Amendment #2 To Master Construction Line of Credit

AMENDMENT NO. 2 TO
MASTER CONSTRUCTION LINE OF CREDIT AGREEMENT


THIS AMENDMENT NO. 2 TO MASTER CONSTRUCTION LINE OF CREDIT AGREEMENT, dated as of May 25, 2000 ("THIS AMENDMENT"), among the following:


(I) THIRD PARTY INVESTORS I, LLC, a Delaware limited liability
company (herein, together with its successors and assigns, the
"BORROWER");


(II) the lending institutions listed on the signature pages
hereof (the "LENDERS");


(IV) FLEET NATIONAL BANK, a national banking association, and
THE HUNTINGTON NATIONAL BANK, a national banking association, as
Co-Agents; and


(V) KEY CORPORATE CAPITAL INC., a Michigan corporation, as
administrative agent (the "ADMINISTRATIVE AGENT").


PRELIMINARY STATEMENTS:


(1) The parties hereto entered into the Master Construction Line of Credit Agreement, dated as of August 31, 1999, as amended by Amendment No. 1 thereto, dated as of March 1, 2000 (as so amended, the "CREDIT AGREEMENT"; with the terms defined therein, or the definitions of which are incorporated therein, being used herein as so defined).


(2) In connection with the execution and delivery of the Credit Agreement, Alterra Healthcare Corporation, a Delaware corporation (herein, together with its successors and assigns, the "COMPANY") and the Administrative Agent entered into the Guaranty, dated as of August 31, 1999, as amended by Amendment No. 1 thereto, dated as of March 1, 2000, as amended by Amendment No. 2 thereto, dated as of the date hereof in the form attached hereto as Exhibit A (as so amended, the "GUARANTY").


(3) The parties hereto desire to change certain of the terms and provisions of the Credit Agreement, all as more fully set forth below.


NOW, THEREFORE, the parties hereby agree as follows:


SECTION 1. AMENDMENTS, ETC.


1.1. REDUCTION IN COMMITMENT. Effective on the Effective Date of this Amendment provided for in section 4 hereof, the Total Commitment shall be partially and permanently reduced to $51,837,193. After giving effect to the foregoing, Annex I to the Credit Agreement is amended to reflect the following Commitments:


2


========================================================================================
NAME OF LENDER COMMITMENT ======================================================================================== Key Corporate Capital Inc. $19,957,319.30 - ---------------------------------------------------------------------------------------- Fleet National Bank $15,939,936.85 - ---------------------------------------------------------------------------------------- The Huntington National Bank $15,939,936.85 - ----------------------------------------------------------------------------------------
TOTAL $51,837,193.00 ========================================================================================


1.2. INTEREST. Effective on the Effective Date of this Amendment provided for in section 4 hereof, section 2.9 (a) of the Credit Agreement is amended to read in its entirety as follows:


(A) INTEREST ON PRIME RATE LOANS. During any period in which a
Loan is a Prime Rate Loan, the unpaid principal amount of such Loan
shall bear interest at a fluctuating rate per annum which shall at all
times be equal to the Prime Rate in effect from time to time, PROVIDED
that during the Construction Period for such Project at all times prior
to June 1, 2000, an interest rate margin of 25 basis points shall be
added to such Prime Rate, and at all times on or after June 1, 2000, an
interest rate margin of 50 basis points shall be added to such Prime
Rate, PROVIDED FURTHER that during the Mini-Perm Period for such
Project prior to the time Stabilization of such Project is achieved, at
all times on and after June 1, 2000, an interest rate margin of 25
basis points shall be added to such Prime Rate.


1.3. EFFECTIVENESS OF PRICING CHANGES. The pricing changes effected pursuant to section 1.1 of this Amendment shall be applicable as of and from and after June 1, 2000, for all Loans outstanding on such date or thereafter.


1.4. DSCR CURE OPTION. Effective on the Effective Date of this Amendment provided for in section 4 hereof, section 9.6 of the Credit Agreement is amended by adding the following text at the end of such section:


If the Borrower fails to satisfy the ratio set forth above for any
period then such failure shall not constitute an Event of Default
pursuant to section 10.1(c), if (i) within forty-five days of the end
of the relevant period, the Borrower prepays the Loans for such Project
in an amount such that when the assumed level debt service obligations
(consisting of both principal and interest) for such Project for such
period and on a going-forward basis, based upon the weighted average
aggregate principal amount of the Loans for such Project, as adjusted
in accordance with the amount of principal prepaid, the DSCR for such
Project for such period will meet or exceed the ratio set forth above,
(ii) the Borrower provides to the Administrative Agent a calculation of
the DSCR for such period including therein the effect of such
prepayment, and (iii) the Administrative Agent confirms its receipt of
such prepayment and that the Borrower's computations support the
conclusion that no Event of Default occurred and so notifies the
parties hereto (which notice the Administrative Agent shall issue
promptly upon confirmation of such conditions).


2


3


1.5. EVENTS OF DEFAULT. Effective on the Effective Date of this Amendment provided for in section 4 hereof, sections 10.1 (c) and (j) of the Credit Agreement are amended to read in their entirety as follows:


(C) CERTAIN NEGATIVE COVENANTS: the Borrower shall default in
the due performance or observance by it of any term, covenant or
agreement contained in sections 9.1 through 9.8, inclusive, of this
Agreement; or the Borrower shall default in the due performance or
observance by it of any term, covenant or agreement contained in
section 5, 10, 16(a)(i) or 16(c) of any Mortgage; or the Guarantor
shall default in the due performance of any term, covenant or agreement
contained in section 13(a), 13(b), 13(c), 13(e), 13(h), 13(j), 13(k),
13(m) or 13(n) of the Alterra Guaranty; or


(J) MATERIAL ADVERSE EFFECT, ETC.: (i) any event or
circumstance shall occur or exist which has a Material Adverse Effect
upon the Borrower or the Guarantor, as compared to the business,
operations, property, assets, liabilities or condition (financial or
otherwise) of the Borrower as reflected in the financial statements
referred to in section 7.8, or the business, operations, property,
assets, liabilities or condition (financial or otherwise) of the
Guarantor and its Subsidiaries as reflected in the financial statements
and the Financial Projections referred to in section 11(f) and 11(i) of
the Alterra Guaranty, as applicable, other than changes in the
condition of the Guarantor described in the Guarantor's annual report
on form 10K for fiscal year 1999 and the Guarantor's quarterly report
on form 10Q for the first quarter of 2000, as filed with the SEC and as
reflected in the May 5, 2000 Model (as defined in the Guaranty); or
...