<PAGE>
Exhibit 10.7

THIS NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933 OR ANY
STATE SECURITIES LAW. NEITHER THIS NOTE NOR ANY PORTION HEREOF OR INTEREST
HEREIN MAY BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
UNLESS THE SAME IS REGISTERED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES
LAW, OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND BALANCED
CARE CORPORATION SHALL HAVE RECEIVED, AT THE EXPENSE OF THE HOLDER HEREOF,
EVIDENCE OF SUCH EXEMPTION REASONABLY SATISFACTORY TO BALANCED CARE CORPORATION
(WHICH MAY INCLUDE, AMONG OTHER THINGS, AN OPINION OF COUNSEL SATISFACTORY TO
BALANCED CARE CORPORATION).

THE INDEBTEDNESS EVIDENCED BY THIS INSTRUMENT IS SUBORDINATED TO THE PRIOR
PAYMENT IN FULL OF THE SENIOR DEBT (AS DEFINED IN THE SUBORDINATION AGREEMENT
HEREINAFTER REFERRED TO) PURSUANT TO, AND TO THE EXTENT PROVIDED IN, THAT
CERTAIN SUBORDINATION AGREEMENT, DATED AS OF APRIL 4, 2001, AMONG BALANCED CARE
CORPORATION, HELLER HEALTHCARE FINANCE, INC., VXM INVESTMENTS LIMITED, HR
INVESTMENTS LIMITED, RH INVESTMENTS LIMITED AND THE OTHER PARTIES IDENTIFIED
THEREIN (THE "SUBORDINATION AGREEMENT"). ANY HOLDER OF THIS INSTRUMENT SHALL BE
DEEMED TO BE BOUND BY, AND SUBJECT TO, THE TERMS OF THE SUBORDINATION AGREEMENT.

                                      NOTE

$900,000                                                        October 29, 2001


                  FOR VALUE RECEIVED, the undersigned, Balanced Care
Corporation, a Delaware corporation (the "Maker"), hereby promises to pay to the
order of VXM Investments Limited, a Cayman Islands corporation, as agent (the
"Agent") for the Lenders identified in the Bridge Loan Agreement, dated as of
April 4, 2001, among the Company, such Lenders and the Agent, as amended as of
June 12, 2001, as further amended as of July 6, 2001, as further amended as of
August 8, 2001, as further amended as of September 6, 2001, as further amended
as of October 4, 2001, as further amended as of the date hereof (as the same may
be further amended, modified or supplemented from time to time in accordance
with its terms, the "Loan Agreement"), at the office of the Agent c/o Unsworth &
Associates, Herengracht 483, Amsterdam, The Netherlands, to be distributed in
accordance with the terms of the Loan Agreement, the
<PAGE>
principal sum of NINE HUNDRED THOUSAND DOLLARS ($900,000), in lawful money of
the United States of America in immediately available funds, and to pay interest
from the date thereof on the principal amount hereof from time to time
outstanding, in like funds, at said office, at a rate or rates per annum and, in
each case, payable on such dates as determined pursuant to the terms of the Loan
Agreement.

                  The Maker promises to pay interest, on demand, on any overdue
principal and fees and, to the extent permitted by law, overdue interest from
their due dates at a rate or rates determined as set forth in the Loan
Agreement.

                  The Maker hereby waives diligence, presentment, demand,
protest and notice of any kind whatsoever. The non-exercise by the holder of any
of its rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.

                  All payments and prepayments of the principal hereof and
interest hereon and the respective dates thereof shall be endorsed by the holder
hereof on the schedule attached hereto and made a part hereof, or on a
continuation thereof which shall be attached hereto and made a part hereof, or
otherwise recorded by such holder in its internal records; provided, however,
that the failure of the holder hereof to make such a notation or any error in
such a notation shall not in any manner affect the obligations of the Maker to
make payments of principal and interest in accordance with the terms of this
Note and the Loan Agreement.

                  This Note is one of the Notes referred to in the Loan
Agreement (and is secured by the Collateral referred to therein), which, among
other things, contains provisions for the acceleration of the maturity hereof
upon the happening of certain events, for optional and mandatory prepayment of
the principal hereof prior to the maturity hereof and for the amendment or
waiver of certain provisions of the Loan Agreement, all upon the terms and
conditions therein specified. THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CHOICE OF
LAW DOCTRINE, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

                                        2
<PAGE>
                                     BALANCED CARE CORPORATION


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


                                        3
<PAGE>
                                Loans and Payment
<TABLE>
<CAPTION>
                                                                                     Unpaid
                                                                                     Principal
                    Amount                         Payments                          Balance of                Person Making
Date                of Loan                   Principal Interest                     Note                      Notation
<S>                 <C>                       <C>                                    <C>                       <C>
</TABLE>