BALANCED CARE CORP
AGRMNT FOR TERMINATION OF LEASE GUARANTIES
<DOCUMENT>
<TYPE>EX-10.16
<SEQUENCE>17
<FILENAME>w48320ex10-16.txt
<DESCRIPTION>AGRMNT FOR TERMINATION OF LEASE GUARANTIES
<TEXT>

<PAGE>   1
                                                                  [Anderson, IN]




Exhibit 10.16

                                  AGREEMENT FOR

                        TERMINATION OF LEASE, GUARANTIES

                             AND ANCILLARY DOCUMENTS

                  THIS AGREEMENT FOR TERMINATION OF LEASE, GUARANTIES AND
ANCILLARY DOCUMENTS (this "Agreement") is made and entered into as of March 31,
2001, by and among HEALTH CARE PROPERTY INVESTORS, INC., a Maryland corporation
("Landlord"), ASSISTED CARE OPERATORS OF ANDERSON, LLC, a Delaware limited
liability company ("Tenant"), ASSISTED CARE OPERATORS, L.L.C., a Delaware
limited liability company ("ACO"), OAKHAVEN SENIOR LIVING, INC., a California
corporation ("Oakhaven Senior"), OAKHAVEN ASSISTED LIVING, INC., a California
corporation ("Oakhaven Assisted"), BALANCED CARE CORPORATION, a Delaware
corporation ("BCC"), BCC DEVELOPMENT AND MANAGEMENT CO., a Delaware corporation
(a/k/a "BCC Management and Development Co." and referred to herein as "BCC
Development"), and BALANCED CARE AT ANDERSON, INC., a Delaware corporation ("BCC
Anderson"), with respect to the following:

                                    RECITALS

A. Landlord, as successor in interest to AHP of Indiana, Inc., an Indiana
corporation ("AHP"), and Tenant are parties to that certain Lease and Security
Agreement dated as of January 30, 1998 (as amended, the "Lease"), covering
certain real and personal property (collectively, the "Leased Property") located
in the City of Anderson, State of Indiana, as more particularly described in the
Lease. Tenant presently operates a residential care facility (the "Facility") on
the Property.

B. Landlord, as successor in interest to AHP, and Tenant are parties to that
certain Assignment of Leases, Rents and Receivables dated as of January 30, 1998
(the "Assignment of Rents"), recorded March 17, 1998, in the Office of the
Recorder in Madison County, Indiana, as Instrument No. 9806515, entered into in
connection with the Lease.

C. Landlord, as successor in interest to AHP, and Tenant are parties to that
certain Security Agreement dated as of January 30, 1998 (the "Security
Agreement"), entered into in connection with the Lease.

D. ACO, Oakhaven Senior, and Oakhaven Assisted are collectively the "Guarantor"
pursuant to (i) that certain Guaranty of Payment
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and Performance dated as of January 30, 1998 (the "Lease Guaranty"), made in
favor of Landlord, as successor in interest to AHP, in connection with the
Lease, and (ii) that certain Assignment Agreement dated as of March 16, 1998
(the "Oakhaven Assignment"), by and between Oakhaven Senior, as assignor, and
Oakhaven Assisted, as assignee. Pursuant to that certain Agreement For
Assumption of Guaranty Obligations dated as of March 31, 2001, BCC is jointly
and severally liable with ACO, Oakhaven Senior, and Oakhaven Assisted under the
Lease Guaranty.

E. Tenant and BCC Anderson are parties to that certain Management Agreement
dated as of January 30, 1998 (the "Management Agreement"), entered into in
connection with the Lease. The Management Agreement will be terminated
concurrently herewith pursuant to that certain Management and Subordination and
Standstill Termination Agreement dated as of March 31, 2001.

F. BCC is the "Guarantor" pursuant to that certain Management Agreement Guaranty
dated as of January 30, 1998 (the "Management Agreement Guaranty"), made in
favor of Landlord, as successor in interest to AHP, in connection with the
Lease.

G. Landlord as successor in interest to AHP, and BCC are parties to that certain
Right of First Refusal Offer Agreement dated as of January 30, 1998 (the "Right
of First Offer"), entered into in connection with the Lease.

H. Landlord, as successor in interest to AHP, Tenant, BCC Development, and BCC
are parties to that certain Assignment of Rights dated as of January 30, 1998
(the "Assignment of Rights"), entered into in connection with the Lease.

I. Landlord, as successor in interest to AHP, Tenant, BCC Development, BCC
Anderson, Oakhaven Assisted, as successor in interest to Oakhaven Senior
pursuant to the Oakhaven Assignment, ACO, and BCC are parties to that certain
Non-Competition Agreement dated as of January 30, 1988 [sic] (the
"Non-Competition Agreement"), entered into in connection with the Lease. As
described in the Oakhaven Assignment, Oakhaven Senior continues to be bound by
the terms of the Non-Competition Agreement.

J. Tenant and Trilogy Health Services, LLC, a Delaware limited liability company
("New Operator"), have entered or will enter into an operations transfer
agreement (the "Operations Transfer Agreement"), pursuant to which Tenant and
New Operator have provided for the orderly transfer of the Facility from Tenant
to New Operator as of the termination of the Lease, and have


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clarified each party's responsibilities and obligations with regard to the
transfer of the operation of and ownership interests in the Facility.

K. The Lease, the Assignment of Rents and the Security Agreement are
collectively referred to herein as the "Lease Documents". The Management
Agreement Guaranty and the Right of First Offer are collectively referred to
herein as the "BCC Documents." The Assignment of Rights and the Non-Competition
Agreement are collectively referred to herein as the "Ancillary Documents".

L. Landlord, Tenant, ACO, Oakhaven Senior, Oakhaven Assisted, BCC, BCC
Development, and BCC Anderson desire to mutually cancel and terminate the Lease
Documents, the Lease Guaranty, the Management Agreement Guaranty and the
Ancillary Documents to which each is a party on the terms and conditions
contained herein.

                                    AGREEMENT

                  IN CONSIDERATION OF the foregoing recitals, the mutual
promises contained herein, and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto hereby
agree as follows:

         1. Termination of Lease Documents. Subject to all of the terms and
conditions of this Agreement, each of the Lease Documents and the respective
obligations of Landlord and Tenant thereunder, including, but not limited to,
(i) Tenant's obligations with respect to present or future Base Rent, Additional
Rent or Additional Charges that directly relate to Base Rent or Additional Rent
that are not specifically described in Section 2 below (collectively, the "Rent
Obligations"), and (ii) any right of Tenant to purchase all or any portion of
the Leased Property pursuant to Article 15, 16 or 25 of the Lease or otherwise
shall be terminated at 11:59 p.m. (Eastern time) on the date (the "Termination
Date") that is the later of (a) the date of this Agreement, or (b) the date upon
which Tenant actually vacates the Leased Property and surrenders possession
thereof to Landlord in accordance with Section 3 below. Unless Landlord delivers
written notice to Tenant specifying a reason that Tenant's surrender of the
Leased Property is not in compliance with Section 3 below, the Termination Date
shall be deemed to be the date of this Agreement. Except as set forth in this
Agreement, neither Landlord nor Tenant shall have any further obligations to the
other pursuant to the Lease Documents subsequent to the Termination Date.


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         2. Cessation of Obligations Under Lease Documents and Reservations.
Effective on the Termination Date, the obligations of Landlord and Tenant in
connection with the Lease Documents shall cease. However, the following
obligations of Tenant shall be reserved and continue subsequent to the
Termination Date:

                  (a) Tenant agrees to defend, indemnify and hold harmless
Landlord from and against any and all liens, claims, costs, losses, expenses,
damages, actions and causes of action for which Tenant is responsible under the
Lease Documents and which accrue or accrued on or before the Termination Date
(other than in connection with the Rent Obligations) or result from a breach of
representation or warranty of Tenant as set forth in Section 8 below.

                  (b) Tenant shall remain liable for (i) the cost of any and all
Impositions, insurance premiums, utilities charges and other expenses incurred
in connection with the operation, maintenance and use of the Leased Property
through and including the Termination Date until full payment thereof (other
than in connection with the Rent Obligations). Tenant shall obtain, or cause to
be obtained, directly from the companies providing any such services closing
statements for all services rendered through the Termination Date and shall
promptly pay the same.

                  (c) Tenant shall remain responsible for and shall pay any
personal property taxes assessed against the Leased Property or any personal
property abandoned by Tenant therein with a lien date prior to the Termination
Date, irrespective of the date of the billing therefor, and shall indemnify,
defend and hold Landlord harmless with respect to any claims for such taxes or
resulting from non-payment thereof.

                  (d) Without limiting the generality of Section 2(b) above,
Tenant shall remain responsible for and shall pay all 2000 assessments for real
estate and personal property taxes due and payable in 2001, and for all prior
years (the "2000 Assessments"). Tenant shall also be responsible for and shall
pay its proportionate share of all real estate and personal property taxes which
are assessed in 2001, and which are due and payable in 2002, based upon the
number of days between January 1, 2001, and the Termination Date.
Notwithstanding the foregoing, Tenant shall not be required to pay the 2000
Assessments or the 2001 Assessments (whether or not due to the taxing
authorities) until the date (the "Assessment Due Date") that is the earlier of
(i) July 1, 2001, and (ii) the closing of BCC's recapitalization.


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         3. Delivery of the Leased Property. On or before the Termination Date,
Tenant shall deliver to Landlord possession of the Leased Property, including
the Land, Improvements, Equipment and Fixtures. Delivery shall be accomplished
by surrender of physical possession of the Leased Property to Landlord. Upon
surrender to Landlord, the Leased Property shall be broom-clean (i.e., free of
debris and rubbish), in a safe condition and free from any Hazardous Substances.

         4. Transfer of Tenant's Personal Property. In consideration for
Landlord's execution of this Agreement, including the termination of Tenant's
Rent Obligations as described in this Agreement, on or before the Termination
Date, Tenant shall convey and deliver to Landlord all of Tenant's Personal
Property other than the property described on Schedule 4A attached hereto free
and clear of any liens, claims or encumbrances, except for (i) any Permitted
Encumbrances, and (ii) the purchase money security interests set forth on
Schedule 4B attached hereto (the "PMSIs"). Tenant shall execute in favor of
Landlord a bill of sale in form and substance acceptable to Landlord evidencing
such conveyance.

         5. Termination of Lease Guaranty.

                  (a) Subject to all of the terms and conditions of this
Agreement, the Lease Guaranty and the respective obligations of Landlord and BCC
thereunder, including, but not limited to, any obligations relating to the Rent
Obligations, shall be terminated at 11:59 p.m. (Eastern time) on the Termination
Date; provided, however, that nothing contained herein shall be deemed to
relieve BCC of any of its obligations or liabilities under the Lease Guaranty
which accrue or have accrued on or prior to the Termination Date, including,
without limitation, obligations arising in connection with Tenant's obligations
described in Section 2 above and any obligations of BCC to indemnify, defend and
hold harmless Landlord from and against any and all claims, liabilities, losses,
costs, actions, damages, expenses or fees, including but not limited to
attorneys' fees and costs of defense, for which BCC is responsible under the
Lease Guaranty and which accrue or have accrued on or before the Termination
Date. BCC acknowledges that pursuant to the terms of Section 5(b) below, ACO,
Oakhaven Senior and Oakhaven Assisted may be released from their obligations
under the Lease Guaranty prior to any termination of BCC's obligations
thereunder.

                  (b) Subject to all of the terms and conditions of this
Agreement, the respective obligations of ACO, Oakhaven

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Senior and Oakhaven Assisted under the Lease Guaranty shall be terminated as of
11:59 p.m. (Eastern time) on the date (the "ACO Termination Date") that is
concurrent with the consummation of the sale by ACO, Oakhaven Senior, and
Oakhaven Assisted to BCC, BCC Anderson or any of their affiliates of all right,
title and interest in the membership interests of Tenant owned by ACO, Oakhaven
Senior or Oakhaven Assisted or their affiliates; provided, however, that nothing
contained herein shall be deemed to relieve ACO, Oakhaven Senior or Oakhaven
Assisted of any of their respective obligations or liabilities under the Lease
Guaranty which accrue or have accrued on or prior to the ACO Termination Date,
including, without limitation, obligations arising in connection with Tenant's
obligations described in Section 2 above, and any obligations of ACO, Oakhaven
Senior or Oakhaven Assisted to indemnify, defend and hold harmless Landlord from
and against any and all claims, liabilities, losses, costs, actions, damages,
expenses or fees, including but not limited to attorneys' fees and costs of
defense, for which each of ACO, Oakhaven Senior and Oakhaven Assisted is
responsible under the Lease Guaranty and which accrue or have accrued on or
before the ACO Termination Date.

         6. Termination of BCC Documents. Subject to all of the terms and
conditions of this Agreement, the BCC Documents and the respective obligations
of Landlord and BCC thereunder, including, but not limited to, any obligations
relating to the Rent Obligations, shall be terminated at 11:59 p.m. (Eastern
time) on the Termination Date,; provided, however, that nothing contained herein
shall be deemed to relieve BCC of any of its obligations or liabilities under
the BCC Documents which accrue or have accrued on or prior to the Termination
Date, including, without limitation, any obligations of BCC to indemnify, defend
and hold harmless Landlord from and against any and all claims, liabilities,
losses, costs, actions, damages, expenses or fees, including but not limited to
attorneys' fees and costs of defense, for which BCC is responsible under the BCC
Documents and which accrue or have accrued on or before the Termination Date.

         7. Termination of Ancillary Documents.

                  (a) Subject to all of the terms and conditions of this
Agreement, each of the Ancillary Documents and the respective obligations of
Landlord, Tenant, BCC, BCC Development, and BCC Anderson, including, but not
limited to, any obligations relating to the Rent Obligations thereunder, shall
be terminated at 11:59 p.m. (Eastern time) on the Termination Date; provided,
however, that nothing contained

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herein shall be deemed to relieve Tenant, or BCC, BCC Development, BCC Anderson
of any of their respective obligations or liabilities under the Ancillary
Documents to which such entity is a party which accrue or have accrued on or
prior to the Termination Date, including, without limitation, any obligations of
Tenant, BCC, BCC Development, or BCC Anderson to indemnify, defend and hold
harmless Landlord from and against any and all claims, liabilities, losses,
costs, actions, damages, expenses or fees, including but not limited to
attorneys' fees and costs of defense, for which Tenant, BCC, BCC Development, or
BCC Anderson are responsible under the Ancillary Document to which Landlord,
BCC, BCC Development, and BCC Anderson is a party and which accrue or have
accrued on or before the Termination Date. BCC acknowledges that pursuant to the
terms of Section 7(b) below, ACO, Oakhaven Senior and Oakhaven Assisted may be
released from their obligations under the Non-Competition Agreement prior to any
termination of the obligations thereunder of BCC, BCC Development and BCC
Anderson.

                  (b) Subject to all of the terms and conditions of this
Agreement, the respective obligations of ACO, Oakhaven Senior and Oakhaven
Assisted under the Non-Competition Agreement shall be terminated at 11:59 p.m.
(Eastern Time) on the ACO Termination Date; provided, however, that nothing
contained herein shall be deemed to relieve ACO, Oakhaven Senior and Oakhaven
Assisted of any of their respective obligations or liabilities under the
Non-Competition Agreement which accrue or have accrued on or prior to the ACO
Termination Date, including, without limitation, any obligations of ACO,
Oakhaven Senior or Oakhaven Assisted to indemnify, defend and hold harmless
Landlord from and against any and all claims, liabilities, losses, costs,
actions, damages, expenses or fees, including but not limited to attorneys' fees
and costs of defense, for which ACO, Oakhaven Senior and Oakhaven Assisted are
responsible under the Non-Competition Agreement and which accrue or have accrued
on or before the ACO Termination Date.

         8. Representations and Covenants. Tenant represents, warrants and
covenants as follows:

                  (a) Except for the Rent Obligations, Tenant will pay or make
provision for the payment of all trade accounts, wage claims and other
obligations of the business conducted in the Leased Property and shall neither
take any action nor fail to take any action the result of which will be the
imposition of any liens upon the Leased Property or the Improvements, Fixtures
or Equipment thereon or therein or the creation of any claims against Landlord.
It is hereby mutually agreed that this

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provision is not intended to bestow any benefit upon any person who is not a
party to this Agreement.

                  (b) The Leased Property, all Improvements, Fixtures and
Equipment therein, and Tenant's Personal Property are free and clear of any
liens, claims or encumbrances created or suffered by, through or under Tenant,
or its Affiliates, sublessees or other third parties for whom Tenant or its
Affiliates are responsible, and that none of the foregoing is subject to a
conditional sales agreement, lease or other title retention device.

                  (c) That there are no subtenants, franchisees, concessionaires
or other persons claiming an interest in the Leased Property or Tenant's
Personal Property or a right to occupy the Leased Property or any portion
thereof under or through Tenant other than the residents of the Facility.

         9. Indemnity for Breach of Representations and Warranties. As
additional consideration for Landlord entering into this Agreement, Tenant and
BCC each agree to indemnify, defend and hold harmless Landlord from and against
any and all claims, liabilities, losses, costs, actions, damages, expenses or
fees, including but not limited to attorneys' fees and costs of defense relating
to the breach of any representation or warranty set forth in Section 8 above.
The obligations of Tenant and BCC under this Section 9 shall be joint and
several.

         10. Mutual Termination of Lease. Within ten (10) days after the
Termination Date, Landlord and Tenant shall execute in recordable form a Mutual
Termination of Lease relating to the Lease in substantially the form of Exhibit
A attached hereto, and shall cause same to be recorded in the office of the
county recorder in the appropriate county where the Facility is located (the
"County"). Landlord and Tenant each hereby agree promptly to execute and deliver
such other documents as the other party may reasonably request in order to
confirm the termination of the Lease in accordance with the terms of this
Agreement.

         11. Further Assurances. The parties hereto agree to execute and deliver
to the other parties hereto any agreement, document or instrument deemed
reasonably necessary or desirable to give effect to the transactions described
in this Agreement. Without limiting the generality of the foregoing, within ten
(10) days after the Termination Date, (i) ACO Anderson and BCC agree to execute
in recordable form and cause to be recorded in the office of the county recorder
in the County, any and all instruments deemed reasonably necessary by Landlord
to remove

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the effect on title to the Leased Property of that certain Revolving
Credit/Future Advances Leasehold Mortgage dated as of January 30, 1998, by and
between ACO Anderson, as mortgagor, and BCC, as mortgagee, and (ii) Landlord
agrees to (a) execute and cause to be recorded in the office of the county
recorder in the County a termination statement relating to that certain
Financing Statement recorded April 3, 1998, as Instrument No. 0105579 in the
office of the recorder of Madison County, Indiana, and (b) execute and cause to
be filed with the office of the Secretary of State of the State of Indiana
termination statements relating to those certain Financing Statements filed
April 2, 1998, as Instrument Nos. 2182310, 2182311, 2182312 and 2182313 in the
office of the Secretary of State of the State of Indiana.

         12. Miscellaneous.

                  (a) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.

                  (b) This Agreement shall be governed by and construed in
accordance with the local law of the state in which the Leased Property is
located.

                  (c) There are no agreements, understandings, commitments,
representations or warranties with respect to the subject matter hereof except
as expressly set forth in this Agreement. This Agreement supersedes all prior
oral or written negotiations, understandings and agreements with respect to the
subject matter hereof, including, but not limited to that certain "Option to
Purchase" term sheet dated March 13, 2001, as amended.

                  (d) Neither anything contained herein nor the transaction
provided for herein shall be deemed or construed to constitute a "bulk sale" or
an assumption by Landlord of any obligations of Tenant. The transaction provided
for herein is and shall be construed solely as the termination of the Lease, the
Lease Guaranty, the Management Guaranty and the Ancillary Documents.

                  (e) Each of the parties hereto acknowledges that it has
negotiated for the specific considerations to be received by it hereunder and
that damages would be an inadequate remedy for the breach of this Agreement by
another party hereto. Each of the parties hereto shall be entitled to enforce
the terms of this Agreement by an action either for specific performance or

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for injunctive relief, or both, to prevent the breach or continued breach of
this Agreement. The prevailing party in any proceeding pursuant to or based upon
this Agreement or in which this Agreement is asserted as a defense shall be
entitled to recover attorneys' fees and costs incurred in such proceeding in
such amount as the court shall determine to be reasonable.

                  (f) All capitalized terms not defined in this Agreement but
defined in the Lease shall have the meaning given to such terms under the Lease.

                  (g) All indemnification covenants are intended to apply to
losses, damages, injuries, claims, etc. incurred directly by the indemnified
parties and their property, as well as by the indemnifying party or third party,
and their property.

                            [SIGNATURE PAGE FOLLOWS]




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                  IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.

"Landlord"                              "Tenant"

HEALTH CARE PROPERTY INVESTORS,         ASSISTED CARE OPERATORS OF ANDERSON,
a Maryland corporation                  LLC, a Delaware limited liability
                                        company

By:/s/Edward J. Henning                 By:  Assisted Care Operators, L.L.C., a
      Edward J. Henning                      Delaware limited liability company,
      Senior Vice President, General         its manager and authorized
      Counsel and Corporate Secretary        representative

                                             By:  Retirement Operators Funding,
                                                  L.L.C., a Delaware limited
                                                  liability company, its manager
                                                  and authorized representative

                                                  By:  Retirement Operators
                                                       Management, Inc., a
                                                       California corporation,
                                                       its manager and
                                                       authorized representative

                                                       By:/s/F. David Carr
                                                             F. David Carr,
                                                             President

"ACO"                                   "Oakhaven Senior"

ASSISTED CARE OPERATORS, L.L.C., a      OAKHAVEN SENIOR LIVING, INC.,
Delaware limited liability company      a California corporation

By:/s/D. Mark Brosche                   By:/s/D. Mark Brosche
      D. Mark Brosche                   Name: D. Mark Brosche
      Manager                           Title: President




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"BCC"                                   "Oakhaven Assisted"

BALANCED CARE CORPORATION,              OAKHAVEN ASSISTED LIVING, INC.,
a Delaware corporation                  a California corporation

By:/s/Robin L. Barber                   By:/s/D. Mark Brosche
      Robin L. Barber                   Name: D. Mark Brosche
      Senior Vice President,            Title: President
      Legal Counsel
      & Assistant Secretary

                                        "BCC Development"

                                        BCC DEVELOPMENT AND MANAGEMENT CO., a
                                        California corporation

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




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</DOCUMENT>
