<PAGE>   1
                                                                    EXHIBIT 10.3


                        FIRST AMENDMENT TO LOAN AGREEMENT
                           AND REAFFIRMATION AGREEMENT

                  This FIRST AMENDMENT TO LOAN AGREEMENT AND REAFFIRMATION
AGREEMENT ("Amendment"), made as of August 28, 1998 is by and among NOMURA ASSET
CAPITAL COMPANY, a Delaware corporation, having an address at 2 World Financial
Center, Building B, New York, New York 10281-1198, Attention: Christopher
Tierney, Telefax Number (212) 667-1666 (together with its successors and
assigns, "Lender"), ALS-VENTURE I, INC., a Delaware corporation having an
address at c/o Alternative Living Services, Inc., 450 North Sunnyslope Road,
Suite 300, Brookfield, Wisconsin 53005, Attention: Chief Financial Officer,
Thomas E. Komula, Telefax Number (414) 789-6182 ("Borrower"), ALTERNATIVE LIVING
SERVICES, INC., a Delaware corporation, 450 North Sunnyslope Road, Suite 300,
Brookfield, Wisconsin 53005, Attention: Chief Financial Officer, Thomas E.
Komula, Telefax Number (414) 789-6182 ("Guarantor" and "Parent Pledgor", as
applicable) and ALS-CLARE BRIDGE, INC., a Delaware corporation, 450 North
Sunnyslope Road, Suite 300, Brookfield, Wisconsin 53005 ("Subsidiary Pledgor";
the "Parent Pledgor" and the "Subsidiary Pledgor" are referred to herein
collectively as the "Pledgors").

                                    RECITALS

                  A.       Lender and Borrower are parties to that certain Loan
Agreement made as of March 31, 1998 (the "Original Loan Agreement") which
Original Loan Agreement provides for a loan (the "Loan") from Nomura in the
principal amount $31,000,000 which amount may be increased by the Earn-Out
Advance, provided the terms of the Loan Agreement are complied with. The Loan is
evidenced by a promissory note dated as of March 31, 1998 and executed and
delivered by Borrower to Lender. The Loan is secured by, inter alia, real
property, improvements thereon and other collateral (collectively, "Property").
Unless otherwise defined herein, capitalized terms used in this Amendment shall
have the meaning set forth in the Original Loan Agreement;

                  B.       Lender and Borrower desire to amend the Loan
Agreement to reflect an additional advance of by Lender to Borrower in the
amount of Nineteen Million One Hundred Forty Thousand Dollars ($19,140,000.00)
(the "Additional Advance") such that the loan amount is Fifty Million One
Hundred Forty Thousand Dollars ($50,140,000.00) and the addition of certain
properties as security for the Loan.

                  C.       In connection with the foregoing recitals, and as a
condition to Lender making the Additional Advance, the parties desire to amend
the Original Loan Agreement in the manner set forth herein.




<PAGE>   2



                  NOW, THEREFORE, in consideration of the foregoing recitals,
which are by this reference incorporated herein, and for other valuable
consideration the receipt and sufficiency of which is hereby acknowledged, the
parties, intending to be legally bound, hereby agree as follows:

         1.       Exhibits. The Exhibits to the Original Loan Agreement are
hereby amended as follows:

                  1.1      Exhibit B. Exhibit B of the Original Loan Agreement
is hereby deleted in its entirety and the Exhibit B attached hereto is
substituted in its place.

                  1.2      Exhibit G. The fifth paragraph of Exhibit G is hereby
deleted in its entirety and the following substituted in its place:

                           The above underwriting assumes that there is no
                  material adverse change anticipated in the operations of any
                  Facility or in the Adjusted Net Operating Income of any
                  Facility from the Closing Date or, as to the Additional
                  Facilities only, the Additional Facilities Closing Date to and
                  including the Stabilization Date.

         2.       Recitals. The Recitals of the Original Loan Agreement are
hereby amended as follows:

                  2.1      Recital A. Recital A is hereby deleted in its
entirety and the following substituted in its place:

                                    WHEREAS, Borrower desires to obtain a loan
                  (the "Loan") from Lender in the maximum principal amount of
                  $50,140,000 (such amount together with the Earn-Out Advance,
                  if any, the "Loan Amount");


         3.       Definitions. Section 1.1 of the Original Loan Agreement is
hereby amended as follows:

                  3.1      Adjusted Net Operating Income. The definition of
"Adjusted Net Operating Income" is hereby deleted in its entirety and replaced
with the following:

                                    "Adjusted Net Operating Income" means
                           (calculated for the Facilities or any Facility), for
                           any period, the Net Operating Income for such period
                           reduced by (i) the Capital Reserve Amount, pro rated
                           for the applicable period, (ii) to the extent not
                           reflected in the Net Operating Income, annual base
                           management fees, pro rated for the applicable period,
                           equal to the greater of (y) actual base management
                           fees paid pursuant to the applicable Management
                           Agreement and (z) five percent (5%) of Gross Revenues
                           (provided, however, in no event shall the annual base
                           management fees included in this clause (ii) 


                                      - 2 -


<PAGE>   3



                           include any management expenses, such as, but not
                           limited to, accounting expenses, marketing costs,
                           regional and corporate personnel expenses and general
                           corporate overhead, to the extent such expenses are
                           actually reflected in the Net Operating Income), and
                           (iii) an amount necessary to reflect a minimum annual
                           vacancy factor of five percent (5%), pro rated for
                           the applicable period. Notwithstanding the foregoing
                           , to the extent Adjusted Net Operating Income must be
                           calculated for a period which is less than twelve
                           (12) months, Adjusted Net Operating Income shall be
                           calculated for such period on an annualized basis.

                  3.2      Base Adjusted NOI. The definition of "Base Adjusted
NOI" is hereby deleted in its entirety.

                  3.3      Closing Date. The definition of the term "Closing
Date" is hereby deleted in its entirety and the following substituted in its
place:

                           "Closing Date" means March 31, 1998; provided,
                  however, that as used in the definitions of the terms
                  "Assignment of Agreements Borrower", "Assignment of Agreements
                  - Joint Venture"; "Assignment of Leases - Borrower",
                  "Assignment of Leases - Joint Venture", "Manager's
                  Subordination", "Mortgage - Borrower", "Mortgage - Joint
                  Venture", "Permitted Encumbrances" and "Secretary's
                  Certificate" to the extent such terms relate to those
                  Facilities which are Additional Facilities, the terms "Closing
                  Date" shall mean August 28, 1998.


                  3.4      Additional Facilities. The following language is
added to Section 1.1:

                           "Additional Facilities" means those Facilities as
         shown on Exhibit B.

                           "Additional Facilities Closing Date" means August 28,
         1998.

                  3.5      Facility. The definition of the term Facility is
hereby deleted in its entirety and the following substituted in its place:

                           "Facility" means the Land, Improvements and Equipment
         and all other Collateral subject to a Related Mortgage and the term
         "Facilities" means every Facility collectively.

                  3.6      Initial Interest Rate. The definition of the term
         "Initial Interest Rate" is hereby deleted in its entirety and the
         following substituted in its place:

                           "Initial Interest Rate" means 7.63% per annum.



                                      - 3 -


<PAGE>   4




                  3.7      Maximum Facility Amount. The defined term of "Maximum
Facility Amount" is hereby deleted in its entirety and the following substituted
in its place:

                           Maximum Facility Amount means Fifty Eight Million One
                  Hundred Forty Thousand Dollars ($58,140,000.00).

                  3.8      Single-Purpose Entity. The definition of the term
"Single-Purpose Entity" is amended to delete clause (xx)(a)(1) in its entirety
and substitute the following in its place:

                  (1) do not exceed, at any time, a maximum amount of One
                  Hundred Fifty Thousand Dollars ($150,000) for each Facility
                  (provided, however, the aggregate amount for all Facilities at
                  any one time shall not exceed Two Million Two Hundred Fifty
                  Thousand Dollars ($2,250,000) and

         4.       Article II. Article II of the Original Loan Agreement is
amended as follows:

                  4.1      Monthly Funding of Sub-Accounts. The following
sentence is added as the final sentence to Section 2.11(g):

                  Notwithstanding anything contained herein to the contrary, on
                  the Additional Facilities Closing Date, Borrower shall deposit
                  (i) the amount designated as the "Additional Facilities
                  Initial Basic Carrying Costs Amount" on Exhibit B into the
                  Basic Carrying Costs Sub-Account and (ii) the amount
                  designated as the"Additional Facilities Initial Capital
                  Reserve Amount" on Exhibit B into the Capital Reserve
                  Sub-Account.

                  4.2      Supplemental Mortgage Affidavits. The penultimate
sentence of Section 2.14 is hereby deleted and the following substituted in its
place:

                  As of the Closing Date and, with respect to the Additional
                  Facilities only, the Additional Facilities Closing Date,
                  Borrower shall have paid all state, county and municipal
                  recording and all other taxes imposed upon the execution and
                  recordation of the Mortgages.

                  4.3      Substitute Property Requirements. Clause (1) of
Section 2.15(b) of the Original Loan Agreement is hereby deleted in its entirety
and the following substituted in its place:

                           (1) be a property operated and licensed as an
                  assisted living facility as to which Borrower will hold
                  indefeasible fee simple title free and clear of any lien or
                  other encumbrance except for Permitted Encumbrances;

         5.       Article III. Article III of the Original Loan Agreement is
hereby amended as follows:


                                      - 4 -


<PAGE>   5




                  5.1      Conditions Precedent to the Making of the Loan. The
first sentence of Section 3.1(a) is hereby deleted and the following substituted
in its place:

                  As a condition precedent to the making of the Loan, Borrower
                  shall have satisfied the following conditions (unless waived
                  by Lender in accordance with Section 8.4) with respect to each
                  Facility on or before the Closing Date or, as to the
                  Additional Facilities only, as of the Additional Facilities
                  Closing Date (to the extent the term "Closing Date" is used in
                  this Section 3.1 in the context of the Additional Facilities
                  only, "Closing Date" shall mean the Additional Facilities
                  Closing Date):

         6.       Representations and Warranties. Article IV of the Original
Loan Agreement is hereby amended as follows:

                  6.1      Other Debt and Obligations. The first sentence of
Section 4.1(j) of the Original Loan Agreement is hereby deleted and the
following substituted in its place:

                  Borrower has no financial obligation under any indenture,
                  mortgage, deed of trust, loan agreement or other agreement or
                  instrument to which Borrower is a party, or by which Borrower
                  or any Facility is bound, other than unsecured trade payables
                  incurred in the ordinary course of business relating to the
                  ownership and operation of such Facility and financing
                  Equipment or vehicles used in the ordinary course of owning
                  and operating the Facility (including capitalized leases of
                  Equipment and vehicles) which trade payables and Equipment and
                  vehicles financing do not exceed a maximum amount of One
                  Hundred Fifty Thousand Dollars ($150,000) for each Facility
                  (provided, however, the aggregate amount for all Facilities at
                  any one time shall not exceed Two Million Two Hundred Fifty
                  Thousand Dollars ($2,250,000) and, with respect to the trade
                  payables, are paid within thirty (30) days of the date
                  incurred, and other than obligations under the Mortgage and
                  the other Loan Documents.

                  6.2      Survival of Representations and Warranties. The first
sentence of Section 4.2 is hereby deleted in its entirety and the following
substituted in its place:

                  Borrower agrees that (i) all of the representations and
                  warranties made by Borrower set forth in this Agreement and in
                  the other Loan Documents delivered on the Closing Date are
                  made as of the Closing Date (except as expressly otherwise
                  provided); provided, however, that the representations and
                  warranties made by Borrower set forth in this Agreement and in
                  the other Loan Documents with respect to the Additional
                  Facilities are made as of the Additional Facilities Closing
                  Date and (ii) all representations and warranties made by
                  Borrower shall survive the delivery of the Note and
                  continue for so long as any amount remains owing to Lender
                  under this Agreement, the Note or any of the other Loan
                  Documents; provided, however, that the representations,
                  warranties and covenants set forth in Section 4.1(v) and


                                      - 5 -


<PAGE>   6



                  Sections 5.1(d) through 5.1(i), inclusive, shall survive in
                  perpetuity and shall not be subject to the exculpation
                  provisions of Section 8.14.

         7.       Covenants. Article VII of the Original Loan Agreement is
hereby amended as follows:

                  7.1      Security Deposits. Section 5.1(z) of the Original
Loan Agreement is hereby amended to add the following at the end of such
section:

                  Notwithstanding the foregoing, any security deposits collected
                  by Borrower shall be held and administered in accordance with
                  applicable laws governing the use and operation of living
                  facilities.

         8.       Negative Covenants. Article VI of the Original Loan Agreement
is hereby amended as follows:

                  8.1      Other Borrowings. The first sentence of Section
6.1(c) of the Original Loan Agreement is hereby deleted in its entirety and the
following substituted in its place:

                  Incur, except for unsecured trade payables incurred in the
                  ordinary course of business relating to the ownership and
                  operation of the Facilities and financing of Equipment or
                  vehicles used in the ordinary course of owning and operating
                  the Facilities (including capitalized leases of such Equipment
                  or vehicles) which trade payables and Equipment or vehicles
                  financings do not exceed, at any time a maximum amount of One
                  Hundred Fifty Thousand Dollars ($150,000) for each Facility
                  (provided, however, the aggregate amount for all Facilities at
                  any one time shall not exceed Two Million Two Hundred Fifty
                  Thousand Dollars ($2,250,000) for all the Facilities and, with
                  respect to the trade payables, are paid within thirty (30)
                  days of the date incurred, create, assume, become or be liable
                  in any manner with respect to Other Borrowings.

                  8.2      Change in Business. Section 6.1(d) of the Original
Loan Agreement is hereby deleted in its entirety and the following substituted
in its place:

                           Change In Business. Cease to be a Single-Purpose
                  Entity or make any material change in the scope or nature of
                  its business objectives, purposes or operations, or undertake
                  or participate in activities other than the continuance of its
                  present business and activities closely related to and
                  compatible with assisted living or, in the case of the
                  Facilities located in New York, congregate care; provided,
                  however, Borrower may offer additional services not offered on
                  the Closing Date and, as to the Additional Facilities only,
                  the Additional Facilities Closing Date to the extent permitted
                  with respect to assisted living facilities, or with respect to
                  the Facilities located in New York, congregate care facilities
                  under applicable Legal Requirements.


                                      - 6 -


<PAGE>   7


         9.       Miscellaneous. Article VIII of the Original Loan Agreement is
hereby amended as follows:

                  9.1      Notices. The second sentence of Section 8.6 is hereby
deleted in its entirety and the following substituted in its place:

                  A copy of all notices, consents, approvals and requests
                  directed to Lender shall be delivered concurrently to each of
                  the following: Dechert Price & Rhoads, 90 State House Square,
                  Hartford, Connecticut 06103, Attention: John J. Gillies, Jr.,
                  Esquire, Telefax Number 860/524-3930; Two World Financial
                  Center, Building B, New York, New York 10281-1198, Attention:
                  Christopher Tierney, Telefax Number (212) 667-1666; The
                  Capital Company of America Client Services LLC, 600 East Las
                  Collinas Boulevard, Suite 1300, Irving, Texas 75039,
                  Attention: Legal Counsel, Telefax Number 972/401-8556; and Two
                  World Financial Center, Building B, New York, NY 10281-1198,
                  Attention: Barry Funt, General Counsel, Telefax Number (212)
                  667-1206; copies of notices to Borrower shall be delivered
                  concurrently to each of the following: David Boitano,
                  Alternative Living Services, Inc., 1201 Pacific Avenue, Suite
                  1800, Tacoma, Washington 98402, Telefax Number (253) 383-0855,
                  Alan C. Leet, Rogers & Hardin, 2700 International Tower,
                  Peachtree Center, 229 Peachtree Street, N.E., Atlanta, Georgia
                  30303, Telefax Number (404) 525-2224, and Mark W. Ohlendorf,
                  Alternative Living Services, Inc., 450 North Sunnyslope Road,
                  Suite 300, Brookfield, Wisconsin 53005, Telefax Number (414)
                  789-6182.

         10.      Ratification and Reaffirmation. Each of Borrower, Guarantor
and Pledgors hereby ratify and confirm, and reaffirm in all respects and without
condition, all of the terms, covenants and conditions set forth in the Loan
Documents to which each is bound and hereby respectively agree as follows:

                  10.1     Borrower remains unconditionally liable to Lender in
accordance with the terms, covenants and conditions of the Loan Documents, all
Collateral, Liens, and other security interests and pledges created pursuant
thereto or referred to therein shall continue unimpaired and in full force and
effect and shall continue to secure all of the existing and future Indebtedness
due under the Original Loan Agreement.

                  10.2     Guarantor remains unconditionally liable to Lender in
accordance with the terms, covenants and conditions of the Guaranty and
Suretyship Agreement, the Environmental Indemnity Agreement, Equity Pledge
Agreement and any other Loan Document by which Guarantor is bound.


                  10.3     Subsidiary Pledgor remains unconditionally liable to
Lender in accordance with the terms, covenants and conditions of the Equity
Pledge Agreement and any other Loan Document by which Subsidiary Pledgor is
bound.


                                      - 7 -


<PAGE>   8



                  10.4     Borrower, Guarantor and Subsidiary Pledgor agree that
the Loan Documents, as so modified, remain in full force and effect as of the
date hereof, and nothing herein contained shall be construed to impair the
security or affect the first priority of the lien of any mortgage, nor impair
any rights or powers which Lender or its successors may have for nonperformance
of any term of any of the Loan Documents. All Collateral, Liens and other
security interests and pledges created pursuant to, or referred to in, the Loan
Documents shall continue unimpaired and in full force and effect and shall
continue to secure all of the existing and future Indebtedness due under the
Original Loan Agreement.

         11.      Representations and Warranties. Borrower, Guarantor and
Pledgors acknowledge and agree that any and all representations and warranties
(including, without limitation, the Single-Purpose Entity representations and
warranties) contained in the Original Loan Agreement and all the other Loan
Documents shall be deemed to be remade as of the date hereof. Further, Borrower,
Guarantor and Pledgors represent and warrant that there are no existing or
pending Defaults or Events of Default under the Loan Agreement or any other Loan
Document.

         12.      Severability. In case any provision of this Amendment shall be
invalid, illegal, or unenforceable, such provision shall be deemed to have been
modified to the extent necessary to make it valid, legal, and enforceable. The
validity, legality, and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

         13.      No Modification Except in Writing. None of the terms of this
Amendment may be modified, waived, altered, amended, supplemented, extended,
consolidated, replaced, exchanged or otherwise changed except by an instrument
in writing duly executed by all of the parties hereto.

         14.      Further Assurances. Borrower, Guarantor and Subsidiary Pledgor
shall execute and deliver such further instruments and perform such further acts
as may be requested by Lender from time to time to confirm the provisions of
this Amendment and the Loan Documents, to carry out more effectively the
purposes of this Amendment and the Loan Documents, or to confirm the priority of
any Lien created by any of the Loan Documents.

         15.      Miscellaneous.

                  15.1     This Amendment constitutes the entire agreement among
the parties concerning its subject matter.

                  15.2     This Amendment shall inure to the benefit of and be
binding upon the parties and their respective heirs, successors and assigns.

                  15.3     This Amendment may be executed in two or more
counterparts each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.


                                      - 8 -


<PAGE>   9




                  15.4     This Amendment shall be governed by and construed in
accordance with the laws of the State of New York (without giving effect to New
York's principles of conflict of law).

                  14.5     Any reference to the Loan Agreement in any of the
Loan Documents shall hereafter mean the Original Loan Agreement as amended by
this Amendment as the same may be subsequently amended, modified, altered,
supplemented, extended, consolidated, replaced, exchanged or otherwise changed.

                        [Signatures Appear On Next Page]





















                                      - 9 -


<PAGE>   10



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


                                    LENDER:                              
                                                                         
                                                                         
                                    NOMURA ASSET CAPITAL CORPORATION, a  
                                    Delaware corporation                 
                                                                         
                                                                         
                                    By:                                  
                                       --------------------------------- 
                                         Name:                           
                                         Title:                          
                                                                         
                                                                         
                                    BORROWER:                            
                                                                         
                                    ALS-VENTURE I, INC., a Delaware      
                                    corporation                          
                                                                         
                                                                         
                                    By:                                  
                                       --------------------------------- 
                                       David Boitano                     
                                       Vice President                    
                                                                         
                                                                         
                                                                         
                                    GUARANTOR / PARENT PLEDGOR:          
                                                                         
                                    ALTERNATIVE LIVING SERVICES, INC.,   
                                    a Delaware corporation               
                                                                         
                                                                         
                                    By:                                  
                                       --------------------------------- 
                                       David Boitano                     
                                       Vice President                    
                                                                         
                                                                         
                                    SUBSIDIARY PLEDGOR:                  

                                    ALS-CLARE BRIDGE, INC., a Delaware 
                                    corporation
                                                                         
                                                                         
                                    By:                                  
                                       --------------------------------- 
                                       David Boitano                     
                                       Vice President                    
                                    

<PAGE>   11



                                    EXHIBIT B

                             Additional Definitions


<TABLE>
<S>                                                           <C>         
Initial Basic Carrying Costs Amount                           $48,670.42 *

Initial Capital Reserve Amount                                $14,843.75 **

Additional Facilities Initial Basic Carrying Costs Amount     $35,451.71 *

Additional Facilities Initial Capital Reserve Amount          $7,333.33 **
</TABLE>


<TABLE>
<CAPTION>
ALLOCATED LOAN AMOUNTS
----------------------

<S>      <C>                                                  <C>
         1.       Clare Bridge
                  Tallahassee, Florida                        $2,894,000.00

         2.       Clare Bridge
                  Tempe, Arizona                              $4,214,000.00

         3.       Clare Bridge
                  Winston-Salem, North Carolina               $3,014,000.00

         4.       Crossings
                  Colorado Springs, Colorado                  $4,615,000.00

         5.       Crossings
                  Pueblo, Colorado                            $3,839,000.00

         6.       Crossings
                  Twin Falls, Idaho                           $4,408,000.00

         7.       WovenHearts
                  Blaine, Minnesota                           $1,032,000.00

         8.       WovenHearts
                  Inver Grove Heights, Minnesota              $1,039,000.00

         9.       Clinton Village
                  Sherman Brook, New York                     $1,760,000.00

         10.      Summer Field Village
                  Syracuse, New York                          $4,185,000.00
</TABLE>


                                       B-1

<PAGE>   12




<TABLE>
<S>      <C>                                                  <C>
         11.      Sterling House of Alliance
                  Alliance, Ohio                              $1,900,000.00

         12.      Sterling House of Columbus
                  Columbus, Indiana                           $2,090,000.00

         13.      Sterling House of Evansville
                  Evansville, Indiana                         $2,030,000.00

         14.      Sterling House of Marion
                  Marion, Indiana                             $2,050,000.00

         15.      Sterling House of Sun City
                  Sun City, Florida                           $2,340,000.00

         16.      Sterling House of Beavercreek
                  Beaver Creek, Ohio                          $2,100,000.00

         17.      WovenHearts of La Crosse (I) and (II)
                  La Crosse, Wisconsin                        $3,310,000.00

         18.      Clare Bridge of Oro Valley
                  Oro Valley, Arizona                         $3,320,000.00
</TABLE>


<TABLE>
<CAPTION>
LEASED FACILITIES             OPERATOR                   ADDRESS
-----------------             --------                   -------

<S>                        <C>                       <C>
Clare Bridge               Clare Bridge of           1610 East Guadalupe Road
Tempe, AZ                  Tempe, L.P.               Tempe, AZ 85283

Crossings                  Crossings of Colorado     2780 Vickers Drive
Colorado Springs, CO       Springs L.P.              Colorado Springs, CO 80918

Crossings                  Crossings of              4723 Surfwood Lane
Pueblo, CO                 Pueblo, L.P.              Pueblo, CO 81005

Crossings                  Crossings of Twin Falls   1367 Locust Street North
Twin Falls, ID             L.P.                      Twin Falls, ID 83301

WovenHearts                WovenHearts of Blaine     1005 Paul Parkway
Blaine, MN                 L.P.                      Blaine, MN 55434
</TABLE>



                                       B-2

<PAGE>   13



<TABLE>
<S>                        <C>                       <C>
WovenHearts                WovenHearts of Inver      5891 Carment Avenue
Inner Grove Heights, MN    Grove Heights L.P.        Inner Grove Heights, MN 55076

Sterling House of          Sterling Marion/Alliance  1277 S. Sawburg Avenue
Alliance                   LLC                       Alliance Corp.

Sterling House of          Wiltshire Development,    2564 Foxpointe Drive,
Columbus                   L.L.C.                    Columbus, Indiana

Sterling House of          Rosebery Development,     6521 Greendale Drive,
Evansville                 L.L.C.                    Evansville, Indiana

Sterling House of Marion   Sterling of Marion/       2452 W. Kem Road
                           Alliance LLC              Marion, Indiana

Sterling House of          Sterling of Sun City      758 Cortaro Drive
Sun City                   LLC                       Sun City, Florida

Sterling House of          Sterling of Beavercreek   3839 Indian Ripple Road
Beavercreek                LLC                       Beaver Creek, Ohio

WovenHearts of             Sterling Cottage of       3161 E. Avenue South
LaCrosse (I)               LaCrosse L.P.             La Crosse, Wisconsin

WovenHearts of             WovenHearts of            3141 E. Avenue South
LaCrosse (II)              LaCrosse L.P.             La Crosse, Wisconsin

Clare Bridge of            Clare Bridge of Oro       10175 N. Oracle Road
Oro Valley (I)             Valley L.P.               Oro Valley, Arizona


NONLEASED FACILITIES                                       ADDRESS
--------------------                                       -------

Clinton Village                                       100 Summerfield Village Lane
Sherman Brook, NY                                     Syracuse, NY 13215

Summer Field Village                                  99 Brookside Drive
Syracuse, NY                                          Clinton, NY 13323

Clare Bridge                                          1980 Centre Pointe Boulevard
Tallahassee, FL                                       Tallahassee, FL 32308
</TABLE>



                                       B-3

<PAGE>   14




<TABLE>
<CAPTION>
JOINT VENTURE FACILITIES          JOINT VENTURE                       ADDRESS
------------------------          -------------                       -------


<S>                           <C>                       <C>
Clare Bridge                  Clare Bridge of Winston-  275 South Peace Haven Road
Winston-Salem, NC             Salem, LLC                Winston-Salem, NC 27104
</TABLE>


SUBLEASED FACILITIES

Clare Bridge Tempa, Arizona; Clare Bridge of Oviedo (I); Sterling House of Sun
City; Clare Bridge of Oro Valley

*        The Initial Basic Carrying Costs and the Additional Facilities Initial
Basic Carrying Costs are allocated among the Facilities as follows:

<TABLE>
<CAPTION>
Facility                                Real Estate               Insurance
                                        Taxes                     Premiums
<S>      <C>                            <C>                       <C>
1.       Clare Bridge
         Tallahassee, FL                $4,750.00                 $  638.08

2.       Clare Bridge
         Tempe, Arizona                 $3,050.00                 $  635.00

3.       Clare Bridge
         Winston-Salem, NC              $3,291.67                 $  638.08

4.       Crossings
         Colorado Springs, CO           $4,600.00                 $  640.00

5.       Crossings
         Pueblo, CO                     $4,600.00                 $  640.00

6.       Crossings
         Twin Falls, ID                 $5,250.00                 $  640.00

7.       WovenHearts
         Blaine, MN                     $1,400.00                 $  196.67

8.       WovenHearts
         Inver Grove Heights, MN        $1,400.00                 $  195.63

9.       Clinton Village
         Sherman Brook, NY              $4,750.00                 $  638.00
</TABLE>


                                       B-4

<PAGE>   15




<TABLE>
<S>      <C>                                         <C>             <C>
10.      Summer Field Village
         Syracuse, NY                                $9,675.00       $1,050.00

11.      Sterling House of Alliance                  $3,068.58       $  669.50
         Alliance, Ohio

12.      Sterling House of Columbus                  $669.50         $3,068.58
         Columbus, Indiana

13.      Sterling House of Evansville                $669.50         $3,068.58
         Evansville, Indiana

14.      Sterling House of Marion                    $669.50         $3,068.58
         Marion, Indiana

15.      Sterling House of Sun City                  $836.88         $3,068.58
         Sun City, Florida

16.      Sterling House of Beavercreek               $682.50         $3,128.17
         Beaver Creek, Ohio

17.      WovenHearts of LaCrosse (I) and (II)        $875.00         $6,883.33
         La Crosse, Wisconsin

18.      Clare Bridge of Oro Valley (I)              $608.25         $4,416.67
         Oro Valley, Arizona
</TABLE>

**       The Initial Capital Reserve Amount and the Additional Facilities 
Initial Capital Reserve Amount are allocated as follows:

<TABLE>
         <S>                                         <C>       
         Clinton Village                             $10,625.00
         Summer Field Village                        $ 4,218.75
         Sterling House of Alliance                  $   875.00
         Sterling House of Columbus                  $   875.00
         Sterling House of Evansville                $   875.00
         Sterling House of Marion                    $   875.00
         Sterling House of Sun City                  $   875.00
         Sterling House of Beavercreek               $   875.00
         WovenHearts of LaCrosse (I) and (II)        $ 1,291.67
         Clare Bridge of Oro Valley (I)              $   791.67
</TABLE>



DOING BUSINESS AS NAMES


                                       B-5

<PAGE>   16



Crossings at Summerfield
Crossings at Sherman Brook
Clare Bridge of Tempe
Crossings at Twin Falls
Crossings at Colorado Springs
Crossings at Pueblo
WovenHearts of Blaine
WovenHearts of Inver Grove Heights
Clare Bridge of Winston-Salem
Clare Bridge of Tallahassee
Sterling House
WovenHearts
Clare Bridge


ADDITIONAL FACILITIES

1.       Sterling House of Alliance
         Alliance, Ohio

2.       Sterling House of Columbus
         Columbus, Ohio

3.       Sterling House of Evansville
         Evansville, Illinois

4.       Sterling House of Marion
         Marion, Indiana

5.       Sterling House of Sun City
         Sun City, Florida

6.       Sterling House of Beavercreek
         Beaver Creek, Ohio

7.       Woven Hearts of LaCrosse (I) and (II)
         LaCrosse, Wisconsin

8.       Clare Bridge of Oro Valley
         Oro Valley, Arizona




                                       B-6