Document:

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                                                                  EXHIBIT 10.116

                            BUILDING LOAN AGREEMENT

        THIS BUILDING LOAN AGREEMENT (this "Agreement") is made and entered into
this 14th day of January, 2000, by and between KEY CORPORATE CAPITAL INC., a
Michigan corporation with an office for the transaction of business at 127
Public Square, 6th Floor, Cleveland, Ohio 44114 (the "Lender"), and CLINTON
BROOKSIDE DRIVE, LLC, a New York limited liability company with an office for
the transaction of business at 250 South Clinton Street, Syracuse, New York
13202 (the "Borrower").

                              W I T N E S S E T H:

        WHEREAS, the Lender is about to make a loan (the "Loan") to Borrower in
an amount not to exceed $3,300,000.00 (the "Loan Amount") for the purposes of
developing a facility in Clinton, New York; and

        WHEREAS, of the Loan Amount, up to $2,299,578.00 is to be advanced by
Lender to Borrower pursuant to this Agreement and the balance of the Loan Amount
is to be advanced by Lender to Borrower pursuant to the terms of a Development
Agreement between the Lender and the Borrower of even date herewith.

        NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:

                                    ARTICLE 1

                              TERMS AND DEFINITIONS

        In addition to the other terms hereinafter defined, the following terms
shall have the meanings set forth in this Article. References to documents and
other materials shall include those documents and materials as they may be
revised, amended and modified, from time to time, with the prior written
approval of Lender.

        1.1     ADVANCE.  "Advance" means any disbursement of the proceeds of
the Loan by Lender pursuant to the terms of this Agreement.

        1.2     APPROVAL.  "Approval", "Approved", "approval" or "approved"
means, as the context so determines, an approval in writing given to the party
seeking approval after full and fair disclosure to the party giving approval of
all material facts necessary in order to determine whether approval should be
granted.

        1.3     ARCHITECT'S CONTRACT.  "Architect's Contract" means the
contract, dated September 17, 1998, between BCI Construction, Inc. (which in the
Architect's Contract is erroneously referred to as BCI/ALS, Inc., a non-existent
entity) and Borrower's Architect as assigned to Borrower pursuant to an
assignment dated ________ __, ___ between BCI Construction, Inc. and Borrower.

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        1.4     BORROWER'S ARCHITECT.  "Borrower's Architect" means Eppstein
Uhen, whose address is 210 East Michigan Street, Milwaukee, Wisconsin
53202-0728.

        1.5     COMPLETION DATE.  "Completion Date" means January 1, 2002.

        1.6     COMMITMENT.  "Commitment" means, collectively, (a) the
commitment letter for the Loan issued by Lender to ALS-Northeast, LLC dated
December 28, 1999, and (b) the master loan commitment issued by Lender to
ALS-Northeast, LLC dated May 5, 1998 and accepted by ALS - Northeast, LLC on May
6, 1998 (the "Master Commitment").

        1.7     CONSTRUCTION BUDGET.  "Construction Budget" means the budget for
total estimated Property Costs, submitted by Borrower, approved by Lender, and
attached hereto as Exhibit A.

        1.8     CONSTRUCTION CONTRACT.  "Construction Contract" means the
contract, dated September 30, 1999 between Borrower and Contractor and providing
for the construction of the Improvements on the Land.

        1.9     CONSTRUCTION INSPECTOR.  "Construction Inspector" means Clough
Harbour & Associates, LLP or at Lender's option either an officer or employee of
Lender or consulting architects, engineers or inspectors appointed by Lender.

        1.10    CONSTRUCTION SCHEDULE.  "Construction Schedule" means the
schedule, broken down by trade, of the estimated dates of commencement and
completion of the Improvements, submitted by Borrower, approved by Lender and
attached hereto as Exhibit B.

        1.11    CONTINGENCY RESERVE.  "Contingency Reserve" means the amount(s),
if any, allocated as contingency reserve(s) in the Construction Budget.

        1.12    CONTRACTOR.  "Contractor" means Central New York Contractors,
Inc., whose address is 250 Clinton Street, Syracuse, New York 13302-1258.

        1.13    COSTS OF IMPROVEMENT.  "Costs of Improvement" means those items
defined as such under Section 2(5) of the Lien Law.

        1.14    DRAW REQUEST.  "Draw Request" means, with respect to each
Advance, Borrower's request for such Advance, and documents required by this
Agreement to be furnished to Lender as a condition to such Advance.

        1.15    EVENT OF DEFAULT.  "Event of Default" means any condition or
event described herein as such.

        1.16    GOVERNMENTAL APPROVALS.  "Governmental Approvals" means all
approvals, consents, waivers, orders, acknowledgements, authorizations, permits
and licenses required under applicable Requirements to be obtained from any
Governmental Authority for the construction of the Improvements and the use,

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occupancy and operation of the Property following completion of construction of
the Improvements.

        1.17    GOVERNMENTAL AUTHORITY.  "Governmental Authority" means the
United States of America, the state in which the Land is located and Borrower is
organized, any political subdivision thereof, municipalities in which the Land
is located, and any agency, authority, department, commission, board, bureau, or
instrumentality of any of them.

        1.18    GUARANTOR.  "Guarantor" means, collectively, Assisted Living
Equities, LLC ("ALE"), with a business address of 250 South Clinton Street,
Syracuse, New York and Alterra Healthcare Corporation ("Alterra"), with a
business address of 10000 Innovation Drive, Milwaukee, Wisconsin 53226
(provided, however, that Guarantor shall mean Alterra once the Limited Recourse
Guaranty dated of even date herewith from ALE is terminated).

        1.19    IMPROVEMENTS.  "Improvements" means the assisted living facility
to be constructed on the Land in accordance with the Plans and Specifications.

        1.20    INDIRECT COSTS.  "Indirect Costs" mean and include title
insurance premiums, survey charges, engineering fees, architectural fees, and
all other expenses which are, in accordance with sound accounting practices,
capital expenditures relating to the Property, to the extent shown in Column B
on page 1 of Exhibit A.

        1.21    LAND.  "Land" means the real property described in Exhibit D
attached hereto.

        1.22    LIEN LAW.  "Lien Law" means the Lien Law of the State of New
York.

        1.23    LOAN.  "Loan" means the loan which is the subject of this
Agreement and the Development Agreement.

        1.24    LOAN AMOUNT.  "Loan Amount" means $3,300,000.

        1.25    LOAN DOCUMENTS.  "Loan Documents" means collectively, this
Agreement, all documents referred to in Article 2 hereof, and all other
agreements, documents and instruments now or hereafter evidencing, securing or
otherwise relating to the Loan.

        1.26.   PERMITTED CONTEST.  "Permitted Contest" means a good faith
active contest of any taxes, assessment, sewer rates, water rates or sums due by
Borrower provided that (1) the Borrower first shall have notified Lender of such
contest, (2) an Event of Default has not occurred under any of the Loan
Documents, (3) the Borrower shall have set aside reasonable adequate reserves
for any such taxes, assessments and other charges, and (4) the Borrower
demonstrates to the reasonable satisfaction of the Lender that the non-payment
of such items will not subject the lien of the Mortgage as to any part of the
Land, to loss or forfeiture.

        1.27    PERMITTED ENCUMBRANCES.  "Permitted Encumbrances" means (A)
utility,

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access and other easements, rights of way, restrictions, encroachments and
exceptions that exist on the date hereof and benefit or do not materially impair
the utility or the value of the Improvements, (B) liens for taxes to the extent
being contested as permitted by Section 7 of the Mortgage or not yet delinquent,
(C) any lien on the Property obtained through any of the Loan Documents, (D) any
lien on the Property in favor of the Mortgagee, (E) any lien listed on Exhibit B
of the Mortgage, and (F) any lien permitted by the Lender.

        1.28    PERSONAL PROPERTY.  "Personal Property" means materials,
furnishings, fixtures, machinery, equipment and all items of tangible and
intangible personal property now or hereafter owned by Borrower, wherever
located, and either (i) to be incorporated into the Improvements, (ii) used in
connection with the construction of the Improvements or (iii) to be used in
connection with the operation of the Land or Improvements or both.

        1.29    PLANS AND SPECIFICATIONS.  "Plans and Specifications" means the
plans and specifications for the Improvements prepared by Borrower's Architect
and more particularly identified on Exhibit E attached hereto.

        1.30    PROPERTY.  "Property" means the Land, Improvements and Personal
Property.

        1.31    PROPERTY COSTS.  "Property Costs" shall mean and include all
costs that will be incurred by Borrower for the items listed in Column B on page
1 of Exhibit A.

        1.32    REQUIRED EQUITY FUNDS.  "Required Equity Funds" means the sums,
if any, required of Borrower by Lender, to be available to pay the difference
between Property Costs and the amount of the Loan.

        1.33    REQUIREMENTS.  "Requirements" means any law, ordinance, order,
rule or regulation of any Governmental Authority relating in any way to the
Property or the Borrower.

        1.34    TAKING.  "Taking" shall mean any condemnation for public use of,
or damage by reason of, the action of any Governmental Authority, or any
transfer by private sale in lieu thereof, either temporarily or permanently.

        1.35    TERMINATION DATE.  "Termination Date" means the earlier of
January 1, 2002, or such other date as may be set forth herein which fixes the
termination of Lender's obligations to make Advances.

                                    ARTICLE 2

                                 LOAN DOCUMENTS

        The following documents have been duly authorized, executed and
delivered to Lender by the parties thereto:

        2.1     NOTE.  The Secured Promissory Note (the "Note") from Borrower to
Lender, dated as of even date herewith, in the Loan Amount.

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        2.2     MORTGAGE AND SECURITY AGREEMENT.  The Mortgage and Security
Agreement (the "Mortgage") from Borrower in favor of Lender, dated of even date
herewith, encumbering the Property as security for the Note and any sums in
addition to the Loan Amount advanced by Lender under the other Loan Documents,
which Mortgage is to be recorded in the appropriate public records on or about
the date hereof.

        2.3     FINANCING STATEMENTS.  Uniform Commercial Code, Form UCC-1
Financing Statements (the "Financing Statements") in favor of Lender giving
notice of a security interest, which Financing Statements are to be filed in the
appropriate public records on or about the date hereof.

        2.4     ASSIGNMENT OF CONTRACT DOCUMENTS.  The Assignment of Contract
Documents (the "Assignment of Contract Documents") from Borrower in favor of
Lender dated of even date herewith.

        2.5     ASSIGNMENT OF RENTS AND LEASES.  The Assignment of Rents and
Leases (the "Assignment") from Borrower in favor of Lender dated of even date
herewith which is to be recorded in the appropriate public records on or about
the date hereof.

        2.6     GUARANTY.  The Guaranty of Payment and Performance (the "ALS
Guaranty") from Alterra in favor of Lender dated of even date herewith.

        2.7     LIMITED RECOURSE GUARANTY.  The Limited Recourse Guaranty (the
"ALE Guaranty") from ALE in favor of Lender dated of even date herewith.

        2.8     INDEMNITY AGREEMENT.  The Hazardous Substances Indemnity
Agreement (the "Indemnity Agreement") from Borrower and Guarantor in favor of
Lender dated of even date herewith.

        2.9     SECURITY AGREEMENT.  The Security Agreement (the "Security
Agreement") from Borrower in favor of Lender dated of even date herewith.

        2.10    DEVELOPMENT AGREEMENT.  The Development Agreement (the
"Development Agreement") between the Borrower and Lender dated of even date
herewith providing for advancing the balance of the Loan not being advanced
hereunder.

                                    ARTICLE 3

                   REPRESENTATIONS AND WARRANTIES OF BORROWER

        Borrower hereby represents and warrants to Lender as follows:

        3.1     VALIDITY OF LOAN DOCUMENTS.  That the Loan Documents are valid
and legally binding obligations, enforceable in accordance with their respective
terms.

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        3.2     Title to Property.  That Borrower has fee simple absolute title
to the Land, subject to no liens, security interests, charges or encumbrances in
favor of any person other than Lender and the Permitted Encumbrances, and that
no conditional sale contract, chattel mortgage, security agreement, lease,
financing statement or other title retention agreement has been or will be
executed in favor of any person other than Lender with respect to any of the
Personal Property.

        3.3     Absence of Conflicts.  That the execution and delivery of the
Loan Documents by Borrower and the performance and observance by Borrower of its
obligations thereunder will not, contravene or result in a breach of (a) if
Borrower purports to be a corporation, any provision of Borrower's corporate
charter or by-laws, or, if Borrower purports to be partnership, any provision of
Borrower's partnership agreement or certificate, or, if Borrower purports to be
a limited liability company, any provision of Borrower's articles of
organization or operating agreement, or (b) any material Requirements, or (c)
any decree or judgement binding on Borrower or (d) any material agreement or
instrument binding on Borrower or any of its property, nor will the same result
in the creation of any lien or security interest under any such agreement or
instrument.

        3.4     Pending Litigation.  That there are no actions, suits,
investigations or proceedings pending, or, to the knowledge of Borrower,
threatened against Borrower, or the Property, or involving the validity or
enforceability of any of the Loan Documents or the priority of the lien thereof,
or which will materially affect Borrower's ability to repay the Loan, at law or
in equity or before or by any Governmental Authority.

        3.5     Violations of Requirements.  That Borrower has no knowledge of
any violations or notices of violations of any Requirements which will
materially affect Borrower's ability to repay the Note of use and update the
Improvements.

        3.6     Compliance with Requirements.  That the Plans and Specifications
and construction of the Improvements pursuant thereto and the use of the
Property contemplated thereby will comply with all material Requirements.

        3.7     Organization, Status and Authority.

                (a)     If Borrower is a corporation, that (i) it is a
        corporation duly organized, validly existing and in good standing under
        the laws of the state in which it is incorporated, (ii) if required by
        the laws of the state in which the Land is located, it is duly qualified
        to do business and is in good standing therein, (iii) it has the
        corporate power, authority and legal right to own and operate its
        properties and assets, carry on the business now being conducted and
        proposed to be conducted by it, and to engage in the transactions
        contemplated by the Loan Documents, and (iv) the execution and delivery
        of the Loan Documents to which it is a party and the performance and
        observance of the provisions thereof have been duly authorized by all
        necessary corporate actions.

                (b)     If Borrower is a partnership, that (i) it is duly formed
        and validly existing under the laws of the state in which it is formed,
        (ii) if required by the

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        laws of the state in which the Land is located, it is fully qualified to
        do business therein, (iii) it has the power, authority and legal right
        to own and operate its properties and assets, to carry on the business
        conducted and to engage in the transactions contemplated by the Loan
        Documents, and (iv) the execution and delivery of the Loan Documents to
        which it is a party and the performance and observance of the provisions
        thereof have all been duly authorized by all necessary actions of its
        partners.

                (c)     If Borrower or any member of Borrower is a limited
        liability company, that (i) it is a limited liability company duly and
        validly existing and in good standing under the laws of the state in
        which it is organized, (ii) if required by the laws of the state in
        which the Land is located, it is duly qualified to so business therein,
        (iii) it has the power, authority and legal right to own and operate its
        properties and assets, carry on the business now being conducted and
        proposed to be conducted by it, and to engage in the transactions
        contemplated by the Loan Documents, and (iv) the execution and delivery
        of the Loan Documents to which it is a party and the performance and
        observance of the provisions thereof have been duly authorized by all
        necessary corporate actions.

        3.8     Availability of Utilities.  That all utility services reasonably
necessary and sufficient for the construction, development and operation of the
Property for its intended purposes are presently available (or are reasonably
anticipated to be available so as not to materially delay construction of the
Improvements) to the boundaries of the Land through dedicated public rights of
way or through perpetual private easements, approved by Lender, with respect to
which the Mortgage creates a valid, binding and enforceable lien, including, but
not limited to, water supply, storm and sanitary sewer, gas, electric and
telephone facilities, and drainage.

        3.9     Condition of Property.  That neither the Property nor any
portion thereof is now materially damaged or injured as result of any fire,
explosion, accident, flood or other casualty or has been the subject of any
Taking, and to the knowledge of Borrower, no Taking is pending or contemplated.

        3.10    Brokerage Commissions.  That any brokerage commissions due in
connection with the transactions contemplated hereby and owned by Borrower have
been paid in full and that any such commissions coming due in the future will be
promptly paid by Borrower. Borrower agrees to and shall indemnify Lender from
any liability, claims or losses arising by reason of any such brokerage
commissions. This provision shall survive the repayment of the Loan and shall
continue in full force and effect so long as the possibility of such liability,
claims or losses exists.

        3.11    Financial Statements.  That the financial statements of Borrower
previously delivered to Lender are true and correct in all material respects,
have been prepared in accordance with generally accepted accounting principles
consistently applied, and fairly present the financial condition of Borrower as
of the respective dates thereof and the results of its operations for the
periods covered thereby; that no adverse change has occurred in the assets,
liabilities, or financial conditions reflected therein since the respective
dates thereof.

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        3.12    Taxes.  That all federal, state and other tax returns of
Borrower required by law to be filed have been filed, that except for Permitted
Contests all federal, state and other taxes, assessments and other governmental
charges upon Borrower and its respective properties which are due and payable
have been paid, and that Borrower has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods for which such return shave been filed.

        3.13    Construction Contract.  That (i) the Construction Contract is in
full force and effect; (ii) both Borrower and Contractor are in material
compliance with their respective obligations under the Construction Contract;
(iii) the work to be performed by Contractor under the Construction Contract is
the work called for by the Plans and Specifications and all work required to
complete the Improvements substantially in accordance with the Plans and
Specifications is provided for under the Construction Contract; and (iv) all
work on the Improvements shall be completed substantially in accordance with the
Plans and Specifications in a good and workmanlike manner and shall be free of
any material defects.

        3.14    Access.  That the rights of way for all roads necessary for the
full utilization of the Improvements for their intended purposes have either
been acquired by the Borrower, the appropriate Governmental Authority or have
been dedicated to public use and accepted by such Governmental Authority, and
all such roads shall have been completed, or all reasonably necessary steps
shall have been taken by Borrower and such Governmental Authority to assure the
complete construction and installation thereof prior to the date upon which
access to the Property via such roads will be necessary. All curb cuts, driveway
permits and traffic signals shown on the Plans and Specifications or otherwise
necessary for access to the Property are existing or have been fully approved by
the appropriate Governmental Authority or Borrower has taken all reasonably
necessary steps so that the obtaining of such approvals will not materially
delay the construction of the Improvements.

        3.15    No Default.  That no Event of Default exists.

        3.16    Architect's Contract.  That (i) the Architect's Contract is in
full force and effect; and (ii) both Borrower and Borrower's Architect are in
material compliance with their respective obligations under the Architect's
Contract.

        3.17    Plans and Specifications.  That Borrower has furnished Lender
complete sets of the Plans and Specifications which comply with all material
Requirements, all material Governmental Approvals, and all material
restrictions, covenants and easements affecting the Property, and which have
been approved by such Governmental Authority as is required for construction of
the Improvements.

        3.18    Governmental Approvals.  That Borrower has obtained all
Governmental Approvals from, and has given all such notices to, and has taken
all such other actions with respect to such Governmental Authority as may be
required under applicable Requirements for the construction of the Improvements
or Borrower has taken all reasonably necessary steps so that the obtaining of
such approvals will not materially delay the construction of the improvements.

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        3.19    Construction Budget.  That the Construction Budget accurately
reflects all material Property Costs.

        3.20    Feasibility.  That the Construction Schedule is realistic and
reasonably feasible, and is materially accurate to date.

        3.21    Effect of Draw Request.  That each Draw Request submitted to
Lender as provided in Article 6 hereof shall constitute an affirmation that the
representations and warranties contained in Article 3 of this Agreement and in
the other Loan Documents remain true and correct as of the date thereof; and
unless Lender is notified to the contrary, in writing, prior to the disbursement
of the requested Advance or any portion thereof, shall constitute an affirmation
that the same remain true and correct on the date of such disbursement.

                                    ARTICLE 4

                              COVENANTS OF BORROWER

        Borrower hereby covenants and agrees with Lender as follows:

        4.1     Commitments.  To permit no default under the terms of the
Commitment.

        4.2     Construction Contract.  (i)  To permit no material default under
the terms of the Construction Contract, (ii) to waive none of the material
obligations of Contractor thereunder, (iii) to do no act which would relieve
Contractor from its obligations to construct the Improvements substantially in
accordance with the Plans and Specifications, and (iv) to make no material
amendments to or material change orders (as defined in Section 4.11) under the
Construction Contract without the prior approval of Lender.

        4.3     Architect's Contract.  (i) To permit no material default under
the terms of the Architect's Contract, (ii) to waive none of the material
obligations of Borrower's Architect thereunder, (iii) to do no act which would
relieve Borrower's Architect from its material obligations under the Architect's
Contract, and (iv) to make no material amendments to the Architect's Contract
without the prior approval of Lender.

        4.4     Insurance.  To obtain insurance or evidence of insurance as
Lender may reasonably require, including, but not limited to, the following:

                (a)     Title Insurance.  A mortgagee title insurance policy
        (the "Title Insurance Policy") in an amount, and issued by a title
        insurance company (the "Title Insurer") and through a title agent as
        shall be approved by insuring a valid first lien upon and security
        interest in and to the Property by virtue of the Mortgage, with such
        reinsurance or co-insurance agreements as may be reasonably required by
        Lender. The Title Insurance Policy shall contain a pending disbursements
        clause or endorsement and such other endorsements as Lender may
        reasonably require, and such affirmative insurance as Lender may
        reasonably require. The Title Insurance Policy, together with evidence
        of

<PAGE>   10

        payment of premiums thereon, shall be delivered to Lender on or before
        the date of this Agreement.

                (b)     Insurance Required by Mortgage.  Such insurance as may
        be required by the Mortgage. If any hazard insurance required by the
        Mortgage is obtained as to all or part of the Property before completion
        of construction then such policy shall contain an endorsement
        recognizing that construction is in progress and agreeing that such
        shall not adversely affect the coverage or be asserted as a defense on
        any claim under such policy.

                (c)     Professional Liability Insurance.  Evidence or
        certificates from insurance companies indicating that Borrower's
        Architect, and all other architects and engineers responsible for the
        design of the Improvements are covered by professional liability
        insurance in an amount of not less than $2,000,000.00 and such evidence
        or certificates to be delivered to Lender on or before the date of this
        Agreement.

        4.5     Application of Loan Proceeds.  To use the proceeds of the Loan
solely for the purpose of paying for the Property Costs in accordance with the
terms of this Agreement.

        4.6     Property Costs and Expenses.  To pay or cause to be paid all
properly incurred Property Costs, regardless of the amount, and to pay all
reasonable costs and expenses of Lender with respect to the financing,
acquisition and construction of the Property, including but not limited to,
appraisal fees, inspection fees, surveying costs, legal fees(including legal
fees incurred by Lender subsequent to the closing of the Loan in connection with
the collection of the Loan), recording expenses, surveys, intangible taxes,
expenses of foreclosure (including attorney's fees) and similar items.

        4.7     Commencement and Completion of Construction.  To commence
construction of the Improvements within thirty (30) days after the date hereof
and to diligently pursue construction to completion prior to the Completion Date
substantially in accordance with the Plans and Specifications, in material
compliance with all material restrictions, covenants and easements affecting the
Property, all material Requirements, and all material Governmental Approvals,
and with all material terms and conditions of the Loan Documents without
deviation from the Plans and Specifications unless with the prior approval of
Lender and the surety company or companies issuing any Payment and Performance
Bond; to pay all sums and to perform such duties as may be necessary to complete
such construction of the Improvements substantially in accordance with the Plans
and Specifications and in material compliance with all restrictions, covenants
and easements affecting the Property, all material Requirements and all material
Governmental Approvals, and with all material terms and conditions of the Loan
Documents, all of which shall be accomplished on or before the Completion Date,
free from any liens, claims or assessments (actual or contingent) asserted,
except for Permitted Encumbrances, against the Property for any material, labor
or other items furnished in connection therewith. Evidence of satisfactory
compliance with the foregoing shall be furnished by Borrower to Lender on or
before the Completion Date.

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        4.8     Right of Lender to Inspect Property.  To permit Lender and its
representatives and agents to enter upon the Property at reasonable times upon
reasonable notice and to inspect the Improvements and all materials to be used
in the construction thereof and to reasonably cooperate and cause Contractor to
reasonably cooperate with Lender and its representatives and agents during such
inspections (including making reasonably available to Lender working copies of
the Plans and Specifications together with all related supplementary materials);
provided, however, that this provision shall not be deemed to impose upon Lender
any obligation to undertake such inspections.

        4.9     Correction of Defects.  Unless Borrower demonstrates to Lender
that such corrective work is inappropriate or inconsistent with the Plans and
Specifications, to promptly correct all material defects in the Improvements or
any material departure from the Plans and Specifications not previously approved
by Lender. Borrower agrees that the advance of any proceeds of the Loan whether
before or after such defects or departures from the Plans and Specifications are
discovered by, or brought to the attention, of Lender, shall not constitute a
waiver of Lender's right to require compliance with this covenant.

        4.10    Sign Regarding Construction Financing.  At Lender's option and
expense, to erect promptly and maintain on a suitable site on the Land a sign
indicating that construction financing is being provided by Lender, all to the
reasonable satisfaction of Lender; and to prevent the destruction or removal of
said sign without the prior approval of Lender.

        4.11    Approval of Change Orders.  To permit no material change orders
during construction without the prior approval of Lender and the surety company
or companies issuing any Payment and Performance Bonds. For the purposes of this
Agreement a material change order shall mean a change order which, when added to
any previous change orders, if any, increases the cost of construction by more
than $50,000.00 individually or $200,000.00 in the aggregate and/or causes a
delay in the Completion Date of more than one (1) month.

        4.12    Notice of Occupancy.  To notify Lender at least ten (10) days
prior to, and again on, the date of occupancy of each tenant of any portion of
the Property (except for residents of the facility), such notice upon occupancy
to include the name of the tenant and the date of occupancy.

        4.13    Books and Records.  To keep and maintain reasonably complete
proper and accurate books, records and accounts reflecting material items of
material income and expense of Borrower in connection with the Property and the
construction of the Improvements and the results of the operation thereof; and,
upon the request of Lender, to make such books, records and accounts reasonably
available to Lender for inspection or independent audit.

        4.14    Financial Statements and Other Information.  To furnish to
Lender such financial statements and information as Borrower has agreed to
provide elsewhere in the Loan Documents.

<PAGE>   12

        4.15    Construction Inspector.  To permit Lender to retain the
Construction Inspector (the "Construction Inspector") at the cost of Borrower to
perform the following services on behalf of Lender:

                (a)     To review and advise Lender whether, in the opinion of
        the Construction Inspector, the Plans and Specifications are
        satisfactory;

                (b)     To review Draw Requests and material change orders;

                (c)     To make periodic inspections (approximately at the date
        of each Draw Request) for the purpose of assuring that construction of
        the Improvements to date is in substantial accordance with the Plans and
        Specifications and to approve Borrower's then current Draw Request as
        being consistent with Borrower's obligations under this Agreement,
        including inter alia, an opinion as to Borrower's continued compliance
        with the provisions of Section 6.1 (f) (4) hereof.

        The reasonable fees of the Construction Inspector shall be paid by
Borrower promptly upon, but in no event later than sixty (60) days after billing
therefor and expenses incurred by Lender on account thereof shall be reimbursed
to Lender forthwith upon request therefor, but neither Lender nor the
Construction Inspector shall have any liability to Borrower on account of (i)
the services performed by the Construction Inspector, (ii) any neglect or
failure on the part of the Construction Inspector to properly perform its
services, or (iii) any approval by the Construction Inspector of construction of
the Improvements. Neither Lender nor the Construction Inspector assumes any
obligation to Borrower or any other person concerning the quality of
construction of the Improvements or the absence therefrom of defects.

        4.16    Soil Tests.  To provide promptly to Lender at Borrower's
reasonable expense such soil tests and environmental assessments of the Land as
Lender may require from time to time.

        4.17    Insufficiency of Loan Proceeds.  To deposit funds with Lender as
follows: if at any time or from time to time during the terms of this Agreement,
in Lender's reasonable judgment and opinion, the remaining undisbursed portion
of the Loan, together with the undisbursed balances of other sums previously
deposited by Borrower with Lender in connection with the Loan, is or will be
insufficient to complete the Improvements substantially in accordance with the
Plans and Specifications, and to pay all other sums due or to become due under
the Loan Documents, regardless of how such condition may be caused, Borrower
shall, within fifteen (15) days after written notice thereof from Lender,
deposit with Lender such sums of money in cash as Lender may reasonably require,
in an amount sufficient to remedy such condition, and, at Lender's option, no
further Advances of the Loan shall be made by Lender until the provisions of
this Paragraph have been fully complied with. All such deposited sums shall
stand as additional security for Borrower's obligations under this Agreement and
shall be disbursed by Lender in the same manner as Advances under this Agreement
before any further Advances of the Loan proceeds shall be made. Lender shall
have no obligation to pay Borrower interest with respect to such deposited
funds. If all or a portion of the money deposited with Lender hereunder has not
been disbursed and the remaining undisbursed portion of the Loan is reasonably
sufficient to complete the

<PAGE>   13

Improvements substantially in accordance with the Plans and Specifications, then
such undisbursed funds shall be immediately returned to Borrower.

        4.18    Additional Documents.  To perform hereunder as follows:

                (a)     Regarding Construction.  To furnish to Lender all
        instruments, documents, boundary surveys, footing or foundation surveys,
        certificates, plans and specifications, appraisals, title and other
        insurance, reports and agreements and each and every other document and
        instrument required to be furnished by, the terms of the Commitment or
        this Agreement or the other Loan Documents, all at Borrower's expense.

                (b)     Regarding Preservation of Security.  To execute and
        deliver to Lender such documents, instrument, assignments and other
        writings, and to do such other acts reasonably necessary or desirable,
        to preserve and protect the collateral at any time securing or intended
        to secure the Loan, as Lender may reasonably require.

                (c)     Regarding this Agreement.  To do and execute all and
        such further lawful and reasonable acts, conveyances and assurances to
        carry out of the intents and purposes of this Agreement as Lender shall
        reasonably require from time to time.

        4.19    Financing Publicity.  To permit Lender to obtain publicity in
connection with the construction of the Improvements through press releases and
participation in such events as ground breaking and opening ceremonies; and to
give Lender reasonable advance notice of such events and to give Lender
reasonable assistance in connection with obtaining such publicity as Lender may
request without expense to Borrower and without specifying the principals of
Borrower, Alterra and ALE.

        4.20    Easements and Restrictions.  To submit to Lender for Lender's
approval prior to the execution thereof by Borrower all proposed easements,
restrictions, covenants, permits, licenses, and other instruments which would or
might materially affect the title to the Property, accompanied by a survey
showing the exact proposed location thereof and such other information as Lender
shall reasonably require. Borrower shall not subject the Property or any part
thereof to any easement, restriction or covenant (including any restriction or
exclusive use provision in any lease or other occupancy agreement) which would
or might materially affect the title to the Property without the prior approval
of Lender.

        4.21    Compliance with Requirements.  Except for Permitted Contests, to
materially comply promptly with all Requirements and Governmental Approvals and
to furnish Lender, on demand, with independent evidence of such compliance.

        4.22    Leases.  To enter into no leases or occupancy agreements
affecting the Property without the prior approval of Lender (except for leases
with residents of the facility). Borrower shall deliver to Lender executed
counterparts of all leases and occupancy agreements affecting the Property
(except for leases with residents of the facility) whether executed before or
after the date of this Agreement, and shall not

<PAGE>   14

amend any provision thereof or waive any obligations of tenants under any leases
or occupancy agreements affecting the Property without the prior approval of
Lender.

        4.23    Compliance With Restrictions, Covenants and Easements.  To
materially comply with all restrictions, covenants and easements affecting the
Property.

        4.24    Laborers, Subcontractors and Materialmen.  To furnish to Lender,
upon request at anytime, and from time to time, affidavits listing all laborers,
subcontractors, materialmen, and any other parties who might or could claim
statutory or common law liens and are furnishing or have furnished labor or
material to the Property or any portion thereof, together with affidavits, or
other evidence satisfactory to Lender, showing that such parties have been paid
all amounts then due for labor and materials furnished to the Property. In
addition, Borrower will promptly notify Lender, and in writing, if Borrower
receives any notice, written or oral, from any laborer, subcontractor or
materialmen to the effect that said laborer, subcontractor or materialmen has
not been paid when due for any labor or materials furnished in connection with
the construction of the Improvements. Borrower will also furnish to Lender, at
any time and from time to time upon demand by Lender, lien waivers bearing a
then current date from Contractor and such subcontractors or materialmen as
Lender may designate.

        4.25    No Transfers or Encumbrances.  Except as permitted by the
Mortgage, to cause or permit no sale, conveyance, transfer, assignment or
encumbering of the Property or any interest therein without the prior approval
of Lender.

                                    ARTICLE 5

                                AGREEMENT TO LEND

        Subject to the terms and conditions set forth in this Agreement, Lender
agrees to make Advances of the Loan to Borrower from time to time during the
period from the date hereof to the Termination Date in an aggregate principal
amount of up to and including the Loan Amount to pay Property Costs actually
incurred including costs incurred in the construction of the Improvements
(including Indirect Costs).

        5.1     Note.  The obligation of Borrower to pay the principal amount of
all Advances made by Lender to Borrower under this Agreement, plus all interest
accrued thereon at the rate or rates set forth in the Note, shall be evidenced
by the Note.

        5.2     Advances.  The Construction Budget reflects, by category and
line items, the purposes and the amounts for which funds to be advanced by
Lender under this Agreement are to be used. Lender shall not be required to
disburse for any category or line item more than the amount specified therefor
in the Construction Budget.

        5.3     Cost Overruns.  If Borrower becomes aware of any change in
Property Costs which will increase or decrease a category or line item of
Property Costs reflected on the Construction Budget (as the Construction Budget
is revised from time to time and approved by Lender), Borrower shall promptly
notify Lender in writing and promptly submit to Lender a revised Construction
Budget. No further Advances need

<PAGE>   15

be made by Lender if the revised Construction Budget, after the application of
line item savings, if any, savings in Development Costs (as that term is defined
in the Development Agreement) and contingency, reflects Project Costs which
cannot be funded by the Loan unless Borrower has deposited funds with Lender in
accordance with Section 4.18.If Lender approves the revised Construction Budget,
and such revised Construction Budget reflects Project Costs to be funded by
Lender in excess of the Loan Amount, the amount of such excess shall be added to
the Loan Amount, and Borrower's obligation to repay the same, together with
interest thereon at the rate or rates provided in the Note, shall be deemed to
be evidenced by the Note and secured by the Loan Documents.

        5.4     Contingency Reserve.  Any amount allocated as Contingency
Reserve in the Construction Budget is not intended to be disbursed and will only
be disbursed upon the prior approval of Lender, which approval will not be
unreasonably withheld of delayed. The disbursement of a portion of the
Contingency Reserve shall in no way prejudice Lender from withholding
disbursement of any further portion of the Contingency Reserve.

        5.5     Stored Materials.  Lender shall not be required to disburse any
funds for any materials, furnishings, fixtures, machinery or equipment not yet
incorporated into Land or Improvements (the "Stored Materials"). Any
disbursement for the cost of Stored Materials shall be contingent upon Lender
receiving satisfactory evidence that:

                (a)     The Stored Materials are components in a form ready for
        incorporation into the Improvements;

                (b)     The Stored Materials are stored at the Land, in a bonded
        warehouse, at a site controlled by Borrower, or at such other site as
        Lender shall reasonably approve, and are reasonably protected against
        theft and damage;

                (c)     The Stored Materials have been paid for in full or will
        be paid for with the funds to be disbursed and all lien rights or claims
        of the supplier have been released or will be released upon payment with
        disbursed funds;

                (d)     Lender has or will have upon payment with disbursed
        funds a perfected, first priority security interest in the Stored
        Materials; and

                (e)     The Stored Materials are insured for an amount equal to
        their replacement costs.

        5.6     Amount of Advances.  In no event shall any Advance exceed the
full amount of Indirect Costs approved by Lender and theretofore paid or to be
paid with the proceeds of such Advance plus ninety (90%) percent of all costs
for construction of Improvements approved by Lender and incurred by Borrower
through the date of the Draw Request for such Advance less the aggregate amount
of any Advances previously made by Lender. It is further understood that the
retainage described above is intended to provide a contingency fund protecting
Lender against failure of Borrower to fulfill any obligations under the Loan
Documents, and that Lender may charge amounts against such retainage in the
event Lender is required or elects to expend its

<PAGE>   16

own funds to cure any Event of Default. Notwithstanding the foregoing, no
retainage shall be required on Required Equity Funds, other funds provided to
Lender by Borrower to be disbursed hereunder, on the purchase of furniture,
fixtures and equipment, or on labor expenses. Further, the retainage shall be
reduced to five (5%) percent thirty (30) days after the substantial completion
of work by a contractor or subcontractor. Upon the completion of the
improvements the remaining retainage shall be released.

        5.7     Quality of Work.  No Advance or part thereof shall be due to the
extent work done at the date the Draw Request for such Advance is submitted is
not done in a good and workmanlike manner and without material defects, as
confirmed by the report of the Construction Inspector, but Lender may disburse
all or part of any Advance before the sum shall become due if Lender believes it
advisable to do so, and all such Advances or parts thereof shall be deemed to
have been made pursuant to this Agreement.

        5.8     Required Equity Funds.  Required Equity Funds shall be disbursed
in the same manner as Advances under this Agreement and shall be so disbursed
before any Advances of the Loan proceeds shall be made.

                                    ARTICLE 6

                             CONDITIONS PRECEDENT TO

                          DISBURSEMENT OF LOAN PROCEEDS

        6.1     Conditions of Initial Advance.  The obligation of Lender to make
the initial Advance shall be subject to the following conditions precedent:

                (a)     Commitment.  All items required by the Commitment or
        letter of instructions from Lender to Borrower regarding the Loan shall
        have been delivered to the proper parties as required therein, and all
        conditions set forth in the Commitment or such letter of instructions
        shall have been satisfied.

                (b)     Loan Documents.  The Loan Documents shall have been duly
        executed and delivered by the parties thereto and shall be in full force
        and effect, and Lender shall have received the original or a fully
        executed counterpart thereof. All Loan Documents to be filed or recorded
        in the public records shall have been submitted for filing and
        recording.

                (c)     Construction Documents.  The Architect's Contract, if
        any, and Construction Contract shall have been duly executed and
        delivered by the parties thereto, shall be in full force and effect, and
        Lender shall have received a certified or a fully executed counterpart
        thereof. Borrower's Architect, if any, and the Contractor shall have
        duly executed and delivered to Lender a consent to the assignment of the
        Architect's Contract, if any, and Construction Contract, and Lender
        shall have received the original or a fully executed counterpart
        thereof.

<PAGE>   17

                (d)     Subcontracts.  Borrower shall have delivered to Lender,
        and Lender shall have approved, a list of all subcontractors and
        materialmen who have been or, to the extent identified by Borrower, will
        be supplying labor or materials for the construction of the
        Improvements, a copy of the standard form of subcontract to be used by
        the Contractor, and correct and complete photocopies of all executed
        subcontracts.

                (e)     Other Contracts.  Borrower shall have delivered to
        Lender correct and complete photocopies of all other executed contracts
        with contractors, engineers or consultants for the Property, and of all
        development, management, brokerage, sales or leasing agreements for the
        Property.

                (f)     Deliveries.  The following items or documents shall have
        been delivered to Lender:

                        (1)     Plans and Specifications.  Two complete sets of
                the Plans and Specifications and approval thereof by any
                necessary Governmental Authority.

                        (2)     Title Insurance Policy.  A paid Title Insurance
                Policy or marked-up title insurance commitment in all respects
                reasonably satisfactory to Lender and its counsel.

                        (3)     Other Insurance.  Policies (or, if permitted,
                certificates or other evidence of) all insurance required by
                this Agreement or any other Loan Document.

                        (4)     Evidence of Sufficiency of Funds.  Evidence
                reasonably satisfactory to Lender that the proceeds of the Loan,
                together with Required Equity Funds, will be sufficient to cover
                all Property Costs reasonably anticipated to be incurred, and to
                satisfy the obligations of Borrower to Lender under this
                Agreement.

                        (5)     Evidence of Access, Availability of Utilities,
                Governmental Approvals. Evidence reasonably satisfactory to
                Lender as to:

                                (A)     the methods of access to and egress from
                        the Property, and nearby or adjoining public ways,
                        meeting the reasonable requirements of property of the
                        type contemplated to be completed under this Agreement
                        and the status of completion of any required
                        improvements to such access;

                                (B)     the availability (or the reasonably
                        anticipated availability so as not to materially delay
                        construction of the Improvements) of storm and sanitary
                        sewer facilities meeting the reasonable requirements of
                        the Property;

                                (C)     the availability (or the reasonably
                        anticipated

<PAGE>   18

                        availability so as not to materially delay construction
                        of the Improvements) of all other required utilities, in
                        location and capacity sufficient to meet the reasonable
                        needs of the Property; and

                                (D)     the securing of all Governmental
                        Approvals from the applicable Governmental Authority
                        which are required under applicable Requirements for the
                        construction of the Improvements or the taking of such
                        reasonable steps so that the securing of such
                        Governmental Approvals will not materially delay
                        construction of the Improvements, together with copies
                        of all secured Governmental Approvals.

                        (6)     Environmental Report.  An environmental
                assessment report or reports of one or more qualified
                environmental engineering or similar inspection firms approved
                by Lender in form, scope and substance reasonably satisfactory
                to Lender, which report or reports shall indicate a condition of
                the Land in all respects reasonably satisfactory to Lender and
                upon which report or reports Lender is expressly entitled to
                rely.

                        (7)     Soil Report.  A soil report for the Land
                prepared by a soil engineer approved by Lender in form and
                substance reasonably satisfactory to Lender, containing
                recommendations for the design of foundations, paved areas and
                underground utilities.

                        (8)     Survey.  A survey prepared in accordance with
                Lender's survey requirements, certified by a land surveyor
                registered as such in the state in which the Land is located,
                which survey shall be in form and substance reasonably
                satisfactory to Lender.

                        (9)     Required Equity Funds.  Borrower's Required
                Equity Funds shall have been delivered to Lender.

                        (10)    Draw Request.  A Draw Request complying with the
                provisions of this Agreement.

                (g)     Legal Opinions.  Lender shall have received opinions in
        form and substance reasonably satisfactory to Lender and Lender's
        counsel from counsel satisfactory to Lender as to such matters as Lender
        shall reasonably request.

                (h)     Certification Regarding Chattels.  Lender shall have
        received a certification from the Title Insurer or counsel reasonably
        satisfactory to Lender (which shall be updated from time to time, but
        not more frequently that once monthly, at Borrower's expense upon
        request by Lender) that a search of the public records disclosed no
        conditional sales contracts, chattel mortgages, leases of personalty,
        financing statements or title retention agreements which affect the
        Property.

                (i)     Notices.  All notices required by any Governmental
        Authority or by any applicable Requirement to be filed prior to
        commencement of construction of the Improvements shall have been filed.

<PAGE>   19

                (j)     Appraisal.  Any appraisal requirements set forth in the
        Commitment shall have been satisfied.

                (k)     Performance; No Default.  Borrower shall have performed
        and complied with all terms and conditions herein required to be
        performed or complied with by it at or prior to the date of the initial
        Advance, and on the date of the initial Advance, there shall exist no
        Event of Default.

                (l)     Representations and Warranties.  The representations and
        warranties made by Borrower and any Guarantor in the Loan Documents or
        otherwise made by or on behalf of Borrower or any Guarantor in
        connection therewith or after the date thereof shall have been true and
        correct in all respects on the date on which made and shall also be true
        and correct in all respects on the date of the initial Advance.

                (m)     Other Documents.  Such other documents, opinions and
        certificates as Lender or its counsel may reasonably require.

                (n)     Proceedings and Documents. Lender shall have received
        all information and such counterpart originals on certified copies of
        such documents and such other certificates, opinions or documents as
        Lender and Lender's counsel may reasonably require.

        6.2     Conditions of Subsequent Advances.  The obligation of Lender to
make any Advance after the initial Advance shall be subject to the following
conditions precedent:

                (a)     Prior Conditions Satisfied.  All conditions precedent to
        the initial Advance and any prior Advance shall continue to be satisfied
        as of the date of such subsequent Advance.

                (b)     Performance; No Default.  Borrower shall have performed
        and complied with all terms and conditions herein required to be
        performed or complied with by it at or prior to the date of such
        advance, and on the date of such Advance there shall exist no Event of
        Default.

                (c)     Representations and Warranties.  The representations and
        warranties made by Borrower and any Guarantor in the Loan Documents or
        otherwise made by or on behalf of Borrower or any Guarantor in
        connection therewith after the date thereof shall have been true and
        correct in all respects on the date on which made and shall also be true
        and correct in all respects on the date of such Advance.

                (d)     No Material Damage.   If a material casualty (as that
        term is defined in the Mortgage) has occurred, that Borrower has
        complied with Section 16 of the Mortgage.

<PAGE>   20

                (e)     Receipt by Lender.  Lender shall have received:

                        (1)     Draw Request.  A Draw Request complying with the
                requirements hereof;

                        (2)     Endorsement to Title Insurance Policy.  A "run
                down" endorsement to the Title Insurance Policy or report
                indicating no material change in the state of title and
                containing no survey exceptions not approved by Lender, which
                endorsement shall, expressly or by virtue of a proper "pending
                disbursements" clause or endorsement in the policy, increase the
                coverage of the policy to the aggregate amount of all proceeds
                of the Loan advanced on or before the effective date of such
                endorsement;

                        (3)     Current Survey.  An updated survey if required
                by the Lender (but not more than twice per year);

                        (4)     Certificates.  Certificates from Borrower and
                the Construction Inspector to the effect that in their knowledge
                and in their opinion, based upon on-site observations and
                submissions by the Contractor, the construction of the
                Improvements to the date thereof was performed in a good and
                workmanlike manner and substantially in accordance with the
                Plans and Specifications; and

                        (5)     Contracts.  Evidence that one hundred percent
                (100%) of the cost of the remaining construction work is covered
                by firm contracts or subcontracts, or orders for the supplying
                of materials, with contractors, subcontractors, materialmen or
                suppliers reasonably satisfactory to Lender or reasonable
                evidence that such contracts will be executed so as not to
                materially delay construction of the Improvements.

                (f)     Other Documents.  Such other documents, opinions and
        certificates as Lender or its counsel may reasonably require.

        6.3     Conditions of Final Advance.  In addition to the conditions set
forth in Paragraph 6.2 above, Lender's obligation to advance sums retained
pursuant to this Agreement shall be subject to receipt by Lender of the
following:

                (a)     Approval of Improvements.  Evidence of the approval by
        all appropriate Governmental Authority of the Improvements in their
        entirety for permanent occupancy to the extent any such approval is or
        will be a condition of lawful use and occupancy of the Improvements, and
        evidence of approval by all appropriate Governmental Authority of the
        contemplated uses thereof.

                (b)     Approval by Construction Inspector.  Notification from
        the Construction Inspector to the effect that the Improvements have been
        completed in a good and workmanlike manner substantially in accordance
        with the Plans and Specifications.

                (c)     Final Survey.  A final survey reasonably acceptable to
        Lender

<PAGE>   21

        showing the as- built location of the completed Improvements

                (d)     Certificate of Borrower's Architect.  Certificate of
        Borrower's Architect that the Improvements have been completed
        substantially in accordance with the Plans and Specifications and that
        the Improvements comply with all applicable material Requirements and
        material Governmental Approvals and are in all material respects (except
        for work to be performed by tenants) ready for occupancy.

                (e)     Payment of Costs.  Evidence reasonably satisfactory to
        Lender that all sums due in connection with the construction of the
        Improvements have been paid in full (or will be paid out of the funds
        requested to be advanced) and that no party claims or has a right to
        claim any statutory or common law lien arising out of the construction
        of the Improvements or the supplying of labor, material, and/or services
        in connection therewith.

        6.4.    Lender's Approval.  Upon Lender's initial, subsequent or final
Advance (as applicable), Borrower shall be deemed to have fully complied with
the conditions precedent thereto set forth in this Article unless, prior to
making such Advance, Lender notifies Borrower in writing of any specific
deficiencies.

                                    ARTICLE 7

                     METHOD OF DISBURSEMENT OF LOAN PROCEEDS

        Lender agrees to make Advances in accordance with the Construction
Budget and subject to the following procedures.

        7.1     Draw Request to be Submitted to Lender.  At such time as
Borrower shall desire to obtain an Advance, Borrower shall complete, execute and
deliver to Lender a Borrower's Requisition in the form attached hereto as
Exhibit F (hereinafter referred to as "Borrower's Requisition") and an Election
Notice as required by the Note. Each Borrower's Requisition shall be accompanied
by:

                (a)     if Borrower's Requisition includes amounts to be paid to
        the Contractor under the Construction Contract, it shall be accompanied
        by a completed and itemized Application and Certificate for Payment (AIA
        Document No. G702) or similar form reasonably approved by Lender,
        containing the certification of Borrower's Architect and the
        Construction Inspector as to the accuracy of same, together with
        invoices relating to all items of direct cost covered thereby. All such
        applications for payment shall show all subcontractors by name and
        trade, the total amount of each subcontract, the amount theretofore paid
        to each subcontractor as of the date of such application, and the amount
        to be paid from the proceeds of the Advance to each subcontractor;

                (b)     if Borrower's Requisition includes payments for Indirect
        Costs, it shall be accompanied by a completed and itemized Indirect Cost
        statement executed by Borrower, together with invoices for all items of
        Indirect Costs covered thereby;

<PAGE>   22

                (c)     written lien waivers from the Contractor and
        subcontractors and materialmen for work done and materials supplied by
        them which were paid for pursuant to any prior Draw Request;

                (d)     a written notification of Borrower of any changes in the
        Plans and Specifications, the Construction Budget the Disbursement
        Schedule or the Construction Schedule;

                (e)     copies of all change orders and subcontracts, and, to
        the extent requested by Lender, of all inspection or test reports and
        other documents relating to the construction of the Improvements, not
        previously delivered to Lender; and

                (f)     such other information, documentation and certification
        as Lender shall reasonably request.

        7.2     Notice and Frequency of Advances.  Each Draw Request shall be
submitted to Lender at least ten (10) business days prior to the date of the
requested Advance, and no more frequently than monthly.

        7.3     Deposit of Funds Advanced.  Borrower shall open and maintain a
non-interest bearing loan checking account with Lender into which Lender shall
deposit the proceeds of each Advance. Lender is hereby irrevocably authorized to
make an Advance to and/or charge any account of Borrower with Lender, including
such loan checking account, without the further approval of Borrower, for (i)
any installment of interest due under the Note, (ii) any reasonable expenses
incurred by Lender (including without limiting the generality of the foregoing,
reasonable attorneys' fees and other fees incurred by Lender), or (iii) any
other sums due to Lender under the Note, this Agreement or any of the other Loan
Documents, all to the extent that the same are not paid by the respective due
dates thereof out of Advances of the Loan proceeds. Borrower shall at all times
maintain and keep collected balances in such loan checking account sufficient to
satisfy the foregoing obligations on the due date thereof.

        7.4     Advances to Contractor.  At its option, Lender may make any or
all Advances for construction expenses properly incurred by Contractor directly
to Contractor for deposit in an appropriately designated special bank account,
and the execution of this Agreement by Borrower shall, and hereby does,
constitute an irrevocable authorization so to advance the proceeds of the Loan
provided that Advances shall only be made directly to the Contractor if (i) sums
due to the Contractor are specifically set forth in the applicable draw request;
(ii) the sums have not been paid to the Contractor; and (iii) the Borrower
receives advance notice that the Lender intends to pay such portions of the
Advance directly to the Contractor. No further authorization from Borrower shall
be necessary to warrant such direct Advances to Contractor and all such Advances
shall satisfy pro tanto the obligations of Lender hereunder and shall be secured
by the Mortgage and the other Loan Documents as fully as if made directly to
Borrower.

<PAGE>   23

        7.5     Advances Do Not Constitute a Waiver.  No Advance shall
constitute a waiver of any of the conditions of Lender's obligation to make
further Advances nor, in the event Borrower is unable to satisfy any such
condition, shall any Advance have the effect of precluding Lender from
thereafter declaring such inability to be an Event of Default hereunder.

        7.6     Trust Fund Provisions.  All proceeds advanced hereunder shall be
subject to the trust fund provisions of Section 13 of the Lien Law. The
affidavit attached hereto as Exhibit G is made pursuant to and in compliance
with Section 22 of the Lien Law, and, if so indicated in said affidavit, Loan
proceeds will be used, in part, for reimbursement for payments made by the
Borrower prior to the initial Advance hereunder but subsequent to the
commencement of the construction and equipping of the Improvements for items
constituting Costs of Improvement.

                                    ARTICLE 8

                               EVENTS OF DEFAULTS

        The occurrence of any one or more of the following conditions or events
(each an "Event of Default") shall constitute a default under and breach of this
Agreement:

                (a)     any failure by Borrower to pay as and when due and
        payable any interest on or principal of or other sum payable under the
        Note; or

                (b)     any failure by Borrower to deposit with Lender any funds
        required by this Agreement to be deposited with Lender and continuance
        of such failure for a period of ten (10) days after written notice
        thereof from Lender; or

                (c)     any failure by Borrower to pay as and when due and
        payable any other sums to be paid by Borrower to Lender under this
        Agreement and continuance of such failure for a period of twenty (20)
        days after written notice thereof from Lender; or

                (d)     title to the Property is or becomes unsatisfactory to
        Lender, in its reasonably judgement, by reason of any material lien,
        charge, or encumbrance, title condition or exception (including without
        limitation, any mechanic's, materialman's or similar statutory or common
        law lien or notice thereof), but excluding the Permitted Encumbrances
        and such matter causing title to be or become unsatisfactory is not
        cured or removed (including by bonding) or reasonably satisfied within
        thirty (30) days after notice thereof from Lender to Borrower; or

                (e)     any refusal by the Title Insurer to insure any Advance
        as being secured by the Mortgage as a valid first lien on the Property
        and continuance of such refusal for a period of thirty (30) days after
        notice thereof by Lender to Borrower; or

                (f)     the Improvements are not substantially completed by the

<PAGE>   24

        Completion Date or, in the reasonable estimation of Lender, construction
        of the Improvements will not be substantially completed by the
        Completion Date unless such delay is caused by reasons beyond Borrower's
        reasonable control; or

                (g)     any material voucher or invoice is submitted at any time
        which Borrower knows has not been earned by the payee for services
        performed or for materials used in or furnished for the Property; or

                (h)     any cessation at any time in construction of the
        Improvements for more than forty-five (45) consecutive days except for
        strikes, acts of God, fire or other casualty, or other causes entirely
        beyond Borrower's reasonable control; or

                (i)     any failure by Borrower to duly observe or perform any
        material term, covenant, condition or agreement requiring Borrower to
        maintain insurance or not to encumber or transfer the Property and
        continuance of such failure for a period of thirty (30) days after
        written notice thereof from Lender; or

                (j)     Borrower requests a termination of the Loan, or
        confesses inability to continue or complete construction of the
        Improvements in accordance with this Agreement; or

                (k)     any Guarantor denies that said Guarantor has any
        liability or obligation under the Guaranty, or shall notify Lender of
        the Guarantor's intention to attempt to cancel or terminate the Guaranty
        unless such cancellation or termination is permitted under the
        appropriate Guaranty; or

                (l)     any material representation or warranty made or deemed
        to be made by or on behalf of Borrower or any Guarantor in this
        Agreement or in any other Loan Document, or in any report, certificate,
        financial statement, Draw Request or other instrument furnished in
        connection with this Agreement, any Advance or any other Loan Document,
        shall prove to have been false or incorrect in any material respect as
        at the date of which made or deemed to be made; or

                (m)     any dissolution, termination, liquidation, merger or
        consolidation of Borrower, or any sale, transfer or other disposition of
        all or substantially all of the assets of Borrower, or any member of
        Borrower, other than with the prior approval of Lender (which approval
        shall not be unreasonably withheld or delayed)(and except for sales,
        transfers or other dispositions permitted by Section 23 of the
        Mortgage); or

                (n)     a court of competent jurisdiction shall enter an order,
        judgment or decree, which shall be filed against Borrower, or the
        Property which, would have a materially adverse affect on the ability of
        Borrower to repay the Loan and to perform each and every one of its
        obligations under and by virtue of the Loan Documents; or

                (o)     any failure by Borrower to obtain any material
        Governmental Approvals, or the revocation or other invalidation of any
        material Governmental Approvals previously issued; or

<PAGE>   25

                (p)     any change in the legal or beneficial ownership of
        Borrower, other than with the prior approval of Lender, such approval
        not to be unreasonably withheld or delayed, and except for sales,
        transfers or other dispositions permitted under Section 23 of the
        Mortgage; or

                (q)     any default in the payment of money in excess of
        $50,000.00 shall occur under or in respect of any loan agreement, credit
        agreement, promissory note, bond, trust deed, indenture, mortgage,
        pledge, security agreement, indemnity or guaranty to which Borrower is a
        party (whether as principal or guarantor or other surety), or any other
        default shall occur thereunder which would entitle the holder thereof to
        declare all amounts payable with respect thereto to be immediately due
        and payable and such amount is in excess of $50,000.00; or

                (r)     any failure by Borrower to duly observe or perform any
        other term, covenant, condition or agreement under this Agreement and
        continuance of such failure for a period of thirty (30) days after
        written notice thereof from Lender; provided, however, that if such
        failure is not susceptible of cure during such thirty (30) day period
        (but is susceptible of cure) and Borrower promptly commences and
        diligently pursues cure of such failure during such thirty (30) day
        period, then such thirty (30) day period shall be extended for an
        additional consecutive period of thirty (30) days; or

                (s)     any "Event of Default" as said term is defined in  any
        of the other Loan Documents shall have occurred and continues beyond any
        applicable notice and/or cure period; or

                                    ARTICLE 9

                          RIGHTS AND REMEDIES OF LENDER

        9.1     Remedies.  Upon the occurrence of any Event of Default, Lender
may at any time thereafter, at its option, exercise any or all of the following
rights and remedies:

                (a)     Lender may declare its obligations to make Advances
        hereunder to be terminated, whereupon the same shall terminate, and/or
        declare all unpaid principal of and accrued interest on the Note,
        together with all other sums payable under the Loan Documents, to be
        immediately due and payable, whereupon same shall become and be
        immediately due and payable, anything in the Loan Documents to the
        contrary notwithstanding, and without presentation, protest or further
        demand or notice of any kind, all of which are expressly hereby waived
        by Borrower; provided, however, that Lender may make Advances or parts
        of Advances thereafter without thereby waiving the right to demand
        payment of the Note, without becoming liable to make any other or
        further Advances, and without affecting the validity of or
        enforceability of the

<PAGE>   26

        Loan Documents. Notwithstanding and without limiting the generality of
        the foregoing, if any event has occurred which but for the passage of
        time, the giving of notice or both would constitute an Event of Default,
        Lender's obligations to make Advances hereunder automatically shall so
        terminate.

                (b)     If Lender has accelerated the Loan, Lender may also
        cause the Property to be completed and may enter upon the Land and
        construct, equip and complete the Property in accordance with the Plans
        and Specifications, with such changes therein as Lender may, from time
        to time, and in its reasonable discretion, deem appropriate. In
        connection with any construction of the Property undertaken by Lender
        pursuant to the provisions of this subparagraph, Lender may:

                        (1)     use any funds of Borrower, including any balance
                which may be held by Lender as security or in escrow, and any
                funds remaining unadvanced under the Loan;

                        (2)     employ existing contractors, subcontractors,
                agents, architects, engineers, and the like, or terminate the
                same and employ others pursuant to commercially reasonable terms
                and conditions;

                        (3)     employ, as reasonably necessary, security
                watchmen to protect the Property;

                        (4)     make such additions, changes and corrections in
                the Plans and Specifications as shall, in the reasonable
                judgment of Lender, be necessary;

                        (5)     take over and use any and all Personal Property
                contracted for or purchased by Borrower, if reasonably
                appropriate, or reasonably dispose of the same;

                        (6)     execute all applications and certificates on
                behalf of Borrower which may be required by any Governmental
                Authority or Requirement;

                        (7)     reasonably pay, settle or compromise all
                existing or future bills and claims which are or may be liens
                against the Property, or may be necessary for the completion of
                the Improvements or the clearance of title to the Property;

                        (8)     complete the marketing and leasing of leasable
                space in the Improvements, enter into new leases and occupancy
                agreements, and modify or amend existing leases and occupancy
                agreements, all as Lender shall deem to be reasonably necessary
                or desirable;

                        (9)     reasonably prosecute and defend all actions and
                proceedings in connection with the construction of the
                Improvements or in any other way affecting the Land or the
                Improvements; and

                        (10)    take such action hereunder, or refrain from
                acting

<PAGE>   27

                hereunder, as Lender may, in its reasonable discretion, from
                time to time determine, to carry out the intent of this
                subparagraph. Borrower shall be liable to Lender for all
                reasonable costs paid or incurred for the construction,
                completion and equipping of the Property, whether the same shall
                be paid or incurred pursuant to the provisions of this
                subparagraph or otherwise, and all payments made or liabilities
                incurred by Lender hereunder of any kind whatsoever shall be
                deemed advances made to Borrower under this Agreement and shall
                be secured by the Mortgage and the other Loan Documents.

                        To the extent that any reasonable costs so paid or
                incurred by Lender, together with all other Advances made by
                Lender hereunder, exceed the Loan Amount, such excess costs
                shall be paid by Borrower to Lender on demand, with interest
                thereon at the Default Rate, if any, set forth in the Note or,
                in the absence of a Default Rate, at the Interest Rate, until
                paid; and Borrower shall execute such notes or amendments to the
                Note as may be requested by Lender to evidence Borrower's
                obligation to pay such excess costs and until such notes or
                amendments are so executed by Borrower, Borrower's obligation to
                pay such excess costs shall be deemed to be evidenced by this
                Agreement. In the event Lender takes possession of the Property
                and assumes control of such construction as aforesaid, it shall
                not be obligated to continue such construction longer than it
                shall see fit and may thereafter, at any time, reasonably change
                any course of action undertaken by it or abandon such
                construction and decline to make further payments for the
                account of Borrower whether or not the Property shall have been
                completed. For the purpose of this subparagraph, the
                construction, equipping and completion of the Property shall be
                deemed to include any action reasonably necessary to cure any
                Event of Default by Borrower under any of the terms and
                provisions of any of the Loan Documents.

                (c)     Lender may to the extent permitted by applicable law, at
        any time and from time to time, without notice (any such notice being
        expressly waived), without regard to the adequacy of any collateral, set
        off and apply any and all deposits (general or specific, time on demand,
        provisional or final, regardless of currency, maturity, or the branch of
        Lender where the deposits are held) at any time held or other sums
        credited by or due from Lender to Borrower against any and all
        liabilities, direct or indirect, absolute or contingent, due or to
        become due, now existing or hereafter arising of Borrower to Lender.

                (d)     Lender may exercise any or all of the rights and
        remedies set forth in the other Loan Documents.

        9.2     Power of Attorney.  For the purposes of carrying out the
provisions and exercising the rights, powers and privileges granted by or
referred to in this Agreement, Borrower hereby irrevocably constitutes and
appoints Lender its true and lawful attorney-in-fact, with full power of
substitution, to execute, acknowledge and deliver any instruments and do and
perform any acts which are referred to in this Agreement, in the name and on
behalf of Borrower. The power vested in such attorney-in-fact is, and shall be
deemed to be, coupled with an interest and irrevocable.

        9.3     Remedies Cumulative.  Upon the occurrence of any Event of
Default, the

<PAGE>   28

rights, powers and privileges provided in this Article 9 and all other remedies
available to Lender under this Agreement or under any of the other Loan
Documents or at law or in equity may be exercised by Lender at any time and from
time to time and shall not constitute a waiver of any of Lender's other rights
or remedies thereunder, whether or not the Loan shall be due and payable, and
whether or not Lender shall have instituted any foreclosure proceedings or other
action for the enforcement of its rights under the Loan Documents.

        9.4     Annulment of Defaults.  An Event of Default shall not be deemed
to be in existence for any purpose of this Agreement or any Loan Document if
Lender shall have waived such Event of Default in writing or stated that the
same has been cured to its reasonable satisfaction, but no such waiver shall
extend to or affect any subsequent Event of Default or impair any of the rights
of Lender upon the occurrence thereof.

        9.5     Waivers.  Borrower hereby waives to the extent not prohibited by
applicable law (a) all presentments, demands for payment or performance, notices
of nonperformance (except to the extent required by the provisions hereof or of
any other Loan Documents), protests and notices of dishonor, (b) any requirement
of diligence or promptness on Lender's part in the enforcement of its rights
(but not fulfillment of its obligations) under the provisions of this Agreement
or any other Loan Document, and (c) any and all notices of every kind and
description which may be required to be given by any statute or rule of law and
any defense of any kind which Borrower may now or hereafter have with respect to
its liability under this Agreement or under any other Loan Document.

        9.6     Course of Dealing, Etc.  No course of dealing between Borrower
and Lender shall operate as a waiver of any of either parties' rights under this
Agreement or any Loan Document. No delay or omission on either parties' part in
exercising any right under this Agreement or any Loan Document shall operate as
a waiver of such right or any other right hereunder. A waiver on any one
occasion shall not be construed as a bar to or waiver of any right or remedy on
any future occasion No waiver or consent shall be binding upon either party
unless it is in writing and signed by the other party. The making of an Advance
hereunder during the existence of an Event of Default shall not constitute a
waiver thereof.

                                   ARTICLE 10

                               GENERAL CONDITIONS

        The following conditions shall be applicable throughout the term of this
Agreement:

        10.1    Rights of Third Parties.  All conditions of the obligations of
Lender hereunder, including the obligation to make Advances, are imposed solely
and exclusively for the benefit of Lender and its successors and assigns and no
other person shall have standing to require satisfaction of such conditions in
accordance with their terms or be entitled to assume that Lender will make
Advances in the absence of strict compliance with any or all thereof and no
other person shall, under any

<PAGE>   29

circumstances, be deemed to be a beneficiary of such conditions, any and all of
which may be freely waived in whole or in part by Lender at any time if in its
sole discretion it deems it desirable to do so. In particular, Lender makes no
representations and assumes no obligations as to third parties concerning the
quality of the construction by Borrower of the Improvements or the absence
therefrom of defects. In this connection Borrower agrees to and shall indemnify
Lender from any liability, claims or losses resulting from the disbursement of
the Loan proceeds or from the condition of the Property whether related to the
quality of construction or otherwise and whether arising during or after the
term of the Loan made by Lender to Borrower in connection herewith. This
provision shall survive the repayment of the Loan and shall continue in full
force and effect so long as the possibility of such liability, claims or losses
exists.

        10.2    Relationship.  The relationship between Lender and Borrower is
solely that of a lender and borrower, and nothing contained herein or in any of
the other Loan Documents shall in any manner be construed as making the parties
hereto partners, joint venturers or any other relationship other than lender and
borrower.

        10.3    Evidence of Satisfaction of Conditions.  Any condition of this
Agreement which requires the submission of evidence of the existence or
non-existence of a specified fact or facts implies as a condition the existence
or non-existence, as the case may be, of such fact of facts and Lender shall, at
all times, be free independently to establish to its satisfaction and in its
reasonable discretion such existence or non-existence.

        10.4    Notices.   Any notices required or permitted to be given
hereunder shall be: (i) personally delivered or (ii) given by registered or
certified mail, postage prepaid, return receipt requested, or (iii) forwarded by
overnight courier service or (iv) sent by telecopy (with hard copy to follow by
another accepted method), in each instance addressed to the addresses set forth
at the head of this Note, or such other addresses as the parties may for
themselves designate in writing as provided herein for the purpose of receiving
notices hereunder. All notices shall be in writing and shall be deemed given, in
the case of notice by personal delivery or overnight courier, upon tender of
delivery, and in the case of mail, three business days after postmark and in the
case of telecopy, upon receipt of such telecopy independently confirmed by other
than sender's machine. A copy of any notice issued hereunder shall be sent to
ALE at 250 South Clinton Street, Syracuse, New York 13202 (Attention: Neil A.
Rube) and to Alterra at 10000 Innovation Drive, Milwaukee, Wisconsin 53226
(Attention: Mark Ohlendorf).

        10.5    Assignment.  Borrower may not assign this Agreement or any of
its rights or obligations hereunder without the prior approval of Lender. A
sale, transfer or other disposition of any interest of Borrower or the Property
that is permitted by Section 23 of the Mortgage shall not constitute an
assignment for the purposes of this Agreement.

        10.6    Successors and Assigns Included in Parties.  Whenever in this
Agreement one of the parties hereto is named or referred to, the heirs, legal
representatives, successors and assigns of such parties shall be included and
all covenants and agreements contained in this Agreement by or on behalf of
Borrower or by or on behalf of Lender shall bind and inure to the benefit of
their respective heirs, legal representatives, successors and assigns, whether
so expressed or not.

<PAGE>   30

        10.7    Headings.  The headings of the articles, paragraphs and
subparagraphs of this Agreement are for the convenience of reference only, are
not to be considered a part hereof and shall not limit or otherwise affect any
of the terms hereof.

        10.8    Invalid Provisions to Affect No Others.  If fulfillment of any
provision hereof or any transaction related hereto at the time performance of
such provisions shall be due, shall involve transcending the limit of validity
presently prescribed by law, with regard to obligations of like character and
amount, then ipso facto, the obligation to be fulfilled shall be reduced to the
limit of such validity; and if any clause or provision herein contained operates
or would prospectively operate to invalidate this Agreement in whole or in part,
then such clause or provision only shall be held for naught, as though not
herein contained, and the remainder of this Agreement shall remain operative and
in full force and effect.

        10.9    Number and Gender.  Whenever the singular or plural number, or
the masculine, feminine or neuter gender is used herein, it shall equally
include the other.

        10.10   Governing Law.  This Agreement shall be governed by and
construed in accordance with laws of the State of New York.

        10.11   Consent to Jurisdiction.  Borrower hereby irrevocably and
unconditionally (a) submits to personal jurisdiction in the State of New York
over any suit, action or proceeding arising out of or relating to this
Agreement, and (b) waives any and all personal rights under the laws of any
state (i) to the right, if any, to trial by jury, or (ii) to object to
jurisdiction within the State of New York or venue in any particular forum
within the State of New York. Nothing contained herein, however, shall prevent
Lender from bringing any suit, action or proceeding or exercising any rights
against any security and against Borrower, and against any property of Borrower,
in any other state. Initiating such suit, action or proceeding or taking such
action in any state shall in no event constitute a waiver of the agreement
contained herein that the laws of the State of New York shall govern the rights
and obligations of Borrower and Lender hereunder or the submission herein by
Borrower to personal jurisdiction within the State of New York.

        10.12   Amendments.  Neither this Agreement nor any provision hereof may
be changed, waived, discharged or terminated orally, but only by instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought.

        IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement
under seal on the date first above written.

                                BORROWER:

                                CLINTON BROOKSIDE DRIVE, LLC
                                By:  ASSISTED LIVING EQUITITES, LLC,
                                        its member

<PAGE>   31

                                By: |S| Neil A. Rube
                                   ---------------------------------------------
                                        Neil A. Rube, Executive Committee Member

                                LENDER:

                                KEY CORPORATE CAPITAL INC.

                                By: /S/ Mark Wegener
                                   ---------------------------------------------
                                     Name:  Mark Wegener
                                     Title: Vice President

<PAGE>   32

STATE OF NEW YORK       )
                        ) ss.:
COUNTY OF ONONDAGA      )

        On this __ day of January, 2000, before me, the undersigned, a Notary
Public in and for said State, personally appeared Neil A. Rube, personally known
to me or proved to me on the basis of satisfactory evidence to be the individual
whose name is subscribed to the within instrument and acknowledged to me that he
executed the same in his capacity, and that by his signature on the instrument,
the individual, or the person upon behalf of which the individual acted,
executed the instrument.

                                   ____________________________________
                                   Notary Public

STATE OF NEW YORK       )
                        ) ss.:
COUNTY OF ____________  )

        On this __ day of January, 2000, before me, the undersigned, a Notary
Public in and for said State, personally appeared__________________, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged to
me that he executed the same in his capacity, and that by his signature on the
instrument, the individual, or the person upon behalf of which the individual
acted, executed the instrument.

                                   ____________________________________
                                   Notary Public<PAGE>   1
                                                                  EXHIBIT 10.117

                             SECURED PROMISSORY NOTE

$3,300,000.00                                                   ALBANY, NEW YORK
                                                                JANUARY 14, 2000

         FOR VALUE RECEIVED, CLINTON BROOKSIDE DRIVE, LLC, a New York limited
liability company with an office for the transaction of business at 250 South
Clinton Street, Syracuse, New York 13202 (the "Borrower") promises to pay to the
order of KEY CORPORATE CAPITAL INC., a Michigan corporation with an office for
the transaction of business at 127 Public Square, 6th Floor, Cleveland, Ohio
44114 (the "Lender") the principal sum of Three Million Three Hundred Thousand
Dollars ($3,300,000.00), or so much thereof as may be advanced from time to time
in accordance with the terms of a building loan agreement dated of even date
herewith (the "Building Loan Agreement") and a development agreement dated of
even date herewith (the "Development Agreement"),with interest on the unpaid
principal balance of such amount from the date of this Note or such advance, as
the case may be, at the Interest Rate (as hereinafter defined). This Note
evidences a loan (the "Loan") made, or so much thereof as may be made, by Lender
to Borrower, in the principal amount hereof, and is secured by (a) a mortgage
and security agreement from Borrower to Lender dated of even date herewith in
the amount of $3,300,000.00 (the "Mortgage"), which creates a lien on certain
real property located in the Town of Clinton, County of Oneida, State of New
York (the "Real Property"), (b) a guaranty of payment and performance dated of
even date herewith from Alterra Healthcare Corporation ("Alterra") to Lender
(the "Guaranty"), (c) a limited recourse guaranty dated of even date herewith
from Assisted Living Equities, LLC ("ALE") (Alterra and ALE being sometimes
hereinafter referred to collectively as the "Guarantor" (provided, however, that
Guarantor shall mean Alterra once the Limited Recourse Guaranty is terminated))
to Lender (the "Limited Recourse Guaranty"), (d) a security agreement dated of
even date herewith from Borrower to Lender (the "Security Agreement") which,
together with financing statements executed in connection therewith (the
"Financing Statements") creates a lien security interest in certain personal
property (the "Personal Property") more particularly described in the Security
Agreement, (e) an assignment of rents and leases dated of even date herewith
from Borrower to Lender (the "Assignment") which conditionally assigns all rents
and absolutely assigns all leases in respect of the Real Property to Lender, (f)
an assignment of contract documents dated of even date herewith (the "Contract
Assignment") from Borrower to Lender, (g) a hazardous substances indemnity
agreement (the "Indemnity Agreement") dated of even date herewith from the
Borrower in favor of Lender, and (h) such other security as may now or hereafter
be given to Lender by Borrower and/or the Guarantors as collateral for the Loan
(the Building Loan Agreement, the Development Agreement, the Mortgage, the
Guaranty, the Limited Recourse Guaranty, the Security Agreement, the Financing
Statements, the Assignment, the Contract Assignment, the Indemnity Agreement,
this

<PAGE>   2

Note and such other documents evidencing such other security which may hereafter
be given as further security for, or in connection with, the Loan being
hereinafter collectively referred to as the "Loan Documents").

                                        I
                                   DEFINITIONS

         Except as otherwise defined herein, capitalized terms used herein shall
have the following definitions:

         "Adjusted Prime Rate" shall mean a rate per annum equal to the greater
of (a) the Prime Rate or (b) the Federal Funds Effective Rate plus one-half of
one percent (1/2%). Any change in the Adjusted Prime Rate shall be effective
immediately from and after such change in the Adjusted Prime Rate.

         "Advance" shall mean each advance of Loan proceeds by Lender to the
Borrower, each of which will be treated separately for purposes of computing
interest and each of which will accrue interest at the Interest Rate selected by
Borrower pursuant to an Interest Rate Election.

         "Business Day" means a day on which banks are not required or
authorized to close in Cleveland, Ohio and, if the applicable Business Day
relates to an Advance bearing interest at or with reference to the LIBOR Rate, a
day on which dealings are carried on in the London interbank Eurodollar market.

         "Certificate of Occupancy" shall mean the document, temporary or
permanent, first issued by the local governmental authority certifying that the
Improvements (as defined in the Mortgage) are sufficiently completed to permit
occupancy.

         "Completion Date" shall mean the date of admission of the first
resident of the Facility.

         "Debt Service Coverage Ratio" shall mean the ratio of (i) net income
before interest expense (including capital leases), taxes, depreciation and
amortization to (ii) the sum of current maturities of long term debt, capital
lease payments and interest expense on the Loan. For the purposes of calculating
the Debt Service Coverage Ratio, it shall be assumed that the Borrower is
required to make monthly payments of principal in the amount of Three Thousand
One Hundred Twelve Dollars and 50/100 ($3,112.50) commencing February 1, 2001,
notwithstanding the actual amortization schedule set forth in Article V hereof.

         "Default Interest Rate" shall mean the lesser of (a) the Prime Rate
plus four percent (4%) per annum or (b) the highest rate permitted by law.

         "Extended Term" shall mean the period beginning on February 2, 2002 and
ending on February 1, 2004.

                                       2
<PAGE>   3
         "Extended Term Maturity Date" shall mean February 1, 2004.

         "Election Notice" shall mean the Advance and/or Interest Rate Election
Notice which may be used by the Borrower when the Borrower is seeking an Advance
and/or electing a Prime Rate or a LIBOR Rate, said Election Notice to be in the
form of Exhibit "B" attached hereto and when delivered, to have been completed
by the Borrower to indicate an Advance amount (if applicable), an Interest Rate,
and, if such Advance is a LIBOR Rate Advance, an Interest Period. An Election
Notice shall be provided by Borrower to Lender at least three (3) business days
prior to each requested advance. The Election Notice may be delivered to the
Lender by telecopy as provided in the Loan Documents.

         "Eurocurrency Reserve Percentage" means, for any Interest Period in
respect of any Advance, as of any date of determination of the Interest Rate,
the aggregate of the then stated required maximum reserve percentages (including
any marginal, special, emergency or supplemental reserves), expressed as a
decimal, applicable to such Interest Period (if more than one such percentage is
applicable, the daily average of such percentages for those days in such
Interest Period during which any such percentage shall be so applicable) by the
Board of Governors of the Federal Reserve System, any successor thereto, or any
other banking authority, domestic or foreign, to which the Lender is subject in
respect to eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of the Federal Reserve Board) or in respect of any
other category of liabilities including deposits by reference to which the
interest rate on Advances is determined or any category of extension of credit
or other assets that include the Advances. For purposes hereof, such reserve
requirements shall include, without limitation, those imposed under Regulation D
of the Federal Reserve Board and the Advances shall be deemed to constitute
Eurocurrency Liabilities subject to such reserve requirements without benefit of
credits for proration, exceptions or offsets which may be available from time to
time to any Lender under said Regulation D.

         "Facility" shall mean the adult home facility to be located on the Real
Property.

         "Federal Funds Effective Rate" shall mean, for any day, the rate per
annum (rounded upward to the nearest one one-hundredth of one percent (1/100 of
1%)) announced by the Federal Reserve Bank (or any successor) on such day as
being the weighted average of the interest rates on overnight federal funds
transactions arranged by federal funds brokers on the previous trading day, as
computed and announced by such Federal Reserve Bank (or any successor) in
substantially the same manner as such Federal Reserve Bank computes and
announces the weighted average it refers to as the "Federal Funds Effective
Rate" as of the Closing Date.

         "Initial Term" shall mean the period beginning on the date of the first
Advance and ending on February 1, 2002.

                                       3
<PAGE>   4

         "Initial Term Maturity Date" shall mean February 1, 2002.

         "Interest Period" means, with respect to any Prime Rate Advance, the
period commencing on the date an Advance is made pursuant to an Election Notice
indicating that such Advance is a Prime Rate Advance and ending on the date a
LIBOR Interest Rate is selected for such Advance pursuant to a subsequent
Election Notice for such Advance. "Interest Period" means, with respect to any
LIBOR Rate Advance, the period commencing on the date an Advance is made
pursuant to an Election Notice indicating that such Advance is a LIBOR Rate
Advance having aduration of either 30, 60, 90 or 180 days and ending on the last
day of the Interest Period selected by Borrower, provided that if upon the
expiration of such Interest Period, Borrower has failed to timely deliver to
Lender a subsequent Election Notice, then the Interest Rate with respect to such
Advance shall be an Interest Rate having the duration of 30 days (unless at such
time, the Lender shall have determined that dollar deposits of the relevant
amount for the relevant Interest Period for such LIBOR Rate Advance is not
available to Lender in the applicable London interbank market or that, by reason
of circumstances affecting such market, adequate and reasonable means do not
exist for ascertaining the LIBOR Rate applicable to such Interest Period, in
which event the Interest Rate with respect to such Advance shall be the Adjusted
Prime Rate, but only until a new Interest Rate is selected by Borrower pursuant
to an Election Notice with respect to such Advance). The duration of each
Interest Period for any LIBOR Rate Advance shall be thirty, sixty or ninety or
one hundred eighty days, in each case as the Borrower shall select upon notice,
as set forth herein, provided that:

         (i)   no Interest Period with respect to a LIBOR Rate Advance shall be
         selected which ends after the Initial Term Maturity Date or, in the
         event the Borrower elects to continue the Loan for the Extended Term,
         the Extended Term Maturity Date;

         (ii)  the Interest Rate that shall be in effect in the event that
         Lender has declared Borrower in default (after the expiration of all
         applicable notice and cure periods) under the Building Loan Agreement,
         the Development Agreement or any other Loan Document shall be the
         Default Interest Rate;

         (iii) if any Interest Period would otherwise expire on a day which is
         not a London Banking Day, such Interest Period shall expire on the next
         London Banking Day, provided that if any Interest Period would
         otherwise expire on a day which is not a London Banking Day but is a
         day of the month after which no further London Banking Day occurs in
         such month, such Interest Period shall expire on the next preceding
         London Banking Day; and

         (iv) if the Borrower fails to so select the duration of any Interest
         Period, the duration of such Interest Period shall be thirty days.

                                       4
<PAGE>   5

         "Interest Rate" shall mean (a) during the Initial Term, a rate of
interest equal to either (i) the Prime Rate or (ii) the thirty, sixty, ninety,
or one hundred eighty day LIBOR Rate, in each case as selected by the Borrower
pursuant to an Interest Rate Election, plus two and eighty-five hundredths
percent (2.85%), (b) during the Extended Term, a rate of interest equal to
either (i) the Prime Rate or (ii) the thirty, sixty, ninety, or one hundred
eighty day LIBOR Rate, in each case as selected by the Borrower pursuant to an
Interest Rate Election, plus two and seventy-five hundredths percent (2.75%).
Notwithstanding the preceding sentence (i) (unless Borrower is entitled to a
lower Interest Rate pursuant to (ii) below, in which event such lower interest
rate will apply) from and after the first day of the month next succeeding the
date on which the Project achieves Stabilization, such rate shall be reduced to,
and shall thereafter be equal to: (a) if the project achieves Stabilization
during the period which is twelve (12) months after the Completion Date, a rate
of interest equal to either (i) the Prime Rate or (ii) the thirty, sixty, ninety
or one hundred eighty day LIBOR Rate, in each case as selected by the Borrower
pursuant to an Interest Rate Election, plus two and five tenths percent (2.50%),
(b) if the Project achieves Stabilization during the period which commences on
the first day of the thirteenth (13th) month after the Completion Date and
concluding on the last day of the twenty-fourth (24th) month after the
Completion Date, a rate of interest equal to either (i) the Prime Rate or (ii)
the thirty, sixty, ninety or one hundred eighty day LIBOR Rate, in each case as
selected by the Borrower pursuant to the Interest Rate Election, plus two and
six tenths percent (2.60%), and (c) if the Project achieves Stabilization during
the period which commences on the first day of the twenty-fifth (25th) month
after the Completion Date and ending on the last day of the thirty-sixth (36th)
month after the Completion Date, a rate of interest equal to either (i) the
Prime Rate or (ii) the thirty, sixty, ninety or one hundred eighty day LIBOR
Rate, in each case as selected by the Borrower pursuant to an Interest Rate
Election, plus two and seven tenths percent (2.70%); (ii) from and after the
first day of the month next succeeding the date on which the project achieves a
Debt Service Coverage Ratio of not less than 1.6 to 1.0 for a period of three
(3) consecutive months, and regardless of the date on which Stabilization
occurs, such rate shall be reduced to, and thereafter be equal to, a rate of
interest equal to either (i) the Prime Rate or (ii) the thirty, sixty, ninety or
one hundred eight day LIBOR Rate, in each case as selected by the Borrower
pursuant to an Interest Rate Election, plus two and forty-five hundredths
percent (2.45%); and (iii) (unless Borrower is entitled to a lower Interest Rate
pursuant to (i) or (ii) above, in which event such lower interest rate will
apply) from and after the first day of the month next succeeding the date on
which Borrower has submitted to Lender and Lender has approved (which approval
shall not be unreasonably withheld or delayed) a commitment for a permanent loan
take-out with respect to the Loan from a lender other than Lender, which
commitment does not include any covenants or requirements other than those
already attained by Borrower on the date of Lender's approval of such
commitment, and regardless of the date on which Stabilization occurs, such rate
shall be reduced to, and thereafter be equal to, a rate of interest equal to
either (i) the Prime Rate or (ii) the thirty, sixty, ninety or one hundred
eighty day LIBOR Rate, in each case as selected by Borrower pursuant to an
Interest Rate Election, plus two and fifty-five hundredths percent (2.55%).

                                       5
<PAGE>   6
 "Interest Rate Election" shall mean a written election on the part of the
Borrower to choose the thirty, sixty, ninety or one hundred eighty day LIBOR
Rate as the reference rate for the determination of the Interest Rate to be
charged on an Advance.

         "LIBOR Rate" shall mean, for any Interest Period with respect to a
LIBOR Rate Advance, the quotient of: (x) the per annum rate of interest,
determined by the Lender in accordance with its usual procedures (which
determination shall be conclusive absent demonstrative error) as of
approximately 11:00 a.m. (London time) two Business Days prior to the beginning
of such Interest Period, appearing on Page 3750 of the Telerate Service (or any
successor or substitute page of such Service, or any successor to or substitute
for such Service providing rate quotations comparable to those currently
provided on such page of such Service, as determined by the Lender from time to
time for purposes of providing quotations of interest rates applicable to dollar
deposits in the London interbank market) as the rate in the London interbank
market for dollar deposits in immediately available funds for an amount
comparable to such LIBOR Rate Advance and with a maturity comparable to the
Interest Period selected by Borrower with respect to such LIBOR Rate Advance
divided by (y) a number equal to 1.00 minus the Eurocurrency Reserve Percentage.
In the event that such rate quotation is not available for any reason, then the
rate (for purposes of clause (x) hereof) shall be the rate, determined by the
Lender as of approximately 11:00 a.m. (London time) two Business Days prior to
the beginning of such Interest Period pertaining to such LIBOR Rate Advance, to
be the average of the per annum rates at which dollar deposits in immediately
available funds in an amount comparable to such LIBOR Rate Advance and with a
maturity comparable to such Interest Period are offered to the prime banks by
leading banks in the London interbank market. The LIBOR Rate shall be adjusted
automatically on and as of the effective date of any change in the Eurocurrency
Reserve Percentage. In respect of any LIBOR Rate Advance, in the event that
Lender shall have determined that dollar deposits of the relevant amount for the
relevant Interest Period for such LIBOR Rate Advance is not available to Lender
in the applicable London interbank market or that, by reason of circumstances
affecting such market, adequate and reasonable means do not exist for
ascertaining the LIBOR Rate applicable to such Interest Period, as the case may
be, Lender shall promptly give notice of such determination to Borrower and (a)
any notice of a new LIBOR Rate Advance previously given by Borrower and not yet
borrowed shall be deemed a notice to make a Prime Rate Advance, and (b) Borrower
shall be obligated either to prepay, or to convert to a Prime Rate Advance, any
outstanding LIBOR Rate Advance on the last day of the then current Interest
Period with respect thereto.

         "LIBOR Rate Advance" shall mean an Advance with respect to which
interest is payable at an interest rate determined by reference to the LIBOR
Rate.

         "London Banking Days" means any day on which commercial banks are open
for business in London, England.

                                       6
<PAGE>   7

         "Prime Rate" shall mean the rate of interest set, determined or
announced on a periodic basis by Key Bank National Association as its "Prime
Rate" which rate of interest is not necessarily the lowest rate charged by Key
Bank National Association on loans and other credits which may be extended by
Key Bank National Association at rates both above and below the Prime Rate
(although such other loans and credits shall have no bearing on the
determination of the Prime Rate for purposes hereof).

         "Prime Rate Advance" shall mean an Advance with respect to which
interest is payable at an interest rate determined by reference to the Prime
Rate.

         "Project" shall mean an assisted living project to be constructed on
the Real Property and operated by the Borrower.

         "Real Property" shall mean 115 Brookside Drive, Town of Clinton, Oneida
County, New York 13323.

         "Stabilization" shall mean the achievement of a Debt Service Coverage
Ratio of not less than 1.4 to 1.0 for a period of not less than three (3)
consecutive calendar months.

                                       7
<PAGE>   8
                                       II
                                    INTEREST

         (a)   COMPUTATION OF INTEREST. Interest on the outstanding principal
balance of this Note shall be computed on the basis of "a 360-day year for the
actual number of days elapsed" (such phrase, as used throughout this Note, shall
mean that in computing interest for the subject period, the interest rate shall
be multiplied by a fraction, the denominator of which is 360 and the numerator
of which is the actual number of days elapsed from the date of the first
disbursement of the Loan or the date of the preceding interest and/or principal
due date, as the case may be, to the date of the next interest and/or principal
due date). Interest shall accrue until the Loan is repaid.

         (b)   INTEREST RATE CHANGE PROCEDURES. The Interest Rate calculated
hereunder for an Interest Period with respect to a LIBOR Rate Advance shall
remain constant for the Interest Period. In the event of a change in the LIBOR
Rate, the Interest Rate will change on the first day following the expiration of
each Interest Period. The Interest Rate calculated hereunder for an Interest
Period with respect to a Prime Rate Advance shall change on the first Business
Day following the date Lender changes the Prime Rate.

         (c)   IMPLEMENTATION OF DEFAULT INTEREST RATE. Upon the occurrence and
during the continuance of an Event of Default (hereinbelow defined), the
computation of interest under this Note shall immediately and without further
action by Lender be based upon the Default Interest Rate.

                                       III
                  PROCEDURES FOR ADVANCES AND ELECTION NOTICES

         (a)   ADVANCES. Provided that no Event of Default (hereinafter defined)
has occurred, Advances shall be made available to the Borrower during the period
from the date hereof through February 1, 2002. Each Advance shall be either a
Prime Rate Advance or a LIBOR Rate Advance, as selected by Borrower pursuant to
an Election Notice. Information with regard to any Advance shall be recorded and
maintained by Lender in its internal records and such records shall be
conclusive as to the information set forth therein, absent demonstrative error.

         (b)   PROCEDURE FOR ADVANCES AND ELECTION NOTICES. Borrower may obtain
an Advance by delivering an Election Notice signed by any one of the Authorized
Individuals on the Schedule of Authorized Individuals attached hereto as Exhibit
"C" setting forth the amount of the Advance requested, and indicating an
Interest Period

                                       8
<PAGE>   9

(which with respect to LIBOR Rate Advance must terminate no later than the
Initial Term Maturity Date or, in the event that Borrower elects to continue the
Loan for the Extended Term, the Extended Term Maturity Date) for such Advance.
Said Interest Rate as determined in accordance with the terms of this Note at
the beginning of the Interest Period with respect to LIBOR Rate Advance shall
remain in effect until expiration of the Interest Period chosen by the Borrower
for that Advance. With respect to each LIBOR Rate Advance, prior to the end of
each Interest Period, if Borrower will not be repaying the amount of that
Advance remaining unpaid, Borrower shall provide an Election Notice designating
a new Interest Period for that Advance. If Borrower fails to provide the
Election Notice to Lender prior to the expiration of any Interest Period with
respect to any Advance, and does not repay that Advance, interest shall accrue
on that Advance at the rate applicable to a LIBOR Rate, having an Interest
Period of thirty days until the Borrower delivers an Election Notice. The
Interest Rate as determined in accordance with the terms of this Note with
respect to a Prime Rate Advance shall remain in effect until a new Election
Notice is delivered to Lender indicating that Borrower has selected a LIBOR Rate
with respect to such Advance. Subject to the satisfaction by Borrower with the
conditions set forth in Article III(c) hereof, Advances shall be made to
Borrower by Lender within five (5) days of Lender's receipt of a properly
completed Election Notice. Any Advance shall be deposited by Lender in an
account to be opened by Borrower for that purpose with Lender (the "Advance
Account") and the deposit of any Advance in the Advance Account by Lender
(absent manifest error) shall be conclusive as to the receipt of said Advance by
Borrower and Borrower will be responsible for repaying any Advance so made
pursuant to the terms of this Note.

         (c)   ADVANCES BY LENDER. Advances hereunder shall be made in
accordance with, and shall be subject to the terms of the Building Loan
Agreement and the Development Agreement. In addition, Lender may make Advances
pursuant to the terms hereof, for the purpose of paying any sums which have
become due and payable hereunder or under any other Loan Document. Any such
Advance shall bear interest at the Interest Rate utilizing a LIBOR Rate
reference with an Interest Period of thirty days.

                                       IV
                            LIBOR RESERVE REQUIREMENT

         If because of the introduction of or any change in or because of any
judicial, administrative or other governmental interpretation of any law or
regulation, there shall be any increase in the direct cost to Lender of making,
funding, maintaining or allocating capital to any LIBOR Rate Advance, then
Borrower shall from time to time upon demand by Lender pay Lender additional
moneys sufficient to compensate Lender for such increased cost.

                                       9
<PAGE>   10

         Any amount or amounts payable by Borrower to Lender pursuant to this
Article shall be paid by Borrower to Lender within ten (10) days of receipt by
Borrower from Lender of a statement setting forth the amount or amounts due and
the basis for the determination from time to time of such amount or amounts,
which statement shall be conclusive and binding upon Borrower absent
demonstrative error.

                                        V
                        PAYMENT OF PRINCIPAL AND INTEREST

         Borrower shall pay interest at the applicable Interest Rate in arrears
on the sums advanced under this Note beginning on February 1, 2000 and said
payments of interest only shall continue through February 1, 2002. Borrower has
the right to extend the Loan to the Extended Term Maturity Date. In the event
that Borrower desires to extend the term of the Loan to the Extended Term
Maturity Date, Borrower shall provide Lender with a written notice of such
election not fewer than thirty (30) days prior to the Initial Term Maturity
Date, which election notice shall be accompanied by the payment to Lender of a
modification fee in an amount equal to .25% of the outstanding principal balance
of the Note (provided, however, that if the outstanding principal balance of the
Note on the date of the commencement of the Extended Term exceeds the
outstanding principal balance of the Note in respect of which the payment of the
modification fee was calculated, the Borrower shall pay to Lender on the date of
the commencement of the Extended Term an additional modification fee equal to
 .25% of the difference between such principal balance). In the event of such
election, commencing on February 1, 2002, and continuing on the first day of
each month thereafter, monthly payments of principal and interest shall be due.
The interest portion of each monthly payment shall be calculated based on the
Interest Rate. The principal portion of each monthly payment shall be Three
Thousand One Hundred Twelve Dollars and 50/100 ($3,112.50) each month. In
addition, on the Extended Term Maturity Date, Borrower shall pay Lender the
outstanding principal balance of this Note, together with accrued interest
thereon and any other sums due hereunder.

                                       VI
                                    COVENANTS

         So long as the Loan is outstanding, Borrower covenants that it shall:

         (a)   During the period commencing with the first day of the sixteenth
(16th) month after the Completion Date and concluding with the last day of the
eighteenth (18th) month after the Completion Date, (1) achieve a 75% occupancy
rate (based on the number of units comprising the Project), and (2) achieve and
sustain for each full month a Debt Service Coverage Ratio of not less than 1.0
to 1.0 provided that this covenant shall be deemed to be satisfied
(notwithstanding the failure of Borrower to

                                       10
<PAGE>   11

meet the tests set forth above) if by the last day of the twenty-first (21st)
month after the Completion Date, Borrower (1) achieves 75% occupancy rates and
(2) achieves and sustains for one full calendar month a Debt Service Coverage
Ratio of not less than 1.0 to 1.0.

         (b)   During the period commencing with the first day of the nineteenth
(19th) month after the Completion Date and concluding with the last day of the
twenty-fourth (24th) month after the Completion Date, (1) achieve an 85%
occupancy rate (based on the number of units comprising the Project) and (2)
achieve and sustain for each full month a Debt Service Coverage Ratio of not
less than 1.2 to 1.0, provided that this covenant shall be deemed to be
satisfied (notwithstanding the failure of Borrower to meet the tests set forth
above) if by the last day of the thirtieth (30th) month after the Completion
Date (or the last day of the twenty-seventh (27th) month after the Completion
Date, if Events of Default have occurred and are continuing under more than
forty percent (40%) of the credit facilities extended by Lender pursuant to the
master loan commitment issued by Lender to ALS-Northeast, LLC dated May 5,
1998), Borrower (1) achieves an 85% occupancy rate, (2) achieves and sustains
for one full calendar month a Debt Service Coverage Ratio of not less that 1.2
to 1.0, and (3) during the period commencing with the first day of the
nineteenth (19th) month after the Completion Date and concluding with the last
day of the thirtieth (30th) month after the Completion Date, achieves and
sustains for each full month a Debt Service Coverage Ratio of not less that 1.0
to 1.0.

         (c)   During the period commencing with the first day of the
twenty-fifth (25th) month after the Completion Date and concluding with the last
day of the thirty-sixth (36th) month after the Completion Date, (1) achieve a
90% occupancy rate (based on the number of units comprising the Project) and (2)
achieve and sustain a minimum Debt Service Coverage Ratio of not less than 1.4
to 1.0, provided that this covenant shall be deemed to be satisfied
(notwithstanding the failure of Borrower to meet the tests set forth above) if
by the last day of the forty-second (42nd) month after the Completion Date (or
the last day of the thirty-ninth (39th) month after the Completion Date, if
Events of Default have occurred and are continuing under more than forty percent
(40%) of the credit facilities extended by Lender pursuant to the master loan
commitment issued by Lender to ALS-Northeast, LLC dated May 5, 1998), Borrower
(1) achieves a 90% occupancy rate, (2) achieves and sustains for one full
calendar month a Debt Service Coverage Ratio of not less than 1.4 to 1.0, and
(3) from and after the first day of the twenty-fifth (25th) month after the
Completion Date, achieves and sustains for each full month a Debt Service
Coverage Ratio of not less than 1.0 to 1.0.

         (d)   Cause Alternative Living Services-New York, Inc. to fully
subordinate all management fees payable to it pursuant to the Property
Management Services Agreement between it and Clinton Sterling Cottage Operator,
Inc. to the payment of all debt service and other payments due to Lender in
respect of the Loan.

         (e)   Cause Alterra to maintain:

                                       11
<PAGE>   12

             (i)    a minimum net worth of One Hundred Five Million Dollars
                    ($105,000,000.00), which minimum net worth requirement shall
                    be increased on the first day of each fiscal quarter,
                    commencing October 1, 1999, by an amount equal to fifty
                    percent (50%) of Alterra's net income for the immediately
                    preceding fiscal quarter, and shall be further increased in
                    the event of any equity offering by Alterra in an amount
                    equal to seventy-five percent (75%) of the net proceeds of
                    such equity offering;

             (ii)   a minimum ratio of (a) the sum of Alterra funded
                    non-convertible debt, plus funded non-convertible debt
                    guaranteed by Alterra plus any other contingent liabilities
                    of ALS not otherwise reflected on Alterra's balance sheet to
                    (b) Alterra's total capitalization (including all debt
                    specified in clause (e)(ii)(a) above) of not less than .7 to
                    1.0 on a rolling four (4) quarter basis; and

             (iii)  a minimum ratio of (a) the sum of Alterra's net income
                    before extraordinary items, plus income taxes, plus interest
                    expense to (b) interest expense of not less than 1.75 to 1.0
                    through December 1999 and 2.0 to 1.0 from January 1, 2000
                    through the balance term of the Loan on a rolling four (4)
                    quarter basis.

         For purposes of this Article, whenever any accounting term is used
herein and is not otherwise defined, it shall be interpreted in accordance with
generally accepted accounting principles.

                                       VII
                               GENERAL CONDITIONS

         (a)   METHOD OF PAYMENT. All payments under this Note are payable at
127 Public Square, 6th Floor, Cleveland, Ohio 44114, or at such other place as
Lender shall notify Borrower in writing. Lender reserves the right to require
any payment on this Note, whether such payment is of a regular installment or
represents a prepayment, to be by wired federal funds or other immediately
available funds or to be paid at a place other than the above address.

         (b)   APPLICATION OF PAYMENTS RECEIVED. Except as may otherwise be
provided in this Note, all payments received by Lender on this Note shall be
applied by Lender to any unpaid Late Payment Charges or Prepayment Penalty (each
hereinbelow defined), accrued and unpaid interest then due and owing and the
reduction of principal of this Note, in such order and in such amounts as Lender
may determine from time to time.

                                       12
<PAGE>   13

         (c)   LATE PAYMENT CHARGES. If Borrower fails to pay any amount of
principal and/or interest on this Note for ten (10) days after such payment
becomes due, whether by acceleration or otherwise, Lender may, at its option,
impose a late payment charge (the "Late Payment Charge") computed by multiplying
the amount of each past due payment by four (4%) percent. Until any and all Late
Payment Charges are paid in full, the amount thereof shall be added to the
indebtedness secured by any of the Loan Documents. The Late Payment Charge is
not a penalty and is deemed to be liquidated damages for the purpose of
compensating Lender for the difficulty in computing the actual amount of damages
incurred by Lender as a result of the late payment by Borrower.

         (d)   PREPAYMENT PENALTY. During the Initial Term, the principal
balance may be prepaid in whole or in part at any time without premium or
penalty. During the Extended Term, the principal balance may be prepaid in whole
or in part, provided, however, that Borrower shall pay Lender the actual
breakage fees incurred by Lender with respect to any LIBOR Rate Advances being
prepaid when the Interest Period for those Advances are greater that thirty (30)
days. Lender shall pay any actual breakage fees with respect to any LIBOR Rate
Advances being prepaid when the Interest Periods for those Advances are thirty
(30) days or less.

         (e)   REFUSAL TO MAKE FURTHER ADVANCES, ACCELERATION AND DEFAULT.  If:

               (1)  Borrower fails to pay any sum due on this Note within ten
         (10) days of the date the same is due; or

               (2)  Borrower shall fail to perform any other covenant,
         obligation or agreement required to be performed by Borrower under this
         Note, thirty (30) days after Lender has given written notice of such
         failure to Borrower or if such failure is capable of cure but cannot be
         reasonably cured in thirty (30) days, the failure of Borrower to
         commence to cure such failure within thirty (30) days and thereafter
         prosecute the same with due diligence; or

               (3)  Any material warranty or representation made or given by
         Borrower or any material financial or other statement submitted by or
         on behalf of Borrower or any Guarantor in any instrument furnished in
         compliance with or in reference to this Note or the Loan Documents was
         false or misleading in any material respect as of the date when made;
         or

               (4)  Borrower or any Guarantor shall generally not be paying
         debts as they become due or file a petition or seek relief under or
         take advantage of any insolvency law; make an assignment for the
         benefit of creditors; commence a proceeding for the appointment of a
         receiver, trustee, liquidator, custodian or conservator of Borrower or
         any Guarantor or of the whole or substantially all of

                                       13
<PAGE>   14

         Borrower or any Guarantor's property or of any material portion of the
         collateral pledged as security for this Note; or if Borrower or any
         Guarantor shall file a petition or an answer to a petition under any
         chapter of the Bankruptcy Reform Act of 1978, as amended (or any
         successor statute thereto), or file a petition or seek relief under or
         take advantage of any other similar law or statute of the United States
         of America, any state thereof, or any foreign country or subdivision
         thereof; or

               (5)  A court of competent jurisdiction shall enter an order,
         judgment or decree appointing or authorizing a receiver, trustee,
         liquidator, custodian or conservator of Borrower or any Guarantor or of
         the whole or substantially all of Borrower or any Guarantor's property,
         or any material portion of the collateral pledged as security for this
         Note, or enter an order for relief against Borrower or any Guarantor in
         any case commenced under any chapter of the Bankruptcy Reform Act of
         1978, as amended (or any successor statute thereto), or grant relief
         under any other similar law or statute of the United States of America,
         any state thereof, or any foreign country or subdivision thereof and
         the same is not stayed or discharged within one hundred twenty (120)
         days of entry; or

               (6)  Under the provisions of any law for the relief or aid of
         debtors, a court of competent jurisdiction or a receiver, trustee,
         liquidator, custodian or conservator shall assume custody or control or
         take possession from Borrower or any Guarantor of all or substantially
         all of Borrower or any Guarantor's property or any material portion of
         any collateral pledged as security for this Note; or

               (7)  There is commenced against Borrower or any Guarantor any
         proceeding for any of the foregoing relief or if a petition is filed
         against Borrower or any Guarantor under any chapter of the Bankruptcy
         Reform Act of 1978, as amended (or any successor statute thereto), or
         under any other similar law or statute of the United States of America,
         any state thereof, or any foreign country or subdivision thereof, and
         such proceeding or petition remains undismissed for a period of one
         hundred eighty (180) days or if Borrower or any Guarantor by any act
         indicates consent to, approval of or acquiescence in any such
         proceeding or petition; or

               (8)  Lender receives a notice to creditors with regard to a
         bulk transfer by Borrower or any Guarantor pursuant to Article VI of
         the Uniform Commercial Code or if the Borrower shall dissolve,
         terminate its existence, fail, cease normal business operation or
         otherwise discontinue its existence; or

               (9)  An "Event of Default", as said term is defined in any of
         the other Loan Documents, shall have occurred and continues beyond any
         applicable notice and/or cure period;

                                       14
<PAGE>   15

then, and in any such event (an "Event of Default"), Lender may, at its option
refuse to make any further advances hereunder and declare the entire unpaid
balance of this Note together with interest accrued thereon and any other sums
due hereunder or under the Loan Documents, to be immediately due and payable and
Lender may proceed to exercise any rights or remedies that it may have under
this Note or any other Loan Documents, or such other rights and remedies which
Lender may have at law, equity or otherwise. In the event of such acceleration,
Borrower may discharge its obligations to Lender by paying:

                  (i)   the unpaid principal balance hereof as at the date of
               such payment, plus

                  (ii)  accrued interest computed in the manner set forth
               above, plus

                  (iii) any Late Payment Charge and Prepayment Penalty computed
               in the manner set forth above, plus

                  (iv)  any other sum due and owing Lender under this Note or
               any other Loan Document.

         (e)   COSTS AND EXPENSES ON DEFAULT. After the occurrence of an Event
of Default, in addition to principal, interest, and any Late Payment Charge,
Lender shall be entitled to collect all reasonable costs of collection,
including, but not limited to, reasonable attorneys' fees, incurred in
connection with the protection or realization of collateral or in connection
with any of Lender's collection efforts, whether or not suit on this Note or any
foreclosure proceeding is filed, and all such reasonable costs and expenses
shall be payable on demand and until paid shall also be secured by the Loan
Documents and by all other collateral held by Lender as security for Borrower's
obligations to Lender.

         (f)   NO WAIVER BY KEY CORPORATE CAPITAL INC. No failure by any
Guarantor of the Loan to make any payments shall be deemed a waiver or release
of Borrower's obligations hereunder. No failure on the part of Lender or other
holder hereof to exercise any right or remedy hereunder, whether before or after
the happening of an Event of Default, shall constitute a waiver thereof, and no
waiver of any past default shall constitute waiver of any future default or of
any other default. No failure to accelerate the Loan evidenced hereby by reason
of an Event of Default hereunder, or acceptance of a past due installment, or
indulgence granted from time to time shall be construed to be a waiver of the
right to insist upon prompt payment thereafter, or shall be deemed to be a
novation of this Note or as a waiver of such right of acceleration or any other
right, or be construed so as to preclude the exercise of any right which Lender
may have, whether by the laws of the state governing this Note, by agreement or
otherwise; and Borrower and each endorser or Guarantor hereby expressly waive
the benefit of any statute or rule of law or equity which would produce a result
contrary to or in conflict with the foregoing. This Note may not be changed

                                       15
<PAGE>   16

orally, but only by an agreement in writing signed by the party against whom
such agreement is sought to be enforced.

         (g)   FINANCIAL INFORMATION. Borrower will advise Lender in writing if
it operates on other than a calendar year basis. Borrower will at all times keep
proper books of record and account in which full, true and correct entries shall
be made in accordance with sound accounting principles and will deliver to
Lender, within one hundred fifty (150) days after the end of its fiscal year, a
copy of the compiled or, if available, audited financial statements of Borrower
relating to such fiscal year, such statements to include (a) the balance sheet
of Borrower, at the end of such fiscal year and (b) the related income statement
and statement of changes in the financial position of Borrower, for such fiscal
year, prepared by such certified public accountants as may be reasonably
satisfactory to Lender. Borrower will also provide Lender with copies of
quarterly internally prepared financial statements and if requested by Lender a
covenant compliance certificate within thirty (30) days of the conclusion of the
last day of each quarter. Borrower will also provide Lender during the Project
lease-up period with such monthly lease-up information as Lender shall
reasonably request. Borrower also agrees to deliver to Lender within fifteen
(15) days after filing same, a copy of Borrower's income tax return and also,
from time to time, such other financial information with respect to Borrower as
Lender may reasonably request.

         Borrower will cause Alterra to keep proper books of record and account
in which full, true and correct entries shall be made in accordance with
generally accepted accounting principles and will cause Alterra to deliver to
Lender, within one hundred twenty (120) days after the end of its fiscal year, a
copy of the annual audited financial statements of Alterra relating to such
fiscal year, such statements to include (a) the balance sheet of Alterra, at the
end of such fiscal year and (b) the related income statement and statement of
changes in the financial position of Alterra, for such fiscal year, prepared by
Alterra's certified public accountants. Borrower will also cause Alterra to
provide Lender with copies of quarterly internally prepared financial statements
within sixty (60) days of the conclusion of the last day of each of Alterra's
fiscal quarters.

         Borrower will cause ALE to keep proper books of record and account in
which full, true and correct entries shall be made in accordance with sound
accounting principles and will cause ALE to deliver to Lender within one hundred
fifty (150) days after the end of its fiscal year, a copy of the annual compiled
or, if available, reviewed financial statements of ALE relating to such fiscal
year, such statements to include (a) the balance sheet of ALE, at the end of
such fiscal year and (b) the related income statement and statement of changes
in the financial position of ALE, for such fiscal year, prepared by such
certified public accountants as may be reasonably satisfactory to Lender.

         (h)   WAIVER BY BORROWER. Borrower and each endorser of this Note
hereby waives presentment, protest, demand, diligence, notice of dishonor and of

                                       16
<PAGE>   17

nonpayment, and waives and renounces all rights to the benefits of any
moratorium, appraisement, exemption and homestead now provided or which may
hereafter be provided by any federal or state statute, including but not limited
to exemptions provided by or allowed under the Bankruptcy Code of 1978, both as
to itself personally and as to all of its or their property, whether real or
personal, against the enforcement and collection of the obligations evidenced by
this Note and any and all extensions, renewals and modifications hereof.

         (i)   COMPLIANCE WITH USURY LAWS. It is the intention of the parties to
conform strictly to the usury laws, whether state or federal, that are
applicable to this Note. All agreements between Borrower and Lender, whether now
existing or hereafter arising and whether oral or written, are hereby expressly
limited so that in no contingency or event whatsoever, whether by acceleration
of maturity hereof or otherwise, shall the amount paid or agreed to be paid to
Lender or the holder hereof, or collected by Lender or such holder, for the use,
forbearance or detention of the money to be loaned hereunder or otherwise, or
for the payment or performance of any covenant or obligation contained herein,
or in any of the Loan Documents, exceed the maximum amount permissible under
applicable federal or state usury laws. If under any circumstances whatsoever
fulfillment of any provision hereof or of the Loan Documents, at the time
performance of such provision shall be due, shall involve exceeding the limit of
validity prescribed by law, then the obligation to be fulfilled shall be reduced
to the limit of such validity; and if under any circumstances Lender or other
holder hereof shall ever receive an amount deemed interest by applicable law,
which would exceed the highest lawful rate, such amount that would be excessive
interest under applicable usury laws shall be applied to the reduction of the
principal amount owing hereunder or to other indebtedness secured by the Loan
Documents and not to the payment of interest, or if such excessive interest
exceeds the unpaid balance of principal and such other indebtedness, the excess
shall be deemed to have been a payment made by mistake and shall be refunded to
Borrower or to any other person making such payment on Borrower's behalf. All
sums paid or agreed to be paid to the holder hereof for the use, forbearance or
detention of the indebtedness of Borrower evidenced hereby, outstanding from
time to time shall, to the extent permitted by applicable law, and to the extent
necessary to preclude exceeding the limit of validity prescribed by law, be
amortized, pro-rated, allocated and spread from the date of disbursement of the
proceeds of this Note until payment in full of the Loan evidenced hereby and
thereby so that the actual rate of interest on account of such indebtedness is
uniform throughout the term hereof and thereof. The terms and provisions of this
paragraph shall control and supersede every other provision of all agreements
between Borrower, any endorser or Guarantor and Lender.

         (j)   GOVERNING LAW; SUBMISSION TO JURISDICTION. This Note shall be
governed by and construed under the laws of the State of New York. To the extent
permitted by applicable law, Borrower and each endorser hereby submits to
personal jurisdiction in said state for the enforcement of Borrower's
obligations hereunder or under any other Loan Document and waives any and all
personal rights under the law

                                       17
<PAGE>   18

of any other state to object to jurisdiction within such state for the purposes
of litigation to enforce such obligations of Borrower.

         (k)   WAIVER OF JURY TRIAL. BORROWER HEREBY EXPRESSLY WAIVES ANY AND
ALL RIGHTS IT MAY HAVE TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE
OF ACTION (1) ARISING UNDER THIS NOTE OR ANY OTHER INSTRUMENT, DOCUMENT, OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (2) CONNECTED WITH OR
RELATED TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO
THIS NOTE OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH, OR THE LOAN, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND
BORROWER HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND KEY
CORPORATE CAPITAL INC. MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF BORROWER'S CONSENT TO THE WAIVER
OF ITS RIGHT TO TRIAL BY JURY.

         (l)   NOTICES. Any notices required or permitted to be given hereunder
shall be: (i) personally delivered or (ii) given by registered or certified
mail, postage prepaid, return receipt requested, or (iii) forwarded by overnight
courier service or (iv) sent by telecopy (with hard copy to follow by another
accepted method), in each instance addressed to the addresses set forth at the
head of this Note, or such other addresses as the parties may for themselves
designate in writing as provided herein for the purpose of receiving notices
hereunder. All notices shall be in writing and shall be deemed given, in the
case of notice by personal delivery or overnight courier, upon tender of
delivery, and in the case of mail, three business days after postmark and in the
case of telecopy, upon receipt of such telecopy independently confirmed by other
than sender's machine. A copy of any notice issued hereunder shall be sent to
ALE at 250 South Clinton Street, Syracuse, New York 13202 (Attention: Neil A.
Rube) and to Alterra at 10000 Innovation Drive, Milwaukee, Wisconsin 53226
(Attention: Mark Ohlendorf).

         (m)   ENTIRE AGREEMENT. This Note and the other Loan Documents
constitute the entire understanding between Borrower and Lender and to the
extent that any writings not signed by Lender or oral statements or
conversations at any time made or had shall be inconsistent with the provisions
of this Note and the other Loan Documents, the same shall be null and void.

         (n)   ALE OBLIGATIONS. ALE's obligations under this Note and the Loan
Documents shall terminate if ALE no longer has an interest in Borrower.

                                       18
<PAGE>   19

         IN WITNESS WHEREOF, Borrower has executed this instrument the date
first above written.
                                   CLINTON BROOKSIDE DRIVE, LLC
                                   By: ASSISTED LIVING EQUITIES, LLC,
                                         its member

                                   By: |S| Neil A. Rube
                                      ------------------------------------------
                                        Neil A. Rube, Executive Committee Member

STATE OF NEW YORK          )
                           )  ss.:
COUNTY OF ONONDAGA         )

         On this __ day of January, 2000, before me, the undersigned, a Notary
Public in and for said State, personally appeared NEIL A. RUBE, personally known
to me or proved to me on the basis of satisfactory evidence to be the individual
whose name is subscribed to the within instrument and acknowledged to me that he
executed the same in his capacity, and that by his signature on the instrument,
the individual, or the person upon behalf of which the individual acted,
executed the instrument.

                                    --------------------------------------------
                                    Notary Public

                                       19

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