Document:

<PAGE>   1
                                                                    EXHIBIT 10.4

                THIRD AMENDMENT TO GUARANTY OF PAYMENT AGREEMENT

         THIS THIRD AMENDMENT TO GUARANTY OF PAYMENT AGREEMENT (herein called
the "Amendment") made as of May 10, 2000 by and among Alterra Healthcare
Corporation, a Delaware corporation, formerly known as Alternative Living
Services, Inc. ("Guarantor"), and Bank United, individually and as agent for
itself and certain additional lenders ("Agent").

                              W I T N E S S E T H:

         WHEREAS, ALS Holdings, Inc., a Delaware corporation, ALS Wisconsin
Holdings, Inc., a Delaware corporation and Agent entered into that certain
Amended and Restated Financing and Security Agreement dated as of February 12,
1999, as amended by that certain First Amendment to Amended and Restated
Financing and Security Agreement dated as of October 29, 1999, that certain
Suspension, Waiver and Modification Agreement dated as of March 28, 2000, and
that certain Second Amendment to Amended and Restated Financing and Security
Agreement dated of even date herewith (as amended, supplemented, or restated to
the date hereof, the "Financing Agreement"), for the purpose and consideration
therein expressed, whereby Lenders (as defined in the Financing Agreement)
became obligated to make loans to Borrower (as defined in the Financing
Agreement) as therein provided; and

         WHEREAS, in connection with the transactions contemplated by the
Financing Agreement, Guarantor executed and delivered to Agent, for the benefit
of Lenders, that certain Guaranty of Payment Agreement dated as of February 12,
1999 as amended by that certain First Amendment to Guaranty of Payment Agreement
dated as of October 29, 1999, and that certain Suspension, Waiver and
Modification Agreement dated as of March 28, 2000 (as amended, supplemented or
restated to the date hereof, the "Original Guaranty"), pursuant to which
Guarantor guaranteed the payment and performance of all obligations of Borrower
under the Financing Agreement; and

         WHEREAS, Guarantor and Agent desire to amend the Original Guaranty to
amend certain provisions thereof;

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and in the Original Guaranty, in
consideration of the loans which may hereafter be made by Lenders to Borrower,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto do hereby agree as follows:
<PAGE>   2

                                   ARTICLE I.

                           Definitions and References

         Section 1.1. Terms Defined in the Original Guaranty. Unless the context
otherwise requires or unless otherwise expressly defined herein, the terms
defined in the Original Guaranty shall have the same meanings whenever used in
this Amendment.

         Section 1.2. Other Defined Terms. Unless the context otherwise
requires, the following terms when used in this Amendment shall have the
meanings assigned to them in this Section 1.2.

                  "Amendment" means this Third Amendment to Guaranty of Payment
         Agreement.

                  "Guaranty" means the Original Guaranty as amended hereby.

                                   ARTICLE II.

                         Amendments to Original Guaranty

         Section 2.1. Financial Covenants.

         (a) Section 3.2.1 of the Original Guaranty is hereby replaced in its
entirety by the following:

                  3.2.1    Minimum Tangible Net Worth.

                  Maintain, on a consolidated basis with all subsidiaries, at
         all times during the term of the Credit Facility measured quarterly
         beginning with the quarter ending December 31, 1999, a minimum Tangible
         Net Worth of not less than the sum of $80,000,000 as of December 31,
         1999 plus fifty percent (50%) of the Guarantor's net income (if
         positive) for each subsequent quarter plus seventy-five (75%) of the
         net proceeds to the Guarantor of any equity capital (or equity
         equivalent) securities offering received during such quarter. "Tangible
         Net Worth" means, at any time, the sum at such time of Net Worth
         (defined as shareholder's equity as defined by GAAP) less the total of
         (aa) all assets which would be classified as intangible assets under
         GAAP, excluding (1) goodwill in excess of $25,000,000 prior to the
         closing of the Equity Transaction, or (2) all goodwill after the
         closing of the Equity Transaction, but including trademarks, trademark
         applications, trade names, service marks, patent applications and
         licenses, and deferred charges, (bb) Premises-opening costs,
         organizational costs and deferred financing costs, and (cc) advances or
         loans made to or receivables from any unconsolidated affiliates of
         which the Guarantor owns less than fifty percent (50%) (other than
         advances or loans made to or receivables from HCR/Alterra Development
         II, LLC up to a total of $35,000,000) or any stockholder of the
         Guarantor or any affiliate.

         (b) Section 3.2.3A of the Original Guaranty is hereby replaced in its
entirety by the following:

                                       2
<PAGE>   3

                  3.2.3A   Minimum Liquidity.

                  Maintain Liquidity, at all times during the term of the Credit
         Facility, measured quarterly, of not less than the greater of (a) (i)
         $15,000,000 prior to the closing of the Equity Transaction, or (ii)
         $20,000,000 after the closing of the Equity Transaction, or (b) the
         Guarantor's Debt Service for the ninety (90) day period beginning on
         the date of determination. For purposes of this Section 3.2.3A, the
         term `Liquidity' shall mean, at any time, the sum of (i) all cash of
         the Guarantor at such time plus (ii) seventy-five percent (75%) of the
         aggregate costs (as determined in accordance with GAAP) expended by
         Guarantor with respect to all Facilities owned by the Guarantor at such
         time that are not subject to a Lien (including any such Facilities that
         are under construction). The term `Guarantor's Debt Service' means,
         with respect to any period, the sum of all lease payments and interest
         and principal payments payable during such period on the aggregate
         indebtedness of the Guarantor for Facilities that, at the time of
         determination, do not constitute Guarantor's Stabilized Projects. The
         term `Guarantor's Stabilized Project' means any Facility owned by
         Guarantor that (i) has a Resident Occupancy of at least 95% and (ii)
         has achieved a ratio of Net Operating Income to Debt Service of not
         less than 1.25 to 1.00 measured for three consecutive months. The
         computation of the financial test set forth in this Section shall be
         based on the Guarantor's quarterly financial statements delivered to
         Lenders and the information used in the preparation thereof.

                                  ARTICLE III.

                         Representations and Warranties

         Section 3.1. Representations and Warranties of Guarantor. In order to
induce Agent to enter into this Amendment, Guarantor represents and warrants to
Agent that:

         (a) The representations and warranties contained in Article II of the
Original Guaranty are true and correct at and as of the time of the
effectiveness hereof except in lieu of Section 2.1.6 of the Original Guaranty
and the last sentence of Section 2.1.7 of the Original Guaranty, Guarantor is
making the representations and warranties in subsection 3.1(e) below.

         (b) Guarantor is duly authorized to execute and deliver this Amendment
and is and will continue to be duly authorized to perform its obligations under
the Guaranty. Guarantor has duly taken all corporate action necessary to
authorize the execution and delivery of this Amendment and to authorize the
performance of the obligations of Guarantor hereunder.

         (c) The execution and delivery by Guarantor of this Amendment, the
performance by Guarantor of its obligations hereunder and the consummation of
the transactions contemplated hereby do not and will not conflict with any
provision of law, statute, rule or regulation or of the articles of
incorporation and bylaws of Guarantor; or of any material agreement, judgment,
license, order or permit applicable to or binding upon Guarantor, or result in
the creation of any lien, charge or encumbrance upon any assets or properties of
Guarantor. Except for those which have been obtained, no consent, approval,
authorization or order of any court or governmental authority or third party is
required in connection with the execution and delivery by Guarantor of this
Amendment or to consummate the transactions contemplated hereby.

                                       3
<PAGE>   4

         (d) When duly executed and delivered, each of this Amendment and the
Guaranty will be a legal and binding obligation of Guarantor, enforceable in
accordance with its terms, except as limited by bankruptcy, insolvency or
similar laws of general application relating to the enforcement of creditors'
rights and by equitable principles of general application.

         (e) The audited annual consolidated financial statements of Guarantor
dated as of December 31, 1999 fairly presents the consolidated financial
position at such date and the consolidated statement of operations and the
changes in consolidated financial position for the period ending on such date
for Guarantor. Copies of such financial statements have heretofore been
delivered to each Lender. Since such date no material adverse change has
occurred in the financial condition or businesses or in the consolidated
financial condition or businesses of Guarantor, except as described in the
Guarantors' annual report on Form 10-K filed with the Securities and Exchange
Commission on March 30, 2000.

                                   ARTICLE IV.

                           Conditions of Effectiveness

         Section 4.1. Effective Date. This Amendment shall become effective upon
satisfaction of the Conditions to Effectiveness of Section V of the Second
Amendment to Amended and Restated Financing and Security Agreement dated of even
date herewith.

                                   ARTICLE V.

                                  Miscellaneous

         Section 5.1. Ratification of Agreements. The Original Guaranty as
hereby amended is hereby ratified and confirmed in all respects. Any reference
to the Guaranty in any Financing Document shall be deemed to be a reference to
the Original Guaranty as hereby amended. The execution, delivery and
effectiveness of this Amendment shall not, except as expressly provided herein,
operate as a waiver of any right, power or remedy of Lenders under the Financing
Agreement, the Guaranty, or any other Financing Document nor constitute a waiver
of any provision of the Financing Agreement, the Guaranty or any other Financing
Document.

         Section 5.2. Survival of Agreements. All representations, warranties,
covenants and agreements of Guarantor herein shall survive the execution and
delivery of this Amendment and the performance hereof, and shall further survive
until all of the Obligations are paid in full.

         Section 5.3. Financing Documents. This Amendment is a Financing
Document, and all provisions in the Financing Agreement pertain hg to Financing
Documents apply hereto.

         Section 5.4. Governing Law. This amendment shall be governed by and
construed in accordance the laws of the State of Texas and any applicable laws
of the United States of America in all respects, including construction,
validity and performance.

         Section 5.5. Counterparts; Fax. This Amendment may be separately
executed in counterparts and by the different parties hereto in separate
counterparts, each of which when so

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<PAGE>   5

executed shall be deemed to constitute one and the same Amendment. This
Amendment may be validly executed by facsimile or other electronic transmission.

         THIS AMENDMENT AND THE OCHER FINANCING DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS OF THE PARTIES.

        [THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]

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<PAGE>   6

         IN WITNESS WHEREOF, this Amendment is executed as of the date first
above written.

                                      ALTERRA HEALTHCARE CORPORATION

                                      By:  /s/ Mark W. Ohlendorf
                                         ---------------------------------------
                                           Name:  Mark W. Ohlendorf
                                                --------------------------------
                                           Title:  Vice President
                                                 -------------------------------

                                      BANK UNITED, as Agent

                                      By:  /s/ Casey Moore
                                         ---------------------------------------
                                           Name:  Casey Moore
                                                --------------------------------
                                           Title:  Vice President
                                                 -------------------------------

                                       6
<PAGE>   7

                          CONSENT OF FIRSTAR BANK, N.A.

         Firstar Bank, N.A., a Lender under the Financing Agreement and a party
to the Agency Agreement, for good and valuable consideration the receipt of
which is hereby acknowledged, hereby consents to the provisions of this
Amendment and the transactions contemplated herein.

                                      FIRSTAR BANK, N.A.

                                      By:  /s/ Dale L. Welke
                                         ---------------------------------------
                                           Name:  Dale L. Welke
                                                --------------------------------
                                           Title:  Vice President
                                                 -------------------------------

                                       7
<PAGE>   8

                             CONSENT OF AMSOUTH BANK

         Amsouth Bank, a Lender under the Financing Agreement and a party to the
Agency Agreement, for good and valuable consideration the receipt of which is
hereby acknowledged, hereby consents to the provisions of this Amendment and the
transactions contemplated herein.

                                      AMSOUTH BANK

                                      By:  /s/ Carl M. Ferris
                                         ---------------------------------------
                                           Name:  Carl M. Ferris
                                                --------------------------------
                                           Title:  Vice President
                                                 -------------------------------

                                       8<PAGE>   1
                                                                    Exhibit 10.5

                     THIRD AMENDMENT TO AMENDED AND RESTATED
                        FINANCING AND SECURITY AGREEMENT

         THIS THIRD AMENDMENT TO AMENDED AND RESTATED FINANCING AND SECURITY
AGREEMENT (herein called this "Amendment") is made as of May 31, 2000, by and
among ALS Holdings, Inc., a Delaware corporation ("Holdings"), ALS Wisconsin
Holdings, Inc., a Delaware corporation ("Wisconsin Holdings"), and Bank United,
individually and as agent for itself and certain other lenders ("Agent").

                              W I T N E S S E T H:

         WHEREAS, Holdings, Wisconsin Holdings and Agent entered into that
certain Amended and Restated Financing and Security Agreement dated as of
February 12, 1999, as amended by that certain First Amendment to Amended and
Restated Financing and Security Agreement dated as of October 29, 1999, that
certain Suspension, Waiver and Modification Agreement dated as of March 28, 2000
and that certain Second Amendment to Amended and Restated Financing Security
Agreement dated as of May 10, 2000 (as amended, supplemented, or restated to the
date hereof, the "Original Agreement"), for the purpose and consideration
therein expressed, whereby Lenders (as defined in the Original Agreement) became
obligated to make loans to Borrower (as defined in the Original Agreement) as
therein provided; and

         WHEREAS, Holdings, Wisconsin Holdings and Agent desire to amend the
Original Agreement for the purposes expressed herein.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and in the Original Agreement, for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do hereby agree as follows:

                                   ARTICLE I.

                           Definitions and References

         Section 1.1. Terms Defined in the Original Agreement. Unless the
context otherwise requires or unless otherwise expressly defined herein, the
terms defined in the Original Agreement shall have the same meanings whenever
used in this Amendment.

         Section 1.2. Other Defined Terms. Unless the context otherwise
requires, the following terms when used in this Amendment shall have the
meanings assigned to them in this Section 1.2:

<PAGE>   2

                  "Amendment" means this Third Amendment to Amended and Restated
Financing and Security Agreement.

                  "Agreement" means the Original Agreement as amended hereby.

                                   ARTICLE II.

                        Amendments to Original Agreement

         Section 2.1 Amended Definitions. The following definition in Section
1.1 of the Original Agreement is hereby amended in its entirety to read as
follows:

                  "Credit Facility Committed Amount" means (i) $80,000,000 from
the date hereof through and including December 31, 2000, (ii) $77,000,000 for
the period commencing January 1, 2001 through and including June 30, 2001 and
(iii) $74,000,000 for the period commencing July 1, 2001 through and including
the Revolving Credit Termination Date.

         Section 2.2 New Definitions. The following definitions are hereby added
to Section 1.1 of the Original Agreement:

                  "Amsouth Note" means that certain note made by Alterra in
favor of Amsouth Bank dated February 12, 1998, in the original principal amount
of $15,000,000.00.

                         Section 2.3 Construction of Tequesta Facilities.
Section 7.32 of the Original Agreement is replaced in its entirety by the
following:

                  Section 7.32      Construction of Tequesta Facilities.

                  Immediately upon closing of the Equity Transaction, Borrower
         shall resume Normal Construction Activity on the Construction
         Facilities and the Tequesta Facilities, to the extent Borrower has not
         already done so. Borrower shall be entitled to additional advances of
         the Loan (in the form of Refinancing Proceeds or otherwise) to fund
         such Normal Construction Activity in an amount up to 80% of the costs
         of Normal Construction Activity with respect to each Construction
         Facility and each Tequesta Facility, subject to the limits of the
         Credit Facility Committed Amount. All advances of the Loan to fund such
         Normal Construction Activity shall be subject to the terms and
         conditions of the Financing Documents regarding the advance of Loan
         proceeds thereunder. Further, without intending to limit the foregoing,
         Borrower acknowledges that the Lenders will not make and Borrower may
         not request advances of Loan proceeds with respect to a Tequesta
         Facility if, as a result thereof, the aggregate of all Loan proceeds
         advanced with respect to the Tequesta Facility would exceed the Deed of
         Trust

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<PAGE>   3

         Lien Amount for such Tequesta Facility (as opposed to the actual amount
         which is secured by the Deed of Trust upon such Tequesta Facility).

         Section 2.4 Interest on AmSouth Note. Paragraph 1 of the AmSouth Note
is replaced in its entirety with the following:

                  Interest on portions of the outstanding Principal Sum shall
accrue and be payable for periods commencing on the first day and ending on the
last day of a calendar month (each a "Eurodollar Period") at a fixed rate equal
to the sum of the Eurodollar Rate (as defined in the Financing Agreement), which
rate shall be adjusted for any Federal Reserve Board reserve requirements
imposed upon the Lender from time to time, plus three hundred fifty (350) basis
points per annum for each Eurodollar Period commencing on or after June 1, 2000
through and including the Maturity Date, as such date may be extended as
provided herein. Interest shall be computed for the actual number of days which
have elapsed from the date of each advance of a portion of the Principal sum
calculated on the basis of a 360-day year. No more than five (5) Eurodollar
Periods may be in effect at any one time. The Eurodollar Rate determined
pursuant hereto shall be in effect to the end of the applicable Eurodollar
Period.

                                  ARTICLE III.

                         Representations and Warranties

         Section 3.1. Representations and Warranties of the Borrower. In order
to induce Agent to enter into this Amendment, the Borrower represents and
warrants to Agent and each Lender that:

         (a) Except with respect to (i) any mechanics, materialmen's and other
similar liens, filed or inchoate, that may have attached to the Construction
Projects or the Tequesta Projects as a result of construction activities, (ii)
the matters described in Alterra's annual report on form 10-K filed with the
Securities and Exchange Commission on March 30, 2000, in Alterra's quarterly
report on Form 10Q filed with the Securities and Exchange Commission on May 5,
2000, and in the notebook entitled "Company Information" dated May 5, 2000 and
provided to Agent (iii) the change of Borrower's principal place of business to
10000 Innovation Drive, Milwaukee, Wisconsin 53226, and (iv) the construction
slowdown or work stoppage on the Construction Projects and the Tequesta Projects
and the resulting increase in costs and deterioration of condition of such
projects as partially constructed, the representations and warranties contained
in Article V of the Original Agreement are true and correct at and as of the
time of the effectiveness hereof.

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<PAGE>   4

         (b) The Borrower is duly authorized to execute and deliver this
Amendment and is and will continue to be duly authorized to perform its
obligations under the Agreement. The Borrower has duly taken all corporate
action necessary to authorize the execution and delivery of this Amendment and
to authorize the performance of the obligations of the Borrower hereunder.

         (c) The execution and delivery by the Borrower of this Amendment, the
performance by the Borrower of its obligations hereunder and the consummation of
the transactions contemplated hereby do not and will not conflict with any
provision of law, statute, rule or regulation or of the articles of
incorporation and bylaws of the Borrower, or of any material agreement,
judgment, license, order or permit applicable to or binding upon the Borrower,
or result in the creation of any lien, charge or encumbrance upon any assets or
properties of the Borrower. Except for those which have been obtained, no
consent, approval, authorization or order of any court or governmental authority
or third party is required in connection with the execution and delivery by the
Borrower of this Amendment or to consummate the transactions contemplated
hereby.

         (d) When duly executed and delivered, each of this Amendment and the
Agreement will be a legal and binding obligation of the Borrower, enforceable in
accordance with its terms, except as limited by bankruptcy, insolvency or
similar laws of general application relating to the enforcement of creditors'
rights and by equitable principles of general application.

         (e) The audited annual consolidated financial statements of the
Borrower and Alterra dated as of December 31, 1999 and the unaudited quarterly
consolidated financial statements of Alterra dated as of March 31, 2000 fairly
present the consolidated financial position at such dates and the consolidated
statement of operations and the changes in consolidated financial position for
the period ending on such dates for the Borrower and Alterra. Copies of such
financial statements have heretofore been delivered to each Lender. Since such
dates, except as disclosed to Agent in writing, and except for matters
referenced in subsection 3(a) above, no material adverse change has occurred in
the financial condition or businesses or in the consolidated financial condition
or businesses of the Borrower or Alterra.

                                   ARTICLE IV.

                                   Agreements

         Section 4.1 Indemnity/Release Provisions. NOTWITHSTANDING ANYTHING TO
THE CONTRARY CONTAINED WITHIN THE FINANCING DOCUMENTS, IT IS THE INTENTION OF
THE BORROWER AND BORROWER AGREES THAT ANY AND ALL RELEASES AND INDEMNITIES MADE
BY THE BORROWER UNDER THE FINANCING DOCUMENTS SHALL APPLY TO EACH
RELEASED/INDEMNIFIED PARTY THEREUNDER WITH RESPECT TO MATTERS, CLAIMS, DEMANDS,
LIABILITIES, LOSSES, DAMAGES, CAUSES OF ACTION, JUDGMENTS, PENALTIES, COSTS AND
EXPENSES (INCLUDING WITHOUT

                                       4
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LIMITATION, REASONABLE ATTORNEY'S FEES) WHICH IN WHOLE OR IN PART ARE CAUSED BY
OR ARISE OUT OF THE NEGLIGENCE OF SUCH (AND/OR ANY OTHER) RELEASED/INDEMNIFIED
PARTY OR ANY STRICT LIABILITY. HOWEVER, SUCH RELEASE AND/OR INDEMNITY SHALL NOT
APPLY TO ANY RELEASED/INDEMNIFIED PARTY TO THE EXTENT THE SUBJECT OF THE
RELEASE/INDEMNITY IS CAUSED BY OR ARISES OUT OF THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF SUCH RELEASED/INDEMNIFIED PARTY.

         Section 4.2 Defaults.

                  (a) Borrower acknowledges that Agent in the past may have
         accepted, without exercising the remedies to which Agent was entitled,
         payments and performance by Borrower that constituted defaults under
         the Financing Documents. Borrower acknowledges that no such acceptance
         or grace granted by Agent in the past, or Agent's agreement to the
         modifications evidenced hereby, has in any manner diminished Agent's
         right in the future to insist that Borrower strictly comply with the
         terms of the Financing Documents, as modified by the terms hereof.
         Furthermore, Borrower specifically acknowledges that any future grace
         or forgiveness of default by Agent shall not constitute a waiver or
         diminishment of any right of Agent with respect to any future default
         of Borrower, whether or not similar to any default with respect to
         which Agent has in the past chosen, or may in the future choose, not to
         exercise all of the rights and remedies granted to it under the
         Financing Documents.

                  (b) Borrower acknowledges that the execution of this Amendment
         by Agent is not intended nor shall it be construed as (i) an actual or
         implied waiver of any subsequent default under the Financing Documents,
         or (ii) an actual or implied waiver of any condition or obligation
         imposed upon Borrower pursuant to the Financing Documents, except to
         the extent expressly set forth herein. Agent acknowledges that upon
         execution of this Amendment, Borrower is not in default under the
         Financing Documents.

         Section 4.3 Release. Borrower and Alterra hereby release, remise,
acquit and forever discharge Agent and the Lenders, together with their
employees, agents, representatives, consultants, attorneys, fiduciaries,
servants, officers, directors, partners, predecessors, successors and assigns,
subsidiary corporations, parent corporations, and related corporate divisions
(all of the foregoing hereinafter called the "Released Parties"), from any and
all actions and causes of action, judgments, executions, suits, debts, claims,
demands, liabilities, obligations, damages and expenses of any and every
character, known or unknown, direct and/or indirect, at law or in equity, of
whatsoever kind or nature, whether heretofore or hereafter accruing, for or
because of any matter or things done, omitted or suffered to be done by any of
the Released Parties prior to and including the date hereof, and in any way
directly or indirectly arising out of or in any way connected to the Financing
Documents, or any of the transactions associated therewith, including
specifically but not limited to claims of usury.

                                       5
<PAGE>   6

                                   ARTICLE V.

                           Conditions of Effectiveness

         Section 5.1 Effective Date. This Amendment shall become effective when,
and only when, the following conditions have been satisfied:

         (a) Agent shall have received, at Agent's office, a counterpart of this
Amendment executed and delivered by Borrower and Alterra.

         (b) Agent shall have received, at Agent's office, an opinion of counsel
to Borrower and Alterra in form and content acceptable to Agent stating that
this Amendment and the Fourth Amendment to Guaranty of Payment Agreement dated
of even date herewith are valid and binding upon Borrower and Alterra and
enforceable in accordance with their terms.

         (c) Intentionally Omitted.

         (d) Intentionally Omitted.

         (e) Intentionally Omitted.

         (f) Intentionally Omitted.

         (g) Intentionally Omitted.

         (h) Borrower shall have paid, or cause to be paid, all costs and
expenses incident to the preparation hereof, the cost of defense of lawsuits
filed in connection with the nonpayment of construction costs, and the
consummation of the transactions specified herein, including without limitation
title insurance charges, recording fees and fees and expenses of legal counsel
and consultants to Agent and the Lenders.

                                       6
<PAGE>   7

                                   ARTICLE VI.

                                  Miscellaneous

         Section 6.1. Ratification of Agreements. The Original Agreement as
hereby amended is hereby ratified and confirmed in all respects. Any reference
to the Original Agreement in any Financing Document shall be deemed to be a
reference to the Original Agreement as hereby amended. The execution, delivery
and effectiveness of this Amendment shall not, except as expressly provided
herein, operate as a waiver of any right, power or remedy of Lenders or Agent
under the Original Agreement or any other Financing Document nor constitute a
waiver of any provision of the Original Agreement or any other Financing
Document.

         Section 6.2. Survival of Agreements. All representations, warranties,
covenants and agreements of the Borrower herein shall survive the execution and
delivery of this Amendment and the performance hereof, and shall further survive
until all of the Obligations are paid in full.

         Section 6.3. Financing Documents. This Amendment is a Financing
Document, and all provisions in the Agreement pertaining to Financing Documents
apply hereto.

         Section 6.4. Governing Law. This Amendment shall be governed by and
construed in accordance the laws of the State of Texas and any applicable laws
of the United States of America in all respects, including construction,
validity and performance.

         Section 6.5. Counterparts; Fax. This Amendment may be separately
executed in counterparts and by the different parties hereto in separate
counterparts, each of which when so executed shall be deemed to constitute one
and the same Amendment. This Amendment may be validly executed by facsimile or
other electronic transmission.

         Section 6.6 Notice and Agreement. Borrower, Alterra and Agent hereby
take notice of and agree to the following:

         A. PURSUANT TO SUBSECTION 26.02(b) OF THE TEXAS BUSINESS AND COMMERCE
CODE, A LOAN AGREEMENT IN WHICH THE AMOUNT INVOLVED THEREIN EXCEEDS $50,000 IN
VALUE IS NOT ENFORCEABLE UNLESS THE AGREEMENT IS IN WRITING AND SIGNED BY THE
PARTY TO BE BOUND OR BY THAT PARTY'S AUTHORIZED REPRESENTATIVE.

         B. PURSUANT TO SUBSECTION 26.02(c) OF THE TEXAS BUSINESS AND COMMERCE
CODE, THE RIGHTS AND OBLIGATIONS OF THE PARTIES TO THE FINANCING DOCUMENTS SHALL
BE DETERMINED SOLELY FROM THE FINANCING DOCUMENTS, AND ANY PRIOR ORAL AGREEMENTS
BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO THE LOAN DOCUMENTS.

                                       7
<PAGE>   8

         C. THE FINANCING DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES THERETO. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

        [THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]

                                       8

<PAGE>   9

         IN WITNESS WHEREOF, this Amendment is executed as of the date first
above written.

                             ALS HOLDINGS, INC.

                             By:           /s/ Mark W. Ohlendorf
                                ---------------------------------------
                                Name:      Mark W. Ohlendorf
                                     ----------------------------------
                                Title:     Vice President
                                      ---------------------------------

                             ALS WISCONSIN HOLDINGS, INC.

                             By:           /s/ Mark W. Ohlendorf
                                ---------------------------------------
                                Name:      Mark W. Ohlendorf
                                     ----------------------------------
                                Title:     Vice President
                                      ---------------------------------

                             BANK UNITED, AS AGENT

                             By:           /s/ Casey Moore
                                ---------------------------------------
                                Name:      Casey Moore
                                     ----------------------------------
                                Title:     Vice President
                                      ---------------------------------

                                       9

<PAGE>   10

                        CONSENT AND AGREEMENT OF ALTERRA

         Alterra Healthcare Corporation, a Delaware corporation, for good and
valuable consideration the receipt of which is hereby acknowledged, joins in
this Amendment for the purpose of agreeing to Sections 4.3 and 6.6 hereof,
consents to the provisions of this Amendment and the transactions contemplated
herein, and ratifies and confirms the Guaranty of Payment Agreement, dated as of
September 12, 1998, as amended by that certain First Amendment to Guaranty of
Payment Agreement dated October 29, 1999, that certain Suspension, Waiver and
Modification Agreement dated as of March 28, 2000, that certain Third Amendment
to Guaranty of Payment Agreement dated May 10, 2000, and that certain Fourth
Amendment to Guaranty of Payment Agreement of even date herewith made by it for
the benefit of Agent and the Lenders, and agrees that its obligations and
covenants thereunder are unimpaired hereby and shall remain in full force and
effect.

                                 ALTERRA HEALTHCARE CORPORATION

                                 By:             /s/ Mark W. Ohlendorf
                                    -----------------------------------
                                    Name:        Mark W. Ohlendorf
                                         ------------------------------
                                    Title:       Senior Vice President
                                          -----------------------------

                                       10

<PAGE>   11

                          CONSENT OF FIRSTAR BANK, N.A.

         Firstar Bank, N.A., a Lender under the Agreement and a party to the
Agency Agreement, for good and valuable consideration the receipt of which is
hereby acknowledged, hereby consents to the provisions of this Amendment and the
transactions contemplated herein and agrees that its obligations under the
Agency Agreement are in full force and effect.

                                 FIRSTAR BANK, N.A.

                                 By:           /s/ Dale Welke
                                    -----------------------------------
                                    Name:      Dale Welke
                                         ------------------------------
                                    Title:     Vice President
                                          -----------------------------

                                       11

<PAGE>   12

                             CONSENT OF AMSOUTH BANK

         Amsouth Bank, a Lender under the Agreement and a party to the Agency
Agreement, for good and valuable consideration the receipt of which is hereby
acknowledged, hereby consents to the provisions of this Amendment and the
transactions contemplated herein and agrees that its obligations under the
Agency Agreement are in full force and effect.

                                  AMSOUTH BANK

                                  By:           /s/ Carl M. Ferris
                                     ----------------------------------
                                     Name:      Carl M. Ferris
                                          -----------------------------
                                     Title:     Vice President
                                           ----------------------------

                                       12

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