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Guaranty of Master Lease and Security Agreement (Migratory) and Letter of Credit Agreement (Migratory) - Balanced Care Corp. and Nationwide Health Properties Inc.

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           GUARANTY OF MASTER LEASE AND SECURITY AGREEMENT (MIGRATORY)
                    AND LETTER OF CREDIT AGREEMENT (MIGRATORY)

 
                   THIS GUARANTY OF MASTER LEASE AND SECURITY AGREEMENT (MIGRATORY)
AND LETTER OF CREDIT AGREEMENT (MIGRATORY) (this "Guaranty") is executed as of July
1, 2000 by BALANCED CARE CORPORATION, a Delaware corporation, and those entities
listed as Guarantors on Schedule 1 hereto, which by this reference is incorporated
herein (collectively, "Guarantor"), in favor of NATIONWIDE HEALTH PROPERTIES, INC.,
a Maryland corporation, and MLD DELAWARE TRUST, a Delaware business trust (collectively,
"Landlord").
 
                                  R E C I T A L S
 
                   A. Landlord and those entities listed as Tenants on Schedule
1 (collectively, "Tenant"), have entered into that certain Master Lease and Security
Agreement (Migratory) of even date herewith (the "Lease") whereby Landlord has agreed
to lease to Tenant the Premises, as more specifically set forth in the Lease. All
capitalized terms used herein and not otherwise defined herein shall have the meaning
ascribed to such terms in the Lease.
 
                   B. Landlord and Tenant have entered into, or shortly after the
date hereof will enter into, that certain Letter of Credit Agreement (Migratory)
(the "Letter of Credit Agreement"), whereby Tenant shall post and maintain with
Landlord a letter of credit as partial security for Tenant's obligations under the
Lease, as more particularly set forth therein.
 
                   C. It is a condition to Landlord's obligations under the Lease
that the Guarantor execute and deliver to Landlord this Guaranty.
 
                                A G R E E M E N T S
 
                   NOW, THEREFORE, in consideration of Landlord entering into the
Lease with Tenant, and other good and valuable consideration the receipt and sufficiency
of which are hereby acknowledged, Guarantor agrees as follows:
 
                   1. Guaranty.    2
                   Guarantor hereby absolutely and unconditionally guarantees to
Landlord the following (collectively, the "Guaranteed Obligations"):
 
                         (a) payment in full by Tenant of all rent (including,
             without limitation, Minimum Rent and Additional Rent) and other
             amounts due under the Lease in the manner and at the time prescribed
             in the Lease;
 
                         (b) the full, complete and timely performance by Tenant
             of all covenants, indemnities and other obligations under the Lease
             including, without limitation, any indemnity or other obligations of
             Tenant which survives the expiration or earlier termination of the
             Lease;
 
                         (c) the full, complete and timely performance by Tenant
             of all covenants, agreements and other obligations under the Letter
             of Credit Agreement;
 
                         (d) the accuracy and truthfulness in all material
             respects of all of the representations and warranties made by Tenant
             under the Lease and under the Letter of Credit Agreement; and
 
                         (e) all costs of collection or enforcement incurred by
             Landlord in exercising any remedies provided for in the Lease or the
             Letter of Credit Agreement at law or in equity with respect to the
             matters set forth in clauses (a) through (d) inclusive, above,
             including, without limitation, legal fees.
 
                   2. Performance by Guarantor.
 
                   If any Minimum Rent, Additional Rent or other amount due under
the Lease shall not be paid, or any obligation not performed as required by the
Lease or the Letter of Credit Agreement, then upon demand by Landlord, Guarantor
shall pay within ten (10) days of demand by Landlord such sums and perform such
obligations as required by the Lease or the Letter of Credit Agreement, as applicable,
without regard to:
 
                         (a) any defense, set-off, or counterclaim which
             Guarantor or Tenant (whether under the Lease or Letter of Credit
             Agreement) may have or assert;
 
                         (b) whether or not Landlord shall have instituted any
             suit, action or proceeding or exhausted its remedies or taken any
             steps to enforce any rights against

 
                                        2    3
             Tenant (whether under the Lease or Letter of Credit Agreement) or
             any other person to collect all or any part of such sums, either
             pursuant to the provisions of the Lease, the Letter of Credit
             Agreement or at law or in equity (it being understood that this is
a
             guaranty of payment and not collection, and Guarantor's liability
             for such payment shall be primary); or
 
                         (c) any other condition or contingency.
 
                   Guarantor waives any right of exoneration and any right to require
Landlord to make an election of remedies. Guarantor covenants and agrees that it
shall not cause any default under the Lease or the Letter of Credit Agreement.
 
                   3. Guarantor's Representations and Warranties.
 
                   Guarantor hereby represents and warrants unto Landlord that:
 
                         (a) This Guaranty constitutes a legal, valid, and
             binding obligation of Guarantor and is fully enforceable against
             Guarantor in accordance with its terms;
 
                         (b) One hundred percent (100%) of the equity interests
             of Tenant are owned beneficially and of record by Manager, and all
             of the issued and outstanding capital stock of Manager is owned
             beneficially and of record by BCC;
 
                         (c) Each entity comprising Guarantor is a corporation
             duly organized, validly existing and in good standing under the laws
             of the State of Delaware and is duly authorized and qualified to do
             all things required of it under this Guaranty; and
 
                         (d) This Guaranty is duly authorized, executed and
             delivered by and binding upon each entity comprising Guarantor.
 
                   Any material breach by Guarantor of the representations and warranties
set forth herein shall be a default under this Guaranty.
 
                   4. Waiver.
 
                   Guarantor hereby knowingly, voluntarily and unequivocally waives:

 
                                        3    4
                         (a) all notice of acceptance hereof, protest, demand and
             dishonor, presentment and demands of any kind now or hereafter
             provided for by any statute or rule of law;
 
                         (b) any and all requirements that Landlord institute any
             action or proceeding, or exhaust any or all of Landlord's rights,
             remedies or recourses, against Tenant (whether under the Lease or
             Letter of Credit Agreement) or anyone else or any collateral as a
             condition precedent to bringing an action against Guarantor under
             this Guaranty, it being expressly agreed that the liability of
             Guarantor hereunder shall be primary and not secondary;
 
                         (c) any defense arising by reason of any disability,
             insolvency, bankruptcy, lack of authority or power, death, insanity,
             minority, dissolution or any other defense of Tenant, its successors
             and assigns, Guarantor or, if applicable, any other guarantor of the
             Guaranteed Obligations (even though rendering same void,
             unenforceable or otherwise uncollectible), it being agreed that
             Guarantor shall remain liable hereon regardless of whether Tenant or
             any other such person be found not liable thereon for any reason;
 
                         (d) the benefits of:
 
                               (1) all statutes of limitations as a defense to
                     any action or proceeding brought against Guarantor by
                     Landlord, to the fullest extent permitted by law;
 
                               (2) any defense based on any claim that
                     Guarantor's obligations exceed or are more burdensome than
                     those of Tenant (whether under the Lease or Letter of Credit
                     Agreement);
 
                               (3) any defense based on or arising out of any
                     defense that Tenant may have (whether under the Lease or
                     Letter of Credit Agreement) to the payment or performance of
                     the Guaranteed Obligations or any part of them; and
 
                               (4) the benefits of any and all express or implied
                     waivers that may otherwise be available to or claimed by
                     Guarantor under the laws of the State of California or any
                     Situs State;

 
                                        4    5
                         (e) any claim Guarantor might otherwise have against
             Landlord by virtue of Landlord's invocation of any right, remedy or
             recourse permitted it hereunder, under the Letter of Credit
             Agreement or under the Lease or otherwise available at law or
             equity;
 
                         (f) any failure, omission, delay or lack on the part of
             Landlord or Tenant (whether under the Lease or Letter of Credit
             Agreement) to enforce, assert or exercise any right, power or remedy
             conferred on Landlord or Tenant in the Lease, the Letter of Credit
             Agreement or this Guaranty or any action on the part of Landlord
             granting a waiver, indulgence or extension to Tenant or any
             Guarantor;
 
                         (g) the voluntary or involuntary liquidation,
             dissolution, sale or other disposition of all or substantially all
             the assets of Tenant or any Affiliate, marshalling of assets or
             liabilities, receiverships, insolvency, bankruptcy, assignment for
             the benefit of creditors, reorganization, arrangement, composition
             or readjustment of, or other similar proceeding affecting Tenant or
             any Affiliate or any of their respective assets, or the
             disaffirmance of all or any part of the Lease or the Letter of
             Credit Agreement in any such proceeding;
 
                         (h) any release or other reduction of the Guaranteed
             Obligations arising as a result of the expansion, release,
             substitution or replacement (whether or not in accordance with terms
             of the Lease) of the Premises or any portion thereof;
 
                         (i) any release or other reduction of the Guaranteed
             Obligations arising as a result of the release, substitution or
             replacement (whether or not in accordance with the terms of the
             Letter of Credit Agreement) of any letter of credit issued and
             outstanding pursuant to the Letter of Credit Agreement.
 
                   This Guaranty shall apply notwithstanding any extension or renewal
of the Lease, or any holdover following the expiration or termination of the Term
or any renewal or extension of the Term.
 
                   5. Financial Statements and Legal Proceedings.
 
                   The financial statements heretofore given to Landlord by or on
behalf of Guarantor (pursuant to this Guaranty, the Lease or otherwise):

 
                                        5    6
                         (a) have been prepared in accordance with generally
             accepted accounting principles consistently applied throughout the
             periods covered thereby;
 
                         (b) are true and correct in all material respects;
 
                         (c) present fairly the results of operations of the
             parties described therein for the respective periods covered
             thereby; and
 
                         (d) reflect accurately, in all material respects, the
             books and records of account of the parties described therein as of
             such dates and for such periods.
 
                   Subject to the foregoing, Guarantor hereby warrants and represents
unto Landlord that any and all balance sheets and other financial statements and
data which have heretofore been given to Landlord with respect to Guarantor fairly
and accurately present the financial condition of Guarantor.
 
                   6. Subsequent Acts.
 
                   Without notice to, consideration to, or the consent of, Guarantor:
 
                         (a) the Lease, and Tenant's rights thereunder, may be
             modified, amended, renewed, assigned or sublet;
 
                         (b) the Letter of Credit Agreement, and Tenant's rights
             and obligations thereunder, may be modified, amended, renewed or
             assigned;
 
                         (c) any additional parties who are or may become liable
             for the Guaranteed Obligations may hereafter be released from their
             liability hereunder and thereon; and/or
 
                         (d) Landlord may take, or delay in taking or refuse to
             take, any and all action with reference to the Lease or the Letter
             of Credit Agreement (regardless of whether same might vary the risk
             or alter the rights, remedies or recourses of any Guarantor),
             including specifically the settlement or compromise of any amount
             allegedly due thereunder.
 
                   No such acts shall in any way release, diminish, or affect the
absolute nature of Guarantor's obligations and liabilities hereunder. Guarantor's
obligations and liabilities

 
                                        6    7 under this Agreement are primary,
absolute and unconditional under any and all circumstances and until the Guaranteed
Obligations are fully and finally satisfied, such obligations and liabilities shall
not be discharged or released, in whole or in part, by any act or occurrence which
might, but for this Section 6, be deemed a legal or equitable discharge or release
of a Guarantor.
 
                   7. Successors and Assigns.
 
                   This Guaranty may be enforced as to any one or more breaches
either separately or cumulatively, shall inure to the benefit of Landlord (and its
successors and assigns) and shall be binding upon Guarantor (and its successors
and assigns). All references herein to "Landlord" shall mean the above-named Landlord
and any subsequent owner of Landlord's interest in the Lease or assignee of Landlord's
rights under the Letter of Credit Agreement. No transfer by any Guarantor of its
obligations hereunder shall operate to release any Guarantor from such obligations.
 
                   8. Remedies Cumulative.
 
                   All rights, remedies and recourses afforded to Landlord by reason
of this Guaranty, or otherwise, are separate and cumulative and may be pursued separately,
successively or concurrently, as occasion therefor shall arise and are non-exclusive
and shall in no way limit or prejudice any other legal or equitable right, remedy
or recourse which Landlord may have.
 
                   9. Subordination; Limitation on Rights of Subrogation.
 
                   If for any reason whatsoever Tenant now or hereafter becomes
indebted to Guarantor or any Affiliate of Guarantor (including, without limitation,
under the Management Agreement), such indebtedness and all interest thereon shall
at all times be subordinate in all respects to the Guaranteed Obligations. Until
the Guaranteed Obligations shall have been paid in full, each Guarantor shall withhold
exercise of (a) any claim, right or remedy, direct or indirect, that such Guarantor
now has or may hereafter have against Tenant or any of its assets in connection
with this Guaranty or the performance by such Guarantor of its obligations hereunder,
in each case whether such claim, right or remedy arises in equity, under contract,
by statute, under common law or otherwise and including without limitation any right
of subrogation, reimbursement or indemnification that such Guarantor now has or
may hereafter

 
                                        7    8 have against Tenant, and (b) any
right of contribution such Guarantor may have against any other guarantor (including
any other Guarantor) of any of the Guaranteed Obligations (including without limitation
any such right of contribution under Section 15(b)). Each Guarantor further agrees
that, to the extent the agreement to withhold the exercise of its rights of subrogation,
reimbursement, indemnification and contribution as set forth in this Section 9 is
found by a court of competent jurisdiction to be void or voidable for any reason,
any rights of subrogation, reimbursement or indemnification such Guarantor may have
against Tenant, and any rights of contribution such Guarantor may have against any
such other guarantor, shall be junior and subordinate to any rights Landlord may
have against Tenant and to any right Landlord may have against such other guarantor.
If any amount shall be paid to any Guarantor on account of any such subrogation,
reimbursement or indemnification rights at any time when all Guaranteed Obligations
shall not have been paid in full, such amount shall be held in trust for Landlord
and shall forthwith be paid over to Landlord to be credited and applied against
the Guaranteed Obligations.
 
                   10. Governing Law.
 
                   This Guaranty and all rights and duties of Guarantor and Landlord
arising from this Guaranty shall be governed by, construed and enforced in accordance
with the laws of the State of California, without regard to the conflict of law
rules of such State, except to the extent as may be provided expressly to the contrary
in the Lease.
 
                   11. Severability.
 
                   If any provision of this Guaranty or the application thereof
to any person or circumstance shall, for any reason and to any extent, be invalid
or unenforceable, neither the remainder of this Guaranty nor the application of
such provision to any other persons or circumstances shall be affected thereby,
but rather the same shall be enforced to the greatest extent permitted by law.
 
                   12. Attorneys' Fees.
 
                   If Landlord or Guarantor brings any action to interpret or enforce
this Guaranty, or for damages for any alleged breach thereof, the prevailing party
in any such action shall be entitled to reasonable attorneys' fees and costs as
awarded by the court in addition to all other recovery, damages and costs.

 
                                        8    9
                   13. Confirmation.
 
                   At any time, and at the request of Landlord, Guarantor shall
execute and deliver to Landlord a certificate ratifying and confirming all of Guarantor's
obligations and liabilities under this Guaranty.
 
                   14. Benefit to Guarantor.
 
                   Guarantor acknowledges that it will derive substantial benefit
and value from the execution and continued existence of the Lease, and Guarantor
further acknowledges that Landlord will be relying upon Guarantor's guarantee, representations,
warranties and covenants contained herein.
 
                   15. Limitation on Amount Guaranteed; Contribution by Guarantors.
 
                   (a) Anything contained in this Guaranty to the contrary notwithstanding,
if any Fraudulent Transfer Law (as hereinafter defined) is determined by a court
of competent jurisdiction to be applicable to the obligations of any Guarantor under
this Guaranty, such obligations of such Guarantor hereunder shall be limited to
a maximum aggregate amount equal to the largest amount that would not render its
obligations hereunder subject to avoidance as a fraudulent transfer or conveyance
under Section 548 of Title 11 of the United States Code or any applicable provisions
of comparable state law (collectively, the "Fraudulent Transfer Laws"), in each
case after giving effect to all other liabilities of such Guarantor, contingent
or otherwise, that are relevant under the Fraudulent Transfer Laws (specifically
excluding, however, any liabilities of such Guarantor (x) in respect of intercompany
indebtedness to Tenant or any Affiliates to the extent that such indebtedness would
be discharged in an amount equal to the amount paid by such Guarantor hereunder
and (y) under any guaranty of other indebtedness or obligations which guaranty contains
a limitation as to maximum amount similar to that set forth in this Section 15(a),
pursuant to which the liability of such Guarantor hereunder is included in the liabilities
taken into account in determining such maximum amount) and after giving effect as
assets to the value (as determined under the applicable provisions of the Fraudulent
Transfer Laws) of any rights to subrogation, reimbursement, indemnification or contribution
of such Guarantor pursuant to applicable law or pursuant to the terms of any agreement
(including any such right of contribution under Section 15(b)).

 
                                        9    10
                   (b) Guarantors under this Guaranty together desire to allocate
among themselves (collectively, the "Contributing Guarantors"), in a fair and equitable
manner, their obligations arising under this Guaranty. Accordingly, in the event
any payment or distribution is made on any date by any Guarantor under this Guaranty
(a "Funding Guarantor") that exceeds its Fair Share (as defined below) as of such
date, that Funding Guarantor shall be entitled to a contribution from each of the
other Contributing Guarantors in the amount of such other Contributing Guarantor's
Fair Share Shortfall (as defined below) as of such date, with the result that all
such contributions will cause each Contributing Guarantor's Aggregate Payments (as
defined below) to equal its Fair Share as of such date. "Fair Share" means, with
respect to a Contributing Guarantor as of any date of determination, an amount equal
to (i) the ratio of (x) the Adjusted Maximum Amount (as defined below) with respect
to such Contributing Guarantor to (y) the aggregate of the Adjusted Maximum Amounts
with respect to all Contributing Guarantors multiplied by (ii) the aggregate amount
paid or distributed on or before such date by all Funding Guarantors under this
Guaranty in respect of the obligations guaranteed. "Fair Share Shortfall" means,
with respect to a Contributing Guarantor as of any date of determination, the excess,
if any, of the Fair Share of such Contributing Guarantor over the Aggregate Payments
of such Contributing Guarantor. "Adjusted Maximum Amount" means, with respect to
a Contributing Guarantor as of any date of determination, the maximum aggregate
amount of the obligations of such Contributing Guarantor under this Guaranty determined
as of such date, in the case of any Guarantor, in accordance with Section 15(a);
provided that, solely for purposes of calculating the Adjusted Maximum Amount with
respect to any Contributing Guarantor for purposes of this Section 15(b), any assets
or liabilities of such Contributing Guarantor arising by virtue of any rights to
subrogation, reimbursement or indemnification or any rights to or obligations of
contribution hereunder shall not be considered as assets or liabilities of such
Contributing Guarantor. "Aggregate Payments" means, with respect to a Contributing
Guarantor as of any date of determination, an amount equal to (i) the aggregate
amount of all payments and distributions made on or before such date by such Contributing
Guarantor in respect of this Guaranty (including in respect of this Section 15(b))
minus (ii) the aggregate amount of all payments received on or before such date
by such Contributing Guarantor from the other Contributing Guarantors as contributions
under this Section 15(b). The amounts payable as contributions hereunder shall be
determined as of the date on which the related payment or distribution is made by
the

 
                                        10    11 applicable Funding Guarantor. The
allocation among Contributing Guarantors of their obligations as set forth in this
Section 15(b) shall not be construed in any way to limit the liability of any Contributing
Guarantor hereunder.
 
                   16. Counterparts.
 
                   This Guaranty may be executed in multiple counterparts, each
of which shall be an original, but all of which shall constitute but one instrument.
The signature page of any counterpart may be detached therefrom and reattached to
any other counterpart to physically form a single document.
 
                   17. Notices.
 
                   All notices, requests and demands to be made hereunder to the
parties hereto shall be made in writing to the addresses set forth below and shall
be given by any of the following means: (a) personal service; (b) electronic communication,
whether by telex, telegram or telecopying; (c) certified or registered mail, postage
prepaid, return receipt requested; or (d) nationally recognized courier or delivery
service. Such addresses may be changed by notice to the other parties given in the
same manner as provided above. Any notice, demand or request sent pursuant to either
subsection (a), (b) or (d) hereof shall be deemed received upon the actual delivery
thereof, and, if sent pursuant to subsection (c) shall be deemed received five (5)
days following deposit in the mail. Refusal to accept delivery of any notice, request
or demand shall be deemed to be delivery thereof. If Guarantor is not an individual,
notice may be made on any officer, general partner or principal thereof. Notice
to any one co-Guarantor shall be deemed notice to all co-Guarantors. In the event
Landlord notifies Guarantor of the name and address of Landlord's lender, Guarantor
shall cause a copy of all notices delivered to Landlord by Guarantor to be concurrently
therewith delivered to such lender.

 If to Guarantor:      c/o Balanced Care Corporation
                       1215 Manor Drive
                       Mechanicsburg, Pennsylvania 17055
                       Attention: Robin Barber, General Counsel
                       Facsimile No.: (717) 796-6294

 with a copy to:       Kirkpatrick & Lockhart, LLP
                       Henry W. Oliver Building
                       535 Smithfield Street
                       Pittsburgh, Pennsylvania 15222

 
                                        11    12
                       Attention: Steven Adelkoff
                       Facsimile:  (412) 355-6501

 If to Landlord:       Nationwide Health Properties, Inc.
                       610 Newport Center Drive, Suite 1150
                       Newport Beach, California  92660
                       Attention: Gary E. Stark, General Counsel
                       Facsimile No.: (949) 759-6876

 with a copy to:       O'Melveny & Myers LLP
                       610 Newport Center Drive, Suite 1700
                       Newport Beach, California  92660
                       Attention: Steven L. Edwards
                       Facsimile No.:  (949) 823-6994
 
                   18. Incorporation of Recitals. The Recitals set forth above are
hereby incorporated by this reference and made a part of this Guaranty. Guarantor
hereby represents and warrants that the Recitals are true and correct.
 
                   19. Preservation of Gross Revenues.
 
                         (a) Guarantor acknowledges that a fair return to
             Landlord on its investment in the Premises is dependent, in part, on
             the concentration on the Premises during the Term of the ALF
             business of Tenant and its Affiliates in the geographical areas in
             which the Facilities located. Guarantor further acknowledges that
             the diversion of patient care activities from the Facilities to
             other facilities owned or operated by Guarantor or Tenant or their
             respective Affiliates at or near the end of the Term will have a
             material adverse impact on the value and utility of the Premises.
             Therefore, Guarantor agrees that during the Term, and for a period
             of one (1) year thereafter, neither Tenant nor Guarantor nor any
             Affiliate of Tenant or Guarantor shall, without the prior written
             consent of Landlord, operate, own, participate in or otherwise
             receive revenues from any other facility or institution providing
             services or similar goods to those provided on or in connection with
             the Premises and the permitted use thereof as contemplated under the
             Lease, within a five (5) mile radius of each of the Facilities;
             provided, however, that the provisions of this Section 19(a) shall
             not apply to the operation or ownership of any licensed skilled
             nursing facility or licensed acute care hospital facility.

 
                                        12    13
                         (b) In addition, Guarantor hereby covenants and agrees
             that for a period of one (1) year following the expiration or
             earlier termination of the Lease, neither Tenant nor Guarantor nor
             any Affiliate of Tenant or Guarantor shall, without prior written
             consent of Landlord, hire, engage or otherwise employ any management
             or supervisory personnel working on or in connection with any of the
             Facilities and not also working at any other facility owned or
             operated by Tenant or Guarantor or any Affiliate of Tenant or
             Guarantor.
 
                         (c) Except as required for medically appropriate
             reasons, prior to and for a period of one (1) year after Lease
             termination, neither Tenant nor Guarantor will recommend or solicit
             the removal or transfer of any patient from any Facility to any
             other nursing or healthcare facility, or to any senior housing or
             retirement housing facility; provided, however, that the provisions
             of this Section 19(c) shall not apply to the operation or ownership
             of any licensed skilled nursing facility or licensed acute care
             hospital facility.
 
                         (d) The terms of this Section 19 shall survive the
             termination or expiration of the Lease.
 
                         (e) Guarantor hereby specifically acknowledges and
             agrees that the temporal, geographical and other restrictions
             contained in this Section 19 are reasonable and necessary to protect
             the business and prospects of Landlord, and that the enforcement of
             the provisions of this Section 19 will not work an undue hardship on
             Guarantor or Tenant. Guarantor further agrees that in the event
             either the length of time, geographical or any other restrictions,
             or portion thereof, set forth in this Section 19 is overly
             restrictive and unenforceable in any court proceeding, the court may
             reduce or modify such restrictions, but only to the extent
             necessary, to those which it deems reasonable and enforceable under
             the circumstances, and the parties agree that the restrictions of
             this Section 19 will remain in full force and effect as reduced or
             modified. Guarantor further agrees and acknowledges that Landlord
             does not have an adequate remedy at law for the breach or threatened
             breach by Guarantor or Tenant of the covenants contained in this
             Section 19, and Guarantor therefore specifically agrees that
             Landlord may, in addition to other remedies which may be available
             to Landlord hereunder, file a suit in equity to enjoin Guarantor or
             Tenant from such breach or threatened breach,

 
                                        13    14
             without the necessity of posting any bond. Guarantor further agrees,
             in the event that any provisions of this Section 19 is held to be
             invalid or against public policy, the remaining provisions of this
             Section 19 and the remainder of this Guaranty and the Lease shall
             not be affected thereby.
 
                   20. License. Guarantor acknowledges and agrees that:
 
                         (a) the ALF licenses and all other licenses and
             certifications on or affecting the Facilities must be in the name of
             Tenant or Guarantor, one of their respective Affiliates, or another
             operator (the "Operator") approved in writing by Landlord whose
             consent may not be unreasonably withheld;
 
                         (b) neither Tenant, or Guarantor nor any other Operator
             may sell, transfer, assign, encumber, sublet, permit to lapse,
             expire, become suspended, or terminate any such licenses or
             certifications, operating rights associated with the Facilities and
             certification without the prior written consent of Landlord which
             may be not unreasonably withheld, except for transfers between
             Tenant, or Guarantor or their respective Affiliates (of which
             Landlord must receive written notice prior to such transfer);
 
                         (c) all such licenses are an integral part of each
             Facility and must remain at the applicable Facility unless approved
             in writing by Landlord, which approval may be unreasonably withheld
             (and agrees to so direct any other Operator);
 
                         (d) Tenant, Guarantor, or such Operator must provide
             photocopies of all such certifications and licenses, and any and all
             notices and reports requested by Landlord, within five days of
             receipt of such request.
 
                   21. Attempted Assignment of License. If (i) Tenant commits a
default under the Lease which remains uncured, (ii) Tenant, Guarantor or other Operator
attempt to transfer the Facility license or certification during the term of the
Lease without the prior written consent of Landlord (except for transfers between
Tenant or Guarantor, or their respective Affiliates, of which Landlord has received
written notice) (iii) at the end of the term of the Lease or any lease termination,
Tenant does not renew this Lease and the Premises are not acquired by Guarantor
or an Affiliate of Guarantor

 
                                        14    15 pursuant to the option to purchase
the Premises set forth in Section 44 of the Lease, or (iv) any governmental agency
or department terminates or fails to renew any ALF or other license and certification,
then, in any such event, Guarantor irrevocably appoints Landlord as its true and
lawful ATTORNEY-IN-FACT for the sole purpose of transferring such licenses and certifications
to Landlord. Guarantor hereby authorizes Landlord to execute on its behalf all documents
necessary for the outright transfer of such licenses and certifications hereunder
to Landlord and such documents may be process by Landlord with the appropriate department
of the applicable State government without hindrance or delay on the part of Tenant,
Manager, or Guarantor. This power of attorney shall be irrevocable and uncontestable
by Guarantor and implement the intention of the Parties, protect against transfers
of Tenant Personal Property, licenses, certifications, and Intangible Property by
and between Guarantor and Tenant, and for the purpose of securing and guaranteeing
the payment and performance of Tenant's obligations under the Lease, Guarantor,
as debtor, hereby grants to Landlord, as secured party, a secured interest in and
an express contractual lien upon, all of Guarantor's right, title and interest in
and to the Tenant Personal Property and in and to the Intangible Property and any
and all products and proceeds thereof (including all licenses, certifications, and
permits, to the extent legally transferable), in which Guarantor now owns or hereafter
acquires an interest or right, including any leased Tenant Personal Property, all
as otherwise provided under the Lease with respect to the Tenant and to the same
extent as if Guarantor had signed the Lease as Tenant. This Guaranty constitutes
a security agreement covering all such Tenant Personal Property, certifications,
licenses, permits, and Intangible Property.
 
                   22. Management Agreement. BCC acknowledges that BCC is the sole
shareholder of Manager. As the sole shareholder of Manager, BCC agrees and shall
cause the Manager to agree, that in the case of an Event of Default under the Lease
(after applicable cure periods): (i) Landlord shall have the right to terminate
the Management Agreement and the Manager's rights to manage the Facility, (ii) Landlord
shall have the right to require Manager to cooperate and assist in all reasonable
ways during any transition of management of the Facility after such termination,
(iii) during any such interim management, Landlord shall have the right to approve
or veto all operational budgets and (iv) during such period, Manager shall otherwise
take such actions or refrain from taking such actions as Landlord may reasonably
request.

 
                                        15    16
                   23. Joint and Several Obligations. Except to the extent expressly
provided to the contrary herein, the liability and obligations of each entity comprising
Guarantor under this Guaranty shall be joint and several including, without limitation,
the provisions of Section 19.
 
                          [Signatures Begin on Next Page]

 
                                        16    17
                  Executed as of the date first set forth above.
 
                                          "GUARANTOR"
 
                                          BALANCED CARE CORPORATION,
                                          a Delaware corporation

 
                                          By:/s/Robin L. Barber
                                          Name:    Robin L. Barber
                                          Title:   Senior Vice President,
                                                   Legal Counsel,
                                                   Assistant Secretary
 
                                          BALANCED CARE AT TALLAHASSEE, INC.,
                                          a Delaware corporation

 
                                          By:/s/Robin L. Barber
                                          Name:    Robin L. Barber
                                          Title:   Vice President and  Secretary
 
                                          BALANCED CARE AT PENSACOLA, INC.,
                                          a Delaware corporation

 
                                          By:/s/Robin L. Barber
                                          Name:    Robin L. Barber
                                          Title:   Vice President and  Secretary
 
                                          BALANCED CARE AT YORK, INC.,
                                          a Delaware corporation

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

 
                                       S-1    18
                                          BALANCED CARE AT LAKEMONT FARMS, INC.,
                                          a Delaware corporation

 
                                          By:/s/Robin L. Barber
                                          Name:    Robin L. Barber
                                          Title:   Vice President and  Secretary
 
                                          BALANCED CARE AT HILLIARD, INC.,
                                          a Delaware corporation

 
                                          By:/s/Robin L. Barber
                                          Name:    Robin L. Barber
                                          Title:   Vice President and  Secretary
 
                                          BALANCED CARE AT AKRON, INC.,
                                          a Delaware corporation

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

 
                                       S-2    19
                                    SCHEDULE 1
 
                        Guarantors and Tenants (Migratory)

 Guarantors:

 1.       Balanced Care Corporation, a Delaware corporation

 2.       Balanced Care at Tallahassee, Inc., a Delaware corporation

 3.       Balanced Care at Pensacola, Inc., a Delaware corporation

 4.       Balanced Care at York, Inc., a Delaware corporation

 5.       Balanced Care at Lakemont Farms, Inc., a Delaware corporation

 6.       Balanced Care at Hilliard, Inc., a Delaware corporation

 7.       Balanced Care at Akron, Inc., a Delaware corporation

 Tenants:

 1.       C&G Healthcare at Tallahassee, L.L.C., a Delaware limited liability company

 2.       C&G Healthcare at Pensacola, L.L.C., a Delaware limited liability company

 3.       Elder Care Operators of York, LLC, a Delaware limited liability company

 4.       Elder Care Operators of Lakemont Farms, LLC, a Delaware limited liability
company

 5.       Elder Care Operators of Hilliard, LLC, a Delaware limited liability company

 6.       Elder Care Operators of Akron, LLC, a Delaware limited liability company

 
                                    Schedule 1