SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential for Use of Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12

Alterra Healthcare Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)

Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

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(2) Form, Schedule or Registration Statement No.:

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(4) Date Filed:

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ALTERRA HEALTHCARE CORPORATION
10000 INNOVATION DRIVE
MILWAUKEE, WISCONSIN 53226
---------------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 30, 2002
---------------------

To the Stockholders of Alterra Healthcare Corporation:

Notice is hereby given that the Annual Meeting of Stockholders (together
with any adjournments or postponements thereof, the "Meeting") of Alterra
Healthcare Corporation (the "Company") will be held at the Radisson Hotel
Milwaukee West, 2303 N. Mayfair Road, Wauwatosa, Wisconsin on Thursday, May 30,
2002, at 8:00 a.m., Milwaukee time, for the purpose of considering and voting
upon the following matters:

(1) To approve an amendment to our Restated Certificate of
Incorporation that (a) reduces the size of our Board of Directors from nine
to seven members, (b) reduces the number of directors elected by the
holders of our Series A 9.75% Cumulative Convertible Pay-In-Kind Preferred
Stock from four to three and (c) reduces the number of directors elected by
the holders of the Company's Common Stock from five to four;

(2) (a) If Proposal No. 1 shall be approved by the stockholders, to
elect a board of seven directors, each to serve until the next annual
meeting of the Company, four of whom are to be elected by the holders of
the Company's Common Stock and three of whom are to be elected by the
holders of the Company's Series A 9.75% Cumulative Convertible Pay-In-Kind
Preferred Stock; or

(b) If Proposal No. 1 shall not be approved by the stockholders,
to elect a board of nine directors, each to serve until the next annual
meeting of the Company, five of whom are to be elected by the holders of
the Company's Common Stock and four of whom are to be elected by the
holders of the Company's Series A 9.75% Cumulative Convertible Pay-In-Kind
Preferred Stock; and

(3) To transact such other business as may properly come before the
Meeting.

These items are more fully described in the accompanying Proxy Statement,
which is hereby made a part of this Notice of Annual Meeting of Stockholders.

The Board of Directors has fixed the close of business on April 26, 2002,
as the record date for the determination of stockholders entitled to notice of,
and to vote at, the Meeting.

A copy of the Company's Annual Report for the year ended December 31, 2001,
is enclosed. The Annual Report is not a part of the proxy soliciting material
enclosed with this Notice.

By Order of the Board of Directors,

/s/ Mark W. Ohlendorf
Mark W. Ohlendorf
Secretary
Milwaukee, Wisconsin

April 30, 2002

ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER
OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN
THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE-PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST BRING TO THE MEETING A
LETTER FROM THE BROKER, BANK OR OTHER NOMINEE CONFIRMING YOUR BENEFICIAL
OWNERSHIP OF THE SHARES. ADDITIONALLY, IN ORDER TO VOTE AT THE MEETING, YOU MUST
OBTAIN FROM THE RECORD HOLDER A PROXY ISSUED IN YOUR NAME.

PROXY STATEMENT
---------------------

ANNUAL MEETING OF STOCKHOLDERS OF
ALTERRA HEALTHCARE CORPORATION
---------------------

INFORMATION CONCERNING SOLICITATION AND VOTING

GENERAL

This Proxy Statement (the "Proxy Statement") and the accompanying form of
proxy are being furnished to the stockholders of Alterra Healthcare Corporation
(the "Company") in connection with the solicitation of proxies by the Board of
Directors of the Company (the "Board") from holders of its outstanding common
stock, $.01 par value per share (the "Common Stock") and holders of its
outstanding Series A 9.75% Cumulative Convertible Pay-In-Kind Preferred Stock
(the "Series A Stock"), for use at the Annual Meeting of Stockholders of the
Company (together with any adjournments or postponements thereof, the "Meeting")
to be held at the Radisson Hotel Milwaukee West, 2303 N. Mayfair Road,
Wauwatosa, Wisconsin on Thursday, May 30, 2002, at 8:00 a.m., Milwaukee time.
This Proxy Statement, the accompanying form of proxy and the Annual Report to
Stockholders are expected to be mailed to stockholders of the Company on or
about April 30, 2002.

SOLICITATION

The expense of this solicitation will be borne by the Company. Solicitation
will be primarily by use of the mails. Executive officers and other employees of
the Company may solicit proxies, without additional compensation, personally and
by telephone and other means of communication. The Company will also reimburse
brokers and other persons holding Common Stock in their names or in the names of
their nominees for their reasonable expenses in forwarding proxies and proxy
materials to beneficial owners.

VOTING RIGHTS AND OUTSTANDING SHARES

Stockholders of record as of the close of business on April 26, 2002 (the
"Record Date") will be entitled to vote at the Meeting. Each share of
outstanding Common Stock and each share of outstanding Series A Stock is
entitled to one vote as follows:

1. The affirmative vote of the holders of a majority of the
outstanding shares of the Series A Stock, voting separately as a class,
will be required to approve the proposed amendment to the Restated
Certificate of Incorporation. Holders of Series A Stock are entitled to
elect three of the seven directors nominated for election at the Annual
Meeting if the proposed amendment to the Restated Certificate of
Incorporation is approved and four of the nine directors nominated for
election at the Annual Meeting if the proposed amendment to the Restated
Certificate of Incorporation is not approved (the "Preferred Directors").
In electing these directors, such holders are entitled to one vote for each
share of Series A Stock held. The Company has been advised that the holders
of all of the outstanding Series A Stock intend to cause all such shares to
be voted in favor of the proposed amendment to the Restated Certificate of
Incorporation and in favor of all of the nominees identified as the
Preferred Director nominees in this Proxy Statement.

2. The affirmative vote of the holders of a majority of the
outstanding shares of Common Stock and Series A Stock, voting as a single
class, will be required to approve the proposed amendment to the Restated
Certificate of Incorporation. Holders of Common Stock are entitled to elect
four of the seven directors nominated for election at the Annual Meeting if
the proposed amendment to the Restated Certificate of Incorporation is
approved and five of the nine directors nominated for election at the
Annual Meeting if the proposed amendment to the Related Certificate of
Incorporation is not approved

(the "At-Large Directors"). In electing these directors, such holders are
entitled to one vote for each share held.

3. On all other matters to come before the Annual Meeting, holders of
Common Stock and Series A Stock, voting as a single class, are entitled to
one vote for each share of Common Stock or Series A Stock held.

As of the Record Date, there were 22,219,168 shares of Common Stock
outstanding and entitled to vote and 1,322,122 Series A Stock outstanding and
entitled to vote.

The presence at the Meeting, in person or by proxy, of a majority of the
outstanding shares of Common Stock and Series A Stock as of the Record Date will
constitute a quorum for transacting business at the Meeting. Abstentions and
broker non-votes are counted towards a quorum. Provided a quorum is present at
the Meeting, directors will be elected by a plurality of the votes present in
person or represented by proxy and entitled to vote at the Meeting.

All votes will be tabulated by the inspector of elections appointed for the
Meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted for purposes of
determining both the presence or absence of a quorum for the transaction of
business and the total number of votes cast with respect to a particular matter.
Broker non-votes will be counted for purposes of determining the presence or
absence of a quorum for the transaction of business but will not be counted for
purposes of determining the votes cast as to any particular proposal on which
the broker has expressly not voted. Broker non-votes with respect to proposals
set forth in this Proxy Statement will, therefore, not be considered votes cast
and, accordingly, will not affect the determination as to whether a plurality or
a majority of votes cast has been obtained with respect to such matters.

REVOCABILITY OF PROXIES

The shares of stock represented by proxy will be voted as instructed if
received in time for the Meeting. If no instructions are indicated, such shares
will be voted in favor of (FOR) (i) the proposed amendment to the Restated
Certificate of Incorporation set forth as Proposal No. 1 below; (ii) each
nominee for election as a director specified herein; and (iii) in the discretion
of the proxy holder, as to any other matter that may properly come before the
Meeting. Any person signing and mailing the proxy may, nevertheless, revoke it
at any time before it is exercised by written notice to the Company (Attention:
Mark W. Ohlendorf, Senior Vice President, Chief Financial Officer, Treasurer and
Secretary) at its headquarters at 10000 Innovation Drive, Milwaukee, Wisconsin,
53226, or by attending in person and voting at the Meeting. Attendance at the
Meeting, however, will not itself constitute the revocation of a proxy.

PROPOSAL 1 -- AMENDMENT TO CERTIFICATE OF INCORPORATION

The Board of Directors has adopted a resolution proposing and recommending
that the Company's Restated Certificate of Incorporation be amended to reduce
the size of the Board from nine to seven members, to reduce the number of
directors elected by the holders of the Series A Stock from four to three
members and to reduce the number of directors elected by the holders of the
Common Stock from five to four members.

The Certificate of Designations, Rights and Preferences of the Company's
Series A Stock and Series B Stock, filed with the Delaware Secretary of State on
May 30, 2000 (the "Certificate of Designation"), sets forth the rights and
preferences of the holders of the Series A Stock, and under the General
Corporation Law of the State of Delaware, constitutes a part of the Restated
Certificate of Incorporation of the Company. Section 7(b) of the Certificate of
Designation provides that, for so long as the aggregate stated value of the
Series A Stock outstanding and the outstanding principal amount of the Company's
Series A 9.75% Convertible Pay-In-Kind Debentures due 2007 and Series B 9.75%
Convertible Pay-In-Kind Debentures due 2007 are equal to or greater than $50
million, (i) the Board of Directors of the Company shall consist of nine
members; (ii) the holders of shares of Series A Stock shall have the exclusive
right, voting separately as a single class, to elect four Preferred Directors of
the Company; and (iii) the remaining five At-Large Directors shall be elected by
the holders of the Common Stock at each meeting of stockholders held for the
purpose of

electing directors. The Company's Amended and Restated Bylaws (the "Bylaws")
include corresponding provisions with respect to the size and composition of the
Company's Board of Directors.

The Board of Directors of the Company has adopted a resolution approving
and recommending to the Company's stockholders for their approval an amendment
to Section 7(b) of the Certificate of Designation providing for (i) a decrease
in the size of the Board of Directors from nine members to seven members; (ii) a
decrease in the number of directors elected by the holders of the Series A Stock
from four directors to three directors; and (iii) a decrease in the number of
directors elected by the holders of the Common Stock from five directors to four
directors. As amended, Section 7(b) of the Certificate of Designation would
provide as follows:

(b) So long as shares of the Series A Preferred Stock and the
Debentures, having collectively, an aggregate Stated Value (with respect to
the Series A Preferred Stock) or principal amount (with respect to the
Debentures), equal to or greater than Fifty Million Dollars ($50,000,000)
remain outstanding, the Board of Directors shall consist of seven (7)
members and the holders of shares of Series A Preferred Stock shall have,
in addition to the other voting rights set forth herein, the exclusive
right, voting separately as a single class, to elect three (3) directors of
the Corporation (the "Preferred Directors"), the remaining directors to be
elected by the other classes of stock entitled to vote therefor (excluding
the Series A Preferred Stock in accordance with Section 7(a) hereof), at
each meeting of stockholders held for the purpose of electing directors. So
long as holders of the Series A Preferred Stock have the right to elect the
Preferred Directors, (i) any or all of the Preferred Directors may be
removed by a vote of the holders of a majority of the issued and
outstanding shares of Series A Preferred Stock or by the written consent of
holders of 100% of the issued and outstanding shares of Series A Preferred
Stock; and (ii) any vacancies created by the removal, resignation or death
of any Preferred Director may be filled by a majority vote of the remaining
Preferred Directors, by a vote of the holders of a majority of the issued
and outstanding shares of Series A Preferred Stock or by the written
consent of holders of 100% of the issued and outstanding shares of Series A
Preferred Stock.

The Board believes it is in the best interest of the Company to reduce the
size of the Board of Directors. In January 2002, Steven L. Vick resigned as a
director and executive officer of the Company in order to pursue other
opportunities. Mr. Vick then served as an At-Large Director, and his resignation
from the Board created a vacancy on the Board. The Board has considered filling
the vacancy created by Mr. Vick's resignation, but has determined that
decreasing the size of the Board would be preferable in the circumstances. The
high demands the Company expects to continue to make on its directors and the
significant uncertainty as to the outcome of the ongoing restructuring
activities were factors the Board considered in reaching this conclusion. In
addition to oversight of the Company's operations and operating initiatives,
management is regularly and frequently consulting with the Board with respect to
various restructuring matters. During 2001, the Board met formally on 18
occasions, and the Board and Board committees participated in numerous other
conference calls and meetings. The Board and management expect this high level
of Board involvement to continue in the foreseeable future and believe that a
seven member Board will be more manageable than a nine person Board as the
relatively smaller size will facilitate scheduling Board meetings and calls. The
Board does not believe that decreasing the size of the Board will have any
adverse impact on the Company. A seven member Board is large enough to allow for
the inclusion of a representative group of qualified directors. In addition, the
"one-director more" relationship between the number of At-Large Directors
elected by the holders of the Common Stock and the number of Preferred Directors
elected by the holders of the Series A Stock will be maintained. Natalie
Townsend, currently a Preferred Director, has agreed to voluntarily resign from
the Board effective at the Meeting (assuming approval of the proposed amendment)
in order to facilitate this proposed amendment and in order to allow the number
of At-Large Directors to continue to exceed the number of Preferred Directors by
one.

Approval of this proposed amendment will require the affirmative vote of
the holders of (i) a majority of the outstanding shares of Series A Stock,
voting separately as a single class, and (ii) the vote of a majority of the
shares of outstanding Common Stock and Series A Stock, voting together as a
single class, with each share of Series A Stock and each share of Common Stock
representing one vote.

The holders of all of the Series A Stock have advised the Company of their
intent to vote in favor of this Proposal No. 1.

If Proposal No. 1 is approved by the stockholders, the Board will adopt
corresponding revisions to the Bylaw provisions relating to the size and
composition of the Board.

If Proposal No. 1 is not approved by the stockholders, the Board is
nominating for election at the Meeting five individuals to serve as At-Large
Directors and four individuals to serve as Preferred Directors.

THE BOARD RECOMMENDS A VOTE IN FAVOR OF PROPOSAL NO. 1

PROPOSAL 2 -- ELECTION OF DIRECTORS

The Company's Restated Certificate of Incorporation and Bylaws provide that
the Board shall consist of nine members, five of whom shall be elected by the
holders of the Common Stock and four of whom shall be elected by the holders of
the Series A Stock. If Proposal No. 1 is approved by the stockholders at the
Meeting, then the Restated Certificate of Incorporation and Bylaws will be
amended to reduce the size of the Board to seven members, four of whom shall be
elected by the holders of the Common Stock and three of whom shall be elected by
the holders of the Series A Stock. If Proposal No. 1 is not approved, then the
Board will be nominating nine individuals to fill the nine Board seats, five of
whom will be At-Large Director nominees and four of whom will be Preferred
Director nominees. Directors elected at the Meeting will serve until the next
Annual Meeting of Stockholders and until their successors have been elected and
qualified.

The At-Large Director nominees of the Board and the Preferred Director
nominees designated by the holders of the Series A Stock and nominated by the
Board are set forth below. In the event any At-Large Director nominee is unable
or declines to serve as an At-Large Director at the time of the Meeting, the
proxies will be voted for any nominee who shall be designated by the present
Board to fill the vacancy. In the event any Preferred Director nominee is unable
or declines to serve as a Preferred Director at the time of the Meeting, the
proxies will be voted for any nominee who shall be designated by the holders of
a majority of the outstanding shares of Series A Stock as of the Record Date. If
additional persons are nominated for election as At-Large Directors, then the
proxy holders intend to vote all proxies received by them for the nominees
listed below unless instructed otherwise. As of the date of this Proxy
Statement, the Company is not aware of any nominee who is unable or who will
decline to serve as a director, if elected.

<Table>
<Caption>
AT-LARGE DIRECTOR NOMINEES PREFERRED DIRECTOR NOMINEES
- -------------------------- ---------------------------

Timothy J. Buchanan William E. Colson
Gene E. Burleson Robert Haveman
Ronald G. Geary Natalie K. Townsend*
Patrick F. Kennedy* Jerry L. Tubergen
William G. Petty, Jr.
</Table>

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

*Mr. Kennedy and Ms. Townsend are each nominated to serve as a director if
Proposal No. 1 shall not be approved by the stockholders.

NOMINEES FOR ELECTION AS DIRECTORS

Set forth below are the names, ages (at April 15, 2002), positions and
offices held and a brief description of the business experience during the past
five years of each person nominated to serve as a director of the Company.

At-Large Director Nominees:

Timothy J. Buchanan (age 48), a private investor, has served as a director
of the Company since 1997. Mr. Buchanan served as the President of the Company
from October 1997 to August 1998 and served as the Vice Chairman of the Board of
the Company from August 1998 to May 2000. Mr. Buchanan served as the Chairman of
the Board, Chief Executive Officer, and a director of Sterling House Corporation
("Sterling") since he co-founded Sterling with Steven Vick in 1991 until
Sterling's merger with the Company in October 1997.

Gene E. Burleson (61) has served as a director of the Company since July
1995. Mr. Burleson has served as Chairman of the Board of Mariner Post-Acute
Network, Inc. ("Mariner"), a diversified provider of long-term and specialty
health care services, since February 2000. Mr. Burleson served as the Chief
Executive Officer and a director of Vitalink Pharmacy Services, Inc. from
February 1997 to August 1997. He served as Chairman of the Board of GranCare,
Inc. ("GranCare"), a provider of long-term and specialty health care services,
from January 1994 to November 1997 and as Chief Executive Officer of GranCare
from December 1990 to February 1997. Mr. Burleson also currently serves on the
Board of Directors of Mariner, Deckers Outdoor Corporation, a shoe manufacturer,
and THCG, Inc., a specialty investment banking firm.

Ronald G. Geary (age 54) has served as a director of the Company since May
of 2001. Mr. Geary has served as a director and President of ResCare, Inc., a
provider of residential, training, educational and support services to
populations with special needs, since 1990 and as Chief Executive Officer since
1993. He was elected Chairman of the Board of ResCare in June 1998. Mr. Geary
also serves as a director of Ventas, Inc., a real estate investment trust.

Patrick F. Kennedy (age 50) has served as Chief Executive Officer of the
Company since November of 2001 and President of the Company since January of
2002. Since 1995, Mr. Kennedy has served as Senior Vice President and as a
director of Holiday Retirement Corp., a major operator of independent living
retirement facilities. Mr. Kennedy is nominated to serve as an At-Large Director
only if Proposal No. 1 shall not be approved by the stockholders.

William G. Petty, Jr. (age 56) has served as a director of the Company
since 1993, served as Chairman of the Board of the Company from December 1993 to
May 2000 and served as Chief Executive Officer of the Company from December 1993
to April 1996. He has served as a Managing Director of Beecken, Petty & Company,
the general partner of a private health care investment fund, since September
1996. Mr. Petty served as the Vice Chairman of GranCare from July 1995 to
November 1997. Mr. Petty also currently serves on the Board of Directors of
Mariner.

Preferred Director Nominees:

William E. Colson (age 60) has served as a director of the Company since
2000. Mr. Colson is a founder of Holiday Retirement Corp., a major operator of
independent living retirement facilities, and has been its President and Chief
Operating Officer since 1987 and its Chief Executive Officer since September
1999. Mr. Colson also serves as President and Managing General Partner of Colson
& Colson Construction Co., which develops and constructs retirement communities
and multi-family projects, since 1963. Mr. Colson also serves as a member of the
Executive Board of the American Seniors Housing Association.

Robert Haveman (age 54) has served as a director of the Company since 1995
and served as Vice Chairman of the Board of the Company from May 2000 to
November 2000 and as President of the Company from November 2000 to January
2001. Mr. Haveman has served as Treasurer of EDP Management Corp., a privately
held investment management firm, since April 1997. Mr. Haveman served as the
Secretary/Treasurer of the Prince Corporation, an automotive interior trim
manufacturer, from 1987 to 1997.

Natalie Townsend (age 41) has served as a director of the Company since
2000. Ms. Townsend has served as President of TD Capital Group, the Merchant
Banking Division of The Toronto-Dominion Bank, and Vice-Chair of TD Securities,
Inc., the Investment Banking Division of The Toronto-Dominion Bank, since 1999.
She served as managing director of TD Capital Group from 1995 to 1999. Ms.
Townsend is nominated to serve as a Preferred Director only if Proposal No. 1
shall not be approved by the stockholders.

Jerry L. Tubergen (age 48) has served as Chairman of the Board of the
Company since May 2000 and has served as a director of the Company since 1995.
He has served as President and Chief Executive Officer of RDV Corporation, a
private investment and financial management firm, since its formation in 1991.
Mr. Tubergen also currently serves on the Board of Directors of the Orlando
Magic, Ltd., an NBA franchise, and Genmar Holdings, Inc., a manufacturer and
marketer of motorized pleasure boats.

There are no family relationships among any of the executive officers or
directors of the Company. Upon the Company's issuance of 1,250,000 shares of
Series A Stock on May 31, 2000, the holders of the Series A Stock were given the
right to elect four directors to the Company's Board of Directors. No other
arrangement or understanding exists between any director or director nominee and
any other person pursuant to whom he or she was or is to be selected as a
director or director nominee of the Company.

MANAGEMENT OF THE COMPANY

BOARD OF DIRECTORS

The Board of Directors is currently comprised of Timothy J. Buchanan, Gene
E. Burleson, William E. Colson, Ronald G. Geary, Robert Haveman, William G.
Petty, Jr., Natalie K. Townsend and Jerry L. Tubergen. A vacancy on the Board
was created by the resignation of Steven Vick on February 15, 2002.

BOARD COMMITTEES AND MEETINGS

During 2001, the Board met 18 times. The Board has established an audit
committee (the "Audit Committee") and a compensation committee (the
"Compensation Committee"). The Board does not have a nominating committee. No
incumbent Board member attended fewer than 75% of the aggregate of (i) the total
number of meetings of the Board which such director was eligible to attend
during 2001 and (ii) the total number of meetings held by any committee of the
Board upon which such director served during 2001.

The Audit Committee is comprised of Messrs. Buchanan, Burleson and Petty.
The primary functions of the Audit Committee are to: (i) recommend an accounting
firm to be appointed by the Company and its independent auditors; (ii) consult
with the Company's independent auditors regarding the audit plan; and (iii)
determine that management placed no restrictions on the scope or implementation
of the independent auditors' examination. The Audit Committee met four times in
2001.

The Compensation Committee is comprised of Messrs. Buchanan, Geary, Haveman
and Petty, with Mr. Haveman serving as Chairman. The Compensation Committee: (i)
sets and approves the compensation (including salary, deferred compensation,
bonuses, incentive compensation and all other types of compensation or
remuneration) of the Company's executive officers; and (ii) administers the
Company's 1995 Amended and Restated Incentive Compensation Plan (the "1995
Plan"). The Compensation Committee met one time in 2001.

EXECUTIVE OFFICERS

Set forth below are the names, ages (at April 15, 2002), positions and
offices held and a brief description of the business experience during the past
five years of each of the Company's executive officers who are not also
directors.

Chet H. Bradeen (age 57) has served as Senior Vice President of the Company
since July 2001. Prior to joining the Company, Mr. Bradeen served as Chief
Executive Officer of Sun Healthcare Asia Pacific, the Asian division of a large
long-term care company, from 1998 to 2001. From 1995 to 1998, Mr. Bradeen served
as Chief Executive Officer of Sun Healthcare UK, the United Kingdom division of
Sun Healthcare.

Anthony R. Geonnotti, Jr. (age 43) has served as Senior Vice President of
the Company since April 2000. From February 1999 to April 2000, Mr. Geonnotti
served as Vice President of Construction and Development. Previously, Mr.
Geonnotti served as Divisional Vice President of Development from September 1996
to February 1999.

Mark W. Ohlendorf (age 42) has served as Senior Vice President of the
Company since October 1997, as Chief Financial Officer and Treasurer since
November 1999 and as Secretary since July 2000. He served as the Chief Financial
Officer of Sterling from April 1997 to October 1997. Mr. Ohlendorf served as
Vice President, Chief Financial Officer and Treasurer of Vitas Healthcare
Corporation from December 1990 to April 1997. Mr. Ohlendorf is a Certified
Public Accountant.

Andrea L. Peck (age 50) has served as Senior Vice President of the Company
since May 2001. From September 2000 to May 2001, Ms. Peck served the Company as
Vice President of Employee Services. Prior to joining the Company, Ms. Peck
served as Senior Vice President of Human Resources -- Europe for
Gorillapark.com, a technology investment management firm, from June to September
2000 and as Senior Vice President of Human Resources for Royal & Sun Alliance
Corp., a property and casualty insurance company, from November 1993 to June
2000.

Subject to the terms of employment agreements, executive officers of the
Company are elected or appointed by the Board and hold office until their
successors are elected or until their death, resignation or removal.

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS

The following table sets forth certain information with respect to the
beneficial ownership of the Company's voting securities as of March 15, 2002,
by: (i) each person known by the Company to own more than 5% of the outstanding
shares of voting securities, by class; (ii) each of the Company's directors and
director nominees; (iii) each of the Company's executive officers included in
the Summary Compensation Table included elsewhere herein; and (iv) all of the
Company's directors and executive officers as a group. Except as otherwise
noted, the person or entity named has sole voting and investment power over the
shares indicated.

<Table>
<Caption>
SHARES OF COMMON SHARES OF SERIES A
STOCK BENEFICIALLY STOCK BENEFICIALLY
OWNED(1) OWNED(2)
-------------------- -------------------
NAME NUMBER PERCENT NUMBER PERCENT
- ---- ---------- ------- --------- -------

Jerry L. Tubergen(3)(4)+................................ 12,868,832 40.3% 1,205,776 91.2%
Richard M. DeVos, Jr.(3)(4)............................. 12,715,400 39.8 1,205,776 91.2
Robert Haveman(3)(5)+................................... 10,539,995 33.0 1,205,776 91.2
Elsa D. Prince(3)(5).................................... 10,437,367 32.7 1,205,776 91.2
The Toronto-Dominion Bank(3)(6)......................... 10,701,000 32.5
HBK Investments L.P.(3)(7).............................. 10,491,250 32.1
RDVEPCO, L.L.C.(3)(8)................................... 9,716,026 30.4 1,205,776 91.2
AR Investments, Ltd.(9)................................. 2,167,900 9.8
Dimensional Fund Advisors(10)........................... 1,841,400 8.3
Warburg Pincus Asset Management, Inc.(11)............... 1,263,100 5.7
Transamerica Corporation and Transamerica Investment
Services, Inc.(12).................................... 1,149,900 5.2
Timothy J. Buchanan (13)+............................... 820,447 3.7
Steven L. Vick(14)++.................................... 713,321 3.2
William E. Colson(15) (16)+............................. 563,346 2.5 116,346 8.8
Holiday Retirement 2000, LLC(3)(15)..................... 560,846 2.5 116,346 8.8
Patrick F. Kennedy(16)++................................ 269,500 1.2
Mark W. Ohlendorf++..................................... 209,746 *
William G. Petty, Jr.(17)+.............................. 139,658 *
Gene E. Burleson(18)+................................... 48,167 *
Anthony R. Geonnotti, Jr.(19)++......................... 20,032 *
Chet H. Bradeen++....................................... 0 *
Ronald G. Geary+........................................ 0 *
Andrea L. Peck++........................................ 0 *
Natalie K. Townsend(20)+................................ 0 *
All Executive Officers and Directors as a Group (13
Persons)(21).......................................... 15,111,573 42.8
</Table>

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

+ Director of the Company.

++ Executive officer or former executive officer of the Company. See
"Management of the Company."

* Less than 1%.

(1) Information as to the beneficial ownership of Common Stock has either been
furnished to the Company by or on behalf of the indicated persons or is
taken from reports on file with the Securities and Exchange Commission.

(2) Shares of Series A Cumulative Convertible Preferred Stock due May 2007
("Series A Stock") are convertible at any time at the holder's option into
shares of the Company's Common Stock. Therefore,

shares listed in the "Series A Stock" column are included in the shares
listed in the respective owner's "Common Stock" column.

(3) On May 31, 2000, Alterra completed a financing transaction in which it
issued $173 million of convertible debentures and Series A Stock to certain
investors, including RDVEPCO, L.L.C., a Michigan limited liability company
("RDVEPCO"), the Elsa D. Prince Living Trust (the "Prince Trust"), RDV
Manor Care, LLC, a Michigan limited liability company ("RDVMC"), Holiday
Retirement 2000, LLC, a Washington limited liability company ("Holiday"),
Group One Investors, L.L.C., a Michigan limited liability company ("Group
One") and HBK Master Fund L.P., a Cayman Islands limited partnership (the
"Equity Transaction"). The securities issued in the Equity Transaction
included: (i) $168 million of the Company's Series A, Series B and Series C
Convertible Pay-In-Kind Debentures due 2007 (collectively, the
"Debentures") with an original conversion price of $4.00 per share, a 9.75%
semi-annual payment-in-kind ("PIK") coupon and a seven year maturity and
(ii) $5 million of shares of the Company's Series A Stock with an original
conversion price of $4.00 per share, a 9.75% semi-annual, cumulative PIK
dividend and a mandatory redemption in seven years. The Series A and the
Series C Debentures and the Series A Stock are convertible at any time at
the applicable holder's option into shares of Common Stock of the Company.
The Series B Debentures are convertible at any time at the applicable
holder's option into shares of the Company's Series B Non-Voting
Participating Preferred Stock (the "Series B Stock") having rights (other
than voting rights) substantially similar to the Company's Common Stock.
Additional information regarding the Equity Transaction is included in
"Certain Relationships and Related Transactions."

As a part of the Equity Transaction, the Company had the option to issue to
approved parties, and the investors had the option to purchase, up to an
additional $29.9 million of Series B or C Debentures within 120 days of May
31, 2000. On August 10, 2000, the Company issued an additional $29.9
million of Series B Debentures to The Toronto-Dominion Bank
("Toronto-Dominion") pursuant to this option provision. Accordingly, the
aggregate transaction amount of the Equity Transaction was approximately
$203 million.

As further described in the notes below, beneficial ownership information
reflected in this table includes shares of Common Stock issuable upon the
conversion of Series A and C Debentures and Series A Stock issued in the
Equity Transaction. Pursuant to the anti-dilution provisions governing the
PIK Debentures and the Series A Stock issued in the Equity Transaction, the
effective conversion price for the PIK Debentures and the Series A Stock
has decreased from $4.00 to $2.68 per share of Common Stock for the Series
A and Series C Debentures and from $400 to $268 per share of Series B Stock
for the Series B Debentures as of December 31, 2001. However, pursuant to
these anti-dilution provisions, the actual conversion price for the Series
A and C Debentures and the Series A stock remains at $4.00 per share and
for the Series B Debentures remains at $400 per share; but upon conversion
of these convertible securities the holder thereof will now also receive
shares of Series B-1 Preferred Stock, in addition to Common Stock, in such
amounts as to provide such holder an equity interest in the Company as
though the conversion price for the Series A and C Debentures and Series A
Stock on the one hand, and the Series B Debentures on the other hand, were
decreased to $2.68 and $268 per share, respectively. As this table reflects
beneficial ownership of the Company's voting securities (and the Series B-1
Preferred Stock is not a voting security of the Company), this table
reflects conversion prices for the Series A Stock and for the Series A and
C Debentures at $4.00 per share.

(4) Based upon a Schedule 13D filed on June 12, 2000, as amended December 11,
2000, by RDV ALTCO, L.L.C., a Michigan limited liability company, RDV
Corporation, a Michigan corporation, Richard M. DeVos, Jr., Daniel G.
DeVos, Suzanne C. DeVos VanderWeide, Douglas L. DeVos, Jerry L. Tubergen,
Elisabeth D. DeVos, Helen J. DeVos, The Richard M. and Helen J. DeVos
Foundation, The Dick and Betsy DeVos Foundation, The Douglas and Maria
DeVos Foundation, The Jerry L. and Marcia D. Tubergen Foundation, Windquest
Group, Inc., a Michigan corporation, Buttonwood Capital, Inc., a Michigan
corporation and RDV Capital Management L.P., a Delaware limited partnership
(collectively, the "RDV Reporting Persons"), the RDV Reporting Persons may
be deemed to beneficially own an aggregate of 12,995,576 shares of Common
Stock, including 12,649,624 shares and 12,778,634 shares

reflected as beneficially owned by Richard M. DeVos, Jr. and Jerry L.
Tubergen, respectively. Based upon their Schedule 13D, the RDV Reporting
Persons as a group have sole power to vote or to direct the vote and sole
power to dispose or direct the disposition of 3,200,052 shares of Common
Stock. Based upon their Schedule 13D, the RDV Reporting Persons, as a group
may be deemed to beneficially own (i) 1,140,000 shares of Series A Stock;
(ii) $40,722,000 Series A Debentures of the Company; (iii) $4,450,000 of
the Company's 7.00% convertible subordinated debentures, due 2004 (the "7%
Debentures"); and (iv) $16,000,000 of the Company's 5.25% convertible
subordinated debentures, due 2002 (the "5.25% Debentures"), all of which
are convertible at any time at the holders' option into 1,140,000,
10,180,500, 219,753 and 556,522 shares of the Company's Common Stock,
respectively. Assuming conversion of the securities described above, the
RDV Reporting Persons will have sole voting and dispositive power with
respect to 3,200,052 shares of the Company's Common Stock. Certain shares
reported as beneficially owned by the RDV Reporting Persons are also
reported as beneficially owned by RDVEPCO and the Prince Reporting Persons
(as defined below). For further information regarding the RDV Reporting
Persons' beneficial ownership of the Company's Common Stock, please see the
Schedule 13D referenced in this note. The principal business address of
Richard M. DeVos, Jr. is 7575 Fulton Street East, Ada, Michigan 49355. Mr.
Tubergen's principal business address is 500 Grand Bank Building, 126
Ottawa, N.W. Grand Rapids, Michigan 49503. In addition, the RDV Reporting
Persons, including Richard M. DeVos, Jr. and Jerry L. Tubergen, may be
deemed to beneficially own 65,776 shares of Series A Stock, as issued to
RDVEPCO pursuant to a dividend on the Series A Stock on January 2, 2001,
which is convertible into Common Stock.

(5) Based upon a Schedule 13D filed on June 12, 2000, by EDP Assisted Living
Properties, L.L.C., a Michigan limited liability company, Elsa D. Prince
and Robert Haveman (collectively the "Prince Reporting Persons"), the
Prince Reporting Persons may be deemed to beneficially own an aggregate of
10,674,583 shares of Common Stock, including 10,371,591 shares and
10,452,052 shares reflected as beneficially owned by Elsa D. Prince and
Robert Haveman, respectively. Based upon their Schedule 13D, the Prince
Reporting Persons as a group have sole power to vote or to direct the vote
and sole power to dispose or direct the disposition of 525,523 shares of
Common Stock. Based upon their Schedule 13D, the Prince Reporting Persons,
as a group may be deemed to beneficially own (i) 1,140,000 shares of Series
A Stock; (ii) $34,041,000 Series A Debentures of the Company; and (iii)
$6,950,000 of 7.00% Debentures, all of which are convertible at any time at
the holders' option into 1,140,000, 8,510,250, and 343,209 shares of the
Company's Common Stock, respectively. Assuming conversion of the securities
described above, the Prince Reporting Persons will have sole voting and
dispositive power with respect to 525,523 shares of the Company's Common
Stock. Certain shares reported as beneficially owned by the Prince
Reporting Persons are also reported as beneficially owned by RDVEPCO and
the RDV Reporting Persons. For further information regarding the Prince
Reporting Persons' beneficial ownership of the Company's Common Stock,
please see the Schedule 13D referenced in this note. The Prince Reporting
Persons' principal business address is 190 S. River Avenue, Suite 300,
Holland, Michigan 49423. In addition, the Prince Reporting Persons,
including Elsa D. Prince and Robert Haveman, may be deemed to beneficially
own 65,776 shares of Series A Stock, as issued to RDVEPCO pursuant to a
dividend on the Series A Stock on January 2, 2001, which is convertible
into Common Stock.

(6) Pursuant to the Equity Transaction, as of August 10, 2000, Toronto-Dominion
acquired $29,904,000 of Series B Debentures from the Company and
$10,000,000 of Series B Debentures from other debenture holders. Pursuant
to an agreement with the Company, Toronto-Dominion has the right to
exchange its Series B Debentures for Series C Debentures, which are
convertible into Common Stock, subject to compliance by Toronto-Dominion
and its affiliates with applicable laws and regulations that restrict their
holdings of voting securities. This table reflects Toronto-Dominion's
beneficial ownership assuming that it exchanges all of its Series B
Debentures for Series C Debentures and converts all of such Series C
Debentures into shares of Common Stock. The Company understands, however,
that under currently applicable regulatory provisions Toronto-Dominion is
prohibited from holding in excess of five percent of the outstanding Common
Stock. The Merchant Banking Division of Toronto-Dominion, TD Capital Group,
manages Toronto-Dominion's investment in the Company. The principal
business

address of Toronto-Dominion and TD Capital Group is P.O. Box 1, TD Tower,
Toronto, Ontario M5K 1A2, Canada.

(7) HBK Master Fund L.P. ("HBK Master Fund") owns $39,729,000 in face amount of
the Series C Debentures of the Company, which are convertible into shares
of the Company's Common Stock. Assuming conversion of such Series C
Debentures, HBK Investments L.P. ("Investments") (pursuant to Investment
Management Agreements among the parties) will have sole voting power and
sole dispositive power with respect to the 9,932,250 shares of the
Company's Common Stock issuable to HBK Master Fund. In addition, HBK Master
Fund owns 1,100 shares of Common Stock and $11,370,000 in face amount of
the 6.75% Debentures of the Company due 2006, which are convertible into
shares of the Company's Common Stock. Assuming conversion of such 6.75%
Debentures, Investments (pursuant to Investment Management Agreements among
the parties) will have sole voting power and sole dispositive power with
respect to the 557,900 shares of the Company's Common Stock issuable to HBK
Master Fund.

The principal place of business of HBK Master Fund and Investments is 777
Main Street, Suite 2750, Fort Worth, Texas 76102.

(8) Based upon a Schedule 13D filed by RDVEPCO on June 12, 2000, RDVEPCO may be
deemed to beneficially own an aggregate of 9,650,250 shares of Common
Stock. RDVEPCO was organized in December 1999 for the principal purpose of
investing in or engaging in other financial transactions with Alterra. The
principal business address of RDVEPCO is 500 Grand Bank Building, 126
Ottawa Avenue, N.W., Grand Rapids, Michigan 49503. RDVEPCO is managed by
its two members, RDV ALTCO, L.L.C. and EDP Assisted Living Properties,
L.L.C. For additional information regarding RDV ALTCO, L.L.C. and EDP
Assisted Living Properties, L.L.C., see notes (3), (4) and (5) hereto.
Based upon its Schedule 13D, RDVEPCO has sole power to vote or direct the
vote and sole power to dispose or to direct the disposition of the
9,650,250 shares of Common Stock. Based upon its Schedule 13D, RDVEPCO owns
(i) 1,140,000 shares of Series A Stock; and (ii) $34,041,000 Series A
Debentures of the Company, all of which are convertible at any time at
RDVEPCO's option into 1,140,000 and 8,510,250 shares of the Company's
Common Stock, respectively. In addition, RDVEPCO may be deemed to
beneficially own 65,776 shares of Series A Stock, as issued pursuant to a
dividend on the Series A Stock on January 2, 2001, which is convertible
into Common Stock. Assuming conversion of such Series A Stock and Series A
Debentures, RDVEPCO will have sole voting and dispositive power with
respect to 9,716,026 shares of the Company's Common Stock. Certain shares
reported as beneficially owned by RDVEPCO are also reported as beneficially
owned by the RDV Reporting Persons and the Prince Reporting Persons. For
further information regarding RDVEPCO's beneficial ownership of the
Company's Common Stock, please see the Schedule 13D referenced in this
note.

(9) Based upon a Schedule 13D filed on January 18, 2000, as amended on January
26, 2000 and February 25, 2000, by AR Investments Limited, a Cayman Islands
corporation ("AR Investments"), RH Investments Limited, a Cayman Islands
corporation ("RH Investments"), VXM Investments Limited, a Cayman Islands
corporation ("VXM Investments"), LXB Investments Limited, a Cayman Islands
corporation ("LXB Investments"), HR Investments Limited, a Cayman Islands
corporation ("HR Investments"), Barry Trust, a Guernsey, Channel Islands
trust, Rachel Trust, a Guernsey, Channel Islands trust, Vivian Trust, a
Guernsey, Channel Islands trust, Lillian Trust, a Guernsey, Channel Islands
trust, Henry Trust, a Guernsey, Channel Islands trust, The Monument Trust
Company Limited, a Guernsey, Channel Islands corporation, IPC Advisors
S.A.R.L., a Luxembourg corporation, LMR Investments Limited, a Cayman
Islands corporation, The LMR Family Trust, a Cayman Islands Trust and
Caledonian Bank & Trust Limited, a Cayman Islands corporation
(collectively, the "Reporting Persons"), AR Investments, RH Investments,
VXM Investments, LXB Investments, and HR Investments own an aggregate of
2,167,900 shares of Common Stock. According to the Schedule 13D, each
Reporting Person may be deemed to be a beneficial owner of all 2,167,900
shares of Common Stock held by the Reporting Persons. The Reporting Persons
as a group have sole power to vote or to direct the vote and sole power to
dispose or to direct the disposition of the 2,167,900 shares of Common

Stock. The principal place of business of the Reporting Persons is c/o
Unsworth & Associates, Herengracht 483, 1017 BT, Amsterdam, The
Netherlands.

(10) Based upon its Schedule 13G filed on February 2, 2002, Dimensional Fund
Advisors Inc. is an investment adviser registered under Section 203 of the
Investment Advisers Act of 1940. Its principal place of business is 1299
Ocean Avenue, 11th Floor, Santa Monica, CA 90401. Dimensional Fund Advisors
Inc. has sole voting power with respect to all of the shares of the
Company's Common Stock held by it.

(11) Based upon its Schedule 13G filed on January 13, 1999, Warburg Pincus Asset
Management, Inc. ("Warburg Pincus") is an investment adviser registered
under Section 203 of the Investment Advisers Act of 1940. Its principal
place of business is 466 Lexington Avenue, New York, New York 10017. Of the
total shares of the Company's Common Stock held by Warburg Pincus, it has
sole voting power with respect to only 1,034,000 of such shares.

(12) Based upon their Schedule 13G filed on February 16, 1999, as amended
January 22, 2000, Transamerica Investment Services, Inc. ("TIS") is an
investment adviser registered under Section 203 of the Investment Advisers
Act of 1940 and is a subsidiary of Transamerica Corporation
("Transamerica"). Transamerica's principal place of business is 600
Montgomery Street, San Francisco, California 94111, and TIS' principal
place of business is 1150 Olive Street, Los Angeles, California 90015.
Transamerica may be deemed to be the beneficial owner of 1,149,900 shares
of the Company's Common Stock, of which 125,000 shares are owned directly
by Transamerica. The remaining 1,024,900 shares of the Company's Common
Stock, including 744,500 of such shares, are beneficially owned by direct
and indirect subsidiaries of Transamerica. TIS is deemed to be the
beneficial owner of 1,149,000 shares of the Company's Common Stock pursuant
to separate arrangements whereby TIS acts as investment adviser to certain
individuals and entities, including two insurance company subsidiaries of
Transamerica. Each of the individuals and entities for which TIS acts as
investment adviser has the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, the securities
held or purchased pursuant to such arrangements.

(13) Mr. Buchanan's beneficial ownership includes (i) 154,600 shares owned
beneficially by Mr. Buchanan's spouse, Meredith Gail Buchanan; (ii) 50,000
shares owned jointly with Mr. Buchanan's spouse, Meredith Gail Buchanan;
(iii) 22,000 shares held in trust for Mr. Buchanan's children for which
trusts Mr. Buchanan is sole trustee; (iv) 11,000 shares beneficially owned
by The Buchanan Family Foundation of which Mr. Buchanan is the sole
trustee; and (v) 47,540 shares issuable upon the exercise of options that
are exercisable on or within 60 days of March 15, 2002.

(14) Mr. Vick's beneficial ownership includes (i) 674,495 shares owned jointly
with Mr. Vick's spouse, Susan C. Vick; (ii) 22,000 shares held in trust for
Mr. Vick's children for which trusts Mr. Vick is the sole trustee; and
(iii) 5,700 shares beneficially owned by The Vick Foundation of which Mr.
Vick is the sole trustee.

(15) Includes shares issuable upon conversion of securities held by Holiday, a
limited liability company organized for the principal purpose of
participating in the Equity Transaction with Alterra, which acquired
110,000 shares of Series A Stock, $1,778,000 of Series A Debentures and
$3,782,000 of Series B Debentures in the Equity Transaction. The principal
place of business of Holiday is 3131 Elliott Avenue, Suite 500, Seattle,
Washington 98121. Holiday is managed by each of William Colson, Norman
Brenden, and Daniel R. Baty, each of whom may be deemed to beneficially own
the shares of Common Stock and Series A Stock beneficially owned by
Holiday.

(16) Mr. Kennedy's beneficial ownership includes shares issuable upon the
conversion of Series C Debentures held by Holiday Retirement Consulting,
LLC, which is owned by Holiday Retirement Corp. and Mr. Kennedy. Mr. Colson
is an executive officer, director and shareholder of Holiday Retirement
Corp., but disclaims beneficial ownership of these shares.

(17) Mr. Petty's beneficial ownership includes options to acquire 96,628 shares
exercisable within 60 days of March 15, 2002.

(18) Mr. Burleson's beneficial ownership includes options to acquire 8,141
shares exercisable within 60 days of March 15, 2002.

(19) Mr. Geonnotti's beneficial ownership includes options to acquire 18,192
shares exercisable within 60 days of March 15, 2002.

(20) Ms. Townsend serves as President of TD Capital Group, the Merchant Banking
Division of Toronto-Dominion. However, Ms. Townsend disclaims beneficial
ownership of any shares of the Company's capital stock beneficially owned
by Toronto-Dominion. See note (6) above with respect to shares beneficially
owned by Toronto-Dominion.

(21) Includes options to acquire 348,856 shares exercisable within 60 days of
March 15, 2002.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

COMPENSATION OF DIRECTORS

Directors of the Company who are not parties to services agreements with
the Company and are not employees of the Company are entitled to an annual
retainer of $20,000, payable in January of each year, together with attendance
fees of $1,000 and $500 per meeting for Board, Audit Committee and Compensation
Committee meetings attended in person or telephonically, respectively. Members
of the Special Committee of the Board formed to review matters that may involve
possible conflicts of interest of other members of the Board will each be
entitled to receive a supplemental fee of $25,000 for their service on this
committee through the first half of 2002. Prior to 2001, directors of the
Company who were not parties to services agreements with the Company and were
not employees of the Company were entitled to an annual retainer of $12,000,
payable in quarterly installments. In lieu of their annual retainer for the 36
month period commencing June 1, 1996, each of Messrs. Burleson, Haveman, and
Tubergen were granted a non-qualified stock option pursuant to the 1995 Plan to
purchase up to 12,420 shares of the Common Stock at an exercise price of $8.69
per share, such options vesting one-third on June 1, 1997, one-third on June 1,
1998 and one-third on June 1, 1999, and expiring on May 8, 2006. In October
1998, each of Messrs. Burleson, Haveman, Petty and Tubergen, each of whom were
non-employee directors, were granted a non-qualified stock option pursuant to
the 1995 Plan to purchase 8,000 shares of the Common Stock at an exercise price
of $19.81 per share, which options vest 25% per year on each of the first,
second, third and fourth anniversaries of the date of grant, subject to
accelerated vesting in the event of a change in control. Directors are also
entitled to reimbursement of reasonable out-of-pocket expenses incurred by them
in attending meetings of the Board of Directors.

SUMMARY COMPENSATION TABLE

The following table sets forth the cash and non-cash compensation awarded
or paid by the Company for services rendered during each of the years in the
three year period ended December 31, 2001 to its Chief Executive Officer and to
its other most highly compensated executive officers other than the Chief
Executive Officer who are required to be included therein ("Named Executives").

<Table>
<Caption>
LONG-TERM
COMPENSATION
AWARDS(1)
SECURITIES
OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION OPTIONS(#)
- --------------------------- ---- --------- -------- ------------ ------------

Patrick F. Kennedy.......................... 2001 -- -- -- --
Chief Executive Officer and 2000 -- -- -- --
President(2) 1999 -- -- -- --
Steven L. Vick.............................. 2001 $362,579 $150,000 $ 79,854 500,000
Former President and 2000 269,415 225,000 -- --
Chief Operating Officer(3) 1999 273,367 -- -- 44,757
</Table>

Chet H. Bradeen............................. 2001 $109,230 $ 55,000 -- --
Senior VP of Operations(4) 2000 -- -- -- --
1999 -- -- -- --
Anthony R. Geonnotti, Jr.................... 2001 $178,695 $ 24,153 -- --
Senior Vice President 2000 169,300 20,183 -- 10,000
1999 112,173 12,107 -- --
Mark W. Ohlendorf........................... 2001 $346,291 $160,000 $181,776 500,000
Chief Financial Officer and 2000 278,919 225,000 -- --
Senior Vice President 1999 221,743 -- -- --
Andrea L. Peck.............................. 2001 $251,307 $ 17,500 -- --
Senior VP of Employee 2000 50,639 7,500 -- --
Services 1999 -- -- -- --
</Table>

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

(1) Represents options granted under the Company's Amended and Restated 1995
Incentive Compensation Plan (the "1995 Plan"). Generally, subject to
accelerated vesting upon a change in control, one-fourth of the options
become exercisable on each of the first through fourth anniversaries of the
grant date, except with respect to (i) options granted to these individuals
in 1998 which became exercisable 50% on the second anniversary of the grant
date, 75% on the third anniversary of the grant date and 100% on the fourth
anniversary of the grant date, (ii) options granted to Messrs. Vick and
Ohlendorf prior to November 1, 2000, the date of their new employment
agreements, all of which expired to the extent not exercised prior to
January 15, 2001, and (iii) options granted to Mr. Vick, all of which, to
the extent not exercised by November 30, 2000 and February 15, 2002,
respectively, have expired.

(2) Mr. Kennedy was elected to the position of Chief Executive Officer on
November 2, 2001 and the position of President on January 18, 2002. Mr.
Kennedy's services are provided to the Company pursuant to a Consulting
Services Agreement between the Company and Holiday Retirement Consulting,
LLC. See "Consulting and Employment Agreements."

(3) Mr. Vick resigned as an executive officer and director of the Company in
January 2002. The terms of Mr. Vick's separation arrangement with the
Company are described under the caption "Consulting and Employment
Agreements."

(4) Mr. Bradeen joined the Company in June 2001.

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth information concerning options issued to the
Named Executives during 2001.

<Table>
<Caption>
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS EXERCISE
UNDERLYING GRANTED IN 2001 PRICE PER EXPIRATION GRANT DATE
NAME OPTIONS GRANTED TO EMPLOYEES SHARE DATE PRESENT VALUE(3)
- ---- --------------- --------------- --------- ---------- ----------------

Patrick F. Kennedy............... -- -- -- -- --
Steven L. Vick(1)................ 500,000 50% $1.31 1/5/11 $440,000
Chet H. Bradeen.................. -- -- -- -- --
Anthony R. Geonnotti, Jr. ....... -- -- -- -- --
Mark W. Ohlendorf(2)............. 500,000 50% $1.31 1/5/11 $440,000
Andrea L. Peck................... -- -- -- -- --
</Table>

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

(1) Represents options granted to Mr. Vick on January 5, 2001 pursuant to his
employment agreement. The options provided for three-year vesting, subject
to special accelerated vesting in the event Mr. Vick's employment was
terminated under certain circumstances and full vesting in the event of a
"change of control" of the Company. Pursuant to Mr. Vick's separation
agreement, all outstanding options granted to Mr. Vick were extinguished as
of February 15, 2002.

(2) Represents options granted to Mr. Ohlendorf on January 5, 2001 pursuant to
this employment agreement. The options provide for three-year vesting,
subject to special accelerated vesting in the event Mr. Ohlendorf's
employment is terminated under certain circumstances and full vesting in the
event of a "change of control" of the Company.

(3) The Black-Scholes option pricing model was chosen to estimate the grant date
present value of the options set forth in this table. The Company's use of
this model should not be construed as an endorsement of its accuracy at
valuing options. Accordingly, there is no assurance that the value realized
by an executive, if any, will be at or near the value estimated by the
Black-Scholes model. Future compensation resulting from option grants is
based solely on the performance of the Company's stock price. The following
weight-averaged assumptions were made for purposes of calculating the
original Grant Date Present Value for options granted by the Company: an
option term of ten years, average volatility of 50%, dividend yield of 0.0%,
a risk-free interest rate of 5.00%, and a projected exercise period of seven
years.

2001 AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES

The following table sets forth information concerning the value of options
exercised by the Named Executives during 2001 and the value at December 31, 2001
of unexercised options held by each such officer.

<Table>
<Caption>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY(1)
NUMBER OF OPTIONS OPTIONS AT
SHARES AT 12/31/01 12/31/01
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ------------- ---------------

Patrick F. Kennedy........................... -- -- -- --
Steven L. Vick............................... -- -- --/500,000 0/0
Chet H. Bradeen.............................. -- -- -- --
Anthony R. Geonnotti, Jr..................... -- -- 15,692/11,250 0/0
Mark W. Ohlendorf............................ -- -- --/500,000 0/0
Andrea L. Peck............................... -- -- -- --
</Table>

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

(1) Calculated on the basis of the fair market value of the underlying
securities on December 31, 2001 ($0.11 per share) minus the exercise price.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Company's Compensation Committee is comprised of Timothy J. Buchanan,
Robert Haveman, Ronald G. Geary and William G. Petty, Jr. Mr. Buchanan served as
President of the Company from October 1997 to August 1998 and as Vice Chairman
of the Board from August 1998 to May 2000. Mr. Haveman served as Vice Chairman
of the Board from May 2000 to November 2000 and as President of the Company from
November 2000 to January 2001. Mr. Petty served as Chairman of the Board from
December 1993 to May 2000 and as Chief Executive Officer of the Company from
December 1993 to April 1996.

On March 5, 2001, the Company closed on a $7.5 million Bridge Loan provided
by RDVEPCO, Holiday, HBK Master Fund and Toronto Dominion. The Bridge Loan has a
six-month term and bears interest at an escalating interest rate, commencing at
10% per annum for the first three months, 11% per annum for the next three
months and, if the maturity of the Bridge Loan is extended, escalating by
one-half of one percent for each month thereafter. The Bridge Loan is secured by
first mortgages on two residences in construction, three vacant residences held
for disposition and several parcels of raw land.

At the Company's option, the six-month term of the loan was extended by an
additional six months whereupon the Bridge Loan became convertible into
convertible subordinated debentures of the Company having rights and terms
substantially similar to the Company's Series B Debentures, but having a
conversion price equal to $75 per share of Series B Stock (a Common Stock
equivalent price of $0.75 per share). Pursuant to the agreements with the bridge
lenders, the bridge lenders will be entitled to participate in any transaction
involving the issuance by the Company of equity or equity-linked securities
during the term of the Bridge Loan. In April 2002, the Bridge Loan was amended
to fix the annual interest rate at 9% and to extend the maturity date to January
5, 2003

As an inducement to make the Bridge Loan, the Company issued the bridge
lenders warrants to purchase an aggregate of 60,000 shares of a newly designated
class of the Company's preferred stock, the Series B-1 Non-Voting Participating
Preferred Stock (the "Series B-1 Preferred Stock"), having rights and terms
substantially similar to the Company's Series B preferred stock. Like the Series
B preferred stock, each share of the Series B-1 Preferred Stock underlying the
warrants has rights, other than voting rights, substantially similar to 100
shares of Common Stock of the Company. The five-year warrants are exercisable at
a price of $75 per share for 20,000 shares of the Series B-1 Preferred Stock,
$100 per share for 20,000 shares of the Series B-1 Preferred Stock and $125 per
share for 20,000 shares of the Series B-1 Preferred Stock. Pursuant to the
anti-dilution provisions operative in the $229.5 million of outstanding PIK
Debentures and Series A Stock originally issued in the Equity Transaction, as a
result of the issuance of these warrants and the Bridge Loan becoming
convertible into convertible subordinated debentures due to the extension of the
term of this Bridge Loan, effective as of December 31, 2001, the effective
conversion price for these debentures and the Series A Stock decreased from
$4.00 to $2.68 per share of Common Stock for the Series A and Series C
Debentures and the Series A Stock and from $400 to $268 per share of Series B
preferred stock for the Series B Debentures. The actual conversion price for the
Series A and C Debentures and the Series A stock remains at $4.00 per share and
for the Series B Debentures remains at $400 per share; however, upon conversion
of these convertible securities the holder thereof will now also receive shares
of Series B-1 Preferred Stock, in addition to Common Stock, in such amounts as
to provide such holder an equity interest in the Company as though the
conversion price for the Series A and C Debentures and Series A Stock on the one
hand, and the Series B Debentures on the other hand, were decreased to $2.68 and
$268 per share, respectively.

Mr. Haveman, a member of the Compensation Committee, may be deemed to
beneficially own an interest in RDVEPCO. See "Security Ownership of Management
and Certain Beneficial Owners."

There are no compensation committee interlocks.

CONSULTING AND EMPLOYMENT AGREEMENTS

Consulting Services Agreement with Holiday Retirement Consulting. In
November 2001, the Company entered into a Consulting Services Agreement with
Holiday Retirement Consulting Services, LLC ("Holiday

Consulting"), an affiliate of Holiday Retirement Corp. Pursuant to the
Consulting Services Agreement, Holiday Consulting is providing management and
consulting services to the Company, including the services of Patrick F.
Kennedy, the Company's Chief Executive Officer and President, as well as
consulting and advisory services provided by other Holiday Consulting personnel.
The Holiday Consulting Services Agreement has a seven-month initial term,
subject to renewal for an additional six months upon the Company's request, and
may be terminated by either party upon 30 days' notice to the other. Pursuant to
this agreement, Holiday Consulting is entitled to receive a fee of $60,000 per
month together with reimbursement of out-of-pocket expenses incurred by Holiday
Consulting personnel in connection with this agreement. In addition, Holiday
Consulting is entitled to earn a $1.5 million cash flow success fee if, during
the term of this agreement, the Company is able to achieve cash flow breakeven
for three consecutive calendar months (reflecting payment of all scheduled debt
service, but excluding debt service on the Company's outstanding Subordinated
Debentures and excluding restructuring charges). Pursuant to the Consulting
Services Agreement, Holiday Consulting has agreed to refrain, during the
twelve-month period following the termination of this agreement, from disclosing
or utilizing confidential information of Alterra and from soliciting for
employment persons employed by Alterra in a managerial position. During 2001,
$120,000 of consulting fees were paid to Holiday Consulting pursuant to this
agreement.

Employment Agreement with Chet H. Bradeen. In June 2001, the Company
entered into an employment agreement with Chet Bradeen with a term that expires
upon the earlier of the third anniversary of the agreement or termination of
employment. Pursuant to the agreement, Mr. Bradeen serves as Senior Vice
President of Operations of the Company. Pursuant to the agreement, Mr. Bradeen
is to receive an annual base salary of not less than $250,000, to be reviewed
annually by the Board of Directors, Chief Executive Officer, President or Chief
Financial Officer. Mr. Bradeen is also entitled to an incentive bonus of up to
50% of his base salary, to be determined by the Board of Directors, the Chief
Executive Officer, President or Chief Operating Officer and, subject to approval
by the President and Chief Operating Officer, may be granted a retention bonus,
to be paid starting in December 2001. If Mr. Bradeen's employment is terminated
by the Company other than for cause or by Mr. Bradeen for "good reason" (as
defined in the agreement), Mr. Bradeen is entitled to (i) continue to receive
payment of salary and benefits under this agreement for the remainder of the
agreement term, but not to exceed twelve months and (ii) receive, within 30 days
of such termination provided Mr. Bradeen shall then execute a general release
for the benefit of the Company, 75% of an amount (the "Base Sum") equal to the
sum of his then current annual salary, any approved but unpaid applicable bonus,
the premiums for all medical and other insurance coverages and his annual
automobile allowance. An additional 25% of the Base Sum will be payable at the
end of the twelve months following his termination. Finally, the employment
agreement provides that Mr. Bradeen will not disclose certain proprietary
information belonging to the Company or, in certain circumstances, otherwise
compete with the Company for a period of twelve months following his termination
of employment.

Employment Agreement with Steven L. Vick. As of November 1, 2000, the
Company entered into an employment agreement with Mr. Vick with a term that
expires on December 31, 2003. Pursuant to the employment agreement, Mr. Vick
served the Company as Chief Operating Officer until his resignation on February
15, 2002. The employment agreement provided that Mr. Vick shall receive a base
salary in an amount determined by the Board; provided, however, that in no event
may such base salary be less than $350,000 in 2001. Pursuant to the agreement,
Mr. Vick received an incentive bonus for 2000 in the amount of $125,000 and was
entitled to an incentive bonus in future years based on an incentive
compensation program approved by the Compensation Committee of the Board of
Directors. Pursuant to a separation agreement between Mr. Vick and the Company
setting forth the terms of the separation from Alterra, Mr. Vick was awarded an
incentive bonus for 2001 in the amount of $150,000. Pursuant to Mr. Vick's
employment agreement, Mr. Vick received a non-qualified option grant for 500,000
shares on January 5, 2001, which options were exercisable at $1.31 per share and
which options vested over a three-year period, subject to special accelerated
vesting in the event Mr. Vick's employment was terminated under certain
circumstances and full vesting in the event of a "change of control" of the
Company, as defined in the employment agreement. Pursuant to Mr. Vick's
separation agreement, all outstanding options granted to Mr. Vick were
extinguished as of February 15, 2002. In addition, pursuant to Mr. Vick's
employment agreement, the Company awarded Mr. Vick 33,378 shares of Common Stock
on January 5, 2001, which shares were

"restricted stock" under the Company's 1995 Plan and, as such, were subject to
being forfeited to the Company if the executive's employment with the Company
terminated under certain circumstances prior to the lapsing of such
restrictions, which occurred over a three-year term (subject to certain
acceleration provisions). Upon his resignation from the Company, 22,252 of Mr.
Vick's restricted shares were forfeited in accordance with the terms of the
restricted stock grant. During the term of his employment by the Company
pursuant to this agreement, the Company agreed to nominate Mr. Vick to serve as
a director of the Company. Finally, Mr. Vick's separation agreement provides
that Mr. Vick will not disclose or use certain proprietary information belonging
to the Company or solicit customers or certain management employees of the
Company for a period of twelve months following his termination of employment.

Employment Agreement with Mark W. Ohlendorf. As of November 1, 2000, the
Company entered into an employment agreement with Mr. Ohlendorf with a term that
expires on December 31, 2003. Pursuant to the employment agreement, Mr.
Ohlendorf serves the Company as Chief Financial Officer. The agreement is
automatically renewed for additional consecutive one-year terms unless timely
notice of non-renewal is given by either the Company or Mr. Ohlendorf. The
employment agreement provides that Mr. Ohlendorf shall receive a base salary in
an amount determined by the Board; provided, however, that in no event may such
base salary be less than $325,000 in 2001, $340,000 in 2002 and $350,000 in
2003. Pursuant to the agreement, Mr. Ohlendorf received incentive bonuses for
2001 and 2000 in the amount of $160,000 and $125,000, respectively, and is
entitled to an incentive bonus in future years based on an incentive
compensation program approved by the Compensation Committee of the Board of
Directors. Pursuant to this employment agreement, Mr. Ohlendorf received a
non-qualified option grant for 500,000 shares on January 5, 2001, which options
are exercisable at $1.31 per share and which options vest over a three-year
period, subject to special accelerated vesting in the event Mr. Ohlendorf's
employment is terminated under certain circumstances and full vesting in the
event of a "change of control" of the Company, as defined in the employment
agreement. In addition, pursuant to the employment agreement, the Company
awarded Mr. Ohlendorf 75,980 shares of Common Stock on January 5, 2001, which
shares are "restricted stock" under the Company's 1995 Plan and, as such, are
subject to being forfeited to the Company if the executive's employment with the
Company terminates under certain circumstances prior to the lapsing of such
restrictions, which will occur over a three-year term (subject to certain
acceleration provisions). Mr. Ohlendorf is entitled to a payment equal to 36
months of his then current base salary plus annualized bonus pay during the
contract term in the event of a "change of control" of the Company if his
employment is thereafter terminated by the Company without "cause" or by him for
"good reason." Absent a change of control, if Mr. Ohlendorf's employment is
terminated by the Company "without cause" or by him for "good reason," then he
is eligible to continue to receive his base salary (together with any applicable
bonus) and employee benefits for a period of 18 months. Finally, the employment
agreement provides that Mr. Ohlendorf will not disclose certain proprietary
information belonging to the Company or otherwise compete with the Company for a
period of twelve months following his termination of employment except for
termination by the Company without cause or by Mr. Ohlendorf for "good reason."

Employment Agreement with Andrea L. Peck. In June 2001, the Company
entered into a post-employment compensation agreement with Andrea Peck. Pursuant
to the agreement, Ms. Peck serves the Company as Senior Vice President of
Employee Services. The agreement remains in effect until the modification of the
agreement or until the expiration of the term of post-employment payments
contemplated by the agreement. The agreement provides that Ms. Peck shall
receive an annual base salary of not less than $210,000, to be reviewed
periodically by the Company's Board of Directors, Chief Operating Officer or
Chief Financial Officer. If Ms. Peck's employment is terminated due to a
reduction in work force and the Company does not offer her another position of
comparable employment, then the Company agrees to continue to pay Ms. Peck's
base salary for a 52-week period following termination. Pursuant to the
agreement, Ms. Peck has agreed not to disclose certain proprietary information
belonging to the Company or otherwise compete with the Company for a period of
52 weeks following her termination of employment.

1995 INCENTIVE COMPENSATION PLAN

The 1995 Plan provides key employees (who may also be directors) of the
Company and its subsidiaries performance incentives and also provides a means of
encouraging stock ownership in the Company by such persons. Under the 1995 Plan,
key employees of the Company or its affiliates are eligible to receive stock
options to purchase shares of, and grants of shares of "restricted stock" of,
the Company's Common Stock. The 1995 Plan currently allows a maximum number of
shares to be subject to options and restricted stock awards of 2,500,000.
Options and restricted stock awards are granted under the 1995 Plan on the basis
of the optionee's contribution to the Company, and no option may exceed a term
of ten years. Options granted under the 1995 Plan may be either incentive stock
options or options that do not qualify as incentive stock options. The Company's
Compensation Committee is authorized to designate the recipients of options and
restricted stock grants, the dates of grants, the number of shares subject to
options or grants, the option price, the terms of payment on exercise of the
options, the vesting and restriction provisions and the time during which the
options may be exercised. The price of incentive stock options granted under the
1995 Plan cannot be less than the fair market value of the shares at the time
the options are granted.

In addition, in connection with the 1997 merger of the Company and Sterling
House Corporation, the Company assumed options to acquire shares of the Common
Stock of Sterling (the "Assumed Options"), and (as of April 10, 2001) the
Assumed Options represented options to acquire an aggregate of 48,994 shares of
Common Stock.

Including the Assumed Options and non-plan options, as of March 29, 2002,
options to purchase an aggregate of 1,198,017 shares of Common Stock were
granted and outstanding at a weighted average exercise price of $7.61 per share,
of which options to purchase 864,684 shares were exercisable at such date.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Compensation Committee, as it was comprised during 2001, has furnished
the following report on the Company's executive compensation program. The report
describes the Compensation Committee's compensation policies applicable to the
Company's executive officers and the basis on which compensation is determined
for the Company's Chief Executive Officer and the other executive officers.

COMPENSATION PHILOSOPHY

In general, the compensation policies adopted by the Compensation Committee
are designed to attract and retain executives capable of leading the Company to
meet its business objectives. Each year, the Compensation Committee reviews the
performance of the Company and compares such performance to specified internal
and external performance standards. The Compensation Committee has developed the
following compensation guidelines as the principles upon which compensation
decisions are made:

- Provide incentives to increase corporate performance, improve cash flow
and complete the Company's financial and operational restructuring; and

- Provide a competitive total compensation package that enables the Company
to attract, motivate and retain key executives. In general, the Committee
seeks to maintain compensation at least at the median compensation
provided by its peer group competitors.

EXECUTIVE COMPENSATION COMPONENTS

The Company's executive compensation program is comprised of fixed and
performance-based compensation. The fixed component is the executive officer's
base salary, and the performance-based component is comprised of awards of stock
options and incentive bonuses.

Base Salary. Subject to the terms of the employment agreements, base
salaries for the Company's executive officers are approved annually with the
objective that the salaries be generally consistent with median salary rates for
comparable positions in companies of similar size within the healthcare and/or
assisted living industries. Among others, the companies included in the peer
index in the stock performance graph

below are included in this salary survey data. An evaluation of competitive base
salary levels must take into account the extent to which compensation paid by
various companies is weighted between base salary and incentive compensation.
Individual performance over time is also taken into account in determining base
salaries. The base salary rate of the Company's executive officers (other than
the Chief Executive Officer) are reviewed and approved by the Compensation
Committee based on recommendations made by the Chief Executive Officer and on
industry salary information.

Incentive Bonuses. To date, the Company has not adopted a formal incentive
bonus plan, but the Compensation Committee has recommended that the Company's
executive officers receive cash bonuses in prior years based on the Company's
overall performance, with the amount awarded to each executive based on the
Compensation Committee's evaluation of each such executive's performance and
relative contribution. In addition, those executive officers subject to
employment agreements with the Company receive bonuses pursuant to the terms of
such agreements, most of which provide for the payment of bonuses at the
discretion of the Board if certain targeted earnings or cash flow is achieved.
Based on the Company's performance, the Compensation Committee recommends to the
Board the payment of bonuses to such executives consistent with such agreements.
Incentive bonuses paid to the Named Executives applicable to 2001 were based
largely on each executive's performance in comparison to pre-established goals
and objectives. These goals and objectives were established at the beginning of
2001 and measured performance in various areas including cash flow improvement,
progress on asset sales, and improvement in customer and employee satisfaction.
The Company intends to continue to use such goal and objective based incentive
compensation arrangements in 2002.

Stock Options. The Compensation Committee has periodically granted the
Chief Executive Officer and the executive officers stock options under the 1995
Plan. The options are granted based on the optionee's contribution to the
Company. Due to the uncertain value of the Company's equity securities until
completion of the Company's pending restructuring, with the exception of stock
options granted pursuant to employment agreements, the Compensation Committee
has not elected to award any option grants to the Named Executives relating to
2001 performance.

CHIEF EXECUTIVE OFFICER COMPENSATION

Until Patrick F. Kennedy was elected Chief Executive Officer in November
2001, the Company did not have a Chief Executive Officer during 2001. Steven L.
Vick served as President and Chief Operating Officer of Alterra during 2001, and
as such was the senior executive officer of the Company until Mr. Kennedy was
elected Chief Executive Officer in November 2001. During 2001, Mr. Vick was
compensated pursuant to the terms of his employment agreement, which was entered
into as of November 1, 2000. This agreement provided that Mr. Vick's base salary
in 2001 was to be no less than $350,000 and that he was to be entitled to an
incentive bonus based on an incentive compensation program approved by the
Compensation Committee. In connection with Mr. Vick's resignation from the
Company on February 15, 2002, the Company and Mr. Vick entered into a separation
agreement pursuant to which Mr. Vick was awarded an incentive bonus for 2001 in
the amount of $150,000.

Mr. Kennedy does not receive any compensation from the Company for his
services as an executive officer of Alterra. His services to Alterra are
provided pursuant to the terms of the Holiday Consulting Agreement, which was
originally entered into as of November 1, 2001. See "Consulting and Employment
Agreements."

Submitted by the Compensation
Committee
(as it was comprised during 2001)
Robert Haveman, Chairman
Timothy J. Buchanan
Ronald G. Geary
William G. Petty, Jr.

Pursuant to Securities and Exchange Commission ("SEC") regulations, this
report is not "soliciting material," is not deemed filed with the SEC and is not
to be incorporated by reference in any filing of the Company under the
Securities Act of 1933 (the "Securities Act") or the Securities Exchange Act of
1934 (the "Exchange Act").

AUDIT COMMITTEE REPORT

The Audit Committee is comprised of Timothy J. Buchanan, Gene E. Burleson
and William G. Petty, Jr., none of whom are officers of the Company.

Pursuant to the rules of the American Stock Exchange (AMEX) regarding the
composition of audit committees, AMEX-listed companies are required to have an
audit committee comprised of at least three members, each of whom is able to
read and understand fundamental financial statements, as well as at least one
member of the audit committee that has past employment experience in finance or
accounting, professional certification in accounting or any other comparable
experience which results in the individual's financial sophistication, including
service as a chief executive officer, chief financial officer or other senior
officer position with financial oversight responsibilities. The Board of Alterra
has determined that the Company's Audit Committee, as currently comprised, meet
these standards.

The AMEX rules also require that all members of an AMEX-listed company's
audit committee be "independent directors," as defined in the AMEX rule,
although the AMEX rules do permit one member of the audit committee who is not
independent in circumstances in which the company's board determines that the
inclusion of such member is in the best interest of the company. The Board of
Alterra has determined that each of Messrs. Burleson and Petty are independent
directors, as defined by the AMEX rules. In light of the fact that Mr. Buchanan
was employed by the Company within the past three years (Mr. Buchanan was an
employee of the Company until October 2000), he is not an independent director
under the AMEX rule. The Alterra Board has determined, however, that it is
nonetheless in the best interest of the Corporation and its stockholders for Mr.
Buchanan to serve on the Audit Committee in light of his experience as the chief
executive officer of Sterling House Corporation, a publicly-owned assisted
living company, prior to its merger with the Company in 1997, and his status as
a significant holder of Common Stock of the Company. The Board does not believe
that Mr. Buchanan's prior employment by the Company creates any impairment of
his independence in serving as a member of the Audit Committee.

The Board of Directors has adopted a written charter for the Audit
Committee, which is included as an Appendix to this Proxy Statement. Management
is responsible for the Corporation's internal controls and the financial
reporting process. The independent accountants are responsible for performing an
independent audit of the Corporation's consolidated financial statements in
accordance with generally accepted auditing standards and to issue a report
thereon. The Committee's responsibility is to monitor and oversee these
processes.

In this context, the Committee has met and held discussions with management
and the independent accountants. Management represented to the Committee that
the Corporation's consolidated financial statements were prepared in accordance
with generally accepted accounting principles, and the Committee has reviewed
and discussed the consolidated financial statements with management and the
independent accountants. The Committee also discussed with the independent
accountants matters required to be discussed by Statement on Auditing Standards
No. 61 (Communication with Audit Committees), including a discussion of
significant accounting policies.

KPMG LLP, the Corporation's independent accountants, also provided to the
Committee the written disclosures required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees), and the
Committee discussed with the independent accountants that firm's independence.

Based on the Committee's discussion with management and the independent
accountants and the Committee's review of the representation of management and
the report of the independent accountants to the Committee, the Committee
recommended that the Board of Directors include the audited consolidated
financial statements in the Corporation's Annual Report on Form 10-K for the
year ended December 31, 2001 filed with the Securities and Exchange Commission.

Submitted by the Audit Committee
Timothy J. Buchanan
Gene E. Burleson
William G. Petty

Pursuant to SEC regulations, this report is not "soliciting material," is
not deemed filed with the SEC and is not to be incorporated by reference in any
filing of the Company under the Securities Act or the Exchange Act.

PERFORMANCE GRAPH

The following graph compares the cumulative total return from an investment
in the Company's Common Stock with the cumulative total return of the Standard
and Poor's 500 Stock Index and two indices comprised of self-constructed peer
groups of companies. The graph assumes the investment of $100 in the Company's
Common Stock on December 31, 1996. The graph also assumes investments on the
same date of $100 each in the S&P 500 Index and the companies comprising the two
peer group indices. The cumulative total return assumes the reinvestment of
dividends.

The old peer group index is based on the total return for investments in
the common stock of ARV Assisted Living, Inc., Assisted Living Concepts, Inc.,
CareMatrix Corporation, Emeritus Corporation and Sunrise Assisting Living, Inc.
The new peer group index is based on the total return for investments in the
common stock of American Retirement Corporation, ARV Assisted Living, Inc.,
Capital Senior Living, Emeritus Corporation and Sunrise Assisted Living, Inc.
Assisted Living Concepts, Inc. and CareMatrix Corporation were both excluded
from the new peer group as a result of having filed for bankruptcy. In future
years, we intend to substitute the new peer group index for the old peer group
index.

[ALTERRA HEALTHCARE CORP GRAPH]

<Table>
<Caption>
CUMULATIVE TOTAL RETURN
---------------------------------------------------------------------
8/6/96 9/96 12/96 3/97 6/97 9/97 12/97 3/98

ALTERRA HEALTHCARE CORPORATION 100.00 107.69 110.58 125.00 172.60 186.54 227.40 254.71
S & P 500 100.00 107.86 116.85 119.98 140.93 151.48 155.83 177.57
NEW PEER GROUP 100.00 110.05 101.69 97.63 119.95 127.14 142.01 150.41
OLD PEER GROUP 100.00 109.97 100.93 106.83 134.88 140.02 160.03 163.42

<Caption>
CUMULATIVE TOTAL RETURN
---------------------------------------------------------------------
6/98 9/98 12/98 3/99 6/99 9/99 12/99 3/00

ALTERRA HEALTHCARE CORPORATION 207.69 205.77 261.54 153.85 105.77 68.27 63.95 30.77
S & P 500 183.43 165.18 200.36 210.34 225.17 211.11 242.53 248.09
NEW PEER GROUP 122.21 108.26 140.45 114.78 100.31 76.04 46.98 42.37
OLD PEER GROUP 135.46 119.05 162.22 128.10 98.20 67.47 37.22 32.50

<Caption>
CUMULATIVE TOTAL RETURN
------------------------------------------------------------
6/00 9/00 12/00 3/01 6/01 9/01 12/01

ALTERRA HEALTHCARE CORPORATION 15.38 16.35 7.69 3.92 1.69 1.38 0.85
S & P 500 241.50 239.16 220.44 194.31 205.68 175.49 194.24
NEW PEER GROUP 45.50 48.37 50.15 41.82 53.70 52.89 58.97
OLD PEER GROUP 39.54 43.79 48.52 38.41 53.28 52.21 58.61
</Table>

Pursuant to SEC regulations, this performance graph is not "soliciting
material," is not deemed filed with the SEC and is not to be incorporated by
reference in any filing of the Company under the Securities Act or the Exchange
Act

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In November 2001, the Company entered into a Consulting Services Agreement
with Holiday Consulting, an affiliate of Holiday Retirement Corp. Pursuant to
the Consulting Services Agreement, Holiday Consulting is providing management
and consulting services to the Company, including the services of Patrick F.
Kennedy, the Company's Chief Executive Officer and President, as well as
consulting and advisory services provided by other Holiday Consulting personnel.
The terms of this agreement are summarized under the caption "Executive
Compensation -- Consulting and Employment Agreements." Mr. Kennedy and William
Colson, a director of Alterra, are each executive officers, directors and
stockholders of Holiday Retirement Corp. During 2001, $120,000 of consulting
fees were paid to Holiday pursuant to this agreement.

In the past, the Company has retained a construction management/development
firm active in the Pennsylvania, New Jersey and Delaware markets to assist the
Company in developing new residences in these markets. Anthony R. Geonnotti,
Jr., a Senior Vice President of the Company, is the President of this firm and
owns approximately 5% of the firm. Mr. Geonnotti's wife owns approximately 30%
of this firm. Development and construction expenditures, including construction
management fees, paid by the Company to this firm during 2001 were $1.4 million.

At the Company's option, the six-month term of the Bridge Loan was extended
by an additional six months whereupon the Bridge Loan became convertible into
convertible subordinated debentures of the Company having rights and terms
substantially similar to the Company's Series B Debentures, but having a
conversion price equal to $75 per share of Series B Stock (a Common Stock
equivalent price of $0.75 per share). Pursuant to the agreements with the bridge
lenders, the bridge lenders will be entitled to participate in any transaction
involving the issuance by the Company of equity or equity-linked securities
during the term of the Bridge Loan. In April 2002, the Bridge Loan was amended
to fix the annual interest rate at 9% and to extend the maturity date to January
5, 2003

INDEPENDENT ACCOUNTANTS

KPMG LLP has been the independent accounting firm that audits the financial
statements of the Company since 1993. Representatives of KPMG LLP are expected
to be present at the Meeting, will have an opportunity to make a statement if
they desire to do so and will be available to respond to appropriate questions
from stockholders.

In addition to performing the audit of the Company's consolidated financial
statements, KPMG LLP provided various other services during 2001. The aggregate
fees billed for 2001 for each of the following categories of services are set
forth below:

<Table>

- - Audit and review of the Company's 2001 consolidated
financial statements (including quarterly reports)........ $289,000.00
- - All other services........................................ $110,000.00
</Table>

"All other services" includes (i) tax planning and the preparation of tax
returns of the Company and its subsidiaries; (ii) evaluation of the Company's
ability to utilize net operating loss carry forwards in future periods; (iii)
advice regarding tax and financial reporting issues in connection with the
Company's ongoing restructuring activities; and (iv) evaluating the effects of
various accounting issues and changes in professional standards. KPMG LLP did
not provide any services related to financial information systems design and
implementation during 2001.

The Audit Committee has reviewed the services provided by KPMG LLP and the
related fees and has considered whether the provision of non-audit services is
compatible with maintaining the independence of KPMG LLP.

Based upon the approval of the Audit Committee, the Company has appointed
KPMG LLP to audit the 2002 financial statements.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires the Company's directors,
executive officers, and persons who own beneficially more than 10% of a
registered class of the Company's equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of such
securities of the Company. Directors, executive officers and greater than 10%
stockholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) reports they file.

To the Company's knowledge, based solely on its review of the copies of
such reports furnished to the Company and representations that no other reports
were required, all Section 16(a) filing requirements applicable to its
directors, executive officers and greater than 10% beneficial owners were
complied with during 2001.

ANNUAL REPORT

The Company's 2001 Annual Report to Shareholders is enclosed with this
Proxy Statement. The Annual Report is not a part of the proxy soliciting
material. Additional copies of such Annual Report, which constitutes the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2001, as filed with the Securities and Exchange Commission (exclusive of
documents incorporated by reference), are available without charge to
stockholders upon written request to the Company, Attention: Mark W. Ohlendorf,
10000 Innovation Drive, Milwaukee, Wisconsin 53226.

OTHER MATTERS

The Board does not know of any other matters which may come before the
Meeting. If any other matters are properly presented to the Meeting, it is the
intention of the persons named in the accompanying proxy to vote, or otherwise
to act, in accordance with their best judgment on such matters.

STOCKHOLDER PROPOSALS

Proposals of stockholders intended to be presented at the Company's 2003
Annual Meeting of Stockholders must be received by the Company no later than
March 1, 2003, in order to be included in the proxy statement and proxy relating
to that annual meeting.

Whether or not you plan to attend, you are urged to complete, sign and
return the enclosed proxy in the accompanying envelope. A prompt response will
greatly facilitate arrangements for the Meeting, and your cooperation will be
appreciated. Stockholders who attend the Meeting may vote their shares
personally even though they have sent in their proxies.

By Order of the Board of Directors,

/s/ Mark W. Ohlendorf
Mark W. Ohlendorf
Secretary

Milwaukee, Wisconsin

April 30, 2002

APPENDIX A

ALTERRA HEALTHCARE CORPORATION

AUDIT COMMITTEE CHARTER
ADOPTED AS OF JUNE 12, 2000
---------------------

ARTICLE I.

PURPOSE

The audit committee assists the board of directors in fulfilling its
oversight responsibilities relating to the accounting and reporting practices of
the corporation. The audit committee's primary responsibilities are to serve as
an independent and objective party to review the corporation's auditing,
accounting and financial reporting processes. The audit committee will primarily
fulfill these responsibilities by carrying out the activities enumerated in
ARTICLE V of this charter.

ARTICLE II.

RELATIONSHIP WITH THE OUTSIDE AUDITORS

The corporation's outside auditor is ultimately accountable to the board of
directors and the audit committee. The board of directors has the ultimate
authority and responsibility to select, evaluate and replace the outside
auditors.

Management is responsible for preparing the corporation's financial
statements. The corporation's outside auditors are responsible for auditing the
financial statements. The activities of the audit committee are in no way
designed to supersede or alter these traditional responsibilities.

The corporation's outside auditors and management have more available time
and information about the corporation than does the audit committee.
Accordingly, the audit committee's role does not provide any special assurances
with regard to the corporation's financial statements, nor does it involve a
professional evaluation of the quality of the audits performed by the outside
auditors.

ARTICLE III.

COMPOSITION

The audit committee shall be comprised of three or more directors as
determined by the board. The board of directors shall also designate (or, if not
designated by the Board as a whole, the audit committee may elect) a chairperson
of the audit committee. Each member of the audit committee shall have no
relationship that might, in the opinion of the board of directors, interfere
with the exercise of his or her independent judgment. The members of the audit
committee shall satisfy at all times the requirements for audit committee
membership of any exchange on which the corporation's securities are listed or
of any applicable law (this provision being applicable with respect to the AMEX
audit committee membership requirements announced in the AMEX Bulletin dated
January 21, 2000, effective as of June 14, 2001). The board of directors shall
determine, in its business judgment, whether the members of the audit committee
satisfy all such requirements.

ARTICLE IV.

MEETINGS

The audit committee shall meet regularly and as circumstances dictate.
Regular meetings of the audit committee may be held without notice at such time
and at such place as shall from time to time be

A-1

determined by the chairperson of the audit committee, the Chairman of the Board,
the Chief Executive Officer, the President or the Secretary of the corporation.
Special meetings of the audit committee may be called by or at the request of
any member of the audit committee, any of the corporation's executive officers,
the secretary, the controller or the outside auditors, in each case on at least
twenty-four hours notice to each member.

As a general rule, the audit committee shall meet on a quarterly basis so
as to facilitate its review of quarterly and annual financial statements of the
corporation prior to their inclusion in reports to be filed with the Securities
and Exchange Commission.

If the board of directors, management or the outside auditors desire to
discuss matters in private, the audit committee shall meet in private with such
person or group.

A majority of the audit committee members shall constitute a quorum for the
transaction of the audit committee's business. Unless otherwise required by
applicable law, the corporation's charter or bylaws or the board of directors,
the audit committee shall act upon the vote or consent of a majority of its
members at a duly called meeting at which a quorum is present. Any action of the
audit committee may be taken by a written instrument signed by all of the
members of the audit committee. Meetings of the audit committee may be held at
such place or places as the audit committee shall determine or as may be
specified or fixed in the respective notices or waivers of a meetings. Members
of the audit committee may participate in audit committee proceedings by means
of conference telephone or similar communications equipment by means of which
all persons participating in the proceedings can hear each other, and such
participation shall constitute presence in person at such proceedings

ARTICLE V.

SPECIFIC ACTIVITIES

Without limiting the audit committee's authority, the audit committee shall
carry out the following specific activities.

SECTION 5.1 REVIEW OF DOCUMENTS AND REPORTS

(a) Review and reassess this charter at least annually.

(b) Review with management and the outside auditors the corporation's
Annual Reports on Form 10-K, including the corporation's year end financial
statements, before its filing with the Securities and Exchange Commission.
Consider whether the information contained in the Annual Reports on Form 10-K is
adequate and consistent with the members' knowledge about the corporation and
its operations. Recommend that the audited financial statements be included in
the Annual Report on Form 10-K.

(c) Review with management and the outside auditors the corporation's
quarterly financial statements to be included in the corporation's Quarterly
Reports on Form 10-Q prior to their filing with the Securities and Exchange
Commission.

SECTION 5.2 OUTSIDE AUDITORS

(a) Approve, acting on behalf of the board of directors, the selection of
the outside auditors, considering independence and effectiveness and approve the
fees and other compensation to be paid to the outside auditors. The audit
committee shall receive from the outside auditors the written disclosures
required by generally accepted auditing standards. On an annual basis, the audit
committee shall require the outside auditors to provide the audit committee with
a written statement delineating all relationships between the outside auditors
and the corporation. The audit committee shall actively engage in a dialogue
with the outside auditor with respect to any disclosed relationships or services
that may impact the objectivity and independence of the outside auditor. The
audit committee shall recommend that the board of directors take appropriate
action in response to the outside auditors' report to satisfy itself of the
outside auditors' independence.

A-2

(b) Review with the outside auditors prior to the annual audit the scope
and approach of the annual audit and after the annual audit, the results of such
audit.

(c) Request that the outside auditors inform the audit committee of any
fraud, illegal acts or deficiencies in internal control of which they become
aware and communicate certain required matters to the audit committee.

(d) Review with the outside auditors their performance and recommend to the
board of directors any proposed discharge of the outside auditors when
circumstances warrant.

(e) Direct and supervise special audit inquiries by the outside auditors as
the board of directors or the audit committee may request.

SECTION 5.3 FINANCIAL REPORTING PROCESSES

(a) Review significant accounting and reporting issues, including recent
professional and regulatory pronouncements or proposed pronouncements, and
understand their impact on the corporation's financial statements.

SECTION 5.4 PROCESS IMPROVEMENT

(a) Request that significant findings and recommendations made by the
outside auditors are received by the audit committee on a timely basis and, upon
receipt of such findings or recommendations, discuss such findings or
recommendations with management on a timely basis.

(b) Review any significant disagreement among management and the outside
auditors in connection with the execution of the annual audit or the preparation
of the financial statements.

SECTION 5.5 REPORTING RESPONSIBILITIES

(a) Regularly update the board of directors about audit committee
activities and make appropriate recommendations.

ARTICLE VI.

MISCELLANEOUS

The audit committee may perform any other activities consistent with this
charter, the corporation's charter and bylaws and governing law, as the audit
committee or the board deems necessary or appropriate.

A-3

PROXY FOR HOLDERS OF COMMON STOCK

PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 30, 2002

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF

ALTERRA HEALTHCARE CORPORATION

The undersigned appoints Patrick F. Kennedy and Mark W. Ohlendorf, and
each of them, with full power of substitution, the proxies and attorneys of the
undersigned, to vote as specified hereon at the Annual Meeting of Stockholders
(the "Annual Meeting") of Alterra Healthcare Corporation (the "Company") to be
held at the Radisson Hotel Milwaukee West, 2303 N. Mayfair Road, Wauwatosa,
Wisconsin on Thursday, May 30, 2002 at 8:00 a.m., Milwaukee time, and at any
adjournments or postponements thereof, with all powers (other than the power to
revoke the proxy or vote the proxy in a manner not authorized by the executed
form of proxy) that the undersigned would have if personally present at the
Annual Meeting, to act in their discretion upon any other matter or matters that
may properly be brought before the Annual Meeting and to appear and vote all the
shares of Common Stock of the Company that the undersigned may be entitled to
vote. The undersigned hereby acknowledges receipt of the accompanying Proxy
Statement and Annual Report to Stockholders, and hereby revokes any proxy or
proxies heretofore given by the undersigned relating to the Annual Meeting.

This proxy may be revoked at any time prior to the voting thereof.

UNLESS OTHERWISE MARKED, THIS PROXY WILL BE VOTED AS IF MARKED FOR THE
FOLLOWING PROPOSALS.

The Board of Directors recommends a vote FOR the following proposals:

1. To approve the amendment to the Restated Certificate of Incorporation.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

2. To elect the following nominees as At-Large Directors of the Board of
Directors of Alterra Healthcare Corporation.

[ ] FOR all nominees [ ] WITHHOLD authority to vote
(except as marked below) for all nominees

NOMINEES: Timothy J. Buchanan, Gene E. Burleson, Ronald G. Geary and William G.
Petty, Jr. AND, if Proposal No. 1 (proposed amendment to the Restated
Certificate of Incorporation) is not approved by the stockholders, Patrick F.
Kennedy.

INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
that name in the space provided below.

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

Signature
-----------------------------

Signature if
jointly held
-----------------------------

Dated: , 2002
-----------------------

PLEASE DATE AND SIGN AS NAME APPEARS HEREON.
WHEN SIGNING AS EXECUTOR, ADMINISTRATOR,
TRUSTEE, GUARDIAN OR ATTORNEY, PLEASE GIVE
FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATE NAME BY PRESIDENT OR
OTHER AUTHORIZED CORPORATE OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME
BY AUTHORIZED PERSON. JOINT OWNERS SHOULD
EACH SIGN.

PROXY FOR HOLDERS OF SERIES A STOCK

PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 30, 2002

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF

ALTERRA HEALTHCARE CORPORATION

The undersigned appoints Patrick F. Kennedy and Mark W. Ohlendorf, and
each of them, with full power of substitution, the proxies and attorneys of the
undersigned, to vote as specified hereon at the Annual Meeting of Stockholders
(the "Annual Meeting") of Alterra Healthcare Corporation (the "Company") to be
held at the Radisson Hotel Milwaukee West, 2303 N. Mayfair Road, Wauwatosa,
Wisconsin on Thursday, May 30, 2002 at 8:00 a.m., Milwaukee time, and at any
adjournments or postponements thereof, with all powers (other than the power to
revoke the proxy or vote the proxy in a manner not authorized by the executed
form of proxy) that the undersigned would have if personally present at the
Annual Meeting, to act in their discretion upon any other matter or matters that
may properly be brought before the Annual Meeting and to appear and vote all the
shares of Series A Stock of the Company that the undersigned may be entitled to
vote. The undersigned hereby acknowledges receipt of the accompanying Proxy
Statement and Annual Report to Stockholders, and hereby revokes any proxy or
proxies heretofore given by the undersigned relating to the Annual Meeting.

This proxy may be revoked at any time prior to the voting thereof.

UNLESS OTHERWISE MARKED, THIS PROXY WILL BE VOTED AS IF MARKED FOR THE
FOLLOWING PROPOSALS.

The Board of Directors recommends a vote FOR the following proposals:

1. To approve the amendment to the Restated Certificate of Incorporation.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

2. To elect the following nominees as Preferred Directors of the Board of
Directors of Alterra Healthcare Corporation.

[ ] FOR all nominees [ ] WITHHOLD authority to vote
(except as marked below) for all nominees

NOMINEES: William E. Colson, Robert Haveman and Jerry L. Tubergen AND, if
proposal No. 1 (proposed amendment to the Restated Certificate of Incorporation)
is not approved by the stockholders, Natalie K. Townsend.

INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
that name in the space provided below.

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

Signature
-----------------------------

Signature if
jointly held
-----------------------------

Dated: , 2002
-----------------------