection with
the Project Properties to send checks, drafts, or other orders for the payment
of money to the Lockbox address. Obligors shall provide Ocwen and Bank written
notice of the Lockbox address.

      Pursuant to Section 15 hereof, Bank agrees to provide Ocwen and the
Obligors daily notice of deposits into the Blocked Account. In addition thereto,
Bank agrees to provide Obligors with written notice each day (which may be set
forth on the written notice provided pursuant to Section 15, as applicable), on
which payments are wired to Ocwen from Bank pursuant to the terms of Section 8
hereof, along with an indication of the total amount of such wire transfer. In
addition to the foregoing, monthly statements for the Blocked Account are to be
provided to Ocwen and Obligors, also as indicated in Section 15 hereof.

      Ocwen agrees that in the event that a refund of payments received in the
Lockbox and deposited into the Blocked Account is owed to a client, customer, or
resident of Obligors, or any other party

                                       -2-
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presenting a colorable claim to funds deposited into the Blocked Account, Ocwen
will consult with Obligors as to the reasonableness of the refund requested. In
the event that Obligors and Ocwen agree that a refund should be made (or Ocwen
alone makes such determination if Ocwen is threatened with litigation with
respect to such funds), then Ocwen shall refund monies to such claimant. Such
refunded amounts shall not be credited against the obligations of Obligors to
Ocwen under the Term Loan Agreement, the Term Note, the BCC Note (as defined in
the Term Loan Agreement), or the Deferred Purchase Price Note (as defined in the
Term Loan Agreement).

      2.    Fees and Charges; Returned Checks, Etc. Bank, Ocwen and Obligors
hereby agree that Bank will be entitled to exercise and/or claim a right of
setoff, deduction, or banker's lien, and/or otherwise make any other claim,
against the Lockbox, items of payment received therein, or any deposits made to
the Blocked Account including, without limitation, any right to charge the
Blocked Account for any returned checks or unpaid fees, costs and expenses.

      Remittance items returned to Bank due to insufficient or uncollected funds
will be automatically redeposited by Bank. If an item of remittance is returned
for "account closed" or "payment stopped" or if an item is unpaid a second time
for insufficient or uncollected funds, such items shall be sent to Bank and
Ocwen. In addition to normal account statements sent to Obligors, a copy of the
notice of any such returned item or charge as described as aforesaid will be
mailed by Bank to Ocwen and Obligors. With respect to each returned check, said
notice shall provide the maker, amount, date of deposit and reason for return.
Bank shall have the right to credit or debit the Blocked Account to correct
processing mistakes which are capable of correction. Copies of credit or debit
advices will be sent to Ocwen and Obligors.

      3.    Deficiency in Blocked Account. In the event that the available funds
in the Blocked Account shall be insufficient to cover any returned or unpaid
items or unpaid account service charges ("Service Charge"), Bank will promptly
notify the Obligors and Ocwen in writing with respect thereto. No later than
five (5) business days after receipt of such notice, Obligors, jointly and
severally, agree to remit to Bank the full amount of any such returned or unpaid
items or Service Charges. If the Obligors fail to reimburse Bank as provided
herein and the available funds in the Blocked Account of one or more of the
Obligors are insufficient for such reimbursement (Bank shall have a claim
against such funds held in the Blocked Account pursuant to Section 2 above),
Ocwen will indemnify and hold Bank harmless for the amount of any returned or
unpaid items, or Service Charges, to the extent Ocwen received payment in
respect thereof or Bank gave value therefore, by paying the amount of the
returned or unpaid items

                                       -3-
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or Service Charges to Bank. Provided, however, that Obligors shall remain
responsible for the payment of all such Service Charges, and the amount of all
such Service Charges not paid by Obligors shall be added to the indebtedness
owed to Ocwen pursuant to the Term Loan Agreement and Term Note. Notwithstanding
anything contained in this Agreement or any other Loan Document to the contrary,
the Obligors shall remain jointly and severally liable for the payment of all
such Service Charges.

      4.    Lockbox Sweep and Deposits into Blocked Account. As agent for Ocwen,
Bank will collect mail from the Lockbox at various times each day in accordance
with the Bank's regular collection schedule. The relationship of Ocwen to the
Bank as depositor will commence only when the remittances are credited to the
Blocked Account. Prior to such time, the Bank will be considered to be a bailee
as to the items in its possession. Checks and other items of payment received in
the Lockbox will be deposited by Bank into the Blocked Account on a daily basis.
The following corporate name or reasonable derivation thereof, as applicable to
the different facilities, will be acceptable as payee, and the Obligors agree
that they will direct all residents and others owing funds to any Obligor in
relation to or in connection with the Project Properties, to make all checks,
drafts, and other remittances payable to the following:

            Balanced Care at Centerville, Inc. or Outlook Pointe at Centerville
            or Outlook Pointe at Washington Township

            Balanced Care at Medina, Inc. or Outlook Pointe at Medina

            Balanced Care at Shippensburg, Inc. or Outlook Pointe at
            Shippensburg for the benefit of Senior Care Operators of
            Shippensburg, LLC; provided, however, that no later than 15 days
            after the date hereof, the following shall be deleted from the above
            "for the benefit of Senior Care Operators of Shippensburg, LLC."

All of the items that appear to be for deposit (i.e., which are written to the
order of the above-described payees) should be endorsed with the standard Ocwen
Federal Bank FSB endorsement (or that of its affiliate). Obligors, Ocwen, and
Bank agree that a payee endorsement shall not be required.

      5.    Additional Documents. Miscellaneous documents received in the
Lockbox without a remittance check will be sent by Bank to the respective
Obligor to which the document was directed, at such Obligor's expense. All
miscellaneous documents, tape listings of checks and remittance documents,
credit advises and photocopies, if

                                       -4-
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appropriate, will be forwarded to the respective Obligor by first class mail
unless otherwise agreed.

      6.    Post-Dating; Undated. Post-dated remittances will be processed in
accordance with the Bank's policy, which may require return to the respective
payee, unprocessed. Undated remittances may be processed in accordance with the
Bank's policy, which may require return to the respective payee, unprocessed.

      7.    Restrictive Endorsements; Irregularities; Interpretation. Checks
containing special or restrictive endorsements, including, but not limited to,
"Paid in Full" or words of similar import and such other items as Bank
designates as irregular, will not be processed by Bank but will be forwarded to
Ocwen (and copies of same will also be provided to Obligors) daily for
disposition. This will be done on a best efforts basis. Bank assumes no
liability for checks with restrictive endorsement inadvertently credited to the
Blocked Account. Incomplete items (missing signature, missing payee, altered
amounts, or items made payable to a payee other than those specified in Section
4) will not be processed by Bank, but will be forwarded to Ocwen (and copies of
same will also be provided to Obligors) for disposition. As with other
irregularities, this will be conducted by Bank on a best-efforts basis. An item
for remittance which appears to Bank to have been materially altered will not be
deposited into the Blocked Account. The Bank's current policy shall apply with
respect to whether the amount in words or amount in figures on any item of
remittance shall be accepted if the two amounts do not agree or if one or the
other is missing or not legible.

      8.    Delivery of Funds to Ocwen. Unless Ocwen directs Bank in writing to
the contrary, the Obligors and Bank hereby agree that as such funds are
collected, Bank will wire transfer to Ocwen or send through an automated
clearinghouse to Ocwen (pursuant to such wire and deposit instructions as Ocwen
shall provide Bank) all available funds deposited in the Blocked Account;
provided, however, that such wires shall not be required until at least $25,000
has accumulated in any of the Blocked Accounts. That is, upon the accumulation
of $25,000 into any one (or more) of the Blocked Accounts, such funds shall be
wired, the same day, to Ocwen.

      9.    No Waiver. This Agreement may be enforced from time to time by Ocwen
at its discretion, with or without order of any court and with or without
appointment of a receiver, as Ocwen shall determine. Ocwen may also at any time
cease to enforce this Agreement. Any failure on the part of Ocwen promptly to
exercise any option hereby given or reserved shall not prevent the exercise of
any such option at any time thereafter. The waiver by Ocwen of any breach of any
term, covenant, or condition contained in this Agreement or any default in the

                                       -5-
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performance of any obligations under this Agreement, shall not be deemed to be a
waiver of any other breach or default of the same or any other term, covenant,
condition or obligation, nor shall any waiver of any incident of breach or
default constitute a continuing waiver of same. Ocwen may pursue and enforce any
remedy or remedies accorded it hereunder independently or, in conjunction or
concurrently with, or subsequent to its pursuing enforcement of any remedy or
remedies that it may have under the other Loan Documents (as defined in the Term
Loan Agreement).

      10.   Miscellaneous. When the context so requires, the singular shall
include the plural and conversely, and use of any gender shall include all
genders.

      11.   Conformity with Term Loan Agreement. The provisions set forth in
Sections 8.1, 8.2, 8.3, 8.4, 8.5, 8.9, 8.10, 8.11, 8.12, 8.13, 8.15, 8.16, 8.19,
8.20, and 8.23 of the Term Loan Agreement shall be applicable to this Agreement
as though set forth herein in full.

      12.   Survivability. Notwithstanding anything set forth herein or in any
other Loan Document to the contrary, the following sections of this Agreement
shall survive the payment in full of the Term Note, or any other termination or
expiration of this Agreement or the Loan Documents: 11, 14, 16, and 18.

      13.   Assignment. This Agreement shall bind and shall inure to the benefit
of the successors and assigns of Ocwen. Ocwen does not consent to any assignment
of this Agreement by any Obligor. Subject to Section 8.16 of the Term Loan
Agreement, Ocwen may assign its rights and interests under this Agreement
freely. If an assignment is made, the Obligors shall render performance under
this Agreement to and with the assignee. The Obligors waive and will not assert
against any assignee any claims, defenses, or set-offs that the Obligors could
assert against Ocwen except defenses which cannot be waived.

      14.   JURY WAIVER. OCWEN AND THE OBLIGORS HEREBY VOLUNTARILY, IRREVOCABLY
AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG OR BETWEEN
OCWEN AND ANY OF THE OBLIGORS ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN OR AMONG THEM IN CONNECTION
WITH THIS AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO. THIS PROVISION IS A
MATERIAL INDUCEMENT TO OCWEN TO ENTER INTO THE TERM LOAN AGREEMENT. IT SHALL NOT
IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR MODIFY OCWEN'S ABILITY TO PURSUE ANY
REMEDY, EITHER IN LAW OR IN EQUITY, AVAILABLE TO IT.

                                       -6-
<PAGE>
      15.   Daily Notice. Bank agrees to advise Ocwen by facsimile at (561)
682-8091 and Obligors by facsimile at (717) 796-6294 each day by 3:00 p.m.,
Columbus, Ohio time, of the amount of checks and items of payment received in
the Lockbox that day and to mail to Ocwen and Obligors each day, a copy of the
deposit slip for each deposit made to the Blocked Account. In addition, Bank
agrees to mail to Ocwen and Obligors copies of all Blocked Account statements.
Notwithstanding the requirement for copies of notices to Ocwen and Obligors to
be sent to their respective legal counsel as provided in Section 8.13 of the
Term Loan Agreement (incorporated herein in Section 11 hereof), the items which
the Bank is required to deliver to Ocwen and Obligors pursuant to this Section
15 need only be delivered to Ocwen and Obligors (and not counsel).

      16.   No Inquiry by Bank; No Duty as to Other Matters; Standard of Care.
Bank shall be fully protected in acting only on orders or directions made by
Ocwen respecting the Lockbox (and Ocwen shall be entitled to make same without
input from Obligor) and the items received therein and the Blocked Account,
without making any inquiry whatsoever as to Ocwen's right or authority to give
such orders or directions or as to the application of any payment made pursuant
thereto. Bank shall have no duty to perform services not enumerated in this
Agreement. The Bank's responsibility in performing the services herein
contemplated by it to be performed shall be to refrain from acts or omissions of
gross negligence or willful misconduct. In the event Bank acts in substantial
compliance with the procedures set forth herein, it shall not be found or
determined to be acting in a grossly negligent manner or engaging in willful
misconduct. In addition, all parties agree that the occasional, unintentional
deviations by the Bank from the procedures set forth herein shall not be deemed
to be gross negligence or willful misconduct by Bank.

      In exercising its rights under and pursuant to this Agreement, Ocwen's
responsibility to the Obligors shall be to refrain from grossly negligent acts
and/or omissions and from engaging in willful misconduct. In the event Ocwen
acts in substantial compliance with the procedures set forth herein, it shall
not be found or determined to be acting in a grossly negligent manner or
engaging in willful misconduct. The parties agree that the occasional,
unintentional deviations by Ocwen from the procedures, or its duties,
responsibilities, or obligations set forth herein, shall not be deemed to be
gross negligence or willful misconduct by Ocwen.

      17.   Term of Agreement. This Agreement shall continue in full force and
effect until terminated by Bank or Ocwen upon not less than sixty (60) days
written notice to the other party (a copy of which will be given to Obligors).
The Obligors shall have no right to terminate this Agreement until the Term Note
and any other obligations

                                       -7-
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set forth in the Term Loan Agreement owing by any Obligor to Ocwen shall have
been paid in full. This Agreement shall automatically terminate at such time as
the Term Note has been paid in full and all other payments due Ocwen under the
Term Loan Agreement have been paid in full. Termination of this Agreement shall
in no event affect any obligation incurred hereunder prior to such termination,
specifically including the obligations set forth in Section 18 hereof. If Bank
shall desire to terminate this Agreement, but Ocwen desires to keep the Lockbox
and Blocked Account procedures set forth herein in place, then Ocwen shall
select a successor bank to perform the services to be performed by Bank
hereunder, and upon such successor's assumption of and agreement to be bound by
this Agreement, all rights, interests, privileges, as well as obligations,
duties, and responsibilities, of Bank hereunder shall apply to, inure to the
benefit of, and be binding upon such successor bank.

      18.   Protection of Bank and Ocwen. Notwithstanding any other provisions
of this Agreement to the contrary, unless Bank is grossly negligent or engages
in willful misconduct in performance or nonperformance in connection with this
Agreement, the Lockbox or the Blocked Account, Obligors, jointly and severally,
agree to hold Bank harmless from any claims, damages, losses or expenses
incurred by Bank or any other party in connection with this Agreement or the
rights, duties and obligations to be observed and/or performed as set forth
herein; in the event Bank breaches the standard of care described in Section 16
above, Obligors and Ocwen expressly agree that Bank's liability shall be limited
to damages directly caused by such breach and in no event shall Bank be liable
for any incidental, indirect, punitive or consequential damages whatsoever. The
Obligors agree that Bank may act on the instructions of Ocwen without making any
special inquiry into the authority of Ocwen, and Bank will not be held liable
for reasonable reliance on such instructions.

      Notwithstanding any other provisions of this Agreement to the contrary,
unless Ocwen is grossly negligent or engages in willful misconduct in
performance or nonperformance in connection with this Agreement, the Lockbox, or
the Blocked Account, Obligors, jointly and severally, agree to hold Ocwen
harmless from any claims, damages, losses or expenses incurred by Ocwen or any
other party in connection with this Agreement or the rights, duties and
obligations to be observed and/or performed as set forth herein; in the event
that Ocwen breaches the standard of care described in Section 16 above, Obligors
expressly agree that Ocwen's liability shall be limited to damages directly
caused by such breach and in no event shall Ocwen be liable for any incidental,
indirect, punitive, or consequential damages whatsoever.

                                       -8-
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      Notwithstanding any other provision of this Agreement to the contrary,
neither Bank nor Ocwen shall be liable for any failure, inability to perform, or
delay in performance hereunder, if such failure, inability or delay is due to
acts of God, war, civil commotion, governmental action, fire, explosion, terror
attack, strikes, other industrial disturbances, equipment malfunction, action,
non-action or delayed action on the part of Obligors, or any other entity or any
other causes that are beyond Bank's or Ocwen's reasonable control.

                                       -9-
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      THE BANK MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR
IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE.

      IN WITNESS WHEREOF, the parties have caused this LOCKBOX AND BLOCKED
ACCOUNT AGREEMENT to be properly executed and delivered as of the date first
written above.

                                         Bank:

WITNESS:                                 OCWEN FEDERAL BANK FSB

/s/John W. Halvorson                     By:/s/William B. Shepro
Name: John W. Halvorson
                                         Name: William B. Shepro

                                         Title: Sr. Vice President

/s/Michael L. Roy
Name: Michael L. Roy

                                         Ocwen:

WITNESS:                                 OCWEN FINANCIAL CORPORATION

                                         By:/s/William B. Shepro
/s/John W. Halvorson
Name: John W. Halvorson                  Name: William B. Shepro

                                         Title: Sr. Vice President

/s/Michael L. Roy
Name: Michael L. Roy

                                         Obligors:

WITNESS:                                 BALANCED CARE REALTY (OFC), INC.

/s/Jaynelle D. Covert                    By:/s/Robin L. Barber
Name: Jaynelle D. Covert
                                         Name: Robin L. Barber

                                         Title: Vice President and
/s/Theresa M. Haddad                            Secretary
Name: Theresa M. Haddad

                                      -10-
<PAGE>
WITNESS:                                 BALANCED CARE CORPORATION

/s/Jaynelle D. Covert                    By:/s/Robin L. Barber
Name: Jaynelle D. Covert
                                         Name: Robin L. Barber

                                         Title: Senior Vice President,
/s/Theresa M. Haddad                            Legal Counsel and
Name: Theresa M. Haddad                         Assistant Secretary

WITNESS:                                 BALANCED CARE AT MEDINA, INC.

/s/Jaynelle D. Covert                    By:/s/Robin L. Barber
Name: Jaynelle D. Covert
                                         Name: Robin L. Barber

                                         Title: Vice President and
/s/Theresa M. Haddad                            Secretary
Name: Theresa M. Haddad

WITNESS:                                 BALANCED CARE AT CENTERVILLE, INC.

/s/Jaynelle D. Covert                    By:/s/Robin L. Barber
Name: Jaynelle D. Covert
                                         Name: Robin L. Barber

                                         Title: Vice President and
/s/Theresa M. Haddad                            Secretary
Name: Theresa M. Haddad

                                      -11-
<PAGE>
WITNESS:                                 BALANCED CARE AT SHIPPENSBURG, INC.

/s/Jaynelle D. Covert                    By:/s/Robin L. Barber
Name: Jaynelle D. Covert
                                         Name: Robin L. Barber

                                         Title: Vice President and
/s/Theresa M. Haddad                     Secretary
Name: Theresa M. Haddad

                                         SENIOR CARE OPERATORS OF
WITNESS:                                 SHIPPENSBURG, LLC

                                         By:  Balanced Care
/s/Jaynelle D. Covert                         at Shippensburg,
Name: Jaynelle D. Covert                      Inc., its Manager

                                         By:/s/Robin L. Barber
/s/Theresa M. Haddad
Name: Theresa M. Haddad                  Name: Robin L. Barber

                                         Title: Vice President and
                                                Secretary

                                      -12-<PAGE>
Exhibit 10.41

                      OPEN-END MORTGAGE, SECURITY AGREEMENT
                       AND ASSIGNMENT OF LEASES AND RENTS
                                (Centerville, OH)

           THIS OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF LEASES
AND RENTS (herein "Instrument") is made as of the 31st day of March, 2002 by the
grantor, Balanced Care Realty (OFC), Inc., a Delaware corporation (the
"Borrower") in favor of the following grantees: Centerville ALF, Inc., a Florida
corporation, Medina ALF, Inc., a Florida corporation, and Shippensburg ALF,
Inc., a Florida corporation (collectively referred to hereinafter as the "Ocwen
Affiliates"), and Ocwen Financial Corporation, a Florida corporation ("Ocwen").

           WHEREAS, the Ocwen Affiliates, Balanced Care Corporation, a Delaware
corporation ("Balanced Care"), Ocwen, Senior Care Operators of Shippensburg,
LLC, a Delaware limited liability company ("Licensee"), Senior Care Operators of
Ohio, LLC, a Delaware limited liability company, and Senior Care Operators of
Centerville LLC, a Delaware limited liability company, have entered into the
Settlement Agreement and Release, effective March 31, 2002 ("Settlement
Agreement") pursuant to which Balanced Care has agreed to provide the Balanced
Care Corporation Promissory Note, also dated as of March 31, 2002, in the
principal amount of $936,445.00, to the Ocwen Affiliates ("BCC Note") to settle
and resolve the Litigation (as defined in the Settlement Agreement).

           WHEREAS, Ocwen, Borrower, Balanced Care, Balanced Care at Medina,
Inc., a Delaware corporation ("BCM"), Balanced Care at Centerville, Inc., a
Delaware corporation ("BCC"), Balanced Care at Shippensburg, Inc. ("BCS") a
Delaware corporation, (BCM, BCC, and BCS are collectively referred to
hereinafter as "Management Companies"), and Licensee, have entered into the Term
Loan Agreement, as of the date hereof ("Term Loan Agreement"), pursuant to which
Ocwen has agreed to loan Borrower, and Borrower has accepted from Ocwen, the
principal sum of Nine Million One Hundred
<PAGE>
Fifty-Three Thousand Three Hundred Fifty-Six Dollars ($9,153,356.00) plus
interest thereon ("Loan").

           WHEREAS, Borrower has used the proceeds of the Loan to pay a portion
of the purchase price for certain real property (and three (3) assisted living
facilities located thereon) Borrower has purchased from the Ocwen Affiliates,
pursuant to the terms and conditions of the Agreement of Purchase and Sale, of
even date herewith, by and among the Ocwen Affiliates, Ocwen, Borrower, Balanced
Care and the following parties joining only as to specific provisions:
Management Companies and Licensee ("Purchase Agreement").

           WHEREAS, in connection with the Loan, Borrower has executed the Term
Note, of even date herewith ("Term Note"), evidencing Borrower's obligation to
repay all principal and interest due under the Loan as well as certain
additional payments that may be required pursuant to the terms of the Term Loan
Agreement and Term Note.

           WHEREAS, Borrower is a wholly owned subsidiary of Balanced Care.

           WHEREAS, in addition to the Loan, a portion of the purchase price for
the real property being transferred and conveyed by the Ocwen Affiliates to
Borrower shall be deferred and is payable in accordance with the terms and
conditions of the Deferred Purchase Price Note given by Borrower to the Ocwen
Affiliates in the original principal amount of $3,449,401.47 ("Deferred Purchase
Price Note").

           WHEREAS, Ocwen and the Ocwen Affiliates, as a condition to providing
the Loan to Borrower, entering into the Settlement Agreement with Balanced Care,
and entering into the Purchase Agreement with Borrower, Balanced Care and the
other parties thereto, requires that Borrower grant to Ocwen and the Ocwen
Affiliates a mortgage on the property legally described on Exhibit A hereto,
pursuant to the terms of this Instrument, and the Borrower is willing to grant
Ocwen and the Ocwen Affiliates a mortgage in and to the property described on
Exhibit A hereto and to otherwise perform the obligations set forth in this
Instrument.

           WHEREAS, Ocwen and the Ocwen Affiliates understand that the lien
created by this Instrument shall be second in priority to the lien of the
Mortgages (as defined in the Term Loan Agreement).

                                      -2-
<PAGE>
           WHEREAS, the Term Loan Agreement, the Term Note, all Security
Documents (as defined in the Term Loan Agreement), all Ancillary Documents (as
defined in the Term Loan Agreement), the Settlement Agreement, the BCC Note, the
Purchase Agreement, and the Deferred Purchase Price Note shall hereinafter be
collectively referred to as the "Transaction Documents."

           Borrower, intending to be legally bound, in consideration of the Loan
from Ocwen, Ocwen's and Ocwen Affiliates' entering into the Settlement Agreement
with Balanced Care, and Ocwen's and Ocwen Affiliates' execution of the Purchase
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, hereby agrees that the foregoing
recitals are incorporated herein by reference and as follows:

           TO SECURE TO THE OCWEN AFFILIATES AND OCWEN (a) the repayment of any
amounts due to Ocwen and/or the Ocwen Affiliates under the Transaction
Documents, specifically including but not limited to the BCC Note and Deferred
Purchase Price Note, and the repayment of other indebtedness of Borrower or
Balanced Care to Ocwen or the Ocwen Affiliates secured by this Instrument, with
interest on the foregoing, and all renewals, extensions and modifications of the
foregoing; (b) the payment of all other sums with interest thereon advanced in
accordance herewith to protect the security of this Instrument; and (c) the
performance of the covenants and agreements of Borrower and Balanced Care herein
contained and contained in the Transaction Documents, and in any other documents
given by Borrower or Balanced Care to Ocwen and/or the Ocwen Affiliates to
evidence, or otherwise in connection with, additional indebtedness of Borrower
or Balanced Care to Ocwen and/or the Ocwen Affiliates secured by this
Instrument, Borrower does hereby mortgage, grant, convey and assign to the Ocwen
Affiliates and Ocwen all of the Borrower's right, title, interest, and
privileges in and to the following: the real property described in Exhibit A
attached hereto and made a part hereof, together with all buildings,
improvements, and tenements now or hereafter erected on the real property and
owned by Borrower, and all heretofore or hereafter vacated alleys and streets
abutting the property, and all easements, rights, appurtenances, rents,
royalties, mineral, oil and gas rights and profits, water, water rights, and
water stock appurtenant to the property, and all fixtures, machinery, equipment,
engines, boilers, incinerators, building materials and appliances whatsoever now
or hereafter located in, or on, or used, or intended to be used in connection
with the property, including, but not limited to, those for the purposes of
supplying or distributing heating, cooling, electricity, gas, water, air and
light; and all elevators, and

                                      -3-
<PAGE>
related machinery and equipment, fire prevention and extinguishing apparatus,
security and access control apparatus, plumbing, bath tubs, water heaters, water
closets, sinks, ranges, stoves, refrigerators, dishwashers, disposals, washers,
dryers, awnings, storm windows, storm doors, screens, blinds, shades, curtains
and curtain rods, mirrors, cabinets, paneling, rugs, attached floor coverings,
furniture, fixtures and equipment now owned or hereafter acquired and used in,
on or about the subject real estate (excluding, however, leased equipment) all
of which, to the extent owned by Borrower, including replacements and additions
thereto, shall be deemed to be and remain a part of the real property covered by
this Instrument; and, to the extent permissible by law, all licenses, permits
and certifications and all other general intangibles owned or used in connection
with the operation of the real property covered by this Instrument; and all of
the proceeds of the foregoing; and all of the above including said real property
are herein referred to as the "Property".

           Borrower covenants and agrees that Borrower is lawfully seized of the
estate hereby conveyed and has the right to mortgage, grant, convey and assign
the Property, that the Property is unencumbered, except for Permitted
Encumbrances, and that Borrower will warrant and defend generally the title to
the Property against all claims and demands, whatsoever. As used herein,
"Permitted Encumbrances" means (i) all matters listed on Schedule B to that
certain "marked up" Title Insurance Commitment issued by First American Title
Insurance Company, dated April 5, 2002 and noted as Commitment Number 9-58499;
(ii) all resident or occupancy contracts for the leasing of units located on the
Property; (iii) the Heartland Rehab lease, assigned to Borrower as of March 31,
2002 and also assigned as collateral to Ocwen as of March 31, 2002, and (iv)
real property taxes and assessments imposed or assessed on the Property but not
yet due and payable as of March 31, 2002.

           Borrower, Balanced Care, Ocwen and the Ocwen Affiliates covenant and
agree as follows:

           1. PAYMENT OF AMOUNTS DUE UNDER THE TRANSACTION DOCUMENTS; OPEN-END
MORTGAGE. Borrower and Balanced Care are obligated to promptly pay when due all
amounts which shall become due to Ocwen or the Ocwen Affiliates under the
Transaction Documents, and all other sums secured by this Instrument. This
Instrument is intended to be and shall be construed as an open-end mortgage and
shall secure the maximum principal amount of $4,385,846.47 together with
interest thereon and such other amounts as shall become due and owing to Ocwen
or the Ocwen Affiliates from

                                      -4-
<PAGE>
Borrower or Balanced Care pursuant to this Instrument, the Transaction
Documents, or other notes, documents or agreements evidencing, or otherwise
executed in connection with, additional indebtedness secured by this Instrument.

           2. FUNDS FOR TAXES, INSURANCE AND OTHER CHARGES. Upon default in
payment of any of the following described items, which default continues for a
period of thirty (30) days after Ocwen or the Ocwen Affiliates have provided
notice of same to Borrower (and Borrower shall notify Ocwen of its default in
the payment of the following promptly after Borrower becomes aware of same), or,
upon the occurrence of an Event of Default under any of the Transaction
Documents, specifically including but not limited to the BCC Note and Deferred
Purchase Price Note, or other notes or agreements given in connection with
additional indebtedness of Borrower or Balanced Care to Ocwen or an Ocwen
Affiliate secured by this Instrument, Ocwen shall have the right, at its option,
to require Borrower to pay to Ocwen on the first day of each month, for so long
as the BCC Note and/or Deferred Purchase Price Note or any of the Transaction
Documents remains outstanding, a sum (herein "Funds") equal to one-twelfth of
(a) the yearly water and sewer rates which may be levied on the Property; and
(b) the yearly expenses, costs or fees associated with any licenses, permits,
certifications or other governmental approvals required, necessary, or desirable
for the operation of the facility located on the Property, all as reasonably
estimated initially and from time to time adjusted by the basis of assessments
and bills and reasonable estimates thereof. Any waiver by Ocwen of a requirement
that Borrower pay such Funds following Borrower's default in payment of any of
such items or the occurrence of an Event of Default under any of the Transaction
Documents, specifically including but not limited to the BCC Note and Deferred
Purchase Price Note, may be revoked by Ocwen, in Ocwen's sole discretion, at any
time upon notice in writing to Borrower. Borrower shall be required to escrow
funds sufficient to pay real property taxes and assessments, and upon Borrower's
failure to pay premiums for the following when due, insurance premiums for fire
and other casualty/hazard insurance, in accordance with the terms and conditions
of Section 4.7 of the Term Loan Agreement, and such escrowed funds shall not be
governed by this Section 2, but rather by Section 4.7 of the Term Loan
Agreement.

           The Funds shall be held by Ocwen and shall be applied to pay said
rates, rents, and/or license, permit, or other fees ("Other Impositions") so
long as no Event of Default has occurred under any of the Transaction Documents,
specifically including but not limited to the BCC Note and/or Deferred Purchase
Price Note.

                                      -5-
<PAGE>
Ocwen shall make no charge for so holding and applying the Funds, analyzing said
account or for verifying and compiling said assessments and bills, unless Ocwen
pays Borrower interest, earnings or profits on the Funds and applicable law
permits Ocwen to make such a charge. Unless applicable law requires interest,
earnings or profits on the Funds to be paid, Ocwen shall not be required to pay
Borrower any interest, earnings or profits on the Funds. Ocwen shall give to
Borrower, without charge, an annual accounting of the Funds showing credits and
debits to the Funds and the purpose for which each debit to such Funds was made.

           If at any time the amount of the Funds held by Ocwen shall be less
than the amount deemed necessary by Ocwen to pay water and sewer rates, rents,
and/or license, permit or other fees, and Other Impositions, as they fall due,
Borrower shall, thirty (30) days after demand, pay such deficiency.

           Upon Borrower's breach of any covenant or agreement of Borrower in
this Instrument or upon the occurrence of an Event of Default under any of the
Transaction Documents, specifically including but not limited to the BCC Note
and/or Deferred Purchase Price Note, Ocwen may apply, in any amount and in any
order as Ocwen shall determine in Ocwen's sole discretion, any Funds held by
Ocwen at the time of application (a) to pay rates, rents, and/or license,
permit, or other fees, and Other Impositions which are now or will hereafter
become due; or (b) as a credit against sums secured by this Instrument. Upon
release of this Instrument, Ocwen shall promptly refund to Borrower any Funds
held by Ocwen.

           3. APPLICATION OF PAYMENTS. All payments received by Ocwen or an
Ocwen Affiliate from Borrower under the Transaction Documents or this Instrument
shall be applied by Ocwen in the following order of priority: (a) amounts
payable to Ocwen by Borrower under paragraph 2 hereof; (b) interest payable on
amounts due under the Transaction Documents; (c) principal due under the
Transaction Documents; (d) interest payable on advances made pursuant to
paragraph 8 hereof; (e) principal of advances made pursuant to paragraph 8
hereof; and (f) any other sums secured by this Instrument in such order as
Ocwen, at Ocwen's option, may determine; provided, however, that Ocwen may, at
Ocwen's option, apply any sums to interest and principal payable by Borrower
pursuant to paragraph 8 hereof prior to amounts due pursuant to the Transaction
Documents and further provided that, in the event of a sale as provided in
paragraph 25 hereof, the proceeds of the sale shall be applied first to the
costs of sale and thereafter as otherwise set forth herein.

                                      -6-
<PAGE>
           4. CHARGES; LIENS. Borrower shall pay all water and sewer rates,
rents, taxes (not being diligently contested by Borrower in a timely manner and
not otherwise paid by Ocwen from the escrow fund therefore established and
maintained pursuant to Section 4.7 of the Term Loan Agreement), premiums, and
license, permit, or other fees, and Other Impositions attributable to the
Property. Borrower shall promptly discharge any lien which has, or may have,
priority over or equality with, the lien of this Instrument (except for the
Mortgages); provided, however, that Borrower shall be entitled to contest any
such lien in good faith (provided Borrower contests such lien in a diligent and
timely manner). With respect to liens filed for failure to pay real property
taxes and/or assessments, Borrower shall be entitled to contest the lien only if
Borrower pays the taxing or assessing authority sufficient funds to discharge
the lien prior to commencement of the contest. Upon written request from Ocwen,
if the lien is in a face amount in excess of $100,000, Borrower shall provide a
bond, letter of credit, or sufficient funds in an escrow account, to pay off the
amount required to discharge the lien during the period of contest by Borrower
(except for real property tax and/or assessment liens, which are governed by the
foregoing sentence). If a mechanic's lien is filed against the Property,
Borrower shall promptly notify Ocwen and, at Ocwen's request, shall, at
Borrower's option, but subject to the right to contest hereinafter set forth,
either (i) escrow with Ocwen or with the consent of Ocwen deposit in a court of
competent jurisdiction a sum of money equal to the amount of the lien, or (ii)
provide a bond against the lien in such amount and in such manner as to
discharge the lien as an encumbrance against the Property. Without Ocwen's prior
written permission, except as otherwise permitted herein or in any other
Transaction Document, Borrower shall not allow any lien, encumbrance, or other
interest in the Property inferior to the lien of this Instrument to be perfected
against the Property.

           5. HAZARD, LIABILITY, AND OTHER INSURANCE. Borrower shall keep the
real property and improvements now existing or hereafter erected on the Property
insured by carriers at all times satisfactory to Ocwen and in a form acceptable
to Ocwen against loss by fire, hazards included within the term "extended
coverage," and such other hazards and casualties as Ocwen shall reasonably
require and in an amount not less than the full replacement cost of the
buildings and improvements located on the Property (i.e., such insurance shall
insure the Property on a replacement value basis). The Borrower shall also
maintain such other insurance, specifically including but not limited to rent
loss (if applicable), general liability, workers' compensation, etc., upon the
Property, of such character as is usually

                                      -7-
<PAGE>
maintained by Balanced Care or its Affiliates on like properties, and in an
amount that is acceptable to Ocwen, in the exercise of its reasonable
discretion. Such policies must be written on an occurrence basis so as to
provide blanket contractual liability, broad form property damage coverage, and
coverage for products and completed operations.

           Borrower shall determine if the Property is located in a federally
identified flood hazard zone and if the property is so located the Borrower will
provide flood insurance coverage in a reasonable amount as determined by Ocwen.

           All policies of insurance required by the terms of this Instrument
shall provide or contain an endorsement by the insurer thereof that any loss
shall be payable in accordance with the terms of such policy notwithstanding any
act or negligence of Borrower which might otherwise result in forfeiture of said
insurance and the further agreement of the insurer waiving all rights of
set-off, counterclaim or deductions against Borrower. In addition, such policies
shall contain an agreement by the insurers thereof that such policies shall not
be canceled or changed except upon not less than 30 days prior written notice
delivered to Ocwen.

           All insurance policies and renewals thereof shall be issued by
companies with a Best's Insurance Reports policy holder's rating of A- or better
and a financial size category of Class XI or better, shall be in a form
acceptable to Ocwen and shall include a standard mortgagee clause in favor of
and in form acceptable to Ocwen. Ocwen shall be listed as a mortgagee, loss
payee and additional insured of all such policies. Ocwen shall have the right to
hold the policies, and Borrower shall promptly furnish to Ocwen all renewal
notices and all receipts of paid premiums. At least ten (10) days prior to the
expiration date of a policy, Borrower shall deliver to Ocwen a renewal policy in
form satisfactory to Ocwen. Notwithstanding anything to the contrary set forth
above, Ocwen will agree to consent, in its reasonable discretion, to
modifications to insurance requirements to accommodate company-wide insurance
programs that may in the future be implemented by Balanced Care and its
Affiliates (as defined in the Term Loan Agreement), which insurance programs may
include (without limitation) self-insurance elements or blanket policy insurance
programs with other Affiliates of Balanced Care or LMR Holdings Limited, an
exempted company incorporated in the Cayman Islands ("LMR").

                                      -8-
<PAGE>
           If Ocwen or an Ocwen Affiliate is made a party defendant to any
litigation concerning this Instrument or the Property or any part thereof or
interest therein, or the occupancy thereof by Borrower, and such litigation is
not caused by any act of Ocwen or an Ocwen Affiliate which constitutes gross
negligence or intentional misconduct on the part of Ocwen or an Ocwen Affiliate,
then Borrower shall indemnify, defend and hold Ocwen and the Ocwen Affiliates
harmless from all liability by reason of said litigation, including reasonable
attorneys' fees and expenses incurred by Ocwen or an Ocwen Affiliate in any such
litigation, whether or not any such litigation is prosecuted to judgment.
Borrower waives any and all right to claim or recover against Ocwen and the
Ocwen Affiliates, their officers, employees, agents and representatives, for
loss of or damage to Borrower, the Property, Borrower's property, or the
property of others under Borrower's control from any cause insured against or
required to be insured against by the provisions of this Instrument, except when
such claim or recovery arises out of an act of Ocwen or the Ocwen Affiliates.

           In the event of loss, Borrower shall give reasonably prompt written
notice to the insurance carrier and to Ocwen. If an Event of Default has
occurred under any of the Transaction Documents, specifically including but not
limited to the Term Loan Agreement, the BCC Note and the Deferred Purchase Price
Note, Borrower hereby authorizes Ocwen to act as attorney-in-fact for Borrower
to make proof of loss, to adjust and compromise any claim under the insurance
policies, to appear in and prosecute any action arising from such insurance
policies, to collect and receive insurance proceeds, and to deduct therefrom
Ocwen's expenses incurred in the collection of such proceeds; provided, however,
that nothing contained in this paragraph 5 shall require Ocwen to incur any
expense or take any action hereunder. In the event of loss, the proceeds of said
insurance shall be paid, held and disbursed as hereinafter provided.

           If the Property is sold pursuant to paragraph 25 hereof, or if the
Ocwen Affiliates acquire title to the Property, Ocwen shall have all of the
right, title and interest of Borrower in and to any insurance policies and
unearned premiums thereon and in and to the proceeds resulting from any damage
to the Property prior to such sale or acquisition.

           Provided that Borrower is not in default hereunder and an Event of
Default has not occurred and is not continuing under any of the Transaction
Documents, specifically including but not limited to the BCC Note and the
Deferred Purchase Price Note,

                                      -9-
<PAGE>
insurance proceeds shall be held by Ocwen to reimburse Borrower for the cost of
restoration and repair of the Property, and the Property shall be restored to
the equivalent of its original condition or such other condition as Ocwen may
approve in writing. Ocwen may, at Ocwen's option, condition disbursement of said
proceeds on Ocwen's approval of plans and specifications of an architect
satisfactory to Ocwen, contractor's cost estimates, architect's certificates,
waivers of lien, sworn statements of mechanics and materialmen and such other
evidence of costs, percentage completion of construction, application of
payments, and satisfaction of liens as Ocwen may reasonably require. If the
amount needed to complete such repairs or restoration is greater than the amount
of insurance proceeds available, the Borrower shall, at the election of Ocwen
and within sixty (60) days from the date of loss, (i) deposit with Ocwen the
difference between the estimated amount needed to complete such repairs and the
available insurance proceeds, or (ii) pay from Borrower's funds all costs
attributable to such repair or restoration until such time as the estimated
remaining cost of the repairs or restoration is less than or equal to the
available insurance proceeds. If the above conditions are not met, Ocwen may
apply such proceeds toward payment of any amounts due under the Transaction
Documents, or toward payment of any other indebtedness of Borrower or Balanced
Care to Ocwen or an Ocwen Affiliate secured by this Instrument.

           6. PRESERVATION AND MAINTENANCE OF PROPERTY. Borrower (a) shall not
commit waste or permit impairment or deterioration of the Property; (b) shall
not abandon the Property; (c) shall restore or repair promptly and in a good and
workmanlike manner all or any part of the Property to the equivalent of its
original condition (except for obsolete equipment and ordinary wear and tear),
or such lesser condition as Ocwen may approve in writing, in the event of any
damage, injury or loss thereto, whether or not insurance proceeds are available
to cover in whole or in part the costs of such restoration or repair unless the
improvements portion of the Property are totally destroyed, insurance has been
maintained thereon as required by this Instrument and Ocwen applies the proceeds
of said insurance to the full payment of the sums secured by this Instrument;
(d) shall keep the Property, including improvements, fixtures, equipment,
machinery and appliances thereon in good repair (except for obsolete items and
ordinary wear and tear) and shall replace improvements, fixtures, equipment,
machinery and appliances in the ordinary course of Borrower's business; (e)
shall comply in all material respects with all laws, ordinances, regulations and
requirements of any governmental body applicable to the Property unless Borrower
is contesting the same in good faith and such contest does not

                                      -10-
<PAGE>
unreasonably jeopardize the continued operation of the Property; (f) shall keep
in full force and effect, without restriction or limitation, and not allow the
expiration or lapse of, and shall fully comply with all conditions and
requirements associated with all licenses, permits, certifications and
governmental approvals (including but not limited to Medicare and Medicaid
provider numbers and participation agreements and requirements of the State of
Ohio Certificate of Need Law, in the event same become applicable) required,
necessary, or desirable for the operation of the long-term care facility
constituting part of the Property hereunder, and (g) shall give notice in
writing to Ocwen of, appear in and defend any action or proceeding purporting to
affect the Property, the security of this Instrument or the rights or powers of
Ocwen hereunder. Neither the Borrower nor any tenant or other person shall
remove, demolish or alter any improvement now existing or hereafter erected on
the Property or any fixture (other than trade fixtures), equipment, machinery or
appliance in or on the Property except when incident to the replacement of
improvements, fixtures, equipment, machinery and appliances with items of like
kind or additions, and except replacements or removals in the ordinary course of
the Borrower's business.

           7. USE OF PROPERTY. Unless required by applicable law or unless Ocwen
has otherwise agreed in writing, Borrower shall not allow changes in the use for
which all or any part of the Property was intended at the time this Instrument
was executed. Borrower shall not initiate or acquiesce in a change in the zoning
classification of the Property without Ocwen's prior written consent.

           8. PROTECTION OF OCWEN'S SECURITY. If Borrower fails to perform the
covenants and agreements contained in this Instrument, or if any action or
proceeding is commenced which affects the Property or title thereto or the
interest of Ocwen therein, including, but not limited to, eminent domain,
insolvency, code enforcement, or arrangements or proceedings involving a
bankrupt or decedent, then Ocwen, at Ocwen's option and after thirty (30) days
prior notice to Borrower, may make such appearances, disburse such sums and take
such action as Ocwen deems necessary, in its sole discretion, to protect Ocwen's
and the Ocwen Affiliates' interests, including, but not limited to, (a)
disbursement of attorney's fees; (b) entry upon the Property to make repairs;
(c) procurement of satisfactory insurance as provided in paragraph 5 hereof; and
(d) taking all action required in order to obtain or reinstate any required,
necessary or desirable licenses, permits, approvals, or authorizations of
governmental entities (including but not limited to Medicare and Medicaid
provider numbers and

                                      -11-
<PAGE>
participation agreements and State of Ohio or Pennsylvania Certificate of Need
approvals and/or authorization, in the event the foregoing become applicable).

           Any amounts disbursed by Ocwen pursuant to this paragraph 8, with
interest thereon, shall become additional indebtedness of Borrower secured by
this Instrument. Unless Borrower and Ocwen agree to other terms of payment, such
amounts shall be immediately due and payable and shall bear interest from the
date of disbursement at the Default Rate of interest stated in the Term Loan
Agreement unless collection from Borrower of interest at such rate would be
contrary to applicable law, in which event such amounts shall bear interest at
the highest rate which may be collected from Borrower under applicable law.
Borrower hereby covenants and agrees that Ocwen shall be subrogated to the lien
of any mortgage or other lien discharged, in whole or in part, by the
indebtedness secured hereby. Nothing contained in this paragraph 8 shall require
Ocwen to incur any expense or take any action hereunder.

           9. INSPECTION. Ocwen may make or cause to be made entries upon and
inspections of the Property in accordance with the terms and provisions of the
Term Loan Agreement governing such inspections.

           10. BOOKS AND RECORDS. Borrower shall keep and maintain at all times
complete and accurate books of account and records adequate to reflect correctly
the operation of the Property and copies of all written contracts, leases and
other instruments which affect the Property, including but not limited to
licenses, permits, certifications and authorizations and approvals of
governmental agencies. Such books, records, contracts, leases and other
instruments (including licenses, permits, certifications, and authorizations and
approvals of governmental agencies) shall be subject to examination and
inspection at any reasonable time by Ocwen.

           11. CONDEMNATION. Borrower shall promptly notify Ocwen of any action
or proceeding relating to any condemnation or other taking, whether direct or
indirect, of the Property, or part thereof, and Borrower shall appear in and
prosecute any such action or proceeding unless otherwise directed by Ocwen in
writing. If any Event of Default under the Transaction Documents has occurred
and is continuing, Ocwen, at Ocwen's option, may act as attorney-in-fact for
Borrower to commence, appear in and prosecute, in Ocwen's name, the names of the
Ocwen Affiliates, or Borrower's name, any action or proceeding relating to any

                                      -12-
<PAGE>
condemnation or other taking of the Property, whether direct or indirect, and to
settle or compromise any claim in connection with such condemnation or other
taking. The proceeds of any award, payment or claim for damages, direct or
consequential, in connection with any condemnation or other taking, whether
direct or indirect, of the Property, or part thereof, or for conveyances in lieu
of condemnation, are hereby assigned to and shall be paid to Ocwen.

           With the consent of Ocwen, which consent shall not be unreasonably
withheld, Borrower may apply such awards, payments, proceeds or damages, after
the deduction of Ocwen's expenses incurred in the collection of such amounts, to
restoration or repair of the Property. Otherwise, such sums so received shall be
applied to payment of any amounts due under the Transaction Documents, under
other notes, agreements, or documents evidencing other indebtedness of Borrower
or Balanced Care to Ocwen or the Ocwen Affiliates secured by this Instrument, or
other sums secured by this Instrument, or, if no such amounts are then due, held
by Ocwen or the Ocwen Affiliates as security for Borrower's obligations under
the Transaction Documents or such other notes, agreements or documents
evidencing indebtedness secured hereby. Borrower agrees to execute such further
evidence of assignment of any awards, proceeds, damages or claims arising in
connection with such condemnation or taking as Ocwen or the Ocwen Affiliates may
require.

           12. BORROWER AND LIEN NOT RELEASED. From time to time, Ocwen may, at
Ocwen's option, without giving notice to or obtaining the consent of Borrower or
Borrower's successors or assigns or of any junior lienholder or guarantor,
without liability on Ocwen's or any Ocwen Affiliate's part and notwithstanding
Borrower's breach of any covenant or agreement of Borrower in this Instrument,
extend the time for payment of any amounts due under the Transaction Documents
or any other indebtedness secured by this Instrument or any part thereof, reduce
the payments thereon, release anyone liable for payment of such amounts, release
from the lien of this Instrument any part of the Property, take or release other
or additional security, reconvey any part of the Property, consent to any map or
plat of the Property, consent to the granting of any easement, join in any
extension or subordination agreement, agree in writing with Borrower to modify
any term or condition of the Transaction Documents, or other notes, documents or
agreements evidencing indebtedness of Borrower to Ocwen or the Ocwen Affiliates
secured hereby, including any term or condition relating to the payment of
money. Any actions taken by Ocwen pursuant to the terms of this

                                      -13-
<PAGE>
paragraph 12 shall not affect the obligation of Borrower or Borrower's
successors or assigns to pay the sums secured by this Instrument and to observe
the covenants of Borrower contained herein, shall not affect the guaranty of any
person, corporation, partnership or other entity for payment of the indebtedness
secured hereby, and shall not affect the lien or priority of lien hereof on the
Property. Borrower shall pay Ocwen a reasonable service charge, together with
such title insurance premiums and attorney's fees as may be incurred at Ocwen's
option for any such action if taken at Borrower's request.

           13. FORBEARANCE BY OCWEN NOT A WAIVER. Any forbearance by Ocwen or
the Ocwen Affiliates in exercising any right or remedy hereunder, or otherwise
afforded by applicable law, shall not be a waiver of or preclude the exercise of
any right or remedy. The acceptance by Ocwen or the Ocwen Affiliates of payment
of any sum secured by this Instrument after the due date of such payment shall
not be a waiver of Ocwen's or the Ocwen Affiliates' right to either require
prompt payment when due of all other sums so secured or to declare a default for
failure to make prompt payment. The procurement of insurance or the payment of
taxes or other liens or charges by Ocwen shall not be a waiver of Ocwen's or the
Ocwen Affiliates' right to accelerate the maturity of the indebtedness secured
by this Instrument. Ocwen's or the Ocwen Affiliates' receipt of any awards,
proceeds or damages under paragraphs 5 and 11 hereof shall not operate to cure
or waive Borrower's default in payment of sums secured by this Instrument.

           14. ESTOPPEL CERTIFICATE. Borrower shall, within 30 days of a written
request from Ocwen, furnish Ocwen or the Ocwen Affiliates with a written
statement, duly acknowledged, setting forth, to Borrower's knowledge, the sums
secured by this Instrument and any right of set-off, counterclaim or other
defense which exists against such sums and the obligations of this Instrument.
Within 30 days of Borrower's written request therefor, Ocwen and the Ocwen
Affiliates shall furnish Borrower with a statement as to (i) the amount then
secured by this Instrument, and (ii) whether, to Ocwen's knowledge, an Event of
Default under the Transaction Documents has occurred or is continuing.

           15. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. In addition to being
a Mortgage and Assignment of Rents, this Instrument is intended to be a security
agreement pursuant to the Uniform Commercial Code for any of the items specified
above as part of the Property which under applicable law may be subject to a
security interest pursuant to the Uniform Commercial Code, and

                                      -14-
<PAGE>
Borrower hereby grants Ocwen and the Ocwen Affiliates a first security interest
in said items. Borrower agrees that Ocwen or the Ocwen Affiliates may file this
Instrument, or a reproduction hereof, in the real estate records or other
appropriate index, as a financing statement for any of the items specified above
as part of the Property. Any reproduction of this Instrument or of any other
security agreement or financing statement shall be sufficient as a financing
statement. In addition, Borrower agrees to execute and deliver to Ocwen, upon
Ocwen's request, any financing statements, as well as extensions, renewals and
amendments thereof, and reproductions of this Instrument in such form as Ocwen
or the Ocwen Affiliates may reasonably require to perfect a security interest
with respect to said items. Borrower shall pay all costs of filing such
financing statements and any extensions, renewals, amendments and releases
thereof, and shall pay all reasonable costs and expenses of any record searches
for financing statements Ocwen or the Ocwen Affiliates may reasonably require.
Without the prior written consent of Ocwen, except as otherwise permitted by the
Transaction Documents, Borrower shall not create or suffer to be created
pursuant to the Uniform Commercial Code any other security interest in said
items, including replacements and additions thereto. If any Event of Default
occurs under any of the Transaction Documents, specifically including but not
limited to the BCC Note and the Deferred Purchase Price Note, or if a default
occurs under any other note, document or agreement given by Borrower or Balanced
Care to Ocwen or the Ocwen Affiliates in connection with indebtedness of
Borrower or Balanced Care to Ocwen or the Ocwen Affiliates secured by this
Instrument, or if Ocwen or the Ocwen Affiliates declare all sums secured hereby
immediately due and payable in accordance with the first sentence of paragraph
25, Ocwen and the Ocwen Affiliates shall have the remedies of a secured party
under the Uniform Commercial Code and, at Ocwen's or the Ocwen Affiliates'
option, may also invoke the remedies provided in paragraph 25 of this Instrument
as to such items. In exercising any of said remedies, Ocwen and the Ocwen
Affiliates may proceed against the items of real property and any items of
personal property specified above as part of the Property separately or together
and in any order whatsoever, without in any way affecting the availability of
Ocwen's or the Ocwen Affiliates' remedies under the Uniform Commercial Code or
of the remedies provided in paragraph 25 of this Instrument.

           16. LEASES OF THE PROPERTY. Borrower shall comply with and observe
Borrower's obligations as landlords under any leases of the Property or any part
thereof. Borrower shall furnish Ocwen with executed copies of all
non-residential leases hereafter made

                                      -15-
<PAGE>
of all or any part of the Property, and all non-residential leases hereafter
entered into will be subject to Ocwen's prior written approval, which approval
shall not be unreasonably withheld. Borrower shall provide copies of all
residential leases to Ocwen within thirty (30) Business Days after Ocwen's
request therefore. Unless otherwise directed by Ocwen and except for
non-residential leases, all leases of the Property made after the date hereof
shall specifically provide that such leases are subordinate to this Instrument;
that the tenant attorns to Ocwen or the Ocwen Affiliates, such attornment to be
effective upon Ocwen's or the Ocwen Affiliates' acquisition of title to the
Property; that the tenant agrees to execute such further evidences of attornment
as Ocwen or the Ocwen Affiliates may from time to time request; and that the
attornment of the tenant shall not be terminated by foreclosure. In addition,
all lessees (other than lessees under residential leases) of all or any part of
the Property shall execute a Subordination, Attornment and Non-Disturbance and
Estoppel Certificate in substantially the same form attached hereto as Exhibit B
or as agreed to by Ocwen or the Ocwen Affiliates. Except for residential leases
amended, modified, executed, surrendered, or terminated in the ordinary course
of Borrower's business, Borrower shall not, without Ocwen's written consent,
which consent shall not be unreasonably withheld, execute, modify, surrender or
terminate, either orally or in writing, any lease hereafter made of all or any
part of the Property, permit an assignment or sublease of such a lease, or
request or consent to the subordination of any lease of all or any part of the
Property to any lien subordinate to this Instrument. If Borrower becomes aware
that any tenant (other than a residential tenant) proposes to do, or is doing,
any act or thing which may give rise to any right to set-off against rent,
Borrower shall (a) take such steps as shall be reasonably calculated to prevent
the accrual of any right to a set-off against rent, (b) notify Ocwen thereof and
of the amount of said set-offs, and (c) within ten days after such accrual,
reimburse the tenant who shall have acquired such right to set-off or take such
other steps as shall effectively discharge such set-off and as shall assure that
rents thereafter due shall continue to be payable without set-off or deduction.

           17. REMEDIES CUMULATIVE. Each remedy provided in this Instrument is
distinct and cumulative to all other rights or remedies under this Instrument or
afforded by law or equity, and may be exercised concurrently, independently, or
successively, in any order whatsoever.

                                      -16-
<PAGE>
           18. TRANSFERS OF THE PROPERTY; CHANGES IN CONTROL OR OWNERSHIP OF
MORTGAGOR. Upon the voluntary or involuntary sale, lease (in violation of this
Instrument or in violation of the Term Loan Agreement), exchange, assignment,
conveyance (other than a condemnation governed by Section 11 of this
Instrument), transfer or other disposition (herein collectively called
"Disposition") of all or any portion of the Property (or any interest therein),
or a transfer of the Borrower of any interest therein prohibited by any of the
Transaction Documents, or in the event Borrower conveys to any other party a
security interest in the Property or any part thereof, or voluntarily or
involuntarily permits or suffers the Property to be further encumbered, in
violation of this Instrument (herein collectively called "Encumbrance"), then
such Disposition or Encumbrance shall be a default hereunder, and Ocwen and the
Ocwen Affiliates may, at their option, enforce any and all of their rights,
remedies and recourses as set forth herein and/or in the Transaction Documents;
provided, however, neither Ocwen nor any Ocwen Affiliate shall enforce such
rights, remedies, and recourses if it consents in writing to the Disposition or
Encumbrance in question. It is expressly agreed that in connection with
determining whether to grant or withhold such consent the determination made by
Ocwen or an Ocwen Affiliate shall be conclusive and Ocwen may require as
conditions to granting such consent (a) payment of Ocwen's or the Ocwen
Affiliates' reasonable attorneys' fees in connection with such Disposition or
Encumbrance, and (b) the express assumption of the payment of the indebtedness
and performance of the obligations of the Borrower or Balanced Care by the party
to whom such Disposition will be made (with or without the release of Borrower
or Balanced Care from liability for such indebtedness and obligations).

           19. NOTICE. Whenever notice is required to be given pursuant to the
provisions hereof, such notice shall be given at the addresses and in the manner
specified in the Term Loan Agreement.

           20. SUCCESSORS AND ASSIGNS BOUND; AGENTS; CAPTIONS. The covenants and
agreements herein contained shall bind, and the rights hereunder shall inure to,
the respective successors and assigns of Ocwen, the Ocwen Affiliates, and
Borrower. In exercising any rights hereunder or taking any actions provided for
herein, Ocwen and the Ocwen Affiliates may act through their employees, agents
or independent contractors as authorized by Ocwen or the Ocwen Affiliates. The
captions and headings of the paragraphs of this Instrument are for convenience
only and are not to be used to interpret or define the provisions hereof.

                                      -17-
<PAGE>
           21. GOVERNING LAW AND FORUM SELECTION; SEVERABILITY. This Instrument
shall be governed by the laws of the State of Ohio, without regard to its
conflict of law provisions. In the event of any dispute, claim or controversy
arising out of the terms or conditions of this Instrument or any of the
Transaction Documents, Borrower hereby agrees that such dispute, claim, or
controversy shall be brought and heard only in the United States District Court
for the Southern district of Ohio, Western Division, in such other federal court
as Ocwen shall select, in state court in the State of Ohio, County of
Montgomery, or in such other state court in such other county and state as Ocwen
may select, and all applicable appellate courts thereof, and Borrower hereby
waives any objection to jurisdiction, venue or forum non convenes that Borrower
may have otherwise had if this provision were not included herein. At the
request of Ocwen, made at any time, Borrower shall designate a statutory agent
in any State requested by Ocwen such that the forum selection clause of this
Section 21 may be effectuated.

           In the event that any provision of this Instrument conflicts with
applicable law, such conflict shall not affect other provisions of this
Instrument which can be given effect without the conflicting provisions, and to
this end the provisions of this Instrument are declared to be severable.

           22. WAIVER OF STATUTE OF LIMITATIONS. To the extent permitted by law,
Borrower hereby waives the right to assert any statute of limitations as a bar
to the enforcement of the lien of this Instrument or to any action brought to
enforce any of the Transaction Documents or any other obligation secured by this
Instrument.

           23. WAIVER OF MARSHALLING. Notwithstanding the existence of any other
security interests in the Property held by Ocwen or by any other party, Ocwen
shall have the right to determine the order in which any or all of the Property
shall be subjected to the remedies provided herein. Ocwen shall have the right
to determine the order in which any or all portions of the indebtedness secured
hereby are satisfied from the proceeds realized upon the exercise of the
remedies provided herein. Borrower, any party who consents to this Instrument,
and any party who now or hereafter acquires a security interest in the Property
and who has actual or constructive notice hereof, hereby waives any and all
right to require the marshalling of assets in connection with the exercise of
any of the remedies permitted by applicable law or provided herein.

                                      -18-
<PAGE>
           24. ASSIGNMENT OF LEASES AND RENTS, CONTRACT RIGHTS, AND LICENSES AND
PERMITS; APPOINTMENT OF RECEIVER; OCWEN IN POSSESSION. Borrower hereby
absolutely and unconditionally assigns and transfers to Ocwen all the leases,
rents and revenues of the Property, including those now due, past due, or to
become due by virtue of any lease or other agreement for the occupancy or use of
all or any part of the Property, regardless of to whom the rents and revenues of
the Property are payable. Borrower hereby absolutely and unconditionally assigns
and transfers to Ocwen all of the contract rights of Borrower in and under
resident agreements or occupancy agreements (quasi real property leases),
service agreements and other vendor agreements necessary, required, or desirable
for the operation of the facility that constitutes the Property secured hereby,
the foregoing assignment to be effective at any time upon Ocwen providing
written notice to Borrower. To the extent permitted by applicable law, Borrower
also hereby absolutely and unconditionally assigns and transfers to Ocwen all of
the rights of Borrower in, under and to all licenses, permits, certifications
and governmental approvals necessary, required or desirable in connection with
the operation of the facility that constitutes the Property secured hereby
(including but not limited to Medicare and Medicaid provider numbers and
participation agreements and Ohio Certificate of Need approvals and
authorizations, in the event the foregoing are applicable), the foregoing
assignment to be effective at any time upon Ocwen providing written notice to
Borrower. Although this Instrument is a present assignment, Ocwen shall not
exercise any of the rights or powers herein conferred upon it until (i) an Event
of Default shall have occurred under any of the Transaction Documents,
specifically including but not limited to the BCC Note and the Deferred Purchase
Price Note and specifically including but not limited to a default in the
payment of Indebtedness (as defined in the Term Loan Agreement) owed to Ocwen,
or a default in performance by Borrower or Balanced Care under any other
documents, agreements or notes provided by Borrower or Balanced Care to Ocwen or
an Ocwen Affiliate in connection therewith, or (ii) a default occurs under this
Instrument or any other instrument securing the Borrower's or Balanced Care's
obligations under the Transaction Documents, and with respect to the latter two
events, Ocwen provides written notice of same to Borrower. Borrower hereby
authorizes Ocwen or Ocwen's agents or its designee to (i) collect the aforesaid
rents and revenues and hereby directs each tenant of the Property to pay such
rents to Ocwen or Ocwen's agents; and (ii) take any action necessary to obtain
the assignment of contracts, licenses, permits, certifications or approvals
necessary, required or desirable in connection with the

                                      -19-
<PAGE>
operation of the facility that constitutes the Property secured hereby and
hereby directs third parties, to the extent they require Borrower's consent or
approval to permit or allow such transfers and assignment, to grant and
effectuate such assignments. Upon an event of default as hereinabove described,
and without the necessity of Ocwen entering upon and taking and maintaining full
control of the Property in person, by agent or by a court-appointed receiver,
Ocwen shall immediately be entitled to possession of all rents and revenues of
the Property, and upon prior written notice to Borrower, all contracts,
licenses, permits, certifications and approvals, as specified in this paragraph;
with respect to rents, revenues, and payments due under income-producing or
income-generating contracts for Borrower, as the same become due and payable
(including but not limited to rents then due and unpaid) and all such rents and
other payments received by Borrower shall immediately upon delivery of such
notice be held by Borrower as trustees for the benefit of Ocwen only. This
paragraph may be supplemented by a separate assignment of leases and rents
instrument, and/or a separate assignment of contracts instrument, and/or
separate assignments of licenses, permits, certifications, and approvals entered
into by and between Ocwen and Borrower, which instrument(s) shall set forth more
fully Ocwen's rights with respect to the leases, rents, revenue, contract
rights, licenses, permits, certifications and approvals relating to the
Property.

           25. ACCELERATION; REMEDIES. If (a) Borrower or Balanced Care is in
default beyond any applicable grace period under any of the Transaction
Documents, specifically including but not limited to the BCC Note and the
Deferred Purchase Price Note, (b) Borrower defaults in the performance or
observance of any of the covenants or agreements of Borrower contained in this
Instrument and such default continues for a period of 30 days after written
notice thereof from Ocwen to Borrower, and, in the event that any such default
(other than a monetary default) cannot be cured in such initial 30 day period
despite the exercise of all reasonable diligence by Borrower, Borrower shall be
entitled to an additional 30 days to cure such default (not including monetary
defaults) provided Borrower has commenced and continues to diligently prosecute
such cure at all times, (c) an Event of Default under the Term Loan Agreement
has occurred and is continuing beyond any applicable grace period, or (d)
Borrower or Balanced Care is in default or in breach of any provision, including
but not limited to any payment provision, beyond any applicable grace period,
contained in any note, document or agreement given by Borrower or Balanced Care
to Ocwen or an Ocwen Affiliate in connection with indebtedness of Borrower and
Balanced Care to Ocwen and the Ocwen

                                      -20-
<PAGE>
Affiliates secured by this Instrument; then, in any such event, at any time,
without further demand or notice, any and all sums secured by this Instrument
shall be immediately due and payable and, in addition to any other right or
remedy which Ocwen or the Ocwen Affiliates may now or hereafter have at law or
in equity, Ocwen and the Ocwen Affiliates shall have the right and power: (a) to
foreclose upon this Instrument and the lien hereof; (b) to sell the Property
according to law at one or more sales as an entity or in parcels and at such
time and place upon such terms and conditions and after such notices thereof as
may be required by law; (c) to enter upon and take possession of the Property
and/or have a receiver appointed therefor as set forth in paragraph 24 hereof;
and (d) to effectuate the assignments of contract rights, licenses, permits,
certifications, and approvals, as described herein. If all sums secured by this
Instrument become immediately due and payable in accordance with this paragraph,
Ocwen or the Ocwen Affiliates, at Ocwen's option, may foreclose this Instrument
by judicial proceeding and may invoke any other remedies permitted by applicable
law or as provided herein. Ocwen and the Ocwen Affiliates shall be entitled to
collect all costs and expenses incurred in pursuing such remedies, including,
but not limited to costs of documentary evidence, abstracts, title reports,
attorneys fees, and any and all fees and costs associated with the (i) transfer
of contracts, or obtaining new contracts, and (ii) transfer of licenses,
permits, certifications, and approvals, both of the foregoing which are
necessary, required, or desirable in connection with the operation of the
facility that constitutes the Property secured hereby.

           26. INDEMNIFICATION. Borrower shall protect, indemnify, defend and
save harmless Ocwen and the Ocwen Affiliates from and against all actions,
claims, causes of action, liabilities, costs and expenses (including, without
limitation, reasonable attorneys fees and expenses, including those incurred in
connection with appellate, bankruptcy and post-judgment proceedings) imposed
upon or incurred by or asserted against Ocwen or an Ocwen Affiliate by reason
of: (a) the terms and conditions set forth in this Instrument; (b) ownership of
the Property or any interest therein, or receipt of any rents; (c) any accident,
injury to or death of persons or loss of or damage to property occurring in, on
or about the Property or any part thereof or on the adjoining sidewalks, curbs,
adjacent property or adjacent parking areas or streets; (d) any use, non-use or
condition in, on or about the Property or any part thereof or on the adjoining
sidewalks, curbs, adjacent property, parking areas or streets; (e) any failure
on the part of Borrower or Balanced Care to perform or comply with any of the
terms of this Instrument; or (f) the performance of any labor or

                                      -21-
<PAGE>
services or the furnishing of any materials or other property in respect of the
Property or any part thereof. The obligations of Borrower under this paragraph
26 shall survive any termination or satisfaction of this Instrument until the
expiration of the statute of limitations of any action, claim, cause of action,
liability, cost or expense for which indemnification is to be provided by
Borrower, as set forth above.

           27. HAZARDOUS WASTE REPRESENTATION AND INDEMNIFICATION. The Borrower,
Ocwen, the Ocwen Affiliates, Balanced Care, Balanced Care at Medina, Inc., a
Delaware corporation, Balanced Care at Centerville, Inc., a Delaware
corporation, Balanced Care at Shippensburg, Inc., a Delaware corporation, and
Senior Care Operators of Shippensburg, LLC, a Delaware limited liability company
have entered into the ENVIRONMENTAL CONDITION AND INDEMNITY AGREEMENT, of even
date herewith, governing the relationship between Borrower and Ocwen (and other
parties) as to environmental matters affecting the Property.

           28. RELEASE. Upon payment of all sums secured by this Instrument that
are due and payable at the time of payoff of the Term Note, and upon the payment
in full of the Term Note (not including any Additional Payments that may become
due in accordance with the terms of Section 1.6 of the Term Loan Agreement) and
all other amounts due and owing to Ocwen under the Term Loan Agreement at the
time of payoff of the Term Note (except for the Additional Payments), Ocwen and
the Ocwen Affiliates shall discharge this Instrument. Borrower shall pay Ocwen's
and the Ocwen Affiliates' reasonable costs incurred in discharging this
Instrument.

           Notwithstanding the foregoing paragraph to the contrary, in the event
that, at the time of the payoff of the Term Note, payment is due Ocwen or any of
its Affiliates (specifically including Medina ALF, Inc., Shippensburg ALF, Inc.,
and Centerville ALF, Inc.) under the Deferred Purchase Price Note and BCC Note,
Ocwen shall not discharge or be required to discharge this Instrument until
payment in full has been made under the Term Note (not including any Additional
Payments that may become due in accordance with the terms of Section 1.6 of the
Term Loan Agreement), the Deferred Purchase Price Note and the BCC Note, and all
other amounts due and owing to Ocwen and/or such Affiliates under the Term Note,
Deferred Purchase Price Note, and BCC Note have been paid in full.

           Ocwen acknowledges that Borrower may choose to pay off the Loan by
refinancing, and Borrower agrees to provide Ocwen with

                                      -22-
<PAGE>
thirty (30) days advance written notice of such refinancing. Ocwen shall have
such 30 days to provide Borrower with a payoff letter and to provide to a title
company or other escrow agent a satisfaction and release of this Instrument to
be held by such escrow agent in escrow until Ocwen shall have received payment
in full of the Term Note, and if applicable, the Deferred Purchase Price Note
and BCC Note. In the event that Ocwen fails to provide a letter of payoff or
provide the release of lien of this Instrument within the time period described
above, and solely as a result of Ocwen's failure to timely respond (and not as a
result of any action or inaction by Borrower), Borrower fails to make a payment
when due under the Term Note, Ocwen may not accelerate payments due under the
Term Note, or deem payment due under the Deferred Purchase Price Note and/or BCC
Note. Provided, however, that nothing set forth above shall release Borrower
and/or Balanced Care from any obligation of Borrower or Balanced Care under the
Term Note or any Loan Documents, or under the BCC Note or Deferred Purchase
Price Note, in the event that payments are otherwise due under any of the
foregoing; the intent of the parties with respect to this paragraph being that
Ocwen may not benefit from its failure to timely respond by accelerating the
Term Note based solely on such failure, thereby causing payments to be due that
would not otherwise be due under the Deferred Purchase Price Note and BCC Note,
but otherwise, the obligations of the Borrower and/or Balanced Care under the
Transaction Documents, Deferred Purchase Price Note and BCC Note shall be
unaffected hereby.

           29. WAIVER OF JURY TRIAL. OCWEN, THE OCWEN AFFILIATES, BALANCED CARE,
AND BORROWER HEREBY VOLUNTARILY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT
TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE, AMONG OCWEN, THE OCWEN AFFILIATES, BALANCED CARE,
AND BORROWER ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED AMONG BORROWER, THE OCWEN AFFILIATES, BALANCED
CARE, AND OCWEN IN CONNECTION WITH THIS INSTRUMENT OR ANY OTHER AGREEMENT OR
DOCUMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTION RELATED
HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO OCWEN AND THE OCWEN
AFFILIATES TO ENTER INTO THE FINANCING TRANSACTION AND THE TRANSACTION
DOCUMENTS. IT SHALL NOT IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR MODIFY OCWEN'S
OR THE OCWEN AFFILIATES' ABILITY TO PURSUE THEIR REMEDIES CONTAINED IN THIS
INSTRUMENT OR ANY OTHER DOCUMENT RELATED HERETO.

                                      -23-
<PAGE>
           IN WITNESS WHEREOF, Borrower has executed this Instrument as of the
day and year first set forth above.

Signed and acknowledged                             BORROWER:
in the presence of:
                                                    BALANCED CARE REALTY (OFC),
                                                    INC.

/s/Theresa M. Haddad
Printed Name: Theresa M. Haddad                     By:/s/Robin L. Barber
                                                    Its: Robin L. Barber
/s/Barbara E. Davis
Printed Name: Barbara E. Davis

COMMONWEALTH OF PENNSYLVANIA   )
                               )  SS
COUNTY OF CUMBERLAND           )

           On this 4th day of April, 2002, before me, a Notary Public in and for
said County and State, personally appeared Robin L. Barber, the Vice President
and Secretary of Balanced Care Realty (OFC), Inc., a Delaware corporation, who
executed the foregoing instrument as his/her free act and deed on behalf of said
corporation.

           IN WITNESS WHEREOF, I have hereunto set my hand and official seal.

                              /s/Jaynelle D. Covert
                              Notary Public

                              My Commission Expires:June 21, 2004

This instrument was prepared by:
Jill E. Aebker, Esq.
Squire, Sanders & Dempsey L.L.P.
1300 Huntington Center
41 South High Street
Columbus, OH  43215

                                      -24-

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