Exhibit 10.5

SETTLEMENT AGREEMENT, MUTUAL RELEASE AND ASSIGNMENT

      This SETTLEMENT AGREEMENT, MUTUAL RELEASE AND ASSIGNMENT (this
"Agreement"), dated as of October 11, 2003, is entered into by and among:
Alterra Healthcare Corporation, a Delaware corporation ("Alterra"); The
Margolick Financial Group LP, a Michigan limited partnership ("Margolick"); the
Limited Partnerships (as hereinafter defined); and the Settling Limited Partners
(as hereinafter defined).

RECITALS

      WHEREAS, Alterra has served as the general partner of the 32 Delaware
limited partnerships listed on Schedule 1 hereto (the "Limited Partnerships");

      WHEREAS, Alterra filed a voluntary petition under Chapter 11 of the U.S.
Bankruptcy Code in the U.S. Bankruptcy Court of the District of Delaware (the
"Bankruptcy Court") on January 22, 2003 (the "Bankruptcy" or the "Bankruptcy
Case");

      WHEREAS, the Persons (as hereinafter defined) whose names are set forth on
the signature pages hereto following the heading "Limited Partners" are (prior
to the Assignment) the limited partners of the Limited Partnerships (each a
"Limited Partner," collectively the "Limited Partners");

      WHEREAS, certain disputes have arisen amongst the parties relating to the
Limited Partnerships;

      WHEREAS, the Limited Partners have filed certain claims in the Bankruptcy
Case (on their own behalf and purportedly in the name of the Limited
Partnerships) related to the Limited Partnerships (collectively, the "Bankruptcy
Claims");

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      WHEREAS, the parties to this Agreement desire to settle such disputes, to
provide for the treatment of the Bankruptcy Claims in the Bankruptcy Case and to
provide for Alterra's purchase of the partnership interests in the Limited
Partnerships held by the Settling Limited Partners on the terms and subject to
the conditions set forth herein; and

      WHEREAS, the parties have further agreed that after such purchase, the
Settling Limited Partners shall have no interest in or rights with respect to
any Limited Partnership or any rights or responsibilities with respect to their
management, operations and finances;

      NOW THEREFORE, in consideration of the mutual releases and agreements set
forth below, the receipt and sufficiency of which is hereby acknowledged by the
parties, and intending to be legally bound, the Settling Limited Partners, the
Limited Partnerships, and Alterra agree as follows:

      1.      Certain Definitions. For purposes of this Agreement, the following
terms shall have the meanings set forth below:

      "Affiliate" of any Person means (a) any other Person who (together with
Family Members) directly or indirectly Controls, or is Controlled by or is under
common Control with such Person, (b) any Person who is a director or officer of,
member in or trustee of, or who serves in a similar capacity with respect to,
such Person, or (c) any other Person who directly or indirectly is the
beneficial owner of 20% or more of the equity interests of such Person. When the
term "Affiliate" is used with respect to another Person who is an individual, it
also means (i) any Family Members of such Person, or (ii) any corporation,
partnership, limited liability company, trust or other entity of which such
other Person serves as an officer, director, general partner, manager, trustee
or in a similar capacity.

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      "Alterra Designee" shall mean ALS National SPE II, Inc., or such other
party (including Alterra) as Alterra shall designate by notice given to the
parties hereto prior to the Effective Time.

      "Alterra Lease Subsidiaries" is defined in the definition of "Lease
Agreements" in this Section 1.

      "Alterra Management Agreements" means the thirty-two (32) Assisted Living
Facility Consultant and Management Services Agreements, as amended, between
Alterra, on the one hand, and each of the thirty-two (32) Limited Partnerships,
on the other hand.

"Approval Order" means an order of the Bankruptcy Court approving the execution
and performance of the Agreement by Alterra in accordance with its terms.

      "Assignment" means the assignment of the partnership interests of the
Settling Limited Partners contained in Section 6 hereof.

      "Bankruptcy" has the meaning ascribed to it in the Recitals.

      "Bankruptcy Case" has the meaning ascribed to it in the Recitals.

      "Bankruptcy Claims" has the meaning ascribed to it in the Recitals.

      "Claims" means any and all claims, counterclaims, rights, demands, costs
(including attorneys fees and court costs), damages, losses, liabilities,
actions, and causes of action of every nature and description, whether known or
unknown, suspected or unsuspected, foreseen or unforeseen, real or imaginary,
actual or potential, and whether arising in tort or contract or at law or in
equity, under the common law, state law, federal law, or any other law, or
otherwise.

      "Control" or "Controlled" means the direct or indirect power to direct or
cause the direction of the management and policies of the "Controlled" Person,
whether through ownership of equity securities, by agreement, or otherwise.
Without limitation of the foregoing, a Person shall be deemed to "Control"
another Person when the first Person owns more than fifty percent (50%) of the
voting stock (in the case of a corporation) or other voting interests (in the
case of a legal entity which is not a corporation) of the other Person.

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      "Deadline" means October 21, 2003.

      "Effective Time" shall have the same meaning as "Effective Date," as
defined in the Plan.

      "Family Member" means, with respect to any individual, (a) the spouse of
such individual, (b) any child of such individual, or any parent, grandparent,
brother or sister living in the same house as such individual, or the spouse of
any of the foregoing individuals described in this clause (b), (c) a custodian,
guardian or personal representative of an individual described in clause (a) or
(b), or (d) a trust for the exclusive benefit of one or more of the individuals
described in clauses (a) or (b).

      "Lease Agreements" means the lease agreements or sublease agreements
between each of the Limited Partnerships, on the one hand, and Alterra or a
subsidiary of Alterra (each, an "Alterra Lease Subsidiary"), on the other hand,
pursuant to which each of the Limited Partnerships acquired a leasehold or
subleasehold interest in an assisted living residence.

     " Limited Partners" has the meaning ascribed to it in the Recitals.

      "Limited Partnerships" has the meaning ascribed to it in the Recitals.

      "Limited Partnership Agreements" means the thirty-two (32) Limited
Partnership Agreements, each dated as of the date set forth in Schedule 1
hereto, of the Limited Partnerships.

      "Management Agreements" means the thirty-two (32) Assisted Living Facility
Consultant and Management Services Agreements, each between a Limited
Partnership, on the one hand, and Alterra, on the other hand.

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      "Person" means any natural person, corporation, partnership, limited
liability company or other entity of any type or nature whatsoever.

      "Plan" means the Second Amended Plan of Reorganization of Alterra dated
September 15, 2003, as amended from time to time.

      "Proportionate Share" means, with respect to each Limited Partner, such
Limited Partner's proportionate share as set forth opposite such Limited
Partner's name in the column entitled "Proportionate Share" on Schedule 2
hereto.

      "Settlement Notes" has the meaning ascribed to it in Section 5 hereof.

      "Settling Limited Partners" means the Limited Partners which have executed
and delivered their applicable signature page to this Agreement to Alterra on or
prior to the Deadline; provided, that in the event any Limited Partner executes
and delivers a signature page after the Deadline, Alterra may in its discretion
elect to accept such signature page and include such Limited Partner as a party
to this Agreement, in which event such Limited Partner shall also be deemed a
Settling Limited Partner. Delivery of the Limited Partners' executed signature
pages to Alterra may be accomplished by the applicable Limited Partner
delivering such executed signature pages to Margolick, and Margolick forwarding
such executed signature page to Alterra in accordance with the provisions of
Section 17 hereof; provided, that such signature pages shall be deemed to have
been delivered to Alterra and the Limited Partnerships at the time deemed
received by Alterra from Margolick pursuant to Section 17 hereof. Any Limited
Partner which delivers an executed signature page to this Agreement after the
Deadline shall not be deemed to have joined in or become party to this Agreement
unless and until Alterra elects to accept such signature page, which Alterra may
do or refuse to do in its sole discretion.

      "Subscription Agreements" means collectively those certain Subscription
Agreements, in each case among the applicable Limited Partnerships, and the
applicable Limited Partners, pursuant to which, among other things, the Limited
Partners subscribed for limited partnership interests in the Limited
Partnerships.

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      2.     Release By the Limited Partners. Subject to the satisfaction or
waiver of the conditions set forth in Section 8 below, effective as of the
Effective Time, each Settling Limited Partner hereby releases, covenants not to
sue, and forever discharges Alterra, the Limited Partnerships, and their
respective Affiliates (including, without limitation, the Alterra Lease
Subsidiaries), employees, agents, attorneys and advisors, from any and all
Claims in any way relating to or arising out of the Limited Partnerships and
such Limited Partner's investment therein, including, without limitation:

(a)      any and all Claims which in any way relate to or arise out of any
agreement to which such Limited Partner is or was a party with any of the
Limited Partnerships or Alterra, including without limitation, the Limited
Partnership Agreements and the Subscription Agreements;

(b)      any and all Claims (including any rights to bring derivative Claims on
behalf of any Limited Partnership) which in any way relate to or arise out of
any agreement to which any Limited Partnership is or was a party, including
without limitation, the Alterra Management Agreements, and the Lease Agreements;

(c)      any and all Claims for breach of any duty owed by any of Alterra, any
Alterra Affiliate (including, without limitation, Alterra's officers, directors
and employees) or any Limited Partnership to any Limited Partnership or to such
Limited Partner, including without limitation any Claims for breach of any
fiduciary duty or contractual duty; and

(d)     any and all Claims based upon misrepresentation, fraud, or violation of
any state or federal securities law, rule or regulation, including, without
limitation, the federal Securities Act of 1933, as amended; it being the
intention of the Limited Partners to effect a general release of all such
Claims;

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(e)      provided, however, that this release shall not release any Settling
Limited Partner's rights under this Agreement, including, without limitation,
the right to receive the Settlement Notes pursuant to Section 5 hereof and/or to
receive the claims treatment with respect to the Bankruptcy Claims as specified
in Section 7 hereof.

      3.     Release by Limited Partnerships. Subject to the satisfaction or
waiver of the conditions set forth in Section 8 below, effective as of the
Effective Time, each Limited Partnership hereby releases, covenants not to sue
and forever discharges each Settling Limited Partner, together with their
respective Affiliates, employees, agents, attorneys and advisors, from any and
all Claims arising out of or relating to the investment by any Settling Limited
Partner in any Limited Partnership or their status as limited partners therein,
including, without limitation, any Claims related to capital contributions.

      4.     Release by Alterra. Subject to the satisfaction or waiver of the
conditions set forth in Section 8 below, effective as of the Effective Time,
Alterra hereby releases, covenants not to sue, and forever discharges, each
Settling Limited Partner, together with their respective Affiliates, employees,
agents, attorneys and advisors, from any and all Claims arising out of or
relating to:

(a)      amounts owed or which may be owed by any Limited Partnership to Alterra
or any of its Controlled Affiliates, or

(b)     the Settling Limited Partners' investment in the Limited Partnerships,
including, without limitation:

(i)     Claims for unpaid management fees and/or reimbursement of expenses owed
under any of the Alterra Management Agreements; and

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(ii)      any loans made by Alterra to any of the Limited Partnerships pursuant
to any of the Limited Partnership Agreements.

      5.     Alterra Notes. Subject to the satisfaction or waiver of the
conditions set forth in Section 8 below, at the Effective Time, reorganized
Alterra shall deliver to each Settling Limited Partner a promissory note (the
"Settlement Notes") of reorganized Alterra in the form of Exhibit A hereto,
dated as of the Effective Time and payable to the order of such Settling Limited
Partner, in an original principal amount equal to the amount set forth opposite
such Settling Limited Partner's name on Schedule 2 hereto under the column
entitled "Settlement Note Amount."

      6.     Assignment of Limited Partnership Interests of Settling Limited
Partners. Subject to the satisfaction or waiver of the conditions set forth in
Section 8 below, effective as of the Effective Time, each Settling Limited
Partner hereby sells and assigns all of his, her or its interests in each
Limited Partnership to Alterra Designee in exchange for the issuance of such
Settling Partner's Settlement Note and a Proportionate Share of a $6,000,000
Class 6 Claim as provided in Section 7 hereof, which Settlement Notes and
Proportionate Shares of the $6,000,000 Class 6 Claims shall constitute the
aggregate purchase price for all such limited partnership interests of the
Settling Limited Partners. Alterra Designee hereby accepts the Assignment, and
Alterra and each Limited Partnership hereby consent to the Assignment and waive
any and all restrictions to and/or limitations on the Assignment contained in
the Limited Partnership Agreements or in any other document, instrument or
writing. It is expressly understood and agreed that Alterra Designee will hold
the limited partnership interests transferred through the Assignment as limited
partnership interests separate and distinct from the interests which Alterra
holds in each Limited Partnership in its capacity as general partner, and that
Alterra Designee will have the status of a limited partner with respect to the
limited

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partnership interest so transferred to it and will be entitled to exercise, as a
limited partner, all rights which each Settling Limited Partner had prior to the
Assignment as a consequence of the limited partnership interest so transferred
(including, without limitation, all rights to vote such limited partnership
interests as it sees fit with respect to any action which requires the consent
of the limited partners of the Limited Partnerships). It is further expressly
understood and agreed that from and after the time the Assignment becomes
effective, the Settling Limited Partners shall have no interest (whether debt,
equity or otherwise) in any Limited Partnership, and accordingly (i) no action
of or by any Limited Partnership shall require the consent of or notice to any
Settling Limited Partner, and (ii) no Settling Limited Partner will have any
rights or responsibilities with respect to the management, operations or
finances of any Limited Partnership.

      7.      Treatment of Bankruptcy Claims. Subject to the Bankruptcy Court
entering an Approval Order, with respect to all of the Bankruptcy Claims
asserted by the Limited Partners, whether on their own behalf or on behalf of
the Limited Partnerships, Alterra and the applicable Settling Limited Partners
and the Limited Partnerships agree to fully settle and compromise such claims in
consideration of:

(i)     such claims being allowed, in the aggregate, a $6,000,000 "Class 6
Claim" (as defined in the Plan); and

(ii)      each Settling Limited Partner shall be entitled to such Settling
Limited Partner's Proportionate Share of such $6,000,000 "Class 6 Claim" and
such Settling Limited Partner's Proportionate Share of such Class 6 Claims shall
be afforded the treatment provided in the Plan to the holders of a Class 6
Claim.

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      8.     Conditions Precedent to Effectiveness. Notwithstanding anything to
the contrary set forth herein, the releases pursuant to Sections 2, 3 and 4
hereof, the issuance of Settlement Notes pursuant to Section 5 hereof, the
Assignment and the provisions of Section 6 hereof and the provisions of Section
10 hereof, shall not be effective and legally binding upon the parties until
each of the following conditions shall have been satisfied or waived in writing
by the party entitled to waive same (as set forth below):

(a)     each Limited Partner shall have executed and delivered to Alterra (or
its counsel) a counterpart signature page to this Agreement, except to the
extent that Alterra waives such requirement by written notice to the Limited
Partners delivered in accordance with Section 17 below;

(b)     each Limited Partnership, Alterra and Alterra Designee shall have
executed and delivered to the Settling Limited Partners, one or more counterpart
signature pages to this Agreement, which delivery may be accomplished by
delivering executed signature pages to Margolick, who is authorized to receive
such delivery on behalf of the Settling Limited Partners, using the address
and/or fax number set forth in Section 17 hereof;

(c)     the Plan shall have been confirmed by the Bankruptcy Court with no
adverse modification to the Plan of the rights of the Settling Limited Partners
as provided in this Agreement, including their rights as holders of a Class 6
Claim; and

(d)     the "Effective Date," as defined in the Plan, shall have occurred.

      9.     Certain Tax Matters. The parties (i) agree that the taxable year of
each of the Limited Partnerships that commenced on January 1, 2003, shall close
at the effective time of the Assignment, and (ii) having determined that the
Settling Limited Partners have not received any portion of the economic benefit,
if any, or borne any portion of the economic burden, if any, that

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corresponds to any item of income, gain, loss, deduction and credit of the
Limited Partnerships for such short taxable year within the meaning of the
applicable U.S. Treasury Regulations, agree that the income tax returns
(including Schedules K-1) of each of the Limited Partnerships for such short
taxable year shall be prepared and filed by Alterra on behalf of the Limited
Partnerships and shall reflect allocation to Alterra of all such items of each
of the Limited Partnerships attributable to such period.

      10.      Covenant Not to Sue; Costs of Enforcement. Subject to the
satisfaction or waiver of the conditions set forth in Section 8 above, the
parties to this Agreement understand and agree that they will not enter or file
suit against the released parties herein, or commence any arbitration or other
proceeding, with respect to the Claims released above. The parties further agree
that, in addition to other relief, any released party shall be entitled to
reasonable attorneys' fees, costs and the expenses of litigation incurred in
defending any action filed in breach of this provision.

      11.     No Admission. This Agreement shall not constitute an admission of
liability or wrongdoing on the part of any party to this Agreement. This
Agreement is made as a compromise of the disputed claims between the parties, to
avoid further expense and to terminate finally and completely the controversies
between the parties, and shall not be construed as an admission or
acknowledgment by any party of any improper action whatsoever. Neither this
Agreement nor anything in this Agreement shall be admissible in any proceeding
as evidence of wrongdoing by any party. This Agreement may be introduced,
however, in any proceeding to enforce this Agreement.

      12.     Representations and Warranties.

(a)     Each party hereby represents and warrants to the other parties that:

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(i)     Except for the Bankruptcy Claims, neither such party nor any of such
party's Affiliates has filed any claims, actions or arbitration proceedings
relating to the Claims to be released pursuant to this Agreement, or will do so
hereafter (other than to enforce this Agreement) unless this Agreement does not
become effective as provided herein;

(ii)     Such party has not heretofore assigned or otherwise transferred to any
Person any interest in any Claim which would otherwise be released pursuant to
the terms of this Agreement;

(iii)     Subject to the entry of the Approval Order in the case of Alterra,
this Agreement and the other agreements contemplated to be executed and
delivered by such party hereunder have been duly authorized, executed and
delivered by such party and constitute each such Person's legal, valid and
binding obligation (to the extent it is a party thereto); and

(iv)     Such party's execution, delivery and performance of this Agreement and
the other agreements contemplated to be executed and delivered by such party
hereunder will not violate, conflict with or result in the breach of (x) any
agreement (including without limitation any mortgage, deed of trust, indenture,
or other security instrument) to which such party or any of its Affiliates is a
party or to which any of their respective assets are subject, (y) any judgment,
decree, injunction, order or arbitration award binding upon such party or any of
its Affiliates, or (z) any law, regulation, rule, ordinance or court decision.

(b)     Each Settling Limited Partner hereby represents and warrants to Alterra
that:

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(i)     Such Settling Limited Partner will be receiving and holding the
Settlement Note for such Settling Limited Partner's own account without the
participation of any other person and with the intent of holding the Settlement
Note for investment and without the intent of participating directly or
indirectly in a distribution of the Settlement Note, or any portion thereof, and
not with a view to, or for resale in connection with, any distribution of the
Settlement Note, or any portion thereof.

(ii)     Such Settling Limited Partner acknowledges that such Settling Limited
Partner has been provided with all information or been given access to all
information with respect to Alterra which might affect such Settling Limited
Partner's decision whether to acquire the Settlement Note. In this regard, such
Settling Limited Partner acknowledges that such Settling Limited Partner has
received and reviewed (a) Alterra's Annual Report on Form 10-K for the fiscal
year ended December 31, 2002, as amended, and Alterra's Quarterly Report on Form
10-Q for the quarter ended June 30, 2003; and (b) the Plan and the Disclosure
Statement in connection therewith filed in the Bankruptcy Case in the United
States Bankruptcy Court for the District of Delaware. Such Settling Limited
Partner further acknowledges that such Settling Limited Partner is familiar with
the business, operations, properties and financial condition of Alterra and has
discussed or had the opportunity to discuss with representatives of Alterra any
questions such Settling Limited Partner may have had with respect thereto.

(iii)     Such Settling Limited Partner fully understands:

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(a)      the risks involved in acquiring the Settlement Note, including the
speculative nature of the investment in Alterra that the Settlement Note
represents;

(b)     the risk of losing the entire investment made by such Settling Limited
Partner in Alterra;

(c)     the lack of liquidity of the Settlement Note; and

(d)     the tax consequences of an investment in the Settlement Note. To the
extent that such Settling Limited Partner deemed such consultation to be
necessary, such Settling Limited Partner has consulted with such legal,
accounting, tax, investment and other advisers to such Settling Limited Partner
with respect to the tax treatment of an investment by such Settling Limited
Partner in the Settlement Note and the merits and risks of an investment in the
Settlement Note.

(iv)      Such Settling Limited Partner (or the trustee of such Settling Limited
Partner, if such Settling Limited Partner is a trust) is over twenty-one years
of age.

(v)     Such Settling Limited Partner is an "accredited investor," as defined in
Rule 501 of Regulation D promulgated under the Securities Act of 1933, as
amended (the "Act"). This representation of such Settling Limited Partner is
based on such Settling Limited Partner's consultation with such Settling Limited
Partner's securities counsel, which counsel is familiar with such Settling
Limited Partner and the requirements of Regulation D under the Act.

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(vi)      Such Settling Limited Partner has sufficient knowledge and experience
in business and financial matters to evaluate the nature of, and the risks
attending, such Settling Limited Partner's investment decision to accept the
Settlement Note.

(vii)      Such Settling Limited Partner certifies, under penalties of perjury
with respect to this subparagraph 12(b)(vii) only, that (a) it is a United
States person for purposes of U.S. income taxation, and (b) its Taxpayer
Identification Number and home address (office address in the case of any
entity) are as set forth on the signature page hereto.

(viii)      Such Settling Limited Partner acknowledges that such Settling
Limited Partner must continue to bear the economic risk of the investment in the
Settlement Note for an indefinite period and recognizes that the Settlement Note
will be (a) sold without registration under any state or federal law relating to
the registration of securities for sale; (b) issued and sold in reliance upon
the exemption from registration prohibited by any applicable state securities
laws; and (c) issued and sold in reliance on exemptions from registration
provided by the Act and the General Rules and Regulations of the Securities and
Exchange Commission promulgated thereunder.

(ix)      Such Settling Limited Partner will in any event offer, sell, pledge,
convey or otherwise transfer the Settlement Note, or any portion thereof, only
if (a) pursuant to an effective registration statement under the Act and any and
all applicable state securities or Blue Sky laws or in a transaction which is
otherwise in compliance with the Act and such laws; and (b) such Settling
Limited Partner has furnished evidence satisfactory to Alterra of compliance
with the laws of such jurisdictions which, in the opinion of Alterra, may be
applicable, it being understood that Alterra shall be entitled to require and
rely upon an opinion of counsel satisfactory to it with respect to compliance
with said laws.

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(x)      Such Settling Limited Partner is aware that Alterra will be under no
obligation and has no intention to register the Settlement Note, or any portion
thereof, or to comply with any exemption available for the subsequent offer or
sale of the Settlement Note, or any portion thereof, without registration.

(xi)     Such Settling Limited Partner is not aware of any remuneration or
commission which is to be paid to any person, directly or indirectly, in
connection with the issuance and delivery of the Settlement Note.

      13.      Entire Agreement. This Agreement and the other agreements
referenced herein constitute the full and complete agreement between the parties
with respect to the subject matter hereof and there are no other agreements,
covenants, promises, or arrangements other than those set forth herein and
therein. Except as expressly provided herein, this Agreement may not be modified
or amended as to any party except by a writing duly executed by the party
against which such modification or amendment is asserted.

      14.      Severability. If any provision of this Agreement or the
application thereof is held invalid, the invalidity shall not affect other
provisions or applications of the Agreement which can be given effect without
the invalid provision or application, and to this end the provisions of this
Agreement are declared to be several.

      15.      Construction. Each party hereto has been represented by counsel
in connection with the negotiation and delivery of this Agreement and the
agreements referenced herein, all of which have been jointly prepared by such
counsel. Accordingly, no rule regarding construction against the draftsman shall
have any applicability in the construction or interpretation of this Agreement
or any agreement referenced herein.

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      16.     No Waiver. No waiver of any breach of any provision of this
Agreement shall be construed to be, or shall be, a waiver of any other breach of
this Agreement. No waiver shall be binding unless in writing and signed by the
party or parties waiving the breach.

      17.      Notices. Each notice, request, demand or other communication
("Notice") by any party to any other party pursuant to this Agreement shall be
in writing and shall be personally delivered or sent by certified mail, return
receipt requested, postage prepaid, or by commercial courier, charges prepaid,
or by facsimile transmission (but each such Notice sent by facsimile
transmission shall be confirmed by sending the original thereof to the other
party by U.S. mail or commercial courier as provided herein), addressed to the
address or fax number of the receiving party set forth below or to such other
address or fax number as such party shall have communicated to the other party
in accordance with this Section. Any Notice hereunder shall be deemed to have
been given and received when personally delivered, or three (3) business days
after the date so sent by certified mail, or on the date when so sent by
facsimile, or on the business day following the date when so sent by commercial
overnight courier.

If to Alterra or to any

Alterra Healthcare Corporation

Limited Partnership:

10000 Innovation Drive

 

Milwaukee, WI 53226

 

Attn: Mark W. Ohlendorf

 

Telephone: (414) 918-5304

 

Fax: (414) 918-5080

With required copy to:

Rogers & Hardin LLP

 

 

 

2700 International Tower

 

229 Peachtree Street, NE

 

Atlanta, GA 30303

 

Attn: Alan C. Leet, Esq.

 

Telephone: 404/420-4616

 

Fax: 404/522-2224

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If to Margolick or to

c/o Margolick Financial Group

any Limited Partner:

32255 Northwestern Highway, Suite 290

 

Farmington Hills, Michigan 48334

 

Attn: Ron Plaine

 

Telephone: (248) 737-3888

 

Fax: (248) 737-4719

   

With required copy to:

Bodman, Longley & Dahling LLP

 

201 West Big Beaver Road

 

Suite 500

 

Troy, MI 48084

 

Attn: Michael B. Lewiston, Esq.

 

Telephone: (248) 743-6001

 

Fax: (248) 743-6002

      18.     Facsimile Signature; Counterparts. This Agreement may be executed
in one or more counterparts, and all of such counterparts shall constitute one
and the same instrument. Any signature of this Agreement that is transmitted by
facsimile transmission shall be treated as an original executed counterpart
signature of this Agreement. In the event that less than all of the Limited
Partners have executed and delivered counterpart signature pages to this
Agreement in accordance with the definition of "Settling Limited Partners," this
Agreement shall nevertheless be binding upon all parties which have executed it
so long as Alterra shall have waived the condition set forth in Section 8(a)
above as provided therein.

      19.     Binding Effect. This Agreement shall be binding upon, and inure to
the benefit of, each party executing this Agreement and their successors and
permitted assigns. This Agreement shall not be assignable by any party without
the written consent of the party against which such assignment is asserted.

      20.     Approval Order; Bankruptcy Matters. This Agreement shall not be
binding upon Alterra unless and until the Bankruptcy Court has entered an
Approval Order. Alterra shall promptly file a motion with the Bankruptcy Court
seeking the issuance of an Approval Order, and shall use reasonable efforts to
pursue the issuance on or before October 28, 2003, of an Approval Order. Upon
the entry of an Approval Order by the Bankruptcy Court, the Settling

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Limited Partners and the Limited Partnerships shall promptly direct their
counsel to withdraw the "Objection of Limited Partners to Sale by Alterra
Healthcare Corporation of Property of Limited Partnerships" filed on or about
July 14, 2003 and any other objection to confirmation filed by the Settling
Limited Partners and/or the Limited Partnerships with the Bankruptcy Court. The
Limited Partnerships and Settling Limited Partners holding at least 90% of the
$6,000,000 Allowed Claim shall vote their interests and claims, if any, in favor
of the Plan on or before the voting deadline therefor, and the Settling Limited
Partners holding the remaining percentage of such Allowed Claim (the "Remaining
Holders") shall vote their interests and claims, if any, in favor of the Plan on
or before 12:00 p.m. on October 28, 2003; provided however, that (i) the failure
to vote in favor of the Plan by any Remaining Holder shall not affect the
treatment of any Settling Limited Partner's interests or claims under this
Agreement or the Plan and (ii) such votes may be changed at the election of the
Settling Limited Partners and the Limited Partnerships if an Approval Order is
not issued on or before confirmation of the Plan.

      21.     Termination of Agreement. Either Alterra, on the one hand, or
Margolick (acting at the direction of Settling Limited Partners entitled hereby
to receive at least a majority in face amount of the Settlement Notes), on the
other hand, may terminate this Agreement by written notice to the other parties
hereto if either:

(a)      an Approval Order is not issued by the Bankruptcy Court on or before
October 28, 2003, unless such date is extended by agreement of Margolick; or

(b)      the Effective Time (and hence the effectiveness of the Assignment of
limited partnership interests and the releases contemplated hereby) shall not
have occurred on or before March 31, 2004.

      22.     Execution by Limited Partnerships. Alterra and the Settling
Limited Partners, being all (or substantially all) of the partners and interest
holders in the Limited Partnerships, hereby consent to Alterra executing this
Agreement on behalf of each of the Limited Partnerships.

-19-

--------------------------------------------------------------------------------

      23.     Third Party Beneficiaries. Each of the Alterra Lease Subsidiaries
and the Affiliates, directors, officers, employees, agents, attorneys and
advisors of the parties hereto released pursuant to the terms of Sections 2, 3
and 4 above are expressly intended by the parties to be third party
beneficiaries of the releases set forth in such Sections.

      24.     Attorney-in-Fact. Each Settling Limited Partner and the holder of
each Settlement Note appoints and authorizes Margolick to act on behalf of such
Settling Limited Partner or holder and authorizes Margolick, with full power and
authority as attorney-in-fact, to institute and maintain actions, suits or
proceedings for the collection and enforcement of the Settlement Notes and to
file such proofs of debt or other documents that may be necessary to have the
claims of the Settling Limited Partners allowed in any proceeding relative to
Alterra or its creditors or affecting its properties, and to take such other
actions which Margolick considers necessary or desirable for the protection,
collection and enforcement of the Settlement Notes. Each Settling Limited
Partner agrees to indemnify Margolick, ratably according to its Proportionate
Share, from and against any and all claims, losses or expenses which may be
imposed on or asserted against Margolick which in any way relate to this Section
24; provided, however, (i) that no Settling Limited Partner shall be liable for
any portion of such claims, losses or expenses resulting from Margolick's gross
negligence or willful misconduct, and (ii) Margolick shall not be obligated to
take any action whatsoever pursuant to this Section 24, it being understood that
this Section is for the convenience of the parties only.

[signature pages follow]

-20-

--------------------------------------------------------------------------------

      IN WITNESS WHEREOF, the undersigned have executed and delivered this
Settlement Agreement, Mutual Release and Assignment as of the date first written
above.

ALTERRA HEALTHCARE CORPORATION

 

By: /s/ Mark Ohlendorf
Name: Mark Ohlendorf
Title: President

MARGOLICK FINANCIAL GROUP LP

 

By: /s/
Name:
Title:

 

[SIGNATURES CONTINUE ON NEXT PAGE]

Signature page to the Settlement Agreement, Mutual Release and Assignment, dated
as of October 11, 2003, by and among Alterra Healthcare Corporation, Margolick
Financial Group LP, the Limited partnerships (as defined therein) and the
Settling Limited partners (as defined therein) -21-

--------------------------------------------------------------------------------

 

LIMITED PARTNERSHIPS:

CLARE BRIDGE COTTAGE OF FLORENCE L.P.
CLARE BRIDE COTTAGE OF LAKELAND L.P.
CLARE BRIDGE COTTAGE OF LEBANON L.P.
CLARE BRIDGE COTTAGE OF LYNCHBURG L.P.
CLARE BRIDGE COTTAGE OF TOPEKA L.P.
CLARE BRIDGE OF ADAMS II L.P.
CLARE BRIDGE OF BEAVERTON L.P.
CLARE BRIDGE OF CORONA L.P.
CLARE BRIDGE OF EVERETT L.P.
CLARE BRIDGE OF GALLOWAY L.P.
CLARE BRIDGE OF GLENDALE L.P.
CLARE BRIDGE OF LYNWOOD L.P.
CLARE BRIDGE OF SILVERDALE L.P.
CLARE BRIDGE OF SOUTHERN PINES L.P.
CLARE BRIDGE OF TEQUESTA L.P.
CLARE BRIDGE OF TROUTDALE L.P.
CLARE BRIDGE OF WICHITA L.P.
CLARE BRIDGE OF WILMINGTON L.P.
STERLING COTTAGE OF HAGERSTOWN I L.P.
STERLING COTTAGE OF JEFFERSONVILLE I L.P.
STERLING COTTAGE OF MICHIGAN CITY I L.P.
STERLING COTTAGE OF MUNCIE I L.P.
STERLING COTTAGE OF NEW PHILADELPHIA I L.P.
STERLING COTTAGE OF VALPARAISO I L.P.
STERLING HOUSE OF HAGERSTOWN II L.P.
STERLING HOUSE OF KOKOMO L.P.
STERLING OF BLOOMINGTON II L.P.
WYNWOOD OF APPLETON L.P.
WYNWOOD OF GALLOWAY L.P.
WYNWOOD OF HARDEN RANCH L.P.
WYNWOOD OF PIN OAK II L.P.

By:     ALTERRA HEALTHCARE CORPORATION*

By: Mark Ohlendorf
Name: Mark Ohlendorf
Title: President

                                                  

* Each Limited Partner, by executing this Agreement is consenting to Alterra's
execution of this Agreement on behalf of the Limited Partnerships.

Signature page to the Settlement Agreement, Mutual Release and Assignment, dated
as of October 11, 2003, by and among Alterra Healthcare Corporation, Margolick
Financial Group LP, the Limited Partnerships (as defined therein) and the
Settling Limited Partners (as defined therein)

--------------------------------------------------------------------------------

LIMITED PARTNERS:

 

 

 

ARBOR INVESTMENTS PROPERTY TRUST

         

By:

/s/ Eugene Applebaum

Tax I.D. Number

   

EUGENE APPLEBAUM, TRUSTEE

       

Address

             

Address

     

   

/s/ Ann Berman-Feld

Address

 

ANN BERMAN-FELD

     

Address

         

Social Security Number

   

   

MADELEINE H. BERMAN PROPERTY TRUST

         

By:

/s/ Madeleine H. Berman

Tax I.D. Number

   

MADELEINE H. BERMAN, TRUSTEE

       

Address

             

Address

     

   

MANDELL L. BERMAN PROPERTY TRUST

         

By:

/s/ Mandell L. Berman

Address

 

MANDELL L. BERMAN, Trustee

       

Address

             

Social Security Number

     

   

/s/ Jonathan S. Berman

Address

 

JONATHAN S. BERMAN

       

Address

             

Social Security Number

     

--------------------------------------------------------------------------------

   

HAROLD BRODE REVOCABLE TRUST

UAD 6/15/82

         

By:

/s/ Harold Brode

Tax I.D. Number

   

HAROLD BRODE, TRUSTEE

       

Address

             

Address

     

   

SEYMOUR BRODE TRUST

         

By:

/s/ Seymour Brode

Tax I.D. Number

   

SEYMOUR BRODE, TRUSTEE

       

Address

             

Address

     

   

DELRAY INVESTORS, LLC

         

By:

/s/ Marvin Rubin

Tax I.D. Number

   

MARVIN RUBIN, MEMBER

       

Address

             

Address

     

   

IRWIN L. & JUDITH L. ELSON JTWROS

         

/s/ Irwin L. Elson

Address

 

IRWIN L. ELSON

     

Address

 

/s/ Judith L. Elson

   

JUDITH L. ELSON

Social Security Number

   

   

FERNDALE DORRELL INVESTORS, LLC

         

By:

/s/ Bruce E. Thal

Tax I.D. Number

         

Name:

BRUCE E. THAL, MEMBER

Address

             

Address

     

--------------------------------------------------------------------------------

   

LARRY D. GIBSON TRUST

         

By:

/s/ Larry D. Gibson

Tax I.D. Number

   

LARRY D. GIBSON, TRUSTEE

       

Address

             

Address

     

   

GLENMORE PARTNERS

         

By:

/s/ Irwin L. Elson

Tax I.D. Number

         

Name:

IRWIN L. ELSON, PARTNER

Address

             

Address

     

   

EDWARD GOLDBERG FAMILY LP

         

By:

/s/ Ed Goldberg

Tax I.D. Number

   

ED GOLDBERG, MEMBER

       

Address

             

Address

     

   

DAVID B. GUZ TRUST

         

By:

/s/ David B. Guz

Tax I.D. Number

   

DAVID B. GUZ, TRUSTEE

       

Address

             

Address

     

   

/s/ Linda Guz

Address

 

LINDA GUZ

     

Address

         

Social Security Number

   

--------------------------------------------------------------------------------

 

 

MORTON E. HARRIS TRUST

         

By:

/s/ Morton E. Harris

Address

   

MORTON E. HARRIS, TRUSTEE

       

Address

             

Social Security Number

     

   

/s/ Paul Harris

Address

 

PAUL HARRIS

     

Address

         

Social Security Number

   

Address

 

/s/ Stuart Harris

STUART HARRIS

     

Address

         

Social Security Number

   

/s/ Robert A. Herdoiza

Address

 

ROBERT A. HERDOIZA

     

Address

         

Social Security Number

   

   

MARK H. HUTTON TRUST

         

By:

/s/ Mark H. Hutton

Tax I.D. Number

   

MARK H. HUTTON, TRUSTEE

       

Address

             

Address

     

   

/s/ Stephen B. Hutton

Tax I.D. Number

 

STEPHEN B. HUTTON

       

Address

             

Address

     

--------------------------------------------------------------------------------

   

/s/ Wayne D. Jones

Address

 

WAYNE D. JONES

     

Address

         

Social Security Number

   

   

/s/ Gerald Katz

Address

 

GERALD KATZ

     

Address

         

Social Security Number

   

   

KLEIN PROPERTIES, LP

         

By:

/s/ Emery Klein

Tax I.D. Number

         

Name:

EMERY KLEIN, PARTNER

Address

         

:

 

Address

     

 

 

   

/s/ Reva Kogan

Address

 

REVA KOGAN

     

Address

         

Social Security Number

   

   

H. BARRY LEVINE TRUST

         

By:

/s/ H. Barry Levine

Address

   

H. BARRY LEVINE, TRUSTEE

       

Address

             

Social Security Number

     

--------------------------------------------------------------------------------

   

/s/ Ann G. Lieber

Address

 

ANN G. LIEBER

     

Address

         

Social Security Number

   

   

/s/ George T. Lieber

Address

 

GEORGE T. LIEBER

     

Address

         

Social Security Number

   

   

/s/ Mimi Lieber

Address

 

MIMI LIEBER

     

Address

         

Social Security Number

   

   

LIEBER PROPERTIES, LP

         

By:

/s/ Mimi Lieber

Tax I.D. Number

   

MIMI LIEBER, PARTNER

       

Address

             

Address

     

   

LAWRENCE M. LOEWENTHAL REV. LIV. TRUST

         

By:

/s/ Lawrence M. Loewenthal

Tax I.D. Number

   

LAWRENCE M. LOEWENTHAL, TRUSTEE

       

Address

             

Address

     

--------------------------------------------------------------------------------

 

 

   

MICHAEL W. MADDIN REVOCABLE LIVING TRUST

         

By:

/s/ Michael W. Maddin

Tax I.D. Number

   

MICHAEL W. MADDIN, TRUSTEE

       

Address

             

Address

     

   

LIONEL S. MARGOLICK TRUST

         

By:

/s/ Lionel S. Margolick

Tax I.D. Number

   

LIONEL S. MARGOLICK, TRUSTEE

       

Address

             

Address

     

   

/s/ Douglas D. Matheson

Address

 

DOUGLAS D. MATHESON

     

Address

         

Social Security Number

   

   

NEW WELLINGTON GROUP LLC

         

By:

/s/ Leo P. Sklar

Tax I.D. Number

   

LEO P. SKLAR, MEMBER

       

Address

             

Address

     

   

RONALD S. PLAINE TRUST

         

By:

/s/ Ronald S. Plaine

Tax I.D. Number

         

Name:

RONALD S. PLAINE, TRUSTEE

Address

             

Address

     

   

EMANUEL RAVET REVOCABLE TRUST UAD 9/27/89

         

By:

/s/ Emanuel Ravet

Tax I.D. Number

   

EMANUEL RAVET, TRUSTEE

       

Address

             

Address

     

--------------------------------------------------------------------------------

   

JAY M. RICHMAN REVOCABLE TRUST UAD 5/18/84

         

By:

/s/ Jay M. Richman

Tax I.D. Number

   

JAY M. RICHMAN, TRUSTEE

       

Address

             

Address

     

   

JOSEPH C. & SUSAN A. ROEBUCK, JTWROS

         

/s/ Joseph C. Roebuck

Address

 

JOSEPH C. ROEBUCK

     

Address

 

/s/ Susan A. Roebuck

   

SUSAN A. ROEBUCK

Social Security Number

   

   

MARVIN RUBIN TRUST

         

By:

/s/ Marvin Rubin

Tax I.D. Number

   

MARVIN RUBIN, TRUSTEE

       

Address

             

Address

     

   

SANDRA RUBIN TRUST

         

By:

/s/ Sandra Rubin

Tax I.D. Number

   

SANDRA RUBIN, TRUSTEE

       

Address

             

Address

     

   

/s/ Brenda H. Saperstein

Address

 

BRENDA H. SAPERSTEIN

     

Address

         

Social Security Number

   

--------------------------------------------------------------------------------

   

/s/ Joel H. Shapiro

Address

 

JOEL H. SHAPIRO

     

Address

         

Social Security Number

   

   

MERTON J. & BEVERLY SEGAL, JTWROS

         

/s/ Beverly Segal

   

BEVERLY SEGAL

Address

       

/s/ Merton J. Segal

Address

 

MERTON J. SEGAL

     

Social Security Number

   

   

LEO SKLAR CAPITAL MANAGEMENT

TRUST

         

By:

/s/ Leo Sklar

Tax I.D. Number

         

Name:

LEO SKLAR, TRUSTEE

Address

             

Address

     

   

LEO SKLAR IRREVOCABLE TRUST

         

By:

/s/ Leo P. Sklar

Tax I.D. Number

         

Name:

LEO SKLAR, TRUSTEE

Address

             

Address

     

   

ROBERT VIDAL TRUST

         

By:

/s/ Robert Vidal

Tax I.D. Number

         

Name:

ROBERT VIDAL, TRUSTEE

Address

             

Address

     

--------------------------------------------------------------------------------

FOR PURPOSES OF ACCEPTING THE ASSIGNMENT PURSUANT TO SECTION 6:

ALTERRA DESIGNEE

ALS NATIONAL SPE II, INC.

BY:  /s/ Mark W. Ohlendorf

MARK W. OHLENDORF

TITLE: Vice President

 

--------------------------------------------------------------------------------

Schedule 1

 

Limited Partnership

Date of Limited Partnership Agreement

Clare Bridge Cottage of Florence L.P.

12/31/99

Clare Bride Cottage of Lakeland L.P.

12/31/99

Clare Bridge Cottage of Lebanon L.P.

12/31/99

Clare Bridge Cottage of Lynchburg L.P.

12/31/99

Clare Bridge Cottage of Topeka L.P.

12/31/99

Clare Bridge of Adams II L.P.

1/15/99

Clare Bridge of Beaverton L.P.

12/31/99

Clare Bridge of Corona L.P.

12/31/99

Clare Bridge of Everett L.P.

1/15/99

Clare Bridge of Galloway L.P.

12/31/99

Clare Bridge of Glendale L.P.

7/15/98

Clare Bridge of Leawood L.P.

12/31/99

Clare Bridge of Lynwood L.P.

12/31/99

Clare Bridge of Silverdale L.P.

1/15/99

Clare Bridge of Southern Pines L.P.

12/31/99

Clare Bridge of Tequesta L.P.

12/31/99

Clare Bridge of Troutdale L.P.

12/31/99

Clare Bridge of Wichita L.P.

1/15/99

Clare Bridge of Wilmington L.P.

7/15/98

Sterling Cottage of Hagerstown I L.P.

1/15/99

Sterling Cottage of Jeffersonville I L.P.

1/15/99

Sterling Cottage of Michigan City I L.P.

1/15/99

Sterling Cottage of Muncie I L.P.

1/15/99

Sterling Cottage of New Philadelphia I L.P.

1/15/99

Sterling Cottage of Valparaiso I L.P.

1/15/99

Sterling House of Hagerstown II L.P.

1/15/99

Sterling House of Kokomo L.P.

1/15/99

Sterling of Bloomington II L.P.

1/15/99

Wynwood of Appleton L.P.

7/15/98

Wynwood of Galloway L.P.

12/31/99

Wynwood of Harden Ranch L.P.

1/15/99

Wynwood of Pin Oak II L.P.

1/15/99

--------------------------------------------------------------------------------

EXHIBIT A

Form of Settlement Note

See attached.