Document:

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                                                                    Exhibit 10.2
                                                                 Loan No. 99-407

                              AMENDED AND RESTATED
                                PROMISSORY NOTE A

$30,600,000.00                                                    April 27, 2000

1.       Promise to Pay.

                  FOR VALUE RECEIVED, BALANCED CARE REALTY AT STATE COLLEGE,
INC., a Delaware corporation, BALANCED CARE REALTY AT ALTOONA, INC., a Delaware
corporation, BALANCED CARE REALTY AT LEWISTOWN, INC., a Delaware corporation,
BALANCED CARE REALTY AT READING, INC., a Delaware corporation, BALANCED CARE
REALTY AT BERWICK, INC., a Delaware corporation, BALANCED CARE REALTY AT
PECKVILLE, INC., a Delaware corporation, BALANCED CARE REALTY AT SCRANTON, INC.,
a Delaware corporation, BALANCED CARE REALTY AT MARTINSBURG, INC., a Delaware
corporation, BALANCED CARE REALTY AT MAUMELLE, INC., a Delaware corporation,
BALANCED CARE REALTY AT SHERWOOD, INC., a Delaware corporation, BALANCED CARE
REALTY AT MOUNTAIN HOME, INC., a Delaware corporation and BALANCED CARE REALTY
AT MANSFIELD, INC., a Delaware corporation (collectively "Maker"), each of which
has its address c/o Balanced Care Corporation, 1215 Manor Drive, Mechanicsburg,
Pennsylvania 17055, Attention: Clint Fegan, Chief Financial Officer, jointly and
severally promises to pay to the order of HELLER HEALTHCARE FINANCE, INC., a
Delaware corporation, and its successors and assigns ("Holder") the sum of
Thirty Million Six Hundred Thousand and No/100 Dollars ($30,600,000.00),
together with all other amounts added thereto pursuant to this Amended and
Restated Promissory Note A ("this Note") or otherwise payable to Holder under
the Loan Documents (as hereinafter defined), including, but not limited to, the
"Exit Fee" as defined and set forth in the Loan Agreement (as hereinafter
defined) (or so much thereof as may from time to time be outstanding), together
with interest thereon as hereinafter set forth, all payable in lawful money of
the United States of America (collectively, the "Loan"). Payments shall be made
to Holder at 500 West Monroe Street, Attention: Real Estate Financial Services,
Chicago, Illinois 60661 (or such other address as Holder may hereafter designate
in writing to Maker).

                  This Note is secured by, among other things, the Mortgages
encumbering the Project. This Note, the Amended and Restated Subordinated
Promissory Note B made by Maker in favor of Holder dated the date hereof in the
original principal amount of Six Million Four Hundred Thousand and No/100
Dollars
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($6,400,000.00) ("Note B"), the Mortgages, the Loan Agreement dated December 30,
1999, between Maker and Holder, as amended by the Amendment to Loan Documents of
even date herewith between Maker and Holder (as so amended, the "Loan
Agreement") and any other documents evidencing or securing the Loan or executed
in connection therewith, and any modification, renewal or extension of any of
the foregoing are collectively called the "Loan Documents". Except as otherwise
provided herein, capitalized terms used in this Note shall have the same
meanings as are assigned to such terms in the Loan Agreement.

2.       Interest.

                  So long as no Event of Default (as hereinafter defined)
exists, interest shall accrue on the principal balance hereof from time to time
outstanding and Maker shall pay interest thereon at a rate equal to a floating
rate per annum equal to three and seventy-five hundredths percent (3.75%) plus
the Base Rate (the aggregate rate referred to as the "Interest Rate"). "Base
Rate" shall mean the rate published each business day in the Wall Street Journal
for notes maturing three (3) months after issuance under the caption "Money
Rates, London Interbank Offered Rates (LIBOR)". The Interest Rate for each
calendar month shall be fixed based upon the Base Rate published prior to and in
effect on the first (1st) business day of such month; provided, however, the
Interest Rate from and including the date hereof through December 31, 1999 shall
be fixed based upon the Base Rate in effect on December 30, 1999. Interest shall
be calculated based on a 360 day year and charged for the actual number of days
elapsed.

3.       Payment.

                  (a) Commencing on February 1, 2000, Maker shall pay interest
         computed at the Interest Rate monthly in arrears on the first (1st) day
         of each month; provided, however, interest for the period from and
         after the date hereof through December 31, 1999, shall be paid in
         advance on the date hereof.

                  (b) In addition to monthly payments of interest, commencing
         November 20, 2000, and on the twentieth (20th) day after the end of
         each calendar month thereafter until the Repayment Date, Maker shall
         pay Holder one hundred percent (100%) of the Excess Cash Flow
         corresponding to such calendar month then ended, to be applied in
         repayment of the principal balance hereof.

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                  (c) This Note shall be due and payable on or before December
         31, 2001, or any earlier date on which this Note shall be required to
         be paid in full, whether by acceleration or otherwise (the "Maturity
         Date").

4.       Intentionally Omitted.

5.       Prepayment.

                  Maker may prepay this Note in full or in part at any time;
provided Maker gives Holder at least thirty (30) days prior written notice
thereof and pays the Exit Fee (as defined in the Loan Agreement) then due
Lender.

6.       Exit Fee.

                  As additional consideration for entering into the Loan
Agreement and making the Loan pursuant thereto, Borrower shall pay to Holder the
Final Exit Fee and, if applicable, the Proportionate Exit Fees, all as provided
in the Loan Agreement.

7.       Default.

                  7.1. Events of Default.

                  Any of the following shall constitute an "Event of Default"
under this Note: (a) failure to pay any amounts owed pursuant to this Note or
Note B within ten (10) calendar days after such payment is due; or (b) the
occurrence of any default under any of the other Loan Documents, which,
continues uncured default beyond any applicable grace or cure period.

                  7.2. Remedies.

                  So long as an Event of Default remains outstanding: (a)
interest shall accrue at a rate equal to the Interest Rate plus four percent
(4%) per annum (the "Default Rate"); (b) Holder may, at its option and without
notice (such notice being expressly waived), declare this Note immediately due
and payable; and (c) Holder may pursue all rights and remedies available under
the Mortgages or any other Loan Documents. Holder's rights, remedies and powers,
as provided in this Note and the other Loan Documents, are cumulative and
concurrent, and may be pursued singly, successively or together against Maker,
any guarantor of the Loan, the security described in the Loan Documents, and any
other security given at any time to secure the payment hereof, all at the sole
discretion of Holder. Additionally, Holder may resort to

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every other right or remedy available at law or in equity without first
exhausting the rights and remedies contained herein, all in Holder's sole
discretion. Failure of Holder, for any period of time or on more than one
occasion, to exercise its option to accelerate the Maturity Date shall not
constitute a waiver of the right to exercise the same at any time during the
continued existence of any Event of Default or any subsequent Event of Default.

                  If any attorney is engaged: (i) to collect the Loan or any
sums due under the Loan Documents, whether or not legal proceedings are
thereafter instituted by Holder; (ii) to represent Holder in any bankruptcy,
reorganization, receivership or other proceedings affecting creditors' rights
and involving a claim under this Note; (iii) to protect the liens of any
Mortgage or any of the Loan Documents; (iv) to represent Holder in any other
proceedings whatsoever in connection with any Mortgage or any of the Loan
Documents including post judgment proceedings to enforce any judgment related to
the Loan Documents; or (v) in connection with seeking an out-of-court workout or
settlement of any of the foregoing, then Maker shall pay to Holder all
reasonable costs, attorneys' fees and expenses in connection therewith, in
addition to all other amounts due hereunder.

8.       Late Charge.

                  If payments of principal or interest due under this Note, or
any other amounts due under the other Loan Documents, are not timely made and
remain overdue for a period of ten (10) days, Maker, without notice or demand by
Holder, promptly shall pay an amount ("Late Charge") equal to four percent (4%)
of each delinquent payment.

9.       Governing Law; Severability.

                  This Note shall be governed by and construed in accordance
with the internal laws of the State of Illinois. The invalidity, illegality or
unenforceability of any provision of this Note shall not affect or impair the
validity, legality or enforceability of the remainder of this Note, and to this
end, the provisions of this Note are declared to be severable.

10.      Waiver.

                  Maker, for itself and all endorsers, guarantors and sureties
of this Note, and their respective heirs, legal representatives, successors and
assigns, hereby waives presentment for payment, demand, notice of nonpayment,
notice of dishonor, protest of any dishonor, notice of protest and protest of
this

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Note, and all other notices in connection with the delivery, acceptance,
performance, default or enforcement of the payment of this Note, and agrees that
their respective liability shall be unconditional and without regard to the
liability of any other party and shall not be in any manner affected by any
indulgence, extension of time, renewal, waiver or modification granted or
consented to by Holder. Maker, for itself and all endorsers, guarantors and
sureties of this Note and their respective heirs, legal representatives,
successors and assigns, hereby consents to every extension of time, renewal,
waiver or modification that may be granted by Holder with respect to the payment
or other provisions of this Note, and to the release of any makers, endorsers,
guarantors or sureties, and their heirs, legal representatives, successors and
assigns, and of any collateral given to secure the payment hereof, or any part
hereof, with or without substitution, and agrees that additional makers,
endorsers, guarantors or sureties and their heirs, legal representatives,
successors and assigns, may become parties hereto without notice to Maker or to
any endorser, guarantor or surety and without affecting the liability of any of
them.

11.      Security, Application of Payments.

                  This Note is secured by the liens, encumbrances and
obligations created hereby and by the other Loan Documents and the terms and
provisions of the other Loan Documents are hereby incorporated herein. Payments
will be applied, at Holder's option, first to any fees, expenses or other costs
Maker is obligated to pay under this Note or the other Loan Documents, second to
current interest due on this Note, third to any past due interest payable under
this Note, fourth to current interest due on Note B, fifth to any past due
interest payable under Note B, sixth to the outstanding principal balance of
this Note, seventh to the outstanding principal balance of Note B and eighth to
the Exit Fee.

12.      Miscellaneous.

                  12.1. Amendments.

                  This Note may not be terminated or amended orally, but only by
a termination or amendment in writing signed by Holder and Maker.

                  12.2. Lawful Rate of Interest.

                  In no event whatsoever shall the amount of interest paid or
agreed to be paid to Holder pursuant to this Note or any of the Loan Documents
exceed the highest lawful rate of interest

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permissible under applicable law. If, from any circumstances whatsoever,
fulfillment of any provision of this Note and the other Loan Documents shall
involve exceeding the lawful rate of interest which a court of competent
jurisdiction may deem applicable hereto ("Excess Interest"), then ipso facto,
the obligation to be fulfilled shall be reduced to the highest lawful rate of
interest permissible under such law and if, for any reason whatsoever, Holder
shall receive, as interest, an amount which would be deemed unlawful under such
applicable law, such interest shall be applied to the Loan (whether or not due
and payable), and not to the payment of interest, or refunded to Maker if such
Loan has been paid in full. Neither Maker nor any guarantor, endorser or surety
nor their heirs, legal representatives, successors or assigns shall have any
action against Holder for any damages whatsoever arising out of the payment or
collection of any such Excess Interest.

                  12.3. Captions.

                  The captions of the Paragraphs of this Note are for
convenience of reference only and shall not be deemed to modify, explain,
enlarge or restrict any of the provisions hereof.

                  12.4. Notices.

                  Notices shall be given under this Note in conformity with the
terms and conditions of the Loan Agreement.

                  12.5. Intentionally Omitted.

                  12.6. Time of Essence.

                  Time is of the essence of this Note and the performance of
each of the covenants and agreements contained herein.

13.      Intentionally Omitted.

14.      Sale of Loan.

                  Holder, at any time and without the consent of Maker, may
grant participations in or sell, transfer, assign and convey all or any portion
of its right, title and interest in and to the Loan, this Note, the Mortgages
and the other Loan Documents, any guaranties given in connection with the Loan
and any collateral given to secure the Loan.

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15.      Consent to Jurisdiction.

                  MAKER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS AND
IRREVOCABLY AGREES THAT, SUBJECT TO HOLDER'S ELECTION, ALL ACTIONS OR
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS NOTE OR THE OTHER LOAN DOCUMENTS
SHALL BE LITIGATED IN SUCH COURTS. MAKER EXPRESSLY SUBMITS AND CONSENTS TO THE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS. MAKER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND
AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON MAKER BY CERTIFIED OR
REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO MAKER, AT THE ADDRESS
SET FORTH IN THIS NOTE AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER
THE SAME HAS BEEN POSTED.

16.      Jury Trial Waiver.

                  MAKER, AND HOLDER BY ITS ACCEPTANCE OF THIS NOTE, HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED
UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS NOTE AND THE BUSINESS
RELATIONSHIP THAT IS BEING ESTABLISHED. THIS WAIVER IS KNOWINGLY, INTENTIONALLY
AND VOLUNTARILY MADE BY MAKER AND BY HOLDER, AND MAKER ACKNOWLEDGES THAT NEITHER
HOLDER NOR ANY PERSON ACTING ON BEHALF OF HOLDER HAS MADE ANY REPRESENTATIONS OF
FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR HAS TAKEN ANY ACTIONS WHICH IN
ANY WAY MODIFY OR NULLIFY ITS EFFECT. MAKER AND HOLDER ACKNOWLEDGE THAT THIS
WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT
MAKER AND HOLDER HAVE ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS NOTE
AND THAT EACH OF THEM WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED
FUTURE DEALINGS. MAKER AND HOLDER FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN
REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF
THIS NOTE AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL.

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                  IN WITNESS WHEREOF, Maker has executed this Note or has caused
the same to be executed by its duly authorized representatives as of the date
first set forth above.

                                    MAKER:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                      -10-<PAGE>   1
                                                                   Exhibit 10.3
                                                                Loan No. 99-407

                              AMENDED AND RESTATED
                         SUBORDINATED PROMISSORY NOTE B

$6,400,000.00                                                     April 27, 2000

1.       Promise to Pay.

                  FOR VALUE RECEIVED, BALANCED CARE REALTY AT STATE COLLEGE,
INC., a Delaware corporation, BALANCED CARE REALTY AT ALTOONA, INC., a Delaware
corporation, BALANCED CARE REALTY AT LEWISTOWN, INC., a Delaware corporation,
BALANCED CARE REALTY AT READING, INC., a Delaware corporation, BALANCED CARE
REALTY AT BERWICK, INC., a Delaware corporation, BALANCED CARE REALTY AT
PECKVILLE, INC., a Delaware corporation, BALANCED CARE REALTY AT SCRANTON, INC.,
a Delaware corporation, BALANCED CARE REALTY AT MARTINSBURG, INC., a Delaware
corporation, BALANCED CARE REALTY AT MAUMELLE, INC., a Delaware corporation,
BALANCED CARE REALTY AT SHERWOOD, INC., a Delaware corporation, BALANCED CARE
REALTY AT MOUNTAIN HOME, INC., a Delaware corporation and BALANCED CARE REALTY
AT MANSFIELD, INC., a Delaware corporation (collectively "Maker"), each of which
has its address c/o Balanced Care Corporation, 1215 Manor Drive, Mechanicsburg,
Pennsylvania 17055, Attention: Clint Fegan, Chief Financial Officer, jointly and
severally promises to pay to the order of HELLER HEALTHCARE FINANCE, INC., a
Delaware corporation, and its successors and assigns ("Holder") the sum of Six
Million Four Hundred Thousand and No/100 Dollars ($6,400,000.00), together with
all other amounts added thereto pursuant to this Amended and Restated
Subordinated Promissory Note B ("this Note") or otherwise payable to Holder
under the Loan Documents (as hereinafter defined), including, but not limited
to, the "Exit Fee" as defined and set forth in the Loan Agreement (as
hereinafter defined) (or so much thereof as may from time to time be
outstanding), together with interest thereon as hereinafter set forth, all
payable in lawful money of the United States of America (collectively, the
"Loan"). Payments shall be made to Holder at 500 West Monroe Street, Attention:
Real Estate Financial Services, Chicago, Illinois 60661 (or such other address
as Holder may hereafter designate in writing to Maker).

                  This Note is secured by, among other things, the Mortgages
encumbering the Project. This Note, the Amended and Restated Promissory Note A
made by Maker in favor of Holder dated the date hereof in the original principal
amount of Thirty Million Six Hundred Thousand and No/100 Dollars
($30,600,000.00) ("Note A"), the Mortgages, the Loan Agreement dated December
30, 1999,

<PAGE>   2
among Maker and Holder, as amended by the Amendment to Loan Documents of even
date herewith among Maker and Holder (as so amended, the "Loan Agreement") and
any other documents evidencing or securing the Loan or executed in connection
therewith, and any modification, renewal or extension of any of the foregoing
are collectively called the "Loan Documents." Except as otherwise provided
herein, capitalized terms used in this Note shall have the same meanings as are
assigned to such terms in the Loan Agreement.

2.       Interest.

                  So long as no Event of Default (as hereinafter defined)
exists, interest shall accrue on the principal balance hereof from time to time
outstanding and Maker shall pay interest thereon at a rate equal to a floating
rate per annum equal to three and seventy-five hundredths percent (3.75%) plus
the Base Rate (the aggregate rate referred to as the "Interest Rate"). "Base
Rate" shall mean the rate published each business day in the Wall Street Journal
for notes maturing three (3) months after issuance under the caption "Money
Rates, London Interbank Offered Rates (LIBOR)". The Interest Rate for each
calendar month shall be fixed based upon the Base Rate published prior to and in
effect on the first (1st) business day of such month; provided, however, the
Interest Rate from and including the date hereof through December 31, 1999 shall
be fixed based upon the Base Rate in effect on December 30, 1999. Interest shall
be calculated based on a 360 day year and charged for the actual number of days
elapsed.

3.       Payment.

                  (a) Commencing on February 1, 2000, Maker shall pay interest
         computed at the Interest Rate monthly in arrears on the first (1st) day
         of each month; provided, however, interest for the period from and
         after the date hereof through December 31, 1999, shall be paid in
         advance on the date hereof.

                  (b) In addition to monthly payments of interest, commencing
         November 20, 2000, and on the twentieth (20th) day after the end of
         each calendar month thereafter until the Repayment Date, Maker shall
         pay Holder an amount equal to (i) one hundred percent (100%) of the
         Excess Cash Flow (as defined in the Loan Agreement) corresponding to
         such calendar month then ended, less (ii) the amount of Excess Cash
         Flow paid by

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         Maker pursuant to Section 3(b) of Note A, said amount to be applied as
         provided in Section 11 below.

                  (c) This Note shall be due and payable on or before December
         31, 2001, or any earlier date on which this Note shall be required to
         be paid in full, whether by acceleration or otherwise (the "Maturity
         Date").

4.       Intentionally Omitted.

5.       Prepayment.

                  Maker may prepay this Note in full or in part at any time;
provided Maker gives Holder at least thirty (30) days prior written notice
thereof, Maker also prepays Note A in full and pays the Exit Fee (as defined in
the Loan Agreement) then due Lender.

6.       Exit Fee.

                  As additional consideration for entering into the Loan
Agreement and making the Loan pursuant thereto, Borrower shall pay to Holder the
Final Exit Fee and, if applicable, the Proportionate Exit Fees, as provided in
the Loan Agreement.

7.       Default.

         7.1.     Events of Default.

                  Any of the following shall constitute an "Event of Default"
under this Note: (a) failure to pay any amounts owed pursuant to this Note or
Note A within ten (10) calendar days after such payment is due; or (b) the
occurrence of any default under any of the other Loan Documents, which default
continues uncured beyond any applicable grace or cure period.

         7.2.     Remedies.

                  So long as an Event of Default remains outstanding: (a)
interest shall accrue at a rate equal to the Interest Rate plus four percent
(4%) per annum (the "Default Rate"); (b) Holder may, at its option and without
notice (such notice being expressly waived), declare this Note immediately due
and payable; and (c) Holder may pursue all rights and remedies available under
the Mortgages or any other Loan Documents. Holder's rights, remedies and powers,
as provided in this Note and the other Loan Documents, are cumulative and
concurrent, and may be pursued singly, successively or together against Maker,
any guarantor of the Loan,

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<PAGE>   4
the security described in the Loan Documents, and any other security given at
any time to secure the payment hereof, all at the sole discretion of Holder.
Additionally, Holder may resort to every other right or remedy available at law
or in equity without first exhausting the rights and remedies contained herein,
all in Holder's sole discretion. Failure of Holder, for any period of time or on
more than one occasion, to exercise its option to accelerate the Maturity Date
shall not constitute a waiver of the right to exercise the same at any time
during the continued existence of any Event of Default or any subsequent Event
of Default.

                  If any attorney is engaged: (i) to collect the Loan or any
sums due under the Loan Documents, whether or not legal proceedings are
thereafter instituted by Holder; (ii) to represent Holder in any bankruptcy,
reorganization, receivership or other proceedings affecting creditors' rights
and involving a claim under this Note; (iii) to protect the liens of any
Mortgage or any of the Loan Documents; (iv) to represent Holder in any other
proceedings whatsoever in connection with any Mortgage or any of the Loan
Documents including post judgment proceedings to enforce any judgment related to
the Loan Documents; or (v) in connection with seeking an out-of-court workout or
settlement of any of the foregoing, then Maker shall pay to Holder all
reasonable costs, attorneys' fees and expenses in connection therewith, in
addition to all other amounts due hereunder.

8.       Late Charge.

                  If payments of principal or interest due under this Note, or
any other amounts due under the other Loan Documents, are not timely made and
remain overdue for a period of ten (10) days, Maker, without notice or demand by
Holder, promptly shall pay an amount ("Late Charge") equal to four percent (4%)
of each delinquent payment.

9.       Governing Law; Severability.

                  This Note shall be governed by and construed in accordance
with the internal laws of the State of Illinois. The invalidity, illegality or
unenforceability of any provision of this Note shall not affect or impair the
validity, legality or enforceability of the remainder of this Note, and to this
end, the provisions of this Note are declared to be severable.

10.      Waiver.

                  Maker, for itself and all endorsers, guarantors and sureties
of this Note, and their respective heirs, legal

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<PAGE>   5
representatives, successors and assigns, hereby waives presentment for payment,
demand, notice of nonpayment, notice of dishonor, protest of any dishonor,
notice of protest and protest of this Note, and all other notices in connection
with the delivery, acceptance, performance, default or enforcement of the
payment of this Note, and agrees that their respective liability shall be
unconditional and without regard to the liability of any other party and shall
not be in any manner affected by any indulgence, extension of time, renewal,
waiver or modification granted or consented to by Holder. Maker, for itself and
all endorsers, guarantors and sureties of this Note and their respective heirs,
legal representatives, successors and assigns, hereby consents to every
extension of time, renewal, waiver or modification that may be granted by Holder
with respect to the payment or other provisions of this Note, and to the release
of any makers, endorsers, guarantors or sureties, and their heirs, legal
representatives, successors and assigns, and of any collateral given to secure
the payment hereof, or any part hereof, with or without substitution, and agrees
that additional makers, endorsers, guarantors or sureties and their heirs, legal
representatives, successors and assigns, may become parties hereto without
notice to Maker or to any endorser, guarantor or surety and without affecting
the liability of any of them.

11.      Security, Application of Payments.

                  This Note is secured by the liens, encumbrances and
obligations created hereby and by the other Loan Documents and the terms and
provisions of the other Loan Documents are hereby incorporated herein. Payments
will be applied, at Holder's option, first to any fees, expenses or other costs
Maker is obligated to pay under this Note or the other Loan Documents, second to
current interest due on Note A, third to any past due interest payable under
Note A, fourth to current interest due on this Note, fifth to any past due
interest payable under this Note, sixth to the outstanding principal balance of
Note A, seventh to the outstanding principal balance of this Note and eighth to
the Exit Fee.

12.      Miscellaneous.

         12.1.    Amendments.

                  This Note may not be terminated or amended orally, but only by
a termination or amendment in writing signed by Holder and Maker.

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<PAGE>   6
         12.2.    Lawful Rate of Interest.

         In no event whatsoever shall the amount of interest paid or agreed to
be paid to Holder pursuant to this Note or any of the Loan Documents exceed the
highest lawful rate of interest permissible under applicable law. If, from any
circumstances whatsoever, fulfillment of any provision of this Note and the
other Loan Documents shall involve exceeding the lawful rate of interest which a
court of competent jurisdiction may deem applicable hereto ("Excess Interest"),
then ipso facto, the obligation to be fulfilled shall be reduced to the highest
lawful rate of interest permissible under such law and if, for any reason
whatsoever, Holder shall receive, as interest, an amount which would be deemed
unlawful under such applicable law, such interest shall be applied to the Loan
(whether or not due and payable), and not to the payment of interest, or
refunded to Maker if such Loan has been paid in full. Neither Maker nor any
guarantor, endorser or surety nor their heirs, legal representatives, successors
or assigns shall have any action against Holder for any damages whatsoever
arising out of the payment or collection of any such Excess Interest.

         12.3.    Captions.

         The captions of the Paragraphs of this Note are for convenience of
reference only and shall not be deemed to modify, explain, enlarge or restrict
any of the provisions hereof.

         12.4.    Notices.

         Notices shall be given under this Note in conformity with the terms and
conditions of the Loan Agreement.

         12.5.    Intentionally Omitted.

         12.6.    Time of Essence.

                  Time is of the essence of this Note and the performance of
each of the covenants and agreements contained herein.

13.      Intentionally Omitted.

14.      Sale of Loan.

                  Holder, at any time and without the consent of Maker, may
grant participations in or sell, transfer, assign and convey all or any portion
of its right, title and interest in and to the Loan, this Note, the Mortgages
and the other Loan Documents, any

                                      -6-
<PAGE>   7
guaranties given in connection with the Loan and any collateral given to secure
the Loan.

15.      Consent to Jurisdiction.

                  MAKER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS AND
IRREVOCABLY AGREES THAT, SUBJECT TO HOLDER'S ELECTION, ALL ACTIONS OR
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS NOTE OR THE OTHER LOAN DOCUMENTS
SHALL BE LITIGATED IN SUCH COURTS. MAKER EXPRESSLY SUBMITS AND CONSENTS TO THE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS. MAKER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND
AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON MAKER BY CERTIFIED OR
REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO MAKER, AT THE ADDRESS
SET FORTH IN THIS NOTE AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER
THE SAME HAS BEEN POSTED.

16.      Jury Trial Waiver.

                  MAKER, AND HOLDER BY ITS ACCEPTANCE OF THIS NOTE, HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED
UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS NOTE AND THE BUSINESS
RELATIONSHIP THAT IS BEING ESTABLISHED. THIS WAIVER IS KNOWINGLY, INTENTIONALLY
AND VOLUNTARILY MADE BY MAKER AND BY HOLDER, AND MAKER ACKNOWLEDGES THAT NEITHER
HOLDER NOR ANY PERSON ACTING ON BEHALF OF HOLDER HAS MADE ANY REPRESENTATIONS OF
FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR HAS TAKEN ANY ACTIONS WHICH IN
ANY WAY MODIFY OR NULLIFY ITS EFFECT. MAKER AND HOLDER ACKNOWLEDGE THAT THIS
WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT
MAKER AND HOLDER HAVE ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS NOTE
AND THAT EACH OF THEM WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED
FUTURE DEALINGS. MAKER AND HOLDER FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN
REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF
THIS NOTE AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL.

                                      -7-
<PAGE>   8
                  IN WITNESS WHEREOF, Maker has executed this Note or has caused
the same to be executed by its duly authorized representatives as of the date
first set forth above.

                                           MAKER:

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

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

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

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

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

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

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

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

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

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

                                      -8-
<PAGE>   9

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

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

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

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

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

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

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

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

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

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

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

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

                                      -9-
<PAGE>   10
                                           BALANCED CARE REALTY AT MANSFIELD,
                                           INC., a Delaware corporation

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

                                      -10-

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