Document:

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Exhibit 10.13

                       AMENDMENT TO MASTER LEASE AGREEMENT

                  THIS AMENDMENT TO MASTER LEASE AGREEMENT ("Amendment") is
dated as of October 1, 2000 between HEALTH CARE REIT, INC., a corporation
organized under the laws of the State of Delaware "HCRI" and "Landlord"), having
its principal office located at One SeaGate, Suite 1500, P.O. Box 1475, Toledo,
Ohio 43603, and BALANCED CARE AT MERRILLVILLE, INC., a corporation organized
under the laws of the State of Delaware ("Tenant") having its chief executive
office located at 1215 Manor Drive, Mechanicsburg, Pennsylvania 17055.

                                 R E C I T A L S

                  A. Landlord and Tenant entered into a Master Lease Agreement
of even date ("Lease") of the Leased Property (as defined in the Lease).

                  B. In the case of the Merrillville Facility (as defined in the
Lease), Landlord originally leased the Merrillville Facility to Summerville
Assisted Living, Inc. ("Prior Tenant"). Landlord and Tenant are entering into
the Lease following Landlord's termination of the Leasehold Interest of Prior
Tenant. To avoid interruption of the operation of the Merrillville Facility,
Tenant agreed to enter into the Lease without the opportunity to do a full and
complete due diligence investigation of the Merrillville Facility. As a result
of these circumstances, Landlord and Tenant have agreed to make certain
modifications to the Lease.

                  C. Landlord and Tenant desire to amend the Lease as set forth
herein.

                     NOW, THEREFORE, in consideration of the foregoing recitals
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows.

                  1. Definitions. Any capitalized terms not defined in this
Amendment shall have the meaning set forth in the Lease.

                  2. Tenant's Obligations. The definition of "Tenant's
Obligations" in Section 1.4 of the Lease is hereby amended to read in its
entirety as follows:

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                     "Tenant's Obligations" means all payment and performance
                     obligations of Tenant under this Lease, the Working Capital
                     Loan, and all documents executed by Tenant in connection
                     with this Lease or the Working Capital Loan.

                  3. Working Capital Loan. Section 1.4 of the Lease is hereby
amended to add the following:

                     "Working Capital Loan" means the loan extended by HCRI to
                     Tenant for working capital purposes.

                  4. Rent. Section 2.1 of the Lease is hereby amended to add the
following subsections (a) and (b):

                     (a) During Lease Years 1-3 inclusive, Tenant shall pay the
                     Base Rent in an amount calculated as if the Lease Rate
                     equaled five percent (5%) per annum, computed using the
                     365/360 method and the balance of the Base Rent shall be
                     deemed to be a Lease Advance.

                     (b) On or before the 15th day of each month commencing with
                     the month following the Commencement Date and continuing
                     through the end of Lease Year 3, Tenant shall [i] pay all
                     its Net Cash Flow to Landlord; and [ii] deliver to Landlord
                     a reconciliation statement of the gross revenues, operating
                     expenses, management fee, and Working Capital Loan debt
                     service, including calculation of the aggregate Net Cash
                     Flow. As used herein, "Net Cash Flow" means the gross
                     revenue of Tenant arising from the Facility as reflected on
                     the income statement of Tenant minus [i] the operating
                     expenses for the Facilities (including payroll taxes); [ii]
                     the management fees actually paid by Tenant as provided
                     herein; [iii] amounts paid to Landlord under the Working
                     Capital Loan; and [iv] amounts paid to Landlord pursuant to
                     Section 2.1(a) above. Landlord

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                     shall apply the Net Cash Flow payments first to reduce the
                     Lease Amount to the extent Lease Advances have been made
                     pursuant to Section 2.1(a), second to the outstanding
                     balance of the Loan in the manner provided in the Loan
                     Agreement, and third to Tenant.

                  5. Impositions. Article 3 of the Lease is hereby amended to
provide that Tenant shall only be responsible for payment of Impositions and
utilities on or after the Contract Date.

                  6. Tenant's Indemnification. Section 5.1 of the Lease is
hereby amended to exclude claims [i] arising from Landlord's negligence and
willful misconduct from the matters subject to Tenant's indemnity obligation;
and [ii] acts of any prior tenant. Landlord acknowledges and agrees that for
purposes of this section, prior tenants of the Facility will not be deemed to be
parties claiming through Tenant.

                  7. Environmental Indemnification. Clause [i] of Section 5.2.1
of the Lease is hereby amended to read as follows:

                     Hazardous Materials first introduced to the Leased Property
                     prior to the Occupancy Date or subsequent to the date that
                     Tenant's occupancy of the Leased Property shall have fully
                     terminated;

                  8. Acceptance of Leased Premises. Section 6.2 of the Lease is
hereby amended to delete clauses [i], [ii], and [v].

                  9. Default. Section 8.1 of the Lease is hereby amended to add
the following subsection (l):

                     (l) Tenant fails to perform any obligations under the note
                     evidencing the Working Capital Loan or the loan agreement
                     executed in connection with the Working Capital Loan.

                  10. Early Option Period. Article 13 of the Lease is hereby
amended to add the following Section 13.6:

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                     Notwithstanding any provision to the contrary contained in
                     this Article 13, Tenant may exercise the Option to Purchase
                     the Merrillville Facility during Lease Years 4-7, inclusive
                     ("Early Option Period") subject to the same terms and
                     conditions of this Article 13 except that [i] the required
                     Purchase Notice shall be given at any time during the Early
                     Option Period; and [ii] the Option Price shall be the
                     greater of [a] the applicable Base Amount increased by 50%
                     of the amount of any Lease Advance for capital expenditures
                     and 100% of the amount of any other Lease Advance
                     (excluding the Initial Lease Advance) ("Base Price"); or
                     [b] the sum of [1] the Base Price plus [2] the lesser of
                     [A] $400,000.00 and [B] the difference between the Fair
                     Market Value and the Base Price. For purposes of this
                     section, the Base Amount for Lease Year 4 shall be
                     $5,500,000.00; Lease Year 5 shall be $5,150,000.00. Lease
                     Year 6 shall be $4,750,000.00; and Lease Year 7 shall be
                     $4,360,000.00.

                     After the expiration of the Early Option Period, Tenant's
                     Option to Purchase shall be governed solely by Section
                     13.1-Section 13.5.

                  11. Management Agreement. Article 14 of the Lease is hereby
amended to add the following Section 14.11:

                     Any management agreement entered into by Tenant is subject
                     to the prior approval of Landlord, which approval will not
                     be unreasonably withheld. Landlord has approved the
                     Management Agreement to be entered into between Manager and
                     Tenant.

                  12. No Debt. Section 14.1 of the Lease is hereby amended to
add the following clause: "[iii] indebtedness in favor of Landlord under the
Working Capital Loan".

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                  13. Compliance With Lease Documents. Section 15.4 of the Lease
is hereby amended to add the following:

                     Notwithstanding any provisions to the contrary in the Lease
                     or any other Lease Documents, Landlord shall not hold
                     Tenant responsible for, or declare a default based on, the
                     Facility's noncompliance with any provisions relating to
                     the Facility contained under the Lease or any other Lease
                     Documents, caused by or arising from the actions or failure
                     to act of the Prior Tenant or existing on the Occupancy
                     Date provided that Tenant gives Landlord notice of the
                     noncompliance promptly following discovery of such
                     noncompliance. Upon each anniversary of the Occupancy Date,
                     Tenant shall notify Landlord in writing of the status of
                     any matters that have arisen under this section and
                     Landlord and Tenant shall endeavor in good faith to develop
                     a mutually acceptable plan to achieve compliance.

                  14. Cash Flow. Section 15.7.1(a)[iv] of the Lease is hereby
amended to read in its entirety as follows:

                     [iv] the amount of the provision for Rent payments, and
                     interest and lease payments, if any, and principal and
                     interest payments for the Working Capital Loan;

                  15. Coverage Ratio. Section 15.7.2 of the Lease is hereby
amended to read in its entirety as follows:

                     Tenant shall maintain a Coverage Ratio of not less than
                     1.25 to 1.00 commencing with the first fiscal quarter
                     following the third anniversary of the Commencement Date
                     and for each fiscal quarter thereafter.

                  16. Occupancy Census; Net Operating Income. The Lease is
hereby amended to add Exhibit J attached to this

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Amendment. In addition, Article 15 of the Lease is hereby amended to add a new
Section 15.7.6 as follows:

                     During Lease Years 1-3, inclusive, the Facility shall
                     maintain an occupancy census and net operating income equal
                     to or greater than the amounts contained on Exhibit J.

                  17. Licenses. Article 15 is hereby amended to add the
following Section 15.9:

                     15.9 Licenses. Tenant shall apply for the appropriate
                     license to operate the Facility within 30 days after the
                     Occupancy Date. Tenant shall also deliver all required
                     notices to the appropriate licensing authorities within the
                     time periods required by law. Tenant shall deliver copies
                     of the foregoing applications and notices to Landlord
                     promptly following submission and shall deliver to Landlord
                     copies of the licenses following issuance to Tenant.

                  18. Subleases. Section 18.1 is hereby amended to add the
following:

                     Notwithstanding the forgoing, Tenant may enter into a
                     Management Agreement for the Facility that will terminate
                     upon issuance of a license to Tenant to operate the
                     Facility.

                  19. Representations and Warranties. Article 22 of the Lease is
hereby amended to [i] delete subsection 22.6 (Condition of Facility), 22.7
(Compliance with Laws), 22.8 (No Litigation) (Facility representations only),
22.15-19 (Parties in Possession, Access, Utilities, Condemnation and
Assessments, and Zoning), 22.21 (Environmental Matters), and 22.23 (No Default);
and [ii] make all representations and warranties effective as of the Occupancy
Date. The representations and warranties contained in Section 22.4 shall be
limited to Governmental Authorizations relating to licensure only.

                  20. Capital Expenditures. Article 25 of the Lease is hereby
amended to add the following Section 25.28:

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                     25.28 Capital Expenditures. Landlord shall provide funds in
                     the amount of up to $100,000.00 for Facility capital
                     expenditures ("Capital Expenditures Allocation").
                     Disbursement of the Capital Expenditures Allocation is
                     subject to Landlord's reasonable approval of the scope of
                     work, budget, construction and disbursement schedules,
                     contractor and construction agreements as submitted by
                     Tenant.

                             (a) Disbursement. Tenant shall provide a collateral
                     assignment of any construction contract to Landlord and the
                     contractor shall consent to the assignment. Landlord shall
                     make disbursement to Tenant from time to time up to the
                     amount of the Capital Expenditures Allocation, provided,
                     for each disbursement, no Event of Default has occurred and
                     is continuing. Disbursements will be made at least eight
                     business days but not more than 12 business days following
                     Tenant's request and delivery to Landlord of such
                     documentation as Landlord shall reasonably request
                     concerning the disbursement, including but not limited to a
                     description of the work and an estimate of the cost of the
                     work to be performed. Each disbursement of the Capital
                     Expenditures Allocation shall be a Lease Advance.

                  21. Prior Tenant Obligations. Article 25 of the Lease is
hereby amended to add the following Section 25.29:

                     25.29 Landlord's Indemnification.

                     25.29.1 Provided Tenant complies with Section 25.29.2 and
                     subject to terms of Section 25.29.2, Landlord shall
                     indemnify and hold harmless Tenant, and any successor or
                     assignee of Tenant, from and against any and all demands,
                     claims causes of action, fines,

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                     penalties, damages (including consequential damages),
                     losses, liabilities (including strict liability),
                     judgments, and expenses (including, without limitation,
                     reasonable attorney's fees, court costs, and the costs set
                     forth in Section 8.7) that Tenant may incur, or become
                     responsible for, as a result of a claim by any person or
                     entity, based upon, or arising out of [i] obligations of
                     Prior Tenant to pay amounts owed to an equipment lessor or
                     lender for equipment at the Facility ("Equipment Claims");
                     [ii] obligations of Prior Tenant to pay amounts owed to a
                     vendor providing goods and services to the Facility,
                     including but not limited to utility providers ("Vendor's
                     Claims"); [iii] a resident's occupancy of the Facility
                     prior to the date that Tenant took occupancy of the
                     Facility, including but not limited to attorneys fees, in
                     connection with litigation filed against Tenant or
                     Guarantor or any of their respective representatives,
                     employees or agents in connection with any litigation or
                     claim filed in connection with Virginia Kennedy, a resident
                     at the Facility; [iv] the use, maintenance, operation and
                     occupancy of the Facility prior to the Occupancy Date; or
                     [v] any claim or lien by any governmental or
                     quasi-governmental unit, body or agency or any third party
                     for [a] clean-up costs or other costs pursuant to any
                     violation of Environmental Laws arising from a release that
                     occurred prior to the Occupancy Date, or [b] costs pursuant
                     to a violation of any Legal Requirement that occurred prior
                     to the Occupancy Date or the condition of the Facility
                     existing prior to the Occupancy Date ("Facility Claim").

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                     25.29.2 Landlord's obligation to indemnify Tenant under
                     Section 25.29.2 is subject to and conditioned upon [i] with
                     respect to an Equipment Claim and a Vendor Claim, Tenant's
                     entering into new equipment contracts/leases and new vendor
                     contracts and not assuming the existing equipment
                     contract/lease or vendor contract giving rise to the
                     Equipment or Vendor Claim; [ii] with respect to any claim
                     hereunder, Tenant's maintaining insurance coverage as
                     required under the terms of this Lease; [iii] with respect
                     to any claim hereunder, Tenant's pursuing any and all
                     available insurance coverage; [iv] with respect to any
                     claim hereunder, Tenant's diligently pursuing a defense of
                     any claim; and [v] with respect to a Facility Claim,
                     Tenant's diligently investigating the condition of the
                     Facility after the Occupancy Date and promptly notifying
                     Landlord of any potential problems.

                  22. Exhibits. Tenant and Landlord acknowledge that Exhibits D
and I of the Lease are preliminary or incomplete based on information provided
by Prior Tenant. Consequently, Tenant shall provide updated exhibits to Landlord
within 120 days after the Occupancy Date. Upon Landlord's approval of the
exhibits, the Lease shall be deemed amended to include the updated exhibits.

                  23. Records. Landlord has delivered to Tenant certain
documents and reports in the possession of Landlord, its professionals or
agents, in connection with the operation of the Facility ("Records"). Tenant
acknowledges that Landlord does not verify the accuracy of the Records and the
Records were delivered pursuant to a confidentiality letter agreement between
Landlord and Tenant.

                  24. Cooperation. Landlord does hereby covenant to reasonably
cooperate with Tenant in effectuating a re-licensure of the Facility and a
smooth and orderly transition of the operations thereof from the Prior Tenant to
Tenant.

                  25. Scope of Amendment. The terms of this Amendment applicable
to the "Facility" or the "Leased Property" apply only

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to the Merrillville Facility. To the extent that the Lease is amended to include
additional properties, this Amendment shall not apply to such properties unless
specifically provided in such amendment.

                  26. Affirmation. Except as specifically modified by this
amendment, the terms and provisions of the Lease are hereby affirmed and shall
remain in full force and effect.

                  27. Binding Effect. This Amendment will be binding upon and
inure to the benefit of the successors and permitted assigns of Landlord and
Tenant.

                  28. Further Modification. The Lease may be further modified
only by writing signed by Landlord and Tenant.

                  29. Counterparts. This Amendment may be executed in multiple
counterparts, each of which shall be deemed an original hereof, but all of which
will constitute one and the same document.

                  30. Consent of Guarantor. This Amendment shall have no force
or effect unless and until each Guarantor has executed the Consent of Guarantor
set forth below.

            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

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                  IN WITNESS WHEREOF, Landlord and Tenant have executed this
Amendment as of the date first set forth above.

Signed and acknowledged
in the presence of                           HEALTH CARE REIT, INC.

Signature /s/ Rita J. Rogge                  By: /s/ Erin C. Ibele
Print Name Rita J. Rogge
                                             Title: Vice President and
Signature /s/ Kathleen A. Sullivan                  Corporate Secretary
Print Name Kathleen A. Sullivan

                                             BALANCED CARE AT MERRILLVILLE, INC.

Signature /s/ Lorie A. Taylor                By: /s/ Robin L. Barber
Print Name Lorie A. Taylor                           Robin L. Barber
                                             Title: Vice President and
Signature /s/ Robyn Cronin                          Secretary
Print Name Robyn Cronin

STATE OF OHIO                  )
                               ) SS:
COUNTY OF LUCAS                )

                  The foregoing instrument was acknowledged before me this 7th
day of November, 2000 by Erin C. Ibele, the Vice President and Corporate
Secretary of Health Care REIT, Inc., a Delaware corporation, on behalf of the
corporation.

                                             /s/ Rita J. Rogge
                                             Notary Public

My Commission Expires:_____________________                   [SEAL]

                                      S-1

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COMMONWEALTH OF PENNSYLVANIA        )
                                    ) SS:
COUNTY OF CUMBERLAND                )

                  The foregoing instrument was acknowledged before me this 1st
day of November, 2000 by Robin L. Barber, the Vice President and Secretary of
Balanced Care at Merrillville, Inc., a Delaware corporation, on behalf of the
corporation.

                                                /s/ Jaynelle D. Covert
                                                Notary Public

My Commission Expires: June 21, 2004                             [SEAL]

THIS INSTRUMENT PREPARED BY:

Cynthia L. Rerucha, Esq.
Shumaker, Loop & Kendrick, LLP
1000 Jackson Street
Toledo, Ohio 43624

                                      S-2

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                              CONSENT OF GUARANTOR

                  In connection with the Unconditional and Continuing Guaranty
("Guaranty") made by the undersigned Guarantor in favor of Landlord dated as of
October 1, 2000, the undersigned Guarantor hereby [i] consents to the foregoing
Amendment to Master Lease Agreement ("Amendment"), [ii] agrees to be bound by
the terms and provisions of the Amendment to the extent applicable to the
undersigned pursuant to its Guaranty, [iii] affirms the Guaranty which shall
remain in full force and effect, and [iv] waive any suretyship defenses arising
in connection with the Amendment. All capitalized terms not defined herein shall
have the meaning set forth in the foregoing Amendment.

                                              BALANCED CARE CORPORATION

                                              By: /s/Robin L. Barber
                                              Robin L. Barber
                                              Title: Senior Vice President,
                                              Legal Counsel and Assistant
                                              Secretary<PAGE>   1
Exhibit 10.14

                      UNCONDITIONAL AND CONTINUING GUARANTY

                  THIS GUARANTY is made effective as of October 1, 2000 (the
"Effective Date") by BALANCED CARE CORPORATION ("Guarantor"), in favor of HEALTH
CARE REIT, INC., a corporation organized under the laws of the State of Delaware
("Landlord").

                                 R E C I T A L S

                  A. Landlord is granting to Balanced Care at Merrillville,
Inc., a corporation organized under the laws of the State of Delaware
("Tenant"), a lease of certain real property ("Property") pursuant to a Master
Lease Agreement between Landlord and Tenant of even date, as amended ("Lease").
Tenant intends to operate a facility ("Facility") on the Property as further
defined in the Lease. Landlord is also extending a working capital loan to
Tenant in the original principal amount of up to $1,000,000.00 ("Working Capital
Loan"). The Working Capital Loan is evidenced by a note of even date ("Note")
and is subject to the terms and conditions of a Loan Agreement of even date
"Loan Agreement"). Any capitalized terms not defined in this Guaranty shall have
the meaning set forth in the Lease or Loan Agreement.

                  B. The Facility and all improvements and fixtures constructed
and installed on the Property will be the property of Landlord and will be
included in the "Leased Property" under the Lease.

                  C. In order to extend the Lease and the Working Capital Loan
to Tenant, Landlord requires that this guaranty be provided by Guarantor. Tenant
is a wholly owned subsidiary of Guarantor and Guarantor has determined that
Guarantor will benefit from the Lease and the Working Capital Loan to Tenant and
has agreed to provide this guaranty to Landlord.

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

<PAGE>   2

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

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

                  2. Warranties.

                     (a) Capacity. Guarantor is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Guarantor warrants that Guarantor has taken all necessary corporate action to
incur the obligations of this guaranty and to execute, deliver and perform this
guaranty.

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

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

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

<PAGE>   3

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

                     (e) No Insolvency. On the date of the Guarantor's entering
into this guaranty and after giving effect to all indebtedness of the Guarantor,
[1] the Guarantor will be able to pay Guarantor's obligations as they become due
and payable; [2] the present fair saleable value of the Guarantor's assets
exceeds the amount that will be required to pay Guarantor's probable liability
on its obligations as the same become absolute and mature; [3] the sum of the
Guarantor's property at a fair valuation exceeds Guarantor's indebtedness; and
[4] the Guarantor will have sufficient capital to engage in Guarantor's
businesses. The proceeds of the Credit constitute fair consideration and
reasonably equivalent value for this guaranty.

                  3. Waivers. Without notice to or consent of Guarantor,
Landlord may do or refrain from doing anything affecting any Credit or any
Security including the following: [a] granting or not granting any indulgences
to anyone liable for payment of the Credit or any Security; [b] failing to get
or to perfect any Security; [c] failing to get an enforceable agreement to repay
the Credit; [d] releasing any Security or anyone or any property from liability
for payment of the Credit; [e] exercising any right or remedy including, without
limitation, eviction of Tenant or termination of the Lease; [f] applying any
funds received from Tenant, Guarantor or any other party and any funds realized
from any Security to the Credit in such manner and in such order or priority as
Landlord elects in its sole discretion; [g] delaying in enforcing or failing to
enforce any rights to payment of the Credit or rights against any Security; [h]
changing the Loan Agreement or any agreement relating to the Credit or the
Security including, without limitation, any change in the schedule or manner for
the payment of any Credit and any increase or decrease in the rate of interest
payable thereon; and [i] extending the time for payment of the Credit including
extending the time beyond the term of the Note. In the event that Landlord
forecloses or otherwise realizes on any Security for repayment of the Credit,
Guarantor agrees that the purchase price at any

<PAGE>   4

judicial or other sale of the Security paid by Landlord or any other party shall
be conclusive evidence of the value of the Security and Landlord shall have an
absolute right, subject to applicable law, to obtain a deficiency judgment of
all amounts due in excess of such purchase price, to the extent permitted by
applicable law. To the fullest extent permitted by law, Guarantor waives the
right to contest the value of the Security through appraisals or otherwise, and
waives any defense to a deficiency judgment that Guarantor may have pursuant to
any statute or other applicable law.

                  4. Defects in Security, Etc. Guarantor's liability under this
guaranty shall not be affected by [a] any default in any document concerning any
Credit or Security when accepted by Landlord or arising any time thereafter; [b]
the unenforceability of or defect in any Security or document relating to any
Credit; [c] any decline in the value of any Security; [d] Landlord's failure to
obtain any Security or to perfect Landlord's security interest therein; [e] the
death, incompetence, insolvency, dissolution, liquidation, or winding up of
affairs of Tenant, Guarantor, or anyone liable for any Security or the start of
insolvency proceedings by or against any such person or entity; [f] any
termination of the leasehold estate created by the Lease to the extent Tenant
remained liable under the Lease; [g] the release or discharge of Tenant in any
creditor's, receivership, bankruptcy, other insolvency proceedings, or other
proceedings; [h] impairment, limitation or modification of the liability of
Tenant or the estate of Tenant in bankruptcy or of any remedy for the
enforcement of Tenant's liability under the Lease, resulting from the operation
of any present or future provisions of the federal Bankruptcy Code or other
statutes or from the decision of any court; [i] the rejection or disaffirmance
of the Lease in any such proceedings; [j] the assignment or transfer of the
Lease by the Tenant; [k] any disability or other defense of Tenant; [l] the
cessation from any cause whatsoever of the liability of Tenant under the Lease;
or [m] any reorganization, merger, consolidation, combination, or sale of
substantially all the assets of Tenant.

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

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

<PAGE>   5

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

                  8. Subordination. Guarantor subordinates to and postpones in
favor of the Credit and Security [a] any present and future debts and
obligations of Tenant to Guarantor (the "Indebtedness") including but not
limited to [i] salary, bonuses, and other payments pursuant to any employment
arrangement; [ii] fees, reimbursement of expenses and other payments pursuant to
any independent contractor arrangement; [iii] principal and interest pursuant to
any Indebtedness; [iv] distributions payable to any shareholders or general or
limited partners of Tenant; and [v] lease payments pursuant to any leasing
arrangement; and [b] any liens or security interests securing payment of the
Indebtedness. Except as otherwise specified in the Lease, the provisions of this
paragraph shall be effective only [i] after the occurrence of an Event of
Default (as defined in the Lease) and until such Event of Default is cured, or
[ii] after the commencement of any bankruptcy or insolvency proceeding by or
against Tenant and until such proceeding is dismissed. Guarantor shall not ask
for, sue for, demand, take or receive any payment, by setoff or in any other
manner, including the receipt of a negotiable instrument, for all or any part of
the Indebtedness owed by Tenant, or any successor or assign of Tenant, including
without limitation a receiver, trustee or debtor in possession (the term
"Tenant" shall include any such successor or assign of Tenant) until the Credit
has been paid in full; however, if Guarantor receives such a payment, Guarantor
shall immediately deliver the payment to Landlord for credit against the then
outstanding balance of the Credit, whether matured or unmatured. Notwithstanding
any right of Guarantor to ask, demand, sue for, take or receive any payment with
respect to the Indebtedness, all rights, liens and security interests of the
Guarantor, whether now or hereafter arising, in any assets of the Tenant or in
any Security shall be and hereby are subordinated to the rights of Landlord in
such assets and Guarantor shall have no right to possession of any such assets
or to foreclose upon any such asset, whether by judicial action or otherwise,
unless and until the Credit has been paid in full. Guarantor agrees that
Landlord shall be subrogated to the Guarantor with respect to the Guarantor's
claims against Tenant and the Guarantor's rights, liens and security interest,
if any, in any of the Tenant's assets and proceeds thereof until all of the
Credit has been paid in full.

                  Guarantor warrants and represents that Guarantor has not
previously assigned any interest in the Indebtedness to any party other than
Landlord, that no other party owns an interest in the Indebtedness other than
Guarantor, (whether as joint holders

<PAGE>   6

of the Indebtedness, participants or otherwise) and that, except as provided
below, the entire Indebtedness is and shall continue to be owing only to the
Guarantor. Guarantor shall not assign or transfer to others any claim Guarantor
has or may have against the Tenant, unless such assignment or transfer is made
expressly subject to this guaranty.

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

                  In the event of any distribution of the assets or readjustment
of the obligations and indebtedness of the Tenant, whether by reason of
liquidation, bankruptcy, arrangement, receivership, assignment for the benefit
of creditors or any other action or proceeding involving the readjustment of all
or any of the Indebtedness hereby subordinated, or the application of the assets
of the Tenant to the payment or liquidation thereof, Landlord shall be entitled
to receive payment in full of any and all of the Credit, due or not due, prior
to the payment of all or any part of the Indebtedness hereby subordinated, and
in order to enable Landlord to enforce its rights hereunder in any such action
or proceeding, Landlord is hereby authorized and empowered in its discretion to
make and present for and on behalf of Guarantor such proofs of claims against
the Tenant, if the Guarantor shall have failed to file any such proof of claim
within thirty (30) days after Landlord has requested Guarantor to file such
proofs of claim on account of the Indebtedness hereby subordinated, as Landlord
may deem expedient or proper and to vote such proofs of claims in any such
proceeding and to receive and collect any and all dividends or other payments or
disbursements made thereon in whatever form the same may be paid or issued and
to apply the same on account of any of the Credit.

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

<PAGE>   7

otherwise, as Landlord may deem necessary or advisable for the enforcement of
this guaranty; and Guarantor will execute and deliver to Landlord such powers of
attorney, assignments or other instruments or documents, as may be requested by
Landlord in order to enable Landlord to enforce any and all claims upon or with
respect to any or all of the Indebtedness and to collect and receive any and all
payments of distributions which may be payable or deliverable at any time upon
or with respect to the Indebtedness, all for Landlord's own benefit.

                  Should any payment, distribution, security, instrument or
proceeds which are subject to the subordination contained in the first paragraph
of this Section 8 be received by Guarantor upon, or with respect to, the
Indebtedness while such subordination provision is effective and prior to the
satisfaction of all of the Credit and termination of all financing arrangements
between the Tenant and Landlord, Guarantor shall receive and hold the same in
trust as trustee, for the benefit of Landlord and shall forthwith deliver the
same to Landlord in precisely the form received (except for the endorsement or
assignment of the Guarantor where necessary), for application on any of the
Credit, due or not due, and until so delivered, the same shall be held in trust
by the Guarantor as the property of Landlord. In the event of the failure of
Guarantor to make any such endorsement or assignment to Landlord, Landlord, or
any of its officers or employees, is hereby irrevocably authorized to make the
same.

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

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

                  9. Financial Statements.

                     (a) Financial Statements. Not later than 90 days after the
end of each fiscal year, Guarantor shall deliver to Landlord audited
consolidated financial statements of Guarantor for the preceding year and not
later than 90 days after the end of the calendar year each individual Guarantor
shall deliver to

<PAGE>   8

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

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

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

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

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

                  10. Financial Covenants.

                     (a) Net Worth. Throughout the term of the Lease, Guarantor
shall maintain for each fiscal quarter a Net Worth and equity capitalization of
not less than $35,000,000.00.

                     (b) Current Ratio. Guarantor shall maintain for each fiscal
quarter a ratio of current assets to current liabilities of not less than 1.25
to 1.00.

                     (c) Debt to Equity Ratio. Guarantor shall maintain for each
fiscal quarter a ratio of total indebtedness to shareholders' equity not to
exceed 10.0 to 1.00. The aggregate lease amount under all capitalized and
operating leases shall be

<PAGE>   9

included as indebtedness and all subordinated debt shall be included as equity.
For purposes of this section, "operating leases" shall include all future lease
obligations where Guarantor is not currently the tenant but has an option to
purchase the equity interest in or assets of the tenant or where Guarantor
otherwise has rights to purchase the assets or equity of the tenant or where
Guarantor has agreed to fund operating shortfalls in connection with the
operation of the facility by the tenant.

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

                  12. Lease Covenants. Throughout the term of the Lease,
Guarantor shall comply with all requirements and covenants of the Lease
expressly applicable to Guarantor, including, without limitation, Section 14.5,
14.6, 14.9 and Article 23.

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

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

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

                  16. Survival. The obligations of the Guarantor under this
guaranty will continue to be effective or shall be reinstated, as the case might
be, if at any time any payment from the Tenant of any sum due to the Landlord is
rescinded or must otherwise be restored or returned by the Landlord on the
insolvency, bankruptcy, dissolution, liquidation or reorganization

<PAGE>   10

of the Tenant or as a result of the appointment of a custodian, conservator,
receiver, trustee or other officer with similar powers with respect to the
Tenant or any part of the Tenant's property or otherwise. If an event permitting
the acceleration of the maturity of the Working Capital Loan has occurred and is
continuing and such acceleration is at such time prevented by reason of the
pendency against Tenant of a proceeding under any bankruptcy or insolvency law,
Guarantor agrees that, for the purposes of this guaranty and the obligations of
Guarantor under this guaranty, the maturity of the Working Capital Loan will be
deemed to have been accelerated with the same effect as if Landlord had
accelerated the same in accordance with the terms of the Loan Agreement and
Note, and Guarantor will immediately pay the unpaid balance of the Credit.

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

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

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

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

                  21. Fees and Expenses. Guarantor shall pay to Landlord all
costs and expenses incurred by Landlord in administering the Lease and the
Security, enforcing or protecting Landlord's rights in connection with any
Credit, Security or this guaranty and in collecting payment on any Credit or
this guaranty, whether or not an Event of Default (as defined in the Lease) has
actually occurred or has been declared and thereafter cured, including, but not
limited to, [a] attorney's fees and paralegal fees; [b] the fees and expenses of
any litigation, administrative,

<PAGE>   11

bankruptcy, insolvency, receivership or any other similar proceeding; [c] court
costs; [d] the expenses of Landlord, its employees, agents, and witnesses in
preparing for litigation and for lodging, travel, and attendance at pretrial
hearings, depositions, and trials; and [e] consulting fees and expenses incurred
by Landlord in connection with any litigation.

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

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

                  24. [INTENTIONALLY DELETED]

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

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

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

<PAGE>   12

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

                  28. Limitation on Landlord's Recourse. Notwithstanding any
provision to the contrary contained in this guaranty, the Loan Agreement, the
Lease or any other Lease Document or Loan Document (collectively the
"Transaction Documents") and except as provided in subsection (a) below, all
obligations of any type or nature of Guarantor under this Guaranty are
non-recourse to Guarantor, and shall be payable solely and exclusively by Tenant
and out of the pledge by Guarantor of the common stock of Tenant. Except as
provided in subsection (a) below, [i] the obligations of Guarantor hereunder do
not constitute or create any obligation, general or special, or liability (debt
or otherwise) or moral obligation of Guarantor, except to the extent payable by
Tenant and except to the extent of the exercise of rights with respect to the
pledge of the common stock of Tenant by Guarantor; [ii] any recovery under this
Guaranty (whether for obligations of Tenant under the Lease or Loan Agreement or
otherwise) shall be solely and exclusively limited to the exercise of the rights
of Landlord to execute upon the common stock of Tenant pledged by Guarantor; and
[iii] in no manner shall Guarantor or any director, officer, agent or employee
of Guarantor be liable for any obligations under this Guaranty, except to the
extent that Landlord may execute upon and obtain the common stock of Tenant
pledged to Landlord.

                     (a) The foregoing limitation shall not apply to Guarantor's
obligations to guaranty performance of Tenant's obligation under Section 2.1.2
of the Loan Agreement.

            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

<PAGE>   13

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

Address:                                  BALANCED CARE CORPORATION
1215 Manor Drive
Mechanicsburg, Pennsylvania 17055         By: /s/ Robin L. Barber
                                                  Robin L. Barber
                                          Title: Senior Vice President and
                                                 Legal Counsel & Assistant
                                                 Secretary

                                          Tax ID No.: 25-1761898

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