Exhibit 10.127

LOAN AGREEMENT
by and between
POMACY CORPORATION,
as Borrower,
and
SNH ALT MORTGAGED PROPERTIES TRUST,
as Lender

                           

Dated as of February 28, 2003

_________________________________

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EXHIBITS

A -     Due Diligence Information and Diligence Dates

B -     Excluded Assets

C -     Outstanding Title Matters

D -     Permitted Control Persons

E -     Form of Note

F -     Form of Guaranty

G -     Form of Mortgage

H -     Form of Lease Assignment

I -     Form of Contract Assignment

J -     Form of UCC Financing Statement

K -     Form of Environmental Indemnity

L -     Form of Stock Pledge

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LOAN AGREEMENT

THIS LOAN AGREEMENT

is made and entered as of February 28, 2003, by and between POMACY CORPORATION,
a Delaware corporation ("Borrower"), and SNH ALT MORTGAGED PROPERTIES TRUST, a
Maryland real estate investment trust ("Lender").

W I T N E S S

E T H:

WHEREAS

, Borrower is the owner and operator of the Facilities (this and other
capitalized terms used herein having the meanings ascribed to such terms in
Article 1); and

WHEREAS

, Borrower has requested that Lender provide a loan to Borrower, and Lender is
willing to make such a loan, subject to and upon the terms and conditions herein
set forth;

NOW, THEREFORE

, in consideration of the mutual covenants herein contained and other good and
valuable consideration, the mutual receipt and legal sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE 1

DEFINITIONS

Capitalized terms used in this Agreement shall have the meanings set forth below
or in the Article or Section of this Agreement referred to below; such terms, as
so defined, shall include in the singular, the plural, and in the plural, the
singular, and the use of any gender shall include all genders.

      1.1   Acceptable Title Matters" shall mean the matters shown on the Title
Commitments or Surveys which are not Outstanding Title Matters.

      1.2  "Acquiring Guarantor" shall mean any successor in interest to any
Guarantor, which shall be deemed to include, without limitation, (a) any Person
or group of two or more Persons acting in concert (other than a Permitted
Control Person or a group comprised exclusively of Permitted Control Persons),
that acquire the ownership of fifty percent (50%) or more of the voting power of
the outstanding shares of voting stock of any Guarantor, (b) any Person
resulting from the merger or consolidation of any Guarantor, and (c) any Person
acquiring through any one or more sales or conveyances all or substantially all
of any Guarantor's assets (including its capital stock) or business, except that
this clause (c) shall not apply to any Person solely because such Person
acquires all or substantially all of Borrower's assets in accordance with the
terms and conditions of the Loan Documents.

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      1.3   "Acquisition Date" shall have the meaning given such term in the
Environmental Indemnity.

      1.4   "Affiliated Person" shall mean, with respect to any Person, (a) in
the case of any such Person which is a partnership, any partner in such
partnership; (b) in the case of any such Person which is a limited liability
company, any member of such company; (c) any other Person which is a Parent, a
Subsidiary, or a Subsidiary of a Parent of the Persons referred to in the
preceding clauses (a) and (b); (d) any other Person otherwise directly or
indirectly controlling or under common control with such Person or one or more
of the Persons referred to in the preceding clauses (a), (b) and (c); and (e)
any other Person who is a member of the Immediate Family of such Person or any
Person referred to in the preceding clauses (a) through (d).

      1.5   "Agreement" shall mean this Loan Agreement, as the same may be
amended, modified or supplemented from time to time as herein provided.

      1.6   "Alterra" shall mean Alterra Healthcare Corporation, a Delaware
corporation and the Parent of Borrower, and its permitted successors and
assigns.

      1.7   "Base Interest" shall have the meaning given such term in the Note.

      1.8   "Borrower" shall have the meaning given such term in the preamble to
this Agreement.

      1.9   "Business Day" shall mean any day other than a Saturday, Sunday or
any other day on which banking institutions in The Commonwealth of Massachusetts
are authorized by law or executive action to close.

      1.10   "Closing Date" shall mean the date upon which the Loan is closed
and funded in accordance with this Agreement.

      1.11   "Conforming Bankruptcy Proceeding" shall have the meaning given
such term in the Lease.

      1.12   "Conforming Plan" shall have the meaning given such term in the
Lease.

      1.13   "Contract Assignments" shall have the meaning given such term in
Section 3.3.4.

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      1.14   "Corrected Title Matters" shall mean, collectively, any Outstanding
Title Matters for which Borrower obtains the required revisions, estoppels or
certificates as set forth on Exhibit C attached hereto and (b) any Outstanding
Title Matters which otherwise become Corrected Title Matters in accordance with
the definition of "Permitted Encumbrances" set forth in this Agreement.

      1.15   "Declaration" shall mean the Declaration of Trust establishing
Lender, dated _________________, as amended, as filed with the Department of
Assessments and Taxation of the State of Maryland.

      1.16   "Default" shall mean any condition, event, act or omission which
with notice and/or lapse of time may ripen into an Event of Default.

      1.17   "Default Rate" shall have the meaning given such term in the Note.

      1.18   "Diligence Date" shall mean the relevant date of the items and
information listed on Exhibit A attached hereto with respect to each item of Due
Diligence Information thereon.

      1.19   "Due Diligence Information" shall mean the items and information
delivered to the Purchaser with respect to the Properties listed on Exhibit A
attached hereto.

      1.20   "Entity" shall mean any corporation, general or limited
partnership, limited liability company or partnership, stock company or
association, joint venture, association, company, trust, bank, trust company,
land trust, business trust, cooperative, any government or agency or political
subdivision thereof or any other entity.

      1.21   "Environment" shall mean soil, surface waters, ground waters, land,
stream, sediments, surface or subsurface strata and ambient air.

      1.22   "Environmental Indemnity" shall have the meaning given such term in
Section 3.3.6.

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      1.23   "Environmental Laws" shall mean all applicable laws, statutes,
regulations, rules, ordinances, codes, licenses, permits and orders (whether now
existing or hereafter enacted or promulgated irrespective of whether its
enactment is foreseeable or contemplated), of all courts of competent
jurisdiction, and Government Agencies, and all applicable judicial and
administrative and regulatory decrees, judgments and orders, including common
law rulings and determinations, relating to injury to, or the protection of,
real or personal property or human health (except those requirements which, by
definition, are solely the responsibility of employers) or the Environment,
including, without limitation, all valid and lawful requirements of courts and
other Government Agencies pertaining to reporting, licensing, permitting,
investigation, remediation and removal of underground improvements (including,
without limitation, treatment or storage tanks, or water, gas or oil wells), or
emissions, discharges, releases or threatened releases of Hazardous Substances,
chemical substances, pesticides, petroleum or petroleum products, pollutants,
contaminants or hazardous or toxic substances, materials or wastes whether
solid, liquid or gaseous in nature, into the Environment, or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances or Regulated Medical Wastes
underground improvements (including, without limitation, treatment or storage
tanks, or water, gas or oil wells), or pollutants, contaminants or hazardous or
toxic substances, materials or wastes, whether solid, liquid or gaseous in
nature.

      1.24   "Environmental Notice" shall have the meaning given such term in
Section 5.4(a).

      1.25   "Event of Default" shall have the meaning given such term in
Section 6.1.

      1.26   "Excluded Assets" shall mean, collectively, all (a) vehicles, (b)
computers, copiers, fax machines, employee cell phones and pagers and other
similar equipment subject to purchase money financing, all of which are listed
on Exhibit B attached hereto, (c) proprietary materials and software and
trademarks and tradenames and (d) all modifications, replacements, alterations
and additions of the foregoing (but, with respect to the preceding clause (b),
only to the extent the same are subject to purchase money financing).

      1.27   "Facility" shall mean, with respect to any Property, the assisted
living/special care facility being operated on such Property.

      1.28   Financing Statements" shall have the meaning given such term in
Section 3.3.5.

      1.29   "GAAP" shall mean generally accepted accounting principles
consistently applied.

      1.30   "Government Agencies" shall mean any court, agency, authority,
board (including, without limitation, environmental protection, planning and
zoning), bureau, commission, department, office or instrumentality of any nature
whatsoever of any governmental or quasi-governmental unit of the United States
or the States of Florida or Michigan or any county or any political subdivision
of any of the foregoing, whether now or hereafter in existence, having
jurisdiction over Borrower or the Property or any portion thereof or the
Facilities operated thereon.

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      1.31   "Guaranties" shall have the meaning given such term in Section
3.3.1.

      1.32   "Guarantor" shall mean any of Alterra, Tenant and each and every
other guarantor of Borrower's obligations under this Agreement, and each such
guarantor's successors and assigns.

      1.33   "Hazardous Substances" shall mean any substance: (a) the presence
of which requires or may hereafter require notification, investigation or
remediation under any federal, state or local statute, regulation, rule,
ordinance, order, action or policy; or (b) which is or becomes defined as a
"hazardous waste", "hazardous material" or "hazardous substance" or "pollutant"
or "contaminant" under any present or future federal, state or local statute,
regulation, rule or ordinance or amendments thereto including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C. et seq.) and the Resource Conservation and Recovery Act (42
U.S.C. section 6901 et seq.) and the regulations promulgated thereunder; or (c)
which is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous and is or becomes regulated by
any governmental authority, agency, department, commission, board, agency or
instrumentality of the United States, any state of the United States, or any
political subdivision thereof; or (d) the presence of which on the Property, or
any portion thereof, causes or materially threatens to cause an unlawful
nuisance upon the Property, or any portion thereof, or to adjacent properties or
poses or materially threatens to pose a hazard to the Property, or any portion
thereof, or to the health or safety of persons on or about the Property, or any
portion thereof; or (e) without limitation, which contains gasoline, diesel fuel
or other petroleum hydrocarbons or volatile organic compounds; or (f) without
limitation, which contains polychlorinated biphenyls (PCBs) or asbestos or urea
formaldehyde foam insulation; or (g) without limitation, which contains or emits
radioactive particles, waves or material; or (h) without limitation, constitutes
Regulated Medical Wastes.

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      1.34   "Immediate Family" shall mean, with respect to any individual, his
spouse, parents, brothers, sisters, children (natural or adopted), stepchildren,
grandchildren, grandparents, parents- in-law, brothers-in-law, sisters-in-law,
nephews and nieces, and the heirs, executors, administrators, legal
representatives and successors and assigns of such individuals (if permitted)
where the context so admits or requires.

      1.35   "Impositions" shall mean all taxes, assessments, and ad valorem,
sales, and use, single business, gross receipts, transaction privilege, rent or
similar taxes as the same are imposed on Borrower with respect to the Property
and/or the business conducted thereon by Borrower and other charges and
impositions (including, but not limited to, fire protection service fees and
similar charges) levied, assessed or imposed at any time by any governmental
authority upon or against the Property or taxes in lieu thereof, but expressly
excluding (a) any net revenue tax imposed on Lender, (b) any tax based on net
income imposed on Lender, and (c) any single business, gross receipts tax,
transaction privilege, rent or similar taxes as the same relate to or are
imposed upon Lender.

      1.36   "Indebtedness" shall mean all obligations, contingent or otherwise,
which in accordance with GAAP should be reflected on the obligor's balance sheet
as liabilities.

      1.37   "Landlord" shall mean SNH ALT Leased Properties Trust, and its
successors and assigns.

      1.38   "Lease" shall mean that certain Lease Agreement, dated as of the
date hereof, between Landlord, as landlord, and Tenant, as tenant.

      1.39   "Lease Documents" shall have the meaning given such term in the
Lease.

      1.40   "Lease Assignments" shall have the meaning given such term in
Section 3.3.3.

      1.41   "Lender" shall have the meaning given such term in the preamble to
this Agreement.

      1.42   "Loan" shall have the meaning given such term in Section 2.1.

      1.43   "Loan Documents" shall mean, collectively, this Agreement, the
Note, the Security Agreements and any other documents executed or delivered in
connection with any of the foregoing.

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      1.44   "Material Adverse Change" shall mean (a) a decrease in the
aggregate occupancy of the Pooled Facilities of more than ten percent (10%) in
the aggregate since the relevant Diligence Date, (b) any change in the condition
of any single Pooled Property, or any Pooled Facility located thereon
(including, without limitation, any casualty, condemnation (or threat thereof),
any environmental, structural, mechanical or title defect or violation of law),
that results in, or is reasonably likely to result in, a cost to remedy or
repair in excess of $500,000, which change first occurs after the Diligence Date
related to the relevant Due Diligence Information with respect thereto or (c)
any change or changes in the condition of any or all of the Pooled Properties,
or any or all of the Pooled Facilities located thereon (including, without
limitation, any casualty, condemnation (or threat thereof), any environmental,
structural, mechanical or title defect or violation of law), that result in, or
are reasonably likely to result in, an aggregate cost to remedy or repair in
excess of $3,000,000, which changes first occur after the Diligence Date related
to the relevant Due Diligence Information with respect thereto.

      1.45   "Mortgages" shall have the meaning given such term in Section
3.3.2.

      1.46   "Note" shall have the meaning given such term in Section 2.2.

      1.47   "Outstanding Title Matters" shall mean, collectively, all matters
shown on the Title Commitments or Surveys for which Lender has required Borrower
to obtain the revisions, estoppels and certificates set forth on Exhibit C
attached hereto.

      1.48   "Parent" shall mean, with respect to any Person, any Person which
owns directly, or indirectly through one or more Subsidiaries or Affiliated
Persons, fifty percent (50%) or more of the voting or beneficial interest in, or
otherwise has the right or power (whether by contract, through ownership of
securities or otherwise) to control, such Person.

      1.49   "Permitted Control Person" shall mean any Person listed on Exhibit
D attached thereto who, immediately following confirmation of the Conforming
Plan, owns of at least five percent (5%) of the voting power of the outstanding
shares of voting stock of Alterra.

      1.50   "Permitted Encumbrances" shall mean, with respect to any Property,
(a) liens for taxes, assessments and governmental charges with respect to such
Property not yet due and payable or due and payable but not yet delinquent; (b)
applicable zoning regulations and ordinances in effect on or prior to the
relevant Diligence Date related to the Due Diligence Items for such Property,
together with applicable zoning regulations and ordinances promulgated or
enacted after such relevant Diligence Date to the extent same do not constitute
a Material Adverse Change; (c) UCC financing statements which would be permitted
pursuant to the terms of Section 21.9 of the Lease or which are in effect with
respect to the Excluded Assets as of the relevant Diligence Dates; (d) all
Acceptable Title Matters and all Corrected Title Matters; provided, however, if
Borrower does not so obtain the required revisions, estoppels or certificates
with respect to any Outstanding Title Matters, then the Permitted Exceptions
shall include such Outstanding Title Matters in the event that Lender has actual
knowledge thereof and, notwithstanding such actual knowledge, elects to proceed
with the Closing, in which event such Outstanding Title Matters shall be
included within the definition of "Corrected Title Matters" hereunder; and (e)
such other nonmonetary encumbrances with respect to such Property first arising
after the relevant Diligence Date which do not constitute a Material Adverse
Change.

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      1.51   "Permitted Use" shall have the meaning given such term in Section
5.2.

      1.52   "Person" shall mean any individual or Entity, and the heirs,
executors, administrators, legal representatives, successors and assigns of such
Person (if permitted) where the context so admits or requires.

      1.53   "Pooled Properties" shall mean, collectively, the Properties and
the properties that are subject to the Lease Documents.

      1.54   "Pooled Facilities" shall mean, collectively, the Facilities and
the facilities that are subject to the Loan Documents.

      1.55   "Property" shall mean any Mortgaged Property, as such term is
defined in the Mortgages, and shall include the Facility located on such
Mortgaged Property, but shall exclude the Excluded Assets.

      1.56   "Provider Agreements" shall mean all participation, provider and
reimbursement agreements or arrangements now or hereafter in effect for the
benefit of Borrower in connection with the operation of the Facilities relating
to any right of payment or other claim arising out of or in connection with
Borrower's participation in any Third Party Payor Program.

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      1.57   "Regulated Medical Wastes" shall mean all materials generated by
Borrower, any Affiliated Person as to Borrower, subtenants, patients, occupants
or the operators of the Property which are now or may hereafter be subject to
regulation pursuant to the Material Waste Tracking Act of 1988, or any
applicable laws promulgated by any Government Agencies.

      1.58   "Recording Acts" shall have the meaning given such term in Section
4.5.

      1.59   "SEC" shall mean the Securities and Exchange Commission.

      1.60   "Security Agreements" shall mean, collectively, the Guaranties, the
Mortgages, the Lease Assignments, the Contract Assignments, the Financing
Statements, the Environmental Indemnity, the Stock Pledge and all other
certificates and documents executed in connection with or securing the Note or
any of them.

      1.61   "Stock Pledge" shall have the meaning given such term in Section
3.3.7.

      1.62   "Subsidiary" shall mean, with respect to any Person, any Entity (a)
in which such Person owns directly, or indirectly through one or more
Subsidiaries, fifty percent (50%) or more of the voting or beneficial interest
or (b) which such Person otherwise has the right or power to control (whether by
contract, through ownership of securities or otherwise).

      1.63   "Surveys" shall mean, collectively, one or more ALTA surveys which
have been delivered to Lender with respect to each of the Properties.

      1.64   "Tenant" shall mean AHC Trailside, Inc., a Delaware corporation,
the tenant under the Lease.

      1.65   "Third Party Payor Programs" shall mean all third party payor
programs in which Borrower presently or in the future may in its sole discretion
elect to participate, including, without limitation, Medicare, Medicaid,
CHAMPUS, Blue Cross and/or Blue Shield, Managed Care Plans, other private
insurance programs and employees assistance programs.

      1.66   "Title Company" shall mean Chicago Title Insurance Corporation or
such other ALTA member title insurance company as shall be acceptable to Lender.

      1.67   "Title Commitments" shall mean, collectively, one or more
commitments to issue title insurance issued by the Title Company to Lender with
respect to the Property in accordance with the provisions of Section 3.4.

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      1.68   "UCC" shall have the meaning given such term in Section 3.3.5.

ARTICLE 2

THE LOAN

      2.1   Commitment for the Loan. Subject to and upon the terms and
conditions of this Agreement, Lender agrees to make to Borrower, and Borrower
agrees to accept from Lender, a loan (the "Loan") in the original principal
amount of Six Million Nine Hundred Thousand Dollars ($6,900,000).

      2.2   The Note. The Loan shall be evidenced by a promissory note made by
Borrower to the order of Lender, dated the date hereof, in the amount of the
Loan and in the form annexed hereto as Exhibit E (the "Note").

      2.3   Interest. The Loan shall bear interest and other charges as provided
in the Note.

      2.4   Maturity. Unless sooner paid or payable provided in this Agreement
or in the Note (whether by prepayment, acceleration or otherwise), the entire
unpaid principal of the Note, together with all interest and other charges
thereon, shall be due and payable on June 30, 2004.

      2.5   Required Prepayments. Simultaneously with the closing of a sale with
respect to any Facility, Borrower shall make a required prepayment of the Note
in an amount equal to the net proceeds of such sale (being the excess of the
purchase price over reasonable brokerage commissions or finders' fees payable to
unaffiliated third parties, prorations and closing costs in connection with such
sale), which sale and payment shall otherwise comply with all of the terms and
conditions of the Loan Documents.

      2.6   Optional Prepayments. Borrower shall have the right to prepay the
Note, in whole or in part, prior to maturity, on the terms set forth in the
Note.

      2.7   Default Interest. From and after the occurrence of an Event of
Default, any amount due under any of the Loan Documents shall (to the extent
permitted by law) bear interest at the Default Rate.

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      2.8   Late Payments. In the event that any payment required to be made to
Lender under any of the Loan Documents shall not be paid within ten (10) days
after the same becomes due, Borrower shall, at the election of Lender, pay to
Lender, in addition to all other amounts payable hereunder and under the Note, a
"late fee" equal to five percent (5%) of the overdue amount.

      2.9   Payments on Non-Business Days; Calculations. Whenever any payment to
be made under any of the Loan Documents shall be stated to be due on a day other
than a Business Day, the payment date thereof shall be extended to the next
succeeding Business Day and interest shall be payable at the applicable rate
during such extension. All interest under each of the Loan Documents shall be
calculated on the basis of a 360-day year consisting of twelve (12) equal 30-day
months, with partial months calculated on the basis of the actual number of days
elapsed.

      2.10   Net Payments. All payments to Lender under any of the Loan
Documents shall be made to such account of Lender within the continental United
States as Lender shall from time to time designate in writing, in lawful money
of the United States of America and in immediately available Federal funds on
the date of payment, without setoff or counterclaim and in such amounts as may
be necessary in order that all such payments (after withholding for or on
account of any present or future taxes, levies, imposts, duties or other similar
charges of whatsoever nature generally imposed by any government or any
political subdivision or taxing authority thereof on the making of, or in
respect of payments on, any loan or indebtedness secured by a mortgage of real
estate, other than any franchise tax on, or any tax on or measured by the net
income of, Lender) shall not be less than the amounts otherwise specified to be
paid under the Loan Documents.

      2.11   Stamp Taxes, Etc. Borrower shall pay any taxes on the issue,
execution and delivery of the Loan Documents and any stamp or other taxes (other
than (a) any net revenue tax imposed on Lender, (b) any tax based on net income
imposed on Lender, and (c) any single business, gross receipts tax, transaction
privilege, rent or similar taxes as the same relate to or are imposed upon
Lender) levied by any jurisdiction on the execution, delivery, filing,
recording, performance and enforcement of the Loan Documents and all taxes
levied by any jurisdiction by reason of any payments under this Article 2.

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ARTICLE 3

GENERAL CONDITIONS PRECEDENT

The obligation of Lender to make the Loan shall be subject to the prior or
simultaneous satisfaction of the following conditions precedent:

      3.1   The Note. Borrower shall have delivered the original duly executed
Note to Lender.

      3.2   No Default; Representations and Warranties. As of the Closing Date
and immediately after giving effect thereto, (a) no Default or Event of Default
shall have occurred and be continuing; (b) all representations and warranties
contained in the Loan Documents shall be true and correct in all material
respects with the same force and effect as though such representations and
warranties had been made on and as of such date; (c) Borrower shall have
complied in all material respects with all covenants and agreements set forth in
the Loan Documents; and (d) there shall have been delivered to Lender a
certificate, dated as of the Closing Date, signed by Borrower to the effect set
forth in this section.

      3.3   Security Agreements, Etc. There shall have been duly executed and
delivered to Lender, as additional security for the due and punctual payment and
performance of the obligations of Borrower under the Loan Documents:

      3.3.1   Guaranties. A guaranty from Alterra, as guarantor, to Lender, and
a guaranty from Tenant, as guarantor, to Lender (collectively, the
"Guaranties"), each dated as of the Closing Date and in the forms annexed hereto
as Exhibits F-1 and F-2, respectively, which shall, as of the Closing Date,
guarantee the payment and performance of all of Borrower's obligations under the
Loan Documents;

      3.3.2   Mortgages. One or more mortgages, assignments of leases and rents
and security agreements (collectively, the "Mortgages"), from Borrower, as
mortgagor, to Lender and Landlord, as mortgagee, dated as of the Closing Date
and in the form annexed hereto as Exhibit G with respect to the Property, which
shall, as of the Closing Date, create a valid and perfected first mortgage lien
on, and security interest in, the Property;

      3.3.3   Assignments of Leases and Rents. One or more assignments of leases
and rents (collectively, the "Lease Assignments"), from Borrower, as assignor,
to Lender and Landlord, as assignee, dated as of the Closing Date and in the
form annexed hereto as Exhibit H with respect to the Property, which shall, as
of the Closing Date, create an absolute assignment to Lender of all leases and
rents with respect to the Property;

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      3.3.4   Assignments of Contracts, Licenses and Permits. One or more
assignments of contracts, licenses and permits (collectively, the "Contract
Assignments"), from Borrower, as assignor, to Lender and Landlord, as assignee,
dated as of the Closing Date and in the form annexed hereto as Exhibit I with
respect to the Property, which shall, as of the Closing Date, create an absolute
assignment to Lender of all contracts, licenses and permits with respect to the
Property, other than the Excluded Assets;

      3.3.5   Financing Statements. Financing statements relating to the
assignments and security interests referred to in Sections 3.3.1 through 3.3.4,
naming Lender and Landlord as secured parties and Borrower as debtor, in the
form annexed hereto as Exhibit J (the "Financing Statements") and sufficient in
number to be filed with all public offices within the States of Florida and
Michigan with which such Financing Statements are required to be filed to create
a perfected security interest under the Uniform Commercial Code of the States of
Florida and Michigan (the "UCC") in the collateral described thereon; and

      3.3.6   Environmental Indemnity. An indemnification agreement (the
"Environmental Indemnity"), from Alterra and Borrower to Lender and Landlord,
dated as of the Closing Date and in the form annexed hereto as Exhibit K, which
shall, as of the Closing Date, indemnify Lender and Landlord from and against
any liabilities associated with the presence of Hazardous Substances on the
Property.

      3.3.7   Stock Pledge Agreement. A stock pledge agreement (the "Stock
Pledge") from Alterra to Lender and Landlord, dated as of the Closing Date and
in the form annexed hereto as Exhibit L, which shall, as of the Closing Date,
create an absolute assignment to Lender and Landlord of all of the stock of
Borrower.

      3.4   Title Insurance. As of the Closing Date, the Title Company shall be
prepared, subject only to payment of the applicable premium endorsement fees and
delivery of the Mortgages in recordable form, to issue mortgagee's title
insurance policies naming Lender and Landlord, as insureds, covering the portion
of the Property consisting of land, improvements and fixtures with an amount
allocated to such portion of the Property covered thereby as Lender shall have
reasonably required, in form and substance consistent with the Title
Commitments, subject only to the Permitted Exceptions.

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      3.5   Filing of Security Agreements, Etc. As of the Closing Date, each of
the documents referred to in or delivered pursuant to the provisions of Section
3.3 shall have been duly executed and delivered in form satisfactory to enable
the Title Company to issue the title policy or policies described in Section 3.4
with the "gap" exceptions deleted, or, in the alternative only if such "gap"
coverage is unavailable, such documents shall have been duly recorded or filed
in such manner and in such places as is required by law to establish, preserve,
protect and perfect the interests and rights created or intended to be created
by the Loan Documents, and all taxes, fees and other charges in connection with
the execution, delivery and/or filing of the Loan Documents shall have been duly
paid.

      3.6   Legality. As of the Closing Date, no statute, rule or regulation
(including, without limitation, any statute, rule or regulation relating to
taxation) of any governmental body shall have come into effect which makes it
illegal for Lender to make the Loan.

      3.7   Insurance. As of the Closing Date, Borrower shall have delivered to
Lender certificates of insurance evidencing compliance with the applicable
provisions of this Agreement and the Mortgages.

      3.8   Opinions of Borrower's Counsel. As of the Closing Date, there shall
have been delivered to Lender legal opinions, addressed to Lender and dated the
Closing Date, of counsel to Borrower acceptable to Lender and its counsel, in
form and substance reasonably satisfactory to Lender and its counsel, to the
effect that Borrower, Tenant and Alterra are duly organized and validly existing
and in good standing; that Borrower, Tenant and Alterra have the power and
authority to perform their respective obligations under the Loan Documents and
the Lease Documents; that all necessary approvals and consents to enable
Borrower, Tenant and Alterra to enter into the Loan Documents and the Lease
Documents to which any of them is a party have been duly obtained; that the Loan
Documents and the Lease Documents have been duly executed and delivered; as to
the validity, binding effect and enforceability of the Loan Documents and the
Lease Documents; that the Loan is not usurious (without giving effect to any
clauses which purport to reduce or reschedule the payment of interest in the
event of a violation of such laws); and addressing such other matters as Lender
or its counsel may reasonably request.

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ARTICLE 4

REPRESENTATIONS AND WARRANTIES

In order to induce Lender to enter into this Agreement and to make the Loan,
Borrower hereby represents and warrants that:

      4.1   Status and Authority of Borrower. Borrower is a corporation duly
organized and validly existing under the laws of Delaware and has all requisite
power and authority under the laws of such State and its charter, by-laws and
other documents to own its property and assets, to enter into and perform its
obligations as such under the Loan Documents to which it is a party, and to
transact the business in which it is engaged or presently proposes to engage.
Borrower is duly qualified to transact business and is in good standing in each
jurisdiction in which the nature of the business conducted or to be conducted by
it or the ownership of properties owned by it requires such qualification,
including, without limitation, the jurisdictions in which the Property is
located.

      4.2   Action of Borrower. Borrower has taken all necessary action under
its charter, by-laws and other documents to authorize the execution, delivery
and performance of the Loan Documents to which it is a party and each such Loan
Document constitutes the valid and binding obligation and agreement of Borrower,
enforceable in accordance with its terms, except as limited by bankruptcy,
insolvency, reorganization or similar laws of general application affecting the
rights and remedies of creditors, and moratorium laws from time to time in
effect, and except to the extent that the availability of equitable relief may
be subject to the discretion of the court before which any proceeding therefor
might be brought.

      4.3   No Violations of Other Agreements, Etc. Neither the execution and
delivery of any of the Loan Documents by Borrower, nor compliance by Borrower
with the terms and provisions hereof or thereof, are events which of themselves,
or with the giving of notice or the passage of time, or both, could constitute,
on the part of Borrower, a violation of, or conflict with, or result in any
breach of, or default under, the terms, conditions or provisions of any other
agreement, instrument or understanding to which Borrower is a party or by which
Borrower or the Property are bound, or require any consent, permit, approval,
authorization, declaration or filing under or pursuant to, any statute, law,
judgment, decree, order, rule or regulation applicable to Borrower, or result in
the creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon the Property or any portion thereof or interest therein (other
than the liens created by the Security Agreements) or any other property or
assets of Borrower pursuant to the terms of any other indenture, mortgage, deed
of trust, note, evidence of indebtedness, agreement or other instrument to which
Borrower may be a party or by which it or any of its properties may be bound, or
violate any provisions of law, or any applicable order, writ, injunction,
judgment or decree of any court, or any order or other public regulation of any
governmental commission, bureau or administrative agency.

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      4.4   Judgments; Litigation. Except as otherwise disclosed to Lender in
writing, there are no judgments presently outstanding and unsatisfied against
Borrower or the Property or any portion thereof and neither Borrower nor the
Property nor any portion thereof is involved in any litigation at law or in
equity, or any proceeding before any court, or by or before any governmental or
administrative agency, which litigation or proceeding could have a material
adverse effect on Borrower or the Property or Lender's security interest
therein, and no such material litigation or proceeding is, to the best of the
knowledge, information and belief of Borrower, threatened against Borrower or
against any of its properties and, to the best of the knowledge, information and
belief of Borrower, no investigation looking toward such a proceeding has begun
or is contemplated.

      4.5   Priority of Liens. As of the Closing Date, subject to the advance of
funds under the Loan, the filing of the Financing Statements where required by
law, and the recording of the Mortgages and the Lease Assignments in the Public
Records of the counties in which the Property is located, the Mortgages and the
security interests and liens granted to Lender pursuant to the other Security
Agreements in the property purported to be covered thereby (including
subsequently acquired personal property upon acquisition thereof), (a) will
constitute perfected security interests under the UCC, to the extent such
security interests can be perfected by filing, or, with respect to such property
constituting real property or fixtures or otherwise subject to laws governing
liens on real estate, perfected mortgage liens under the real estate recording
acts of the States of Florida and Michigan (the "Recording Acts"), (b) will be
entitled to all of the rights, benefits and priorities provided by the UCC or
the Recording Acts, as applicable, and (c) except as expressly set forth in the
Title Policies or as otherwise may be expressly permitted by this Agreement and
the Security Agreements, will be superior and prior to the rights of all Persons
now existing or hereafter arising.

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      4.6   Charter Documents, Etc. Borrower has heretofore delivered to Lender
true, correct and complete copies of its charter documents, none of which have
been amended except as evidenced by amendments similarly delivered.

      4.7   Insurance. The insurance coverages required by the Mortgages are in
full force and effect. Borrower has not received any notice from any insurance
carrier and is not aware of defects or inadequacies in the Property which, if
not corrected, would result in termination of insurance coverage or increase its
cost. There is no pending claim, action or proceeding, and no notice of a
possible claim, action or proceeding has been received by Borrower under, with
respect to the termination of such insurance coverage for any Property.

      4.8   Taxes. Borrower has properly filed all Federal, state and other
income, franchise, property and other tax returns which are required to be filed
and have paid all taxes required to be paid in connection therewith to the
extent that such taxes have become due, except to the extent that the same (a)
have been disclosed to Lender in writing, and (b) are being currently contested
in good faith by appropriate proceedings or other appropriate actions promptly
initiated and diligently conducted and adequate reserves shall have been set
aside therefore in accordance with generally accepted accounting principles.

      4.9   Disclosure. Neither this Agreement nor any other document,
certificate or statement furnished to Lender by or on behalf of Borrower in
connection with the transactions contemplated hereby contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading.

ARTICLE 5

COVENANTS

Borrower hereby further covenants and agrees as follows:

      5.1   Payments. To pay the principal of, and interest and other charges
on, the Note in accordance with its terms and to pay all fees, expenses and
other amounts due under the Loan Documents in accordance with the terms thereof.

      5.2   Permitted Use, Etc. Continuously to use and operate, or cause to be
used and operated, each Facility as an assisted living/special care facility and
for any uses incidental thereto (the particular use to which the Facility is put
at any particular time, its "Permitted Use"); not to use any Facility or any
portion thereof for other than its Permitted Use without the prior written
consent of Lender, which consent may not be unreasonably withheld or delayed;
not to take, or omit to take, any action, the taking or omission of which may
materially impair the value or the usefulness of any of the Property for its
Permitted Use.

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      5.3   Compliance with Laws, Etc. Except to the extent that the same may
properly be contested in accordance with the Mortgage, to (a) comply in all
material respects with all laws, regulations and other requirements from time to
time in effect or otherwise applicable to the Property, (b) procure, maintain
and comply in all material respects with all appropriate licenses, certificates
of need, permits, provider agreements and other authorizations required for any
use of the Property then being made, and for the proper erection, installation,
operation and maintenance of the Property or any part thereof, and (c) comply in
all material respects with all terms, covenants and conditions of all Permitted
Encumbrances; to use and operate the Property and all portions thereof, for the
Permitted Use in material compliance with, and to obtain and maintain in full
force and effect all material approvals, consents, permits, licenses and
certificates required under, all applicable federal, state, municipal and other
material governmental statutes, laws, ordinances, by-laws, rules, regulations
and other legal requirements, including, without limitation, those relating to
certifications for reimbursement licensure and those relating to construction,
occupancy, zoning, subdivision, land use, adequacy of parking, conservation,
wetlands protection, environmental protection, occupational health and safety
and fire safety and food and beverage services, and with all material
restrictions and easements of any kind affecting the Property the non-compliance
with which may have a material effect upon the Property, Borrower or the
security of the Security Agreements or may impose a duty or obligation upon
Borrower or Lender.

      5.4   Environmental Matters. (a) Not to store, spill upon, dispose of or
transfer to or from the Property any Hazardous Substance, except that Borrower
may store, transfer and dispose of Hazardous Substances in compliance with all
Environmental Laws; to maintain the Property at all times free of any Hazardous
Substance (except such Hazardous Substances as are maintained in compliance with
all Environmental Laws); promptly to (i) notify Lender in writing of any change
in the nature or extent of such Hazardous Substances maintained, (ii) transmit
to Lender a copy of any report which is required to be filed with respect to the
Property pursuant to any Environmental Law, (iii) transmit to Lender copies of
any citations, orders, notices or other governmental communications received by
Borrower or its agents or representatives with respect thereto (collectively,
"Environmental Notice"), (iv) observe and comply in all material respects with
any and all Environmental Laws relating to the use, maintenance and disposal of
Hazardous Substances and all orders or directives from any official, court or
agency of competent jurisdiction relating to the use or maintenance or requiring
the removal, treatment, containment or other disposition thereof, and (v) pay or
otherwise dispose (or cause to be paid or otherwise disposed) of any fine,
charge or Imposition related thereto.

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(b) To take all actions, and to incur any and all expense, as may be reasonably
necessary and as may be required by any Government Agencies having jurisdiction
thereof, (x) to clean up and remove from and about the Property all Hazardous
Substances thereon, (y) to contain and prevent any further release or threat of
release of Hazardous Substances on or about the Property and (z) to eliminate
any further release or threat of release of Hazardous Substances on or about the
Property.

(c) To indemnify and hold harmless Lender from and against all liabilities,
obligations, claims, damages, penalties, costs and expenses (including, without
limitation, reasonable attorney's fees and expenses) imposed upon, incurred by
or asserted against any of them by reason of any failure by Borrower to perform
or comply with any of the terms of this Section 5.4, except that Borrower's
obligations hereunder shall not apply to events or activities giving rise to
liabilities, obligations, claims, damages, penalties, costs and expenses
(including, without limitation, reasonable attorney's fees and expenses) if such
events or activities take place on or after the Acquisition Date, unless such
events shall arise or such activities take place as a result of the acts or
omissions of Borrower.

      5.5   Compliance with Agreements. To comply with each and every material
term, covenant and condition contained in any Security Agreement and in this
Agreement and the Note and to comply in all material respects with each and
every agreement or other agreement or instrument to which Borrower is a party
relating to the Property or any portion thereof or by which it or the Property
or any portion thereof is bound.

      5.6   Compliance with Medicaid and Medicare Requirements. To make whatever
improvements (capital or ordinary) as are required to conform the Property to,
and otherwise to comply in all material respects with, such standards as may,
from time to time, be required by Federal Medicare (Title 18) or Medicaid (Title
19) skilled and/or intermediate care nursing programs to the extent Borrower, in
Borrower's sole discretion, elects to participate in such program, or any other
applicable programs or legislation, or required by any Government Agencies as a
condition to the continued operation of the Facilities for its Permitted Use.

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      5.7   Other Amendments and Agreements. Not to suffer or permit any change
in the Loan Documents, in whole or in part, of the rights of Borrower in any of
the Loan Documents, or enter into, modify, amend or terminate any material
management, utility agreement, lease, indemnification or similar contract or
agreement with respect to any Property the effect of which would be to
materially and adversely prejudice Lender's rights or interest in the
collateral, without in each instance obtaining the prior written consent of
Lender, which consent may be withheld in Lender's sole and absolute discretion;
provided, however, that Borrower may enter into a management agreement or lease
with Alterra or any Subsidiary of Alterra acting as manager or lessee without
the prior written consent of Lender so long as such management agreement (a) is
delivered to Lender prior to or simultaneously with the execution hereof, (b) is
on terms and conditions which are commercially reasonable, (c) is expressly made
subordinate to this Agreement and provides, inter alia, that all amounts due
from Borrower to the manager/lessee thereunder shall be subordinate to all
amounts due from Borrower to Lender under the Loan Documents (provided that, as
long as no Event of Default has occurred and is continuing, Borrower may pay all
amounts due to a manager/lessee pursuant to such management agreement or lease),
(d) provides for termination thereof, at Lender's option, upon the occurrence of
an Event of Default hereunder, and (e) otherwise complies with the remaining
provisions of this Section 5.7. Borrower shall not take any action, grant any
consent or permit any action under any management agreement or lease so entered
with Alterra or any Subsidiary of Alterra which might have a material adverse
effect on Lender, without the prior written consent of Lender, and further
agrees not to modify, amend or terminate any such management agreement except in
accordance with the terms and conditions of this Section 5.7.

      5.8   Maintenance and Repair, Etc. To keep the Property and all private
roadways, sidewalks and curbs appurtenant thereto in good order and repair,
reasonable wear and tear excepted, and promptly to make all necessary and
appropriate repairs and replacements thereto of every kind and nature, whether
interior or exterior, structural or nonstructural, ordinary or extraordinary,
foreseen or unforeseen, all of which repairs shall be at least equivalent in
quality to the original work.

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      5.9   Restoration of Damage. To repair promptly any material loss or
damage to the Facilities, whether caused by taking or condemnation, fire, theft,
vandalism or other casualty, and to restore promptly the Facilities to
substantially the same condition it was in immediately prior to such loss or
damage; provided, however, that Borrower's obligation to so restore shall be
limited to the extent insurance proceeds or condemnation awards are actually
made available for Borrower's use in such restoration, exclusive of any
applicable insurance deductibles or any shortfall attributable to Borrower's
failure to maintain any required insurance.

      5.10   Examination of Books and Property. After reasonable advance notice
from Lender (which notice may be oral), to permit Lender or its representatives
to enter the Property and improvements thereon for purposes of inspecting the
same; and to permit Lender (and its agents) to examine the books of account of
Borrower and make copies thereof at Borrower' expense, at such reasonable times
as Lender may request, for the purpose of determining compliance by Borrower
with the Loan Documents, subject, however, to the agreement of Lender to use
reasonable steps to preserve the confidentiality of the information so obtained
and the privacy rights of residents of the Facilities.

      5.11   Financial Information, Etc. To furnish to Lender, promptly upon
request at Borrower's sole cost and expense, such unaudited financial and other
information with respect to the Property as Lender may from time to time
reasonably request in order to comply with any applicable securities laws and/or
any rules, regulations or requirements of the Securities and Exchange Commission
and, if required or requested, to permit Lender to incorporate by reference any
information included in filings made by Alterra with the SEC.

      5.12   Indemnification of Lender. To indemnify and hold harmless Lender
from and against all liabilities, obligations, claims, damages, penalties,
causes of action, costs and expenses (including, without limitation, reasonable
attorneys' fees), to the maximum extent permitted by law, imposed upon or
incurred by or asserted against Lender by reason of the following, except to the
extent caused by Lender's gross negligence or willful misconduct: (a) any
accident, injury to or death of persons or loss of or damage to property
occurring on or about the Property or adjoining sidewalks, including, without
limitation, any claims of malpractice and occurring on or after the date on
which Borrower or any Affiliated Person as to Borrower acquired the Property,
(b) any use, misuse, non-use, condition, management, maintenance or repair of
the Property or any litigation, proceeding or claim by governmental entities or
other third parties to which Lender is made a party or participant related to
the Property or such use, misuse, non-use, condition, management, maintenance,
or repair thereof including, failure to perform obligations to which Lender is
made a party, in each case to the extent relating to periods on or after the
date on which Borrower acquired the Property, (c) any Impositions, and (d) any
failure on the part of Borrower or any Affiliated Person as to Borrower to
perform or comply with any of the terms of the Loan Documents; and Borrower, at
its expense, shall contest, resist and defend any such claim, action or
proceeding asserted or instituted against Lender using counsel reasonably
satisfactory to Lender. Borrower shall pay all amounts due and payable under
this Section 5.12 within ten (10) days after demand therefor, and if not timely
paid, such amounts shall bear interest at the Default Rate from the due date
thereof to the date of payment.

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      5.13   Costs, Charges and Expenses. To pay all reasonable costs, charges
and expenses, related to the Loan Documents including, without limitation, the
following: (a) reasonable attorneys' fees and expenses hereafter incurred by
Lender in connection with the negotiation of the Loan Documents; (b) reasonable
attorneys' fees and expenses hereafter incurred by Lender in connection with an
Event of Default; and (c) title insurance premiums, insurance premiums and
recording costs for the Security Agreements.

      5.14   Notices Respecting Property, Etc. To deliver to Lender copies of
all material notices and other communications from time to time received by
Borrower, Alterra or any Affiliated Person as to either of them with respect to
the Property, promptly upon receipt thereof, together with, to the extent
requested by Lender from time to time, copies of any other material reports or
documents filed by Borrower or Alterra with any third party.

      5.15   Maintenance of Insurance. To maintain or cause to be maintained
with respect to the Property the insurance coverages required by the Mortgage.

      5.16   No Sale, Transfer, Liens, Etc. Except in the ordinary course of
business, without the prior written consent of Lender (which consent may be
given or withheld by Lender in its sole discretion for any reason or for no
reason at all), and except as otherwise expressly permitted by this Agreement or
the Mortgage, not, directly or indirectly, to suffer or permit any sale, lease,
transfer or encumbrance of, or lien upon, the Property or Borrower or any
portion thereof or any interest therein, other than (a) Permitted Encumbrances,
(b) Change in Control of Alterra as defined in and permitted under the Lease and
(c) any other encumbrance or lien then being properly contested in accordance
with the Mortgage. Notwithstanding the foregoing, prior to the Maturity Date,
Lender shall consent to the sale of any Property so long as the net proceeds of
such sale are at least equal to Forty-Seven Thousand Five Hundred Dollars
($47,500) per unit of resident capacity at the Facility located on such
Property.

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      5.17   Continued Existence, Etc. Not to suffer or permit the termination
of the legal existence of Borrower or any Affiliated Person as to Borrower which
is a party to any of the Loan Documents or to engage in any business other than
the ownership and operation of the Property.

      5.18   Modification of Documents. Not to suffer or permit any material
modification, change or amendment to the charter documents of Borrower or any
Affiliated Person as to Borrower which is a party to any of the Loan Documents
which would materially and adversely affect Borrower' or such other Affiliated
Person's ability to perform its obligations under the Loan Documents without the
prior written consent of Lender, which consent may be given or withheld in
Lender's sole and absolute discretion.

      5.19   Further Assurances. To provide to Lender, within ten (10) days
after a request therefor by Lender, the certification of Borrower as to the
continuing accuracy of the representations and warranties contained in Article 4
(or specifying any inaccuracies as of such date) and the continuing compliance
of Borrower with the covenants contained in this Article 5.

      5.20   Notice of Litigation, Potential Event of Default, Etc. To give
prompt notice to Lender of any litigation or any administrative proceeding to
which Borrower may hereafter become a party which involves a potential liability
equal to or greater than Five Hundred Thousand Dollars ($500,000) with respect
to the Facilities or which may otherwise result in any material adverse change
in the business, operations, property, prospects, results of operation or
condition, financial or other, of Borrower; forthwith upon Borrower obtaining
knowledge of any Default, Event of Default or any default or event of default
under any agreement relating to indebtedness for money borrowed in an aggregate
amount exceeding, at any one time, Five Hundred Thousand Dollars ($500,000).

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      5.21   Prompt Payment of Indebtedness. To (a) pay or cause to be paid when
due all payments of principal of and premium and interest on Indebtedness for
money borrowed and not permit or suffer any such Indebtedness to become or
remain in default beyond any applicable grace or cure period, (b) pay or cause
to be paid when due all lawful claims for labor and rents, (c) pay or cause to
be paid when due all trade payables and (d) pay or cause to be paid when due all
other Indebtedness upon which Borrower is or becomes obligated, except, in each
case, other than that referred to in clause (a), to the extent payment is being
contested in good faith by appropriate proceedings in accordance with the
Mortgage and if Borrower shall have set aside on its books adequate reserves
with respect thereto in accordance with GAAP or unless and until foreclosure,
distraint sale or other similar proceedings shall have been commenced.

      5.22   Indebtedness. Borrower shall not create, incur, assume or
guarantee, or permit to exist, or become or remain liable directly or indirectly
for, any Indebtedness except as otherwise expressly permitted by the Loan
Documents.

      5.23   Liens and Encumbrances. Except as permitted by Section 5.16 and
Section 5.22 hereof or as otherwise expressly permitted by the Loan Documents,
Borrower shall not create or incur or suffer to be created or incurred or to
exist any Lien on this Agreement or any of Borrower's assets, properties, rights
or income, or any of its interest therein, now or at any time hereafter owned.

      5.24   Maintenance of Accounts and Records. To keep true records and books
of account in which full, true and correct entries will be made of dealings and
transactions in relation to the business and affairs of Borrower in accordance
with GAAP.

      5.25   Change of Control of Guarantor. Borrower shall cause each Acquiring
Guarantor, as a condition of, and prior to, such Person becoming an Acquiring
Guarantor, to execute a Guaranty in favor of Lender pursuant to which the
Acquiring Guarantor shall guarantee the payment and performance of Borrower's
obligations under the Loan Documents. It is expressly understood and agreed that
the foregoing is not intended to release any Guarantor from its liabilities and
obligations under its Guaranty and that all Guarantors shall in all events
remain liable under their Guaranties.

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ARTICLE 6

EVENTS OF DEFAULT

      6.1   Events of Default. The occurrence of any one or more of the
following events shall constitute an event of default ("Event of Default") under
this Agreement:

6.1.1   onpayment. Should Borrower or any Affiliated Person as to Borrower (as
applicable):

(a)     Fail to pay any installment of principal or interest under the Note or
any payment of Minimum Rent or Additional Rent (as such terms are defined in the
Lease) under the Lease within five (5) days after the date due; or

(b)     Fail to pay when due any other payment required under the Loan Documents
or the Lease Documents within five (5) days after receiving notice of such
nonpayment.

6.1.2   Insurance. Should Borrower fail to maintain the insurance coverages
required by the Mortgage; or

6.1.3   Acquiring Guarantor.     Should Borrower fail to provide a Guaranty from
any Acquiring Guarantor in accordance with the provisions of Section 5.25 and
such failure shall continue for a period of fifteen (15) days after Notice
thereof from Lender to Borrower; or

6.1.4   Other Covenants. Should Borrower or any Affiliated Person as to Borrower
default in the due performance or observance of any term, covenant or agreement
on its part to be performed or observed pursuant to any of the provisions of the
Loan Documents (other than those expressly referred to in this Section 6.1) or
any and such default shall continue for a period of thirty (30) days after
notice thereof from Lender to Borrower or such Affiliated Person (provided that
no such notice shall be required if Lender shall reasonably determine immediate
action is necessary to protect person or property); provided, however, that if
such default is susceptible of cure but such cure cannot be accomplished within
such period of time, and if, in addition, Borrower or such Affiliated Person
commences to cure such default within thirty (30) days after notice thereof from
Lender, and thereafter prosecutes the curing of such default with all diligence,
such period of time shall be extended to a period of time (not to exceed an
additional sixty (60) days in the aggregate) as may be necessary to cure such
default with all due diligence; or

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6.1.5   Other Obligations. Should any obligation of Borrower in respect of any
Indebtedness for money borrowed or for the deferred purchase price of any
material property or services, or any guaranty relating thereto, be declared to
be or become due and payable prior to the stated maturity thereof, or should
there occur and be continuing with respect to any such Indebtedness or deferred
purchase price, in each case equal to or in excess of Five Hundred Thousand
Dollars ($500,000) any monetary default under any instrument or agreement
evidencing or securing the same, the effect of which is to permit the holder or
holders of such instrument or agreement or a trustee, agent or other
representative on behalf of such holder or holders, to cause such any such
obligations to become due prior to its or their stated maturity; or

6.1.6   Other Documents. Should any Loan Document or any Lease Document cease to
be in full force and effect for any reason or should any Event of Default occur
and be continuing under any Loan Document or any Lease Document; or

6.1.7   Representations and Warranties. Should any representation or warranty
made by or on behalf of Borrower or any other Person under or in connection with
this Agreement, the Note or any Security Agreement, or in any document,
certificate or agreement delivered in connection herewith or therewith prove to
have been false or misleading in any material respect on the date when made or
deemed made; or

6.1.8   Nonpayment of Debts. Should Borrower or any Guarantor generally not be
paying its debts as they become due or should Borrower or any Guarantor make a
general assignment for the benefit of creditors; provided, however that (i) the
failure of Alterra to generally not be paying its debts as they become due or
the making of a general assignment by Alterra for the benefit of creditors shall
not constitute an Event of Default hereunder if such failure or assignment
occurs on or prior to January 31, 2003 or at any time during the pendency of a
Conforming Bankruptcy Proceeding filed on or prior to January 31, 2003 and (ii)
the sale or disposition by Borrower of the collateral pledged for to secure its
obligations under the Loan Documents shall not constitute an Event of Default
hereunder provided Lender releases the applicable Mortgage for such collateral
in connection therewith; or

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6.1.9   Insolvency. Should any petition be filed by or against Borrower or any
Guarantor under the Federal bankruptcy laws, or should any other proceeding be
instituted by or against Borrower or any Guarantor seeking to adjudicate
Borrower or any Guarantor bankrupt or insolvent, or seeking liquidation,
reorganization, arrangement, adjustment or composition of Borrower's debts under
any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, custodian or other similar official for Borrower or any
Guarantor or for any substantial part of the property of Borrower or any
Guarantor and such proceeding is not dismissed within one hundred eighty (180)
days after institution thereof; provided, however, that the failure of Alterra
to comply with this Section 6.1.9 shall not constitute an Event of Default
hereunder if such failure or assignment occurs on or prior to January 31, 2003
or at any time during the pendency of a Conforming Bankruptcy Proceeding filed
on or prior to January 31, 2003; or

6.1.10   Dissolution, Etc. Should Borrower or any Guarantor cause or institute
any proceeding for its dissolution or termination (provided that Borrower may
institute a proceeding for its dissolution once its obligations under the Loan
Documents have been satisfied and paid in full); or

6.1.11   Cessation of Operations. Should Borrower voluntarily cease operation of
any Mortgaged Property for its Permitted Use for a period in excess of thirty
(30) consecutive days, except as a result of damage, destruction or partial or
complete condemnation the effect of which is to materially and adversely affect
by ten percent (10%) or more the aggregate revenue generated by such Mortgaged
Property; or

6.1.12   Loss of Premises. Should Borrower be ejected from any substantial
portion of any Mortgaged Property or the use thereof for any reason, including,
without limitation, by reason of a defect in title to such Mortgaged Property
for any reason (except as result of a taking by the power of eminent domain to
the extent permitted under the applicable provisions of the Mortgage), the
effect of which is to materially and adversely affect by ten percent (10%) or
more the revenue generated by such Mortgaged Property); or

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6.1.13   Other Liens. Should the estate or interest of Borrower in the Property
or any part thereof be levied upon or attached in any proceeding and the same
shall not be vacated, discharged or bonded within the later of (x) ninety (90)
days after commencement thereof, unless the amount in dispute is less than
$100,000, in which case Borrower shall give notice to Lender of the dispute but
Borrower may defend in any suitable way, and (y) two hundred seventy (270) days
after receipt by Borrower of notice thereof from Lender (unless Borrower shall
be contesting such lien or attachment in good faith in accordance with the
Mortgage); or

6.1.14   Judgments. Should a judgment for the payment of money in excess of Five
Hundred Thousand Dollars ($500,000) be rendered against Borrower and should such
judgment or judgments, if unsatisfied after expiration of all applicable appeal
periods (and unless insured or bonded to the satisfaction of Lender), remain
unstayed for a period in excess of thirty (30) days, or should there be a levy
against any property of Borrower in respect of any such judgment.

      6.2   Lender's Rights on Default. Upon the occurrence and during the
continuance of an Event of Default, Lender shall have the right forthwith, at
its election, to exercise any and all rights and remedies available to it at law
or in equity, and, in addition, Lender shall have the following specific rights,
which shall be cumulative and not exclusive and in addition to any other rights
granted to Lender under the Loan Documents or otherwise:

6.2.1   Performance of Obligations. Lender may, in its sole discretion and
without notice to Borrower, pay or perform in the name and on behalf of Borrower
any obligation of Borrower or any other Person for the purpose of curing such
default if it relates to (a) any failure to pay or perform Borrower's
obligations under the Loan Documents or to pay any Imposition on or affecting
any of the Property, or (b) any other failure to pay or perform any other
obligation of Borrower under Loan Documents if the effect of such failure could,
in the reasonable opinion of Lender, jeopardize the security provided by the
Security Agreements or materially impair the value of any of the Property. Any
amounts expended by Lender pursuant to this Section 6.2.1 shall be added to the
principal amount of the Note and shall be secured by the Security Agreements and
have equal priority with the Loan, and Borrower agrees to repay the same upon
demand.

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6.2.2   Entire Amount of Note Due and Payable. Lender may, in its sole
discretion, declare the entire outstanding and unpaid principal balance of, and
all accrued interest and other charges on, the Note to be immediately due and
payable and the Note shall thereupon become immediately due and payable without
presentment, demand, protest or notice of any kind whatsoever, to or upon
Borrower or any other person, all of which are hereby expressly waived.

6.2.3   Right of Lender to Take Control of Property. Lender, either in person or
by agent, may, in its sole discretion, at any time or times thereafter with or
without bringing any action or proceeding, but after notice to Borrower, or by a
receiver appointed by a court, enter upon and take possession of any or all of
the Property and may exclude Borrower and their respective successors or
assigns, and their partners, agents, servants and employees wholly therefrom and
assume control over such Property and may cause operation thereof to be carried
on in such manner as it shall deem best. In the event that Lender does assume
such control, all amounts expended by it therefor shall be added to the
principal amount of the Note and shall be secured by the Security Agreements and
have equal priority with the Loan, and Borrower agrees to repay the same upon
demand. In the event that Lender takes possession of the Property and assumes
control thereof as aforesaid, it shall not be obligated to operate the same
longer than it shall see fit and may thereafter at any time abandon such
operation and refuse to make further payments for the account of Borrower.
Whether or not operation of the Property is continued or abandoned, Lender may
apply any and all funds of Borrower held by Lender to the payment of the Note,
to the payment of rent and other charges due from the tenant to the landlord
under the Lease, to the curing of any default under the Loan Documents or the
Lease Documents and to the payment of other amounts due to Lender under the Loan
Documents or due to Landlord under the Lease Documents.

ARTICLE 7

RELEASE

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      7.1   Release. If Borrower shall sell or otherwise transfer all or any
portion of the Property in accordance with all of the terms and conditions of
the Loan Documents then, promptly upon Lender's receipt of the full amount of
the net proceeds of such sale or transfer (being the excess of the purchase
price over reasonable brokerage commissions or finders' fees payable to
unaffiliated third parties, prorations and closing costs in connection with such
sale ), then Lender and Borrower shall enter into a termination agreement, in
form and substance reasonably satisfactory to Lender and Borrower, pursuant to
which Lender and Borrower shall terminate each of the Security Agreements which
are exclusively related to the Property so sold or transferred and, in
connection therewith, Lender shall deliver to Borrower one or more discharges
with respect to such Security Agreements. Any such discharge shall be in form
and substance satisfactory to Lender in its reasonable discretion so long as the
same is in recordable form and is otherwise sufficient to discharge the lien of
such Security Agreements as aforesaid. Lender shall cause Landlord to join in
the execution of any of the documents referred to in this Section 7.1 to the
extent necessary to document the terminations and releases contemplated hereby.
Nothing contained in this Section 7.1 shall be construed so as to permit
Borrower to sell or otherwise transfer all or any portion of the Property other
than in accordance with the terms and conditions of the Loan Documents.

ARTICLE 8

MISCELLANEOUS

      8.1   Notices, Etc. (a) Any and all notices, demands, consents, approvals,
offers, elections and other communications required or permitted under this
Agreement shall be deemed adequately given if in writing and the same shall be
delivered either (i) in hand, (ii) by telecopier with electronic confirmation of
receipt (provided a conforming copy is immediately delivered by hand or by
Federal Express or a similar expedited commercial carrier), or (iii) by mail or
Federal Express or similar expedited commercial carrier, addressed to the
recipient of the notice, postpaid and registered or certified with return
receipt requested (if by mail), or with all freight charges prepaid (if by
Federal Express or similar carrier).

(b) All notices required or permitted to be sent hereunder shall be deemed to
have been given for all purposes of this Agreement upon the date of acknowledged
receipt, in the case of a notice by telecopier, and, in all other cases, upon
the date of receipt or refusal, except that whenever under this Agreement a
notice is either received on a day which is not a Business Day or is required to
be delivered on or before a specific day which is not a Business Day, the day of
receipt or required delivery shall automatically be extended to the next
Business Day.

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(c) All such notices shall be addressed,

if to Lender to:

c/o Senior Housing Properties Trust
400 Centre Street
Newton, Massachusetts 02458
Attn: Mr. David J. Hegarty
[Telecopier No. (617) 796-8349]

with a copy to:

Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attn: Nancy S. Grodberg, Esq.
[Telecopier No. (617) 338-2880]

if to Borrower to:

c/o Alterra Healthcare Corporation
10000 Innovation Drive
Milwaukee, Wisconsin 53227
Attn: Mr. Mark W. Ohlendorf
[Telecopier No. (414) 918-5055]

With a copy to:

Rogers & Hardin LLP
2700 International Tower
229 Peachtree Street, N.E.
Atlanta, Georgia 30303-1601
Attn: Miriam J. Dent, Esq.
[Telecopier No. (404) 525-2224]

(d) By notice given as herein provided, the parties hereto and their respective
successors and assigns shall have the right from time to time and at any time
during the term of this Agreement to change their respective addresses effective
upon receipt by the other parties of such notice and each shall have the right
to specify as its address any other address within the United States of America.

      8.1   Successors and Assigns. This Agreement shall bind, and the benefits
hereof shall inure to, Borrower and Lender and their respective successors and
assigns; provided, however that Borrower shall have no right to transfer or
assign any or all of their respective rights and obligations hereunder without
the prior written consent of Lender, which consent may be withheld by Lender in
Lender's sole discretion. Whenever in this Agreement, any of the parties hereto
is referred to, such reference shall be deemed to include the permitted
successors and assigns of such party, and all covenants, promises and agreements
by or on behalf of Borrower which are contained in this Agreement, shall inure
to the benefit of the successors and assigns of Lender.

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      8.3   Survival of Agreement. All covenants, agreements, representations
and warranties made in this Agreement, and in the certificates delivered
hereunder, shall survive the making by Lender of the Loan herein contemplated
and the execution and delivery to Lender of the Note and shall continue in full
force and effect so long as this Agreement is in effect or any amount remains
owing to Lender hereunder or under the Note and any Security Agreement.

      8.4   Applicable Law, Etc. Except as to matters regarding the internal
affairs of Lender and issues of or limitations on any personal liability of the
shareholders and trustees of Lender for obligations of Lender, as to which the
laws of the State of Maryland shall govern, this Agreement and any other
instruments executed and delivered to evidence, complete or perfect the
transactions contemplated hereby shall be interpreted, construed, applied and
enforced in accordance with the laws of The Commonwealth of Massachusetts
applicable to contracts between residents of Massachusetts which are to be
performed entirely within Massachusetts, regardless of (a) where any such
instrument is executed or delivered; or (b) where any payment or other
performance required by any such instrument is made or required to be made; or
(c) where any breach of any provision of any such instrument occurs, or any
cause of action otherwise accrues; or (d) where any action or other proceeding
is instituted or pending; or (e) the nationality, citizenship, domicile,
principal place of business, or jurisdiction of organization or domestication of
any party; or (f) whether the laws of the forum jurisdiction otherwise would
apply the laws of a jurisdiction other than The Commonwealth of Massachusetts;
or (g) any combination of the foregoing. Notwithstanding the foregoing, the laws
of the state in which the Property is located shall apply to the perfection and
priority of liens upon and the disposition of and disposition with respect to
any of the Property.

To the maximum extent permitted by applicable law, any action to enforce,
arising out of, or relating in any way to, any of the provisions of this
Agreement may be brought and prosecuted in such court or courts located in The
Commonwealth of Massachusetts as is provided by law; and the parties consent to
the jurisdiction of said court or courts located in The Commonwealth of
Massachusetts and to service of process by registered mail, return receipt
requested, or by any other manner provided by law.

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      8.5   Modification of Agreement. No modification or waiver of any
provision of this Agreement, nor any consent to any departure by Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Borrower and Lender, and such modification, waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on Borrower in any case shall entitle Borrower to
any other or further notice or demand in the same, similar or other
circumstances.

      8.6   Waiver of Rights by Lender. Neither any failure nor any delay on the
part of Lender in exercising any right, power, or privilege under this Agreement
shall operate as a waiver thereof, nor shall a single or partial exercise
thereof preclude any other or further exercise or the exercise of any other
right, power or privilege.

      8.7   Severability. In case any one or more of the provisions contained in
this Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or impaired thereby and the
Agreement shall thereupon be reformed and construed and enforced to the maximum
extent permitted by law.

      8.8   Entire Contract. This Agreement, including all annexes and exhibits
hereto and all other documents furnished to Lender in connection with this
Agreement and the Lease, constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and thereof and shall supersede
and take the place of any other instruments purporting to be an agreement of the
parties hereto relating to the transactions contemplated hereby, including,
without limitation, any letter of intent or loan commitment letter.

      8.9   Controlling Provisions. To the extent that the provisions of this
Agreement may be inconsistent with any provision of the Security Agreements or
any other document delivered by Borrower as security for performance of its
obligations under the Note and hereunder, the provisions of this Agreement shall
take precedence.

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      8.10   Counterparts; Headings. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but which, when
taken together, shall constitute but one instrument and shall become effective
as of the date hereof when copies hereof, which, when taken together, bear the
signatures of each of the parties hereto shall have been signed. Headings in
this Agreement are for purposes of reference only and shall not limit or affect
the meaning of the provisions hereof.

      8.11nbsp;  Participations, Etc. Lender shall have the right to sell,
assign, participate, syndicate, transfer, divide or hypothecate all or any
portion of its investment in the Loan to one or more institutional investors,
and, by execution hereof, Borrower agrees to cooperate with Lender to effect
such transactions, including, without limitation, providing and agreeing to
provide, at Lender's sole cost and expense, necessary disclosures and available
information relating to the Facilities, and executing documentation as requested
by Lender in providing such disclosures and information and in effecting such
transactions and Borrower shall provide full recognition thereto, provided the
same does not result in any additional obligation or liability of Borrower.

      8.12   Lender's Liability. (a) The term "Lender" as used in this Agreement
so far as covenants or obligations to be performed by Lender are concerned,
shall be limited to mean and include only the holders at the time in question of
the Note, and in the event of any assignment of the Note, Lender (and in case of
any subsequent assignment or conveyances, the then holder) shall be concurrently
freed and relieved from and after the date of such assignment or conveyance,
without any further instrument or agreement, of all liability with respect to
the performance of any covenants or obligations on the part of Lender contained
in this Agreement thereafter to be performed, it being intended hereby that the
covenants and obligations contained in this Agreement on the part of Lender,
shall, subject as aforesaid, be binding on Lender, its successors and assigns,
only during and in respect of their respective successive periods as holder of
the Note.

(b) THE DECLARATION OF TRUST OF LENDER PROVIDES THAT THE NAME "SNH ALT MORTGAGED
PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS
TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER,
SHAREHOLDER, EMPLOYEE OR AGENT OF LENDER SHALL BE HELD TO ANY PERSONAL
LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST,
LENDER. ALL PERSONS DEALING WITH LENDER, IN ANY WAY, SHALL LOOK ONLY TO THE
ASSETS OF LENDER FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY
OBLIGATION.

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      8.13   Borrower's Liability. By acceptance hereof, Lender agrees that,
except as otherwise set forth in the next succeeding sentences of this
paragraph, neither Borrower nor any officer or agent of Borrower, nor any of
their respective successors and assigns, shall have personal liability, directly
or indirectly, under the Note, this Agreement, the Mortgages or any other
Security Agreement, and if any proceeding shall be brought to enforce the
provisions of the Note, this Agreement, the Mortgages or any other Security
Agreement, Lender shall not be entitled to take any action to procure any money
judgment against Borrower, or their respective successors and assigns, and
Lender shall have recourse hereunder only against the Property, and against such
additional security as may be furnished by or on behalf of Borrower in
connection herewith. Notwithstanding the foregoing, Borrower shall be fully and
personally liable to Lender for all cost, loss, damage or expense suffered or
incurred by Lender (a) as a result of misrepresentation or willful fraud on
their part; (b) as a result of the retention of any rental or other income from
the Property after an Event of Default shall have occurred and shall be
continuing (to the full extent of such rental or other income so retained and
collected by Borrower); (c) to the extent of the fair market value of any
personal property or fixtures removed from the Property or disposed of by
Borrower in violation of the terms of the Security Agreements while an Event of
Default shall have occurred and be continuing; (d) as a result of the
misapplication of any proceeds in violation of the terms of the Security
Agreements (to the full extent of such misapplied proceeds) under any insurance
policies or awards resulting from condemnation or the exercise of the power of
eminent domain by reason of damage, loss or destruction of any portion of the
Property. If two or more persons or entities are named as Borrower herein, each
of such persons or entities shall be jointly and severally liable for the
obligations of Borrower hereunder, and Lender may proceed against any one
without first having commenced proceedings against any other of them.

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IN WITNESS WHEREOF

, Borrower and Lender have executed this Agreement under seal as of the date
above first written.

BORROWER:

POMACY CORPORATION, a Delaware corporation

 

 

By:     /s/ Mark W. Ohlendorf

Mark W. Olendorf
Vice President

LENDER:

SNH ALT MORTGAGED PROPERTIES TRUST, a
Maryland real estate investment trust

 

 

By:     /s/ John R. Hoadley
John R. Hoadley
Treasurer