Exhibit 10.9

FOURTH AMENDMENT TO LOAN AGREEMENT AND

FORBEARANCE AGREEMENT

Dated as of November 5, 2002

 

          This FOURTH AMENDMENT TO LOAN AGREEMENT AND FORBEARANCE AGREEMENT (as
the same may be modified, amended or supplemented from time to time, this
"Fourth Amendment"), dated as of November 1, 2002, is by and among THE CAPITAL
COMPANY OF AMERICA LLC, a Delaware limited liability company, (together with its
successors and assigns, the "Lender"), ALS-VENTURE II, INC., a Delaware
corporation (the "Borrower"), ALTERRA HEALTHCARE CORPORATION f/k/a ALTERNATIVE
LIVING SERVICES, INC., a Delaware corporation (the "Parent"), and ALS-CLARE
BRIDGE, INC., a Delaware corporation (the "Subsidiary").

RECITALS

     WHEREAS, Nomura Asset Capital Corporation, a Delaware corporation
("Nomura"), and the Borrower entered into that certain Loan Agreement made as of
May 26, 1998 (the "Original Loan Agreement");

     WHEREAS, pursuant to (i) that certain Assignment and Assumption Agreement
dated as of July 28, 1998, and (ii) that certain Allonge and the other documents
related thereto, Nomura assigned to the Lender, and the Lender assumed from
Nomura, all of Nomura's right, title, interest, duties and obligations in, to
and under the Original Loan Agreement and the other Loan Documents;

     WHEREAS, the Lender and the Borrower have amended the Original Loan
Agreement pursuant to (i) that certain First Amendment to Loan Agreement and
Reaffirmation Agreement dated as of July 31, 1998, (ii) that certain Second
Amendment to Loan Agreement, First Amendment to Guaranty and Suretyship
Agreement and Reaffirmation Agreement dated as of September __, 1998, and (iii)
that certain Third Amendment to Loan Agreement and Reaffirmation Agreement dated
as of November 30, 2000 (collectively with the Original Loan Agreement, the
"Loan Agreement");

     WHEREAS, the Borrower has acknowledged that certain Events of Default, as
more fully described on Schedule I hereto, have occurred and are continuing
under the Loan Documents (the "Existing Events of Default");

     WHEREAS, the Borrower has informed the Lender that during the Forbearance
Period (as hereinafter defined) certain additional Events of Default, as more
fully described on Schedule II hereto, will occur (the "Impending Events of
Default" and collectively with the Existing Events of Default, the "Specified
Events of Default"); and

     WHEREAS, the Borrower has requested that the Lender forbear from exercising
certain rights and remedies in respect of the Specified Events of Default, and
the Lender has agreed to do so on the terms and subject to the conditions
contained herein.

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     NOW, THEREFORE, in consideration of the foregoing premises, the covenants
set forth in this Fourth Amendment and for other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

ARTICLE I

DEFINED TERMS

SECTION 1.1   Defined Terms. Unless otherwise defined herein or the context
otherwise requires, capitalized terms used in this Fourth Amendment, including
its preamble and recitals, have the respective meanings given to such terms in
the Loan Agreement.

ARTICLE II

ACKNOWLEDGMENT OF EVENTS OF
DEFAULT; FORBEARANCE

SECTION 2.1   Acknowledgment of Events of Default. Each of the Loan Parties
hereby acknowledges and confirms that the Existing Events of Default have
occurred and are continuing.

SECTION 2.2   Forbearance. On the terms and subject to the conditions set forth
in this Fourth Amendment, the Lender agrees to forbear from exercising any right
or remedy permitted to be taken or exercised by it under the Loan Agreement or
the other Loan Documents with respect to the Specified Events of Default for the
period (the "Forbearance Period") commencing on the Effective Date (as defined
below) and terminating on the Termination Date (as defined below); provided,
however, that such forbearance shall extend only to the Specified Events of
Default and not to any other Defaults or Events of Default now existing or
occurring after the Effective Date and shall not in any way or manner restrict
the Lender from exercising any rights or remedies it may have with respect to
the Specified Events of Default from and after the expiration or termination of
the Forbearance Period or with respect to any other Default or Event of Default
at any time. "Termination Date" shall mean the earliest to occur of any of the
following events: (i) 5:00 p.m. (New York time) on March 31, 2004; (ii) the
occurrence of an Event of Default other than a Specified Event of Default, and
(iii) the failure by any of the Loan Parties to comply with any of the
provisions of this Fourth Amendment or any other documents or agreements to be
entered into or delivered in connection with this Fourth Amendment. The
Forbearance Period shall automatically terminate and expire on the Termination
Date without any requirement for notice to any of the Loan Parties or any other
Person and all rights, remedies and privileges of the Lender under the Loan
Agreement and the other Loan Documents (whether at law, in equity or otherwise)
shall be available to, and capable of exercise by, the Lender.

SECTION 2.3   Loan Documents Still in Force. Each of the Loan Parties hereby
(a) ratifies and affirms in their entirety the Loan Agreement and each of the
other Loan Documents to which it is a party and (b) subject to the forbearance
in respect of the Specified Events of Default set forth in Section 2.2 above,
agrees that the Loan Agreement and each of the other Loan Documents shall remain
in full force and effect throughout the Forbearance Period and from and after
the expiration or termination thereof. Each of the Loan Parties agrees that
nothing in this Fourth Amendment shall, or shall be construed to: (i) impair the
validity, perfection or priority of any lien or security interest created under
or evidenced by the Loan Agreement (including, without limitation, Section 2.12
thereof) or any Mortgage, Equity Pledge Agreement, Collateral Security
Instrument or any other Loan Document to which it is a party; (ii) waive or
impair any rights, powers or remedies of the Lender un der the Loan Documents
upon termination of the Forbearance Period, all of which are expressly reserved;
(iii) require the Lender to extend the Forbearance Period, or grant any cure
periods or additional forbearance periods, or otherwise modify this Fourth
Amendment or any of the other Loan Documents; or (iv) waive any of the Specified
Events of Default.

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ARTICLE III
AMENDMENTS TO CREDIT AGREEMENT

SECTION 3.1   Amendments.

      (a)      Section 1.1 of the Loan Agreement is hereby amended by adding
thereto in the appropriate alphabetical order the following definitions:

"Alterra's Cash Flow" shall mean, for any applicable fiscal quarter, the net
income of Parent for such quarter, adjusted to add thereto, without duplication,
(a) interest expense, (b) income tax expense, (c) depreciation and amortization
expense, and (d) any other noncash adjustments, in each case determined in
accordance with generally accepted accounting principles, consistently applied;
provided, that for purposes of calculating Atlerra's Cash Flow, the net income
of the Parent shall be after deducting any general and administrative expenses
or operating expenses (other than those described in clauses (a) through (d)
above) of the Parent.

"Alterra's Debt" shall mean all debt, guarantees and all convertible debt issued
by Parent, including zero coupon instruments and non-cash paying securities
(such as convertibles and PIKs), but excluding preferred equity securities that
are not convertible to debt, all of the above on a consolidated basis with
Parent's subsidiaries and other affiliates, determined in accordance with
generally accepted accounting principles, consistently applied.

"Bankruptcy Code" means The Bankruptcy Reform Act of 1978, as heretofore and
hereafter amended, and codified as 11 U.S.C. Section 101 et seq.

"Bankruptcy Court" means the United Sates Bankruptcy Court for the District of
Delaware or any other court having jurisdiction over the Conforming Bankruptcy
Proceeding from time to time.

"Cash Collateral Agreement" means that certain Cash Collateral Account Agreement
dated as of August 22, 2001 among LaSalle Bank, N.A., the Borrower and the
Lender.

"Cash Management Agreements" means, collectively, the Cash Collateral Agreement,
the Collection Account Agreement and the Disbursement Agreement.

"Collection Account Agreement" means that certain Collection Account Agreement
dated as of May 22, 1998 among the Borrower, the Lender and Firstar Bank, N.A.

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"Commencement Date" means the date of commencement of any Conforming Bankruptcy
Proceeding

"Conforming Bankruptcy Proceeding" means a proceeding in the Bankruptcy Court
(i) instituted pursuant to a voluntary petition for reorganization filed by the
Parent under Chapter 11 of the Bankruptcy Code (or an involuntary petition filed
by any Person that is converted by the Parent into a voluntary petition under
Chapter 11 of the Bankruptcy Code within 30 days after the filing of such
involuntary petition) and (ii) in which the Parent at all times during the
pendency of such proceeding pursues the confirmation of a Conforming Plan.

"Conforming Plan" shall mean a plan of reorganization of the Parent that
contains each of the following elements and will result upon confirmation in:

      (i)      the rights, remedies and claims of the Lender under the Guaranty
and any of the other Loan Documents to which the Parent is a party, in each case
as modified by this Fourth Amendment, shall be unimpaired under the Conforming
Plan and shall be fully enforceable and shall leave unaltered and unimpaired all
rights, remedies, and claims of the Lender against the Borrower and its assets
in accordance with their terms;

      (ii)      the Parent and its wholly owned subsidiaries continuing to own
or operate not less than three hundred (300) assisted living residences;

      (iii)      the ratio of Alterra's Debt to Alterra's Cash Flow not
exceeding 11:1 as of the end of the fiscal quarter during which the Conforming
Plan is confirmed;

      (iv)      upon the confirmation and implementation of the Conforming Plan,
at least seventy percent (70%) of the Parent's voting stock on a fully diluted
basis being owned by (A) Persons who had, prior to filing of the bankruptcy
petition instituting the Conforming Bankruptcy Proceeding, (1) an ownership or
other interest in Parent's stock or debt (including debt of Parent's
subsidiaries guaranteed by Parent) or (2) a joint venture ownership interest in
Parent's assets or Parent's subsidiaries' assets, and (B) Related Persons of
Persons described in the foregoing clause (A), but excluding each such Person or
Related Person who: (1) held, together with all Related Persons of such Person
or Related Persons, less than a Material Investment in the Parent on the
Commencement Date and (2) subsequent to the Commencement Date and prior to or
contemporaneously with the confirmation and implementation of such plan
increases their respective investment (on a cost basis) in Parent by more than
ten perc ent (10%);

      (v)      the Parent ratifying, and assuming all of its obligations under,
the Guaranty, the Manager's Subordinations, the Cash Management Agreements, this
Fourth Amendment and the other Loan Documents to which it is a party (as
modified by the Fourth Amendment) and the Management Agreements; and

      (vi)      all "claims" (as such term is defined in Section 101(5) of the
Bankruptcy Code) of the Parent, if any, against the Borrower being subordinated
to the prior indefeasible payment in cash in full of all Indebtedness; provided,
however, that the Borrower shall be permitted (A) to pay a Management Fee to the
Parent during the Forbearance Period subject to and in accordance with the terms
and provisions of the Fourth Amendment, and (B) to reimburse the Parent for
operating expenses subject to and in accordance with the terms and provisions of
the Fourth Amendment and the Cash Management Agreements.

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"Default Interest" shall have the meaning given to such term in the Disbursement
Agreement.

"Disbursement Agreement" means that certain letter agreement dated as of
August 22, 2001 among the Borrower, the Parent, the Subsidiary and the Lender.

"Forbearance Period" shall have the meaning given to such term in the Fourth
Amendment.

"Fourth Amendment" means the Fourth Amendment to Loan Agreement and Forbearance
Agreement dated as of November 5, 2002, among the Loan Parties and the Lender.

"Fourth Amendment Date" has the meaning given to the term "Effective Date" in
the Fourth Amendment.

"Loan Parties" means, collectively, the Borrower, the Parent (whether in its
capacity as Guarantor, Manager or otherwise) and the Subsidiary.

"Management Fee" means a fee payable to the Parent (in its capacity as Manager)
on a monthly basis for managing the Facilities in an amount not to exceed, in
the aggregate, four percent (4%) of the Gross Revenue of each Facility during
the immediately preceding month.

"Material Investment" as used in the definition of Conforming Plan, shall mean
an investment in stock of the Parent or debt of the Parent or of any subsidiary
of the Parent in the amount of at least Two Million Dollars ($2,000,000) on a
cost basis.

"Net Proceeds" means, with respect to any Transfer of any Facility or any
portion thereof, all Proceeds less all customary fees and expenses reasonably
acceptable to the Lender and actually incurred by the Borrower in connection
with such Transfer; provided, that in no event shall any legal fees of counsel
for the Borrower be deducted from such Proceeds.

"Overview of Potential Restructured Company" shall have the meaning given to
such term in Section 6.1(b) of the Fourth Amendment.

"Quarterly Test Date" means the last day of each March, June, September and
December.

"Related Person" shall mean, as to a specified Person, another Person related
to, affiliated with or who controls, is controlled by or is under common control
with such specified Person.

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"Secured Financing Capitalization Overview" shall have the meaning given to such
term in Section 6.1(b) of the Fourth Amendment.

"Termination Date" shall have the meaning given to such term in the Fourth
Amendment.

"Transfer" means, with respect to any Person, any sale, lease, transfer,
assignment, pledge, refinancing or any other disposition or encumbrance of, or
other realization upon, or receipt of proceeds with respect to, any rights,
interests, property or other assets of such person.

      (b)      The following definitions appearing in Section 1.1 of the Loan
Agreement are hereby amended to read in their entirety as follows:

"Debt Service Coverage Ratio" means, with respect to any three (3) month period
ending on a Quarterly Test Date, the quotient obtained by dividing (a) Adjusted
Net Operating Income for all of the Facilities for such period by (b) the sum of
(x) Debt Service for all of the Facilities for such period; provided, that for
purposes of calculating the Debt Service Coverage Ratio, Debt Service shall not
include any Mandatory Prepayments, Default Interest or Late Charges.

"Maturity Date" means March 31, 2004.

      (c)      Section 2.6(b) of the Loan Agreement is hereby amended to read in
its entirety as follows:

"Mandatory Prepayments. The Borrower shall make one or more prepayments (each, a
"Mandatory Prepayment") of Principal Indebtedness, indefeasibly in cash, in an
aggregate amount of at least (i) $8,668,656.00 during the period beginning on
the Fourth Amendment Date and ending on January 31, 2003, and (ii) $24,668,656
during the period beginning on the Fourth Amendment Date and ending on September
30, 2003. All such Mandatory Prepayments shall be accompanied by the payment of
(i) all accrued and unpaid interest (other than Default Interest) on the
Principal Indebtedness prepaid on the date of such Mandatory Prepayment and (ii)
all other fees, charges and expenses (other than Late Charges) due and payable
to the Lender on the date of such Mandatory Prepayment; provided, that in the
event that the Lender exercises its right to apply any amount in repayment of
the Indebtedness in accordance with the Cash Management Agreements during the
periods set forth in clauses (i) and (ii ) of the first sentence of this Section
2.6(b), such amount shall be deemed a Mandatory Prepayment for purposes of this
Section 2.6(b)."

      (d)      Section 2.6(c) of the Loan Agreement is hereby amended to read in
its entirety as follows:

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"Release of Mortgaged Property. The Borrower may from time to time obtain a
release of each Mortgaged Property, as identified in Exhibit A attached hereto
and by this reference incorporated herein, from the lien of the Mortgage
recorded against such Mortgaged Property (the "Mortgage Release"), provided
that: (i) the Borrower shall have given the Lender not less than thirty (30)
days prior written notice, specifying (A) the expected Prepayment Date on which
to effectuate the Mortgage Release (the "Mortgage Release Date") and (B) the
Mortgaged Property to be released from the lien of its respective Mortgage;
(ii) simultaneously with each Mortgage Release, the Borrower shall sell or
otherwise convey the Mortgaged Property in question to a third party for fair
value on an arm's length basis; (iii) on the Mortgage Release Date, the Borrower
shall have paid or cause to be paid to the Lender one-hundred percent (100%) of
the Net Proceeds of such sale or co nveyance; (iv) that the consideration for,
and the Net Proceeds of, such sale or conveyance (A) shall be cash, and
(B) shall be in an amount acceptable to the Lender in its sole discretion with
respect to all such Mortgaged Properties; (v) no Default or Event of Default
(other than the Specified Events of Default) shall have occurred and be
continuing at the time of the Mortgage Release Date; (vi) the Borrower shall, at
its sole cost and expense, prepare any and all documents necessary to effect the
Mortgage Release, all of which shall be subject to the approval of the Lender in
its sole discretion, and which (other than closing statements and other
documentation typically not finalized until the Mortgage Release Date) shall be
delivered to the Lender at least ten (10) days prior to the Mortgage Release
Date; (vii) the Borrower shall pay all costs and expenses incurred by the Lender
or the Lender's loan servicer (including, but not limited to attorney's fees and
disbursements) in connecti on with the review execution and delivery of the
Mortgage Release; (viii) the Borrower, the Parent and the Subsidiary shall
execute and deliver to the Lender a release and indemnity satisfactory in form
and substance to the Lender in its sole discretion; and (ix) the Lender shall
have received such other information, materials and documents as the Lender or
its counsel may request with respect to such Mortgage Release, which
information, materials and documents shall be satisfactory in form and substance
to the Lender and its counsel. All prepayments made pursuant to this Section
shall be applied in accordance with the provisions of Section 2.7; provided,
however, such prepayment, if any, shall not be applied to the payment of accrued
and unpaid Default Interest and Late Charges at any time prior to the
Termination Date.

      (e)      Article II of the Loan Agreement is hereby amended to include the
following new Section 2.17: "Payment of Default Interest. In consideration of
the forbearance granted by the Lender pursuant to the Fourth Amendment, the
Borrower hereby agrees to pay to the Lender, on the Termination Date, default
interest in an amount equal to three percent (3%) of the outstanding Principal
Indebtedness, which amount shall be applied in reduction of accrued and unpaid
Default Interest."

      (f)      Section 7.1(a) of the Loan Agreement is hereby amended by
deleting the word "and" appearing at the end of clause (xx)(2) thereof and by
inserting the following new clauses immediately after clause (xxi):

"(xxii)  if any of the Loan Parties, any of their respective affiliates or any
other Related Person seeks to challenge or supports any challenge to the
validity or approval of the Fourth Amendment, or impairs or attempts to impair
the rights, remedies or privileges of the Lender under, files a plan of
reorganization that provides for the impairment of the rights, remedies or
privileges of the Lender under, the Loan Agreement, the Guaranty or any of the
other Loan Documents (including, without limitation, this Fourth Amendment) or
under applicable law;

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(xxiii) if any order is entered in any court of competent jurisdiction that
limits or restricts any right, remedy or privilege the Lender may have under the
Loan Agreement, the Guaranty or any of the other Loan Documents (including,
without limitation, this Fourth Amendment) or under applicable law;

(xxiv)  if the Parent shall have failed to file a voluntary petition commencing
the Conforming Bankruptcy Proceeding on or prior to December 31, 2002;

(xxv)  if the Parent shall have failed to have filed a Conforming Plan within
ninety (90) days after the filing of the Conforming Bankruptcy Proceeding;

(xxvi)  if the United States Bankruptcy Court shall have failed to approve a
disclosure statement within one hundred eighty (180) days after the filing of
the Conforming Bankruptcy Proceeding;

(xxvii)  if the United States Bankruptcy Court shall have failed to enter an
order, within ninety (90) days after the filing of the Conforming Bankruptcy
Proceeding authorizing the Parent to assume in the Conforming Bankruptcy
Proceeding all of its obligations under the Loan Agreement and the other Loan
Documents (including, without limitation, the Fourth Amendment and the Cash
Management Agreements);

(xxviii)  if the Conforming Plan shall not have been confirmed and become
effective within one (1) year after the filing of the Conforming Bankruptcy
Proceeding;

(xxix)  if the Conforming Bankruptcy Proceeding is (i) dismissed, except upon
the motion of Parent, (ii) is converted into any proceeding, voluntary or
involuntary, under Chapter 7 of the Bankruptcy Code, or (iii) a trustee or
examiner with expanded powers shall be appointed or elected;

(xxx)  if a United States Bankruptcy Court shall have entered an order or orders
authorizing the use of cash collateral or an alternative cash management system
that is inconsistent with, or would constitute a breach under, the Cash
Management Agreements, or would impair the Lender's sole dominion and control
provided in the Cash Management Agreements;

(xxxi)  if any voluntary or involuntary bankruptcy petition is filed by or
against the Parent commencing a proceeding that is not a Conforming Bankruptcy
Proceeding and is not converted to a Conforming Bankruptcy Proceeding within
thirty (30) days after the filing of such involuntary petition against Parent;

(xxxii)  if a plan of reorganization shall be filed with respect to the estate
of the Parent in any bankruptcy proceeding other than a Conforming Plan; and

(xxxiii)  if the Bankruptcy Court shall enter any order that conflicts with, or
is otherwise materially inconsistent with, the Conforming Plan."

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      (g)      The second sentence of Section 8.6 of the Loan Agreement is
hereby amended to read in its entirety as follows:

"A copy of all notices, consents, approvals and requests directed to Lender
shall be delivered concurrently to each of the following: Clifford Chance US
LLP, 200 Park Avenue, New York, New York 10166-0153, Attention: William R.
Wagner, Esquire, Telefax Number (212) 878-8375; The Capital Company of America
LLC, Two World Financial Center, Building B, New York, NY 10281-1198, Attention:
Stuart Simon, Managing Director, Telefax Number (212) 667-1095; copies of
notices to Borrower shall be delivered concurrently to each of the following:
Rogers & Hardin, 2700 International Tower, Peachtree Center, 229 Peachtree
Street, N.E., Atlanta, Georgia 30303, Attention: Carolyn Dobbins, Esquire,
Telefax Number (404) 525-2224, and Alterra Healthcare Corporation, 10000
Innovation Drive, Milwaukee, Wisconsin 53226, Attention: Mark Ohlendorf, Telefax
Number (414) 918-5055."

      (h)      Exhibit A to the Loan Agreement is hereby deleted in its entirety
and replaced with a new "Exhibit A" in the form attached hereto as Exhibit A.

ARTICLE IV CASH MANAGEMENT

SECTION 4.1   Cash Management.      Throughout the Forbearance Period and until
the Indebtedness is indefeasibly repaid in full in cash, the cash management
arrangements set forth under the Cash Management Agreements shall remain
unmodified and in full force and effect and the forbearance hereunder shall not
preclude Lender from exercising any rights or remedies under any Cash Management
Agreement at any time.

      (b)      Notwithstanding the foregoing Section 4.1(a), the Borrower shall
be permitted to pay a Management Fee to the Parent beginning in April 2003 for
the month of March 2003 and for each month thereafter during the Forbearance
Period; provided, that as a condition to the payment of a Management Fee during
any month, the Debt Service Coverage Ratio as of the most recent Quarterly Test
Date occurring prior to such month shall not have been less than 1.20:1.

ARTICLE V
AGREEMENT REGARDING FORECLOSURE

SECTION 5.1   Escrow Arrangements. The Borrower shall, on or prior to the
Effective Date, place into escrow with an escrow agent acceptable to the Lender,
such documents, instruments, stipulations or certificates required by the Lender
or a Title Insurer to effect a stipulated or consensual foreclosure under the
laws of the jurisdiction where each Facility is located. The Borrower further
agrees that it shall, in accordance with Section 5.1(o) of the Loan Agreement ,
execute and deliver to the Lender such documents, instruments, certificates,
assignments, releases and other writings, and do such other acts as may be
required by the Lender or a Title Insurer for the issuance of a title insurance
policy in respect of any such transfer. In lieu of or in addition to placing the
foregoing documents into escrow with respect to each Facility, if the Lender so
elects, the Borrower and the Parent agree to place into escrow a deed for each
Facility pursuant to escrow arrangements satisfactory to the Lender. The de ed
for each Facility shall transfer to the Lender (or the Lender's designee), good,
marketable and insurable title to the applicable Facility; provided, that the
Liens evidenced by the Mortgages, the Collateral Instruments and the other Loan
Documents with respect to the Facilities shall survive any transfer or
recordation of such deeds and in no event shall any such Lien merge with the
title evidenced by any deed. Each of the Loan Parties further covenants and
agrees that it shall promptly execute and deliver to the Lender such other
documents, instruments, certificates, assignments, releases and other writings,
and do such other acts as may be required by the Lender in connection with the
provisions of this Article V.

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SECTION 5.2   Foreclosure. Each of the Loan Parties hereby agrees to cooperate,
and to cause its respective affiliates to cooperate, with the Lender in any
action after the Termination Date (i) to foreclose the Mortgages, (ii) to
exercise any other rights, remedies and powers available to the Lender under the
Loan Documents or under applicable law (including, without limitation, any
request by the Lender for the appointment of a receiver), or (iii) to sell or
cause the sale of any Facilities after a recordation of deeds or foreclosure of
the Mortgages. The Borrower, the Parent and the Subsidiary agree (i) that they
will not seek to restrict or limit any rights or remedies of the Lender or
prevent the exercise by the Lender of any such rights or remedies after the
Termination Date and (ii) that any stay imposed by operation of Section 362 in
any voluntary or involuntary bankruptcy proceeding of the Parent (including a
Conforming Bankruptcy Proceeding) shall be lifted, to the extent applicable, in
order to permit th e Lender to exercise after the Termination Date all rights
and remedies under the Loan Documents and under applicable law with respect to
the Parent and its assets.

ARTICLE VI
COVENANTS OF THE LOAN PARTIES

SECTION 6.1   Cooperation. (a) If any voluntary or involuntary bankruptcy
petition is filed by or against the Parent (other than a Conforming Bankruptcy
Proceeding) or the Borrower, each of the Loan Parties hereby agrees to
cooperate, and to cause its respective affiliates to cooperate, with the Lender
in any motion seeking relief from the automatic stay and, consistent with
Section 8.25 of the Loan Agreement, agree not to oppose or contest, and to cause
their affiliates not to oppose or contest the enforceability of this provision
or Section 8.25 of the Loan Agreement.

      (b)      Each of the Parent and the Borrower further agree that to the
extent it is not prohibited from doing so pursuant to the confidentiality
agreements with its other creditors it shall promptly provide to the Lender, or
cause to be promptly provided to the Lender, copies of (i) any and all plans of
reorganization, lock-up agreements, financial analyses, pro forma business
projections and all other notices, documents and materials issued by the Parent
to its creditors, generally, at any time in connection with the proposed filing
by the Parent of a voluntary petition under Chapter 11 of the Bankruptcy Code,
as contemplated by the Conforming Bankruptcy Proceeding, and (ii) copies of the
"Secured Financing Capitalization Overview" the "Overview of Potential
Restructured Company" as and when such reports shall be updated and distributed
to its other creditors from time to time and, in each case, substantially in the
form delivered to the Lender on October 16, 2002.

      (c)      If any voluntary or involuntary bankruptcy petition is filed by
or against the Parent (including a Conforming Bankruptcy Proceeding), the Parent
agrees that it will assume all of its obligations under the Guaranty, this
Fourth Amendment, the Cash Management Agreements and the other Loan Documents to
which it is a party.

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      (d)      Each of the Loan Parties further acknowledges and agrees that the
foregoing provisions (i) were bargained-for by the Lender and were integral and
essential to the Lender's agreement to forebear from the exercise of certain
rights and remedies now available to the Lender under the Loan Documents; (ii)
shall survive any subsequent breach or default by the any of the Loan Parties;
and (iii) may be specifically enforced against any of the Loan Parties by the
Lender.

SECTION 6.2   Financial Advisor. The Borrower shall at all times retain a
financial advisor reasonably acceptable to the Lender to assist it in the
development of strategic alternatives for the sale of all or substantially all
of the Facilities and the repayment in full of all Indebtedness.

SECTION 6.3   Environmental Reports. The Borrower shall, within ten (10) days of
receiving a written request from the Lender, cooperate with the Lender and
initiate all necessary and appropriate action required for the preparation and
delivery to the Lender of environmental reports, engineering reports, surveys or
appraisals, or such other reports in respect of the Facilities as the Lender may
require.

SECTION 6.4   Management of the Facilities. The Parent (for itself and in its
capacity as Manager) hereby covenants and agrees that:

     (a)      it shall continue at all times (whether or not a Management Fee
may be payable) to manage the Facilities: (i) during the Forbearance Period,
(ii) after the Termination Date, (iii) during the pendency of any bankruptcy
proceeding filed by or against the Parent (including a Conforming Bankruptcy
Proceeding), (iv) from and after it emerges from bankruptcy and (v) after the
Lender acquires title to the Facilities upon a transfer and recordation of the
deeds held in escrow pursuant to Section 5.1 of the Fourth Amendment or a
foreclosure of any one or more mortgages;

      (b)      notwithstanding any term or provision to the contrary contained
in any Management Agreement or Manager's Subordination, it shall not be entitled
to receive any fee from the Borrower for managing the Facilities other than the
Management Fee in accordance with the terms of this Fourth Amendment;

      (c)      notwithstanding any term or provision to the contrary contained
in any Management Agreement or Manager's Subordination, it shall not terminate
any of its Management Agreements without the prior written consent of the
Lender.

ARTICLE VII
CONDITIONS TO EFFECTIVENESS

SECTION 7.1   Effective Date. This Fourth Amendment shall become effective on
that date (the "Effective Date") when all of the conditions set forth in this
Article VII have been satisfied.

      (a)      The Lender shall have received counterparts of this Fourth
Amendment executed on behalf of each of the Loan Parties.

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      (b)      The Lender shall have received such other information, materials,
and documents as either the Lender or Clifford Chance US LLP ("Clifford
Chance"), counsel for the Lender, may reasonably request, which information,
materials and documents shall be satisfactory in form and substance to the
Lender and Clifford Chance.

      (c)      Each of the Loan Parties shall have obtained all consents and
waivers from any Person necessary for the execution, delivery and performance of
this Fourth Amendment.

      (d)      The representations and warranties made by each of the Loan
Parties herein shall be true and correct in all material respects.

      (e)      The Lender shall have received copies of any environmental
reports, engineering reports, title reports, surveys, appraisals and other
reports and information in the possession of any of the Loan Parties in respect
of the Facilities (other than those delivered in connection with the closing
under the Loan Agreement with respect to each Facility).

      (f)      All of the documents, stipulations, certificates, deeds, or other
instruments or agreements that may required by the Lender in accordance with
Section 5.1 of this Agreement shall have been placed into escrow and all matters
related thereto (including, without limitation, title insurance) shall be in
form and substance satisfactory to the Lender in its sole discretion.

      (g)      The Lender shall have received all Schedules to this Fourth
Amendment (including any schedules to Exhibit B), which Schedules shall in form
and substance be satisfactory to the Lender in its sole discretion.

      (h)      The Lender shall have received payment in full of all outstanding
invoices for costs and expenses owing to the Lender under the terms of the Loan
Agreement, the Cash Management Agreements or any of the other Loan Documents
including without limitation all fees and expenses due to Clifford Chance and
any local counsel.

      (i)      The Lender shall have received an opinion or opinions of counsel
to the Borrower, the Parent and the Subsidiary in form and substance reasonably
acceptable to the Lender and Clifford Chance, dated as of the Effective Date and
covering such states as the Lender shall reasonably require.

      (j)      All legal matters in connection with this Fourth Amendment, the
Loan Agreement and the other Loan Documents shall be reasonably satisfactory to
Clifford Chance.

      (k)      The Lender shall have received a copy of an unaudited statement
of net worth of the Parent, which statement shall be in form and substance
satisfactory to the Lender in its sole discretion.

      (l)      Cohen & Steers Capital Advisors LLC shall have executed and
delivered to the Lender a confidentiality agreement or other similar agreement
with respect to the Loan, this Fourth Amendment and any other Loan Document,
instrument or agreement entered into in connection with the Loan.

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ARTICLE VIII
REPRESENTATIONS AND WARRANTIES

SECTION 8.1   Representations and Warranties. In order to induce the Lender to
enter into this Fourth Amendment, each of the Loan Parties hereby represents and
warrants as to itself and for the benefit of the Lender as follows:

      (a)      Each Loan Party (i) is a duly organized and validly existing
corporation in good standing under the laws of the State of its formation, (ii)
has the requisite corporate power and authority to carry on its business as now
being conducted, (iii) is duly qualified to do business in each jurisdiction in
which the nature of its business, the Property or any of its collateral makes
such qualification necessary or desirable, and (iv) has the requisite corporate
power to execute and deliver, and perform its obligations under, this Fourth
Amendment.

      (b)      The execution and delivery of this Fourth Amendment by each of
the Loan Parties, and the performance of its respective obligations hereunder
(i) have been duly authorized by all requisite corporate action on the part of
such Loan Party, (ii) will not violate any provision of any applicable legal
requirements, decree, injunction or demand of any court or other governmental
authority, any organizational document of such Loan Party or any indenture or
agreement or other instrument to which such Loan Party is a party or by which
such Loan Party is bound, (iii) will not be in conflict with, result in a breach
of, or constitute (with due notice or lapse of time or both) a default under, or
result in the creation or imposition of any Lien of any nature whatsoever upon
any of the property or assets of such Loan Party pursuant to, any such indenture
or agreement or instrument and (iv) have been duly authorized, executed and
delivered by such Loan Party. Except as may have been obtained or filed on or
prior to the da te hereof, no Loan Party is required to obtain any consent,
approval or authorization from, or to file any declaration or statement with,
any governmental authority or other agency in connection with or as a condition
to the execution, delivery or performance of this Fourth Amendment.

      (c)      No statement of fact made by or on behalf any Loan Party in this
Fourth Amendment or in any other document or certificate delivered to Lender by
any Loan Party contains any untrue statement of a material fact or omits to
state any material fact necessary to make statements contained herein or therein
not misleading. There is no fact presently known to any Loan Party that has not
been disclosed to Lender which materially adversely affects, or might materially
adversely affect, the business, operations or condition (financial or otherwise)
of the Loan Parties.

      (d)      Upon the Effective Date, this Fourth Amendment, the Guaranty, the
Loan Agreement and each of the other Loan Documents to which each Loan Party is
a party will constitute the legal, valid and binding obligation of such Loan
Party, enforceable in accordance with its terms, in each case subject, as to
enforceability, to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally and general equitable principles (whether considered
in a proceeding at law or in equity) and an implied covenant of good faith.

      (e)      There are no existing claims by any Loan Party against the Lender
and there are no offsets or defenses by any Loan Party to the payment of any
amounts required under the Loan Documents or otherwise to the enforcement by the
Lender of the Loan Documents.

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      (f)      Except with respect to the matters disclosed on Schedule III and
the occurrence of the Specified Events of Default, the representations and
warranties set forth in Article IV of the Loan Agreement and in each other Loan
Document are true and correct in all material respects with the same effect as
if made on the Effective Date (unless stated to relate solely to an earlier
date, in which case such representations and warranties shall be true and
correct in all material respects as if made on and as of such earlier date).

      (g)      Except with respect to the occurrence of the Specified Events of
Default, after giving effect to the amendments set forth in this Fourth
Amendment, no Default or Event of Default has occurred and is continuing.

      (h)      The Borrower has represented to the Lender that the Borrower is
not currently engaging in any activity, and will not engage in any activity, (i)
to prepare or otherwise to file, with respect to itself, a bankruptcy,
insolvency or reorganization petition or otherwise institute insolvency
proceedings or otherwise seek any relief under any laws relating to the relief
under any laws related to the relief from debts or the protection of debtors
generally, or (ii) to seek or consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator, custodian or any similar official.

SECTION 8.2   Additional Representations as to the Facilities.  In order to
induce the Lender to enter into this Fourth Amendment, each of the Loan Parties
hereby makes as to itself and for the benefit of Lender each of the
representations and warranties set forth on Annex I attached hereto.

ARTICLE IX
ACKNOWLEDGEMENT, RELEASE AND INDEMNITY

SECTION 9.1   Acknowledgement.      Each of the Loan Parties: (i) hereby
reconfirms, acknowledges and agrees as of the date hereof that it is validly and
justly indebted to the Lender for the payment of all Indebtedness, without
defense, counterclaim, offset, cross-complaint, claim or demand of any kind or
nature whatsoever; and (ii) further confirms, acknowledges and agrees that the
outstanding amount of the Principal Indebtedness is $72,324,656.00 as of the
date hereof.

      (b)      Release. Each of the Loan Parties, for itself and each of its
executors, administrators, successors, legal representatives and assigns and all
persons claiming by, through or under them, and each of their respective parent,
subsidiary and/or affiliated companies and the shareholders, officers,
directors, partners, members, employees, agents, representatives and attorneys
of all of the foregoing and their respective heirs, executors, administrators,
successors, legal representatives and assigns and all persons claiming by,
through or under them or any of them (all hereinafter collectively referred to
as the "Releasing Parties"), does hereby remise, release, acquit and forever
discharge the Lender and Nomura, and their respective attorneys, successors and
assigns, parent, subsidiary and/or affiliated companies and the shareholders,
officers, directors, partners, members, employees, agents, representatives and
attorneys of all of the foregoing and their respective heirs, executors, admi
nistrators, attorneys, successors, legal representatives and assigns (all
hereinafter collectively referred to as the "Released Parties") of, from and
against any and all manner of actions, causes of actions, choses in action,
suits, debts, dues, sums of money, compensation, accounts, rentals, commissions,
reckonings, bonds, bills, specialties, covenants, rights, contracts,
controversies, agreements, promises, costs, damages, judgments, executions,
claims and demands whatsoever (regardless of by whom raised) in law or in
equity, which the Releasing Parties, and any of them, and anyone claiming by,
through or under any of the Releasing Parties now have or ever had against the
Lender, the Released Parties or any of them, singly or in any combination, on
account of, arising out of, or in connection with any thing, cause, matter,
transaction, act or omission of any nature whatsoever of, or involving any of
the Released Parties from the beginning of time through the date hereof which in
any way relates to the Loans, this Fourth Amendment, the Loan Agreement, any
other Loan Document or the transactions contemplated thereby, or any Released
Party's relationship with any of the Releasing Parties (collectively, the
"Claims"). Each of the Loan Parties hereby covenants and agrees, for and on
behalf of itself and the Releasing Parties, that it shall forever refrain, and
is hereby estopped, from instituting, prosecuting, asserting or otherwise
pursuing or pressing against any of the Released Parties any Claims (whether or
not such Claims are now existing or are hereafter discovered).

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      (c)      Indemnity. Immediately effective from and after the date hereof,
each of the Loan Parties does hereby agree jointly and severally to indemnify
(and defend with counsel satisfactory to the Lender) and hold harmless the
Lender and the other Released Parties from and against any and all manner of
actions, causes of actions, choses in action, suits, debts, dues, sums of money,
compensation, accounts, rentals, commissions, reckonings, bonds, bills,
specialties, covenants, rights, contracts, controversies, agreements, promises,
costs (including attorneys fees and disbursements), damages, judgments,
executions, claims and demands whatsoever, whether known or unknown, foreseen or
unforeseen (regardless of by whom raised) in law or in equity, which (i) one or
more of the Releasing Parties, and/or (ii) anyone claiming by, through or under
one or more of the Releasing Parties and/or (iii) any other person or entity
whether related or unrelated to one or more of the Releasing Parties, including,
but not lim ited to creditors or equity security holders of the Releasing
Parties, now have, ever had or may ever have from the beginning of time to the
date hereof against the Released Parties or any of them, singly or in any
combination, on account of, arising out of, or in connection with any thing,
cause, matter, transaction, act or omission of any nature whatsoever of, or
involving the Loans, the Loan Agreement, this Fourth Amendment or any other Loan
Document or any Released Party's relationship with the Releasing Parties.

ARTICLE X
MISCELLANEOUS

SECTION 10.1   Cross-References

. Any reference in this Fourth Amendment to any Section is, unless otherwise
specified, to such Section of this Fourth Amendment.

SECTION 10.2   Loan Document Pursuant to Loan Agreement. This Fourth Amendment
is a Loan Document executed pursuant to the Loan Agreement and shall (unless
otherwise expressly indicated therein) be construed, administered and applied in
accordance with the terms and provisions of the Loan Agreement, including
Article VII thereof. Each of the Loan Parties hereby agrees that its failure to
comply with any provision of this Fourth Amendment shall constitute an immediate
Event of Default (without regard to any applicable cure period) and shall cause
the forbearance granted hereunder to cease to be in effect immediately and
without the requirement of any prior notice from or further action on the part
of the Lender.

SECTION 10.3   Counterparts, etc. This Fourth Amendment may be executed in any
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same instrument. Delivery of an executed counterpart of a signature page of this
Fourth Amendment by facsimile shall be effective as delivery of a manually
executed counterpart of this Fourth Amendment.

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SECTION 10.4   Governing Law. THIS FOURTH AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.

SECTION 10.5  Successors and Assigns. This Fourth Amendment shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.

SECTION 10.6   Entire Agreement. This Fourth Amendment and the other Loan
Documents set forth the entire understanding and agreement of the parties hereto
in relation to the subject matter hereof and thereof and supercede any prior
negotiations and agreements among the parties relative to such subject matter.
No promise, condition, representation or warranty, express or implied, not
herein or therein set forth shall bind any party hereto, and no one of them has
relied on any such promise, condition, representation or warranty. Each of the
parties hereto acknowledges that, except as otherwise expressly stated in this
Fourth Amendment, no representations, warranties or commitments, express or
implied, have been made by any party to any other party with respect to the
subject matter of this Fourth Amendment.

SECTION 10.7   Full Force and Effect. This Fourth Amendment shall be limited
precisely as written and shall not be deemed (a) to be a consent granted
pursuant to, or a waiver or modification of, any other term or condition of the
Loan Agreement, the other Loan Documents or any of the instruments or agreements
referred to therein or a waiver of, or forbearance with respect to, any other
Default or Event of Default (other than the Specified Events of Default) under
the Loan Documents, whether or not known to the Lender or (b) to prejudice any
other right or remedy which the Lender may now have or have in the future under
or in connection with the Loan Agreement, the other Loan Documents or any of the
instruments or agreements referred to therein. Subject to the forbearance in
respect of the Specified Events of Default in Section 2.2 above, the Loan
Agreement and each of the other Loan Documents shall continue in full force and
effect in accordance with the provisions thereof on the Effective Date. As us ed
in the Loan Agreement, the terms "Loan Agreement," "this Agreement," "herein,"
"hereafter," "hereto," "hereof," and words of similar import shall, unless the
context otherwise requires, mean the Loan Agreement as modified by this Fourth
Amendment. References to the terms "Agreement" or "Loan Agreement" appearing in
the Exhibits or Schedules to the Loan Agreement or in the other Loan Documents
shall, unless the context otherwise requires, mean the Loan Agreement as
modified by this Fourth Amendment.

SECTION 10.8   Invalidity; Severability. Whenever possible, each provision of
this Fourth Amendment shall be interpreted in such manner as to be effective and
valid under all applicable laws and regulations. Any provision of this Fourth
Amendment which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

SECTION 10.9   Headings. The headings of this Fourth Amendment are for the
purposes of reference only and shall not affect the construction of, or be taken
into consideration in interpreting, this Fourth Amendment.

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SECTION 10.10   Further Assurances. Each of the Loan Parties hereby expressly
acknowledges and agrees to enter into such other or further documents, and to
take such other or further actions that may be necessary or, in the opinion of
the Lender, desirable to perfect, preserve or protect the liens and security
interests created, permitted or contemplated under any of the Loan Documents.

SECTION 10.11   Consultation with Advisors. Each of the Loan Parties
acknowledges that it has consulted with counsel and with such other experts and
advisors as it has deemed necessary in connection with the negotiation,
execution and delivery of this Fourth Amendment. This Fourth Amendment shall be
deemed to have been jointly drafted and shall be construed without regard to any
presumption or rule requiring that it be construed against the party causing
this Fourth Amendment or any part hereof or thereof to be drafted.

SECTION 10.12   Survival.   All representations, warranties, covenants,
agreements, undertakings, waivers and releases of each of the Loan Parties
contained herein shall be deemed to have been relied upon by the Lender
(notwithstanding any investigation heretofore or hereafter made by the Lender or
on its behalf) and shall survive the Termination Date and the indefeasible
payment in full in cash of the Indebtedness.

SECTION 10.13   Amendment. No amendment, modification, rescission, waiver or
release of any provision of this Fourth Amendment shall be effective unless made
in accordance with the terms of the Loan Agreement.

SECTION 10.14   No Duress; Jointly Drafted.  Each of the Loan Parties is
represented by legal counsel of its respective choice, is fully aware of the
terms contained in this Fourth Amendment and has voluntarily and without
coercion or duress of any kind entered into this Fourth Amendment. This Fourth
Amendment shall be deemed to be jointly drafted, and no provision of it shall be
interpreted or construed for or against any party hereto because such party
purportedly prepared or requested such provision, any other provision, or this
Fourth Amendment as a whole.

SECTION 10.15   Confidentiality.      Each of the Loan Parties shall keep
confidential and shall not divulge to any party, without the Lender's prior
written consent, any material term of the Loan, this Fourth Amendment or any
other Loan Document, instrument or agreement entered into in connection with the
Loan, except: (i) to the extent that it is appropriate to do so in working with
Cohen & Steers Capital Advisors, LLC and Silverman Consulting, as financial
advisors to the Loan Parties, legal counsel, auditors, taxing authorities or
other governmental agencies; (ii) to the extent that such information has become
publicly available (other than as a direct or indirect result of such
information being disclosed in breach of this Section 10.15); (iii) as required
by law or by court order; and (iv) information previously disclosed to existing
lenders of the Loan Parties in the Secured Financing Capitalization Overview and
the Overview of Potential Restructured Company.

      (b)      Each of the Loan Parties hereby represents: (i) that the Parent
has filed the Loan Agreement (including, the First Amendment, the Second
Amendment and the Third Amendment thereto) and will file the Fourth Amendment as
exhibits to periodic reports filed by the Parent pursuant to applicable federal
securities laws; (ii) that such filings are required by applicable federal
securities laws.

      (c)      Each of the Loan Parties expressly acknowledges and agrees that
any news release, publicity or advertising by or on behalf of any of the Loan
Parties or any of their Affiliates through any media intended to reach the
general public, which refers or relates to Lender, the Loan, this Fourth
Amendment or any other Loan Document is strictly prohibited.

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SECTION 10.16   Valuation. Each of the Loan Parties expressly acknowledges and
agrees that the Lender has neither participated in the preparation of, nor
approved the content of, any report, projection, analysis, statement or other
similar document that purports to assess, allocate, analyze or otherwise
evaluate the value of any the Collateral, any of the Facilities or any other
aspect of the business and operations of any of the Loan Parties.

[Signatures on Following Page]

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     IN WITNESS WHEREOF, the parties hereto have caused this FOURTH AMENDMENT TO
LOAN AGREEMENT AND FORBEARANCE AGREEMENT to be duly executed by their duly
authorized representatives, all as of the day and year first above written.

LENDER:

THE CAPITAL COMPANY OF AMERICA LLC, a
Delaware limited liability company
     By:     /s/ Stuart Simon
          Stuart Simon
          Managing Director

 

BORROWER

:

ALS-VENTURE II, INC., a Delaware corporation
     By:     /s/ Mark Ohlendorf
          Mark Ohlendorf
          Vice President

PARENT

:

ALTERRA HEALTHCARE CORPORATION f/k/a
ALTERNATIVE LIVING SERVICES, INC, a Delaware
corporation

     By:     /s/ Mark Ohlendorf     
          Mark Ohlendorf
          Vice President

SUBSIDIARY

:

ALS-CLARE BRIDGE, INC., a Delaware corporation

     By:     /s/ Mark Ohlendorf     
          Mark Ohlendorf
          Vice President