Document:

Exhibit 10.4

                          REGISTRATION RIGHTS AGREEMENT

     This REGISTRATION RIGHTS AGREEMENT, dated as of December 31, 2003 (the
"Agreement"), is entered into by and among Metaldyne Corporation, a Delaware
corporation (the "Company"), each of the Company's subsidiaries listed on
Schedule I hereof (such subsidiaries, the "Guarantors"), and DaimlerChrysler
Corporation, a Delaware corporation (the "Initial Holder").

     The Company and the Initial Holder are parties to (i) the Amended and
Restated Operating Agreement, dated as of January 2, 2003 (the "Operating
Agreement"), and (ii) the Securities Purchase Agreement, dated as of the date
hereof (the "Purchase Agreement" and, together with the Operating Agreement, the
"Transaction Documents"), which provide for the sale by the Company to the
Initial Holder of $31,746,000 aggregate principal amount of the Company's 10%
Senior Subordinated Notes due 2014 (the "Securities"), which will be fully and
unconditionally guaranteed on an unsecured senior subordinated basis by each of
the Guarantors (the "Guarantees"). As an inducement to the Initial Holder to
enter into the Transaction Documents, the Company and the Guarantors have agreed
to provide to the Initial Holder and its direct and indirect transferees the
registration rights set forth in this Agreement. The execution and delivery of
this Agreement is a condition to the Metaldyne Call Option Closing (as defined
in the Operating Agreement).

     In consideration of the foregoing, the parties hereto agree as follows:

     Section 1. Definitions.

     As used in this Agreement, the following terms shall have the following
meanings:

     "Affiliate" shall mean, with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person, where "control"
means, with respect to any Person, the possession, directly or indirectly, of
the power to direct the management and policies of such Person, whether through
the ownership of voting securities, by contract or otherwise.

     "Business Day" shall mean any day that is not a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to remain closed.

     "Company" shall have the meaning set forth in the preamble and shall also
include the Company's successors.

     "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time.

     "Exchange Date" shall have the meaning set forth in Section 2(a)(ii)
hereof.

     "Exchange Offer" shall mean the exchange offer by the Company and the
Guarantors of Exchange Securities for Registrable Securities pursuant to Section
2(a) hereof.

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     "Exchange Offer Registration" shall mean a registration under the
Securities Act effected pursuant to Section 2(a) hereof.

     "Exchange Offer Registration Statement" shall mean an exchange offer
registration statement on Form S-4 (or, if applicable, on another appropriate
form) and all amendments and supplements to such registration statement, in each
case including the Prospectus contained therein, all exhibits thereto and any
document incorporated by reference therein.

     "Exchange Securities" shall mean the 10% Senior Subordinated Notes due 2014
issued by the Company and guaranteed by the Guarantors under the Indenture
containing terms identical to the Securities and the Guarantees (except that the
Exchange Securities will not be subject to restrictions on transfer or to any
increase in annual interest rate for failure to comply with this Agreement) and
to be offered to Holders of Securities in exchange for Securities pursuant to
the Exchange Offer.

     "Guarantors" shall have the meaning set forth in the preamble and shall
also include any successors to the Guarantors.

     "Holders" shall mean the Initial Holder, for so long as it owns any
Registrable Securities, and each of its successors, assigns and direct and
indirect transferees who become owners of Registrable Securities under the
Indenture.

     "Indemnified Person" shall have the meaning set forth in Section 6(c)
hereof.

     "Indemnifying Person" shall have the meaning set forth in Section 6(c)
hereof.

     "Indenture" shall mean the Indenture relating to the Securities, dated as
of December 31, 2003, among the Company and the Guarantors as the same may be
amended or supplemented from time to time in accordance with the terms thereof,
including to designate a trustee pursuant to Section 5 hereof.

     "Initial Holder" shall have the meaning set forth in the preamble.

     "Inspector" shall have the meaning set forth in Section 3(m) hereof.

     "Majority Holders" shall mean the Holders of a majority of the aggregate
principal amount of outstanding Registrable Securities; provided that whenever
the consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities owned directly or
indirectly by the Company or any of its Affiliates shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage or amount.

     "Person" shall mean an individual, partnership, limited liability company,
corporation, trust or unincorporated organization, or a government or agency or
political subdivision thereof.

     "Purchase Agreement" shall have the meaning set forth in the preamble.

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     "Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Shelf Registration Statement, and by all
other amendments and supplements to such prospectus, and in each case including
any document incorporated by reference therein.

     "Registrable Securities" shall mean the Securities; provided that the
Securities shall cease to be Registrable Securities (i) when a Registration
Statement with respect to such Securities has been declared effective under the
Securities Act and such Securities have been exchanged or disposed of pursuant
to such Registration Statement, (ii) when such Securities have been sold
pursuant to Rule 144 or are eligible for resale pursuant to Rule 144(k) (or any
similar provision then in force, but not Rule 144A) under the Securities Act or
(iii) when such Securities cease to be outstanding.

     "Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the Company and the Guarantors with this
Agreement, including without limitation: (i) all SEC, stock exchange or National
Association of Securities Dealers, Inc. registration and filing fees, (ii) all
fees and expenses incurred in connection with compliance with state securities
or blue sky laws (including reasonable fees and disbursements of counsel for any
Underwriters or Holders in connection with blue sky qualification of any
Exchange Securities or Registrable Securities), (iii) all expenses of any
Persons in preparing or assisting in preparing, word processing, printing and
distributing any Registration Statement, any Prospectus and any amendments or
supplements thereto, any underwriting agreements, securities sales agreements or
other similar agreements and any other documents relating to the performance of
and compliance with this Agreement, (iv) all rating agency fees, (v) all fees
and disbursements relating to the qualification of the Indenture under
applicable securities laws, (vi) the fees and disbursements of the Trustee and
its counsel, (vii) the fees and disbursements of counsel for the Company and the
Guarantors and, in the case of a Shelf Registration Statement, the fees and
disbursements of one counsel for the Holders (which counsel shall be selected by
the Majority Holders and which counsel may also be counsel for the Initial
Holder) and (viii) the fees and disbursements of the independent public
accountants of the Company and the Guarantors, including the expenses of any
special audits or "comfort" letters required by or incident to the performance
of and compliance with this Agreement, but excluding fees and expenses of
counsel to the Underwriters (other than fees and expenses set forth in clause
(ii) above) or the Holders and underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of Registrable
Securities by a Holder.

     "Registration Statement" shall mean any registration statement of the
Company and the Guarantors that covers any of the Exchange Securities or
Registrable Securities pursuant to the provisions of this Agreement and all
amendments and supplements to any such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and any document incorporated by reference
therein.

     "SEC" shall mean the Securities and Exchange Commission.

     "Securities" shall have the meaning set forth in the preamble.

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     "Securities Act" shall mean the Securities Act of 1933, as amended from
time to time.

     "Shelf Registration" shall mean a registration effected pursuant to Section
2(b) hereof.

     "Shelf Registration Statement" shall mean a "shelf" registration statement
of the Company and the Guarantors that covers all the Registrable Securities
(but no other securities unless approved by the Holders whose Registrable
Securities to be covered by such Shelf Registration Statement) on an appropriate
form under Rule 415 under the Securities Act, or any similar rule that may be
adopted by the SEC, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and any document incorporated
by reference therein.

     "Staff" shall mean the staff of the SEC.

     "Transaction Documents" shall have the meaning set forth in the preamble.

     "Trigger Date" shall mean the date on which the Initial Holder makes a
written demand of the Company to commence the registration process, which
written demand includes a statement that the Initial Holder has sold at least $5
million aggregate principal amount of Registrable Securities to an unaffiliated
third party.

     "Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as
amended from time to time.

     "Trustee" shall mean the trustee with respect to the Securities under the
Indenture, who shall be appointed pursuant to Section 5 hereof.

     "Underwriter" shall have the meaning set forth in Section 3 hereof.

     "Underwritten Offering" shall mean an offering in which Registrable
Securities are sold to an Underwriter for reoffering to the public.

     Section 2. Registration Under the Securities Act.

     (a) To the extent not prohibited by any applicable law or applicable
interpretations of the Staff, following the Trigger Date, the Company and the
Guarantors shall use their reasonable best efforts to (i) cause to be filed an
Exchange Offer Registration Statement covering an offer to the Holders to
exchange all the Registrable Securities for Exchange Securities and (ii) have
such Registration Statement remain effective until the closing of the Exchange
Offer. The Company and the Guarantors shall commence the Exchange Offer promptly
after the Exchange Offer Registration Statement is declared effective by the SEC
and use their reasonable best efforts to complete the Exchange Offer not later
than 60 days after such effective date.

     The Company and the Guarantors shall commence the Exchange Offer by mailing
the related Prospectus, appropriate letters of transmittal and other
accompanying documents to each Holder stating, in addition to such other
disclosures as are required by applicable law:

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     (i)  that the Exchange Offer is being made pursuant to this Agreement and
          that all Registrable Securities validly tendered and not properly
          withdrawn will be accepted for exchange;

     (ii) the dates of acceptance for exchange (which shall be a period of at
          least 20 Business Days from the date such notice is mailed) (each, an
          "Exchange Date");

     (iii) that any Registrable Security not tendered will remain outstanding
          and continue to accrue interest but will not retain any rights under
          this Agreement;

     (iv) that any Holder electing to have a Registrable Security exchanged
          pursuant to the Exchange Offer will be required to surrender such
          Registrable Security, together with the appropriate letters of
          transmittal, to the institution and at the address (located in the
          Borough of Manhattan, The City of New York) and in the manner
          specified in the notice, prior to the close of business on the last
          Exchange Date; and

     (v)  that any Holder will be entitled to withdraw its election, not later
          than the close of business on the last Exchange Date, by sending to
          the institution and at the address (located in the Borough of
          Manhattan, The City of New York) specified in the notice, a telegram,
          telex, facsimile transmission or letter setting forth the name of such
          Holder, the principal amount of Registrable Securities delivered for
          exchange and a statement that such Holder is withdrawing its election
          to have such Securities exchanged.

     As a condition to participating in the Exchange Offer, a Holder will be
required to represent to the Company and the Guarantors that (i) any Exchange
Securities to be received by it will be acquired in the ordinary course of its
business, (ii) at the time of the commencement of the Exchange Offer it has no
arrangement or understanding with any Person to participate in the distribution
(within the meaning of the Securities Act) of the Exchange Securities in
violation of the provisions of the Securities Act, (iii) it is not an
"affiliate" (within the meaning of Rule 405 under Securities Act) of the Company
or any Guarantor and (iv) if such Holder is a broker-dealer that will receive
Exchange Securities for its own account in exchange for Registrable Securities
that were acquired as a result of market-making or other trading activities,
then such Holder will deliver a Prospectus in connection with any resale of such
Exchange Securities.

     As soon as practicable after the last Exchange Date, the Company and the
Guarantors shall:

     (i)  accept for exchange Registrable Securities or portions thereof validly
          tendered and not properly withdrawn pursuant to the Exchange Offer;
          and

     (ii) deliver, or cause to be delivered, to the Trustee for cancellation all
          Registrable Securities or portions thereof so accepted for exchange by
          the Company and issue, and cause the Trustee to promptly authenticate
          and deliver to each Holder, Exchange Securities equal in principal
          amount to the principal amount of the Registrable Securities
          surrendered by such Holder.

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<PAGE>

     The Company and the Guarantors shall use their reasonable best efforts to
complete the Exchange Offer as provided above and shall comply with the
applicable requirements of the Securities Act, the Exchange Act and other
applicable laws and regulations in connection with the Exchange Offer. The
Exchange Offer shall not be subject to any conditions, other than that the
Exchange Offer does not violate any applicable law or applicable interpretations
of the Staff.

     (b) In the event that (i) the Company and the Guarantors determine that the
Exchange Offer Registration provided for in Section 2(a) above is not available
or may not be completed as soon as practicable after the last Exchange Date
because it would violate any applicable law or applicable interpretations of the
Staff, (ii) the Exchange Offer is not for any other reason completed by 210 days
after the Trigger Date or (iii) the Exchange Offer has been completed and in the
opinion of counsel for the Initial Holder a Registration Statement must be filed
and a Prospectus must be delivered by the Initial Holder in connection with any
offering or sale of Registrable Securities held by the Initial Holder, the
Company and the Guarantors shall use their reasonable best efforts to cause to
be filed as soon as practicable after such determination, date or notice of such
opinion of counsel is given to the Company, as the case may be, a Shelf
Registration Statement providing for the sale of all the Registrable Securities
by the Holders thereof (or Initial Holder that is a holder thereof in the case
of a Shelf Registration Statement filed pursuant to clause (iii) of this
sentence) and to have such Shelf Registration Statement declared effective by
the SEC.

     In the event that the Company and the Guarantors are required to file a
Shelf Registration Statement solely as a result of the matters referred to in
clause (iii) of the preceding sentence, the Company and the Guarantors shall use
their reasonable best efforts to file and have declared effective by the SEC
both an Exchange Offer Registration Statement pursuant to Section 2(a) with
respect to all Registrable Securities and a Shelf Registration Statement (which
may be a combined Registration Statement with the Exchange Offer Registration
Statement) with respect to offers and sales of Registrable Securities held by
the Initial Holder after completion of the Exchange Offer. The Company and the
Guarantors agree to use their reasonable best efforts to keep the Shelf
Registration Statement continuously effective until the expiration of the period
referred to in Rule 144(k) under the Securities Act with respect to the
Registrable Securities or such shorter period that will terminate when all the
Registrable Securities covered by the Shelf Registration Statement have been
sold pursuant to the Shelf Registration Statement. The Company and the
Guarantors further agree to supplement or amend the Shelf Registration Statement
and the related Prospectus if required by the rules, regulations or instructions
applicable to the registration form used by the Company for such Shelf
Registration Statement or by the Securities Act or by any other rules and
regulations thereunder for shelf registration or if reasonably requested by a
Holder of Registrable Securities with respect to information relating to such
Holder, and to use their reasonable best efforts to cause any such amendment to
become effective and such Shelf Registration Statement and Prospectus to become
usable as soon as thereafter practicable. The Company and the Guarantors agree
to furnish to the Holders of Registrable Securities copies of any such
supplement or amendment promptly after its being used or filed with the SEC.

     (c) The Company and the Guarantors shall pay all Registration Expenses in
connection with the registration pursuant to Section 2(a) and Section 2(b)
hereof. Each Holder shall pay

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<PAGE>

all underwriting discounts and commissions and transfer taxes, if any, relating
to the sale or disposition of such Holder's Registrable Securities pursuant to
the Shelf Registration Statement.

     (d) An Exchange Offer Registration Statement pursuant to Section 2(a)
hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof will
not be deemed to have become effective unless it has been declared effective by
the SEC; provided that if, after it has been declared effective, the offering of
Registrable Securities pursuant to a Shelf Registration Statement is interfered
with by any stop order, injunction or other order or requirement of the SEC or
any court or other governmental or regulatory agency or body, such Registration
Statement will be deemed not to have become effective during the period of such
interference until the offering of Registrable Securities pursuant to such
Registration Statement may legally resume.

     In the event that either the Exchange Offer is not completed or a Shelf
Registration Statement, if required hereby, is not declared effective within 210
days of the Trigger Date, the interest rate on the Registrable Securities will
be increased by 1.00% per annum until the Exchange Offer is completed or the
Shelf Registration Statement, if required hereby, is declared effective by the
SEC or the Securities become freely tradable under the Securities Act.

     (e) Without limiting the remedies available to the Initial Holder and the
Holders, the Company and the Guarantors acknowledge that any failure by the
Company or the Guarantors to comply with their obligations under Section 2(a)
and Section 2(b) hereof may result in material irreparable injury to the Initial
Holder or the Holders for which there is no adequate remedy at law, that it will
not be possible to measure damages for such injuries precisely and that, in the
event of any such failure, the Initial Holder or any Holder may obtain such
relief as may be required to specifically enforce the Company's and the
Guarantors' obligations under Section 2(a) and Section 2(b) hereof.

     Section 3. Registration Procedures.

     In connection with their obligations pursuant to Section 2(a) and Section
2(b) hereof, the Company and the Guarantors shall as expeditiously as possible:

     (a) prepare and file with the SEC a Registration Statement on the
appropriate form under the Securities Act, which form (x) shall be selected by
the Company and the Guarantors, (y) shall, in the case of a Shelf Registration,
be available for the sale of the Registrable Securities by the selling Holders
thereof and (z) shall comply as to form in all material respects with the
requirements of the applicable form and include all financial statements
required by the SEC to be filed therewith; and use their reasonable best efforts
to cause such Registration Statement to become effective and remain effective
for the applicable period in accordance with Section 2 hereof;

     (b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement effective for the applicable period in accordance with
Section 2 hereof and cause each Prospectus to be supplemented by any required
prospectus supplement and, as so supplemented, to be filed pursuant to Rule 424
under the Securities Act; and keep each Prospectus current during the period
described in Section 4(3) of and Rule 174 under the Securities Act that is
applicable to

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transactions by brokers or dealers with respect to the Registrable Securities or
Exchange Securities;

     (c) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, to counsel for the Initial Holder, to counsel for such
Holders and to each Underwriter of an Underwritten Offering of Registrable
Securities, if any, without charge, as many copies of each Prospectus, including
each preliminary Prospectus, and any amendment or supplement thereto in order to
facilitate the sale or other disposition of the Registrable Securities
thereunder; and the Company and the Guarantors consent to the use of such
Prospectus and any amendment or supplement thereto in accordance with applicable
law by each of the selling Holders of Registrable Securities and any such
Underwriters in connection with the offering and sale of the Registrable
Securities covered by and in the manner described in such Prospectus or any
amendment or supplement thereto in accordance with applicable law;

     (d) use their reasonable best efforts to register or qualify the
Registrable Securities under all applicable state securities or blue sky laws of
such jurisdictions as any Holder of Registrable Securities covered by a
Registration Statement shall reasonably request in writing by the time the
applicable Registration Statement is declared effective by the SEC; cooperate
with the Holders in connection with any filings required to be made with the
National Association of Securities Dealers, Inc.; and do any and all other acts
and things that may be reasonably necessary or advisable to enable each Holder
to complete the disposition in each such jurisdiction of the Registrable
Securities owned by such Holder; provided that neither the Company nor any
Guarantor shall be required to (i) qualify as a foreign corporation or other
entity or as a dealer in securities in any jurisdiction where it would not
otherwise be required to so qualify, (ii) file any general consent to service of
process in any such jurisdiction or (iii) subject itself to taxation in any such
jurisdiction if it is not so subject;

     (e) in the case of a Shelf Registration, notify each Holder of Registrable
Securities, counsel for such Holders and counsel for the Initial Holder promptly
and, if requested by any such Holder or counsel, confirm such advice in writing
(i) when a Registration Statement has become effective and when any
post-effective amendment thereto has been filed and becomes effective, (ii) of
any request by the SEC or any state securities authority for amendments and
supplements to a Registration Statement and Prospectus or for additional
information after the Registration Statement has become effective, (iii) of the
issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of a Registration Statement or the initiation of
any proceedings for that purpose, (iv) if, between the effective date of a
Registration Statement and the closing of any sale of Registrable Securities
covered thereby, the representations and warranties of the Company or any
Guarantor contained in any underwriting agreement, securities sales agreement or
other similar agreement, if any, relating to an offering of such Registrable
Securities cease to be true and correct in all material respects or if the
Company or any Guarantor receives any notification with respect to the
suspension of the qualification of the Registrable Securities for sale in any
jurisdiction or the initiation of any proceeding for such purpose, (v) of the
happening of any event during the period a Shelf Registration Statement is
effective that makes any statement made in such Registration Statement or the
related Prospectus untrue in any material respect or that requires the making of
any changes in such Registration Statement or Prospectus in order to make the
statements therein not misleading and (vi) of any determination

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<PAGE>

by the Company or any Guarantor that a post-effective amendment to a
Registration Statement would be appropriate;

     (f) use their reasonable best efforts to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement at the earliest
possible moment and provide immediate notice to each Holder of the withdrawal of
any such order;

     (g) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, without charge, at least one conformed copy of each
Registration Statement and any post-effective amendment thereto (without any
documents incorporated therein by reference or exhibits thereto, unless
requested);

     (h) in the case of a Shelf Registration, cooperate with the selling Holders
of Registrable Securities to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing any
restrictive legends and enable such Registrable Securities to be issued in such
denominations and registered in such names (consistent with the provisions of
the Indenture) as the selling Holders may reasonably request at least one
Business Day prior to the closing of any sale of Registrable Securities;

     (i) in the case of a Shelf Registration, upon the occurrence of any event
contemplated by Section 3(e)(iii) or 3(e)(v) hereof, use their reasonable best
efforts to prepare and file with the SEC a supplement or post-effective
amendment to a Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to purchasers of the Registrable Securities, such
Prospectus will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and the Company
and the Guarantors shall notify the Holders of Registrable Securities to suspend
use of the Prospectus as promptly as practicable after the occurrence of such an
event, and such Holders hereby agree to suspend use of the Prospectus until the
Company and the Guarantors have amended or supplemented the Prospectus to
correct such misstatement or omission;

     (j) a reasonable time prior to the filing of any Shelf Registration
Statement, any related Prospectus, any amendment to a Shelf Registration
Statement or amendment or supplement to a related Prospectus or of any document
that is to be incorporated by reference into a Shelf Registration Statement or a
related Prospectus after initial filing of a Shelf Registration Statement,
provide copies of such document to the Initial Holder and its counsel and to the
Holders of Registrable Securities and their counsel and make such of the
representatives of the Company and the Guarantors as shall be reasonably
requested by the Initial Holder or its counsel or the Holders of Registrable
Securities or their counsel available for discussion of such document; and the
Company and the Guarantors shall not at any time after initial filing of a Shelf
Registration Statement file any amendment to the Shelf Registration Statement,
any related Prospectus or any amendment of or supplement to a Shelf Registration
Statement or a related Prospectus or any document that is to be incorporated by
reference into a Shelf Registration Statement or a related Prospectus, of which
the Initial Holder and its counsel and the Holders of Registrable Securities and
their counsel shall not have previously been advised and furnished a copy or to
which the Initial Holder or its counsel or the Holders or their counsel shall
reasonably object;

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<PAGE>

     (k) obtain a CUSIP number for all Exchange Securities or Registrable
Securities, as the case may be, not later than the effective date of a
Registration Statement;

     (l) cause the Indenture to be qualified under the Trust Indenture Act in
connection with the registration of the Exchange Securities or Registrable
Securities, as the case may be, and in the event such qualification would
require the appointment of a new Trustee under the Indenture, appoint a new
Trustee thereunder pursuant to the terms of the Indenture; cooperate with the
Trustee and the Holders to effect such changes to the Indenture as may be
required for the Indenture to be so qualified in accordance with the terms of
the Trust Indenture Act; and execute, and use their reasonable best efforts to
cause the Trustee to execute, all documents as may be required to effect such
changes and all other forms and documents required to be filed with the SEC to
enable the Indenture to be so qualified in a timely manner;

     (m) in the case of a Shelf Registration, make available for inspection by a
representative of the Holders of the Registrable Securities (an "Inspector"),
any Underwriter participating in any disposition pursuant to such Shelf
Registration Statement, and attorneys and accountants designated by the Holders,
at reasonable times and in a reasonable manner, all pertinent financial and
other records, pertinent documents and properties of the Company and the
Guarantors, and cause the respective officers, directors and employees of the
Company and the Guarantors to supply all information reasonably requested by any
such Inspector, Underwriter, attorney or accountant in connection with a Shelf
Registration Statement; provided that if any such information is identified by
the Company or any Guarantor as being confidential or proprietary, each Person
receiving such information shall take such actions as are reasonably necessary
to protect the confidentiality of such information to the extent such action is
otherwise not inconsistent with, an impairment of or in derogation of the rights
and interests of any Inspector, Holder or Underwriter;

     (n) in the case of a Shelf Registration, use their reasonable best efforts
to cause all Registrable Securities to be listed on any securities exchange or
any automated quotation system on which similar securities issued or guaranteed
by the Company or any Guarantor are then listed if requested by the Majority
Holders, to the extent such Registrable Securities satisfy applicable listing
requirements;

     (o) if reasonably requested by any Holder of Registrable Securities covered
by a Registration Statement, promptly incorporate in a Prospectus supplement or
post-effective amendment such information with respect to such Holder as such
Holder reasonably requests to be included therein and make all required filings
of such Prospectus supplement or such post-effective amendment as soon as the
Company has received notification of the matters to be incorporated in such
filing; and

     (p) in the case of a Shelf Registration, enter into such customary
agreements and take all such other actions in connection therewith (including
those requested by the Holders of a majority in principal amount of the
Registrable Securities being sold) in order to expedite or facilitate the
disposition of such Registrable Securities including, but not limited to, an
Underwritten Offering and in such connection, (i) to the extent possible, make
such representations and warranties to the Holders and any Underwriters of such
Registrable Securities with respect to the business of the Company and its
subsidiaries, the Registration Statement, Prospectus and docu-

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<PAGE>

ments incorporated by reference or deemed incorporated by reference, if any, in
each case, in form, substance and scope as are customarily made by issuers to
underwriters in underwritten offerings and confirm the same if and when
requested, (ii) obtain opinions of counsel to the Company and the Guarantors
(which counsel and opinions, in form, scope and substance, shall be reasonably
satisfactory to the Holders and such Underwriters and their respective counsel)
addressed to each selling Holder and Underwriter of Registrable Securities,
covering the matters customarily covered in opinions requested in underwritten
offerings, (iii) obtain "comfort" letters from the independent certified public
accountants of the Company and the Guarantors (and, if necessary, any other
certified public accountant of any subsidiary of the Company or any Guarantor,
or of any business acquired by the Company or any Guarantor for which financial
statements and financial data are or are required to be included in the
Registration Statement) addressed to each selling Holder and Underwriter of
Registrable Securities, such letters to be in customary form and covering
matters of the type customarily covered in "comfort" letters in connection with
underwritten offerings and (iv) deliver such documents and certificates as may
be reasonably requested by the Holders of a majority in principal amount of the
Registrable Securities being sold or the Underwriters, and which are customarily
delivered in underwritten offerings, to evidence the continued validity of the
representations and warranties of the Company and the Guarantors made pursuant
to clause (i) above and to evidence compliance with any customary conditions
contained in an underwriting agreement.

     In the case of a Shelf Registration Statement, the Company may require each
Holder of Registrable Securities to furnish to the Company such information
regarding such Holder and the proposed disposition by such Holder of such
Registrable Securities as the Company and the Guarantors may from time to time
reasonably request in writing.

     The Holders of Registrable Securities covered by a Shelf Registration
Statement who desire to do so may sell such Registrable Securities in an
Underwritten Offering. In any such Underwritten Offering, the investment banker
or investment bankers and manager or managers (the "Underwriters") that will
administer the offering will be selected by the Majority Holders of the
Registrable Securities included in such offering and shall be reasonably
acceptable to the Company and the Guarantors.

     Section 4. Suspension.

     (a) Notwithstanding any of the other provisions of this Agreement, but
subject to Section 4(c) hereof, in the case of a Shelf Registration Statement,
each Holder of Registrable Securities agrees that, upon receipt of a written
notice from the Company and the Guarantors of the happening of any event of the
kind described in Section 3(e)(iii) or 3(e)(v) hereof, such Holder will
forthwith discontinue disposition of Registrable Securities pursuant to such
Shelf Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 3(i) hereof and, if
so directed by the Company and the Guarantors, such Holder will deliver to the
Company and the Guarantors all copies in its possession, other than permanent
file copies then in such Holder's possession, of the Prospectus covering such
Registrable Securities that is current at the time of receipt of such written
notice. If the Company and the Guarantors shall give any such written notice to
suspend the disposition of Registrable Securities pursuant to a Registration
Statement pursuant to this Section 4(a), the Company and the Guarantors shall
extend the period during which the Registration Statement

                                      -11-
<PAGE>

shall be maintained effective pursuant to this Agreement by the number of days
during the period from and including the date of the giving of such notice to
and including the date when the Holders shall have received copies of the
supplemented or amended Prospectus necessary to resume such dispositions.

     (b) Notwithstanding any of the other provisions of this Agreement, but
subject to Section 4(c) hereof, the Company shall have the right on one or more
occasions to delay the filing, amendment or effectiveness of a Shelf
Registration Statement or, if the Shelf Registration Statement has become
effective, to suspend the distribution or disposition of each Holder's
Registrable Securities pursuant to such Registration Statement in the event that
the board of directors of the Company determines in its reasonable good faith
judgment that (i) the filing, declaration of effectiveness or continued
effectiveness of such Shelf Registration Statement at such time would require
the Company to disclose therein a proposed or consummated financing,
reorganization or recapitalization, or pending or consummated negotiations
relating to a merger, consolidation, acquisition or similar transaction or other
business transaction, or other material event, which would otherwise adversely
affect the Company or (ii) pro forma and/or historical financial statements
meeting the requirements of the Securities Act as a result of any transaction
described in clause (i) above are not available at such time. Any delay or
suspension period pursuant to this Section 4(b) shall begin on the date
specified in a written notice given by the Company to the Holders and shall end
on the date specified in a subsequent written notice given by the Company to the
Holders. If the Company shall exercise its right to delay the filing, amendment
or effectiveness of a Shelf Registration Statement or to suspend the
distribution or disposition of each Holder's Registrable Securities pursuant to
such Registration Statement pursuant to this Section 4(b), the period within
which such Shelf Registration Statement must be declared effective or during
which the effectiveness of such Shelf Registration Statement must maintained
pursuant to this Agreement shall be extended by the number of days of the delay
or suspension period.

     (c) The Company may give a delay or suspension notice pursuant to Section 4
hereof at any time and from time to time; provided that the aggregate of all
delay and suspension periods during any 365-day period shall not exceed 90 days.

     Section 5. Appointment of Trustee.

     As soon as reasonably practicable following the Trigger Date, and in any
event before a Registration Statement is filed with the SEC pursuant to Section
2 hereof, the Company shall appoint a Trustee, and the Company, the Guarantors,
the Initial Holder and the Trustee shall execute a supplemental indenture to the
Indenture designating the Trustee as trustee with respect to the Securities
under the Indenture and otherwise amending the Indenture accordingly.

     Section 6. Indemnification and Contribution.

     (a) The Company and each Guarantor, jointly and severally, agree to
indemnify and hold harmless the Initial Holder and each Holder, their respective
Affiliates and each Person, if any, who controls the Initial Holder or any
Holder within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, from and against any and all losses, claims, damages and
liabilities (including, without limitation, legal fees and other expenses
incurred in con-

                                      -12-
<PAGE>

nection with any suit, action or proceeding or any claim asserted), joint or
several, (i) arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or any
Prospectus or (ii) arising out of or based upon any omission or alleged omission
to state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, except insofar as such losses, claims,
damages or liabilities are arising out of or based upon any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with any information relating to the Initial Holder, or any Holder
furnished to the Company in writing through the Initial Holder or any selling
Holder expressly for use therein. In connection with any Underwritten Offering
permitted by Section 3, the Company and the Guarantors will also indemnify the
Underwriters, if any, selling brokers, dealers and similar securities industry
professionals participating in the distribution, their respective Affiliates and
each Person who controls such Persons (within the meaning of the Securities Act
and the Exchange Act) to the same extent as provided above with respect to the
indemnification of the Holders, if requested in connection with any Registration
Statement.

     (b) Each Holder agrees, severally and not jointly, to indemnify and hold
harmless the Company, the Guarantors, the Initial Holder and the other selling
Holders, their respective Affiliates, the directors of the Company and the
Guarantors, each officer of the Company and the Guarantors who signed the
Registration Statement and each Person, if any, who controls the Company, the
Guarantors, the Initial Holder and any other selling Holder within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act to the
same extent as the indemnity set forth in paragraph (a) above, but only with
respect to any losses, claims, damages or liabilities arising out of or based
upon any untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with any information relating to such
Holder furnished to the Company in writing by such Holder expressly for use in
any Registration Statement and any Prospectus.

     (c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnification may be sought pursuant to either
paragraph (a) or (b) above, such Person (the "Indemnified Person") shall
promptly notify the Person against whom such indemnification may be sought (the
"Indemnifying Person") in writing; provided that the failure to notify the
Indemnifying Person shall not relieve it from any liability that it may have
under this Section 6 except to the extent that it has been materially prejudiced
(through the forfeiture of substantive rights or defenses) by such failure; and
provided, further, that the failure to notify the Indemnifying Person shall not
relieve it from any liability that it may have to an Indemnified Person
otherwise than under this Section 6. If any such proceeding shall be brought or
asserted against an Indemnified Person and it shall have notified the
Indemnifying Person thereof, the Indemnifying Person shall retain counsel
reasonably satisfactory to the Indemnified Person to represent the Indemnified
Person and any others entitled to indemnification pursuant to this Section 6
that the Indemnifying Person may designate in such proceeding and shall pay the
fees and expenses of such counsel related to such proceeding. In any such
proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless (i) the Indemnifying Person and the Indemnified
Person shall have mutually agreed to the contrary; (ii) the Indemnifying Person
has failed within a reasonable time to retain counsel reasonably satisfactory to
the Indemnified Person; (iii) the In-

                                      -13-
<PAGE>

demnified Person shall have reasonably concluded that there may be legal
defenses available to it that are different from or in addition to those
available to the Indemnifying Person; or (iv) the named parties in any such
proceeding (including any impleaded parties) include both the Indemnifying
Person and the Indemnified Person and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood and agreed that the Indemnifying Person shall
not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Persons, and that all
such fees and expenses shall be reimbursed as they are incurred. Any such
separate firm (x) for the Initial Holder, its Affiliates and any control Persons
of such Initial Holder shall be designated in writing by the Initial Holder, (y)
for any Holder, its Affiliates and any control Persons of such Holder shall be
designated in writing by the Majority Holders and (z) in all other cases shall
be designated in writing by the Company. The Indemnifying Person shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the Indemnifying Person agrees to indemnify each Indemnified
Person from and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified
Person shall have requested that an Indemnifying Person reimburse the
Indemnified Person for fees and expenses of counsel as contemplated by this
paragraph, the Indemnifying Person shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by the Indemnifying Person of such
request and (ii) the Indemnifying Person shall not have reimbursed the
Indemnified Person in accordance with such request prior to the date of such
settlement. No Indemnifying Person shall, without the written consent of the
Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party and indemnification could have been sought hereunder by such Indemnified
Person, unless such settlement (A) includes an unconditional release of such
Indemnified Person in form and substance satisfactory to such Indemnified Person
from all liability on claims that are the subject matter of such proceeding and
(B) does not include any statement as to or any admission of fault, culpability
or a failure to act by or on behalf of any Indemnified Person.

     (d) If the indemnification provided for in paragraphs (a) and (b) above is
unavailable to an Indemnified Person or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then each Indemnifying
Person under such paragraph, in lieu of indemnifying such Indemnified Person
thereunder, shall contribute to the amount paid or payable by such Indemnified
Person as a result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Guarantors from the offering of the Securities, on the one hand,
and by the Holders from receiving Securities or Exchange Securities registered
under the Securities Act, on the other hand, or (ii) if the allocation provided
by clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
but also the relative fault of the Company and the Guarantors on the one hand
and the Holders on the other in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault of the Company and the
Guarantors on the one hand and the Holders on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company and the

                                      -14-
<PAGE>

Guarantors or by the Holders and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.

     (e) The Company, the Guarantors and the Holders agree that it would not be
just and equitable if contribution pursuant to this Section 6 were determined by
pro rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in paragraph (d) above. The amount paid or
payable by an Indemnified Person as a result of the losses, claims, damages and
liabilities referred to in paragraph (d) above shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses incurred
by such Indemnified Person in connection with any such action or claim.
Notwithstanding the provisions of this Section 6, in no event shall a Holder be
required to contribute any amount in excess of the amount by which the total
price at which the Securities or Exchange Securities sold by such Holder exceeds
the amount of any damages that such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.

     (f) The remedies provided for in this Section 6 are not exclusive and shall
not limit any rights or remedies that may otherwise be available to any
Indemnified Person at law or in equity.

     (g) The indemnity and contribution provisions contained in this Section 6
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
the Initial Holder or any Holder, their respective Affiliates or any Person
controlling the Initial Holder or any Holder, or by or on behalf of the Company,
the Guarantors, their respective Affiliates or the officers or directors of or
any Person controlling the Company or the Guarantors, (iii) acceptance of any of
the Exchange Securities and (iv) any sale of Registrable Securities pursuant to
a Shelf Registration Statement.

     Section 7. Miscellaneous.

     (a) No Inconsistent Agreements. The Company and the Guarantors represent,
warrant and agree that (i) the rights granted to the Holders hereunder do not in
any way conflict with and are not inconsistent with the rights granted to the
holders of any other outstanding securities issued or guaranteed by the Company
or any Guarantor under any other agreement and (ii) neither the Company nor any
Guarantor has entered into, or on or after the date of this Agreement will enter
into, any agreement that is inconsistent with the rights granted to the Holders
of Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof.

     (b) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
unless the Company and the Guarantors have obtained the written consent of
Holders of at least a majority in aggregate principal amount of the outstanding
Registrable Securities affected by such amendment, modification, supplement,

                                      -15-
<PAGE>

waiver or consent; provided that no amendment, modification, supplement, waiver
or consent to any departure from the provisions of Section 6 hereof shall be
effective as against any Holder of Registrable Securities unless consented to in
writing by such Holder.

     (c) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, registered first-class
mail, telex, telecopier, or any courier guaranteeing overnight delivery (i) if
to a Holder, at the most current address given by such Holder to the Company by
means of a notice given in accordance with the provisions of this Section 7(c),
which address initially is, with respect to the Initial Holder, DaimlerChrysler
Corporation, 1000 Chrysler Drive, Auburn Hills, Michigan 48326, Attention:
General Counsel, Facsimile: (248) 512-1771, with a copy to Jones, Day, Reavis &
Pogue, 77 W. Wacker, Suite 3500, Chicago, Illinois 60601, Attention: Elizabeth
C. Kitslaar, Facsimile: (312) 782-8585; and (ii) if to the Company and the
Guarantors, at the Company's address, which address initially is Metaldyne
Corporation, 47603 Halyard Drive, Plymouth, Michigan 48170, Attention: Thomas A.
Amato and R. Jeffrey Pollock, Facsimile: (734) 207-6741 and (734) 207-6797, with
a copy to Cahill Gordon & Reindel, 80 Pine Street, New York, New York 10005,
Attention: W. Leslie Duffy and Jonathan A. Schaffzin, Facsimile: (212) 269-5420,
and thereafter at such other address, notice of which is given in accordance
with the provisions of this Section 7(c). All such notices and communications
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt is
acknowledged, if telecopied; and on the next Business Day if timely delivered to
an air courier guaranteeing overnight delivery. Copies of all such notices,
demands or other communications shall be concurrently delivered by the Person
giving the same to the Trustee, if any, at the address specified in the
Indenture.

     (d) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders; provided that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Registrable Securities
in violation of the terms of the Purchase Agreement. If any transferee of any
Holder shall acquire Registrable Securities in any manner, whether by operation
of law or otherwise, such Registrable Securities shall be held subject to all
the terms of this Agreement, and by taking and holding such Registrable
Securities such Person shall be conclusively deemed to have agreed to be bound
by and to perform all of the terms and provisions of this Agreement and such
Person shall be entitled to receive the benefits hereof. The Initial Holder (in
its capacity as Initial Holder) shall have no liability or obligation to the
Company or the Guarantors with respect to any failure by a Holder to comply
with, or any breach by any Holder of, any of the obligations of such Holder
under this Agreement.

     (e) Purchases and Sales of Securities. The Company and the Guarantors shall
not, and shall use their reasonable best efforts to cause their affiliates (as
defined in Rule 405 under the Securities Act) not to, purchase and then resell
or otherwise transfer any Registrable Securities.

     (f) Third Party Beneficiaries. Each Holder shall be a third party
beneficiary to the agreements made hereunder between the Company and the
Guarantors, on the one hand, and the Initial Holder, on the other hand, and
shall have the right to enforce such agreements directly to

                                      -16-
<PAGE>

the extent it deems such enforcement necessary or advisable to protect its
rights or the rights of other Holders hereunder.

     (g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

     (h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

     (i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE COMPANY AND THE
GUARANTORS EACH HEREBY AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK, COUNTY OF NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT.

     (j) Miscellaneous. This Agreement contains the entire agreement between the
parties relating to the subject matter hereof and supersedes all oral statements
and prior writings with respect thereto. This Agreement may not be amended or
modified except by a writing executed by each of the parties hereto. Section
headings herein are for convenience only and are not a part of this Agreement.
If any term, provision, covenant or restriction contained in this Agreement is
held by a court of competent jurisdiction to be invalid, void or unenforceable
or against public policy, the remainder of the terms, provisions, covenants and
restrictions contained herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated. The Company, the Guarantors and the
Initial Holder shall endeavor in good faith negotiations to replace the invalid,
void or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, void or unenforceable
provisions.

                     [Remainder of Page Intentionally Blank]

                                      -17-
<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

                             METALDYNE CORPORATION

                             By:    /s/  Timothy D. Leuliette
                                    --------------------------------------
                                    Name:  Timothy D. Leuliette
                                    Title:    Chairman, President & CEO

                             EACH OF THE GUARANTORS LISTED ON SCHEDULE I HERETO:

                             By:    /s/  Timothy D. Leuliette
                                    ---------------------------------------
                                    Name:  Timothy D. Leuliette
                                    Title:    Chairman, President & CEO

                             DAIMLERCHRYSLER CORPORATION

                             By:    /s/  John C. Stellman
                                    ----------------------------------------
                                    Name:  John C. Stellman
                                    Title:    Vice President

                                      -18-
<PAGE>

                                   Schedule I

                              ER Acquisition Corp.
                              GMTI Holding Company
                         Halyard Aviation Services, Inc.
                             MASG Disposition, Inc.
                        MASX Energy Services Group, Inc.
                       Metaldyne Accura Tool & Mold, Inc.
                              Metaldyne Company LLC
                    Metaldyne DuPage Die Casting Corporation
                             Metaldyne Europe, Inc.
                        Metaldyne European Holdings Inc.
                  Metaldyne Lester Precision Die Casting, Inc.
                      Metaldyne Light Metals Company, Inc.
                 Metaldyne Machining and Assembly Company, Inc.
                  Metaldyne Precision Forming-Fort Wayne, Inc.
                            Metaldyne Services, Inc.
                 Metaldyne Sintered Components of Indiana, Inc.
                       Metaldyne Sintered Components, LLC
                        Metaldyne Tubular Products, Inc.
                           Metaldyne U.S. Holding Co.
                         Precision Headed Products, Inc.
                               Punchcraft Company
                            Stahl International, Inc.
                                              W.C. McCurdy & Co.
                             Windfall Products, Inc.
                        Windfall Specialty Powders, Inc.CROSS  REFERENCES:
San  Bernardino  County,  California
------------------------------------
Document  No.  1998-0304505
Document  No.  1998-0304506
Document  No.  1998-0518548
Document  No.  1999-0226719
APN  No.  0283-201-51
San  Diego  County,  California
-------------------------------
Document  No.  1998-0480733
Document  No.  1998-0480734
Document  No.  1998-0854042
Document  No.  1999-0378318
APN  No.  168-012-27
Butler  County,  Kansas
-----------------------
Deed  Book  859,  Page  290
Deed  Book  859,  Page  291
Deed  Book  875,  Page  25
Deed  Book  899,  Page  275
Seward  County,  Kansas
-----------------------
Deed  Book  496,  Page  090
Deed  Book  496,  Page  123
Deed  Book  500,  Page  006
Deed  Book  505,  Page  481
El  Paso  County,  Colorado
---------------------------
Reception  No.  098107592
Reception  No.  098107593
Reception  No.  098169015
Reception  No.  099092094
This  instrument  prepared  by
and  when  recorded  return  to:
Patrick  M.  McGeehan,  Esq.
McKenna  Long  &  Aldridge  LLP
303  Peachtree  Street,  Suite  5300
Atlanta,  Georgia  30308
------------------------
     (Space  Above  for  Recorder's  Use  Only)

LOAN ASSUMPTION AGREEMENT WITH AMENDMENT OF TRUST DEEDS, MORTGAGES AND SECURITY
-------------------------------------------------------------------------------
          INSTRUMENTS AND AMENDMENT OF ASSIGNMENTS OF LEASES AND RENTS
          ------------------------------------------------------------
                               LOAN NO. 01-1018103

<PAGE>
     THIS  LOAN  ASSUMPTION  AGREEMENT (this "Agreement") is made as of the 31st
                                              ---------
day  of  December,  2003,  and  shall  be  effective  as of January 1, 2004 (the
"Effective Date") by and among LASALLE BANK NATIONAL ASSOCIATION, FORMERLY KNOWN
       --------
AS  LASALLE  NATIONAL BANK, AS TRUSTEE FOR GMAC COMMERCIAL MORTGAGE PASS-THROUGH
CERTIFICATES,  SERIES  1998-C2  ("Lender"),  ALS  FINANCING  INC.,  a  Kansas
                                  ------
corporation  ("Borrower"),  EMERITUS  PROPERTIES XVI, INC., a Nevada corporation
               --------
("Purchaser"),  ALTERRA HEALTHCARE CORPORATION, a Delaware corporation, formerly
  ---------
known  as  Alternative  Living  Services,  Inc.  ("Alterra"),  and  EMERITUS
                                                   -------
CORPORATION,  a  Washington  corporation  ("New  Indemnitor").
                                            ---------------

                              W I T N E S S E T H :
                              - - - - - - - - - -

WHEREAS,  on  or  about  July  30, 1998, GMAC Commercial Mortgage Corporation, a
California corporation ("Original Lender"), made a loan (the "Loan") to Borrower
                         ---------------                      ----
in  the original principal amount of $25,000,000.00, which Loan is evidenced by,
among  other  things,  that  certain  Loan Agreement, dated as of July 30, 1998,
between  Original  Lender  and  Borrower  (the  "Loan  Agreement");  and
                                                 ---------------
WHEREAS, Borrower executed and delivered to Lender that certain Promissory Note,
dated  July  30,  1998,  and  made  by Borrower payable to the order of Original
Lender  in the stated principal amount of $25,000,000.00 and evidencing the Loan
(the  "Note");  and
       ----
WHEREAS,  the Loan is further evidenced and secured by, among other things, five
(5)  security  instruments  as  described  on  Exhibit  A-1  attached hereto and
                                               ------------
incorporated herein by reference (collectively, the "Security Instruments"), and
                                                     --------------------
five  (5)  assignments  of leases and rents as described on Exhibit B-1 attached
                                                            -----------
hereto  and  incorporated herein by reference (collectively, the "Assignments of
                                                                  --------------
Leases and Rents") encumbering five (5) separate facilities operated as assisted
 ---------------
living  facilities  and located in the States of California, Kansas and Colorado
located,  respectively,  on  the real properties described in Exhibit A attached
                                                              ---------
hereto  and  incorporated  herein  by  reference.  All  such  real  and personal
properties,  both  tangible  and  intangible,  together  with  all improvements,
appurtenances,  rights and interests described in and encumbered by the Security
Instruments,  are  hereinafter  referred  collectively as the "Properties".  For
                                                               ----------
purposes  of  this  Agreement,  that  part  of the Properties located in (i) San
Bernardino  County  in the State of California is hereby referred to as the "The
                                                                             ---
Palms  at Loma Linda Facility", (ii) San Diego County in the State of California
 ----------------------------
is  hereby  referred to as the "The Springs at Oceanside Facility", (iii) Butler
                                ---------------------------------
County  in  the  State  of  Kansas is hereby referred to as the "The Fairways at
                                                                 ---------------
Augusta  Facility", (iv) Seward County in the State of Kansas is hereby referred
    -------------
to  as  the  "Liberal  Springs Facility", and (v) El Paso County in the State of
              -------------------------
Colorado  is hereby referred to as the "Loyalton at Broadmoor Facility", as each
                                        ------------------------------
such  facility  is being renamed by Purchaser with the original names when owned
by  Borrower  being  described  on  Exhibit  A-1  and  Exhibit  B  hereto;  and
                                    ------------       ----------
WHEREAS,  the  Loan is further evidenced and secured by, among other things, (i)
those  certain  Assignments  of Leases and Rents, dated as of July 30, 1998, and
executed by Borrower in favor of Original Lender, covering all of the Properties
(collectively,  the  "Lease  Assignments");  (ii)  those certain Lessee Security
                      ------------------
Agreements  dated  July 30, 1998, and executed by Alterra, in favor of Borrower,
applicable  to  each  of  the  Properties  (other than the Loyalton at Broadmoor
Facility)  and  by Sterling House Corporation, a Kansas corporation, in favor of
Borrower,  applicable  to  the Loyalton at Broadmoor Facility (collectively, the
"Lessee  Security  Agreements"); and (iii) that certain Collateral Assignment of
  ---------------------------
Lessee's  Security  Agreements,  dated  as  of  July  30,  1998, and executed by
Borrower  in  favor  of  Original  Lender  (the  "Lessee  Security  Agreements
                                                  ----------------------------
Assignment");  (iv) that certain Exceptions to Nonrecourse Guaranty, dated as of
July  30,1998  (the  "Original Guaranty"); (v) that certain Lessee Environmental
                      -----------------
Indemnity  Agreement,  dated  as  of  July  30,  1998  (the  "Original  Lessee
                                                              ----------------
Environmental  Indemnity");  (vi)  those  certain  Subordination  and Attornment
           -------------
Agreements,  dated  as  of  July  30,  1998  (collectively,  the  "Subordination
                                                                   -------------
Agreements");  and  (vii)  those  certain UCC-1 Financing Statements executed by
        --
Borrower  in  favor  of  Lender  securing  the Loan (collectively, the "Borrower
                                                                        --------
UCCs")  and  those certain UCC-Financing Statements executed by Alterra in favor
of Borrower securing the Lessee Security Agreements, as collaterally assigned to
Lender  (collectively,  the  "Lease UCCs").  The Note, the Security Instruments,
                              ----------
the  Assignments of Leases and Rents, the Lease Assignments, the Lessee Security
Agreements,  the  Lessee  Security Agreements Assignment, the Original Guaranty,
the  Original  Lessee Environmental Indemnity, the SNDAs, the Borrower UCCs, the
Lease  UCCs  and  any  and  all  other  documents  and instruments evidencing or
securing the Loan are hereinafter referred to collectively as the "Original Loan
                                                                   -------------
Documents";  and
---------
WHEREAS,  the  Loan  has  been assigned by Original Lender to Lender pursuant to
those  certain Assignments of Mortgage and Security Agreement and Assignments of
Assignment  of  Leases  and  Rents,  dated as of August 6, 1998, and executed by
Original  Lender, as assignor, in favor of Lender, as assignee as also described
in  the  aforementioned  Exhibit  A;  and
                         ----------
WHEREAS,  pursuant  to  the terms and conditions of that certain Stipulation and
Order  by and between the Debtor and LaSalle Bank National Association (formerly
known  as  LaSalle  National  Bank)  as  Trustee  for  GMAC  Commercial Mortgage
Securities,  Inc.  Mortgage  Pass  Through  Certificates,  Series  1998-C2  (A)
Permitting Use of Cash Collateral; (B) Consenting to Assumption Transaction with
Emeritus Corporation; (C) Consenting to Immediate Relief from the Automatic Stay
of 11 U.S.C.   362; and (D) Amending and Replacing Stipulation and Order of June
13,  2003  Permitting  Use  of  Cash  Collateral,  entered  November 26, 2003 in
Alterra's voluntary Chapter 11 Case No. 03-10254 (the "Stipulation"), Lender has
released  Alterra  from  its  obligations  under  the  Original Guaranty and the
Original  Lessee  Environmental Indemnity and all other Original Loan Documents,
other  than  any  claims  for  damages  for  breach  of  the  Stipulation;
     WHEREAS, Lender has been asked to consent to the transfer of the Properties
to  Purchaser  and to the assumption by Purchaser of the obligations of Borrower
under  the  Loan  and  certain  of  the  Original  Loan  Documents;  and
WHEREAS,  Lender  has agreed to consent to the transfer of the Properties and to
the assumption of the Loan, on and subject to the terms and conditions set forth
herein;  and
NOW,  THEREFORE,  for  and  in  consideration  of the foregoing premises and the
mutual covenants and agreements contained herein and for other good and valuable
consideration,  the  receipt  and  sufficiency of which are hereby acknowledged,
Lender,  Borrower,  Purchaser,  Alterra,  and  New  Indemnitor  hereby  agree as
follows:
1.     Assumption  of Obligations by Purchaser.  For purposes of this Agreement,
       ---------------------------------------
the  Note,  the  Security  Instruments,  and  the  other Original Loan Documents
(excluding  from  the  Original Loan Documents for purposes of this sentence the
Lessee  Security  Agreements,  the  Lessee  Security  Agreement Assignments, the
Original  Guaranty,  the  Original  Lessee  Environmental  Indemnity,  the
Subordination  Agreements, the Borrower UCCs and the Lease UCCs), as modified by
this Agreement and the Letter Agreement Regarding Loan Agreement (as hereinafter
     defined),  together  with  the  New Environmental Indemnity (as hereinafter
defined),  the  Payment  Guaranty (as hereinafter defined), the Letter Agreement
Regarding  Loan  Agreement  and  the Purchaser UCCs (as hereinafter defined) are
hereinafter  referred  to collectively as the "Loan Documents". Purchaser agrees
                                               --------------
to  assume  and  does  hereby  assume  and  covenant and agree to timely pay and
perform all of the payment and performance obligations of Borrower arising from,
on or after the Effective Date under the Loan Documents in accordance with their
respective  terms  and conditions, including, without limitation, the obligation
of payment of all sums due from, on and after the Effective Date under the Note.
Purchaser  further  agrees from, on and after the Effective Date to abide by and
be  bound  by  all  of  the  terms  of  the  Loan  Documents  and  all  of  the
representations,  warranties,  covenants,  agreements,  and  acknowledgments  of
Borrower  contained  in  the  Loan  Documents,  all  as  though each of the Loan
Documents  had  been  made,  executed,  and  delivered  by  Purchaser  as of the
Effective  Date.
2.     Certain  Contemporaneous  Documents.
       -----------------------------------
(a)     Payment  Guaranty,  New  Environmental  Indemnity  and  Purchaser  UCCs.
        -----------------------------------------------------------------------
Simultaneously  with  the  execution  and  delivery  of this Agreement:  (i) New
Indemnitor  and  Purchaser  have  executed  and  delivered  a  new Environmental
Indemnity  Agreement (the "New Environmental Indemnity"), of even date herewith,
                           ---------------------------
in  favor  of  Lender,  pursuant  to  which  Purchaser  and  New Indemnitor have
indemnified  Lender  for the matters as described therein and in accordance with
the  terms  of the New Environmental Indemnity; (ii) New Indemnitor has executed
and delivered an Unconditional Guaranty of Payment and Performance, of even date
     herewith,  in  favor  of Lender (the "Payment Guaranty"), pursuant to which
                                           ----------------
New  Indemnitor  has  guaranteed  the  payment  and  performance  of Purchaser's
obligations under the Loan Documents in accordance with the terms and conditions
of  the  Payment  Guaranty;  and (iii) Purchaser has authorized Lender to record
certain  UCC-1  financing statements naming Purchaser, as debtor, and Lender, as
secured  party  (the  "Purchaser  UCCs").
                       ---------------
(b)     Letter  Agreement  Regarding  Loan  Agreement.  Simultaneously herewith,
        ---------------------------------------------
Purchaser  and Lender have executed that certain Letter Agreement Regarding Loan
Agreement,  of  even  date  herewith  (the  "Letter  Agreement  Regarding  Loan
                                             ----------------------------------
Agreement"),  pursuant  to  which  Purchaser  and  Lender have agreed to certain
modified covenants and agreements with respect to certain provisions of the Loan
Documents.  Alterra  and  New  Indemnitor  hereby acknowledge and consent to the
execution and delivery by Purchaser and Lender of the Letter Agreement Regarding
Loan  Agreement.
(c)     Loyalton  at  Broadmoor  Interim  Arrangements.  The  parties  hereto
        ----------------------------------------------
acknowledge  and  agree that certain interim transitional arrangements are being
put  into  place  with respect to the Loyalton at Broadmoor Facility pursuant to
which,  in accordance with the terms, conditions and documents described and set
forth  in Exhibit E attached hereto and incorporated by reference, Alterra shall
          ---------
continue  on  an  interim  basis,  pending  the  completion of certain licensure
matters  as to Purchaser or Purchaser's designee with respect to the Loyalton at
Broadmoor  Facility,  to  operate such facility under a modified lease agreement
between  Purchaser  and  Alterra.  Notwithstanding  anything  to  the  contrary
contained  in the Loan Documents, including, without limitation, this Agreement,
the  terms  and  provisions  of  Exhibit  E  shall  govern  and control the Loan
                                 ----------
Documents.
3.     Consent  to  Transfer.  Lender  hereby  consents  to  the transfer of the
       ---------------------
Properties  to Purchaser (subject to the Loan and the Loan Documents) and to the
assumption by Purchaser of all of the obligations of Borrower from, on and after
     the  Effective  Date  under  the  Loan  Documents, subject to the terms and
conditions set forth in this Agreement.  Lender's consent to the transfer of the
Properties  to  Purchaser  and to the assumption of the Loan by Purchaser is not
intended  to  be,  and  shall  not  be construed as, a consent to any subsequent
transfer or conveyance or assumption which requires Lender's consent pursuant to
the  terms  of  the  Loan  Documents.
4.     Acknowledgments,  Warranties, and Representations of Alterra Parties.  As
       --------------------------------------------------------------------
a  material inducement to Lender to enter into this Agreement, to consent to the
transfer  of  the  Properties,  and  to  consent  to the assumption of the Loan,
Borrower  and  Alterra  hereby  acknowledge,  represent,  warrant,  and  agree,
(Borrower,  and, Alterra being hereinafter sometimes collectively referred to as
the  "Alterra  Parties"),  to  and  for  the  benefit  of  Lender,  as  follows:
      ----------------
(a)     Indebtedness.  That,  as  of  the  date  of this Agreement: (a) prior to
        ------------
application  of  the  January 1, 2004, payment due under the Loan Documents, the
unpaid principal balance of the Note is $22,639,265.78; (b) the current interest
     rate  under  the  Note  is  6.98%  per  annum; (c) interest has accrued and
remains  unpaid under the Note for the period from December 1, 2003, through the
date  of  this Agreement; (d) the constant principal and interest payment amount
due  each  month (prior to the maturity date) under the Note is $178,009.15; (e)
the  next monthly payment under the Note becomes due on January 1, 2004; and (f)
the  maturity  date  under  the  Note  is  August  1,  2008.
(b)     Loan  Documents.  That,  except  as  set  forth  in the Stipulation, the
        ---------------
Alterra Parties have no defenses, setoffs, objections, claims, counterclaims, or
causes  of  action  of any kind or nature whatsoever with respect to the Loan or
the  Loan  Documents,  or  the  indebtedness  evidenced  and  secured  thereby.
(c)     Transfer  of  Property.  That  contemporaneously  with the execution and
        ----------------------
delivery  of this Agreement, Borrower has assigned, conveyed, and transferred to
Purchaser  all of Borrower's right, title, and interest in and to the Properties
and  any  and all personal property owned by Borrower located on, relating to or
arising  from the operation of the Properties and Alterra has assigned, conveyed
and  transferred  to Purchaser all of Alterra's right, title and interest in and
to  any  personal  property  owned by Alterra located on, relating to or arising
from  operation  of  the  Properties,  pursuant  to  the  transfer  documents
contemplated  to  be  executed and delivered pursuant to that certain Conveyance
and  Operations  Transfer  Agreement,  made  and entered into as of December 31,
2003,  by and among Borrower, Alterra and Purchaser (collectively, the "Transfer
                                                                        --------
Documents"),  in  each case, excluding only the Excluded Property (as defined in
---------
the  Transfer  Documents).  The  Alterra Parties, jointly and severally, warrant
and  represent  to  Lender  that, except for the Transfer Documents, none of the
Alterra  Parties  has  entered  into,  executed,  or  delivered  any  contracts,
agreements,  or  other  documents  or  instruments  with  Purchaser (or with any
affiliates  of  Purchaser)  regarding the assignment, conveyance, or transfer of
the  Properties  to  Purchaser  or  otherwise  regarding  any interest of either
Borrower  or  Alterra  in the Properties, other than such contracts, agreements,
documents and instruments as may be necessary in the ordinary course of business
to fully evidence and complete the conveyance of the Properties to Purchaser and
copies  of  which  have  been  provided  to  Lender.
(d)     Further  Assurances.  That each of the Alterra Parties shall execute and
        -------------------
deliver  to  Lender such agreements, instruments, statements, and other writings
as  may  be  reasonably  requested from time to time by Lender to consummate the
transactions  contemplated  by  or  in  this  Agreement.
(e)     Imposition  Deposits.  That,  pursuant  to  the  terms  of  the Security
        --------------------
Instruments,  Borrower has made monthly payments to Lender to fund a reserve for
the  payment  of real estate taxes on the Properties (the "Imposition Deposits")
                                                           -------------------
and  that, as of the date of this Agreement, prior to application of the January
1,  2004,  payment  due under the Loan Documents, the Imposition Deposits have a
balance  of  $177,375.26.  The  Alterra  Parties  acknowledge  that Borrower has
transferred  and  conveyed  all  of Borrower's right, title, and interest in the
Imposition  Deposits  to  Purchaser.
5.     Acknowledgments, Warranties and Representations of Purchaser Parties.  As
       --------------------------------------------------------------------
     a  material inducement to Lender to enter into this Agreement to consent to
the  sale,  conveyance  and  transfer  of  the Properties, and to consent to the
assumption  of  the  Loan,  Purchaser  and  New  Indemnitor  (Purchaser  and New
Indemnitor  being  herein  sometimes  together  referred  to  as  the "Purchaser
Parties")  hereby:
(a)     represent  and  warrant  to  and  for the benefit of Lender, as follows:
(i)     Loan  Documents.  That  the  Loan  Documents,  as  assumed  by Purchaser
        ---------------
pursuant  to this Agreement, constitute valid and legally binding obligations of
Purchaser,  and  are enforceable against Purchaser and against the Properties in
accordance  with  their  terms,  except as such enforceability may be limited by
creditors  rights  laws  and  general  principles  of equity; and that as of the
Effective  Date  the  Purchaser  Parties  have no defenses, setoffs, objections,
claims, counterclaims, or causes of action of any kind or nature whatsoever with
     respect  to  the  Loan or the Loan Documents, or the indebtedness evidenced
and  secured  thereby;  and
(ii)     Transfer  of  Property.  That  contemporaneously with the execution and
         ----------------------
delivery  of this Agreement, Borrower has assigned, conveyed, and transferred to
Purchaser  all of Borrower's right, title, and interest in and to the Properties
and  any  and all personal property owned by Borrower located on, relating to or
arising  from the operation of the Properties and Alterra has assigned, conveyed
and  transferred  to Purchaser all of Alterra's right, title and interest in and
to  any  personal  property  owned by Alterra located on, relating to or arising
from  operation  of  the Properties, pursuant to the Transfer Documents, in each
case,  excluding  only  the  Excluded  Property  (as  defined  in  the  Transfer
Documents).  The Purchaser Parties, jointly and severally, warrant and represent
to Lender that, except for the Transfer Documents, none of the Purchaser Parties
has  entered  into,  executed,  or delivered any contracts, agreements, or other
documents  or  instruments  with  Borrower  (or with any affiliates of Borrower)
regarding the assignment, conveyance, or transfer of the Properties to Purchaser
or  otherwise  regarding  any  interest  of  either  Borrower  or Alterra in the
Properties,  other than such contracts, agreements, documents and instruments as
may  be  necessary  in  the  ordinary  course  of business to fully evidence and
complete  the conveyance of the Properties to Purchaser and copies of which have
been  provided  to  Lender;  and
(b)     acknowledge  and  agree:
(i)     Indebtedness.  That,  as  of  the  date  of this Agreement: (a) prior to
        ------------
application  of  the  January 1, 2004, payment due under the Loan Documents, the
unpaid principal balance of the Note is $22,639,265.78; (b) the current interest
     rate  under  the  Note  is  6.98%  per  annum; (c) interest has accrued and
remains  unpaid under the Note for the period from December 1, 2003, through the
date  of  this Agreement; (d) the constant principal and interest payment amount
due  each  month (prior to the maturity date) under the Note is $178,009.15; (e)
the  next monthly payment under the Note becomes due on January 1, 2004; and (f)
the  maturity  date  under  the  Note  is  August  1,  2008;  and
(ii)     Further  Assurances.  That  each of the Purchaser Parties shall execute
         -------------------
and  deliver  to  Lender  such  agreements,  instruments,  statements, and other
writings  as  may be reasonably requested from time to time by Lender to perfect
or  maintain  the  perfection  of  Lender's  security  interest  in  and  to the
Properties  and  to  consummate  the  transactions  contemplated  by  or in this
Agreement  and  the  Loan  Documents;  and
(iii)     Imposition  Deposits.  That,  pursuant  to  the  terms of the Security
          --------------------
Instruments,  Borrower has made monthly payments to Lender to fund a reserve for
the  payment  of real estate taxes on the Properties (the "Imposition Deposits")
                                                           -------------------
and  that, as of the date of this Agreement, prior to application of the January
1,  2004,  payment  due under the Loan Documents, the Imposition Deposits have a
balance  of  $177,375.26.  The  Purchaser Parties further represent, warrant and
acknowledge  that Borrower has transferred and conveyed all of Borrower's right,
title,  and  interest  in  the  Imposition  Deposits to Purchaser, and Purchaser
affirms  Purchaser's  obligation hereafter to make monthly payments to Lender to
fund  the  Imposition  Deposits  in  amounts  as determined from time to time by
Lender  in  accordance  with  the  terms  of  the  Security  Instruments.
6.     Lender  Representations  and  Warranties.  Lender  hereby  represents and
       ----------------------------------------
warrants  to  Purchaser  and  New  Indemnitor that as of the Effective Date: (a)
prior  to  application  of  the  January  1,  2004,  payment  due under the Loan
Documents,  the  Note has an outstanding principal balance of $22,639,265.78 and
interest  has  been  paid through December 1, 2003 (prior to taking into account
the interest payment to be made by Purchaser under the Note on January 1, 2004);
     (b)  prior to the application of the January 1, 2004, payment due under the
Loan  Documents,  Lender is holding Imposition Deposits under the Loan Documents
for  the  payment  of  real  estate  taxes  on  the  Properties in the amount of
$177,375.26; and (c) Lender has not given any written notice of default prior to
the  Effective  Date under the Loan Documents, except for any written notices of
default  with  respect  to  which the subject default has been cured or has been
waived  by  Lender.
7.     Financing  Statements.  (a)  Purchaser  hereby  authorizes  Lender,  its
       ---------------------
counsel  or its representative, at any time and from time to time from and after
the  Effective Date, to file one or more new financing statements, or amendments
to  existing  financing  statements,  covering  fixtures  and  personal property
collateral  included  in  the  Properties  and covered by any security agreement
contained  in  any  of  the  Loan Documents, without the signature of Purchaser,
where  permitted  by  law, in such jurisdictions as Lender may deem necessary or
desirable,  and  such  financing  statements  may  contain, among other items as
Lender  may  deem  advisable  to include therein, the federal tax identification
number  of  Purchaser,  and  may describe the property covered by such financing
statements  as  "all assets of Purchaser," "all personal property of Purchaser,"
or words of similar effect.  Lender shall promptly provide Purchaser with copies
of  any  such financing or continuation statements which may be filed by Lender.
Purchaser  acknowledges  and  agrees  that  Lender  continues to have a security
interest in all fixtures, personal property, and other property described in the
Loan  Documents  (the  "Collateral")  transferred  to  Purchaser by Borrower and
                        ----------
further  acknowledges  and  agrees that Lender shall continue to have a security
interest  (and  is hereby granted a security interest) in all Collateral whether
such Collateral is now owned by Purchaser or is hereafter acquired by Purchaser.
(b)     In  consideration  of  the  filing  of the Purchaser UCCs, Lender hereby
covenants  and  agrees  for  the benefit of the parties hereto and Chicago Title
Insurance  Company  ("CTIC")  following the Effective Date to promptly cause all
                      ----
Borrower  UCCs  and  the  Lease  UCCs  to be terminated.  Borrower covenants and
agrees  for  the  benefit  of  the  parties  hereto  and  CTIC to countersign or
otherwise  consent to any such termination statements, if required, to terminate
the  Lease  UCCs.
8.     No  Impairment  of  Lien.  Nothing  set  forth  herein  shall  affect the
       ------------------------
priority  or  extent of the security title or lien of any of the Loan Documents,
nor, except as may be expressly set forth herein and in the Stipulation, release
     or  change  the  liability of any party who may now be or after the date of
this  Agreement,  become  liable,  primarily  or  secondarily,  under  the  Loan
Documents.  Except  as  expressly  modified  hereby,  the  Note,  the  Security
Instruments  and the other Loan Documents shall remain in full force and effect,
and  this  Agreement  shall  have  no  effect on the priority or validity of the
security  title or liens set forth in the Security Instruments or the other Loan
Documents.
9.     Purchaser  Obligations.  From  and  after the date of this Agreement, all
       ----------------------
documents,  actions,  or  responsibilities which are required under the terms of
the  Loan  Documents  to  be  undertaken  by  Borrower  shall  be deemed to be a
responsibility of Purchaser, except as is specifically otherwise provided in the
Letter Agreement Regarding Loan Agreement.  For example, but without limitation,
Purchaser  is  now required to provide financial statements and information with
respect  to itself in lieu of the provision of financial information by Borrower
as  to  Borrower.  Additionally, circumstances in the Loan Documents which would
or  could  create a default and/or an Event of Default and which are relative to
the nature or condition of Borrower or Alterra, shall now be deemed effective as
to the nature or condition, respectively, of Purchaser and New Indemnitor (e.g.,
bankruptcy of Purchaser shall now constitute a default rather than bankruptcy of
Borrower  and bankruptcy of New Indemnitor shall now constitute a default rather
than  bankruptcy  of  Alterra).
10.     Further  Acknowledgments,  Warranties,  and Representations of Purchaser
        ------------------------------------------------------------------------
Parties.  As an inducement to Lender to enter into this Agreement and to consent
  -----
to  the  conveyance  of the Properties to Purchaser and to the assumption of the
Loan  by  Purchaser, Purchaser and New Indemnitor hereby acknowledge, represent,
warrant,  and agree to and with Lender that (i) except as expressly set forth in
this  Agreement,  Lender  has made no representation or statement of any kind to
Purchaser  or  New  Indemnitor  concerning the Properties, the Loan, or the Loan
Documents;  (ii)  Purchaser  and  New Indemnitor draw no inference from Lender's
silence  concerning  the Properties, the Loan, and the Loan Documents; and (iii)
in  connection with the assumption of the Loan, Lender has no duty or obligation
whatsoever  to  provide  information  or  advice  to Purchaser or New Indemnitor
concerning  the  Properties,  the  Loan,  or  the  Loan  Documents.
11.     No  Waiver  of  Remedies.  Except as expressly set forth herein, nothing
        ------------------------
contained in this Agreement shall prejudice, act as, or be deemed to be a waiver
of  any  right  or  remedy  available  to  Lender by reason of the occurrence or
existence  at  any  time  from,  on  or  after  the  Effective Date of any fact,
circumstance,  or  event constituting a default under the Note or the other Loan
Documents,  it  being  understood and agreed that Lender has agreed to waive any
default  under  the  Note or the Loan Documents which arose or occurred prior to
the  Effective  Date as a result of the acts or omissions of Borrower or Alterra
under  the  Loan  Documents.
12.     Ratification  and  Reaffirmation.  Except  as  set  forth  in the Letter
        --------------------------------
Agreement  Regarding  Loan  and  this  Agreement,  Purchaser  hereby affirms and
confirms  the truth and accuracy of all representations and warranties set forth
in  the  Loan  Documents.
13.     Release  of  Lender.  The  Alterra  Parties  and  the Purchaser Parties,
        -------------------
jointly  and  severally,  for  themselves  and  their  respective successors and
assigns,  do  hereby  remise,  release,  acquit,  waive,  satisfy,  and  forever
discharge  Lender  and  any  and all of Lender's predecessors in interest, their
respective  affiliates  and  subsidiaries,  and  all  of their past, present and
future officers, directors, contractors, employees, agents, attorneys, servicers
(including,  but  not  limited  to,  GMAC  Commercial  Mortgage  Corporation,  a
California  corporation,  as  servicer  for Lender), attorneys, representatives,
participants,  successors, and assigns (collectively, the "Lender Parties") from
                                                           --------------
any  and  all  manner of debts, accountings, bonds, warranties, representations,
covenants,  promises,  contracts,  controversies,  agreements,  liabilities,
obligations,  expenses,  damages,  judgments,  executions, objections, defenses,
setoffs,  actions,  claims,  demands,  and  causes  of  action  of  any  nature
whatsoever,  whether  at  law or in equity, whether known or unknown, either now
accrued  or  hereafter  maturing,  which any of the Alterra Parties or Purchaser
Parties  now  has  or hereafter can, shall, or may have by reason of any matter,
cause,  or  thing,  from the beginning of the world to and including the date of
this Agreement arising out of or relating to the Loan, the Loan Documents or the
indebtedness  evidenced  and secured thereby, the Properties or the development,
financing,  and operation thereof, or any other agreement or transaction between
any  of  the Alterra Parties and any of the Lender Parties or between any of the
Purchaser  Parties  and any of the Lender Parties relating to the Loan, the Loan
Documents  or the Properties; and the Alterra Parties and the Purchaser Parties,
for  themselves and their respective successors and assigns, hereby covenant and
agree  never  to  institute or cause to be instituted or continue prosecution of
any  suit or other form of action or proceeding of any kind or nature whatsoever
against  any of the Lender Parties by reason of or in connection with any of the
foregoing  matters,  claims,  or  causes  of  action.
14.     Release  of  Alterra  Parties.  The Lender for itself and its successors
        -----------------------------
and  assigns,  does  hereby remise, release, acquit, waive, satisfy, and forever
discharge  Alterra  and  Borrower and any and all of their respective affiliates
and subsidiaries, and all of their past, present and future officers, directors,
contractors,  employees,  agents,  attorneys,  representatives,  successors, and
assigns  (collectively,  the "Alterra Released Parties") from any and all manner
                              ------------------------
of  debts, accountings, bonds, warranties, representations, covenants, promises,
contracts,  controversies,  agreements,  liabilities,  obligations,  expenses,
damages,  judgments, executions, objections, defenses, setoffs, actions, claims,
demands,  and  causes  of  action of any nature whatsoever, whether at law or in
equity,  whether  known  or  unknown,  either now accrued or hereafter maturing,
which  Lender  now  has  or  hereafter  can, shall, or may have by reason of any
matter,  cause,  or  thing, from the beginning of the world to and including the
date  of  this  Agreement  arising  out  of  or  relating  to the Loan, the Loan
Documents  or  the indebtedness evidenced and secured thereby, the Properties or
the  development,  financing,  and  operation thereof, or any other agreement or
transaction  between  any  of  the Alterra Parties and Lender or any of Lender's
predecessor's  in  interest  relating  to  the  Loan,  the Loan Documents or the
Properties,  but  excluding  specifically  any  the Alterra Parties' obligations
under Section 2 (but only excluding Section 2 from this release and covenant not
to  sue  to the extent the Alterra Parties shall remain obligated to execute and
deliver,  if  required, documents to correct scrivener's errors), Section 4, and
Section  9  of  the  Stipulation;  and  Lender for itself and its successors and
assigns,  hereby  covenants  and  agrees  never  to  institute  or  cause  to be
instituted  or  continue  prosecution  of  any  suit  or other form of action or
proceeding  of any kind or nature whatsoever against any of the Alterra Released
Parties by reason of or in connection with any of the foregoing matters, claims,
or  causes  of  action.
15.     Notices.  Any  notices  or  other  communications  required or permitted
        -------
under  this Agreement or the Loan Documents shall be provided in accordance with
the requirements therefor as set forth in the Loan Documents; provided, however,
that  from  and  after  the  date  hereof  the addresses of Lender and Purchaser
(identified as "Trustor," "Grantor" or "Mortgagor"  in the Security Instruments)
shall,  subject  to change as provided in the Loan Documents, be as set forth in
Exhibit  D  attached  hereto  and  incorporated  herein  by  reference.
 ---------
16.     Costs  and  Expenses;  Assumption  Fee.  Contemporaneously  with  the
        --------------------------------------
execution  and  delivery  hereof,  Purchaser shall pay, or cause to be paid, the
costs  and  expenses  incident to the preparation, execution, and recordation of
this  Agreement  and the consummation of the transaction contemplated hereby and
as  agreed  to  by  Lender  and  Purchaser  and  reflected  on the final closing
statement  approved  by  Lender,  including,  but  not  limited to, the fees and
expenses  of  legal  counsel to Lender.  In addition, contemporaneously with the
execution  and  delivery hereof, Purchaser shall pay to Lender an assumption fee
in an amount equal to one percent (1.0%) of the outstanding principal balance of
the  Loan,  which  fee  shall  not  be applied against any indebtedness or other
amounts  outstanding  under  the  Loan  Documents.
17.     References in Loan Documents.  All references to "Trustor," "Grantor" or
        ----------------------------
"Mortgagor"  (as  defined in the Security Instruments) shall be deemed, from and
after  the date hereof, to refer to Purchaser.  Any reference in any of the Loan
Documents  to  the Loan, the amount constituting the Loan, any defined terms, or
to  any of the other Original Loan Documents shall be deemed, from and after the
date  hereof,  to  refer  to the Loan, the amount constituting the Loan, defined
terms,  and to such other Original Loan Documents, as modified hereby and by the
Letter  Agreement  Regarding  Loan  Agreement  and  as  now  constitute the Loan
Documents.  From  and  after  the  date  hereof,  this  Agreement,  the  New
Environmental  Indemnity, the Payment Guaranty, and all other documents executed
in  connection  herewith shall be deemed to constitute additional Loan Documents
for  all  purposes  under  the  Loan  Documents.
18.     Governing  Law.  The validity, interpretation, enforcement and effect of
        --------------
this  agreement shall be governed by, and construed in accordance with, the laws
of  the  State of Kansas, and the parties hereto submit (and waive all rights to
object)  to  non-exclusive personal jurisdiction in the State of Kansas, for the
enforcement  of  any  and  all  obligations  under the Loan Documents, provided,
however,  that with respect to the creation, perfection and enforcement of liens
on  real property securing the Security Instruments, the substantive laws of the
state  in which such property is located shall govern.  Should any obligation or
remedy  under  this  Agreement  be invalid or unenforceable pursuant to the laws
provided  herein to govern, the laws of any other state referred to herein or of
any  other  state  whose  laws  can  validate  and  apply  thereto shall govern.
19.     Time.  Time  is  of  the  essence  in  the  performance of the covenants
        ----
contained  herein  and  in  the  Loan  Documents.
20.     Binding  Agreement.  This Agreement shall be binding upon the successors
        ------------------
and  assigns  of  the  parties hereto; provided, however, the provisions of this
Paragraph  18  shall  not  be  deemed  or  construed  to  (i)  permit, sanction,
authorize, or condone the assignment of all or any part of the Properties or any
of  Purchaser's rights, titles, or interests in and to the Properties, except as
expressly  authorized  in  the  Loan Documents; or (ii) confer any right, title,
benefit,  cause  of  action,  or  remedy  upon  any person or entity not a party
hereto,  which  such  party  would  not  or  did  not  otherwise  possess.
21.     Headings.  The  section  headings hereof are inserted for convenience of
        --------
reference  only  and  shall  in  no  way alter, amend, define, or be used in the
construction  or  interpretation  of  the  text  of  such  section.
22.     Construction.  Whenever the context hereof so requires, reference to the
        ------------
singular  shall  include the plural, and, likewise, the plural shall include the
singular;  words  denoting  gender  shall  be  construed  to mean the masculine,
feminine,  or neuter, as appropriate; and specific enumeration shall not exclude
the  general  but  shall  be  construed as cumulative of the general recitation.
23.     Severability.  If any clause or provision of this Agreement is or should
        ------------
ever  be  held  to  be  illegal,  invalid, or unenforceable under any present or
future  law  applicable  to  the terms hereof, then and in that event, it is the
intention  of  the parties hereto that the remainder of this Agreement shall not
be  affected  thereby  and that in lieu of each such clause or provision of this
Agreement  that  is illegal, invalid, or unenforceable, such clause or provision
shall  be judicially construed and interpreted to be as similar in substance and
content  to  such  illegal, invalid, or unenforceable clause or provision as the
context  thereof  would reasonably suggest, so as to thereafter be legal, valid,
and  enforceable.
24.     Counterparts.  To  facilitate  execution,  this  Agreement  (including,
        ------------
without  limitation,  the  initialing  of  Section  29 of this Agreement) may be
executed in as many counterparts as may be convenient or required.  It shall not
be  necessary  that  the  signature and acknowledgment of, or on behalf of, each
party,  or that the signature and acknowledgment of all persons required to bind
any  party,  appear  on  each  counterpart.  All counterparts shall collectively
constitute  a  single  instrument.  It shall not be necessary in making proof of
this  Agreement  to  produce  or  account  for  more  than  a single counterpart
containing  the  respective  signatures  and acknowledgment of, or on behalf of,
each  of  the  parties  hereto.
25.     ENTIRE  AGREEMENT.  THIS  AGREEMENT,  THE  LOAN  DOCUMENTS AND THE OTHER
        -----------------
DOCUMENTS  AND  INSTRUMENTS  EXECUTED  AND  DELIVERED  IN  CONNECTION  WITH THIS
AGREEMENT  EMBODY  THE  FINAL,  ENTIRE  AGREEMENT  AMONG  THE PARTIES HERETO AND
THERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF, AND SUPERSEDE ANY
AND  ALL  PRIOR  COMMITMENTS,  AGREEMENTS,  REPRESENTATIONS, AND UNDERSTANDINGS,
WHETHER  WRITTEN  OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND
MAY  NOT  BE  CONTRADICTED  OR  VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT  ORAL  AGREEMENTS  OR  DISCUSSIONS  OF THE PARTIES HERETO OR THERETO.
THERE  ARE  NO  ORAL  AGREEMENTS  AMONG  THE  PARTIES  HERETO  OR  THERETO.  THE
PROVISIONS  OF  THIS  AGREEMENT  AND  THE OTHER LOAN DOCUMENTS MAY BE AMENDED OR
WAIVED ONLY BY AN INSTRUMENT IN WRITING SIGNED BY THE RESPECTIVE PARTIES TO SUCH
DOCUMENTS.
26.     References  to GAAP.  Lender and Purchaser Parties hereby agree that any
        -------------------
and all references to GAAP or Generally Accepted Accounting Principles in any of
the  Loan  Documents  and  with  reference  to  any representations, warranties,
covenants  and  agreements  contained  in  any of the Loan Documents, including,
without  limitation,  any  provisions  or covenants regarding the preparation of
financial  statements,  shall  be  deemed  to be interpreted to refer to GAAP or
Generally  Accepted Accounting Principles except with reference to the manner in
which  Purchaser  Parties account for "move-in" fees on any financial statements
of  New  Borrower  or  the  Properties.
27.     (a)     Each  of the Security Instruments is hereby amended and modified
as  described in Exhibit C attached hereto and incorporated herein by reference.
                 ---------
(b)     The  Note  is  hereby amended by deleting Section 8.4 of the Note in its
entirety  and  replacing  said  section  with  the  following:
     8.4     Intentionally  Deleted.
28.     Each  of  the  Assignments  of  Leases  and  Rents is hereby amended and
modified by deleting all references to the "Lease Agreement' which is defined as
     the "Operating Lease" in the Assignment of Leases and Rents and by deleting
all  references  to  the  Operating  Lease,  each
               [THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]

<PAGE>
of  which  "Lease  Agreements" Lender and Purchaser Parties acknowledge is being
terminated  by  Alterra Parties in connection with the transactions contemplated
by  this  Agreement.
29.     Kansas  Notice.  The  following  provision is included in this Agreement
        --------------
for  purposes  of  compliance  with  Sections  16-117  and  16-118 of the Kansas
Statutes  Annotated:
NOTICE  TO  DEBTOR.  THIS  AGREEMENT  IS  THE  FINAL EXPRESSION OF THE AGREEMENT
------------------
BETWEEN  THE  PARTIES.  IT MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR ORAL
-----
CREDIT AGREEMENT OR OF A CONTEMPORANEOUS ORAL CREDIT AGREEMENT AMONG THE PARTIES
HERETO.  ANY  NONSTANDARD  TERMS  OR PREVIOUS ORAL CREDIT AGREEMENTS BETWEEN THE
PARTIES  MUST  BE  INSERTED  HERE  TO  BE  ENFORCEABLE:
                                      NONE.
THE  PARTIES  AFFIRM  BY  THEIR  INITIALS  BELOW  THAT NO UNWRITTEN, ORAL CREDIT
AGREEMENT  EXISTS  BETWEEN  THEM:
     GMAC COMMERCIAL MORTGAGE CORPORATION, AS ATTORNEY-IN- FACT FOR LASALLE BANK
NATIONAL  ASSOCIATION,  FORMERLY  KNOWN AS LASALLE NATIONAL BANK, AS TRUSTEE FOR
GMAC  COMMERCIAL  MORTGAGE  PASS-THROUGH  CERTIFICATES,  SERIES  1998-C2

     ALS  FINANCING,  INC.

     ALTERRA  HEALTHCARE  CORPORATION

     EMERITUS  PROPERTIES  XVI,  INC.

     EMERITUS  CORPORATION

               [THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]

<PAGE>

          IN  WITNESS WHEREOF, this Agreement is executed as of the day and year
first  above  written.

     LENDER:
     ------

     LASALLE BANK NATIONAL ASSOCIATION, FORMERLY KNOWN AS LASALLE NATIONAL BANK,
AS  TRUSTEE  FOR  GMAC  COMMERCIAL  MORTGAGE  PASS-THROUGH  CERTIFICATES, SERIES
1998-C2

     By:  GMAC  Commercial  Mortgage  Corporation,  Special  Servicer  and
Attorney-In-Fact
       By: /s/  David J. Stoller
     Name:      David J. Stoller
    Title:  Vice President

     PURCHASER:
     ---------

     EMERITUS  PROPERTIES  XVI,  INC.,  a  Nevada  corporation
     By: /s/  William M. Shorten
   Name:      William M. Shorten
  Title:  Director of Real Estate Finance

     NEW  INDEMNITOR:
     ---------------

     EMERITUS  CORPORATION,  a  Washington  corporation
     By: /s/  William M. Shorten
   Name:      William M. Shorten
  Title:  Director of Real Estate Finance

     ALTERRA:
     -------

     ALTERRA  HEALTHCARE  CORPORATION
     By: /s/  Mark W. Ohlendorf
   Name:      Mark W. Ohlendorf
  Title:  President

     BORROWER:
     --------

     ALS  FINANCING  INC.,  a  Kansas  corporation
     By: /s/  Mark W. Ohlendorf
   Name:      Mark W. Ohlendorf
  Title:  Vice President

<PAGE>
                            CORPORATE ACKNOWLEDGMENT

(State  and  County  Where  Executed)
     On December __, 2003, before me,                         , a Notary Public,
personally  appeared:                    , the                of GMAC Commercial
Mortgage  Corporation,  personally  known to me (or proved to me on the basis of
satisfactory  evidence)  to be the person whose name is subscribed to the within
instrument  and  acknowledged  to  me  that  he/she executed the same in his/her
authorized capacity, and that by his/her signature on the instrument the person,
or  the  entity  upon behalf of which the person acted, executed the instrument.
     WITNESS  my  hand  and  official  seal.
Signature                              (SEAL)

<PAGE>
                            CORPORATE ACKNOWLEDGMENT

(State  and  County  Where  Executed)
     On December __, 2003, before me,                         , a Notary Public,
personally  appeared:                    ,  the                of  Emeritus
Properties  XVI,  Inc.,  personally known to me (or proved to me on the basis of
satisfactory  evidence)  to be the person whose name is subscribed to the within
instrument  and  acknowledged  to  me  that  he/she executed the same in his/her
authorized capacity, and that by his/her signature on the instrument the person,
or  the  entity  upon behalf of which the person acted, executed the instrument.
     WITNESS  my  hand  and  official  seal.
Signature                              (SEAL)
<PAGE>
                            CORPORATE ACKNOWLEDGMENT

(State  and  County  Where  Executed)
     On December __, 2003, before me,                         , a Notary Public,
personally  appeared:                    ,  the                of  Emeritus
Corporation,  personally  known  to  me  (or  proved  to  me  on  the  basis  of
satisfactory  evidence)  to be the person whose name is subscribed to the within
instrument  and  acknowledged  to  me  that  he/she executed the same in his/her
authorized capacity, and that by his/her signature on the instrument the person,
or  the  entity  upon behalf of which the person acted, executed the instrument.
     WITNESS  my  hand  and  official  seal.
Signature                              (SEAL)

<PAGE>
                            CORPORATE ACKNOWLEDGMENT

(State  and  County  Where  Executed)
     On December __, 2003, before me,                         , a Notary Public,
personally  appeared:                    ,  the                of  Alterra
Healthcare  Corporation, personally known to me (or proved to me on the basis of
satisfactory  evidence)  to be the person whose name is subscribed to the within
instrument  and  acknowledged  to  me  that  he/she executed the same in his/her
authorized capacity, and that by his/her signature on the instrument the person,
or  the  entity  upon behalf of which the person acted, executed the instrument.
     WITNESS  my  hand  and  official  seal.
Signature                              (SEAL)
<PAGE>
                            CORPORATE ACKNOWLEDGMENT

(State  and  County  Where  Executed)
     On December __, 2003, before me,                         , a Notary Public,
personally  appeared:                    ,  the                of  ALS Financing
Inc.,  personally  known  to  me  (or  proved to me on the basis of satisfactory
evidence) to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and  that  by his/her signature on the instrument the person, or the entity upon
behalf  of  which  the  person  acted,  executed  the  instrument.
     WITNESS  my  hand  and  official  seal.
Signature                              (SEAL)

<PAGE>
                                   Page 2 of 2
                                                               ATLANTA:4608512.7
                                    EXHIBIT A
                                    ---------
                               LEGAL DESCRIPTIONS

              LEGAL DESCRIPTION OF THE PALMS AT LOMA LINDA FACILITY
              -----------------------------------------------------
            City of Loma Linda, County of San Bernardino, California
Parcel  1  of  Parcel  Map  7277,  in  the  City  of  Loma  Linda, County of San
Bernardino,  State  of  California,  as per Map recorded in Book 83, Page 24, of
Parcel  Maps,  in  the  Office  of  the  County  Recorder  of  said  County.
     APN  No.  0283-201-51

             LEGAL DESCRIPTION OF THE SPRINGS AT OCEANSIDE FACILITY
             ------------------------------------------------------

               City of Oceanside, County of San Diego, California

Parcel  1  of Parcel Map No. 7252 in the City of Oceanside, County of San Diego,
State of California, as filed in the Office of the County Recorder of San Diego,
May  11,  1978  as  File  No.  78-191830,  Official  Records.
EXCEPTING  one  half of all petroleum and gas, if any, and allied hydrocarbonous
---------
substances  as  reserved  by the Vista Irrigation District by Deed recorded July
17,  1945 in Book 1901, Page 429, excepting the right to enter upon said land as
quitclaimed  by  the  Vista  Irrigation  District,  recorded  June  18,  1987 as
Instrument  No.  87-340401.
     APN  No.  168-012-27

             LEGAL DESCRIPTION OF THE LOYALTON OF BROADMOOR FACILITY
             -------------------------------------------------------
               City of Colorado Springs, El Paso County, Colorado
Lot  1,  Southpointe  Subdivision,  City of Colorado Springs, County of El Paso,
State  of  Colorado  as recorded in Plat Book P-5 at Page 91 under Reception No.
94105937  of  the  Records  of  El  Paso  County,  Colorado.

<PAGE>

              LEGAL DESCRIPTION OF THE FAIRWAYS AT AUGUSTA FACILITY
              -----------------------------------------------------
                     City of Augusta, Butler County, Kansas
Lot  Numbered 1, in Block Numbered 3, in Country Club First Addition to the City
of  Augusta,  in  Butler  County,  Kansas, Except the North 160.75 feet thereof.
                                           ------
Together with any and all right, title and interest in and to a 50' easement for
ingress  and  egress and for surface drainage over, under and across the West 50
feet  of the North 160.75 feet of Lot I, Block 3, in Country Club First Addition
to  the City of Augusta, as granted in Easement filed May 7, 1997 in Book 591 at
page  484.

                LEGAL DESCRIPTION OF THE LIBERAL SPRINGS FACILITY
                -------------------------------------------------
                     City of Liberal, Seward County, Kansas
The South 420 feet of Block 1, Woodland Terrace Addition to the City of Liberal,
Seward County, Kansas, more particularly described as follows:  Beginning at the
southwest  corner  of  said Block 1; thence N 00 10'40" W along the west line of
said  Block  1,  a  distance  of 420.00 feet; thence N 89 59'58" E a distance of
458.22 feet to a point on the westerly right-of-way of Terrace Avenue (having an
80  foot  right-of-way); thence continuing along said right-of-way on a curve to
the  right having a radius of 260 feet an arc distance of 99.39 feet to a point;
thence  continuing  along  said  right-of-way S 19 59'58" W a distance of 103.73
feet  to  a  point;  thence continuing along said right-of-way on a curve to the
left  having  a  radius  of  380 feet an arc distance of 132.64 feet to a point;
thence continuing along said right-of-way S 00 00'02" E a distance of 95 feet to
the  southeast  corner  of  said  Block  1, said point also being located at the
intersection  of  the  westerly right-of-way of Terrace Avenue and the northerly
right-of-way of 15th Street (having a 100 foot right-of-way); thence S 89 59'58"
W  along  the northerly right-of-way of 15th Street a distance of 382.99 feet to
the  Point  of  Beginning.

<PAGE>
                                     1 of 2
                                                               ATLANTA:4608512.7

                                   EXHIBIT A-1
                                   -----------
                              SECURITY INSTRUMENTS
1.     That  certain Deed of Trust, Fixture Filing and Security Agreement, dated
as  of  July  30,  1998,  by  ALS  Financing  Inc.,  a  Kansas  corporation (the
"Borrower")  to  Chicago Title Insurance Company, as Trustee, for the benefit of
GMAC  Commercial  Mortgage  Corporation,  a California corporation ("GMAC"), and
recorded  August  3,  1998,  in  the  land  records  of  San  Bernardino County,
California,  as  Document  No.  19980304505;  subsequently  assigned  by GMAC to
LaSalle  National Bank, as trustee for the registered holders of GMAC Commercial
Mortgage  Securities,  Inc.  Mortgage  Pass-Through Certificates, Series 1998-C2
(the  "Trust") by that certain Assignment of Mortgage and Security Agreement and
Assignment  of  Assignment of Leases and Rents, recorded on December 4, 1998, in
aforesaid  records as Document No. 19980518548; and subsequently amended by that
certain  First Amendment to Deed of Trust, Fixture Filing and Security Agreement
dated  March  23,  1999,  and  recorded on May 27, 1999, in aforesaid records as
Document  No.  19990226719.  [encumbering "The Palms at Loma Linda Facility", as
formerly  known  when owned by Borrower as the "Crossing at the Palms Facility"]
2.     That  certain Mortgage and Security Agreement, dated as of July 30, 1998,
by  Borrower  to GMAC, and recorded July 31, 1998, in the land records of Butler
County, Kansas, in Deed Book 859, Page 290; subsequently assigned by GMAC to the
Trust  by  that  certain  Assignment  of  Mortgage  and  Security  Agreement and
Assignment  of Assignment of Leases and Rents, recorded on November 19, 1998, in
aforesaid  records  in  Deed  Book  875,  Page  25  as Instrument No. 12891; and
subsequently  amended  by  that certain First Amendment to Mortgage and Security
Agreement  dated  March  23,  1999,  and  recorded on May 17, 1999, in aforesaid
records  in  Deed  Book  899,  Page  275.  [encumbering "The Fairways at Augusta
Facility",  as  formerly  known when owned by Borrower as the "Sterling House at
Augusta  Facility"]
3.     That  certain Mortgage and Security Agreement, dated as of July 30, 1998,
by  Borrower to GMAC,  and recorded July 31, 1998, in the land records of Seward
County,  Kansas, in Deed Book 496, Page 90; subsequently assigned by GMAC to the
Trust  by  that  certain  Assignment  of  Mortgage  and  Security  Agreement and
Assignment  of Assignment of Leases and Rents, recorded on November 19, 1998, in
aforesaid  records  in Deed Book 500, Page 006; and subsequently amended by that
certain First Amendment to Mortgage and Security Agreement dated March 23, 1999,
and  recorded  May  14,  1999,  in aforesaid records in Deed Book 505, Page 481.
[encumbering  the  "Liberal  Springs  Facility", as formerly known when owned by
Borrower  as  the  "Woodland  Terrace  Facility"]
4.     That  certain Deed of Trust, Fixture Filing and Security Agreement, dated
as  of July 30, 1998, by Borrower to Public Trustee of the County of El Paso, as
Trustee,  for  the  benefit  of  GMAC,  and  recorded July 31, 1998, in the land
records  of  El  Paso County, Colorado, as Reception No. 098107592; subsequently
assigned  by  GMAC  to  the  Trust  by  that  certain Assignment of Mortgage and
Security Agreement and Assignment of Assignment of Leases and Rents, recorded on
November  18,  1998,  in  aforesaid  records  as  Reception  No.  098169015; and
subsequently  amended  by that certain First Amendment to Deed of Trust, Fixture
Filing  and  Security Agreement dated March 23, 1999, and recorded June 8, 1999,
in  aforesaid  records as Reception No. 099092094. [encumbering the "Loyalton at
Broadmoor  Facility",  as formerly known when owned by Borrower as the "Sterling
House  at  Broadmoor  Facility"]
5.     That  certain Deed of Trust, Fixture Filing and Security Agreement, dated
as of July 30, 1998, by Borrower to Chicago Title Insurance Company, as Trustee,
for the benefit of GMAC,  and recorded July 31, 1998, in the land records of San
Diego County, California, as Document No. 1998-0480733; subsequently assigned by
GMAC  to the Trust by that certain Assignment of Mortgage and Security Agreement
and Assignment of Assignment of Leases and Rents, recorded on December 29, 1998,
in  aforesaid  records as Document No. 1998-0854042; and subsequently amended by
that  certain  First  Amendment  to  Deed  of Trust, Fixture Filing and Security
Agreement  dated March 23, 1999, and recorded June 1, 1999, in aforesaid records
as  Document No. 1999-0378318. [encumbering "The Springs at Oceanside Facility",
as  formerly  known when owned by Borrower as the "Lake Park Villas at Oceanside
Facility"]

<PAGE>

                                   Page 1 of 1
                                                               ATLANTA:4608512.7
                                    EXHIBIT B
                                    ---------
                         ASSIGNMENTS OF LEASES AND RENTS
1.     That  certain  Assignment of Leases and Rents, dated as of July 30, 1998,
by  ALS Financing Inc., a Kansas corporation (the "Borrower") to GMAC Commercial
Mortgage  Corporation, a California corporation ("GMAC"), and recorded on August
3,  1998  in  the land records of San Bernardino County, California, as Document
No.  19980304506;  subsequently  assigned  by  GMAC to LaSalle National Bank, as
trustee  for the registered holders of GMAC Commercial Mortgage Securities, Inc.
Mortgage Pass-Through Certificates, Series 1998-C2 (the "Trust") by that certain
Assignment  of  Mortgage  and Security Agreement and Assignment of Assignment of
Leases  and  Rents,  and  recorded  on December 4, 1998, in aforesaid records as
Document  No.  19980518548.  [encumbering "The Palms at Loma Linda Facility", as
formerly  known  when owned by Borrower as the "Crossing at the Palms Facility"]
2.     That  certain  Assignment of Leases and Rents, dated as of July 30, 1998,
by Borrower to GMAC, and recorded on July 31, 1998 in the land records of Butler
County, Kansas, in Deed Book 859, Page 291; subsequently assigned by GMAC to the
Trust  by  that  certain  Assignment  of  Mortgage  and  Security  Agreement and
Assignment of Assignment of Leases and Rents, and recorded on November 19, 1998,
in  aforesaid  records  in  Deed  Book  875,  Page  25  as  Instrument No. 8155.
[encumbering "The Fairways at Augusta Facility", as formerly known when owned by
Borrower  as  the  "Sterling  House  at  Augusta  Facility"]
3.     That  certain  Assignment of Leases and Rents, dated as of July 30, 1998,
by Borrower to GMAC, and recorded on July 31, 1998 in the land records of Seward
County, Kansas, in Deed Book 496, Page 123; subsequently assigned by GMAC to the
Trust  by  that  certain  Assignment  of  Mortgage  and  Security  Agreement and
Assignment of Assignment of Leases and Rents, and recorded on November 19, 1998,
in  aforesaid  records  in  Deed Book 500, Page 6. [encumbering "Liberal Springs
Facility",  as  formerly  known  when owned by Borrower as the "Woodland Terrace
Facility"]
4.     That  certain  Assignment of Leases and Rents, dated as of July 30, 1998,
by  Borrower  to  Public  Trustee  of the County of El Paso, as Trustee, for the
benefit  of  GMAC,  and recorded on July 31, 1998 in the land records of El Paso
County,  Colorado,  as Reception No. 098107593; subsequently assigned by GMAC to
the  Trust  by  that  certain  Assignment of Mortgage and Security Agreement and
Assignment of Assignment of Leases and Rents, and recorded on November 18, 1998,
in  aforesaid  records as Reception No. 098169015. [encumbering the "Loyalton at
Broadmoor  Facility",  as formerly known when owned by Borrower as the "Sterling
House  at  Broadmoor  Facility"]
5.     That  certain  Assignment of Leases and Rents, dated as of July 30, 1998,
by  Borrower  to  GMAC, and recorded on July 31, 1998 in the land records of San
Diego County, California, as Document No. 1998-0480734; subsequently assigned by
GMAC  to the Trust by that certain Assignment of Mortgage and Security Agreement
and  Assignment  of Assignment of Leases and Rents, and recorded on December 29,
1998,  in  aforesaid records as Document No. 1998-0854042. [encumbering "Springs
at  Oceanside  Facility",  as formerly known when owned by Borrower as the "Lake
Park  Villas  at  Oceanside  Facility"]
<PAGE>
                                  Page 11 of 11
                                                               ATLANTA:4608512.7
                                    EXHIBIT C
                                    ---------
CROSS  REFERENCES:

San  Bernardino  County,  California
------------------------------------
Document  No.  1998-0304505
Document  No.  1998-0304506
Document  No.  1998-0518548
Document  No.  1999-0226719
APN  No.  0283-201-51
and
San  Diego  County,  California
-------------------------------
Document  No.  1998-0480733
Document  No.  1998-0480734
Document  No.  1998-0854042
Document  No.  1999-0378318
APN  No.  168-012-27
                  AMENDMENT OF CALIFORNIA SECURITY INSTRUMENTS
                  --------------------------------------------
     That certain Deed of Trust, Fixture Filing and Security Agreement, dated as
of  July  30,  1998,  executed  and  delivered  by ALS Financing, Inc., a Kansas
corporation,  to Chicago Title Insurance Company, as Trustee, for the benefit of
GMAC  Commercial  Mortgage  Corporation,  a  California  corporation  ("Original
Lender"),  and  recorded  on July 31, 1998, in the official records of San Diego
County, California, as Document No. 19980480733, as subsequently amended by that
certain  First Amendment to Deed of Trust, Fixture Filing and Security Agreement
dated  March  23,  1999,  and  recorded  June  1,  1999, in aforesaid records as
Document  No.  1999-0378318 (the "San Diego County Security Instrument"), and as
assigned by Original Lender to LaSalle Bank National Association, formerly known
as  LaSalle  National Bank, as Trustee for GMAC Commercial Mortgage Pass-Through
Certificates, Series 1998-C2 by that certain Assignment of Mortgage and Security
Agreement  and  Assignment  of  Assignment  of Leases and Rents, dated August 6,
1998,  and  recorded  on December 29, 1998, in the aforesaid records as Document
No.  1998-0854042,  encumbering  certain  real  and personal property located in
Oceanside,  San  Diego  County,  California;  and
     That certain Deed of Trust, Fixture Filing and Security Agreement, dated as
of  July  30,  1998,  executed  and  delivered  by ALS Financing, Inc., a Kansas
corporation,  to Chicago Title Insurance Company, as Trustee, for the benefit of
GMAC  Commercial  Mortgage  Corporation,  a  California  corporation  ("Original
Lender"),  and  recorded  on  August  3,  1998,  in  the official records of San
Bernardino  County,  California,  as  Document  No. 19980304505, as subsequently
amended  by  that  certain  First Amendment to Deed of Trust, Fixture Filing and
Security  Agreement  dated  March  23,  1999,  and  recorded on May 27, 1999, in
aforesaid  records  as  Document  No.  19990226719  (the  "San Bernardino County
Security  Instrument"),  and  as  assigned  by  Original  Lender to LaSalle Bank
National  Association,  formerly  known as LaSalle National Bank, as Trustee for
GMAC  Commercial  Mortgage  Pass-Through  Certificates,  Series  1998-C2 by that
certain  Assignment  of  Mortgage  and  Security  Agreement  and  Assignment  of
Assignment  of  Leases and Rents, dated August 6, 1998, and recorded on December
4,  1998,  in  the  aforesaid  records  as Document No. 19980518548, encumbering
certain  real and personal property located in San Bernardino County, California
(the San Diego County Security Instrument and the San Bernardino County Security
Instrument  being  together,  the  "California Security Instruments") are hereby
amended  and  modified  as  follows:
1.     (a)  Section  1(i) of each of the San Diego County Security Instrument is
hereby  amended  by  deleting  said Section and substituting in lieu thereof the
following:
(i)     "FACILITY"  means  the assisted living facility known as "The Springs at
Oceanside",  presently  located  on the Land, together with any other general or
specialized  care  facilities,  if  any  (including  any  Alzheimer's care unit,
subacute,  and  any licensed skilled nursing facility) now or hereafter operated
on  the  Land.
          (b)  Section  1(i) of each of the San Diego County Security Instrument
is  hereby amended by deleting said Section and substituting in lieu thereof the
following:
(i)     "FACILITY"  means  the  assisted  living facility known as "The Palms at
Loma  Linda",  presently located on the Land, together with any other general or
specialized  care  facilities,  if  any  (including  any  Alzheimer's care unit,
subacute,  and  any licensed skilled nursing facility) now or hereafter operated
on  the  Land.
2.     Section  1(m)  of  each  of the California Security Instruments is hereby
amended  by  deleting  said  Section  and  by  substituting  in lieu thereof the
following:
          (m)     "GUARANTOR"  means  Emeritus  Corporation,  a  Washington
corporation.
3.     Section  1(n)  of  each  of the California Security Instruments is hereby
amended  by  deleting  said  Section  and  by  substituting  in lieu thereof the
following:
(n)     "GUARANTY"  means  that  certain  Unconditional  Guaranty of Payment and
Performance, dated and effective as of January 1, 2004, executed by Guarantor in
favor  of  and  for  the  benefit  of  Beneficiary.
4.     The  definition of "UCC" set forth in Section 2 of each of the California
Security  Instruments  shall  be  deemed  and  understood  to  include,  without
limitation,  Revised  Article  9  of  the  Uniform Commercial Code as and in the
manner  adopted in the State of California ("Revised Article 9").  Additionally,
each  of  the  definitions  of  "Accounts,"  "Equipment," "General Intangibles,"
"Governmental  Authority,"  "Instruments,"  "Inventory," and "Proceeds" shall be
deemed  to include, without limitation, the definitions of each of such terms as
contained  within  Revised  Article  9.
5.     Section  2(e)  of  each  of the California Security Instruments is hereby
amended  by  deleting  therefrom  all of the text thereof after the colon and by
substituting  in  lieu  thereof  the  following  text  after  the  colon:
     Name  of  Debtor:
          Emeritus  Properties  XVI,  Inc.
     State  of  Debtor's  Organization:
          Nevada
     Name  of  Secured  Party:
     LaSalle Bank National Association, formerly known as LaSalle National Bank,
as  trustee  for  GMAC  Commercial  Mortgage  Pass-Through  Certificates, Series
1998-C2
     Address  of  Secured  Party:
          c/o  GMAC  Commercial  Mortgage  Corporation
          650  Dresher  Road
          P.O.  Box  1015
          Horsham,  Pennsylvania  19044-8015
     Debtor's  trade  name  or  style,  if  any:
          The  Palms  at  Loma  Linda
          The  Springs  at  Oceanside
6.     Section  3  of  each  of  the  California  Security Instruments is hereby
amended by deleting said Section and substituting in lieu thereof the following:
3.     LEASES.  Trustor  shall  not,  without  the  prior  written  consent  of
Beneficiary,  enter  into  any  Lease,  or  enter  into or permit any management
agreement  of  or  affecting  any  part  of  the  Mortgaged  Property.
7.     Section  24(d)  of  each of the California Security Instruments is hereby
amended by deleting said Section and substituting in lieu thereof the following:
(d)  A  copy of any notice sent to the Trustor pursuant to this Section shall be
sent  to:
     Emeritus  Properties  XVI,  Inc.
     3131  Elliott  Avenue
     Suite  500
     Seattle,  Washington  98121
     Attn:  Raymond  R.  Brandstrom
     with  a  copy  to:
     Randi  Nathanson,  Esq.
     The  Nathanson  Group  PLLC
     1520  Fourth  Avenue,  Sixth  Floor
     Seattle,  Washington  98101
     a copy of any notice sent to the Beneficiary pursuant to this Section shall
be  sent  to:
     LaSalle Bank National Association, formerly known as LaSalle National Bank,
as  trustee  for  GMAC  Commercial  Mortgage  Pass-Through  Certificates, Series
1998-C2
     c/o  GMAC  Commercial  Mortgage  Corporation
     650  Dresher  Road
     P.O.  Box  1015
     Horsham,  Pennsylvania  19044-8015
     Attn:  Servicing  Department

<PAGE>
CROSS  REFERENCES:
Butler  County,  Kansas
-----------------------
Deed  Book  859,  Page  290
Deed  Book  859,  Page  291
Deed  Book  875,  Page  25
Deed  Book  899,  Page  275
Seward  County,  Kansas
-----------------------
Deed  Book  496,  Page  090
Deed  Book  496,  Page  123
Deed  Book  500,  Page  006
Deed  Book  505,  Page  481
                    AMENDMENT OF KANSAS SECURITY INSTRUMENTS
                    ----------------------------------------
     That  certain  Mortgage  and Security Agreement, dated as of July 30, 1998,
executed  and  delivered  by  ALS Financing, Inc., a Kansas corporation, to GMAC
Commercial  Mortgage  Corporation, a California corporation ("Original Lender"),
and  recorded on July 31, 1998, in the land records of Seward County, Kansas, in
Deed  Book 496, Page 90, as subsequently amended by that certain First Amendment
to Mortgage and Security Agreement dated March 23, 1999, and recorded on May 17,
1999,  in  aforesaid  records  in  Deed  Book  899, Page 275 (the "Seward County
Security  Instrument"),  and  as  assigned  by  Original  Lender to LaSalle Bank
National  Association,  formerly  known as LaSalle National Bank, as Trustee for
GMAC  Commercial  Mortgage  Pass-Through  Certificates,  Series  1998-C2 by that
certain  Assignment  of  Mortgage  and  Security  Agreement  and  Assignment  of
Assignment  of  Leases and Rents, dated August 6, 1998, and recorded on November
19,  1998,  in  aforesaid  records in Deed Book 500, Page 6, encumbering certain
real  and  personal  property  located  in  Liberal,  Seward County, Kansas; and
     That  certain  Mortgage  and Security Agreement, dated as of July 30, 1998,
executed  and delivered by ALS Financing, Inc., a Kansas corporation, to Chicago
Title Insurance Company, as Trustee, for the benefit of GMAC Commercial Mortgage
Corporation,  a California corporation ("Original Lender"), and recorded on July
31,  1998,  in the land records of Butler County, Kansas, in Deed Book 859, Page
290,  as  subsequently  amended  by that certain First Amendment to Mortgage and
Security  Agreement  dated  March  23,  1999,  and  recorded on May 17, 1999, in
aforesaid  records  in  Deed  Book  899,  Page  275 (the "Butler County Security
Instrument"),  and  as  assigned  by  Original  Lender  to LaSalle Bank National
Association,  formerly  known  as  LaSalle  National  Bank,  as Trustee for GMAC
Commercial  Mortgage  Pass-Through  Certificates, Series 1998-C2 by that certain
Assignment  of  Mortgage  and Security Agreement and Assignment of Assignment of
Leases and Rents, dated August 6, 1998, and recorded on November 9, 1998, in the
aforesaid  records  in  Deed  Book  875,  Page  25,  as  Instrument  No.  12891,
encumbering  certain  real  and  personal  property  located  in Augusta, Butler
County,  Kansas  (the  Seward  County  Instrument and the Butler County Security
Instrument  being together the "Kansas Security Instruments") are hereby amended
and  modified  as  follows:
1.     (a)     Section  1(h) of each of the Seward County Security Instrument is
hereby  amended  by  deleting  said Section and substituting in lieu thereof the
following:
(h)     "FACILITY"  means  the  assisted  living  facility  known  as  "Liberal
Springs",  presently  located  on  the  Land, together with any other general or
specialized  care  facilities,  if  any  (including  any  Alzheimer's care unit,
subacute,  and  any licensed skilled nursing facility) now or hereafter operated
on  the  Land.
          (b)     Section  1(h) of each of the Butler County Security Instrument
is  hereby amended by deleting said Section and substituting in lieu thereof the
following:
(h)     "FACILITY"  means the assisted living facility known as "The Fairways at
Augusta",  presently  located  on  the  Land, together with any other general or
specialized  care  facilities,  if  any  (including  any  Alzheimer's care unit,
subacute,  and  any licensed skilled nursing facility) now or hereafter operated
on  the  Land.
2.     Section 1(l) of each of the Kansas Security Instruments is hereby amended
     by deleting said Section and by substituting in lieu thereof the following:
          (l)     "GUARANTOR"  means  Emeritus  Corporation,  a  Washington
corporation.
3.     Section 1(m) of each of the Kansas Security Instruments is hereby amended
     by deleting said Section and by substituting in lieu thereof the following:
(m)     "GUARANTY"  means  that  certain  Unconditional  Guaranty of Payment and
Performance, dated and effective as of January 1, 2004, executed by Guarantor in
favor  of  and  for  the  benefit  of  Beneficiary.
4.     The  reference to "the Uniform Commercial Code as adopted in the State of
Kansas"  in  the  first  sentence  of  Section  2 of each of the Kansas Security
Instruments  shall  be  deemed  and  understood  to include, without limitation,
Revised Article 9 of the Uniform Commercial Code as and in the manner adopted in
     the  State  of  Kansas  ("Revised  Article  9").  Additionally, each of the
definitions  of  "Accounts,"  "Equipment,"  "General Intangibles," "Governmental
Authority,"  "Instruments,"  "Inventory,"  and  "Proceeds"  shall  be  deemed to
include,  without limitation, the definitions of each of such terms as contained
within  Revised  Article  9.
5.     Section 2(e) of each of the Kansas Security Instruments is hereby amended
by  deleting  therefrom  all  of  the  text  thereof  after  the  colon  and  by
substituting  in  lieu  thereof  the  following  text  after  the  colon:
     Name  of  Debtor:
          Emeritus  Properties  XVI,  Inc.
     State  of  Debtor's  Organization:
          Nevada
     Name  of  Secured  Party:
     LaSalle Bank National Association, formerly known as LaSalle National Bank,
as  trustee  for  GMAC  Commercial  Mortgage  Pass-Through  Certificates, Series
1998-C2
     Address  of  Secured  Party:
          c/o  GMAC  Commercial  Mortgage  Corporation
          650  Dresher  Road
          P.O.  Box  1015
          Horsham,  Pennsylvania  19044-8015
     Debtor's  trade  name  or  style,  if  any:
          Liberal  Springs
          The  Fairways  at  Augusta
6.     Section 3 of each of the Kansas Security Instruments is hereby amended by
     deleting  said  Section  and  substituting  in  lieu thereof the following:
3.     LEASES.  Trustor  shall  not,  without  the  prior  written  consent  of
Beneficiary,  enter  into  any  Lease,  or  enter  into or permit any management
agreement  of  or  affecting  any  part  of  the  Mortgaged  Property.
7.     Section  24(d)  of  each  of  the  Kansas  Security Instruments is hereby
amended by deleting said Section and substituting in lieu thereof the following:
(d)  A  copy of any notice sent to the Trustor pursuant to this Section shall be
sent  to:
     Emeritus  Properties  XVI,  Inc.
     3131  Elliott  Avenue
     Suite  500
     Seattle,  Washington  98121
     Attn:  Raymond  R.  Brandstrom
     with  a  copy  to:
     Randi  Nathanson,  Esq.
     The  Nathanson  Group  PLLC
     1520  Fourth  Avenue,  Sixth  Floor
     Seattle,  Washington  98101
     a copy of any notice sent to the Beneficiary pursuant to this Section shall
be  sent  to:
     LaSalle Bank National Association, formerly known as LaSalle National Bank,
as  trustee  for  GMAC  Commercial  Mortgage  Pass-Through  Certificates, Series
1998-C2
     c/o  GMAC  Commercial  Mortgage  Corporation
     650  Dresher  Road
     P.O.  Box  1015
     Horsham,  Pennsylvania  19044-8015
     Attn:  Servicing  Department

<PAGE>
                                     ------

CROSS  REFERENCES:
El  Paso  County,  Colorado
---------------------------
Reception  No.  098107592
Reception  No.  098107593
Reception  No.  098169015
Reception  No.  099092094
                       AMENDMENT OF COLORADO DEED OF TRUST
                       -----------------------------------
     That  certain  Deed  of  Trust and Security Agreement, dated as of July 30,
1998,  executed  an  delivered  by ALS Financing, Inc., a Kansas corporation, to
Public  Trustee of the County of El Paso, State of Colorado, as Trustee, for the
benefit  of  GMAC  Commercial  Mortgage  Corporation,  a  California corporation
("Original  Lender"),  and  recorded on July 31, 1998, in the land records of El
Paso  County,  Colorado, as Instrument No. 098107592, as amended by that certain
First  Amendment  to  Deed of Trust, Fixture Filing and Security Agreement dated
March 23, 1999, and recorded June 8, 1999, in aforesaid records as Reception No.
099092094,  and  as  assigned  by  Original  Lender  to  LaSalle  Bank  National
Association,  formerly  known  as  LaSalle  National  Bank,  as Trustee for GMAC
Commercial  Mortgage  Pass-Through  Certificates, Series 1998-C2 by that certain
Assignment  of  Mortgage  and Security Agreement and Assignment of Assignment of
Leases  and Rents, dated as of August 6, 1998, and recorded on November 18, 1998
(such  deed of trust being the "Colorado Security Instrument"), in the aforesaid
records  as  Instrument No. 098169015 is hereby amended and modified as follows:
8.     Section  1(i)  of  the  Colorado Security Instrument is hereby amended by
deleting  said  Section  and  substituting  in  lieu  thereof  the  following:
(i)     "FACILITY"  means  the  assisted  living  facility known as "Loyalton of
Broadmoor",  presently  located  on the Land, together with any other general or
specialized  care  facilities,  if  any  (including  any  Alzheimer's care unit,
subacute,  and  any licensed skilled nursing facility) now or hereafter operated
on  the  Land.
9.     Section  1(m)  of  the  Colorado Security Instrument is hereby amended by
deleting  said  Section  and  by  substituting  in  lieu  thereof the following:
          (m)     "GUARANTOR"  means  Emeritus  Corporation,  a  Washington
corporation.
10.     Section  1(n)  of  the Colorado Security Instrument is hereby amended by
deleting  said  Section  and  by  substituting  in  lieu  thereof the following:
(n)     "GUARANTY"  means  that  certain  Unconditional  Guaranty of Payment and
Performance, dated and effective as of January 1, 2004, executed by Guarantor in
favor  of  and  for  the  benefit  of  Beneficiary.
11.     The reference to "the Uniform Commercial Code as adopted in the State of
     Colorado"  in  the  first  sentence  of  Section 2 of the Colorado Security
Instrument  shall  be  deemed  and  understood  to  include, without limitation,
Revised Article 9 of the Uniform Commercial Code as and in the manner adopted in
the  State  of  Colorado  ("Revised  Article  9").  Additionally,  each  of  the
definitions  of  "Accounts,"  "Equipment,"  "General Intangibles," "Governmental
Authority,"  "Instruments,"  "Inventory,"  and  "Proceeds"  shall  be  deemed to
include,  without limitation, the definitions of each of such terms as contained
within  Revised  Article  9.
12.     Section  2(e)  of  the Colorado Security Instrument is hereby amended by
deleting  therefrom  all of the text thereof after the colon and by substituting
in  lieu  thereof  the  following  text  after  the  colon:
     Name  of  Debtor:
          Emeritus  Properties  XVI,  Inc.
     State  of  Debtor's  Organization:
          Nevada
     Name  of  Secured  Party:
     LaSalle Bank National Association, formerly known as LaSalle National Bank,
as  trustee  for  GMAC  Commercial  Mortgage  Pass-Through  Certificates, Series
1998-C2
     Address  of  Secured  Party:
          c/o  GMAC  Commercial  Mortgage  Corporation
          650  Dresher  Road
          P.O.  Box  1015
          Horsham,  Pennsylvania  19044-8015
     Debtor's  trade  name  or  style,  if  any:
          Loyalton  of  Broadmoor
13.     Section  3  of  the  Colorado  Security  Instrument is hereby amended by
deleting  said  Section  and  substituting  in  lieu  thereof  the  following:
3.     LEASES.  Trustor  shall  not,  without  the  prior  written  consent  of
Beneficiary,  enter  into  any  Lease,  or  enter  into or permit any management
agreement  of  or  affecting  any  part  of  the  Mortgaged  Property.
14.     Section  24(d)  of the Colorado Security Instrument is hereby amended by
deleting  said  Section  and  substituting  in  lieu  thereof  the  following:
(d)  A  copy of any notice sent to the Trustor pursuant to this Section shall be
sent  to:
     Emeritus  Properties  XVI,  Inc.
     3131  Elliott  Avenue
     Suite  500
     Seattle,  Washington  98121
     Attn:  Raymond  R.  Brandstrom
     with  a  copy  to:
     Randi  Nathanson,  Esq.
     The  Nathanson  Group  PLLC
     1520  Fourth  Avenue,  Sixth  Floor
     Seattle,  Washington  98101
     a copy of any notice sent to the Beneficiary pursuant to this Section shall
be  sent  to:
     LaSalle Bank National Association, formerly known as LaSalle National Bank,
as  trustee  for  GMAC  Commercial  Mortgage  Pass-Through  Certificates, Series
1998-C2
     c/o  GMAC  Commercial  Mortgage  Corporation
     650  Dresher  Road
     P.O.  Box  1015
     Horsham,  Pennsylvania  19044-8015
     Attn:  Servicing  Department

<PAGE>
                                        1
                                                               ATLANTA:4608512.7
                                    EXHIBIT D
                                    ---------

                                NOTICE ADDRESSES

Lender:     LaSalle  Bank  National  Association,  formerly  known  as  LaSalle
National  Bank,  as  trustee  for  GMAC  Commercial  Mortgage  Pass-Through
Certificates,  Series  1998-C2
c/o  GMAC  Commercial  Mortgage  Corporation
650  Dresher  Road
P.O.  Box  1015
Horsham,  Pennsylvania  19044-8015
Attn:  Servicing  Department
with  a  copy  to:     Patrick  M.  McGeehan,  Esq.
McKenna  Long  &  Aldridge  LLP
303  Peachtree  Street,  Suite  5300
Atlanta,  Georgia  30308
Facsimile:  (404)  527-4198
Borrower:     ALS  Financing,  Inc.
c/o  Alterra  Healthcare  Corporation
10000  Innovations  Drive
Milwaukee,  Wisconsin  53226

with  a  copy  to:     Carolyn  B.  Dobbins,  Esq.
Rogers  &  Hardin
2700  International  Tower
229  Peachtree  Street,  N.E.
Atlanta,  Georgia  30303
Facsimile:  (404)  525-2224
Purchaser:     Emeritus  Properties  XVI,  Inc.
3131  Elliott  Avenue,  Suite  500
Seattle,  Washington  98121
     Attn:  Raymond  R.  Brandstrom
     Facsimile:  (206)  301-4500
with  a  copy  to:     Randi  S.  Nathanson,  Esq.
The  Nathanson  Group  PLLC
1520  Fourth  Avenue,  Sixth  Floor
     Seattle,  Washington  98101
     Facsimile:  (206)  623-1738

<PAGE>
                                   Page 2 of 2
                                                               ATLANTA:4608512.7
                                    EXHIBIT E
                                    ---------

          TRANSITIONAL ARRANGEMENTS REGARDING COLORADO SPRINGS PROPERTY
          -------------------------------------------------------------
(a)     For purposes of this Exhibit E, terms not otherwise defined herein shall
                             ---------
have  the  meanings  ascribed  thereto in that certain Conveyance and Operations
Transfer  Agreement, made and entered into as of December 31, 2003, by and among
Purchaser,  Borrower  and  Alterra  (the  "OTA");
                                           ---
(b)     Lender  hereby  acknowledges and consents to the terms and provisions of
the  OTA  with  respect  to  the  Colorado  Springs  Property  as such terms and
provisions  relate  to  the  Colorado  Lease Assignment and the Colorado Springs
Lease,  including,  without limitation, Section 4 of the OTA with respect to the
deferred  delivery  by  Alterra  until  the  Licensure  Date  of  those  certain
identified  documents  in  Section  4(d)  of  the  OTA.
(c)     In  consideration  of  the  acknowledgment  and  consent  of  Lender
hereinabove:
          (i)     The  parties  to  this  Agreement  agree  that:
          (A)     any  and  all  references  in the  Loan Documents to the Lease
Agreement  that  relate  to  the Colorado Springs Property shall be deemed to be
references  to  the  Colorado Springs Lease as executed pursuant to the OTA; and
          (B)     none of the Colorado Springs Lease as executed pursuant to the
OTA,  the  Subordination  Agreement relating to the Colorado Springs Property or
the  Lease  UCCs  relating  to the Colorado Springs Property shall be terminated
unless  and  until  such time as (x) the Licensure Date shall have occurred; (y)
the  documents  executed  and  delivered  by  Alterra at Closing as set forth in
Section  4(d)  of  the OTA have been released from escrow either to Purchaser or
Purchaser's  designee as contemplated by the OTA and the requirements of Section
(d)  hereinbelow  have  been  satisfied,  if  such  transfer  is  to Purchaser's
designee; and (z) Purchaser shall have delivered to Lender the legal opinion and
copies  of  license issued by the State of Colorado required pursuant to Section
(c)  (iii)  hereinbelow  (collectively,  the  "Transfer  Conditions").
                                               --------------------
(ii)     The  parties  to  this Agreement agree that the terms and provisions of
this Agreement and the Letter Agreement Regarding Loan Agreement having as their
subject  matter the amendment and modification of the provisions in the Original
Loan Documents as such terms and provisions relate to the Colorado Springs Lease
(including,  without limitation, Section 6 of the Amendment of Colorado Security
Instrument  contained in Exhibit C to this Agreement and Sections 1(d), 9(b), 15
                         ---------
and  19  of the Letter Agreement Regarding Loan Agreement) shall not take effect
unless  and  until  the  Transfer  Conditions  are  satisfied.
(iii)     Purchaser  shall  cause  to  be delivered on the Licensure Date: (A) a
copy  of  the  license  issued  by the State of Colorado permitting Purchaser or
Purchaser's  designee  to  operate  the Colorado Springs Property as an assisted
living  facility under Colorado law and (B) a legal opinion of the firm of Miles
&  Peters,  P.C.  or  other  firm reasonably acceptable to Lender regarding such
licensing  in  form  and  content  reasonably  acceptable  to  Lender.
(iv)     Alterra Parties acknowledge and agree that the release and covenant not
to  sue  from  Lender  to  Alterra Parties in Section 13 of this Agreement shall
prior  to  the  satisfaction  of  the  Transfer  Conditions exclude the Colorado
Springs  Lease,  the  Lessee Security Agreement relating to the Colorado Springs
Property,  the  Lessee  Security  Agreement  Assignment relating to the Colorado
Springs  Property,  the  Original Lessee Environmental Indemnity relating to the
Colorado  Springs Property, the Subordination Agreement relating to the Colorado
Springs  Property and the Borrower UCCs and Lessee UCCs relating to the Colorado
Springs  Property,  and  any  obligations  of  Alterra  Parties  under  any such
documents;  provided,  however,  (A)  that  any  such  obligations  shall  be
non-recourse  to  Alterra;  and  (B)upon  the  satisfaction  of  the  Transfer
Conditions,  the  release  and covenant not to sue by Lender in favor of Alterra
Parties in Section 13 of this Agreement shall be deemed to automatically include
such otherwise excluded documents and obligations of Alterra Parties without any
further  written  agreement  among  the  parties  thereto  being  required.
(v)     Purchaser  and  Emeritus  agree  that  until  such  time as the Transfer
Conditions  are  satisfied,  the  term  "Loan  Documents"  for  purposes of this
Agreement  shall  include the Lessee Security Agreement relating to the Colorado
Springs  Property,  the  Lessee  Security  Agreement  Assignment relating to the
Colorado  Springs  Property,  and  the  Subordination  Agreement relating to the
Colorado  Springs  Property;  provided,  however,  upon  the satisfaction of the
Transfer  Conditions the terms "Loan Documents" shall automatically be deemed to
exclude  such  otherwise  included  documents.
(vi)     Purchaser  acknowledges  and  agrees that, upon the satisfaction of the
Transfer  Conditions  involving a transfer of the Alterra Assets relating to the
Colorado  Springs  Property to Purchaser, all personal property then conveyed to
Purchaser  by  Alterra  shall  be  and  become  property subject to the security
interest of Lender under the Colorado Security Instrument (as defined in Exhibit
                                                                         -------
C  to  this  Agreement)  and  included  within the Purchaser UCC relating to the
Colorado  Springs  Property.
(d)     In the event the Alterra Assets related to the Colorado Springs Property
shall  be  conveyed to any designee of Purchaser  (a "Designee") as contemplated
                                                      --------
by  the  second  paragraph  of  Section  2(d)  of  the  OTA,  including, without
limitation  in  connection  with a new lease or management agreement relating to
such  property,  the terms and conditions of Section 13 of the Colorado Security
Instrument shall be understood to be applicable to and control such transaction.
(e)     In  furtherance and not in limitation of Section 2(c) of this Agreement,
the  terms  of  this  Exhibit  E  shall govern and control and in the event of a
                      ----------
conflict  between  the  terms  hereof and the terms of any other Loan Documents,
including,  without  limitation,  this Agreement, the Letter Agreement Regarding
Loan  Agreement,  the  New Environmental Indemnity and the Payment Guaranty, the
terms  of this Exhibit E shall control to the extent the terms of this Exhibit E
                                                                       ---------
are  inconsistent  therewith.

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