THIRD AMENDED AND RESTATED NOTE


$15,000,000.00                                                 Chicago, Illinois
                                                               December 21, 1998


         FOR VALUE  RECEIVED,  BROOKDALE  LIVING  COMMUNITIES,  INC., a Delaware
corporation  (the  "Maker"),  with its  principal  place of  business at 77 West
Wacker Drive, Suite 4400, Chicago, Illinois 60601, hereby promises to pay to the
order of LaSALLE NATIONAL BANK, a national banking  association (the "Bank"), at
its office at 135 South LaSalle Street,  Chicago,  Illinois 60603, or such other
place as Bank may direct from time to time, in lawful money of the United States
and in  available  funds,  the  principal  amount  of  FIFTEEN  MILLION  DOLLARS
($15,000,000.00),  or such lesser  amount as Bank  advanced  to Maker  hereunder
which is  outstanding  as of the Maturity Date, as defined in that certain Fifth
Amendment to Loan Agreement and Documents dated December 21, 1998 by and between
Maker and the Bank (the "Fifth Amendment").

         Maker  previously  executed  and  delivered  to the Bank a certain Note
dated April 27, 1998 in the original  principal  amount of  $15,000,000.00  (the
"Original  Note")  pursuant  to a Loan  Agreement  dated  April  27,  1998  (the
"Original  Loan  Agreement")  evidencing  a Loan  made by the Bank to the  Maker
pursuant to such  Original  Loan  Agreement.  Maker  subsequently  executed  and
delivered to the Bank a certain Amended and Restated Note dated July 16, 1998 in
the principal  amount of  $25,000,000.00  (the  "Restated  Note")  pursuant to a
certain  First  Amendment to Loan  Agreement and Documents of the same date (the
"First  Amendment"),  as amended by a Second  Amendment  to Loan  Agreement  and
Documents  (the "Second  Amendment")  with the Bank dated October 14, 1998,  and
further  evidenced by a Second  Amended and Restated Note dated October 14, 1998
(the "Second  Amended and Restated  Note"),  as amended by a Third  Amendment to
Loan Agreement and Documents (the "Third Amendment") with the Bank dated October
20, 1998,  and as amended by a Fourth  Amendment to Loan Agreement and Documents
(the "Fourth Amendment") with the Bank dated November 3, 1998 (the Original Loan
Agreement,  as Amended by the First Amendment,  the Second Amendment,  the Third
Amendment,  the Fourth Amendment and the Fifth Amendment,  is herein referred to
as the "Loan  Agreement").  The Second  Amended  and  Restated  Note is amended,
restated and superseded in its entirety by this Third Amended and Restated Note,
and any  amounts  outstanding  under the Second  Amended and  Restated  Note are
transferred to this Third Amended and Restated Note.

         The Loan evidenced by this Third Amended and Restated Note  constitutes
a  revolving  credit  under  applicable  Laws and Maker  may repay and  reborrow
hereunder  subject  to the  terms  and  conditions  of the  Loan  Agreement  and
Documents.  All advances  under this Third  Amended and Restated Note shall bear
interest in accordance  with and be governed by the terms and  provisions of the
Loan Agreement.  All payments received from the Maker hereunder shall be applied
by the Bank in accordance with the terms of the Loan Agreement.

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         The Borrower may prepay the  outstanding  amounts of the Loan from time
to time in whole or in part on any business day without penalty or premium.

         This  Third  Amended  and  Restated  Note  is  issued  under  the  Loan
Agreement, and this Third Amended and Restated Note and the Bank are entitled to
all of the benefits,  rights and remedies  provided for by the Loan Agreement or
referred to therein,  to which Loan Agreement  reference is made for a statement
thereof.  All capitalized  terms used herein which are not defined  herein,  but
which are defined in the Loan  Agreement,  shall have the meaning  prescribed in
the Loan Agreement.

         All unpaid  amounts owing on this Third Amended and Restated Note or on
any  other   Obligations  under  the  Loan  Agreement  or  the  other  Documents
immediately  shall  become due and  payable  at the option of the Bank,  without
notice or demand, upon the occurrence of any Event of Default.

         In the event of default in the payment of any sums due under this Third
Amended and Restated  Note, the Maker hereby agrees that the Bank may offset all
of Maker's money, bank or other deposits or credits now or hereafter held by the
Bank or owed by the Bank to the Maker  against  all amounts due under this Third
Amended and Restated Note or against any other amounts which may be due the Bank
from the Maker.

         No clause or  provision  contained  in this Third  Amended and Restated
Note or any documents  related hereto shall be construed or shall so operate (a)
to raise the interest  rate set forth in this Third  Amended and  Restated  Note
above the lawful maximum,  if any, in effect from time to time in the applicable
jurisdiction  for  loans  to  borrowers  of the  type,  in the  amount,  for the
purposes, and otherwise of the kind contemplated,  or (b) to require the payment
or the  doing  of any  act  contrary  to law,  but if any  clause  or  provision
contained  shall  otherwise  so operate to  invalidate  this Third  Amended  and
Restated Note, in whole or in part, then (i) such clauses or provisions shall be
deemed  modified to the extent  necessary to be in  compliance  with the law, or
(ii) to the extent not  possible,  shall be deemed void as though not  contained
and the  remainder  of this Third  Amended and Restated  Note and such  document
shall remain operative and in full force and effect.

         All  makers  and any  endorsers,  guarantors,  sureties,  accommodation
parties and all other persons  liable or to become liable for all or any part of
the indebtedness  evidenced by this Third Amended and Restated Note, jointly and
severally waive, to the extent permitted by law, except as otherwise provided in
the Loan Agreement or the other Documents, diligence,  presentment,  protest and
demand, and also notice of protest, of demand, of nonpayment, of dishonor and of
maturity  and also  recourse or  suretyship  defenses  generally;  and they also
jointly and  severally  hereby  consent to any and all  renewals,  extensions or
modifications  of the terms of this Third Amended and Restated  Note,  including
time for  payment,  and  further  agree  that any such  renewals,  extension  or
modification of the terms of this Third Amended and Restated Note or the release
or  substitution of any security for the  indebtedness  under this Third Amended
and Restated Note or any other indulgences shall not affect the liability of any
of the parties for the indebtedness evidenced by this

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Third Amended and Restated Note.  Any such renewals, extensions or modifications
may be made without notice to any of said parties.

         The  Maker  shall be  liable  to the Bank for all  costs  and  expenses
incurred in connection  with  collection,  whether by suit or otherwise,  of any
amount  due under this Third  Amended  and  Restated  Note,  including,  without
limitation,  reasonable  attorneys'  fees,  as more  fully set forth in the Loan
Agreement.

         This Third Amended and Restated Note shall be governed by and construed
in accordance with the laws of the State of Illinois.


                                       BROOKDALE LIVING COMMUNITIES, INC.,
                                       a Delaware corporation


                                    By:  /s/ Darryl W. Copeland, Jr.
                                    Print Name:  Darryl W. Copeland, Jr.
                                    Title:  Executive Vice President

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