EQUITY OPTION AGREEMENT
                             -----------------------

         This Equity Option Agreement (this "Agreement"), dated as of August 24,
1999, is made and entered into by and among AH Battery Park Member, LLC, an Ohio
limited  liability  company (the "Member"),  AH Battery Park Owner, LLC, an Ohio
limited  liability  company (the "Owner",  and together with the Member shall be
individually  referred to as an "Owner Related Entity" and shall be collectively
referred to as the "Owner Related  Entities"),  and Brookdale Living Communities
of New York-BPC, Inc., a Delaware corporation ("Brookdale").


                                    RECITALS
                                    --------

         WHEREAS,  the Member was  formed on or about  September  of 1998 by the
filing and recording of the Member's  Articles of  Organization in the Office of
the Secretary of State of the State of Ohio,  pursuant to an Operating Agreement
dated as of September  16, 1998 and amended and restated  pursuant to an Amended
and Restated  Operating  Agreement  dated as of June 19, 1999 (as so amended and
restated, and as it may be further amended from time to time with the consent of
Brookdale, the "Member Operating Agreement");

         WHEREAS,  the Member is the sole  member and  manager  of, and owns one
hundred percent (100%) of the membership interests (the "Membership  Interests")
in, the Owner;

         WHEREAS,  the Owner was  formed  on or about  September  of 1998 by the
filing and recording of the Owner's  Articles of  Organization  in the Office of
the Secretary of State of the State of Ohio,  pursuant to an Operating Agreement
dated as of September  16, 1998 and amended and restated  pursuant to an Amended
and Restated  Operating  Agreement  dated as of June 19, 1999 (as so amended and
restated, and as it may be further amended from time to time with the consent of
Brookdale, the "Owner Operating Agreement");

         WHEREAS,   the  Owner  intends  to  develop  a  senior  congregate  and
non-licensed  assisted  living  facility in Battery  Park City,  New York,  (the
"Project");

         WHEREAS, Key Corporate Capital,  Inc., Fleet National Bank and European
American Bank  (collectively,  the "Senior Lender"),  have agreed to make a loan
(the "Senior Loan") to the Owner up to the sum of  $49,125,000to  fund a portion
of the costs of the Project pursuant to (i) that certain Building Loan Agreement
of even date  herewith  (as it may be amended from time to time with the consent
of  Brookdale,  the "Senior  Loan  Agreement")  between the Owner and the Senior
Lender  and (ii) the other  "Loan  Documents"  (as such term is  defined  in the
Senior  Loan  Agreement;  as the same may be amended  from time to time with the
consent of Brookdale,  collectively with Senior Loan Agreement, the "Senior Loan
Documents");

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         WHEREAS,  Banc One Capital Partners IV, Ltd., an Ohio limited liability
company (the "Subordinate  Lender"), has agreed to loan (the "Subordinate Loan")
to the Member an amount up to the sum of $13,674,590.00, which the Member has or
will  contribute  as equity  to the Owner to fund a portion  of the costs of the
Project,  pursuant to (i) that certain Promissory Note of even date herewith (as
it may be  amended  from  time  to time  with  the  consent  of  Brookdale,  the
"Subordinate Note") from to the Member to the Subordinate Lender; (ii) the other
loan documents  related to and/or securing the Subordinate Note; as the same may
be amended from time to time with the consent of  Brookdale,  collectively  with
the  Subordinate  Note,  the  "Subordinate  Loan  Documents")(the   Senior  Loan
Documents and the Subordinate  Loan Documents shall be collectively  referred to
as the "Loan Documents");

         WHEREAS  Brookdale  is the  developer  of the Project  pursuant to that
certain Amended and Restated  Development  Agreement dated as of August 24, 1999
(as it may be amended from time to time, the  "Development  Agreement")  between
the Owner and Brookdale and, upon substantial completion of the Project, will be
the  manager of the  Project  pursuant to a  Management  Agreement  of even date
herewith (as it may be amended from time to time,  the  "Management  Agreement")
between the Owner and Brookdale; and

         WHEREAS,  the  Member is  willing  to grant an option to  Brookdale  to
purchase  the  Membership  Interests  upon the  terms and  conditions  set forth
herein.

         NOW,  THEREFORE,  in consideration of the mutual  agreements  contained
herein  and  for  other  good  and  valuable  consideration,   the  receipt  and
sufficiency  of which are hereby  acknowledged,  the Owner Related  Entities and
Brookdale hereby agree as follows:

1.       The  Option.  The  Member  hereby  grants an  irrevocable  option  (the
         "Option")  to Brookdale  (or its  nominee) to purchase  the  Membership
         Interests  at the  Purchase  Price (as  defined in Section 2 hereof) in
         accordance with the terms of this Agreement. The Option shall terminate
         and expire on the date (the "Option  Termination  Date") that is thirty
         (30) days after the stated  maturity date of the Senior Loan, as it may
         be extended.

2.       Purchase  Price.  The  purchase  price (the  "Purchase  Price") for the
         Membership  Interests  shall  be an  amount  equal  to the  outstanding
         balance under the Subordinate  Loan,  minus the aggregate amount of any
         distributions made by the Owner to the Member.

3.       Exercise of the Option. Brookdale may exercise the Option by giving the
         Member,  the  Subordinate  Lender,  and the Escrow Agent (as defined in
         Section 12 hereof) at least five (5) days'  prior  written  notice (the
         "Option Notice") at any time prior to the Option  Termination Date. The
         Option  Notice  shall  specify  the date  (the  "Closing  Date") of the
         exercise of the Option,  which shall also be the date of the  repayment
         in full by Member of the Subordinate Loan, and in any case shall not be
         later than the Option  Termination  Date.  If Brookdale  exercises  the
         Option prior to the Option Termination Date but fails to close prior to
         the  Option  Termination  Date  due to no fault  of any  Owner  Related
         Entities,  then the Option shall terminate and Brookdale's rights shall
         cease and be null and void. The Member hereby appoints Brookdale as its
         true and  lawful  attorney-in-fact  for  purposes  of giving  notice of
         optional  prepayment of the  Subordinate  Note,  which  appointment  as
         attorney-in-fact is irrevocable and is coupled with an interest.

                                       2

<PAGE>

4.       Closing.
         --------

         a.     Upon  receipt of the  Option  Notice,  the Member and  Brookdale
                shall schedule a closing (the "Closing") to occur on the Closing
                Date at the Chicago,  Illinois  offices of counsel to Brookdale.
                The Member and Brookdale  shall each be solely  responsible  for
                its own costs incurred in connection with the Closing; provided,
                however,  that Brookdale shall pay, or reimburse the Member for,
                all reasonable legal fees and expenses of the Member incurred in
                connection  with the  Closing in an amount not to exceed  $2,500
                when  aggregated  with all other legal fees and expenses paid or
                reimbursed by Brookdale pursuant to Section 7(c) of the Property
                Option  Agreement  of even date  herewith  (as it may be amended
                from time to time, the "Property  Option  Agreement")  among the
                Member, the Owner and Brookdale.

         b.     Contemporaneously  with  the  execution  and  delivery  of  this
                Agreement,  the  Member is  delivering  to the  Escrow  Agent an
                Assignment  and  Acceptance  Agreement  in the form of Exhibit A
                attached  hereto (the  "Assignment"  and together with any other
                documents  and  instruments  delivered  pursuant to Section 4(c)
                below, the "Assignment Documents"),  undated, but otherwise duly
                executed by the Member.

         c.     At the Closing,  the Escrow Agent shall,  in accordance with the
                escrow instructions set forth in Section 12 hereof,  deliver the
                Purchase  Price to,  or as  directed  by,  the  Member,  and the
                Assignment to Brookdale  (or its nominee),  and the Member shall
                deliver to Brookdale (or its nominee) the following items:

                i.       original executed copies (or if unavailable,  certified
                         copies)  of  the  Member's  and  Owner's   Articles  of
                         Organization, the Member Operating Agreement, the Owner
                         Operating  Agreement,  all certified by an  appropriate
                         officer of the relevant  Owner Related Entity as of the
                         Closing  Date,  as being true,  correct,  complete  and
                         unamended or if amended with the consent of  Brookdale,
                         certified  to such effect) and in full force and effect
                         as of such date;

                ii.      a certificate of an  appropriate  officer of each Owner
                         Related Entity, dated the Closing Date, certifying that
                         the   representations  and  warranties  of  such  Owner
                         Related Entity set forth in the  applicable  Section of
                         this Agreement are true, correct and complete as of the
                         Closing  Date as  though  made by  such  Owner  Related
                         Entity on the Closing Date;

                iii.     the books and records of each Owner Related Entity;

                iv.      such other documents and instruments of transfer as are
                         necessary to complete  the  transfer of the  Membership
                         Interests; and

                v.       evidence that the Subordinate  Loan will be repaid with
                         the Purchase Price.

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<PAGE>

         d.     The  representations  and  warranties  made by the Owner Related
                Entities as of the Closing Date shall survive the Closing.

         e.     Prior to the Closing,  Brookdale may conduct Uniform  Commercial
                Code,  tax  lien,  pending  suit  and  judgment  and  any  other
                appropriate searches (collectively, the "Searches") against each
                of the Owner Related Entities and the Project to confirm that no
                liens and/or  security  interests have been created by any Owner
                Related Entities (or their  creditors)  except those in favor of
                Senior Lender or Subordinate Lender or those consented to by, or
                requested  or permitted  by,  Brookdale  or its  affiliates  (an
                "Unpermitted  Exception").  If said  Searches  reveal  any  such
                Unpermitted  Exception,  then the Owner Related  Entities  shall
                cause such Unpermitted Exception to be released of record at its
                sole cost and expense.

5.       Grant of Security Interest.
         ---------------------------

         a.     To secure the performance by the Owner Related Entities of their
                respective  obligations  hereunder  and the repayment of any and
                all indebtedness and other  liabilities  arising from any breach
                by  any  of  the  Owner  Related  Entities  of  its  obligations
                hereunder  the  Property   Option   Agreement,   the  Management
                Agreement  or  the  Development  Agreement  (collectively,   the
                "Brookdale  Documents")  the Member hereby grants to Brookdale a
                continuing security interest in the Membership Interests and all
                proceeds thereof,  including,  without limitation,  the right to
                receive any and all payments or  distributions  of any and every
                kind whatsoever,  whether in cash, property or otherwise, at any
                time made,  owing or  payable  with  respect  to the  Membership
                Interests,  together  with all  applicable  rights,  powers  and
                privileges  of the Member as the sole  member and manager of the
                Owner  pursuant  to the Owner  Operating  Agreement  (all of the
                foregoing  being  hereinafter  collectively  referred  to as the
                "Collateral".

         b.     The  Member  does  hereby  irrevocably  constitute  and  appoint
                Brookdale its true and lawful attorney-in-fact,  with full power
                of  substitution,  for the  Member  and in its  name,  place and
                stead, to ask, demand, collect,  receive,  receipt for, sue for,
                compound and give acquittance for any and all sums or properties
                which  may be or  become  due,  payable  or  distributable  with
                respect to the Collateral,  with full power to settle, adjust or
                compromise any claim thereunder as fully as the Member could do,
                and to  endorse  or sign the name of the  Member  on all  items,
                instruments  and  commercial  paper  given in payment or in part
                payment thereof, and all documents of satisfaction, discharge or
                receipt required or requested in connection  therewith,  and, in
                its  discretion,  to file any claim or take any other  action or
                proceeding, either in its own name or in the name of the Member,
                or otherwise,  which Brookdale may deem necessary or appropriate
                to  perfect  Brookdale's  security  interest  in or  collect  or
                otherwise realize upon any and all of the Collateral,  or effect
                a transfer thereof  pursuant to the Member Operating  Agreement,
                the Owner Operating Agreement or this Agreement, or which may be
                necessary  or  appropriate  to protect and  preserve  the right,
                title and interest of Brookdale in and to the Collateral and the
                security intended to be afforded hereby.

                                       4

<PAGE>

         c.     Without limiting the foregoing,  the Member agrees that it will,
                upon  request of  Brookdale,  execute and deliver  such  further
                documents  and  instruments   (including,   without  limitation,
                Uniform Commercial Code Financing Statements) and do and perform
                such  other  acts and  things  (including,  without  limitation,
                obtaining such consents hereto,  and giving such notices hereof,
                as  Brookdale  may  reasonably  request  from  time to  time) as
                Brookdale may deem necessary or appropriate to more  effectively
                vest in and secure to Brookdale  the  Collateral or other rights
                or interests due or hereafter to become due.

         d.     Upon the  occurrence  and  continuance  of default of any of the
                Owner Related Entities under any of the Brookdale Documents,  in
                addition  to  the  rights  and  remedies   Brookdale   may  have
                hereunder,  it  shall  have all the  rights  and  remedies  of a
                secured  party  under   applicable   law  with  respect  to  the
                Collateral.  All costs and expenses of any kind  whatsoever,  of
                collection and enforcement of the obligations  secured hereby or
                any rights or remedies hereunder  (including without limitation,
                all costs of disposing of the  Collateral,  together  with court
                costs and reasonable  attorneys' fees), or incurred in realizing
                upon the  Collateral or in enforcing  this  Agreement,  shall be
                deemed to be additional  obligations  secured hereby, and may be
                deducted  and  retained  by  Brookdale   from  the  proceeds  of
                disposition  of the  Collateral  and  applied to the payment and
                satisfaction of such costs and expenses.

         e.     The  security  interest of  Brookdale  in the  Collateral  shall
                terminate  upon  the  earlier  of  the  Closing  or  the  Option
                Termination  Date, and upon such  termination,  Brookdale  shall
                promptly   deliver  to  the  Member  the   appropriate   Uniform
                Commercial Code termination statements.

6.       Member Representations. The Member represents and warrants to Brookdale
         as follows as of the date hereof and as of the Closing Date:

         a.     The  Member  is a  limited  liability  company  duly  organized,
                validly  existing  and in good  standing  under  the laws of the
                State of Ohio  and has all  requisite  power  and  authority  to
                execute,   deliver  and  perform  its  obligations   under  this
                Agreement  and the  Assignment  Documents and to own and operate
                its property and to carry on its business as now conducted.  The
                Member is duly  qualified  to do business  in each  jurisdiction
                where the nature of its operations  and applicable  laws require
                such qualification,  except where the failure to be so qualified
                would not have a material adverse effect on the Member.

         b.     The  execution,  delivery and  performance of this Agreement and
                the Assignment Documents by the Member have been duly authorized
                by all necessary  organizational  action,  and this Agreement is
                the  legal,   valid  and  binding   obligation  of  the  Member,
                enforceable in accordance with its terms,  except as enforcement
                may  be  limited  by  bankruptcy,  insolvency  or  the  laws  or
                equitable  principles  affecting the  enforcement  of creditors'
                rights generally.

                                       5

<PAGE>

         c.     The  execution,  delivery and  performance by the Member of this
                Agreement and the  Assignment  Documents do not  contravene  the
                terms of the  Member's  Articles of  Organization  or the Member
                Operating Agreement,  true, correct and complete copies of which
                have been delivered to Brookdale, conflict with or result in any
                breach or  contravention  of, or the creation of any lien under,
                any agreements or instruments to which it is a party or by which
                it or any of its  property  is bound  or  violate  any  state or
                federal law and all required  approvals  therefor,  if any, have
                been duly obtained.

         d.     The  Membership  Interests  constitute  all  of  the  membership
                interests  in the  Owner,  and the  Member  owns the  Membership
                Interests, free of any liens, claims or encumbrances, other than
                the security interest created pursuant to this Agreement and the
                interest of Brookdale  created  pursuant to the Member Operating
                Agreement.

         e.     There is no litigation or other  proceeding  pending against the
                Member  which  could  have  a  material  adverse  effect  on the
                Member's ability to consummate the transactions  contemplated by
                this Agreement and the Assignment Documents.

         f.     The  Member is the sole  member and  manager of the Owner  other
                than Brookdale's  special  management rights created pursuant to
                the Member  Operating  Agreement.  . The Member's  sole place of
                business  is  located  at its  address  set forth in the  notice
                section of this Agreement.

         g.     The Membership Interests are not represented by any certificates
                and/or  similar   instruments,   and  the  Membership  Operating
                Agreement  contains a  description  of the  rights of  Brookdale
                pursuant to this Agreement.

         h.     There is no litigation or other  proceeding  pending against the
                Member  which  could  have  a  material  adverse  effect  on the
                Member's ability to consummate the transactions  contemplated by
                the Property  Option  Agreement  and as of the Closing  Date, if
                applicable, the Assignment (as defined therein).

         i.     All of the  representations  and  warranties  of the  Member set
                forth in the Subordinate  Loan Documents are true and correct as
                though such representations and warranties were set forth herein
                for Brookdale's benefit.

         j.     All of the  representations  and  warranties  of the  Member set
                forth in the Property Option Agreement are true and correct.

         k.     The  Member  has  no  outstanding  liabilities,   contingent  or
                otherwise,   other  than,  as  of  the  date  hereof,   (i)  the
                indebtedness  evidenced  by  the  Subordinated  Notes  and  (ii)
                liabilities for which  Brookdale or the  Subordinate  Lender (or
                any one or more of their affiliates) is liable to the Member.

7.       Owner  Representations.  The Owner represents and warrants to Brookdale
         as follows as of the date hereof and as of the Closing Date:

                                       6

<PAGE>

         a.     The Owner is a limited liability company duly organized, validly
                existing  and in good  standing  under  the laws of the State of
                Ohio and has all  requisite  power and  authority to execute and
                deliver this Agreement, to perform its obligations hereunder and
                to own and operate its  property and to carry on its business as
                now  conducted.  The Owner is duly  qualified  to do business in
                each  jurisdiction  where  the  nature  of  its  operations  and
                applicable  laws  require such  qualification,  except where the
                failure to be so  qualified  would not have a  material  adverse
                effect on the Owner.

         b.     The execution and delivery of this Agreement and the performance
                by the  Owner  of  its  obligations  hereunder  have  been  duly
                authorized  by all  necessary  organizational  action,  and this
                Agreement  is the legal,  valid and  binding  obligation  of the
                Owner,  enforceable  in  accordance  with its  terms,  except as
                enforcement may be limited by bankruptcy, insolvency or the laws
                or equitable  principles affecting the enforcement of creditors'
                rights generally.

         c.     The execution and delivery of this Agreement and the performance
                by the Owner of its obligations  hereunder do not contravene the
                terms of the Ownership Operating Agreement,  a true, correct and
                complete copy of which has been delivered to Brookdale, conflict
                with  or  result  in any  breach  or  contravention  of,  or the
                creation of any lien under,  any  agreements or  instruments  to
                which it is a party or by  which  it or any of its  property  is
                bound or  violate  any  state or  federal  law and all  required
                approvals therefor, if any, have been duly obtained

         d.     There is no litigation or other  proceeding  pending against the
                Owner which could have a material  adverse effect on the Owner's
                ability  to  consummate  the  transactions  contemplated  by the
                Property  Option  Agreement  and  as of  the  Closing  Date,  if
                applicable, the Property Conveyance Documents (as defined in the
                Property Option Agreement).

         e.     All of the  representations and warranties made on behalf of the
                Owner relating to Owner (as opposed to the Project) set forth in
                the Senior  Loan  Documents  are true and correct as though such
                representations   and  warranties  were  set  forth  herein  for
                Brookdale's benefit.

         f.     All of the representations and warranties of the Owner set forth
                in the Property Option Agreement are true and correct.

         g.     The  Owner  has  no  outstanding   liabilities,   contingent  or
                otherwise,  other than those  incurred under or permitted by the
                Senior  Loan  Documents,   the  Management   Agreement  and  the
                Development Agreement.

8.       Member  Covenants.  Until the  earlier  of the  Closing  or the  Option
         Termination Date, unless Brookdale  otherwise consents in writing,  the
         Member:

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<PAGE>

         a.     Shall  preserve  and  maintain  its  legal  existence,   rights,
                franchises  and  privileges  in the  State  of Ohio,  and  shall
                qualify and remain qualified in each  jurisdiction in which such
                qualification  is necessary or desirable in view of its business
                and operations or the ownership of its property.

         b.     Shall at all times observe and comply with the provisions of its
                Articles of Organization as in effect on the date hereof.

         c.     Shall not amend the  Member's  Articles of  Organization  or the
                Member  Operating  Agreement  and shall at all times observe and
                comply with the provisions thereof.

         d.     Shall not cause or permit the  dissolution  of the Member or the
                Owner.

         e.     Shall not permit the issuance of any member's  interests (or any
                other  interests)  in the Owner in  addition  to the  Membership
                Interests.

         f.     Shall  continue to own the  Membership  Interests  (which  shall
                continue to constitute  100% of the membership  interests in the
                Owner),  free of any liens,  claims or encumbrances,  other than
                the security interest created by this Agreement and the interest
                of Brookdale created pursuant to the Member Operating Agreement.

         g.     Shall not file a voluntary  petition in bankruptcy and shall use
                its best  efforts  to contest  any  involuntary  petition  filed
                against it.

         h.     Shall not  permit or accept  any  distributions  by the Owner or
                Member.

         i.     Shall give  Brookdale at least  thirty (30) days' prior  written
                notice of any change in its place of business.

         j.     Shall  not  take  any  actions  that  might   adversely   affect
                Brookdale's  rights under, or be inconsistent with the terms of,
                this Agreement.

9.       Owner  Covenants.  Until  the  earlier  of the  Closing  or the  Option
         Termination Date, unless Brookdale  otherwise consents in writing,  the
         Owner:

         a.     Shall not amend the Articles of Organization or amend or consent
                to the amendment of the Owner Operating Agreement,  and shall at
                all times observe and comply with the provisions thereof.

         b.     Shall not amend,  or request any waiver of any provision of, the
                Senior Loan Agreement and/or Senior Loan Documents.

         c.     Shall not permit any distributions by the Owner to Member.

                                       8

<PAGE>

         d.     Shall give  Brookdale at least  thirty (30) days' prior  written
                notice of any change in its place of business.

         e.     Shall  comply  with all of the  covenants  applicable  to it set
                forth  in  the  Senior   Loan   Documents   (except   for  those
                responsibilities   delegated  to   Brookdale   pursuant  to  the
                Development  Agreement or the  Management  Agreement)  and shall
                promptly   deliver  to   Brookdale   copies  of  all   financial
                statements,  reports,  notices,  certificates  or other writings
                delivered  to, or  received  from,  the Senior  Lender  pursuant
                thereto.

         f.     Shall not incur any  liabilities or  obligations,  contingent or
                otherwise,  except  expenses  incurred in the ordinary course of
                administering  its business or those that are incurred  under or
                are necessary to comply or are permitted by with the  provisions
                of the  Senior  Loan  Documents,  and shall  not enter  into any
                agreement  or  contract,  whether  oral or written,  except this
                Agreement,  the Property  Option  Agreement,  the  Intercreditor
                Agreement, the Senior Loan Documents to which it is a party, the
                Development   Agreement  and  the  Management   Agreement,   and
                agreements  entered into in the ordinary course of administering
                its business,  which are terminable without penalty with no more
                than thirty (30) days prior written notice.

         g.     Shall  continue to own the  Property (as defined in the Property
                Option Agreement),  free of any liens,  claims, or encumbrances,
                other than  Permitted  Exceptions  (as  defined in the  Property
                Option Agreement).

         h.     Shall  not  take  any  actions  that  might   adversely   affect
                Brookdale's  rights under, or be inconsistent with the terms of,
                this Agreement  other than as may be required by the Senior Loan
                Documents.

10.      Defaults.  A "Default"  shall mean the occurrence of one or more of the
         following described events:

         a.     A  material  breach  by any Owner  Related  Entity of any of the
                representations and warranties contained herein.

         b.     Any  Owner  Related  Entity   defaults  in  the  performance  or
                observation  of  any  covenant  of  such  Owner  Related  Entity
                contained  in this  Agreement  and such default  shall  continue
                without  cure for  fifteen  (15) days  after  notice  thereof by
                Brookdale  to such  Owner  Related  Entity  and the  Subordinate
                Lender.

         c.     An "Event of  Default"  (as  defined  in the  Subordinate  Note)
                occurs,  which "Event of Default" has not been caused,  directly
                or indirectly, by Brookdale.

         d.     An "Event of Default" (as defined in the Senior Loan  Documents)
                occurs,  which "Event of Default" has not been caused,  directly
                or indirectly, by Brookdale.

                                       9

<PAGE>

         e.     An "Event of Default" (as defined in the Development  Agreement)
                by the Owner occurs.

         f.     An "Event of Default" (as defined in the  Management  Agreement)
                by the Owner occurs.

         g.     Any Owner Related  Entity makes an assignment for the benefit of
                creditors.

         h.     Any Owner  Related  Entity  petitions or applies to any tribunal
                for the  appointment  of a trustee or receiver for itself or any
                substantial  part  of its  assets  or the  Member  and/or  Owner
                commences any  proceeding  relating to it under any  bankruptcy,
                reorganization,  arrangement,  insolvency, readjustment of debt,
                dissolution or liquidation law of any  jurisdiction  whether now
                or hereafter in effect.

         i.     Any petitions or applications  are filed, or any proceedings are
                commenced,   against  any  Owner  Related   Entity  seeking  the
                adjudication  of it as bankrupt and such Owner Related Entity by
                any  act  indicates  its  admission  or  consent   thereto,   or
                acquiescence  therein,  or any  order is  entered  appointing  a
                trustee or receiver,  or adjudicating  such Owner Related Entity
                bankrupt or  insolvent,  or  approving  the petition in any such
                proceedings and such order remains  unstayed or undischarged for
                more than sixty (60) days.

         j.     Any order is entered in any proceeding against any Owner Related
                Entity  decreeing the  dissolution  of such Owner Related Entity
                and such order remains  unstayed or  undischarged  for more than
                sixty (60) days.

         k.     Any  judgment  or  order is  entered  in any  proceedings  which
                affects the Membership  Interests,  or any lien,  claim or other
                encumbrance  encumbers  any thereof,  other than, in the case of
                the  Membership  Interests,  the interest of  Brookdale  created
                pursuant to the Operating Agreement.

11.      Notice of Certain  Events.  Owner and each other Owner  Related  Entity
         agrees to promptly give notice to Brookdale of:

         a.     Any Default known to Owner or such other Owner Related Entity;

         b.     Any  notice of any  default or "Event of  Default"  or any other
                notice  received  from the Senior  Lender  under the Senior Loan
                Documents  (unless  a copy  of such  notice  is  required  to be
                delivered to Brookdale pursuant thereto);

         c.     Any  notice of any  default or "Event of  Default"  or any other
                notice   received   from  the   Subordinate   Lender  under  the
                Subordinate  Loan  Documents  (unless  a copy of such  notice is
                required to be delivered to Brookdale pursuant thereto); and

         d.     Any notice given by Owner or any other Owner  Related  Entity to
                the Senior Lender or the Subordinate Lender.

                                       10

<PAGE>

                Each notice  pursuant to this Section shall be  accompanied by a
                statement of the chief  executive  officer of the relevant Owner
                Related  Entity  setting  forth the  details  of the  occurrence
                referred to therein and, if applicable, stating what action such
                Owner Related Entity proposes to take with respect thereto.

12.      Appointment of Escrow Agent and Establishment of Escrow.

         a.     Brookdale  and the  Member  agree to appoint  Squire,  Sanders &
                Dempsey,  LLP as Escrow Agent (in such  capacity,  together with
                any successor thereto, the "Escrow Agent") pursuant to the terms
                of the Escrow Agent  Appointment  Agreement  attached  hereto as
                Exhibit B (the "Escrow Agent Appointment Agreement").

         b.     Brookdale and the Member hereby  establish an escrow to hold the
                Assignment and to facilitate the Closing.

         c.     The Escrow  Agent  agrees to act in  accordance  with the Escrow
                Agent Appointment Agreement and this Section.

         d.     On the Closing Date, Brookdale (or its nominee) shall deliver to
                the Escrow  Agent,  (i) the Purchase  Price by wire  transfer of
                immediately  available  funds to an  account  designated  by the
                Escrow  Agent,   (ii)  a  certificate   (the   "Purchase   Price
                Certificate")  of a  Treasurer  or  an  Assistant  Treasurer  of
                Brookdale,  dated as of the  Closing  Date or a date  within the
                preceding five (5) days, stating that (A) the Option Termination
                Date has not occurred,  (B) in the event that Brookdale  desires
                the  Assignment  to be delivered to a nominee,  the name of such
                nominee,  (C) the Purchase Price has been accurately  calculated
                and showing such  calculation,  and (E) a payoff letter from the
                Subordinate  Lender  confirming  that,  upon  receipt the amount
                referenced therein,  the Subordinate Loan will have been paid in
                full in accordance with the Subordinate Loan Documents.

         e.     On the Closing Date,  upon receipt of the Purchase Price and the
                Purchase  Price  Certificate,  the Escrow  Agent  shall take the
                following actions:

                i.       Date the Assignment  the Closing Date,  insert the name
                         of the  "Assignee" in the preamble  thereto and deliver
                         the Assignment to Brookdale (or its nominee); and

                ii.      Deliver  the  Purchase  Price  to the  Member  by  wire
                         transfer of immediately  available  funds to an account
                         designated by the Member.

         f.     In the event  that  Brookdale  assigns  its  rights  under  this
                Agreement  pursuant to Section 13(d) hereof,  it shall so notify
                the Escrow Agent.

                                       11

<PAGE>

13.      Miscellaneous.
         --------------

         a.     Equitable Relief.  Each Owner Related Entity and Brookdale agree
                that  money  damages  or other  remedy at law would not alone be
                sufficient or adequate remedy for any breach or violation of, or
                a default under, this Agreement by such Owner Related Entity and
                that, in addition to all other remedies  available to Brookdale,
                Brookdale  shall be entitled to an injunction  restraining  such
                breach,  violation or default or threatened breach, violation or
                default and to any other equitable  relief,  including,  without
                limitation, specific performance, without bond or other security
                being required.

         b.     Notices.  Any notices required or permitted to be sent hereunder
                shall be delivered  personally or by facsimile (with answer back
                acknowledged)   or  mailed,   certified  mail,   return  receipt
                requested,  or  delivered by  overnight  courier  service to the
                following  addresses,  or such other addresses as shall be given
                by notice delivered hereunder,  and shall be deemed to have been
                given upon delivery, if delivered personally,  upon receipt with
                answer back acknowledged,  if delivered by facsimile,  three (3)
                business  days after  mailing,  if mailed,  or one  business day
                after delivery to the courier,  if delivery by overnight courier
                service:

                If to any Owner
                Related Entities:         AH Battery Park Member, LLC
                                          c/o Alliance Holdings, Inc.
                                          723 Electronic Drive
                                          Suite 300
                                          Horsham, Pennsylvania  19044
                                          Attention: David B. Fenkell
                                          Facsimile: (610) 902-0777

                with a copy to:           Squire, Sanders & Dempsey, L.L.P.
                                          41 South High Street
                                          Columbus, Ohio 43215
                                          Attention: David Cooper, Jr.
                                          Facsimile: (614) 365-2499

                If to Brookdale:          Brookdale Living Communities of
                                            New York-BPC, Inc.
                                          c/o Brookdale Living Communities, Inc.
                                          77 West Wacker Drive
                                          Suite 4400
                                          Chicago, Illinois 60601
                                          Attention: Darryl W. Copeland, Jr.
                                          Facsimile: (312) 977-3699
                                          Attention: Robert Rudnik and
                                                       Scott Jordan
                                          Facsimile: (312) 977-3769

                                       12

<PAGE>

                A copy of any notice sent hereunder  shall be sent to the Escrow
                Agent at Squire, Sanders & Dempsey L.L.P., 41 South High Street,
                Columbus, Ohio 43215,  Attention:  David Cooper, Jr., Facsimile:
                (614)  365-2499  (or  such  other  address  as shall be given by
                notice delivered hereunder).

         c.     Entire  Agreement.  This  Agreement  (including the schedule and
                exhibits  hereto)  constitutes  the entire  agreement  among the
                parties  hereto with  respect to the subject  matter  hereof and
                supersedes  all prior  agreements and  understandings,  oral and
                written,  among the parties  hereto with  respect to the subject
                matter hereof.

         d.     Binding  Effect;  Benefit.  This  Agreement  shall  inure to the
                benefit  of and be  binding  upon the  parties  hereto and their
                respective  successors  and  assigns.  Brookdale  may assign its
                rights  under this  Agreement  without  the consent of any Owner
                Related Entities. In the event that Brookdale assigns its rights
                under  this  Agreement,  it shall so notify  the  other  parties
                hereto, and references herein, including, without limitation, in
                Section  12  hereof,   and  in  the  Escrow  Agent   Appointment
                Agreement,  to Brookdale shall be deemed to be references to the
                assignee  to whom  such  rights  have  been  assigned  upon  the
                execution  and  delivery by  Brookdale  and such  assignee of an
                assignment and  assumption  agreement with respect to the Escrow
                Appointment  Agreement and this Agreement and delivery of a copy
                thereof  to each of the  other  parties  hereto  and the  Escrow
                Agent.

         e.     No Third Party Beneficiaries.  This Agreement is not intended to
                and does not benefit or confer rights upon,  and is not intended
                to be and is not  enforceable  by, any persons or  entities  not
                party to this  Agreement,  including,  without  limitation,  the
                Senior Lender and the Subordinate Lender.

         f.     Amendment;  Waiver.  No  provision  of  this  Agreement  may  be
                amended,  waived or otherwise modified without the prior written
                consent of the parties hereto, and, in the case of any amendment
                to, or waiver or  modification  of, the provisions of Section 12
                hereof, the acknowledgment and agreement of the Escrow Agent.

         g.     Section  Headings.   The  section  headings  contained  in  this
                Agreement are for  reference  purposes only and shall not affect
                the meaning or interpretation of this Agreement.

         h.     Counterparts.  This  Agreement  may be executed in any number of
                counterparts,  each of which  shall be deemed to be an  original
                and all of which together shall be deemed to be one and the same
                instrument.

         i.     Applicable   Law.  This  Agreement  shall  be  governed  by  and
                construed in  accordance  with the laws of the State of Illinois
                (without giving effect to principles of conflicts of law).

                                     13

<PAGE>

         j.     Waiver of Jury Trial.  Each party  hereto,  after  consulting or
                having had the  opportunity to consult with counsel,  knowingly,
                voluntarily and  intentionally  waives any right any of them may
                have to a trial by jury in any litigation  based upon or arising
                out of this Agreement,  or any of the transactions  contemplated
                by this Agreement, or any course of conduct, dealing, statements
                (whether  oral or  written)  or actions of any of them.  No such
                party shall seek to  consolidate,  by counterclaim or otherwise,
                any action in which a jury trial has been  waived with any other
                action in which a jury  trial  cannot be or has not been  waived
                unless failure to so consolidate  would result in a loss of such
                claim.

         k.     Limitation  of  Personal  Liability.  Notwithstanding  any other
                provision  of this  Agreement to the  contrary,  (i) in no event
                shall  any  officer,   director,   member,   partner,   manager,
                shareholder,  incorporator  or agent of any Owner Related Entity
                be personally  liable to Brookdale for any of such Owner Related
                Entity's obligations under this Agreement, and (ii) if the Owner
                defaults in connection  with any  representation  or covenant of
                the Owner set forth in this  Agreement,  it will not  create any
                personal  liability against the Owner or any lien rights against
                the  Property.  Notwithstanding  any  other  provision  of  this
                Agreement  to the  contrary,  in no  event  shall  any  officer,
                director, member, partner, manager, shareholder, incorporator or
                agent of Brookdale  be  personally  liable to any Owner  Related
                Entity for any of Brookdale's obligations under this Agreement.

         l.     Confidentiality.   Owner  Related   Entities   acknowledge  that
                Brookdale  may  suffer   irreparable  harm  if  the  information
                provided to any of the Owner Related  Entities  pursuant to this
                Agreement or this  Agreement was disclosed to any third parties.
                Accordingly,  Owner Related  Entities  shall keep this Agreement
                and all such information confidential and shall not disclose any
                of such information not already known to the public to any party
                except Owner Related Entities' lenders,  attorneys,  accountants
                and  other   professional   advisors  in  connection   with  the
                transactions  contemplated  by this  Agreement  or as  otherwise
                required by law or court order.  Owner  Related  Entities  shall
                endeavor  to  minimize  the number of persons who have copies of
                this  Agreement  and shall  inform  each of such  persons of the
                confidential  nature  thereof.  The  provisions  of this Section
                13(l)  shall  not  prohibit  any  affiliate  of any of the Owner
                Related   Entities   from   participating   in   other   similar
                transactions  with parties  other than  Brookdale,  Developer or
                their affiliates.


                           [Signature page to follow]

                                       14

<PAGE>

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


                              MEMBER:

                              AH Battery Park Member, LLC

                              By:  Alliance Holdings, Inc.,
                                   its sole member and manager

                                   By:  /s/ David B. Fenkell
                                        ------------------------------
                                   Name:     David B. Fenkell
                                   Its:      President


                              OWNER:

                              AH Battery Park Owner, LLC

                              By:  AH Battery  Park  Member,  LLC,
                                   its sole  member and manager

                                   By:  Alliance  Holdings,  Inc.,
                                        its sole  member and manager


                                        By:  /s/ David B. Fenkell
                                             --------------------------
                                        Name:     David B. Fenkell
                                        Its:      President


BROOKDALE:

BROOKDALE LIVING COMMUNITIES
OF NEW YORK-BPC, INC.


By:  /s/ Mark J. Schulte
     -----------------------
Name:     Mark J. Schulte
Its:      President


<PAGE>



                                     JOINDER
                                     -------

         The  undersigned  hereby  joins in the  execution  and  delivery of the
foregoing  Agreement for the sole purpose of  acknowledging  and agreeing to the
provisions of Section 12 thereof.


                                   SQUIRE, SANDERS & DEMPSEY, L.L.P.


                                   By:
                                        --------------------------------
                                   Name:
                                             ---------------------------


<PAGE>

                                    EXHIBIT A


                       ASSIGNMENT AND ACCEPTANCE AGREEMENT


         THIS  AGREEMENT  made  as of  ___________________,  by and  between  AH
BATTERY PARK MEMBER,  LLC, an Ohio limited liability company  ("Assignor"),  and
_______________________________________ ("Assignee").


                                   WITNESSETH:


         1.     For good and valuable consideration, the receipt and sufficiency
of which are hereby  acknowledged,  Assignor  does hereby  transfer,  assign and
convey to Assignee a one hundred  percent  (100%)  interest (the  "Interest") as
Member in AH Battery  Park Owner,  LLC an Ohio  limited  liability  company (the
"LLC").

         2.     Assignor does hereby  warrant and represent  that it is the sole
and lawful owner of the Interest herein  transferred,  free of any liens, claims
or encumbrances and that it has full power and authority to make such transfer.

         3.     Assignee does hereby accept the foregoing  assignment and agrees
to become a Member of the LLC.

                                   ASSIGNOR:

                                   AH BATTERY PARK MEMBER, LLC

                                   By:  Alliance  Holdings,  Inc.,
                                        its sole member and manager


                                        By:
                                        Title:
                                        Its:


                                   ASSIGNEE:



                                   By:
                                   Title:


<PAGE>


                                    EXHIBIT B