Exhibit 10.8



SPACE ABOVE THIS LINE RESERVED FOR CLERK'S USE



Recording requested by and

when recorded return to:







Assumption, Extension and Modification Agreement

NOTICES TO RECORDERS:



FLORIDA     This Assumption, Extension and Modification Agreement extends and modifies that certain Mortgage, Assignment of Leases and Rents and Security Agreement recorded in Official Records Book 4218, at Page 0842 of the Public Records of Escambia County, Florida.  The Notes described in this Modification Agreement were executed and delivered outside of the State of Florida and are secured by property located both inside and outside of the State of Florida.  The value of the real property located in Florida is $5,300,000 and the value of the real property located outside the State of Florida is $48,000,000.  The percentage that the value of the Florida real property bears to the value of all mortgaged property located both inside and outside the State of Florida is 9.797%.  However, the Mortgagee has agreed to limit its recovery from the Florida property to less than the total amount of the Notes and has chosen the amount to be secured by Florida property to be $3,043,500.  Accordingly, upon recordation hereof documentary stamp taxes are being paid in the amount of $10,653 and intangibles taxes are being paid in the amount of $6,087.

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This ASSUMPTION, EXTENSION AND MODIFICATION AGREEMENT dated as of the 26th day of July, 2002, by and among ALS WEST, INC., a Delaware corporation doing business in Arizona as AHC West, Inc. (hereinafter called "Borrower"), GUARANTY BANK (formerly known as Guaranty Federal Bank, F.S.B.), a federal savings bank (hereinafter called "Lender"), and ALTERRA HEALTHCARE CORPORATION (formerly known as Alternative Living Services, Inc.),  a Delaware corporation (hereinafter called "Alterra");









WHEREAS, Borrower, Lender, in its capacity as agent and as a lender, and Alterra entered into that certain Master Loan Agreement dated as of January 8 1999, as modified by Modification of Master Loan Agreement dated March 15, 2000 and Second Modification of Master Loan Agreement dated May 31, 2000 (hereinafter called the "Master Loan Agreement");

WHEREAS, Alterra has executed and delivered to Lender one certain promissory note (hereinafter called the "Mesa Note") dated December 22, 1997, payable to the order of Lender in the original principal sum of $2,344,000, with interest and principal payable as therein provided, a Construction Deed of Trust, Assignment of Leases and Rents,  Security Agreement and Fixture Filing (as modified and amended by Extension and Modification Agreement dated as of January 4, 1999, letter agreement dated March 22, 1999, Modification Agreement dated March 15, 2000, Fourth Modification Agreement dated May 31, 2000, and Fifth Extension Agreement dated January 4, 2001, hereinafter called the "Mesa Mortgage") dated of even date with the Mesa Note, securing the payment of the Mesa Note, covering certain real and personal property described therein (hereinafter called the "Mesa Property", the real property forming a part of which is more particularly described in Exhibit A-1 attached hereto and incorporated herein) recorded under File No. 97-0902731, Official Records of Maricopa County, Arizona, and an Assignment of Leases and Rents ( hereinafter called the "Mesa Assignment") dated of even date with the Mesa Note, providing a source of future payment of the Mesa Note, recorded under File No. 97-0902730, Official Records of Maricopa County, Arizona, reference being here made to the Mesa Mortgage and the Mesa Assignment and the record thereof for all purposes (the foregoing documents and all other documents executed by Alterra and/or any other party or parties evidencing or securing or otherwise in connection with the loan evidenced by the Mesa Note, being herein collectively called the "Mesa Loan Documents");



WHEREAS, Alterra has executed and delivered to Lender one certain promissory note (hereinafter called the "Peoria Note") dated December 22, 1997, payable to the order of Lender in the original principal sum of $2,448,000, with interest and principal payable as therein provided, a Construction Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing (as modified and amended by Extension and Modification Agreement dated as of January 4, 1999, letter agreement dated March 22, 1999, Modification Agreement dated March 15, 2000, Fourth Modification Agreement dated May 31, 2000, and Fifth Extension Agreement dated January 4, 2001, hereinafter called the "Peoria Mortgage") dated of even date with the Peoria Note, securing the payment of the Peoria Note, covering certain real and personal property described therein (hereinafter called the "Peoria Property", the real property forming a part of which is more particularly described in Exhibit A-2 attached hereto and incorporated herein) recorded under File No. 97-0902732, Official Records of Maricopa County, Arizona, and an Assignment of Leases and Rents (hereinafter called the "Peoria Assignment") dated of even date with the Peoria Note, providing a source of future payment of the Peoria Note, recorded under File No. 97-0902733, reference being here made to the Peoria Mortgage and the Peoria Assignment and the record thereof for all purposes (the foregoing documents and all other documents executed by Alterra and/or any other party or parties evidencing or securing or otherwise in connection with the loan evidenced by the Peoria Note, being herein collectively called the "Peoria Loan Documents");

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WHEREAS, Alterra has executed and delivered to Lender one certain promissory note (hereinafter called the "Pensacola Note") dated January 22, 1998, payable to the order of Lender in the original principal sum of $2,644,000, with interest and principal payable as therein provided, a Mortgage, Assignment of Leases and Rents and Security Agreement (as modified and amended by Extension and Modification Agreement dated as of January 4, 1999, letter agreement dated March 22, 1999, Modification Agreement dated March 15, 2000, Fourth Modification Agreement dated May 31, 2000, and Fifth Extension Agreement dated January 4, 2001, hereinafter called the "Pensacola Mortgage") dated of even date with the Pensacola Note, securing the payment of the Pensacola Note, covering certain real and personal property described therein (hereinafter called the "Pensacola Property", the real property forming a part of which is more particularly described in Exhibit A-3 attached hereto and incorporated herein) recorded under Instrument 98-454064 in Official Records Book 4218, Page 0842, Public Records of Escambia County, Florida, and an Assignment of Leases and Rents ( hereinafter called the "Pensacola Assignment") dated of even date with the Pensacola Note, providing a source of future payment of the Pensacola Note, recorded under Instrument 98-454065 in Official Records Book 4218, Page 0843, Public Records of Escambia County, Florida, reference being here made to the Pensacola Mortgage and the Pensacola Assignment and the record thereof for all purposes (the foregoing documents and all other documents executed by Alterra and/or any other party or parties evidencing or securing or otherwise in connection with the loan evidenced by the Pensacola Note, being herein collectively called the "Pensacola Loan Documents");



WHEREAS, Alterra has executed and delivered to Lender one certain promissory note (hereinafter called the "Tucson Note") dated February 5, 1998, payable to the order of Lender in the original principal sum of $2,112,000, with interest and principal payable as therein provided, a Construction Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing (as modified and amended by Extension and Modification Agreement dated as of February 5, 1999, letter agreement dated March 22, 1999, Modification Agreement dated March 15, 2000, Fourth Modification Agreement dated May 31, 2000, and Fifth Extension Agreement dated January 4, 2001, hereinafter called the "Tucson Mortgage") dated of even date with the Tucson Note, securing the payment of the Tucson Note, covering certain real and personal property described therein (hereinafter called the "Tucson Property", the real property forming a part of which is more particularly described in Exhibit A-4 attached hereto and incorporated herein) recorded in Pima County, Arizona by instrument in Docket 10729, Page 11, and an Assignment of Leases and Rents (hereinafter called the "Tucson Assignment") dated of even date with the Tucson Note, providing a source of future payment of the Tucson Note, recorded in Pima County, Arizona by instrument in Docket 10729, Page 64, reference being here made to the Tucson Mortgage and the Tucson Assignment and the record thereof for all purposes (the foregoing documents and all other documents executed by Alterra and/or any other party or parties evidencing or securing or otherwise in connection with the loan evidenced by the Tucson Note, being herein collectively called the "Tucson Loan Documents");



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WHEREAS, pursuant to the terms of the Master Loan Agreement, Borrower has executed and delivered to Lender one certain promissory note (hereinafter called the "Olympia Note") dated January 8, 1999, payable to the order of Lender in the original principal sum of $4,938,738, with interest and principal payable as therein provided, a Deed of Trust (with Security Agreement, Fixture Filing and Assignment of Leases and Rents) ( hereinafter called the "Olympia Mortgage") dated of even dated with the Olympia Note, covering certain real and personal property described therein (hereinafter called the "Olympia Property", the real property forming a part of which is more particularly described in Exhibit A-5 attached hereto and incorporated herein) recorded under File Nos. 3205188, 3205189, 3205190 and 3205191 in Thurston County, Washington, and an Assignment of Leases and Rents (hereinafter called the "Olympia Assignment") dated of even date with the Olympia Deed of Trust, providing a source of future payment of the Olympia Note, recorded under File No. 3205192 in Thurston County, Washington, reference being here made to the Olympia Mortgage and the Olympia Assignment and the record thereof for all purposes (the foregoing documents and all other documents executed by Borrower and/or any other party or parties evidencing or securing or otherwise in connection with the loan evidenced by the Olympia Note being herein collectively called the "Olympia Loan Documents");



WHEREAS, pursuant to the terms of the Master Loan Agreement, Borrower has executed and delivered to Lender one certain promissory note (hereinafter called the "Spokane Note") dated January 8, 1999, payable to the order of Lender in the original principal sum of $4,542,758, with interest and principal payable as therein provided, a Deed of Trust (with Security Agreement, Fixture Filing and Assignment of Leases and Rents) (hereinafter called the "Spokane Mortgage") dated of even date with the Spokane Note, covering certain real and personal property described therein (hereinafter called the "Spokane Property", the real property forming a part of which is more particularly described in Exhibit A-6 attached hereto and incorporated herein) recorded under File Nos. 4319410, 4319411, 4319412 and 4319413 in Spokane  County, Washington, and an Assignment of Leases and Rents (hereinafter called the "Spokane Assignment") dated of even date with the Spokane Mortgage, providing a source of future payment of the Spokane Note, recorded under File Nos. 4319414 and 4319415 in Spokane County, Washington, reference being here made to the Spokane Mortgage and the Spokane Assignment and the record thereof for all purposes (the foregoing documents and all other documents executed by Borrower and/or any other party or parties evidencing or securing or otherwise in connection with the loan evidenced by the Spokane Note being herein collectively called the "Spokane Loan Documents");



WHEREAS, pursuant to the terms of the Master Loan Agreement, Borrower has executed and delivered to Lender one certain promissory note (hereinafter called the "Puyallup Note") dated January 8, 1999, payable to the order of Lender in the original principal sum of $4,633,862, with interest and principal payable as therein provided, a Deed of Trust (with Security Agreement, Fixture Filing and Assignment of Leases and Rents) (hereinafter called the "Puyallup Mortgage") dated of even date with the Puyallup Note, securing the payment of the Puyallup Note, covering certain real and personal property described therein (hereinafter called the "Puyallup Property", the real property forming a part of which is more particularly described in Exhibit A-7 attached hereto and incorporated herein) recorded under Recording Number 9901191056 in Pierce County, Washington, and an Assignment of Leases and Rents (hereinafter called the "Puyallup Assignment") dated of even date with the Puyallup Note, providing a source of future payment of the Puyallup Note, recorded under Recording Number 9901191057 in Pierce County, Washington, reference being here made to the Puyallup Mortgage and the Puyallup Assignment and the record thereof for all purposes (the foregoing documents and all other documents executed by Borrower and/or any other party or parties evidencing or securing or otherwise in connection with the loan evidenced by the Puyallup Note being herein collectively called the "Puyallup Loan Documents");



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WHEREAS, pursuant to the terms of the Master Loan Agreement, Borrower has executed and delivered to Lender one certain promissory note (hereinafter called the "Plymouth Note") dated January 8, 1999, payable to the order of Lender in the original principal sum of $4,880,809, with interest and principal payable as therein provided, a Mortgage and Security Agreement (and Fixture Financing Statement) (hereinafter called the "Plymouth  Mortgage") dated of even date with the Plymouth Note, securing the payment of the Plymouth Note, covering certain real and personal property described therein (hereinafter called the "Plymouth Property", the real property forming a part of which is more particularly described in Exhibit A-8 attached hereto and incorporated herein) recorded under Document No. 1017926, Office of the Registrar of Titles, Hennepin County, Minnesota, and an Assignment of Leases and Rents (hereinafter called the "Plymouth Assignment") dated of even date with the Plymouth Note, providing a source of future payment of the Plymouth Note, recorded under Document No. 1017926, Office of Registrar of Titles, Hennepin County, Minnesota, reference being here made to the Plymouth Mortgage and the Plymouth Assignment and the record thereof for all purposes (the foregoing documents and all other documents executed by Borrower and/or any other party or parties evidencing or securing or otherwise in connection with the loan evidenced by the Plymouth Note being herein collectively called the "Plymouth Loan Documents");



WHEREAS, pursuant to the terms of the Master Loan Agreement, Borrower has executed and delivered to Lender one certain promissory note (hereinafter called the "North Oaks Note") dated January 8, 1999, payable to the order of Lender in the original principal sum of $4,795,657, with interest and principal payable as therein provided, a Mortgage and Security Agreement (and Fixture Financing Statement) (hereinafter called the "North Oaks Mortgage") dated of even date with the North Oaks Note, securing the payment of the North Oaks Note, covering certain real and personal property described therein (hereinafter called the "North Oaks Property", the real property forming a part of which is more particularly described in Exhibit A-9 attached hereto and incorporated herein) recorded under Document No. 1528770 in the Registrar of Titles, Ramsey County, Minnesota, and an Assignment of Leases and Rents (hereinafter called the "North Oaks Assignment") dated of even date with the North Oaks Note, providing a source of future payment of the North Oaks Note, recorded under Document No. 1528770 in the Registrar of Titles, Ramsey County, Minnesota, reference being here made to the North Oaks Mortgage and the North Oaks Assignment and the record thereof for all purposes (the foregoing documents and all other documents executed by Borrower and/or any other party or parties evidencing or securing or otherwise in connection with the loan evidenced by the North Oaks Note being herein collectively called the "North Oaks Loan Documents");



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WHEREAS, pursuant to the terms of the Master Loan Agreement, Borrower has executed and delivered to Lender one certain promissory note (hereinafter called the "Eden Prairie Note") dated January 8, 1999, payable to the order of Lender in the original principal sum of $5,074,914, with interest and principal payable as therein provided, a Mortgage and Security Agreement (and Fixture Financing Statement) (hereinafter called the "Eden Prairie Mortgage") dated of even date with the Eden Prairie Note, securing the payment of the Eden Prairie Note, covering certain real and personal property described therein (hereinafter called the "Eden Prairie Property", the real property forming a part of which is more particularly described in Exhibit A-10 attached hereto and incorporated herein) recorded under Document No. 7037784, Hennepin County, Minnesota, and an Assignment of Leases and Rents (hereinafter called the "Eden Prairie Assignment") dated of even date with the Eden Prairie Mortgage, providing a source of future payment of the Eden Prairie Note, recorded under Document No. 7037785, Hennepin County, Minnesota, reference being here made to the Eden Prairie Mortgage and the Eden Prairie Assignment and the record thereof for all purposes (the foregoing documents and all other documents executed by Borrower and/or any other party or parties evidencing or securing or otherwise in connection with the loan evidenced by the Eden Prairie Note being herein collectively called the "Eden Prairie Loan Documents");



WHEREAS, pursuant to the terms of the Master Loan Agreement, Borrower has executed and delivered to Lender one certain promissory note (hereinafter called the "Salem Note") dated February 23, 1999, payable to the order of Lender in the original principal sum of $2,084,073, with interest and principal payable as therein provided, an Open-End Mortgage, Assignment of Rents and Security Agreement (hereinafter called the "Salem Mortgage") dated of even date with the Salem Note, securing the payment of the Salem Note, covering certain real and personal property described therein (hereinafter called the "Salem Property", the real property forming a part of which is more particularly described in Exhibit A-11 attached hereto and incorporated herein) recorded in Volume 720, Page 790, Columbiana County, Ohio, and an Assignment of Leases and Rents (hereinafter called the "Salem Assignment") dated of even date with the Salem Note, providing a source of future payment of the Salem Note, in Volume 720, Page 830, Columbiana County, Ohio, reference being here made to the Salem Mortgage and the Salem Assignment and the record thereof for all purposes (the foregoing documents and all other documents executed by Borrower and/or any other party or parties evidencing or securing or otherwise in connection with the loan evidenced by the Salem Note being herein collectively called the "Salem Loan Documents");



WHEREAS, pursuant to the terms of the Master Loan Agreement, Borrower has executed and delivered to Lender one certain promissory note (hereinafter called the "Portage Note") dated February 19, 1999, payable to the order of Lender in the original principal sum of $2,966,706, with interest and principal payable as therein provided, a Mortgage, Assignment of Leases and Rents, Security Agreement and Financing Statement (hereinafter called the "Portage Mortgage") dated of even date with the Portage Note, securing the payment of the Portage Note, covering certain real and personal property described therein (hereinafter called the "Portage Property", the real property forming a part of which is more particularly described in Exhibit A-12 attached hereto and incorporated herein) recorded under File No. 1999-007160, Porter County, Indiana, and an Assignment of Leases and Rents (hereinafter called the "Portage Assignment") dated of even date with the Portage Note, providing a source of future payment of the Portage Note, under File No. 1999-007161, Porter County, Indiana, reference being here made to the Portage Mortgage and the Portage Assignment and the record thereof for all purposes (the foregoing documents and all other documents executed by Borrower and/or any other party or parties evidencing or securing or otherwise in connection with the loan evidenced by the Portage Note being herein collectively called the "Portage Loan Documents");



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WHEREAS, pursuant to the terms of the Master Loan Agreement, Borrower has executed and delivered to Lender one certain promissory note (hereinafter called the "Merrillville Note") dated February 19, 1999, payable to the order of Lender in the original principal sum of $3,126,422, with interest and principal payable as therein provided, a Mortgage, Assignment of Leases and Rents, Security Agreement and Financing Statement (hereinafter called the "Merrillville Mortgage") dated of even date with the Merrillville Note, securing the payment of the Merrillville Note, covering certain real and personal property described therein (hereinafter called the "Merrillville Property", the real property forming a part of which is more particularly described in Exhibit A-13 attached hereto and incorporated herein) recorded under File No. 99020714, Lake County, Indiana, and an Assignment of Leases and Rents (hereinafter called the "Merrillville Assignment") dated of even date with the Merrillville Note, providing a source of future payment of the Merrillville Note, under File No. 99020715, Lake County, Indiana, reference being here made to the Merrillville Mortgage and the Merrillville Assignment and the record thereof for all purposes (the foregoing documents and all other documents executed by Borrower and/or any other party or parties evidencing or securing or otherwise in connection with the loan evidenced by the Merrillville Note being herein collectively called the "Merrillville Loan Documents");



WHEREAS, pursuant to the terms of the Master Loan Agreement, Borrower has executed and delivered to Lender one certain promissory note (hereinafter called the "Richmond Note") dated February 19, 1999, payable to the order of Lender in the original principal sum of $3,002,792, with interest and principal payable as therein provided, a Mortgage, Assignment of Leases and Rents, Security Agreement and Financing Statement (hereinafter called the "Richmond Mortgage") dated of even date with the Richmond Note, securing the payment of the Richmond Note, covering certain real and personal property described therein (hereinafter called the "Richmond Property", the real property forming a part of which is more particularly described in Exhibit A-14 attached hereto and incorporated herein) recorded under Instrument 1999002717, Wayne County, Indiana, and an Assignment of Leases and Rents (hereinafter called the "Richmond Assignment") dated of even date with the Richmond Note, providing a source of future payment of the Richmond Note, under Instrument 1999002718, Wayne County, Indiana, reference being here made to the Richmond Mortgage and the Richmond Assignment and the record thereof for all purposes (the foregoing documents and all other documents executed by Borrower and/or any other party or parties evidencing or securing or otherwise in connection with the loan evidenced by the Richmond Note being herein collectively called the "Richmond Loan Documents");



WHEREAS, pursuant to the terms of the Master Loan Agreement, Borrower has executed and delivered to Lender one certain promissory note (hereinafter called the "Austintown Note") dated March 26, 1999, payable to the order of Lender in the original principal sum of $2,555,726, with interest and principal payable as therein provided, an Open-End Mortgage, Assignment of Rents and Security Agreement (hereinafter called the "Austintown Mortgage") dated of even date with the Austintown Note, securing the payment of the Austintown Note, covering certain real and personal property described therein (hereinafter called the "Austintown Property", the real property forming a part of which is more particularly described in Exhibit A-15 attached hereto and incorporated herein) recorded in Volume 4111, Page 76, under File No. 9900013032, Mahoning County, Ohio, and an Assignment of Leases and Rents (hereinafter called the "Austintown Assignment") dated of even date with the Austintown Note, providing a source of future payment of the Austintown Note, in Volume 4111, Page 116, under File No. 9900013033, Mahoning County, Ohio, reference being here made to the Austintown Mortgage and the Austintown Assignment and the record thereof for all purposes (the foregoing documents and all other documents executed by Borrower and/or any other party or parties evidencing or securing or otherwise in connection with the loan evidenced by the Austintown Note being herein collectively called the "Austintown Loan Documents");



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WHEREAS, pursuant to the terms of the Master Loan Agreement, Borrower has executed and delivered to Lender one certain promissory note (hereinafter called the "Columbus Note") dated March 26, 1999, payable to the order of Lender in the original principal sum of $2,729,703, with interest and principal payable as therein provided, an Open-End Mortgage, Assignment of Rents and Security Agreement (hereinafter called the "Columbus Mortgage") dated of even date with the Columbus Note, securing the payment of the Columbus Note, covering certain real and personal property described therein (hereinafter called the "Columbus Property", the real property forming a part of which is more particularly described in Exhibit A-16 attached hereto and incorporated herein) recorded under Instrument 199904020082584, Franklin County, Ohio, and an Assignment of Leases and Rents (hereinafter called the "Columbus Assignment") dated of even date with the Columbus Note, providing a source of future payment of the Columbus Note, under Instrument 199904020082588, Franklin County, Ohio, reference being here made to the Columbus Mortgage and the Columbus Assignment and the record thereof for all purposes (the foregoing documents and all other documents executed by Borrower and/or any other party or parties evidencing or securing or otherwise in connection with the loan evidenced by the Columbus Note being herein collectively called the "Columbus Loan Documents");



WHEREAS, pursuant to the terms of the Master Loan Agreement, Borrower has executed and delivered to Lender one certain promissory note (hereinafter called the "Middletown Note") dated March 26, 1999, payable to the order of Lender in the original principal sum of $2,314,985, with interest and principal payable as therein provided, a Open-End Mortgage, Assignment of Rents and Security Agreement (hereinafter called the "Middletown Mortgage") dated of even date with the Middletown Note, securing the payment of the Middletown Note, covering certain real and personal property described therein (hereinafter called the "Middletown Property", the real property forming a part of which is more particularly described in Exhibit A-17 attached hereto and incorporated herein) recorded in OR Book 6346, Page 1754, Butler County, Ohio, under File No. 990002704, and an Assignment of Leases and Rents (hereinafter called the "Middletown Assignment") dated of even date with the Middletown Note, providing a source of future payment of the Middletown Note, in OR Book 6346, Page 1794, Butler County, Ohio, under File No. 9900026705, reference being here made to the Middletown Mortgage and the Middletown Assignment and the record thereof for all purposes (the foregoing documents and all other documents executed by Borrower and/or any other party or parties evidencing or securing or otherwise in connection with the loan evidenced by the Middletown Note being herein collectively called the "Middletown Loan Documents");



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WHEREAS, the Sterling House Mortgages provide that the indebtedness secured thereby may, at the option of the holder thereof, be accelerated if Alterra sells or conveys any or all of the Sterling House Mortgaged Properties without the consent of Lender;



WHEREAS, Lender has been requested to consent to the conveyance of the Sterling House Mortgaged Properties to Borrower and Lender is willing so to consent upon compliance with the terms and provisions of this Agreement;



WHEREAS, one or more of the Notes is currently due and payable;



WHEREAS, Borrower has requested that Lender extend the term of the Notes to June 30, 2004, and otherwise modify certain terms of the Loan Documents, and Lender is willing to do so on the terms and conditions herein set forth;



WHEREAS, Alterra has executed and delivered to Lender a Guaranty (herein collectively called the "Guaranties") with respect to each Project Loan;



WHEREAS, Lender is the owner and holder of the Notes and the Borrower is the owner of the legal and equitable title to the Mortgaged Properties;



NOW, THEREFORE, for and in consideration of the mutual covenants contained herein and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:



1. Definitions.  As used herein, the following terms shall have the meanings assigned to them below:
2. "Alterra Leases":  The lease agreements between ALS West and Alterra of even date herewith with respect to the Sterling House Mortgaged Properties.
3. "Assignment" or "Assignments":  Individually or collectively (as applicable), the Mesa Assignment, Peoria Assignment, Pensacola Assignment, Tucson Assignment, Olympia Assignment, Spokane Assignment, Puyallup Assignment, Plymouth Assignment, North Oaks Assignment, Eden Prairie Assignment, Salem Assignment, Portage Assignment, Merrillville Assignment, Richmond Assignment, Austintown Assignment, Columbus Assignment and Middletown Assignment.
4. "Benefits":  All existing 401(k) employee benefits, dental health insurance benefits, general health insurance benefits and other similar benefits paid by the Borrower with respect to employees of the Projects.
5. "Collateral Assignment":  A Collateral Assignment of even date herewith made by Borrower and Alterra in favor of Lender in connection with the Sterling House Mortgaged Properties.
6. "Confirmation Date":  The date of confirmation of a bankruptcy plan of reorganization with respect to Alterra.
7. "Corporate Allocations":  Expenses, if any, related to the Projects which are incurred on a corporate wide basis by Alterra and allocated to the Borrower (including, without limitation malpractice insurance, liability insurance, property insurance and advertising costs and expenses), which expenses are, in any case, allocable to the Projects, directly or on a per bed basis, and which expenses and allocations are otherwise acceptable to the Lender.
8. "Credit Card Expenses":  With respect to any Project, expenses relating to the day to day operation of the Project, which expenses are charged by the local on-site administrator or staff of the Project on the credit card provided to it by Borrower.
9. "Depository":  Wells Fargo Bank, Wisconsin, N.A.
10. "Eligible Account":  A separate and identifiable account from all other funds held by the holding institution that is an account or accounts maintained with an Eligible Institution.
11. "Eligible Institution".  A  depository institution or trust company, insured by the Federal Deposit Insurance Corporation, having a combined capital and surplus of at least $50,000,000.00.
12. "Leased Mortgaged Property" or "Leased Mortgaged Properties":  Individually or collectively (as applicable), the Austintown Mortgaged Property, Portage Mortgaged Property and Richmond Mortgaged Property.
13. "Loan Agreement" or "Loan Agreements":  Individually or collectively (as applicable), the Mesa Loan Agreement, Peoria Loan Agreement, Pensacola Loan Agreement, Tucson Loan Agreement, Olympia Loan Agreement, Spokane Loan Agreement, Puyallup Loan Agreement, Plymouth Loan Agreement, North Oaks Loan Agreement, Eden Prairie Loan Agreement, Salem Loan Agreement, Portage Loan Agreement, Merrillville Loan Agreement, Richmond Loan Agreement, Austintown Loan Agreement, Columbus Loan Agreement and Middletown Loan Agreement.
14. "Loan Documents":  Individually or collectively (as applicable), the Master Loan Agreement, Mesa Loan Documents, Peoria Loan Documents, Pensacola Loan Documents, Tucson Loan Documents, Olympia Loan Documents, Spokane Loan Documents, Puyallup Loan Documents, Plymouth Loan Documents, North Oaks Loan Documents, Eden Prairie Loan Documents, Salem Loan Documents, Portage Loan Documents, Merrillville Loan Documents, Richmond Loan Documents, Austintown Loan Documents, Columbus Loan Documents and Middletown Loan Documents.
15. "Lock-Box":  The post office lockbox of Borrower at Regulus.
16. "Lock-Box Agreement":   A Lock-Box Agreement between Borrower, Lender, Depository and Regulus.
17. "Monthly Reserve Deposit":  An amount equal to the following:
18. "Mortgage" or "Mortgages":  Individually or collectively (as applicable), the
19. "Mortgaged Property" or "Mortgaged Properties":  Individually or collectively (as applicable), the Mesa Property, Peoria Property, Pensacola Property, Tucson Property, Olympia Property, Spokane Property, Puyallup Property, Plymouth Property, North Oaks Property, Eden Prairie Property, Salem Property, Portage Property, Merrillville Property, Richmond Property, Austintown Property, Columbus Property and Middletown Property.
20. "Note" or "Notes":  Individually or collectively (as applicable), the Mesa Note, Peoria Note, Pensacola Note, Tucson Note, Olympia Note, Spokane Note, Puyallup Note, Plymouth Note, North Oaks Note, Eden Prairie Note, Salem Note, Portage Note, Merrillville Note, Richmond Note, Austintown Note, Columbus Note and Middletown Note.
21. "Operating Expenses": With respect to any period, all reasonably incurred and documented operating expenses incurred by the Borrower in connection with the operation of the Projects, determined on a cash basis, including but not limited to the following expenses:
22. "Payment Event of Default":  An Event of Default which arises as a result of the failure to pay a sum of money.
23. "Pledge Agreement":  A Pledge Agreement of even date herewith made by Borrower in favor of Lender.
24. "Project Loan" or "Project Loans":  Individually or collectively (as applicable), the loans evidenced by the Notes.
25. "Regulus":  Regulus West LLC.
26. "Remittances":  All funds, items, instruments, investments, securities and other things of value at any time, paid, deposited, credited or held in, or in transit to, the Lock-Box.
27. "Rents":  All rents, revenues, income and proceeds due from residents of the Projects for using, occupying or otherwise enjoying the Projects.
28. "Replacements":   The costs of any repairs, improvements, equipment, alterations, additions, changes, replacements and other items which, under GAAP, are properly classified as capital expenditures or capital improvements by the Borrower's auditors, but excluding (i) costs of routine maintenance to a Project; (ii) the costs of salaries, benefits and administrative expenses related to the employment of (A) officers and executives of Borrower, and of employees of Borrower above the level of building manager, and (B) employees of Borrower at or below the level of building manager, except in the case of those costs which Borrower can demonstrate to Lender's satisfaction to be properly allocable to the work performed by such employees in connection with Replacements; (iii) the cost of any items for which Borrower is reimbursed by insurance or otherwise; and (iv) the cost of any landscaping work to a Project.
29. "Restricted Account":  An Eligible Account to be established and maintained with Depository.
30. "Restructure Documents":  This Agreement, the Lock-Box Agreement, Pledge Agreement, Stock Pledge Agreement, Sterling House Guaranty, Security Agreement, Collateral Assignment, Subordination of Management Agreement and Subordination and Attornment Agreement.
31. "Security Agreement":  A Security Agreement of even date herewith made by Borrower and Alterra in favor of Lender in connection with the Sterling House Mortgaged Properties.
32. "Sterling House Assignment" or "Sterling House Assignments":  Individually or collectively (as applicable), the Mesa Assignment, Peoria Assignment, Pensacola Assignment and Tucson Assignment.
33. "Sterling House Guaranty":  A Guaranty of even date herewith made by Alterra with respect to the Sterling House Notes.
34. "Sterling House Loan Documents":  Individually or collectively (as applicable), the Mesa Loan Documents, Peoria Loan Documents, Pensacola Loan Documents and Tucson Loan Documents.
35. "Sterling House Mortgage"or"Sterling House Mortgages":  Individually or collectively (as applicable), the Mesa Mortgage,, Peoria Mortgage, Pensacola Mortgage and Tucson Mortgage.
36. "Sterling House Mortgaged Property"or"Sterling House Mortgaged Properties":  Individually or collectively (as applicable), the Mesa Mortgaged Property, Peoria Mortgaged Property, Pensacola Mortgaged Property and Tucson Mortgaged Property.
37. "Sterling House Note"or"Sterling House Notes":  Individually or collectively (as applicable), the Mesa Note, Peoria Note, Pensacola Note and Tucson Note.
38. "Stock Pledge Agreement":  A Stock Pledge Agreement of even date herewith made by Alterra in favor of Lender.
39. "Straight-Line Payment":  An amount equal to the following:
40. "Subordination and Attornment Agreement":  A Subordination and Attornment Agreement of even date herewith made by Alterra in favor of Lender with respect to the Sterling House Mortgaged Properties.
41. "Subordination of Management Agreement":  A Subordination of Management Agreement of even date herewith made by Alterra in favor of Lender.
42. "Third Party Leases":  The lease agreements between Borrower and Sterling Cottage of Austintown LLC, Sterling House of Portage LLC and Sterling House of Richmond LLC with respect to the Austintown Mortgaged Property, Portage Mortgaged Property and Richmond Mortgaged Property, respectively.
43. Consent to Conveyance.  Lender hereby consents to the above described conveyance of the Sterling House Mortgaged Properties and waives its option to accelerate as provided in the Sterling House Mortgages, without prejudice to its rights with respect to any future conveyance of said property or any interest therein.
44. Assumption.  Borrower hereby assumes and promises to pay according to the terms thereof all principal and interest now remaining unpaid on the Sterling House Notes and also assumes and promises to keep and perform all other covenants and obligations in the Sterling House Notes to be performed by the maker thereof, in the Sterling House Mortgages to be performed by the grantor thereof and in the Sterling House Assignments to be performed by the assignor thereof and all other obligations of the maker of the Sterling House Notes under any and all other Sterling House Loan Documents as any of the foregoing may be modified as provided herein.
45. Extension Fee; Exit Fee.  In consideration for the agreements made herein, Borrower will pay to Lender an extension fee in the amount of $822,864, payable as follows:  (i) one-half ($411,432) contemporaneously with the execution of this Agreement, and (ii) one-half ($411,432) on the earlier to occur of (x) June 30, 2003 or (y) the date the Project Loans are paid in full.  At the time of payment in full of each Project Loan and prior to release of the Mortgage related to the Project Loan, Borrower shall pay Lender an exit fee in the amount set forth on Schedule I attached hereto and made a part hereof.
46. Maturity Date Extension.  The maturity date of each of the Notes is hereby extended to June 30, 2004.  The liens, security interests, assignments and other rights evidenced by the Loan Documents are hereby renewed and extended to secure payment of the Notes as extended hereby.
47. Modifications of Notes.
48. Master Loan Agreement.  The Master Loan Agreement is modified as follows:
49. Replacement Reserves.
50. Management Fees.  Notwithstanding anything to the contrary contained in any management agreement between Borrower and Manager or any Subordination of Management Agreement or any similar agreement, the monthly management fee payable to Manager on all Projects shall be limited to six percent (6%) of gross revenues.  No "incentive fee" may be paid to Manager.
51. Tax Escrow.  Borrower shall commence the escrow of taxes with Lender in accordance with the terms of Section 2.2(n) of each Mortgage.  Commencing on July 1, 2002 and on the first day of each month through and including December 1, 2002, Borrower shall make a monthly escrow deposit for such purpose of $80,000.  Commencing January 1, 2003 and on the first day of each month through and including June 1, 2003, Borrower shall make a monthly escrow deposit for such purpose of $57,516.  Thereafter, the monthly escrow deposit shall be an amount estimated by Lender to be sufficient to pay the next maturing taxes when due, all as more particularly described in Section 2.2(n) of each Mortgage.  In furtherance, but not in limitation, of the requirements of each Mortgage, Borrower shall provide Lender copies of any notices setting forth and/or changing the taxes payable with respect to a Mortgaged Property.  In addition, Borrower shall promptly provide Lender copies of all tax bills when received and make written request to Lender thirty (30) days prior to the due date for payment of such bills, to the extent of monies escrowed for that purpose.  In the event, escrowed funds are insufficient for that purpose, Lender will so notify Borrower and Borrower will pay the deficiency before Lender releases any escrowed funds.
52. Pledge Agreement.  Upon execution of this Agreement, Borrower shall execute and deliver to Lender the Pledge Agreement with respect to, inter alia, tax escrows, CAPEX escrows and insurance indemnity payments deposited with Lender.
53. Stock Pledge Agreement.  Upon execution of this Agreement, Alterra shall execute and deliver to Lender the Stock Pledge Agreement with respect to the stock in Borrower, together with originals of all ALS West, Inc. stock certificates, a stock power and a UCC financing statement.
54. Sterling House Guaranty.  Upon execution of this Agreement, Alterra shall execute and deliver to Lender the Sterling House Guaranty.
55. Lock-Box Agreement.
56. Modification of Mesa Mortgage.  Paragraphs 1.1 and 1.2 on page 4 of the Mesa Mortgage are hereby deleted in their entirety and there is inserted in lieu thereof the following:
57. Modification of Peoria Mortgage.  Paragraphs 1.1 and 1.2  on page 4 of the Peoria Mortgage are hereby deleted in their entirety and there is inserted in lieu thereof the following:
58. Modification of Pensacola Mortgage.  Paragraphs 1.1 and 1.2  on pages 3 and 4 of the Pensacola Mortgage are hereby deleted in their entirety and there is inserted in lieu thereof the following:
59. Modification of Tucson Mortgage.  Paragraphs 1.1 and 1.2 on page 4 of the Tucson Mortgage are hereby deleted in their entirety and there is inserted in lieu thereof the following:
60. Modification of Salem Mortgage.  Subparagraph 1.1(a) beginning on page 3 of the Salem Mortgage is hereby deleted in its entirety and there is inserted in lieu thereof the following:
61. Modification of Portage Mortgage.  Subparagraph 1.1(a) on page 4 of the Portage Mortgage is hereby deleted in its entirety and there is inserted in lieu thereof the following:
62. Modification of Merrillville Mortgage.  Subparagraph 1.1(a) on page 4 of the Merrillville Mortgage is hereby deleted in its entirety and there is inserted in lieu thereof the following:
63. Modification of Richmond Mortgage.   Subparagraph 1.1(a) on page 4 of the Richmond Mortgage is hereby deleted in its entirety and there is inserted in lieu thereof the following:
64. Modification of Austintown Mortgage.   Subparagraph 1.1(a) beginning on page 3 of the Austintown Mortgage is hereby deleted in its entirety and there is inserted in lieu thereof the following:
65. Modification of Columbus Mortgage.    Subparagraph 1.1(a) on page 3 of the Columbus Mortgage is hereby deleted in its entirety and there is inserted in lieu thereof the following:
66. Modification of Middletown Mortgage.   Subparagraph 1.1(a) beginning on page 3 of the Middletown Mortgage is hereby deleted in its entirety and there is inserted in lieu thereof the following:
67. Modification of Mesa Assignment.  The first paragraph at the top of page 2 of the Mesa Assignment is hereby deleted in its entirety and there is inserted in lieu thereof the following:
68. Modification of Peoria Assignment.  The first paragraph at the top of page 2 of the Peoria Assignment is hereby deleted in its entirety and there is inserted in lieu thereof the following:
69. Modification of Pensacola Assignment.  The first paragraph at the top of page 2 of the Pensacola Assignment is hereby deleted in its entirety and there is inserted in lieu thereof the following:
70. Modification of Tucson Assignment.  The first paragraph at the top of page 2 of the Tucson Assignment is hereby deleted in its entirety and there is inserted in lieu thereof the following:
71. Modification of Salem Assignment.  Subparagraph (a) on page 2 of the Salem Assignment is hereby deleted in its entirety and there is inserted in lieu thereof the following:
72. Modification of Portage Assignment.   Subparagraph (a) on page 2 of the Portage Assignment is hereby deleted in its entirety and there is inserted in lieu thereof the following:
73. Modification of Merrillville Assignment.   Subparagraph (a) on page 2 of the Merrillville Assignment is hereby deleted in its entirety and there is inserted in lieu thereof the following:
74. Modification of Richmond Assignment.   Subparagraph (a) on page 2 of the Richmond Assignment is hereby deleted in its entirety and there is inserted in lieu thereof the following:
75. Modification of Austintown Assignment.  Subparagraph (a) on page 2 of the Austintown Assignment is hereby deleted in its entirety and there is inserted in lieu thereof the following:
76. Modification of Columbus Assignment.   Subparagraph (a) on page 2 of the Columbus Assignment is hereby deleted in its entirety and there is inserted in lieu thereof the following:
77. Modification of Middletown Assignment.  Subparagraph (a) on page 2  of the Middletown Assignment is hereby deleted in its entirety and there is inserted in lieu thereof the following:
78. Insurance.
79. Intentionally Omitted.
80. Third Party Leases.  The following agreements are made with respect to the Third Party Leases:
81. Management Agreements.  Borrower and Alterra acknowledge and agree that the Management Agreements between the two parties of even date herewith with respect to each of the Mortgaged Properties (other than Austintown Mortgaged Property, Richmond Mortgaged Property and Portage Mortgaged Property) constitute Operating Agreements and Management Contracts.
82. Financing Statements.  Borrower and Alterra hereby authorize Lender to file any financing statement or financing statement amendment covering the Collateral or relating to the security interest created therein.
83. Medicare/Medicaid.  Borrower agrees that it shall not enter into, nor will it permit any other party to enter into, a Medicare, Medicaid or similar contract with respect to a Project.
84. Loan Document.  This Agreement and each of the Restructure Documents constitutes a Loan Document.  In the event of a conflict between the terms of this Agreement and the terms of any Loan Document, the terms of this Agreement shall control.  References herein and in the Loan Documents to Loan Documents are references to such agreements as modified from time to time.
85. Agent/Lender.  Guaranty Bank is the sole Lender (as such term is used in the Master Loan Agreement) under the Master Loan Agreement.  Accordingly, the terms Lender and Agent as used therein and herein may be used interchangeably.
86. Notice of Change.  Borrower and Alterra agree to give prompt written notice to the Lender of:  (a) any Event of Default under the Loan Documents; (b) any occurrence which might mature into an Event of Default (whether by the passage of time, giving of notice or otherwise); (c) any default under any material agreement to which the Borrower or Alterra is a party or by which any of the Mortgaged Properties are bound or the acceleration of the maturity of any indebtedness owing by the Borrower or Alterra, provided that such notice shall be required with respect to Alterra only after the Confirmation Date; (d) all litigation or claims affecting the Borrower, Alterra, or any of the Mortgaged Properties which if adversely determined could reasonably be expected to result in a material adverse change in the financial condition of Borrower or Alterra or a material adverse change in the value of any of the Mortgaged Properties; and (e) any other matter the occurrence of which could reasonably be expected to result in a material adverse change in the financial condition of the Borrower or Alterra or a material adverse change in the value of any of the Mortgaged Properties.  Such notice will describe the foregoing matters with particularity and the actions which the Borrower and Alterra are taking or propose to take with respect thereto.
87. Borrower's Existence and Authority.  Borrower hereby represents and warrants that (a) it is the sole legal and beneficial owner of the Mortgaged Properties; (b) it is a corporation and is duly organized and legally existing under the laws of the state of its corporation and is duly qualified to do business in the state where the Mortgaged Properties are located; (c) the execution and delivery of, and performance under this Agreement are within its power and authority without the joinder or consent of any other party and have been duly authorized by all requisite action and are not in contravention of law or the powers of Borrower's organizational documents; (d) this Agreement constitutes the legal, valid and binding obligations of Borrower enforceable in accordance with its terms;  (e) the execution and delivery of this Agreement by Borrower do not contravene, result in a breach of or constitute a default under any deed of trust, loan agreement, indenture or other contract, agreement or undertaking to which it is a party or by which it or any of its properties may be bound (nor would such execution and delivery constitute such a default with the passage of time or the giving of notice or both) and, to the best of its knowledge, do not violate or contravene any law, order, decree, rule or regulation to which Borrower is subject; and (f) other than the Alterra Leases and Third-Party Leases, there are no Lease Agreements or Sublease Agreements affecting the Mortgaged Properties.  Borrower agrees to indemnify and hold Lender harmless against any loss, claim, damage, liability or expense (including without limitation attorneys' fees) incurred as a result of any representation or warranty made by it herein proving to be untrue in any respect.
88. Alterra Existence and Authority.  Alterra hereby represents and warrants that (a) Alterra is duly organized and legally existing under the laws of the state of its incorporation; (b) the execution and delivery of, and performance under this Agreement are within Alterra's power and authority without the joinder or consent of any other party and have been duly authorized by all requisite action and are not in contravention of law or the powers of Alterra's charter, by-laws or other corporate papers; (c) this Agreement constitutes the legal, valid and binding obligations of Alterra enforceable in accordance with its terms; and (d) the execution and delivery of this Agreement by Alterra do not contravene, result in a breach of or constitute a default under any deed of trust, loan agreement, indenture or other contract, agreement or undertaking to which Alterra is a party or by which Alterra or any of its properties may be bound (nor would such execution and delivery constitute such a default with the passage of time or the giving of notice or both) and do not violate or contravene any law, order, decree, rule or regulation to which Alterra is subject.  Alterra agrees to indemnify and hold Lender harmless against any loss, claim, damage, liability or expense (including without limitation attorneys' fees) incurred as a result of any representation or warranty made by it herein proving to be untrue in any respect.
89. Other Documents.  Alterra and Borrower agree to execute, upon request from Lender, such other and further documents as may be necessary (in Lender's reasonable judgment) to consummate the transactions contemplated herein or to perfect the liens and security interests intended to secure the payment of the Project Loans.  The foregoing shall include, without limitation, the execution of additional copies of this Agreement in order to satisfy local filing requirements.
90. Default.  If Alterra or Borrower shall fail to keep or perform any of the covenants or agreements contained herein or if any statement, representation or warranty contained herein is false, misleading or erroneous in any material respect, after the expiration of any grace or cure period provided by the applicable Loan Documents, such party shall be deemed to be in default hereunder and Lender shall be entitled at its option to exercise any and all of the rights and remedies granted pursuant to the Loan Documents, or to which Lender may otherwise be entitled, whether at law or in equity.
91. Events of Default.  Borrower hereby represents and warrants that, to the best of Borrower's knowledge, after giving effect hereto, there exists no uncured default under the Notes, Mortgages, Assignments, or any other Loan Documents, except as disclosed on Schedule II attached hereto and made a part hereof.  Lender represents and warrants that it has no knowledge that any Event of Default exists under the Loan Documents except those described on Schedule II.  No representation or waiver is made with respect to any Event of Default with respect to which Lender has no knowledge.  Without waiving its ability to declare Events of Default with respect to acts or omissions of Borrower or other parties to the Loan Documents which occur after the date hereof, Lender hereby waives each Event of Default listed on Schedule II.  Prior to the Confirmation Date, Lender will not declare an Event of Default as the result, after the date hereof, of Alterra's failure generally to pay (or admission in writing of its inability to pay) its debts as such debts become due.
92. Title Endorsements.  Contemporaneously with the execution and delivery hereof, Borrower shall, at its sole cost and expense, obtain and deliver to Lender an endorsement of the Mortgagee Title Policy insuring the lien of each Mortgage, under the applicable title insurance rules and regulations, in form and content reasonably acceptable to Lender, stating that the company issuing said Mortgagee Title Policy will not claim that policy coverage has terminated, or that policy coverage has been reduced, solely by reason of the execution of this Agreement and maintaining the liability thereunder for the period of limitation applicable to the indebtedness secured by the lien of such Mortgage calculated from the renewed and extended maturity date as provided herein.
93. Ratification.  Except as provided herein, the terms and provisions of the Master Loan Agreement, Notes, the Mortgages, the Assignments, and the other Loan Documents shall remain unchanged and shall remain in full force and effect.  Any modification herein of the Master Loan Agreement, the Notes, the Mortgages, the Assignments, and the other Loan Documents shall in no way affect the security of the Mortgages, the Assignments, and the other Loan Documents for the payment of the Notes.  The promissory note(s) described in each Mortgage, Assignment, and other Loan Documents as the note(s) secured thereby shall hereafter mean such note(s) as modified by this Agreement.  The Master Loan Agreement, the Notes, the Mortgages, the Assignments, the Guaranties and the other Loan Documents, as modified and amended hereby, are hereby ratified and confirmed in all respects.  All liens, security interests, mortgages and assignments granted or created by or existing under the Mortgages, the Assignments, and the other Loan Documents remain unchanged and continue, unabated, in full force and effect, to secure the obligations described therein.
94. Validity.  Borrower hereby acknowledges that the liens, security interests, and assignments created and evidenced by the Mortgages and the assignments created by the Assignments are valid and subsisting and further acknowledges and agrees that there are no offsets, claims, or defenses to the Notes, Mortgages or Assignments or any other Loan Documents.
95. Entire Agreement. This Agreement supersedes and merges all prior and contemporaneous promises, representations and agreements with respect to its subject matter.  No modification of this Agreement or any document referenced herein, or any waiver of rights under any of the foregoing, shall be effective unless made by supplemental agreement, in writing, executed by Lender and the affected party or parties.  The parties hereto further agree that this Agreement may not in any way be explained or supplemented by a prior, existing, or future course of dealings between the parties or by any prior, existing, or future performance between the parties pursuant to this Agreement or otherwise.
96. Notice.  Any notice or communication required or permitted hereunder or, after the date hereof, under any Loan Document shall be given in writing, sent by (a) personal delivery, or (b) expedited delivery service with proof of delivery, or (c) United States mail, postage prepaid, registered or certified mail, addressed as follows:
97. Opinions.  Upon execution of this Agreement, Borrower and Alterra shall each deliver to Lender an opinion of counsel, in form and substance reasonably satisfactory to Lender, stating that the Borrower and Alterra are duly organized and validly existing under the laws of the state of their organization, Borrower is qualified to do business in each state in which a Mortgaged Property is located, the execution of each of the Restructure Documents by Alterra and Borrower has been duly authorized and each of the Restructure Documents has been properly executed and delivered by Alterra and Borrower.
98. Costs.  Contemporaneous with the execution and delivery hereof, Borrower shall pay, or cause to be paid, all costs and expenses incident to the preparation hereof and the consummation of the transactions specified herein, including without limitation title insurance policy and/or endorsement charges, recording fees, and reasonable fees and expenses of legal counsel to Lender.
99. Release.  Alterra and Borrower hereby release, remise, acquit and forever discharge Lender, together with its employees, agents, representatives, consultants, attorneys, fiduciaries, participants, servants, officers, directors, partners, predecessors, successors and assigns, subsidiary corporations, parent corporations, and related corporate divisions (all of the foregoing hereinafter called the "Released Parties"), from any and all actions and causes of action, judgments, executions, suits, debts, claims, demands, liabilities, obligations, damages and expenses of any and every character, known or unknown, direct and/or indirect, at law or in equity, of whatsoever kind or nature, whether heretofore or hereafter accruing, for or because of any matter or things done, omitted or suffered to be done by any of the Released Parties prior to and including the date hereof, and in any way directly or indirectly arising out of or in any way connected to this Agreement, the Master Loan Agreement, the Notes, the Mortgages, the Assignments, or any other Loan Document, or any of the transactions associated therewith, or the Mortgaged Properties, including specifically but not limited to claims of usury, REGARDLESS OF WHETHER THE MATTER RELEASED IS THE RESULT OF THE NEGLIGENCE OF ONE OR MORE OF THE RELEASED PARTIES.
100. Counterpart Execution.  This Agreement may be executed in any number of counterparts with the same effect as if all parties hereto had signed the same document.  All such counterparts shall be construed together and shall constitute one instrument, but in making proof hereof it shall only be necessary to produce one such counterpart, provided that the counterpart produced must be the counterpart executed by the party against whom enforcement is sought.
101. Severance.  If any covenant, condition, or provision herein contained is held to be invalid by final judgment of any court of competent jurisdiction, the invalidity of such covenant, condition, or provision shall not in any way affect any other covenant, condition or provision herein contained.
102. Time of the Essence.  It is expressly agreed by the parties hereto that time is of the essence with respect to this Agreement.
103. Construction.  The parties acknowledge and confirm that each of their respective attorneys have participated jointly in the review and revision of this Agreement and that it has not been written solely by counsel for one party.  The parties hereto therefore stipulate and agree that the rule of construction to the effect that any ambiguities are to or may be resolved against the drafting party shall not be employed in the interpretation of this Agreement to favor any party against the other.
104. Governing Law.  This Agreement and the rights and duties of the parties hereunder shall be governed for all purposes by the law of the State of Texas and the law of the United States applicable to transactions within said State.
105. Successors.  The terms and provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their representatives, successors, and assigns.
106. Notice and Agreement.  Alterra, Borrower and Lender hereby take notice of and agree to the following:
107. Bankruptcy Matters.
108. No Waiver.  Lender in the past may have accepted, without exercising the remedies to which Lender was entitled, payments and performance by Borrower that constituted defaults under the Loan Documents.  Alterra and Borrower acknowledge that no such acceptance or grace granted by Lender in the past, or Lender's agreement to the modifications evidenced hereby, has in any manner diminished Lender's right in the future to insist that Alterra and Borrower strictly comply with the terms of the Loan Documents, as modified by the terms hereof.  Furthermore, Alterra and Borrower specifically acknowledge that any future grace or forgiveness of default by Lender shall not constitute a waiver or diminishment of any right of Lender with respect to any future default of Alterra or Borrower, whether or not similar to any default with respect to which Lender has in the past chosen, or may in the future choose, not to exercise all of the rights and remedies granted to it under the Loan Documents.
109. Recording.  For ease of recording, certain signature pages, exhibits and schedules to this Agreement may not be recorded in all of the jurisdictions in which this Agreement is recorded.  Nevertheless, the parties are bound by all terms and provisions hereof.
110. any failure to make payments to Lender when due;
111. any failure to comply with the financial covenants of Sections 6.16-6.19, 6.22 or 6.23;
112. any failure to maintain general liability or professional liability insurance as required by the Mortgages;
113. any failure to deliver certificates evidencing renewal of insurance policies at least 15 days before the insurance expired;
114. any failure to notify Lender, prior to the occurrence thereof, of the name change from Alternative Living Services, Inc. to Alterra Healthcare Corporation, the address change from 450 Sunnyslope Drive to 10000 Innovation Drive or the merger of Sterling House Corporation with Alterra Healthcare Corporation;
115. any failure of Alterra or Borrower generally to pay (or any admission in writing of inability to pay) its debts as such debts become due;
116. any failure to deliver rent rolls for the Projects;
117. any failure to deliver an Officer's Certificate identifying, or to notify Lender in the format or within the time frame required by the Loan Documents of, or to remedy (a) any Default described in paragraphs (i) through (vii) above, (b) any Material Adverse Change in the financial condition of Borrower or Alterra, (c) the filing of any suit or proceeding against Alterra which was disclosed in Alterra's filings on Form 10K or 10Q with the Securities and Exchange Commission, or (d) the following proceedings against Borrower:
118. Ramsey v. Amoco Oil, et al., "In the Matter of the Condemnation of Certain Lands for Highway Purposes," Case 62C201011916 filed in the Second Judicial District Court, Ramsey County, MN;
119. Tim Foley Plumbing Service, inc. et al. v. Eby Development and Management Co., L.L.C., et al., Cause No. 89C01-9904-CP-061 filed in the Wayne Circuit Court, Wayne County, IN; and
120. Claim for slip and fall incident in October, 2001 at the Alterra Clare Bridge of Olympia residence.  Liability estimated at $5,000.
121. the imposition of, and any failure to deliver an Officer's Certificate identifying, or to notify Lender in the format or within the time frame required by the Loan Documents of, the following bans on admissions at the Alterra Clare Bridge of Olympia residence:
122. The Department of Social and Health Services ("Department") conducted a survey on various dates from March 24, 2000, through June 6, 2000.  The Department alleged that the residence failed to ensure appropriate care for residents with a significant change of condition, failed to properly evaluate its ability to provide medication management at night and failed to notify a resident's family of injury of unknown source.  Based upon these findings, on June 16, 2000, the Department issued a ban on admissions and a fine of $700.00.  The ban on admissions was lifted on August 15, 2000 and the fine was paid.
123. The Department conducted an investigation on July 23, 2001.  The Department alleged that the residence failed to discharge a resident in a timely fashion.  The Department issued a stop placement and assessed a forfeiture in the amount of $7,500.  The ban on admissions was lifted on August 9, 2001.
124. the issuance of, and any failure to deliver an Officer's Certificate identifying, or to notify Lender in the format or within the time frame required by the Loan Documents of, a notice issued by the Ohio Department of Health on May 2, 2002 proposing to revoke the license for the Alterra Clare Bridge of Austintown based on a violation related to exceeding the 120-day limit on providing intermittent skilled nursing care.  The proposed revocation is being appealed.