Document:

Exhibit 10.19

                            PROPERTY LEASE AGREEMENT

                                 by and between

                           PSLT-ALS PROPERTIES I, LLC,

                      a Delaware limited liability company,

                                  as Landlord,

                                       and

                          ALS PROPERTIES TENANT I, LLC,

                      a Delaware limited liability company,

                                    as Tenant

                                   Dated as of

                                October __, 2004

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                                TABLE OF CONTENTS
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1.       Definitions..............................................................................................1
2.       Leased Property..........................................................................................13
3.       Condition of Leased Property.............................................................................14
4.       Term.....................................................................................................14
         (a)      Initial Term....................................................................................14
         (b)      Renewal Terms...................................................................................14
5.       Rent.....................................................................................................14
         (a)      Rent............................................................................................14
         (b)      Base Rent.......................................................................................15
         (c)      Additional Rent.................................................................................15
         (d)      Consent Expenses................................................................................15
         (e)      Late Charge; Interest...........................................................................15
         (f)      Payment without Abatement.......................................................................15
6.       Holding Over.............................................................................................15
7.       Use of Leased Property; Compliance With Legal Requirements...............................................16
         (a)      Intended Use....................................................................................16
         (b)      Compliance with Legal Requirements, Insurance Requirements, Facility
                  Mortgage Requirements and Other Requirements....................................................16
         (c)      Compliance with Third Party Payor Program Requirements..........................................16
         (d)      Landlord to Grant Easements, Etc................................................................17
         (e)      Landlord's Receipt Of Third Party Payor Program Reimbursements..................................17
8.       Tenant's Covenant to Repair..............................................................................17
         (a)      Repair and Maintenance..........................................................................17
         (b)      Related Personal Property.......................................................................17
9.       No Landlord Repair Obligations...........................................................................18
10.      Surrender................................................................................................18
         (a)      Surrender of Leased Property....................................................................18
         (b)      Transfer of Licenses and Permits................................................................18
         (c)      Apportionment of Impositions, Insurance Premiums and the Minimum
                  Capital Additions Amount........................................................................19
11.      Capital Additions........................................................................................19
         (a)      Construction of Capital Additions...............................................................19
         (b)      Non-Capital Additions...........................................................................20
         (c)      Capital Additions Financed by Landlord..........................................................20
         (d)      Disbursement of Capital Addition Allowances.....................................................21
         (e)      Capital Addition Allowances Added to Lease Basis................................................22
12.      Utilities and Other Services.............................................................................22
13.      Performance by Landlord of Tenant's Obligations..........................................................22
         (a)      Landlord's Self Help............................................................................22
         (b)      Landlord's Inspections..........................................................................23
14.      Entry....................................................................................................23
15.      Assignment, Subletting and Liens.........................................................................24
         (a)      Transfers Prohibited Without Consent............................................................24
         (b)      Adequate Assurances.............................................................................24
         (c)      Permitted Subleases.............................................................................24

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         (d)      Whole Facility Subleases........................................................................25
         (e)      Liens...........................................................................................25
16.      Impositions..............................................................................................26
17.      Casualty.................................................................................................26
         (a)      Restoration and Repair..........................................................................26
         (b)      Unavailability of Proceeds......................................................................27
         (c)      Escrow of Insurance Proceeds....................................................................27
         (d)      Uninsured Losses................................................................................28
         (e)      Deletion of Properties..........................................................................28
18.      Insurance................................................................................................28
         (a)      Insurance By Tenant.............................................................................29
         (b)      Landlord as Additional Insured and/or Loss Payee................................................32
         (c)      Carriers and Features...........................................................................32
         (d)      Failure to Procure Insurance....................................................................32
         (e)      Intentionally Omitted...........................................................................32
         (f)      Indemnification of Landlord.....................................................................32
19.      Environmental Matters....................................................................................33
         (a)      Tenant's Covenant...............................................................................33
         (b)      Clean-Up........................................................................................34
         (c)      Indemnification.................................................................................34
         (d)      Notice..........................................................................................34
20.      Costs and Attorneys' Fees................................................................................35
21.      Default; Remedies........................................................................................35
         (a)      Default.........................................................................................35
         (b)      Remedies........................................................................................37
22.      Landlord's Default; Landlord's Right to Dispute..........................................................39
         (a)      Landlord Default................................................................................39
         (b)      Landlord's Right to Dispute.....................................................................40
23.      Condemnation.............................................................................................40
         (a)      Complete Taking.................................................................................40
         (b)      Partial Taking..................................................................................40
         (c)      Award...........................................................................................40
         (d)      Unavailability of Award.........................................................................41
         (e)      Notices.........................................................................................41
24.      Reports and Statements...................................................................................41
25.      Additional Covenants of Tenant...........................................................................42
         (a)      Indebtedness of Tenant..........................................................................43
         (b)      Management of Leased Property; Joinder by Manager...............................................43
         (c)      Intentionally Omitted...........................................................................44
         (d)      Capital Additions...............................................................................44
         (e)      Capital Additions Reserve.......................................................................44
         (f)      Operation of each of the Facilities.............................................................45
26.      Permitted Contests.......................................................................................45
27.      Notices of Commencement of Construction..................................................................46
28.      Limitation on Liability of Landlord and Tenant...........................................................46
29.      "Net" Lease/No Impairment................................................................................47

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         (a)      "Net" Lease.....................................................................................47
         (b)      No Affect or Impairment.........................................................................47
30.      Representations and Warranties...........................................................................47
         (a)      Representations of Tenant.......................................................................47
         (b)      Representations of Landlord.....................................................................48
31.      Notices..................................................................................................49
32.      No Waiver................................................................................................50
33.      Quiet Enjoyment..........................................................................................50
34.      Intentionally Omitted....................................................................................50
35.      Subordination, Non-Disturbance and Attornment............................................................50
36.      Brokers..................................................................................................51
37.      Invalidity...............................................................................................51
38.      Counterparts.............................................................................................51
39.      Memorandum of Lease......................................................................................51
40.      Cumulative...............................................................................................51
41.      Governing Law............................................................................................51
42.      Successors and Assigns; Relationship.....................................................................51
43.      Entire Agreement.........................................................................................52
44.      Survival.................................................................................................52
45.      Estoppel Certificates....................................................................................52
46.      Time.....................................................................................................52
47.      Captions and Headings....................................................................................52
48.      Waiver of Jury Trial.....................................................................................52
49.      Signage..................................................................................................52
50.      Guaranty.................................................................................................53
51.      Intentionally Omitted....................................................................................53
52.      Public Offering Information; Delivery of Information.....................................................53
53.      Appraisal Procedure......................................................................................53
54.      Facility Mortgages.......................................................................................54
         (a)      Cooperation in Obtaining Facility Mortgages.....................................................55
         (b)      Compliance With Facility Mortgages..............................................................55
         (c)      Escrow Reserve Accounts Under Facility Mortgages................................................55
55.      Escrows Held by Facility Mortgagee.......................................................................56
56.      Single Lease.............................................................................................56

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                                    EXHIBITS:

Exhibit A        Legal Description
Exhibit B        Memorandum of Lease
Exhibit C        Subordination Agreement
Exhibit D        Guaranty

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                            PROPERTY LEASE AGREEMENT

         THIS PROPERTY LEASE AGREEMENT (the "Lease") is made as of this ___ day
of October 2004, by and between PSLT-ALS PROPERTIES I, LLC, a Delaware limited
liability company, as landlord ("Landlord") and ALS PROPERTIES TENANT I, LLC, a
Delaware limited liability company, as tenant ("Tenant"), and is joined into for
certain limited purposes by ALTERRA HEALTHCARE CORPORATION, a Delaware limited
liability company ("Manager").

         In consideration of the mutual promises and agreements herein
contained, the parties agree as follows:

1.       Definitions. For all purposes of this Lease, except as otherwise
expressly provided or unless the context otherwise requires, (i) the terms
defined in this Paragraph shall have the meanings assigned to them in this
Paragraph or elsewhere in this Agreement and shall include the plural as well
as the singular, (ii) all accounting terms not otherwise defined herein shall
have the meanings assigned to them in accordance with GAAP, (iii) all
references in this Lease to designated "Paragraphs" or "Subparagraphs" and
other subdivisions are to the designated Paragraphs, Subparagraphs and other
subdivisions of this Lease, and (iv) the words "herein," "hereof," "hereunder"
and other words of similar import refer to this Lease as a whole and not to
any particular Paragraph or Subparagraph or other subdivision.

         "Additional Rent" shall have the meaning given to such term in
Paragraph 5(c).

         "Affiliate" shall mean, with respect to any Person, (i) in the case of
any such Person which is a partnership, any general partner in such partnership
or any limited partner holding, directly or indirectly, fifty percent (50%) or
more of the partnership interests in such partnership; (ii) in the case of any
such Person which is a limited liability company, the managing member of such
limited liability company or any other member of such limited liability company
holding, directly or indirectly, fifty percent (50%) or more of the membership
interests in such company; (iii) any other Person which is a Parent, a
Subsidiary, or a Subsidiary of a Parent with respect to such Person or to one or
more of the Persons referred to in the preceding clauses (i) and (ii); (iv) any
other Person who is an officer, director or trustee of, or partner holding,
directly or indirectly, fifty percent (50%) or more of the partnership,
membership or stock interests in, such Person or any Person referred to in the
preceding clauses (i), (ii) and (iii); and (v) any other Person who is a member
of the Immediate Family of such Person or of any Person referred to in the
preceding clauses (i) through (iv).

         "Aggregate Lease Basis" shall mean, for all of the Leased Properties
subject to this Lease as of the applicable Deletion Date, an amount equal to the
Lease Basis, as increased each year by three and one-half percent (3.5%),
compounded annually (pro rata for any partial Lease Year), from the Commencement
Date (or with respect to any increase or decrease in the Lease Basis, from the
date of such increase or decrease) to the Deletion Date.

         "Agreement Regarding Leases" means that certain Agreement Regarding
Leases dated as of the date hereof by and between PSLT-ALS Holdings and ALS
Holdings.

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         "ALS Holdings" shall mean ALS Properties Holding Company, LLC, a
Delaware limited liability company.

         "Annual Increase" shall mean:

                  (a) with respect to the First Comparison Year, an amount equal
         to the lesser of (i) 1.025 and (ii) one (1) plus the product of four
         (4) times the percentage increase in the Consumer Index (expressed as a
         decimal) as of the first month of the First Comparison Year (or the
         next preceding determination date) over the Base CPI Index; and

                  (b) with respect to each Lease Year thereafter during the Term
         (including any Renewal Term), an amount equal to the lesser of (i)
         1.025 and (ii) one (1) plus the product of four (4) times the
         percentage increase in the Consumer Index (expressed as a decimal) as
         of the first month of each such Lease Year (or the next preceding
         determination date) over the Consumer Index applicable for the
         immediately preceding Lease Year;

                  provided, however, that in no event shall the Annual Increase
for any Lease Year be less than 1.0.

         "Award" shall mean all compensation, sums or other value awarded, paid
or received by virtue of a complete or partial Condemnation of one (1) or more
of the Leased Properties (after deduction of all reasonable legal fees and other
reasonable costs and expenses, including, without limitation, expert witness
fees, incurred in connection with obtaining any such award).

         "Base CPI Index" shall mean the Consumer Index on the date hereof or
the determination date immediately prior to the date hereof.

         "Base Rent" shall mean:

                  (a) During the first month of the initial Lease Year, an
         amount equal to $493,066.50.

                  (b) During each subsequent month during the Term, including
         any Renewal Term, an amount equal to one-twelfth (1/12th) of the
         product of (x) the Lease Basis (as of the date of determination)
         multiplied by (y) the Lease Rate (as of the date of determination).

         "Business Day" shall mean any day other than Saturday, Sunday, or any
other day on which the Federal Reserve system is authorized by law or executive
action to close.

         "Capital Accretion Amounts" shall mean the sum of all of the following
amounts made by Landlord through the date of determination: (1) Capital Addition
Allowances and (2) Mandatory Capital Addition Allowances (as defined in the
Agreement Regarding Leases).

         "Capital Addition" shall mean one or more new buildings, or one or more
additional structures annexed to any portion of the Leased Improvements with
respect to any one (1) or more of the Leased Properties, or the material
expansion of existing improvements, which are

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constructed on any parcel or portion of the Land during the Term, including
the construction of a new wing or new story, the renovation of existing
improvements on any one (1) or more of the Leased Properties in order to
provide a functionally new facility needed to provide services not previously
offered, or any expansion, construction, renovation or conversion in order to
increase the number of units of the applicable Facility, to change the purpose
for which such units are utilized or to improve materially the quality of the
applicable Facility, or any related improvement whose cost would be treated as
a capital expenditure under GAAP.

         "Capital Addition Allowance" shall have the meaning set forth in
Paragraph 11(d).

         "Capital Additions Cost" shall mean the cost of any Capital Addition
made to one (1) or more of the Facilities in accordance with the terms of this
Lease. Such cost shall include, but not be limited to, the following: (i) the
cost of construction of the Capital Addition, including site preparation and
improvement, materials, labor, supervision, developer and administrative fees,
legal fees, and costs of related design, engineering and architectural services,
the cost of any fixtures, the cost of equipment and other personalty, the cost
of construction financing (including, but not limited to, capitalized interest)
and other miscellaneous costs approved by Landlord, which approval shall not be
unreasonably withheld or delayed; (ii) if agreed to by Landlord in writing, in
advance, the cost of any land (including all related acquisition costs incurred
by Tenant) contiguous to the applicable Facility to which such additional land
is to become a part for the purpose of placing thereon a Capital Addition or any
portion thereof or for providing means of access thereto, or parking facilities
therefor, including the cost of surveying the same; (iii) the cost of insurance,
real estate taxes, water and sewage charges and other carrying charges for such
Capital Addition during construction; (iv) title insurance charges; (v)
reasonable attorneys' fees and expenses; (vi) filing, registration and recording
taxes and fees; (vii) documentary stamp or transfer taxes, and (viii) all actual
and reasonable costs and expenses of Tenant incurred in connection with such
Capital Addition; provided, however, that in no event shall the direct or
indirect costs of any employees of Tenant be deemed a Capital Additions Cost
(other than construction management agreements that are arms-length and have
market terms).

         "Capital Additions Reserve" shall have the meaning given to such term
in Paragraph 25(d).

         "Casualty" shall have the meaning given to such term in Paragraph
17(a).

         "Change of Control" shall have the meaning given to such term in the
Agreement Regarding Leases.

         "Claims" shall have the meaning given to such term in Paragraph 26.

         "Code" shall mean the Internal Revenue Code of 1986 and, to the extent
applicable, the Treasury Regulations promulgated thereunder, each as from time
to time amended.

         "Commencement Date" shall mean the date of this Lease.

         "Condemnation" shall mean, with respect to any of the Leased
Properties, (i) the exercise of any governmental power with respect to the
applicable Leased Property, whether by legal

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proceedings or otherwise, by a Condemnor of its power of condemnation; (ii) a
voluntary sale or transfer of the applicable Leased Property by Landlord to
any Condemnor, either under threat of condemnation or while legal proceedings
for condemnation are pending; and (iii) a taking or voluntary conveyance of
all or part of the applicable Leased Property, or any interest therein, or
right accruing thereto or use thereof, as the result or in settlement of any
condemnation or other eminent domain proceeding affecting the applicable
Leased Property, whether or not the same shall have actually been commenced.

         "Condemnor" shall mean any public or quasi-public authority, or private
corporation or individual, having the power of Condemnation.

         "Consumer Index" shall mean the Consumer Price Index for all Urban
Consumers (CPI-U), U.S. City Average, All Items Less Food and Energy
(1982-1984=100) as published by the Bureau of Labor Statistics of the U.S.
Department of Labor, or if it ceases publication, a successor index measuring
the price of comparable market basket of consumer goods published by the United
States or any agency or department thereof.

         "Date of Taking" shall mean the date the Condemnor has the right to
possession of the applicable Leased Property, or any portion thereof, in
connection with a Condemnation.

         "Default" shall mean any event or condition that, with the giving of
notice and/or lapse of time, may ripen into an Event of Default.

         "Deleted Properties" shall mean any Leased Property that is deleted
from the terms and scope of this Lease in accordance with a Limited Termination
Election in connection with a Casualty (in accordance with Paragraph 17) or a
Condemnation (in accordance with Paragraph 23).

         "Deleted Property Rent Adjustment" shall mean, with respect to any
Deleted Property, the product of (i) the quotient of (x) the amount of any
insurance proceeds or Awards actually received by Landlord or any Facility
Mortgagee and not made available to Tenant for the purposes of restoration
divided by (y) the Aggregate Lease Basis (as of the day immediately preceding
the Deletion Date) multiplied by (ii) the Base Rent that was payable immediately
prior to the applicable Deletion Date.

         "Deletion Date" shall mean the date that a Deleted Property is removed
from the premises demised under this Lease pursuant to the terms and conditions
of Paragraph 17 or Paragraph 23.

         "Entity" shall mean any general partnership, limited partnership,
limited liability company, limited liability partnership, corporation, joint
venture, trust, business trust, cooperative or association.

         "Environment" shall mean soil, surface waters, ground waters, land,
stream, sediments, surface or subsurface strata, ambient air and the indoor
environment.

         "Environmental Laws" shall mean all applicable laws, statutes,
regulations, rules, ordinances, codes, licenses, permits and orders of all
courts of competent jurisdiction and

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Government Agencies, and all applicable judicial and administrative and
regulatory decrees, judgments and orders, including common law rulings and
determinations, relating to injury to, or the protection of, the Environment,
including, without limitation, all valid and lawful requirements of courts and
other Government Agencies pertaining to reporting, licensing, permitting,
Remediation and removal of underground improvements (including, without
limitation, treatment or storage tanks, or water, gas or oil wells), or
emissions, discharges, Releases or threatened Releases, or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances.

         "Equity Transfer" shall have the meaning given to such term in
Paragraph 6(c) of the Agreement Regarding Leases.

         "Escrow Agent" shall have the meaning given to such term in Paragraph
17(b).

         "Event of Default" shall have the meaning given to such term in
Paragraph 21(a).

         "Excluded Items" shall mean all cash, accounts receivable, credits
against account payable; trade names, trade marks, service names, service marks,
copyrights and other intellectual property relating to Tenant or Manager or the
Leased Properties; employees' cell phones and pagers; copier machines, fax
machines, time clocks and other equipment which is leased by Tenant or Manager
pursuant to equipment or financing leases and located at the Leased Properties;
employee manuals, training materials, policies, procedures and materials related
thereto with respect to the operation of the Facility; all brochures, pamphlets,
flyers, mailers and other promotional materials relating to the marketing and
advertising of the Facilities; computer software programs (other than for nurse
call or other life safety systems), discs and related materials connected to or
developed by or for Tenant's or Manager's systems or operations; all signs and
signage (other than signage monuments) referring to Tenant or Manager or to any
trade name, trademark, service name or service mark owned by Tenant or Manager
or the name of any of the Facilities or any combination or portion thereof; and
all automobiles, vans, minivans and other vehicles used in connection with the
operation of the Facilities.

         "Expiration Date" shall have the meaning given to such term in
Paragraph 4(a), as same may be extended pursuant to Paragraph 4(b).

         "Extraordinary Capital Expenditures" shall mean expenditures incurred
in connection with Capital Additions to one (1) or more of the Facilities which
are not contemplated by the then current capital budget and other non-recurring
expenditures incurred by Tenant with respect to the Facility that are not
ordinary course repair and maintenance items.

         "Facility" shall mean, as to any Leased Property, the senior housing
and/or independent living and/or assisted living facility being operated or
proposed to be operated on such Leased Property.

         "Facility Mortgage" shall mean, with respect to any one (1) or more of
the Leased Properties, any encumbrance securing the repayment of indebtedness
(and including any obligations in connection with credit enhancement) now or
hereafter placed upon the fee simple interest or leasehold interest, as
applicable, in the applicable Leased Property, provided such

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Leased Property is then subject to the terms of this Lease, together with all
other documents and instruments evidencing or securing the indebtedness
secured thereby.

         "Facility Mortgage Requirements" shall mean, subject to the
requirements of Paragraph 54(b), all covenants, agreements, restrictions and
encumbrances contained in any future Facility Mortgage in effect from time to
time, other than any covenants and agreements with respect to the payment of the
Indebtedness secured thereby.

         "Facility Mortgagee" shall mean the holder of a Facility Mortgage.

         "Facility State" shall mean the State in which the applicable
Facility is located.

         "Fair Market Value" shall mean, as determined by agreement between
Landlord and Tenant or, failing agreement and upon demand by either party, the
appraisal procedures set forth in Paragraph 53, as to any one (1) or more of the
Leased Properties, the amount that an uncompelled, willing buyer would pay, and
an uncompelled, willing seller would accept, at arm's length, for a fee simple
interest in the applicable Leased Property, including all Capital Additions
thereto and all Related Personal Property. In addition to such other market
factors as may be applicable in determining the Fair Market Value, the Fair
Market Value shall be determined on the basis, and on the assumptions, that (i)
the applicable Leased Property (or Leased Properties) is unencumbered by this
Lease or the Agreement Regarding Leases, (ii) the applicable Leased Property (or
Leased Properties) is in material compliance with any and all Legal Requirements
and Insurance Requirements, (iii) the applicable Leased Property (or Leased
Properties), for the benefit of the aforesaid buyer, have in full force and
effect any and all Permits and Licenses.

         "First Comparison Year" shall mean the Lease Year commencing on
November 1, 2005, and ending on October 31, 2006.

         "GAAP" shall mean generally accepted accounting principles,
consistently applied, and being principally derived from promulgations of The
Financial Accounting Standards Board and The American Institute of Certified
Public Accountants, or their successors.

         "Government Agency" shall mean any court, agency, authority, board
(including, without limitation, environmental protection, planning and zoning),
bureau, commission, department, office or instrumentality of any nature
whatsoever of any governmental or quasi-governmental unit of the United States
or the applicable Facility State or any county or any political subdivision of
any of the foregoing, whether now or hereafter in existence, having jurisdiction
over Landlord or Tenant or the applicable Leased Property or any portion thereof
or the Facility operated thereon.

         "Guarantor" shall mean the Person that is the "guarantor" under the
Guaranty of Agreement Regarding Leases. The initial Guarantor is Alterra
Healthcare Corporation, a Delaware corporation.

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         "Guaranty" shall mean that certain Guaranty of Agreement Regarding
Leases made by Guarantor in favor of PSLT-ALS Holdings in the form of Exhibit D
annexed to the Agreement Regarding Leases.

         "Hazardous Materials Substances" shall mean any substance (whether
solid, liquid or gaseous in nature):

                  (a) the presence of which requires or may hereafter require
         notification or Remediation under any federal, state or local statute,
         regulation, rule, ordinance, order, action or policy; or

                  (b) which is or becomes defined as a "hazardous waste",
         "hazardous material" or "hazardous substance" or "pollutant" or
         "contaminant" under any present or future federal, state or local
         statute, regulation, rule or ordinance or amendments thereto including,
         without limitation, the Comprehensive Environmental Response,
         Compensation and Liability Act (42 U.S.C. et seq.) and the Resource
         Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.) and the
         regulations promulgated thereunder; or

                  (c) which is toxic, explosive, corrosive, flammable,
         infectious, radioactive, carcinogenic or otherwise hazardous and is or
         becomes regulated by any governmental authority, agency, department,
         commission, board, agency or instrumentality of the United States, any
         state of the United States, or any political subdivision thereof; or

                  (d) the presence of which on any Leased Property causes or
         reasonably threatens to cause a violation of Environmental Laws upon
         the applicable Leased Property or to adjacent properties or poses or
         reasonably threatens to pose a hazard to the health or safety of
         persons on or about such Leased Property; or

                  (e) without limitation, which contains gasoline, diesel fuel
         or other petroleum hydrocarbons or volatile organic compounds; or

                  (f) without limitation, which contains polychlorinated
         biphenyls (PCBs) or asbestos or urea formaldehyde foam insulation; or

                  (g) without limitation, which contains or emits radioactive
         particles, waves or material; or

                  (h) without limitation, constitutes Regulated Medical Wastes.

         "Immediate Family" shall mean, with respect to any individual, such
individual's spouse, parents, brothers, sisters, children (natural or adopted),
stepchildren, grandchildren, grandparents, parents-in-law, brothers-in-law,
sisters-in-law, nephews and nieces.

         "Impositions" shall mean with respect to each of the Leased Properties,
all taxes (including, without limitation, all taxes imposed under the laws of
the applicable Facility State, as such laws may be amended from time to time,
and all ad valorem, sales and use, single business, gross receipts, transaction
privilege, rent or similar taxes as the same relate to or are

                                      7
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imposed upon Landlord, Tenant or the business conducted upon the applicable
Leased Property or additional federal and state taxes, interest or penalties,
arising out of the applicable Leased Property's non-compliance with Legal
Requirements), assessments (including, without limitation, all assessments for
public improvements or benefit, whether or not commenced or completed prior to
the date hereof and whether or not to be completed within the Term), water,
sewer or other rents and charges, excises, tax levies, fees (including,
without limitation, license, permit, inspection, authorization and similar
fees), all other governmental charges, in each case whether general or
special, ordinary or extraordinary, or foreseen or unforeseen, of every
character in respect of the applicable Leased Property or the business
conducted thereon by Tenant (including all interest and penalties thereon due
to any failure in payment by Tenant), which at any time prior to, during or in
respect of the Term hereof may be assessed or imposed on or in respect of or
be a lien upon (a) Landlord's interest in the applicable Leased Property, (b)
the applicable Leased Property or any part thereof or any rent therefrom or
any estate, right, title or interest therein, or (c) any occupancy, operation,
use or possession of, or sales from, or activity conducted on, or in
connection with the applicable Leased Property or the leasing or use of the
applicable Leased Property or any part thereof by Tenant, and shall include
any tax being contested during the period that such taxes are being contested,
which tax, and any interest and penalties attributable thereto, shall
nevertheless be treated as a Claim within the meaning of Paragraph 25;
provided, however, that nothing contained herein shall be construed to require
Tenant to pay, and the term "Impositions" shall not include: (i) any tax based
on the net income of the Landlord, except for federal and state taxes arising
out of non-compliance with Legal Requirements, (ii) any net revenue tax of
Landlord, (iii) any transfer fee, stamp tax, mortgage recording tax,
intangibles tax or other similar tax imposed with respect to the sale,
exchange, financing, encumbering or other disposition by Landlord of any of
the Leased Properties or any portion thereof or the proceeds thereof,
including without limitation as a result of any Facility Mortgage, (iv) any
single business, gross receipts, transaction privilege, rent or similar taxes
(other than a commercial rent, sale, use or occupancy type tax or tax imposed
with respect to the rental or occupancy of one (1) or more of the Leased
Properties) as the same relate to or are imposed upon Landlord, (v) taxes
attributable to a period after the expiration or earlier termination of the
Initial Lease Term or any Renewal Term (if applicable), (vi) taxes, interest,
penalties and additions to tax imposed solely as a result of the failure of
the Landlord to duly file any tax return required to be filed by Landlord,
(vii) taxes imposed solely as a result of the Landlord's breach of any
covenant or the inaccuracy of any representation or warranty of the Landlord
in any of the Operative Documents, (viii) taxes imposed on Landlord to the
extent that Landlord receives a credit (or otherwise has a reduction in
liability for such taxes) in respect of such taxes, (ix) taxes resulting from
the gross negligence or willful misconduct of the Landlord, (x) taxes to the
extent that such taxes would have been imposed on the Landlord in the absence
of any of the transactions contemplated by the Operative Documents, (xi) taxes
imposed on any transferee of Landlord pursuant to the laws in effect at the
time of the transfer to such transferee, to the extent such tax exceeds the
amount of such tax indemnified against hereunder that would have been imposed
on the transferor, (xii) taxes imposed by ERISA or Section 4975 of the
Internal Revenue Code to the extent resulting from any act or omission of
Landlord or its Affiliates, and (xiii) withholding taxes imposed on payments
to non-U.S. persons. Impositions shall include interest, penalties and
additions to taxes only to the extent that the taxes to which such items
relate are treated as Impositions hereunder. Any refund of taxes or other
items that are treated as Impositions hereunder shall be for the benefit of
Tenant. References to Landlord

                                      8
<PAGE>

as contained in this definition of Impositions shall include, as applicable,
Affiliates of Landlord, and references to the "Operative Documents" shall mean
the Lease and the Agreement Regarding Leases and the other documents and
instruments executed and delivered in connection herewith or pursuant hereto.
Notwithstanding any other provision hereof to the contrary, Impositions shall
not include any taxes arising as a result of any failure of Landlord (or any
Affiliate) to qualify as a real estate investment trust for federal income tax
purposes, or under any corresponding state or local tax law.

         "Improvements" shall have the meaning given such term in Paragraph 2.

         "Initial Term" shall have the meaning given to such term in Paragraph
4(a).

         "Inspection Report" shall have the meaning given to such term in
Paragraph 13(b).

         "Insurance Requirements" shall mean all terms of any insurance policy
required by this Lease and all requirements of the issuer of any such policy.

         "Intended Use" shall have the meaning given such term in Paragraph
7(a).

         "Land" shall have the meaning given such term in Paragraph 2.

         "Landlord" shall have the meaning given such term in the preamble to
this Lease.

         "Landlord Capital Addition" shall have the meaning given to such term
in Paragraph 11(c).

         "Lease" shall mean this Property Lease Agreement including the Exhibits
attached hereto, as it and they may be amended from time to time as herein
provided.

         "Lease Basis" shall mean $167,654,254.20 as of the date of this Lease,
as such amount shall be (a) increased from time to time in accordance with the
express terms of this Lease or the Agreement Regarding Leases by the amount of
any Capital Accretion Amounts or otherwise as expressly provided herein or
therein, and (b) decreased from time to time by (i) the amount of any Awards in
any Condemnation received by Landlord or received by any Facility Mortgagee and,
in either case, not made available to Tenant to rebuild or restore such
Facility, (ii) any insurance proceeds received by Landlord or any Facility
Mortgagee as a result of a Casualty, and, in either case, not made available to
Tenant to rebuild or restore the applicable Facility, and (iii) the amount of
any payment made (other than in connection with any third party claims) by
Alterra Healthcare Corporation under the indemnity provisions set forth in
Article 8 of that certain Amended and Restated Stock Purchase Agreement dated as
of October 19, 2004, between Alterra Healthcare Corporation and Provident Senior
Living Trust, to the extent such payment relates specifically to one (1) or more
of the Leased Properties demised pursuant to the terms of this Lease, or, if any
such payment under said indemnification provisions relates to more than one (1)
Leased Property or does not relate to any particular Leased Property (or Leased
Properties), then the amount of any such indemnity payment shall be divided
ratably across the Facilities (as defined in the Agreement Regarding Leases);
provided, however, that during each Renewal Term, the Lease Basis shall mean, as
determined in accordance with the provisions of Paragraph 3(b) of the Agreement
Regarding Leases, an amount equal to the greater of: (x) the

                                      9
<PAGE>

Lease Basis for the immediately preceding calendar month and (y) the sum of
the Fair Market Values of each of the Leased Properties, as such amounts in
clause (x) and clause (y) above shall be (A) increased from time to time in
accordance with the terms of this Lease and the Agreement Regarding Leases by
the amount of any Capital Accretion Amounts, and (B) decreased from time to
time in connection with the receipt by Landlord of the items delineated in
clauses (b)(i) through (iii) of this definition.

         "Lease Guarantor" shall mean the Person that is the "guarantor" under
the Lease Guaranty. The initial Lease Guarantor is ALS Holdings.

         "Lease Guaranty" shall mean that certain guaranty made by Lease
Guarantor in favor of Landlord in the form of Exhibit D annexed hereto.

         "Lease Rate" shall mean (a) initially, 9.625%, (b) commencing on the
first month of the First Comparison Year and for the remainder of the First
Comparison Year, the product of (i) 9.625% times (ii) the Annual Increase, and
(c) on the first month of each subsequent Lease Year, the product of (i) the
Lease Rate in effect during the last month of the immediately preceding Lease
Year, times (ii) the Annual Increase in effect for the Lease Year commencing on
such date.

         "Lease Year" shall mean each twelve month period commencing on November
1st during the Term, provided that (i) the first Lease Year shall include the
period of time from the Commencement Date through October 31, 2005, and (ii) the
last Lease Year shall be the period of time from November 1st of such year
through the Expiration Date (as the same may be extended for the Renewal Terms
in accordance with the terms of the Agreement Regarding Leases).

         "Leased Property" or "Leased Properties" shall have the meaning given
to such term in Paragraph 2.

         "Legal Requirements" shall mean, as to any Leased Property, all
federal, state, county, municipal and other governmental statutes, laws, rules,
orders, regulations, ordinances, judgments, decrees and injunctions affecting
the applicable Leased Property or the maintenance, construction, alteration or
operation thereof, whether now or hereafter enacted or in existence, including,
without limitation, all Permits and Licenses.

         "Lien" shall mean any mortgage, security interest, pledge, collateral
assignment, or other encumbrance, lien or charge of any kind, or any transfer of
any property or assets for the purpose of subjecting the same to the payment of
indebtedness or performance of any other obligation in priority to payment of
its general creditors.

         "Limited Termination Election" shall mean the termination of this Lease
as it relates to any one (1) or more of the Leased Properties in accordance with
the terms and conditions of Paragraph 17 or Paragraph 23.

         "Management Agreement" shall mean one (1) or more management
agreements, management and leasing agreements (where required under applicable
Legal Requirements), or

                                      10
<PAGE>

other similar agreements conformed to comply with applicable Legal
Requirements, each of even date herewith by and between Tenant and Manager
with respect to the management of each of the Facilities.

         "Manager" shall mean the Person that is the "manager" under a
Management Agreement pursuant to Paragraph 25(b). The initial Manager is Alterra
Healthcare Corporation, a Delaware corporation.

         "Mandatory Capital Addition" shall have the meaning given to such term
in the Agreement Regarding Leases.

         "Non-Capital Additions" shall have the meaning given such term in
Paragraph 11(b).

         "North Oaks Facility" shall have the meaning given to such term in
Paragraph 21(a).

         "Notice" shall mean a notice given or received in accordance with
Paragraph 31.

         "Officer's Certificate" shall mean a certificate signed by a duly
authorized officer of the sole member of the Tenant.

         "Other Requirements" shall mean all covenants, agreements, restrictions
and encumbrances contained in any Permitted Encumbrances affecting the
applicable Leased Property, other than any Facility Mortgage.

         "Overdue Rate" shall mean, on any date, a per annum rate of interest
equal to the lesser of (i) ten percent (10%) and (ii) the maximum rate then
permitted under applicable law, calculated from the date any payment obligation
is due (except with respect to payments which are indeterminable prior to Notice
from Landlord, in which event the Overdue Rate shall be calculated from the 10th
day following the date such Notice was received).

         "Parent" shall mean, with respect to any Person, any Person which owns
directly, or indirectly through one or more Related Parties, fifty percent (50%)
or more of the voting or beneficial interest in such Person, or otherwise has
the right or power (whether by contract, through ownership of securities or
otherwise) to control such Person.

         "Permits and Licenses" shall mean all permits, licenses, certificates
of need, provider agreements and other authorizations and approvals required
under applicable Legal Requirements in connection with the ownership of one (1)
or more of the Facilities for their respective Intended Uses.

         "Permitted Encumbrances" shall mean all rights, restrictions, and
easements of record set forth on Schedule B to the owner's title insurance
policy and any other matters of record on the date of this Lease, and any other
covenants, restrictions, encumbrances or similar instruments as may after the
date hereof be granted or caused by Landlord or otherwise consented to in
writing by Landlord from time to time and which covenants, restrictions,
encumbrances or similar instruments arising after the date hereof (other than
Facility Mortgages) have been approved by Tenant, such approval not to be
unreasonably withheld, conditioned or delayed.

                                      11
<PAGE>

         "Permitted Transfer" shall have the meaning given to such term in the
Agreement Regarding Leases.

         "Person" shall mean any individual or Entity, and the heirs, executors,
administrators, legal representatives, successors and assigns of such Person
where the context so requires.

         "PSLT-ALS Holdings" shall mean PSLT-ALS Properties Holdings, LLC, a
Delaware limited liability company.

         "Regulated Medical Wastes" shall mean all materials generated by
Tenant, subtenants, patients, occupants or operators of any one (1) or more of
the Leased Properties which are now or may hereafter be subject to regulation
pursuant to the Medical Waste Tracking Act of 1988, or any similar Environmental
Law promulgated by any Government Agencies.

         "REIT" shall have the meaning given such term in Paragraph 15(a).

         "Related Party" shall mean, with respect to any Person, (i) in the case
of any such Person which is a partnership, any general partner in such
partnership or any limited partner holding, directly or indirectly, ten percent
(10%) or more of the partnership interests in such partnership; (ii) in the case
of any such Person which is a limited liability company, the managing member of
such limited liability company or any other member of such limited liability
company holding, directly or indirectly, ten percent (10%) or more of the
membership interests in such company; (iii) any other Person which is a Parent,
a Subsidiary, or a Subsidiary of a Parent with respect to such Person or to one
or more of the Persons referred to in the preceding clauses (i) and (ii); (iv)
any other Person who is an officer, director or trustee of, or partner holding,
directly or indirectly, ten percent (10%) or more of the partnership, membership
or stock interests in, such Person or any Person referred to in the preceding
clauses (i), (ii) and (iii); and (v) any other Person who is a member of the
Immediate Family of such Person or of any Person referred to in the preceding
clauses (i) through (iv).

         "Related Personal Property" shall mean all consumable inventory and
supplies, furniture, furnishings, fixtures, movable walls and partitions,
equipment and machinery and all other tangible personal property owned by Tenant
and located at the Leased Properties or used in Tenant's business at one (1) or
more of the Leased Properties, whether located at the applicable Leased Property
on the date hereof or acquired after the date hereof, and all modifications,
replacements, alterations and additions to such personal property installed at
the expense of Tenant during the Term; provided, however, that the "Related
Personal Property" shall not include (i) the Residents' Personal Property or
(ii) the Excluded Items.

         "Release" shall mean the presence, release, spill, emission, leaking,
emitting, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration of Hazardous Materials in or into the Environment, including, but
not limited to, the movement of Hazardous Materials through the air, soil,
surface water or groundwater.

         "Remediation" or "Remediate" shall mean any action to (i) investigate,
study, monitor, clean up, remove, treat, respond to or in any other way address
Hazardous Materials in the Environment; or (ii) prevent the Release or minimize
the further Release of Hazardous Materials.

                                      12
<PAGE>

         "Renewal Term" shall have the meaning given to such term in Paragraph
4(b).

         "Rent" shall mean, collectively, the Base Rent and the Additional Rent.

         "Residents' Personal Property" shall mean, with respect to each Leased
Property, such items of furniture, clothing and other personalty that is the
property of any of the residents of any of the units at the Leased Property.

         "SEC" shall mean the Securities and Exchange Commission.

         "Subordination Agreement" shall have the meaning given to such term in
Paragraph 35.

         "Subsidiary" shall mean, with respect to any Person, any Entity (a) in
which such Person owns directly, or indirectly through one or more Subsidiaries,
fifty percent (50%) or more of the voting or beneficial interest, or (b) which
such Person otherwise has the right or power to control (whether by contract,
through ownership of securities or otherwise).

         "Tenant" shall have the meaning given such term in the preamble to this
Lease.

         "Term" shall have the meaning given such term in Paragraph 4(b).

         "Third Party Payor Programs" shall mean all third party payor programs
in which Tenant presently or in the future may elect to participate (but only
during the time that Tenant has so elected to participate therein), including,
without limitation, Medicare, Medicaid, CHAMPUS, Blue Cross and/or Blue Shield,
Managed Care Plans and other private insurance programs.

         "Third Party Payors" shall mean Medicare, Medicaid, CHAMPUS, Blue Cross
and/or Blue Shield, private insurers and any other Person which presently or in
the future provides Third Party Payor Programs.

         "Unsuitable for its Intended Use" shall mean a state or condition of
any Facility, taken as a whole, such that (i) following any damage or
destruction involving such Facility, the applicable Facility cannot reasonably
be expected to be restored to substantially the same condition as existed
immediately before such damage or destruction, within eighteen (18) months
following such damage or destruction or such other longer period of time as to
which business interruption insurance is available to fully cover Rent and other
costs related to the applicable Facility following such damage or destruction;
or (ii) as the result of a partial taking by Condemnation, the applicable
Facility or Improvements, as the case may be, cannot be operated, in the good
faith judgment of Landlord and Tenant, on a commercially practicable basis for
its Intended Use, taking into account, among other relevant factors, the number
of usable units, the amount of square footage or the revenues affected by such
partial taking.

2.       Leased Property. Landlord hereby leases to Tenant, and Tenant hereby
leases from Landlord, subject to the conditions hereinafter expressed: (a) those
certain thirty-eight (38) parcels of land and the easements, rights and
appurtenances related thereto, more particularly described on Exhibit A hereto
(collectively, the "Land"); (b) improvements on each parcel of the Land,
including, without limitation, the senior independent and/or assisted living
facilities situated thereon as of the date hereof, together with related paved
parking and appurtenant

                                      13
<PAGE>

improvements and any replacements thereof (collectively, the "Improvements");
and (c) the Related Personal Property. As used herein, the Land, Improvements
and the Related Personal Property at any time subject to the terms of this
Lease as they relate to a particular parcel of the Land are referred to as the
"Leased Property." The Leased Property does not include the Resident's
Personal Property or the Excluded Items.

3.       Condition of Leased Property. Tenant acknowledges and agrees that each
of the Leased Properties is and shall be leased by Landlord to Tenant in its
"as-is" condition, as of the Commencement Date and at all times thereafter,
subject to all liens, encumbrances and restrictions affecting the Leased
Properties. Landlord makes absolutely no representations or warranties
whatsoever with respect to the Leased Properties or the condition thereof,
either to their respective fitness for use, condition, purpose or otherwise as
to the quality or material or workmanship therein, latent or patent, it being
agreed that all such risks are to be borne by Tenant. Tenant acknowledges that
Landlord has not investigated and does not warrant or represent to Tenant that
any of the Leased Properties is fit for the Intended Use or for any other
purposes whatsoever. Tenant acknowledges that Tenant shall be solely
responsible for any and all actions, repairs, permits, approvals and costs
required for the rehabilitation, renovation, use, occupancy and operation of
the Leased Properties in accordance with applicable Legal Requirements, Other
Requirements, Facility Mortgage Requirements and Insurance Requirements. By
leasing each of the Leased Properties, Tenant warrants and represents to
Landlord that Tenant has examined and approved all things concerning the
Leased Properties which Tenant deems material to Tenant's leasing and use of
the Leased Properties. Tenant further acknowledges and agrees that: (i)
neither Landlord nor any agent of Landlord has made any representation or
warranty, express or implied, concerning any of the Leased Properties or which
have induced Tenant to execute this Lease except as expressly contained in
this Lease; and (ii) any other representations and warranties are expressly
disclaimed by Landlord.

4.       Term.

         (a) Initial Term. This Lease shall be for an initial term (the "Initial
Term") commencing on the Commencement Date, and ending at midnight October 31,
2019, unless modified or earlier terminated pursuant to the terms hereof (as
such date may be extended pursuant to the terms of the Agreement Regarding
Leases, the "Expiration Date").

         (b) Renewal Terms. Subject to the conditions set forth in Paragraph
3(b) of the Agreement Regarding Leases, this Lease may be renewed by ALS
Holdings pursuant to Paragraph 3(b) of the Agreement Regarding Leases for two
(2) additional consecutive five (5) year periods (each, a "Renewal Term", and
collectively, the "Renewal Terms"), and upon such renewal, this Lease shall
automatically, and without any action by any Person, be deemed to have been
extended for the applicable Renewal Term for which ALS Holdings has exercised
such option. As used herein, the Initial Term and the Renewal Term(s), if
exercised, shall be referred to hereinafter collectively as the "Term."

5.       Rent.

         (a) Rent. Tenant shall pay Rent to Landlord (or to such Person as
Landlord may direct (in writing)) during the Term, in lawful money of the United
States of America which

                                      14
<PAGE>

shall be legal tender for the payment of public and private debts, without
offset, abatement, demand or deduction, except as hereinafter expressly
provided. All payments of Rent to Landlord shall be made by wire transfer of
immediately available federal funds or by other means acceptable to Landlord
in its sole discretion. Base Rent for any partial month shall be prorated on a
per diem basis based on a 360 day year and the twelve (12) thirty (30) day
months. In addition, if directed to do so by Landlord in writing, Tenant shall
pay a portion of the Base Rent directly to any Facility Mortgagee in an amount
specified in such Notice to Tenant.

         (b) Base Rent. Base Rent shall be paid in arrears on the first (1st)
day of each calendar month for the immediately preceding month, or if such day
is not a Business Day, the immediately preceding Business Day.

         (c) Additional Rent. Tenant shall pay as additional rent hereunder
("Additional Rent"), all other charges and amounts payable in accordance with
the terms of this Lease. Except as otherwise provided herein, any costs or
expenses paid or incurred by Landlord on behalf of Tenant that constitute
Additional Rent shall be reimbursed by Tenant to Landlord within ten (10) days
after the delivery by Landlord to Tenant of invoices therefor.

         (d) Consent Expenses. Tenant shall pay, as Additional Rent hereunder,
on behalf of Landlord, or reimburse Landlord for, any and all reasonable
out-of-pocket costs or expenses paid or incurred by Landlord relating to any
request made by Tenant of Landlord, including, without limitation, reasonable
attorneys' fees, in connection with any of the following activities undertaken
by or on behalf of Landlord under this Lease: (i) the review, execution,
negotiation or delivery of any consent, waiver, estoppel, subordination
agreement or approval requested of Landlord by Tenant hereunder, including,
without limitation, any request for consent to Capital Additions or any
so-called "landlord's waiver," excluding any such costs relating to any Facility
Mortgage; (ii) the review by Landlord or its representatives of any plans and
specifications in connection with any restoration of any of the Leased
Properties, any Capital Addition or otherwise; (iii) the review by Landlord or
its representatives of any request by Tenant for any other approval or consent
hereunder, or any waiver of any obligation of Tenant hereunder; (iv) any
assistance provided by Landlord in connection with a permitted contest pursuant
to Paragraph 26; (v) in connection with any Default by Tenant under this Lease;
or (vi) any other request by Tenant comparable to any of the foregoing.

         (e) Late Charge; Interest. If Tenant fails to make any payment of Rent
on or before the date such payment is due and payable and such amount remains
unpaid for a period of five (5) days, such past due payment shall bear interest
at the Overdue Rate.

         (f) Payment without Abatement. No abatement, diminution or reduction of
Rent shall be allowed to Tenant or any Person claiming under Tenant, under any
circumstances or for any reason whatsoever, except to the extent herein
provided.

6.       Holding Over. If Tenant or any other Person shall remain in possession
of one (1) or more of the Leased Properties or any part thereof following the
expiration of the Term or earlier termination of this Lease without an
agreement in writing between Landlord and Tenant with respect thereto, the
Person remaining in possession shall be deemed to be a tenant at sufferance,
and during any such holdover, the Rent payable under this Lease by such tenant
at sufferance

                                      15
<PAGE>

shall be one hundred fifty percent (150%) of the Rent in effect immediately
prior to the expiration of the Term or earlier termination of this Lease. In
no event, however, shall such holding over be deemed or construed to be or
constitute a renewal or extension of this Lease.

7.       Use of Leased Property; Compliance With Legal Requirements.

         (a) Intended Use. Tenant shall use the Leased Properties as a senior
housing facility, including, without limitation, as a senior housing and/or
independent living and/or an assisted living facility and for such other uses as
may be related, incidental or necessary thereto (the "Intended Use") and for no
other purpose; provided, that in no event shall any of the Leased Properties be
used as a skilled nursing facility. Tenant shall not perform any act or follow
any practice relating to any of the Leased Properties which shall constitute a
nuisance. Subject to the terms and provisions of this Lease, Tenant shall have
the right to control the business being conducted at each of the Leased
Properties.

         (b) Compliance with Legal Requirements, Insurance Requirements,
Facility Mortgage Requirements and Other Requirements. Tenant, at its sole
expense, and subject to the right of diligent contest as provided in Paragraph
26, shall (i) comply with all Legal Requirements, Insurance Requirements and
Facility Mortgage Requirements (provided that, with respect to any Facility
Mortgage, the terms of such Facility Mortgage comply with the requirements of
Paragraph 54(b)) in respect of the use, operation, maintenance, repair,
alteration and restoration of each of the Leased Properties, including, without
limitation, all zoning classifications of any lawful Government Agencies or
other public or private regulatory authority (including insurance underwriters
or ratings bureaus) having jurisdiction over any of the Leased Properties, (ii)
comply in all material respects with all Other Requirements and (iii) procure,
maintain and comply in all material respects with all Permits and Licenses, and
for the proper operation and maintenance of each of the Leased Properties or any
part thereof, including, without limitation, any Capital Additions, except, in
the case of (i), (ii) or (iii) above, where failure to comply will not have a
material adverse effect on Tenant or Tenant's ability to operate the Leased
Properties for their Intended Use. Upon Tenant's written request, Landlord shall
cooperate with Tenant's reasonable requests and at Tenant's sole cost and
expense, to the extent Landlord's involvement is required for Tenant to comply
with this Paragraph 7(b).

         (c) Compliance with Third Party Payor Program Requirements. Tenant
shall, at its sole cost and expense, make (i) whatever improvements (capital or
ordinary) as are required to conform each of the Leased Properties in all
material respects to such standards, if any, as may, from time to time, be
required by any applicable Third Party Payor Programs to the extent Tenant
elects to be and remains a participant in such Third Party Payor Programs (it
being acknowledged that the initial election to participate and to continue to
participate in such Third Party Payor Programs is at the sole and absolute
discretion of Tenant), or (ii) capital improvements required by any other
Government Agency having jurisdiction over the applicable Leased Property as a
condition of the continued operation of such Leased Property for its Intended
Use, except, in the case of (i) or (ii) above, where the failure to comply will
not have a material adverse effect on Tenant or Tenant's ability to operate the
Leased Properties for their Intended Use.

                                      16
<PAGE>

         (d) Landlord to Grant Easements, Etc. Landlord shall from time to time,
at the request of Tenant and at Tenant's sole cost and expense, with respect to
each applicable Leased Property (i) grant easements and other rights in the
nature of easements with respect to the applicable Leased Property to third
parties; (ii) release existing easements or other rights in the nature of
easements which are for the benefit of the applicable Leased Property; (iii)
dedicate or transfer unimproved portions of the applicable Leased Property for
road, highway or other public purposes; (iv) execute petitions to have the
applicable Leased Property annexed to any municipal corporation or utility
district; (v) execute amendments to any covenants and restrictions affecting the
applicable Leased Property; and (vi) execute and deliver to any Person any
instrument appropriate to confirm or effect such grants, release, dedications,
transfer, petitions and amendments (to the extent of its interests in the
applicable Leased Property); provided, however, that Landlord shall have first
reasonably determined in good faith that such grant, release, dedication,
transfer, petition or amendment is not detrimental in any material respect to
the operation of the applicable Leased Property for its Intended Use, does not
materially reduce the value of the applicable Leased Property and, to the extent
required by the Facility Mortgage, if any, is acceptable to the Facility
Mortgagee.

         (e) Landlord's Receipt Of Third Party Payor Program Reimbursements. If
Landlord is required by applicable law to receive any payments from Third Party
Payors as the owner of any Facility which would be deemed payment for services
provided by or on behalf of Tenant to residents of such Facility, the parties
hereto agree that, so long as there is no existing and continuing Event of
Default hereunder, Landlord shall pay such monies to Tenant as promptly as
practicable.

8.       Tenant's Covenant to Repair.

         (a) Repair and Maintenance. Except to the extent expressly permitted to
the contrary in Paragraph 17 or Paragraph 23, Tenant shall, at all times during
the Term and at its sole cost and expense, (i) put, keep, replace and maintain
each of the Leased Properties (including, without limitation, the Improvements
and the Related Personal Property) in good repair and in good and safe order and
condition, ordinary wear and tear excepted (subject to Tenant's obligations
under clauses (ii) and (iii) below), (ii) make all repairs and replacements
thereto, both inside and outside, structural and non-structural, ordinary and
extraordinary, howsoever the necessity for repairs and replacements may occur,
and whether or not necessitated by wear, tear, obsolescence or defects, latent
or otherwise to satisfy Tenant's obligation under clause (i) above, (iii) use
all reasonable precautions to prevent waste, damage or injury, and (iv) install,
maintain and replace all landscaping, signs, sidewalks, roadways, driveways and
parking areas within each of the Leased Properties in good repair and in good
and safe order and condition, ordinary wear and tear excepted (subject to
Tenant's obligations under clauses (ii) and (iii) above). Tenant's obligations
under this Paragraph 8 shall constitute an expense of Tenant, shall not
constitute Rent and shall not offset or reduce any Rent otherwise required to be
paid hereunder.

         (b) Related Personal Property. Tenant may (and shall as provided herein
below), at its expense, affix or assemble or place on any parcels of the Land or
in any of the Improvements, any Related Personal Property, and Tenant may,
subject to the conditions set forth below, remove the same at any time, provided
it is replaced with substantially equivalent personal property sufficient to
comply with the terms of this Paragraph 8(b). Tenant shall provide and

                                      17
<PAGE>

maintain throughout the Term all such Related Personal Property as shall be
necessary in order to operate each of the Facilities for its Intended Use and
in material compliance with all applicable Legal Requirements and Insurance
Requirements. All of the Related Personal Property shall, upon the expiration
or earlier termination of this Lease, at Landlord's option, exercised by
written notice to Tenant, be either removed by Tenant, at Tenant's sole cost
and expense, or left at the applicable Facility.

9.       No Landlord Repair Obligations. Landlord shall not be required to make
any structural or non-structural alterations, reconstructions, replacements,
changes, additions, improvements or repairs of any kind or nature whatsoever
to any of the Leased Properties or any portion thereof (including, without
limitation, any portion of the Improvements or any Related Personal Property)
at any time during the Term.

10.      Surrender.

         (a) Surrender of Leased Property. Tenant shall on the last day of the
Term, or upon the sooner termination of this Lease, peaceably and quietly
surrender each of the Leased Properties to Landlord, in good repair and in good
and safe order and condition and, further, in at least as good condition as when
each of the Leased Properties was received, ordinary wear and tear and damage by
fire, Casualty or Condemnation excepted (but subject to Tenant's obligation to
restore the Leased Properties as provided in Paragraph 17 and Paragraph 23).

         (b) Transfer of Licenses and Permits. In addition, upon the expiration
or earlier termination of this Lease, Tenant shall, at Landlord's sole cost and
expense, with respect to each Leased Property, (i) use commercially reasonable
efforts to cooperate with Landlord or Landlord's nominee in connection with the
processing of Landlord's or such nominee's applications for Permits and Licenses
and (ii) to the extent the same are assignable or otherwise transferable by law
and pursuant to the terms thereof, transfer to Landlord or Landlord's nominee
the Permits and Licenses and all contracts, including contracts with
governmental or quasi-governmental entities which may be necessary for the
operation of the applicable Facility for its Intended Use. If requested by
Landlord, Tenant will continue to manage one (1) or more of the applicable
Facilities after the expiration of the Term and for up to six (6) additional
months, if necessary for Landlord or Landlord's nominee to obtain all necessary
Permits and Licenses on commercially reasonable terms, including, without
limitation, (i) an agreement to pay Tenant a market rate management fee (which
shall in no event be less that $10,000 per month per Facility net to Tenant
(which $10,000 per month shall be increased by the same percentage as the
Consumer Index has increased from the Base CPI Index to the Consumer Index
published most closely in time to the effective date of such management
agreement), (ii) an agreement for Landlord to pay all costs and expenses of
operating the applicable Facility, either directly or by reimbursement to
Tenant, and (iii) an agreement for Landlord to reimburse Tenant for Tenant's
reasonable out-of-pocket costs and expenses, and reasonable administrative
costs, and (iv) such other terms and conditions as Landlord and Tenant shall
mutually agree. To that end, pending completion of the transfer of the
operational control of the applicable Facility to Landlord or its nominee:

                  (i) Tenant will provide all information reasonably requested
         by Landlord or its nominee for Landlord's or such nominee's use in the
         preparation and filing of any and

                                      18
<PAGE>

         all necessary applications or notifications of any federal or state
         governmental authority having jurisdiction over a change in the
         operational control of the applicable Facility, and any other
         information reasonably required to effect an orderly transfer of the
         applicable Facility; and

                  (ii) Tenant shall use commercially reasonable efforts to keep
         the business and organization of the applicable Facility intact and to
         preserve for Landlord or its nominee the goodwill of the suppliers,
         distributors, residents and others having business relations with
         Tenant with respect to the applicable Facility (it being acknowledged
         that residency rates typically decline and employee turnover rates
         typically increase when a change in management becomes known).

         (c) Apportionment of Impositions, Insurance Premiums and the Minimum
Capital Additions Amount. Upon the expiration of the Term, Landlord and Tenant
shall apportion and prorate Impositions, Insurance Premiums and the Minimum
Capital Additions Amount through the Expiration Date, with Tenant being
responsible for all Impositions, Insurance Premiums and the Minimum Capital
Additions Amount relating to the period prior to the Expiration Date and
Landlord being responsible for all Impositions, Insurance Premiums and the
Minimum Capital Additions Amount relating to the period on and after the
Expiration Date.

11.      Capital Additions.

         (a) Construction of Capital Additions. Tenant shall not construct or
install any Capital Addition on any of the Leased Properties without obtaining
Landlord's prior written consent, which consent shall not be unreasonably
withheld, delayed or conditioned, provided that no consent shall be required for
any Capital Addition as long as (i) the Capital Additions Costs for such Capital
Addition are less than Two Hundred Fifty Thousand Dollars ($250,000.00) per
Capital Addition (including all related work), with respect to any particular
Leased Property and (ii) such construction or installation will not materially
and adversely affect or violate any Legal Requirement or Insurance Requirement
applicable to such Leased Property. Prior to commencing construction of any
Capital Addition requiring consent pursuant to the preceding sentence, Tenant
shall submit to Landlord, in writing, a proposal setting forth, in reasonable
detail, any proposed Capital Addition and shall provide to Landlord such plans
and specifications, permits, licenses, contracts and other information
concerning the proposed Capital Addition as Landlord may reasonably request.
Landlord shall have ten (10) Business Days to review all materials submitted to
Landlord in connection with any such proposal. Failure of Landlord to respond to
Tenant's proposal within ten (10) Business Days after receipt of all information
and materials requested by Landlord in connection with the proposed Capital
Addition shall be deemed to constitute approval of such proposed Capital
Addition, subject in all events, however, to Tenant's compliance with the other
requirements of this Paragraph 11. Without limiting the generality of the
foregoing, such proposal shall indicate the approximate projected cost of
constructing such Capital Addition and the use or uses to which it will be put.
No Capital Addition shall be made which would tie in or connect any Improvement
on the applicable Leased Property with any other improvements on property
adjacent to such Leased Property (and not part of the Land), including, without
limitation, tie-ins of buildings or other structures or utilities (other than a
utility facility belonging to the provider of such utility service), without
Landlord's consent, which shall be given or withheld in Landlord's discretion.
Any Capital Additions shall,

                                      19
<PAGE>

upon the expiration or sooner termination of the Term, pass to and become the
property of Landlord, free and clear of all encumbrances other than Permitted
Encumbrances.

         (b) Non-Capital Additions. Tenant shall have the right, at Tenant's
sole cost and expense, without Landlord consent, to make additions,
modifications or improvements which are not Capital Additions ("Non-Capital
Additions") to any of the Leased Properties from time to time as Tenant, in its
sole discretion, may deem desirable for the applicable Intended Use provided
that any such Non-Capital Addition will not materially alter the character or
purpose or materially detract from the value of the applicable Leased Property.

         (c) Capital Additions Financed by Landlord. Upon the request of Tenant,
Landlord may elect to finance a Capital Addition, if Landlord, Tenant and ALS
Holdings mutually agree to Tenant's performing such work (each, a "Landlord
Capital Addition"). If Landlord agrees to finance a Landlord Capital Addition,
Tenant shall provide such information as Landlord may from time to time request,
including, without limitation, the following:

                  (i) Reasonable evidence that such Landlord Capital Addition
         will be, and upon completion, has been, completed in compliance with
         all applicable Legal Requirements, all Other Requirements and all
         Facility Mortgage Requirements;

                  (ii) Copies of any required building, zoning and land use
         permits and approvals and, upon completion of such Landlord Capital
         Addition, a copy of the certificate of occupancy for such Landlord
         Capital Addition, if required;

                  (iii) Such information, certificates, licenses, permits or
         other documents necessary to confirm that Tenant will be able to use
         the Landlord Capital Addition upon completion thereof in accordance
         with the applicable Facility's Intended Use, including all Legal
         Requirements and all Other Requirements;

                  (iv) An Officer's Certificate and a certificate from Tenant's
         architect, if available, setting forth, in reasonable detail, the
         projected (or actual, if available) Capital Additions Cost and invoices
         and lien waivers from Tenant's contractors for such work;

                  (v) A deed conveying to Landlord title to any land acquired
         for the purpose of constructing the Landlord Capital Addition free and
         clear of any liens or encumbrances, except those approved by Landlord,
         and, upon completion of the Landlord Capital Addition, a final as-built
         survey thereof reasonably satisfactory to Landlord;

                  (vi) Endorsements to any outstanding owner's policy of title
         insurance, for Capital Additions Costs in excess of $500,000, covering
         the applicable Facility or commitments therefor, reasonably
         satisfactory in form and substance to Landlord, (A) adding any land
         acquired for purposes of constructing the Landlord Capital Addition,
         (B) updating the same without any additional exceptions except as
         reasonably approved by Landlord, and (C) increasing the coverage
         thereof by an amount equal to the Capital Additions Cost relating to
         such Landlord Capital Addition; and

                                      20
<PAGE>

                  (vii) Copies of plans and specifications relating to such
         Landlord Capital Addition and other instruments reasonably required by
         Landlord.

         (d) Disbursement of Capital Addition Allowances. Provided that no
Default or Event of Default hereunder or under the Agreement Regarding Leases
has occurred and is continuing, and subject to Tenant's satisfaction of the
conditions set forth in this Paragraph 11(d) and, with respect only to any
Mandatory Capital Addition to one (1) or more of the Leased Properties, the
conditions set forth in Paragraph 5(a) of the Agreement Regarding Leases, Tenant
shall have the right upon ten (10) days' prior written notice to Landlord to
request from Landlord a disbursement of funds in connection with a Landlord
Capital Addition or a Mandatory Capital Addition (each, a "Capital Addition
Allowance"). Requests for disbursements under this Paragraph 11(d) shall not be
made more often than once during any calendar month and shall be made in
increments of not less than Twenty Five Thousand and No/100 Dollars ($25,000.00)
and in an aggregate amount not to exceed the approved Capital Additions Cost for
such Landlord Capital Addition.

                  (i) Landlord shall, upon written request from Tenant and
         satisfaction of the requirements set forth in this Paragraph 11(d),
         disburse a Capital Addition Allowance to Tenant necessary to pay for
         the actual approved costs of Landlord Capital Additions (or, upon
         partial completion of such Landlord Capital Additions pursuant to
         Paragraph 11(d)(vi)).

                  (ii) Each request for a Capital Addition Allowance shall be in
         a form reasonably specified or approved by Landlord and shall set forth
         (a) the applicable Leased Property and the specific Landlord Capital
         Addition for which the Capital Addition Allowance is requested, (b) if
         the Landlord Capital Addition includes the purchase or replacement of
         specific items, the quantity and price of each item purchased, (c) the
         price of all materials (grouped by type or category) used in connection
         with the Landlord Capital Addition to be paid for with the Capital
         Addition Allowance, other than the purchase or replacement of specific
         items, and (d) the cost of all contracted labor or other services
         applicable to each Landlord Capital Addition for which such request for
         disbursement is made.

                  (iii) With each request, Tenant shall certify that all
         Landlord Capital Additions to be paid for with the Capital Addition
         Allowance will be made in a good and workmanlike manner and in
         accordance with all applicable Legal Requirements of any Government
         Agency having jurisdiction over the applicable Facility.

                  (iv) To the extent required by Landlord, each request for a
         Capital Addition Allowance shall include copies of invoices for all
         items or materials purchased and all contracted labor or services
         provided or to be provided as a condition to any requested
         disbursement, and shall include a waiver of lien (or conditional waiver
         of lien conditioned only upon payment of all or a portion of the
         requested Capital Addition Allowance) from each Person receiving
         payment prior to Landlord's disbursement, and from each contractor,
         supplier, materialman, mechanic or subcontractor or other Person who
         receives payment in an amount equal to or greater than $25,000.00 for
         completion of its work or delivery of its materials.

                                      21
<PAGE>

                  (v) Any lien waiver delivered hereunder shall conform to Legal
         Requirements and shall cover all work performed and materials supplied
         (including equipment and fixtures) for the applicable Facility by that
         contractor, supplier, subcontractor, mechanic or materialman or other
         Person up to the date covered by the current disbursement request.

                  (vi) Each request for a Capital Addition Allowance shall be
         made only after completion of the portion of the work with respect to
         the Landlord Capital Addition for which the Capital Addition Allowance
         is requested. Tenant shall provide Landlord with such evidence of
         completion of the portion of the Landlord Capital Addition with respect
         to which the Capital Addition Allowance is requested, which shall be
         satisfactory to Landlord in its reasonable judgment.

                  (vii) Upon receipt of the requested Capital Addition
         Allowance, Tenant shall pay all invoices in connection with the
         Landlord Capital Addition relating to the applicable Capital Addition
         Allowance.

         (e) Capital Addition Allowances Added to Lease Basis. All Capital
Addition Allowances made by Landlord shall be added to the Lease Basis on a
dollar-for-dollar basis and the Base Rent shall be adjusted accordingly.

12.      Utilities and Other Services. Tenant shall be liable for and shall pay
directly all charges, fees and amounts (together with any applicable penalties,
late charges, taxes or assessments thereon) when due for water, gas,
electricity, air conditioning, heat, septic, sewer, refuse collection, telephone
and any other utility charges or similar items in connection with the use or
occupancy of each of the Leased Properties. Landlord shall not be responsible or
liable in any way whatsoever for the quality, quantity, impairment,
interruption, stoppage, or other interference with any utility service,
including, without limitation, water, air conditioning, heat, gas, electric
current for light and power, telephone, or any other utility service provided to
or serving any of the Leased Properties or any damage or injury caused thereby.
No such interruption, termination or cessation of utility services shall relieve
Tenant of its duties and obligations pursuant to this Lease, including, without
limitation, its obligation to pay all Rent as and when the same shall be due
hereunder.

13.      Performance by Landlord of Tenant's Obligations.

         (a) Landlord's Self Help. If an Event of Default shall have occurred
and is continuing, Landlord may (but shall be under no obligation to), after
Notice to Tenant (or without Notice or time to perform if, in Landlord's
reasonable opinion, an emergency exists or action is necessary to cure any
default under any applicable Facility Mortgage prior to the expiration of the
applicable cure period therefor), perform the same for the account and at the
expense of Tenant. If, at any time and by reason of such Event of Default,
Landlord is compelled to pay, or reasonably elects to pay, any sum of money or
do any reasonable act which will require the payment of any sum of money, or is
compelled to incur any expense in the enforcement of its rights hereunder or
otherwise, such sum or sums, together with interest thereon at the Overdue Rate,
shall be deemed Additional Rent hereunder and shall be paid to

                                      22
<PAGE>

Landlord by Tenant promptly when billed therefor, and Landlord shall have all
the same rights and remedies in respect thereof as Landlord has in respect of
the Rent herein reserved.

         (b) Landlord's Inspections. Landlord, its agents or representatives,
including any applicable Facility Mortgagee, shall have the right, but not the
obligation, upon reasonable advance Notice to enter from time to time upon any
or all of the Leased Properties to perform inspections (including, but not
limited to, sampling) of such Leased Property or Leased Properties to confirm
that Tenant is performing all of Tenant's obligations under this Lease, that
Tenant has not violated any of its covenants under this Lease and that the
Leased Property is in compliance with the applicable Facility Mortgage. Landlord
shall use reasonable efforts to minimize any disturbance to Tenant or any
resident or occupant of the applicable Leased Property (or Leased Properties) as
a result of any such entry by Landlord, its agents or representatives. Upon
completion of such inspection, Landlord may deliver to Tenant a written report
("Inspection Report") outlining certain defaults, if any, in Tenant's
obligations under Paragraph 7(b), Paragraph 7(c) or Paragraph 8(a). Within ten
(10) Business Days after Tenant's receipt of such Inspection Report, Tenant
shall either (i) object to Landlord in writing as to any portion of the
Inspection Report, specifically describing such objection; or (ii) commence any
and all required work outlined in the Inspection Report which Tenant has not
objected to, and diligently complete such work. If Tenant objects to any item in
the Inspection Report, then within ten (10) Business Days of Landlord's receipt
of Tenant's objection notice, both Landlord and Tenant shall select a third
party licensed engineer mutually satisfactory to Landlord and Tenant or if a
single engineer cannot be agreed upon, then Landlord and Tenant shall each, at
their own cost, select a licensed engineer and the two chosen engineers shall
select a third licensed engineer, the cost of the third engineer being paid
equally by Landlord and Tenant. The engineer(s) shall determine, by majority
vote, whether the work outlined in the Inspection Report is necessary to put the
applicable Leased Property in good condition and repair, ordinary wear and tear
excepted (but subject to Tenant's covenants under clauses (ii) and (iii) of
Paragraph 8(a) and otherwise in compliance with this Lease). Such determination
shall be final and binding on Landlord and Tenant. Notwithstanding anything to
the contrary contained in this Paragraph 13(b), all inspections shall occur at
reasonable times during normal business hours and shall be conducted in a manner
aimed to minimize the disturbance or interference with (x) Tenant's and
Manager's use and operation of the applicable Facility and (y) the residents'
and occupants' use of the applicable Facility, and the scope of such inspections
shall be limited by (A) any security, health, safety or confidentiality
requirements of any Governmental Agency or imposed by applicable law or
regulations and (B) Tenant's ordinary business practices and standard residency
agreements, if any, requiring Tenant to maintain the confidential nature of
certain personal information relating to individual residents living in the
applicable Facility.

14.      Entry. Landlord, any related Facility Mortgagee and their agents or
representatives may enter any of the Leased Properties at reasonable times
during normal business hours upon twenty-four (24) hours prior written Notice
(except during emergencies, in which case Landlord shall give reasonable notice
under the circumstances) for the purpose of performing any work which Landlord
elects pursuant to Paragraph 13(a) to undertake by reason of an Event of
Default. Landlord shall use reasonable efforts not to disturb Tenant or any
resident or occupant of the applicable Leased Property (or Leased Properties)
and not to interfere unreasonably with the use and operations of the applicable
Facility (or Facilities) as a result of any such entry by Landlord, its agents
or representatives. Landlord's right to entry with respect to the applicable

                                      23
<PAGE>

Leased Property shall be limited by (A) any security, health, safety or
confidentiality requirements of any Governmental Agency or imposed by applicable
law or regulations and (B) Tenant's ordinary contractual business practices, if
any, requiring Tenant to maintain the confidential nature of certain personal
information relating to individual residents living in the applicable Facility.

15.      Assignment, Subletting and Liens.

         (a) Transfers Prohibited Without Consent. Except as provided below,
Tenant shall not, without the prior written consent of Landlord, which consent
may be withheld in Landlord's sole and absolute discretion, in each instance,
sell, assign or otherwise transfer Tenant's interest under this Lease, or
Tenant's interest in one (1) or more of the Leased Properties, in whole or in
part, or any rights or interest which Tenant may have under this Lease, or
sublet one (1) or more of the Leased Properties, or any part thereof. If given,
the consent of Landlord to an assignment, transfer or subletting shall in no
event be construed to relieve Tenant or such assignee or subtenant from the
obligation of obtaining the express consent in writing of Landlord to any
further assignment, transfer or subletting. For purposes of this Paragraph
15(a), a Change of Control which is not expressly permitted in accordance with
the terms of Paragraph 6 of the Agreement Regarding Leases shall be deemed to
constitute a prohibited assignment of this Lease. Any assignment, transfer or
sublease in violation of this Paragraph 15 shall be voidable at Landlord's
option. For purposes of this Paragraph, Landlord's consent shall conclusively be
deemed reasonably withheld (i) if the proposed transfer would, in Landlord's
judgment, violate the terms of any Facility Mortgage and Tenant has not obtained
the written consent (in form satisfactory to Landlord) of the applicable
Facility Mortgagee, or (ii) if the effect of any such transfer would adversely
affect the status or the treatment of Landlord or its direct or indirect Parent
as a real estate investment trust ("REIT") under applicable REIT regulations.
Notwithstanding the foregoing, except as expressly provided in Paragraph 6 of
the Agreement Regarding Leases, Landlord's consent shall not be required in
connection with (x) any Permitted Transfer, (y) any Equity Transfer or (z) any
Affiliate Transfer.

         (b) Adequate Assurances. Without limiting any of the foregoing
provisions of this Paragraph 15, if, pursuant to the U.S. Bankruptcy Code, as
the same may be amended from time to time, Tenant is permitted to assign or
otherwise transfer its rights and obligations under this Lease in disregard of
the restrictions contained in this Paragraph 15, the assignee agrees to provide
adequate assurance to Landlord (i) of the continued use of the applicable Leased
Property solely in accordance with the Intended Use thereof and in compliance
with all other terms of this Lease; and (ii) of such other matters as Landlord
may reasonably require at the time of such assumption or assignment. Such
assignee shall expressly assume this Lease by an agreement in recordable form.

         (c) Permitted Subleases. Notwithstanding the foregoing, Tenant may
enter into (i) third party residency agreements with respect to the individual
residency units located at each of the Facilities, (ii) subleases for space at
each of the Leased Properties for use as a bank, beauty salon, barber shop,
laundry, commissary or healthcare purposes or other concessions and services in
the ordinary course of business consistent with and ancillary to the Intended
Use; provided, however, that any such proposed subleases with terms longer than
six (6) months shall be subject to Landlord's prior written approval, which
shall not be unreasonably withheld,

                                      24
<PAGE>

conditioned or delayed, (iii) any sublease shall be for a term that will
expire prior to the Expiration Date, and (iv) subject to Landlord's prior
written approval as to the form of sublease agreement, the identity of the
proposed tenant and the substance of such proposed sublease transaction (which
will not be unreasonably withheld), subleases with Manager in so-called
"possessory interest" Facility State where use of a sublease is required by
applicable Legal Requirements. Any sublease permitted hereunder shall not
reduce the number of units at the applicable Facility and will not violate or
affect any Legal Requirement or Insurance Requirement, and Tenant shall
maintain (or cause any sublessee to maintain) such additional insurance
coverage with respect to the activities to be conducted in such subleased
space as Landlord may reasonably require so long as such additional insurance
coverage is customarily maintained for comparable activities and uses at
comparable properties.

         (d) Whole Facility Subleases. Notwithstanding anything to the contrary
set forth herein, upon Tenant's satisfaction of the conditions set forth below
in this clause (d), Tenant shall be permitted to sublease up to six (6) of the
Facilities to third party owner/operators of independent living facilities or
senior living facilities. Any subleases under this Paragraph 15(d) shall be
subject to the satisfaction of the following conditions: (i) Tenant shall have
received Landlord's prior written consent both with respect to the identity of
the proposed sublessee and with respect to the form and content of the proposed
sublease, which consent under this clause (i) shall not be unreasonably
withheld, (ii) if required under the terms of any applicable Facility
Mortgage(s) affecting the Leased Properties proposed to be subleased, Tenant
shall have received the applicable Facility Mortgagee's prior written consent to
such sublease, (iii) Tenant shall promptly after demand by Landlord reimburse
Landlord and any applicable Facility Mortgagee for any out-of-pocket costs
(including reasonable attorneys' fees and disbursements) incurred by Landlord or
any such Facility Mortgagee in reviewing the proposed sublease documents or any
preparing any consent agreements, (iv) the sublease by its terms shall be
expressly subject and subordinate to the interests of Landlord under this Lease,
and any such sublease shall provide that upon the termination of this Lease, at
Landlord's option, such sublease will either (x) terminate and be of no further
force and effect, whereupon the subtenant shall immediately quit and vacate the
Leased Property, or (y) continue in effect as a direct lease between Landlord ,
as the landlord thereunder, and the subtenant, as the tenant thereunder, (v) the
terms of the subleasing transaction shall otherwise comply with Paragraph 15(c),
and (vi) Landlord shall have determined, in Landlord's discretion reasonably
exercised, that Tenant's entering into the proposed sublease would not adversely
affect the status or the treatment of Landlord or its direct or indirect Parent
as a REIT under applicable REIT regulations. If Tenant enters into one (1) or
more subleases contemplated under this Paragraph 15(d), Tenant shall remain
fully liable for all of Tenant's obligations under this Lease, and no such
sublease shall release or relieve Tenant of any of Tenant's duties or
obligations under this Lease, including, without limitation, the obligation to
pay Rent applicable to any sublet Leased Property.

         (e) Liens. Subject to the provisions of Paragraph 26, Tenant shall not,
directly or indirectly, create or allow to remain and shall promptly discharge
or bond over in a manner reasonably satisfactory to Landlord, at its expense,
any Lien encumbering one (1) or more of the Leased Properties or Tenant's
leasehold interest therein or any attachment, levy, claim or encumbrance in
respect of the Rent, other than (i) Permitted Encumbrances; (ii) restrictions,
liens and other encumbrances which are consented to in writing by Landlord or
otherwise permitted under this Lease; (iii) Liens for those taxes of Landlord
which Tenant is not required to pay

                                      25
<PAGE>

hereunder; (iv) Liens for Impositions or for sums resulting from purported
noncompliance with Legal Requirements so long as (A) the same are not yet
payable, or (B) are being contested in accordance with Paragraph 26; (v) liens
of mechanics, laborers, materialmen, suppliers or vendors incurred in the
ordinary course of business that are not yet due and payable or are for sums
that are being contested in accordance with Paragraph 26; and (vi) any
Facility Mortgage or other liens which are the responsibility of Landlord
pursuant to the provisions of Paragraph 35.

16.      Impositions. Throughout the Term, Tenant shall bear, pay and discharge
all Impositions which become due and payable during, arise during, accrue
during or otherwise relate to the period comprising (a) the Term or (b) any
period prior to the commencement of the Term. Upon request of Landlord, Tenant
shall promptly furnish to Landlord satisfactory evidence of the payment of any
Imposition required to be paid by Tenant pursuant to the foregoing. If,
pursuant to the terms of any Facility Mortgage, Landlord is required to
establish and fund payments of Impositions to an escrow reserve account
established under the loan documents relating to such Facility Mortgage, then
Tenant shall fund all such payments to the reserve account, and such payments
shall constitute Additional Rent hereunder. Upon the expiration of the Term,
Landlord and Tenant shall apportion and prorate Impositions to the Expiration
Date, with Tenant being responsible for all Impositions relating to the period
prior to the Expiration Date and Landlord being responsible for all
Impositions relating to the period on and after the Expiration Date, as more
particularly described in Paragraph 10.

17.      Casualty.

         (a) Restoration and Repair. If the Improvements and/or the Related
Personal Property at any Leased Property shall be destroyed or damaged in whole
or in part by fire or any cause whatsoever ("Casualty"), Tenant shall give
Landlord prompt written notice thereof. If such Casualty does not render the
individual Leased Property Unsuitable for its Intended Use, and if the
applicable Facility Mortgagee applies all or any portion of the applicable
insurance proceeds to repay the applicable Facility Mortgage and therefore any
portion of the proceeds is not available for restoration, or the Facility
Mortgagee otherwise refuses in writing to make any portion of such proceeds
available to be used for restoration within a commercially reasonable period of
time in light of the nature of the Casualty event, then Landlord, in Landlord's
sole and absolute discretion, may elect to make available to Tenant funds in an
amount equal to the amount of the proceeds so applied or withheld, as the case
may be, by such Facility Mortgagee. If Landlord elects not to make such funds
available for restoration, Tenant may, by written Notice to Landlord terminate
this Lease as to the applicable Facility by electing a Limited Termination
Election with respect thereto, in which case the provisions of Paragraph 17(b)
shall apply. If the applicable insurance company or Landlord elects to fund the
proceeds for restoration (as more particularly described in Paragraph 17(b)),
then upon Tenant's receipt of proceeds or funds from the insurance carrier or
Landlord as described above, Tenant shall repair, reconstruct or replace the
Improvements and/or the Related Personal Property, or the portion thereof so
destroyed or damaged (whichever is reasonably required), at least to the extent
practicable to a condition substantially equivalent in value and character as
existed immediately prior to such Casualty, and in accordance with all Legal
Requirements, all Insurance Requirements, all Facility Mortgage Requirements and
all Other Requirements. All such work shall be started as soon as practicable
and completed at Tenant's sole cost and expense if the

                                      26
<PAGE>

amount of insurance proceeds are insufficient to complete the project
(provided Tenant actually receives all such proceeds either from the insurance
company or, if any portion of such proceeds is held by the Facility Mortgagee,
then from Landlord), and Tenant shall immediately take such action as is
necessary to secure the applicable Leased Property (or any portion thereof)
such that the same does not constitute a nuisance or otherwise present a
health or safety hazard. Notwithstanding the occurrence of any such Casualty,
Tenant shall continue to pay all Rent without abatement.

         (b) Unavailability of Proceeds. Upon the occurrence of a Casualty in
which any individual Leased Property is rendered Unsuitable for its Intended
Use, and if the applicable Facility Mortgagee (i) applies all or any portion of
the applicable insurance proceeds to repay the applicable Facility Mortgage and
therefore any portion of the proceeds are not available for restoration or (ii)
otherwise refuses in writing to make any portion of such proceeds available to
be used for restoration within a commercially reasonable period of time in light
of the nature of the Casualty event, then, unless Landlord, in Landlord's sole
and absolute discretion, agrees to make available to Tenant funds in an amount
equal to the amount of proceeds so applied or withheld as aforesaid by such
Facility Mortgagee, Tenant may elect by written notice to Landlord ("Limited
Termination Election") to terminate this Lease as it relates to the applicable
Leased Property. Upon Landlord's receipt of a Limited Termination Election under
this Paragraph 17(b) or under Paragraph 17(a), Landlord shall notify Tenant in
writing as to whether Landlord intends to make such funds available and shall
deliver such notice to Tenant not later than ten (10) Business Days after
receiving written notice from the applicable Facility Mortgagee that such
Facility Mortgagee has applied or intends to apply (or has made a final
determination not to disburse) the insurance proceeds (it being acknowledged and
agreed by the parties hereto that if Landlord advances any funds under this
Paragraph 17(b), the Lease Basis will not be increased in connection with any
such funding). Such Limited Termination Election shall be exercised, if at all,
by written termination notice given during the fifteen (15) Business Day period
after Tenant's receipt of such notice from Landlord (time being of the essence
with respect to the giving of such termination notice by Tenant within such time
period), and shall be effective on the day on which the applicable insurance
company (or insurance companies) fund the proceeds of the applicable insurance
policies and the proceeds thereof are actually applied by the applicable
Facility Mortgagee in reduction of the principal amount of the applicable
Facility Mortgage. Upon the effective date of the transactions contemplated by
the Limited Termination Election (i) Tenant shall immediately (x) assign
Tenant's rights in and to all insurance proceeds for such damage or destruction
to Landlord and any applicable Facility Mortgagee, and (y) pay to Landlord an
amount equal to the deductible or self-insured retention amount under each
insurance policy under which a claim was paid, and (ii) from and after such
effective date until the Expiration Date, the Rent payable monthly under this
Lease shall be reduced in an amount equal to the Deleted Property Rent
Adjustment, and the applicable Deleted Property shall no longer be considered a
Leased Property for the purposes of this Lease other than Paragraph 18(f) and
Paragraph 19(c).

         (c) Escrow of Insurance Proceeds. Subject to the requirements of any
Facility Mortgagee, in the event of a Casualty resulting in an insurance loss
payment for any Improvements and/or Related Personal Property in an amount
greater than Two Hundred Fifty Thousand Dollars ($250,000.00), unless this Lease
is terminated as provided in Paragraph 17(a) or Paragraph 17(b), the proceeds of
all insurance policies maintained by Tenant plus the amount

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<PAGE>

of any deductible (to be deposited by Tenant) shall, subject to all Legal
Requirements and to the terms of any Facility Mortgage, be deposited in the
name of Landlord, Tenant and any applicable Facility Mortgagee in an escrow
account at an approved financial institution designated by Landlord or the
Facility Mortgagee (which depositary may be the Facility Mortgagee) (the
"Escrow Agent"), and shall be used by Tenant for the repair, reconstruction or
restoration of the Improvements and/or Related Personal Property. Such
proceeds shall be disbursed periodically by the Escrow Agent upon
certification of the general contractor, architect or engineer having
supervision of the work that such amounts are the amounts paid or payable for
the repair, reconstruction or restoration. Tenant shall, at the time of
establishment of such escrow account and from time to time thereafter until
said work shall have been completed and paid for, furnish Landlord with
adequate evidence that at all times the undisbursed portion of the escrowed
funds, together with any funds made available by Tenant, is sufficient to pay
for the repair, reconstruction or restoration in its entirety. Subject to the
requirements of a Facility Mortgage, if a Casualty results in a loss payment
for the Improvements and/or Related Personal Property in an amount equal to or
less than Two Hundred Fifty Thousand Dollars ($250,000.00), unless this Lease
is terminated as provided in Paragraph 17(b), then the proceeds shall be paid
to Tenant, and shall be applied by Tenant toward the repair, reconstruction
and restoration of the Leased Property. Tenant shall obtain, and make
available to Landlord, receipted bills and, upon completion of the work, full
and final waivers of lien.

         (d) Uninsured Losses. Nothing contained herein shall relieve Tenant of
its obligations under this Paragraph 17 even if the Casualty is not covered,
either in whole or in part, by insurance.

         (e) Deletion of Properties. If this Lease is terminated as to one (1)
or more Leased Properties (but not all of the Leased Properties) in connection
with a Casualty (in accordance with this Paragraph 17) or a Condemnation (in
accordance with Paragraph 23), the provisions of this Paragraph 17(e) shall be
applicable. Without necessity of any further action of the parties, this Lease
shall terminate as to the Deleted Property(ies), and the Deleted Property(ies)
shall be separated and removed herefrom, on the effective date of such removal
(each such date, a "Property Removal Date") as set forth under the express terms
of Paragraph 17 or Paragraph 23. As of the applicable Property Removal Date,
this Lease shall be automatically and ipso facto amended to: (i) delete and
eliminate the Deleted Property(ies) herefrom; and (ii) exclude the applicable
Deleted Property(ies) from the definition of Leased Property (except with
respect to Tenant's obligations under Paragraph 18(f) or Paragraph 19(c)). The
terms of items (i) and (ii) above shall not limit the liability of Tenant in
case of any termination of this Lease as it relates to an applicable Deleted
Property in connection with a Casualty (in accordance with Paragraph 17) or a
Condemnation pursuant to Paragraph 23 for any other amounts then owed by Tenant
to Landlord with respect to the related Leased Property, and the deletion of one
(1) or more of the Leased Properties from this Lease shall not reduce the Lease
Basis or otherwise affect or reduce the obligations of Tenant hereunder, except
for reducing the Rent by the Deleted Property Rent Adjustment. Tenant and
Landlord shall execute and enter into an amendment to this Lease reflecting the
elimination of any Deleted Property(ies) herefrom at the effective date of the
Limited Termination Election for such Deleted Property.

18.      Insurance.

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<PAGE>

         (a) Insurance By Tenant. Tenant shall, throughout the Term, and at its
sole cost and expense, maintain in full force and effect the types and amounts
of insurance required under each of the Facility Mortgages or, if there is no
Facility Mortgage affecting the applicable Leased Property or if the applicable
Facility Mortgagee does not require the maintenance of insurance, the following
types and amounts of insurance coverage with respect to each of the Leased
Properties; provided such insurance coverage is commercially available at
commercially reasonable rates:

                  (i) Hazard Insurance. Tenant shall keep the Improvements and
         the Related Personal Property at each of the Leased Properties,
         including all permitted alterations, changes, additions and
         replacements thereof and thereto, insured against loss or damage caused
         by: (A) fire, and other hazards and perils generally included under
         extended coverage; (B) sprinkler leakage; (C) vandalism and malicious
         mischief; (D) boiler and machinery; and (E) other perils commonly
         covered by "All Risk" insurance, all in an amount which reasonably
         assures there will be sufficient proceeds to replace such Improvements
         and the Related Personal Property in the event of a loss against which
         such insurance is issued but in no event less than 100% of the full
         replacement value thereof (exclusive of foundations). Such insurance
         shall contain (x) "Ordinance or Law Coverage" (if any of the related
         Improvements at such Leased Property or the use of the applicable
         Leased Property shall at any time constitute legal non-conforming
         structures or uses which non-conformance shall be presumed unless and
         until Tenant proves to Landlord's reasonable satisfaction, that such
         uses are conforming), "Operation of Building Laws," or "Enforcement"
         endorsement, (y) "demolition" insurance (in an amount of at least
         $5,000,000) and (z) "increased cost of construction" endorsement (equal
         to at least $5,000,000). All insurance required hereunder, and all
         other insurance maintained by Tenant on the Improvements and the
         Related Personal Property in excess of or in addition to that required
         hereunder, shall be carried in favor of Landlord, any related Facility
         Mortgagee and Tenant, as their respective interests may appear.

                  (ii) Liability Insurance. Tenant shall provide and keep in
         full force and effect a policy of general public liability and property
         damage insurance providing coverage against liability for personal
         injury, death and property damage having limits of not less than Five
         Million Dollars ($5,000,000) in the aggregate. Such insurance shall (A)
         continue at not less than the aforesaid limits until required to be
         changed by Landlord by reason of changed economic conditions making
         such protection inadequate, and (B) cover at least the following: (1)
         premises and operations; (2) products and completed operations on an
         "if any" basis; (3) independent contractors; (4) blanket contractual
         liability for all insured contracts; (5) contractual liability covering
         indemnities, if any, given by Tenant contained any applicable Facility
         Mortgage, to the extent the same is available; (6) broad form property
         damage; (7) personal injury (including death resulting therefrom); (8)
         healthcare professional liability and (9) a liquor liability
         endorsement if alcoholic beverages are sold at the applicable Leased
         Property.

                  (iii) Business Interruption. Tenant shall provide and keep in
         effect a policy of business interruption insurance in an amount to
         cover costs, damages, lost income, expenses, Base Rent, and all other
         sums payable under this Lease for a period of not less than eighteen
         (18) months from the date of casualty or loss. Such insurance shall

                                      29
<PAGE>

         (A) cover all risks required to be covered by the insurance provided
         for in clause (i) above and clause (vii) below; (B) be in an amount
         sufficient to avoid any co-insurance penalty; and (C) contain an
         extended period of indemnity endorsement that provides that after
         the physical loss to the applicable Leased Property has been
         repaired, the continued loss of income will be insured until such
         income returns to the same level it was prior to the loss, or the
         expiration twelve (12) months from the date of the repair, whichever
         first occurs, and notwithstanding that the policy may expire prior
         to the end of such period.

                  (iv) Worker's Compensation and Employer's Liability Insurance.
         Tenant shall provide and keep in full force and effect workers'
         compensation insurance, in a form prescribed by the laws of the
         applicable Facility State for each of the Leased Properties, and
         employers' liability insurance with limits of not less than One Million
         Dollars ($1,000,000).

                  (v) Builder's Risk Insurance. Tenant shall, prior to the
         commencement of and during the construction of any restoration,
         renovation or alteration to any of the Leased Property, provide and
         keep in full force and effect builder's risk insurance equal to the
         total cost of the project.

                  (vi) Flood Insurance. If any Improvements relating to any of
         the Leased Properties are or become located in an area which is
         considered a flood risk by the U.S. Department of Housing and Urban
         Development, Tenant shall provide and keep in effect a policy of flood
         insurance with the maximum limit of coverage available for the
         Improvements under the National Flood Insurance Act of 1968, the Flood
         Disaster Protection Act of 1973 or the National Flood Insurance Reform
         Act of 1994.

                  (vii) Boiler and Machinery Insurance. Tenant shall provide and
         keep in effect a policy of broad form boiler and machinery insurance
         (without exclusion for explosion) covering all boilers or other
         pressure vessels, machinery, and equipment located in, on or about any
         of the Leased Properties (including "system breakdown coverage") in an
         amount equal to or greater than the repair and full replacement cost of
         such equipment and insurance against loss of occupancy or use arising
         from any breakdown of such equipment on a so-called "accident basis"
         and in such amounts as are generally required by institutional lenders
         for properties comparable to the applicable Leased Property.

                  (viii) Motor Vehicle Insurance. Tenant shall provide and keep
         in effect motor vehicle liability coverage for all owned and non-owned
         vehicles, including rented and leased vehicles, used in connection with
         the operation of the Leased Property, containing minimum limits per
         occurrence of One Million and No/100 Dollars ($1,000,000.00).

                  (ix) "Dram-Shop" Insurance. If alcoholic beverages are sold at
         any of the Leased Properties, Tenant shall provide and keep in effect a
         policy of so-called "dramshop" insurance or other liability insurance
         required in connection with the sale of alcoholic beverages containing
         minimum limits per occurrence of One Million and No/100 Dollars
         ($1,000,000.00).

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<PAGE>

                  (x) Fidelity Insurance. Tenant shall provide and keep in
         effect a policy of insurance against employee dishonesty in an amount
         not less than One Million and No/100 Dollars ($1,000,000) and with a
         deductible not greater than Twenty-five Thousand and No/100 Dollars
         ($25,000.00).

                  (xi) Healthcare Professional Liability Insurance. Tenant shall
         provide and keep in effect a policy of insurance covering claims
         arising out of healthcare professional liability in an amount as stated
         in clause (ii) of this Paragraph 18(a), and, if written on a
         "claims-made" basis, Tenant shall also provide continuous liability
         coverage for claims arising during the Term either by obtaining an
         endorsement providing for an extended reporting period reasonably
         acceptable to Landlord if such policy is cancelled or not renewed for
         any reason whatsoever, or by obtaining "tail" insurance coverage
         providing coverage for a period of at least twelve (12) months beyond
         the expiration of the Term.

                  (xii) Earthquake Insurance. If any of the Leased Properties is
         in a high probability earthquake area (i.e., Zone 1 and 2), and a
         probable maximum loss ("PML") study reveals that the PML is greater
         than 10% of the replacement cost (as determined by Landlord), then
         earthquake insurance must be maintained in an amount equal to the PML
         percentage of the replacement cost with a deductible not to exceed 5%
         of the values at risk. The insurance pursuant to this clause (xii)
         shall be on terms consistent with the comprehensive all risk insurance
         policy required under clause (i) above.

                  (xiii) Terrorism Insurance. If the insurance required under
         Paragraph 18(a)(i) above excludes coverage for acts of terrorism,
         Tenant shall provide terrorism insurance coverage in an amount equal to
         the full replacement cost of the applicable Leased Property or Leased
         Properties, unless such terrorism insurance coverage is (i) waived by
         Landlord, (ii) unable to be procured from any carrier of such
         insurance, or (iii) not available at commercially reasonable rates and
         not being carried by owners or operators of similarly situated
         properties.

                  (xiv) Other Insurance. In addition, Tenant shall, at
         Landlord's request, provide and keep in full force and effect such
         other insurance for such risks and in such amounts as may from time to
         time be required pursuant to any Facility Mortgage or by any Legal
         Requirements or as Landlord may, from time to time, reasonably request
         against such other insurable hazards or casualties that at the time are
         commonly insured against in the case of business operations similar to
         those contemplated by this Lease or for properties similar to the
         Leased Properties located in or around the region in which each of the
         Leased Properties is located including, without limitation, wind,
         sinkhole, mine subsidence and environmental insurance, due regard being
         given to the height and type of each of the applicable Leased
         Properties, construction, location, use and occupancy. In addition,
         with respect to the insurance policies required under clauses (iv),
         (viii), (ix), (x) and (xi) of this Paragraph 18, Landlord shall have
         the right on Notice to Tenant to change the limits of said policies by
         reason of changed economic conditions making such protection inadequate
         in Landlord's discretion, but only to the extent that such revised
         increased limits are customarily carried and maintained by companies
         engaged in businesses similar to Tenant's and operating properties
         similar to the Leased Properties.

                                      31
<PAGE>

         (b) Landlord as Additional Insured and/or Loss Payee. Any and all
insurance maintained by Tenant as required by this Lease, or in excess of or in
addition to that required hereunder, shall name Landlord and any Facility
Mortgagee as additional insureds, as their interests may appear, and shall
contain waiver of subrogation endorsements from its insurance carrier. Landlord
and any Facility Mortgagee shall be named as the loss payee on all property
policies.

         (c) Carriers and Features. All insurance policies (except those
required under clause (a)(ii) and clause (a)(xi) of Paragraph 18(a) required to
be carried by Tenant as provided in this Paragraph 18 shall be issued by
insurance companies authorized and/or licensed to do business in the Facility
State with a Best's Insurance Rating of not less than "A-" or a Best's Financial
Category of not less than "VIII", with reasonable deductibles per occurrence.
All such policies shall be for periods of not less than one year. At least
fifteen (15) days prior to the expiration of any such policy, Tenant shall
provide evidence, reasonably satisfactory to Landlord, of Tenant's policy
renewal options and evidence that such policy renewal will be in place prior to
the expiration thereof. All such policies shall require not less than thirty
(30) days written notice to Landlord prior to any cancellation thereof or any
change reducing coverage thereunder. Notwithstanding the foregoing, Tenant may
elect to obtain blanket insurance for each of the foregoing required types of
insurance.

         Tenant shall pay the premiums for all insurance policies which Tenant
is obligated to carry under this Paragraph 18 and, prior to the expiration of
any such policy, deliver to Landlord a copy of the renewal policy or policies,
or, if Landlord or any related Facility Mortgagee requests, a certificate or
certificates thereof, along with evidence that the premiums therefor have been
paid for through, at least, the next ensuing monthly period or longer as may be
required by the premium installment plan offered by the insurer(s) or premium
finance company(ies). If, pursuant to the terms of any Facility Mortgage,
Landlord is required to establish and fund payments for insurance premiums to
any escrow reserve account established under the loan documents relating to such
Facility Mortgage, then Tenant shall fund all such payments to the reserve
account, and such payments shall constitute Additional Rent hereunder. Any such
funds, paid to an escrow reserve account in connection with insurance premiums
shall, subject to the terms of the applicable Facility Mortgage, be used to pay
for insurance policies required under the Facility Mortgage. Upon the expiration
of the Term, Landlord and Tenant shall apportion and prorate funds on deposit in
any such reserve account, with Tenant being responsible for all insurance
premiums relating to the period prior to the Expiration Date and Landlord being
responsible for all insurance premiums relating to the period on and after the
Expiration Date.

         (d) Failure to Procure Insurance. If Tenant fails to procure insurance
required under this Paragraph or fails to maintain the same in full force and
effect continuously during the Term, Landlord shall be entitled to procure the
same and Tenant shall immediately reimburse Landlord for such premium expense as
Additional Rent.

         (e) Intentionally Omitted.

         (f) Indemnification of Landlord. Notwithstanding the existence of any
insurance provided for herein and without regard to the policy limits of any
such insurance, Tenant shall protect, indemnify and hold harmless Landlord for,
from and against all liabilities, obligations,

                                      32
<PAGE>

claims, damages, penalties, causes of action, costs and reasonable expenses
(including, without limitation, reasonable attorneys' fees), to the maximum
extent permitted by law, imposed upon or incurred by or asserted against
Landlord (except to the extent that any of the following result from
Landlord's gross negligence or willful misconduct after the Commencement Date)
by reason of: (i) any accident, injury to or death of persons or loss of or
damage to property occurring on or about any of the Leased Properties or
adjoining sidewalks or right of way, including, without limitation, any claims
of malpractice; (ii) any past, present or future use, misuse, non-use,
non-compliance, condition, management, maintenance or repair by Tenant or
anyone claiming under Tenant of any of the Leased Properties or the Related
Personal Property or any litigation, proceeding or claim by Government
Agencies or other third parties (other than Condemnation proceedings) to which
Landlord is made a party or participant relating to any of the Leased
Properties or the Related Personal Property or such use, misuse, non-use,
non-compliance, condition, management, maintenance, or repair thereof; (iii)
any Impositions (which are the obligation of Tenant to pay pursuant to the
applicable provisions of this Lease), and (iv) any failure or inability of
Tenant to obtain the insurance coverage required hereunder. If at any time
Landlord shall have received written notice of the assertion of a claim,
Landlord shall give reasonably prompt written notice of such claim to Tenant,
provided that (x) Landlord shall have no liability for the failure to give
notice of any claim of which Tenant has otherwise been notified or has actual
knowledge, and (y) the failure of Landlord to give such a notice to Tenant
shall not limit the rights of Landlord or the obligations of Tenant with
respect to such claim, except to the extent that Tenant suffers actual
monetary loss as a result of such failure. Tenant shall pay all amounts
payable under this Paragraph 18(f) within fifteen (15) Business Days after
demand therefor, and if not timely paid, such amounts shall bear interest at
the Overdue Rate from the date payment thereof is required hereunder to the
date of payment. Tenant shall have the right to control the defense and
settlement of any such claim (but Tenant, without Landlord's prior written
consent, which Landlord may withhold in Landlord's sole and absolute
discretion, shall not be permitted to settle any claim if such settlement
would admit criminal liability of Landlord), and Tenant, at its expense, shall
contest, resist and defend any such claim, action or proceeding asserted or
instituted against Landlord or may compromise or otherwise dispose of the
same, with Landlord's prior written consent (which consent may not be
unreasonably withheld, delayed or conditioned), provided no such consent shall
be required if the compromise or settlement shall result in a complete release
of Landlord from the claim so compromised or settled). Landlord shall have the
right (but not the obligation), at Landlord's election and sole cost and
expense, to participate in the defense of any such claim, and Tenant shall
have no obligation to reimburse Landlord for any attorneys' fees incurred by
Landlord in connection with same. The obligations of Tenant under this
Paragraph 18(f) are in addition to the obligations set forth in Paragraph
19(c) and shall survive the termination of this Lease for two (2) years.

19.      Environmental Matters.

         (a) Tenant's Covenant. Throughout the Term, Tenant covenants that it
shall not cause, permit or allow any Hazardous Materials to be placed, stored,
dumped, dispensed, deposited, used, transported, located, generated or subject
to a Release on any of the Leased Properties in violation of any Environmental
Law. Tenant shall not install or permit the installation of any underground
storage tanks, above ground storage tanks, surface impoundments or
asbestos-containing materials on any of the Leased Properties, unless Landlord
consents in writing prior to the installation. With respect to any asbestos or
any asbestos-

                                      33
<PAGE>

containing materials located on or within any of the Leased Properties, Tenant
will perform all necessary actions, including, but not limited to, operation
and maintenance that are necessary to avoid exposing any Person to asbestos or
asbestos-containing materials.

         (b) Clean-Up. During the Term, to the extent required by any applicable
Environmental Laws, Tenant shall (i) Remediate the applicable Leased Property to
comply with any and all Environmental Laws regarding Hazardous Materials and
Remediation thereof, and (ii) pay for all Remediation costs at no cost to
Landlord; provided, in each case, such Hazardous Materials were placed, used,
transported, generated or subject to a Release prior to the end of the Term and
do not result from any act or omission after the date hereof of Landlord (other
than a failure to perform Remediation) or any other indemnity hereunder.

         (c) Indemnification. Tenant shall indemnify, release and hold harmless
Landlord, its successors, assigns, members, managers, officers, directors,
shareholders and employees, from and against all Liabilities (as defined below),
suffered by, incurred by or assessed against such parties, their agents or other
representatives, whether incurred as a result of legal action taken by any
Government Agency, taken by any private claimant, or taken by Landlord, before
or after the expiration of the Term as a result of the Release or Remediation of
any Hazardous Materials upon or under, on or off site, associated with,
generated on or flowing or originating from any of the Leased Properties prior
to the end of the Term, provided such Liabilities do not arise as a result of
any act or omission after the Commencement Date by Landlord (other than a
failure to perform Remediation) or any other indemnitee hereunder. The term
"Liabilities" as used in this Paragraph 19 is hereby defined as any and all
liabilities, expenses, demands, damages, punitive or exemplary damages,
consequential damages, costs, Remediation costs, losses, causes of action,
claims for relief, reasonable attorneys' fees, other professional fees,
penalties, fines, assessments and charges. Tenant shall have the right to
control the defense or settlement of any such claim (except that Tenant shall
not be authorized to settle criminal charges against Landlord without obtaining
Landlord's, prior written consent, which may be withheld in Landlord's sole and
absolute discretion), and Tenant, at its expense, shall contest, resist and
defend any such claim, action or proceeding asserted or instituted against
Landlord or may compromise or otherwise dispose of the same, with Landlord's
prior written consent (which consent may not be unreasonably withheld, delayed
or conditioned, provided no such consent shall be required if the compromise or
settlement shall result in the complete release of Landlord from the claim so
compromised or settled). Landlord shall have the right (but not the obligation),
at its election and sole cost and expense, to participate in the defense of any
such claim, and Tenant shall have no obligation to reimburse Landlord for any
attorneys' fees incurred by Landlord in connection with same. The provisions of
this Paragraph 19 shall survive the expiration or sooner termination of this
Lease for two (2) years.

         (d) Notice. Tenant shall promptly notify Landlord of any pending or
threatened claim concerning Environmental Laws and/or Hazardous Material and one
(1) or more of the Leased Properties, for which Tenant has received written
notice. All such notices shall describe in reasonable detail the nature of such
fact, circumstance, condition, occurrence or environmental claim and, where
applicable, Tenant's response thereto. Tenant shall provide additional
information relating to any of the foregoing in such detail as may be reasonably
requested by Landlord.

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<PAGE>

20.      Costs and Attorneys' Fees. If either party shall bring an action to
recover any sum due hereunder, or for any breach hereunder, and shall obtain a
judgment or decree in its favor, the court may award to the prevailing party
in such action its reasonable costs and reasonable attorneys' fees,
specifically including reasonable attorneys' fees incurred in connection with
any appeals (whether or not taxable or assessable as such by law). Landlord
shall also be entitled to recover Landlord's reasonable attorneys' fees and
costs incurred in any bankruptcy action filed by or against Tenant, including,
without limitation, those incurred in seeking relief from the automatic stay,
in dealing with the assumption or rejection of this Lease, in any adversary
proceeding, and in the preparation and filing of any proof of claim.

21.      Default; Remedies.

         (a) Default. Upon the occurrence and during the continuance of any one
or more of the following events (each, an "Event of Default"), Landlord shall
have the right to exercise any rights or remedies available in this Lease, at
law or in equity. Events of Default shall consist of:

                  (i) Tenant's failure to pay when due any regularly scheduled
         payment of Rent, and such failure is not cured within five (5) days (or
         such earlier period as set forth in this Paragraph 21(a)); provided,
         however, that no Event of Default shall be deemed to have occurred
         under this Paragraph 21(a)(i), if Tenant or ALS Holdings cures such
         failure to pay, pursuant to the terms of the Agreement Regarding Leases
         or otherwise, within such five (5) day period;

                  (ii) Tenant's failure to pay when due any other payment of
         Rent, or any other sum of money payable hereunder (whether as
         Additional Rent or otherwise) and such failure is not cured within five
         (5) days after receipt of Notice thereof from Landlord; provided,
         however, that no Event of Default shall be deemed to have occurred
         under this Paragraph 21(a)(ii), if Tenant or ALS Holdings cures such
         failure to pay, pursuant to the terms of the Agreement Regarding Leases
         or otherwise, within such five (5) day period;

                  (iii) Tenant's failure to perform any other of the terms,
         covenants or conditions contained in this Lease if not remedied within
         thirty (30) days after receipt of Notice thereof, or, if such default
         cannot reasonably be remedied within such period, Tenant does not
         within thirty (30) days after Notice thereof commence such act or acts
         as shall be necessary to remedy the default and shall not thereafter
         diligently complete such act or acts within a reasonable time,
         provided, however, in no event shall such cure period extend beyond one
         hundred eighty (180) days after Notice thereof;

                  (iv) if Tenant, Lease Guarantor or Guarantor becomes bankrupt
         or insolvent, or files any debtor proceedings, or files pursuant to any
         statute a petition in bankruptcy or insolvency or for reorganization,
         or files a petition for the appointment of a receiver or trustee for
         all or substantially all of its assets, or (x) any of the foregoing are
         filed against Tenant, Lease Guarantor or Guarantor, and such petition
         or appointment shall not have been set aside within ninety (90) days
         after the date of such petition or appointment, or (y) Tenant, Lease
         Guarantor or Guarantor makes an assignment for the benefit of creditors
         or shall admit in writing its inability to pay its debts generally as
         they become due, or if Tenant's interest in this Lease is attached,
         levied upon, seized or made subject

                                      35
<PAGE>

         to any other judicial seizure and such seizure or attachment is not
         discharged within ninety (90) days;

                  (v) if Tenant fails to provide insurance coverage (or allows
         such coverage to be canceled or lapse) pursuant to its obligation
         hereunder;

                  (vi) if any of Tenant, Lease Guarantor or Guarantor is
         liquidated or dissolved, or begins proceedings toward such liquidation
         or dissolution, or, in any manner, permits the sale or divestiture of
         substantially all of its assets;

                  (vii) if a default occurs under Paragraph 15;

                  (viii) if (x) there has been a final, unappealable revocation
         of any license, permit, certification or approval required for the
         lawful operation of any of the Facilities in accordance with its
         Intended Use, or (y) any license, permit, certification or approval
         required for the lawful operation of any of the Facilities is
         materially limited and, as a result of such limitation, Tenant
         experiences a material adverse effect on the operation of the Leased
         Properties, taken as a whole, for their respective Intended Use;

                  (ix) if Tenant voluntarily ceases operation of any of the
         Leased Properties for its Intended Use, except as a result of Casualty
         or partial or complete Condemnation;

                  (x) if Tenant fails to pay for money borrowed or for the
         deferred purchase price of any material property or services (excluding
         trade accounts payable in the ordinary course of business on customary
         trade terms) or any guaranty relating thereto which, in the aggregate,
         exceeds Two Hundred Fifty Thousand Dollars ($250,000), and the same be
         declared to be or become due and payable prior to the stated maturity
         thereof and all applicable notices with respect thereto have been given
         and all applicable grace or cure periods with respect thereto shall
         have lapsed;

                  (xi) Intentionally Omitted;

                  (xii) Intentionally Omitted;

                  (xiii) any material representation or warranty made by Tenant
         in this Lease is determined to have been false when made;

                  (xiv) the issuance or entry against Tenant of any final,
         unappealable award or judgment (or any appeal periods have expired) in
         an amount of Two Hundred Fifty Thousand Dollars ($250,000.00) or more,
         and such award or judgment shall continue unsatisfied and in effect for
         a period of ten (10) consecutive days without demonstrating that any
         insurance policy exists that would cover such award or judgment;

                  (xv) the issuance or entry against Lease Guarantor or
         Guarantor of any final, unappealable award or judgment (after any
         appeal period have expired) in an amount of One Million Six Hundred
         Thousand Dollars ($1,600,000.00) or more, and such award or judgment
         shall continue unsatisfied and in effect for a period of ten (10)
         consecutive days

                                      36
<PAGE>

         without Tenant's demonstrating, to Landlord's reasonable satisfaction,
         that any insurance policy exists that would cover such award or
         judgment;

                  (xvi) Intentionally Omitted;

                  (xvii) if an Event of Default (as defined in the Agreement
         Regarding Leases) occurs under the Agreement Regarding Leases;
         provided, however, that if and to the extent that a default under this
         clause (xvii) occurs and such default arises solely as a result of a
         default under one (1) or more of the other Property Leases (as defined
         in the Agreement Regarding Leases), then, provided that no other
         independent Event of Default then exists under this Lease, such default
         shall not constitute an Event of Default, unless each Facility
         Mortgagee (if any) holding a Facility Mortgage encumbering the Leased
         Property consents in writing to such default's constituting an Event of
         Default; or

                  (xviii) if, on or before the fifty-fifth (55th) day following
         the date hereof, Tenant has either failed to (i) obtain a modification
         of the conditional use permit relating to the Leased Property commonly
         known as Alterra Clare Bridge of North Oaks (the "North Oaks Facility")
         in satisfaction of Tenant's obligations under Paragraph 25(g) or (ii)
         repurchase the North Oaks Facility from Landlord for an aggregate
         purchase price equal to the sum of (x) $10,081,490, plus (y) all
         out-of-pocket costs and expenses reasonably incurred by Landlord
         (including, without limitation, any legal fees and transfer taxes) in
         connection with such repurchase.

         Notwithstanding the foregoing, if any applicable Facility Mortgage
provides for a shorter cure or grace period, or does not require notice to be
given to trigger an event of default thereunder for the same obligation as
described above and provided such obligation is a concurrent obligation of
Tenant hereunder, then the provisions for notice (or lack thereof) and cure
under such Facility Mortgage shall supersede the notice and cure provisions set
forth above, it being acknowledged and agreed that all such payments and
obligations of Tenant hereunder shall be made and performed within such time
periods so as to comply with the terms of the Facility Mortgage.

         (b) Remedies. If any of the Events of Default hereinabove specified
shall occur and be continuing, Landlord shall have and may exercise any one or
more of the following rights and remedies:

                  (i) Landlord may, by written Notice thereof to Tenant,
         terminate this Lease as to all but not less than all of the Leased
         Properties, and, peaceably or pursuant to appropriate legal
         proceedings, re-enter, retake and resume possession of all of the
         Leased Properties for Landlord's own account and recover immediately
         from Tenant any and all Rent and other sums and damages due or in
         existence at the time of such termination, including, without
         limitation: (A) all Rent and other sums, charges, payments, costs and
         expenses agreed and/or required to be paid by Tenant to Landlord
         hereunder; (B) all reasonable costs and expenses of Landlord in
         connection with the recovery of possession of the Leased Properties,
         including reasonable attorneys' fees and court costs; and (C) all costs
         and expenses of Landlord in connection with any reletting or attempted
         reletting of the Leased Properties or any part or parts thereof,
         including, without limitation,

                                      37
<PAGE>

         brokerage fees, reasonable attorneys' fees and the cost of any
         alterations or repairs which may be reasonably required to so relet
         the Leased Properties or any part or parts thereof;

                  (ii) If an Event of Default continues uncured for a period of
         six (6) months, Landlord may, by written Notice thereof to Tenant,
         terminate Tenant's option to renew the term this Lease for one (1) or
         both of the Renewal Terms;

                  (iii) Landlord may, pursuant to any prior notice required by
         law, and without terminating this Lease, peaceably or pursuant to
         appropriate legal proceedings, re-enter, retake and resume possession
         of the Leased Properties for the account of Tenant, make such
         alterations of and repairs to the Leased Properties as may be
         reasonably necessary in order to relet the same or any part or parts
         thereof and relet or attempt to relet the Leased Properties or any part
         or parts thereof for such term or terms (which may be for a term or
         terms extending beyond the Term), at such rent and upon such other
         terms and provisions as Landlord, in its reasonable discretion, may
         deem advisable. If Landlord retakes and resumes possession of the
         Leased Properties, it shall use commercially reasonable efforts to
         mitigate any damages it suffered by virtue of such Event of Default.
         Subject to the requirements of any Facility Mortgage, upon any such
         reletting, all rents received by Landlord from such reletting shall be
         applied: (A) first, to the payment of all costs and expenses of
         recovering possession of the Leased Properties; (B) second, to the
         payment of any costs and expenses of such reletting, including
         brokerage fees, reasonable attorneys' fees and the cost of any
         alterations and repairs reasonably required for such reletting; (C)
         third, to the payment of any indebtedness, other than Rent, due
         hereunder from Tenant to Landlord, and to satisfy any Liens encumbering
         Tenant's leasehold interest; (D) fourth, to the payment of all Rent and
         other sums due and unpaid hereunder with respect to the Leased
         Properties; and (E) fifth, the residue, if any, shall be held by
         Landlord and applied in payment of future Rent as the same may become
         due and payable hereunder. If the rents received from such reletting
         during any period shall be less than that required to be paid during
         that period by Tenant hereunder, then Tenant shall promptly pay any
         such deficiency to Landlord and failing the prompt payment thereof by
         Tenant to Landlord, Landlord shall immediately be entitled to institute
         legal proceedings for the recovery and collection of the same. Landlord
         shall, in addition, be immediately entitled to sue for and otherwise
         recover from Tenant any other damages occasioned by or resulting from
         any abandonment of any of the Leased Properties or other Event of
         Default under this Lease other than a monetary Event of Default. No
         such re-entry, retaking or resumption of possession of any of the
         Leased Properties by Landlord for the account of Tenant shall be
         construed as an election on the part of Landlord to terminate this
         Lease, unless a Notice of such intention shall be given to Tenant or
         unless the termination of this Lease be decreed by a court of competent
         jurisdiction. Notwithstanding any such re-entry and reletting or
         attempted reletting of any Leased Property or any part or parts thereof
         for the account of Tenant without termination of this Lease as provided
         above, Landlord may at any time thereafter, upon Notice to Tenant,
         elect to terminate this Lease as provided above or pursue any other
         remedy available to Landlord for Tenant's previous and continuing Event
         of Default under this Lease; or

                                      38
<PAGE>

                  (iv) Landlord may, without re-entering, retaking or resuming
         possession of the Leased Property, sue for all Rent and all other sums,
         charges, payments, costs and expenses due from Tenant to Landlord
         hereunder either: (A) as they become due under this Lease, taking into
         account that Tenant's right and option to pay the Rent hereunder with
         respect to the Leased Properties on a monthly basis in any particular
         Lease Year is conditioned upon the absence of an Event of Default under
         this Lease; or (B) at Landlord's option, accelerate the maturity and
         due date of the whole or any part of the Rent for the entire
         then-remaining unexpired balance of the Initial Term or the applicable
         Renewal Term, as the case may be (reduced to its present value,
         applying an interest rate of eight percent (8%)) less the present value
         of the fair market rent for the same period, plus all other sums,
         charges, payments, costs and expenses required to be paid by Tenant to
         Landlord hereunder, including, without limitation, damages for breach
         or default of Tenant's obligations hereunder in existence at the time
         of such acceleration, such that all sums due and payable under this
         Lease shall, following such acceleration, be treated as being, and in
         fact shall be, due and payable in advance as of the date of such
         acceleration. Landlord may then proceed to recover and collect all such
         unpaid Rent and other sums so sued for from Tenant by distress, levy,
         execution or otherwise.

         In addition to the remedies hereinabove specified and enumerated,
Landlord shall have and may exercise the right to invoke any other remedies
allowed at law or in equity as if the remedies of re-entry, unlawful detainer
proceedings and other remedies were not herein provided. Accordingly, the
mention in this Lease of any particular remedy shall not preclude Landlord from
having or exercising any other remedy at law or in equity. Nothing herein
contained shall be construed as precluding Landlord from having or exercising
such lawful remedies as may be and become necessary in order to preserve
Landlord's right or the interest of Landlord in the Leased Properties and in
this Lease, even before the expiration of any notice periods provided for in
this Lease, if under the particular circumstances then existing the allowance of
such notice periods will result in the termination of the rights and estate of
Landlord in this Lease and in any of the Leased Properties.

22.      Landlord's Default; Landlord's Right to Dispute.

         (a) Landlord Default. If Landlord shall default in the performance or
observance of any of its covenants or obligations set forth in this Lease and
such default shall continue for a period of thirty (30) days after Notice
thereof from Tenant to Landlord, or such additional period as may be reasonably
required to correct the same provided Landlord has commenced and is diligently
prosecuting a cure thereof, Tenant may declare the occurrence of a "Landlord
Default" by a second Notice to Landlord. Thereafter, Tenant may, but shall have
no obligation, to cure the same (including, without limitation, by making
payments past due under any Facility Mortgage(s) directly to the applicable
Facility Mortgagee(s)), and, subject to the provisions of Paragraph 22(b),
invoice Landlord for costs and expenses (including reasonable attorneys' fees
and court costs) incurred by Tenant in curing the same, together with interest
thereon from five (5) days following the date Landlord receives Tenant's
invoice, at the Overdue Rate. Tenant shall have no right to terminate this Lease
for any default by Landlord hereunder and no right, for any such default, to
offset or counterclaim against any Rent or other charges due hereunder.

                                      39
<PAGE>

         (b) Landlord's Right to Dispute. If Landlord shall in good faith
dispute the occurrence of any Landlord Default, and Landlord, before the
expiration of the thirty (30) day cure period, shall give Notice thereof to
Tenant, setting forth, in reasonable detail, the basis therefor, Landlord shall
have no obligation with respect to such occurrence or event until a final
adverse determination thereof by a court of competent jurisdiction. Tenant and
Landlord shall in good faith attempt to resolve such dispute and if they fail to
do so within ten (10) days after Landlord's Notice, either may submit the matter
for resolution to a court of competent jurisdiction.

23.      Condemnation.

         (a) Complete Taking. If (i) the whole of any of the Leased Properties
shall be taken by Condemnation or (ii) a Condemnation of less than the whole of
any of the Leased Properties renders the affected Leased Property Unsuitable for
its Intended Use, then this Lease shall automatically terminate as to the
affected Leased Property only as of the Date of Taking, subject to the
obligations of Tenant to deliver to Landlord all Awards to which Landlord is
entitled pursuant to the terms of this Lease and to pay such other amounts as
required by Paragraph 23(c) hereof, which obligations shall survive the
termination of this Lease as to such affected Leased Property. Tenant and
Landlord shall seek the Award for their interests in the affected Leased
Property as provided in Paragraph 23(c).

         (b) Partial Taking. If any part of any of the Leased Properties shall
be taken by Condemnation, such that the remaining portion of the affected Leased
Property may continue to be used for its Intended Use, this Lease shall not
terminate or be terminated, and subject to Paragraph 23(d), Tenant shall restore
the remaining portion of the affected Leased Property to the extent necessary to
render it reasonably suitable for its Intended Use and make all repairs to any
related Improvements or Related Personal Property damaged by such taking to the
extent necessary to constitute such Improvements a complete architectural unit
and otherwise in accordance with Legal Requirements.

         (c) Award. All Awards in any Condemnation, either permanent or
temporary, of all or any part of any of the Leased Properties or any easement or
any appurtenance thereto, including severance and consequential damages and
change in grade of any street, shall, after any required repayment of any
applicable Facility Mortgage pursuant to the terms thereof, be the property of
and paid to Landlord, provided that the Award in connection with any partial
taking shall be made available by Landlord to pay or reimburse Tenant for the
cost of restoration or rebuilding. Landlord shall make available to Tenant all
or any portion of the Award to be used to pay for costs of restoration or
rebuilding in connection with any such partial taking. Any such funds shall be
held and disbursed by Escrow Agent in the manner and under the conditions
provided in Paragraph 17. Any surplus which may remain out of any Award after
any required repayment of any applicable Facility Mortgage and any payment or
reimbursement to Tenant of the cost of restoration or rebuilding shall be
retained by Landlord, and the Lease Basis shall be reduced on a
dollar-for-dollar basis by the amount so retained. Notwithstanding the
foregoing, any Award made for the Tenant's leasehold interest in the Leased
Property, the loss of Tenant's business for the remainder of the Term and
relocation expenses of Tenant shall be paid to and be the property of Tenant.

                                      40
<PAGE>

         (d) Unavailability of Award. If, in connection with a partial
Condemnation, a Facility Mortgagee refuses to make available (within a
commercially reasonable time in light of the circumstances) for the
reconstruction, repair and restoration of the applicable Facility any portion of
the Award, then, unless Landlord, in Landlord's sole and absolute discretion,
agrees to make available to Tenant funds in an amount equal to the amount of
proceeds so applied by such Facility Mortgagee, Tenant may give a Notice
electing to terminate this Lease as it relates to the applicable Leased
Property. Landlord shall notify Tenant in writing as to whether Landlord intends
to make such funds available and shall deliver such notice to Tenant not later
than ten (10) Business Days after receiving written notice from the applicable
Facility Mortgagee that such Facility Mortgagee has applied or intends to apply
(or has made a final determination not to disburse) the Award (it being
acknowledged and agreed by the parties hereto that if Landlord advances any
funds under this Paragraph 23(d), the Lease Basis will not be increased in
connection with any such funding). Such termination option shall be exercised,
if at all, by termination Notice given during the fifteen (15) Business Day
period after Tenant's receipt of such notice from Landlord (time being of the
essence with respect to the giving of such termination notice by Tenant within
such time period). If Tenant elects under this Paragraph 23(d) to terminate this
Lease as it relates to the applicable Leased Property, such partial termination
shall be effective on the day on which the applicable condemning authority pays
the Award and such funds are actually applied by the applicable Facility
Mortgagee in reduction of the principal amount of the applicable Facility
Mortgage. Upon the effective date of the transactions contemplated by the
termination notice, (i) Tenant shall immediately assign Tenant's rights in and
to any Award relating to such condemnation, and (ii) from and after such
effective date until the Expiration Date, the Rent payable monthly under this
Lease shall be reduced in an amount equal to the Deleted Property Rent
Adjustment, and the applicable Deleted Property shall no longer be considered a
Leased Property for the purposes of this Lease (other than Paragraph 18(f) and
Paragraph 19(c)).

         (e) Notices. Each of Landlord and Tenant further covenants and agrees
to give the other immediate Notice of the actual or threatened commencement of
any Condemnation proceedings and to deliver to the other copies of any and all
papers served in connection with any such proceedings.

24.      Reports and Statements. Tenant shall furnish the following reports and
statements to Landlord during the Term; provided, however, that with respect to
the items listed in clauses (i) through (v) below, Tenant shall be required to
furnish same only if and to the extent such reports are required to be delivered
to any Facility Mortgagee pursuant to the loan documents relating to the
applicable Facility Mortgage, whereupon Tenant shall furnish such reports listed
in clauses (i) through (v) below simultaneously with the delivery of the same to
such Facility Mortgagee (except to the extent that (x) Tenant is legally
prohibited from delivering such information based on the facility-resident
relationship and/or the physician-resident privilege under applicable laws or
under any security, health, safety or confidentiality requirements imposed by
applicable law or regulations or (y) Tenant's ordinary business practices and
standard resident agreements, if any, require Tenant to maintain the
confidential nature of certain personal information relating to individual
residents living in the applicable Facility, in which case, such protected
information shall be redacted from the material otherwise required to be
delivered hereunder):

                                      41
<PAGE>

                  (i) copies of all licenses authorizing Tenant to operate each
         of the Facilities for its Intended Use (together with any renewals or
         extensions thereof), accompanied by an Officer's Certificate certifying
         that copies of such licenses are accurate and complete in all material
         respects;

                  (ii) true and complete copies of a report regarding the
         compliance of each of the Leased Properties with all licenses, permits
         and authorizations necessary for the use thereof in accordance with its
         Intended Use;

                  (iii) all Medicare and Medicaid certifications, together with
         provider agreements and all material correspondence relating thereto
         with respect to each of the Facilities, if any (excluding, however,
         correspondence which may be subject to any attorney-client privilege);

                  (iv) all reports or surveys, statements of deficiencies, plans
         of correction, and all material correspondence relating thereto,
         including, without limitation, all reports and material correspondence
         concerning compliance with or enforcement of licensure, Medicare/
         Medicaid (if applicable), all accreditation requirements including
         physical environment and Life Safety Code survey reports (excluding,
         however, correspondence which may be subject to any attorney-client
         privilege);

                  (v) such other confirmation as to the licensure and, if
         applicable, Medicare and Medicaid participation of Tenant as Landlord
         may reasonably request from time to time;

                  (vi) as soon as available, and in any event within thirty (30)
         days after the end of each calendar year and within thirty (30) days
         after the end of each calendar quarter with respect to the first three
         (3) quarters of each calendar year, unaudited operating statements
         prepared for such calendar year or calendar quarter, as the case may
         be, with respect to Tenant, and a quarterly operating statement for
         each Facility, each accompanied by an Officer's Certificate certifying
         that the information contained therein is true and correct in all
         material respects;

                  (vii) within thirty (30) days after the end of each calendar
         month, an income statement for the Tenant, occupancy reports and a rent
         roll (if reasonably requested by Landlord) for each of the Facilities
         (including the amounts paid by residents at each of the Facilities);
         and

                  (viii) with reasonable promptness following request from
         Landlord, information regarding licensure, regulatory compliance and,
         if applicable, Medicare and Medicaid participation, and any other
         statements, reports and other information with respect to Tenant or the
         operation of the Leased Property required pursuant to any Facility
         Mortgage or otherwise reasonably requested by Landlord.

25.      Additional Covenants of Tenant.

                                      42
<PAGE>

         (a) Indebtedness of Tenant. Tenant shall not create, incur, assume or
guarantee, or permit to exist, or become or remain liable directly or indirectly
upon, any indebtedness except the following:

                  (i) indebtedness of Tenant to Landlord or to Manager under the
Management Agreement;

                  (ii) indebtedness of Tenant for current taxes, assessments,
         governmental charges of levies, to the extent that payment thereof
         shall not at the time be required to be made in accordance with the
         provisions of Paragraph 26;

                  (iii) indebtedness of Tenant in respect of judgments or awards
         (A) either (x) which have been in force for less than the applicable
         appeal period and in respect of which execution thereof shall have been
         stayed pending such appeal or review, or (y) which are fully covered by
         insurance payable to Tenant, or (z) which are for an amount not in
         excess of $250,000.00, in the aggregate, at any one time outstanding,
         and (B) either (x) which have been in force for not longer than the
         applicable appeal period, so long as execution is not levied
         thereunder, or (y) in respect of which an appeal or proceedings for
         review shall at the time be prosecuted in good faith in accordance with
         the provisions of Paragraph 26, and in respect of which execution
         thereof shall have been stayed pending such appeal or review;

                  (iv) unsecured borrowings from any Related Party (other than
         Landlord or its Affiliates) which are by their terms expressly
         subordinate to the payment and performance of Tenant's obligations
         under this Lease;

                  (v) indebtedness for purchase money financing of goods and
         services in an amount not to exceed Fifty Thousand Dollars
         ($50,000.00), per Facility, incurred in the ordinary course of
         business, provided that any such indebtedness in excess of $50,000.00
         incurred in the ordinary course of business shall be subject to
         Landlord's consent, which shall not be unreasonably withheld,
         conditioned or delayed; or

                  (vi) unsecured trade payables incurred in the ordinary course
         of business.

         (b) Management of Leased Property; Joinder by Manager. Tenant shall not
enter into or permit to exist any management agreement with respect to any of
the Leased Properties, or make any material modification of an approved
management agreement, unless the terms thereof have been previously approved in
writing by Landlord, which approval may be withheld in Landlord's reasonable
discretion; provided, however, that Landlord hereby approves the terms of the
Management Agreement. Subject to the rights of any Facility Mortgagee, all
management fees, payments in connection with any extension of credit and fees
for services provided in connection with the operation of each of the Leased
Properties payable by Tenant to Manager under the Management Agreement are
hereby subordinated to all of the obligations of Tenant due under this Lease,
and Manager's consent to such subordination is evidenced by its joining into
this Lease solely to acknowledge and agree to the subordination and the other
terms and conditions set forth in this Paragraph 25(b). Upon replacement of the
Manager in accordance with the terms of this Lease, Tenant shall, and shall
cause the new Manager of the applicable

                                      43
<PAGE>

Leased Property or Leased Properties to, execute (x) a Manager's Consent and
Subordination of Property Management Agreement, in form and substance
reasonably acceptable to Landlord and the new Manager, which shall provide
that any fee relating to the management or operation of the applicable Leased
Property (or Leased Properties) is and shall at all times remain subordinate
to the payments of Rent hereunder and that such replacement manager shall be
subject to the termination provisions of Paragraph 28 of the Agreement
Regarding Leases, and (y) a Manager's Consent and Subordination of Property
Management Agreement, in form and substance reasonably acceptable to any
applicable Facility Mortgagee and the new Manager, which shall provide that
any fee relating to the management or operation of the applicable Leased
Property (or Leased Properties) is and shall at all times remain subordinate
to the payments under any related Facility Mortgage.

         (c) Intentionally Omitted.

         (d) Capital Additions. Subject to the provisions of Paragraph 10(c) of
the Agreement Regarding Leases, during each Lease Year of the Term, Tenant shall
expend on Capital Additions made to the Facilities, in the aggregate, an amount
at least equal to the Minimum Capital Additions Amount. As used herein, the term
"Minimum Capital Additions Amount" shall mean, with respect to the Facilities,
the product of (i) the number of units contained in the Facilities (in the
aggregate) multiplied by (ii) Four Hundred Dollars ($400) during the first (1st)
year of the Term, as such amount shall be increased on the first day of each
succeeding Lease Year of the Term after the first Lease Year of the Term in
proportion to increases in the Consumer Index, provided that in no event shall
the Minimum Capital Additions Amount be less than the Minimum Capital Additions
Amount for the prior Lease Year. If in any Lease Year Tenant fails to expend the
entire Minimum Capital Additions Amount, as required pursuant to this Paragraph
25(d), prior to the end of such Lease Year, Tenant shall pay any such shortfall
amount to Landlord, which funds shall be deposited into the Capital Additions
Reserve (as defined in the Agreement Regarding Leases) (or a similar account
required in connection with any Facility Mortgage(s)), for expenditure by Tenant
as required herein. If Tenant funds any such shortfall amount to the Capital
Additions Reserve prior to the end of the applicable Lease Year, no default
shall be deemed to have occurred hereunder. Provided no Event of Default exists
hereunder any such escrowed funds shall be disbursed by Landlord from time to
time during the Term, in accordance with the terms and conditions set forth in
Paragraph 10(d) of the Agreement Regarding Leases, to be used in connection with
Capital Additions requiring funds in the applicable Lease Year in excess of the
Minimum Capital Additions Amount, as more particularly described in Paragraph
10(c) and Paragraph 10(d) of the Agreement Regarding Leases. Subject to the
provisions of Paragraph 12(a) of the Agreement Regarding Leases, the Minimum
Capital Additions Amount may be adjusted from time to time based on the
requirements of any Facility Mortgagee, provided any such provisions regarding
the funding of capital replacement reserves under any future Facility Mortgage
shall be in compliance with the requirements of Paragraph 54(b). In addition,
Landlord and Tenant agree to review the Minimum Capital Additions Amount
periodically (but in no event less than annually), to provide for the proper
operation and maintenance of each of the Facilities.

         (e) Capital Additions Reserve. Upon Landlord's written request, or if
Tenant deposits any funds in accordance with Paragraph 25(d), or if otherwise
required by any Facility Mortgagee, Tenant shall establish a reserve fund for
the Minimum Capital Additions Amount

                                      44
<PAGE>

(the "Capital Additions Reserve"), which reserve fund shall be held in
Landlord's name or in the name of the Facility Mortgagee, if applicable, in an
escrow account with a financial institution designated by Landlord or by the
Facility Mortgagee, if applicable. If the Capital Additions Reserve is
established, Tenant shall deposit therein one-twelfth (1/12th) of the Minimum
Capital Additions Amount each month. All moneys deposited into the Capital
Additions Reserve shall be maintained for the payment of, or reimbursement to
Tenant for, Capital Additions Costs (other than with respect to Landlord
Capital Additions). Tenant shall convey, pledge and grant to Landlord or the
Facility Mortgagee, as applicable, a security interest in the Capital
Additions Reserve in order to secure Tenant's obligations to pay Rent and
other charges under this Lease. Tenant shall cooperate with Landlord and the
Facility Mortgagee, if applicable, in connection with perfecting any such
security interest.

         (f) Operation of each of the Facilities. Tenant shall operate each of
the Facilities in at least as high a standard of operation as the Facilities are
currently operated as of the date of this Lease.

         (g) North Oaks Zoning Compliance. Tenant shall use its best efforts to
obtain, not later than fifty-five (55) days after the date hereof, (i) a
modification of the conditional use permit relating to the North Oaks Facility
that will reinstate the effectiveness of such conditional use permit and (ii)
consent (in form reasonably satisfactory to Landlord) from the Governmental
Agency granting such conditional use permit to the sale and lease back
transaction contemplated by the Stock Purchase Agreement (as defined in the
Agreement Regarding Leases), as it relates to the North Oaks Facility. If Tenant
fails to obtain the conditional use permit modification and the consent referred
to above in this Paragraph 25(g) on or before the date that is fifty-five (55)
days after the date hereof, then, on the date that is fifty-five (55) days after
the date hereof, Tenant shall purchase from Landlord the North Oaks Facility for
a purchase price equal to the sum of (A) $10,081,490 plus (B) all out-of-pocket
costs and expenses reasonably incurred by Landlord in connection with such
repurchase (including, without limitation, any legal fees and transfer taxes),
time being of the essence with respect to Tenant's obligation to consummate the
repurchase transaction on or before the date that is fifty-five (55) days after
the date hereof. If Tenant consummates the repurchase transaction as set forth
above in this Paragraph 25(g), then from and after the date of the closing of
such sale and repurchase, (1) the North Oaks Facility shall be deleted from the
definition of Leased Property, except with respect to Tenant's obligations under
Paragraph 19(c), and (2) the Lease Basis shall be reduced by $10,081,490.

26.     Permitted Contests. Tenant shall have the right to contest the amount or
validity of any Legal Requirement, Insurance Requirement, Lien, Imposition,
charge or other claim (collectively, "Claims") as to any of the Leased
Properties, by appropriate legal proceedings, conducted in good faith and with
due diligence, provided that (i) the foregoing shall in no way be construed as
relieving, modifying or extending Tenant's obligation to pay any Claims as
finally determined; (ii) such contest shall not cause Landlord to be in default
under any Facility Mortgage; (iii) no part of the applicable Leased Property nor
any Rent therefrom shall be in any immediate danger of sale, forfeiture,
attachment or loss; and (iv) Tenant shall indemnify and hold harmless Landlord
from and against any cost, claim, damage, penalty or reasonable expense,
including reasonable attorneys' fees, incurred by Landlord in connection
therewith or as a result thereof. Upon Landlord's request, Tenant shall either
(i) provide a bond, title indemnity, endorsement or other assurance reasonably
satisfactory to Landlord that all Claims which may be

                                      45
<PAGE>

assessed against the applicable Leased Property, together with all interest
and penalties thereon, will be paid, or (ii) deposit within the time otherwise
required for payment with the Escrow Agent or another financial institution
reasonably acceptable to Landlord, as security for the payment of such Claims,
an amount sufficient to pay the same, together with interest and penalties in
connection therewith and all Claims which may be assessed against or become a
Claim on or with respect to the applicable Leased Property, or any part
thereof, in connection with any such contest. Tenant shall furnish Landlord
with reasonable evidence of such deposit, title indemnity, endorsement or
other assurance within five (5) Business Days after request therefor. Landlord
agrees to join in such proceedings if required legally to prosecute such
contest (and shall cooperate with Tenant's reasonable requests in connection
therewith, at Tenant's sole cost and expense), provided that Landlord shall
not thereby be subjected to any liability therefor (including, without
limitation, for the payment of any costs or expenses in connection therewith).
Tenant shall be entitled to any refund of any Claims and such charges and
penalties or interest thereon which have been paid by Tenant or paid by
Landlord and for which Landlord has been fully reimbursed by Tenant. If Tenant
shall fail (A) to pay any Claims promptly after such Claim is finally
determined (provided no appeal has been commenced and under applicable law no
payment is required to be made during the pendency of any appeal), (B) to
provide security therefor as provided in this Paragraph 26, or (C) to
prosecute any such contest diligently and in good faith, Landlord may, upon
reasonable Notice to Tenant, pay such charges, together with interest and
penalties due with respect thereto, and Tenant shall reimburse Landlord
therefor, upon demand.

27.      Notices of Commencement of Construction. If required by the laws of the
Facility State with respect to the related Leased Property or in the event
permitted by the laws of the Facility State with respect to the related Leased
Property and Landlord so requests, upon Tenant giving Notice to Landlord of its
intended construction, and if Tenant reasonably contemplates that construction
of any work on the applicable Leased Property will cost, in the aggregate, Two
Hundred Fifty Thousand Dollars ($250,000.00) or more for such project, prior to
commencement by Tenant of any work on the applicable Leased Property which shall
have been previously permitted by Landlord as provided in this Lease, Tenant
shall record or file a notice of the commencement of such work (the "Notice of
Commencement") in the land records of the county in which such Leased Property
is located, identifying Tenant as the party for whom such work is being
performed, stating such other matters as may be required by applicable law and
requiring the service of copies of all notices, liens or claims of lien upon
Landlord. Any such Notice of Commencement shall clearly reflect that the
interest of Tenant in the applicable Leased Property is that of a leasehold
estate and shall also clearly reflect that the interest of Landlord, as the fee
simple owner of the applicable Leased Property, shall not be subject to
mechanics or materialmen's liens on account of the work which is the subject of
such Notice of Commencement. A copy of any such Notice of Commencement shall be
furnished to and approved by Landlord (in Landlord's reasonable discretion) and
its attorneys prior to the recording or filing thereof, as aforesaid.

28.      Limitation on Liability of Landlord and Tenant. If Tenant is awarded a
money judgment against Landlord, then Tenant's sole recourse for satisfaction
of such judgment shall be limited to execution against the applicable Leased
Property. In no event shall any trustee, stockholder, shareholder, member,
manager, partner, employee, officer or beneficiary of Landlord be personally
liable for the obligations of Landlord hereunder. Except to the extent

                                      46
<PAGE>

expressly provided in the Guaranty and the Lease Guaranty or in the Agreement
Regarding Leases, in no event shall any trustee, shareholder, member,
guarantor, partner, employee, officer or beneficiary of Tenant or any
Affiliate of Tenant be personally liable for any of the obligations of Tenant
hereunder.

29.      "Net" Lease/No Impairment.

         (a) "Net" Lease. Landlord and Tenant acknowledge and agree that this
Lease shall be and constitute what is generally referred to as a "triple net" or
"absolute net" lease, such that Tenant shall be obligated hereunder to pay all
costs and expenses howsoever incurred with respect to, and associated with, each
of the Leased Properties and each of the Facilities, including, without
limitation, all Impositions, utility charges, insurance costs, maintenance
costs, replacement costs and repair and restoration expenses (all as more
particularly herein provided).

         (b) No Affect or Impairment. The obligations of Tenant hereunder shall
not be affected or impaired by reason of (a) any damage to, or destruction of,
any of the Leased Properties or any portion thereof, from whatever cause, or any
Condemnation of any of the Leased Properties or any portion thereof (except as
otherwise expressly and specifically provided in Paragraph 17 or Paragraph 23),
(b) the interruption or discontinuation of any service or utility servicing any
of the Leased Properties, (c) the lawful or unlawful prohibition of, or
restriction upon, Tenant's use of the Leased Property, or any portion thereof,
due to the interference with such use by any Person or eviction by paramount
title, except as provided in Paragraph 33, (d) except as provided in Paragraph
22, any claim that Tenant has or might have against Landlord on account of any
breach of warranty or default by Landlord under this Lease or any other
agreement by which Landlord is bound, (e) any bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution, winding up
or other proceedings affecting Landlord or any assignee or transferee of
Landlord, (f) the revocation, suspension or non-renewal of any license, permit,
approval or other authorization necessary for the use of any of the Facilities
for its Intended Use, or (g) for any other cause whether similar or dissimilar
to any of the foregoing other than a discharge of Tenant from any such
obligations as a matter of law. Tenant hereby specifically waives all rights,
arising from any occurrence whatsoever, which may now or hereafter be conferred
upon it by law (i) to modify, surrender or terminate this Lease or quit or
surrender any of the Leased Properties or any portion thereof, or (ii) that
would entitle Tenant to any abatement, reduction, suspension or deferment of the
Rent or other sums payable by Tenant hereunder. The obligations of Landlord and
Tenant hereunder shall be separate and independent covenants and agreements and
the Rent and all other sums payable by Tenant hereunder shall continue to be
payable in all events unless otherwise expressly provided herein.

30.      Representations and Warranties

         (a) Representations of Tenant. To induce Landlord to enter into this
Lease, Tenant represents and warrants to Landlord as follows:

                  (i) Status and Authority of Tenant. Tenant is a limited
         liability company duly organized, validly existing and in corporate
         good standing under the laws of the State of Delaware. Tenant has all
         requisite power and authority to enter into and perform its obligations
         under this Lease and to consummate the transactions contemplated
         hereby,

                                      47
<PAGE>

         including such licensing as may be required for Tenant to lease
         and Manager to operate each of the Leased Properties for its respective
         Intended Use as a senior independent and assisted living facility;
         provided, however, that Tenant has informed Landlord that the
         conditional use permit relating to the North Oaks Facility is not in
         full force an effect. Tenant has duly qualified to transact business in
         each jurisdiction in which the nature of the business conducted by it
         requires such qualification.

                  (ii) Action of Tenant. Tenant has taken all necessary action
         to authorize the execution, delivery and performance of this Lease, and
         this Lease constitutes the valid and binding obligation and agreement
         of Tenant, enforceable against Tenant in accordance with its terms,
         except as enforceability may be limited by bankruptcy, insolvency,
         reorganization, moratorium or similar laws of general application
         affecting the rights and remedies of creditors.

                  (iii) No Violations of Agreements. To the best of Tenant's
         knowledge, except as permitted or contemplated by this Lease or the
         Facility Mortgage, neither the execution, delivery or performance of
         this Lease by Tenant, nor compliance with the terms and provisions
         hereof, will result in any breach of the terms, conditions or
         provisions of, or conflict with or constitute a default under, or
         result in any breach of the terms, conditions or provisions of, or
         conflict with or constitute a default under, or result in the creation
         of any lien, charge or encumbrance upon any of the Leased Properties
         pursuant to the terms of any indenture, mortgage, deed of trust, note,
         evidence of indebtedness or any other material agreement or instrument
         by which Tenant is bound.

                  (iv) Litigation. Tenant has received no written notice, and,
         to Tenant's knowledge, no action or proceeding is pending or
         threatened, which questions the validity of this Lease.

         (b) Representations of Landlord. To induce Tenant to enter into this
Lease, Landlord represents and warrants to Tenant as follows:

                  (i) Status and Authority of Landlord. Landlord is a duly
         organized, validly existing limited liability company and in good
         standing under the laws of the State of Delaware, and has all requisite
         power and authority under the laws of such state to enter into and
         perform its obligations under this Lease and, to consummate the
         transactions contemplated hereby. Landlord has duly qualified and is in
         good standing in each jurisdiction in which the nature of the business
         conducted by it required such qualification.

                  (ii) Action of Landlord. Landlord has taken all necessary
         action to authorize the execution, delivery and performance of this
         Lease, and, upon the execution and delivery of this Lease by Landlord,
         this Lease shall constitute the valid and binding obligation and
         agreement of Landlord, enforceable against Landlord in accordance with
         its terms, except as enforceability may be limited by bankruptcy,
         insolvency, reorganization, moratorium or similar laws of general
         application affecting the rights and remedies of creditors.

                                      48
<PAGE>

                  (iii) No Violations of Agreements. Neither the execution,
         delivery or performance of this Lease by Landlord, nor compliance with
         the terms and provisions hereof, will result in any breach of the
         terms, conditions or provisions of, or conflict with or constitute a
         default under, or result in any creation of any lien, charge or
         encumbrance upon any of the property or assets of Landlord pursuant to
         the terms of any indenture, mortgage, deed of trust, note, evidence of
         indebtedness or any other material agreement or instrument by which
         Landlord is bound.

                  (iv) Litigation. No investigation, action or proceeding is
         pending and, to Landlord's knowledge, no action or proceeding is
         threatened which questions the validity of this Lease or any action
         taken or to be taken pursuant hereto.

31.      Notices. All notices, approvals, requests, consents and other
communications ("Notices") given pursuant to this Lease shall be in writing
and shall be deemed to have been duly given (i) when actually received if
either (A) hand delivered or (B) sent by facsimile transmission, with evidence
of receipt; (ii) two (2) days after the same was deposited in a regularly
maintained receptacle for the deposit of United States mail, sent by
registered or certified mail, postage and charges prepaid; or (iii) on the
next Business Day if sent via a national overnight delivery service,
addressed, in each case, as follows or at such other address as either party
may specify from time to time by Notice to the other party at least five (5)
days prior Notice to the other party of the changed address:

         If to Tenant:         ALS Properties Tenant I, LLC
                               c/o Alterra Healthcare Corporation
                               6737 W. Washington Street, Suite 2300
                               Milwaukee, Wisconsin  53214
                               Attention:  Mark W. Ohlendorf
                               Telephone:  (414) 918-5403
                               Facsimile:  (414) 918-5055

         with a copy to:       Rogers & Hardin LLP
                               229 Peachtree Street, N.E., Suite 2700
                               Atlanta, Georgia 30303
                               Attention:  Miriam J. Dent, Esq.
                               Telephone:  (404) 420-4608
                               Facsimile:  (404) 525-2224

         If to Guarantor:      ALS Properties Holding Company, LLC
                               c/o Alterra Healthcare Corporation
                               6737 W. Washington Street, Suite 2300
                               Milwaukee, Wisconsin  53214
                               Attention:  Mark W. Ohlendorf
                               Telephone:  (414) 918-5403
                               Facsimile:  (414) 918-5055

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<PAGE>

         with a copy to:       Rogers & Hardin LLP
                               229 Peachtree Street, N.E., Suite 2700
                               Atlanta, Georgia 30303
                               Attention:  Miriam J. Dent, Esq.
                               Telephone:  (404) 420-4608
                               Facsimile:  (404) 525-2224

         If to Landlord:       PSLT-ALS Properties I, LLC
                               c/o Provident Senior Living Trust
                               600 College Road East, Suite 3400
                               Princeton, New Jersey 08540
                               Attention:  General Counsel
                               Telephone:  (609) 720-0825
                               Facsimile:  (609) 720-0826

         with a copy to:       Sidley Austin Brown & Wood llp
                               787 Seventh Avenue
                               New York, New York 10019
                               Attention:  Scott Freeman, Esq.
                               Telephone:  (212) 839-7358
                               Facsimile:  (212) 839-5599

32.      No Waiver. No course of dealing between Landlord and Tenant, or any
delay or omission of Landlord or Tenant to insist upon a strict performance of
any term or condition of this Lease shall be deemed a waiver of any right or
remedy that such party may have, and shall not be deemed a waiver of any
subsequent breach of such term or condition.

33.      Quiet Enjoyment. Landlord covenants that Tenant, upon paying the Rent
and observing and keeping the covenants, agreements and stipulations of this
Lease on its part to be kept, shall lawfully, peaceably and quietly hold,
occupy and enjoy each of the Leased Properties during the Term without
hindrance, ejection or molestation. Landlord covenants and warrants that it is
lawfully seized of each of the Leased Properties and has good, right and
lawful authority to enter into this Lease for the full term aforesaid, that
each of the Leased Properties is free and clear of all encumbrances that would
prevent Landlord from having such right and authority and that Landlord will
put Tenant in actual possession of each of the Leased Properties on the
Commencement Date.

34.      Intentionally Omitted.

35.      Subordination, Non-Disturbance and Attornment. If Landlord places a
Facility Mortgage on any of the Leased Properties, Landlord agrees to cause
the Facility Mortgagee to execute and deliver to Tenant, and Tenant agrees to
enter into, execute and deliver promptly to the Facility Mortgagee, a
subordination, non-disturbance and attornment agreement substantially similar
to the form attached hereto as Exhibit C (the "Subordination Agreement") with
any such Facility Mortgagee, which shall provide, among other things, that if
the Facility Mortgagee or any other Person acquires title to the applicable
Leased Property, so long as no Event of Default has occurred and is continuing
hereunder, Tenant's leasehold estate, possession and occupancy

                                      50
<PAGE>

of such Leased Property shall not be disturbed, and which Subordination
Agreement shall acknowledge that (subject to the foregoing) this Lease,
Tenant's interest hereunder and Tenant's leasehold interest in and to each of
the Leased Properties is junior, inferior, subordinate and subject in right,
title, interest, lien, encumbrance, priority and all other respects to the
lien of the applicable Facility Mortgage. If, within fifteen (15) days
following Tenant's receipt of a written request by Landlord or the holder or
proposed holder of any such Facility Mortgage, Tenant shall fail or refuse or
shall have not executed any such Subordination Agreement, Tenant shall be in
breach and default of its obligation to do so and of this Lease and Landlord
shall be entitled thereupon to exercise any and all remedies available to
Landlord pursuant to this Lease or otherwise provided by law.

36.     Brokers. Each of Landlord and Tenant represent and warrant to the other
that neither of them has engaged or contracted with any person, firm or entity
to serve or act as a broker, agent or finder for the purpose of leasing any of
the Leased Properties, and that no broker's or real estate or other similar
commissions or fees are or shall be due in respect of the transaction
contemplated by this Lease. Each of Landlord and Tenant shall indemnify,
defend and save harmless the other from and against any cost and expense,
including reasonable attorney's fees, incurred by the other as a result of the
untruth of any of the foregoing representations made by it. The terms of this
Paragraph 36 shall survive the termination or expiration of this Lease.

37.      Invalidity. If any provision of this Lease shall be declared invalid or
unenforceable, the remainder of this Lease shall continue in full force and
effect.

38.      Counterparts. This Lease may be executed in two (2) or more
counterparts, which taken together shall be deemed one (1) original.

39.      Memorandum of Lease. The parties hereto agree not to record this
Lease. The parties agree to execute and to record in the appropriate local
registry where each of the Facilities is located, at Tenant's sole cost and
expense, one (1) or more Memoranda of Lease substantially in the form attached
hereto as Exhibit B.

40.      Cumulative. All rights and remedies of Landlord and Tenant herein
shall be cumulative and none shall be exclusive of any other or of any rights
and remedies allowed by law.

41.      Governing Law. Except as to matters regarding the internal affairs of
Landlord and issues of or limitations on any personal liability of the members
or managers of Landlord for obligations of Landlord, as to which the laws of the
State of Delaware shall govern, this Lease shall be interpreted, construed,
applied and enforced with respect to each applicable Leased Property in
accordance with the laws of the Facility State in which such Leased Property is
located.

42.      Successors and Assigns; Relationship. The covenants, terms, conditions,
provisions, and undertakings in this Lease shall extend to and be binding upon
the permitted successors, and assigns of the respective parties hereto, and
shall be construed as covenants running with the land. This Lease creates and
evidences a lease between Landlord and Tenant, and not a partnership, joint
venture, or other type of ownership, inconsistent with a lease, and neither
Landlord nor Tenant shall make any representation to the contrary.

                                      51
<PAGE>

43.      Entire Agreement. Except for the terms and conditions of the Agreement
Regarding Leases, this Lease and any exhibits attached hereto, contains the
entire agreement and understanding between the parties with respect to the
subject matter hereof. There are no oral understandings, terms, or conditions,
and neither party has relied upon any representation, express or implied, with
respect to the subject matter hereof not contained in this Lease or the
Agreement Regarding Leases. All prior understandings, terms, or conditions with
respect to the subject matter hereof are deemed merged in this Lease. This Lease
cannot be changed or supplemented orally, but may be modified or amended only by
a written instrument executed by the parties. Any disputes regarding the
interpretation of any portion of this Lease shall not be presumptively construed
against the drafting party.

44.      Survival. Tenant's indemnity obligations herein, including, without
limitation, those set forth in Paragraphs 18(f) and Paragraph 19(c) shall
survive termination of this Lease for two (2) years.

45.      Estoppel Certificates. Each of Landlord and Tenant shall from time to
time, within fifteen (15) Business Days after request by the other and without
charge, give to any person, firm or corporation specified by the requesting
party an estoppel certificate containing such matters with respect to this
Lease as may be reasonably requested. If the estoppel certificate is not
returned within such fifteen (15) Business Day period, such party shall be
deemed to have consented to the information contained therein as if it had
executed such Estoppel Certificate and returned it to the requesting party.

46.      Time. Time is of the essence in every particular of this Lease,
including, without limitation, obligations for the payment of money.

47.      Captions and Headings. The captions and headings in this Lease have
been inserted herein only as a matter of convenience and for reference and in
no way define, limit or describe the scope or intent of, or otherwise affect,
the provisions of this Lease.

48.      Waiver of Jury Trial. TO THE EXTENT ALLOWED BY APPLICABLE LAW, TENANT
AND LANDLORD HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT
EITHER OF THEM OR THEIR HEIRS, PERSONAL REPRESENTATIVES, SUCCESSORS OR ASSIGNS
MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS LEASE OR ANY AGREEMENT CONTEMPLATED TO BE
EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION
IS A MATERIAL INDUCEMENT TO LANDLORD'S ACCEPTING THIS LEASE.

49.      Signage. Tenant shall have the right to install signs containing
Tenant's trade name and such other identification signs on each of the Leased
Properties as are permitted by applicable Legal Requirements. Tenant shall
obtain all governmental permits, licenses and approvals necessary to erect
such signs, and shall maintain such signs in good condition and repair,
ordinary wear and tear excepted (subject to Tenant's obligations under clauses
(ii) and (iii) of

                                      52
<PAGE>

Paragraph 8(a)). Tenant shall not remove any identification signs without
first obtaining Landlord's written consent, which shall not be unreasonably
withheld or delayed.

50.      Guaranty. At the time of Tenant's execution of this Lease, Tenant shall
obtain the execution of the guaranty agreement in the form of Exhibit D attached
hereto ("Guaranty") by Guarantor.

51.      Intentionally Omitted.

52.      Public Offering Information; Delivery of Information. Tenant
specifically agrees that Landlord (or Landlord's direct or indirect Parent)
may include financial information and information concerning Tenant, Lease
Guarantor, Guarantor and the operation of each of the Leased Properties that
does not violate the confidentiality of the facility-resident relationship and
the physician-resident privilege under applicable laws, in offering memoranda
or prospectuses, or similar publications in connection with syndications,
private placements or public offerings of Landlord's (or Landlord's direct or
indirect Parent's) securities or interests, and any other reporting
requirements under applicable federal and state laws, including those of any
successor to Landlord (or Landlord's direct or indirect Parent). Tenant agrees
to provide such other reasonable information necessary with respect to Tenant,
the Facilities, and each of the Leased Properties to facilitate a private
placement or a public offering or to satisfy the SEC or regulatory disclosure
requirements. Tenant agrees to cause, at Landlord's sole cost and expense,
Tenant's independent accountants to consent to the inclusion of their audit
report issued with respect to such financial statements in any registration
statement or other filing under federal and state laws and to provide the
underwriters participating in any offering of securities or interests of
Landlord (or Landlord's direct or indirect Parent) with a standard
accountant's "comfort" letter with regard to the financial information of
Tenant or the Leased Properties included or incorporated by reference into any
prospectus or other offering document. Tenant also agrees to make available to
any underwriter participating in an offering of Landlord's (or Landlord's
direct or indirect Parent's) securities or interests, and any attorney,
accountant or other agent or representative retained by an underwriter (an
"Inspector"), all financial and other records and pertinent corporate
documents of Tenant as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause Tenant's directors,
officers and employees to supply all information requested by any such
Inspector in connection with such offering. Prior to any submission or
circulation of any such offering memoranda, prospectuses or similar
publications, Landlord shall provide to Tenant such documents for the purpose
of reviewing same. Upon request of Landlord, Tenant shall notify Landlord of
any necessary corrections to information Landlord proposes to publish within a
reasonable period of time (not to exceed three (3) Business Days) after being
informed thereof by Landlord.

53.     Appraisal Procedure. If it becomes necessary to determine the Fair
Market Value of one (1) or more the Facilities for any purpose of this Lease
and the parties cannot agree thereon, such Fair Market Value shall be
determined upon the written demand of either party in accordance with the
following procedure:

                  (i) The party requesting an appraisal, by Notice given within
         thirty (30) days after the date of the event that requires or permits
         such procedure, shall propose and unilaterally approve an appraiser
         licensed to perform MAI appraisals and experienced in

                                      53
<PAGE>

         the valuation of assisted living, independent living or skilled
         nursing facilities (a "Qualified Appraiser"). The other party, by
         Notice given within fifteen (15) days after receipt of such Notice
         appointing the first Qualified Appraiser, may appoint a second
         Qualified Appraiser. If the other party fails to appoint the second
         Qualified Appraiser within such fifteen (15) day period, such party
         shall have waived its right to appoint a Qualified Appraiser, and the
         first Qualified Appraiser shall make the sole determination of the
         Fair Market Value.

                  (ii) The selected Qualified Appraiser or Appraisers shall
         thereupon determine the Fair Market Value of the applicable Leased
         Property or Leased Properties. Each such Qualified Appraiser shall,
         within thirty (30) days following its appointment, submit its appraisal
         of such fair market value to each of Landlord and Tenant in writing,
         and if the amounts set forth in such appraisals vary by five percent
         (5%) or less of the greater value, the Fair Market Value of the
         applicable Leased Property or Leased Properties shall be determined by
         calculating the average of the two determinations by the two
         appraisers.

                  (iii) If the fair market values set forth in the two
         appraisals vary by more than five percent (5%) of the greater of the
         two values, the two Qualified Appraisers shall select a third Qualified
         Appraiser within an additional fifteen (15) days following the
         submittal of the last appraisal. If the two appraisers are unable to
         agree upon the appointment of a third appraiser within such fifteen
         (15) day period, either party may, upon written notice to the other,
         request that such appointment be made by the then President (or
         equivalent officer) of the Chapter of the American Institute of Real
         Estate Appraisers in the Facility State for each of the applicable
         Leased Properties, or his or her designee or, if there is no such
         organization or if such individual declines to make such appointment,
         by any state or Federal court of competent jurisdiction for the
         Facility State for each of the applicable Leased Properties.

                  (iv) Within twenty (20) days following its selection, the
         third appraiser shall review the two (2) appraisals and select the
         appraisal that it determines most clearly reflects the fair market
         value. The selected fair market value shall then be the Fair Market
         Value of the applicable Leased Property or Leased Properties.

                  (v) In connection with the appraisal process, Tenant shall
         provide the appraisers full access during normal business hours to
         examine the applicable Facility or Facilities, the books, records and
         files of Tenant and all agreements, leases and other operating
         agreements relating to the applicable Facility or Facilities. The costs
         of each party's appraisal shall be borne by the selecting party and the
         cost of the third appraisal shall be shared equally. Upon determining
         such value, the appraisers shall promptly notify Landlord and Tenant in
         writing of such determination. The determination of the Qualified
         Appraisers made in accordance with the foregoing provisions shall be
         final and binding upon the parties, such determination may be entered
         as an award in arbitration in a court of competent jurisdiction, and
         judgment thereon may be entered.

54.      Facility Mortgages.

                                      54
<PAGE>

         (a) Cooperation in Obtaining Facility Mortgages. Tenant agrees, at
Landlord's cost and expense, to cooperate with Landlord's reasonable requests to
assist Landlord in obtaining one (1) or more Facility Mortgage(s) with respect
to Landlord's fee interest in one (1) or more of the Leased Properties. Subject
to the execution of a reasonably satisfactory confidentiality agreement, and
provided there is no violation of (i) any security, health, safety, or
confidentiality requirements of any Governmental Agency or imposed by applicable
law or regulations and/or (ii) Tenant's ordinary business practices and standard
resident agreements, if any requiring Tenant to maintain the confidential nature
of certain personal information relating to individual residents living in the
applicable Facility, Tenant agrees to provide such information as is reasonably
requested by Landlord or any proposed Facility Mortgagee with respect to Tenant,
Guarantor or the operation of the applicable Leased Property or Leased
Properties to facilitate in obtaining such Facility Mortgage.

         (b) Compliance With Facility Mortgages. Tenant agrees to operate each
of the Facilities and to maintain each of the Facilities and all of the Leased
Properties in a manner that complies in all material respects with the terms of
any Facility Mortgage, provided the same do not conflict with the terms of this
Lease (subject to the penultimate sentence of this Paragraph 54(b)). Tenant
shall make all deliveries of information with respect to the applicable Leased
Property available to Tenant and required under such Facility Mortgages and
shall otherwise comply with the operational requirements in such Facility
Mortgages, provided the same do not conflict with the terms of this Lease
(subject to the penultimate sentence of this Paragraph 54(b)), including,
without limitation, complying in all material respects with the insurance
requirements (subject to the proviso in the penultimate sentence of this
Paragraph 54(b)) and the financial reporting requirements. Tenant shall not have
any right to approve the terms of any Facility Mortgage, and Landlord may enter
into any Facility Mortgage as Landlord may determine in Landlord's sole and
absolute discretion; provided, however, that Landlord agrees that the business
terms, provisions and conditions contained in any Facility Mortgage shall be
commercially reasonable in the then current market at the time that such
Facility Mortgage is obtained and shall be reasonably consistent with the then
current standards for similar-type financing transactions affecting similar
types of properties as reflected, generally, in mortgages, deeds of trust and
security deeds encumbering other assisted living and independent living
facilities which are similar to those owned and/or managed by Guarantor or its
direct or indirect subsidiaries (provided, however, that with respect to
assessing whether the insurance requirements under the proposed Facility
Mortgage satisfy the foregoing requirement, the standard set forth in Paragraph
18(a)(xiv) shall govern); provided, further, that in no event shall the terms of
any Facility Mortgage increase the Base Rent payable hereunder or alter the
payment schedule for Base Rent, and Tenant agrees that Tenant's obligation to
comply with the terms of any such Facility Mortgage shall not be deemed to be in
contravention or conflict with the terms of this Lease, even in cases where the
Facility Mortgage imposes obligations that are greater than the obligations of
Tenant under this Lease. Landlord shall deliver to Tenant drafts of all proposed
new Facility Mortgage loan documents at least fifteen (15) Business Days prior
to entering into same.

         (c) Escrow Reserve Accounts Under Facility Mortgages. For purposes of
this Lease, any funds on deposit in any escrow reserve account required under
any Facility Mortgage (other than any principal reserve funds) that were funded
by Tenant in accordance with Tenant's obligations under this Lease shall be
deemed to be the property of Tenant. If during the term,

                                      55
<PAGE>

any Facility Mortgage is refinanced and the terms of the replacement Facility
Mortgage do not require Landlord to establish escrows at the inception
thereof, then any amounts then held in escrow reserve accounts (other than
principal reserve accounts) shall be disbursed to Tenant, and any amounts then
held in principal reserve accounts shall be disbursed to Landlord. Subject to
Section 16, at the expiration of the Term, any funds on deposit in any escrow
reserve account (other than any principal reserve account) that were funded by
Tenant in accordance with Tenant's obligations under this Lease shall be
promptly returned to Tenant.

55.      Escrows Held by Facility Mortgagee. Tenant shall be responsible for
funding the real estate tax, capital improvement reserve account, deferred
maintenance reserve account and other property-related reserve accounts under
any Facility Mortgage to the extent that such reserves are used to fund any of
Tenant's obligations under this Lease; provided, however, that Tenant shall
not in any event be required to fund deposits into any principal repayment
reserve account. Provided no Event of Default has occurred and is continuing,
Landlord shall cooperate with Tenant to make available to Tenant for use in
accordance with the terms of the Facility Mortgage amounts held in escrow by
any Facility Mortgagee or any Facility Mortgage on any of the other Leased
Properties, excluding amounts on deposit in debt service reserve funds and
amounts held as tenant security deposits, for the uses established therefor in
accordance with the terms of the applicable Facility Mortgage (i.e., payment
of taxes or insurance premiums; capital expenditures) and which are required
to be performed by Tenant under this Lease. Tenant shall cooperate with
Landlord in requesting the disbursement of such amounts from the applicable
Facility Mortgagee in accordance with the provisions of the Facility Mortgage,
and shall promptly furnish to Landlord such documents and other evidence
requested by the applicable Facility Mortgagee in connection therewith.

56.     Single Lease. Tenant hereby acknowledges that the agreement between
Landlord and Tenant to treat this Lease as single lease in all respects was
and is of primary importance to Landlord, and Landlord would not have entered
into this Lease without there being such an agreement and such treatment of
this Lease. All rights and obligations under this Lease relating to the Leased
Properties shall apply to each Leased Property and any default under this
Lease pertaining to a single Leased Property or to all of the Leased
Properties or any portion thereof shall be an Event of Default pertaining to
all of the Properties and each of the Leased Properties. Without limiting the
generality of the foregoing, the parties hereto acknowledge that,
notwithstanding any references herein to any individual Leased Property and
notwithstanding the possibility that certain individual Leased Properties may
be deleted herefrom pursuant to the express provisions of this Lease under
certain limited circumstances, the parties hereto expressly intend and agree
that this Lease is not divisible and shall be treated as a single lease for
all purposes whatsoever (including, without limitation, in the context of
Tenant's attempted rejection, assumption and/or assignment of this Lease in
any bankruptcy or other insolvency proceeding affecting any Tenant, in which
case the parties hereto intend for such rejection to terminate this Lease with
respect to all of the Leased Properties or such assumption to apply with
respect to all of the Leased Properties, i.e., all but not less than all of
the Leased Properties). This Lease does not constitute, and may not be
enforced or treated as, a separate lease for any individual Leased Property.

                 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      56
<PAGE>

         IN WITNESS WHEREOF, the parties have hereunto executed this Lease the
day and year first above written.

                                   LANDLORD:
                                   --------

                                   PSLT-ALS PROPERTIES I, LLC,
                                   a Delaware limited liability company

                                   By:  Provident Senior Living Trust, a
                                        Maryland real estate investment trust,
                                        its sole member
                                   By:_________________________________________
                                        Name: Saul A. Behar
                                        Title:  Senior Vice President

                                   TENANT:
                                   ------

                                   ALS PROPERTIES TENANT I, LLC,
                                   a Delaware limited liability company

                                   By:  ALS Properties Holding Company, LLC,
                                        a Delaware limited liability company,
                                        its sole member

                                   By:_______________________________
                                        Name:
                                        Title:

                  [SIGNATURES CONTINUE ON THE FOLLOWING PAGE]

<PAGE>

Manager hereby joins into this Property Lease Agreement for the limited purposes
set forth in Paragraph 25(b):

MANAGER:

ALTERRA HEALTHCARE CORPORATION,
a Delaware Corporation

By:_______________________________
   Name:
   Title:

<PAGE>

                                   EXHIBIT A

                               LEGAL DESCRIPTION

                                  Exhibit A-1

<PAGE>

                                   EXHIBIT B

                      FORM OF MEMORANDUM OF MASTER LEASE

This instrument prepared by and upon recordation return to:

___________________
___________________
___________________
___________________

   ________________________________________________________________________

                          MEMORANDUM OF MASTER LEASE

         THIS MEMORANDUM OF MASTER LEASE (this "Memorandum") is made and
entered into this ___ day of October, 2004 by and between PSLT-ALS PROPERTIES
I, LLC, a Delaware limited liability company, with an address at c/o Provident
Senior Living Trust, 600 College Road East, Suite 3400, Princeton, New Jersey
08540 ("Landlord"), and ALS PROPERTIES TENANT I, LLC, a Delaware limited
liability company, with an address at c/o Alterra Healthcare Corporation, 6737
West Washington Street, Suite 2300, Milwaukee, Wisconsin 53214 ("Tenant").

                               WITNESSETH THAT:

         1. Landlord and Tenant entered into a Property Lease Agreement (the
"Lease") effective as of the date hereof, for premises located at the
locations listed on Schedule 1 annexed hereto and made a part hereof,
including the real property commonly known as ___________________ and more
particularly described in Exhibit A attached hereto (collectively, the
"Premises").

         2. The term of the Lease commences as of the date hereof, the date
referred to therein as the Commencement Date, and shall terminate on October
31, 2019. The Lease contains two (2) five (5) year renewal terms. The Lease
may be terminated earlier pursuant to the terms of the Lease.

         3. This Memorandum shall apply with respect to Landlord, Tenant and
each of their respective successors and permitted assigns. This Memorandum is
not intended to modify the terms of the Lease and in the event of any
ambiguity, the Lease shall control.

         4. Any notices required hereunder shall be directed to the parties
shown on Exhibit B attached hereto and made a part hereof for all purposes.

                                  Exhibit B-1

<PAGE>

         EXECUTED by the undersigned under seal with the intent that this
instrument be an instrument under seal as of the day, month and year first
above written.

                                         LANDLORD:
                                         ---------

                                         PSLT-ALS PROPERTIES I, LLC
                                         a Delaware limited liability company

                                         By:  Provident Senior Living Trust,
                                              its sole member

                                              By:____________________________
                                                 Name:  Saul A. Behar
                                                 Title:  Senior Vice President

                                         TENANT:
                                         ------

                                         ALS PROPERTIES TENANT I, LLC

                                         By:  ALS Properties Holding
                                              Company, LLC,
                                              its sole member

                                              By:________________________
                                                 Name:  Kristin A. Ferge,
                                                 Vice President

                                  Exhibit B-2

<PAGE>

                             [ADD Acknowledgement]

                                  Exhibit B-3

<PAGE>

                                  SCHEDULE 1
                 List of All Properties Demised Under the Lease

-----------------------------------------------------------
                  Property Name                County
            (Street, City, State, Zip)
-----------------------------------------------------------
1.       Sterling House of Mesa               Maricopa
         6060 East Arbor Avenue
         Mesa, AZ 85206
-----------------------------------------------------------
2.       Clare Bridge of Ore Valley             Pima
         10175 North Oracle Road
         Ore Valley, AZ 85737
-----------------------------------------------------------
3.       Sterling House of Peoria             Maricopa
         8989 West Greenbriar Drive
         Peoria, AZ 85382
-----------------------------------------------------------
4.       Clare Bridge of Tempe                Maricopa
         1610 East Guadalupe Road
         Tempe, AZ  85283
-----------------------------------------------------------
5.       Sterling House on East Speedway        Pima
         8468 East Speedway Boulevard
         Tucson, AZ  85710
-----------------------------------------------------------
6.       Wynwood of Colorado Springs          El Paso
         2780 Vickers Drive
         Colorado Springs, CO 80918
-----------------------------------------------------------
7.       Wynwood of Pueblo Pueblo 4723 Surfwood Lane
         Pueblo, CO 81005
-----------------------------------------------------------
8.       Sterling House of Pensacola          Escambia
         8700 University Parkway
         Pensacola, FL 32514
-----------------------------------------------------------
9.       Clare Bridge of Tallahassee            Leon
         1980 Centre Pointe Boulevard
         Tallahassee, FL 32308
-----------------------------------------------------------
10.      Clare Bridge of West Melbourne       Brevard
         7199 Greenboro Drive
         West Melbourne, FL 32904
-----------------------------------------------------------
11.      Sterling House of Winter Haven         Polk
         6110 Cypress Gardens Boulevard
         Winter Haven, FL  33884
-----------------------------------------------------------
12.      Clare Bridge Cottage of Winter         Polk
         Haven
         6120 Cypress Gardens Boulevard
         Winter Haven, FL 33884
-----------------------------------------------------------
13.      Wynwood at Twin Falls               Twin Falls
         1367 Locust Street North
         Twin Falls, ID  83301
-----------------------------------------------------------
14.      Sterling House of Evansville       Vanderburgh
         6521 Greendale Drive
         Evansville, IN 47711
-----------------------------------------------------------
15.      Sterling House of Marion              Grant
         2452 West Kem Road
         Marion, IN 49652
-----------------------------------------------------------

                                 Exhibit B-4
<PAGE>

-----------------------------------------------------------
16.      Sterling House of Portage             Porter
         3444 Swanson Road
         Portage, IN  46368
-----------------------------------------------------------
17.      Steling House of Richmond             Wayne
         3700 South A Street
         Richmond, IN 47374
-----------------------------------------------------------
18.      Clare Bridge of Leawood              Johnson
         12724 State Line Road
         Leawood, KS  62209
-----------------------------------------------------------
19.      Clare Bridge Cottage of Topeka       Shawnee
         5800 SW Drury Lane
         Topeka, KS 66604
-----------------------------------------------------------
20.      Sterling House of Blaine              Anoka
         1005 Paul Parkway NE
         Blaine, MN 55434
-----------------------------------------------------------
21.      Clare Bridge of Eden Prairie         Hennepin
         7513 Mitchell Road
         Eden Prairie, MN 55344
-----------------------------------------------------------
22.      Sterling House of Inver Grove         Dakota
         Heights
         5891 Carmen Avenue
         Inver Grove Heights, MN 55076
-----------------------------------------------------------
23.      Clare Bridge of North Oaks            Ramsey
         300 Village Center Drive
         North Oaks, MN 55127
-----------------------------------------------------------
24.      Clare Bridge of Plymouth             Hennepin
         15855 22nd Avenue North
         Plymouth, MN 55447
-----------------------------------------------------------
25.      Clare Bridge of Winston-Salem        Forsyth
         275 South Peace Haven Road
         Winston-Salem, NC 27104
-----------------------------------------------------------
26.      Villas of Sherman Brook               Oneida
         99 Brookside Drive
         Clinton, NY 13323
-----------------------------------------------------------
27.      Villas of Summerfield                Onondaga
         100 Summerfield Village Lane
         Syracuse, NY 13215
-----------------------------------------------------------
28.      Sterling House of Alliance            Stark
         1277 South Sawburg Road
         Alliance, OH 44601
-----------------------------------------------------------
29.      Clare Bridge Cottage of Austintown   Mahoning
         1420 South Canfield Niles Road
         Austintown, OH 44515
-----------------------------------------------------------
30.      Sterling House of Beaver Creek        Greene
         3839 Indian Ripple Road
         Beaver Creek, OH 45440
-----------------------------------------------------------
31.      Sterling House of Westerville        Franklin
         6377 Cooper Road
         Columbus, OH 43231
-----------------------------------------------------------

                                 Exhibit B-5
<PAGE>

-----------------------------------------------------------
32.      Sterling House of Salem             Columbiana
         1916 South Lincoln Avenue
         Salem, OH 44460
-----------------------------------------------------------
33.      Clare Bridge of Lynnwood            Snohomish
         18706 36th Avenue West
         Lynnwood, WA 98307
-----------------------------------------------------------
34.      Clare Bridge of Puyallup              Pierce
         8811 176th Street East
         Puyallup, WA 98375
-----------------------------------------------------------
35.      Sterling House of Fond du Lac      Fond du Lac
         1001 Primrose Lane
         Fond Du Lac, WI 54935
-----------------------------------------------------------
36.      Clare Bridge of Kenosha              Kenosha
         10108 74th Street
         Kenosha, WI 53143
-----------------------------------------------------------
37.      Clare Bridge Cottage of LaCrosse     LaCrosse
         3161 East Avenue South
         LaCrosse, WI 54601
-----------------------------------------------------------
38.      Sterling House of LaCrosse           LaCrosse
         3141 East Avenue South
         LaCrosse, WI 54601
-----------------------------------------------------------

                                 Exhibit B-6
<PAGE>

                                   EXHIBIT A
                            to Memorandum of Lease

                       Legal Description of the Premises

                                 Exhibit B-7
<PAGE>

                                   EXHIBIT B
                            to Memorandum of Lease

                                    Notices

         If to Tenant:         ALS Properties Tenant I, LLC
                               c/o Alterra Healthcare Corporation
                               6737 W. Washington Street, Suite 2300
                               Milwaukee, Wisconsin 53214
                               Attention:  Mark W. Ohlendorf
                               Telephone:  (414) 918-5403
                               Facsimile:  (414) 918-5055

         with a copy to:       Rogers & Hardin LLP
                               229 Peachtree Street, N.E., Suite 2700
                               Atlanta, Georgia 30303
                               Attention:  Miriam J. Dent, Esq.
                               Telephone:  (404) 420-4608
                               Facsimile:  (404) 525-2224

         If to Guarantor:      ALS Properties Holdings Company, LLC
                               c/o Alterra Healthcare Corporation
                               6737 W. Washington Street, Suite 2300
                               Milwaukee, Wisconsin  53214
                               Attention:  Mark W. Ohlendorf
                               Telephone:  (414) 918-5403
                               Facsimile:  (414) 918-5055

         with a copy to:       Rogers & Hardin LLP
                               229 Peachtree Street, N.E., Suite 2700
                               Atlanta, Georgia 30303
                               Attention:  Miriam J. Dent, Esq.
                               Telephone:  (404) 420-4608
                               Facsimile:  (404) 525-2224

         If to Landlord:       PSLT-ALS Properties I, LLC
                               c/o Provident Senior Living Trust
                               600 College Road East, Suite 3400
                               Princeton, New Jersey  08540
                               Attention:  General Counsel
                               Telephone:  (609) 720-0825
                               Facsimile:  (609) 720-0826

         with a copy to:       Sidley Austin Brown & Wood llp
                               787 Seventh Avenue
                               New York, New York 10019
                               Attention:  Scott Freeman, Esq.
                               Telephone:  (212) 839-7358
                               Facsimile:  (212) 839-5599

                                 Exhibit B-8
<PAGE>

                                   EXHIBIT C

                        FORM OF SUBORDINATION AGREEMENT

                                              Loan Number: ____________________

Drafted by and when recorded return to:

____________________________
____________________________
____________________________
____________________________
____________________________
____________________________

             SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT
             ------------------------------------------------------

                        For use with Commercial Leases

THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT ("Agreement") is
made to be effective as of the ___ day of , 200_, between
_______________________________ ("Lender") and , a Delaware limited liability
company ("Tenant").

                                  BACKGROUND:

Tenant has entered into a lease agreement with , a Delaware limited liability
company ("Landlord") dated , 200_, (the "Lease") relating to the property
described in Exhibit A attached to this Agreement and by this reference made a
part of this Agreement (the "Property"). Lender has made or has committed to
make or has purchased a loan to Landlord in the original principal amount of $
(the "Loan") secured by a [Deed of Trust/Mortgage, Assignment of Rents and
Security Agreement] filed on
         , 200_, in the office of the Clerk/Register of Deeds in Liber
_______, Page ____ (the "Mortgage") covering the Property. Tenant has agreed
that the Lease will be subject and subordinate to the Mortgage held by Lender,
provided Tenant is assured of continued use of the Property under the terms of
the Lease.

                                  AGREEMENT:

For and in consideration of the mutual covenants contained in this Agreement,
the sum of Ten Dollars ($10.00) and other good and valuable considerations,
the receipt and sufficiency of which are acknowledged, and notwithstanding
anything in the Lease to the contrary, the parties agree as follows:

1.   Subordination. The Lease with all rights, options, liens and charges
     created by the Lease is expressly made and will continue to be subject to
     and subordinate in all respects to the terms, conditions, lien, operation
     and effect of the Mortgage and to any renewals, modifications,
     consolidations, replacements and extensions of the Mortgage.

2.   Nondisturbance. If Lender or any other party takes possession of the
     Property or becomes the owner of the Property by foreclosure, conveyance
     in lieu of foreclosure or otherwise ("Successor Landlord"), so long as
     Tenant complies with and performs its obligations under

                                 Exhibit C-1
<PAGE>

      the Lease and no event of default has occurred and is continuing under
      the Lease, then Lender, on its own behalf and on behalf of Successor
      Landlord agrees as follows:

         (a) Successor Landlord will not terminate, impair or disturb the
possession of Tenant.
         (b) The Lease will continue in full force and effect as a direct
Lease between Successor Landlord and Tenant, upon and subject to all of the
terms, covenants and conditions of the Lease, for the balance of the term of
the Lease.

3.   Mortgage Remedies. Nothing contained in this Agreement will prevent
     Lender from naming Tenant in any foreclosure or other action or
     proceeding initiated by Lender pursuant to the Mortgage to the extent
     necessary under applicable law in order for Lender to avail itself of and
     complete the foreclosure or other remedy.

4.   Attornment. If Successor Landlord becomes the owner of the Property by
     foreclosure, conveyance in lieu of foreclosure or otherwise, then Tenant
     agrees as follows:

         (c) Tenant will perform and observe its obligations under the Lease.
         (d) Tenant will attorn to and recognize Successor Landlord as the
Landlord under the Lease for the remainder of the term of the Lease, such
attornment to be automatic and self-operative.
         (e) Tenant will execute and deliver upon request of Successor
Landlord an appropriate agreement of attornment to Successor Landlord.

5.   Protection of Successor Landlord. Tenant agrees that Successor Landlord
     will not be liable for, subject to or bound by any of the following:

         (f) claims, offsets or defenses which Tenant might have against
Landlord;

         (g) acts or omissions of Landlord;

         (h) rent or additional rent which Tenant might have paid for more
than current month;

         (i) any security deposit or other prepaid charge paid to Landlord
which Successor Landlord has not received;

         (j) construction or completion of any improvements for Tenant's use
and occupancy;

         (k) warranties of any nature whatsoever, including any warranties
respecting use, compliance with zoning, hazardous wastes or environmental
laws, Landlord's title, Landlord's authority, habitability, fitness for
purpose or possession; or

         (l) amendments or modifications of the Lease made without its
 written consent.

6.   Successor Landlord Exculpation. Tenant will look solely to Successor
     Landlord's interest in the Property for the payment and discharge of any
     obligation or liability imposed upon Successor Landlord under the Lease.

7.   Estoppel. To the best of Tenant's knowledge, there does not exist any
     default, claim, controversy or dispute under the Lease. Tenant has not
     commenced any action nor sent or received any notice to terminate the
     Lease.

8.   Notice to Lender. Tenant agrees that it will deliver to Lender a copy of
     all notices of default or termination received by it under the terms of
     the Lease.

                                 Exhibit C-2
<PAGE>

9.   Assignment to Lender. Tenant acknowledges that the Landlord may execute
     and deliver to Lender an assignment of the Lease as security for the Loan
     and Lender may assign the Loan to _____________________. Tenant expressly
     consents to such assignments.

10.  Invalidity. If any portion of this Agreement is held invalid or
     inoperative, then all of the remaining portions will remain in full force
     and effect, and, so far as is reasonable and possible, effect will be
     given to the intent manifested by the portion or portions held to be
     invalid or inoperative.

11.  Governing Law. This Agreement will be governed by and construed in
     accordance with the laws of the State where the Property is located.

12.  Notices.

                  (i) All notices, demands and other communications
         ("Notices") under or concerning this Agreement must be in writing.
         Each Notice shall be addressed to the intended recipient at its
         address set forth in this Agreement, and will be deemed given on the
         earliest to occur of (1) the date when the Notice is received by the
         addressee; (2) the first Business Day after the Notice is delivered
         to a recognized overnight courier service, with arrangements made for
         payment of charges for next Business Day delivery; or (3) the third
         Business Day after the Notice is deposited in the United States mail
         with postage prepaid, certified mail, return receipt requested. The
         term "Business Day" means any day other than a Saturday, a Sunday or
         any other day on which Lender is not open for business.

                  (ii) Any party to this Agreement may change the address to
         which Notices intended for it are to be directed by means of Notice
         given to the other party in accordance with this Section. Each party
         agrees that it will not refuse or reject delivery of any Notice given
         in accordance with this Section, that it will acknowledge, in
         writing, the receipt of any Notice upon request by the other party
         and that any Notice rejected or refused by it will be deemed for
         purposes of this Section to have been received by the rejecting party
         on the date so refused or rejected, as conclusively established by
         the records of the U.S. Postal Service or the courier service.

         Any Notice, if given to Lender, must be addressed as follows:

                        ________________________________
                        ________________________________
                        ________________________________
                        ________________________________

         Any Notice, if given to Tenant, must be addressed as follows:

                        ________________________________
                        ________________________________
                        ________________________________
                        ________________________________

                                 Exhibit C-3
<PAGE>

13.  Successors and Assigns. This Agreement will be binding upon and inure to
     the benefit of the parties to this Agreement and their respective heirs,
     legal representatives, successors, successors-in-title and assigns.

14.  Counterparts. This Agreement may be executed in any number of
     counterparts, all of which when taken together will constitute one and
     the same instrument.

                           [SIGNATURE PAGE FOLLOWS]

                                 Exhibit C-4
<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Agreement [under
seal] as of the date first above written.

                                         LENDER:

                                         _______________________________

                                         By: ___________________________
                                         Name: _________________________
                                         Title: ________________________

                             [ADD ACKNOWLEDGEMENT]

                                 Exhibit C-5

<PAGE>

                                         TENANT:

                                         ____________________________________,
                                         a Delaware limited liability company

                                         By:
                                         Name:
                                         Its:

                             [ADD ACKNOWLEDGEMENT]

                                 Exhibit C-6
<PAGE>

                                   EXHIBIT A

                          (Legal Description of Land)

                                 Exhibit C-7
<PAGE>

                                   EXHIBIT D

                            FORM OF LEASE GUARANTY

         THIS LEASE GUARANTY (this "Guaranty") is made and entered into to be
effective as of October __, 2004 (the "Effective Date"), by ALS Properties
HOLDING COMPANY, LLC, a Delaware limited liability company ("Guarantor"), in
favor of PSLT-ALS PROPERTIES I, LLC, a Delaware limited liability company
("Landlord").

                                   RECITALS

         WHEREAS, as of the Effective Date, Landlord and ALS Properties Tenant
I, LLC, a Delaware limited liability company, as tenant ("Tenant"), have
executed and entered into that certain Lease Agreement (as the same may be
renewed, extended, amended or modified from time to time, the "Lease"),
pertaining to those certain Leased Properties (as defined in the Lease
Agreement);

         WHEREAS, Guarantor is a direct or indirect owner of 100% of the
beneficial ownership interest in Tenant, and Guarantor will derive substantial
direct and indirect benefit from the transactions contemplated by the Lease;
and

         WHEREAS, it is a condition to the entering into of the Lease by
Landlord that Guarantor shall have executed and delivered this Guaranty.

         NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration the receipt and sufficiency of which are hereby
acknowledged by Guarantor, and in order to induce Landlord to enter into the
Lease, Guarantor hereby agrees as follows:

     1. GUARANTY. Guarantor hereby unconditionally and irrevocably guarantees
(i) the full and prompt payment of all rent and other sums required to be paid
by Tenant under the Lease, (ii) the full and timely performance of all other
terms, conditions, covenants and obligations of Tenant under the Lease (as
same may be amended, renewed, extended or modified), and (iii) any and all
expenses (including reasonable attorneys' fees and expenses) incurred by
Landlord in enforcing any rights under the Lease or this Guaranty (such
obligations, collectively, are referred to as the "Guaranteed Obligations").
Guarantor agrees that this Guaranty is a guarantee of payment and performance,
not collection, and that Guarantor is primarily liable and responsible for the
payment and performance of the Guaranteed Obligations. It is not necessary for
Landlord, in order to enforce payment and performance by Guarantor under this
Guaranty, first or contemporaneously to institute suit or exhaust remedies
against Tenant or others liable for any of the Guaranteed Obligations or to
enforce rights against any collateral securing any of it. With the exception
of the defense of prior payment, performance, or compliance by Tenant or
Guarantor of the Guaranteed Obligations which Guarantor is called upon to pay,
or the defense that Landlord's claim against Guarantor hereunder is barred by
the applicable statute of limitations, all defenses of the law of guaranty or
suretyship, including, without limitation, substantive defenses and procedural
defenses, are waived and released by Guarantor to the extent permitted by law.
Except as provided in the preceding sentence, under no circumstances will the
liability of Guarantor under this Guaranty be terminated either with respect
to any period of time when the liability of Tenant under the Lease continues,
or with respect to any circumstances as to which the Guaranteed Obligations
have not been fully discharged by payment, performance or compliance.

                                 Exhibit D-1
<PAGE>

     2. GUARANTY ABSOLUTE. Guarantor guarantees that the Guaranteed
Obligations will be paid and performed strictly in accordance with the terms
of the Lease. The liability and responsibilities of Guarantor under this
Guaranty shall be absolute and unconditional, shall not be subject to any
counterclaim, setoff, or deduction and shall not be released, discharged,
affected or impaired by (i) any change in the time, manner, or place of
payment or performance of any of the Guaranteed Obligations, or any other
amendment or waiver of, or any consent to or departure from, or termination
of, the Lease, (ii) any release or discharge of Tenant in any bankruptcy,
receivership or other similar proceedings, (iii) the impairment, limitation or
modification of the liability of Tenant or the estate of Tenant in bankruptcy
or of any remedy for the enforcement of Tenant's liability under the Lease,
resulting from the operation of any present or future provisions of any
bankruptcy code or other statute or from the decision in any court, the
rejection or disaffirmance of the Lease in any such proceedings, or the
assignment or transfer of the Lease by Tenant, (iv) any failure, omission or
delay on the part of Landlord, to enforce, assert or exercise any right, power
or remedy conferred on or available to Landlord in or by the Lease or this
Guaranty, or any action on the part of Landlord granting indulgence or
extension in any form whatsoever or any invalidity, irregularity or
unenforceability as to Tenant of all or any part of the Guaranteed Obligations
or any security therefor, (v) the waiver by Landlord of the performance or
observance by Tenant or Guarantor of any of the agreements, covenants, terms
or conditions contained in the Lease or this Guaranty, (vi) any merger,
consolidation, reorganization or similar transaction involving Tenant even if
Tenant ceases to exist as a result of (and is not the surviving party in) such
transaction, (vii) the inability of Landlord or Tenant to enforce any
provision of the Lease for any reason, (viii) any change in the corporate
relationship between Tenant and Guarantor or any termination of such
relationship, (ix) any change in the ownership of all or any part of the
membership interests in Tenant, (x) the inability of Tenant to perform, or the
release of Tenant or Guarantor from the performance of, any obligation,
agreement, covenant, term or condition under the Lease or this Guaranty by
reason of any law, regulation or decree, now or hereafter in effect, (xi) any
merger of the leasehold estate of Tenant with the fee estate or any other
estate in any of the Leased Properties, or (xii) any disability or other
defense of Tenant. Landlord and Tenant, without notice to or consent by
Guarantor, may at any time or times enter into such modifications, extensions,
amendments, or other covenants with respect to the Lease as they may deem
appropriate and Guarantor shall not be released thereby, but shall continue to
be fully liable for the payment and performance of all liabilities,
obligations and duties of Tenant under the Lease as so modified, extended or
amended.

     3. REINSTATEMENT. Guarantor further agrees that, if at any time all or
any part of any payment applied to any of the Guaranteed Obligations is or
must be rescinded or returned for any reason whatsoever (including, without
limitation, the insolvency, bankruptcy or reorganization of Guarantor), such
Guaranteed Obligations shall, for the purposes of this Guaranty, to the extent
that such payment is or must be rescinded or returned, be deemed to have
continued in existence, notwithstanding such application, and this Guaranty
shall continue to be effective or be reinstated, as the case may be, as to
such Guaranteed Obligations, all as though such application had not been made.

     4. CERTAIN ACTIONS. Landlord may, from time to time at its discretion and
without notice to Guarantor, take any or all of the following actions: (a)
retain or obtain the primary or secondary obligation of any obligor or
obligors, in addition to Guarantor, with respect to any of

                                 Exhibit D-2
<PAGE>

the Guaranteed Obligations; (b) extend or renew for one or more periods
(regardless of whether longer than the original period), or release or
compromise any obligation of Guarantor hereunder or any obligation of any
nature of any other obligor (including, without limitation, Tenant) with
respect to any of the Guaranteed Obligations; or (c) release or fail to
perfect any lien upon or security interest in, or impair, surrender, release
or permit any substitution or exchange for, all or any part of any property
securing any of the Guaranteed Obligations or any obligation hereunder, or
extend or renew for one or more periods (regardless of whether longer than the
original period) or release or compromise any obligations of any nature of any
obligor with respect to any such property.

     5. WAIVER. To the extent permitted by applicable law, Guarantor hereby
expressly waives: (i) notice of the acceptance of this Guaranty, (ii) except
as otherwise provided in the Lease or this Guaranty, notice of the existence
or creation or non-payment of all or any of the Guaranteed Obligations, (iii)
presentment, demand, notice of dishonor, protest and all other notices
whatsoever except as otherwise provided in the Lease or this Guaranty, and
(iv) all diligence in collection or protection of or realization upon the
Guaranteed Obligations or any part thereof, any obligation hereunder, or any
security for or guaranty of any of the foregoing.

     6. WAIVER OF SUBROGATION. Guarantor hereby waives all rights of
subrogation which it may at any time otherwise have as a result of this
Guaranty to the claims of Landlord against Tenant and all contractual,
statutory or common law rights of reimbursement, contribution or indemnity
from Tenant which it may at any time otherwise have as a result of this
Guaranty prior to final payment and satisfaction of the Guaranteed
Obligations.

     7. MISCELLANEOUS.

         (m) Amendments, Etc. No amendment or waiver of any provision of this
Guaranty nor consent to any departure by Guarantor therefrom shall be
effective unless the same shall be in writing and signed by Landlord.

         (n) Addresses for Notices. All notices hereunder shall be in writing,
personally delivered, delivered by overnight courier service, sent by
facsimile transmission (with confirmation of receipt), or sent by certified
mail, return receipt requested, addressed as follows, or to such other address
as shall be designated by Guarantor or Landlord in written notice to the other
party:

         If to Tenant:         ALS Properties Tenant I, LLC
                               c/o Alterra Healthcare Corporation
                               6737 W. Washington Street, Suite 2300
                               Milwaukee, Wisconsin 53214
                               Attention:  Mr. Mark W. Ohlendorf
                               Telephone:  (414) 918-5403
                               Facsimile:  (414) 918-5055

         with a copy to:       Alterra Healthcare Corporation
                               6737 W. Washington Street, Suite 2300
                               Milwaukee, Wisconsin 53214
                               Attention:  Mr. Mark W. Ohlendorf

                                 Exhibit D-3
<PAGE>

                               Telephone:  (414) 918-5403
                               Facsimile:  (414) 918-5055

         and to:               Rogers & Hardin LLP
                               229 Peachtree Street
                               2700 International Tower
                               Atlanta, Georgia 30303
                               Attention:  Alan C. Leet, Esq.
                               Telephone:  (404) 420-4616
                               Facsimile:  (404) 525-2224

         If to Guarantor:      ALS Properties Holding Company, LLC
                               c/o Alterra Healthcare Corporation
                               6737 W. Washington Street, Suite 2300
                               Milwaukee, Wisconsin 53214
                               Attention:  Mr. Mark W. Ohlendorf
                               Telephone:  (414) 918-5402
                               Facsimile:  (414) 918-5055

         with a copy to:       Alterra Healthcare Corporation
                               c/o Alterra Healthcare Corporation
                               6737 W. Washington Street, Suite 2300
                               Milwaukee, Wisconsin 53214
                               Attention:  Mr. Mark W. Ohlendorf
                               Telephone:  (414) 918-5402
                               Facsimile:  (414) 918-5055

         and to:               Rogers & Hardin LLP
                               229 Peachtree Street
                               2700 International Tower
                               Atlanta, Georgia 30303
                               Attention:  Alan C. Leet, Esq.
                               Telephone:  (404) 420-4616
                               Facsimile:  (404) 525-2224

         If to Landlord:       PSLT-ALS Properties I, LLC
                               c/o Provident Senior Living Trust
                               600 College Road East, Suite 3400
                               Princeton, New Jersey 08540
                               Attention:  General Counsel
                               Telephone:  (609) 720-0825
                               Facsimile:  (609) 720-0826

         with a copy to:       Sidley Austin Brown & Wood LLP
                               787 Seventh Avenue
                               New York, New York 10019
                               Attention:  Scott Freeman, Esq.
                               Telephone:  (212) 839-7358
                               Facsimile:  (212) 839-5599

         (o) No Waiver; Remedies. No failure on the part of Landlord to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the

                                 Exhibit D-4
<PAGE>

exercise of any other right. The remedies herein provided are cumulative and
not exclusive of any other remedies available at law or equity.

         (p) Continuing Guaranty; Transfer of Interest. This Guaranty shall
create a continuing guaranty and will (i) remain in full force and effect
until payment and performance in full and satisfaction of the Guaranteed
Obligations, (ii) be binding upon Guarantor and its successors and assigns,
and (iii) inure, together with the rights and remedies of Landlord hereunder,
to the benefit of Landlord and its successors, as permitted under the Lease.
Without limiting the generality of the foregoing clause, if and when Landlord
assigns or otherwise transfers any interest held by it under the Lease to any
other person, that other person shall thereupon become vested with all the
benefits held by Landlord under this Guaranty.

     8. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

     9. INDUCEMENT TO LANDLORD. Guarantor acknowledges and agrees that the
execution and delivery of this Guaranty by Guarantor to Landlord has served as
a material inducement to Landlord to execute and deliver the Lease, and
Guarantor further acknowledges and agrees that but for the execution and
delivery of this Guaranty by Guarantor, Landlord would not have executed and
delivered the Lease.

     10. INTENTIONALLY DELETED.

     11. INTENTIONALLY DELETED.

     12. SUBMISSION TO JURISDICTION. Guarantor hereby irrevocably submits to
the non-exclusive jurisdiction of any State or Federal court located in New
York County, New York State over any action, suit or proceeding to enforce or
defend any right under this Guaranty or otherwise arising from or relating to
this Guaranty, and Guarantor irrevocably agrees that all claims in respect of
any such action, suit or proceeding may be heard and determined in such court.
Guarantor hereby irrevocably waives, to the fullest extent that it may
effectively do so, the defense of an inconvenient forum or venue to the
maintenance of any such action, suit or proceeding. Guarantor hereby agrees
that a final, non-appealable judgment in any such action, suit or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.

     13. WAIVER OF JURY TRIAL. Guarantor hereby waives, to the fullest extent
permitted by applicable law, any right to a trial by jury in any action, suit
or proceeding to enforce or defend any rights under this Guaranty or any other
transaction document or any amendment, instrument, document or agreement
delivered or which may in the future be delivered in connection herewith or
arising from or relating to any relationship existing in connection with this
guaranty, and agrees, to the fullest extent permitted by applicable law, that
any such action, suit or proceeding shall be tried before a court and not
before a jury.

     14. COOPERATION, FURTHER ASSURANCES. Guarantor covenants, and agrees to
sign, execute and deliver or cause to be signed, executed and delivered and to
do or make, or to cause

                                 Exhibit D-5
<PAGE>

to be done or make, upon the written request of Landlord, any and all
agreements, instruments, papers, deeds, acts or things, supplemental,
confirming or otherwise, as may be reasonably required by Landlord for the
purpose of, or in connection with, the transaction contemplated hereby. Upon
full and final payment and performance of the Guaranteed Obligations, Landlord
agrees to execute a release for the benefit of Guarantor, in form and content
reasonably satisfactory to Landlord. Notwithstanding anything to the contrary
contained herein, this Guaranty shall survive for a period of twenty four (24)
months after the expiration or earlier termination of the Lease, and Guarantor
shall be liable to Landlord hereunder for any Guaranteed Obligations which
arise during such period and relate to matters which (i) occurred during the
term of the Lease or (ii) Tenant is otherwise required to indemnify Landlord
against pursuant to the terms of the Lease. Except to the extent expressly
provided otherwise in any guaranty or indemnity from Guarantor or its direct
or indirect Parent to Landlord or its Affiliates (each such term as defined in
the Lease), in no event shall any trustee, shareholder, member, guarantor,
partner, employee, officer or beneficiary of Guarantor be personally liable
for any of the obligations of Guarantor hereunder.

               [THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]

                                 Exhibit D-6
<PAGE>

Guarantor has caused this Guaranty to be effective as of the Effective Date.

                                         GUARANTOR:

                                         ALS Properties HOLDING
                                            COMPANY, LLC,
                                         a Delaware limited liability company

                                         By:_________________________________
                                            Name:
                                            Title:

                                 Exhibit D-7
<PAGE>

                                ACKNOWLEDGMENT

STATE OF _____________     )
                           )       SS
COUNTY OF ___________      )

            On this ___ day of October, 2004, before me, the undersigned
officer, personally appeared ____________________________, personally known to
me, or proved to me on the basis of satisfactory evidence, and who
acknowledged that he/she is the _________________ of ALS Properties HOLDING
COMPANY, LLC, a Delaware limited liability company, and that as such officer,
being duly authorized to do so pursuant to the company's bylaws or a
resolution of its board of directors, executed, subscribed and acknowledged
the foregoing instrument for the purposes therein contained, by signing the
name of the company by himself in his authorized capacity as such officer, as
his free and voluntary act and deed and the free and voluntary act and deed of
the company.

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

[NOTARIAL SEAL]                         _____________________________________
                                        Notary Public

                                        My Commission Expires:

                                        _____________________________________

                                 Exhibit D-8Exhibit 10.20

                          AGREEMENT REGARDING LEASES

                                by and between

                     ALS PROPERTIES HOLDING COMPANY, LLC,

                     a Delaware limited liability company

                                      and

                      PSLT-ALS PROPERTIES HOLDINGS, LLC,

                     a Delaware limited liability company

                                  Dated as of

                               October 20, 2004

<PAGE>

1.    Definitions............................................................1

2.    Lease.................................................................10

3.    Term..................................................................10

4.    Alterra Rent Payments.................................................12

5.    Capital Additions.....................................................12

6.    Assignment, Subletting and Material Contracts.........................13

7.    Default; Remedies.....................................................14

8.    Intentionally Deleted.................................................18

9.    Financial and Other Statements........................................18

10.   Additional Covenants of ALS Holdings..................................20

11.   Limitation on Liability...............................................22

12.   Facility Mortgages....................................................22

13.   Representations and Warranties........................................23

14.   Intentionally Deleted.................................................25

15.   Notices...............................................................25

16.   No Waiver.............................................................26

17.   Invalidity............................................................26

18.   Counterparts..........................................................26

19.   Cumulative............................................................26

20.   Governing Law.........................................................26

21.   Successors and Assigns; Relationship..................................26

22.   Entire Agreement......................................................27

23.   Survival..............................................................27

24.   Time..................................................................27

25.   Captions and Headings.................................................27

                                      i
<PAGE>

26.   Waiver of Jury Trial..................................................27

27.   Guaranty..............................................................27

28.   Termination of Facility Management Agreements.........................27

29.   Joinder by Alterra Management.........................................29

30.   Joinder by Alterra Lessees............................................30

31.   Joinder by Provident Lessors..........................................30

32.   Intentionally Deleted.................................................30

33.   Security Deposit......................................................30

34.   Public Offering Information...........................................32

35.   Special Purpose Entity Covenants of ALS Holdings......................33

                                      ii
<PAGE>

EXHIBITS:
--------

      Exhibit A   Provident Lessors
      Exhibit B   Alterra Lessees
      Exhibit C   Facilities
      Exhibit D   Guaranty

                                      i
<PAGE>

                          AGREEMENT REGARDING LEASES
                          --------------------------

     THIS AGREEMENT REGARDING LEASES (this "Agreement") is made as of the 20th
day of October,  2004, by and between  PSLT-ALS  PROPERTIES  HOLDINGS,  LLC, a
Delaware limited liability company ("PSLT-ALS  Holdings"),  and ALS PROPERTIES
HOLDING COMPANY,  LLC, a Delaware limited  liability company ("ALS Holdings"),
and is joined  herein for  certain  limited  purposes  by  ALTERRA  HEALTHCARE
CORPORATION, a Delaware corporation ("Alterra Management"), and by the Alterra
Lessees (as defined below).

                                   RECITALS
                                   --------

     A. PSLT-ALS Holdings is the owner of the beneficial interest in those
certain entities listed on Exhibit A attached hereto and made a part hereof
(each, a "Provident Lessor" and collectively referred to herein as the
"Provident Lessors").

     B. ALS Holdings is the owner of the beneficial interest in those certain
entities listed on Exhibit B attached hereto and made apart hereof (each, an
"Alterra Lessee" and collectively referred to herein as the "Alterra Lessees")

     C. Each of the Provident Lessors, as lessor, has entered into a property
lease agreement dated as of the date hereof (each, a "Property Lease" and
collectively, the "Property Leases") with one of the Alterra Lessees, as
lessee, for senior housing and/or assisted living and/or independent living
facilities as more particularly described on Exhibit C attached hereto and
made a part hereof (such facilities, including the land and any and all
improvements thereon, are referred to herein individually as a "Facility" or
collectively as the "Facilities", as the context may require).

     D. Alterra Management has entered into exclusive management and leasing
agreements, dated as of the date hereof, with each of the Alterra Lessees to
manage their respective Facilities (such agreements, as the same may be
amended from time to time are collectively referred to hereafter as the
"Facility Management Agreements").

     E. PSLT-ALS Holdings and ALS Holdings desire to enter into this Agreement
regarding various agreements concerning the Facilities, and, in connection
therewith, require various undertakings from Alterra Management, all as more
particularly set forth herein.

     In consideration of the mutual promises and agreements herein contained,
the parties agree as follows:

1. Definitions. For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires, (i) the terms
defined in this paragraph shall have the meanings assigned to them in this
paragraph and elsewhere in this Agreement and include the plural as well as
the singular, (ii) all accounting terms not otherwise defined herein shall
have the meanings assigned to them in accordance with GAAP, (iii) all
references in this Agreement to designated "paragraphs" or "subparagraphs" and
other subdivisions are to the designated paragraphs, subparagraphs and other
subdivisions of this Agreement, and (iv) the words

                                      1
<PAGE>

"herein", "hereof", "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular paragraph or subparagraph
or other subdivision.

     "Affiliate" shall mean, with respect to any Person, (i) in the case of
any such Person which is a partnership, any general partner in such
partnership or any limited partner holding, directly or indirectly, fifty
percent (50%) or more of the partnership interests in such partnership; (ii)
in the case of any such Person which is a limited liability company, the
managing member of such limited liability company or any other member of such
limited liability company holding, directly or indirectly, fifty percent (50%)
or more of the membership interests in such company; (iii) any other Person
which is a Parent, a Subsidiary, or a Subsidiary of a Parent with respect to
such Person or to one or more of the Persons referred to in the preceding
clauses (i) and (ii); (iv) any other Person who is an officer, director or
trustee of, or partner holding, directly or indirectly, fifty percent (50%) or
more of the partnership, membership or stock interests in, such Person or any
Person referred to in the preceding clauses (i), (ii) and (iii); and (v) any
other Person who is a member of the Immediate Family of such Person or of any
Person referred to in the preceding clauses (i) through (iv).

     "Agreement" shall mean this Agreement including the exhibits attached
hereto, as it and they may be amended from time to time as herein provided.

     "Alterra Rent Payments" shall mean the Master Rent and all other charges,
payments and sums due hereunder.

     "Award" shall mean all compensation, sums or other value awarded, paid or
received by virtue of a complete or partial Condemnation of any Facility
(after deduction of all reasonable legal fees and other reasonable costs and
expenses, including, without limitation, expert witness fees, incurred in
connection with obtaining any such award).

     "Bond Documents" shall mean, with respect to the Existing Facility
Mortgages that are structured as bond financings, any and all documents
evidencing, securing or otherwise entered into in connection with the
outstanding obligations to the Erie County Industrial Development Agency and
the Schenectady County Development Agency secured by the Facilities known as
Wynwood of Kenmore and Wynwood of Niskayuna located in Erie County, New York
and Schenectady County, New York, respectively, and with respect to any future
Facility Mortgage that is structured as a bond financing, any and all
documents evidencing, securing or otherwise entered into in connection with
such Facility Mortgage.

     "Business Day" shall mean any day other than Saturday, Sunday, or any
other day on which the Federal Reserve System is authorized by law or
executive action to close.

     "Capital Addition" shall mean one or more new buildings, or one or more
additional structures annexed to any portion of the improvements with respect
to any Facility, or the material expansion of existing improvements, which are
constructed on any parcel or portion of the Facility during the Term,
including the construction of a new wing or new story, the renovation of
existing improvements on such Facility in order to provide a functionally new
facility needed to provide services not previously offered, or any expansion,
construction, renovation or conversion in order to increase the number of
units of the Facility, to change the

                                      2
<PAGE>

purpose for which such units are utilized or to improve materially the quality
of the Facility, or any related improvement whose cost would be treated as a
capital expenditure under GAAP.

     "Capital Addition Allowance" shall have the meaning given to such term in
the Property Leases.

     "Capital Additions Cost" shall mean the cost of any Capital Addition, any
Landlord Capital Addition or any Mandatory Capital Addition proposed to be
made by ALS Holdings or any Alterra Lessee, whether paid for by any Alterra
Lessee or Provident Lessor. Such cost shall include, but not be limited to,
the following: (i) the cost of construction of the Capital Addition, including
site preparation and improvement, materials, labor, supervision, developer and
administrative fees, legal fees, and costs of related design, engineering and
architectural services, the cost of any fixtures, the cost of equipment and
other personalty, the cost of construction financing (including, but not
limited to, capitalized interest) and other miscellaneous costs approved by
PSLT-ALS Holdings, which approval shall not be unreasonably withheld or
delayed, (ii) if agreed to by PSLT-ALS Holdings in writing, in advance, the
cost of any land (including all related acquisition costs incurred by any
Alterra Lessee) contiguous to the Facility to which such additional land is to
become a part for the purpose of placing thereon a Capital Addition or any
portion thereof or for providing means of access thereto, or parking
facilities therefor, including the cost of surveying the same; (iii) the cost
of insurance, real estate taxes, water and sewage charges and other carrying
charges for such Capital Addition during construction; (iv) title insurance
charges; (v) reasonable attorneys' fees and expenses; (vi) filing,
registration and recording taxes and fees; (vii) documentary stamp or transfer
taxes, and (viii) all actual and reasonable costs and expenses of PSLT-ALS
Holdings and any Provident Lessor or ALS Holdings and any Alterra Lessee
incurred in connection with such Capital Addition; provided, however, that in
no event shall the direct or indirect costs of any ALS Holdings employees be
deemed a Capital Additions Cost (other than construction management agreements
under the Facility Management Agreements that are arms-length and have market
terms).

     "Capital Additions Reserve" shall have the meaning given to such term in
Paragraph 10(d).

     "Change of Control" shall mean (i) the acquisition or attainment by any
means by any Person, or two or more Persons acting in concert, of direct or
indirect beneficial ownership (within the meaning of Rule 13d-3 of the SEC) or
control of 50% or more, or rights, options or warrants to acquire 50% or more,
of the voting stock or membership interests in Guarantor, ALS Holdings or in
any of the Alterra Lessees, or (ii) the merger or consolidation of Guarantor,
ALS Holdings, any Alterra Lessee or any Person that directly or indirectly
owns more than 50% of the membership interests in ALS Holdings or any Alterra
Lessee with or into any other Person, or (iii) any one or more sales or
conveyances to any Person of all or substantially all of the assets of
Guarantor, ALS Holdings or any Alterra Lessee; provided, however, that either
(a) any transfer (including, without limitation, a transfer as a result of a
merger or a business combination) of the direct or indirect equity interests
in FIT-ALT Investors LLC, Emeritus Corporation or NW Select LLC (collectively,
the "FEBC Members") or any Person holding directly or indirectly beneficial
ownership or control of voting stock or membership interests in any of the
FEBC Members or (b) any transfer of membership interests in FEBC-ALT Investors
LLC ("FEBC-ALT") solely between and among any existing members of FEBC-ALT,
shall not be deemed to be a "Change

                                      3
<PAGE>

of Control" for purposes of this Agreement. For purposes hereof, in no event
will the Class B member interests in FEBC-ALT (the interests currently held by
Emeritus Corporation and NW Select LLC) be deemed to constitute 50% or more of
the member interests in FEBC-ALT.

     "Code" shall mean the Internal Revenue Code of 1986 and, to the extent
applicable, the Treasury Regulations promulgated thereunder, each as from time
to time amended.

     "Commencement Date" shall mean the date of this Agreement.

     "Condemnation" shall mean, with respect to any Facility, (i) the exercise
of any governmental power, whether by legal proceedings or otherwise, by a
Condemnor of its power of condemnation; (ii) a voluntary sale or transfer of
the Facility by any Provident Lessor to any Condemnor, either under threat of
condemnation or while legal proceedings for condemnation are pending; and
(iii) a taking or voluntary conveyance of all or part of the Facility, or any
interest therein, or right accruing thereto or use thereof, as the result or
in settlement of any condemnation or other eminent domain proceeding affecting
any such Facility, whether or not the same shall have actually been commenced.

     "Condemnor" shall mean any public or quasi-public authority, or private
corporation or individual, having the power of Condemnation.

     "Current Lease Payment" shall mean the sum of the Base Rent, as defined
in each of the Property Leases, payable in the aggregate under all of the
Property Leases, calculated for the prior twelve (12) month period (or shorter
period for which the Lease Coverage Ratio is being calculated) after giving
effect to the event for which the Lease Coverage Ratio is being calculated.

     "Default" shall mean any event or condition that, with the giving of
notice and/or lapse of time, may ripen into an Event of Default.

     "Entity" shall mean any general partnership, limited partnership, limited
liability company or partnership, corporation, joint venture, trust, business
trust, cooperative or association.

     "Equity Transfer" shall have the meaning given to such term in Paragraph
6(c).

     "Event of Default" shall have the meaning given to such term in Paragraph
7(a).

     "Excess Cash Flow" shall mean the difference between NOI minus the
aggregate Base Rent (as defined in the Property Leases) payable under all of
the Property Leases.

     "Existing Facility Mortgage" shall mean the Facility Mortgage(s), other
than any new Facility Mortgage(s) entered into by any Provident Lessor on the
Commencement Date, that are in effect on the Commencement Date and with
respect to the Property Lease between ALS Properties Tenant II, LLC and
PSLT-ALS Properties II, LLC, shall mean the Facility Mortgages in effect on
the date of the execution and delivery of such Property Lease.

                                       4
<PAGE>

     "Extraordinary Capital Expenditures" shall mean expenditures incurred in
connection with Capital Additions to the Facilities which are not contemplated
by the then current capital budget and other non-recurring expenditures
incurred by the Alterra Lessees with respect to the Facilities that are not
ordinary course repair and maintenance items.

     "Facility" or "Facilities" shall have the meaning set forth in the
recitals.

     "Facility Management Agreement" shall have the meaning given to such term
in the recitals of this Agreement.

     "Facility Mortgage" shall mean, with respect to any Facility, any
encumbrance securing the repayment of indebtedness (and including any
obligations in connection with any credit enhancement) now or hereafter placed
upon the fee simple interest or leasehold interest, as applicable, in such
Facility, provided such Facility is then subject to the terms of a Property
Lease, together with all other documents and instruments evidencing or
securing the indebtedness secured thereby.

     "Facility Mortgagee" shall mean the holder of a Facility Mortgage.

     "Facility State" shall mean the State in which the applicable Facility is
located.

     "Fair Market Value" shall have the meaning set forth in the Property
Leases.

     "Financial Officer's Certificate" shall mean, as to any Entity, a
certificate of the chief financial officer of such Entity, duly authorized,
accompanying the financial statements required to be delivered by such Entity
pursuant to Paragraph 9 in which such officer shall certify (i) that, to such
officer's knowledge, such statements have been properly prepared in accordance
with GAAP and are true, correct and complete in all material respects and
fairly present the consolidated financial condition of such Entity at and as
of the dates thereof and the results of its and their operations for the
periods covered thereby, and (ii) that such officer has reviewed this
Agreement and, to such officer's knowledge, has no knowledge of any Event of
Default hereunder.

     "First Renewal Notice" shall have the meaning given to such term in
Paragraph 3(b).

     "GAAP" shall mean generally accepted accounting principles, consistently
applied, and being principally derived from promulgations of The Financial
Accounting Standards Board and The American Institute of Certified Public
Accountants, or their successors.

     "Government Agency" shall mean any court, agency, authority, board
(including, without limitation, environmental protection, planning and
zoning), bureau, commission, department, office or instrumentality of any
nature whatsoever of any governmental or quasi-governmental unit of the United
States or the Facility State or any county or any political subdivision of any
of the foregoing, whether now or hereafter in existence, having jurisdiction
over PSLT-ALS Holdings, the Provident Lessors, ALS Holdings, the Alterra
Lessees or the Facilities or any portion thereof.

                                      5
<PAGE>

     "Guarantor" shall mean the Person that is the "guarantor" under the
Guaranty. The initial Guarantor is Alterra Healthcare Corporation, a Delaware
corporation.

     "Guaranty" shall have the meaning given to such term in Paragraph 27.

     "Immediate Family" shall mean, with respect to any individual, such
individual's spouse, parents, brothers, sisters, children (natural or
adopted), stepchildren, grandchildren, grandparents, parents-in-law,
brothers-in-law, sisters-in-law, nephews and nieces.

     "Independent Director" shall mean a Person who is not at the time of
initial appointment, or at any time while serving as a director, and has not
been at any time during the preceding five (5) years: (a) a stockholder,
director (with the exception of serving as the Independent Director), officer,
employee, partner, member, attorney or counsel of Guarantor or any Related
Party of Guarantor; (b) a customer, supplier or other person who derives any
of its purchases or revenues from its activities with Guarantor or any Related
Party of Guarantor; (c) a Person controlling or under common control with any
such stockholder, director, officer, partner, member, customer, supplier or
other Person; or (d) a member of the Immediate Family of any such stockholder,
director, officer, employee, partner, member, customer, supplier or other
person. As used in this definition, the term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of
management, policies or activities of a Person, whether through ownership of
voting securities, by contract or otherwise.

     "Initial Term" shall have the meaning given to such term in Paragraph
3(a).

     "Inspector" shall have the meaning given to such term in Paragraph 34.

     "Intended Use" shall have the meaning given to such term in the Property
Leases.

     "Landlord Capital Addition" shall have the meaning given to such term in
the Property Leases.

     "Lease Coverage Ratio" shall mean the ratio of NOI to the Current Lease
Payment for the applicable period.

     "Lease Year" shall mean each twelve month period commencing on November
1st during the Term, provided the first Lease Year shall include the period of
time from the Commencement Date through October 31, 2005.

     "Legal Requirements" shall mean, as to any Facility, all federal, state,
county, municipal and other governmental statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions affecting the
applicable Facility or the maintenance, construction, alteration or operation
thereof, whether now or hereafter enacted or in existence, including, without
limitation, all Permits and Licenses.

     "Letter of Credit" shall have the meaning given to such term in Paragraph
33(a).

     "Management Termination Event" shall have the meaning set forth in
Paragraph 28(a).

                                      6
<PAGE>

     "Mandatory Capital Addition" shall have the meaning given to such term in
Paragraph 5.

     "Mandatory Capital Addition Allowance" and "Mandatory Capital Addition
Allowances" shall have the meaning given to such term in Paragraph 5.

     "Master Rent" shall mean an amount equal to (i) the aggregate Base Rent
(as defined in the Property Leases) and all Additional Rent (as defined in the
Property Leases), charges and other amounts payable under each of the Property
Leases per month of the Term, less (ii) the amount of Base Rent, Additional
Rent, charges and other amounts due and payable under the Property Leases for
such month of the Term that was actually paid by the Alterra Lessees, the
Lease Guarantor (as defined in the Property Leases) or Guarantor to the
Provident Lessors (or offset against rent paid to applicable Facility
Mortgagees in accordance with the terms of the Property Leases).

     "Minimum Capital Additions Amount" shall have the meaning given to such
term in Paragraph 10(c).

     "Net Worth" shall mean, with respect to any Person, (x) the assets of
such Person minus (y) the liabilities of such Person, all determined in
accordance with GAAP.

     "NOI" shall mean, for the period in question, Total Revenues less
Operating Expenses.

     "Notice" shall mean a notice given or received in accordance with
Paragraph 15.

     "Officer's Certificate" shall mean a certificate signed by an officer of
ALS Holdings or Guarantor, as applicable, duly authorized by the member of ALS
Holdings or the board if directors of Guarantor, as applicable.

     "Operating Expenses" shall mean, for the applicable period, all expenses
in the aggregate, for all of the Facilities (determined on an accrual basis in
accordance with GAAP), incurred by any of the Alterra Lessees or any Related
Party of any of them in connection with the operation of the Facilities or any
use of the Facilities on a pro forma basis for the period in question,
including a 5% management fee and an annual capital reserve equal to $400 per
residential unit, provided, however, that the Current Lease Payment payable
under the Property Leases shall not be included as an Operating Expense for
purposes hereof.

     "Overdue Rate" shall mean, on any date, a per annum rate of interest
equal to the lesser of ten percent (10%) and the maximum rate then permitted
under applicable law, calculated from the date any payment obligation is due
(except with respect to payments which are indeterminable prior to Notice from
PSLT-ALS Holdings, in which event the Overdue Rate shall be calculated from
the tenth (10th) day following the date such Notice was received).

     "Parent" shall mean, with respect to any Person, any Person which owns
directly, or indirectly through one or more Related Parties, fifty percent
(50%) or more of the voting or beneficial interest in such Person, or
otherwise has the right or power (whether by contract, through ownership of
securities or otherwise) to control such Person.

     "Permits and Licenses" shall have the meaning given to such term in the
Property Leases.

                                      7
<PAGE>

     "Permitted Investments" shall mean United States Treasury securities,
bank certificates of deposit issued by banks rated at least A by Standard &
Poor's and other debt instruments rated at least A by Standard & Poor's and
having maturities not longer than one (1) year, or investments otherwise
approved by PSLT-ALS Holdings.

     "Permitted Management Incentive Program" shall mean the equity incentive
plan for management of Guarantor as contemplated on the date of this
Agreement, pursuant to which not more than ten percent (10%) of the interests
in Guarantor shall be transferred (directly or indirectly).

     "Permitted Transfer" shall have the meaning set forth in Paragraph 6(b).

     "Person" shall mean any individual or Entity, and the heirs, executors,
administrators, legal representatives, successors and assigns of such Person
where the context so requires.

     "Property Lease" or "Property Leases" shall have the meaning given such
term in the recitals hereto, as the same may be amended from time to time,
subject to the terms of Paragraph 2 hereof.

     "Provident Lessors" shall have the meaning given such term in the
recitals hereto.

     "Related Party" shall mean, with respect to any Person, (i) in the case
of any such Person which is a partnership, any general partner in such
partnership or any limited partner holding, directly or indirectly, ten
percent (10%) or more of the partnership interests in such partnership; (ii)
in the case of any such Person which is a limited liability company, the
managing member of such limited liability company or any other member of such
limited liability company holding, directly or indirectly, ten percent (10%)
or more of the membership interests in such company; (iii) any other Person
which is a Parent, a Subsidiary, or a Subsidiary of a Parent with respect to
such Person or to one or more of the Persons referred to in the preceding
clauses (i) and (ii); (iv) any other Person who is an officer, director or
trustee of, or partner holding, directly or indirectly, ten percent (10%) or
more of the partnership, membership or stock interests in, such Person or any
Person referred to in the preceding clauses (i), (ii) and (iii); and (v) any
other Person who is a member of the Immediate Family of such Person or of any
Person referred to in the preceding clauses (i) through (iv).

     "Renewal Determination Notice" shall have the meaning given such term in
Paragraph 3(b).

     "Renewal Term" shall have the meaning given such term in Paragraph 3(b).

     "SEC" shall mean the Securities and Exchange Commission.

     "Security Deposit" shall have the meaning set forth in Paragraph 33(a).

     "Special Purpose Entity" shall have the meaning given to such term in
Paragraph 35(b).

                                      8
<PAGE>

     "Stock Purchase Agreement" shall mean that certain Amended and Restated
Stock Purchase Agreement dated as of October 19, 2004, between Alterra
Healthcare Corporation, as seller, and Provident Senior Living Trust, as
acquiror.

     "Subsidiary" shall mean, with respect to any Person, any Entity (a) in
which such Person owns directly, or indirectly through one or more
Subsidiaries, fifty percent (50%) or more of the voting or beneficial
interest, or (b) which such Person otherwise has the right or power to control
(whether by contract, through ownership of securities or otherwise).

     "Successor Guarantor" shall have the meaning set forth in Paragraph 6(b).

     "Term" shall mean, collectively, the Initial Term and each Renewal Term,
to the extent properly exercised pursuant to the provisions of Paragraph 3,
unless sooner terminated pursuant to the provisions of this Agreement.

     "Third Party Payor Programs" shall mean all third party payor programs in
which any Alterra Lessee presently or in the future may elect to participate
(but only during the time that any such Alterra Lessee has so elected to
participate therein), including, without limitation, Medicare, Medicaid,
CHAMPUS, Blue Cross and/or Blue Shield, Managed Care Plans and other private
insurance programs.

     "Third Party Payors" shall mean Medicare, Medicaid, CHAMPUS, Blue Cross
and/or Blue Shield, private insurers and any other Person which presently or
in the future maintains Third Party Payor Programs.

     "Total Revenues" shall mean, for the period in question, all revenues in
the aggregate for all of the Facilities (determined on an accrual basis in
accordance with GAAP) received by the Alterra Lessees or any Affiliate of any
of them (without duplication) from the operation of the Facilities or any
other use of the Facilities, or any portion thereof, including, without
limitation, all resident rents and revenues received or receivable for the use
of or otherwise by reason of all units, beds and other facilities provided,
meals served, services performed, space or facilities subleased or goods sold
on the Facilities, including, without limitation, and except as provided
below, any other arrangements with third parties relating to the possession or
use of the Facilities; provided, however, that Total Revenues shall not
include: (i) allowances according to GAAP for uncollectible accounts,
including credit accounts and charity care and other administrative discounts
(other than allowance for uncollectible accounts related to Third Party Payor
reimbursements properly submitted, which shall be deducted in determining
Total Revenues), (ii) revenue from professional fees or charges by physicians
and unaffiliated providers of services, when and to the extent such charges
are paid over to such physicians or unaffiliated providers of services, or are
separately billed and not included in comprehensive fees; (iii) non-operating
revenues such as interest income or income from the sale of assets not sold in
the ordinary course of business; (iv) revenues attributable to services
actually provided off-site or otherwise away from a Facility, such as home
health care, to persons that are not residents of a Facility; (v) security
deposits of residents of a Facility; (vi) proceeds of any insurance coverage
other than Third Party Payor Programs and rent loss or business interruption
coverage; and (vii) any Award from any Condemnation.

                                       9
<PAGE>

     "Wrongful Distribution" shall mean, in the event that Alterra Rent
Payments are due and owing and have not been made as required hereunder, the
distribution of all or any portion of Total Revenues by ALS Holdings or any
Alterra Lessee to the Parent of ALS Holdings or any Affiliate (other than ALS
Holdings) thereof that results in inadequate monies being available to make
the Alterra Rent Payments, to the extent of any such shortfall on a cumulative
basis (it being the intent of the parties that no such distribution to ALS
Holdings' Parent or any Related Party thereto (other than to ALS Holdings,
PSLT-ALS Holdings or PSLT-ALS Holdings' Affiliates) should be made unless all
Alterra Rent Payments due hereunder are current).

2. Lease.

     PSLT-ALS Holdings hereby grants to ALS Holdings certain rights contained
herein relating to the Property Leases and ALS Holdings hereby grants to
PSLT-ALS Holdings certain rights contained herein relating to the Property
Leases, all as more particularly set forth herein. The parties hereto agree
and acknowledge that from and after the effective date of any termination of
any Property Lease as it relates to any individual Deleted Property (as
defined in each of the Property Leases) in connection with a casualty event or
Condemnation, such Deleted Property shall no longer be deemed to be a
"Facility" for purposes of this Agreement.

3. Term.

     (a) Term. Subject to ALS Holdings' right to renew this Agreement and the
Property Leases as set forth below, the initial term of this Agreement shall
be coterminous with the term of each of the Property Leases, it being
acknowledged that the initial term of the Property Leases expires at midnight
on October 31, 2019, unless modified or earlier terminated pursuant to the
terms of this Agreement or the Property Leases ("Initial Term").

     (b) Renewal Terms. Provided (i) there is not an existing and continuing
Event of Default under this Agreement or under any of the Property Leases
either on the date that ALS Holdings exercises the applicable Renewal Term or
on the commencement date thereof, (ii) there is not an existing and continuing
Management Termination Event under this Agreement either on the date that ALS
Holdings exercises the first Renewal Term or on the commencement date thereof,
(iii) the Alterra Lessees or their approved successors-in-interest (including
any approved sublessees) shall continue to be lessees of the Facilities, (iv)
Guarantor shall deliver to PSLT-ALS Holdings an affirmation of the Guaranty,
and (v) ALS Holdings shall deliver to PSLT-ALS Holdings affirmations of each
Lease Guaranty (as defined in the Property Leases) with respect to each of the
Property Leases, ALS Holdings, acting on behalf of each of the Alterra
Lessees, shall have the option to renew all, but not less than all, of the
Property Leases for two (2) additional five (5) year periods in accordance
with the terms of the Property Leases (each, a "Renewal Term", and
collectively, the "Renewal Terms"); provided, however, that the second five
(5) year renewal option shall be additionally conditioned upon ALS Holdings
having exercised the first five (5) year renewal option with respect to all,
but not less than all of the Property Leases. If ALS Holdings desires to
exercise its option under this Paragraph 3(b) to renew all of the Property
Leases, ALS Holdings shall deliver to PSLT-ALS Holdings written Notice (the
"First Renewal Notice") not less than one (1) year prior to the expiration of
the Initial Term or the initial Renewal Term, as applicable, requesting that
PSLT-ALS Holdings deliver to ALS Holdings written Notice (the "Renewal
Determination Notice") setting forth PSLT-ALS

                                      10
<PAGE>

Holdings' determination of the Lease Basis (as defined in the Property Leases)
with respect to each of the Facilities to be used in the calculation of Base
Rent (as defined in the Property Leases) under each of the Property Leases
during the applicable Renewal Term. Within fifteen (15) days after the receipt
by PSLT-ALS Holdings of the First Renewal Notice, PSLT-ALS Holdings shall
deliver to ALS Holdings the Renewal Determination Notice, and, within fifteen
(15) days after delivery by PSLT-ALS Holdings to ALS Holdings of the Renewal
Determination Notice, ALS Holdings shall, by written notice to PSLT-ALS
Holdings, either (x) decline to extend the Property Leases and this Agreement
for the applicable Renewal Term, in which event, ALS Holdings shall have no
further renewal rights pursuant to this Paragraph 3(b), (y)(i) agree with
PSLT-ALS Holdings' determination of the Lease Basis with respect to all of the
Facilities as set forth in the Renewal Determination Notice and (ii) extend
the Term of the Property Leases and this Agreement for the applicable Renewal
Term using the Lease Basis for each of the Facilities as set forth in the
Renewal Determination Notice for purposes of determining the Base Rent payable
under the Property Leases for the applicable Renewal Term, or (z) disagree
with one (1) or more of the determinations of Lease Basis set forth in the
Renewal Determination Notice, in which event, the parties shall immediately
initiate the appraisal procedures set forth in Paragraph 53 of the Property
Leases with respect to the applicable Facility(ies). If ALS Holdings exercises
its option pursuant to clause (z) of the immediately preceding sentence, ALS
Holdings shall either accept or reject the determination of the Lease Basis
for each of the Facilities either as set forth in the Renewal Determination
Notice or as determined in accordance with the appraisal procedures set forth
in Paragraph 53 of the Property Leases, as the case may be, not later than two
hundred seventy (270) days prior to the expiration of the Initial Term or the
expiration of the initial Renewal Term, as applicable, by written Notice to
PSLT-ALS Holdings, which Notice shall constitute ALS Holdings' irrevocable
election hereunder to (A) extend the Term of the Property Leases and this
Agreement for the applicable Renewal Term using the Lease Basis for each of
the Facilities determined in accordance with the terms of this Paragraph, or
(B) decline to extend the Property Leases and this Agreement for the
applicable Renewal Term; provided, however, that if the appraisal procedures
with respect to the applicable Facility(ies) are continuing in good faith
between the parties, but the parties have not yet determined the Base Rent for
all of the Facilities for the applicable Renewal Term, then ALS Holdings shall
have an additional thirty (30) days to make its decision; provided, further,
that in any event, ALS Holdings must make its election whether or not to
extend the Property Leases and this Agreement not later than two hundred forty
(240) days prior to the expiration of the Initial Term or the expiration of
the initial Renewal Term, as applicable, based upon either the Lease Basis set
forth in the Renewal Determination Notice or the results of the appraisal
procedures that have been completed as of such date. Upon the renewal of the
Property Leases by ALS Holdings as provided in this Paragraph 3(b), this
Agreement shall automatically, and without any action by any Person, be deemed
to have been extended for the same term. In the event of such exercise, (1)
PSLT-ALS Holdings and ALS Holdings shall enter into such confirmatory
documents as may be necessary to effect such renewal of this Agreement, and
(2) PSLT-ALS Holdings and ALS Holdings shall cause and direct the Provident
Lessors and the Alterra Lessees, respectively, to enter into such confirmatory
documents as may be necessary to effect such renewals. Time shall be of the
essence with respect to the giving of notices under this Paragraph 3(b).

                                      11
<PAGE>

4. Alterra Rent Payments.

     (a) Alterra Rent Payments. ALS Holdings shall pay to PSLT-ALS Holdings
(or to such Person as PSLT-ALS Holdings may direct), in lawful money of the
United States of America which shall be legal tender for the payment of public
and private debts, without offset, abatement, demand or deduction, the Alterra
Rent Payments required hereunder during the Term, except as hereinafter
expressly provided. All payments to PSLT-ALS Holdings shall be made by wire
transfer of immediately available federal funds or by other means acceptable
to PSLT-ALS Holdings in its sole discretion. Payments for any partial month
shall be prorated on a per diem basis based on a 360 day year and twelve (12)
thirty (30) day months.

     (b) Master Rent. The Master Rent shall be paid in arrears on the first
(1st) day of each calendar month for the immediately preceding month, or if
such day is not a Business Day, the immediately preceding Business Day.

     (c) Overdue Interest. If ALS Holdings fails to make any Alterra Rent
Payment on or before the date such payment is due and payable and such amount
remains unpaid for a period of five (5) Business Days, such past due payment
shall bear interest at the Overdue Rate; provided, however, that with respect
to any other sums or amounts to be paid by ALS Holdings hereunder, the Overdue
Rate shall apply if such amounts remain unpaid for a period of five (5)
Business Days after Notice thereof from PSLT-ALS Holdings is received by ALS
Holdings (calculated from the date of such receipt). The amount of any
interest due under this Paragraph 4(d) shall not be diminished by ALS
Holdings' making a partial payment, except in such circumstances where ALS
Holdings provides evidence reasonably satisfactory to PSLT-ALS Holdings that
the payment rendered was intended as a full payment, and that the shortfall
was due to a good faith mistake. Notwithstanding anything to the contrary
contained in this Paragraph 4(c), in no event shall ALS Holdings have any
obligation to pay interest to PSLT-ALS Holdings on any overdue amounts
(including, without limitation, on the Master Rent) to the extent any Alterra
Lessee has paid interest on such overdue amount under the applicable Property
Lease, and, to the extent PSLT-ALS Holdings and any Provident Lessor each
collect interest on the same overdue amount, PSLT-ALS shall promptly refund
such interest payment to ALS Holdings.

     (d) Payment Without Abatement. No abatement, diminution or reduction of
any payments required hereunder shall be allowed to ALS Holdings or any person
claiming under ALS Holdings, under any circumstances or for any reason
whatsoever, except to the extent expressly herein provided or to the extent
expressly provided in the Property Leases.

5. Capital Additions.

     (a) Mandatory Capital Addition Allowances. PSLT-ALS Holdings agrees to
make available, in its reasonable discretion, to ALS Holdings, from time to
time, as hereinafter provided, the aggregate amount of up to Five Million
Dollars ($5,000,000) for the purpose of funding the following Capital
Additions to the Facilities: (i) if PSLT-ALS Holdings and ALS Holdings
mutually agree in their reasonable discretion that a Capital Addition is
necessary for the applicable Facility to be in compliance with Legal
Requirements, subject to the right of ALS Holdings or the applicable Alterra
Lessee to contest the applicable Legal Requirement pursuant to Paragraph 26 of
the applicable Property Lease (including, without limitation, by reason of

                                      12
<PAGE>

compliance of the applicable Facility with such Legal Requirement pursuant to
a grandfather clause), or (ii) if PSLT-ALS Holdings, ALS Holdings and Alterra
Management mutually agree in their reasonable discretion in writing that the
cost of a Capital Addition proposed by ALS Holdings would constitute an
Extraordinary Capital Expenditure (any such Capital Addition described in
clause (i) or (ii) above is herein referred to as a "Mandatory Capital
Addition", and any portion of the $5,000,000 disbursed in PSLT-ALS Holdings'
reasonable discretion in connection with any such Mandatory Capital Addition
is herein referred to as a "Mandatory Capital Addition Allowance" and
collectively, the "Mandatory Capital Addition Allowances"). Notwithstanding
the foregoing, if an Event of Default arises under the applicable Property
Lease (as defined thereunder) as a result of the failure by ALS Holdings or
the applicable Alterra Lessee to make any Mandatory Capital Addition described
in clause (i) of the immediately preceding sentence, then PSLT-ALS Holdings
and the applicable Provident Lessor shall have all rights and remedies
available to such party under this Agreement or the applicable Property Lease,
as applicable, to perform such work. ALS Holdings agrees that, in connection
with any Mandatory Capital Addition Allowance, ALS Holdings shall, or shall
cause the applicable Alterra Lessee to, provide PSLT-ALS Holdings or the
applicable Provident Lessor with the information required to be provided
pursuant to Paragraph 11(c) of the Property Leases relating to Landlord
Capital Additions. The provisions of Paragraph 11(d) of the Property Leases
shall govern the disbursement of Mandatory Capital Addition Allowances,
provided that PSLT-ALS Holdings shall have no obligation to make any Mandatory
Capital Addition Allowance pursuant to this Paragraph 5(a), if at the time of
a disbursement of any Mandatory Capital Addition Allowance, an Event of
Default shall have occurred and is continuing.

     (b) Mandatory Capital Addition Allowances Added to Lease Basis. All
Mandatory Capital Addition Allowances made by PSLT-ALS Holdings pursuant to
this Paragraph 5 shall be added to the Lease Basis under the related Property
Lease for the applicable Facility such that the Base Rent under such Property
Lease shall be adjusted in accordance with its terms (each such term as
defined in the Property Lease).

6. Assignment, Subletting and Material Contracts.

     (a) Transfers Prohibited Without Consent. ALS Holdings shall not, without
the prior written consent of PSLT-ALS Holdings, which consent may be withheld
in PSLT-ALS Holdings' sole and absolute discretion, in each instance, sell,
assign, pledge, hypothecate or otherwise transfer its ownership interest in
any Alterra Lessee, in whole or in part, or any rights or interest which ALS
Holdings may have under this Agreement. For the purposes of this Paragraph
6(a), except to the extent expressly permitted pursuant to this Paragraph 6, a
Change of Control shall be deemed to constitute a prohibited sale of an
ownership interest in each of the Alterra Lessees. If Guarantor pledges all or
any portion of the equity interests in ALS Holdings, and if the holder of such
pledge forecloses on its security interest in such equity interests, then the
Person (including the pledgee) that acquires the pledged equity interests at
foreclosure or otherwise and the circumstances of such transfer must comply
with the provisions of this Paragraph 6. If given, the consent of PSLT-ALS
Holdings to any such transfer shall in no event be construed to relieve ALS
Holdings or such transferee from the obligation of obtaining the express
consent in writing of PSLT-ALS Holdings to any further transfer. Any
assignment or transfer in violation of this Paragraph 6(a) shall be voidable
at PSLT-ALS Holdings' option.

                                      13
<PAGE>

     (b) Permitted Transfers. Notwithstanding anything to the contrary
contained herein, and subject to the terms of any Facility Mortgage, PSLT-ALS
Holdings shall have the right to consent, such consent not to be unreasonably
withheld, conditioned or delayed, to the proposed sale (including a sale in
the form of a merger or business combination) of fifty percent (50%) or more
of the outstanding shares of voting stock of Guarantor or voting stock or
membership interests of any Parent of Guarantor, but excluding any Permitted
Management Incentive Program from such calculation (a "Permitted Transfer"),
provided that, PSLT-ALS Holdings' consent shall not be required if: (i) ALS
Holdings provides PSLT-ALS Holdings written Notice of such proposed Permitted
Transfer not less than thirty (30) days prior to the effective date thereof,
together with evidence reasonably satisfactory to PSLT-ALS Holdings of
compliance with clause (ii) below, (ii) ALS Holdings furnishes evidence
reasonably satisfactory to PSLT-ALS Holdings that the industry experience in
owning, operating and managing senior living facilities similar to the
Facilities (as determined by PSLT-ALS Holdings) of the senior management of
Guarantor or the Successor Guarantor, after giving effect to such transfer, is
at least comparable to or better than that of Guarantor, (iii) ALS Holdings
furnishes evidence to PSLT-ALS Holdings that the Net Worth of Guarantor or any
successor entity proposed to be delivering a guaranty of this Agreement
following any such Permitted Transfer (the "Successor Guarantor") shall at
least equal the Net Worth of Guarantor immediately prior to such Permitted
Transfer (which Net Worth determination shall not take into account any
extraordinary and non-recurring transactions during the twelve (12) months
prior to such Permitted Transfer which reduce the net worth of Guarantor),
(iv) ALS Holdings furnishes evidence to PSLT-ALS Holdings that Guarantor or
the Successor Guarantor, as the case may be, shall continue to own all of the
membership interests in ALS Holdings, (v) ALS Holdings furnishes evidence to
PSLT-ALS Holdings that ALS Holdings shall continue to be a Special Purpose
Entity and shall continue to own all of the membership interests in each of
the Alterra Lessees, and (vi) Guarantor or the Successor Guarantor, as the
case may be, shall execute and deliver to PSLT-ALS Holdings either an
affirmation of the Guaranty in form and substance reasonably satisfactory to
PSLT-ALS Holdings, or a new guaranty of this Agreement in form and substance
identical to the Guaranty, as the case may be.

     (c) Equity Transfers. Notwithstanding anything to the contrary contained
herein, PSLT-ALS Holdings' consent shall not be required in connection with
any of the following (each, an "Equity Transfer"): (i) an initial public
offering of Guarantor or any Parent or any other equity owner of Guarantor or
similar equity sale transaction targeted to raise capital for Guarantor or any
Parent or other equity owner of Guarantor, or (ii) any direct or indirect
equity transfer in Guarantor of less than fifty percent (50%) of the ownership
interest, excluding any Permitted Management Incentive Program from such
calculation, provided that, in each case, the current shareholders of
Guarantor which control the management of Guarantor as of the date hereof
continue to control the management of Guarantor following any such Equity
Transfer.

     (d) Material Contracts. Prior to entering into any contract or modifying
any existing contract that materially changes the scope of services provided
to the residents of any Facility or that engages any subsidiary of Guarantor
(except for any such subsidiary which is a subsidiary of ALS Holdings), ALS
Holdings shall obtain PSLT-ALS Holdings' consent, which consent shall not be
unreasonably withheld or delayed.

7. Default; Remedies.

                                      14
<PAGE>

     (a) Default. Upon the occurrence of any Event of Default (defined below),
ALS Holdings shall have the affirmative obligation to notify PSLT-ALS Holdings
as soon as it knows of any such event. The occurrence of any of the following
events shall constitute an "Event of Default" under this Agreement, and in
connection therewith, PSLT-ALS Holdings shall have the right to exercise any
rights or remedies available in this Agreement, at law or in equity:

          (i) Any default by any of the Alterra Lessees under the terms of
their respective Property Leases with the Provident Lessors, and the
continuation of such default beyond any applicable notice and cure period
therefor;

          (ii) ALS Holdings' failure to pay when due hereunder any of the
Alterra Rent Payments (whether due to a Wrongful Distribution or otherwise)
and such failure is not cured within five (5) Business Days;

          (iii) ALS Holdings' failure to perform any other of the terms,
covenants or conditions contained in this Agreement if not remedied within
thirty (30) days after receipt of Notice thereof, or, if such default cannot
reasonably be remedied within such period, ALS Holdings does not within thirty
(30) days after Notice thereof commence such act or acts as shall be necessary
to remedy the default and shall not thereafter diligently complete such act or
acts within a reasonable time, provided, however, in no event shall such cure
period extend beyond one hundred eighty (180) days after Notice thereof;

          (iv) if (w) ALS Holdings or Guarantor becomes bankrupt or insolvent,
or files any debtor proceedings, or files pursuant to any statute a petition
in bankruptcy or insolvency or for reorganization, or files a petition for the
appointment of a receiver or trustee for all or substantially all of its
assets, or (x) any of the foregoing are filed against ALS Holdings or
Guarantor and such petition or appointment shall not have been set aside
within ninety (90) days from the date of such petition or appointment, or (y)
ALS Holdings or Guarantor makes an assignment for the benefit of creditors or
shall admit in writing its inability to pay its debts generally as they become
due, or (z) ALS Holdings' or Guarantor's interest in all or portion of the
Total Revenues is attached, levied upon, seized or made subject to any other
judicial seizure and such seizure or attachment is not discharged within
ninety (90) days;

          (v) if either of ALS Holdings or Guarantor is liquidated or
dissolved, or begins proceedings toward such liquidation or dissolution, or in
any manner permits the sale or divestiture of substantially all of its assets;

          (vi) a default occurs under Paragraph 6;

          (vii) Intentionally Deleted;

          (viii) if any material representation or warranty made by or on
behalf of ALS Holdings under this Agreement shall prove to be false or
misleading in any material respect on the date when made and the same has a
material adverse effect on the financial condition of ALS Holdings or ALS
Holdings' ability to perform under this Agreement or the Lease Guaranty (as
defined in the Property Leases);

                                      15
<PAGE>

          (ix) if any material representation or warranty made by or on behalf
of Guarantor under the Guaranty shall prove to have been false or misleading
in any material respect on the date when made and the same has a material
adverse effect on the financial condition of Guarantor or Guarantor's ability
to perform under the Guaranty;

          (x) Intentionally Deleted;

          (xi) the issuance or entry against Guarantor of any final,
unappealable award or judgment (after any applicable appeal periods have
expired) in an amount of One Million Six Hundred Thousand Dollars
($1,600,000.00) or more, and such award or judgment shall continue unsatisfied
and in effect for a period of ten (10) consecutive days without ALS Holdings
demonstrating, to PSLT-ALS Holdings' reasonable satisfaction, that an
insurance policy exists that would cover such award or judgment; or

          (xii) Intentionally Deleted; or

          (xiii) if Guarantor fails to perform any of the terms, covenants or
conditions contained in the Guaranty beyond any applicable notice and cure
periods set forth therein.

Notwithstanding anything to the contrary set forth in this Section 7(a), as to
any Facility that is encumbered by one or more Facility Mortgages (any such
encumbered Facility, an "Applicable Facility" and each Facility Mortgage
encumbering the Applicable Facility, an "Applicable Facility Mortgage"), if
and to the extent that:

          (A) a default occurs under clause (i), clause (ii), clause (iii),
clause (vi) or clause (xiii) of this Section 7(a), and

          (B)such default arises solely as a result of a default under or
relating to a Property Lease other than the Property Lease demising the
Applicable Facility (and not as result of a default under the Property Lease
demising the Applicable Facility),

then, provided that no other independent Event of Default then exists under
the Property Lease demising the Applicable Facility, such default shall not
constitute an Event of Default, unless the holders of each Applicable Facility
Mortgage (if any) encumbering the Applicable Facility consents in writing to
such default's constituting an Event of Default.

     (b) Remedies. If any of the Events of Default hereinabove specified shall
occur and be continuing, PSLT-ALS Holdings shall have and may exercise any one
or more of the following rights and remedies, exclusive of any remedies that
may be available to any of the Provident Lessors under the Property Leases if
the facts creating such Event of Default also create an event of default under
any of the applicable Property Lease(s):

          (i) With respect to any Property Lease(s) and any Event(s) of
Default thereunder as contemplated by Paragraph 7(a)(i) hereof, PSLT-ALS
Holdings may cause and direct the applicable Provident Lessor(s) to terminate
the applicable Property Lease(s) and, peaceably or pursuant to appropriate
legal proceedings, re-enter, retake and resume possession of the Facilities
demised thereunder;

                                      16
<PAGE>

          (ii) PSLT-ALS Holdings may recover immediately from ALS Holdings any
and all Alterra Rent Payments and other sums and damages due or in existence
at the time of such termination, including, without limitation, the Master
Rent and other sums, charges, payments, costs and expenses agreed and/or
required to be paid by ALS Holdings to PSLT-ALS Holdings hereunder with
interest thereon at the Overdue Rate provided herein.

          (iii) If an Event of Default continues uncured for a period of six
(6) months, PSLT-ALS Holdings may, by written notice thereof to ALS Holdings,
terminate ALS Holdings' and the Alterra Lessees' option to renew the Property
Leases for one or both of the Renewal Terms; provided, however, that if, as a
result of any such Event of Default, PSLT-ALS Holdings causes the applicable
Provident Lessor(s) to terminate the applicable Property Lease(s) and PSLT-ALS
Holdings and the applicable Provident Lessor(s) have actually collected all
damages required to be paid hereunder and thereunder with respect to such
Event of Default, then such Event of Default shall no longer be deemed to
exist for purposes of this Paragraph 7(b)(iii).

          (iv) PSLT-ALS Holdings may, without causing or directing any of the
Provident Lessors to re-enter, retake or resume possession of the applicable
Facility, sue ALS Holdings for all Alterra Rent Payments and all other sums,
charges, payments, costs and expenses due from ALS Holdings to PSLT-ALS
Holdings hereunder (or any Alterra Lessee under a Property Lease under which
an Event of Default (as defined thereunder) has occurred for all rents and
other sums, charges, payments, costs and expenses due from the applicable
Alterra Lessee under its applicable Property Lease) either: (A) as they become
due under this Agreement (or the applicable Property Lease); or (B) at
PSLT-ALS Holdings' option, accelerate the maturity and due date of the whole
or any part of the Alterra Rent Payments for the entire then-remaining
unexpired balance of the Initial Term or the applicable Renewal Term, as the
case may be (reduced to its present value, applying an interest rate of eight
percent (8%)), less the fair rental value of the Facilities reduced to its
present value, as well as all other sums, charges, payments, costs and
expenses required to be paid by ALS Holdings to PSLT-ALS Holdings hereunder,
including, without limitation, damages (other than consequential damages) for
breach or default of ALS Holdings' obligations hereunder in existence at the
time of such acceleration, such that all sums due and payable under this
Agreement shall, following such acceleration, be treated as being and, in
fact, be due and payable in advance as of the date of such acceleration.
PSLT-ALS Holdings may then proceed to recover and collect all such unpaid
Alterra Rent Payments and other sums so sued for from ALS Holdings by
distress, levy, execution or otherwise.

          (v) PSLT-ALS Holdings may pursue its remedies under the against
Guarantor under the Guaranty.

     (c) Remedies Not Exclusive. In addition to the remedies hereinabove
specified and enumerated, so long as an Event of Default has occurred and is
continuing, PSLT-ALS Holdings shall have and may exercise such other rights
and remedies as are available at law or in equity, and the mention in this
Agreement of any particular remedy shall not preclude PSLT-ALS Holdings from
having or exercising any other remedy at law or in equity. So long as an Event
of Default has occurred and is continuing, nothing herein contained shall be
construed as precluding PSLT-ALS Holdings from having or exercising such
lawful remedies as may be or become necessary in order to preserve its rights
hereunder, even before the expiration of any notice periods provided for in
this Agreement, if under the particular circumstances then existing, the

                                      17
<PAGE>

allowance of such notice periods will result in the termination of the
ownership interests of the Provident Lessors in the Facilities. In addition,
with respect to any Property Lease under which an Event of Default (as defined
thereunder) has occurred and is continuing, the applicable Provident Lessor
shall be entitled to exercise all of its rights and remedies under the
applicable Property Lease. Notwithstanding anything to the contrary contained
herein, in no event shall PSLT-ALS Holdings and any Provident Lessor have the
right, by exercise of their respective remedies under this Agreement and/or
the applicable Property Lease, to double recovery of any amounts, including,
without limitation, Rent (as defined in the Property Leases) or any interest
thereon.

8. Intentionally Deleted.

9. Financial and Other Statements. ALS Holdings shall furnish the following
statements to PSLT-ALS Holdings during the Term:

     (a) Financial Statements, Budgets and Reports.

          (i) within thirty (30) days after each of the first three quarters
of each calendar year during the Term, the most recent operating statements of
ALS Holdings (reflecting a "roll-up" of all of the Facilities), in each case
accompanied by the Financial Officer's Certificate;

          (ii) within thirty (30) days after the end of each calendar year
during the Term, the most recent operating statements of ALS Holdings
(reflecting a "roll-up" of all of the Facilities), in each case accompanied by
a Financial Officer's Certificate;

          (iii) within thirty (30) days after the end of each calendar month,
an unaudited statement of income and occupancy for the Facilities on an
aggregate basis;

          (iv) promptly, upon Notice from PSLT-ALS Holdings, such other
information concerning the business, financial condition and affairs of ALS
Holdings and any Alterra Lessees as PSLT-ALS Holdings may reasonably request
from time to time;

          (v) thirty (30) days prior to the first day of each calendar year
during the Term, a capital budget for such calendar year describing in
reasonable detail all anticipated Capital Additions to be made to each
Facility, together with a description of the source of funds therefor;

          (vi) within thirty (30) days after each calendar quarter during the
Term, an Officer's Certificate setting forth the Lease Coverage Ratio and the
calculation of Excess Cash Flow for such calendar quarter;

          (vii) within thirty (30) days after each calendar quarter during the
Term, an Officer's Certificate setting forth Total Revenues and NOI for such
calendar quarter;

          (viii) upon reasonable request in writing from PSLT-ALS Holdings,
the following reports as of any calendar quarter end or with respect to any
other period for which PSLT-ALS Holdings may reasonably request: all loss runs
and material actuarial reports,

                                      18
<PAGE>

studies, reviews and analysis, if any, prepared by or on behalf of ALS
Holdings and each of the Alterra Lessees or their insurance actuaries,
quarterly and otherwise, concerning ALS Holdings' and each of the Alterra
Lessees' reserves for expenses relating to malpractice or professional
liability and malpractice or professional liability insurance; and

          (ix) copies of other financial statements required to be delivered
in connection with any Facility Mortgage.

     (b) Proprietary Information. Any proprietary information obtained by the
parties hereunder pursuant to the provisions of this Agreement shall be
treated as confidential, except that such information may be used, subject to
the appropriate confidentiality safeguards, in any litigation between the
parties or in connection with other Legal Requirements or as otherwise
required by securities or other laws. The obligations of ALS Holdings and
PSLT-ALS Holdings contained in this Paragraph 9(b) shall survive the
expiration or earlier termination of this Agreement; and

     (c) Record Keeping. ALS Holdings shall utilize, or cause the Alterra
Lessees to utilize, an accounting system of the Facilities in accordance with
its usual and customary practices and in accordance with GAAP, which will
accurately record all NOI, and ALS Holdings or the Alterra Lessees shall
retain, for as long as required to be retained for tax purposes, the
accounting books and records supporting the determination of NOI for such
Lease Year. PSLT-ALS Holdings, at its own expense except as provided herein,
shall have the right from time to time by its accountants or representatives
to audit the information set forth in the Officer's Certificate and, in
connection with such audits, to examine ALS Holdings and any Alterra Lessee's
books and records (upon reasonable notice during customary business hours)
with respect thereto (including supporting data and sales and excise tax
returns) subject to any prohibitions or limitations on disclosure of any such
data under applicable law or regulations, including such limitations as may be
necessary to preserve the confidentiality of the facility-patient relationship
and the physician-patient privilege and/or other similar privilege or
confidentiality obligations.

     (d) Financial Statements of Guarantor. ALS Holdings shall cause Guarantor
to furnish to PSLT-ALS Holdings the following: (i) within thirty (30) days
after each of the first three quarters of any calendar year during the Term,
the most recent unaudited income statements and balance sheets of Guarantor,
and (ii) as soon as available, and in any event within eighty (80) days after
the close of each calendar year during the Term, financial statements prepared
for such year, including a balance sheet and operating statement as of the end
of such year, together with related statements of income and members'
partners' or owner's capital for such calendar year, audited by a "Big Four"
accounting firm or a nationally recognized, independent certified public
accounting firm reasonably satisfactory to PSLT-ALS Holdings, whose opinion
shall be to the effect that such financial statements have been prepared in
accordance with GAAP, applied on a consistent basis, and shall not be
qualified as to the scope of the audit. Together with Guarantor's quarterly
and annual financial statements, ALS Holdings shall cause Guarantor to furnish
to PSLT-ALS Holdings an Officer's Certificate certifying as of the date
thereof whether, to Guarantor's knowledge, there exists an event or
circumstance that constitutes an Event of Default under this Agreement or
that, with the giving of notice or the passage of time, or both, would
constitute a default by Guarantor under the Guaranty, and if such

                                      19
<PAGE>

Event of Default hereunder or default under the Guaranty exists, the nature
thereof, the period of time it has existed and the action then being taken to
remedy the same.

     (e) Quarterly Meetings; Facility Level Meetings and Reviews. On a
quarterly basis, ALS Holdings shall permit, and upon request by PSLT-ALS
Holdings, shall make appropriate arrangements for, PSLT-ALS Holdings and/or
its representatives to discuss the affairs, operations, finances and accounts
of ALS Holdings, each Alterra Lessee and Guarantor with, and be advised as to
the same by, senior officers of ALS Holdings or Guarantor (and, at PSLT-ALS
Holdings' request and expense, such of ALS Holdings' or Guarantor's
independent accountants and other financial advisors as would be relevant to
the topic(s) of the particular meeting), all as PSLT-ALS Holdings may
reasonably deem appropriate for the purpose of verifying any report(s)
delivered by ALS Holdings to PSLT-ALS Holdings under this Agreement or by the
Alterra Lessees under the Property Leases, or for otherwise ascertaining
compliance with this Agreement by ALS Holdings or compliance with the Property
Leases by the Alterra Lessees, or the business, operational or financial
condition of ALS Holdings, each Alterra Lessee, Guarantor and/or any of the
Facilities. Without limitation of the foregoing, from time to time promptly
following receipt of written notice from PSLT-ALS Holdings to ALS Holdings
(and in any event within five (5) Business Days of such receipt), ALS Holdings
shall permit, and shall make appropriate arrangements for, PSLT-ALS Holdings
and/or PSLT-ALS Holdings' representatives to discuss the business, operational
and financial condition of specific Facilities designated by PSLT-ALS Holdings
with, and be advised as to the same by, appropriate personnel of ALS Holdings,
the Alterra Lessees and Guarantor having operational and accounting
responsibilities for the Facilities so specified by PSLT-ALS Holdings, and to
review, and make abstracts from and copies of, the books, accounts and records
of ALS Holdings, the Alterra Lessees and Guarantor relative to any such
Facilities. Unless otherwise agreed in writing by PSLT-ALS Holdings and ALS
Holdings, all of the discussions, reviews, abstracting and copying referenced
in this Paragraph 9(e) shall occur during normal business hours.

10. Additional Covenants of ALS Holdings.

     (a) Indebtedness of ALS Holdings. ALS Holdings shall not create, incur,
assume or guarantee, or permit to exist, or become or remain liable directly
or indirectly upon, any indebtedness, without PSLT-ALS Holdings' prior written
consent, which consent shall not be unreasonably withheld or delayed.

     (b) Modification of Organizational Documents. ALS Holdings shall not,
without the prior written consent of PSLT-ALS Holdings in each instance,
permit any amendment of its certificate of formation and operating agreement,
or amend the certificate of formation or operating agreement of any of the
Alterra Lessees.

     (c) Minimum Capital Additions Amount. ALS Holdings shall cause the
Alterra Lessees to expend on Capital Additions made to the Facilities during
each Lease Year during the Term an amount, in the aggregate, at least equal to
the Minimum Capital Additions Amount. As used herein and in the Property
Leases, the term "Minimum Capital Additions Amount" shall mean, with respect
to the Facilities, the product of (i) the number of units contained in the
Facilities (in the aggregate) multiplied by (ii) Four Hundred Dollars ($400)
during the first (1st) Lease Year of the Term, as such amount shall be
increased on the first day of each succeeding

                                      20
<PAGE>

Lease Year after the first Lease Year of the Term in proportion to increases
in the Consumer Index (as defined in the Property Leases), provided that in no
event shall the Minimum Capital Additions Amount be less than the Minimum
Capital Additions Amount for the prior Lease Year. If in any Lease Year the
Alterra Lessees fail to expend the entire Minimum Capital Additions Amount as
required pursuant to this Paragraph 10(c) prior to the end of such Lease Year,
such failure shall not constitute a Default or Event of Default hereunder or
under the Property Leases so long as ALS Holdings or the applicable Alterra
Lessee pays any such shortfall to the applicable Provident Lessor or PSLT-ALS
Holdings, which funds shall be deposited into the Capital Additions Reserve
(or a similar account required in connection with any Facility Mortgage(s)),
for expenditure as required herein and pursuant to Paragraph 25(d) of the
Property Leases. Subject to the provisions of Paragraph 12(a) hereof, the
Minimum Capital Additions Amount may be adjusted from time to time based on
the requirements of any Facility Mortgagee, provided any such provisions
regarding the funding of capital replacement reserves under any future
Facility Mortgage shall be in compliance with the requirements of Paragraph
54(b) of the Property Leases. In addition, PSLT-ALS Holdings and ALS Holdings
agree to review the Minimum Capital Additions Amount periodically (but in no
event less than annually), to provide for the proper operation and maintenance
of each of the Facilities.

     (d) Capital Additions Reserve. Upon PSLT-ALS Holdings' or the applicable
Provident Lessor's request, or if ALS Holdings or any Alterra Lessee deposits
any funds in accordance with Paragraph 10(c) hereof, or if otherwise required
by an Facility Mortgagee, ALS Holdings shall, or, if required by any Facility
Mortgagee with respect to any one or more of the Facilities, ALS Holdings
shall cause the applicable Alterra Lessee(s) to, establish a reserve fund for
the Minimum Capital Additions Amount (the "Capital Additions Reserve"), which
reserve shall be held in PSLT-ALS Holdings' name or in the name of the
Facility Mortgagee, if applicable. If the Capital Additions Reserve is
established, ALS Holdings shall, or shall cause the applicable Alterra
Lessee(s) to, deposit therein one-twelfth (1/12th) of the Minimum Capital
Additions Amount each month. The fact that funds are on deposit in the Capital
Additions Reserve shall in no way limit or relieve ALS Holdings' obligations
to cause the Alterra Lessees to expend the Minimum Capital Additions Amount
with respect to any Lease Year, without taking into account any funds then on
deposit in the Capital Additions Reserve. If at the end of the Term or earlier
expiration of any Property Lease, funds remain in the Capital Additions
Reserve which have been funded as a result of a shortfall described in the
immediately preceding sentence, such funds shall become the property of
PSLT-ALS Holdings or the applicable Provident Lessor, and ALS Holdings and the
Alterra Lessee shall have no further right, interest or title in or to such
funds. Provided no Event of Default exists hereunder or under the applicable
Property Leases(s), PSLT-ALS Holdings shall cause the applicable Provident
Lessor(s) to disburse, in accordance with the terms and conditions set forth
in Paragraph 11(d) of the Property Leases, funds deposited in the Capital
Additions Reserve to the applicable Alterra Lessee(s) from time to time as the
applicable Alterra Lessee(s) shall request in writing to fund or reimburse the
applicable Alterra Lessee(s) for Capital Additions made to the Facilities;
provided, however, that no funds will be disbursed from the Capital Additions
Reserve in any given Lease Year until after ALS Holdings has satisfied its
obligations under this Paragraph 10(d) and caused the Alterra Lessees to
expend an amount at least equal to the Minimum Capital Additions Amount for
such Lease Year with respect to Capital Additions to the Facilities. All
moneys deposited into the Capital Additions Reserve shall be maintained for
the payment of, or reimbursement to the applicable Alterra Lessee(s) for,
Capital Additions Costs (other than

                                      21
<PAGE>

Landlord Capital Additions or Mandatory Capital Additions). ALS Holdings
shall, or shall cause the applicable Alterra Lessee(s) to, convey, pledge and
grant to PSLT-ALS Holdings or the Facility Mortgagee, as applicable, a
security interest in the Capital Additions Reserve in order to secure the
Alterra Lessees' obligations to pay Rent (as defined in the Property Leases)
and other charges under the Property Leases. ALS Holdings shall, and shall
cause the Alterra Lessees to, cooperate with PSLT-ALS Holdings and the
Facility Mortgagee, if applicable, in connection with perfecting any such
security interest.

11. Limitation on Liability. If ALS Holdings is awarded a money judgment
against PSLT-ALS Holdings, then ALS Holdings' sole recourse for satisfaction
of such judgment shall be limited to execution against PSLT-ALS Holdings'
ownership interest in the Provident Lessors. In no event shall any trustee,
stockholder, shareholder, member, manager, partner, employee, officer or
beneficiary of PSLT-ALS Holdings be personally liable for the obligations of
PSLT-ALS Holdings or any Provident Lessor hereunder. Except to the extent
provided in the terms of the Guaranty or any other Parent guaranty or
indemnity, in no event shall any trustee, shareholder, member, guarantor,
partner, employee, officer or beneficiary of ALS Holdings be personally liable
for any of the obligations of ALS Holdings hereunder.

12. Facility Mortgages.

     (a) Cooperation in Obtaining Facility Mortgages. ALS Holdings shall, and
shall cause the Alterra Lessees to, reasonably cooperate with PSLT-ALS
Holdings and the Provident Lessors, at PSLT-ALS Holdings' and the Provident
Lessors' cost and expense, to assist PSLT-ALS Holdings and the Provident
Lessors in obtaining Facility Mortgages (including any refinancing of any
Existing Facility Mortgage), with respect to the Provident Lessors' fee
interests in the Facilities. Subject to the execution of a reasonably
satisfactory confidentiality agreement, and provided there is no violation of
(i) any security, health, safety or confidentiality requirements of any
Governmental Agency or imposed by applicable law or regulations and/or (ii)
any Alterra Lessee's ordinary business practices and standard resident
agreements, if any, requiring such Alterra Lessee to maintain the confidential
nature of certain personal information relating to individual residents living
in the Facility, ALS Holdings shall, and shall cause the Alterra Lessees to,
provide such information as is reasonably requested by PSLT-ALS Holdings or
any proposed Facility Mortgagee with respect to ALS Holdings, the Alterra
Lessees, Guarantor or the operation of any Facility to facilitate in obtaining
such Facility Mortgage. PSLT-ALS Holdings shall, or shall cause the applicable
Provident Lessor to, reimburse ALS Holdings or the applicable Alterra Lessee
for reasonable out-of-pocket expenses actually incurred by ALS Holdings or the
applicable Alterra Lessee in connection with its compliance with the terms of
this Paragraph 12(a). Neither ALS Holdings nor any Alterra Lessee shall have
any right to approve the terms of any Facility Mortgage, and PSLT-ALS Holdings
may, and may cause the applicable Provident Lessor to, obtain any Facility
Mortgage as it may determine in its sole discretion; provided, however, that
PSLT-ALS Holdings agrees that the business terms, provisions and conditions
contained in any Facility Mortgage (other than any Existing Facility Mortgage)
shall be commercially reasonable in the then current market at the time that
such Facility Mortgage is obtained and shall be reasonably consistent with the
then current standards for similar-type financing transactions affecting
similar types of properties, as reflected, generally, in mortgages, deeds of
trust and security deeds encumbering other assisted living and independent
living facilities which are similar to those owned and/or managed by Guarantor
or

                                      22
<PAGE>

any of its direct or indirect subsidiaries (provided, however, that with
respect to assessing whether the insurance requirements under the proposed
Facility Mortgage satisfy the foregoing requirements, the standard set forth
in Paragraph 18(a)(xiv) of each of the Property Leases shall govern);
provided, further, that in no event shall the terms of any Facility Mortgage
increase the Base Rent (as defined in the applicable Property Lease(s))
payable under the applicable Property Lease(s) or alter the payment schedule
for Base Rent thereunder, and ALS Holdings agrees that ALS Holdings' and the
Alterra Lessees' respective obligations to comply with the terms of any such
Facility Mortgage shall not be deemed to be in contravention or conflict with
the terms of this Agreement or the applicable Property Lease(s), even in cases
where the Facility Mortgage imposes obligations that are greater than the
obligations of ALS Holdings under this Agreement or of the Alterra Lessee(s)
under the applicable Property Lease(s).

     (b) Subordination. PSLT-ALS Holdings and ALS Holdings hereby acknowledge
and agree that the Alterra Lessees' interests under the Property Leases and
the Alterra Lessees' leasehold interests in and to the Facilities are junior,
inferior, subordinate and subject in right, title, interest, lien,
encumbrance, priority and all other respects to the lien of any one or more
Facility Mortgages now or hereafter in force and effect upon or encumbering
the Provident Lessors' interests in the Facilities, or any portion thereof,
and to all collateral assignments by the Provident Lessors to any third party
or parties of any of the Provident Lessors' rights under the Property Leases
or the rents, issues and profits thereof or therefrom as security for any
liability or indebtedness, direct, indirect or contingent, of the Provident
Lessors to such third party or parties, and to all future modifications,
extensions, renewals, consolidations and replacements of, and all amendments
and supplements to, any such mortgage, mortgages or assignments, provided
that, in connection with any Facility Mortgage (other than the Existing
Facility Mortgages) placed upon the Facilities after the date hereof, PSLT-ALS
Holdings shall (or shall cause the applicable Provident Lessor(s) to) cause
the applicable Facility Mortgagee to enter into, execute and deliver a
subordination, non-disturbance and attornment agreement substantially similar
to the form attached to the Property Leases as Exhibit C, or such other form
as shall be reasonably acceptable to ALS Holdings, PSLT-ALS Holdings and the
applicable Facility Mortgagee (the "SNDA"), which SNDA shall acknowledge the
subordination of the Property Leases described in this Paragraph 12(b) and
shall provide, among other things, that if the Facility Mortgagee or any other
person acquires title to the applicable Facility, so long as the applicable
Alterra Lessee is not in default (beyond the expiration of any applicable
notice and/or grace period) under the applicable Property Lease, the
applicable Alterra Lessee's leasehold estate possession and occupancy of the
applicable Facility shall not be disturbed, provided further that ALS Holdings
shall cause the Alterra Lessees to enter into, execute and deliver promptly to
the requesting party the SNDA in accordance with the terms of this Paragraph
12(b) and the Property Leases.

13. Representations and Warranties.

     (a)  Representations of ALS Holdings. To induce PSLT-ALS Holdings to enter
into this Agreement, ALS Holdings represents and warrants to PSLT-ALS Holdings
as follows:

          (i) Status and Authority of ALS Holdings. ALS Holdings is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware. ALS Holdings has all requisite power and
authority to enter into and perform its obligations under this Agreement and
to consummate the transactions contemplated hereby.

                                      23
<PAGE>

ALS Holdings is duly qualified to transact business in each jurisdiction in
which the nature of the business conducted by it requires such qualification.

          (ii) Action of ALS Holdings. ALS Holdings has taken all necessary
action to authorize the execution, delivery and performance of this Agreement,
and this Agreement constitutes the valid and binding obligation and agreement
of ALS Holdings, enforceable against ALS Holdings in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application affecting
the rights and remedies of creditors.

          (iii) No Violations of Agreements. Subject to obtaining the required
consents contemplated by the Stock Purchase Agreement, neither the execution,
delivery or performance of this Agreement by ALS Holdings, nor compliance with
the terms and provisions hereof, will result in any breach of the terms,
conditions or provisions of, or conflict with or constitute a default under,
or result in any breach of the terms, conditions or provisions of, or conflict
with or constitute a default under, or result in the creation of any lien,
charge or encumbrance upon any Facility or any property or assets of ALS
Holdings pursuant to the terms of any indenture, mortgage, deed of trust,
note, evidence of indebtedness or any other material agreement or instrument
by which ALS Holdings is bound.

          (iv) Litigation. ALS Holdings has received no written notice and, to
ALS Holdings' knowledge, no action or proceeding is pending or threatened
which questions the validity of this Agreement.

     (b)  Representations of PSLT-ALS Holdings. To induce ALS Holdings to enter
into this Agreement, PSLT-ALS Holdings represents and warrants to ALS Holdings
as follows.

          (i) Status and Authority of PSLT-ALS Holdings. PSLT-ALS Holdings is
a duly organized, validly existing limited liability company and in good
standing under the laws of the State of Delaware, and has all requisite power
and authority under the laws of such State to enter into and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby. PSLT-ALS Holdings is duly qualified and is in good
standing in each jurisdiction in which the nature of the business conducted by
it requires such qualification.

          (ii) Action of PSLT-ALS Holdings. PSLT-ALS Holdings has taken all
necessary action to authorize the execution, delivery and performance of this
Agreement, and upon the execution and delivery of this Agreement by PSLT-ALS
Holdings, it shall constitute the valid and binding obligation and agreement
of PSLT-ALS Holdings, enforceable against PSLT-ALS Holdings in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application affecting
the rights and remedies of creditors.

          (iii) No Violations of Agreements. Neither the execution, delivery
or performance of this Agreement by PSLT-ALS Holdings, nor compliance with the
terms and provisions hereof, will result in any breach of the terms,
conditions or provisions of, or conflict with or constitute a default under,
or result in any creation of any lien, charge or encumbrance upon any Facility
or any of the property or assets of PSLT-ALS Holdings pursuant to the terms

                                      24
<PAGE>

of any indenture, mortgage, deed of trust, note, evidence of indebtedness or
any other material agreement or instrument by which PSLT-ALS Holdings is
bound.

          (iv) Litigation. No investigation, action or proceeding is pending
and, to PSLT-ALS Holdings' knowledge, no action or proceeding is pending or
threatened which questions the validity of this Agreement or any action taken
or to be taken pursuant hereto.

14. Intentionally Deleted.

15. Notices. All notices, approvals, requests, consents and other
communications ("Notices") given pursuant to this Agreement shall be in
writing and shall be deemed to have been duly given (i) when actually received
if either (A) hand delivered or (B) sent by facsimile transmission with
evidence of receipt of delivery; (ii) two (2) days after the same was
deposited in a regularly maintained receptacle for the deposit of United
States mail, sent by registered or certified mail, postage and charges
prepaid; or (iii) the next Business Day if sent via a national overnight
delivery service, addressed as follows or at such other address as either
party may specify from time to time by Notice to the other party at least five
(5) days prior Notice of the changed address:

      If to ALS Holdings:          ALS Properties Holding Company, LLC
                                   c/o Alterra Healthcare Corporation
                                   6737 W. Washington Street, Suite 2300
                                   Milwaukee, Wisconsin  53214
                                   Attention:  Mr. Mark W. Ohlendorf
                                   Telephone:  (414) 918-5403
                                   Facsimile:  (414) 918-5055

      with a copy to:              Alterra Healthcare Corporation
                                   16737 W. Washington Street, Suite 2300
                                   Milwaukee, Wisconsin  53214
                                   Attention:  Mr. Mark W. Ohlendorf
                                   Telephone:  (414) 918-5403
                                   Facsimile:  (414) 918-5055

      and to:                      Rogers & Hardin LLP
                                   229 Peachtree Street
                                   2700 International Tower
                                   Atlanta, Georgia 30303
                                   Attention:  Alan C. Leet, Esq.
                                   Telephone:  (404) 420-4616
                                   Facsimile:  (404) 525-2224

      If to PSLT-ALS Holdings:     PSLT-ALS Properties Holdings, LLC
                                   c/o Provident Senior Living Trust
                                   600 College Road East, Suite 3400
                                   Princeton, New Jersey 08540
                                   Attention:  General Counsel

                                      25
<PAGE>

                                   Telephone:  (609) 720-0825
                                   Facsimile:  (609) 720-0826

      with a copy to:              Sidley Austin Brown & Wood LLP
                                   787 Seventh Avenue
                                   New York, New York 10019
                                   Attention:  Scott Freeman, Esq.
                                   Telephone:  (212) 839-7358
                                   Facsimile:  (212) 839-5599

16. No Waiver. No course of dealing between PSLT-ALS Holdings and ALS
Holdings, or any delay or omission of PSLT-ALS Holdings or ALS Holdings to
insist upon a strict performance of any term or condition of this Agreement
shall be deemed a waiver of any right or remedy that such party may have, and
shall not be deemed a waiver of any subsequent breach of such term or
condition.

17. Invalidity. If any provision of this Agreement shall be declared invalid
or unenforceable, the remainder of this Agreement shall continue in full force
and effect.

18. Counterparts. This Agreement may be executed in two (2) or more
counterparts, which taken together shall be deemed one (1) original.

19. Cumulative. All rights and remedies of PSLT-ALS Holdings and ALS Holdings
herein shall be cumulative and none shall be exclusive of any other or of any
rights and remedies allowed by law.

20. Governing Law. Except as to matters regarding the internal affairs of
PSLT-ALS Holdings and issues of or limitations on any personal liability of
the members or managers of PSLT-ALS Holdings for obligations of PSLT-ALS
Holdings, as to which the laws of the State of Delaware shall govern, this
Agreement shall be interpreted, construed, applied and enforced in accordance
with the laws of the State of New York applicable to contracts between
residents of New York which are to be performed entirely within New York,
regardless of (i) where this Agreement is executed or delivered; or (ii) where
any payment or other performance required by this Agreement is made or
required to be made; or (iii) where any breach of any provision of this
Agreement occurs, or any cause of action otherwise accrues; or (iv) where any
action or other proceeding is instituted or pending; or (v) the nationality,
citizenship, domicile, principle place of business, or jurisdiction of
organization or domestication of any party; or (vi) whether the laws of the
forum jurisdiction otherwise would apply to the laws of a jurisdiction other
than the State of New York; or (vii) any combination of the foregoing.
Notwithstanding the foregoing, the laws of the applicable Facility State shall
apply to the perfection and priority of liens upon and the disposition of and
the exercise of any remedies by PSLT-ALS Holdings under this Agreement with
respect to any Facility.

21. Successors and Assigns; Relationship. The covenants, terms, conditions,
provisions, and undertakings in this Agreement shall extend to and be binding
upon the permitted successors, and assigns of the respective parties hereto,
and shall be construed as covenants running with the land. This Agreement does
not create a partnership, joint venture, or other type

                                      26
<PAGE>

of ownership inconsistent with the Agreement, and neither PSLT-ALS Holdings or
ALS Holdings shall make any representation to the contrary.

22. Entire Agreement. Except for the provisions contained in the Property
Leases, this Agreement, together with any exhibits attached hereto, contains
the entire agreement and understanding between the parties with respect to the
subject matter hereof and of the Property Leases. There are no oral
understandings, terms, or conditions, and neither party has relied upon any
representation, express or implied, with respect to the subject matter hereof
not contained in this Agreement and/or the Property Leases. All prior
understandings, terms, or conditions with respect to the subject matter hereof
are deemed merged in this Agreement. This Agreement cannot be changed or
supplemented orally, but may be modified or amended only by a written
instrument executed by the parties. Any disputes regarding the interpretation
of any portion of this Agreement shall not be presumptively construed against
the drafting party.

23. Survival. ALS Holdings' indemnity obligations herein shall survive
termination of this Agreement for a period of two (2) years.

24. Time. Time is of the essence in every particular of this Agreement,
including, without limitation, obligations for the payment of money.

25. Captions and Headings. The captions and headings in this Agreement have
been inserted herein only as a matter of convenience and for reference and in
no way define, limit or describe the scope or intent of, or otherwise affect,
the provisions of this Agreement.

26. Waiver of Jury Trial. TO THE EXTENT ALLOWED BY APPLICABLE LAW, ALS
HOLDINGS AND PSLT-ALS HOLDINGS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE THE RIGHT EITHER OF THEM OR THEIR HEIRS, PERSONAL REPRESENTATIVES,
SUCCESSORS OR ASSIGNS MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT TO ALS HOLDINGS'
ENTERING INTO THIS AGREEMENT.

27. Guaranty. At the time of ALS Holdings' execution of this Agreement, ALS
Holdings shall obtain the execution of the Guaranty of Agreement Regarding
Leases in the form of Exhibit D attached hereto ("Guaranty") by Guarantor. As
a condition to ALS Holdings' exercise of either Renewal Term and accompanying
notice of such exercise, ALS Holdings shall deliver to PSLT-ALS Holdings an
affirmation of the Guaranty executed by the Guarantor.

28. Termination of Facility Management Agreements.

     (a) Management Termination Event. If any one or more of the following
occurs (each, a "Management Termination Event"), PSLT-ALS Holdings shall have
the right to cause ALS Holdings and the Alterra Lessees to terminate all or
any of the Facility Management Agreements:

                                      27
<PAGE>

          (i) if the Alterra Lessees shall fail to pay Rent (as defined in the
Property Leases) under their respective Property Leases and ALS Holdings fails
to make the Alterra Rent Payments hereunder and such failure continues for
thirty (30) days after the due date of such payments;

          (ii) if, as measured at the end of each calendar quarter during the
Term, the Facilities fail to maintain a Lease Coverage Ratio for the
immediately preceding four (4) calendar quarters, of (A) at least 1.05 to 1.00
on an aggregate basis during any of the first (1st) through third (3rd) Lease
Years, and (B) at least 1.10 to 1.00 on an aggregate basis during any of the
fourth (4th) through fifteenth (15th) Lease Years and during each Renewal
Term; provided, however, that the Lease Coverage Ratio for the initial Lease
Year shall be determined with respect to the following periods: (1) for the
initial calendar quarter of the first Lease Year, on the basis of such
calendar quarter, (2) for the second calendar quarter of the first Lease Year,
on the basis of such first two calendar quarters, and (3) for the third
calendar quarter of the first Lease Year, on the basis of such first three
calendar quarters (in each case, on an annualized basis); and provided,
further, that ALS Holdings or Alterra Management may, at its option, cure such
Management Termination Event by depositing with PSLT-ALS Holdings cash or a
Letter of Credit in an amount sufficient to decrease on a dollar-for-dollar
basis the amount of Current Lease Payments reflected in the denominator in the
calculation of Lease Coverage Ratio, such that ALS Holdings satisfies the
Lease Coverage Ratio requirements set forth in this Paragraph; provided,
further, however, that ALS Holdings and Alterra Management may only exercise
such cure right two (2) times during the first through tenth Lease Years. No
cure right shall exist after the tenth (10th) Lease Year during the Initial
Term or during any Renewal Term;

          (iii) subject to the provisions of clause (i) above, if an Event of
Default (as defined in the Property Leases) shall have occurred and remains
uncured under any of the Property Leases or if an Event of Default shall have
occurred and remains uncured under this Agreement;

          (iv) Intentionally Deleted; or

          (v) if (w) Alterra Management or any Related Party of Alterra
Management which becomes the Manager (as defined in the Property Leases) with
respect to any of the Facilities (as used in this clause (v), an "Alterra
Successor Manager") becomes bankrupt or insolvent, or files any debtor
proceedings, or files pursuant to any statute a petition in bankruptcy or
insolvency or for reorganization, or files a petition for the appointment of a
receiver or trustee for all or substantially all of its assets, or (x) any of
the foregoing are filed against Alterra Management or against any Alterra
Successor Manager, and such petition or appointment shall not have been set
aside within ninety (90) days from the date of such petition or appointment,
or (y) Alterra Management or any Alterra Successor Manager makes an assignment
for the benefit of creditors or shall admit in writing its inability to pay
its debts generally as they become due, or (z) Alterra Management's or any
Alterra Successor Manager's interest in all or portion of the Total Revenues
is attached, levied upon, seized or made subject to any other judicial seizure
and such seizure or attachment is not discharged within ninety (90) days.

     (b) Remedies. In the event of any Management Termination Event, PSLT-ALS
Holdings shall have the right to cause ALS Holdings and the Alterra Lessees to
terminate all or

                                      28
<PAGE>

any of the Facility Management Agreements and replace Alterra Management at
such Facility(ies) as are designated by PSLT-ALS Holdings with a manager
selected by PSLT-ALS Holdings, and ALS Holdings shall cause the Alterra
Lessee(s) to enter into new management agreements with such replacement
manager on terms and conditions reasonably satisfactory to PSLT-ALS Holdings.
ALS Holdings shall cause the Alterra Lessees to pay such replacement manager
the management fee pursuant to the applicable management agreement entered
into between such replacement manager and each Alterra Lessee, provided that
the applicable Alterra Lessees shall be entitled to a credit against Base Rent
payable under the applicable Property Lease for any payments (excluding
out-of-pocket reimbursements) payable to such replacement manager in excess of
an amount equal to five percent (5%) of gross revenues.

     (c) Alterra Termination Right. If PSLT-ALS Holdings terminates the
Facility Management Agreements and replaces Alterra Management with a manager
other than Alterra Management or any Affiliates of Alterra Management, ALS
Holdings shall have the right to cause the Alterra Lessees to terminate those
Property Leases for Facilities as to which the Facility Management Agreements
have been terminated and with respect to which a replacement manager has been
appointed. In the event of such termination, all references to the
"Facilities" and the "Property Leases" under this Agreement shall be deemed to
exclude those Facilities as to which the Alterra Lessees have terminated the
Property Leases, and the Master Rent payable hereunder shall be adjusted by
excluding from the calculation of Master Rent the amount of Base Rent due
under any such terminated Property Lease. ALS Holdings may exercise such
termination right, if at all, by providing PSLT-ALS Holdings written Notice
thereof not later than thirty (30) days after termination of the applicable
Facility Management Agreement (time being of the essence with respect to such
date). Such termination shall become effective on the date (the "Termination
Date") that is one hundred twenty (120) days following delivery of such
written Notice to PSLT-ALS Holdings, provided that the applicable Property
Leases shall not terminate, and ALS Holdings' exercise of such termination
right shall be deemed to be null and void, if PSLT-ALS Holdings reinstates
Alterra Management or appoints an Affiliate of Alterra Management to manage
the Facilities within such one hundred twenty (120) day period. If any of the
Property Leases are terminated as a result of ALS Holdings' exercise of its
termination right as set forth herein, (i) ALS Holdings shall cause the
applicable Alterra Lessees to comply with the provisions of Paragraph 10 of
the Property Leases pursuant to which the applicable Alterra Lessee shall
cooperate with the applicable Provident Lessor in obtaining all necessary
licensing, operating permits and other governmental authorizations which may
be necessary for the operation of the Facilities, and (ii) ALS Holdings shall
cause the applicable Alterra Lessees to promptly transfer to the applicable
Provident Lessors or their nominees all of the third party residency
agreements with respect to units located at the Facilities and all other
subleases for space at the Facilities.

29. Joinder by Alterra Management. Alterra Management has joined into this
Agreement for the limited purposes of (i) acknowledging that in each of the
Facility Management Agreements, PSLT-ALS Holdings and ALS Holdings are
intended third party beneficiaries of such Facility Management Agreements;
(ii) acknowledging and hereby granting to PSLT-ALS Holdings the right to
terminate any or all of the Facility Management Agreements upon the occurrence
and during the continuation of any Management Termination Event as set forth
in this Agreement (subject to any applicable notice and cure rights as set
forth herein), and (iii) acknowledging and authorizing, to the extent required
by applicable law, that payments due to

                                      29
<PAGE>

Alterra Management are hereby subordinated to the Alterra Rent Payments or any
other payments required hereunder, and that any amounts paid to Alterra
Management following and during the continuance of an Event of Default under
this Agreement shall be paid to PSLT-ALS Holdings upon demand therefor,
without offset, abatement, demand or deduction. All payments made by ALS
Holdings or any Alterra Lessee or any of their Affiliates to Alterra
Management shall be deemed to be made in trust, to be retained by Alterra
Management and released from trust for any period in question only upon
payment of all amounts due PSLT-ALS Holdings hereunder for the same period.

30. Joinder by Alterra Lessees. Each of the Alterra Lessees has joined into
this Agreement for the limited purposes of (i) acknowledging that if an Event
of Default (as defined in the applicable Property Lease) has occurred and is
continuing, PSLT-ALS Holdings shall have the right to exercise its remedies as
set forth herein; (ii) acknowledging and hereby granting to PSLT-ALS Holdings
the right to terminate any or all of the Facility Management Agreements upon
the occurrence and during the continuation of any Management Termination Event
as set forth in this Agreement (subject to any applicable notice and cure
rights as set forth herein), (iii) acknowledging and authorizing, to the
extent required by applicable law, that payments due to Alterra Management are
hereby subordinated to the Alterra Rent Payments or any other payments
required hereunder, and that any amounts paid to Alterra Management following
and during the continuance of an Event of Default under this Agreement shall
be paid to PSLT-ALS Holdings upon demand therefor, without offset, abatement,
demand or deduction, (iv) acknowledging the provisions of Paragraph 3(b)
hereof with respect to the right of ALS Holdings to exercise the Renewal Terms
and agreeing that any exercise of the applicable Renewal Tern(s) by ALS
Holdings in accordance with the terms of Paragraph 3(b) hereof shall be
binding upon the Alterra Lessees and shall constitute an exercise of such
Renewal Term(s) in accordance with the terms of Paragraph 4(b) of each of the
Property Leases, and (v) acknowledging the provisions of Paragraph 10(c) and
Paragraph 10(d) hereof and agreeing that the Alterra Lessees shall fund the
amounts required thereunder and otherwise comply with the terms thereof. All
payments made by any Alterra Lessee or any of their Affiliates to Alterra
Management shall be deemed made in trust, to be retained by Alterra Management
and released from trust for any period in question only upon payment of all
amounts due PSLT-ALS Holdings hereunder for the same period.

31. Joinder by Provident Lessors. Each of the Provident Lessors has joined
into this Agreement for the limited purpose of acknowledging the provisions of
Paragraph 3(b) hereof with respect to the right of ALS Holdings to exercise of
the Renewal Terms and agreeing that any exercise of the applicable Renewal
Term(s) by ALS Holdings in accordance with the terms of Paragraph 3(b) hereof
shall constitute an exercise by the Alterra Lessees of such Renewal Term(s) in
accordance with the terms of Paragraph 4(b) of the Property Leases.

32. Intentionally Deleted.

33. Security Deposit.

     (a) Security Deposit/Letter of Credit. Commencing on the thirty-first
(31st) day of the first month after the first calendar quarter which occurs
after the Commencement Date (taking into account periods prior to the
commencement of such quarter with respect to the first

                                      30
<PAGE>

determination hereunder), and on the thirty-first (31st) day of the first
month after each calendar quarter (or with respect to the first calendar
quarter, on May 1 of each year) thereafter, ALS Holdings shall either: (i)
deposit with PSLT-ALS Holdings or a bank designated by PSLT-ALS Holdings' cash
(the "Security Deposit"), or (ii) deliver to PSLT-ALS Holdings a letter of
credit (the "Letter of Credit") issued in favor of PSLT-ALS Holdings, in each
case in an amount equal to fifty percent (50%) of Excess Cash Flow for the
prior calendar quarter, until such time as the amount held as the Security
Deposit or the aggregate face amount of all Letters of Credit previously
delivered to PSLT-ALS Holdings under this Paragraph 33, as the case may be,
shall equal Ten Million Dollars ($10,000,000). The Security Deposit or the
Letters of Credit, as the case may be, shall be held as security for the
performance and observance by ALS Holdings of the terms, conditions and
provisions of this Agreement and as security for the performance and the
observance by each of the Alterra Lessees of the terms, conditions and
provisions of the Property Leases, including, without limitation, the
surrender of possession of the Facilities by the Alterra Lessees as provided
in the Property Leases, and shall be released to ALS Holdings at such time as
ALS Holdings satisfies the requirements set forth in Paragraph 33(c) below.
Upon the occurrence and during the continuance of an Event of Default,
PSLT-ALS Holdings may draw upon any Letter of Credit or apply any portion of
the Security Deposit to the extent required for the payment of any sum as to
which ALS Holdings or the Alterra Lessee(s) under the Property Lease(s) to
which the applicable Event of Default relates is in default or for any sum
which PSLT-ALS Holdings may have expended or may be required to expend by
reason of the occurrence of such Event of Default, including any damages or
deficiency accrued before or after summary proceedings or other re-entry by
any Provident Lessor pursuant to any Property Lease. The Security Deposit
shall be held in a segregated bank account and shall be invested in Permitted
Investments. ALS Holdings shall be responsible for payment of any federal,
state or local income or other tax applicable to income earned from Permitted
Investments. All interest accruing on the Security Deposit shall be held by
PSLT-ALS Holdings for the account of ALS Holdings, and shall be distributed to
ALS Holdings on the fifteenth (15th) day after the end of each Lease Year.

     (b) Letter of Credit Requirements. The Letter of Credit shall be an
irrevocable, unconditional letter of credit with an initial term of not less
than one year from the Commencement Date of this Agreement. Without further
act or instrument required by PSLT-ALS Holdings, the Letter of Credit shall be
automatically renewed for successive one year periods throughout the remainder
of the Term unless, not less than 30 days prior to the then current expiration
date of the Letter of Credit, the issuing bank notifies PSLT-ALS Holdings of
its intention not to renew the Letter of Credit. The Letter of Credit (or any
renewal, extension or replacement thereof) shall continue in full force and
effect and shall be maintained in its full face amount for two full calendar
months beyond the expiration of the Term of this Agreement (including any
extension of the Term hereof). The Letter of Credit shall (i) be negotiable
and freely transferable in connection with a sale or transfer of the
Facilities or the interests in the Provident Lessors; (ii) be issued by a
national banking association reasonably acceptable to PSLT-ALS Holdings; (iii)
provide for payment of all or any portion of the face amount of the Letter of
Credit to PSLT-ALS Holdings upon the receipt by the issuing bank of a
statement signed by a representative of PSLT-ALS Holdings that PSLT-ALS
Holdings is entitled to such amount pursuant to the terms of this Agreement,
and (iv) be otherwise in form and substance reasonably satisfactory to
PSLT-ALS Holdings. PSLT-ALS Holdings' receipt of notice from the issuing bank
of its intention not to renew the Letter of Credit or ALS Holdings' failure to
deliver

                                      31
<PAGE>

a renewal or replacement Letter of Credit shall entitle PSLT-ALS Holdings to
draw the full face amount of the Letter of Credit and retain such sum as
security hereunder in lieu of the Letter of Credit. ALS Holdings' failure to
maintain the Letter of Credit or to substitute a cash security deposit as a
replacement therefor shall constitute a default under this Agreement.

     (c) Return of Security Deposit. If the Facilities maintain a Lease
Coverage Ratio at least equal to 1.15 to 1.00 on an aggregate basis for two
(2) consecutive six (6) month periods, assuming payment of a 5% management fee
and creation of an annual capital reserve for the Facilities equal to $400 per
residential unit, any remaining portion of the Security Deposit or the
Letter(s) of Credit, as the case may be, shall be returned to ALS Holdings. If
the Security Deposit or the Letter(s) of Credit, as the case may be, shall not
be returned to ALS Holdings in accordance with the foregoing sentence, but ALS
Holdings shall fully and faithfully comply with all of the terms of this
Agreement and all of the Alterra Lessees shall have paid and performed all of
the terms of their respective Property Leases, the remaining portions of the
Security Deposit or the Letter(s) of Credit, as the case may be, shall be
returned to ALS Holdings promptly after the expiration of the Term or sooner
termination of this Agreement (other than a termination which results from ALS
Holdings' default hereunder).

34. Public Offering Information. ALS Holdings specifically agrees that
PSLT-ALS Holdings may include financial information and information concerning
ALS Holdings, the Alterra Lessees, Guarantor and the operation of the
Facilities that does not violate the confidentiality of the facility-resident
relationship and the physician-resident privilege under applicable laws, in
offering memoranda or prospectuses, or similar publications in connection with
syndications, private placements or public offerings of PSLT-ALS Holdings' (or
PSLT-ALS Holdings' Parent's) securities or interests, and any other reporting
requirements under applicable federal and state laws, including those of any
successor to PSLT-ALS Holdings. ALS Holdings agrees to provide such other
reasonable information necessary with respect to ALS Holdings, the Alterra
Lessees and the Facilities to facilitate a private placement or public
offering or to satisfy the SEC or regulatory disclosure requirements. ALS
Holdings agrees to cause its independent accountants, at PSLT-ALS Holdings'
cost, to consent to the inclusion of their audit report issued with respect to
such financial statements in any registration statement or other filing under
federal and state laws and to provide the underwriters participating in any
offering of securities or interests of PSLT-ALS Holdings (or PSLT-ALS
Holdings' Parent) with a standard accountant's "comfort" letter with regard to
the financial information of ALS Holdings included or incorporated by
reference into any prospectus or other offering document. ALS Holdings also
agrees to make available to any underwriter participating in an offering of
PSLT-ALS Holdings' (or PSLT-ALS Holdings' Parent's) securities or interests,
and any attorney, accountant or other agent or representative retained by an
underwriter (an "Inspector"), all financial and other records and pertinent
corporate documents of ALS Holdings as shall be reasonably necessary to enable
them to exercise their due diligence responsibility, and cause ALS Holdings'
directors, officers and employees to supply all information requested by any
such Inspector in connection with such offering. Prior to submission or
circulation of any such offering memoranda, prospectuses or similar
publications, PSLT-ALS Holdings shall provide to ALS Holdings copies of such
documents for the purpose of reviewing same. Upon request of PSLT-ALS
Holdings, ALS Holdings shall notify PSLT-ALS Holdings of any necessary
corrections to information PSLT-ALS Holdings proposes to publish within a
reasonable period

                                      32
<PAGE>

of time (not to exceed three (3) Business Days) after being informed thereof
by PSLT-ALS Holdings.

35. Special Purpose Entity Covenants of ALS Holdings.

     (a) Until (i) this Agreement and all of the Property Leases have expired
or otherwise have terminated and (ii) all amounts due and owing to PSLT-ALS
Holdings under this Agreement and to the Provident Lessors under the Property
Leases have been paid in full, ALS Holdings hereby represents, warrants and
covenants that ALS Holdings is, shall be and shall continue to be a Special
Purpose Entity.

     (b) As used in this Agreement, "Special Purpose Entity" shall mean a
limited liability company which at all times on and after the date hereof:

          (i) is organized solely for the purpose of owning 100% of the
limited liability company interests in each of the Alterra Lessees and
transacting lawful business that is incident, necessary and appropriate to
accomplish the foregoing;

          (ii) is not engaged and will not engage in any business unrelated to
the ownership of 100% of the limited liability company interests in each of
the Alterra Lessees and transacting lawful business that is incident,
necessary and appropriate to accomplish the foregoing; (iii) does not have and
will not have any assets other than those related to its limited liability
company interest in the Alterra Lessees;

          (iv) has not engaged, sought or consented to and will not engage in,
seek or consent to any dissolution, winding up, liquidation, consolidation,
merger, sale of all or substantially all of its assets, transfer of membership
interests or amendment of its certificate of formation and operating agreement
with respect to the matters set forth in this definition;

          (v) has at least two Independent Directors (or if an Independent
Director resigns, dies, is removed or is otherwise unable to serve, the other
directors or such entity's members shall promptly act to fill the vacancy
thereby created with another Independent Director) and has not caused or
allowed and will not cause or allow the board of directors of such entity to
take any action requiring the unanimous affirmative vote of one hundred
percent (100%) of the board of directors unless two Independent Directors
shall have participated in such vote, and, if the Special Purpose Entity is a
limited liability company with only one member, has at least one springing
member that will become the member of such entity upon the dissolution of the
existing member;

          (vi) has a certificate of formation and/or an operating agreement
that provides that it will not: (A) dissolve, merge, liquidate, consolidate;
(B) sell all or substantially all of its assets or the assets of the Alterra
Lessees; (C) engage in any other business activity, or amend its
organizational documents with respect to the matters set forth in this
definition without the consent of PSLT-ALS Holdings; or (D) without the
affirmative vote of two Independent Directors and of all its other directors,
file a bankruptcy or insolvency petition or otherwise

                                      33
<PAGE>

institute insolvency proceedings with respect to itself or to any other entity
in which it has a direct or indirect legal or beneficial ownership interest;

          (vii) is solvent and will pay its debts and liabilities (including,
as applicable, shared personnel and overhead expenses) from its assets as the
same shall become due, and is maintaining and will maintain adequate capital
for the normal obligations reasonably foreseeable in a business of its size
and character and in light of its contemplated business operations;

          (viii) has not failed and will not fail to correct any known
misunderstanding regarding the separate identity of such entity;

          (ix) has maintained and will maintain its accounts, books and
records separate from any other Person and will file its own tax returns,
except to the extent that it is required to file consolidated tax returns by
law;

          (x) has maintained and will maintain its own records, books,
resolutions and agreements;

          (xi) Intentionally Deleted;

          (xii) has held and will hold its assets in its own name;

          (xiii) has conducted and will conduct its business in its name or in
a name franchised or licensed to it by an entity other than its Affiliate,
except for services rendered under a management agreement with an Affiliate
that complies with the terms contained in subsection (xxvii) below, so long as
the manager, or equivalent thereof, under such management agreement holds
itself out as an agent of ALS Holdings;

          (xiv) has maintained and will maintain its financial statements,
accounting records and other entity documents separate from any other Person
and has not permitted and will not permit its assets to be listed as assets on
the financial statement of any other entity except as required by GAAP;
provided, however, that any such consolidated financial statement shall
contain a note indicating that its separate assets and liabilities are neither
available to pay the debts of the consolidated entity nor constitute
obligations of the consolidated entity;

          (xv) has paid and will pay its own liabilities and expenses,
including the salaries of its own employees, out of its own funds and assets,
and has maintained and will maintain in its reasonable business judgment a
sufficient number of employees in light of its contemplated business
operations;

          (xvi) has observed and will observe all partnership, corporate or
limited liability company formalities, as applicable;

          (xvii) has and will have no indebtedness other than its obligations
under this Agreement;

          (xviii) has not and will not assume or guarantee or become obligated
for the debts of any other Person or hold out its credit as being available to
satisfy the obligations of any other

                                      34
<PAGE>

Person except for those certain Lease Guaranties executed in connection with
the Property Leases;

          (xix) has not and will not acquire obligations or securities of its
partners, members or shareholders or any other Affiliate except the Alterra
Lessees;

          (xx) has allocated and will allocate fairly and reasonably any
overhead expenses that are shared with any Affiliate, including, but not
limited to, paying for shared office space and services performed by any
employee of an Affiliate;

          (xxi) maintains and uses and will maintain and use separate
stationery, invoices and checks bearing its name. The stationery, invoices,
and checks utilized by ALS Holdings or utilized to collect its funds or pay
its expenses shall bear its own name and shall not bear the name of any other
entity unless such entity is clearly designated as being ALS Holdings' agent;

          (xxii) has not pledged and will not pledge its assets for the
benefit of any other Person;

          (xxiii) has held itself out and identified itself and will hold
itself out and identify itself as a separate and distinct entity under its own
name or in a name franchised or licensed to it by an entity other than an
Affiliate of ALS Holdings and not as a division or part of any other Person,
except for services rendered under a management agreement with an Affiliate
that complies with the terms contained in subsection (xxvii) below, so long as
the manager, or equivalent thereof, under such management agreement holds
itself out as an agent of ALS Holdings;

          (xxiv) has maintained and will maintain its assets in such a manner
that it will not be costly or difficult to segregate, ascertain or identify
its individual assets from those of any other Person;

          (xxv) has not made and will not make loans to any Person or hold
evidence of indebtedness issued by any other Person or entity (other than cash
and investment-grade securities issued by an entity that is not an Affiliate
of or subject to common ownership with such entity);

          (xxvi) has not identified and will not identify its partners,
members or shareholders, or any Affiliate of any of them, as a division or
part of it, and has not identified itself and shall not identify itself as a
division of any other Person;

          (xxvii) has not entered into or been a party to, and will not enter
into or be a party to, any transaction with its partners, members,
shareholders or Affiliates except in the ordinary course of its business and
on terms which are intrinsically fair, commercially reasonable and are no less
favorable to it than would be obtained in a comparable arm's-length
transaction with an unrelated third party;

          (xxviii) Intentionally Deleted;

                                      35
<PAGE>

          (xxix) does not and will not have any of its obligations guaranteed
by any Affiliate other than the Guaranty; and

          (xxx) has complied and will comply with all of the terms and
provisions contained in its organizational documents. The statement of facts
contained in its organizational documents are true and correct and will remain
true and correct.

                 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      36
<PAGE>

     IN WITNESS WHEREOF, the parties have hereunto executed this Agreement the
day and year first above written.

                                  PSLT-ALS HOLDINGS:

                                  PSLT-ALS PROPERTIES HOLDINGS, LLC,
                                  a Delaware limited liability company

                                  By: PSLT OP, L.P., a Delaware limited
                                  partnership, its sole member

                                  By: PSLT GP, LLC, a Delaware limited
                                  liability company, its sole general partner

                                  By: Provident Senior Living Trust, a
                                  Maryland real estate investment trust,
                                  its sole member

                                  By:/s/ Saul A. Behar
                                     -----------------------------------------
                                     Name:  Saul A. Behar
                                     Title: Senior Vice President

                                  ALS HOLDINGS:

                                  ALS PROPERTIES HOLDING COMPANY, LLC,
                                  a Delaware limited liability company

                                  By:/s/ Geri Krupp-Gordon
                                     -----------------------------------------
                                     Name:  Geri Krupp-Gordon
                                     Title: Vice President

                  [SIGNATURES CONTINUE ON THE FOLLOWING PAGE]

<PAGE>

Alterra Management joins into this Agreement Regarding Leases for the purposes
set forth in Paragraph 29 hereof:

ALTERRA MANAGEMENT:

ALTERRA HEALTHCARE CORPORATION,
a Delaware corporation

By:/s/ Kristin A. Ferge
   -----------------------------------
   Name:  Kristin A. Ferge
   Title: Vice President and Chief Financial Officer

                  [SIGNATURES CONTINUE ON THE FOLLOWING PAGE]

<PAGE>

Each of the Alterra Lessees joins into this Agreement Regarding Leases for the
purposes set forth in Paragraph 30 hereof:

ALTERRA LESSEES:

ALS PROPERTIES TENANT I, LLC,
a Delaware limited liability company

By:  ALS Properties Holding Company, LLC,
     a Delaware limited liability company,
     its sole member

By:/s/ Kristin A. Ferge
   -----------------------------------
   Name:  Kristin A. Ferge
   Title: Vice President

                  [SIGNATURES CONTINUE ON THE FOLLOWING PAGE]

<PAGE>

Each of the Provident Lessors joins into this Agreement Regarding Leases for
the purposes set forth in Paragraph 31 hereof:

PROVIDENT LESSORS:

PSLT-ALS PROPERTIES I, LLC,
a Delaware limited liability company

By: Provident Senior Living Trust, a
    Maryland real estate investment trust,
    its sole member

By:/s/ Saul A. Behar
   -----------------------------------
   Name:  Saul A. Behar
   Title: Senior Vice President

<PAGE>

                                   EXHIBIT A

                               Provident Lessors

      1. PSLT-ALS Properties I, LLC

      2. PSLT-ALS Properties II, LLC

<PAGE>

                                   EXHIBIT B

                                Alterra Lessees

      1. ALS Properties Tenant I, LLC

      2. ALS Properties Tenant II, LLC

<PAGE>

                                   EXHIBIT C

                                  Facilities

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
                    Property Name                    State            City               County
                    -------------                    -----            ----               ------
----------------------------------------------------------------------------------------------------
<S>       <C>                                    <C>            <C>                <C>
----------------------------------------------------------------------------------------------------
1.        Sterling House of Mesa                 Arizona        Mesa               Maricopa
----------------------------------------------------------------------------------------------------
2.        Clare Bridge of Oro Valley             Arizona        Oro Valley         Pima
----------------------------------------------------------------------------------------------------
3.        Sterling House of Peoria               Arizona        Peoria             Maricopa
----------------------------------------------------------------------------------------------------
4.        Clare Bridge of Tempe                  Arizona        Tempe              Maricopa
----------------------------------------------------------------------------------------------------
5.        Sterling House on East Speedway        Arizona        Tucson             Pima
----------------------------------------------------------------------------------------------------
6.        Wynwood of Colorado Springs            Colorado       Colorado Springs   El Paso
----------------------------------------------------------------------------------------------------
7.        Wynwood of Pueblo                      Colorado       Pueblo             Pueblo
----------------------------------------------------------------------------------------------------
8.        Sterling House of Pensacola            Florida        Pensacola          Escambia
----------------------------------------------------------------------------------------------------
9.        Clare Bridge of Tallahassee            Florida        Tallahassee        Leon
----------------------------------------------------------------------------------------------------
10.       Clare Bridge of West Melbourne         Florida        West Melbourne     Brevard
----------------------------------------------------------------------------------------------------
11.       Clare Bridge Cottage of Winter Haven   Florida        Winter Haven       Polk
----------------------------------------------------------------------------------------------------
12.       Sterling House of Winter Haven         Florida        Winter Haven       Polk
----------------------------------------------------------------------------------------------------
13.       Wynwood at Twin Falls                  Idaho          Twin Falls         Twin Falls
----------------------------------------------------------------------------------------------------
14.       Sterling House of Evansville           Indiana        Evansville         Vanderburgh
----------------------------------------------------------------------------------------------------
15.       Sterling House of Marion               Indiana        Marion             Grant
----------------------------------------------------------------------------------------------------
16.       Sterling House of Portage              Indiana        Portage            Porter
----------------------------------------------------------------------------------------------------
17.       Sterling House of Richmond             Indiana        Richmond           Wayne
----------------------------------------------------------------------------------------------------
18.       Clare Bridge of Leawood                Kansas         Leawood            Johnson
----------------------------------------------------------------------------------------------------
19.       Clare Bridge Cottage of Topeka         Kansas         Topeka             Shawnee
----------------------------------------------------------------------------------------------------
20.       Wynwood of Northville*                 Michigan       Northville         Wayne
----------------------------------------------------------------------------------------------------
21.       Wynwood of Utica*                      Michigan       Utica              Macomb
----------------------------------------------------------------------------------------------------
22.       Sterling House of Blaine               Minnesota      Blaine             Anoka
----------------------------------------------------------------------------------------------------
23.       Clare Bridge of Eden Prairie           Minnesota      Eden Prairie       Hennepin
----------------------------------------------------------------------------------------------------
24.       Sterling House of Inver Grove Heights  Minnesota      Inver Grove Hts.   Dakota
----------------------------------------------------------------------------------------------------
25.       Clare Bridge of North Oaks             Minnesota      North Oaks         Ramsey
----------------------------------------------------------------------------------------------------
26.       Clare Bridge of Plymouth               Minnesota      Plymouth           Hennepin
----------------------------------------------------------------------------------------------------
27.       Clare Bridge of Westhampton*           New Jersey     Westhampton        Burlington
----------------------------------------------------------------------------------------------------
28.       Clare Bridge of Williamsville*         New York       Amherst            Erie
----------------------------------------------------------------------------------------------------
29.       Villas of Sherman Brook                New York       Clinton            Oneida
----------------------------------------------------------------------------------------------------
30.       Wynwood Commons of Kenmore*            New York       Kenwood            Erie
----------------------------------------------------------------------------------------------------
31.       Clare Bridge of Niskayuna*             New York       Niskayuna          Schenectady
----------------------------------------------------------------------------------------------------
32.       Wynwood Commons of Niskayuna*          New York       Niskayuna          Schenectady
----------------------------------------------------------------------------------------------------
</TABLE>

---------

* These properties will be deemed added as "Facilities" upon the execution and
delivery of the Property Lease between ALS Properties Tenant II, LLC and
PSLT-ALS Properties II, LLC relating to such Facilities.

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
                    Property Name                    State            City               County
                    -------------                    -----            ----               ------
----------------------------------------------------------------------------------------------------
<S>       <C>                                    <C>            <C>                <C>
----------------------------------------------------------------------------------------------------
33.       Clare Bridge of Perinton*              New York       Pittsford          Monroe
----------------------------------------------------------------------------------------------------
34.       Villas of Summerfield                  New York       Syracuse           Onondaga
----------------------------------------------------------------------------------------------------
35.       Clare Bridge of Cary*                  North Carolina Cary               Wake
----------------------------------------------------------------------------------------------------
36.       Clare Bridge of Winston-Salem          North Carolina Winston-Salem      Forsyth
----------------------------------------------------------------------------------------------------
37.       Sterling House of Alliance             Ohio           Alliance           Stark
----------------------------------------------------------------------------------------------------
38.       Clare Bridge Cottage of Austintown     Ohio           Austintown         Mahoning
----------------------------------------------------------------------------------------------------
39.       Sterling House of Beaver Creek         Ohio           Beaver             Creek
----------------------------------------------------------------------------------------------------
40.       Sterling House of Westerville          Ohio           Columbus
----------------------------------------------------------------------------------------------------
41.       Sterling House of Salem                Ohio           Salem
----------------------------------------------------------------------------------------------------
42.       Clare Bridge of Lynnwood               Washington     Lynnwood           Snohomish
----------------------------------------------------------------------------------------------------
43.       Clare Bridge of Puyallup               Washington     Puyallup           Pierce
----------------------------------------------------------------------------------------------------
44.       Sterling House of Fond du Lac          Wisconsin      Fond du Lac        Fond du Lac
----------------------------------------------------------------------------------------------------
45.       Clare Bridge of Kenosha                Wisconsin      Kenosha            Kenosha
----------------------------------------------------------------------------------------------------
46.       Clare Bridge Cottage of LaCrosse       Wisconsin      LaCrosse           Lacrosse
----------------------------------------------------------------------------------------------------
47.       Sterling House of LaCrosse             Wisconsin      LaCrosse           Lacrosse
----------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                                   EXHIBIT D

                FORM OF GUARANTY OF AGREEMENT REGARDING LEASES
                ----------------------------------------------

     THIS GUARANTY OF AGREEMENT REGARDING LEASES (this "Guaranty") is made and
entered into to be effective as of October __, 2004 (the "Effective Date"), by
ALTERRA HEALTHCARE CORPORATION, a Delaware corporation ("Guarantor"), in favor
of PSLT-ALS PROPERTIES HOLDINGS, LLC, a Delaware limited liability company
("PSLT-ALS Holdings").

                                   RECITALS:

     WHEREAS, as of the Effective Date, PSLT-ALS Holdings and ALS Properties
Holding Company, LLC, a Delaware limited liability company, as tenant ("ALS
Holdings"), have executed and entered into (i) that certain Agreement
Regarding Leases, and (ii) a certain Agreement Regarding ARL (the Agreement
Regarding Leases, as so modified, and as the same may be renewed, extended, or
further amended or modified from time to time, the "Agreement Regarding
Leases"), pertaining to the Facilities. Capitalized terms used but not
otherwise defined herein shall have the meanings ascribed to such terms in the
Agreement Regarding Leases;

     WHEREAS, Guarantor is a direct or indirect owner of 100% of the
beneficial ownership interest in ALS Holdings, and Guarantor will derive
substantial direct and indirect benefits from the transactions contemplated by
the Agreement Regarding Leases; and

     WHEREAS, it is a condition to the entering into of the Agreement
Regarding Leases by PSLT-ALS Holdings that Guarantor shall have executed and
delivered this Guaranty.

     NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged by Guarantor, and in order to induce PSLT-ALS Holdings to enter
into the Agreement Regarding Leases, Guarantor hereby agrees as follows:

1. GUARANTY. Guarantor hereby unconditionally and irrevocably guarantees (i)
the full and prompt payment of all Alterra Rent Payments and other sums
required to be paid by ALS Holdings under the Agreement Regarding Leases, (ii)
the full and timely performance of all other terms, conditions, covenants and
obligations of ALS Holdings under the Agreement Regarding Leases (as same may
be amended, renewed, extended or modified), and (iii) any and all expenses
(including reasonable attorneys' fees and expenses) incurred by PSLT-ALS
Holdings in enforcing any rights under the Agreement Regarding Leases or this
Guaranty (such obligations, collectively, are referred to as the "Guaranteed
Obligations"). Guarantor agrees that this Guaranty is a guarantee of payment
and performance, not collection, and that Guarantor is primarily liable and
responsible for the payment and performance of the Guaranteed Obligations. It
is not necessary for PSLT-ALS Holdings, in order to enforce payment and
performance by Guarantor under this Guaranty, first or contemporaneously to
institute suit or exhaust remedies against ALS Holdings or others liable for
any of the Guaranteed Obligations or to enforce rights against any collateral
securing any of it. With the exception of the defense of prior payment,
performance, or compliance by ALS Holdings or Guarantor of the Guaranteed
Obligations which Guarantor is called upon to pay, or the defense that
PSLT-ALS Holdings' claim against

<PAGE>

Guarantor hereunder is barred by the applicable statute of limitations, all
defenses of the law of guaranty or suretyship, including, without limitation,
substantive defenses and procedural defenses, are waived and released by
Guarantor to the extent permitted by law. Except as provided in the preceding
sentence, under no circumstances will the liability of Guarantor under this
Guaranty be terminated either with respect to any period of time when the
liability of ALS Holdings under the Agreement Regarding Leases continues, or
with respect to any circumstances as to which the Guaranteed Obligations have
not been fully discharged by payment, performance or compliance.

2. GUARANTY ABSOLUTE. Guarantor guarantees that the Guaranteed Obligations
will be paid and performed strictly in accordance with the terms of the
Agreement Regarding Leases. The liability and responsibilities of Guarantor
under this Guaranty shall be absolute and unconditional, shall not be subject
to any counterclaim, setoff, or deduction and shall not be released,
discharged, affected or impaired by (i) any change in the time, manner, or
place of payment or performance of any of the Guaranteed Obligations, or any
other amendment or waiver of, or any consent to or departure from, or
termination of, the Agreement Regarding Leases or any of the Property Leases,
(ii) any release or discharge of ALS Holdings or any Alterra Lessee in any
bankruptcy, receivership or other similar proceedings, (iii) the impairment,
limitation or modification of the liability of ALS Holdings or the estate of
ALS Holdings in bankruptcy or any Alterra Lessee or the estate of any Alterra
Lessee in bankruptcy, or of any remedy for the enforcement of ALS Holdings'
liability under the Agreement Regarding Leases, resulting from the operation
of any present or future provisions of any bankruptcy code or other statute or
from the decision in any court, the rejection or disaffirmance of the
Agreement Regarding Leases in any such proceedings, or the assignment or
transfer of the Agreement Regarding Leases by ALS Holdings, (iv) any failure,
omission or delay on the part of PSLT-ALS Holdings to enforce, assert or
exercise any right, power or remedy conferred on or available to PSLT-ALS
Holdings in or by the Agreement Regarding Leases or this Guaranty, or any
action on the part of PSLT-ALS Holdings granting indulgence or extension in
any form whatsoever or any invalidity, irregularity or unenforceability as to
ALS Holdings of all or any part of the Guaranteed Obligations or any security
therefor, (v) the waiver by PSLT-ALS Holdings of the performance or observance
by ALS Holdings or Guarantor of any of the agreements, covenants, terms or
conditions contained in the Agreement Regarding Leases or this Guaranty, (vi)
any merger, consolidation, reorganization or similar transaction involving ALS
Holdings even if ALS Holdings ceases to exist as a result of (and is not the
surviving party in) such transaction, (vii) the inability of PSLT-ALS Holdings
or ALS Holdings to enforce any provision of the Agreement Regarding Leases for
any reason, (viii) any change in the corporate relationship between ALS
Holdings and Guarantor or any termination of such relationship, (ix) any
change in the ownership of all or any part of the membership interests in ALS
Holdings, (x) the inability of ALS Holdings to perform, or the release of ALS
Holdings or Guarantor from the performance of, any obligation, agreement,
covenant, term or condition under the Agreement Regarding Leases or this
Guaranty by reason of any law, regulation or decree, now or hereafter in
effect, or (xi) any disability or other defense of ALS Holdings. PSLT-ALS
Holdings and ALS Holdings, without notice to or consent by Guarantor, may at
any time or times enter into such modifications, extensions, amendments, or
other covenants with respect to the Agreement Regarding Leases as they may
deem appropriate and Guarantor shall not be released thereby, but shall
continue to be fully liable for the payment and performance of all
liabilities, obligations and duties of ALS Holdings under the Agreement
Regarding Leases as so modified, extended or amended.

<PAGE>

3. REINSTATEMENT. Guarantor further agrees that, if at any time all or any
part of any payment applied to any of the Guaranteed Obligations is or must be
rescinded or returned for any reason whatsoever (including, without
limitation, the insolvency, bankruptcy or reorganization of Guarantor), such
Guaranteed Obligations shall, for the purposes of this Guaranty, to the extent
that such payment is or must be rescinded or returned, be deemed to have
continued in existence, notwithstanding such application, and this Guaranty
shall continue to be effective or be reinstated, as the case may be, as to
such Guaranteed Obligations, all as though such application had not been made.

4. CERTAIN ACTIONS. PSLT-ALS Holdings may, from time to time, at its
discretion and without notice to Guarantor, take any or all of the following
actions: (a) retain or obtain the primary or secondary obligation of any
obligor or obligors, in addition to Guarantor, with respect to any of the
Guaranteed Obligations; (b) extend or renew for one or more periods
(regardless of whether longer than the original period), or release or
compromise any obligation of Guarantor hereunder or any obligation of any
nature of any other obligor (including, without limitation, ALS Holdings) with
respect to any of the Guaranteed Obligations; or (c) release or fail to
perfect any lien upon or security interest in, or impair, surrender, release
or permit any substitution or exchange for, all or any part of any property
securing any of the Guaranteed Obligations or any obligation hereunder, or
extend or renew for one or more periods (regardless of whether longer than the
original period) or release or compromise any obligations of any nature of any
obligor with respect to any such property.

5. WAIVER. To the extent permitted by applicable law, Guarantor hereby
expressly waives: (i) notice of the acceptance of this Guaranty, (ii) except
as otherwise provided in the Agreement Regarding Leases or this Guaranty,
notice of the existence or creation or non-payment of all or any of the
Guaranteed Obligations, (iii) presentment, demand, notice of dishonor, protest
and all other notices whatsoever except as otherwise provided in the Agreement
Regarding Leases or this Guaranty, and (iv) all diligence in collection or
protection of or realization upon the Guaranteed Obligations or any part
thereof, any obligation hereunder, or any security for or guaranty of any of
the foregoing.

6. WAIVER OF SUBROGATION. Guarantor hereby waives all rights of subrogation
which it may at any time otherwise have as a result of this Guaranty to the
claims of PSLT-ALS Holdings against ALS Holdings and all contractual,
statutory or common law rights of reimbursement, contribution or indemnity
from ALS Holdings which it may at any time otherwise have as a result of this
Guaranty prior to final payment and satisfaction of the Guaranteed
Obligations.

7. MISCELLANEOUS.

     (a) Amendments, Etc. No amendment or waiver of any provision of this
Guaranty nor consent to any departure by Guarantor therefrom shall be
effective unless the same shall be in writing and signed by PSLT-ALS Holdings.

     (b) Addresses for Notices. All notices hereunder shall be in writing,
personally delivered, delivered by overnight courier service, sent by
facsimile transmission (with confirmation of receipt), or sent by certified
mail, return receipt requested, addressed as follows,

<PAGE>

or to such other address as shall be designated by Guarantor or PSLT-ALS
Holdings in written notice to the other party:

      If to ALS Holdings:           ALS Properties Holding Company, LLC
                                    c/o Alterra Healthcare Corporation
                                    6737 W. Washington Street, Suite 2300
                                    Milwaukee, Wisconsin  53214
                                    Attention:  Mr. Mark W. Ohlendorf
                                    Telephone:  (414) 918-5403
                                    Facsimile: (414) 918-5055

      with a copy to:               Alterra Healthcare Corporation
                                    c/o Alterra Healthcare Corporation
                                    6737 W. Washington Street, Suite 2300
                                    Milwaukee, Wisconsin  53214
                                    Attention:  Mr. Mark W. Ohlendorf
                                    Telephone:  (414) 918-5403
                                    Facsimile: (414) 918-5055

      and to:                       Rogers & Hardin LLP
                                    229 Peachtree Street
                                    2700 International Tower
                                    Atlanta, Georgia 30303
                                    Attention:  Alan C. Leet, Esq.
                                    Telephone:  (404) 420-4616
                                    Facsimile: (404) 525-2224

      If to Guarantor:              Alterra Healthcare Corporation
                                    c/o Alterra Healthcare Corporation
                                    6737 W. Washington Street, Suite 2300
                                    Milwaukee, Wisconsin  53214
                                    Attention:  Mr. Mark W. Ohlendorf
                                    Telephone:  (414) 918-5403
                                    Facsimile: (414) 918-5055

      with a copy to:               Rogers & Hardin LLP
                                    229 Peachtree Street
                                    2700 International Tower
                                    Atlanta, Georgia 30303
                                    Attention:  Alan C. Leet, Esq.
                                    Telephone:  (404) 420-4616
                                    Facsimile: (404) 525-2224

<PAGE>

      If to PSLT-ALS Holdings:      PSLT-ALS Properties Holdings, LLC
                                    c/o Provident Senior Living Trust
                                    600 College Road East, Suite 3400
                                    Princeton, New Jersey 08540
                                    Attention:  General Counsel
                                    Telephone:  (609) 720-0825
                                    Facsimile:   (609) 720-0826

      with a copy to:               Sidley Austin Brown & Wood LLP
                                    787 Seventh Avenue
                                    New York, New York 10019
                                    Attention:  Scott Freeman, Esq.
                                    Telephone:  (212) 839-7358
                                    Facsimile:  (212) 839-5599

     (c) No Waiver; Remedies. No failure on the part of PSLT-ALS Holdings to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of
any other right. The remedies herein provided are cumulative and not exclusive
of any other remedies available at law or equity.

     (d) Continuing Guaranty; Transfer of Interest. This Guaranty shall create
a continuing guaranty and will (i) remain in full force and effect until
payment and performance in full and satisfaction of the Guaranteed
Obligations, (ii) be binding upon Guarantor and its successors and assigns,
and (iii) inure, together with the rights and remedies of PSLT-ALS Holdings
hereunder, to the benefit of PSLT-ALS Holdings and its successors, as
permitted under the Agreement Regarding Leases. Without limiting the
generality of the foregoing clause, if and when PSLT-ALS Holdings assigns or
otherwise transfers any interest held by it under the Agreement Regarding
Leases to any other person, that other person shall thereupon become vested
with all the benefits held by PSLT-ALS Holdings under this Guaranty.

8. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

9. INDUCEMENT TO LANDLORD. Guarantor acknowledges and agrees that the
execution and delivery of this Guaranty by Guarantor to PSLT-ALS Holdings has
served as a material inducement to PSLT-ALS Holdings to execute and deliver
the Agreement Regarding Leases, and Guarantor further acknowledges and agrees
that but for the execution and delivery of this Guaranty by Guarantor,
PSLT-ALS Holdings would not have executed and delivered the Agreement
Regarding Leases.

10. INTENTIONALLY DELETED.

11. INTENTIONALLY DELETED.

12. SUBMISSION TO JURISDICTION. Guarantor hereby irrevocably submits to the
non-exclusive jurisdiction of any State or Federal court located in New York
County, New York State over any action, suit or proceeding to enforce or
defend any right under this Guaranty or

<PAGE>

otherwise arising from or relating to this Guaranty, and Guarantor irrevocably
agrees that all claims in respect of any such action, suit or proceeding may
be heard and determined in such court. Guarantor hereby irrevocably waives, to
the fullest extent that it may effectively do so, the defense of an
inconvenient forum or venue to the maintenance of any such action, suit or
proceeding. Guarantor hereby agrees that a final, non-appealable judgment in
any such action, suit or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law.

13. WAIVER OF JURY TRIAL. Guarantor hereby waives, to the fullest extent
permitted by applicable law, any right to a trial by jury in any action, suit
or proceeding to enforce or defend any rights under this Guaranty or any other
transaction document or any amendment, instrument, document or agreement
delivered or which may in the future be delivered in connection herewith or
arising from or relating to any relationship existing in connection with this
guaranty, and agrees, to the fullest extent permitted by applicable law, that
any such action, suit or proceeding shall be tried before a court and not
before a jury.

14. COOPERATION, FURTHER ASSURANCES. Guarantor covenants, and agrees to sign,
execute and deliver or cause to be signed, executed and delivered and to do or
make, or to cause to be done or make, upon the written request of PSLT-ALS
Holdings, any and all agreements, instruments, papers, deeds, acts or things,
supplemental, confirming or otherwise, as may be reasonably required by
PSLT-ALS Holdings for the purpose of, or in connection with, the transaction
contemplated hereby. Upon full and final payment and performance of the
Guaranteed Obligations, PSLT-ALS Holdings agrees to execute a release for the
benefit of Guarantor, in form and content reasonably satisfactory to PSLT-ALS
Holdings. Notwithstanding anything to the contrary contained herein, this
Guaranty shall survive for a period of twenty four (24) months after the
expiration or earlier termination of the Agreement Regarding Leases, and
Guarantor shall be liable to PSLT-ALS Holdings hereunder for any Guaranteed
Obligations which arise during such period and relate to matters which (i)
occurred during the term of the Agreement Regarding Leases or (ii) ALS
Holdings is otherwise required to indemnify PSLT-ALS Holdings against pursuant
to the terms of the Agreement Regarding Leases.

15. INTENTIONALLY DELETED.

16. Delivery of Financial Information. Guarantor hereby agrees to cause ALS
Holdings to deliver the financial information of Guarantor required to be
delivered to PSLT-ALS Holdings pursuant to Paragraph 9(d) of the Agreement
Regarding Leases and further agrees that any such financial information of
Guarantor so delivered may, without the prior consent of, or notice to,
Guarantor, be disclosed in offering memoranda or prospectuses, or similar
publications in connection with syndications, private placements or public
offerings of PSLT-ALS Holdings' (or PSLT-ALS Holdings' direct or indirect
Parent's) securities or interests, and any other reporting requirements under
applicable federal and state laws, including those of any successor to
PSLT-ALS Holdings. Guarantor agrees to provide such other reasonable
information necessary to facilitate a private placement or a public offering
or to satisfy the SEC or regulatory disclosure requirements. Guarantor agrees
to cause its independent accountants, at PSLT-ALS Holdings' cost, to consent
to the inclusion of their audit report issued with respect to such financial
statements in any registration statement or other filing under federal and
state laws and

<PAGE>

to provide the underwriters participating in any offering of securities or
interests of PSLT-ALS Holdings (or PSLT-ALS Holdings' direct or indirect
Parent) with a standard accountant's "comfort" letter with regard to the
financial information of Guarantor included or incorporated by reference into
any prospectus or other offering document. Guarantor also agrees to make
available to any underwriter participating in an offering of PSLT-ALS
Holdings' (or PSLT-ALS Holdings' direct or indirect Parent's) securities or
interests, and any attorney, accountant or other agent or representative
retained by an underwriter (an "Inspector"), all financial and other records
and pertinent corporate documents of Guarantor as shall be reasonably
necessary to enable them to exercise their due diligence responsibility, and
cause Guarantor's directors, officers and employees to supply all information
requested by any such Inspector in connection with such offering. Upon request
of PSLT-ALS Holdings, Guarantor shall notify PSLT-ALS Holdings of any
necessary corrections to information PSLT-ALS Holdings proposes to publish
within a reasonable period of time (not to exceed three (3) Business Days)
after being informed thereof by PSLT-ALS Holdings.

17. INDEMNITY.

     (a) Indemnity. Guarantor shall indemnify, defend, protect and hold
harmless PSLT-ALS Holdings, its Affiliates, its direct and indirect Parent,
directors, employees, agents and each Person, if any, who controls PSLT-ALS
Holdings or any such Affiliate within the meaning of Section 15 of the
Securities Act of 1933 or Section 20 of the Securities Exchange Act of 1934,
and any placement agent or underwriter with respect to any syndication,
private placement or public offering, from and against all Losses (defined
below) that any Indemnified Party (defined below) may at any time suffer or
incur in connection with or relating to any Third Party Claim (defined below)
that arises out of or is based upon any untrue statement of any material fact
contained in any information or documents furnished by Guarantor, ALS
Holdings, the Alterra Lessees or their respective Affiliates pursuant to
Section 16 hereof or the Agreement Regarding Leases or any Property Lease, as
applicable, or arising out of, or which are based upon, the omission or
alleged omission to state therein a material fact required to be stated in
such information or necessary in order to make the statements in such
information not materially misleading. Any and all of such Losses shall become
part of the Guaranteed Obligations for which Guarantor is liable hereunder.
Any claim for indemnification under this Section 17 shall be subject to the
provisions and procedures set forth in this Section 17. Guarantor shall not
have any indemnification obligations under this Section 17 with respect to
financial statements delivered to PSLT-ALS Holdings following the date that
PSLT-ALS Holdings or PSLT-ALS Holdings' direct or indirect Parent no longer
separately includes, or incorporates by reference, Guarantor's financial
information in its public filings. PSLT-ALS Holdings and/or its direct or
indirect Parent will continue to separately include, or incorporate by
reference, Guarantor's financial statements in its public filings until such
time as PSLT-ALS Holdings' and/or its direct or indirect Parent's attorneys
and accountants reasonably determine that such separate inclusion or
incorporation by reference of Guarantor's financial information in its public
filings is no longer necessary.

     (b) Notification of Third Party Claims. (i) A Person that may be entitled
to be indemnified under this Section 17 (the "Indemnified Party"), shall
promptly notify the party or parties liable for such indemnification (the
"Indemnifying Party") in writing of any pending or threatened claim or demand
by a third party, including any Governmental Authority, that the

<PAGE>

Indemnified Party has determined has given or could reasonably give rise to a
right of indemnification under this Section 17 (including a pending or
threatened claim or demand asserted by a third party, including any
Governmental Authority, against the Indemnified Party, such claim being a
"Third Party Claim"), describing in reasonable detail the facts and
circumstances with respect to the subject matter of such claim or demand;
provided, however, that the failure to provide such notice shall not release
the Indemnifying Party from any of its obligations under this Section 17
except to the extent the Indemnifying Party is actually prejudiced by such
failure.

          (ii) Upon receipt of a notice of a claim for indemnity from an
Indemnified Party pursuant to Section 17.2(a), and subject to Section 17.2(d),
the Indemnifying Party may, by notice to the Indemnified Party delivered
within ten (10) Business Days of the receipt of notice of such claim, assume
the defense and control of any Third Party Claim but shall allow the
Indemnified Party a reasonable opportunity to participate in the defense of
such Third Party Claim with its own counsel and at its own expense. The
Indemnified Party may take any actions reasonably necessary to defend such
Third Party Claim prior to the time that it receives a notice from the
Indemnifying Party as contemplated by the preceding sentence. The Indemnifying
Party shall select counsel, contractors and consultants of recognized standing
and competence. To the extent the principal remedy sought in any Third Party
Claim is equitable relief, the Indemnifying Party shall consult with the
Indemnified Party as to the selection of counsel to defend such Third Party
Claim. Each Indemnified Party, shall, and shall cause each of its Affiliates
and Representatives to, cooperate in good faith with the Indemnifying Party in
the defense of any Third Party Claim. The Indemnifying Party shall not be
authorized to consent to a settlement of, or the entry of any judgment arising
from, any Third Party Claim, without the consent of any Indemnified Party,
provided that the Indemnified Party shall not withhold its consent if such
settlement or judgment involves solely the payment of money without any
finding or admission of any violation of any Law (defined below) or admission
of any wrongdoing and the Indemnifying Party shall (i) pay or cause to be paid
all amounts arising out of such settlement or judgment concurrently with the
effectiveness of such settlement and (ii) obtain, as a condition of any
settlement or judgment, a complete and unconditional release of each relevant
Indemnified Party from any and all liability in respect of such Third Party
Claim.

          (iii) If an Indemnified Party determines in good faith that it is
reasonably likely that a Third Party Claim would materially adversely affect
it other than as a result of monetary damages for which it would be entitled
to indemnification under this Agreement (including with respect to remediation
of any environmental matters), the Indemnified Party may, by notice to the
Indemnifying Party, assume the exclusive right to defend, compromise or settle
such Third Party Claim with its own counsel and at its own expense; provided,
however, that the Indemnifying Party will not be bound by any determination of
a Third Party Claim so defended or any compromise or settlement effected
without its written consent.

          (iv) Notwithstanding the foregoing, no Indemnifying Party shall have
any liability under this Section 17 for any Losses arising out of or relating
to any Third Party Claim that is settled or compromised by an Indemnified
Party without the consent of such Indemnifying Party (which consent shall not
be unreasonably withheld or delayed).

<PAGE>

     (c) Payment; Interest on Payment. If any Third Party Claim shall have
been finally determined (including if any Action (defined below) for
indemnification under this Section 17 shall have been finally determined), the
amount of such final determination shall be paid to the Indemnified Party, on
demand in immediately available funds. A Third Party Claim or Action and the
liability for and amount of Losses, shall be deemed to be "finally determined"
for purposes of this Section 17 when the parties to such Third Party Claim or
Action have so determined by mutual agreement or, if disputed, when a final
non-appealable Governmental Order (defined below) with respect thereto shall
have been entered. Any amounts not paid when due pursuant to this Section 17
shall bear interest from the date thereof until the date paid at a rate equal
to the rate publicly announced from time to time by Citibank, N.A. as its
prime or base rate. Nothing in this Section 17 shall operate to bar an
Indemnified Party from seeking and (where appropriate) obtaining interest on
any claim to the extent ordered by a court adjudicating any Action brought by
the Indemnified Party against an Indemnifying Party.

     (d) Additional Indemnification Provisions. (i) The parties hereto agree,
for themselves and on behalf of any of their respective Related Parties and
Representatives, that, with respect to each indemnification obligation in this
Section 17, (i) all Losses shall be net of any Eligible Insurance Proceeds (as
defined below) and (ii) in no event shall the Indemnifying Party have
liability to the Indemnified Party for any punitive, incidental, special,
indirect or consequential damages, except to the extent that the Indemnified
Party pays punitive, incidental, special, indirect or consequential damages to
a third party in respect of a Third Party Claim.

          (ii) Any amount payable by an Indemnifying Party pursuant to this
Section 17 shall be paid promptly and payment shall not be delayed pending any
determination of Eligible Insurance Proceeds or Retained Insurance Proceeds
(as defined below). In any case where an Indemnified Party recovers from a
third Person, any amount in respect of any Loss for which such Indemnified
Party has actually been reimbursed by an Indemnifying Party pursuant to this
Section 17 (other than Retained Insurance Proceeds), such Indemnified Party
shall promptly pay over to the Indemnifying Party the amount so recovered
(after deducting therefrom the amount of expenses incurred by it in procuring
such recovery), but not in excess of the sum of (i) any amount previously paid
by the Indemnifying Party to or on behalf of the Indemnified Party in respect
of such Loss and (ii) any amount expended by the Indemnifying Party in
pursuing or defending any claim arising out of such matter.

          (iii) All payments required to be made by an Indemnifying Party
under this Section 17 to any Indemnified Party shall be without set-off,
counterclaim or deduction of any kind.

          (iv) If any portion of Losses to be reimbursed by the Indemnifying
Party may be covered, in whole or in part, by third-party insurance coverage
(each, an "Insurance Policy"), the Indemnified Party shall promptly give
notice thereof to the Indemnifying Party (a "Notice of Insurance"). If the
Indemnifying Party so requests within 30 days after receipt of a Notice of
Insurance, the Indemnified Party shall use its commercially reasonable efforts
to collect the maximum amount of insurance proceeds thereunder, in which event
(i) all such proceeds actually received, net of costs reasonably incurred by
the Indemnified Party in seeking such collection, shall be considered
"Eligible Insurance Proceeds" and (ii) the Indemnifying Party shall reimburse
the Indemnified Party for all reasonable costs incurred in connection with
such

<PAGE>

collection and the amount of any prospective or retroactive increase in
premiums actually paid by the Indemnified Party under the Insurance Policy (as
such increased premiums are incurred) directly related to the payment of
Eligible Insurance Proceeds for such Loss for three years following the next
renewal of such Insurance Policy. If the Indemnifying Party does not request
that the Indemnified Party seek coverage of any portion of such Loss under the
Insurance Policy within 30 days after receipt of a Notice of Insurance, (i)
any proceeds that the Indemnified Party may receive thereunder shall be
considered "Retained Insurance Proceeds" and (ii) the Indemnifying Party shall
have no liability for any premium increases thereunder relating to the
collection of such Retained Insurance Proceeds. (v) If the indemnification
provided for in this Section 17 is unavailable or insufficient to hold
harmless an Indemnified Party, then each Indemnifying Party shall contribute
to the amount paid or payable by such Indemnified Party as a result of such
Losses in such proportion as is appropriate to reflect the relative fault of
Guarantor, on the one hand, and PSLT-ALS Holdings, on the other hand, in
connection with the statements or omissions which resulted in such Losses as
well as any other relevant equitable considerations. The relative fault shall
be determined by reference to, among other things, whether the untrue
statement of a material fact or the omission to state a material fact relates
to information supplied by PSLT-ALS Holdings, on the one hand, or by
Guarantor, on the other hand, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission.

          (vi) Notwithstanding anything to the contrary in this Section 17, to
the extent that the Indemnified Party or an Affiliate realizes an actual Tax
(as defined below) benefit as a result of the event giving rise to the
indemnity payment hereunder (such as, by way of example but not limitation, a
Tax savings resulting from the payment of an indemnified amount that is
deductible by the Indemnified Party, in a case in which the indemnity payment
itself does not give rise to gross income for Tax purposes), the Indemnified
Party shall promptly rebate to the Indemnifying Party the amount of such Tax
benefit.

     (e) Mitigation of Losses. Each of the parties agrees to take all
reasonable steps to mitigate their respective Losses upon and after becoming
aware of any event or condition which would reasonably be expected to give
rise to any Losses that are indemnifiable hereunder. The Indemnifying Party
shall not be liable for Losses hereunder to the extent that such Losses
resulted solely from the Indemnified Party's failure to mitigate its Losses in
accordance with the preceding sentence.

     (f) No Recourse to Parent Entities. PSLT-ALS Holdings and its existing
and future Affiliates (collectively, the "Releasing Parties") do hereby
absolutely release and discharge each of (i) FEBC-ALT Investors LLC, Emeritus
Corporation, NW Select LLC, their respective existing and future Affiliates
(other than Guarantor and its Subsidiaries) and their respective existing and
future officers and directors and (ii) the existing and future officers and
directors of Guarantor and its Subsidiaries (collectively, the "Releasees")
from any and all Losses which any of the Releasing Parties ever had or now has
or have or hereafter can, shall or may have, for, upon or by reason of any
matter, cause or thing whatsoever to the extent arising from, in connection
with, related to or as a result of (a) the matters addressed in this Section
17, and (b) any action or inaction of any of the Releasees relating to or
associated with the foregoing, in each case, relating to any period from the
beginning of the world to the end of time, regardless of

<PAGE>

when brought; provided, however, such release and discharge shall not release
or discharge (i) any Releasee from any Losses to the extent arising from, in
connection with, related to or as a result of any fraud, gross negligence or
willful misconduct by or on behalf of such Releasee, or (ii) Guarantor, ALS
Holdings, the Alterra Lessees or any of their respective successors and
assigns from their respective obligations under this Guaranty, the Agreement
Regarding Leases, the Property Leases, the Lease Guaranties (as defined in the
Property Leases) and any and all of the other documents or agreements entered
into with respect to any of the foregoing documents.

     (g) Definitions. For purposes of this Section 17, the following terms
shall have the meanings set forth below:

          "Action" means any civil, criminal or administrative action, suit,
demand, claim, arbitration, hearing, litigation, dispute or other proceeding
or investigation by or before any Governmental Authority or arbitrator.

          "Code" means the United States Internal Revenue Code of 1986, as
amended.

          "Governmental Authority" means any United States federal, state or
local or any supra-national or non-U.S. government, political subdivision,
governmental, regulatory or administrative authority, instrumentality, agency,
body or commission, self-regulatory organization or any court, tribunal, or
judicial or arbitral body.

          "Governmental Order" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any
Governmental Authority.

          "Law" means any U.S. federal, state, local or non-U.S. statute, law,
ordinance, regulation, rule, code, order or other requirement or rule of law.

          "Losses" means, without duplication, all losses, damages, costs,
expenses, liabilities, obligations and claims of any kind (including any
Action brought by any Governmental Authority or Person), including reasonable
attorneys' fees and costs of investigation.

          "Representative" of a Person means the directors, officers,
stockholders, partners, members, employees, trustees, counsel, controlling
persons (if any), representatives and agents of such Person, and each of the
heirs, executors, successors and permitted assigns of any of the foregoing.

          "Tax" or "Taxes" means (i) any federal, state, local or foreign net
income, gross income, gross receipts, windfall profit, severance, property,
production, sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or add-on minimum, ad valorem, value-added, transfer
(including real estate transfer taxes), stamp, or environmental tax (including
taxes under Code Section 59A), or any other tax, custom, duty, governmental
fee or other like assessment or charge of any kind whatsoever, together with
any interest or penalty, addition to tax or additional amount imposed by any
Governmental Authority; and (ii) any liability of PSLT-ALS Holdings or any
Provident Lessor for the payment of amounts with respect to payments of a type
described in clause (i) as a result of being a member of an affiliated,
consolidated, combined or unitary group, or as a result of any obligation of
PSLT-ALS Holdings or any Provident Lessor under any Tax sharing arrangement or
Tax indemnity arrangement.

              [THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]

<PAGE>

     Guarantor has caused this Guaranty to be effective as of the Effective
Date.

                                GUARANTOR:

                                ALTERRA HEALTHCARE CORPORATION,
                                a Delaware corporation

                                By:_________________________________
                                    Name:
                                    Title:

<PAGE>

                                ACKNOWLEDGMENT

STATE OF _____________  )
                        )     SS
COUNTY OF ___________   )

          On this ___ day of October, 2004, before me, the undersigned
officer, personally appeared ____________________________, personally known to
me, or proved to me on the basis of satisfactory evidence, and who
acknowledged that he/she is the _________________ of ALTERRA HEALTHCARE
CORPORATION, a Delaware corporation, and that as such officer, being duly
authorized to do so pursuant to the company's bylaws or a resolution of its
board of directors, executed, subscribed and acknowledged the foregoing
instrument for the purposes therein contained, by signing the name of the
company by himself in his authorized capacity as such officer, as his free and
voluntary act and deed and the free and voluntary act and deed of the company.

          IN WITNESS WHEREOF, I hereunto set my hand and official seal.

                                         ------------------------------------
[NOTARIAL SEAL]                          Notary Public

                                         My Commission Expires:

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

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