EX-10 5 exhibit103.htm Exhibit 10.3

EXHIBIT 10.3

STOCK PLEDGE AGREEMENT

This STOCK PLEDGE AGREEMENT (this "Agreement") is made and entered into as of
April 9, 2002 entered into by and among Alterra Healthcare Corporation, a
Delaware corporation ( "Pledgor"), and the Entities Listed on Schedule  1
(collectively, "Secured Party").

R E C I T A L S

           A.        Pledgor is the legal and beneficial owner of all of the
shares of stock (collectively, the "Pledged Shares") issued by ALS Leasing,
Inc., a Delaware corporation ( "ALS Leasing"), and Assisted Living Properties,
Inc., a Kansas corporation ("ALP" and, collectively with ALS Leasing, the
"Companies"), as such Pledged Shares are further described on Schedule  2.

           B.        Secured Party, as "Landlord," and the Companies, as
"Tenant," have entered into that certain Master Lease of even date herewith (as
amended, modified or revised from time to time, the "Lease"), pursuant to which
Secured Party has agreed to lease to Tenant the Premises described in the Lease.
All initially capitalized terms not otherwise defined herein shall have the
meanings given to them in the Lease.

           C.        Pledgor has executed that certain Guaranty of Lease and
Letter of Credit Agreement of even date herewith (as amended, modified or
revised from time to time, the "Guaranty"), guarantying, among other things, the
full performance by Tenant under the Lease.

           D.        Tenant has executed that certain Letter of Credit Agreement
of even date herewith (as amended, modified or revised from time to time, the
"LC Agreement"), pursuant to which Tenant has agreed, among other things, to
post and maintain a letter or letters of credit with Landlord as a partial
collateral for the Lease obligations.

           E.        It is a condition precedent to the Secured Party's
obligations under the Lease that Pledgor executes and delivers this Agreement
and that Pledgor shall have granted the security interests and undertaken the
obligations contemplated by this Agreement.

A G R E E M E N T

           NOW, THEREFORE, in consideration of the foregoing recitals (which by
this reference are incorporated herein), in order to induce Secured Party to
enter into the Lease and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, Pledgor hereby agrees with
Secured Party as follows:

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           1.     Pledge of Security. Pledgor hereby pledges to Secured Party,
and hereby grants to Secured Party a security interest in, all of Pledgor's
right, title and interest in and to the following (collectively, the "Pledged
Collateral" ):

(a)  (i)  The Pledged Shares and the certificates representing the Pledged
Shares and all dividends, warrants, rights, instruments and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Pledged Shares; and (ii)  any
and all additional shares of, and all securities convertible into, and all
warrants, options and other rights to purchase, capital stock of either of the
Companies from time to time acquired by Pledgor in respect or on account of
Pledgor's ownership of the Pledged Shares (which shares shall be deemed to be
part of the Pledged Shares); and

(b)  To the extent not covered by Section 1(a), all proceeds of any or all of
the foregoing Pledged Collateral. The term "proceeds" shall have the meaning
assigned that term under the Uniform Commercial Code (the "Code") as in effect
in California and, shall include, but not be limited to, any and all
(i) payments under insurance, (ii) proceeds of any indemnity or guaranty payable
to Pledgor or Secured Party from time to time with respect to any of the Pledged
Collateral and (iii) any other amounts from time to time paid or payable under
or in connection with any of the Pledged Collateral or otherwise receivable or
received when the Pledged Collateral is or proceeds are sold, collected,
exchanged, or otherwise disposed of, whether such disposition is voluntary or
nvoluntary.

           2.  Security for Obligations. This Agreement secures, and the Pledged
Collateral is collateral security for: payment in full by Tenant of all Minimum
Rent, Manlius Debt Service, other Rent and all other charges, reserves and other
amounts due under the Lease in the manner and at the time prescribed in the
Lease (including the payment of amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11
U.S.C. § 362(a)); the full, complete and timely performance by Tenant of all
covenants, indemnities and other obligations under the Lease including any
indemnities or other obligations of Tenant that survive the expiration or
earlier termination of the Lease; payment in full by Pledgor of all amounts due
under the Guaranty in the manner and at the time prescribed in the Guaranty
(including the payment of amounts that would become due but for the operation of
the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. §
362(a)); the full, complete and timely performance by Pledgor of all covenants,
indemnities and other obligations under the Guaranty including any indemnities
or other obligations of Guarantor that survive the expiration or earlier
termination of the Guaranty; payment in full by Tenant of all amounts due under
any LC Agreement in the manner and at the time prescribed in such LC Agreement
(including the payment of amounts that would become due but for the operation of
the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. §
362(a)); the full, complete and timely performance by Tenant of all covenants,
indemnities and other obligations under any LC Agreement including any
indemnities or other obligations of Tenant that survive the expiration or
earlier termination of any LC Agreement; and all other obligations and
liabilities of every nature of Tenant under the Lease and the LC Agreement and
Pledgor under the Guaranty, now or hereafter existing under or arising out of or
in connection with the Lease, the LC Agreement or the Guaranty, as applicable,
and all amendments, revisions, renewals, replacements, restatements or
extensions (including an extension of the Term of the Lease by holding over),
whether for rent, interest (including interest that, but for the filing of a
petition in bankruptcy with respect to Tenant or any entity comprising
Guarantor, would accrue on such obligations), fees, expenses, indemnities or
otherwise, whether voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, irrespective of whether jointly owed
with others, and irrespective of whether from time to time decreased or
extinguished and later increased, created or incurred, and all or any portion of
such obligations or liabilities that are paid, to the extent all or any part of
such payment is avoided or recovered directly or indirectly from Secured Party
as a preference, fraudulent transfer or otherwise, and all obligations of every
nature of Pledgor now or hereafter existing under this Agreement (collectively,
the "Secured Obligations").

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           3.        Delivery of Pledged Collateral. All certificates or
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by Secured Party pursuant hereto and shall be in suitable form for
transfer by delivery, accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to Secured Party.
Upon the occurrence and during the continuance of an Event of Default (as
defined below), Secured Party shall have the right, at any time in its
discretion and without notice to Pledgor, to transfer or to register in the name
of Secured Party or any of its nominees any or all of the Pledged Collateral.

           4.        Representations and Warranties. Pledgor represents and
warrants as follows:

(a)        Pledgor is the legal, record and beneficial owner of the Pledged
Collateral free and clear of any lien, security interest, preferential
arrangement or other charge or encumbrance (each a "Lien") except for the
security interest created by this agreement.

(b)        The Pledged Shares constitute all of the outstanding shares of the
voting stock of ALS Leasing and ALP, and no other shares of stock or securities,
or right to acquire stock or securities, of ALS Leasing or ALP are issued or
outstanding.

(c)        Pledgor has all the requisite capacity, power and authority to enter
into this Agreement and to carry out the transactions contemplated hereby; and
this Agreement has been duly executed and delivered by Pledgor and constitutes
the legally valid and binding obligation of Pledgor, enforceable against Pledgor
in accordance with its terms.

(d)        No consent of any other party and no consent, authorization, approval
or other action by, and no notice to or filing with, any governmental authority
or regulatory body is required for the execution, delivery and performance of
this Agreement by Pledgor.

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(e)     The pledge and delivery to Secured Party of the Pledged Collateral
pursuant to this Agreement creates a valid and perfected first priority security
interest in the Pledged Collateral, securing the payment of the Secured
Obligations.

(f)     The Pledged Shares have been duly authorized and validly issued and are
fully paid and non-assessable.

(g)     There are no outstanding warrants, options or other rights to purchase,
or other agreements outstanding with respect to, or property that is now or
hereafter convertible into, or that requires the issuance or sale of, any
Pledged Shares.

(h)     The pledge of the Pledged Collateral pursuant to this Agreement does not
violate Regulation T, U or X of the Board of Governors of the Federal Reserve
System.

(i)     Neither this Agreement nor anything provided in or contemplated by this
Agreement does now or shall hereafter breach, invalidate, cancel, make
inoperative or interfere with, or result in the acceleration or maturity of, any
agreement, document, instrument, right or interest, affecting or relating to
Pledgor or any of the Pledged Collateral.

(j)     There are no actions, suits or proceedings pending or, to the best of
such Pledgor's knowledge after due inquiry, threatened before or by any
judicial, administrative or union body, any arbiter or any governmental
authority, against or affecting any of the Pledged Collateral or against Pledgor
that, if determined adversely to Pledgor, would adversely affect the value of
the Pledged Collateral, the security interest therein granted to, or the rights
and remedies of, Secured Party pursuant to this Agreement.

           5.        Certain Covenants. Pledgor hereby covenants that, until the
Secured Obligations have been indefeasibly paid in full, Pledgor will:

(a)     not sell, assign (by operation of law or otherwise) or otherwise dispose
of, or grant any option with respect to, any of the Pledged Collateral, except
for the security interest under this Agreement; and

(b)     pay or discharge, prior to delinquency, all taxes, charges, fees,
expenses, Liens and assessments of every nature levied or imposed upon the
Pledged Collateral.

           6.        Further Assurances. Pledgor agrees that at any time and
from time to time, at the expense of Pledgor, Pledgor will promptly execute and
deliver, or consent to, as applicable, all further instruments and documents
(including, without limitation, financing statements and continuation
statements), and take all further actions, that may be necessary or desirable,
or that Secured Party may request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable Secured Party to
exercise and enforce its rights and remedies hereunder with respect to any
Pledged Collateral.

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           7.     Voting Rights; Dividends.
(a)     So long as no Event of Default shall have occurred and be continuing
Pledgor shall be entitled to receive all dividends and to exercise any and all
voting and other consensual rights pertaining to the Pledged Collateral or any
part thereof for any purpose that is not inconsistent with the terms of this
Agreement.

(b)        Upon the occurrence and during the continuance of an Event of
Default, all rights of Pledgor to receive all dividends and to exercise the
voting and other consensual rights which it would otherwise be entitled to
exercise pursuant to Section 7(a) shall cease, and all such rights shall
thereupon become vested in Secured Party who shall thereupon have the sole right
to receive such dividends and to exercise such voting and other consensual
rights.

           8.     Secured Party Appointed Attorney-In-Fact. Pledgor hereby
irrevocably appoints, effective upon and during the continuance of an Event of
Default, Secured Party as Pledgor's attorney-in-fact, with full authority in the
place and stead of Pledgor and in the name of Pledgor or otherwise, from time to
time in Secured Party's discretion to take any action and to execute and/or
deliver any instrument, including but not limited to financing and continuation
statements, which Secured Party may deem necessary or advisable to accomplish
the purposes of this Agreement, including, without limitation, to receive,
endorse and collect all instruments made payable to Pledgor representing any
dividend or other distribution in respect of the Pledged Collateral or any part
thereof and to give full discharge for the same, to ask, demand, collect, sue
for, recover, compound, receive and give acquittance and receipts for moneys due
and to become due under or in respect to any of the Pledged Collateral, and to
file any claims or take any action or institute any proceedings which Secured
Party may deem necessary or desirable for the collection of any of the Pledged
Collateral or to enforce the rights of Secured Party with respect to any of the
Pledged Collateral.

           9.     Secured Party May Perform. If Pledgor fails to perform any
agreement contained herein, Secured Party may itself perform, or cause
performance of, such agreement, and the expenses of Secured Party incurred in
connection therewith shall be payable by Pledgor under Section 14(b).

           10.     Standard of Care. The powers conferred on Secured Party
hereunder are solely to protect its interest in the Pledged Collateral and shall
not impose on it any duty to exercise such powers. Secured Party shall be deemed
to have exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if the Pledged Collateral is accorded treatment
substantially equivalent to that which Secured Party accords its own property
consisting of negotiable securities, it being understood that Secured Party
shall have no responsibility for (a) ascertaining or taking action with respect
to calls, conversions, exchanges, tenders or other matters relating to any
Pledged Collateral, whether or not Secured Party has or is deemed to have
knowledge of such matters, or (b) taking any necessary steps to preserve rights
against any parties with respect to any Pledged Collateral.

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           11.     Events of Default. The occurrence of any of the following
shall be an "Event of Default" under this Agreement: (a) the occurrence of any
"Event of Default" as defined in the Lease, (b) the occurrence of any default of
or breach under this Guaranty or the LC Agreement, or (c) a default or breach by
Pledgor of any covenant, representation or warranty made in this Agreement.

           12.     Remedies Upon Default. If any Event of Default shall have
occurred and be continuing:

(a)        Secured Party may exercise in respect of the Pledged Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party on default under the Code
as in effect in the State of California (or any other state with jurisdiction
over the Pledged Collateral) at that time, and Secured Party also may in its
sole discretion, without notice (except as specified below), sell the Pledged
Collateral or any part thereof in one or more parcels at public or private sale,
at any exchange, broker's board or at any of Secured Party's offices or
elsewhere, for cash, on credit or for future delivery, at such time or times and
at such price or prices and upon such other terms as Secured Party may deem
commercially reasonable, irrespective of the impact of any such sales on the
market price of the Pledged Collateral. Secured Party may be the purchaser of
any or all of the Pledged Collateral at any such sale and shall be entitled, for
the purpose of bidding and making settlement or payment of the purchase price
for all or any portion of the Pledged Collateral sold at any such public sale,
to use and apply any of the Secured Obligations as a credit on account of the
purchase price of any Pledged Collateral payable by Secured Party at such sale.
Each purchaser at any such sale shall hold the property sold absolutely free
from any claim or right on the part of Pledgor, and Pledgor hereby waives (to
the extent permitted by law) all rights of redemption, stay and/or appraisal
which it now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. Pledgor agrees that, to the extent
notice of sale shall be required by law, at least ten (10) days' notice to
Pledgor of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. Secured
Party shall not be obligated to make any sale of Pledged Collateral regardless
of notice of sale having been given. Secured Party may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned. Pledgor hereby waives any claims against
Secured Party arising by reason of the fact that the price at which any Pledged
Collateral may have been sold at such a private sale was less than the price
which might have been obtained at a public sale, even if Secured Party accepts
the first offer received and does not offer such Pledged Collateral to more than
one offeree.

(b)        Pledgor acknowledges that, by reason of certain prohibitions
contained in the Securities Act of 1933, (as amended, the "Securities Act"), and
applicable state securities laws, Secured Party may be compelled, with respect
to any sale of all or any part of the Pledged Collateral conducted without prior
registration or qualification of such Pledged Collateral under the Securities
Act and/or such state securities laws, to limit purchasers to those who will
agree, among other things, to acquire the Pledged Collateral for their own
account, for investment and not with a view to the distribution or resale
thereof. Pledgor acknowledges that any such sales may be at prices and on terms
less favorable to Secured Party than those obtainable through a sale without
such restrictions (including, without limitation, a public offering made
pursuant to a registration statement under the Securities Act) and,
notwithstanding such circumstances, Pledgor agrees that any such sale shall be
deemed to have been made in a commercially reasonable manner and that Secured
Party shall have no obligation to delay the sale of any Pledged Collateral for
the period of time necessary to permit the issuer thereof to register it for a
form of public sale requiring registration under the Securities Act or under
applicable state securities laws, even if such issuer would, or should, agree to
so register it.

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           13.     Application of Proceeds. All Proceeds received by Secured
Party in respect of any sale of, collection from, or other realization upon all
or any part of the Pledged Collateral shall be applied in whole or in part by
Secured Party against the Secured Obligations in the following order of
priority:

           First:        To the payment of the costs and expenses of such sale,
collection or other realization, and all expenses, liabilities and advances made
or incurred by Secured Party in connection therewith, including reasonable
compensation to Secured Party and its agents and counsel, in accordance with
Section 14(b);

           Second:        To the payment in full of all Secured Obligations in
such order as Secured Party shall elect; and

           Third:        To the payment to or upon the order of Pledgor, or to
whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then remaining from such
proceeds.

           14.        Indemnity and Expenses.

(a)     Pledgor hereby agrees to indemnify and defend Secured Party from and
against any and all claims, losses and liabilities in any way relating to,
growing out of or resulting from this Agreement and the transactions
contemplated hereby (including, without limitation, enforcement of this
Agreement), except claims, losses or liabilities resulting from Secured Party's
gross negligence or willful misconduct with respect to the Pledged Collateral.

(b)     Pledgor will upon demand pay to Secured Party the amount of any and all
reasonable costs and expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, which Secured Party may incur in
connection with (i)  the custody or preservation of any of the Pledged
Collateral after an Event of Default has occurred, or the sale of, collection
from, or other realization upon, any of the Pledged Collateral, (ii)  the
exercise or enforcement of any of the rights of Secured Party hereunder or
(iii)  the failure by Pledgor to perform or observe any of the provisions
hereof. Any such amount not paid by Pledgor at the time and in the manner
required hereunder, shall bear interest at the Agreed Rate until paid or, at the
option of Secured Party (to be exercised in its sole and absolute discretion)
until added to Landlord's Investment pursuant to Section 13.4 of the Lease.

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           15.        Waivers of Pledgor.

(a)     Pledgor (to the maximum extent permitted by law) waives any right to
require Secured Party to: (i) proceed against any other person or entity;
(ii) proceed against or exhaust any other security held from any other person or
entity; (iii) pursue any other remedy in Secured Party's power; or (iv) make or
give any presentments, demands for performance, notices of nonperformance,
protests, notices of protest or notices of dishonor in connection with any
obligations or evidences of indebtedness which constitute in whole or in part
the Secured Obligations or in connection with the creation of new or additional
Secured Obligations;

(b)     Pledgor waives (to the maximum extent permitted by law) any defenses
(other than a defense based upon the Secured Obligations having been paid in
full) arising by reason of: (i) any disability or other defense of Pledgor or
any other entity, including, without limitation, any defense based on or arising
out of the unenforceability of any of the Secured Obligations, or legal or
equitable discharge of the Secured Obligations or this Agreement; (ii) the
cessation from any cause whatsoever, other than payment in full, of the Secured
Obligations or the release or substitution of any sureties or guarantors of the
Secured Obligations; (iii) any act or omission by Secured Party which directly
or indirectly results in or aids the discharge of Pledgor or any of the Secured
Obligations by operation of law or otherwise; (iv) the release of any other
collateral securing the Secured Obligations or the failure of Secured Party to
perfect or maintain the perfection of any such other collateral; (v) any
modification of the Secured Obligations, in any form whatsoever, including, but
not limited to the increase or decrease in the amount of, renewal, extension,
acceleration or other change in the time for payment of the Secured Obligations,
and any change in the terms of the Secured Obligations, including, but not
limited to, any increase or decrease of the rate of interest on the Secured
Obligations; and (vi) any law limiting the liability of or exonerating
guarantors or sureties, including, without limitation, California Civil Code
Sections 2787 to 2855, inclusive, 2899 and 3433; and

(c)     Until all the Secured Obligations shall have been paid in full, Pledgor
waives any right to enforce any remedy which Secured Party now has or may
hereafter have against any person or entity guaranteeing or securing the Secured
Obligations, and waives any benefit of, or any right to participate in any
security whatsoever now or hereafter held by Secured Party for the Secured
Obligations.

(d)        If for any reason whatsoever either of the Companies now or hereafter
becomes indebted to Pledgor or any Affiliate of Pledgor, such indebtedness and
all interest thereon shall at all times be subordinate in all respects to the
Secured Obligations. Notwithstanding anything to the contrary contained in this
Agreement or any payments made by Pledgor, Pledgor shall not have any right of
subrogation in or under the Lease or the LC Agreement or to participate in the
rights and benefits accruing to Secured Party thereunder, all such rights of
subrogation and participation, together with all of the contractual, statutory,
or common law rights which Pledgor may have to be reimbursed for any payments
Pledgor may make to, or performance by Pledgor of any of the Secured Obligations
for the benefit of, Secured Party pursuant to this Agreement, being hereby
expressly waived and released.

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           16.        Continuing Security Interest. This Agreement shall create
a continuing security interest in the Pledged Collateral and shall (a)  remain
in full force and effect until indefeasible payment in full of all Secured
Obligations, (b)  be binding upon Pledgor, its successors and assigns, and (c) 
inure, together with the rights and remedies of Secured Party hereunder, to the
benefit of Secured Party and its successors, transferees and assigns. Upon
receipt by Secured Party of indefeasible payment in full of all Secured
Obligations, and satisfaction of all the terms and provisions of this Agreement
(including the provisions of Section 13), Secured Party will return to Pledgor
any remaining Pledged Collateral in Secured Party's possession.

           17.     No Waiver by Secured Party. No failure on the part of Secured
Party to exercise, and no course of dealing with respect to, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise by Secured Party of any right,
power or remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The remedies herein provided are
cumulative to the fullest extent permitted by law and are not exclusive of any
remedies provided by law.

           18.     Amendments, Waivers and Consents. No amendment or waiver of
any provision of this Agreement, nor consent to any departure by Pledgor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by Secured Party, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.

           19.     Notices. All notices, requests and demands under this
Agreement shall be in writing and sent by personal delivery, U.S. certified or
registered mail (return receipt requested, postage prepaid) or FedEx or similar
generally recognized overnight carrier regularly providing proof of delivery,
addressed as follows:

If to Pledgor: Alterra Healthcare Corporation
10000 Innovation Drive
Milwaukee, Wisconsin 53226
Attention: Mark W. Ohlendorf
Facsimile: (414) 918-5055

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With a copy to: Rogers & Hardin LLP
2700 International Tower
229 Peachtree Street, N.E.
Atlanta, Georgia 30303-1601
Attention: Miriam J. Dent
Facsimile: (404) 525-2224
   
If to Secured Party: Nationwide Health Properties, Inc.
610 Newport Center Drive, Suite 1150
Newport Beach, California 92660-6429
Attention: President and General Counsel
Facsimile: (949) 759-6876
   
And: JER Partners
1650 Tysons Boulevard, Suite 1600
McLean, Virginia 22101
Attention: Paul A. Froning
Facsimile: (703) 714-8060 and
Attention: Daniel T. Ward, Esq.
Facsimile: (703) 714-8102

   
With a copy to: O'Melveny & Myers LLP
610 Newport Center Drive, Suite 1700
Newport Beach, California 92660-6429
Attention: Steven L. Edwards
Facsimile: (949) 823-6994
   
And: Pircher, Nichols & Meeks
1925 Century Park East, Suite 1700
Los Angeles, California 90067
Attention: Stevens A. Carey, Esq.
Facsimile: (310) 201-8922

A party may designate a different address by notice as provided above. Any
notice, demand or request so delivered (whether accepted or refused) shall be
deemed to have been given and received on the date of delivery established by
the U.S. Post Office return receipt or the carrier's proof of delivery or, if
not so given, upon on the day received (provided that such notice or instrument
shall be deemed received on the next succeeding business day if received after
5:00 p.m. (local time)). Delivery to any officer, general partner of principal
of a party shall be deemed delivery to such party. If Secured Party notifies
Pledgor of the name and address of any lender, Pledgor shall deliver a copy of
all its notices concurrently to such lender.

           20.     Miscellaneous Provisions. The titles and headings in this
Agreement are for convenience of reference only and shall not in any way affect
the meaning or construction of any provision. Since each party has been
represented by counsel and this Agreement has been freely and fairly negotiated,
all provisions shall be interpreted according to their fair meaning and shall
not be strictly construed against any party. If any part of this Agreement shall
be determined to be invalid or unenforceable, the remainder shall nevertheless
continue in full force and effect. Time is of the essence, and whenever action
must be taken (including the giving of notice or the delivery of documents)
hereunder during a certain period of time or by a particular date that ends or
occurs on a Saturday, Sunday or federal holiday, then such period or date shall
be extended until the immediately following business day. Whenever the words
"including", "include" or "includes" are used in this Agreement, they shall be
interpreted in a non-exclusive manner as though the words "without limitation"
immediately followed. Whenever the words day or days are used in this Agreement,
they shall mean "calendar day" or "calendar days " unless expressly provided to
the contrary. Unless otherwise expressly provided, any reference to any "
Section" means a section of this Agreement (including all subsections), and any
reference to any "Exhibit" or "Schedule" means an exhibit or schedule attached
hereto. Unless otherwise defined herein or in the this Agreement or the Lease,
terms defined in Article 9 of the Code are used herein as therein defined. If
more than one Person is Pledgor hereunder, their liability and obligations
hereunder shall be joint and several. This Agreement (a) contains the entire
agreement of the parties as to the subject matter hereof and supersedes all
prior or contemporaneous verbal or written agreements or understandings, (b) may
be executed in several counterparts, each of which shall be deemed an original,
but all of which shall constitute one and the same document, (c) may only be
amended by a writing executed by the parties, (d)  may be assigned by Secured
Party (including any assignment for security purposes) to any assignee of, or
successor in interest to, its rights under the Lease, (e) shall inure to the
benefit of and be binding upon the successors and permitted assigns of the
parties, (f) shall be governed by and construed and enforced in accordance with
the laws of the State of California, without regard to the conflict of laws
rules thereof, and (g) incorporates by this reference any Exhibits and Schedules
attached hereto.

           21.     Attorney's Fees. In the event of any action for breach of
this Agreement, the prevailing party shall be entitled to reasonable attorney's
fees, costs and expenses incurred in such action. Attorney's fees incurred in
enforcing any judgment in respect of this Agreement are recoverable as a
separate item. The preceding sentence is intended to be severable from the other
provision of this Agreement and to survive any judgment and, to the maximum
extent permitted by law, shall not be deemed merged into any such judgment.
[Signatures begin on next page.]

-11-

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IN WITNESS WHEREOF, Pledgor and Secured Party have duly executed and delivered
this Agreement as of the date first above written.

PLEDGOR:

ALTERRA HEALTHCARE CORPORATION
a Delaware corporation

By:        /s/ Mark W. Ohlendorf        
Name:        Mark W. Ohlendorf                
Title:        VP                                

Witness:        /s/ Sarah
Wits                                Witness:        /s/ Kristin Ferge        

SECURED PARTY:

JER/NHP SENIOR LIVING ACQUISITION, LLC,
a Delaware limited liability company

By: JER/NHP SENIOR HOUSING, LLC,
a Delaware limited liability company,
its sole member    
   

  By: NATIONWIDE HEALTH PROPERTIES, INC.,
a Maryland corporation,
its managing member
     
     
    By:  /s/ Donald D. Bradley
Name:  Donald D. Bradley
Title:  Senior Vice President & General Counsel

Witness:     /s/ Sharina Ross                              Witness:     /s/
Frank M. Crance

S-1

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JER/NHP SENIOR LIVING TEXAS, L.P.,
a Texas limited partnership

 
 
By: JER/NHP MANAGEMENT TEXAS, LLC,
a Texas limited liability company,
its general partner  
 

    By:  /s/ Donald D. Bradley
Name:  Donald D. Bradley
Title:  Manager

Witness:     /s/ Sharina Ross                              Witness:     /s/
Frank M. Crance

JER/NHP SENIOR LIVING WISCONSIN, LLC
a Delaware limited liability company

By: JER/NHP SENIOR HOUSING, LLC,
a Delaware limited liability company,
its sole member
        By: NATIONWIDE HEALTH PROPERTIES, INC.,
a Maryland corporation,
its managing member
           

    By:  /s/ Donald D. Bradley
Name:  Donald D. Bradley
Title:  Senior Vice President & General Counsel

Witness:     /s/ Sharina Ross                              Witness:     /s/
Frank M. Crance

S-2

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JER/NHP SENIOR LIVING KANSAS, INC.,
a Kansas corporation

By:  /s/ Donald D. Bradley
Name:         Donald D. Bradley
Title:        Secretary and Treasurer

Witness:     /s/ Sharina Ross                              Witness:     /s/
Frank M. Crance

S-3

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SCHEDULE 1

ENTITIES COMPRISING SECURED PARTY

JER/NHP Senior Living Acquisition, LLC, a Delaware limited liability company

JER/NHP Senior Living Texas, L.P., a Texas limited partnership

JER/NHP Senior Living Wisconsin, LLC, a Delaware limited liability company

JER/NHP Senior Living Kansas, Inc., a Kansas corporation
(f/k/a Meditrust of Kansas, Inc., a Kansas corporation)

Schedule 1

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SCHEDULE 2
DESCRIPTION OF PLEDGED SHARES

 
Company Certificate
Number Number of
Shares Dated Listed Shareholder ALS Leasing, Inc. 2 100 Common February 6, 2002
Alterra Healthcare Corporation Assisted Living Properties, Inc. 1 500 Common
February 8, 1996 Sterling House Corporation (now known as Alterra Healthcare
Corporation)

Schedule 2

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