Exhibit 10.5

AMENDED AND RESTATED SUBORDINATION AGREEMENT
(Management Agreements)





A.          Omega and Lessee
are parties to a Master Lease dated as of June 14, 1999, as amended by a
Forbearance Agreement and Amendment to Master Leases dated as of January 31,
2002, and a Second Amendment to Master Lease dated of even date herewith (as
amended through and including the date of this Agreement, and as it may
hereafter be amended, the "Master Lease"), pursuant to which Omega leases
certain assisted living facilities to Lessee. Lessee and Omega-Kansas, a
wholly-owned subsidiary of Omega, are parties to a Kansas Master Lease dated as
of June 14, 1999, as amended by a Forbearance Agreement and Amendment to Master
Leases dated as of January 31, 2002, and a Second Amendment to Master Lease
dated of even date herewith (as amended through and including the date of this
Agreement, and as it may hereafter be amended, the "Kansas Master Lease")
pursuant to which Omega-Kansas leases an assisted living facility located in
Kansas to Lessee. The Master Lease and the Kansas Master Lease are collectively
referred to herein as the "Master Leases". The assisted living facilities
covered by the Master Leases are listed on attached Exhibit A (the
"Facilities").

B.     Lessee and
each of the Sublessees are parties to separate Subleases pertaining to certain
of the Facilities (the "Subleases").

C.     A Sublessee or
Lessee, on the one hand, and Management Company, on the other, are parties to
various Amended and Restated Management Agreements (collectively, the
"Management Agreements"), pursuant to which Management Company manages
the Facilities. Pursuant to the Management Agreements, Management Company is
entitled to receive a management fee.

D.     Effective June
14, 1999, Management Company, Lessee, the Sublessees and certain other parties
executed a Subordination Agreement (Management Agreements) (the "Original
Subordination Agreement") in favor of Omega Healthcare Investors, Inc. and
Omega-Kansas.

E.     On January 22,
2003, Management Company filed a chapter 11 petition for reorganization relief
in the United States Bankruptcy Court, District of Delaware (the
"Court"), bearing Case No. 03-10254 (MFW) (the "Case"). As of the
date of this Agreement, Lessee and the Sublessees have not filed for bankruptcy.



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F.     On January 24,
2003, the Court entered interim orders (the "Interim Orders") granting
Management Company certain rights, to which Omega and Omega-Kansas filed an
Objection (the "Objection"), together with a Motion for Adequate
Protection (the "Motion for Adequate Protection").



G.     Omega,
Omega-Kansas, Lessee, Management Company and certain other interested parties
agreed to resolve the Objection and the Motion for Adequate Protection pursuant
to the entry of a stipulated order, which was entered by the Court on March 18,
2003.

H.     Omega,
Omega-Kansas, Lessee and Management Company have resolved certain other disputes
among them pursuant to a Settlement Agreement dated June 4, 2003 (the
"Settlement Agreement"). The execution, delivery and performance of the
Settlement Agreement by Management Company was approved by the Court pursuant to
an order (the "Order") which was entered by the Court on June 23, 2003,
and became a Final Order (as defined in the Settlement Agreement) on or before
July 7, 2003. The Settlement Agreement provides, among other things, that
Management Company will amend and restate the Original Management Agreement, as
set forth herein.

NOW, THEREFORE, in consideration of the
premises and other good and valuable consideration, Omega, Lessee, Sublessees
and Management Company amend and restate the Original Management Agreement in
its entirety as follows:

1.     As used
herein:





(b)     "Master Lease Obligations" means all
indebtedness and obligations of Lessee to Omega, individually or with others,
and to Omega-Kansas, individually or with others, and whether now existing or
hereafter incurred, including but not limited to Lessee's obligations to Omega
and Omega-Kansas under the Master Leases. The Senior Obligations include, but
shall not be limited to, all rent payments, additional rent, expenses, principal
payments, interest, fees, and other charges due Omega and Omega-Kansas from
Lessee and every subsequent amendment, extension or renewal, of the Master
Leases in whole or in part, all Master Lease Obligations from time to time after
the commencement of any Proceeding, whether or not such Master Lease Obligations
are allowable as a claim in such Proceeding, and all Master Lease Obligations
made after the commencement of a Proceeding.

(c)     "Sublease Obligations" means all
indebtedness and obligations of the Sublessees to Lessee, Omega, or
Omega-Kansas, individually or with others, and whether now existing or hereafter
incurred, including but not limited to Sublessees' obligations under the
Subleases. The Senior Obligations include, but shall not be limited to, all rent
payments, additional rent, expenses, principal payments, interest, fees, and
other charges due Lessee, Omega or Omega-Kansas from Sublessees and every
subsequent amendment, extension or renewal, of the Subleases in whole or in
part, all Sublease Obligations from time to time after the commencement of any
Proceeding, whether or not such Sublease Obligations are allowable as a claim in
such Proceeding, and all Sublease Obligations made after the commencement of a
Proceeding.

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(d)     "Junior
Obligations" means all fees, expenses, indebtedness and obligations of
Sublessees to Management Company under the Management Agreements.

(e)     "Proceeding" means any assignment by
Lessee or a Sublessee for the benefit of creditors, or any filing of a voluntary
case by, or of an involuntary case against, Lessee or a Sublessee pursuant to
any chapter of the federal bankruptcy code, 11 USC §§ 101, et seq., as may be
amended from time to time, or any institution of a voluntary proceeding by, or
of an involuntary proceeding against, Lessee or a Sublessee under any other
federal or state law relating to relief of debtors, or any appointment of a
receiver, trustee or liquidator of Lessee or a Sublessee or of all or a
substantial part of any of its assets under any other federal or state law
relating to relief of debtors, or any liquidation or dissolution of Lessee or a
Sublessee, or any foreclosure or similar action or proceeding and/or any other
marshaling of Lessee's or a Sublessee's assets and liabilities.

2.     Management
Company, for itself, its successors and assigns and every other holder of the
Junior Obligations, hereby subordinates the payment and satisfaction of the
Junior Obligations to the prior payment and satisfaction in full of the Senior
Obligations. Notwithstanding the foregoing and the provisions of Section 9
hereof, Management Company shall be entitled to collect the Junior Obligations
during any period in which an Event of Default under the Master Leases does not
exist.

3.     Management
Company will not, without first obtaining the written consent of Omega: (i)
accept any security for the Junior Obligations or any part thereof; (ii) take
any action of any kind to accelerate, assert, collect or enforce the Junior
Obligations or any guaranty thereof; (iii) accept any note or other writing to
evidence the Junior Obligations or any part thereof; or (iv) amend or modify the
Management Agreement. During any period in which an Event of Default exists
under the Master Leases, Management Company will not demand or accept, directly
or indirectly, any payment or property in respect or on account of the Junior
Obligations.

4.     During any
period in which an Event of Default exists under the Master Leases, Lessee and
Sublessee agrees that it will not directly or indirectly make payments to
Management Company on the Junior Obligations, whether in cash or any other
property, or otherwise take any action which would result in a violation of any
agreement of Lessee, Sublessee or Management Company.

5.     Any payment of
cash or transfer of property in violation of this Agreement will be deemed to
have been made or transferred in trust for Omega and Omega-Kansas, and
Management Company will forthwith pay or transfer the same to Omega, in
precisely the form received (but with such endorsements as may be necessary), to
be applied upon the Senior Obligations.

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6.     In any
Proceeding, Management Company shall have the right to prepare and file a proof
of claim, answer or other pleading based upon the Junior Obligations, but in all
such instances giving effect to this instrument, and to enforce and use the
same, provided that if Management Company shall fail to file such proof of
claim, answer or other pleading on or before the 30th day preceding the last day
permitted for such filing, Omega shall have the right (but not the duty) to
prepare and file a proof of claim, answer or other pleading based on the Junior
Obligations and giving effect to this instrument. To effectuate the foregoing,
Management Company, and each holder of any of the Junior Obligations, hereby
irrevocably authorizes and appoints Omega, and each of its officers, its true
and lawful attorney or attorneys, with full power of substitution and with full
authority on behalf of Management Company, and each holder of any of the Junior
Obligations, and in its name, place and stead, to prove all claims and to
receive and collect all fees, expenses and other property to which Management
Company or any of its assigns would be otherwise entitled, to accept or reject
any plan or reorganization or arrangement, and generally to do any act in
connection with any Proceeding that Management Company or any of its successors
or assigns might otherwise do.

7.     Notwithstanding any rights of subrogation that
Management Company may have to the rights of Omega and Omega-Kansas, Management
Company agrees that Omega may make all determinations and take or omit to take
all actions and exercise or refrain from exercising all remedies that Omega may
have with respect to collateral security for, or guaranties of, any of the
Senior Obligations without any consultation with, or participation or joinder
by, or any consideration of the interests of Management Company, and without any
liability or loss of right or remedy to Management Company.

8.     To the extent
that Omega is required to restore or return any payment received by it from
Lessee, a Sublessee or any other person for any reason, for the purposes of this
Agreement, such payments shall be deemed never to have been made to Omega. As
used in this Agreement the words "paid", "paid in full", "payment in full", or
similar phrases, when applied or relating to the Senior Obligations shall, in
all instances, unless the context requires otherwise, be deemed to mean
indefeasibly paid or indefeasible payment.

9.     To secure its
obligations under this Agreement, Management Company hereby grants to Omega a
continuing security interest in Management Company's right, title and interest
in and to all existing and future Junior Obligations, and the products and
proceeds thereof. Without in any way limiting the generality of the foregoing,
for purposes of this grant of security interest, the Junior Obligations include,
but are not limited to, all accounts due to Management Company by Sublessees,
any chattel paper under which a Sublessee is obligor and grantor, any contract
rights enforceable by Management Company against a Sublessee, and any choses in
action of Management Company against a Sublessee. The security interest granted
herein shall be effective so long as any of the Senior Obligations are
outstanding and unperformed. Management Company agrees to execute any documents,
including but not limited to Uniform Commercial Code financing statements, as
Omega may request to effectuate the purpose and intent of this paragraph. Omega
shall, promptly upon written request by Lessee after the termination of the
Master Leases, execute and deliver to Management Company Uniform Commercial Code
termination statements relating to such financing statements.

10.     Management
Company consents and agrees that until the payment in full of the Senior
Obligations, Management Company will not sell, assign or otherwise transfer or
encumber the Junior Obligations without the prior written consent of Omega. Any
attempted sale, assignment, transfer or encumbrance in violation of the
preceding sentence will be void and without force or effect.

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11.     In the event
of any acceleration of the Senior Obligations pursuant to the terms of any
agreement now or hereafter in effect between Lessee and Omega or Omega-Kansas or
any distribution of Lessee's or a Sublessee's assets of any kind or character,
or any dissolution, winding-up, liquidation or reorganization of Lessee or a
Sublessee (whether in bankruptcy, insolvency or receivership proceedings or upon
an assignment for the benefit of creditors or otherwise), the Senior Obligations
shall be paid and satisfied in full before the holder of the Junior Obligations
is entitled to receive any payment thereunder, and any payment or distribution
to which the holder thereof would be entitled thereunder but for the
subordination provisions hereof shall be paid directly to Omega.

12.     All notices,
demands or requests required or permitted to be given to any party hereto shall
be in writing and shall be deemed given if delivered personally, sent by
reputable overnight courier, with acknowledgment of receipt requested, or mailed
by registered, overnight or certified mail, with full postage paid thereon,
return receipt requested (such notice to be effective on the date such receipt
is acknowledged), to the addresses set forth in attached Exhibit B, or to
such place and with such other copies as Management Company, Lessee, a Sublessee
or Omega may designate for itself by written notice to the other.

13.     Management
Company acknowledges and agrees that (i) Omega makes no representation or
warranty to Management Company with respect to the value or adequacy of Omega's
collateral or otherwise, and (ii) without notice to Management Company, Omega
and Omega-Kansas may (a) amend, renew, or extend the Master Leases, (b)
exercise, fail to exercise, waive or amend any of its rights under the Master
Leases, (c) release collateral or any guarantor or other obligor of the Senior
Obligations, (d) apply any amounts paid to Omega in such order of application as
Omega, in its sole discretion, deems appropriate and (e) enter into or approve
new leases or subleases with the Sublessees.

14.     In the event
of any amendment to the Master Leases or a Sublease or termination of the Master
Leases or a Sublease or the entering into new leases or subleases with one or
more Sublessees, Management Company agrees, from time to time upon the request
of Lessee, a Sublessee or Omega, to execute substitute subordination agreements
substantively equivalent to this Agreement in favor of Omega.

15.     No amendment,
modification, termination, or waiver of any provisions of this Agreement, nor
consent to any variance therefrom, shall be effective unless the same shall be
in writing and signed by the party against whom enforcement is sought. Further,
any such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given. Omega and Management Company may amend
this Agreement in the manner provided above without the consent or approval of
Lessee and Sublessees, and without impairing Lessee's and Sublessees' obligation
to abide by all provisions hereof not so amended, but no such amendment shall be
binding upon Lessee or Sublessees unless Lessee or Sublessees have approved
same.

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16.     The
provisions of this Agreement shall be cumulative to the rights Omega and
Omega-Kansas may otherwise have or acquire by operation of law, by contract, or
otherwise. This instrument shall be governed by and construed in accordance with
the laws of the State of Michigan (excluding all conflicts of law principles or
other principles of Michigan law that would result in the application of any
substantive law, other than the law of Michigan) and shall bind Management
Company and each other holder of all or any portion of the Junior Obligations,
and their respective heirs, personal representatives, successors and assigns,
and shall benefit no creditor of Lessee or Sublessees other than Omega and its
successors and assigns, including without limitation, other holders of all or
any portion of the Senior Obligations.

Signatures on following page.



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IN WITNESS WHEREOF, the parties have caused
this Subordination Agreement to be executed on the date appearing on the first
page hereof.





ALTERRA HEALTHCARE CORPORATION

By:  /s/ Kristin A. FergeName:  Kristin A.
FergeTitle:  Vice President of Finance

LESSEE:

AHC PROPERTIES, INC.

By:  /s/ Kristin A. FergeName:  Kristin A.
FergeTitle:  Vice President

OMEGA:

OMEGA HEALTHCARE INVESTORS, INC.By:  /s/ Daniel J.
BoothName:  Daniel J. BoothTitle:  Chief Operating
Officer



OMEGA-KANSAS:

OMEGA (KANSAS), INC.By:  /s/ Daniel J.
BoothName:     Daniel J.
BoothTitle:     Chief Operating
Officer

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SUBLESSEES:Sterling House of Kokomo L.P.,a Delaware limited
partnershipSterling Cottage of Oklahoma City LLC,a Delaware limited
liability company



By:





By:  /s/ Kristin A. Ferge Name:  Kristin A.
FergeTitle:  Vice President of
Finance

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STATE OF
MARYLAND      )
                                               )ss.
COUNTY OF BALTIMORE )

The foregoing instrument was acknowledged
before me this 2nd day of July, 2003, by Daniel J. Booth who is Chief Operating
Officer of OMEGA HEALTHCARE INVESTORS, INC., a Maryland corporation, and of
OMEGA (KANSAS), INC., a Kansas corporation, on behalf of the corporations.

/s/ Judith Jacobs
Notary Public, Baltimore County, Maryland
My commission expires: 5/15/2004

STATE OF WISCONSIN       )
                                                )ss.
COUNTY OF MILWAUKEE)

The foregoing instrument was acknowledged
before me this 2nd day of July, 2003, by Kristin A. Ferge, who is
Vice President of AHC PROPERTIES, INC., a Delaware corporation, on behalf of the
corporation, and Vice President of Finance of ALTERRA HEALTHCARE CORPORATION, a
Delaware corporation, on behalf of the corporation and as a partner or member of
Sterling House of Sterling House of Kokomo L.P., a Delaware limited partnership,
and Sterling Cottage of Oklahoma City LLC, a Delaware limited liability company,
on behalf of each such company or partnership.

/s/ Patricia C. SauerNotary Public, Milwaukee County, WisconsinMy
commission expires:
2/6/2005

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EXHIBIT ATHE FACILITIES


Alterra Sterling House of Briargate7560 Lexington DriveColorado
Springs, CO 80920(El Paso County)



Alterra Sterling House of Bloomington3802 South Sare RoadBloomington,
IN 47401



Alterra Sterling House of Kokomo3025 West Sycamore RoadKokomo, IN
46901



Alterra Clare Bridge of Wichita9191 East 21st Street
NorthWichita, KS 67206



Alterra Clare Bridge Cottage of New Philadelphia716 Commercial Avenue,
SWNew Philadelphia, OH 44663



Alterra Clare Bridge Cottage of SW Oklahoma City10001 South May
AvenueOklahoma City, OK



Alterra Clare Bridge Cottage of Goodlettesville I3001 Business Park
CircleGoodlettsville, TN 37072



Alterra Clare Bridge of Silverdale1501 NW Tower View
CircleSilverdale, WA 98383

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To Alterra Entities:





With a copy to (which shall not constitute notice)





To Omega Entities:



With copy to (which shall not constitute notice):



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