Document:

<PAGE>   1

                                                                    EXHIBIT 10.2

[NOTE: CERTAIN PORTIONS OF THIS DOCUMENT HAVE BEEN MARKED TO INDICATE THAT
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CONFIDENTIAL INFORMATION. THE
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.]

                         DEVELOPMENT SERVICES AGREEMENT

         THIS AGREEMENT, made and entered into as of this 25th day of September,
2000, by and between Hemomax, LLC, a Pennsylvania limited liability company (the
"Company"), and Alteon Inc., a Delaware corporation ("Alteon").

                                   BACKGROUND

         The Company wishes to obtain development services in connection with
the further development of the Hemomax Technology. The Hemomax Technology was
developed, and is owned, by the University of Pittsburgh, and the Company has
obtained a worldwide, exclusive license to exploit such technology.

         Alteon wishes to provide such development services to the Company
subject to the terms and conditions of this Agreement.

         The parties are entering into a separate Membership Unit Subscription
Agreement dated the date hereof, pursuant to which Alteon will receive shares of
Membership Units in the Company, as partial consideration for agreeing to make
available and for carrying out the services provided under this Agreement. Such
Membership Units will confer on Alteon the same rights and preferences with
respect to such Membership Units as those enjoyed by the founding unitholders of
the Company.
<PAGE>   2
                                    AGREEMENT

         NOW, THEREFORE, it is agreed as follows:

1.       DEFINITIONS

         1.1. "Affiliate" of an entity means any person, corporation,
partnership, limited liability company, trust or other entity which, directly or
indirectly, controls, is controlled by, or is under common control with such
entity.

         1.2. "First Vesting Event" means the first to occur of the following:
(1) a Sale Event, or (2) completion of the Preliminary Evaluation as evidenced
by a written Preliminary Evaluation report presented to and accepted by the
Board of Managers of the Company.

         1.3. "Hemomax Technology" shall mean any product or part thereof or
process which is:

                  (a) Covered in whole or in part by an issued, unexpired or
pending claim contained in the Patent Rights in the country in which any such
product or part thereof is made, used or sold or in which any such process is
used or sold;

                  (b) Manufactured by using a process or is employed to practice
a process which is covered in whole or in part by an issued, unexpired claim or
a pending claim contained in the Patent Rights in the country in which any such
process that is included in Hemomax Technology is used or in which such product
or part thereof is used or sold; or

                  (c) Created, discovered, developed or invented at any time
prior to, on, or after the date of this Agreement relating to, based on, or
incorporating Hemomax Technology or the Patent Rights, or arising out of the
services performed by Alteon hereunder.
<PAGE>   3
         1.4. "Patent Rights" shall mean:

                  (a) The United States and foreign patents and/or patent
applications listed in Schedule 1.4;

                  (b) United States and foreign patents issued from the
applications listed in Schedule 1.4 and from divisionals and continuations and
continuations-in-part of these applications;

                  (c) Claims of U.S. and foreign continuation-in-part
applications, and of the resulting patents, which are directed to subject matter
specifically described in the U.S. and foreign applications listed in Schedule
1.4;

                  (d) Claims of all foreign patent applications, and of the
resulting patents, which are directed to subject matter specifically described
in (a), (b) or (c) above.

         1.5. "Preliminary Evaluation" shall have the meaning set forth on
Schedule 2.1 hereto.

         1.6. "Product" means a product or service which employs, embodies or
relates to Hemomax Technology.

         1.7. "Sale Event" shall be deemed to occur if any one or more of the
following occur(s):

                  (1) the Company sells, transfers, licenses, assigns, or
otherwise disposes of the Hemomax Technology or any portion thereof or interest
therein, including without limitation transfers to an Affiliate of the Company;

                  (2) a merger or consolidation of the Company with or into
another entity, a sale of all or substantially all of the assets of the Company
to another entity, a sale of a majority of the voting power of the outstanding
membership interests of the Company, or any other
<PAGE>   4
transaction which results in a change of ownership or control over the Company
or the Hemomax Technology.

         1.8. "Second Vesting Event" means the first to occur of the following:

                  (1) a Sale Event; or

                  (2) the completion of Phase II described in Schedule 2.1 and
the delivery of the Technology Development Plan to the Board of Managers and the
Board's acceptance thereof.

                  1.9. "Technology Development Plan" shall mean the written plan
created after implementing the Preliminary Evaluation, presented by Alteon to
the Hemomax Board of Managers and accepted by the Board.

                  1.10. "Third Vesting Event" means (1) a Sale Event or (2) the
filing of an IND for a Product.

                  1.11. "University" means the University of Pittsburgh - of the
Commonwealth System of Higher Education, a Pennsylvania nonprofit corporation.

         2. DEVELOPMENT SERVICES.

                  2.1. FURNISHING OF SERVICES. Alteon shall provide consulting
services to Hemomax for developing a strategic direction and a development plan
for the Hemomax Technology. After a phased plan has been identified by Alteon
and approved by the Company, Alteon shall implement the plan by managing the
performance of the necessary work. Alteon shall keep the Company informed
throughout the work and shall involve the Company when important decisions are
made in implementing the plan or at such times as are otherwise requested by the
Company. Alteon shall furnish to the Company the services described in Schedule
2.1. Alteon's
<PAGE>   5
Services may be performed at Alteon or at any other location in Alteon's
reasonable, sole discretion.

         2.2. REPORTING. Alteon shall provide written progress reports to
Company as often as reasonably necessary to permit Company to consider any
significant issues and approve any recommendations for implementation. Alteon
shall consult with the Company at mutually agreeable times as reasonably
requested by the Company.

3.       COMPANY PROGRAM MANAGER. The Company shall appoint a program manager
         ("Program Manager") to act as a liaison and single point of contact
         regarding contractual matters between Alteon and the Company.

4.       ALTEON EMPLOYEES AND CONSULTANTS.

         4.1. IDENTIFICATION OF EMPLOYEES AND CONSULTANTS. Alteon shall provide
to the Company the services of the following employees and consultants of
Alteon: Robert deGroof, Ph.D., who is Alteon's Senior Vice President, Scientific
Affairs ("Dr. deGroof"); Jan Lessem, M.D., Ph.D., FACC, who is a consultant to
Alteon in pre-clinical and clinical development ("Dr. Lessem"); Kenneth Moch,
who is Alteon's President and Chief Executive Officer ("Moch"); and other
employees and consultants of Alteon as selected by Alteon. Dr. deGroof (or
another person designated by Alteon and reasonably acceptable to the Company)
will act as a liaison (the "Alliance Manager") with the Company's Program
Manager for all work to be performed under this Agreement.

         4.2. ASSIGNMENT OF EMPLOYEES AND CONSULTANTS. Alteon in its discretion
shall assign Dr. deGroof, Dr. Lessem, Mr. Moch, or other equally qualified
members of its staff chosen by Alteon and reasonably acceptable to the Company,
to perform services on behalf of the Company. Subject to the immediately
preceding sentence, Alteon will be entitled to replace any
<PAGE>   6
of its employees and consultants performing services hereunder. Alteon shall be
responsible for binding its employees and consultants to comply with the
provisions of Sections 9.1 and 29.

         4.3. USE OF THIRD PARTY CONTRACTORS. Upon Alteon's request and the
Company's agreement, Company shall retain third party contractors identified by
Alteon, including, but not limited to, specialists in toxicology, pharmacology,
formulations and patent law, to perform the services hereunder. Alteon shall not
be responsible for any such services provided by any such third-party
contractors, except that Alteon shall have management responsibility for the
work being done by such contractors and shall review the results of the third
party contractors' work. Alteon shall review and present to the Company
contracts with third party contractors pursuant to which such contractors agree
to confidentiality provisions and provisions with respect to the Company's
ownership of the technology similar to that contained in Sections 9.1 and 29
hereof; provided, that Alteon shall not be responsible for any changes to such
language agreed to by the Company. Company shall be responsible for paying any
third-party contractors, other than Alteon's employees or consultants, hired or
retained by Company, for the services performed by such contractors.

5.       RECRUITMENT AND EMPLOYEE RETENTION.

         5.1. HIRING. Alteon shall be responsible for all final hiring and
retention decisions with respect to its employees, consultants and third party
contractors who will be performing services for the Company.

         5.2. TERMINATION AND SUBSTITUTION OF EMPLOYEES AND CONSULTANTS. In the
case where an employee or consultant or third party contractor of Alteon
terminates employment or any other relationship with Alteon, or is terminated,
Alteon will be entitled to designate a substitute.
<PAGE>   7
6.       PAYMENT.

         6.1. PAYMENT OF HOURLY RATES. The Company agrees to pay Alteon for work
performed under this Agreement (at Company premises or elsewhere) according to
the pricing terms set forth on Schedule 6.1.

         6.2. TRAVEL EXPENSES. Alteon shall be fully reimbursed by the Company
for travel, meals, lodging, transportation, and related out-of-pocket expenses,
in each case to the extent reasonable, incurred by Alteon's employees or
consultants.

         6.3. SUBMISSION OF INVOICES. Alteon will submit invoices to the Company
on a monthly basis. Payment will be due within thirty (30) days of the invoice
date.

7.       OPTION AND RIGHT OF FIRST NEGOTIATION.

         7.1. OPTION. Company hereby grants to Alteon an irrevocable option (the
"Option") to (a) acquire or (b) obtain an exclusive, worldwide license, with the
right to sublicense (the "License") under the Hemomax Technology (including
without limitation the Patent Rights) owned by or licensed to the Company and
created at any time prior to, on, or after the date of this Agreement, to make,
have made, offer for sale, sell, use, modify, prepare derivative works, and/or
import Product or the Hemomax Technology or any portion thereof. The term of the
License shall extend at least until the date of expiration of the last-to-expire
patent issued under the Patent Rights for the Hemomax Technology being licensed
to Alteon. The Option is exercisable at any time after the date of this
Agreement, and may be exercised numerous times for different Licenses or
different rights within the Hemomax Technology. The Option is exercisable if the
Company decides to license or sell all or a portion of the Hemomax Technology
and then is exercisable only as to that portion of the Hemomax Technology that
the Company decides to license or sell. The Company will be under no obligation
at any time to
<PAGE>   8
license or sell any or a portion of the Hemomax Technology. The Company shall
provide written notice to Alteon in each instance when the Company wishes to
license or sell all or a portion of the Hemomax Technology. The Notice shall
identify the portion of the Hemomax Technology that the Company wishes to
license or sell but need not include the terms of the proposed sale; provided,
however, that if a bona fide offer has been made to the Company such offer shall
be disclosed to Alteon by the Company. Within thirty (30) days of receipt of the
Notice Alteon shall inform the Company whether Alteon has any interest in
pursuing such a license or purchase and shall be given all available
information, dates and results related to the Hemomax Technology which is the
subject of the Notice (the "Information Packet").

         7.2. GOOD-FAITH NEGOTIATION. If Alteon informs the Company that it has
an interest, the parties will negotiate in good faith to attempt to reach a
definitive, written agreement which will provide for the grant of the License or
for the sale of the Hemomax Technology (the "Right of First Negotiation");
provided, that neither party shall be required to enter into the same. Company
shall immediately notify Alteon upon any additional developments not included in
the Information Packet.

         7.3. RIGHT TO LICENSE OR SELL. If the parties are unable to execute a
definitive, written license agreement or sales agreement within three (3) months
after the receipt of the Information Packet by Alteon (the "Negotiation
Period"), the Company will be entitled to offer a license or sell to third
parties for a period of twelve (12) months thereafter; provided, however, that
Company shall not grant a license or sell to a third party which is equal to or
less financially advantageous to the Company than a written offer made by Alteon
to the Company during the Negotiation Period. After such twelve-month period
expires, if the Company has not licensed or sold to a third party, the Company
shall again be required to comply with Alteon's Option and
<PAGE>   9
Right of First Negotiation. For the purpose of the foregoing, any non-cash
consideration received by the Company shall be measured at its fair market cash
value.

         7.4. IRREVOCABILITY. The Option and Right of First Negotiation are
being granted by Company as partial consideration for Alteon entering into this
Agreement and offering the services of its employees and consultants to the
Company. Both the Option and the Right of First Negotiation are irrevocable and
fully vested upon the signing of this Agreement, and their exercise is not
subject to any further conditions, including the acceptance by the Company of
the services to be performed by Alteon, other than any conditions expressly
referred to in this Section 7.

8.       ISSUANCE OF MEMBERSHIP UNITS.

         8.1. ISSUANCE OF MEMBERSHIP UNITS. As consideration for Alteon entering
into this Agreement and offering the services of its employees and consultants,
the Company has agreed to issue and transfer 154,412 membership interest units
to Alteon, pursuant to the Membership Unit Subscription Purchase Agreement dated
the date hereof between Alteon and the Company. Such units being issued to
Alteon represent fifteen percent (15%) of the issued and outstanding securities
of the Company as of the date of this Agreement. Such units will confer on
Alteon the same rights and preferences with respect to such units as those
enjoyed by the founding unitholders of the Company. The units shall vest ratably
upon the occurrence of each of three vesting events, the First Vesting Event,
the Second Vesting Event and the Third Vesting Event.

         8.2. FIRST VESTING. Upon the occurrence of the First Vesting Event, one
third of the membership units of the Company issued and transferred to Alteon
under Section 8.1, that is 51,471 units, shall immediately vest. Company shall
immediately notify Alteon of the occurrence of the First Vesting Event. Such
units vested by this occurrence will be
<PAGE>   10
nonrefundable and nonassessable, and the issuance and transfer to Alteon shall
be irrevocable and independent of any obligations of Alteon under this
Agreement.

         8.3. SECOND VESTING. Upon the occurrence of the Second Vesting Event,
the second one third of the membership units of the Company issued and
transferred to Alteon under Section 8.1, that is 51,471 units, shall immediately
vest. Company shall immediately notify Alteon of the occurrence of the Second
Vesting Event. Such units vested by this occurrence will be nonrefundable and
nonassessable, and the issuance and transfer to Alteon shall be irrevocable and
independent of any obligations of Alteon under this Agreement.

         8.4. THIRD VESTING. Upon the occurrence of the Third Vesting Event, the
third one third of the membership units of the Company issued and transferred to
Alteon under Section 8.1, that is 51,470 units, shall immediately vest. Company
shall immediately notify Alteon of the occurrence of the Third Vesting Event.
Such units vested by this occurrence will be non-refundable and non-assessable,
and the issuance and transfer to Alteon shall be irrevocable and independent of
any obligations of Alteon under this Agreement.

         8.5. TERMS OF RESTRICTIONS. Prior to the lapse or termination of the
applicable restrictions, unit certificates for the restricted units shall be
issued in the name of Alteon and deposited with the Company in escrow. Dividends
and other distributions on the units held in escrow, if any, shall not be paid
to Alteon until the lapse or termination of the applicable restrictions. Any
such dividends or other distributions shall not bear interest. Upon the lapse or
termination of the applicable restrictions (and not before such time), Alteon
shall receive the unit certificates for the restricted units and unpaid
dividends, if any. Alteon shall be a unitholder with respect to all the units
represented by the unit certificates and shall have all the rights of a
unitholder with respect to all the restricted units, including the right to vote
such units and to receive all dividends and other distributions paid with
respect to such units, if any, subject only
<PAGE>   11
to the preceding provisions of this paragraph. Any units which vest will be
transferred to Alteon promptly after vesting. Any units which do not vest will
be deemed forfeited to the Company.

9.       INTELLECTUAL PROPERTY.

         9.1. OWNERSHIP. All inventions, technologies, improvements, derivative
works or other intellectual property made or developed by Alteon's employees or
consultants, solely or jointly, in the Hemomax Technology in performance of its
obligation under this Agreement shall be owned solely by Company. All other
inventions, technologies, improvements, derivative works or other intellectual
property not related to the Hemomax Technology, and made by Alteon's employees
or consultants shall be owned solely by Alteon. Company will own solely all
inventions, technologies, improvements, derivative works and other intellectual
property developed, made or created solely by Company's employees or
consultants. Alteon and Company will own jointly all inventions, technologies,
improvements, derivative works, and other intellectual property not related to
the Hemomax Technology, and developed, made or created jointly by Alteon's and
Company's employees or consultants. Alteon's employees or consultants shall not
be considered to be the Company's employees or consultants. Inventorship shall
be determined in accordance with the United States patent laws.

10.      WARRANTIES AND LIMITATION OF LIABILITY.

         10.1. WARRANTY FOR SERVICES. Alteon warrants that the services provided
by Alteon shall be performed in accordance with generally accepted industry
practices and standards.

         10.2. LIMITATION OF LIABILITY. Alteon shall not be liable for any
indirect, incidental, consequential, or special damages. Alteon's liability in
any form whatsoever under this Agreement and Company's exclusive remedy shall be
limited to a return of the service fees paid in the prior 12-month period to
Alteon pursuant to Section 6.1 directly attributable to the services
<PAGE>   12
which are rejected by the Company. Under no event will Alteon (i) be obligated
to return the membership units in the Company received by Alteon, or be subject
to any restrictions with respect to such membership units (provided, that such
units are still subject to vesting or forfeiture as set forth in Section 8
hereof), or (ii) be precluded from exercising its Option and Right of First
Negotiation pursuant to Section 7.

         10.3. FORCE MAJEURE. Alteon shall not be liable for any damages
resulting from delays in performance or failure to perform due to causes beyond
its control. Such causes shall include but not be limited to acts of God,
strikes and governmental actions.

         10.4. DISCLAIMER OF WARRANTIES. EXCEPT AS PROVIDED IN THIS AGREEMENT,
ALTEON DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE
SERVICES OR GOODS PROVIDED HEREUNDER, INCLUDING WITHOUT LIMITATION, THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND THE
WARRANTIES OF TITLE AND NONINFRINGEMENT.

11.      INDEMNIFICATION.

         11.1. BY COMPANY. Company agrees to indemnify (collectively, "Alteon's
Indemnitees"), defend and hold Alteon, and Alteon's officers, directors,
employees, consultants and Affiliates harmless from and against all losses,
claims, damages, costs and expenses, including attorney's fees (collectively,
the "Losses"), incurred in connection with this Agreement, including without
limitation (i) claims brought by third parties arising out of the services
performed by Alteon hereunder, (ii) product liability claims, including without
limitation claims for personal injury by Alteon's Indemnitees, (iii) claims for
intellectual property infringement or other violations, (iv) claims brought for
violations of Federal or states securities laws in respect of Company's
securities, and (v) claims brought by Company employees,
<PAGE>   13
consultants, or contractors arising out of the services performed by Alteon
hereunder; provided, however, that such indemnification for such Losses shall
not apply to the extent the Losses were caused by the negligence or intentional
misconduct of Alteon's Indemnitees in performance of the services hereunder.

         11.2. BY ALTEON. Alteon agrees to indemnify, defend and hold Company
and Company's officers, directors, employees, consultants and Affiliates
(collectively, "Company's Indemnitees") harmless from and against Losses
incurred in connection with this Agreement, to the extent such Losses are caused
by the negligence or intentional misconduct of Alteon's Indemnitees, including
without limitation (i) claims brought by third parties arising out of the
services performed by Alteon hereunder, (ii) product liability claims, including
without limitation claims for personal injury brought by Alteon's Indemnitees,
(iii) claims for intellectual property infringement or other violations, (iv)
claims brought in violation of Federal or State laws in respect to the Company's
securities, and (v) claims brought by Company employees, consultants or
contractors arising out of the services performed by Alteon hereunder.

12.      INSURANCE. Each of Alteon and the Company shall maintain such insurance
as is reasonable and prudent under their respective circumstances, and shall
upon the request of the other party provide evidence of such insurance, if any.

13.      TERM AND EXTENSIONS. The term of this Agreement shall commence on the
date of this Agreement and continue until completion of Phase III set forth in
Schedule 2.1.

14.      TERMINATION.

                  (a) This Agreement may be terminated by either party upon one
hundred and eighty (180) days' prior written notice to the other party. Upon
notice of termination by Hemomax under this Section 14(a): (i) Alteon shall
retain its Option and Right of First
<PAGE>   14
Negotiation under Section 7 for three (3) years following the effective date of
termination, (ii) in addition to any previously vested membership units at the
effective date of termination, one-half (1/2) of the unvested membership units
next due to vest under Sections 8.2, 8.3 or 8.4, as applicable, shall vest upon
termination (example: upon notice of termination after vesting of the first
one-third of the units but before the second one-third, one half of the second
one-third of the units would also vest and the third set of one-third of the
units would not vest), and (iii) notwithstanding anything in this Agreement to
the contrary, if a Sale Event is consummated with twelve (12) months of the
effective date of such termination, then the Company shall issue to Alteon a
number of units equal to the unvested units of Alteon which were forfeited upon
termination.

                  (b) This Agreement may also be terminated:

                           (i) by mutual written agreement of the parties
hereto;

                           (ii) by either party on thirty (30) days' prior
written notice to the other party in the event such other party shall cause a
material breach of this Agreement which is not cured within the period of
written notice thereof. Upon termination by the Company under this Section
14(b)(ii), any unvested membership units shall be forfeited and Alteon shall
have no further Option and Right of First Negotiation under Section 7. Upon
termination by Alteon under this Section 14(b)(ii), any unvested membership
units shall immediately vest and Alteon shall retain its Option and Right of
First Negotiation under Section 7 for three (3) years following the effective
date of termination.

                           (iii) by either party upon the insolvency of the
other party, or upon the filing of a voluntary petition in bankruptcy by the
other party or to have the other party declared a
<PAGE>   15
bankrupt, or upon the appointment of a receiver or trustee for the other party,
or upon the execution by the other party of an assignment for the benefit of
creditors.

                  (c) Upon the occurrence of a Sale Event described in Section
1.7(2), or a sale or licensing of all or substantially all of the Hemomax
Technology, Alteon will have the right to terminate this Agreement on thirty
(30) days prior written notice. Such right of termination is in addition to any
other rights Alteon may have under this Agreement upon a Sale Event.

                  (d) Alteon shall have the right to terminate its obligations
under this Agreement in that portion of the Hemomax Technology which is the
subject of a Sale Event on thirty (30) days prior written notice.

15.      ASSIGNMENT. No part of this Agreement or of the obligations or rights
of either party hereto shall be assigned without the prior written consent of
the other party, except that Alteon shall have the right to assign without
Company's consent the Option and Right of First Negotiation (as defined in
Section 7), or the membership units issued to Alteon in Section 8.1 (although
such membership units still remain subject to restrictions on transfer described
in the Operating Agreement of the Company).

16.      SOLICITATION OF EMPLOYEES. During the Term of this Agreement and for a
period of two years thereafter, the Company and any successor, transferee,
purchaser, licensee, or assignee of the Company or of any of Company's rights
(including, without limitation, any purchaser or licensee of the Hemomax
Technology) agree not to solicit or hire any of Alteon's employees, or
consultants of Alteon that work on the Hemomax Technology, except by mutual
written consent of the parties hereto, in which case a fee for the hiring of any
such employee(s) or consultant(s) shall be negotiated and mutually agreed upon.
<PAGE>   16
17.      INDEPENDENT CONTRACTOR. In taking any action pursuant to this
Agreement, Alteon shall act only as an independent contractor of the Company.
Nothing in this Agreement shall be construed as creating an agency, employment,
tenancy, partnership, joint venture or any other relationship between the
parties hereto.

18.      RESOLUTION OF DISPUTES. The parties agree that, in the event a dispute
arises between them, they will attempt, in good faith, to resolve such dispute
through mutual negotiations, which negotiations shall be conducted in an
amicable and equitable manner. However, if any dispute cannot be so resolved
after a reasonable period of time, the parties agree that the matter shall be
submitted to and decided by binding arbitration to be held in Pittsburgh,
Pennsylvania in accordance with the Commercial Arbitration Rules of the American
Arbitration Association. Either party may apply to the American Arbitration
Association to institute the arbitration proceedings. The fees and expenses of
the arbitrators shall be shared equally by both parties.

19.      NOTICES. All notices and other communications pursuant to this
Agreement shall be in writing and shall be deemed to have been duly given if
personally delivered or, if mailed, when mailed by United States certified or
registered mail, or by Federal Express (or comparable overnight mail service),
postage prepaid, to the other party at the following addresses (or at such other
address as shall be given in writing by either party to the other):

                  If to the Company:

                           Hemomax, LLC.
                           5140 Pembroke Place
                           Pittsburgh, PA  15232
                           Attention:  David J. D'Appolonia
                           Tel.:  412-683-1903
<PAGE>   17
                  If to Alteon:

                           Alteon Inc.
                           170 Williams Drive
                           Ramsey, New Jersey 07746
                           Attention:  Kenneth I. Moch
                                        President and CEO
                           Tel.:  201-818-5500

20.      GOVERNING LAW AND CHOICE OF FORUM. This Agreement and the relations
between the parties will be governed in accordance with the laws of the
Commonwealth of Pennsylvania, without regard to conflicts of law rules. The
parties hereby submit to the jurisdiction of the courts in the Commonwealth of
Pennsylvania for any disputes arising between them.

21.      AMENDMENT. This Agreement may be amended only by a written agreement
between Alteon and the Company that expressly amends, terminates or supersedes
this Agreement.

22.      SUCCESSORS AND ASSIGNS. This Agreement, and all rights and powers
granted hereby, will bind and inure to the benefit of the parties hereto and
their respective successors and assigns.

23.      VALIDITY OF TERMS. If any term of this Agreement shall be held void,
illegal, unenforceable or in conflict with any law of a federal, state or local
government having jurisdiction over this Agreement, the validity of the
remaining portions or provisions hereof shall not be affected thereby.

24.      NO WAIVER. No delay or failure by any party to exercise any right under
this Agreement, and no partial or single exercise thereof, shall constitute a
waiver of that or any other right unless otherwise expressly provided herein.
<PAGE>   18
25.      COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.

26.      HEADINGS. The section headings contained in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.

27.      ENTIRE AGREEMENT. This Agreement and any attached exhibits, schedules
or appendices constitute the complete and exclusive agreement between the
Company and Alteon with respect to the subject matter hereof and supersede all
prior and contemporaneous agreements and understandings.

28.      SURVIVAL. The following sections shall survive the termination of this
Agreement: Section 6 on payment, Section 7 on Option and Right of First
Negotiation , Section 8 on issuance of membership units, Section 9 on
intellectual property, Section 10 on warranties and limitation of liability,
Section 11 on indemnification, Section 14 on terminations, Section 15 on
assignment, Section 16 on solicitation of employees, Section 18 on resolution of
disputes, Section 20 on governing law and choice of forum, Section 28 on
survival, and Section 29 on confidentiality.

29.      CONFIDENTIALITY. Each party acknowledges that it may have access to
certain confidential information of the other party concerning the other party's
business, plans, customers, technology, and products, and other information held
in confidence by the other party ("Confidential Information"). Confidential
Information will include all information in tangible or intangible form that is
marked or designated in writing as confidential at the time of disclosure. Each
party agrees that it will not use in any way, for its own account or the account
<PAGE>   19
of any third party, except as expressly permitted by, or required to achieve the
purposes of, this Agreement, nor disclose to any third party (except as required
by law or to that party's attorneys, accountants and other advisors as
reasonably necessary), any of the other party's Confidential Information and
will take reasonable precautions to protect the confidentiality of such
information, at least as stringent as it takes to protect its own Confidential
Information. Information will not be deemed Confidential Information hereunder
if such information: (i) is known to the receiving party prior to receipt from
the disclosing party directly or indirectly from a source other than one having
an obligation of confidentiality to the disclosing party; (ii) becomes known
(independently of disclosure by the disclosing party) to the receiving party
directly or indirectly from a source other than one having an obligation of
confidentiality to the disclosing party; (iii) becomes publicly known or
otherwise ceases to be secret or confidential, except through a breach of this
Agreement by the receiving party; or (iv) is independently developed by the
receiving party. The receiving party may disclose Confidential Information
pursuant to the requirements of a governmental agency or by operation of law,
provided that it gives the disclosing party reasonable prior written notice
sufficient to permit the disclosing party to contest such disclosure.

                     [REST OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>   20
         Intending to be legally bound, the parties have executed this Agreement
as of the date first written above.

                                              HEMOMAX, LLC

                                              By:  /s/David J. D'Appolonia
                                                 -------------------------
                                                   Name:  David J. D'Appolonia
                                                       Title:  President

                                              ALTEON INC.

                                              By:  /s/ Kenneth I. Moch
                                                   Kenneth I. Moch
                                                       President and CEO
<PAGE>   21
                                  SCHEDULE 1.4

                                  PATENT RIGHTS

                       [CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>   22
                                  SCHEDULE 2.1

                       Description of Development Services

Alteon will manage the further development of Hemomax Technology. The
development will be carried out in three phases.

1.       Phase I will be the "Preliminary Evaluation", which will consist of a
review and evaluation of existing information on the Hemomax Technology and the
preparation of a report for review and approval by the Hemomax Board of
Managers.

         1.1. The Preliminary Evaluation will consist of a work plan with a
schedule and cost estimate for conducting studies of formulation, pharmacology
and toxicology needed to fill the most significant gaps and resolve the most
significant uncertainties related to the feasibility of commercial development,
as well as conducting preliminary review of the patent status and positioning of
the Hemomax Technology.

         1.2. The Preliminary Evaluation is a rough outline of a work plan.
Development of the Preliminary Evaluation will be a short-term activity,
comprising a few days of work by the Alteon development team. No new data will
be created during this activity.

2.       Phase II will be implementation of the Preliminary Evaluation.

         2.1. As described above, the primary tasks performed during the
implementation of the Preliminary Evaluation will be to resolve specific issues
relating to formulation, pharmacology, toxicology and patents. It is anticipated
that approximately $[CONFIDENTIAL TREATMENT REQUESTED]will be expended during
this effort. The assessment of formulation, pharmacology and toxicology issues
will be designed to provide short term (within[CONFIDENTIAL TREATMENT
REQUESTED]) answers to key pharmaceutical
<PAGE>   23
development issues. The assessment of the intellectual property status of the
Hemomax Technology will include recommendations as to filings and or other
actions that should be made to strengthen and broaden Hemomax's proprietary
interest in the Hemomax Technology.

         2.2. The work product from implementation of the Preliminary Evaluation
will be the development and delivery of the Technology Development Plan, which
would include all the tasks necessary for the first filing for the first
product. The data generated from the resolution of the issues in the Preliminary
Evaluation will form the basis of the Technology Development Plan. The
Technology Development Plan will include the specifications for the pre-clinical
studies to be carried out on formulation, pharmacology and toxicology as needed
to support the IND filing of the first product. It will also include a strategic
analysis of how to best bring products based on the HemoMax Technology to market
and to create value for the HemoMax equity holders. The Technology Development
Plan will include a detailed schedule and budget.

3.       Phase III will be the implementation of the Technology Development
Plan, which will be completed upon the IND filing for the first Product.
<PAGE>   24
                                  SCHEDULE 6.1

                                  PRICING TERMS

The following hourly rates will apply for Alteon's employees and consultants,
regardless of the physical location of the employee or consultant at the time of
the performance of services:

<TABLE>
<CAPTION>
NAME OF EMPLOYEE OR CONSULTANT OR CATEGORY        RATES
------------------------------------------        -----
<S>                                               <C>
Kenneth Moch                                      [CONFIDENTIAL TREATMENT REQUESTED]

Dr. deGroof and other employees of Alteon         [CONFIDENTIAL TREATMENT REQUESTED]

Dr. Lessem and other consultants to Alteon        [CONFIDENTIAL TREATMENT REQUESTED]
</TABLE><PAGE>   1
                                                                    Exhibit 10.1

                                                               Loan No. 99-407

                              AMENDED AND RESTATED
                             SUBORDINATION AGREEMENT

                  THIS AMENDED AND RESTATED SUBORDINATION AGREEMENT (this
"Agreement") is made as of November 6, 2000, by and among the entities listed on
Exhibit A hereto, each a Delaware corporation (collectively, "Borrowers"),
BALANCED CARE CORPORATION, a Delaware corporation ("BCC"), the entities listed
on Exhibit D hereto, each a Delaware corporation, which are direct or indirect
subsidiaries of BCC and shareholders of one or more of the Borrowers
(collectively "BCC Subs", and collectively with BCC, "Pledgor"), FRR Investments
Limited, a Cayman Islands corporation ("FRR"), IPC Advisors, S.a.r.l., a
Luxembourg corporation ("IPC"), HR Investments Limited, a Cayman Islands
corporation ("HR"), RH Investments Limited, a Cayman Islands corporation ("RH"),
VXM Investments Limited, a Cayman Islands corporation ("VXM") (FRR, IPC, RH, HR
and VXM, together with any successors or assigns in such capacity, are
collectively referred to herein as the "Junior Lender"), and HELLER HEALTHCARE
FINANCE, INC., a Delaware corporation, (together with any successors or assigns
in such capacity, "Senior Creditor").

                              W I T N E S S E T H:

                  WHEREAS, Borrowers, BCC, BCC Subs, FRR, IPC and Senior
Creditor are parties to that certain Subordination Agreement dated as of
November 6, 2000 (the "Original Subordination Agreement");

                  WHEREAS, Borrowers have executed and delivered a Second
Amended and Restated Promissory Note A in the principal amount of Thirty Million
Six Hundred Thousand and No/100 Dollars ($30,600,000.00) in favor of Senior
Creditor (the "Senior Note A"), a Second Amended and Restated Subordinated
Promissory Note B in the principal amount of Six Million Four Hundred Thousand
and No/100 Dollars ($6,400,000.00) in favor of Senior Creditor (the "Senior Note
B"; Senior Note A and Senior Note B being referred to herein collectively as the
"Senior Notes"), and a Promissory Note C in the principal amount of Five Million
and No/100 Dollars ($5,000,000.00) in favor of Senior Creditor ("Note C");

                  WHEREAS, in connection with the execution and delivery of this
Agreement, (i) a reserve account originally funded with

<PAGE>   2

some of the proceeds of Note C was disbursed to Senior Creditor to repay, in
part, Note C, (ii) Note C was repaid in its entirety, and (iii) a Third
Amendment to Loan Documents dated the date hereof (the "Third Amendment") was
entered into among Borrowers, BCC, Senior Creditor and certain affiliates of BCC
and Borrowers;

                  WHEREAS, all amounts owed by Borrowers to Senior Creditor
under the Senior Notes or otherwise under the Senior Security Documents (as
defined below) and all amounts owed by BCC Borrowers (as defined in the Third
Amendment) to Senior Creditor pursuant to the Revolving Credit Facility Loan
Documents (as defined in (and amended by) the Third Amendment) or otherwise are
being hereinafter referred to collectively as the "Senior Debt;"

                  WHEREAS, the Senior Debt is secured by, among other things,
those certain mortgages and deeds of trust, each dated December 30, 1999 listed
on Exhibit B hereto, as each has been amended (together with the Revolving
Credit Facility Mortgages (as defined in (and amended by) the Third Amendment),
collectively, the "Senior Mortgages"), covering certain real property including
the real property more particularly described on Exhibit C attached hereto and
incorporated herein by reference (together with the properties encumbered by the
Revolving Credit Facility Mortgages, collectively, the "Properties");

                  WHEREAS, (i) FRR agreed to loan an amount not to exceed Seven
Million and No/100 Dollars ($7,000,000.00) to BCC, which loan was evidenced by a
Series One 1999 BCC Discount Note dated December 29, 1999, executed by BCC in
favor of FRR, and which loan was subsequently repaid in full, and (ii) BCC has
executed and delivered in favor of IPC that certain Indemnification, Defense,
Hold Harmless and Reimbursement Agreement dated as of December 29, 1999 (the
"Indemnification Agreement");

                  WHEREAS, some or all of the Junior Lenders have agreed to loan
BCC (through one or more disbursements and evidenced by one or more notes) an
amount not to exceed Eight Million and No/100 Dollars ($8,000,000.00) in
aggregate (the note(s) evidencing such loan being referred to (collectively) as
the "Junior Note");

                  WHEREAS, the indebtedness and other obligations of BCC to each
Junior Lender under the Indemnification Agreement, and the indebtedness and
other obligations of the Borrowers to each Junior Lender pursuant to the Junior
Note, is hereinafter referred to collectively as the "Junior Debt";

                                      -2-
<PAGE>   3

                  WHEREAS, the Junior Debt is secured by a Pledge Agreement
pursuant to which Pledgor is pledging the capital stock of Borrowers (the
"Stock") to Junior Lender as security for the Junior Debt (as amended by that
certain Amendment and Joinder to Stock Pledge Agreement dated the date hereof,
the "Pledge Agreement", and together with the Junior Note and Indemnification
Agreement, the "Junior Loan Documents");

                  WHEREAS, Junior Lender has agreed to fully subordinate the
Junior Debt and the Junior Loan Documents to the Senior Debt and Senior Security
Documents;

                  WHEREAS, that certain Loan Agreement dated December 30, 1999
among Senior Creditor and Borrowers, as amended to date, including by the Third
Amendment (the "Loan Agreement"), the Senior Mortgages, the Senior Notes and all
other documents evidencing, securing or otherwise executed in connection with
the Senior Notes or the Senior Debt (other than this Agreement), together with
the Revolving Credit Facility Loan Documents are referred to herein as the
"Senior Security Documents;"

                  WHEREAS, all capitalized terms used herein and not defined
herein shall have the meanings as signed to them in the Loan Agreement; and

                  WHEREAS, the parties intend that the Original Subordination
Agreement is hereby amended and restated in its entirety to read as provided in
this Agreement.

                  NOW, THEREFORE, in consideration of the premises, and for
other good and valuable consideration, the parties agree as follows:

                  1. The Junior Loan Documents and the Junior Debt and the
liens, security interests and assignments created thereunder (including without
limitation the Pledge Agreement and any liens created thereby) are and shall
continue to be expressly subject and subordinate to (a) the Senior Debt and the
liens, security interests and assignments created by the Senior Security
Documents (regardless of the relative times and method of attachment or
perfection thereof or the order of filing, of financing statements, mortgages,
deeds of trust, assignments or other security agreements or documents, or
anything in the Junior Loan Documents or this Agreement to the contrary); (b)
all the terms, covenants and conditions contained in the Senior Security
Documents and any extensions, replacements, consolidation, modifications and
supplements thereto, including without limitation any and all advances (whether
or not obligatory), in

                                      -3-
<PAGE>   4

whatever amounts and whenever made, with interest thereon, and to any expenses,
charges and fees incurred thereby, including any and all advances, interest,
expenses, charges and fees which may increase the indebtedness secured by the
Senior Security Documents above the original principal amount thereof and any
post-petition interest which accrues, or would have accrued but for such filing,
after the commencement of any case under the Federal Bankruptcy Code, to the
full extent of all of the foregoing; and (c) any amounts advanced or incurred,
in the sole judgment of Senior Creditor whether or not in accordance with the
Senior Security Documents, for the benefit of the Properties or for costs and
expenses associated with the Senior Debt or otherwise. In foreclosing on the
Senior Creditor's security interests and liens, Senior Creditor may proceed to
foreclose on its security interests and liens in any manner which Senior
Creditor, in its sole discretion, chooses, even though a higher price might have
been realized if Senior Creditor had proceeded to foreclose on its security
interests and liens in another manner. Notwithstanding the foregoing to the
contrary, nothing in this Agreement shall be construed to prevent Junior Lender
from receiving (i) payment of the obligations under the Indemnification
Agreement at any time from BCC, (ii) so long as no Event of Default has occurred
and is continuing under (and as defined in) any of the Senior Security
Documents, regularly scheduled interest payments under the Junior Note may be
made by BCC to the Junior Lender, and (iii) so long as (1) BCC obtains new funds
to repay the Junior Note from either (A) an equity contribution (without an
increase in BCC's liabilities as would be the case, for example, if convertible
debt were issued, as opposed to common or preferred stock) or (B) new debt
incurred by BCC which debt is consented to by Senior Creditor (whose consent
will not be unreasonably withheld), and which new debt is subject to a complete
standstill and subordination in favor of Senior Creditor by the holder of such
debt, pursuant to a written agreement in substantially the form of this
Agreement, and (2) no Event of Default has occurred and is continuing under (and
as defined in) any of the Senior Security Documents, payment due under the
Junior Note upon maturity (as the maturity date may be extended from time to
time) (the payments described in clauses (i), (ii) and (iii) of this sentence
being referred to collectively as the "Permitted Payments").

                  2. (a) Until the Senior Debt has been satisfied in full,
Junior Lender shall not be entitled to receive or retain any payment made by
BCC, any of the BCC Borrowers, any of the Borrowers or any of the BCC Subs with
respect to the Junior Debt or under the Junior Loan Documents, except for the
Permitted

                                      -4-
<PAGE>   5

Payments. The BCC Subs, BCC, BCC Borrowers and Borrowers agree that they shall
not, directly or indirectly, make any payments (whether of principal, interest
or otherwise) on account of the Junior Debt (other than the Permitted Payments)
or redeem, purchase or otherwise acquire, directly or indirectly, any Junior
Debt, and Junior Lender agrees that it will not accept any such payment (other
than the Permitted Payments) or payment from any other source including, without
limitation, proceeds of insurance or any condemnation award or participate in
any such redemption, purchase or other acquisition.

                           (b) Until the Senior Debt has been  satisfied in
full, Junior Lender agrees that it shall not exercise any remedies whatsoever
under the Junior Loan Documents, including without limitation, any remedies with
respect to the capital shares of any of the Borrowers or of any of the Pledgors
(or if applicable at any time hereafter, any of the BCC Borrowers), whether
under the Junior Loan Documents or otherwise.

                           (c) Until the Senior Debt has been fully satisfied,
Junior Lender shall not take, require or accept from BCC, any BCC Borrower, any
Borrower or any BCC Sub any security or collateral for the Junior Debt or any
guaranty of the Junior Debt (except for pledges of shares by the Pledgor and
other security granted by the Pledgor under the Pledge Agreement).

                  3. At all times during which the Senior Debt is outstanding,
Junior Lender agrees that it shall not (i) vote for any plan of reorganization
of BCC Borrowers, Borrowers or Pledgor without the written consent of the Senior
Creditor; (ii) commence or join with any other creditor or creditors of BCC
Borrowers, Borrowers or Pledgor in commencing any bankruptcy, reorganization or
insolvency proceeding against BCC Borrowers, Borrowers or Pledgor; (iii) object
to any motion filed in any bankruptcy proceeding that rents from the Properties,
or any of them, shall constitute cash collateral of the Senior Creditor; (iv)
oppose any motion filed by the Senior Creditor to lift the automatic stay in a
bankruptcy proceeding; or (v) take any action to appoint a receiver for Pledgor,
Borrowers, BCC Borrowers or any of the Properties.

                  4. Nothing contained in this Agreement is intended to or shall
impair the obligations of Borrowers, BCC and BCC Borrowers, which are absolute
and unconditional, to pay to Senior Creditor the principal of the prepayment
premium, if any, and the interest on the Senior Debt as and when the same shall
become due and payable in accordance with its terms, or to affect the

                                      -5-
<PAGE>   6

relative rights of Senior Creditor and creditors of BCC Borrowers, Borrowers or
Pledgor, other than Junior Lender.

                  5. Should any payment on account of, or any stock as
collateral (or other collateral) for any part of, the Junior Debt be paid to
Junior Lender in violation of the terms of this Agreement, such payment or
collateral shall be delivered forthwith to Senior Creditor by the recipient for
application to the Senior Debt, in the form received. Senior Creditor is
irrevocably authorized to supply any required endorsement or assignment which
may have been omitted. Until so delivered, any such payment or collateral shall
be held by Junior Lender in trust for Senior Creditor and shall not be
commingled with other funds or property of Junior Lender.

                  6. Each of FRR, IPC, HR, RH and VXM represents that it has not
transferred or assigned its rights under the Junior Note, in the case of HR, RH
and VXM, and the Indemnification Agreement, in the case of IPC, and no part
thereof has been subordinated in favor of anyone except Senior Creditor. Junior
Lender may not sell, assign or transfer its collateral interest in the Stock or
its interest in the Junior Note or any of the Junior Loan Documents without
Senior Creditor's consent.

                  7. The rights in favor of Senior Creditor created hereunder
are solely for its benefit and protection and for the benefit and protection of
its participants, successors and assigns. Nothing herein contained shall impose
on Senior Creditor any duties with respect to any property of BCC Borrowers,
Borrowers, Pledgor or the Junior Lender.

                  8. Senior Creditor is hereby authorized to demand specific
performance of this Agreement, whether or not BCC Borrowers, Borrowers or
Pledgor shall have complied with the provisions hereof applicable to it, at any
time when Junior Lender shall have failed to comply with any provision hereof
applicable to it. Junior Lender hereby irrevocably waives any defense based on
the adequacy of a remedy at law which might be asserted as a bar to the remedy
of specific performance hereof in any action brought therefor by Senior
Creditor. Junior Lender consents that, without the necessity of any reservation
of rights against Junior Lender, and without notice to or further assent by
Junior Lender:

                  (a) any demand for payment of any Senior Debt may be rescinded
in whole or in part, and any Senior Debt may continue;

                                      -6-
<PAGE>   7

                  (b) the Senior Debt, or the liability of BCC, BCC Borrowers,
Borrowers or any other party upon or for any part thereof, or any collateral
security therefor or guaranty thereof or right of offset with respect thereto,
may, from time to time, in whole or in part, be renewed, increased, extended,
modified, compromised, waived, surrendered or released;

                  (c) the Senior Notes and any other agreement or instrument
evidencing the Senior Debt or governing the terms of the Senior Debt, and any
collateral security documents or guaranties or documents signed in connection
therewith, and the Revolving Credit Facility Loan Documents, may be amended,
modified, supplemented or terminated, in whole or in part, as Senior Creditor
may deem advisable from time to time; and

                  (d) any collateral security at any time held by the Senior
Creditor for the payment of any of the Senior Debt may be sold, waived,
surrendered or released, and Senior Creditor may take any other action it deems
desirable with respect to the collateral for the Senior Debt.

                  9. Junior Lender shall execute and deliver to the Senior
Creditor such further instruments and shall take such further action as the
Senior Creditor may reasonably request from time to time in order to carry out
the provisions and intent of this Agreement or to enable Senior Creditor to
exercise and enforce its rights and remedies hereunder.

                  10. Junior Lender and Senior Creditor agree to provide to each
other estoppel certificates current to the date of such request within thirty
(30) business days of the request of the other party, but not more frequently
than three times per year, which estoppel certificate shall provide that the
Junior Debt or Senior Debt (as the case may be) is in full force and effect,
that, to the affirming party's knowledge, no defaults have occurred and are
continuing thereunder, and as to any other matters reasonably requested by the
requesting party.

                  11. Junior Lender agrees that in the event of a casualty to
one or more of the Properties or a condemnation or taking under a power of
eminent domain of all or any portion of one or more of the Properties, or a
threat of such a condemnation or taking, all adjustments of insurance claims,
condemnation claims and settlements in anticipation of such a condemnation or
taking shall be prosecuted, at Senior Creditor's election, by Senior Creditor or
at Senior Creditor's direction pursuant to the terms and provisions of the
Senior Security Documents, and all payments and settlements of insurance claims
or condemnation

                                      -7-
<PAGE>   8

awards or payments in anticipation of condemnation or a taking shall be paid to
Senior Creditor or at Senior Creditor's direction for use and application
pursuant to the terms and provisions of the Senior Security Documents. Junior
Lender irrevocably assigns to Senior Creditor all of its interest, if any, in
any such claims, settlements or awards and irrevocably grants to Senior Creditor
authorization to execute any and all documents on Junior Lender's behalf
necessary in connection with the prosecution or settlement of such claims,
awards and payments.

                  12. The execution of this Agreement shall not create or be
construed as creating a partnership, joint venture or other joint enterprise
between the Senior Creditor and the Junior Lender, and shall not be construed as
creating any special relationship between Senior Creditor and Junior Lender.
Except as provided in Sections 5 and 15, nothing in this Agreement shall be
construed to constitute the Senior Creditor or the Junior Lender as trustee or
other fiduciary for the other or to impose on either of them any duty,
responsibility or obligation other than those expressly provided for herein,
including, without limitation, any duty of good faith and fair dealing. Each of
the Senior Creditor and the Junior Lender has, independently and without
reliance on the other and based on such documents and information as it has
deemed appropriate, made its own credit analysis of the BCC Borrowers, Borrowers
and/or Pledgor, as applicable, and agrees that it will, independently and
without reliance upon the other, and based on such documents and information as
it shall deem appropriate at the time, continue to make its own independent
analysis and decisions in taking or not taking action under this Agreement, the
Senior Security Documents or the Junior Loan Documents, respectively.

                  13. In the event there exists a conflict between the terms and
provisions of the Senior Security Documents, the Junior Loan Documents and this
Agreement, the terms and provisions of this Agreement will prevail. Senior
Lender hereby consents to, and waives any default under the Senior Security
Documents in connection with, the execution and delivery of the Junior Loan
Documents, and the performance thereunder of the parties thereto, subject to the
terms and conditions of this Agreement.

                  14. If Junior Lender shall acquire by subrogation or
otherwise, any lien, estate, right, or other interest in the Properties which is
or may be prior in right to the Senior Creditor, including, but not limited to,
advances made by the Junior Lender for real estate taxes and assessments, such
lien, estate, right or other interest shall be subordinate to the

                                      -8-
<PAGE>   9

Senior Security Documents and Junior Lender shall not exercise any such
subrogation or other rights until all amounts due under the Senior Security
Documents are paid in full and all obligations thereunder are fully satisfied.

                  15. Upon any distribution of the assets of one or more of BCC,
the BCC Borrowers or the Borrowers in connection with any dissolution, winding
up, liquidation or reorganization of one or more of BCC, the BCC Borrowers or
the Borrowers (whether in bankruptcy proceedings or upon an assignment for the
benefit of creditors or any other marshaling of the assets and liabilities of
BCC, a BCC Borrower or a Borrower or otherwise), or the distribution of
insurance proceeds or condemnation awards received with respect to one or more
of the Properties in the event of a casualty or condemnation, Senior Creditor
shall first be entitled to receive payment in full of all Senior Creditor claims
which claims shall include, without limitation, the right to payment in full of
the Senior Debt (the "Senior Claims") before Junior Lender shall be entitled to
receive any payment from such proceeds in respect of the claims of the Junior
Lender (the "Junior Claims"). Upon any such dissolution, winding up, liquidation
or reorganization, any payment or distribution of assets of BCC, a BCC Borrower
or Borrower of any kind or character, whether in cash, property or securities,
to which Senior Creditor is entitled shall be made directly to Senior Creditor
by the liquidating trustee or agent or other persons making such payment or
distribution (whether a trustee in bankruptcy, a receiver or liquidating trustee
or otherwise) (a "Paying Party"). If the aggregate amount of such payments or
distributions on the Senior Claims is insufficient to pay the Senior Claims in
full, then Junior Lender hereby irrevocably authorizes the Paying Party to remit
promptly to Senior Creditor, and Junior Lender hereby assigns to Senior
Creditor, the lesser of the proceeds Junior Lender is entitled to receive by
reason of any payment or distribution on the Junior Claims, or the difference
between the aggregate amount of the Senior Claims and the proceeds Senior
Creditor receives by reason of any payment on distribution on the Senior Claims.
In furtherance of the foregoing, but not by way of limitation thereof, if one or
more of BCC, the BCC Borrowers or the Borrowers are subject to any proceeding,
with the result that BCC, such BCC Borrower or BCC Borrowers or such Borrower or
Borrowers, as applicable, are excused from the obligation to pay all or part of
the interest otherwise payable in respect of the Senior Claims during the period
subsequent to the commencement of any such Proceedings, Junior Lender agrees
that such interest (calculated at the rate of interest set forth in the Senior
Security Documents) shall be

                                      -9-
<PAGE>   10

payable out of payments or distributions made by the Paying Party in respect of
the Junior Claims.

                  If any payment or distribution of assets of BCC, a BCC
Borrower or a Borrower of any kind or character (including any distribution of
insurance proceeds or condemnation awards received with respect to the Property
owned by BCC, such BCC Borrower or such Borrower in the event of a casualty or
condemnation), whether in cash, property or securities, and whether or not
pursuant to any dissolution, winding up, liquidation or reorganization, not
permitted by or in accordance with the provisions of this Agreement shall be
received by Junior Lender in connection with the Junior Claims, such payment or
distribution to Junior Lender shall be held in trust for the benefit of, and
shall be paid over or delivered to, Senior Creditor, or to its representative,
in precisely the form received (except for the endorsement or assignment of
Junior Lender where necessary). In the event of any failure by Junior Lender to
make any such endorsement or assignment, Senior Creditor is hereby irrevocably
authorized to make same.

                  16. This Agreement shall be binding upon the parties hereto
until all of the Senior Debt shall have been paid and fully satisfied.

                  17. Junior Lender agrees that: (a) Senior Creditor shall be
entitled to manage and supervise the Senior Debt and its relationship to
Borrowers, BCC Borrowers and BCC as it deems appropriate under the
circumstances; (b) Senior Creditor shall not have any responsibility to Junior
Lender to advise it of information known to Senior Creditor regarding the
financial condition of the BCC Borrowers, the Borrowers or Pledgor or of any
circumstances bearing upon the risk of nonpayment of the Senior Debt or any
other indebtedness of the BCC Borrowers, Borrowers or Pledgor; and (c) Senior
Creditor shall have the right at all times to determine the order in which any
or all of the collateral for the Senior Debt shall be subjected to the remedies
provided by the Senior Security Documents. In any event, Senior Creditor shall
not have any liability to Junior Lender for, and Junior Lender hereby waives any
claim which it may now or hereafter have against Senior Creditor arising out of
any amendment to, waiver or departure from, any term of the Senior Security
Documents and any and all actions to which Senior Creditor, takes or omits to
take with respect to the BCC Borrowers, Borrowers, Pledgor, the Senior Security
Documents or any collateral (including, without limitation, (i) actions with
respect to the taking, perfection or release of liens or security interests in
any other collateral, (ii) actions with respect to

                                      -10-
<PAGE>   11

the foreclosure upon sale of, release of or failure to realize upon, any
collateral or to the collection of the Senior Debt or the valuation, use or
protection of any collateral, and (iii) actions under any guaranty of the Senior
Debt.)

                  18. All notices or other written communications hereunder
shall be deemed to have been properly given (i) upon delivery, if delivered in
person or by facsimile transmission with receipt acknowledged by the recipient
thereof, (ii) one (1) Business Day (defined below) after having been deposited
for overnight delivery with any reputable overnight courier service, or (iii)
three (3) Business Days after having been deposited in any post office or mail
depository regularly maintained by the U.S. Postal Service and sent by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:

          If to Senior Creditor:       Heller Healthcare Finance, Inc.
                                       Loan No. 99-407
                                       2 Wisconsin Circle
                                       Suite 400
                                       Chevy Chase, Maryland 20815
                                       Attn:  Manager, Portfolio
                                              Administration Group
                                       Facsimile No. (301) 664-9866

          with a copy to:              Heller Healthcare Finance, Inc.
                                       Loan No. 99-407
                                       816 Congress Avenue
                                       Suite 1900
                                       Austin, Texas  78701
                                       Attn:Diana Pennington,
                                                V.P. and Chief Counsel
                                                Senior Living Group
                                       Facsimile No. (512) 505-5487

          with a copy to:              Heller Healthcare Finance, Inc.
                                       Loan No. 99-407
                                       500 West Monroe Street
                                       Chicago, Illinois  60661
                                       Attn:Kevin McMeen,
                                                Senior Vice President
                                       Facsimile No. (312) 441-7119

                                      -11-
<PAGE>   12

          If to Junior Lender:         IPC Advisors S.a.r.l.
                                       28, rue Jean Baptiste Fresez
                                       Luxembourg L-1542
                                       Attn:J.B. Unsworth
                                       Facsimile No.:  (352) 2620-1713

          with a copy to:              FRR Investments Limited
                                       Walter House
                                       Mary Street
                                       George Town, Grand Cayman
                                       Attn:J.B. Unsworth
                                       Facsimile No.:  (3120) 623-2285

          and with copies to:          Goodman, Phillips & Vineberg
                                       250 Young Street, Suite 2400
                                       Toronto, Ontario M5B 2M6
                                       Attn:Stephen Pincus, Esq.
                                       Facsimile No.:  (416) 979-1234

                                       Alliance Finance B.V.
                                       Herengracht 483, 1017 BT
                                       Amsterdam, Netherlands
                                       Attn:J.B. Unsworth
                                       Facsimile No.:  (3120) 623-2285

          If to Borrowers, BCC         Balanced Care Corporation
          BCC or the BCC Subs:         1215 Manor Drive
                                       Mechanicsburg, Pennsylvania  17055
                                       Attn:Clint Fegan, Chief
                                            Financial Officer
                                       Telecopy: (717) 796-6150

          with a copy to:              Balanced Care Corporation
                                       1215 Manor Drive
                                       Mechanicsburg, Pennsylvania 17055
                                       Attn:Robin L. Barber, Esq.
                                       Telecopy:  (717) 796-6294

          with a copy to:              Kirkpatrick & Lockhart LLP
                                       1500 Oliver Building
                                       Pittsburgh, Pennsylvania  15222
                                       Attn: Steven J. Adelkoff, Esq.
                                       Telecopy:  (412) 355-6501

or addressed as such party may from time to time designate by written notice to
the other parties.

                                      -12-
<PAGE>   13

                  Either party by notice to the other may designate additional
or different addresses for subsequent notices or communications.

                  For purposes of this Section, "Business Day" shall mean a day
on which commercial banks are not authorized or required by law to close in
Chicago, Illinois, and a day which is not any of the first, second, seventh or
eighth day of Passover, the first or second day of Shavuoth, the first or second
day of Rosh Hashanah, Yom Kippur, the first or second day of Sukkoth, Shemini
Azerth or Simchas Torah.

                  19. Time is of the essence with respect to the obligations
contained herein.

                  20. The Agreement shall be binding upon BCC, BCC Borrowers,
BCC Subs, Borrowers, Senior Creditor, Junior Lender and their respective
successors and assigns, and shall inure to the benefit of Senior Creditor and
its successors and assigns. The terms "Borrowers", "BCC", "BCC Subs" and "BCC
Borrowers" as used herein shall also refer to their respective successors and
assigns, including, without limitation, a receiver, trustee, custodian or debtor
in possession.

                  21. This Agreement may be executed in any number of
counterparts, but all such counterparts shall together constitute but one
agreement. In making proof of this Agreement, it shall not be necessary to
produce or account for more than one counterpart signed by each of the parties
hereto.

                  22. This Agreement and the rights and obligations of the
parties hereunder shall in all respects be construed, governed, applied and
enforced in accordance with the laws of the State of Illinois (without regard to
conflicts of laws principles) and the applicable laws of the United States of
America. PLEDGOR, BORROWERS, BCC BORROWERS AND JUNIOR LENDER HEREBY CONSENT TO
THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF
COOK, STATE OF ILLINOIS AND IRREVOCABLY AGREE THAT, SUBJECT TO SENIOR CREDITOR'S
ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT SHALL BE LITIGATED IN SUCH COURTS. PLEDGOR, BORROWERS, BCC BORROWERS
AND JUNIOR LENDER EXPRESSLY SUBMIT AND CONSENT TO THE JURISDICTION OF THE
AFORESAID COURTS AND WAIVE ANY DEFENSE OF FORUM NON CONVENIENS. PLEDGOR,
BORROWERS, BCC BORROWERS AND JUNIOR LENDER HEREBY WAIVE PERSONAL SERVICE OF ANY
AND ALL PROCESS AND AGREE THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON
PLEDGOR, BORROWERS, BCC BORROWERS AND JUNIOR LENDER BY CERTIFIED OR REGISTERED
MAIL, RETURN RECEIPT REQUESTED, ADDRESSED

                                      -13-
<PAGE>   14

TO PLEDGOR, BORROWERS, BCC BORROWERS AND JUNIOR LENDER, AT THE ADDRESSES SET
FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS
AFTER THE SAME HAS BEEN POSTED.

                  23. Pledgor, BCC Borrowers and Borrowers are executing this
Agreement for the sole purpose of evidencing their consent to the terms hereof
and the agreements made between Senior Creditor and Junior Lender evidenced
hereby; however, none of Pledgor, BCC Borrowers or Borrowers shall be entitled
to enforce any of the provisions of this Agreement, but nonetheless are
permitted to rely on (i) the consent by Senior Creditor to the pledge to Junior
Lender of the stock owned by Pledgor in Borrowers, and (ii) the waiver of any
default under any Senior Security Document as a result of entering into the
Pledge Agreement and making the Junior Debt. There are no third party
beneficiaries to this Agreement.

                  24. Notwithstanding any other provision of this Agreement
which may be to the contrary: (i) any debt or obligation which is or becomes
secured by the Pledge Agreement shall automatically and without further
documentation irrevocably become part of the Junior Debt for all purposes of
this Agreement and all documents, notes, debentures, agreements or other
instruments evidencing or securing such debt or obligations shall automatically
and without further documentation irrevocably become Junior Loan Documents for
all purposes of this Agreement; provided, however, nothing in this clause (i)
shall be deemed to constitute the consent of Senior Creditor to any debt
incurred hereafter by BCC (other than the debt evidenced (or to be evidenced) by
the Junior Note as defined above), Borrowers, BCC Subs or BCC Borrowers, when
such consent is required under the terms of the Senior Security Documents; (ii)
Junior Lender and their affiliates will not make additional loans or provide
other financial assistance (other than the debt evidenced (or to be evidenced)
by the Junior Note as defined above), without regard to how they are documented
(as notes, convertible securities or otherwise), to BCC, Borrowers, BCC Subs,
BCC Borrowers or their affiliates, if doing so would cause a default under any
of the Senior Security Documents, without in each instance obtaining the prior
written consent of Senior Creditor; (iii) Junior Lender and their affiliates
will not take additional security to secure any existing or future debt or
obligations of BCC, Borrowers, BCC Subs, BCC Borrowers or their affiliates, if
doing so would cause a default under any of the Senior Security Documents,
without in each instance obtaining the prior written consent of Senior Creditor;
(iv) if Senior Creditor consents to any debt or other financial assistance
described in clause (ii) above, in the exercise of Senior Creditor's reasonable
discretion, Senior

                                      -14-
<PAGE>   15

Creditor may require as a condition to its consent, that such debt or other
financial assistance become part of the Junior Debt for all purposes of this
Agreement and, if required as a condition to Senior Creditor's consent, all
documents, notes, debentures, agreements or other instruments evidencing or
securing such debt or other financial assistance shall automatically and without
further documentation irrevocably become part of the Junior Loan Documents and
subject to the provisions of this Agreement; and (v) if Senior Creditor consents
to any security described in clause (iii) above, all documents, notes,
debentures, agreements or other instruments evidencing such security interests
shall automatically and without further documentation irrevocably become Junior
Loan Documents for all purposes of this Agreement. Junior Lender shall give
Senior Creditor prompt written notice as to any debts or obligations which
become secured by the Pledge Agreement.

                  {remainder of page intentionally left blank}

                                      -15-
<PAGE>   16

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.

                                            JUNIOR LENDER:

                                            IPC Advisors, S.a.r.l.

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

                                            FRR Investments Limited

                                            By:/s/J.B. Unsworth
                                            Name: J.B. Unsworth
                                            Title:   Director

                                            HR Investments Limited

                                            By: /s/J.B. Unsworth
                                            Name: J.B. Unsworth
                                            Title:   Director

                                            RH Investments Limited

                                            By: /s/J.B. Unsworth
                                            Name: J.B. Unsworth
                                            Title:   Director

                                            VXM Investments Limited

                                            By: /s/J.B. Unsworth
                                            Name: J.B. Unsworth
                                            Title:   Director

                                            SENIOR CREDITOR:

                                            HELLER HEALTHCARE FINANCE, INC., a
                                            Delaware corporation

                                            By:/s/Steven M. Curwin
                                            Name: Steven M. Curwin
                                            Title: EVP

                                      -16-
<PAGE>   17

                               BCC:

                               BALANCED CARE CORPORATION, a Delaware
                               corporation

                               By:/s/Robin L. Barber
                               Name:    Robin L. Barber
                               Title:   Senior Vice President and
                               Counsel; Assistant Secretary

                               BORROWERS:

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

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

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

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

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

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

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

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

                                      -17-
<PAGE>   18

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

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

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

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

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

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

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

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

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

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

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

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

                                      -18-
<PAGE>   19

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

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

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

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

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

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

                               BCC SUBS:

                               BALANCED CARE REALTY I, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY II, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY III, INC., a
                               Delaware corporation

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

                                      -19-
<PAGE>   20

                               BALANCED CARE REALTY IV, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY V, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY VI, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY VII, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY VIII, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY IX, INC., a
                               Delaware corporation

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

                                      -20-
<PAGE>   21

                               BALANCED CARE REALTY X, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY XI, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY XII, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY XIII, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY XIV, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY XV, INC., a
                               Delaware corporation

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

                                      -21-
<PAGE>   22

                               BALANCED CARE REALTY XVI, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY XVII, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY XVIII, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY XIX, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY XX, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY XXI, INC., a
                               Delaware corporation

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

                                      -22-
<PAGE>   23

                               BALANCED CARE REALTY XXII, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY XXIII, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY XXIV, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY XXV, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY XXVI, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY XXVII, INC., a
                               Delaware corporation

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

                                      -23-
<PAGE>   24

                               BALANCED CARE REALTY XXVIII, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY XXIX, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY XXX, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY XXXI, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY XXXII, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY XXXIII, INC., a
                               Delaware corporation

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

                                      -24-
<PAGE>   25

                               BALANCED CARE REALTY XXXIV, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY XXXV, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY XXXVI, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY XXXVII, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY XXXVIII, INC., a
                               Delaware corporation

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

                               BALANCED CARE REALTY XXXIX, INC., a
                               Delaware corporation

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

                               BCC BORROWERS:

                               BCC AT DARLINGTON, INC.,
                               a Delaware corporation

                               By/s/Robin L. Barber
                               Name Robin L. Barber
                               Its Vice President and Secretary

                                      -25-
<PAGE>   26

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

                               By/s/Robin L. Barber
                               Name Robin L. Barber
                               Its Vice President and Secretary

                               BALANCED CARE AT BUTLER, INC.,
                               a Delaware corporation

                               By/s/Robin L. Barber
                               Name Robin L. Barber
                               Its Vice President and Secretary

                               BALANCED CARE AT SARVER, INC.,
                               a Delaware corporation

                               By/s/Robin L. Barber
                               Name Robin L. Barber
                               Its Vice President and Secretary

                               BALANCED CARE AT NORTH RIDGE, INC.,
                               a Delaware corporation

                               By/s/Robin L. Barber
                               Name Robin L. Barber
                               Its Vice President and Secretary

                                      -26-
<PAGE>   27

                                    EXHIBIT A

                                    Borrowers

1.       Balanced Care Realty at State College, Inc.
2.       Balanced Care Realty at Altoona, Inc.
3.       Balanced Care Realty at Lewiston, Inc.
4.       Balanced Care Realty at Reading, Inc.
5.       Balanced Care Realty at Berwick, Inc.
6.       Balanced Care Realty at Peckville, Inc.
7.       Balanced Care Realty at Scranton, Inc.
8.       Balanced Care Realty at Martinsburg, Inc.
9.       Balanced Care Realty at Maumelle, Inc.
10.      Balanced Care Realty at Sherwood, Inc.
11.      Balanced Care Realty at Mountain Home, Inc.
12.      Balanced Care Realty at Mansfield, Inc.

<PAGE>   28

                                    EXHIBIT B

                                Senior Mortgages

1.       Open-End Mortgage, Assignment of Rents and Security Agreement executed
         by Balanced Care Realty at State College, Inc. in favor of Senior
         Creditor, as amended

2.       Open-End Mortgage, Assignment of Rents and Security Agreement executed
         by Balanced Care Realty at Altoona, Inc. in favor of Senior Creditor,
         as amended

3.       Open-End Mortgage, Assignment of Rents and Security Agreement executed
         by Balanced Care Realty at Lewistown, Inc. in favor of Senior Creditor,
         as amended

4.       Open-End Mortgage, Assignment of Rents and Security Agreement executed
         by Balanced Care Realty at Reading, Inc. in favor of Senior Creditor,
         as amended

5.       Open-End Mortgage, Assignment of Rents and Security Agreement executed
         by Balanced Care Realty at Berwick, Inc. in favor of Senior Creditor,
         as amended

6.       Open-End Mortgage, Assignment of Rents and Security Agreement executed
         by Balanced Care Realty at Peckville, Inc. in favor of Senior Creditor,
         as amended

7.       Open-End Mortgage, Assignment of Rents and Security Agreement executed
         by Balanced Care Realty at Scranton, Inc. in favor of Senior Creditor,
         as amended

8.       Credit Line Deed of Trust, Assignment of Rents and Security Agreement
         executed by Balanced Care Realty at Martinsburg, Inc. in favor of
         Senior Creditor, as amended

9.       Mortgage, Assignment of Rents and Security Agreement executed by
         Balanced Care Realty at Maumelle, Inc. in favor of Senior Creditor, as
         amended

10.      Mortgage, Assignment of Rents and Security Agreement executed by
         Balanced Care Realty at Sherwood, Inc. in favor of Senior Creditor, as
         amended

11.      Mortgage, Assignment of Rents and Security Agreement executed by
         Balanced Care Realty at Mountain Home, Inc. in favor of Senior
         Creditor, as amended

<PAGE>   29

12.      Open-End Mortgage, Assignment of Rents and Security Agreement executed
         by Balanced Care Realty at Mansfield, Inc. in favor of Senior Creditor,
         as amended

<PAGE>   30

                                    EXHIBIT C

                                   Properties

<TABLE>
<CAPTION>
                  Borrower                                   Property

<S>                                           <C>
Balanced Care Realty at State College, Inc.   1901 Circleville Road (Lot 2R, Valley Vista
                                              Drive), State College, PA 16803
                                              Fergusun Township, Centre County

Balanced Care Realty at Altoona, Inc.         170 Red Fox Drive, Duncansville, PA 16635
                                              Allegheny Township, Blair County

Balanced Care Realty at Lewistown, Inc.       55 Carriage House Lane, Reedsville, PA 17084
                                              Mifflin County

Balanced Care Realty at Reading, Inc.         9 Colin Court, Reading, PA 19606
                                              Exeter Township, Berks County

Balanced Care Realty at Berwick, Inc.         2050 West Front Street (State Route 11),
                                              Berwick, PA 18603
                                              Columbia County

Balanced Care Realty at Peckville, Inc.       Sturges Road, Peckville, PA 18452
                                              Mid Valley, Lackawanna County

Balanced Care Realty at Scranton, Inc.        815-819 Jeffersona Avenue, Scranton, PA 18503
                                              Lackawanna County

Balanced Care Realty at Martinsburg, Inc.     Gloucester Parkway,
                                              Martinsburg District, WV 25401
                                              Berkeley County

Balanced Care Realty at Maumelle, Inc.        100 Bringler Drive, Maumelle, AR 72113
                                              Pulaski County

Balanced Care Realty at Sherwood, Inc.        9880 Brockingham Road, Sherwood, AR 72120
                                              Pulaski County

Balanced Care Realty at Mountain Home, Inc.   715 West 6th Street, Mountain Home, AR 72653
                                              Baxter County

Balanced Care Realty at Mansfield, Inc.       2010 Walker Lake Road, Mansfield, OH 44906
                                              Ontario Village, Richland County
</TABLE>

<PAGE>   31

                                    EXHIBIT D

                                    BCC Subs

1.       Balanced Care Realty I, Inc.
2.       Balanced Care Realty II, Inc.
3.       Balanced Care Realty III, Inc.
4.       Balanced Care Realty IV, Inc.
5.       Balanced Care Realty V, Inc.
6.       Balanced Care Realty VI, Inc.
7.       Balanced Care Realty VII, Inc.
8.       Balanced Care Realty VIII, Inc.
9.       Balanced Care Realty IX, Inc.
10.      Balanced Care Realty X, Inc.
11.      Balanced Care Realty XI, Inc.
12.      Balanced Care Realty XII, Inc.
13.      Balanced Care Realty XIII, Inc.
14.      Balanced Care Realty XIV, Inc.
15.      Balanced Care Realty XV, Inc.
16.      Balanced Care Realty XVI, Inc.
17.      Balanced Care Realty XVII, Inc.
18.      Balanced Care Realty XVIII, Inc.
19.      Balanced Care Realty XIX, Inc.
20.      Balanced Care Realty XX, Inc.
21.      Balanced Care Realty XXI, Inc.
22.      Balanced Care Realty XXII, Inc.
23.      Balanced Care Realty XXIII, Inc.
24.      Balanced Care Realty XXIV, Inc.
25.      Balanced Care Realty XXV, Inc.
26.      Balanced Care Realty XXVI, Inc.
27.      Balanced Care Realty XXVII, Inc.
28.      Balanced Care Realty XXVIII, Inc.
29.      Balanced Care Realty XXIX, Inc.
30.      Balanced Care Realty XXX, Inc.
31.      Balanced Care Realty XXXI, Inc.
32.      Balanced Care Realty XXXII, Inc.
33.      Balanced Care Realty XXXIII, Inc.
34.      Balanced Care Realty XXXIV, Inc.
35.      Balanced Care Realty XXXV, Inc.
36.      Balanced Care Realty XXXVI, Inc.
37.      Balanced Care Realty XXXVII, Inc.
38.      Balanced Care Realty XXXVIII, Inc.
39.      Balanced Care Realty XXXIX, Inc.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00017-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00017-of-00352.parquet"}]]