Document:

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                                                                    EXHIBIT 10.8

                  SECOND MODIFICATION OF MASTER LOAN AGREEMENT

         THIS SECOND MODIFICATION OF MASTER LOAN AGREEMENT (this "Agreement") is
made as of the 31st day of May, 2000, by and between ALS WEST, INC., a Delaware
corporation ("West"), ALTERRA HEALTHCARE CORPORATION, a Delaware corporation
formerly known as Alternative Living Services, Inc. ("Alterra"), and GUARANTY
FEDERAL BANK, F.S.B., a federal savings bank ("GFB"), as a Lender and as Agent
for the Lenders under the Master Loan Agreement.

                              W I T N E S S E T H:

         WHEREAS, West, Alterra, and GFB have entered into that certain Master
Loan Agreement dated January 8, 1999, as modified by Modification of Master Loan
Agreement dated March 15, 2000 (such Master Loan Agreement and all supplements
thereto and amendments or modifications thereof and all agreements given in
substitution therefor or in restatement, renewal or extension thereof, in whole
or in part, being herein referred to as the "Master Loan Agreement"), which
Master Loan Agreement contemplates a loan facility in the total amount of
$50,000,000 (the "Loan Facility"); and

         WHEREAS, West and Alterra have requested and Lender has agreed to
modify certain provisions of the Master Loan Agreement;

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

         1. Capitalized terms not otherwise defined herein shall have the
meaning assigned to such terms in the Master Loan Agreement.

         2. Sections 6.17 through 6.19 of the Master Loan Agreement are deleted
and the following are substituted in lieu thereof:

                  Section 6.17. Company Debt Service Coverage Ratio. The Company
         Debt Service Coverage Ratio, as of the last day of each fiscal quarter
         of the Company, shall be greater than or equal to:

<TABLE>
<CAPTION>

         Fiscal Year   1st Quarter  2nd Quarter  3rd Quarter  4th Quarter
         ------------- ------------ ------------ ------------ ------------
<S>                    <C>          <C>          <C>          <C>
         2000          0.75 to 1.0  0.75 to 1.0  0.75 to 1.0  0.75 to 1.0
</TABLE>

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<PAGE>   2

<TABLE>
<S>                    <C>          <C>          <C>          <C>
         2001          0.75 to 1.0  0.82 to 1.0  0.91 to 1.0  1.0 to 1.0

         2002          1.06 to 1.0  1.13 to 1.0  1.19 to 1.0  1.25 to 1.0
</TABLE>

         Nothing contained herein shall imply an agreement on the part of Lender
         to extend the maturity date of any Project Loan.

                  Section 6.18. Leverage Ratio. The Leverage Ratio, as of the
         last day of each fiscal quarter of the Company, shall be less than or
         equal to 0.75 to 1.0.

                  Section 6.19. Invested Equity. At all times the sum of (i) Net
         Worth plus (ii) the outstanding amount of the Debentures (as defined in
         the Purchase Agreement) shall be greater than or equal to $110,000,000,
         increased on a cumulative basis as of the end of each fiscal quarter of
         the Company commencing with the fiscal quarter ending March 31, 2000 by
         (A) an amount equal to 50% of Net Income (to the extent positive) for
         the fiscal quarter then ended plus (B) an amount equal to 75% of the
         proceeds from any Equity Issuance subsequent to December 31, 1999, and
         75% of the amount of any pay-in-kind dividends or coupons issued
         subsequent to December 31, 1999.

         3. The following are added as Sections 6.22 and 6.23 to the Master Loan
Agreement:

                  Section 6.22. Liquidity. The Company shall maintain Liquidity,
         at the end of each fiscal quarter, of not less than $15,000,000.00. For
         purposes of this Section 6.22, the term "Liquidity" shall mean, at any
         time, the sum of (i) all cash of the Consolidated Parties at such time
         plus (ii) all cash equivalents owned or held by the Consolidated
         Parties at such time plus (iii) all available credit capacity to which
         any Consolidated Party could have drawn upon on the last day of any
         fiscal quarter.

                  Section 6.23. Definitions. As used in Sections 6.17 through
         6.19 and in Section 6.22, the following terms shall have the meanings
         assigned to them in this Section 6.23:

                        (a)  "Capital Stock" means (i) in the case of a
                             corporation, capital stock, (ii) in the case of an
                             association or business entity, any and all shares,
                             interests, participations, rights or other
                             equivalents (however designated) of capital stock,
                             (iii) in the case of a limited liability company,
                             membership interests and (v) any other interest or
                             participation that confers on a Person the right to
                             receive a share of the profits and losses of, or
                             distribution of assets of, the issuing Person.

                        (b)  "Capital Lease" means, as applied to any Person,
                             any lease of any Property (whether real, personal
                             or mixed) by that Person as lessee which, in
                             accordance with GAAP, is or should be accounted for
                             as a capital lease on the balance sheet of that
                             Person.

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                        (c)  "Company Debt Service Coverage Ratio" means, (i) as
                             of the end of the fiscal quarter ending March 31,
                             2000, for the three month period ending on such
                             date, (ii) as of the end of the fiscal quarter
                             ending June 30, 2000, for the six month period
                             ending on such date, (iii) as of the end of the
                             fiscal quarter ending September 30, 2000, for the
                             nine month period ending on such date and (iv) as
                             of the end of each fiscal quarter of the Company
                             beginning with the fiscal quarter ending December
                             31, 2000, for the four fiscal quarter period ending
                             on such date, the ratio of (a) the sum of (I)
                             EBITDA for such period plus (II) Rental Expense for
                             such period, as determined in accordance with GAAP
                             to (b) the sum of (I) cash Interest net of Interest
                             income for such period plus (II) Rental Expense for
                             such period, as determined in accordance with GAAP.

                        (d)  "Consolidated Parties" means a collective reference
                             to the Company and its Subsidiaries, and
                             "Consolidated Party" means any one of them.

                        (e)  "EBITDA" means, for any period, with respect to the
                             Consolidated Parties on a consolidated basis, the
                             sum of (i) Net Income for such period plus (ii) the
                             following to the extent deducted in computing such
                             Net Income: (a) income tax expense, (b) interest
                             expense, (c) depreciation and amortization expense,
                             (d) non-cash non-recurring losses arising out of
                             the ordinary course of business (including without
                             limitation any adjustments to the Company's book
                             tax valuation allowance), (e) cash non-recurring
                             net losses related to the sale of assets in an
                             amount not to exceed $25 million and (f) cash
                             non-recurring losses in connection with any charges
                             related to the reduction or elimination of overhead
                             costs or restructuring of the Company's stock
                             option program in an amount not to exceed $10
                             million, all as determined in accordance with GAAP
                             minus (iii) the following to the extent added in
                             computing such Net Income: (a) income tax benefit
                             and (b) Interest income and (c) extraordinary or
                             non-recurring gains, all as determined in
                             accordance with GAAP.

                        (f)  "Equity Issuance" means any issuance by a
                             Consolidated Party to any Person of (a) shares of
                             its Capital Stock or other equity interests, (b)
                             any shares of its Capital Stock or other equity
                             interests pursuant to the exercise of options
                             (other than Capital Stock issued to employees and
                             directors pursuant to employees or directors stock
                             option plans and Capital Stock issued to

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                             consultants) or warrants, (c) any shares of its
                             Capital Stock or other equity interests pursuant to
                             the conversion of any debt securities to equity or
                             (d) any convertible debt securities evidenced by
                             debentures. The amount of any Equity Issuance shall
                             be the sum of (a) the net cash proceeds derived
                             from such issuance, plus (b) the amount of any
                             indebtedness or debentures cancelled, retired or
                             exchanged in connection with the issuance
                             (exclusive of any indebtedness or debentures
                             cancelled in connection with their conversion to
                             equity), plus (c) the amount for which any TPI-HCR
                             Assignee (as defined in the Purchase Agreement)
                             shall be given a credit against the purchase price
                             for such securities pursuant to Section 8.1 of the
                             Purchase Agreement plus (d) the amount for which
                             any remaining holders of the TPI-HCR Membership
                             Interests (as defined in the Purchase Agreement)
                             shall be given a credit against the purchase price
                             for such securities pursuant to Section 8.2 of the
                             Purchase Agreement or (e) the amount for which any
                             TPI Member (as defined in the Purchase Agreement)
                             shall be given a credit against the purchase price
                             for such securities pursuant to Section 9.1 of the
                             Purchase Agreement.

                        (g)  "Funded Indebtedness" means, with respect to any
                             Person, without duplication, (a) all obligations of
                             such Person for borrowed money, (b) all obligations
                             of such Person evidenced by bonds, debentures,
                             notes or similar instruments, or upon which
                             interest payments are customarily made (expressly
                             excluding, however, the amount of convertible
                             securities of the Consolidated Parties (including
                             the Debentures (as defined in the Purchase
                             Agreement)) outstanding on such date), (c) all
                             obligations of such Person under conditional sale
                             or other title retention agreements relating to
                             Property purchased by such Person (other than
                             customary reservations or retentions of title under
                             agreements with suppliers entered into in the
                             ordinary course of business), (d) all obligations
                             of such Person issued or assumed as the deferred
                             purchase price of Property or services purchased by
                             such Person (other than trade debt incurred in the
                             ordinary course of business and due within twelve
                             months of the incurrence thereof) which would
                             appear as liabilities on a balance sheet of such
                             Person, (e) the principal portion of all
                             obligations of such Person under Capital Leases,
                             (f) the maximum amount of all standby letters of
                             credit issued or bankers' acceptances facilities
                             created for the account of such Person and, without
                             duplication, all drafts drawn thereunder (to the
                             extent unreimbursed), (g) the principal portion of
                             all obligations of such Person under Synthetic
                             Leases, (h) all Indebtedness of another Person of
                             the type referred to in clause (a)-(g) above
                             secured by (or for which the holder of such Funded
                             Indebtedness

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                             has an existing right, contingent or otherwise, to
                             be secured by) any Lien on, or payable out of the
                             proceeds of production from, Property owned or
                             acquired by such Person, whether or not the
                             obligations secured thereby have been assumed, (i)
                             all Guaranty Obligations of such Person with
                             respect to Indebtedness of the type referred to in
                             clauses (a)-(g) above of another Person and (j)
                             Indebtedness of the type referred to in clauses
                             (a)-(g) above of any partnership or unincorporated
                             joint venture in which such Person is legally
                             obligated or has a reasonable expectation of being
                             liable with respect thereto.

                        (h)  "Guaranty Obligations" means, with respect to any
                             Person, without duplication, any obligations of
                             such Person (other than endorsements in the
                             ordinary course of business of negotiable
                             instruments for deposit or collection) guaranteeing
                             or intended to guarantee any Indebtedness of any
                             other Person in any manner, whether direct or
                             indirect, and including without limitation any
                             obligation, whether or not contingent, (i) to
                             purchase any such Indebtedness or any Property
                             constituting security therefor, (ii) to advance or
                             provide funds or other support for the payment or
                             purchase of any such Indebtedness or to maintain
                             working capital, solvency or other balance sheet
                             condition of such other Person (including without
                             limitation keep well agreements, maintenance
                             agreements, comfort letters or similar agreements
                             or arrangements) for the benefit of any holder of
                             Indebtedness of such other person, (iii) to lease
                             or purchase property, securities or services
                             primarily for the purpose of assuring the holder of
                             such Indebtedness, or (iv) to otherwise assure or
                             hold harmless the holder of such Indebtedness
                             against loss in respect thereof. The amount of any
                             Guaranty Obligation hereunder shall (subject to any
                             limitations set forth therein) be deemed to be an
                             amount equal to the outstanding principal amount
                             (or maximum principal amount, if larger) of the
                             Indebtedness in respect of which such Guaranty
                             Obligation is made.

                        (i)  "Indebtedness" means, with respect to any Person,
                             without duplication, (a) all obligations of such
                             Person for borrowed money, (b) all obligations of
                             such Person evidenced by bonds, debentures, notes
                             or similar instruments, or upon which interest
                             payments are customarily made, (c) all obligations
                             of such Person under conditional sale or other
                             title retention agreements relating to Property
                             purchased by such Person (other than customary
                             reservations or retentions of title under
                             agreements with suppliers

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                             entered into in the ordinary course of business),
                             (d) all obligations of such Person issued or
                             assumed as the deferred purchase price of Property
                             or services purchased by such Person (other than
                             trade debt incurred in the ordinary course of
                             business and due within six months of the
                             incurrence thereof or such longer period, if the
                             payment of which is being contested in good faith)
                             which would appear as liabilities on a balance
                             sheet of such person, (e) all obligations of such
                             Person under take-or-pay or similar arrangements or
                             under commodities agreements, (f) all Indebtedness
                             of others secured by (or for which the holder of
                             such Indebtedness has an existing right, contingent
                             or otherwise, to be secured by) any Lien on, or
                             payable out of the proceeds of production from,
                             Property owned or acquired by such Person, whether
                             or not the obligations secured thereby have been
                             assumed, (g) all Guaranty Obligations of such
                             person, (h) the principal portion of all
                             obligations of such Person under Capital Leases,
                             (i) all obligations of such Person under Hedging
                             Agreements, (j) all obligations of such Person to
                             repurchase any securities which repurchase
                             obligation is related to the issuance thereof, (k)
                             the maximum amount of all standby letters of credit
                             issued or bankers' acceptances facilities created
                             for the account of such Person and, without
                             duplication, all drafts drawn thereunder (to the
                             extent unreimbursed), (l) all preferred Capital
                             Stock issued by such Person and required by the
                             terms thereof to be redeemed, or for which
                             mandatory sinking fund payments are due, by a fixed
                             date, (m) all other obligations of such person
                             under any arrangement or financing structure
                             classified as debt (for tax purposes) by any
                             nationally recognized rating agency, (n) the
                             principal portion of all obligations of such Person
                             under Synthetic Leases and (o) the Indebtedness of
                             any partnership or unincorporated joint venture in
                             which such Person is a general partner or a joint
                             venturer.

                        (j)  "Interest" means, for any period, with respect to
                             the Consolidated Parties on a consolidated basis,
                             interest expense net of interest income (including
                             the amortization of debt discount and premium and
                             the interest component under Capital Leases and the
                             implied interest component under Synthetic Leases
                             but excluding the amortization of deferred
                             financing costs, amendment fees paid and bridge
                             loan fees paid), as determined in accordance with
                             GAAP.

                        (k)  "Leverage Ratio" means, as of the end of any fiscal
                             quarter of the Company, for the four fiscal quarter
                             period ending on such date with respect to the
                             Consolidated Parties on a consolidated basis,

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                             the ratio of (a) Funded Indebtedness of the
                             Consolidated Parties on a consolidated basis on the
                             last day of such period to (b) the sum of (i)
                             Funded Indebtedness plus (ii) Net Worth as of such
                             date plus (iii) the amount of convertible
                             securities of the Consolidated Parties (including
                             the Debentures (as defined in the Purchase
                             Agreement)) outstanding on such date plus (iv) book
                             equity which exists in entities for which
                             guaranties are included in the definition of Funded
                             Indebtedness.

                        (l)  "Net Income" means, for any period, with respect to
                             the Consolidated Parties on a consolidated basis,
                             net income (excluding extraordinary items) after
                             Interest expense, income taxes and depreciation and
                             amortization, all as determined in accordance with
                             GAAP (net of sublease income with respect to such
                             Operating Leases) occurring after December 31,
                             1999.

                        (m)  "Net Worth" means, as of any date with respect to
                             the Consolidated Parties on a consolidated basis,
                             shareholder's equity or net worth, as determined in
                             accordance with GAAP excluding the impact of net
                             non-recurring losses.

                        (n)  "Operating Leases" means, as applied to any Person,
                             any lease (including, without limitation, leases
                             which may be terminated by the lessee at any time)
                             of any Property (whether real, personal or mixed)
                             which is not a Capital Lease other than any such
                             lease in which that Person is the lessor.

                        (o)  "Purchase Agreement" means that certain Purchase
                             Agreement dated as of April 26, 2000 by and among
                             Alterra, as seller, and RDVEPCO, L.L.C., a Michigan
                             limited liability company, Group One Investors,
                             L.L.C., a Michigan limited liability company and
                             Holiday Retirement 2000, LLC, as purchasers, as
                             amended pursuant to First Amendment of even date.

                        (p)  "Property" means, any interest in any kind of
                             property or asset, whether real, personal or mixed,
                             or tangible or intangible.

                        (q)  "Rental Expense" means, for any period, with
                             respect to the Consolidated Parties on a
                             consolidated basis, rental expense under Operating
                             Leases, as determined in accordance with GAAP (net
                             of sublease income with respect to such Operating
                             Leases).

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                        (r)  "Subsidiary" means, as to any Person at any time,
                             (a) any corporation more than 50% of whose Capital
                             Stock of any class or classes having by the terms
                             thereof ordinary voting power to elect a majority
                             of the directors of such corporation (irrespective
                             of whether or not at such time, any class or
                             classes of such corporation shall have or might
                             have voting power by reason of the happening of any
                             contingency) is at such time owned by such Person
                             directly or indirectly through subsidiaries, and
                             (b) any partnership, association, joint venture or
                             other entity of which such Person directly or
                             indirectly through subsidiaries owns at such time
                             more than 50% of the Capital Stock.

                        (s)  "Synthetic Lease" means any synthetic lease, tax
                             retention operating lease, off-balance sheet loan
                             or similar off-balance sheet financing product
                             where such transaction is considered borrowed money
                             indebtedness for tax purposes but is classified as
                             an Operating Lease for purposes of GAAP.

         4. Section 8.1(h) of the Master Loan Agreement is deleted and the
following is substituted in lieu thereof:

            (h) A default occurs under any of Sections 6.16 through 6.19, 6.21
or 6.22; or

         5. In consideration of the execution hereof, Alterra shall pay Lender
an extension fee of $125,000 on or before May 31, 2000.

         6. Alterra hereby ratifies and confirms its obligations under each
Guaranty delivered by Alterra in connection with a Project Loan.

         7. West and Alterra each hereby respectively represents and warrants
that (i) it is duly incorporated and legally existing under the laws of the
state of its incorporation; (c) the execution and delivery of, and performance
under this Agreement are within its power and authority without the joinder or
consent of any other party and have been duly authorized by all requisite action
and are not in contravention of law or the powers of its charter, by-laws or
other corporate papers; (d) this Agreement constitutes its legal, valid and
binding obligations, enforceable in accordance with its terms; (e) the execution
and delivery of this Agreement do not contravene, result in a breach of or
constitute a default under any deed of trust, loan agreement, indenture or other
contract, agreement or undertaking to which it is a party or by which it or any
of its properties may be bound (nor would such execution and delivery constitute
such a default with the passage of time or the giving of notice or both) and do
not violate or contravene any law, order, decree, rule or regulation to which it
is subject; and (f) to the best of its knowledge, there exists no uncured
default under the Loan Documents, as modified hereby.

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         8. This Agreement constitutes a Loan Document.

         9. West hereby acknowledges that the liens, security interests and
assignments created and evidenced by the Project Loan Documents and other Loan
Documents are valid and subsisting and further acknowledges and agrees that
there are no offsets, claims or defenses to the Notes, the Project Loan
Documents or any other Loan Documents.

         10. Contemporaneously with the execution and delivery hereof, West
shall pay, or cause to be paid, all costs and expenses incident to the
preparation hereof and the consummation of the transactions specified herein,
including without limitation fees and expenses of legal counsel to GFB.

         11. West and Alterra each hereby releases, remises, acquits and forever
discharges GFB, together with its 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 this Agreement, the Master Loan Agreement, the Notes, the Project
Loan Documents or any other Loan Document, or any of the transactions associated
therewith, or the Collateral, including specifically but not limited to claims
of usury.

         12. The parties acknowledge and confirm that each of their respective
attorneys have participated jointly in the review and revision of this Agreement
and that it has not been written solely by counsel for one party. The parties
hereto therefore stipulate and agree that the rule of construction to the effect
that any ambiguities are to or may be resolved against the drafting party shall
not be employed in the interpretation of this Agreement to favor either party
against the other.

         13. This Agreement and the rights and duties of the parties hereunder
shall be governed for all purposes by the law of the State of Texas and the law
of the United States applicable to transactions within said State.

         14. The terms and provisions hereof shall be binding upon and inure to
the benefit of the parties hereto, their successors and assigns.

         15. All references in the Loan Documents to the Master Loan Agreement
shall hereafter mean the Master Loan Agreement as modified hereby. Except to the
extent specifically amended and modified by the terms and provisions of this
Agreement, all of the

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terms and provisions of the Master Loan Agreement, as hereby amended, shall
remain in full force and effect and the parties hereto hereby ratify and confirm
all of the terms and provisions of the Master Loan Agreement, as hereby amended.

         16. This Agreement may be executed in any number of counterparts, each
of which when executed and delivered shall be deemed an original, and all of
which, when taken together, shall be deemed to be one document. All such
counterparts shall be construed together and shall constitute one instrument,
but in making proof hereof it shall only be necessary to produce one such
counterpart.

         17. THIS AGREEMENT, THE MASTER LOAN AGREEMENT AND THE OTHER LOAN
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 BETWEEN THE PARTIES.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]

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         This Agreement is executed as of the date first written above.

                                     ALS WEST, INC., a Delaware corporation

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

                                     ALTERRA HEALTHCARE CORPORATION, a
                                     Delaware corporation

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

                                     GUARANTY FEDERAL BANK, F.S.B., a federal
                                     savings bank, as Agent and as a Lender

                                     By:          /s/ Deborah M. Laycock
                                        ----------------------------------------
                                        Name:     Deborah M. Laycock
                                              ----------------------------------
                                        Title:    Vice President
                                              ----------------------------------

                                       11<PAGE>   1
                                                                    EXHIBIT 10.9

                         ALTERRA HEALTHCARE CORPORATION
                             10000 INNOVATION DRIVE
                           MILWAUKEE, WISCONSIN 53226

                 WAIVER AND AMENDMENT NO.3 TO CREDIT AGREEMENT

                                                                  March 28, 2000

Firstar Bank, National Association
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202

Ladies and Gentlemen:

         Alterra Healthcare Corporation, a Delaware corporation (the
"Borrower"), hereby agrees with you as follows:

         1. Definitions. Reference is made to that certain Revolving Credit
Agreement dated as of August 19, 1997, as amended by the Amendment thereto dated
February 27, 1999 and the Second Amendment thereto dated September 9, 1999 (the
"Credit Agreement") between the Borrower and you (the "Bank"), pursuant to which
the Borrower has issued its Revolving Credit Note dated August 19, 1997, as
amended (the "Original Note"). All capitalized terms used and not otherwise
defined herein shall have the meanings given to such terms by the Credit
Agreement as amended hereby.

         2. Background. The Borrower has requested that the Maturity Date of the
Revolving Credit Facility be extended to April 30, 2000 and that certain
financial covenants in the Credit Agreement be waived and amended as set forth
below. The Bank has agreed to such amendments and waivers subject to all of the
terms and conditions of this Agreement. Any additional loans made pursuant to
the Credit Agreement as amended hereby, together with the unpaid balance of the
Original Note, shall be evidenced by a new promissory note of the Borrower in
the form of Exhibit A annexed hereto (the "New Note") to be dated as of the date
hereof in the principal amount of $15,000,000 which shall be executed by the
Borrower and delivered to the Bank against the return of the Original Note to
the Borrower. Accrued interest on the Original Note outstanding on the date of
issuance of the New Note shall be included in interest due on the New Note on
the first interest payment date specified therein or in the Credit Agreement.

                                      -1-
<PAGE>   2

         3. Amendments to Credit Agreement. Subject to all of the terms and
conditions hereof, upon execution and delivery of this Agreement, the Credit
Agreement shall be amended, effective as of December 31, 1999, as follows:

                  (a) All references to the Credit Agreement in the Credit
         Agreement, the Note and all other documents related thereto shall refer
         to the Credit Agreement as amended hereby.

                  (b) All references in the Credit Agreement to the Note issued
         thereunder and the loans evidenced thereby shall refer to the New Note
         issued hereunder and the loans evidenced thereby (including the unpaid
         balance of the Original Note).

                  (c) The date of March 31, 2000 set forth in Section 1.1 of the
         Credit Agreement (the "Maturity Date") is hereby amended to April 30,
         2000.

                  (d) Clause (iii) of Section 2.2 of the Credit Agreement is
         amended to read as follows: "(iii) do not require the approval of any
         governmental agency, other entity or person;"

                  (e) Clause (iii) of Section 2.3 of the Credit Agreement is
         hereby amended to read as follows:

               (iii) not liquidate, dissolve, merge or consolidate with or into
               another entity if, as a result of such merger or consolidation,
               the stockholders of the Borrower immediately prior to such merger
               or consolidation do not own in excess of fifty percent (50%) of
               the outstanding voting stock of the surviving corporation, or its
               parent company, immediately following such merger or
               consolidation.

                  (f) The second sentence of Section 2.4 of the Credit Agreement
         is hereby amended to read as follows:

               The Borrower will not, without the prior written consent of the
               Bank, redeem, purchase or retire any of its capital stock (other
               than the redemption of stock issued in connection with the
               proposed equity transaction referred to in Section 4.1(i) below)
               or pay dividends or make other payments or distributions of a
               similar nature (other than pay-in-kind dividends payable in
               connection with the proposed equity transaction referred to in
               Section 4.1(i) below).

                  (g) Section 2.12 of the Credit Agreement is amended such that
         the Borrower shall be required to deliver quarterly financial
         statements within 60 days after

                                      -2-
<PAGE>   3

         the end of each of the first three fiscal quarters in each fiscal year,
         and within 120 days after the end of the fourth fiscal quarter in each
         fiscal year.

                  (h) Section 2.14 of the Credit Agreement is hereby amended and
         restated in its entirety to read as follows:

               2.14 FINANCIAL STATUS. The Borrower will maintain at all times:

               (i) on a consolidated basis with all subsidiaries, at all times
               during the term of this Agreement 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 plus fifty percent
               (50%) of the Borrower's net income (if positive) for each
               subsequent quarter (beginning with the quarter ending March 31,
               2000) plus seventy-five percent (75%) of the net proceeds to the
               Borrower of any equity capital (or equity equivalent) securities
               offering received during such quarter.

               (ii) at the end of each fiscal quarter set forth in the table
               below, a ratio of EBITDAR to the sum of Interest plus Rent for
               the fiscal quarter then ended of not less than the ratio set
               forth opposite such fiscal quarter in the table below:
<TABLE>
<CAPTION>
               QUARTER ENDING                                   RATIO
               --------------                                   -----
<S>            <C>                                              <C>
               March 31, 2000                                   0.65:1
               June 30, 2000                                    0.80:1
               September 30, 2000                               0.90:1
</TABLE>

               (iii) at the end of each fiscal quarter set forth in the table
               below, a ratio of EBITDAR to the sum of Interest plus Rent for
               the four fiscal quarters then ended of not less than the ratio
               set forth opposite such fiscal quarter in the table below:
<TABLE>
<CAPTION>
               QUARTER ENDING                                   RATIO
               --------------                                   -----
<S>                                                             <C>
               December 31, 2000                                0.95:1
               March 31, 2001                                   1.0:1
               June 30, 2001                                    1.05:1
               September 30, 2001                               1.15:1
               December 31, 2001                                1.25:1
               Thereafter                                       1.25:1
</TABLE>

               The terms used in this Section 2.14 will have the meanings set
               forth in a supplement entitled "Financial Definitions", a copy of
               which the Borrower hereby acknowledges having received

                                      -3-
<PAGE>   4

               with this Agreement and which is incorporated herein by
               reference.

                  (i) Section 4.1(g) of the Credit Agreement is hereby amended
         by adding the following at the end of clause (i) thereof:

                 as compared to the business, properties, financial condition or
                 affairs of the Borrower as reflected in the financial
                 projections prepared by management of Borrower consisting of,
                 among other things, a projected balance sheet, income statement
                 and cash flow statement for its fiscal years ended December 31,
                 1999 through December 31, 2003 delivered to the Bank on or
                 about February 2, 2000.

                  (j) Section 4.1 of the Credit Agreement is hereby amended by
         adding two additional subparagraphs (h) and (i) thereto, reading in
         their entirety as follows:

               (h) CROSS DEFAULT TO BANK UNITED CREDIT FACILITY. An "Event of
               Default" shall occur under the Amended and Restated Financing and
               Security Agreement dated February 12, 1999, as amended and in
               effect from time to time, between ALS Holdings, Inc. et al (as
               Borrower) and Bank United (as Agent).

               (i) EQUITY TRANSACTION. The Borrower shall fail to complete an
               equity transaction (which may consist of the issuance and sale of
               additional equity securities or the conversion of outstanding
               indebtedness) resulting in additional cash equity to the Borrower
               in the amount of at least $100,000,000, all on such terms and
               conditions as shall be reasonably satisfactory to the Bank, by
               not later than June 30, 2000.

                  (k) Section 4.5 of the Credit Agreement is hereby deleted in
         its entirety.

                  (l) The Financial Definitions Supplement to the Credit
         Agreement is hereby amended by deleting the definitions of "Debt
         Service Coverage Ratio" and "Eligible Account" and by inserting therein
         the following new definitions:

               2. The term "EBITDAR" shall mean earnings before interest, taxes,
               depreciation, amortization, and Rent, plus the dollar amount of
               the Borrower's minority interest in losses of unconsolidated
               subsidiaries.

               3. The term "Interest" shall mean the sum of all interest expense
               (as defined by GAAP), net of interest income.

                                      -4-
<PAGE>   5

               4. The term "Rent" shall mean lease expense as defined pursuant
               to GAAP.

               5. The term "Tangible Net Worth" shall mean, at any time, the sum
               of shareholders' equity as defined by GAAP less the total of (a)
               all assets which would be classified as intangible assets under
               GAAP, including goodwill (other than goodwill resulting from the
               purchase of joint venture interests currently held by joint
               venture partners), trademarks, trademark applications, trade
               names, service marks, patent applications and licenses, and
               deferred charges, (b) pre-opening costs, organizational costs and
               deferred financing costs, and (c) advances or loans made to or
               receivables from any consolidated affiliates of which the
               Borrower owns less than fifty percent (50%) or any stockholder of
               the Borrower or any affiliate.

                  (m) Section 2(a) of Appendix 1 to the Credit Agreement is
         hereby amended to read as follows:

                 Promptly upon transmission thereof or other filing with the
                 SEC, copies of all annual, quarterly or current reports that
                 the Company files with the SEC. In addition, the Company shall
                 cause Live Edgar(TM) or another third-party service bureau
                 regularly offering such "watch" services to promptly notify via
                 e-mail a representative designated by the Bank of all
                 registration statements filed by the Company with the SEC.

         4. Waiver. The Borrower was not in compliance with the "Minimum Net
Profit" requirement of Section 2.14 of the Credit Agreement for the quarter
ended December 31, 1999. The Bank hereby waives such covenant violation for the
quarter ended December 31, 1999. The Bank also waives any default existing
7pursuant to the cross-default provision in Section 4.1(d) and the material
adverse change clause in Section 4.1(g), in each case as of December 31, 1999.

         5. Conditions. Notwithstanding any other provision of this Agreement,
this Agreement shall not become effective unless and until it has been signed by
all parties to the Credit Agreement.

         6. Representations and Warranties. Except for the representation in
Section 2.12 that there has been no material adverse change in the Borrower's
financial condition since the last financial statements delivered to you, the
Borrower hereby repeats and reaffirms the representations and warranties set
forth in Article II of the Credit Agreement. The Borrower also represents and
warrants that the execution, delivery and performance of this Agreement

                                      -5-
<PAGE>   6

and the other documents required hereby are within the corporate powers of the
Borrower, have been duly authorized by all necessary corporate action and do not
and will not (i) require any consent or approval of the stockholders of the
Borrower; (ii) violate any provision of the articles of incorporation or by-laws
of the Borrower or of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to the Borrower or any subsidiary; (iii) require the consent or
approval of, or filing or registration with, any governmental body, agency or
authority; or (iv) result in any breach of or constitute a default under, or
result in the imposition of any lien, charge or encumbrance upon any property of
the Borrower or any subsidiary pursuant to, any indenture or other agreement or
instrument under which the Borrower or any subsidiary is a party or by which it
or its properties may be bound or affected. This Agreement constitutes, and each
of the documents required herein when executed and delivered hereunder will
constitute, legal, valid and binding obligations of the Borrower or other
signatory enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy or similar laws affecting the
enforceability of creditors' rights generally.

         7. Confirmation of Agreements. Except as expressly provided above, the
Credit Agreement shall remain in full force and effect. This Agreement does not
constitute a waiver or Agreement of any term, condition or covenant in the
Credit Agreement other than as specifically set forth above. Nothing contained
in this Agreement or in any other document, or any course of dealing with the
Borrower, shall be construed to imply that there is any agreement by the Bank to
provide any waiver or agree to any Agreement in the future. This Agreement shall
not release, discharge or satisfy any present or future debts, obligations or
liabilities to the Bank of the Borrower or of any debtor, guarantor or other
person or entity liable for payment or performance of any of such debts,
obligations or liabilities of the Borrower, or any mortgage, security interest,
lien or other collateral or security for any of such debts, obligations or
liabilities of the Borrower or such debtors, guarantors or other persons or
entities, or waive any default except as expressly provided herein, and the Bank
expressly reserves all of its rights and remedies with respect to the Borrower
and all such debtors, guarantors or other persons or entities, and all such
mortgages, security interests, liens and other collateral and security. This is
an amendment and not a novation. The Borrower acknowledges and agrees that the
obligations under the Credit Agreement and Note exist and are owing with no
offset, defense or counterclaim assertible by the Borrower and that the Credit
Agreement and the Note are valid, binding and fully enforceable according to
their respective terms.

         8. Miscellaneous. The Borrower shall be responsible for the payment of
all fees and out-of-pocket disbursements incurred by the Bank in connection with
the preparation, execution, delivery, administration and enforcement of this
Agreement including all costs of collection, and including without limitation
the reasonable fees and disbursements of counsel for the Bank, whether or not
any transaction contemplated by this Agreement is consummated. The provisions of
this Agreement shall inure to the benefit of any holder of the Note, and shall
inure to the benefit of and be binding upon any successor to any of the parties
hereto. All agreements, representations and warranties made herein shall survive
the execution of this Agreement and the making of the loans under the Credit
Agreement, as so amended. This

                                      -6-
<PAGE>   7

Agreement shall be governed by and construed in accordance with the internal
laws of the State of Wisconsin. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement is solely for the benefit of the
parties hereto and their permitted successors and assigns. No other person or
entity shall have any rights under, or because of the existence of, this
Agreement.

                                      -7-
<PAGE>   8

         If the foregoing is satisfactory to you, please sign the form of
acceptance below and return a signed counterpart hereof to the Borrower.

                                      Very truly yours,

                                      ALTERRA HEALTHCARE CORPORATION

(Corporate Seal)

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

                  Agreed to as of the date first above written.

                                      FIRSTAR BANK, NATIONAL ASSOCIATION

                                      By:  /s/ Dale L. Welke
                                           -------------------------------------

                                             Title:   Vice President

                                      -8-

<PAGE>   9

                                                                       EXHIBIT A

                                      NOTE

$15,000,000                                                       March 28, 2000

         FOR VALUE RECEIVED, Alterra Healthcare Corporation, a Delaware
corporation ("Borrower"), promises to pay to the order of Firstar Bank, National
Association ("Bank"), without setoff or counterclaim, the principal sum of
Fifteen Million Dollars ($15,000,000) at the Main Office of the Bank in
Milwaukee, Wisconsin, on the Maturity Date (as defined in the Credit Agreement
referred to below).

         The unpaid principal balance of this Note shall bear interest at the
Prime Rate announced by the Bank and in effect from time to time (with the rate
changing as and when such Prime Rate changes).

         Interest is payable monthly in arrears on the last day of each month,
beginning with the first such day occurring after the date hereof, and all
accrued and unpaid interest shall be due and payable on the Maturity Date.

         Interest will be computed for the actual number of days principal is
unpaid, using a daily factor obtained by dividing the stated interest rate by
360. Principal and interest not paid when due shall bear interest from and after
the due date until paid at a rate of two percent (2%) per annum plus the rate
otherwise payable hereunder. All amounts payable under this Note and the Credit
Agreement shall be payable in lawful money of the United States of America.

         Without affecting the liability of the Borrower or any indorser, surety
or guarantor, the Bank may, without notice, renew or extend the time for
payment, accept partial payments, release or impair any collateral security for
the payment of this Note, or agree not to sue any party liable on it.

         The Borrower agrees to pay all costs of collection, including
reasonable attorneys' fees and legal expenses, and waives presentment, protest,
demand, and notice of dishonor.

         This Note shall be governed by the internal laws of the State of
Wisconsin, except to the extent superseded by federal law.

         This Note constitutes the Note issued under a Revolving Credit
Agreement dated as of August 19, 1997, as amended from time to time (the "Credit
Agreement"), between the

                                      -9-
<PAGE>   10

undersigned and Firstar Bank, National Association, to which Credit Agreement
reference is hereby made for a statement of the terms and conditions on which
loans evidenced hereby were or may be made, and for a description of the
conditions upon which this Note may be prepaid, in whole or in part, or its
maturity accelerated. This Note is entitled to the benefits of the Credit
Agreement and all collateral documents related thereto.

                                    ALTERRA HEALTHCARE CORPORATION

                                    By:
                                       -----------------------------------------
                                        Title:

(CORPORATE SEAL)

                                      -10-

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