<PAGE>
Exhibit 10.4

                            FIFTH AMENDMENT AGREEMENT

                  This FIFTH AMENDMENT AGREEMENT (this "Amendment"), dated as of
October 4, 2001, among Balanced Care Corporation, a Delaware corporation (the
"Company"), VXM Investments Limited, a Cayman Islands corporation ("VXM"), HR
Investments Limited, a Cayman Islands corporation, and RH Investments Limited, a
Cayman Islands corporation (each, a "Lender" and collectively, the "Lenders"),
and VXM, as agent for the Lenders (in such capacity, the "Agent"), amends the
Bridge Loan Agreement, dated as of April 4, 2001, among the parties hereto, as
previously amended pursuant to the Amendment Agreement, dated as of June 12,
2001, among the parties hereto, as further amended pursuant to the Second
Amendment Agreement, dated as of July 6, 2001, among the parties hereto, as
further amended pursuant to the Third Amendment Agreement, dated as of August 8,
2001, among the parties hereto, as further amended pursuant to the Fourth
Amendment Agreement, dated as of September 6, 2001, among the parties hereto (as
so amended and as may be further amended, modified or supplemented from time to
time, the "Loan Agreement"). Capitalized terms used and not otherwise defined
herein shall have the meanings ascribed to them in the Loan Agreement.

                  WHEREAS, the Company has informed the Agent of its desire to
amend the Loan Agreement to provide for (i) additional funds to be loaned to it
pursuant thereto, and (ii) an extension of the Maturity Date thereunder; and

                  WHEREAS, the Company will execute and deliver such other
documents and instruments necessary to carry out the terms of the Loan
Agreement.

                  NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and subject to the fulfillment of
the conditions set forth below, the parties hereto agree as follows:

                  Section 1. Amendments to Loan Agreement.

                  1.1 The definition of "Loan Commitment" set forth in the Loan
Agreement is hereby amended and restated to read in its entirety as follows:

                           "`Loan Commitment' means an aggregate amount equal to
$33,203,524."
<PAGE>
                  1.2 The table set forth in Section 2.1 of the Loan Agreement
is hereby deleted and replaced in its entirety with the following:
<TABLE>
<CAPTION>
                             Advance Date:                                   Amount of Loan:
            <S>                                                              <C>
                              April 4, 2001                                    $26,003,524
                                May 1, 2001                                    $   750,000
                               May 30, 2001                                    $ 1,100,000
                              June 12, 2001                                    $ 1,250,000
                               July 6, 2001                                    $   600,000
                             August 8, 2001                                    $   700,000
                          September 6, 2001                                    $   500,000
                         September 25, 2001                                    $   300,000
                            October 4, 2001                                    $ 1,200,000
            Not later than October 31, 2001                                    $   800,000
</TABLE>

                  1.3 Section 3.2 of the Loan Agreement is hereby amended by
deleting therefrom the date "October 16, 2001" and replacing it with "November
16, 2001."

                  Section 2. Miscellaneous.

                  2.1 The Company represents and warrants to the Agent that:

                  (a) The Company has the corporate power and authority to
execute, deliver and carry out the terms and provisions of this Amendment and
the transactions contemplated hereby and has taken or caused to be taken all
necessary corporate action to authorize the execution, delivery and performance
of this Amendment and the transactions contemplated hereby;

                  (b) No consent of any other person (including, without
limitation, shareholders or creditors of the Company), and no action of, or
filing with, any governmental or public body or authority is required to
authorize, or is otherwise required in connection with the execution, delivery
and performance of this Amendment;
<PAGE>
                  (c) This Amendment has been duly executed and delivered on
behalf of the Company by a duly authorized officer, and constitutes a legal,
valid and binding obligation of the Company enforceable in accordance with its
terms, subject to bankruptcy, reorganization, insolvency, moratorium and other
similar laws affecting the enforcement of creditors' rights generally and the
exercise of judicial discretion in accordance with general principles of equity;
and

                  (d) The execution, delivery and performance of this Amendment
will not violate any law, statute or regulation, or any order or decree of any
court or governmental instrumentality, or conflict with, or result in the breach
of, or constitute a default under any contractual obligation of the Company.

                  2.2 Except as herein expressly amended, the Loan Agreement is
ratified and confirmed in all respects and shall remain in full force and effect
in accordance with its terms.

                  2.3 All references to the Loan Agreement in the Loan
Agreement, the Security Documents and the other documents and instruments
delivered pursuant to or in connection therewith shall mean such agreements as
amended hereby and as each may in the future be amended, restated, supplemented
or modified from time to time.

                  2.4 The Company hereby irrevocably and unconditionally
ratifies and confirms in favor of the Agent and the Lenders the grant of a
security interest in the Collateral contained in the Security Documents, which
security interest shall continue in full force and effect without interruption
and which shall continue to be applicable to all of the Company's obligations
under the Loan Agreement as amended hereby.

                  2.5 This Amendment may be executed by the parties hereto
individually or in combination, in one or more counterparts, each of which shall
be an original and all of which shall constitute one and the same agreement.

                  2.6 Delivery of an executed counterpart of a signature page by
telecopier shall be effective as delivery of a manually executed counterpart.
<PAGE>
                  2.7 This Amendment shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York.

                  2.8 The parties hereto shall, at any time and from time to
time following the execution of this Amendment, execute and deliver all such
further instruments and take all such further action as may be reasonably
necessary or appropriate in order to carry out the provisions of this Amendment.

                                    * * * * *


                                          THE COMPANY:

                                          BALANCED CARE CORPORATION


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

                                          THE LENDERS:

                                          VXM INVESTMENTS LIMITED, as Lender


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

                                          HR INVESTMENTS LIMITED

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

                                          RH INVESTMENTS LIMITED

                                          By:/s/J.B. Unsworth
                                             -----------------------------------
                                             Name:J.B. Unsworth
                                             Title:Director
<PAGE>
                                          THE AGENT:

                                          VXM INVESTMENTS LIMITED, as Agent


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